Long-Term Layoff Agreement
:
By and Among
-
the
Transmission Agency of Northern California
and certain
of its Members
namely
The City of Palo Alto
The City of Roseville
The Modesto Irrigation District
The Turlock Irrigation District
and
The Sacramento Municipal Utility District
EXECUTION ORIGINAL
Approved January 28, 2009
TABLE OF CONTENTS
RECITALS 1
AGREEMENT. .3
Section 1. Effective Date. ..3
Section 2. Term .....3
Section 3. COTP Layoffs. ..3
a. Layoff of ROSEVILLE's COTP Interests, Rights, and
Obligations.. .4
Return of ROSEVILLE's Interests, Rights, and Obligations. ..5 c. Layoff of PALO ALTO's COTP Interests, Rights, and
Obligations.. ..5
d. Return of PALO ALTO's Interests, Rights, and Obligations. ..6 e. Project Agreement No. 3 Appendix C .7
f. Billings and Payments... .8
Additions, Betterments, and Replacements. ...9
h. Default .13
i. Voting Rights .14
Section 4. SOT Layoff .15
a. Layoff of ROSEVILLE's SOT Interests, Rights, and
Obligations... .15
b. Return of ROSEVILLE's Interests, Rights, and Obligations .16 C. SOT Agreement Appendix B-2 16
d. Billings and Payments….... 17
e. Increases in SOT Allocation, Interests, or Obligations 18 f. Default .18
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...19
Section 5. No Assignment Without Consent.
Section 6. Long-Term Layoff to Third Parties Not an Assignment .20 .21
Section 7. Dispute Resolution
.21
a. Negotiation..
.22
b. Mediation
.22
c. Additional Rights...
.23
Section 8. Attorney Fees
.23
Section 9. California Law...
.23
Section 10. Integrated Agreement..
..24
Section 11. No Third Party Beneficiaries
...24
Section 12. TANC Liability..
.24
Section 13. Notices
..25
Section 14. Severability.
Section 15. Discharge of Obligations.. .25
.26
Section 16. Modifications
.......L......
ii
EXECUTION ORIGINAL
Approved January 28, 2009
This Long-Term Layoff Agreement ("Agreement") is entered into by and among the Transmission Agency of Northern California, a California public entity and joint powers agency ("TANC"), and certain of its members, namely the City of Palo Alto, a California charter city and municipal corporation ("PALO ALTO"), the City of Roseville, a California charter city and municipal corporation ("ROSEVILLE"), the Modesto Irrigation District, a California irrigation district ("MODESTO"), the Turlock Irrigation District, a California irrigation district ("TURLOCK"), and the Sacramento Municipal Utility District, a California municipal utility district ("SMUD"), referred to as "Party" or "Parties" in this Agreement, as of the Effective Date, defined in section 1 of this Agreement, with regard to the following
RECITALS:
A. ROSEVILLE, PALO ALTO, MODESTO, TURLOCK, and SMUD are each Participants in and parties to TANC Project Agreement No. 3, entered into as of March 1, 1990.
B. Pursuant to section 7.1 of TANC Project Agreement No. 3, ROSEVILLE and PALO ALTO each desire to make their entitlement to TAN's Transfer Capability on the California-Oregon Transmission Project (COTP), in their respective Participation Percentages, available to a Participant (hereinafter "layoff) in accordance with the terms and conditions relating to layoffs by 1 EXECUTION ORIGINAL
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• !
Participants under the Intertie Agreements, under TANC's Long-Term Layoff Procedures, and this Agreement.
C. MODESTO, TURLOCK and SMUD are willing to accept the PALO ALTO and ROSEVILLE Participation Percentages of TAN's entitlement to Transfer Capability on the COTP.
D. ROSEVILLE, TURLOCK and SMUD are each SOT Members and parties to the South of Tesla Agreement (SOT Agreement) between TANC and its Members, dated as of February 14, 1993.
E. ROSEVILLE desires to voluntarily transfer its SOT Allocation of TANC's entitlement to firm bidirectional Tesla-Midway Transmission Service from PG&E as a Long-Term Reallocation pursuant to section 4 of the SOT Agreement and in accordance with this Agreement.
TURLOCK and SMUD are willing to accept the ROSEVILLE SOT Allocation of TAN's entitlement to Tesla-Midway Transmission Service.
NOW THEREFORE, in consideration of the premises described in the recitals, and in consideration of the terms, covenants, and conditions that are set out below, the Parties have entered into this
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AGREEMENT:
Section 1. Effective Date.
This Agreement shall become effective and enforceable on its effective date, which date shall commence at 0001 hours Pacific Prevailing Time on the first day of the month following the due execution and delivery of this Agreement to TANC (hereinafter "Effective Date").
Section 2. Term.
The term of this Agreement shall be fifteen (15) years commencing on the Effective Date and terminating at 0000 hours Pacific Prevailing Time on the day before the 15th anniversary of the Effective Date, unless the Parties mutually agree in writing to extend the term of the Agreement for another five (5) years (hereinafter "Term").
Section 3. COTP Layoffs.
This section 3 does not apply to or affect any provision of section 4, SOT Layoffs, of this Agreement. Section 4 shall not be construed with reference to this section 3. Section 3 is intended to stand alone. Section 3 and section 4 are included in this single Agreement to make the administration, management, and recordkeeping of layoffs under the TANC programs efficient and economic. Terms in section 3 of 3 EXECUTION ORIGINAL
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this Agreement that begin with capitalized letters are defined in TAN Project Agreement No. 3, unless otherwise specifically defined in this Agreement.
Layoff of ROSEVILLE's COIP Interests, Rights, and Obligations.
