AMENDMENT NO. 1 AND CONSENT TO FINANCING AGREEMENT
Exhibit 10.11(a)
AMENDMENT NO. 1 AND CONSENT TO FINANCING AGREEMENT
This Amendment No. 1 and Consent to Financing Agreement (this “Agreement”) is entered into as of May 9, 2025 (the “Effective Date”) by and among PELICANS JAW MEMBER B, LLC, a Delaware limited liability company (the “Class B Member”), PELICANS JAW SOLAR, LLC, a Delaware limited liability company (the “Project Company” and, together with the Class B Member, each individually a “Borrower” and, collectively, the “Borrowers”), PELICANS JAW TE HOLDCO, LLC, a Delaware limited liability company (the “Tax Holdco”), PELICANS JAW CONSTRUCTION HOLDCO, LLC, a Delaware limited liability company (the “Construction Holdco”), PELICANS JAW CLASS B MEMBER HOLDCO, LLC, a Delaware limited liability company (the “Parent”), SBE US HOLDINGS ONE, LLC, a Delaware limited liability company (the “Sponsor”), MUFG BANK, LTD., as administrative agent (in such capacity, together with its successors and permitted assigns, the “Administrative Agent”), U.S. Bank Trust Company National Association, as collateral agent (in such capacity, together with its successors and permitted assigns, the “Collateral Agent”) and the Lenders party hereto (constituting the Supermajority Lenders).
WHEREAS, reference is made to that certain Financing Agreement, dated as of December 23, 2024, by and among the Project Company, the Class B Member, the Administrative Agent, the financial institutions from time to time parties thereto as lenders (collectively, the “Lenders”) and as issuers of letters of credit, the Collateral Agent, and the other agents and persons from time to time party thereto (as amended, restated, amended and restated, supplemented or otherwise modified and in effect from time to time prior to the date hereof, the “Existing Financing Agreement”, and as further amended by this Agreement, the “Financing Agreement”).
WHEREAS, reference is made to that certain Advance Rate Guaranty and Equity Contribution Agreement, dated as of December 23, 2024, by and among the Sponsor and the Collateral Agent (as may be amended, restated, amended and restated, supplemented or otherwise modified and in effect from time to time, the “Advance Rate Guaranty”).
WHEREAS, reference is made to that certain letter agreement, dated as of December 23, 2024, delivered by the Sponsor to Class B Member, Tax Holdco, the Administrative Agent and the Collateral Agent (as may be amended, restated, amended and restated, supplemented or otherwise modified and in effect from time to time, the “Tax Indemnity Agreement”).
WHEREAS, the Class B Member desires to (A) enter into, and to cause the applicable Borrower Entities to enter into that certain (i) Equity Capital Contribution Agreement, by and among Class B Member, Tax Holdco and FNBC Leasing Corporation, a Delaware corporation (the “TE Investor”), substantially in the form attached hereto as Exhibit A-1 (the “TE ECCA”), (ii) Membership Interest Purchase Agreement, between Tax Holdco and Construction Holdco, substantially in the form attached hereto as Exhibit A-2 (the “TE MIPA”), (iii) Amended and Restated Limited Liability Company Agreement of Tax Holdco, between Class B Member and the TE Investor, substantially in the form attached hereto as Exhibit A-3 (the “Tax Holdco LLCA”), (iv) Consent and Agreement (ECCA and LLCA), by and among the Class B Member,
the TE Investor, Tax Holdco and the Collateral Agent, substantially in the form attached hereto as Exhibit A-4 (the “TE Consent and Agreement (ECCA/LLCA)”), (v) Consent and Agreement (MIPA), by and among Tax Holdco, Construction Holdco and the Collateral Agent, substantially in the form attached hereto as Exhibit A-5 (the “TE Consent and Agreement (MIPA) (Tax Holdco)”), (vi) Consent and Agreement (MIPA), by and among Tax Holdco, Construction Holdco and the Collateral Agent, substantially in the form attached hereto as Exhibit A-6 (the “TE Consent and Agreement (MIPA) (Construction Holdco)”) and (vii) Guaranty, made by the Sponsor in favor of the Collateral Agent, substantially in the form attached hereto as Exhibit A-7 (the “TE Cash Diversion Guaranty”) and (B) procure the Sponsor to enter into that certain Guaranty (ECCA & LLCA), by the Sponsor in favor of the TE Investor, substantially in the form attached hereto as Exhibit A-8 (the “TE Sponsor Guaranty” and collectively, the “Proposed Tax Equity Documents”, and upon the execution thereof, the “Executed Tax Equity Documents” and the tax equity transaction contemplated thereby, the “Proposed Tax Equity Transaction”).
WHEREAS, in connection with the Proposed Tax Equity Transaction, the Borrower desires to amend certain provisions of the Existing Financing Agreement.
WHEREAS, pursuant to Section 5.32(d) of the Existing Financing Agreement, the Class B Member desires to deliver to the Lenders the TE Documentation Effective Date Base Case Forecast in the same form as Exhibit B (the “Proposed TE Documentation Effective Date Base Case Forecast”).
WHEREAS, in connection with the Proposed Tax Equity Transaction, the Borrower desires to confirm the termination of the Advance Rate Guaranty and Tax Indemnity Agreement.
WHEREAS, pursuant to Section 5.32(i) of the Existing Financing Agreement, (x) without the written consent of the Supermajority Lenders, no Borrower Entity shall enter into any TE Documents, (y) a TE Document may be executed and upon the execution thereof shall be deemed a TE Document under the Existing Financing Agreement if the document shall be reasonably acceptable to the Supermajority Lenders (such consent not to be unreasonably withheld, conditioned, or delayed) and (z) the TE Documentation Effective Date Base Case Forecast shall be reasonably acceptable to the Supermajority Lenders (such consent not to be unreasonably withheld, conditioned, or delayed).
WHEREAS, pursuant to Section 10.9(c) of the Existing Financing Agreement, without the consent of the Supermajority Lenders (or the Administrative Agent with the consent in writing of the Supermajority Lenders, as applicable), the Borrower shall not amend certain provisions of the Existing Financing Agreement.
WHEREAS, on February 11, 2025, the EPC Contractor commenced limited construction work at the Project prior to obtaining the necessary permit (the “PV Building Permit”) from Kern County (the “PV Building Permit Non-compliance”). On April 10, 2025, the Borrower Entities became aware that Kern County does not allow limited work prior to building permit issuance and provided notice regarding such events to the Administrative Agent on April 19, 2025, which may constitute a failure to promptly inform the Administrative Agent of the PV Building Permit Non-compliance (the “Failure to Notify”).
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WHEREAS, on April 16, 2025, the Project Company submitted a Notice of Construction Loan Borrowing requesting the borrowing of Construction Loans on April 21, 2025, where the Project Company made the representation that no Default or Event of Default has occurred and is continuing or would result from the making of the requested Construction Loans and the representations and warranties set forth in Article 4 of the Financing Agreement are true and correct in all material respects as of April 16, 2025 (the “Misrepresentation”).
WHEREAS, pursuant to Section 5.3(d) of the Financing Agreement, the Borrower is required to promptly, upon acquiring written notice or given written notice, or any Borrower Entity obtaining knowledge thereof, deliver to the Administrative Agent written notice of any Default or Event of Default.
WHEREAS, pursuant to Section 5.8(c) of the Financing Agreement, the Borrower shall at or before the time that any Permit becomes an Applicable Permit, obtain such Permit.
WHEREAS, pursuant to Section 5.18 of the Financing Agreement, the Borrower shall use commercially reasonable efforts to ensure that the Project is constructed substantially in accordance with Applicable Permits and Legal Requirements.
WHEREAS, pursuant to Section 8.1(c) of the Financing Agreement, if any representation or warranty made by any Borrower Entity in the Financing Documents shall prove to have been untrue or incorrect in any material respect as of the date made shall constitute an Event of Default.
WHEREAS, the Borrower requests that the Administrative Agent (with the prior consent in writing of the Majority Lenders) consent and agree to waive any Default or Event of Default arising from (i) the PV Building Permit Non-compliance, (ii) the Misrepresentation and (iii) the Failure to Notify (the “Waivers”).
WHEREAS, the Borrower desires to obtain the consent of the Administrative Agent and the applicable Lenders to (i) enter into the Proposed Tax Equity Documents and effectuate the Proposed Tax Equity Transaction and (ii) amend certain provisions of the Existing Financing Agreement and (iii) the TE Documentation Effective Date Base Case Forecast.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. All capitalized terms used, but not otherwise defined, herein, including in the introductory and recital paragraphs above, shall have the meanings assigned thereto, directly or by reference, in Exhibit A to the Financing Agreement. The rules of interpretation contained in Exhibit A of the Financing Agreement shall apply to this Agreement as if set forth in this Agreement.
SECTION 2. Consents and Confirmation.
(a) The Borrower hereby requests that each of the Lenders party hereto (constituting the Supermajority Lenders) consents to the Borrower and the applicable Borrower
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Entities entering into the Proposed Tax Equity Documents and effectuating the Proposed Tax Equity Transaction. Effective upon satisfaction of the conditions set forth in Section 4 below, each of the Lenders party hereto (constituting the Supermajority Lenders) hereby confirms and agrees that (i) each of the Proposed Tax Equity Documents is in form and substance reasonably satisfactory to the Lenders (constituting the Supermajority Lenders), (ii) the Executed Tax Equity Documents are deemed “TE Documents” under the Financing Agreement and (iii) the Proposed TE Documentation Effective Date Base Case Forecast is in form and substance reasonably satisfactory to the Supermajority Lenders.
(b) The Borrower hereby requests that the Lenders party hereto (constituting the Supermajority Lenders) consent, and the Lenders party hereto (constituting the Supermajority Lenders) hereby consent to amending the Existing Financing Agreement as set forth in Section 3 below.
(c) The Borrower hereby requests that the Lenders (constituting the Supermajority Lenders) party hereto acknowledge, and such Lenders hereby acknowledge, that upon the consummation of the Proposed Tax Equity Transaction, the TE Documentation Effective Date (as defined in the Existing Financing Agreement) and the Tax Documentation Effective Date (as defined in the Existing Financing Agreement) has occurred, and that each such date has occurred prior to the Tax Deadline Date (as defined in the Existing Financing Agreement and including for purposes of Section 2.10(e) and Section 5.35 of the Existing Financing Agreement).
(d) The Borrower hereby requests that the Administrative Agent and the Collateral Agent acknowledge, and the Administrative Agent and the Collateral Agent hereby acknowledge (and the Lenders party hereto direct the Administrative Agent and the Collateral Agent to acknowledge), that upon the consummation of the Proposed Tax Equity Transaction, the Guaranty Termination Date (as defined in the Advance Rate Guaranty) will have occurred and the Advance Rate Guaranty is terminated in accordance with its terms as of the occurrence of the TE Documentation Effective Date.
(e) The Borrower hereby requests that the Administrative Agent and the Collateral Agent acknowledge, and the Administrative Agent and the Collateral Agent hereby acknowledge (and the Lenders party hereto direct the Administrative Agent and the Collateral Agent to acknowledge), that upon the consummation of the Proposed Tax Equity Transaction, the Tax Indemnity Agreement and the obligations of the Sponsor thereunder (other than with respect to Section 19 thereof) have terminated in accordance with its terms as of the occurrence of the TE Documentation Effective Date.
(f) The Borrower hereby requests that the Administrative Agent consents and agrees, and the Administrative Agent (with the prior consent in writing of the Majority ▇▇▇▇▇▇▇) hereby consents and agrees to provide the Waivers.
SECTION 3. Amendments to Existing Financing Agreement. Effective upon satisfaction of the conditions set forth in Section 4 below, pursuant to Section 10.9 of the Existing Financing Agreement, each of the Borrower, the Administrative Agent (acting at the direction of and with the consent of the Lenders party hereto (constituting the Supermajority
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Lenders)) and the Lenders party hereto (constituting the Supermajority Lenders) (which, for the avoidance of doubt, shall constitute the percentage specified in the event that the Acceptable TE Investor (as defined in the Existing Financing Agreement) is FNBC Leasing Corporation and the terms of the TE Documents or the Acceptable Tax Term Sheet (as defined in the Existing Financing Agreement), as applicable, are substantially similar to those reflected in the TE Term Sheet) hereby agrees as follows:
(a) The Existing Financing Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit C-1 hereto.
(b) Exhibit A (Definitions and Rules of Interpretation) to the Existing Financing Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit C-2 hereto.
(c) Exhibit J (Schedule of Lender Commitments) to the Existing Financing Agreement is hereby amended and restated in its entirety as set forth in Exhibit C-3 hereto.
(d) Exhibit K (Amortization Schedule) to the Existing Financing Agreement is hereby amended and restated in its entirety as set forth in Exhibit C-4 hereto.
(e) The Borrower hereby requests that the Administrative Agent and the Collateral Agent acknowledge, and the Administrative Agent and the Collateral Agent hereby acknowledge (and the Lenders party hereto direct the Administrative Agent and the Collateral Agent to acknowledge) that (i) immediately prior to the Effective Date, the Total Construction Loan Commitment and outstanding Construction Loans and the Total Bridge Loan Commitment and outstanding Bridge Loans of each Lender are as set forth on Part A of Exhibit D and (ii) immediately after the occurrence of the Effective Date, the Total Construction Loan Commitment and outstanding Construction Loans and the Total Bridge Loan Commitment and outstanding Bridge Loans of each Lender are as set forth on Part B of Exhibit D.
SECTION 4. Condition Precedent to Effectiveness. This Agreement shall become effective as of the Effective Date only upon satisfaction by the Borrower of each of the following conditions to the reasonable satisfaction of the Administrative Agent and the Supermajority Lenders (unless waived in writing by the Administrative Agent with the consent of the Supermajority Lenders):
(a) Delivery to the Administrative Agent of executed counterparts of this Agreement from the Project Company, Class B Member, each other Borrower Entity, the Administrative Agent, the Collateral Agent and the Lenders party hereto (constituting Supermajority Lenders);
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(b) Delivery to the Administrative Agent of the Executed Tax Equity Documents (other than the Tax Holdco LLCA) in the forms attached hereto as Exhibits A-1 through A-8;
(c) Delivery to the Administrative Agent of a certificate from each Borrower Entity, the Sponsor and the TE Investor, in form and substance reasonably satisfactory to the Administrative Agent, signed by a Responsible Officer of each such entity, dated as of the Effective Date, as to the incumbency of the natural persons authorized to execute and deliver the Operative Documents and/or the Proposed Tax Equity Documents, as applicable, to which such entity is a party;
(d) Delivery to the Administrative Agent of a copy of (i) the certificate of formation of each Borrower Entity, the Sponsor and the TE Investor, in form and substance reasonably satisfactory to the Administrative Agent, certified as of a recent date by the Secretary of State or other appropriate state entity of the jurisdiction of organization of each Borrower Entity, the Sponsor and the TE Investor, and (ii) the limited liability agreement or bylaws, as applicable, of each Borrower Entity, the Sponsor and the TE Investor, and any related agreements or certificates filed in accordance with applicable State law with respect to each such entity;
(e) Delivery to the Administrative Agent of certificates of good standing issued by the Secretary of State or other appropriate state entity of the jurisdiction of organization of each Borrower Entity, the Sponsor and the TE Investor;
(f) Delivery to the Administrative Agent of an opinion, in form and substance reasonably satisfactory to the Administrative Agent and the Supermajority Lenders and dated as of the Effective Date of:
(i) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel to the Borrower Entities and the Sponsor (addressing customary corporate and enforceability with respect to this Agreement and the Executed Tax Equity Documents); and
(ii) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, as special counsel to the TE Investor (addressing customary corporate and enforceability with respect to the Executed Tax Equity Documents);
(g) Delivery to the Administrative Agent of all such documentation and information requested by the Administrative Agent and the Secured Parties that are necessary for the Administrative Agent and the Secured Parties to identify TE Investor in accordance with the requirements of the Patriot Act (including the “know your customer” rules and regulations and similar rules and regulations thereunder);
(h) Delivery to the Administrative Agent of the TE Documentation Effective Date Base Case Forecast, in form and substance reasonably acceptable to the Administrative Agent and the Supermajority Lenders;
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(i) Delivery to the Administrative Agent of an updated Cost Segregation Report and Appraisal, in form and substance reasonably satisfactory to the Administrative Agent and the Supermajority Lenders;
(j) Delivery to the Administrative Agent of copies of the Domestic Content Bonus Certificate (Effective Date) and Energy Community Bonus Certificate (Effective Date) (each as defined in the TE ECCA) that are being delivered to the TE Investor pursuant to the terms of the TE ECCA;
(k) Payment of all fees, costs and other expenses and all other amounts then due and payable by the Borrower pursuant to the Financing Agreement and Section 7(a) hereof;
(l) The representations and warranties set forth in Section 5 are true and correct in all material respects as of the Effective Date; and
(m) No Default or Event of Default has occurred and is continuing as of the Effective Date or would result from this Agreement becoming effective in accordance with its terms.
SECTION 5. Representations and Warranties. Each Borrower Entity and the Sponsor hereby represents and warrants to the Administrative Agent, the Collateral Agent and the Lenders that, as of the Effective Date:
(a) Each Borrower Entity and the Sponsor is a limited liability company and (i) is duly formed, validly existing and in good standing under the laws of the State of Delaware; (ii) is authorized to do business and is in full force and effect in the State of Delaware and in good standing (or other jurisdictional equivalent) in each other jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary; and (iii) has all requisite limited liability company power and authority to own or hold under lease the property it purports to own or hold under lease and to carry on its business as now being conducted and as proposed to be conducted under this Agreement.
(b) Each Borrower Entity and the Sponsor has duly authorized, executed and delivered this Agreement and the Financing Agreement, and neither such Borrower Entity’s and Sponsor’s execution and delivery of this Agreement nor the performance of this Agreement or the Financing Agreement (i) is in conflict with or results in a breach of such Borrower Entity’s or Sponsor’s organizational documents; (ii) violates any other Legal Requirement applicable to or binding on such Borrower Entity, the Sponsor or any of their respective properties, except for any such violation of a Legal Requirement that would not reasonably be expected to have a Material Adverse Effect; (iii) results in any material breach of or constitute any material default under, or results in or requires the creation of any Lien (other than Permitted Liens) upon any of the Collateral under, any Material Project Document to which it is a party or by which it or any of the Collateral may be bound or affected; or (iv) requires the material consent or approval of any Person, which has not already been obtained.
(c) Assuming the due authorization, execution and delivery by each other party hereto, each of this Agreement and the Financing Agreement is a legal, valid and binding
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obligation of each Borrower Entity and the Sponsor, enforceable against such Borrower Entity and the Sponsor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and subject to general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).
(d) No Default or Event of Default has occurred and is continuing prior to, or after the occurrence of, the Effective Date.
(e) Each of the representations and warranties set forth in Article 4 of the Financing Agreement and in the other Financing Documents are true and correct in all material respects as if made on such date (unless such representation or warranty (A) is already qualified by “materiality” or “Material Adverse Effect”, and, if so, such representation and warranty shall be true and correct in all respects and (B) relates solely to an earlier date, in which case it shall have been true and correct in all material respects (or, if clause (A) is applicable, all respects) as of such earlier date).
SECTION 6. Reaffirmation of Security and Guarantees.
(a) Each Borrower Entity party hereto hereby (a) acknowledges and agrees that each of the Financing Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its payment obligations, guarantees, pledges, grants of security interests and other obligations, as applicable, under and subject to the terms of such Financing Documents shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Agreement or any of the transactions contemplated hereby and (b) confirms the security interests in the Collateral granted by it pursuant to the applicable Collateral Documents in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Collateral Documents.
(b) The Sponsor hereby acknowledges and agrees that each Sponsor Guaranty shall continue in full force and effect and that all of its guarantees, payment and other obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Agreement or any of the transactions contemplated hereby.
SECTION 7. Miscellaneous.
(a) Costs and Expenses. Without limiting the obligations of the Borrowers under the Financing Agreement, the Borrowers agree to pay or reimburse to the Administrative Agent and the Collateral Agent all of their reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of this Agreement in accordance with the terms of Section 13.4 of the Financing Agreement, including all reasonable and documented fees, disbursements and other charges of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, as counsel for the Administrative Agent.
(b) Reference to and Effect on other Financing Documents. On and after the Effective Date, each reference in the Financing Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Financing Agreement, and each
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reference in the other Financing Documents to the Financing Agreement, “thereunder”, “thereof” or words of like import referring to the Financing Agreement, shall mean and be a reference to the Financing Agreement.
(c) Continuing Effect; No Waiver. Except as set forth herein, all of the terms and provisions of the Financing Agreement and the other Financing Documents are and shall remain in full force and effect and are hereby ratified and confirmed. This is a limited amendment and one-time consent, and the execution and delivery of this Agreement shall not, except as expressly provided herein, constitute (a) a waiver or amendment of any provision of any Financing Document, (b) a waiver of any Default, Event of Default, or any other breach of the Financing Agreement or any Financing Document, whether now existing or hereafter arising, or (c) a waiver of any right, power or remedy of any Agent or any of the Secured Parties under any Financing Document, including, other than as expressly set forth herein, rights, powers and remedies arising out of or relating to any existing Defaults or Events of Default. No course of dealing and no failure or delay by any Secured Party in exercising any right, power or remedy under any Financing Document shall operate as a waiver thereof or otherwise prejudice the rights, powers or remedies of such Secured Party. This Agreement shall be a “Financing Document” for purposes of the definition thereof in the Financing Agreement.
(d) Electronic Execution. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept electronic signatures in any form or in any format in the event that the Administrative Agent shall have notified the Borrower in writing that a manually executed signature is required with regard to any one or more documents.
(e) GOVERNING LAW. THIS AGREEMENT AND ANY INSTRUMENT OR AGREEMENT REQUIRED HEREUNDER (TO THE EXTENT NOT EXPRESSLY PROVIDED FOR THEREIN), SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAWS PROVISIONS THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
(f) Incorporation by Reference. Sections 13.8 (Severability), 13.9 (Headings), 13.13 (Limitation on Liability), 13.14 (Waiver of Jury Trial), 13.15 (Consent to Jurisdiction) and 13.19 (Counterparts) of the Financing Agreement are hereby incorporated by reference as if fully set forth in this Agreement mutatis mutandis.
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(g) Direction. The Lenders party to this Agreement (constituting Supermajority Lenders) hereby direct the Administrative Agent and the Collateral Agent to execute this Agreement.
(h) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
[Signature Pages Follow]
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IN WITNESS THEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective proper and duly authorized officers, representative or authorized persons as of the day and year first above written.
| PELICANS JAW SOLAR, LLC, | ||||||||||||||
| as a Borrower | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
| PELICANS JAW MEMBER B, LLC, | ||||||||||||||
| as a Borrower | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
| PELICANS JAW TE HOLDCO, LLC, | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
| PELICANS JAW CLASS B MEMBER | ||||||||||||||
| HOLDCO, LLC, | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| PELICANS JAW CONSTRUCTION | ||||||||||||||
| HOLDCO, LLC, | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
| SBE US HOLDINGS ONE, LLC, | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| Accepted and Acknowledged by: | ||||||||||||||
| U.S. BANK TRUST COMPANY, | ||||||||||||||
NATIONAL ASSOCIATION as | ||||||||||||||
| Collateral Agent | ||||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||||||||
| Title: Authorized Signer, VP | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| MUFG BANK, LTD., | ||||||||||||||
| as Administrative Agent | ||||||||||||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇ ▇. ▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
| MUFG BANK, LTD., | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇ ▇. ▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| ING CAPITAL LLC | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇ ▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇ ▇▇ | ||||||||||||||
| Title: Director | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||||||||||||
| Title: Director | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| MIZUHO BANK, LTD., | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ | ||||||||||||||
| Title: Director | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| SUMITOMO MITSUI BANKING | ||||||||||||||
| CORPORATION, | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇ ▇▇▇ | |||||||||||||
| Name: ▇▇▇▇ ▇▇▇ | ||||||||||||||
| Title: Managing Director | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| COMMONWEALTH BANK OF | ||||||||||||||
| AUSTRALIA, | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | ||||||||||||||
| Title: Director | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| JPMORGAN CHASE BANK, N.A., | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| ROYAL BANK OF CANADA, | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||||||||||||||
| Title: Authorized Signatory | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| SOCIETE GENERALE, | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇ | ||||||||||||||
| Title: Vice President | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
| TRUIST BANK, | ||||||||||||||
| as a Lender | ||||||||||||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||||||||||||
| Title: Managing Director | ||||||||||||||
[Signature Page to Amendment No. 1 and Consent to Financing Agreement]
Exhibit A-1
TE ECCA
[Attached]
EQUITY CAPITAL CONTRIBUTION AGREEMENT
by and among
PELICANS JAW MEMBER B, LLC
FNBC LEASING CORPORATION
and
PELICANS JAW TE HOLDCO, LLC
Dated as of May 9, 2025
TABLE OF CONTENTS
| Page | ||||||||
| ARTICLE I DEFINITIONS | 2 | |||||||
| Section 1.1 | Definitions | 2 | ||||||
| Section 1.2 | Other Definitional Provisions | 22 | ||||||
| ARTICLE II CAPITAL CONTRIBUTIONS | 23 | |||||||
| Section 2.1 | Equity Capital Contributions | 23 | ||||||
| Section 2.2 | Use of Proceeds | 23 | ||||||
| Section 2.3 | Tax Treatment | 24 | ||||||
| Section 2.4 | Updates to the Base Case Model and Capital Contributions | 25 | ||||||
| ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CLASS B EQUITY INVESTOR | 27 | |||||||
| Section 3.1 | Organization and Good Standing; Etc | 27 | ||||||
| Section 3.2 | Execution, Delivery and Enforceability | 27 | ||||||
| Section 3.3 | No Conflicts | 28 | ||||||
| Section 3.4 | Tax Status | 28 | ||||||
| Section 3.5 | Prohibited Person | 29 | ||||||
| Section 3.6 | Absence of Litigation | 29 | ||||||
| Section 3.7 | Transaction Documents | 29 | ||||||
| Section 3.8 | Company Ownership | 30 | ||||||
| Section 3.9 | Project Company Ownership | 30 | ||||||
| Section 3.10 | Taxes | 31 | ||||||
| Section 3.11 | Compliance with Applicable Laws | 33 | ||||||
| Section 3.12 | Environmental Matters | 33 | ||||||
| Section 3.13 | Material Project Contracts and Defaults | 34 | ||||||
| Section 3.14 | Real Property | 34 | ||||||
| Section 3.15 | Personal Property | 35 | ||||||
| Section 3.16 | Governmental Approvals, Permits and Filings | 35 | ||||||
| Section 3.17 | Employee Matters | 36 | ||||||
| Section 3.18 | Affiliate Transactions | 37 | ||||||
| Section 3.19 | Books and Records | 37 | ||||||
| Section 3.20 | No Broker Fees | 37 | ||||||
| Section 3.21 | Foreign Person | 37 | ||||||
| Section 3.22 | Regulatory Status | 37 | ||||||
| Section 3.23 | Liens | 38 | ||||||
| Section 3.24 | Insurance | 38 | ||||||
| Section 3.25 | State Utility Regulation | 38 | ||||||
| Section 3.26 | Commitments | 39 | ||||||
i
| Section 3.27 | Financial Statements | 39 | ||||||
| Section 3.28 | Investment Company | 39 | ||||||
| Section 3.29 | Information | 39 | ||||||
| Section 3.30 | No Other Representation | 40 | ||||||
| ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE CLASS A EQUITY INVESTOR | 40 | |||||||
| Section 4.1 | Organization and Good Standing, Etc | 40 | ||||||
| Section 4.2 | Execution, Delivery and Enforceability | 41 | ||||||
| Section 4.3 | No Conflicts | 41 | ||||||
| Section 4.4 | Legal Proceedings | 41 | ||||||
| Section 4.5 | Investment Intent; Restricted Securities | 41 | ||||||
| Section 4.6 | Accredited Investors | 41 | ||||||
| Section 4.7 | Related Party Tax-Exempt Status | 42 | ||||||
| Section 4.8 | Brokers | 42 | ||||||
| Section 4.9 | Prohibited Person | 42 | ||||||
| Section 4.10 | CFIUS Rules Inapplicable | 42 | ||||||
| Section 4.11 | Regulatory Status | 42 | ||||||
| Section 4.12 | No Other Representations | 43 | ||||||
| ARTICLE V CONDITIONS TO OBLIGATIONS OF THE CLASS A EQUITY INVESTOR | 43 | |||||||
| Section 5.1 | Conditions Precedent to the effectiveness of this Agreement on the Effective Date | 43 | ||||||
| Section 5.2 | Conditions Precedent to the Obligations of the Class A Equity Investor on the Mechanical Completion Funding Date | 47 | ||||||
| Section 5.3 | Conditions Precedent to the Obligations of the Class A Equity Investor on the Substantial Completion Funding Date | 53 | ||||||
| ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE CLASS B EQUITY INVESTOR | 60 | |||||||
| Section 6.1 | Conditions Precedent to the Obligations of the Class B Equity Investor on the Effective Date | 60 | ||||||
| Section 6.2 | Conditions Precedent to the Obligations of the Class B Equity Investor on each Equity Capital Contribution Date | 60 | ||||||
| ARTICLE VII FUNDING DATES; FURTHER ASSURANCES; EXPENSES; INTERIM COVENANTS | 61 | |||||||
| Section 7.1 | Mechanical Completion Funding Date | 61 | ||||||
| Section 7.2 | Substantial Completion Funding Date | 61 | ||||||
| Section 7.3 | Further Assurances | 61 | ||||||
| Section 7.4 | Domestic Content Bonus; Energy Community Bonus | 61 | ||||||
| Section 7.5 | Prevailing Wage and Apprenticeship | 62 | ||||||
ii
| Section 7.6 | Payment of Expenses | 63 | ||||||
| Section 7.7 | Transmission Upgrades | 63 | ||||||
| Section 7.8 | Other Deliverables | 64 | ||||||
| Section 7.9 | Code Section 6418 Tax Law Change and Proposed Tax Law Change | 64 | ||||||
| ARTICLE VIII INDEMNIFICATION | 64 | |||||||
| Section 8.1 | Indemnification by the Class B Equity Investor | 64 | ||||||
| ARTICLE IX GENERAL PROVISIONS | 65 | |||||||
| Section 9.1 | Notices | 65 | ||||||
| Section 9.2 | Complete Agreement | 65 | ||||||
| Section 9.3 | Governing Law; Construction | 66 | ||||||
| Section 9.4 | Jurisdiction; Service of Process | 66 | ||||||
| Section 9.5 | WAIVER OF JURY TRIAL | 66 | ||||||
| Section 9.6 | Attorneys’ Fees | 66 | ||||||
| Section 9.7 | Severability | 66 | ||||||
| Section 9.8 | Public Announcements | 67 | ||||||
| Section 9.9 | Further Assurances | 67 | ||||||
| Section 9.10 | Counterparts | 67 | ||||||
| Section 9.11 | Amendment and Modification | 67 | ||||||
| Section 9.12 | Confidentiality | 67 | ||||||
| Section 9.13 | Assignment | 67 | ||||||
| Section 9.14 | No Strict Construction | 68 | ||||||
| Section 9.15 | Effect of Waiver or Consent | 68 | ||||||
| Section 9.16 | Third Parties | 68 | ||||||
| Section 9.17 | Disclosure | 68 | ||||||
iii
| SCHEDULES AND EXHIBITS: | |||||
| Exhibit A | Base Case Model | ||||
| Exhibit B | Insurance | ||||
| Exhibit C-1 | Form of Landowner Estoppel | ||||
| Exhibit C-2 | Form of SOLV EPC Agreement Estoppel | ||||
| Exhibit C-3 | Form of Switchyard EPC Agreement Estoppel | ||||
| Exhibit C-4 | Form of Power Purchase Agreement Estoppel | ||||
| Exhibit C-5 | Form of O&M Agreement Estoppel | ||||
| Exhibit D | Knowledge Parties | ||||
| Exhibit E | Form of IE Mechanical Completion Certificate | ||||
| Exhibit F | Form of IE Substantial Completion Certificate | ||||
| Exhibit G | Form of PWA Certificate | ||||
| Exhibit H | Form of Payoff Letter | ||||
| Exhibit I | Progress Conditions | ||||
| Exhibit J | Form of Domestic Content Bonus Certificate | ||||
| Exhibit K | Form of Energy Community Bonus Certificate | ||||
| Exhibit L | Project Site | ||||
| Exhibit M | Form of LLCA | ||||
| Exhibit N | Form of Placed in Service Certificate | ||||
| Exhibit O | Form of PWA Joinder Agreement | ||||
| Schedule 3.3(b) | No Conflicts | ||||
| Schedule 3.12 | Environmental Matters | ||||
| Schedule 3.13 | Material Project Contracts, Real Estate Documents and Ancillary Real Estate Agreements | ||||
| Schedule 3.14 | Real Estate Matters | ||||
| Schedule 3.16 | Governmental Approvals, Permits and Filings | ||||
| Schedule 3.18 | Affiliate Transactions | ||||
| Schedule 3.27 | Financial Statements | ||||
iv
EQUITY CAPITAL CONTRIBUTION AGREEMENT
THIS EQUITY CAPITAL CONTRIBUTION AGREEMENT (this “Agreement”), dated as of May 9, 2025 (the “Effective Date”), is made and entered into by and among PELICANS JAW MEMBER B, LLC, a Delaware limited liability company (the “Class B Equity Investor”), FNBC LEASING CORPORATION, a Delaware corporation (the “Class A Equity Investor”) and PELICANS JAW TE HOLDCO, LLC, a Delaware limited liability company (the “Company” and, together with the Class B Equity Investor and the Class A Equity Investor, each a “Party” and together, the “Parties”).
RECITALS
A. The Company was formed on September 3, 2024, upon filing its Certificate of Formation with the Delaware Secretary of State;
B. As of the Effective Date, (i) the Class B Equity Investor is the sole member of the Company, and (ii) Pelicans Jaw Construction Holdco, LLC, a Delaware limited liability company (the “Seller”) owns one hundred percent (100%) of Pelicans Jaw Solar, LLC, a Delaware limited liability company (the “Project Company”);
C. The Project Company’s sole assets are an approximately 573 MWdc / 440 MWac solar photovoltaic power generation facility (the “PV Project”) and a 238 MWac / 954 MWh battery energy storage system (“▇▇▇▇ Project” and collectively with the PV Project, the “Project”) located in Kern County, California;
D. On the Effective Date, the Company will enter into that certain Membership Interest Purchase Agreement (the “Purchase Agreement”), between the Company and the Seller, whereby, concurrently with the Mechanical Completion Funding Date, the Company will purchase from the Seller and the Seller will sell to the Company, subject to the terms therein, one hundred percent (100%) of the limited liability company interests in the Project Company;
E. On the Mechanical Completion Funding Date, the Class A Equity Investor and the Class B Equity Investor will enter into that certain Amended and Restated Limited Liability Company Agreement of the Company (the “LLCA”) substantially in the form attached hereto as Exhibit M, which agreement will define each Member’s (as defined in the LLCA) respective interests, rights and obligations in the Company from and after the Mechanical Completion Funding Date;
F. On the Mechanical Completion Funding Date, (i) the Class B Equity Investor will cause the Company to issue additional units in the Company (the “Issued Units”) to the Class A Equity Investor, which shall be designated the Class A Units representing the Class A Units in the Company pursuant to the LLCA and (ii) the Class B Equity Investor will cause the Company to exchange the Class B Equity Investor’s existing units in the Company for Class B Units representing the Class B Units in the Company pursuant to the LLCA; and
G. The Parties intend to provide for the issuance of the Issued Units, as represented by the Class A Units, and the Class B Equity Investor and the Class A Equity Investor intend to
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ECCA – Pelicans Jaw
make their respective capital contributions to the Company, each as provided herein, the proceeds of which will be applied in accordance with Section 2.2.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
The following capitalized terms, as and when used in this Agreement, shall have the meanings set forth below:
“2021 ALTA Requirements” means the “2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys” jointly established and adopted by the American Land Title Association and the National Society of Professional Surveyors effective February 23, 2021.
“Administrator” means SB Energy DevCo (US), LLC, a Delaware limited liability company, or any successor Person who becomes the Administrator in accordance with the Investment Documents.
“Affiliate” means with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such first Person; provided, that notwithstanding the foregoing, the Affiliates of the Project Company, the Class B Equity Investor and Sponsor shall be limited to SB Energy Affiliates.
“Agreement” has the meaning set forth in the preamble hereto.
“Ancillary Real Estate Agreements” means those documents listed as “Ancillary Real Estate Agreements” under the applicable section of Schedule 3.14.
“Anti-Bribery and Anti-Corruption Laws” means (a) the FCPA and (b) all other applicable laws and regulations prohibiting domestic or foreign corruption or bribery, including laws and regulations imposed by any jurisdictions in which the Project and the Project Company is organized, operating, or doing business.
“Anti-Terrorism and Money Laundering Laws and Regulations” means applicable laws and regulations relating to money laundering and terrorism financing that (a) prohibit transactions with Persons who (i) commit, threaten to commit or support terrorism, (ii) engage in transactions or conduct operations that are illegal and / or criminal in nature, and / or (iii) participate in monetary transactions in property derived from specified unlawful activity, (b) otherwise relate to prohibiting in connection with the illegal laundering of the proceeds of any
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ECCA – Pelicans Jaw
criminal activity, or (c) prohibit the funds, proceeds, and revenue of the Project and the Project Company from being used in connection with the advancement of criminal activity.
“Appraisal” means an appraisal report from the Appraiser in respect of the Project.
“Appraiser” means DAI Management Consultants, Inc.
“Battery Power Marketing Consultant” means Energy GPS Consulting, LLC.
“Battery Power Marketing Report” means that certain WECC Market Report – ZP26 ▇▇▇▇ Focus dated March 25, 2025, prepared by the Battery Power Marketing Consultant.
“Battery Supply Agreement” means that certain Purchase Order #1, dated August 16, 2024, by and between the Project Company and BYD America LLC.
“▇▇▇▇ Circuit” has the meaning set forth in the SOLV EPC Agreement.
“▇▇▇▇ Project” has the meaning set forth in the recitals.
“Business Day” means any day other than a Saturday, a Sunday, or any other day on which banks in California or New York are authorized to be closed.
“CAISO” means the California Independent System Operator.
“CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by the Federal Energy Regulatory Commission.
“Capital Contribution” means, with respect to any Equity Investor, the amount of money and the initial Gross Asset Value of any property (other than money) contributed to or deemed contributed to the Company with respect to such Equity Investor’s Membership Interest (as defined in the LLCA). Any reference in this Agreement to the Capital Contribution of an Equity Investor shall include the Capital Contributions of its predecessors in interest.
“Capital Contribution Notice” means a request for Capital Contributions prepared by the Class B Equity Investor and delivered to the Class A Equity Investor on each date that is five (5) Business Days (or such shorter period as the Class A Equity Investor may determine) prior to each Equity Capital Contribution Date, consisting of the amount of the Capital Contribution to be made by the Class A Equity Investor on such Equity Capital Contribution Date.
“Casualty Defect” means any damage to the Project as a result of a casualty that has not been repaired and would reasonably be expected to materially interfere with (or materially increase the cost of) the operation and maintenance of the Project or the sale of electricity or RECs therefrom unless repaired.
“Certified Public Accountants” has the meaning set forth in the LLCA.
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ECCA – Pelicans Jaw
“Circuit” has the meaning set forth in the SOLV EPC Agreement.
“Claim” means any and all judgments, awards, causes of action, lawsuits, suits, proceedings, investigations by any Governmental Authority or audits, losses (including amounts paid in settlement of claims, penalties and interest), assessments, fines, penalties, administrative orders or injunctions (including any loss of profits, consequential, punitive, incidental or special damages recovered by any Third Party, but excluding (a) loss of profits, consequential, punitive, incidental or special damages asserted by any Equity Investor or an Affiliate thereof and (b) damages or losses, the recovery of which is limited by Section 8.1).
“Class A Capital Contribution” means the aggregate amount of Capital Contributions, as determined in accordance with the Base Case Model (as may be adjusted and updated pursuant to Section 2.4 in order for the Class A Equity Investor to achieve the Investment Targets), to be made by the Class A Equity Investor with respect to the Project on the Mechanical Completion Funding Date and the Substantial Completion Funding Date.
“Class A Capital Contribution Commitment” means six hundred fifty-five million one hundred nine thousand nine hundred forty seven Dollars ($655,109,947.00).
“Class A Equity Investor” has the meaning set forth in the preamble hereto.
“Class A Membership Interest” has the meaning set forth in the LLCA.
“Class A Units” has the meaning set forth in the LLCA.
“Class B Equity Investor” has the meaning set forth in the preamble hereto.
“Class B Mechanical Completion Funding Amount” means an amount equal to the sum of (i) amounts then due or payable under the Purchase Agreement and (ii) any amounts required for the Class B Equity Investor and the Company to satisfy their obligations under Sections 7.5(a) and 7.6 and to pay amounts then due and payable under any Material Project Contract by the applicable Project Entity party thereto, as of the Mechanical Completion Funding Date, less the Mechanical Completion Funding Amount contributed by the Class A Equity Investor pursuant to Section 2.2(a) in connection with the Mechanical Completion Funding Date.
“Class B Units” has the meaning set forth in the LLCA.
“Code” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“Collateral Agent” means U.S. Bank Trust Company, National Association.
“Commitment End Date” means April 1, 2027 or, if the Power Purchase Agreement is effective and there are no pending or threatened default or termination Claims thereunder, April 30, 2027.
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ECCA – Pelicans Jaw
“Company” has the meaning set forth in the preamble hereto.
“Construction Management Services Agreement” means that certain Construction Management Services Agreement, dated as of September 27, 2024, by and between the Project Company and the Administrator.
“Contract” means any contract, lease, evidence of indebtedness (including any promissory note), purchase order, letter of credit, license, obligation, or other legally binding agreement or undertaking of any nature (whether written or oral), but not including any Governmental Approvals.
“Control” means the possession, directly or indirectly, of either of the following:
(a) (i) in the case of a corporation, more than fifty percent (50%) of the outstanding voting securities thereof; (ii) in the case of a limited liability company, partnership, limited partnership or joint venture, the right to more than fifty percent (50%) of the distributions (including liquidating distributions) therefrom; (iii) in the case of a trust or estate, including a business trust, more than fifty percent (50%) of the beneficial interest therein; and (iv) in the case of any other entity, more than fifty percent (50%) of the economic or beneficial interest therein; or
(b) in the case of any entity, the power or authority, through ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of the entity.
“Cost Seg Report” means the Cost Segregation Study, attached as Appendix Two to the Appraisal, prepared by DAI Management Consultants, Inc.
“CPUC” means the California Public Utilities Commission and any successor agency thereto.
“Data Room” means the virtual data room in respect of the Project located at ▇▇▇▇▇://▇▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇/#▇▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇.
“Disclosure Schedules” means the disclosure schedules attached hereto and “Disclosure Schedule” means the applicable schedule as the context requires.
“Domestic Content Bonus” means the ten percent (10%) bonus credit in respect of “domestic content” as provided in Section 48(a)(12)(C)(ii) of the Code.
“Domestic Content Bonus Certificate” means a certificate in the form of Exhibit J.
“Domestic Content Requirements” means the Class A Equity Investor has received (i) a tax opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, as counsel to the Class A Equity Investor, in respect of the Project’s qualification for the Domestic Content Bonus at a “will” level, which opinion shall be in form and substance satisfactory to the Class A Equity Investor, (ii) written confirmation from the Tax Return preparer of the Company that the Tax Return preparer will prepare and file the applicable Tax Returns of the Company claiming the Domestic Content Bonus, (iii) on the Mechanical Completion Funding Date, to the extent available, evidence reasonably satisfactory
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ECCA – Pelicans Jaw
to the Class A Equity Investor, and on the Substantial Completion Funding Date, evidence reasonably satisfactory to the Class A Equity Investor, that the Project qualifies for the Domestic Content Bonus based on use of the “New Elective Safe Harbor” in accordance with Section 4 of IRS Notice 2024-41 pursuant to the Solar PV Table (with respect to “ground-mount tracking” projects) and the Battery Electric Storage System (▇▇▇▇) Table under Sections 4.04(1) and (3) of IRS Notice 2024-41 or the “First Updated Elective Safe Harbor” in accordance with Section 5 of IRS Notice 2025-08 pursuant to the Updated Table for the Solar PV (Ground-mount) and Battery Energy Storage Systems under Sections 5.05 and 5.07 of IRS Notice 2025-08, as applicable, as elected by Class B Equity Investor in its sole discretion in accordance with Section 11 in IRS Notice 2025- 08 (including compliance certificates, documentation, and other supporting information from the relevant Material Project Contracts or other applicable Contract parties, mill certificates for all structural steel or iron used in the Project, and (A) from the Module Supplier, receipt of a memorandum entitled “Domestic Content Bonus Credit for First Solar Series 7 Solar Modules” and a memorandum entitled “Domestic Content Bonus Credit for First Solar Series 6+ Solar Modules,” each prepared by Hunton ▇▇▇▇▇▇▇ ▇▇▇▇▇ and dated August 19, 2024, (B) with respect to the Substantial Completion Funding Date, (x) a “Domestic Content safe harbor letter” from the Module Supplier to the Project Company, (y) from Contractor, an executed Steel and Iron Product Certificate (attached as Exhibit N-2 to the SOLV EPC Agreement) and a Single-Axis Tracker Installation Certificate (attached as Exhibit N-4 to the SOLV EPC Agreement) from Contractor or other evidence reasonably satisfactory to Class A Investor that the Project’s Single Axis Tracker Equipment (as defined in Exhibit N to the SOLV EPC Agreement) was, or will be, manufactured at the Project site, and (z) from NEXTracker Inc., an executed Final Domestic Content Certificate (attached as “Exhibit N-3-Supplier” to Attachment 1 to Exhibit N-1 of the SOLV EPC Agreement), (C) with respect to the Mechanical Completion Funding Date, from NEXTracker Inc., an executed Preliminary Domestic Content Certificate (attached as “Exhibit N-3-Supplier” to Attachment 1 to Exhibit N-1 of the SOLV EPC Agreement) and from Contractor, an executed Single-Axis Tracker Equipment Certificate (attached as Exhibit N-3–Contractor to the SOLV EPC Agreement) or other evidence reasonably satisfactory to Class A Investor that the Project’s Single Axis Tracker Equipment (as defined in Exhibit N to the SOLV EPC Agreement) was manufactured at the Project site and (D) a memorandum entitled “Domestic content bonus credit under the Inflation Reduction Act”, prepared by Arent Fox Schiff and dated October 22, 2024 and, at the Class A Equity Investor’s reasonable request, any other information from the relevant Original Equipment Manufacturer that describes the applicable components’ U.S. manufacturing process), and (iv) with respect to the Effective Date and Substantial Completion Funding Date, an executed Domestic Content Bonus Certificate.
“Effective Date” has the meaning set forth in the preamble hereto.
“Effective Date Lender Consent” means that certain Consent and Agreement (ECCA and LLCA), dated as of the Effective Date, by and between the Class A Equity Investor, the Company, the Class B Equity Investor and the Collateral Agent.
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ECCA – Pelicans Jaw
“Encumber”, “Encumbering”, or “Encumbrance” means the creation, or the existence, of any lien (statutory or otherwise), mortgage, deed of trust, claim, condition, equitable interest, option, right of first refusal, lease, easement, right of way, encroachment, charge, pledge, security interest, hypothecation, assignment, use restriction, limitation or other encumbrance of any kind or nature whatsoever, whether voluntary or involuntary, ▇▇▇▇▇▇ or inchoate (including any agreement to give any of the foregoing), and any conditional sale or other title retention agreement.
“Energy Community Bonus” means the ten (10) percentage point “energy community” ITC bonus credit pursuant to Section 48(a)(14) of the Code.
“Energy Community Bonus Certificate” means a certificate in the form of Exhibit K.
“Energy Community Bonus Requirements” means the Class A Equity Investor has received (i) a tax opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, as counsel to the Class A Equity Investor, in respect of the Project’s qualification for the Energy Community Bonus at a “will” level, which opinion shall be in form and substance satisfactory to the Class A Equity Investor, and (ii) an executed Energy Community Bonus Certificate (together with any attachments or exhibits thereto) reasonably satisfactory to the Class A Equity Investor.
“Environmental Consultant” means Stantec Consulting Services, Inc.
“Environmental Law” means any applicable Law pertaining to, regulating, relating to or imposing liability, standards or obligations of conduct concerning (a) the prevention, abatement or elimination of pollution, (b) the protection or preservation of the environment, wildlife, wildlife habitat, cultural or archeological resources, natural resources, (c) the actual or threatened Release, manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of, or exposure to, any Hazardous Substance, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. § 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. § 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the National Environmental Policy Act (42 U.S.C. § 4321 et seq.), the Endangered Species Act (16 U.S.C. § 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. § 703 et seq.), the Bald and Golden Eagle Protection Act (16 U.S.C. § 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. § 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), Section 106 of the National Historic Preservation Act of 1966, as amended (54 U.S.C. § 306108), Section 10 of the Rivers and Harbors Appropriation Act of 1899, and the Occupational Safety and Health Act of 1970 (to the extent that it relates to the exposure to Hazardous Substances), and any similar or analogous state and local statutes or regulations promulgated thereunder of by any Governmental Authority, and all Governmental Approvals issued under such Environmental Laws.
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“Environmental Reports” means those certain Phase I and II Environmental Site Assessments for the Pelicans Jaw Solar Project, located in Kern County, California, prepared for the Project Company, dated as of June 14, 2024 (Phase I), November 4, 2024 (Phase I) and July 11, 2024 (Phase II), prepared by the Environmental Consultant.
“EPC Agreements” means, collectively, the SOLV EPC Agreement and the Switchyard EPC Agreement.
“EPC Contractors” means, collectively, the SOLV EPC Contractor and the Switchyard EPC Contractor.
“Equity Capital Contribution Date” means the Mechanical Completion Funding Date or Substantial Completion Funding Date, as applicable.
“Equity Investors” means the Class A Equity Investor and the Class B Equity Investor.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“EWG” means an “exempt wholesale generator” as such term is defined in Section 1262(6) of PUHCA and FERC’s rules at 18 C.F.R. §§ 366.1.
“Executive Branch” means, collectively, the President of the United States, the Executive Office of the President, and any federal administrative agency, department or commission that is part of or under the direct authority of the President of the United States.
“Fair Market Value” has the meaning set forth in the LLCA.
“FCPA” means the U.S. Foreign Corrupt Practices Act of 1977, as amended.
“Fee Letter” means that certain Fee Letter, dated as of the date hereof, by and between the Class A Equity Investor and Sponsor.
“FERC” means the Federal Energy Regulatory Commission or any successor organization.
“Final Completion” has the meaning given to “Final Acceptance” in the EPC Agreements.
“Final Completion Reserve Account” means the reserve account, in the sole name of the Company, into which the amount of the Final Completion Holdback will be deposited on the Substantial Completion Funding Date pursuant to Section 2.2(c)(iii).
“Financing Agreement” means that certain Financing Agreement dated as of December 23, 2024, by and among the Project Company, as borrower, Class B Equity Investor, as borrower, MUFG Bank Ltd., as administrative agent thereunder, including its successors, designees and permitted assigns in such capacity, U.S. Bank Trust Company, National
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Association, in its capacity as collateral agent thereunder, including its successors, designees and permitted assigns in such capacity, the lenders and the other agents and persons party thereto.
“Financing Lien” means, with respect to the Project, the Project Company, the Class B Equity Investor and the Company, the Lien on the Project, the membership interests of the Project Company, the Class B Equity Investor and the Company and the assets owned by the Project Company and the Company granted pursuant to the applicable Financing Loan Documents.
“Financing Loan Documents” means, the Financing Documents (as such term is defined in the Financing Agreement).
“Flip Point” has the meaning set forth in the LLCA.
“Flow of Funds Memorandum” means the funding memoranda setting forth all amounts to be funded with each Capital Contribution on each Equity Capital Contribution Date, as agreed between the Class B Equity Investor and the Class A Equity Investor.
“FPA” or “Federal Power Act” means the Federal Power Act, and all rules and regulations adopted thereunder.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time consistently applied throughout the relevant periods.
“Governmental Approvals” means all permits, licenses, approvals, determinations, registrations, variances, exemptions, authorizations and orders of any Governmental Authority.
“Governmental Authority” means any national, provincial, regional, state, municipal or local government authority, body, agency, ministry, court, judicial or administrative body, taxing authority, regulatory authority or other governmental organization, including FERC, CAISO, CPUC and NERC, having jurisdiction or effective control over, as applicable, the Equity Investors, the Company, the Project Company, their respective Affiliates, or the Project, or the conduct, operation, or actions thereof.
“Government Official” means any officer, employee or representative of any level of a government, including any agency or division thereof; (ii) any officer, employee or representative of any commercial enterprise that is owned or controlled by any level of the foregoing; (iii) any officer, employee or representative of any public international organization, such as the International Monetary Fund, the United Nations or the World Bank; (iv) any Person acting in an official or unofficial capacity for any of the foregoing government, enterprise, or organization identified above; and (v) any political party, party official or candidate for political office.
“Gross Asset Value” has the meaning set forth in the LLCA.
“Hazardous Substance” means any material, chemical, substance, waste or emission that, by its nature or use, is defined, listed or regulated as hazardous, toxic, radioactive, a pollutant or contaminant under any Environmental Law, including without limitation any
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petroleum or petroleum-derived substance, waste or additive, asbestos, polychlorinated biphenyls, per- and polyfluoroalkyl substances, including, but not limited to perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) or radon.
“IDS Report” means that certain Memo with respect to Pelicans Jaw Hybrid Solar (Q1593) Interim Deliverability, delivered to SB Energy DevCo (US), LLC by Qualus LLC in the form most recently Made Available to the Class A Equity Investor.
“IE Mechanical Completion Certificate” means the certificate provided by the Independent Engineer in substantially the form set forth on Exhibit E hereto.
“IE Substantial Completion Certificate” means the certificate provided by the Independent Engineer in substantially the form set forth on Exhibit F hereto.
“Indemnified Person” means the Company, the Class A Equity Investor and the Class A Equity Investor’s officers, directors, shareholders, employees, agents, permitted successors, permitted assigns, and their respective Affiliates.
“Independent Engineer” means ICF Resources, LLC or such other Person as shall be approved by the Equity Investors.
“Independent Engineer Report” means the report of the Independent Engineer with respect to the Project in the form most recently Made Available to the Class A Equity Investor.
“Insurance Consultant” means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Risk Partners.
“Insurance Report” means the report of the Insurance Consultant, dated as of December 10, 2024.
“Interim Deliverability Status” has the meaning given to it under the CAISO Tariff.
“Internal Rate of Return” has the meaning set forth in the LLCA.
“Investment Documents” means, collectively, this Agreement, the LLCA, the Sponsor Guaranty, the Lender Consents, and the Purchase Agreement.
“Investment Targets” means collectively, (i) achievement of the Target 20-year PT IRR, (ii) the occurrence of the Flip Point no later than the Target Flip Date, (iii) at no time will the deficit restoration obligation of the Class A Equity Investor in the aggregate exceed 7.60%1 and (iv) achievement of the Target 20-year AT IRR.
“IRS” means the U.S. Internal Revenue Service.
“Issued Units” has the meaning set forth in the recitals hereto.
“ITC” means an investment tax credit pursuant to Sections 38(b)(1), 46(2) and 48(a) of the Code.
1 DRO Cap to be based on Sponsor 75 case.
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ECCA – Pelicans Jaw
“ITC Eligible Property” means property that (a) is described in Section 48(a)(3)(A)(i) or (ix) of the Code and (b) is “solar energy property” as defined under Treasury Regulation Section 1.48-9(e)(1) or energy storage technology as defined under Treasury Regulation Section 1.48- 9(e)(10)(ii).
“ITC Insurance Binders” means the insurance binders for ITC Insurance Policy.
“ITC Insurance Policy” means a single trigger insurance policy for the benefit of the Class A Equity Investor, the Company, and (if applicable) any “transferee taxpayer” (within the meaning and for purposes of Section 6418 of the Code) in respect of any Class A Transferred Credits (as defined in the LLCA), in form and substance reasonably satisfactory to the Class A Equity Investor, provided by an insurer that is reasonably acceptable to the Class A Equity Investor, which insures (subject to reasonable and customary exclusions for an insurance policy of such type) against (i) failure of the PV Project and the ▇▇▇▇ Project to be treated as ITC Eligible Property, (ii) failure of the total tax basis of the PV Project, and of the allocation of the total tax basis of the PV Project between ITC Eligible Property and non-ITC Eligible Property, in each case as set forth in the Updated Base Case Model, to be respected for purposes of determining the amount of ITC with respect to the PV Project, (iii) failure of the total tax basis of the ▇▇▇▇ Project, and of the allocation of the total tax basis of the ▇▇▇▇ Project between ITC Eligible Property and non-ITC Eligible Property, in each case as set forth in the Updated Base Case Model, to be respected for purposes of determining the amount of ITC with respect to the ▇▇▇▇ Project, (iv) failure of the Project to be eligible for the ITC at the increased credit amount under Section 48(a)(9) of the Code by fully complying with the PWA Requirements, (v) to the extent reflected in the Updated Base Case Model, failure of the Project to be eligible for the Domestic Content Bonus and/or the Energy Community Bonus, (vi) recapture, loss, or disallowance of any portion of the ITC pursuant to Section 50 of the Code, and (vii) failure of the Placed In Service Date of each Circuit or ▇▇▇▇ Circuit comprising the Project, as certified by the Class B Equity Investor in the Placed in Service Certificate, to be respected.
“Knowledge” means with respect to any Person, the actual knowledge after due inquiry of those individuals holding the titles (or performing job responsibilities commensurate with such title) of such Persons set forth on Exhibit D hereto.
“Law” means any applicable constitutional provision, statute, act, code (including the Code), law, regulation, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision, declaration or interpretive or advisory opinion or letter of a Governmental Authority.
“Lender” or “Lenders” means the lenders party to the Financing Agreement.
“Lender Consent” means, collectively, (i) the Effective Date Lender Consent and (ii) as of the Mechanical Completion Funding Date, the MIPA Lender Consent.
“Lien” means any liens, pledges, security interests, mortgages, deeds of trust or other Encumbrances.
“LLCA” has the meaning set forth in the recitals hereto.
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ECCA – Pelicans Jaw
“Made Available to the Class A Equity Investor” or “Make Available to the Class A Equity Investor” means (i) the posting to the Data Room or (ii) the delivery (including by electronic transmission) to the Class A Equity Investor or its representatives by the Class B Equity Investor or its Affiliates or any of their respective representatives in accordance with the notice requirements set forth in Section 9.1.
“Major Subcontractors” means (i) each supplier of Major Equipment (as defined in the EPC Agreements) and (ii) each subcontractor whose contract or contracts (in the aggregate) with the Project Company and any EPC Contractor, or any of their subcontractors, require payments by the Project Company and any EPC Contractor (or their subcontractors) in excess of $500,000.
“▇▇▇▇▇▇▇ Project” means Pacific Gas & Electric’s ▇▇▇▇▇▇▇ 500/230 kV Substation Project and the corresponding overhead transmission lines.
“▇▇▇▇▇▇▇ Substation Completion Date” means the date that the ▇▇▇▇▇▇▇ Project has reached commercial operation.
“Material Adverse Effect” means any change or effect that is, or would reasonably be expected to be, materially adverse to the business, assets, liabilities, financial condition, or results of operations of the Sponsor, the Project or the Project Company, or to the ability of the Sponsor or Project Company to perform its respective material obligations under any Transaction Documents to which it is a party.
“Material Project Contracts” means (a) those agreements listed as “Material Project Documents” and those agreements listed as “Real Estate Documents”, in each case, on the applicable portion of Schedule 3.13, or any agreement entered into in replacement or substitution of the foregoing, (b) the Construction Management Services Agreement, (c) the MSA or any agreement entered into in replacement or substitution thereof, (d) any other Contract to which a Project Entity is a party under which it could reasonably be expected to have obligations, liabilities or revenues equal to or in excess of Six Hundred Thousand Dollars ($600,000) in any year or Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) over the term of the contract; provided, that for the purposes of calculating such dollar threshold, any series of related transactions shall be considered as one transaction and all Contracts in respect of such transactions shall be considered as one Contract, (e) any Contract that provides for non-monetary obligations on the part of a Project Entity, the non-performance of which obligations could reasonably be expected to have a Material Adverse Effect and (f) any other guarantees in respect of any of the foregoing. For the avoidance of doubt, “Material Project Contracts” shall not include this Agreement, the Financing Loan Documents, the Investment Documents or any Ancillary Real Estate Agreement.
“MBR Authority” means authorization from FERC pursuant to Section 205 of the FPA to sell electric energy, capacity and certain ancillary services at wholesale at market-based rates, acceptance by FERC of a tariff providing for such sales, and conferral by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to “persons,” as defined in the FPA, authorized to sell electric energy at market-based rates, including blanket
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authorization under Section 204 of the FPA and FERC’s regulations at 18 C.F.R. Part 34 to issue securities and assume liabilities.
“Mechanical Completion” means (a) Circuit Group Mechanical Completion (as defined in the SOLV EPC Agreement) in respect of the first three2 Circuits (as defined in the SOLV EPC Agreement) set forth on Exhibit I has occurred, as evidenced by an executed Circuit Group Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) for each such Circuit, (b) ▇▇▇▇ Circuit Group Mechanical Completion (as defined in the SOLV EPC Agreement) in respect of the first two (2) of the six (6) ▇▇▇▇ Circuits set forth on Exhibit I has occurred, as evidenced by an executed ▇▇▇▇ Circuit Group Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) for each such ▇▇▇▇ Circuit, (c) High Voltage Mechanical Completion (as defined in the SOLV EPC Agreement) has occurred, as evidenced by an executed High Voltage Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) and (d) Mechanical Completion (as defined in the Switchyard EPC Agreement) has occurred, as evidenced by an executed Mechanical Completion Certificate (as defined in the Switchyard EPC Agreement).
“Mechanical Completion Funding” means the Class A Capital Contribution to be made, subject to the last sentence of Section 7.1, on the Mechanical Completion Funding Date.
“Mechanical Completion Funding Amount” means an amount equal to twenty percent (20%) of the Class A Capital Contribution.
“Mechanical Completion Funding Date” means the date on which the Class A Equity Investor makes the Capital Contribution with respect to the Mechanical Completion Funding Amount.
“MIPA Lender Consent” means that certain Consent and Agreement (MIPA) to be entered into on the Effective Date by and between the Company, the Seller and the Collateral Agent.
“Module Supplier” means First Solar, Inc., a Delaware corporation (or any successor thereto).
“Monthly Operating Report” means, in accordance with Section 5.2(gg), a report setting forth (a) the kilowatt hours of electricity produced and sold during such month from each Project (including under the Power Purchase Agreement), (b) the revenues and expenses of the Company and its consolidated subsidiaries for the most recent available month, (c) in the case of the months ending after April 30th, the same information set forth in the foregoing subclauses (a) and (b) on a cumulative basis since the beginning of the then current fiscal year, (d) notice of any substantial technical or operational issues for which the Company obtained actual knowledge in such immediately preceding calendar month.
2 JPM will seek credit approval for the Mechanical Completion Funding to occur when two of the ten circuits comprising the PV Project have achieved Mechanical Completion under the SOLV EPC Agreement.
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“MSA” means that certain Management Services Agreement, to be dated as of the Mechanical Completion Funding Date, or such replacement management services agreement as is approved pursuant to Section 6.03 of the LLCA.
“MW” means megawatt.
“NERC” means the North American Electric Reliability Corporation and any regional entity exercising delegated authority therefrom, and any successor to either of them.
“O&M Agreement” means that certain Operation and Maintenance Agreement, dated as of October 7, 2024, by and between the Project Company and the Operator.
“OFAC Blocked List” means the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control, or any other list of blocked or designed persons maintained by the Office of Foreign Assets Control, or any replacement list intended to be a successor to such list.
“Operator” means SOLV Energy, LLC, a Delaware limited liability company.
“Party” has the meaning set forth in the preamble hereto.
“Permitted Equity Encumbrance” means (a) those restrictions on transfer imposed by applicable Law, including applicable securities laws and under the Material Project Contracts, (b) Liens or restrictions imposed on transfers set forth in the organizational documents of any Person, (c) in the case of the Units in the Company, Liens that comply with the provisions of Section 3.03(c) of the LLCA, and (d) in the case of assets of, and the membership interests in, the Project Company and the Company, the Financing Lien; provided, that on the Substantial Completion Funding Date the Financing Lien shall be released from the assets of, and membership interests in, the Project Company and the assets of the Company.
“Permitted Liens” means (a) Encumbrances imposed by any Governmental Authority for Taxes (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceeding shall not involve any material risk of the sale, forfeiture or loss of any part of the Project or (y) the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Equity Investors, (b) mechanics’, materialmen’s, repairmen’s and other similar liens arising in the ordinary course of business or incident to the construction, improvement or restoration of the Project in respect of obligations (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceedings shall not involve any material risk of forfeiture, sale or loss of any part of the Project or (y) the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Equity Investors, (c) minor defects, easements, rights-of-way, restrictions and other similar Encumbrances incurred in the ordinary course of business and Encumbrances, licenses, restrictions on the use of property or minor imperfections in title that, either individually or in the aggregate, do not materially impair the property affected thereby for the purpose for which the
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affected property was acquired by the Company, the Project Company or the Seller, as applicable, or materially adversely interfere with the operation and maintenance of the Project, (d) Encumbrances created by or pursuant to the Material Project Contracts, (e) judgment Encumbrances that (i) do not involve any material risk of the sale, forfeiture or loss of any part of the Project, (ii) within fifteen (15) Business Days of their existence or after the entry thereof, are being contested in good faith and by appropriate proceedings, and (iii) for which the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Equity Investors, (f) deposits or pledges required to secure the performance of statutory obligations, appeals, supersedes and other bonds in connection with judicial or administrative proceedings and other obligations of a like nature, (g) zoning, entitlement, conservation restrictions and other land use and environmental regulations by Governmental Authorities; provided that the Company or the Project Company is not in material violation thereof, (h) Encumbrances on the proceeds of insurance policies that secure the financing of premiums to be paid under such insurance policies, (i) Liens and any right of setoff in favor of a bank or other financial institution arising by operation of applicable Laws or in the ordinary course of business Encumbering deposits held by such bank or financial institution, (j) Permitted Equity Encumbrances, (k) the Financing Lien; provided, that on the Substantial Completion Funding Date the Financing Lien shall be released from the assets of, and membership interests in, the Project Company and the assets of the Company, (l) all exceptions and Encumbrances listed or disclosed in the Effective Date Title Policy or the Effective Date Survey, as applicable, (m) any exceptions and Encumbrances listed or disclosed in the Mechanical Completion Date Endorsement that have been approved by the Class A Equity Investor in accordance with Section 5.2(v), (n) any exceptions and Encumbrances listed or disclosed in the Substantial Completion Date Endorsement or Substantial Completion Date Survey, in each case, that have been approved by the Class A Equity Investor in accordance with Section 5.3(n), (o) any Encumbrances disclosed in a landowner estoppel delivered pursuant to Section 5.3(x) and reasonably acceptable to the Equity Investors, (p) any Encumbrances or exceptions listed in the Substantial Completion Date Survey or Substantial Completion Date Endorsement delivered pursuant to Section 6.13 of the LLCA and (q) any other Encumbrance approved by the Equity Investors after the Mechanical Completion Funding Date.
“Person” means any individual, partnership, joint venture, limited liability company, limited liability partnership, corporation, trust, Governmental Authority or other entity.
“Placed In Service” means, with respect to the Project or each Circuit or ▇▇▇▇ Circuit, as applicable, (i) all necessary permits and licenses for operation have been obtained, (ii) all critical tests necessary for proper operation have been completed, (iii) care, custody, and control, and risk of loss and title, have transferred from the EPC Contractors to the Project Company under the EPC Agreements, (iv) initial synchronization to the grid has occurred and (v) daily operation has begun.
“Placed In Service Date” means the date on which the Project or each Circuit or ▇▇▇▇ Circuit, as applicable, was Placed In Service.
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“Plan” means all “employee benefit plans” as defined by Section 3(3) of ERISA, all specified fringe benefit plans as defined in Section 6039D of the Code, and all other bonus, incentive compensation, deferred compensation, profit-sharing, stock-option, stock, appreciation right, stock-bonus, stock-purchase, employee-stock-ownership, savings, severance, change in control, supplemental unemployment, layoff, salary-continuation, retirement, pension, health, life- insurance, disability, accident, group-insurance, vacation, holiday, sick-leave, or welfare plan, and any other employee compensation or benefit plan, agreement, policy, practice, or contract (whether qualified or non-qualified, currently effective or terminated, written or unwritten) and any trust or other segregated funding vehicle related thereto.
“PML Consultant” means ABSG Consulting, Inc.
“PML Report” means the report of the PML Consultant with respect to the Project in the form most recently Made Available to the Class A Equity Investor.
“Power Purchase Agreement” means that certain Renewable Power Purchase and Energy Storage Service Agreement, dated as of February 9, 2024, by and between the Power Purchaser and the Project Company, as amended by that (a) certain Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of May 1, 2024, and (b) that certain First Amendment to Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of December 13, 2024.
“Power Purchaser” means San Diego Community Power, a California joint power authority.
“Pre-Tax IRR” means the annual effective discount rate (calculated and compounded on a monthly basis) as of the calculation date which results in the present values of the projected ITCs and cash distributions, less the Class A Equity Investor’s actual Capital Contributions, to equal zero.
“Prohibited Person” means any Person that is, or is fifty percent (50%) or more owned by, Controlled by, or acting on behalf of a Person that is, (a) listed on the OFAC Blocked List, (b) located, incorporated or organized under the laws of a country, territory or region that is the subject of comprehensive Sanctions (a “Sanctioned Country”), (c) otherwise a target of Sanctions such that any party hereto would be prohibited or restricted under Sanctions from engaging in trade, business or other activities with such Person.
“Project” has the meaning set forth in the recitals.
“Project Company” has the meaning set forth in the recitals.
“Project Construction Indebtedness” means all outstanding indebtedness for borrowed money (including accrued and unpaid interest thereon) incurred prior to the Substantial Completion Funding Date pursuant to the Financing Agreement that is (a) secured by Liens on assets of the Project or the ownership interests of the Project Company or (b) otherwise an obligation of the Company or the Project Company.
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“Project Entity” means the Company and the Project Company.
“Project Improvements” means, collectively, all solar arrays, collection lines, inverters, roads, substations, transmission lines, ▇▇▇▇ Project equipment, operations and maintenance buildings and other facilities, points of interconnection, and any additional facilities or improvements located on the Project Site that are necessary for the operation of or otherwise comprise the Project.
“Project Site” means the real property described in Exhibit L.
“Proposal Letter” means the Letter Agreement, dated as of November 8, 2024, by and between the Sponsor and the Class A Equity Investor.
“Proposed Tax Law Change” means as of any Equity Capital Contribution Date, any proposed change in or amendment to the Code or another applicable federal income tax statute under legislation that is (i) passed by either house of Congress, (ii) included in a bill reported by the House Ways and Means Committee or the Senate Finance Committee, or (iii) included in currently proposed written federal legislation from (1) the Executive Branch, (2) the Majority Leader of the United States Senate or (3) the Speaker of the United States House of Representatives, in either case, on or after the Effective Date and before such Equity Capital Contribution Date, that in each case, (A) if it became law, (1) would materially affect the federal income tax treatment of or federal income tax consequences to (as set forth in the Base Case Model) (i) the Company or its ownership and operation of the Project or (ii) the Class A Equity Investor in connection with the acquisition or ownership of the Class A Membership Interests or the allocations with respect thereto or (2) would repeal, change, amend, or modify Section 6418 of the Code in a manner that prohibits or materially affects the Company’s or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code; provided, that, for purposes of subclause (2), if any proposed change or amendment would allow the Company to continue to rely on Section 6418 of the Code and the Treasury Regulations thereunder effective as of the Effective Date with respect to the Project such that such proposed change or amendment would not repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that prohibits or materially affects the Company’s or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code, then such proposed change or amendment will not be considered a Proposed Tax Law Change and (B) is reasonably likely to become law taking into account public statements from relevant congressional leaders. For purposes of this definition, a “Proposed Tax Law Change” shall not include any proposed change that would affect the Class A Equity Investor’s capacity to utilize tax benefits or realize actual tax savings therefrom (including as a result of a member-level limitation), except that a “Proposed Tax Law Change” shall take into account a proposed change that would impose a member-level limitation that would apply to all corporate taxpayers or all financial institutions to limit utilization of tax benefits from the Project regardless of the taxpayer’s particular facts and circumstances (such as a change in the Code that would require corporate taxpayers or financial institutions to recognize the ITC over five (5) years instead of the year that the property was placed in service for U.S. federal income tax purposes).
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“PUHCA” means the Public Utility Holding Company Act of 2005 and FERC’s regulations thereunder.
“Purchase Agreement” has the meaning set forth in the recitals.
“PV Project” has the meaning set forth in the recitals.
“PWA Certificate” means a certificate substantially in the form of Exhibit G.
“PWA Compliance Report” means a report from the PWA Consultant, in form and substance reasonably acceptable to the Class A Equity Investor, addressing the Project’s compliance with the PWA Requirements, which for clarity shall include review of all relevant documentation then available to the PWA Consultant, that reasonably concludes either (a) that the Project has fully satisfied the PWA Requirements through the date specified in the report or (b) that the Project has satisfied the PWA Requirements through the date specified in the report except for one or more specified violations and, in each case, identifies supporting documentation and explains in reasonable detail its conclusions (including, in the case of scenario (b), each violation and a remediation plan for correcting each such violation (which shall include a calculation of any PWA Cure Costs required for the Project to comply with the PWA Requirements notwithstanding such violation)).
“PWA Consultant” means ▇▇▇▇▇ ▇▇▇▇▇ Advisory Group, LP.
“PWA Cure Costs” means the sum of the amount described in (a) Sections 48(a)(10)(B) and 45(b)(7)(B) of the Code for failure to satisfy the “prevailing wage requirements” (within the meaning of PWA Requirements), and (b) Sections 45(b)(8)(D) in respect of failure to satisfy the “apprenticeship requirements” (within the meaning of PWA Requirements).
“PWA Cure Reserve Account” means a segregated depositary account established and maintained by the Company for the purposes of reserving amounts required to effectuate any reasonably anticipated PWA Cure Costs, which account shall not be pledged to the Lenders or otherwise included as collateral security under any Financing Loan Document after the Substantial Completion Funding Date.
“PWA Requirements” means the “prevailing wage” requirements (as set forth in Sections 48(a)(10) and 45(b)(7) of the Code), the “apprenticeship” requirements (as set forth in Sections 48(a)(11) and 45(b)(8) of the Code), and the recordkeeping requirements set forth therein, including making any necessary payments for any required correction and penalty amounts under Sections 48(a)(10)(B) and 48(a)(11) of the Code, as clarified by IRS Notice 2022-61, the Frequently Asked Questions about the prevailing wage and apprenticeship requirements under the Inflation Reduction Act published by the IRS, final Treasury Regulations Sections 1.45-6 through 1.45-8, 1.45-12, and 1.48-13, and any other guidance, instructions or terms and conditions published or issued by the United States Treasury Department or the IRS in respect of or under Section 48 of the Code as it relates to the prevailing wage and apprenticeship requirement therein applicable to a Project.
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“Real Estate Documents” means with respect to the Project, those documents listed as “Real Estate Documents” under the applicable section of Schedule 3.14 and any other agreement entered into by the Project Company after the Effective Date which is a material written agreement pertaining to real property owned or leased by the Project Company or is a material written agreement pursuant to which the Project Company has fee, leasehold, easement, or other insurable real property rights. For the avoidance of doubt, “Real Estate Documents” shall not include any Ancillary Real Estate Agreement.
“RECs” means any renewable energy credits as defined by Public Utilities Code Section 399.12 and in CPUC Decision (D.) ▇▇-▇▇-▇▇▇ as the generation of electric energy from Eligible Renewable Energy Resources (as each such term is defined in Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by law). RECs are measured in one MWh increments and evidenced by the transfer of one Western Renewable Energy Generation Information System Certificate. The term also includes other environmental attributes such as credit certificates, green tags, allowances, offsets, entitlements or other similar green energy attributes.
“Release” has the same meaning as under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601(22).
“Sanctioned Country” has the meaning set forth under the definition of “Prohibited Person” herein.
“Sanctions” means any U.S. laws, regulations, executive orders, embargoes or restrictive measures relating to the economic sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, or any other Governmental Authority in the United States.
“SB Energy Affiliates” means all Subsidiaries of Sponsor.
“Securities Act” means the Securities Act of 1933 or any successor statute.
“Seller” has the meaning set forth in the recitals.
“Seller Parent” means Construction Holdco, LLC, a Delaware limited liability company.
“SOLV EPC Agreement” means that certain Turnkey Engineering, Procurement and Construction Agreement, dated as of August 13, 2024, by and between the Project Company and the SOLV EPC Contractor.
“SOLV EPC Contractor” means, SOLV, LLC, a Delaware limited liability company.
“Sponsor” means SBE US Holdings One, LLC, a Delaware limited liability company.
“Sponsor Guaranty” means that certain Sponsor Guaranty, dated as of the Effective Date, issued by Sponsor in favor of the Class A Equity Investor.
“Subsidiary” means, with respect to any Person, any other Person that, directly or indirectly through one of more intermediaries, is Controlled by such first Person.
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“Substantial Completion” means the achievement of (i) Substantial Completion (as defined in the EPC Agreements), as evidenced by executed Substantial Completion Certificates (as defined in each EPC Agreement), (ii) Commissioning Completion (under the Battery Supply Agreement), as evidenced by an executed Commissioning Completion Certificate (as defined in the Battery Supply Agreement) and (iii) (A) if the Substantial Completion Funding Date occurs prior to April 1, 2027, each of the conditions precedent to the occurrence of the Commercial Operation Date (as defined in the Power Purchase Agreement) pursuant to Sections 2.2(b), 2.2(c), 2.2(e), 2.2(f), 2.2(g), and 2.2(h) of the Power Purchase Agreement or (B) if the Substantial Completion Funding Date occurs after April 1, 2027, the Commercial Operation Date (as defined in the Power Purchase Agreement).
“Substantial Completion Funding” means the Class A Capital Contribution to be made, subject to the last sentence of Section 7.2, on the Substantial Completion Funding Date.
“Substantial Completion Funding Amount” means an amount equal to the excess of the Class A Capital Contribution, as adjusted at the time thereof, over the sum of the Mechanical Completion Funding Amount actually made prior thereto.
“Substantial Completion Funding Date” means the date on which the Class A Equity Investor makes the Capital Contribution with respect to the Substantial Completion Funding Amount.
“Switchyard EPC Agreement” means that certain Engineering, Procurement and Construction Agreement, dated July 25, 2024, by and between the Project Company and the Switchyard EPC Contractor.
“Switchyard EPC Contractor” means, ▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation.
“Target 20-year AT IRR” means an after-tax Internal Rate of Return of not less than ten and eighty-one hundredths percent (10.81%) through the twentieth (20th) anniversary of the Mechanical Completion Funding Date, assuming all ITCs are valued at face value.
“Target 20-year PT IRR” means a Pre-Tax IRR of not less than four and seventy-four hundredths percent (4.74%) through the twentieth (20th) anniversary of the Mechanical Completion Funding Date, assuming all ITCs are valued at face value.
“Target Flip Date” means the date that is 6.91 years after the Mechanical Completion Funding Date.
“Tax” or “Taxes” (and with correlative meaning, “Taxable” and “Taxing”) has the meaning set forth in the LLCA.
“Tax Credit Transferee” has the meaning set forth in the LLCA.
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“Tax Exempt Person” has the meaning set forth in the LLCA.
“Tax Law Change” means as of any date, (i) any change in or amendment to the Code or other applicable federal income tax statute, (ii) any issuance, promulgation and/or change in, or of, temporary or final Treasury Regulations, (iii) any published and generally applicable guidance, notice, proposed regulation or announcement, in each case, in written form and published by the Treasury, IRS or any other Governmental Authority that applies, advances or articulates a new or different interpretation or analysis of the federal income tax law, or (iv) any change in the interpretation of the Code or Treasury Regulations attributable to a decision by the United States Tax Court, a United States District Court, United States Court of Appeals or the United States Supreme Court, in each case issued on or after the Effective Date and before such relevant date and that (1) materially affects the federal income tax treatment of or federal income tax consequences to (as set forth in the Base Case Model) to either (A) the Company or its ownership and operation of the Project or (B) the Class A Equity Investor in connection with the acquisition or ownership of the Class A Membership Interests or the allocations with respect thereto or (2) would repeal, change, amend, or modify Section 6418 of the Code in a manner that prohibits or materially affects the Company’s or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code; provided, that, for purposes of subclause (2), if items under (i) – (iv) would allow the Company to continue to rely on Section 6418 of the Code and the Treasury Regulations thereunder effective as of the Effective Date with respect to the Project such that such change, amendment or publication would not repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that prohibits or materially affects the Company’s or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code, then such change, amendment or publication will not be considered a Tax Law Change. For purposes of this definition, a “Tax Law Change” shall not include any change that would affect the Class A Equity Investor’s capacity to utilize tax benefits or realize actual tax savings therefrom (including as a result of a member-level limitation), except that a “Tax Law Change” shall take into account a change that imposes a member-level limitation that would apply to all corporate taxpayers or all financial institutions to limit utilization of tax benefits from the Project regardless of the taxpayer’s particular facts and circumstances (such as a change in the Code that would require corporate taxpayers or financial institutions to recognize the ITC over five (5) years instead of the year that the property was placed in service).
“Tax Return” has the meaning set forth in the LLCA.
“Third Party” means a Person other than a Party or an Affiliate of a Party.
“Title Company” means Old Republic National Title Insurance Company.
“Title Policy” means the ALTA 2021 extended coverage owner’s policy of title insurance issued by the Title Company as Policy No. OX-15444916 (including all endorsements attached thereto), insuring the Project Company’s marketable leasehold and easement title to the Project Site.
“Transaction” means the transactions contemplated hereunder.
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“Transaction Documents” means the Investment Documents and the Material Project Contracts.
“Transmission Consultant” means nFront Consulting, LLC.
“Transmission Report” means the report of the Transmission Consultant in the form most recently Made Available to the Class A Equity Investor.
“Treasury” means the United States Department of the Treasury.
“Treasury Regulations” has the meaning set forth in the LLCA.
“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York.
“United States Person” means a “United States person” as defined in Section 7701(a)(30) of the Code.
“Units” has the meaning set forth in the LLCA.
Section 1.2 Other Definitional Provisions.
(a) Construction. As used herein, the singular shall include the plural, the masculine gender shall include the feminine and neuter, and the neuter gender shall include the masculine and feminine unless the context otherwise indicates.
(b) References. References to Articles and Sections Annexes, Exhibits and Schedules, in each case without identifying any particular agreement or instrument to which they refer, are intended to refer to Articles and Sections of this Agreement as well as the Annexes, Exhibits and Schedules attached to this Agreement, each of which is made a part of this Agreement for all purposes. The terms “include”, “includes” and “including” mean “including, without limitation”. Any date specified for action that is not a Business Day shall mean the first Business Day after such date. Any reference to a Person shall be deemed to include such Person’s successors and permitted assigns. Any reference to any document or instrument shall be deemed to refer to such document or instrument as amended, amended and restated, modified, supplemented or replaced as of the date hereof. References to Laws refer to such Laws as they may be amended from time to time, and references to particular provisions of a Law include any corresponding provisions of any succeeding Law. The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references in this Agreement to “hereunder”, “hereof”, “hereby” and like terms, without more, refer to this Agreement as a whole and not to any particular Article, Section or provision of this Agreement. Any reference in this Agreement to “the date of this Agreement” refers to the date specified in the first paragraph of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require.
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Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms. References to money refer to legal currency of the United States of America.
(c) Accounting Terms. As used in this Agreement and in any certificate or other documents made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such certificate or other document, and accounting terms partly defined in this Agreement or in any such certificate or other document to the extent not defined, will have the respective meanings given to them under GAAP. To the extent that the definitions of accounting terms in this Agreement or in any such certificate or other document are inconsistent with the meanings of such terms under GAAP, the definitions contained in this Agreement or in any such certificate or other document will control.
ARTICLE II
CAPITAL CONTRIBUTIONS
Section 2.1 Equity Capital Contributions.
(a) The Parties agree that, subject to fulfillment or waiver of the conditions precedent in Article V and Article VI and otherwise in accordance with this Agreement, (i) on the Mechanical Completion Funding Date, the Class A Equity investor shall make a capital contribution in an amount equal to the Mechanical Completion Funding Amount, (ii) on the Mechanical Completion Funding Date, the Class B Equity Investor shall make a capital contribution in an amount equal to the Class B Mechanical Completion Funding Amount, and (iii) on the Substantial Completion Funding Date, the Class A Equity Investor shall make a capital contribution in an amount equal to the Substantial Completion Funding Amount and the Class B Equity Investor shall make a capital contribution in the amount required for the Company and the Class B Equity Investor to satisfy their respective obligations under Sections 7.5 and 7.6 and to pay amounts then due and payable under any Material Project Contract by the applicable Project Entity party thereto.
(b) On the Mechanical Completion Funding Date, (i) the Equity Investors shall execute and deliver the LLCA, (ii) the Company shall, and the Class B Equity Investor shall cause the Company to, (1) issue the Class A Units to the Class A Equity Investor, and (2) issue the Class B Units to the Class B Equity Investor in exchange for the Class B Equity Investor’s membership interests in the Company, in each case in accordance with the terms of the LLCA, and (iii) the Company and the Class B Equity Investor shall take all action as may be necessary to effectuate and record the foregoing.
Section 2.2 Use of Proceeds.
(a) On the Mechanical Completion Funding Date, the Mechanical Completion Funding Amount shall be paid to the Company or other recipient as set forth in the Flow of Funds Memorandum and the proceeds thereof shall be applied on the Mechanical Completion Funding Date as provided for in the Flow of Funds Memorandum, including to pay the Project Company Purchase Price (as defined in the Purchase Agreement).
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(b) On the Mechanical Completion Funding Date, the Class B Mechanical Completion Funding Amount shall be paid to the Company or other recipient as set forth in the Flow of Funds Memorandum and the proceeds thereof shall be applied on the Mechanical Completion Funding Date as provided for in the Flow of Funds Memorandum, including to pay the Project Company Purchase Price (as defined in the Purchase Agreement) and to satisfy the Class B Equity Investor’s and the Company’s obligations under Sections 7.5 and 7.6 and to pay amounts then due and payable under any Material Project Contract by the applicable Project Entity party thereto.
(c) On the Substantial Completion Funding Date, the Substantial Completion Funding Amount shall be wired in immediately available funds to the Company or other recipient as set forth in the applicable Flow of Funds Memorandum and the proceeds thereof shall be applied on the Substantial Completion Funding Date:
(i) first, to satisfy in full the outstanding indebtedness for borrowed money, including the Project Construction Indebtedness, and any other outstanding obligations for borrowed money incurred pursuant to the Financing Loan Documents due on such date;
(ii) second, to pay any outstanding costs and expenses attributable to the Project due and owing by the Company or the Project Company to any Person or Persons, including any amounts then due and payable under any Material Project Contract;
(iii) third, to make a deposit into the Final Completion Reserve Account in an amount equal to (A) one hundred percent (100%) of all remaining costs that are owed to the EPC Contractors under the EPC Agreements with respect to punch-list items plus (B) one hundred ten percent (110%) of all other items required to satisfy the obligations under Sections 6.07(a) and (b) of the LLCA, including for the achievement of Placed in Service and Final Completion of the Project (the “Final Completion Holdback”);
(iv) fourth, to satisfy the Class B Equity Investor’s and the Company’s obligations under Sections 7.5 and 7.6; and
(v) fifth, as otherwise specified in the Flow of Funds Memorandum.
Section 2.3 Tax Treatment.
For federal income tax purposes, the Parties and their Affiliates shall report the Transaction as follows:
(a) Prior to the Mechanical Completion Funding Date, (i) the Project Company is treated as a disregarded entity for federal income tax purposes that is separate from and wholly owned by the Seller Parent, (ii) the Company is treated as a disregarded entity for federal income tax purposes that is separate from and wholly owned by SE Global Holdings,
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LLC, and (iii) the Company (or any member thereof) and the Seller Parent are treated as separate taxpayers for U.S. federal income tax purposes; and
(b) Upon the Class A Equity Investor’s contribution of the Mechanical Completion Funding Amount as described in Section 2.1(a) and the issuance of Class A Units and Class B Units as described in Section 2.1(a), the Class A Equity Investor will be treated as having contributed the Mechanical Completion Funding Amount to the Company in exchange for an ownership interest in the Company pursuant to Code Section 721.
(c) The formation of the Company as a partnership for federal income tax purposes will be treated consistently with Revenue Ruling 99-5 (situation 2).
(d) On the Mechanical Completion Funding Date, pursuant to the Purchase Agreement, the Company will be treated as purchasing the Project from the Seller Parent for U.S. federal income tax purposes for an amount equal to the Project Company Purchase Price (as defined in the Purchase Agreement).
(e) The Company will have a basis in the Project equal to the Project Company Purchase Price (as defined in the Purchase Agreement). The Company’s basis in the Project will be allocated among the assets comprising the Project in a manner consistent with the Cost Seg Report.
Section 2.4 Updates to the Base Case Model and Capital Contributions.
(a) At least three (3) Business Days before each Equity Capital Contribution Date which is either the Mechanical Completion Funding Date or the Substantial Completion Funding Date, the Class B Equity Investor shall:
(i) cause the Base Case Model as previously revised and updated under this Section 2.4 (as updated from time to time pursuant to this Section 2.4, the “Updated Base Case Model”) to be revised and updated to:
(A) take into account any Tax Law Change or Proposed Tax Law Change; provided, that, in the event there is a Tax Law Change or Proposed Tax Law Change that would repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that prohibits or materially affects the Company or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code, such update shall be made in accordance with Section 7.9;
(B) demonstrate the Class A Equity Investor achieving the Investment Targets;
(C) take into account any adjustments required to be made to allocations under Section 5.01(a) of the LLCA and/or distributions under Section 5.02(a) of the LLCA in order to demonstrate clause (B) (and the Parties agree that the LLCA shall be amended to incorporate any such changes to the extent necessary);
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(D) take into account any updates to the inputs or assumptions therein due to (1) the actual Project costs incurred and reasonably expected to be incurred to complete the Project, including the Project Construction Indebtedness and any other obligations for borrowed money incurred and reasonably expected to be incurred pursuant to the Financing Loan Documents (if any) and transaction costs; (2) asset cost segregation, depreciation and amortization rates, and depreciation and amortization expense, as set forth in the Cost Seg Report and, if the Fair Market Value of the Project as set forth in the Appraisal; (3) changes, if any, to general operating expenses with respect to the Project, including insurance costs or taxes with respect to the Project; (4) changes, if any, to the Independent Engineer Report or Transmission Report, including, but not limited to, changes to anticipated basis, curtailment, and/or degradation reflected in the applicable bring- down; (5) changes reflective of any terminations of, amendments to, replacements of, or additional, Material Project Contracts, if any; (6) the actual Purchase Date (as defined under the Purchase Agreement); (7) the actual commercial operation date under the Power Purchase Agreement; (8) the aggregate liquidated damages accrued and received or accrued and reasonably expected to be received or paid or reasonably expected to be paid under the terms of any Material Project Contract; (9) the most recent Hitachi Energy merchant forecasts as adjusted for nodal basis assumptions for the pricing of power with respect to the Project based on the most recent forecast from the Transmission Consultant; (10) changes, if any, to the Battery Power Marketing Report; (11) the Project’s eligibility for and receipt of Interim Deliverability Status from CAISO; (12) delays in obtaining a Partial Capacity Deliverability Status Finding (as defined in the Power Purchase Agreement) from CAISO and delays in completion of the ▇▇▇▇▇▇▇ Project; and (13) any changes reflected in the most recent PWA Compliance Report;
(E) solely to the extent that the Domestic Content Requirements or the Energy Community Bonus Requirements have not been satisfied, remove the Domestic Content Bonus or the Energy Community Bonus, as applicable, from the amount of ITCs expected to be available in respect of the Project;
(F) solely in the event the Class A Equity Investor has provided prior written consent, to reflect any ▇▇▇▇ Augmentation ITCs (as defined in the LLCA) including allocations, transfers, distributions, and “flip mechanics” related thereto;
(G) correct any manifest errors and clerical inaccuracies; and
(ii) deliver to the Class A Equity Investor the Updated Base Case Model accurately implementing all such changes or corrections. For the avoidance of doubt, notwithstanding anything else to the contrary herein, the methodology used in the Base Case Model with respect to the calculation of basis shall not be subject to change.
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(b) Notwithstanding anything to the contrary herein, if the Updated Base Case Model does not demonstrate the Class A Equity Investor achieving the Investment Targets after taking into account the model updated in Sections 2.4(a)(i)(A), 2.4(a)(i)(D), 2.4(a)(i)(E) and 2.4(a)(i)(F), the Class A Capital Contribution shall first be adjusted in an amount sufficient to cause the Updated Base Case Model to demonstrate the Class A Equity Investor achieving the Investment Targets; provided, that if the Updated Base Case Model does not demonstrate the Class A Equity Investor achieving the Investment Targets after the foregoing adjustments to the Class A Capital Contribution, the adjustments contemplated to the Updated Base Case Model under Section 2.4(a)(i)(C) shall thereafter be made.
(c) Notwithstanding anything to the contrary contained in this Agreement, in no event will the Class A Equity Investor be required under this Agreement to make any capital contributions in excess of the Class A Capital Contribution Commitment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CLASS B EQUITY INVESTOR
The Class B Equity Investor represents and warrants to the Class A Equity Investor that the following statements are true and correct as of the Effective Date and each Equity Capital Contribution Date:
Section 3.1 Organization and Good Standing; Etc.
(a) The Class B Equity Investor is duly formed, validly existing, and in good standing under the Laws of the State of Delaware; if required by applicable Law, the Class B Equity Investor is duly qualified and in good standing in the jurisdiction of its principal place of business, if different from its jurisdiction of formation and the Class B Equity Investor has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and all necessary actions by the board of directors, shareholders, managers, members, partners, trustees, beneficiaries, or other applicable Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by such Member have been duly taken.
(b) Each Project Entity is a limited liability company duly organized and existing under, and by virtue of, the Laws of the State of Delaware and is in good standing under such Laws. Each Project Entity has the requisite limited liability power and authority to own, lease and operate its properties and assets and to carry on its business as being conducted on the applicable Equity Capital Contribution Date.
Section 3.2 Execution, Delivery and Enforceability.
(a) The Class B Equity Investor has duly executed and delivered this Agreement and the other documents to which it is a party contemplated herein, and they constitute the legal, valid and binding obligations of the Class B Equity Investor enforceable against it in accordance with their terms (except as may be limited by bankruptcy, insolvency or similar Laws of general application and by the effect of general principles of equity, regardless of whether considered at law or in equity).
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(b) Each Project Entity has the limited liability company power and authority to enter into the Transaction Documents to which it is a party, to perform its obligations thereunder, and to consummate the transactions contemplated thereby and to, in the case of the Project Company, develop and operate the Project. Each of the Transaction Documents to which the Company and/or the Project Company is a party (assuming due authorization, execution and delivery by the counterparties thereto), constitute the valid and binding obligations of the Company and Project Company, as applicable, enforceable against it, as applicable, in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
Section 3.3 No Conflicts.
(a) The Class B Equity Investor’s authorization, execution, delivery, and performance of this Agreement does not and will not (i) conflict with, or result in a breach, default or violation of, (A) the organizational documents of the Class B Equity Investor, (B) any contract or agreement to which the Class B Equity Investor is a party or is otherwise subject, or (C) any Law, writ, injunction or arbitral award to which the Class B Equity Investor is subject; or (ii) require any consent, approval or authorization from, filing or registration with, or notice to, any Governmental Authority or other Person, unless such requirement has already been satisfied.
(b) Except as set forth on Schedule 3.3(b), the execution and delivery by the Company and Project Company of the Transaction Documents to which each such entity is a party do not, and the performance by each of them of its obligations thereunder will not, in any material respect, (A) violate any Laws applicable to the Company or the Project Company, (B) cause a breach of any provision in the certificate of formation or limited liability agreement of the Company or Project Company, as applicable, or (C) cause a material breach of, constitute a material default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any material contract, license, instrument, decree, judgment or other arrangement to which the Company or Project Company is a party or under which it is bound or to which any of its assets are subject (or result in the imposition of an Encumbrance upon any such assets other than Permitted Liens).
Section 3.4 Tax Status.
(a) Neither the Class B Equity Investor nor any Affiliate of the Class B Equity Investor that is a “related person” with respect to the Class B Equity Investor for purposes of Treasury Regulation Section 1.752-4(b) has any “obligation to make a payment” within the meaning of Treasury Regulation Section 1.752-2(b)(3), excluding for this purpose the Class B Equity Investor’s obligation to restore a deficit capital account under Section 12.04 and Section 4.02(b) of the LLCA.
(b) The Class B Equity Investor (x) is a United States Person (or is a “disregarded entity” for U.S. federal income tax purposes, the sole owner of which is a United States Person) and (y) is not subject to withholding under Section 1445 or Section 1446 of the Code.
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(c) The Class B Equity investor is not a Tax Exempt Person and is not related to any Power Purchaser within the meaning of Sections 267(b) and 707(b)(1) of the Code or to any Tax Credit Transferee.
Section 3.5 Prohibited Person.
The Class B Equity Investor and its directors, officers, employees and to the knowledge (as defined in the FCPA) of the Class B Equity Investor, its agents (i) has not within the past five years made, given, offered, authorized, or promised to make, give, offer or authorize the payment of any money, commission, reward, gift, hospitality, entertainment, inducement (including any facilitation payments) or anything else of value, directly or indirectly, to: (a) any Government Official; (b) any person acting for or on behalf of any Government Official or any other Person in violation of applicable Anti Bribery and Anti-Corruption Laws, and (ii) has not engaged in the illegal laundering of the proceeds of any criminal activity, within the past five (5) years, in violation of applicable Anti-Terrorism and Money Laundering Laws and Regulations.
Section 3.6 Absence of Litigation.
None of the Class B Equity Investor, the Company or the Project Company has received any written notice of any litigation, claim, action, suit, proceeding or investigation of a Governmental Authority pending that has not been resolved, and there is no pending or, to the Knowledge of the Class B Equity Investor, threatened litigation, claim, action, suit, proceeding or Governmental Authority investigation, in each case, against the Class B Equity Investor, the Company or the Project Company which seeks the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. No action, suit or proceeding by or before any Governmental Authority against Class B Equity Investor, the Company or the Project Company for a violation of applicable Anti-Bribery and Anti-Corruption Laws is pending, or to the actual knowledge of the Class B Equity Investor, threatened.
Section 3.7 Transaction Documents.
No Project Entity is party to any material written contract or agreement (other than Governmental Approvals) other than the Transaction Documents and the Financing Loan Documents. No Transaction Document has been amended, terminated or otherwise modified except as permitted (or not prohibited) hereunder. Each Transaction Document has been duly authorized, executed and delivered by the Class B Equity Investor, the Company or the Project Company, as applicable, and is in full force and effect and is binding on the Company or the Project Company (as applicable) and, to the Knowledge of the Class B Equity Investor, is binding on the counterparties thereto, except as enforceability may be limited by applicable bankruptcy and similar laws affecting the enforcement of creditors’ rights and general equitable principles. None of the Class B Equity Investor, the Sponsor, the Company, Project Company or any other Affiliate of the Class B Equity Investor or, to the Knowledge of the Class B Equity Investor, any other party is in default under any Investment Document or material default under any Material Project Contract or any Financing Loan Document, nor has any event occurred which, with notice or the lapse of time or both, would reasonably be expected to result in a default under any Investment Document or any material default under any Material Project
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Contract or any Financing Loan Document, whether caused by the Class B Equity Investor, Sponsor, the Company, Project Company or any other Affiliate of the Class B Equity Investor or, to the Knowledge of the Class B Equity Investor, any other party to a Transaction Document. The consummation of the transactions contemplated by this Agreement would not give any party to a Transaction Document the right to terminate or materially alter the terms of such contract or a right to claim damages thereunder.
Section 3.8 Company Ownership.
Immediately prior to the Effective Date and the Mechanical Completion Funding Date, the Class B Equity Investor was the sole legal and beneficial owner of the Company and there have never been any other owners of the Company. The Units issued to the Class A Equity Investor on the Mechanical Completion Funding Date shall be validly issued (and duly authorized) to the Class A Equity Investor free and clear of any Liens (other than Permitted Equity Encumbrances) and there have never been any other owners of the Class A Units. Except in connection with Permitted Equity Encumbrances, no Person holds any option, warrant or other right (including conversion or preemptive rights, preferential rights to purchase, and rights of first refusal) to acquire the Units or any equity or other ownership interest in the Company or obligating the Company to transfer any rights, interests or properties to any Person. On the Effective Date, there are no voting agreements or other similar agreements with respect to the Units. Except in connection with Permitted Equity Encumbrances, neither the Class B Equity Investor nor the Company has any contract or commitment to issue or sell any of the Units or any securities or obligations convertible into or exchangeable for, or giving any Person any right to acquire from it, any of its membership interests and no such securities or obligations are issued or outstanding.
Section 3.9 Project Company Ownership.
After giving effect to the transaction anticipated to occur on the “Purchase Date” under the Purchase Agreement, as of each Equity Capital Contribution Date, (a) the Company owns of record and beneficially one hundred percent (100%) of the membership interests in the Project Company, (b) there are no outstanding options, warrants, calls, puts, convertible securities or other contracts of any nature obligating the Class B Equity Investor, the Company or the Project Company to issue, deliver or sell membership interests or other securities in the Project Company (other than, prior to the Substantial Completion Funding Date, the rights granted under the Financing Loan Documents), (c) the Project Company is the sole owner of the Project, (d) the membership interests in the Project Company are free and clear of all Liens other than Permitted Equity Encumbrances, (e) the Project Company has no subsidiaries, (f) no Person has or will have a right to acquire an ownership interest in the Project or in all or substantially all of the property of the Project (other than pursuant to Permitted Liens) and (g) the Project Company is not a party to nor otherwise subject to any legal, regulatory, or contractual restriction (other than as set forth in this Agreement or the Material Project Contracts) restricting the ability of the Project Company to pay dividends or make similar distributions to the Company, the Class A Equity Investor or the Class B Equity Investor (other than pursuant to the Financing Loan Documents, prior to the Substantial Completion Funding Date).
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Section 3.10 Taxes.
(a) The Class B Equity Investor, the Company and the Project Company have timely filed all material Tax Returns with respect to the Company, the Project Company, and the Project and have paid all Taxes shown as owing on any such Tax Returns. Neither the Company nor the Project Company have (i) executed (or had executed on its behalf) any outstanding waivers of the statute of limitations for any Taxes or Tax Return, (ii) granted any powers of attorney with respect to any Tax matter or (iii) received or requested any written ruling of a taxing authority with respect to Taxes or entered into any other written agreement with a taxing authority relating to Taxes. At all times prior to the Mechanical Completion Funding Date, the Company has been disregarded as an entity separate from SE Global Holdings, LLC for federal income tax purposes. No election has been or will be made for the Company or the Project Company to be treated as an association taxable as a corporation for federal income tax purposes. Neither the Company nor Project Company is a party to any Tax indemnity, allocation or sharing agreement currently in force other than customary tax indemnification provisions in the Transaction Documents. No claim has been made by a Taxing authority, in a jurisdiction where the Company or the Project Company does not file Tax Returns that the Company or Project Company is or may be subject to taxation by that jurisdiction. There are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or Project Company, other than Permitted Liens. There are no audits, claims, assessments, levies, administrative proceedings, or lawsuits with respect to Taxes or Tax Returns pending or, threatened in writing with respect to the Project Company or the Project or to which the Company or the Project Company could be made subject.
(b) Neither the Class B Equity Investor nor any Affiliate has (i) taken a position on any federal, state or local tax report, tax filing or Tax Return that (x) is inconsistent with the original use, for federal income tax purposes, of the Project or any property that is part of the Project by the Company or (y) will result in the reduction, denial or recapture of the ITC or (ii) claimed with respect to the Project or any property that is part of the Project, on any tax report, tax filing or Tax Return, any depreciation or amortization deductions, renewable energy production tax credits pursuant to Section 45 of the Code, the ITC or any other tax credits under other applicable tax law that are available with respect to the Project or any property that is part of the Project (except for any such Tax benefits allocated to the Class B Equity Investor from the Company pursuant to the LLCA following the Mechanical Completion Funding Date).
(c) The Company has no Subsidiaries other than the Project Company and less than five percent (5%) of the Fair Market Value of the materials and parts that comprise the Project, on the date such property was placed in service for U.S. federal income tax purposes, consisted of property, materials and parts used by a Person other than the Company or the Project Company (or the EPC Contractors).
(d) The sales, use, transfer, ad valorem, property and similar taxes payable by the Company or the Project Company in respect of (i) the ownership of the Project, (ii) the obligations set forth in the Real Estate Documents, and (iii) payments made or to be made to the Company or the Project Company by the Power Purchaser under, or otherwise in relation to, the
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Power Purchase Agreement will not exceed the amount of such taxes set forth in the Base Case Model.
(e) As of the Mechanical Completion Funding Date, none of clauses (ii), (iii), (iv), or (v) of the definition of Placed in Service have yet occurred with respect to any portion of the Project.
(f) As of the Substantial Completion Funding Date, (i) all Circuits have achieved Placed In Service and all ▇▇▇▇ Circuits have achieved Placed In Service, and (ii) the Placed in Service Certificate is true, accurate, and complete.
(g) As of the end of the Company’s taxable year including the Placed In Service Date of the Project, the initial tax basis allocable to ITC Eligible Property of the Project Company with respect to each of the PV Project and the ▇▇▇▇ Project shall be no less than the amount allocated to ITC Eligible Property of the PV Project and the ▇▇▇▇ Project, as applicable, in the latest Updated Base Case Model.
(h) As of the Effective Date and each Equity Capital Contribution Date, the Project is, or upon placement in service will be, eligible for the increased credit amount under Section 48(a)(9) by fully complying with the PWA Requirements with respect to all construction, alteration, and repair work to which such requirements apply through the Effective Date or the applicable Equity Capital Contribution Date; provided, Class B Equity Investor shall not be in breach of this representation so long as either (i) the Class B Equity Investor (or the applicable EPC Contractor on behalf of the Class B Equity Investor) has funded an amount in the PWA Cure Reserve Account equal to the total PWA Cure Costs required for the Company to fully comply with the PWA Requirements, as determined by the PWA Consultant and identified in the PWA Compliance Report delivered in connection with each Equity Capital Contribution Date as of such date and in accordance with Section 7.5 or, (ii) if applicable, the Class B Equity Investor has caused the Company or the Project Company to pay (or the EPC Contractors have paid) all PWA Cure Costs required for the Company to fully comply with PWA Requirements. As of each Equity Capital Contribution Date, the PWA Certificate is true, accurate, and complete.
(i) (i) The Domestic Content Bonus Certificate is true, accurate and complete and (ii) for purposes of Section 48(a)(12) of the Code, the Project has satisfied the domestic content requirements set forth in Section 45(b)(9)(B)(i) and is, or will be upon placement in service, eligible for the Domestic Content Bonus; provided, the Class B Equity Investor shall not be in breach of this representation if the Domestic Content Bonus is not reflected in the Updated Base Case Model.
(j) (i) The Energy Community Bonus Certificate is true, accurate and complete, (ii) the Project “began construction” (for purposes of IRS Notice 2022-61) in calendar year 2024, and (iii) the Project is, or will be deemed to be, located in an “energy community” (within the meaning of Section 48(a)(14) of the Code) as of the date the Project “began construction” (for purposes of IRS Notice 2022-61) and is, or will be upon placement in service, eligible for the Energy Community Bonus; provided, the Class B Equity Investor shall
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not be in breach of this representation if the Energy Community Bonus is not reflected in the Updated Base Case Model.
(k) The Project, upon placement in service, constitutes a “single energy property” (within the meaning and for purposes of Treasury Regulations section 1.48-13(d)).
(l) None of the Class B Equity Investor or any of its Affiliates, the Company, or the Project Company has elected or entered into any contract or arrangement for “transferability” under Section 6418 of the Code or any similar mechanic in respect of any tax credit relating to the Project or any portion thereof; provided that the foregoing representation shall not apply with respect to an election made by the Company under Section 7.02(j) of the LLCA.
(m) The Class B Equity Investor is not treated as the same taxpayer as (or treated as an entity disregarded from) the Seller or Seller Parent for U.S. federal income tax purposes.
(n) None of the property in the Project is “tax-exempt bond financed property” within the meaning of Section 168(h)(2)(A) of the Code.
Section 3.11 Compliance with Applicable Laws.
(a) Except as listed on Part III of Schedule 3.16, Each of the Class B Equity Investor, the Project Company and the Company is, and the business and operations of each such Person and Project Company’s development, construction and operation of the Project are, and have been, conducted in all material respects in compliance with all applicable Laws, and none of Class B Equity Investor, the Company or Project Company has received any written notice from any Governmental Authority of an actual or potential material noncompliance with or material violation of any applicable Laws.
(b) Each of the Class B Equity Investor, the Project Company and the Company and their respective officers, directors, employees, and, to the Knowledge if the Class B Equity Investor, agents (if any), (1) has complied, since April 24, 2019, with all applicable Sanctions, (2) has complied, within the past five (5) years, in all material respects with (a) all applicable export controls laws and regulations administered by the U.S. Department of Commerce, the U.S. Department of State, the U.S. Department of Homeland Security, or any other relevant Governmental Authority in the United States; and (b) any applicable U.S. anti-boycott laws and regulations, and (3) is not a Prohibited Person. The Project Company has not engaged, since April 24, 2019, in any dealings or transaction with any Prohibited Person or in any Sanctioned Country, in violation of applicable Sanctions.
Section 3.12 Environmental Matters.
Except as set out on Schedule 3.12 or as would not reasonably be expected to have a Material Adverse Effect (i) each of Class B Equity Investor, the Company and Project Company is, and since December 12, 2023, has been, in compliance with all applicable Environmental Laws and all applicable Governmental Approvals issued pursuant to Environmental Law; (ii) the Class B Equity Investor has no Knowledge that the Project Company was not in compliance with all
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applicable Environmental Laws prior to December 12, 2023; (iii) to the Knowledge of the Class B Equity Investor, no Hazardous Substances have been Released in, on, or under the Project or the Project Site (including the soil or groundwater thereunder) that (A) would reasonably be expected to require Project Company or Company to conduct any investigation, removal or remediation pursuant to any Environmental Law in connection therewith or (B) would reasonably be expected to result in a Claim against the Company or Project Company by, or liability of the Company or the Project Company to, any Person, in each case, under any Environmental Law, and (iv) none of Class B Equity Investor, the Company nor Project Company has received any written notice from any Governmental Authority or any other Person of any actual or potential violation, noncompliance, or liability, or any written notice of any investigation by any Governmental Authority, or any written request for information regarding an investigation by any Governmental Authority, or an actual or potential violation of or noncompliance with, in each case, any Environmental Law.
Section 3.13 Material Project Contracts and Defaults.
Schedule 3.13 lists each Material Project Contract to which Project Company is a party. The Class B Equity Investor has provided to the Class A Equity Investor copies of all Material Project Contracts and such copies are true, accurate and complete in all material respects. As of each Equity Capital Contribution Date, each Material Project Contract to which Project Company is a party has been duly authorized, executed and delivered by Project Company and is in full force and effect and is binding on Project Company and, to the Knowledge of the Class B Equity Investor, on the other parties thereto, except as enforceability may be limited by applicable bankruptcy and similar laws affecting the enforcement of creditors’ rights and general equitable principles. None of Project Company nor, to the Knowledge of Class B Equity Investor, any other party thereto is in default under any Material Project Contract, nor has any event occurred which, with notice or the lapse of time or both, would reasonably be expected to result in a default under, any Material Project Contract, whether caused by Class B Equity Investor, Project Company or, to the Knowledge of Class B Equity Investor, any other party to any Material Project Contract, in each case that would reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 3.13, the consummation of the transactions contemplated by this Agreement would not give any party to a Material Project Contract, the right to terminate or alter the terms of such contract or a right to claim damages thereunder.
Section 3.14 Real Property.
The Project Company has valid leasehold and easement interests to the Project Site, subject only to Permitted Liens. As of the Effective Date, all material written agreements to which the Project Company is a party pertaining to real property (i) owned or leased by the Project Company or (ii) are insured leasehold or easement interests under the Effective Date Title Policy are listed as “Real Estate Documents” on the applicable portion of Schedule 3.14. All crossing agreements, letters of no objection and surface waivers (other than those contained within leases included as “Real Estate Documents”) (including all modifications, amendments and supplements thereto) to which the Project Company is a party are listed as “Ancillary Real Estate Agreements” on the applicable portion of Schedule 3.14. Each of the Real Estate Documents and Ancillary Real Estate Agreements is in full force and effect and is binding on the
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Project Company party thereto and to the Knowledge of the Class B Equity Investor, on the other parties thereto, except as enforceability may be limited by applicable bankruptcy and similar laws affecting the enforcement of creditors’ rights and general equitable principles. The Class B Equity Investor has provided to the Class A Equity Investor copies of all Real Estate Documents and Ancillary Real Estate Agreements and such copies are true, accurate and complete in all material respects. Except as set forth on Schedule 3.14, the Real Estate Documents, Ancillary Real Estate Agreements and other rights granted pursuant to the other Material Project Contracts are sufficient to enable the Project to be located, constructed, accessed, operated and maintained on the Project Site for at least twenty-five (25) years from the Final Completion of the Project in accordance with all Governmental Approvals and the Transaction Documents. None of the Class B Equity Investor, the Company, the Project Company or any Affiliate of the foregoing has been informed in writing by a counterparty to any Real Estate Document or Ancillary Real Estate Agreement that the Project Company is in material breach of its obligations under any Real Estate Document or Ancillary Real Estate Agreement, as applicable. The Project Company has not executed any options or contracts to lease, sublease, grant an easement, or to sell any portion of the Project Site.
Section 3.15 Personal Property.
The Project Company owns or leases or has a contractual right to use, or reasonably expects to acquire by the Placed In Service Date ownership of, a leasehold interest in or a contractual right to use, all material equipment and facilities currently used in the operations of the Project. All material equipment and facilities included in the Project are (or are reasonably expected to be when acquired, leased or contracted for) in good repair and operating condition subject to ordinary wear and tear and are suitable for the purposes for which they are employed, and, to the Knowledge of the Class B Equity Investor there is no material defect, hazard or dangerous condition existing with respect to any such equipment or facilities. There is no Casualty Defect with respect to the Project (regardless of whether covered by insurance) in existence or, if a Casualty Defect is in existence, in the opinion of the Independent Engineer, (a) such Casualty Defect is capable of repair in a reasonably satisfactory time-frame, (b) an adequate reserve has been established for such repair and (c) such Casualty Defect will not result in any liquidated damages or material default under any Material Project Contract which have not been cured or paid by the Project Company or the Class B Equity Investor or for which adequate proceeds under the Financing Agreement or applicable insurance policies have not been committed or otherwise available to the Project Company, and which, as of the Substantial Completion Funding Date, have not been deposited in the Final Completion Reserve Account, to pay such amounts when due.
Section 3.16 Governmental Approvals, Permits and Filings.
(a) No material Governmental Approval of or filing with any Governmental Authority is required to be obtained or made by or on behalf of the Class B Equity Investor, the Company or the Project Company pursuant to any applicable Law for (i) the execution, delivery and performance by the Class B Equity Investor, the Company or the Project Company of any Transaction Document to which it is a party, (ii) the consummation of the transactions contemplated therein, (iii) the leasing of the Project Site or (iv) the acquisition, siting,
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development, construction, operation, ownership, and routine maintenance of the Project in compliance with applicable Laws, tariffs and rules, including for the sale of electrical energy at wholesale and the sale of RECs therefrom, other than those Governmental Approvals or filings set out on Part I of Schedule 3.16 and (v) those Governmental Approval or filings that have been obtained and are on Part II of Schedule 3.16, each of which such Governmental Approval on Part II of Schedule 3.16 is in full force and effect, and no Person has filed an administrative or judicial challenge to the issuance of any such Governmental Approval on Part II of Schedule 3.16 that has not been resolved. For the avoidance of doubt, material Governmental Approvals or filings do not include those which are ministerial in nature, and obtainable in the ordinary course of business. All pending material Governmental Approvals and material Governmental Approvals not yet required to be obtained are set out on Part I of Schedule 3.16, and all obtained material Governmental Approvals are set out on Part II of Schedule 3.16. The Class B Equity Investor has provided to the Class A Equity Investor copies of all such obtained Governmental Approvals, and such copies are true, accurate and complete in all material respects. Except as set forth on Part III of Schedule 3.16, none of Sponsor, the Company, Project Company, or the Class B Equity Investor has received written notification that any noncompliance or violation has been recorded or found against any obtained Governmental Approval, or that a citation, notice, or warning has been issued by any Governmental Authority with respect to any such Governmental Approval, or that any investigation of any actual or potential noncompliance or violation has been held by or before such Governmental Authority that would reasonably be expected to result in the cancelation, revocation, termination, suspension, denial or nonrenewal of any Governmental Approval required for the leasing of the Project Site or the acquisition, siting, development, construction, operation, ownership or routine maintenance of the Project.
(b) To the Knowledge of Class B Equity Investor, all information set forth in the applications and other documents submitted by the Project Company or Class B Equity Investor (or any of its Affiliates) to any Governmental Authority in connection with any Governmental Approval on Part II of Schedule 3.16 was true and correct in all material respects at the time of such submission. As of the Effective Date and each Equity Capital Contribution Date, as applicable, each Governmental Approval set out on Part II of Schedule 3.16 is valid and in full force and effect, and all appeals periods set forth in the statute or administrative rule pursuant to which such Governmental Approval was issued have expired, except as set forth on Schedule 3.16.
(c) To the Knowledge of Class B Equity Investor, there is no event or circumstance that could reasonably be expected to cause any Governmental Approval on Part I of Schedule 3.16 to not be obtained by the time such Governmental Approval is needed.
Section 3.17 Employee Matters.
Neither the Company nor the Project Company has, and since the date of its creation has never had, any employees, nor has it maintained sponsored, administered or participated in any employee benefit plan subject to ERISA. Neither the Company nor the Project Company sponsors, maintains, contributes to, or has any obligation to contribute to, except that certain labor costs may have been allocated to the Project Company or Project for service performed by the Seller’s or its ERISA Affiliates’ employees in connection with the Project. There does not
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now exist, nor do any circumstances exist that could reasonably be expected to result in, any liability of the Company, Project Company or its ERISA Affiliates under any Plan of the Project Company, Seller or their ERISA Affiliates, including under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv) any “multiemployer plan” (as defined in Section 3(37) of ERISA), (v) any voluntary employees’ beneficiary association (as described in Section 501(c)(9) of the Code), (vi) any post termination or retiree life insurance, health or other employee welfare benefits arrangement, or (vii) the provisions of Section 601, et. seq. of ERISA and Section 4980B of the Code.
Section 3.18 Affiliate Transactions.
Except for the Transaction Documents or as disclosed on Schedule 3.18, there are no existing Contracts between the Class B Equity Investor or any Affiliate of the Class B Equity Investor, on the one hand, and the Company or the Project Company on the other hand. Other than in accordance with the Transaction Documents, none of the Company or the Project Company has outstanding debt to any Affiliate. Each of the Transaction Documents between the Company or the Project Company on the one hand, and the Class B Equity Investor or any Affiliate of the Class B Equity Investor on the other hand, is on arms’ length terms and conditions.
Section 3.19 Books and Records.
All books, accounts and files of the Company and Project Company are complete in all material respects.
Section 3.20 No Broker Fees.
No broker, finder, investment banker, or other Person is entitled to any brokerage, finder’s or other fee or commission payable by the Company, Project Company or the Seller in connection with the transactions contemplated hereunder.
Section 3.21 Foreign Person.
None of the Company, Project Company or the Class B Equity Investor is a foreign person within the meaning of Section 1445 of the Code.
Section 3.22 Regulatory Status.
(a) As of the Mechanical Completion Funding Date, the Project Company is an EWG.
(b) As of the Substantial Completion Funding Date, the Project Company is an EWG and shall have MBR Authority, which MBR Authority is valid and in full force and effect.
(c) As of the Mechanical Completion Funding Date and the Substantial Completion Funding Date, none of the Class B Equity Investor, the Company, or the Project Company is, nor will be or become subject to, nor will fail to be exempt from, regulation as a “holding company” within the meaning of Section 1262(8) of PUHCA (42 U.S.C. Section
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16451(8)), other than the Company and the Class B Equity Investor as a “holding company” within the meaning of Section 1262(8) of PUHCA solely with respect to its direct or indirect ownership of the Project Company. As of the Mechanical Completion Funding Date and the Substantial Completion Funding Date, the Project Company is not subject to regulation by FERC under PUHCA except with respect to regulation relating to maintaining EWG status, and any applicable regulation as a “subsidiary company” or an “affiliate” of a “holding company,” as such terms are used within the meaning of PUHCA.
(d) The Class A Equity Investor will not, solely as a result of entry into or performance of the Investment Documents (other than with respect to the exercise of remedies by the Class A Equity Investor) or the consummation of the Transaction, including ownership and operation of the Project by the Project Company and the sale of electricity at wholesale therefrom by the Project Company, (a) be subject to, (b) lose its status as exempt from, regulation as an “electric utility company”, a “public-utility company” or a “holding company” or an “affiliate” or “subsidiary company” as such terms are defined under Section 1262 of PUHCA (other than as a “holding company” that is exempt from regulation by FERC under PUHCA pursuant to 18 C.F.R. § 366.3(a)), or as a “public utility” under the FPA or (c) be subject to regulation as a “public utility” (as such term is defined in California Public Utilities Code Section 216) or become subject to other laws or regulations of the State of California respecting the rates charged by, or the financial or organizational regulation of “public utilities”.
(e) No later than the date the Project injects electric energy into the transmission system, the Project Company shall be a “public utility,” as such term is defined in Section 201(e) of the FPA, and shall have MBR Authority, which MBR Authority is valid and in full force and effect.
Section 3.23 Liens.
All assets owned by Company or Project Company are free and clear of all Liens, other than Permitted Liens. There has been no work performed on the Project Site by Sponsor, the Class B Equity Investor, Project Company, their Affiliates or any contractor or subcontractor retained by any such Person that are reasonably expected to result in any claims for mechanic’s or materialmen’s liens (other than Permitted Liens).
Section 3.24 Insurance.
Exhibit B contains a list of all insurance policies required, pursuant to the Material Project Contracts or otherwise, to be obtained and/or maintained with respect to the Company, the Project Company and the Project and all such policies are in full force and effect and there are no unpaid claims with respect thereto.
Section 3.25 State Utility Regulation.
Neither the Company nor Project Company is subject to state regulation as a “public utility” (as such term is defined in California Public Utilities Code Section 216) and will not, as a result of the development, construction, ownership, siting, use, operation or maintenance of the Project or the sale at wholesale of electric energy and the sale of RECs therefrom be or become
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subject to, or not exempt from, regulation as a “public utility” (as such term is defined in California Public Utilities Code Section 216).
Section 3.26 Commitments.
The Class B Equity Investor or its Affiliate has, or has commitment for, sufficient proceeds to (x) pay all of its obligations which are reasonably likely to be due pursuant to this Agreement and (y) repay in full all outstanding indebtedness and other outstanding obligations for borrowed money incurred pursuant to the Financing Loan Documents on the Substantial Completion Funding Date after giving effect to all Capital Contributions to be made on the Substantial Completion Funding Date as and when such indebtedness or obligations are due.
Section 3.27 Financial Statements.
Included in Schedule 3.27 are (i) audited financial statements of Sponsor and its consolidated Subsidiaries, (ii) audited balance sheets and income statements of Sponsor that have been prepared as of and for the quarter ended December 31, 2023, and (iii) the most recently available unaudited consolidated balance sheet of the Company and the Project Company as of the Mechanical Completion Funding Date and the Substantial Completion Funding Date. Such financial statements have been prepared in accordance with GAAP and present fairly in all material respects the financial position of Sponsor, the Company, and Project Company, as applicable, as of such date and the results of operations for the period then ended, subject to normal year-end audit adjustments and the absence of footnotes. Project Company has no material liabilities or debts except those related to the development, construction, ownership or operation of the Project.
Section 3.28 Investment Company.
Neither the Project Company nor the Company is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940 or an “investment advisor” within the meaning of the Investment Company Act of 1940. In making the preceding representation, the Class B Equity Investor is not relying on an exemption under Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940.
Section 3.29 Information.
All of the factual information furnished in writing by or on behalf of the Company, Project Company, the Class B Equity Investor or any of their respective Affiliates to the Class A Equity Investor, or any Affiliates of the Class A Equity Investor or any of the consultants or advisors engaged by the Class A Equity Investor, the Class B Equity Investor or their Affiliates in connection herewith, with respect to the Company, Project Company, the Class B Equity Investor or Project, when taken as a whole, is (A) true and complete (or, where appropriate, estimated in good faith) in all material respects as of the date made or furnished and (B) not incomplete by omission of any material fact necessary to make such information (taken as a whole and in light of the circumstances when made or provided) not misleading at such time and in light of the circumstances in which made (after giving effect to all updates and subsequent disclosures provided); provided, however, that, except as expressly set forth herein, no
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representation or warranty is made with respect to (i) any assumptions, projections or other pro-forma information or forward-looking statements provided by or on behalf of the Company, Project Company, the Class B Equity Investor or any of their respective Affiliates (including the Base Case Model) or the reports of the Appraiser, Certified Public Accountant, Environmental Consultant, PWA Consultant, Independent Engineer and Insurance Consultant, except as to factual information provided by or on behalf of the Company, Project Company, the Class B Equity Investor or any of their respective Affiliates which formed the basis for the assumptions in the Base Case Model or such reports, and that such assumptions made by Company, Project Company, the Class B Equity Investor or any of their respective Affiliates, or, to the Knowledge of the Class B Equity Investor, Appraiser, Certified Public Accountant, Environmental Consultant, PWA Consultant, Independent Engineer and Insurance Consultant, have been made in good faith and were reasonable in light of the conditions that existed at the time of delivery (it being understood that no assurance can be given that the assumptions in the Base Case Model or such reports will be realized, and that actual results may differ and such differences may be material), (ii) the tax consequences to the Class A Equity Investor and its Affiliates of owning the Class A Units in the Company or (iii) publicly available information and information of a general economic or industry-specific nature.
Section 3.30 No Other Representation.
The Class B Equity Investor has not made any representations or warranties, express or implied, nor has the Company or the Class A Equity Investor relied on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations and warranties of the Class A Equity Investor (or its Affiliates) expressly set out in this Agreement or any other Transaction Document and any certification delivered in connection with any of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE CLASS A EQUITY INVESTOR
The Class A Equity Investor represents and warrants to the Class B Equity Investor that the following statements are true and correct with respect to the Class A Equity Investor, as of the Effective Date and each Equity Capital Contribution Date:
Section 4.1 Organization and Good Standing, Etc.
The Class A Equity Investor is duly incorporated, validly existing, and in good standing under the Laws of the State of Delaware; if required by applicable Law, the Class A Equity Investor is duly qualified and in good standing in the jurisdiction of its principal place of business, if different from its jurisdiction of incorporation and the Class A Equity Investor has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and all necessary actions by the board of directors, shareholders, managers, members, partners, trustees, beneficiaries, or other applicable Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by the Class A Equity Investor have been duly taken.
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Section 4.2 Execution, Delivery and Enforceability.
The Class A Equity Investor has duly executed and delivered this Agreement and the other documents to which it is a party contemplated herein, and they constitute the legal, valid and binding obligations of the Class A Equity Investor enforceable against it in accordance with their terms (except as may be limited by bankruptcy, insolvency or similar Laws of general application and by the effect of general principles of equity, regardless of whether considered at law or in equity).
Section 4.3 No Conflicts.
The Class A Equity Investor’s authorization, execution, delivery, and performance of this Agreement does not and will not (i) conflict with, or result in a breach, default or violation of, (A) the organizational documents of the Class A Equity Investor, (B) any contract or agreement to which the Class A Equity Investor is a party or is otherwise subject, or (C) any Law, writ, injunction or arbitral award to which the Class A Equity Investor is subject; or (ii) require any consent, approval or authorization from, filing or registration with, or notice to, any Governmental Authority or other Person, unless such requirement has already been satisfied.
Section 4.4 Legal Proceedings.
There is no action, suit, claim, investigation or proceeding of any kind, including any arbitration proceeding, pending or, to the knowledge of the Class A Equity Investor, threatened, before any court, arbitration panel or Governmental Authority against the Class A Equity Investor which would reasonably be expected to adversely affect the Class A Equity Investor’s ability to execute, deliver and perform its obligations under each Investment Document to which it is a party and consummate the Transaction.
Section 4.5 Investment Intent; Restricted Securities.
(a) The Class A Equity Investor is acquiring the Class A Units on the Mechanical Completion Funding Date for investment for its own account and not as a nominee or agent. The Class A Equity Investor understands that the Class A Units have not been, and will not be, registered under the Securities Act and are being acquired in a transaction not involving a public offering by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the Class A Equity Investor’s investment intent and the accuracy of the Class A Equity Investor’s representations as expressed herein.
(b) The Class A Equity Investor understands that no public market now exists for the Class A Units or any of the securities of the Company and none of the Sponsor, the Seller, the Class B Equity Investor, the Company or the Project Company have made any assurances that a public market will ever exist for the Class A Units or other Company securities.
Section 4.6 Accredited Investors.
The Class A Equity Investor is an “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act. The Class A Equity Investor is not relying on the
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Sponsor, the Seller, the Class B Equity Investor, the Company or the Project Company for any technical, accounting, commercial, legal or tax advice.
Section 4.7 Related Party Tax-Exempt Status.
(a) Neither the Class A Equity Investor nor any Affiliate of the Class A Equity Investor that is a “related person” with respect to the Class A Equity Investor for purposes of Treasury Regulation Section 1.752-4(b) has any “obligation to make a payment” within the meaning of Treasury Regulation Section 1.752-2(b)(3), excluding for this purpose the Class A Equity Investor’s obligation to restore a deficit capital account under Section 12.04 and Section 4.02(b) of the LLCA.
(b) The Class A Equity Investor (x) is a United States Person (or is a “disregarded entity” for U.S. federal income tax purposes the sole owner of which is a United States Person) and (y) is not subject to withholding under Section 1445 or Section 1446 of the Code.
(c) The Class A Equity investor is not a Tax Exempt Person and is not related to any Power Purchaser within the meaning of Sections 267(b) and 707(b)(1) of the Code.
Section 4.8 Brokers.
Neither the Class A Equity Investor, nor any of its Affiliates, has retained any broker, agent or finder or incurred any liability or obligation for any brokerage fees, commissions or finder fees with respect to this Agreement or the Transaction.
Section 4.9 Prohibited Person.
The Class A Equity Investor and, to the Knowledge of the Class A Equity Investor, its officers, directors, employees, and agents (if any), (1) has complied, within the past five (5) years, with all applicable Sanctions, (2) has complied, within the past five (5) years, in all material respects with (a) all applicable export controls laws and regulations administered by the U.S. Department of Commerce or the U.S. Department of State; and (b) any applicable U.S. anti-boycott laws and regulations, and (3) is not a Prohibited Person.
Section 4.10 CFIUS Rules Inapplicable.
The Class A Equity Investor is not a “foreign person” within the meaning of 31 C.F.R. § 800.224.
Section 4.11 Regulatory Status.
The Class A Equity Investor is not subject to, or is exempt from, regulation as a “holding company” under PUHCA. Class A Equity Investor is not subject to regulation as a “public utility” under Section 201(e) of the FPA.
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Section 4.12 No Other Representations.
The Class A Equity Investor has not made any representations or warranties, express or implied, nor has the Company or the Class B Equity Investor relied on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations and warranties of the Class A Equity Investor (or its Affiliates) expressly set out in this Agreement or any other Transaction Document and any certification delivered in connection with any of the foregoing.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF THE CLASS A EQUITY INVESTOR
Section 5.1 Conditions Precedent to the effectiveness of this Agreement on the Effective Date.
The effectiveness of this Agreement is subject to the satisfaction or waiver by the Parties of the follow conditions precedent, as applicable:
(a) the Class A Equity Investor has received (A) a legal opinion from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP as to (i) due authority of the Class B Equity Investor, Seller, the Company, and the Sponsor to execute the Investment Documents (other than the LLCA) and the Fee Letter to which each is party as of the Effective Date, and (ii) enforceability of the Investment Documents (other than the LLCA) and the Fee Letter, (B) a legal opinion from Husch ▇▇▇▇▇▇▇▇▇ LLP as to federal energy regulatory matters, California energy regulatory matters, and enforceability of certain specified Material Project Contracts (but specifically excluding any Real Estate Documents) to which the Project Company is party, solely to the extent such documents are stated to be governed by the Laws of the State of California, (C) a legal opinion from Bell ▇▇▇▇▇▇, Ltd as to certain federal, state, local land use and environmental permitting matters governed by California and federal law and (D) a tax opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP as counsel to the Class A Equity Investor, which opinion shall be in form and substance satisfactory to the Class A Equity Investor;
(b) the Class A Equity Investor shall have received (i) fully executed counterparts of this Agreement (including the Disclosure Schedules and all other schedules, exhibits and annexes hereto), the Sponsor Guaranty, the Effective Date Lender Consent entered into as of the Effective Date and any other Investment Documents to be executed on or prior to the Effective Date, each in form and substance satisfactory to the Class A Equity Investor and (ii) fully executed copies of each of the Material Project Contracts listed on Schedule 3.13 that have been executed as of the Effective Date; each of which shall be in full force and effect and no event shall have occurred and be continuing that would constitute a default by the Sponsor, the Class B Equity Investor, the Company, the Project Company or any other Affiliate of the Sponsor and which, with notice or the lapse of time or both, would reasonably be expected to have a Material Adverse Effect;
(c) the Domestic Content Requirements and the Energy Community Bonus Requirements have been satisfied;
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(d) The Class A Equity Investor shall have received (i) an update to the existing ALTA/NSPS Land Title Survey of the Project Site (a) showing each tract of land referenced in the Title Policy, the location of all exceptions to title shown on the Title Policy, as updated by the Effective Date Endorsement, that are capable of being plotted (or otherwise stating that the exception is “not plottable,” “blanket in nature,” “does not affect,” or is “not addressed herein”), and the proposed location of all Project Improvements and otherwise depicting access to a public roadway and the point of change of ownership or interconnection for the Project, (b) prepared by a land surveyor duly licensed and registered in the State of California, (c) including, if applicable, Table A Items 1, 2, 3, 4, 6(A)(B), 7(A), 8, 11, 12, 13, 14, 15, 16, 17, 18, and 19, (d) prepared in accordance with the 2021 ALTA Requirements, (e) certified to the Project Company, the Title Company, and the Class A Equity Investor, (f) confirming that the location of the Project Improvements will be in compliance with all applicable building and setback lines affecting the Property, except for (A) those building and setback lines for which setback waivers have been obtained, (B) those building and setback lines set forth in the Kern County, California, Zoning Ordinance Section 19.08.405 which the Project Company is seeking to remove or reduce through amendment to the General Plan to remove or reclassify road reservations along section or midsection lines, and (C) those encroachments of Project fences onto county setback lines for which the Project has obtained approval from Kern County, each of the foregoing items (A)-(C) which, either individually or in the aggregate, do not, or would not reasonably be expected to materially adversely interfere with the construction, operation and maintenance of the Project; and (g) showing that the Project Improvements will not encroach on adjacent property or existing easements of record that restrict or prevent the construction or placement of the Project Improvements in accordance with the Project site design (whether on, above or below ground other than underground utility lines) unless noted otherwise and (A) for which crossing or encroachment agreements, letters of no objections, or other written consents or approvals have been obtained or (B) for which the Title Company has agreed to provide the Title Policy and associated endorsements without carveout for said encroachment, and (h) which is otherwise in form and substance reasonably satisfactory to the Title Company and the Class A Equity Investor (the “Effective Date Survey”), and (ii) an irrevocable commitment from the Title Company, in the form of a closing instruction letter signed by the Title Company, to issue a date down endorsement to the Title Policy substantially in the form of the proforma date down endorsement and in form and substance reasonably satisfactory to the Title Company and the Class A Equity Investor, which shall (a) bring forward the effective date of the Title Policy to the Effective Date, and (b) if applicable and to the extent constituting Permitted Liens or otherwise reasonably acceptable to the Class A Equity Investor, include additional title exceptions imposed subsequent to the effective date of the Title Policy (the “Effective Date Endorsement,” and together with the Title Policy, the “Effective Date Title Policy”);
(e) the Class A Equity Investor shall have received the Insurance Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor;
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(f) the Class A Equity Investor shall have received the Independent Engineer Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(g) the Class A Equity Investor shall have received the Transmission Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(h) the Class A Equity Investor shall have received the Environmental Reports and, if the Environmental Report were not prepared for the benefit of the Class A Equity Investor, a reliance letter with respect to such reports, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(i) the Class A Equity Investor shall have received the Battery Power Marketing Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(j) the Class A Equity Investor shall have received the PML Report in form and substance reasonably satisfactory to the Class A Equity Investor;
(k) the Class A Equity Investor has obtained all necessary internal approvals to enter into this Agreement, including, without limitation, with respect to the insurance coverages and deductibles for hail events as set forth in Exhibit B;
(l) the Class A Equity Investor shall have received Uniform Commercial Code, litigation, fixture, tax and bankruptcy search reports of the Class B Equity Investor, the Company, and the Project Company;
(m) the most recently available audited financial statements of Sponsor and its consolidated Subsidiaries shall have been Made Available to the Class A Equity Investor;
(n) the Class A Equity Investor shall have received a draft of the Appraisal, and Cost Seg Report and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(o) (i) the Class A Equity Investor shall have received incumbency certificates, secretary certificates, good standing certificates (from each such Person’s jurisdiction of formation), resolutions, formation documents and limited liability company agreement of the Class B Equity Investor, the Sponsor, the Company, and the Project Company as are customary for transactions of this type, each of which is reasonably satisfactory to the Class A Equity Investor and (ii) the Class B Equity Investor shall have received officer certificates, incumbency certificates, secretary certificates, good standing certificates, resolutions and formation documents of the Class A Equity Investor, as are customary for transactions of this type, each of which is reasonably satisfactory to each of the Parties;
(p) the Class A Equity Investor shall have received fully executed copies of the Financing Loan Documents;
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(q) the Class A Equity Investor shall have received the Base Case Model, which is in form and substance reasonably satisfactory to the Class A Equity Investor;
(r) the Class B Equity Investor, the Company and the Project Company shall have received all Third Party consents, waivers, authorizations and approvals under any Material Project Contract for the execution, delivery and performance of this Agreement and the transactions contemplated hereunder, which consents, waivers, authorizations and approvals are in form reasonably satisfactory to the Parties and copies of the same shall have been delivered to the Parties;
(s) no Material Adverse Effect has occurred since December 31, 2023 and is continuing; provided, that no Tax Law Change or Proposed Tax Law Change shall be taken into account in determining whether a Material Adverse Effect shall have occurred for purposes of this Section 5.1(s);
(t) the Class A Equity Investor shall have received, in form and substance reasonably satisfactory to the Class A Equity Investor, (i) a detailed plan or outline describing the processes and procedures for ensuring compliance with the PWA Requirements and evidence of engagement of the PWA Consultant (which shall include a description of the services to be performed by the PWA Consultant to demonstrate compliance with the PWA Requirements);
(u) each of the representations and warranties of the Class B Equity Investor in Article III shall be true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality), in each case as of the Effective Date (except those representations and warranties that address matters as of a specified date, the accuracy of which shall be determined as of such specified date);
(v) the Class A Equity Investor shall have received (A) reports and opinions reasonably satisfactory to the Class A Equity Investor from Qualus LLC that the Project is reasonably anticipated to be allocated the full 238.5 MW of Interim Deliverability Status from CAISO beginning on the Commercial Operation Date (as defined in the Power Purchase Agreement), through and including the completion date of the ▇▇▇▇▇▇▇ Project and thereafter until the date on which the Partial Capacity Deliverability Status Finding (as defined in the Power Purchase Agreement) is obtained from CAISO for the full 238.5 MW and (B) the ▇▇▇▇▇▇▇ Substation Construction Report from the Independent Engineer reasonably satisfactory to the Class A Equity Investor confirming (i) the date on which the ▇▇▇▇▇▇▇ Project is reasonably expected to begin construction, which in no event shall be later than March 31, 2029 and (ii) the reasonably expected completion date of the ▇▇▇▇▇▇▇ Project, which in no event shall be later than December 31, 2029; and
(w) the Class A Equity Investor shall have received the IDS Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor.
