HomeMy WebLinkAbout9 Attachment - 4 CFR Governance Agreement CLEAN FUEL REWARD PROGRAM
GOVERNANCE AGREEMENT
BY AND AMONG
PACIFIC GAS AND ELECTRIC COMPANY
SAN DIEGO GAS & ELECTRIC COMPANY
SOUTHERN CALIFORNIA EDISON COMPANY
LOS ANGELES DEPARTMENT OF WATER& POWER
SACRAMENTO MUNICIPAL UTILITY DISTRICT
AND
THE OTHER ELECTRIC DISTRIBUTION UTILITIES PARTY HERETO
DATED AS OF [ ],2019
43425759.3
TABLE OF CONTENTS
Pan
ARTICLE 1 CERTAIN DEFINITIONS .........................................................................................3
I.I. Defined Terms .........................................................................................................3
1.2. Construction...........................................................................................................10
ARTICLE 2 FORMATION OF CFR PROGRAM .......................................................................11
2.1. Governance Agreement.........................................................................................11
2.2. EDU Participation..................................................................................................I I
ARTICLE 3 ADMINISTRATION OF CFR PROGRAM.............................................................11
3.1. SCE Appointment as Initial Program Administrator and Agent. ..........................11
3.2. Program Administrator Authority..........................................................................12
3.3. Steering Committee. ..............................................................................................13
3.4. Advisory Committee..............................................................................................20
3.5. Duties.....................................................................................................................20
ARTICLE 4 SOLICITATION PROCESS.....................................................................................21
4.1. Solicitation.............................................................................................................21
4.2. Program Implementer(s)........................................................................................22
4.3. Financial Institution...............................................................................................23
4.4. Program Auditor....................................................................................................27
4.5. Program Implementer Qualifications.....................................................................28
ARTICLE 5 CFR PROGRAM EXPENSES; COST SHARING; LAUNCH................................29
5.1. Program Administrator Expenses..........................................................................29
5.2. Payment/Reimbursement of Administrative Expenses..........................................30
5.3. Start-Up Funding...................................................................................................31
5.4. Periodic Funding Requirements.............................................................................32
5.5. CFR Program Commencement..............................................................................34
ARTICLE 6 APPROVAL AND PAYMENT OF INVOICES......................................................35
6.1. Implementer Invoices.............................................................................................35
6.2. Program Administrator Invoices............................................................................35
6.3. Reward Amount Payments ....................................................................................36
43425759.3 i
TABLE OF CONTENTS
(Continued)
Page
ARTICLE 7 RELEASE, COVENANT NOT TO SUE, INSURANCE AND
INDEMNIFICATION............................................................................................36
7.1. Release and Waiver................................................................................................36
7.2. Covenant Not To Sue.............................................................................................38
7.3. Effect of Release and Covenant Not to Sue...........................................................38
7.4. Insurance................................................................................................................39
7.5. Indemnification......................................................................................................40
7.6. Maximum Liability................................................................................................42
7.7. Savings...................................................................................................................42
7.8. New Program Administrator; Amendment............................................................42
7.9. Survival..................................................................................................................43
ARTICLE 8 PROGRAM MATERIALS;PUBLIC ANNOUNCEMENTS..................................44
8.1. Ownership of Program Materials...........................................................................44
8.2. Public Announcements ..........................................................................................44
ARTICLE 9 PROGRAM TERM; TERMINATION; WITHDRAWAL.......................................45
9.1. Term.......................................................................................................................45
9.2. Withdrawal by a Party...........................................................................................46
9.3. Removal of a Party.................................................................................................47
ARTICLE 10 MISCELLANEOUS ...............................................................................................48
10.1. Governing Law; Waiver of Jury Trial. ..................................................................48
10.2. Use of Name or Endorsements. .............................................................................48
10.3. Damages Limitation...............................................................................................48
10.4. Survival..................................................................................................................49
10.5. Headings. ...............................................................................................................49
10.6. Severability. ...........................................................................................................49
10.7. Amendments..........................................................................................................49
10.8. Assignment. ...........................................................................................................50
10.9. Dispute Resolution.................................................................................................50
43425759.3 ii
TABLE OF CONTENTS
(Continued)
Page
10.10. No Third Party Beneficiaries. ................................................................................51
10.11. Independent Parties................................................................................................51
10.12, Counterparts...........................................................................................................51
10.13. Full Performance Required....................................................................................51
10.14. Notices. ..................................................................................................................51
10.15. Construction...........................................................................................................52
10.16. Time of Essence.....................................................................................................52
10.17. Specific Performance.............................................................................................52
10.18. Legal Matters. ........................................................................................................53
10.19. Entire Agreement...................................................................................................53
10.20. Representations by the Parties. ..............................................................................54
43425759.3 lil
Draft Rev 8.
CLEAN FUEL REWARD PROGRAM
GOVERNANCE AGREEMENT
This Governance Agreement ("Agreement") is made and entered into effective as of
[MONTH 01, 2019 (the "Effective Date"), by and among Pacific Gas and Electric Company
("PG&E"), San Diego Gas & Electric Company ("SDG&E"), Southern California Edison
Company ("SCE"), Los Angeles Department of Water & Power ("LADWP"), Sacramento
Municipal Utility District ("SMUD"), and the other electric distribution utilities that may
become a Party hereto during the term of the Agreement.
RECITALS
WHEREAS, the Low Carbon Fuel Standard ("LCFS") regulation of the California Air
Resources Board ("CARE") (as may be amended from time to time, the "LCFS Regulation")
provides for the issuance of"base" credits for residential electric vehicle charging ("LCFS Base
Credits") to electric distribution utilities ("EDUs") that participate in the LCFS program, each
quarter;t and
WHEREAS, on September 27, 2018, CARE adopted amendments to the LCFS
Regulation mandating the development and implementation of a statewide, common-design,
EDU-run program to reduce the price of purchased and leased light-duty, zero emission, plug-in
electric and electric hybrid vehicles ("ZEVs") at the point of sale that is funded by EDUs' LCFS
Base Credit revenues that are assigned to the statewide program according to provisions in
California Code of Regulations Title 13 sections 95481 and section 95483(c), and the Parties (as
defined in Section 1.1 below) have agreed that the name for this program shall be the Clean Fuel
Reward Program ("CFR Program"); and
WHEREAS, CARB's amended LCFS Regulation requires that the CFR Program be (i)
initiated through the investor-owned utilities ("IOUs"), publicly-owned utilities ("POUs") and
electric cooperatives ("COOPs") participating in the CFR Program, and (ii) funded by the EDUs
with revenue from the sale of LCFS Base Credits pursuant to mandatory EDU contributions of
such LCFS Base Credit revenue to the CFR Program in accordance with the minimum
percentage amounts determined by EDU-size3 set forth in the LCFS Regulation ("EDU
Contributions"); and
WHEREAS, the Parties hereby agree to establish and fund the CFR Program, per the
direction of CARE, in an effort to accelerate the progress towards achieving the state and
1 See California Code of Regulations Title 13 sections 95480, et seq.
Z See September 27, 2018 CARB Resolution 18-34 available at:
https://www.arb.ca.gov/regact/2018/lefsl 8/finalres 18-34.pdf
3 Participating EDUs' minimum percentages of LCFS Credit Revenue that must be contributed
to the CFR Program pursuant to the LCFS Regulations are set forth in Appendix A.
43425759.3 1
national clean energy and environmental policies through the execution of this Agreement in
compliance with CARB's directives, including but not limited to implementation of a sliding-
scale incentive program based on the ZEV's all-electric operating range and equity for all
customers; and
WHEREAS, the Parties recognized that in order to develop and implement the CFR
Program in a timely manner to support accelerating ZEV market adoption in California, one of
the EDUs needs to serve as the initial administrator of the CFR Program through the start-up
process.and early stages of the CFR Program; and
WHEREAS, in the absence of another EDU volunteer to serve as the initial
administrator, SCE agreed to serve in such role on a short term basis provided that the California
Public Utilities Commission ("CPUC") directed and CARB has authorized SCE to do so, and
the other EDUs agree to have SCE serve in such capacity subject to SCE's receipt of the CPUC's
direction and CARB's authorization to do so; and
WHEREAS, SCE filed Advice Letter #AL 3982-E with the CPUC on April 2, 2019 (the
"Advice Letter") to request the CPUC to authorize and direct SCE to serve as the initial short-
term administrator of the CFR Program and to effect SCE's proposed implementation plan for
the CFR Program on the terms and conditions set forth in the Advice Letter; and
WHEREAS, on August 15, 2019, the CPUC issued Resolution E-5015 adopting and
approving the Advice Letter and SCE's proposed implementation plan for the CFR Program,
subject to certain modifications set forth in such Resolution (the "CPUC Approval"); and
WHEREAS, on [ �, 2019, CARB authorized and directed that the CFR Program
be administered pursuant to this Governance Agreement and found that this Governance
Agreement is in the public interest, is made for the public purposes stated in the LCFS
Regulation, and is consistent with the LCFS Regulation (the "CARB Authorization"); and
WHEREAS, the Parties have agreed to appoint SCE as the initial administrator of the
CFR Program consistent with the terms and conditions set forth in the Advice Letter, the CPUC
Approval, the CARB Authorization, and this Agreement in order to expedite the implementation
of the CFR Program for the benefit of the EDUs, CARB, and the State of California; and
WHEREAS, the Parties desire to enter into this Agreement to set forth the rights, powers,
duties, obligations, and liabilities of the Parties concerning the conduct, operation, administration
and funding of the CFR Program and any fees, costs, expenses and liabilities arising from the
administration of the CFR Program by SCE as the Program Administrator, including those
arising under this Agreement or any agreement entered into by SCE in connection with its role as
the Program Administrator of the CFR Program, in each case pursuant to the terms and
conditions of this Agreement; and
WHEREAS, each of the Large EDUs has executed and delivered this Agreement to one
another on or before the Effective Date, and each additional Participating EDU who becomes a
Party after the Effective Date shall execute and deliver a joinder to this Agreement pursuant to
the provisions of Section 2.2 below.