Except as otherwise set forth in this Agreement, on the Effective Date, and for the Term of this Agreement, ROSEVILLE hereby lays off and relinquishes to TANC all of ROSEVILLE's use of its interests, rights, and obligations under TANC Project Agreement No. 3, except its interests, rights and obligations in the event of a default pursuant to section 6 of Project Agreement No. 3 and this Agreement, associated with ROSEVILLE's 2.1119 Participation Percentage in TANC's entitlement to Transfer Capability on the COTP. TANC hereby transfers at that instant: (i) 0.2373 Participation Percentage in TANC's entitlement to Transfer Capability on the COTP to MODESTO; (ii) 0.9373 Participation Percentage in TANC's entitlement to Transfer Capability on the COTP to TURIOCK; and (ili) 0.9373 Participation Percentage in TAN's entitlement to Transfer Capability on the COTP to SMUD. MODESTO, TURLOCK, and SMUD hereby accept and
assume at that instant for the Term of this Agreement all of the use of the ROSEVILLE interests, rights, and obligations under the provisions of TANC Project Agreement No. 3.
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b. Retur of ROSEVILLE's Interests, Rights, and Obligations.
Unless earlier relinquished because of a default under this Agreement by MODESTO, TURLOCK and/or SMUD, upon the end of the last hour of the last day of the Term of this Agreement, all of the ROSEVILLE interests, rights, and obligations in ROSEVILLE's Participation Percentage adjusted for any changes in such Participation Percentages during the Term of this Agreement (presently 2.1119 as of the Effective Date of this Agreement) under TAN Project Agreement No. 3 shall automatically and without any action of the Parties be relinquished by MODESTO, TURLOCK, and SMUD through TANC to ROSEVILLE, and ROSEVILLE hereby accepts its interests, rights, and obligations at that instant in the future.
Layoff of PALO ALTO's COTP Interests, Rights, and Obligations.
Except as otherwise set forth in this Agreement, on the Effective Date and for the Term of this Agreement, PALO ALTO hereby lays off and relinquishes to TANC all of PALO ALTO's use of its interests, rights, and obligations under TANC Project Agreement No. 3, except its interests, rights and obligations in the event of a default pursuant to section 6 of Project Agreement No. 3 and this Agreement, associated with PALO ALTO's 3.6815 Participation Percentage in TANC's entitlement to Transfer Capability on the COTP. TANC hereby 5 EXECUTION ORIGINAL
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transfers at that instant: (i) 0.4137 Participation Percentage in TAN's entitlement to Transfer Capability on the COTP to MODESTO; and (it)
1.6339 Participation Percentage in TAN's entitlement to Transfer Capability in the COTP to TURLOCK; and (ili) 1.6339 Participation Percentage in TAN's entitlement to Transfer Capability on the COTP to SMUD. MODESTO, TURLOCK, and SMUD hereby accept and
assume at that instant for the Term of this Agreement all of the use of the PALO ALTO interests, rights, and obligations under the provisions of TANC Project Agreement No. 3.
d. Return of PALO ALTO's Interests, Rights, and Obligations.
Unless earlier relinquished because of a default under this Agreement by MODESTO, TURLOCK and / or SMUD, upon the end of the last hour of the last day of the Term of this Agreement, all of the PALO ALTO interests, rights, and obligations in PALO ALTO's Participation Percentage adjusted for any changes in such Participation Percentages during the Term of this Agreement (presently 3.6815 as of the Effective Date of this Agreement) under TANC Project Agreement No. 3 shall automatically and without any action of the Parties be relinquished by MODESTO, TURLOCK, and SMUD through TANC to PALO ALTO,
and PALO ALTO hereby accepts its interests, rights, and obligations at that instant in the future.
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e. Project Agreement No. 3 Appendix C.
The TANC Commission by resolution has approved a revised version of APPENDIX C of TANC Project Agreement No. 3, showing the effect of the layoffs on the Participation Percentages of ROSEVILLE, PALO ALTO, MODESTO, TURLOCK, and SMUD during the Term of this Agreement, for the purposes of delineating voting rights, billings, and obligations during the Term of this Agreement. The version of APPENDIX C approved by the TANC Commission and attached to and incorporated into this Agreement as ATTACHMENT A has been created solely for the convenience of the Parties, and does not affect the interests, rights, or obligations of ROSEVILLE or PALO ALTO if MODESTO, TURLOCK, or SMUD were to default in their obligations under this Agreement. Notwithstanding anything to the contrary in this Agreement, title to the interests, rights and obligations of ROSEVILLE and PALO ALTO in their respective Participation Percentages shall remain vested in ROSEVILLE and PALO ALTO during the Term of this Agreement, while the right of use of those interests, rights, and obligations shall be vested in MODESTO, TURLOCK, and SMUD in their respective layoff shares acquired hereunder. Nothing in this Agreement is intended to alter or amend any interest, right or obligation of any Participant under TAN Project Agreement No. 3. The failure to give due and timely notice of a default or potential default pursuant to section 3(h) of this Agreement shall 7 EXECUTION ORIGINAL
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not absolve the obligation of any Party to this Agreement to comply with its responsibilities under TAN Project Agreement No. 3.
Regardless of any default on the part of MODESTO, TURLOCK, or SMUD, neither ROSEVILLE nor PALO ALTO shall be excused from their respective obligations under TAN Project Agreement No. 3. f. Billings and Payments.
During the Term of this Agreement, and in the absence of a default under this Agreement by MODESTO, TURLOCK, or SMUD, all
billings and payments shall be made in accordance with the provisions of TANC Project Agreement No. 3, with ATTACHMENT A of this Agreement employed by TANC to assure that, in the absence of a default by MODESTO, TURLOCK, or SMUD, ROSEVILLE and PALO ALTO will not be billed for any TANC Project Agreement No. 3 costs, including but not limited to TANC Project Agreement No. 3's O&M Costs, Indebtedness, Debt Service, or Capital Improvement Costs, during the Term of this Agreement; provided, however, that ROSEVILLE and PALO ALTO shall remain responsible under the TANC Joint Powers Agreement for any costs unrelated to TANC Project Agreement No. 3. During the Term of this Agreement, TANC shall bill SMUD, and SMUD shall pay, for TANC Project Agreement No. 5 costs, expenses, fees, and charges otherwise allocable to ROSEVILLE and PALO ALTO pursuant to section 3 of TANC Project 8 EXECUTION ORIGINAL
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Agreement No. 5 for the portion of TAN's entitlement to Transfer Capability on the COTP laid off to SMUD in this Agreement.
