87 Buyer and receives any award independent from that granted to Seller, Buyer may retain such award.
(e) LIMITATION OF LIABILITY . PRIOR TO THE COMMERCIAL
OPERATION DATE, SELLER’S AGGREGATE LIABILITY UN DER THIS AGREEMENT
FOR DAMAGES ARISING OUT OF TH E PERFORMANCE OR UNEXECUSED
NONPERFORMANCE OF ITS OBLIGATIONS PU RSUANT TO THIS AGREEMENT AS A
CONSEQUENCE OF A CLAIM OR SUIT INITIATED BY BUYER SHALL NOT EXCEED THE AMOUNT OF FORTY-FIVE MI LLION DOLLARS ($45,000,000); PROVIDED,
HOWEVER, THAT THE FOREGOING LIABIL ITY CAP SHALL NOT APPLY TO (A)
INDEMNIFICATION OBLIGATIONS OF SELLER TO BUYER HEREUNDER IN RESPECT
OF LIABILITIES OF BUYER TO THIRD PARTIES OR (B) LIABILITY ARISING OUT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER, OR ANY OF SELLER’S OFFICERS, AGENTS, EMPLOYEES OR SUBCONT RACTORS OF ANY TIER.
EXCEPT TO THE EXTENT INCLUDED IN (I) DAILY DELAY DAMAGES, SHORTFALL
LIQUIDATED DAMAGES, SHORTFALL PENALTY, OR ANY OTHER LIQUIDATED
DAMAGES, (II) INDEMNIFICATION OB LIGATIONS OF SELLER TO BUYER
HEREUNDER IN RESPECT OF LIABILITIES OF BUYER 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 CONTRA CT, 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 14.18 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 advers ely 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.
Section 14.19 Confidentiality.
(a) Each Party agrees, and shall use reas onable efforts to cause its parent, subsidiary and Affiliates, and its and their respective directors, officers, employees, representatives and agents, as a condition to r eceiving confidential information hereunder, to keep confidential, except as required by applicable laws: (i) 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 (ii) documents that are clearly marked “Confidential” at the time a Party shares such information with the other Party ((i) and (ii), the “Confidential Information”).
The provisions of this Section 14.19 shall survive and shall continue to be binding upon the Parties 226 of 662
88 for period of one (1) year following the date of termination of this Agreement. Notwithstanding the foregoing, information shall not be considered Confidential Information which (A) is disclosed with the prior written consent of the originat ing Party, (B) was in the public domain prior to disclosure or is or becomes publicly known or available other than th rough the action of the receiving Party in violation of this Agreement, (C) was lawfully in a Party’s possession or acquired by a Party outside of this Agreem ent, which acquisition was not known by the receiving Party to be in breach of any confidentiality obligation, or (D) 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 14.19, disclose matters that are made confidential by this Agreement:
(i) To its counsel, accountants, audito rs, advisors, other professional consultants, credit rating agencies, actual or prospective co-owners, investors, lenders, underwriters, contractors, suppliers, and others involved in construction, operation, and financing transactions and arrangements for a Party or its subsidiaries, Affiliates, or parent; (ii) To Governmental Authorities and parties involved in any proceeding in which either Party is seeking a Per mit, certificate, or other regulatory approval or order necessary or appropriate to carry out this Agreement; to Governmental Authorities or the public as required by any applicable law, regulation, order, rule, ruling or other Requirement of Law, including oral questions, discovery requests, subpoenas, ci vil investigatio ns or similar processes and laws or regulations requiring disc losure of financial information, information material to financial matters, and filing of financial reports. (c) If a Party is requested or required, pursuant to any applicable law, regulation, order, rule, ruling or other Requirement of Law, di scovery request, subpoena, civil investigation or similar process to disclose any of the Confiden tial Information, such Party shall provide prompt written notice to th e other Party of such request or requirement so that, at such other Party’s expense, such other Party can seek a protective order or ot her appropriate remedy concerning such disclosure.
(d) Notwithstanding the foregoing or any ot her provision of this Agreement, Buyer may record, register, deliver and file all such notices, st atements, instruments and other documents as may be necessary or advisable to render fully valid, perfected and enforceable under all Requirements of Law the credit support cont emplated by this Agreem ent and the Ancillary Documents, including the Development Security, and the Performance Secu rity, and the rights, Liens and priorities of Buyer with respect to such credit support. (e) Notwithstanding the foregoing or any ot her provision of this Agreement, Seller acknowledges that Buyer, as a Californi a joint powers authority, and each Participating Member is subject to disclosure 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”), each as may be amended or superseded from time to time. Seller acknowledges that Buyer shall not be in breach of this Agreem ent or have any liability whatsoever under this Agreement or otherwise for any claims or causes of action whatsoever resulting from or arising 227 of 662
89 out of Buyer or any Participatin g Member copying or releasing to a third party any Confidential Information of Seller pursuant to the CPRA or Brown Act. (f) If Buyer receives a CPRA request for Confidential Information of Seller, and Buyer determines that such Confidential Information is subject to disclosure under the CPRA, then Buyer will notify Seller of the request and its intent to disclose the documents. Buyer, as required by the CPRA, will release such documents unless Seller timely obtains a court order prohibiting such release. If Seller, at its sole expense, chooses to seek a court order prohibiting the release of Confidential Information pursuant to a CPRA request, then Seller undertakes and agrees to defend, indemnify and hold harmless the Indemn itees from and against all suits, claims, and causes of action brought against any Indemnitee fo r Buyer’s refusal to disclose Confidential Information of Seller to any person making a request pursuant to CP RA. Seller’s indemnity obligations shall include all actu al costs incurred by any Indemnit ee, 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 Indemnitee, 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 liabilities of any nature. (g) Each Party acknowledges that any di sclosure or mis appropriation of Confidential Information by such Party in violation of this Agreement could cause the other Party or their Affiliates irreparable ha rm, the amount of which may be extremely difficult to estimate, thus making any remedy at law or in damages in adequate. Therefore each Party agrees that the non-breaching Party shall have th e right to apply to any court of competent jurisdiction for a restraining order or an injunction restraining or en joining any breach or threatened breach of this Agreement and for any other equitable relief th at 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 14.17(e).
Section 14.20 Mobile-Sierra. Notwithstanding any provision of this Agreement, neither Party shall seek, nor shall they support any third party in seeking, to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisi ons of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior agreement in writing by both Partie s, the standard of review for changes to the rates, terms or conditions of this Agreement proposed by a Party, a non-Party or the FERC acting sua sponte shall be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp. , 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co. , 350 U.S. 348 (1956), and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 at 550- 51 (2008) and NRG Power Marketing, LLC v. Maine Public Utilities Comm’n , 558 U.S. 165 (2010).
Section 14.21 Right of First Offer and Right of First Refusal. From and after the fifth (5th) anniversary of the Commercial Operation Date and continuing through the Agreement Term, 228 of 662
90 Buyer shall have a “ Right of First Offer ” (or “ ROFO”) and a “ Right of First Refusal ” (or “ROFR”) for any proposed sale of all of the Facility or the Facility Assets or one hundred percent (100%) of the interests held directly or indirectly by Seller with respect to the Facility (any “Disposition”); provided that the ROFO and ROFR shall not apply to sales of any interests of Seller in connection with (a) any Tax Financing or Sale Leaseback Financing, (b) sales of any interests in Seller to any Affiliate of Seller, or (c) sales in connection with the exercise of a Facility Lender’s remedies pursuant to any Financing Agreement to a Qualified Transferee. (a) Seller shall not consumma te any Disposition wit hout complying with the provisions of this Section 14.21. Prior to Sell er consummating any Disposition, Seller shall provide notice to Buyer of Sell er’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 sh all have seventy-five (75) days in which to notify Seller that Buyer may purchase the Facility Assets from Seller (a “ Proposed Purchase Notice”). If Buyer provides Seller with a Proposed Purchase Notice, then unless and until Seller sends a notice to Buyer rejecting Buyer’s proposed purchase price (“Rejection Notice”), the Parties shall undertake for a period of up to one hundred eighty (180) days after 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 and to close on the sale of such Facility Assets w ithin ninety (90) days thereafter, which ninety (90) days may be extended to the extent requi red to obtain funding and any necessary third-party or governmental (including approval from a Participating Member’s board or city council). (b) If (i) Buyer does not pr ovide a Proposed Purchase Notice to Seller, (ii) Seller issues a Rejection Notice or (iii) the Parties are unable to agree upon the terms and conditions of a sale of the Facility Assets to Buyer and close on such sale within the time periods set forth in Section 14.21(a), then Seller shall be free to negotiate a Disposition to any third party, subject to the ROFR; provided, however, that (A) any Disposition shall include the assignment of this Agreement and Seller’s rights under th e Ancillary Documents (in accordance with Section 14.6), and (B) a purchase agreement with re spect to such Disposition is executed within one hundred eighty (180) days afte r the delivery of the Proposed Sa le Notice, and such purchase agreement closes within ninety (90) days thereafter, which ninety (90) day period may be extended to the extent required to obtain any necessary third-party or governmental approvals. If Seller and such third party are unable to consummate the Disposition within the aforementioned time period, Seller shall be obligated to rep eat the ROFO process. If Buye r provided a Proposed Purchase Notice, then prior to consummating any such Disposition, 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”) in which Seller shall confirm whether the agreed upon purchase price is less than or equal to 95% of the proposed purchase pr ice in the Proposed Purchase Notice. 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, then Buyer shall have forty-five (45) days to exercise its Right of First Refusal to purchase the Facility Assets on substantially similar terms to those set forth in the Notice of Proposed Third Party Sale, subject to any modifi cations required to conform the tr ansaction to requirements for transactions entered into by public agencies. If Buyer exercises the ROFR, then Buyer and Seller shall attempt to reach agreemen t on the terms and conditions of a purchase and sale agreement within one hundred eighty (180) days after Buyer’s submittal of the ROFR and close within ninety 229 of 662
91 (90) days thereafter, which such ninety (90) day period may be extended to the extent required to obtain funding or any necessary third party or governmental approvals (including any approvals required by the Participating Members’ board or city council). If th e Parties cannot reach agreement within ninety (90) days after Buyer’s submittal of the ROFR, Seller may consummate the proposed Disposition; provided that a purchas e agreement is executed within two hundred seventy (270) days after delivery of the ROFR and such purchase agreement closes within ninety (90) days thereafter, which ninety (90) day period may be extended to the extent required to obtain any necessary third party or governmental approvals. If Buyer does not elect to exercise its Right of First Refusal and purchase the Facility Assets within such forty-five (45) days or if the proposed purchase price set forth in the No tice of Proposed Third Party Sale is greater than ninety-five percent (95%) of the purchase price included in the Proposed Purchase Notice, then Seller shall be free to consummate the Disposition; provided that (A) such any sale of th e 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) a purchase agre ement is executed within one hundred eighty (180) days after Seller’s issuance of the Notice of Proposed Thir d Party Sale and such purchase agreement closes within ninety (90) days thereafter, which ninety (90) day period may be extended to the extent required to obtain any necessary third-party or governmental approvals. If Seller and such third party are unable to consummate the Disposition within the aforementioned time period, Seller shall be obligated to repeat the ROFO/ROFR process.
Section 14.22 Future Phases. During the Term, if (i) Seller or Affiliates of Seller develop additional phases of the Facil ity or additional projects that interconnect through the Milford Generator Lead and (ii) there is sufficient capac ity for such additional phases or projects on the Milford Generator Lead, then Seller shall offer to Buyer a power purchase agreement (which shall be substantially in the form of this Agreement) and a purchase option (which shall be substantially in the form of the Option Agreement) for up to 300 MW of such additional phase or project. Buyer and Seller shall have one hundred twenty (120) days in which to negotiate diligently in good faith, on an exclusive basis, the applicable definitive agreements. If Buyer and Seller cannot mutually agree on the terms of the definitive agreements after good faith diligent negotiation for a period of one hundred twenty (120) days, th en Seller may sell the energy fr om such additional phase or project to a third party; provided that Seller may not offer terms with respect to such third party which are more favorable than the terms offered to Buyer. If Buyer and Seller mutually agree on the terms of an exclusivity agreement for the pu rchase of energy from su ch additional phase or project, then, for the period of time specified in the excl usivity period, Buye r and Seller shall negotiate diligent in good fait h to reach agreement on the term s of a power purchase agreement and a purchase option with respect to such additional phase or project. If Buyer and Seller cannot mutually agree on terms of a power purchase agreement and a purchase option with respect to such additional phase or project after good faith diligent negotiation for the period of time specified in such exclusivity agreement, then Seller may sell the energy from such additional phase or project to a third party; provided that Seller may not offer terms with respect to the purchase of energy from such additional phase or project to such third party which are more favorable than the terms offered to Buyer. This Agreement does not limit the right of Seller to contract for any other additional phases of the Facil ity or additional projects that interconnect through the Milford Generator Lead; provided, Seller complies with th e terms of this Section 14.22 with respect to such additional phases or additiona l projects. As of the Effective Date, storage is not included in the Facility. In recognition of emerging technologies and opportunities that will continue to evolve 230 of 662
92 during the Agreement Term, incorporate the use of storage technologies into the Facility shall be subject to the mutual agreement by Buyer and Seller . If in connection with Seller’s or any of its Affiliates’ development of additional phases of the Facility or additional projects that interconnect through the Milford Generator Lead, Seller reasonably determines that it requires the use of certain shared facilities, the right to occupy or use shared real pr operty, or the ownership or governance of the rights associated with either, then upon written notice to Buyer from Seller, Buyer shall reasonably cooperate and negotiate in good faith with Seller or Seller’s Affiliates to enter into one or more Shared Facilities Agreements with Selle r’s Affiliates, subject to the approval of Buyer, which approval shall not be unreasonably withheld so long as Buyer is not materially adversely impacted (including under this PPA) by the terms and conditions of any such Shared Facilities Agreement. Each such Shared Facilities Agreement shall provide Buyer with the right to approve any material amendments to each form for th e purpose of protecting Buyer’s rights under this Agreement and the Option Agreement, and shall provide that Buyer is a third party beneficiary for the purpose of enforcing the agreements, rights, obligations or remedies of Seller or any other party with whom Buyer has entered into a power purchase agreement.
Section 14.23 No Dedication of Facilities . Any undertaking by one Party to the other Party under any provisions of this Agreement shall not constitute the dedication of the Facility or any portion thereof of either Party to the public or to 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 14.24 Buyer and Participating Member Business Policies.
Seller acknowledges that its agreement to abide by the business policies of Buyer and the Participating Members is material to Buyer’s decision to enter into this Agreement, and accordingly, Seller agrees that it will comply with the following, as such policies may be amended or updated from time to time:
(a) Recycling Policy.
(i) Buyer supports the use of recycled content products of all types.
Recycled content products help conserve natural resources, including water and energy, and reduce demands upon landfills.
(ii) To the extent feasible, Seller shall submit all written documents on paper with a minimum of thirty percent (30 %) post-consumer recycl ed content. Existing company/corporate letterhead or stationery that accompanies these documents is exempt from this requirement. Documents of two (2) or more pages in length shall be duplex-copied (double-sided pages). Neon or fluorescent paper shall not be used in any written documents submitted to Buyer. (b) Non-Discrimination/Equal Employment Practices/Affirmative Action Construction & Non-Construction Agreements. (i) During the performance of this Agreement, Seller shall not discriminate in its employment practices against any em ployee or applicant for employment because of race, religion, national origin, ancestry, sex, sexual orientation, age, disability, marital status, domestic partner status, or medical condition. All subcontracts awarded by Seller under this Agr eement shall contain a like nondiscri mination provision. The applicable 231 of 662
93 provisions of Executive Order No. 11246 of Sept ember 24, 1965; Part 60 741 of 41 Code of Federal Regulations pertaining to handicapped workers, including 60 741.4 Affirmative Action Clause; and Sections 10.8 to 10.13 of the Los Angeles Administrative Code (“LAAC”) pertaining to nondiscrimination in employment in the performance of City of Los Angeles contracts are incorporated herein by reference and made a part hereof as if they were fully set forth herein. (ii) Any of the above-mentioned subcontracts shall be effective for twelve (12) months following the date of approval for the Affirmative Action pr actices. An Affirmative Action plan shall be in effect and on file with Buyer for the duration of this Agreement. (c) Small Business Enterprise (“SBE”) and Disabled Veteran Business Enterprise (“DVBE”) Opportunity Program. (i) It is the policy of LADWP, which Buyer must comply with, to provide SBEs, DVBEs, Disadvantaged Business Enterprises (“DBEs”), Emerging Business Enterprises, Women Business Enterprises (“ WBEs”), Minority Business Enterprises (“MBEs”), Lesbian, Gay, Bisexual, or Tr ansgender Business Enterprises (“ LGBTBEs”) and all Other Business Enterprises (“OBEs”) an equal opportunity to participate in the performance of all Buyer contracts. (ii) LADWP’s goals for SBE/DVBE participation in performance of its contracts are twenty-five percent (25%) fo r SBEs and three percent (3%) fo r DVBEs. Seller shall assist Buyer in implementing this policy by taking all commercially reasonable steps to ensure that all available business enterprises, including SBEs and DVBEs, have an equal opportunity to compete for and participate in the work being requested by this Agreement. (iii) Seller shall notify LADWP if Seller is a certified SBE, DVBE, DBE, WBE, LGBTBE or MBE. Seller shall provide to LADWP (A) the company name, contact person, addre ss, and telephone number of each proposed Subcontractor that qualifies as an SBE, DVBE, DBE, WBE, LGBTBE or MBE, and (B) copies of all certifications of su ch Subcontractor as an SBE, DVBE , DBE, WBE, LGBTBE or MBE, as applicable.
(d) Child Support Policy . Seller and any of its Subcontractors shall fully comply with all applicable state and federal em ployment reporting requirements for Seller’s and any Seller’s Subcontractors’ employees. Seller and any of its Subcontractors shall fully comply with all lawfully served Wage and Earnings As signment Orders and Notices of Assignment in accordance with the California Family Code. Seller and any of its Subcontractors shall certify that the principal owners thereof (which shall include any person who owns an interest of ten percent (10%) or more) complies with any Wage and Earnings Assignment Orders or Notices of Assignment applicable to them personally. Seller and any of its Subcontractors shall certify that such compliance will be maintained throughout the Agreement Term. Failure of Seller or any its Subcontractors to fully comply with all applicable reporting requirements or to implement lawfully served Wage and Earnings Assignments or Notices of Assignment or failure of the principal owners to comply with any Wage and Earnings Assignments or Notices of Assignment applicable to them personally shall constitute an event of default under this Agreemen t. Failure of Seller or any its Subcontractors or principal owners thereof to cure the event of default within ninety (90) days of notice of such event of default by Buyer shall subject this Agreement to termination. (e) Current Los Angeles City Business Tax Registration Certificate Required. Seller shall obtain and keep in full force and effect during the Agreement Term either (i) all Business Tax Registration Ce rtificates required by the City of Los Angeles Business Tax Ordinance, Article 1, Chapter II, Section 21.00 or (ii) Seller’s Vendor Registration Number. 232 of 662
94 Seller’s Vendor Registration Number must be shown on all invoices s ubmitted for payment.
Failure to do so may delay payment. For additional information regarding applicability of the City Business Tax Registration, contact the City of Los Angeles Clerk’s Office at (213) 978-1521. (f) Taxpayer Identification Number (TIN). Seller has provided its taxpayer identification number (TIN) to Buyer in writing. No payment will be made to Seller under this Agreement without a valid TIN number.
(g) Equal Benefits Ordinance. Seller agrees to comply with the requirements of the Equal Benefits Ordinance (“EBO”), codified at LAAC § 10.8.2.1, and to sign any required certifications related to such ordinance. Seller agrees to complete the form attached to Appendix Q related to the EBO and any certifications attached thereto. (h) Contractor Responsibility Ordinance. Seller agrees to comply with the requirements of the Contractor Responsibility Ordinance (“ CRO”), codified at LAAC § 10.40 et seq., and sign any required certifications related to su ch ordinance. Seller agrees to complete the form attached to Appendix Q related to the CRO and any certifications attached thereto. (i) Sweat-Free Procurement Ordinance . Seller agrees to comply with the requirements of the Sweat Free Procurement Ordinance (“ SFPO”), codified at LAAC § 10.43 et seq., and sign any required certifications related to su ch ordinance. Seller agrees to complete the form attached to Appendix Q re lated to the SFPO and a ny certifications atta ched thereto. In the case of impracticality in any provisions of the form due to the substitution of Buyer for the City of Los Angeles, Buyer will reasonably accommodate changes or substitutions in the requirements of the form as necessary to accomplish the purpose of the SFPO. (j) Iran Contracting Act of 2010 . In accordance with California Public Contract Code Sections 2200 2208, all bidders s ubmitting proposals for, entering, or renewing contracts with the City of Los Angeles for goods and services estimated at $1,000,000 or more are required to complete, sign, and su bmit the “Iran Contracting Act of 2010 Compliance Affidavit” in the form attached to Appendix Q.
(k) Prevailing Wage . Seller and Seller’s agents , employees and contractors shall, in connection with their performance of th is Agreement or their work in respect of the Facility, comply with all applicable provisions of the labor and employme nt laws and all other Requirements of Law of the stat e(s) and municipality(ies) in which they operate, including requirements affecting the hours of work, wa ges and other compensation of employees, nondiscrimination and other conduct of the work. Workers at the Faci lity shall be paid not less than prevailing wages required under local labor and employment laws, if applicable. Seller shall ensure that the construction Facility is gov erned by a project labor agreement, community workforce agreement, work site agreement, collective bargaining agreement, or any other similar agreements providing for terms and conditions of employment with applicable labor organizations. (l) Los Angeles Municipal Lobbying Ordinance. Seller agrees to comply with the disclosure requiremen ts and prohibitions es tablished in the Los Angeles Municipal Lobbying Ordinance if Seller qualifies as a lob bying entity under Los A ngeles Municipal Code Section 48.02.
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95 (m) California Russia Sanctions. Seller will use reasonable best efforts to ensure that Seller complies with California St ate Executive Order N-6-22, dated March 4, 2022 (“State Executive Order ”) concerning economic sanctions (“ Economic Sanctions”). Seller has read the State Executive Order, is not the subject or target of any Economic Sanctions, and will use reasonable best efforts to comply with any reasonable request to report information or submit documents to the State, or Buyer, or both, be fore or after the expiration, termination, or cancellation of this Agreement. At any time and upon written notice to Seller, Buyer, in its sole discretion, may either immediately invoke any one or more of the remedies listed in Section 13.2 for Default under Section 13.1(b), or terminate this Agreement for Buyer’s convenience under Section 13.3, if Buyer determines that any one or more of th e following circumstances or events have occurred:
(i) Seller is the subject or target of Economic Sanctions; (ii) Seller is conducting prohibited tr ansactions with sanctioned individuals or entities; or
(iii) Seller has failed to comply, in any manner, with the State Executive Order.
Section 14.25 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 Code. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[Signature Page of Milford Solar Phase II PPA]
IN WITNESS WHEREOF, each Party was re presented by legal counsel during the negotiation and execution of this Agreement and the Parties have executed this Agreement as of the dates set forth below effective as of the Effective Date.
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
D a t e : B y :
President
A t t e s t :
Assistant Secretary
Approved as to legal form:
B y :
Christine Godinez
General Counsel
31858747
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236 of 662
Final Form
A-1
DB2/ 48370525.19
APPENDIX A
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
CONTRACT PRICES
General Contract Prices. Subject to all of the terms and conditions of this Agreement:
1. Startup and Test Energy: Buyer shall, subject to the limitations in Section 3.3(b) of the Agreement, purchase and pay for all Startup and Test Energy from the Facility (along with all associated Environmental Attributes and Capacity Rights) for an aggregate price equal to $18.88 per MWh (the “Startup Price”).
2. Payment for Delivered Energy After Facility Commercial Operation Date: Full Contract Price. Commencing on the Commercial Operation Date of the Facility, Buyer shall purchase and pay for all Delivered Energy (along with all associated Environmental Attributes and Capacity Rights but excluding Excess Energy and its associated Environmental Attributes and Capacity Rights) for an aggregate price equal to $37.75 per MWh (the “Full Contract Price”).
3. Payment for Excess Energy: Excess Energy Price . During the Initial Stub Year, each Contract Year thereafter, and the Final Stub Year, Buyer shall purchase and pay for all (a) Delivered Energy comprising Excess Energy 110%-120% (along with all associated Environmental Attributes and Capacity Rights) for an aggregate price equal to $15.10 per MWh and (b) for all Delivered Energy comprising Excess Energy > 120% (along with all associated Environmental Attributes and Capacity Rights) for an aggregate price equal to $9.44 (the “Excess Energy Price”).
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DB2/ 48370525.19
B-1
APPENDIX B
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
FACILITY DESCRIPTION AND MILESTONE SCHEDULE
ARTICLE I. FACILITY DESCRIPTION
1. Name of Facility: Solar photovoltaic powered electric generating facility, known as the “Milford Solar Project, Phase
II”
2. Facility Site: Beaver County, Utah
The Project site is located at Latitude: 38.535276°;
Longitude: -113.017212°.
3. Generator Owner: Milford Solar Phase II, LLC
4. Generator Operator: Milford Solar Phase II, LLC, or a Qualified Operator
5. Transmission Services Coordinator: Milford Generator Lead Owner. Milford Generator Lead Owner will provide firm transmission services as set forth in the Transmission Services Agreement for a term no shorter than the Delivery Term.
6. Equipment:
(a) Type of Facility: Photovoltaic solar generation
(b) Contract Capacity: 300 MW-ac
7. Target Commercial Operation Date: December 31, 2026
8. Other included facilities: N/A
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DB2/ 48370525.22
B-2
ARTICLE II. MILESTONE SCHEDULE
Note - a “*” designates a Key Milestone.
Shaded items are complete as of the Effective Date.
**If the Approvals Date has not occurred on or prior to July 31, 2025, the (i) Milestone Date for the Construction Commencement Milestone and (ii) Guaranteed Commercial Operation Date set forth below shall be extended for each day of such delay until all such approvals have been obtained.
Milestone Date Milestone Description
Daily Liquidated
Damages for Delay
Other Remedies for
Delay
Prior to the
Approvals Date
Execute all
Interconnection
Agreements
Ten (10) Business
Days following
Approvals Date
Provision of
Development Security
Commercial
Operation Date
Provision of Performance
Security
December 31, 2024 Execute Site Control
Agreements Mitigation Plan to
complete
December 31, 2025 Execute Facility
financing documents
Mitigation Plan to
complete
June 30, 2026** (as
may be extended
pursuant to the
terms of this
Agreement)
Construction
Commencement
Milestone
Mitigation Plan to
complete
December 31, 2026 Target Commercial
Operation Date
Guaranteed
Commercial
Operation Date**
(as may be extended
pursuant to the
terms of this
Agreement)
*Commercial Operation
Date
$166,667 for up to 180
days of delay (up to
amount of
Development
Security)
Within six (6)
months of the
Commercial
Operation Date
Seller shall furnish proof
reasonably acceptable to
Buyer that the Facility is
CEC Certified.
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APPENDIX C
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
Milford Solar Phase II, LLC
BUYER AND SELLER BILLING, NOTIFICATION AND
SCHEDULING CONTACT INFORMATION
1. Authorized Representative . Correspondence 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]
With a copy to:
Los Angeles Department of Water and Power
RE: Milford Solar, Phase II
111 N. Hope Street, Room 1263
Los Angeles, California 90012
Attention: External Resources Management Group – Stanley Chang
Glendale Water and Power
141 N. Glendale Avenue, Level 4
Glendale, CA 91206
Attention: GWP – Power Management
Email: [email protected]
Burbank Water and Power
320 N. Lake Ave.
Burbank, CA 91502
Attn: General Manager
Email: [email protected]
Or, if sent electronically, under Section 4.3, Section 4.6, or Section 4.7, send to all the emails listed below:
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[email protected]
[email protected]
1.2 If to Seller:
Milford Solar Phase II, LLC
c/o Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: Asset Management
Email: [email protected]
Fax: (617) 819-8083
With a copy to:
Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: General Counsel
Email: [email protected]
Fax: (617) 819-8083
2. Billings and payments pursuant to Section 6.1 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]
and to: [email protected]
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With a copy to:
Los Angeles Department of Water and Power
SCPPA Accounting Section
Re: Milford Solar, Phase II
Atif A. Haji Datoo
111 N. Hope St., Room 462
Los Angeles, California 90012
Or, if sent electronically, under Section 4.3, Section 4.6, or Section 4.7, send to all the emails listed below:
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]
With a copy to:
Los Angeles Department of Water and Power
SCPPA Accounting Section
Re: Milford Solar, Phase II
Atif A. Haji Datoo
111 N. Hope St., Room 462
Los Angeles, California 90012
Or, if sent electronically, under Section 4.3, Section 4.6, or Section 4.7, send to all the emails listed below:
2.3 If Billing to Seller:
Milford Solar Phase II, LLC
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c/o Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: Accounts Payable
Email: [email protected]
Fax: (617) 819-8083
2.4 If Payment to Seller:
Milford Solar Phase II, LLC
c/o Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: Accounts Payable
Email: [email protected]
Fax: (617) 819-8083
3. All notices (other than scheduling notices) required under the Agreement shall be sent pursuant to Section 14.2, postage prepaid, 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]
With a copy to:
Los Angeles Department of Water and Power
RE: Milford Solar, Phase II
111 N. Hope Street, Room 1263
Los Angeles, California 90012
Attention: External Resources Management Group – Stanley Chang
Or, if sent electronically, under Section 4.3, Section 4.6, or Section 4.7, send to all the emails listed below:
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[email protected]
[email protected]
And, if prior to the achievement of Commercial Operation, with a copy to:
Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Telephone: 626-793-9364
Attention: Randy Krager, [email protected]
Email: [email protected]
If to Seller:
Milford Solar Phase II, LLC
c/o Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: Asset Management
Email: [email protected]
Fax: (617) 819-8083
With a copy to:
Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: General Counsel
Email: [email protected]
Fax: (617) 819-8083
4. Throughout the Delivery Term, all notices related to scheduling, forecasts, availability, real-time access to data, or an Access Failure related to the Facility shall be sent to the following address:
If to Buyer:
Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
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Telephone: 626-793-9364
Facsimile: 626-793-9461
Attention: Director of Asset Management
Email: [email protected]
With a copy to:
Los Angeles Department of Water and Power
RE: Milford Solar, Phase II
111 N. Hope Street, Room 1263
Los Angeles, California 90012
Attention: External Resources Management Group – Stanley Chang Telephone: 213-367-2382
And electronically to the emails listed below:
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
If to Seller:
Milford Solar Phase II, LLC
c/o Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: Asset Management
Email: [email protected]
Fax: (617) 819-8083
With a copy to:
Longroad Energy
125 High Street
High Street Tower
Suite 1705
Attention: General Counsel
Email: [email protected]
Fax: (617) 819-8083
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APPENDIX D
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, 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 and location:
Fuel Type:
Capacity (MW): Operational Date:
As applicable: CEC Reg. no. ___ Energy Admin. ID no. ____ Q.F. ID no. ___ Dates MWhrs generated
________________ 20__ ___________
________________ 20__ ___________
________________ 20__ ___________
in the amount of one Environmental Attribute or its equivalent for each megawatt hour generated.
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
iv) Seller owns the Facility a nd 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. 246 of 662
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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:
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APPENDIX E
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
SALE LEASEBACK REQUIREMENTS
If Seller enters into a Sale Leaseback Transaction, then, with respect to the Lease arising thereunder, Seller and the Lessor thereunder shall agree in writing with Buyer to the following:
(a) Seller shall at all times keep, perform, observe and comply with, or cause to be kept, performed, observed and complied with, all material 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 Lease, and Seller shall not do or permit anything to be done, the doing of which, or refrain from doing anything, the omission of which, would reasonably be expected to impair the rights of Seller under the Lease, or could be grounds for the Lessor to terminate the Lease.
(b) Seller shall promptly, but in any case no later than two (2) Business Days after learning of the occurrence of any of the following, give Buyer 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 the Lease or of the receipt by Seller of any notice from the Less or thereof, or (ii) the commencement or threat of any action or proceeding or arbitration pertaining to the Lease. 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 the Lease.
Seller shall deliver to Buyer, promptly following 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) 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 the Lease pursuant to the Bankruptcy Code, Seller hereby presently, absolutely, irrevocably and unconditionally grants and assigns to Buyer the sole and exclus ive right to make or refrain from making any election available to lessees under the Bankruptcy Code (including, without limitation, the election available pursuant to Section 365(h) of the Bankruptcy Code, 11 U.S.C. § 365(h), 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 Lease 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 the Lease or the leasehold estate created thereby as terminated under Section 365 of the Bankruptcy Code, after rejection or disaffirmance of the Lease by the Lessor (whether as debtor 248 of 662
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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 Appendix E, Section (c). (d) 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 Lease, 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 the Lease or otherwise. (e) 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 the Lease pursuant to the Bankruptcy Code (or allow the same), Seller shall give Buyer at least ten (10) days prior notice of the date on which application shall be made to the cour t for authority to reject or disaffirm the Lease or the Lease 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 the Lease 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 to provide adequate assurance of future performance under the Lease. 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 the Lease and Seller (whether as debt or 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.
(f) Upon any payment by Buyer to cure any default of Seller, as lessee thereunder, and thereby to prevent termination of the Lease or the exercise of any other remedy of the Lessor thereunder arising out of such default, Seller, 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. (g) A memorandum of the Lease shall be recorded in the applicable county.
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APPENDIX F
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
INSURANCE
I. GENERAL REQUIREMENTS
As specified in the Agreement, Seller shall furnish Buyer evidence of coverage from insurers acceptable to Buyer and in a form reasonably acceptable to Buyer’s Risk Management. 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.
With the exception of Workers’ Compensation/Employers Liability Insurance, 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 nonrenewed 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: Department of Water and Power of the City of Los Angeles, Attention: Risk Management, Room 465, Post Office Box 5111, 111 North Hope Street, Los Angeles, CA 90012.
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.
Buyer reserves the right to request at any time during the term or during any extension of this Agreement, applying generally accepted risk management principles, to adjust the amounts and types of insurance required hereunder to ensure such coverage remains adequate and relevant throughout the term and any extension of this Agreement, which Seller shall take commercially reasonable efforts to obtain. Failure to maintain and provide acceptable evidence of the required insurance for the required period of coverage shall constitute a breach of contract, upon which Buyer may immediately terminate or suspend the Agreement.
Seller shall take commercially reasonable efforts to require, and shall be responsible for, all Major Subcontractors’ compliance with the insurance requirements set forth herein. Seller shall also take commercially reasonable efforts to require its other Subcontractors to obtain and maintain, 250 of 662
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throughout the performance of any work, types of insurance with limits and terms that are normal and customary for the industry and type of services being performed by such subcontractor; provided that Seller shall obtain and maintain the insurance coverages listed in Section II of this Appendix F.