43425759.3 2
NOW THEREFORE, in consideration of the mutual covenants, purposes and agreements
set forth herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the following capitalized terms shall
have the respective meanings specified in this Section 1.1.
(a) "Accounts"has the meaning set forth in Section 4.3(b).
(b) "Additional LCFS Revenue Payments" has the meaning set forth in
Section 9.1(b)(ii).
(c) "Adnunistrative Expenses"has the meaning set forth in Section 5.1.
(d) "Advice Letter"has the meaning set forth in the Recitals.
(e) "Advisory Committee" has the meaning set forth in Section 3.4.
(f) "Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with such other Person. For purposes of this
definition, "control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have
correlative meanings.
(g) "Agreement"has the meaning set forth in the preamble.
(h) "Alternates"has the meaning set forth in Section 3.3(c).
(i) "Annual Program Funds Amount" means the total EDU Contributions
deposited by all of the Participating EDUs during each calendar year following the Initial
Funding Date, plus all interest and earnings thereon regardless of the Account in which such
funds are held from time to time, during such calendar year.
(j) "Bond"has the meaning set forth in Section 7.4.
(k) "CARS"has the meaning set forth in the Recitals.
(1) "CARB Authorization"has the meaning set forth in the Recitals.
(m) "CARB Representative"has the meaning set forth in Section 3.3(a).
(n) "CFR Program"has the meaning set forth in the Recitals.
43425759.3 3
(o) "Claim" or "Claims" means any and all actions, causes of action,
complaints, charges, claims, costs, damages, deficiencies, demands, expenses, fees,
indebtedness, injuries, interest, judgments, liabilities, losses, obligations, orders, penalties,
remedies, suits, sums of money, Taxes, and torts, of whatever kind or character, whether in law,
equity or otherwise, direct or indirect, fixed or contingent, foreseeable or unforeseeable,
liquidated or unliquidated, known or unknown, matured or umnatured, absolute or contingent,
determined or determinable.
(p) "Collective Deposit Account" has the meaning set forth in Section
4.3 ii .
(q) "Contribution Percentage"means, with respect to any Party at any time,
the resulting percentage determined by multiplying 100 by a fraction, the numerator of which
shall be the amount of such Party's Initial EDU Contribution, and the denominator of which shall
be the aggregate total of shares all Initial EDU Contributions made by all Parties (including any
former Parties) at such time. In calculating the respective Contribution Percentages of the
Parties at an time, in the event that a court or arbitrator of competent jurisdiction has determined
that any Party is released or excused from its obligation to pay, or is otherwise unable or not
required to pay, its Contribution Percentage of any Indemnified Claim, then such Party's Initial
EDU Contribution shall be excluded from the denominator for purposes of calculating the
respective Contribution Percentages with respect to such Indemnified Claim as well as to any
Indemnified Claim thereafter to which such exclusion would be applicable according to such
court or arbitral order or determination.
(r) °°COOPS"has the meaning set forth in the Recitals.
(s) "Covenant Not to Sue"has the meaning set forth in Section 7.3(a).
(t) "Covered Person"has the meaning set forth in Section 3.5(a).
(u) "CPUC"has the meaning set forth in the Recitals.
(v) "CPUC Approval"has the meaning set forth in the Recitals.
(w) "Deposit Account" means any Collective Deposit and any Individual
Deposit Account.
(x) "Designated Account Holder" means any Governmental Authority
(including, for the avoidance of doubt, a POU) or not for profit entity that is identified and
selected by the Program Administrator and the Steering Committee to hold the Program Funds
Account pursuant to Section 4.3(b)(i) or any Collective Deposit Account pursuant to Section
4.3 b ii .
(y) "Disbursement Account"has the meaning set forth in Section 4.3(c).
W "Earmarked Credits" means any LCFS Base Credits that are deposited
into any EDU's LCFS balancing account by CARB at any time on or after the Final CPUC
Approval Date.
43425759.3 4
(aa) "EDU Contribution Account" means, when used with respect to any
Participating EDU at any time and from time to time, (i) if a Program Funds Account has been
established and is being maintained at such time, the Program Funds Account, or (ii) if there is
no Program Funds Account at such time, then either the Collective Deposit Account or the
Individual Deposit Account for such Participating EDU into which such Participating EDU is
instructed to make its EDU Contributions at such time in accordance with the instructions of the
Program Administrator.
(bb) "EDU Contributions"has the meaning set forth in the Recitals.
(cc) "EDUs"has the meaning set forth in the Recitals.
(dd) "Effective Date"has the meaning set forth in preamble.
(cc) "Excess Party"has the meaning set forth in the Section 7.5(b)(iii).
(ff) "FDIC"means the Federal Deposit Insurance Corporation.
(gg) "Final CPUC Approval Date" the first date on which each of the
following approvals from the CPUC shall have been received: (i) the CPUC Approval, (ii) the
CPUC's approval of the advice letter submitted by PG&E for approval to enter into this
Agreement, and (iii) the CPUC's approval of the advice letter submitted by SDG&E for approval
to enter into this Agreement.
(hh) "Financial Institution"has the meaning set forth in Section 4.1(a).
(ii) "Governmental Authority" means the United States, or any state,
county, city, municipal, territory, possession, foreign or other governmental or quasi-
governmental entity or authority of any nature, including any courts, departments, commissions,
boards,bureaus, agencies or other instrumentalities of any of the foregoing.
6j) "Holdback Funds"has the meaning set forth in the Section 7.5(b)(iii).
(kk) "Imaged Agreement"has the meaning set forth in Section 10.19.
(11) "Implementer"has the meaning set forth in Section 3.2(a).
(mm) "Indemnified Claim" means (i) when used in connection with the SCE
Indemnified Persons, the SCE Indemnified Claims, and (ii) when used in connection with the
Steering Committee Indemnified Persons, the Steering Committee Indemnified Claims.
(nn) "Indemnified Persons" means any of the SCE Indemnified Persons and
the Steering Committee Indemnified Persons, each an "Indemnified Person".
(oo) "Individual Deposit Account" has the meaning set forth in Section
4.3 b iii .
43425759.3 5
(pp) "Individual Deposit Account Agreement" has the meaning set forth in
Section 4.3(b)(iii).
(qq) "Initial EDU Contributions"has the meaning set forth in Section 5.3.
(Tr) "Initial Funding Date"has the meaning set forth in Section 5.3.
(ss) "Invoice Subcommittee"has the meaning set forth in Section 3.3(e).
(tt) "IOUs"has the meaning set forth in the Recitals.
(uu) "Joinder"has the meaning set forth in Section 2.2.
(vv) "LADWP"has the meaning set forth in the preamble.
(ww) "Large EDU Members"has the meaning set forth in Section 3.3(a).
(xx) "Large EDUs" means PG&E, SDG&E, SCE, LADWP, and SMUD, each
a"Large EDU".
(yy) "Law Firms"has the meaning set forth in Section 10.18.
(zz) "LCFS"has the meaning set forth in the Recitals.
(aaa) "LCFS Base Credits"has the meaning set forth in the Recitals.
(bbb) "LCFS Credit Revenue" means the aggregate gross revenue received by
any EDU at any time from the sale, transfer or other disposition of Earmarked Credits.
(ccc) "LCFS Non-Base Credit Revenue" has the meaning set forth in the
Section 7.5(b)(iii).
(ddd) "LCFS Regulation"has the meaning set forth in the Recitals.
(eee) "Liability Reserve"has the meaning set forth in Section 4.3(e).
(M) "Master Account Agreement" has the meaning set forth in Section
4.3 .
(ggg) "Member"has the meaning set forth in Section 3.3(a).
(hhh) °GME&O"has the meaning set forth in Section 4.2(a).
(iii) °`NCPA"means the Northern California Power Agency.
6J) "Northern EDU Majority Vote" has the meaning set forth in Section
3.3 a .
(kkk) "Northern EDU Member"has the meaning set forth in Section 3.3(a).
43425759.3 6
(111) "Northern EDUs" means any EDU listed as a Northern EDU on
Schedule 1.1 hereto, as such Schedule may be amended from time to time hereafter; provided
that in no event shall any Large EDU ever be listed as or deemed to be a Northern EDU.
(mmm)"Operating Reserve"has the meaning set forth in Section 4.3(e).
(nnn) "PA Representative"has the meaning set forth in Section 3.3(a).
(000) "Participating EDU" means any EDU that has (i) become a Party to this
Agreement by either (A) executing and delivering a duly executed signature page to this
Agreement to the other Parties on or prior to the Effective Date, or (B) executing and delivering
a duly executed Joinder to this Agreement to the Program Administrator in accordance with the
provisions of Section 2.2 following the Effective Date, and (ii)not withdrawn as a Party pursuant
to Section 9.2 or been removed as Party pursuant to Section 9.3.
(ppp) "Participating Northern EDU" has the meaning set forth in Section
(qqq) "Participating Southern EDU" has the meaning set forth in Section
(rrr) "Party" means any entity that is a signatory to this Agreement as set forth
on the signature pages hereto or that hereafter becomes a party to this Agreement by executing
and delivering a duly executed Joinder to this Agreement to the Program Administrator in
accordance with the provisions of Section 2.2 following the Effective Date, which entities are
referred to collectively, as the "Parties". For the avoidance of doubt, unless and until an entity
that is not an EDU becomes a Party to this Agreement, each Party is a Participating EDU, and
vice versa, and the terms may be used interchangeably. '
(sss) "Percentage Target"has the meaning set forth in Section 5.2.
(ttt) "Person" means an individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,joint venture, estate, trust,
unincorporated organization, association, organization or other entity or form of business
enterprise or Governmental Authority.