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Section 5.2 Conditions Precedent to the Obligations of the Class A Equity Investor on the Mechanical Completion Funding Date.
The obligations of the Class A Equity Investor to make its Capital Contribution on the Mechanical Completion Funding Date are subject to the satisfaction or waiver of the following conditions precedent:
(a) each of the representations and warranties of the Class B Equity Investor in Article III shall be true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality), in each case as of the Mechanical Completion Funding Date (except those representations and warranties that address matters as of a specified date, the accuracy of which shall be determined as of such specified date);
(b) the Class A Equity Investor shall have received a Capital Contribution Notice from the Class B Equity Investor at least five (5) Business Days (or such shorter period as the Class A Equity Investor may determine) prior to the Mechanical Completion Funding Date;
(c) the Class A Equity Investor shall have received a copy of an IE Mechanical Completion Certificate confirming that (i) Mechanical Completion has occurred, (ii) each of the Progress Conditions set forth on Part I of Exhibit I have been satisfied, (iii) (x) no portion of the Project (A) has been energized, interconnected, or synchronized with the electrical grid (and, with respect to the ▇▇▇▇ Project, the PV Project) and lockout/tagout equipment and mechanics which prevent any energization or backfeed of any Circuit or ▇▇▇▇ Circuit have been installed, (B) has actually generated or charged/discharged meterable quantities of electricity or is capable of generating or charging/discharging electricity on a sustained or reliable basis, or (C) has successfully performed any critical tests necessary for proper operation of the PV Project or the ▇▇▇▇ Project, including Commissioning (under the Battery Supply Agreement), or any testing requiring energization under Exhibit C-1 to the SOLV EPC Agreement, and (y) the Project Company does not hold risk of loss or care, custody and control of any portion of the Project, and (iv) Substantial Completion is reasonably expected to occur no later than the Commitment End Date;
(d) (A) each of the Sponsor, the Company, the Class B Equity Investor and the Project Company shall have performed the obligations required to be performed by it under the Transaction Documents to which it is a party (in each case to the extent such obligations are required to have been performed as of or prior to the Mechanical Completion Funding Date), except (i) any obligations under Section 7.4 or (ii) to the extent that failure to perform such obligations would not reasonably be expected to result in a Material Adverse Effect with respect to the Company or the Project Company, and (B) the Class B Equity Investor shall have delivered to the Class A Equity Investor (1) each additional Material Project Contract to which the Project Company is a party not previously delivered and (2) each amendment to each Material Project Contract to which the Project Company is a party, in each case, that has been executed since the Effective Date and each of which, if consent of the Class A Equity Investor would have been required pursuant to Section 6.03 of the LLCA if the LLCA were in effect as of the Effective Date, shall be in form and substance reasonably satisfactory to the Class A Equity Investor;
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(e) (A) the Class B Equity Investor, the Company and the Project Company shall have obtained and Made Available to the Class A Equity Investor all material Governmental Approvals required pursuant to applicable Law, tariffs and rules for (i) the leasing of the Project Site, (ii) the acquisition, siting, development, construction, operation, ownership, and routine maintenance of the Project, (iii) the sale at wholesale of electrical energy and the sale of RECs therefrom, except for any such Governmental Approvals that are ministerial in nature or are not yet required to be obtained but which are reasonably expected to be obtained in the ordinary course when required, and, except as set forth on Schedule 3.16, all such Governmental Approvals obtained for the Project shall be validly issued and in full force and effect, no party shall have filed an administrative or judicial challenge to the issuance of any such Governmental Approval that has not been resolved to the reasonable satisfaction of the Class A Equity Investor, and each such Governmental Approval that is required to be obtained pursuant to this Section 5.2(e) and has not been previously provided to the Class A Equity Investor shall be Made Available to the Class A Equity Investor, and (B) the Class B Equity Investor, the Company and the Project Company shall have obtained all Governmental Approvals required to be obtained based on the then current stage of Project’s development for the performance of the Transaction Documents to which the Class B Equity Investor, the Company or the Project Company is a party, in each case as of the Mechanical Completion Funding Date;
(f) (A) a bring-down tax opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP as counsel to the Class A Equity Investor, which opinion shall be in form and substance satisfactory to the Class A Equity Investor and (B) a legal opinion from ▇▇▇▇▇▇ ▇▇▇▇▇ LLP as to enforceability of the LLCA under the Laws of the State of Delaware;
(g) to the extent reasonably requested by the Class A Equity Investor and solely to the extent of any new Investment Documents executed since the Effective Date, the Class A Equity Investor shall have received legal opinions with respect to corporate and enforceability matters in respect of such new Investment Documents, in form and substance reasonably satisfactory to the Class A Equity Investor;
(h) the Class A Equity Investor shall have received (A) a bring-down or update to the Independent Engineer Report and, to the extent applicable, a reliance letter for the benefit of the Class A Equity Investor with respect thereto, each of which shall be in form and substance reasonably satisfactory to the Class A Equity Investor, (B) an update to the Environmental Report (solely if any of the applicable tasks required pursuant ASTM standard E 1527-21 to prepare such Environmental Report were completed more than one hundred eighty (180) days prior to the Mechanical Completion Funding Date) and, to the extent applicable, a reliance letter for the benefit of the Class A Equity Investor with respect thereto, each of which shall be in form and substance reasonably satisfactory to the Class A Equity Investor, (C) a bringdown of the Transmission Report dated no more than twenty (20) Days prior to the Mechanical Completion Funding Date, which report shall (1) be in form and substance reasonably satisfactory to the Class A Equity Investor and (2) not include any material adverse change in the conclusions with respect to the Project from the Transmission Report Made Available to the Class A Equity Investor on or about the Effective Date that has not been reflected in the Updated Base Case Model, other than any such change that is addressed pursuant to any adjustments made to the Updated Base Case Model as updated pursuant to this
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Agreement, (D) a bring-down or update to the Battery Power Marketing Report and, to the extent applicable, a reliance letter for the benefit of the Class A Equity Investor with respect thereto, each of which shall be in form and substance reasonably satisfactory to the Class A Equity Investor and (E) a bring-down or update to the PML Report, which shall be in form and substance reasonably satisfactory to the Class A Equity Investor;
(i) the Class B Equity Investor, the Company and the Project Company shall have received all Third Party consents, waivers, authorizations and approvals under any Material Project Contract for the execution, delivery and performance of this Agreement and the transactions contemplated hereunder, which consents, waivers, authorizations and approvals are in form reasonably satisfactory to the Parties and copies of the same shall have been delivered to the Parties and are in full force and effect as of the Mechanical Completion Funding Date.
(j) since the Effective Date no Material Adverse Effect with respect to the Sponsor, the Company, the Project or the Project Company shall have occurred and be continuing; provided, that without limiting Section 5.2(k) no Tax Law Change or Proposed Tax Law Change (which are dealt with exclusively in Section 5.2(k) below) shall be taken into account in determining whether a Material Adverse Effect shall have occurred for purposes of this Section 5.2(j);
(k) since the Effective Date, there shall have occurred (A) no Tax Law Change or Proposed Tax Law Change that has not been reflected in the Updated Base Case Model or (B) no material adverse change in law (excluding any Tax Law Change) with regard to the Project Company or the Project, in each case, which would (x) make it illegal for the Class A Equity Investor (1) to make its Capital Contributions or (2) acquire, own or hold Class A Units or (y) effectively preclude the Class A Equity Investor from (1) making its Capital Contributions or (2) acquiring, owning or holding Class A Units;
(l) Except as listed on Part III of Schedule 3.16, no action or proceeding shall have been instituted or, to the Knowledge of the Class B Equity Investor, threatened in writing by any Governmental Authority or any other Person against the Class B Equity Investor, the Company or the Project Company that could reasonably be expected to impair, restrain, prohibit or invalidate (A) the transactions contemplated by this Agreement or the other Transaction Documents or (B) any material Governmental Approval of the Project or the Project Company;
(m) no condemnation shall be pending or, to the Knowledge of the Class B Equity Investor, threatened in writing with respect to the Project, or any portion thereof material to the ownership or operation of the Project, and no unrepaired Casualty Defect exists with respect to the Project or any portion thereof other than, as of the Mechanical Completion Funding Date, (A) as has been repaired to the reasonable satisfaction of the Class A Equity Investor following consultation with the Independent Engineer or (B) in the opinion of the Independent Engineer, (1) such Casualty Defect is capable of repair in a reasonably satisfactory time-frame, (2) an adequate reserve has been established for such repair and (3) such Casualty Defect shall not result in any liquidated damages or material default under any Material Project Contract which have not been cured or paid by the Project Company or the Class B Equity Investor or for which adequate proceeds under the Financing Agreement or applicable insurance
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policies are not committed or otherwise available to the Project Company to pay such amounts when due;
(n) the Class A Equity Investor shall have received a copy of the bill of sale pursuant to which the Seller shall sell one hundred percent (100%) of the membership interests in the Project Company in substantially the form attached as Exhibit A to the Purchase Agreement;
(o) (A) the Class A Equity Investor shall have received from the Class B Equity Investor and the Company a certificate from an authorized officer dated as of the Mechanical Completion Funding Date (1) to the extent any of the organizational documents (other than the LLCA) of the Class B Equity Investor or the Company have changed since the delivery thereof to the Class A Equity Investor on the Effective Date, attaching true, accurate and complete copies of the organizational documents of the Class B Equity Investor and the Company, as applicable, in form and substance reasonably satisfactory to Class A Equity Investor or (2) certifying that such organizational documents (other than the LLCA) have not changed since they were delivered to the Class A Equity Investor on the Effective Date, and (B) the Class A Equity Investor has received from the Project Company (1) an incumbency certificate dated as of the Mechanical Completion Funding Date, (2) a good standing certificate, dated as of a recent date prior to the Mechanical Completion Funding Date, from the applicable Secretary of State, (3) resolutions of the board of directors, or other equivalent governing and managing body, authorizing and approving the execution of each Transaction Document to which it is a party and the transactions contemplated thereunder, certified by an authorized representative as of the Mechanical Completion Funding Date and (4) formation documents certified by an authorized representative as of the Mechanical Completion Funding Date;
(p) none of clauses (ii), (iii), (iv), or (v) of the definition of Placed in Service have yet occurred with respect to any portion of the Project;
(q) the Class A Equity Investor shall have received a copy of the final Appraisal (which shall be a complete bring-down of the Appraisal delivered pursuant to Section 5.1(n), as updated for any adjustments to the Appraisal analysis and conclusions based upon any adjustments reflected in the Base Case Model or any change in facts or circumstances with respect to the Project (including any change in the Project’s qualification for the Domestic Content Bonus or the Energy Community Bonus)) and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(r) the Class A Equity Investor shall have received a merchant price curve from Hitachi Energy in form and substance reasonably satisfactory to the Class A Equity Investor;
(s) the Class A Equity Investor shall have received, in form and substance reasonably satisfactory to the Class A Equity Investor, (i) the PWA Certificate and, to the extent available, evidence that the Project has satisfied, and will continue to satisfy, the PWA Requirements for the Project (including compliance certificates, documentation, and other supporting information from the relevant Material Project Contracts or other applicable Contract parties) through approximately thirty (30) days prior to the Mechanical Completion Funding
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Date and (ii) the PWA Compliance Report from the PWA Consultant in respect of the Project’s compliance with the PWA Requirements through approximately thirty (30) days prior the Mechanical Completion Funding Date and if such report is not directly addressed to the Class A Equity Investor, the Class A Equity Investor shall have executed a joinder and assumption agreement with the PWA Consultant, substantially in the form of Exhibit O (the “PWA Joinder Agreement”);
(t) (A) no (1) event of default or (2) material default or material breach by theClass B Equity Investor, the Project Company, or any Affiliate of the Class B Equity Investor, or to the Knowledge of the Class B Equity Investor, the applicable counterparty which, with the passage of time or the giving of notice, would reasonably be expected to become an event of default, shall have occurred and be continuing under any Transaction Document, (B) to the Knowledge of the Class B Equity Investor, there has not been any material adverse change in the ability of a counterparty to an Investment Document (excluding the Class A Equity Investor(s)) to perform its obligations thereunder, and (C) since the Effective Date no change, event or effect that is, or would reasonably be expected to be, materially adverse to (1) the Power Purchaser’s ability to perform its obligations under the Power Purchase Agreement, (2) the SOLV EPC Contractor’s ability to perform its obligations under the SOLV EPC Agreement or (3) the Switchyard EPC Contractor’s ability to perform its obligations under the Switchyard EPC Agreement;
(u) the Class A Equity Investor shall have received true, correct and complete copies of all of the insurance certificates from the insurance broker with respect to the insurance policies listed on Exhibit B for the Company, the Project Company, the Project or such other evidence reasonably satisfactory to the Class A Equity Investor that such insurance policies are in full force and effect, in each case, to the extent such policies are in effect as of the Mechanical Completion Funding Date;
(v) the Class A Equity Investor shall have received either (A) written confirmation from the Insurance Consultant, dated no more than twenty (20) days prior to the Mechanical Completion Funding Date, that there have been no material changes through such date to the inputs and assumptions which formed the basis of the conclusions with respect to the Project in the Insurance Report Made Available to the Class A Equity Investor on or around the Effective Date or (B) a bring-down or update to the Insurance Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(w) the Class A Equity Investor shall have received either (A) confirmation of the original Base Case Model or (B) if there has occurred any change or correction to the Base Case Model described in Section 2.4, the Updated Base Case Model pursuant to Section 2.4 in form and substance reasonably satisfactory to the Class A Equity Investor;
(x) the Class A Equity Investor shall have received an irrevocable commitment, from of the Title Company, in the form of a closing instruction letter signed by the Title Company (in form and substance reasonably satisfactory to the Title Company and the Class A Equity Investor), to issue a date-down endorsement to the Effective Date Title Policy
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dated as of the Mechanical Completion Funding Date, which (A) extends the effective date of the Effective Date Title Policy to the Mechanical Completion Funding Date and which shall include, if applicable and to the extent constituting Permitted Liens or otherwise reasonably acceptable to the Class A Equity Investor, additional title exceptions imposed subsequent to the Effective Date, and (B) adds (i) the ALTA 15.1-06 (Non-Imputation – Additional Insured) and the ALTA 40-06 (Tax Credit – Owner’s Policy) endorsements in favor of the Class A Equity Investor and (ii) any other endorsements reasonably requested by the Class A Equity Investor to address any changes to the Title Policy (the issuance of which shall be contingent upon the availability of such endorsements under California title insurance laws and underwriting approval thereof by the Title Company) to the Effective Date Title Policy (the “Mechanical Completion Date Endorsement”).
(y) the Class A Equity Investor shall have received a copy of a bring-down of the draft Cost Seg Report delivered on or about the Effective Date, which draft shall be dated no more than ten (10) days prior to the Mechanical Completion Funding Date and shall be in form and substance reasonably satisfactory to the Class A Equity Investor and, to the extent applicable, a reliance letter with respect thereto, in form and substance reasonably satisfactory to the Class A Equity Investor;
(z) the Class A Equity Investor shall have received complete copies of all signed conditional and unconditional lien waivers received by the Project Company in a form that complies with applicable Law from the Contractor and Major Subcontractors performing work on the Project, each as required to be provided under the EPC Agreements;
(aa) the Project Company shall have filed with FERC a notice of self- certification as an EWG in good faith in accordance with 18 C.F.R. § 366.7;
(bb) Sponsor has paid, or will pay contemporaneously on the Mechanical Completion Funding Date, all amounts then due under the Fee Letter;
(cc) the Class B Equity Investor shall have caused any and all amounts due and owing under the Power Purchase Agreement (other than amounts that are being disputed in good faith) to be paid in full (or adequate proceeds are committed or otherwise available to the Project Company to pay such amounts when due as reasonably acceptable to the Class A Equity Investor);
(dd) the Mechanical Completion Funding Date is occurring on or prior to September 10, 2026;
(ee) the Class A Equity Investor shall have received fully executed counterparts (from every signatory thereto other than the Class A Equity Investor or any of its Affiliates) of the LLCA (including all schedules, exhibits and annexes thereto), substantially in the form attached hereto as Exhibit M;
(ff) the Class A Equity Investor shall have received the ITC Insurance Binder within sixty (60) days of the Effective Date and such coverage is in full force and effect;
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(gg) the Class A Equity Investor shall have received, in form and substance reasonably satisfactory to the Class A Equity Investor, a form of Monthly Operating Report;
(hh) the Class A Equity Investor shall have received (A) reports and opinions reasonably satisfactory to the Class A Equity Investor from Qualus LLC that the Project is reasonably anticipated to be allocated at least fifty percent (50%) of the full 238.5 MW of Interim Deliverability Status from CAISO beginning on the Commercial Operation Date (as defined in the Power Purchase Agreement), through and including the completion date of the ▇▇▇▇▇▇▇ Project and thereafter until the date on which the Partial Capacity Deliverability Status Finding (as defined in the Power Purchase Agreement) is obtained from CAISO for the full 238.5 MW and (B) the ▇▇▇▇▇▇▇ Substation Construction Report from the Independent Engineer reasonably satisfactory to the Class A Equity Investor confirming (i) the then-current date on which the ▇▇▇▇▇▇▇ Project is reasonably expected to begin construction, which in no event shall be later than March 31, 2029 and (ii) the then-current reasonably expected completion date of the ▇▇▇▇▇▇▇ Project, which in no event shall be later than December 31, 2029;
(ii) the Energy Community Bonus Requirements have been satisfied; provided, this Section 5.2(ii) shall be a condition precedent to the occurrence of the Mechanical Completion Funding Date solely if the Energy Community Bonus for the Project is reflected in the Updated Base Case Model; and
(jj) the Class B Equity Investor shall have funded an amount in the PWA Cure Reserve Account equal to the total PWA Cure Costs required for the Company to fully comply with the PWA Requirements as of the Mechanical Completion Funding Date, as determined by the PWA Consultant as of the Mechanical Completion Funding Date and in accordance with Section 7.5.
Section 5.3 Conditions Precedent to the Obligations of the Class A Equity Investor on the Substantial Completion Funding Date.
The obligations of the Class A Equity Investor to make its Capital Contribution on the Substantial Completion Funding Date are subject to the satisfaction or waiver of the following conditions precedent:
(a) the Company shall have received a certificate from the Seller certifying that each of the representations and warranties of the Seller in Article 3 of the Purchase Agreement are true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality) as of the Substantial Completion Funding Date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date);
(b) each of the representations and warranties of the Class B Equity Investor in Article III shall be true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality) as of the Substantial Completion Funding Date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date);
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(c) the Class A Equity Investor shall have received a Capital Contribution Notice from the Class B Equity Investor at least five (5) Business Days (or such shorter period as the Class A Equity Investor may determine) prior to the Substantial Completion Funding Date;
(d) Substantial Completion shall have been achieved, and the Independent Engineer has delivered to the Class A Equity Investor a copy of the IE Substantial Completion Certificate confirming the foregoing;
(e) (A) each of the Sponsor, the Class B Equity Investor, the Company and the Project Company shall have performed the obligations required to be performed by it under the Transaction Documents to which it is a party (in each case to the extent such obligations are required to have been performed as of or prior to the Substantial Completion Funding Date), except (i) any obligations under Section 7.4 or (ii) to the extent that failure to perform such obligations would not reasonably be expected to result in a Material Adverse Effect with respect to the Company or the Project Company, and (B) the Class A Equity Investor shall have received (i) a list of each Material Project Contract that has been entered into, amended, terminated or otherwise modified since the Mechanical Completion Funding Date and prior to the Substantial Completion Funding Date, (ii) each additional Material Project Contract to which the Project Company is a party not previously delivered and (iii) each amendment to each Material Project Contract to which the Project Company is a party, in each case, that has been executed since the Mechanical Completion Funding Date and prior to the Substantial Completion Funding Date, each of which, if consent of the Class A Equity Investor is required pursuant to Section 6.03 of the LLCA, is in form and substance reasonably satisfactory to the Class A Equity Investor;
(f) except for any such Governmental Approval that is of a ministerial nature or not required until a later date (each of which is reasonably expected to be obtained in the ordinary course as and when required), all material Governmental Approvals required for the leasing of the Project Site or the acquisition, siting, development, construction, operation, ownership or routine maintenance of the Project and the sale at wholesale of electrical energy and RECs therefrom, (A) except as set forth on Schedule 3.16, shall be validly issued and in full force and effect, all applicable rehearing or appeal periods with respect to such Governmental Approvals shall have expired, and no Person has filed an administrative or judicial challenge to the issuance of any such Governmental Approval that has not been resolved, and (B) each such Governmental Approval that has not been previously provided to the Class A Equity Investor shall be Made Available to the Class A Equity Investor;
(g) (A) to the extent of any new Investment Documents executed since the Mechanical Completion Funding Date, the Class A Equity Investor shall have received legal opinions with respect to corporate and enforceability matters in respect of such new Investment Documents, in form and substance reasonably satisfactory to the Class A Equity Investor; (B) a bring-down tax opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP as counsel to the Class A Equity Investor, which opinion shall be in form and substance satisfactory to the Class A Equity Investor and (C) only in the event that any new Governmental Approval has been issued since the Effective Date, a bring- down legal opinion of Husch ▇▇▇▇▇▇▇▇▇ LLP as to certain federal energy regulatory matters and California energy regulatory matters and a bring-down legal opinion of Bell ▇▇▇▇▇▇,
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Ltd as to certain permitting matters which opinion shall be in form and substance reasonably satisfactory to the Class A Equity Investor;
(h) the Class A Equity Investor shall have received complete copies of all signed conditional and unconditional lien waivers received by the Project Company in a form that complies with applicable Law from the Contractor and Major Subcontractors performing work on the Project, each as required to be provided under the EPC Agreements;
(i) the Class A Equity Investor shall have received, in form and substance reasonably satisfactory to the Class A Equity Investor, (i) the PWA Certificate and evidence that the Project has satisfied the PWA Requirements for the Project (including compliance certificates, documentation, and other supporting information from the relevant Material Project Contracts or other applicable Contract parties) through the later of approximately thirty (30) days prior to the Substantial Completion Funding Date and the Placed In Service Date and (ii) the PWA Compliance Report from the PWA Consultant in respect of the Project’s compliance with the PWA Requirements through the Placed In Service Date of the Project and if such report is not directly addressed to the Class A Equity Investor, the Class A Equity Investor shall have executed the PWA Joinder Agreement;
(j) the Class B Equity Investor, the Company and the Project Company shall have received all Third Party consents, waivers, authorizations and approvals under any Material Project Contract for the execution, delivery and performance of this Agreement and the transactions contemplated hereunder, which consents, waivers, authorizations and approvals are in form reasonably satisfactory to the Parties and copies of the same shall have been delivered to the Parties and are in full force and effect as of the Substantial Completion Funding Date;
(k) Except as listed on Part III of Schedule 3.16, no action or proceeding shall have been instituted or, to the Knowledge of the Class B Equity Investor, threatened in writing by any Governmental Authority or any other Person against the Class B Equity Investor, the Company or the Project Company that could reasonably be expected to materially impair, restrain, prohibit or invalidate (A) the transactions contemplated by this Agreement or the other Transaction Documents or (B) the effectiveness or validity of any material Governmental Approval with respect to the Project or the Project Company;
(l) since the Mechanical Completion Funding Date, (A) no Material Adverse Effect with respect to the Sponsor, the Company, the Project or the Project Company shall have occurred and be continuing; provided, that without limiting Section 5.3(m), no Tax Law Change or Proposed Tax Law Change shall be taken into account in determining whether a Material Adverse Effect shall have occurred for purposes of this Section 5.3(l) and (B) no change, event or effect that is, or would reasonably be expected to be, materially adverse to (1) the Power Purchaser’s ability to perform its obligations under the Power Purchase Agreement or (2) the EPC Contractor’s ability to perform its obligations under the EPC Agreements;
(m) since the Mechanical Completion Funding Date, there shall have occurred (A) no Tax Law Change or Proposed Tax Law Change that has not been reflected in the Updated Base Case Model in accordance with Section 2.4(a)(i)(A) and (B) no material adverse change in law (excluding any Tax Law Change) with regard to the Project Company or the Project, in each
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case, which would (a) make it illegal for the Class A Equity Investor (i) to make its Capital Contributions or (ii) acquire, own or hold Class A Units or (b) effectively preclude the Class A Equity Investor from (i) making its Capital Contributions or (ii) acquiring, owning or holding Class A Units;
(n) the Class A Equity Investor shall have received an irrevocable commitment from the Title Company, in the form of a closing instruction letter signed by the Title Company (in form and substance reasonably satisfactory to the Title Company and the Class A Equity Investor), to issue (A) a date-down endorsement to the Effective Date Title Policy dated as of the Substantial Completion Funding Date, which (i) extends the effective date of the Effective Date Title Policy to the Substantial Completion Funding Date and which shall include, if applicable and to the extent constituting Permitted Liens or otherwise reasonably acceptable to the Class A Equity Investor, additional title exceptions imposed subsequent to the Mechanical Completion Funding Date, (ii) shall reference the Substantial Completion Date Survey (as defined below) and (iii) increases the insured amount of the Effective Date Title Policy to the fair market value of the Project, as mutually agreed upon by Class A Equity Investor and Class B Equity Investor, each acting reasonably (the “Substantial Completion Date Endorsement”), and (B) an update to the Effective Date Survey showing the as-built locations of all Project Improvements then existing and the locations of all exceptions to title shown on the Effective Date Title Policy as updated by the Mechanical Completion Date Endorsement and Substantial Completion Date Endorsement that are capable of being plotted (or otherwise stating that the exception is “not plottable,” “blanket in nature,” “does not affect,” or is “not addressed herein”), (a) prepared by a land surveyor duly licensed and registered in the State of California, (b) including, if applicable, Table A Items 1, 2, 3, 4, 6(A)(B), 7(A), 8, 11, 12, 13, 14, 15, 16, 17, 18, and 19, (c) certified to the Title Company, the Class A Equity Investor, and the Project Company, (d) prepared in accordance with the 2021 ALTA Requirements, (e) confirming that the location of the Project Improvements is in compliance with all applicable building and setback lines affecting the Property, except for (A) those building and setback lines for which setback waivers have been obtained and (B) those encroachments of Project fences onto county setback liens for which the Project has obtained approval from Kern County, (f) showing that the Project Improvements do not encroach on adjacent property or existing easements of record that restrict or prevent the construction or placement of the Project Improvements in accordance with the Project site design (whether on, above or below ground other than underground utility lines) unless noted otherwise and (A) for which crossing or encroachment agreements, letters of no objections, or other written consents or approvals have been obtained or (B) for which the Title Company has agreed to provide the Title Policy and associated endorsements without carveout for said encroachment, and (g) otherwise in form and substance reasonably satisfactory to the Title Company and the Class A Equity Investor (the “Substantial Completion Date Survey”);
(o) no condemnation shall be pending or, to the Knowledge of the Class B Equity Investor, threatened in writing with respect to the Project, or any portion thereof material to the ownership or operation of the Project, and no unrepaired Casualty Defect exists with respect to the Project or any portion thereof other than, as of the Substantial Completion Funding Date, (A) as has been repaired to the reasonable satisfaction of the Class A Equity Investor
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following consultation with the Independent Engineer or (B) in the opinion of the Independent Engineer, (1) such Casualty Defect is capable of repair in a reasonably satisfactory time-frame, (2) an adequate reserve has been established for such repair and (3) such Casualty Defect shall not result in any liquidated damages or material default under any Material Project Contract which have not been cured or paid by the Project Company or the Class B Equity Investor or for which adequate proceeds (including under insurance policies) are not committed or otherwise available to the Project Company to pay such amounts when due;
(p) (A) no (1) event of default or (2) material default or material breach by theClass B Equity Investor, the Project Company or any other Affiliate of the Class B Equity Investor, or to the Knowledge of the Class B Equity Investor, the applicable counterparty which, with the passage of time or the giving of notice, would reasonably be expected to become an event of default, shall have occurred and be continuing under any Transaction Document and (B) to the Knowledge of the Class B Equity Investor, there has not been any material adverse change in the ability of a counterparty to an Investment Document (excluding the Class A Equity Investor(s)) or any Material Project Contract, to perform its obligations under such Transaction Document;
(q) the Class A Equity Investor shall have received either (A) confirmation of the original Base Case Model or (B) if there has occurred any change or correction to the Base Case Model described in Section 2.4, the Updated Base Case Model pursuant to Section 2.4 in form and substance reasonably satisfactory to the Class A Equity Investors;
(r) the Class A Equity Investor shall have received either (A) written confirmation from the Insurance Consultant, dated no more than twenty (20) days prior to the Substantial Completion Funding Date, that there have been no material changes through such date to the inputs and assumptions which formed the basis of the conclusions with respect to the Project in the Insurance Report Made Available to the Class A Equity Investor on or around the Effective Date or the Mechanical Completion Funding Date, as the case may be or (B) a bring-down or update to the Insurance Report and, to the extent applicable, a reliance letter with respect to such report, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(s) the Class A Equity Investor shall have received (A) a bring-down of the Independent Engineer Report (which report shall be substantially similar in scope as the Independent Engineer Report that was Made Available to the Class A Equity Investor on or around the Mechanical Completion Funding Date) and, to the extent applicable, a reliance letter for the benefit of the Class A Equity Investor with respect thereto, each of which shall be in form and substance reasonably satisfactory to the Class A Equity Investor and (B) a bringdown of the Transmission Report which report shall (1) be in form and substance reasonably satisfactory to the Class A Equity Investor and (2) not include any material adverse change in the conclusions with respect to the Project from the Transmission Report Made Available to the Class A Equity Investor on or about the Mechanical Completion Funding Date that has not been reflected in the Updated Base Case Model, other than any such change that is addressed pursuant to any adjustments made to the Updated Base Case Model as updated pursuant to this Agreement, (C) a bring-down or update to the Battery Power Marketing Report and, to the extent applicable, a
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reliance letter for the benefit of the Class A Equity Investor with respect thereto, each of which shall be in form and substance reasonably satisfactory to the Class A Equity Investor and (D) a bring-down or update to the PML Report which shall be in form and substance reasonably satisfactory to the Class A Equity Investor;
(t) the Class A Equity Investor shall have received a final Cost Seg Report and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(u) solely in the event there has been any material change in facts or circumstances with respect to the Project (including any change in the Project’s qualification for the Domestic Content Bonus or the Energy Community Bonus), the Class A Equity Investor shall have received a bring-down of the Appraisal delivered on the Mechanical Completion Funding Date and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to the Class A Equity Investor;
(v) the Project shall have been Placed in Service and the Class A Equity Investor shall have received a certificate from the Class B Equity Investor in substantially the form attached hereto as Exhibit N setting forth the date each unit of energy property of the PV Project and the ▇▇▇▇ Project were Placed In Service (the “Placed in Service Certificate”), each in form and substance reasonably satisfactory to the Class A Equity Investor;
(w) the Substantial Completion Funding Date is occurring on or prior to the Commitment End Date;
(x) the Class A Equity Investor shall have received (A) an estoppel certificate from each of the real property landowners with respect to the applicable Real Estate Documents, in each case substantially in the form as set forth in Exhibit C-1 and in each case dated no more than sixty (60) days prior to the Substantial Completion Funding Date, (B) an estoppel certificate from (1) the SOLV EPC Contractor with respect to the SOLV EPC Agreement substantially in the form as set forth in Exhibit C-2, (2) the Switchyard EPC Contractor with respect to the Switchyard EPC Agreement substantially in the form as set forth in Exhibit C-3, (3) the Power Purchaser with respect to the Power Purchase Agreement substantially in the form as set forth in Exhibit C-4, and (C) the Operator with respect to the O&M Agreement substantially in the form as set forth in Exhibit C-5, in each case dated no more than thirty (30) days prior to the Substantial Completion Funding Date;
(y) the Class A Equity Investor shall have received (A) a payoff letter, substantially in the form attached as Exhibit H hereto (the “Payoff Letter”), confirming that all indebtedness for borrowed money under the Financing Agreement owed by the Company or the Project Company has been converted to indebtedness owed solely by the Class B Equity Investor with no recourse to the Company or the Project Company and the release of all Liens granted to or held by the applicable Lenders in the Project, the Company or the Project Company and copies of the draft Uniform Commercial Code termination statements and executed agreements or notices of termination of such Liens, in each case as described in the Payoff Letter, which shall be filed or delivered on the Substantial Completion Funding Date and (B) evidence reasonably satisfactory to the Class A Equity Investor that the “Release Conditions” (as defined
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in the Payoff Letter) have occurred or will occur substantially concurrently with the Class A Equity Investor making the Capital Contribution with respect to the Substantial Completion Funding Amount;
(z) Sponsor has paid all amounts due under the Fee Letter;
(aa) the Class B Equity Investor shall have caused any and all amounts, including, without limitation, any delay liquidated damages (including, for the avoidance of doubt, any COD Delay Damages and Construction Delay Damages (as each such term is defined in the Power Purchase Agreement)) due and payable under the Power Purchase Agreement to be paid in full (or adequate proceeds are committed or otherwise available to the Project Company to pay such amounts when due as reasonably acceptable to the Class A Equity Investor); provided that amounts that are being disputed in good faith, which have been disclosed to the Class A Equity Investor and for which adequate proceeds are committed or otherwise available to the Project Company to pay such amounts when due as reasonably acceptable to the Class A Equity Investor, shall not be construed as being due and payable;
(bb) the Domestic Content Requirements and the Energy Community Bonus Requirements have been satisfied; provided, satisfaction of this Section 5.3(bb) shall be a condition precedent to reflecting the Domestic Content Bonus and the Energy Community Bonus for the Project in the Updated Base Case Model, however, such satisfaction shall not otherwise be a condition precedent to the occurrence of the Substantial Completion Funding Date;
(cc) the Class A Equity Investor has received the bound ITC Insurance Policy, which includes the same terms and conditions as the ITC Insurance Binder provided in connection with the Mechanical Completion Funding Date, and the ITC Insurance Policy is in full force and effect;
(dd) [reserved];
(ee) Class B Equity Investor shall have used commercially reasonable efforts to deliver to the Class A Equity Investor the 63209 testing results for Series 6 Plus and Series 7 modules;
(ff) the Class A Equity Investor shall have received (A) reports and opinions reasonably satisfactory to the Class A Equity Investor from Qualus LLC that the Project is reasonably anticipated to be allocated at least fifty percent (50%) of the full 238.5 MW of Interim Deliverability Status from CAISO beginning on the Commercial Operation Date (as defined in the Power Purchase Agreement), through and including the completion date of the ▇▇▇▇▇▇▇ Project and thereafter until the date on which the Partial Capacity Deliverability Status Finding (as defined in the Power Purchase Agreement) is obtained from CAISO for the full 238.5 MW and (B) the ▇▇▇▇▇▇▇ Substation Construction Report from the Independent Engineer reasonably satisfactory to the Class A Equity Investor confirming (i) the then-current date on which the ▇▇▇▇▇▇▇ Project is reasonably expected to begin construction, which in no event shall be later than March 31, 2029 and (ii) the then-current reasonably expected completion date of the ▇▇▇▇▇▇▇ Project, which in no event shall be later than December 31, 2029; and
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(gg) the Class B Equity Investor shall have funded an amount in the PWA Cure Reserve Account equal to the total PWA Cure Costs required for the Company to fully comply with the PWA Requirements as of the Substantial Completion Funding Date, as determined by the PWA Consultant as of the Substantial Completion Funding Date and in accordance with Section 7.5.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE CLASS B EQUITY INVESTOR
Section 6.1 Conditions Precedent to the Obligations of the Class B Equity Investor on the Effective Date.
The obligations of the Class B Equity Investor to execute and deliver this Agreement and the other Investment Documents to be executed and delivered on the Effective Date shall be subject to the satisfaction or waiver of each of the following conditions prior to such execution and delivery, any of which may be waived, in whole or in part, by the Class B Equity Investor in its sole discretion:
(a) the Class B Equity Investor shall have received fully executed counterparts of this Agreement and each of the other Investment Documents to be executed and delivered on the Effective Date;
(b) each of the representations and warranties of the Class A Equity Investor made pursuant to this Agreement and the other Investment Documents to which it is a party shall be true and correct on the Effective Date, in each case except to the extent that any such representation or warranty was expressly made only as of an earlier date, in which case such representation and warranty was true and correct as of such earlier date; and
(c) the Base Case Model shall be in form and substance reasonably satisfactory to the Class B Equity Investor.
Section 6.2 Conditions Precedent to the Obligations of the Class B Equity Investor on each Equity Capital Contribution Date.
The obligations of the Class B Equity Investor on each Equity Capital Contribution Date shall be subject to the satisfaction or waiver prior to such Equity Capital Contribution Date of each of the following conditions, any of which may be waived, in whole or in part, by the Class B Equity Investor in its sole discretion;
(a) each of the representations and warranties of the Class A Equity Investor made pursuant to this Agreement and the other Investment Documents to which it is a party shall be true and correct in all material respects on such Equity Capital Contribution Date, in each case except to the extent that any such representation or warranty was expressly made only as of an earlier date, in which case such representation and warranty was true and correct in all material respects as of such earlier date;
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(b) each of the conditions precedent to the obligations of the Class A Equity Investor on each Equity Capital Contribution Date pursuant to Section 5.2 and Section 5.3, as applicable, shall have been satisfied or waived; and
(c) the Updated Base Case Model shall be in form and substance reasonably satisfactory to the Class B Equity Investor.
ARTICLE VII
FUNDING DATES; FURTHER ASSURANCES; EXPENSES; INTERIM COVENANTS
Section 7.1 Mechanical Completion Funding Date.
The closing to occur on the Mechanical Completion Funding Date shall take place electronically as promptly as practicable after the satisfaction or waiver of all the applicable conditions set forth in Section 5.2 and Section 6.2 or on such other date upon which the Parties may agree prior to the Commitment End Date. In no event will the Class A Equity Investor be required to make a Mechanical Completion Funding after September 10, 2026.
Section 7.2 Substantial Completion Funding Date.
The closing to occur on the Substantial Completion Funding Date shall take place electronically as promptly as practicable after the satisfaction or waiver of all the applicable conditions set forth in Section 5.3 and Section 6.2 or on such other date upon which the Parties may agree prior to the Commitment End Date. In no event will the Class A Equity Investor be required to make a Substantial Completion Funding after the Commitment End Date.
Section 7.3 Further Assurances.
Each of the Parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to consummate, as promptly as practicable, the Transaction, including, but not limited to obtaining all necessary consents, waivers, authorizations, orders and approvals of Third Parties, whether private or governmental, required of it. Each Party agrees to cooperate fully with the other Parties in assisting it to comply with the provisions of this Section 7.3. Notwithstanding the foregoing, no Party shall be required to initiate any litigation, make any substantial payment (including any payments not contemplated by this Agreement) or incur any material economic burden to obtain any such consent, approval or waiver.
Section 7.4 Domestic Content Bonus; Energy Community Bonus.
(a) Prior to (i) the Mechanical Completion Funding Date, the Class B Equity Investor shall provide, to the extent available, evidence reasonably satisfactory to the Class A Equity Investor, and (ii) prior to the Substantial Completion Funding Date, the Class B Equity Investor shall provide evidence reasonably satisfactory to the Class A Equity Investor, in each case to establish that the Project is or will be eligible to claim the Domestic Content Bonus, including by seeking and providing documentation, certificates, and supporting cost information from relevant Material Project Contract parties and other applicable Contract parties, and making itself and such parties available on a mutually convenient basis to provide additional information
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and explanation of any material provided to the Class A Equity Investor pursuant to this Agreement, provided, that the foregoing obligation will not apply if the Updated Base Case Model delivered on the applicable funding date does not include the Domestic Content Bonus and the Class B Equity Investor has provided written notice to the Class A Equity Investor that the Project is no longer reasonably expected to qualify for the Domestic Content Bonus. Notwithstanding anything else to the contrary contained herein, the sole remedy of the Class A Equity Investor for any breach or failure of the obligations, covenants or agreements in this Section 7.4(a) by the Class B Equity Investor shall be to not fund the portion of the Class A Capital Contribution attributable to the Domestic Content Bonus. The Parties hereby acknowledge and agree that the Class A Equity Investor’s diligence with respect to the Project’s eligibility to claim the Domestic Content Bonus is ongoing as of the Effective Date and documentation, certificates, and supporting information remain outstanding and are expected to be obtained no later than the Substantial Completion Funding Date.
(b) For the avoidance of doubt, neither the Domestic Content Requirements nor the Energy Community Bonus Requirements shall be deemed to be satisfied or waived by the Class A Equity Investor on the Mechanical Completion Funding Date or the Substantial Completion Funding Date as a result of the Parties reflecting the Domestic Content Bonus and/or the Energy Community Bonus, as applicable, in the Base Case Model or the Updated Base Case Model in connection with the Mechanical Completion Funding Date.
Section 7.5 Prevailing Wage and Apprenticeship.
(a) Class B Equity Investor shall cause the Company and the Project Company to (i) satisfy the PWA Requirements and maintain (for the applicable statute of limitations) documentation, certificates, and supporting wage, hours, labor classification and apprenticeship program information from the relevant Material Project Document and other applicable contract parties with respect to the PWA Requirements and (ii) pursue any remedies from any contractors or subcontractors for non-compliance with the PWA Requirements and make all payments necessary to cure any failure to satisfy any of the PWA Requirements no later than the date the relevant U.S. federal income tax return is filed by the Company.
(b) Any costs required to satisfy the obligations in this Section 7.5 shall be borne by the Class B Equity Investor. On each Equity Capital Contribution Date, and within ten (10) days following receipt of a PWA Compliance Report, the Class B Equity Investor shall be required to make an additional Capital Contribution to the Company to fund the PWA Cure Reserve Account in an amount equal to the total PWA Cure Costs required for the Project to be in full compliance with the PWA Requirements, as determined by the PWA Consultant, but only if (i) the applicable EPC Contractor has not previously made a payment in full satisfaction of such PWA Cure Costs under the relevant contract and (ii) such PWA Cure Costs have not otherwise been paid; provided, further, such PWA Compliance Report shall reflect the payroll information and any PWA Cure Costs as applicable through thirty (30) days prior to the date when such PWA Compliance Report is delivered. The Class B Equity Investor shall make Capital Contributions to the Company as and when needed (but no later than the date the relevant U.S. federal income tax return is filed by the Company), after taking into account any funds that are available in the PWA Cure Reserve Account and payments made by EPC Contractors under
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the relevant contract in satisfaction of such PWA Cure Costs, to enable the Company to pay any and all PWA Cure Costs with respect to the Project no later than the date the relevant U.S. federal income tax return is filed by the Company. The Class B Equity Investor shall be able to withdraw certain funds from the PWA Cure Reserve Account to an account designated by the Class B Equity Investor (x) to pay the PWA Cure Costs on behalf of the Company or the Project Company or (y) within ten (10) Business Days after the EPC Contractors have paid the PWA Cure Costs, and Class A Equity Investor has received evidence of payment of such PWA Cure Costs, in the amount previously funded by the Class B Equity Investor into the PWA Cure Reserve Account with respect to such PWA Cure Costs paid by the EPC Contractors.
(c) With respect to each fiscal quarter during the period between the Effective Date and Final Completion, within ten (10) days after the end of each such fiscal quarter, the Class A Equity Investor shall receive a draft or interim PWA Compliance Report, and prior to the Substantial Completion Funding Date, the Class B Equity Investor shall deliver to the Class A Equity Investor the final PWA Compliance Report setting forth the Project’s compliance with the PWA Requirements through the Placed In Service Date of the Project and any PWA Cure Costs that were determined (and remedied) with respect to any failure to satisfy the PWA Requirements through the Placed In Service Date of the Project.
Section 7.6 Payment of Expenses.
Upon the Effective Date and each Equity Capital Contribution Date, the Company shall pay, and the Class B Equity Investor shall reimburse the Company for, all reasonable out-of-pocket fees and expenses of the Class A Equity Investor and the Class B Equity Investor, including reasonable fees and expenses of counsel, related to the negotiation, execution and delivery of this Agreement and each other Investment Document and the transactions contemplated by the Investment Documents including those incurred in connection with each Capital Contribution; provided, that such obligation of the Class B Equity Investor to reimburse the Company for the Class A Equity Investor’s legal expenses shall be subject to the limitations set forth in the Proposal Letter. The Company shall be responsible for all fees and expenses, including reasonable fees and expenses of counsel, incurred by the Class A Equity Investor in connection with any amendment, consent or waiver of this Agreement or any other Transaction Document requested by the Class B Equity Investor subject to reasonable caps to be mutually agreed by the Class A Equity Investor and the Class B Equity Investor at such time.
Section 7.7 Transmission Upgrades.
Within ten (10) Business Days after the end of each calendar month, beginning with the first full month after the Effective Date until the ▇▇▇▇▇▇▇ Substation Completion Date, the Class B Equity Investor shall cause the Independent Engineer to deliver to the Class A Equity Investor a monthly report indicating the construction status of the ▇▇▇▇▇▇▇ Project, which the Independent Engineer may produce using publicly available information (each such report, a “▇▇▇▇▇▇▇ Substation Construction Report”).
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Section 7.8 Other Deliverables.
(a) The Class B Equity Investor shall use commercially reasonable efforts to obtain the module quality assurance and quality control documentation from the Module Supplier, inclusive of batch testing results that comprise a representative sampling based on the modules procured for the PV Project, each in form and substance reasonably satisfactory to the Class A Equity Investor, and deliver such module quality assurance and quality control documentation to the Class A Equity Investor and Independent Engineer on or before February 28, 2026.
(b) The Class B Equity Investor and the Class A Equity Investor shall use commercially reasonable efforts to negotiate in good faith to finalize and agree upon a form tax credit transfer agreement for the purposes of Section 7.03 of the LLCA by the Substantial Completion Funding Date.
Section 7.9 Code Section 6418 Tax Law Change and Proposed Tax Law Change
In the event there is a Tax Law Change or Proposed Tax Law Change that would repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that would prohibit or materially affects the Company’s or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code, the Parties agree to use good faith efforts to restructure the Transaction contemplated under this Agreement and the LLCA (which shall include amending this Agreement and the LLCA), in form and substance satisfactory to each Party, to include an additional investor in respect of the Company that is capable of complying with the applicable requirements and performing the applicable obligations as set forth in this Agreement and the LLCA as an additional Class A Member; provided, for the avoidance of doubt, in the event the Parties have not successfully restructured the Transaction under this Agreement and the LLCA in accordance with this Section 7.9 prior to the Mechanical Completion Funding Date, for purposes of determining the amounts of the Class A Capital Contributions and whether the Flip Point has occurred, the Parties will take into account the total ITC amount generated by the Project as an amount equal to eighty-eight percent (88%) of the portion of the ITCs actually realized, in accordance with Section 5.05(b)(iii)(B) of the LLCA.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnification by the Class B Equity Investor.
(a) The Class B Equity Investor shall provide the indemnities set forth in the LLCA with respect to breaches of its representations, warranties, covenants (other than under Section 7.4) and other obligations under this Agreement in accordance with the terms and procedures set forth in the LLCA and the provisions of Article 13 (other than Sections 13.02 and 13.04) of the LLCA shall apply to this Agreement mutatis mutandis.
(b) None of the Company or the Project Company shall have any liability to indemnify the Class B Equity Investor on account of the breach of any representation or warranty or the nonfulfillment of any covenant or agreement of the Project Company or the Company
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hereunder or under the Investment Documents or Material Project Contracts, and the Class B Equity Investor shall not have any right of contribution against the Company or the Project Company.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Notices.
All notices and other communications given hereunder shall be in writing. Notices shall be effective when delivered, if delivered personally. Otherwise, they shall be effective when sent to the Parties at the addresses or numbers listed below, as follows: (a) on the Business Day delivered (or the next Business Day following delivery if not delivered on a Business Day) if sent by a local or long distance courier (including Federal Express) or electronic transmission (confirmed receipt), or (b) four (4) days after mailing if mailed by registered or certified U.S. mail, postage prepaid and return receipt requested. Notwithstanding the foregoing, the parties shall provide notices and other communications by electronic transmission regardless of whether and what other means of transmission may also be used.
If to the Class B Equity Investor or the Company to:
c/o SB Energy
▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
Redwood City, CA 94065
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
If to the Class A Equity Investor, at:
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented Investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
Any Person may change the address or number to which notices are to be delivered to him, her or it by giving the other Persons named above notice of the change in the manner set forth above.
Section 9.2 Complete Agreement.
This Agreement and the other Investment Documents, and the annexes, exhibits and schedules hereto and thereto, and the other documents executed and delivered on each Equity Capital Contribution Date, contain the entire agreement between the Parties with respect to the Transaction, and shall supersede all previous oral and written and all contemporaneous oral negotiations, commitments, and understandings including, without limitation, the Proposal Letter
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(other than the provisions of the Proposal Letter related to Breakfunding Fee (as such term is defined in the Proposal Letter)) and all other letters, memoranda or other documents or communications, whether oral, written or electronic, in connection with the negotiation and execution of this Agreement.
Section 9.3 Governing Law; Construction.
This Agreement shall be deemed made and prepared and shall be governed, construed and interpreted in accordance with the internal laws of the State of New York, without reference to conflicts of laws rules (other than Section 5-1401 of the New York General Obligations Law).
Section 9.4 Jurisdiction; Service of Process.
The Parties agree to submit to the exclusive jurisdiction of the courts of the State of New York and the Federal District Court located in the Borough of Manhattan, State of New York, and any court of appeal from any such court, in connection with any action or other proceeding relating to this Agreement. Each Party irrevocably waives and agrees not to make, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the jurisdiction of any such court or to the laying of venue of any such action or proceeding brought in any such court and any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
Section 9.5 WAIVER OF JURY TRIAL.
THE PARTIES HERETO MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO EXECUTE THIS AGREEMENT AND CONSUMMATE THE TRANSACTION.
Section 9.6 Attorneys’ Fees.
If a suit or action is filed by any Party to enforce the provisions of this Agreement or otherwise with respect to the subject matter of this Agreement or the Transaction, the prevailing Party shall be entitled to recover reasonable attorneys’ fees related thereto (as the prevailing Party and the amount of recoverable attorney’s fees are determined by a court of competent jurisdiction in a final non-appealable order).
Section 9.7 Severability.
If one or more of the provisions of this Agreement are held by a proper court to be unenforceable under applicable Law, portions of such provisions, or such provisions in their entirety, to the extent necessary and permitted by Law, shall be severed herefrom, and the balance of this Agreement shall be enforceable in accordance with its terms.
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Section 9.8 Public Announcements.
Each Party will consult with the other Parties before issuing any press releases or otherwise making any public statements with respect to this Agreement and the Transaction and will not issue, or permit any of its Affiliates to issue, any such press release or make any such public statement without the consent of the other Parties unless such action is required by Law. Each Party will be given the opportunity to review in advance, upon their respective request, all information relating to this Agreement, the Transaction and the other Investment Documents that appears in any energy regulatory filing made in connection with the transactions contemplated hereby or thereby.
Section 9.9 Further Assurances.
Upon the reasonable request of a Party or Parties hereto at any time after the Effective Date the other Party or Parties shall forthwith execute and deliver such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as the requesting Party or Parties or its or their counsel may reasonably request in order to effectuate the purposes of this Agreement.
Section 9.10 Counterparts.
Electronic transmission of any signed original document and / or retransmission of any signed electronic transmission will be deemed the same as delivery of an original. At the request of any Party, the Parties will confirm electronic signatures by signing a duplicate original document. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one and the same instrument.
Section 9.11 Amendment and Modification.
This Agreement may be amended, modified or supplemented only by written agreement of the Company, the Class B Equity Investor and the Class A Equity Investor.
Section 9.12 Confidentiality.
The provisions of Section 3.06 of the LLCA shall apply to this Agreement mutatis mutandis.
Section 9.13 Assignment.
This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. This Agreement may only be assigned in connection with a transfer of all or part of the Membership Interests (as such term is defined in the LLCA) in accordance with the terms of Article 3 of the LLCA (or, prior to the Mechanical Completion Funding Date, to any person to whom the assigning Party would have been permitted to assign this Agreement if the LLCA were in effect as of the Effective Date and Membership Interests (as defined in the LLCA) had been issued to the Equity Investors as contemplated under the LLCA); provided, that, prior to the Substantial Completion Funding Date, the Class A Equity Investor shall at all times be Controlled by JPMorgan Chase & Co., a Delaware corporation. Any attempted assignment of this Agreement other than in strict
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accordance with this Section 9.13 and the terms of Article 3 of the LLCA, shall be null and void and of no force and effect.
Section 9.14 No Strict Construction.
The Investment Documents are the result of negotiations among, and have been reviewed by the Class A Equity Investor, the Class B Equity Investor, and the Company, and their respective counsel. Accordingly, the Investment Documents shall be deemed to be the product of all of the Parties, and no ambiguity shall be construed in favor of or against any of the Class A Equity Investor, the Class B Equity Investor or the Company.
Section 9.15 Effect of Waiver or Consent.
Except as otherwise provided in this Agreement, and to the fullest extent permitted by Law, a waiver or consent, express or implied, to or of any breach or default by any Party in the performance by such Party of its obligations hereunder is not a consent or waiver to or of any other breach or default in the performance by such Party of the same or any other obligations of such Party hereunder. Except as otherwise provided in this Agreement, and to the fullest extent permitted by Law, failure on the part of a Party to complain of any act of any Party or to declare any Party in default hereunder, irrespective of how long that failure continues, does not constitute a waiver by such Party of its rights with respect to that default until the applicable statute-of- limitations period has run.
Section 9.16 Third Parties.
The provisions of this Agreement are intended solely to benefit the Parties and, to the fullest extent permitted by applicable Law, should not be construed as conferring any benefit upon any creditor of either Party (and no such creditor shall be a third-party beneficiary of this Agreement) and no Party shall have any duty or obligation to any creditor of the Company to make any additional contributions to the Company.
Section 9.17 Disclosure.
At any time from the Effective Date through and including the earlier of the (a) Substantial Completion Funding Date, and (b) the termination of this Agreement, the Class B Equity Investor has a continuing right to modify, supplement and amend the Disclosure Schedules (each, an “Update”) (i) if after the Effective Date any information arises or is discovered which, if existing or known on the date of the Effective Date, would have been required to have been set forth on the Disclosure Schedules, and (ii) if necessary or appropriate to correct any inaccuracy in a representation or warranty made by the Class B Equity Investor as of the Effective Date or a prior Equity Capital Contribution Date, whether or not such representation and warranty as set forth herein is qualified by reference to a Disclosure Schedule; provided that the Class B Equity Investor shall, if necessary, provide such an Update no later than three (3) Business Days prior to each Equity Capital Contribution Date. Notification of any information disclosed in any Update pursuant to this Section 9.17 shall not be deemed to cure any breach of any representation or warranty resulting from the information that is being so updated, unless such Update is delivered by the Class B Equity Investor in accordance with Section 9.1 and is approved in writing by the
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Class A Equity Investor pursuant to this Section 9.17. Any proposed Updates shall be subject to the prior written approval of the Class A Equity Investor acting in its reasonable discretion; provided, that if (A) any information disclosed in such Update is approved by the Class A Equity Investor in writing or is the result of actions approved by the Class A Equity Investor in writing, or expressly contemplated or permitted by this Agreement or any other Investment Document or (B) the Class A Equity Investor consummates the applicable Equity Capital Contribution Date after receipt of an Update that is delivered at least three (3) Business Days prior to the applicable Equity Capital Contribution Date, the Disclosure Schedules shall be deemed for all purposes of this Agreement to incorporate all applicable Updates, including for purposes of satisfying the conditions precedent set forth in Article 5, as applicable, and any applicable representations and warranties to which such updated Disclosure Schedules refer shall be deemed qualified by such Updates. Other than in respect of Third Party Claims or claims for any breaches constituting fraud or willful misconduct, neither the Class A Equity Investor nor any other Indemnified Person shall be entitled to make an indemnification claim for breach of representation with respect to the matters disclosed by such Update if such disclosure was made in accordance with this Section 9.17, was properly delivered in accordance with Section 9.1 and the Class A Equity Investor consummates the applicable Equity Capital Contribution Date after receipt of such Update.
[Signature Pages Follow.]
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IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.
CLASS B EQUITY INVESTOR: | |||||||||||
| PELICANS JAW MEMBER B, LLC | |||||||||||
| By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||
| Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||
| Title: Vice President | |||||||||||
[Signature Page to Equity Capital Contribution Agreement – Pelicans Jaw]
COMPANY: | |||||||||||
| PELICANS JAW TE HOLDCO, LLC | |||||||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||||
| Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||||||
| Title: Vice President | |||||||||||
[Signature Page to Equity Capital Contribution Agreement – Pelicans Jaw]
CLASS A EQUITY INVESTOR: | |||||||||||
| FNBC LEASING CORPORATION | |||||||||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||||||||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||||||
| Title: Executive Director | |||||||||||
[Signature Page to Equity Capital Contribution Agreement – Pelicans Jaw]
EXHIBIT A
BASE CASE MODEL
Please refer to the financial projections with respect to the Project in Excel file “EXT_2026_SBE_Pelicans Jaw Model_50% ITC_5.02.2025”.
A-1
EXHIBIT B
INSURANCE
1.1 General Requirements. The Company shall cause each Project Company to maintain, without cost to the Class A Equity Investor, its successors or assigns, maintain or cause to be maintained in effect at all times on and after the Effective Date the types of insurance required by the following provisions together with any other types of insurance required hereunder or pursuant to the Material Project Contracts with respect to the Project, in such form acceptable to the Class A Equity Investor in consultation with the Insurance Consultant, with insurance companies rated “A-” or better, with a minimum size rating of “X” (excess property carriers may have a size rating of VII or higher) by A.M. Best or rated “A” or better by Standard and Poor’s (or an equivalent rating by another nationally recognized insurance rating agency of similar standing) or other companies reasonably satisfactory to the Class A Equity Investor (in consultation with the Insurance Consultant).
(a)Ocean Cargo, Storage and Marine Business Interruption. Ocean cargo and/or storage insurance (including any inland transit insurance to the extent not insured under Section 1.1(b) or (d) of this Exhibit B) on an all-risk basis, to the extent an exposure exists, in an amount not less than the replacement cost value of the largest value of property in any one single shipment or maximum value being stored at a particular location and with any applicable natural catastrophic perils sublimits reasonably satisfactory to Class A Equity Investor (in consultation with the Insurance Consultant) and including coverage for marine delay in startup or marine business interruption, including such coverages for inland transit to the extent not insured under Section 1.1(c) or (e) of this Exhibit B (if the loss of such property being shipped or stored is expected to cause a delay in the anticipated completion date of the Project or to cause or extend an interruption of normal business operations of the Project), with a limit and associated indemnity period equivalent to the loss of gross revenues less non- continuing expenses for the longest period of interruption or delay reasonably expected to occur subject to a maximum period of indemnity of twelve (12) months. Should ocean cargo insurance for physical damage be provided by unaffiliated third parties, the Company will procure difference in conditions (DIC) and difference in limits (DIL) coverage with respect to marine delay in startup/marine business interruptions, with a limit acceptable to the Class A Equity Investor, and shall use commercially reasonable efforts to obtain additional insured and loss payee status on such third parties’ ocean cargo insurance for the benefit of itself and the Equity Investors, as applicable. All such policies may have per occurrence deductibles of not greater than: (i) $100,000 for physical damage and (ii) thirty (30) days for business interruption and delay in startup.
(b)Construction All-Risk. On the date of or prior to the issuance of Full Notice to Proceed (as defined in the applicable EPC Contract), construction “all-risk” insurance, as such term is used in the insurance industry, in an amount of not less than the replacement cost value of the Project at the time of loss or such other amount necessary or agreed to for purposes of complying with any Material Project Contract
B-1
including coverage for all testing and commissioning activities required to complete the Project, mechanical and electrical breakdown plus resulting or ensuing damage arising out of defects in design, materials, workmanship, the perils of flood, earthquake, named windstorm, severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), wildfire, freezing, strike, riot and civil commotion, vandalism and malicious mischief, sabotage (unrelated to terrorism, war or political violence), subject to terms that are consistent with current industry practice and insuring all real and personal property of the Project Company whether at a fixed location (including non-owned locations for off-site repair or refurbishment), off-site storage or a warehouse location, and while in the course of inland transit, for an amount of not less than the full replacement cost value of Project property and equipment at each location, or such other amount as agreed by the Class A Equity Investor and that is sufficient to comply with the requirements of all Material Project Contracts. All responsibility for verification of compliance with the Material Project Contracts shall rest solely with the Company or the Project Company.
Sublimits and policy aggregate limits are permitted with respect to the following perils:
(i)off-Project Site property, to the extent any exposure exists, in an amount that is not less than the full replacement cost values of any property in storage;
(ii)inland transit, to the extent any exposure exists, in an amount that is not less than the full replacement cost value of any shipment;
(iii)earthquake, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case that is reasonably acceptable to the Class A Equity Investor and in no event less than $72,250,000 per occurrence and aggregate, or such other amount required or agreed to by Class A Equity Investor (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(iv)flood, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case that is reasonably acceptable to the Class A Equity Investor and in no event less than $25,000,000 per occurrence and aggregate, or such other amount required or agreed to by Class A Equity Investor (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(v)named windstorm, in an amount equal to the full replacement cost of the Project per occurrence and aggregate, or other amount required by or agreed to by the Class A Equity Investor (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice;
B-2
(vi)severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case that is reasonably acceptable to the Class A Equity Investor and in no event less than $100,000,000 per occurrence and aggregate, or such other amount required or agreed to by Class A Equity Investor (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice; Microcracking endorsements shall subject to approval by the Class A Equity Investor (in consultation with the Insurance Consultant); and;
(vii)wildfire, in an amount equal to the full replacement cost of the Project per occurrence and aggregate, or other amount required by or agreed to by the Class A Equity Investor (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice; and
(viii)such other coverages customarily sub-limited and/or aggregated or restricted in reasonable amounts consistent with current industry practice with respect to similar risks and acceptable to the Class A Equity Investor (in consultation with the Insurance Consultant), including without limitation, debris removal, pollutant cleanup, professional fees extra expense, expediting expense, ingress/egress, and ordinance or law coverage, including the increased cost of construction to comply with the enforcement of any law that regulates the construction or repair of damaged property, including the cost to demolish undamaged portions of the Project, etc. Wildfire or vegetation management protective safeguards restrictions shall be subject to approval by the Class A Equity Investor (in consultation with the Insurance Consultant).
Such policy shall include: (a) an automatic reinstatement of limits following each loss (except for the perils of earthquake, flood, named windstorm, severe convective storm ( including but not limited to tornadoes, hail, lightning, straight line winds and derechos) wildfire, and other aggregated limits that typically apply under Section 1.1(b)(viii) of this Exhibit B); (b) replacement cost valuation with no deduction for depreciation (in the event the Project is repaired or replaced following a loss) and no coinsurance clauses (or a waiver thereof); (c) coverage for physical damage that is not covered by warranty or guaranty to the extent normally insured (LEG 2 or equivalent); and (d) coverage for physical damage that is not reimbursed under warranty or guaranty to the extent normally insured.
Construction All-Risk policy may have per occurrence deductibles of not greater than $250,000 for all perils related to the PV solar assets and $500,000 for all perils related to the ▇▇▇▇ assets, except $1,000,000 for severe convective storm and wildfire and five percent (5%) of the value of property at risk at the time of loss subject to a minimum of $500,000 and commercially available and economically feasible deductible cap for earthquake and flood, or such other deductibles approved by the Class A Equity Investor in consultation with the Insurance Consultant, subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice.
B-3
(c)Delay in Startup. Delay in startup insurance following all perils required and insured above under Section 1.1(b) of this Exhibit B, with limits of not less than the projected equivalent of twelve (12) months’ gross revenues, less non-continuing expenses for the Project (including all revenues derived from any environmental attribute of the Project, including without limitation, any renewable energy credit that is owned or sold by the Company, the Project Company or the Project). If coverage is subject to an indemnification period, such period shall not be less than twelve (12) months. Contingent delay in startup shall also be included with respect to damage to the first electrical interconnection not owned by the Company or the Project Company with covered perils acceptable to the Class A Equity Investor (in consultation with the Insurance Consultant) and limits and indemnity period not less than one hundred twenty (120) days, subject to commercial availability, but in no event less than ninety (90) days. The deductible or waiting period shall not exceed forty-five (45) days on a per occurrence basis, or such other deductibles approved by the Class A Equity Investor (in consultation with the Insurance Consultant).
(d)All-Risk Property/Machinery Breakdown. On or prior to Substantial Completion (as defined in the EPC Contract), “all-risk” property insurance, as such term is used in the insurance industry, written on a replacement cost basis including the value of Project property and/or equipment at each location without the presence of coinsurance, in an amount (a) sufficient to cover full replacement value of Project property including all owned substations and transmission lines and/or equipment at each location or (b) an acceptable loss limit (subject to the approval of the Class A Equity Investor as further noted in Section 1.1 (k) of this Exhibit B), including coverage for mechanical and electrical breakdown, plus resulting or ensuing damage arising out of defects in design, materials or workmanship, the perils of flood, earthquake, named windstorm, severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), wildfire, strike, riot and civil commotion, vandalism and malicious mischief, sabotage (unrelated to terrorism, war or political violence), subject to terms that are consistent with current industry practice insuring all real and personal property of the Company whether at a fixed location (including non-owned locations for off-Project Site repair or refurbishment), off-Project Site storage or a warehouse location, and while in the course of inland transit, for an amount of not less than the full replacement cost value of Project property and equipment at each location, or such other amount as agreed to by the Class A Equity Investor and that is sufficient to comply with the requirements of all Material Project Contracts. The property coverage shall cover all substations and transmission lines owned by the Project Company. All responsibility for verification of compliance with the Material Project Contracts shall rest solely with the Company or the Project.
Sublimits and policy aggregate limits are permitted with respect to the following perils:
(i)off-Project Site property, to the extent any exposure exists, in an amount that is not less than the full replacement cost values of any property in storage;
B-4
(ii)inland transit, to the extent any exposure exists, in an amount that is not less than the full replacement cost value of any shipment;
(iii)earthquake, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case in an amount that is reasonably acceptable to the Class A Equity Investor (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(iv)flood, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case in an amount that is reasonably acceptable to the Class A Equity Investor (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(v)named windstorm, in an amount equal to the full replacement cost of the Project per occurrence and annual aggregate, or other amount required by or agreed to by the Class A Equity Investor (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice;
(vi)severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case in an amount that is reasonably acceptable to the Class A Equity Investor (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice; Microcracking endorsements shall subject to approval by the Class A Equity Investor (in consultation with the Insurance Consultant);
(vii)wildfire, in an amount equal to the full replacement cost of the Project per occurrence and annual aggregate, or other amount required by or agreed to by the Class A Equity Investor (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice; and
(viii)such other coverages customarily sub-limited and/or aggregated or restricted in reasonable amounts consistent with current industry practice with respect to similar risks and acceptable to the Class A Equity Investor (in consultation with the Insurance Consultant), including without limitation, debris removal, pollutant cleanup, professional fees extra expense, expediting expense, ingress/egress, and ordinance or law coverage, including the increased cost of construction to comply with the enforcement of any law that regulates the construction or repair of damaged property, including the cost to demolish undamaged portions of the Project, etc. Wildfire or vegetation management protective safeguards restrictions shall subject to approval by the Class A Equity Investor (in consultation with the Insurance Consultant).
B-5
Such policy shall include: (a) an automatic reinstatement of limits following each loss (except for the perils of earthquake, flood, named windstorm, severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos) wildfire, and other aggregated limits that typically apply under Section 1.1(d)(viii) of this Exhibit B); (b) replacement cost valuation with no deduction for depreciation (in the event the Project is repaired or replaced following a loss) and no coinsurance clauses (or a waiver thereof); (c) coverage for physical damage that is not covered by warranty or guaranty to the extent normally insured (LEG 2 or equivalent); and (d) coverage for physical damage that is not reimbursed under warranty or guaranty to the extent normally insured.
Such policy may have per occurrence deductibles of not greater than $250,000 for all perils related to the PV solar assets and $500,000 for all perils related to the ▇▇▇▇ assets, except $1,000,000 for severe convective storm and wildfire and five percent (5%) of the value of property subject to a minimum of $500,000 and to the extent commercially available and economically feasible deductible cap for earthquake and flood, or such other deductibles approved by the Class A Equity Investor in consultation with the Insurance Consultant, subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice.
(e)Business Interruption. Business interruption insurance following all perils required and insured above under Section 1.1(d) of this Exhibit B, with limits of not less than the projected equivalent of twelve (12) months gross revenues, less non-continuing expenses for the Project (including all revenues derived from any environmental attribute of the Project, including without limitation, any renewable energy credit that is owned or sold by any the Company, the Project Company or the Project). If coverage is subject to an indemnification period, such period shall not be less than twelve (12) months. Subject to commercial availability and any requirements of the Class A Equity Investor in consultation with the Insurance Consultant, contingent business interruption shall also be included with respect to the non-owned portion of electric interconnection and transmission facilities up to the first non-owned substation with a sublimit equal to one hundred twenty (120) days, subject to commercial availability, but in no event less than ninety (90) days. The deductible or waiting period shall not exceed forty-five (45) days on a per occurrence basis, or such other deductibles approved by the Class A Equity Investor (in consultation with the Insurance Consultant).
(f)Commercial General Liability. Commercial general liability insurance covering the Project Company and the Project with respect to Project operations, written on “occurrence” policy forms, including coverage for premises/operations, products/completed operations, broad form property damage, blanket contractual liability (i.e., policy shall not require insured contracts to be scheduled), and personal injury, with no exclusions for explosion, collapse and underground perils, or fire and wildfire with primary coverage limits of no less than $1,000,000 per occurrence and $2,000,000 annual aggregate for injuries or death to one or more persons or damage to property resulting from any one occurrence, and a products and completed operations liability aggregate limit of not less than $2,000,000. The commercial general liability policy
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shall also include a severability of interest clause with no exclusions or limitations on cross liability. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Equity Investor, except sudden and accidental pollution if provided under this commercial general liability insurance.
(g)Automobile Liability. Automobile liability insurance, including coverage for owned (if any), leased, non-owned and hired automobiles for bodily injury and property damage in accordance with statutory legal requirements, with combined single limits of no less than $1,000,000 per accident with respect to bodily injury and or death, and property damage. Hired and non-owned automobile liability may be obtained through endorsement to the general liability policy required in Section 1.1(f) of this Exhibit B. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Equity Investor.
(h)Workers’ Compensation/Employer’s Liability. To the extent exposure exists, workers’ compensation insurance in accordance with statutory and/or state requirements at any time in which the Project Company has employees, including coverage for employer’s liability with a limit of not less than $1,000,000 and such other forms of insurance which the Project Company and the Project is required by law to provide for loss resulting from injury, sickness, disability or death of the employees of the Project Company. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Equity Investor.
(i)Umbrella or Excess. Umbrella or excess liability insurance of not less than $25,000,000 per occurrence and annual aggregate during construction and operations (inclusive of the requirements and in addition to the limits in Sections 1.1(f), (g) and (h) with respect to employer’s liability of this Exhibit B). Such coverage shall be on an occurrence policy form over and above coverage provided by the policies described in Sections 1.1(f), (g) and (h) of this Exhibit B with respect to employer’s liability. If the policy or policies provided under this Section 1.1(i) of this Exhibit B contain(s) aggregate limits, and such limits are reduced below $20,000,000 during the applicable policy term by any one or more incident, occurrence, claim, settlement or judgment against such insurance which has caused the insurer to establish a reserve, the Company shall, within ten (10) Business Days after obtaining knowledge of such event, inform the Class A Equity Investor, and within thirty (30) Business Days purchase an additional umbrella/excess liability insurance policy satisfying the requirements of this Section 1.1(i) of this Exhibit B, unless waived by the Class A Equity Investor in consultation with the Insurance Consultant. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Equity Investor.
(j)Pollution Liability. Pollution liability insurance shall be required with a limit commensurate with industry practice for similar operations but not less than $1,000,000 per occurrence in the annual aggregate for property damage and bodily injury to third parties arising out of “time element” pollution conditions as a result of Project operations including coverage for cost of off-Project Site cleanup. All such coverages can be included in the commercial general liability and/or umbrella or
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excess liability policies or provided under a separate pollution liability policy. Claims made coverage forms and deductibles of up to $100,000 per occurrence shall be acceptable.
(k)Shared Limits – Property Insurance. To the extent that the Project Company or the Company wishes to insure the Project under a property insurance program that contemplates shared limits and sublimits, the Project Company or the Company shall submit an advance written request to the Class A Equity Investor and shall provide supporting documentation requested by the Class A Equity Investor. At the time of such request, the Project Company or the Company shall furnish to the Class A Equity Investor existing, updated or new probable maximum loss analyses assessing the combined risk of insured values under the proposed property insurance program for assets that would share limits or sublimits with the Project in form and substance reasonably acceptable to the Class A Equity Investor in light of the combined risks. So long as the Project is insured under a property insurance program that includes shared limits and sublimits, the Project Company or the Company shall furnish to the Class A Equity Investor updated or new probable maximum loss analyses whenever the combined insured values sharing the available aggregate limit under the property insurance program with the Project increase by ten percent (10%) or greater over the combined insured values for the prior policy year, but in any event not less frequently than once every three (3) years. The Class A Equity Investor may approve or deny the request to insure the Project under the property insurance program in its sole discretion. To the extent such a request is approved, approval may also be conditioned upon the purchase of new or additional coverage beyond the types and amounts required herein as well as the obligation to reinstate any aggregate limits that are reduced by insured claims as the result of insured losses to insured assets thereunder.
(l)Contractors and Subcontractors. The Company shall, or shall cause the Project Company to, use commercially reasonable efforts to require each EPC Contractor, the Module Supplier, the Operator and other contractors or subcontractors with which it has a direct contractual relationship, if any, that will be performing operations and maintenance or other on-site work on its behalf (as applicable), to obtain and maintain the basic “types” of insurance required in Sections 1.1(f), (g), (h), (i) and (j) above in amounts that are customary for contractors and subcontractors performing similar work and operations. The Company shall, or shall cause the Project Company to, require such contractors or subcontractors to provide evidence of insurance required under the applicable Material Project Contracts prior to performing any work at the Project.
The contractors shall be responsible for tools and equipment brought onto the Project Site unless such tools and equipment are financed by the Project; all such financed tools and equipment shall be covered under the builder’s risk policy.
All responsibility for verification of compliance with the insurance requirements of the Material Project Contracts shall rest solely with the Company or the Project Company.
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1.2 Special Insurance Provisions.
(a)Loss Payable Endorsement. All property-related policies of insurance required to be maintained pursuant to Sections 1.1(d)-(e) of this Exhibit B, shall name the Class A Equity Investor as loss payee pursuant to an industry standard loss payable endorsement approved by the Class A Equity Investor in consultation with the Insurance Consultant.
(b)Non-Vitiation. All property-related policies of insurance required to be maintained pursuant to Sections 1.1(a)-(e) of this Exhibit B shall insure the interests of each insured, and their successors and assigns, regardless of any breach or violation by the Project Company, their affiliates or other insureds including any warranties, declarations or conditions contained in such policies, any action or inaction, or any foreclosure relating to the Project or any change in ownership of all or any portion of the Project (the foregoing may be accomplished by the use of an approved Class A Equity Investor’s loss payable endorsement, multiple insureds clause or other similar clause acceptable to the Class A Equity Investor).
(c)Additional Insured & Waiver of Subrogation. All polices of insurance required in Sections 1.1 (a)-(j) of this Exhibit B that are maintained by the Project Company or on its behalf shall name the Equity Investors and their successors and assigns, as additional insureds (with the exception of workers’ compensation and employer’s liability insurance). The Company shall, or shall cause the Project Company to, cause its insurers to provide a waiver of subrogation in favor of the Equity Investors.
(d)Severability of Interest, Primary and Non-Contributory. All liability policies required in Sections 1.1 of this Exhibit B (with the exception of workers compensation) that are maintained by the Company or on its behalf shall expressly provide that all provisions thereof, except the limits of liability (which shall be applicable to all insureds as a group) shall operate in the same manner as if there were a separate policy covering each such insured and shall not contain exclusions for cross-liability (except as otherwise approved by the Class A Equity Investor in consultation with the Insurance Consultant). All policies required in this Exhibit B shall be considered primary without contribution from any other policies the Equity Investors or their successors and assigns may hold.
(e)Notice of Cancellation. All polices of insurance required in Section 1.1 of this Exhibit B shall provide thirty (30) days written notice of cancellation to the Class A Equity Investor, with the exception of ten (10) days’ notice for nonpayment of premiums, to the extent commercially available. To the extent endorsement of the required policies to provide such written notice of cancellation is not commercially available (as determined in consultation with the Insurance Consultant), the Company shall, or shall cause the Project Company to provide written notice of cancellation to the Class A Equity Investor. The Company shall, or shall cause the Project Company to, provide thirty (30) days’ written notice of material change in policy conditions to the Class A Equity Investor. For purposes of this section, material change is considered to
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be any modification or reduction in coverage that would cause the Company’s or the Project Company’s insurance policies to be out of compliance with the terms of this Exhibit B.
(f)Claims-Made Forms. If any liability insurance required under the provisions of this Exhibit B is allowed to be written on a “claims made” basis, then such insurance shall include (i) a retroactive date (as such term is specified in each of such policies) that is no later than the Effective Date; and (ii) each time any policy written on a “claims made” basis is not renewed or the retroactive date of such policy is to be changed, the Company shall, or shall cause the Project Company to obtain or cause to be obtained for each such policy or policies the broadest extended reporting period coverage, or “tail coverage”, reasonably available in the commercial insurance market for each such policy or policies, but in no event less than any such extended reporting period or “tail coverage” required under the Material Project Contracts.
(g)Loss Notification. The Company shall promptly notify the Class A Equity Investor of any single loss or event likely to give rise to a claim against an insurer for an amount in excess of $1,000,000 covered by the property-related policies of insurance required to be maintained pursuant to Sections 1.1(a)-(e) of this Exhibit B.
(h)Loss Adjustment and Settlement. Any loss insured by the property-related policies of insurance required to be maintained pursuant to Sections 1.1(a)-(e) of this Exhibit B shall be adjusted with the respective insurance companies, including the filing in a timely manner of appropriate proceedings, by the Company, in consultation with the Class A Equity Investor if such loss is in excess of $1,000,000. In addition, the Company or the Project Company may, in its reasonable judgment, consent to the settlement of any loss; provided that in the event that the amount of the loss exceeds $1,000,000 the terms of such settlement is agreed in writing by the Class A Equity Investor.
(i)Failure to Maintain Insurance. In the event the Company or the Project Company fails to take out or maintain the full insurance coverage required by this Exhibit B, the Class B Equity Investor or Class A Equity Investor may (but shall not be obligated to), upon thirty (30) days’ prior notice (unless the aforementioned insurance would lapse within such period, in which event notice should be given as soon as reasonably possible) to the other Equity Investors of any such failure, take out the required policies of insurance and pay the premiums on the same. All amounts so paid by Equity Investors shall be considered a Capital Contribution to the Company which shall accrue a preferred return at a rate of three and half percent (3.5%) per annum until an amount of cash equal to such amounts and such accrued return has been distributed to such Equity Investor by the Company thereafter.
(j)Failure to Collect. From and after Substantial Completion, in the event that the Company or any other party providing insurance on its behalf fails to respond in a timely and appropriate manner (as reasonably determined by the Class A Equity Investor) to take any steps necessary or reasonably requested by the Class A Equity
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Investor to collect from any insurers for any loss covered by any insurance required to be maintained by this Exhibit B, the Class A Equity Investor shall have the right to make all proofs of loss, negotiate all claims and/or receive all or any part of the proceeds of the foregoing insurance policies, either in its own name or the name of the Company or the Project Company; provided, however, that the Company or the Project Company shall, upon the Class A Equity Investor’s request and at the Company’s own cost and expense, make all proofs of loss and take all other steps necessary or reasonably requested by the Class A Equity Investor to collect from insurers for any loss covered by any insurance required to be obtained by this Exhibit B.
(k)Acceptable Policy Terms and Conditions. All policies of insurance required to be maintained pursuant to this Exhibit B shall contain terms and conditions reasonably acceptable to the Class A Equity Investor in consultation with the Insurance Consultant.
(l)Draft Insurance Policy Review. To the extent that the Company or the Project Company furnishes the Class A Equity Investor or the Insurance Consultant with draft copies of the policies of insurance it intends to procure that are required to be maintained pursuant to this Exhibit B, including the identities of the insurer(s), the insured amounts and the deductibles, all of which the Class A Equity Investor (in consultation with the Insurance Consultant) have approved, the Company or the Project Company, as applicable, warrants that the insurance policies procured by or on behalf of the it shall be the same in all material respects as the policies previously approved by the Class A Equity Investor.
1.3 Other Insurance Requirements. The Company shall, or shall cause the Project Company to, maintain or cause to be maintained such insurance in addition to or in lieu of that required by the foregoing provisions of this Exhibit B as the Class A Equity Investor may from time to time reasonably require, due to (i) new information coming to the attention of the Class A Equity Investor after the Closing Date or (ii) changed circumstances after the Effective Date, which, in the case of either of the foregoing clauses (i) and (ii), is reasonably determined by the Class A Equity Investor to render the insurance coverage set forth in this Exhibit B materially inadequate. In addition to the other requirements of this Exhibit B, the Company shall, or shall cause the Project Company to, obtain and maintain such other or additional insurance (as to risks covered, policy amounts, policy provisions or otherwise) as the Class A Equity Investor in consultation with the Insurance Consultant may reasonably request from time to time; provided that such other insurance and amounts are then commonly insured against with respect to similar assets, in similar regions, with similar exposures, and which are available on commercially reasonable terms.
1.4 Certification of Compliance. The Company shall, or shall cause the Project Company to, deliver to the Class A Equity Investor on or before the Effective Date and annually thereafter with respect to the renewal date of each insurance policy required to be maintained by it pursuant to this Exhibit B, certificates of insurance executed by the insurer or its duly authorized representative which shall be in a form acceptable to the Class A Equity Investor
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and shall indicate the types, amounts, deductibles and terms and conditions required herein, accompanied by a letter from the Company’s or the Project Company’s insurance broker certifying to the Class A Equity Investor that the proposed renewal policy (or policies) satisfies the requirements of this Exhibit B, coverage is in full force and effect and all premiums then due have been paid or are not in arrears. The Company shall advise the Class A Equity Investor in writing promptly of any default in the payment of any premium and of any other act or omission on the part of the Company or other party providing insurance on its behalf which may invalidate or render unenforceable, in whole or in part, any insurance being maintained by the Company or the Project Company pursuant to this Exhibit B.
Upon request from the Class A Equity Investor, the Company will promptly furnish the Class A Equity Investor with complete copies of all insurance policies, binders and cover notes or other evidence of such insurance relating to the insurance required to be maintained by or on behalf of the Company, the Project Company and the Project.
1.5 No Duty to Verify Insurance Compliance. The Class A Equity Investor shall be entitled, upon reasonable advance notice, to review the Company’s (or other appropriate party’s) books and records regarding all insurance policies maintained with respect to the Project and the Company’s obligations under this Exhibit B. Notwithstanding the foregoing, no provision of this Exhibit B or any other provision of this Agreement or any other Investment Document shall impose on the Class A Equity Investor, or their successors and assigns, any duty or obligation to verify the existence or adequacy of the insurance coverage maintained by the Company or the Project, nor shall the Class A Equity Investor, or their successors and assigns, be responsible for any representations or warranties made by or on behalf of the Company or any other party to any insurance company or underwriter.
1.6 Waiver of Insurance Requirements. If at any time the Company determines in its reasonable judgment that any insurance (including the limits or deductibles thereof) required to be maintained by this Exhibit B is not available on commercially reasonable terms due to prevailing conditions in the commercial insurance market at such time, then the Company may make a written request to temporarily waive such requirement together with a written report of the Company’s insurance broker or another independent insurance broker of nationally- recognized standing in the insurance industry (i) certifying that such insurance is not available on commercially reasonable terms (and, in any case where the required maximum coverage is not reasonably available, certifying as to the maximum amount which is so available), (ii) explaining in detail the basis for such broker’s conclusions, and (iii) containing such other information as the Class A Equity Investor or the Insurance Consultant may reasonably request. If the Class A Equity Investor, in consultation with the Insurance Consultant, determines that such insurance (including the limits or deductibles thereof) is not available on commercially reasonable terms in the commercial insurance market, then the Class A Equity Investor shall temporarily waive such requirement. At any time after the granting of any temporary waiver pursuant to this Section 1.6 of this Exhibit B, but not more than once in any year, the Class A Equity Investor may request, and the Company shall furnish to the Class A Equity Investor within thirty (30) days after such request, an updated insurance report reasonably acceptable to the Class A Equity Investor and the Insurance Consultant from the Company’s independent insurance broker. Any waiver granted pursuant
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to this Exhibit B shall expire, without further action by any party, immediately upon (A) such waived insurance requirement becoming available on commercially reasonable terms, as determined by the Class A Equity Investor, in consultation with the Insurance Consultant or (B) failure of the Company to deliver an updated insurance report pursuant to this Section 1.6.
1.7 No Limitation of Liability. The insurance coverages required of the Company and the Project Company set forth in this Exhibit B shall in no way affect, nor are they intended as a limitation of, the Company’s liability with respect to the Equity Capital Contribution Agreement. For the avoidance of doubt, coverage limits specified in this Exhibit B do not serve as a limitation to the Company or the Project Company’s insurance companies’ liabilities.
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EXHIBIT C-1
LANDLORD ESTOPPEL CERTIFICATE
(SOLAR GENERATING FACILITY LAND OPTION AND LEASE AND EASEMENT AGREEMENT)
This Landlord Estoppel Certificate (this “Estoppel Certificate”), dated as of [ó], (the “Effective Date”), is made by RF SOLAR PROPERTIES LLC, a Delaware limited liability company (“Landlord”). This Estoppel Certificate is provided for the benefit of FNBC LEASING CORPORATION, a Delaware corporation (the “Investor”); PELICANS JAW SOLAR, LLC, a Delaware limited liability company (“Lessee”); and OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY (the “Title Company”).
RECITALS
A. Landlord and Lessee are the current parties to that certain Solar Generating Facility Land Option and Lease and Easement Agreement dated April 1, 2020, as amended by that certain First Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of October 13, 2020, as further amended by that certain Second Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated February 10, 2021, as further amended by that certain Third Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of March 7, 2024, as further amended by that certain Fourth Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated August 1, 2024, as evidenced by that certain Memorandum of Option Agreement dated as of May 31, 2021, recorded June 23, 2021, as Document No. 221117785 in the Official Records of Kern County, California (the “Recording Office”), as the interest of lessee was assigned by Samsung Solar Energy 2, LLC to Lessee pursuant to that certain Memorandum of Assignment and Assumption Agreement dated as of May 17, 2022 and recorded May 18, 2022 as Document No. 222079077 of the Recording Office, as further assigned by Memorandum of Assignment of Option Agreement dated as of October 23, 2023, by and between Wonderful Nut Orchards LLC, a Delaware limited company, as Assignor, and Landlord, as Assignee, recorded October 31, 2023 as Document No. 223134667 in the Recording Office, as amended by that certain Amendment to Memorandum of Option Agreement dated as of May 13, 2024, recorded May 22, 2024, as Document No. 24058719 in the Recording Office as further amended by that certain Fourth Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement and Second Amendment to Memorandum of Option Agreement dated as of August 1, 2024, and recorded November 22, 2024, as Document No. 224144497 in the Recording Office (as amended and assigned, collectively, the “Lease”) relating to that certain real property owned in fee by ▇▇▇▇▇▇▇▇ and more particularly described in the Lease as the Property (the “Property”).
B. ▇▇▇▇▇▇▇▇ has been advised that Investor is a party to that certain Equity Capital Contribution Agreement dated May 9, 2025 (as it may be amended, supplemented, extended, restated, or otherwise modified from time to time, the “ECCA”) by and among Investor, Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Equity Investor”), and Pelicans Jaw TE Holdco, LLC, a Delaware limited liability company (the “Company”).
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Pursuant to the terms of the ECCA, (i) the ownership interests in Lessee have been contributed to the Company, (ii) the Investor has made and will make certain capital contributions to Company for use by Lessee for the construction and operation by Lessee of a solar energy electric generating plant, (iii) in exchange the Investor has been issued certain membership interests in the Company.
C. The Title Company will be issuing a date down endorsement to the current owner’s title policy (the “Date Down Endorsement”).
D. [In connection with the Substantial Completion Funding Date under the ECCA, the Investor has required the execution of this Estoppel Certificate.]1
E. Initially capitalized words used without definition herein have the meanings ascribed thereto in the Lease.
Pursuant to Section 23(b) of the Lease, Landlord hereby certifies, as of the Effective Date, to Lessee, Investor and Title Company that:
1) The Lease constitutes the entire agreement between Landlord and Lessee with respect to the Property described in the Lease.
2) The Lease Option was exercised by Lessee on July 30, 2024.
3) The Lease Term commenced on August 1, 2024 and is scheduled to terminate on July 31,
2049.
4) Lessee is not in default in the payment of fees and other monetary obligations under the Lease or, to Landlord’s actual knowledge, in the performance or observance of any covenant or condition to be performed or observed by the Lessee thereunder.
5) All fees payable by Lessee under the Lease prior to the date hereof have been paid through [_________, 202__.]2
6) The Lease is in full force and effect and has not been altered, modified or amended, except as otherwise set forth in Recital A above.
7) Lessee does not make any type of escrow deposits with Landlord, and Landlord does not hold any type of deposit from Lessee (for security or otherwise).
8) No bankruptcy proceedings, whether voluntary or otherwise, are pending, or to Landlord’s actual knowledge, threatened, against Landlord.
9) To Landlord’s actual knowledge, neither Lessee nor Landlord is in default under any provision of the Lease beyond any applicable notice and/or cure periods, nor to Landlord’s actual knowledge, has any event occurred which with the passage of time or giving of notice, or both, would constitute a default on the part of Lessee or Landlord.
1 Note to Form: To be updated as necessary once ECCA is finalized.
2 Note to Form: To be dated as of SC Funding Date
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10) There are no pending indemnification claims by Landlord against ▇▇▇▇▇▇, and to Landlord’s actual knowledge, there are no pending disputes between Landlord and Lessee under the Lease.
11) Landlord has not received written notice of any pending eminent domain proceedings or other governmental actions or any judicial actions against ▇▇▇▇▇▇▇▇’s interest in the Property encumbered by the Lease.
12) Landlord has not received written notice that it is in violation of any governmental law or regulation applicable to its interest in the Property encumbered by the Lease.
13) To Landlord’s actual knowledge, there are no federal or state tax liens, or other real estate liens, that have been filed against Landlord. To Landlord’s actual knowledge, there are no past due and unpaid real or personal property taxes, assessments or fees, or judgments, liens, mortgages, or other claims against the Property that are not otherwise of record.
14) Landlord has not entered into any agreement with any broker for the management, sale, purchase, lease, or mortgage of the Property which is reasonably likely to result in a lien for which said broker has not been paid.
15) Lessee has not waived any rights under the Lease with regards to title defects.
16) Landlord does not have actual knowledge of any adverse matters or claims affecting the
title to the Property which are not shown of record.
17) To Landlord’s actual knowledge, there are no (i) unrecorded tenancies, lease agreements, or other occupancies or rights of possession on the Property, or (ii) options, contracts, or other agreements with any person or entity that would adversely affect or interfere with the use of the Property by ▇▇▇▇▇▇, for the purposes set forth in the Lease.
18) To Landlord’s actual knowledge, there are no pending lawsuits for the collection of any assessments filed against the Landlord with respect to the Property.
19) To Landlord’s actual knowledge, there are no unpaid bills incurred by or on behalf of the Landlord for work performed upon or materials delivered to the Property for the construction or improvement of the Property during the past 12 months.
20) Without limiting any provision of the Lease, Landlord acknowledges and agrees that, upon
the execution and delivery of the ECCA, Investor will be a “Lender” under the Lease.
21) Landlord shall, concurrently with or as soon as reasonably possible after the delivery of any notice to Lessee of any condition, occurrence or event that, after notice or passage of time or both, would be an event of default (a “Default Notice”), provide a copy of such Default Notice to the Investor , at the following address:
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Investor
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented Investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
22) Investor and its affiliates, successors and assigns, Lessee, and Title Company (collectively, the “Relying Parties”) may rely upon the truth and accuracy of the representations, certifications and warranties contained herein, and the agreements set forth herein, and said representations, certifications, warranties and agreements shall be binding upon Landlord and its successors and assigns and inure to the benefit of the Relying Parties.
23) Investor may at any time, without Landlord’s consent, sell, assign, participate or securitize all or any portion of Investor’s rights and obligations under the ECCA, and any such sale, assignment, participation or securitization may be to one or more financial institutions or other entities, to private investors, and/or into the public securities market, in Investor’s sole discretion. This Estoppel Certificate shall be binding upon Landlord and its successors and assigns and shall inure to the benefit of Lessee, Title Company, Investor and their successors and assigns. Upon the request of the Investor, Landlord will promptly deliver to Investor or its successors and assigns, an estoppel certificate in the form of this Estoppel Certificate in accordance with Section 23(b) of the Lease.
24) If any term, provision, covenant or condition of this instrument is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of this instrument shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.
25) The laws of the State of California shall govern the validity, performance and enforcement of this instrument. If any dispute or claim arises out of this instrument or the breach or alleged breach of any term or provision of this instrument, which remains unresolved after direct negotiation between the parties, the parties agree that the dispute or claim shall be litigated in a court of appropriate jurisdiction in the State of California. Each party consents to personal jurisdiction within the State of California for the purposes of litigating any dispute arising out of this instrument or the breach hereof.
26) Notwithstanding any provision of the Lease, this Estoppel Certificate shall be deemed to provide notice to the Landlord of the name and address of the Investor.
27) As used in this Estoppel Certificate, the phrase “to Landlord’s actual knowledge” or words of similar import shall refer exclusively to matters within the current actual (as opposed to constructive) knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, Associate Vice President, Property and Risk Management, of Wonderful Nut Orchards LLC (“Landlord’s Representative”), the person most knowledgeable with respect to the Property and shall not be construed, by imputation or otherwise, to refer to the knowledge of Landlord, or any affiliate of Landlord, to any property
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manager, or to any other officer, agent, manager, representative or employee of Landlord or any affiliate thereof. No duty of inquiry or investigation on the part of Landlord or Landlord’s Representative will be required or implied by the making of any statement which is so limited to matters within Landlord’s actual knowledge, and Landlord agrees and acknowledges that in no event shall Landlord’s Representative have any personal liability therefor.
28) Landlord shall have the right to execute this Estoppel Certificate using an electronic signature appearing on the signature block below, and Landlord’s electronic signature shall be deemed valid and binding and admissible as if the same were an original ink signature.
[Signature Page Follows.]
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has executed and delivered this Estoppel Certificate as of the Effective Date.
LANDLORD: | RF SOLAR PROPERTIES LLC, | ||||||||||||||||||||||
| a Delaware limited liability company | |||||||||||||||||||||||
| By: | |||||||||||||||||||||||
| Name: | |||||||||||||||||||||||
| Title: | |||||||||||||||||||||||
C-1-A-6
EXHIBIT C-1
OWNER ESTOPPEL CERTIFICATE
(ACCESS AND TRANSMISSION LINE EASEMENT AGREEMENTS)
This Owner Estoppel Certificate (this “Estoppel Certificate”), dated as of [ó] (the “Effective Date”), is made by WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company (“Owner”). This Estoppel Certificate is provided for the benefit of; FNBC LEASING CORPORATION, a Delaware corporation (the “Investor”); PELICANS JAW SOLAR, LLC, a Delaware limited liability company (“Grantee”); and OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY (the “Title Company”).
RECITALS
A. Owner and Grantee are the current parties to (i) that certain Access Easement Agreement dated March 20, 2024, recorded March 22, 2024, as document No. 224032029 in the Official Records of Kern County, California (the “Recording Office”), as amended by that certain First Amendment to Access Agreement dated as of June 26, 2024, recorded in the Recording Office on July 3, 2024 as document no. 224076724 in the Recording Office (as amended and assigned, collectively, the “Access Easement”) relating to that certain real property owned in fee by Owner and more particularly described in the Access Easement (the “Access Easement Property”) and (ii) that certain Easement Agreement dated October 12, 2023, as evidenced by that certain Memorandum of Easement Agreement dated as of October 12, 2023, recorded June 21, 2024 as document no. 224071364 in the Recording Office (as amended and assigned, collectively, the “Transmission Line Easement” and together with the Access Easement, collectively, the “Easement”) relating to that certain real property owned in fee by Owner and more particularly described in the Transmission Line Easement (the “Transmission Line Easement Property” and together with the Access Easement Property, collectively, the “Property”).
B. ▇▇▇▇▇▇▇▇ has been advised that Investor is a party to that certain Equity Capital Contribution Agreement dated May 9, 2025 (as it may be amended, supplemented, extended, restated, or otherwise modified from time to time, the “ECCA”) by and among Investor, Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Equity Investor”), and Pelicans Jaw TE Holdco, LLC, a Delaware limited liability company (the “Company”). Pursuant to the terms of the ECCA, (i) the ownership interests in Lessee have been contributed to the Company, (ii) the Investor has made and will make certain capital contributions to Company for use by Lessee for the construction and operation by Lessee of a solar energy electric generating plant, (iii) in exchange the Investor has been issued certain membership interests in the Company.
C. The Title Company will be issuing a date down endorsement to the current owner’s title policy (the “Date Down Endorsement”).
D. [In connection with the Substantial Completion Funding Date under the ECCA, the Investor has required the execution of this Estoppel Certificate.]
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E. Initially capitalized words used without definition herein have the meanings ascribed thereto in the Easement.
Pursuant to the Easement, Owner hereby certifies, as of the Effective Date, to Grantee, Investor and Title Company that:
1) The Easement constitutes the entire agreement between Owner and Grantee with respect to the Property described in the Easement.
2) Grantee is not in default in the payment of fees and other monetary obligations under the Easement or, to Owner’s actual knowledge, in the performance or observance of any covenant or condition to be performed or observed by the Grantee thereunder.
3) All fees payable by Grantee under the Easement prior to the date hereof have been paid through [__________, 202_.]1
4) The Easement is in full force and effect and has not been altered, modified or amended.
5) Grantee does not make any type of escrow deposits with Owner, and Owner does not hold any type of deposit from Grantee (for security or otherwise).
6) No bankruptcy proceedings, whether voluntary or otherwise, are pending, or to Owner’s actual knowledge, threatened, against Owner.
7) To Owner’s actual knowledge, neither Grantee nor Owner is in default under any provision of the Easement beyond any applicable notice and/or cure periods, nor to Owner’s actual knowledge has any event occurred which with the passage of time or giving of notice, or both, would constitute a default on the part of Grantee or Owner.
8) There are no pending indemnification claims by Owner against ▇▇▇▇▇▇▇, and to Owner’s actual knowledge there are no pending disputes between Owner and Grantee under the Easement.
9) Owner has not received written notice of any pending eminent domain proceedings or other governmental actions or any judicial actions against Owner’s interest in the Property encumbered by the Easement.
10) Owner has not received written notice that it is in violation of any governmental law or regulation applicable to its interest in the Property encumbered by the Easement.
11) To Owner’s actual knowledge, there are no federal or state tax liens, or other real estate liens, that have been filed against Owner. To Owner’s actual knowledge, there are no past due and unpaid real or personal property taxes, assessments or fees, or judgments, liens, mortgages, or other claims against the Property that are not otherwise of record.
1 Note to Form: To be dated as of SC Funding Date.
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12) Owner has not entered into any agreement with any broker for the management, sale, purchase, lease, or mortgage of the Property which is reasonably likely to result in a lien for which said broker has not been paid.
13) Grantee has not waived any rights under the Easement with regards to title defects.
14) Owner does not have actual knowledge, of any adverse matters or claims affecting the title thereto which are not shown of record.
15) To Owner’s actual knowledge, there are no (i) unrecorded tenancies, lease agreements, or other occupancies or rights of possession on the Property, or (ii) options, contracts, or other agreements with any person or entity related to the Property that would adversely affect or interfere with the use of the Property by Grantee for the purposes set forth in the Easement.
16) To Owner’s actual knowledge, there are no pending lawsuits for the collection of any assessments filed against the Owner or with respect to the Property.
17) To Owner’s actual knowledge, there are no unpaid bills incurred by or on behalf of the Owner for work performed upon or materials delivered to the Property for the construction or improvement of the Property during the past 12 months.
18) Without limiting any provision of the Easement, Owner acknowledges and agrees that, upon the execution and delivery of the ECCA, Investor will be a “Financing Party” under the Easement.
19) Owner shall, concurrently with or as soon as reasonably possible after the delivery of any notice to Grantee of any condition, occurrence or event that, after notice or passage of time or both, would be an event of default (a “Default Notice”), provide a copy of such Default Notice to the, at the following address:
Investor
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented Investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
20) Investor and its respective affiliates, successors and assigns, Grantee, and Title Company (collectively, the “Relying Parties”) may rely upon the truth and accuracy of the statements contained herein, and said statements shall be binding upon Owner and its successors and assigns and inure to the benefit of the Relying Parties.
21) Investor may at any time, without Owner’s consent, sell, assign, participate or securitize all or any portion of Investor’s rights and obligations under the ECCA, and any such sale, assignment, participation or securitization may be to one or more financial institutions or other
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entities, to private investors, and/or into the public securities market, in Investor’s sole discretion. This Estoppel Certificate shall be binding upon Owner and its successors and assigns and shall inure to the benefit of Grantee, Title Company, Investor and their successors and assigns. Upon the request of the Investor, Owner will promptly deliver to Investor or its successors and assigns, an estoppel certificate in the form of this Estoppel Certificate.
22) If any term, provision, covenant or condition of this instrument is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of this instrument shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.
23) The laws of the State of California shall govern the validity, performance and enforcement of this instrument. If any dispute or claim arises out of this instrument or the breach or alleged breach of any term or provision of this instrument, which remains unresolved after direct negotiation between the parties, the parties agree that the dispute or claim shall be litigated in a court of appropriate jurisdiction in the State of California. Each party consents to personal jurisdiction within the State of California for the purposes of litigating any dispute arising out of this instrument or the breach hereof.
24) Notwithstanding any provision of the Easement, this Estoppel Certificate shall be deemed to provide notice to the Owner of the name and address of the Investor.
25) As used in this Estoppel Certificate, the phrase “to Owner’s actual knowledge” or words of similar import shall refer exclusively to matters within the current actual (as opposed to constructive) knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, Associate Vice President, Property and Risk Management, of Wonderful Nut Orchards LLC (“Owner’s Representative”), and shall not be construed, by imputation or otherwise, to refer to the knowledge of Owner, or any affiliate of Owner, to any property manager, or to any other officer, agent, manager, representative or employee of Owner or any affiliate thereof. No duty of inquiry or investigation on the part of Owner or Owner’s Representative will be required or implied by the making of any statement which is so limited to matters within Owner’s actual knowledge, and Owner agrees and acknowledges that in no event shall Landlord’s Representative have any personal liability therefor.
26) Owner shall have the right to execute this Estoppel Certificate using an electronic signature appearing on the signature block below, and Owner’s electronic signature shall be deemed valid and binding and admissible as if the same were an original ink signature.
[Signature Page Follows.]
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IN WITNESS WHEREOF, Owner has executed and delivered this Estoppel Certificate as of the Effective Date.
OWNER: | WONDERFUL NUT ORCHARDS LLC | ||||||||||||||||||||||
| a Delaware limited liability company | |||||||||||||||||||||||
| By: | |||||||||||||||||||||||
| Name: | |||||||||||||||||||||||
| Title: | |||||||||||||||||||||||
C-1-B-5
EXHIBIT C-1
LANDLORD ESTOPPEL CERTIFICATE
(BIFURCATED, AMENDED AND RESTATED SOLAR GENERATING FACILITY LAND OPTION AND LEASE AND EASEMENT AGREEMENT)
This Landlord Estoppel Certificate (this “Estoppel Certificate”), dated as of [ó] (the “Effective Date”), is made by WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company (“Landlord”). This Estoppel Certificate is provided for the benefit of FNBC LEASING CORPORATION, a Delaware corporation (the “Investor”); PELICANS JAW SOLAR, LLC, a Delaware limited liability company (“Lessee”); and OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY (the “Title Company”).
RECITALS
A. Landlord and Lessee are the current parties to that certain Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated July 25, 2024, as evidenced by that certain Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated July 25, 2024 and recorded August 23, 2024 as Document No. 224100425 the Official Recorded of Kern County, California (the “Recording Office”), as amended by that certain Amendment to Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement and Amendment to Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated August 1, 2024 and recorded November 25, 2024, as Document No. 2245147 in the Recording Office, as affected by that certain Assignment and Assumption Agreement dated July 24, 2024, by and between Lessee and Pelicans Jaw Solar II, LLC, a Delaware limited liability company, recorded August 23, 2024 as Document No. 224100424 in the Recording Office (as amended and assigned, collectively, the “Lease”) relating to that certain real property owned in fee by ▇▇▇▇▇▇▇▇ and more particularly described in the Lease as the Property ( the “Property”).
B. ▇▇▇▇▇▇▇▇ has been advised that Investor is a party to that certain Equity Capital Contribution Agreement dated May 9, 2025 (as it may be amended, supplemented, extended, restated, or otherwise modified from time to time, the “ECCA”) by and among Investor, Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Equity Investor”), and Pelicans Jaw TE Holdco, LLC, a Delaware limited liability company (the “Company”). Pursuant to the terms of the ECCA, (i) the ownership interests in Lessee have been contributed to the Company, (ii) the Investor has made and will make certain capital contributions to Company for use by Lessee for the construction and operation by Lessee of a solar energy electric generating plant, (iii) in exchange the Investor has been issued certain membership interests in the Company.
C. The Title Company will be issuing a date down endorsement to the current owner’s title policy (the “Date Down Endorsement”).
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D. [In connection with the Substantial Completion Funding Date under the ECCA, the Investor has required the execution of this Estoppel Certificate.]1
E. Initially capitalized words used without definition herein have the meanings ascribed thereto in the Lease.
Pursuant to Section 23(b) of the Lease, Landlord hereby certifies, as of the Effective Date, to Lessee, Investor and Title Company that:
1) The Lease constitutes the entire agreement between Landlord and Lessee with respect to the Property described in the Lease.
2) The Lease Option was exercised by Lessee on July 30, 2024.
3) The Lease Term commenced on August 1, 2024, and is scheduled to terminate on July 31, 2049.
4) Lessee is not in default in the payment of fees and other monetary obligations under the Lease or, to Landlord’s actual knowledge, in the performance or observance of any covenant or condition to be performed or observed by the Lessee thereunder.
5) All fees payable by Lessee under the Lease prior to the date hereof have been paid through [_________, 202 .]2
6) The Lease is in full force and effect and has not been altered, modified or amended, except as otherwise set forth in Recital A above.
7) Lessee does not make any type of escrow deposits with Landlord, and Landlord does not hold any type of deposit from Lessee (for security or otherwise).
8) No bankruptcy proceedings, whether voluntary or otherwise, are pending, or to Landlord’s actual knowledge, threatened, against Landlord.
9) To Landlord’s actual knowledge, neither Lessee nor Landlord is in default under any provision of the Lease beyond any applicable notice and/or cure periods, nor to Landlord’s actual knowledge, has any event occurred which with the passage of time or giving of notice, or both, would constitute a default on the part of Lessee or Landlord.
10) There are no pending indemnification claims by Landlord against ▇▇▇▇▇▇, and to Landlord’s actual knowledge, there are no pending disputes between Landlord and Lessee under the Lease.
11) Landlord has not received written notice of any pending eminent domain proceedings or other governmental actions or any judicial actions against ▇▇▇▇▇▇▇▇’s interest in the Property encumbered by the Lease.
1 Note to Form: To be updated as necessary once ECCA is finalized.
2 Note to Form: To be dated as of SC Funding Date.
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12) Landlord has not received written notice that it is in violation of any governmental law or regulation applicable to its interest in the Property encumbered by the Lease.
13) To Landlord’s actual knowledge, there are no federal or state tax liens, or other real estate liens, that have been filed against Landlord. To Landlord’s actual knowledge, there are no past due and unpaid real or personal property taxes, assessments or fees, or judgments, liens, mortgages, or other claims against the Property that are not otherwise of record.
14) Landlord has not entered into any agreement with any broker for the management, sale, purchase, lease, or mortgage of the Property which is reasonably likely to result in a lien for which said broker has not been paid.
15) Lessee has not waived any rights under the Lease with regards to title defects.
16) Landlord does not have actual knowledge of any adverse matters or claims affecting the
title to the Property which are not shown of record.
17) To Landlord’s actual knowledge, there are no (i) unrecorded tenancies, lease agreements, or other occupancies or rights of possession related to the Property, or (ii) options, contracts, or other agreements with any person or entity that would materially and adversely affect the use of the Property by Lessee for the purposes set forth in the Lease.
18) To Landlord’s actual knowledge, there are no pending lawsuits for the collection of any assessments filed against the Landlord with respect to the Property.
19) To Landlord’s actual knowledge, there are no unpaid bills incurred by or on behalf of the Landlord for work performed upon or materials delivered to the Property for the construction or improvement of the Property during the past 12 months.
20) Without limiting any provision of the Lease, Landlord acknowledges and agrees that, upon the execution and delivery of the ECCA, Investor will be a “Lender” under the Lease.
21) Landlord shall, concurrently with or as soon as reasonably possible after the delivery of any notice to Lessee of any condition, occurrence or event that, after notice or passage of time or both, would be an event of default (a “Default Notice”), provide a copy of such Default Notice to the Investor, at the following address:
Investor
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented Investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
22) Investor and its respective affiliates, successors and assigns, Lessee, and Title Company (collectively, the “Relying Parties”) may rely upon the truth and accuracy of the statements
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contained herein, and said statements shall be binding upon Landlord and its successors and assigns and inure to the benefit of the Relying Parties.
23) Investor may at any time, without Landlord’s consent, sell, assign, participate or securitize all or any portion of Investor’s rights and obligations under the ECCA and any such sale, assignment, participation or securitization may be to one or more financial institutions or other entities, to private investors, and/or into the public securities market, in Investor’s sole discretion. This Estoppel Certificate shall be binding upon Landlord and its successors and assigns and shall inure to the benefit of Lessee, Title Company, Investor and their successors and assigns. Upon the request of the Investor, Landlord will promptly deliver to Investor or its successors and assigns, an estoppel certificate in the form of this Estoppel Certificate in accordance with Section 23(b) of the Lease.
24) If any term, provision, covenant or condition of this instrument is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of this instrument shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby.
25) The laws of the State of California shall govern the validity, performance and enforcement of this instrument. If any dispute or claim arises out of this instrument or the breach or alleged breach of any term or provision of this instrument, which remains unresolved after direct negotiation between the parties, the parties agree that the dispute or claim shall be litigated in a court of appropriate jurisdiction in the State of California. Each party consents to personal jurisdiction within the State of California for the purposes of litigating any dispute arising out of this instrument or the breach hereof.
26) Notwithstanding any provision of the Lease, this Estoppel Certificate shall be deemed to provide notice to the Landlord of the name and address of the Investor.
27) As used in this Estoppel Certificate, the phrase “to Landlord’s actual knowledge” or words of similar import shall refer exclusively to matters within the current actual (as opposed to constructive) knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, Associate Vice President, Property and Risk Management, of Wonderful Nut Orchards LLC (“Landlord’s Representative”), and shall not be construed, by imputation or otherwise, to refer to the knowledge of Landlord, or any affiliate of Landlord, to any property manager, or to any other officer, agent, manager, representative or employee of Landlord or any affiliate thereof. No duty of inquiry or investigation on the part of Landlord or Landlord’s Representative will be required or implied by the making of any statement which is so limited to matters within Landlord’s actual knowledge, and Landlord agrees and acknowledges that in no event shall Landlord’s Representative have any personal liability therefor.
28) Landlord shall have the right to execute this Estoppel Certificate using an electronic signature appearing on the signature block below, and Landlord’s electronic signature shall be deemed valid and binding and admissible as if the same were an original ink signature.
[Signature Page Follows.]
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has executed and delivered this Estoppel Certificate as of the Effective Date.
LANDLORD: | WONDERFUL NUT ORCHARDS LLC | ||||||||||||||||||||||
| a Delaware limited liability company | |||||||||||||||||||||||
| By: | |||||||||||||||||||||||
| Name: | |||||||||||||||||||||||
| Title: | |||||||||||||||||||||||
C-1-C-5
EXHIBIT C-2
FORM OF SOLV EPC AGREEMENT ESTOPPEL
| To: | FNBC Leasing Corporation (together with any assignee or successor of its rights and obligations under the ECCA (as defined below), the “Class A Equity Investor”) | ||||
[DATE]
A. Pelicans Jaw Solar, LLC (the “Project Company”) owns and is developing an approximately 573 MWdc / 440 MWac photovoltaic solar facility and a 238 MWac / 954 MWh battery energy storage system (the “Project”) located in Kern County, California.
B. SOLV Energy, LLC, a Delaware limited liability company (“Contractor”) has entered into that certain Turnkey Engineering, Procurement and Construction Agreement, dated as of August 13, 2024, by and between the Project Company and Contractor, (including all appendices, annexes, schedules and exhibits thereto, the “EPC Contract”) for the design, engineering, procurement, construction and installation of the Project as fully set forth in the EPC Contract. Unless otherwise defined in this estoppel certificate (this “Certificate”), capitalized terms used herein shall have the meanings given to such terms in the EPC Contract.
C. Pursuant to the Equity Capital Contribution Agreement, dated as of May 9, 2025 (together with any amendments and supplements thereto, the “ECCA”), by and among the Class A Equity Investor, Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Member”) and Pelicans Jaw TE HoldCo, LLC (the “Company”), the Class A Equity Investor has agreed to make an investment in the Company, which shall, following the consummation of the transactions contemplated by the Purchase Agreement (as defined in the ECCA), be the owner of the Project Company. Contractor acknowledges that each Class A Equity Investor is relying on this Certificate in connection with making its respective investment in the Company pursuant to the ECCA.
Contractor hereby confirms and agrees as follows:
1.Contractor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct its business in all jurisdictions necessary to perform its obligations under the EPC Contract and this Certificate;
2.The execution, delivery and performance by Contractor of the EPC Contract and this Certificate (a) are within Contractor’s powers and have been duly authorized by all necessary action and (b) do not conflict with or violate Applicable Law or any of the terms or conditions in its governing documents or any indenture, mortgage, chattel mortgage, deed of trust, lease, conditional sales contract, loan or credit arrangement to which it is a party or by which it or its properties may be bound or affected;
3.Each of the EPC Contract and this Certificate is in full force and effect, has been duly executed and delivered on behalf of Contractor by the appropriate officers of Contractor, and constitute a legal, valid and binding obligation of Contractor, enforceable against
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Contractor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally, or by the exercise of judicial discretion in accordance with general principles of equity;
4.As of the date hereof, (i) the EPC Contract represents the entire agreement between Contractor and Project Company with respect to the subject matter thereof and, except pursuant to this Certificate and as described on Schedule 1 hereto, such EPC Contract has not been amended or modified since the Effective Date, (ii) other than the EPC Contract (including any Change Orders), each Limited Notice to Proceed and the Full Notice to Proceed, there are no agreements, arrangements, understandings or dealings entered into between Contractor and the Project Company with respect to the subject matter of the EPC Contract, (iii) there have not been any Change Orders, and there are not any pending requests for Change Orders, other than as described on Schedule 1 hereto, and (iv) the Contractor has not transferred or assigned any of its right, title and interest or liabilities and obligations in, to and under the EPC Contract;
5.Contractor has not received written notice of, does not have any knowledge of, and has not consented to, any assignment, pledge or hypothecation of the right, title and interest of the Project Company in, to and under the EPC Contract, except pursuant to that certain Consent and Agreement, dated on or about the date hereof, by and among Contractor, the Project Company and U.S. Bank Trust Company, National Association (in its capacity as collateral agent under a Financing Agreement);
6.There are no actions, proceedings, judgments, rulings or orders, issued by or, to Contractor’s knowledge, pending before any court or other governmental body against Contractor and under or in connection with the EPC Contract;
7.Except as otherwise provided for on Schedules 2 and 3 hereto, there are no unresolved Disputes between the Project Company and Contractor under the EPC Contract, and there are no material unresolved disputes between Contractor and any of its Major Subcontractors with respect to the Project that could reasonably be expected to have a material adverse effect on the Contractor’s ability to achieve the Guaranteed Substantial Completion Date;
8.No consent, approval or authorization of, or registration, filing or declaration with, any federal or state governmental authority or other regulatory agency which has not been received, waived or satisfied as of the date hereof, or which is not required to be obtained as of the date hereof based on the current stage of the Project but which is reasonably expected to be received, waived or satisfied in the ordinary course of business as and when required pursuant to the EPC Contract, is required for the valid execution and delivery by Contractor of the EPC Contract or this Certificate, the consummation by Contractor of the transactions contemplated thereby or hereby to be performed prior to the date hereof or compliance by Contractor prior to the date hereof with the terms and
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provisions thereof or hereof, and there is no bankruptcy proceeding pending by Contractor, or to its knowledge threatened against it;
9.As of the date hereof, Contractor hereby reaffirms all representations and warranties made by it in the EPC Contract and agrees that all such representations and warranties shall be deemed to have been re-made as of the date of this Certificate (except to the extent such representations and warranties expressly relate to a prior date, or have otherwise been fulfilled);
10.As of the date hereof, Contractor is in compliance with the requirements set forth in Exhibit N-1.
11.As of the date hereof, no Contractor Event of Default exists under the EPC Contract;
12.Except as set forth on Schedule 3 hereto, (i) no Force Majeure Event exists under the EPC Contract, and (ii) to the best of Contractor’s knowledge, there are no Hazardous Materials at the Site which were brought onto the Site by Contractor or any Subcontractor other than those required to complete the Work in accordance with the EPC Contract, and (ii) no default, breach, unsatisfied condition or other event has occurred or circumstances exist that constitute or that, with the giving of notice or the passage of time (including the passage of time during which a default has occurred and has not yet been cured during any applicable grace period) or both, would constitute an Owner Event of Default or Contractor Event of Default under the EPC Contract;
13.Contractor hereby acknowledges that (i) it received the Limited Notices to Proceed listed in Schedule 4 hereto with respect to the Project and (ii) no extension to the Project Schedule has occurred;
14.Based on information delivered by Owner to Contractor, Contractor hereby acknowledges and agrees that (i) the Class A Equity Investor constitutes a “Financing Party” under the EPC Contract, and (ii) the Class A Equity Investor has all of the rights granted to “Financing Parties” pursuant to Section 13.3 of the EPC Contract;
15.Except as set forth on Schedule 2 hereto, as of the date hereof, the Project Company and Contractor have not made any indemnity or warranty claim or claims for Initial Capacity Liquidated Damages, Delay Liquidated Damages or any Liquidated Damages against the other and no Initial Capacity Liquidated Damages, Delay Liquidated Damages or any Liquidated Damages have accrued under the EPC Contract;
16.As of the date hereof, Contractor is in compliance with the requirements set forth in Exhibit N-6.
17.As of the date hereof, all payments, taxes, costs and expenses that are due, owing and payable under the EPC Contract have been made or paid by the Project Company;
18.This Certificate shall be construed, interpreted and enforced in accordance with the internal laws and decisions of the State of California without giving effect to any choice of law or conflict of law rules thereof; and
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19.Contractor will execute and deliver a bringdown of this Certificate upon request of the Class A Equity Investor, including in connection with Substantial Completion of the Project; provided such estoppel shall be modified to reflect the accuracy of the statements herein as of such date, and in connection with Substantial Completion of the Project it shall include the statements in Annex A hereto, modified as needed.
[Signature Page Follows.]
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| CONTRACTOR: | |||||||||||
| SOLV ENERGY, LLC | |||||||||||
| By: | |||||||||||
| Name: | |||||||||||
| Title: | |||||||||||
Signature Page – EPC Estoppel
Schedule 1
Amendments and Change Orders
1.Amendment 1 – executed February 13, 2025
2.Change Order 1 – executed January 22, 2025
Pending Change Orders:
2 | PV - 2 Spare Inverters | $ | 427,000 | ||||||||
2.1 | ▇▇▇▇ - 2 Spare Inverters | $ | 670,720 | ||||||||
3 | HV - CLR For The Substation | $ | 3,273,786 | ||||||||
4.1 | ▇▇▇▇ - Overbuild Reduction | $ | (311,658) | ||||||||
4.2 | ▇▇▇▇ - BYD Yard Extension | $ | 488,340 | ||||||||
4.3 | ▇▇▇▇ - ▇▇▇▇▇▇ Fire System | $ | 180,541 | ||||||||
5.1 | PV - Automation Trailer | $ | 108,600 | ||||||||
5.2 | PV - O&M building 10k Water Tank | $ | 100,000 | ||||||||
5.3 | PV - Mod 8 Labor Changes | $ | - | ||||||||
5.4 | PV - Spare Inverter Storage | TBD | |||||||||
6.1 | SCADA - Spare Equipment | $ | 252,680 | ||||||||
6.2 | SCADA - Distribution Switches | $ | 64,904 | ||||||||
7.1 | PV/HV/▇▇▇▇ - Spare Parts | TBD | |||||||||
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TBD | PV – Bio, Archaeological, Paleontological Clearance Exclusion Zones | ▇▇▇ | |||||||||
▇▇▇ | PV - Fema Flood Zone A Height Adjustment | ▇▇▇ | |||||||||
▇▇▇ | PV - OH Pole Foundation/Pole Type Per Updated Geotech | ▇▇▇ | |||||||||
▇▇▇ | SCADA - UPS Adder For IHI | TBD | |||||||||
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Schedule 2
Unresolved Disputes or Liquidated Damages Claims
[None.]
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Schedule 3
Force Majeure Events or Claims
1.Force Majeure Event Notice regarding Extended County Permitting Durations sent February 6, 2025.
2.Notice regarding Change In Law due to Tariffs sent on February 6, 2025.
3.Claim of Owner Caused Delay due to Owner’s Subcontractor IHI Terrasun Solutions’ Schedule sent on April 2, 2025.
4.Claim of Excused Site Condition sent on March 14, 2025.
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Schedule 4
Limited Notices to Proceed
1.Limited Notice to Proceed Agreement dated January 12, 2024.
2.Change Order No. 01 dated April 23, 2024 to Limited Notice to Proceed Agreement.
3.Change Order No. 02 dated June 14, 2024 to Limited Notice to Proceed Agreement.
4.Change Order No. 03 dated August 1, 2024 to Limited Notice to Proceed Agreement.
5.Limited Notice to Proceed #2 dated August 13, 2024.
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Annex A
Draft Substantial Completion Estoppel Statements
1.Contractor hereby acknowledges that, with respect to the Project (i) as of the date hereof, all Major Equipment which was supplied by Major Equipment Suppliers has been installed, and, to Contractor’s knowledge is in compliance with the terms and conditions of the applicable Major Equipment Warranties and (ii) to the extent required by the EPC Contract, Contractor has taken all necessary reasonable action to cause the Major Equipment to remain in compliance with the Major Equipment Warranties;
2.Contractor hereby acknowledges that, with respect to the Project, (i) as of the date hereof, all Modules which were supplied by the Module Supplier (the “Module Components”), have been installed in compliance with, all Module Requirements and (ii) EPC Contractor has taken all necessary reasonable action, within its scope of work, to cause the Module Components and the handling, storage, installation, testing and commissioning thereof to remain in compliance with the Module Requirements;
3.To the knowledge of Contractor, all materials, equipment and other goods were new and undamaged property at the time provided to the Project Company by Contractor under the EPC Contract;
4.Contractor has (i) paid all transfer taxes arising under the EPC Contract or (ii) provided Project Company with certificates evidencing Contractor’s exemption from such transfer taxes;
5.As of the date hereof, except as set forth in any Change Order set forth on Schedule 1 hereto, (i) no suspension of Work under Section 6.5 of the EPC Contract has occurred, (ii) no stop-work or slow-work directives have been issued under Section 6.7 of the EPC Contract and (iii) no unknown conditions or conditions differing from the Site Conditions have been discovered to date;
6.As of the date hereof, except as set forth in any Change Order set forth on Schedule 1 hereto, (i) Contractor has not requested any increase to the Contract Price due to a Force Majeure Event and (ii) no changes to the Project Schedule have occurred due to a Force Majeure Event;
7.Substantial Completion with respect to the Project has been achieved in accordance with the EPC Contract.
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EXHIBIT C-3
FORM OF SWITCHYARD EPC AGREEMENT ESTOPPEL
| To: | FNBC Leasing Corporation (together with any assignee or successor of its rights and obligations under the ECCA (as defined below), the “Class A Equity Investor”) | ||||
[DATE]
A. Pelicans Jaw Solar, LLC (the “Project Company”) owns and is developing an approximately 573 MWdc / 440 MWac photovoltaic solar facility and a 238 MWac / 954 MWh battery energy storage system (the “Project”) located in Kern County, California.
▇. ▇▇▇▇▇▇▇▇ Corporation, a Delaware limited liability company (“Contractor”) has entered into that certain Engineering, Procurement and Construction Agreement, dated as of July 25, 2024, by and between the Project Company and Contractor (including all appendices, annexes, schedules and exhibits thereto, the “EPC Contract”) for the design, engineering, procurement, construction and installation of the Project as fully set forth in the EPC Contract. Unless otherwise defined in this estoppel certificate (this “Certificate”), capitalized terms used herein shall have the meanings given to such terms in the EPC Contract.
C. Pursuant to the Equity Capital Contribution Agreement, dated as of May 9, 2025 (together with any amendments and supplements thereto, the “ECCA”), by and among the Class A Equity Investor, Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Member”) and Pelicans Jaw TE Holdco, LLC (the “Company”), the Class A Equity Investor has agreed to make an investment in the Company, which shall, following the consummation of the transactions contemplated by the Purchase Agreement (as defined in the ECCA), be the owner of the Project Company. Contractor acknowledges that the Class A Equity Investor is relying on this Certificate in connection with making its respective investment in the Company pursuant to the ECCA.
Contractor hereby confirms and agrees as follows:
1.Contractor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and is qualified to conduct its business in all jurisdictions necessary to perform its obligations under the EPC Contract and this Certificate;
2.The execution, delivery and performance by Contractor of the EPC Contract and this Certificate (a) are within Contractor’s powers and have been duly authorized by all necessary action and (b) do not conflict with or violate Applicable Law or any of the terms or conditions in its governing documents or any indenture, mortgage, chattel mortgage, deed of trust, lease, conditional sales contract, loan or credit arrangement to which it is a party or by which it or its properties may be bound or affected;
3.Each of the EPC Contract and this Certificate is in full force and effect, has been duly executed and delivered on behalf of Contractor by the appropriate officers of Contractor, and constitute a legal, valid and binding obligation of Contractor, enforceable against
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Contractor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally, or by the exercise of judicial discretion in accordance with general principles of equity;
4.As of the date hereof, (i) the EPC Contract represents the entire agreement between Contractor and Project Company with respect to the subject matter thereof and, except pursuant to this Certificate and as described on Schedule 1 hereto, such EPC Contract has not been amended or modified since the Effective Date, (ii) other than the EPC Contract (including any Change Orders), each Limited Notice to Proceed and the Full Notice to Proceed, there are no agreements, arrangements, understandings or dealings entered into between Contractor and the Project Company with respect to the subject matter of the EPC Contract, (iii) there have not been any Change Orders, and there are not any pending requests for Change Orders, other than as described on Schedule 1 hereto, and (iv) the Contractor has not transferred or assigned any of its right, title and interest or liabilities and obligations in, to and under the EPC Contract;
5.Contractor has not received written notice of, does not have any knowledge of, and has not consented to, any assignment, pledge or hypothecation of the right, title and interest of the Project Company in, to and under the EPC Contract, except pursuant to that certain Consent and Agreement, dated as of December 23, 2024, by and among Contractor, the Project Company and U.S. Bank Trust Company, National Association (in its capacity as collateral agent under the Financing Agreement);
6.There are no actions, proceedings, judgments, rulings or orders, issued by or, to Contractor’s knowledge, pending before any court or other governmental body against Contractor under or in connection with the EPC Contract;
7.[Except as otherwise provided for on Schedules 2 and 3 hereto, ]there are no unresolved Disputes between the Project Company and Contractor under the EPC Contract, and there are no material unresolved disputes between Contractor and any of its Major Subcontractors with respect to the Project that could reasonably be expected to have a material adverse effect on the Contractor's ability to achieve the Guaranteed Substantial Completion Date;
8.No consent, approval or authorization of, or registration, filing or declaration with, any federal or state governmental authority or other regulatory agency which has not been received, waived or satisfied as of the date hereof, or which is not required to be obtained as of the date hereof based on the current stage of the Project but which is reasonably expected to be received, waived or satisfied in the ordinary course of business as and when required pursuant to the EPC Contract, is required for the valid execution and delivery by Contractor of the EPC Contract or this Certificate, the consummation by Contractor of the transactions contemplated thereby or hereby to be performed prior to the date hereof or compliance by Contractor prior to the date hereof with the terms and provisions thereof or hereof, and there is no bankruptcy proceeding pending by Contractor, or to its knowledge threatened against it;
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9.As of the date hereof, Contractor hereby reaffirms all representations and warranties made by it in the EPC Contract and agrees that all such representations and warranties shall be deemed to have been re-made as of the date of this Certificate (except to the extent such representations and warranties expressly relate to a prior date, or have otherwise been fulfilled);
10.As of the date hereof, no Contractor Event of Default exists under the EPC Contract;
11.Except as set forth on Schedule 3 hereto, (i) no Force Majeure Event exists under the EPC Contract, (ii) to the best of Contractor’s knowledge, there are no Hazardous Materials at the Site which were brought onto the Site by Contractor or any Subcontractor other than those required to complete the Work in accordance with the EPC Contract, and (iii) no default, breach, unsatisfied condition or other event has occurred or circumstances exist that constitute or that, with the giving of notice or the passage of time (including the passage of time during which a default has occurred and has not yet been cured during any applicable grace period) or both, would constitute an Excusable Event, Owner Event of Default or Contractor Event of Default under the EPC Contract;
12.Contractor hereby acknowledges that (i) it received the Limited Notices to Proceed listed in Schedule 4 hereto with respect to the Project and (ii) no extension to the Project Schedule has occurred;
13.Contractor hereby acknowledges that (i) the Class A Equity Investor constitutes a “Financing Party” under the EPC Contract, and (ii) the Class A Equity Investor has all of the rights granted to “Financing Parties” pursuant to Section 13.2 of the EPC Contract;
14.Except as set forth on Schedule 2 hereto, as of the date hereof, the Project Company and Contractor have not made any indemnity or warranty claim or claims for Delay Liquidated Damages against the other and no Delay Liquidated Damages have accrued under the EPC Contract;
15.As of the date hereof, all payments, taxes, costs and expenses that are due, owing and payable under the EPC Contract have been made or paid by the Project Company;
16.This Certificate shall be construed, interpreted and enforced in accordance with the internal laws and decisions of the State of California without giving effect to any choice of law or conflict of law rules thereof;
17.Contractor will execute and deliver a bringdown of this Certificate upon request of the Class A Equity Investor, including in connection with Substantial Completion of the Project; provided such estoppel shall be modified to reflect the accuracy of the statements herein as of such date, and in connection with Substantial Completion of the Project it shall include the certifications in Annex A hereto;
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18.The obligations of Project Company under the Contract required to be performed on or before the date hereof have been properly performed or waived by Counterparty in writing; and
19.All representations made by Counterparty in the Contract were true and correct as of the effective date of the Contract and continue to be true and correct as of the date hereof.
[Signature Page Follows.]
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| CONTRACTOR: | |||||||||||
▇▇▇▇▇▇▇▇ CORPORATION | |||||||||||
| By: | |||||||||||
| Name: | |||||||||||
| Title: | |||||||||||
Signature Page – EPC Estoppel
Schedule 16
Amendments and Change Orders
1.Change Order No. 01 dated January 29, 2025
6 Note to Form: SBE and ▇▇▇▇▇▇▇▇ to confirm if there are any more amendments and change orders to be included here.
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Schedule 2
Unresolved Disputes or Liquidated Damages Claims
[None.]7
7 Note to Form: SBE and ▇▇▇▇▇▇▇▇ to confirm.
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Schedule 3
Force Majeure Events or Claims
[None.]8
8 Note to Form: SBE and ▇▇▇▇▇▇▇▇ to confirm.
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Schedule 41
Limited Notices to Proceed
1.Limited Notice to Proceed Agreement – Switchyard dated February 28, 2023.
2.Limited Notice to Proceed #2 dated May 30, 2023.
3.Limited Notice to Proceed #3 dated November 22, 2023.