In the event that any insurance (including the limits or deductibles thereof) described in Section II, other than insurance required by law to be maintained, is not available on commercially reasonable terms in the global commercial insurance market, Buyer shall not unreasonably withhold its agreement to modify Seller’s obligation to obtain such insurance to the extent of such unavailability; provided, however, that as a condition of agreeing to such modification, (i) Seller shall first request any such modification in writing, which request shall be accompanied by written reports prepared by Seller and its insurance broker, in a form reasonably acceptable to Buyer, certifying that such insurance is not available on commercially reasonable terms in the global commercial insurance market for similar facilities (and, in any case where the required amount is not so available, certifying as to the maximum amount which is available), and explaining in detail the basis for such conclusions; (ii) at any time after the granting of such modification (but no more frequently than once per year unless Buyer has reason to believe, in good faith, that the applicable insurance has become available on commercially reasonable terms), Buyer may reasonably request supplemental reports updating the reports and reaffirming the certifications described in (i), and Seller shall, within sixty (60) days after such reasonable request, provide to Buyer such supplemental reports in a form reasonably acceptable to Buyer; and (iii) any such modification shall be effective only so long as such insurance shall not be available on commercially reasonable terms in the global commercial insurance market (including re-insurers) and Seller shall promptly notify Buyer if such insurance becomes available, it being understood that the failure of Seller to timely furnish any supplemental report described in (ii) shall be considered conclusive evidence that such modification is no longer effective because such condition no longer exists.
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 two million dollars ($2,000,000.00) combined single limit per occurrence and shall apply to all operations of Seller. Limits may be satisfied through a combination of primary and excess policies.
The Commercial Automobile Liability policy shall include Buyer, Buyer’s Board of Commissioners, its members, and their offi cers, agents, and employees 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 equivalent or an endorsement to the policy acceptable to Buyer’s Risk Management Section. Blanket 251 of 662
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additional insured endorsement shall be deemed acceptable to Buyer’s Risk Management for auto liability coverage.
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 not less than twenty-five million dollars ($25,000,000.00) 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 equivalent 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 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.
For general liability coverage, a blanket additional insured endorsement shall be deemed acceptable to Buyer’s Risk Management.
C. Excess Liability
Seller may use an Umbrella or Excess Liability Coverage with “follow form” 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 equivalent, or on an endorsement to the policy acceptable to Buyer’s Risk Management Section. A blanket additional insured endorsement shall be deemed acceptable to Buyer’s Risk Management Section.
Such policy shall include, as appropriate, coverage for Commercial General Liability, Hired & Non-Owned Commercial Automobile 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) for each accident or illness and shall be a 252 of 662
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separate policy if not included with Workers’ Compensation coverage. Umbrella or Excess Liability coverages may be used to supplement primary coverages to meet the required limits. 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. Builders’ Risk
Builder’s Risk insurance shall be of the “all risk” type, shall be written in full replacement value and shall protect the Seller and Buyer against risks of damage to buildings, structures and materials and equipment whether on site or in transit from any location worldwide.
The amount of such insurance shall be not less than the insurable value of the work at completion, subject to standard and commercially available sublimits and deductibles.
Buyer shall be an additional insured on the policy. The Builder’s Risk insurance shall provide for losses to be payable to the Seller and the aforementioned additional insured, as their interests may appear, unless required otherwise by a Facility Lender. The policy shall contain a provision that in the event of payment for any loss under the coverage provided, the insurance company shall have no rights of recovery against the Buyer. The Builder’s Risk policy shall insure against all risks of direct physical loss or damage to property from any cause, including testing, ensuing loss, commissioning, earthquake and flood, subject to standard and commercially available sublimits . Seller shall maintain such Builder’s Risk insurance policy in full force and effect from the later of the Effective Date or the date of commencement of construction of the Facility through the Commercial Operation Date.
Evidence of this coverage shall be provided by Seller to Buyer by the later of the Effective Date or commencement of construction of the Facility.
F. Property All Risk Insurance
Seller shall procure and maintain or cause to be procured and maintained an All Risk Physical Damage policy to insure the full replacement value of the property located at the Facility as described in this Agreement, subject to standard and commercially available sublimits and deductibles. The policy shall include coverage for expediting expense, extra expense, Business Interruption, ensuing loss from faulty workmanship, faulty materials or faulty design. This policy need not be in full force and effect until the date of expiration of the Builder’s Risk policy described in Paragraph II.E. This policy shall have the same insureds, and all losses shall be payable in the same manner, as provided for the Builders’ Risk policy in Paragraph II.E.
G. Cyber Security Insurance
Seller shall procure and maintain a cyber liability and financial loss, intellectual property infringement, and data protection liability insurance. Seller shall procure and maintain coverage for cyber liabilities and financial loss resulting or arising from acts, errors, or omissions, in connection with data maintenance, hosting, software development and other 253 of 662
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information technology services provided under this Agreement. Coverage shall include protection for liability arising from:
1. intellectual property infringement arising out of software and/or content (excluding patent infringement and misappropriation of trade secrets);
2. breaches of security;
3. violation or infringement of any right, privacy, breach of federal, state, or foreign security and/or privacy laws or regulations; and,
4. data theft, damage, destruction, or corruption, including without limitation, unauthorized access, unauthorized use, identity theft, theft of personally identifiable information or confidential corporate information, transmission of a computer virus or other type of malicious code; and participation in a denial of service attack on a third party.
The minimum limits shall be three million dollars ($3,000,000) for each claim and in the aggregate.
H. Pollution Liability Insurance
Seller shall procure and maintain, or cause to be procured and maintained, for the duration of the Agreement Term Third Party Pollution Liability insurance that provides coverage for liability caused by pollution conditions arising out of the operations of the Facility. Coverage must be included on behalf of the insured for covered claims arising out of the actions of independent contractors. If the insured is using Subcontractors, the policy must include work performed “by or on behalf” of the insured. Coverage may be satisfied through a standalone third party pollution liability policy or via endorsement under the General Liability policy.
The policy limit must provide coverage of no less than five million dollars ($5,000,000) per occurrence and in the aggregate. Coverage must apply to bodily injury; property damage, including loss of use of damaged property or of property that has not been physically inured; cleanup costs; and costs of defense, including costs and expenses incurred in the investigation, defense, or settlement of claims.
Buyer, its officers, agents, employees, and representatives must be added to the policy as additional insureds by endorsement.
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APPENDIX G
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
METEOROLOGICAL AND PYRANOMETER MEASUREMENTS
Monitored Meteorological Data Points:
1. Irradiance (horizontal and plane of array)
2. Ambient air temperature
3. Back of module temperature
4. Rainfall quantity
5. Wind speed
6. Wind direction
7. Relative humidity
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APPENDIX H
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
REAL PROPERTY AGREEMENTS
1. Land Lease Agreement dated July 31, 2018, by and between PVRE Holdings LLC a Utah limited liability company, as lessor, and Milford Solar Phase II, LLC, a Delaware limited liability company, as lessee, as disclosed by that certain Memorandum of Lease dated July 31, 2018, and recorded August 6, 2018, as Entry No. 266550, in Book 524, at Page 71, of Official Records of Beaver County, Utah
2. Land Lease Agreement dated July 31, 2018, by and between Tammy J. Pearson, Trustee of the Shaun W. Pearson and Tammy J. Pearson Living Trust, under declaration of Trust dated August 24, 2004 as to an undivided ½ interest and Jetta Pearson Robinson and Seth C. Davie, as joint tenants as to an undivided ½ interest, as lessor, and Milford Solar Phase II, LLC, a Delaware limited liability company, as lessee, as disclosed by that certain Memorandum of Lease dated July 31, 2018, and recorded August 15, 2018, as Entry No. 266603, in Book 524, at Page 243, of Official Records of Beaver County, Utah, as amended by as amended by that certain First Amendment to Land Lease Agreement, dated November 11, 2020, as disclosed by that certain Amendment to Memorandum of Lease dated November 11, 2020, and recorded December 21, 2020, as Entry No. 272756, in Book 550, at Page 640, of Official Records of Beaver County, Utah
3. Land Lease Agreement dated March 31, 2020, by and between Sherri L. Kia and Khodayar Kia, as lessor and Milford Solar Phase II, LLC, a Delaware limited liability company, as lessee, as disclosed by that certain Memorandum of Lease dated March 31, 2020, and recorded April 20, 2020, as Entry No. 270309, in Book 540, at Page 97, of Official Records of Beaver County, Utah
4. Land Lease Agreement dated March 14, 2024, by and between Obsidian Land, LLC, a Utah limited liability company, as lessor, and Milford Solar Phase II, LLC, a Delaware limited liability company, as lessee, as disclosed by that certain Memorandum of Lease dated March 14, 2024, and recorded March 18, 2024, as Entry No. 282784, of Official Records of Beaver County, Utah
5. Lease Agreement between Milford Solar Phase II, LLC and Laura Bradshaw, Trustee of the LKKC Living Trust, dated January 17th, 2011
6. Grant of Easements, dated July 7, 2022, by Murphy-Brown LLC, a Delaware limited liability company, as grantor, in favor of Milford Solar Phase II, LLC, a Delaware 256 of 662
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limited liability company, as grantee, recorded July 18, 2022, as Entry No. 278560 of Official Records of Beaver County, Utah
7. Right-of-Way Grant/Temporary Use Permit, issued by United States Department of the Interior Bureau of Land Management in favor of Milford Solar Phase II, LLC for the right to construct, operate, maintain, upgrade and terminate two overhead/buried collector transmission lines and an access road. Said document was also filed in the Office of the Bureau of Land Management, State of Utah, as Serial No. 94837.
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APPENDIX I
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
TABLE 1
EXPECTED ANNUAL GENERATION; GUARANTEED DELIVERED ENERGY
Contract Year Expected Annual Generation, MWh Guaranteed Delivered Energy, MWh Initial Stub Year See note (1) 80% of Expected Annual Generation 1 813,722 650,978
2 808,840 647,072
3 803,987 643,189
4 799,163 639,330
5 794,368 635,494
6 789,602 631,681
7 784,864 627,891
8 780,155 624,124
9 775,474 620,379
10 770,821 616,657
11 766,196 612,957
12 761,599 609,279
13 757,029 605,623
14 752,487 601,990
15 747,972 598,378
16 743,484 594,787
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17 739,023 591,219
18 734,589 587,671
19 730,182 584,145
20 725,801 580,641
21 721,446 577,157
22 717,117 573,694
23 712,814 570,252
24 708,538 566,830
25 704,286 563,429
26 700,061 560,049
27 695,860 556,688
28 691,685 553,348
29 687,535 550,028
30 683,410 546,728
Final Stub Year See note (2) 80% of Expected Annual Generation
(1) The “ Expected Annual Generation ” for the Initial Stub Year equals 813,722 MWh, multiplied by the sum of the percentages (from the Expected Monthly Production Table below) of Energy generated by the Facility during the months between the Commercial Operation Date (prorated for the month in which the Commercial Operation Date occurs if the same does not occur on the first day of such month) and the end of the Initial Stub Year.
For example, if the Commercial Operation Date is achieved on June 1, 2026, the Expected Annual Generation in the Initial Stub Year would be 813,722 MWh x 60.16% (June through December) (which is 489,535 MWh), and the Guaranteed Delivered Energy would be 80% of this number (which is 391,628 MWh).
(2) The Expected Annual Generation for the Final Stub Year equals 683,410 MWh multiplied by the sum of the percentages (from the Expected Monthly Production Table below) of Energy generated by the Facility during the months from January 1 of the Final Stub Year to the end of the Final Stub Year (prorated for final month in the Final Stub Year if not a full month). For example, if the Commercial Operation Date is achieved on June 1, 2026, the Expected Annual Generation in the Final Stub Year would be 683,410 MWh x 39.84% (January through May) (which is 272,271 MWh), and the Guaranteed Delivered Energy would be 80% of this number (which is 217,816 MWh).
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TABLE 2
EXPECTED ENERGY MONTHLY PRODUCTION TABLE
The following table shows the percentage of generation by the Facility per calendar month for purposes of calculating the Guaranteed Delivered Energy for the Initial Stub Year and the Final Stub Year.
Month Percent Month Percent
Jan 4.97% Jul 10.89%
Feb 5.64% Aug 10.33%
Mar 8.60% Sep 9.59%
Apr 9.50% Oct 7.76%
May 11.13% Nov 5.38%
Jun 11.81% Dec 4.40%
Total 100.0%
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APPENDIX J
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
QUALITY ASSURANCE PROGRAM
Seller shall implement a Quality Assurance (“Q/A”) Program to ensure that the performance of the development, design and construction of the Facility fulfills the Requirements. 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 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 meet or exceed 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. 261 of 662
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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 target six (6) areas to monitor quality:
1) A written work plan with accompanying Q/A Manual (as defined below). 2) Detailed review of the Facility design at the planning and conceptual design phase. 3) Detailed review of Facility final design prior to construction. 4) A quality control program during constructio n to verify implementation is in compliance with design documents and document any changes. 5) Independent engineering review of the entire process, from design review through Commercial Operation.
6) A written maintenance manual for the Facility for the duration of the Commercial Operation 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 one (1) electronic copy of the Q/A Manual at least sixty (60) days prior to the Facility construction commencement milestone 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. It shall also provide the plan for detailed review of Facility conceptual design and final design, hold points, and methodology for document control and comment. Furthermore, it shall provide the plan and strategy for quality control and review during the construction of the Facility and for maintenance and operations during Commercial Operation. 262 of 662
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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 maintain ed to be current, accurate and in compliance with all applicable law.
(b) The purchased materials, equipment and services comply with the Requirements. (c) The materials received at the site are inspected for compliance with specifications. (d) The subcontracted work is adequately inspected by third parties or qualified internal personnel.
(e) Proper methods are employed for the qualification of personnel who are performing work for the development, design and construction of the Facility. (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.
(h) Detailed and complete plan for maintenance and operation during Commercial Operation consistent with manufacturers’ and suppliers’ recommendations and best industry practices.
Conceptual Design Review
Seller shall have a team of professionals who develop and review the Facility layout and Facility conceptual design. The team shall consist of specialists in land-use and planning, permitting, meteorology, engineering, construction, project management, and finance. A preliminary site plan is developed and meetings are held to assess optimization of the resource, constructability, minimization of cultural and biological impacts, land use restrictions, and landowner requirements.
Preliminary road design will also be started and access to the Facility Site will be reviewed in detail. When this plan is ready for review, a formal plan and map shall be created and a final internal review is conducted. Following that shall be detailed studies for biological, cultural and other types of impacts completed by various third parties. The site plan will be reviewed, modified as necessary, and then used to begin the permitting and public review process. The site plan shall be further modified based on comments in that process. At that point, the site plan can be issued for construction, and final engineering can commence.
In parallel with this process, preliminary conceptual design will start for the major areas of the Facility, including the substation, transmission line, racking systems, and communications system; and road and grading done to develop construction estimates as well as materials specifications.
All of these areas of conceptual designs shall be used to check and verify the assumptions used for development of the site plan.
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Seller shall provide Buyer the foregoing designs and any related documents at (i) 60% through the Conceptual Design Review Process (as measured in Seller’s sole discretion) and (ii) final completion of the Conceptual Design Review Process. Buyer may request interim designs throughout the Conceptual Design Review Process.
Final Engineering Design
Following finalization of the site plan, the detailed design will be done for the roads and grading, transmission line, and substation by third party engineering firms licensed to practice in the State of Utah. Each firm shall have its own quality assurance and checking procedures, however, Seller shall review the final work products in detail to check with conformance with this Agreement and provide comments as a second round of quality assurance. When Seller’s comments have been incorporated, the design of each area will be considered final, and that design will then be submitted to an independent engineer for review and comment. This ensures that another entity, in addition to Seller, has done a comprehensive review of all areas of the Facility and details to ensure conformance with this Agreement.
In parallel with final design and checking activities, final geotechnical studies will be conducted at the Facility Site, and a final resource assessment will be performed with the issued-for-construction Facility layout. If existing subsurface conditions are different from what is expected, the racking locations could be slightly modified. Any changes of this nature would be documented in as-built design drawings and approved of in advance by Seller.
Seller shall provide Buyer the foregoing designs and any related documents at (a) 60% through the Final Engineering Design Process (as measured in Seller’s sole discretion) and (b) final completion of the Final Engineering Design Process. Buyer may request interim designs throughout the Final Engineering Design Process.
Quality Assurance at the Construction Site
Seller will engage a proven construction contractor to perform the construction activities. A Construction Quality Assurance Plan will be agreed upon between Seller and such contractor for all construction activity at the construction site. This Construction Quality Assurance Plan will be consistent with industry standards and norms and will assure all activities receive appropriate attention. Seller will perform active construction management oversight of the contractor during the construction of the Facility to further assure quality performance.
Quality Assurance and Quality Control (“Q/C”) Activities After Commercial Operation Throughout the Agreement Term, Seller shall perform Q/A and Q/C activities on all materials and equipment associated with the Facility, including all photovoltaic solar power generation equipment, on a periodic basic. Seller shall provide Buyer a detailed report identifying all areas of inspections performed, O&M contractor provided reports, results found, remedial actions taken, if any, and follow up for any corrective actions.
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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
[To be provided by Seller prior to Construction Commencement Milestone]
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APPENDIX K
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
PERMITS
*Shaded items have been obtained as of the Effective Date.
Agency/Office
Permit, Clearance,
Approval, or
Authorization
Permit Trigger
BLM Federal Land Policy
and Management Act
(FLPMA) Right-of-
Way Grant
Installation of access roads and utility
infrastructure across BLM-managed land.
Beaver County Amended Conditional
Use Permit (CUP)
Installation of a PV electrical generation system
and associated transmission infrastructure and
substation on land zoned MU-20.
Beaver County Environmental
Assessment Report
(EAR);
Supplemented
September 2023.
Chapter 9-17-8 of the Beaver County Zoning
Code; CUP ordinance adopted under authority
of the County Land Use, Development and
Management Act, UCA Title 17, Ch.27a, Secs.
401-403 & 506.
Utah Division
of Water
Quality
Utah Pollutant
Discharge
Elimination System
(UPDES) General
Construction
Stormwater Permit
Construction activities that will disturb 1 acre or
more of land.
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Agency/Office
Permit, Clearance,
Approval, or
Authorization
Permit Trigger
Utah Division
of Water
Rights
Stream Alteration
Permit
Construction activities impacting the bed and
bank of a natural stream or within (a) two times
the width of the active channel up to a maximum
of 30 feet from water’s edge, or (b) within
continuous riparian areas adjacent to the stream.
Utah Division
of Water
Rights
Temporary Change of
Use
Wells drilled to a depth of greater than 30 feet
must be permitted by the Utah Division of Water
Rights and completed by a licensed well driller.
BLM Finding of No
Significant Impact
Milford Solar II, LLC right-of-way
Southwest
Utah Public
Health
Department
Septic System
Application Approval
(operations and
maintenance
building), if
applicable
An onsite wastewater system requires review
and approval by the local health department
prior to construction.
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APPENDIX L
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
OPTION AGREEMENT
[See attached.]
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DB2/ 48370541.18
OPTION AGREEMENT
by and between
MILFORD SOLAR PHASE II, LLC
as “Seller”
and
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
as “Buyer”
Dated as of [__________]
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS ........................................................................................................... 1
1.1 Definitions............................................................................................................... 1
1.2 Rules of Interpretation ............................................................................................ 1 ARTICLE II OPTION TO PURCHASE; CLOSING ................................................................ 1
2.1 Option to Purchase .................................................................................................. 1
2.2 Exercise of Project Purchase Option ....................................................................... 2
2.3 Tentative Exercise Notice ....................................................................................... 2
2.4 Fair Market Value; Exercise Notice ....................................................................... 2
2.5 Memorandum of Option ......................................................................................... 4
2.6 Closing .................................................................................................................... 4
2.7 No Additional Warranties ....................................................................................... 4
2.8 Assumed Liabilities ................................................................................................ 4
2.9 Excluded Liabilities ................................................................................................ 5
2.10 Schedule Updating: Final Purchase Price ............................................................... 7
2.11 Proration .................................................................................................................. 8
2.12 Closing Costs; Transfer Taxes and Fees ................................................................. 9
2.13 Decommissioning and Other Costs ......................................................................... 9
2.14 Closing Obligations ................................................................................................ 9
2.15 Bulk Sales Law ....................................................................................................... 9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER ........................... 9
3.1 Organization and Good Standing ............................................................................ 9
3.2 Authority; Absence of Conflict or Breach .............................................................. 9
3.3 Real Property Matters ........................................................................................... 10
3.4 Consents ................................................................................................................ 11
3.5 Assets of the Business ........................................................................................... 12
3.6 Title to Facility Assets .......................................................................................... 12
3.7 Environmental ....................................................................................................... 12
3.8 No Undisclosed Liabilities .................................................................................... 14
3.9 Taxes ..................................................................................................................... 14
3.10 Compliance With Laws ......................................................................................... 15
3.11 Litigation ............................................................................................................... 15
3.12 Assumed Contracts ............................................................................................... 15
3.13 Intellectual Property .............................................................................................. 15
3.14 Brokers or Finders................................................................................................. 16
3.15 Permits .................................................................................................................. 16
3.16 Investment Company Act ..................................................................................... 16
3.17 Employees and Employee Benefit Plans .............................................................. 17
3.18 General Representation ......................................................................................... 17
3.19 Regulatory Status .................................................................................................. 17 270 of 662
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER ................................. 17
4.1 Organization .......................................................................................................... 17
4.2 Authority; Absence of Conflict or Breach ............................................................ 18
4.3 Consents ................................................................................................................ 18
4.4 Brokers or Finders................................................................................................. 18
4.5 Litigation ............................................................................................................... 18 ARTICLE V COVENANTS OF SELLER PRIOR TO CLOSING DATE .......................... 18
5.1 Access to Materials ............................................................................................... 18
5.2 Investigations ........................................................................................................ 19
5.3 Financial Statements ............................................................................................. 19
5.4 Operation of the Business ..................................................................................... 19
5.5 Disposition of Assets ............................................................................................ 20
5.6 Required Approvals .............................................................................................. 20
5.7 Notification ........................................................................................................... 20
5.8 Reasonable Efforts ................................................................................................ 20
5.9 Waivers of Claims................................................................................................. 20
5.10 Additional Contracts ............................................................................................. 21
5.11 Transitional Services ............................................................................................. 21 ARTICLE VI COVENANTS OF BUYER PRIOR TO CLOSING DATE ................................... 21
6.1 Notification ........................................................................................................... 21
6.2 Required Approvals .............................................................................................. 22
6.3 Reasonable Efforts ................................................................................................ 22 ARTICLE VII CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE ....... 22
7.1 Accuracy of Representations ................................................................................ 22
7.2 Seller’s Performance ............................................................................................. 22
7.3 Consents ................................................................................................................ 22
7.4 Additional Seller Documents ................................................................................ 22
7.5 Litigation ............................................................................................................... 24
7.6 Liens ...................................................................................................................... 24
7.7 No Material Adverse Effect .................................................................................. 24 ARTICLE VIII CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE ..... 24
8.1 Accuracy of Representations ................................................................................ 24
8.2 Buyer’s Performance ............................................................................................ 24
8.3 Consents ................................................................................................................ 25
8.4 Additional Buyer Documents ............................................................................... 25
8.5 Litigation ............................................................................................................... 25 ARTICLE IX MUTUAL COVENANTS, TAXES AND OTHER MATTERS........................... 25
9.1 Tax Matters ........................................................................................................... 25
9.2 Seller Cooperation Post-Closing ........................................................................... 27
9.3 Risk of Loss .......................................................................................................... 27
9.4 Liabilities .............................................................................................................. 28 271 of 662
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9.5 Insurance ............................................................................................................... 28
9.7 RWI Insurance Proposal ........................................................................................ 29 ARTICLE X TERM AND TERMINATION ............................................................................... 29
10.1 Term ...................................................................................................................... 29
10.2 Termination Events ............................................................................................... 29
10.3 Effect of Termination ............................................................................................ 30 ARTICLE XI LIMITATION OF LIABILITY ........................................................................ 30
11.1 Survival of Representations, Etc. .......................................................................... 30
11.2 Limitation of Liability ........................................................................................... 31 ARTICLE XII GENERAL PROVISIONS ................................................................................ 31
12.1 Indemnification ..................................................................................................... 31
12.2 Expenses ............................................................................................................... 33
12.3 Ambiguity ............................................................................................................. 34
12.4 Voluntary Execution ............................................................................................. 34
12.5 Notices .................................................................................................................. 34
12.6 Entire Agreement; Amendments ........................................................................... 34
12.7 Further Assurances................................................................................................ 34
12.8 Waiver ................................................................................................................... 34
12.9 Severability ........................................................................................................... 34
12.10 Consequential or Punitive Damages ..................................................................... 35
12.11 Equitable Remedies .............................................................................................. 35
12.12 Time of Essence .................................................................................................... 35
12.13 Governing Law ..................................................................................................... 35
12.14 Execution in Counterparts ..................................................................................... 35
12.15 Relationship of the Parties .................................................................................... 35
12.16 Third Party Beneficiaries ...................................................................................... 35
12.17 Provisions of PPA ................................................................................................. 35
12.19 Exhibits and Schedules ......................................................................................... 36
12.20 Relationship with PPA .......................................................................................... 36
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Exhibits
Exhibit 1.1 Definitions
Exhibit 2.4 Purchase Price
Exhibit 2.5 Form of Memorandum of Option
Exhibit 5.11 Form of Transition Services Agreement
Exhibit 7.4(i) Form of Seller Guaranty
Schedules
Schedule 3.3 Real Property Matters
Schedule 3.4 Seller’s Consents
Schedule 3.5 Certain Assets
Schedule 3.6 Title to Facility Assets
Schedule 3.7 Environmental Matters
Schedule 3.8 Liabilities
Schedule 3.9 Tax Matters
Schedule 3.10 Comp liance with Laws
Schedule 3.11 Litigation
Schedule 3.12(a) Contracts
Schedule 3.12(b) Excepti ons to Assumed Contracts
Schedule 3.13 Intellectual Property
Schedule 3.15 Permits
Schedule 3.17 Employee Matters
Schedule 3.18 General Matters
Schedule 3.20 Support Obligations
Schedule 4.3 Buyer’s Consents
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OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into as of this [____] day of [______], 20[__], by and between Milford Solar Phase II, LLC, a limited liability company organized and existing under the laws of the State of Delaware (“ Seller”), and SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (“Buyer”), a joint powers agency and a public entity organized under the laws of the State of California and created under the provisions of the California Joint Exercise of Powers Act (California Government Section 6500 et seq.). 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, Seller and Buyer have entered into that certain Power Purchase Agreement of even date herewith (the “PPA”) relating to the purchase by Buyer of Delivered Energy, Capacity Rights and associated Environmental Attributes (each as defined in the PPA) generated by a photovoltaic solar facility to be developed, constructed, owned or leased (in accordance with the PPA) and operated by Seller in Beaver County, Utah; and WHEREAS, Seller desires to grant to Buyer, and Buyer wishes to have, an option, exercisable at various times as set forth herein, to purchase the Facility Assets (as defined herein) on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein, and Buyer entering into the PPA, and in consideration of the agreements herein and in the other Operative Documents (as defined herein) and in reliance upon the representations and warranties therein and herein, Buyer and Seller, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Except as otherwise expressly provided herein, capitalized terms used in this Agreement, including in its Recitals, Schedules and Exhibits, shall have the meanings given in Exhibit 1.1. Capitalized terms used herein but not defined in Exhibit 1.1 shall have the meanings ascribed thereto in the PPA.
1.2 Rules of Interpretation. Except as otherwise expressly provided herein, the rules of interpretation set forth in the PPA shall apply to this Agreement.
ARTICLE II
OPTION TO PURCHASE; CLOSING
2.1 Option to Purchase. Seller hereby grants Buyer an option, on the terms and conditions set forth in this Agreement, to purchase all of Seller’s right, title and interest in and to the Facility Assets, but not the Excluded Assets, and to assume the Assumed Liabilities, but not the Excluded Liabilities, on and subject to the terms and conditions set forth in this Agreement (the “Project Purchase Option ”). The Project Purchase Option may only be exercised with respect to all of Seller’s right, title and interest in and to the Facility Assets, and not with respect to only a portion thereof.
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2 2.2 Exercise of Project Purchase Option. Buyer may exercise the Project Purchase Option in accordance with the provisions of Section 2.3 and Section 2.4 at any time following the Approvals Date:
(a) one (1) year prior to the tenth (10th) anniversary of the Commercial Operation Date;
(b) one (1) year prior to the fifteenth (15th) anniversary of the Commercial Operation Date;
(c) one (1) year prior to every subsequent five (5) years after the fifteenth (15th) anniversary of the Commercial Operation Date until the end of the Agreement Term; (d) during the sixty (60) day period commencing on the date on which a Termination Notice is provided by Buyer to Seller pursuant to Section 13.3(a) of the PPA.
Each opportunity of Buyer to exercise the Project Purchase Option set forth in Sections 2.2(a),
2.2(b), 2.2(c) and 2.2(d) above shall be referred to herein as a “Purchase Option Opportunity.” Seller acknowledges that Buyer has no obligation to exercise the Project Purchase Option and that Buyer may decline to exercise the Project Purchase Option for any or no reason, as Buyer deems appropriate in its sole discretion.
2.3 Tentative Exercise Notice. Buyer shall exercise the Project Purchase Option (if at all) by delivering to Seller a written notice of exercise signed by Buyer (the “ Purchase Option Tentative Exercise Notice”) within the periods of time specified in Section 2.2. Within forty-five (45) days after it receives the Purchase Option Tentative Exercise Notice, Seller will deliver to Buyer (the date of such delivery being the “ Schedule Delivery Date ”) the following, dated as of the Schedule Delivery Date: (a) Sche dule 3.3 (Real Property Matters); (b) Schedule 3.4 (Seller’s Consents); (c) Schedule 3.5 (Certain Assets); (d) Schedule 3.6 (Title to Facility Assets); (e) Schedule 3.7 (Environmental Matters); (f) Schedule 3.8 (Liabilities); (g) Schedule
3.9 (Tax Matters); (h) Schedule 3.10 (Compliance with Laws); (i) Schedule 3.11 (Litigation); (j) Schedule 3.12(a) (Contracts); (k) Schedule 3.12(b) (Exceptions to Assumed Contracts); (l) Schedule 3.13 (Intellectual Property); (m) Schedule 3.15 (Permits); (n) Schedule 3.17 (Employee Matters); (o) Schedule 3.18 (General Matters); and (p) Schedule 3.20 (Support Obligations) ((a) through (p) collectively, the “ Seller Disclosure Schedules ”), each of which shall be applicable to the Facility and be reasonably acceptable to Buyer, and which shall include, as required, any qualifications or exceptions required to make the representations in Article III true and correct in all material respects, and Seller, at its sole discretion, may elect, to submit an RWI Proposal along with the submission of the Seller Disclosure Schedules.
Thereupon, Buyer will deliver to Seller Schedule 4.3 (Buyer’s Consents) (together with the Seller Disclosure Schedules, the “ Disclosure Schedules ”). Each Disclosure Schedule shall include and set forth the properties, materials, instruments, matters and all other specifications and information as indicated in the form of such Disclosure Schedule attached to this Agreement.
2.4 Fair Market Value; Exercise Notice.
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3 (a) The Fair Market Value shall be determined in accordance with Exhibit 2.4.
After the Disclosure Schedules have been delivered and the Fair Market Value has been determined pursuant to Section 2.4(a), Buyer may elect, in its sole discretion to (i) decline to exercise the Project Purchase Option with respect to the applicable Purchase Option Opportunity, or (ii) exercise the Project Purchase Option for the Final Purchase Price determined in accordance with Exhibit 2.4. If Buyer elects to exercise the Project Purchase Option, upon determination of the Final Purchase Price in accordance with Exhibit 2.4, Buyer shall give written notice (the “Purchase Option Exercise Notice”) to Seller no later than the Purchase Option Exercise Deadline, which notice shall state that Buyer is electing to exercise the Project Purchase Option under this Agreement and designating the applicable Closing Date. If Buyer elects not to exercise the Project Purchase Option, Buyer shall notify Seller of such election. The delivery of a Purchase Option Exercise Notice by Buyer shall constitute a binding and irrevocable commitment by Buyer to purchase, subject to the acceptance of such Purchase Option Exercise Notice by Seller in accordance with Section 2.4(c) and the satisfaction or waiver of each of the conditions to Closing set forth in Article VII and Article VIII by the applicable Closing Date. (b) If Buyer (i) declines to exercise the Project Purchase Option pursuant to Section 2.4(b)(i), or (ii) fails to timely deliver a Purchase Option Tentative Exercise Notice or Purchase Option Exercise Notice with respect to any Purchase Option Opportunity within the deadlines therefor under Sections 2.3 and 2.4(a) respectively, then Buyer’s right to exercise the Project Purchase Option with respect to such Purchase Option Opportunity shall expire and shall no longer be effective (but such expiration shall not affect Buyer’s right to exercise any Project Purchase Option with respect to any future Purchase Option Opportunity).
(c) If Buyer elects to exercise the Project Purchase Option, then Seller may elect, in its sole and absolute discretion, within thirty (30) days after Buyer delivers the Purchase Option Exercise Notice, to (i) decline to accept the Purchase Option Exercise Notice with respect to the applicable Purchase Option Opportunity, or (ii) accept Buyer’s exercise of the Project Purchase Option for the Final Purchase Price determined in accordance with Exhibit 2.4 by providing written notice of such acceptance to Buyer (the “Acceptance Notice ”); provided, that if Seller submitted an RWI Proposal pursuant to Section 2.3, then such Acceptance Notice may be contingent upon Buyer’s agreement to accept such proposal. The delivery of the Acceptance Notice shall create a binding obligation of Seller to sell, the Facility Assets as specified herein, subject to the provisions set forth in Exhibit 2.4 and the satisfaction or waiver of each of the conditions to Closing set forth in Article VII and Article VIII, by the applicable Closing Date. (d) If Buyer delivers the Purchase Option Exercise Notice and Seller delivers the Acceptance Notice, then, subject to Section 2.6, the Closing Date shall occur (i) in the case of a Project Purchase Option exercised pursuant to Section 2.2(a), on the tenth (10th) anniversary of the Commercial Operation Date, (ii) in the case of a Project Purchase Option exercised pursuant to Section 2.2(b), on the fifteenth (15th) anniversary of the Commercial Operation Date, (iii) in the case of a Project Purchase Option exercised under Section
2.2(c), on the twentieth (20th), twenty-fifth (25th) or thirtieth (30th) anniversary of the 276 of 662
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4 Commercial Operation Date, as applicable, and (iv) in the case of a Project Purchase Option exercised under Section 2.2(d), no later than twelve (12) months after the delivery by Buyer of a Purchase Option Exercise Notice.