(non) "PG&E"has the meaning set forth in the preamble.
(vvv) "Policy"has the meaning set forth in Section 7.4.
(www)G°POU"has the meaning set forth in the Recitals.
(xxx) "Program Administrator" means SCE in its capacity as program
administrator and administrative agent for the Parties with respect to the CFR Program for the
term set forth in Section 3.1(b), or any successor Program Administrator appointed following the
end of SCE's term as Program Administrator in accordance with the provisions of Section 3.l(e)
or any amendment to this Agreement entered into pursuant to the provisions thereof.
43425759.3 7
(yyy) "Program Agreement" has the meaning set forth in Section 3.1(a).
(zzz) "Program Auditor"has the meaning set forth in Section 4.1(a).
(aaaa) "Program Funds"has the meaning set forth in Section 4.3(a).
(bbbb) "Program Funds Account'has the meaning set forth in Section 4.3(b)(i).
(cccc) "Program Implementer"has the meaning set forth in Section 4.1(a).
(dddd) "Program Implementer Representatives" has the meaning set forth in
Section 4.5(a).
(eeee) "Program Launch Date"has the meaning set forth in Section 5.5.
(ffff) "Program Legal Matters"has the meaning set forth in Section 10.18.
(gggg) "Program Material'has the meaning set forth in Section 8.1.
(hhhh) "Related Entities"has the meaning set forth in Section 7.1(a).
(iiii) "Release"has the meaning set forth in Section 7.1(b).
0b) "Released Claims" means (i) when used in connection with the SCE
Released Parties, the SCE Released Claims, and (ii) when used in connection with the Steering
Committee Released Parties, the Steering Committee Released Claims.
(kkkk) "Released Parties" means any of the SCE Released Parties and the
Steering Committee Released Parties, each a"Released Party".
(1111) "Remaining Liabilities"has the meaning set forth in Section 9.1(b).
(mmmm) "Removal Vote"has the meaning set forth in Section 9.3(a).
(nnnn) "Representative"means, with respect to a particular Person, any director,
member, partner, officer, employee, agent, consultant, advisor or other representative of such
Person, including outside legal counsel, accountants and financial advisors; provided that in no
event shall any hnplementer, any other vendor or contractor retained by the Program
Administrator on behalf of the CFR Program, or any of their respective Representatives be, or be
deemed to be, a Representative of the Program Administrator or of any Participating EDU.
(0000) "Required Percentage"has the meaning set forth in Section 5.4.
(pppp) "Reserve Amounts" means the aggregate amounts of Program Funds
maintained at any time, and from time to time, in the Liability Reserve and the Operating
Reserve.
(qqqq) "Reward Amount'has the meaning set forth in Section 3.3(d)(iii)
43425759.3 _ 8
(rrrr) °°RFI"has the meaning set forth in Section 3.2(a).
(ssss) "RFP"has the meaning set forth in Section 3.2(a).
(tttt) "SCE"has the meaning set forth in the preamble.
(uuuu) "SCE Indemnified Claim"has the meaning set forth in Section 7.5(a)(i).
(vvvv) "SCE Indemnified Person(s)" has the meaning set forth in Section
7.Sa i .
(wwww) "SCE Released Claims" has the meaning set forth in Section
7.1 a i .
(xxxx) "SCE Released Part(ylies)" has the meaning set forth in Section
7.1 a i .
(yyyy) "SDG&E"has the meaning set forth in the preamble.
(zzzz) "Shortfall Indemnity Termination Date" has the meaning set forth in
Section 7.9.
(aaaaa)"Shortfall Party"has the meaning set forth in the Section 7.5(bb)(iii).
(bbbbb) "Shortfall Payments" has the meaning set forth in Section
9.1 i .
(ccccc)"Small EDU Members" means the Northern EDU Member and the
Southern EDU Member, each a"Small EDU Member".
(ddddd) "SMUD"has the meaning set forth in the preamble.
(eeeee)"Southern EDU Member"has the meaning set forth in Section 3.3(a).
(fffff) "Southern EDUs" means any EDU listed as a Southern EDU on
Schedule 1.1 hereto, as such Schedule may be amended from time to time hereafter; provided
that in no event shall any Large EDU ever be listed as or deemed to be a Southern EDU.
(ggggg) "Southern EDU Supermajority Vote" has the meaning set forth
in Section 3.3(a).
(hhhhh) "Steering Committee"has the meaning set forth in Section 3.3(a).
(iiiii) "Steering Committee Indemnified Claim" has the meaning set forth in
Section 7.5(a)(ii).
(jjjjj) "Steering Committee Indemnified Person(s)" has the meaning set forth
in Section 7.5(a)(ii).
43425759.3 9
(kkkkk) "Steering Committee Released Claims" has the meaning set
forth in Section 7.1(a)(ii).
(11111) "Steering Committee Released Part(y/ies)" has the meaning set forth in
Section 7.1(a)(ii).
(mmmmm) "Tax" or "Taxes" means any and all taxes, assessments, charges,
duties, fees, levies, imposts or other governmental charges, including all federal, state, local or
non-U.S. income taxes (including any tax on or based upon net income, gross income, or income
as specially defined, or earnings, profits, or selected items of income, earnings or profits) and all
gross receipts, payroll, employment, excise, severance, stamp, occupation, premium,
environmental, customs duties, capital stock, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use, ad valorem, transfer,
service, franchise, license, windfall profits taxes, estimated, alternative or add-in minimum taxes
and any other taxes of any kind whatsoever(whether or not requiring the filing of a Tax Return),
together with any interest and any penalties and additions to tax.
(nnnnn) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any schedules and
amendments thereof.
(00000) "Third Party Program Administrator" means any successor
Program Administrator appointed at any time following the end of SCE's term as Program
Administrator, in accordance with the provisions of Section 3.1(c) or any amendment to this
Agreement entered into pursuant to the provisions thereof, that is not also a Participating EDU
hereunder..
(ppppp) "TOU"has the meaning set forth in Section 4.2(b).
(qqqqq) "Withdrawing Notice" has the meaning set forth in Section
9.2 a .
(rrrrr) G°ZEVs"has the meaning set forth in the Recitals.
1.2. Construction. As used herein, unless the context of this Agreement otherwise
requires, (a) all references to Sections, Articles, Schedules or Exhibits are to Sections, Articles,
Schedules or Exhibits of this Agreement; (b) each accounting term has the meaning assigned to it
in accordance with GAAP; (e) words of any gender include each other gender; (d) words using
the singular or plural number also include the plural or singular number, respectively; (e) the
terms "hereof," "herein," "hereby," "hereto" and derivative or similar words refer to this entire
Agreement; (f) the word "including" shall mean "including, without limitation'; (g) the word
"or" shall be used in the inclusive sense of"and/or" and not exclusive; (h) each reference to '$"
or"dollars" shall be to United States dollars; and (i) each reference to "days" shall be to calendar
days.
43425759.3 10
ARTICLE 2
FORMATION OF CFR PROGRAM
2.1. Governance Agreement. This Agreement shall constitute a "Governance
Agreement' (as that term is used in the Advice Letter and the CPUC Approval). The rights,
powers, duties, obligations, and liabilities of the Parties to each other with respect to the CFR
Program shall be determined pursuant to this Agreement. Each Party shall at all times comply
with its respective duties, obligations, covenants and agreements set forth in this Agreement.
2.2. EDU Participation. As of the Effective Date, the Parties and Participating EDUs
consist of PG&E, SDG&E, SCE, LADWP, and SMUD. Any EDU that desires to participate in
the CFR Program and that is not already a Party hereto on the Effective Date as set forth in the
preamble to this Agreement and the signature pages hereto, will be required to execute and
deliver to the Program Administrator (with a copy to CARB) a joinder to this Agreement in the
form attached hereto as Exhibit A (a "Joinder"), in order to become a Party and a Participating
EDU hereunder.
ARTICLE 3
ADMINISTRATION OF CFR PROGRAM
3.1. SCE Appointment as Initial Program Administrator and Agent.
(a) Appointment. Each of the Participating EDUs (in its capacity as a
Participating EDU) and each other current and future Party hereto hereby irrevocably appoints
SCE as the initial Program Administrator, and hereby designates and authorizes SCE to act on its
behalf as the Program Administrator under this Agreement and under any agreement approved
by the Steering Committee that is entered into by the Program Administrator or any Participating
EDU with respect to the CFR Program pursuant to the terms and conditions hereof (each, a
"Program Agreement"), and authorizes the Program Administrator to take such actions on its
behalf and to exercise such powers as are delegated to the Program Administrator by the terns
hereof or thereof, together with such actions and powers as are reasonably incidental thereto or
as otherwise determined by the Steering Committee, in each case for the time period set forth in
Section 3.1(b) below. As used herein, Program Administrator shall mean SCE in its capacity as
program administrator and administrative agent for the Parties with respect to the CFR Program
under this Agreement or any Program Agreement, or any successor to SCE appointed by the
Parties as Program Administrator pursuant to the terms of the replacement administrative and
governance structure for the CFR Program implemented pursuant to Section 3.1(c) below. It is
understood and agreed that the use of the terms "agent" and "administrator" herein or in any
other Program Agreement (or any other similar term) with reference to the Program
Administrator or SCE is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such tern is used as a
matter of market custom, and is intended to create or reflect only an administrative relationship
between sophisticated contracting parties.
(b) Term. SCE is hereby appointed and authorized to serve in such role as
Program Administrator from the Effective Date until the earliest to occur of(i) the third (P)
anniversary of the commencement date of the third party contractor solicitation process
43425759.3 1
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described in ARTICLE 4 below, unless SCE files an advice letter with the CPUC requesting
authority to administer the CFR Program long term, in which case SCE will continue to serve as
Program Administrator while the CPUC considers the appropriate disposition of the advice
letter, and thereafter, if approved,in compliance with the CPUC resolution approving that advice
letter, (ii) the date on which SCE is removed or ordered to be removed as Program Administrator
by CARB or CPUC, and (iii) the effective date of resignation of SCE as Program Administrator
as set forth in any written communication of resignation delivered by SCE to the other Parties
after receiving CPUC authorization or approval to withdraw as Program Administrator.