4.Limited Notice to Proceed #4 dated April 30, 2024.
5.Limited Notice to Proceed #5 dated July 25, 2024.
1 Note to Form: SBE and ▇▇▇▇▇▇▇▇ to confirm if there are any more LNTPs to be included here.
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Annex A
Substantial Completion Certifications
1.Contractor hereby acknowledges that, with respect to the Project (i) as of the date hereof, all Major Equipment which was supplied by Major Equipment Suppliers or any of their subsidiaries or affiliates has been installed, and, to Contractor’s knowledge is in compliance with the terms and conditions of the applicable Major Equipment Warranties and (ii) to the extent required by the EPC Contract, Contractor has taken all necessary reasonable action to cause the Major Equipment to remain in compliance with the Major Equipment Warranties;
2.To the knowledge of Contractor, all materials, equipment and other goods were new and undamaged property at the time provided to the Project Company by Contractor under the EPC Contract;
3.Contractor has (i) paid all transfer taxes arising under the EPC Contract or (ii) provided Project Company with certificates evidencing Contractor’s exemption from such transfer taxes;
4.As of the date hereof, except as set forth in any Change Order set forth on Schedule 1 hereto, (i) no suspension of Work under Section 6.5 of the EPC Contract has occurred, (ii) no stop-work or slow- work directives have been issued under Section 6.7 of the EPC Contract and (iii) no unknown conditions or conditions differing from the Site Conditions have been discovered to date;
5.As of the date hereof, except as set forth in any Change Order set forth on Schedule 1 hereto, (i) Contractor has not requested any increase to the Contract Price due to a Force Majeure Event and (ii) no changes to the Project Schedule have occurred due to a Force Majeure Event;
6.Substantial Completion with respect to the Project has been achieved in accordance with the EPC Contract.
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EXHIBIT C-4
FORM OF POWER PURCHASE AGREEMENT
[DATE]
This Estoppel Certificate (this “Estoppel”) is being delivered by San Diego Community Power, a California joint power authority (“Buyer”) for the benefit of FNBC Leasing Corporation (together with any assignee or successor of its rights and obligations under the ECCA (as defined below), the “Class A Equity Investor”), in connection with the Class A Equity Investor’s investment in Pelicans Jaw TE HoldCo, LLC, a Delaware limited liability company (the “Company”), pursuant to that certain Equity Capital Contribution Agreement, dated as of May ___ (the “ECCA”), by and among the Class A Equity Investor, the Company and Pelicans Jaw Member B, LLC, a Delaware limited liability company.
A. The Company is anticipated to become the owner of Pelicans Jaw Solar, LLC, a Delaware limited liability company (the “Project Company”) pursuant to the transactions contemplated under the ECCA.
B. The Project Company owns and is developing an approximately 573 MWdc / 440 MWac photovoltaic solar facility and a 238 MWac / 954 MWh battery energy storage system in Kern County, California.
C. Buyer and the Project Company are parties to that certain Renewable Power Purchase and Energy Storage Service Agreement, dated as of February 9, 2024, as amended and restated by that certain Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of May 1, 2024, as further amended by that certain First Amendment to Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of December 13, 20241 (the “PPA”), pursuant to which Buyer has agreed to purchase the Product produced by or associated with the Facility from the Seller for the Contract Price, pursuant to the terms of the PPA. Capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the PPA.
D. Buyer, the Project Company and Collateral Agent (as defined in the ECCA) are party to that certain Consent and Agreement (the “PPA Consent”), dated as of December 23, 2024, with respect to the PPA.
E. Buyer acknowledges that the Class A Equity Investor and its affiliates, successors and assigns are relying on this Estoppel in connection with the Class A Equity Investor’s investment in the Company pursuant to the ECCA.
Buyer hereby represents, warrants and certifies to the Class A Equity Investor that:
1.As of the date of this Estoppel, the PPA is in full force and effect and, other than under the PPA Consent and this Estoppel, has not been modified or amended in any way, and constitutes the entire agreement between Buyer and the Project Company relating to the
1 Note to Form: Include any new amendments that have been executed at the time the Certificate is delivered.
C-4-1
purchase of the Product and payment of the Contract Price, and, other than the PPA, the PPA Consent and this Estoppel, there are no other agreements between Buyer and the Project Company relating to the Project.
2.As of the date of this Estoppel, ▇▇▇▇▇ has not transferred or assigned any interest (including any collateral interest) in the PPA and has not consented to any transfer or assignment (other than collateral assignment) by the Project Company of the PPA.
3.As of the date of this Estoppel, Buyer is not in default under and has not materially breached the PPA and, to Buyer’s knowledge, the Project Company is not in default under, and has not materially breached, the PPA, and to Buyer’s knowledge, there is no condition or event that would, with the giving of notice or lapse of time, constitute a default under or material breach of the PPA or enable either the Buyer or the Project Company to terminate or suspend its obligations under the PPA.
4.All representations and warranties made by Buyer in the PPA were true and correct in all respects on the day when made and, except for those that by their terms speak as of a specific date, are true and correct in all material respects on and as of the date of this Estoppel.
5.No authorizations, approvals or consents of any governmental or regulatory authority or agency or any other person, and no filings or registrations with any governmental authority or agency, are necessary for the execution, delivery and performance by Buyer of this Estoppel or the PPA, or for the validity or enforceability thereof, including any consents, approvals, registrations, filings, and permissions required to permit Buyer to perform its obligations pursuant to the PPA, except for any authorizations, approvals, consents or filings which (i) have been made or obtained prior to the date hereof and are in full force and effect or (ii) are not yet required and will be obtainable without material expense or delay when required.
6.As of the date of this Estoppel, there is no outstanding injunction, judgment, action, suit or proceeding pending or, to the knowledge of Buyer, threatened in writing against Buyer, which could reasonably be expected to have a material adverse effect on Buyer’s ability to perform its obligations under this Estoppel or the PPA or which questions the validity, binding effect or enforceability hereof or thereof.
7.As of the date of this Estoppel, ▇▇▇▇▇ is not aware of any event, act, circumstance or condition constituting an event of Force Majeure, including with respect to COVID-19 and the effects and mitigation strategies pursued by Buyer or any Governmental Authority in connection therewith.
8.As of the date of this Estoppel, there are no existing offsets or defenses in favor of Buyer against enforcement of any of the terms, covenants or conditions of the PPA;
9.As of the date of this Estoppel, there are no actions or proceedings, whether voluntary or involuntary, pending against Buyer under the bankruptcy or insolvency laws of the United States of America or any state thereof.
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10.Each milestone for which the applicable completion date under the milestone schedule set forth on the Cover Sheet and Exhibit B of the PPA (as may be extended) is on or prior to the date hereof was satisfied on or prior to the applicable completion date (as may be extended);
11.As of the date of this Estoppel, no Delay Damages or any damages relating to a RA Deficiency pursuant to Section 3.8 of the PPA or otherwise have accrued or are owed by the Project Company.
12.The Class A Equity Investor constitutes a “Lender” under the PPA, and shall have all of the rights granted to such parties pursuant the PPA;
13.Each of the following conditions set forth in Section 2.2 of the PPA have been met or waived2:
(a) Section 2.2(b): A Participating Generator Agreement and a Meter Service Agreement between Seller and CAISO shall have been executed and delivered and be in full force and effect, and a copy of each such agreement delivered to Buyer.
(b) Section 2.2(c): An Interconnection Agreement between Seller and the PTO shall have been executed and delivered and be in full force and effect and a copy of the Interconnection Agreement delivered to Buyer.
(c) Section 2.2(e): Seller has received CEC Precertification of the Generating Facility, and ▇▇▇▇▇▇ has informed Buyer that Seller reasonably expects to receive final CEC Certification and Verification for the Generating Facility in no more than one hundred eighty (180) days from the Commercial Operation Date.
(d) Section 2.2(f): Seller has completed all applicable WREGIS registration requirements, including the completion and submittal of all applicable registration forms and supporting documentation, which may include applicable interconnection agreements, informational surveys related to the Facility, QRE service agreements, and other appropriate documentation required to effect Facility registration with WREGIS and to enable Renewable Energy Credit transfers related to the Facility within the WREGIS system.
(e) Section 2.2(g): The Facility has successfully completed all testing required by Prudent Operating Practice or any requirement of Law to operate the Facility.
(f) Section 2.2(h): Insurance requirements for the Facility that are required to be in place during the Delivery Term have been met, with evidence provided in writing to Buyer, in accordance with Section 17.1 of the PPA.
2 Note to Form: If Substantial Completion Funding occurs after COD, revise to state “All of the conditions set forth in Section 2.2 of the PPA have been met or waived and the Commercial Operation Date with respect to the Project occurred on [insert date here].”
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(g) Section 2.2(j): Seller has paid Buyer for all amounts owing under the PPA, if any, including Construction Delay Damages and COD Delay Damages, as of the date hereof.
14.On the basis of information provided to Buyer by the Company, ▇▇▇▇▇ reasonably believes that the expected Installed Capacity as of the date hereof is equal to [_] MW.
15.For purposes of items in this Estoppel, notices shall be provided to the Class A Equity Investor at the following address:
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented Investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
16.As of the date hereof and indicated in CAISO’s website3, CAISO has awarded the Project [Interim Deliverability Status/Partial Capacity Deliverability Status] equal to [_] MW.
17.The Project Company has provided [Performance][Development]4 Security in the form of a [Letter of Credit (Nos. [l], [l], [l], [l])] / [Guaranty], dated [l], in the amount of $52,265,000, which complies with Section 8.8 of the PPA. There have been no drawings on such [Performance][Development]5 Security and the Project Company is not required to deliver any additional [Performance][Development]6 Security to Buyer.
18.This Estoppel shall be governed, construed and interpreted in accordance with the internal laws of the State of New York, without reference to conflicts of laws rules (other than Section 5-1401 of the New York General Obligations Law).
[Signature Page Follows.]
3 Note to Form: The link to CAISO’s website is ▇▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇-▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇-▇▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇-▇▇▇.
4 Note to Form: Revise to speak to Performance Security if Substantial Completion Funding occurs after COD.
5 Note to Form: Revise to speak to Performance Security if Substantial Completion Funding occurs after COD.
6 Note to Form: Revise to speak to Performance Security if Substantial Completion Funding occurs after COD.
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IN WITNESS WHEREOF, ▇▇▇▇▇ has caused this Estoppel to be executed and delivered by its authorized representative as of the date first set forth above.
| SAN DIEGO COMMUNITY POWER | ||||||||||||||
| By: | ||||||||||||||
| Name: | ||||||||||||||
| Title: | ||||||||||||||
[Signature Page to PPA Estoppel – Pelicans Jaw]
EXHIBIT C-5
FORM OF O&M AGREEMENT ESTOPPEL
| To: | FNBC Leasing Corporation (together with any assignee or successor of its rights and obligations under the ECCA (as defined below), the “Class A Equity Investor”) | ||||
[DATE]
A. Pelicans Jaw Solar, LLC (the “Project Company”) owns and is developing an approximately 573 MWdc / 440 MWac photovoltaic solar facility and a 238 MWac / 954 MWh battery energy storage system (the “Project”) located in Kern County, California.
B. The Project Company has entered into that certain Operation and Maintenance Agreement, dated as of October 7, 2024,1 (the “O&M Agreement”), by and between the Project Company and SOLV Energy, LLC (the “Operator”). Unless otherwise defined in this estoppel certificate (this “Certificate”), capitalized terms used herein shall have the meanings given to such terms in the O&M Agreement.
C. Pursuant to the Equity Capital Contribution Agreement, dated as of May 9, 2025 (the “ECCA”), by and among the Class A Equity Investor, Pelicans Jaw Member B, LLC, a Delaware limited liability company, and Pelicans Jaw TE HoldCo, LLC, a Delaware limited liability company (the “Company”), the Class A Equity Investor has agreed to make an investment in the Company, which is the owner of the Project Company. Operator acknowledges that each of the Class A Equity Investor and its successors and assigns is relying on this Certificate in connection with making its investment in the Company pursuant to the ECCA.
The Operator hereby confirms and agrees as follows:
1.Operator is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct its business in all jurisdictions necessary to perform its obligations under the O&M Agreement.
2.The execution, delivery and performance by the Operator of the O&M Agreement and this Certificate are within Operator’s powers and have each been duly authorized by all necessary action and do not conflict with or violate any of the terms or conditions in its governing documents or any agreement to which it is a party, or any law, rule, regulation, order, writ, judgment, decree or other legal or regulatory determination applicable to Operator.
3.The O&M Agreement is in full force and effect, has been duly executed and delivered on behalf of Operator by the appropriate officers thereof, and constitutes a legal, valid and binding obligation of Operator, enforceable against Operator in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization and other laws
1 Note to Form: Operator to include any new amendments or change orders that have been executed at the time the Certificate is delivered.
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affecting creditors’ rights generally, or by the exercise of judicial discretion in accordance with general principles of equity.
4.As of the date hereof, (i) the O&M Agreement represents the entire agreement between Operator and the Project Company with respect to the subject matter thereof and, except as set forth in the recitals, the O&M Agreement has not been amended or modified since the Effective Date, (ii) other than the O&M Agreement, the O&M Consent (as defined below) and this Certificate, there are no agreements, arrangements, understandings or dealings entered into between the Operator and the Project Company with respect to the subject matter therein, and (iii) the Operator has not transferred or assigned any of its right, title and interest or liabilities and obligations in, to and under the O&M Agreement;
5.The Operator has not received written notice of, does not have any knowledge of, and has not consented to, any assignment, pledge or hypothecation of the right, title and interest of the Project Company in, to and under the O&M Agreement other than as set forth in that certain Consent and Agreement, by and among Project Company, Operator and the Collateral Agent (as defined in the ECCA), dated as of December 23, 2024 (the “O&M Consent”);
6.There are no actions, proceedings, judgments, rulings or orders, issued by or, to Operator’s knowledge, pending before any court or other governmental body against Operator under or in connection with the O&M Agreement.
7.To Operator’s knowledge, there are no unresolved Disputes between the Project Company and Operator under the O&M Agreement, and there are no unresolved disputes between Operator and any of its subcontractors with respect to the Project.
8.No consent, approval or authorization of, or registration, filing or declaration with, any federal or state governmental authority or other regulatory agency or any other person, which has not been received, waived or satisfied as of the date hereof, or which is expected to be obtained when needed under the O&M Agreement in the regular course of business, is required for the valid execution, delivery and performance by Operator of the O&M Agreement or this Certificate, the consummation by Operator of the transactions contemplated thereby or hereby or compliance by Operator with the terms and provisions thereof or hereof, and there is no bankruptcy proceeding pending by Operator, or to its knowledge threatened against Operator.
9.As of the date hereof, Operator hereby reaffirms all representations and warranties made by it in the O&M Agreement and agrees that all such representations and warranties shall be deemed to have been re-made as of the date of this Certificate (except to the extent such representations and warranties expressly relate to a prior date, or have otherwise been fulfilled).
10.No Force Majeure Event currently exists under the O&M Agreement, and no default or breach has occurred or circumstances exist that constitute or that, with the giving of notice or the passage of time (including the passage of time during which a default has occurred and has not yet been cured during any applicable grace period) or both, would
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constitute an Operator Event of Default or, to the knowledge of the Operator, an Owner Event of Default under the O&M Agreement;
11.There are currently no indemnity claims or claims of set-off pending by the Operator against the Project Company, nor, to the Operator’s knowledge, by the Project Company against the Operator under the O&M Agreement, and the Operator has no current knowledge of any facts that would entitle the Operator to, nor, to the Operator’s knowledge, entitle the Project Company to any indemnity claim or claim of set-off.
12.As of the date hereof, the Project Company has not made any warranty claim or claims for liquidated damages against Operator and no liquidated damages have accrued under the O&M Agreement.
13.As of the date hereof, all payments, costs and expenses that are due, owing and payable under the O&M Agreement have been made or paid by the Project Company.
14.Operator is in compliance with the Prevailing Wage Requirements as outlined in Attachment 4.10.7(a) of the O&M Agreement.
15.This Certificate shall be construed, interpreted and enforced in accordance with the internal laws and decisions of the State of California, without giving effect to any choice of law or conflict of law rules thereof.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Certificate as of the date first set forth above.
| SOLV ENERGY, LLC, | |||||||||||||||||
| a Delaware limited liability company | |||||||||||||||||
| By: | |||||||||||||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇, ▇▇. | ||||||||||||||||
| Title: | Chief Commercial Officer | ||||||||||||||||
[Signature Page to O&M Estoppel – Pelicans Jaw]
EXHIBIT D
KNOWLEDGE PARTIES
1.▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President, Capital Markets
2.▇▇▇▇ ▇▇▇▇▇, Senior Director, Capital Markets
3.▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President, Projects
4.▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Director, Projects
5.▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President, Operational Excellence
6.▇▇▇▇▇ ▇▇▇▇▇▇▇, Director, Asset Management
7.▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Director, Operations & Maintenance
8.▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Director, Development and Performance Engineering
9.▇▇▇▇ ▇▇▇▇▇, Vice President, Grid Integration & Transmission Analytics
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EXHIBIT E
FORM OF INDEPENDENT ENGINEER CIRCUIT
MECHANICAL COMPLETION CERTIFICATE
[DATE]
Via E-mail (▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇)
Pelicans Jaw TE Holdco, LLC, a Delaware limited liability company and FNBC Leasing Corporation, a Delaware corporation (collectively, together with their respective successors and assigns, the “Reliance Party”)
Pelicans Jaw TE Holdco, LLC c/o SB Energy
▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
Redwood City, CA 94065
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented Investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail:▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
| Subject: | Pelicans Jaw Solar and ▇▇▇▇ Project (the “Project”) Substantial Completion Certificate | ||||
Ladies and Gentlemen:
This Independent Engineer Circuit Mechanical Completion Certificate (“Certificate”) is delivered to you by ICF Resources, LLC (the “Independent Engineer”), pursuant to the Equity Capital Contribution Agreement, dated as of May 9, 2025, by and between FNBC Leasing Corporation, a Delaware corporation, Pelicans Jaw Member B, LLC, a Delaware limited liability company, and Pelicans Jaw TE Holdco, LLC, a Delaware limited liability company (the “ECCA”), and the Membership Interest Purchase Agreement, dated as of May 9, 2025, by and between Pelicans Jaw Construction Holdco, LLC, a Delaware limited liability company, and Pelicans Jaw TE Holdco, LLC (the “MIPA”). All capitalized terms used herein shall have the respective meanings specified in the ECCA or MIPA unless otherwise defined herein or unless the context requires otherwise.
The Independent Engineer’s review and observations were performed in accordance with generally accepted technical consulting practice and included such general investigations, observations and review as the Independent Engineer, in its professional opinion, deemed necessary under the circumstances within the scope of its services as Independent Engineer pursuant to and in accordance with its scope of work defined in its Master Services Agreement with Pelicans Jaw Solar, LLC, dated as of July 27, 2022 (the “MSA”) and associated Project task
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order number 8 executed August 16, 2024 (the “TO” and, together with the MSA, the “Contract”). We have discussed matters set forth in this Certificate, where we deem such discussions to be pertinent, with Pelicans Jaw Solar, LLC (the “Project Company”), its affiliates and subsidiaries, and appropriate third parties.
We last visited the site of the Project to conduct a walk through visit of such site on [ó] (the “Site Visit”). In connection with our Site Visit, our review and observations were performed in accordance with generally accepted consulting practices consisting of a walkthrough of such site, observation of installed equipment and material, observation of work procedures and review of QA/QC reports, as such reports were available at the time of the visit. Our general field observations were visual, above ground examinations of selected areas which we deemed adequate to comment on the completion of construction of the Project but were not in the detail which would be necessary to reveal conditions with respect to safety, geologic or environmental conditions, codes, permits or regulations applicable to the construction of the Project.
The statements contained herein are made on the understanding and assumption that the information provided to the Independent Engineer as to the matters covered by this Certificate is true, correct, and complete, provided; however, that the Independent Engineer is not aware of any material inaccuracies, misstatements or errors in the information provided.
Based upon the foregoing review and review of the information provided to us, as of the date of this Certificate (provided that the certifications set forth below are limited to the technical aspects of the statements in such paragraphs and, for clarity, do not include any confirmations regarding legal or tax opinions, or any permitting requirements outside of the scope of the Contract), we are of the opinion that, with respect to the Project:1
1.Circuit Group Mechanical Completion (as defined in the SOLV EPC Agreement) has been achieved for the first three Circuits comprising the Project, as set forth on Schedule 1 (hereinafter, the “Applicable Circuits”), and a Circuit Group Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) has been provided by SOLV EPC Contractor and accepted by the Project Company for such Applicable Circuits. Such Circuits are mechanically, electrically and functionally completely installed.
2.▇▇▇▇ Circuit Group Mechanical Completion (as defined in the SOLV EPC Agreement) has been achieved for the first two of six ▇▇▇▇ Circuits comprising the Project, as set forth on Schedule 1 (hereinafter, the “Applicable ▇▇▇▇ Circuits”), and a ▇▇▇▇ Circuit Group Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) has been provided by SOLV EPC Contractor and accepted by the Project Company for such Applicable ▇▇▇▇ Circuits. Such Applicable ▇▇▇▇ Circuits are mechanically, electrically and functionally completely installed.
3.The Applicable Circuits have achieved Circuit Mechanical Completion and all Work completed to date has been constructed in all material respects in accordance with: (i)
1 Note to Form: Certifications subject to changes reflected in the updated Independent Engineering Report to be issued on or around the Mechanical Completion Funding Date and in correspondence with applicable Mechanical Completion Funding CPs as finalized.
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reviewed designs; (ii) the SOLV EPC Agreement, applicable supply agreements and the Large Generator Interconnection Agreement, by and among the Project Company, Pacific Gas and Electric Company, and California Independent System Operator Corporation (CAISO), dated September 25, 2022 (Pelican Jaw Hybrid Solar Project in CAISO Queue Position 1593 (Q1953)) (the “Interconnection Agreement”); and (iii) otherwise in compliance with prudent industry standards.
4.The Applicable ▇▇▇▇ Circuits have achieved ▇▇▇▇ Circuit Mechanical Completion and all Work completed to date has been constructed in all material respects in accordance with: (i) reviewed designs; (ii) the SOLV EPC Agreement, applicable supply agreements and the Interconnection Agreement; and (iii) otherwise in compliance with prudent industry standards.
5.High Voltage Mechanical Completion (as defined in the SOLV EPC Agreement) has been achieved and a High Voltage Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) has been provided by SOLV EPC Contractor and accepted by the Project Company.
6.Mechanical Completion (as defined in the Switchyard EPC Agreement) has been achieved and a Mechanical Completion Certificate (as defined in the Switchyard EPC Agreement) has been provided by Switchyard EPC Contractor and accepted by the Project Company.
7.Each of the progress conditions set forth on Schedule 1 has been satisfied.
8.The Transformers (as defined in the SOLV EPC Agreement) with serial numbers 150- 2300459-2C and 150-2300459-3C (including, per Transformer, one conservator tank, the tank base plate (no stiffener/no paint/no welding), and four tank walls (no stiffeners/no paint/no welding), each with serial numbers 150-2300459-2C or 150-2300459-3C, respectively) have been delivered to the Project site and included in the Project as an operational component.
9.There is sufficient funding available (after taking into account the actual and expected Class A Capital Contributions and other sources of funding expected to be available to the Project Company, including, without limitation, liquidated damages under the Material Project Contracts and insurance proceeds) for the Project to achieve Substantial Completion.
10.The Commercial Operation Date (as defined in the Power Purchase Agreement) is reasonably expected to occur on or prior to April 1, 2027.
11.Commercial Operation (as defined in the Interconnection Agreement) is reasonably expected to occur on or prior to April 1, 2027.
12.Substantial Completion (as defined in the SOLV EPC Agreement) is reasonably expected to occur on or prior to April 1, 2027.
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13.Our scope of review has not brought to our attention any material errors in the Circuit Mechanical Completion Certificates with respect to the Applicable Circuits, the ▇▇▇▇ Circuit Group Mechanical Completion Certificates with respect to the Applicable ▇▇▇▇ Circuits, the High Voltage Mechanical Completion Certificate, or the Mechanical Completion Certificate (under the Switchyard EPC Agreement).
14.The conclusions in our report titled Independent Engineer’s Report for Pelicans Jaw Solar and ▇▇▇▇ Project dated [l], delivered pursuant to Section 5.1(f) of the ECCA and Section 2.2(e) of the MIPA and attached hereto as Exhibit A remain valid with respect to the Project.
15.To our knowledge, no unrepaired casualty exists with respect to the Project or any portion thereof material to the operation of the Project (inclusive of the generation of electricity by the Project) or the sale of electricity therefrom.
16.As of the date hereof, (i) critical tests necessary for proper operation of any Circuit or ▇▇▇▇ Circuit comprising the Project (including any hot commissioning or any testing requiring energization or backfeed power) have not been completed, including Commissioning (under the Battery Supply Agreement) and testing requiring energization under Exhibit C- 1 to the SOLV EPC Agreement, (ii) care, custody, and control of, and risk of loss and title to, any Circuit or ▇▇▇▇ Circuit has not transferred from the SOLV EPC Contractor to the Project Company under the SOLV EPC Agreement, and (iii) no portion of any Circuit or ▇▇▇▇ Circuit comprising the Project has been (A) energized or is capable of receiving or consuming backfeed power and (B) interconnected or synchronized with the transmission grid and lockout/tagout equipment and mechanics which prevent any energization or backfeed of any Circuit or ▇▇▇▇ Circuit have been installed, and (iv) no portion of any Circuit or ▇▇▇▇ Circuit comprising the Project has produced or transmitted electricity (including test energy) (with respect to any Circuit) or has charged or discharged electricity (including test energy) (with respect to any ▇▇▇▇ Circuit), to the transmission grid (or is capable of generating, charging or exporting power to the transmission grid).
17.The Project is anticipated to have an Installed Capacity (as defined in the Power Purchase Agreement) of [l] MW.
18.The ▇▇▇▇▇▇▇ Project is reasonably expected to start construction by [l]2 and reasonably expected to be completed by [l]3.
This Certificate is solely for the information of, and assistance to, the Reliance Party in conducting and documenting their investigation of the matters in connection with the Project and is not to be used, circulated, quoted, or otherwise referred to for any other purpose. The Independent Engineer disclaims any obligation to update this Certificate. This Certificate is not intended to, and may not, be relied upon by any party other than the Reliance Party. Reliance upon this certificate by any Person is subject in all respects to this certificate and the General
2 Note to Form: the date shall in no event be later than March 31, 2029.
3 Note to Form: the date shall in no event be later than December 31, 2029.
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Conditions forming part of the Contract, including that ICF Resources’ aggregate liability to all parties is limited to the amount set out in the Contract. Your use of and reliance on this certificate constitutes acceptance of the foregoing.
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| Name: | |||||
| Title: | |||||
| Name: | |||||
| Title: | |||||
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Schedule 1
Progress Conditions4
Summary of Circuits
Circuit # | Inverters | MWdc | MWac | ||||||||
PV 1 | |||||||||||
PV 2 | |||||||||||
PV 3 | |||||||||||
PV 4 | |||||||||||
PV 5 | |||||||||||
PV 6 | |||||||||||
PV 7 | |||||||||||
PV 8 | |||||||||||
PV 9 | |||||||||||
PV 10 | |||||||||||
Total PV System | |||||||||||
▇▇▇▇ 1 | |||||||||||
▇▇▇▇ 2 | |||||||||||
▇▇▇▇ 3 | |||||||||||
▇▇▇▇ 4 | |||||||||||
▇▇▇▇ 5 | |||||||||||
▇▇▇▇ 6 | |||||||||||
Total ▇▇▇▇ | |||||||||||
As of the date hereof, equipment has been delivered to the Project Site and is in the custody of the SOLV EPC Contractor in the following percentages of the total equipment required for the Project:
•Racking: 99%
•Modules: 99%
•Inverters: 99%
•BESS Enclosures: 99%
4 Note to Form: Subject to ongoing diligence.
E-7
Exhibit A
Independent Engineer Report
[See attached.]
E-8
EXHIBIT F
Form of Independent Engineer Substantial Completion Certificate
[Letterhead of Independent Engineer]
[DATE]
To: FNBC Leasing Corporation, a Delaware corporation (together with
its successors and assigns, the “Reliance Party”)
FNBC Leasing Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
CIB-Tax Oriented investments
Chicago, IL 60603-2300
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Reference: E240026
| Subject: | Pelicans Jaw Solar and ▇▇▇▇ Project (the “Project”) Substantial Completion Certificate | ||||
Ladies and Gentlemen:
This Independent Engineer Substantial Completion Certificate (“Certificate”) is delivered to you by ICF Resources, LLC (the “Independent Engineer”) pursuant to that Equity Capital Contribution Agreement, dated as of May 9, 2025, by and between FNBC Leasing Corporation, a Delaware corporation, Pelicans Jaw Member B, LLC, a Delaware limited liability company and Pelicans Jaw TE HoldCo, LLC, a Delaware limited liability company (the “ECCA”). All capitalized terms used herein shall have the respective meanings specified in the ECCA unless otherwise defined herein or unless the context requires otherwise.
The Independent Engineer’s review and observations were performed in accordance with generally accepted technical consulting practice and included such general investigations, observations and review as the Independent Engineer, in its professional opinion, deemed necessary under the circumstances within the scope of its services as Independent Engineer pursuant to and in accordance with its scope of work defined in its Master Services Agreement with Pelicans Jaw Solar, LLC (the “Project Company”), dated as of July 27, 2022 (the “MSA”) and associated Project task order number 8, executed August 16, 2024 (the “TO” and together with the MSA, the “Contract”). The Independent Engineer makes no representations or warranties to the Reliance Party regarding compliance with any other standard except as expressly set forth in the Contract or herein.
We last visited the site of the Project to conduct a walk through visit of such site on [ó] (“Site Visit”). In connection with our Site Visit, our review and observations were performed in accordance with generally accepted consulting practices consisting of a walkthrough of such site, observation of installed equipment and material, observation of work procedures and review of
F-1
QA/QC reports, as such reports were available at the time of the visit. Our general field observations were visual, above ground examinations of selected areas which we deemed adequate to comment on the completion of construction of the Project, but were not in the detail which would be necessary to reveal conditions with respect to safety, geologic or environmental conditions, codes, permits or regulations applicable to the construction of the Project.
The statements contained herein are made on the understanding and assumption that the information provided to the Independent Engineer as to the matters covered by this Certificate is true, correct, and complete, provided, however, that the Independent Engineer is not aware of any material inaccuracies, misstatements or errors in the information provided. We have visited the site periodically during construction, on [ó] to support issuance of the IE Circuit Mechanical Completion Certificate and on [ó] to support issuance of this Certificate, and have relied on correspondence from the Power Purchaser and the EPC Contractor in connection with the certifications provided herein.
Based upon the foregoing review and review of the information provided to us, as of the date of this Certificate, we are of the opinion that, with respect to the Project:1
1. All Circuits (as defined in the SOLV EPC Agreement) of the Project have achieved Circuit Mechanical Completion (as defined in the SOLV EPC Agreement) and all Circuit Groups (as defined in the SOLV EPC Agreement) of the Project have achieved Circuit Group Placed in Service (as defined in the SOLV EPC Agreement) and a Circuit Mechanical Completion Certificate and Circuit Group Placed in Service Certificate for each Circuit and Circuit Group, as applicable, has been delivered by the SOLV EPC Contractor and accepted by the Project Company.
2. All ▇▇▇▇ Circuits (as defined in the SOLV EPC Agreement) of the Project have achieved ▇▇▇▇ Circuit Mechanical Completion (as defined in the SOLV EPC Agreement) and all ▇▇▇▇ Circuit Groups (as defined in the SOLV EPC Agreement) of the Project have achieved Circuit Group Placed in Service (as defined in the SOLV EPC Agreement) and a ▇▇▇▇ Circuit Mechanical Completion Certificate and a ▇▇▇▇ Circuit Group Placed in Service Certificate for each ▇▇▇▇ Circuit and ▇▇▇▇ Circuit Group, as applicable, has been delivered by the SOLV EPC Contractor and accepted by the Project Company.
3. (a) All ▇▇▇▇ Circuits of the Project have achieved Commissioning Completion (under the Battery Supply Agreement) and a Commissioning Completion Certificate (as defined in the Battery Supply Agreement) for each ▇▇▇▇ Circuit has been delivered by Battery Supplier and accepted by the Project Company. Our scope of review has not brought to our attention any material errors in any Commissioning Completion Certificate; and (b) all Performance
1 Note to Form: Certifications subject to changes reflected in the updated Independent Engineering Report to be issued on or around the Substantial Completion Funding Date and in correspondence with applicable Substantial Completion Funding CPs as finalized.
F-2
Test Procedures (under the Battery Supply Agreement) have been Successfully Run (under the Battery Supply Agreement).
4. (a) Each Circuit and ▇▇▇▇ Circuit of the Project has been synchronized with the electrical grid, (b) the Project Company has received all permits and licenses necessary to operate the Project, (c) each Circuit and ▇▇▇▇ Circuit of the Project has produced and delivered, or charged and discharged, as applicable, meterable quantities of electricity and is capable of producing and delivering, or charging and discharging, as applicable, to the grid electricity in commercial quantities on a sustained and reliable basis, (d) care, custody and control of, and risk of loss and title to, the Project has been transferred from the SOLV EPC Contractor to the Project Company under the SOLV EPC Agreement, and (e) all critical testing (including commissioning) necessary for proper operation of each Circuit and ▇▇▇▇ Circuit of the Project is complete.
5. Substantial Completion (as defined in the SOLV EPC Agreement) was achieved on [l], and a Substantial Completion Certificate (as defined in the SOLV EPC Agreement) has been delivered by SOLV EPC Contractor and accepted by the Project Company. Our scope of review has not brought to our attention any material errors in the Substantial Completion Certificate.
6. Substantial Completion (as defined in the Switchyard EPC Agreement) was achieved on [l], and a Substantial Completion Certificate (as defined in the Switchyard EPC Agreement) has been delivered by Switchyard EPC Contractor and accepted by the Project Company. Our scope of review has not brought to our attention any material errors in the Substantial Completion Certificate..
7. The Transformers (as defined in the EPC Agreement) with serial numbers 150-2300459-2C and 150-2300459-3C (including, per Transformer, one conservator tank, the tank base plate (no stiffener/no paint/no welding), and four tank walls (no stiffeners/no paint/no welding), each with serial numbers 150- 2300459-2C or 150-2300459-3C, respectively) have been delivered to the Project site and included in the Project as an operational component.
8. The Project constitutes both (i) a fully integrated solar power generation system and (ii) a fully integrated battery energy storage system, and is complete for its intended use.
9. A Punchlist (as defined in the SOLV EPC Agreement) has been issued in the Punchlist Amount (as defined in the SOLV EPC Agreement) of $[l] and a Punchlist Holdback (as defined in the SOLV EPC Agreement) in the amount of $[ó] has been set aside to complete such Punchlist. We have reviewed the Punchlist and consider the Punchlist reasonably comprehensive and representative of items and associated costs remaining to be completed at the Project.
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10. The Punchlist does not contain items that are, individually or in the aggregate, anticipated to (i) affect the safe operation of the Project or (ii) materially impact the energy production of the Project.
11. Based on reasonable independent inquiry, investigation, review of the Capacity Test (as defined in the SOLV EPC Agreement) and receipt of the results of said test, we confirm that: (i) anomalous performance/potential underperformance has not been detected, inclusive of data periods filtered from the performance tests and (ii) the data has been collected in accordance with good industry practice (e.g. sensors mounted correctly and cleaned daily) and the results of the tests are not subject to above-typical uncertainty due to instrumentation- related, weather- related, or other issues.
12. The Storage Capacity Test (as defined under the Power Purchase Agreement) has been successfully completed. Performance testing of the BESS has demonstrated the ▇▇▇▇ to meet the full design levels discussed in the Independent Engineer Report, including (but not limited to) the guaranteed capacity and round trip efficiency levels under the Battery Supply Agreement.
13. The Project Company has (i) received copies of all the Contractor Permits (as defined in the SOLV EPC Agreement) required to be obtained by SOLV EPC Contractor and (ii) confirmed that it has all key permits required to operate the Project;
14. All SOLV EPC Contractor spare parts and other deliverables, if any, required to be delivered to the Project Company pursuant to the Scope of Work set forth in Exhibits A-1, A-2 and A-3 to the SOLV EPC Agreement have been delivered;
15. The SCADA System and the ▇▇▇▇ SCADA System are installed, operating and able to monitor and control the Project in line with interconnection requirements;
16. The Commercial Operation Date (as defined in the Power Purchase Agreement) pursuant to Exhibit B to the Power Purchase Agreement has occurred.
17. The Project has achieved an Installed Capacity (as defined in the Power Purchase Agreement) of [l] MWac. The as-built PV plant is [l] MWdc.
18. [The Project has been allocated the full 238.5 MW of Interim Deliverability Status from CAISO.]
19. To our knowledge, no unrepaired casualty exists with respect to the Project or any portion thereof material to the operation of the Project (inclusive of the generation of electricity by the Project) or the sale of electricity therefrom.
20. We are not aware of any current or pending warranty claims with respect to the Project.
F-4
21. The Project has received permission to operate from all applicable interconnection authorities, including CAISO.
22. The Project has obtained all necessary Governmental Approvals and permits.
23. The ▇▇▇▇▇▇▇ Project is reasonably expected to start construction by [l]2 and reasonably expected to be completed by [l]3.
[Signature page follows]
2 Note to Form: the date shall in no event be later than March 31, 2029.
3 Note to Form: the date shall in no event be later than December 31, 2029.
F-5
This Certificate is solely for the information of, and assistance to, the Reliance Party in conducting and documenting their investigation of the matters in connection with the Project and is not to be used, circulated, quoted, or otherwise referred to for any other purpose. The Independent Engineer disclaims any obligation to update this Certificate. This Certificate is not intended to, and may not, be relied upon by any party other than the Reliance Party. Reliance upon this certificate by any Person is subject in all respects to this certificate and the General Conditions forming part of the Contract, including that ICF Resources’ aggregate liability to all parties is limited to the amount set out in the Contract. Your use of and reliance on this certificate constitutes acceptance of the foregoing.
ICF Resources, LLC | |||||||||||||||||
| By: | |||||||||||||||||
| Name: | |||||||||||||||||
| Title: | |||||||||||||||||
| By: | |||||||||||||||||
| Name: | |||||||||||||||||
| Title: | |||||||||||||||||
F-6
Exhibit A
Independent Engineer Report
[See attached.]
F-7
EXHIBIT G
FORM OF PWA CERTIFICATE
[Date]
This certificate (this “Certificate”) is delivered in connection with Section [5.2(s)]1 [5.3(i)]2 of that certain Equity Capital Contribution Agreement dated as of May 9, 2025, by and among Pelicans Jaw TE HoldCo, a Delaware limited liability company (the “Company”), Pelicans Jaw Member B, LLC, a Delaware limited liability company (“Class B Equity Investor”), and FNBC Leasing Corporation, a Delaware corporation (the “Class A Equity Investor”) (as amended, restated, modified or supplemented on or prior to the date hereof, the “ECCA”). All capitalized terms not otherwise defined herein shall have the meanings set forth in the ECCA.
The undersigned, being duly authorized to execute and deliver this Certificate on behalf of the Class B Equity Investor, hereby certifies, with the knowledge that the Class A Equity Investor and its Affiliates intend to rely on the information set forth in this Certificate, and acknowledging that the Class A Equity Investor hereby is authorized to rely on the information set forth in this Certificate, as follows:
1. As of the date hereof, Exhibit A includes all of the contracts (the “Covered Work Contracts”) that have been entered into with respect to the Project which include, or may include, a scope of work that gives rise to “construction, alteration or repair” (as defined in Treasury Regulations Section 1.45-7(d)(3)) work performed by “laborers” or “mechanics” (as defined in Treasury Regulations Section 1.45-7(d)(8)) with respect to the Project (the “Covered Work”) and is therefore subject to the PWA Requirements with respect to the Covered Work.
2. Covered Work did not occur prior to November 4th, 2024. 100% of the Covered Work with respect to the Project has been, and will be, completed pursuant to the Covered Work Contracts listed on Exhibit A.
3. 100% of the Project is located in Kern County, California and Covered Work has not occurred, and will not occur, outside of Kern County, California.
4. To the Class B Equity Investor’s knowledge, Contractor and all of its Subcontractors (as defined in the SOLV EPC Agreement) have complied with the requirements set forth in Exhibit N-6 to the SOLV EPC Agreement with respect to any portion of the Covered Work through the date hereof, except as set forth on Exhibit B.
5. To the Class B Equity Investor’s knowledge, BYD America, LLC and all of its Subcontractors (as defined in the Battery Supply Agreement) complied with [l3] to the Battery Supply Agreement with respect to any portion of the Work (as defined in the Battery Supply Agreement) that constitutes Covered Work performed through the date hereof, except as set forth on Exhibit B.
1 Note to Form: To be included in the PWA Certificate delivered on the Mechanical Funding Date.
2 Note to Form: To be included in the PWA Certificate delivered on the Substantial Completion Funding Date.
3 Note to Form: To be completed after the Change Order with BYD America, LLC has been executed.
G-1
6. To the Class B Equity Investor’s knowledge, WEG Transformers USA, LLC and all of its subcontractors have complied with the requirements set forth in Exhibit R to the Transformer Supply Agreement, dated as of November 3, 2023, by and between WEG Transformers USA, LLC and the Project Company, as amended by that certain Change Order No. 1 dated June 5, 2024, as amended by that certain Change Order No. 2 dated August 30, 2024, as amended by that certain Change Order No. 3 dated August 30, 2024, as amended by that certain Change Order No. 4 dated October 7, 2024, and as amended by that certain Change Order No. 5 dated December 11, 2024 (the “Transformer Supply Agreement”) with respect to any portion of the Covered Work through the date hereof, except as set forth on Exhibit B.
Prevailing Wage Requirements
7. Each laborer or mechanic employed under a Covered Work Contract either (i) has a proper wage determination (within the meaning of Treasury Regulations Section 1.45-7(b)) in accordance with such laborer’s or mechanic’s actual scope of work under the applicable Covered Work Contract or (ii) has an outstanding supplemental wage determination request pending at the U.S. Department of Labor, which accurately and completely describes such laborer’s or mechanic’s scope of work.
8. Except as set forth on Exhibit B, all payments due and payable on or prior to the date hereof under the Covered Work Contracts have been paid by the counterparty to such Covered Work Contract (or the Class B Equity Investor (or its Affiliate) on behalf of such counterparty) in the time and manner required for the Project to maintain compliance with the “prevailing wage” requirements (as set forth in Code Sections 48(a)(10) and 45(b)(7)) as of the date hereof. To the extent any laborer or mechanic has not been paid prevailing wages, the Class B Equity Investor (or any of its Affiliates), or the counterparty to the applicable Covered Work Contract, has made, or will make, all cure payments (including interest) to such laborer or mechanic, and any penalty payments, in accordance with Code Section 48(a)(10)(B) and Treasury Regulations Section 1.45-7(c)(1) and (3), no later than the date the U.S. federal income tax returns of the Company for the applicable year are filed.
Apprenticeship Requirements
9. Except as set forth on Exhibit B, each of the contractors and subcontractors that employs, or will employ, four or more workers to perform Covered Work have engaged or will engage with a registered apprenticeship program and either (i) have received or will receive qualified apprentices (as defined in Code Section 45(b)(8)(E)(ii)) (“Qualified Apprentices”) or (ii) satisfied the good faith effort exception within the meaning of Code Section 45(b)(8)(D)(ii) and Treasury Regulations Section 1.45-8(f)(1) (the “Good Faith Exception”). With respect to those deficiencies listed on Exhibit B, the Class B Equity Investor is taking steps to remediate such deficiencies and will make, or cause to be made, any penalty payments as required under Treasury Regulations Section 1.45-8(f)(2) no later than the date the Company’s U.S. federal income tax returns for the applicable year are filed.
10. Any counterparty to a Covered Work Contract relying on the Good Faith Exception for satisfaction of the “apprenticeship requirements” is based on (a) there being no registered apprenticeship program in Kern County, California that meets the requirements set
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forth in Code Section 45(b)(8)(D)(ii) and Treasury Regulations Section 1.45-8(f)(1), (b) a request for Qualified Apprentices by such counterparty being denied, or (c) the apprenticeship program failing to respond to such counterparty’s request for qualified apprentices, and such counterparty has duly and timely sent, and such counterparty will continue to duly and timely send, through the date upon which the Project is Placed in Service, follow up requests for Qualified Apprentices at least once every 365 days. None of the contractors or subcontractors relied on the Good Faith Exception for apprentices under the Covered Work Contracts.
11. The current percentage of labor hours performed by Qualified Apprentices is at least 15% and the Class B Equity Investor reasonably believes that the percentage of qualifying labor hours performed by Qualified Apprentices as of the date the Project is Placed in Service will equal or exceed 15%, accounting for any labor hours qualifying for the Good Faith Exception.
12. The Class B Equity Investor (or its Affiliates) has made or will make (or will cause any other responsible party to make) any penalty payments as a result of any failure to comply with the “apprenticeship” requirements through the Placed in Service Date, taking into account any failure to satisfy the Good Faith Exception, no later than the date the Company’s U.S. federal income tax returns for the applicable taxable year are filed.
Recordkeeping and Compliance
13. The Company has engaged ▇▇▇▇▇ ▇▇▇▇▇ Advisory Group, LP (“PWA Consultant”) to compile and track all information related to the PWA Requirements in respect of the Project and provide a PWA Compliance Report prior to each of the Mechanical Completion Funding Date and the Substantial Completion Funding Date that outlines and details compliance with the PWA Requirements, including tracking the use of apprentices and any necessary payments for any required correction, interest, and penalty amounts, as contemplated in the ECCA (the “Compliance Certification Report(s)”). All information provided to the PWA Consultant with respect to each Compliance Certification Report is materially true, accurate, and complete. Unless otherwise agreed by the Class A Equity Investor or required by the PWA Requirements, the Class B Equity Investor will attach the final Compliance Certification Report, or similar documentation available at the time of filing, in each case, as required by the PWA Requirements, to the Company’s filing of its 2025 U.S. federal income tax return.
14. Written notice of the applicable wage rates for all classifications of Covered Work to laborers and mechanics have been posted at the Project Site.
15. All agreements that provide for Covered Work occurring after the Placed in Service Date and during the Recapture Period, including the Operation and Maintenance Agreement, dated as of October 7, 2024, by and between SOLV Energy, LLC and the Project Company (the “O&M Agreement”), require or will require that the relevant counterparty comply with the PWA Requirements and deliver reports to the Project Company in the timeframe as specified in such agreement.
16. The Class B Equity Investor has and will maintain records (including the Compliance Certification Reports and any documentation received by the PWA Consultant from
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any counterparty to a Covered Work Contract to establish compliance with the PWA Requirements) in accordance with Treasury Regulations Section 1.45-12 with respect to compliance with the PWA Requirements.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Class B Equity Investor has caused this Certificate to be executed and delivered by its duly authorized officer as of the date first above written.
PELICANS JAW MEMBER B, LLC | |||||||||||
By: | |||||||||||
Name: | |||||||||||
Title: | |||||||||||
[Signature Page to PWA Certificate (Pelicans Jaw Solar)]
Exhibit A
Covered Work Contracts
1.SOLV EPC Agreement
2.Battery Supply Agreement
3.O&M Agreement
4.Transformer Supply Agreement
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Exhibit B
Known Deficiencies
Prevailing Wage Requirements
1.
Apprenticeship Requirements
2.
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EXHIBIT H
FORM OF PAYOFF LETTER
[ ] [ ], 20[ ]
Pelicans Jaw Solar, LLC
c/o SB Energy
▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Redwood City, CA 94065
Email: ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
Re: Project Pelicans Jaw – Payoff Letter
Ladies and Gentlemen:
Reference is made to the Financing Agreement, dated as of December 23, 2024 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and among Pelicans Jaw Member B, LLC, Pelicans Jaw Solar, LLC (the “Project Company”), MUFG Bank, Ltd., as administrative agent (in such capacity, together with its successors, assigns and designees in such capacity, the “Administrative Agent”), U.S. Bank Trust Company, National Association, as collateral agent (in such capacity, together with its successors, assigns and designees in such capacity, the “Collateral Agent”), JPMorgan Chase Bank, N.A. as Depositary (in such capacity, together with its successors in such capacity, the “Depositary”), the issuing banks party thereto (the “Issuing Banks”) and the lenders and joint lead arrangers party thereto from time to time (collectively with the Issuing Banks, the “Lenders”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Financing Agreement.
The Project Company has advised the Administrative Agent that the Project Company intends to pay in full all outstanding Construction Loans (that are not converted to Term Loans), Bridge Loans and LC Loans (such amount of Construction Loans, such amount of Bridge Loans and such amount of LC Loans, collectively, the “Subject Loans”) and terminate all Construction Loan Commitments, all Bridge Loan Commitments and the Maximum Interconnection LC Commitment under the Financing Agreement (collectively, the “Payoff”) and take related actions on [ ], 202[ ] (the “Payoff Date”). In connection therewith, you have requested confirmation of all amounts required to be paid by the Project Company under the Financing Agreement in connection with the Payoff.
Subject to (a) receipt by Administrative Agent of a fully executed copy of this Payoff Letter, (b) the receipt by the Administrative Agent of the Payoff Amount set forth and defined in Annex 1 attached hereto and made a part hereof via wire transfer to the Agent Account (as defined in Annex 1) on or prior to [4:00 p.m.]1, New York time (the “Payoff Time”), on the Payoff Date and (c) the return of the Interconnection Letters of Credit, together with a letter of cancellation satisfactory to the Interconnection LC Issuing Bank, to the Interconnection LC
1 Note to Form: Administrative Agent to confirm timing of the Payoff
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Issuing Bank ((a) through (c), together, the “Release Conditions”), (1) all Subject Loans shall have been repaid in full, (2) the Project Company Security Agreement, the Tax Holdco Security Agreement, the Construction Holdco Security Agreement, the Deed of Trust and the Consents (except where the terms thereof provide otherwise) (collectively, the “Release Documents”) shall be terminated automatically, and without the need for further action, (3) no further Obligations under or in respect of the Release Documents shall remain (other than obligations under the Release Documents (including contingent reimbursement obligations and indemnity obligations) that, by their express terms, survive termination of the Release Documents), (4) all guarantees of the Tax Holdco and Construction Holdco shall be automatically released and discharged, (5) all security interests, liens or other rights which the Collateral Agent may have on or in any assets of the Project Company, the Tax Holdco and the Construction Holdco under the Release Documents securing the obligations of the Secured Parties pursuant to the Financing Agreement or any other Financing Document shall be automatically terminated and released and discharged, without the need for further action, and (6) Project Company and Tax Holdco shall have no further Obligations under or in respect of the Financing Agreement (the “Release”).
The Release shall not discharge or in any manner, affect or impair the continuing Obligations of the Borrower Entities (other than the Project Company, the Construction Holdco and the Tax Holdco) under the Financing Agreement or other Financing Documents after giving effect to the transactions contemplated by this letter.
The Payoff Amount assumes that the Payoff will occur on the Payoff Date and that there will be no additional expenses incurred prior to that time. Notwithstanding the foregoing, if the Project Company fails to pay the Payoff Amount in full by the Payoff Time in accordance with this Payoff Letter, none of the foregoing shall have any force or effect, and this Payoff Letter shall terminate automatically.
Upon the occurrence of the Release, (i) the Lenders or counsel to the Lenders, at the sole cost and expense of the Project Company, shall promptly file all such UCC-3 termination statements (including UCC-3 termination statements in the form attached hereto as Exhibit A) and other instruments and take such other action as shall be reasonably requested by the Project Company to effect or otherwise evidence the termination and release of such Liens pursuant to the Release Documents; and (ii) the Collateral Agent (acting at the direction of the Administrative Agent) shall return to the Project Company any of such Collateral held by the Collateral Agent pursuant to the Release Documents.
Notwithstanding anything in this Payoff Letter to the contrary, if all or any portion of the Payoff Amount is rescinded or must otherwise be returned for any reason under any state or federal bankruptcy or other law or otherwise, then all obligations of the Project Company under the Financing Documents in respect of the Payoff Amount (or portion thereof) so rescinded or returned shall be automatically and immediately revived (without any further action or consent by any of the parties hereto or any other Person) and shall continue in full force and effect as if such amounts had not been paid and the release given herein shall be void and of no further force and effect.
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The Project Company (on behalf of itself and its affiliates) hereby fully and forever waives, releases, extinguishes and forever discharges the Secured Parties and their affiliates, subsidiaries, officers, directors, attorneys, agents and employees from any and all liability, damages, claims, actions, complaints, causes of action, debts, losses or expenses of any kind that it (or its affiliates) may now or hereafter have against any such Persons, in each case, solely to the extent arising out of or relating to the Release Documents and existing as of the date hereof, the commitments for or funding or use of proceeds of any Subject Loans under the Financing Documents or any transactions in connection with the Subject Loans thereunder, or any act, omission or event in any manner arising out thereof or relating thereto and the transactions contemplated hereby or thereby.
The Project Company (on behalf of itself and its affiliates) specifically confirms and agrees that the indemnification provisions set forth in the Financing Agreement, including, without limitation, Section 5.15 of the Financing Agreement, will apply and be enforceable in respect of the Administrative Agent’s and the Collateral Agent’s execution, delivery and performance of this Payoff Letter and the other instruments and agreements provided for herein, all actions taken or omitted by the Administrative Agent or the Collateral Agent and all claims based upon or arising in connection with any of the foregoing. The Administrative Agent and the Collateral Agent reserve the right to enforce, in respect of such execution, delivery, performance, actions or claims, each and all of the rights, benefits, immunities, exculpatory provisions and indemnities provided thereto under the Financing Documents.
The preparation, negotiation, delivery and performance of this Payoff Letter and all actions to be taken hereunder shall be at the expense of the Project Company and with no liability for such expense to any Secured Party, and with no representation, warranty by or recourse to any Secured Party.
The provisions of this Payoff Letter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Project Company may not assign or otherwise transfer any of its rights under this Payoff Letter without the prior written consent of Administrative Agent and the Lenders. This Payoff Letter shall be deemed to be a Financing Document for all purposes of the Financing Agreement and each other Financing Document.
In case any one or more of the provisions contained in this Payoff Letter should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and the parties hereto shall enter into good-faith negotiations to replace the invalid, illegal or unenforceable provision.
The provisions of Sections 13.7 (Governing Law), 13.8 (Severability), 13.13 (Limitation on Liability), 13.14 (Waiver of Jury Trial), 13.15 (Consent to Jurisdiction) and 13.18 (Confidentiality) of the Financing Agreement are incorporated herein by reference as if fully set forth herein, mutatis mutandis.
This Payoff Letter may be executed in one or more duplicate counterparts and by electronic mail and when signed by all of the parties listed below shall constitute a single binding agreement. A portable document format (“pdf”) signature page shall constitute an original for purposes hereof. The words “execution,” “signed,” “signature,” and words of like import in this
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Payoff Letter shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
By execution of this Payoff Letter, the Administrative Agent (acting at the direction of the Lenders) hereby authorizes and directs the Collateral Agent to execute this Payoff Letter and perform the actions contemplated herein.
[Signature Pages Follow]
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Very truly yours, | |||||||||||
MUFG BANK, LTD., | |||||||||||
as Administrative Agent | |||||||||||
By: | |||||||||||
Name: | |||||||||||
Title: | |||||||||||
Pelicans Jaw: Payoff Letter
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, | |||||||||||
as Collateral Agent | |||||||||||
By: | |||||||||||
Name: | |||||||||||
Title: | |||||||||||
By: | |||||||||||
Name: | |||||||||||
Title: | |||||||||||
Pelicans Jaw: Payoff Letter
Accepted and Agreed to: | ||||||||
| PELICANS JAW SOLAR, LLC, | ||||||||
as the Project Company | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
Pelicans Jaw: Payoff Letter
Annex 1
The total amount required to achieve Payoff is $[ ] (the “Payoff Amount”), and it shall be wired to the following accounts and in the following amounts:
MUFG Bank, Ltd. Account (“Agent Account”):
Bank Name: [___]
ABA No.: [___]
Account Name: [___]
Account Number: [___]
Ref: [___]
Payoff Amount: | Amount Owed | ||||
Principal | $[___] | ||||
Interest | $[___] | ||||
Fees | $[___] | ||||
Expenses | $[___] | ||||
Total | $[___] | ||||
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Payoff Letter
Exhibit A
UCC-3 Termination Statements
[Termination Statement to be attached]
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EXHIBIT I
PROGRESS CONDITIONS
Summary of Circuits
Circuit # | Inverters | MWdc | ||||||
PV 1 | ||||||||
PV 2 | ||||||||
PV 3 | ||||||||
PV 4 | ||||||||
PV 5 | ||||||||
PV 6 | ||||||||
PV 7 | ||||||||
PV 8 | ||||||||
PV 9 | ||||||||
PV 10 | ||||||||
Total PV Project | ||||||||
▇▇▇▇ 1 | ||||||||
▇▇▇▇ 2 | ||||||||
▇▇▇▇ 3 | ||||||||
▇▇▇▇ 4 | ||||||||
▇▇▇▇ 5 | ||||||||
▇▇▇▇ 6 | ||||||||
Total ▇▇▇▇ Project | ||||||||
In addition to all other conditions precedent set forth in Section 5.2, as of the Mechanical Completion Funding Date, equipment attributable to the PV Project and/or the ▇▇▇▇ Project has been delivered to the Project Site and is in the custody of the SOLV EPC Contractor in the following percentages of the total equipment required for the Project:
•Racking: 99%
•Modules: 99%
•Inverters: 99%
•▇▇▇▇ Enclosures: 99%3
3 JPM is willing to seek internal approvals prior to the Mechanical Completion Funding Date to document a lower threshold (not lower than 80%) for equipment delivered to the Project site based on the facts and circumstances, including construction status, at such time.
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EXHIBIT J
DOMESTIC CONTENT CERTIFICATE ([EFFECTIVE DATE]28[SUBSTANTIAL COMPLETION FUNDING DATE]29)
[Date]
This certificate (the “Certificate”) is delivered in connection with [Section 5.1(c)]30[Section 5.3(bb)]31 of that certain Equity Capital Contribution Agreement, dated as of [l], by and among Pelicans Jaw TE HoldCo, LLC, a Delaware limited liability company (the “Company”), Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Equity Investor”), and FNBC Leasing Corporation, a Delaware corporation (the “Class A Equity Investor”) (as amended, restated, modified or supplemented on or prior to the date hereof, the “ECCA”). All capitalized terms not otherwise defined herein shall have the meanings set forth in the ECCA.
The undersigned, being duly authorized to execute and deliver this Certificate on behalf of the Class B Equity Investor, hereby certifies, with the knowledge that the Class A Equity Investor and its Affiliates intend to rely on the information set forth in this Certificate, and acknowledging that the Class A Equity Investor hereby is authorized to rely on the information set forth in this Certificate, as follows:
1.Pelicans Jaw Solar, LLC, a Delaware limited liability company (the “Project Company”), is developing and intends to construct, own and operate an approximately 573 MWDC / 440 MWAC solar photovoltaic generating facility (“Solar PV Facility”) and an approximately 238 MWAC battery energy storage system (“▇▇▇▇ Facility” and collectively with the Solar PV Facility, the “Project”) in Kern County, California, and sell electric power therefrom.
2.The Project Company intends to claim the domestic content bonus credit under Section 48(a)(12) of the Code pursuant to the elective safe harbor described in Section 4 of IRS Notice 2024-41, 2024-24 I.R.B. 1615 (“Notice 2024-41”).32
Structural Steel and Iron Requirement
3.All “manufacturing processes” with respect to 100% of the (i) pile or ground screw and (ii) any steel or iron rebar in foundation, as those terms are used in Section 4.04 Table 1 – (1) Solar PV Table of Notice 2024-41 that have been or will be, upon completion of construction of the Project, used in the Project (such components, the “Pelicans Jaw Structural Steel and Iron Components”) have taken, or will take, place in the United
28 NTD: To be included in the Execution Date Domestic Content Certificate.
29 NTD: To be included in the SC Funding Date Domestic Content Certificate.
30 NTD: To be included in the Execution Date Domestic Content Certificate.
31 NTD: To be included in the SC Funding Date Domestic Content Certificate.
32 Note to Draft: SBE intends to rely on the 2024 safe harbor for domestic content qualification; however, if SBE chooses to elect the safe harbor under IRS Notice 2025-08, then all references to the 2024 guidance will be updated accordingly in the SC Funding Date Domestic Content Certificate.
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States, other than metallurgical processes involving refinement of steel additives. For purposes of this Certificate, “manufacturing process” or “Manufactured” mean the application of processes to alter the form or function of materials or elements of a product in a manner adding value and transforming those materials or elements so that they represent a new item functionally different from that which would result from mere assembly of the elements or materials and shall be defined consistently with Code Section 48(a)(12), as modified, clarified, or supplemented by the Department of Treasury or the IRS, or any guidance, notices, announcements, Treasury Regulations, or other forms of tax law interpreting or applying such requirements (including IRS Notice 2023-38, 2023-22 I.R.B. 872 (“Notice 2023-38”), Notice 2024-41, and IRS Notice 2025-08) issued as of the date of this Certificate (the “Domestic Content Requirements”). All of the mill certificates with respect to all Pelicans Jaw Structural Steel and Iron Components [available as of the date hereof]33 have been uploaded to the Intralinks data room in the following folder: 3.3.2.13.1 (Mill Certs Received Prior to TE Closing) and made available to the Class A Equity Investor. To the knowledge of the Class B Equity Investor, each mill certificate provided to the Class A Equity Investor (i) includes a certification that the related Pelicans Jaw Structural Steel and Iron Component was Manufactured in the United States and (ii) is true, accurate and complete.
4.Pursuant to Exhibit N-1 of that certain Turnkey Engineering, Procurement and Construction Agreement between the Project Company and SOLV Energy, LLC (the “Contractor”), dated as of August 13, 2024 (as amended or modified, the “EPC Contract”), Contractor is required to (i) ensure that one hundred percent (100%) of the certain “Steel and Iron Structural Products,” including the Pelicans Jaw Structural Steel and Iron Components, are manufactured in the United States, except metallurgical processes involving refinement of steel additives and (ii) make Commercially Reasonable Efforts (as that term is defined in Exhibit N-1 to the EPC Contract) to obtain from each supplier of Steel and Iron Components a Steel and Iron Product Certificate, in the form of Exhibit N-2 to the EPC Contract, certifying the such requirement has been met. The Steel and Iron Product Certificates, executed by each supplier of Pelicans Jaw Structural Steel and Iron Components, are attached hereto as Exhibit A.
Modules
5.All modules comprising the Project (the “Modules”) were purchased by the Project Company from First Solar, Inc. (“First Solar”) as follows: (i) 253,750,000 Wdc of Modules (“S7 Modules”) were purchased pursuant to Project Purchase Order PELICANS JAW_PO1_S7, dated June 7, 2024; (ii) 200,000,000 Wdc of Modules were purchased pursuant to Project Purchase Order PELICANS JAW_PO2_S6+, dated June 7, 2024; and (iii) 125,410,820 Wdc of Modules were purchased (together with Modules purchased pursuant to Project Purchase Order PELICANS JAW_PO2_S6+, the “S6+ Modules”) pursuant to Project Purchase Order PELICANS JAW_PO3_S6+, dated June 7, 2024, each attached hereto as Exhibits B-1, B-2, and B-3 (the “Module Purchase Orders”).
33 NTD: To be included only in the Execution Date Domestic Content Certificate.
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6.All such Modules are comprised of photovoltaic cells, mounting frames or backrails, front glass, encapsulants, backsheets/backglass, junction box (including pigtails and connectors), edge seals, pottants, adhesives, and bus ribbons (such components, the “Module Components”). 100% of the Module Components used in all Modules have been, or will be, fully Manufactured in facilities located in the United States.
7.Each S7 Module used in the Project was, or will be, fully Manufactured in, produced in and supplied from First Solar’s manufacturing facilities in the United States and each S6+ Module used in the Project was, or will be, fully Manufactured in, produced in and supplied from First Solar’s manufacturing facilities in the United States.
8.Upon completion of construction of the Project, the Modules (and the Module Components) [will be]34 [have been]35 installed in the Project as operational components.
9.[In connection with the Module Purchase Orders, First Solar provided to the Project Company the “First Solar Domestic Content Indicative Information,” dated as of April 14, 2025 (the “2023 First Solar Indicative Cost Information”), and the “First Solar Domestic Content Indicative Information,” dated as of October 30, 2024 (the “2025 First Solar Indicative Cost Information,” together with the 2023 First Solar Indicative Cost Information, the “First Solar Indicative Cost Information”), regarding the New Elective Safe Harbor Cost Percentage Determination under Notice 2024-41. Pursuant to the First Solar Indicative Cost Information, (i) all of the Modules used in the Project were produced or manufactured at First Solar’s manufacturing facilities in Ohio, USA or Alabama, USA, (ii) each such Module is comprised of cells, frame/backrail, front glass, encapsulants, backsheet/backglass, junction box, edge seals, pottants, adhesives, and bus ribbons, and (iii) each such Module Component was manufactured in the United States. To the knowledge of the Class B Equity Investor, the First Solar Indicative Cost Information (1) categorize components consistently with the “manufactured products” and “manufactured product components” for a utility-scale photovoltaic system in Table 2 of Notice 2023-38, Table 1 of Notice 2024-41 and (2) is true and correct. Attached hereto as Exhibit C is the First Solar Indicative Cost Information.]36[On [___], in connection with the Module Purchase Orders, First Solar provided to the Project Company a letter (the “First Solar Safe Harbor Letter”) regarding the New Elective Safe Harbor Cost Percentage Determination under Notice 2024-41 with respect to the Project. Pursuant to the First Solar Safe Harbor Letter, (i) all of the Modules were produced or manufactured in 2023 or 2025 at First Solar’s manufacturing facilities in Ohio, USA or Alabama, USA, (ii) each Module is comprised of cells, frame/backrail, front glass, encapsulants, backsheet/backglass, junction box, edge seals, pottants, adhesives, and bus ribbons, and (iii) each such Module Component was manufactured in the United States. To the knowledge of the Class B Equity Investor, the First Solar Safe Harbor Letter (1) categorizes components consistently with the “manufactured products” and
34 NTD: To be included in the Execution Date Domestic Content Certificate.
35 NTD: To be included in the SC Funding Date Domestic Content Certificate
36 NTD: To be included in the Execution Date Domestic Content Certificate. This language will be deleted if no 2023 panels will be used in the Project
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“manufactured product components” for a utility-scale photovoltaic system in Table 2 of Notice 2023-38, and Table 1 of Notice 2024-41 and (2) is true and correct. Attached hereto as Exhibit C is the First Solar Safe Harbor Letter]37.
10.First Solar provided to the Class B Equity Investor a memorandum entitled “Domestic Content Bonus Credit for First Solar Series 7 Solar Modules” and a memorandum entitled “Domestic Content Bonus Credit for First Solar Series 6+ Solar Modules,” each prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and dated August 19, 2024 (the “Hunton Memos”). Each Hunton Memo describes the U.S. “manufacturing process” as defined in, and for purposes of, the Domestic Content Requirements for each Module Component. To Class B Equity Investor’s knowledge, (i) each of the Module Component included in the S6+ Modules or in the S7 Modules has been, or will be, manufactured in accordance with the applicable descriptions contained in the Hunton Memos and (ii) each Hunton Memo is true, accurate, and complete in all respects.
Trackers
11.The Project [will use]38 [uses]39 the NEXTracker Horizon single-axis trackers (each, a “Tracker” and together, the “Trackers”) purchased by the Contractor from NEXTracker Inc. (“NEXTracker”) in connection with the EPC Contract pursuant to that certain Purchase Order No. 24446001-009 executed by Contractor and NEXTracker, dated August 5, 2024 and modified by that certain Change Order 01 dated December 27, 2024 (the “NEXTracker Purchase Order”). The NEXTracker Purchase Order is attached hereto as Exhibit D.
12.Pursuant to the NEXTracker Purchase Order, NEXTracker covenants that (i) the Tracker Components (as defined below) “are designed to function together as a ‘PV Tracker or Non-Steel Roof Racking’ for ‘Ground-mount (Tracking)’ photovoltaic generation property, in each case, as such term is used in Table 1 of Section 4.04 of Notice 2024-41,” and that (ii) the Tracker Components in the aggregate will have an Assigned Cost Percentage (defined in Notice 2024-41) equal to 18.5%.
13.Each Tracker used in the Project is comprised of torque tubes, fasteners, slew drives, dampers, motors, controllers, and rails (collectively, the “Tracker Components”) and has been, or will be, Manufactured by EPC Contractor at the Project site in a manner involving significant tailoring and testing by skilled personnel. 100% of the Tracker Components used in the Trackers have been, or will be, Manufactured by NEXTracker’s suppliers or contract manufacturers in one or more manufacturing facilities located in the United States.
14.Upon completion of construction of the Project, the Trackers (and the Tracker Components) [will be]40 [have been]41 installed in the Project as operational components.
37 NTD: To be included in the SC Funding Date Domestic Content Certificate.
38 NTD: To be included in the Execution Date Domestic Content Certificate.
39 NTD: To be included in the SC Funding Date Domestic Content Certificate.
40 NTD: To be included in the Execution Date Domestic Content Certificate.
41 NTD: To be included in the SC Funding Date Domestic Content Certificate.
H-13
15.On [April 4, 2025]42 [___]43, in connection with the EPC Contract, NEXTracker provided the [Preliminary]44 [Final]45 Domestic Content Certificate, in the form attached to Attachment 1 to Exhibit N-1 of the EPC Contract as Exhibit N-3 – Supplier [Preliminary][Final Domestic Content Certificate] with respect to the Project (the “NEXTracker Certification”). 100% of all Tracker Components comprising the Trackers are described in the NEXTracker Certification (including where each Tracker Component was Manufactured). To the knowledge of the Class B Equity Investor, the NEXTracker Certification is true and correct and categorizes components consistently with the “manufactured products” and “manufactured product components” for a utility-scale photovoltaic system in Table 2 of Notice 2023-38, and the New Elective Safe Harbor PV Table set forth in Section 4.04(1) of Notice 2024-41. Attached hereto as Exhibit E is the executed NEXTracker Certification.
16.[On [___], in connection with the EPC Contract, EPC Contractor provided the Single Axis Tracker Equipment Certificate in the form attached as Exhibit N-3 – Contractor to the EPC Contract and the Single Axis Tracker Installation Certificate in the form attached as Exhibit N-4 – Contractor to the EPC Contract, or other evidence reasonably satisfactory to the Class A Investor that the Project’s Single Axis Tracker Equipment was manufactured at the Project site (such certificates or other evidence, the “On-site Tracker Certification”). To the knowledge of the Class B Equity Investor, the On-site Tracker Certification is true and correct. Attached hereto as Exhibit E-1 is the executed On-site Tracker Certification.]46
17.NEXTracker provided a memorandum entitled “Domestic content bonus credit under the Inflation Reduction Act”, prepared by Arent ▇▇▇ ▇▇▇▇▇▇ and dated October 22, 2024 (the “Arent Memo”). The Arent Memo describes the U.S. “manufacturing process” as defined in, and for purposes of, the Domestic Content Requirements for each Tracker Component. To Class B Equity Investor’s knowledge, (i) each Tracker Component has been, or will be, manufactured in the United States in accordance with the applicable descriptions contained in the Arent Memo and (ii) the Arent Memo is true, accurate and complete in all respects. The Arent Memo is attached as Exhibit F.
Project Requirements
18.Each Circuit comprising the Solar PV Facility and each ▇▇▇▇ Circuit comprising the ▇▇▇▇ Facility (i) will be constructed on contiguous pieces of land; (ii) are described in a common power purchase agreement; (iii) will have a common intertie; (iv) will share a common substation; (v) are and will be described in one or more common environmental or other regulatory permit; (vi) are being constructed pursuant to a single master construction contract; and (vii) will be financed pursuant to the same loan agreement.
19.As evidenced by the “SBE – Pelican Jaw Domestic Cost Safe Harbor Calculations” attached hereto as Exhibit G, pursuant to the New Elective Safe Harbor Solar PV Table
42 NTD: To be included in the Execution Date Domestic Content Certificate.
43 NTD: To be included in the SC Funding Date Domestic Content Certificate.
44 NTD: To be included in the Execution Date Domestic Content Certificate.
45 NTD: To be included in the SC Funding Date Domestic Content Certificate.
46 NTD: To be included in the SC Funding Date Domestic Content Certificate.
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for a ground-mount (tracking) solar PV facility, the Project, upon completion of construction, will achieve an Adjusted Percentage (as defined in the Domestic Content Requirements) of no less than 40%.47
[Signature Page Follows]
47 NTD: Subject to satisfaction of the applicable conditions in the LOI, the parties will consider the direct cost method in good faith as an alternative.
H-15
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate on and as of the date first written above.
PELICANS JAW MEMBER B, LLC | |||||||||||
By: | |||||||||||
Name: | |||||||||||
Title: | |||||||||||
J-15
EXHIBIT A
Steel and Iron Product Certificate
J-16
EXHIBIT B-1
Purchase Order PELICANS JAW PO1 S7
J-17
EXHIBIT B-2
Purchase Order PELICANS JAW PO2 S6+
J-18
EXHIBIT B-3
Purchase Order PELICANS JAW PO3 S6+
J-19
EXHIBIT C
[First Solar Indicative Cost Information ]1[First Solar Safe Harbor Letter]2
1 To be included in the Execution Date Domestic Content Certificate.
2 To be included in the SC Funding Date Domestic Content Certificate.
J-20
EXHIBIT D
NEXTracker Purchase Order
J-21
EXHIBIT E
Executed [Preliminary]3[Final]4 NEXTracker Certification
3 NTD: To be included in the Domestic Content Certificate (Effective Date).
4 NTD: To be included in the Domestic Content Certificate (SC Funding Date).
J-22
EXHIBIT E-1
On-site Tracker Certification5
5 NTD: To be included in the Domestic Content Certificate (SC Funding Date).
J-23
EXHIBIT F
Arent Memo
J-24
EXHIBIT G
SBE – Pelicans Jaw Domestic Content Cost Safe Harbor Calculations
J-25
EXHIBIT K
FORM OF ENERGY COMMUNITY BONUS CERTIFICATE
[DATE]
This certificate (the “Certificate”) is delivered in connection with [5.1(c)]1 [5.2(ii)]2[5.3(bb)]3 of that certain Equity Capital Contribution Agreement, dated as of May ___, by and among Pelicans Jaw TE HoldCo, LLC, a Delaware limited liability company (the “Company”), Pelicans Jaw Member B, LLC, a Delaware limited liability company (the “Class B Equity Investor”), and FNBC Leasing Corporation, a Delaware corporation (the “Class A Equity Investor”) (as amended, restated, modified or supplemented on or prior to the date hereof, the “ECCA”). All capitalized terms not otherwise defined herein shall have the meanings set forth in the ECCA.
The undersigned, being duly authorized to execute and deliver this Certificate on behalf of the Class B Equity Investor, hereby certifies, with the knowledge that the Class A Equity Investor and its Affiliates intend to rely on the information set forth in this Certificate, and acknowledging that the Class A Equity Investor hereby is authorized to rely on the information set forth in this Certificate, as follows:
Beginning of Construction
1.On November 3, 2023 (the “Effective Date”), SE US Development, a Delaware limited liability company (“Buyer”), and WEG Transformers USA, LLC (“WEG”) entered into the Transformer Supply Agreement (as amended or modified, the “Agreement”), pursuant to which WEG agreed to provide and sell to Buyer two solar project generator step-up transformers with custom specifications for the Project (Transformer with serial number 150-2300459-2C, “Transformer #1” and Transformer with serial number 150-2300459- 3C, “Transformer #2”, and together the “Transformers”) for $12,211,836, as adjusted by the Change Order 5 (defined below) (the “Contract Price”). A copy of the Agreement is attached hereto as Exhibit A.
2.The reports titled “Transformer Factory Visit Report,” dated July 31, 2024 (the “Site Visit Report”), that DNV Energy USA Inc. (“DNV”) prepared in respect of the Transformers, describes DNV’s visit to the Voltran SA DE CV transformer facility, an affiliate of WEG, on March 27, 2024 and April 8, 2024. The Site Visit Report includes date-stamped photographs of two completed conservator tanks, eight tank walls and two base plates with serial numbers 150-2300459-2C and 150-2300459-3C, one for each Transformer. A copy of the Site Visit Report is attached hereto as Exhibit B.
1 Note to Form: to be included in the Energy Community Certificate delivered on the Effective Date (as defined in the ECCA).
2 Note to Form: to be included in the Energy Community Certificate delivered on the Mechanical Completion Funding Date.
3 Note to Form: to be included in the Energy Community Certificate delivered on the Substantial Completion Funding Date.
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3.As evidenced by the Site Visit Report, pursuant to the Agreement, as of April 15, 2024, with respect to each Transformer, WEG completed the manufacture and fabrication of one (1) conservator tank, the tank base plate (no stiffener/no paint/no welding) and four (4) tank walls (no stiffeners/no paint/no welding) in accordance with the design and technical specifications set forth in Exhibit A to the Agreement (the “Safe Harbor Work”).
4.Neither the Safe Harbor Work nor the Transformers is property that is in WEG’s or any Subcontractor’s (as defined in the Agreement) existing inventory or property of a type held in inventory by WEG or any Subcontractor but is a custom-designed component for the Project, and WEG and each Subcontractor has not held, and does not normally hold, any of the Safe Harbor Work or the Transformers in inventory at any time, including during any period of storage.
5.As of January 15, 2025, (a) the following additional physical work was completed with respect to Transformer #1: 89% of core assembly, 100% of coil assembly and 60% of tank assembly, and (b) the following additional physical work was completed with respect to Transformer #2: 74% of core assembly, 84% of coil assembly and 19% of tank assembly.
6.Each Transformer (including the components constituting the Safe Harbor Work) is a custom-designed transformer that steps up the voltage of electricity produced at a renewable energy project to the voltage needed for transmission. The Transformers [will be]4 [have been]5 incorporated into the Project.
7.On December 21, 2023 (the “Assignment Agreement Effective Date”), Buyer and the Project Company entered into that certain Assignment and Assumption Agreement (the “Assignment Agreement”), which assigned all of Buyer’s rights, title, and interest in, under and to the Agreement to the Project Company as of the Assignment Agreement Effective Date. The Assignment Agreement references Section 14.1 of the Agreement, which allows the Agreement to be assigned by Buyer to the Project Company by written notice to WEG and without WEG’s prior consent. On the Assignment Agreement Effective Date, Buyer and the Project Company provided written notice via email to WEG of the assignment of the Agreement to the Project Company. As of the Assignment Agreement Effective Date, Buyer and the Project Company were related (within the meaning of Code section 197(f)(9)(C) and Treas. Reg. § 1.197-2(h)(6)). The Assignment Agreement and written notice thereto are attached hereto as Exhibit C.
8.On June 5, 2024, the Project Company and WEG executed a change order (“Change Order 1”), which modified Exhibit A to the Agreement to revise the Transformer Rated Rise Temp to address high ambient temperatures and revise the wind and snow loading requirements and the referenced building code. Change Order 1 did not increase the Contract Price. On August 30, 2024, the Project Company and WEG executed a second change order (“Change Order 2”), which revised Section 2.8(b) of the Agreement to
4 Note to Form: To be included in Energy Community Certificate delivered pursuant to Sections 5.1(c) and 5.2(q).
5 Note to Form: To be included in Energy Community Certificate delivered pursuant to Section 5.3(bb).
K-2
modify specific delivery requirements at the site and WEG’s responsibilities. Change Order 2 also did not increase the Contract Price. On August 30, 2024, the Project Company and WEG executed a third change order (“Change Order 3”), which switched the make of the OLTC controller for the Transformers. Change Order 3 increased the Contract Price by $40,696.00, bringing the total Contract Price to $12,196,296. On October 7, 2024, the Project Company and WEG executed a fourth change order (“Change Order 4”), which added prevailing wage and apprenticeship requirements. Change Order 4 did not increase the Contract Price. On December 11, 2024, the Project Company and WEG executed a fifth change order (“Change Order 5”) which changed the model and specifications of the surge protectors to be utilized in connection with the Transformers. Change Order 5 increased the Contract Price by $15,540, bringing the total Contract Price to $12,211,836. Each of Change Order 1, Change Order 2, Change Order 3, Change Order 4 and Change Order 5 (collectively the “Change Orders”) provides that other than the modifications discussed in each Change Order, the Agreement will remain unaltered. Each of the Change Orders is attached hereto as Exhibit D. None of the Change Orders includes a material modification to the Agreement. The Agreement and the Change Orders together represent the entire agreement between Buyer and WEG with respect to the Transformers. Other than the Change Orders and the Assignment Agreement, there are no side letters, other understandings, or agreements, oral or written, that may vary the terms of the Agreement, and there have been no amendments, modifications, or changes to the Agreement. The Agreement is (and at all times since its Effective Date of November 3, 2023, has been) valid, binding, and enforceable under state law, and does not limit damages to an amount less than five percent of the total Contract Price.
9.Buyer has timely and fully paid all portions of the Contract Price that were previously due and payable to WEG pursuant to the Agreement as modified by the Change Orders.
10.Exhibit A of the Agreement sets forth certain design and technical specifications of the Transformers with respect to the Project. Since execution of the Agreement, there have been no changes to the design or technical specifications set forth in Exhibit A of the Agreement, other than as set forth in Change Order #5, which included only de-minimis changes to the design and technical specifications of the Transformers.
11.On June 25, 2024, WEG executed that certain Physical Work Certificate (the “Physical Work Certificate”), in which WEG provided the certifications set forth below. To the Class B Equity Investor’s knowledge, the Physical Work Certificate is true, accurate, and complete. A copy of the Physical Work Certificate is attached hereto as Exhibit E.
a.WEG started physical work of the Transformers with serial numbers 150-2300459-2C and 150-2300459-3C on February 9, 2024 pursuant to the Agreement, which is a binding written contract. Prior to the Effective Date under the Agreement, none of WEG or any Subcontractors or any other person had commenced the performance of any physical work on the Transformers.
K-3
b.Any Subcontractors assisting WEG in the manufacture started their physical work on the Transformers after the Effective Date under the Agreement, and they did so (and any Subcontractor of any Subcontractor at any tier did so) pursuant to their own binding written contract with WEG and/or Buyer or the applicable Subcontractor, which meets the following requirements: (1) such contract was entered into pursuant to a new binding written contract after the Effective Date and no physical work under such contract was performed prior to such contract being entered into; (2) such contract is binding and enforceable under applicable laws (including state and local laws) and is a binding written contract under United States Internal Revenue Notice 2018-59, section 7.03(1) and Treasury Regulation Sections 1.168(k)-(1)(b)(4)(ii)(A)-(D); (3) such contract requires the applicable Subcontractor not to have begun work prior to the date such contract was entered into and requires such Subcontractors to comply with the requirements of the Agreement, insofar as applicable; (4) if relating to the supply of equipment or other property, such contract specifies the amounts and design specifications of the equipment or other property being provided; (5) such contract does not limit damages payable by either party thereto to an amount less than eleven percent (11%) of the total contract price under such contract; (6) such contract is subject to a minimum non-refundable fee of at least eleven percent (11%) of the total contract price under such contract; and (7) such contract provides that any material changes to such contracts will not be made without prior notice to the Buyer.
c.As of the date of the Physical Work Certificate, WEG has performed the following work under the Agreement per Transformer: fabrication of one (1) conservator tank, the tank base plate (no stiffener/no paint/no welding) and four (4) tank walls (no stiffeners/no paint/no welding). This represents at least 611 man-hours of direct labor.
d.The aggregate direct cost of materials for all of the Safe Harbor Work was $195,840 total, and the aggregate direct cost of labor for all of the Safe Harbor Work was $102,672 total.
e.The equipment being fabricated for Buyer, including the Safe Harbor Work, was not in WEG’s existing inventory and is not of the type normally held in WEG’s inventory. WEG and any Subcontractor (a) segregated the equipment comprising each Transformer and the Safe Harbor Work and all components thereof from WEG’s (or Subcontractor’s) inventory, (b) assigned serial numbers to all components of each Transformer and the Safe Harbor Work and designated such components and the equipment as that to be delivered to Buyer, and (c) ensured that the equipment comprising each Transformer and the Safe Harbor Work is not intermingled with the same or similar equipment sold (or to be sold) to other customers of WEG (or Subcontractor).
f.Each Transformer (including the components constituting the Safe Harbor Work) is a custom-designed transformer that steps up the voltage of electricity produced
K-4
at a green hydrogen, renewable energy and/or other energy storage project, as applicable, to the voltage needed for transmission.
g.WEG started construction of the Transformers before April 15, 2024, and performed the physical work related to such construction, including with respect to the completion and acceptance of the Safe Harbor Work, as described in the Safe Harbor Report (which includes the applicable serial numbers) as of the date of the Physical Work Certificate, but in any event prior to April 15, 2024.
12.As of December 31, 2024, the Company (or its affiliates) (i) spent or incurred approximately $189,000,000 with respect to the development or construction of the Project, (ii) entered into certain agreements with respect to the development and construction of the Project, including the EPC Agreements, the Power Purchase Agreement (as defined in the LLCA), three purchase orders with Module Supplier for the purchase of S6+ and S7 solar modules for the Project, the Battery Supply Agreement, the Interconnection Agreement (as defined in the LLCA), and the Energy Management System Supply and Service Agreement with IHI Terrasun Solutions, Inc., (iii) obtained site control for the Project and pursued Project-specific permits, and (iv) completed certain development activities with respect to the Project pursuant to certain Limited Notices to Proceed issued under the EPC Contracts.
13.Prior to January 1, 2024, no physical work of a significant nature (within the meaning of IRS Notice 2018-59, 2018-28 I.R.B. 196 (June 22, 2018) (“Notice 2018-59”)) was performed with respect to the Project and less than five percent (5%) of all costs included in the depreciable basis of the Project (excluding the cost of land or any property not integral to production of electricity from the Project, as determined under Notice 2018- 59) were incurred (within the meaning of Treasury Regulation Section 1.461-1(a)(1) and (2) and for purposes of Notice 2018-59, modified by Notice 2019-43, 2019-31 I.R.B. 487, and modified by Notice 2020-41, 2020-25 I.R.B. 954 and Notice 2021-41, 2021-29 I.R.B. 479).
Energy Community Adder
1.The Project Company is developing an approximately 573 MWDC / 440 MWAC solar photovoltaic generating facility (“Solar PV Facility”) and an approximately 238 MWAC / 954 MWh battery energy storage system (“▇▇▇▇ Facility” and collectively with the Solar PV Facility, the “Project”). The Project is entirely located in Kern County, California.
2.According to Appendix A of IRS Notice 2023-29, 2023-29 I.R.B. 1 (April 4, 2023) (“Notice 2023-29”), Appendix 2 of Notice 2023-47, 2023-29 I.R.B. 318 (June 15, 2023) (“Notice 2023-47”), and Appendix 1 of Notice 2024-48, 2024-26 I.R.B. 1749 (June 7, 2024) (“Notice 2024-48”), Kern County, California is in the Metropolitan Statistical Area (“MSA”) of Bakersfield, California; MSA Code: 12540 (the “Project Statistical Area”).
3.As evidenced by Appendix 2 of Notice 2023-47, the Project Statistical Area is an MSA that qualifies as an energy community within the meaning of Code Sections 45(b)(11)(B) and 48(a)(14) for calendar year 2023 and the portion of calendar year 2024 occurring
K-5
prior to release of Notice 2024-48 on June 7, 2024, by having (or, at any time during the period beginning after December 31, 2009, having had) 0.17% or greater direct employment related to the extraction, processing, transport, or storage of coal, oil, or natural gas (described in Code Sections 48(a)(14)(A) and 45(b)(11)(B)(ii)(I) and section 3.03(2) of Notice 2023-29, clarified by IRS Notice 2023-45, 2023-29 I.R.B. 317 (June 15, 2023) (“Notice 2023-45”) and as modified by IRS Notice 2024-30, 2024-16 I.R.B. 878 (March 22, 2024) (“Notice 2024-30”)) (the “Fossil Fuel Employment Threshold”) and an unemployment rate at or above the national average unemployment rate (described in Code Sections 48(a)(14)(A) and 45(b)(11)(B)(ii)(II) and section 3.03(3) of Notice 2023-29, clarified by Notice 2023-45 and as modified by Notice 2024-30) (the “Unemployment Rate Requirement”) for calendar year 2022.
4.As evidenced by Appendix 1 of Notice 2024-48, the Project Statistical Area is an MSA that continues to qualify as an energy community within the meaning of Code Sections 45(b)(11)(B) and 48(a)(14) from June 7, 2024 by meeting the Fossil Fuel Employment Threshold and Unemployment Rate Requirement for calendar year 2023, until the Treasury Department and the IRS issue an updated list based on unemployment rates for calendar year 2024.
5.Each Circuit comprising the Solar PV Facility and each ▇▇▇▇ Circuit comprising the ▇▇▇▇ Facility (i) will be constructed on contiguous pieces of land; (ii) are described in a common power purchase agreement; (iii) will have a common intertie; (iv) will share a common substation; (v) are and will be described in one or more common environmental or other regulatory permit; (vi) are being constructed pursuant to a single master construction contract; and (vii) will be financed pursuant to the same loan agreement.
[Signature Page Follows]
K-6
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate on and as of the date first written above.
| PELICANS JAW MEMBER B, LLC | |||||
| a Delaware limited liability company | |||||
By: [ ] | |||||
| Its: [ ] | |||||
[Signature Page to Energy Community Bonus Certificate (Pelicans Jaw)]
Exhibit A
Transformer Supply Agreement
[See attached]
K-8
Exhibit B
DNV Site Visit Report
[See attached]
K-9
Exhibit C
Assignment and Assumption Agreement
[See attached]
K-10
Exhibit D
Change Orders
[See attached]
K-11
Exhibit E
Physical Work Certificate
[See attached]
K-12
EXHIBIT L
PROJECT SITE
Parcels 1-22:
RF SOLAR PROPERTIES LLC, a Delaware limited liability company
Parcel 1:
THAT PORTION OF THE NORTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN; THENCE SOUTH 89° 58’ EAST, 2673.10 FEET TO THE NORTH QUARTER SECTION CORNER OF SECTION 6; THENCE ALONG THE NORTH AND SOUTH QUARTER SECTION LINE OF SECTION 6, SOUTH 0° 26-1/2’ WEST, 2911.57 FEET TO THE SWAMP AND OVERFLOW SEGREGATION LINE; THENCE ALONG SAID SWAMP AND OVERFLOW SEGREGATION LINE, ACCORDING TO UNITED STATES GOVERNMENT PLAT, APPROVED MARCH 19, 1856, NORTH 42° 18’ WEST, 3938.49 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL PETROLEUM, OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS, AND ALL OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN AND UNDERLYING OR THAT MAY BE PRODUCED FROM THE PARCEL OF REAL PROPERTY DESCRIBED ABOVE, TOGETHER WITH ANY AND ALL RIGHTS AND INTERESTS IN ANY WAY RELATED TO THE SEARCH FOR, EXTRACTION OF OR TREATMENT OR STORAGE OF ANY OF THE MINERALS REFERRED TO HEREIN, AND ALL RIGHTS OF INGRESS AND EGRESS NECESSARY TO THE FOREGOING, AS RESERVED IN THE GRANT DEED EXECUTED BY ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, HUSBAND AND WIFE, AS COMMUNITY PROPERTY, AS TO AN UNDIVIDED ½ INTEREST, AND ▇▇▇▇▇▇ ▇. ▇▇▇, A MARRIED ▇▇▇, AS HIS SOLE AND SEPARATE PROPERTY, AS TO AN UNDIVIDED 1/2 INTEREST, RECORDED JULY 23, 1979 AS INSTRUMENT NO. 007273, IN BOOK 5215, PAGE 589, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS RESERVED IN THE GRANT DEED EXECUTED ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEES OF THE ▇▇▇▇▇ ▇▇▇▇▇▇ KAIME TRUST ESTATE, RECORDED AUGUST 17, 1979 AS INSTRUMENT NO. 017671, IN BOOK 5221, PAGE 2128, OF OFFICIAL RECORDS.
L-1
EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL PETROLEUM, OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS, AND ALL OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN AND UNDERLYING OR THAT MAY RE PRODUCED FROM THE PARCEL OF REAL PROPERTY DESCRIBED ABOVE, TOGETHER WITH ANY AND ALL RIGHTS AND INTERESTS IN ANY WAY RELATED TO THE SEARCH FOR, EXTRACTION OF OR TREATMENT OR STORAGE OF ANY OF THE MINERALS REFERRED TO HEREIN, AND ALL RIGHTS OF INGRESS AND EGRESS NECESSARY TO THE FOREGOING AS RESERVED BY ▇▇▇▇▇▇▇ NATIONAL BANK, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AS TRUSTEES OF RESIDUARY TRUST CREATED PURSUANT TO THE WILL OF S.F.B. ▇▇▇▇▇, DECEASED, IN DEED RECORDED JULY 1, 1981 IN BOOK 5386, PAGE 367 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 2:
THAT PORTION OF THE EAST HALF OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, THENCE SOUTH 0° 48’ WEST 5285.30 FEET TO THE SOUTHEAST CORNER OF SECTION 6, THENCE ALONG THE SWAMP AND OVERFLOW SEGREGATION LINE, ACCORDING TO THE UNITED STATES GOVERNMENT PLAT APPROVED MARCH 19, 1856 NORTH 51° 13’ WEST 2206.40 FEET AND NORTH 42° 18’ WEST 1343.51 FEET; THENCE ALONG THE NORTH AND SOUTH QUARTER SECTION LINE OF SAID SECTION 6, NORTH 0° 26-1/2’ EAST 2911.57 FEET TO THE NORTH QUARTER SECTION CORNER OF SECTION 6, THENCE SOUTH 89° 58’ EAST 2673.10 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM ALL OIL, GAS AND OTHER MINERALS IN AND UNDER SAID LAND AS CONVEYED TO SFER PROPERTIES-A, INC., A DELAWARE CORPORATION IN MINERAL DEED RECORDED DECEMBER 21, 1993 IN BOOK 6960, PAGE 1516 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 3:
ALL OF THE GOVERNMENT OR HIGH LAND (AS CONTRA-DISTINGUISHED FROM SWAMP AND OVERFLOWED LAND GRANTED TO THE STATE OF CALIFORNIA) IN LOT 2 OF THE NORTHWEST QUARTER, THE FRACTIONAL SOUTHEAST QUARTER OF THE NORTHWEST QUARTER, THE FRACTIONAL NORTHEAST QUARTER OF THE SOUTHWEST QUARTER, OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
L-2
EXCEPT ALL OIL AND GAS IN SAID LAND, TOGETHER WITH THE RIGHT TO PROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS FROM SAME UPON
COMPLIANCE WITH CONDITIONS AND SUBJECT TO PROVISIONS AND LIMITATIONS OF ACT OF JULY 17, 1914 (38 STAT. 509), AS EXCEPTED AND RESERVED BY THE UNITED STATES OF AMERICA IN PATENT RECORDED MAY 8, 1946 IN BOOK 1322, PAGE 44 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 4:
ALL OF THE GOVERNMENT OR HIGH LAND (AS CONTRA-DISTINGUISHED FROM SWAMP AND OVERFLOWED LAND GRANTED TO THE STATE OF CALIFORNIA), IN THE FRACTIONAL NORTHWEST QUARTER OF THE SOUTHEAST QUARTER, THE FRACTIONAL SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER, AND FRACTIONAL SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL AND GAS IN SAID LAND, TOGETHER-WITH THE RIGHT TO PROSPECT FOR, MINE AND RESERVE SUCH DEPOSITS FROM SAME UPON COMPLIANCE WITH CONDITIONS AND SUBJECT TO PROVISIONS AND LIMITATIONS OF ACT OF JULY 17, 1914 (38 STAT. 509), AS EXCEPTED AND RESERVED BY THE UNITED STATES OF AMERICA IN PATENT RECORDED MAY 8, 1946 IN BOOK 1322, PAGE 44 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 5:
THE NORTH HALF OF SECTION 5, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN. IN THE UNINCORPORATED AREA, COUNTY OF ▇▇▇▇, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL MINERALS OF EVERY KIND AND DESCRIPTION, INCLUDING OIL, PETROLEUM, GAS AND ALL OTHER MINERALS IN, UPON OR UNDER THE SAID LAND, AS EXCEPTED AND RESERVED IN DEED DATED OCTOBER 24, 1955, FROM DEL MONTE PROPERTIES COMPANY TO ▇. ▇▇▇▇▇ & SONS, RECORDED DECEMBER 19, 1955 IN BOOK 2531, PAGE 251, OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 6:
THE SOUTHEAST QUARTER OF SECTION 5, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE
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COUNTY OF ▇▇▇▇, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL MINERALS OF EVERY KIND AND DESCRIPTION, INCLUDING OIL, PETROLEUM, GAS AND ALL OTHER MINERALS IN, UPON OR UNDER THE SAID LAND, AS EXCEPTED AND RESERVED IN DEED DATED OCTOBER 24, 1955, FROM DEL MONTE PROPERTIES COMPANY TO ▇▇▇▇▇▇▇ ▇▇▇, ET AL, RECORDED DECEMBER 19, 1955 IN BOOK 2531, PAGE 251, OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 7:
THE NORTH HALF OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL FLAT THEREOF.
EXCEPTING THEREFROM AN UNDIVIDED 1/2 OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS, A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, AS INSTRUMENT NO. 0203038168, AND RE-RECORDED JUNE 12, 2003 AS INSTRUMENT NO. 0203114997, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 8:
THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING 7/8THS OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, IN DEED RECORDED MARCH 17, 1981 IN BOOK 5359, PAGE 1951, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 1/16TH OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS. A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28,2003, INSTRUMENT NO. 0203038168 AND RERECORDED JUNE 12, 2003, INSTRUMENT NO. 0203114997, BOTH OF OFFICIAL RECORDS.
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APN: ▇▇▇-▇▇▇-▇▇
Parcel 9:
THE SOUTH HALF OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THEREFROM 50% OF ALL OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES LYING IN AND UNDER SAID LAND, AS RESERVED BY ▇▇▇▇▇▇▇▇▇ ▇. HADLWY, ET UK, IN DEED RECORDED JANUARY 25, 1977 IN BOOK 5003, PAGE 1770, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 25% OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS. A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, INSTRUMENT NO. 0203038168 AND RE-RECORDED JUNE 12, 2003, AS INSTRUMENT NO. 0203114997, BOTH OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 10:
THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER AND THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND ▇▇▇▇▇▇ TO RECOVER SAME AS RESERVED IN THE DEED FROM ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED WOMAN AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED MAN, RECORDED APRIL 4, 1974 IN BOOK 4834, PAGE 1195 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 11:
BEING A 178.300 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE NORTHWEST QUARTER AND SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 11 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL
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RECORDS, KERN COUNTY, CALIFORNIA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT AN IRON PIPE WITH HUB FOUND FOR THE WEST QUARTER CORNER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 283.67 FEET TO THE POINT OF BEGINNING;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 2,356.94 FEET TO THE NORTHWEST CORNER OF SAID SECTION 9;
THENCE SOUTH 89° 01’ 55” EAST, ALONG THE NORTH LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 2,496.56 FEET TO THE NORTHEAST CORNER OF THE LEASE AREA DESCRIBED HEREIN;
THENCE SOUTH 00° 22’ 07” WEST, OVER AND ACROSS THE NORTHWEST QUARTER AND SOUTHWEST CORNER OF SAID SECTION 9, A DISTANCE OF 3,839.60 FEET TO A POINT ON THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH, RECORDED IN BOOK 11, PAGE 88, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA;
THENCE ALONG THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH THE FOLLOWING TWO (2) COURSES AND DISTANCES:
1. NORTH 54° 21’ 31” WEST, A DISTANCE OF 168.52 FEET TO A FOUND 2-INCH IRON PIPE, AND
2. NORTH 59° 00’ 55” WEST, A DISTANCE OF 2,771.71 FEET TO THE POINT OF BEGINNING AND CONTAINING 178.300 ACRES (7,766,736 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 12:
A 76.18 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE SOUTHEAST QUARTER AND SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 12 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT AN IRON PIPE WITH HUB FOUND FOR THE WEST QUARTER CORNER OF SAID SECTION 9;
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THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 9, 283.67 FEET TO THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH, RECORDED IN BOOK 11, PAGE 88, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA;
THENCE ALONG SAID MEANDER LINE OF BUENA VISTA LAKE SLOUGH THE FOLLOWING TWO (2) COURSES AND DISTANCES:
1. SOUTH 59° 00’ 55” EAST, A DISTANCE OF 2,771.77 FEET TO A FOUND 2-INCH IRON PIPE, AND
2. SOUTH 54° 21’ 31” EAST, A DISTANCE OF 357.66 FEET TO THE NORTHEAST CORNER OF THE LEASE AREA DESCRIBED HEREIN;
THENCE SOUTH 01° 06’ 27” WEST, LEAVING SAID MEANDER LINE OF BUENA VISTA LAKE SLOUGH AND ACROSS THE SOUTH HALF OF SAID SECTION 9, A DISTANCE OF 870.98 FEET;
THENCE SOUTH 87° 45’ 04” EAST, A DISTANCE OF 357.12 FEET;
THENCE SOUTH 02° 11’ 48” WEST, A DISTANCE OF 456.93 FEET TO A POINT ON THE SOUTH LINE OF SAID SECTION 9;
THENCE NORTH 89° 00’ 24” WEST, ALONG SAID SOUTH LINE OF SECTION 9, PASSING THE SOUTH QUARTER CORNER OF SAID SECTION 9 AT A DISTANCE OF 400.48 FEET, AND CONTINUING FOR A TOTAL DISTANCE OF 1,721.02 FEET TO THE SOUTHWEST CORNER OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 9;
THENCE NORTH 01° 16’ 15” EAST, ALONG THE WEST LINE OF THE EAST HALF OF THE SOUTHWEST QUARTER OF SAID SECTION 9, A DISTANCE OF 1,980.86 FEET;
THENCE NORTH 89° 00’ 55” WEST, ACROSS THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 9, A DISTANCE OF 1,329.47 FEET TO THE WEST LINE OF THE SOUTHWEST QUARTER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 45” EAST, ALONG SAID WEST LINE OF THE SOUTHWEST QUARTER, A DISTANCE OF 660.21 FEET TO THE POINT OF BEGINNING AND CONTAINING 76.18 ACRES (3,318,246 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 13:
THE SOUTHEAST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
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EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, AS RESERVED BY ▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇, IN DEED RECORDED MARCH 1, 1974, IN BOOK 4828, PAGE 2003, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 14:
THE SOUTHWEST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED TO ▇▇▇▇▇▇▇-NATIONAL BANK, TRUSTEE, UNDER THE WILL OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, DECEASED, IN DEED RECORDED APRIL 24, 1974, IN BOOK 4837, PAGE 1485, OF OFFICIAL RECORDS.
APNs: ▇▇▇-▇▇▇-▇▇ AND ▇▇▇-▇▇▇-▇▇
Parcel 15:
ALL THAT PORTION OF THE NORTHEAST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, WHICH LIES NORTHEASTERLY OF THE SWAMP AND OVERFLOW SEGREGATION LINE.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS RESERVED IN DEED FROM ▇▇▇▇ ▇▇▇▇▇▇, ET AL, RECORDED APRIL 19, 1974 IN BOOK 4836, PAGE 2254, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 16:
BEING A 99.19 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE SOUTHWEST QUARTER OF FRACTIONAL SECTION 4, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 16 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY,
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RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE SOUTH 89° 02’ 01” EAST, ALONG THE SOUTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1667.55 FEET;
THENCE NORTH 00° 59’ 36” EAST, OVER AND ACROSS SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2644.29 FEET TO THE NORTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 89° 02’ 35” WEST, ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1600.54 FEET TO THE NORTHWEST CORNER OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE SOUTH 02° 26’ 42” WEST, ALONG THE WEST LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2644.90 FEET TO THE POINT OF BEGINNING AND CONTAINING 99.19 ACRES (4,320,667 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 17:
BEING A 78.86 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE NORTHWEST QUARTER OF FRACTIONAL SECTION 4, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PORTION PART OF PARCEL 17 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO OF LAND OUT OF A TRACT CONVEYED TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE NORTHWEST QUARTER OF SAID FRACTIONAL SECTION 4;
THENCE SOUTH 89° 29’ 40” EAST, ALONG THE NORTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1547.45 FEET;
THENCE SOUTH 01° 02’ 46” WEST, OVER AND ACROSS SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2188.63 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4;
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THENCE NORTH 89° 02’ 35” WEST, ALONG THE SOUTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1600.54 FEET TO THE SOUTHWEST CORNER OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 02° 26’ 42” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2177.17 FEET TO THE POINT OF BEGINNING AND CONTAINING 78.86 ACRES (3,435,069 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 18:
A LEASE AREA IN SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 18 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS;
THE NORTHWEST QUARTER AND THE NORTHEAST QUARTER AND THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, EXCEPT LOT 1 IN SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
SAID LEASE AREA CONTAINING 321.464 ACRES (14,002,955 SQUARE FEET), MORE OR LESS.
APNs: ▇▇▇-▇▇▇-▇▇-▇▇, ▇▇▇-▇▇▇-▇▇-▇▇ and ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 19:
THE SOUTHEAST QUARTER OF SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING THE OFFICIAL PLAT THEREOF.
EXCEPT AN UNDIVIDED 1/8TH INTEREST IN AND TO ALL OIL, GAS, PETROLEUM, AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED IN THE DEED RECORDED FEBRUARY 5, 1970 IN BOOK 4364, PAGE 383, OF OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 1/2 INTEREST IN AND TO ALL OIL, GAS, PETROLEUM AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING
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SAID LAND, AS EXCEPTED AND RESERVED IN THE DEED RECORDED FEBRUARY 5, 1970 IN BOOK 4364, PAGE 385 OF OFFICIAL RECORDS.
ALSO EXCEPT ALL REMAINING OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND AS EXCEPTED IN DEEDS RECORDED JUNE 27, 1974 IN BOOK 4847, PAGE 2052 AND IN BOOK 4847, PAGE 2055, BOTH OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 20:
THE NORTH HALF OF THE NORTH HALF OF SECTION 16, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND ▇▇▇▇▇▇ TO RECOVER SAME AS RESERVED IN THE DEED FROM ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED WOMAN AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED MAN, RECORDED APRIL 4, 1974 IN BOOK 4834, PAGE 1195, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 21:
ALL THAT PORTION OF SECTION 15, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING WESTERLY OF THE SEGREGATION LINE.
EXCEPT THEREFROM AN UNDIVIDED 45% INTEREST IN AND TO AN UNDIVIDED 1/3RD INTEREST OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS IN OR UNDER SAID PREMISES, OR THAT MAY BE AT ANY TIME BE PRODUCED OR EXTRACTED THEREFROM, TOGETHER WITH THE RIGHT TO PROSPECT FOR, DEVELOP, EXTRACT OR REMOVE THE SAME, AS RESERVED BY DEED FROM ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, AS TRUSTEE UNDER DECLARATION OF TRUST DATED OCTOBER 22, 1969 RECORDED JULY 19, 1974 IN BOOK 4851, PAGE 703, OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 112 OF AN UNDIVIDED 55% INTEREST IN AND TO AN UNDIVIDED 1/3RD INTEREST IN ALL OIL, GAS, OTHER HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER SAID LAND, AS RESERVED BY DEED FROM CRACKER NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, TRUSTEE, RECORDED JUNE 17, 1915 IN BOOK 4900, PAGE 6544 OF OFFICIAL RECORDS.
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ALSO EXCEPT AN UNDIVIDED 4/9THS INTEREST OF AN UNDIVIDED 2/3RDS INTEREST OF ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED IN DEED BY MAXINE T. SMITH, THALIA K. CONSIDINE, HERBERT C. KELLY, JR. AND GRAHAM M. KELLY, RECORDED JUNE 3, 1977 IN BOOK 5031, PAGE 1724 OF OFFICIAL RECORDS.
APN: 044-130-39
Parcel 22:
ALL OF SECTION 16, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THE NORTH HALF OF THE NORTH HALF OF SAID SECTION 16.
ALSO EXCEPT ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND EGRESS TO RECOVER SAME AS RESERVED IN THE DEED FROM ETHEL B. COOPER, A MARRIED WOMAN AND FINIS G. COOPER, A MARRIED MAN, RECORDED APRIL 4, 1974, IN BOOK 4834, PAGE 1195 OF OFFICIAL RECORDS.
APNs: 044-150-17 and 044-150-24
Parcels 23, 25 and 26:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
Parcel 23:
That portion of Section 21 and 16 Township 25 South, Range 21 East, Mount Diablo Base and meridian, in the unincorporated area of the county of Kern, State of California, more particularly described as follows:
The westerly 100.00 feet of said Section 21 and the southerly 100 feet of the west 100 feet of Section 16.
Contains 12.21± acres across APN: 044-150-25
APN: 044-150-25
Parcel 24:
DELETED
Parcel 25:
THE EAST HALF OF THE SOUTHEAST QUARTER OF FRACTIONAL SECTION 7, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN
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THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ONLY THE RIGHTS TO ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS ON OR UNDERLYING SAID LAND, AS CONVEYED IN THE DEED TO HANNAH RANCH, A PARTNERSHIP, RECORDED FEBRUARY 6, 1987 IN BOOK 5967, PAGE 2117, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM UNTO GRANTOR 50% OF ALL REMAINING OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER ALL OF THE LAND AS RESERVED IN THE DEED EXECUTED BY WEST HAVEN FARMING COMPANY, A CORPORATION AND WESTFARMERS, A CALIFORNIA GENERAL PARTNERSHIP, RECORDED MAY 12, 2003 AS INSTRUMENT NO. 0203114997, OF OFFICIAL RECORDS.
APN: 044-101-16-00
Parcel 26:
A 100 foot wide collector line easement, being a portion of land out of the east half of the northeast quarter of Section 7, Township 25 South, Range 21 East, of the Mount Diablo Base and Meridian, Kern County, California, and a portion of land out of a tract conveyed to Wonderful Nut Orchards, LLC, recorded in document no. 0215082425, Kern County, California and being more particularly described as follows:
Commencing at an iron pipe with cap found for the east quarter corner of said Section 7;
Thence South 88° 25’ 15” West, along the south line of the northeast quarter of said Section 7, a distance of 130.07 feet to the POINT OF BEGINNING;
Thence leaving the south line of the northeast quarter of said Section 7 and across the east half of the northeast quarter of said Section 7 the following course and distance:
North 00° 16’ 43” East, a distance of 2658.46 feet to the north line of the northeast quarter of said Section 7;
Thence South 88° 09’ 14” West, along the north line of the northeast quarter of said Section 7, a distance of 100.07 feet;
Thence leaving the north line of the northeast quarter of said Section 7 and across the east half of the northeast quarter of said Section 7 the following courses and distances:
1.South 00° 16’ 43” West, a distance of 2658.00 feet, to the south line northeast quarter and
2.North 88° 25’ 15” East, along said south line, a distance of 100.05 feet to the POINT OF BEGINNING and containing 6.102 acres (265,823 square feet), more or less.
APN: 044-101-11-00-8
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EXHIBIT M
FORM OF LLCA
[See attached]
M-1
Final Form
FORM OF
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
PELICANS JAW TE HOLDCO, LLC
a Delaware limited liability company
Dated as of [l]
TABLE OF CONTENTS
| Page | ||||||||||||||
| ARTICLE 1 DEFINITIONS AND CONSTRUCTION | 1 | |||||||||||||
| 1.01 | Definitions | 1 | ||||||||||||
| 1.02 | Construction | 34 | ||||||||||||
| ARTICLE 2 ORGANIZATION | 34 | |||||||||||||
| 2.01 | Formation | 34 | ||||||||||||
| 2.02 | Name | 34 | ||||||||||||
| 2.03 | Registered Office; Registered Agent; Principal Office | 35 | ||||||||||||
| 2.04 | Purposes | 35 | ||||||||||||
| 2.05 | Foreign Qualification | 35 | ||||||||||||
| 2.06 | Term | 35 | ||||||||||||
| 2.07 | No State-Law Partnership | 36 | ||||||||||||
| 2.08 | Units; Certificates of Membership Interest; Applicability of Article 8 of UCC | 36 | ||||||||||||
| ARTICLE 3 MEMBERSHIP; DISPOSITIONS OF INTERESTS | 36 | |||||||||||||
| 3.01 | Members | 36 | ||||||||||||
| 3.02 | Representations, Warranties and Covenants | 36 | ||||||||||||
| 3.03 | Dispositions and Encumbrances of Membership Interests | 40 | ||||||||||||
| 3.04 | Creation of Additional Membership Interests | 47 | ||||||||||||
| 3.05 | Access to Information | 48 | ||||||||||||
| 3.06 | Confidential Information | 48 | ||||||||||||
| 3.07 | Liability to Third Parties | 51 | ||||||||||||
| 3.08 | Withdrawal | 51 | ||||||||||||
| ARTICLE 4 CAPITAL CONTRIBUTIONS | 51 | |||||||||||||
| 4.01 | Capital Contributions | 51 | ||||||||||||
| 4.02 | Additional Capital Contributions | 52 | ||||||||||||
| 4.03 | Managing Member Loans; LC Loans | 55 | ||||||||||||
| 4.04 | Return of Contributions | 56 | ||||||||||||
| 4.05 | Capital Accounts | 56 | ||||||||||||
| ARTICLE 5 DISTRIBUTIONS AND ALLOCATIONS | 57 | |||||||||||||
| 5.01 | Allocations | 57 | ||||||||||||
| 5.02 | Distributions | 64 | ||||||||||||
| 5.03 | Other Distributions | 69 | ||||||||||||
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| 5.04 | Satisfaction of Certain Obligations of the Class B Member to the Class A Members | 69 | ||||||||||||
| 5.05 | Calculation of Flip Point | 71 | ||||||||||||
| 5.06 | Withholding | 79 | ||||||||||||
| 5.07 | Substitute Payments | 80 | ||||||||||||
| ARTICLE 6 MANAGEMENT | 81 | |||||||||||||
| 6.01 | Management by Members | 81 | ||||||||||||
| 6.02 | Affiliate Agreements; Conflicts of Interest | 82 | ||||||||||||
| 6.03 | Consent Required for Certain Action | 83 | ||||||||||||
| 6.04 | Limitations of Liability; Standard of Care | 88 | ||||||||||||
| 6.05 | Approved Budgets | 90 | ||||||||||||
| 6.06 | Removal of the Managing Member | 91 | ||||||||||||
| 6.07 | Placed in Service; Final Completion | 91 | ||||||||||||
| 6.08 | Insurance | 91 | ||||||||||||
| 6.09 | Anti-Corruption Compliance Covenant | 91 | ||||||||||||
| 6.10 | Financing Loan Covenants | 92 | ||||||||||||
| 6.11 | Commercial Operation Date; Harmonics | 92 | ||||||||||||
| 6.12 | Build-Out Obligation | 93 | ||||||||||||
| 6.13 | Substantial Completion Date Survey | 93 | ||||||||||||
| 6.14 | BESS Augmentation Capital Contribution Obligations | 94 | ||||||||||||
| 6.15 | Qualified Replacement PPA | 94 | ||||||||||||
| 6.16 | Casualty Losses | 94 | ||||||||||||
| 6.17 | Prevailing Wage and Apprenticeship Requirements | 95 | ||||||||||||
| 6.18 | Interim Deliverability Status and Partial Capacity Deliverability Status Capital Contribution Obligation | 96 | ||||||||||||
| ARTICLE 7 PARTNERSHIP REPRESENTATIVE, COMPANY TAX FILINGS, AND | ||||||||||||||
| SECTION 6418 | 97 | |||||||||||||
| 7.01 | Tax Elections | 97 | ||||||||||||
| 7.02 | Partnership Representative | 98 | ||||||||||||
| 7.03 | Section 6418 Election | 104 | ||||||||||||
| 7.04 | Survival | 108 | ||||||||||||
| 7.05 | Further Amendment | 108 | ||||||||||||
| ARTICLE 8 BOOKS, REPORTS AND ACCOUNTS | 109 | |||||||||||||
| 8.01 | Maintenance of Books | 109 | ||||||||||||
| 8.02 | Reports | 109 | ||||||||||||
| 8.03 | Bank Accounts | 109 | ||||||||||||
| 8.04 | Separateness | 109 | ||||||||||||
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| 8.05 | Payment of Expenses | 109 | ||||||||||||
| 8.06 | Financial Statements | 109 | ||||||||||||
| 8.07 | Permitted Investments and Volcker Rule | 110 | ||||||||||||
| ARTICLE 9 BUYOUT OPTION | 111 | |||||||||||||
| 9.01 | Buyout Events | 111 | ||||||||||||
| 9.02 | Procedure | 112 | ||||||||||||
| 9.03 | Buyout Purchase Price; Terms and Method of Payment | 112 | ||||||||||||
| 9.04 | Closing | 113 | ||||||||||||
| 9.05 | Terminated Member | 109 | ||||||||||||
| ARTICLE 10 PURCHASE OPTION | 114 | |||||||||||||
| 10.01 | Purchase Option | 114 | ||||||||||||
| 10.02 | Procedure | 114 | ||||||||||||
| 10.03 | Closing | 114 | ||||||||||||
| ARTICLE 11 DISPUTE RESOLUTION | 115 | |||||||||||||
| 11.01 | Disputes | 115 | ||||||||||||
| 11.02 | Negotiation to Resolve Disputes | 115 | ||||||||||||
| 11.03 | Flip Point Dispute Resolution | 115 | ||||||||||||
| ARTICLE 12 DISSOLUTION, WINDING-UP AND TERMINATION | 116 | |||||||||||||
| 12.01 | Dissolution | 116 | ||||||||||||
| 12.02 | Winding-Up and Termination | 116 | ||||||||||||
| 12.03 | Certificate of Cancellation | 118 | ||||||||||||
| 12.04 | Deficit Capital Accounts | 118 | ||||||||||||
| ARTICLE 13 GENERAL INDEMNITY | 118 | |||||||||||||
| 13.01 | General Indemnification by the Class B Member | 118 | ||||||||||||
| 13.02 | Indemnification of Members by the Company | 122 | ||||||||||||
| 13.03 | General Procedures for Indemnity Obligations | 122 | ||||||||||||
| 13.04 | Member Indemnification Procedures | 124 | ||||||||||||
| 13.05 | Gross-Up of Indemnity | 126 | ||||||||||||
| ARTICLE 14 GENERAL PROVISIONS | 126 | |||||||||||||
| 14.01 | Notices | 126 | ||||||||||||
| 14.02 | Entire Agreement; Superseding Effect | 127 | ||||||||||||
| 14.03 | Effect of Waiver or Consent | 127 | ||||||||||||
| 14.04 | Amendment or Restatement | 127 | ||||||||||||
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| 14.05 | Binding Effect | 127 | ||||||||||||
| 14.06 | Governing Law; Construction | 127 | ||||||||||||
| 14.07 | Jurisdiction; Service of Process; Waiver of Jury Trial | 127 | ||||||||||||
| 14.08 | Third Parties | 127 | ||||||||||||
| 14.09 | Severability | 128 | ||||||||||||
| 14.10 | Further Assurances | 128 | ||||||||||||
| 14.11 | Counterparts | 128 | ||||||||||||
| 14.12 | Operator or Administrator; Successor Operator or Administrator | 128 | ||||||||||||
| Exhibit A | Form of Certificate of Interest | |||||||||||||
| Exhibit B | Members | |||||||||||||
| Exhibit C | Base Case Model | |||||||||||||
| Exhibit D | Initial Approved Budget | |||||||||||||
| Exhibit E | Insurance | |||||||||||||
| Exhibit F | Form of Assignment and Assumption Agreement | |||||||||||||
| Exhibit G | Knowledge Parties | |||||||||||||
| Schedule 5.02(a) | Priority Cash Schedule | |||||||||||||
iv
LIMITED LIABILITY COMPANY AGREEMENT
OF
PELICANS JAW TE HOLDCO, LLC
a Delaware limited liability company
THIS LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of Pelicans Jaw TE Holdco, LLC (the “Company”), dated as of [l]1 (the “Effective Date”), is adopted, executed and agreed to, for good and valuable consideration, by and among FNBC Leasing Corporation, a Delaware corporation (“FNBC”), as the initial Class A Member and Pelicans Jaw Member B, LLC, a Delaware limited liability company (“SBE Class B Member”), as the initial Class B Member.
RECITALS
1. The Company was formed on September 3, 2024, upon filing its Certificate of Formation with the Delaware Secretary of State.
2. The purpose of the Company, as more fully set for herein, is to (i) acquire, own and manage Pelicans Jaw Solar, LLC, a Delaware limited liability company (the “Project Company”) and (ii) cause the Project Company to own and manage its interest in, and to operate or cause to be operated an approximately 573 MWdc / 440 MWac solar project (“PV Project”) and a 238 megawatt AC / 954 megawatt-hour battery energy storage system (“BESS Project”) located in Kern County, California (collectively, the “Project”).
3. The Company and the Seller (as defined below) have entered into that certain Membership Interest Purchase Agreement, dated as of May 9, 2025 (the “Purchase Agreement”), pursuant to which the Company shall, subject to the satisfaction of certain conditions precedent, purchase from the Seller 100% of the limited liability company interests in the Project Company.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Class A Member and the Class B Member hereby agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.01 Definitions. As used in this Agreement, the following terms have the respective meanings set forth below or set forth in the Sections referred to below:
“ABS” means ABS Consulting.
1 Note to Form: To be the Mechanical Completion Funding Date.
“Act” – the Delaware Limited Liability Company Act, Del. Code Ann. tit. 6, §§18-101 et seq.
“Additional ITC Conditions” – satisfaction of the following conditions, to the Class A Member’s satisfaction:
(a) Completion of diligence by the Class A Member with respect to the Project’s qualification of any applicable “bonus” ITC amount or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8), including, to the extent requested by the Class A Member, certain written confirmations from the Independent Engineer;
(b) If requested by the Class A Member, receipt of an opinion of nationally- recognized tax counsel reasonably acceptable to the Class B Member (with the understanding that Vinson & Elkins LLP shall be reasonably acceptable to the Class B Member) that the Company “will” be eligible for any applicable “bonus” ITC amount or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8);
(c) Receipt by the Class A Member of legal and factual representations from the SBE Class B Member with respect to the Project’s qualification for any applicable “bonus” ITC amount or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8);
(d) Prior written confirmation from the Tax Return Preparer that it shall report, consistent with applicable Law, any applicable “bonus” ITC amount or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8) on the Company’s relevant U.S. federal income tax return; and
(e) The Sponsor agrees to fully indemnify the Class A Member, or guaranty such indemnification obligations of the Class B Member, from any loss arising from, in whole or in part, the Company claiming and, if applicable, transferring pursuant to Section 6418 of the Code, any applicable “bonus” ITC amount or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8), and the Class B Member has agreed to economically bear (and reimburse the Company for) all costs and expenses associated with any applicable “bonus” ITC amount or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8).
“Adjusted Capital Account Deficit” – with respect to any Member for any period, the deficit, if any, in such Member’s Capital Account as of the end of such period, after giving effect to the following adjustments:
(a) Increase such Capital Account by any amounts that such Member has the obligation to restore pursuant to Section 4.02(b) and Section 12.04, or is deemed to have an obligation to restore as described in the penultimate sentences of Treasury Regulation Section 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Decrease such Capital Account by the items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),(5) and (6).
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This definition is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Administrator” – SB Energy DevCo (US), LLC, a Delaware limited liability company, or any successor Person who becomes the Administrator in accordance with the Investment Documents.
“Affiliate” – with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by or is under common Control with such first Person; provided, that notwithstanding the foregoing, the Affiliates of the Project Company, the SBE Class B Member and Sponsor shall be limited to Subsidiaries of Sponsor.
“Agreement” – has the meaning set forth in the introductory paragraph.
“Allocation Year” – (a) the period commencing on the Effective Date and ending on the immediately succeeding December 31, (b) any subsequent twelve (12) month period commencing on January 1 and ending on December 31, or (c) any portion of the period described in clauses (a) or (b) for which the Company is required to allocate items of Company income, gain, loss, or deduction pursuant to Section 5.01 or Section 12.02(a).
“Anticipated Output” – has the meaning set forth in Section 6.12.
“Anti-Bribery and Anti-Corruption Laws” means (a) the FCPA and (b) all other applicable laws and regulations prohibiting domestic or foreign corruption or bribery, including laws and regulations imposed by any jurisdiction in which the Project and the Project Company is organized, operating, or doing business.
“Anti-Terrorism and Money Laundering Laws and Regulations” means applicable laws and regulations relating to money laundering and terrorism financing that (a) prohibit transactions with Persons who (i) commit, threaten to commit or support terrorism, (ii) engage in transactions or conduct operations that are illegal and / or criminal in nature, and / or (iii) participate in monetary transactions in property derived from specified unlawful activity, (b) otherwise relate to prohibiting in connection with the illegal laundering of the proceeds of any criminal activity, or (c) prohibit the funds, proceeds, and revenue of the Project and the Project Company from being used in connection with the advancement of criminal activity.
“Appraised Residual Interest” – has the meaning set forth in Section 10.02(b).
“Approved Budget” – has the meaning set forth in Section 6.05.
“Assignee” – any Person that acquires a Membership Interest or any portion thereof through a Disposition or a Permitted Disposition; provided, however, that an Assignee shall have no right to be admitted to the Company as a Member except in accordance with Section 3.03(b)(iii).
“Assumed Tax Rate” – the highest marginal U.S. federal income tax rate generally applicable to U.S. corporate financial institutions, as in effect from time to time (which is twenty- one percent (21%) as of the Effective Date) and with no state, local, foreign, or other
3
income taxes being taken into account; provided, that if there is a specific rate applicable to U.S. financial institutions that includes the Class A Member, such definition shall mean the then highest marginal federal income tax rate applicable to U.S. financial institutions including the Class A Member, as then in effect.
“Auction Rate Security” – a security with a long term maturity which bears interest at a rate set in an auction process.
“Augmentation Recapture Period” – the period from the date when the energy storage technology is Placed in Service in connection with a BESS Augmentation for which BESS Augmentation ITCs are claimed, until the fifth (5th) anniversary of such Placed in Service date.
“Available Insurance Proceeds” – has the meaning set forth in Section 6.16.
“Bankruptcy” or “Bankrupt” – with respect to any Person, that (a) such Person (i) makes a general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any applicable Law; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties; or (b) a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any applicable Law has been commenced against such Person, and ninety (90) Days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence, a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties has been appointed and ninety (90) Days have expired without the appointment’s having been vacated or stayed, or ninety (90) Days have expired after the date of expiration of a stay, if the appointment has not previously been vacated.
“Base Case Model” – the financial model attached as Exhibit C, as such model may be revised on each Equity Capital Contribution Date.
“BESS Augmentation” – has the meaning set forth in Section 6.14(a).
“BESS Augmentation ITC” – any Clean Electricity Investment Tax Credit under Code Section 48E resulting from a BESS Augmentation.
“BESS Augmentation ITC Special Allocation Conditions” – satisfaction of the following conditions, to the Class A Member’s reasonable satisfaction, as confirmed by the Class A Member in writing:
(a) Completion of diligence of the BESS Augmentation, including, but not limited to, that BESS Augmentation was completed consistent with the BESS Augmentation Plan, whether BESS Augmentation is eligible for BESS Augmentation ITCs and is capable of
4
operating independently from, and being separately metered from, the BESS Project, the anticipated economic and tax consequences with respect to BESS Augmentation and, to the extent requested by the Class A Member, certain written confirmations from the Independent Engineer;
(b) The Class B Member has fully complied with its obligations under Section 6.14(a);
(c) Prior written confirmation from the Tax Return Preparer that it shall report, consistent with applicable Law, (1) (i) any BESS Augmentation ITCs on the Company’s relevant U.S. federal income tax return, or (ii) the transfer of any BESS Augmentation ITCs pursuant to Section 6418 of the Code, as applicable, and (2) permit the special allocation of Company Items of income, gain, loss, deduction and credit (including the BESS Augmentation ITC) arising from or attributable to BESS Augmentation in accordance with Section 5.01(a)(iii);
(d) If requested by the Class A Member, receipt of an opinion of nationally- recognized tax counsel reasonably acceptable to the Class B Member (with the understanding that Vinson & Elkins LLP shall be reasonably acceptable to the Class B Member), that the Company “should” be eligible for BESS Augmentation ITCs and that any special allocation of Company Items of income, gain, loss, deduction, and credit (including the BESS Augmentation ITC) arising from or attributable to BESS Augmentation “should” not result in a loss, disallowance, reduction, or recapture of any ITCs or other Tax Benefits previously claimed by the Class A Member, in form and substance acceptable to the Class A Member; and
(e) The Class A Investor has obtained internal approval for any special allocation of Company Items of income, gain, loss, deduction, and credit (including the BESS Augmentation ITC) arising from or attributable to BESS Augmentation.
“BESS Augmentation ITC Transfer Conditions” – satisfaction of the following conditions, to the Class A Member’s reasonable satisfaction, as confirmed by the Class A Member in writing:
(a) Completion of diligence of the BESS Augmentation, including, but not limited to, that BESS Augmentation was completed consistent with the BESS Augmentation Plan, whether BESS Augmentation is eligible for BESS Augmentation ITCs and is capable of operating independently from, and being separately metered from, the BESS Project, the anticipated economic and tax consequences with respect to BESS Augmentation and, to the extent requested by the Class A Member, certain written confirmations from the Independent Engineer;
(b) The Class B Member has fully complied with its obligations under Section 6.14(a);
(c) Prior written confirmation from the Tax Return Preparer that it shall report, consistent with applicable Law, (i) any BESS Augmentation ITCs on the Company’s relevant U.S. federal income tax return, or (ii) the transfer of any BESS Augmentation ITCs pursuant to Section 6418 of the Code, as applicable; and
5
(d) If requested by the Class A Member, receipt of an opinion of nationally- recognized tax counsel reasonably acceptable to the Class B Member (with the understanding that Vinson & Elkins LLP shall be reasonably acceptable to the Class B Member), that the Company “should” be eligible for BESS Augmentation ITCs and that claiming and transfer pursuant to Code Section 6418 BESS Augmentation ITCs arising from or attributable to BESS Augmentation “should” not result in a loss, disallowance, reduction, or recapture of any ITCs or other Tax Benefits previously claimed by the Class A Member, in form and substance acceptable to the Class A Member.
“BESS Augmentation Plan” – a written plan describing the anticipated necessary augmentation of the BESS Project (or portion thereof) required for the Project to maintain compliance with the requirements under the Power Purchase Agreement (for the avoidance of doubt, including, but not limited to, the requirements of the Power Purchase Agreement relating to Guaranteed RA Amount and Guaranteed Storage Availability) during the entirety of the term of the Power Purchase Agreement, as amended, modified, or supplemented from time to time in accordance with the Prudent Operator Standard and in a manner reasonably expected to preserve the economics of the BESS Project, in each case, which has been approved by the prior written consent of the Majority of Class A Members, such consent not to be unreasonably withheld, conditioned, or delayed.
“BESS Project” – has the meaning set forth in the Recitals.
“Build-Out Agreement” –a Build-Out Agreement, with respect to a project referred to in Section 6.12, in form and substance satisfactory to the Class A Member.
“Business Day” – any day other than a Saturday, a Sunday, or any other day on which banks in New York are authorized to be closed.
“Buyout Event” – has the meaning set forth in Section 9.01.
“Buyout Member” – has the meaning set forth in Section 9.01.
“Buyout Purchase Price” – has the meaning set forth in Section 9.03.
“CAISO” – the California Independent System Operator.
“Capital Account” – the account to be maintained by the Company for each Member in accordance with Section 4.05.
“Capital Contribution” – with respect to any Member, the amount of money and the initial Gross Asset Value of any property (other than money) contributed to or deemed contributed to the Company with respect to such Member’s Membership Interest. Any reference in this Agreement to the Capital Contribution of a Member shall include the Capital Contributions of its predecessors in interest.
“Cash Difference” – has the meaning set forth in Section 5.05(b)(iv)(A).
6
“Cash Equivalents” – any of the following having a maturity of not greater than one year from the date of issuance thereof: (a) readily marketable direct obligations of the government of the United States of America or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the government of the United States of America; (b) insured certificates of deposit of, or time deposits with, any commercial bank that is a member of the Federal Reserve System which issues (or the parent of which issues) commercial paper rated as described in clause (c) below, which is organized under the laws of the United States or any State thereof and which has combined capital and surplus of at least $1,000,000,000; or (c) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P; provided that, for the avoidance of doubt, Auction Rate Securities shall not be Cash Equivalents.
“Cash Flows” – the amounts set forth in Section 5.05(b)(ii).
“Cause” – (a) with respect to the Managing Member, the Administrator or the Partnership Representative, the (i) commission by the Managing Member, the Administrator or Partnership Representative, as applicable, acting in its capacity as such, of fraud, willful misconduct or gross negligence, (ii) Bankruptcy of the Managing Member, the Administrator or Partnership Representative, as applicable, (iii) material breach by the Managing Member, the Administrator or Partnership Representative, as applicable, of its obligations hereunder; provided, however, that in the case of this clause (iii), if such breach is curable, the Managing Member, the Administrator or Partnership Representative shall have the opportunity to cure such breach or violation within forty-five (45) Days of obtaining Knowledge of such breach; provided, that if such breach cannot be cured within such period, no Material Adverse Effect has yet occurred, and the Managing Member, the Administrator or the Partnership Representative, as applicable, is proceeding with diligence to cure such breach, the forty-five (45) Day cure period shall be extended by an additional period not to exceed forty-five (45) Days or (b) with respect to the Managing Member only, in the event that the Company or the Project Company does not have sufficient cash to pay its obligations and the Managing Member fails to advance all of the needed funds to or on behalf of the Company or the Project Company pursuant to Section 4.03(a)(i) or otherwise in a manner mutually agreed by the Members; provided, that the Managing Member shall have the opportunity to cure such breach within forty-five (45) Days of obtaining Knowledge of such breach.
“Certified Public Accountants” – a nationally recognized firm of independent public accountants selected from time to time by the Managing Member approved by Members holding the Required Voting Percentage. The initial Certified Public Accountant will be Deloitte LLP.
“Change of Member Control” – with respect to any Member, an event (such as a Disposition of voting securities) that causes such Member to cease to be Controlled by such Member’s Parent; provided, however, that an event that causes such Member’s Parent to be Controlled by another Person shall not constitute a Change of Member Control; provided, that, prior to the Substantial Completion Funding Date, an event that causes FNBC to cease to be Controlled by JPMorgan Chase Bank, N.A. shall constitute a Change of Member Control.
7
“Claim” – any and all judgments, awards, causes of action, lawsuits, suits, proceedings, investigations by any Governmental Authority or audits, losses (including amounts paid in settlement of claims, penalties and interest), assessments, fines, penalties, administrative orders or injunctions (including any loss of profits, consequential, punitive, incidental or special damages recovered by any Third Party, but excluding (a) loss of profits, consequential, punitive, incidental or special damages asserted by any Member or an Affiliate thereof and (b) damages or losses, the recovery of which is limited by Sections 6.04 and 13.01(c)).
“Claim Notice” – has the meaning set forth in Section 13.03(b).
“Class A Imputed Underpayment” – any Imputed Underpayment that would result from a Final Partnership Adjustment to any Company Items for any Taxable Year reported to the Class A Members on a Schedule K-1 from the Company (determined on a standalone basis, ignoring all other proposed Partnership Adjustments), (a) that (i) would not have occurred but for the Fixed Tax Assumptions being incorrect (excluding, for the avoidance of doubt, any Fixed Tax Assumptions to the extent not considered Fixed Tax Assumptions by operation of the definition thereof) or (ii) resulted from a breach of any representation, warranty or covenant of a Class A Member in this Agreement and (b) for which an Imputed Underpayment Final Determination has been made, provided, that this definition of “Class A Imputed Underpayment” shall not include a Class B Imputed Underpayment.
“Class A Member” – a Member that holds Class A Units; provided that if a Member holds both Class A Units and Class B Units, such Member is a Class A Member only to the extent of the Class A Units held by such Member. Initially, the “Class A Member” means FNBC.