Additions, Betterments, and Replacements.
Use of Additions, Betterments, and Replacements during Term of Agreement.
Additions, Betterments, and Replacements, as defined in TANC Project Agreement No. 3, that are approved by TANC during the Term of this Agreement in regards to the use of the acquired shares of the COTP interests, rights, and obligations laid off to MODESTO, TURLOCK and SMUD under this Agreement (referred to in this section 3g as "layoff portions"), shall be available for MODESTO, TURLOCK and SMUD's sole use and at their sole expense during the Term hereof.
(ii) Responsibility For and Use of Betterments at End of the Term of this Agreement.
At the end of the Term of this Agreement, MODESTO, TURLOCK, and/or SMUD shall be solely and severally responsible for the layoff portions of Betterments approved and financed by them during the Term of this Agreement, and the layoff portions of such Betterments shall remain available for their sole use and benefit for the life of the COTP.
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(iii) Responsibility For and Use of Additions that Exceed the Adjusted Cost Index at End of the Term of this Agreement.
At the end of the Term of this Agreement, MODESTO, TURLOCK, and/or SMUD shall be solely and severally responsible for the layoff portions of Additions approved and financed by them that exceed the adjusted cost index defined in section 3.1.2.2.2 of TANC Project Agreement No. 3 (hereinafter "Adjusted Cost Index"). Such layoff portions of such Additions shall remain available for MODESTO, TURLOCK, and/or SMUD's sole use and benefit for the life of the COTP.
Responsibility For and Use of Additions Up to the Adjusted Cost Index at End of the Term of this Agreement.
At the end of the Term of this Agreement, PALO ALTO and ROSEVILLE shall be solely and severally responsible for the layoff portions of Additions approved by TANC during the Term of this Agreement in an amount up to the Adjusted Cost Index, and the layoff portions of such Additions shall be available for their sole use and benefit in their respective Participation Percentage, adjusted for any changes in such Participation Percentages during the Term of this Agreement for the life of the COTP. For the purposes of clarification, to the extent that an Addition exceeds the Adjusted Cost Index, PALO ALTO and ROSEVILLE shall be responsible for any amount up to the Adjusted Cost Index pursuant to this subsection 3(g)(iv), and MODESTO, TURLOCK, and/ or SMUD, as applicable shall be
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responsible for the remaining amount that exceeds the Adjusted Cost Index, in accordance with subsection (3)(g)(iii).
Responsibility For and Use of Replacements at End of the Term of this Agreement.
At the end of the Term of this Agreement, PALO ALTO and ROSEVILLE shall be solely and severally responsible for the layoff portions of Replacements approved by TANC during the Term of this Agreement. Such layoff portions of such Replacements shall be available for their sole use and benefit in their respective Participation Percentage, adjusted for any changes in such Participation Percentages during the Term of this Agreement for the life of the COTP. (vi) Allocation of Capital Costs and Associated Financing Costs.
The Parties agree that the capital costs and associated financing costs of any portions of Additions that do not exceed the Adjusted Cost Index and all Replacements put into service during the Term of this Agreement shall be allocated on a straight-line financial basis over the expected useful life of such Additions and Replacements. Capital costs and associated financing costs and the expected useful life of such Additions and Replacements shall be determined at the time the Additions and Replacements are put into service.
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(vii) Payment of True-Up Adjustments.
If the expected useful life of any portions of Additions that do not exceed the Adjusted Cost Index and all Replacements put into service during the Term of this Agreement extend beyond the Term of this Agreement, the Parties agree to make "true-up adjustments" via true- up payments for the capital costs and associated financing costs paid or incurred for such Additions or Replacements put into service during the Term of this Agreement. The "true-up adjustments" will be based on the cost differences between the costs calculated on a straight line financial basis, and the actual payment method(s) used. Upon the end of the Term of this Agreement the Parties shall make such true-up payments to each other, as calculated in accordance with subsection 3(g)(vili), below, to effect their mutual intention that costs for such Additions and Replacements with long lives be allocated among the Parties on a straight-line financial basis. These true-up payments will effect the required true-up adjustments referenced above. (vili) Calculation of True-Up Adjustments.
Prior to the end of the Term of this Agreement, unless the Parties otherwise agree, TANC shall determine from its books and records, and recommend to the Parties an allocation of the capital costs and associated financing costs for any portions of Additions that do not 12 EXECUTION ORIGINAL
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exceed the Adjusted Cost Index and all Replacements during the Term of the Agreement that have been (aa) paid or incurred during the Term of the Agreement plus (bb) those that remain to be paid beyond the Term of the Agreement. The true-up adjustments shall be calculated by TANC in a manner consistent with the examples in Attachment C, which are incorporated herein by reference. Any disagreement regarding the calculation of the true-up adjustments shall be resolved by the TANC Commission.
h. Default.
• In the event of a default by MODESTO, TURLOCK, or SMUD under this Agreement, TANC shall immediately and simultaneously notify each of the Parties in accordance with the provisions of section 13 of this Agreement. If a default remains uncured for twenty (20) days after the date notice is first given under section 13, then ROSEVILLE and PALO ALTO shall cure any monetary default not later than three (3) business days following the 20th day. Upon ROSEVILLE and PALO ALTO's completion of the cure of a monetary default or, in the instance of a non-monetary default arising out of a breach of sections 5 or 6, below, by MODESTO, TURLOCK and / or SMUD that remains uncured for twenty (20) days after the date notice is first given under section 13 use of the interests, rights, and obligations laid off shall be automatically relinquished to ROSEVILLE and PALO ALTO at that 13 EXECUTION ORIGINAL
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instant, and without any action of the Parties. TANC shall provide notice of the default to each of the Parties to this Agreement, but TANC shall have no responsibility to otherwise respond to the default. i. Voting Rights.
