PROGRAM SUPPORT AGREEMENT
This Program Support Agreement (this “Agreement”) dated effective as of July 15, 2022, (the “Effective Date”) is by and between CITY OF POMONA, A CALIFORNIA MUNICIPAL CORPORATION, D/B/A POMONA CHOICE ENERGY (“Member”), and Participate.Energy LLC, a Delaware limited liability company (th e “Owner”). The p arties hereto are sometimes herein referred to individually as a “Party” and collectively as the “Parties”.
RECITALS
A. Member, Owner and Tesla, Inc. (“O&M Provider”) have entered in to certain agreements for the creation of a distributed solar and energy storage program for residential electricity customers in Member’s serv ice territory (the “Program”). Under the terms of the Program, Owner will develop, finance, and own residential solar and energy storage systems to be located at private residences within Member’s service ter ritory (each a “System” or, collectively,
the “Systems”), O&M Provider will operate and maintain the Systems u nder an O&M Contract between O&M Provider and Owner (the “O&M Contract”), Member will buy from Owner the energy and certain en ergy attributes and ben efits generated by each System under the terms o f a certain power purch ase agreement between the Parties of even d ate herewith (the “Power Purchase Agreement” ), and sell the electric power generated by a System to the residential customer in Member’s service territory, where the System is located (the “Customer”).
B. Buyer and Owner intend that Systems will be added to this Agreement and the Power Purchase Agreement from time to time during the term of the Power Purchase Agreement.
C. Owner does not independently maintain the internal capability to perform the Program Support Services (as defined below) that Owner requires in connection with the operation and maintenance of the Systems, and Member’s capabilities are expected to provide sig nificant benefits to Owner. Th erefore, Owner desires to engage Member to support certain aspects of the Systems operations and management as further set forth herein (the “Program Support Services”).
D. In consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy o f which are hereby acknowledged, the Parties agree to the following:
AGREEMENT
In consideration of the above recitals, the premises and mutual covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
1. Appointment and Term; Assumption of Development Responsibilities; Standard of Performa nce. Owner hereby appoints Member to render the Program Support Services as further described in the Schedule of Program Support Services attached hereto as Exhibit A. Member hereby accepts such appointment. The term of this Agreement shall be co- terminus with the term of the Power Purchase Agreement (“Term”). Member shall use su ch diligence, care and prudence in the performance of its obligations hereunder a s are commercially ATTACHMENT NO. 4
2 reasonable, and shall devote such time, effort and skills of its pe rsonnel as a reasonable service provider in like position would do in like circumstances.
2. Standard of Conduct.
a) Member shall provide the Program Support Services, perform its other obligations and exercise its rights or powers under this Agreement in a prudent manner, with the degree of skill and judgment normally exercised by service providers performing operations and management services to support solar and energy storage system operations and management of a similar nature, and in accordance with: (i) any applicable laws and regulations and permits; and (ii) any agreement, instrument or other document to which Owner is a party, and that Owner has delivered to Member , that relates to the development, construction, Owner or a System or any component thereof ( “System Documents”), except to the extent Owner provides Member with written instructions not to do so in the event Owner is contesting in good faith the validity or application of any such applicable laws and regulations or such term and condition of a System Document, in any reasonable manner.
b) Member may, at any time, if it reasonably considers it to be necessary or appropriate, request written instruction from Owner with respect to any matter contemplated by this Agreement and may defer action thereon pending the receipt of such written instructions. c) Member shall advise Owner promptly, if it becomes aware of any material inconsistency between any of the following:
(i) Owner’s instructions given in accordance with this Agreement from time to time;
(ii) any System Document;
(iii) Required insurance (if any); and
(iv) any applicable laws and regulations or permit.
d) Any action taken by Member in accordance with the written instructions of Owner, or failure to act pending the receipt of such written instructions, shall be deemed to be within the scope of Member ’s authority and in accordance with its obligations under this Agreement and, without limitation, shall not constitute gross negligence or willful misconduct as referred in
Section 7.
3. Accounts and Records.
(a) Member, on behalf of Owner , shall keep such books of account and other records relating to each System as may be required by applicable laws and regulations or reasonably requested by Owner in writing. All accounts and records relating to a System , including all correspondence, shall be surrendered to Owner upon demand without charge therefor. (b) All books and records prepared or maintained by Member shall be kept and maintained at all times at secure locations accessible to Owner for audit, inspection and copying 3 by Owner or any representative or auditor therefor or supervisory or regulatory authority upon reasonable written request.