“Class A Member Tax Distribution” – the product of (a) the Assumed Tax Rate and (b) the aggregate net taxable income actually allocated to the Class A Members for any Allocation Year (beginning with the Allocation Year which includes the Flip Point), including taxable income recognized by the Class A Members pursuant to Code Section 731(a) (but excluding taxable income allocated to the Class A Members pursuant to Sections 5.05(b)(iv) and 5.05(b)(v)), taking into account the use of losses previously suspended due to operation of Code Section 704(d) but available for use in such Allocation Year; provided, that for the Allocation Year which includes the Flip Point, only the period following the Flip Point shall be considered. Notwithstanding the foregoing, to the extent that any liabilities that were not assumed in the Base Case Model (as adjusted pursuant to Section 2.4 of the ECCA) are allocated to the Class A Members and such liabilities, for any applicable Allocation Year, either (i) reduce the losses suspended or increase the losses realized under Section 704(d) of the Code or (ii) reduce the gain generated under Section 731(a) of the Code, then any Class A Member Tax Distribution shall be determined as if no such liabilities had existed.
“Class A Membership Interest” – with respect to a Class A Member, (a) such Class A Member’s status as a Class A Member; (b) such Class A Member’s share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company; (c) all other rights, benefits and privileges enjoyed by such Class A Member (under the Act, this Agreement, or otherwise) in its capacity as a Class A Member, including such Class A Member’s rights to vote, consent and approve and otherwise to participate in the management of the
8
Company, to the extent provided in this Agreement; and (d) all obligations, duties and liabilities imposed on such Class A Member (under the Act, this Agreement or otherwise) in its capacity as a Class A Member, including any obligations to make Capital Contributions.
“Class A Transferred Credits” – with respect to any Class A Member, the amount of Company Credits (other than any ▇▇▇▇ Augmentation ITCs) transferred pursuant to Section 6418 and Section 7.03 that, absent such transfer, would have been allocated to the particular Class A Member under Section 5.01(a)(i).
“Class A Units” – Units representing Class A Membership Interests in the Company having the rights, preferences and designations provided for Class A Units herein.
“Class B Imputed Underpayment” – in respect of an Imputed Underpayment Final Determination, all or any portion of the Imputed Underpayment determined by taking into account (on a standalone basis) only those Partnership Adjustments that resulted from the breach of a representation, warranty or covenant by a Class B Member, Sponsor, Project Company or their representatives (including as the Managing Member, the Partnership Representative or Designated Individual selected by the Partnership Representative in accordance with Section 7.02(a) on behalf of the Company) in the Investment Documents or that are attributable to any allocations of tax items to the Class B Member; provided, that this definition of “Class B Imputed Underpayment” shall not include a Class A Imputed Underpayment.
“Class B Mechanical Completion Funding Amount” has the meaning set forth in the ECCA.
“Class B Member” – a Member that holds Class B Units; provided that if a Member holds both Class A Units and Class B Units, such Member is a Class B Member only to the extent of the Class B Units held by such Member. Initially, the “Class B Member” means the SBE Class B Member.
“Class B Membership Interest” – with respect to a Class B Member, (a) such Class B Member’s status as a Class B Member; (b) such Class B Member’s share of the income, gain, loss, deduction and credits of, and the right to receive distributions from, the Company; (c) all other rights, benefits and privileges enjoyed by such Class B Member (under the Act, this Agreement, or otherwise) in its capacity as a Class B Member, including such Class B Member’s rights to vote, consent and approve and otherwise to participate in the management of the Company, to the extent provided in this Agreement; and (d) all obligations, duties and liabilities imposed on such Class B Member (under the Act, this Agreement or otherwise) in its capacity as a Class B Member, including any obligations to make Capital Contributions.
“Class B Transferred Credits” – with respect to any Class B Member, the amount of Company Credits (other than any ▇▇▇▇ Augmentation ITCs) transferred pursuant to Section 6418 and Section 7.03 that, absent such transfer, would have been allocated to the particular Class B Member under Section 5.01(a)(i).
“Class B Units” – Units representing Class B Membership Interests in the Company having the rights, preferences and designations provided for Class B Units herein.
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“Code” – the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“Commitment End Date” – has the meaning set forth in the ECCA.
“Company” – has the meaning set forth in the preamble.
“Company Credits” – Tax credits (including the ITCs) for which the Company is eligible.
“Company Item” – the separate items of income, gain, loss, deduction and credit of the Company for purposes of subchapter K of the Code, as determined for Capital Account maintenance purposes consistent with the principles of Treasury Regulations Section 1.704-1(b)(2)(iv).
“Company Minimum Gain” – has the same meaning as the term “partnership minimum gain” in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
“Competitor” – any Person other than Sponsor or its Affiliates that directly or indirectly (including through its Affiliates) engages in owning, operating, maintaining or developing facilities for the production of electricity utilizing renewable energy technology for sale to any other Person.
“Confidential Information” – has the meaning set forth in Section 3.06.
“Construction Management Services Agreement” – that certain Construction Management Services Agreement, dated as of September 27, 2024, by and between the Administrator and the Project Company.
“Contract” – any contract, lease, evidence of indebtedness (including any promissory note), purchase order, letter of credit, license, obligation, or other legally binding agreement or undertaking of any nature (whether written or oral), but not including any Governmental Approvals.
“Control” – the possession, directly or indirectly, of either of the following:
(a) (i) in the case of a corporation, more than 50% of the outstanding voting securities thereof; (ii) in the case of a limited liability company, partnership, limited partnership or joint venture, the right to more than 50% of the distributions (including liquidating distributions) therefrom; (iii) in the case of a trust or estate, including a business trust, more than 50% of the beneficial interest therein; and (iv) in the case of any other entity, more than 50% of the economic or beneficial interest therein; or
(b) in the case of any entity, the power or authority, through ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of the entity.
“CPUC” – the California Public Utilities Commission and any successor agency thereto.
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“Curative Flip Allocation” – the adjustment(s) described in Section 5.05(b)(v).
“Day” – a calendar day; provided, however, that if any period of Days referred to in this Agreement shall end on a Day that is not a Business Day, then the expiration of such period shall be automatically extended until the end of the first succeeding Business Day.
“Delaware Certificate” – has the meaning set forth in Section 2.01.
“Depreciation” – for each Allocation Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Allocation Year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Allocation Year, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Allocation Year bears to such beginning adjusted tax basis, provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Allocation Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member and approved by Members holding the Required Voting Percentage.
“Designated Individual” – the designated individual selected by the Partnership Representative pursuant to Section 7.02(a) and appointed by the Company pursuant to Treasury Regulation Section 301.6223-1 (and any similar provision of state, local or foreign law).
“Dispose”, “Disposing” or “Disposition” – with respect to any asset (including any Unit or Membership Interest or any portion thereof), a sale, assignment, transfer, conveyance, gift, exchange or other disposition of such asset, whether such disposition be voluntary, involuntary or by operation of Law, excluding an Encumbrance but including the following: (a) in the case of an asset owned by a natural person, a transfer of such asset upon the death of its owner, whether by will, intestate succession or otherwise; and (b) in the case of an asset owned by an entity, (i) a merger or consolidation of such entity (other than where such entity is the survivor thereof), (ii) any transaction treated as a sale or exchange of such asset for U.S. federal income tax purposes including a conversion of the entity at issue into another type of entity for U.S. federal income tax purposes to the extent that such conversion would be treated as a sale or exchange of such asset for U.S. federal income tax purposes, or (iii) a distribution of such asset, including in connection with the dissolution, liquidation, winding-up or termination of such entity (unless, in the case of dissolution, such entity’s business is continued without the commencement of liquidation or winding-up).
“Dispute” – has the meaning set forth in Section 11.01.
“Disputing Member” – has the meaning set forth in Section 11.01.
“Disqualified Assignee” – any Person, which is, or whose Affiliate is, then (a) a party adverse in any pending or threatened action, suit or proceeding to the Company or any other Member or an Affiliate thereof (excluding the assigning member), if the Company or such Member shall not have consented (in its sole and absolute discretion) to the Disposition to such
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Person, (b) a Tax Exempt Person or (c) with respect to any Disposition of a Class A Membership Interest, a Competitor; provided, however, that for the avoidance of doubt, a Person will not be deemed to be Competitor solely by virtue of owning an interest in a facility similar to the ownership interest of the Class A Members in the Company so long as such Person has in place procedures to prevent the distribution of Confidential Information that is prohibited under this Agreement; provided, further, that clause (a) of this definition shall not apply in connection with a Disposition pursuant to an Encumbrance upon (or in lieu of) foreclosure to a Lender or, in connection therewith, its designee, nominee or agent.
“Dissolution Event” – has the meaning set forth in Section 12.01.
“Distributable Cash” – as of any date, all cash, Cash Equivalents and liquid investments (excluding Capital Contributions, Transfer Proceeds, and any amounts received by the Company pursuant to the ITC Insurance Policy) held by the Company or Project Company as of such date, and received after the Substantial Completion Funding Date, less (A) the payment of all operating costs of the Project Company and the Company, including all amounts payable by the Project Company or the Company in respect of Material Project Contracts to which the Project Company or the Company is a party, less (B) all reasonable reserves for the Project Company or Company as reasonably determined by the Managing Member: (i) necessary for payment of expenses expressly included in the Approved Budget, (ii) necessary to prevent or mitigate an emergency situation, (iii) established with the prior written consent of the Members holding the Required Voting Percentage, and (iv) subject to Section 6.05, necessary to allow the Company to meet expenses that are clearly identified and expected with reasonable certainty to become due and which are not included in the Approved Budget, less (C) Liquidation Proceeds.
“Distribution Date” – with respect to Distributable Cash at the end of any calendar month, fifteen (15) calendar days following the end of such calendar month.
“DRO Limitation” – has the meaning set forth in Section 4.02(b).
“ECCA” – that certain Equity Capital Contribution Agreement, dated as of the ECCA Execution Date, by and among the Class A Member, SBE Class B Member and the Company.
“ECCA Execution Date” – means the “Effective Date” as defined in the ECCA.
“Effective Date” – has the meaning set forth in the preamble.
“Effective Date Survey” – has the meaning set forth in the ECCA.
“Effective Date Title Policy” – has the meaning set forth in the ECCA.
“Emergency Contracts” – has the meaning set forth in Section 6.03(e).
“Encumber”, “Encumbering”, or “Encumbrance” – the creation, or the existence, of any lien (statutory or otherwise), mortgage, deed of trust, claim, condition, equitable interest, option, right of first refusal, lease, easement, right of way, encroachment, charge, pledge, security interest, hypothecation, assignment, use restriction, limitation or other encumbrance of any kind or nature whatsoever, whether voluntary or involuntary, ▇▇▇▇▇▇ or inchoate (including
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any agreement to give any of the foregoing), and any conditional sale or other title retention agreement.
“EPC Agreements” – has the meaning set forth in the ECCA.
“EPC Contractors” – has the meaning set forth in the ECCA.
“Equity Capital Contribution Date” – the Mechanical Completion Funding Date or Substantial Completion Funding Date, as applicable.
“ERISA” – the Employee Retirement Income Security Act of 1974.
“Escrow” – has the meaning set forth in Section 5.04(b).
“Escrow Agent” – has the meaning set forth in Section 5.04(b).
“Escrowed Funds” – has the meaning set forth in Section 5.04(b)(i).
“EWG” – means an “exempt wholesale generator,” as such term is defined in Section 1262(6) of PUHCA and FERC’s rules at 18 C.F.R. § 366.1.
“Excluded Event” – means (a) a Tax Law Change that would reduce the Tax Credit Transferee’s tax capacity to utilize any Class A Transferred Credits, (b) any sale or disposition of Class A Transferred Credits by the Tax Credit Transferee or deemed sale in connection with any assignment by the Tax Credit Transferee of its rights under a tax credit transfer agreement, (c) the inability of the Tax Credit Transferee to utilize Class A Transferred Credits validly and legally transferred to the Tax Credit Transferee in accordance with Code Section 6418 and the Treasury Regulations promulgated thereunder, (d) the Tax Credit Transferee’s classification or any change in the Tax Credit Transferee’s classification, in each case, for federal income tax purposes, (e) fraud, gross negligence or willful misconduct of the Tax Credit Transferee, or any Affiliate thereof, or (f) a breach by Tax Credit Transferee of any representation, warranty or covenant in the tax credit transfer agreement.
“Fair Market Value” – with respect to any asset, the price at which the asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts.
“FCPA” – the U.S. Foreign Corrupt Practices Act of 1977, as amended.
“Federal Tax Return” – has the meaning set forth in Section 7.02(b).
“FERC” – the Federal Energy Regulatory Commission or any successor organization.
“Final Completion” – has the meaning given to “Final Acceptance” in the EPC Agreements.
“Final Completion Holdback” – has the meaning set forth in Section 4.01(b).
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“Final Completion Reserve Account” – the reserve account, in the sole name of the Company, into which the amount of the Final Completion Holdback will be deposited on the Substantial Completion Funding Date pursuant to Section 4.01(b).
“Final Partnership Adjustment” – a final partnership adjustment mailed by the IRS under Section 6231 of the Code resulting from any administrative proceeding with respect adjustment of any item of income, gain, loss, deduction, or credit of the Company for a Taxable Year, or any partner’s distributive share thereof, for which judicial or administrative review of the relevant Partnership Adjustment is not pending or ongoing in any manner and such Partnership Adjustment is not subject to possible appeal.
“Financing Agreement” – has the meaning set forth in the ECCA.
“Financing Lien” – (a) prior to the Substantial Completion Funding Date, with respect to the Project, the Project Company, the Class B Member, and the Company, the Lien on the Project, the membership interests of the Project Company, the Class B Member and the Company and the assets owned by the Project Company and the Company granted pursuant to the applicable Financing Loan Documents and (b) from and after the Substantial Completion Funding Date, the Lien on the membership interests of the Class B Member and the membership interests of the Company held by the Class B Member granted pursuant to the applicable Financing Loan Document.
“Financing Loan Documents” – has the meaning set forth in the ECCA.
“Fiscal Year” – the annual accounting period of the Company and the Project Company ending December 31 of each calendar year.
“Fixed Tax Assumptions” – from and after the Mechanical Completion Funding Date, (a) each Class A Member will be fully taxable at the Assumed Tax Rate; (b) the Company is and will be the sole owner for federal income tax purposes of the Project; (c) the Company is and shall remain a partnership, of which each of the Class A Members and the Class B Member are and will be the sole partners, for U.S. federal income tax purposes; (d) the allocations of items of income, gain, loss, deduction and credit to and among the Class A Members under this Agreement will be respected by the IRS either because they have “substantial economic effect” or are otherwise consistent with the Members’ interests in the Company within the meaning of Code Section 704(b) (for purposes of clarification, this Fixed Tax Assumption concerns the validity of the allocations and not the amounts that will be allocated or the timing of the allocation); and (e) the transactions undertaken pursuant to the Transaction Documents have economic substance within the meaning of Section 7701(o) of the Code. The Fixed Tax Assumptions shall apply without regard to any changes in law and irrespective of any determination as to whether such assumptions were correct when made or whether any assumed or resulting tax treatment is allowable on or at any time after the Mechanical Completion Funding Date, provided, however, that any assumption described in (a) – (e) above shall not be a Fixed Tax Assumption to the extent that (i) such assumption is not true as a result of the breach of a representation, warranty or covenant by a Class B Member (including as the Managing Member, the Partnership Representative or Designated Individual selected by the Partnership Representative in accordance with Section 7.02(a) on behalf of the Company) in the Investment
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Documents, (ii) such assumption becomes untrue as a result of a change in, or amendment to, the Code or any other applicable federal income tax law that is described in clause (i) or (ii) of the definition of “Tax Law Change” or (iii) the Tax Return Preparer does not file a Tax Return which is consistent with any such assumption, (other than as the result of (x) the breach of a representation, warranty or covenant of a Class A Member under this Agreement or the ECCA, or (y) any final determination under a federal income tax audit or administrative or judicial proceeding involving such Federal Tax Return or a Federal Tax Return for a prior period making an adjustment to any item affected by such assumption; provided that such audit or administrative or judicial proceeding is prosecuted by the Company materially in the manner required by Article 7).
“Flip Imputed Underpayment” – any Imputed Underpayment that would result from a Final Partnership Adjustment to any Company Item for any Taxable Year reported to the Class A Members on a Schedule K-1 from the Company (determined on a standalone basis, ignoring all other proposed Partnership Adjustments), (a) which, if paid by the Class A Members, would cause the Flip Point to be delayed by more than three (3) months after the anticipated Flip Point (calculated by re-running the Base Case Model as of the Substantial Completion Funding Date, adjusted only with respect to such Partnership Adjustments), (b) which is neither a Class A Imputed Underpayment nor a Class B Imputed Underpayment and (c) for which an Imputed Underpayment Final Determination has been made.
“Flip Point” – the later of (a) the last day in the month in which the Class A Units are determined, under the procedures set forth in Section 5.05, to have realized the Flip Rate and (b) the day after the last day of the Recapture Period.
“Flip Rate” – an Internal Rate of Return equal to eight and a half percent (8.5%).
“Flow of Funds Memorandum” – the funding memoranda setting forth all amounts to be funded with each Capital Contribution on each Equity Capital Contribution Date, as agreed between the Class B Member and the Class A Member.
“FNBC” – has the meaning set forth in the preamble.
“Foreign Accounts” – any banking account that is physically located outside the United States and its territories. Foreign Accounts do not include any banking accounts maintained with a United States branch of a foreign third-party bank.
“Formation Date” – has the meaning set forth in Section 2.01.
“FPA” or “Federal Power Act” – the Federal Power Act, and all rules and regulations adopted thereunder.
“Fundamental Representations” – the representations and warranties contained in (a) Section 3.02(a)(i), Section 3.02(a)(ii), Section 3.02(a)(iii), Section 3.02(a)(v), Section 3.02(a)(vi), Section 3.02(a)(vii), Section 3.02(a)(viii), Section 3.02(a)(x) and Section 3.02(c) and (b) Section 3.1(b), Section 3.2(b), Section 3.3(b), Section 3.8, Section 3.9,
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Section 3.10, Section 3.11(a), Section 3.12, Section 3.13, Section 3.14, Section 3.20, Section 3.21 of the ECCA.
“GAAP” – generally accepted accounting principles in the United States of America as in effect from time to time consistently applied throughout the relevant periods.
“General Indemnity Claim” – a Claim for which any Indemnified Person may seek indemnification under Section 13.01(a).
“Good Utility Practice” – the practices, methods and acts engaged in or approved by a significant portion of the utility-scale solar power and battery storage industry in California for projects of a similar type and capacity to the Project that, at a particular time, in the exercise of reasonable judgment in light of the facts known at the time a decision was made, would have been expected to accomplish the desired result in a manner consistent in material respects with applicable Law, generally accepted standards of professional care, skill, diligence and competence applicable to ownership, and management, or the supervision thereof. Good Utility Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be a spectrum of reasonable and prudent practices and methods as commonly practiced in the utility-scale solar and battery storage industry in California during the relevant time, having due regard for, among other things, the requirements or guidance of Governmental Authorities, applicable laws, applicable interconnection operating guidelines and rules.
“Government Official” – any officer, employee or representative of any level of a government, including any agency or division thereof; (ii) any officer, employee or representative of any commercial enterprise that is owned or controlled by any level of the foregoing; (iii) any officer, employee or representative of any public international organization, such as the International Monetary Fund, the United Nations or the World Bank; (iv) any Person acting in an official or unofficial capacity for any of the foregoing government, enterprise, or organization identified above; and (v) any political party, party official or candidate for political office.
“Governmental Approval” – all permits, licenses, approvals, determinations, registrations, variances, exemptions, authorizations and orders of any Governmental Authority.
“Governmental Authority” – means any national, provincial, regional, state, municipal or local government authority, body, agency, ministry, court, judicial or administrative body, taxing authority, regulatory authority or other governmental organization, including FERC, CAISO, CPUC and NERC, having jurisdiction or effective control over, as applicable, the Equity Investors, the Company, the Project Company, their respective Affiliates, or the Project, or the conduct, operation, or actions thereof.
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“Gross Asset Value” – with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross Fair Market Value of such asset, as agreed to by Members holding the Required Voting Percentage;
(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross Fair Market Values (taking Section 7701(g) of the Code into account), as agreed to by Members holding the Required Voting Percentage, as of the following times: (A) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company; (B) in connection with the grant of an interest in the Company other than a de minimis interest as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a member capacity or in anticipation of being a Member; (C) after the Substantial Completion Funding Date, the acquisition of an additional interest in the Company by any new or existing Member in exchange for a Capital Contribution; and (D) the liquidation of the Company within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), provided that an any adjustment described in clauses (A) and (B) of this paragraph shall be made only with the prior written consent of the Members holding the Required Voting Percentage;
(c) The Gross Asset Value of any item of Company assets distributed to any Member shall be adjusted to equal the gross Fair Market Value (taking Code Section 7701(g) into account) of such asset on the date of distribution, as agreed to by Members holding the Required Voting Percentage; and
(d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulation Section 1.704- 1(b)(2)(iv)(m) and Section 5.01(b)(vii), provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) is required in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d). If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraph (a), (b), or (d), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset.
“Imputed Underpayment” – an imputed underpayment within the meaning of Section 6225(b) of the Code.
“Imputed Underpayment Defaulted Contribution” – has the meaning set forth in Section 4.02(h).
“Imputed Underpayment Final Determination” – has the meaning set forth in Section 7.02(i).
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“Indemnified Persons” – has the meaning set forth in Section 13.01(a).
“Indemnify” (or “Indemnifying”) – to indemnify, protect, defend and hold harmless.
“Indemnifying Member” – has the meaning set forth in Section 13.01(a).
“Indemnity Obligation” – has the meaning set forth in Section 13.02.
“Indemnity Payment Amount” – has the meaning set forth in Section 13.05.
“Independent Engineer” – ICF Resources, LLC or such other Person as shall be approved by the Required Voting Percentage.
“Independent Expert”– has the meaning set forth in Section 5.07(a).
“Intent Notice” – has the meaning set forth in Section 10.02(a).
“Interconnection Agreement” – that certain Large Standard Generator Interconnection Agreement, dated as of September 25, 2022, among the Project Company, CAISO and the Pacific Gas and Electric Company, a Delaware limited liability company, as amended by that certain First Amendment to the Large Generator Interconnection Agreement, dated as of September 26, 2024.
“Interim Deliverability Status” – has the meaning set forth in the ECCA.
“Internal Rate of Return” – with respect to the Class A Members at the time of any determination, the annual effective discount rate (calculated and compounded on a daily basis using the Microsoft Excel XIRR function on all after-tax cash flows and otherwise calculated in accordance with the rules and conventions set forth in Section 5.05(b)) that causes “A” to equal “B” in present-value terms where (a) “A” is, without duplication, the total present values as of the Mechanical Completion Funding Date, of: (i) cash that is distributed to the Class A Members, plus (ii) all Tax Benefits that are allocated to the Class A Member, plus (iii) if exercised, the cash received by the Class A Members in connection with the Class B Member’s exercise of the Purchase Option, plus, (iv) all indemnity payments (net of any tax gross-up) received by the Class A Members, that compensate for loss of any item listed in the foregoing clauses (i), (ii), and (iii) (but not including any indemnity payments that are already included in cash distributions), plus (v) without duplication of amounts described in clause (a)(i) hereof amounts received directly by, or paid at the direction of, the Class A Member under the ITC Insurance Policy (if any) or any insurance policy contemplated by Exhibit E under which the Class A Member is the loss payee minus (vi) all Tax Costs that are allocated to the Class A Member; and where (b) “B” is, without duplication, the sum of the present values as of the Mechanical Completion Funding Date, of: (i) the Capital Contributions made by the Class A Members (other than a Capital Contribution required to be made by a Class A Member in connection with a Class A Imputed Underpayment); and (ii) without duplication of amounts described in clause (a)(vi) hereof, any payment made by the Class A Members to any tax authority after and solely as a result of an audit with respect to the Project or the Company (other than (A) as the result of the negligence of, or a breach by a Class A Member of any of its representations and warranties in any Investment Document, or (B) in connection with the incorrectness of a Fixed Tax
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Assumption (excluding, for the avoidance of doubt, any Fixed Tax Assumptions to the extent not considered Fixed Tax Assumptions by operation of the definition thereof)).
“Investment Documents” – this Agreement, the Purchase Agreement, the Lender Consents, the ECCA and the Sponsor Guaranty.
“Investment Targets” – has the meaning set forth in the ECCA.
“IRS” – the U.S. Internal Revenue Service.
“ITC” – an investment tax credit pursuant to Sections 38(b)(1), 46(2) and 48(a) of the Code.
“ITC Insurance Policy” – has the meaning set forth in the ECCA.
“Knowledge” – with respect to any Person, the actual knowledge after due inquiry of those individuals holding the titles (or performing job responsibilities commensurate with such title) of such Persons set forth on Exhibit G hereto.
“Law” – any applicable constitutional provision, statute, act, code (including the Code), law, regulation, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision, declaration or interpretive or advisory opinion or letter of a Governmental Authority.
“LC Loan” – has the meaning set forth in Section 4.03(b)(ii).
“Lender(s)” – any lenders, noteholders, hedge providers and credit support providers to the Class B Member and/or any of its Affiliates (but not the Company), any agents acting on their behalf and their nominees or designees, including in relation to any construction, term or letter of credit financing.
“Lender Consent” – has the meaning set forth in the ECCA.
“Lien” – any liens, pledges, security interests, mortgages, deeds of trust or other Encumbrances.
“Liquidation Proceeds” – has the meaning set forth in Section 12.02(a)(iii)(C).
“Majority of all Members” – Members collectively holding more than 50% of all the then outstanding Class A Units and more than 50% of all the then outstanding Class B Units.
“Majority of Class A Members” – Members collectively holding more than 50% of the then outstanding Class A Units.
“Majority of Class B Members” – Members collectively holding more than 50% of the then outstanding Class B Units.
“Managing Member” – SBE Class B Member (on and as of the Effective Date) or any subsequent replacement or successor managing member of the Company in accordance with the terms of this Agreement.
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“Managing Member Additional Working Capital Loan” – has the meaning set forth in Section 4.03(a)(i).
“Managing Member Committed Working Capital Loan” – has the meaning set forth in Section 4.03(a)(i).
“Managing Member Loans” – has the meaning set forth in Section 4.03(a)(i).
“Material Adverse Effect” – any change or effect that is, or would reasonably be expected to be, materially adverse to the business, assets, liabilities, financial condition, or results of operations of the Sponsor, the Project or the Project Company, or to the ability of the Sponsor or Project Company to perform its respective material obligations under any Transaction Documents to which the Project Company is a party.
“Material Casualty Event” – has the meaning set forth in Section 6.16.
“Material Project Contracts” – (a) those agreements listed as “Material Project Documents” and those agreements listed as “Real Estate Documents”, in each case, on the applicable portion of Schedule 3.13 to the ECCA, or any agreement entered into in replacement or substitution of the foregoing, (b) the Construction Management Services Agreement, (c) the MSA or any agreement entered into in replacement or substitution thereof, (d) any other Contract to which a Project Entity is a party under which it could reasonably be expected to have obligations, liabilities or revenues equal to or in excess of Six Hundred Thousand Dollars ($600,000) in any year or Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) over the term of the contract; provided, that for the purposes of calculating such dollar threshold, any series of related transactions shall be considered as one transaction and all Contracts in respect of such transactions shall be considered as one Contract, (e) any Contract that provides for non-monetary obligations on the part of a Project Entity, the non-performance of which obligations could reasonably be expected to have a Material Adverse Effect and (f) any other guarantees in respect of any of the foregoing. For the avoidance of doubt, “Material Project Contracts” shall not include this Agreement, the Financing Loan Documents, the Investment Documents or any agreement listed as an “Ancillary Real Estate Document” on the applicable portion of Schedule 3.13 to the ECCA.
“MBR Authority” – means authorization from FERC pursuant to Section 205 of the FPA to sell electric energy, capacity and certain ancillary services at wholesale at market-based rates, acceptance by FERC of a tariff providing for such sales, and conferral by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to “persons,” as defined in the FPA, authorized to sell electric energy at market-based rates, including blanket authorization under Section 204 of the FPA and FERC’s regulations at 18 C.F.R. Part 34 to issue securities and assume liabilities.
“Mechanical Completion Date Endorsement” – has the meaning set forth in the ECCA.
“Mechanical Completion Funding Amount” – has the meaning set forth in the ECCA.
“Mechanical Completion Funding Date” – has the meaning set forth in the ECCA.
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“Member” – any Person executing this Agreement as of the date of this Agreement as a member or hereafter admitted to the Company as a member as provided in this Agreement, but such term does not include any Person who has ceased to be a member in the Company. Exhibit B sets forth certain particulars concerning the Members as of the Effective Date. The Managing Member shall amend, or cause to be amended, Exhibit B from time to time to reflect changes in the information set forth thereon, including the admission or withdrawal of Members.
“Member Nonrecourse Debt” – has the same meaning as the term “partner nonrecourse debt” in Treasury Regulation Section 1.704-2(b)(4).
“Member Nonrecourse Debt Minimum Gain” – an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulation Section 1.704-2(i)(3).
“Member Nonrecourse Deductions” – has the same meaning as the term “partner nonrecourse deductions” in Treasury Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2).
“Member Party” – has the meaning set forth in Section 13.02.
“Membership Interest” – the Class A Membership Interest and the Class B Membership Interest, as applicable. “Minimum Class B Distribution” – ten percent (10%) of Distributable Cash on any Distribution Date.
“Minority of Class A Members” – Members collectively holding at least twenty percent (20%) of the then-outstanding Class A Units.
“MSA” – that certain Management Services Agreement, dated on or about thirty (30) days prior to the Effective Date, between the Company and the Administrator, or such replacement management services agreement as is approved by the Members pursuant to Section 6.03.
“Monthly Operating Report” – has the meaning set forth in the ECCA.
“Moody’s” – ▇▇▇▇▇’▇ Investors Service, Inc., or any successor entity.
“MW” – megawatt.
“Nonrecourse Deduction” – has the meaning set forth in Treasury Regulation Sections 1.704-2(b)(1) and 1.704-2(c).
“Nonrecourse Liability” – has the meaning set forth in Treasury Regulation Section 1.704-2(b)(3).
“Notice Period” – has the meaning set forth in Section 13.03(c).
“O&M Agreement”– that certain Operation and Maintenance Agreement, dated as of October 7, 2024, by and between the Project Company and the Operator.
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“OFAC Blocked List”– the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control, or any other list of blocked or designed persons maintained by the Office of Foreign Assets Control, or any replacement list intended to be a successor to such list.
“Operator” – SOLV Energy, LLC, or any Person who becomes the Operator in accordance with the Investment Documents.
“Outside Activities” – has the meaning set forth in Section 6.02.
“Parent” – if applicable to the SBE Class B Member, means, the Sponsor, or, if applicable to any other Member, the Person or Persons that directly own and Control such Member.
“Partial Capacity Deliverability Status” – has the meaning set forth in the ECCA.
“Parties” – the Members executing this Agreement, and any other Person that becomes a Member in accordance with the provisions hereof.
“Partnership Adjustment” – a “partnership adjustment” within the meaning of Section 6241(2) of the Code to the federal income tax returns of the Company.
“Partnership Representative” – has the meaning set forth in Section 7.02(a).
“Permitted Disposition” – a Disposition or Encumbrance of any Unit to or in favor of (a) the Affiliate of any Member, or any other Member (or its Affiliate) of the same class as the Units Disposed of or Encumbered, but only if such Disposition or Encumbrance (x) if made by SBE Class B Member prior to the date on which the Flip Point occurs, does not result in SBE Class B Member and/or its Affiliates thereafter owning (A) if made prior to the final Substantial Completion Funding Date, less than the amount of the Class B Units owned by SBE Class B Member on the Effective Date or (B) after the Substantial Completion Funding Date, less than fifty point one percent (50.1%) of the Class B Units or (y) if made by a Class A Member, is made in accordance with Section 3.03(b)(i)(A)(III), (b) any creditor of a Member, or any collateral agent for such creditor or any other Lender(s) to the extent that such Disposition or Encumbrance constitutes security for the indebtedness of a Member or its Affiliate to such Lender and including the Disposition upon foreclosure of such Encumbrance or in lieu of foreclosure, so long as such Encumbrance complies with the provisions of Section 3.03(c); (c) any Disposition subsequent to a Disposition upon foreclosure or in lieu of foreclosure described in paragraph (b) above, provided, that, such Disposition is to a Qualified Assignee or (d) any Member pursuant to Article 9 or Article 10; provided that any Disposition to, or Encumbrance in favor of, a Disqualified Assignee is not a Permitted Disposition.
“Permitted Equity Encumbrance” – (a) those restrictions on transfer imposed by applicable Law, including applicable securities laws and under the Material Project Contracts, (b) Liens or restrictions imposed on transfers set forth in the organizational documents of any Person, (c) in the case of the Units in the Company, Liens that comply with the provisions of Section 3.03(c), and (d) in the case of assets of, and the membership interests in, the Project
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Company and the Company, the Financing Lien; provided, that on the Substantial Completion Funding Date the Financing Lien shall be released from the assets of, and membership interests in, the Project Company and the assets of the Company.
“Permitted Investments” – has the meaning set forth in Section 8.07(a).
“Permitted Liens” – (a) Encumbrances imposed by any Governmental Authority for Taxes (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceeding shall not involve any material risk of the sale, forfeiture or loss of any part of the Project or (y) the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Majority of all Members, (b) mechanics’, materialmen’s, repairmen’s and other similar liens arising in the ordinary course of business or incident to the construction, improvement or restoration of the Project in respect of obligations (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceedings shall not involve any material risk of forfeiture, sale or loss of any part of the Project or (y) the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to a Majority of all Members, (c) minor defects, easements, rights-of-way, restrictions and other similar Encumbrances incurred in the ordinary course of business and Encumbrances, licenses, restrictions on the use of property or minor imperfections in title that, either individually or in the aggregate, do not materially impair the property affected thereby for the purpose for which the affected property was acquired by the Company, the Project Company or the Seller, as applicable, or materially adversely interfere with the operation and maintenance of a, Project, (d) Encumbrances created by or pursuant to the Material Project Contracts, (e) judgment Encumbrances that (i) do not involve any material risk of the sale, forfeiture or loss of any part of the Project, (ii) within fifteen (15) Business Days of their existence or after the entry thereof, are being contested in good faith and by appropriate proceedings, and (iii) for which the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Majority of all Members, (f) deposits or pledges required to secure the performance of statutory obligations, appeals, supersedes and other bonds in connection with judicial or administrative proceedings and other obligations of a like nature, (g) zoning, entitlement, conservation restrictions and other land use and environmental regulations by Governmental Authorities provided that the Company or the Project Company is not in material violation thereof, (h) Encumbrances on the proceeds of insurance policies that secure the financing of premiums to be paid under such insurance policies, (i) Liens and any right of setoff in favor of a bank or other financial institution arising by operation of applicable Laws or in the ordinary course of business Encumbering deposits held by such bank or financial institution, (j) Permitted Equity Encumbrances, (k) the Financing Lien; provided, that on the Substantial Completion Funding Date the Financing Lien shall be released from the assets of, and membership interests in, the Project Company and the assets of the Company, (l) all exceptions and Encumbrances listed or disclosed in the Effective Date Title Policy, the Effective Date Survey or any landowner estoppel delivered pursuant to Section 5.4(z) of the ECCA and reasonably acceptable to the Members, as applicable, (m) any exceptions and Encumbrances listed or disclosed in the Mechanical Completion Date Endorsement that have been approved by the Class A Member in accordance with Section 5.2(x) of the ECCA, (n) any exceptions and
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Encumbrances listed or disclosed in the Substantial Completion Date Endorsement or Substantial Completion Date Survey, in each case, that have been approved by the Class A Member in accordance with Section 5.3(o) of the ECCA, (o) any exceptions and Encumbrances listed or disclosed on the Substantial Completion Date Survey or Substantial Completion Date Endorsement delivered pursuant to Section 6.13 and (p) any other Encumbrance approved by a Majority of all Members after the Effective Date.
“Person” – any individual, partnership, joint venture, limited liability company, limited liability partnership, corporation, trust, Governmental Authority or other entity.
“Placed In Service” – has the meaning set forth in the ECCA.
“Power Purchase Agreement” – that certain Renewable Power Purchase and Energy Storage Service Agreement, dated as of February 9, 2024, by and between the Power Purchaser and the Project Company, as amended by that (a) certain Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of May 1, 2024, and (b) that certain First Amendment to Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of December 13, 2024.
“Power Purchaser” – San Diego Community Power, a California joint power authority.
“Potential Tax Credit Transferee” means a potential Tax Credit Transferee that has executed a term sheet with respect to a tax credit transfer commitment by such Tax Credit Transferee which includes binding confidentially obligations or has otherwise agreed in writing to binding confidentiality obligations.
“PPA Start Date” – means the Commercial Operation Date as defined in the Power Purchase Agreement.
“PPA Ineffective Date” – has the meaning set forth in Section 6.15.
“Priority Cash Schedule” – has the meaning set forth in Section 5.02(a)(ii)(B).
“Priority Amount Shortfall” – has the meaning set forth in Section 5.02(a)(ii)(B).
“Pro Rata Share” – as to the holder of any class of Units, the number of Units of such class held by such Member divided by the total number of Units of such class outstanding.
“Product” – with respect to the Project and Project Company, any electricity output, capacity attributes, ancillary services and environmental attributes or any output or right associated therewith, including RECs.
“Prohibited Person” – means any Person that is, or is 50% or more owned by, Controlled by, or acting on behalf of a Person that is, (a) listed on the OFAC Blocked List, (b) located, incorporated or organized under the laws of a country, territory or region that is the subject of comprehensive Sanctions (a “Sanctioned Country”), or (c) otherwise a target of Sanctions such that any party hereto would be prohibited or restricted under Sanctions from engaging in trade, business or other activities with such Person.
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“Project” – has the meaning set forth in the recitals.
“Project Company” – has the meaning set forth in the recitals.
“Project Company Purchase Price” – has the meaning set forth in the Purchase Agreement.
“Project Construction Indebtedness” – all outstanding indebtedness for borrowed money (including accrued and unpaid interest thereon) incurred prior to the Substantial Completion Funding Date pursuant to the Financing Agreement that is (a) secured by ▇▇▇▇▇ on assets of the Project or the ownership interests of the Project Company or (b) otherwise an obligation of the Company or the Project Company.
“Project Credit Support” – any credit and other contractual support and assurance that the Project Company is required to provide pursuant to any applicable Law, Governmental Approval, the Power Purchase Agreement or any other Material Project Contract.
“Project Entity” – the Company and the Project Company.
“Proposed Tax Law Change” has the meaning set forth in the ECCA.
“Prudent Operator Standard” – at a particular time, in the exercise of reasonable judgment in light of the facts known at the time a decision was made, those practices, standards, designs, methods, means, techniques, equipment and acts that would require a Person to: (a) perform its duties in good faith and as a reasonably prudent operator and in compliance with applicable Law and applicable Governmental Approvals, having due regard for, among other things, the requirements or guidance of Governmental Authorities, applicable interconnection operating guidelines and rules, (including, without limitation, neither engaging in nor directing Affiliates or any other Person to engage in activities or behaviors that are fraudulent, manipulative, or otherwise anticompetitive activities or behaviors to the extent not in compliance with applicable Law and applicable Governmental Approvals), (b) perform its duties in compliance with the requirements of the Material Project Contracts in all material respects, (c) perform its duties in compliance with Good Utility Practices, (d) exercise such care, skill and diligence as a reasonably prudent business company of established reputation engaged in the utility-scale solar power and battery storage industry in California for projects of a similar type and capacity to the Project would exercise in the conduct of its business and for the advancement or protection of its own interests, (e) perform the duties in accordance with applicable solar energy industry standards, taking into account the requirements to qualify for ITCs, (f) use commercially reasonable efforts to maintain sufficient and properly trained and skilled personnel, and (g) use parts and supplies that meet the specifications set forth in the Material Project Contracts, in all cases with respect to (a) through (g) herein, taking into account all of the costs, expenses and benefits of operation of the Project. The Prudent Operator Standard is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be a spectrum of reasonable and prudent practices and methods as commonly practiced in the utility-scale solar and battery storage industry in California during the relevant time.
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“PUHCA” – the Public Utility Holding Company Act of 2005 and FERC’s regulations thereunder.
“Purchase Agreement” – has the meaning set forth in the recitals.
“Purchase Date” – has the meaning set forth in the Purchase Agreement.
“Purchase Option” – has the meaning set forth in Section 10.01.
“Purchase Option Appraisal Method” – one nationally recognized appraiser shall be appointed by the Class A Member and one nationally recognized appraiser shall be appointed by the Class B Member, in each case, within fifteen (15) Days of a party invoking the procedure described in this definition, which appraisers shall attempt to agree upon the Fair Market Value of the Class A Membership Interests. Provided that the Members are provided two (2) Business Days’ written notice prior to the expiration of the fifteen (15) Day period referenced in the immediately preceding sentence, if either the Class A Member or the Class B Member does not appoint their respective appraiser within five (5) Days after the end of such fifteen (15) Day period, the determination of the appraiser appointed by the other Person (if so appointed within such period) shall be conclusive and binding on the Members. If the appraisers appointed by the Class A Member and the Class B Member are unable to agree upon the Fair Market Value of the Class A Membership Interests within thirty (30) Days after the appointment of the second of such appraisers, the two appraisers shall appoint a third appraiser. In such case, the average of the determinations of the three appraisers shall be conclusive and binding on the Members, unless the determination of one appraiser differs from the middle determination by more than twice the amount by which the third determination differs from the middle determination, in which case the determination of the most disparate appraiser shall be excluded, and the average of the remaining two determinations shall be conclusive and binding on the Members. No appraiser appointed pursuant to this definition shall be an Affiliate of the Person appointing such appraiser.
“Purchase Option Period” – has the meaning set forth in Section 10.01.
“Purchasing Members” – has the meaning set forth in Section 9.02.
“PV Project” – has the meaning set forth in the Recitals.
“PWA Compliance Report” – a report from the PWA Consultant, in form and substance reasonably acceptable to the Class A Member, addressing the Project’s compliance with the PWA Requirements, which for clarity shall include review of all relevant documentation then available to the PWA Consultant, that reasonably concludes either (a) that the Project has fully satisfied the PWA Requirements through the date specified in the report or (b) that the Project has satisfied the PWA Requirements through the date specified in the report except for one or more specified violations and, in each case, identifies supporting documentation and explains in reasonable detail its conclusions (including, in the case of scenario (b), each violation and a remediation plan for correcting each such violation (which shall include a calculation of any PWA Cure Costs required for the Project to comply with the PWA Requirements notwithstanding such violation)).
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“PWA Consultant” – ▇▇▇▇▇ ▇▇▇▇▇ Advisory Group, LP.
“PWA Cure Costs” – means the sum of the amount described in (a) Sections 48(a)(10)(B) and 45(b)(7)(B) of the Code for failure to satisfy the “prevailing wage requirements” (within the meaning of PWA Requirements), and (b) Sections 45(b)(8)(D) in respect of failure to satisfy the “apprenticeship requirements” (within the meaning of PWA Requirements).
“PWA Cure Reserve Account” – a segregated depositary account established and maintained by the Company for the purposes of reserving amounts required to effectuate any reasonably anticipated PWA Cure Costs, which account shall not be pledged to the Lenders or otherwise included as collateral security under any Financing Loan Document after the Substantial Completion Funding Date.
“PWA Requirements” – the “prevailing wage” requirements (as set forth in Sections 48(a)(10) and 45(b)(7) of the Code), the “apprenticeship” requirements (as set forth in Sections 48(a)(11) and 45(b)(8) of the Code), and the recordkeeping requirements set forth therein, including making any necessary payments for any required correction and penalty amounts (under Sections 48(a)(10)(B) and 48(a)(11) of the Code), as clarified by IRS Notice 2022-61, the Frequently Asked Questions about the prevailing wage and apprenticeship requirements under the Inflation Reduction Act published by the IRS, Proposed Treasury Regulations Sections 1.45-6 through 1.45-8, 1.45-12, and 1.48-13, final Treasury Regulations Sections 1.45-6 through 1.45-8, 1.45-12, and 1.48-13, and any other guidance, instructions or terms and conditions published or issued by the United States Treasury Department or the IRS in respect of or under Section 48 of the Code as it relates to the prevailing wage and apprenticeship requirement therein applicable to the Project.
“Qualified Appraiser” – a nationally recognized third-party 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 and (c) not be associated with any Member or any Affiliate thereof.
“Qualified Assignee” – with respect to any proposed Disposition involving the Class B Membership Interest, a Person that (a) has owned or operated for a period of at least three (3) consecutive years, and at the time of such Disposition continues to own and operate, utility-scale solar energy generation and battery storage facilities with an aggregate electricity output of at least 500 MW for solar and 300 MW for battery storage facilities; provided that in connection with (A) a Disposition upon foreclosure or in lieu of such foreclosure by or on behalf of any Lender, any such ▇▇▇▇▇▇’s collateral agent or any of their respective affiliates to any Lender, any such Lender’s collateral agent and/or any of their respective affiliates and (B) the first Disposition subsequent to such Disposition in the foregoing clause (A), in each case such experience standard may be satisfied by hiring a Third Party administrator for the Project which satisfies such experience standard and (b) either (A) has (1) a credit rating of “BBB” or higher by S&P or “Baa2” or higher by ▇▇▇▇▇’▇ or (2) a consolidated tangible net worth of at least Six Hundred and Fifty Million Dollars ($650,000,000) or (B) has a direct or indirect parent with (1) a credit rating of “BBB” or higher by S&P or “Baa2” or higher by ▇▇▇▇▇’▇ or (2) a consolidated
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tangible net worth of at least Six Hundred and Fifty Million Dollars ($650,000,000) and such direct or indirect parent provides a guaranty in form and substance substantially similar to the Sponsor Guaranty or otherwise acceptable to the Class A Member.
“Qualified Replacement PPA” means a power purchase agreement that is (i) entered into with a counterparty with at least equivalent credit standing or financial capability as the Power Purchaser, and the pricing and terms of such power purchase agreement are consistent, in all material respects (or not materially less favorable than) those set forth in the Power Purchase Agreement, (ii) for the same quantity of energy, capacity and environmental attributes produced by the Project, (iii) anticipated to generate revenues that are sufficient to pay operating expenses during the term of such Qualified Replacement PPA and (iv) otherwise approved by the Class A Member.
“Recapture Amount” – the amount of the ITC allocated to the Class A Member pursuant to Section 5.01 that is recaptured as a result of a Recapture Event during the Recapture Period and, if applicable, during the Augmentation Recapture Period.
“Recapture Event” – (a) an event within the meaning of Section 50 of the Code or the Treasury Regulations thereunder (including Treasury Regulations promulgated under Section 47 of the Code), except to the extent attributable solely to a breach by the Class A Member of a representation, warranty or covenant under this Agreement or the ECCA, or (b) a breach of any of the representations, warranties or covenants of the SBE Class B Member, any Class B Member, the Managing Member, the Partnership Representative, the Designated Individual or any Affiliate thereof under the Investment Documents that results in reduction, denial or recapture of the ITC, or a portion thereof, under Code Section 50(a) at the level of any of the Project Company, the Company or the Class A Member.
“Recapture Period” – the period from the date that the first Circuit (as defined in the ECCA) or ▇▇▇▇ Circuit (as defined in the ECCA) (whichever is earlier) is Placed In Service until the fifth (5th) anniversary of the date the last Circuit or ▇▇▇▇ Circuit (whichever is later) is Placed In Service.
“RECs” – any renewable energy credits as defined by Public Utilities Code Section 399.12 and in CPUC Decision (D.) ▇▇-▇▇-▇▇▇ as the generation of electric energy from Eligible Renewable Energy Resources (as each such term is defined in Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by law). RECs are measured in one MWh increments and evidenced by the transfer of one Western Renewable Energy Generation Information System Certificate. The term also includes other environmental attributes such as credit certificates, green tags, allowances, offsets, entitlements or other similar green energy attributes.
“Reference Rate” – with respect to any day, the secured overnight financing rate (SOFR) published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.
“Registration Number” – with respect to the Project and/or any “eligible credit property” (as defined for purposes of Section 6418 of the Code) included therein, the registration
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number obtained or to be obtained through the pre-filing registration process set forth in Treasury Regulations Section 1.6418-4.
“Regulated Holder” – any holder of the Company’s Securities that is (or that is a Subsidiary of a bank holding company that is) subject to the various provisions of Regulation Y of the Board of Governors of the Federal Reserve Systems, 12 C.F.R., Part 225 (or any successor to Regulation Y).
“Regulatory Allocations” – has the meaning set forth in Section 5.01(c).
“Regulatory Problem” – with respect to any specified Person (a) any set of facts or circumstances wherein it has been asserted by any Governmental Authority (or a Class A Member or the Managing Member reasonably believes based on advice of its regulatory counsel or regulators that there is a significant risk of such assertion) that such Person (or any bank holding company that controls such Person) is not entitled to hold, or exercise any material right with respect to, all or any portion of the Securities of the Company which such Person holds or (b) such Person and its Affiliates does or would own, control or have power (including voting rights) over a greater quantity of Securities of the Company than is permitted under any Law applicable to such Person or to which such Person is subject.
“Relevant Damages” – has the meaning set forth in Section 13.01(a).
“Representatives” – with respect to a Party, such Party’s authorized representatives, including without limitation, its professional and financial advisors, counsel and public accountants.
“Required Creditworthiness” – the standards set forth in clause (b) of the definition of “Qualified Assignee”. “Required Experience Standard” – the standards set forth in clause (a) of the definition of “Qualified Assignee”.
“Required Restoration Capital Contribution” – has the meaning set forth in Section 6.16.
“Required Restoration Capital Contribution Cap” – has the meaning set forth in Section 6.16.
“Required Sublimit” – has the meaning set forth in Section 6.16.
“Required Voting Percentage” – the following:
(a) prior to the date the Flip Point occurs, (i) as to matters for which Member approval is required hereunder not covered by clause (ii), the Majority of all Members and (ii) as to matters for which Member approval is required hereunder described in Section 6.03(a), Section 6.03(b), Section 6.03(c), Section 6.03(d), Section 6.03(e)(i), Section 6.03(f), Section 6.03(g), Section 6.03(h), Section 6.03(i), Section 6.03(k), Section 6.03(l), Section 6.03(m), Section 6.03(n), Section 6.03(o), Section 6.03(r), Section 6.03(s), Section 6.03(t), Section 6.03(v), Section 6.03(w), and Section 6.03(y), the Supermajority of all Members; and
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(b) following the date the Flip Point occurs, (i) as to items for which Member approval is required hereunder not covered by clause (ii) below, the Majority of Class B Members and (ii) as to matters for which Member approval is required hereunder described in Section 6.03(d), Section 6.03(f), Sections 6.03(g)(i), Section 6.03(g)(ii) (solely with respect to a change in legal form), Section 6.03(i), Section 6.03(k) (unless the Company certifies in writing that the transaction is arm’s length), Section 6.03(l), Section 6.03(m), Section 6.03(n) (other than subclauses (i) through (ii) thereof), Section 6.03(q), Section 6.03(r), Section 6.03(s), Section 6.03(t), Section 6.03(v), Section 6.03(w), and Section 6.03(y), a Majority of all Members.
“Restricted Area” means a location within five (5) miles of the Point of Interconnection (as defined in the Interconnection Agreement).
“Risk Policy” means the Pelicans Jaw Risk Policy as may be provided by the SBE Class B Member to the Class A Member in satisfaction of the requirements of Section 6.03(q).
“S&P” – Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc., or any successor entity.
“Sanctions” – any U.S. laws, regulations, executive orders, embargoes or restrictive measures relating to the economic sanctions programs administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, or any other Governmental Authority in the United States.
“Sanctioned Country” – has the meaning set forth under the definition of “Prohibited Person” herein.
“SBE Class B Member” – has the meaning set forth in the preamble.
“Section 6226 Election” – has the meaning set forth in Section 7.02(h).
“Securities” – with respect to any Person, such Person’s capital stock or limited liability company interests or any options, warrants or other Securities which are directly or indirectly convertible into, or exercisable or exchangeable for, such Person’s capital stock or limited liability company interests (whether or not such derivative Securities are issued by the Company). Whenever a reference herein to Securities refers to any derivative Securities, the rights of a Class A Member shall apply to such derivative Securities and all underlying Securities directly or indirectly issuable upon conversion, exchange or exercise of such derivative Securities.
“Seller” – Pelicans Jaw Construction Holdco, LLC, a Delaware limited liability company.
“Sponsor” – SBE US Holdings One, LLC, a Delaware limited liability company.
“Sponsor Guaranty” – that certain Sponsor Guaranty, dated as of the ECCA Execution Date, issued by Sponsor in favor of FNBC.
“Sponsor Project” – has the meaning set forth in Section 6.12.
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“Subsidiary” – shall mean, with respect to any Person, any other Person that, directly or indirectly through one of more intermediaries, is Controlled by such first Person.
“Substantial Completion Date Endorsement” – has the meaning set forth in the ECCA.
“Substantial Completion Date Survey” – has the meaning set forth in the ECCA.
“Substantial Completion Funding” – a Capital Contribution on the Substantial Completion Funding Date in an amount equal to the Substantial Completion Funding Amount.
“Substantial Completion Funding Amount” – has the meaning set forth in the ECCA.
“Substantial Completion Funding Date” – the date on which the Class A Member makes the Capital Contribution with respect to the Substantial Completion Funding Amount.
“Supermajority of all Members” – the Members collectively holding at least seventy five percent (75%) of all the then outstanding Class A Units and at least seventy five percent (75%) of all the then outstanding Class B Units.
“Supermajority of Class A Members” – Members collectively holding at least seventy five percent (75%) of the then outstanding Class A Units.
“Target Flip Date” – the date that is 6.91 years after the Mechanical Completion Funding Date.
“Tax” or “Taxes” (and with correlative meaning, “Taxable” and “Taxing”) – any United States federal, state or local, or non-United States, income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, withholding, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, net worth, intangibles, social security, unemployment, disability, payroll, license, employee or other tax or similar levy, of any kind whatsoever, including any interest, penalties or additions to tax in respect of the foregoing.
“Tax Benefits” – with respect to a Class A Unit, the periodic federal income tax savings resulting from (a) the distributive share of ITCs reported by the Company to the holder of such Class A Unit on the Schedules K and K-1 of the Federal Tax Return filed by the Company (or equivalent reporting under successor forms and procedures), (b) the distributive share of tax losses and deductions reported by the Company to the holder of such Class A Unit on the Schedules K and K-1 of the Federal Tax Return filed by the Company (or equivalent reporting under successor forms and procedures), and (c) any loss recognized under Section 1001 of the Code from the disposition of Class A Units pursuant to the exercise of the Purchase Option under Article 10 only, in each case, as such federal income tax savings is determined (or redetermined) in accordance with Section 5.05(b).
“Tax Costs” – with respect to a Class A Unit, the periodic federal income tax liability resulting from (a) the distributive share of taxable income and gain reported by the Company to the holder of such Class A Unit on the Schedules K and K-1 of the Federal Tax Return filed by
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the Company (or equivalent reporting under successor forms and procedures), (b) any gain recognized by such holder under Sections 731(a) from cash distributions, and (c) any gain recognized under Section 1001 of the Code from the disposition of Class A Units pursuant to the exercise of the Purchase Option under Article 10 only, in each case, as such federal income tax liability is as determined (or redetermined) in accordance with Section 5.05(b). For the avoidance of doubt, Tax Costs shall not include any federal income tax liability for which the Class A Members are required to make Capital Contributions under Section 4.02(g) in respect of a Class A Imputed Underpayment (and any such Capital Contribution shall not be taken into account under Section 5.05(b)(ii)). For the avoidance of doubt, Tax Costs shall also not include any federal income tax liability for which the Class A Members are required to make Capital Contributions under Section 4.02(f) in respect of a Flip Imputed Underpayment (but any such Capital Contribution shall be taken into account under Section 5.05(b)(ii)).
“Tax Credit Transferee” means “transferee taxpayer” (within the meaning and for purposes of Section 6418 of the Code).
“Tax Exempt Person” – (a) the United States, any state or political subdivision thereof, any possession of the United States or any agency or instrumentality of any of the foregoing, (b) any organization which is exempt from tax imposed by the Code (including any former tax- exempt organization within the meaning of Section 168(h)(2)(E) of the Code), (c) any Person who is not a United States Person, (d) any Indian tribal government described in Section 7701(a)(40) of the Code (e) any “tax-exempt controlled entity” under Section 168(h)(6)(F) of the Code, (f) any entity referred to in paragraph (4) of Section 54(j) of the Code; (g) a mutual savings bank, cooperative bank, or domestic building and loan association to which Code Section 593 applies; (h) a regulated investment company or real estate investment trust subject to taxation under subchapter M, chapter 1 of the Code; (i) a cooperative organization described in Code Section 1381(a); (j) the Tennessee Valley Authority or any Alaska Native Corporation (within the meaning of Code Section 6417(d)(1)(A)); and (k) a partnership or other pass-through entity (including a disregarded entity) a direct owner of which is described in clause (a)-(j) or this clause (k); provided, however, that any such Person shall not be considered a Tax Exempt Person to the extent that (i) the exception under Section 168(h)(1)(D) of the Code applies with respect to the income from the Company for that Person, (ii) the Person is described within clause (c) of this definition, and the exception under Section 168(h)(2)(B)(i) of the Code applies with respect to the income from the Company for that Person, or (iii) such Person avoids being a “tax-exempt controlled entity” under Section 168(h)(6)(F) of the Code by making an election under Section 168(h)(6)(F)(ii) of the Code. A Person shall cease to be a Tax Exempt Person if (i) such Person ceases to be a “tax-exempt entity” within the meaning of Section 168(h)(2) of the Code or any successor provision thereto, by virtue of a change in such Section or provision of the Code; or (ii) such Person ceases to be a “tax-exempt controlled entity” within the meaning of Section 168(h)(6)(F) of the Code or any successor provision thereto, by virtue of a change in such Section or provision of the Code.
“Tax Information” – has the meaning set forth in Section 3.06(f).
“Tax Law Change” – has the meaning set forth in the ECCA.
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“Tax Payment Dates” – has the meaning set forth in Section 5.05(b)(iii)(D).
“Tax Return” – any written return, report, declaration, statement, claim for refund, information return or other document (including any amendments thereto and any related or supporting schedule, attachment or other information) filed with or supplied to, or required to be filed with or supplied to, any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or the administration of any laws, regulations or administrative requirements relating to any Taxes.
“Tax Return Preparer” – has the meaning set forth in Section 7.02(b).
“Taxable Year” – has the meaning set forth in Section 7.01(d).
“Term” – has the meaning set forth in Section 2.06.
“Terminated Member” – has the meaning set forth in Section 9.05.
“Third Party” – a Person other than a Member or an Affiliate of a Member.
“Title Company” – has the meaning set forth in the ECCA.
“Tracking Model” – has the meaning set forth in Section 5.05(a)(ii).
“Transaction” – has the meaning set forth in Section 3.06(a).
“Transaction Documents” – the Investment Documents and the Material Project Contracts.
“Transfer Proceeds” – the net proceeds (after reduction for any reasonable and documented fees and expenses incurred by the Company or the Project Company) received by the Company from any sale, transfer, or other disposition of Class A Transferred Credits, Class B Transferred Credits, or ▇▇▇▇ Augmentation ITCs pursuant to and in accordance with Code Section 6418 and Section 7.03 under any Company Credit transfer agreement.
“Transferring Member” – has the meaning set forth in Section 7.03.
“Transmission Effect” – has the meaning set forth in Section 6.12.
“Transmission Effects Report” – has the meaning set forth in Section 6.12.
“Treasury Regulations” – the federal income tax regulations promulgated under the Code (including corresponding provisions of successor Treasury Regulations).
“Uncontracted ▇▇▇▇ Revenue” – the portion of Distributable Cash resulting from the operations of the ▇▇▇▇ Project, except cash receipts paid to the Project Company under the Power Purchase Agreement.
“Uncontracted RECs” – any RECs not required to be delivered to the Power Purchaser or to a Person under any other power purchase agreement entered into in accordance with the terms hereof.
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“Uniform Commercial Code” – the Uniform Commercial Code as in effect from time to time in the State of New York.
“Uninsured Restoration Costs” – has the meaning set forth in Section 6.16.
“United States Person” – a “United States person” as defined in Section 7701(a)(30) of the Code.
“Units” – Class A Units and Class B Units. The number of Units as of the Effective Date is set forth on Exhibit B. Upon a Disposition by any Member in accordance with the provisions of this Agreement of any portion of such Member’s Membership Interest, the Assignee shall receive from the Disposing Member a number of Units of the relevant class equal to the percentage of the Membership Interest so Disposed multiplied by the total number of Units owned by the Disposing Member immediately prior to the Disposition and the Managing Member shall update Exhibit B to reflect such Disposition.
“Updated Base Case Model” – has the meaning set forth in the ECCA.
“▇▇▇▇▇▇▇ Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956 and the applicable rules and regulations thereunder.
1.02 Construction. Unless the context requires otherwise: (a) the gender (or lack of gender) of all words used in this Agreement includes the masculine, feminine, and neuter; (b) words used or defined in the singular include the plural and vice versa; (c) references to Articles and Sections refer to Articles and Sections of this Agreement; (d) references to Exhibits and Schedules refer to the Exhibits and Schedules attached to this Agreement, each of which is made a part hereof for all purposes (as the same may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement); (e) references to Laws refer to such Laws as they may be amended from time to time, and references to particular provisions of a Law include any corresponding provisions of any succeeding Law; (f) terms defined in this Agreement are used throughout this Agreement and in any Exhibits or Schedules hereto as so defined; and (g) references to any agreement, contract or document (including any referred to herein in any exhibit, schedule or annex hereto) means such agreement, contract or document as the same may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement; (h) the words “herein”, “hereof” and “hereunder” shall refer to this Agreement as a whole and not to any particular section or subsection of this Agreement; (i) references to money refer to legal currency of the United States of America; (j) references to any Person include such Person’s successors and permitted assigns, unless otherwise specifically provided herein; and (k) the words “include,” “includes” or “including” shall mean “including, without limitation”. Each reference to the Project Company shall mean the Project Company from and after the date it is purchased by the Company.
ARTICLE 2
ORGANIZATION
2.01 Formation. The Company was formed as a Delaware limited liability company upon the filing of its Certificate of Formation (the “Delaware Certificate”), dated as of
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September 3, 2024 (the “Formation Date”), with the Secretary of State of Delaware pursuant to the Act. Pursuant to this Agreement, the Parties provide for the admission to the Company of the Class A Member, effective upon the execution and delivery of this Agreement by all Parties.
2.02 Name. The name of the Company is “Pelicans Jaw TE Holdco, LLC” and all Company business must be conducted in that name or such other names that comply with Law as the Managing Member may select; provided that in the event of a change in name, the Managing Member shall notify the Members of such name change promptly thereafter.
2.03 Registered Office; Registered Agent; Principal Office. The address of the registered office of the Company, required by the Act to be maintained in the State of Delaware, shall be: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other office (which need not be a place of business of the Company) as the Managing Member may designate in the manner provided by Law. The registered agent of the Company in the State of Delaware shall be Corporation Service Company or such other Person or Persons as the Managing Member may designate in the manner provided by Law. The principal office of the Company in the United States shall be at such place as the Managing Member may designate, which need not be in the State of Delaware, and the Company shall maintain records there or in such other place as the Managing Member shall designate. The Managing Member shall give prompt written notice to each Member of any election or change in the principal office of the Company.
2.04 Purposes.
(a) The purposes of the Company are limited to engaging in the ownership of the Project Company, the acquisition, construction, installation, lease, ownership and sale, and the operation, management, maintenance and financing of the Project Company and the Project and all other rights and assets necessary for the ownership and operation of the Project Company and the Project and the sale and transmission of Product therefrom, and the purchase, ownership, use, transmission, marketing and sale of any input, output or right associated therewith, and all actions incidental, necessary or appropriate to the foregoing that may be engaged in by a limited liability company formed under the Act.
(b) The Company shall exist for the purposes and business specified in Section 2.04(a) and this Agreement shall not be deemed to create a partnership, company, joint venture or other arrangement among the Members with respect to any activities whatsoever other than the purposes and business specified in Section 2.04(a) and the activities related thereto.
2.05 Foreign Qualification. The Managing Member shall cause the Company to comply with all requirements necessary to qualify the Company as a foreign limited liability company in any foreign jurisdiction where the conduct of the business of the Company makes such qualification necessary. At the request of the Managing Member, each Member shall execute, acknowledge, swear to, and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue, and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business.
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2.06 Term. The period of existence of the Company (the “Term”) commenced on the Formation Date and continues perpetually unless the Company is earlier dissolved in accordance with either the provisions of this Agreement or the Act.
2.07 No State-Law Partnership. The Members intend that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint venturer of any other Member, for any purposes (including, without limitation, Section 303 of the United States Federal Bankruptcy Code) other than tax purposes and this Agreement may not be construed to suggest otherwise.
2.08 Units; Certificates of Membership Interest; Applicability of Article 8 of UCC. Membership Interests shall be represented by Units, divided into Class A Units (in the case of Class A Membership Interests) and Class B Units (in the case of Class B Membership Interests). The class of Membership Interest and number of Units of a Member shall be as provided in Exhibit B. The Members hereby specify, acknowledge and agree that all Units (and the Membership Interests represented thereby) are securities governed by Article 8 of the Uniform Commercial Code, and pursuant to the terms of Section 8-103(c) of the Uniform Commercial Code, such interests shall be “securities” for all purposes under such Article 8 and under all other provisions of the Uniform Commercial Code. All Units (and the Membership Interests represented thereby) shall be represented by certificates substantially in the form attached hereto as Exhibit A, shall be recorded in a register thereof maintained by the Company, and shall be subject to such rules for the issuance thereof in compliance with this Agreement as the Managing Member may from time to time determine. The Managing Member is expressly authorized to execute the certificates on behalf of the Company. References in this Agreement to Dispositions or Encumbrances of a “Membership Interest” shall also refer to Dispositions or Encumbrances of the corresponding Units or a portion of a Membership Interest or the corresponding Units. References in this Agreement to Dispositions or Encumbrances of “Units” shall also refer to Dispositions or Encumbrances of the corresponding “Membership Interest” represented by such Units.
ARTICLE 3
MEMBERSHIP; DISPOSITIONS OF INTERESTS
3.01 Members. As of the Effective Date, each of the Members listed on Exhibit B have been admitted as Members of the Company, with the class designation and number of Units set forth on such Exhibit B.
3.02 Representations, Warranties and Covenants.
(a) By each Member. Except as otherwise set forth on the Schedules hereto, each Member, in each case solely with respect to itself, hereby severally but not jointly (I) represents and warrants to the Company and each other Member that the following statements are true and correct (x) with respect to the Class A Member and SBE Class B Member, as of the Effective Date and each Equity Capital Contribution Date and (y) with respect to any other Person hereinafter admitted as a Member pursuant to this Agreement, as of the date such Person
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is so admitted and each Equity Capital Contribution Date thereafter and (II) covenants that (x) paragraphs (iv), (v), (vi), (vii) and (xi) below shall be true and correct at all times that such Member is a Member and (y) paragraph (x) below shall be true and correct at all times during the Recapture Period (and, if applicable, the Augmentation Recapture Period) that such Member is a member:
(i) such Member is duly incorporated, organized or formed (as applicable), validly existing, and (if applicable) in good standing under the Law of the jurisdiction of its incorporation, organization or formation; if required by applicable Law, such Member is duly qualified and in good standing in the jurisdiction of its principal place of business, if different from its jurisdiction of incorporation, organization or formation and such Member has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and all necessary actions by the board of directors, shareholders, managers, members, partners, trustees, beneficiaries, or other applicable Persons necessary for the due authorization, execution, delivery, and performance of this Agreement by such Member have been duly taken;
(ii) such Member has duly executed and delivered this Agreement and the other documents to which it is a party contemplated herein, and they constitute the legal, valid and binding obligations of such Member enforceable against it in accordance with their terms (except as may be limited by bankruptcy, insolvency or similar Laws of general application and by the effect of general principles of equity, regardless of whether considered at law or in equity);
(iii) such Member’s authorization, execution, delivery, and performance of this Agreement does not and will not (A) conflict with, or result in a breach, default or violation of, (x) the organizational documents of such Member, (y) any contract or agreement to which such Member is a party or is otherwise subject, or (z) any Law, writ, injunction or arbitral award to which such Member is subject; or (B) require any consent, approval or authorization from, filing or registration with, or notice to, any Governmental Authority or other Person, unless such requirement has already been satisfied;
(iv) such Member is a United States person as defined in the Securities Act of 1933;
(v) neither such Member nor any Affiliate of such Member that is a “related person” with respect to such Member for purposes of Treasury Regulation Section 1.752-4(b) has any “obligation to make a payment” within the meaning of Treasury Regulation Section 1.752-2(b)(3), excluding for this purpose such Member’s obligation to restore a deficit capital account under Section 12.04 and Section 4.02(b);
(vi) such Member is not related within the meaning of Sections 267(b) and 707(b)(1) of the Code to the Power Purchaser or to any Tax Credit Transferee to the extent identified;
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(vii) such Member (A) is a United States Person (or is a “disregarded entity” the sole owner of which is a United States Person) and (B) is not subject to withholding under Section 1445 or Section 1446 of the Code;
(viii) either (A) no part of the aggregate Capital Contributions made by such Member, (whether used by such Member to acquire any Units or Membership Interest or otherwise), constitutes assets of any “employee benefit plan” within the meaning of Section 3(3) of ERISA, or other “benefit plan investor” (as defined in U.S. Department of Labor Reg. §§2510.3-101 et seq.) or assets allocated to any insurance company separate account or general account in which any such employee benefit plan or benefit plan investor (or related trust) has any interest or (B) the source of the funding used to pay the Capital Contributions made by such Member is an “insurance company general account” within the meaning of Department of Labor Prohibited Transaction Exemption 95-60, issued July 12, 1995, and there is no employee benefit plan, treating as a single plan all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan exceeds ten percent (10%) of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the National Association of Insurance Commissioners “Annual Statement” filed with such Member’s state of domicile;
(ix) Such Member has not made any representations or warranties, express or implied, nor has the Company or any other Member relied on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations and warranties of such Member (or its Affiliates) expressly set out in this Agreement or any other Transaction Document and any certification delivered in connection with any of the foregoing;
(x) Such Member is not and shall not become at any time during the Recapture Period (and, if applicable, the Augmentation Recapture Period) a Tax Exempt Person;
(xi) Such Member shall cooperate with the Company, the Project Company and the Managing Member in order to make any filings required under FERC’s or CPUC’s rules and regulations to ensure that (A) once obtained, the Project Company maintains its MBR Authority and its status as an EWG and (B) the Company is not subject to, or is exempt from, regulation as a “holding company” as defined in Section 1262(8) of PUHCA, with respect to FERC access to books and records, accounting, record-retention and reporting requirements to the extent set forth in 18 C.F.R. Section 366.3(a); and (C) Project Company is subject to regulation under PUHCA only with respect to regulations relating to maintaining EWG status, to the extent applicable, and regulation under Sections 1265 and 1275(b) of PUHCA, and have all necessary energy regulatory Governmental Approvals to maintain the Project’s ability to sell electric energy or renewable energy credits therefrom in accordance with applicable Law;
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(xii) Such Member, or its respective directors, officers, employees, and to the knowledge (with respect to anti-corruption, as defined in the FCPA) of such Class B Member, its agents (A) is not a Prohibited Person, (B) has not within the past five (5) years made, given, offered, authorized, or promised to make, give, offer or authorize the payment of any money, commission, reward, gift, hospitality, entertainment, inducement (including any facilitation payments) or anything else of value, directly or indirectly, to: (a) any Government Official; (b) any person acting for or on behalf of any Government Official or any other Person in violation of applicable Anti-Bribery and Anti-Corruption Laws, and (C) has not engaged in the illegal laundering of the proceeds of any criminal activity, within the past five (5) years, in violation of applicable Anti-Terrorism and Money Laundering Laws; and
(xiii) Such Member shall not (A) take any action or (B) fail to take any action or provide consent for any Person (including the Administrator, the Partnership Representative or Designated Individual) to take any action, in each case, if such action or failure to take action or provide consent, as applicable, would cause a loss of coverage under the ITC Insurance Policy.
(b) By the Class B Member. The Class B Member hereby further covenants to, and agrees with the Company and each other Member that, the Class B Member shall notify, in writing, each Class A Member within five (5) Business Days of obtaining Knowledge of a breach by the Class B Member, the Project Company, the Company or any of their respective Affiliates under this Agreement or any other Transaction Document.
(c) Federal Income Tax Matters. The Class B Member hereby represents, warrants and covenants to the Class A Members that the following statements shall be true and correct at all times (unless otherwise limited to a specific time period):
(i) No federal tax credit (other than ITCs) has been or is allowed with respect to any property that is part of the Project, and to the extent permitted, the Company shall not claim any such other federal tax credits that result from a Tax Law Change; provided that if a favorable federal tax credit is enacted in connection with a Tax Law Change, the parties agree to negotiate in good faith whether to claim such tax credit.
(ii) The Project is located in its entirety in the United States.
(iii) All electricity sold by the Company or the Project Company will either be (A) produced by the Company or Project Company (as applicable) through the use of solar energy from the PV Project or (B) stored and delivered by the ▇▇▇▇ Project as a result of the ▇▇▇▇ Project being charged by the PV Project or a source other than the PV Project pursuant to Section 4.5(i) of the PPA;
(iv) Subject to Section 6.04(c), the Class B Member shall not take or fail to take any action that causes a Recapture Event during the Recapture Period, and, only to the extent ▇▇▇▇ Augmentation ITCs are allocated to the Class A Members, also during the Augmentation Recapture Period.
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(v) The Class B Member shall, and shall cause its Affiliates to, report in all documents, filings and accounting statements that the amount realized on the sale of the Project Company to the Company is the Project Company Purchase Price.
(vi) No tangible property of the Company or the Project Company is leased to a Tax Exempt Person during the Recapture Period, and, only to the extent ▇▇▇▇ Augmentation ITCs are allocated to the Class A Members, also during the Augmentation Recapture Period.
(vii) Except as provided in the Investment Documents and any Financing Loan Documents, no Person other than the Company or Project Company has an ownership interest, or a right to acquire an ownership interest, in the Project.
(d) Foreign Accounts. The Class B Member and the Managing Member hereby further covenants, and agrees with the Company and each other Member that, it will not permit the Company to, and will not permit the Company to permit the Project Company to, open or maintain any Foreign Accounts during the Term.
(e) Reliance. The Members and their successors and Assignees will be entitled to rely upon the representations, warranties and covenants made in this Section 3.02.
3.03 Dispositions and Encumbrances of Membership Interests.
(a) General Restriction. A Member may not Dispose of or Encumber all or
any portion of its Units or Membership Interest except in accordance with this Section 3.03. (References in this Agreement to Dispositions or Encumbrances of a “Membership Interest” shall also refer to Dispositions or Encumbrances of the corresponding Units or a portion of a Membership Interest or the corresponding Units. References in this Agreement to Dispositions or Encumbrances of “Units” shall also refer to Dispositions or Encumbrances of the corresponding Membership Interest represented by such Units.) Any attempted Disposition or Encumbrance of any Unit or Membership Interest, other than in accordance with this Section 3.03, shall be, and is hereby declared, null and void ab initio and neither the Managing Member nor the Company shall recognize it. Any Assignee resulting from a Disposition or Encumbrance that does not comply with the requirements of this Article 3 shall not be recognized as a Member by the Company or the Managing Member, shall have no right to act as a Member (and the interest of such Assignee shall not be considered in the determination of any vote or consent required of any of the Members) or otherwise participate in the management of the Company and shall not be entitled to receive from the Company the distributions or allocations to which the transferor would have been entitled with respect to such Units or Membership Interest pursuant to this Agreement. The Members agree that a breach of the provisions of this Section 3.03 may cause irreparable injury to the Company and to the other Members for which monetary damages (or other remedy at law) are inadequate in view of (i) the complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure of a Member to comply with such provision and (ii) the uniqueness of the Company’s business and the relationship among the Members. Accordingly, the Members agree that the provisions of this Section 3.03 may be enforced by specific performance.
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(b) Dispositions of Membership Interests.
(i) General Provision. A Member may not Dispose of all or any portion of its Units except by complying with all of the following requirements:
(A) Prior to the Flip Point. Prior to the occurrence of the Flip Point, the following rules apply:
(I) a Disposition of more than forty-nine point nine percent (49.9%) of the Class B Units by the Class B Member (taking into account all Dispositions by the Class B Member) (a) may only be made upon the consent of the Majority of Class A Members, and (b) may not be made to a Disqualified Assignee.
(II) a Disposition of forty-nine point nine percent (49.9%) or less of the Class B Units by the Class B Member (taking into account all Dispositions by the Class B Member) (a) may only be made upon the consent of the Majority of Class A Members and (b) may not be made to a Disqualified Assignee; provided that the consent of the Majority of Class A Members shall not be required pursuant to clause (a) of this Section 3.03(b)(i)(A)(II) from and after the Substantial Completion Funding Date; and
(III) a Disposition of Class A Units by a Class A Member (a) may only be made upon the consent of the Class B Member, (b) may not be made to a Disqualified Assignee and (c) may not result in the Company having more than four (4) Class A Members; provided that a Disposition of any Class A Units held by a Class A Member may be effected without the prior written consent of the Majority of the Class B Members pursuant to clause (a) of this Section 3.03(b)(i)(A)(III) so long as the owner of the applicable Class A Units or Class A Member after giving effect to such Disposition (i) prior to the Substantial Completion Funding Date, is either JPMorgan Chase Bank, N.A., a national banking association or JPM Capital Corporation, a Delaware corporation; provided, that consent of the Majority of Class B Members shall be required for any Disposition of Class A Units to JPM Capital Corporation unless (x) a parent guaranty issued by JPMorgan Chase Bank, N.A., with respect to all of the obligations of JPM Capital Corporation under the ECCA and this Agreement through the Substantial Completion Funding Date is provided in favor of the Class B Member (such guaranty to be in form and substance reasonably satisfactory to the Class B Member) and (y) JPM Capital Corporation is, and until the Substantial Completion Funding Date remains, Controlled by JPMorgan Chase & Co., a Delaware corporation and (ii) from and after the Substantial Completion Funding Date, has a consolidated tangible net worth, excluding the value of the Class A Membership Interests, of at least Fifty Million Dollars
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($50,000,000); provided that this Section 3.03(b)(i)(A)(III) shall not prohibit the Disposition of Class A Units to any Tax Exempt Person that is not otherwise described by clauses (i) or (iii) of the definition of Disqualified Assignee if, as a condition precedent to such transfer, the transferring Member has indemnified the other Members against any adverse tax effects from such transfer in a manner reasonably acceptable to the other Members.
(B) After the Flip Point. After the occurrence of the Flip Point, Disposition of any Units by any Member may not be made to a Disqualified Assignee; provided that, notwithstanding the foregoing, neither this Section 3.03(b)(i)(B) nor Section 3.03(b)(iii)(C)(V) shall prohibit the Disposition of Units occurring following the expiration of the Recapture Period (and, to the extent any ▇▇▇▇ Augmentation ITCs are claimed or transferred by the Company, including the Augmentation Recapture Period) to any Tax Exempt Person that is not otherwise described by clauses (a) or (b) of the definition of Disqualified Assignee.
(C) Compliance with Requirements. Any Disposition must comply with the requirements of Section 3.03(b)(iii) and, if the Assignee is to be admitted as a Member, Section 3.03(b)(ii).
(D) Permitted Disposition, Certain Other Dispositions. Anything to the contrary in this Section 3.03 notwithstanding, the provisions of Section 3.03(a), Section 3.03(b)(i) (other than with respect to clause (b)(i)(A)(III) (to the extent set forth in the definition of Permitted Disposition) and this clause (b)(i)(D)) and Section 3.03(b)(iv) shall not apply to any Permitted Disposition.
(ii) Admission of Assignee as a Member. An Assignee pursuant to a Permitted Disposition shall be admitted as a Member promptly upon its compliance with Section 3.03(b)(iii). Any other Assignee has the right to be admitted to the Company as a Member, with the Membership Interest so transferred to such Assignee, only if (A) the Disposing Member making the Disposition has granted the Assignee the Disposing Member’s entire Membership Interest, or, in the case of Disposition of a part of such Member’s Membership Interest, the express right to be so admitted; and (B) such Disposition is effected in strict compliance with this Section 3.03. Any Assignee that has acquired all of the Class B Units of the Managing Member shall become the Managing Member so long as such Assignee is a Qualified Assignee.
(iii) Requirements Applicable to All Dispositions and Admissions. In addition to the requirements set forth in Section 3.03(b)(i) and Section 3.03(b)(ii), any Disposition of a Membership Interest and any admission of an Assignee as a Member shall also be subject to the following requirements, and such Disposition (and admission, if applicable) shall not be effective unless such requirements are complied with.
(A) Disposition Documents. The following documents must be
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(i) delivered to the Managing Member, and in the case of Section 3.03(b)(iii)(A)(I), each other Member, and (ii) satisfactory, in form and substance, to the Managing Member:
(I) Notice. Written notice not less than ten (10) Business Days prior to the effective date of such Disposition; provided that such advance notice shall be five (5) Business Days in the case of a Disposition to an Affiliate of the Disposing Member or to another Member.
(II) Disposition Instrument. An instrument
implementing the Disposition in substantially the form of Exhibit F or such other form receiving Managing Member consent (such consent not to be unreasonably withheld).
(III) Ratification of this Agreement. An instrument, executed by the Disposing Member and its Assignee, containing the following information and agreements, to the extent applicable and to the extent they are not contained in the instrument described in Section 3.03(b)(iii)(A)(II): (1) the notice address of the Assignee; (2) if applicable, the Parent of the Assignee; (3) the number of Units as to each class of Membership Interest held by the Disposing Member and the Assignee after the Disposition (which must total the number of Units as to each class of Membership Interest held by the Disposing Member before the Disposition); (4) the allocation percentages as to each class of Membership Interest of the Disposing Member and its Assignee after the Disposition by such Disposing Member (which must total the allocation percentages as to each class of Membership Interest of the Disposing Member before the Disposition); (5) the Assignee’s ratification of, assumption of obligations pursuant to an agreement to be bound by this Agreement and its confirmation that the applicable representations and warranties in Section 3.02(a), Section 3.02(b) (in the case of a Disposition by a Class B Member) and Section 3.02(c) are true and correct as of the date of such Disposition; (6) the Assignee’s ratification of the Transaction Documents and agreement to be bound by them to the same extent that the Disposing Member was bound by them with respect to the Disposed Membership Interest prior to the Disposition, including the assumptions of all liabilities and obligations thereunder with respect to the Disposed Membership Interest; and (7) representations and warranties by the Disposing Member and its Assignee (aa) that the Disposition and admission is being made in accordance with all applicable Laws, and (bb) that the conditions set forth in Section 3.03(b)(iii)(B) through Section 3.03(b)(iii)(I) are satisfied.
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(B) Applicable Laws, Securities Laws. Such Disposition does not violate any provision of applicable Laws, including, without limitation, applicable securities Laws.
(C) Tax Consequences.
(I) Entity Classification. Such Disposition does not cause the Company to be classified as an entity other than a partnership (or cause the Company to be treated as a publicly traded partnership taxable as a corporation) for purposes of the Code, unless the transferring Member has indemnified the other Members against any adverse federal income tax effects that result from such Disposition in a manner reasonably acceptable to the other Members.
(II) ITCs. If such Disposition would occur prior to the occurrence of the later of (1) the Flip Point and (2) the end of the Recapture Period, and, only to the extent ▇▇▇▇ Augmentation ITCs are allocated to the Class A Members, also the end of the Augmentation Recapture Period, such Disposition would not result in the disallowance, loss or recapture of the ITCs or ▇▇▇▇ Augmentation ITCs otherwise accruing to the Class A Members, unless the transferring Member has indemnified the other Members against any adverse federal income tax effects that result from such Disposition in a manner reasonably acceptable to the other Members.
(III) Tax Exempt Person. If such Disposition is by a Member prior to the Flip Point, such Disposition is not to a Tax Exempt Person, unless the transferring Member has indemnified the other Members against any adverse federal income tax effects that result from such Disposition to a Tax Exempt Person in a manner reasonably acceptable to the other Members.
(IV) Tax Credit Transfer. Such Disposition would not cause the Company to be “related” (for purposes and within the meaning of Section 6418 of the Code) to any Tax Credit Transferee.
(V) CA Property Taxes. Such Disposition would not result in the loss of any property tax exemption, exclusion, or other benefit granted by a Governmental Authority with respect to the Project’s real property or improvements; provided, that any such Disposition shall be permitted if the Disposing Member (or its transferee) compensates the Company for the loss of any such exemption, exclusion, or other benefit and indemnifies the Company and the other Members for an adverse consequences resulting from any such exemption, exclusion or other benefit.
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(D) Payment of Expenses. The Disposing Member and its Assignee shall pay, or reimburse the Company and each non-Disposing Member for, all reasonable costs and expenses incurred by the Company and each non- Disposing Member in connection with the Disposition and admission, on or before the tenth (10th) Day after the receipt by that Person of the Company’s or non- Disposing Member’s invoice for the amount due.
(E) Institutional Investor. Except in the case of a Disposition by a Member to its Affiliate or to another Member, the Assignee of any Class A Units pursuant to such Disposition shall be a sophisticated institutional investor that is capable of performing the obligations of the Disposing Member as set forth in this Agreement.
(F) No Adverse Energy Regulatory Impact. Such Disposition shall not result in: (I) the Company or the Project Company being in violation of the FPA or any regulation or order of FERC or the CPUC; (II) the Project Company ceasing to be an EWG or the Company ceasing to be not subject to, or exempt from, regulation as a “holding company” as defined in Section 1262(8) of PUHCA except for regulation under Sections 1265 and 1275(b) of PUHCA; or (III) the Project Company or the Company becoming subject to regulation as a “public utility” (as such term is defined in Section 201(e) of the FPA), or as a “public utility” (as such term is defined in California Public Utilities Code Section 216).
(G) Permits. All permits, consents and licenses, including all necessary Governmental Approvals, with respect to such Disposition shall have been obtained within the time required by applicable Law.
(H) Investment Company Act. Such Disposition does not require the Company to register as an “investment company” under the Investment Company Act of 1940.
(I) No Release. Such Disposition shall not effect a release of
the Disposing Member from any liabilities to the Company or the other Members arising from events occurring prior to or in connection with the Disposition.
(iv) Change of Member Control. A Change of Member Control with respect to a Member must also comply with the requirements of this Section 3.03, other than those set forth in (A) Section 3.03(b)(iii)(A) (other than the notice requirement set forth in clause (I) thereof) and (B) Section 3.03(b)(iii)(E).
(v) Revised Exhibit B. Upon a Disposition effectuated in compliance with this Section 3.03, the Managing Member shall amend Exhibit B to reflect such Disposition.
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(vi) Regulatory Compliance:
(A) Regulatory Compliance Cooperation. In the event that a Class A Member reasonably determines that it has a Regulatory Problem, the Managing Member shall, at the sole cost and expense of such Class A Member (including reasonable attorney’s fees), cause the Company to take all such actions as are reasonably requested by such Class A Member in order (I) to effectuate and facilitate any transfer by such Class A Member of any Securities of the Company then held by such Class A Member to any Person designated by such Class A Member; provided that Section 3.03(b)(iii) shall be complied with, (II) to permit such Class A Member (or any of its Affiliates) to exchange all or any portion of the voting Securities then held by such Person on a share-for-share basis for shares of a class of non-voting Securities of the Company, which non-voting Securities shall be identical in all respects to such voting Securities, except that such new Securities shall be non-voting and shall be convertible on such terms as are requested by such Class A Member into voting Securities and reasonably acceptable to the Company in light of regulatory considerations then prevailing, and (III) to continue and preserve the respective allocation of the voting interests with respect to the Company arising out of such Class A Member’s ownership of voting Securities before the transfers and amendments referred to above (including entering into such additional agreements as are reasonably requested by such Class A Member to permit any Person(s) designated by such Class A Member to exercise any voting power which is relinquished by such Class A Member upon any exchange of voting Securities for non-voting Securities of the Company); and at the sole cost and expense of such Class A Member (including reasonable attorney’s fees), the Members shall enter into such additional agreements, adopt such amendments to this Agreement and other relevant agreements and take such additional actions, in each case as are reasonably requested by such Class A Member in order to effectuate the intent of the foregoing; provided that, any such additional agreements, amendments to this Agreement or other relevant agreements, or other actions shall not have any adverse impact (other than to a de minimis extent) on the Company or any other Member. If a Class A Member elects to transfer Securities of the Company to a Regulated Holder in order to avoid a Regulatory Problem, the Company agrees at the request of such Class A Member that the provisions of this Section 3.03(b)(vi) shall be applicable to such Regulated Holder in order to assist such Regulated Holder in complying with applicable laws and regulations to which it is subject. To the extent necessary to comply with such laws and regulations, such agreements may include restrictions on the redemption, repurchase or retirement of Securities of the Company that would result or be reasonably expected to result in such Regulated Holder holding more voting Securities or total securities (equity and debt) than it is permitted to hold under such laws and regulations. In the event a Class A Member has the right to acquire any of the Company’s Securities from the Company or any other Person (as the result of a preemptive offer, pro rata offer or otherwise), and such Class A Member reasonably
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determines that it has a Regulatory Problem, at such Class A Member’s request the Company, at the sole cost and expense of such Class A Member (including reasonable attorney’s fees), will offer to sell to such Class A Member non-voting Securities (or, if the Company is not the proposed seller, will arrange for the exchange of any voting Securities for non-voting Securities immediately prior to or simultaneous with such sale) on the same terms as would have existed had such Class A Member acquired the Securities so offered and immediately requested their exchange for non-voting Securities pursuant to this subsection (A).
(B) Related Covenants:
(I) In connection with a Regulatory Problem, the Company shall provide at least fifteen (15) Days prior written notice to a Class A Member of a proposal to distribute voting or equity Securities to any Member or to repurchase voting or equity Securities from any Member.
(II) If, in connection with a Regulatory Problem, at any time as a result of any repurchase, redemption or conversion of Company Securities or otherwise, a Class A Member shall hold in excess of 4.99% of any class of voting Securities of the Company, the portion of such Class A Member’s Securities of each such class of Securities entitling such Class A Member to in excess of 4.99% of the voting power of such class shall, without further action on the part of the Class A Member or the Company, be deemed to be non-voting Securities.
(c) Encumbrances of Membership Interest. Notwithstanding any provision of this Agreement, a Member may Encumber its Membership Interest (or a Parent of a Member or any Subsidiary thereof may Encumber its interest in a Member) if the instrument creating such Encumbrance provides that any Disposition upon foreclosure (or in lieu of such foreclosure) by or on behalf of any Lender, any such Lender’s collateral agent or any of their respective affiliates of such Encumbrance shall (A) be to a Qualified Assignee or to a Person that satisfies the Required Experience Standard; provided that if such Person does not have the Required Creditworthiness, they shall be required to either have their obligations under this Agreement guaranteed by a Person with the Required Creditworthiness or transfer their interest (which transfer, for the avoidance of doubt, shall not be subject to any consent of any Class A Member under Section 3.03(b)(i) or otherwise) in the Company to a Qualified Assignee within six (6) months of such foreclosure or Disposition in lieu of foreclosure and (B) be in compliance with (x) the applicable requirements of Section 3.03(b)(iii), subject to Section 3.03(b)(iv), or (y) if applicable, a Lender Consent. Any Disposition upon foreclosure of such Encumbrance (or Disposition in lieu of such foreclosure) that complies with such requirements shall be a Permitted Disposition.
3.04 Creation of Additional Membership Interests. Membership Interests additional to those in existence on the Effective Date may be created only with the prior unanimous written consent of all Members, which consent may be withheld in any such Member’s sole discretion. If
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such creation and issuance has been so approved, such Membership Interest shall be issued to existing Members or to other Persons in each case as specified in such consent, and such other Persons may be admitted to the Company as Members at the time, and on such terms and conditions as may be specified in such consent. The terms of admission or issuance pursuant to such written consent must specify the allocation of items of income, gain, loss, deduction or credit applicable thereto and may provide for the creation of different classes or groups of Members having different rights, powers, and duties. The Supermajority of all Members shall reflect the creation of any such new class or group in an amendment to this Agreement indicating the different rights, powers, and duties. Any such admission is effective only after the new Member has executed and delivered to the Members an instrument containing the notice address of the new Member, the Assignee’s ratification of this Agreement and agreement to be bound by it, and its confirmation that the representations and warranties in Section 3.02(a) are true and correct with respect to it. The provisions of this Section 3.04 shall not apply to Dispositions of Membership Interests or admissions of Assignees in connection therewith, such matters being governed by Section 3.03.
3.05 Access to Information. Each Member shall be entitled to receive any information that it may reasonably request concerning the Company and, after acquired by the Company, the Project Company, which right shall include the right to inspect a reasonable number of times during business hours, at the expense of such Member, the acquired Project subject to (i) at least ten (10) Business Days’ prior advance written notice, (ii) the presence of a representative of the Managing Member or the Administrator (which if required by such entity shall make themselves reasonably available for such visit) and (iii) compliance with applicable safety and security measures; provided, however, that this Section 3.05 shall not obligate the Company, the Project Company, the Managing Member or the Administrator to create any information that does not already exist at the time of such request (other than to convert existing information from one medium to another, such as providing a printout of information that is stored in a computer database). Each Member shall also have the right, upon reasonable notice, and at all reasonable times during usual business hours to inspect the properties of the Company and, after acquired by the Company, the Project Company and to audit, examine and make copies of the books of account and other records of the Company and, after acquired by the Company, the Project Company. The rights of a Member under this Section 3.05 may be exercised through any agent or employee of such Member designated in writing by it or by an independent public accountant, engineer, attorney or other consultant designated in writing by such Member. The Member making the request shall bear all costs and expenses incurred in any inspection, examination or audit made by or on such Member’s behalf. All information obtained pursuant to this Section 3.05 shall be subject to the provisions of Section 3.06.
3.06 Confidential Information.
(a) Confidential Information. The Parties shall, and shall cause their Affiliates and their respective stockholders, members and Representatives to, hold confidential this Agreement and any confidential information furnished hereunder, the transactions contemplated hereby and by the other Investment Documents (the “Transaction”), and all information they may have or obtain concerning the Members and their Affiliates and their
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respective assets, businesses, operations or prospects (the “Confidential Information”), and shall not disclose, or cause to be disclosed, any such Confidential Information to any Person; provided, however, that Confidential Information shall not include information that (A) becomes generally available to the public other than as a result of a disclosure by a Party or its Affiliates or any of their respective Representatives in violation of this Agreement or (B) becomes available to a Party or its Affiliates or any of their respective Representatives on a nonconfidential basis prior to its disclosure by the other Party or its Representatives from a Person not known by the recipient to have a duty of confidentiality with respect to such information. Notwithstanding the foregoing, the Parties acknowledge that Sponsor or its Affiliates reports on a general basis about its originations, the Power Purchaser and information contained in documents related to the Project, and that such reporting shall not be a violation of this Section 3.06; provided that, without the consent of the Class A Member, neither the identity of the Class A Member nor the economics of the Transaction shall be disclosed in any such reports.
(b) Legally-Compelled Disclosure. Confidential Information may be disclosed (A) as required or requested to be disclosed by a Party or any of its Affiliates or their respective stockholders, members or Representatives as a result of any applicable Law or any rule or regulation of any stock exchange, the National Association of Insurance Commissioners or other regulatory authority having valid jurisdiction over such Party or its Affiliate, or (B) as required or requested by the IRS, including, but not limited to, in connection with a request for any private letter ruling, any determination letter or any audit. If a Party or any of its Affiliates or their respective stockholders, members or Representatives becomes compelled or requested by legal or administrative process to disclose any Confidential Information, such Party shall, to the extent permitted by applicable Law, provide the other Parties with prompt notice so that the other Parties may (at their expense) seek a protective order or other appropriate remedy or waive compliance with the non-disclosure provisions of this Section 3.06 with respect to the information required to be disclosed. If such protective order or other remedy is not obtained, or such other Parties waive compliance with the non-disclosure provisions of this Section 3.06 with respect to the information required to be disclosed, the first party shall furnish only that portion of such information that it is advised, by opinion of counsel, is legally required or advisable to be furnished and shall exercise reasonable efforts, at the expense of the Party whose Confidential Information is being disclosed, to obtain reliable assurance that confidential treatment will be accorded such information, including, in the case of disclosures to the IRS described in clause (B) above, to obtain reliable assurance that, to the maximum extent permitted by Law, such information will not be made available for public inspection pursuant to Section 6110 of the Code.
(c) Disclosure to Representatives. Notwithstanding the foregoing, a Party may disclose Confidential Information received by it to its Affiliates and their respective employees, consultants, legal counsel, lenders, potential lenders, investors (including potential purchasers of equity interests in the Company), Tax Credit Transferees, Potential Tax Credit Transferees, management service providers or other agents or Representatives of the Party or such Persons who have a need to know such information; provided that such Party informs each such Person who has access to the Confidential Information of the confidential nature of such Confidential Information, the terms of this Agreement, and each such Person agrees to abide by
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such terms, including this Section 3.06. The Parties shall use commercially reasonable efforts to ensure that each such Person complies with the terms of this Agreement and that any Confidential Information received by such Person is kept confidential and shall be liable for any breach by such Person of the confidentiality obligations hereunder.
(d) Other Permitted Disclosures. Nothing herein shall be construed as prohibiting a Party from using such Confidential Information to the extent required in connection with (A) any claim against another Party hereunder, (B) any exercise by a Party of any of its rights hereunder or the performance by a Party of its obligations hereunder, (C) a Disposition by SBE Class B Member of all or a portion of its Class B Units or a Disposition by any Affiliate of SBE Class B Member of all or a portion of such Person’s equity interest in SBE Class B Member or (D) a Disposition by any Affiliate of FNBC of all or a portion of such Person’s equity interests in FNBC, provided that in the case of clauses (C) and (D), the potential purchaser has entered into a confidentiality agreement with respect to Confidential Information on customary terms used in confidentiality agreements in connection with corporate acquisitions before any such information may be disclosed.
(e) Publicity. Notwithstanding the provisions of this Section 3.06, the Parties shall consult with each other in connection with making public announcements regarding the Transaction; provided that no Party shall make any public announcement regarding the Transaction which has not been approved in writing by the other Parties.
(f) Tax Information. Notwithstanding anything to the contrary, the foregoing
obligations shall not apply to the tax treatment or tax structure of the Transaction and each Party (and any employee, Representative, or agent of any Party) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all other materials of any kind (including opinions or other tax analyses) that are provided to any Party to the extent relating to such tax treatment and tax structure (all such information that may be so disclosed hereunder is hereinafter referred to as the “Tax Information”). For purposes of this Section 3.06(f), the Tax Information includes only those facts that may be relevant to understanding the purported or claimed U.S. federal income tax treatment or tax structure of the Transaction and, to eliminate any doubt, therefore specifically does not include information that either reveals or standing alone or in the aggregate with other information so disclosed tends of itself to reveal or allow the recipient of the information to ascertain the identity of any of the Company, any Member (or potential Member), or any other Third Parties involved in any of the Transaction or any other potential transactions with any of the foregoing. However, any Tax Information is required to be kept confidential to the extent necessary to comply with any applicable securities laws. This Section 3.06(f) is intended to prevent such an investment in the Company from being treated as a “reportable transaction” as a result of it being a transaction offered to a taxpayer under conditions of confidentiality within the meaning of Code Sections 6011, 6111 and 6112 (or any successor provision) and the Treasury Regulations thereunder (as clarified by Notice 2004-80 and Notice 2005-22) and shall be construed in a manner consistent with such purpose.
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3.07 Liability to Third Parties. No Member shall be personally liable for the debts, obligations or liabilities of the Company, whether arising in contract, tort or otherwise solely by reason of being a Member.
3.08 Withdrawal. A Member may not withdraw or resign from the Company except as
permitted by this Agreement.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.01 Capital Contributions.
(a) Pursuant to the ECCA, on the Effective Date, (i) the Class A Member has made a Capital Contribution to the Company in an amount equal to the Mechanical Completion Funding Amount and the Managing Member has caused the Company to issue Class A Membership Interests to the Class A Member and (ii) the Class B Member has made a Capital Contribution to the Company in an amount equal to the Class B Mechanical Completion Funding Amount and the Managing Member has caused the Company to convert the Membership Interests of the Company held by the SBE Class B Member into the Class B Membership Interests, in each case of clauses (i) and (ii) above, as indicated on Exhibit B.
(b) Pursuant to the ECCA, on the Substantial Completion Funding Date, the Class A Member shall make the Substantial Completion Funding to the Company in an amount equal to the Substantial Completion Funding Amount and the Class B Member shall make a Capital Contribution in the amount required for the Company and the Class B Member to satisfy their respective obligations under Sections 7.5 and 7.6 of the ECCA and Section 6.17 and to pay amounts then due and payable under any Material Project Contract by the applicable Project Entity party thereto. The Capital Contributions made on such date, together with other available funds, shall be applied (i) first, to satisfy in full the outstanding indebtedness for borrowed money, including the Project Construction Indebtedness, and any other outstanding obligations for borrowed money incurred pursuant to the Financing Loan Documents due on such date, (ii) second, to make a deposit into the Final Completion Reserve Account in an amount equal to at least (A) one hundred percent (100%) of all remaining costs that are owed to the EPC Contractors under the EPC Agreements with respect to punch-list items plus (B) one hundred ten percent (110%) of all other items required for the achievement of Final Completion of the Project (the “Final Completion Holdback”), (iii) third, to satisfy the Company’s and the Class B Member’s obligations under Sections 7.5 and 7.6 of the ECCA and Section 6.17 and to pay amounts then due and payable under any Material Project Contract by the applicable Project Entity party thereto, and (iv) thereafter, as otherwise specified in the Flow of Funds Memorandum.
(c) The Capital Account balance of each Member, as indicated on Exhibit B, shall be revised as of each Equity Capital Contribution Date to reflect the Capital Contribution made as of such Equity Capital Contribution Date.
(d) The Members shall cause the Base Case Model to be revised as of the date that is three hundred sixty five (365) days after the Substantial Completion Funding Date to
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reverse the impact of any Proposed Tax Law Change incorporated into a Base Case Model delivered at an Equity Capital Contribution Date that has not resulted in a Tax Law Change as of the date that is three hundred sixty five (365) days after the Substantial Completion Funding Date. Such Base Case Model shall include any adjustments required to be made to allocations under Section 5.01(a) and/or distributions under Section 5.02(a) in order to demonstrate the occurrence of the Flip Point as close as possible to, but no later than, the Target Flip Date and the achievement by the Class A Member of the Investment Targets (and the Parties agree that this Agreement shall be amended to incorporate any such changes to the extent necessary).
4.02 Additional Capital Contributions.
(a) Except as otherwise provided in Section 4.01, this Section 4.02, Section 6.14(a), Section 6.16, Section 6.17, Section 7.03, Section 12.04 or Section 13.01(b), no Member shall be required to make any Capital Contribution.
(b) In the event a Member’s interest in the Company is “liquidated” within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), after giving effect to all allocations (including those under Section 5.01 and Sections 12.02(a)(iv) and (vi)), all distributions (including those under Section 5.02(a) and Section 5.04) and all contributions (including those under Section 4.01, Section 4.02 and Section 5.04) for all periods, if such Member has a deficit Capital Account balance, calculated in each case without regard to such Member’s obligation pursuant to this Section 4.02(b), then such Member shall be obligated to pay to the Company cash in an amount equal to such deficit balance by the end of the Taxable Year of the Company during which the liquidation of the Company occurs, or if later, within ninety (90) Days after the date of such liquidation; provided, however, that the restoration obligation of all Class A Members in the aggregate will not be more than [forty-nine million seven hundred eighty-seven thousand seven hundred fifty Dollars ($[49,787,750.00])]2 (the “DRO Limitation”); provided, further, that, once each Class A Member’s deficit Capital Account balance has occurred and then has been eliminated, no allocation of losses or deductions shall be made to the Class A Members that would result in the recurrence of a deficit Capital Account balance of any such Class A Member; provided, lastly, that the restoration obligation of all Class B Members in the aggregate will not be more than zero Dollars ($0).
(c) Notwithstanding Section 4.02(b), at the end of any Allocation Year following the final Substantial Completion Funding Date, a Class A Member shall have the unilateral right and option, but not the obligation, to amend this Agreement, by written notice to the Company and to each other Member, to increase the DRO Limitation. If one or more Class A Members should at any time increase the DRO Limitation, and if all Class A Members do not at that time increase their respective restoration obligations proportionately, then this Agreement shall be amended, effective as of the date of that increase, to provide that the Flip Point and Purchase Option event will be determined separately for each Class A Member, and that the sharing of allocations and distributions between the Class B Members and Class A Members under Sections 5.01, 5.02(a), and 12.02(a) will likewise be determined separately for each Class
2 Note to Form: To be updated once updated model is final. DRO Limitation to be based on the Sponsor P75 Case in the Base Case Model.
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A Member to reflect the time (if ever) at which the Flip Point occurs for that Class A Member. Each of the Members hereby agrees to cooperate in good faith to agree on and implement such an amendment as promptly as possible following such an increase.
(d) In the event that the Company is required to pay an Imputed Underpayment (including any associated penalties, interest and additions to tax) prior to an Imputed Underpayment Final Determination, then to the extent that the Company’s Distributable Cash is less than the amount of such Imputed Underpayment (including any associated penalties, interest and additions to tax), the Class A Member and/or the Class B Member may, at its option, contribute to the Company an amount equal to the difference between such Imputed Underpayment (and any associated penalties, interest and additions to tax for such Imputed Underpayments) and the Company’s Distributable Cash in the form of a loan (upon the same terms and conditions as a loan pursuant to Section 4.03). Any such loan made pursuant to this Section 4.02(d) shall be repaid out of Distributable Cash that would otherwise be distributed to Members pursuant to the provisions of Section 5.02(a), and if and to the extent such loan has not been repaid at the time any Capital Contributions with respect to Class A Imputed Underpayments, Class B Imputed Underpayments, and/or Flip Imputed Underpayments, if any, have been made by the Members in accordance with Sections 4.02(e), (f) or (g), any unpaid amount shall be immediately repaid out of (or offset against) such Capital Contributions. To the extent that any Distributable Cash is used to repay the loans made pursuant to this Section 4.02(d), then any portion of Capital Contributions made by the Members in accordance with Sections 4.02(e), (f) or (g) that are not used to repay or offset any loan made pursuant to this Section 4.02(d) shall be immediately distributed to the Members in accordance with Section 5.02 or, if the Flip Point has already occurred, but after taking into account the amount of such Capital Contribution in accordance with Section 5.05(b) the Flip Point is determined to no longer have occurred, then in accordance with Section 5.02 as adjusted in the same manner as set forth in Section 5.05(b)(v)(B). To the extent that amounts contributed by the Class A Member and/or the Class B Member pursuant to this Section 4.02(d), plus Distributable Cash, are less than the amount required to be paid by the Company to satisfy the Imputed Underpayment (including any associated penalties, interest and additions to tax), the Managing Member shall cause the Company to borrow funds in an amount equal to the shortfall and use the proceeds of such borrowing to satisfy the Imputed Underpayment.
(e) In the event that the Company is required to pay an Imputed Underpayment that includes in its calculation any Class B Imputed Underpayments (including any associated penalties, interest and additions to tax), once an Imputed Underpayment Final Determination has been made with respect to such Class B Imputed Underpayments, the Class B Members shall have the obligation to contribute to the Company an amount equal to such Class B Imputed Underpayments (and any associated penalties, interest and additions to tax for such Class B Imputed Underpayments), but not to exceed such Imputed Underpayment, in the form of an additional Capital Contribution, in accordance with the Pro Rata Shares of each Class B Member.
(f) In the event that the Company is required to pay an Imputed Underpayment that includes in its calculation any Flip Imputed Underpayments (and any associated penalties, interest and additions to tax), once an Imputed Underpayment Final
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Determination has been made with respect to such Flip Imputed Underpayments, the Class A Members shall have the obligation to contribute to the Company the lesser of such Imputed Underpayment and the Flip Imputed Underpayments (and any associated penalties, interest and additions to tax for such Flip Imputed Underpayments) in the form of an additional Capital Contribution, pro rata in accordance with their Class A Units.
(g) In the event that the Company pays an Imputed Underpayment in accordance with this Agreement that includes in its calculation any Class A Imputed Underpayments (and any associated penalties, interest and additions to tax for such Class A Imputed Underpayments), once an Imputed Underpayment Final Determination has been made with respect to such Class A Imputed Underpayments, the Class A Members shall have the obligation to contribute to the Company an amount equal to the lesser of such Imputed Underpayment and such Class A Imputed Underpayments (and any associated penalties, interest and additions to tax for such Class A Imputed Underpayments) in the form of an additional Capital Contribution, pro rata in accordance with their Class A Units.
(h) In the event that a Member fails to make a Capital Contribution under Section 4.02(e) through (g) within ten (10) Business Days from the date such Member is notified to make such Capital Contribution in accordance with Sections 4.02(e) through (g) (for the avoidance of doubt, after an Imputed Underpayment Final Determination has been made and after resolution of any dispute pursuant to Article 11) (such amount, if such notice has been timely provided, being an “Imputed Underpayment Defaulted Contribution”), (i) the Imputed Underpayment Defaulted Contribution shall accrue interest, to the extent permitted by applicable Law, from the date such Imputed Underpayment Defaulted Contribution was otherwise required to be contributed pursuant to Section 4.02(e) through (g) until the date such amount is actually contributed to, and received by, the Company at a per annum rate equal to seven percent (7%), and (ii) the Members shall have the right to make a claim on the distributions otherwise payable to the applicable Members in accordance with Section 5.02, equal to the Imputed Underpayment Defaulted Contribution plus interest accrued pursuant to this Section 4.02(h).
(i) If the Company is required to make any payments in connection with the transfer of any Company Credits pursuant to Code Section 6418 for any loss, recapture, or disallowance of such Company Credits, each Member shall make an additional Capital Contribution to the Company in a ratio that reflects how the particular tax risk giving rise to such loss or disallowance was allocated under the Investment Documents to the Members as such allocation is agreed between the Members.
(j) The Class B Members shall make Capital Contributions to the Company with respect to any liquidated damages, penalties, or other losses or reductions to revenue as required under the “Tolling Agreements,” “Forward Energy Market Participation,” “Resource Adequacy (RA) Capacity” and “Renewable Energy Credit” paragraphs of the Risk Policy.
(k) All payments required to be made under this Section 4.02 shall be by wire transfer in immediately available funds. For the avoidance of doubt, the obligations of each Member pursuant to this Section 4.02 are several and not joint.
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4.03 Managing Member Loans; LC Loans.
(a) Managing Member Loans.
(i) If, and only if, the Company or the Project Company does not have sufficient cash to pay its obligations, the Managing Member (A) shall advance (or cause an Affiliate of the Managing Member to advance) one or more working capital loans to the Company (each a “Managing Member Committed Working Capital Loan”) in an aggregate principal amount (excluding any LC Loans and Managing Member Additional Working Capital Loans) of up to Thirty Million Dollars ($30,000,000) and (B) may advance (or cause an Affiliate of the Managing Member to advance) additional working capital loans in excess of the Managing Member Committed Working Capital Loans (each a “Managing Member Additional Working Capital Loan” and together with Managing Member Committed Working Capital Loans and LC Loans, the “Managing Member Loans”) so long as the aggregate principal amount of outstanding Managing Member Additional Working Capital Loans does not at any time exceed Thirty Million Dollars ($($30,000,000)); provided that the Managing Member (or such Affiliate) shall not have the right to accelerate the repayment of such loans. Managing Member Loans shall be repaid in full solely out of Distributable Cash that would otherwise be distributed to Members prior to the commencement of distributions pursuant to the provisions of Section 5.02(a).
(ii) Managing Member Loans shall bear interest, unless otherwise agreed by such Managing Member in its sole discretion, equal to the lesser of (x) the Reference Rate plus two percent (2%) or (y) the highest rate of interest that may be charged by the Managing Member to the Company in accordance with applicable Law, which interest shall be payable monthly in arrears. The Company shall apply all Distributable Cash first to pay accrued interest on all Managing Member Additional Working Capital Loans, second to the payment of the principal of such Managing Member Additional Working Capital Loans, third to pay accrued interest on all Managing Member Committed Working Capital Loans and fourth, to the payment of the principal of such Managing Member Committed Working Capital Loans.
(iii) Each Managing Member Loan shall constitute a loan from the Managing Member (or such Affiliate) to the Company and is not a Capital Contribution.
(b) LC Loans.
(i) The Class B Member(s) or any Affiliate of a Class B Member shall provide directly or procure and subsequently maintain (or cause to be maintained) on behalf of the Project Company all Project Credit Support, in each case, satisfying the terms of and in accordance with the terms of each applicable Material Project Contract, applicable Law or Governmental Approval. In the event that the Class B Member or any of its Affiliates provides Project Credit Support in the form of one or more letters of credit, bonds or surety contracts, then the Class A Members hereby agree that all actual out-of-pocket fees, costs and expenses incurred in connection therewith after the Substantial Completion Funding Date, or in the case of any Project Credit Support in the
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form of cash deposits, guaranties or other security (other than a letter of credit, bond or surety contract), an annual fee equal to two percent (2%), shall be included in the Approved Budget and shall be paid by the Company to such Class B Member or its Affiliate as and when due prior to distributions to the Members pursuant to Section 5.02.
(ii) In the event any Project Credit Support is called upon, then such amount drawn will be considered to be an unsecured loan due (an “LC Loan”) from the Company to the applicable Class B Member(s) or its Affiliate procuring the Project Credit Support and repaid monthly out of the Project Company’s revenues from the Project Company’s operations before any distributions of Distributable Cash to the Members or repayment of any Managing Member Committed Working Capital Loans or Managing Member Additional Working Capital Loans (as provided for in Section 4.03(a)) and will be repaid together with interest at a rate equal to the lesser of (x) the rate of interest charged to the Class B Member(s) or the applicable Affiliate in respect of such drawn amount under the arrangements to procure the Project Credit Support or (y) the highest rate of interest that may be charged by a Member or such Affiliate to the Company in accordance with applicable Law, which interest shall be payable monthly in arrears. An advance or loan by a Class B Member or applicable Affiliate described in this Section 4.03(b) constitutes a loan from such Class B Member or applicable Affiliate to the Company and is not a Capital Contribution.
(c) Unless and until the outstanding principal amount of all Managing Member Loans and LC Loans is repaid in full in accordance with Sections 4.03(a) and 4.03(b), together with all interest thereon and all other amounts due in respect thereof, there shall be no distributions to the Members under this Agreement pursuant to Article 5 or otherwise.
4.04 Return of Contributions. Except as expressly provided herein, a Member is not entitled to the return of any part of its Capital Contributions or to be paid interest in respect of either its Capital Account or its Capital Contributions. An unrepaid Capital Contribution is not a liability of the Company or of any Member.
4.05 Capital Accounts.
(a) A Capital Account shall be established and maintained for each Member. Each Member’s Capital Account shall be increased by (a) the amount of money contributed by such Member to the Company, (b) the Fair Market Value of property contributed by such Member to the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Code), (c) allocations to such Member of Company income and gain (or items thereof), including income and gain exempt from tax and income and gain described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g), but excluding income and gain described in Treasury Regulation Section 1.704-1(b)(4)(i), (d) the amount of any increase of such Members share of partnership liabilities described in Treasury Regulation Section 1.752-1(b), and (e) an amount equal to an allocation of upward basis adjustment to such Member as a result of recapture of the ITC as described in Treasury Regulation Section 1.704-1(b)(2)(iv)(j), and shall be decreased by (f) the amount of money distributed to such Member by the Company, (g) the Fair Market Value of property
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distributed to such Member by the Company (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Code), (h) allocations to such Member of expenditures of the Company described (or treated as described) in Section 705(a)(2)(B) of the Code (including, for the avoidance of doubt, any payment by the Company of an Imputed Underpayment or other nondeductible penalties and/or interest), (i) allocations of Company loss and deduction (or items thereof), including loss and deduction described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g), but excluding items described in (h) above and loss or deduction described in Treasury Regulation Section 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii), and (j) an amount equal to an allocation of downward basis adjustment to such Member as described in Treasury Regulation Section 1.704-1(b)(2)(iv)(j). To the extent not otherwise inconsistent with the provisions of this Section 4.05, the Members’ Capital Accounts shall be maintained and adjusted as required by the provisions of Treasury Regulation Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4) including adjustments required by the provisions of Treasury Regulation Sections 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(m) and adjustments to reflect the allocations to the Members of depreciation, depletion, amortization, and gain or loss as computed for book purposes rather than the allocation of the corresponding items as computed for tax purposes, as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g). The Members’ Capital Accounts shall be increased or decreased to reflect a revaluation of the Company’s property on its books based on the Fair Market Value of the Company’s property on the date of adjustment immediately prior to the events described in clause (ii) of the definition of Gross Asset Value. Upon the Disposition of all or a portion of a Membership Interest, the Capital Account of the Disposing Member that is attributable to such Membership Interest shall carry over to the Assignee in accordance with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(1).
(b) The foregoing provisions of this Article 4 and the other provisions of this Agreement are intended to comply with Treasury Regulation Sections 1.704-1 and 1.704-2 and will be interpreted and applied in a manner consistent with such Treasury Regulations and any amendment or successor provision thereto.
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
5.01 Allocations.
(a) General.
(i) After giving effect to the Regulatory Allocations and other special allocations set forth in Section 5.01(b) and the other special allocations required pursuant to Section 5.01(c), and subject to Sections 5.01(a)(ii)-(iii) and 5.01(d), all Company Items of income, gain, loss, deduction and credit (including the ITC) shall be allocated:
(A) First, from the Effective Date until the end of the calendar year in which Substantial Completion Funding Date occurs, ninety-nine percent (99%) to the Class A Members in accordance with their Pro Rata Shares, and one percent (1%) to the Class B Members in accordance with their Pro Rata Shares;
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(B) Second, from the expiration of the period in clause (A) above through the end of the calendar year in which the Recapture Period ends, sixty- seven percent (67%) to the Class A Members in accordance with their Pro Rata Shares, and thirty-three percent (33%) to the Class B Members in accordance with their Pro Rata Shares;
(C) Third, from the expiration of the period in clause (B) above through the occurrence of the Flip Point, five percent (5%) to the Class A Members, in accordance with their Pro Rata Shares, and ninety-five percent (95%) to the Class B Members, in accordance with their Pro Rata Shares;
(D) Thereafter, six and a half percent (6.5%) to the Class A Members in accordance with their Pro Rata Shares, and ninety-three and a half percent (93.5%) to the Class B Members in accordance with their Pro Rata Shares; provided, however, from January 1st until December 31st of the first Taxable Year in which the Company realizes positive net taxable income from all Company Items of income, gain, loss, and deduction, all Company Items of income and gain (other than any Company Items of income and gain from the sale of Uncontracted RECs) shall be allocated ninety-nine percent (99%) to the Class A Members in accordance with their Pro Rata Shares, and one percent (1%) to the Class B Members in accordance with their Pro Rata Shares; provided, further if there is a deficit Capital Account balance of any Class A Member following the end of the Recapture Period, Company Items of income and gain shall be allocated to such Class A Member in the largest amount possible, and Company Items of loss and deductions shall be allocated to the Class B Members to the extent necessary, in order to eliminate such deficit balance as quickly as possible. Losses or deductions that a Member cannot be allocated by reason of this Section 5.01(a)(i) will be allocated to the other Members.
Notwithstanding the foregoing provisions of this Section 5.01(a)(i), after giving effect to the Regulatory Allocations and other special allocations set forth in Section 5.01(b), the other special allocations required pursuant to Section 5.01(c), and subject to Section 5.01(d), if the allocations set forth in Sections 5.01(a)(i) otherwise (x) would result in less than sixty-seven percent (67%) of any item of income or gain, for any Allocation Year during the Recapture Period being allocated to the Class A Members, then such item of income or gain shall be reallocated for such Allocation Year so that not less than sixty-seven percent (67%) of each such item of income and gain is allocated to the Class A Members in accordance with their Pro Rata Shares, (y) would result in less than five percent (5%) of any item of income or gain, for any Allocation Year being allocated to the Class A Members, then such item of income or gain shall be reallocated for such Allocation Year so that not less than five percent (5%) of each such item of income and gain is allocated to the Class A Members in accordance with their Pro Rata Shares, or (z) would result in less than one percent (1%) of any item of income, gain, loss or deduction for any Allocation Year being allocated to the Class B Members, then to the extent possible after giving effect to (x) and (y), such item of income, gain, loss or deduction shall be reallocated for such Allocation Year so that not less than one percent (1%) of each such item is allocated to the Class B Members in accordance with their Pro Rata Shares.
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(ii) Notwithstanding the foregoing, all Company Items of income, gain, loss, deduction, and credit from the sale of Uncontracted RECs shall be allocated:
(A) First, from the Effective Date until the occurrence of the Flip Point, ninety-nine percent (99%) to the Class A Members in accordance with their Pro Rata Shares, and one percent (1%) to the Class B Members in accordance with their Pro Rata Shares; and
(B) Thereafter, six and a half percent (6.5%) to the Class A Members in accordance with their Pro Rata Shares, and ninety-three and a half percent (93.5%) to the Class B Members in accordance with their Pro Rata Shares; provided, however, if there is a deficit Capital Account balance of any Class A Member following the end of the Recapture Period, Company Items of income and gain from the sale of Uncontracted RECs shall be allocated to such Class A Member in the largest amount possible, and Company Items of loss and deductions from the sale of Uncontracted RECs shall be allocated to the Class B Members in the largest amount possible, in each case to the extent necessary in order to eliminate such deficit balance as quickly as possible. Losses or deductions that a Member cannot be allocated by reason of this Section 5.01(a)(ii) will be allocated to the other Members.
(iii) Notwithstanding the foregoing, if the ▇▇▇▇ Augmentation ITC Special Allocation Conditions have been satisfied, Company Items of income, gain, loss, deduction and credit (including the ▇▇▇▇ Augmentation ITC) arising from or attributable to the ▇▇▇▇ Augmentation shall be allocated five percent (5%) to the Class A Members, in accordance with their Pro Rata Shares, and ninety-five percent (95%) to the Class B Members, in accordance with their Pro Rata Shares ; provided, for the avoidance of doubt, in the event that the ▇▇▇▇ Augmentation ITC Special Allocation Conditions are not satisfied in respect of a ▇▇▇▇ Augmentation, Company Items from such ▇▇▇▇ Augmentation shall be allocated consistent with Company Items from the ▇▇▇▇ Project under Section 5.01(a).
(b) Special Allocations. The following special allocations shall be made in the
following order:
(i) Company Minimum Gain Chargeback. Notwithstanding the other provisions of this Section 5.01, except as provided in Treasury Regulation Section 1.704- 2(f), if there is a net decrease in Company Minimum Gain during any Allocation Year, each Member shall be specially allocated items of Company income and gain for such Allocation Year (and, if necessary subsequent Allocation Years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulation Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(f)(6) and 1.704- 2(j)(2). This Section 5.01(b)(i) is intended to comply with the minimum gain chargeback
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requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt. Notwithstanding the other provisions of this Section 5.01, except as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Allocation Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such Allocation Year (and, if necessary, subsequent Allocation Years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt, determined in accordance with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 5.01(b)(ii) is intended to comply with the partner nonrecourse debt minimum gain chargeback requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by Treasury Regulations, the Adjusted Capital Account Deficit of the Member as quickly as possible, provided that an allocation pursuant to this Section 5.01(b)(iii) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 5.01 have been tentatively made as if this Section 5.01(b)(iii) were not in this Agreement.
(iv) Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Allocation Year that is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to Section 4.02(b) and (ii) the amount such Member is deemed obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible; provided that an allocation pursuant to this Section 5.01(b)(iv) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Section 5.01 have been made as if Sections 5.01(b)(iii) and this Section 5.01(b)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for any Allocation Year shall be specially allocated to the Members in accordance with the
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subparagraph of Section 5.01(a) that is in effect at the time the Nonrecourse Deduction arises.
(vi) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Allocation Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i)(1).
(vii) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s interest in the Company or a distribution to a Member other than in complete liquidation of such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis). Such gain or loss shall be specially allocated to the Members as follows: (x) to the Member to whom such distribution was made in the event the first sentence of Treasury Regulation Section 1.704- 1(b)(2)(iv)(m)(4) applies; (y) in accordance with how the corresponding item of “displaced” gain or loss would be allocated to the Members pursuant to Section 5.01(b)(ix) to the extent the second sentence of Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies; and (z) to the Members in accordance with the Members’ “interest in the Company” under Treasury Regulation Section 1.704-1(b)(3) in the event Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) applies.
(viii) Allocations Relating to Certain Payments. Any item of deduction or loss attributable to any payment by the Company with respect to which the Class B Member makes Capital Contributions under Section 13.01(b) shall be specially allocated one hundred percent (100%) to the Class B Member(s) in accordance with their Pro Rata Shares.
(ix) Certain Gains. Upon a sale, transfer or other disposition of an asset that constitutes “capital gain property” within the meaning of Treasury Regulations Section 1.755-1(a)(1), then any item of gain resulting from such sale, transfer or other disposition shall be allocated to the Members pursuant to the respective allocations set forth in Section 5.01(a)(i) in accordance with the Members’ Pro Rata Shares; provided, in the event the Class A Member has a deficit Capital Account balance, up to ninety-nine percent (99%) to the Class A Member in accordance with their Pro Rata Shares and the remainder to the Class B Members in accordance with their Pro Rata Shares and in the event the Class B Member has a deficit Capital Account balance, up to ninety-five percent (95%) to the Class B Members in accordance with their Pro Rata Shares and the remainder to the Class A Members in accordance with their Pro Rata Shares, in each case in order to eliminate such deficit balance as quickly as possible.
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For the avoidance of doubt, gain for purposes of this Section 5.01(b)(ix) shall not include any gain for which Code Sections 1245(a)(1) or 1250(a) would apply.
(x) Items in Connection with Liquidation. Items of income, gain, loss or deduction, credits (including ITCs) and any credit recapture (including any ITC recapture) for the Allocation Year in which there is a disposition of all or substantially all of the assets of the Company pursuant to Section 12.02(a)(iii) shall be specially allocated pursuant to Sections 12.02(a)(iv) and 12.02(a)(vi).
(xi) Items in Connection with a Partnership Audit.
(A) Company Items of loss and deduction for the Taxable Year attributable to the payment of an Imputed Underpayment that includes in its calculation any Class A Imputed Underpayments and/or Flip Imputed Underpayments (and any associated penalties, interest and additions to tax) shall in proportion to such inclusions in the overall calculation be allocated one hundred percent (100%) to the Class A Members, pro rata in accordance with their Class A Units, and zero percent (0%) to the Class B Members, pro rata in accordance with their Class B Units.
(B) Company Items of loss and deduction for the Taxable Year attributable to the payment of an Imputed Underpayment that includes in its calculation any Class B Imputed Underpayments (and any associated penalties, interest and additions to tax) shall in proportion to such inclusions in the overall calculation be allocated one hundred percent (100%) to the Class B Members, pro rata in accordance with their Class B Units, and zero percent (0%) to the Class A Members, pro rata in accordance with their Class A Units.
(C) Company Items of loss and deduction for the Taxable Year attributable to the payment of an Imputed Underpayment that is none of a Class B Imputed Underpayment, Class A Imputed Underpayment or Flip Imputed Underpayment (and any associated penalties, interest and additions to tax) shall be allocated among the Members so as to correspond to the Company Item of income, gain, loss or deduction allocated and credited or debited pursuant to Section 5.01 in the Taxable Year for which the Partnership Adjustment relating to such Imputed Underpayment is made.
(xii) Transferability Allocations. In the event an election under Code Section 6418 is made in accordance with Section 7.03, to the greatest extent permitted by Section 6418 of the Code and the Treasury Regulations promulgated thereunder, any item of tax-exempt income (within the meaning of Code Section 705) resulting from receipt of Transfer Proceeds shall be allocated to the applicable Transferring Member in accordance with the proportion of Class A Transferred Credits and Class B Transferred Credits comprising such transfer, in each case in accordance with each Member’s Pro Rata Share, or otherwise as required under Code Section 6418(c)(1)(B).
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(iii), (iv) and (vii) and Section 5.01(d) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, on and after the date that the deficit Capital Account balance of any Class A Member has been eliminated, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss, or deduction pursuant to this Section 5.01(c). Therefore, notwithstanding any other provisions of this Section 5.01, the Regulatory Allocations shall be taken into account in allocating items of income, gain, loss, deduction and credit among the Members such that, to the extent possible, the net amount of allocations of such items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each Member if the Regulatory Allocations had not occurred.
(d) Loss Limitations. Losses allocated pursuant to Section 5.01(a) and any items of loss or deduction allocated pursuant to Section 5.01(b)(viii) and Section 12.02(a)(vi) shall not exceed the maximum amount of losses and other items of loss or deduction that can be allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any current or future Allocation Year. In the event some but not all of the Members would have Adjusted Capital Account Deficits as a consequence of an allocation of losses pursuant to Section 5.01(a) or any items of loss or deduction allocated pursuant to Section 5.01(b)(viii) or Section 12.02(a)(vi), the limitation set forth in this Section 5.01(d) shall be applied on a Member by Member basis and losses and items of loss or deduction not allocable to any Member as a result of such limitation shall be allocated to the other Members in accordance with the positive balances in such Member’s Capital Accounts so as to allocate the maximum permissible losses to each Member under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
(e) Other Allocation Rules.
(i) The Members are aware of the income tax consequences of the allocations made by this Agreement and hereby agree to be bound by the provisions of this Agreement in reporting their shares of Company income and loss for income tax purposes.
(ii) The Company shall allocate one hundred percent (100%) of the
“excess” Nonrecourse Liabilities of the Company, for purposes of Treasury Regulation Section 1.752-3(a)(3), five percent (5%) to the Class A Members in accordance with their Pro Rata Shares, and ninety-five percent (95%) to the Class B Member(s) in accordance with their Pro Rata Shares.
(iii) The Company shall allocate deductions relating to the depreciation of adjustments under Code Section 734(b)(1)(A) to the bases of capital gain property in accordance with the respective allocations set forth in Section 5.01(a)(i) to the Class A Members and the Class B Member(s) in accordance with their Pro Rata Shares: provided, in the event the Class A Member has a deficit Capital Account balance following the end of the Recapture Period, as low as five percent (5%) to the Class A Member in accordance with their Pro Rata Shares and the remainder to the Class B Members in accordance with their Pro Rata Shares, and in the event the Class B Member has a deficit
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Capital Account balance following the end of the Recapture Period, as low as one percent (1%) to the Class B Members in accordance with their Pro Rata Shares and the remainder to the Class A Members in accordance with their Pro Rata Shares, in each case in order to eliminate such deficit balance as quickly as possible.
(iv) If in any Allocation Year, the Members have varying interests in the Company (due to a Disposition or otherwise), then, for the Allocation Year or other period in which the Members have varying interests, tax items shall be allocated, as between the Members for such Allocation Year or other period by taking into account their varying interests using the interim-closing-of-the-books under Section 706 of the Code and the Treasury Regulations thereunder.
(f) Income Tax Allocations; Code Section 704(c). Except as otherwise provided in this Section 5.01(f), each item of income, gain, loss, and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book purposes pursuant to this Section 5.01. In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of Gross Asset Value) using the allocation method under Treasury Regulation Section 1.704-3 chosen by the Managing Member with the written consent of a Majority of Class A Members, such consent not to be unreasonably withheld. In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Treasury Regulations thereunder; provided that any items of loss or deduction attributable to property contributed by a Member shall, to the extent of an amount equal to the excess of (A) the federal income tax basis of such property at the time of its contribution over (B) the Gross Asset Value of such property at such time, be allocated in its entirety to such contributing Member and the tax basis of such property for purposes of computing the amounts of all items allocated to any other Member (including an Assignee of the contributing Member) shall be equal to its Gross Asset Value upon its contribution to the Company. Any elections or other decisions relating to such allocations shall be made by the Managing Member in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 5.01(f) are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of items of income, gain, loss, deduction or credit, or distributions pursuant to any provision of this Agreement.
5.02 Distributions.
(a) Except as provided in Section 4.03, Section 5.02(e), Section 5.04, Section 5.05, Section 5.07 and Section 12.02(a)(vi), Distributable Cash (other than Distributable Cash from Uncontracted ▇▇▇▇ Revenue and the sale of Uncontracted RECs) shall be distributed
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to the Members on each Distribution Date on which the Company has Distributable Cash, as follows:
(i) Commencing from the Substantial Completion Funding Date through the PPA Start Date: an amount equal to five percent (5%) of Distributable Cash to the Class A Members in accordance with their Pro Rata Shares and the remainder to the Class B Members in accordance with their Pro Rata Shares;
(ii) Commencing from the PPA Start Date through the Target Flip Date:
(A) First, an amount equal to twenty-five percent (25%) of Distributable Cash to the Class A Members in accordance with their Pro Rata Shares; provided, the percentage above may be adjusted pursuant to Section 6.15; and
(B) Second, if the cumulative distributions of Distributable Cash to the Class A Members pursuant to Section 5.02(a)(ii)(A) at the end of any Allocation Year is less than the aggregate distribution amount contemplated in Schedule 5.02(a) (as updated pursuant to the ECCA in accordance with the Updated Base Case Model or Section 6.15 of this Agreement, the “Priority Cash Schedule”) for such Allocation Year (such difference, the “Priority Amount Shortfall”), then for each subsequent Distribution Date until such Priority Amount Shortfall is eliminated, (1) an additional amount of Distributable Cash, up to an amount that, when added to the amount of Distributable Cash distributed to the Class A Members pursuant to Section 5.02(a)(ii)(A), equals an aggregate amount of ninety percent (90%) of Distributable Cash, to the Class A Members in accordance with their Pro Rata Shares, and the remainder to the Class B Members, in accordance with their Pro Rata Shares; provided, to the extent there is an unpaid portion of the Priority Amount Shortfall on any Distribution Date, such shortfall shall accrue until paid to the Class A Members;
(iii) Commencing from the Target Flip Date until the Flip Point:
(A) First, if the Flip Point has not then occurred by the Target Flip Date, an amount equal to fifty percent (50%) of actual Distributable Cash; and
(B) Second, in the event that, at the end of any Allocation Year, there is a Priority Amount Shortfall, then for each subsequent Distribution Date until such Priority Amount Shortfall is eliminated, (1) an additional amount of Distributable Cash, up to an amount that, when added to the amount of Distributable Cash distributed to the Class A Members pursuant to Section 5.02(a)(iii)(A), equals an aggregate amount of ninety percent (90%) of Distributable Cash, to the Class A Members in accordance with their Pro Rata Shares, and the remainder to the Class B Members, in accordance with their Pro Rata Shares;
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(iv) From and after the Flip Point, all Distributable Cash shall be distributed to (x) the Class A Members in accordance with their Pro Rata Shares, in an amount equal to six and fifty hundredth percent (6.5%) of Distributable Cash and (y) the remainder shall be paid to the Class B Members in accordance with their Pro Rata Shares; provided, however, to the extent that the total Distributable Cash (excluding the distributions received by the Class A Members pursuant to this proviso) distributed to the Class A Members during any Allocation Year (or if such Allocation Year includes the Flip Point, during the period following the Flip Point to the end of such Allocation Year) does not at least equal the Class A Member Tax Distribution for such Allocation Year, then immediately following the determination of such shortfall, the Distributable Cash distributed to the Class A Members shall be increased by the amount of such shortfall and the amount otherwise distributed to the Class B Members shall be subject to a corresponding decrease;
For the avoidance of doubt, in no event shall (x) more than ninety percent (90%) of Distributable Cash available on any Distribution Date be distributed to the Class A Members on such Distribution Date or (y) less than the Minimum Class B Distribution be distributed to the Class B Members on any Distribution Date.
(b) Notwithstanding Section 5.02(a), (i) any payments or portion thereof received by the Company as indemnification, compensation or reimbursement for, the loss, reduction or recapture of the ITCs (excluding amounts received with respect to the ITC Insurance Policy) shall be distributed ninety-nine percent (99%) to the Class A Members in accordance with their Pro Rata Shares and, subject to Section 5.04, one percent (1%) to the Class B Members in accordance with their Pro Rata Shares and (ii) any amounts received by the Company with respect to the ITC Insurance Policy shall be distributed (x) first, one hundred percent (100%) to the Class A Members in accordance with their Pro Rata Shares until the Class A Members have received an amount equal to such lost, reduced or recaptured ITCs or other Tax Benefits (on an after-tax basis) with respect to the Class A Members, (y) second, subject to Section 5.04, one hundred percent (100%) to the Class B Members in accordance with their Pro Rata Shares until the Class B Members have received an amount equal to such lost, reduced or recaptured ITCs or other Tax Benefits (on an after-tax basis) with respect to the Class B Members and (z) third, the balance in accordance with Section 5.02(a), as applicable.