During the Term of this Agreement:
(i) • In the absence of a default under this Agreement, neither PALO ALTO nor ROSEVILLE shall have rights to vote on any matter related to TANC Project Agreement No. 3.
(ii) In the event of a default under this Agreement by either MODESTO, TURLOCK, or SMUD, the defaulting Party may not vote on any matter related to TANC Project Agreement No. 3 with respect to the use of their acquired shares of the COTP interests, rights, and obligations laid off to them under this Agreement. The Parties adversely affected by the default may vote on any matter related to TAN Project Agreement No. 3 with respect to their shares of the COTP interests, rights, and obligations that were laid off to the defaulting Party under this Agreement.
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(ili) Any new TANC program or project shall be governed by the agreements that pertain to such programs or projects.
Section 4. SOT Layoff.
This section 4 does not apply to or affect any provision of section 3, COTP Layoffs, of this Agreement. Section 3 shall not be construed with reference to this section 4. Section 4 is intended to stand alone. Section 3 and section 4 are included in this single Agreement to make the administration, management, and recordkeeping of layoffs under the TANC programs efficient and economic. Terms in section 4 of this Agreement that begin with capitalized letters are defined in the SOT Agreement, unless otherwise specifically defined in this Agreement. a. Layoff of ROSEVILLE's SOT Interests, Rights, and Obligations.
Except as otherwise set forth in this Agreement, on the Effective Date and for the Term of this Agreement, ROSEVILLE hereby voluntarily transfers to TANC all of ROSEVILLE's use of its interests, rights, and obligations, except its interests, rights and obligations in the event of a default pursuant to section 10 of the TANC SOT Agreement and/ or this Agreement, associated with ROSEVILLE's 1.786 percent SOT Allocation (expressed as a percentage of TAN's Tesla-Midway Transmission Service), and TANC hereby makes a Long-Term Reallocation and transfers at that instant 62.71 percent of the 15 EXECUTION ORIGINAL
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ROSEVILLE SOT Allocation (1.120 percent of the total SOT Allocations) to TURLOCK and 37.29 percent of the ROSEVILLE SOT Allocation to SMUD (0.666 percent of the total SOT Allocations).
TURLOCK and SMUD hereby accept and assume at that instant for the Term of this Agreement the use of all of the ROSEVILLE interests, rights, and obligations under the provisions of the TANC SOT Agreement.
b. Return of ROSEVILLE's Interests, Rights, and Obligations.
Unless relinquished earlier because of a default under this Agreement by TURLOCK and/or SMUD, upon the end of the last hour of the last day of the Term of this Agreement, all of ROSEVILLE's interests, rights, and obligations under the TANC SOT Agreement, including ROSEVILLE's 1.786 percent SOT Allocation, shall automatically and without any action of the Parties be relinquished by TURLOCK and SMUD through TANC to ROSEVILLE, and ROSEVILLE hereby
accepts its interests, rights, and obligations at that instant in the future. c. SOT Agreement Appendix B-2.
The TANC Commission by resolution has approved a revised version of Appendix B-2 of the TANC SOT Agreement, showing the effect of the transfer on the SOT Allocations and the Cost Sharing Percentages 16 EXECUTION ORIGINAL
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for the purposes of delineating voting rights, billings, and payments during the Term of this Agreement. The revision of Appendix B-2 approved by the TANC Commission and attached to and incorporated into this Agreement as ATTACHMENT B has been prepared solely for the convenience of the Parties, and does not affect the interests, rights, and obligations of ROSEVILLE, if TURLOCK or SMUD were to default in their obligations under this Agreement. Notwithstanding anything to the contrary in this Agreement, title to the interests, rights and obligations of ROSEVILLE in its SOT Allocation shall remain vested in ROSEVILLE during the Term of this Agreement, while the right of use of those interests, rights, and obligations of ROSEVILLE's SOT Allocation shall remain vested in TURLOCK and SMUD during the Term of this Agreement.
d. Billings and Payments.
During the Term of this Agreement, and in the absence of a default by TURLOCK or SMUD under this Agreement, all billings and payments shall be made in accordance with the provisions of the TANC SOT Agreement, with ATTACHMENT B of this Agreement employed by TANC to assure that, in the absence of a default by TURLOCK or SMUD, ROSEVILLE will not be billed for any costs, SOT Service Charges, or other expenses associated with the SOT Agreement during the Term of this Agreement.
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e. Increases in SOT Allocation, Interests, or Obligations.
Any increases in SOT Allocations, interests, rights or obligations approved by TURLOCK or SMUD during the Term of this Agreement shall be available for their sole use and at their sole expense during the Term hereof, and at the end of the Term of this Agreement, such increases in SOT Allocations, interests, rights or obligations shall remain with TURLOCK or SMUD.
f. Default.
In the event of a default by TURLOCK or SMUD under this Agreement, TANC shall immediately and simultaneously notify each of the Parties in accordance with the provisions of section 13 of this Agreement. If a default remains uncured for twenty (20) days after the date notice is first given under section 13 of this Agreement, then ROSEVILLE shall cure any monetary default not later than three (3) business days following the 20th day. Upon ROSEVILLE's completion . of the cure of a monetary default or, in the instance of a non-monetary default arising out of a breach of sections 5 or 6, below, by TURLOCK and/ or SMUD that remains uncured for twenty (20) days after the date notice is first given under section 13 use of the interests, rights, and obligations laid off shall be automatically relinquished to ROSEVILLE 18 EXECUTION ORIGINAL
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at that instant, and without any action of the Parties. TANC shall provide notice of the default to each of the Parties to this Agreement, but TANC shall have no responsibility to otherwise respond to the default.