(e) If Seller does not provide an Acceptance Notice within the time period set forth in Section 2.4(d), then Buyer’s right to exercise the Project Purchase Option with respect to such Purchase Option Opportunity shall expire and shall no longer be effective (but such expiration shall not effect Buyer’s right to exercise any Project Purchase Option with respect to any future Purchase Option Opportunity). For the avoidance of doubt, neither Party shall have any liability to the other as a result of Seller’s election not to provide an Acceptance Notice within the time period set forth in Section 2.4(c).
2.5 Memorandum of Option. Concurrently with the Approvals Date, the Parties shall execute and acknowledge a memorandum of option in the form attached hereto as Exhibit 2.5, and Seller shall record such memorandum in the Official Records of Beaver County, Utah. Seller shall be responsible for payment of all fees and Taxes associated with such recording.
2.6 Closing. In the event Buyer delivers a Purchase Option Exercise Notice, the closing of the purchase and sale of the Facility Assets (the “ Closing”) shall occur at 11:59 p.m. local time on the Closing Date designated pursuant to Section 2.4(d), or such later date within the following fourteen (14) days as shall be thereafter designated by Buyer due to conditions affecting Buyer’s bond financing with respect to the acquisition of the Facility Assets. The Closing shall be held at the offices of Buyer in Glendora, California, or such other reasonable location in California that Buyer designates in a timely notice to Seller, unless the Parties otherwise agree.
All events at the Closing shall be deemed to occur simultaneously, unless otherwise provided herein. In the event the Closing has not occurred by the Closing Date in respect of a Purchase Option Opportunity, then Buyer (in the case of the conditions set forth in Article VII) or Seller (in the case of the conditions set forth in Article VIII), upon written notice to the other Party and without liability, may terminate the Project Purchase Option with respect to such Purchase Option Opportunity, and such Purchase Option Opportunity shall expire and shall no longer be effective (but such termination shall not effect Buyer’s right to exercise any Project Purchase Option with respect to any future Purchase Option Opportunity); provided that a Party cannot terminate any Project Purchase Option with respect to a Purchase Option Opportunity if the failure of the Closing to occur is the result of the failure on the part of such Party to perform its obligations under this Agreement.
2.7 No Additional Warranties. OTHER THAN THE REPRESENTATIONS AND
WARRANTIES EXPLICITLY SET FORTH IN THIS AGREEMENT, NO OTHER
REPRESENTATIONS OR WARRANTIES WHETHER EXPRESS OR IMPLIED SHALL BE
GIVEN OR DEEMED GIVEN AS TO THE FACILITY OR THE FACILITY ASSETS CONSTITUTING THE FACILITY.
2.8 Assumed Liabilities. At the Closing, Buyer shall assume and agree to pay for, perform, fulfill and discharge from and after the Closing, the liabilities and obligations relating to the Facility Assets or the Business that are first required to be performed after the Closing or arising or occurring after the Closing, other than the Excluded Liabilities (collectively, the “Assumed Liabilities”), including the following:
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5 (a) Any Taxes attributable to the ownership of the Facility Assets or operation of the Business for any Post-Closing Tax Period, except for those Taxes attributable to a Pre-Closing Tax Period imposed on Buyer as transferee or successor by contract or under any Requirement of Law as set forth in Section 2.9(b)(iii); (b) Any liability or obligation arising from or relating to any period of time or event occurring after the Closing or that, with notice or lapse of time, could constitute or result in a breach of any Assumed Contracts or Transferred Permit arising from or relating to any period of time or event occurring after the Closing, but only to the extent such liability or obligation does not (i) arise from or relate to any breach by Seller of any Assumed Contract or Transferred Permit prior to Closing, (ii) arise from or relate to any event, circumstance, or condition occurring or existing on or prior to Closing that, with notice or the lapse of time, would constitute a breach of any such Assumed Contract or Transferred Permit, and (iii) arise from any violation of law, breach of warranty, tort or infringement committed by Seller at any time;
(c) Any liability or obligation for the remediation or cleanup of the Facility Site under applicable Environmental Laws attributable to the Release of Hazardous Substances arising or occurring after the Closing Date; but only to the extent such liability or obligation does not (i) arise from or relate to any act or omission of Seller prior to Closing, and (ii) arise from any violation of law, breach of any Permit or breach of any Contract committed by Seller at any time; or
(d) Any liability or obligation for the decommissioning or demolition of the Facility and any environmental and other liability associated with such decommissioning or demolition, without regard to the timing or cause of such decommissioning or demolition.
2.9 Excluded Liabilities. Notwithstanding anything in this Agreement to the contrary, Buyer shall not assume, and shall not be deemed to have assumed, and shall have no liability with respect to (whether asserted before or after the Closing and regardless of whether the same or the basis therefor may have been disclosed to Buyer by Seller or otherwise be known to Buyer), any liabilities or obligations of any nature, fixed or contingent or known or unknown related to the Facility Assets or the Business other than as specifically set forth in Section 2.7 (with all such unassumed obligations referred to in this Agreement as the “ Excluded Liabilities ”). Without limiting the generality of the preceding sentence, it is agreed that Buyer shall have no liability with respect to any of the following liabilities or obligations (whether asserted before or after the Closing and regardless whether the same or the basis therefor may have been disclosed to Buyer by Seller or otherwise be known to Buyer), all of which are included in the Excluded Liabilities:
(a) Any liability or obligation with respect to any Taxes due from Seller, and any Taxes on or attributable to Facility Assets with respect to any Pre-Closing Tax Period; (b) (i) Any and all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Seller (or any predecessor thereto) is or was a member, including under Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law or regulation, (ii) all Transfer Taxes, and (iii) all Taxes imposed on 278 of 662
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6 Buyer in respect of Seller and the transactions contemplated hereby as transferee or successor, by contract or under any Requirement of Law, in each case with respect to any Pre-Closing Tax Period;
(c) Any liability or obligation of Seller (other than for Taxes), whether it is ascertainable in nature and amount by reference to the express written terms of any Assumed Contracts or Transferred Permits, relating to the Facility Assets or the Business, including arising out of Seller’s ownership and operation of the Facility Assets to the extent that such liability or obligation (i) arose, or otherwise relates to the period, prior to Closing, or (ii) relates to Seller’s ownership or operation of the Facility Assets or the Business prior to Closing;
(d) Any liability or obligation of Seller arising out of Seller’s ownership and operation of any assets other than the Facility or any business other than the Business at any time;
(e) Any liability or obligation of Seller under (i) any Contract (including with respect to any contractors or subcontractors thereunder) other than an Assumed Contract or (ii) any Permit other than a Transferred Permit;
(f) Any liability or obligation under any Assumed Contract or a Transferred Permit to the extent such liability or obligation arises from or relates to any breach by Seller of any provision of any such Assumed Contracts or Transferred Permits on or prior to the Closing;
(g) Any liability or obligation (other than for Taxes) arising from or relating to any period of time or event occurring prior to the Closing or that, with notice or lapse of time, could constitute or result in a breach of any Assumed Contracts or Transferred Permit arising from or relating to any period of time or event occurring on or prior to the Closing; (h) Any liability or obligation with respect to any Assumed Contracts or Transferred Permits that is not ascertainable, in nature and amount, solely by reference to the express written terms of any Assumed Contracts or Transferred Permits; (i) Any liability or obligation of Seller arising from or relating to any breach by Seller of any provision of this Agreement, or arising from a breach by Seller, or any event, circumstance or condition occurring or existing on or prior to the Closing that, with notice or lapse of time, constitutes or results in a breach by Seller under this Agreement, the PPA (including the Ancillary Documents), or any of the Operative Documents; (j) Any liability or obligation under any Contract entered into during the Applicable Diligence Period and not assumed by Buyer pursuant to Section 5.10; (k) Any liability or obligation for the remediation or cleanup of the Facility Site under applicable Environmental Laws attributable to the Release of Hazardous Substances arising or occurring on or prior to the Closing Date;
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7 (l) Any liability or obligation of Seller with respect to the employment or termination of any employee or group of employees by Seller, or the terms thereof, whether union or nonunion, whether the liability or obligation calls for performance or observance before or after the Closing and whether the liability or obligation arises from a collective bargaining agreement, pension trust fund plan, or other agreement or arrangement to which Seller is a party or by which Seller is bound (whether oral or written and whether express or implied in fact or in law) or any past practice or custom or otherwise, it being understood and agreed that after the Closing, Buyer will itself be specifying the terms on which it offers employment to any individual to whom it, in its sole discretion, chooses to offer employment and will not be bound by any term of employment of Seller in effect at or at any time prior to the Closing;
(m) Any liability or obligation of Seller for pension fund payments or unfunded pension fund liabilities;
(n) Any liability or obligation arising from or associated with any of the Excluded Assets;
(o) Any liability or obligation of Seller or its Affiliates (other than for Taxes) arising out of or related to any claim or loss against Seller or its Affiliates or any third- party claims or losses which adversely affects the Facility Assets and which shall have been asserted prior to the Closing or to the extent the basis of which shall have arisen exclusively prior to the Closing;
(p) Any liability or obligation of Seller or its Affiliates to a third party arising from any indemnification claim, injury to or death of any person or damage to or destruction of any property (and including workers’ compensation claims, discrimination, wrongful discharge, or unfair labor practice), whether based on negligence, breach of warranty, strict liability, enterprise liability or any other legal or equitable theory arising from actions by, for or on behalf of Seller or its Affiliates arising prior to the Closing; and (q) Any liability or obligation of Seller or its Affiliates representing Facility Debt incurred by Seller or its Affiliates or Liens or encumbrances other than Closing Permitted Encumbrances.
Seller shall remain liable for or otherwise pay or discharge, or cause the payment or discharge, of all Excluded Liabilities prior to the Closing.
2.10 Schedule Updating: Final Purchase Price.
(a) No later than the date that is thirty (30) days prior to the designated Closing Date (the “ Updated Schedule Delivery Date ”), Seller shall have provided Buyer with updated Seller Disclosure Schedules which shall be the final Seller Disclosure Schedules for purposes of its representation and warranties made under Article III as of the Closing.
Notwithstanding the foregoing, any update included in an updated Seller Disclosure Schedule delivered pursuant to this Section 2.9(a) shall have no effect for purposes of 280 of 662
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8 determining the satisfaction of any condition to Closing set forth in Article VII and shall not alter the effect of Buyer’s right to terminate this Agreement pursuant to Section 10.2. (b) At the Closing, upon the terms and subject to the conditions set forth herein, Buyer shall, in exchange for the sale, transfer, assignment, conveyance and delivery of the Facility Assets by Seller, and the assumption by Buyer of the Assumed Liabilities in accordance with this Agreement, pay Seller the Final Purchase Price determined in accordance with Exhibit 2.4. Such Final Purchase Price shall be paid by Buyer by wire transfer of immediately available funds to an account designated in writing by Seller. The Parties agree to allocate the Final Purchase Price (and all other capitalizable costs) among the Facility Assets in accordance with Code §1060 and the U.S. Department of Treasury regulations thereunder (and any similar provision of state, local, or non-U.S. law, as appropriate).
2.11 Proration. Buyer and Seller agree that any items normally prorated, including those listed below, relating to the Business and the Facility Assets, shall be prorated as of the Closing, with Seller being liable therefor to the extent such items relate to periods (or portions thereof) ending on or prior to the Closing, and Buyer being liable to the extent such items relate to periods (or portions thereof) beginning after the Closing with, to the extent practicable, a cash settlement on the Closing:
(a) personal property and real estate Taxes, assessments and other charges, if any, by the applicable municipality, on the basis of the applicable municipality’s fiscal year, on or with respect to the Business;
(b) rent, Taxes and other items payable by or to Seller under any of the Assumed Contracts assigned to and assumed by Buyer hereunder which are associated with the Facility Assets;
(c) any Permit, registration, compliance, assurance fees or other fees with respect to any Transferred Permit comprising part of the Facility Assets; and (d) sewer rents and charges for water, telephone, electricity and other utilities.
In connection with the prorations referred to in this Section 2.11, in the event that the actual amounts for such items are not available on the Closing Date, the proration to be used as of the Closing Date shall be based upon actual Taxes or fees for the preceding year (or such other appropriate period of time) for which actual Taxes or fees are available. The prorated amounts of Taxes or fees shall be adjusted upon the request of Seller, on the one hand, or Buyer, on the other hand, within sixty (60) days following the date on which actual amounts become available. Seller and Buyer shall furnish each other with such documents and other records as may be reasonably requested in order to confirm any adjustments to the proration calculations made pursuant to this Section 2.11. The Parties shall make any true-up payments owed to the other Party within thirty (30) days following receipt by the Parties of all required information required in connection with the prorations referred to in this Section 2.11. Taxes shall be prorated as provided in the definition of “Straddle Period”.
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9 2.12 Closing Costs; Transfer Taxes and Fees. Seller shall be solely responsible for all recording, documentary and transfer Taxes and any sales, use or other Taxes imposed by reason of the transfer of the Facility Assets as provided hereunder (collectively, “Transfer Taxes”), and any deficiency, interest or penalty asserted with respect thereto, under applicable Requirements of Law. Seller shall provide Buyer with evidence reasonably satisfactory to Buyer that all Transfer Taxes have been paid by Seller. If any Transfer Taxes are imposed on Buyer and Buyer pays such Transfer Taxes, Buyer shall have the right to seek reimbursement for its payment of such Transfer Taxes from Seller, and Seller shall be obligated to reimburse Buyer for such payment.
2.13 Decommissioning and Other Costs. Unless a Closing occurs pursuant to the exercise by Buyer of the Project Purchase Option, Buyer shall not be responsible for any cost of decommissioning or demolition of the Facility or any environmental or other liability associated with such decommissioning or demolition, without regard to the timing or cause of such decommissioning or demolition.
2.14 Closing Obligations. At the Closing: (a) Seller will deliver (or will have delivered) to Buyer each of the certificates, instruments, documents and agreements referred to in Article VII to be provided by Seller on or prior to the Closing, and (b) Buyer will deliver (or will have delivered) to Seller (i) the Final Purchase Price, and (ii) each of the certificates, instruments, documents and agreements referred to in Article VIII to be provided by Buyer on or prior to the Closing.
2.15 Bulk Sales Law. Unless waived by Buyer or otherwise not applicable, Seller shall, prior to the Closing, comply with the requirements of sellers under any applicable bulk sales law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Upon the exercise of the Project Purchase Option, Seller represents and warrants to Buyer as follows as of the Schedule Delivery Date and the Closing Date and, with respect to Sections 3.1 and 3.2, the Effective Date (with the understanding that, following the Schedule Delivery Date, Seller shall have the right, until it delivers final Seller Disclosure Schedules as provided in Section 2.10(a), to update any information contained in the Seller Disclosure Schedules if the occurrence of events or the discovery of new information makes the revision of such Seller Disclosure Schedules necessary, but subject to a Purchase Price adjustment as set forth in Exhibit 2.4 and the limitations on the effect of such revisions set forth in Section 2.10(a)):
3.1 Organization and Good Standing. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of its state of organization and is qualified to do business in 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 and perform its obligations under this Agreement and each of the Operative Documents to which Seller is a party.
3.2 Authority; Absence of Conflict or Breach. The sale of the Facility Assets and the execution, delivery and performance by Seller of this Agreement and each of the Operative Documents have been duly authorized by all necessary limited liability company action on the part of Seller and the owners of any interest in Seller and do not require any consent or approval 282 of 662
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10 other than those which have already been obtain ed or otherwise as disclosed in the Seller Disclosure Schedules. This Agreement and each of the Operative Documents to which Seller is a party constitute the legal, valid and binding obligation of Seller, enforceable in accordance with their respective terms, except as such enforce ability 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, re gardless of whether such enforceability is considered in a proceeding in equity or at law. The execution and delivery of this Agreement and each of the Operative Documents to which Seller is a party, the consummation of the sale of the Facility Assets and the fulfillment of and complia nce with the provisions of this Agreement and the Operative Documents to which Seller is a party do not conflict with or constitute a breach of or a default under, any of the terms, conditions or provisions of any Requirements 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 Seller is a party or by which it or any of its property is bound, or 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 Seller (except as contemplated hereby).
3.3 Real Property Matters.
(a) If Seller entered into a Sale Leaseback Financing of the Facility Site in accordance with the PPA, the Lessor (as defined in the PPA) has provided Buyer evidence, which evidence Buyer has either confirmed in writing is satisfactory to Buyer or has not objected to in writing, of a binding obligation of such Lessor or Lessors and Seller to terminate such Sale Leaseback Financing (as defined in the PPA) on or prior to the Closing by the (i) reconveyance of the Facility Site by such Lessor or Lessors to Seller and the termination of the lease of the Facility Site by such Lessor or Lessors and Seller, or (ii) transfer of the Facility Site directly by such Lessor or Lessors to Buyer, provided that any such transfer from Lessor directly to Buyer shall be on the same terms and conditions as a transfer of the Facility Site from Seller to Buyer as set forth in this Agreement. (b) As of the Closing Date, Schedule 3.3 contains a true, correct and complete list of any Contracts, including the Land Documents, that provide Seller with any rights in or to real property (“ Real Property Contracts ”), including rights in the nature of leases, easements, licenses, rights of way, franchise agreements, restrictive covenants, purchase agreements, agreements to relinquish or limit surface access rights with regards to minerals, options to purchase or lease, or applications for or bids to Governmental Authorities with respect to any of the foregoing interests in real property (collectively, “Real Property Interests”), as well as leases (including farm and grazing leases) and other agreements that grant or purport to grant, or reserve or purport to reserve to third parties, interests in or to the land which is subject to Real Property Interests (“Third Party Property Interests”). True, correct and complete copies of the Real Property Contracts have been delivered to Buyer. As of the Closing Date, Seller holds no Real Property Interests other than those that are set forth in such Real Property Contracts. Neither Seller, nor to Seller’s Knowledge, any counterparty thereto, is in default in any material respect of any material obligation with respect to the Real Property Contracts. Each of the Real Property Interests granted by a Real Property Contract provides legal, valid, and enforceable rights in favor of Seller and constitutes a legal, valid and binding obligation of Seller and, to Seller’s 283 of 662
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11 Knowledge, of the other parties thereto. To the extent obtained by or in the possession or control of Seller, or any Affiliate of Seller, t rue, correct and complete copies of all title reports, surveys, mineral reports for any severed minerals (including any evaluation as to feasibility or likelihood of mineral extraction and any separate chain of title for severed minerals), material records searches (for any governmental records not included in any title reports) and exception documents referenced in such reports, policies, or searches have been delivered to Buyer.
(c) Except as set forth in Schedule 3.3, Seller has not received any written notice of any appropriation, condemnation or like proceeding, or of any violation of any applicable zoning or land use law, regulation or rule or other Requirement of Law relating to or affecting any of the Real Property Interests.
(d) Except as set forth in Schedule 3.3, Seller has not previously severed any mining, mineral or water rights from any of the Real Property Interests and has disclosed to Buyer any information known to Seller or any Affiliate of Seller regarding any severed mining, mineral or water rights affecting the Real Property Interests. (e) Except as set forth in Schedule 3.3, other than with respect to the Real Property Contracts or Permits and any Third-Party Property Interests, Seller has not received any written notice that any agreements with any Governmental Authority or public or private utility affect the Real Property Interests. (f) Except as set forth in Schedule 3.3, each of the Real Property Interests consisting of a “fee estate” has been legally subdivided and is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements is assessed and taxed together with any such Real Property Interests consisting of a Fee Estate or any portion thereof. Except as set forth in Schedule 3.3, with respect to Real Property Interests comprising either a leasehold or easement estate, the Facility Assets have either been separately assessed for real estate tax purposes by Beaver County or any liability of the holder of such leasehold or easement estate for real estate taxes has been apportioned pursuant to the Real Property Contracts creating the leasehold or easement estate.
(g) Except as set forth in Schedule 3.3, none of the Real Property Interests has been designated as “Border Zone Property” under the provisions of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted in accordance therewith, and there has been no occurrence or condition on any real property adjoining any of the Real Property Interests that is reasonably likely to cause such Real Property Interest or any part thereof to be designated as border zone property.
3.4 Consents. Except as set forth in Schedule 3.4, including the Consent required under the Federal Power Act, other than those that have been obtained or filed, no Consent of, or registration, qualification or filing with, any Person, including any Governmental Authority, is required for the sale of the Facility Assets or the execution and delivery by Seller of this 284 of 662
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12 Agreement or any of the Operative Documents to which it is a party or in order for Seller to perform its obligations hereunder or thereunder.
3.5 Assets of the Business. Except as set forth in Schedule 3.5, the Facility Assets (a) constitute all of the assets, properties, rights, privileges, claims, Permits and Contracts of every kind and nature, real or personal, tangible or intangible, absolute or contingent, wherever located, owned or used (including those necessary to access and utilize any common use facilities) necessary to conduct operations on the Premises, to operate the Facility, and to sell, and deliver Energy generated by the Facility, in substantially the same manner as it has historically been operated by Seller, and (b) are free from material defects caused by errors or omissions in design, engineering or construction, and are generally consistent with the description of the Facility set forth in the PPA. Except as provided in Schedule 3.5, the Fixtures and Equipment are in good repair and operating condition, ordinary wear and tear excepted.
3.6 Title to Facility Assets. Except as provided in Schedule 3.6, on the Schedule Delivery Date, Seller has good (and, with respect to real property, marketable) title to all of the Facility Assets, free and clear of all Liens, except for the Purchase Option Permitted Encumbrances. Except as provided in Schedule 3.6, at the Closing, Seller shall deliver and Buyer shall acquire good (and, with respect to the real property, marketable) title to all of the Facility Assets free and clear of all Liens, except for Closing Permitted Encumbrances.
3.7 Environmental. Except as set forth in Schedule 3.7:
(a) There are no pending or outstanding or threatened Agency Actions concerning the Facility or the Premises with respect to Environmental Laws applicable to Seller, the Facility or the Premises, or to Seller’s ownership, operation and use of the Facility. Seller is, and at all times has been, and has owned (except in connection with any Sale Leaseback Financing) and operated (or its designated Qualified Operator has operated) the Facility and the Premises in compliance with all applicable Environmental Laws. There are no writs, injunctions, decrees, Orders or judgments outstanding, or any notices, actions, suits, Proceedings or investigations outstanding or pending or threatened involving Seller relating to (i) its compliance with any Environmental Laws with respect to any of the Facility Assets, the Premises, or any other asset owned or used by Seller or in which it has or had an interest in connection with the Facility, or (ii) the Release of any Hazardous Substances at the Premises.
(b) All Permits required by Environmental Laws and necessary for the operation of the Facility have been obtained and are currently in full force and effect.
Seller’s operations at the Premises and in connection with the Facility Assets are in compliance with all the requirements of such Permits. Seller is not in possession of any current written notice of violation or other notification from any Governmental Authority or from any other Person alleging that Seller has committed any act, or failed to act, in any manner or under any circumstance that would preclude continued operation of the Facility Assets, including the Premises, under any of these Permits. (c) Each of the Facility Assets and Seller are in compliance with all Environmental Laws. There are currently no circumstances or conditions existing on the 285 of 662
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13 Premises which could reasonably be expected to prevent or substantially interfere with Seller’s compliance with Environmental Laws in connection with Seller’s operation of the Facility Assets and use of the Premises.
(d) Hazardous Substances have not been generated, used, treated or stored on, or transported to or from, any of the Premises in violation of Environmental Laws. (e) There is no asbestos contained in or forming any part of any building, building component, structure or other asset that is part of the Facility Assets, and no asbestos is or has been stored, disposed of or otherwise been present at the Premises or on or in any of the Facility Assets, and Seller does not have any liability for asbestos in connection with the use, operation, renovation or demolition of any of the Facility Assets. (f) There has been no Release or threatened Release of Hazardous Substances by Seller or any party under the reasonable control of Seller and, to Seller’s Knowledge, there has been no Release or threatened Release of Hazardous Substances by any other party at, on, under or from any of the Premises or at, on, under or from any property adjoining any of the Premises, other than in compliance with applicable Environmental Laws or as has previously been remediated in accordance with applicable Environmental Laws.
(g) In connection with its ownership and operation of the Facility Assets, Seller has disposed of all wastes, including those containing any Hazardous Substances, in compliance with all applicable Environmental Laws, and Seller has not received any notice or demand letter from any Person claiming Seller may be liable for any on- or off-site Release or threatened Release of Hazardous Substances. Seller has not received written notice from any Person or Governmental Authority indicating that there has been ongoing or past Release of Hazardous Substances at, from or migrating beneath of on to any of the Real Property Interests.
(h) There are not now, and never have been, any above-ground or underground storage tanks or PCB-containing transformers or equipment located at the Premises. (i) To the extent obtained by or in the possession or control of Seller or any Affiliate of Seller, Seller has provided Buyer with all reports, surveys, studies, correspondence, investigations, tests and environmental sampling and analyses (whether commissioned by Seller or otherwise) concerning the wildlife, cultural resources, natural resources, the Environmental Condition of any of the Facility Assets, and Hazardous Substances in, at, on and under the Premises, regardless of whether such Environmental Conditions were caused by, or arose from, Seller’s operation of the Facility, Seller’s ownership of all or any portion of the Facility Assets, Seller’s compliance with applicable Environmental Laws in the operation of the Fa cility, the use of the Facility Assets, or otherwise.
(j) Seller has not received any written request for information nor any written notification that it is a potentially responsible party under CERCLA or any similar state Environmental Laws, including any such request or notification relating directly or 286 of 662
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14 indirectly to any of the Facility Assets, and none of the Premises is proposed to be listed or is listed on the National Priorities List under CERCLA or any similar state Environmental Laws requiring environmental investigation or cleanup.
3.8 No Undisclosed Liabilities. Seller has no liabilities (absolute, accrued, contingent or otherwise) in excess of Twenty Five Thousand Dollars ($25,000) in the aggregate, except for those (a) set forth in Schedule 3.5, Schedule 3.7, Schedule 3.8, Schedule 3.9, Schedule 3.10, or Schedule 3.11, (b) otherwise disclosed in writing to Buyer or explicitly set forth in any of the Assumed Contracts, Transferred Permits, or Support Obligations, (c) constituting Excluded Liabilities, or (d) disclosed in the Financial Statements.
3.9 Taxes. As of the Schedule Delivery Date, and again as of the designated Closing Date, any Liens for Taxes are set forth in Schedule 3.9, and, except to the extent set forth therein:
(a) There are no Liens for Taxes on any of the Facility Assets, except for Purchase Option Permitted Encumbrances and, upon the Closing, Closing Permitted Encumbrances.
(b) The Facility Assets do not include, for Taxes purposes, any equity interest in any corporation, any partnership or other entity.
(c) All Tax Returns that Seller (or any Affiliate of Seller) is required to file with respect to the Facility Assets have been filed with the appropriate Governmental Authorities, all such Tax Returns were correct and complete in all material respects and all Taxes due and payable by Seller and all Tax assessments made against Seller by any Governmental Authority have been paid whether or not shown to be due on such Tax Returns. All property Taxes due and payable with respect to the Facility Assets or any fee property thereunder have been paid (whether or not shown to be due on any Tax Return) and all Tax Returns related thereto have been filed with the appropriate Governmental Authorities.
(d) Seller has not received any written notice from any Governmental Authority of, and has no other Knowledge of, any outstanding claims or assessments with respect to any Tax relating to the Facility Assets and no such claim is pending or is presently being asserted in writing against the Seller or with respect to any of the Facility Assets. (e) Seller has no Knowledge of any proposed Tax assessment against the Facility Assets, other than a proposed Tax assessment that is being actively contested by Seller in good faith and by appropriate proceedings, so long as the results of any such actively-contested assessment could not reasonably be expected to have a Material Adverse Effect hereunder.
(f) Seller is not subject to any pending Tax audit, investigation, action or Proceeding with any Governmental Authority that has been asserted in writing, and there is no threatened Tax audit, investigation, action or Proceeding by any Governmental Authority that has been asserted in writing with respect to any of the Facility Assets that remains pending. Seller has not received written notice of any claim by any Governmental 287 of 662
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15 Authority in any jurisdiction where it does not file Tax Returns or pay Taxes that it is or may be subject to Tax by that jurisdiction.
(g) Seller has timely withheld and timely paid all Taxes that are required to have been withheld and paid by it in connection with amounts paid or owing to any employee, independent contractor, creditor or other Person.
3.10 Compliance With Laws. Except as set forth in Schedule 3.10, Seller is in full compliance in all respects with all Requirements of Law applicable to the Facility Assets and operation and use of the Facility, and there are no condemnations or similar proceedings applicable to any part of the Facility.
3.11 Litigation. Except as set forth in Schedule 3.11:
(a) There are no Proceedings pending, or to Seller’s Knowledge threatened, against the Facility or any material portion thereof;
(b) There are no existing Orders, writs, injunctions, judgments or decrees of any court, arbitrator, tribunal or other Governmental Authority against the Facility or any material portion thereof.
3.12 Assumed Contracts.
(a) Seller has delivered or made available to Buyer true and complete copies of all Contracts. Schedule 3.12(a) contains a true, correct and complete list of all Contracts (excluding Land Contracts) and any Contract listed therein that is not an Assumed Contract is identified with an asterisk (*).
(b) Except as set forth in Schedule 3.12(b), all Assumed Contracts are in full force and effect, and neither Seller nor, to Seller’s Knowledge, any other party thereto is in default under or in breach of any of them, nor does any event or condition exist that after notice or lapse of time or both could constitute a default thereunder or breach thereof on the part of Seller or, to Seller’s Knowledge, any other party thereto (except for defaults, events of default and other events as to which requisite waivers have been, or prior to Closing will have been, obtained). Except as set forth in Schedule 3.12(b), no approval, consent, or waiver of or by any Person that has not already been obtained is needed in order that the Assumed Contracts continue in full force and effect following the consummation of the transactions contemplated by this Agreement, and no Assumed Contract includes any provision, the effect of which may be to terminate (or give rise to a right of termination under) such Assumed Contract, to give rise to, enlarge, or accelerate any obligations of Seller thereunder, or to give additional rights to any other Person, upon or by reason of the consummation of the transactions contemplated by this Agreement.
3.13 Intellectual Property.
(a) Schedule 3.13 lists all of the patents, patent applications, inventions, improvements, computer programs, computer applications, operating programs, other programs and software, including system documentation and instructions, engineering, 288 of 662
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16 construction and other drawings (other than drawings not needed for the operation, maintenance or repair of the Facility), designs, technology, know-how, trade secrets, trademarks, trademark applications, trade names, copyrights and other proprietary rights and proprietary information used in connection with the operation and/or maintenance of the Facility as of the Schedule Delivery Date, including control room operating system software (collectively, the “Intellectual Property Assets”). (b) Except as set forth in Schedule 3.13, Seller owns or is the licensee of, the Intellectual Property Assets. No assignment or Consent from any third party is necessary to transfer, license, assign or convey to Buyer, as appropriate, any of the Intellectual Property Assets.
(c) Except as set forth in Schedule 3.13, none of the Intellectual Property Assets infringes on or conflicts with the intellectual property rights of others. (d) Except as set forth in Schedule 3.13, there have been no claims, and there is no basis for any claim, challenging the scope, validity or enforceability of any of the Intellectual Property Assets. Except as set forth in Schedule 3.13, there are no instances where it has been held, or to Seller’s Knowledge claimed or alleged, whether directly or indirectly, and, to Seller’s Knowledge, there is no basis upon which a claim may be made, that any activity of Seller relating to the
operation or maintenance of the Facility, infringes
or may infringe upon, is in violation of, or misappropriates, any rights of a third party.
3.14 Brokers or Finders. Neither Seller nor any of its officers, directors, employees, shareholders or Affiliates has employed or made any agreement with any broker, finder or similar agent or any Person which will result in the obligation of Buyer or any of its Affiliates to pay any finder’s fee, brokerage fees or commission or similar payment in connection with the transactions contemplated hereby.
3.15 Permits. All Permits are set forth on Schedule 3.15 and any Permit listed therein that is not a Transferred Permit is identified with an asterisk (*). Except as set forth on Schedule
3.15, all non-environmental Permits required by any Requirement of Law for the operation of the Facility have been obtained, are currently in effect, are final and non-appealable, and are transferrable to Buyer. Except as set forth on Schedule 3.15, Seller’s operations at the Premises and in connection with the Facility Assets are in compliance with all the requirements of such Permits and, as of Closing, Seller is not in possession of, and, to the Knowledge of Seller, there is no basis for the issuance of, any written notice of violation or other notification from any Governmental Authority or from any other Person alleging that the Facility is in violation of such Permits or that Seller has committed any act, or failed to act, in any manner or under any circumstance that could have a Material Adverse Effect on the continued operation of the Facility Assets, including the Premises, by Buyer under any of these Permits. Seller has made available to Buyer complete and correct copies of each such Permit, together with all amendments thereto.
Except as set forth on Schedule 3.15, no suspension, cancellation of termination of any such Permit is, to Seller’s Knowledge, threatened or imminent.
3.16 Investment Company Act. Seller is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act. 289 of 662
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17 3.17 Employees and Employee Benefit Plans. Except as set forth in Schedule 3.17, Seller does not have and has never had any employees, and Seller does not maintain or contribute to, and has not ever maintained or contributed to, any pension, profit-sharing, deferred compensation, bonus, stock, option, share, appreciation right, severance, group or individual health, dental, medical, life, insurance, survivor benefit or similar plan, policy or arrangement for the benefit of any director, officer, consultant or employee, whether active or terminated, of Seller.
3.18 General Representation. Except as set forth in Schedule 3.18, no representation or warranty made by Seller, its agents and Representatives in this Agreement, including the schedules and exhibits hereto, or any of the Operative Documents, or in any certificate or other agreement delivered by Seller to Buyer in connection with the transactions contemplated hereby or thereby, contains any untrue statement of a fact, or omits to state a fact necessary in order to make the statements contained herein, in light of the circumstances in which they were made, not misleading. All information contained in the
Provided Materials is or will be, or is or will be
consistent with, the information which has been used by Seller in the management of the Business and also with what has been or will be reported to Seller’s management, equity holders and the Facility Lender in connection with the Business.
3.19 Regulatory Status. The Facility is an “Exempt Wholesale Generator,” as that term is defined under 18 C.F.R. § 366.1, and is also a “public utility” under the Federal Power Act, and the regulations of the Federal Energy Regulatory Commission (“ FERC”) thereunder (collectively, the “FPA”). The status of Seller and the Facility hereunder is not subject to any pending or threatened challenge, petition or investigation by or before the FERC. Seller requires no authorization under the FPA to execute, deliver, and perform its obligations under this Agreement, apart from such authorizations from FERC that have already been received or will be received as of the Closing Date. The Facility is interconnected to the electrical grid pursuant to a valid and effective agreement for such interconnection, which agreement is sufficient to permit the delivery of the Facility’s entire net electrical output to the therein-specified point of interconnection.