(c) In the event that the Company receives any indemnification proceeds pursuant to any other Investment Document, the Managing Member shall distribute such proceeds to the Members in accordance with the following priority: (i) first to the Class A Members in accordance with their Pro Rata Shares to the extent necessary until the Class A Members achieve the Flip Rate on the Capital Contributions made by such Class A Member in respect of which the indemnification proceeds are received and (ii) any amounts remaining following such distribution shall be distributed in accordance with Section 5.02(a)(iii), upon which the Flip Point shall be deemed to have occurred; provided, that prior to the Substantial Completion Funding Date, any amounts with respect to clause (ii) shall be distributed entirely to the Class B Members; provided, further, that notwithstanding anything else to the contrary herein, the Members agree that in the event of the receipt of any indemnification proceeds
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pursuant to any other Investment Document, they shall in good faith negotiate an equitable agreement, which may include an amendment to this Agreement (including with respect to the distributions under this Section 5.02) in order to (x) prevent an unexpected windfall, to any Member, not contemplated in the Base Case Model, (y) return the Members to the same (or as similar as possible) economic position they were in under the Base Case Model prior to the event that resulted in the receipt by the Company of indemnification proceeds pursuant to such Investment Document and (z) equitably account for the facts and circumstances with respect to the Project at such time.
(d) Notwithstanding anything herein to the contrary, any amounts received by the Project Company (i) as a return of Project Credit Support that is replaced with Project Credit Support provided by a Class B Member or an Affiliate thereof shall be distributed entirely to the Class B Member or such Affiliate providing such replacement Project Credit Support, or (ii) in respect of any network or interconnection upgrade refunds pursuant to an interconnection agreement (to the extent such amounts were funded by the Class B Members or prior to the Purchase Date).
(e) Notwithstanding Section 5.02(a), any portion of Distributable Cash from the sale of Uncontracted RECs and Uncontracted ▇▇▇▇ Revenue (i) prior to the occurrence of the Flip Point, shall be distributed one hundred percent (100%) to the Class B Members in accordance with their Pro Rata Shares and (ii) thereafter, six and a half percent (6.5%) to the Class A Members in accordance with their Pro Rata Shares and ninety-three and a half percent (93.5%) to the Class B Members in accordance with their Pro Rata Shares; provided, however, in the event Commercial Operation (as defined in the Power Purchase Agreement) is never declared or the Power Purchase Agreement otherwise becomes subject to early termination, then from the PPA Ineffective Date until the Project Company has entered into Qualified Replacement PPAs in accordance with Section 6.15, any portion of Distributable Cash from the sale of Uncontracted RECs and Uncontracted BESS Revenue shall be distributed pursuant to Section 5.02(a) and subject to the Priority Cash Schedule.
(f) Notwithstanding anything herein to the contrary, (i) any payment properly designated as a refund, rebate, release of deposits or other reimbursement of payments previously made by or on behalf of the Class B Member or an Affiliate with respect to the Project, in each case to the extent such amounts constitute transaction expenses, construction costs, capital expenditures, and overbills and excess contingency amounts or indemnification, reimbursement or other compensation with respect to the period prior to the Substantial Completion Funding Date, (ii) any cash held by the Project Company on the Substantial Completion Funding Date, including all revenues received prior to the Substantial Completion Funding Date and amounts in the bank accounts of the Project Company (including the Collateral Accounts (as defined in the Financing Agreement)), (iii) any cash received by the Project Company attributable to pre-Substantial Completion Funding Date sales of merchant energy and renewable energy credits, whether received before or after the Substantial Completion Funding Date and (iv) any amounts received by the Project Company as liquidated damages paid by the EPC Contractors minus any amounts of delay liquidated damages payable by the Project Company to the Power Purchaser under the Power Purchase Agreement from and after the Purchase Date shall be distributed one hundred percent (100%) to the Class B Members.
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(g) In the event that the Company pays any Imputed Underpayment, and the Class A Members have not made the Capital Contributions required to be made by the Class A Members pursuant to Sections 4.02(f) and (g) with respect to any Flip Imputed Underpayments (and any associated penalties, interest and additions to tax) and/or Class A Imputed Underpayments (and any associated penalties, interest and additions to tax), the distributions of Distributable Cash that would otherwise be made to the Class A Members shall be reduced, and the distributions that would otherwise be made to the Class B Members shall be increased, until the Class B Members shall have received cumulative additional distributions of Distributable Cash equal to the incremental distributions of Distributable Cash the Class B Members would have received if neither any Flip Imputed Underpayments (or any associated penalties, interest and additions to tax) nor any Class A Imputed Underpayments (or any associated penalties, interest and additions to tax) had been paid by the Company, along with interest accrued at a per annum rate equal to seven percent (7%) from the date the Capital Contributions required to be made by the Class A Members pursuant to Sections 4.02(f) and (g) would otherwise have been due and payable.
(h) In the event that the Company pays any Imputed Underpayment, and the Class B Members have not made the Capital Contributions required to be made by the Class B Members pursuant to Section 4.02(e) with respect to any Class B Imputed Underpayments (and any associated penalties, interest and additions to tax), any distributions as to which the Class B Member would otherwise be entitled pursuant to Section 5.02(a) shall be reduced, and the distributions that would otherwise be made to the Class A Members shall be increased, until the Class A Members shall have received cumulative additional distributions of Distributable Cash equal to the incremental distributions of Distributable Cash the Class A Members would have received if no Class B Imputed Underpayments (or any associated penalties, interest and additions to tax) had been paid by the Company, along with interest accrued at a per annum rate equal to seven percent (7%) from the date the Capital Contributions required to be made by the Class B Members pursuant to Section 4.02(e) would otherwise have been due and payable.
(i) Notwithstanding anything herein to the contrary, prior to making any distributions under Section 5.02(a) or Section 5.07(b), the Company shall reimburse the Managing Member and its Affiliates for (i) any Managing Member Committed Working Capital Loan or Managing Member Additional Working Capital Loan made in accordance with Section 4.03(a) and (ii) all fees, costs and expenses and any reimbursement obligations or LC Loans in accordance with Section 4.03(b).
(j) Notwithstanding Section 5.02(a), but subject to Section 7.03(g), Transfer Proceeds attributable to Class A Transferred Credits shall be distributed one hundred percent (100%) to the Class A Member in accordance with their Pro Rata Shares and Transfer Proceeds attributable to Class B Transferred Credits shall be distributed one hundred percent (100%) to the Class B Members in accordance with their Pro Rata Shares; provided, to the extent any Transfer Proceeds that would otherwise have been received by the Company as consideration for a transfer of Company Credits pursuant to Section 6418 and Section 7.03 and distributed to the applicable Member pursuant to this Section 5.02(j) are paid directly to such Member, such Transfer Proceeds shall be deemed to have been paid to the Company and distributed to the
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applicable Member pursuant to this Section 5.02(j) for purposes of this Agreement and U.S. federal income tax purposes.
(k) Notwithstanding anything in this Section 5.02 to the contrary, if the Company or Project Company receives any damages, refund, or other payment in connection with a Third Party’s non-compliance with the PWA Requirements, to the extent the Class B Members (or the EPC Contractors, on behalf of the Class B Members) have paid in full any and all PWA Cure Costs required for the Company to fully comply with the PWA Requirements, as confirmed by the PWA Consultant in the most recent PWA Compliance Report (or have deposited such amount in the PWA Cure Reserve Account), such amounts (after reduction for any reasonable and documented collection costs incurred by the Company or the Project Company) shall be distributed one hundred percent (100%) to the Class B Members, in accordance with their Pro Rata Shares.
5.03 Other Distributions. Upon the dissolution and winding up of the Company, distributions shall be effected pursuant to Section 12.02.
5.04 Satisfaction of Certain Obligations of the Class B Member to the Class A Members.
(a) Following the delivery of a Claim Notice pursuant to Section 13.03(b) as to which (i) payment has not otherwise been made (A) in accordance with Article 13, (B) in accordance with the Sponsor Guaranty (it being understood that the Class A Member shall make a written claim under the Sponsor Guaranty before giving effect to this Section 5.04), (C) under the ITC Insurance Policy (it being understood that an Insured or Additional Insured (as each term is defined in the ITC Insurance Policy) shall make a written claim under the ITC Insurance Policy before giving effect to this Section 5.04) or (D) into Escrow as provided in Section 5.04(b) and (ii) the Indemnifying Member or Sponsor, as applicable, has agreed in writing with respect to liability for the applicable General Indemnity Claim or a court of competent jurisdiction has made a final determination that the Indemnifying Member or Sponsor, as applicable, is liable with respect to such General Indemnity Claim (each such General Indemnity Claim satisfying the foregoing clauses (i) and (ii), an “Undisputed Indemnity Obligation”), commencing with the first Distribution Date to occur following the date that is after the date on which (x) the Indemnifying Member or Sponsor, as applicable, has agreed in writing with respect to liability for Undisputed Indemnity Obligation or (y) a court of competent jurisdiction has made a final determination that the Indemnifying Member or Sponsor is liable with respect to such Undisputed Indemnity Obligation, and until all Undisputed Indemnity Obligations have been paid in full to the applicable Indemnified Person, an amount equal to the greater of (i) sixty seven percent (67%) of the distributions to which the Class B Members would otherwise be entitled pursuant to Section 5.02 and (ii) the Distributable Cash that the Class B Members would otherwise be entitled in excess of the amount sufficient to pay scheduled principal and interest on back-leverage debt of the Class B Members or their Affiliates shall not be paid to the Class B Members, and instead shall be paid to the applicable Indemnified Persons until satisfaction in full of the Undisputed Indemnity Obligations.
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(b) Following the delivery of a Claim Notice pursuant to Section 13.03(b) with respect to any General Indemnity Claim as to which (i) payment has not otherwise been made (A) in accordance with this Article 13, (B) in accordance with the Sponsor Guaranty (it being understood that the Class A Member shall make a written claim under the Sponsor Guaranty before giving effect to this Section 5.04), (C) under the ITC Insurance Policy or (D) into Escrow as provided in this Section 5.04(b) and (ii) the Indemnifying Member or Sponsor, as applicable, has disputed such General Indemnity Claim, or failed to respond to a Claim Notice within thirty (30) days following receipt of such Claim Notice, and no court of competent jurisdiction has made a final determination as to the liability with respect to such General Indemnity Claim (each such General Indemnity Claim satisfying the foregoing clauses (i) and (ii), a “Disputed Indemnity Obligation”), commencing with the first Distribution Date to occur following the date that is sixty (60) Days after the date on which the Claim Notice with respect to such Disputed Indemnity Obligation was delivered, and until all Disputed Indemnity Obligations have been paid in full to the applicable Indemnified Person or deposited into the Escrow (as defined below), the greater of (i) sixty seven percent (67%) of the distributions to which the Class B Members would otherwise be entitled pursuant to Section 5.02 and (ii) the Distributable Cash that the Class B Members would otherwise be entitled in excess of the amount sufficient to pay scheduled principal and interest on back-leverage debt of the Class B Members or their Affiliates, shall not be paid to the Class B Members, and instead shall be paid into an escrow account (the “Escrow”) maintained at a commercial bank that is a member of the Federal Reserve System organized under the Laws of the United States or any state thereof and that has a combined capital and surplus of at least One Billion Dollars ($1,000,000,000) and a rating of its long-term senior unsecured indebtedness of at least A- from Standard & Poor’s Financial Services LLC or A3 from ▇▇▇▇▇’▇ Investor Service, Inc. (the “Escrow Agent”). Such escrow arrangement shall be evidenced by an escrow agreement in the Escrow Agent’s customary form and reasonably acceptable to the Class B Members and the Indemnified Person and providing as follows:
(i) funds paid into such Escrow shall be invested in Cash Equivalents (such escrowed funds together with the earnings thereon being referred to herein as the “Escrowed Funds”);
(ii) Escrowed Funds shall be disbursed by the Escrow Agent as follows:
(A) Upon the Escrow Agent’s receipt of joint written notice from the Class B Member and the Indemnified Person, the Escrow Agent shall promptly disburse Escrowed Funds to the party or parties, and in the amount or amounts, specified in such joint written notice; or
(B) Upon receipt by the Escrow Agent of a judgment or order of a court of competent jurisdiction regarding all matters relating to the relevant Claim, and, if there exists a right of appeal therefrom, the expiration of the time for appealing such judgment or order without appeal of such judgment or order by any party, the Escrow Agent shall disburse the Escrowed Funds as specified in or consistent with such certificate, judgment or order; and
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(C) any amounts remaining in the Escrow following the disbursement of all amounts pursuant to the immediately preceding clause (A) or (B), as applicable, shall promptly be disbursed by the Escrow Agent to the applicable Class B Member.
(iii) The Indemnifying Member shall pay the Escrow Agent’s fees and charges related to the Escrow.
(iv) If at any time the amount of Escrowed Funds exceeds the amount required to be maintained in the Escrow, the Class B Member shall have the right, upon not less than ten (10) Days’ prior written notice to each Class A Member and the Escrow Agent, to require the Escrow Agent to disburse such excess amount to the Class B Member (or its designees).
(c) To the extent an Indemnified Person receives an opinion at a “more likely than not” level or higher from a nationally-recognized law firm supporting such position, amounts paid or distributed to the Indemnified Person pursuant to this Section 5.04 shall be treated as a non-taxable return of capital for U.S. federal income tax purposes. Otherwise, amounts paid or distributed to the Indemnified Person pursuant to this Section 5.04 shall be grossed-up and paid on an after-tax basis in accordance with Section 13.05. For the avoidance of doubt, if an indemnity payment has been treated by the parties as a non-taxable return of capital and such position is subsequently disallowed by the IRS, the gross-up amount described in the preceding sentence will be promptly paid to the Indemnified Person by the Class B Member, plus any interest, penalties and additions to tax payable as a result of the disallowance.
(d) If, as a result of an indemnified event described under Section 13.01(a), the Company is held to be liable to a Third Party for the payment of any amounts resulting from such event, any such payment shall, when actually paid by the Company, be deemed to be distributed to the Class B Members and deemed immediately paid over by the Class B Members to such Third Party.
5.05 Calculation of Flip Point.
(a) Monthly Calculation; Liquidation Calculation.
(i) If a final determination that the Flip Point has occurred has not previously been made under this Section 5.05, prior to each Distribution Date, the Managing Member shall determine in good faith whether a calculation as of such Distribution Date is necessary in order for the Managing Member to conclude whether the Flip Point has occurred.
(ii) If the Managing Member calculates, in the manner provided in this Section 5.05, that the Flip Point has occurred during a calendar month, then no less than ten (10) Days prior to the immediately upcoming Distribution Date, the Managing Member shall provide such calculation to the Class A Members in the form of the Base Case Model updated to reflect actual results of the Company and otherwise prepared in accordance with the calculation rules and conventions of this Section 5.05 (the “Tracking
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Model”), specifying the Flip Point, the portion of the Distributable Cash which is to be distributed in accordance with the applicable subsections of Section 5.02(a) before and after the Flip Point and the portion of the tax attributes of the Company which are to be allocated in accordance with the applicable subsections of Section 5.01(a) before and after the Flip Point.
(iii) If the Flip Point has not occurred, prior to making any liquidating distribution pursuant to Section 12.02, the Managing Member shall make a calculation, in the manner described in this Section 5.05, as to whether the Flip Point will occur in connection with the liquidation of the Company. No less than thirty (30) Days prior to making such distribution, the Managing Member shall provide such calculation to the Class A Members in the form of the Tracking Model and prepared in accordance with the calculation rules and conventions of this Section 5.05, specifying the Flip Point (or stating that the Managing Member has concluded that it will not occur), the portion of the Liquidation Proceeds which is to be distributed in accordance with Section 12.02(a)(vii) and the proportions in which the tax attributes of the Company for the Allocation Year in which the liquidation occurs shall be allocated in accordance with Sections 12.02(a)(iv) and (vi).
(iv) In the event that no objection to a calculation provided to the Class A Members under paragraph (ii) or (iii) of this Section 5.05(a) is received by the Managing Member from at least a Minority of Class A Members within thirty (30) Days following receipt of such calculation, then the Flip Point shall be deemed to have occurred as specified in such calculation (subject to adjustment under Section 5.05(b)(v)) and the distribution of Distributable Cash or Liquidation Proceeds, and the allocation of tax attributes for the applicable taxable period, shall be governed by such calculation. In the event that such an objection is received by the Managing Member, then the determination of the Flip Point and the making of the distribution (and all subsequent distributions of Distributable Cash or Liquidation Proceeds) shall be suspended until the Flip Point and the allocation of distributions and allocation of tax attributes is finally determined under the dispute resolution procedures set forth in Section 11.03.
(v) Notwithstanding the foregoing, if there is a Recapture Event after a final determination has been made that the Flip Point has occurred, the Flip Point shall be recalculated at the time of such Recapture Event in accordance with the terms of this Section 5.05, taking into account any Recapture Amount, only to the extent appropriate under Section 5.05(b). If the results of such recalculation indicate that the Class A Members’ Internal Rate of Return is below the Flip Rate, the sharing percentages set forth in the applicable provisions of Section 5.01(a) and Section 5.02(a) shall be adjusted to the maximum extent necessary so as to correct, on a present value basis calculated at a per annum rate equal to the Flip Rate, the difference between the Flip Rate assumed to have been realized by a holder of Class A Units on the Distribution Date as of which the Flip Point was determined, and the Internal Rate of Return actually realized by such a holder. Such change in sharing percentages shall remain in effect until, and to the extent necessary so that, the difference between the Flip Rate and actual Internal Rates of Return shall have been eliminated. If, such Recapture Event is discovered subsequent to
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the filing of the Company’s federal income tax return for the Taxable Year in which the Flip Point was deemed to have occurred, such Recapture Event shall be deemed to give rise to a Curative Flip Allocation in accordance with Section 5.05(b)(v). To the extent this Section 5.05(a)(v) is in effect, or a Curative Flip Allocation is occurring to resolve the effects of a Recapture Event, the rights of the Members under this Agreement (including voting rights, consent rights, etc.) shall revert to the rights of the Members prior to the Flip Point.
(b) Calculation Rules and Conventions.
The Managing Member shall employ the following calculation rules and conventions in determining the Flip Point:
(i) Continuity of Ownership. The Managing Member shall treat ownership of the Class A Units as being continuous from the Effective Date to the Distribution Date as of which the calculation is being made without regard to any change in ownership of any Class A Units during such period.
(ii) Cash Flows. The cash flows (and timing thereof) taken into account in determining the Flip Point shall consist of (A) the Class A Member Capital Contributions made on the Equity Capital Contribution Dates and in respect of Flip Imputed Underpayments in accordance with Section 4.02(f), and (B) cash distributions to the Class A Member (other than cash distribution of Transfer Proceeds in respect of Class A Transferred Credits) on any Distribution Date, at any other time or upon the date of distribution of Liquidation Proceeds (or to be made on the Distribution Date or date of distribution of Liquidation Proceeds as of which date the Flip Point is being determined). In the event the Flip Point is being computed in connection with the determination of the Purchase Option price, the aggregate amount paid to the Class A Member upon the exercise of the Purchase Option shall be taken into account. Any amounts received by the Class A Members, which is in the nature of a recovery or replacement of, or indemnity or compensation for the loss of, an item which would otherwise be taken into account in clauses (A) or (B) above, shall also be taken into account in determining the Flip Point (without duplication of such amounts described in clauses (A) or (B) above). For the avoidance of doubt, for the purpose of Flip Point calculation, the timing of all such amounts shall be taken into account on the date on which they are actually incurred or received, except (a) for the avoidance of doubt, the timing of the Tax Costs and Tax Benefits shall be determined in accordance with Section 5.05(b)(iii), and (b) the timing of Distributable Cash shall be treated as received on the last Day of the month in which the distribution occurs.
(iii) Tax Costs and Tax Benefits.
(A) Tax Costs and Tax Benefits shall be taken into account in determining the Flip Point as follows:
(I) Except as they shall be recalculated and adjusted pursuant to Section 5.05(b)(iii)(A)(II), for the avoidance of doubt, Tax
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Costs and Tax Benefits incorporated into the Tracking Model shall take into account the actual performance by the Project and the Company, and consistent with the definition of such terms, generally shall be based upon the actual amounts of items of income, gain, deduction, loss and credit provided on the Schedules K and K-1 of the Federal Tax Return filed by or for the Company (or equivalent reporting under successor forms and procedures), taking into account adjustments as the result of any amended Federal Tax Return filed by the Company or of a final determination following a federal income tax audit, in each case that was materially in compliance with Article 7.
(II) Tax Costs and Tax Benefits incorporated into the Tracking Model shall be recalculated and adjusted to the extent necessary so as to be consistent with the Fixed Tax Assumptions as of such calculation date. Tax Costs and Tax Benefits incorporated into the Tracking Model shall be recalculated and adjusted to the extent necessary so as to disregard any transfer of Company Credits pursuant to Section 7.03, any Disposition by a Class A Member, or a Change of Member Control with respect to a Class A Member.
(III) Tax Costs and Tax Benefits for any taxable period shall be taken into account as realized at the time set forth in Sections 5.05(b)(iii)(B), (C), (D) and (E) (unless the Class A Member is unable to use such Tax Benefits because of Section 704(d) of the Code, in such a case, the Member will be assumed to be able to use the tax benefits when Section 704(d) allows). Notwithstanding the foregoing, to the extent that (a) any liabilities that was not assumed in the Base Case Model is allocated to the Class A Members and (b) such liabilities, for any given Taxable Year, either (i) reduces, suspends or increases the losses realized by the Class A Members under Section 704(d) of the Code or (ii) reduces the taxable income allocated to the Class A Members under Section 731(a) of the Code, then the Tax Costs and Tax Benefits shall be determined as if no such indebtedness had existed.
(IV) For the avoidance of doubt and notwithstanding anything else in this Agreement to the contrary, Tax Benefits and Tax Costs shall not take into account any consequences under Code Sections 743 and 754 from a Disposition of Class A Units.
(B) Tax Benefits in respect of ITCs shall be calculated and taken into account as an amount equal to ninety-four percent (94%) of such Tax Benefits in respect of ITCs actually realized; provided, however, in the event any portion of the Project is placed in service on or after January 1, 2027 and the total amount of ITCs generated from such portion of the Project exceeds twenty percent (20%) of the total ITC amount generated by the Project, then the portion of any ITCs generated in the 2027 calendar year in excess of twenty percent
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(20%) of the total ITC amount generated by the Project shall be calculated and taken into account as an amount equal to eighty-nine percent (89%) of such portion of the ITCs actually realized; provided, further, in the event there is a Tax Law Change or Proposed Tax Law Change that would repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that prohibits or materially affects the Company’s or Class A Equity Investor’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code and, as of the Mechanical Completion Funding Date, the Parties have not successfully restructured the Transaction under this Agreement and the ECCA in accordance with Section 7.9 of the ECCA, Tax Benefits in respect of ITCs shall be calculated and taken into account as an amount equal to eighty-eight percent (88%) of the total ITCs actually realized. Tax Benefits in respect of ITCs shall be taken into account at the time realized using the convention set forth in Section 5.05(b)(iii)(D) (or the time they would have been realized pursuant to Section 5.05(b)(iii)(A)(I) or Section 5.05(b)(iii)(A)(II)), without regard to any provision of law limiting, restricting, deferring or disallowing such loss, deduction or credit that applies at the level of a Class A Unit, unless the Class A Member is unable to use such Tax Benefits because of Section 704(d) of the Code, in such a case, the Member will be assumed to be able to use the Tax Benefits when Section 704(d) of the Code allows (as opposed to any such limitation, restriction, deferral or disallowance that applies at the level of the Company, except if the Company-level limitation, restriction, deferral or disallowance of such loss, deduction or credit results from any action of the Class A Member that is a holder of such Class A Unit that is not required by this Agreement). Any Tax Costs taken into account pursuant to this Section 5.05 from the recapture of the ITC shall be taken into account at the time actually recaptured. For the avoidance of doubt, Tax Benefits in respect of ITCs shall not take into account (i) any ▇▇▇▇ Augmentation ITCs unless the ▇▇▇▇ Augmentation ITC Special Allocation Conditions or the ▇▇▇▇ Augmentation ITC Transfer Conditions are satisfied and the Class A Member has provided prior written consent or (ii) qualified interconnection property pursuant to Code Section 48(a)(8), the “low- income community” bonus pursuant to Code Section 48(e) or any other “bonus” Tax credits available pursuant to Sections 45 or 48 of the Code (other than the Domestic Content Bonus (as defined in the ECCA) or the Energy Community Adder (as defined in the ECCA) if such bonus credits are reflected in the Updated Base Case Model) (or any successor statutes), unless the Class A Member has provided prior written consent. For the avoidance of doubt, none of the tax-exempt income resulting from receipt of Transfer Proceeds from the sale of ▇▇▇▇ Augmentation ITCs otherwise allocable to the Class A Member pursuant to Section 7.03(h) shall be taken into account for purposes of calculating Tax Benefits pursuant to this Section 5.05(b), unless the ▇▇▇▇ Augmentation ITC Special Allocation Conditions or ▇▇▇▇ Augmentation ITC Transfer Conditions are satisfied and the Class A Member has provided prior written consent.
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(C) Any Tax Benefits from loss or deduction shall be taken into account on the Tax Payment Dates for the period in which such loss or deduction arises or would have arisen pursuant to Section 5.05(b)(iii)(A)(I) or Section 5.05(b)(iii)(A)(II), without regard to any provision of law limiting, restricting, deferring or disallowing such loss or deduction that applies at the level of a Class A Unit, unless the Class A Member is unable to use such Tax Benefits because of Section 704(d) of the Code, in such a case, the Member will be assumed to be able to use the Tax Benefits when Section 704(d) of the Code allows (as opposed to any such limitation, restriction, deferral or disallowance that applies at the level of the Company, except if Company-level limitation, restriction, deferral or disallowance of such loss, deduction or credit results from any action of the Class A Member that is a holder of such Class A Unit that is not required by this Agreement). Any Tax Cost from income or gain, including income or gain pursuant to Section 731(a) of the Code, shall be taken into account on the Tax Payment Date for the period in which such income or gain arises or would have arisen pursuant to Section 5.05(b)(iii)(A)(I) or Section 5.05(b)(iii)(A)(II), without regard to any provision of law that is applicable to a holder of a Class A Unit as opposed to the Company (unless the Class A Member is unable to use such tax benefits because of Section 704(d) of the Code, in such a case, the Member will be assumed to be able to use the tax benefits when Section 704(d) of the Code allows), or the existence of any losses, deductions or credits, which would reduce, defer, or permit the holder of a Class A Unit to obtain credit for, such Tax Cost.
(D) With respect to any calendar year which has ended prior to the Distribution Date or date of distribution of Liquidation Proceeds as of which the calculation is being made, the net Tax Costs or net Tax Benefits, as the case may be, for such year shall be apportioned equally to the estimated tax payment dates in the Allocation Year as set forth in the Base Case Model (i.e., April 30, June 30, September 30 and December 31) (the “Tax Payment Dates”) which apply to a calendar year corporate taxpayer with respect to tax liability arising in such year (and would have been paid or received pursuant to Section 5.05(b)(iii)(A)(I) or Section 5.05(b)(iii)(A)(II), as the case may be), on such Tax Payment Dates; provided, that the ITCs attributable to the Project shall be treated as having been earned on the date that is six (6) months following the later of (1) the Substantial Completion Funding Date and (2) the date the Project was placed in service for U.S. federal income tax purposes.
(E) With respect to any calendar year which has not ended prior to the Distribution Date or date of distribution of Liquidation Proceeds as of which the calculation is being made, the net Tax Costs or net Tax Benefits, as the case may be, for the portion of such year as has been completed (as of the end of the month immediately preceding such Distribution Date or date of distribution of Liquidation Proceeds) shall be apportioned ratably and treated as having been paid or received, as the case may be, on the Tax Payment Dates for such calendar year, including Tax Payment Dates which fall subsequent to the Distribution Date
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or date of distribution of Liquidation Proceeds. Notwithstanding the immediately preceding sentence, solely for the purpose of calculating the Flip Point, all Tax Costs and Tax Benefits in the applicable calendar year through the estimated Flip Point will be used in the calculation of the Flip Point by discounting (back to the estimated Flip Point) the portion of Tax Costs and Tax Benefits apportioned ratably to the Tax Payment Dates subsequent to the estimated Flip Point for such calendar year. In any case in which Tax Costs or Tax Benefits are deemed to be received after the Distribution Date or date of distribution of Liquidation Proceeds, or in calculating the Flip Point, the per annum rate equal to the Flip Rate shall be applied to calculate the present value of such items for the period between the Distribution Date or date of distribution of Liquidation Proceeds, or the estimated Flip Point, as the case may be, and the Tax Payment Date.
(iv) End of Year True Up:
(A) Prior to filing the Company’s federal income tax return for the Taxable Year which includes the Flip Point, the Managing Member shall compare the Tax Benefits and Tax Costs for the portion of the Taxable Year through the month in which the Flip Point was determined to have occurred, as taken into account in the calculation of the Flip Point, with the Tax Benefits and Tax Costs for such period as determined using the amounts reflected in the Federal Tax Return as proposed to be filed; provided, that any difference in such calculation of the Flip Point and such amounts reflected in the federal income tax returns is not the result of an adjustment or recalculation described in Section 5.05(b)(iii)(A)(II). In the event of any difference, the Managing Member shall re-calculate when the Flip Point has occurred based upon the amounts reflected in such Federal Tax Return, and shall (i) adjust the Flip Point accordingly (including by advancing or delaying the Flip Point to a prior or subsequent month), and (ii) determine the difference (the “Cash Difference”) between the actual cash distribution to the Class A Members on the Distribution Date for the month in which the Flip Point was originally determined to have occurred (and any subsequent Distribution Dates, if relevant) and the cash distribution which would have been made on such Distribution Date(s) based on such recalculation (it being acknowledged that any difference between the tax attributes assumed to be allocable to the Class A Units at the time the Flip Point was first determined and the amounts of such tax attributes reflected in the allocations pursuant to the Federal Tax Return actually filed will have been reflected in the final determination of the Flip Point under this Section 5.05(b)(iv)).
(B) Provisions similar to those provided in Section 5.05(a)(iii) shall apply for purposes of (x) advance notification of the Class A Members of the adjusted Flip Point and Cash Difference calculations referred to in Section 5.05(b)(iv)(A) above, and provisions similar to those provided in Section 5.05(a)(iv) shall apply for purposes of (y) rights of at least a Minority of
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Class A Members to challenge such determination of the adjusted Flip Point and Cash Difference calculations.
(C) Upon becoming final pursuant to Section 5.05(b)(iv)(B) above, the Managing Member shall apply the adjusted Flip Point for all purposes of this Agreement. On the Distribution Date immediately following the calculation becoming final, the sharing percentages set forth in the applicable subsections of Section 5.01(a) and the applicable subsections of Section 5.02(a) after the Flip Point shall be adjusted to the maximum extent necessary so as to correct, on a present value basis calculated at a per annum rate equal to the Flip Rate, the Cash Difference; provided that, the sharing percentages of the Class A Members shall be equal to or greater than five percent (5%). Such change in sharing percentages shall remain in effect until, and to the extent necessary so that, the Cash Difference shall have been eliminated.
(v) Curative Flip Allocations:
(A) The Managing Member’s determination that the Flip Point has occurred, subject to the rights of the Class A Members to dispute such determination in advance under the procedures set forth in Section 11.03 and subject to any adjustment provided for in paragraph (iv) above, shall become final on the Distribution Date or date of distribution of Liquidation Proceeds as of which such determination is made, in the absence of fraud or manifest mathematical error. Except as provided for in paragraph (iv) above, the occurrence of the Flip Point shall not be affected by any Tax Costs or Tax Benefits, distribution or other event or circumstance arising at any time after the Distribution Date or date of distribution of Liquidation Proceeds as of which such determination is made. Notwithstanding the above, if, subsequent to the filing of the Federal Tax Return for the Taxable Year in which the Flip Point is deemed to have occurred, there occurs an adjustment to the Tax Costs or Tax Benefits taken into account in calculating the Flip Point (other than such an adjustment or recalculation described in Section 5.05(b)(iii)(A)(II)) or that is described in Section 5.05(b)(iii)(A)(III) or Section 5.05(b)(iii)(A)(IV)) for any period prior to the end of the calendar month associated with the Distribution Date for which such determination is made, such change shall give rise to a Curative Flip Allocation under this subparagraph. Except with respect to an adjustment or recalculation described in Section 5.05(b)(iii)(A)(II) or that is described in Section 5.05(b)(iii)(A)(III) or Section 5.05(b)(iii)(A)(IV), the adjustments taken into account under this subparagraph shall include a difference in the calculation of taxable income, gain, loss or credit in any federal income tax return as filed by the Company, and any amended return or as a result of a final determination in a federal income tax audit, in each case that was materially in compliance with Article 7.
(B) In the event a change described in Section 5.05(b)(v)(A) above gives rise to a Curative Flip Allocation, the sharing
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percentages set forth in the applicable subsections of Section 5.02(a) after the Flip Point shall be adjusted to the maximum extent necessary so as to correct, on a present value basis calculated at a per annum rate equal to the Flip Rate, the difference between the Flip Rate assumed to have been realized by a holder of Class A Units on the Distribution Date as of which the Flip Point was determined, and the Internal Rate of Return actually realized by such a holder after accounting for the adjustment referred to in Section 5.05(b)(v)(A) above; provided that, the sharing percentages of the Class A Members shall be equal to or greater than five percent (5%). Such change in sharing percentages shall remain in effect until, and to the extent necessary so that, the difference between the Flip Rate and actual Internal Rates of Return shall have been eliminated.
(C) Subsequent to a purchase of any Class A Unit by the Class B Member under Article 10 or a liquidation under Article 12, if events that, in the absence of such purchase or liquidation, would have given rise to a Curative Flip Allocation under this subparagraph occur and the economic equivalent of such Curative Flip Allocation was not taken into account in establishing the purchase price under Section 10.02 or distributed as proceeds in liquidation, then the Class B Member will pay in cash, within thirty (30) Days of the occurrence of such event, the economic equivalent of the Curative Flip Allocation as additional purchase price for such Class A Unit or as additional liquidation proceeds (up to the amount of all Liquidation Proceeds distributed to the Class B Member).
(c) Annual Status Reports. Within one hundred twenty (120) Days after the end of each Fiscal Year until the Flip Point is finally determined by the Managing Member to have occurred, the Managing Member shall prepare and distribute to each holder of Class A Units a status report consisting of a calculation of the Internal Rate of Return of the Class A Members as of the end of the applicable Fiscal Year in the form of the Tracking Model and prepared in accordance with the calculation rules and conventions of this Section 5.05, and together with such exhibits or supplemental information as is reasonably required to demonstrate the basis of such calculation; provided, that if the Managing Member determines that the Flip Point will occur in the next twelve (12) months, the Tracking Model shall be delivered quarterly within sixty (60) Days after the end of each calendar quarter. The Managing Member shall make itself available at the reasonable request of any Class A Member to discuss the basis for such calculation, including the interpretation and application of the rules and procedures of this Section 5.05. At least a Minority of Class A Members may initiate the dispute resolution procedures of Section 11.03 to resolve any item or procedure which is in dispute, and the conclusion of such dispute resolution procedures shall apply for all subsequent periods to any substantially similar item or procedure.
5.06 Withholding. Notwithstanding any other provision of this Agreement, the Company shall comply with any withholding requirements under any Law and shall remit amounts withheld to, and file required forms with, applicable taxing authorities. To the extent that the Company is required to withhold and pay over any amounts to any taxing authority with respect to distributions or allocations to any Member, the amount withheld shall be treated for all
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purposes under this Agreement as a distribution of cash to such Member in the amount of such withholding. In the event of any claimed over-withholding, Members shall be limited to an action against the applicable taxing authority. If an amount required to be withheld was not withheld from an actual distribution, the Company may reduce subsequent distributions by the amount of such required withholding and any penalties or interest thereon. Each Member agrees to furnish to the Company such forms or other documentation as is necessary to assist the Company in determining the extent of, and in fulfilling, its withholding obligations.
5.07 Substitute Payments.
(a) In the event that the Company or the Project Company receives any net proceeds (which are not Liquidation Proceeds) either (i) as indemnification, compensation or reimbursement for the reduction in any past, present or future electrical production or (ii) without duplication with clause (i), from warranty payments and insurance claims relating to the construction, development, maintenance, testing and/or operation of the Project, then the Managing Member shall determine the characterization and proposed distribution of such net proceeds; provided that any such characterization and proposed distribution shall be approved by Members holding the Required Voting Percentage and, if so approved, the Members shall execute any amendments to this Agreement required to implement such characterization and proposed distribution; provided, further, that Section 5.02(b) shall govern the distribution of any portion of such net proceeds that are applicable to indemnification, compensation or reimbursement for the loss of ITCs. If no agreement has been reached by the Managing Member and Members holding the Required Voting Percentage within thirty (30) Days following receipt by an amount described in this Section 5.07(a), then the actual determination shall be finally referred to a partner of the Certified Public Accountants acting as an independent expert (an “Independent Expert”) who shall be appointed by the consent of all Members (such consents not to be unreasonably withheld).
(b) After agreement or the determination for the characterization and proposed distribution of proceeds described under Section 5.07(a) is reached under that subsection, net proceeds received under Section 5.07(a) shall be distributed as follows:
(i) With respect to any net proceeds received pursuant to clause (i) of Section 5.07(a), such proceeds are to be distributed in the manner that reasonably reflects the Members’ interests in that revenue from such electrical production.
(ii) With respect to any net proceeds received pursuant to clause (ii) of Section 5.07(a), such proceeds are to be distributed in the manner that reasonably reflects the Members’ present value interests in the incremental net cash flows if such sale, casualty, insurable event or event triggering such warranty payment had not occurred.
(c) In the event that the Company receives any net proceeds (which are not Liquidation Proceeds) either from sales of the Project or the components thereof, casualty or condemnation payments or termination payments under the Power Purchase Agreement, which, in the case of any such casualty insurance proceeds, are not used by the Company or the Project Company to rebuild the Project, the Managing Member shall distribute such net proceeds to the Members in accordance with the following priority: (x) first to the Class A Members in
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accordance with their Pro Rata Shares to the extent necessary until the Class A Members achieve the Flip Rate (taking into account any recapture of the ITC resulting from such casualty or condemnation event) and (y) any amounts remaining following such distribution shall be distributed in accordance with Section 5.02(a)(iii), provided, that prior to the Substantial Completion Funding Date, any amounts with respect to clause (y) shall be distributed one hundred percent (100%) to the Class B Members.
(d) In the event that the Company or the Project Company receives any net proceeds (which are not Liquidation Proceeds) as indemnification, compensation or reimbursement in respect of any Claim for which the Class B Member or its Affiliates has previously satisfied the indemnity obligations set forth in Section 13.01 or Section 8.1(a) of the ECCA, such proceeds are to be distributed one hundred percent (100%) to the Class B Member.
ARTICLE 6
MANAGEMENT
6.01 Management by Members. The SBE Class B Member is hereby appointed by the Members as the Managing Member of the Company. Except as otherwise expressly provided in this Agreement, including the provisions of Section 6.02, Section 6.03, and Section 6.04, the management of the Company is fully and exclusively vested in the Managing Member, acting exclusively in its membership capacity. The Managing Member shall cause the Company and the Project Company to take all necessary actions to perform its obligations and enforce its rights under the Transaction Documents to which it is a party and to otherwise carry out its purposes (including, in the case of the Company, the purposes set forth in Section 2.04). The Managing Member is hereby authorized to cause the Company to execute, deliver and, subject to the terms of Section 6.03, perform the obligations set forth in the MSA and the documents and agreements required pursuant to the terms thereof. Subject to the provisions of this Agreement, each Member agrees that it will not exercise its authority under the Act to bind or commit the Company or the Project Company to agreements, transactions or other arrangements, or to hold itself out as an agent of the Company or the Project Company. Decisions or actions taken in accordance with the provisions of this Agreement shall constitute decisions or actions by the Company and shall be binding on the Company, each Member, officer and employee of the Company. Decisions or actions taken by the Managing Member in accordance with the provisions of this Agreement shall constitute decisions or actions by the Company and shall be binding on the Company, each Member, officer and employee of the Company. The Managing Member shall not be entitled to compensation for services rendered pursuant to this Article 6; provided, that the Company shall directly pay and reimburse the Managing Member for all actual Third Party expenses reasonably incurred by Managing Member in the performance of its duties from time to time from Distributable Cash. Managing Member shall be responsible for enforcing the performance of the Administrator under the MSA, and if the Managing Member fails, after demand by a Member, to enforce any material rights or remedies of the Company or the Project Company under the O&M Agreement or the MSA, as applicable, the Members may enforce such rights and remedies. In the event any such agreement is terminated and is not replaced, the Managing Member shall, either (i) perform the work previously performed by the Administrator prior to the termination of such agreement or (ii) engage one or more Third Party operators or administrators, as necessary
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to perform such work, in either case, in accordance with the Prudent Operator Standard. Any agreement to hire such Third Party operator or administrator is subject to the consent of the Members holding the Required Voting Percentage in accordance with Section 6.03(r). The Company has entered into the MSA pursuant to which the Administrator shall be responsible for the administration of the Transaction Documents and the day-to-day operations of the Company and the Project Company, and the Members acknowledge and agree that the Managing Member may, to the fullest extent permitted by law, delegate to the Administrator all or any part of its power and authority as the Managing Member hereunder (subject to matters requiring a vote by the Members pursuant to this Agreement) pursuant to the MSA. The Managing Member may, but need not, appoint one or more officers of the Company, which may include, but shall not be limited to, chief executive officer, chief operating officer, president, one or more executive vice presidents or vice presidents, secretary, treasurer or chief financial officer, and such other officers as deemed necessary or appropriate by the Managing Member. The Managing Member may delegate its day- to-day management responsibilities to any such officers, to the extent permitted by applicable Law, and such officers shall have the authority to contract for, negotiate on behalf of and otherwise represent the interests of the Company as and to the extent authorized in writing by the Managing Member. Each officer shall perform such duties and have such powers as the Managing Member shall designate from time to time. Each officer shall hold office at the pleasure of the Managing Member and until his or her successor shall have been duly appointed and qualified, or until he or she shall resign or shall have been removed in the manner provided herein. Any individual may hold any number of offices. No officer need be a Member or a resident of the State of Delaware. Any officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time be specified, at the time of its receipt by the Managing Member. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Subject to the terms of any applicable employment agreement, any officer may be removed as such, either with or without cause, at any time by the Managing Member. Notwithstanding the foregoing, the Managing Member shall not appoint any officer or employee of a Class A Member as an officer of the Company without the prior consent of such Class A Member.
6.02 Affiliate Agreements; Conflicts of Interest. Subject to Section 3.06 or any other agreement among the Members (and their respective Affiliates, as applicable), a Member, or an Affiliate of a Member, may engage in and possess interests in other business ventures of any and every type and description, independently or with others, including ones in competition with the Company, with no obligation to offer to the Company or the Project Company, any other Member, or any Affiliate of another Member, the right to participate therein. The Company or the Project Company may transact business with any Member or Affiliate thereof (including pursuant to a Material Project Contract), provided the terms and conditions of those transactions are (i) approved by the Managing Member or expressly contemplated in this Agreement and (ii) no less favorable to the Company or Project Company, as applicable, than those that would reasonably be expected to be obtained from an unrelated Third Party. Subject to the generality of the foregoing, the Members recognize and agree that they and their respective Affiliates currently engage in certain activities involving the generation, transmission, distribution, marketing and trading of electricity and other energy products (including futures, options, swaps,
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exchanges of future positions for physical deliveries and commodity trading), and the gathering, processing, storage and transportation of such products, as well as other commercial activities related to such products, and that these and other activities by Members and their Affiliates may be made possible or more profitable by reason of the Company’s, or the Project Company’s, activities (herein referred to as “Outside Activities”). The Members agree that (A) no Member or Affiliate of a Member shall be restricted in its right to conduct, individually or jointly with others, for its own account any Outside Activities and (B) no Member or its Affiliates shall have any duty or obligation, express or implied, to account to, or to share the results or profits of such Outside Activities with, the Company, the Project Company, any other Member or any Affiliate of any other Member, by reason of such Outside Activities.
6.03 Consent Required for Certain Action. Any other provision of this Agreement to the contrary notwithstanding, without the prior written consent of the Members holding the Required Voting Percentage (which consent shall not be unreasonably withheld, conditioned or delayed), the Managing Member shall not cause (or permit the Company or the Project Company to cause), or take any action which causes the Company to (or causes the Project Company to):
(a) incur or assume any indebtedness for borrowed money by the Company or permit the Project Company to incur or assume any indebtedness for borrowed money (including by means of guaranteeing the obligations of another Person), except for:
(i) indebtedness secured by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
(ii) indebtedness consisting of obligations arising in the ordinary course of the business of the Company or the Project Company;
(iv) indebtedness incurred under the Financing Loan Documents; or
(v) other unsecured indebtedness for borrowed money of the Company or the Project Company in principal amount not in excess of $500,000 at any time outstanding for the Project Company and the Company in the aggregate;
(b) encumber the assets or rights of the Company, or permit the Project Company to Encumber the assets or rights of the Project Company other than Permitted Liens;
(c) sell, assign, lease or otherwise transfer any asset or group of assets of the Company or permit the Project Company to sell, assign, lease or otherwise transfer any asset or group of assets of the Project Company, in either case, with a value in excess of, prior to the Flip Point, One Million Five Hundred Thousand Dollars ($1,500,000) or, following the Flip Point, Six Million Dollars ($6,000,000) individually or in the aggregate (in any Fiscal Year) other than, with respect to the Project Company, (i) from and after the adoption and approval of the Risk Policy, non-speculative sales of power, RECs, congestion revenue rights, capacity or electricity-related products, emissions credits, or ancillary services or other inventory in the ordinary course of business and not in breach of the Transaction Documents (including in connection with any non- speculative point-to-point trades, DART optimization trades or virtual trades reasonably
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related to the operation of the Project), which sales (A) are permitted by the Risk Policy, (B) do not involve or result in any Liens encumbering assets of Project Company and (C) in the case of a sale other than in connection with any such point-to-point trades, DART optimization trades or virtual trades, do not involve any “fixed shape” or “fixed volume” hedge or any similar arrangement (ii) the transfer of any related environmental credits, (iii) the transfer of an asset that is worn out, obsolete, or no longer necessary or useful for the operation of the Project, (iv) transfers of spare assets for the Project, which (A) to the extent the Recapture Period and, if applicable, the Augmentation Recapture Period, has not lapsed, have not been included tax basis allocable to ITC Eligible Property (as defined in the ECCA) of the Project and (B) are confirmed by the Independent Engineer to be not necessary to the Project and sold to an Affiliate for not less than the original purchase price of the asset, in accordance with the Prudent Operator Standard, (v) transfers in accordance with any Material Project Contract, and (v) in accordance with any Emergency Contract;
(d) hire or permit the Project Company to hire any employees, enter into or adopt or permit the Project Company to enter into or adopt any bonus, profit sharing, thrift, compensation, option, pension, retirement, savings, welfare, deferred compensation, employment, termination, severance or other employee benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers or employees of the Company or the Project Company;
(e) (i) amend, modify, assign, release or relinquish the rights or obligations of
any party to, cancel, suspend, renew (unless such renewal is on substantially similar terms and conditions), replace, terminate or resolve any material dispute relating to any Investment Document or (ii) after the Substantial Completion Funding date, amend, modify, assign, release or relinquish the rights or obligations of any party to cancel, suspend, renew (unless such renewal is on substantially similar terms and conditions), replace, terminate or resolve any material dispute relating to any, or execute or enter into any additional, Material Project Contract, other than (x) in the case of execution or entry in any additional Contract, as required to prevent or mitigate an emergency situation (any such additional Contract, an “Emergency Contract”) or (y) any amendments or modifications to any Material Project Contracts, which amendment or modification involves less than Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) in any year and, in each case, could not reasonably be expected to have a Material Adverse Effect;
(f) (i) change its, or permit the Project Company to change, methods of
accounting as in effect on the Effective Date, except as required by GAAP, or take or permit the Project Company to take any action, other than reasonable and usual actions in the ordinary course of business or specifically contemplated under the Transaction Documents, with respect to accounting policies or procedures, unless required by GAAP, (ii) consent to any tax audit adjustment or (iii) engage a Certified Public Accountant in replacement of the then-current Certified Public Accountant;
(g) (i) enter into or permit the Project Company to enter into a joint venture
with, merge into or consolidate with any Person or acquire all or substantially all of the assets or stock of any class of any Person, or (ii) change its, or permit the Project Company to change its,
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legal form, recapitalize or liquidate, wind-up or dissolve (except as permitted under this Agreement);
(h) Take or permit the Project Company to take any action that would result in any material event of default, or that would result in the acceleration of any material obligation or termination of any material right, under any Transaction Document;
(i) (i) change the purpose of the Company or engage in any business other than as set forth in Section 2.04, (ii) permit the Project Company to change its purpose or (iii) engage or permit the Project Company to engage in any business other than the direct or indirect development, construction, ownership, financing, maintenance, management and operation of the Project and sales of Product;
(j) make or permit the Project Company to make any capital expenditures, other than (i) as contemplated by the Material Project Contracts and in accordance with the Approved Budget, (ii) expenditures required by Law or necessary to prevent or mitigate an emergency situation or to preserve the value of the Project’s property and assets, (iii) capital expenditures paid for from funds on reserve and consistent with the uses contemplated for such reserves, (iv) as contemplated by an Emergency Contract, or (v) other than in accordance with an Approved Budget or the preceding clauses (i), (ii), (iii) or (iv), solely with respect to the Project Company, capital expenditures not in excess of $500,000 per year;
(k) execute and deliver, amend or modify or terminate any contract, lease or agreement with an Affiliate of the Managing Member except as permitted without consent under this Agreement;
(l) except pursuant to any Financing Loan Documents, permit (i) possession of property of the Company or the Project Company by any Member, (ii) the assignment, transfer or pledge of rights of the Company or the Project Company in specific property of the Company for other than a Company or Project Company purpose or other than for the benefit of the Company or Project Company or (iii) any commingling of the funds of the Company or the Project Company with the funds of any other Person that is not the Company or the Project Company;
(m) (i) sell or issue any interest, or any option, warrant or similar right to acquire any interest, of any kind in the Company or the Project Company, including any Membership Interest, except for issuances of additional Units pursuant to Section 3.04, or (ii) except as otherwise specified in this Agreement, (A) distribute any assets of the Company or the Project Company or (B) redeem, purchase or otherwise acquire any interest in the Company;
(n) elect that the Company be treated as an entity other than a partnership for U.S. federal income tax purposes or elect that the Project Company be treated as an entity other than a disregarded entity for U.S. federal income tax purposes, or take or permit the Project Company to take any of the following listed actions;
(i) cause the Company or the Project Company to sell or grant (or permit to be sold or granted) any ownership interest in the Project other than as
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contemplated in this Agreement, the Financing Loan Documents or the Power Purchase Agreement (for the avoidance of doubt, Dispositions of Membership Interests shall be governed by the provisions of Section 3.03 without regard to this clause (i));
(ii) voluntarily and permanently remove, or permit the Project Company to voluntarily and permanently remove, the Project from service (other than a removal from service caused by a force majeure event or casualty or if required by applicable Law); or
(iii) make any federal income tax election (or corresponding state or local income tax election) for the Company or the Project Company, except as otherwise expressly provided in this Agreement;
(o) (i) settle or permit the Company or the Project Company to settle any claim of or against the Company or Project Company, or confess or permit the Company or the Project Company to consent to entry of a judgment against the Company or the Project Company with respect to claims (or any series of claims), in each case (A) in excess of $250,000 if such judgment is not covered by insurance, (B) in excess of $1,500,000 if such judgment is covered by insurance, (C) which includes consent to or award of an injunction, specific performance or other equitable relief or (D) as a result of which the Company or the Project Company (or the assets or Representatives of the same, as applicable) would be subject to criminal liability or sanction or be deemed to have admitted to wrongdoing or (ii) initiate any judicial, arbitral, mediation or administrative proceeding for which the amounts in controversy exceed One Million Dollars ($1,000,000);
(p) amend or permit the Project Company to amend (except in the ordinary course of business), or fail to obtain, or permit the Project Company to fail to maintain, or, as a result of the breach of its terms, cause the revocation of, any Governmental Approval required for the operation, ownership, management or maintenance of the Project or the sale or transmission of power therefrom, in each case in a manner that would reasonably be expected to have a Material Adverse Effect;
(q) engage or permit the Project Company to engage in any speculative operating activities, any speculative energy or credits sales, any speculative forward contracts or any similar speculative transactions in each case other than as contemplated by any Material Project Contract, provided, however that the Managing Member may cause or engage or permit the Project Company to engage in such activities, sales or transactions without the prior written consent of the Members holding the Required Voting Percentage so long as (i) the performance by the Project Company under such contracts or agreements shall not cause a default under the Power Purchase Agreement and (ii) such activities, sales or transactions shall either (x) consist of sales of physical, as generated energy made to the CAISO real-time market or (y) be made pursuant to any form of transaction other than as described in the foregoing clause (x) (including, but not limited to, day-ahead sales, non-speculative point-to-point trades, DART optimization trades and virtual trades reasonably related to the operation of the Project); provided, that in the case of such activities, sales or transactions under this clause (y), such activities, sales or transactions are made only following adoption of the Risk Policy and in accordance therewith;
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provided further, that the Risk Policy initially adopted on or after the Effective Date and any modifications and amendments thereto shall, prior to the date the Flip Point occurs, be in form and substance reasonably satisfactory to the Class A Member;
(r) except in accordance with Section 6.08, change, amend or substitute or permit the Company or the Project Company or the Administrator (provided the Administrator is an Affiliate of the Company) to change, amend or substitute the insurance required to be maintained by (x) the Company or the Project Company pursuant to this Agreement or (y) the Operator pursuant to the O&M Agreement;
(s) loan any funds of the Company, or permit the Project Company to loan any of its funds, to any Person, or provide any guaranty of another Person’s obligations;
(t) guarantee or permit the Project Company to guarantee, in the name or on behalf of the Company or the Project Company, the payment of money or the performance of any contract or other obligations of any Person except for guarantees of obligations, endorsements and other similar guarantees under the Financing Loan Documents or in the ordinary course of business of the Company or the Project Company;
(u) fail to (i) deposit all cash of the Company and the Project Company in an account maintained for such entity, as applicable, and (ii) if not held in cash, invest any such deposited funds in Cash Equivalents;
(v) take or file or permit the Project Company to take or file any action or institute any proceedings in Bankruptcy;
(w) take any action reserved for, or which specifically requires the consent of, the Members under any other Section of this Agreement, in each case without the required consent of the Members;
(x) approve any public announcement regarding the Purchase Agreement;
(y) prior to the later of (x) the Flip Point and (y) the date on which the Class A Members do not have any deficit balance in their Capital Accounts, transfer any Company property that constitutes “capital gain property” within the meaning of Treasury Regulation Section 1.755- 1(a)(1), other than in connection with a liquidation of the Company or a transfer or assignment approved under clause (c) above;
(z) following the occurrence of a casualty event affecting the Project giving rise to insurance proceeds (other than proceeds of business interruption insurance) in excess of Twenty Million Dollars ($20,000,000) decide whether to (i) use, or cause the Project Company to use, any such insurance proceeds to repair or restore the affected portions of the Project or (ii) distribute such insurance proceeds to the Members in accordance with the terms of this Agreement; provided that the Members shall not withhold, condition or delay consent if (w) the Class A Members are not required to provide capital contributions or loans to the Company in respect of the casualty event, (x) the condition in Section 6.16(a)(ii) and Section 6.16(b) has been satisfied with respect to the casualty event, (y) the casualty event occurred after the end of the
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Recapture Period or the impacts to the Class A Members of any Recapture Event potentially resulting from casualty event have been addressed to the satisfaction of the Class A Members (including through coverage under the ITC Insurance Policy) and (z) after giving event to the planned use of the insurance proceeds, the Flip Date is expected to occur within 8 years after the Mechanical Completion Funding Date; or
(aa) (i) take any action or (ii) fail to take any action or provide consent for any Person (including the Administrator, the Partnership Representative or Designated Individual) to take any action, in each case, if such action or failure to take action or provide consent, as applicable, would cause a loss of coverage under the ITC Insurance Policy.
6.04 Limitations of Liability; Standard of Care.
(a) Anything in this Agreement to the contrary notwithstanding, the Managing Member does not guarantee any outcome or event or that the Company will in fact comply with any applicable legal or contractual obligation. The Managing Member shall be required to perform its duties and obligations expressly set forth in this Agreement (i) in instances not involving the operation and management of the Project, in good faith and in a manner reasonably believed to be in the best interest of the Company and/or the Project and (ii) with respect to operation and management of the Project, in accordance with the Prudent Operator Standard; provided, to the fullest extent permitted by applicable Law, that it shall not be a breach of the Managing Member’s standard of care and the Managing Member shall not be responsible hereunder for the gross negligence or willful misconduct of, or breach of contract by, any sufficiently qualified Person engaged by the Managing Member or Administrator, whether or not an Affiliate of the Managing Member, pursuant to a Contract that requires such Person to perform its duties in accordance with the Prudent Operator Standard and the Managing Member uses commercially reasonable efforts to appoint, supervise and oversee such Persons in accordance with the Prudent Operator Standard. The Managing Member shall be obligated to administer and enforce the Contracts to which the Company or the Project Company is a party in a commercially reasonable manner in accordance with their respective terms.
(b) The Company may purchase and maintain reasonable amounts of insurance on behalf of any Person who is or was an officer, employee, or agent of the Company, against any liability asserted against the Person and incurred by the person in any capacity, or arising out of the Person’s status as such, whether or not the Company would have the power to indemnify the Person against the liability in accordance with Article 13.
(c) For the avoidance of doubt, any action taken by the Managing Member in compliance with the Prudent Operator Standard that is necessary to comply with applicable Law including the permanent cessation of operation of the Project that is the result of a casualty, force majeure event or other event outside of the reasonable control of the Managing Member shall not constitute a breach of this Agreement, including the requirement to obtain the consent of the Members holding the Required Voting Percentage required pursuant to Section 6.03.
(d) The Members shall be required to perform their obligations and duties hereunder in good faith.
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(e) In respect of any specific matter or circumstance requiring interpretation, application, or enforcement of any contract or agreement related to the business of the Company or the Project Company, the Managing Member may rely conclusively on the advice of legal counsel and/or qualified industry consultants or other advisors engaged to advise the Managing Member, the Company or the Project Company with respect to such matter or circumstance. The Managing Member shall have no liability to the Company, the Project Company or any Member in respect of any election made in good faith pursuant to Article 7. The Managing Member, in its capacity as the Managing Member, shall have no liability to the Company or to the other Members for particular action taken, or decision not to act, if such action or decision not to act either (i) was taken with the written approval of the Members required by this Agreement for such action (including actions under the Approved Budget) or (ii) requires the consent of the Members hereunder, and the Managing Member has properly requested such consent of the Members in accordance with the terms of this Agreement, and the requisite Members did not grant such requested consent (unless such approval is denied or withheld due to an ongoing breach by the Managing Member of its obligations hereunder).
(f) EACH MEMBER’S (INCLUDING THE MANAGING MEMBER’S) INDEMNIFICATION OBLIGATIONS SHALL BE LIMITED TO ACTUAL LOSSES, AND SHALL NOT INCLUDE SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY LOSSES OR DAMAGES (INCLUDING LOSSES FOR LOST OPPORTUNITY, LOST PROFIT, LOST REVENUE, OR LOSS OF USE OF SUCH PROFITS OR REVENUE) OR ANY OTHER SPECIAL DAMAGES, REGARDLESS OF WHETHER THE CLAIM IS BASED UPON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHER THEORY OF LAW; PROVIDED, THAT THE VALUE OF LOST OR REDUCED ITCS (INCLUDING ANY ITCS SUBJECT TO AN ELECTION PURSUANT TO SECTION 6418 OF THE CODE) OR OTHER TAX BENEFITS, TO THE EXTENT REFLECTED IN THE BASE CASE MODEL, SHALL BE RECOVERABLE AS DIRECT DAMAGES AND SHALL NOT CONSTITUTE SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES; PROVIDED FURTHER THAT THE FOREGOING SHALL NOT LIMIT THE ABILITY OF ANY CLASS A MEMBER FROM RECOVERING SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY LOSSES (INCLUDING LOSSES FOR LOST OPPORTUNITY, LOST PROFIT, LOST REVENUE, OR LOSS OF USE OF SUCH PROFITS OR REVENUE) OR ANY OTHER SPECIAL DAMAGES PAID BY ANY CLASS A MEMBER TO AN UNAFFILIATED THIRD PARTY IN CONNECTION WITH A THIRD-PARTY CLAIM. THE OBLIGATIONS OF THE MEMBERS AND THE MANAGING MEMBER UNDER THIS AGREEMENT ARE OBLIGATIONS OF THE MEMBERS AND THE MANAGING MEMBER (AS APPLICABLE) ONLY, AND NO RECOURSE SHALL BE AVAILABLE AGAINST ANY OFFICER, DIRECTOR, MANAGER, MEMBER, PARTNER, OR AFFILIATE OF ANY MEMBER.
6.05 Approved Budgets. The Managing Member shall prepare or cause to be prepared for each Fiscal Year of the Company an operating budget for the Company and the Project setting forth the anticipated revenues and expenses of the Company and the Project Company for such Fiscal Year and an estimate of project taxable income or loss for such Fiscal Year;
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provided, however, if the Managing Member has actual knowledge of an event beyond such Fiscal Year that is reasonably expected to significantly and adversely affect the budget beyond such fiscal year, the Managing Member will notify the Members of such event when it delivers the proposed operating budget. The initial operating budget for the balance of the year [2025]3 and the next succeeding Fiscal Year, with respect to the Project Company if acquired by the Company in [2025], and the year [2026], with respect to the Project Company if acquired in 2026, is attached as Exhibit D. Upon the Managing Member’s approval of a proposed operating budget for the succeeding Fiscal Year (commencing with the [2026] Fiscal Year), the Managing Member shall, not later than November 10 of the then-current Fiscal Year (commencing no later than November 10, [2025]), submit the proposed operating budget for the succeeding Fiscal Year to the Members for their review; provided, that any Member may request within ten (10) Business Days following receipt of such proposed operating budget that the Independent Engineer review and comment on the adequacy of such budget and following receipt of such a request the Company shall, at its sole cost and expense, submit such budget to the Independent Engineer for its review and comment and shall make available to the Members all responses and recommendations provided by the Independent Engineer. Unless the Majority of all Members (without regard to the Managing Member or any Member who is an Affiliate of the Managing Member) object in writing to such proposed operating budget not later than November 30 (which date shall be extended by the number of days, if any, that the proposed operating budget was delivered late to the Members), such operating budget shall be deemed approved by the Members (each budget as attached hereto, approved or deemed approved, an “Approved Budget”). If such Members disapprove the proposed operating budget, the Managing Member shall prepare or cause to be prepared a revised budget, which shall be submitted to the Members for their approval as set forth in the preceding sentence; upon final approval of such budget by Members collectively holding the Required Voting Percentage, such budget shall become an Approved Budget hereunder. To the extent that amounts relating to any items of a proposed budget are not approved, the corresponding amounts for the items in the preceding year’s budget will continue as part of the budget for such year, until a more current amount for such item is approved in accordance with this Section 6.05. The Managing Member may from time to time during the Fiscal Year amend the Approved Budget for the Company and/or the Project Company to decrease expected expenditures, or to increase expected expenditures, by an amount not to exceed in the aggregate for all such amendments ten percent (10%) of the aggregate expense amount reflected in such Approved Budget during the applicable Fiscal Year. Except as otherwise contemplated herein (including in Section 4.03(b)), any variances from an Approved Budget for the Project Company in excess of ten (10%) percent for the Project Company in the aggregate during such Fiscal Year (excluding any increase attributable to an Emergency Contract or as a result of actions taken, in accordance with Section 6.05, to prevent or mitigate an emergency situation) shall require the approval of the Majority of all Members, and if so approved, each such variance shall be added to the Approved Budget, which, as so amended, shall thereafter be the Approved Budget for the Project Company for the year.
6.06 Removal of the Managing Member. The Managing Member shall not be removed from its capacity of Managing Member without Cause, except to the extent that the Managing Member is replaced in connection with a Disposition of the Class B Units owned by
3 Note to Form: To reflect the year this LLCA is entered into.
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the Managing Member in accordance with Section 3.03(b)(ii). If Cause exists as to the Managing Member, the Managing Member may be removed from its capacity of Managing Member upon the vote or written consent of a Supermajority of Class A Members both prior to and after the Flip Point. The appointment of a replacement Managing Member following removal of the Managing Member for Cause shall require the vote or written consent of the Members (other than any Member that is, or is an Affiliate of, the removed Managing Member) holding the Required Voting Percentage.
6.07 Placed in Service; Final Completion.
(a) Following acquisition of the Project, the Managing Member shall cause the Company to cause the Project to be Placed In Service no later than the Commitment End Date.
(b) Following the satisfaction of its obligations under Section 6.07(a) above, Managing Member shall take all actions, and cause the Company to undertake such actions, necessary to cause the Project to achieve Final Completion on or before the completion deadlines as set forth in the applicable Material Project Contracts, as may be extended from time to time, provided such extension could not reasonably be expected to result in a Material Adverse Effect.
(c) To the extent that the funds then on deposit in the Final Completion Reserve Account on any date following the Substantial Completion Funding Date and costs paid by the Project Company are insufficient to pay all costs and expenses necessary to achieve Final Completion, then, the Class B Member shall make one or more capital contributions to the Company as and when necessary such that the Company and/or Project Company can pay any such outstanding costs and expenses when due.
6.08 Insurance. To the extent available on commercially reasonable terms, the Managing Member shall cause the Company and the Project Company to maintain all insurance policies with respect to the Company, the Project Company and the Project consistent with the requirements set forth on Exhibit E; provided that, to the extent insurance policies consistent with the requirements set forth on Exhibit E are not available on commercially reasonable terms, the Managing Member shall inform the Class A Members and consult with them regarding alternative commercially available insurance coverage.
6.09 Anti-Corruption Compliance Covenant.
(a) The Managing Member, at the cost and expense of the Company, shall (i) develop and maintain risk-based policies and procedures reasonably designed to promote and achieve compliance by the Company, the Project Company and their respective directors, officers, employees, and agents (in each case, solely in connection with such persons’ actions in respect of the Company and the Project Company and the development of the Project) with (1) applicable Anti-Bribery and Anti-Corruption Laws, particularly with respect to interactions with Governmental Authorities, (2) applicable Anti-Terrorism and Money Laundering Laws and Regulations, and (3) applicable Sanctions and (ii) provide the documentation and information reasonably requested by any Class A Member for such Class A Member to comply with the
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requirements of all “know your customer” rules and regulations pursuant to Anti-Terrorism and Money Laundering Laws.
(b) The Managing Member shall not directly or indirectly, use, and, in carrying out its duties hereunder, shall not permit the Project Company to use, the proceeds of any Capital Contribution made hereunder (i) in furtherance of any offer, payment, promise to pay or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any applicable Anti-Bribery and Anti-Corruption Law or any applicable Anti- Terrorism and Money Laundering Law and Regulation, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Prohibited Person, or in any Sanctioned Country, in each case except to the extent such activities, business or transaction would be permissible for a Person required to comply with Sanctions or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
6.10 Financing Loan Covenants.
(a) Managing Member hereby covenants that none of Managing Member, the Company, the Project Company or any other Affiliate party to the Financing Agreements shall amend or provide any waiver of (or permit any Affiliate to amend or provide any waiver of) the material terms of any Financing Loan Document from and after the Mechanical Completion Funding Date in a manner that would reasonably be expected to materially and adversely impact the interests of the Class A Members.
(b) Managing Member hereby covenants that it shall promptly deliver (no later than three (3) Business Days after receipt thereof) to the Class A Members (i) a copy of any notice of event of default received from the Lenders and (ii) such other notices and documentation as the Class A Members may reasonably request in connection with such event of default notified under the Financing Loan Documents.
6.11 Commercial Operation Date; Harmonics.
(a) If the Substantial Completion Funding Date occurs prior to April 1, 2027, on April 1, 2027, the Company shall deliver a Notice of Commercial Operation (as defined in the Power Purchase Agreement) to the Power Purchaser pursuant to Section 2.2 of the Power Purchase Agreement declaring that the Commercial Operation Date (as defined in the Power Purchase Agreement) has occurred as of April 1, 2027.
(b) The Managing Member shall monitor the Project harmonics at the Project’s interconnection facilities following a harmonic monitoring plan that is deemed satisfactory by the Independent Engineer and Class A Member. If the Independent Engineer reasonably determines that harmonic filters are recommended to be installed at the Project, the Managing Member shall cause the Project Company to install the applicable harmonic filters and the cost of such obligation shall be a cost to achieve Final Completion under Section 6.07(b). If the Independent Engineer reasonably determinates that, based on the results of the harmonics monitoring, no harmonic filters are required to be installed, no further action shall be required hereunder with respect to harmonics.
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6.12 Build-Out Obligation. In the event that Class B Member (or any of its Affiliates) (i) seeks to build any new electrical generation capacity or energy storage capacity (a “Sponsor Project”) with any infrastructure of such Sponsor Project located in any Restricted Area (or consents to the development of a Sponsor Project on any real property which has been or is in the future owned or otherwise controlled by the Class B Member or any of its Affiliates with any infrastructure of such Sponsor Project located in any Restricted Area) or (ii) seeks to use any part of the assets of the Project for any such Sponsor Project, the Class B Member shall cause its Affiliate to enter into a Build-Out Agreement with the Class A Member prior to building any such Sponsor Project or using any such part of the facilities of the Project. The provisions of such Build- Out Agreement will address, among other things, the obligation of Class B Member to retain a transmission consultant reasonably acceptable to Class A Member to prepare, as of commercial operation of such Sponsor Project, a report (the “Transmission Effects Report”) on the identifiable reduction of electric generation or increase in basis or curtailment losses of the Project attributable to local transmission curtailment (including any downtime at the Project related to such Sponsor Project’s interconnection or maintenance) or local congestion directly caused by, and directly resulting from, the Sponsor Project being granted access to and use of the Project’s substation or any transmission line or transmission facility used by the Project Company, as such reduction, curtailment or congestion is reasonably determined by such transmission consultant (the “Transmission Effect”), provided that such Transmission Effect shall be considered to be zero if the identified reduction in the projected total output of the Project in a measured period based on a P50 production case without taking any other Sponsor Project into account (the “Anticipated Output”) is less than one half percent (0.5%) of such Anticipated Output of the Project in the measured period. If the Transmission Effects Report concludes that there is a material Transmission Effect, then the Managing Member shall update the Base Case Model, changing only the assumptions necessary to reflect the conclusions in the Transmission Effects Report. If such updated Base Case Model results in the Flip Point failing to be achieved by the Target Flip Date, the Managing Member will determine (which determination shall be reasonably acceptable to the Majority of Class A Members) the cash amount that if paid as a lump sum payment to the Class A Members will cause the Flip Point to be achieved by the Target Flip Date.
6.13 Substantial Completion Date Survey. At or prior to the Substantial Completion Funding Date, Managing Member shall cause to be delivered to the Class A Member and the Company (i) the Substantial Completion Date Survey and (ii) an irrevocable commitment from the Title Company, in the form of a closing instruction letter signed by the Title Company (in form and substance reasonably satisfactory to the Title Company and the Class A Member), to issue the Substantial Completion Date Endorsement in the form required under Section 5.3(o) the ECCA.
6.14 ▇▇▇▇ Augmentation Capital Contribution Obligations.
(a) The Class B Member shall cause the Company and the Project Company to augment the ▇▇▇▇ Project (or applicable portion thereof) consistent with the ▇▇▇▇ Augmentation Plan (“▇▇▇▇ Augmentation”) and shall make any Capital Contributions that are necessary or reasonably appropriate to enable the Company and/or the Project Company to pay when due any costs or expenses for, or in furtherance of, ▇▇▇▇ Augmentation. Any actions taken
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by, or by the direction or instruction of, the Managing Member to implement such ▇▇▇▇ Augmentation shall be in accordance with the ▇▇▇▇ Augmentation Plan.
(b) Following successful completion of ▇▇▇▇ Augmentation in accordance with the ▇▇▇▇ Augmentation Plan, if ▇▇▇▇ Augmentation ITC Special Allocation Conditions or ▇▇▇▇ Augmentation ITC Transfer Conditions are satisfied and the Class A Equity Investor has provided prior written consent in accordance with Section 5.05(b)(iii)(B) for any ▇▇▇▇ Augmentation ITCs and/or tax-exempt income resulting from receipt of Transfer Proceeds from the sale of ▇▇▇▇ Augmentation ITCs otherwise allocable to the Class A Member pursuant to Section 7.03(h) to be taken into account for purposes of determining whether the Flip Point has occurred under Section 5.05(b) , the Members shall, consistent with this Agreement, recalculate and adjust the then-current Tracking Model to take into account incremental ▇▇▇▇ Augmentation ITCs from such ▇▇▇▇ Augmentation (and/or, if applicable, the transfer of such ▇▇▇▇ Augmentation ITCs pursuant to Section 7.03(h)), including any anticipated Recapture Event of such incremental ▇▇▇▇ Augmentation ITCs resulting from the step-down in allocation percentages of Company Item set forth in Section 5.01(a)(i), exercise of the Purchase Option or Buyout Option, or otherwise, and any other Tax Benefits and Tax Costs arising therefrom, but without changing any other inputs or parameters.
(c) As of the Mechanical Completion Funding Date, each of the Members hereby agrees to cooperate in good faith in determining whether prong (e) of the ▇▇▇▇ Augmentation ITC Special Allocation Conditions has been satisfied and may be removed.
6.15 Qualified Replacement PPA. In the event Commercial Operation (as defined in the Power Purchase Agreement) is never declared or the Power Purchase Agreement otherwise becomes subject to early termination pursuant to the terms therein, the Class B Member will cause the Project Company to enter into one or more Qualified Replacement PPAs within six (6) months of following such early termination or anticipated effective date (the “PPA Ineffective Date”). In the event the Class B Member does not cause the Project Company to enter into one or more Qualified Replacement PPAs within six (6) months of such PPA Ineffective Date, the priority cash distribution percentage to Class A Member pursuant to Section 5.02(a)(ii) shall increase from twenty-five percent (25%) to fifty percent (50%) (based on the anticipated cash flows as set forth in the Updated Base Case Model as adjusted in connection with the Substantial Completion Funding Date), with a corresponding adjustment to the Priority Cash Schedule, until the Flip Point.
6.16 Casualty Losses.
(a) Subject to Section 6.03(z), if after the Substantial Completion Funding Date, (i) the Project has suffered a casualty event that has caused material damage to the Project that has materially interfered with the operation of the Project prior to the Flip Point (a “Material Casualty Event”), and (ii) the Independent Engineer has opined that (A) the insurance proceeds received by or payable (or expected to be payable) to the Project Company pursuant to the Effective Date Title Policy or any other insurance policy related to such Material Casualty Event (“Available Insurance Proceeds”), together with any Managing Member Loans, any Required Restoration Capital Contributions, additional Capital Contributions made or committed to be
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made by the Members with respect to the Project and cash on hand, are sufficient to repair such casualty, (B) the Project Company can reasonably be expected to obtain all required Governmental Approvals in connection with such rebuilding or restoration and (C) such rebuild or restoration is achievable in accordance with such Governmental Approvals, then the Managing Member covenants to cause the Company and/or the Project Company to, as soon as practical, enter into Contracts with contractors to repair, replace, remediate or rebuild the Project (or portion of the Project) in order to restore the Project to the Project’s condition prior to the occurrence of the applicable casualty event and use all such insurance proceeds and other available funds to pay costs under such Contracts.
(b) To the extent that (i) the restoration costs related to such Material Casualty Event exceed the sum of Available Insurance Proceeds and other cash on hand of the Project Company or Company (such difference, the “Uninsured Restoration Costs”), (ii) the sublimit for the applicable insurance policy is less than one hundred percent (100%) of the 500-year PML as provided by ABS or other qualified third-party engineering company that is reasonably acceptable to the Class A Member, as will be updated prior to the Substantial Completion Funding Date (the “Required Sublimit”), and (iii) the condition in clause (ii) of Section 6.16(a) is satisfied, the Class B Members shall make one or more Capital Contributions to the Company, on a joint and several basis, on or prior to the date when needed to pay restoration costs that are due and payable, in an amount equal to the Uninsured Restoration Costs (a “Required Restoration Capital Contribution”), up to the lesser of (A) an aggregate cap equal to Forty Million Dollars $40,000,000 and (B) per-calendar year cap equal to the difference between (x) the Required Sublimit minus (y) the amount of Available Insurance Proceeds (the “Required Restoration Capital Contribution Cap”), and the Managing Member shall apply such Required Restoration Capital Contributions in the manner described in Section 6.16(a).
6.17 Prevailing Wage and Apprenticeship Requirements.
(a) The Class B Member shall, during construction of the Project and through the expiration of the Recapture Period (and, only to the extent ▇▇▇▇ Augmentation ITCs are allocated to the Class A Members, including through the expiration of the Augmentation Recapture Period), (i) cause the Company and the Project Company to fully satisfy the PWA Requirements and maintain (for the applicable statute of limitations) documentation, certificates, and supporting wage, hours, labor classification and apprenticeship program information from relevant Material Project Contract and other applicable contract parties with respect to the PWA Requirements and (ii) pursue any remedies from any contractors or subcontractors for non-compliance with the PWA Requirements and make (or cause to be made) all payments necessary to cure any failure to satisfy any of PWA Requirements no later than the date the relevant U.S. federal income tax return is filed by the Company. For the avoidance of doubt, any costs required to satisfy the obligations under this Section 6.17 shall be borne by the Class B Member.
(b) The Managing Member shall deliver to the Class A Members (i) within three (3) months after the achievement of Final Completion, a final PWA Compliance Report from the PWA Consultant setting forth the Project’s compliance with the PWA Requirements through Final Completion and any PWA Cure Costs that were determined (and, if applicable,
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remedied) with respect to any failure to satisfy the PWA Requirements through Final Completion, and evidence that the Project has satisfied the PWA Requirements (including compliance certificates, documentation, and other supporting information from the relevant Material Project Contracts or other applicable Contract parties) and (ii) with respect to each Taxable Year (or portion thereof) during the period following Final Completion through the end of the Recapture Period (and, only to the extent ▇▇▇▇ Augmentation ITCs are allocated to the Class A Members, including through the expiration of the Augmentation Recapture Period), within sixty (60) days after the end of each such Taxable Year, the Class A Member shall receive a PWA Compliance Report from the PWA Consultant setting forth the Project’s compliance with the PWA Requirements through such Taxable Year (or portion thereof) and any PWA Cure Costs that were determined (and, if applicable, remedied) with respect to any failure to satisfy the PWA Requirements through such period, and evidence that the Project has satisfied the PWA Requirements (including compliance certificates, documentation, and other supporting information from the relevant Material Project Contracts or other applicable Contract parties) for such period.
(c) Notwithstanding anything to the contrary in Section 7.5 of the ECCA, within ten (10) days following receipt of any PWA Compliance Report, the Class B Member shall make an additional Capital Contribution to the Company to fund the PWA Cure Reserve Account in an amount equal to the total PWA Cure Costs required for the Project to be in full compliance with the PWA Requirements, as determined by the PWA Consultant. Without limiting the foregoing, the Class B Member shall make Capital Contributions to the Company as and when needed (but no later than the date the relevant U.S. federal income tax return is filed by the Company), after taking into account any funds that are available in the PWA Cure Reserve Account, to enable the Company to pay any and all PWA Cure Costs with respect to the Project (regardless of whether such PWA Cure Costs were detailed in the PWA Compliance Report) no later than the date the relevant U.S. federal income tax return is filed by the Company.
6.18 Interim Deliverability Status and Partial Capacity Deliverability Status Capital Contribution Obligation. In the event that the Project is not allocated at least fifty percent (50%) of the full 238.5 MW of Interim Deliverability Status from CAISO by the Commercial Operation Date (as defined in the Power Purchase Agreement) the Class B Member shall make Capital Contributions in an amount equal to any resulting damages that are paid by the Company or the Project Company to the Power Purchaser pursuant to the terms of the Power Purchase Agreement, as set forth in the Updated Base Case Model; provided that the Updated Base Case Model in any event shall reflect the extent to which the Project is not allocated the full 238.5 MW of Interim Deliverability Status from CAISO.
ARTICLE 7
PARTNERSHIP REPRESENTATIVE, COMPANY TAX FILINGS, AND SECTION 6418
7.01 Tax Elections. The Managing Member shall make the following federal income tax elections on the appropriate Company Federal Tax Returns:
(a) to use the accrual method of accounting;
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(b) to amortize any organizational and start-up expenses of the Company ratably over a period of 180 months as permitted by Code Sections 709(b) and 195(b);
(c) to adjust the basis of Company assets under Code Section 754;
(d) to use, to the extent permitted under Section 706 of the Code, the calendar year as the taxable year (the “Taxable Year”);
(e) to elect not to claim any “bonus depreciation” otherwise available and to use 5-year MACRS for property classified as “5-year class property” under Section 168(e)(3)(B) of the Code;
(f) to the extent decided under Section 7.03 to elect pursuant to Section 6418 of the Code to transfer all or a portion of the Company Credits, in the time and manner described in Section 7.03;
(g) if approved in writing by a Majority of Class A Members, any other election the Managing Member may deem appropriate;
(h) to the extent applicable, to elect the increase in credit rate for energy communities under Section 48(a)(14) of the Code for the Project; and
(i) to the extent applicable, to elect the “Domestic Content Bonus Credit Amount” pursuant to Code Section 48(a)(12) and, in connection therewith, timely submit a domestic content certification statement in accordance with Section 5 of IRS Notice 2023-38 and affirmatively elect, in accordance with Section 4.03(8) in IRS Notice 2024-41, to rely on the New Elective Safe Harbor under IRS Notice 2024-41 pursuant to the Solar PV Table (ground-mount tracking) and the Battery Electric Storage System (▇▇▇▇) Table set forth in Sections 4.04(1) and (3) of IRS Notice 2024-41 or affirmatively elect, in accordance with Section 8.03(8) in IRS Notice 2025-08, to rely on the First Updated Elective Safe Harbor under IRS Notice 2025-08 pursuant to the Updated Table for Solar PV Ground-Mount and the Battery Energy Storage System set forth in Sections 5.05 and 5.07 of IRS Notice 2025-08, as applicable, as determined by the Class B Member in its sole discretion in accordance with Section 11 in IRS Notice 2025-08.
The Managing Member shall make no other tax elections for the Company or the Project Company, except as otherwise provided herein without the written consent of the Class A Members, such consent not to be unreasonably withheld; provided, however, that the Managing Member may elect to extend the time for filing any Company Federal Tax Return as provided for under the Code and applicable State statutes, so long as the Class A Members receive written notice of such extension in a timely manner and in any event (i) such return shall be filed no later than August 1 and (ii) such notice shall be received no later than the immediately preceding February 1. Neither the Company nor any Member may make an election for the Company to be excluded from the application of the provisions of subchapter K of Chapter 1 of subtitle A of the Code or any similar provisions of applicable state law. No Member, Managing Member, officer or Representative of the Company or the Project Company is authorized to, or may, file IRS Form 8832 (or such alternative or successor form) to elect to have the Company or the Project
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Company be classified as a corporation for federal income tax purposes under Regulation Section 301.7701- 3. The Managing Member shall, in addition, affirmatively take such action within its control as may be necessary or required to maintain the status of the Company as a partnership for federal income tax purposes.
The Company shall not report any ITCs on a Federal Tax Return that take into account any Domestic Content Bonus (as defined in the ECCA) or the Energy Community Adder (as defined in the ECCA), unless reflected in the Updated Base Case Model. Further, the Company shall not report on any Tax Return (x) any ▇▇▇▇ Augmentation ITCs unless the ▇▇▇▇ Augmentation ITC Special Allocation Conditions or ▇▇▇▇ Augmentation ITC Transfer Conditions have been satisfied, or (y) any ITCs that take into account qualified interconnection property pursuant to Code Section 48(a)(8), the “low income community bonus” pursuant to Code Section 48(e), or any other “bonus” Tax credits available (other than Domestic Content Bonus (as defined in the ECCA) or the Energy Community Adder (as defined in the ECCA)), unless the Class A Member has provided prior written consent or the Additional ITC Conditions have been satisfied. The Managing Member shall maintain sufficient documentation consistent with the PWA Requirements and the requirements of Section 48(a)(12) and (14) of the Code as amended, updated or clarified by any applicable Treasury Regulations, IRS Notices or other applicable guidance, to qualify the Project for any ITC amount available pursuant to Sections 48(a)(9), 48(a)(12) and (14) reflected on any Federal Tax Returns filed by the Company.
Any Federal Tax Returns that will be filed by the Company will be filed on a basis that is consistent with the allocation of federal income tax depreciation and amortization and other tax items as agreed or determined pursuant to the Base Case Model, and such allocations shall be binding on the Company and the Members for all tax reporting purposes, and neither the Company nor any Member shall take inconsistent positions with respect thereto (other than as the result of a judicial or administrative determination prosecuted by the Company in the manner materially in accordance with this Article 7).
For the avoidance of doubt, the Managing Member shall not file an election under Section 6221(b) of the Code to elect out of subchapter C of Chapter 63.
7.02 Partnership Representative.
(a) The Managing Member shall be, to the extent permitted under the Code, the “partnership representative” as that term is described in Section 6223 of the Code (the “Partnership Representative”). The Managing Member is hereby directed and authorized to take whatever steps it, in its reasonable discretion, deems necessary or desirable to perfect such designation, including filing any forms or documents with the IRS and taking such other action as may from time to time be required under the Treasury Regulations. The Managing Member will remain as the Partnership Representative so long as it retains any ownership interests in the Company unless (i) the Managing Member requests that it not serve as Partnership Representative, (ii) the Partnership Representative has engaged in or committed fraud, willful breach, or willful misconduct or exhibited gross negligence, or (iii) the Managing Member has otherwise been removed pursuant to Section 6.06; provided, however, that notwithstanding the foregoing, the Managing Member shall not be permitted to resign unless and until the Members
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have found a replacement Partnership Representative approved in writing by the Class A Members; provided, further, that any replacement Partnership Representative must be approved by the consent of the Class A Members. For each Taxable Year of the Company, the Company shall appoint an individual selected by the Partnership Representative as the Designated Individual, and the Company shall revoke such appointment if and only if instructed to do so by the Partnership Representative. At the request of any Member, the Managing Member shall provide the identity of, and contact information for, the Designated Individual for any Taxable Year. If the Designated Individual with respect to any Taxable Year ceases to be an employee or officer of the Partnership Representative (or an Affiliate thereof), the Partnership Representative shall promptly designate another individual that is an employee or officer of the Partnership Representative (or an Affiliate thereof) to serve as the new Designated Individual with respect to such Taxable Year in accordance with the Code. In the event of the removal or resignation of the Partnership Representative with respect to any Taxable Year, the designation of the Designated Individual with respect to such Taxable Year shall automatically be revoked, and the successor Partnership Representative shall promptly designate a new Designated Individual with respect to such Taxable Year.
(b) At the Company’s expense, the Partnership Representative shall cause to be prepared and signed by a nationally recognized accounting firm, chosen by the Partnership Representative and reasonably satisfactory to the Majority of Class A Members (“Tax Return Preparer”), the IRS Form 1065 along with all accompanying Schedules (including Schedule K- 1s) for the Company (or successor IRS federal income tax return required to be filed for the Company (the “Federal Tax Return”)), along with all necessary state and local income Tax Returns for the Company. The Partnership Representative shall prepare, or cause the Tax Return Preparer to prepare, all such Tax Returns in a manner consistent with this Agreement, including the Fixed Tax Assumptions applicable at such time, and the Base Case Model (except to the extent that a Fixed Tax Assumption is adjusted or recalculated as described in Section 5.05(b)(iii)(A)(II)), and the Partnership Representative shall alert the Class A Members, by timely written notice, of any proposed inconsistencies, differences or changes therefrom; provided that if any proposed inconsistency relates to the Fixed Tax Assumptions, the tax elections pursuant to Section 7.01, or the tax reporting pursuant to Section 2.3 of the ECCA, such notice shall be provided no later than March 31st of the Fiscal Year in which the Tax Return is required to be filed. If at least a Supermajority of Class A Members assert in writing within fifteen (15) Days that any such proposed inconsistencies, differences or changes, have not been accurately identified, and/or handled in accordance with the foregoing return preparation procedures of this Section 7.02(b), such dispute shall be resolved in a manner equivalent to a Flip Point dispute under Section 11.03.
(c) The Partnership Representative shall file all necessary Federal Tax Returns and other Tax Returns for the Company. The Partnership Representative shall use commercially reasonable efforts to furnish to the Members on a timely basis copies of all Tax Returns, and with respect to Federal Tax Returns, (w) by no later than December 1st of each fiscal year, a projection of the Class A Members’ Capital Accounts and any Adjusted Capital Account Deficit in any Class A Members’ Capital Account that might result in a reallocation of items of loss and deduction as of the end of such fiscal year, (x) by no later than February 28th of
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each Fiscal Year, an estimate and all draft working papers related thereto of all Company items of income, gain, loss, deduction and credit (including ITCs) expected by the Partnership Representative to be reported on the Federal Tax Return to be submitted by the Partnership Representative to the Class A Members for the immediately preceding Fiscal Year, (y) by no later than May 1st of each Fiscal Year, preliminary drafts of the Schedules K-1 proposed to be delivered to the Members and filed by the Company with its Federal Tax Return and (z) a proposed final Federal Tax Return, including all working papers related thereto no less than forty-five (45) Days before the Partnership Representative intends to file such Federal Tax Return. The Class A Members shall have up to thirty (30) Days to provide comments to the Partnership Representative on such proposed Federal Tax Return. Each Member shall furnish to the Partnership Representative all pertinent information, such in its possession relating to Company operations that is necessary to enable the Company’s income tax returns to be prepared and filed. For Federal income tax purposes, each Member shall report all items of income, gain, loss, deduction and credit attributable to the Company, the character and timing of such items, and the sharing of the Company’s liabilities, consistent with the manner in which such items and share of liabilities are reported by the Company on such Federal Tax Returns. In no event shall any Federal Tax Return be filed later than August 1 and in all cases, the Federal Tax Return as filed including all final working papers related thereto shall be provided to the Members within twenty (20) days of the date of such filing. For the avoidance of doubt, the filing of any amended Federal Tax Return shall be subject to the provisions of this Article 7.
(d) The Partnership Representative, in consultation with the other Members, will direct the defense of any claims made by the IRS to the extent that such claims relate to the adjustment of Company Items and, in connection therewith, will cause the Company to retain and to pay the fees and expenses of counsel and other advisors chosen by the Partnership Representative, except that, upon the receipt of notice of any proposed or Final Partnership Adjustment, audit, administrative or judicial proceedings, meetings or conferences with the IRS or other similar matters that come to its attention in its capacity as Partnership Representative, then the Partnership Representative shall give the Class A Members prompt written notice of the receipt of such letter (or equivalent) and the selection of counsel to assist in the applicable audit and the approach taken with the tax authorities with respect to such audit shall require the consent of a Majority of Class A Members. The Partnership Representative will promptly deliver, to each Member a copy of all notices, communications, reports and writings received from the IRS relating to or potentially resulting in an adjustment of Company Items, will promptly advise each Member of the substance of any conversations with the IRS in connection therewith and will keep the Members advised of all developments with respect to any proposed adjustments which come to its attention. The Partnership Representative shall provide the Class A Members with a reasonable opportunity to consult with the Partnership Representative regarding the course and conduct of all material matters that are the subject of or relating to or potentially resulting in an adjustment of Company Items. In addition, the Partnership Representative will (i) provide each Member with a draft copy of any correspondence or filing to be submitted by the Company in connection with any administrative or judicial proceedings relating to the determination of Company Items reasonably in advance of such submission, (ii) provide each Member with the right to review and comment on any submissions to the IRS, and attend and jointly participate in any meetings or conferences with the IRS at its own expense,
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(iii) incorporate all reasonable changes or comments (as determined by the Partnership Representative in its reasonable good faith discretion) to such correspondence or filing requested by any Member, (iv) provide each Member with a final copy of such correspondence or filing and (v) for any issue or matter relating to any Taxable Year ending before, or including, the Flip Point or, if any Class A Member has a deficit Capital Account balance following the Flip Point, the date on which such deficit balance has been restored, take any action requested by the Supermajority of Class A Members, so long as such action (1) is otherwise consistent with this Agreement, including the Fixed Tax Assumptions and the Base Case Model, and (2) would not reasonably be expected to cause the Class B Member (or any Affiliate) to suffer more than a de minimis amount of Tax detriment (as determined by the Partnership Representative in its reasonable good faith discretion), the present value of the dollar amount of which Tax detriment exceeds the present value of the dollar amount of the aggregate Tax detriment to the Class A Members from the position proposed by the Partnership Representative. The Partnership Representative will provide each Member with notice reasonably in advance of any meetings or conferences with respect to any administrative or judicial proceedings relating to the determination of Company Items (including any meetings or conferences with counsel or advisors to the Company with respect to such proceedings) and each Member will have the right to participate, at its sole cost and expense, in any such meetings or conferences. Notwithstanding the foregoing, for the purposes of this Section 7.02(d), with respect to a Federal income tax audit of any Allocation Year prior to or including the Flip Point, the Class A Members shall have the right to select counsel and direct the Partnership Representative in the conduct of proceedings and correspondence with the taxing authorities, if and to the extent that the Class A Members acknowledge in writing that: (A) that there is no obligation of the Class B Members to indemnify the Class A Members for the subject of such proceedings, (B) that such proceedings are in respect of one or more Fixed Tax Assumptions, and (C) the Class A Members shall pay all incremental costs and expenses of such proceedings; provided, that the Class A Members shall provide the Class B Members with a reasonable opportunity to consult with the Class A Members regarding the course and conduct of any such issue, and the Class A Members shall consent to incorporate all reasonable changes or comments to any correspondence or filing requested by the Class B Members; provided, further, that the Class A Members shall have the right to direct the settlement of any issue to which the Class A Members have the right to direct the response under this Section 7.02(d), so long as such settlement would not have a material adverse effect on the Class B Member.
(e) The Partnership Representative shall not take any action contemplated by Sections 6221 through 6235 of the Code unless the Partnership Representative has first given the Members timely written notice of the contemplated action. For any issue or matter relating to the period prior to the Flip Point, without the consent of the Members, the Partnership Representative will not (i) file a petition under Section 6234 of the Code; (ii) enter into a settlement agreement with the IRS relating to any Company Item for any Allocation Year or that may adversely affect the validity of any Fixed Tax Assumption; (iii) make any demonstration contemplated in Sections 6225(c)(3), (4), or (5) of the Code; (iv) file a request for an administrative adjustment under Section 6227 of the Code; (v) make any waiver under Section 6232(c)(2) of the Code; (vi) enter into an agreement extending the period of limitations as contemplated in Section 6235(b) of the Code; or (vii) take any action within its control in respect
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of an audit or administrative or judicial proceeding, the taking of which could be reasonably expected to affect any material tax item reported to the Class A Members on a Schedule K-1 and/or reported on any tax return of the Class A Members or in any manner delays the expected timing of Class A Member’s achieving the Flip Point by more than three (3) months (calculated by re-running the Base Case Model, adjusted only with respect to such action). Any cost or expense incurred by the Partnership Representative in connection with its duties as the Partnership Representative will be paid by the Company.
(f) To the extent that any administrative or judicial proceeding regarding a Partnership Adjustment may not be conducted at the Company level (i.e., “partnership level”):
(i) The Members shall keep the Partnership Representative fully and timely informed by written notice of any administrative or judicial proceedings, meetings or conferences with the IRS or other similar matters with respect to all Partnership Adjustments, and the Partnership Representative shall have the right to review and comment on any submissions to the IRS, and attend and jointly participate in any meetings or conferences with the IRS at its own expense;
(ii) The Members shall not consent to any settlement of any administrative or judicial proceedings regarding any Final Partnership Adjustment or proposed Partnership Adjustment, for which a Flip Imputed Underpayment will result without the consent of the other Members, such consent not to be unreasonably withheld or delayed; provided, however, that the Class A Members may settle any administrative or judicial proceedings regarding any Final Partnership Adjustment or proposed Partnership Adjustment, for which a Flip Imputed Underpayment will result if and to the extent that (1) the Class A Members acknowledge in writing that: (A) there is no obligation of the Class B Members to indemnify the Class A Members for the subject of such settlement, (B) the Class A Members shall pay all incremental costs and expenses of such settlement, and (C) the Class A Members shall provide the Class B Members with a reasonable opportunity to consult with the Class A Members regarding such settlement, and (2) such settlement will not cause a material adverse effect on the Class B Member or its Affiliates for which the Class B Member is not indemnified to its reasonable satisfaction; and
(iii) The Members shall take any action or omit to take any action requested by the Partnership Representative in connection with the administrative or judicial proceedings, meetings or conferences with the IRS or other similar matters regarding any Final Partnership Adjustment or proposed Partnership Adjustment, for which an Imputed Underpayment would have reasonably resulted. Subject to the provisions of this Section 7.02, each Member will provide the other Members with such assistance as may reasonably be requested by such other Members in connection with the preparation of any Tax Return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to the liability for any Taxes with respect to the operations of the Company.
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(g) Upon receipt of any notice of proposed Partnership Adjustment pursuant to Section 6231(a)(2) of the Code that would result in an Imputed Underpayment, (i) each Member shall use commercially reasonable efforts and reasonably cooperate with the Partnership Representative to seek timely modification of the proposed Imputed Underpayment pursuant to Section 6225(c)(3) or (4) of the Code, to the extent applicable to such Member, and (ii) any Member may elect to timely file amended tax returns taking into account the proposed Partnership Adjustments and to pay any additional taxes due pursuant to Section 6225(c)(2) of the Code. Any modification of any proposed Imputed Underpayment shall be taken into account by the Partnership Representative in determining each Member’s share of any remaining Imputed Underpayment pursuant to Section 7.02(i).
(h) If the Partnership Representative elects application of Section 6226 of the Code (a “Section 6226 Election”), the Company shall furnish to each Member of the Company for the reviewed year and to the Department of the Treasury a statement of each Member’s share of any adjustment to income, gain, loss, deduction, or credit (as determined in the notice of Final Partnership Adjustment); provided, in the event the Company receives a notice of Final Partnership Adjustment that would, with the passing of time, result in either a Class B Imputed Underpayment, a Class A Imputed Underpayment or a Flip Imputed Underpayment, then the Partnership Representative shall make such Section 6226 Election with respect to a Class A Imputed Underpayment, Class B Imputed Underpayment or Flip Imputed Underpayment, in each case, in the event that the Collateral Agent (as defined in the Financing Agreement) (acting at the good faith discretion of the Administrative Agent (as defined in the Financing Agreement) or the Majority Lenders (as defined in the Financing Agreement), in each case, as defined in the Financing Agreement) determines, in its sole, good faith discretion, that any Member does not have the financial wherewithal to make its capital contribution pursuant to Section 4.02(d), (f) or (g), as applicable. If and to the extent an Imputed Underpayment with respect to which a Section 6226 Election is made is a Partnership Adjustment for which the Class B Members reasonably would be required to make a Capital Contribution or indemnify the Class A Members under this Agreement or the Purchase Agreement, the Class B Members shall be required to indemnify the Class A Members for (i) any special underpayment interest rate provided by Section 6226(c)(2) of the Code in excess of the underpayment interest that would have otherwise been due absent such Section 6226 Election, if any, and (ii) any payments made by the Class A Members in respect of any Imputed Underpayment relating to such Partnership Adjustment. If and to the extent an Imputed Underpayment with respect to which a Section 6226 Election is made is a Partnership Adjustment for which the Class A Members reasonably would be required to make a Capital Contribution, the Class A Members shall be required to indemnify the Class B Members for (i) any special underpayment interest rate provided by Section 6226(c)(2) of the Code in excess of the underpayment interest that would have otherwise been due absent such Section 6226 Election, if any, and (ii) any payments made by the Class B Members in respect of any Imputed Underpayment relating to such Partnership Adjustment. For the avoidance of doubt, the Class A Member shall retain all rights to participate in any proposed or Final Partnership Adjustment, audit, administrative or judicial proceedings, meetings or conferences with the IRS or other similar matters as described in Section 7.02(d).
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(i) Promptly upon a Final Partnership Adjustment, the Partnership Representative shall, in consultation with Members, allocate the Imputed Underpayment among a Class B Imputed Underpayment, Class A Imputed Underpayment or Flip Imputed Underpayment (the occurrence of such allocation or a Final Partnership Adjustment determination being an “Imputed Underpayment Final Determination”). If any of the Class A Members or the Class B Members disputes whether an Imputed Underpayment should be characterized as a Class A Imputed Underpayment, Class B Imputed Underpayment and/or Flip Imputed Underpayment, such Member shall provide notice to the other Members of such dispute. The Members shall meet to attempt to resolve the dispute no later than fifteen (15) days after notice of the dispute was initially received. Should a resolution of the dispute not be obtained within fifteen (15) days after such meeting, such dispute shall be resolved by means of binding arbitration before a mutually agreed upon single arbitrator in accordance with the then existing commercial arbitration rules of the American Arbitration Association. The arbitration shall be held in the Borough of Manhattan, NY or any other place agreed upon at the time by the parties. The arbitrator is not authorized to award punitive or other damages not measured by the prevailing party’s actual damages. Any arbitral award issued will be conclusive and binding on each party. The arbitrator will render its decision in writing, explaining the reasons supporting such decision. The fees and expenses of the arbitrator will be shared equally by the parties to the dispute. All other expenses and costs of the arbitration proceeding will be the responsibility of the party incurring such expenses and costs.
7.03 Section 6418 Election.
(a) The Members shall be permitted, in their sole discretion, to unilaterally negotiate for the transfer pursuant to Code Section 6418 of all or any portion of its Class A Transferred Credits or Class B Transferred Credits, as applicable, to a Tax Credit Transferee for any given Taxable Year (such Member, a “Transferring Member”); provided, that no Tax Credit Transferee shall have a material adverse interest to the other Members or their Affiliates (as determined by the Transferring Member in good faith in cooperation with the non-Transferring Members). If the Transferring Member provides written notice to the Partnership Representative of their intent to cause such transfer no later than thirty (30) days prior to the required filing date for a Tax Return for such Taxable Year(s) (including any applicable extension) unless an earlier deadline is imposed by the IRS, and the terms of the applicable tax credit transfer agreement meets the requirements set forth in this Section 7.03, then the Company shall elect pursuant to Code Section 6418 to transfer such portion of Class A Transferred Credits or Class B Transferred Credits, as applicable to the Tax Credit Transferee. The notice described in the aforementioned sentence shall include (i) the name and other identifying information of the Tax Credit Transferee, (ii) the relevant Taxable Year(s), (iii) the portion of Class A Transferred Credits or Class B Transferred Credits to be transferred, and (iv) any other information as may be reasonably required based on applicable Law and the forms or other guidance made available in respect of Section 6418 of the Code and the Treasury Regulations promulgated thereunder.
(b) In the event a Transferring Member provides written notice to the Managing Member that it has negotiated a transfer in accordance with this Section 7.03, if requested by the Transferring Member, the Company shall act as the “Seller” under the applicable tax credit transfer agreement provided the Tax Credit Transferee will not have
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recourse against the Class A Member, the Class B Member, the Company, or the Project Company and the Sponsor shall provide, or guarantee the obligations of the Class B Member or SBE Class B Member who shall provide, all representations, warranties, covenants, and indemnities required by the Tax Credit Transferee and reasonably acceptable to the Sponsor (with the understanding that no-fault recapture indemnification, indemnification for the inability to claim, reduction of, recapture of, or disallowance of all or part of the Class A Transferred Credits and any of the tax-related representations, warranties, covenants and indemnifications provided to the Class A Member under the ECCA or this Agreement, in each case, to the extent not the result of an Excluded Event, shall be reasonably acceptable to the Sponsor). Sponsor shall provide the foregoing indemnification obligation, or guaranty the Class B Member’s or SBE Class B Member’s foregoing indemnification obligation, in an amount up to one hundred fifty percent (150%) of the total value of the Class A Transferred Credits (inclusive of any penalties, interest, tax gross-up costs, and costs of enforcements). No transfer of Class A Transferred Credits shall (1) limit the ability of any Member or any other Indemnified Persons to recover damages pursuant to the terms of the Investment Documents or to obtain the economic benefit of any damages paid by any Member (including through cash distributions and it being understood that damages may include loss of Class A Transferred Credits) and (2) shall expose the Class A Members, the Class B Member, the Company or the Project Company to any greater liability, claim, obligation, or loss as compared to a scenario in which no such transfer has occurred.
(c) If a Class A Member notifies the Managing Member that it has negotiated a sale of Company Credits as permitted pursuant this Section 7.03, the Managing Member and the Company shall effectuate such transfer in the time and manner required pursuant to this Section 7.03 and Code Section 6418 and the Treasury Regulations and guidance issued thereunder, including by complying with any registration requirements, executing a “transfer election statement”, filing the Tax Returns of the Company to reflect such transfer and taking all other steps necessary, or requested by the Transferring Member, in connection with such transfer; it being understood that the Company will be treated as the “eligible taxpayer” for purposes of Code Section 6418 and shall execute the corresponding “transfer election statement” in accordance with Treasury Regulations Section 1.6418-2(b)(5). Each Transferring Member agrees to provide the Company and the Managing Member any information as may be reasonably required by the Transferring Member or the Treasury for the Managing Member and the Company to effectuate such transfer, including completing the pre-registration process and filing the Tax Returns reflecting the transfer, based on applicable Law and the forms or other guidance made available in respect of Code Section 6418.
(d) In the event a Class A Member Transferring Member negotiates a transfer in accordance with this Section 7.03, (x) if the Class B Member provides a written notice to the Class A Member of their intent to cause a transfer of its Class B Transferred Credits no later than five (5) Business Days after receiving notice from the Class A Member regarding the transfer of Class A Transferred Credits, the Transferring Member shall enable the Class B Member to sell all or a portion of any Class B Transferred Credits to the Transferee Taxpayer identified by such Transferring Member on substantially similar terms as provided to the Transferring Member (it being understood that the Class B Member (or its Affiliate) shall contract directly with the Tax Credit Transferee, shall be the “Transferring Member” with respect to such Class B Transferred
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Credits, and shall bear direct responsibility for all transfer and indemnity risk associated with such Class B Transferred Credits) and (y) the Managing Member shall, or shall cause the Administrator to, promptly respond to any reasonable requests from, and provide any information reasonably requested by, the Members and/or any Tax Credit Transferee in respect of a proposed or actual election pursuant to Code Section 6418. Each Transferring Member shall pay all of its (and its Affiliates) own costs and expenses incurred in connection with any transaction contemplated by this Section 7.03 and shall reimburse the Company, the Managing Member, and the other Members and their Affiliates for all of its or their reasonable and documented costs and expenses incurred in connection with this Section 7.03; provided that the Class B Member shall be responsible for any transaction costs and expenses that are specifically allocable to any transfer of Class B Transferred Credits (including any costs associated with obtaining consent from the Lenders).
(e) Each Tax Credit Transferee of Class A Transferred Credits (i) shall be an additional insured under the ITC Insurance Policy and such Tax Credit Transferee’s sole and exclusive recourse for indemnification in respect of any indemnification claim under the applicable tax credit transfer agreement shall be recovery in the following order of priority: (1) first, coverage under the ITC Insurance Policy, but only if and to the extent recovery for such indemnifiable loss is available under the ITC Insurance Policy after using commercially reasonable efforts and (2) second, to the extent that recoveries under the ITC Insurance Policy (if any) are insufficient or, after using commercially reasonable efforts, Tax Credit Transferee is unable to make a valid claim under the ITC Insurance Policy to satisfy the indemnification obligations, then any unpaid portions of such indemnifiable losses shall be payable by the Sponsor or its Affiliates providing the indemnity (or guaranty) as provided above, and (ii) shall agree in the applicable tax credit transfer agreement to comply with the terms of the ITC Insurance Policy.
(f) Registration.
(i) In the event a Transferring Member provides written notice to the Managing Member that it intends to transfer all or any portion of ITCs allocable to such Member in accordance with Section 7.03, the Managing Member shall promptly, but in no event later than thirty (30) days after the later of (A) the date the Project (or portion thereof) is Placed in Service or (B) the date the registration portal is open for the applicable Taxable Year submit for the Project’s Registration Number(s) number through the IRS electronic pre-filing registration system and complete the pre-filing registration process with respect to the Project (or any portion thereof, as applicable) and cause such Project (or such portion) to be registered at the time(s) and in the manner required by Section 6418 of the Code and Treasury Regulations Section 1.6418-4 (the “Pre-Filing Registration”).
(ii) The Managing Member shall provide to the Transferring Member confirmation of completion of the Pre-Filing Registration and the Registration Number(s) with respect to the eligible credit property comprising such Project, which may include a “screen-shot” showing completion of the Pre-Filing Registration process and/or Registration Number(s), within ten (10) Business Days of receipt thereof.
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(iii) The Managing Member shall timely renew and amend any Pre- Filing Registration if required by Treasury Regulations Section 1.6418-4.
(g) Subject to the tax contest requirements in the ITC Insurance Policy and negotiations with Tax Credit Transferee, the Members intend for any tax credit transfer agreement to include the following provisions:
(i) With respect to any tax action, investigation, examination, audit, claim, proceeding or controversy with respect to Class A Transferred Credits or Class B Transferred Credits (“Transfer Contest”) of a Tax Credit Transferee, in the event Sponsor is required to indemnify the Tax Credit Transferee under the applicable tax credit transfer agreement or otherwise agrees in writing to indemnify Tax Credit Transferee for any loss, reduction, disallowance, or recapture of ITCs and any reasonable and documented penalties, interest, tax gross-up costs, and costs of enforcements imposed on Tax Credit Transferee, in an amount up to one hundred fifty percent (150%) of the total value of the subject Class A Transferred Credits and, if applicable, Class B Transferred Credits, (A) if the IRS agrees to permit the Company to contest such Transfer Contest in its own name and not in the Tax Credit Transferee’s name without causing any material adverse consequences to Tax Credit Transferee, the Company shall conduct the defense of such Transfer Contest at Sponsor’s expense or (B) in the event the IRS not permitted to contest such Transfer Contest in its own name, Tax Credit Transferee (1) shall use good faith efforts to minimize and mitigate any loss for which Tax Credit Transferee has made or may make any indemnity claim against Sponsor or the Company, (2) shall keep the Company informed of any developments in such Transfer Contest, including by promptly providing correspondences related to such Transfer Contest to the extent received by Tax Credit Transferee from the IRS with unrelated information and any confidential information redacted (as determined by Tax Credit Transferee in its sole discretion) within a commercially reasonable amount of time, considering response deadlines, to allow the Company the opportunity to review and comment on such submissions, and (3) shall use commercially reasonable efforts to consult with the Company on, and consider in good faith any reasonable comments provided by the Company to, any material written submissions to the applicable Tax authority relating to such Transfer Contest. Notwithstanding the foregoing, Tax Credit Transferee shall not settle, compromise or resolve any such Transfer Contest during the IRS audit stage (including IRS administrative appeals) without prior written consent of the Company (such consent not to be unreasonably withheld, conditioned, or delayed); provided, Tax Credit Transferee shall have the right to enter into a settlement, compromise or resolution without the Company’s consent if (x) all administrative appeals with the IRS Independent Office of Appeals have been exhausted, (y) after working in good faith to reach a resolution on such Transfer Contest (including considering in good faith any reasonable requests by the IRS to extend the statute of limitations), Tax Credit Transferee has been issued a notice of deficiency, or (z) Tax Credit Transferee has agreed to waive its indemnity rights.
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(ii) Notwithstanding the foregoing, the Tax Credit Transferee shall have no right to participate in or control any audit or controversy that is between the IRS and the Company (or any Affiliate of Company) and to which Tax Credit Transferee and its Affiliates is not a party; provided (A) Tax Credit Transferee and the Company shall be required to promptly inform the other party of any written information document requests or other inquiries relating to the applicable Class A Transferred Credits and/or Class B Transferred Credits received from the IRS, including any notice of proposed or final audit adjustment and (B) the Company shall keep the Tax Credit Transferee informed of any developments in such tax proceeding or contest to the extent relevant to such Tax Credit Transferee’s tax return positions and shall consider in good faith any reasonable comments provided by the Tax Credit Transferee.
(h) Subject to the Class A Member’s prior written consent or satisfaction of the ▇▇▇▇ Augmentation ITC Transfer Conditions or the Additional ITC Conditions, as applicable, the Class B Member shall be permitted to cause the Company to transfer any ▇▇▇▇ Augmentation ITCs or any bonus credits or increased ITC amounts not reflected in Updated Base Case Model; provided, that (i) any such tax credit transfer agreement is reasonably acceptable to the Class A Members, (ii) the Class A Members, the Company, and the Project Company shall have no additional liability, potential liability or indemnification obligations with respect to such transfer, (iii) the Class B Member shall economically bear all costs and expenses associated with the transfer of such ▇▇▇▇ Augmentation ITCs, bonus credits, or increased ITC amounts, as applicable, and cause the Sponsor Guaranty to cover any indemnification obligations under such tax credit transfer agreement and such transfer shall not expose the Class A Members, the Company or the Project Company to any greater liability, claim, obligation, or loss as compared to a scenario in which no such transfer has occurred, (v) one hundred percent (100%) of the any Transfer Proceeds attributable to such ▇▇▇▇ Augmentation ITCs shall be distributed to the Class B Member.
(i) Prior to the Substantial Completion Funding Date, the Members shall negotiate in good faith to incorporate into this Agreement additional protections or mechanics for the benefit of FNBC to eliminate the net impact of any California state income tax liability on FNBC or its Affiliates with respect to the receipt of Transfer Proceeds pursuant to Section 5.02(j).
7.04 Survival. The provisions of this Article 7 and Sections 4.02(d) through (h) shall survive the termination of the Company or the termination of any Member’s interest in the Company and will remain binding on the Members for the period of time necessary to resolve with the IRS or other federal tax agency any and all federal income tax matters relating to the Company that are subject to Sections 6221 through 6241 of the Code.
7.05 Further Amendment. The Members agree to amend this Agreement upon further authorities being enacted, promulgated or issued after the Effective Date as necessary to remain consistent with Section 7.03 or as otherwise needed to maintain the expected relative economic benefits of the Members.
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ARTICLE 8
BOOKS, REPORTS AND ACCOUNTS.
8.01 Maintenance of Books.
(a) The Managing Member shall keep or cause to be kept at the principal office of the Company, at the office of the Managing Member or at such other location approved by the Managing Member, complete and accurate books and records of the Company in accordance with prudent business practices and minutes of the proceedings of its Members and the Managing Member, and any other books and records that are required to be maintained by applicable Law.
(b) The books of account of the Company shall be (i) maintained on the basis of a Fiscal Year, (ii) maintained on an accrual basis in accordance with GAAP, and (iii) audited by the Certified Public Accountants for each Fiscal Year as set forth above in the reporting provisions.
8.02 Reports. The Managing Member shall deliver or cause to be delivered to each
Member:
(a) such annual, quarterly and monthly reports as made available to it pursuant to the MSA and O&M Agreement; and
(b) commencing with the first full month following the Effective Date,
monthly, within thirty (30) days after the end of each calendar month, a Monthly Operating Report.
8.03 Bank Accounts. The Managing Member shall ensure that funds of the Company
and the Project Company shall be deposited in such banks or other depositories, and withdrawals from any such depository shall be made, only as authorized pursuant to the MSA. All monies in bank accounts shall be retained in cash or invested in Cash Equivalents.
8.04 Separateness. The Managing Member shall ensure that the Company exists solely for the purpose of owning the Project, conducts business only in its own name, does not engage in any business or have any assets unrelated to the Project, does not have any indebtedness other than as permitted by this Agreement, has its own separate books, records, and accounts (with no commingling of assets), holds itself out as being a Person separate and apart from any other Person, and observes corporate and partnership formalities independent of any other entity.
8.05 Payment of Expenses. The Company shall be responsible for all fees and expenses, including reasonable fees and expenses of counsel, incurred by any Class A Member in connection with any amendment, consent or waiver of this Agreement or any other Transaction Document requested by the Managing Member.
8.06 Financial Statements. The Managing Member shall, at the Company’s expense,
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deliver or cause to be delivered to each Member:
(a) as and when available, and in any event within sixty (60) Days after each quarter end, starting the quarter ended after the Substantial Completion Funding Date, complete unaudited financial statements of the Company for each fiscal quarter (other than the fourth quarter), including (i) a consolidated balance sheet showing the Company’s financial position as of the end of such quarter including details of depreciable assets at the Project Company level which are placed in service, (ii) a consolidated statement of income for the Company for such quarter, (iii) a consolidated statement of cash flows for the Company for such quarter, and (iv) a consolidated statement of Members’ equity, which shall include details on the amount of Distributable Cash that was distributed to each Member, each of which shall be prepared in accordance with GAAP, subject to normal recurring year-end audit adjustments and the absence of footnotes; and
(b) as and when available and in any event within one hundred twenty (120) Days after the end of each Fiscal Year beginning with the Fiscal Year ending on December 31, 2025, consolidated financial statements with respect to such fiscal year for the Company that are audited and certified by from a nationally recognized accounting firm and prepared in accordance with GAAP (subject only to normal year-end audit adjustments with respect to any consolidating statements), consisting of (i) a consolidated balance sheet showing the Company’s financial position as of the end of such Fiscal Year including details of depreciable assets at the Project Company level which are placed in service, (ii) consolidated statement of income for the Company for such Fiscal Year, (iii) a consolidated statement of cash flows for the Company for such Fiscal Year, (iv) a consolidated statement of Members’ equity, which shall include details on the amount of Distributable Cash that was distributed to each Member, and (v) related footnotes.
8.07 Permitted Investments and ▇▇▇▇▇▇▇ Rule.
(a) The cash of the Company and the Project Company may only be invested and reinvested in Permitted Investments. The following investment alternatives shall constitute “Permitted Investments” (but shall not include any investment directly or indirectly in any “public utility”, “public-utility company” (other than the Project Company), “holding company”, “electric utility”, “transmission and distribution utility”, “utility”, or “retail electric provider” as those terms are defined under the FPA or PUHCA, as applicable, unless applicable prior FERC or CPUC approvals have been obtained):
(i) Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or obligations the timely payment of the principal of and interest on which are fully guaranteed by the United States of America;
(ii) Interest-bearing demand or time deposits (including certificates of deposit) which are either (A) insured by the Federal Deposit Insurance Corporation, or (B) held in banks and savings and loan associations, having a long-term rating of at least “BBB+” by S&P and “Baa1” by ▇▇▇▇▇’▇ or equivalent, or if not so rated, secured at all
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times, in the manner and to the extent provided by Law, by collateral security described in clauses (i) or (ii) of this definition, of a market value of no less than the amount of moneys so invested;
(iii) Obligations of any state of the United States or any agency or instrumentality of any of the foregoing which are rated at least “A-” by S&P or at least “A3” by ▇▇▇▇▇’▇; or
(iv) Any other investments agreed to by the Members and the Managing Member;
provided, however, that in all cases, (1) the investments set forth in subparts (i) through (iii) above shall have a remaining maturity of not more than sixty (60) days; (2) the Managing Member will commit to retaining any investment in subparts (i) and (iii) for a minimum of sixty (60) days; (3) all Permitted Investments other than those described in clause (i) above must be undertaken solely for purposes of cash management and not for the purpose of (a) short-term resale, (b) benefitting from actual or expected short-term price movements, (c) realizing short-term arbitrage profits, or hedging one or more positions resulting from the purchases or sale of financial instruments described in (a)-(c); and (4) without the prior consent of Class B Members, Permitted Investments shall not include debt securities that are valued by the Company at fair value under a fair value option with changes in fair value reported in current earnings for purposes of the Company’s financial statements, books and records or otherwise. The Managing Member covenants and agrees that it will monitor any investments to ensure that such investments comply with the aforesaid requirements and will promptly notify the Managing Member in the case of any instances of non- compliance that are detected.
(b) The Managing Member and each other Member shall not cause the Company or the Project Company to directly or indirectly acquire or retain any “ownership interest” in or “sponsor” a “covered fund” (as each such term is defined in the ▇▇▇▇▇▇▇ Rule).
(c) Neither the Company nor the Project Company is or will become an “investment company” or company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940 or an “investment advisor” within the meaning of the Investment Advisors Act of 1940. In making the preceding representation and warranty, the Class B Member is not relying on and will not rely on the exemptions to becoming an “investment company” set forth under Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940. Neither the Company nor the Project Company is or will become a “commodity pool” under Section 1(a)(10) of the Commodity Exchange Act.
ARTICLE 9
BUYOUT OPTION
9.01 Buyout Events. This Article 9 shall apply to any of the following events (each a “Buyout Event”):
(a) a Member becomes Bankrupt;
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(b) a Member dissolves and commences liquidation or winding up;
(c) there occurs an event (other than a Regulatory Problem resolved pursuant to Section 3.03(b)(vi)) that makes it unlawful for the Member to continue to be a Member if such event can reasonably be expected to result in a Material Adverse Effect (including dissolution of the Company) and such Member does not, within thirty (30) Days following the date such Member became aware of such event, either take all actions necessary to make its continuation as a Member lawful, or Dispose of its Membership Interest in accordance with Section 3.03(b)(vi); or.
(d) the Company or the Project Company does not have sufficient cash to pay its obligations and the Managing Member fails to advance all of the needed funds to or on behalf of the Company or the Project Company in accordance with Section 4.03(a)(i) or otherwise in a manner mutually agreed by the Members; provided, that the Managing Member shall have the opportunity to cure such breach within forty-five (45) Days of becoming aware of such breach.
In each case, the Member with respect to whom a Buyout Event has occurred is referred to herein as the “Buyout Member.”
9.02 Procedure. If a Buyout Event occurs, then each of the other Members shall have the option to acquire the Membership Interest of the Buyout Member (or to cause it to be acquired by a Third Party designated by the other Members), in accordance with procedures that are substantively equivalent to those set forth in Section 3.03(b)(iii) (and with the Members exercising such preferential right also being referred to herein as “Purchasing Members”); provided, however, that if the Buyout Member is a Class B Member and a collateral agent for any Lenders has notified the other Members within five (5) Business Days after occurrence of the Buyout Event that it intends to foreclose on the Membership Interests of such Buyout Member and such foreclosure would cure the event giving rise to the Buyout Event, then the Purchasing Members’ ability to exercise the buyout option shall be tolled for a period of one hundred eighty (180) Days from the date of such notice (the “Buyout Toll Period”); provided, further, that if the event giving rise to the Buyout Event is cured during such Buyout Toll Period, the Purchasing Member shall retain no right to exercise the buyout option with respect to the event giving rise to such Buyout Event following the Buyout Toll Period.
9.03 Buyout Purchase Price; Terms and Method of Payment. The purchase price (the “Buyout Purchase Price”) for a Membership Interest being purchased pursuant to this Article 9 shall be Fair Market Value of such Membership Interest; Interest; provided however, in the case of any Buyout Event described in Section 9.01(d), the Buyout Purchase Price shall be no less than the amount sufficient to repay the full outstanding balance under any financing document referred to in any Lender Consent at the time of such purchase plus all accrued and unpaid interest and any applicable make-whole or other payment owing on account of such repayment. For purposes of this Section 9.03, Fair Market Value shall be determined in the following manner:
(a) Within thirty (30) Days following the occurrence of the Buyout Event, the Purchasing Members shall appoint a Qualified Appraiser. Within thirty (30) Days following the appointment of the Qualified Appraiser, such appraiser shall determine the Fair Market Value of
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the applicable Membership Interest utilizing valuation methods and practices commonly used in the independent electric generating industry, and taking into account all of the facts and circumstances relating to the Company, including any cash reserves that may be held by the Company, but excluding cash withheld from distribution to the Buyout Member pursuant to Section 5.06, and excluding any deficit in their Capital Accounts that could create a liability upon liquidation pursuant to Section 12.04. The decision of the Qualified Appraiser shall be binding and conclusive on the Parties. The Buyout Member on the one hand, and the Purchasing Members on the other hand, shall each pay fifty percent (50%) of the fees and expenses of the Qualified Appraiser.
(b) The Parties acknowledge and agree that the provisions of this Section 9.03 are fair and reasonable and are a material inducement to their entering into this Agreement. The Parties agree not to raise any claim, objection or defense challenging the validity of, or otherwise questioning the reasonableness of, the determination of the Buyout Purchase Price.
9.04 Closing. If an option to purchase is exercised in accordance with the other provisions of this Article 9, the closing of such purchase shall occur on the thirtieth (30th) Day after the determination of the Fair Market Value pursuant to Section 9.03 (or, if later, the fifth (5th) Business Day after the receipt of all applicable Governmental Approvals to the purchase); provided, however, that commercially reasonable efforts shall be made to obtain all applicable Governmental Approvals to the purchase prior to the expiration of such thirty (30) day period, and such purchase shall comply with the requirements set forth in Section 3.03(b)(iii). Unless otherwise agreed among the Buyout Member and the Purchasing Members, the Buyout Purchase Price shall be paid in cash at such closing.
9.05 Terminated Member. Upon the occurrence of a closing under Section 9.04, the following provisions shall apply to the Buyout Member (now a “Terminated Member”):
(a) The Terminated Member shall cease to be a Member immediately upon the occurrence of the closing.
(b) The Terminated Member shall no longer be entitled to receive any distributions (including liquidating distributions) or allocations from the Company, and neither it nor its representative shall be entitled to exercise any voting or consent rights or to receive any further information (or access to information) from the Company (other than any required tax information).
(c) The Terminated Member must pay to the Company all amounts owed to the Company by such Terminated Member.
(d) The Terminated Member shall remain obligated for all liabilities it may have under this Agreement or otherwise with respect to the Company that accrue prior to the closing.
(e) The Membership Interest, including the Capital Account balance attributable thereto, of the Terminated Member shall be allocated among the Purchasing Members in the proportion of the total Buyout Purchase Price paid by each Purchasing Member.
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ARTICLE 10
PURCHASE OPTION
10.01 Purchase Option. The Class B Member or any of its Affiliates shall have the option to purchase all, but not less than all, of the Class A Members’ Membership Interests in the Company (the “Purchase Option”) (a) within six (6) months after the later of the (i) date on which the Flip Point occurs and (ii) fifth (5th) anniversary of the date the Project is Placed In Service; or (b) if the Flip Point has not occurred within nine (9) years and six (6) months after the Mechanical Completion Funding Date, the Purchase Option shall only be exercisable on the earlier of the date on which the Flip Point occurs and the date which is ten (10) years after the Mechanical Completion Funding Date (the period pursuant to clause (a) or the date pursuant to clause (b), the “Purchase Option Period”).
10.02 Procedure. The Purchase Option shall be exercised in accordance with procedures that are substantively equivalent to those set forth in Section 3.03(b)(iii), and otherwise in the following manner:
(a) At any time during the Purchase Option Period, the Class B Member may give written notice (the “Intent Notice”), of its intent to exercise its option hereunder to each Class A Member. Once an Intent Notice has been provided with respect to the Purchase Option set forth in Section 10.01(b) it may not be revoked.
(b) The purchase price payable upon such exercise following a Purchase Option shall be (A) if the Flip Point shall have occurred, the Fair Market Value of the Class A Membership Interests determined as of the anticipated purchase date plus an amount equal to the grossed-up Recapture Amount in respect of any ITCs previously allocated to the Class A Member which are recaptured as a result of exercise of the Purchase Option (such amount, the “Appraised Residual Interest”) and (B) if the Flip Point shall not have occurred, an amount equal to (x) the Appraised Residual Interest (which shall assume the Flip Point has then occurred) plus (y) the amount that, if distributed to the Class A Member, would result in the Class A Member achieving the Flip Point, plus (z) an amount equal to the grossed-up Recapture Amount in respect of any ITCs previously allocated to the Class A Member which are recaptured as a result of exercise of the Purchase Option. The foregoing valuations shall be determined by agreement of the Supermajority of all Members. If the Members are unable to agree on any such valuation of the Class A Membership Interests within ten (10) Days, then an appraiser selected jointly by the Class A Member and Class B Member (and if they are unable to agree upon a single appraiser within a five (5) day period, they shall use the Purchase Option Appraisal Method) shall provide an appraisal of the Class A Membership Interests.
10.03 Closing. If the Class B Member exercises any option to purchase in accordance with the provisions of Section 10.02 and subject to Section 5.05(b)(v)(C), the closing of the purchase shall occur within thirty (30) Days following the delivery by the Class B Member of the notice specified in Section 10.02(a) (or, in any event, if later, the fifth (5th) Business Day after the receipt of all applicable Governmental Approvals to the purchase); provided, however, that commercially reasonable efforts shall be made to obtain all applicable Governmental Approvals to the purchase prior to the expiration of such thirty (30) day period; provided, further, that the
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closing of the purchase with respect to the Purchase Option set forth in Section 10.01 shall be the earlier of the date on which the Class A Member achieves the Flip Point and the date which is ten (10) years after the Mechanical Completion Funding Date.
ARTICLE 11
DISPUTE RESOLUTION
11.01 Disputes. This Article 11 shall apply to any dispute arising under or related to this Agreement (whether arising in contract, tort or otherwise, and whether arising at law or in equity), including (a) any dispute regarding the construction, interpretation, performance, validity or enforceability of any provision of this Agreement or whether any Person is in compliance with, or breach of, any provisions of this Agreement, and (b) the applicability of this Article 11 to a particular dispute. Notwithstanding the foregoing, this Article 11 shall not apply to any matters that, pursuant to the provisions of this Agreement, are to be resolved by a vote of the Members (including through the Managing Member) or to disputes arising under Section 7.02(i). Any dispute to which this Article 11 applies is referred to herein as a “Dispute.” With respect to a particular Dispute, each Member that is a party to such Dispute is referred to herein as a “Disputing Member.”
11.02 Negotiation to Resolve Disputes. If a Dispute arises, the Disputing Members shall attempt to resolve such Dispute through the following procedure:
(a) first, the representatives of each of the Disputing Members shall promptly meet (whether by phone or in person) in a good faith attempt to resolve the Dispute;
(b) second, if the Dispute is still unresolved after twenty (20) Days following the commencement of the negotiations described in Section 11.02(a), then the designated executive officer of each Disputing Member shall meet (whether by phone or in person) in a good faith attempt to resolve the Dispute; and
(c) third, if the Dispute is still unresolved after ten (10) Days following the commencement of the negotiations described in Section 11.02(b), then any Disputing Member may take such Dispute to litigation.
11.03 Flip Point Dispute Resolution. If at least a Minority of Class A Members shall dispute any item or procedure or calculation of the Flip Point contained in any notice or report delivered to such Class A Members, such Class A Members shall notify the Managing Member within thirty (30) Days following receipt of the notice or report disputed, setting forth in reasonable detail such Class A Members’ objections to such calculation, and the Parties shall attempt in good faith to promptly resolve any differences as to the calculation so disputed. If the Parties are unable to resolve any such differences within ten (10) Days after the date of the disputing Class A Members’ notice, then the actual calculation shall be finally referred to a an Independent Expert who shall be appointed by the mutual consent of both the disputing Class A Members and the Managing Member (such consents not to be unreasonably withheld). The Class A Members and the Managing Member shall submit the Tracking Model and all other data necessary for the Independent Expert to make his determination, including any additional data requested by the Independent Expert. The Independent Expert shall keep confidential all
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information submitted to him in connection with his resolution of the dispute(s) hereunder. The Independent Expert shall be requested to render his determination as promptly as possible after he receives all necessary data. The determination of the Independent Expert resolving a dispute pursuant to this Section 11.03 shall be final and binding upon the disputing parties, and such determination shall apply for all subsequent periods to any item or procedure substantially similar to that determined hereunder. The Company shall pay the fees of the Independent Expert incurred for such determination.
ARTICLE 12
DISSOLUTION, WINDING-UP AND TERMINATION
12.01 Dissolution. The Company shall dissolve and its affairs shall be wound up on the first to occur of the following events (each a “Dissolution Event”):
(b) the unanimous consent of the Members to dissolve the Company;
(c) the disposition of all or substantially all of the Company’s business and assets;
(d) an event that makes it unlawful for the business of the Company to be carried on; or
(e) any circumstance or reason otherwise required by the Act (that the Act does not allow to be waived by agreement of the Parties), unless, to the extent permitted by the Act, a Majority of all Members (other than the Member with respect to which such event occurs) elect in writing, within ninety (90) Days of the date such event described in this Section 12.01(e) occurs, to continue the business of the Company, in which case the Company will not dissolve.
12.02 Winding-Up and Termination.
(a) On the occurrence of a Dissolution Event, the Managing Member shall act as the liquidator or may select one or more other Persons to act as liquidator, provided that it may not select a Class A Member to act as liquidator without such Class A Member’s consent. The liquidator shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Act. The costs of winding up shall be borne as a Company expense. Until final distribution, the liquidator shall continue to operate the Company properties with all of the power and authority of the Members. The steps to be accomplished by the liquidator are as follows:
(i) as promptly as possible after dissolution and again after final winding up, the liquidator shall cause a proper accounting to be made by the Certified Public Accountants of the Company’s assets, liabilities, and operations through the last calendar day of the month in which the dissolution occurs or the final winding up is completed, as applicable;
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(ii) the liquidator shall discharge from Company funds all of the debts, liabilities and obligations of the Company (including all expenses incurred in winding up and any loans described in Section 4.03) or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash escrow fund for contingent liabilities in such amount and for such term as the liquidator may reasonably determine); and
(iii) with respect to the remaining assets of the Company:
(A) the liquidator shall use all commercially reasonable efforts to obtain the best possible price and may sell any or all Company property, including to Members at such price but in no event lower than the Fair Market Value thereof, and any resulting gain or loss from each sale shall be computed and allocated to the Capital Accounts of the Members in accordance with the provisions of clauses (iv) and (vi) hereof; and
(B) with respect to all Company property that has not been sold, the Fair Market Value of that property shall be determined and the Capital Accounts of the Members shall be adjusted in accordance with clauses (iv) and (vi) hereof.
(C) All cash, cash equivalents, liquid investments, unsold Company property or other proceeds derived from or attributable to the disposition of Company property under this Section 12.02(a)(iii) (together with any Distributable Cash not previously distributed pursuant to Section 5.02(a)) are the “Liquidation Proceeds.”
(iv) Items of gross income and gain arising in connection with the liquidation shall first be allocated to each Member having a deficit balance in its Capital Account, in the proportion that such deficit balance bears to the total deficit balances in the Capital Accounts of all Members, until each Member has been allocated items of gross income and gain equal to any such deficit balance in its Capital Account.
(v) [Reserved].
(vi) Any remaining items of income, gain, credit, loss and deduction (including any items attributable to the disposition of property pursuant to Section 12.02(a)(iii)) for the Allocation Year during which the Dissolution Event occurs shall be allocated among the Members in such manner so as to ensure that, to the greatest extent feasible, following these allocations, (A) the balances in the Capital Accounts would result in target liquidation distributions of 100% of proceeds to the Class A Members until the Flip Point has been achieved and (B) thereafter in the order and priority of Section 5.02(a)(iii), provided, however, (i) that in determining whether the Flip Rate has been reached taxes related to the cash distributions causing the Flip Rate to occur shall be taken into account and (ii) that target liquidation distributions to the Class A Members after the Flip Rate is reached shall be increased to the extent necessary so as, to the extent possible, to cause the amounts distributable to the Class A Members after the Flip Rate
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has been achieved to be at least equal to the Assumed Tax Rate multiplied by any taxable income allocated to the Class A Members for the Allocation Year during which the Dissolution Event occurs that has not been taken into account in determining whether the Flip Rate was reached.
(vii) After giving effect to all allocations (including those under Section 5.01 and Sections 12.02(a)(iv) and (vi)), all distributions (including those under Section 5.02(a) and Section 5.04) and all Capital Contributions (including those under Section 4.01, Section 4.02 and Section 5.04) for all periods, all remaining Liquidation Proceeds shall be distributed to the Members in accordance with the positive balances in their Capital Accounts.
(viii) Any distribution to the Members in respect of their Capital Accounts pursuant to this Section 12.02 shall be made by the end of the Company taxable year in which the Dissolution Event occurs (or if later, within ninety (90) Days after the date of such Dissolution Event).
(b) The distribution of cash or property to a Member in accordance with the provisions of this Section 12.02 shall constitute a complete return to the Member of its Capital Contributions and a complete distribution to the Member on account of its Membership Interest and all the Company’s property and shall constitute a compromise to which all Members have consented pursuant to Section 18-502(b) of the Act.