(c) Replacement Structure. No later than the second anniversary of the
Effective Date, the Steering Committee, with oversight from GARB, will develop and determine
a replacement administrative and governance structure for the CFR Program that would go into
effect upon the date of expiration or termination of SCE's appointment as Program
Administrator in accordance with the provisions of Section 3.1(b), in order to ensure a seamless
transition to a new administrative and governance regime following such date. The Parties will
implement such replacement administrative and governance structure through an amendment to
this Agreement establishing the terms of such replacement structure, which amendment shall be
executed by all Parties no later than the date that is ninety (90) days before the third anniversary
of the Effective Date.
3.2. Program Administrator Authority.
(a) Solicitation. The Program Administrator will serve as the principal agent
of the Parties to develop, issue and administer the competitive Request for Proposals ("RFP"),
Request for Information with Pricing ("RFI") or other such solicitations to acquire the services
of one (or more) qualified firm(s) to develop, administer and implement the CFR Program,
subject to the terms below. All Parties shall assist the Program Administrator in the performance
of the associated responsibilities, as may be requested by the Program Administrator during the
solicitation process, and the Program Administrator shall work with the Steering Committee in
selecting the successful respondent(s) to the solicitation. The Steering Committee shall make
recommendations to the Program Administrator regarding the competitive solicitation, selection
of offers, and negotiation of third-party contracts. The Program Administrator shall have the
discretionary contracting authority (i) to recommend the third party firms and institutions that it
deems to be the best-qualified to perform the necessary and appropriate functions to develop,
implement and maintain the CFR Program, which at a minimum will include the Program
Auditor, Financial Institution, and Program Implementer (each, an "Implementer"), (ii) to
negotiate the terms and conditions of any Program Agreement entered into with any Implementer
in connection with the CFR Program, and (iii) subject to receipt of approval from the Steering
Committee, to enter into Program Agreements with the Implementers as Program Administrator
of the CFR Program on behalf of the Parties. The selection of each Implementer and the final
form of each Program Agreement shall require the approval of both the Program Administrator
and the Steering Committee. The mechanics of the solicitation process are set forth in further
detail in ARTICLE 4 below.
(b) Post-Solicitation Program Administration. The Program Administrator
will also serve as the principal agent of the Parties with respect to the administration of the CFR
Program, in providing instructions to the Implementers and in enforcing the provisions of the
43425759.3 12
Program Agreements both during and following the solicitation process. All Parties shall assist
the Program Administrator in the performance of the associated responsibilities necessary for the
successful functioning and operation of the CFR Program, as may be requested by the Program
Administrator from time to time in accordance with the provisions of this Agreement, the
Program Agreements and the decisions and resolutions of the Steering Committee that will be
responsible for oversight of the CFR Program.
(c) Reporting. The Program Administrator shall provide the Steering
Committee quarterly reports on program administration, financial accounting and program
results, which quarterly reports are anticipated to be delivered to the Steering Committee by the
end of the first month that commences following the close of each of the first three calendar
quarters, and by the last day of February following the close of the fourth calendar quarter and
the calendar year. At any other time, the Program Administrator shall provide the Steering
Committee such other information as may be reasonably requested by the Steering Committee
with reasonable advance notice of not less than ten (10) business days for the Program
Administrator to collect the requested information. The Program Administrator and the Steering
Committee shall cause to be provided to the Participating EDUs on a quarterly basis such Tax
information regarding the operation of the CFR Program as the Program Administrator
determines is reasonably necessary for the Participating EDUs to calculate their Taxes with
respect to the CFR Program.
3.3. Steering Committee.
(a) Composition. The CFR Program will be overseen by a joint steering
committee (the "Steering Committee") made up of seven (7) voting members (each, a
"Member"), one (1) non-voting representative appointed by the Program Administrator (the
"PA Representative"), and one (1) non-voting LCFS program implementation representative
from CARB with oversight authority over the Steering Committee (the "CARB
Representative").
(i) The Members will consist of (1) one senior representative from
and appointed by each Large EDU (the "Large EDU Members"), one (1) Member (the
"Southern EDU Member") selected by the Southern EDUs that are Participating EDUs (the
"Participating Southern EDUs"), and one (1) Member (the "Northern EDU Member")
selected by the Northern EDUs that are Participating EDUs (the "Participating Northern
EDUs").
(ii)
(A) Southern EDU Member annual voting structure.
The Southern EDU Member shall be confirmed annually before each new calendar year and shall
be either a representative from one of the Participating Southern EDUs or a qualified third-party
representative, as determined by the Participating Southern EDUs. The Southern EDU Member
shall be selected by at least a 2/3 majority vote(with each of the Participating Southern EDUs
receiving a single vote each of equal weight)of the Participating Southern EDUs ("Southern
EDU Supermajority Vote"), if the Member is a representative from one of the Participating
Southern EDUs. If the Southern EDU Member is a third-party representative they shall be
43425759.3 13
selected by a unanimous vote of the Participating Southern EDUs. Votes shall be submitted by a
senior representative (Assistant General Manager level or higher; or equivalent position(s))
through a conference call vote with an email confirmation of the final vote following the call. A
proxy voting representative may be assigned by each Participating Southern EDU through a
written notification from their senior representative to the other Participating Southern EDUs.
a (B) Initial adoption period. Notwithstanding the
provisions of Section 3.3(a)(ii)(A) above, selection of the Southern EDU Member will be
conducted asset forth in this Section 3.3(a)(ii)(B) until December 31st, 2020. Once the first
Participating Southern EDU has become a Party to this Agreement in accordance with the
provisions of Section 2.2, it will select the initial Southern EDU Member. A new vote will be
held among the Participating Southern EDUs to elect the Southern EDU Member each time a
new Southern EDU becomes a Party to this Agreement in accordance with the provisions of
Section 2.2, until December 31 st,2020. All votes during this initial adoption period will continue
to follow the Southern EDU Supermajority Vote and senior representative voting requirements
set forth in Section 3.3(a)(ii)(A). The Participating Southern EDUs will vote, in accordance with
the provisions of Section 3.3(a)(ii)(A), to elect a Southern EDU Member for the 2021 calendar
year before the end of 2020. After December 31, 2020, even if any new Southern EDU becomes
a Party to this Agreement in accordance with the provisions of Section 2.2, there will be no new
vote on a Southern EDU Member until the annual vote,unless a vote is called for under Section
3.4b .
(iii) The Northern EDU Member shall be selected by vote of the
Participating Northern EDUs (which vote may be cast directly by any such Participating
Northern EDU or indirectly by a third party Representative granted a proxy by any such
Participating Northern EDU to act on its behalf for purposes of such vote) representing more
than 50%of the aggregate EDU Contributions made as of such date by all Participating Northern
EDUs, as determined from time to time(a"Northern EDU Majority Vote"), and shall be either
a senior representative from one of the Participating Northern EDUs or a member of the staff of
NCPA or other qualified third party representative.
(iv) Each of the seven Members on the Steering Committee shall serve
on the Steering Committee until such time as a replacement is designated for such Member
pursuant to the provisions of Section 3.3(b) below. The Steering Committee shall maintain a
Chair, a Vice-Chair and Secretary positions. The Members that hold these positions described in
the preceding sentence shall be selected from within the Steering Committee by a vote thereof
pursuant to Section 3.3(i), and shall, subject to the provisions of Section 3.3(b), maintain those
positions for a oneError! Bookmark not defined. year term, unless agreed upon in writing by
all Members (other than the Member holding the position). The Chair (or, in the absence of the
Chair, the Vice-Chair) shall preside over all meetings of the Steering Committee, and the
Secretary (or, in the absence of the Secretary, any person appointed by the Chair or, in the
Chair's absence, by the Vice-Chair) shall take and maintain the minutes of the proceedings of the
meetings of the Steering Committee.
(v) The Program Administrator will designate a staff person to serve
as the PA Representative, who will be invited to participate in all meetings of the Steering
Committee. The PA Representative will be the Program Administrator's non-voting
43425759.3 14
representative on the Steering Committee and will serve as the primary point of contact between
the Program Administrator and the Steering Committee. The Program Administrator may
remove and replace the PA Representative at any time with or without cause, effective upon
written notice to the Members provided in accordance with the provisions of Section 10.14.
(vi) CARB will designate a senior LCFS program staff person to serve
as the CARB Representative, who will be invited to participate in all meetings of the Steering
Committee. The CARB Representative will monitor and provide feedback to and oversight of
the Steering Committee regarding LCFS and vehicle incentive goals and implementation.
CARB may remove and replace the CARB Representative at any time with or without cause,
effective upon written notice to the Members provided in accordance with the provisions of
Section 10.14.
(b) Member Removal. Resignation and Replacement. Each Large EDU may
remove and/or replace any Large EDU Member appointed by it at any time with or without
cause, effective upon written notice to the other Members. The Participating Southern EDUs
may by a Southern EDU Supermajority Vote remove and/or replace the Southern EDU Member
at any time with or without cause, effective upon written notice to the Members documenting the
results of such Southern EDU Supermajority Vote. The Participating Northern EDUs may by a
Northern EDU Majority Vote remove and/or replace the Northern EDU Member at any time
with or without cause, effective upon written notice to the Members documenting the results of
such Northern EDU Majority Vote. A Member may resign at any time from the Steering
Committee by delivering his or her written resignation to the Chair (or in the absence of a Chair,
the Vice Chair or Secretary). Any such resignation shall be effective upon receipt thereof unless
it is specified to be effective at some other time or upon the occurrence of some other event. The
Steering Committee's acceptance of a resignation shall not be necessary to make it effective.