3.20 Support Obligations. All of the Support Obligations that have been provided by, on behalf of, or for the benefit of, Seller or the Facility are as described on Schedule 3.20. True, correct and complete copies of each Support Obligation have been delivered to Buyer and such Support Obligations constitute all of the credit and other contractual support and assurance that Buyer is required by any law (including any Permit) or Contract to provide as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Upon the exercise of the Project Purchase Option, Buyer represents and warrants to Seller as follows as of the date on which Buyer delivers the Purchase Option Exercise Notice to Seller and the Closing Date and, with respect to Sections 4.1 and 4.2, the Effective Date:
4.1 Organization. Buyer is a validly existing joint powers agency formed 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 and perform its obligations under this Agreement and each of the Operative Documents to which Buyer is a party. 290 of 662
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18 4.2 Authority; Absence of Conflict or Breach. The purchase of the Facility Assets and the execution, delivery and performance by Buyer of this Agreement and each of the Operative Documents executed and delivered by Buyer in connection with such purchase have been duly authorized by all necessary action on the part of each of Buyer’s Members and do not require any consent or approval of Buyer’s regulatory or governing bodies other than that which has been obtained; provided that further authorizations from Buyer and Buyer’s Members will be required for Buyer to exercise the Project Purchase Option; provided, further, that on the date on which Buyer delivers the Purchase Option Exercise Notice to Seller and the Closing Date, Buyer and Buyer’s Members shall have obtained all required authorizations, consents or approvals of Buyer’s or Buyer’s Members’ regulatory or governing bodies required for Buyer to consummate the Closing, except for the required authorizations, consents or approvals of Buyer or Buyer Members with respect to Buyer’s bond financing for the acquisition of the Facility Assets. This Agreement and each of the Operative Documents to which Buyer is a party constitute the legal, valid and binding obligation of Buyer enforceable in accordance with their respective 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.
4.3 Consents. Except as set forth in Schedule 4.3, other than those that have been obtained or filed, no Consent of, or registration, qualification or filing with any Person, including any Governmental Authority, is required for the purchase of the Facility Assets or the execution and delivery by Buyer of any of the Operative Documents to which it is a party or in order for Buyer to perform its obligations hereunder.
4.4 Brokers or Finders. Neither Buyer nor any of Buyer’s Members, officers, directors, employees, shareholders or Affiliates has employed or made any agreement with any broker, finder or similar agent or any Person which will result in the obligation of Seller or any of its Affiliates to pay any finder’s fee, brokerage fees, or commission or similar payment in connection with the transactions contemplated hereby.
4.5 Litigation. There are no Proceedings pending or, to Buyer’s knowledge, threatened, against Buyer which could reasonably be expected to materially adversely affect its ability to perform its obligations with respect to the purchase of the Facility Assets pursuant to the Project Purchase Option.
ARTICLE V
COVENANTS OF SELLER PRIOR TO CLOSING DATE
5.1 Access to Materials. Prior to the Sche dule Delivery Date, Seller will furnish to Buyer all information required hereunder to be furnished by the Schedule Delivery Date. Between the Schedule Delivery Date and the earlier of (a) the Closing Date or (b) the date upon which Buyer has declined to exercise the applicable Purchase Option Opportunity, such Purchase Option Opportunity has expired or is no longer in effect, or the Agreement has terminated (such period, the “Applicable Diligence Period”), upon reasonable advance notice, Seller will (i) afford Buyer and its Representatives (and the Qualified A ppraiser) full and complete access during normal business hours to the Facility and to Seller’s personnel, Assumed Contracts, Permits, Books and Records, properties and other documents and data relating to the Facility (provided that Buyer shall observe, and shall cause its Representatives to observe, all of Seller’s security protocols and 291 of 662
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19 such access shall not disturb or interfere with the normal operations of the Facility Assets in any material respect), (ii) furnish Buyer and Buyer’s Representatives (and the Qualified Appraiser) with copies of all such Assumed Contracts, Permits, Books and Records, and other existing documents and data in Seller’s possession or to which Seller has access with respect to the Facility or pertaining to the design of the Facility (including design schematics, blueprints or other similar documents) and other Facility Assets as Buyer or the Qualified Appraiser may reasonably request, and (iii) furnish Buyer and its Representatives (and the Qualified Appraiser) with such additional financial, operating, and other data and information of or pertaining to the Business in Seller’s possession or to which Seller has access as Buyer and its representatives (and the Qualified Appraiser) may reasonably request. All such Assumed Contracts, Books and Records, documents, data and information required to be furnished by Seller under this Section 5.1 are collectively referred to as the “ Provided Materials .” Buyer shall have the right to diligently review the Provided Materials. The Provided Materials may be redacted as necessary to allow for disclosure to Buyer and the Qualified Appraiser to the extent any Provided Materials are (A) subject to confidentiality, non-disclosure or similar agreements in favor of third parties whose consent to disclose cannot be obtained by the Closing, (B) legally-privileged information of Seller, (C) concerning any alleged dispute or pending litigation, investigation or Proceeding involving Seller or its Affiliates that is protected by or subject to a court order or the attorney-client privilege or (D) sensitive and proprietary economic information of Seller that is not relevant to the purchase, ownership, operation, maintenance, repair or use of the Facility or Facility Assets.
5.2 Investigations. During the Applicable Diligence Period, upon reasonable advance notice (but not less than twenty four (24) hours), Seller shall afford Buyer and its Representatives (and the Qualified Appraiser) with reasonable access to the Facility Assets for the purpose of inspecting the same, to conduct any performance tests or physical inspections or otherwise, including to conduct a phase 1 environmental site assessment and, in Buyer’s sole discretion, a phase 2 environmental site assessment, during normal business hours in such manner that complies with Seller’s safety protocols and in such manner so as not to materially disturb or interfere with the normal operations of the Facility Assets and subject to a reasonable number of visits.
5.3 Financial Statements. On the Schedule Delivery Date, Seller will deliver to Buyer unaudited balance sheets and unaudited statements of income and cash flow of Seller for the three (3) most recent fiscal years of Seller, prepared in material compliance with GAAP. From and after the Schedule Delivery Date, as soon as available and in any event during the Applicable Diligence Period or the end of each fiscal quarter of Seller, Seller will provide Buyer with unaudited statements of income and cash flow for such quarter, setting forth in comparative form figures for the corresponding period of the preceding fiscal year. All Financial Statements (as defined below) shall be accompanied by a certificate signed by an authorized officer of Seller stating that such financial statements present fairly in all material respects the financial condition of Seller and that the same have been prepared in compliance with GAAP. Seller will also deliver to Buyer copies of all financial statements or other financial information delivered to any Facility Lender during the Applicable Diligence Period contemporaneously with the delivery thereof to such Facility Lender. The financial statements required to be provided by Seller to Buyer under this Section are collectively referred to as the “Financial Statements.”
5.4 Operation of the Business. During the Applicable Diligence Period, Seller will conduct its Business with respect to the Facility in accordance with the ordinary course of business consistent with past practices and Prudent Utility Practices. 292 of 662
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20 5.5 Disposition of Assets. During the Applicable Diligence Period, unless required by any contract entered into by Seller prior to the Schedule Delivery Date, Seller shall not (a) sell or otherwise dispose of or encumber (other than Purchase Option Permitted Encumbrances) any of the Facility Assets or any other property or assets which are primarily related to the operation, maintenance and use of the Facility (other than sales, leases, transfers or dispositions in the ordinary course of business consistent with past practice and Prudent Utility Practices), or (b) except as may be required by their term s, and except in the ordinary course of business consistent with past practice, modify, subordinate, amend, terminate, cancel, sever or surrender, or permit or suffer the modification, subordination, amendment, termination, cancellation, severance or surrender of any Assumed Contract, Permit or Warranties, without the prior written approval of Buyer.
5.6 Required Approvals. As promptly as practicable following Buyer’s delivery of the Purchase Option Exercise Notice until the end of the Applicable Diligence Period, Seller will make, and thereafter diligently pursue during the Applicable Diligence Period, all registrations, qualifications or filings to be identified in Schedule 3.4 or necessary or appropriate to obtain all the Consents therein identified.
5.7 Notification. During the Applicable Diligence Period, Seller shall give prompt notice (each notice, a “ Change Notice”) to Buyer of the occurrence or non-occurrence of any event, change, effect or development of any kind which would or could reasonably be expected to result in: (a) any representation or warranty of Seller contained in any Operative Document or this Agreement being untrue or incorrect in any material respect on the date such representation or warranty is to be made or that would otherwise result in a Material Adverse Effect, or (b) a breach of any of Seller’s covenants under this Agreement or any Operative Document. Each Change Notice must include a detailed description of the event, change, effect, development or failure and a description of the action Seller has taken and proposes to take with respect thereto.
The delivery of a Change Notice will not be deemed to (i) modify any representation or warranty hereunder (other than to the extent included in updated Seller Disclosure Schedules in accordance with Section 2.9), (ii) modify any condition set forth in Article VII, or ( iii) limit or otherwise affect the remedies available hereunder to Buyer. Buyer shall thereafter have the right, but not the obligation, to terminate the Project Purchase Op tion with respect to the applicable Purchase Option Opportunity, in which case such Purchase Option Opportunity shall no longer be effective; provided, however, that such termination shall not affect Buyer’s right to exercise any Project Purchase Option with respect to a future Purchase Option Opportunity.
5.8 Reasonable Efforts. Following Buyer’s delivery of the Purchase Option Exercise Notice and until the end of the Applicable Diligence Period, Seller will, and will cause its Affiliates to, use all commercially reasonable efforts to satisfy the conditions in Article VII and Article VIII to be performed by Seller and its Affiliates.
5.9 Waivers of Claims. During the Applicable Diligence Period, Seller shall not incur, create, assume or otherwise become liable for indebtedness for borrowed money, or issue any debt securities, other than those that are or will be discharged at or prior to Closing, nor shall it waive or release any right that it has relating to the Facility Assets or any Assumed Liabilities (other than to the extent provided for pursuant to Section 5.5). If any Assumed Contract necessary for the operation of the Facility (and is required for ongoing operations of the Facility consistent with past practices and Prudent Utility Practices) expires or is terminated prior to the Closing Date, then Seller will replace same with a cont ract approved by Buyer, such approval not to be 293 of 662
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21 unreasonably withheld. The preceding sentence shall not be deemed a limitation of the obligations of Seller under Section 5.5.
5.10 Additional Contracts. Any Contract entered into by Seller during the Applicable Diligence Period shall be an Excluded Liability unless Buyer agrees in writing to include such Contract as an Assumed Contract.
5.11 Transitional Services. During the period between Buyer’s delivery of the Purchase Option Tentative Exercise Notice until the earliest to occur of (a) Buyer’s delivery of the Purchase Option Exercise Notice, (b) the Purchase Option Exercise Deadline, (c) termination of the relevant Purchase Option Opportunity, or (d) termination of this Agreement, Buyer and Seller shall negotiate in good faith an agreement for transition operation and maintenance services upon terms and conditions to be mutually agreed upon by both Parties, in form and substance consistent with Exhibit 5.11.
5.12 Replacing or Procuring Intellectual Property Assets. If Seller within six (6) months prior to the Closing Date has information or reasonably believes that (1) any of the Intellectual Property Assets allegedly or actually infringes or is likely to infringe upon any third- party intellectual property rights, or (2) any of the Intellectual Property Assets licenses used to operate or maintain the Facility and the Facility Site is to expire, to be terminated or enjoined within six (6) months prior to or after the Clos ing Date, Seller shall immediately notify Seller of such alleged, actual or potential infringement or license status. Upon Buyer’s request, Seller shall, at Seller’s own expense: (i) procure for Buyer the right or license to continue using the Intellectual Property Asset(s) at issue; or (ii) replace the Intellectual Property Asset(s) at issue with a functionally equivalent, non-infringing product, if commercially practicable. Exercise of any of the above-mentioned options shall not cause undue business interruption to the operation or maintenance of the Facility and the Facility Site, or diminish the intended benefits, output and enjoyment of the Facility and the Facility Site by the Seller under this Agreement or the PPA.
5.13 Shared Facilities. If in connection with Seller’s or any of its Affiliates’ development of additional phases of the Facility or additional projects that interconnect through the Milford Generator Lead, Seller reasonably determines that it requires the use of certain shared facilities, the right to occupy or use shared real property, or the ownership or governance of the rights associated with either, then upon written notice to Buyer from Seller, Buyer shall reasonably cooperate and negotiate in good faith with Seller or Seller’s Affiliates to enter into one or more Shared Facilities Agreements with Seller’s Affiliates, subject to the approval of Buyer, which approval shall not be unreasonably withheld so long as Buyer is not materially adversely impacted (including under this Agreement or in connection with its use of the Facility) by the terms and conditions of any such Shared Facilities Agreement.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Notification. During the Applicable Diligence Period, Buyer shall give reasonable notice to Seller of the occurrence or non-occurrence of any event, change, effect or development of which Buyer has knowledge and that would cause (a) any representation or warranty of Buyer contained in any Operative Document or this Agreement to be untrue or incorrect in any material respect on the date such representation or warranty is to be made, or (b) a breach of any of Buyer’s covenants under this Agreement or any Operative Document. Each Change Notice must include 294 of 662
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22 a detailed description of the event, change, effect, development or failure and a description of the action Buyer has taken and proposes to take with respect thereto. The delivery of a Change Notice will not be deemed to (i) modify any representation or warranty hereunder, (ii) modify any condition set forth in Article VII, or (iii) limit or otherwise affect the remedies available hereunder to Seller.
6.2 Required Approvals. As promptly as practicable following Buyer’s delivery of the Purchase Option Exercise Notice and until the end of the Applicable Diligence Period, Buyer will make, and thereafter during the Applicable Diligence Period pursue, all registrations, qualifications or filings identified in Schedule 4.3 or necessary or appropriate to obtain any Consent therein identified.
6.3 Reasonable Efforts. Following Buyer’s delivery of the Purchase Option Exercise Notice until the end of the Applicable Diligence Period, Buyer will use reasonable efforts to cause the conditions in Article VII and Article VIII to be performed by Buyer, to be satisfied.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYE R’S OBLIGATION TO CLOSE
Buyer’s obligation to purchase the Facility Assets and to take the other actions required to be taken by Buyer at the Closing Date is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer in its sole discretion, in whole or in part):
7.1 Accuracy of Representations. All of Seller’s representations and warranties in this Agreement and the other Operative Documents (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date when deemed made and must be accurate in all material respects as of the Closing Date as if made on the Closing Date.
7.2 Seller’s Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement or any of the other Operative Documents at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects.
7.3 Consents. Each of the Consents identified in Schedule 3.4 and Schedule 4.3 must have been obtained and must be in full force and effect.
7.4 Additional Seller Documents. Seller, at its sole cost and expense, shall deliver each of the following documents to Buyer:
(a) legal opinion of Seller’s counsel, dated the Closing Date, with respect to the enforceability of the Agreement and due authorization by Seller to sell the Facility Assets and related matters, in form and substance reasonably acceptable to Buyer; 295 of 662
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23 (b) a written certificate, in form and substance satisfactory to Buyer, executed and delivered by Seller by its authorized officer, certifying that each of the conditions specified in Sections 7.1, 7.2, and 7.3, have been satisfied; (c) a Bill of Sale, dated as of the Closing Date, in form and substance reasonably acceptable to Buyer (“Bill of Sale”), and executed by Seller by its authorized officer;
(d) agreements and related documentation effective to transfer to Buyer the Real Property Interests, Transferred Permits, the Assumed Contracts, and any other Facility Assets (together with the Bill of Sale, the “ Asset Assignment Documents ”) in form and substance reasonably acceptable to Buyer, executed by Seller by its authorized officer;
(e) an irrevocable commitment by a title company acceptable to Buyer to issue an extended coverage owner’s policy of title insurance based upon a recent ALTA survey, including such endorsements as Buyer may reasonably require, insuring Buyer in the amount of the Final Purchase Price, that title to the Premises (in fee, leasehold and/or easement, as applicable) is vested in Buyer, subject only to those exceptions that are Closing Permitted Encumbrances;
(f) confirmation in writing by Seller that any existing operations and maintenance agreement with respect to the Facility shall terminate upon the Closing Date (unless Buyer elects to assume such agreement, in which case such agreement shall be deemed an Assumed Contract);
(g) duly executed pay-off letters for the release or termination of all Liens securing Facility Debt, if any, that acknowledge repayment in full of such Facility Debt (unless Buyer otherwise agrees in writing that any such Liens shall not be released or terminated);
(h) if Seller has entered into a Sale Leaseback Financing, evidence satisfactory to Buyer of the (i) reconveyance of the Facility Site by Lessor or Lessors to Seller and the termination of the lease of the Facility by such Lessor or Lessors and Seller or (ii) transfer of the Facility Site directly by such Lessor or Lessors to Buyer on the same terms and conditions as a transfer of the Facility Site from Seller to Buyer as set forth in this Agreement;
(i) the Seller Guaranty, dated as of the Closing Date and executed by Seller Guarantor; and
(j) such other documents as Buyer may reasonably request for the purpose of (i) evidencing the accuracy of any of Seller’s representations and warranties, (ii) evidencing the performance by Selle r of, or the compliance by Seller with, any covenant or obligation required to be performed or complied with by Seller, or (iii) evidencing the satisfaction of any condition referred to in this Article VII; provided, 296 of 662
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24 that any such documentation shall have been identified by Buyer in writing on or prior to the date upon which Buyer delivers the Purchase Option Exercise Notice to Seller.
7.5 Litigation. No Proceeding shall have been instituted or any other action taken or Requirement of Law or Environmental Law enacted, promulgated or deemed applicable by any Governmental Authority or by any other Person and, at what would otherwise have been the Closing Date, remain pending, that could reasonably be expected to delay, restrain or prohibit any part of the transactions contemplated by this Agreement or to seek any divestiture or to revoke or suspend any Permit by reason of any or all of the transactions contemplated by this Agreement; nor shall any Governmental Authority have notified either Party or any of their respective Affiliates that consummation of all or any part of the transactions contemplated by this Agreement would constitute a violation of the Requirements of Law or Environmental Laws of any jurisdiction or that it intends to commence a Proceeding to restrain or prohibit all or any part of the transactions contemplated by this Agreement or to require such divestiture, revocation or suspension; unless, in any such case, such Governmental Authority or other Person could not reasonably be expected to prevail or shall have withdrawn such notice and abandoned such Proceeding, action, Requirement of Law or Environmental Law, in each case, to the reasonable satisfaction of Buyer.
7.6 Liens. Title to the Facility Assets shall be free and clear at the Closing of all Liens other than Closing Permitted Encumbrances (which shall include any Lien approved in writing by Buyer as a Purchase Option Permitted Encumbrance following the Schedule Delivery Date).
7.7 No Material Adverse Effect. During the Applicable Diligence Period, no action shall have been taken or omitted and no event shall have occurred or be threatened which has had or could reasonably be expected to result in a Material Adverse Effect.
Assets and Property. If a Material Casualty Event occurs prior to the Closing Date, the Parties shall have complied with the terms of Section 9.3.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
Seller’s obligation to sell the Facility Assets an d to take the other actions required to be taken by Seller at the Closing Date is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller in its sole discretion, in whole or in part):
8.1 Accuracy of Representations. All of Buyer’s representations and warranties in this Agreement and the other Operative Documents (considered collectively), and each of these representations and warranties (considered individually), must have been accurate in all material respects as of the date of this Agreement and as of the date when deemed made.
8.2 Buyer’s Performance.
(a) All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement or any of the other Operative Documents at or 297 of 662
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25 prior to the Closing, and each of these covenants and obligations (considered collectively and individually), must have been performed and complied with in all material respects. (b) Buyer must have paid the Final Purchase Price to Seller.
8.3 Consents. Each of the Consents identified in Schedule 3.4 and Schedule 4.3 must have been obtained and must be in full force and effect.
8.4 Additional Buyer Documents. Buyer shall deliver each of the following documents to Seller:
(a) a legal opinion with respect to the enforceability and due authorization by Buyer (but not with respect to any of Buyer’s Members) of this Agreement and the purchase of the Facility Assets;
(b) the Bill of Sale and other Asset Assignment Documents (as delivered by Seller pursuant to Section 7.4) executed by Buyer by its authorized Representative; and (c) any Performance Security then held by Buyer pursuant to Section 5.6 of the PPA.
8.5 Litigation. No Proceeding shall have been instituted or any other action taken or Requirement of Law or Environmental Law enacted, promulgated or deemed applicable by any Governmental Authority or by any other Person and, at what would otherwise have been the Closing Date, remain pending, that could reasonably be expected to delay, restrain or prohibit any material part of the transactions contemplated by this Agreement; nor shall any Governmental Authority have notified either Party or any of their respective Affiliates that consummation of any part of the transactions contemplated by this Agreement would constitute a violation of the Requirements of Law or Environmental Laws of any jurisdiction or that it intends to commence a Proceeding to restrain or prohibit any part of the transactions contemplated by this Agreement, unless, in any such case, such Governmental Authority or other Person could not reasonably be expected to prevail or shall have withdrawn such notice and abandoned such Proceeding, action, Requirement of Law or Environmental Law, in each case, to the reasonable satisfaction of Seller.
ARTICLE IX
MUTUAL COVENANTS, TAXES AND OTHER MATTERS
9.1 Tax Matters. Seller, at its own expense, will file, to the extent required by applicable Requirements of Law, all necessary Tax Returns and other documentation with respect to its portion of any Transfer Taxes, and, if required by applicable Requirements of Law, Buyer will join in the execution of any such Tax Returns or other documentation and will take such positions in such returns as are reasonably requested by Seller. (a) With respect to any Tax Return reporting Taxes with respect to the ownership or operation of the Facility Assets for any taxable period ending on or before the Closing Date that is due after the Closing Date or for any Straddle Period, Buyer shall prepare and timely file all such Tax Returns, if any, and shall duly and timely pay all such Taxes, whether imposed on Buyer or Seller, shown to be due on such Tax Returns. Buyer 298 of 662
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26 shall make such Tax Returns available for Seller’s review and approval no later than fifteen (15) Business Days prior to the due date for filing such Tax Return. With respect to each Tax Return filed in accordance with this Section 9.1(a), each Party shall reimburse the other Party, within ten (10) Business Days of demand therefor, for any such Taxes shown as due on such Tax Return that it is responsible for under this Agreement but that were paid by the other Party or economically borne by the other Party pursuant to Section
2.11 in accordance with the reimbursement procedures set forth in the flush language of Section 2.11, mutatis mutandis.
(b) Each of Buyer and Seller shall provide the other with such assistance as may reasonably be requested by the other Party in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative Proceeding relating to liability for Taxes, and each will retain and provide the requesting Party with any records or information which may be relevant to such return, audit or examination, Proceedings or determination. Each Party will take any and all commercially reasonable steps, act in good faith, and cooperate fully, to permit the other Party to comply with its/their obligations and secure its/their rights to indemnification hereunder.
(c) Seller will be entitled to any refunds or credits of Taxes with respect to the ownership or operation of the Facility Assets that pertains to any Pre-Closing Tax Period (and such refunds and credits shall be Excluded Assets), and Buyer shall be entitled to such refunds or credits of Taxes that pertain to any Post-Closing Tax Period. Each of Buyer and Seller will promptly notify and forward to the other Party the amounts of any such refunds or credits received by such Party, but to which the other Party is entitled, within sixty (60) days after receipt thereof.
(d) After the Closing, Buyer will notify Seller in writing, within thirty (30) days after its receipt, of any correspondence, notice or other communication from a taxing authority or any Representative thereof, of any pending or threatened Tax audit, or any pending or threatened Proceeding that involves Taxes relating to the Facility Assets that pertains to any Pre-Closing Tax Period, and furnish Seller with copies of all correspondence received from any taxing authority in connection with any audit or information request with respect to any such Taxes relating to the Facility Assets that pertains to any Pre-Closing Tax Period. After the Closing, Seller will notify Buyer in writing, within thirty (30) days after its receipt, of any correspondence, notice or other communication from a taxing authority or any Representative thereof, of any pending or threatened Tax audit, or any pending or threatened judicial or administrative Proceeding that involves Taxes relating to the Facility Assets, and furnish Buyer with copies of all correspondence received from any taxing authority in connection with any audit or information request with respect to any such Taxes relating to the Facility Assets. (e) Notwithstanding any provision of this Agreement to the contrary, with respect to any claim for refund, audit, examination, notice of deficiency or assessment or any Proceeding that involves Taxes relating to the Facility Assets (collectively, “ Tax Claim”), each of Buyer and Seller will reasonably cooperate with the other Party in 299 of 662
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27 prosecuting or contesting any Tax Claim, including making available original books, records, documents and information for inspection, copying and, if necessary, introduction of evidence at any such Tax Claim contest or Proceeding and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder with respect to such Tax Claim or to testify at Proceedings relating to such Tax Claim. Seller will control all Proceedings taken in connection with any Tax Claim that pertains entirely to any period ending on or prior to the Closing Date, and Buyer will control all Proceedings taken in connection with any Tax Claim that pertains to any period commencing after the Closing Date, and Seller and Buyer will jointly control all Proceedings taken in connection with any Tax Claim pertaining to any period commencing prior to and ending after the Closing. Seller shall have no right to settle or otherwise compromise any Tax Claim which pertains entirely to a period ending on or prior to the Closing without Buyer’s prior written consent, which consent shall not be unreasonably withheld or delayed; neither Buyer nor Seller shall have the right to settle or otherwise compromise any Tax Claim which pertains to a Straddle Period without the other Party’s prior written consent, which consent shall not be unreasonably withheld or delayed; and Seller shall have no right to settle or other compromise any Tax Claim which pertains entirely to any taxable period or portion thereof beginning after the Closing.
9.2 Seller Cooperation Post-Closing. In furtherance, and not in limitation of, the transitional services agreement to be executed in connection with Section 5.11, Seller agrees that, for a period of two (2) years after the Closing, it will use good faith efforts to respond to Buyer’s inquiries relating to the Facility or the Facility Assets.
9.3 Risk of Loss.
(a) Promptly following the delivery by Buyer of a Purchase Option Exercise Notice and delivery by Seller of the Acceptance Notice, Seller shall make Buyer a named insured under Seller’s all risk property insurance policy through the Applicable Diligence Period. If, either at the time of Buyer’s delivery of a Purchase Option Exercise Notice or at any time during the Applicable Diligence Period, all or any portion of the Facility is damaged or destroyed in whole or in part by a Material Casualty Event or becomes subject to or threatened with any condemnation or eminent domain proceeding (the “ Affected Portion”), and the amount that is the greater of the (i) fair market value of the Affected Portion (such value to be determined as of the date immediately prior to such damage, destruction or actual or threatened condemnation or eminent domain proceeding) or (ii) the cost of repair of the Affected Portion, as determined by a qualified independent engineer (which engineer has appropriate training and sufficient experience to evaluate the proper repair scope) (such greater amount, the “Diminished Amount”) is equal to or greater than three percent (3%) of the then-current Fair Market Value, then such Fair Market Value shall be reduced by an amount equal to one hundred percent (100%) of the Diminished Amount; provided, that (1) notwithstanding whether Buyer is named as a “named insured” on any such all-risk property insurance policy, Seller shall receive all proceeds from all risk property insurance with respect to such Material Casualty Event (whether paid out prior to or after the Closing Date) or any such condemnation or eminent domain proceeding, (2) Buyer shall have the option to either (A) if Buyer requests Seller to repair 300 of 662
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28 the Facility, to delay the Closing Date for such reasonable time as may be necessary for Seller to complete restoration of the Affected Portion, or (B) proceed with Closing on the scheduled Closing Date with the Final Purchase Price adjusted to reflect the Diminished Amount, and (3) if Seller, at Buyer’s request, restores the Affected Portion prior to the Closing Date (if and as extended by Buyer pursuant to the foregoing clause (2)(A)) to the reasonable satisfaction of Buyer utilizing all available insurance proceeds and equity contributed by Seller, the Fair Market Value shall be adjusted to the Fair Market Value as computed prior to deduction of the Diminished Amount.
(b) If, during the Applicable Diligence Period, all or any portion of the Facility is damaged or destroyed in whole or in part by a Material Casualty Event or becomes subject to or threatened with any condemnation or eminent domain proceeding, such that it cannot reasonably be expected (as determined by the Qualified Appraiser(s)), that, (i) in the case of a Material Casualty Event, the Facility will be fully repaired within sixty (60) days after the Closing Date or (ii) in the case of a condemnation or eminent domain proceeding, such condemnation or eminent domain proceeding would not have a Material Adverse Effect, then Buyer may, in its sole discretion, elect to terminate this Agreement or withdraw from the present Project Purchase Opportunity.
9.4 Liabilities.
(a) From and after Closing, Buyer shall assume, pay, perform and discharge when due, and, as between Buyer and Seller, shall be solely responsible for, the Assumed Liabilities. Other than as set forth in Section 9.1, Seller shall have no liability or obligation for the Assumed Liabilities from and after the Closing Date (and Buyer shall have no liability or obligation for the Assumed Liabilities prior to the Closing Date). (b) Except for the Assumed Liabilities, Buyer shall not assume by virtue of this Agreement or the transactions contemplated by this Agreement, and shall have no liability under this Agreement for, the Excluded Liabilities.
9.5 Insurance. Buyer acknowledges and agrees that, effective upon the Closing, Seller’s insurance policies in respect of the Facility and the Facility Assets shall be terminated or modified to exclude coverage of the Facility Assets, except to the extent required to address a Material Casualty Event under Section 9.3. Buyer ac knowledges and agrees that it may need to provide to certain Governmental Authorities and third parties evidence of replacement or substitute insurance coverage for the continued operation of the Facility Assets following the Closing.
9.6 Securities Replacement. Within ten (10) Business Days after the Closing Date, Buyer shall, at its sole cost, (i) with respect to any Support Obligations set forth on Schedule 3.20 (whether any such Support Obligation is in the form of a letter of credit, bond or cash deposit) (“Seller Support Obligations”), deliver to the applicable beneficiary or counterparty duly executed replacement or substitute Support Obligations, in each case, in a form that satisfies the requirements of the beneficiaries of the Seller Support Obligations (such replacement or substitute security, the “Replacement Security”), and (ii) use commercially reasonable efforts to cause the beneficiary of each such Seller Support Obligation, as soon as practicable following receipt of the 301 of 662
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29 Replacement Security thereof pursuant to this Section 9.6, to terminate, surrender, and redeliver to Seller each instrument constituting or evidencing such Seller Support Obligation. If the applicable beneficiary of any Seller Support Obligation delivers or returns any such Seller Support Obligations, including any cash deposit amounts, to Buyer and Seller has not previously been reimbursed for such amounts, Buyer shall promptly, and in any event within seven (7) Business Days, deliver such Seller Support Obligations to Seller or, in the case of cash deposit amounts, pay such cash deposit amounts to Seller. Except as set forth in the immediately preceding sentence, Buyer shall have no obligation pursuant to this Section 9.6 to pay any amount to Seller in respect of any Seller Support Obligation that is in the form of a cash deposit.
9.7 RWI Insurance Proposal. Seller may propose to procure, at its sole cost and expense, insurance coverage for misrepresentations or breaches by Seller of its representations and warranties made to Buyer pursuant to Article III, subject to customary exclusions, in which case, Seller shall provide Buyer relevant details of the proposed represent ations and warranties insurance and such insurance coverage may be Buyer’s sole recourse (subject to customary exclusions) for breaches by Seller of its representations and warranties made to Buyer pursuant to Article III that are covered by such representations and warranties insurance (the “RWI Proposal”) and Buyer shall consider such proposal in good faith.
ARTICLE X
TERM AND TERMINATION
10.1 Term. This Agreement shall become effective when it is executed by each of the Parties and delivered to the other Party and the term of this Agreement shall continue for the Agreement Term (including any survival periods set forth in Section 2.4 of the PPA), or such other period as may be provided in this Agreement, but in any event up to and including the Closing Date, if any, unless terminated earlier as provided in Section 10.2.
10.2 Termination Events. This Agreement shall be terminated upon the delivery of a termination notice under Section 2.6 of the PPA. In addition, this Agreement may, by notice given prior to the Closing, be terminated:
(a) by either Buyer or Seller upon (i) a failure by the other Party to perform any of its duties or obligations under this Agreement when and as due which is not cured to the reasonable satisfaction of the Party obligated to perform such duties or obligations under this Agreement by the earlier of the Closing Date or the date that is thirty (30) days after receipt of written notice thereof from the other Party, or (ii) an inaccuracy in any material respect of any representation, warranty, certification or other statement made by the other Party herein or in any other document contemplated hereby or in any Operative Document at any time given by a Party in writing pursuant hereto or thereto, or in connection herewith or therewith at the time made or deemed to be made;
(b) either (i) by Buyer if satisfaction of any of the conditions in Article VII has become impossible due to an event outside of Buyer’s reasonable control despite the exercise of due care and diligence (and in no event through the failure of Buyer to comply with its obligations under this Agreement) and Buyer has not previously waived such condition; or (ii) by Seller if satisfaction of any of the conditions in Article VIII has become impossible due to an event outside of Seller’s reasonable control despite the exercise of 302 of 662
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30 due care and diligence (and in no event through the failure of Seller to comply with its obligations under this Agreement) and Seller has not previously waived such condition; (c) (i) by either Party, if a Default of the other Party shall have occurred under the PPA or any Ancillary Document or the PPA or any Ancillary Document is terminated or shall fail to be in full force and effect prior to or concurrently with this Agreement, or (ii) by either Party, if the other Party or such other Party’s Affiliates shall contest the validity or enforceability of the PPA or any provision thereof in writing or deny that it has any further liability thereunder; or
(d) by mutual consent of Buyer and Seller.
10.3 Effect of Termination. In the event of termination of this Agreement:
(a) To the extent reasonably available, upon a request from the other Party, each Party will redeliver all documents, work papers and other material of the other Party relating to the transactions contemplated hereby or by the other Operative Documents to the Party furnishing the same, whether so obtained before or after the execution hereof, and each Party will withdraw any applications for approval of transfer of Permits and surrender any Permits already transferred, as necessary; (b) The provisions of Article XII shall survive in full force and effect; (c) Neither Party shall have any liability or further obligation to the other Party, except as stated in subsections (a) and (b) of this Section 10.3, and except for any breach of representation, warranty or obligation arising under this Agreement or otherwise occurring prior to the proper termination of this Agreement. The foregoing provisions shall not limit or restrict the availability of specific performance or other injunctive relief to the extent that specific performance or such other relief would otherwise be available to a Party hereunder; and
(d) The PPA shall remain in full force and effect in accordance with its terms.