12.03 Certificate of Cancellation. On completion of the distribution of the Company’s assets as provided herein, the Members (or such other Person or Persons as the Act may require or permit) shall file a certificate of cancellation with the Secretary of State of Delaware, cancel any other filings made pursuant to Section 2.05, and take such other actions as may be necessary to terminate the existence of the Company. Upon the filing of such certificate of cancellation, the existence of the Company shall terminate (and the Term shall end), except as may be otherwise provided by the Act or other applicable Law. All costs and expenses in fulfilling the obligations under this Section 12.03 shall be borne by the Company.
12.04 Deficit Capital Accounts. If following the allocations provided for in Section 12.02(a)(iv) and (vi) and the adjustment of the Members’ Capital Account balances to reflect such allocations, any Member has a deficit Capital Account balance, such Member shall be obligated to contribute cash to the Company as provided in Section 4.02(b).
ARTICLE 13
GENERAL INDEMNITY
13.01 General Indemnification by the Class B Member.4
(a) Beginning on the Effective Date (or, with respect to any additional Class B Member which becomes a Class B Member after the Effective Date, on the first date on which such Person becomes a Member hereunder) and continuing thereafter, but subject to Section
4 Note to Form: Additional mutually agreed protections for potential changes to tariff regime and their applicability to the Project to be discussed in good faith and included if agreed at Mechanical Completion.
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13.01(a)(ii), the Class B Member (and if there shall be more than one Class B Member, each Class B Member jointly and severally) (each, an “Indemnifying Member”) shall Indemnify, the Company, each Class A Member and each Class A Member’s officers, directors, shareholders, employees, agents, permitted successors, permitted assigns, and their respective Affiliates (the “Indemnified Persons”), on an after-tax basis determined in accordance with Section 13.05, from and against any and all Claims which may be suffered by any Indemnified Person relating to or arising out of any of the following (collectively, “Relevant Damages”):
(i) the inaccuracy, breach or failure of any representation or warranty or covenant (other than under Section 7.4 of the ECCA) made by such Class B Member (whether in its capacity as a Class B Member, Partnership Representative or as Managing Member) or any Affiliate of such Class B Member under this Agreement or any other Investment Document; or
(ii) the breach of any obligation or agreement set forth herein by such Class B Member, acting in its capacity as the Managing Member;
(iii) the fraud, gross negligence or willful misconduct of such Indemnifying Member or any Affiliate of such Class B Member in relation to any Investment Document; or
(iv) solely with respect to each Class A Member, in respect of ▇▇▇▇ Augmentation, (A) any loss as a result of, or caused in whole or in part by, the Company claiming, specially allocating, and/or, transferring pursuant to Code Section 6418 ▇▇▇▇ Augmentation ITCs, (B) any loss of Tax Benefits with respect to ▇▇▇▇ Augmentation reflected in the Updated Base Case Model as a result of, or caused in whole or in part by, a breach of Section 6.14(a), or (C) any loss of ▇▇▇▇ Augmentation ITCs reflected in the Updated Base Case Model allocated to the Class A Members pursuant to Section 5.01(a) as a result of, or caused in whole or in part by, a Recapture Event;
(v) solely with respect to each Class A Member, any loss as a result of, or caused in whole or in part by, the Company claiming, specially allocating, and/or, transferring pursuant to Code Section 6418, as applicable, any applicable “bonus” ITC amount not reflected in the Updated Base Case Model, or additional ITC in respect of “qualified interconnection property” pursuant to Code Section 48(a)(8).
(b) To the extent that any Claim results from the Company being held liable to a Third Party for the payment of any amounts (but for the avoidance of doubt, lost ITCs shall not constitute any such amount) and such payment creates an item of deduction or loss or amortizable or depreciable basis for the Company for Capital Account purposes which is not capitalized as part of gross income from the sale of electrical production, then, in lieu of making, or having any obligation to make any indemnification payment to an Indemnified Person under Section 13.01(a), on or before the first cash distribution under Section 5.02 made by the Company following the date on which Company is held liable to a Third Party for that payment, unless any such payment has been previously made by the Class B Member, the Class B Member shall make a Capital Contribution to the Company in an amount equal to the full amount of the
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payment (or such lesser amount as shall have been agreed between the Class B Member and the Class A Members or finally determined by a court of competent jurisdiction).
(c) The obligations of the Parties pursuant to Section 13.01(a) shall be subject to the limitations set forth in Section 6.04 and the following limitations:
(i) Notwithstanding any other provision of this Agreement, the aggregate liability of the Indemnifying Members under this Section 13.01 or otherwise arising out of or relating to this Agreement or any other Transaction Document for all Relevant Damages (whether based in contract, tort (including negligence), strict liability, law or equity, or any other cause of action) shall not exceed, at the applicable time of determination, an amount equal to: (v) one hundred percent (100%) of the aggregate amount of Capital Contributions actually paid by the Class A Members to the Company pursuant to Article 4; plus (w) the Flip Rate accrued through the applicable date of determination; plus (x) all actual and documented costs reasonably incurred by the Class A Member in connection with the enforcement of this Agreement that have not been previously paid or reimbursed by or on behalf of an Indemnifying Member whether under this Agreement, the Sponsor Guaranty or the ITC Insurance Policy; less (y) all amounts previously paid, without duplication, to (I) any Indemnified Person in respect of any Relevant Damages hereunder, (II) any Indemnified Person in respect of indemnification claims under any other Transaction Document and (III) any Indemnified Person (or paid at the direction of such Indemnified Person) pursuant to the ITC Insurance Policy or any insurance policy contemplated by Exhibit E under which such Indemnified Person is the loss payee (excluding any amounts that are paid pursuant to such ITC Insurance Policy in respect of penalties, interest, costs of enforcement or gross-up for Taxes); and less (z) the sum of, without duplication, (1) all distributions previously made to the Class A Members pursuant to this Agreement, (2) the value of any Tax Benefits taken into account in determining the Flip Point (other than any Class A Transferred Credits), net of Tax Costs, allocated to the Class A Members pursuant to hereto and (3) the excess of the value of any Class A Transferred Credits taken into account in determining the Flip Point (other than in respect of Tax credit amounts described in Section 13.01(a)(iv)) over distributions of Transfer Proceeds made to the Class A Members in respect of such Class A Transferred Credits; provided, that this clause (2) and (3) shall only take into account ITCs that are no longer subject to recapture and shall be recalculated at any such time as the IRS commences any audit or proceeding in which it makes a claim, or proposes to make a claim, against the Company, the Project Company, or any Member that could reasonably be expected to result in the loss, recapture, reduction, or disallowance of adjustment of the Tax Benefits described above; provided, further, that the foregoing limitations on liability shall not apply to all or any portion of any Third Party Claims (except to the extent such Third Party Claim or portion of such Third Party Claim is directly and finally determined by a court of competent jurisdiction to have been caused by the Indemnified Persons) or to any indemnification claims based upon the fraud, gross negligence, or willful misconduct of, the Indemnifying Member.
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(ii) Notwithstanding anything to the contrary in this Agreement, except for Claims resulting from fraud, gross negligence or willful misconduct, in no event shall the Indemnifying Members’ indemnification obligations hereunder apply with respect to any Claim until all Claims for indemnification hereunder exceed, in the aggregate, $500,000, and once such threshold amount of Claims has been reached, at which point and thereafter, such indemnification obligation shall apply to all Claims for indemnification hereunder, including amounts that were not previously subject because such threshold amount had not been reached.
(iii) All Claims for breaches of (A) any Fundamental Representation will survive until the expiration of the applicable statute of limitations, (B) representations and warranties contained in Section 3.9 or Section 3.16 of the ECCA will survive for three (3) years from the Effective Date, and (C) all other representations and warranties under Section 3.02 or Article III of the ECCA that are not listed in clauses (A) or (B) above will survive for eighteen (18) months following the Effective Date; provided, that if written notice of a Claim has been given to the Class B Member on or prior to the last day of the applicable foregoing period, then the obligation of the Class B Member to indemnify such Indemnified Person shall survive with respect to such Claim until such Claim is finally resolved.
(iv) The amount of any Relevant Damages required to be paid by any Indemnifying Member to any Indemnified Person pursuant to this Article 13 shall be reduced to the extent of any amounts actually received by such Indemnified Person (net of any cost of collection) after the Effective Date (A) pursuant to the terms of the insurance policies obtained and maintained by the Company covering such claim or (B) received from third parties (net of any costs of collection) arising out of the indemnified matters, and if any such recoveries are received after the payment of the applicable indemnity amount (for example, by the Company pursuing a third party for damages), the indemnitee shall promptly refund the amounts so received, but not in excess of the indemnity amount originally received by such indemnitee.
(v) No indemnity obligation of an Indemnifying Member shall apply to the extent that any Relevant Damages are attributable to the fraud, gross negligence or willful misconduct of any Indemnified Person.
(d) The Parties for themselves, their Affiliates, successors and permitted assigns, agree that, notwithstanding anything to the contrary herein or in any other agreement, in relation to any breach, default, or nonperformance of any representation, warranty, covenant, or agreement made or entered into by a Party pursuant to this Agreement or the ECCA or any certificate, instrument, or document delivered pursuant hereto or thereto, including each other Transaction Document, or arising out of the transactions contemplated herein or therein (i) the provisions of this Article 13, together with Article 8 of the ECCA shall be the Indemnified Persons’ sole and exclusive means of recovery in respect of this Agreement and the ECCA and (ii) the Indemnified Persons will not bring any action or proceeding, or take any other action, to recover any such damages except as provided by this Article 13 and/or Article 8 of the ECCA, provided that for the avoidance of doubt, notwithstanding anything to the contrary herein or in
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any other agreement, any liability for indemnification under this Article 13 or reduction thereof shall be without duplication of recovery or limitation. Notwithstanding anything herein to the contrary, to the extent that an obligation arises under this Agreement and the Sponsor Guaranty and the Sponsor has satisfied its obligations thereunder by making payment thereunder or the Indemnified Person has received payment (or directed payment) following recovery under any other Investment Document or ITC Insurance Policy or any insurance policy contemplated by Exhibit E under which such Indemnified Person is the loss payee, such payment obligations shall be deemed to have satisfied any claim under this Agreement arising from similar facts or claims; provided, that in the event an Indemnified Person receives in excess of 100% of the due amount of such claim arising from similar facts or claims pursuant to the indemnification obligations under this Agreement, any other Investment Document and/or claims under the ITC Insurance Policy amounts received by the Class A Member under the ITC Insurance Policy or any insurance policy contemplated by Exhibit E under which such Indemnified Person is the loss payee, such Indemnified Person shall promptly pay to the Class B Member such excess amount.
13.02 Indemnification of Members by the Company.
(a) Each Member and its officers, directors, shareholders, Affiliates, employees and agents (each a “Member Party”) shall be exculpated from liability for and defended, indemnified and held harmless by the Company from all Claims arising out of the performance by such Member Party of its obligations under this Agreement so long as such Member Party acted in good faith and in a manner reasonably believed by it to be in the best interest of or not opposed to the interest of the Company, and the Member Party’s actions did not constitute willful misconduct, fraud or gross negligence or breach of any of its representations, warranties or covenants under the Transaction Documents, and did not, with respect to the Class B Member, give rise to any obligation to indemnify under this Article 13 or Article 8 of the ECCA for which such Member Party is liable (“Indemnity Obligation”).
13.03 General Procedures for Indemnity Obligations.
(a) All General Indemnity Claims for indemnification by the Indemnified Persons under Section 13.01(a) shall be asserted and resolved in accordance with this Section 13.03.
(b) If an Indemnified Person learns of an actual or potential General Indemnity Claim for which such Indemnified Person may seek indemnification under Section 13.01(a), such Indemnified Person shall promptly notify the Class B Member thereof, specifying the nature of and specific basis for such General Indemnity Claim and the actual or estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such General Indemnity Claim) (the “Claim Notice”); provided, however, that the failure to provide such notice promptly shall not limit or reduce such Indemnified Person’s right to indemnification under Section 13.01(a) except to the extent that such failure to provide such notice promptly shall prevent or shall have prevented the Class B Member from properly or effectively defending the General Indemnity Claim or from recovering reimbursement or other damages to which the Class B Member would be entitled.
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(c) The Class B Member shall have thirty (30) Days from the date such notice is delivered (the “Notice Period”) to notify all Indemnified Persons whether or not it disputes its obligation to Indemnify the Indemnified Persons against such General Indemnity Claim; provided, however, that the Indemnified Persons are hereby authorized prior to and during such Notice Period to file any motion, answer or other pleading that is necessary or appropriate (as determined by such Indemnified Persons acting in good faith) to protect their respective interests or those of the Class B Member and that are not prejudicial in any material way to the Class B Member and a copy of such filing shall be promptly delivered to the Class B Member.
(d)
(i) If the Class B Member notifies the Indemnified Persons within such Notice Period that it does not dispute its obligation to Indemnify the Indemnified Persons against such General Indemnity Claim, then, except as hereinafter provided, the Class B Member shall have the right, but not the obligation, to defend by all appropriate proceedings, and with counsel of its own choosing that is reasonably acceptable to the Indemnified Persons, such right being exercisable only in the same notice in which it notifies the Indemnified Persons that it does not dispute its obligation to Indemnify them against the General Indemnity Claim.
(ii) If the Class B Member elects to defend against the General Indemnity Claim, it shall promptly settle such General Indemnity Claim or diligently prosecute it to a final conclusion. If the Indemnified Persons desire to participate in, but not control, any such defense or settlement, they may do so at their sole cost and expense.
(iii) If the Class B Member disputes its liability with respect to such General Indemnity Claim or fails to defend against such General Indemnity Claim, whether by not giving timely notice as provided above or otherwise, the Indemnified Persons shall have the right but not the obligation to defend against such General Indemnity Claim.
(iv) Unless the Class B Member has accepted liability for a General Indemnity Claim in writing, the Class B Member shall not settle any such General Indemnity Claim without the prior written consent of the Indemnified Persons. The Indemnified Persons shall not settle any General Indemnity Claim without the prior written consent of the Class B Member unless the Class B Member has refused to accept liability for such General Indemnity Claim or failed to defend the Indemnified Persons against such General Indemnity Claim pursuant to the terms of this Agreement.
(v) If requested by the Class B Member, the Indemnified Persons agree to cooperate with the Class B Member, its insurers and their respective counsel in contesting any Third Party Claims that the Class B Member elects to contest; provided, however, that the Class B Member (i) has furnished the Indemnified Persons with a written opinion of the Class B Member’s outside counsel to the effect that a reasonable basis exists to contest the Claim, (ii) pays all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees) that the Indemnified Persons may incur in so cooperating in the contest of such claim and (iii) if the Sponsor does not
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then meet the Required Creditworthiness and if reasonably requested by the Indemnified Persons and to the extent such Claim results in an actual out-of-pocket loss to the Indemnified Persons that is not covered by the Class B Member’s insurance, the Class B Member shall provide a letter of credit satisfactory to the Indemnified Persons for the expected amount of such loss; provided, that upon providing such letter of credit, any payments into Escrow pursuant to Section 5.04(b)(ii) shall be released to the Class B Member and no additional distributions to which the Class B Member is entitled shall be paid into Escrow in connection with such Claim.
(vi) Notwithstanding anything herein to the contrary, the Class B Member shall not, without the prior written consent of the Indemnified Persons, settle any General Indemnity Claim, unless such settlement includes an unconditional release of all Indemnified Persons from any liability arising out of such General Indemnity Claim.
(e) In the event an Indemnified Person shall have a General Indemnity Claim against the Class B Member hereunder which does not involve a General Indemnity Claim or demand being asserted against or sought to be collected from such Indemnified Person by a Third Party, such Indemnified Person shall promptly send a Claim Notice with respect to such Claim to the Class B Member. If the Class B Member does not notify the Indemnified Person within the Notice Period that it disputes such General Indemnity Claim, the amount of such General Indemnity Claim shall be conclusively deemed a liability of the Class B Member hereunder.
(f) Payment shall be due in respect of General Indemnity Claims (i) that are not subject to contest upon the date that is thirty (30) days after the expiration of the Notice Period or (ii) for all General Indemnity Claims subject to contest, upon the settlement, final resolution or withdrawal of the contest.
13.04 Member Indemnification Procedures.
(a) All Claims for indemnification by the Member Parties under Section 13.02 shall be asserted and resolved in accordance with this Section 13.04.
(b) If any Member Party learns of an actual or potential General Indemnity Claim for which such Member Party may seek indemnification under Section 13.02, such Member Party shall promptly notify the Managing Member (and, if the Member Party is the Class B Member or an Affiliate of the Class B Member, each Class A Member) thereof, by sending a Claim Notice; provided, however, that the failure to provide such notice promptly shall not limit or reduce such Member Party’s right to indemnification under Section 13.02 except to the extent that such failure to provide such notice promptly shall prevent or shall have prevented the Company from properly or effectively defending the General Indemnity Claim or from recovering reimbursement or other damages to which the Company would be entitled.
(c) The Managing Member, on behalf of the Company, shall, during the Notice Period, notify all Member Parties whether or not it disputes the Company’s obligation to
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Indemnify the Member Parties against such General Indemnity Claim; provided, however, that the Member Parties are hereby authorized prior to and during such Notice Period to file any motion, answer or other pleading that may be necessary or appropriate to protect their interests or those of the Company and the other Members and that are not in any material way prejudicial to the Company and the other Members and a copy of such pleading shall be promptly delivered to the other Members.
(d) If the Managing Member, on behalf of the Company, notifies the Member Parties within such Notice Period that it does not dispute the Company’s obligation to Indemnify the Member Parties against such General Indemnity Claim, then, except as hereinafter provided, the Managing Member, on behalf of the Company, shall have the right, but not the obligation, to defend by all appropriate proceedings, and with counsel chosen by the Managing Member (with the consent of each Class A Member if the Member Party is the Class B Member or an Affiliate of the Class B Member), such right being exercisable only in the same notice in which it notifies the Member Parties that it does not dispute the obligation to Indemnify them against the General Indemnity Claim.
(e) If the Managing Member elects to defend the General Indemnity Claim, it shall promptly settle such claim or diligently prosecute it to a final conclusion. If the Member Parties desire to participate in, but not control, any such defense or settlement, they may do so at their sole cost and expense. If the Company disputes its liability with respect to such General Indemnity Claim or fails to defend against such General Indemnity Claim, whether by not giving notice as provided above or otherwise, the Member Parties shall have the right but not the obligation to defend against such General Indemnity Claim. Notwithstanding anything to the contrary herein, the Company shall not settle any such General Indemnity Claim without the prior written consent of each Member Party, unless such settlement includes an unconditional release of all Indemnified Persons from any liability arising out of such General Indemnity Claim. The Member Parties shall not settle any General Indemnity Claim without the prior written consent of the Company unless the Company has refused to accept liability for such General Indemnity Claim or failed to defend the Member Party against such General Indemnity Claim pursuant to the terms of this Agreement.
(f) If requested by the Managing Member, the Member Parties agree to cooperate with the Managing Member on behalf of the Company, the Company’s insurers and the Company’s counsel in contesting any Third Party Claims that the Managing Member elects to contest on behalf of the Company; provided, however, that the Company (i) has furnished the Member Parties with a written opinion of outside counsel to the Company to the effect that a reasonable basis exists to contest such Claim, (ii) pays all out-of-pocket costs and expenses (including reasonable attorneys’ fees) that the Member Parties may incur in so cooperating in the contest of such claim and (iii) if requested by the Member Parties, provides credit support acceptable to the Indemnified Persons.
(g) If a Member Party shall have an indemnification Claim against the Company under Section 13.02 which does not involve an indemnification Claim or demand being asserted against or sought to be collected from such Member Party by a Third Party, such Member Party shall promptly send a Claim Notice with respect to such Claim to the Managing
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Member (and, if the Member Party is a Class B Member or an Affiliate of a Class B Member, each of the Class A Members). If (i) the Managing Member or (ii) the Member Party seeking indemnification under Section 13.02 is a Class B Member or an Affiliate of a Class B Member, and a Majority of Class A Members, in each case on behalf of the Company, does not notify such Member Party within the Notice Period that it disputes such indemnification Claim, the amount of such indemnification Claim shall be conclusively deemed a liability of the Company hereunder.
(h) Payment shall be due in respect of General Indemnity Claims (i) that are not subject to contest within thirty (30) days of the expiration of the Notice Period or (ii) for all General Indemnity Claims subject to contest, upon the settlement, final resolution or withdrawal of the contest.
13.05 Gross-Up of Indemnity. At the time that the Class B Member makes any payment in connection with a General Indemnity Claim under Section 13.01(a) for any amount due thereunder (the “Indemnity Payment Amount”), the Class B Member shall also pay together with such payment an additional amount that, when added to such payment, will result in the recipients (including in the case of any Class A Member, the affiliated group with which such Class A Member files a single consolidated federal income tax return) receiving an amount equal to such Indemnity Payment Amount, after taking into account (i) the federal income taxes that are payable by the recipients (including the affiliated groups with which such Class A Member files a single consolidated income tax return) with respect to the receipt of such payment, using the highest marginal U.S. federal income tax rate then applicable to corporations (and ignoring state and local taxes), and (ii) the U.S. federal income tax savings from deductions (including losses) allowable to the recipients (including the affiliated group with which such Class A Member files a single consolidated federal income tax return) as a result of such Indemnity Payment Amount, using the highest marginal federal income tax rate then applicable to corporations (and ignoring state and local taxes).
ARTICLE 14
GENERAL PROVISIONS
14.01 Notices. Except as expressly set forth to the contrary in this Agreement, all notices, requests or consents provided for or permitted to be given under this Agreement must be in writing and must be delivered to the recipient in person, by courier or certified mail, return receipt requested, or by electronic transmission. A notice, request or consent given under this Agreement is effective on receipt by the Member to receive it; provided, however, that an electronic transmission that is transmitted after the normal business hours of the recipient shall be deemed effective on the next Business Day. All notices, requests and consents to be sent to a Member must be sent to or made at the addresses given for such Member on Exhibit B, as amended from time to time. A copy of any notice, request or consent to the Company must be given to all of the Members. Whenever any notice is required to be given by Law, the Delaware Certificate or this Agreement, a written waiver thereof, signed by the Person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
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14.02 Entire Agreement; Superseding Effect. This Agreement (together with the other Transaction Documents) constitutes the entire agreement of the Members and their Affiliates relating to the Company and the transactions contemplated hereby and supersedes all provisions and concepts contained in all prior contracts or agreements between the Members or any of their Affiliates with respect to the Company and the transactions contemplated hereby, whether oral or written.
14.03 Effect of Waiver or Consent. Except as otherwise provided in this Agreement, a waiver or consent, express or implied, to or of any breach or default by any Member in the performance by such Member of its obligations with respect to the Company is not a consent or waiver to or of any other breach or default in the performance by such Member of the same or any other obligations of such Member with respect to the Company. Except as otherwise provided in this Agreement, failure on the part of a Member to complain of any act of any Member or to declare any Member in default with respect to the Company, irrespective of how long that failure continues, does not constitute a waiver by such Member of its rights with respect to that default until the applicable statute-of-limitations period has run.
14.04 Amendment or Restatement. This Agreement or the Delaware Certificate may be amended or restated only by a written instrument executed (or, in the case of the Delaware Certificate, approved) by all of the Members.
14.05 Binding Effect. Subject to the restrictions on Dispositions set forth in this Agreement, this Agreement is binding on and shall inure to the benefit of the Members and their respective successors and permitted assigns.
14.06 Governing Law; Construction. This Agreement is governed by and shall be construed in accordance with the Law of the State of Delaware, excluding any conflict-of-laws rule or principle that might refer the governance or the construction of this Agreement to the Law of another jurisdiction.
14.07 Jurisdiction; Service of Process; Waiver of Jury Trial. Each of the Parties hereby irrevocably consents to the exclusive jurisdiction of the courts of the State of New York and of any federal court located therein in connection with any suit, action or other proceeding arising out of or relating to this Agreement or the transactions contemplated hereby; agrees to waive any objection to venue in the State of New York and the Borough of Manhattan in the City of New York, New York; and agrees that, to the extent permitted by law, service of process in connection with any such proceeding may be effected by mailing same in the manner provided in Section 14.01. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
14.08 Third Parties. Other than as expressly set forth in Article 13 with respect to Indemnified Persons, the provisions of this Agreement are intended solely to benefit the Members and, to the fullest extent permitted by Law, should not be construed as conferring any benefit upon any creditor of the Company (and no such creditor shall be a third-party beneficiary
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of this Agreement) and no Member shall have any duty or obligation to any creditor of the Company to make any additional contributions to the Company.
14.09 Severability. If one or more of the provisions of this Agreement are held by a proper court to be unenforceable under Law, portions of such provisions, or such provisions in their entirety, to the extent necessary and permitted by Law, shall be severed herefrom, and the balance of this Agreement shall be enforceable in accordance with its terms.
14.10 Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver, at the Company’s cost and expense, any additional documents and instruments and perform, at the Company’s cost and expense, any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions contemplated herein, including all filing, recording, publishing and other acts appropriate to comply with all requirements for the operation of a limited liability company under the laws of all jurisdictions where the Company shall conduct business.
14.11 Counterparts. This Agreement may be executed in any number of counterparts, each executed counterpart constituting an original but all together only one agreement.
14.12 Operator or Administrator; Successor Operator or Administrator. Notwithstanding anything contained herein or in the MSA or the O&M Agreement, the Parties hereby agree that in no event shall the Project Company, the Company or any Member engage or enter into any agreement engaging any Competitor or any Affiliate of a Competitor to act as Operator or Administrator, successor operator or administrator (or similar role) of the Company or the Project Company; provided that only to the extent (i) the Administrator is terminated for Cause, (ii) other qualified Persons are not available on commercially reasonable terms and (iii) it is reasonably necessary, then the Company or Project Company may engage a Competitor to act as administrator in respect of the duties described in the MSA or operator in respect of the duties described in the O&M Agreement, as applicable.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
Pelicans Jaw Member B, LLC, a Delaware limited liability company | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
FNBC Leasing Corporation, a Delaware corporation | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
EXHIBIT A
FORM OF CERTIFICATE OF INTEREST
THE INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY, SUCH INTERESTS MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF WITHOUT COMPLIANCE WITH SUCH ACT AND SUCH STATE SECURITIES LAWS, AND THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO IT THAT NO VIOLATION OF SUCH ACT AND SUCH STATE SECURITIES LAWS WILL RESULT FROM ANY PROPOSED SALE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF SUCH INTERESTS; PROVIDED THAT THE FOREGOING SHALL NOT APPLY IN THE EVENT OF A FORECLOSURE (OR TRANSFER IN LIEU).
THIS CERTIFICATE EVIDENCES AN INTEREST IN PELICANS JAW TE HOLDCO, LLC AND SHALL BE A SECURITY FOR THE PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF NEW YORK.
A-1
No. [A][B]-[1] | [____________] [Class A] [Class B] Units | |||||||
Pelicans Jaw TE Holdco, LLC a
Limited Liability Company
under the laws of the State of Delaware
CERTIFICATE OF INTEREST
This certifies that [_________________] is the owner of a [Class A] [Class B] membership interest in Pelicans Jaw TE Holdco, LLC (the “Company”), represented by [___________________] [Class A] [Class B] Units, which membership interest is subject to the terms of the Limited Liability Company Agreement of Pelicans Jaw TE Holdco, LLC dated as of [l] as the same may be amended from time to time in accordance with the terms thereof (the “Limited Liability Company Agreement”).
This Certificate of Interest may be transferred by the lawful holders hereof only in accordance with the provisions of the Limited Liability Company Agreement.
IN WITNESS WHEREOF, the said Company has caused this Certificate of Interest to be signed by its duly authorized officer this [____] day of [___________], 20[__].
Pelicans Jaw TE Holdco, LLC | ||||||||
By: | [____________], LLC, | |||||||
| Its: | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
INSTRUMENT OF TRANSFER OF
MEMBERSHIP INTEREST IN
PELICANS JAW TE HOLDCO, LLC
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer unto ______________________________________________________________________________(print or type name of assignee)
the membership interest evidenced by and within the Certificate of Interest herewith, and does hereby irrevocably constitute and appoint ___________________as attorney to transfer said interest on the books of Pelicans Jaw TE Holdco, LLC and to cancel said Certificate of Interest, with full power of substitution in the premises.
Dated as of:
[_________________] | ||||||||||||||
By: | ||||||||||||||
Name: | ||||||||||||||
Title: | ||||||||||||||
Exhibit B
MEMBERS
Member Name | Address for Notices | Capital Account | Number and Class of Units | ||||||||
Pelicans Jaw Member B, LLC | c/o SB Energy ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | $0.00 | 1,000 Class B Units | ||||||||
FNBC Leasing Corporation | ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-2003 Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ E-mail: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ Reference: E240026 | $0.00 | 1,000 Class A Units | ||||||||
B-1
EXHIBIT C
BASE CASE MODEL
Please refer to the financial projections with respect to the Project in Excel file “EXT_2026_SBE_Pelicans Jaw Model_50% ITC_5.02.2025".
C-1
EXHIBIT D
INITIAL APPROVED BUDGET
[See attached]
D-1
| Pelicans Jaw - Initial Approved Budget (2026-2027) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All figures in US$ 000s | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Monthly Period Beg. | 7/31/2026 | 8/31/2026 | 9/30/2026 | 10/31/2026 | 11/30/2026 | 12/31/2026 | 1/31/2027 | 2/28/2027 | 3/31/2027 | 4/30/2027 | 5/31/2027 | 6/30/2027 | 7/31/2027 | 8/31/2027 | 9/30/2027 | 10/31/2027 | 11/30/2027 | 12/31/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Energy Generation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Theoretical MWh produced - Base | 1,821,378 | 81,357 | 139,359 | 118,463 | 92,493 | 66,638 | 50,962 | 53,709 | 72,770 | 107,209 | 125,831 | 143,935 | 151,583 | 149,154 | 139,359 | 118,463 | 92,493 | 66,638 | 50,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Availability (%) | 80.00 | % | 80.00 | % | 80.00 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 97.70 | % | 98.50 | % | 98.50 | % | 98.50 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Degradation Factor (%) | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 99.73 | % | 99.73 | % | 99.73 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Curtailment Factor (%) | 94.35 | % | 94.35 | % | 86.97 | % | 74.96 | % | 90.76 | % | 91.28 | % | 80.90 | % | 87.45 | % | 82.65 | % | 96.50 | % | 99.35 | % | 99.34 | % | 99.50 | % | 99.35 | % | 98.40 | % | 98.83 | % | 99.50 | % | 99.15 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| MWh Produced | 1,616,659 | 61,410 | 105,191 | 82,418 | 67,734 | 59,092 | 45,447 | 42,451 | 62,171 | 86,571 | 118,629 | 139,716 | 147,118 | 144,991 | 135,264 | 113,887 | 89,798 | 65,134 | 49,635 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BESS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total ▇▇▇▇ Capacity - MW | 4,185 | 130 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Availability (%) | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | 96.00 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Degradation Factor (%) | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ Capacity - Arbitrage | 1,957 | 125 | 229 | 229 | 229 | 229 | 229 | 229 | 229 | 229 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ Capacity - RA | 2,038 | 130 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | 239 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Generation by Revenue Type | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPA Revenue | 1,004,173 | -- | -- | -- | -- | -- | -- | -- | -- | -- | 118,629 | 139,716 | 147,118 | 144,991 | 135,264 | 113,887 | 89,798 | 65,134 | 49,635 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant Revenue at Node | 612,486 | 61,410 | 105,191 | 82,418 | 67,734 | 59,092 | 45,447 | 42,451 | 62,171 | 86,571 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant RECs | 612,486 | 61,410 | 105,191 | 82,418 | 67,734 | 59,092 | 45,447 | 42,451 | 62,171 | 86,571 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PPA Revenue | $40,970 | -- | -- | -- | -- | -- | -- | -- | -- | -- | 4,840 | 5,700 | 6,002 | 5,916 | 5,519 | 4,647 | 3,664 | 2,657 | 2,025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant Revenue at Node | $12,981 | 2,979 | 5,037 | 2,650 | 252 | 896 | 887 | 604 | (13) | (312) | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant RECs | $25,592 | 2,667 | 4,569 | 3,580 | 2,942 | 2,567 | 1,974 | 1,619 | 2,371 | 3,302 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tolling Agreement Revenue | $36,126 | -- | -- | -- | -- | -- | -- | -- | -- | -- | 4,014 | 4,014 | 4,014 | 4,014 | 4,014 | 4,014 | 4,014 | 4,014 | 4,014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant Arbitrage ▇▇▇▇ Revenues | $17,116 | 1,745 | 3,336 | 2,598 | 1,662 | 1,478 | 941 | 1,431 | 2,100 | 1,825 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merchant RA Revenues | $4,221 | -- | -- | -- | 3,220 | 215 | 215 | 191 | 191 | 191 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Revenue (Accrual Basis) | $137,007 | $7,392 | $12,942 | $8,828 | $8,075 | $5,156 | $4,017 | $3,845 | $4,649 | $5,006 | $8,854 | $9,714 | $10,016 | $9,930 | $9,533 | $8,661 | $7,678 | $6,671 | $6,039 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV O&M Covered | $3,266 | -- | -- | -- | $216 | $216 | $216 | $216 | $216 | $216 | $216 | $216 | $216 | $216 | $216 | $221 | $221 | $221 | $221 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV O&M Non-Covered | $1,627 | -- | -- | -- | $109 | $109 | $109 | $109 | $109 | $109 | $109 | $109 | $109 | $109 | $109 | $108 | $108 | $108 | $108 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Major Maintenance Reserve | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ ▇&▇ Covered | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ O&M Non-Covered | $1,054 | -- | -- | -- | $70 | $70 | $70 | $70 | $70 | $70 | $70 | $70 | $70 | $70 | $70 | $71 | $71 | $71 | $71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BESS Maintenance | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ Auxiliary Power | $2,305 | -- | -- | -- | $153 | $153 | $153 | $153 | $153 | $153 | $153 | $153 | $153 | $153 | $153 | $156 | $156 | $156 | $156 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ Asset Management | $95 | -- | -- | -- | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | $6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV Onsite Expenses | $995 | -- | -- | -- | $66 | $66 | $66 | $66 | $66 | $66 | $66 | $66 | $66 | $66 | $66 | $68 | $68 | $68 | $68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV Insurance | $5,757 | -- | -- | -- | $607 | $607 | $607 | $607 | $607 | $607 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ Insurance | $4,979 | -- | -- | -- | $525 | $525 | $525 | $525 | $525 | $525 | $203 | $203 | $203 | $203 | $203 | $203 | $203 | $203 | $203 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV Asset Management | $389 | -- | -- | -- | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | $26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV QSE | $69 | -- | -- | -- | $11 | $11 | $11 | $11 | $11 | $11 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV - Market Service Charges | $181 | -- | -- | -- | $33 | $29 | $22 | $21 | $31 | $43 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ▇▇▇▇ - Market Service Charges | $176 | -- | -- | -- | $29 | $29 | $29 | $30 | $30 | $30 | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV Legal, Tax, Audit | $199 | -- | -- | -- | $13 | $13 | $13 | $13 | $13 | $13 | $13 | $13 | $13 | $13 | $13 | $14 | $14 | $14 | $14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV Interconnection Facilities | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PV State Franchise Tax | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Site Lease | $2,821 | -- | -- | -- | -- | -- | -- | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | $235 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property Tax | $1,371 | -- | -- | -- | $95 | $95 | $95 | $95 | $95 | $95 | $95 | $95 | $95 | $95 | $95 | $82 | $82 | $82 | $82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Letters of Credit | $1,433 | -- | -- | -- | $109 | $109 | $109 | $109 | $109 | $109 | $87 | $87 | $87 | $87 | $87 | $87 | $87 | $87 | $87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depositary Fees | $71 | -- | -- | -- | $10 | $10 | $10 | $3 | $3 | $3 | $3 | $3 | $3 | $3 | $3 | $3 | $3 | $3 | $3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Expense (Accrual Basis) | $26,786 | -- | -- | -- | $2,077 | $2,073 | $2,066 | $2,294 | $2,304 | $2,316 | $1,517 | $1,517 | $1,517 | $1,517 | $1,517 | $1,517 | $1,517 | $1,517 | $1,517 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EBITDA (Accrual Basis) | $110,220 | $7,392 | $12,942 | $8,828 | $5,998 | $3,083 | $1,951 | $1,551 | $2,344 | $2,690 | $7,337 | $8,197 | $8,499 | $8,412 | $8,015 | $7,143 | $6,161 | $5,154 | $4,522 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exhibit E
to
Amended and Restated
Limited Liability Company Agreement
Insurance Requirements
1.1 General Requirements. The Company shall cause each Project Company to maintain, without cost to the Class A Member, its successors or assigns, maintain or cause to be maintained in effect at all times on and after the Effective Date the types of insurance required by the following provisions together with any other types of insurance required hereunder or pursuant to the Material Project Contracts with respect to the Project, in such form acceptable to the Class A Member in consultation with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Risk Partners (the “Insurance Consultant”), with insurance companies rated “A-” or better, with a minimum size rating of “X” (excess property carriers may have a size rating of VII or higher) by A.M. Best or rated “A” or better by Standard and Poor’s (or an equivalent rating by another nationally recognized insurance rating agency of similar standing) or other companies reasonably satisfactory to the Class A Member (in consultation with the Insurance Consultant).
(a) Ocean Cargo, Storage and Marine Business Interruption. Ocean cargo and/or storage insurance (including any inland transit insurance to the extent not insured under Section 1.1(b) or (d) of this Exhibit E) on an all-risk basis, to the extent an exposure exists, in an amount not less than the replacement cost value of the largest value of property in any one single shipment or maximum value being stored at a particular location and with any applicable natural catastrophic perils sublimits reasonably satisfactory to the Class A Member (in consultation with the Insurance Consultant) and including coverage for marine delay in startup or marine business interruption, including such coverages for inland transit to the extent not insured under Section 1.1(c) or (e) of this Exhibit E (if the loss of such property being shipped or stored is expected to cause a delay in the anticipated completion date of the Project or to cause or extend an interruption of normal business operations of the Project), with a limit and associated indemnity period equivalent to the loss of gross revenues less non- continuing expenses for the longest period of interruption or delay reasonably expected to occur subject to a maximum period of indemnity of twelve (12) months. Should ocean cargo insurance for physical damage be provided by unaffiliated third parties, the Company will procure difference in conditions (DIC) and difference in limits (DIL) coverage with respect to marine delay in startup/marine business interruptions, with a limit acceptable to the Class A Member, and shall use commercially reasonable efforts to obtain additional insured and loss payee status on such third parties’ ocean cargo insurance for the benefit of itself, the Class A Member and the Class B Member, as applicable. All such policies may have per occurrence deductibles of not greater than: (i) $100,000 for physical damage and (ii) thirty (30) days for business interruption and delay in startup.
(b) Construction All-Risk. On the date of or prior to the issuance of Full Notice to Proceed (as defined in the applicable EPC Agreement), construction “all-risk” insurance, as such term is used in the insurance industry, in an amount of not less than the replacement cost value of the Project at the time of loss or such other amount necessary or agreed to for purposes of complying with any Material Project Contract including coverage for all testing and commissioning activities required to complete the Project, mechanical and electrical breakdown plus resulting or ensuing damage arising out of defects in design, materials, workmanship, the perils of flood, earthquake, named windstorm, severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), wildfire, freezing, strike, riot and civil commotion, vandalism and malicious mischief, sabotage (unrelated to terrorism, war or political violence), subject to terms that are consistent with current industry practice and insuring all real and personal property of the Project Company whether at a fixed location (including non-owned locations for off-site repair or refurbishment), off-site storage or a warehouse location, and while in the course of inland transit, for an amount of not less than the full replacement cost value of Project property and equipment at each location, or such other amount as agreed by the Class A Member and that is sufficient to comply with the requirements of all Material Project Contracts. All responsibility for verification of compliance with the Material Project Contracts shall rest solely with the Company or the Project Company.
Sublimits and policy aggregate limits are permitted with respect to the following perils:
(i) off-Project Site (as defined in the ECCA) property, to the extent any exposure exists,
in an amount that is not less than the full replacement cost values of any property in storage;
(ii) inland transit, to the extent any exposure exists, in an amount that is not less than the full replacement cost value of any shipment;
(iii) earthquake, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case that is reasonably acceptable to the Class A Member and in no event less than $72,250,000 per occurrence and aggregate, or such other amount required or agreed to by the Class A Member (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(iv) flood, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case that is reasonably acceptable to the Class A Member and in no event less than $25,000,000 per occurrence and aggregate, or such other amount required or agreed to by the Class A Member (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
Exhibit E-2
(v) named windstorm, in an amount equal to the full replacement cost of the Project per occurrence and aggregate, or other amount required by or agreed to by the Class A
Member (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice;
(vi) severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case that is reasonably acceptable to the Class A Member and in no event less than $100,000,000 per occurrence and aggregate, or such other amount required or agreed to by the Class A Member (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice; Microcracking endorsements shall subject to approval by the Class A Member (in consultation with the Insurance Consultant); and;
(vii) wildfire, in an amount equal to the full replacement cost of the Project per occurrence and aggregate, or other amount required by or agreed to by the Class A Member (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice; and
(viii) such other coverages customarily sub-limited and/or aggregated or restricted in reasonable amounts consistent with current industry practice with respect to similar risks and acceptable to the Class A Member (in consultation with the Insurance Consultant), including without limitation, debris removal, pollutant cleanup, professional fees extra expense, expediting expense, ingress/egress, and ordinance or law coverage, including the increased cost of construction to comply with the enforcement of any law that regulates the construction or repair of damaged property, including the cost to demolish undamaged portions of the Project, etc. Wildfire or vegetation management protective safeguards restrictions shall be subject to approval by the Class A Member (in consultation with the Insurance Consultant).
Such policy shall include: (a) an automatic reinstatement of limits following each loss (except for the perils of earthquake, flood, named windstorm, severe convective storm ( including but not limited to tornadoes, hail, lightning, straight line winds and derechos) wildfire, and other aggregated limits that typically apply under Section 1.1(b)(viii) of this Exhibit E); (b) replacement cost valuation with no deduction for depreciation (in the event the Project is repaired or replaced following a loss) and no coinsurance clauses (or a waiver thereof); (c) coverage for physical damage that is not covered by warranty or guaranty to the extent normally insured (LEG 2 or equivalent); and (d) coverage for physical damage that is not reimbursed under warranty or guaranty to the extent normally insured.
Construction All-Risk policy may have per occurrence deductibles of not greater than $250,000 for all perils related to the PV solar assets and $500,000 for all perils related to the ▇▇▇▇ assets, except $1,000,000 for severe convective storm and wildfire and five percent
Exhibit E-3
(5%) of the value of property at risk at the time of loss subject to a minimum of $500,000 and commercially available and economically feasible deductible cap for
earthquake and flood, or such other deductibles approved by the Class A Member in consultation with the Insurance Consultant, subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice.
(c) Delay in Startup. Delay in startup insurance following all perils required and insured above under Section 1.1(b) of this Exhibit E, with limits of not less than the projected equivalent of twelve (12) months’ gross revenues, less non-continuing expenses for the Project (including all revenues derived from any environmental attribute of the Project, including without limitation, any renewable energy credit that is owned or sold by the Company, the Project Company or the Project). If coverage is subject to an indemnification period, such period shall not be less than twelve (12) months. Contingent delay in startup shall also be included with respect to damage to the first electrical interconnection not owned by the Company or the Project Company with covered perils acceptable to the Class A Member (in consultation with the Insurance Consultant) and limits and indemnity period not less than one hundred twenty (120) days, subject to commercial availability, but in no event less than ninety (90) days. The deductible or waiting period shall not exceed forty-five (45) days on a per occurrence basis, or such other deductibles approved by the Class A Member (in consultation with the Insurance Consultant).
(d) All-Risk Property/Machinery Breakdown. On or prior to Substantial Completion (as defined in the EPC Agreement), “all-risk” property insurance, as such term is used in the insurance industry, written on a replacement cost basis including the value of Project property and/or equipment at each location without the presence of coinsurance, in an amount (a) sufficient to cover full replacement value of Project property including all owned substations and transmission lines and/or equipment at each location or (b) an acceptable loss limit (subject to the approval of the Class A Member as further noted in Section 1.1 (k) of this Exhibit E), including coverage for mechanical and electrical breakdown, plus resulting or ensuing damage arising out of defects in design, materials or workmanship, the perils of flood, earthquake, named windstorm, severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), wildfire, strike, riot and civil commotion, vandalism and malicious mischief, sabotage (unrelated to terrorism, war or political violence), subject to terms that are consistent with current industry practice insuring all real and personal property of the Company whether at a fixed location (including non-owned locations for off-Project Site repair or refurbishment), off-Project Site storage or a warehouse location, and while in the course of inland transit, for an amount of not less than the full replacement cost value of Project property and equipment at each location, or such other amount as agreed to by the Class A Member and that is sufficient to comply with the requirements of all Material Project Contracts. The property coverage shall cover all substations and transmission lines owned by the Project Company. All responsibility for verification of compliance with the Material Project Contracts shall rest solely with the Company or the Project.
Exhibit E-4
Sublimits and policy aggregate limits are permitted with respect to the following perils:
(i) off-Project Site property, to the extent any exposure exists, in an amount that is not less
than the full replacement cost values of any property in storage;
(ii) inland transit, to the extent any exposure exists, in an amount that is not less than the full replacement cost value of any shipment;
(iii) earthquake, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case in an amount that is reasonably acceptable to the Class A Member (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(iv) flood, in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case in an amount that is reasonably acceptable to the Class A Member (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice;
(v) named windstorm, in an amount equal to the full replacement cost of the Project per occurrence and annual aggregate, or other amount required by or agreed to by the Class A Member (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice;
(vi) severe convective storm (including but not limited to tornadoes, hail, lightning, straight line winds and derechos), in an amount of not less than 100% of the 500-year PML as provided by ABS or other qualified third-party engineering company, in each case in an amount that is reasonably acceptable to the Class A Member (in consultation with the Insurance Consultant), subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice; Microcracking endorsements shall subject to approval by the Class A Member (in consultation with the Insurance Consultant);
(vii) wildfire, in an amount equal to the full replacement cost of the Project per occurrence and annual aggregate, or other amount required by or agreed to by the Class A Member (in consultation with the Insurance Consultant), subject to commercial availability and customary cost in the insurance marketplace in accordance with accepted industry practice; and
(viii) such other coverages customarily sub-limited and/or aggregated or restricted in reasonable amounts consistent with current industry practice with respect to similar risks and acceptable to the Class A Member (in consultation with the Insurance Consultant), including without limitation, debris removal, pollutant cleanup, professional fees extra expense, expediting expense, ingress/egress, and ordinance or law coverage, including the increased cost of construction to comply with the enforcement of any law that
Exhibit E-5
regulates the construction or repair of damaged property, including the cost to demolish undamaged portions of the Project, etc. Wildfire or vegetation management protective safeguards restrictions shall subject to approval by the Class A Member (in consultation with the Insurance Consultant).
Such policy shall include: (a) an automatic reinstatement of limits following each loss (except for the perils of earthquake, flood, named windstorm, severe convective storm ( including but not limited to tornadoes, hail, lightning, straight line winds and derechos) wildfire, and other aggregated limits that typically apply under Section 1.1(d)(viii) of this Exhibit E); (b) replacement cost valuation with no deduction for depreciation (in the event the Project is repaired or replaced following a loss) and no coinsurance clauses (or a waiver thereof); (c) coverage for physical damage that is not covered by warranty or guaranty to the extent normally insured (LEG 2 or equivalent); and (d) coverage for physical damage that is not reimbursed under warranty or guaranty to the extent normally insured.
Such policy may have per occurrence deductibles of not greater than $250,000 for all perils related to the PV solar assets and $500,000 for all perils related to the ▇▇▇▇ assets, except $1,000,000 for severe convective storm and wildfire and five percent (5%) of the value of property subject to a minimum of $500,000 and to the extent commercially available and economically feasible deductible cap for earthquake and flood, or such other deductibles approved by the Class A Member in consultation with the Insurance Consultant, subject to the availability and reasonable and customary cost in the insurance marketplace in accordance with accepted industry practice.
(e) Business Interruption. Business interruption insurance following all perils required and insured above under Section 1.1(d) of this Exhibit E, with limits of not less than the projected equivalent of twelve (12) months gross revenues, less non-continuing expenses for the Project (including all revenues derived from any environmental attribute of the Project, including without limitation, any renewable energy credit that is owned or sold by any the Company, the Project Company or the Project). If coverage is subject to an indemnification period, such period shall not be less than twelve (12) months. Subject to commercial availability and any requirements of the Class A Member in consultation with the Insurance Consultant, contingent business interruption shall also be included with respect to the non-owned portion of electric interconnection and transmission facilities up to the first non-owned substation with a sublimit equal to one hundred twenty (120) days, subject to commercial availability, but in no event less than ninety (90) days. The deductible or waiting period shall not exceed forty-five (45) days on a per occurrence basis, or such other deductibles approved by the Class A Member (in consultation with the Insurance Consultant).
(f) Commercial General Liability. Commercial general liability insurance covering the Project Company and the Project with respect to Project operations, written on “occurrence” policy forms, including coverage for premises/operations, products/completed operations, broad form property damage, blanket contractual liability (i.e., policy shall not require insured contracts to be scheduled), and personal injury, with no exclusions for explosion, collapse and underground perils, or fire and wildfire with
Exhibit E-6
primary coverage limits of no less than $1,000,000 per occurrence and $2,000,000 annual aggregate for injuries or death to one or more persons or damage to property resulting from any one occurrence, and a products and completed operations liability aggregate limit of not less than $2,000,000. The commercial general liability policy shall also include a severability of interest clause with no exclusions or limitations on cross liability. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Member, except sudden and accidental pollution if provided under this commercial general liability insurance.
(g) Automobile Liability. Automobile liability insurance, including coverage for owned (if any), leased, non-owned and hired automobiles for bodily injury and property damage in accordance with statutory legal requirements, with combined single limits of no less than $1,000,000 per accident with respect to bodily injury and or death, and property damage. Hired and non-owned automobile liability may be obtained through endorsement to the general liability policy required in Section 1.1(f) of this Exhibit E. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Member.
(h) Workers’ Compensation/Employer’s Liability. To the extent exposure exists, workers’ compensation insurance in accordance with statutory and/or state requirements at any time in which the Project Company has employees, including coverage for employer’s liability with a limit of not less than $1,000,000 and such other forms of insurance which the Project Company and the Project is required by law to provide for loss resulting from injury, sickness, disability or death of the employees of the Project Company. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Member.
(i) Umbrella or Excess. Umbrella or excess liability insurance of not less than $25,000,000 per occurrence and annual aggregate during construction and operations (inclusive of the requirements and in addition to the limits in Sections 1.1(f), (g) and (h) with respect to employer’s liability of this Exhibit E). Such coverage shall be on an occurrence policy form over and above coverage provided by the policies described in Sections 1.1(f), (g) and (h) of this Exhibit E with respect to employer’s liability. If the policy or policies provided under this Section 1.1(i) of this Exhibit E contain(s) aggregate limits, and such limits are reduced below $20,000,000 during the applicable policy term by any one or more incident, occurrence, claim, settlement or judgment against such insurance which has caused the insurer to establish a reserve, the Company shall, within ten (10) Business Days after obtaining knowledge of such event, inform the Class A Member, and within thirty (30) Business Days purchase an additional umbrella/excess liability insurance policy satisfying the requirements of this Section 1.1(i) of this Exhibit E, unless waived by the Class A Member in consultation with the Insurance Consultant. Deductibles in excess of $100,000 shall be subject to review and approval by the Class A Member.
Exhibit E-7
(j) Pollution Liability. Pollution liability insurance shall be required with a limit commensurate with industry practice for similar operations but not less than $1,000,000 per occurrence in the annual aggregate for property damage and bodily injury to third parties arising out of “time element” pollution conditions as a result of Project operations including coverage for cost of off-Project Site cleanup. All such coverages can be included in the commercial general liability and/or umbrella or excess liability policies or provided under a separate pollution liability policy. Claims made coverage forms and deductibles of up to $100,000 per occurrence shall be acceptable.
(k) Shared Limits – Property Insurance. To the extent that the Project Company or the Company wishes to insure the Project under a property insurance program that contemplates shared limits and sublimits, the Project Company or the Company shall submit an advance written request to the Class A Member and shall provide supporting documentation requested by the Class A Member. At the time of such request, the Project Company or the Company shall furnish to the Class A Member existing, updated or new probable maximum loss analyses assessing the combined risk of insured values under the proposed property insurance program for assets that would share limits or sublimits with the Project in form and substance reasonably acceptable to the Class A Member in light of the combined risks. So long as the Project is insured under a property insurance program that includes shared limits and sublimits, the Project Company or the Company shall furnish to the Class A Member updated or new probable maximum loss analyses whenever the combined insured values sharing the available aggregate limit under the property insurance program with the Project increase by ten percent (10%) or greater over the combined insured values for the prior policy year, but in any event not less frequently than once every three (3) years. The Class A Member may approve or deny the request to insure the Project under the property insurance program in its sole discretion. To the extent such a request is approved, approval may also be conditioned upon the purchase of new or additional coverage beyond the types and amounts required herein as well as the obligation to reinstate any aggregate limits that are reduced by insured claims as the result of insured losses to insured assets thereunder.
(l) Contractors and Subcontractors. The Company shall, or shall cause the Project Company to, use commercially reasonable efforts to require each EPC Contractor, the Module Supplier (as defined in the ECCA), the Operator and other contractors or subcontractors with which it has a direct contractual relationship, if any, that will be performing operations and maintenance or other on-site work on its behalf (as applicable), to obtain and maintain the basic “types” of insurance required in Sections 1.1(f), (g), (h), (i) and (j) above in amounts that are customary for contractors and subcontractors performing similar work and operations. The Company shall, or shall cause the Project Company to, require such contractors or subcontractors to provide evidence of insurance required under the applicable Material Project Contracts prior to performing any work at the Project.
Exhibit E-8
The contractors shall be responsible for tools and equipment brought onto the Project Site unless such tools and equipment are financed by the Project; all such financed tools and equipment shall be covered under the builder’s risk policy.
All responsibility for verification of compliance with the insurance requirements of the Material Project Contracts shall rest solely with the Company or the Project Company.
1.2 Special Insurance Provisions.
(a) Loss Payable Endorsement. All property-related policies of insurance required to be maintained pursuant to Sections 1.1(d)-(e) of this Exhibit E, shall name the Class A Member as loss payee pursuant to an industry standard loss payable endorsement approved by the Class A Member in consultation with the Insurance Consultant.
(b) Non-Vitiation. All property-related policies of insurance required to be maintained pursuant to Sections 1.1(a)-(e) of this Exhibit E shall insure the interests of each insured, and their successors and assigns, regardless of any breach or violation by the Project Company, their affiliates or other insureds including any warranties, declarations or conditions contained in such policies, any action or inaction, or any foreclosure relating to the Project or any change in ownership of all or any portion of the Project (the foregoing may be accomplished by the use of an approved the Class A Member’s loss payable endorsement, multiple insureds clause or other similar clause acceptable to the Class A Member).
(c) Additional Insured & Waiver of Subrogation. All polices of insurance required in Sections 1.1 (a)-(j) of this Exhibit E that are maintained by the Project Company or on its behalf shall name the Class A Member and the Class B Member and their successors and assigns, as additional insureds (with the exception of workers’ compensation and employer’s liability insurance). The Company shall, or shall cause the Project Company to, cause its insurers to provide a waiver of subrogation in favor of the Class A Member and the Class B Member.
(d) Severability of Interest, Primary and Non-Contributory. All liability policies required in Sections 1.1 of this Exhibit E (with the exception of workers compensation) that are maintained by the Company or on its behalf shall expressly provide that all provisions thereof, except the limits of liability (which shall be applicable to all insureds as a group) shall operate in the same manner as if there were a separate policy covering each such insured and shall not contain exclusions for cross-liability (except as otherwise approved by the Class A Member in consultation with the Insurance Consultant). All policies required in this Exhibit E shall be considered primary without contribution from any other policies the Class A Member or the Class B Member or their successors and assigns may hold.
(e) Notice of Cancellation. All polices of insurance required in Section 1.1 of this Exhibit E shall provide thirty (30) days written notice of cancellation to the Class A Member, with the exception of ten (10) days’ notice for nonpayment of premiums, to
Exhibit E-9
the extent commercially available. To the extent endorsement of the required policies to provide such written notice of cancellation is not commercially available (as determined in consultation with the Insurance Consultant), the Company shall, or shall cause the Project Company to provide written notice of cancellation to the Class A Member.
The Company shall, or shall cause the Project Company to, provide thirty (30) days’ written notice of material change in policy conditions to the Class A Member. For purposes of this section, material change is considered to be any modification or reduction in coverage that would cause the Company’s or the Project Company’s insurance policies to be out of compliance with the terms of this Exhibit E.
(f) Claims-Made Forms. If any liability insurance required under the provisions of this Exhibit E is allowed to be written on a “claims made” basis, then such insurance shall include (i) a retroactive date (as such term is specified in each of such policies) that is no later than the Effective Date; and (ii) each time any policy written on a “claims made” basis is not renewed or the retroactive date of such policy is to be changed, the Company shall, or shall cause the Project Company to obtain or cause to be obtained for each such policy or policies the broadest extended reporting period coverage, or “tail coverage”, reasonably available in the commercial insurance market for each such policy or policies, but in no event less than any such extended reporting period or “tail coverage” required under the Material Project Contracts.
(g) Loss Notification. The Company shall promptly notify the Class A Member of any single loss or event likely to give rise to a claim against an insurer for an amount in excess of $1,000,000 covered by the property-related policies of insurance required to be maintained pursuant to Sections 1.1(a)-(e) of this Exhibit E.
(h) Loss Adjustment and Settlement. Any loss insured by the property-related policies of insurance required to be maintained pursuant to Sections 1.1(a)-(e) of this Exhibit E shall be adjusted with the respective insurance companies, including the filing in a timely manner of appropriate proceedings, by the Company, in consultation with the Class A Member if such loss is in excess of $1,000,000. In addition, the Company or the Project Company may, in its reasonable judgment, consent to the settlement of any loss; provided that in the event that the amount of the loss exceeds $1,000,000 the terms of such settlement is agreed in writing by the Class A Member.
(i) Failure to Maintain Insurance. In the event the Company or the Project Company fails to take out or maintain the full insurance coverage required by this Exhibit E, the Class B Member or the Class A Member may (but shall not be obligated to), upon thirty (30) days’ prior notice (unless the aforementioned insurance would lapse within such period, in which event notice should be given as soon as reasonably possible) to the other Member, as applicable, of any such failure, take out the required policies of insurance and pay the premiums on the same. All amounts so paid by the Class A Member or the Class B Member shall be considered a Capital Contribution to the Company which shall accrue a preferred return at a rate of three
Exhibit E-10
and half percent (3.5%) per annum until an amount of cash equal to such amounts and such accrued return has been distributed to the Class A Member or the Class B Member, as applicable, by the Company thereafter.
(j) Failure to Collect. From and after Substantial Completion, in the event that the Company or any other party providing insurance on its behalf fails to respond in
a timely and appropriate manner (as reasonably determined by the Class A Member) to take any steps necessary or reasonably requested by the Class A Member to collect from any insurers for any loss covered by any insurance required to be maintained by this Exhibit E, the Class A Member shall have the right to make all proofs of loss, negotiate all claims and/or receive all or any part of the proceeds of the foregoing insurance policies, either in its own name or the name of the Company or the Project Company; provided, however, that the Company or the Project Company shall, upon the Class A Member’s request and at the Company’s own cost and expense, make all proofs of loss and take all other steps necessary or reasonably requested by the Class A Member to collect from insurers for any loss covered by any insurance required to be obtained by this Exhibit E.
(k) Acceptable Policy Terms and Conditions. All policies of insurance required to be maintained pursuant to this Exhibit E shall contain terms and conditions reasonably acceptable to the Class A Member in consultation with the Insurance Consultant.
(l) Draft Insurance Policy Review. To the extent that the Company or the Project Company furnishes the Class A Member or the Insurance Consultant with draft copies of the policies of insurance it intends to procure that are required to be maintained pursuant to this Exhibit E, including the identities of the insurer(s), the insured amounts and the deductibles, all of which the Class A Member (in consultation with the Insurance Consultant) have approved, the Company or the Project Company, as applicable, warrants that the insurance policies procured by or on behalf of the it shall be the same in all material respects as the policies previously approved by the Class A Member.
1.3 Other Insurance Requirements. The Company shall, or shall cause the Project Company to, maintain or cause to be maintained such insurance in addition to or in lieu of that required by the foregoing provisions of this Exhibit E as the Class A Member may from time to time reasonably require, due to (i) new information coming to the attention of the Class A Member after the Closing Date or (ii) changed circumstances after the Effective Date, which, in the case of either of the foregoing clauses (i) and (ii), is reasonably determined by the Class A Member to render the insurance coverage set forth in this Exhibit E materially inadequate. In addition to the other requirements of this Exhibit E, the Company shall, or shall cause the Project Company to, obtain and maintain such other or additional insurance (as to risks covered, policy amounts, policy provisions or otherwise) as the Class A Member in consultation with the Insurance Consultant may reasonably request from time to time; provided that such other insurance and amounts are then commonly insured against with
Exhibit E-11
respect to similar assets, in similar regions, with similar exposures, and which are available on commercially reasonable terms.
1.4 Certification of Compliance. The Company shall, or shall cause the Project Company to, deliver to the Class A Member on or before the Effective Date and annually thereafter with respect to the renewal date of each insurance policy required to be maintained by it pursuant to this Exhibit E, certificates of insurance executed by the insurer or its duly authorized representative which shall be in a form acceptable to the Class A Member and
shall indicate the types, amounts, deductibles and terms and conditions required herein, accompanied by a letter from the Company’s or the Project Company’s insurance broker certifying to the Class A Member that the proposed renewal policy (or policies) satisfies the requirements of this Exhibit E, coverage is in full force and effect and all premiums then due have been paid or are not in arrears. The Company shall advise the Class A Member in writing promptly of any default in the payment of any premium and of any other act or omission on the part of the Company or other party providing insurance on its behalf which may invalidate or render unenforceable, in whole or in part, any insurance being maintained by the Company or the Project Company pursuant to this Exhibit E.
Upon request from the Class A Member, the Company will promptly furnish the Class A Member with complete copies of all insurance policies, binders and cover notes or other evidence of such insurance relating to the insurance required to be maintained by or on behalf of the Company, the Project Company and the Project.
1.5 No Duty to Verify Insurance Compliance. The Class A Member shall be entitled, upon reasonable advance notice, to review the Company’s (or other appropriate party’s) books and records regarding all insurance policies maintained with respect to the Project and the Company’s obligations under this Exhibit E. Notwithstanding the foregoing, no provision of this Exhibit E or any other provision of this Agreement or any other Investment Document shall impose on the Class A Member, or their successors and assigns, any duty or obligation to verify the existence or adequacy of the insurance coverage maintained by the Company or the Project, nor shall the Class A Member, or their successors and assigns, be responsible for any representations or warranties made by or on behalf of the Company or any other party to any insurance company or underwriter.
1.6 Waiver of Insurance Requirements. If at any time the Company determines in its reasonable judgment that any insurance (including the limits or deductibles thereof) required to be maintained by this Exhibit E is not available on commercially reasonable terms due to prevailing conditions in the commercial insurance market at such time, then the Company may make a written request to temporarily waive such requirement together with a written report of the Company’s insurance broker or another independent insurance broker of nationally-recognized standing in the insurance industry (i) certifying that such insurance is not available on commercially reasonable terms (and, in any case where the required maximum coverage is not reasonably available, certifying as to the maximum amount which is so available), (ii) explaining in detail the basis for such broker’s conclusions, and (iii) containing such other information as the Class A Member or the Insurance Consultant may
Exhibit E-12
reasonably request. If the Class A Member, in consultation with the Insurance Consultant, determines that such insurance (including the limits or deductibles thereof) is not available on commercially reasonable terms in the commercial insurance market, then the Class A Member shall temporarily waive such requirement. At any time after the granting of any temporary waiver pursuant to this Section 1.6 of this Exhibit E, but not more than once in any year, the Class A Member may request, and the Company shall furnish to the Class A Member within thirty (30) days after such request, an updated insurance report reasonably acceptable to the Class A Member and the Insurance Consultant from the Company’s independent insurance broker. Any waiver granted pursuant to this Exhibit E shall expire, without further action by any party, immediately upon (A) such waived insurance
requirement becoming available on commercially reasonable terms, as determined by the Class A Member, in consultation with the Insurance Consultant or (B) failure of the Company to deliver an updated insurance report pursuant to this Section 1.6.
1.7 No Limitation of Liability. The insurance coverages required of the Company and the Project Company set forth in this Exhibit E shall in no way affect, nor are they intended as a limitation of, the Company’s liability with respect to the Limited Liability Company Agreement. For the avoidance of doubt, coverage limits specified in this Exhibit E do not serve as a limitation to the Company or the Project Company’s insurance companies’ liabilities.
Exhibit E-13
EXHIBIT F
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is made as of _________, ___________, by and among _______________ (the “Assignor”); and _______________(the “Assignee”). Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the LLC Agreement (defined below).
WITNESSETH:
WHEREAS, the Assignor is a Member of Pelicans Jaw TE Holdco, LLC (the “Company”);
WHEREAS, Section 3.03(b) of the Limited Liability Company Agreement of Pelicans Jaw TE Holdco, LLC, dated as of [l] (the “LLC Agreement”), by and among the Members party thereto, permits, under certain circumstances, the Disposition of the Assignor’s Membership Interest in the Company;
WHEREAS, the Assignor has agreed to sell, grant, convey, transfer, assign and deliver to the Assignee (or its designee), and the Assignee has agreed to purchase, accept and assume (or will cause its designee to purchase, accept and assume), all [or a portion thereof] of the rights, duties and obligations of the Assignor with respect to its Membership Interest in the Company.
NOW, THEREFORE, for value received, in consideration of the mutual agreements herein contained and other good and valuable consideration, receipt and sufficiency thereof being hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignment. The Assignor hereby irrevocably sells, grants, conveys, transfers, assigns, and delivers unto Assignee (or its designee), without recourse to the Assignor, all [or a portion thereof] of the Assignor’s rights, title and interest in and to Assignor’s Membership Interest in the Company (the “Assigned Interest”). [Subject to Section 3.03(b) of the LLC Agreement,] The Assignor hereby irrevocably delegates, without recourse to the Assignor, any and all duties, obligations, responsibilities, claims, demands and other commitments in connection with the Assigned Interest, as applicable, unto Assignee.
2. Acceptance of Assignment. [Subject to Section 3.03(b) of the LLC Agreement,] Assignee hereby irrevocably purchases, accepts and assumes the Assigned Interest and from the date hereof agrees to perform and be bound by all the terms, conditions and covenants of and assumes the duties and obligations of the Assignor with respect to the Assigned Interest.
3. Representations and Warranties of Assignor. The Assignor hereby represents and warrants to the Assignee as follows:
(a) The Assignor (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, (ii) is in good standing under such laws and (iii)
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has full power and authority to execute, deliver and perform its obligations under this Agreement.
(b) The rights and duties assigned by the Assignor pursuant to this Agreement are not subject to any prior sale, transfer, assignment or participation by the Assignor or any agreement to assign, convey, transfer or participate, in whole or in part.
4. Representations and Warranties of Assignee. Assignee hereby represents and warrants to the Assignor that the Assignee (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, (ii) is in good standing under such laws and (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement.
5. LLC Agreement Requirements.
(a) As required by Section 3.03(b)(iii)(A)(III) (1) of the LLC Agreement, Assignee’s notice address for purposes of the LLC Agreement is: _______________________.
(b) As required by Section 3.03(b)(iii)(A)(III)(2) of the LLC Agreement, the Parent(s) of Assignee is (are): _______________________________________.
(c) As required by Section 3.03(b)(iii)(A)(III)(3) of the LLC Agreement, after the transfer contemplated by this Agreement, the number of Units of each class of Membership Interest, respectively, of (i) Assignor is, with respect to Class A Units, _____Units, and with respect to Class B Units, _____Units, and (ii) Assignee is, with respect to Class A Units, ______Units, and with respect to Class B Units, ______Units, but in the case of this clause (ii) only, excluding any Membership Interest already held by Assignee prior to the Transfer.
(d) As required by Section 3.03(b)(iii)(A)(III)(4) of the LLC Agreement, after the transfer contemplated by this Agreement, the percentage ownership of each class of Membership Interest of (i) Assignor is, with respect to Class A Units, ______%, and with respect to Class B Units, ______%, and (ii) Assignee is, with respect to Class A Units, ______%, and with respect to Class B Units, ______%, but in the case of this clause (ii) only, excluding any Membership Interest already held by Assignee prior to the Transfer.
(e) As required by Section 3.03(b)(iii)(A)(III)(5) of the LLC Agreement [(as modified by Section 3.03(c))], Assignee hereby ratifies the LLC Agreement and confirms that the representations and warranties in Section 3.02[(a)(i) through (viii)] of the LLC Agreement are true and correct with respect to Assignee.
(f) As required by Section 3.03(b)(iii)(A)(III)(6) of the LLC Agreement, Assignee hereby ratifies the Transaction Documents and agrees to be bound by them to the same extent that the Assignor was bound by them prior to the transfer contemplated by this Agreement.
[(g) As required by Section 3.03(b)(iii)(A)(III)(6) of the LLC Agreement (as modified by Section 3.03(c)), Assignee hereby ratifies the LLC Agreement and agrees to be
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bound by the LLC Agreement to the same extent that the Assignor was bound by it prior to the transfer contemplated by this Agreement; provided that Assignee shall not be bound by any obligation or liability of Assignor incurred prior to the date of this Agreement; provided, further, that the foregoing limitation of liability shall not limit the right of the Class A Member to cause Distributable Cash to be used pursuant to the terms of Section 5.04 of the LLC Agreement with respect to indemnity claims arising from events or other circumstances occurring prior to, or in connection with, the transactions contemplated by this Agreement, regardless of whether the relevant Claim Notice is filed before or after the date of this Agreement; provided, further that the parties hereto acknowledge that the transfer shall not effect a release of the Assignor (or its Affiliates) from any liabilities to any other Members arising from events occurring prior to or in connection with the transactions contemplated by this Agreement.]
(g) As required by Section 3.03(b)(iii)(A)(III)(7) of the LLC Agreement, each of Assignor and Assignee hereby represents and warrants that the transfer contemplated by this Agreement is in accordance with all applicable Laws and that the conditions set forth in Section 3.03(b)(iii)(B) and (C) have been satisfied as of the date hereof taking into account the transfer contemplated by this Agreement.
6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
7. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall constitute an original, but all of which counterparts together shall constitute one and the same instrument.
[Signature pages to follow]
F-3
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the date set forth above.
ASSIGNOR: | [INSERT ASSIGNOR] | ||||||||||
| By:______________________________________ | |||||||||||
| Name: ___________________________________ | |||||||||||
| Title: ____________________________________ | |||||||||||
ASSIGNEE: | [INSERT ASSIGNEE] | ||||||||||
| By:______________________________________ | |||||||||||
| Name: ___________________________________ | |||||||||||
| Title: ____________________________________ | |||||||||||
EXHIBIT G
KNOWLEDGE PARTIES
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President, Capital Markets
2. ▇▇▇▇ ▇▇▇▇▇, Senior Director, Capital Markets
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President, Projects
4. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Director, Projects
5. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President, Operational Excellence
6. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Director, Asset Management
7. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Director, Operations & Maintenance
8. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Director, Development and Performance Engineering
9. ▇▇▇▇ ▇▇▇▇▇, Vice President, Grid Integration & Transmission Analytics
G-1
LLCA Schedule 5.02(a)
Priority Cash Schedule
Date | Year | Annual Priority Cash Schedule | |||||||||
12/31/2026 | 2026 | $ - | |||||||||
12/31/2027 | 2027 | $ | 13,256,818.22 | ||||||||
12/31/2028 | 2028 | $ | 17,791,735.93 | ||||||||
12/31/2029 | 2029 | $ | 17,641,892.35 | ||||||||
12/31/2030 | 2030 | $ | 17,522,351.56 | ||||||||
12/31/2031 | 2031 | $ | 17,326,800.04 | ||||||||
12/31/2032 | 2032 | $ | 16,804,489.49 | ||||||||
12/31/2033 | 2033 | $ | 30,988,714.34 | ||||||||
12/31/2034 | 2034 | $ | 31,127,922.68 | ||||||||
12/31/2035 | 2035 | $ | 31,040,681.41 | ||||||||
12/31/2036 | 2036 | $ | 30,833,485.44 | ||||||||
12/31/2037 | 2037 | $ | 30,436,304.61 | ||||||||
12/31/2038 | 2038 | $ | 30,222,983.60 | ||||||||
12/31/2039 | 2039 | $ | 30,068,054.74 | ||||||||
12/31/2040 | 2040 | $ | 29,877,191.42 | ||||||||
12/31/2041 | 2041 | $ | 29,863,095.37 | ||||||||
12/31/2042 | 2042 | $ | 16,282,888.56 | ||||||||
12/31/2043 | 2043 | $ | 9,121,216.48 | ||||||||
12/31/2044 | 2044 | $ | 9,212,594.61 | ||||||||
12/31/2045 | 2045 | $ | 9,454,556.73 | ||||||||
12/31/2046 | 2046 | $ | 10,590,087.78 | ||||||||
Total | $ | 429,463,865.38 | |||||||||
EXHIBIT N
PLACED-IN-SERVICE CERTIFICATE
[_________], 2025
This certificate (this “Certificate”) is delivered to the Class A Equity Investor (defined below) pursuant to Section 5.3(v) of that certain Equity Capital Contribution Agreement, dated as of May 9, 2025 (the “ECCA”), among PELICANS JAW MEMBER B, LLC, a Delaware limited liability company (“Class B Equity Investor”), PELICANS JAW TE HOLDCO, LLC, a Delaware limited liability company, and FNBC LEASING CORPORATION, a Delaware corporation (“Class A Equity Investor”). Capitalized terms used and not otherwise defined herein have the respective meanings assigned thereto in the ECCA.
The undersigned, not individually but in [his/her] capacity as [___] of Class B Equity Investor hereby certifies and represents that they are a duly acting officer of Class B Equity Investor and as such, is authorized to execute and deliver this Certificate on behalf of Class B Equity Investor, and on behalf of Class B Equity Investor, hereby certifies and represents that each Circuit and ▇▇▇▇ Circuit under the applicable Circuit Group listed in Schedule 1 attached hereto has been Placed in Service and the Placed in Service Date for each Circuit and ▇▇▇▇ Circuit under each applicable Circuit Group is set forth on Schedule 1 attached hereto.
[Signature Page Follows.]
N-1
IN WITNESS WHEREOF, I have signed my name as of the date set forth above.
| PELICANS JAW MEMBER B, LLC | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
[Signature Page to Placed In Service Certificate (Pelicans Jaw)]
Schedule 1
PV Circuit Group # | Placed in Service Date | ||||
PV Circuit Group 1 | |||||
PV 1 | |||||
PV 2 | |||||
PV 3 | |||||
PV Circuit Group 2 | |||||
PV 4 | |||||
PV 5 | |||||
PV Circuit Group 3 | |||||
PV 6 | |||||
PV 7 | |||||
PV 8 | |||||
PV Circuit Group 4 | |||||
PV 9 | |||||
PV 10 | |||||
▇▇▇▇ Circuit Group # | Placed in Service Date | ||||
▇▇▇▇ Circuit Group 1 | |||||
▇▇▇▇ Circuit 1 | |||||
▇▇▇▇ Circuit 2 | |||||
▇▇▇▇ Circuit Group 2 | |||||
▇▇▇▇ Circuit 3 | |||||
▇▇▇▇ Circuit 4 | |||||
▇▇▇▇ Circuit Group 3 | |||||
▇▇▇▇ Circuit 5 | |||||
▇▇▇▇ Circuit 6 | |||||
N-3
EXHIBIT O
FORM OF JOINDER AND ASSUMPTION TO
MASTER SERVICES AGREEMENT AND STATEMENT OF WORK
THIS JOINDER and ASSUMPTION dated as of [l], to the Master Services Agreement executed by and between ▇▇▇▇▇ ▇▇▇▇▇ Advisory Group, LP (“▇▇▇▇▇ ▇▇▇▇▇”) and SB Energy DevCo (US), LLC (“SBE”) dated January 24, 2025 (the “MSA”) and Statement of Work #1 between ▇▇▇▇▇ ▇▇▇▇▇ and Pelicans Jaw Solar, LLC ( “Project Company” and, together with SBE, the “Client”) dated February 6, 2025 (the “SOW”, and the MSA and SOW together referred to as the “Agreement”) is made and entered into by FNBC Leasing Corporation, a Delaware corporation (“Joining Party”). Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Agreement.
RECITALS
A. WHEREAS, ▇▇▇▇▇ ▇▇▇▇▇ has been engaged to provide certain services as described in the Agreement, which is attached hereto as Exhibit A;
B. WHEREAS, subject to the limitations contained herein, Joining Party desires to become a party to the Agreement, in addition to the Client;
C. NOW, THEREFORE, in consideration of becoming a party to the Agreement being entitled to the benefits of the parties under the Agreement as described herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Joining Party hereby agrees as follows:
AGREEMENT
For mutual consideration, including the mutual covenants and agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Agreement to be Bound. Joining Party agrees that it is a party to the Agreement and, solely for purposes of this joinder and assumption agreement to the extent necessary for Joining Party to receive, use and rely upon the work product generated by ▇▇▇▇▇ ▇▇▇▇▇ under the Agreement, Joining Party further agrees that it shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement applicable to the Client in its capacity as the “Client” under the Agreement, including all attachments or exhibits thereto, as the same may be amended, modified, supplemented or restated from time to time, and shall be entitled to all of the Client’s benefits thereof with respect to the services to be provided to the Client. For clarity and avoidance of doubt, Joining Party’s joinder and assumption with respect to the Agreement applies only to the extent necessary and applicable with respect to Joining Party receiving, using and relying upon the work product under the Agreement. Notwithstanding the foregoing, ▇▇▇▇▇ ▇▇▇▇▇, the Client and Joining Party agree that Joining Party shall not be responsible for any of the Client’s payment or other affirmative obligations under the Agreement; provided that, for the avoidance of doubt, Joining Party agrees and shall be subject to any and all limiting conditions, disclaimers and limitations on liability contained in such provisions. Further, for the avoidance of doubt, ▇▇▇▇▇ ▇▇▇▇▇, the Client
and Joining Party agree that the Client is solely responsible for the payment of fees and expenses incurred under the Agreement, as well as the satisfaction of any indemnification obligations under the Agreement and that Joining Party does not assume any payment obligations by executing this Joinder and Assumption. Further, for the avoidance of doubt, ▇▇▇▇▇ ▇▇▇▇▇, the Client and Joining Party agree that Joining Party shall not be entitled to give directions to ▇▇▇▇▇ ▇▇▇▇▇ with respect to the performances of work, changes in scope, or other terms under the Agreement.
O-1
2. Successors and Assigns. This Joinder and Assumption shall be binding upon and shall inure to the benefit of and be enforceable by, Joining Party and its successors and assigns.
3. Subrogation. Joining Party hereby assigns to Client all of its rights, claims, and remedies under the Agreement, to the extent that such rights, claims, and remedies related to the services performed by ▇▇▇▇▇ ▇▇▇▇▇ for Client or the material breach or gross negligence of ▇▇▇▇▇ ▇▇▇▇▇ in performing such services. Joining Party hereby subrogates Client to the extent of any claims by Joining Party against ▇▇▇▇▇ ▇▇▇▇▇ including but not limited to ▇▇▇▇▇ ▇▇▇▇▇’▇ ▇▇▇▇▇ negligence, intentional misconduct, or fraud under the Agreement, and Joining Party hereby relinquishes and releases all right to pursue any direct claim against ▇▇▇▇▇ ▇▇▇▇▇ and authorizes Client to pursue ▇▇▇▇▇ ▇▇▇▇▇ for any damages that Joining Party suffers from ▇▇▇▇▇ ▇▇▇▇▇, whether arising from contract, tort, or otherwise. Client also agrees to notify Joining Party promptly of any communication or demand from ▇▇▇▇▇ ▇▇▇▇▇ relating to such claims, and to allow Joining Party to participate in any negotiation, litigation, or arbitration involving such claims. For avoidance of doubt, Joining Party and the Client each acknowledge that the limitations of ▇▇▇▇▇ ▇▇▇▇▇’▇ liability in the Agreement are in aggregate and that all direct liabilities of ▇▇▇▇▇ ▇▇▇▇▇ under the Agreement will be allocated to the Client, provided always neither Joining Party nor the Client shall dispute the validity, enforceability or operation of the limitation of liability on the ground that no such allocation was agreed.
4. Conflicts Waiver. Both Joining Party and the Client acknowledge and agree that the services being provided hereunder are being provided on behalf of each of them and each of them hereby waives any and all conflicts of interest that may arise on account of the services being provided on behalf of the other party. Both Joining Party and the Client represent that they have taken any corporate action necessary and are authorized to waive such potential conflicts of interest.
5. Governing Law. This Joinder and Assumption shall be governed by and interpreted in accordance with the laws of the state of Illinois, without regard to the conflict of laws principles thereof that would defer to the laws of another jurisdiction or the actual domiciles of the parties hereto. This Joinder and Assumption may not be assigned or otherwise transferred in whole or in part. The Agreement remains in full force and effect except to the extent expressly modified herein.
[Signature Page Follows.]
O-2
IN WITNESS WHEREOF, Joining Party has executed this ▇▇▇▇▇▇▇ and Assumption as of the date written below.
| FNBC LEASING CORPORATION | ||||||||
| By: | ||||||||
| Print Name: | ||||||||
| Title: | ||||||||
| Date: | ||||||||
Signature Page to Joinder Agreement (Pelicans Jaw)
Acknowledged and Agreed by:
| ▇▇▇▇▇ ▇▇▇▇▇ ADVISORY GROUP, LP | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| Date: | ||||||||
Signature Page to Joinder Agreement (Pelicans Jaw)
Acknowledged and Agreed by:
| SB ENERGY DEVCO (US), LLC | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| Date: | ||||||||
Signature Page to Joinder Agreement (Pelicans Jaw)
Acknowledged and Agreed by:
| PELICANS JAW SOLAR, LLC | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| Date: | ||||||||
Signature Page to Joinder Agreement (Pelicans Jaw)
Exhibit A
[See attached.]
O-7
Schedule 3.3(b)
No Conflicts
None.
Schedule 3.12
Environmental Matters
None.
Schedule 3.13
Material Project Contracts
A. SOLV EPC Contract
1. Turnkey Engineering, Procurement and Construction Agreement, dated as of August 13, 2024, by and between the Project Company and SOLV EPC Contractor, as amended by that certain Change Order No. 1, dated as of January 22, 2025, and as amended by that certain First Amendment to Engineering, procurement and Construction Agreement, dated as of February 13, 2025.
2. Parent Company Guaranty, dated as of November 11, 2024, by and between AS Renewable Technologies Intermediate LLC, SOLV EPC Contractor, and the Project Company.
B. Switchyard EPC Contract
1. Engineering, Procurement and Construction Agreement, dated as of July 25, 2024, by and between the Project Company and Switchyard EPC Contractor, as amended by that certain First Amendment to the Engineering, Procurement, and Construction Agreement, dated as of January 29, 2025, and as amended by that certain Change Order No. 1, dated as of January 29, 2025.
C. Power Purchase Agreement and Energy Storage Agreement
1. Amended and Restated Renewable Power Purchase and Energy Storage Agreement, by and between the Project Company and Power Purchaser, dated as of May 1, 2024, as amended by that certain First Amendment to Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of December 13, 2024.
D. O&M Agreement
1. Operation and Maintenance Agreement, dated as of October 7, 2024, by and between the Project Company and Operator.
E. Interconnection Agreement
1. Large Generator Interconnection Agreement, dated as of September 25, 2022, by and between the Project Company, Pacific Gas and Electric Company, and California Independent System Operator Corporation, as amended by that certain First Amendment to the Large Generator Interconnection Agreement, dated as of September 26, 2024.
F. Equipment Supply Contracts
1. Project Purchase Order PELICANS JAW_PO1_S7, dated as of June 7, 2024, as amended by that certain Change Order No. 1, dated as of December 24, 2024, by and between the Project Company and Module Supplier.
2. Project Purchase Order PELICANS JAW_PO2_S6+, dated as of June 7, 2024, by and between the Project Company and Module Supplier.
3. Project Purchase Order PELICANS JAW_PO3_S6+, dated as of June 7, 2024, by and between the Project Company and Module Supplier.
4. BESS Supply Agreement, dated as of July 15, 2024, by and between SE US Development, LLC and BYD America LLC.
5. Purchase Order PO#1, dated as of August 16, 2024, by and between the Project Company and BYD America LLC, as revised by Change Order No. 1, dated as of November 22, 2024.
6. Buyer Parent Guaranty, dated as of November 14, 2024, by Sponsor for the benefit of BYD America, LLC.
7. Irrevocable Standby Letter of Credit No. SO180398200, dated as of November 7, 2024, by BYD America LLC for the benefit of the Project Company.
8. Seller’s Parent Guarantee, dated as of November 15, 2024, by BYD Company Limited for the benefit of the Project Company.
9. Transformer Supply Agreement, dated as of November 3, 2023, by and between SE US Development, LLC and WEG Transformers USA, LLC, as revised by Change Order No. 1, dated as of June 5, 2024, as revised by Change Order No. 2, dated as of August 30, 2024, as revised by Change Order No. 3, dated as of August 30, 2024, as revised by Change Order No. 4, dated as of October 7, 2024, as revised by Change Order No. 5, dated as of December 11, 2024.
10. Assignment and Assumption Agreement, dated as of December 21, 2023, by and between SE US Development, LLC and the Project Company.
11. Seller Guaranty, dated as of April 9, 2024, by WEG Electric Corp. in favor or the Project Company.
12. Energy Management System Supply and Services Agreement, dated as of December 11, 2024, by and between the Project Company and IHI Terrasun Solutions, Inc.
13. Performance Guaranty, dated as of December 11, 2024, by IHI Corporation to and for the benefit of the Project Company.
G. Services Contracts
1. Amended and Restated Task Order No. 01, dated as of July 8, 2024, by and between the Project Company and HGS, LLC.
2. Task Order No. 01, dated as of March 6, 2024, by and between the Project Company and Western EcoSystems Technology, Inc.
3. Task Order No. 3, dated as of March 20, 2024, by and between Project Company and Sapphos Environmental, Inc, as revised by Change Order No. 4, dated September 16, 2024.
4. Task Order No. 2024-1, dated as of January 3, 2024, by and between the Project Company and Sapphos Environmental, Inc., as revised by Change Order No. 1, dated July 18, 2024.
5. Service Order, dated as of April 24, 2024, by and between CVN, LLC. Dba Vast Networks and the Project Company.
6. Construction Management Services Agreement, dated as of September 27, 2024, by and between the Project Company and Administrator.
Schedule 3.14
Real Estate Documents
1. Solar Generating Facility Land Option and Lease and Easement Agreement dated April 1, 2020, by and between Wonderful Nut Orchards LLC, a Delaware limited liability company, formerly known as Paramount Land Company, LLC, a Delaware limited liability company, successor by merger to Paramount Land Company, L.P., a California limited partnership (“Original Lessor”), and Samsung Solar Energy 2, LLC, a Delaware limited liability company (“Original Lessee”) (“Original Lease”); as amended by that certain unrecorded First Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated October 13, 2020, by and between Original Lessor and Original Lessee (“First Amendment”); as further amended by that certain unrecorded Second Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of February 10, 2021, by and between Original Lessor and Original Lessee (“Second Amendment”); the Original Lease, First Amendment and Second Amendment as as evidenced by Memorandum of Option Agreement dated as of May 31, 2021, by and between Original Lessor and Original Lessee, recorded August 23, 2021 as Instrument No. 221117785; as assigned by that certain Assignment and Assumption Agreement dated May 4, 2022, by and between Original Lessee and the Project Company (“Lessee”), as evidenced by that certain Memorandum of Assignment and Assumption Agreement dated as of May 17, 2022, by and between Original Lessee and Lessee, recorded May 18, 2022 as Instrument No. 222079077; as further assigned by Memorandum of Assignment of Option Agreement dated as of October 23, 2023, by and between Original Lessor, Assignor, and RF Solar Properties LLC, a Delaware limited liability company (“Lessor”), Assignee, recorded October 31, 2023 as Instrument No. 223134667; and as further amended by that certain Third Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of March 7, 2024, by and between Lessor and Lessee (“Third Amendment”), as evidenced by that certain Amendment to Memorandum of Option Agreement dated May 13, 2024, but dated effective as of March 7, 2024, recorded March 22, 2024 as Instrument No. 224058719, Official Records, Kern County, California; and; as further amended by that certain Fourth Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement and Second Amendment to Memorandum of Option Agreement dated as of August 1, 2024, by and between Lessor and Lessee, recorded November 11, 2024 as Instrument No. 224144497, Official Records, Kern County, California.
2. Access Easement Agreement dated March 20, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and the Project Company, recorded March 22, 2024 as Instrument No. 224032029; as amended by that certain First Amendment to Access Easement Agreement dated as of June 26, 2024, by and between WONDERFUL NUT ORCHARDS, LLC, a Delaware limited liability company; and the Project Company, recorded July 3, 2024 as Instrument No. 224076724, Official Records, Kern County, California.
3. Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated as of July 25, 2024, by and between WONDERFUL NUT
ORCHARDS LLC, a Delaware limited liability company, as Landlord, and the Project Company, as Lessee, as evidenced by that certain Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated as of July 25, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and the Project Company, recorded August 23, 2024 as Instrument No. 224100425; and as amended by that certain Amendment to Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement and Amendment to Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated August 1, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and the Project Company, recorded November 25, 2024, as Instrument No. 224145147, Official Records, Kern County, California.
4. Easement Agreement dated October 12, 2023, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company; and the Project Company, as evidenced by that certain Memorandum of Easement Agreement dated as of October 12, 2023, recorded June 21, 2024 as Instrument No. 224071364, Official Records, Kern County, California.
Ancillary Real Estate Agreements
1. Waiver of Surface Rights dated January 16, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇ and the Project Company. (Affects Parcel 1)
2. Waiver of Surface Rights dated January 16, 2023, by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇, and the Project Company. (Affects Parcel 1)
3. Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Project Company, recorded March 22, 2024 as Instrument No. 224032025, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
4. Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Project Company, recorded March 22, 2024 as Instrument No. 224032026, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
5. Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Project Company, recorded March 22, 2024 as Instrument No. 224032027, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
6. Waiver of Surface Rights dated March 13, 2024, by and between ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ and the Project Company. (Affects Parcels 1, 5 and 6)
7. Waiver of Surface Rights dated July 11, 2023, by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇, and the Project Company. (Affects Parcels 1, 5 and 6)
8. Waiver of Surface Rights dated June 21, 2023, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 5)
9. Waiver of Surface Rights dated July 17, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and the Project Company. (Affects Parcel 5)
10. Waiver of Surface Rights dated June 29, 2023, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a/k/a E. ▇▇▇▇▇ ▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, and the Project Company. (Affects Parcel 5)
11. Waiver of Surface Rights dated June 29, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and the Project Company. (Affects Parcel 5)
12. Waiver of Surface Rights dated June 14, 2023, by and between ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ School and the Project Company. (Affects Parcel 5)
13. Waiver of Surface Rights dated July 25, 2023, by and between Yale University and the Project Company. (Affects Parcels 1, 5 and 6)
14. Waiver of Surface Rights dated September 8, 2022, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 11 and 15)
15. Waiver of Surface Rights dated October 2, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇, Successor Trustee or sometimes called Successor Sole Trustee of the ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Family Trust dated February 27, 1990 and the Project Company. (Affects Parcels 11 and 15)
16. Waiver of Surface Rights dated October 18, 2022, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executor of the Estate of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Deceased, and the Project Company. (Affects Parcels 11 and 15)
17. Waiver of Surface Rights dated October 4, 2022, by and between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the Project Company. (Affects Parcels 11 and 15)
18. Waiver of Surface Rights dated February 13, 2023, by and between ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇, Successor Trustee of the Gay ▇. ▇▇▇▇▇▇▇▇▇ Separate Property Trust Established August 2, 1990 and the Project Company. (Affects Parcels 11 and 15)
19. Waiver of Surface Rights dated February 23, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Successor Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇ Liquidating Trust, and the Project Company. (Affects Parcels 11 and 15)
20. Waiver of Surface Rights dated April 10, 2024, by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (f.k.a. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇), beneficiary of the Testamentary Trust established under the Will of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, and the Project Company. (Affects Parcel 8)
21. Waiver of Surface Rights dated July 26, 2023, by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, f.k.a. ▇▇▇▇ ▇. ▇▇▇▇▇▇, a single person, and the Project Company. (Affects Parcel 8)
22. Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and the Project Company. (Affects Parcel 10)
23. Waiver of Surface Rights dated September 29, 2023, by and between ▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 12)
24. Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as
Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Living Trust date February 3, 2014, and the Project Company. (Affects Parcel 13)
25. Waiver of Surface Rights dated January 27, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Project Company. (Affects Parcel 13)
26. Waiver of Surface Rights dated January 24, 2023, by and between Mineral Acquisition Group, LLC and the Project Company. (Affects Parcel 13)
27. Waiver of Surface Rights dated August 19, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and the Project Company. (Affects Parcel 13)
28. Waiver of Surface Rights dated July 8, 2022, by and between ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ a/k/a ▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
29. Waiver of Surface Rights dated July 7, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
30. Waiver of Surface Rights dated August 17, 2022, by and between ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
31. Waiver of Surface Rights dated July 7, 2022, by and between ▇▇▇▇ ▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
32. Waiver of Surface Rights dated August 2, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
33. Waiver of Surface Rights dated August 29, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
34. Waiver of Surface Rights dated August 19, 2022, by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
35. Waiver of Surface Rights dated July 21, 2023, by and between ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, f/k/a ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
36. Waiver of Surface Rights acknowledged August 24, 2023, by and between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
37. Waiver of Surface Rights dated October 26, 2023, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ as Trustee of the Survivors Trust created under the ▇▇▇▇▇▇ ▇. ▇▇▇▇ Family Trust dated July 19, 1985, and the Project Company. (Affects Parcels 18 and 19)
38. Waiver of Surface Rights dated August 23, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ and Devisee of the Estate of ▇▇▇▇▇ ▇. ▇▇▇▇▇, htta ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, deceased, and the Project Company. (Affects Parcels 18 and 19)
39. Waiver of Surface Rights dated October 18, 2022, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
40. Waiver of Surface Rights dated August 2, 2022, by and between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
41. Waiver of Surface Rights dated August 2, 2022, by and between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
42. Waiver of Surface Rights dated August 25, 2022, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
43. Waiver of Surface Rights dated January 10, 2024, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee under the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ Revocable Trust dated March 30, 1976, and the Project Company, recorded March 22, 2024 as Instrument No. 224032028, Official Records, Kern County, California. (Affects Parcels 18 and 19)
44. Waiver of Surface Rights dated March 29, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, as Executor of the Will of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, deceased and the Project Company (Affects Parcels 18 and 19)
45. Waiver of Surface Rights acknowledged July 26, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ and the Project Company. (Affects Parcels 18 and 19)
46. Waiver of Surface Rights dated July 3, 2023, by and between ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Family Trust as amended on March 15, 2002 and the Project Company. (Affects Parcels 18 and 19)
47. Waiver of Surface Rights dated November 2, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
48. Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and the Project Company. (Affects Parcel 20)
49. Waiver of Surface Rights dated May 10, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇▇▇ Trust dated December 14, 1977, and the Project Company. (Affects Parcel 21)
50. Waiver of Surface Rights dated July 19, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Successor Trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Separate Property Trust dated May 20, 2003, and the Project Company. (Affects Parcel 21)
51. Waiver of Surface Rights dated May 5, 2023, by and between Rocking T. Properties, LP, a California limited partnership, c/o TEEKAYSEE, Inc., a California Corporation, as General Partner, and the Project Company. (Affects Parcel 21)
52. Waiver of Surface Rights dated August 14, 2023, by and between The President and Fellows of Middlebury College and the Project Company. (Affects Parcel 21)
53. Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and the Project Company. (Affects Parcel 22)
54. Waiver of Surface Rights dated March 16, 2023, by and between The ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust dated June 1, 2003, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees, and the Project Company. (Affects Parcel 21)
55. Waiver of Surface Rights dated October 24, 2023, by and between Hannah Ranch, a California partnership, and the Project Company. (Affects Parcel 25)
56. Consent and Crossing Agreement dated November 15, 2024, by and between Wonderful Nut Orchards LLC, a Delaware limited liability company, the Project Company, and RF Solar Properties LLC, a Delaware limited liability company.
57. Letter of No Objection from Lost Hills Water District dated November 28, 2023; as amended by Letter of No Objection from Lost Hills Water District dated July 9, 2024.
58. Letter of No Objection from Shell Pipeline Company LP dated July 3, 2024.
59. Letter of No Objection from Pacific Electric and Gas Company dated April 2, 2025.
Real Estate Matters
1. Non-Exclusive Utility Easement by and between Wonderful Nut Orchards, LLC, a Delaware limited liability company, and Pacific Gas and Electric Company, a California corporation, to be obtained in the ordinary course.
2. Exclusive Utility Easement by and between Wonderful Nut Orchards, LLC, a Delaware limited liability company, and Pacific Gas and Electric Company, a California corporation, to be obtained in the ordinary course.
3. Access Easement by and between Wonderful Nut Orchards, LLC, a Delaware limited liability company, and Pacific Gas and Electric Company, a California corporation, to be obtained in the ordinary course.
Schedule 3.16
Governmental Approvals, Permits and Filings
Part I – Governmental Approvals to be Obtained
| Permit / Document | Issuing Agency | ||||||||||
| FEDERAL | |||||||||||
| Market-Based Rate Authority | Federal Energy Regulatory Commission (“FERC”) | ||||||||||
| Notice of Self Certification of Exempt Wholesale Generator Status | FERC | ||||||||||
| Acceptance for filing of Shared Facilities Agreement, to the extent required (applicability to be determined depending on future project development activity of affiliated project referred to as the Pelicans Jaw 2 project) | FERC | ||||||||||
| Registration as a Generator Owner and Generator Operator | North American Electric Reliability Corporation | ||||||||||
| STATE | |||||||||||
| RPS Certification | CEC | ||||||||||
| LOCAL | |||||||||||
| General Plan Amendments to remove and reclassify road reservations | Kern County | ||||||||||
Part II - Governmental Approvals Obtained
| Permit / Document | Issuing Agency | Date of Approval / Issuance | |||||||||||||||
| FEDERAL | |||||||||||||||||
| Incidental Take Permit ESPER12502334 | United States Fish and Wildlife Service | September 6, 20241 | |||||||||||||||
1 The general six-year statute of limitations under 28 U.S.C. § 2401(a) would apply to challenges to the incidental take permit.
| Permit / Document | Issuing Agency | Date of Approval / Issuance | |||||||||||||||
| Low Effect Incidental Take Permit Screening Form and NEPA Environmental Action Statement finding Project Incidental Take Permit qualifies for NEPA Categorical Exclusion | United States Fish and Wildlife Service | September 6, 20242 | |||||||||||||||
| STATE | |||||||||||||||||
| Streambed Alteration Agreement EPIMS-KER- 48486-R4 | California Department of Fish and Wildlife | September 3, 20243 | |||||||||||||||
| Streambed Alteration Agreement EPIMS-KER- 55832-R4 | California Department of Fish and Wildlife | March 18, 20254 | |||||||||||||||
| Incidental Take Permit 2081-2023-055-04 | California Department of Fish and Wildlife | October 4, 2024, amended January 28, 20255 | |||||||||||||||
| Renewables Portfolio Standard (“RPS”) Pre- Certification (RPS ID 65573C) | California Energy Commission (“CEC”) | October 2, 20246 | |||||||||||||||
2 The general six-year statute of limitations under 28 U.S.C. § 2401(a) would apply to challenges to this decision.
3 Multiple statutes of limitation could potentially apply to a third-party challenge to the Streambed Alteration Agreement: (i) a four-year statute of limitations period under Code of Civil Procedure section 343; (ii) a three-year statute of limitations period under Code of Civil Procedure section 338(a); (iii) a 90-day statute of limitations under Code of Civil Procedure section 1094.6; or (iv) a 30- or 180-day statute of limitations period under Public Resources Code section 21167.
4 Multiple statutes of limitation could potentially apply to a third-party challenge to the Streambed Alteration Agreement: (i) a four-year statute of limitations period under Code of Civil Procedure section 343; (ii) a three-year statute of limitations period under Code of Civil Procedure section 338(a); (iii) a 90-day statute of limitations under Code of Civil Procedure section 1094.6; or (iv) a 30- or 180-day statute of limitations period under Public Resources Code section 21167.
5 Multiple statutes of limitation could potentially apply to a challenge to the Incidental Take Permit: (i) a four-year statute of limitations period under Code of Civil Procedure section 343; (ii) a three-year statute of limitations period under Code of Civil Procedure section 338(a); (iii) a 90-day statute of limitations under Code of Civil Procedure section 1094.6; or (iv) a 30- or 180-day statute of limitations period under Public Resources Code section 21167.
6 An administrative appeal process could potentially apply to a third-party challenge to the CEC RPS Pre-Certification: (i) a 30 day period for filing a petition for reconsideration to the CEC Executive Director, followed by (ii) a 15 or 30 day appeal period for filing a letter of appeal to the CEC Chair of the CEC Executive Director’s denial of the petition for reconsideration. Refer to CEC RPS Eligibility Guidebook at Chapter 8 Section C; California Public Resources Code Section 25747; Title 20, California Code of Regulations, Section 1232.5.
| Permit / Document | Issuing Agency | Date of Approval / Issuance | |||||||||||||||
| LOCAL | |||||||||||||||||
| Resolution Nos. 2023-321 and 2023-322 approving California Environmental Quality Act Findings of Fact and Mitigation and Monitoring Program; certifying Final Environmental Impact Report for the Pelicans Jaw Hybrid Solar Project; approving General Plan Amendment Case No. 2, Map No. 5; and approving Conditional Use Permit No. 3, Map No. 5. | Kern County | December 5, 2023 | |||||||||||||||
| Road Encroachment Permit No. 0814-24 (county road use) | Kern County | September 3, 20247 | |||||||||||||||
| Road Encroachment Permit No. 0943-24C (driveways) | Kern County | October 1, 20248 | |||||||||||||||
Part III – Notifications of Noncompliance
1. On April 21, 2025, the Kern County Planning and Natural Resources Department Director issued a Notice to Comply related to certain construction activities at the Project site performed prior to issuance of building permits in violation of the Project’s Conditional Use Permit. That Notice confirmed that the Project could resume grading work and offered the Project Company the opportunity for a public hearing or to submit a report supplementing previously-submitted compliance binders detailing the Project’s compliance with the permits issued to date, which the County will evaluate for compliance in connection with issuance of the building permit. The Project Company elected on April 21, 2025 to submit this report in lieu of a hearing and submitted such report on April 25, 2025.
7 Multiple statutes of limitation could potentially apply to a challenge to the road encroachment permit: (i) a four-year statute of limitations period under Code of Civil Procedure section 343; (ii) a three-year statute of limitations period under Code of Civil Procedure section 338(a); (iii) a 90-day statute of limitations under Code of Civil Procedure section 1094.6; or (iv) a 30- or 180-day statute of limitations period under Public Resources Code section 21167.
8 Multiple statutes of limitation could potentially apply to a challenge to the road encroachment permit: (i) a four-year statute of limitations period under Code of Civil Procedure section 343; (ii) a three-year statute of limitations period under Code of Civil Procedure section 338(a); (iii) a 90-day statute of limitations under Code of Civil Procedure section 1094.6; or (iv) a 30- or 180-day statute of limitations period under Public Resources Code section 21167.
Schedule 3.18
Affiliate Transactions
Construction Management Services Agreement, dated as of September 27, 2024, by and between the Project Company and Administrator.
Schedule 3.27
Financial Statements
See attached.
SBE US Holdings One, LLC
Consolidated Financial Statements
As of and for the years ended December 31, 2023 and 2022 and Independent Auditor's Report
Index to Consolidated Financial Statements
| Pages | |||||
| SBE US Holdings One, LLC | |||||
| Independent Auditor's Report | 1 | ||||
| Consolidated Balance Sheets | 3 | ||||
| Consolidated Statements of Operations | 4 | ||||
| Consolidated Statements of Comprehensive Income (Loss) | 5 | ||||
| Consolidated Statements of Changes in Member's Equity | 6 | ||||
| Consolidated Statements of Cash Flows | 7 | ||||
| Notes to Consolidated Financial Statements | 9 | ||||
| Note 1. Organization and nature of operations | 9 | ||||
| Note 2. Summary of significant accounting principles and policies | 10 | ||||
| Note 3. Equity method investments | 18 | ||||
| Note 4. Asset acquisitions | 19 | ||||
| Note 5. General and administrative | 20 | ||||
| Note 6. Accounts receivable | 20 | ||||
| Note 7. Property, plant and equipment | 21 | ||||
| Note 8. Other current assets | 22 | ||||
| Note 9. Borrowings | 22 | ||||
| Note 10. Fair value measurements | 27 | ||||
| Note 11. Commitments, guarantees and contingencies | 29 | ||||
| Note 12. Related party transactions | 29 | ||||
| Note 13. Asset retirement obligations | 30 | ||||
| Note 14. Leases | 31 | ||||
| Note 15. Other Income | 32 | ||||
| Note 16. Subsequent events | 32 | ||||
 | Deloitte & Touche ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇:▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ | |||||||
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of SBE US Holdings One, LLC
Opinion
We have audited the consolidated financial statements of SBE US Holdings One, LLC and subsidiaries (the "Company"), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), changes in member’s equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
•Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
•Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
•Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
•Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control‐related matters that we identified during the audit.
/s/: Deloitte & Touche LLP
April 29, 2024
SBE US Holdings One, LLC
Consolidated Balance Sheets
In thousands, unless otherwise stated
| Notes | As of December 31, 2023 | As of December 31, 2022 | |||||||||||||||
| Assets | |||||||||||||||||
| Current assets | |||||||||||||||||
Cash and cash equivalents | $ | 93,211 | $ | 33,532 | |||||||||||||
Restricted cash | 111,310 | 50,541 | |||||||||||||||
Accounts receivable | 6 | 7,764 | 17,047 | ||||||||||||||
Receivables from related parties | 12 | 664 | 597 | ||||||||||||||
Advances to suppliers | 15,361 | 11,667 | |||||||||||||||
Other current assets | 8 | 12,427 | 29,749 | ||||||||||||||
| Total current assets | 240,737 | 143,133 | |||||||||||||||
| Non-current assets | |||||||||||||||||
Construction in progress | 7 | 694,015 | 184,474 | ||||||||||||||
Property, plant and equipment, net | 7 | 2,106,319 | 1,871,027 | ||||||||||||||
Advances to suppliers | 1,515 | 9,623 | |||||||||||||||
Equity method investments | 3 | — | 7,570 | ||||||||||||||
Derivative asset | 10 | 354 | — | ||||||||||||||
Right-of-use asset | 14 | 151,347 | 102,276 | ||||||||||||||
Other non-current assets | 32,293 | 11,339 | |||||||||||||||
| Total non-current assets | 2,985,843 | 2,186,309 | |||||||||||||||
| Total assets | $ | 3,226,580 | $ | 2,329,442 | |||||||||||||
| Liabilities and equity | |||||||||||||||||
| Current liabilities | |||||||||||||||||
Accounts payable | $ | 65,678 | $ | 19,843 | |||||||||||||
Accrued expenses and other current liabilities | 125,843 | 57,126 | |||||||||||||||
Payables to related parties | 12 | 3,494 | 5,133 | ||||||||||||||
Derivative liabilities | 10 | 53,601 | 101,023 | ||||||||||||||
Lease liabilities | 14 | 9,055 | 4,930 | ||||||||||||||
Borrowings, net | 9 | 461,456 | 71,455 | ||||||||||||||
| Total current liabilities | 719,127 | 259,510 | |||||||||||||||
| Non-current liabilities | |||||||||||||||||
Borrowings, net | 9 | 1,027,140 | 919,091 | ||||||||||||||
Derivative liabilities | 10 | 202,369 | 262,277 | ||||||||||||||
Lease liabilities | 14 | 146,986 | 97,861 | ||||||||||||||
Asset retirement obligations | 13 | 39,073 | 31,686 | ||||||||||||||
Other non-current liabilities | 20 | 6,654 | |||||||||||||||
| Total non-current liabilities | 1,415,588 | 1,317,569 | |||||||||||||||
| Total liabilities | $ | 2,134,715 | $ | 1,577,079 | |||||||||||||
| Commitments, guarantees and contingencies | 11 | ||||||||||||||||
| Member's equity | |||||||||||||||||
Common stock | $ | 1 | $ | 1 | |||||||||||||
Additional paid-in capital | 724,227 | 508,052 | |||||||||||||||
Retained earnings | 124,809 | 39,560 | |||||||||||||||
| Total member's equity | 849,037 | 547,613 | |||||||||||||||
| Non-controlling interest | 242,828 | 204,750 | |||||||||||||||
| Total liabilities and equity | $ | 3,226,580 | $ | 2,329,442 | |||||||||||||
See accompanying Notes to Consolidated Financial Statements
3
SBE US Holdings One, LLC
Consolidated Statements of Operations
In thousands, unless otherwise stated
| Notes | Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||||||||||
| Operating revenue | |||||||||||||||||
| Revenue | 2 | $ | 78,243 | $ | 66,217 | ||||||||||||
| Total operating revenue | 78,243 | 66,217 | |||||||||||||||
| Operating costs and expenses | |||||||||||||||||
General and administrative | 5 | (1,943) | (1,718) | ||||||||||||||
Management fees | 12 | (8,555) | (10,572) | ||||||||||||||
Depreciation, amortization and accretion | 7 | (58,446) | (51,178) | ||||||||||||||
Other operating expenses | (35,366) | (24,204) | |||||||||||||||
| Operating loss | (26,067) | (21,455) | |||||||||||||||
Interest expense | (75,162) | (68,566) | |||||||||||||||
Changes in fair value of derivatives | 10 | 107,684 | (140,200) | ||||||||||||||
Unrealized loss in equity method investment | 3 | (25,294) | — | ||||||||||||||
Other income, net | 15 | 1,370 | 22,146 | ||||||||||||||
| Net loss | $ | (17,469) | $ | (208,075) | |||||||||||||
| Net loss attributable to non-controlling interest | (102,718) | (187,719) | |||||||||||||||
| Net income (loss) attributable to SBE US Holdings One, LLC | $ | 85,249 | $ | (20,356) | |||||||||||||
See accompanying Notes to Consolidated Financial Statements.
4
SBE US Holdings One, LLC
Consolidated Statements of Comprehensive Income (Loss)
In thousands, unless otherwise stated
As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Comprehensive income (loss) | $ | 85,249 | $ | (20,356) | ||||||||||
| Comprehensive income (loss) | $ | 85,249 | $ | (20,356) | ||||||||||
See accompanying Notes to Consolidated Financial Statements.
5
SBE US Holdings One, LLC
Consolidated Statements of Changes in Member's Equity
In thousands, unless otherwise stated
| Common stock | Additional paid-in capital | Retained earnings (Accumulated deficit) | Total member's equity | Non- controlling interest | |||||||||||||||||||||||||||||||
Numbers of shares | Amount | ||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | 642 | $ | 1 | $ | 231,409 | $ | 59,916 | $ | 291,326 | $ | 1,253 | ||||||||||||||||||||||||
| Capital contributions | — | — | 292,266 | — | 292,266 | 417,776 | |||||||||||||||||||||||||||||
| Capital distributions | — | — | (6,627) | — | (6,627) | (10,896) | |||||||||||||||||||||||||||||
| Non-cash distributions | — | — | (5,863) | — | (5,863) | — | |||||||||||||||||||||||||||||
| Equity financing costs | (3,133) | (3,133) | (15,664) | ||||||||||||||||||||||||||||||||
| Net loss | — | — | (20,356) | (20,356) | (187,719) | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | 642 | $ | 1 | $ | 508,052 | $ | 39,560 | $ | 547,613 | $ | 204,750 | ||||||||||||||||||||||||
| Capital contributions | — | — | 252,500 | — | 252,500 | 168,339 | |||||||||||||||||||||||||||||
| Capital distributions | — | — | (35,082) | — | (35,082) | (20,045) | |||||||||||||||||||||||||||||
| Non-cash distributions | — | — | (1,243) | — | (1,243) | — | |||||||||||||||||||||||||||||
| Equity financing costs | — | — | — | — | — | (7,498) | |||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | 85,249 | 85,249 | (102,718) | |||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | 642 | $ | 1 | $ | 724,227 | $ | 124,809 | $ | 849,037 | $ | 242,828 | ||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements
6
SBE US Holdings One, LLC
Consolidated Statements of Cash Flows
In thousands, unless otherwise stated
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||||||||
| Cash flow from operating activities | ||||||||||||||
Net income (loss) attributable to SBE US Holdings One, LLC | $ | 85,249 | $ | (20,356) | ||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities | ||||||||||||||
Non-cash (income)/ expenses | ||||||||||||||
Amortization of deferred financing cost | 4,899 | 12,586 | ||||||||||||
Terminated development projects write-off | — | 406 | ||||||||||||
Loss attributable to non-controlling interest | (102,718) | (187,719) | ||||||||||||
Unrealized loss in equity method investment | 25,294 | — | ||||||||||||
Depreciation, amortization and accretion expense | 58,446 | 51,178 | ||||||||||||
Interest and fees on loans | 40,608 | 27,653 | ||||||||||||
Bad debt expense | (77) | 20 | ||||||||||||
Other interest and fees | — | (326) | ||||||||||||
Operating income before working capital changes | $ | 111,701 | $ | (116,558) | ||||||||||
Changes in operating assets and liabilities | ||||||||||||||
Accounts receivable | 9,657 | (12,955) | ||||||||||||
Other current assets | 1,403 | (1,098) | ||||||||||||
Receivable from related parties | (2,384) | (1,718) | ||||||||||||
Derivative assets | (354) | — | ||||||||||||
Other non-current assets | (12,744) | (4,381) | ||||||||||||
Payables to related parties | (4,970) | (8,573) | ||||||||||||
Accounts payable | 192 | 2,519 | ||||||||||||
Accrued expenses and other current liabilities | (9,220) | 11,665 | ||||||||||||
Derivative liabilities | (107,330) | 140,200 | ||||||||||||
Lease liabilities | 3,993 | 898 | ||||||||||||
Income taxes paid | — | (11,120) | ||||||||||||
Net cash used in operating activities | $ | (10,056) | $ | (1,121) | ||||||||||
| Cash flows from investing activities | ||||||||||||||
Payments for construction in progress | (408,069) | (329,878) | ||||||||||||
Payments for property, plant and equipment | (246,075) | — | ||||||||||||
Returns of deposits | 12,471 | — | ||||||||||||
Payment of capitalized interest and fees on loans | — | (11,003) | ||||||||||||
Advances to suppliers | (7,252) | (21,291) | ||||||||||||
Proceeds from promissory note | — | 4,544 | ||||||||||||
Equity method investment | (25,294) | (7,605) | ||||||||||||
Cash acquired through asset acquisition | 51 | — | ||||||||||||
Net cash used in investing activities | $ | 674,168 | $ | (365,233) | ||||||||||
| Cash flows from financing activities | ||||||||||||||
Capital contributions | 420,839 | 710,042 | ||||||||||||
Capital distributions | (55,127) | (17,523) | ||||||||||||
Proceeds from borrowings | 784,588 | 793,952 | ||||||||||||
Payment of borrowings from related parties | — | (95,000) | ||||||||||||
Repayment of borrowings | (310,773) | (1,173,570) | ||||||||||||
Payment for deferred financing costs | (27,357) | (203) | ||||||||||||
Payment of equity financing costs | (7,498) | (18,164) | ||||||||||||
Net cash generated from financing activities | $ | 804,672 | $ | 199,534 | ||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 120,448 | (166,820) | ||||||||||||
7
SBE US Holdings One, LLC
Consolidated Statements of Cash Flows
In thousands, unless otherwise stated
| Cash and cash equivalents and restricted cash at the beginning of the period | 84,073 | 250,893 | ||||||||||||
| Cash and cash equivalents and restricted cash at the end of period | $ | 204,521 | $ | 84,073 | ||||||||||
| Supplemental cash flow information | ||||||||||||||
Cash and cash equivalents | $ | 93,211 | $ | 33,532 | ||||||||||
Restricted cash | 111,310 | 50,541 | ||||||||||||
Total cash and cash equivalents and restricted cash | $ | 204,521 | $ | 84,073 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 6,664 | $ | 5,380 | ||||||||||
| ▇▇▇▇ paid for interest on loans | $ | 33,592 | $ | 22,912 | ||||||||||
| Supplemental non-cash flow information | ||||||||||||||
Property, plant and equipment additions within accounts payable and accrued expenses | $ | 103,565 | $ | 49,348 | ||||||||||
| Portion of land acquired through operating leases | $ | 52,071 | $ | 27,351 | ||||||||||
| Asset retirement obligations additions | $ | 5,363 | $ | — | ||||||||||
See accompanying Notes to Consolidated Financial Statements
8
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Note 1. Organization and nature of operations
SBE US Holdings One, LLC together with its consolidated subsidiaries, (herein after referred to as “SBE” or the “Company”) is a leading utility scale solar, energy storage, and technology platform backed by investments from SoftBank Group and Ares Management. The Company is headquartered in Redwood City, California and it develops, constructs, owns, and operates some of the largest and most technically advanced renewable projects in the United States. SBE has an operating portfolio of 2.0 gigawatts ("GW") of solar projects in California and Texas, and a pipeline of 18.2 GW of solar (including 0.9 GW in construction) and 15.0 GW of storage across the United States.
SBE was incorporated as SBE US Holdings One, Inc. under the federal laws of United States in the state of Delaware on June 20, 2019. On November 30, 2021, the Company’s then direct parent company SB Energy Global Holdings One Limited, a company incorporated in the United Kingdom, formed SB Energy Holdco, LLC and SB Energy Global, LLC, and immediately contributed 100% of its membership interest in the Company to SB Energy Holdco, LLC, which in turn contributed 100% of the membership interest to SB Energy Global, LLC.
On August 23, 2023, SE Global Borrower, LLC was incorporated under the federal laws of United States in the state of Delaware. the Company’s then direct parent company, SB Energy Global, LLC has assigned 100% membership interest of the Company to SE Global Borrower, LLC ("Parent").
On March 4, 2022, SBE Global, LP a Delaware limited partnership (the "Partnership"), was formed when SBE GP Holdco, LLC ("General Partner") and SB Energy Holdco, LLC ("SB Partner") entered into a limited partnership agreement ("LP Agreement"). Concurrently, the Partnership entered into a Securities Purchase Agreement with Ares Management (Ares SS 2022 SPV, L.P., a Delaware limited partnership), and the SB Partner, pursuant to which the Partnership issued Series A Preferred Units and Series A Common Units to the Ares Partner.
SBE Global, LP, acquired the Company on March 4, 2022, and is the ultimate parent company and ultimate controlling party of SBE and all of its subsidiaries. On July 14, 2022, the Company converted from a corporation to a disregarded LLC.
SBE indirectly holds 100% Class B Membership Interest in the tax equity partnerships holding several operating projects, through its 100% ownership of the Class B Members in SE Juno Member B, LLC, SE Titan & Aragorn Member B, LLC, SE Athos Member B, LLC and Eiffel Member B, LLC which each holds operating projects. Through these Class B Members, the Company also indirectly conducts and directs all operating activities of the following partnerships: SE Juno TE Holdco, LLC, SE Titan & Aragorn TE Holdco, LLC, SE Athos TE Holdco, LLC and Eiffel TE Holdco, LLC.
As of December 31, 2023, SBE indirectly held 100% of the membership interest in a series of renewable energy projects in construction or development with each set up as a limited liability Company ("LLC"): ▇▇▇ ▇▇▇▇▇ Solar 1, LLC ("▇▇▇ ▇▇▇▇▇ 1 Project Company"), ▇▇▇ ▇▇▇▇▇ Solar 2, LLC ("▇▇▇ ▇▇▇▇▇ 2 Project Company"), ▇▇▇ ▇▇▇▇▇ Solar 3, LLC ("▇▇▇ ▇▇▇▇▇ 3 Project Company"), Angiola East, LLC and Pelicans Jaw Solar, LLC.
During 2023, Paris Farm Solar, LLC ("Paris Farm Project Company"), had reached substantial completion ("SC"). Paris Farm Project Company's revenues are derived from market-based sales and long-term contractual arrangements for the output or capacity from these assets. The duration of these off-taker agreements is 15 years.
Paris Farm Solar, LLC, ▇▇▇ ▇▇▇▇▇ 1 Project Company, ▇▇▇ ▇▇▇▇▇ 2 Project Company, ▇▇▇ ▇▇▇▇▇ 3 Project Company, Angiola East, LLC, SE Juno LLC ("Juno Project Company"), SE Titan LLC ("Titan Project Company"), SE Aragorn LLC ("Aragorn Project Company"), SE Athos II LLC ("Athos II Project Company"),
9
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
SE Athos I LLC ("Athos I Project Company"), and Pelicans Jaw Solar, LLC are collectively referred to as "Project Entities".
Note 2. Summary of significant accounting principles and policies
Basis of presentation and use of estimates
Basis of presentation. The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP"). The Accounting Standards Codification, or ASC, established by the Financial Accounting Standards Board, or FASB, is the source of authoritative US GAAP to be applied by nongovernmental entities.
The consolidated financial statements include the Company's accounts and operations and those of its subsidiaries. All significant intercompany transactions and balances have been eliminated in the consolidated financial statements.
The comparative consolidated financial statements include the Company’s financial results for the years ended December 31, 2023 and 2022.
Use of estimates. The preparation of consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and comprehensive income (loss) that are reported and disclosed in the consolidated financial statements and accompanying notes. These estimates are based on management’s best knowledge of current events, historical experience, actions the Company may undertake in the future and on various other assumptions that are believed to be prudent and reasonable under the circumstances. Significant estimates and assumptions are used for, but not limited to the following:
• Valuation of equity method investments (refer Note 3. Equity method investments)
• Fair value of derivative instruments (refer to Note 10. Fair value measurements)
• Operating lease right-of-use assets and liabilities (refer to Note 14. Leases)
• Asset retirement obligations (refer to Note 13. Asset retirement obligations)
• Hypothetical liquidation at book value ("HLBV") method of equity accounting (refer to Note 2. Non- controlling interests and hypothetical liquidation at book value ("HLBV"))
Functional currency and presentational currency
The functional currency of the Company and its subsidiaries is the United States Dollars ("USD"), which represents the currency of the economic environment in which they operate. The consolidated financial statements of the Company are presented in USD.
All amounts disclosed in these consolidated financial statements have been rounded to the nearest thousand USD "$", unless otherwise stated.
Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries in which it has a controlling financial interest or variable interest entities ("VIEs"), for which the Company is the primary beneficiary.
A controlling financial interest is typically determined when a Company holds a majority of the voting equity interest in an entity.
The Company consolidates VIEs when the Company is the primary beneficiary. VIEs are entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders, as a group, lack one or more of the following characteristics: (a) direct or indirect ability to make decisions; (b) obligation to absorb expected losses; or (c) right to receive expected residual returns. VIEs must be evaluated quantitatively and qualitatively to determine the primary beneficiary, which is the reporting entity that has (a) the power to direct activities of the VIE that most significantly impact the VIE's economic
10
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. A VIE can have only one primary beneficiary but may not have a primary beneficiary if no party meets the criteria described above.
When evaluating whether the Company is the primary beneficiary of a VIE, and must therefore consolidate the entity, the Company performs a qualitative analysis that considers the design of the VIE, the nature of its involvement and the variable interests held by other parties. If that evaluation is inconclusive as to which party absorbs a majority of the entity’s expected losses or residual returns, a quantitative analysis is performed to determine the primary beneficiary.
Equity method investments
The Company uses the equity method of accounting for the investments when it has the ability to exercise significant influence. The Company records the equity method investments at historical cost and subsequently adjusts the carrying amount each period for its share of earnings or losses of the investee and other adjustments required by the equity method of accounting. Dividends and other distributions received from the equity method investments are recorded as reductions in the cost of such investments.
Investments are evaluated for impairment when facts or circumstances indicate that the fair value of the investment is less than its carrying value. An impairment is recognized when a decline in fair value is determined to be other- than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial conditions and near term prospects of the affiliates; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.
On April 11, 2022, SBE in partnership with Samsung Solar Energy 2, LLC ("Samsung") formed 5S Energy Holdings, LLC, ("5S Energy"), a joint venture and variable interest entity for SBE. SBE holds 50% economic interest and voting rights and has shared governance and development rights of 5S Energy. Since SBE does not have control but has significant influence of 5S Energy, for the years ended December 31, 2023 and 2022, SBE has accounted for 5S Energy as an equity method investment.
On July 31, 2023, SBE, through its wholly owned subsidiary, SE US Development, LLC ("US Development"), executed an Amended and Restated Limited Liability Company Agreement ("A&R LLCA") and Subscription Agreement with Balanced Rock Power Holdco, LLC ("BRP Management") and SG Energy BRP, LLC ("Electra"), through which US Development has agreed to make certain contributions to Balanced Rock Power, LLC ("BRP"), a Delaware limited company, formed January 29, 2021, in exchange for the issuance of the Units of BRP's Membership Interests. SBE holds 12% economic interest and voting rights and has shared governance and development rights of BRP as of December 31, 2023. Since SBE does not have control but has significant influence of BRP, for the year ended December 31, 2023, SBE has accounted for BRP as an equity method investment.
Business combination
Business combinations are recorded using the acquisition method and, accordingly, the acquired assets and liabilities are recorded at their fair market value at the date of acquisition. Any excess of acquisition cost over the fair value of the acquired assets and liabilities, including identifiable intangible assets, is recorded as goodwill. The Company charges acquisition related costs that are not part of the purchase price consideration to general and administrative expenses as they are incurred. These costs typically include transaction and integration costs, such as legal, accounting, and other professional fees.
Asset acquisition
When the Company acquires other entities, if the assets acquired and liabilities assumed do not constitute a business, the transaction is accounted for as an asset acquisition. Assets are recognized based on the cost, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets’ carrying amounts on the
11
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Company’s books. If the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued), measurement is based on either the cost to the acquiring entity or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. The cost of a group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair value and does not give rise to goodwill.
Non-controlling interests and hypothetical liquidation at book value ("HLBV")
The Company finances the ongoing construction of the solar power plants through tax equity structures, in which part of the necessary funds is provided by a tax partner. The Company secures tax equity financing for its solar power plants in construction through its subsidiaries, which are direct owners of the respective solar power plant. The Company reflects tax equity financing as non-controlling interest.
Non-controlling interests thus represent the portion of net assets in consolidated subsidiaries that are not owned by the Company. The Company has determined for certain of its consolidated subsidiaries, the allocation of economics between controlling and third party non-controlling interests does not correspond to ownership percentages. In order to reflect the substantive profit sharing arrangements, the Company has determined that the appropriate methodology for determining the value of non-controlling interests is a balance sheet approach using the HLBV method.
Under the HLBV method, the amounts reported as non-controlling interest on the consolidated balance sheets represent the amounts the third party investors could hypothetically receive at each balance sheet reporting date based on the liquidation provisions of the respective operating partnership agreements. HLBV assumes that the proceeds available for distribution are equivalent to the unadjusted, stand-alone net assets of each respective partnership. The third party non-controlling interests in the consolidated statements of operations and comprehensive loss are determined based on the difference in the carrying amounts of non-controlling interests on the consolidated balance sheets between reporting dates, adjusted for any capital transactions between the Company and third party investors that occurred during the respective period. Non-controlling interests are reported as a non-permanent component of equity in the consolidated balance sheets.
Where, prior to the commencement of operating activities for a respective solar power plant, HLBV results in an immediate change in the carrying value of non-controlling interest (due to the recognition of investment tax credits or other adjustments as required by the U.S. Internal Revenue Code) on the consolidated balance sheets, the Company records the impact (sometimes referred to as a "Day 1 gain") to income in the same period.
Cash and cash equivalents and restricted cash
Cash and cash equivalents consist of cash on deposit and money market securities with a maturity of less than 90 days and that are readily convertible to cash.
Restricted cash consists primarily of funds held within the Company's projects that are restricted for specific uses by terms of financing agreements, LLCAs and power purchase agreements ("PPAs"). The reserve is established for the purpose of paying all the remaining costs required for the achievement of final completion or providing the PPA off- takers with control over such reserve accounts. As of December 31, 2023 and 2022, the balance of restricted cash was $111,310, and $50,541, respectively.
Significant risks and uncertainties including business and credit concentrations
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Management considers available reasonable and supportive forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate, etc.).
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, notes receivable from related parties, advances to suppliers, accounts receivable from the customers and variable rate borrowings. All of the Company's cash and cash equivalents are held with financial institutions that management believes to have high credit quality. The energy industry may impact the Company’s overall exposure to credit risk, either positively or negatively, in that the customers
12
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
and suppliers may be similarly affected by changes in economic, industry or other conditions. The Company performs ongoing credit evaluations of its suppliers and customers' financial conditions.
The advances to suppliers for the Company is comprised of more than 85% from a single supplier. The Company generally does not require collateral or security against advances to suppliers; however, the Company believes that the credit risk posed by such supplier concentration is offset by the creditworthiness of its supplier base. The Company is exposed to credit losses in the event of noncompliance by counterparties to its contractual obligations, resulting in financial loss and general business risk of non-performance of contract obligations, which is applicable to any contract of any type and a risk of actual cost of performance exceeding the contracted cost, with such instances subject to change orders or renegotiation. The maximum amount of loss due to credit risk, should these suppliers fail to perform, is any losses associated with the Company's obligations towards its customers, being in a form of liquidated damages or any losses associated with replacing these customers.
Credit risk for the Company for the years ended December 31, 2023 and 2022 was concentrated in the following customers who comprised the majority of the Company's total revenue, excluding the swap settlements and merchant revenue. The Company does not believe the concentration of customers presents a significant risk to the Company.
| December 31, 2023 | December 31, 2022 | ||||||||||
| Customer A | 12 | % | 10 | % | |||||||
| Customer B | 8 | % | 7 | % | |||||||
| Customer C | 9 | % | 9 | % | |||||||
| Customer D | 18 | % | 15 | % | |||||||
| Customer E | 28 | % | 41 | % | |||||||
| Customer F | 24 | % | 18 | % | |||||||
The Company maintains its USD cash in bank accounts with major financial institutions with high credit standings. Cash deposits held in the United States are insured by the FDIC for up to $250 per account. As of December 31, 2023, the Company's cash balance held in financial institutions amounted to $204,521 which was not fully insured by the FDIC. Nonetheless, management believes that using major financial institutions with high credit ratings mitigates the credit risk sufficiently.
Property, plant and equipment
Property, plant and equipment is recorded at cost less accumulated depreciation. The cost of property, plant and equipment comprises its purchase price and any directly attributable costs, including interest costs capitalized during the period the asset is brought to its working condition and location for its intended use. The Company expenses repair and maintenance costs as incurred which are included in operating costs and expenses in the consolidated statements of operations.
Construction in progress
Construction in progress ("CIP") represents the accumulated cost of solar plants that have not been placed into service as of the reporting date. CIP is reclassified to property, plant and equipment when the project begins its commercial operations or is placed into service, whichever is earlier. Advances to suppliers are not capitalized until construction commences, at which point they are reclassified to CIP. CIP includes capitalized interest cost, which includes debt issuance costs. Interest costs are capitalized to CIP while the solar plants are under construction, as prescribed under ASC 835—Interest ("ASC 835"). All of the interest costs were incurred as a direct result of the construction activities. Under ASC 835, the capitalization period covers the duration of the activities required to get the asset ready for its intended use, provided that expenditures for the asset have been made and interest cost is being incurred. The capitalization periods begins when the following conditions are met: expenditures for the asset have been made, activities that are necessary to get the asset ready for its intended use are in progress, and interest cost is being incurred.
13
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Revenues earned during testing or commissioning period of the solar power plant are recorded to CIP.
CIP is assessed for impairment in accordance with the impairment of long-term assets policy. There were no indicators of impairment as of December 31, 2023 and 2022.
Impairment of long-lived assets
The Company evaluates long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount may no longer be fully recoverable. An impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset. The impairment loss to be recognized is the amount by which the carrying value of the long-lived asset exceeds the asset's fair value. In most instances, the fair value is determined by discounting estimated future cash flows using an appropriate discount rate. The Company has not recognized an impairment loss for the years ended December 31, 2023 and 2022.
Asset retirement obligations
Upon the expiration of the land lease arrangements for solar plants located on leasehold lands, the respective subsidiaries are obligated to remove the structures and foundations, devise a plan ensuring financial resources will be available to fully decommission each site and restore the land to same or better condition.
The estimate for site restoration cost is provided by an independent party using fair valuation of the expected obligation. Subsequent revisions to the decommissioning plan and cost estimate may be required based on changes in construction techniques and technology and changing scrap values. The Company records the fair value of the liability for asset retirement obligation ("ARO") in the period in which it is incurred if it can be reasonably estimated, with the offsetting associated asset retirement costs capitalized as part of the carrying amount of the long- lived assets. The ARO asset is depreciated over the remaining useful life of the solar plant. The liability is accreted and expensed to its present expected future value each period based on a credit adjusted risk free interest rate. Upon the extinguishment of the obligation, the liability is eliminated and a gain or loss is recognized based on the actual cost to retire.
Leases
All leases are evaluated at inception to determine whether they represent finance or operating leases. For the years ended December 31, 2023 and 2022, the lease liabilities presented in the consolidated balance sheets are operating leases.
Short-term operating leases with an initial term of 12 months or shorter are not recorded on the consolidated balance sheets but are expensed on a straight-line basis over the lease term. Long-term operating leases with a greater than 12-month term are included on the consolidated balance sheets as right-of-use assets and lease liabilities. Right-of- use assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the term. As the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate by leveraging internally available information to determine the present value of lease payments. The Company calculates the straight-line rent amount over the period from the date when it takes possession of the property through the lease end date and records the straight-line amount as rent expense which is included in Other operating expenses in the consolidated statements of operations every period. See Note 14. Leases for further discussion.
Land easements
The Company has entered into various land easements for a defined term, which are prepaid or paid over time, and give the Company certain rights as to the use of the land for solar activity. The land easements are evaluated under ASC 842 - Leases and classified as leases if the criteria is met. If the easements are not classified as leases, they are capitalized into construction in progress ("CIP") until the construction is complete. Costs incurred after construction is complete are recorded to other operating expenses on the consolidated statements of operations.
14
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Offsetting
Financial assets and financial liabilities are offset, and the net amount is presented in the consolidated balance sheets when the below mentioned conditions are complied with:
• Each of two parties owes each other determinable amounts;
• The reporting party has the right to set off the amount owed with the amount owed by the other party;
• The reporting party intends to set off the liability; and
• The right of set-off is enforceable by law.
Fair value of financial instruments
The Company applies authoritative guidance for fair value measurements for its financial assets and liabilities. The guidance defines fair value as an exit price representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. The guidance also establishes a fair value hierarchy, which prioritized the inputs used in measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. The Company’s restricted cash balance for all periods presented uses Level 1 fair value inputs.
Level 2—Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3—Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
In accordance with ASC Topic 820, assets and liabilities are to be measured based on the following valuation techniques:
Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Income approach—converting the future amounts based on the market expectations to its present value using the discounting methodology.
Cost approach—Replacement cost method.
Advances to suppliers
The Company makes prepayments to certain suppliers and such amounts are recorded in capital advances to suppliers in the consolidated balance sheets. Capital advances to suppliers expected to be utilized within twelve months as of each balance sheet date are recorded as current assets and the portion expected to be utilized after 12 months are classified as non-current assets in the consolidated balance sheets.
Provisions and contingencies
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reasonable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
15
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Contingent liabilities are disclosed in the notes to consolidated financial statements, unless possibility of a loss is remote. See Note 11. Commitments, guarantees and contingencies for further discussion.
Revenue recognition
The Company applies the guidance in ASC 606, Revenue from Contracts with Customers, or Topic 606, when recognizing revenue associated with its contracts with customers.
The Company’s policies with respect to its various revenue streams are detailed below.
Power Purchase Agreements
The majority of the Company’s revenues are obtained through PPAs. PPAs are accounted for as executory contracts under Topic 606. In applying Topic 606, the Company determines whether the sale of energy, capacity, and other attributes or services represent a single performance obligation based on the terms of contracts. Generally, the promise to transfer energy and capacity represents a performance obligation that is satisfied over time and meets the criteria to be accounted for as a series of distinct goods or services. Revenue is recognized on an accrual basis each period, as electricity is produced by the solar facility and delivered to the off-takers at the rate billable per MWh under the terms of the PPAs.