(c) During the Term, Member shall keep Owner informed as to the status of the Program Support Services provided by Member hereunder in a frequency Member and Owner may agree to from time to time . Member shall notify Owner of any material event related to the Program Support Services provided by Member hereunder.
4. Compensation and Payment.
(a) As consideration for Member’s Program Support Services to be performed under this Agreement, Owner will pay Member a fee (the “Program Support Services Fee”) equal to (i) Two U.S. Cents ($0.02) multiplied by each Kilowatt-hour of solar energy generation for each System that has been placed into operation and for which Member has confirmed in a legally binding manner that such System will be covered under the Power Purchase Agreement for the term thereof, plus (ii ) Fifteen Dollars ($15.00) per month for each Tesla Powerwall installed as part of a System that has been placed into operation and for which Member has confirmed in a legally binding manner that such System will be covered under the Power Purchase Agreement for the term thereof.
(b) The Program Support Services Fee shall become due and payable on a quarterly basis, not later than the fifteenth (15
th) day after the end of each calendar quarter during
the Term (each, a “Fee Calculation Period”) , provided, that payment of any Program Support Services Fee due and payable shall be limited to funds available to Owner from Net Operating Cash Flow during such Fee Calculation Period. The term “Net Operating Cash Flow” as used in this Agreement shall mean the cash pro ceeds received by Owner under the terms of the Power Purchase Agreement during a Fee Calculation Period, reduced by (i) actual or reasonably estimated operating and maintenance expenses for all Systems in operation at any time during such Fee Calculation P eriod, including, without limitation insurance expenses and reasonably estimated reserves for loses, and actual or reasonably estimated System equipment replacement costs during the Term and reserves therefore, (ii) actual or reasonably estimated income or other taxes payable by Buyer with respect to such cash proceeds (iii) preferred distributions to be made and any cash flow payable, or revenue or profit participation allocated to tax or sponsor equity investors unaffiliated with Owner in accordance with the terms and conditions of the then current charter documents of Owner, and (iv) payment of all obligations, including without limitation payment of principal and interest, under any loan document binding Owner at any time during such Fee Calculation Period, or for which any System operating at any time during such Fee Calculation Period has been placed as collateral.
(c) Together with any Program Support Services Fee payment, Owner shall provide Member a written accounting for the Program Support Fee due i n reasonable detail . In addition, if payment for a Fee Calculation Period is reduced to available funds for payment for the respective Fee Calculation Period in accordance with Section 4(b) , above, Owner shall provide
Member a written accounting in reasona ble detail supporting any fee reduction during such Fee Calculation Period.
4 (d) Any portion of the Program Support Services Fee reduced during one Fee Calculation Period in accordance with Section 4(b), above, shall be added to the Program Support Services Fee becoming due and payable in the following Fee Calculation Period subject, however, to availability funds from Net Operating Cash Flow during such following Fee Calculation Period.
(e) To facilitate payment and verification, Owner shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least two (2) years or as otherwise required by applicable laws and regulations.
Upon fifteen (15) days’ Notice to Owner, Member shall be granted reasonable access to the accounting books and records pertaining to all invoices generated pursuant to this Agreement.
(f) Payment adjustments shall be made if Owner or Member discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 4(h) ,
or there is determined to have been a meter inaccuracy sufficient to require a payment adjustment under the Power Purchase Agreement. If the required adjustment is in favor of Owner, Owner’s quarterly Program Support Services Fee payment shall be credited in an amount equal to the adjustment. If the required adjustment is in favor of Member , Member shall add the adjustment amount to Owner’s next quarterly Program Support Fee payment obligation, subject, however, to the limitations set forth in Section 4(b), above.
(g) If a payment due date under Section 4(b), above, falls on a weekend or legal holiday, such due date shall be the next Business Day . Payments made after the due date will be considered late and will bear interest on the unpaid balance , except, however, any payment reduction applied during a Fee Calculation Period, if paid during the next available Fee Calculation Period during which funds available to Owner from Net Operating Cash Flow first allow payment of the reduced amount. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be ad ded to the next billing statement. Such late payment charge shall be calculated based on an annual interest rate equal to 10% (the “Interest Rate”) of the total amount due. If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day. The payment of any late payment fee by Owner shall be subject to availability of funds from Net Operating Cash Flow.