ARTICLE XI
LIMITATION OF LIABILITY
11.1 Survival of Representations, Etc.. The representations, warranties, covenants and agreements of Seller and Buyer contained her ein shall survive the consummation of the transactions contemplated hereby and the Closin g Date, without regard to any investigation made by either of the Parties or, subject to Section 11.2, the fact that the damaged Party had knowledge of any misrepresentation or breach of warranty or covenant at the time of Closing or at any other time, until the expiration of two (2) years after the Closing Date (a) other than with respect to the covenants set forth in Section 2.11 and Section 9.1 and the representation and warranties set forth in Sections 3.1, 3.2, 3.5, 3.6 and 3.9, which shall survive for the applicable statute of limitations, and (b) Section 3.7, which shall survive upon expiration of five (5) years after the Closing Date (at which time, in each case, the other Party shall be precluded from making a claim or commencing a cause of action with respect thereto). The termination 303 of 662
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31 of any representation and warrant y provided herein shall not affect the rights of a Party in respect of a Claim made by such Party with specificity and in a writing received by the other Party prior to the expiration of the a pplicable survival period provided herein.
11.2 Limitation of Liability.
(a) Notwithstanding anything contained in this Agreement to the contrary:
(i) In no event shall Seller’s aggregate liability to Buyer (1) for breach of Seller’s representations and warranties under Article 3 of this Agreement exceed twenty percent (20%) of the Final Purchase Price, and (2) otherwise under this Agreement or any Operative Document to Buyer under any theory of liability (whether contract, tort, strict liability or otherwise) exceed one hundred percent (100%) of the Final Purchase Price; provided that the foregoing limitations shall not apply (A) to any liability arising under or caused in whole or in part by Seller’s fraud, (B) to the extent based upon a breach of any covenant made in Section 2.11 and Section 9.1 or any representation or warranty made in Section 3.1, 3.2, 3.4, 3.6,
3.9, 3.13 or 3.14, (C) to Excluded Liabilities or (D) to bodily injury or property damage arising from activities conducted on any Premises on or prior to the Closing or from Hazardous Substances that were present at or on the Premises on or prior to the Closing and that were released by Seller or any other Person for whose conduct Seller is held responsible at any time on or prior to the Closing. (ii) in no event shall Seller have any liability under this Agreement or any Operative Document following the Closing for any event, circumstance or condition arising from Facility Assets to the extent that, prior to the Purchase Option Exercise Deadline, Buyer (A) had actual knowledge of such event, circumstance or condition, (B) such event, circumstance or condition was disclosed to Buyer in a Disclosure Schedule, or (C) such event has been included in the determination of Fair Market Value.
(iii) payments by a Party in respect of any claim for indemnification pursuant to Section 12.1 shall be limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment received by the Party being indemnified in respect of any such claim.
(iv) Each Party being indemnified under this Agreement shall take all reasonable steps to mitigate any loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that gives rise to such loss.
ARTICLE XII
GENERAL PROVISIONS
12.1 Indemnification.
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32 (a) Seller undertakes and agrees to indemnify and hold harmless Buyer, and its officers, agents, employees, attorneys, consultants, advisors, and representatives (collectively, “Indemnitees”) from and against any and all charges, damages, demands, judgments, civil fines and penalties, or losses of any kind or nature whatsoever, arising by reason of any (i) material breach of this Agreement or any of the Operative Documents by Seller, (ii) failure of any representation, warranty or guarantee made by Seller herein or in any of the other Operative Documents that is qualified by materiality to have been true when made, (iii) failure of any representation, warranty or guarantee made by Seller herein or in any of the other Operative Documents that is not so qualified by materiality to have been true in all material respects when made, or (iv) Excluded Liabilities. (b) Buyer shall promptly notify Seller of any action, suit, proceeding, demand, or breach (a “ Claim”) with respect to which Buyer claims indemnification; provided, however, that failure of Buyer to give such notice shall not relieve Seller of its obligations under this Section 12.1, unless such failure or delay actually and demonstrably prejudices Seller’s ability to effectively defend such Claim. If such Claim relates to any action, suit, proceeding, or demand instituted by a third party against the Indemnitees (a “ Third Party Claim”), Buyer shall notify Seller thereof, and upon receipt of notice from Buyer, Seller shall be entitled to participate in the defense of such Third Party Claim, and if and only if each of the conditions set forth in clauses (i) through (iii) below is satisfied, Seller shall be entitled to assume the defense of such Third Party Claim, and in the case of such an assumption, Seller shall have the authority to negotiate, compromise, and settle such Third Party Claim (provided that Seller shall not settle any such Third Party Claim without consent of Buyer, not to be unreasonably withheld or delayed, unless such settlement (x) includes a full and complete release of Buyer and Indemnitees by the claimant, (y) does not include an admission of guilt or responsibility of Buyer, and (z) does not include any non-monetary conditions that would be binding on Buyer):
(i) Seller has selected counsel to handle the defense that is reasonably acceptable to Buyer;
(ii) Buyer does not give Seller written notice, which shall be given within sixty (60) days of Buyer’s notice to Seller of the Claim, that, in the exercise of its reasonable discretion, matters of policy or a conflict of interest make separate representation by Buyer’s own counsel advisable; and
(iii) Seller establishes to the reasonable satisfaction of Buyer that Seller has (and will continue to have) adequate financial resources to satisfy and discharge such Claim.
(c) Buyer shall retain the right to particip ate in the defense of any Third Party Claim, the defense of which has been assumed by Seller pursuant hereto, but Buyer shall bear and shall be solely responsible for its own costs and expenses in connection with such participation, unless such Claim is determined by a court of competent jurisdiction against Seller, in which case, Seller shall be solely responsible for Buyer’s reasonable and documented costs and expenses in connection with Buyer’s participation. In the event 305 of 662
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33 Seller shall fail or not be entitled to assume the defense of any Third Party Claim, then Buyer shall control the defense and settlement thereof, and Seller shall be responsible for (i) the reasonable and documented costs and expenses of a single counsel selected by Buyer, and (ii) any judgment on or settlement of such Third Party Claim entered into by Buyer with the consent of Seller (not to be unreasonably withheld or delayed), which shall be conclusive and binding on Seller for all purposes.
(d) Any liability for indemnification under this Section 12.1 shall be determined without duplication of recovery by Indemnitees. (e) No individual Representative of either Party shall be personally liable for any losses under the provisions contained in this Section 12.1. Nothing herein shall relieve either Party of any liability to make any payment expressly required to be made by such Party pursuant to this Agreement.
(f) Subject to Section 12.2, Section 12.12 and except in the case of fraud, willful misconduct or negligence Buyer acknowledges and agrees that its sole and exclusive remedy with respect to any and all Claims for any breach of any representation, warranty, covenant, agreement or obligation se t forth herein or otherwise relating to the subject matter of this Agreement from and after the Closing Date, shall be pursuant to the indemnification provisions set forth in this Section 12.1 and in Section 12.2. Nothing in this Section 12.1(f) shall limit any Person’s right to seek and obtain any specific performance of the obligations set forth in this Agreement or equitable relief to which any Person shall be entitled pursuant to Section 12.12.
(g) Any payment pursuant to this Article XII shall be treated by the Parties hereto as an adjustment to the purchase consideration for the Facility Assets by the Parties for income Tax purposes, unless otherwise required by Law.
12.2 Intellectual Property Indemnification. Seller, at its own expense, undertakes and agrees to defend, indemnify and hold harmless Buyer and the Indemnitees from and against all charges, damages, civil fines and penalties, or losses of any kind or nature whatsoever arising out of any Third Party Claim of infringement, actual or alleged, direct or contributory, caused by the use of any Intellectual Property Assets in connection with the operation and maintenance of the Facility in accordance with industry standards for its intended use as designed; provided, however, that this Section 12.2 will not apply to the extent the underlying actual or alleged infringement arises from (a) the Buyer’s material breach of this Agreement or (b) the combination of the Intellectual Property Assets with any materials not used by Seller immediately prior to the Closing Date, except that Seller’s obligations under this Section will apply to any Third Party Claims arising from the combination of the Intellectual Property Assets with any other materials or products where such combination is described in or contemplated by the applicable written specifications, documentation, usage manuals or other instructions or information guides.
12.3 Expenses. Except as otherwise expressly provided in this Agreement, each Party will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. Both Parties agree that, 306 of 662
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34 in any action to enforce the terms of this Agreement, each Party shall be responsible for its own attorney fees and costs. Each of the Parties was represented by its respective legal counsel during the negotiation and execution of this Agreement.
12.4 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 in accordance with Exhibit 1.1 and according to the application of the rules on interpretation of contracts.
12.5 Voluntary Execution. The Parties 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.
12.6 Notices. All notices, requests, demands, consents, waivers, and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when given in the manner set forth in Section 14.2 of the PPA.
12.7 Entire Agreement; Amendments.
(a) This Agreement (including all Schedules and Exhibits) and the PPA contain the entire understanding concerning the subject matter herein and supersede and replace any prior negotiations, discussions or agreements between the Parties 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, express or implied, that is not expressly contained in this Agreement or the other documents of even date herewith between the Parties that induced the other Party to sign this document. (b) This Agreement may be amended or modified only by an instrument in writing signed by both Parties.
12.8 Further Assurances. The Parties agree to furnish upon request to the other Party such further information, to execute and deliver to the other Party such other documents, and to do such other acts and things, all as the ot her Party may reasonably request for the purpose of carrying out the intent of this Agreement and the other Operative Documents.
12.9 Waiver. The failure of either Party 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.
12.10 Severability. In the event all or part of any of the terms, covenants or conditions of this Agreement, or the application of any such terms, covenants or conditions, shall be held 307 of 662
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35 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, however, that the remaining valid and enforceable provisions materially retain the essence of the Parties’ original bargain.
12.11 Consequential or Punitive Damages. Neither Party shall be liable to the other Party 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, including damages for lost revenues, income or profits.
12.12 Equitable Remedies. The Parties acknowledge that money damages may not be an adequate remedy for violations of this Agreement by either Party and that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or equity. The Parties hereby waive any objection to specific performance or injunctive or other equitable relief.
12.13 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.
12.14 Governing Law. This Agreement shall be interpreted, governed by, and construed under the laws of the State of California without consideration of conflicts of law principles. The venue for any litigation relating to this Agreement shall be in Los Angeles, California and each Party hereby waives any objections on the basis of forum non-conveniens or otherwise with respect to the venue of any such action being heard in Los Angeles, California.
12.15 Execution in Counterparts. 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.
12.16 Relationship of the Parties. This Agreement shall not be interpreted to create an association, joint venture or partnership between the Parties 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.
12.17 Third Party Beneficiaries. Except as expressly provided herein, this Agreement shall not be construed to create rights in, or to grant remedies to, any third party as a beneficiary of this Agreement or any duty, obligation or undertaking established herein.
12.18 Provisions of PPA. The provisions of Section 14.3 (“Dispute Resolution”), Section 14.6 (“Assignment of Agreement; Change in Control”), Section 14.17(a) (“Indemnification”), Section 14.19 (“Confidentiality”) and Section 14.20 (“Mobile Sierra”) of the PPA are incorporated herein in their entirety, mutatis mutandis. 308 of 662
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36 12.19 Exhibits and Schedules. The Exhibits and Schedules referred to in and attached to this Agreement are incorporated herein in full by this reference. To the extent that the terms and conditions of an Exhibit or Schedule conflict with the terms and conditions of the main body of this Agreement, the terms and conditions of the main body of this Agreement shall control.
12.20 Relationship with PPA. Except as otherwise specifically stated herein, this Agreement is independent of the PPA and, as a separate agreement, shall survive the amendment, modification, or termination of the PPA, except as otherwise provided herein. In the event of a conflict between this Agreement and the PPA, this Agreement shall control. [Remainder of Page Intentionally Left Blank]
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Signature Page of Milford Solar Phase II Option Agreement DB2/ 48370541.18
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the date first written above.
MILFORD SOLAR PHASE II, LLC, a Delaware limited liability company By: _________________
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
Date: By:
President
Attest:
Assistant Secretary
Approved as to legal form:
By:
Christine Godinez
General Counsel
ORD SOLAR PHASE I
_________________
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Exhibit 1.1 – Page 1
EXHIBIT 1.1
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
DEFINITIONS
“AAA” shall have the meaning ascribed to it in Exhibit 2.4. “Acceptance Notice” shall have the meaning ascribed to it in Section 2.4(c). “Affected Portion” shall have the meaning ascribed to it in Section 9.3(a). “Agency Action” means any notice of violation, complaint, order, consent order, consent agreement, assessment of a fine or penalty or other similar demand for action brought by a Governmental Authority having the requisite authority and jurisdiction to bring such action. “Agreement” means this Option Agreement.
“Applicable Diligence Period” shall have the meaning ascribed to it in Section 5.1. “Asset Assignment Documents” shall have the meaning ascribed to it in Section 7.4(d). “Assumed Contracts” means all of Seller’s rights under the Contracts to which Seller is a party or to which the Facility is subject, as set forth in Schedule 3.3 and Schedule 3.12(a) (excluding any Contract identified with an asterisk (*)). “Assumed Liabilities” shall have the meaning ascribed to it in Section 2.7. “Bill of Sale” means the document described in Section 7.4(c). “Books and Records ” means, to the extent relating to any period of time prior to the Closing, (a) all books, records, purchasing records, lists, files and papers in the possession or control of Seller or its Affiliates pertaining to the Facility Assets and the Facility, and all records and lists concerning suppliers to and personnel of the Facility or Taxes with respect thereto; (b) all ledgers, and reports, plans, drawings, maps, photographs, technical manuals and operating records of every kind maintained by Seller with respect to the Facility, whether in hard copy or electronic format; and (c) all software used by Seller primarily in connection with the operation of the Facility, in each case to the extent transferable; provided that Books and Records may include inextricable information or data unrelated to the Facility, in which case such information or data may be redacted; provided, further that Books and Records shall not include income Tax Returns and associated workpapers and other documentation.
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“Business” means the business of owning and operating the Facility. “Buyer” shall have the meaning ascribed to it in the first paragraph of this Agreement. “CEQA” means the California Environmental Quality Act, as amended from times to time, and any successor statute.
“CERCLA” means the federal Comprehensive Environmental Response, Compensation and Liability Act.
“Change Notice” shall have the meaning ascribed to it in Section 5.7. “Claim” shall have the meaning ascribed to it in Section 12.1(b). “Closing” shall have the meaning ascribed to it in Section 2.6. “Closing Date” means the date on which the Closing is required to take place, as set forth in Section 2.6.
“Closing Permitted Encumbrances” means any Purchase Option Permitted Encumbrances other than those (i) that secure any form of Facility Debt, if any, or any other monetary obligation (other than Liens for Taxes not yet due and payable) and (ii) otherwise accepted by Buyer in writing.
“Consent” means any approval, consent, ratification, waiver, license, permit, certification, registration or other authorization (including any issued, granted, given, or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Requirement of Law or Environmental Law).
“Contract” means any agreement, arrangement, lease, commitment, sales order, purchase order, indenture, mortgage, right, warrant or instrument, which provides for ownership or operation of the Facility or the Premises and is intended to, or purports to be, or is required to be binding and enforceable as contemplated under this Agreement, including the Land Documents, but excluding the Permits.
“Diminished Amount” shall have the meaning ascribed to it in Section 9.3(a). “Disclosure Schedules” shall have the meaning ascribed to it in Section 2.3. “Environment” includes (a) the navigable waters, the contiguous zone, and the ocean waters of which the natural resources are under the exclusive management authority of the United States under the Magnuson-Stevens Fishery Conservation and Management Act and (b) any other surface water, ground water, drinking water supply, stream sediments, soil, land surface or subsurface strata, or ambient air, plant and animal life, and any other environmental medium or natural resource within the United States, or a foreign nation or under jurisdiction of the United States or a foreign nation.
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“Environmental Conditions” means the presence of Hazardous Substances which have been Released into the Environment or the presence of Hazardous Substances that could reasonably be expected to pose a threat of Release of Hazardous Substances into the Environment. “Excluded Assets ” means, notwithstanding any other provision of this Agreement, the following assets:
(a) cash, certificates of deposit and other bank deposits, treasury bills and other cash equivalents or other investments, on hand or in bank accounts, and all of Seller’s bank accounts, intercompany accounts and accounts receivable; (b) accounts and notes receivable relating to the period prior to the Closing Date, including amounts owing under the PPA;
(c) all of Seller’s rights under the PPA and any other Contract between Seller and Buyer or between Seller and any other third party for the sale of Facility Energy or Capacity Rights from the Facility;
(d) any Contract between Seller and its Affiliates, other than for on-going operations and maintenance of the Facility on commercially reasonable terms; (e) any Contract that is not an Assumed Contract;
(f) any Permit that is not a Transferred Permit;
(g) any computers not used primarily in connection with the Facility, any communication or data network systems not used primarily in connection with the Facility, and any other equipment not reasonably required to operate the Facility; (h) all refunds or credits, if any, of Taxes of, due to or from Seller and any refunds of Taxes with respect to the ownership or operation of the Facility Assets for any Pre-Closing Tax Period;
(i) any income Tax Returns of Seller;
(j) all corporate, financial an d tax records of Seller that (i) do not relate in whole or in part to the Facility, (ii) relate solely to any Excluded Asset, (iii) relate solely to any Excluded Liability, (iv) relate to the organization, existence, capitalization or debt financing of Seller, (v) relate to information about Seller or its Affiliates pertaining to energy or project evaluation methodologies, ec onomic evaluation of the Facility Assets (other than the Financial Statements), energy or other economic predictive models, or (vi) do not constitute Books and Records;
(k) all rights to claims, refunds or adjustments against Buyer or any other third parties arising out of the period prior to the Closing Date; (l) Seller’s insurance policies; and
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(m) the assets identified as “Excluded Assets” in Schedule 3.5; provided that no asset that is required for the operation or maintenance of the Facility in the ordinary course and as intended may be listed on Schedule 3.5.
“Excluded Liabilities” shall have the meaning set forth in Section 2.8. “Facility Assets” means all of the following (excluding those assets constituting Excluded Assets):
(a) the Facility;
(b) the Premises;
(c) all Assumed Contracts (including all Real Property Contracts and the Interconnection Agreements);
(d) all Transferred Permits;
(e) all Fixtures and Equipment;
(f) all Books and Records;
(g) all Permits;
(h) all Intellectual Property Assets;
(i) all Supplies;
(j) all Transmission Assets;
(k) all Warranties; and
(l) all other assets, properties, rights, privileges, claims and Contracts (excluding any Contract identified with an asterisk(*)) of every kind and nature, real or personal, tangible or intangible, absolute or contingent, wherever located, owned or used (including those necessary to access to utilize any common use facilities), comprising the Facility.
“Fair Market Value ” shall mean, with respect to a particular time of calculation, the amount a willing buyer would pay for the Facility Assets and all rights, title and interests associated therewith, in an arm’s-length transaction, to a willing seller under no compulsion to sell on the applicable Closing Date, taking into account all relevant facts and circumstances relating to the Facility Assets, the Excluded Assets, the Assumed Liabilities, the Excluded Liabilities and the Disclosure Schedules, as of the Closing Date, and assuming (1) compliance with the terms and provisions of the PPA through the Agreement Term, including delivery of the generation for the then-remaining Agreement Term at the Contract Price or Replacement Energy, as applicable, and (2) that the Facility is able to generate revenue for the remaining Useful Life of the Facility Assets 314 of 662
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at a price per MWh equal to the then fair market price for Energy, Capacity Rights, Environmental Attributes and other products generated by the Facility (except in the case Buyer is exercising its Project Purchase Option as a result of a Default of Seller under the PPA, in which case the Energy, Capacity Rights, Environmental Attributes and other products generated by the Facility will be assumed to be sold at their fair market price as of the Closing Date for the remaining Useful Life of the Facility Assets), as determined in accordance with Exhibit 2.4. “Final Purchase Price” shall have the meaning ascribed to it in Exhibit 2.4. “Financial Statements” shall have the meaning ascribed to it in Section 5.3. “Fixtures and Equipment” means the fixtures, equipment (including solar panels, control rooms and other auxiliaries, furniture, office equipment, communications equipment, fixtures, furnishings, machinery, vehicles, computers, air conditioning ventilation and heating equipment and control stations), but excluding Supplies and other tangible personal property located on the Premises and owned or used by Seller in connection with the operation of the Facility. “FPA” means the Federal Power Act.
“Hazardous Substances ” means any substance, material or waste that is regulated by or forms the basis of liability now or hereafter under, any Hazardous Substances Law or Environmental Law, including any material, substance or waste that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or other similar term or phrase under any Environmental Law, (b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive substance. “Hazardous Substances Law” means any current or future treaty, constitution, law, statute, ordinance, rule, Order, decree, regulation or other directive which is legally binding and has been enacted, issued or promulgated by any Governmental Authority that imposes liability for or standards of conduct or compliance concerning the generation, distribution, use, treatment, storage, disposal, cleanup, transport or handling of Hazardous Substances, including, the Federal Water Pollution Control Act, the Resource Conservation and Recovery Act of 1976, CERCLA, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, and includes the Occupational Safety and Health Act of 1970, to the extent that it relates to the handling of and exposure to hazardous or toxic materials or similar substances. “Indemnitees” shall have the meaning ascribed to it in Section 12.1(a). “Intellectual Property Assets” shall have the meaning ascribed to in in Section 3.13(a). “Interconnection Agreements” shall have the meaning ascribed to it in the PPA. “Investment Company Act” means the Investment Company Act of 1940. 315 of 662
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“Knowledge” means the actual, current 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, of any fact, circumstance or condition. “Land Documents” means the documents listed in Appendix H of the PPA, as may be updated.
“Material Adverse Effect ” means a material adverse change (or changes which, taken together, result in a material ad verse change) in, or effect on, Seller, the Facility, the business, condition (financial or otherwise) or results of operations of th e Business, or any of the Facility Assets; provided, however, that “Material Adve rse Effect” shall not include any event, occurrence, fact, condition or change arising out of or attributable to: (i) general economic, political or regulatory conditions; (ii) conditions generally affecting the electric generating, transmission or distribution industries; (iii) changes in the national, regional, state or local renewable energy industry or whol esale or retail markets for electric power, power generation, power transmission or other fuel supply or transportation or related products and operations, including those due to actions by competitors and regu lators; (iv) changes in the markets for or costs for electricity, generally; (v) new genera ting facilities and their effect on pricing or transmission; (vi) labor strikes, requests for representation, orga nizing campaigns, work stoppages, slowdowns or other labor disputes; (v ii) epidemics, pandemics or disease outbreaks (including COVID-19) and any material worsen ing of any epidemic, pandemic or disease outbreak threatened or existi ng as of the Closing Date, or nay shutdown or material limitation of federal, state or local govern ment services, declaration of mart ial law, quarantine or similar directive, guidance, policy or other similar action by any Governmental Authority in connection with any epidemic, pandemic or disease outbreak ; (viii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the price of any security or any market index; (ix) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (x) any action required or expressly permitted by this Agreement or any action take n (or omitted to be taken) with the written consent of or at the written request of th e Buyer; (xi) any changes in applicable Requirements of Law or accounting rules (including GAAP) or the interpretation or enforcement thereof; (xii) the announcement, pend ency or completion of th e transactions contemplated by this Agreement; (xiii) any breach, vi olation or non-perf ormance of any provision of this Agreement by Buyer; (xiv) changes in or effects on the Facility Assets which are cured (including by the payment of money) by Seller; (xv) effects of weather, meteoro logical conditions or events or other natural disasters or acts of God; or (xvi) any failure by the Facility to meet any internal or published projections, forecasts or revenue or earnings predictions (provi ded that the underlying causes of such failures (subject to the other provisions of th is definition) shall not be excluded); provided further, that the exclusions provided in clauses (i)-(ix), (xi) and (xv) shall not apply to the extent the Facility is disproportionately adversely affected by any such event, occurrence, fact, condition or change relative to other similarly situated participants in the industries in which the Facility generally operates.
“Material Casualty Event” means any physical damage or destruction to all or a portion of the Facility that would materially and adversely affect the capacity or output of the Facility, or Buyer’s ownership or operation of the Facility Assets as of and following the Closing. 316 of 662
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“National Priorities List” means the list of national priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States and its territories and that guides the Environmental Protection agency in determining which sites warrant further investigation.
“Operations Period” means the six (6) month period of time prior to the delivery by Buyer of the Purchase Option Exercise Notice.
“Operative Documents” means each of the agreements, instruments, certificates and other documents executed and delivered by a Party under this Agreement in connection with the performance and consummation of the transaction contemplated by this Agreement, but excluding the PPA and Ancillary Documents as defined in the PPA.
“Order” means any final, non-appealable award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Authority, or by any arbitrator.
“Organizational Documents ” means as applicable, (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; (c) the certificate of organization and the operating agreement of a limited liability company; and (d) any amendment to any of the foregoing.
“Party” and “ Parties” shall have the meaning ascribed to it in the preamble to this Agreement.
“Post-Closing Tax Period” means any taxable period, or portion thereof for any Straddle Period, that does not constitute a Pre-Closing Tax Period. “PPA” shall have the meaning ascribed to it in the recitals to this Agreement. “Pre-Closing Tax Period ” means any taxable period ending on or before the Closing Date and the portion of any Straddl e Period ending on the Closing Date. “Premises” means the fee, leasehold, easement and other Real Property Interests held by Seller in connection with the ownership or operation of the Facility, together with all buildings, improvements, structures and fixture s thereon owned by Seller, and all easements, privileges, rights-of-way, lands underlying an y adjacent streets or roads, appurtenances, licenses and other rights owned by Seller pertaini ng to or accruing to the benefit of such property.
“Proceeding” means any action, order, writ, judgment or decree outstanding, arbitration, audit, hearing, investigation, claim, litigation, or suit (whether civil, criminal, regulatory, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Person.
“Project Purchase Option” shall have the meaning ascribed to it in Section 2.1. 317 of 662
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“Provided Materials” shall have the meaning ascribed to it in Section 5.1. “Purchase Option Exercise Deadline” means a period of one hundred eighty (180) days after the date of delivery of the Disclosure Schedules for the applicable Purchase Option Opportunity.
“Purchase Option Exercise Notice ” shall have the meaning ascribed to it in Section 2.4(a).
“Purchase Option Opportunity” shall have the meaning ascribed to it in Section 2.2. “Purchase Option Permitted Encumbrances ” means (a) any Lien approved by Buyer in a writing; (b) Liens for Taxes not yet due and payable or for Taxes being contested in good faith by appropriate proceedings, so long as either (i) such proceedings do not involve a substantial risk of the sale, forfeiture, loss or restriction on the use of the Facility or any part thereof, or (ii) a bond or other security reasonably acceptable to Buyer that has been posted or provided in such manner and amount as to assure Buyer that any Taxes determined to be due will be promptly paid in full when such contest is determined; (c) zoning, building codes and other land use laws regulating the use or occupancy of the Premises or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over the Premises; (d) 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 either (i) such proceedings do not involve a substantial risk of the sale, forfeiture, loss or restriction on use of the Facility or any part thereof, or (ii) a bond or other security reasonably acceptable to Buyer has been posted or provided in such manner and amount as to assure Buyer that any amounts determined to be due will be promptly paid in full when such contest is determined; (e) easements, rights of way, use rights, excepti ons, encroachments, reservations, restrictions, conditions or limitations which do not materially impair the Premises affected thereby for the purpose for which title was acquired or materially interfere with or impair the operation of the Facility Assets; (f) Liens in favor of Facility Lenders; (g) the Real Property Agreements, or memoranda of such Real Property Agreements, or Liens contemplated the Real Property Agreements; and (h) Liens created or reserved pursuant to or contemplated by the PPA (including Section 14.6 thereof), this Agreement (including any Liens imposed by the memorandum of this Agreement) or any Performance Security under the PPA. “Purchase Option Tentative Exercise Notice ” shall have the meaning ascribed to it in Section 2.3.
“Qualified Appraiser ” means a nationally recognized, appropriately licensed, certified general real estate appraiser, which shall (a) be qualified to appraise independent electric generating businesses, (b) have been engaged in the appraisal or business valuation and consulting business for a period of not less than five (5) years, (c) be qualified and have expertise at calculating forward projections of power curves and valuations, and (d) not be associated with Seller, Buyer or any of their respective Affiliates. 318 of 662
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“Real Property Contracts” shall have the meaning ascribed to it in Section 3.3(b). “Real Property Interests” shall have the meaning ascribed to it in Section 3.3(b). “Release” means any physical release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Substances in the Environment, including the movement of Hazardous Substances through or in the Environment, including the Premises.
“Replacement Security” shall have the meaning ascribed to it in Section 8.4(d)(i). “Representative” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors,
“Schedule Delivery Date” shall have the meaning ascribed to it in Section 2.3. “Seller” shall have the meaning ascribed to it in the first paragraph of this Agreement. “Seller Disclosure Schedules” shall have the meaning ascribed to it in Section 2.3. “Seller Guarantor” means an entity to be mutually agreed by the Parties. “Seller Guaranty ” means the guaranty to be executed by Seller Guarantor in the form attached hereto as Exhibit 7.4(i).
“Straddle Period” means any taxable period that includes but does not end on the Closing Date. For all purposes of this Agreement, with respect to Taxes for any Straddle Period, the portion of such Taxes related to the portion of the Tax period ending on and including the Closing Date shall, (i) in the case of any property or ad valorem Taxes, equal the product of (A) the amount of such Tax for the entire Straddle Period and (B) a fraction the nu merator of which is the total number of days from the beginning of the Straddle Period through and including the Closing Date and the denominator of which is the total number of days in the entire Straddle Period and (ii) in the case of all other Taxes other than Transfer Taxes (such as franchise Taxes, Taxes that are based upon or re lated to income or receipts, based upon production or occupancy or imposed in connection with any sale or othe r transfer or assignment of property (real or personal, tangible or intangible) be com puted on a “closing-of-the-books” basis as though the relevant Straddle Period ended at the end of the Closing Date. “Supplies” means those supplies, inventories and spare parts on the Premises or otherwise dedicated to the Facility as of the Closing Date.
“Support Obligations ” means any letters of credit, cash collateral, parent company guaranties, surety bonds and other similar credit support. “Tax Claim” shall have the meaning ascribed to it in Section 9.1(e). 319 of 662
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“Tax Return” means any return, report, information return or other document (including any related or supporting information) required to be supplied to any authority with respect to Taxes, and including any amendment thereof or thereto.
“Third Party Claim” shall have the meaning ascribed to it in Section 12.1(b). “Third Party Property Interests” shall have the meaning ascribed to it in Section 3.3(b). “Transfer Taxes” shall have the meaning ascribed to it in Section 2.11. “Transferred Permit” means any Permit transferred to Buyer at Closing, as set forth in Schedule 3.15 (excluding any Permit identified with an asterisk (*)). “Transmission Assets ” means the fixtures, equipment (including transformers and switchgear) and other tangible property interests owned by Seller and required for the interconnection and transmission of Energy to the Point of Delivery. “Updated Schedule Delivery Date” shall have the meaning ascribed to it in Section 2.9(a). “Useful Life of the Facility Assets” shall mean no less than thirty-five (35) years from the Commercial Operation Date.
“Warranties” means all rights of Seller under or pursua nt to all third-party warranties, representations and guarantees made by manufact urers and suppliers in connection with the Facility Assets or services furnished to Seller pe rtaining to the Facility or affecting the Facility Assets.
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EXHIBIT 2.4
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
PURCHASE PRICE
The “Fair Market Value,” as defined for purposes of this Agreement in Exhibit 1.1, shall be determined in accordance with this Exhibit 2.4.
Within sixty (60) days following the delivery of the Disclosure Schedules, the Parties shall meet and attempt to agree on the Fair Mark et Value based on the Disclosure Schedules. If the Parties are unable to agree on the Fair Market Value within sixty (60) days after the delivery of the Disclosure Schedules, then each of Seller and Buyer shall, within fourteen (14) additional days, select an independent recognized apprais er who will meet the requirements for the Qualified Appraiser. Within forty-five (45) days following the deadline for the Parties to select Qualified Appraisers, each such independent recognized appraiser shall determine the Fair Market Value. Upon completion of the two appraisals, each of Buyer and Seller shall deliver the results to the other Party. If the Fair Market Value appraisals of the two independent appraisers vary by less than ten percent (10%) , the Fair Market Value determination shall be the simple average of the Fair Market Value de terminations of the two appraisals. If the variance is greater than ten percent (10%), the tw o independent appraiser s shall either select a third independent appraiser, who meets the requi rements for a Qualified A ppraiser, or, if the two independent appraisers fail to agree on a third independent appraiser within fourteen (14) days following delivery of the second appraisal, a third independent appraiser shall be appointed by the American Arbitration Associat ion (“AAA”) upon application by either Party in accordance with the applicable rules and regulations of the AAA for such selection. The third independent appraiser sh all select one of the a ppraisals generated by the two independent appraisers within thirty (30) days of retention and such appraisal shall be the Fair Market Value determination. If the third independent appraiser selects the appraisal originally prepared by Buyer’s independent appraiser, Seller shall pay th e fees and costs of the third independent appraiser. If the third independent appraiser s elects the appraisal originally prepared by Seller’s independent appraiser, Buyer shall pay the fe es of the third independent appraiser.
The Fair Market Value shall be adjusted from time to time by the amount (as determined by the Parties in good faith, or absent their mutual agreement, by the Qualified Appraiser or the independent appraisers using the same methodology set forth in paragraph 2 above) necessary to compensate Buyer for (i) any differences between the Seller Disclosure Schedules originally delivered to Buyer on the Schedule Delivery Date and any updated Seller Disclosure Schedules delivered to Buyer from time to time prior to Closing, (ii) any item or omission in a Seller Disclosure Schedule that is not resolved to the reasonable satisfaction of Buyer, (iii) any differences in Facility Assets, Excluded Assets, Assumed Liabilities or 321 of 662
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Excluded Liabilities from the Schedule Delivery Date to the Closing, (iv) the inability of Seller to satisfy any of the Buyer Closing Conditions set forth in Article VII, (v) a Material Casualty Event or any real or threatened condemnation or eminent domain proceeding as described under Section 9.3(a) of the Agreement, but solely to the extent an adjustment to Fair Market Value is required under such Section 9.3, or (vi) any issue that requires the delivery of a Change Notice.
The “Final Purchase Price ” to be paid by Buyer at the Closing shall be the Fair Market Value determined in accordance with this Exhibit 2.4, as such may be adjusted hereunder.
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Exhibit 2.5 – Page 1
EXHIBIT 2.5
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
FORM OF MEMORANDUM OF OPTION
AFTER RECORDING, RETURN TO:
Attn: ___________________
MEMORANDUM OF OPTION AGREEMENT
THIS MEMORANDUM OF OPTION AGREEMENT (this “Memorandum”) is dated as of _________________, 202_ (the “Effective Date”), by and between MILFORD SOLAR PHASE II, LLC, a Delaware limited liability company (the “ Seller”), and SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers agency and a public entity organized under the laws of the State of California and created under the provisions of the California Joint Exercise of Powers Act (California Government Section 6500 et seq.) (together with its successors and assigns, “Buyer”).