Section 5. No Assignment Without Consent.
During the Term of this Agreement, MODESTO, TURLOCK and/ or SMUD shall not assign the rights to the use of the interests, rights or obligations of PALO ALTO and ROSEVILLE acquired pursuant to this Agreement, or delegate any obligations that have been undertaken by MODESTO, TURLOCK and/ or SMUD pursuant to this Agreement, including but not limited to the obligation to pay as set forth in sections 3 and 4 of this Agreement and the obligations set forth in sections 5 or 6, to any entity, including but not limited to a TANC Member (hereinafter "Assign" or "Assignment"), without the advance written consent of the respective boards, commissions and/or councils with requisite authority (hereinafter "Council") of TANC, PALO ALTO and ROSEVILLE, or their authorized representatives. The Parties agree that such consent shall not be unreasonably withheld, and further agree that best efforts shall be utilized by the Parties to bring the issue of a proposed Assignment to Council within ninety (90) days following the Parties' receipt of written notice requesting permission to Assign. It is the intent of the Parties that any proposed Assignment by MODESTO, TURLOCK and/ or SMUD must result in a complete assumption of that which was acquired by the assigning 19 EXECUTION ORIGINAL
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Party under this Agreement. Partial Assignments by MODESTO, TURLOCK and/or SMUD are expressly prohibited.
Section 6. Long-Term Layoff to Third Parties Not an Assignment.
To the extent that either MODESTO, TURLOCK, and / or SMUD, as applicable (hereinafter "Layoff Party") intend to layoff or transfer the use of the interests, rights, and obligations received from ROSEVILLE and PALO ALTO under this Agreement to a third party ("Acquiring Party"') for a period of more than one (1) year, and such layoff or transfer is not otherwise an Assignment as defined and discussed in section 5 of this Agreement, and provided the conditions of sections 7.1, 7.2, and 7.4 of Project Agreement No. 3 have been satisfied, the Layoff Party shall do all of the following: (1) provide written notice to ROSEVILLE, PALO ALTO and TANC prior to the effective date of such layoff; (2) include in its layoff agreement with the Acquiring Party provisions specifying (i) that such layoff agreement shall be terminated immediately upon a default under this Agreement by MODESTO, TURLOCK and/or SMUD, as applicable, that remains uncured for twenty (20) days after the date notice is first given under section 13; (ii) that the Acquiring Party is not a third-party beneficiary of this Agreement between ROSEVILLE and PALO ALTO on the one hand and MODESTO, TURLOCK and/or SMUD, as applicable, on the other; and (ili) that the Acquiring Party shall have no recourse against ROSEVILLE, PALO ALTO and TANC in the event of a default by MODESTO, TURLOCK and/ or SMUD 20 EXECUTION ORIGINAL
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under this Agreement and the layoff agreement; and (3) provide ROSEVILLE, PALO ALTO and TANC with a copy of the executed layoff agreement.
Section 7. Dispute Resolution.
In the event of any controversy or claim between the Parties, whether based in contract, tort or otherwise, arising out of, based upon, or relating to this Agreement, except for any controversy or claim based upon a default of the obligations to make payments as set forth in sections 3 or 4 of this Agreement or a breach of the obligations set forth in sections 5 or 6 of this Agreement hereinafter "Dispute"), the Parties shall attempt to resolve such Dispute in the following manner:
a. Negotiation.
The Parties shall attempt in good faith to resolve the Dispute promptly by negotiations between duly authorized representatives of the Parties who have authority to resolve the Dispute. When a Party believes there is a Dispute, that Party shall give the other Party written notice describing the Dispute with reasonable particularity. Within fifteen (15) calendar days following the receipt of such notice, the receiving Party shall submit a written response to the noticing Party. The authorized representatives shall meet in person and attempt to resolve the Dispute.
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b. Mediation.
If the Dispute is not resolved within fifteen (15) calendar days following receipt of the receiving Party's response given pursuant to subsection a, above, or such additional time, if any, that the Parties mutually agree to in writing, the Parties shall try in good faith to resolve the Dispute by mediation. The form of mediation and the mediator selected to mediate the Dispute shall be acceptable to both Parties, which acceptance shall be confirmed by the Parties in writing.
C. Additional Rights.
If the Dispute is not resolved through mediation within ninety (90) calendar days of the noticing Party's written notice of the Dispute pursuant to subsection a above, or such additional time, if any, that the Parties mutually agree to in writing, the Party or Parties involved in the dispute shall be free to pursue any and all legal and equitable • -
actions or remedies.
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Section 8. Attorney Fees.
In any mediation, arbitration, or litigation to enforce or defend any interest, right, or obligation of this Agreement, the prevailing Party shall be entitled to an award of reasonable attorneys' fees and other litigation expenses.
Section 9. California Law.
This Agreement was made in and will be performed in California, and the law of California shall apply in the interpretation and enforcement of this Agreement.
Section 10. Integrated Agreement.
This Agreement is the whole, integrated agreement of the Parties, superseding prior negotiations and replacing and terminating the Principles for Long-Term Layoff of Palo Alto and Roseville Transmission Entitlements. This Agreement does not amend Project Agreement No. 3 or the TANC SOT Agreement in any respect. In the event of any conflict between this Agreement, TANC Project Agreement No. 3, or TANC SOT Agreement, the provisions of TAN Project Agreement No. 3 or the TANC SOT Agreement shall control. 23 EXECUTION ORIGINAL
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Section 11. No Third-Party Beneficiaries.
There are no third-party beneficiaries to this Agreement, and this Agreement shall not impart any rights enforceable by any person or entity that is not a Party to this Agreement.