Any vacancy on the Steering Committee resulting from the resignation, removal, death or
disability of a Member shall be filled by (i) if a Large EDU Member, the same Large EDU that
appointed such Member pursuant to Section 3.3(a), (ii) if a Southern EDU Member, by written
notice to the other Members documenting the results of the Southern EDU Supermajority Vote
held to select a replacement for such Southern EDU Member, or (iii) if a Northern EDU
Member, by written notice to the other Members documenting the results of the Northern EDU
Majority Vote held to select a replacement for such Northern EDU Member, in each case with
such appointment to become effective immediately upon delivery of written notice of such
appointment to the Chair(or in the absence of a Chair, the Vice Chair or Secretary).
(c) Alternates. In addition to the Member removal and replacement
procedures set forth in Section 3.3(b) above, each Large EDU, the Participating Southern EDUs
(by Southern EDU Supermajority Vote), and the Participating Northern EDUs (by Northern
EDU Majority Vote), may by written notice delivered to the Chair designate up to two (2)
alternative representatives ("Alternates") who may, upon written or oral notice by such
Party/Parties to the Chair that the Member designated by such Party/Parties is unable to attend
any meeting (or participate in any action by written consent) of the Steering Committee (or any
subcommittee thereof) and shall instead be represented by the Alternate designated in such
notice, attend, participate and vote at any regular or special meeting of the Steering Committee
(or any subcommittee thereof), or participate and vote in any action by written consent, in lieu of
the regular Member designated by such Party/Parties. The Program Administrator may also
43425759.3 15
designate one or more alternate representatives to attend and participate in any meeting of the
Steering Committee (or any subcommittee thereof) in lieu of the designated PA Representative.
CARB may also designate one or more alternate representatives to attend and participate in any
meeting of the Steering Committee (or any subcommittee thereof) in lieu of the designated
CARB Representative.
(d) Roles and Responsibilities: The Steering Committee is responsible for
strategic direction, program guidance, oversight of policy objectives, and overall governance and
supervision of the CFR Program, subject to the oversight of CARB exercised through the CARB
Representative's participation on the Steering Committee as provided by Section 3.3(a)(vi).
These roles and responsibilities will include but not be limited to:
(i) participation with the Program Administrator in the development,
review and selection processes related to the competitive solicitation process to select the
Implementers, and final approval of the solicitation process, the selection of Implementers and
the final form of the Program Agreements to be entered into with the Implementers;
(ii) reviewing and approving the CFR Program's budget and the initial
starting balance for the CFR Program, each of which shall be submitted to the Steering
Committee by the Program Administrator for review and approval;
(iii) approving the initial CFR rebate amount ("Reward Amount") and
approving any required adjustments thereto or in the method of payment of any Reward
Amounts, in each case as recommended by the Program Administrator following CARB
approval of the methodology for determining the Reward Amount;
(iv) determining the process for approving payment of invoices for
administrative and marketing functions, including Implementer invoices, in accordance with the
provisions of ARTICLE 6, and the Steering Committee shall also have the authority to make any
changes to the invoice approval processes set forth in ARTICLE 6 or otherwise as determined by
the Steering Committee from time to time, in order to maintain the efficient operation of the CFR
Program;
(v) determining whether to adjust the amounts specified to be held in
the Liability Reserve or the Operating Reserve as set forth in Section 4.3(e) and the amount of
any such increase, but in no event shall any such specified amounts be decreased without the
prior written consent of the Program Administrator;
(vi) reviewing the performance of the CFR Program and
recommending any required adjustments thereto;
(vii) approving the timing and content of public announcements about
this Agreement and/or the CFR Program(as described in Section 8.2);
(viii) terminating this Agreement(as described in Section 9.1);
(ix) removing a Party as a party under this Agreement (as described in
Section 9.3);
43425759.3 16
(x) amending this Agreement, or waiving, discharging, or terminating
any provision hereof(as described in Section 10.7);
(xi) reviewing the quarterly reports and other information required to
be provided by the Program Administrator under Section 3.2(c); and
(xii) any and all other roles and responsibilities for the Steering
Committee set forth in this Agreement or in any Program Agreement.
(e) Subcommittees. The Steering Committee may, by resolution, designate
from among the Members one or more subcommittees, each of which shall be comprised of two
or more Members, and that, subject to the limitations set forth in the next sentence, shall have
and may exercise any authority of the Steering Committee as the Steering Committee may
delegate to it in the resolution forming such subcommittee. The Steering Committee shall not,
and shall not have the power or authority to, designate or authorize any subcommittee with all of
the powers and authority of the Steering Committee, or with the authority of the Steering
Committee in reference to: (A) final approval of the initial Reward Amount or the amount of any
adjustment thereto, (B) any proposed increase (or other adjustment) to the amounts specified to
be held in the Liability Reserve or the Operating Reserve as set forth in Section 4.3(e), (C) final
approval of payment of any invoice for Administrative Expenses (provided that the Steering
Committee may create one or more subcommittees with the responsibility and authority to
review, reject, negotiate, pre-approve and submit to the Steering Committee for final approval
any or all such invoices (each, an "Invoice Subcommittee")), (D) altering or repealing any
resolution of the Steering Committee that by its terms provides that it shall not be so amendable
or repealable, or (E) final approval of any Implementers. The Steering Committee may dissolve
any subcommittee or remove any member(or non-voting participant) of a subcommittee through
a Steering Committee vote conducted pursuant to the provisions of Section 3.36) below at any
time. The Parties anticipate that, in addition to an Invoice Subcommittee, potential
subcommittees may include (but not be limited to) subcommittees to address dealer training,
marketing and outreach, and financial forecasting. The Steering Committee and any
subcommittee thereof, and their respective Members, may consult with and seek and rely upon
information and advice from employees and representatives of any Participating EDUs,
Implementers, Advisory Committee members, Governmental Authorities, legal counsel,
independent accountants and other Persons as to matters which they believe to be within such
Person's professional or expert competence. The Steering Committee shall designate a chair and
secretary for each subcommittee. The chair (or in the absence of the chair, the secretary) shall
preside over all meetings of the subcommittee, and the secretary (or, in the absence of the
secretary, the chair or any person appointed by the chair) shall take and maintain the minutes of
the proceedings of the meetings of the subcommittee. All minutes of subcommittee meetings
shall be made available to all Steering Committee Members. If any member of the Advisory
Committee is invited to a subcommittee meeting or a Steering Committee meeting, then the
portion(s) of the minutes of such meeting during which such member of the Advisory Committee
was present shall also be made available to all members of the Advisory Committee.
(f) Regular Meetings. Regular meetings of the Steering Committee shall be
held no less than monthly during the first year, and quarterly thereafter, via a conference call at a
date and time that is either (i) determined by the Chair (or in the absence thereof, by the Vice
43425759.3 17
Chair or Secretary) after consulting with the Members at the immediately preceding meeting, or
(ii) scheduled by the Chair (or in the absence thereof, by the Vice Chair or Secretary) on not less
than five (5) calendar days' notice to the Members, the PA Representative and the GARB
Representative. All meetings (regular or special) of the Steering Committee shall be held by
means of telephone or video conference or other communications device that permits all
Members, the PA Representative and the CARB Representative participating in the meeting to
hear each other, provided that if all Members agree any meeting may be held in person at a
mutually agreed location. The Parties acknowledge and agree that the presence and participation
of all Members (or their respective Alternates) on the Steering Committee at the meetings and
proceedings of the Steering Committee is important for the successful development,
implementation, operation and oversight of the CFR Program and, accordingly, each Party shall
use its commercially reasonable efforts to have its respective Member (or Alternate) attend each
meeting (regular and special) of the Steering Committee. To the extent reasonably practicable,
any written materials for regular meetings of the Steering Committee shall be provided to all
Members, the PA Representative and the CARB Representative not less than seventy-two (72)
hours prior to the meeting. Unless specifically noted on such meeting materials or in the cover
correspondence distributed with such meeting materials that such materials (or any portion
thereof) are not to be distributed outside of the Steering Committee, each Member shall be free
to distribute copies of the meeting materials to the Participating EDUs that such Member
represents on the Steering Committee.
(g) Special Meetings. Special meetings of the Steering Committee to address
emergency, urgent or other time sensitive matters shall be held on the call of the Program
Administrator or any two (2) Members upon written notice to the Members, the PA
Representative and the CARB Representative sent at least 2 business days prior to the meeting,
or upon such shorter notice as may be approved by all the Members. To the extent reasonably
practicable, any written materials for special meetings of the Steering Committee shall be
provided to all Members, the PA Representative and the CARB Representatives not less than
twenty-four (24) hours prior to the meeting (it being understood that it may not always be
practicable to meet such a timeframe). Any Member may waive such notice as to himself or
herself.