RECITALS
A. Buyer and Seller entered into that certain Option Agreement dated of even date herewith (the “Agreement”), which by its terms grants to Buyer an option to purchase the Facility Assets, including the Premises as legally described on Exhibit A attached hereto, all as more particularly described in the Agreement and incorporated herein by this reference.
B. Buyer and Seller have executed and acknowledged this Memorandum for the purpose of providing constructive notice of the Agreement.
C. Capitalized terms used but not otherwise defined in this Memorandum shall have the meanings given to such terms in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer provide record notice of the following:
(a) 1. Grant of Option and Option Term . Pursuant to the Agreement, Seller has granted to Buyer an exclusive, irrevocable option to purchase the Facility Assets (the “Project Purchase Option”). The Project Purchase Option may be exercised at any time: (a) one (1) year prior to the tenth (10th) anniversary of the Commercial Operation 323 of 662
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Date; (b) one (1) year prior to the fifteenth (15th) anniversary of the Commercial Operation Date; (c) one (1) year prior to every subsequent five (5) years after the fifteenth (15th) anniversary of the Commercial Operation Date until the end of the Agreement Term; (d) during the sixty (60) day period commencing on the date on which a Termination Notice is provided by Buyer to Seller pursuant to Section 13.3(a) of the PPA.
2. Manner of Exercise. Buyer may exercise the Project Purchase Option during a Purchase Option Opportunity by delivering written notice to Seller and complying with the terms of Section
2.3 of the Agreement.
3. Covenant by Seller. Seller hereby covenants to and for the benefit of Buyer that neither Seller nor any of its agents, employees, directors, officers, shareholders, members, or representatives shall contract with any other party to sell, convey, lease, sublease, grant any option rights with respect to, or encumber in any way all or any portion of the Facility Assets in a manner that would adversely affect the rights of Buyer under the Agreement.
4. Effect of Agreement. The Parties intend that the Agreement create a valid option in favor of Buyer as to the Facility Assets on the terms set forth in the Agreement and shall inure to the benefit of, and bind, each of the Parties and their respective successors and assigns.
5. No Conflict. In the event of any conflict or inconsistency between the provisions of this Memorandum and the provisions of the Agreement, the provisions of the Agreement shall control.
Nothing in this Memorandum shall be deemed to amend, modify, change, alter, amplify, limit, interpret or supersede any provision of the Agreement or otherwise limit or expand the rights and obligations of the Parties under the Agreement.
6. Counterparts. This Memorandum may be executed in two or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]
IN WITNESS WHEREOF, Buyer has caused this Memorandum to be executed and delivered by its duly authorized representative.
BUYER:
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
D a t e : B y :
Name:
Title:
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A t t e s t :
Name:
Title:
Approved as to legal form and content:
B y :
Name:
Title:
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF ___________
On , before me, , Notary Public personally appeared ____________________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
SIGNATURE
PLACE NOTARY SEAL ABOVE
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IN WITNESS WHEREOF, Seller has caused this Memorandum to be executed and delivered by its duly authorized representative.
SELLER:
MILFORD SOLAR PHASE II, LLC,
a Delaware limited liability company
By: __________________________
Name: ________________________
Its: ___________________________
STATE OF ____________________)
COUNTY OF __________________)
This instrument was acknowledged before me this _____ day of _______________, 202_, by _______________, as ________________ of Milford Solar Phase II, LLC, a Delaware limited liability company.
__________________________________________
[SEAL] Notary Public
M y c o m m i s s i o n e x p i r e s :
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Exhibit A – Legal Description of the Premises
[LEGAL DESCRIPTION + TAX PARCEL NUMBER TO BE INSERTED]
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EXHIBIT 5.11
FORM OF TRANSITION SERVICES AGREEMENT
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
This TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into on [•], 20[__] (the “Effective Date”), by and between Milford Solar Phase II, a Delaware limited liability company (“Seller”) and SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers agency and a public entity organized under the laws of the State of California and created under the provisions of the California Joint Exercise of Power Act (California Government Section 6500 et seq.) (“Buyer”). Seller and Buyer are hereinafter sometimes collectively referred to as the “Parties,” and each individually as a “Party.” W I T N E S S E T H:
WHEREAS, the Parties have entered into that certain Option Agreement, dated as of [_________] (the “Option Agreement”), pursuant to which, among other things, Seller has agreed to sell, transfer, assign, convey and deliver to Buyer, and Buyer has agreed to purchase, receive and assume from Seller, the Facility Assets (as defined in the Option Agreement), upon the terms and subject to the conditions set forth in the Option Agreement; and WHEREAS, Section 5.11 of the Option Agreem ent provides that Seller or its Affiliates will provide Buyer with transitional operation and maintenance services; and WHEREAS, Buyer hereby requests that Seller (or its Affiliates) perform certain transitional operation and maintenance services for a period of time following the Closing Date to facilitate the transition of the operations of the Facility to Buyer; and WHEREAS, Seller is willing to provide, or cause its Affiliates to provide, such services to Buyer subject to the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the premises and the covenants set forth herein and the benefits to be derived herefrom, the Parties hereby agree as follows:
ARTICLE I
DEFINED TERMS
Capitalized terms used in this Agreement shall have (unless provided elsewhere in this Agreement) the meanings given to such terms in the Option Agreement and as set forth below:
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“Services” means the services that are listed on Schedule 1 attached hereto; provided, however, that the term “Services” shall not include the services listed under the heading “Excluded Services” on Schedule 1 attached hereto.
ARTICLE II
DESCRIPTION OF SERVICES
2.1 Seller’s Undertakings. The purpose of this Agreement is to give Buyer the option, but not the obligation, to receive the Services from Seller or Seller’s Affiliates on an interim basis in order to permit Buyer the opportunity to obtain alternate sources of supply of such Services prior to the expiration of the Initial Term, or if extended, the Extension Term (as such terms are defined in Section 3.1 below). Seller agrees to provide, or to cause the provision through its Affiliates, the Services to Buyer during the Initial Term or Extension Term, if any, in accordance with the terms and conditions of this Agreement, in a professional, workmanlike manner, subject to the applicable Laws and in a manner that is substantially the same as the manner in which such Services were performed prior to the date of this Agreement.
2.2 Resources Committed. Seller shall provide the Services set forth on Schedule 1, provided that Seller shall not be required to provide any services to Buyer that neither Seller nor its Affiliates previously provided and/or performed in connection with the ownership of the Facility Assets or the Business prior to the Closing Date. Nothing herein shall require Seller to install equipment, acquire licenses, expand any systems or services or expend or devote any resources beyond the level provided by Seller and its Affiliates to the Business during the Operations Period. In connection with the performance of the Services, Seller may, at its sole cost and expense and at all times on an arms-length basis: (a) subcontract with a non-Affiliate and/or personnel of a non-Affiliate to perform any portion of the Services to be performed hereunder; (b) utilize personnel who are employees of Affiliates of Seller; or (c) subcontract work to Affiliates of Seller; provided that all such personnel and subcontractors shall be fully qualified to perform the applicable Services pursuant to the terms and conditions of this Agreement and Buyer shall have consented in writing to such personnel and subcontracts, such consent not to be unreasonably withheld or delayed; provided, that if such subcont ract is on substantially the same terms and conditions as was being provided to Seller prior to the Closing Date, then such subcontract shall be deemed to be acceptable to Buyer.
ARTICLE III
TERM AND TERMINATION
3.1 Term. The initial term of this Agreement (the “Initial Term”) shall commence as of the Closing Date and shall continue in effect for a maximum of six (6) months; provided, however, that following the expiration of the Initial Term this Agreement may be extended for up to three additional terms (or such greater number that is agreed by the Parties), each not to exceed two (2) months (each such two (2) month extensions, an “Extension Term” and collectively with the Initial Term, the “Term”) if Buyer provides written notice not less than thirty (30) days prior to the expiration of the Initial Term.
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3.2 Termination of Entire Agreement. Notwithstanding anything herein or elsewhere to the contrary, this Agreement may be terminated and the transactions contemplated hereby abandoned, at any time, upon the occurrence of any of the following events or conditions:
(a) upon the mutual written agreement of the Parties to terminate this Agreement;
(b) by Seller, upon Buyer’s breach of a material obligation under this Agreement (including Buyer’s failure to pay Seller amounts owing hereunder) and such breach is not remedied to Seller’s reasonable satisfaction within thirty (30) days after notice to Buyer of such breach; or
(c) by Buyer, upon Seller’s breach of a material obligation under this Agreement and such breach is not remedied to Buyer’s reasonable satisfaction within fifteen (15) days after notice to Seller of such breach or if such breach is not capable of rectification within fifteen (15) days, if Seller has not promptly commenced to rectify the breach within such fifteen (15)-day period and is not proceeding diligently to rectify the breach; provided, however, that such right to continue to rectify a breach shall end upon expiration of this Agreement.
In the event of termination of this Agreement pursuant to this Section 3.2, no Party will have any further liability or obligation hereunder, except that any such termination will not affect (i) the provisions of Section 4.1, Article V and Article VI, which will survive any such termination, or (ii) the rights and obligations of the Parties accruing prior to such termination.
3.3 Termination of Particular Service. Notwithstanding anything herein or elsewhere to the contrary, Buyer shall have the right, upon thirty (30) days written notice to Seller, to terminate this Agreement as to any Service listed on Schedule 1. Upon the effectiveness of the termination of any particular Service, Seller shall no longer be required to provide such Service to Buyer, and Buyer shall incur no additional obligations to pay Seller the fee associated with the provision of such Service, other than obligations that have accrued prior to the termination of such Service, including, without limitation, any third-party fees, penalties or other payments related to the termination by Seller of such Service.
3.4 Termination Procedures. Upon any termination of this Agreement (in whole or in part), each Party shall cooperate with the other Party as reasonably necessary to assist Buyer in transferring responsibility for the provision of the terminated Service(s) to Buyer (or any third party as designated in writing by Buyer).
ARTICLE IV
FEES, BILLING, AND PAYMENT
4.1 Compensation. Buyer shall, in accordance with Section 4.2, (a) pay Seller the fees set forth on Schedule 1 attached hereto for the provision of each particular Service provided under this Agreement and (b) except as set forth in Section 3.3 above, reimburse Seller for any incidental, out-of-pocket expenses reasonably incurred by Selle r or Seller’s Affiliates in connection with 330 of 662
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performing the Services. All amounts paid by Buyer to Seller hereunder shall be paid in full without any deduction or withholding for taxes or any other fees or expenses.
4.2 Billing and Payment. After the end of each calendar month, Seller shall send to Buyer an invoice, setting forth a description of the Services provided during the prior calendar month and identifying the fees that are to be paid. Buyer shall pay to Seller the amounts due and payable on each such invoice within sixty (60) days after its receipt thereof. If Buyer in good faith disputes any portion of an invoice, and Buyer notifies Seller in writing of the nature and basis of such good faith dispute within sixty (60) days after Buyer’s receipt of such invoice, Buyer shall have the right to withhold payment of the disputed portion and Buyer shall pay only the undisputed portion. Seller shall be entitled to a late fee on any undisputed amounts, and any amounts not disputed in good faith by Buyer, due hereunder that remain unpaid following the date due hereunder at the rate of one percent (1%) per month.
4.3 Access. During the Term, Buyer will provide Seller, Seller’s Affiliates and their respective authorized representatives, at each such Party’s sole risk, reasonable access (during regular business hours and upon reasonable prior notice), to Buyer and its employees, representatives, facilities and books and records as Seller, Seller’s Affiliates and their respective authorized representatives may reasonably request which are reasonably necessary for providing the Services and not subject to confidentiality restrictions; provided, that (i) Buyer shall have the right to have a representative present for any communication with employees or representatives of Buyer; (ii) such access and activities incidental thereto shall be undertaken in accordance with applicable Laws and Buyer’s generally applicab le policies and procedures; and (iii) Buyer shall have the right to impose reasonable restrictions and requirements for safety purposes. Buyer grants to Seller and its representatives access to the Facility for a period of thirty (30) days after the expiration or termination of this Agreement so that Seller may demobilize its work force, including the removal of its personal property that was brought to the Facility by Seller to provide the Services.
4.4 Records Retention. Each Party shall retain all records relating to this Agreement for so long as required by any Governmental Authority having jurisdiction.
ARTICLE V
INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE
5.1 Indemnification. Each Party shall indemnify, defend and hold harmless either Party and its officers, directors, employees, agents and representatives from and against any and all suits, sanctions, liabilities, legal proceedings, claims, demands, losses, costs and expenses of whatsoever kind or character, including reasonable attorneys’ fees and expenses, for injury or death of persons or physical loss of or damage to property of Persons to the extent arising from either Party’s (including its employees or agents) negligence, breach or willful misconduct in connection with the performance of Services under this Agreement. Each Party shall also indemnify, defend and hold harmless either Party and its officers, directors, employees, agents and representatives from and against any and all regulatory penalties or fines and reasonable expenses (including attorneys’ fees and expenses) to the extent arising from the either Party’s violation of 331 of 662
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any law, regulation, or government approval in connection with the performance of this Agreement.
5.2 Limitation of Liability. Each Party’s liability in connection with its performance of the Services hereunder, regardless of whether such liability arises in contract, tort or otherwise, shall not exceed the aggregate amount of the fees payable hereunder; provided that, the such limitation shall not apply to, and each Party shall be liable for, Losses arising under or caused in whole or in part by either Party’s gross negligence, fraud or willful misconduct or the Party’s third party indemnification obligations under Section 5.1. The Parties agree that for any loss implicating any of the liability or property insurance required to be carried by Seller under this Agreement, or otherwise carried by Buyer in relation to the Facility, the limitation of liability in this Section 5.2 shall correspond to and not reduce the coverage limits in all such primary and excess insurance policies. The Parties’ liability shall be covered, at a minimum, to the full extent of the limits of their respective insurance coverages. Nothing in this Section 5.2 inures to the benefit of the Parties’ insurers. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT
TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY, OR ANY OF ITS
AFFILIATES, HAVE ANY LIABILITY HEREUNDER TO THE CLAIMING PARTY OR ITS
AFFILIATES IN RESPECT OF ANY INCIDENTAL, SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES, LOSSES, OR EXPENSES ARISING OUT
OF, OR IN CONNECTION WITH, THIS AGREEMENT OR THE PERFORMANCE OR NONPERFORMANCE OF SERVICES HEREUNDER.
5.3 Insurance. Seller shall at its sole cost and expense procure, provide, and maintain, and shall require each subcontractor (regardless of tier) to provide and maintain, in effect during the performance of any Services under this Agreement, and with respect to subparagraphs (d) and (e) below, the period of time specified therein, insurance coverage with carriers reasonably satisfactory to Buyer, as follows (collectively, the “Required Policies”)1:
(a) Workers’ Compensation insurance in accordance with statutory limits, as required by the state in which the services are to be performed, including a waiver of subrogation favoring Buyer, and Employer’s Liability insurance with limits of not less than [one million dollars ($1,000,000)] each employee for accident, [one million dollars ($1,000,000)] each employee for disease, and [one million dollars ($1,000,000)] policy limit for disease. (b) Commercial General Liability insurance providing coverage for bodily injury, property damage, personal injury, advertising liability, blanket contractual liability, Seller’s obligations under this Agreement, products and completed operations, and coverage for independent contractors with limits of not less than [one million dollars ($1,000,000)] for each occurrence. Such policy shall cover Buyer as an additional insured, include a severability of
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interest provision, and be primary and not contributory with respect to any insurance carried by Buyer.
(c) Commercial Automobile Liability insurance providing coverage for all owned, non-owned, and hired automobiles used by Seller in the performance of the Services with a combined single limit of not less than [one million dollars ($1,000,000)] for each occurrence of bodily injury and property damage.
(d) Errors & Omissions/Professional Liability insurance, including coverage for liability arising from intellectual property infringement, information technology and software development services, with limits of [one million dollars ($1,000,000)] per claim and in the aggregate. The policy must be kept in force during the life of the contract and for three years (either as a policy in force with “prior acts” coverage covering the Agreement’s term, or under an extended reporting provision) after contract termination. (e) Cyber Security Coverage including technology / professional liability insurance, intellectual property infringement, and data protection liability insurance. Seller shall procure and maintain coverage for cyber liabilities and financial loss resulting or arising from acts, errors, or omissions, in connection with data maintenance, hosting, software development and other information technology services provided under this agreement. Coverage shall include protection for liability arising from:
(i) intellectual property infringement arising out of software and/or content (excluding patent infringement and misappropriation of trade secrets); (ii) breaches of security;
(iii)violation or infringement of any right, privacy, breach of federal, state, or foreign security and/or privacy laws or regulations; and (iv) data theft, damage, destruction, or corruption, including without limitation, unauthorized access, unauthorized use, identity theft, theft of personally identifiable information or confidential corporate information, transmission of a computer virus or other type of malicious code; and participation in a denial of service attack on a third party.
The minimum limits shall be [three million dollars ($3,000,000)] for each claim and in the aggregate.
The Required Policies must address all of the foregoing without limitation if caused by an employee of Seller or an independent contractor working on behalf of Seller in performing Services under this Agreement. Policy must provide coverage for wrongful acts, claims, and lawsuits anywhere in the world. The Required Policies must be kept in force during the Term and for three years (either as a policy in force with “prior acts” coverage covering the Agreement’s Term, or under an extended reporting provision) after contract termination.
All Required Policies shall provide not less than thirty (30) calendar day notice of cancellation to Buyer. The Required Policies shall not include any of the following: except for 333 of 662
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Professional Liability Insurance, any claims-made in surance policies; any self-insured retention or deductible amount greater than [two hundred fifty thousand dollars ($250,000)] unless approved in writing by Buyer; any endorsement limiting coverage available to Buyer that is otherwise required by this Section 5.3; and any policy or endorsement language that (A) negates coverage to Buyer for Buyer’s own negligence; (B) limits the duty to defend Buyer under the policy; (C) provides coverage to Buyer only if Seller is negligent, or (D) permits the recovery of defense costs from any additional insured. The insurance provided under this Agreement shall not contain any restrictions or limitations which are inconsistent with Buyer’s rights under this Agreement.
Seller shall furnish Buyer proof of all Required Policies evidencing the required coverages prior to commencement of Services under this Agreement. Seller shall provide Buyer a new or renewed certificate of insurance upon any changes or modifications to coverage including any extension or renewal of required insurance coverage; provided that any changes or modifications to coverage shall be consistent with the requirements of this Agreement.
The insurance requirements set forth in this Section 5.3 are separate and independent from the indemnification and defense provisions of this Agreement. The insurance provisions do not limit the applicability, scope, or obligations of indemnification and defense obligations of this Agreement, and this Agreement’s indemnification and defense obligations do not limit the insurance coverage requirements of this Agreement.
ARTICLE VI
RELATIONSHIP OF PARTIES
This Agreement is not intended to and shall not be construed as creating a joint venture, partnership, agency or other association within the meaning of the common law or under the laws of the state in which any Party is incorporated, organized, or conducting business. Except for the obligations arising from the auth orized activities of Seller as described herein, no Party shall be responsible for the obligations or actions of any other Party, each Party being severally responsible only for its obligations and actions arising hereunder. It is the intent of the Parties that with respect to performing the Services, the Seller and its Affiliates are independent contractors, and shall provide the Services in accordance with the reasonable instructions provided by authorized representatives of Buyer, subject to the provisions of this Agreement.
ARTICLE VII
FORCE MAJEURE
7.1 Force Majeure Event. No Party shall be liable to any other Party for its failure or delay in performing its obligations hereunder (other than its obligation to pay money for Services rendered hereunder) due to any contingency beyond such Party’s reasonable control (a “Force Majeure Event”) including, without limitation, acts of God, fires, floods, wars, acts of war, sabotage, terrorism, accidents, labor disputes (whether or not such disputes are within the power of the Party to settle), shortages, governmental laws, ordinances, rules or regulations. 334 of 662
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7.2 Notice of Force Majeure Event. Each Party affected by a Force Majeure Event will give notice to the other Party as promptly as practicable of the nature and probable duration of the Force Majeure Event as well as of the anticipated termination of such Force Majeure Event. The Party affected by the Force Majeure Event will use commercially reasonable efforts to remove the Force Majeure Event and, in the case of Seller, to resume the performance of the Services as soon as reasonably practicable after such removal.
ARTICLE VIII
CONFIDENTIALITY
This Agreement is subject to the terms and conditions of Section 14.19 of that certain Power Purchase Agreement between the Parties.
ARTICLE IX
MISCELLANEOUS
9.1 Operational Coordination. Buyer designates [_______] as Buyer’s representative[s] for purposes of operational coordination under this Agreement. Seller designates [_______] as Seller’s representative[s] for purposes of operational coordination under this Agreement. Either Party may change its designee for purposes of this Section 9.1 by providing notice thereof to the other Party in accordance with this Section.
9.2 Notices. All notices and other communications required or permitted to be given or delivered hereunder shall be in writing signed by or on behalf of the Party making the same, shall specify the Section under this Agreement pursuant to which it is given or made and shall be delivered personally, transmitted by facsimile with answerback confirmed or sent by recognized overnight courier service or United States mail, postage prepaid and return receipt requested, directed to the Party intended at the address or facsimile number set forth in Section 12.5 of the Option Agreement, or at such other address or facsimile number as may be designated by such Party by notice given to the other Party in the manner aforesaid, and shall be effective upon receipt.
Such address may be changed from time to time by means of a notice given in the manner provided in this Section 9.2.
9.3 Waiver. The failure of a Party at any time or times to enforce or require performance of any provision hereof shall in no way operate as a waiver or affect the right of such Party at a later time to enforce the same. No waiver by a Party of any condition or the breach of any term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of any breach of any other term, covenant, representation or warranty contained in this Agreement. Any waiver of an obligation, agreement or condition contained herein shall be valid and effective only if in writing and signed by the Party making such waiver.
9.4 Severability. In the event any provision of this Agreement is held to be invalid by a court or arbitrator of competent jurisdiction, the invalidity of any such provision shall in no way 335 of 662
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affect any other provision contained herein; provided, however, that any such invalidity does not materially prejudice either Buyer or Seller in their respective rights and obligations contained in the valid provisions of this Agreement.
9.5 Dispute. 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 9.5 (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. 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 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. In the event a Dispute is not resolved pursuant to the procedures set forth herein by the expiration of the thirty (30) day period set forth above, then either Party may pursue any legal remedy available to it in accordance with the provisions of this Agreement. In the event of a dispute regarding payments due hereunder, each Party shall continue to perform its respective obligations hereunder pending the resolution of such dispute.
9.6 Governing Law; Venue. 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 above, the Parties must comply with California law governing claims against public entities and presentment of such claims. 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. Both Parties agree that in any action to enforce the terms of this Agreement that each Party shall be responsible for its own attorney fees and costs. Each of the Parties was represented by its respective legal counsel during the negotiation and execution of this Agreement.
9.7 No Third-Party Beneficiaries. Nothing in this Agreement, whether express or implied, is intended or shall be construed to confer any rights or remedies under or by reason of this Agreement on any persons other than the Parties and their respective successors and assigns permitted hereby, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third person to any Party to this Agreement, and no provision of this Agreement shall give any third persons any right of subrogation or action over and against any Party to this Agreement.
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9.8 Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and by different Parties on separate counterparts, all of which shall be considered one and the same agreement, and each of which shall be deemed an original, and this Agreement shall become binding when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties.
9.9 Assignment; Delegation. No Party may assign any right, interest, or obligation granted it under this Agreement without the express written consent of the other Party. Subject to the foregoing, this Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the Parties and their permitted successors and assigns.
9.10 Entire Agreement; Amendments. This Agreement (including Schedule 1 hereto) and the Option Agreement (a) constitute the entire agreement among the Parties with respect to the subject matter hereof and (b) supersede all prior statements, representations, discussions and understandings relating to such subject matter. This Agreement shall only be amended or modified by a written instrument signed by a duly authorized representative of each of the Parties.
9.11 Headings. The headings of Articles and Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect in any way the meaning or interpretation of this Agreement. [SIGNATURE PAGE FOLLOWS]
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The Parties have caused this Agreement to be executed and delivered as of the date first set forth above by their duly authorized representatives.
SELLER
MILFORD SOLAR PHASE II, LLC
By:
Name:
Title:
BUYER
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY
By:
Name:
Title:
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SCHEDULE 1
TO TRANSITION SERVICES AGREEMENT
SERVICES2
Following the Closing Date, during the Initial Term and, if applicable, the Extension Term, Seller shall perform (or shall cause its Affiliates to perform) the following Services:
1. Access, Information and Training. Seller shall provide Buyer and Buyer’s representatives, agents, employees and personnel (“Buyer’s Personnel”) with access, information and training as may be reasonably required so that the transfer of the duties and responsibilities of Seller cause as little disruption as possible to the Facility.
2. System Monitoring. Seller shall conduct system monitoring or assist Buyer’s Personnel with conducting system monitoring, including, as applicable, continued upkeep and operation of any operations center that monitors project metrics or hosts SCADA activities, retrieval and storage of performance data and remote or on- Premises monitoring and support.
3. Preventative and Scheduled Maintenance. Seller shall perform or assist Buyer’s Personnel with performing maintenance duties for the Facility Assets, which may include, but are not limited to, the following duties:
• Regular inspection, repair and functional testing of Facility components, including, as necessary, of photovoltaic modules, mounting systems, combiner boxes and fuse boxes, inverter shelters, power conversion station performers, switchgear and other components.
• Regular inspection, repair and functional testing of inverters in compliance with, and to ensure continued coverage under, any applicable warranties. • Regular inspection and repair, adjustment or cleaning, in accordance with manufacturers’ recommendations, of filters, cable connections, warning labels, paint and exterior, operators and handles, weather stripping, relays, transistors and other items.
• Visual inspection of the Facility and the Premises and correction of undesirable conditions, including fencing, shading, vegetation, animal damage, erosion, corrosion and discolored panels.
• Inspection and correction of loose electrical connections and ground connections.
• Training regarding Seller’s Quality Assurance Program (as defined in the Power Purchase Agreement between the Parties), and provision of and
2 NTD: To be updated in connection with execution.
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training regarding Seller’s operation and maintenance plan and related records.
• Maintain records of service history and information and training regarding such maintenance.
• Maintenance and testing of sensors and meters.
4. Emergency Response. Seller shall provide or assist Buyer’s Personnel with providing responses to emergency events that reduce or halt power production and with performing unscheduled repairs. Seller shall provide, and provide training regarding, any documents, plans or protocols Seller has developed in relation to such events.
5. Warranty Management. Seller shall verify and enforce or assist Buyer’s Personnel with verifying and enforcing all warranties applicable to the Facility Assets.
6. Spare Parts Inventory Management. Seller shall maintain or assist Buyer’s Personnel with maintaining spare parts inventories for the Facility and documentation related to the usage and location of spare parts. Seller shall assist Buyer’s Personnel in determining appropriate quantities of inventory and with the procurement of goods and materials that Buyer will need for continued operating and maintenance of the Facility.
7. Performance Reporting. Seller shall continue to generate or assist Buyer’s Personnel with generating appropriate reports from Facility data.
8. Compliance with Requirements. Seller shall comply with, assist Buyer’s Personnel in complying with, and provide information and training regarding compliance with all applicable permits, Operative Documents, Assumed Contracts, warranties, and other requirements applicable to the Facility Assets.
9. Data Transfer. Seller shall transfer the data from the Computerized Maintenance Management System (“CMMS”) to Buyer.
B. Excluded Services.
[Seller and Buyer shall mutually agree on any Excluded Services on or before the Closing Date.]
C. Fees for Services.
[Seller and Buyer shall mutually agree on fees for Services on or before the Closing Date.]
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EXHIBIT 7.4(i)
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
SELLER GUARANTY
[To come.]
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SCHEDULE 3.3
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
REAL PROPERTY MATTERS
[All Real Property Contracts and Real Property Interests of Seller to be set forth in accordance with Section 3.3 shall be specified and briefly described in this Schedule] 342 of 662
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SCHEDULE 3.4
to
OPTION AGREEMENT
dated as of [_____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
SELLER’S CONSENTS
[All Consents of Seller which are necessary or incidental to the Facility shall be specified and briefly described in this Schedule]
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SCHEDULE 3.5
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
CERTAIN ASSETS
[Any Assets that are not in good repair and operating condition, normal wear and tear excepted, and Excluded Assets.]
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SCHEDULE 3.6
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
TITLE TO FACILITY ASSETS
[Any exceptions to Seller’s representation regarding having good title to the Facility Asset, free and clear of all Liens, except for certain permitted liens.] 345 of 662
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Schedule 3.7 – Page 1
SCHEDULE 3.7
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
ENVIRONMENTAL MATTERS
[All environmental matters referred to in Section 3.7 shall be specified and briefly described in this Schedule]
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SCHEDULE 3.8
to
OPTION AGREEMENT
dated as of [_____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
LIABILITIES
[All liabilities referred to in Section 3.8 shall be specified and briefly described in this Schedule] 347 of 662
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SCHEDULE 3.9
to
OPTION AGREEMENT
dated as of [____________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
TAX MATTERS
[All tax matters referred to in Section 3.9 shall be specified and briefly described in this Schedule] 348 of 662
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SCHEDULE 3.10
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
COMPLIANCE WITH LAWS
[All non-compliance with laws referred to in Section 3.10 shall be specified and briefly described in this Schedule]
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SCHEDULE 3.11
to
OPTION AGREEMENT
dated as of [___________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
LITIGATION
[All litigation proceedings referred to in Section 3.11 shall be specified and briefly described in this Schedule]
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SCHEDULE 3.12(a)
to
OPTION AGREEMENT
dated as of [________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
CONTRACTS
[All Contract matters referred to in Section 3.12(a) of the Agreement shall be specified and briefly described in this Schedule, with any Contract not constituting an Assumed Contract identified by an asterisk
(*)]
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SCHEDULE 3.12(b)
to
OPTION AGREEMENT
dated as of [________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
EXCEPTIONS TO ASSUMED CONTRACTS
[All exceptions to the Assumed Contracts referred to in Section 3.12(a) and 3.12(b) of the Agreement shall be specified and briefly described in this Schedule.] 352 of 662
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SCHEDULE 3.13
to
OPTION AGREEMENT
dated as of [_______________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
INTELLECTUAL PROPERTY
[All Intellectual Property Asset matters referred to in Section 3.13 with respect to the Facility shall be specified and briefly described in this Schedule] 353 of 662
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SCHEDULE 3.15
to
OPTION AGREEMENT
dated as of [________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
PERMITS
[All Permit matters referred to in Section 3.15 of the Agreement shall be specified and briefly described in this Schedule, with any Permit not constituting a Transferred Permit identified by an asterisk (*)]
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SCHEDULE 3.17
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
EMPLOYEE MATTERS
[All Employee matters referred to in Section 3.17 shall be specified and briefly described in this Schedule]
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SCHEDULE 3.18
to
OPTION AGREEMENT
dated as of [__________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
GENERAL MATTERS
[All general representation matters referred to in Section 3.18 shall be specified and briefly described in this Schedule]
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Schedule 4.3 – Page 1
SCHEDULE 4.3
to
OPTION AGREEMENT
dated as of [_________]
by and between
MILFORD SOLAR PHASE II, LLC
and
SCPPA
BUYER’S CONSENTS
[All Consents of Buyer which are necessary or incidental to the Closing shall be specified and briefly described in this Schedule]
31954473
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APPENDIX M
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
FORM OF LETTER OF CREDIT
DATE:
IRREVOCABLE STANDBY LETTER OF CREDIT NO.
_____________
BENEFICIARY:
Southern California Public Power Authority
1160 Nicole Court
Glendora, California 91740
Telephone: (626) 793-9364
Facsimile: (626) 793-9461
APPLICANT:
ADVISING BANK:
AMOUNT: USD (FIGURES)
(AMOUNT IN WORDS)
DATE OF EXPIRY:
AT COUNTER OF ISSUING BANK
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Ladies and Gentlemen:
We hereby issue our Irrevocable Unconditional, Standby Letter of Credit (“Letter of Credit”) in favor of the beneficiary by order and for the account of the applicant, and on behalf of Milford Solar Phase II, LLC, which is available at sight for USD $[XX,XXX,XXX] by sight payment:
(a) upon presentation to us at our office at [insert address], of: (i) your written demand for payment containing the text of Exhibit I and (ii) your signed statement containing the text of Exhibit II (collectively, the “Documents”); or (b) Upon both beneficiary’s telephone or fax advice of demand to the attention of transaction services at telephone [_______] and/or fax number [_______] and presentation to us by fax to address [_______] of: (i) your written demand for payment containing the text of Exhibit I and (ii) your statement containing the text of Exhibit II.
If you present a fax drawing under this Letter of Credit you do not need to present the original of any drawing documents, and if we receive any such original drawing documents, they will not be examined by us. In the event of a full or final drawing the original Letter of Credit must be returned to us by overnight courier.
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 of your Documents in conformity with the foregoing, on the second Business Day after such presentation (unless such presentation occurs after [1:00 p.m. Eastern Standard Time] on the day of such presentation, in which event payment will be made on the third Business Day), but without any other delay whatsoever, irrevocably and without reserve or condition, we will make payment to your order in the account at the bank designated by you in the demand in immediately available funds. 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.
“Business Day” means a day other than a Saturday, Sunday or any other day on which banking institutions in the State of New York are authorized or required by law to close.
Provided that the presentation of this Letter of Cred it is made on or prior to the Expiration Date and the applicable Documents as set forth above conform to the requirements of this Letter of Credit, 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 you, including 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 a valid written order issued by a court of competent jurisdiction that 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.
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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 referred to above with care so as to ascertain that on their face they appear to comply with the terms of this Letter of Credit, and that if such demand(s) and Documents on their face appear to so comply, failure to make any such payment within such time shall constitute dishonor of such demand(s).
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 and as otherwise provided in this Letter of Credit. Any amendment shall become effective only upon acceptance by your signature on a hard copy amendment. The expiration date shall also be amended as provided in the following paragraph.
This Letter of Credit shall expire on the earlies t to occur of (1) the Expiration Date or (2) our receipt of written confirmation from the Beneficiary authorizing us to cancel this Letter of Credit accompanied by the original of this Letter of Credit. This Letter of Credit shall automatically renew, without amendment, for a term of one year (and the Expiration Date shall automatically be extended for such period) upon the Expiration Date unless we provide the Beneficiary with a written notice of non-renewal (each such notice a “Notice of Non-Renewal”) in a customary form on our letterhead, by overnight courier, at least sixty (60) days prior to the then existing Expiration Date. It is agreed that a Notice of Non-Renewal shall be deemed given without any further action by us with respect to any extension of the Expiration Date to any date occurring after [_______]
1. To the extent a Notice of Non-Renewal has been provided to the Beneficiary in accordance herewith, the Beneficiary is authorized to draw on us up to the stated amount of this Letter of Credit, by presentation to us, in the manner specified herein of (i) your written demand for payment containing the text of Exhibit I and (ii) your signed statement containing the text of Exhibit II.
You 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.