Section 12. TANC Liability.
- . . TANC and its officers, agents, and employees, as well as the other members and commissioners of TANC (hereinafter "Indemnitees"), undertake no legal liability to the Parties to this Agreement and each Party releases, holds harmless, and covenants not to sue the Indemnitees for any cause, claim, injury, damage, or death arising from a negligent act or omission of an Indemnitee in connection with :
this Agreement.
1... Section 13. Notices.
Notices required under this Agreement shall be given by TANC to each Party to this Agreement using all of the four following methods on the same day, if possible: facsimile, email, overnight delivery, and a personal phone call from the TANC General Manager to each Chief Executive Officer of each Party. 24 EXECUTION ORIGINAL
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Contact information for the purposes of notice for each Party shall be maintained by TANC as ATTACHMENT D of this Agreement, attached to and incorporated herein.
Each Party shall be responsible for maintaining current contact information with TANC.
Section 14. Severability.
Any provision of this Agreement determined by a court of competent jurisdiction to be invalid shall not be severed from this Agreement if severance would materially adversely affect any Party, and if any Party in good faith concludes that severance would result in materially adverse consequences, such Party may give notice under the notice provisions hereof, that this Agreement shall terminate on a date all of the Parties consider appropriate, and if no agreement is reached on an appropriate early termination date, then at the last hour of the day that is one hundred and twenty (120) days after the date notice was first given.
Section 15. Discharge of Obligations.
All obligations unsatisfied at the end of the Term of this Agreement shall be promptly discharged by the responsible Party.
25 EXECUTION ORIGINAL
Approved January 28, 2009
Section 16. Modifications.
This Agreement may only be modified or amended in writing by the Parties following receipt of all necessary approvals.
TRANSMISSION AGENCY OF TURLOCK IRRIGATION DISTRICT
NORTHERN CALIFORNIA
By:_ By:-
Its:
Dated: 01/25/09 Dated:
CITY OF PALO ALTO SACRAMENTO MUNICIPAL
UTLITY DISTRICT
By: By:_
Its: Its:
Dated: Dated:_
CITY OF ROSEVILLE MODESTO IRRIGATION DISTRICT
By:_ By:_
Its: Its:
Dated: Dated:_
26 EXECUTION ORIGINAL
Approved January 28, 2009
Section 16. Modifications.
This Agreement may only be modified or amended in writing by the Parties following receipt of all necessary approvals.
TRANSMISSION AGENCY OF TURLOCK IRRIGATION DISTRICT
NORTHERN CALIFORNIA
Den less
By:- By..
Its: Its: to Mar
Dated: Dated;
CITY OF PALO ALTO SACRAMENTO MUNICIPAL
UTLITY DISTRICT
By:_ By:
Its: Its:
Dated: Dated:
CITY OF ROSEVILLE MODESTO IRRIGATION DISTRICT
By:
Its: Its:
Dated: Dated:
26 EXECUTION ORIGINAL
Approved January 28, 2009
Section 16. Modificatiors.
This Agreement may only be modified or amended in writing by the Parties following receipt of all necessary approvals.
TRANSMISSION AGENCY OF TURLOCK IRRIGATION DISTRICT
NORTHERN CALIFORNIA
By:
Its:
Its:
Dated: Dated:
SACRAMENTO MUNICIPAL
CITY OF PALO ALTO UTLITY DISTRICT
By. Pit Dalemen By:-
Its:
Its:
1/28/09 Dated:
Dated:
CITY OF ROSEVILLE MODESTO IRRIGATION DISTRICT
By:_
By:
Its:
Its:
Dated:
Dated:
26 EXECUTION ORIGINAL
Approved January 28, 2009
Section 16. Modifications.
This Agreement may only be modified or amended in writing by the Parties following receipt of all necessary approvals.
TRANSMISSION AGENCY OF TURLOCK IRRIGATION DISTRICT
NORTHERN CALIFORNIA
By:_ By:
Its: Its:
Dated: Dated:
CITY OF PALO ALTO SACRAMENTO MUNICIPAL
UTLITY DISTRICT
By:_ By:_
Its: VEM + 400
Its:
Dated:™ Dated: JANUARy 27, 2009
CITY OF ROSEVILLE MODESTO IRRIGATION DISTRICT
By_ - By:
Its: Its:
Dated: Dated:
-
26 EXECUTION ORIGINAL
Approved January 28, 2009
Section 16. Modifications.
This Agreement may only be modified or amended in writing by the Parties following receipt of all necessary approvals.
TRANSMISSION AGENCY OF TURLOCK IRRIGATION DISTRICT
NORTHERN CALIFORNIA
By:_ By:_
Its: Its:
Dated: Dated:_
CITY OF PALO ALTO SACRAMENTO MUNICIPAL
UTLITY DISTRICT
By:_ By:_
Its: Its:
Dated: Dated:_
CITY OF ROSEVILLE MODESTO IRRIGATION DISTRICT
W. Craka By:_
Its: Its:
1 22 01 Dated:_
Dated:_
26 EXECUTION ORIGINAL
Approved January 28, 2009
Section 16. Modifications.
This Agreement may only be modified or amended in writing by the Parties following receipt of all necessary approvals.
TRANSMISSION AGENCY OF TURLOCK IRRIGATION DISTRICT
NORTHERN CALIFORNIA
By:_ By:_
Its: Its:
Dated: Dated:_
CITY OF PALO ALTO SACRAMENTO MUNICIPAL
UTLITY DISTRICT
By:_ By:_
-
Its: Its:
Dated:_ Dated:
CITY OF ROSEVILLE MODESTO IRRIGATION DISTRICT
By:- By:_ Allen lirt
-
Its: Its:
Dated: Dated: 1-28.09
-
26 EXECUTION ORIGINAL
Approved January 28, 2009
ATTACHMENT A
APPENDIX C-1 OPERATIONS AND MAINTENANCE
MW
TANC Third-Party Scheduling
Entitlement Percent MW Layoffs* Rights
21.2960% 295.9351 5.9629 290
MID 115
Redding 8.4120% 116.8950 2.3553
SMUD 27.5631% 383.0252 7.7177 375
20.4745% 5.7329 278
Santa Clara 284.5201 3.5110 171
12.5393% 174.2501
TID .........