(h) A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within two (2) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be 5 returned upon request or deducted by the Party receiving such overpayment from subsequent payments, with interest accrued at the Inter est Rate from and including the date of such overpayment to but excluding the date repaid or deducted by the Party receiving such overpayment. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Sect ion 4(h)
within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve -month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
5. Default and Remedies . If either Party defaults in the performance of any of its material covenants or obligations under this Agreement and such default continues unremedied for a period of (a) ten (10) days, in case of any monetary default, or (b) thirty (30) days in case of non- monetary default, in each after written notice th ereof from the non- defaulting Party to the defaulting Party, the non-defaulting Party shall have the right, at its election , to exercise one or more of the following rights and remedies; provided, however, if a non-monetary default is of such a nature that it cannot be cured within said thirty (30) day period, and the defaulting Party has begun to cure each default within the 30-day period, the defaulting Party shall have an additional 60 days in which to cure said default provided it acts in good faith and with due diligence to cure the same (all of which shall be cumulative) ; provided, further, however, that a default under any agreement with a contractor, subcontractor, engineer or equipment manager for a System, or a delay due to action or inaction by the utility shall not be deemed a default under the Agreement:
(a) terminate this Agreement; and
(b) enforce the provisions of this Agreement by legal proceedings for the specific performance of any covenant or agreement contained herein or for the enforcement of any other appropriate legal or equitable remedy and recover damages caused by any breach by the defaulting Party of the provisions of this Agreement, including court costs, reasonable attorneys’ fees and other expenses incurred in the enforcement of the obligations of the Defaulting Party hereunder; and
(c) exercise any and all rights and remedies that the non-defaulting Party may have under applicable laws and regulations; and
(d) in addition to any rights now or hereafter granted under applicable laws and regulations and not by way of limitation of any such rights, upon the occurrence of any event of default hereunder that is not cured within the time period specified in this Section 5 , the non-
defaulting Party is authorized to set off and to apply any amounts pay able to the defaulting Party hereunder against and on account of the obligations of defaulting Party to the non-defaulting Party hereunder.
6. Indemnity and Liability
(a) Limitation of Liability.
6 (i) Notwithstanding any provision in this Agreement to the cont rary, neither Party, nor their respective Affiliates, nor any of their respective officers, directors, employees, agents, contractors, subcontractors, vendors, shareholders, members, partners or representatives, shall be liable hereunder for any consequent ial or indirect loss or damage, including loss of profit, cost of capital, loss of goodwill or any other special or incidental damages, it being understood that the Parties’ indemnification obligations under this Section 6 are not and
shall not be deemed to be consequential or indirect loss or damage under this Section 6. (ii) Except as provided in this Section 6, Member shall have no liability hereunder to Owner for damages or other amounts in connection with a breach by Member of this Agreement or a failure by Member to perform the Program Support Services in accordance with the terms and conditions hereof or otherwise as a result of the Program Support Services performed by Member pursuant to this Agreement.
(iii) The Parties further agree that the waivers and disclaimers of liability, indemnities, releases from liability, and limitations on liability expressed in this Agreement shall survive termination or expiration of this Agreement, and shall apply at all times, whether in contract, equity, tort or otherwise, even in the event of the fault, negligence, including sole negligence, strict liability, or breach of the Party indemnified, released or whose liabilities are limited, and shall extend to the partners, members, principals, shareholders, directors, officers, employees and agents of each Party and its Affiliates.
(b) Indemnity.
To the extent it may lawfully do so, each of Member and Owner hereby indemnify, defend (with counsel of its choosing), and hold harmless the other party and its directors, agents, officers, members, employees and volunteers from and against any and all liability or claim of liability, loss or expense, including defense costs and legal fees and claims for damages of whatsoever character, nature and kind , whether directly or indirectly arising from or connected to: bodily injury, death, personal injury, or property damage caused by negligence, creation or maintenance of a dangerous condition of property, or intentional infliction of harm, including any workers’ compensation suits, liability, or expense, arising from or connected with Program Support Services performed by on behalf of the indemnifying party by any person pursuant to this Agreement; nonpayment for labor, materials, appliances, teams, or powe r, performed on, or furnished or contributed to the Site. Notwithstanding the above, neither Member nor Owner shall be required to defend, indemnify and hold harmless the other for such other party’s negligent acts and omissions or willful misconduct. It is the intent of the Parties that where negligence is determined to have been joint or contributory, principles of comparative negligence will be followed, and each Party shall bear the proportionate cost of any loss damage, expense or liability attributable to that Party’s negligence.