In the event of an Act of God, riot, civil commotion, insurrection, war or any other cause beyond our control that interrupts our business and causes the place for presentation of this Letter of Credit to be closed for business on the last day for presentation, the expiry date of this Letter of Credit will be automatically extended without amendment to a date twenty (20) calendar days after the place for presentation reopens for business.
We hereby engage with you that your demand(s) for payment in conformity with the terms of this Letter of 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 your successors by operation of law. In this connection, in the event of a drawing made by a party other than you, such drawing must be accompanied by the following signed certification:
1 NTD: To be finalized at time of issuance.
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“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 banks] Letter of Credit No. ________________ .”
THIS LETTER OF CREDIT IS TRANSFERABLE IN FULL, BUT NOT IN PART BY BENEFICIARY, AND MAY BE TRANSFERRED SUCCESSIVELY. WE SHALL NOT
RECOGNIZE ANY TRANSFER OF THIS CREDIT UNTIL A TRANSFER APPLICATION IN
THE FORM OF EXHIBIT III ATTACHED HERETO IS FILED WITH US, AND OUR TRANSFER CHARGES HAVE BEEN PAID BY THE APPLICANT. OUR TRANSFER FEE IS [____]. THE ORIGINAL LETTER OF CREDIT AND ANY ORIGINAL AMENDMENTS MUST ACCOMPANY THE TRANSFER APPLICATION. THE SIGNATURE AND THE
TITLE OF THE PERSON SIGNING THE TRANSFER APPLICATION MUST BE VERIFIED BY YOUR BANK OR NOTARIZED BY A NOTARY PUBLIC.
Except so far as otherwise expressly stated herein, this Letter of Credit is governed by International Standby Practices 98 (“ISP98”). As to matters not governed by the ISP98, this Letter of Credit shall be governed by and construed in accordance with the laws of the State of New York. Any litigation arising out of, or relating to this Letter of Credit, shall be brought in a State or Federal court in the Borough of Manhattan in the State of New York. The Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of New York.
Please send all claims and drawings as per the terms and conditions herein at the following address:
[________]
.
For queries if any contact our client services team at: [________] or [____________]
_____________________________ _________________________ [___________] [___________]
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
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Exhibit I
Demand for Payment
TO: [________]
[________]
Re: Irrevocable and Unconditional, Standby Letter of Credit No. ________________ Dated __________, 20__
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, Standby 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:
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Exhibit II
Statement
TO: [________]
[________]
Re: Irrevocable and Unconditional, Standby Letter of Credit No. ________________ Dated __________, 20__
To Whom It May Concern:
Reference is hereby made to your Irrevocable and Unconditional, Standby Letter of Credit No. [______] dated [________] in the amount of $ [_________] established by you in our favor for the account of _______________., on behalf of Milford Solar Phase II, LLC.
We hereby certify to you that $ ________________ is payable to us [as provided in our agreement with Milford Solar Phase II, LLC and that we are entitled to draw on this Irrevocable and Unconditional, Standby Letter of Credit No. [______] pursuant to the terms of such agreement.] [because you have provided us a Notice of Non-Renewal.]
DATED: _____________ , 20 __
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY
By: __________________________
Name:
Title:
Date:
Attest: ________________________
Name:
Title:
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Exhibit III
Application
APPLICATION TO TRANSFER A STANDBY CREDIT
DATE: _____________________
TO
[________]
[________]
STANDBY LETTER OF CREDIT REFERENCE NO. ____________________
LADIES AND GENTLEMEN,
FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:
____________________________________
(NAME OF TRANSFEREE)
__________________________________________
(ADDRESS)
REASON FOR TRANSFER OF STANDBY LETTER OF CREDIT:
___________________________________________
ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE STANDBY LETTER OF CREDIT IN ITS ENTIRETY.
BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH
STANDBY LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE AND THE
TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF,
INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER
INCREASES OR EXTENSIONS, OR OTHER AMENDMENTS AND WHETHER NOW EXISTING OR HEREAFTER MADE.
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ALL AMENDMENTS ARE TO BE ADVISED DIRECTLY TO THE TRANSFEREE
WITHOUT NECESSITY OF CONSENT OR NOTICE TO THE UNDERSIGNED BENEFICIARY.
THE ORIGINAL OF SUCH STANDBY LETTER OF CREDIT IS RETURNED HEREWITH
AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND
FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.
AUTHORIZED SIGNATORIES
NAME OF BENEFICIARY:
B Y :
P R I N T N A M E :
TITLE:
TELEPHONE NUMBER: E-MAIL ADDRESS:
THE ABOVE SIGNATURE, WITH TITLE AS STATED, CONFORMS TO THAT ON FILE WITH US, AND IS AUTHORIZED FOR THE EXECUTION OF THIS DOCUMENT.
NAME OF BANK/ NOTARY: _
BANK / NOTARY ADDRESS: _
________________________________________________
B Y :
AUTHORIZED SIGNATURE
N A M E :
TITLE:
TELEPHONE NUMBER: E-MAIL ADDRESS:
_____________________
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APPENDIX N
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
CERTIFICATE FOR COMMERCIAL OPERATION
In accordance with the terms of that certain Power Purchase Agreement dated as of [___], 2024 (“Agreement”) by and between Southern California Public Power Authority (“Buyer”) and Milford Solar Phase II, LLC (“ Seller”), in order to determine achievement of Commercial Operation of the Facility, Seller shall demonstrate to Buyer that the Facility is operating and able to produce and deliver Facility Energy to Buyer in accordance with the terms of the Agreement by delivery of a Certificate of Commercial Operation (the “ Certificate”), signed by an authorized representative of Seller as to all of the items below, and which shall include a certificate in the form attached hereto of an Independent Engineer, licensed in the State of Utah, regarding the Facility’s ability to deliver Facility Energy and confirming the items set forth therein. 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:
1. Solar panels and all other equipment comprising the Facility have been installed in accordance with the manufacturer’s specifications.
2. The electrical collection system related to the solar panels referenced in (1) above is complete, functional, and energized for the Facility.
3. Seller’s collector substation is complete and capable of delivering an as-available product.
4. The Facility is operational and interconnected with the Point of Delivery and capable of delivering the Facility Energy.
5. Copies of any documentation provided by the manufacturer of the solar panels referenced in paragraph (1) with respect to the warranties provided in connection therewith have been provided to Buyer.
6. Construction of the Facility has been completed in accordance with the terms and conditions of this Agreement, and the Facility possesses all of the characteristics required by, and satisfies all of, the Requirements.
7. The Facility has successfully completed all testing required by Prudent Utility Practices or any Requirement of Law to be completed prior to full commercial operation. Testing shall include but not be limited to operating the Facility for a period of 366 of 662
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not less than seven (7) consecutive days and delivering Delivered Energy in an amount equal to at least ninety-five percent (95%) of the Contract Capacity during such period in accordance with the Requirements. The Facility shall demonstrate it has delivered the Facility Energy to the Point of Delivery at a rate, volume, and time of day in a manner equivalent to a facility with similar specifications and under similar solar profiles during such period.
8. Seller has obtained all of the Permits required for the development, construction, operation and maintenance of the Facility (other than ministerial Permits that can reasonably be expected to be obtained in the ordinary course of business), including those identified in Appendix K of the PPA, and all such Permits are final and effective.
9. Seller has obtained the Operating Insurance.
10. Seller shall have entered into, and delivered to Buyer, an agreement providing for the operation and maintenance of th e Facility with a Qualified Operator (which may be redacted for confidential or proprietary information), in form and substance reasonably satisfactory to Buyer, unless Seller provides the operation and maintenance of the Facility.
11. Seller provided the Performance Security in accordance with Section 5.6 of the Agreement.
12. Seller has fully performed and discharged any liabilities, indebtedness, guarantees or other obligations in compliance with the definition of “Special Purpose Entity.”
13. Buyer has received a bring-down of the Non-Consolidation Opinion.
14. Buyer has received a true and complete copy of each Interconnection Agreements.
15. Buyer has accepted (which acceptance shall not be unreasonably withheld, conditioned or delayed) 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.
16. Buyer has accepted Seller’s mapping of NERC registered Function Types in accordance with the currently-effective WECC Entity Function Mapping procedures.
17. Buyer has received and found reasonably acceptable the applicable Q/A Program documentation in accordance with Appendix J.
Upon reasonable notice and during regular business hours, Buyer’s representative(s) may inspect the Facility and observe the testing associated with achievement of Commercial Operation, 367 of 662
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provided that such representative(s) of Buyer shall at all times comply with Seller’s written instructions regarding safety and security while on the Facility Site.
Signed,
___________________________
NAME:
TITLE:
DATE:
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INDEPENDENT ENGINEER CERTIFICATE
In accordance with the terms of that certain Power Purchase Agreement dated as of [___], 2024 (“Agreement”) by and between Southern California Public Power Authority (“Buyer”) and Milford Solar Phase II, LLC (“Seller”), in order determine achievement of Commercial Operation of the Facility, I, ______________, an Independent Engineer, licensed in the State of Utah, certify the following regarding the Facility’s ability to deliver Delivered Energy:
1. Solar panels and all other equipment comprising the Facility have been installed in accordance with the manufacturer’s specifications.
2. The electrical collection system related to the solar panels referenced in (1) above is complete, functional, and energized for the Facility.
3. Seller’s collector substation is complete and capable of delivering an as-available product.
4. Copies of any documentation provided by the manufacturer of the solar panels referenced in paragraph (1) with respect to the warranties provided in connection therewith have been provided to Buyer.
5. The Facility is operational and interconnected with the Point of Delivery and capable of delivering the Facility Energy.
6. Construction of the Facility has been completed in accordance with Prudent Utility Practices.
7. The Facility has successfully completed all testing required by Prudent Utility Practices or any Requirement of Law to be completed prior to full commercial operation. Testing shall include but not be limited to operating the Facility for a period of not less than seven (7) consecutive days and delivering Delivered Energy in an amount equal to at least ninety-five percent (95%) of the Contract Capacity during such period in accordance with the Requirements. The Facility shall demonstrate it has delivered the Facility Energy to the Point of Delivery at a rate, volume, and time of day in a manner equivalent to a facility with similar specifications and under similar solar profiles during such period.
[Signature Page to Follow]
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Signed,
___________________________
Name:
Title:
Date:
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APPENDIX O
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
FORM OF CONSENT AND ESTOPPEL AGREEMENT2
CONSENT AND ESTOPPEL AGREEMENT
This CONSENT AND ESTOPPEL AGREEMENT (this “Consent”), dated as of ____________, 20__, by and among Southern California Public Power Authority (“Buyer”), [_____________] (in its capacity as collateral agent for the Facility Lenders under the Financing Agreement, as defined below, “Collateral Agent”) and Milford Solar Phase II, LLC, a Utah limited liability company (“Seller”). Each of Buyer, Seller and Collateral Agent 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 memb ers of Buyer. Capitalized terms used but not defined herein shall have the meanings set forth in the PPA (as defined below).
RECITALS
3 A. [_____________] (“Borrower”), an indirect owner of Seller, entered into a Financing Agreement with Collateral Agent, 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 [_____] MW solar-powered electric generating facility (the “Facility” as further described in the PPA). Seller and Collateral Agent have also entered into a Guarantee and Security Agreement (the “Security Agreement”) under which Seller collaterally assigned its interest under the PPA to Collateral Agent as collateral for the credit facilities under the Financing Agreement and a deed of trust or mortgage under which Seller has granted to Collateral Agent a lien on the Facility to be recorded in [___________] (the “Financing Deed of Trust”). Additionally, [_____________] (“Pledgor”) has entered into a Guarantee, Pledge and Security Agreement pursuant to which it has pledged to Collateral Agent 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”). [On the “Term Conversion Date” (which for
2 NTD: Subject to lender comments, this Consent and Estoppel Agreement to be in substantially similar form as Appendix O.
3 NTD: Conforming changes to be made throughout this Consent (including the Recitals) to reflect the structure of the applicable financing arrangement and the final form of consent is subject to the actual financing structure.
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purposes of this Consent shall mean the date upon which the construction period security is released, the construction loan is converted to a term loan, the Lender Collateral Documents are terminated, and the remaining collateral security in the Project is as described by Collateral Agent in Section 4.10 hereof), the only remaining collateral security of the Collateral Agent securing the obligations of the Borrower under the Financing Agreement will be the membership interests in and any assets of the Pledgor and the Borrower, and there will be no remaining collateral security of the Collateral Agent in the Seller or its assets that secures the obligations of the Borrower under the Financing Agreement. A true and correct copy of each of the Lender Collateral Documents has been furnished to Buyer.]
4 B. Buyer and Seller entered into that certain Power Purchase Agreement, dated as of [___], 2024 (as may be amended, supplemented, or modified from time to time, the “PPA”), pursuant to which Seller will develop, finance, c onstruct, own, and operate the Facility, and will, except as otherwise provided in the PPA, sell the Energy to Buyer.
C. Pursuant to Section 13.4 of the PPA, Seller is assigning, pursuant to the Security Agreement, to Collateral Agent Seller’s interest under the PPA. In addition, this Consent is entered into in compliance with Section 14.6(d) of the PPA.
AGREEMENT
1. Assignment and Agreement.
1.1 Consent to Assignment. Buyer hereby consents to the collateral assignment to Collateral Agent 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 (together, the “Assigned Interests”) as security for Borrower’s obligations under the Financing Agreement. Subject to the terms and conditions of this Consent, Buyer agrees that in exercising its remedies, Collateral Agent may exercise Seller’s rights under the PPA.
1.2 Notices: Right to Cure by Collateral Agent. Upon the occurrence of a Default (as defined under the PPA) by Seller under the PPA, Buyer shall give concurrent notice of such Default to Seller and Collateral Agent. Buyer shall not terminate or suspend its performance under the PPA until Collateral Agent has been given, (a) if such Default is a monetary Default, thirty (30) days after the later of (i) the expiration of all cure periods available to Seller under the PPA and (ii) receipt of such notice to cure a monetary Default or, (b) if such Default is a nonmonetary Default, sixty (60) days after the later of (i) th e expiration of all cure periods available to Seller under the PPA and (ii) receipt of such notice (or up to sixty (60) additional days, so long as Collateral Agent reasonably demonstrates to Buyer that it is diligently pursuing appropriate action
4 NTD: It is anticipated that the Facility level liens would terminate on the Term Conversion Date. However, it is possible that they will not depending upon how the monetization of the anticipated tax credits from the Facility are structured. Conforming changes to be made to this Consent and Agreement to reflect the final financing structure. 372 of 662
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to cure and is making sufficient progress toward curing such Default); provided, that if the Collateral Agent is prohibited from curing any su ch Default by any process, stay or injunction issued by any Governmental Authority or pursuant to any bankruptcy or insolvency proceeding or other similar proceeding involving Seller, then the time periods specified herein for curing a Default shall be extended for the period of such prohibition, so long as the Collateral Agent has diligently pursued removal of such process, stay or injunction, but in no event more than one hundred twenty (120) days. Failure of Buyer to provide such notice to Collateral Agent shall not constitute a breach of the PPA or this Consent by Buyer and Collateral Agent agrees that Buyer shall have no liability to Collateral Agent for such failure whatsoever; provided that no claim of Default or termination of the PPA by Buyer shall be binding without such notice and the lapsing of the applicable periods set forth above. If Collateral Agent fails 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 or Replacement Agreement.
(a) Subsequent Owner. Subject to the terms and conditions of this Consent, the Parties agree that the Collateral Agent shall, in accordance with Section 1.5, notify Buyer of the pendency of such foreclosure or transfer and, in addition, Collateral Agent shall subsequently notify Buyer following the occurrence of such foreclosure or transfer. If Collateral Agent 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”, Collateral Agent or its permitted successor or assigns, or any other purchaser of the Assigned Interests shall be recognized as a party substituting for Seller under the PPA and the Option Agreement so long as Collateral Agent or its permitted successor or assigns, or any other purchaser of the Assigned Interests meets the qualifications for a Qualified Transferee and expressly assumes in writing Seller’s obligations under the PPA and the Option Agreement and agrees to comply with the terms of the PPA and the Option Agreement in connection with such foreclosure or the “deed in lieu of foreclosure” (provided, that if the Collateral Agent or an Affiliate of the Collateral Agent would be deemed as the Subsequent Owner, then it shall not be obligated to meet the requirement set forth in clause (a)(ii)(B) of the definition of Qualified Transferee so long as the Collateral Agent or its applicable Affiliate transfers the Facility or the Assigned Interests to a Qualified Transferee within six (6) months following the foreclosure) (each such permitted and qualified successor or assign or other purchaser of the Assigned Interests, a “Subsequent Owner”) and the terms and conditions of the PPA and the Option Agreement as in effect on such date of assignment or foreclosure shall continue to apply to such Subsequent Owner. For purposes of the definition of Qualified Transferee contained in the PPA, any Person that meets the definition of Qualified Operator or is identified on Exhibit E hereof or an Affiliate of such Person shall be a Qualified Operator, so long as such Person is not in active litigation adverse to Buyer or any Participating Member. (b) Replacement Agreement. If the PPA is terminated or rejected in connection with a bankruptcy, insolvency, winding up or simila r occurrence with respect to Seller, then, Collateral Agent or a Subsequent Owner shall certify in writing to Buyer, not more than ninety (90) days after the date of such termination or r ejection, as applicable, occurs, that it meets the requirements of a Subsequent Owner and will perform the obligations of Seller as and to the extent required under the PPA. Following receipt of such certification and at the request of Collateral 373 of 662
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Agent, Buyer will execute and deliver to Collateral Agent or Subsequent Owner a new agreement for the balance of the remaining term under the original PPA containing the same conditions, agreements, terms, provisions and limitations as the original PPA.
1.4 Buyer Cure Rights under the Financing Agreement. Under the Financing Agreement, the Collateral Agent shall agree not to exercise remedies under the Financing Agreement or any related collateral documents that could preclude Buyer from exercising its purchase option pursuant to Section 1.5 below until Buyer has been given: (a) if such default thereunder is a monetary default, thirty (30) days after the expiration of all cure periods available to Seller under the Financing Agreement, or (b) if such default thereunder is a nonmonetary default, sixty (60) days after the expiration of all cure periods available to Seller under the Financing Agreement, so long as, in the case of this clause (b), Buyer reasonably demonstrates that it is diligently pursuing appropriate action to cure and is making sufficient progress toward curing such default; and the effect of any such cure by Buyer shall be as if Seller had cured the applicable default within the cure period afforded Seller under the Financing Agreement, including cessation of exercise of remedies by the Collateral Agent; provided, that Buyer shall not have any cure rights pursuant to this Section 1.4 to the extent that Seller’s default under the Financing Agreement is caused by Buyer’s payment default under the PPA. Upon any payment or cure by Buyer relating to such a default by Seller, the amounts expended by Buyer to provide such cure, including any defaulted payment and interest thereon at the Interest Rate, and all other payments made and expenses incurred by Buyer in providing such cure shall be applied either (i) in reduction of the price for the Delivered Energy payable by Buyer as provided under Section 6.1 and Appendix A of the PPA, provided that the reduction of the price for the Delivered Energy shall not result in an inability of Seller to pay required debt service in connection with the Facility Debt (as defined below), or (ii) in the event of the purchase of the Facility by Buyer under Section 1.5 hereof, the purchase price shall be reduced by such amounts expended to provide such cure, provided that the purchase price shall not be less than the Facility Debt (as defined below). For purposes of this Consent, “Facility Debt” shall have the meaning set forth in the PPA, except that (i) the reference to the obligations of “Seller” thereunder shall be deemed to refer to the obligations of “Borrower,” as the counterparty under the Financing Agreement and (ii) any debt of Borrower to the lenders under the Financing Agreement shall be deemed “Facility Debt”. Upon the request of the Buyer, the Collateral Agent can send a written notice of the amount of Facility Debt that is needed to be received by the Collateral Agent pursuant to the Financing Agreement.
1.5 Buyer’s Purchase in Lieu of Foreclosure. 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, Collateral Agent shall, concurrent with any statutory notice required to be delivered to Seller, give notice in writing to Buyer not less than ninety (90) 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”).
(a) Upon receipt by Buyer of a Foreclosure Notice, Buyer shall have the right, at its option, to purchase the Facility from Seller in lieu of foreclosure as set forth in this Section 374 of 662
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1.5. In the event that, within thirty (30) days following Buyer’s receipt of such Foreclosure Notice, Buyer furnishes written notice to Collateral Agent that it will (concurrent with and subject to the closing of a bond financing by Buyer) exercise its option to purchase the Facility, which notice shall be in the form of, and containing the information specified in, Exhibit B hereto (the “Purchase Notice”), including setting forth the date of such purchase (which shall be within ninety (90) days following the date of Buyer’s notice to Collateral Agent in the form of Exhibit B, which date may be reasonably extended by Buyer for up to an additional fifteen (15) days in order to close the bond financing), Buyer shall purchase the Facility from Seller as hereinafter provided. The purchase price of the Facility shall be paid by the Buyer to the account designated by Collateral Agent and shall be equal to the amount, measured as of the date of such payment, of the Facility Debt. In consideration of such payment, Collateral Agent shall, upon the closing therefor, release of record all of the liens and security interests under the Lender Collateral Documents. (b) If Buyer believes that the purchase of the Facility will not take place within such ninety (90) day period, and, prior to the end of such ninety (90) day period provides notice to Collateral Agent in the form of Exhibit C, then the Foreclosure Sale (or, as applicable, the taking of a deed in lieu of foreclosure) shall not be held and Buyer shall, within ten (10) days after the end of such ninety (90) day period, purchase from the Collateral Agent all of their right, title and interest in, to and under the Financing Agreement and the Lender Collateral Documents, free and clear of all Collateral Agent liens, claims and encumbrances. Upon such a purchase by Buyer, Collateral Agent agrees to cause the transfer, sale and assignment of all of the right, title and interest of the Collateral Agent in, to and under the Financing Agreement, related promissory notes, and the Lender Collateral Documents to be made to Buyer (or, if and to the extent designated by Buyer, to a member of Buyer that is a purchaser from Buyer of Energy produced by the Facility (a “Member”)) upon the payment by Buyer or such Member to Collateral Agent of the amount of the Facility Debt measured as of the date of such purchase. (c) If Buyer has not provided Collateral Agent a notice in the form of Exhibit C prior to the end of such ninety (90) day period after the Foreclosure Notice, then the Collateral Agent may effect the Foreclosure Sale or take a deed in lieu of foreclosure at any time after the end of such ninety (90) day period.].
1.6 Foreclosure Sale. In the event a Foreclosure Sale under the Lender Collateral Documents shall take place, Collateral Agent may se ll the Assigned Interests pursuant to such Foreclosure Sale to any Person, free of any rights of Buyer under this Section 1.6, and Seller waives, to the extent permitted by law, all rights of redemption, stay or appraisal; provided, however, Buyer or any Member shall have the right to bid at such Foreclosure Sale.
1.7 Third Party Beneficiary. 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.
1.8 No Assignment. Buyer agrees that it shall not, without the prior written joint consent of Seller and Collateral Agent (such consent to not be unreasonably withheld, conditioned or delayed) sell, assign or transfer any of its rights under the PPA other than in accordance with 375 of 662
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Section 14.6 of the PPA. Collateral Agent shall be deemed to have consented to such sale, assignment or transfer should it fail to respond within (90) days after the date of the notice from Buyer.
1.9 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 third-party 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 or any of the Lender Collateral Documents, or this Consent. (b) Collateral Agent or any Subsequent Owner shall expressly assume in writing Seller’s obligations under the PPA and the Option Agreement and agree to comply with the terms of the PPA and the Option Agreement if Collateral Agent forecloses on the Facility or the Assigned Interests or takes a “deed in lieu of foreclosure”, and shall not have any liability under the PPA unless and until such assumption. Collateral Agent agrees that, except to the extent expressly provided hereunder, in no event shall Buyer be liable to Collateral Agent or any Subsequent Owner for any claims, losses, expenses or damages whatsoever under the PPA other than liability Buyer may have to Seller under the PPA. In the event a Subsequent Owner elects to perform Seller’s obligations under the PPA, Buyer’s rights under the Option Agreement shall survive any Foreclosure Sale. A Subsequent Owner shall assume both the PPA and the Option Agreement, or neither, and may not assume only the PPA without assuming the Option Agreement.
1.10. Assignment of PPA by Collateral Agent. In connection with an exercise of remedies under the Financing Agreement or any related security documents, the Collateral Agent shall not assign the PPA without also assigning the Option Agreement therewith.
2. Payments under the PPA. Without limiting the rights of Buyer under the PPA, Buyer shall pay any amounts owed in the manner and when required under the PPA directly to the accounts specified below or otherwise designated by Collateral Agent 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. Seller hereby directs Buyer, and Buyer agrees, to make all payments and amounts Buyer is obligated to pay to Seller under 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: [_____________]
Collateral Agent 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 Selle r or Collateral Agent (or their successors and 376 of 662
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assigns) for making payments due or to become due under the PPA to Lender or for failure to direct such payments to Collateral Agent rather than Seller.
3. Acknowledgements; Representations and Warranties.
(a) Seller and Collateral Agent 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 Lende r Collateral Documents (the “Collateral”) and Collateral Agent acknowledges that it has not relied upon any such representations of Buyer.
Collateral Agent 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, Collateral Agent acknowledges that Buyer shall not have any contractual obligations to Collateral Agent, and Collateral Agent acknowledges that it has not relied upon any representations of Buyer in connection with its lending arrangements with Seller, other than the representations of Buyer set forth in this Consent and the representations of Buyer set forth in the estoppel certificate that Buyer will deliver pursuant to this Consent.
(c) Except in the event of Buyer’s breach of this Consent, Seller and Collateral Agent acknowledge that Buyer shall have no liability to Seller or Collateral Agent resulting from or related to this Consent, or for consenting to any future assignments of the Collateral or any interest of Seller or Collateral Agent therein.
(d) Seller and Collateral Agent 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 in accordance with Section 11.4 of the PPA.
(e) Each of Buyer, Seller and Collateral Agent represents and warrants that it is duly authorized to enter into and perform its obligations under this Consent. (f) Seller represents and warrants to Buyer that the rights of Buyer to exercise its cure rights and other rights and remedies hereunder, including to purchase the Facility in accordance with the provisions of Section 1.5 of this Consent, do not and will not conflict with the Financing Agreement, and are permitted by the Financing Agreement, the Lender Collateral Documents, and any related agreements and documents securing Seller’s performance under the Financing Agreement.
(g) Buyer agrees that any foreclosure by Collateral Agent on the membership interests in Borrower or Pledgor upon the occurrence of a default by Borrower under the Financing Agreement 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. Collateral Agent shall obtain Buyer’s consent (such consent not to be unreasonably withheld) prior to any transfer by Collateral Agent 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 377 of 662
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(provided, that if the Collateral Agent or an Affiliate of the Collateral Agent is the Subsequent Owner, then it shall not be obligated to meet the requirement set forth in clause (a)(ii)(B) of the definition of Qualified Transferee so long as the Collateral Agent or its applicable Affiliate transfers the Facility or the Assigned Interests to a Qualified Transferee within six (6) months following any foreclosure).
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 No Amendment of PPA. This Consent (in the form as attached to the PPA as of the Effective Date) shall not be deemed to be an amendment to the PPA.
4.3 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.
4.4 Amendment, Waiver. Neither this Consent nor any of the terms hereof may be terminated, amended, supplemented, waived or modified except by an instrument in writing signed by Buyer and Collateral Agent and after the initial funding by any Tax Equity Investor, such Tax Equity Investor.
4.5 Successors and Assigns. This Consent shall bind and benefit Buyer, Seller and Collateral Agent, and their respective successors and permitted assigns.
4.6 Attorney’s Fees. Seller shall reimburse Buyer for all actual and documented reasonable 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 Collateral Agent.
4.7 Representation by Counsel. Each of the Parties was represented by its respective legal counsel during the negotiation and execution of this Consent.
4.8 Estoppel Certificate. Buyer agrees to deliver to the Tax Equity Investors and the Collateral Agent a customary estoppel certificate substantially in the form of Exhibit D from time to time, including on the date of delivery of this Consent, in connection with the fundings by the Tax Equity Investors and in connection with the achievement of Commercial Operation of the Facility following receipt of a written request therefor from Seller. 378 of 662
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4.9 Notices. Any communications between the Parties or notices provided herein to be given shall be given to the following addresses:
If to Seller:
Milford Solar Phase II, LLC
c/o [_____________]
If to Buyer:
Southern California. Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Facsimile: (626) 793-9461
Telephone: (626) 793-9364
Attention: Executive Directo
r
If to Collateral Agent:
[_____________]
All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly gi ven (a) if delivered in person, (b) if sent by overnight delivery service, (c) if mailed by first class United States Mail, postage prepaid, registered or certified with return receipt reques ted, or (d) if sent by prepaid telegram or by facsimile. Any Party may change its address for notice hereunder by giving written notice of such change to the other Parties.
4.10 [Termination of Collateral Documents and Consent. Seller and Collateral Agent agree that upon the termination of the Lender Collateral Documents on the Term Conversion Date (as defined in the Recitals), the only remaining collateral security of the Collateral Agent securing the obligations of the Borrower under the Financing Agreement will be the membership interests in and any assets of the Pledgor and the Borrower, and there will be no remaining collateral security of the Collateral Agent in the Seller or its assets that secures the obligations of the Borrower under the Financing Agreement. Seller agrees to deliver notice of the occurrence of the Term Conversion Date to Buyer (with a copy to Collateral Agent) promptly but in no event more than 10 days after such Term Conversion Date. The Parties agree that, as of such date, any rights, duties or obligations arising hereunder shall terminate and no longer be applicable; provided, that Sections
1.9(a), 3, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, and 4.10 and the definition of “Facility Debt” in Section 1.4 shall survive the termination of this Consent.]5
4.11 [Tax Equity Investor Accession. Each of Buyer, Collateral Agent, Seller and the Tax Equity Investors hereby agree as follows:
(a) Effective as of (i) the date of the initial funding by any Tax Equity Investor, (ii) the execution by the Tax Equity Investor of an accession agreement to this Consent reasonably
5 NTD: These provisions to be included if applicable.
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acceptable to the other Parties hereto and (iii) the earlier to occur of (1) the date that the obligations under the Financing Agreement are repaid in full; and (2) the Term Conversion Date:
I. The rights of the Collateral Agent under Section 1 hereof and the payment direction in Section 2 hereof will terminate.
II. Buyer will not terminate the PPA or suspend performance of its services under the PPA on account of any Default (as defined under the PPA) of Seller thereunder, without written notice to the Tax Equity Investors and first providing to the Tax Equity Investors (i) thirty (30) days from the date notice of Default is delivered to the Tax Equity Investors to cure such Default if such Default is the failure to pay amounts to Buyer which are due and payable by Seller under th e PPA, or (ii) one forty-five (45) days from receipt of such notice, to cure such Default if the Default cannot be cured by the payment of money to Buyer.
(b) The address of the Tax Equity Investors for purposes of all notices and other communications shall be as set forth in the applicable accession agreement.] [Signature page follows]
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IN WITNESS WHEREOF, the Parties have caused this Consent and Estoppel Agreement to be duly executed and delivered as of the date first above written.
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
B y :
[__________]
President
Date:
Attest:
[__________]
Assistant Secretary
Milford Solar Phase II, LLC, a Utah limited liability company
B y :
Name: [_____________]
Title: [_____________]
[Collateral Agent]
B y :
Name: [_____________]
Title: [_____________]
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EXHIBIT A
to Consent and Estoppel Agreement
FORM OF FORECLOSURE NOTICE
[Letterhead of Collateral Agent]
[Insert date]
Via Certified Mail, Return Receipt Requested
Southern California Public Power Authority
1160 Nicole Court
Glendora, CA 91740
Attn: Executive Director
Re: []
Ladies and Gentlemen:
This notice is provided to you pursuant to the Consent and Agreement (“Consent”) dated as of ___________, 20__, among Southern California Public Power Authority (“Buyer”), __________________, as collateral agent (“Collateral Agent”) and Milford Solar Phase II, LLC (“Seller”). 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] 6% 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.]
6 NTD: Subject to applicable Financing Agreement.
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An Event of Default, as defined in the Financing Agreement, has occurred and is continuing. The Collateral Agent anticipates that it may 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,
[_______________________]
383 of 662
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EXHIBIT B
to Consent and Estoppel Agreement
FORM OF PURCHASE NOTICE
[Letterhead of SCPPA]
[Insert date]
Via Certified Mail, Return Receipt Requested
[_______________________]
[Address]
[City, State ZIP]
Attn: [___________]
Re:
Ladies and Gentlemen:
This notice is provided to you pursuant to the Consent and Agreement (“Consent”), dated as of __________, 20__, among Southern California Public Power Authority (“Buyer”), ____________, as collateral agent (“Collateral Agent”) and Milford Solar Phase II, LLC (“Seller”). This is a Purchase Notice, as defined in the Consent. Capitalized terms used and not defined herein have the respective meanings given in the Consent.
We have received your foreclosure Notice, dated [insert date of Foreclosure Notice]. By this Purchase Notice, we hereby notify Collateral Agent that we will exercise our option and purchase the Facility pursuant to our rights under Section 1.5(a) of the Consent no later than ninety (90) days from the date of the Foreclosure Notice, and upon consummation of such purchase, pay to Collateral Agent, for the account of the Collateral Agent, the Facility Debt.
Very truly yours,
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY
By:
[__________]
President
Date:
Attest:
[__________]
Assistant Secretary
384 of 662
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EXHIBIT C
to Consent and Estoppel Agreement
FORM OF PURCHASE NOTICE
[Letterhead of SCPPA]
[Insert date]
Via Certified Mail, Return Receipt Requested
[__________________]
[Address]
[City, State ZIP]
Attn: [___________]
Re:
Ladies and Gentlemen:
This notice is provided to you pursuant to the Consent and Agreement (“Consent”), dated as of _____________, 20__, among Southern California Public Power Authority (“Buyer”), ________, as collateral agent (“Collateral Agent”) and Milford Solar Phase II, LLC (“Seller”). Capitalized terms used herein and not defined herein have the respective meanings given in the Consent.
We have received your Foreclosure Notice, dated [insert date of Foreclosure Notice]. By this notice, we hereby notify Collateral Agent that we believe that the purchase of the Facility pursuant to Section 1.5(b) of the Consent will not take place within the ninety (90) day period following our receipt of such Foreclosure Notice. We will, within ten (10) days after the end of such ninety (90) day period, purchase from the Collateral Agent all of their right, title and interest in, to and under the Financing Agreement, related promissory notes, and Lender Collateral Documents, for a price equal to the Facility Debt.