1.2272% 0.3436 17
Alameda 17.0531
Healdsburg 0.2456% 34132 0.0688 3
1.9201% 26.6817 0.5376 26
Lodi
0.1865% 2.5911 0.0522 3
Lompoc
51.1594 1.0308 50
Palo Alto 3.6815%
Plumas 0.1479% 2.0555 0.0414 2
Roseville 2.1119% 29.3482 0,5913
0.1945% 2.7026 0.0545 3
Ukiah
100.0000% 1389.6304 28.0000 1362
Total
*Includes Western 27 MW and San Juan 1 MW assignments
27 EXECUTION ORIGINAL
Approved January 28, 2009
APPENDIX C-la
OPERATIONS AND MAIN 0 Long To acromodate Palo Alto and
TANC Net TANC North to South to
Member Member South MW North MW
TANC Pre-Layoff Layoff Percentage Scheduling Scheduling Entitlement Percentage Rights Rights
MIDD 21.2960% 0.6509% 21.9469% 229
Redding 8.4120% 0.0000% 84120%
SMUD 27.5631% 2.5713% 30.1344%
Santa Clara 20.4745% 0.0000% 20.4745%
TID 12.5393% 2.5713% 15.1106%
Alameda 1.2272% 0.0000% 1.2272%
Healdsburg... 0.2456% 0.0000% 0.2456%
Lodi 1.9201% 0.0000% 1.9201%
Lompoc 0.1865% 0.0000% 0.1865%
Palo Alto 3.6815% -3.6815% 0.0000%
Plumas 0.1479% 0.0000% 0.1479%
Roseville 2.1119% -2.119% 0.0000%
Ukiah 0.1945% 0.0000% 0.1945%
Total 100.0000% 0.0000% 100.0000%
28 EXECUTION ORIGINAL
Approved January 28, 2009
APPENDIX C-2
ORIGINAL COTP DEBT SERVICE
TANC Member Percent
MID 21.1200%
Redding 8.2810%
SMUD 27.1330%
Santa Clara 20.7030%
TID 12.4220%
Alameda 1.3330%
Healdsburg 0.2670%
Lodi 1.8900%
Lompoc 0.1840%
Palo Alto 4.0000%
Plumas 0.1610%
Roseville 2.2950
Ukiah 0.2110%
Total 100.0000%
29 EXECUTION ORIGINAL
Approved January 28, 2009
APPENDIX C-2a
COTP DEBT SERVICE (To accommodate Palo Alto and Roseville 2008 Long- Term Layoffs)
TANC Net TANC
Member Member
TANC Member Percent Layoff Percentage
MID 21.1200% 0.7073% 21.8273%
Redding 8.2810% 0.0000% 8.2810%
SMUD 27.1330% 2.7938% 29.9269%
Santa Clara 20.7030% 0.0000% 20.7030%
TID 12.4220% 2.7938% 15.2158%
Alameda 1.3330% 0.0000% 1.3330%
Healdsburg 0.2670% 0.0000% 0.2670%
Lodi 1.8900% 0.0000% 1.8900%
Lompoc 0.1840% 0.0000% 0.1840%
Palo Alto 4.0000% -4.0000% 0.0000%*
Plumas 0.1610% 0.0000% 0.1610%
Roseville 2.2950 -2.2950% 0.0000%
Ukiah 0.2110% 0.0000% 0.2110%
Total 100.0000% 0.0000% 100.0000%
30 EXECUTION ORIGINAL
Approved January 28, 2009
ATTACHMENT B
APPENDIX B-1
PERMANENT ALLOCATIONS of SOTP
(A) (B)
Expressed Expressed
in
percentages Megawatts
City of Alameda 2.104 6.31
City of Healdsburg 0.236 0.71
2.069 6.21
City of Lodi
0.266 0.80
City of Lompoc 102.00
Modesto Irrigation District 34.000
Plumas-Sierra Rural Electric
0.235 0.70
Cooperative 31.00
City of Redding 10.333
City of Roseville 1.786 5.36
Sacramento Municipal Utility
District 15.333 46.00
City of Santa Clara 27.000 81.00
Turlock Irrigation District 5,334 19.00
0.91 City of Ukiah
TOTAL 100.000 300.00
31 EXECUTION ORIGINAL
Approved January 28, 2009
APPENDIX B-1a
PERMANENT ALLOCATIONS of SOTP
(To accommodate Roseville's 2008 Long-Term Layoff)
City of Alameda
City of Healdsburg
City of Lodi 2.069 6.21
City of Lompoc 0.266 0.80
Modesto Irrigation District 34.000 102.00
Plumas-Sierra Rural Blectric Cooperative 0.235 0.70
City of Redding 10.333 31.00
City of Roseville 0.000 0.00
Sacramento Municipal Utility District 15.999 48.00
City of Santa Clara 27.000 81.00
Turlock Irrigation District 7.454 22.36
City of Ukiah 0.304 0.91
TOTAL 100.000 300.00
32 EXECUTION ORIGINAL
Approved January 28, 2009
ATTACHMENT C
True-Up Methodology for Replacements and Additions
The Parties have identified a desire to provide for equitable allocation of costs between limit) that, at the end of the term of the layoff, will revert from a right and responsibility of the Districts to that of the Cities.
TANC developed the following methodology, which has been approved by the Parties.