Any excess capacity generated is sold in the open market at market rates.
Juno Project Company has off-takers under two separate PPAs, where all electricity generated by the project is sold to the off-takers.
Titan Project Company and Aragorn Project Company have off-takers under two separate PPAs, where electricity generated by the project is sold to the off-takers and the excess of electricity is sold in the open market at market rates.
Athos I Project Company and Athos II Project Company have off-takers under two separate PPAs, where all electricity generated by the project is sold to the off-takers.
Paris Farm Project Company has off-takers under two PPAs, where all electricity expected to be generated by the project is sold to the off-takers. The PPA term is effective on June 1, 2024 for off-taker A and on September 30, 2024 for off-taker B. The Paris Farm Project Company has been placed in service on September 29, 2023. Paris Farm Project Company sells the electricity it generates on the open market at market rates until the PPAs' terms are effective.
Renewable Energy Credits ("RECs")
RECs are usually sold through long-term PPAs or through REC contracts with counterparties. Revenue from the sale of self-generated RECs is recognized when the related energy is generated and simultaneously delivered even in cases where there is a certification lag. In a bundled contract to sell energy, capacity and/or self-generated RECs, all performance obligations are deemed to be delivered at the same time and hence, timing of recognition of revenue for all performance obligations is the same and occurs over time. In such cases, it is often unnecessary to allocate transaction price to multiple performance obligations. For unbundled RECs, revenue is recognized when the title is transferred.
Athos I Project Company and Athos II Project Company sell the RECs that they generate to the off-takers. Per the production guarantee term defined in the PPAs, Athos I Project Company and Athos II Project Company guarantee to deliver the guaranteed annual energy production listed in the PPAs to the off takers. In the event Athos I Project Company and Athos II Project Company fail to deliver guaranteed energy production, Athos I Project Company and Athos II Project Company will either provide the replacement RECs or pay the replacement price.
For the years ended December 31, 2023 and 2022, the Company recorded $1,701 and $2,163, respectively, of REC shortfall which offsets the gross REC revenue of $14,969 and $12,431, respectively. For the year ended
16
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
December 31, 2023, the Company did not incur REC shortfall and the $1,701 of REC shortfall recorded in 2023 was for the remeasurement of 2022 REC shortfall obligations based on the actual market prices.
Swap Settlements
To manage the financial exposures related to commodity price fluctuations, the Athos I Project Company and Athos II Project Company entered into swap agreements to hedge against power purchase price fluctuation. These swap agreements require monthly settlements in which our company receives a fixed-price based on specified quantities of electricity and pays the counterparty a variable market price based on the same specified quantity of electricity. These contracts are accounted for as derivatives, and the Company has not applied hedge accounting. Cash settlements received represent realized gains, while cash settlements paid represent realized losses related to our commodity derivative instruments. The swap settlement gains and losses are presented as a net amount in the revenue account in the consolidated statements of operations. In addition to cash settlements, the Company also recognizes fair value changes on our commodity derivative instruments in each reporting period. The changes in fair value result from settlements that may occur during each reporting period, as well as the relationships between contract prices and the associated forward curves. See note 10. Fair value measurements for further discussion.
The Company's revenue for the years ended December 31, 2023 and 2022 is summarized as follows (in thousands):
| December 31, 2023 | December 31, 2022 | |||||||||||||
| Energy revenue | $ | 85,728 | $ | 103,041 | ||||||||||
| Swap settlement | (21,101) | (47,092) | ||||||||||||
| REC revenue | 13,268 | 10,268 | ||||||||||||
| Other revenue | 348 | — | ||||||||||||
Total revenue | $ | 78,243 | $ | 66,217 | ||||||||||
General and administrative expenses
General and administrative expenses include costs for corporate, finance and other support staff expense, professional fees and other corporate expenses.
Debt issuance costs
Transaction costs incurred in connection with obtaining loans for solar plants under construction are deferred as debt issuance costs and amortized over the term of the respective loan using the effective interest rate method, as prescribed under ASC Topic 470 Debt. The amortization of debt issuance costs are capitalized as part of CIP per ASC 835. Subsequent to the solar plant being placed into service, and CIP being reclassified to property, plant and equipment, amortization of debt issuance costs is recorded as part of interest expense in the consolidated statements of operations.
Income taxes
Income taxes are recorded under the asset and liability method, as prescribed under ASC Topic 740 Income Taxes, whereby deferred tax assets and liabilities are recognized for differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses.
17
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
On July 14, 2022, the Company converted from a corporation to a disregarded LLC. As such, for the year ended December 31, 2023 and 2022, income tax assets and liabilities, as well as income tax expense should not be recorded on the Company's consolidated financial statements given the corporate liquidation that occurred for income tax purposes.
Recently issued accounting standards and laws
In March 2020 and January 2021, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform (Topic 848): Scope, respectively. ASU 2020-04 and ASU 2021-01 provide optional expedients and exceptions for applying US GAAP, to contracts and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. In December 2022, the FASB issued ASU No. 2022-6, Deferral of the Sunset Date of Reference Rate Reform, to extend the end of the transition period to December 31, 2024. As of December 31, 2023, all of the applicable contracts that previously used LIBOR as a reference rate were amended and replaced with secured overnight financing rate ("SOFR") as an alternative benchmark rate. The adoption did not have a material impact on the Company’s financial statements. All new contracts entered in 2023 use SOFR as the benchmark rate.
On August 16, 2022, the Inflation Reduction Act ("IRA") was signed into law and contains certain provisions that have a significant impact on the development and financing of clean energy projects in the U.S. The IRA extends and expands multiple solar tax credits including the Investment Tax Credit ("ITC") and the Production Tax Credit (the "PTC") as well as introduces new and expanded tax credits for other technologies and the clean energy supply chain. Additionally, the IRA includes adder credits intended to encourage development in low-income and energy communities, the use of domestically produced materials and satisfying certain labor-related requirements, which can result in an ITC percentage between 30% and 50%. During the year ended December 31, 2023, the Paris Farm Project Company recognized a 40% ITC based on a 30% ITC and a 10% energy community bonus credits. The estimated ITCs expected to be received are included in the HLBV calculation and hence the net loss attributable to non-controlling interest is presented in the consolidated statement of operations.
Note 3. Equity method investments
On April 11, 2022 a Limited Liability Company Agreement to establish 5S Energy Holdings, LLC, a Delaware limited liability company ("5S Energy"), was entered into between Samsung Solar Energy 2, LLC ("Samsung"), a Delaware limited liability company and US Development, a Delaware limited liability company wholly owned by SBE US Holdings One, LLC. The 5S Energy partnership is owned 50% by US Development and 50% by Samsung. The purpose of the partnership is to engage in the acquisition, ownership, development and sale of an initial development project ("Pelicans Jaw") and possibly other development projects in the future.
5S Energy is a variable interest entity, but given the joint development nature, shared governance structure and voting rights, and shared development risks, SBE does not assume the primary beneficiary designation and accounts for 5S Energy as an equity method investment.
As of December 31, 2022, SBE's equity investment in 5S Energy was $7,570. SBE made capital contributions of $2,000 upon the full execution of the Interconnection Agreement and of $4,000 upon the achievement of the Point of Interconnection Project Condition Precedent. On December 12, 2023, US Development and 5S Energy executed a Membership Interest Purchase and Sale Agreement ("PJ MIPA"), whereby US Development purchased 100% of the membership interests of Pelicans Jaw Solar, LLC from 5S Energy for a total purchase price of $46,210. After the execution of ▇▇ ▇▇▇▇, the Company is the primary beneficiary of Pelicans Jaw Solar, LLC and therefore consolidates Pelicans Jaw Solar, LLC as of December 31, 2023. Please see Note 4. Asset acquisitions for further discussion.
18
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
On July 31, 2023, SBE, through its wholly owned subsidiary, US Development, executed an A&R LLCA and Subscription Agreement with BRP Management and Electra, through which US Development has agreed to make certain contributions to BRP, a Delaware limited company, formed January 29, 2021, in exchange for the issuance of the Units of BRP's Membership Interests. SBE holds 12% economic interest and voting rights and has shared governance and development rights of BRP as of December 31, 2023. The Company has made capital contributions of $16,315 upon the execution of A&R LLCA and an additional contribution of $8,979 on December 15, 2023. The Company recognizes only its share of the profits and losses based on HLBV methodology. For the year ended December 31, 2023, the Company recognized an unrealized loss in equity method investment of $25,294 which is included in the consolidated statements of operations. The unrealized loss in equity method investment reduces SBE equity investment in BRP to $0.
Note 4. Asset acquisitions
On February 9, 2022, US Development, an affiliate of the Company wholly owned by Parent, acquired 100% of the membership interest in ▇▇▇ ▇▇▇▇▇ 1 Project Company, ▇▇▇ ▇▇▇▇▇ 2 Project Company, and ▇▇▇ ▇▇▇▇▇ 3 Project Company per the terms of a Membership Interest Purchase Agreement dated February 9, 2022, to purchase 100% of the membership interest in the Orion solar power plants in Milam County, Texas. ▇▇▇ ▇▇▇▇▇ 1 Project Company, ▇▇▇ ▇▇▇▇▇ 2 Project Company, and ▇▇▇ ▇▇▇▇▇ 3 Project Company are also collectively referred to as "▇▇▇ ▇▇▇▇▇ Project Companies". The Company, on behalf of US Development also entered into a guarantee agreement with the seller to guarantee the amount of $17,500 plus seller development expenses. The solar plants were under development and had executed PPAs on September 9, 2022 to deliver power to an off-taker. As of December 31, 2022, US Development paid $5,374 for interconnection security deposits and $9,623 for the modules security deposits. As of December 31, 2022, $23,100 in closing payment out of a total purchase price of $38,500 was made to seller, with $15,400 remaining of the purchase obligation. The total of $2,100 of earnout ("Earnout") was contingent on the ▇▇▇ ▇▇▇▇▇ Project Companies securing 30% of ITC that is due at the notice to proceed date ("NTP Date"). US Development also paid $2,246 to reimburse seller’s development expenses. As of December, 31, 2023, the remaining purchase price and Earnout payments have been paid in full to the seller. The Company has determined that substantially all the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. Given the ▇▇▇ ▇▇▇▇▇ Project Companies are in the developmental stage, the entities are not capable of producing outputs as defined in ASC 805 - Business Combination, nor did US Development acquire the substantive processes and so US Development accounted for the transaction as an asset acquisition having effectively obtained control of the ▇▇▇ ▇▇▇▇▇ Project Companies. On June 28, 2022, the Company, US Development, Parent and other affiliates entered into a Distribution, Contribution, and Sale Agreement to contribute and sell to the Company and effectively contributed and sold all membership interest in the ▇▇▇ ▇▇▇▇▇ Project Companies to the Company.
On December 12, 2023, US Development and 5S Energy executed a Membership Interest Purchase and Sale Agreement ("PJ MIPA"), whereby US Development purchased 100% membership interest of Pelicans Jaw Solar, LLC from 5S Energy for a total purchase price of $46,210. US Development agreed to pay in cash to 5S Energy the $46,210 of purchase price net of its initial $11,105 equity investment into 5S Energy. As of December 31, 2023, the remaining purchase price is $35,105.
19
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
The total purchase price comprised of the following (in thousands):
| Milestone | Amount | |||||||
| Joint development agreement ("JDA") close payment | $ | 2,000 | ||||||
| Point of interconnection ("POI") milestone payment | 4,000 | |||||||
| PJ MIPA closing payment | 14,000 | |||||||
| Full notice to proceed payment | 8,000 | |||||||
| Earnout contingent on securing 30% of ITC | 8,000 | |||||||
| Reimbursement of 50% of development expenses paid by the Company | 5,105 | |||||||
| Reimbursement of 50% of development expenses paid by Samsung | 5,105 | |||||||
Total purchase price | $ | 46,210 | ||||||
The components of the remaining purchase price of $35,105 are tied to future construction milestones and are contingent upon achievement of these milestones. As of December 31, 2023, the Company concluded that the achievement of these milestones is probable in accordance with ASC 450 – Contingencies and these amounts have been accrued.
On September 14, 2022, US Development entered into the asset purchase agreement ("APA") with an unrelated third party of the Company to purchase all the assets and certain liabilities with respect to the Horizon solar project, which is located in Bienville, Parish County, Louisiana, for a total purchase price of $21,200 plus the seller's developer fee of $52. On June 26, 2023, $1,219 in a closing payment out of the total purchase price of $21,200 was made to the Seller, with $19,981 of the remaining purchase price to be paid comprised of the following (in thousands):
| Milestone required for future payment | Amount | |||||||
| Horizon queue position | $ | 795 | ||||||
| Usage permit milestone payment | 530 | |||||||
| Generator interconnection agreement milestone payment | 1,590 | |||||||
| Notice to proceed payment | 13,250 | |||||||
| Commercial operation date payment | 3,816 | |||||||
Total remaining purchase price | $ | 19,981 | ||||||
The components of the remaining purchase price of $19,981 are tied to future construction milestones and are contingent upon achievement of these milestones. As of December 31, 2023, the Company concluded that the achievement of these milestones is not probable in accordance with ASC 450 – Contingencies and these amounts have not been accrued.
Note 5. General and administrative
General and administrative expenses for the years ended December 31, 2023 and 2022 were $1,943 and $1,718, respectively. Professional services were the primary cost driver and accounted for $1,781 and $1,387 of the general and administrative expenses for 2023 and 2022, respectively.
Note 6. Accounts receivable
The Company recognized revenue and has outstanding balances due from customers included in accounts receivable in the consolidated balance sheets as of December 31, 2023 and 2022. Revenues earned during testing or commissioning period of the solar power plant were recorded against construction in progress in the consolidated balance sheets.
20
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
On an ongoing basis, the Company evaluates accounts receivable based on customers and industry credit conditions, collections, and historical payment performance. The Company's strategy regarding collection efforts varies based on individual customer circumstances.
As of December 31, 2023 and 2022, the Company had an allowance balance for bad debt of $131 and $661, respectively, for accounts receivable amount the Company deemed uncollectible from the utility company due to its adverse liquidity position at the time.
Energy sales that have been delivered but not billed by period end are estimated. Accrued unbilled revenues are based on estimates of delivered energy since the date of the last meter reading. Estimate amounts are adjusted when actual usage is known and billed. As of December 31, 2023 and 2022, the Company estimated the unbilled receivables to be $6,290, and $16,243, respectively.
The following table presents the Company's accounts receivable balance its corresponding expected credit loss provision as of December 31, 2023 and December 31, 2022 (in thousands):
| December 31, 2023 | December 31, 2022 | |||||||||||||
| Billed trade receivable | $ | 1,001 | $ | 1,465 | ||||||||||
| Unbilled trade receivable | 6,290 | 16,243 | ||||||||||||
| Other receivable | 604 | — | ||||||||||||
| Total trade receivable | 7,895 | 17,708 | ||||||||||||
Less: allowance for doubtful accounts | (131) | (661) | ||||||||||||
| Accounts receivable, net | $ | 7,764 | $ | 17,047 | ||||||||||
Note 7. Property, plant and equipment
The following table presents a summary of property, plant and equipment, net by asset category as of December 31, 2023 and 2022 (in thousands):
| December 31, 2023 | December 31, 2022 | |||||||||||||
| Land | $ | 30,832 | $ | 30,404 | ||||||||||
| Solar systems | 2,152,008 | 1,866,270 | ||||||||||||
| Asset retirement obligation | 32,857 | 27,494 | ||||||||||||
| Total property, plant and equipment | 2,215,697 | 1,924,168 | ||||||||||||
| Less: accumulated depreciation | (109,378) | (53,141) | ||||||||||||
| Property, plant and equipment, net | $ | 2,106,319 | $ | 1,871,027 | ||||||||||
| Construction in progress | $ | 694,015 | $ | 184,474 | ||||||||||
Depreciation on solar systems is computed on a straight-line basis over the estimated useful lives of 35 years.
Improvements to property, plant and equipment deemed to extend the useful economic life of an asset are capitalized. Additional capacity, if any, added to property, plant and equipment is depreciated over the remaining estimated useful life.
21
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Note 8. Other current assets
The following table shows other current assets as of December 31, 2023 and 2022 (in thousands):
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Security deposit | $ | 5,084 | $ | 24,748 | ||||||||||
| Prepaid expense | 6,924 | 4,332 | ||||||||||||
| Other current assets | 419 | 669 | ||||||||||||
| Total | $ | 12,427 | $ | 29,749 | ||||||||||
Note 9. Borrowings
The following table shows borrowings as of December 31, 2023 and 2022 (in thousands):
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||||||||
| Short-term debt from financial institutions, secured | $ | 480,155 | $ | 73,606 | ||||||||||
| Long-term debt from financial institutions, secured | 1,033,875 | 925,614 | ||||||||||||
| Debt issuance costs | (25,434) | (8,674) | ||||||||||||
| Total | $ | 1,488,596 | $ | 990,546 | ||||||||||
Holdings Three Term Loan
On November 16, 2020, SBE, through its wholly owned subsidiary, SE US Holdings Three, LLC, entered into a financing agreement ("Holdings Three Term Loan") for an initial amount of $100,000. This agreement was subsequently amended on December 8, 2020, when the Company borrowed an additional $5,000. Interest was payable based on LIBOR plus 1000bps. SBE was required to repay principal on a quarterly basis beginning on March 31, 2022 in an amount equal to the greater of (i) 80% of Excess Cash Flow (as defined in the financing agreement) for the interest period and (ii) up to 100% of the Excess Cash Flow for such interest period required to achieve the Target Amortization (as defined in the agreement). Any remaining principal balance was due on November 16, 2023.
In accordance with the terms of the issuance, the proceeds of the loan were used to, among others, repay the GA Development Loan Agreement, fund certain qualified development costs of the Athos I and Athos II projects as well as additional projects, to pay amounts owed to Intersect Power, LLC, and to fund corporate overhead and expenses related to certain relevant entities as defined in the agreement up to $2,000 per month.
As of December 31, 2021, the principal outstanding on the facility was $75,000. During 2022, the Company repaid $10,444 on the Holdings Three Term Loan. As of December 31, 2022, the principal outstanding on the facility was $64,556. During 2023, the Company has fully repaid the outstanding principal balance of $64,556, as extended, using cash on hand. The Company also paid the total interest of $6,267 for the year ended December, 31, 2023.
Holdings Three Development Loan
On November 16, 2020, SBE, through its wholly owned subsidiary, SE US Holdings Three, LLC, entered into a financing agreement ("Holdings Three Development Loan") for a total commitment amount of $150,000, of which the Company drew down $11,050 in cash and $114,362 as a line of credit as of December 31, 2020. Interest was payable based on LIBOR plus 550bps. Commitment fees are payable based on 1% of average daily
22
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
unused portion of the total loan commitment amount. Any remaining principal balance was due on November 16, 2023.
As of December 31, 2021, the principal outstanding on the facility was $4,350. During 2022, the Company made additional draws of $11,800 and on October 3, 2022, the Company repaid the principal of $7,100. As of December 31, 2022, the principal amount outstanding on the facility was $9,050.
During 2023, the Company made additional draws of $53,500 and on October 16, 2023, the Company has fully repaid the outstanding principal of $62,550, as extended, using cash on hand. The Company also paid the total interest of $5,791 for the year ended December, 31, 2023.
IP Backlog Land Loan
On September 10, 2020, SBE, through its now wholly owned subsidiary, IP Backlog Land Holdings, LLC, entered into a loan agreement ("IP Backlog Land Loan") for a total loan amount of $37,010. Interest is payable based on 450bps per annum and the loan shall be paid in full at August 11, 2055 according to the payment schedule in the loan agreement.
As of December 31, 2023 and 2022, the principal outstanding on the loan was $37,198 and $37,054, respectively, including capitalized interest of $4,212 and $4,205, respectively.
The principal repayments are due per the loan schedule set forth in the loan agreements. The future principal repayments for each of the next five years and thereafter subsequent to December 31, 2023, are as follows (in thousands):
| After December 31, 2023 | Principal | |||||||||||||
2024 | $ | 42 | ||||||||||||
2025 | 80 | |||||||||||||
2026 | 119 | |||||||||||||
2027 | 161 | |||||||||||||
2028 | 199 | |||||||||||||
| Thereafter | 36,597 | |||||||||||||
Principal repayments | $ | 37,198 | ||||||||||||
Titan and Aragorn Construction Loans
On November 16, 2020, the Titan Project Company entered into a financing agreement with certain lenders for an initial facility of $194,200 ("Titan Construction Loan"). As per the terms of the agreement, the principal was payable on October 31, 2021. On October 18, 2021, lenders consented to extending the maturity date of the Titan Construction Loan to January 31, 2022 as well as to certain amendments to the PPAs and engineering, procurement and construction contracts for the construction of the Titan project. Interest was payable based on LIBOR plus 125bps. The interest on the facility was capitalized to the principal amount of the debt. As of December 31, 2022, the Company has fully repaid, including capitalized interest of $5,223, the outstanding principal balance of $282,623, as extended and in full, using proceeds from the loan drawdown under the Note Purchase Agreement, tax equity contributed, and cash on hand. Any remaining deferred financing cost was fully amortized as of December 31, 2022. There were no new debt obligations entered into in 2023 for Titan Project Company.
On November 16, 2020, the Aragorn Project Company entered into a financing agreement with certain lenders for an initial facility of $30,400 ("Aragorn Construction Loan"). As per the terms of the agreement, the principal was payable on November 1, 2021. On October 18, 2021, lenders consented to extending the maturity date of the Aragorn Construction Loan to January 31, 2022 as well as to certain amendments to the PPAs and engineering, procurement and construction contracts for the construction of the Aragorn project. Interest was
23
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
payable based on LIBOR plus 125bps. The interest on the facility was capitalized to the principal amount of the debt. As of December 31, 2022, the Company has fully repaid, including capitalized interest of $2,602, the outstanding principal balance of $172,902, as extended and in full, using proceeds from the loan drawdown under the Note Purchase Agreement, tax equity contributed, and cash on hand. Any remaining deferred financing cost was fully amortized as of December 31, 2022. There were no new debt obligations entered into in 2023 for Aragorn Project Company.
In accordance with the terms of the Titan Construction Loan and Aragorn Construction Loan, the proceeds were used for paying approved development and construction costs in accordance with the budget and to pay interest, fees and expenses incurred in connection with each agreement.
Also pursuant to the agreements, 100% of the membership interests of the Titan Project Company and the Aragorn Project Company, wholly-owned by Titan & Aragorn TE Holdco, were pledged as collateral in the event of default with the pledge of collateral released upon repayment of the loan in full.
Athos I and Athos II Construction Loans
The Athos I Project Company entered into a financing agreement with certain lenders dated May 26, 2021, for $396,160 in an aggregate principal amount ("Athos I Construction Loan") and a letter of credit facility of $66,466. As per the terms of the Construction Loan, the principal amount was payable on December 31, 2022. Interest was payable based on LIBOR plus 87.5bps. The interest on the facility was capitalized to the principal amount of the debt. As of December 31, 2022, the Company has fully repaid, including capitalized interest of $6,210, the outstanding principal balance of $396,160, as extended and in full, using proceeds from the loan drawdown under the Note Purchase Agreement, tax equity contributed, and cash on hand. Any remaining deferred financing cost was fully amortized as of December 31, 2022. There were no new debt obligations entered into in 2023 for Athos I Project Company.
The Athos II Project Company entered into a financing agreement with certain lenders dated May 26, 2021, for $317,433 in an aggregate principal amount ("Athos II Construction Loan") and a letter of credit facility of $34,000. As per the terms of the agreement, the principal amount was payable on December 31, 2022. Interest was payable based on LIBOR plus 87.5bps. The interest on the facility was capitalized to the principal amount of the debt. As of December 31, 2022, the Company has fully repaid, including capitalized interest of $1,435, the outstanding principal balance of $317,456, as extended and in full, using proceeds from the loan drawdown under the Note Purchase Agreement, tax equity contributed, and cash on hand. Any remaining deferred financing cost was fully amortized as of December 31, 2022. There were no new debt obligations entered into in 2023 for Athos II Project Company.
In accordance with the terms of the Athos I Construction Loan and Athos II Construction Loan, the proceeds were used for paying approved development and construction costs in accordance with the budget and to pay interest, fees and expenses incurred in connection with these agreement. Also, pursuant to the agreement, 100% of the membership interests of the Athos I Project Company and Athos II Project Company, wholly-owned by Athos TE Holdco, were pledged as collateral in the event of default with the pledge of collateral released upon repayment of the loan in full.
Note Purchase Agreement
On July 24, 2020, SBE, through its wholly owned subsidiary, SE Big Five Borrower, LLC, ("Big Five Borrower") entered into a Note Purchase Agreement. Per the terms of the Note Purchase Agreement, the Company issued and sold in an aggregate principal amount of $860,000, 6.00% Senior Secured Notes with respect to different projects in an aggregate principal amount of up to the maximum note amount for such project. As per the terms of the agreement, the Juno Project Company, Titan Project Company, Aragorn Project Company, Athos I Project Company and Athos II Project Company had access to the loan drawdown related to the respective portion of the Note Purchase Agreement once the respective project reached the substantial completion date. The Senior Secured Notes mature in 2052. Pursuant to the agreement, 100% of the membership interests in the Juno Project Company, Titan
24
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Project Company, Aragorn Project Company, Athos I Project Company and Athos II Project Company drawing on the Note Purchase Agreement and respective assets are pledged as collateral in the event of default. The Company is in compliance with financial covenants and other requirements of the Note Purchase Agreement.
The principal repayments are due per the loan schedule set forth in the loan agreements. The future principal repayments for each of the next five years and thereafter subsequent to December 31, 2023, are as follows (in thousands):
| After December 31, 2023 | Principal | |||||||||||||
2024 | $ | 20,510 | ||||||||||||
2025 | 21,950 | |||||||||||||
2026 | 24,878 | |||||||||||||
2027 | 13,636 | |||||||||||||
2028 | 15,667 | |||||||||||||
| Thereafter | 808,964 | |||||||||||||
Principal repayments | $ | 905,605 | ||||||||||||
On February 17, 2022, the Company obtained $150,781 and $97,009 of funding under the Note Purchase Agreement with proceeds used to repay the Titan construction loan and Aragorn construction Loan, respectively.
On March 31, 2022, the Company obtained $166,374 funding under the Note Purchase Agreement with proceeds used to repay the Athos II Construction Loan.
On November 18, 2022, the Company obtained $213,667 funding under the Note Purchase Agreement with proceeds used to repay the Athos I Construction Loan.
As of December 31, 2023 and 2022, the principal outstanding on the facility is $905,605 and $888,562, unamortized deferred financing cost is $5,669 and $6,525, and $0 and $28,562 of accrued capitalized interest, respectively.
Eiffel Term Loan
On March 31, 2023, the Paris Farm Project Company entered into a financing agreement with certain lenders for a total commitment of $78,535, of which the Paris Farm Project Company drew down $61,553 in cash ("Eiffel Construction Loan"). Interest was payable based on SOFR plus 113bps. On December 6, 2023, the Company, through it's wholly owned subsidiary, Eiffel Member B, LLC, converted the Eiffel Construction Loan into a term loan ("Eiffel Term Loan") and the total commitment on the Eiffel Term Loan is $91,071. Eiffel Construction Loan had an outstanding principal of $61,553 at the time of conversion. During 2023, Eiffel Member B, LLC made additional draws of $29,518 on the Eiffel Term Loan. Interest was payable based on 6 month SOFR plus 175bps. Eiffel Term Loan matures on December 6, 2033. Also pursuant to the agreements, 100% of the membership interests of the Paris Farm Project Company, wholly-owned by Eiffel TE Holdco, were pledged as collateral in the event of default. As of December 31, 2023, principal outstanding on the loan is $91,071 and unamortized financing cost is $546.
25
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
The principal repayments are due per the loan schedule set forth in the loan agreements. The principal repayments for each of the next five years and thereafter subsequent to December 31, 2023, are as follows (in thousands):
| After December 31, 2023 | Principal | |||||||||||||
2024 | $ | 962 | ||||||||||||
2025 | 786 | |||||||||||||
2026 | 1,611 | |||||||||||||
2027 | 1,454 | |||||||||||||
2028 | 1,364 | |||||||||||||
| Thereafter | 84,894 | |||||||||||||
Principal repayments | $ | 91,071 | ||||||||||||
Eiffel Bridge Loan
On March 31, 2023, the Paris Farm Project Company entered into a financing agreement with certain lenders for a total commitment of $164,970, of which the Paris Farm Project Company drew down $160,082 in cash ("Eiffel Bridge Loan"). Interest was payable based on SOFR plus 113bps. As of December 31, 2023, the Company has fully repaid the outstanding principal balance of $160,082, as extended and in full, using proceeds from Eiffel Term Loan and tax equity partner contributions. The Company also paid the total interest of $6,134 for the year ended December, 31, 2023.
▇▇▇ ▇▇▇▇▇ 1 Construction and Bridge Loans
The ▇▇▇ ▇▇▇▇▇ 1 Project Company entered into a financing agreement with certain lenders dated August 4, 2023, for a total commitment of $255,720 ("▇▇▇ ▇▇▇▇▇ 1 Construction and Bridge Loans") and a letter of credit facility of $31,808. As per the terms of the financing agreements, on the earlier of the substantial completion closing date or the loan maturity date of November 1, 2024, the principal amount of ▇▇▇ ▇▇▇▇▇ 1 Construction Loan will be converted to a term loan and ▇▇▇ ▇▇▇▇▇ 1 Bridge Loan will be paid in full. Interest is payable based on SOFR plus 137.5bps. The initial draw of ▇▇▇ ▇▇▇▇▇ 1 Construction Loan at closing was $36,850. During 2023, the ▇▇▇ ▇▇▇▇▇ 1 Project Company made additional draws of $126,229. As of December 31, 2023, the principal amount outstanding on the facility was $163,079.
▇▇▇ ▇▇▇▇▇ 2 Construction and Bridge Loans
The ▇▇▇ ▇▇▇▇▇ 2 Project Company entered into a financing agreement with certain lenders dated November 16, 2023, for a total commitment of $314,414 ("▇▇▇ ▇▇▇▇▇ 2 Construction and Bridge Loans") and a letter of credit facility of $56,344. As per the terms of the financing agreements, on the earlier of the substantial completion closing date or the loan maturity date of October 31, 2024, the principal amount of ▇▇▇ ▇▇▇▇▇ 2 Construction Loan will be converted to a term loan and ▇▇▇ ▇▇▇▇▇ 2 Bridge Loan will be paid in full. Interest is payable based on SOFR plus 125bps. The initial draw at closing was $54,700. During 2023, the ▇▇▇ ▇▇▇▇▇ 2 Project Company made additional draws of $34,250. As of December 31, 2023, the principal amount outstanding on the facility was $88,950.
▇▇▇ ▇▇▇▇▇ 3 Construction and Bridge Loans
The ▇▇▇ ▇▇▇▇▇ 3 Project Company entered into a financing agreement with certain lenders dated June 15, 2023, for a total commitment of $333,200 ("▇▇▇ ▇▇▇▇▇ 3 Construction and Bridge Loans") and a letter of credit facility of $37,183. As per the terms of the financing agreements, on the earlier of the substantial completion closing date or the loan maturity date of October 31, 2024, the principal amount of ▇▇▇ ▇▇▇▇▇ 3 Construction Loan will be converted to a term loan and ▇▇▇ ▇▇▇▇▇ 3 Bridge Loan will be paid in full. Interest was payable based on SOFR plus 125bps. The initial draw at closing was $48,500. During 2023, the ▇▇▇ ▇▇▇▇▇ 3 Project Company made additional draws of $179,626. As of December 31, 2023, the principal amount outstanding on the facility was $228,126.
26
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Note 10. Fair value measurements
Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
SE Athos I, LLC and SE Athos II, LLC entered into swap arrangements with two separate hedging parties. Each of the swaps has a contractual term of 7 years and is effective upon completion of the construction of the solar plant. The swaps hedge the floating price per megawatt hour ("MWh") against a contractual fixed price based on the underlying capacity of the solar plant, projected at 338.7MWh and 270.9MWh of direct current, respectively. As of December 31, 2023, the power price swaps are presented as derivative liabilities on the Company's consolidated balance sheets.
The fair values of the power price swaps are based on a discounted cash flow method under the income approach. Forecasted net settlement payments to or from the Company are estimated based on forecasted prices, the fixed price, and the contractual hourly quantity. The fair value is then calculated by discounting the forecasted net settlement payments based on discount rates commensurate with the terms and risk in each settlement payment. The forecasted prices are sourced from an independent third-party (Standard & Poors) but are not considered completely observable since the Company made certain adjustments to the forecasted power prices. Combined with the discount rate being a significant unobservable input, the Company classifies the derivative instruments as Level 3 in the fair value hierarchy. The discount rate used to discount each net settlement tranche is dependent on which party is to pay such net settlement.
As of December 31, 2023, the discount rate ranges between 4.99% and 5.75%; and the floating price is between $27.06 and $108.23 for the Athos I Project Company. The discount rate ranges between 4.51% and 5.29%, and the floating price is between $23.26 and $107.99 for Athos II Project Company.
As of December 31, 2022, the discount rate ranges between 5.47% and 6.05%; and the floating price is between $41.56 and $164.57 for Athos I Project Company. The discount rate ranges between 4.94% and 5.54%, and the floating price is between $31.75 and $164.57 for Athos II Project Company.
The fair value of the interest rate swaps is calculated as the net of the discounted future cash flows of the pay and receive legs of the swaps. Mid-market interest rates on the valuation date are used to create the forward curve for the floating legs (if applicable) and discount curve(s).
On December 6, 2023, Eiffel Member B, LLC entered into an interest rate swap agreement to mitigate the risk of losses due to unanticipated unfavorable movements in the interest rate of its term loan borrowing. The swap instrument trades a 6 month term SOFR floating rate index for a fixed interest rate of 3.4540%, with no mandatory early termination. As of December 31, 2023, the interest rate swap is presented as a derivative asset on the Company's consolidated balance sheets.
On August 4, 2023, ▇▇▇ ▇▇▇▇▇ 1 Project Company entered into interest rate swap agreement to mitigate the risk of losses due to unanticipated unfavorable movements in the interest rate of its term loan borrowing. The swap instrument trades 6 month term SOFR floating rate index for a fixed interest rate of 3.757%, with a termination date on July 31, 2044. As of December 31, 2023, the interest rate swap is presented as a derivative asset on the Company's consolidated balance sheets.
On November 16, 2023, ▇▇▇ ▇▇▇▇▇ 2 Project Company entered into interest rate swap agreement to mitigate the risk of losses due to unanticipated unfavorable movements in the interest rate of its term loan borrowing. The swap instrument trades a 6 month term SOFR floating rate index for a fixed interest rate of 4.165%, with a termination date on January 31, 2044. As of December 31, 2023, the interest rate swap is presented as a derivative liability on the Company's consolidated balance sheets.
On June 15, 2023, ▇▇▇ ▇▇▇▇▇ 3 Project Company entered into interest rate swap agreement to mitigate the risk of losses due to unanticipated unfavorable movements in the interest rate of its term loan borrowing. The swap instrument trades a 6 month term SOFR floating rate index for a fixed interest rate of 3.366%, with a
27
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
termination date on August 31, 2044. As of December 31, 2023, the interest rate swap is presented as a derivative liability on the Company's consolidated balance sheets.
The following table presents the estimated fair values of the Company's asset and liability financial instruments as of December 31, 2023 (in thousands):
| Fair Value or Settlement value measurements at reporting date using | ||||||||||||||||||||||||||
| As of December 31, 2023 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||||
| Asset | ||||||||||||||||||||||||||
| Non-current derivative asset | $ | 354 | $ | — | $ | 354 | $ | — | ||||||||||||||||||
| Total | $ | 354 | $ | — | $ | 354 | $ | — | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Current derivative liability | $ | 53,601 | $ | — | $ | — | $ | 53,601 | ||||||||||||||||||
| Non-current derivative liability | 202,369 | — | 8,270 | 194,099 | ||||||||||||||||||||||
| Total | $ | 255,970 | $ | — | $ | 8,270 | $ | 247,700 | ||||||||||||||||||
The following table presents the estimated fair values of the Company liability financial instruments as of December 31, 2022 (in thousands):
| Fair Value or Settlement value measurements at reporting date using | ||||||||||||||||||||||||||
| As of December 31, 2022 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Current derivative liabilities | $ | 101,023 | $ | — | $ | — | $ | 101,023 | ||||||||||||||||||
| Non-current derivative liabilities | 262,277 | — | — | 262,277 | ||||||||||||||||||||||
| Total | $ | 363,300 | $ | — | $ | — | $ | 363,300 | ||||||||||||||||||
The following table presents a reconciliation of the opening to closing balance of liabilities measured using significant unobservable inputs (Level 3) as of December 31, 2023 and 2022 (in thousands):
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Beginning balance | $ | 363,300 | $ | 223,100 | ||||||||||
| Unrealized mark to market (gain) loss on derivative | (14,577) | 183,388 | ||||||||||||
| Settlements | (101,023) | (43,188) | ||||||||||||
| Closing balance | $ | 247,700 | $ | 363,300 | ||||||||||
28
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
Note 11. Commitments, guarantees and contingencies
On December 14, 2023, the Juno Project Company, Titan Project Company and Aragorn Project Company received an open letter from the Public Utility Commission of Texas for an investigation of non-compliance with electric reliability council of Texas ("ERCOT") operating guides. The Company believes that it is probable that the investigation will result in a financial loss. As a result, for the year ended December 31, 2023, the Company has recognized the loss contingency of $765, which is included in the other operating expenses in the accompanying consolidated statements of operations.
The Company has entered into power purchase agreements providing annual delivery of a minimum amount of electricity at fixed prices and has certain interconnection studies to perform as required by the grid. In connection with the financing agreement dated March 31, 2023, the Eiffel Member B, LLC entered into irrevocable standby letter of credit to establish the debt service reserve letter of credits. As collateral for power purchase agreements, interconnection performance obligations and debt service reserve, the Company entered into letter of credit agreements ("LCs") as a safeguard for the following types of agreements as of December 31, 2023 and 2022 (in thousands):
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Power purchase agreements LCs | $ | 224,500 | $ | 224,500 | ||||||||||
| Interconnection performance obligations LCs | 32,191 | 29,000 | ||||||||||||
| Debt service reserve LCs | 7,490 | — | ||||||||||||
| Module procurement LCs | 13,017 | — | ||||||||||||
| Total | $ | 277,198 | $ | 253,500 | ||||||||||
The following table represents the contractual obligations of the construction projects the Company has for the years ended December 31, 2023 and 2022 (in thousands):
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Engineering, procurement and construction contracts | $ | 142,821 | $ | — | ||||||||||
| Modules | 114,604 | — | ||||||||||||
| Transformers | 1,516 | — | ||||||||||||
| Total | $ | 258,941 | $ | — | ||||||||||
Note 12. Related party transactions
The Company has various management service agreements with SB Energy DevCo (US) Inc. (an affiliate of the Company). SB Energy DevCo (US) Inc. provides management and administrative services for project development, asset management of projects under construction, and asset management of operational projects, and charges a monthly and/or quarterly management fee for its services. For the year ended December 31, 2023 and 2022 Management fees expense were $8,555 and $10,572, respectively.
Related party management fees for the years ended December 31, 2023 and 2022 are as follows (in thousands):
| For the year ended December 31, 2023 | For the year ended December 31, 2022 | |||||||||||||
| Management fees | $ | 8,555 | $ | 10,572 | ||||||||||
29
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
An overview of related party balances is as follows (in thousands):
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Receivables from related parties | $ | (664) | $ | (597) | ||||||||||
| Total receivables from related parties | $ | (664) | $ | (597) | ||||||||||
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||
| Payables to related parties | $ | 3,494 | $ | 5,133 | ||||||||||
| Total payable to related parties | $ | 3,494 | $ | 5,133 | ||||||||||
As of December 31, 2022, the receivables from related parties of $597 primarily represents the amount owed to the Company for bill payments made on behalf of Athos I Project Company and other Project Entities. The payables to related parties of $5,133 represent amounts owed to SB Energy DevCo (US), LLC for the performance of its management and development services.
As of December 31, 2023, the receivables from related parties of $664 and the payables to related party of $3,494 primarily represents the amount owed SB Energy DevCo (US), LLC for the performance of its management and development services.
On March, 2022, upon the consummation of the Securities Purchase Agreement between SBE Global, LP, Ares SS 2022 SPV, L.P. and SB Energy Holdco, LLC, the Company paid-off its $95,000 intercompany loan to SB Energy Global Holdings Limited.
Note 13. Asset retirement obligations
The Company has AROs arising from a contractual liability to perform certain asset retirement activities at the time that it disposes of its solar power plants. The liability is initially measured at fair value and is subsequently adjusted for accretion expense and any changes in the amount or timing of the estimated cash flows. The corresponding asset retirement costs are capitalized as part of the carrying amount of the solar power plant and are depreciated over the asset’s remaining useful life. Asset retirement cost is recognized under Property, plant and equipment, net on the consolidated balance sheets.
The following table presents the activity for the AROs for the years ended December 31, 2023 and 2022 (in thousands):
| As of December 31, 2023 | ||||||||
| Balance as of December 31, 2021 | $ | 29,872 | ||||||
| Accretion expense | 1,814 | |||||||
| Balance as of December 31, 2022 | $ | 31,686 | ||||||
| Additional obligations incurred | 5,363 | |||||||
| Accretion expense | 2,024 | |||||||
| Balance as of December 31, 2023 | $ | 39,073 | ||||||
Note 14. Leases
The Company has operating lease agreements between the Project Entities as the lessees and landowners as the lessors. Lease agreements are entered into by the Company during the initial development stage of a project. The land lease agreements have terms ranging from 20 to 50 years with an ability to extend for periods of 5 to 10 years. The Company's lease terms may include options to extend or terminate the lease when it is reasonably
30
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
certain that the Company will exercise any such options. The extension periods are included in the life of the right-of-use asset and lease liabilities up until the 35 years of useful life of the solar assets.
Lease expense is recognized on a straight-line basis over the expected lease term. At times, the Company enters into operating land leases that are subject to annual changes to the lease payment based upon annual escalations between 2% to 5% per year until the end of the production term or based upon the lease schedule presented in the lease agreements.
Estimated future minimum lease payments for each of the next five years and thereafter subsequent to December 31, 2023 are as follows (in thousands):
| After December 31, 2023 | Leases | ||||||||||
2024 | $ | 9,055 | |||||||||
2025 | 9,141 | ||||||||||
2026 | 9,311 | ||||||||||
2027 | 9,522 | ||||||||||
2028 | 9,697 | ||||||||||
| Thereafter | 372,514 | ||||||||||
| Undiscounted cash flows | $ | 419,240 | |||||||||
| Total lease liability | 156,041 | ||||||||||
| Difference between undiscounted cash flows and discounted cash flows | $ | 263,199 | |||||||||
The lease term is less than 75% of the asset's estimated useful life and present value of the lease payments is less than 90% of the fair value of the asset. Additionally, the lease agreements do not contain bargain purchase options nor do they contain a transfer of ownership criterion and, therefore, the Company has determined that the ground lease agreements meet the criteria for operating leases.
As of December 31, 2023 and 2022, the right-of-use asset balance was $151,347, and $102,276, respectively, the current lease liability was $9,055, and $4,930, and the non-current lease liability was $146,986 and $97,861, respectively. During the years ended December 31, 2023 and 2022, the Company recorded the ground lease expense of $10,904, and $6,514, respectively, which is included in other operating expenses on the accompanying consolidated statements of operations.
The weighted-average remaining term is 33.46 years and the weighted-average discount rate ranges between 6% and 6.75%.
Note 15. Other income
On October 18, 2021, the Company purchased a $47,500 10-year Promissory Note (“the Note”) from one of its engineering, procurement, and construction contractors (“the Contractor”) for $1,500. The purpose of the Note was to provide long-term financing to the Contractor to complete the construction of the Aragorn and Titan solar projects. The Note had a 10-year term during which interest would accumulate on an annual basis until due at final maturity. The Note also included a comprehensive list of affirmative and negative covenants to protect the Company. Concurrently, the Company agreed to post $2,500 in collateral on behalf of the Contractor and to direct certain of its subsidiaries to approve $45,000 in cost overruns to complete the construction of the Titan and Aragorn solar projects. On February 10, 2022, after the successful completion of the projects, the Contractor and the Company mutually agreed to redeem the Note for an all-in negotiated price of $27,500 including accrued interest.
31
SBE US Holdings One, LLC
Notes to Consolidated Financial Statements
In thousands, unless otherwise stated
The $27,500 was accounted for as a $23,545 gain net of the $1,500 purchase price initially recorded and the $2,500 of collateral posted.
Note 16. Subsequent events
Subsequent events have been evaluated through April 29, 2024, which was the date the consolidated financial statements were available to be issued.
On August 22, 2023, the Company's wholly owned subsidiary, SE Global Borrower, LLC, was organized as a Delaware limited liability company. On December 28, 2023, the Company's wholly owned subsidiaries, Big Five Holdco 1, LLC, Big Five Holdco 2, LLC, Big Five Intermediate Holdco 1, LLC and Big Five Intermediate Holdco 2, LLC, were organized as a Delaware limited liability company. On October 18, 2023, SE Global Borrower, LLC entered into financing agreement with certain lender to obtain the senior secured credit facilities in an aggregate amount up to $600,000 ("Hickory Loan"). On January 24, 2024, Big Five Holdco 1, LLC, Big Five Holdco 2, LLC, Big Five Intermediate Holdco 1, LLC and Big Five Intermediate Holdco 2, LLC entered into credit agreements with certain lenders to obtain the Big Five Senior and Mezzanine loans. The proceeds from the initial draw of $424,333 from the Big Five Senior and Mezzanine loans and initial draw of $414,235 from the Hickory Loan and cash on hand were used to pay in full the outstanding principal balance of $909,867 on the Note Purchase Agreement loan.
On May 10, 2023, the Company's wholly owned subsidiary, Orion 3 Member B, LLC, was organized as a Delaware limited liability company. The purpose of Orion 3 Member B, LLC is to make capital contributions to Orion 3 TE Holdco, LLC. On May 10, 2023, Orion 3 TE Holdco, LLC was organized under the federal laws of the United States in the state of Delaware and formed by Orion 3 Member B, LLC, as the sole member. On June 15, 2023, an ECCA was entered into by and among Orion 3 Member B, LLC, Orion 3 TE Holdco, LLC, and Truist Bank ("Orion 3 Initial Class A Member"), pursuant to which Orion 3 Member B, LLC intended to, subject to the satisfaction of certain conditions precedent, cause Orion 3 TE Holdco, LLC to issue membership interests in Orion 3 TE Holdco, LLC to Orion 3 Initial Class A Member on committed tax equity contributions by Orion 3 Initial Class A Member and have Orion 3 TE Holdco, LLC purchase 100% of membership interests in the ▇▇▇ ▇▇▇▇▇ 3 Project Company. On February 9, 2024, upon achieving mechanical completion of the construction on the ▇▇▇ ▇▇▇▇▇ 3 Project Company, Orion 3 Initial Class A Member made tax equity contributions of $47,995.
On July 24, 2023, the Company's wholly owned subsidiary, Orion 1 Member B, LLC, was organized as a Delaware limited liability company. The purpose of Orion 1 Member B, LLC is to make capital contributions to Orion 1 TE Holdco, LLC. On July 24, 2023, Orion 1 TE Holdco, LLC was organized under the federal laws of the United States in the state of Delaware and formed by Orion 1 Member B, LLC, as the sole member. On August 4, 2023, an ECCA was entered into by and among Orion 1 Member B, LLC, Orion 1 TE Holdco, LLC, and FNBC Leasing Corporation ("Orion 1 Initial Class A Member"), pursuant to which Orion 1 Member B, LLC intended to, subject to the satisfaction of certain conditions precedent, cause Orion 1 TE Holdco, LLC to issue membership interests in Orion 1 TE Holdco, LLC to Orion 1 Initial Class A Member on committed tax equity contributions by Orion 1 Initial Class A Member and have Orion 1 TE Holdco, LLC purchase 100% of membership interests in the ▇▇▇ ▇▇▇▇▇ 1 Project Company. On April 2, 2024, upon achieving mechanical completion of the construction on the ▇▇▇ ▇▇▇▇▇ 1 Project Company, Orion 1 Initial Class A Member made tax equity contributions of $35,133.
From January 1, 2024 and through the date these consolidated financial statements were available to be issued, the Company distributed $3,277 to Class A Member.
From January 1, 2024 and through April 29, 2024, the ▇▇▇ ▇▇▇▇▇ 2 Project Company made additional draws of $46,026 on the ▇▇▇ ▇▇▇▇▇ 2 Construction Loan and the ▇▇▇ ▇▇▇▇▇ Project Companies made additional draws of $251,624 on the ▇▇▇ ▇▇▇▇▇ 1 Bridge Loan, ▇▇▇ ▇▇▇▇▇ 2 Bridge Loan and ▇▇▇ ▇▇▇▇▇ 3 Bridge Loan.
On March 18, 2024, the Company made an additional contribution of $4,193 to BRP.
32
SBE US Holdings One, LLC
Consolidated Financial Statements (Unaudited)
As of December 31, 2024 and 2023
Index to Consolidated Financial Statements
| Pages | |||||
| SBE US Holdings One, LLC | |||||
| Consolidated Balance Sheets | 3 | ||||
| Consolidated Statements of Operations | 4 | ||||
| Consolidated Statements of Changes in Member's Equity | 5 | ||||
| Consolidated Statements of Cash Flows | 6 | ||||
SBE US Holdings One, LLC
Consolidated Balance Sheets
In thousands, unless otherwise stated
| Unaudited | Audited | |||||||||||||
As of December 31, 2024 | As of December 31, 2023 | |||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
Cash and cash equivalents | $ | 31,526 | $ | 93,211 | ||||||||||
Restricted cash | 172,815 | 111,310 | ||||||||||||
Accounts receivable | 14,099 | 7,764 | ||||||||||||
Receivables from related parties | 590 | 664 | ||||||||||||
Advances to suppliers | 599 | 15,361 | ||||||||||||
Other current assets | 30,189 | 12,427 | ||||||||||||
| Total current assets | 249,818 | 240,737 | ||||||||||||
| Non-current assets | ||||||||||||||
Construction in progress | 361,421 | 694,015 | ||||||||||||
Property, plant and equipment, net | 2,999,479 | 2,106,319 | ||||||||||||
Advances to suppliers | — | 1,515 | ||||||||||||
Equity method investments | 36,383 | — | ||||||||||||
Derivative asset | 13,789 | 354 | ||||||||||||
Right-of-use asset | 199,836 | 151,347 | ||||||||||||
| Other Intangible Assets | 16,496 | — | ||||||||||||
Other non-current assets | 33,309 | 32,293 | ||||||||||||
| Total non-current assets | 3,660,713 | 2,985,843 | ||||||||||||
| Total assets | $ | 3,910,531 | $ | 3,226,580 | ||||||||||
| Liabilities and equity | ||||||||||||||
| Current liabilities | ||||||||||||||
Accounts payable | $ | 64,253 | $ | 65,678 | ||||||||||
Accrued expenses and other current liabilities | 132,074 | 125,843 | ||||||||||||
Payables to related parties | 2,896 | 3,494 | ||||||||||||
Derivative liabilities | 28,404 | 53,601 | ||||||||||||
Lease liabilities | 11,093 | 9,055 | ||||||||||||
Borrowings, net | 4,661 | 461,456 | ||||||||||||
| Total current liabilities | 243,381 | 719,127 | ||||||||||||
| Non-current liabilities | ||||||||||||||
Borrowings, net | 970,406 | 1,027,140 | ||||||||||||
Derivative liabilities | 104,878 | 202,369 | ||||||||||||
Lease liabilities | 197,977 | 146,986 | ||||||||||||
Asset retirement obligations | 58,042 | 39,073 | ||||||||||||
Other non-current liabilities | 996 | 20 | ||||||||||||
| Total non-current liabilities | 1,332,299 | 1,415,588 | ||||||||||||
| Total liabilities | $ | 1,575,680 | $ | 2,134,715 | ||||||||||
| Commitments, guarantees and contingencies | ||||||||||||||
| Member's equity | ||||||||||||||
Common stock | $ | 1 | $ | 1 | ||||||||||
Additional paid-in capital | 1,332,564 | 724,227 | ||||||||||||
Retained earnings | 483,328 | 124,809 | ||||||||||||
| Total member's equity | 1,815,893 | 849,037 | ||||||||||||
| Non-controlling interest | 518,958 | 242,828 | ||||||||||||
| Total liabilities and equity | $ | 3,910,531 | $ | 3,226,580 | ||||||||||
SBE US Holdings One, LLC
Consolidated Statements of Operations
In thousands, unless otherwise stated
| Unaudited | Audited | |||||||||||||
Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||
| Operating revenue | ||||||||||||||
| Revenue | $ | 112,943 | $ | 78,243 | ||||||||||
| Total operating revenue | 112,943 | 78,243 | ||||||||||||
| Operating costs and expenses | ||||||||||||||
General and administrative | (2,580) | (1,943) | ||||||||||||
Management fees | (2,983) | (8,555) | ||||||||||||
Depreciation, amortization and accretion | (72,884) | (58,446) | ||||||||||||
Other operating expenses | (48,469) | (35,366) | ||||||||||||
| Operating loss | (13,973) | (26,067) | ||||||||||||
| Interest income | 6,364 | — | ||||||||||||
Interest expense | (63,348) | (75,162) | ||||||||||||
Changes in fair value of derivatives | 136,124 | 107,684 | ||||||||||||
Unrealized loss in equity method investment | — | (25,294) | ||||||||||||
| Other expense (income), net | (550) | 1,370 | ||||||||||||
| Net income (loss) | $ | 64,617 | $ | (17,469) | ||||||||||
| Net loss attributable to non-controlling interest | (293,902) | (102,718) | ||||||||||||
| Net income attributable to SBE US Holdings One, LLC | $ | 358,519 | $ | 85,249 | ||||||||||
SBE US Holdings One, LLC
Consolidated Statements of Changes in Member's Equity
In thousands, unless otherwise stated
| Common stock | Additional paid-in capital | Retained earnings (Accumulated deficit) | Total member's equity | Non- controlling interest | |||||||||||||||||||||||||||||||
Numbers of shares | Amount | ||||||||||||||||||||||||||||||||||
| Audited Balance as of December 31, 2022 | 642 | $ | 1 | $ | 508,052 | $ | 39,560 | $ | 547,613 | $ | 204,750 | ||||||||||||||||||||||||
| Capital contributions | — | — | 252,500 | — | 252,500 | 168,339 | |||||||||||||||||||||||||||||
| Capital distributions | — | — | (35,082) | — | (35,082) | (20,045) | |||||||||||||||||||||||||||||
| Non-cash distributions | — | — | (1,243) | — | (1,243) | — | |||||||||||||||||||||||||||||
| Equity financing costs | — | — | — | (7,498) | |||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | 85,249 | 85,249 | (102,718) | |||||||||||||||||||||||||||||
| Audited Balance as of December 31, 2023 | 642 | $ | 1 | $ | 724,227 | $ | 124,809 | $ | 849,037 | $ | 242,828 | ||||||||||||||||||||||||
| Capital contributions | — | — | 650,192 | — | 650,192 | 719,359 | |||||||||||||||||||||||||||||
| Capital distributions | — | — | (55,183) | — | (55,183) | (114,277) | |||||||||||||||||||||||||||||
| Non-cash distributions | — | — | 13,328 | — | 13,328 | — | |||||||||||||||||||||||||||||
| Equity financing costs | — | — | — | — | — | (35,050) | |||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | 358,519 | 358,519 | (293,902) | |||||||||||||||||||||||||||||
| Unadited Balance as of December 31, 2024 | 642 | $ | 1 | $ | 1,332,564 | $ | 483,328 | $ | 1,815,893 | $ | 518,958 | ||||||||||||||||||||||||
S
SBE US Holdings One, LLC
Consolidated Statements of Cash Flows
In thousands, unless otherwise stated
| Unaudited | Audited | |||||||||||||
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||
| Cash flow from operating activities | ||||||||||||||
Net income attributable to SBE US Holdings One, LLC | $ | 358,519 | $ | 85,249 | ||||||||||
Adjustments to reconcile net income to net cash used in operating activities | ||||||||||||||
Non-cash (income)/ expenses | ||||||||||||||
Amortization of deferred financing cost | 10,508 | 4,899 | ||||||||||||
Loss attributable to non-controlling interest | (293,902) | (102,718) | ||||||||||||
Unrealized loss in equity method investment | 352 | 25,294 | ||||||||||||
Depreciation, amortization and accretion expense | 72,907 | 58,446 | ||||||||||||
Interest and fees on loans | 2,248 | 40,608 | ||||||||||||
Bad debt expense | — | (77) | ||||||||||||
Operating income before working capital changes | $ | 150,632 | $ | 111,701 | ||||||||||
Changes in operating assets and liabilities | ||||||||||||||
Accounts receivable | (5,638) | 9,657 | ||||||||||||
Other current assets | (7,909) | 1,403 | ||||||||||||
Receivable from related parties | (315) | (2,384) | ||||||||||||
Derivative assets | 7 | (354) | ||||||||||||
Other non-current assets | (28,425) | (12,744) | ||||||||||||
Payables to related parties | (18) | (4,970) | ||||||||||||
Accounts payable | 1,134 | 192 | ||||||||||||
Accrued expenses and other current liabilities | 20,054 | (9,220) | ||||||||||||
Derivative liabilities | (136,131) | (107,330) | ||||||||||||
Lease liabilities | 6,268 | 3,993 | ||||||||||||
Net cash used in operating activities | $ | (341) | $ | (10,056) | ||||||||||
| Cash flows from investing activities | ||||||||||||||
Payments for construction in progress | (601,829) | (408,069) | ||||||||||||
Payments for property, plant and equipment | — | (246,075) | ||||||||||||
Returns of deposits | (10,322) | 12,471 | ||||||||||||
Advances to suppliers | — | (7,252) | ||||||||||||
Equity method investment | (24,535) | (25,294) | ||||||||||||
Cash acquired through asset acquisition | — | 51 | ||||||||||||
Net cash used in investing activities | $ | (636,686) | $ | (674,168) | ||||||||||
| Cash flows from financing activities | ||||||||||||||
Capital contributions | 1,369,551 | 420,839 | ||||||||||||
Capital distributions | (169,460) | (55,127) | ||||||||||||
Proceeds from borrowings | 969,783 | 784,588 | ||||||||||||
Repayment of borrowings | (1,466,529) | (310,773) | ||||||||||||
Payment for deferred financing costs | (43,279) | (27,357) | ||||||||||||
Payment of equity financing costs | (23,221) | (7,498) | ||||||||||||
Net cash generated from financing activities | $ | 636,845 | $ | 804,672 | ||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | (182) | 120,448 | ||||||||||||
| Cash and cash equivalents and restricted cash at the beginning of the period | 204,521 | 84,073 | ||||||||||||
| Cash and cash equivalents and restricted cash at the end of period | $ | 204,339 | $ | 204,521 | ||||||||||
6
Exhibit A-2
TE MIPA
[Attached]
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and between
Pelicans Jaw Construction Holdco, LLC
and
Pelicans Jaw TE Holdco, LLC
May 9, 2025
TABLE OF CONTENTS
ARTICLE 1 DEFINED TERMS | 1 | ||||||||||
| 1.1 | Defined Terms | 1 | |||||||||
| 1.2 | Construction | 15 | |||||||||
ARTICLE 2 PURCHASE OF PROJECT COMPANY | 15 | ||||||||||
| 2.1 | Purchase | 15 | |||||||||
| 2.2 | Conditions Precedent to the Effective Date | 16 | |||||||||
| 2.3 | Conditions Precedent to the Obligations of Purchaser on the Purchase Date | 18 | |||||||||
| 2.4 | Conditions Precedent to the Obligations of the Seller on the Purchase Date | 22 | |||||||||
ARTICLE 3 REPRESENTATIONS AND WARRANTIES | 22 | ||||||||||
| 3.1 | Representations and Warranties of Seller | 22 | |||||||||
| 3.2 | Representations and Warranties of Purchaser | 31 | |||||||||
ARTICLE 4 [RESERVED] | 32 | ||||||||||
ARTICLE 5 TERMINATION | 32 | ||||||||||
| 5.1 | Termination | 32 | |||||||||
| 5.2 | Procedure and Effect of Termination | 33 | |||||||||
ARTICLE 6 DISPUTE RESOLUTION | 33 | ||||||||||
| 6.1 | Good Faith Negotiations | 33 | |||||||||
ARTICLE 7 PURCHASER LOSSES | 33 | ||||||||||
| 7.1 | Indemnity for Loss | 33 | |||||||||
| 7.2 | General Procedures for Indemnity Obligations | 35 | |||||||||
ARTICLE 8 GENERAL PROVISIONS | 37 | ||||||||||
| 8.1 | Annexes, Exhibits and Schedules | 37 | |||||||||
| 8.2 | Amendment, Modification and Waiver | 37 | |||||||||
| 8.3 | Severability | 38 | |||||||||
| 8.4 | Parties in Interest | 38 | |||||||||
| 8.5 | Notices | 38 | |||||||||
| 8.6 | Counterparts | 39 | |||||||||
| 8.7 | Entire Agreement | 39 | |||||||||
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| 8.8 | Governing Law; Submission to Jurisdiction; Waiver of Jury Trial | 39 | |||||||||
| 8.9 | Public Announcements | 40 | |||||||||
| 8.10 | Assignment | 40 | |||||||||
| 8.11 | Relationship of Parties | 40 | |||||||||
| 8.12 | Disclosure | 40 | |||||||||
Annex 1 | Material Project Contracts, Real Estate Documents and Ancillary Real Estate Agreements | ||||
| Annex 2 | Project Site | ||||
| Annex 3 | Pro Forma Owner’s Policies | ||||
| Annex 4 | Progress Conditions | ||||
| Schedule 1 | Payment of Project Company Purchase Price | ||||
| Schedule 3.1(c) | No Conflicts | ||||
| Schedule 3.1(f)(6) | Taxes | ||||
| Schedule 3.1(j) | Financial Statements | ||||
| Schedule 3.1(k) | Governmental Approvals, Permits and Filings | ||||
| Schedule 3.1(l) | Environmental Matters | ||||
| Schedule 3.1(m) | Real Estate Matters | ||||
| Schedule 3.1(o) | Material Project Contracts Matters | ||||
| Schedule 3.1(q) | Affiliate Transactions | ||||
| Schedule 3.1(u) | Material Project Contract Payments | ||||
| Exhibit A | Form of Bill of Sale and Assignment | ||||
| Exhibit B | Knowledgeable Persons of Seller | ||||
| Exhibit C | Independent Engineer Circuit Mechanical Completion Certificate | ||||
| Exhibit D | Form of Lien Waivers | ||||
| Exhibit E-1 | Domestic Content Bonus Certificate | ||||
| Exhibit E-2 | Energy Community Bonus Certificate | ||||
| Exhibit F | PWA Certificate | ||||
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
This MEMBERSHIP INTEREST PURCHASE AGREEMENT is made and entered into as of May 9, 2025 (the “Effective Date”), by and between Pelicans Jaw Construction Holdco, LLC (“Seller”) and Pelicans Jaw TE Holdco, LLC (“Purchaser”) (the use of “Party” herein means Seller or Purchaser).
RECITALS
1. Immediately prior to the Purchase Date and before giving effect to the transactions contemplated by this Agreement, (i) Construction Holdco, LLC (“Seller Parent”) directly owns 100% of the membership interests in Seller and (ii) Seller directly owns 100% of the membership interests in Pelicans Jaw Solar, LLC (the “Project Company”), which is developing an approximately 573 MWdc/ 440 MWac photovoltaic solar generating facility and an approximately 238 MWac/ 954 MWh battery energy storage system in Kern County, California (the “Project”).
2. Purchaser desires to purchase, and Seller desires to sell, 100% of the limited liability company interests of the Project Company on the terms and subject to the conditions set forth herein.
3. In order to facilitate such purchase, the Parties wish to enter into this Agreement.
NOW THEREFORE, in consideration of the respective representations, warranties, covenants, agreements, and conditions hereinafter set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto hereby agree as follows:
AGREEMENT
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms. As used herein, the following terms have the following meanings:
“2021 ALTA Requirements” means the “2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys” jointly established and adopted by the American Land Title Association and the National Society of Professional Surveyors effective February 23, 2021.
“Administrator” means SB Energy DevCo (US), LLC, a Delaware limited liability company.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly Controlled, Controlled by or is under common Control with such Person; provided, that, with respect to Seller, so long as Seller is a Subsidiary of Sponsor, Affiliate shall also include
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Sponsor; provided, further, that notwithstanding the foregoing, the Affiliates of the Project Company and Seller shall be limited to SB Energy Affiliates.
“After-Tax Basis” means, with respect to any payment to be actually or constructively received by any Person, the amount of such payment (the “base payment”) supplemented (if necessary) by a further payment (the “additional payment”) to that Person so that the sum of the base payment plus the additional payment shall, after deduction of the amount of all U.S. federal income taxes required to be paid by such Person in respect of the receipt or accrual of the base payment and the additional payment, using an assumed rate equal to the Corporate Tax Rate for the applicable period (and ignoring state, local or foreign taxes), taking into account any U.S. federal income tax savings allowable by the recipient as a result of the payment or the event giving rise to the payment, using an assumed rate equal to the Corporate Tax Rate for the applicable period (and ignoring state, local or foreign taxes and using a discount rate equal to eight and a half percent (8.5%) to determine the present value of any future U.S. federal income tax savings if such tax savings are not available in the same year that the payment is received) equals the amount required to be received.
“Agreement” means this Membership Interest Purchase Agreement, made and entered into as of the Effective Date, by and between Seller and Purchaser, together with all exhibit, annexes and schedules appended hereto.
“Ancillary Real Estate Agreements” means those documents listed as “Ancillary Real Estate Agreements” under the applicable section of Annex 1.
“Anti-Bribery and Anti-Corruption Laws” means (a) the U.S. Foreign Corrupt Practices Act of 1977 and (b) all other U.S. laws and regulations prohibiting corrupt payments to and bribery of Governmental Authorities, business partners or other commercial parties, including laws and regulations imposed by local jurisdictions within the United States in which each of the Project and the Project Company is organized, operates, or is doing business.
“Anti-Terrorism and Money Laundering Laws and Regulations” means U.S. laws and regulations relating to money laundering and terrorism financing that (a) prohibit transactions with Persons who (i) commit, threaten to commit or support terrorism, (ii) engage in transactions or conduct operations that are illegal, and / or criminal in nature, and / or (iii) participate in monetary transactions in property derived from specified unlawful activity, (b) otherwise relate to prohibitions in connection with the illegal laundering of the proceeds of any criminal activity, or (c) prohibit the funds, proceeds, and revenue of the Project and the Project Company from being used in connection with the advancement of criminal activity.
“Appraisal” means an appraisal report from the Appraiser in respect of the Project.
“Appraiser” means DAI Management Consultants, Inc.
“Battery Supply Agreement” means that certain Purchase Order #1, dated August 16, 2024, by and between the Project Company and BYD America LLC.
“▇▇▇▇ Circuit” has the meaning set forth in the SOLV EPC Agreement.
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“▇▇▇▇ Project” means a 238 Mwac/ 954 MWh battery energy storage system located in Kern County, California and owned and developed by the Project Company.
“Business Day” means any day other than a Saturday, a Sunday, or any other day on which banks in California or New York are authorized to be closed.
“Cash Portion” has the meaning set forth on Schedule 1.
“Casualty Defect” means any damage to the Project as a result of a casualty that has not been repaired and would reasonably be expected to materially interfere with (or materially increase the cost of) the operation and maintenance of the Project or the sale of electricity or RECs therefrom unless repaired.
“Certified Public Accountants” means a nationally recognized firm of independent public accountants selected from time to time. The initial Certified Public Accountant will be KPMG LLP.
“Circuit” has the meaning set forth in the SOLV EPC Agreement.
“Claim” means any and all judgments, awards, causes of action, lawsuits, suits, proceedings, investigations by any Governmental Authority or audits, losses (including amounts paid in settlement of claims, penalties and interest), assessments, fines, penalties, administrative orders or injunctions (including any loss of profits, consequential, punitive, incidental or special damages recovered by any third party, but excluding (a) loss of profits, consequential, punitive, incidental or special damages asserted by any Party or an Affiliate thereof and (b) damages or losses, the recovery of which is limited by Section 7.1(b)).
“Code” means the Internal Revenue Code of 1986, as amended, or any successor federal tax statute.
“Construction Management Services Agreement” means that certain Construction Management Services Agreement, dated as of September 27, 2024, by and between the Administrator and the Project Company.
“Contract” means any contract, lease, evidence of indebtedness (including any promissory note), purchase order, letter of credit, license, obligation, or other legally binding agreement or undertaking of any nature (whether written or oral), but not including any Governmental Approvals.
“Control” means the possession, directly or indirectly, of either of the following:
(a) (i) in the case of a corporation, more than 50% of the outstanding voting securities thereof; (ii) in the case of a limited liability company, partnership, limited partnership or joint venture, the right to more than 50% of the distributions (including liquidating distributions) therefrom; (iii) in the case of a trust or estate, including a
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business trust, more than 50% of the beneficial interest therein; and (iv) in the case of any other entity, more than 50% of the economic or beneficial interest therein; or
(b) in the case of any entity, the power or authority, through ownership of voting securities, by contract or otherwise, to exercise a controlling influence over the management of the entity.
“Corporate Tax Rate” means as of a given date of determination, the highest marginal U.S. federal corporate income tax rate applicable to corporations (which is twenty-one percent (21%) as of the Effective Date).
“Cost Segregation Report” means the Cost Segregation Study, attached as Appendix Two to the Appraisal, prepared by Appraiser in respect of the Project.
“CPUC” means the California Public Utilities Commission and any successor agency thereto.
“Domestic Content Bonus” means the ten percent (10%) bonus credit in respect of “domestic content” as provided in Section 48(a)(12)(C)(ii) of the Code.
“Domestic Content Bonus Certificate” means a certificate in the form of Exhibit E-1.
“Effective Date” has the meaning set forth in the Preamble.
“Employee Plan” shall mean all “employee benefit plans” as defined by Section 3(3) of ERISA, all specified fringe benefit plans as defined in Section 6039D of the Code, and all other bonus, incentive compensation, deferred compensation, profit-sharing, stock-option, stock appreciation right, stock-bonus, stock-purchase, employee-stock-ownership, savings, severance, change in control, supplemental unemployment, layoff, salary-continuation, retirement, pension, health, life-insurance, disability, accident, group-insurance, vacation, holiday, sick-leave, or welfare plan, and any other employee compensation or benefit plan, agreement, policy, practice, or contract (whether qualified or non-qualified, currently effective or terminated, written or unwritten) and any trust or other segregated funding vehicle (other than the Sponsor’s general assets) related thereto.
“Encumber”, “Encumbering”, or “Encumbrance” means the creation, or the existence, of any lien (statutory or otherwise), mortgage, deed of trust, claim, condition, equitable interest, option, right of first refusal, lease, easement, right of way, encroachment, charge, pledge, security interest, hypothecation, assignment, use restriction, limitation or other encumbrance of any kind or nature whatsoever, whether voluntary or involuntary, ▇▇▇▇▇▇ or inchoate (including
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any agreement to give any of the foregoing), and any conditional sale or other title retention agreement.
“Energy Community Bonus” means the ten (10) percentage point “energy community” ITC bonus credit pursuant to Section 48(a)(14) of the Code.
“Energy Community Bonus Certificate” means a certificate in the form of Exhibit E-2.
“Environmental Consultant” means Stantec Consulting Services, Inc.
“Environmental Law” means any applicable Law pertaining to, regulating, relating to or imposing liability, standards or obligations of conduct concerning (a) the prevention, abatement or elimination of pollution, (b) the protection or preservation of the environment, wildlife, wildlife habitat, cultural or archeological resources or natural resources, or (c) the actual or threatened Release, manufacture, processing, distribution, use, treatment, storage, disposal, transport, handling of, or exposure to, any Hazardous Substance, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. § 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. § 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the National Environmental Policy Act (42 U.S.C. § 4321 et seq.), the Endangered Species Act (16 U.S.C. § 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. § 703 et seq.), the Bald and Golden Eagle Protection Act (16 U.S.C. § 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. § 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), and the Occupational Safety and Health Act of 1970 (to the extent that it relates to the handling of and exposure to Hazardous Substances), and any similar or analogous state and local statutes or regulations promulgated thereunder of any Governmental Authority and all Governmental Approvals issued under such Environmental Laws.
“Environmental Report” means, with respect to the Project Site, Phase I and Phase II Environmental Site Assessment prepared in accordance with applicable ASTM standards by the Environmental Consultant.
“EPC Agreements” means, collectively, the SOLV EPC Agreement and the Switchyard EPC Agreement.
“EPC Contractors” means, collectively, the SOLV EPC Contractor and the Switchyard EPC Contractor.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” shall mean, with respect to any Person, any entity controlled by, controlling or under common control with such Person within the meaning of Section 414 of the Code or Section 4001(a)(14) or Section 4001(b) of ERISA.
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“EWG” means an “exempt wholesale generator,” under Section 1262(6) of PUHCA and the implementing regulations of FERC, at 18 C.F.R. §§ 366.1 and 366.7 (2024).
“FERC” means the Federal Energy Regulatory Commission or any successor organization.
“Final Completion” has the meaning given to “Final Acceptance” in the EPC Agreements.
“Financing Agreement” means that certain Financing Agreement dated as of December 23, 2024, by and among the Project Company, Pelicans Jaw Member B, LLC, a Delaware limited liability company, MUFG Bank Ltd., in its capacity as administrative agent thereunder, including its successors, designees and permitted assigns in such capacity, U.S. Bank Trust Company, National Association, in its capacity as collateral agent thereunder, including its successors, designees and permitted assigns in such capacity, the lenders and the other agents and persons party thereto.
“Financing Lien” means, with respect to the Project and the Project Company, the Lien on the Project, the membership interests of the Project Company and the assets owned by the Project Company granted pursuant to the applicable Financing Loan Documents.
“Financing Loan Documents” means, the Financing Documents (as such term is defined in the Financing Agreement).
“FPA” or “Federal Power Act” means the Federal Power Act, and all rules and regulations adopted thereunder.
“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time consistently applied throughout the relevant periods.
“Governmental Approvals” means all permits, licenses, approvals, determinations, registrations, variances, exemptions, authorizations and orders of any Governmental Authority.
“Governmental Authority” or “Governmental” means any national, provincial, regional, state, municipal or local authority, body, agency, ministry, court, judicial or administrative body, taxing authority, regulatory authority or other governmental organization, including FERC, CAISO, CPUC and NERC, having jurisdiction or effective control over Seller, Sponsor, Purchaser (or any member of Purchaser), the Project Company, their respective Affiliates, or the Project, or the conduct, operation, or actions thereof.
“Hazardous Substance” means any material, chemical, substance, waste or emission that, by its nature or use, is defined, listed or regulated as hazardous, toxic, radioactive or as a pollutant or contaminant under any Environmental Law, including without limitation any petroleum or petroleum-derived substance, waste or additive, asbestos or any asbestos-containing material, polychlorinated biphenyls, per- and polyfluoroalkyl substances, including, but not limited to perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) or radon.
“Independent Engineer” means ICF Resources, LLC.
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“Independent Engineer Report” means, with respect to the Project, the report of the Independent Engineer.
“Insurance Consultant” means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Risk Partners.
“Insurance Report” means, with respect to the Project Company, the report of the Insurance Consultant delivered on the Effective Date.
“IRS” means the U.S. Internal Revenue Service.
“ITC” means an investment tax credit pursuant to Sections 38(b)(1), 46(2) and 48(a) of the
Code.
“ITC Eligible Property” means property that (i) is described in Section 48(a)(3)(A)(i) or (ix) of the Code and (ii) is “solar energy property” as defined under Treasury Regulation Section 1.48-9(e)(1) or energy storage technology as defined under Treasury Regulation Section 1.48-9(e)(10).
“Knowledge of Purchaser” means the actual knowledge of the authorized persons of Purchaser.
“Knowledge of Seller” means the actual knowledge after due inquiry of those individuals holding the titles (or performing job responsibilities commensurate with such titles) at Sponsor set forth on Exhibit B.
“Law” means any applicable constitutional provision, statute, act, code (including the Code), law, regulation, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision, declaration or interpretive or advisory opinion or letter of a Governmental Authority.
“Lenders” means the “Lenders” as defined in the Financing Agreements.
“Lien” means any liens, pledges, security interests, mortgages, deeds of trust or other Encumbrances.
“Major Subcontractors” means (i) each supplier of Major Equipment (as defined in the EPC Agreements for the Project Company) and (ii) each subcontractor whose contract or contracts (in the aggregate) with the Project Company and the applicable EPC Contractor, or any of their subcontractors, require payments by the Project Company and the EPC Contractor (or their subcontractors) in excess of five hundred thousand dollars ($500,000).
“Material Adverse Effect” means any change or effect that is, or would reasonably be expected to be, materially adverse to the business, assets, liabilities, financial condition, operations, or results of operations of the Sponsor, the Project or the Project Company, or to the ability of the Sponsor or Project Company to perform its respective material obligations under the Material Project Contracts.
“Material Project Contracts” means with respect to the Project, (a) those agreements listed as “Material Project Documents” and those agreements listed as “Real Estate Documents”,
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in each case, on the applicable portion of Annex 1 hereto, or any agreement entered into in replacement or substitution of the foregoing, (b) the Construction Management Services Agreement, (c) any other Contract to which the Project Company is a party under which it could reasonably be expected to have obligations, liabilities or revenues equal to or in excess of six hundred thousand dollars ($600,000) in any year or two million two hundred fifty thousand dollars ($2,250,000) over the
term of the contract; provided, that for the purposes of calculating such dollar threshold, any series of related transactions shall be considered as one transaction and all Contracts in respect of such transactions shall be considered as one Contract, (d) any Contract that provides for non-monetary obligations on the part of the Project Company, the non-performance of which obligations could reasonably be expected to have a Material Adverse Effect and (e) any other guarantees in respect of any of the foregoing. For the avoidance of doubt, “Material Project Contracts” shall not include this Agreement, the Financing Loan Documents or any Ancillary Real Estate Agreements.
“Mechanical Completion” means (a) Circuit Group Mechanical Completion (as defined in the SOLV EPC Agreement) in respect of the first three Circuits (as defined in the SOLV EPC Agreement) has occurred, as evidenced by an executed Circuit Group Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) for each such Circuit, (b) ▇▇▇▇ Circuit Group Mechanical Completion (as defined in the SOLV EPC Agreement) in respect of the first two (2) of the six (6) ▇▇▇▇ Circuits has occurred, as evidenced by an executed ▇▇▇▇ Circuit Group Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) for each such ▇▇▇▇ Circuit, (c) High Voltage Mechanical Completion (as defined in the SOLV EPC Agreement) has occurred, as evidenced by an executed High Voltage Mechanical Completion Certificate (as defined in the SOLV EPC Agreement) and (d) Mechanical Completion (as defined in the Switchyard EPC Agreement) has occurred, as evidenced by an executed Mechanical Completion Certificate (as defined in the Switchyard EPC Agreement).
“MSA” means that certain Management Services Agreement, to be dated on or about thirty (30) days prior to the Purchase Date, between Purchaser and the Administrator.
“MW” means megawatt.
“NERC” means the North American Electric Reliability Corporation, any regional entity exercising delegated authority therefrom, and any successor entity.
“OFAC Blocked List” means the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control, or any other list of blocked or designed persons maintained by the Office of Foreign Assets Control, or any replacement list intended to be a successor to such list.
“Party” has the meaning set forth in the Preamble.
“Permitted Equity Encumbrances” means (a) those restrictions on transfer imposed by applicable Law, including applicable securities laws, (b) Liens or restrictions imposed on
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transfers set forth in the organizational documents of any Person, and (c) in the case of assets of, and the membership interests in the Project Company, the Financing Lien.
“Permitted Liens” means (a) Encumbrances imposed by any Governmental Authority for Taxes (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceeding shall not involve any material risk of the sale, forfeiture or loss of any part of any Project or (y) the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Purchaser, (b) mechanics’, materialmen’s, repairmen’s and other similar liens arising in the ordinary course of business or incident to the construction, improvement or restoration of a Project in respect of obligations (i) that are not yet due or (ii) that are being contested in good faith by appropriate proceedings so long as (x) such proceedings shall not involve any material risk of forfeiture, sale or loss of any part of the Project or (y) the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Purchaser, (c) minor defects, easements, rights-of-way, restrictions and other similar Encumbrances incurred in the ordinary course of business and Encumbrances, licenses, restrictions on the use of property or minor imperfections in title that do not materially impair the property affected thereby for the purpose for which the affected property was acquired by the Project Company or the Seller, as applicable, or materially adversely interfere with the operation and maintenance of the Project, (d) Encumbrances created by or pursuant to the Material Project Contracts, (e) judgment Encumbrances that (i) do not involve any material risk of the sale, forfeiture or loss of any part of the Project, (ii) within fifteen (15) Business Days of their existence or after the entry thereof, are being contested in good faith and by appropriate proceedings, and (iii) for which the payment thereof is fully covered by adequate reserves in accordance with GAAP, bonds or other security reasonably acceptable to the Purchaser, (f) deposits or pledges required to secure the performance of statutory obligations, appeals, supersedes and other bonds in connection with judicial or administrative proceedings and other obligations of a like nature, (g) zoning, entitlement, conservation restrictions and other land use and environmental regulations by Governmental Authorities, provided that the Project Company is not in material violation thereof, (h) Encumbrances on the proceeds of insurance policies that secure the financing of premiums to be paid under such insurance policies, (i) Liens and any right of setoff in favor of a bank or other financial institution arising by operation of applicable Laws or in the ordinary course of business Encumbering deposits held by such bank or financial institution, (j) Permitted Equity Encumbrances, (k) the Financing Lien in respect of the Project, (l) all exceptions and Encumbrances listed or disclosed in the Effective Date Title Policy or the Effective Date Survey, as applicable, or any other exceptions and Encumbrances listed or disclosed in any date-down endorsements to the Effective Date Title Policy issued after the Effective Date, or any update to the Effective Date Survey issued after the Effective Date, (o) any Encumbrances disclosed in a landowner estoppel reasonably acceptable to Purchaser and (p) any other Encumbrance approved by the Purchaser after the Effective Date.
“Person” means any individual, partnership, joint venture, limited liability company, limited liability partnership, corporation, trust, Governmental Authority or other entity.
“Placed In Service” means, with respect to the Project or each Circuit or ▇▇▇▇ Circuit, as applicable, (i) all necessary permits and licenses for operation have been obtained, (ii) all
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critical tests necessary for proper operation have been completed, (iii) care, custody, and control, and risk of loss and title, have transferred from the EPC Contractors to the Project Company under the EPC Agreements, (iv) initial synchronization to the grid has occurred and (v) daily operation has begun.
“Placed In Service Date” means the date on which the Project was Placed In Service.
“Power Purchase Agreement” means that certain Renewable Power Purchase and Energy Storage Service Agreement, dated as of February 9, 2024, by and between the Power Purchaser and the Project Company, as amended by that (a) certain Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of May 1, 2024, and (b) that certain
First Amendment to Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of December 13, 2024.
“Power Purchaser” means San Diego Community Power, a California joint power authority.
“Prohibited Person” means any Person that is, or is 50% or more owned by, Controlled by, or acting on behalf of a Person that is, (a) listed on the OFAC Blocked List, (b) incorporated or organized under the laws of a country, territory or region that is the subject of comprehensive Sanctions (a “Sanctioned Country”), (c) otherwise a target of Sanctions such that any party hereto would be prohibited or restricted under Sanctions from engaging in trade, business or other activities with such Person.
“Project” has the meaning set forth in the recitals hereof.
“Project Company” has the meaning set forth in the recitals hereof.
“Project Improvements” means, collectively, all solar arrays, collection lines, inverters, roads, substations, transmission lines, ▇▇▇▇ Project equipment, operations and maintenance buildings and other facilities, points of interconnection, and any additional facilities or improvements located on the Project Site that are necessary for the operation of or otherwise comprise the Project.
“Project Site” means the real property described in Annex 2.
“Proposed Tax Law Change” means as of the Purchase Date, any proposed change in or amendment to the Code or another applicable federal income tax statute under legislation that is (i) passed by either house of Congress, (ii) included in a bill reported by the House Ways and Means Committee or the Senate Finance Committee, or (iii) included in currently proposed written federal legislation from (1) the Executive Branch, (2) the Majority Leader of the United States Senate or (3) the Speaker of the United States House of Representatives, in either case, on or after the Effective Date and before such Purchase Date, that in each case, (A) if it became law, (1) would materially affect the federal income tax treatment of or federal income tax
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consequences to Purchaser or FNBC Leasing Corporation (based upon the expectations from purchasing and holding the Project Company) or (2) would repeal, change, amend, or modify Section 6418 of the Code in a manner that prohibits or materially affects the FNBC Leasing Corporation’s or Purchaser’s ability to transfer ITCs pursuant to Section 6418 of the Code with respect to the Project; provided, that, for purposes of subclause (2), if any proposed change or amendment would allow the Purchaser to continue to rely on Section 6418 of the Code and the Treasury Regulations thereunder effective as of the Effective Date with respect to the Project such that such proposed change or amendment would not repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that prohibits or materially affects the FNBC Leasing Corporation’s or Purchaser’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code, then such proposed change or amendment will not be considered a Proposed Tax Law Change, and (B) is reasonably likely to become law taking into account public statements from relevant congressional leaders. For purposes of this definition, a “Proposed Tax Law Change” shall not include any proposed change that would affect FNBC Leasing Corporation’s capacity to utilize tax benefits or realize actual tax savings therefrom (including as a result of a member-level limitation), except that a “Proposed Tax Law Change” shall take into account a proposed change that would impose a member-level limitation that would apply to all corporate taxpayers or all financial institutions to limit utilization of tax benefits from the Project regardless of the taxpayer’s particular facts and circumstances (such as a change in the Code that would require corporate taxpayers or financial institutions to recognize the ITC over five (5) years instead of the year that the property was placed in service for U.S. federal income tax purposes).
“PUHCA” means the Public Utility Holding Company Act of 2005 and FERC’s regulations thereunder.
“Purchased Interests” means all of the Project Company’s membership interests purchased by Purchaser from any Seller pursuant to Section 2.1(a).
“Purchaser” has the meaning set forth in the Preamble.
“PWA Certificate” means a certificate substantially in the form of Exhibit F.
“PWA Compliance Report” means a report from the PWA Consultant, in form and substance reasonably acceptable to the Purchaser, addressing the Project’s compliance with the PWA Requirements, which for clarity shall include review of all relevant documentation then available to the PWA Consultant, that reasonably concludes either (ii) that the Project has fully satisfied the PWA Requirements through the date specified in the report or (iii) that the Project has satisfied the PWA Requirements through the date specified in the report except for one or more specified violations and, in each case, identifies supporting documentation and explains in reasonable detail its conclusions (including, in the case of scenario (b), each violation and a
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remediation plan for correcting each such violation (which shall include a calculation of any PWA Cure Costs required for the Project to comply with the PWA Requirements notwithstanding such violation).
“PWA Consultant” means ▇▇▇▇▇ ▇▇▇▇▇ Advisory Group, LP.
“PWA Cure Costs” means the sum of the amount described in (a) Sections 48(a)(10)(B) and 45(b)(7)(B) of the Code for failure to satisfy the “prevailing wage requirements” (within the meaning of PWA Requirements), and (b) Sections 45(b)(8)(D) in respect of failure to satisfy the “apprenticeship requirements” (within the meaning of PWA Requirements).
“PWA Requirements” means the “prevailing wage” requirements (as set forth in Sections 48(a)(10) and 45(b)(7) of the Code), the “apprenticeship” requirements (as set forth in Sections 48(a)(11) and 45(b)(8) of the Code), and the recordkeeping requirements set forth therein, including making any necessary payments for any required correction and penalty amounts under Sections 48(a)(10)(B) and 48(a)(11) of the Code, as clarified by IRS Notice 2022-61, the Frequently Asked Questions about the prevailing wage and apprenticeship requirements under the Inflation Reduction Act published by the IRS, final Treasury Regulations Sections 1.45-6 through 1.45-8, 1.45-12, and 1.48-13, and any other guidance, instructions or terms and conditions published or issued by the United States Treasury Department or the IRS in respect of or under Section 48 of the Code as it relates to the prevailing wage and apprenticeship requirement therein applicable to the Project.
“Real Estate Documents” means with respect to the Project, those documents listed as “Real Estate Documents” under the applicable section of Annex 1 and any other agreement entered into by the Project Company in respect of the Project after the Effective Date which is a material written agreement pertaining to real property owned or leased by the Project Company or is a material written agreement pursuant to which the Project Company has rights with respect to real property under easements, rights of way or otherwise.
“RECs” or “Renewable Energy Credits” means any credits (including all renewable energy credits as defined by California Public Utilities Code Section 399.14.3.2 and in CPUC Decision (D.) ▇▇-▇▇-▇▇▇, credit certificates, green tags or similar environmental or green energy attributes to the generation of electric energy from Eligible Renewable Energy Resources (as each such term is defined in Public Utilities Code Section 399.12(h), as may be amended from time to time or as further defined or supplemented by law)). RECs are measured in one MWh increments and evidenced by the transfer of one Western Renewable Energy Generation Information System Certificate. The term also includes other environmental attributes such as credit certificates, green tags, allowances, offsets, entitlements or other similar green energy attributes.
“Release” has the same meaning as under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601(22).
“Sanctions” means any U.S. laws, regulations, executive orders, embargoes or restrictive measures relating to the economic sanctions programs administered by the U.S. Department of
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the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, or any other Governmental Authority in the United States.
“SB Energy Affiliate” means all Subsidiaries of Sponsor.
“Seller” has the meaning set forth in the Preamble.
“Seller Documents” means this Agreement and the Bill of Sale.
“Seller Parent” has the meaning set forth in the recitals hereof.
“SOLV EPC Agreement” means that certain Turnkey Engineering, Procurement and Construction Agreement, dated as of August 13, 2024, by and between the Project Company and the SOLV EPC Contractor, as amended by that certain First Amendment to the Engineering, Procurement and Construction Agreement, dated as of February 13, 2025.
“SOLV EPC Contractor” means SOLV Energy, LLC.
“Sponsor” means SBE US Holdings One, LLC, a Delaware limited liability company.
“Subsidiary” or “Subsidiaries” mean, with respect to any Person, any other Person that, directly or indirectly through one of more intermediaries, is Controlled by such first Person.
“Substantial Completion” means the achievement of (i) Substantial Completion (as defined in the EPC Agreements), as evidenced by executed Substantial Completion Certificates (as defined in each EPC Agreement), (ii) Commissioning Completion (as defined in the Battery Supply Agreement), as evidenced by an executed Commissioning Completion Certificate (as defined in the Battery Supply Agreement) and (iii) the Commercial Operation Date (as defined in the Power Purchase Agreement).
“Switchyard EPC Agreement” means that certain Engineering, Procurement and Construction Agreement, dated July 25, 2024, by and between the Project Company and the Switchyard EPC Contractor, as amended by that certain First Amendment to Engineering Procurement and Construction Agreement, dated as of January 29, 2025, by and between the Project Company and the Switchyard EPC Contractor.
“Switchyard EPC Contractor” means, ▇▇▇▇▇▇▇▇ Corporation, a Delaware corporation.
“Tax” or “Taxes” (and with correlative meaning, “Taxable” and “Taxing”) mean any United States federal, state or local, or non-United States, income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, withholding, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, net worth, intangibles, social security, unemployment, disability, payroll, license, employee or other tax or similar levy, of any kind whatsoever, including any interest, penalties or additions to tax in respect of the foregoing.
“Tax Law Change” means as of any date, (i) any change in or amendment to the Code or other applicable federal income tax statute, (ii) any issuance, promulgation and/or change in, or
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of, temporary or final Treasury Regulations, (iii) any published and generally applicable guidance, notice, proposed regulation or announcement, in each case, in written form and published by the Treasury, IRS or any other Governmental Authority that applies, advances or articulates a new or different interpretation or analysis of the federal income tax law, or (iv) any change in the interpretation of the Code or Treasury Regulations attributable to a decision by the United States Tax Court, a United States District Court, United States Court of Appeals or the United States Supreme Court, in each case issued on or after the Effective Date and before such relevant date and that (A) materially affects the federal income tax treatment of or federal income tax consequences to Purchaser or FNBC Leasing Corporation (based upon the expectations from purchasing and holding the Project Company) or (B) repeals, changes, amends, or modifies Section 6418 of the Code in a manner that prohibits or materially affects the FNBC Leasing Corporation’s or Purchaser’s ability to transfer ITCs pursuant to Code Section 6418 with respect to the Project; provided, that, for purposes of subclause (B), if items under (i) – (iv) would allow the Purchaser to continue to rely on Section 6418 of the Code and the Treasury Regulations thereunder effective as of the Effective Date with respect to the Project such that such change, amendment, or publication would not repeal, change, amend, or modify Section 6418 of the Code as applicable to the Project in a manner that would prohibit or materially affect the FNBC Leasing Corporation’s or Purchaser’s ability to transfer ITCs with respect to the Project pursuant to Section 6418 of the Code, then such change, amendment, or publication will not be considered a Tax Law Change. For purposes of this definition, a “Tax Law Change” shall not include any change that would affect the FNBC Leasing Corporation’s capacity to utilize tax benefits or realize actual tax savings therefrom (including as a result of a member-level limitation), except that a “Tax Law Change” shall take into account a change that imposes a member-level limitation that would apply to all corporate taxpayers or all financial institutions to limit utilization of tax benefits from the Project regardless of the taxpayer’s particular facts and circumstances (such as a change in the Code that would require corporate taxpayers or financial institutions to recognize the ITC over five (5) years instead of the year that the property was placed in service for U.S. federal income tax purposes).
“Tax Return” means any written return, report, declaration, statement, claim for refund, information return or other document (including any amendments thereto and any related or supporting schedule, attachment or other information) filed with or supplied to, or required to be filed with or supplied to, any Governmental Authority in connection with the determination, assessment, collection or administration of any Taxes or the administration of any Laws, regulations or administrative requirements relating to any Taxes.
“Term” means the period commencing on the Effective Date and ending upon termination pursuant to Article 4.
“Title Company” means Old Republic National Title Insurance Company.
“Title Policy” means the ALTA 2021 extended coverage owner’s policy of title insurance (including all endorsements attached thereto) issued by the Title Company as Policy No. OX- 15444916, insuring the Project Company’s marketable leasehold and easement title to the Project Site in the form attached hereto as Annex 3.
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“Transmission Consultant” means nFront Consulting, LLC.
“Transmission Report” means the report of the Transmission Consultant with respect to the Project.
“Treasury Regulations” means the federal income tax regulations promulgated under the Code (including corresponding provisions of successor Treasury Regulations).
1.2 Construction. Unless the context requires otherwise: (a) the gender (or lack of gender) of all words used in this Agreement includes the masculine, feminine, and neuter; (b) words used or defined in the singular include the plural and vice versa; (c) references to Articles and Sections refer to Articles and Sections of this Agreement; (d) references to Annexes, Exhibits and Schedules refer to the Annexes, Exhibits and Schedules attached to this Agreement, each of which is made a part hereof for all purposes (as the same may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement); (e) references to Laws refer to such Laws as they may be amended from time to time, and references to particular provisions of a Law include any corresponding provisions of any succeeding Law; (f) terms defined in this Agreement are used throughout this Agreement and in any Annexes, Exhibits or Schedules hereto as so defined; and (g) references to any agreement, contract or document (including any referred to herein in any exhibit, schedule or annex hereto) means such agreement, contract or document as the same may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement; (h) the words “herein”, “hereof” and “hereunder” shall refer to this Agreement as a whole and not to any particular section or subsection of this Agreement; (i) references to money refer to legal currency of the United States of America; (j) references to any Person include such Person’s successors and permitted assigns, unless otherwise specifically provided herein; and (k) the words “include,” “includes” or “including” shall mean “including, without limitation”.
ARTICLE 2
PURCHASE OF PROJECT COMPANY
2.1 Purchase.
(a) Subject to the terms and conditions hereof, Purchaser shall purchase from Seller, all right, title and interest of Seller in one hundred percent (100%) of the membership interests of the Project Company (the “Purchased Interests”) in exchange for the Project Company Purchase Price (as defined below). The consummation of the purchase of the Purchased Interests will take place pursuant to this Agreement on the date (or as soon as practicable thereafter) determined by Purchaser and Seller upon which Mechanical Completion shall have been achieved and each other condition set forth in Section 2.3 and Section 2.4 for the Project Company has been satisfied or waived (the “Purchase Date”). The purchase price to be paid to Seller in respect of the Purchased Interests (the “Project Company Purchase Price”) shall be as specified on Schedule 1 and substantiated by the Appraisal. The Project Company Purchase Price shall be paid to the Seller in the manner set forth in Schedule 1.
(b) On the Purchase Date, Purchaser will purchase and assume all of Seller’s right, title and interest in the Purchased Interests.
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(c) Tax Treatment. As a result of the U.S. federal income Tax classification of the Project Company as a disregarded entity, the Parties agree to treat the transfer of the Purchased Interests pursuant to this Agreement as a sale by Seller and as a purchase by Purchaser of all of the Project’s assets and an assumption by Purchaser of all of the liabilities of the Project Company on the Purchase Date for U.S. federal (and where applicable, state and local) income Tax purposes. The Parties acknowledge and agree that, for U.S. federal income Tax purposes, the allocation of the Project Company Purchase Price among the Project’s assets shall be made in accordance with the allocation set forth in the Cost Segregation Report. The Project Company, Purchaser and Seller agree to file all U.S. federal, state, and local Tax Returns in accordance with the provisions of this Section 2.1(c), and such agreed allocation. Except as otherwise required pursuant to a final determination following a federal income Tax audit, no Party nor any of its respective Affiliates (including the Project Company) shall take a Tax position that is inconsistent with the provisions of this Section 2.1(c).
2.2 Conditions Precedent to the Effective Date. The effectiveness of this Agreement is subject to the satisfaction or waiver by the Parties of each of the conditions set forth in this Section 2.2. The execution of this Agreement by each Party, and the delivery of such executed copy to each other Party, evidences the satisfaction or waiver (by each Party) of each such condition:
(a) Each of the representations and warranties of Seller in Section 3.1 is true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality) as of the Effective Date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that date);
(b) Each of the representations and warranties of Purchaser in Section 3.2 is true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality) as of Effective Date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that date);
(c) (i) Purchaser has received fully executed copies of each of the Material Project Contracts listed on Annex 1 that have been executed as of the Effective Date and each such Material Project Contract is in full force and effect and (ii) no event has occurred and is continuing that would constitute a default by Seller, Sponsor, the Project Company or, to the Knowledge of Seller, any other party under any such Material Project Contracts or which, with notice or the lapse of time or both, would reasonably be expected to constitute an event of default under such Material Project Contracts;
(d) (i) Each of Sponsor, Seller, and the Project Company shall have obtained and made available to Purchaser all material Governmental Approvals required to be obtained by it for the leasing of the Project Site, and the acquisition, siting, development, construction, operation, ownership and maintenance of the Project and the sale at wholesale of electric energy and sale of RECs therefrom, except for any such material Governmental Approval not yet required to be obtained but which is reasonably expected to be obtained in the ordinary course on commercially reasonable terms when required, and all such obtained material Governmental
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Approvals shall be validly issued and in full force and effect and no Person has filed an administrative or judicial challenge to the issuance of any such Governmental Approval that has not been resolved, and (ii) each of Sponsor, Seller, Purchaser and the Project Company shall have obtained all material Governmental Approvals required for the execution, delivery and, to the extent required on the Purchase Date, performance of the Material Project Contracts and the Seller Documents to which such Person is party. For the avoidance of doubt, material Governmental Approvals do not include those which are ministerial in nature and obtainable in the ordinary course of business;
(e) Purchaser has received the Independent Engineer Report and, to the extent applicable, a reliance letter with respect thereto, in form and substance reasonably satisfactory to Purchaser;
(f) Purchaser has received the Environmental Report and, if the Environmental Report was not prepared for the benefit of Purchaser, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(g) Purchaser has received the Insurance Report and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(h) Purchaser has received (i) an update to the existing ALTA/NSPS Land Title Survey of the Project Site (a) showing each tract of land referenced in the Title Policy, the location of all exceptions to title shown on the Title Policy, as updated by the Effective Date Endorsement, that are capable of being plotted (or otherwise stating that the exception is “not plottable,” “blanket in nature,” “does not affect,” or is “not addressed herein”), and the proposed location of all Project Improvements, (b) prepared by a land surveyor duly licensed and registered in the State of California, (c) including, if applicable, Table A Items 1, 2, 3, 4, 6(A)(B), 7(A), 8, 11, 12, 13, 14, 15, 16, 17, 18, and 19, (d) prepared in accordance with the 2021 ALTA Requirements, (e) certified to the Project Company, the Title Company, and Purchaser, and (f) which is otherwise in form and substance reasonably satisfactory to the Title Company and Purchaser (the “Effective Date Survey”), and (ii) an irrevocable commitment from the Title Company, in the form of a closing instruction letter signed by the Title Company (in form and substance reasonably satisfactory to Purchaser), to issue a date down endorsement to the Title Policy substantially in the form of the proforma date down endorsement, which shall which shall (a) bring forward the effective date of the Title Policy to the Effective Date, and (b) if applicable and to the extent constituting Permitted Liens or otherwise reasonably acceptable to the Purchaser, include additional title exceptions imposed subsequent to the effective date of the Title Policy (the “Effective Date Endorsement,” and together with the Title Policy, the “Effective Date Title Policy”).
(i) Each of Sponsor, the Seller, Purchaser and the Project Company has received all third party consents, waivers, authorizations and approvals required for the execution, delivery and performance of this Agreement, the other Seller Documents and each of the Material Project Contracts, each of which is in form and substance reasonably satisfactory to the Parties and copies of the same have been delivered to the Parties;
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(j) No Material Adverse Effect has occurred since December 31, 2023 and is continuing provided, that no Tax Law Change or Proposed Tax Law Change shall be taken into account in determining whether a Material Adverse Effect shall have occurred for purposes of this Section 2.2(j);
(k) [Reserved];
(l) Purchaser has received from Sponsor and Seller (i) an incumbency certificate dated as of the date hereof, (ii) a good standing certificate, dated as of a recent date, from the applicable Secretary of State, (iii) resolutions of the board of directors, or other equivalent governing and managing body, authorizing and approving the execution of this Agreement and each other Seller Document, as applicable, and the transactions contemplated hereunder and thereunder, as applicable, certified by an authorized representative as of the date hereof and (iv) formation documents certified by an authorized representative as of the date hereof;
(m) Purchaser has received an Appraisal with respect to the Project and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(n) Purchaser has received a draft Cost Segregation Report with respect to the Project and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(o) Purchaser has received the Transmission Report and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(p) Purchaser has received (i) a detailed plan or outline describing the procedures and processes for ensuring compliance with the PWA Requirements and evidence of engagement with the PWA Consultant (which shall include a description of the services to be performed by the PWA Consultant to demonstrate compliance with the PWA Requirements); (ii) an executed Domestic Content Bonus Certificate and evidence, reasonably satisfactory to Purchaser, that the Project will be eligible or the ten percent (10%) bonus credit in respect of “domestic content” as provided in Section 48(a)(12)(C)(ii) of the Code, and (iii) an executed Energy Community Bonus Certificate and evidence, reasonably satisfactory to Purchaser, that the Project will be eligible for the Energy Community Bonus.
2.3 Conditions Precedent to the Obligations of Purchaser on the Purchase Date. The obligations of Purchaser to pay to the Seller the Project Company Purchase Price and to consummate the Purchase of a Project Company on the Purchase Date will be subject to the satisfaction of each of the following conditions with respect to the Project Company, except for any such condition that is waived by the Purchaser:
(a) Each of the representations and warranties of Seller in Section 3.1 of this Agreement is true and correct in all respects (if qualified by materiality) and in all material respects (if not qualified by materiality) as of the Purchase Date (except those representations
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and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that date);
(b) The Seller shall have executed and delivered a Bill of Sale and Assignment in the form substantially as attached hereto as Exhibit A (the “Bill of Sale”);
(c) Purchaser shall have received a duly executed IRS Form W-9 from Seller (or, if Seller is a disregarded entity for U.S. federal income Tax purposes, a certificate from Seller’s sole member);
(d) (A) Mechanical Completion and each of the progress conditions set forth on Annex 4 shall have been satisfied and (B) Purchaser shall have received the Independent Engineer Circuit Mechanical Completion Certificate issued by the Independent Engineer in substantially the form of Exhibit C, certifying that (i) Mechanical Completion and the progress conditions set forth on Annex 4 have been satisfied and (ii) (x) no portion of the Project (1) has been energized, interconnected, or synchronized with the electrical grid (and, with respect to the ▇▇▇▇ Project, the PV Project) and lockout/tagout equipment and mechanics which prevent any energization or backfeed of any Circuit or ▇▇▇▇ Circuit have been installed, (2) has actually generated or charged/discharged meterable quantities of electricity or is capable of generating or charging/discharging electricity on a sustained or reliable basis, or (3) has successfully performed any critical tests necessary for proper operation of the PV Project or the ▇▇▇▇ Project, including Commissioning (under the Battery Supply Agreement), or any testing requiring energization under Exhibit C-1 to the SOLV EPC Agreement, and (y) the Project Company does not hold risk of loss or care, custody and control of any portion of the Project.
(e) (i) Each of Seller and the Project Company shall have performed the obligations required to be performed by it under this Agreement and the Material Project Contracts to which it is a party (in each case to the extent such obligations are required to have been performed as of or prior to the Purchase Date), except to the extent that failure to perform such obligations would not reasonably be expected to result in a Material Adverse Effect with respect to the Project Company and (ii) the Seller shall have delivered to Purchaser (A) each additional Material Project Contract to which the Project Company is a party not previously delivered, each of which shall be in form and substance reasonably satisfactory to Purchaser, and (B) each amendment to each Material Project Contract to which the Project Company is a party that has been executed since the Effective Date and each of which shall be in form and substance reasonably satisfactory to Purchaser;
(f) Purchaser has received an update to the Independent Engineer Report and, to the extent applicable, a reliance letter with respect thereto, in form and substance reasonably satisfactory to Purchaser;
(g) Purchaser has received an update to the Environmental Report (solely if any of the applicable tasks required pursuant ASTM standard E1527-21 to prepare such Environmental Report were completed more than one hundred eighty (180) days prior to the Purchase Date) and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
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(h) Purchaser has received either (A) written confirmation from the Insurance Consultant, dated no more than twenty (20) days prior to the Purchase Date, that there have been no material changes through such date to the inputs and assumptions which formed the basis of the conclusions with respect to the Project in the Insurance Report made available on or around the Effective Date pursuant to Section 2.2(g) or (B) an update to the Insurance Report with respect to the Project and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(i) Purchaser has received (i) written confirmation from the Transmission Consultant, dated no more than twenty (20) days prior to the Purchase Date, that there have been no material changes through such date to the inputs and assumptions which formed the basis of the conclusions in the Transmission Report made available on or around the Effective Date pursuant to Section 2.2(o) or (ii) a bringdown of the Transmission Report with respect to the Project and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(j) No Material Adverse Effect has occurred since the Effective Date and is continuing; provided, that, for the purposes of this provision Material Adverse Effect shall relate only to the Purchaser, Sponsor, the Seller, the Project and the Project Company; provided further, that without limiting Section 2.3(k) no Tax Law Change or Proposed Tax Law Change (which are dealt with exclusively in Section 2.3(k) below) shall be taken into account in determining whether a Material Adverse Effect shall have occurred for purposes of this Section 2.3(j).
(k) There has been (i) no Tax Law Change or Proposed Tax Law Change that has not been addressed in a manner satisfactory to the Purchaser and (ii) no material adverse change in Law (excluding any Tax Law Change) with regard to the Project Company or the Project, in each case, affecting Purchaser or which would (x) make it illegal for any member of Purchaser (1) to make capital contributions to Purchaser or (2) acquire, own or hold membership interests in Purchaser or (y) effectively preclude any member of Purchaser from (1) making capital contributions to Purchaser or (2) acquiring, owning or holding limited liability company interest in Purchaser;
(l) Except as listed on Part III of Schedule 3.1(k), no action or proceeding has been instituted or, to the Knowledge of Seller, threatened by any Governmental Authority or any other Person (i) against Sponsor, the Seller, Purchaser or the Project Company that could reasonably be expected to impair, restrain, prohibit or invalidate the transactions contemplated by this Agreement, the other Seller Documents or the Material Project Contracts with respect to the Project or (ii) regarding the effectiveness or validity of any material Governmental Approval with respect to the Project or Project Company;
(m) No condemnation is pending or, to the Knowledge of Seller, threatened in writing with respect to the Project, or any portion thereof material to the ownership or operation of the Project, and no unrepaired Casualty Defect exists with respect to the Project or any portion thereof other than (i) as has been repaired to the reasonable satisfaction of the Purchaser or (ii) in the opinion of the Independent Engineer, (1) such Casualty Defect is capable of repair in a
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reasonably satisfactory time-frame and (2) an adequate reserve, reasonably acceptable to the Purchaser has been established for such repair;
(n) Purchaser has received a copy of the final Appraisal (which shall be a complete bring-down of the Appraisal delivered pursuant to Section 2.2(m), as updated for any adjustments to the Appraisal analysis and any change in facts or circumstances with respect to the Project (including any change in the Project’s qualification for the Domestic Content Bonus or the Energy Community Bonus) and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(o) Purchaser has received a bring-down of the Cost Segregation Report in respect of the Project, which draft shall be dated no more than ten (10) days prior to the Purchase Date and, to the extent applicable, a reliance letter with respect thereto, each in form and substance reasonably satisfactory to Purchaser;
(p) (i) No (A) event of default or (B) material default or material breach which, with the passage of time or the giving of notice, would reasonably be expected to become an event of default, exists and is continuing under any Material Project Contract with respect to the Project or under this Agreement or any other Seller Document and (ii) no change, event or effect has occurred that is, or would reasonably be expected to be, materially adverse to (1) the Power Purchaser’s ability to perform its obligations under the Power Purchase Agreement or (2) the EPC Contractors’ ability to perform its obligations under the EPC Agreements;
(q) [Reserved];
(r) Purchaser shall have received evidence reasonably satisfactory to it of the delivery of all lien waivers received by the Project Company (such lien waivers in substantially the form attached as Exhibit D) in connection with payments made to each applicable EPC Contractor and any Major Subcontractors with a value of the applicable subcontract in excess of Five Hundred Thousand Dollars ($500,000), each as required to be provided under the EPC Agreements;
(s) The Project Company shall be self-certified as an EWG in accordance with 18 C.F.R. § 366.7; and
(t) Purchaser has received (i) an executed PWA Certificate and evidence, reasonably satisfactory to Purchaser, that the Project has complied with the PWA Requirements (including compliance certificates, documentation, and other supporting information under the Major Project Contracts or other applicable contract parties) through approximately thirty (30) days prior to the Purchase Date, (ii) the PWA Compliance Report from the PWA Consultant in respect of the Project’s compliance with the PWA Requirements through approximately thirty (30) days prior to the Purchase Date, (iii) to the extent applicable, evidence that Seller has set or aside funds for the Company equal to the total PWA Cure Costs required for the Project Company to fully comply with the PWA Requirements as of the Purchase Date, as determined by the PWA Consultant and identified in the PWA Compliance Report delivered in connection with the Purchase Date, (iv) evidence, to the extent not previously received, reasonably satisfactory to Purchaser, that the Project will be eligible for the Domestic Content Bonus, and
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(v) an executed bring-down Energy Community Bonus Certificate and evidence, reasonably satisfactory to Purchaser, that the Project will be eligible for the Energy Community Bonus; provided that, clauses (iv) and (v) of this Section 2.3(t) shall be a condition to the occurrence of the Purchase Date solely if the Domestic Content Bonus or the Energy Community Bonus, as applicable, for the Project is reflected in the Project Company Purchase Price.
2.4 Conditions Precedent to the Obligations of the Seller on the Purchase Date. The obligations of the Seller to consummate a Purchase of the Project Company will be subject to the satisfaction of each of the following conditions with respect to that Project Company, except for any such condition that is waived by the Seller:
(a) Each of the representations and warranties of Purchaser in Section 3.2 shall be true and correct in all material respects for the Project Company as of the Purchase Date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date);
(b) All consents, approvals and filings then required to be obtained or made by Purchaser to execute, deliver and perform the Seller Documents to which it is a party shall have been obtained or made and shall be in full force and effect as of the Purchase Date;
(c) Except as listed on Part III of Schedule 3.1(k), no action or proceeding has been instituted or, to the Knowledge of Purchaser, threatened by any Governmental Authority or other Person against Purchaser that seeks to impair, restrain, prohibit or invalidate the transactions contemplated by this Agreement and the other Seller Documents or the effectiveness or validity of any material Governmental Approval with respect to the relevant Project; and
(d) ▇▇▇▇▇▇▇▇▇ has executed and delivered the Bill of Sale.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. (i) Seller represents and warrants to Purchaser as follows as of the Effective Date with respect to itself, Sponsor and the Project Company, and (ii) Seller represents and warrants to Purchaser as follows as of the Purchase Date with respect to itself, Sponsor and the Project Company:
(a) Organization, Good Standing, Etc. Each of Seller, Sponsor and Project Company is a limited liability company duly organized and existing under the Laws of the State of Delaware and is in good standing under such Laws. Each of Seller, Sponsor and Project Company has the requisite limited liability power and authority to own, lease and operate its properties and assets and to carry on its business as being conducted on the Effective Date or Purchase Date, as applicable.
(b) Authority. Each of Seller, Sponsor and, as of the Purchase Date, Project Company has the limited liability company or corporate, as applicable, power and authority to enter into the Seller Documents and Material Project Contracts to which it is a party, to perform its obligations thereunder, and to consummate the transactions contemplated hereby or thereby
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and to cause Project Company to develop and operate the Project. This Agreement, the other Seller Documents and, as of the Purchase Date, the Material Project Contracts, in each case, to which Seller, Sponsor and/or Project Company is a party (assuming due authorization, execution and delivery by the counterparties thereto), constitute the valid and binding obligations of each of Seller, Sponsor and Project Company, as applicable, enforceable against each of Seller, Sponsor and Project Company, as applicable, in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(c) No Conflicts. Except as set forth on Schedule 3.1(c), the execution and delivery by Seller, Sponsor and Project Company, as applicable, of the Seller Documents and Material Project Contracts to which it is a party do not, and the performance by each of them of its obligations thereunder will not (i) violate any Laws applicable to Seller, Sponsor or Project Company in any material respect, (ii) cause a breach of any provision in the certificate of formation or limited liability agreement of Seller, Sponsor or Project Company, or (iii) cause a material breach of, constitute a material default under, cause the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any authorization, consent, waiver or approval under any material contract, license, instrument, decree, judgment or other arrangement to which Seller, Sponsor or Project Company is a party or under which it is bound or to which any of its assets are subject (or result in the imposition of an Encumbrance upon any such assets other than Permitted Liens).
(d) Absence of Litigation. (i) (a) Neither Seller, nor to the Knowledge of Seller, any other Person has received any written notice of any litigation, claim, action, suit, proceeding or Governmental investigation pending with respect to the Project or Project Company that would reasonably be expected to have a material and adverse impact on the development, construction, ownership, operation or maintenance of the Project, in each case that has not been resolved and (b) Project Company has not received any written notice of any litigation, claim, action, suit, proceeding or Governmental investigation pending, in each case that has not been resolved and (ii) (a) there is no pending or, to the Knowledge of Seller, threatened litigation, claim, action, suit, proceeding or Governmental investigation against Seller which seeks the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement and (b) there is no pending or, to the Knowledge of Seller, threatened litigation, claim, action, suit, proceeding or Governmental investigation against Project Company. No action, suit or proceeding by or before any Governmental Authority against Seller or Project Company for a violation of applicable Anti-Bribery and Anti-Corruption Laws or applicable Anti-Terrorism and Money Laundering Laws and Regulations is pending, or to the actual Knowledge of Seller, threatened.
(e) Ownership. Seller will own of record and beneficially one hundred percent (100%) of the limited liability company interests in Project Company immediately prior to the Purchase Date and before giving effect to the transactions contemplated by this Agreement and, as of the Purchase Date, there will be no limited liability company interests in Project Company other than the Purchased Interests. Following the Purchase Date, Purchaser will own of record and beneficially one hundred percent (100%) of the limited liability company interests in Project
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Company. Except for the sale to Purchaser set forth in this Agreement, there are no outstanding options, warrants, calls, puts, convertible securities or other contracts of any nature obligating Seller, Purchaser or Project Company to issue, deliver or sell membership interests or other securities in Project Company (other than the rights granted under the Financing Loan Documents). Project Company is the sole owner of the Project. The limited liability company interests in Project Company are free and clear of all Liens other than Permitted Equity Encumbrances. Project Company has no subsidiaries. No Person has or will have a right to acquire an ownership interest in the Project or in all or substantially all of the property of the Project (other than Permitted Liens).
(f) Taxes.
(1) All material Tax Returns with respect to Project Company and the Project have been filed and all Taxes shown as owing on any such Tax Return have been paid. Project Company has not (I) executed (or had executed on its behalf) any outstanding waivers of the statute of limitations for any Taxes or Tax Return, (II) granted any powers of attorney with respect to any Tax matter or (III) received or requested any written ruling of a taxing authority with respect to Taxes or entered into any other written agreement with a taxing authority relating to Taxes. At all times from the Effective Date until the Purchase Date, each of Seller and Project Company has been disregarded as an entity separate from Seller Parent for federal income tax purposes; Seller Parent is treated as an association taxable as a corporation for federal income tax purposes. No election has been made for Project Company to be treated as an association taxable as a corporation for federal income tax purposes. Project Company has been treated as a disregarded entity for federal income tax purposes at all times since its formation. Project Company has no liability for Taxes of any Person as a transferee or successor, by contract or otherwise (other than pursuant to customary tax indemnification provisions in the Material Project Contracts), or as a result of having been a member of an affiliated, combined, consolidated, unitary or similar group for tax purposes. Project Company is not a party to any Tax indemnity, allocation or sharing agreement currently in force other than customary tax indemnification provisions in the Material Project Contracts. No claim has been made by a Taxing authority, in a jurisdiction where any Project Company does not file Tax Returns, that Project Company or the Project is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Project Company or the Project, other than Permitted Liens. There are no audits, claims, assessments, levies, administrative proceedings, or lawsuits with respect to Taxes or Tax Returns pending or, threatened in writing with respect to the Project Company or the Project or which Purchaser or Project Company could be made subject.
(2) None of Sponsor, Seller, nor Project Company has (a) taken a position on any federal, state or local tax report, tax filing or Tax Return that (x) is inconsistent with the original use by Purchaser, for federal income tax purposes, of the Project or any property that is part of the Project or (y) will result in the reduction, denial or recapture of the ITC, (b) claimed with respect to the Project or any property that is part of the Project on any tax report, tax filing or Tax Return, any depreciation or amortization deductions, renewable energy production tax credits pursuant to Section 45 of the Code, ITCs, or any other tax credits or deductions under other applicable Tax Law that are available with respect to the Project or any
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property that is part of the Project, or (c) taken a position on any federal, state or local tax report, tax filing or Tax Return that the Purchase is other than a sale for federal income tax purposes or that the amount realized on the sale of Project Company to Purchaser is other than the Project Company Purchase Price.
(3) The Project is located in its entirety in the United States.
(4) Less than five percent (5%) of the fair market value of the materials and parts that comprise the Project, on the date such property was placed in service for U.S. federal income tax purposes, consisted of property, materials and parts used by a Person other than the Project Company (or its contractors that are constructing the Project).
(5) Seller shall, and shall cause its Affiliates to, report in all documents, filings and accounting statements that the amount realized on the sale of the Project to Purchaser is the Project Company Purchase Price.
(6) Except as set forth on Schedule 3.1(f)(6), there are no sales, use, transfer, ad valorem, property or similar taxes due in respect of the Purchase under this Agreement, or for which Purchaser may become liable as successor or derivatively as a result of the transactions contemplated by this Agreement.
(7) No proceeds of any issue of State or local government obligations have been used to provide financing for the Project, the interest on which is exempted from tax under Section 103 of the Code.
(8) As of the Purchase Date, none of clauses (ii), (iii), (iv), or (v) of the definition of Placed In Service have occurred with respect to any portion of the Project.
(9) As of the Purchase Date, Seller (A) (1) has caused the Project Company to (x) fully satisfy the PWA Requirements, (y) maintain documentation, certificates, and supporting wage, hours, labor classification and apprenticeship program information from relevant Material Project Contract and other applicable contract parties with respect to the PWA Requirements, and (z) pursue any remedies from any contractors or subcontractors for non- compliance with the PWA Requirements, and (2) has disclosed to Purchaser any known failure to satisfy the PWA Requirements as of the Purchase Date, and (B) has a reasonable expectation that the Project, upon completion of construction, will be eligible for the Domestic Content Bonus and Energy Community Bonus (provided, if the Project Company Purchase Price does not take into account availability of the Domestic Content Bonus or Energy Community Bonus, as agreed by the Seller and Purchaser, then the Seller shall not be in breach of this representation).
(10) Each representation set forth in the PWA Certificate, the Domestic Content Bonus Certificate, and Energy Community Bonus Certificate is true, accurate and complete and shall remain true, accurate and complete until the end of the Purchaser’s taxable year including the Placed In Service Date (provided, if the Project Company Purchase Price does not take into account availability of the Energy Community Bonus, as agreed by the Seller and Purchaser, then this representation shall be deemed not to include the Energy Community Bonus Certificate).
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(11) Neither the Seller or any of its affiliates, or the Project Company, has elected or entered, nor shall elect or enter, into any contract or arrangement for, “transferability” under Section 6418 of the Code or any similar mechanic in respect of any tax credit relating to the Project or any portion thereof; provided that the foregoing representation shall not apply with respect to a transfer election made by the Purchaser.
(12) Each Circuit and ▇▇▇▇ Circuit comprising the Project (A) is owned by a single taxpayer, (B) was financed from the same source of funds, (C) is constructed on contiguous pieces of land, (D) is described in a common power purchase agreement, (E) share a common substation and have a common intertie, and (F) are described in one or more common environmental or other regulatory permits.
(g) Compliance with Applicable Laws.
(1) Except as listed on Part III of Schedule 3.1(k), Seller and Project Company are, and the business and operations of Seller and Project Company, as well as Seller and Project Company’s development, construction and operation of the Project are, and, to the Knowledge of Seller, have been, conducted in all material respects in compliance with all applicable Laws, and none of Seller or Project Company has received any written notice from any Governmental Authority of any actual or potential material noncompliance with or material violation of any applicable Laws.
(2) Seller, Project Company and their respective directors, officers, and, to the Knowledge of Seller, their respective employees and agents (if any) (1) are in compliance with applicable Anti-Terrorism and Money Laundering Laws and Regulations, (2) has complied, within the past five (5) years, with all applicable Sanctions, (3) has complied, within the past five (5) years, in all material respects with any applicable U.S. anti-boycott laws and regulations, and (4) is not a Prohibited Person. The Project Company has not engaged, within the past five (5) years, in any dealings or transaction with any Prohibited Person, in violation of applicable Sanctions. Seller and Project Company have implemented and maintain in effect, or are subject to, policies and procedures reasonably designed to promote and achieve compliance by Seller and Project Company, and their respective directors, officers, employees and agents (if any), each in their capacity as such, with applicable Anti-Bribery and Anti-Corruption Laws or applicable Anti- Terrorism and Anti-Money Laundering Laws and Regulations.
(h) Personal Property. Project Company owns or leases or has a contractual right to use, or reasonably expects to acquire by the date the Project is Placed in Service, ownership of, a leasehold interest in or a contractual right to use, all equipment and facilities currently used in the operations of the Project. All equipment and facilities included in the Project are (or are reasonably expected to be when acquired, leased or contracted for) in good repair and operating condition subject to ordinary wear and tear and are suitable for the purposes for which they are employed, and, to the Knowledge of Seller, as applicable, there is no material defect, hazard or dangerous condition existing with respect to any such equipment or facilities. There is no Casualty Defect with respect to the Project (regardless of whether covered by insurance) in existence or, if a Casualty Defect is in existence, in the opinion of the Independent
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Engineer, (a) such Casualty Defect is capable of repair in a reasonably satisfactory time-frame and (b) an adequate reserve, reasonably acceptable to the Purchaser has been established for such repair.
(i) Information. All of the factual information furnished in writing by or on behalf of Project Company, Sponsor, Seller or any of their respective Affiliates to Purchaser, or any member of Purchaser or any of the consultants or advisors engaged by Purchaser, Seller, Sponsor or any member of Purchaser in connection herewith, with respect to Seller, Sponsor, the Project Company or the Project, when taken as a whole, is (A) true and complete (or, where appropriate, estimated in good faith) in all material respects as of the date made or furnished and none of such supplied information contained, as of the date made, an untrue statement of material fact and (B) not incomplete by omission of any material fact necessary to make such information (taken as a whole and in light of the circumstances when made or provided) not misleading at such time and in light of the circumstances in which made (after giving effect to all Updates and subsequent disclosures provided); provided, however, that, except as expressly set forth herein, no representation or warranty is made with respect to (i) any assumptions, projections or other pro- forma information or forward-looking statements provided by or on behalf of Project Company, Seller or any of their respective Affiliates or the reports of the Appraiser, Certified Public Accountant, Environmental Consultant, Independent Engineer and Insurance Consultant, except as to factual information provided by or on behalf of Project Company, Seller or any of their respective Affiliates which formed the basis for the assumptions in projections or reports, and that such assumptions made by Project Company, Seller or any of their respective Affiliates or, to the Knowledge of Seller, Appraiser, Certified Public Accountant, Environmental Consultant, Independent Engineer and Insurance Consultant, have been made in good faith and were reasonable in light of the conditions that existed at the time of delivery (it being understood that no assurance can be given that the assumptions in any such projections or such reports will be realized, and that actual results may differ and such differences may be material), (ii) the tax consequences to Purchaser and its Affiliates of owning the Purchased Interests in Project Company or (iii) publicly available information and information of a general economic or industry-specific nature.
(j) Financial Statements. Included in Schedule 3.1(j) are (i) audited financial statements of Sponsor and its consolidated Subsidiaries and (ii) unaudited balance sheets and income statements of Sponsor that have been prepared as of and for the quarter ended December 31, 2023. Such financial statements have been prepared in accordance with GAAP and present fairly in all material respects the financial position of Sponsor as of such date and the results of operations for the period then ended, subject to normal year-end audit adjustments and the absence of footnotes. Project Company has no material liabilities or debts except those related to the development, construction, ownership or operation of the Project.
(k) Governmental Approvals, Permits and Filings.
(1) No material Governmental Approval of or filing with any Governmental Authority is required to be obtained or made by Seller or Project Company pursuant to any applicable Law for the execution, delivery and performance by Seller or Project Company of any Seller Document or Material Project Contract to which it is a party, or the
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consummation of the transactions contemplated therein, the leasing of the Project Site or for the acquisition, siting, development, construction, operation, ownership or routine maintenance of the Project in compliance with applicable Laws, tariffs and rules, including for the sale of electric energy at wholesale and the sale of RECs, other than Governmental Approvals or filings listed on Schedule 3.1(k). For the avoidance of doubt, material Governmental Approvals or filings do not include those which are ministerial in nature and obtainable in the ordinary course of business. Seller has provided to Purchaser copies of all obtained Governmental Approvals listed on Part II of Schedule 3.1(k) and such copies are true, accurate and complete in all material respects. Except as listed on Part III of Schedule 3.1(k), neither Project Company nor Seller has received written notification that (i) any violation has been recorded or found against any such Governmental Approval, (ii) any citation, notice, or warning has been issued by any Governmental Authority with respect to any such Governmental Approval, or (iii) any investigation or hearing regarding any investigation of any actual or potential violation has been held by or before such Governmental Authority that would reasonably be expected to result in the cancellation, revocation, termination, suspension, denial or nonrenewal of any such Governmental Approval required for the leasing of the Project Site or the acquisition, siting, development, construction, operation, ownership or routine maintenance of the Project.
(2) To the Knowledge of Seller, all information set forth in the applications and other documents submitted by Project Company or Seller to any Governmental Authority in connection with any Governmental Approval on Part II of Schedule 3.1(k) was true and correct in all material respects at the time of such submission.
(3) To the Knowledge of Seller, there is no event or circumstance that could reasonably be expected to cause any Governmental Approval on Part I of Schedule 3.1(k) to not be obtained by the time such Governmental Approval would be needed.
(4) As of the Purchase Date, all Governmental Approvals and crossing consents required to be assigned to Project Company have been assigned to Project Company and all material Governmental Approvals and other required interested party approvals have been obtained for such assignments.
(l) Environmental Matters. Except as set out on Schedule 3.1(l) and as could not reasonably be expected to have a Material Adverse Effect, (i) each of Seller and Project Company is in material compliance with all applicable Environmental Laws and all applicable Governmental Approvals issued pursuant to Environmental Law; (ii) to the Knowledge of Seller, no Hazardous Substances have been Released in, on, or under the Project or Project Site (including the soil or groundwater thereunder) that (A) would reasonably be expected to require any investigation, removal, or remediation by Seller or the Project Company pursuant to any Environmental Law in connection therewith, or (B) would reasonably be expected to result in a material Claim against Seller, Purchaser or Project Company by, or material liability of Seller or Project Company to any Person, in each case, under any Environmental Law; and (iii) neither Seller nor Project Company has received written notice from any Governmental Authority or any other Person of any actual or potential violation, noncompliance, or liability, or any written notice of any investigation by any Governmental Authority, or any written request for
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information regarding an investigation by any Governmental Authority or an actual or potential violation of, in each case, any Environmental Law.
(m) Real Property. Seller does not own or lease any real property with respect to the Project. The Project Company has valid leasehold, easement interests, rights of way or other rights to the Project Site, subject only to Permitted Liens. All material written agreements (included all modifications, amendments and supplements thereto) to which the Project Company is a party pertaining to real property (i) owned or leased by the Project Company or (ii) are insured leasehold or easement interests under the Effective Date Title Policy are listed as “Real Estate Documents” on the applicable portion of Annex 1. Each of the Real Estate Documents is in full force and effect and is binding on the Project Company party thereto and to the Knowledge of Seller, on the other parties thereto, except as enforceability may be limited by applicable bankruptcy and similar laws affecting the enforcement of creditors’ rights and general equitable principles. All crossing agreements, letters of no objection and surface waivers (other than those contained within leases included as “Real Estate Documents”) (including all modifications, amendments and supplements thereto) to which the Project Company is a party are listed as “Ancillary Real Estate Agreements” on the applicable portion of Annex 1. Seller has provided to Purchaser copies of all Real Estate Documents and all Ancillary Real Estate Agreements and such copies are true, accurate and complete in all material respects. Except as set out on Schedule 3.1(m), the Real Estate Documents, Ancillary Real Estate Agreements and other rights granted pursuant to the other Material Project Contracts (including adequate ingress and egress) are sufficient to enable the Project to be leased, acquired, sited, developed, constructed, operated, owned and maintained on the Project Site for at least twenty-five (25) years from the Final Completion of the Project in accordance with all Governmental Approvals and the Material Project Contracts. None of the Seller, the Project Company or any Affiliate of the foregoing has been informed in writing by a counterparty to any Real Estate Document or Ancillary Real Estate Agreement that the Project Company is in material breach of its obligations under any Real Estate Document or Ancillary Real Estate Agreement. The Project Company has not executed any options, rights of refusal or contracts to lease, sublease, grant an easement, or to sell or otherwise transfer any other interest in the Project Site or sold or agreed to sell any portion of the Project Site or interest therein. No part of Project Site lies within the flood plain or any designated special flood hazard area, in each case as shown on the most recent Flood Hazard Boundary Maps prepared by the Department of Housing and Urban Development or as designated by either the Federal Emergency Management Administration or the Flood Insurance Administration.
(n) Liens. All assets owned by Project Company are free and clear of all Liens, other than Permitted Liens. There has been no work performed on the Project Site by Seller, Sponsor, Project Company, their Affiliates or any contractor or subcontractor retained by Seller, Sponsor, Project Company or their Affiliates that would result in any claims for mechanic’s or materialmen’s liens (other than Permitted Liens).
(o) Material Project Contracts and Defaults. Annex 1 lists, as of the Effective Date, each Material Project Contract to which Project Company is a party. Seller has provided to Purchaser copies of all Material Project Contracts and such copies are true, accurate and complete in all material respects. As of the Purchase Date, each Material Project Contract to
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which Project Company is a party has been duly authorized, executed and delivered by Project Company and is in full force and effect and is binding on Project Company and, to the Knowledge of Seller, on the other parties thereto, except as enforceability may be limited by applicable bankruptcy and similar laws affecting the enforcement of creditors’ rights and general equitable principles. None of Project Company nor, to the Knowledge of Seller, any other party thereto is in material default under any Material Project Contract, nor has any event occurred which, with notice or the lapse of time or both, would reasonably be expected to result in a material default under, any Material Project Contract, whether caused by Seller, Project Company or, to the Knowledge of Seller, any other party to any Material Project Contract. None of Seller nor, to the Knowledge of Seller, any other party to a Seller Document is in material default under such Seller Document, nor has any event occurred which, with notice or the lapse of time or both, would reasonably be expected to result in such a material default. Except as set forth on Schedule 3.1(o), the consummation of the transactions contemplated by this Agreement would not give any party to a Seller Document or any party to a Material Project Contract, the right to terminate or alter the terms of such contract or a right to claim damages thereunder.
(p) Employee Matters. Project Company does not have and, since the date of its creation, has not had any employees, and has not maintained sponsored, administered or participated in any employee benefit plan subject to ERISA. The Project Company does not sponsor, maintain, contribute to, or have any obligation to contribute to, and has never sponsored, maintained, contributed to, or had any obligation to contribute to, any Employee Plan, except that certain labor costs may have been allocated to the Project Company or Project for service performed by the Seller’s or its ERISA Affiliates’ employees in connection with the Project. There does not now exist, nor do any circumstances exist that could reasonably be expected to result in, any liability of the Project Company, Purchaser or its ERISA Affiliates following the Purchase Date under any Employee Plan of the Project Company, Seller or their ERISA Affiliates, including under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv) any “multiemployer plan” (as defined in Section 3(37) of ERISA), (v) any voluntary employees’ beneficiary association (as described in Section 501(c)(9) of the Code), (vi) any post termination or retiree life insurance, health or other employee welfare benefits arrangement, or (vii) the provisions of Section 601, et. seq. of ERISA and Section 4980B of the Code.
(q) Affiliate Transactions. Except for the MSA, the Construction Management Services Agreement or as set forth on Schedule 3.1(q), there are no existing Contracts between (A) the Project Company on the one hand and the Purchaser or Pelicans Jaw Member B, LLC, a Delaware limited liability company or any Affiliate of either, on the other hand, or (B) the Purchaser on the one hand and Pelicans Jaw Member B, LLC, a Delaware limited liability company, or any of its Affiliates (other than the Project Company) on the other hand.
(r) ITC Eligible Property. As of the end of the Purchaser’s taxable year including the Placed In Service Date, the initial tax basis allocable to ITC Eligible Property of the Project shall be no less than the amount allocated to ITC Eligible Property in the final Cost Segregation Report issued with respect to the Project.
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(s) Regulatory Status.
(1) As of the Purchase Date, (A) Project Company is an EWG, (B) Purchaser is not nor will be or become subject to, nor will fail to be exempt from, regulation as a “holding company” within the meaning of Section 1262(8) of PUHCA (42 U.S.C. Section 16451(8)), other than as a “holding company” within the meaning of Section 1262(8) of PUHCA solely with respect to its ownership of the Project Company, and (C) the Project Company is not subject to regulation by FERC under PUHCA except with respect to regulation relating to maintaining EWG status, and any applicable regulation as a “subsidiary company” or an “affiliate” of a “holding company,” as such terms are used within the meaning of PUHCA.
(2) The Purchaser will not, solely as a result of entry into or performance of this Agreement or the consummation of the Purchase, including ownership and operation of the Project by the Project Company and the sale of electricity at wholesale therefrom by the Project Company, (A) be subject to, or (B) lose any applicable exemption from, regulation as an “electric utility company”, a “public-utility company” or a “holding company” or an “affiliate” or “subsidiary company” as such terms are defined under Section 1262 of PUHCA (other than as a “holding company” that is exempt from regulation by FERC under PUHCA pursuant to 18 C.F.R. § 366.3(a)) or (C) be subject to, or not exempt from, regulation as a “public utility” under the California Public Utilities Code, or become subject to other laws or regulations of the State of California respecting the rates charged by, or the financial or organizational regulation of “public utilities”. The Project is not and will not be interconnecting to any other independent system operators other than CAISO.