(h) Quorum, Voting Percentages. Members holding a majority of the voting
percentages held by all Members (as described below in this Section 3.3(h)), shall constitute a
quorum for the transaction of business of the Steering Committee. For the avoidance of doubt,
as long as such a quorum is present, the Steering Committee may meet and act even if there are
vacancies on the Steering Committee at such time, including, without limitation, during the time
period following the Effective Date prior to the appointment of any Small EDU Member to the
Steering Committee. At all times when the Steering Committee is conducting business at a
meeting of the Steering Committee, a quorum of the Steering Committee must be present at such
meeting. If a quorum shall not be present at any meeting of the Steering Committee, then the
Members present at the meeting may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present. Until such time as SCE is no
longer the Program Administrator, the voting percentages of the Members (which shall always
total 100% in the aggregate) shall be:
Member Voting Percentage
43425759.3 18
SCE's Member 33.0%
Each remaining Large EDU Member 12.5%
The Southern EDU Member 8.5%
The Northern EDU Member 8.5%
Unless previously modified pursuant to a replacement structure implemented by way of an
amendment to this Agreement entered into pursuant to the provisions of Section 3.1(c), the
following voting percentages set forth below will serve as the default replacement structure in
the event of the replacement of the initial Program Administrator. In the event that another Large
EDU replaces SCE as the Program Administrator, then its designated Member shall have a
33.0% voting percentage and SCE's Member shall have a 12.5% voting percentage, and the
other voting percentages shall remain unchanged. In the event that a Participating Southern
EDU replaces SCE as the Program Administrator, then such Participating Southern EDU shall
have the sole power to appoint the Southern EDU Member and the Southern EDU Member shall
have a 25.0% voting percentage, each Large EDU Member shall have a 13.3% voting
percentage, and the Northern EDU Member shall have a 8.5% voting percentage. In the event
that a Participating Northern EDU replaces SCE as the Program Administrator, then such
Participating Northern EDU shall have the sole power to appoint the Northern EDU Member and
the Northern EDU Member shall have a 25.0% voting percentage, each Large EDU Member
shall have a 13.3% voting percentage, and the Southern EDU Member shall have a 8.5% voting
percentage. In the event that the Program Administrator is not an EDU, then unless otherwise
approved by the Steering Committee in connection with its approval of such replacement
Program Administrator, the Program Administrator shall have no (0%) voting percentage, and
each Large EDU Member shall have a 16% voting percentage, and the Southern EDU Member
and the Northern EDU Member shall each have a 10%voting percentage.
(i) Vote Required for Action. Except as expressly set forth otherwise with
respect to certain actions in this Agreement, (i) all actions of the Steering Committee must be
taken at any duly scheduled or called meeting thereof at which a quorum is present and shall
require the affirmative vote of Members (or of their respective Alternate or designated proxy as
set forth below) holding a majority of the aggregate voting percentages held by all Members
present at such meeting, and (ii) all actions of any subcommittee of the Steering Committee must
be taken at any duly scheduled or called meeting of such subcommittee at which a quorum (i.e., a
majority of the aggregate voting percentage held by all members of such subcommittee) is
present and shall require the affirmative vote of Members (or of their respective Alternate or
designated proxy as set forth below) holding a majority of the aggregate voting percentages held
by all Members who are members of such subcommittee. Voting by proxy, which proxy must be
in writing and signed by the Member or Alternate designated by the Party granting a proxy,
granted to another Member(or Alternate therefor) will be allowed in case a Party with a Member
on the Steering Committee is not able to have its designated Member or Alternate attend any
regular or special meeting.
0) Action by Written Consent. Notwithstanding anything herein to the
contrary, any action of the Steering Committee (or any subcommittee thereof) may be taken
43425759.3 19
without a meeting if either (a) a written consent of Members holding at least sixty-six percent
(66%) of the aggregate voting percentage held by all Members on the Steering Committee (or
subcommittee), and which consent must include the signature of the Member (or Alternate)
designated by the Program Administrator, shall approve such action; provided, that prior written
notice of such action is provided to all Members, the PA Representative and the CARB
Representative at least two (2) business days before such action is taken, or(b) a written consent
constituting all of the Members on the Steering Committee(or subcommittee) shall approve such
action. Such written consent shall have the same force and effect as a vote at a meeting where a
quorum was present.
3.4. Advisory Committee
(a) The CFR Program's performance will be monitored by an advisory
committee (the "Advisory Committee") comprised of representatives of stakeholder
organizations (such as EDUs, regulatory agencies, industry groups, ZEV manufacturers and
dealers, other industry representatives, environmental NGOs, social and economic justice groups,
and other community-based organizations) that have a direct interest in the success of the CFR
Program. A list of the stakeholders that the Parties anticipate inviting to join the Advisory
Committee is set forth on Schedule 3.4(a) hereto, which Schedule may be amended from time to
time by the Steering Committee.
(b) The purpose and role of the Advisory Committee will be to provide
feedback to the Steering Committee on CFR Program performance and on market and industry
trends and best practices to ensure a successful program. The Advisory Committee shall provide
such information and feedback to the Steering Committee, and may make recommendations to
the Steering Committee on program implementation, in response to consumer and dealer
feedback, on metrics needed to evaluate program effectiveness and on CFR Program or process
improvement, but the Advisory Committee shall have no management, operational, or decision-
making power or authority, or any other type of power or authority, with respect to the CFR
Program and neither the Steering Committee nor the Program Administrator shall be required to
implement or follow any recommendations made by the Advisory Committee.
(c) The Advisory Committee and Steering Committee will meet or have
conference calls or electronic meetings not less than twice a year to share feedback on CFR
Program performance. The Steering Committee shall inform the Advisory Committee, by way
of written or electronic notice to all members of the Advisory Committee or at an in-person,
telephonic or electronic meeting of the Advisory Committee, prior to effecting any adjustment to
the Reward Amount.
3.5. Duties
(a) This Agreement is not intended to, and does not, create or impose any
fiduciary duty on any Party, the Program Administrator, the PA Representative, the CARB
Representative, any Member or any member of the Advisory Committee appointed by a
Participating EDU (each of the foregoing, a "Covered Person"). Furthermore, each of the
Parties hereby waives any and all fiduciary duties that, absent such waiver, may be implied on
any Covered Person by applicable law, and in doing so, acknowledges and agrees that the duties
43425759.3 20
and obligation of each Covered Person to each other, to any other Party and to the CFR Program
with respect to the CFR Program or the matters that are the subject of this Agreement, are only
as expressly set forth in this Agreement. The provisions of this Agreement,to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are
expressly agreed by the Parties to replace such other duties and liabilities of such Covered
Person.
(b) Whenever in this Agreement a Covered Person is permitted or required to
make a decision (including a decision that is in such Covered Person's "discretion" or under a
grant of similar authority or latitude), the Covered Person shall be entitled to consider only such
interests and factors as such Covered Person desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or factors affecting any other
Party, Member or third party. Whenever in this Agreement a Covered Person is permitted or
required to make a decision in such Covered Person's "good faith," the Covered Person shall act
under such express standard and shall not be subject to any other or different standard imposed
by this Agreement or any other applicable law.
ARTICLE 4
SOLICITATION PROCESS.
4.1. Solicitation.
(a) As set forth above, the Steering Committee, under the oversight of the
CARB Representative, will work with the Program Administrator to develop and ultimately
approve the RFP/RFI processes to select the Implementers who will be engaged to develop,
administer and implement the CFR Program, and the Program Administrator will serve as the
primary agent-of the Parties to issue and administer the RFP/RFI processes, subject to the terms
below. The Parties agree that at least the following three Implementer functions will be required
for the statewide CFR program: (i) implementation of the CFR program activities ("Program
Implementer(s)"); (ii) a FDIC insured financial institution to receive, hold, and/or distribute
CFR funds ("Financial Institution"); and (iii) an independent accounting firm to perform
regular audits ("Program Auditor"). The Parties acknowledge and agree that additional
Implementers may also be required as determined and approved by the Program Administrator
and the Steering Committee.
(b) The Program Administrator will utilize a competitive solicitationibidding
process by issuing a Request for Proposal/Information with pricing (RFP/RFI) to potential
Implementers to submit a proposal or quote on a specific commodity or service. The RFP/RFI
bid process is a fair and standardized method for the Program Administrator to systematically
obtain and demonstrate best value for goods and services procured and ensure that the CFR
Program's vendor costs are reasonable according to prevailing market conditions.
(c) Competitive awards resulting from the RFPs/RFIs will be based upon the
comparison of commercial and/or technical information from multiple independent suppliers.
The RFP/RFI process will start with the development and definition of business requirements
contained in a Statement of Work (SOW) or Specification. A list of prospective qualified
suppliers will be established. The Program Administrator will receive input and approval from
43425759.3 21
the Steering Committee on the RFP/RFIs and development of an evaluation criteria prior to
receipt of the bids. The Program Administrator will manage the competitive procurement
process including the evaluation of the RFP responses. The successful bidder will be selected
based on the established criteria (e.g., technical, commercial, supplier responsibility, and risk
considerations). Negotiations are entered into, if necessary. Once negotiations with a proposed
Implementer are complete, the Program Administrator will submit the proposed Program
Agreement with such Implementer together with any requested supporting documentation to the
Steering Committee for review and approval; provided that approval of each Program
Implementer and the Program Auditor shall require the approval of Members holding at least
sixty-six percent (66%) of the aggregate voting percentage held by all Members on the Steering
Committee, which approval must include the approval of the Member designated by the Program
Administrator and, as long as there are at least five (5) Members on the Steering Committee, the
approval of at least three (3) other Members in addition to the Member designated by the
Program Administrator. If the Steering Committee rejects the proposed Program Agreement
with any vendor, it shall provide the Program Administrator with a detailed set of terms and
conditions that must be included in the Program Agreement for the Steering Committee to
provide its approval thereof. The Program Administrator shall then continue negotiations with
the proposed Implementer or with other respondents to the solicitation process in order to meet
the terms and conditions specified by the Steering Committee, and may then submit one or more
revised proposals to the Steering Committee for approval. Following Steering Committee
approval, the approved procurement award and Program Agreement will be delivered to the
applicable vendor selected to serve as such Implementer.
4.2. Program Implementer(s).
(a) The Program Implementer(s) will consist of one or more third parties
(which may include multiple contractors or a prime contractor that engages multiple
subcontractors) to engage in Marketing, Education and Outreach ("ME&O") activities for the
CFR Program; establish, operate, and maintain the web-based portal for ZEV dealers to request
reimbursement for payment of a Reward Amount and to submit documentation required to
establish compliance with requirements for such reimbursement; and to review and evaluate the
dealership requests for Reward Amount reimbursements to confirm whether they comply with
the reimbursement requirements set forth in the applicable Program Agreement; and to perform
such other services and obligations as are set forth in the applicable Program Agreement. The
Program Implementer(s) will also assist with the collection of data, including all data necessary
for participant and CFR Program reporting, and submit invoices to the Program Administrator to
request payments owed to the Program Implementer or to approved subcontractors or vendors
that have been engaged in accordance with the terms of the applicable Program Agreement. The
Program Irplementer(s) will perform, or contract for, other administrative and ME&O functions
necessary and appropriate for the efficient operation of the CFR Program pursuant to the terms
and conditions of the Program Agreements entered into with such Program Implementers by the
Program Administrator on behalf of the Parties.