7. Notices. Any notice, request, demand or other communication which is required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given: (i ) on the date of receipt by the applicable Party if personally delivered; (ii) when transmitted by the applicable Party if transmitted by telecopy, electronic mail, or other digital transmission method, subject to the sender’s facsimile machine receiving the correct answerback of the addressee and confirmation of uninterrupted transmission by a transmission report or the recipient confirming by telephone to sender that he has received the facsimile or electronic mail message; and (iii) when received by the applicable Party, if sent for next day delivery to a domestic 7 address by recognized overnight delivery service or, if sent by certified or registered mail, return receipt requested.
Notices shall be given:
If to Owner, to:
Participate.Energy LLC
2093 Philadelphia Pike #3125,
Claymont, DE 19703.
Attn: Ethan Friedman
Phone: 917-301-2621
Email: [email protected]
If to Member, to:
Pomona Choice Energy
505 South Garey Avenue
Pomona, CA 91766
Attn: Contract Administration
Email: [email protected]
8. General Provisions.
(a) No Agency Relationship. This Agreement does not create an agency relationship between the P arties and does not establish a joint venture or partnership between the parties. Except as expressly set forth herein, neither party has the authority to bind the other party or represent to any person that the party is an agent of the other party. (b) Agreement. This Agreement consists of the terms and conditions set forth herein, as well as the appendices hereto, which are incorporated by reference herein and made part hereof.
In the event of a conflict, variation or inconsistency between the appendices hereto and the terms and conditions contained in the body of this Agreement, the latter shall control and be given priority.
(c) Relationship of the Parties.
(i) Member has been retained by Owner as an independent contractor to solely perform the Program Support Services on behalf of Owner.
(ii) Without limiting the relationship of any Party under any other agreement, nothing contained or implied in this Agreement shall constitute or be deemed to constitute any Party as the partner of any other Party for any purpose whatsoever; or create, or be deemed to create, any partnership between any Party and the any other Party.
8 (iii) No Party shall by virtue of this Agreement have the power or authority to enter into any agreement or undertaking for or to act on behalf of or otherwise to bind the any other Party as to any matter or thing to be done in relation to a System or to the provision of the Program Support Services save as may be expressly authorized in this Agreement or agreed in writing between the Parties from time to time.
(d) Entire Agreement. This Agreement, the Schedules and Exhibits attached hereto contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, undertakings and agreements. Neither Party will be bound by or deemed to have made in connection herewith any representations, warranties, commitments or undertakings, except those contained herein.
(e) Captions; Exhibits. Titles or captions of sections contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend, describe or otherwise affect the scope or meaning of this Agreement or the intent of any provision hereof. All exhibits and appendices attached hereto shall be considered a par t hereof as though fully set forth herein.
(f) Amendment. This Agreement may not be amended or modified in any way unless such amendment or modification is in writing signed by duly authorized representatives of each Party.
(g) No Waivers. It is understood and agreed that any delay, waiver or omission by Owner or Member to exercise any right or power arising from any breach or default by Owner or Member with respect to any of the terms, provisions, or covenants of this Agreement shall not be construed to be a waiver by Owner or Member of any subsequent breach or default of the same or other terms, provisions or covenants on the part of Owner or Member. No waiver of any right or power by any Party under this Agreement shall be deemed effectiv e unless in writing and signed by the waiving Party.
(h) Changed Conditions; Invalidity . If there is an occurrence of an event of Force Majeure, there is a material change in market conditions affecting the prices of goods and Program Support Services constituting Development Costs, there is a change in any Project Document or financing document or Owner enters into a new Project Document or financing document affecting performance of the Program Support Services hereunder, or there is a change in any applicable Law, and any such performance or occurrence results in increased or decreased costs to Member, or Owner, as the case may be, shall be entitled to an equitable budget adjustment reflecting the reasonable value of any such increased or decreased costs fr om such performance or occurrence, and the Parties hereby agree to adjust equitably such other provisions of this Agreement that are directly affected by such performance or occurrence; provided, however, that such adjustments must be consistent with the economic expectations and the intent of the Parties. The invalidity or unenforceability for public policy or other equitable grounds of any provision of this Agreement shall be determined only by a court of competent jurisdiction, and the Parties hereby ag ree to negotiate an equitable adjustment to the invalid or unenforceable provisions with a view toward affecting the purposes of this Agreement. The validity or enforceability of the remaining provisions or portions or applications hereof shall not be affected thereby. 9 (i) Representations and Warranties.