(t) State Utility Regulation. Neither Seller nor Project Company is subject to regulation by the CPUC as a “public utility” and will not, as a result of the development, construction, ownership, siting, use, operation or maintenance of the Project or the sale at wholesale of electric energy and the sale of RECs therefrom be or become subject to, or not exempt from, regulation as a “public utility” by the CPUC.
(u) Payments under Material Project Contracts. Schedule 3.1(u) lists all amounts reasonably expected as of the Effective Date to become due and payable following the Purchase Date with respect to the Project under the Material Project Contracts through Substantial Completion of the Project.
(v) Mechanical Completion. As of the Purchase Date, (A) Mechanical Completion has been achieved but (B) none of the clauses (ii), (iii), (iv), or (v) of the definition of Placed In Service have occurred with respect to any portion of the Project.
3.2 Representations and Warranties of Purchaser. Purchaser represents and warrants, with respect to itself, to Seller as follows as of the Effective Date and to the Seller as follows as of the Purchase Date:
(a) Organization, Good Standing, Etc. Purchaser is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, and has the requisite company power and authority to own, lease and operate its properties and to carry on its business as being conducted on the Effective Date or Purchase Date, as applicable.
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(b) Authority. Purchaser has the requisite power and authority to enter into this Agreement and the other Seller Documents to which it is a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby or thereby. This Agreement constitutes, and upon execution and delivery by Purchaser of the other Seller Documents to which it is a party, the Seller Documents will constitute (assuming due authorization, execution and delivery by Seller), the valid and binding obligations of Purchaser, enforceable against it in accordance with their respective terms, subject the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws affecting enforcement of creditors’ rights and remedies generally and to general principles of equity.
(c) No Conflicts. The execution and delivery by Purchaser of this Agreement and the other Seller Documents to which Purchaser is a party do not, and the performance by Purchaser of Purchaser obligations hereunder and thereunder will not, (i) violate any Laws applicable to Purchaser that would materially adversely affect its ability to perform any of its obligations under the Seller Documents, (ii) cause a breach of any provision in the certificate of formation or the governing documents of Purchaser, or (iii) cause a material breach of, constitute a material default under, cause the acceleration of, create in any party the right to accelerate, terminate, materially modify or cancel, or require any material authorization, consent, waiver or approval under any contract, license, instrument, decree, judgment or other arrangement to which Purchaser is a party or under which it is bound or to which any of its assets are subject (or result in the imposition of an Encumbrance upon any such assets other than Permitted Liens).
(d) Absence of Litigation. There is no pending or, to the Knowledge of Purchaser, threatened litigation, claim, action, suit, proceeding or Governmental investigation against Purchaser which seeks the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement.
(e) No Other Representations. Seller has not made any representations or warranties, express or implied, nor has Purchaser relied on any representations or warranties whatsoever, express, implied, at common law, statutory or otherwise, except for the representations and warranties of Seller expressly set out in this Agreement, and any certification delivered in connection with the foregoing.
ARTICLE 4
[RESERVED]
ARTICLE 5
TERMINATION
5.1 Termination. This Agreement may be terminated by any Party, upon written notice to the other Party, if the Purchase Date has not occurred on or prior to September 10, 2026; provided that no Party who is in breach of its obligations may terminate this Agreement while such Party remains in breach. Without limiting any Seller’s or Purchaser’s ability to exercise any right or remedy to which it is entitled hereunder or under any of the Seller Documents, this Agreement may be terminated prior to expiration of the Term:
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(a) by a non-defaulting Party solely with respect to another Party that voluntarily commences bankruptcy, insolvency, reorganization, stay, moratorium or similar debtor-relief proceedings, or makes an assignment for the benefit of creditors;
(b) by a non-defaulting Party solely with respect to another Party if insolvency, receivership, reorganization, bankruptcy, or similar proceedings shall have been commenced against such other Party and such proceedings remain undismissed or unstayed for a period of ninety (90) calendar days;
(c) automatically and without further action by any party on the date on which Purchaser dissolves; and
(d) by the mutual written consent of ▇▇▇▇▇▇ and Purchaser.
5.2 Procedure and Effect of Termination.
(a) The Party desiring to terminate this Agreement pursuant to Section 5.1 shall give written notice of such termination to the other Party in accordance with Section 8.5, specifying the provision hereof pursuant to which such termination is effectuated.
(b) If this Agreement is terminated in accordance with Section 5.1 then this Agreement shall be terminated, in whole or in part, as applicable, with no liability on the part of Seller or Purchaser; provided, however, that, (i) the agreements contained in this Section 5.2, Article 6, Article 7 and Article 8 shall survive the termination hereof and (ii) no such termination shall relieve any Party of any liability or damages resulting from any breach by that Party of this Agreement or affect the rights of another Party to indemnification for such breach nor shall any such termination relieve any Party of any obligations of such Party that arose pursuant to this Agreement prior to its termination with respect to such Party.
ARTICLE 6
DISPUTE RESOLUTION
6.1 Good Faith Negotiations. In the event that any question, dispute, difference or claim arises out of or is in connection with this Agreement, including any question regarding the Agreement’s existence, validity, performance or termination (a “Dispute”), which either Party has notified to the other, senior management personnel from the Seller and Purchaser shall meet and diligently attempt in good faith to resolve the Dispute for a period of thirty (30) calendar days following one Party’s written request to the other Party for such a meeting.
ARTICLE 7
PURCHASER LOSSES
7.1 Indemnity for Loss
(a) Seller agrees to indemnify, defend and hold harmless on an After-Tax Basis, Purchaser, its respective members and their respective Affiliates (“Purchaser Indemnified Person”) from and against any and all Claims which may be suffered by such Purchaser
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Indemnified Person relating to or arising out of any breach of any representation or warranty or covenant made by Seller under this Agreement (a “General Indemnity Claim”).
(b) The obligations of Seller pursuant to Section 7.1(a) shall be subject to the following limitations:
(1) Except for Claims resulting from fraud, gross negligence or willful misconduct on the part of Seller (or any of its respective Affiliates) or third party claims, in no event will Seller’s or its respective Affiliates’ aggregate indemnification obligations under Section 7.1(a) exceed (A) ten percent (10%) of the Project Company Purchase Price minus (B) all amounts previously paid by Seller or its respective Affiliates for any Claim under this Agreement. The amount of any Claim required to be paid by Seller to any Purchaser Indemnified Person pursuant to this Article 7 shall be reduced to the extent of any amounts actually received by such Purchaser Indemnified Person (net of any cost of collection) after the Effective Date pursuant to the terms of the insurance policies covering such Claim (but in no instance shall any insurance proceeds from policies obtained and maintained by any member or upstream Affiliate of Purchaser be considered in connection with a reduction of damages pursuant to this Section 7.1(b)(1)).
(2) Notwithstanding anything to the contrary in this Agreement, except for Claims resulting from fraud, gross negligence or willful misconduct, or third party claims, in no event shall Seller’s indemnification obligations under the Agreement apply with respect to any Claim until all Claims for indemnification hereunder exceed in the aggregate five hundred thousand dollars ($500,000), and once such threshold amount of Claims has been reached, at which point and thereafter, such indemnification obligation shall apply to all Claims for indemnification hereunder, including amounts that were not previously subject because such threshold amount had not been reached.
(3) All Claims for breaches of (A) representations and warranties contained in Section 3.1(a), Section 3.1(b), Section 3.1(c), Section 3.1(e), Section 3.1(f), Section 3.1(g), Section 3.1(l), Section 3.1(m), Section 3.1(r), Section 3.1(s) and Section 3.1(v), will survive until the expiration of the applicable statute of limitations, (B) Section 3.1(k) will survive for three (3) years from the Effective Date, and (C) all other representations and warranties under Section 3.1 that are not listed in clauses (A) or (B) above will survive for eighteen (18) months following the Effective Date; provided, that if written notice of a Claim has been given to Seller on or prior to the last day of the applicable foregoing period, then the obligation of Seller to indemnify such Purchaser Indemnified Person shall survive with respect to such Claim until such Claim is finally resolved.
(c) SELLER’S INDEMNIFICATION OBLIGATIONS SHALL BE LIMITED TO ACTUAL LOSSES, AND SHALL NOT INCLUDE SPECIAL,
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INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY LOSSES OR DAMAGES (INCLUDING LOSSES FOR LOST OPPORTUNITY, LOST PROFIT, LOST REVENUE, OR LOSS OF USE OF SUCH PROFITS OR REVENUE) OR ANY OTHER SPECIAL DAMAGES, REGARDLESS OF WHETHER THE CLAIM IS BASED UPON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHER THEORY OF LAW; PROVIDED, THAT THE FOREGOING SHALL NOT (A) LIMIT THE ABILITY OF PURCHASER FROM RECOVERING SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY LOSSES (INCLUDING LOSSES FOR LOST OPPORTUNITY, LOST PROFIT, LOST REVENUE, OR LOSS OF USE OF SUCH PROFITS OR REVENUE) OR ANY OTHER SPECIAL DAMAGES PAID BY PURCHASER TO AN UNAFFILIATED THIRD PARTY IN CONNECTION WITH A THIRD-PARTY CLAIM OR (B) BE DEEMED TO EXCLUDE LOSSES THAT ARE A REASONABLY FORESEEABLE RESULT OF THE UNDERLYING BREACH; PROVIDED FURTHER, THAT THE VALUE OF LOST OF REDUCED ITCS OR OTHER TAX BENEFITS SHALL BE RECOVERABLE AS DIRECT DAMAGES AND SHALL NOT CONSTITUTE SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY LOSSES OR DAMAGES. THE OBLIGATIONS OF THE SELLER UNDER THIS AGREEMENT ARE OBLIGATIONS OF THE SELLER ONLY, AND NO RECOURSE SHALL BE AVAILABLE AGAINST ANY OFFICER, DIRECTOR, MANAGER, MEMBER, PARTNER, OR AFFILIATE OF SELLER.
7.2 General Procedures for Indemnity Obligations.
(a) All General Indemnity Claims for indemnification by the Purchaser Indemnified Persons under Section 7.1(a) shall be asserted and resolved in accordance with this Section 7.2.
(b) If a Purchaser Indemnified Person learns of an actual or potential General Indemnity Claim for which such Purchaser Indemnified Person may seek indemnification under Section 7.1(a), such Purchaser Indemnified Person shall promptly notify the Seller thereof, specifying the nature of and specific basis for such General Indemnity Claim and the actual or estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such General Indemnity Claim) (the “Claim Notice”); provided, however, that the failure to provide such notice promptly shall not limit or reduce such Purchaser Indemnified Person’s right to indemnification under Section 7.1(a) except to the extent that such failure to provide such notice promptly shall prevent or shall have prevented the Seller from properly or effectively defending the General Indemnity Claim or from recovering reimbursement or other damages to which the Seller would be entitled.
(c) The Seller shall have thirty (30) days from the date such notice is delivered (the “Notice Period”) to notify all Purchaser Indemnified Persons whether or not it disputes its obligation to indemnify the Purchaser Indemnified Persons against such General Indemnity Claim; provided, however, that the Purchaser Indemnified Persons are hereby authorized prior to and during such Notice Period to file any motion, answer or other pleading that is necessary or appropriate (as determined by such Purchaser Indemnified Persons acting in
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good faith) to protect their respective interests or those of the Seller and that are not prejudicial in any material way to Seller and a copy of such filing shall be promptly delivered to Seller.
(1) If Seller notifies the Purchaser Indemnified Persons within such Notice Period that it does not dispute its obligation to indemnify the Purchaser Indemnified Persons against such General Indemnity Claim, then, except as hereinafter provided, Seller shall have the right, but not the obligation, to defend by all appropriate proceedings, and with counsel of its own choosing that is reasonably acceptable to the Purchaser Indemnified Persons, such right being exercisable only in the same notice in which it notifies the Purchaser Indemnified Persons that it does not dispute its obligation to indemnify them against the General Indemnity Claim.
(2) If Seller elects to defend against the General Indemnity Claim, it shall promptly settle such General Indemnity Claim or diligently prosecute it to a final conclusion. If the Purchaser Indemnified Persons desire to participate in, but not control, any such defense or settlement, they may do so at their sole cost and expense.
(3) If Seller disputes its liability with respect to such General Indemnity Claim or fails to defend against such General Indemnity Claim, whether by not giving timely notice as provided above or otherwise, the Purchaser Indemnified Persons shall have the right but not the obligation to defend against such General Indemnity Claim.
(4) Unless Seller has accepted liability for a General Indemnity Claim in writing, Seller shall not settle any such General Indemnity Claim without the prior written consent of the Purchaser Indemnified Persons. The Purchaser Indemnified Persons shall not settle any General Indemnity Claim without the prior written consent of Seller unless ▇▇▇▇▇▇ has refused to accept liability for such General Indemnity Claim or failed to defend the Purchaser Indemnified Persons against such General Indemnity Claim pursuant to the terms of this Agreement.
(5) If requested by Seller, the Purchaser Indemnified Persons agree to cooperate with Seller, its insurers and their respective counsel in contesting any third person Claims that Seller elects to contest; provided, however, that Seller (i) has furnished the Purchaser Indemnified Persons with a written opinion of Seller’s outside counsel to the effect that a reasonable basis exists to contest the Claim, (ii) pays all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees) that the Purchaser Indemnified Persons may incur in so cooperating in the contest of such Claim and (iii) if reasonably requested by the Purchaser Indemnified Persons and to the extent such Claim results in an actual out-of-pocket loss to the Purchaser Indemnified Persons that is not covered by Seller’s insurance, Seller shall provide
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credit support satisfactory to the Purchaser Indemnified Persons in their sole discretion for the expected amount of such loss.
(6) Notwithstanding anything herein to the contrary, Seller shall not, without the prior written consent of the Purchaser Indemnified Persons, settle any General Indemnity Claim, unless such settlement includes an unconditional release of all Purchaser Indemnified Persons from any liability arising out of such General Indemnity Claim.
(d) In the event a Purchaser Indemnified Person shall have a General Indemnity Claim against Seller hereunder which does not involve a General Indemnity Claim or demand being asserted against or sought to be collected from such Purchaser Indemnified Person by a third person, such Purchaser Indemnified Person shall promptly send a Claim Notice with respect to such Claim to Seller. If Seller does not notify the Purchaser Indemnified Person within the Notice Period that it disputes such General Indemnity Claim, the amount of such General Indemnity Claim shall be conclusively deemed a liability of Seller hereunder.
(e) Payment shall be due in respect of General Indemnity Claims (i) that are not subject to contest upon the date that is thirty (30) days after the expiration of the Notice Period or (ii) for all General Indemnity Claims subject to contest, upon the settlement, final resolution or withdrawal of the contest.
(f) To the extent a Purchaser Indemnified Person receives an opinion at a “more likely than not” level or higher from a nationally-recognized law firm supporting such position, damages paid pursuant to this Article 7 shall be treated as an adjustment to the Project Company Purchase Price for federal income tax purposes. Otherwise, damages paid pursuant to this Article 7 shall be grossed-up and paid on an After-Tax Basis. If the tax position supported by the tax opinion described above is subsequently disallowed by the IRS, the After-Tax Basis gross-up amount will be promptly paid to such indemnified Person. To the extent a Purchaser Indemnified Person subsequently recovers all or a part of the damages indemnified under this Article 7, the Purchaser Indemnified Person shall promptly refund the recovered damages on an After-Tax Basis; provided that any such refund shall not exceed the original amount paid to the Purchaser Indemnified Person (on an After-Tax Basis) hereunder.
ARTICLE 8
GENERAL PROVISIONS
8.1 Annexes, Exhibits and Schedules. All Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference.
8.2 Amendment, Modification and Waiver. This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. Any failure of Seller or Purchaser to comply with any obligation, covenant, agreement, or condition contained herein may be waived only if set forth in an instrument in writing signed by the Party to be bound thereby, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure.
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8.3 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any Party.
8.4 Parties in Interest. Other than as expressly provided in Article 7 with respect to the Purchaser Indemnified Persons, this Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each Party and their successors and assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
8.5 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by a nationally recognized overnight courier, by facsimile, or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
| (a) | If to Seller to: | |||||||
Pelicans Jaw Construction Holdco, LLC c/o SB ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇: (415) 728-6826 Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | ||||||||
With a copy to: Pelicans Jaw Member B, LLC c/o SB ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇: Head of Legal (US) Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | ||||||||
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(b) | If to Purchaser, to: Pelicans Jaw TE Holdco, LLC c/o SB ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇: (415) 728-6826 Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇; ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | |||||||
With a copy to: Pelicans Jaw TE Holdco, LLC c/o SB ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇: Head of Legal (US) Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ | ||||||||
With a copy to: FNBC Leasing Corporation 10 South Dearborn, 7th Floor CIP-Tax Oriented Investments Chicago, Illinois 60603-2300 Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇: ▇▇▇▇▇.▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇▇▇▇▇: E240026 | ||||||||
All notices and other communications given in accordance herewith shall be deemed given (i) on the date of delivery, if hand delivered, (ii) on the date of receipt, if faxed or if such date is not a Business Day, the next Business Day following the date of receipt provided sender can and does provide evidence of successful transmission, (iii) on the fifth (5th) Business Day after the date of mailing, if mailed by registered or certified mail, return receipt requested, and (iv) on the second (2nd) Business Day after the date of sending, if sent by a nationally recognized overnight courier; provided, that a notice given in accordance with this Section 8.5 but received on any day other than a Business Day or after 5:00 pm on a Business Day in the place of receipt, will be deemed given on the next Business Day in that place.
8.6 Counterparts. This Agreement may be executed by facsimile or electronic signature in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
8.7 Entire Agreement. This Agreement (together with the other Seller Documents) constitutes the entire agreement of the Parties and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the Parties with respect to the subject matter hereof.
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8.8 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL APPLY TO THIS AGREEMENT). THE PARTIES SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT LOCATED THEREIN WITH RESPECT TO ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
8.9 Public Announcements. Except for statements made or press releases issued pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934 or as otherwise required by Law, Sellers and Purchaser shall not issue, or permit any of their respective Affiliates to issue, any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other Party; provided that no Seller shall make any public announcement regarding this Agreement which has not been approved in writing by Purchaser.
8.10 Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither Party shall assign this Agreement without the prior written consent of the other Party, in its sole discretion; provided that either Party may grant a security interest in this Agreement to any of its lenders without any such consent and such lenders shall have the right to, directly or indirectly, step into the rights and obligations of either Party hereunder. Any attempted assignment of this Agreement other than in strict accordance with this Section 8.10 shall be null and void and of no force or effect.
8.11 Relationship of Parties. This Agreement does not constitute a joint venture, association or partnership between the Parties. No express or implied term, provision or condition of this Agreement shall create, or shall be deemed to create, an agency, joint venture, partnership or any fiduciary relationship between the Parties.
8.12 Disclosure. Seller has a continuing right to modify, supplement and amend the Schedules hereto (each, an “Update”) (i) if after the Effective Date any information arises or is discovered which, if existing or known on the date of the Effective Date, would have been required to have been set forth on the Schedules, and (ii) if necessary or appropriate to correct any inaccuracy in a representation or warranty made by Seller as of the Effective Date, whether or not such representation and warranty as set forth herein is qualified by reference to a Schedule. Notification of any information disclosed in any Update pursuant to this Section 8.12 shall not be deemed to cure any breach of any representation or warranty resulting from the information that is being so updated, unless such Update is delivered by Seller in accordance with Section 8.5 and is approved in writing by Purchaser pursuant to this Section 8.12. Any proposed Updates shall be shall be subject to the prior written approval of Purchaser acting in its
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reasonable discretion; provided, that if (A) any information disclosed in such Update is approved by Purchaser in writing or is the result of actions approved by Purchaser in writing, or expressly contemplated or permitted by this Agreement or (B) Purchaser consummates the Purchase after receipt of an Update that is delivered at least three (3) Business Days prior to the Purchase Date, the Schedules hereto shall be deemed for all purposes of this Agreement to incorporate all applicable Updates, including for purposes of satisfying the conditions precedent herein and any applicable representations and warranties to which such updated Schedules refer shall be deemed qualified by such Updates. Other than in respect of third party claims or claims for any breaches constituting fraud or willful misconduct, no Purchaser Indemnified Person shall be entitled to make an indemnification claim for breach of representation with respect to the matters disclosed by such Update if such disclosure was made in accordance with this Section 8.12, was properly delivered in accordance with Section 8.5 and Purchaser consummates the Purchase Date after receipt of such Update.
[Remainder of page intentionally left blank. Signature pages to follow.]
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| Pelicans Jaw Construction Holdco, LLC, | ||||||||
a Delaware limited liability company | ||||||||
By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||
Title: Vice President | ||||||||
Signature Page to MIPA (Pelicans Jaw)
| Pelicans Jaw Construction Holdco, LLC, | ||||||||
a Delaware limited liability company | ||||||||
By: | /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||||||
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||||||||
Title: Vice President | ||||||||
Signature Page to MIPA (Pelicans Jaw)
Annex 1
Material Project Contracts, Real Estate Documents and Ancillary Real Estate Agreements
Material Project Contracts
A.SOLV EPC Contract
1.Turnkey Engineering, Procurement and Construction Agreement, dated as of August 13, 2024, by and between the Project Company and SOLV EPC Contractor, as amended by that certain Change Order No. 1, dated as of January 22, 2025, and as amended by that certain First Amendment to Engineering, procurement and Construction Agreement, dated as of February 13, 2025.
2.Parent Company Guaranty, dated as of November 11, 2024, by and between AS Renewable Technologies Intermediate LLC, SOLV EPC Contractor, and the Project Company.
B.Switchyard EPC Contract
1.Engineering, Procurement and Construction Agreement, dated as of July 25, 2024, by and between the Project Company and Switchyard EPC Contractor, as amended by that certain First Amendment to the Engineering, Procurement, and Construction Agreement, dated as of January 29, 2025, and as amended by that certain Change Order No. 1, dated as of January 29, 2025.
C.Power Purchase Agreement and Energy Storage Agreement
1.Amended and Restated Renewable Power Purchase and Energy Storage Agreement, by and between the Project Company and Power Purchaser, dated as of May 1, 2024, as amended by that certain First Amendment to Amended and Restated Renewable Power Purchase and Energy Storage Service Agreement, dated as of December 13, 2024.
D.O&M Agreement
1.Operation and Maintenance Agreement, dated as of October 7, 2024, by and between the Project Company and First Solar, Inc.
E.Interconnection Agreement
1.Large Generator Interconnection Agreement, dated as of September 25, 2022, by and between the Project Company, Pacific Gas and Electric Company, and California Independent System Operator Corporation, as amended by that certain First Amendment to the Large Generator Interconnection Agreement, dated as of September 26, 2024.
Annex 4-1
F.Equipment Supply Contracts
1.Project Purchase Order PELICANS JAW_PO1_S7, dated as of June 7, 2024, as amended by that certain Change Order No. 1, dated as of December 24, 2024, by and between the Project Company and First Solar, Inc.
2.Project Purchase Order PELICANS JAW_PO2_S6+, dated as of June 7, 2024, by and between the Project Company and First Solar, Inc.
3.Project Purchase Order PELICANS JAW_PO3_S6+, dated as of June 7, 2024, by and between the Project Company and First Solar, Inc.
4.BESS Supply Agreement, dated as of July 15, 2024, by and between SE US Development, LLC and BYD America LLC.
5.Purchase Order PO#1, dated as of August 16, 2024, by and between the Project Company and BYD America LLC, as revised by Change Order No. 1, dated as of November 22, 2024.
6.Buyer Parent Guaranty, dated as of November 14, 2024, by Sponsor for the benefit of BYD America, LLC.
7.Irrevocable Standby Letter of Credit No. SO180398200, dated as of November 7, 2024, by BYD America LLC for the benefit of the Project Company.
8.Seller’s Parent Guarantee, dated as of November 15, 2024, by BYD Company Limited for the benefit of the Project Company.
9.Transformer Supply Agreement, dated as of November 3, 2023, by and between SE US Development, LLC and WEG Transformers USA, LLC, as revised by Change Order No. 1, dated as of June 5, 2024, as revised by Change Order No. 2, dated as of August 30, 2024, as revised by Change Order No. 3, dated as of August 30, 2024, as revised by Change Order No. 4, dated as of October 7, 2024, as revised by Change Order No. 5, dated as of December 11, 2024.
10.Assignment and Assumption Agreement, dated as of December 21, 2023, by and between SE US Development, LLC and the Project Company.
11.Seller Guaranty, dated as of April 9, 2024, by WEG Electric Corp. in favor or the Project Company.
12.Energy Management System Supply and Services Agreement, dated as of December 11, 2024, by and between the Project Company and IHI Terrasun Solutions, Inc.
13.Performance Guaranty, dated as of December 11, 2024, by IHI Corporation to and for the benefit of the Project Company.
G.Services Contracts
1.Amended and Restated Task Order No. 01, dated as of July 8, 2024, by and between the Project Company and HGS, LLC.
2.Task Order No. 01, dated as of March 6, 2024, by and between the Project Company and Western EcoSystems Technology, Inc.
3.Task Order No. 3, dated as of March 20, 2024, by and between Project Company and Sapphos Environmental, Inc, as revised by Change Order No. 4, dated September 16, 2024.
4.Task Order No. 2024-1, dated as of January 3, 2024, by and between the Project Company and Sapphos Environmental, Inc., as revised by Change Order No. 1, dated July 18, 2024.
5.Service Order, dated as of April 24, 2024, by and between CVN, LLC. Dba Vast Networks and the Project Company.
6.Construction Management Services Agreement, dated as of September 27, 2024, by and between the Project Company and Administrator.
Real Estate Documents
1.Solar Generating Facility Land Option and Lease and Easement Agreement dated April 1, 2020, by and between Wonderful Nut Orchards LLC, a Delaware limited liability company, formerly known as Paramount Land Company, LLC, a Delaware limited liability company, successor by merger to Paramount Land Company, L.P., a California limited partnership (“Original Lessor”), and Samsung Solar Energy 2, LLC, a Delaware limited liability company (“Original Lessee”) (“Original Lease”); as amended by that certain unrecorded First Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated October 13, 2020, by and between Original Lessor and Original Lessee (“First Amendment”); as further amended by that certain unrecorded Second Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of February 10, 2021, by and between Original Lessor and Original Lessee (“Second Amendment”); the Original Lease, First Amendment and Second Amendment as as evidenced by Memorandum of Option Agreement dated as of May 31, 2021, by and between Original Lessor and Original Lessee, recorded August 23, 2021 as Instrument No. 221117785; as assigned by that certain Assignment and Assumption Agreement dated May 4, 2022, by and between Original Lessee and the Project Company (“Lessee”), as evidenced by that certain Memorandum of Assignment and Assumption Agreement dated as of May 17, 2022, by and between Original Lessee and Lessee, recorded May 18, 2022 as Instrument No. 222079077; as further assigned by Memorandum of Assignment of Option Agreement dated as of October 23, 2023, by and between Original Lessor, Assignor, and RF Solar Properties LLC, a Delaware limited liability company (“Lessor”), Assignee, recorded October 31, 2023 as Instrument No. 223134667; and as further amended by that certain Third Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of March 7, 2024, by and between Lessor and Lessee (“Third Amendment”), as evidenced by that certain Amendment to Memorandum of Option Agreement dated May 13, 2024, but dated effective as of March 7, 2024, recorded March 22, 2024 as Instrument No. 224058719, Official Records, Kern County, California; and; as further amended by that certain Fourth Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement and Second Amendment to Memorandum of Option Agreement dated as of August 1, 2024, by and
between Lessor and Lessee, recorded November 11, 2024 as Instrument No. 224144497, Official Records, Kern County, California.
2.Access Easement Agreement dated March 20, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and the Project Company, recorded March 22, 2024 as Instrument No. 224032029; as amended by that certain First Amendment to Access Easement Agreement dated as of June 26, 2024, by and between WONDERFUL NUT ORCHARDS, LLC, a Delaware limited liability company; and the Project Company, recorded July 3, 2024 as Instrument No. 224076724, Official Records, Kern County, California.
3.Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated as of July 25, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, as Landlord, and the Project Company, as Lessee, as evidenced by that certain Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated as of July 25, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and the Project Company, recorded August 23, 2024 as Instrument No. 224100425; and as amended by that certain Amendment to Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement and Amendment to Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated August 1, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and the Project Company, recorded November 25, 2024, as Instrument No. 224145147, Official Records, Kern County, California.
4.Easement Agreement dated October 12, 2023, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company; and the Project Company, as evidenced by that certain Memorandum of Easement Agreement dated as of October 12, 2023, recorded June 21, 2024 as Instrument No. 224071364, Official Records, Kern County, California.
Ancillary Real Estate Agreements
1.Waiver of Surface Rights dated January 16, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇ and the Project Company. (Affects Parcel 1)
2.Waiver of Surface Rights dated January 16, 2023, by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇, and the Project Company. (Affects Parcel 1)
3.Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Project Company, recorded March 22, 2024 as Instrument No. 224032025, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
4.Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Project Company, recorded March 22, 2024 as Instrument No. 224032026, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
5.Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the Project Company, recorded March 22, 2024 as Instrument No. 224032027, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
6.Waiver of Surface Rights dated March 13, 2024, by and between ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇ and the Project Company. (Affects Parcels 1, 5 and 6)
7.Waiver of Surface Rights dated July 11, 2023, by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇, and the Project Company. (Affects Parcels 1, 5 and 6)
8.Waiver of Surface Rights dated June 21, 2023, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 5)
9.Waiver of Surface Rights dated July 17, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and the Project Company. (Affects Parcel 5)
10.Waiver of Surface Rights dated June 29, 2023, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a/k/a E. ▇▇▇▇▇ ▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, and the Project Company. (Affects Parcel 5)
11.Waiver of Surface Rights dated June 29, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and the Project Company. (Affects Parcel 5)
12.Waiver of Surface Rights dated June 14, 2023, by and between ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ School and the Project Company. (Affects Parcel 5)
13.Waiver of Surface Rights dated July 25, 2023, by and between Yale University and the Project Company. (Affects Parcels 1, 5 and 6)
14.Waiver of Surface Rights dated September 8, 2022, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 11 and 15)
15.Waiver of Surface Rights dated October 2, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇, Successor Trustee or sometimes called Successor Sole Trustee of the ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Family Trust dated February 27, 1990 and the Project Company. (Affects Parcels 11 and 15)
16.Waiver of Surface Rights dated October 18, 2022, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executor of the Estate of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Deceased, and the Project Company. (Affects Parcels 11 and 15)
17.Waiver of Surface Rights dated October 4, 2022, by and between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the Project Company. (Affects Parcels 11 and 15)
18.Waiver of Surface Rights dated February 13, 2023, by and between ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇, Successor Trustee of the Gay ▇. ▇▇▇▇▇▇▇▇▇ Separate Property Trust Established August 2, 1990 and the Project Company. (Affects Parcels 11 and 15)
19.Waiver of Surface Rights dated February 23, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., Successor Trustee of the ▇▇▇▇▇▇▇ ▇▇▇▇ Liquidating Trust, and the Project Company. (Affects Parcels 11 and 15)
20.Waiver of Surface Rights dated April 10, 2024, by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (f.k.a. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇), beneficiary of the Testamentary Trust established under the Will of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, and the Project Company. (Affects Parcel 8)
21.Waiver of Surface Rights dated July 26, 2023, by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, f.k.a. ▇▇▇▇ ▇. ▇▇▇▇▇▇, a single person, and the Project Company. (Affects Parcel 8)
22.Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and the Project Company. (Affects Parcel 10)
23.Waiver of Surface Rights dated September 29, 2023, by and between ▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 12)
24.Waiver of Surface Rights dated November 20, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Living Trust date February 3, 2014, and the Project Company. (Affects Parcel 13)
25.Waiver of Surface Rights dated January 27, 2023, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Project Company. (Affects Parcel 13)
26.Waiver of Surface Rights dated January 24, 2023, by and between Mineral Acquisition Group, LLC and the Project Company. (Affects Parcel 13)
27.Waiver of Surface Rights dated August 19, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and the Project Company. (Affects Parcel 13)
28.Waiver of Surface Rights dated July 8, 2022, by and between ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ a/k/a ▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
29.Waiver of Surface Rights dated July 7, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
30.Waiver of Surface Rights dated August 17, 2022, by and between ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
31.Waiver of Surface Rights dated July 7, 2022, by and between ▇▇▇▇ ▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Project Company. (Affects Parcel 16)
32.Waiver of Surface Rights dated August 2, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
33.Waiver of Surface Rights dated August 29, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, a/k/a ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
34.Waiver of Surface Rights dated August 19, 2022, by and between ▇▇▇▇ ▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
35.Waiver of Surface Rights dated July 21, 2023, by and between ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, f/k/a ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
36.Waiver of Surface Rights acknowledged August 24, 2023, by and between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
37.Waiver of Surface Rights dated October 26, 2023, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ as Trustee of the Survivors Trust created under the ▇▇▇▇▇▇ ▇. ▇▇▇▇ Family Trust dated July 19, 1985, and the Project Company. (Affects Parcels 18 and 19)
38.Waiver of Surface Rights dated August 23, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ and Devisee of the Estate of ▇▇▇▇▇ ▇. ▇▇▇▇▇, htta ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, deceased, and the Project Company. (Affects Parcels 18 and 19)
39.Waiver of Surface Rights dated October 18, 2022, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
40.Waiver of Surface Rights dated August 2, 2022, by and between ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
41.Waiver of Surface Rights dated August 2, 2022, by and between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
42.Waiver of Surface Rights dated August 25, 2022, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
43.Waiver of Surface Rights dated January 10, 2024, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee under the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ Revocable Trust dated March 30, 1976, and the Project Company, recorded March 22, 2024 as Instrument No. 224032028, Official Records, Kern County, California. (Affects Parcels 18 and 19)
44.Waiver of Surface Rights dated March 29, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, as Executor of the Will of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, a/k/a ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, deceased and the Project Company (Affects Parcels 18 and 19)
45.Waiver of Surface Rights acknowledged July 26, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇ and the Project Company. (Affects Parcels 18 and 19)
46.Waiver of Surface Rights dated July 3, 2023, by and between ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Family Trust as amended on March 15, 2002 and the Project Company. (Affects Parcels 18 and 19)
47.Waiver of Surface Rights dated November 2, 2022, by and between ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and the Project Company. (Affects Parcels 18 and 19)
48.Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and the Project Company. (Affects Parcel 20)
49.Waiver of Surface Rights dated May 10, 2023, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇▇▇ Trust dated December 14, 1977, and the Project Company. (Affects Parcel 21)
50.Waiver of Surface Rights dated July 19, 2023, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Successor Trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Separate Property Trust dated May 20, 2003, and the Project Company. (Affects Parcel 21)
51.Waiver of Surface Rights dated May 5, 2023, by and between Rocking T. Properties, LP, a California limited partnership, c/o TEEKAYSEE, Inc., a California Corporation, as General Partner, and the Project Company. (Affects Parcel 21)
52.Waiver of Surface Rights dated August 14, 2023, by and between The President and Fellows of Middlebury College and the Project Company. (Affects Parcel 21)
53.Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and the Project Company. (Affects Parcel 22)
54.Waiver of Surface Rights dated March 16, 2023, by and between The ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust dated June 1, 2003, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees, and the Project Company. (Affects Parcel 21)
55.Waiver of Surface Rights dated October 24, 2023, by and between Hannah Ranch, a California partnership, and the Project Company. (Affects Parcel 25)
56.Consent and Crossing Agreement dated November 15, 2024, by and between Wonderful Nut Orchards LLC, a Delaware limited liability company, the Project Company, and RF Solar Properties LLC, a Delaware limited liability company.
57.Letter of No Objection from Lost Hills Water District dated November 28, 2023; as amended by Letter of No Objection from Lost Hills Water District dated July 9, 2024.
58.Letter of No Objection from Shell Pipeline Company LP dated July 3, 2024.
59.Letter of No Objection from Pacific Electric and Gas Company dated April 2, 2025.
Annex 2
Project Site
Parcels 1-22:
RF SOLAR PROPERTIES LLC, a Delaware limited liability company
Parcel 1:
THAT PORTION OF THE NORTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN; THENCE SOUTH 89° 58’ EAST, 2673.10 FEET TO THE NORTH QUARTER SECTION CORNER OF SECTION 6; THENCE ALONG THE NORTH AND SOUTH QUARTER SECTION LINE OF SECTION 6, SOUTH 0° 26-1/2’ WEST, 2911.57 FEET TO THE SWAMP AND OVERFLOW SEGREGATION LINE; THENCE ALONG SAID SWAMP AND OVERFLOW SEGREGATION LINE, ACCORDING TO UNITED STATES GOVERNMENT PLAT, APPROVED MARCH 19, 1856, NORTH 42° 18’ WEST, 3938.49 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL PETROLEUM, OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS, AND ALL OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN AND UNDERLYING OR THAT MAY BE PRODUCED FROM THE PARCEL OF REAL PROPERTY DESCRIBED ABOVE, TOGETHER WITH ANY AND ALL RIGHTS AND INTERESTS IN ANY WAY RELATED TO THE SEARCH FOR, EXTRACTION OF OR TREATMENT OR STORAGE OF ANY OF THE MINERALS REFERRED TO HEREIN, AND ALL RIGHTS OF INGRESS AND EGRESS NECESSARY TO THE FOREGOING, AS RESERVED IN THE GRANT DEED EXECUTED BY ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, HUSBAND AND WIFE, AS COMMUNITY PROPERTY, AS TO AN UNDIVIDED ½ INTEREST, AND ▇▇▇▇▇▇ ▇. ▇▇▇, A MARRIED ▇▇▇, AS HIS SOLE AND SEPARATE PROPERTY, AS TO AN UNDIVIDED 1/2 INTEREST, RECORDED JULY 23, 1979 AS INSTRUMENT NO. 007273, IN BOOK 5215, PAGE 589, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS RESERVED IN THE GRANT DEED EXECUTED ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEES OF THE ▇▇▇▇▇ ▇▇▇▇▇▇ KAIME TRUST ESTATE, RECORDED AUGUST 17, 1979 AS INSTRUMENT NO. 017671, IN BOOK 5221, PAGE 2128, OF OFFICIAL RECORDS.
EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL PETROLEUM, OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS, AND ALL OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN AND UNDERLYING OR THAT MAY RE PRODUCED FROM THE PARCEL OF REAL PROPERTY DESCRIBED ABOVE, TOGETHER WITH ANY AND ALL RIGHTS AND INTERESTS IN ANY WAY RELATED TO THE
Annex 2-1
SEARCH FOR, EXTRACTION OF OR TREATMENT OR STORAGE OF ANY OF THE MINERALS REFERRED TO HEREIN, AND ALL RIGHTS OF INGRESS AND EGRESS NECESSARY TO THE FOREGOING AS RESERVED BY ▇▇▇▇▇▇▇ NATIONAL BANK, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AS TRUSTEES OF RESIDUARY TRUST CREATED PURSUANT TO THE WILL OF S.F.B. ▇▇▇▇▇, DECEASED, IN DEED RECORDED JULY 1, 1981 IN BOOK 5386, PAGE 367 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 2:
THAT PORTION OF THE EAST HALF OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, THENCE SOUTH 0° 48’ WEST 5285.30 FEET TO THE SOUTHEAST CORNER OF SECTION 6, THENCE ALONG THE SWAMP AND OVERFLOW SEGREGATION LINE, ACCORDING TO THE UNITED STATES GOVERNMENT PLAT APPROVED MARCH 19, 1856 NORTH 51° 13’ WEST 2206.40 FEET AND NORTH 42° 18’ WEST 1343.51 FEET; THENCE ALONG THE NORTH AND SOUTH QUARTER SECTION LINE OF SAID SECTION 6, NORTH 0° 26-1/2’ EAST 2911.57 FEET TO THE NORTH QUARTER SECTION CORNER OF SECTION 6, THENCE SOUTH 89° 58’ EAST 2673.10 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM ALL OIL, GAS AND OTHER MINERALS IN AND UNDER SAID LAND AS CONVEYED TO SFER PROPERTIES-A, INC., A DELAWARE CORPORATION IN MINERAL DEED RECORDED DECEMBER 21, 1993 IN BOOK 6960, PAGE 1516 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 3:
ALL OF THE GOVERNMENT OR HIGH LAND (AS CONTRA-DISTINGUISHED FROM SWAMP AND OVERFLOWED LAND GRANTED TO THE STATE OF CALIFORNIA) IN LOT 2 OF THE NORTHWEST QUARTER, THE FRACTIONAL SOUTHEAST QUARTER OF THE NORTHWEST QUARTER, THE FRACTIONAL NORTHEAST QUARTER OF THE SOUTHWEST QUARTER, OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ALL OIL AND GAS IN SAID LAND, TOGETHER WITH THE RIGHT TO PROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS FROM SAME UPON COMPLIANCE WITH CONDITIONS AND SUBJECT TO PROVISIONS AND LIMITATIONS OF ACT OF JULY 17, 1914 (38 STAT. 509), AS EXCEPTED AND RESERVED BY THE UNITED STATES OF AMERICA IN PATENT RECORDED MAY 8, 1946 IN BOOK 1322, PAGE 44 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 4:
ALL OF THE GOVERNMENT OR HIGH LAND (AS CONTRA-DISTINGUISHED FROM SWAMP AND OVERFLOWED LAND GRANTED TO THE STATE OF CALIFORNIA), IN THE FRACTIONAL NORTHWEST QUARTER OF THE SOUTHEAST QUARTER, THE FRACTIONAL SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER, AND FRACTIONAL SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL AND GAS IN SAID LAND, TOGETHER-WITH THE RIGHT TO PROSPECT FOR, MINE AND RESERVE SUCH DEPOSITS FROM SAME UPON COMPLIANCE WITH CONDITIONS AND SUBJECT TO PROVISIONS AND LIMITATIONS OF ACT OF JULY 17, 1914 (38 STAT. 509), AS EXCEPTED AND RESERVED BY THE UNITED STATES OF AMERICA IN PATENT RECORDED MAY 8, 1946 IN BOOK 1322, PAGE 44 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 5:
THE NORTH HALF OF SECTION 5, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN. IN THE UNINCORPORATED AREA, COUNTY OF ▇▇▇▇, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL MINERALS OF EVERY KIND AND DESCRIPTION, INCLUDING OIL, PETROLEUM, GAS AND ALL OTHER MINERALS IN, UPON OR UNDER THE SAID LAND, AS EXCEPTED AND RESERVED IN DEED DATED OCTOBER 24, 1955, FROM DEL MONTE PROPERTIES COMPANY TO ▇. ▇▇▇▇▇ & SONS, RECORDED DECEMBER 19, 1955 IN BOOK 2531, PAGE 251, OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 6:
THE SOUTHEAST QUARTER OF SECTION 5, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL MINERALS OF EVERY KIND AND DESCRIPTION, INCLUDING OIL, PETROLEUM, GAS AND ALL OTHER MINERALS IN, UPON OR UNDER THE SAID LAND, AS EXCEPTED AND RESERVED IN DEED DATED OCTOBER 24, 1955, FROM DEL MONTE PROPERTIES COMPANY TO ▇▇▇▇▇▇▇ ▇▇▇, ET AL, RECORDED DECEMBER 19, 1955 IN BOOK 2531, PAGE 251, OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 7:
THE NORTH HALF OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT
DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF ▇▇▇▇, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL FLAT THEREOF.
EXCEPTING THEREFROM AN UNDIVIDED 1/2 OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS, A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, AS INSTRUMENT NO. 0203038168, AND RE- RECORDED JUNE 12, 2003 AS INSTRUMENT NO. 0203114997, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 8:
THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING 7/8THS OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, IN DEED RECORDED MARCH 17, 1981 IN BOOK 5359, PAGE 1951, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 1/16TH OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS. A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, INSTRUMENT NO. 0203038168 AND RERECORDED JUNE 12, 2003, INSTRUMENT NO. 0203114997, BOTH OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 9:
THE SOUTH HALF OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THEREFROM 50% OF ALL OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES LYING IN AND UNDER SAID LAND, AS RESERVED BY ▇▇▇▇▇▇▇▇▇ ▇. HADLWY, ET UK, IN DEED RECORDED JANUARY 25, 1977 IN BOOK 5003, PAGE 1770, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 25% OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS. A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, INSTRUMENT NO. 0203038168 AND RE- RECORDED JUNE 12, 2003, AS INSTRUMENT NO. 0203114997, BOTH OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 10:
THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER AND THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND ▇▇▇▇▇▇ TO RECOVER SAME AS RESERVED IN THE DEED FROM ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED WOMAN AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED MAN, RECORDED APRIL 4, 1974 IN BOOK 4834, PAGE 1195 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 11:
BEING A 178.300 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE NORTHWEST QUARTER AND SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 11 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT AN IRON PIPE WITH HUB FOUND FOR THE WEST QUARTER CORNER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 283.67 FEET TO THE POINT OF BEGINNING;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 2,356.94 FEET TO THE NORTHWEST CORNER OF SAID SECTION 9;
THENCE SOUTH 89° 01’ 55” EAST, ALONG THE NORTH LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 2,496.56 FEET TO THE NORTHEAST CORNER OF THE LEASE AREA DESCRIBED HEREIN;
THENCE SOUTH 00° 22’ 07” WEST, OVER AND ACROSS THE NORTHWEST QUARTER AND SOUTHWEST CORNER OF SAID SECTION 9, A DISTANCE OF 3,839.60 FEET TO A POINT ON THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH, RECORDED IN BOOK 11, PAGE 88, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA;
THENCE ALONG THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH THE FOLLOWING TWO (2) COURSES AND DISTANCES:
1.NORTH 54° 21’ 31” WEST, A DISTANCE OF 168.52 FEET TO A FOUND 2-INCH IRON PIPE, AND
2.NORTH 59° 00’ 55” WEST, A DISTANCE OF 2,771.71 FEET TO THE POINT OF BEGINNING AND CONTAINING 178.300 ACRES (7,766,736 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 12:
A 76.18 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE SOUTHEAST QUARTER AND SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 12 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT AN IRON PIPE WITH HUB FOUND FOR THE WEST QUARTER CORNER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 9, 283.67 FEET TO THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH, RECORDED IN BOOK 11, PAGE 88, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA;
THENCE ALONG SAID MEANDER LINE OF BUENA VISTA LAKE SLOUGH THE FOLLOWING TWO (2) COURSES AND DISTANCES:
1.SOUTH 59° 00’ 55” EAST, A DISTANCE OF 2,771.77 FEET TO A FOUND 2-INCH IRON PIPE, AND
2.SOUTH 54° 21’ 31” EAST, A DISTANCE OF 357.66 FEET TO THE NORTHEAST CORNER OF THE LEASE AREA DESCRIBED HEREIN;
THENCE SOUTH 01° 06’ 27” WEST, LEAVING SAID MEANDER LINE OF BUENA VISTA LAKE SLOUGH AND ACROSS THE SOUTH HALF OF SAID SECTION 9, A DISTANCE OF 870.98 FEET;
THENCE SOUTH 87° 45’ 04” EAST, A DISTANCE OF 357.12 FEET;
THENCE SOUTH 02° 11’ 48” WEST, A DISTANCE OF 456.93 FEET TO A POINT ON THE SOUTH LINE OF SAID SECTION 9;
THENCE NORTH 89° 00’ 24” WEST, ALONG SAID SOUTH LINE OF SECTION 9, PASSING THE SOUTH QUARTER CORNER OF SAID SECTION 9 AT A DISTANCE OF 400.48 FEET, AND CONTINUING FOR A TOTAL DISTANCE OF 1,721.02 FEET TO THE SOUTHWEST CORNER OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 9;
THENCE NORTH 01° 16’ 15” EAST, ALONG THE WEST LINE OF THE EAST HALF OF THE SOUTHWEST QUARTER OF SAID SECTION 9, A DISTANCE OF 1,980.86 FEET;
THENCE NORTH 89° 00’ 55” WEST, ACROSS THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 9, A DISTANCE OF 1,329.47 FEET TO THE WEST LINE OF THE SOUTHWEST QUARTER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 45” EAST, ALONG SAID WEST LINE OF THE SOUTHWEST QUARTER, A DISTANCE OF 660.21 FEET TO THE POINT OF BEGINNING AND CONTAINING 76.18 ACRES (3,318,246 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 13:
THE SOUTHEAST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, AS RESERVED BY ▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇, IN DEED RECORDED MARCH 1, 1974, IN BOOK 4828, PAGE 2003, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 14:
THE SOUTHWEST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED TO ▇▇▇▇▇▇▇-NATIONAL BANK, TRUSTEE, UNDER THE WILL OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, DECEASED, IN DEED RECORDED APRIL 24, 1974, IN BOOK 4837, PAGE 1485, OF OFFICIAL RECORDS.
APNs: ▇▇▇-▇▇▇-▇▇ AND ▇▇▇-▇▇▇-▇▇
Parcel 15:
ALL THAT PORTION OF THE NORTHEAST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, WHICH LIES NORTHEASTERLY OF THE SWAMP AND OVERFLOW SEGREGATION LINE.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS RESERVED IN DEED FROM ▇▇▇▇ ▇▇▇▇▇▇, ET AL, RECORDED APRIL 19, 1974 IN BOOK 4836, PAGE 2254, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 16:
BEING A 99.19 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE SOUTHWEST QUARTER OF FRACTIONAL SECTION 4, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 16 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE SOUTH 89° 02’ 01” EAST, ALONG THE SOUTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1667.55 FEET;
THENCE NORTH 00° 59’ 36” EAST, OVER AND ACROSS SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2644.29 FEET TO THE NORTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 89° 02’ 35” WEST, ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1600.54 FEET TO THE NORTHWEST CORNER OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE SOUTH 02° 26’ 42” WEST, ALONG THE WEST LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2644.90 FEET TO THE POINT OF BEGINNING AND CONTAINING 99.19 ACRES (4,320,667 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 17:
BEING A 78.86 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE NORTHWEST QUARTER OF FRACTIONAL SECTION 4, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PORTION PART OF PARCEL 17 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO OF LAND OUT OF A TRACT CONVEYED TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE NORTHWEST QUARTER OF SAID FRACTIONAL SECTION 4;
THENCE SOUTH 89° 29’ 40” EAST, ALONG THE NORTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1547.45 FEET;
THENCE SOUTH 01° 02’ 46” WEST, OVER AND ACROSS SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2188.63 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 89° 02’ 35” WEST, ALONG THE SOUTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1600.54 FEET TO THE SOUTHWEST CORNER OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 02° 26’ 42” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2177.17 FEET TO THE POINT OF BEGINNING AND CONTAINING 78.86 ACRES (3,435,069 SQUARE FEET), MORE OR LESS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 18:
A LEASE AREA IN SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 18 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS;
THE NORTHWEST QUARTER AND THE NORTHEAST QUARTER AND THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, EXCEPT LOT 1 IN SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
SAID LEASE AREA CONTAINING 321.464 ACRES (14,002,955 SQUARE FEET), MORE OR LESS.
APNs: ▇▇▇-▇▇▇-▇▇-▇▇, ▇▇▇-▇▇▇-▇▇-▇▇ and ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 19:
THE SOUTHEAST QUARTER OF SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING THE OFFICIAL PLAT THEREOF.
EXCEPT AN UNDIVIDED 1/8TH INTEREST IN AND TO ALL OIL, GAS, PETROLEUM, AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED IN THE DEED RECORDED FEBRUARY 5, 1970 IN BOOK 4364, PAGE 383, OF OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 1/2 INTEREST IN AND TO ALL OIL, GAS, PETROLEUM AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED IN THE DEED RECORDED FEBRUARY 5, 1970 IN BOOK 4364, PAGE 385 OF OFFICIAL RECORDS.
ALSO EXCEPT ALL REMAINING OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND AS EXCEPTED IN DEEDS RECORDED JUNE 27, 1974 IN BOOK 4847, PAGE 2052 AND IN BOOK 4847, PAGE 2055, BOTH OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 20:
THE NORTH HALF OF THE NORTH HALF OF SECTION 16, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND ▇▇▇▇▇▇ TO RECOVER SAME AS RESERVED IN THE DEED FROM ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED WOMAN AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED MAN, RECORDED APRIL 4, 1974 IN BOOK 4834, PAGE 1195, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 21:
ALL THAT PORTION OF SECTION 15, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING WESTERLY OF THE SEGREGATION LINE.
EXCEPT THEREFROM AN UNDIVIDED 45% INTEREST IN AND TO AN UNDIVIDED 1/3RD INTEREST OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS IN OR UNDER SAID PREMISES, OR THAT MAY BE AT ANY TIME BE PRODUCED OR EXTRACTED THEREFROM, TOGETHER WITH THE RIGHT TO PROSPECT FOR, DEVELOP, EXTRACT OR REMOVE THE SAME, AS RESERVED BY DEED FROM ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, AS TRUSTEE UNDER DECLARATION OF TRUST DATED OCTOBER 22, 1969 RECORDED JULY 19, 1974 IN BOOK 4851, PAGE 703, OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 112 OF AN UNDIVIDED 55% INTEREST IN AND TO AN UNDIVIDED 1/3RD INTEREST IN ALL OIL, GAS, OTHER HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER SAID LAND, AS RESERVED BY DEED FROM CRACKER NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, TRUSTEE, RECORDED JUNE 17, 1915 IN BOOK 4900, PAGE 6544 OF OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 4/9THS INTEREST OF AN UNDIVIDED 2/3RDS INTEREST OF ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED IN DEED BY ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, RECORDED JUNE 3, 1977 IN BOOK 5031, PAGE 1724 OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇
Parcel 22:
ALL OF SECTION 16, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THE NORTH HALF OF THE NORTH HALF OF SAID SECTION 16.
ALSO EXCEPT ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND ▇▇▇▇▇▇ TO RECOVER SAME AS RESERVED IN THE DEED FROM ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED WOMAN AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, A MARRIED ▇▇▇, RECORDED APRIL 4, 1974, IN BOOK 4834, PAGE 1195 OF OFFICIAL RECORDS.
APNs: ▇▇▇-▇▇▇-▇▇ and ▇▇▇-▇▇▇-▇▇
Parcels 23, 25 and 26:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
Parcel 23:
That portion of Section 21 and 16 Township 25 South, Range 21 East, Mount Diablo Base and meridian, in the unincorporated area of the county of Kern, State of California, more particularly described as follows:
The westerly 100.00 feet of said Section 21 and the southerly 100 feet of the west 100 feet of Section 16.
Contains 12.21± acres across APN: ▇▇▇-▇▇▇-▇▇
APN: ▇▇▇-▇▇▇-▇▇
Parcel 24:
DELETED
Parcel 25:
THE EAST HALF OF THE SOUTHEAST QUARTER OF FRACTIONAL SECTION 7, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ONLY THE RIGHTS TO ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS ON OR UNDERLYING SAID LAND, AS CONVEYED IN THE DEED TO HANNAH RANCH, A PARTNERSHIP, RECORDED FEBRUARY 6, 1987 IN BOOK 5967, PAGE 2117, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM UNTO GRANTOR 50% OF ALL REMAINING OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER ALL OF THE LAND AS RESERVED IN THE DEED EXECUTED BY WEST HAVEN FARMING COMPANY, A CORPORATION AND WESTFARMERS, A CALIFORNIA GENERAL PARTNERSHIP, RECORDED MAY 12, 2003 AS INSTRUMENT NO. 0203114997, OF OFFICIAL RECORDS.
APN: ▇▇▇-▇▇▇-▇▇-▇▇
Parcel 26:
A 100 foot wide collector line easement, being a portion of land out of the east half of the northeast quarter of Section 7, Township 25 South, Range 21 East, of the Mount Diablo Base and Meridian, Kern County,
California, and a portion of land out of a tract conveyed to Wonderful Nut Orchards, LLC, recorded in document no. 0215082425, Kern County, California and being more particularly described as follows:
Commencing at an iron pipe with cap found for the east quarter corner of said Section 7;
Thence South 88° 25’ 15” West, along the south line of the northeast quarter of said Section 7, a distance of 130.07 feet to the POINT OF BEGINNING;
Thence leaving the south line of the northeast quarter of said Section 7 and across the east half of the northeast quarter of said Section 7 the following course and distance:
1.North 00° 16’ 43” East, a distance of 2658.46 feet to the north line of the northeast quarter of said Section 7;
Thence South 88° 09’ 14” West, along the north line of the northeast quarter of said Section 7, a distance of 100.07 feet;
Thence leaving the north line of the northeast quarter of said Section 7 and across the east half of the northeast quarter of said Section 7 the following courses and distances:
1.South 00° 16’ 43” West, a distance of 2658.00 feet, to the south line northeast quarter and
2.North 88° 25’ 15” East, along said south line, a distance of 100.05 feet to the POINT OF BEGINNING and containing 6.102 acres (265,823 square feet), more or less.
APN: 044-101-11-00-8
Annex 3
Pro Forma Owner's Policies
 | OWNER'S POLICY OF TITLE INSURANCE Policy Number PRO FORMA Issued by Old Republic National Title Insurance Company | ||||
Any notice of claim and any other notice or statement in writing required to be given to the Company under this Policy must be given to the Company at the address shown in Section 18 of the Conditions.
COVERED RISKS
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS, OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, a Florida corporation (the "Company") insures, as of Date of Policy and, to the extent stated in Covered Risks 9 and 10, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of:
1.Title being vested other than as stated in Schedule A.
2.Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is not limited to insurance against loss from:
(a)A defect in the Title caused by
(i)forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation;
(ii)failure of any person or Entity to have authorized a transfer or conveyance;
(iii)a document affecting Title not properly created, executed, witnessed, sealed, acknowledged, notarized, or delivered;
(iv)failure to perform those acts necessary to create a document by electronic means authorized by law;
(v)a document executed under a falsified, expired, or otherwise invalid power of attorney;
(vi)a document not properly filed, recorded, or indexed in the Public Records including failure to perform those acts by electronic means authorized by law; or
(vii)a defective judicial or administrative proceeding.
(b)The lien of real estate taxes or assessments imposed on the Title by a governmental authority due or payable, but unpaid .
(c)Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term "encroachment" includes encroachments of existing improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land.
3.Unmarketable Title.
4.No right of access to and from the Land.
5.The violation or enforcement of any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to
(a)the occupancy, use, or enjoyment of the Land;
(b)the character, dimensions, or location of any improvement erected on the Land;
(c)the subdivision of land; or
(d)environmental protection
(e)If a notice, describing any part of the Land, is recorded in the Public Records setting forth the violation or intention to enforce, but only to the extent of the violation or enforcement referred to in that notice.
6.An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 5 if a notice of the enforcement action, describing any part of the Land, is recorded in the Public Records, but only to the extent of the enforcement referred to in that notice.
7.The exercise of the rights of eminent domain if a notice of the exercise, describing any part of the Land, is recorded in the Public Records.
8.Any taking by a governmental body that has occurred and is binding on the rights of a purchaser for value without Knowledge.
9.Title being vested other than as stated in Schedule A or being defective
(a)as a result of the avoidance in whole or in part, or from a court order providing an alternative remedy, of a transfer of all or any part of the title to or any interest in the Land occurring prior to the transaction vesting Title as shown in Schedule A because that prior transfer constituted a fraudulent or preferential transfer under federal bankruptcy, state insolvency, or similar creditors’ rights laws; or
(b)because the instrument of transfer vesting Title as shown in Schedule A constitutes a preferential transfer under federal bankruptcy, state insolvency, or similar creditors’ rights laws by reason of the failure of its recording in the Public Records
(i)to be timely, or
(ii)to impart notice of its existence to a purchaser for value or to a judgment or lien creditor.
10.Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 9 that has been created or attached or has been filed or recorded in the Public Records subsequent to Date of Policy and prior to the recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.
The Company will also pay the costs, attorneys' fees, and expenses incurred in defense of any matter insured against by this Policy, but only to the extent provided in the Conditions.
Issued through the Office of:
Old Republic National Commercial Title Services National Energy Title Services Division - Houston ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇: ▇▇▇-▇▇▇-▇▇▇▇ | OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (612) 371-1111 | ||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Authorized Signature | Attest | /s/ ▇▇▇▇▇▇ ▇▇▇▇ | Secretary | ||||||||||||||||||||
PRO FORMA OWNER’S POLICY OF TITLE INSURANCE
NOTE: This PROFORMA POLICY is furnished to or on behalf of the party to be insured. It does not reflect the present status of title and is NOT A COMMITMENT to insure the estate or interest as shown herein, nor does it evidence the willingness of the Company to provide any affirmative coverage shown herein. Any such commitment must be an express written undertaking on appropriate forms of the Company.
SCHEDULE A
Old Republic National Title Insurance Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Minneapolis, MN 55401-2499
Old Republic National Title Insurance Company
National Energy Title Services Division - Houston
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Houston, TX 77057
Phone: ▇▇▇-▇▇▇-▇▇▇▇
File No.: NCT24031395
Policy No. PRO FORMA
Amount of Insurance: $1,028,307,325.00
Premium: $TBD
Date of Policy: Date and Time of Recording
Issued: April 11, 2024 (Revised December 19, 2024)
Reference: Pelicans Jaw Solar, LLC, a Delaware limited liability company
1.Name of Insured:
Pelicans Jaw Solar, LLC, a Delaware limited liability company
2.The estate or interest in the Land that is insured by this policy is:
Leasehold estates and easement interests as described in Schedule A-1, attached hereto and made a part hereof.
3.Title is vested in:
The leasehold estates and easement interests are vested in: Pelicans Jaw Solar, LLC, a Delaware limited liability company.
Fee title to the estate or interest in the land insured is vested in the party or parties identified in the caption of the descriptions contained in Schedules A-1 and A-2, attached hereto and made a part hereof with respect to the land described under such captions.
4.The land referred to in the policy is described as follows:
See Schedule A-2, attached hereto.
SCHEDULE A-1
Description of Leases and Easements
Parcels 1-22:
RF SOLAR PROPERTIES LLC, a Delaware limited liability company
Leasehold and easement interests created by that certain Solar Generating Facility Land Option and Lease and Easement Agreement dated April 1, 2020, by and between Wonderful Nut Orchards LLC, a Delaware limited liability company, formerly known as Paramount Land Company, LLC, a Delaware limited liability company, successor by merger to Paramount Land Company, L.P., a California limited partnership (“Original Lessor”), and Samsung Solar Energy 2, LLC, a Delaware limited liability company (“Original Lessee”) (“Original Lease”); as amended by that certain unrecorded First Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated October 13, 2020, by and between Original Lessor and Original Lessee (“First Amendment”); as further amended by that certain unrecorded Second Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of February 10, 2021, by and between Original Lessor and Original Lessee (“Second Amendment”); the Original Lease, First Amendment and Second Amendment as as evidenced by Memorandum of Option Agreement dated as of May 31, 2021, by and between Original Lessor and Original Lessee, recorded August 23, 2021 as Instrument No. 221117785; as assigned by that certain Assignment and Assumption Agreement dated May 4, 2022, by and between Original Lessee and Pelicans Jaw Solar, LLC, a Delaware limited liability company (“Lessee”), as evidenced by that certain Memorandum of Assignment and Assumption Agreement dated as of May 17, 2022, by and between Original Lessee and Lessee, recorded May 18, 2022 as Instrument No. 222079077; as further assigned by Memorandum of Assignment of Option Agreement dated as of October 23, 2023, by and between Original Lessor, Assignor, and RF Solar Properties LLC, a Delaware limited liability company (“Lessor”), Assignee, recorded October 31, 2023 as Instrument No. 223134667; and as further amended by that certain Third Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement dated as of March 7, 2024, by and between Lessor and Lessee (“Third Amendment”), as evidenced by that certain Amendment to Memorandum of Option Agreement dated May 13, 2024, but dated effective as of March 7, 2024, recorded March 22, 2024 as Instrument No. 224058719, Official Records, Kern County, California; and; as further amended by that certain Fourth Amendment to Solar Generating Facility Land Option and Lease and Easement Agreement and Second Amendment to Memorandum of Option Agreement dated as of August 1, 2024, by and between Lessor and Lessee, recorded November 11, 2024 as Instrument No. 224144497, Official Records, Kern County, California. (Affects Parcels 1-22)
The fee is vested in RF SOLAR PROPERTIES LLC, a Delaware limited liability company, by Grant Deed dated October 23, 2023, recorded October 31, 2023 as Instrument No. 223134665, Official Records, Kern County, California.
Parcel 23:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
Easement interests created by that certain Access Easement Agreement dated March 20, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and Pelicans Jaw Solar, LLC, a Delaware limited liability company, recorded March 22, 2024 as Instrument No. 224032029; as amended by that certain First Amendment to Access Easement Agreement dated as of June 26, 2024, by and between WONDERFUL NUT ORCHARDS, LLC, a Delaware limited liability company; and Pelicans Jaw Solar, LLC, a Delaware limited liability company, recorded July 3, 2024 as Instrument No. 224076724, Official Records, Kern County, California.
The fee is vested in WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, by Grant Deed dated September 22, 2004, recorded December 2, 2004 as Instrument No. 204295552; Certificate of
Merger dated December 21, 2010, recorded January 3, 2011 as Instrument No. 211000050; and Certificate of Amendment to the Certificate of Formation dated June 1, 2015, recorded June 25, 2015 as Instrument No. 215082425, Official Records, Kern County, California.
Parcel 24:
DELETED
Parcel 25:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
Leasehold and easement interests created by that certain Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated as of July 25, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, as Landlord, and Pelicans Jaw Solar, LLC, a Delaware limited liability company, as Lessee, as evidenced by that certain Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated as of July 25, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and Pelicans Jaw Solar, LLC, a Delaware limited liability company, recorded August 23, 2024 as Instrument No. 224100425; and as amended by that certain Amendment to Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement and Amendment to Memorandum of Bifurcated, Amended and Restated Solar Generating Facility Land Option and Lease and Easement Agreement dated August 1, 2024, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, and Pelicans Jaw Solar, LLC, a Delaware limited liability company, recorded November 25, 2024, as Instrument No. 224145147, Official Records, Kern County, California.
The fee is vested in WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, by Grant Deed dated February 25, 2003, recorded February 28, 2003 as Instrument No. 0203038168; Certificate of Conversion dated December 21, 2010, recorded January 3, 2011 as Instrument No. 211000047; and Certificate of Amendment to the Certificate of Formation dated June 1, 2015, recorded June 25, 2015 as Instrument No. 215082425, Official Records, Kern County, California.
Parcel 26:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
Easement interests created by that certain Easement Agreement dated October 12, 2023, by and between WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company; and Pelicans Jaw Solar, LLC, a Delaware limited liability company, as evidenced by that certain Memorandum of Easement Agreement dated as of October 12, 2023, recorded June 21, 2024 as Instrument No. 224071364, Official Records, Kern County, California.
The fee is vested in WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company, by Grant Deed dated February 25, 2003, recorded February 28, 2003 as Instrument No. 0203038168; Certificate of Conversion dated December 21, 2010, recorded January 3, 2011 as Instrument No. 211000047; and Certificate of Amendment to the Certificate of Formation dated June 1, 2015, recorded June 25, 2015 as Instrument No. 215082425, Official Records, Kern County, California.
SCHEDULE A-2
Description of Leasehold Estates and Easement Interests
Parcels 1-22:
RF SOLAR PROPERTIES LLC, a Delaware limited liability company
Parcel 1:
THAT PORTION OF THE NORTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN; THENCE SOUTH 89° 58’ EAST, 2673.10 FEET TO THE NORTH QUARTER SECTION CORNER OF SECTION 6; THENCE ALONG THE NORTH AND SOUTH QUARTER SECTION LINE OF SECTION 6, SOUTH 0° 26-1/2’ WEST, 2911.57 FEET TO THE SWAMP AND OVERFLOW SEGREGATION LINE; THENCE ALONG SAID SWAMP AND OVERFLOW SEGREGATION LINE, ACCORDING TO UNITED STATES GOVERNMENT PLAT, APPROVED MARCH 19, 1856, NORTH 42° 18’ WEST, 3938.49 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL PETROLEUM, OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS, AND ALL OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN AND UNDERLYING OR THAT MAY BE PRODUCED FROM THE PARCEL OF REAL PROPERTY DESCRIBED ABOVE, TOGETHER WITH ANY AND ALL RIGHTS AND INTERESTS IN ANY WAY RELATED TO THE SEARCH FOR, EXTRACTION OF OR TREATMENT OR STORAGE OF ANY OF THE MINERALS REFERRED TO HEREIN, AND ALL RIGHTS OF INGRESS AND EGRESS NECESSARY TO THE FOREGOING, AS RESERVED IN THE GRANT DEED EXECUTED BY HARRY S. HUNT, WILLIAM J. MOUREN AND DORIS L. MOUREN, HUSBAND AND WIFE, AS COMMUNITY PROPERTY, AS TO AN UNDIVIDED ½ INTEREST, AND ROBERT M. LEE, A MARRIED MAN, AS HIS SOLE AND SEPARATE PROPERTY, AS TO AN UNDIVIDED 1/2 INTEREST, RECORDED JULY 23, 1979 AS INSTRUMENT NO. 007273, IN BOOK 5215, PAGE 589, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS RESERVED IN THE GRANT DEED EXECUTED EDWARD E. GASPAR, KATHERINE GASPAR AND PATRICIA ARMSTRONG OLIVER, TRUSTEES OF THE ALVAH MANSUR KAIME TRUST ESTATE, RECORDED AUGUST 17, 1979 AS INSTRUMENT NO. 017671, IN BOOK 5221, PAGE 2128, OF OFFICIAL RECORDS.
EXCEPTING THEREFROM AN UNDIVIDED 1/3 INTEREST AS TO ALL PETROLEUM, OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS, AND ALL OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN AND UNDERLYING OR THAT MAY RE PRODUCED FROM THE PARCEL OF REAL PROPERTY DESCRIBED ABOVE, TOGETHER WITH ANY AND ALL RIGHTS AND INTERESTS IN ANY WAY RELATED TO THE SEARCH FOR, EXTRACTION OF OR TREATMENT OR STORAGE OF ANY OF THE MINERALS REFERRED TO HEREIN, AND ALL RIGHTS OF INGRESS AND EGRESS
NECESSARY TO THE FOREGOING AS RESERVED BY CROCKER NATIONAL BANK, EDWARD D. LANDELS AND KENNETH A.
EHRMAN, AS TRUSTEES OF RESIDUARY TRUST CREATED PURSUANT TO THE WILL OF S.F.B. MORSE, DECEASED, IN DEED RECORDED JULY 1, 1981 IN BOOK 5386, PAGE 367 OF OFFICIAL RECORDS.
APN: 044-101-02
Parcel 2:
THAT PORTION OF THE EAST HALF OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, THENCE SOUTH 0° 48’ WEST 5285.30 FEET TO THE SOUTHEAST CORNER OF SECTION 6, THENCE ALONG THE SWAMP AND OVERFLOW SEGREGATION LINE, ACCORDING TO THE UNITED STATES GOVERNMENT PLAT APPROVED MARCH 19, 1856 NORTH 51° 13’ WEST 2206.40 FEET AND NORTH 42° 18’ WEST 1343.51 FEET; THENCE ALONG THE NORTH AND SOUTH QUARTER SECTION LINE OF SAID SECTION 6, NORTH 0° 26-1/2’ EAST 2911.57 FEET TO THE NORTH QUARTER SECTION CORNER OF SECTION 6, THENCE SOUTH 89° 58’ EAST 2673.10 FEET TO THE POINT OF BEGINNING.
EXCEPTING THEREFROM ALL OIL, GAS AND OTHER MINERALS IN AND UNDER SAID LAND AS CONVEYED TO SFER PROPERTIES-A, INC., A DELAWARE CORPORATION IN MINERAL DEED RECORDED DECEMBER 21, 1993 IN BOOK 6960, PAGE 1516 OF OFFICIAL RECORDS.
APN: 044-101-03
Parcel 3:
ALL OF THE GOVERNMENT OR HIGH LAND (AS CONTRA-DISTINGUISHED FROM SWAMP AND OVERFLOWED LAND GRANTED TO THE STATE OF CALIFORNIA) IN LOT 2 OF THE NORTHWEST QUARTER, THE FRACTIONAL SOUTHEAST QUARTER OF THE NORTHWEST QUARTER, THE FRACTIONAL NORTHEAST QUARTER OF THE SOUTHWEST QUARTER, OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ALL OIL AND GAS IN SAID LAND, TOGETHER WITH THE RIGHT TO PROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS FROM SAME UPON COMPLIANCE WITH CONDITIONS AND SUBJECT TO PROVISIONS AND LIMITATIONS OF ACT OF JULY 17, 1914 (38 STAT. 509), AS EXCEPTED AND RESERVED BY THE UNITED STATES OF AMERICA IN PATENT RECORDED MAY 8, 1946 IN BOOK 1322, PAGE 44 OF OFFICIAL RECORDS.
APN: 044-101-05
Parcel 4:
ALL OF THE GOVERNMENT OR HIGH LAND (AS CONTRA-DISTINGUISHED FROM SWAMP AND OVERFLOWED LAND GRANTED TO THE STATE OF CALIFORNIA), IN THE
FRACTIONAL NORTHWEST QUARTER OF THE SOUTHEAST QUARTER, THE FRACTIONAL SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER, AND FRACTIONAL SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL AND GAS IN SAID LAND, TOGETHER-WITH THE RIGHT TO PROSPECT FOR, MINE AND RESERVE SUCH DEPOSITS FROM SAME UPON COMPLIANCE WITH CONDITIONS AND SUBJECT TO PROVISIONS AND LIMITATIONS OF ACT OF JULY 17, 1914 (38 STAT. 509), AS EXCEPTED AND RESERVED BY THE UNITED STATES OF AMERICA IN PATENT RECORDED MAY 8, 1946 IN BOOK 1322, PAGE 44 OF OFFICIAL RECORDS.
APN: 044-101-06
Parcel 5:
THE NORTH HALF OF SECTION 5, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN. IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL MINERALS OF EVERY KIND AND DESCRIPTION, INCLUDING OIL, PETROLEUM, GAS AND ALL OTHER MINERALS IN, UPON OR UNDER THE SAID LAND, AS EXCEPTED AND RESERVED IN DEED DATED OCTOBER 24, 1955, FROM DEL MONTE PROPERTIES COMPANY TO C. DUFUR & SONS, RECORDED DECEMBER 19, 1955 IN BOOK 2531, PAGE 251, OFFICIAL RECORDS.
APN: 044-102-01
Parcel 6:
THE SOUTHEAST QUARTER OF SECTION 5, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL MINERALS OF EVERY KIND AND DESCRIPTION, INCLUDING OIL, PETROLEUM, GAS AND ALL OTHER MINERALS IN, UPON OR UNDER THE SAID LAND, AS EXCEPTED AND RESERVED IN DEED DATED OCTOBER 24, 1955, FROM DEL MONTE PROPERTIES COMPANY TO JOAQUIN IZU, ET AL, RECORDED DECEMBER 19, 1955 IN BOOK 2531, PAGE 251, OFFICIAL RECORDS.
APN: 044-102-03
Parcel 7:
THE NORTH HALF OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL FLAT THEREOF.
EXCEPTING THEREFROM AN UNDIVIDED 1/2 OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS, A CALIFORNIA GENERAL
PARTNERSHIP, RECORDED FEBRUARY 28, 2003, AS INSTRUMENT NO. 0203038168, AND RE-RECORDED JUNE 12, 2003 AS INSTRUMENT NO. 0203114997, OF OFFICIAL RECORDS.
APN: 044-110-01
Parcel 8:
THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING 7/8THS OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES, IN DEED RECORDED MARCH 17, 1981 IN BOOK 5359, PAGE 1951, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 1/16TH OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS. A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, INSTRUMENT NO. 0203038168 AND RERECORDED JUNE 12, 2003, INSTRUMENT NO. 0203114997, BOTH OF OFFICIAL RECORDS.
APN: 044-110-03
Parcel 9:
THE SOUTH HALF OF THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 6, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THEREFROM 50% OF ALL OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES LYING IN AND UNDER SAID LAND, AS RESERVED BY FREDERICK N. HADLWY, ET UK, IN DEED RECORDED JANUARY 25, 1977 IN BOOK 5003, PAGE 1770, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM AN UNDIVIDED 25% OF ALL OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS, AS RESERVED IN DEED, EXECUTED BY WEST HAVE FARMING COMPANY, A COOPERATION AND WESTFARMERS. A CALIFORNIA GENERAL PARTNERSHIP, RECORDED FEBRUARY 28, 2003, INSTRUMENT NO. 0203038168 AND RE-RECORDED JUNE 12, 2003, AS INSTRUMENT NO. 0203114997, BOTH OF OFFICIAL RECORDS.
APN: 044-110-25
Parcel 10:
THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER AND THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND EGRESS TO RECOVER SAME AS RESERVED IN THE DEED FROM ETHEL B. COOPER, A MARRIED WOMAN AND FINIS G.
COOPER, A MARRIED MAN, RECORDED APRIL 4, 1974 IN BOOK 4834, PAGE 1195 OF OFFICIAL RECORDS.
APN: 044-103-08
Parcel 11:
BEING A 178.300 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE NORTHWEST QUARTER AND SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 11 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT AN IRON PIPE WITH HUB FOUND FOR THE WEST QUARTER CORNER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 283.67 FEET TO THE POINT OF BEGINNING;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 2,356.94 FEET TO THE NORTHWEST CORNER OF SAID SECTION 9;
THENCE SOUTH 89° 01’ 55” EAST, ALONG THE NORTH LINE OF SAID NORTHWEST QUARTER OF SECTION 9, A DISTANCE OF 2,496.56 FEET TO THE NORTHEAST CORNER OF THE LEASE AREA DESCRIBED HEREIN;
THENCE SOUTH 00° 22’ 07” WEST, OVER AND ACROSS THE NORTHWEST QUARTER AND SOUTHWEST CORNER OF SAID SECTION 9, A DISTANCE OF 3,839.60 FEET TO A POINT ON THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH, RECORDED IN BOOK 11, PAGE 88, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA;
THENCE ALONG THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH THE FOLLOWING TWO (2) COURSES AND DISTANCES:
1.NORTH 54° 21’ 31” WEST, A DISTANCE OF 168.52 FEET TO A FOUND 2-INCH IRON PIPE, AND
2.NORTH 59° 00’ 55” WEST, A DISTANCE OF 2,771.71 FEET TO THE POINT OF BEGINNING AND CONTAINING 178.300 ACRES (7,766,736 SQUARE FEET), MORE OR LESS.
APN: 044-103-06
Parcel 12:
A 76.18 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE SOUTHEAST QUARTER AND SOUTHWEST QUARTER OF SECTION 9, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 12 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN
INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT AN IRON PIPE WITH HUB FOUND FOR THE WEST QUARTER CORNER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 49” EAST, ALONG THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 9, 283.67 FEET TO THE MEANDER LINE OF BUENA VISTA LAKE SLOUGH, RECORDED IN BOOK 11, PAGE 88, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA;
THENCE ALONG SAID MEANDER LINE OF BUENA VISTA LAKE SLOUGH THE FOLLOWING TWO (2) COURSES AND DISTANCES:
1.SOUTH 59° 00’ 55” EAST, A DISTANCE OF 2,771.77 FEET TO A FOUND 2-INCH IRON PIPE, AND
2.SOUTH 54° 21’ 31” EAST, A DISTANCE OF 357.66 FEET TO THE NORTHEAST CORNER OF THE LEASE AREA DESCRIBED HEREIN;
THENCE SOUTH 01° 06’ 27” WEST, LEAVING SAID MEANDER LINE OF BUENA VISTA LAKE SLOUGH AND ACROSS THE SOUTH HALF OF SAID SECTION 9, A DISTANCE OF 870.98 FEET;
THENCE SOUTH 87° 45’ 04” EAST, A DISTANCE OF 357.12 FEET;
THENCE SOUTH 02° 11’ 48” WEST, A DISTANCE OF 456.93 FEET TO A POINT ON THE SOUTH LINE OF SAID SECTION 9;
THENCE NORTH 89° 00’ 24” WEST, ALONG SAID SOUTH LINE OF SECTION 9, PASSING THE SOUTH QUARTER CORNER OF SAID SECTION 9 AT A DISTANCE OF 400.48 FEET, AND CONTINUING FOR A TOTAL DISTANCE OF 1,721.02 FEET TO THE SOUTHWEST CORNER OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 9;
THENCE NORTH 01° 16’ 15” EAST, ALONG THE WEST LINE OF THE EAST HALF OF THE SOUTHWEST QUARTER OF SAID SECTION 9, A DISTANCE OF 1,980.86 FEET;
THENCE NORTH 89° 00’ 55” WEST, ACROSS THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 9, A DISTANCE OF 1,329.47 FEET TO THE WEST LINE OF THE SOUTHWEST QUARTER OF SAID SECTION 9;
THENCE NORTH 01° 00’ 45” EAST, ALONG SAID WEST LINE OF THE SOUTHWEST QUARTER, A DISTANCE OF 660.21 FEET TO THE POINT OF BEGINNING AND CONTAINING 76.18 ACRES (3,318,246 SQUARE FEET), MORE OR LESS.
APN: 044-103-09
Parcel 13:
THE SOUTHEAST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, AS RESERVED BY DOROTHY J. MC VICKER, IN DEED RECORDED MARCH 1, 1974, IN BOOK 4828, PAGE 2003, OF OFFICIAL RECORDS.
APN: 044-102-22
Parcel 14:
THE SOUTHWEST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED TO CROCKER-NATIONAL BANK, TRUSTEE, UNDER THE WILL OF MIRIAM M. STUTSMAN, DECEASED, IN DEED RECORDED APRIL 24, 1974, IN BOOK 4837, PAGE 1485, OF OFFICIAL RECORDS.
APNs: 044-102-21 AND 044-102-23
Parcel 15:
ALL THAT PORTION OF THE NORTHEAST QUARTER OF SECTION 8, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, WHICH LIES NORTHEASTERLY OF THE SWAMP AND OVERFLOW SEGREGATION LINE.
EXCEPTING THEREFROM ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS RESERVED IN DEED FROM WARD THOMAS, ET AL, RECORDED APRIL 19, 1974 IN BOOK 4836, PAGE 2254, OF OFFICIAL RECORDS.
APN: 044-102-05-00
Parcel 16:
BEING A 99.19 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE SOUTHWEST QUARTER OF FRACTIONAL SECTION 4, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 16 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF THE SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE SOUTH 89° 02’ 01” EAST, ALONG THE SOUTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1667.55 FEET;
THENCE NORTH 00° 59’ 36” EAST, OVER AND ACROSS SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2644.29 FEET TO THE NORTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 89° 02’ 35” WEST, ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1600.54 FEET TO THE NORTHWEST CORNER OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE SOUTH 02° 26’ 42” WEST, ALONG THE WEST LINE OF SAID SOUTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2644.90 FEET TO THE POINT OF BEGINNING AND CONTAINING 99.19 ACRES (4,320,667 SQUARE FEET), MORE OR LESS.
APN: 044-103-04
Parcel 17:
BEING A 78.86 ACRE LEASE AREA, BEING A PORTION OF LAND OUT OF THE NORTHWEST QUARTER OF FRACTIONAL SECTION 4, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PORTION PART OF PARCEL 17 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO OF LAND OUT OF A TRACT CONVEYED TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF THE NORTHWEST QUARTER OF SAID FRACTIONAL SECTION 4;
THENCE SOUTH 89° 29’ 40” EAST, ALONG THE NORTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1547.45 FEET;
THENCE SOUTH 01° 02’ 46” WEST, OVER AND ACROSS SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2188.63 FEET TO THE SOUTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4;
THENCE NORTH 89° 02’ 35” WEST, ALONG THE SOUTH LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 1600.54 FEET TO THE SOUTHWEST CORNER OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4; THENCE NORTH 02° 26’ 42” EAST, ALONG THE WEST LINE OF SAID NORTHWEST QUARTER OF FRACTIONAL SECTION 4 A DISTANCE OF 2177.17 FEET TO THE POINT OF BEGINNING AND CONTAINING 78.86 ACRES (3,435,069 SQUARE FEET), MORE OR LESS.
APN: 044-103-01
Parcel 18:
A LEASE AREA IN SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, OF THE MOUNT DIABLO BASE AND MERIDIAN, KERN COUNTY, CALIFORNIA, AND ALSO BEING A PART OF PARCEL 18 DESCRIBED IN DEED FROM WONDERFUL NUT ORCHARDS LLC, A DELAWARE LIMITED LIABILITY COMPANY, TO RF SOLAR PROPERTIES LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED IN INSTRUMENT NO. 223134665, OFFICIAL RECORDS, KERN COUNTY, CALIFORNIA, MORE PARTICULARLY DESCRIBED AS FOLLOWS;
THE NORTHWEST QUARTER AND THE NORTHEAST QUARTER AND THE NORTHEAST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 22, TOWNSHIP 25 SOUTH, RANGE
21 EAST, EXCEPT LOT 1 IN SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
SAID LEASE AREA CONTAINING 321.464 ACRES (14,002,955 SQUARE FEET), MORE OR LESS.
APNs: 044-130-18-00, 044-130-21-00 and 044-130-23-00
Parcel 19:
THE SOUTHEAST QUARTER OF SECTION 22, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING THE OFFICIAL PLAT THEREOF.
EXCEPT AN UNDIVIDED 1/8TH INTEREST IN AND TO ALL OIL, GAS, PETROLEUM, AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED IN THE DEED RECORDED FEBRUARY 5, 1970 IN BOOK 4364, PAGE 383, OF OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 1/2 INTEREST IN AND TO ALL OIL, GAS, PETROLEUM AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED AND RESERVED IN THE DEED RECORDED FEBRUARY 5, 1970 IN BOOK 4364, PAGE 385 OF OFFICIAL RECORDS.
ALSO EXCEPT ALL REMAINING OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND AS EXCEPTED IN DEEDS RECORDED JUNE 27, 1974 IN BOOK 4847, PAGE 2052 AND IN BOOK 4847, PAGE 2055, BOTH OF OFFICIAL RECORDS.
APN: 044-130-16
Parcel 20:
THE NORTH HALF OF THE NORTH HALF OF SECTION 16, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND EGRESS TO RECOVER SAME AS RESERVED IN THE DEED FROM ETHEL B. COOPER, A MARRIED WOMAN AND FINIS G. COOPER, A MARRIED MAN, RECORDED APRIL 4, 1974 IN BOOK 4834, PAGE 1195, OF OFFICIAL RECORDS.
APN: 044-150-05-00
Parcel 21:
ALL THAT PORTION OF SECTION 15, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING WESTERLY OF THE SEGREGATION LINE.
EXCEPT THEREFROM AN UNDIVIDED 45% INTEREST IN AND TO AN UNDIVIDED 1/3RD INTEREST OF ALL OIL, GAS AND OTHER HYDROCARBON SUBSTANCES AND MINERALS IN OR UNDER SAID PREMISES, OR THAT MAY BE AT ANY TIME BE PRODUCED OR
EXTRACTED THEREFROM, TOGETHER WITH THE RIGHT TO PROSPECT FOR, DEVELOP, EXTRACT OR REMOVE THE SAME, AS RESERVED BY DEED FROM NORMA FRANCES COHN, AS TRUSTEE UNDER DECLARATION OF TRUST DATED OCTOBER 22, 1969 RECORDED JULY 19, 1974 IN BOOK 4851, PAGE 703, OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 112 OF AN UNDIVIDED 55% INTEREST IN AND TO AN UNDIVIDED 1/3RD INTEREST IN ALL OIL, GAS, OTHER HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER SAID LAND, AS RESERVED BY DEED FROM CRACKER NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, TRUSTEE, RECORDED JUNE 17, 1915 IN BOOK 4900, PAGE 6544 OF OFFICIAL RECORDS.
ALSO EXCEPT AN UNDIVIDED 4/9THS INTEREST OF AN UNDIVIDED 2/3RDS INTEREST OF ALL OIL, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES WITHIN OR UNDERLYING SAID LAND, AS EXCEPTED IN DEED BY MAXINE T. SMITH, THALIA K. CONSIDINE, HERBERT C. KELLY, JR. AND GRAHAM M. KELLY, RECORDED JUNE 3, 1977 IN BOOK 5031, PAGE 1724 OF OFFICIAL RECORDS.
APN: 044-130-39
Parcel 22:
ALL OF SECTION 16, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT THE NORTH HALF OF THE NORTH HALF OF SAID SECTION 16.
ALSO EXCEPT ALL OIL, GAS AND MINERAL RIGHTS, WITHIN AND UNDER SAME, TOGETHER WITH RIGHT OF INGRESS AND EGRESS TO RECOVER SAME AS RESERVED IN THE DEED FROM ETHEL B. COOPER, A MARRIED WOMAN AND FINIS G. COOPER, A MARRIED MAN, RECORDED APRIL 4, 1974, IN BOOK 4834, PAGE 1195 OF OFFICIAL RECORDS.
APNs: 044-150-17 and 044-150-24
Parcels 23, 25 and 26:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
Parcel 23:
That portion of Section 21 and 16 Township 25 South, Range 21 East, Mount Diablo Base and meridian, in the unincorporated area of the county of Kern, State of California, more particularly described as follows:
The westerly 100.00 feet of said Section 21 and the southerly 100 feet of the west 100 feet of Section 16.
Contains 12.21± acres across APN: 044-150-25
APN: 044-150-25
Parcel 24:
DELETED
Parcel 25:
THE EAST HALF OF THE SOUTHEAST QUARTER OF FRACTIONAL SECTION 7, TOWNSHIP 25 SOUTH, RANGE 21 EAST, MOUNT DIABLO BASE AND MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPT ONLY THE RIGHTS TO ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS ON OR UNDERLYING SAID LAND, AS CONVEYED IN THE DEED TO HANNAH RANCH, A PARTNERSHIP, RECORDED FEBRUARY 6, 1987 IN BOOK 5967, PAGE 2117, OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM UNTO GRANTOR 50% OF ALL REMAINING OIL, GAS, AND HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER ALL OF THE LAND AS RESERVED IN THE DEED EXECUTED BY WEST HAVEN FARMING COMPANY, A CORPORATION AND WESTFARMERS, A CALIFORNIA GENERAL PARTNERSHIP, RECORDED MAY 12, 2003 AS INSTRUMENT NO. 0203114997, OF OFFICIAL RECORDS.
APN: 044-101-16-00
Parcel 26:
A 100 foot wide collector line easement, being a portion of land out of the east half of the northeast quarter of Section 7, Township 25 South, Range 21 East, of the Mount Diablo Base and Meridian, Kern County, California, and a portion of land out of a tract conveyed to Wonderful Nut Orchards, LLC, recorded in document no. 0215082425, Kern County, California and being more particularly described as follows:
Commencing at an iron pipe with cap found for the east quarter corner of said Section 7;
Thence South 88° 25’ 15” West, along the south line of the northeast quarter of said Section 7, a distance of 130.07 feet to the POINT OF BEGINNING;
Thence leaving the south line of the northeast quarter of said Section 7 and across the east half of the northeast quarter of said Section 7 the following course and distance:
1.North 00° 16’ 43” East, a distance of 2658.46 feet to the north line of the northeast quarter of said Section 7;
Thence South 88° 09’ 14” West, along the north line of the northeast quarter of said Section 7, a distance of 100.07 feet;
Thence leaving the north line of the northeast quarter of said Section 7 and across the east half of the northeast quarter of said Section 7 the following courses and distances:
1.South 00° 16’ 43” West, a distance of 2658.00 feet, to the south line northeast quarter and
2.North 88° 25’ 15” East, along said south line, a distance of 100.05 feet to the POINT OF BEGINNING and containing 6.102 acres (265,823 square feet), more or less.
APN: 044-101-11-00-8
End of Schedule A
OWNER’S POLICY OF TITLE INSURANCE
SCHEDULE B
File No. NCT24031395
Policy No. PRO FORMA
EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage, and the Company will not pay costs, attorneys' fees, or expenses that arise by reason of:
1.INTENTIONALLY DELETED.
2.INTENTIONALLY DELETED.
3.(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records.
4.INTENTIONALLY DELETED.
5.INTENTIONALLY DELETED.
6.Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law and not shown by the public records.
7.INTENTIONALLY DELETED.
8.Taxes and assessments, general and special, for the fiscal year 2024-2025, as follows:
Parcel 1:
Tax Parcel No.: 044-101-02-00
1st Installment: $68.01 Marked Paid
2nd Installment: $68.01 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 2:
Tax Parcel No.: 044-101-03
1st Installment: $199.50 Marked Paid
2nd Installment: $199.50 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 3:
Tax Parcel No.: 044-101-05
1st Installment: $87.58 Marked Paid
2nd Installment: $87.58 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 4:
Tax Parcel No.: 044-101-06
1st Installment: $51.59 Marked Paid
2nd Installment: $51.58 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 5:
Tax Parcel No.: 044-102-01
1st Installment: $250.34 Marked Paid
2nd Installment: $250.34x Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 6:
Tax Parcel No.: 044-102-03
1st Installment: $125.14 Marked Paid
2nd Installment: $125.13 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 7:
Tax Parcel No.: 044-110-01
1st Installment of $7.76 Marked Paid
2nd Installment of $7.76 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 8:
Tax Parcel No.: 044-110-03
1st Installment: $15.59 Marked Paid
2nd Installment: $15.58 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 9:
Tax Parcel No.: 044-110-25
1st Installment: $7.76 Marked Paid
2nd Installment: $7.76 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 10:
Tax Parcel No.: 044-103-08
1st Installment: $46.90 Marked Paid
2nd Installment: $46.89 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 11:
Tax Parcel No.: 044-103-06
1st Installment: $374.78 Marked Paid
2nd Installment: $374.78 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 12:
Tax Parcel No.: 044-103-09
1st Installment: $78.98 Marked Paid
2nd Installment: $78.97 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 13:
Tax Parcel No.: 044-102-22
1st Installment: $125.14 Marked Paid
2nd Installment: $125.13 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 14:
Tax Parcel No.: 044-102-21
1st Installment: $120.45 Marked Paid
2nd Installment: $120.45 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Tax Parcel No.: 044-102-23
1st Installment: $4.64 Marked Paid
2nd Installment: $4.63 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 15:
Tax Parcel No.: 044-102-05-00
1st Installment: $71.92 Marked Paid
2nd Installment: $71.92 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 16:
Tax Parcel No.: 044-103-04
1st Installment: $127.49 Marked Paid
2nd Installment: $127.49 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 17:
Tax Parcel No.: 044-103-01
1st Installment: $125.14 Marked Paid
2nd Installment: $125.13 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 18:
Tax Parcel No.: 044-130-18-00
1st Installment: $93.86 Marked Paid
2nd Installment: $93.85 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Tax Parcel No.: 044-130-21-00
1st Installment: $156.46 Marked Paid
2nd Installment: $156.46 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Tax Parcel No.: 044-130-23-00
1st Installment: $93.86 Marked Paid
2nd Installment: $93.85 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 19:
Tax Parcel No.: 044-130-16
1st Installment: $123.58 Marked Paid
2nd Installment: $123.58 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 20:
Tax Parcel No.: 044-150-05-00
1st Installment: $125.14 Marked Paid
2nd Installment: $125.13 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 21:
Tax Parcel No.: 044-130-39
1st Installment: $179.92 Marked Paid
2nd Installment: $179.92 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 22:
Tax Parcel No.: 044-150-17
1st Installment: $375.57 Marked Paid
2nd Installment: $375.57 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Tax Parcel No.: 044-150-24
1st Installment: $0.14 Marked Paid
2nd Installment: $0.13 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 23:
Tax Parcel No.: 044-150-25
1st Installment: $9.32 Marked Paid
2nd Installment: $9.32 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 24:
DELETED
Parcel 25:
Tax Parcel No.: 044-101-16-00
1st Installment: $62.53 Marked Paid
2nd Installment: $62.52 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
Parcel 26:
Tax Parcel No.: 044-101-11-00-8
1st Installment: $78.19 Marked Paid
2nd Installment: $78.18 Marked Unpaid, Due 4/10/2025
Code Area: 088-010
9.INTENTIONALLY DELETED.
10.INTENTIONALLY DELETED.
I.SURFACE WAIVERS:
Parcels 1-22:
RF SOLAR PROPERTIES LLC, a Delaware limited liability company
10aa.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated January 16, 2023, by and between Harry S. Hunt and Pelicans Jaw Solar, LLC. (Affects Parcel 1)
10aaa.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated January 16, 2023, by and between Harry S. Hunt and Pelicans Jaw Solar, LLC. (Affects Parcel 1)
10aaaa.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated January 16, 2023, by and between Joan Winstanley, a/k/a Joan Hopkins, and Pelicans Jaw Solar, LLC. (Affects Parcel 1)
10a.Subject to the terms, conditions and restrictions of that certain Waiver of Surface Rights dated November 20, 2023, by and between Cynthia Riveroll Armstrong and Pelicans Jaw Solar, LLC, recorded March 22, 2024 as Instrument No. 224032025, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
10b.Subject to the terms, conditions and restrictions of that certain Waiver of Surface Rights dated November 20, 2023, by and between Adriana Riveroll and Pelicans Jaw Solar, LLC, recorded March 22, 2024 as Instrument No. 224032026, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
10c.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated November 20, 2023, by and between Alexandra Riveroll Armstrong and Pelicans Jaw Solar, LLC, recorded March 22, 2024 as Instrument No. 224032027, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
10d.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated March 13, 2024, by and between Laura Kamie-Gaspar and Pelicans Jaw Solar, LLC. (Affects Parcels 1, 5 and 6)
10e.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 11, 2023, by and between Joan Winstanley, a/k/a Joan Hopkins, and Pelicans Jaw Solar, LLC. (Affects Parcels 1, 5 and 6)
10ee.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated June 21, 2023, by and between Arthur H. Gaspar and Pelicans Jaw Solar, LLC. (Affects Parcel 5)
10eee.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 17, 2023, by and between Diane K. Bartley, a/k/a Diana Oliver Bartley, and Pelicans Jaw Solar, LLC. (Affects Parcel 5)
10eeee.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated June 29, 2023, by and between Edward A. Gaspart, a/k/a E. Alvah Gaspar, a/k/a Edward Alvah Kaime Gaspar, and Pelicans Jaw Solar, LLC. (Affects Parcel 5)
10ff.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated June 29, 2023, by and between Michael T. Oliver, a/k/a Michael Oliver, and Pelicans Jaw Solar, LLC. (Affects Parcel 5)
10fff.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated June 14, 2023, by and between Robert Louis Stevenson School and Pelicans Jaw Solar, LLC. (Affects Parcel 5)
10ffff.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 25, 2023, by and between Yale University and Pelicans Jaw Solar, LLC. (Affects Parcels 1, 5 and 6)
10f.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated September 8, 2022, by and between Annette Irene Thomas and Pelicans Jaw Solar, LLC. (Affects Parcels
11 and 15)
10g.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated October 2, 2023, by and between Lance W. Ely, Successor Trustee or sometimes called Successor Sole Trustee of the Joan Ward Thomas Family Trust dated February 27, 1990 and Pelicans Jaw Solar, LLC. (Affects Parcels 11 and 15)
10h.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated October 18, 2022, by and between Marcia I. Packard, Executor of the Estate of James L. Packard, Deceased, and Pelicans Jaw Solar, LLC. (Affects Parcels 11 and 15)
10i.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated October 4, 2022, by and between Mitchell S. Packard and Pelicans Jaw Solar, LLC. (Affects Parcels 11 and 15)
10j.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated February 13, 2023, by and between Robin Ross-Duggan, a/k/a Robin Ross-Duggan, Successor Trustee of the Gay T. Henderson Separate Property Trust Established August 2, 1990 and Pelicans Jaw Solar, LLC. (Affects Parcels 11 and 15)
10jj.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated February 23, 2023, by and between Cameron Miller, Esq., Successor Trustee of the Charles Cohn Liquidating Trust, and Pelicans Jaw Solar, LLC. (Affects Parcels 11 and 15)
10k.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated April 10, 2024, by and between Joan M. Madison (f.k.a. Joan Irene Mullen), beneficiary of the Testamentary Trust established under the Will of Millicent H. Hutchinson, and Pelicans Jaw Solar, LLC. (Affects Parcel 8)
10l.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 26, 2023, by and between Joan M. Madison, f.k.a. Joan I. Mullen, a single person, and Pelicans Jaw Solar, LLC. (Affects Parcel 8)
10m.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and Pelicans Jaw Solar, LLC. (Affects Parcel 10)
10n.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated September 29, 2023, by and between David Medoff and Pelicans Jaw Solar, LLC. (Affects Parcel 12)
10o.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated November 20, 2023, by and between Betty L. McVicker, as Trustee of the Douglas M. McVicker Living Trust date February 3, 2014, and Pelicans Jaw Solar, LLC. (Affects Parcel 13)
10p.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated January 27, 2023, by and between Candice Banducci and Pelicans Jaw Solar, LLC. (Affects Parcel 13)
10q.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated January 24, 2023, by and between Mineral Acquisition Group, LLC and Pelicans Jaw Solar, LLC. (Affects Parcel 13)
10r.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 19, 2023, by and between William M. McVicker, Jr. and Pelicans Jaw Solar, LLC. (Affects Parcel 13)
10s.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 8, 2022, by and between Alice Ames Young a/k/a Alice B. Young and Pelicans Jaw Solar, LLC. (Affects Parcel 16)
10t.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 7, 2022, by and between Carol Andersen, a/k/a Carol L. Andersen and Pelicans Jaw Solar, LLC. (Affects Parcel 16)
10u.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 17, 2022, by and between Christopher Heltai and Pelicans Jaw Solar, LLC. (Affects Parcel 16)
10v.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 7, 2022, by and between Joan Bennet, a/k/a Joan M. Benett and Pelicans Jaw Solar, LLC. (Affects Parcel 16)
10vv.Subject to the terms, conditions and restrictions of that certain Modification of Right of Surface Entry Agreement dated June 7, 2024, by and between the State of California by the California State Lands Commission, and Wonderful Nut Orchards LLC, recorded August 23, 2024 as Instrument No. 224100048; as affected by Ratification of Modification of Right of Surface Entry Agreement dated July 31, 2024, recorded August 23, 2024 as Instrument No. 224100049, Official Records, Kern County, California. (Affects Parcel 18)
10w.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 2, 2022, by and between David Wells and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
10x.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 29, 2022, by and between Dawyn Leigh Dunn, a/k/a Dawyn Brinton Harvey, a/k/a Dawyn Lee Brinton Harvey and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
10y.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 19, 2022, by and between Dean Troutman, a/k/a Dean Brinton Montoya, a/k/a Dean Brinton Troutman and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
10z.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 21, 2023, by and between Debra White Hall, f/k/a Debra White Fera and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11a.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights acknowledged August 24, 2023, by and between Geoffrey J. Cross and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11b.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated October 26, 2023, by and between Harold Daniel Hill as Trustee of the Survivors Trust created under the Harold M. Hill Family Trust dated July 19, 1985, and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11c.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 23, 2022, by and between James Arthur Marshall, Heir and Devisee of the Estate of Norma J. Young, htta Norma J. Brinton, deceased, and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11d.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated October 18, 2022, by and between Janet E. Dibble and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11e.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 2, 2022, by and between Jeannette Yenor, a/k/a Jeannette Tarver and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11f.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 2, 2022, by and between Jennifer Wells and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11g.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 25, 2022, by and between Kenneth Chadwick Brinton and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11h.Subject to the terms, conditions and restrictions of that certain Waiver of Surface Rights dated January 10, 2024, by and between Martha A. Bronstein, Trustee under the Howard S. Bronstein and Martha Ray Bronstein Revocable Trust dated March 30, 1976, and Pelicans Jaw Solar, LLC, recorded March 22, 2024 as Instrument No. 224032028, Official Records, Kern County, California. (Affects Parcels 18 and 19)
11i.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated March 29, 2023, by and between Michael R. Mansperger, a/k/a Michael Mansperger, as Executor of the Will of Shirley Sorensen Mansperger, a/k/a Shirley L. Mansperger, deceased and Pelicans Jaw Solar, LLC (Affects Parcels 18 and 19)
11j.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights acknowledged July 26, 2023, by and between Ralph H. Cross, IV and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11k.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 3, 2023, by and between John B. Sooy and Margaret M. Sooy Family Trust as amended on March 15, 2002 and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11l.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated November 2, 2022, by and between Susan White Graves and Pelicans Jaw Solar, LLC. (Affects Parcels 18 and 19)
11m.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and Pelicans Jaw Solar, LLC. (Affects Parcel 20)
11mm.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated May 10, 2023, by and between LeBon G. Abercrombie, Trustee of the Esperanza Trust dated December 14, 1977, and Pelicans Jaw Solar, LLC. (Affects Parcel 21)
11mmm.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated July 19, 2023, by and between Maureen M. Gorman, Successor Trustee of the Hebert C. Kelly, Jr. Separate Property Trust dated May 20, 2003, and Pelicans Jaw Solar, LLC. (Affects Parcel 21)
11mmmm.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated May 5, 2023, by and between Rocking T. Properties, LP, a California limited partnership, c/o TEEKAYSEE, Inc., a California Corporation, as General Partner, and Pelicans Jaw Solar, LLC. (Affects Parcel 21)
11nn.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated August 14, 2023, by and between The President and Fellows of Middlebury College and Pelicans Jaw Solar, LLC. (Affects Parcel 21)
11n.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated December 22, 2022, by and between Thunder Patch, LLC and Pelicans Jaw Solar, LLC. (Affects Parcel 22)
Parcels 23, 25 and 26:
WONDERFUL NUT ORCHARDS LLC, a Delaware limited liability company
11oo.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated March 16, 2023, by and between The Clifford and Susan Kellogg Trust dated June 1, 2003, Clifford L. Kellogg and Susan L. Kellogg, Trustees, and Pelicans Jaw Solar, LLC. (Affects Parcel 21)
11o.Subject to the terms, conditions and restrictions of that certain unrecorded Waiver of Surface Rights dated October 24, 2023, by and between Hannah Ranch, a California partnership, and Pelicans Jaw Solar, LLC. (Affects Parcel 25)
II.SPECIFIC EXCEPTIONS:
11p.INTENTIONALLY DELETED.
11q.INTENTIONALLY DELETED.
11.INTENTIONALLY DELETED.
12.Pipeline and Access Easement Agreement dated October 31, 2023, by and between RF Solar Properties LLC, a Delaware limited liability company, as Grantor, and Wonderful Nut Orchards LLC, a Delaware limited liability company, as Grantee, recorded October 31, 2023 as Instrument No. 223134666, Official Records, Kern County, California. (Affects Parcels 2, 4, 6 and 16)
Subject to that certain unrecorded Consent and Crossing Agreement dated November 15, 2024, by and between Wonderful Nut Orchards LLC, a Delaware limited liability company, Pelicans Jaw Solar, LLC, a Delaware limited liability company, and RF Solar Properties LLC, a Delaware limited liability company.
13.Reservation of all surface and ground water and all water entitlements, rights and privileges as described in Grant Deed dated October 23, 2023, by Wonderful Nut Orchards LLC, a Delaware limited liability company, to RF Solar Properties LLC, a Delaware limited liability company, recorded October 31, 2023 as Instrument No. 223134665, Official Records, Kern County, California. (Affects Parcels 1-22)
14.INTENTIONALLY DELETED.
15.INTENTIONALLY DELETED.
16.Lost Hills Water District Water Supply Contract (With Termination of Prior Contract) dated November 20, 2018, by and between Lost Hills Water District, a California water district and Wonderful Nut Orchards, LLC, a Delaware limited liability company, recorded December 13, 2018 as Instrument No. 218163892; as amended by First Amendment to Water Supply Contract dated January 1, 2021, recorded March 9, 2021 as Instrument No. 221043967, Official Records, Kern County, California. (Affects all Parcels)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
17.Easement Agreement dated May 12, 2014, by and between Paramount Land Company LLC, a Delaware limited liability company, and Pacific Gas and Electric Company, a California corporation, recorded July 24, 2014 as Instrument No. 0214085297, Official Records, Kern County, California. (Affects Parcel 19)
18.Water Supply Contract executed in duplicate October 5, 2011, by and between Lost Hills Water District, a California water district organized and existing under and by virtue of the provisions of Division 13 of the Water Code, as District, and Paramount Orchards Partners VI, LLC, a Delaware limited liability company, as Buyer, recorded October 5, 2011 as Instrument No. 0211129725, Official Records, Kern County, California. (Affects Parcel 19)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
19.Water Supply Contract executed in duplicate March 2, 2011, by and between Lost Hills Water District, a California water district organized and existing under and by virtue of the provisions of Division 13 of the Water Code, as District, and Paramount Orchards Partners VI, LLC, a Delaware limited liability company, as Buyer, recorded March 7, 2011 as Instrument No. 0211029979; as amended by Agreement Amending Water Supply Contract dated September 27, 2011, recorded October 5, 2011 as Instrument No. 0211129725, Official Records, Kern County, California. (Affects Parcels 19, 20 and 21)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
20.INTENTIONALLY DELETED.
21.INTENTIONALLY DELETED.
22.INTENTIONALLY DELETED.
23.INTENTIONALLY DELETED.
24.INTENTIONALLY DELETED.
25.INTENTIONALLY DELETED.
26.INTENTIONALLY DELETED.
27.Water Supply Contract executed in duplicate September 10, 2004, by and between Lost Hills Water District, a California water district organized and existing under and by virtue of the provisions of Division 13 of the Water Code, as District, and Paramount Land Company, L.P., a limited partnership, as Buyer, recorded December 2, 2004 as Instrument No. 0204295560; as amended by Agreement Amending Water Supply Contract dated August 7, 2007, recorded August 9, 2007 as Instrument No. 0207166152; and further amended by Agreement Amending Water Supply Contract dated August 11, 2008, recorded August 14, 2008 as Instrument No. 0208129789, Official Records, Kern County, California. (Affects Parcel 20) Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
28.Water Supply Contract executed in duplicate September 10, 2004, by and between Lost Hills Water District, a California water district organized and existing under and by virtue of the provisions of Division 13 of the Water Code, as District, and Paramount Orchards Partners VI, LLC, a Delaware limited liability company, as Buyer, recorded December 2, 2004 as Instrument No. 0204295559; as amended by Agreement Amending Water Supply Contract dated December 21, 2004, recorded December 22, 2004 as Instrument No. 0204317162; as further amended by Agreement Amending Water Supply Contract dated August 7, 2007, recorded August 9, 2007 as Instrument No. 0207166153; and as further amended by Agreement Amending Water Supply Contract dated August 11, 2008, recorded August 14, 2008 as Instrument No. 0208129788, Official Records, Kern County, California. (Affects Parcel 18)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
29.INTENTIONALLY DELETED.
30.Unrecorded Pipeline Agreement and those terms for co-ownership, shared used, and operation of certain gas transmission pipelines, as described in Quitclaim Deed and Bill of Sale dated September 22, 1997, by Pacific Gas and Electric Company, a California corporation, and Sacramento Municipal Utility District, a California municipal utility district, recorded July 25, 2000 as Instrument No. 0200089565, Official Records, Kern County, California. (Affects Parcels 3, 4, 7, 8, 9, 13, 14 and 26)
31.Water Supply Contract executed in duplicate January 11, 1999, by and between Lost Hills Water District, a California water district organized and existing under and by virtue of the provisions of Division 13 of the Water Code, as District, and Westfarmers, a California general partnership, as Buyer, recorded February 17, 1999 as Instrument No. 0199023043; as amended by Agreement Amending Water Supply Contract dated January 1, 2000, recorded May 2, 2000 as Instrument No. 0200052354; as affected by Agreement of Purchase and Sale of Annual Entitlement to State Water Project Water dated July 1, 2000, recorded June 7, 2001 as Instrument No. 0201078305; as further amended by Agreement Amending Water Supply Contract dated July 1, 2000, recorded June 7, 2001 as Instrument No. 0201078306; as further amended by First Amendment to Agreement of Purchase and Sale of Annual Entitlement to State Water Project Water dated November 20, 2001, recorded January 2, 2002 as Instrument No. 0202000260; as further amended by Third Amendment to Water Supply Contract dated February 27, 2003, recorded February 28, 2003 as Instrument No. 0203038162; and as affected by Agreement Assuming Water Supply Contract dated August 29, 2003, recorded October 1, 2003 as Instrument No. 0203211399, Official Records, Kern County, California. (Affects Parcels 20 and 21)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
32.Reservation of all easements, rights of way and like interests previously acquired by the District, and surrenders to the District any and all claims and rights to water service or any supply, as described in Quit Claim Deed dated April 17, 1998, by Lost Hills Water District, a California water district, to Westfarmers, a California general partnership, recorded April 27, 1998 as Instrument No. 0198053523, Official Records, Kern County, California. (Affects Parcels 1, 3-9, 17, 20, 21, 25 and 26)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
33.Non-exclusive easement to divert, transport and redivert water as described in Easement Deed dated September 26, 1985, by Kenneth L. Puryear and H. P. Anderson III to BFK II, a California general partnership, recorded October 31, 1985 in Book 5811, Page 2330, Official Records, Kern County, California. (Affects Parcels 13-16, 20, 21 and 26)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
34.Easement and right of way dated March 20, 1985, granted by Kenneth L. Puryear to Pacific Gas and Electric Company, a California corporation, recorded April 5, 1985 in Book 5748, Page 2030, Official Records, Kern County, California. (Affects Parcel 16)
35.Easement and right of way dated Match 20, 1985, by H. P. Anderson, III, a single man, to Pacific Gas and Electric Company, a California corporation, recorded April 5, 1985 in Book 5748, Page 2018, Official Records, Kern County, California. (Affects Parcel 11)
36.Grant of Easement dated August 18, 1983, granted by Kenneth L. Puryear, a single man, to Lost Hills Water District, recorded August 10, 1984 in Book 5684, Page 808, Official Records, Kern County, California. (Affects Parcels 13 and 14)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
37.Grant of Easement dated August 18, 1983, granted by Kenneth L. Puryear, a single man, to Lost Hills Water District, recorded August 10, 1984 in Book 5684, Page 788, Official Records, Kern County, California. (Affects Parcel 21)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
38.Grant of Easement dated August 18, 1983, granted by Kanneth L. Puryear, a single man to Lost Hills Water District,, recorded August 10, 1984 in Book 5684, Page 720, Official Records, Kern County, California. (Affects Parcel 26)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
39.Grant of Easement dated August 18, 1983, granted by Kenneth L. Puryear, a single man, to Lost Hills Water District, recorded August 10, 1984 in Book 5684, Page 716, Official Records, Kern County, California. (Affects Parcels 13 and 14)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
40.Grant of Easement dated August 18, 1983, granted by Kenneth L. Puryear, a single man, to Lost Hills Water District, recorded August 10, 1984 in Book 5684, Page 712, Official Records, Kern County, California. (Affects Parcels 10, 11, 12 and 15)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
41.Easement dated July 23, 1984, granted by Corky Anderson, a single man, to Pacific Gas and Electric Company, a California corporation, recorded August 1, 1984 in Book 5681, Page 872, Official Records, Kern County, California. (Affects Parcel 23)
42.Easements and right of way dated July 6, 1984, granted by Lost Hills Water District, a public body of the State of California, to Pacific Gas and Electric Company, a California corporation, recorded July 23, 1984 in Book 5678, Page 549, Official Records, Kern County, California. (Affects Parcel 23)
43.Easements and right of way as created in that certain Final Order and Decree of Condemnation Case No. 144-230, by The Superior Court of California, County of Kern in favor of Lost Hills Water District, a
California water district, against Kenneth L. Puryear, et al, recorded February 14, 1983 in Book 5526, Page 1885, Official Records, Kern County, California. (Affects Parcels 4 and 26)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
44.Easement and right of way dated April 27, 1982, granted by Kenneth L. Puryear to Pacific Gas and Electric Company, a California corporation, recorded May 7, 1982 in Book 5457, Page 1352, Official Records, Kern County, California. (Affects Parcels 13 and 14)
45.Easements created by Final Order and Decree of Condemnation Case No. 151-517, by the Superior Court of California, County of Kern, dated February 27, 1980, recorded August 18, 1980 in Book 5307, Page 148, Official Records, Kern County, California. (Affects Parcel 21)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
46.Easements created by Final Order and Decree of Condemnation Case No. 143-357, by the Superior Court of California, County of Kern, dated July 30, 1979, recorded July 31, 1979 in Book 5230, Page 736, Official Records, Kern County, California. (Affects Parcel 23)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
47.Easements created by Final Order and Decree of Condemnation Case No. 143-157, by the Superior Court of California, County of Kern, dated May 9, 1979, recorded June 21, 1979 in Book 5218, Page 1258, Official Records, Kern County, California. (Affects Parcels 11, 13 and 14)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
48.Easements created by Final Order and Decree of Condemnation Case No. 151-517 by the Superior Court of California, County of Kern, dated May 9, 1979, recorded June 5, 1979 in Book 5203, Page 729, Official Records, Kern County, California. (Affects Parcels 10, 11, 13 and 14)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
49.Easements and right of way as created in that certain Final Order and Decree of Condemnation Case No. 144-230 dated December 17, 1978, by The Superior Court of California, County of Kern in favor of Lost Hills Water District, a California water district, against Kenneth L. Puryear, et al, recorded December 15, 1978 in Book 5172, Page 1264, Official Records, Kern County, California. (Affects Parcels 2 and 17)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
50.INTENTIONALLY DELETED.
51.Easements as described in Lis Pendens Case No. 151517 dated January 24, 1978, by Lost Hills Water District, a California water district, Plaintiff, vs. Chanslor Western Oil and Development Company, a Delaware corporation, et al, Defendants, recorded January 24, 1978 in Book 5084, Page 1980, Superior Court of California, County of Kern, California. (Affects Parcels 6 and 22)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
52.Consent to Common Use dated June 20, 1977, by and between Pacific Gas and Electric Company and Lost Hills Water District, recorded August 23, 1977 in Book 5050, Page 1039, Official Records, Kern County, California. (Affects Parcel 26)
53.INTENTIONALLY DELETED.
54.Electric Transmission Easement dated September 15, 1971, granted by Dorothy Hannah Cutler, et al, to Pacific Gas and Electric Company, a California corporation, recorded October 14, 1971 in Book 4586, Page 551, Official Records, Kern County, California. (Affects Parcel 25)
55.Easement for transmission lines dated September 19, 1965, granted by Harold L. Hill, et al, to Pacific Gas and Electric Company, a California corporation, recorded November 26, 1965 in Book 3895, Page 428, Official Records, Kern County, California. (Affects Parcel 23)
56.Right of Way Deed dated April 8, 1964, granted Evelyn A. Shearer to Lost Hills Water District, a political subdivision of the State of California, recorded June 19, 1964 in Book 3737, Page 265, Official Records, Kern County, California. (Affects Parcel 26)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
57.Right of Way Deed dated May 17, 1964, granted by Samuel Cohen and Madelyne C. Cohen to Lost Hills Water District, a political subdivision of the State of California, recorded June 19, 1964 in Book 3737, Page 136, Official Records, Kern County, California. (Affects Parcel 25)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
58.Gas Transmission Easement dated August 15, 1953, granted by Loretta Inghram, Executrix of the estate of John William Galbreath, also known as John W. Galbreath, also known as J. W. Galbreath, deceased, to Pacific Gas and Electric Company, a California corporation, recorded November 20, 1953 in Book 2153, Page 133, Official Records, Kern County, California. (Affects Parcels 3 and 4)
59.Gas Transmission Easement dated September 22, 1953, granted by Fred L. Morris, a widower, to Pacific Gas and Electric Company, a California corporation, recorded November 20, 1953 in Book 2153, Page 129, Official Records, Kern County, California. (Affects Parcels 13 and 14)
60.INTENTIONALLY DELETED.
61.Gas Transmission Easement dated July 7, 1953, granted by Bates Estate Company, a California corporation, to Pacific Gas and Electric Company, a California corporation, recorded August 25, 1953 in Book 2120, Page 100, Official Records, Kern County, California. (Affects Parcel 22)
62.Gas Transmission Easement dated July 9, 1953, granted by Fred W. Hadley and Mable M. Hadley, husband and wife, to Pacific Gas and Electric Company, a California corporation, recorded August 19, 1953 in Book 2118, Page 154, Official Records, Kern County, California. (Affects Parcel 9)
63.Gas Transmission Easement dated July 9, 1953, granted by F. L. Morris, a widower, to Pacific Gas and Electric Company, a California corporation, recorded August 19, 1953 in Book 2118, Page 153, Official Records, Kern County, California. (Affects Parcels 13 and 14)
64.Gas Transmission Easement dated July 9, 1953, granted by F. C. Niemeyer, a widower, to Pacific Gas and Electric Company, a California corporation, recorded August 19, 1953 in Book 2118, Page 131, Official Records, Kern County, California. (Affects Parcel 7)
65.INTENTIONALLY DELETED.
66.Gas Transmission Easement dated July 9, 1953, granted by John L. Bacon, et al, to Pacific Gas and Electric Company, a California corporation, recorded August 19, 1953 in Book 2118, Page 125, Official Records, Kern County, California. (Affects Parcel 26)
67.Gas Transmission Easement dated June 26, 1953, granted by James B. Cutten and Marjorie Cutten, husband and wife, to Pacific Gas and Electric Company, a California corporation, recorded August 4, 1953 in Book 2113, Page 51, Official Records, Kern County, California. (Affects Parcel 18)
68.INTENTIONALLY DELETED.
69.Easements, and right of way dated December 8, 1947, granted by Kate H. Hannah, a widow, et al, to Pacific Gas and Electric Company, a California corporation, recorded January 7, 1948 in Book 1474, Page 351, Official Records, Kern County, California. (Affects Parcel 25)
70.Easements for ingress and egress, to erect use, and maintain gates in all fences, to trim and cut away trees and brush as described in Instrument dated October 1, 1947, granted by Fred W. Hadley and Mabel M. Hadley to Pacific Gas and Electric Company, a California corporation, recorded November 4, 1947 in Book 1448, Page 137, Official Records, Kern County, California. (Affects Parcel 9)
71.Easements for ingress and egress, to erect use, and maintain gates in all fences, to trim and cut away trees and brush as described in Instrument dated October 3, 1947, granted by S. C. Mekeel and Laura Mekeel to Pacific Gas and Electric Company, a California corporation, recorded November 4, 1947 in Book 1430, Page 453, Official Records, Kern County, California. (Affects Parcel 8)
72.Reservation of a right of way for ditches and canals constructed by the authority of the United States and excepting and reserving to the United States all of the oil and gas and the right to prospect, mine, and remove as described in Patent dated April 8, 1946, by Harry S. Truman, as The President of The United States of America, to Leona Galbreath, recorded May 8, 1946 in Book 1322, Page 44, Official Records, Kern County, California. (Affects Parcel 3)
73.Easement and right of way dated November 15, 1944, granted by Miller & Lux Incorporated, a corporation organized and doing business under the laws of the State of Nevada, to The Superior Oil Company, a California corporation, recorded November 27, 1944 in Book 1214, Page 287, Official Records, Kern County, California. (Affects Parcel 17)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
74.Easement as described in the Instrument recorded February 28, 1941 in Book 1016, Page 133, Official Records, Kern County, California. (Affects Parcels 1, 5 and 6)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
75.Easement and right of way dated March 2, 1937, granted by Miller & Lux, Inc., a corporation, to Shell Oil Company, a California corporation, recorded July 21, 1937 in Book 741, Page 52, Official Records, Kern County, California. (Affects Parcel 21)
Subject to that certain unrecorded letter of no objection from Shell Pipeline Company LP dated July 3, 2024.
76.Grant of Right of Way dated December 8, 1936, granted by Emmeline L. Bates to Shell Oil Company, a California corporation, recorded June 10, 1937 in Book 735, Page 33, Official Records, Kern County, California. (Affects Parcels 20 and 22)
Subject to that certain unrecorded letter of no objection from Shell Pipeline Company LP dated July 3, 2024.
77.Easement and right of way dated December 31, 1930, granted by Miller and Lux Incorporated, a corporation organized and doing business under the laws of the State of Nevada, to Jacob Thomas, recorded February 14, 1931 in Book 396, Page 106, Official Records, Kern County, California. (Affects Parcel 15)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
78.INTENTIONALLY DELETED.
79.Reservation of a thirty-foot strip of land for rights of way and easements as described in Grant Deed dated November 21, 1928, granted by E. K. Potter and Elizabeth F. Potter to Chanslor-Canfield-Midway Oil Company, a corporation, recorded November 30, 1928 in Book 276, Page 392, Official Records, Kern County, California. (Affects Parcel 2)
80.Easements and right of way for public roads, telephone, telegraph and electric power and pipelines, sewers, drainage ditches, and all those rights reserved as described in the Instrument dated November 20, 1928, granted by Miller & Lux Incorporated, a corporation, to E. K. Potter, recorded November 30, 1928 in Book 276, Page 391, Official Records, Kern County, California. (Affects Parcel 2)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
81.Easements dated May 15, 1928, granted by Miller & Lux Incorporated, a corporation organized and doing business under the laws of the State of Nevada, to A. D. Whittemore, recorded May 29, 1928 in Book 250, Page 255, Official Records, Kern County, California. (Affects Parcel 16)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
82.Reservations and exceptions in the Patent dated October 23, 1925, by F. W. Richardson, Governor of the State of California, to E. L. Shea, recorded November 2, 1925 in Book 97, Page 116, Official Records, Kern County, California. (Affects Parcels 7, 13 and 14)
83.Reservation of Easement and Right of Way as described in the Contract of Settlement of Water Rights dated July 28, 1888, by Kern County Land Company, a corporation, to Henry Miller, et al, recorded December 30, 1892 in Book 44, Page 287, Official Records, Kern County, California. (Affects Parcels 1, 2, 5, 6 and 15-16)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
84.Right of way and those easements affecting water rights as described in Contract and Agreement dated October 3, 1888, by and between Henry Miller, et al, and James B. Haggin, et al, recorded October 13, 1888 in Book 2, Page 40, Official Records, Kern County, California. (Affects Parcels 1, 15, 16 and 18)
Subject to that certain unrecorded letter of no objection from Lost Hills Water District dated November 28, 2023; as amended by letter of no objection from Lost Hills Water District dated July 9, 2024.
All Parcels:
85.Construction Leasehold Deed of Trust with Power of Sale, Assignment of Leases and Rents, Security Agreement and Fixture Filing, made by Pelicans Jaw Solar, LLC, a Delaware limited liability company, to
U.S. Bank Trust Company, National Association, as Collateral Agent for the Secured Parties, in the amount of $1,028,307,325.00, dated ________, 2024, recorded ____________, 2024 as Instrument No. ________________, Official Public Records, Kern County, California.
86.Liability hereunder at the date hereof is limited to $___________. Liability shall increase as contemplated improvements are made, so that any loss payable hereunder shall be limited to said sum plus the amount actually expended by the Insured in improvements at the time the loss occurs. Any expenditures made for improvements, subsequent to the date of this Policy, will be deemed made as of the date of this Policy. In no event shall the liability of the Company hereunder exceed the face amount of this Policy. Nothing contained in this paragraph shall be construed as limiting any exception or any printed provision of this Policy.
End of Schedule B
Endorsement | ||||||||
ALTA 3.2-06 (CLTA 123.3-06) ZONING – LAND UNDER DEVELOPMENT (MODIFIED) | ||||||||
 | Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
1.For purposes of this endorsement:
a.“Electricity Facility” means an electricity generating facility which may include one or more of the following: a substation; a transmission, distribution or collector line; an interconnection, inverter, transformer, generator, turbine, array, solar panel, or module; a circuit breaker, footing, tower, pole, cross-arm, guy line, anchor, wire, control system, communications or radio relay system, safety protection facility, road, and other building, structure, fixture, machinery, equipment, appliance and item associated with or incidental to the generation, conversion, storage, switching, metering, step-up, step-down, inversion, transmission, conducting, wheeling, sale or other use or conveyance of electricity, on the Land at Date of Policy or to be built or constructed on the Land in the locations according to the Plans, that by law constitutes real property.
b.”Severable Improvement” means property affixed to the Land at Date of Policy or to be affixed in the locations according to the Plans, that would constitute an Electricity Facility but for its characterization as personal property, and that by law does not constitute real property because (a) of its character and manner of attachment to the Land and (b) the property can be severed from the Land without causing material damage to the property or to the Land.
c.“Plans” means the ALTA/NSPS Land Title Survey prepared by wsb dated December 20, 2024, certified by Tucker J. Sanders, License No. 9398, designated as Project No. 020343-000 and consisting of thirteen (13) sheet(s).
2.The Company insures against loss or damage sustained by the Insured in the event that, at Date of Policy:
a.According to applicable zoning ordinances and amendments, the Land is not classified Zone: A (Exclusive Agriculture) District.
b.The following use or uses are not allowed under that classification: solar photovoltaic (PV) power generation facility, battery storage facility, and associated infrastructure.
c.There shall be no liability under paragraph 2.b. if the use or uses are not allowed as the result of any lack of compliance with any condition, restriction, or requirement contained in the zoning ordinances and amendments, including but not limited to the failure to secure necessary consents or authorizations as a prerequisite to the use or uses. This paragraph 2.c. does not modify or limit the coverage provided in Covered Risk 5.
3.The Company further insures against loss or damage sustained by the Insured by reason of a final decree of a court of competent jurisdiction either prohibiting the use of the Land, with any Electricity Facility or Severable Improvement, as specified in paragraph 2.b. or requiring the removal or alteration of the Electricity Facility or Severable Improvement, because of a violation of the zoning ordinances and amendments in effect at Date of Policy with respect to any of the following matters:
a.Area, width, or depth of the Land as a building site for the Electricity Facility or Severable Improvement;
b.Floor space area of the Electricity Facility or Severable Improvement;
c.Setback of the Electricity Facility or Severable Improvement from the property lines of the Land;
d.Height of the Electricity Facility or Severable Improvement; or
e.Number of parking spaces.
4.There shall be no liability under this endorsement based on:
a.The invalidity of the zoning ordinances and amendments until after a final decree of a court of competent jurisdiction adjudicating the invalidity, the effect of which is to prohibit the use or uses;
b.The refusal of any person to purchase, lease or lend money on the Title covered by this policy.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division – Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | Attest | /s/ Daniel Wold | Secretary | ||||||||||||||||||||
Endorsement | ||||||||
ALTA 8.2-06 (CLTA 110.9.1-06) – COMMERCIAL ENVIRONMENTAL PROTECTION LIEN | ||||||||
| Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
The Company insures against loss or damage sustained by the Insured by reason of an environmental protection lien that, at Date of Policy, is recorded in the Public Records or filed in the records of the clerk of the United States district court for the district in which the Land is located, unless the environmental protection lien is set forth as an exception in Schedule B.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division – Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | Attest | /s/ Daniel Wold | Secretary | ||||||||||||||||||||
Endorsement | ||||||||
ALTA 9.9-06 (CLTA 110.2.9-06) – PRIVATE RIGHTS – OWNER | ||||||||
| Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
1.The insurance provided by this endorsement is subject to the exclusions in Section 4 of this endorsement; and the Exclusions from Coverage, the Exceptions from Coverage contained in Schedule B, and the Conditions in the policy.
2.For the purposes of this endorsement only:
a.“Covenant” means a covenant, condition, limitation or restriction in a document or instrument recorded in the Public Records at Date of Policy.
b.“Private Right” means (i) an option to purchase; (ii) a right of first refusal; or (iii) a right of prior approval of a future purchaser or occupant.
3.The Company insures against loss or damage sustained by the Insured under this Owner’s Policy if enforcement of a Private Right in a Covenant affecting the Title at Date of Policy based on a transfer of Title on or before Date of Policy causes a loss of the Insured’s Title.
4.This endorsement does not insure against loss or damage (and the Company will not pay costs, attorneys’ fees, or expenses) resulting from:
a.Any Covenant contained in an instrument creating a lease;
b.Any Covenant relating to obligations of any type to perform maintenance, repair, or remediation on the Land;
c.Any Covenant relating to environmental protection of any kind or nature, including hazardous or toxic matters, conditions, or substances; or
d.Any Private Right in an instrument identified in Exception(s) NONE in Schedule B.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division – Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | Attest | /s/ Daniel Wold | Secretary | ||||||||||||||||||||
Endorsement | ||||||||
ALTA 17-06 (CLTA 103.11-06) – ACCESS AND ENTRY | ||||||||
| Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
The Company insures against loss or damage sustained by the Insured if, at Date of Policy (i) the Land does not abut and have both actual vehicular and pedestrian access to and from Twisselman Road and Lost Hills Road (the “Street”), (ii) the Street is not physically open and publicly maintained, or (iii) the Insured has no right to use existing curb cuts or entries along that portion of the Street abutting the Land.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division – Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | Attest | /s/ Daniel Wold | Secretary | ||||||||||||||||||||
Endorsement | ||||||||
ALTA 17.2-06 – UTILITY ACCESS | ||||||||
 | Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
The Company insures against loss or damage sustained by the Insured by reason of the lack of a right of access to the following utilities or services:
| o | Water service | o | Natural gas service | o | Telephone service | |||||||||||||||
X | Electrical power service | o | Sanitary sewer | o | Storm water drainage | |||||||||||||||
either over, under or upon rights-of-way or easements for the benefit of the Land because of:
(1)a gap or gore between the boundaries of the Land and the rights-of-way or easements;
(2)a gap between the boundaries of the rights-of-way or easements; or
(3)a termination by a grantor, or its successor, of the rights-of-way or easements.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division – Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | Attest | /s/ Daniel Wold | Secretary | ||||||||||||||||||||
Endorsement | ||||||||
ALTA 18.1-06 (CLTA 129.1-06) - MULTIPLE TAX PARCEL –EASEMENTS | ||||||||
| Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
The Company insures against loss or damage sustained by the Insured by reason of:
1.Those portions of the Land identified below not being assessed for real estate taxes under the listed tax identification numbers or those tax identification numbers including any additional land:
Parcel Nos.: | APNs: | ||||||||||
Parcel 1: | 044-101-02-00 | ||||||||||
Parcel 2: | 044-101-03 | ||||||||||
Parcel 3: | 044-101-05 | ||||||||||
Parcel 4: | 044-101-06 | ||||||||||
Parcel 5: | 044-102-01 | ||||||||||
Parcel 6: | 044-102-03 | ||||||||||
Parcel 7: | 044-110-01 | ||||||||||
Parcel 8: | 044-110-03 | ||||||||||
Parcel 9: | 044-110-25 | ||||||||||
Parcel 10: | 044-103-08 | ||||||||||
Parcel 11: | 044-103-06 | ||||||||||
Parcel 12: | 044-103-09 | ||||||||||
Parcel 13: | 044-102-22 | ||||||||||
Parcel 14: | 044-102-21 and 044-102-23 | ||||||||||
Parcel 15: | 044-102-05-00 | ||||||||||
Parcel 16: | 044-103-04 | ||||||||||
Parcel 17: | 044-103-01 | ||||||||||
Parcel 18: | 044-130-18-00, 044-130-21-00 and 044-130-23-00 | ||||||||||
Parcel 19: | 044-130-16 | ||||||||||
Parcel 20: | 044-150-05-00 | ||||||||||
Parcel 21: | 044-130-39 | ||||||||||
Parcel 22: | 044-150-17 and 044-150-24 | ||||||||||
Parcel 23: | 044-150-25 | ||||||||||
Parcel 24: | N/A | ||||||||||
Parcel 25: | 044-101-16-00 | ||||||||||
Parcel 26: | 044-101-11-00-8 | ||||||||||
2.The easements, if any, described in Schedule A being cut off or disturbed by the nonpayment of real estate taxes, assessments or other charges imposed on the servient estate by a governmental authority.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division – Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | Attest | /s/ Daniel Wold | Secretary | ||||||||||||||||||||
Endorsement | ||||||||
ALTA 19-06 (CLTA 116.4.1-06) - CONTIGUITY - MULTIPLE PARCELS | ||||||||
| Attached to Policy No. PRO FORMA Issued By OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY | |||||||
The Company insures against loss or damage sustained by the Insured by reason of:
1.The failure of all of the Parcels described in Schedule A to be contiguous along their common boundary lines.
2.The presence of any gaps, strips, or gores separating any of the contiguous boundary lines described above.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.
Issued through the Office of:
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY A Stock Company 400 Second Avenue South, Minneapolis, Minnesota 55401 (612) 371-1111 | |||||||||||||||||||||||
Old Republic National Title Insurance Company National Energy Title Services Division - Houston 5718 Westheimer Road, Suite 1700 Houston, TX 77057 Phone: 713-789-0680 | |||||||||||||||||||||||
| By | /s/ C Monroe | President | |||||||||||||||||||||
PRO FORMA | |||||||||||||||||||||||
Lauren M. Gray | |||||||||||||||||||||||
| Attest | /s/ Daniel Wold | Secretary | |||||||||||||||||||||
Endorsement | ||||||||
ALTA 25-06 (CLTA 116.1-06) - SAME AS SURVEY | ||||||||
| Attached to Policy No. PRO FORMA | |||||||