TANC will treat all Replacements and Additions (at least up to the PA 3 Threshold Amount) as if they were financed using "typical municipal financing" (i.e. levelized payments composed of principal and interest, at the prevailing municipal cost of money at the time of the Replacement or Addition, over the useful life of the Replacement/ Addition). The TANC Commission will make a determination of the useful life and the cost of financing at the time of approving a Replacement and/or Addition.
If a payment structure or financing were used that were different from the form of a "typical municipal financing," then a transfer payment may be necessary to account for an accelerated or decelerated (relative to typical municipal financing) payoff of principal as of the end of the term of the layoff.
EXAMPLES:
The following assumptions apply to the examples provided below:
1. End of term of layoff: 2/1/2024
2. Timing of Replacement (or Addition): 2/1/2014
3. Applicable cost threshold for Section 3.1.2.2.2: $52.7M
5. Cost of Replacement or Addition: $25M
6. Estimated useful life of Replacement or Addition at 1/1/2014: 20 years
7. Remaining term of layoff at 2/1/2014: 10 years
8. Estimate useful life of Replacement or Addition remaining after layoff: 10 years
9. Prevailing municipal cost of money, 2/1/2014: 6 percent (20-year term) Using the assumptions listed above, TANC examined five different payment structures and the potential need for a transfer payment under each. These are described below and a summary table is included at the end of this section Example #1: TANC Pays Cash at time of Replacement (Addition) As of February 1, 2024, all principal would have been paid off and there would be no outstanding obligations for the Addition. With typical municipal financing, there would have been ten years of levelized payments remaining for principal and interest at 33 EXECUTION ORIGINAL
Approved January 28, 2009
$2.180M/ yr with respect to the full $25M cost for the Addition. The NPV of this payment stream as of 2/1/2024 comes to $16.04M.! Cities should pay the respective Districts their laid off participation percentages times $16.04M.
Example #2: TANC Borrows $25 million and makes interest only payments:
is of February 1, 22, n principal would have been paid off. With typical municipa. inancing, there would have been approximately $9M of principal paid off at the end o the layott; and the Districts should pay the respective Cities their laid off participation percentages times $8.96 million.
Example #3: Levelized payments over life of Addition:
As of February 1, 2024, there would have been $8.96 million principal retired. Since financing used typical municipal financing, this is the expected amount of principal to be paid off at the end of the layoff, and no transfer payment is needed.
Example #4: Levelized payments over longer than life of Addition:
As of February 1, 2024, assuming a 25-year financing term, there would have been about $6M of principal paid off. With typical municipal financing, there would have been about $9M of principal paid off at the end of the layoff. Districts should pay the respective Cities their laid off participation percentages times $3M.
Example #5: Levelized payments over shorter than life of Addition:
As of February 1, 2024, assuming a 15-year financing term, there would have been about $14.2M of principal paid off. With typical municipal financing, there would have been about $9M of principal paid off at the end of the layoff. Cities should pay the respective Districts their laid off participation percentages times $5.2M.
Exarple #1 Exanple #2 Example #3 Example #4 Example #S
Cash Payment Interest Only "Typcial" Maturity Longer Maturity Shorter Maturity Loan Amount 25,000,000 25,000,000 25,000,000 25,000,000 25,000,000 Interst Rate 6.00% 6.00% 6.00% 6.00%
"Typical Tenn" - years 6.00%
20! 20 20 20
Annual Payment S2.179,614 S2,179,614 S2,179,614 32179620 52179,614 Target Balance 1/1/2024 S16,042,148 S16.042,148 S16,042,148 S16,042,148 S16.042,148 Example Tenn - years na 20 25 15
Actual Remaining Balance as of
January 1,2024 0 S 25,000,000 $16,042,148 18,993,934 10842915.45 Deviation from "ly pical" (16,042,148) 8,957,852
2,951,786 (5.199,233)]
Payincatto Districts 16,042,148 S (8,957,852) S 22910 5 5,199,233
for the determined useful life.
* Alternatively, $8.96M of the $25M original principal would have been paid down.
EXECUTION ORIGINAL
Approved January 28, 2009
ATTACHMENT D
Contact Information for Purposes of Notices
City of Palo Alto:
Valerie Fong, Utilities Director
City of Palo Alto
USPS: P.O. Box 10250
Palo Alto. CA 94303
Courier: 250 Hamilton Avenue
Palo Alto, CA 94301
Phone: (650) 329-2277
(650) 321-0651
Email: [email protected]
City of Roseville:
Tom Habashi, Electric Utility Director
Roseville Electric
City of Roseville
2090 Hilltop Circle
Roseville, CA 95747
Phone: (916) 774-5600
Fax:
Email: [email protected]
MID:
Allen Short, General Manager
Modesto Irrigation District
USPS: P.O. Box 4060
Modesto, CA 95352
Courier: 1231 Eleventh Street
Modesto, CA 95354
Phone: (209) 526-7405
Fax: (209) 526-7315
Email: [email protected]
TID:
Larry Weis, General Manager
Turlock Irrigation District
USPS: P.O. Box 949
Turlock, CA 95381-0949
Courier: 333 East Canal Drive
Turlock, CA 95380
Phone: (209) 883-8211
(209) 656-2143
Email: [email protected]
35 EXECUTION ORIGINAL
Approved January 28, 2009
Jim Shetler
Assistant General Manager, Energy Supply
Sacramento Municipal Utility District
P.O. Box 15852
Mail Stop: B408
Sacramento, CA 95852-1830
Courier: 6201 S Street,
Sacramento, CA 95817-1899
Phone: 916732 6757
Fax: 916 732 6562
Email: [email protected]
TANC:
ansmission Agency of Northern Californi
ames W. Beck, General Manage
P.O. Box 15129
Sacramento, CA 95851-0129
Phone: (916) 852-1673
Fax: (916) 852-1073
Email: [email protected]
36 EXECUTION ORIGINAL
Approved January 28, 2009