(i) Each Party represents and warrants to the other that:
(A) it is duly formed and validly existing under the laws of its jurisdiction of formation;
(B) it has the legal right and full power and author ity to execute and deliver, and to exercise its rights and perform its obligations under, this Agreement;
(C) all corporate or company action required by it validly and duly to authorize the execution and delivery of, and to exercise its rights and perform its obligations under, this Agreement has been duly taken; and
(D) this Agreement constitutes a valid and binding agreement enforceable against it in accordance with its terms.
(ii) Except as expressly provided in this Agreement or as required by law, no Party makes any warranties or guarantees to the other, either express or implied, with respect to the Facility, the Program Support Services or any other subject matter of this Agreem ent, and, to the extent permitted by law, each Party disclaims and waives any implied warranties or warranties imposed by law.
(j) Counterparts. The Parties may execute this Agreement in two or more counterparts, which shall, in the aggregate, be signed by the Parties and each counterpart shall be deemed an original instrument as against any Party who has signed it.
(k) Facsimile or Electronic Delivery . This Agreement may be duly executed and delivered by a Party by execution and facsimile or electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party, and, if delivery is made by facsimile or other electronic format, the executing Party shall promptly deliver, via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Agreement shall be binding on and enforceable against the executing Party whether or not it delivers such original counterpart.
(l) Dispute Resolution. In the event a dispute arises between the Parties regarding the application or interpretation of this Agreement, the aggrieved Party shall promptly notify the other Party of its intent to invoke this dispute resolution procedure within ten (10) Business Days after such dispute arises. If the Parties shall fail to resolve the dispute within ten (10) Business Days after delivery of such notice, each Party shall, within five (5) Business Days thereafter, nominate a senior officer of its management to meet at the Facility, or at any other mutually agreed location, to resolve the dispute. If the dispute remains unresolved within ten (10) Business Days after such a meeting has commenced, each Party, without further delay, shall have the right to pursue any 10 and all remedies available at law or in equity. The pendency of any dispute under this Agreement shall not of itself relieve any Party of any duty to perform under this Agreement.
(m) Non-Recourse. Notwithstanding anything to the contrary provided in this Agreement, it is specifically understoo d and agreed that there shall be absolutely no personal liability on the part of any of the partners, members, shareholders, or a ffiliates of the Parties, or any of their respective directors, officers, employees, agents or representatives, (each, a “Protected Person”) for the payment of any amounts due or the performance of any other obligation of any Party under this Agreement. Each Party shall look solely to the assets of the other Parties for the satisfaction of each and every right or remedy under or in connection with this Agreement. In furtherance of the foregoing, Owner and Member each agrees that it shall neither seek or obtain, nor be entitled to seek or obtain, any deficiency or other judgment against any Protected Person for any action or inact ion under or in connection with this Agreement, and Owner and Member each releases all such Protected Persons from any such claims by Member or Owner, as the case may be.
[Signature Page Follows]
[Signature Page to Program Support Agreement]
IN WITNESS WHEREOF, the parties have executed this Program Support Services Agreement as of the date first written above.
MEMBER:
City of Pomona,
a California municipal corporation,
d/b/a Pomona Choice Energy
By: ____________________________
Name: ___________________________
Title: ___________________________
OWNER:
Participate.Energy LLC
a Delaware limited liability company
By: ____________________________
Name: ___________________________
Title: ___________________________
EXHIBIT A
PROGRAM SUPPORT SERVICES SCHEDULE
1. Member shall provide Level 1 System Support for all Systems included under the Power Purchase Agreement, including without limitation maintaining and coordinating all personnel, activities, and infrastructure reasonably required for such Level 1 Support Services . “Level 1 Support Services” shall include:
a) Provide first contact and Customer interaction for any System-related communication via email and telephone;
b) Clarify general System functions and featur es via email or telephone upon receipt of Customer requests;
c) To the extent possible by telephone or email, verify, analyze and correct System problems reported by Customers;
d) Create incident reports, including initial analysis, for System problems that cannot be corrected by telephone or email;
e) Forward incident reports to Tesla promptly upon report of any System problem that cannot be corrected by Member by telephone or email;
f) Period reporting to Owner and Tesla of all significant System- related Customer interactions.