(b) A rate education and outreach implementation plan will be developed by
the Program Implementer, in collaboration with the Steering Committee and the CPUC's Energy
Division, designed to educate ZEV purchasers and the public on time-of-use ("TOU") rates (in
general), other applicable rates and the benefits of off-peak charging. The rate education and
43425759.3 22
outreach plan will include a proposal for point of purchase or dealership educational materials.
Rate education and outreach materials developed for the statewide CFR program will specify
that there are a variety of rate options available depending on the different EDU service
territories and will direct customers to contact their specific utility for more information. At a
minimum, rate education will be required for all IOU customers who participate in the CFR
Program.
(c) The Program Implementer's contract will require it to collect certain data,
including but not limited to customer name, address, Vehicle Identification Number (VIN), ZEV
make and model. The Program Implementer will provide this information to the Participating
EDU that serves that particular customer, and to any non-Participating EDU that serves that
customer that has executed and delivered the non-disclosure agreement with the Program
Implementer required under Section 4.2(d). See Appendix B for a copy of the data collection
template.
(d) In order to receive certain confidential customer related information from
the Program Implementer (such as customer name, address, vehicle make, and other information
relevant for purposes of grid planning, marketing of any additional utility ZEV programs and
similar permitted uses), each Participating EDU shall be required to execute and deliver a non-
disclosure agreement with the Program Implementer in a form negotiated by the Program
Administrator and approved by the Steering Committee, which shall include the applicable
confidentiality and data security requirements governing the handling of such information under
applicable laws.
4.3. Financial Institution.
(a) The Financial Institution shall be a state or federally regulated bank or
other financial institution that is insured by the FDIC and selected through a RFP/RFI process
approved by the Steering Committee. The Financial Institution will receive and hold the EDU
Contributions and all interest or other earnings thereon (collectively, "Program Funds") in
designated Accounts (as defined and described below), and will disseminate Program Funds
from the Accounts upon receipt of appropriate instructions from the Program Administrator,
including (i) to pay reimbursements to ZEV dealers for their qualifying Reward Amount
payments following verification thereof by the Program Implementer pursuant to the terms of its
Program Agreement, and (ii) to pay other CFR Program costs, expenses and liabilities, including
Administrative Expenses following approval of payment of the invoice by the Steering
Committee or CARB in accordance with ARTICLE 6, and any amounts payable for or in
connection with Indemnified Claims pursuant to Sections 7.5(b)(ii) and 7.5 b iii .
(b) Subject to such modifications to the below provisions as may be proposed
by the Program Administrator and approved by the Steering Committee, the Program
Administrator will enter into a master agreement with the Financial Institution (the "Master
Account Agreement") that will provide for the establishment and maintenance of one or more
bank accounts to hold, disburse or otherwise administer the Program Funds ("Accounts").
While the terms of the Master Account Agreement and the structure of the Accounts will not be
able to be finalized until the completion of the RFP/RFI process to select a Financial Institution,
the Parties currently anticipate that the basic financial structure of the CFR Program will follow
43425759.3 23
one of the structural models set forth below (with such modifications thereto as are proposed by
the Program Administrator and approved by the Steering Committee), which are ranked in order
of preference and which, to the extent a higher priority option is available prior to finalization of
the Master Account Agreement, shall be approved by the-Steering Committee in such order,
subject to the provisions of Section 4.3(fl below and consideration of relevant Tax reporting and
administration requirements:
(i) if the Program Administrator and the Steering Committee identify
a Governmental Authority(including, for the avoidance of doubt, a POU) or not for profit entity
that (A) is willing to serve as the record holder (under its name and federal Tax identification
number) of an Account to hold all Program Funds (the "Program Funds Account'), and (B)
they believe in good faith is appropriate to hold the Program Funds Account, then the Program
Administrator shall negotiate the terms of one or more Program Agreements (each of which shall
be subject to the approval of the Steering Committee in accordance with Section 3.2(a)) with
such Designated Account Holder (as such term is defined in Section 1.1) and the Financial
Institution pursuant to which the Designated Account Holder will (1) open and maintain the
Program Funds Account in its name and federal Tax identification number, and (2) provide sole
management authority and control over the Program Funds Account, all funds contained therein
and all decisions pertaining thereto to the Program Administrator, which management authority
and control shall in all cases be limited by and subject to the provisions of this Governance
Agreement and any additional requirements established by CARB pursuant to the LCFS
Regulation;
(ii) in the event that the Program Administrator and the Steering
Committee have not identified a Designated Account Holder to hold the Program Funds
Account, but have identified any Governmental Authority(including, for the avoidance of doubt,
a POU) or not for profit entity that (A) is willing to serve as the record holder (under its name
and federal Tax identification number) of an Account to hold the EDU Contributions (and all
interest and earnings thereon) of more than one but less than all of the Participating EDUs (a
"Collective Deposit Account"), and (B) they believe in good faith is appropriate to hold such
Collective Deposit Account, then the Program Administrator shall negotiate the terms of one or
more Program Agreements (each of which shall be subject to the approval of the Steering
Committee in accordance with Section 3.2(a)) with each such Designated Account Holder and
the Financial Institution pursuant to which the Designated Account Holder will (1) open and
maintain such Collective Deposit Account in its name and federal Tax identification number, and
(2) provide sole management authority and control over such Collective Deposit Account, all
funds contained therein and all decisions pertaining thereto to the Program Administrator, which
management authority and control shall in all cases be limited by and subject to the provisions of
this Governance Agreement and any additional requirements established by CARB pursuant to
the LCFS Regulation. For the avoidance of doubt, any Participating EDU that is not authorized
to deposit its EDU Contributions into a Collective Deposit Account established pursuant to this
Section 4.3(b)(ii) must establish an Individual Deposit Account in accordance with the
provisions of Section 4.3(b)(iii)below; or
(iii) in the event that the Program Administrator and the Steering
Committee have not identified (A) a Designated Account Holder to hold the Program Funds
Account pursuant to Section 4.3 b i , or (B) one or more Designated Account Holders to hold
43425759.3 24
one or more Collective Deposit Accounts pursuant to Section 4.3(b)(ii) that, individually or in
the aggregate, would hold the EDU Contributions for all Participating EDUs, then any
Participating EDU that is not authorized to deposit its EDU Contributions into a Collective
Deposit Account or, in the event there is no Collective Deposit Account, each Participating
EDU, must establish its own individual deposit Account with the Financial Institution selected
pursuant to Section.4.1(c) (each, an "Individual Deposit Account") and will be required to
execute and deliver, upon the Program Administrator's request therefor, the separate Program
Agreement with the Financial Institution creating and governing its Individual Deposit Account
in the final form thereof negotiated by the Program Administrator for all Participating EDUs to
deliver and as such final form has been approved by the Steering Committee (the "Individual
Deposit Account Agreement"), as a condition to remaining as a Participating EDU and Party
under this Agreement. The Individual Deposit Account Agreement shall grant the Program
Administrator sole management authority and control over each Individual Deposit Account, all
funds contained therein and all decisions pertaining thereto, which management authority and
control shall in all cases be limited by and subject to the provisions of this Governance
Agreement and any additional requirements established by CARB pursuant to the LCFS
Regulation.
(c) In the event that the Program Administrator and the Steering Committee
have not identified a Designated Account Holder to hold the Program Funds Account, the
Program Administrator will establish one or more disbursement Accounts (the "Disbursement
Account") to be maintained for the purpose of paying all Reward Amount reimbursement
payments to ZEV dealers (and, solely to the extent required by CARB pursuant to the LCFS
Regulation and in accordance with the terms thereof, any carrying costs associated with any
undue delay in reimbursement of Reward Amount payments to the ZEV dealers due to the fault
of the Program Administrator), all Administrative Expenses, all payments to reimburse the
Program Administrator for its (or its Affiliates') payment of any Administrative Expenses, and
all amounts payable for or in connection with Indemnified Claims pursuant to Sections 7.5(b)(ii)
and 7.5 b iii . If there is a Program Funds Account, then all such payments, Administrative
Expenses, reimbursement and amounts referenced in the preceding sentence will be paid out of
the Program Funds Account. The Disbursement Account shall be held in the name of and under
the federal Tax identification number of the Program Administrator, and the Program
Administrator's management authority and control over the funds in the Disbursement Account
shall in all cases be limited by and subject to the provisions of this Governance Agreement and
any additional requirements established by CARB pursuant to the LCFS Regulation.
(d) In the event that the Program Administrator and the Steering Committee
have not identified a Designated Account Holder to hold the Program Funds Account, the Master
Account Agreement shall set forth the terms and condition pursuant to which:
(i) when the Program Administrator delivers an instruction to the Financial
Institution to make any payment of any Reward Amount to any ZEV dealer as
verified by the Program Implementer, the Financial Institution will transfer from
the Deposit Accounts to the Disbursement Account, pro rata from each Deposit
Account (based on the respective then current account balances in each of the
Deposit Accounts), the amounts necessary to pay such Reward Amount, and
43425759.3 25
(ii) when the Program Administrator delivers an instruction to the Financial
Institution to make a payment of any Administrative Expense from the
Administrative Account following approval of payment of the invoice from the
Steering Committee or CARB in accordance with ARTICLE 6, the Financial
Institution will transfer from the Deposit Accounts to the Disbursement Account,
pro rats,from each Deposit Account (based on the respective then current account
balances in each of the Deposit Accounts), the amounts necessary to pay such
Administrative Expense.