Very truly yours,
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY
By:
[__________]
President
Date:
Attest:
[__________]
Assistant Secretary
385 of 662
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EXHIBIT D
to Consent and Estoppel Agreement
[FORM OF] PPA ESTOPPEL CERTIFICATE
[Date]7
Reference is made to that certain Power Purchase Agreement (the “Power Purchase Agreement”) dated as of [___], 2024 (the “PPA”), by and between the Southern California Public Power Authority, a public entity and joint powers agency formed and organized pursuant to the California Joint Exercise of Powers Act (California Government Code Section 6500, et seq. ) (“Buyer”; provided, that in no event shall the term “Buyer” refer to any of the members of Buyer, and the term “Buyer’s knowledge” as used herein shall refer only to the knowledge of persons at SCPPA, and not to the knowledge of anyone at any of the members of Buyer) and Milford Solar Phase II, LLC, a Utah limited liability company (“Seller”). Terms used herein but not defined herein have the same meanings as in the PPA.
Buyer hereby confirms and agrees as of the date hereof as follows:
1. The copy of the PPA, as amended, attached as Exhibit A, constitutes a true and complete copy of the PPA.
2. The PPA is in full force and effect and has not been modified or amended in any way [since [_______ __, 202_]], and constitutes the only agreement between Buyer and Seller other than that certain Consent and Estoppel Agreement dated as of [___________, 20__] and that certain Option Agreement dated as of [___], 2024.
3. Buyer has not transferred or assigned its interest in the PPA.
4. Buyer is not in default under the PPA nor has Buyer breached any of its representations, warranties, agreements or covenants under the PPA and, to Buyer’s knowledge, no facts or circumstances exist which, with the passage of time or the giving of notice nor both, would constitute a default or breach by Buyer under the PPA or that would give Seller the right to terminate the PPA. To Buyer’s knowledge, Seller is not in default under the PPA nor, to Buyer’s knowledge, has Seller breached any of its representations, warranties, agreements or covenants under the PPA and, to Buyer’s knowledge, no facts or circumstances exist which, with the passage of time or the giving of notice nor both, would constitute a default or breach by Seller under the PPA or that would allow Buyer to terminate the PPA.
5. All representations made by Buyer in the PPA were true and correct as of the effective date of the PPA and continue to be true and correct.
7 To be delivered on the date of delivery of the Consent and, upon the initial funding and upon the final funding under the Tax Equity transaction commensurate with COD. 386 of 662
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6. To Buyer’s knowledge, no event, act, circumstance or condition constituting an event of Force Majeure under the PPA has occurred and is continuing.
7. Seller has not claimed any amounts under the indemnification obligation of Buyer set forth in the PPA.
8. To Buyer’s knowledge, Buyer has no existing counterclaims, offsets or defenses against Seller under the PPA. Buyer has no present knowledge of any facts entitling Buyer to any material claim, counterclaim or offset against Seller in respect of the PPA.
9. All payments due and owing[, except for those under dispute as described in Schedule I hereto]
8, under the PPA by Buyer have been paid in full through the period ending on the date hereof.
10. [The Commercial Operation Date of the Facility occurred on [____], 202[__].
11. The Contract Capacity of the Project as of the Commercial Operation Date is [ ] MW.]
9 IN WITNESS WHEREOF, Buyer has caused this Certificate to be duly executed by its officer thereunto duly authorized as of the date first set forth above.
SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY
B y :
Name:
Title:
8 To include if applicable.
9 Bracketed language in 10 and 11 to be included in the Estoppel Certificate delivered at the final funding under the Tax Equity Transaction commensurate with COD.
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[Schedule I
SCHEDULE I TO [FORM OF] PPA ESTOPPEL CERTIFICATE]10
10 To include if applicable.
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EXHIBIT E
to Consent and Estoppel Agreement
[Seller to provide]
Qualified Operators
[_____________]
provided, however, that no Person listed above shall be a Qualified Operator if at the relevant time such Person is in active litigation adverse to Buyer or any Participating Member.
Moreover, this list is not exclusive and, subject to the foregoing proviso, other entities that meet the definition of Qualified Operator in the PPA shall be deemed to be Qualified Operators hereunder.
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APPENDIX P
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
BUYER’S SYSTEM PROTECTION DESIGN
The Facility shall be equipped with a distributed control system (“ DCS”) that will be able to throttle, ramp, turn-on, turn-off, and telemeter the total MW output. The DCS will use the DNP
3.0 and International Electrotechnical Commission (“ IEC”) 61850 communication protocols to interface with LADWP’s SCADA Remote Terminal Unit (“ RTU”). All control, metering, and relay systems shall be provided with DNP 3.0 and IEC 61850, as may be updated from time to time.
Seller shall provide weather stations including data storage with automatic archiving of data files necessary to validate irradiance calculations at th e Facility Site. Data storage capacity shall be sufficient to store 360 days of weather data.
Inverter/DCS Performance Criteria
A. Distributed Control System – The Facility Site shall have one master DCS at the 34.5 kV level controlling the inverters. The master DCS shall provide the capability of controlling the entire Facility’s output, and shall provide to the operators the ability to control the active power output of the Facility through a single setpoint. The DCS shall allow LADWP’s ECC to issue commands (single setpoint) for the options listed below.
B. Normal Startup – The master DCS shall provide the capability of starting the entire Facility to partial or full output (“Normal Startup”), and shall provide to the operators the ability to control Normal Startup of the entire Facility through a single command.
C. Normal Shutdown – The master DCS shall provide the capability of stopping the entire Facility from partial or full output (“Normal Shutdown”), and shall provide to the operators the ability to control Normal Shutdown of the entire Facility through a single command.
D. Emergency Stop – The DCS shall be capable of operating in two stop modes (each, an “Emergency Stop”), as necessary (automatic Emergency Stop and directed Emergency Stop). In automatic Emergency Stop mode, the master DCS shall meet any shutdown requirements specified in applicable NERC Reliability Standards, including as of the Effective Date NERC Reliability Standard PRC-024, and shall be capable of shutting down in full compliance with UL1741, and with applicable NERC Reliability Standards, in either mode as necessary for LADWP 390 of 662
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operations. In directed Emergency Stop mode, the master DCS shall provide the capability of stopping the entire Facility from partial or full output through a single command.
E. Black Start – The master DCS’s capability of starting the entire Facility from a Black Start condition, even when sufficient solar irradiance is available to the solar collectors, is NOT required. However, the Facility shall maintain communication and control power and capability with LADWP’s ECC whether solar irradiance is available or not.
F. Solar Curtailment – The master DCS shall provide the capability to curtail solar photovoltaic power generation to a specified percentage of the nominal power rating. Such curtailment of a Participating Member shall be effected by the control of the solar photovoltaic inverters of such Participating Member.
G. Voltage Ride Through – All systems supplied shall meet the Low Voltage Fault Ride Through (“LVRT”) requirements and any over or under voltage capabilities specified in the applicable NERC Reliability Standards, including as of the Effective Date NERC Reliability Standard PRC- 024, and shall be capable of operating in full compliance with UL1741, and with applicable NERC Reliability Standards applicable to LVRT requirements, in either mode as necessary for LADWP operations.
H. Fault Ride Through - All systems supplied under this Agreement shall meet any fault ride through requirements specified in applicable NERC Reliability Standards, including as of the Effective Date NERC Reliability Standard PRC-024, and shall be capable of operating in full compliance with UL1741, and with applicable NERC Reliability Standards relating to fault ride through requirements, in either mode as necessary for LADWP operations.
I. Frequency Ride Through - All systems supplied shall meet the over and under frequency capabilities specified in applicable NERC Reliability Standards, including as of the Effective Date NERC Reliability Standard PRC-024, and shall be capable of operating in full compliance with UL1741, and with applicable NERC Reliability Standards relating to over and under frequency capabilities, in either mode as necessary for LADWP operations.
J. Reactive Power - The inverters shall have the capability to supply and absorb reactive power over the complete real power range. The DCS shall be able to control inverter reactive power dispatch through a single setpoint in each of the following three modes: Power Factor Control Mode, Voltage Control Mode, and Reactive Power Control Mode. In Power Factor Control Mode, the DCS shall provide the operators the ability to control the Facility’s reactive power dispatch within the power factor range of 0.95 lead/lag at the Point of Interconnection (as specified in the Generator Interconnection Agreement). In Reactive Power Control mode, the DCS shall provide the operators the ability to control the Facility’s reactive power dispatch at the Point of Interconnection independently of active power production. In Voltage Control Mode, the DCS shall provide the operators the ability to control the voltage at the Point of Interconnection within a specified range by automatically controlling reactive power dispatch dependent on active power production.
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APPENDIX Q
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
BUYER’S BUSINESS POLICIES AND CERTIFICATION FORMS
[See attached.]
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Responsibility Questionnaire (rev 04/22/15) 1 of 9
NOTICE: Responses to this Questionnaire will not be made available to the public for review.
This is not a public document. [ CPCC §20101(a) ]
CITY OF LOS ANGELES
RESPONSIBILITY QUESTIONNAIRE
RESPONSES TO THE QUESTIONS CONTAINED IN THIS QUESTIONNAIRE MUST BE SUBMITTED ON THIS FORM. In responding to the Questionnaire, neither the City form, nor any of the questions contained therein, may be retyped, recreated, modified, altered, or changed in any way, in whole or in part. Bidders or Proposers that submit responses on a form that has been retyped, recreated, modified, altered, or changed in any way shall be deemed non-responsive.
The signatory of this Questionnaire guarantees the trut h and accuracy of all statements and answers to the questions herein. Failure to complete and return this questionnaire, any false statements, or failure to answer (a) question(s) when required, may render the bid/proposal non-re sponsive. All responses must be typewritten or printed in ink. Where an explanation is required or where additional space is needed to explain an answer, use the Responsibility Questionnaire Attachments. Submit the completed form and all attachments to the awarding authority. Retain a copy of this completed form for future reference. Contractors must submit updated information to the awarding authority if changes have occurred that would render any of the responses inaccurate in any way.
Updates must be submitted to the awarding authority within 30 days of the change(s).
A. INFORMATION
____________________________________________________________________________________________ Bid Number and Project Title
BIDDER/CONTRACTOR INFORMATION
____________________
Bidder/Proposer Business Name Contractor’s License Number ____________________________________________________________________________________________ Street Address City State Zip
____________________________________________________________________________________________ Contact Person, Title Phone Fax
CERTIFICATION UNDER PENALTY OF PERJURY
I certify under penalty of perjury under the laws of the State of Californi a that I have read and understand the questions contained in this questionnaire and the responses contained herein and on all Attachments. I further certify that I have provided full and complete answers to each question, and that all information provided in response to this Questionnaire is true and accurate to the best of my knowledge and belief.
The Questionnaire being submitted is: (check one)
An initial submission of a completed Questionnaire.
An update of a prior Questionnaire dated ______/_ _____/______. A copy of the prior Questionnaire and newly updated information are attached.
No change. There has been no change to any of the responses since the last Responsibility Questionnaire dated ____/______/____ was submitted. A copy of the last Responsibility Questionnaire is attached.
________________________________________________________________________________________ Print Name, Title Signature Date
TOTAL NUMBER OF PAGES SUBMITTED, INCLUDING ALL ATTACHMENTS: ___________ 393 of 662
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B. BUSINESS ORGANIZATION/STRUCTURE
Indicate the organizational structure of your firm. “Firm” includes a sole proprietorship, corporation, joint venture, consortium, association, or any combination thereof.
Ƒ Corporation: Date incorporated: _____/_____/_____ State of incorporation: ____________ List the corporation’s current officers.
President:
Vice President:
Secretary:
Treasurer:
Ƒ Check the box only if your firm is a publicly traded corporation.
Ƒ Limited Liability Company: Date of formation: _____/_____/_____ State of formation: ____________
Ƒ Partnership: Date formed: _____/_____/_____ State of formation: ____________ List all partners in your firm. Use Attachment A if more space is needed.
Ƒ Sole Proprietorship: Date started: _____/_____/_____ List any firm(s) that you have been associated with as an owner, partner, or officer for the last five years.
Use Attachment A if more space is needed. Do not include ownership of stock in a publicly traded company in your response to this question.
Ƒ Joint Venture: Date formed: _____/_____/_____
List: (1) each firm that is a member of the joint venture and (2) the percentage of ownership the firm will have in the joint venture. Use Attachment A if more space is needed. Each member of the Joint Venture must complete a separate Questionnaire for the Joint Venture’s submission to be considered as responsive to the invitation.
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C. OWNERSHIP AND NAME CHANGES
1. Has any of the firm’s owners, partners, or officers operated a similar business in the past five years? Ƒ Yes Ƒ No
If Yes, list on Attachment A the names and addresses of all such businesses, and the person who operated the business. Include information about a similar business only if an owner, partner or officer of your firm holds a similar position in another firm.
2. Has the firm changed names in the past five years?
Ƒ Yes Ƒ No
If Yes, list on Attachment A all prior names, addresses, and the dates they were used. Explain the reason for each name change in the last five years.
Bidders/Contractors must continue on to Section D and answer all remaining questions contained in this Questionnaire.
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D. FINANCIAL RESOURCES AND RESPONSIBILITY
3. Is your firm now, or has it ever been at any time in the last five years, the debtor in a bankruptcy case? Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance.
4. Is your company in the process of, or in negotiations toward, being sold? Ƒ Yes Ƒ No
If Yes, explain the circumstances on Attachment B.
5. In the past five years, has any bonding company made any payments to satisfy any claims made against a bond issued on your firm’s behalf?
Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance.
E. PERFORMANCE HISTORY
6. How many years has your firm been in business? _________ Years.
7. List on Attachment B all contracts your firm has had with any private or governmental entity (other than the City of Los Angeles) over the last five years that are similar to the work to be performed on the contract for which you are bidding or proposing. For each contract listed in response to this question, include: (a) entity name; (b) purpose of contract; (c) total cost; (d) starting date; and (e) ending date.
Ƒ Check the box if you have not had any similar contracts in the last five years
8. In the past five years, has your firm ever had a contract, whether with a governmental entity or with a private individual or entity, terminated prior to completion of the contract? Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance.
9. In the past five years, has your firm been denied an award of a contract based on a finding by a governmental entity that your company was not a responsible bidder or contractor? Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance.
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F. DISPUTES
10. In the past five years, has your firm been a defendant in any employment-related litigation brought by an employee, which has been adjudicated in favor of the employee(s)? Ƒ Yes Ƒ No
If Yes, explain the circumstances surrounding each instance on Attachment B. You must include the following in your response: the name of the plaintiffs in each court case, the specific causes of action in each case; the date each case was filed; and the disposition/current status of each case.
11. In the past five years, has your firm been assessed liquidated damages on a contract? Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance and identify all such projects, the amount assessed and paid, and the name and address of the project owner.
G. COMPLIANCE
12. In the past five years, has your firm or any of its owners, or partners been cited, assessed any penalties, or been found to have violated any laws, rules, or regulations enforced or administered, by any of the governmental entities listed on Attachment C (Page 9)? For this question, the term “owner” does not include owners of stock in your firm if your firm is a publicly traded corporation.
Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance, including the entity that was involved, the dates of such instances, and the outcome.
13. In the past five years, has your firm, any of its owners, partners, or officers, ever been penalized or given a letter of warning by the City of Los Angeles for failing to obtain authorization from the City for the substitution of a Minority-owned (MBE), Women-owned (WBE), or Other (OBE) business enterprise? Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance in the last five years.
H. BUSINESS INTEGRITY
14. For questions (a), (b), and (c) below, check Yes if the situation applies to your firm. For these questions, the term “your firm” includes any owners, or partners in the firm. The term “owner” does not include owners of stock in your firm if the firm is a publicly traded corporation. If you check Yes to any of the three questions below, explain on Attachment B the circumstances surrounding each instance.
(a) Is a governmental entity or public utility currently investigating your firm for making (a) false claim(s) or material misrepresentation(s)?
Ƒ Yes Ƒ No
(b) In the past five years, has a governmental entity or public utility alleged or determined that your firm made (a) false claim(s) or material misrepresentation(s)? Ƒ Yes Ƒ No
(c) In the past five years, has your firm been convicted or found liable in a civil suit for, making (a) false claim(s) or material misrepresentation(s) to any governmental entity or public utility? 397 of 662
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Ƒ Yes Ƒ No
15. In the past five years, has your firm or any of its owners been convicted of a crime or been found liable in a civil suit involving the bidding of a government contract, the awarding of a government contract, the performance of a government contract, or the crime of theft, fraud, embezzlement, perjury or bribery? For this question, the term “owner” does not include those who own stock in a publicly traded corporation.
Ƒ Yes Ƒ No
If Yes, explain on Attachment B the circumstances surrounding each instance.
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ATTACHMENT A FOR SECTIONS A THROUGH C
Where additional information or an explanation is required, use the space below to provide the information or explanation. Information submitted on this sheet must be typewritten or printed in ink. Indicate the question for which you are submitting additional information.
Page _____
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ATTACHMENT B FOR SECTIONS D THROUGH H
Where additional information or an explanation is required, use the space below to provide the information or explanation. Information submitted on this sheet must be typewritten or printed in ink. Indicate the question for which you are submitting additional information.
Page _____
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ATTACHMENT C: GOVERNMENTAL ENTITIES FOR SECTION G, QUESTION NO. 12
Check Yes in response to Question No. 12 if your firm or any of its owners, partners or officers, have ever been cited, assessed any penalties, or found to have violated any laws, rules, or regulations enforced or administered, by any of the governmental entities listed below (or any of its subdivisions), including but not limited to those examples specified below. The term “owner” does not include owners of stock in your firm if your firm is a publicly traded corporation. If you answered Yes, provide an explanation on Attachment B of the circumstances surrounding each instance, including the entity involved, the dates of such instances, and the outcome.
FEDERAL ENTITIES
Federal Department of Labor
x American with Disabilities Act
x Immigration Reform and Control Act
x Family Medical Leave Act
x Fair Labor Standards Act
x Davis-Bacon and laws covering wage requirements
for federal government contract workers
x Migrant and Seasonal Agricultural Workers
Protection Act
x Immigration and Naturalization Act
x Occupational Safety and Health Act
x anti-discrimination provisions applicable to
government contractors and subcontractors
x whistleblower protection laws
Federal Department of Justice
x Civil Rights Act
x American with Disabilities Act
x Immigration Reform and Control Act of 1986
x bankruptcy fraud and abuse
Federal Department of Housing and Urban
Development (HUD)
x anti-discrimination provisions in federally
subsidized/assisted/sponsored housing programs
x prevailing wage requirements applicable to HUD
related programs
Federal Environmental Protection Agency
x Environmental Protection Act
National Labor Relations Board
x National Labor Relations Act
Federal Equal Employment Opportunity
Commission
x Civil Rights Act
x Equal Pay Act
x Age Discrimination in Employment Act
x Rehabilitation Act
x Americans with Disabilities Act
STATE ENTITIES
California’s Department of Industrial Relations
x wage and labor standards, and licensing and
registration
x occupational safety and health standards
x workers’ compensation self insurance plans
x Workers’ Compensation Act
x wage, hour, and working standards for apprentices
x any provision of the California Labor Code
California’s Department of Fair Employment and
Housing
x California Fair Employment and Housing Act
x Unruh Civil Rights Act
x Ralph Civil Rights Act
California Department of Consumer Affairs
x licensing, registration, and certification
requirements
x occupational licensing requirements administered
and/or enforced by any of the Department’s
boards, including the Contractors’ State Licensing
Board
California’s Department of Justice
LOCAL ENTITIES
City of Los Angeles or any of its subdivisions for
violations of any law, ordinance, code, rule, or
regulation administered and/or enforced by the City,
including any letters of warning or sanctions issued by the City of Los Angeles for an unauthorized substitution of subcontractors, or unauthorized reductions in dollar amounts subcontracted.
OTHERS
Any other federal, state, local governmental entity
for violation of any other federal, state, or local law or regulation relating to wages, labor, or other terms and conditions of employment.
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IRAN CONTRACTING ACT OF 2010 COMPLIANCE AFFIDAVIT
(California Public Contract Code Sections 2200-2208)
The California Legislature adopted the Iran Contracting Act of 2010 to respond to policies of Iran in a uniform fashion (PCC § 2201(q)). The Iran Contracting Act prohibits bidders engaged in investment activities in Iran from bidding on, submitting proposals for, or entering into or renewing contracts with public entities for goods and services of one million dollars ($1,000,000) or more (PCC § 2203(a)). A bidder who “engages in investment activities in Iran” is defined as either:
1. A bidder providing goods or services of twenty million dollars ($20,000,000) or more in the energy sector of Iran, including provision of oil or liquefied natural gas tankers, or products used to construct or maintain pipelines used to transport oil or liquefied natural gas, for the energy sector of Iran; or
2. A bidder that is a financial institution (as that term is defined in 50 U.S.C. § 1701) that extends twenty million dollars ($20,000,000) or more in credit to another person, for 45 days or more, if that person will use the credit to provide goods or services in the energy sector in Iran and is identified on a list created by the California Department of General Services (DGS) pursuant to PCC § 2203(b) as a person engaging in the investment activities in Iran.
The bidder shall certify that at the time of submitting a bid for new contract or renewal of an existing contract, he or she is not identified on the DGS list of ineligible businesses or persons and that the bidder is not engaged in investment activities in Iran in violation of the Iran Contracting Act of 2010.
California law establishes penalties for providing false certifications, including civil penalties equal to the greater of $250,000 or twice the amount of the contract for which the false certification was made; contract termination; and three-year ineligibility to bid on contracts (PCC § 2205).
To comply with the Iran Contracting Act of 2010, the bidder shall complete and sign ONE of the options shown below.
OPTION #1: CERTIFICATION
I, the official named below, certify that I am duly authorized to execute this certification on behalf of the bidder or financial institution identified below, and that the bidder or financial institution identified below is not on the current DGS list of persons engaged in investment activities in Iran and is not a financial institution extending twenty million dollars ($20,000,000) or more in credit to another person or vendor, for 45 days or more, if that other person or vendor will use the credit to provide goods or services in the energy sector in Iran and is identified on the current DSG list of persons engaged in investment activities in Iran.
Name of Bidder/Financial Institution (Printed): _____________________________________________________ Signed by: _______________________________________________________________ (Authorized Signature) _____________________________________________________________________(Printed Name) ______________________________________________________________(Title of Person Signing) OPTION #2: EXEMPTION
Pursuant to PCC § 2203(c) and (d), a public entity may permit a bidder or financial institution engaged in investment activities in Iran, on a case-by-case basis, to be eligible for, or to bid on, submit a proposal for, or enter into, or renew, a contract for goods and services. If the bidder or financial institution identified below has obtained an exemption from the certification requirement under the Iran Contracting Act of 2010, the bidder or financial institution shall complete and sign below and attach documentation demonstrating the exemption approval.
Name of Bidder/Financial Institution (Printed): _____________________________________________________ Signed by: _______________________________________________________________ (Authorized Signature) _____________________________________________________________________(Printed Name) ______________________________________________________________(Title of Person Signing) 404 of 662
CITY OF LOS ANGELES
Department of General Services
Office of the Purchasing Agent
(213) 928-9525
CONTRACTOR CODE OF CONDUCT
The City of Los Angeles has long supported the premise that employers should fairly compensate employees, that the health and safety of workers should be protected, and that no form of discrimination or abuse should be tolerated.
Experience indicates that laws and regulations designed to safeguard basic tenets of ethical business practices are disregarded in some workplaces, commonly referred to as “sweatshops.”
In its role as a market participant that procures equipment, goods, materials and supplies, the City seeks to protect its interests by assuring that the integrity of the City’s procurement process is not undermined by contractors who engage in sweatshop practices and other employment practices abhorrent to the City. When the City inadvertently contracts with these contractors, the City’s ethical contractors are placed at a distinct competitive disadvantage. Many times ethical contractors are underbid by unscrupulous contractors in competition for City contracts. These ethical contractors may be dissuaded from participating in future procurement contracts.
The City’s proprietary contracting interests are served by doing business with contractors who make a good faith effort to ensure that they and their subcontractors shun sweatshop practices and adhere to workplace and wage laws.
Seeking to protect these municipal interests, the City requires that all contractors subject to the Sweat-free Procurement Ordinance certify that they and, to the best of their knowledge, their subcontractors will comply with the City’s Contractor Code of Conduct and to promise the following:
(a) To comply with all applicable wage, health, labor, environmental and safety laws, legal guarantees of freedom of association, building and fire codes, and laws and ordinances relating to workplace and employment discrimination.
(b) To comply with all human and labor rights and labor obligations that are imposed by treaty or law on the country in which the equipment, supplies, goods or materials are made or assembled, including but not limited to abusive forms of child labor, slave labor, convict or forced labor, or sweatshop labor. (c) To take good faith measures to ensure, to the best of the contractor’s knowledge, that the contractor’s subcontractors also comply with the City’s Contractor Code of Conduct. (d) To pay employees working on contracts for garments, uniforms, foot apparel, and related accessories a procurement living wage, meaning for domestic manufacturers a base hourly wage adjusted annually to the amount required to produce, for 2,080 hours worked, an annual income equal to or greater than the U.S. Department of Health and Human Services most recent poverty guideline for a family of three plus an additional 20 percent of the wage level paid either as hourly wages or health benefits. For manufacturing operations in countries other than the United States, a procurement living wage which is comparable to the wage for domestic manufacturers as defined above, adjusted to reflect the country’s level of economic development by using the World Bank’s Gross National Income Per Capita Purchasing Power index.
CERTIFICATION UNDER PENALTY OF PERJURY
I certify under penalty of perjury under the laws of the State of California that I have read and understood the City’s Contractor Code of Conduct and agree to comply with its requirements.
__________________________________________________________________________________ Signature of Officer or Authorized Representative Date
__________________________________________________________________________________ Print Name and Title of Authorized Representative
__________________________________________________________________________________ Print Company Name, Address and Phone Number
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APPENDIX R-1
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
Milford Solar Phase II, LLC
SINGLE LINE DIAGRAM
[See attached.]
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APPENDIX R-2
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
METERING DIAGRAM
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APPENDIX S
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
Milford Solar Phase II, LLC
PMU REQUIREMENTS
I. LADWP Compliance Responsibilities
As Planning Coordinator and Transmission Operator registered with NERC, LADWP shall demonstrate compliance with NERC Reliability Standard MOD-033-2, and any successor NERC Reliability Standard. As Seller’s Planning Coordinator, LADWP does not expect Seller to submit any compliance documentation for MOD-033-2 to NERC or WECC, however, Seller shall cooperate to enable LADWP to demonstrate compliance with MOD-033-2. In particular, as Seller’s Planning Coordinator, LADWP requires the phasor measurement unit (“ PMU”) data specified below in order to continue planning for the Project Site and to perform data validation in accordance with NERC Reliability Standard MOD-033-2 requirement R1, as such requirement may be amended from time to time subject to FERC approval.
II. Compliance under Agreement
LADWP's Transmission Analysis and Regional Planning (“Transmission Planning”) has deemed necessary the collection of PMU data, both from sources at LADWP sites and at sites of projects for which LADWP has power purchase agreements, to adequately perform data validation per NERC Reliability Standard MOD-033-2 requirement R1, as such requirement may be amended from time to time subject to FERC approval. LADWP’s Transmission Planning has identified the Project Site as a site required to have PMU data.
a. PMU Location
To ensure the availability of needed PMU data for LADWP's Transmission Planning to perform adequate data validation per NERC Reliability Standard MOD-033-2 requirement R1, as such requirement may be amended from time to time subject to FERC approval, Seller shall take the necessary steps to ensure that adequate PMU data is available for the location specified by LADWP's Transmission Planning. This includes the installation of PMU equipment if there is no PMU currently installed at the specified location. This also includes modifying existing PMUs to satisfy LADWP’s Transmission Planning’s validation requirements. If adequate PMU data exists for the location specified by LADWP’s Transmission Planning, then Seller does not need to install additional PMUs.
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b. PMU Technical Requirements
The provided PMU data shall, at minimum, be time-synchronized and include 30 samples per second of the positive sequence data (including voltage, real and reactive power flow, frequency, phase angle).
c. Communications
Seller shall coordinate with LADWP to ensure the needed communications infrastructure exists to continuously provide PMU data to LADWP’s designated server. So long as PMU communications with LADWP functions correctly, Seller shall not be required to archive PMU data on-site. Rather, Seller shall continuously provide PMU data to LADWP’s designated server. However, if the PMU fails to send data to LADWP’s designated server, Seller shall archive the PMU data for the duration of the failure and provide the data to LADWP.
d. Maintenance Requirements
Seller shall perform the necessary maintenance, within reason, to ensure that PMU data is continuously provided to LADWP. In the event of a failure of PMU recording or communications capability, Seller shall complete the following steps:
1. Within 1 Business Day following discovery of failure, notify LADWP’s Transmission Planning of the failure.
2. Within 4 Business Days following discovery of failure:
a. Provide LADWP’s Transmission Planning with a corrective action plan (“CAP”) to restore the PMU’s recording and communications capability within the timeframes for proposed CAP completion determined in items (i)-(v) below:
i. For CAPs consisting of PMU replacement for which a spare is available: within 7 Business Days following discovery of failure;
ii. For CAPs consisting of PMU replacement for which a spare is not available: within 10 Business Days of discovery of failure;
iii. For CAPs consisting of CVT replacement: within 10 calendar days following discovery of failure;
iv. For CAPs addressing communications failure: within 5 Business Days following discovery of failure;
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v. For CAPs addressing other issues not addressed above: within 10 Business Days following discovery of failure.
3. Within the timeframe for initial proposed CAP completion date determined in Step 2.a.:
a. Restore the PMU’s recording and communications capability.
b. If, within reasonable effort, it is not possible to restore the PMU’s recording and communications capability within the timeframe specified above, then Seller shall provide an updated CAP within 3 Business Days following the initial proposed CAP completion date and obtain LADWP’s agreement on the updated plan.
e. Compliance Documentation
Seller shall maintain the necessary information to provide, upon request by LADWP, the following:
1. Confirmation of whether the PMU equipment has been running and providing data for the timeframe in question.
2. If there have been outages, a list of the outage dates within the timeframe in question, as well as: cause of outages, duration of outages, and corrective actions taken.
f. Financial Liability for a Compliance Violation
Seller shall be financially liable for any failure to provide regulatory data, per Prudent Utility Practices, to the extent such failure (i) causes LADWP to pay penalties to FERC, NERC, or WECC and (ii) was due to Seller’s act or omission.
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g. LADWP Points of Contact
Transmission Planning and Contacts
Manager
Faranak Sarbaz
(213) 367-1265
[email protected]
Regulatory, Standards and Compliance Group
Assistant Supervisor
Sangeetha Losari
(213) 367-2315
[email protected]
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APPENDIX T
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
PRELIMINARY DRAFT FORM OF INVOICE
In accordance with Section 11.1(g), below are non-binding preliminary draft forms of invoices to be used by the Parties for monthly financial settlements under Article 11 and the Parties shall finalize a single final form for use in accordance with Section 11.1(g). All information in the form invoices below is preliminary and indicative and for form only. Other provisions of the Agreement shall control in the event of any conflict or inconsistency with this preliminary draft form of invoice.
[See next page]
413 of 662
From:
Milford Solar Phase II, LLC
C/O (Blank)
(Address)
(Address)
To:
Attn: Accounting Division - Accounts Payable Section - Supervisor of Accounts Payable P.O. Box 51211
Room 424 JFB
Los Angeles, CA 90051-5511
Attn: Accounting Division - Accounts Payable Section - Supervisor of Accounts Payable Invoice Information:
Invoice Number: 1
Invoice issue Date: 1-Dec-26
Billing Period Begin: 1-Nov-26
Billing Period End: 30-Nov-26
Payment Due Date: 30-Jan-27
COD Date: 8-Dec-26
Generating Facility: Milford Solar Phase II (Address)
LADWP Contracts: Milford Solar Phase II, PSA, LADWP No. BP 24-002 Milford Solar Phase II, AA, LADWP No. BP 24-003
DESRI Charge Code Description Energy (MWh) Rate ($/MWh) Amount ($) 100 GROSS Energy Generated 0
Energy Loss (ancillary/line loss etc.) 0
NET Delivered Energy -1 37.75 $ (37.75) $
Test Energy 0 18.88 $ - $
102 Energy Curtailed 0 -$ - $
(37.75)$
Energy Participant's Breakdown:
Current Month -1 Glendale: 8.33%
Year-to-Date 172,569 Burbank: 13.33%
LADWP: 78.34%
SCPPA (Total) 100.00%
Current Month -
Year-to-Date 7,703
Payments Information:
Due 60 days after receipt of invoice by wire transfer to the following account:
Bank: (Fill IN)
ABA Number: (Fill IN)
Account Number: (Fill IN)
Account Name: Milford Solar Phase II, LLC
Milford Solar Phase II Contact: (Fill IN)
Title: (Fill IN)
Email: (Fill IN)
Phone: (Fill IN)
Total Due:
Current Month Billing Calculation
Milford Solar Phase II Solar Project
12/ 2026 - Energy Invoice
Curtailed Energy (MWh)
Delivered Energy (MWh)
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II Project
Attestation
Jan-26 35,539
Feb-26 37,677
Mar-26 42,792
Apr-26 56,561
May-26
Jun-26
Jul-26
Aug-26
Sep-26
Oct-26
Nov-26
Dec-26
Year-to-Date 172,569
mental Attribute Attestation and Bill of Sale
"Seller" (Milford Solar Phase II LLC) hereby confirms to comply with Article VIII - Environmental Attributes; EPS and RPS Compliance of the Power Purchase Agreement (PPA) and delivers to the "Buyer" (Southern California Public Power Authority) the Environmental Attributes. The "Seller" also confirms that the "Seller" has uploaded Environmental Attributes to WREGIS System (" WREGIS Certificates") as shown below:
Facility Information:
Facility Name: MilfordSolarPhaseII
GenerationType: Solar
GPSCoordinates: (Fillin)
Capacity(MW): 300
CommercialOperationDate: 8ͲDecͲ26
CECReg.No. (Fill in)
Q.F.IDNo. (Fillin)
Dates: REC(inMWh)TransferredorToͲBeͲTransferred
Period REC(inMWh)
JanͲ26 35,539
FebͲ26 37,677
MarͲ26 42,792
AprͲ26 56,561
MayͲ26 -
JunͲ26 -
JulͲ26 -
AugͲ26 -
SepͲ26 -
OctͲ26 -
NovͲ26 -
DecͲ26 -
TOTAL for 2026 172,569
** REC is calculated per "Gross Energy", generated at plant's bus-bar.
REC = Renewable Energy Credit as defined in the Power Purchase Agreement.
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 all of the 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 iv) Seller owns the Facility and each of the Environmental Attributes and Environmental Attribute Reporting Rights associated with the generation of the indicated Energy of delivery to the grid have been generated and sold by the Facility.
This serves as a bill of sale,
Contact Person: (FILL IN) Tel:
RECs Delivered (MWh)
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ReadTimeHour Date Month TotalKWhReceived
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U-1
APPENDIX U
TO THE
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
MILFORD SOLAR PHASE II, LLC
LADWP METERING POLICY
[See attached.]
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LLADWP BES Meter Policy
Version 1.0
May 1, 2020