(e) A reserve of Program Funds totaling Ten Million Dollars
($10,000,000.00) in the aggregate shall be maintained at all times following the Program Launch
Date in the Program Funds Account or, if none, segregated among the Deposit Accounts in the
manner and amounts determined by the Program Administrator but totaling Ten Million Dollars
in the aggregate (the "Liability Reserve"). The Liability Reserve shall only be used by the
Program Administrator as a reserve to cover and pay any and all amounts payable to any
Indemnified Party in accordance with the indemnification provisions of Section 7.5(b), or to pay
off any Remaining Liabilities following the termination of the CFR Program or this Agreement
pursuant to the provisions of Section 9.1(b). In addition to the Liability Reserve, for each
calendar year that ends following the Program Launch Date, an operating reserve shall be
maintained in the Program Funds Account or, if none, segregated among the Deposit Accounts in
the manner and amounts determined by the Program Administrator, in an amount equal to the
CFR Program's highest forecasted calendar month of expenditures projected for such year as set
forth in the CFR Program budget for such year (the "Operating Reserve"). The Operating
Reserve shall only be used by the Program Administrator as a reserve to cover and pay any and
all amounts payable in accordance with the provisions of Section 4.3(d) and ARTICLE 6, or to
any Indemnified Party in accordance with the indemnification provisions of Section 7.5(b), or to
pay off any Remaining Liabilities following the termination of the CFR Program or this
Agreement pursuant to the provisions of Section 9.1(b), in each case solely to the extent that
there are insufficient Program Funds otherwise available to pay such amounts when due or
required to be paid. Upon the request of the Program Administrator at any time, the Steering
Committee is hereby authorized to adjust the respective amounts of the Liability Reserve and the
Operating Reserve from time to time in an effort to ensure that adequate reserves for the payment
of all costs, expenses, and liabilities (fixed or contingent) of the CFR Program, and all Claims
pertaining thereto, are maintained at all times.
(f) Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, in the event that the Program Administrator determines in good faith that
modifications to the foregoing structure, or an alternative Account structure, are necessary or
appropriate in order to avoid any adverse Tax consequences to the Program Administrator or its
Affiliates arising from such structure, the Program Administrator may call an emergency
meeting for Steering Committee review and approval of any such modifications or alternative
structures; provided that if the Program Administrator and the Steering Committee are unable to
agree upon the modifications to be implemented within ten (10) business days following the
initial issuance of the notice for such emergency meeting by the Program Administrator, the
Program Administrator shall have the power, authority and discretion to implement such
modifications or alternative structures as are determined appropriate by the , Program
Administrator, and the Program Administrator shall promptly notify the Steering Committee no
43425759.3 26
later than three (3) business days following the implementation of any such modifications or
alternative structures that did not receive Steering Committee approval.
(g) Without limiting the provisions of Section 9.1(b) below, once any EDU
Contribution is deposited into any Deposit Account or Program Funds Account, as the case may
be, those funds and all interest and earnings thereon will become Program Funds and the
Participating EDU or Designated Account Holder that is the holder of such Deposit Account or
Program Funds Account, as the case may be, will not be able to withdraw, transfer or otherwise
exercise any control over such funds (or any interest or earnings thereon) even if such
Participating EDU withdraws or is removed from the CFR Program or this Agreement, or such
Designated Account Holder desires to close such Collective Deposit Account or Program Funds
Account; provided that for Tax purposes, such Participating EDU or Designated Account Holder
that is the holder of such Deposit Account or Program Funds Account shall be considered the
owner of such funds and all interest and earnings on such funds maintained in any Deposit
Account will be reported as interest and earnings paid to or received by the Participating EDU or
Designated Account Holder that is the record holder of such Account. All applicable bank fees
and penalties for all Accounts are considered part of CFR Program Administrative Expenses and
will be paid or reimbursed using Program Funds. No Participating EDU shall claim a Tax
deduction in connection with a deposit to their respective EDU Contribution Account, except at
such time and to the extent such funds are paid to ZEV dealers or to satisfy or reimburse
Administrative Expenses or Indemnified Claims pursuant to Sections 7.5(b)(ii) and 7.5 iii .
4.4. Program Auditor.
(a) Program Auditor. The Program Auditor will be an independent (i.e., not
an Affiliate of any EDU), nationally-recognized (i.e., with 10 or more offices in at least 3
different states) accounting firm engaged to perform regular audits of all auditable aspects of the
CFR Program, including the program controls and performance, the administration of the CFR
Program and Administrative Expenses, including payment/reimbursement of expenses to the
Program Administrator and Program Implementers, and Reward Amount
payments/reimbursements to ZEV dealers. An annual audit of the CFR Program will be
conducted by the Program Auditor each fiscal year with a published report to be issued within
sixty (60) days following the completion of the audit (and in no event later than one hundred
eighty(180) days following the end of the fiscal year). During the first year of the CFR Program
following the Program Launch Date, an interim audit will be performed to test CFR Program
controls and such audit will commence within six (6) months after the Program Launch Date
with a report issued sixty(60) days after completion of the audit.
(b) Confidential and Market-Sensitive Information. Unless otherwise
determined by the Steering Committee it is not anticipated that the Program Auditor will receive
any market-sensitive information in connection with its audits and market-sensitive aspects of
the CFR Program, such as, but not limited to, any trading activity in LCFS Base Credits by the
EDUs, shall not be included within the scope of any audit by the Program Auditor. No
Participating EDU is obligated to provide or disclose any of its confidential or market-sensitive
information to any other Participating EDU under this Agreement. All Participating EDUs and
Implementers shall be required to comply with any and all requests for information issued by
43425759.3 27
CARB in accordance with the LCFS Regulation or other applicable law, as well as to any other
Govermnental Authority with legal authority and jurisdiction to request such information.
(c) Audit Reports. The Program Auditor's audit reports shall be provided to
all Participating EDUs, GARB, the CPUC, and the public. Any Participating EDU shall have the
right at its own expense to review any non-confidential records and information underlying the
Program Auditor's report on reasonable notice during regular business hours. The Program
Auditor's reports shall contain all information necessary for the Program Administrator to
comply with its reporting obligations to CARB as set forth in the CPUC Approval (and in any
subsequent resolution issued by GARB), and each Party shall provide all information and
assistance requested by the Program Auditor or the Program Administrator in order to comply
with such reporting obligations to CARB or any other Governmental Authority.
(d) Program Auditor Insurance. The Program Auditor shall maintain
insurance coverage of the specified types, with an endorsement as additional insured for the
benefit of the Program Administrator, the Steering Committee and the Parties, and in amounts
equal to or in excess of such minimum coverage amounts, in each case as are determined by the
Steering Committee.
4.5. Program Implementer Qualifications. The RFP solicitation shall provide that
third parties seeking to be Program Implementers must meet certain minimum requirements in
order to submit an offer in response to the RFP. The RFP will provide that each Program
Implementer will be required to execute and deliver one or more Program Agreements with the
Program Administrator (and, if applicable, the Participating EDUs) that includes terms and
conditions pursuant to which the Program Implementer, depending on the scope of work to be
provided by such Program Implementer to the CFR Program,will:
(a) indemnify, defend, and hold each of the Participating EDUs, their
Affiliates, and each of their respective Representatives harmless for and from any liabilities
arising from or in connection with any negligent or intentional acts/omissions or mismanagement
of Program Funds or other LCFS Credit Revenue by such Program Implementer, its contractors
or subcontractors, or any of its or their respective Representatives (collectively, the "Program
Implementer Representatives");
(b) have procured, and will cause Program Implementer Representatives and
other vendors and contractors, to have or procure, sufficient insurance to cover their liabilities in
such amounts equal to or in excess of such minimum coverage amounts as are determined by the
Steering Committee to cover any negligence, errors or omissions, or mismanagement of the
Program Funds, LCFS Credit Revenue or the CFR Program by the Program Implementer
Representatives;
(c) have internal practices and procedures to prevent the risk of fraud or
mismanagement (including terms and conditions that would apply to the evaluation of claims
submitted and payment of Reward Amounts to participating ZEV dealers);
(d) have experience managing large-scale programs with aggregate funding in
excess of$100 million;
43425759.3 28
(e) have technological experience creating web-based programs;
(0 ensure that all agreements with subcontractors include terms for the
protection of the Participating EDUs;
(g) not be an Affiliate of the Program Administrator or any Participating
EDU; and
(h) have practices and procedures to prevent and prosecute fraud by ZEV
dealers seeking reimbursement for Reward Amounts, such as through carefully crafted terms and
conditions to which ZEV purchasers and point-of-sale entities must agree to receive the
applicable Reward Amount for the ZEV purchaser.
ARTICLE 5
CFR PROGRAM EXPENSES; COST SHARING; LAUNCH
5.1. Program Administrator Expenses. The Parties hereby acknowledge and agree
that Program Funds shall be used to pay and/or reimburse the Program Administrator(unless it is
a Third Party Program Administrator) for, all costs, expenses, fees, Taxes, liabilities, and other
amounts paid or incurred by the Program Administrator pursuant to or in connection with its
service or status as Program Administrator ("Administrative Expenses"), including without
limitation (but subject to the provisions of Section 5.2 below), (i) all amounts paid or incurred
with respect to (A) any Implementers, or (B) any other contractors, vendors, attorneys,
accountants, or other third parties in connection with the role of Program Administrator, (ii) an
allocated portion of the fully-loaded labor costs (excluding bonus programs) for any employees
who provide services in connection with the Program Administrator role and functions (which
allocation shall be determined by the Program Administrator in good faith), (iii) an allocated
portion of time and materials costs paid to. independent contractors who provide services in
connection with the Program Administrator role and functions (which allocation shall be
determined by the Program Administrator in good faith), (iv) any reasonable travel related
expenses incurred by any such persons described in the preceding clauses (ii) or (iii) associated
with the Program Administrator role or functions, and (v) any non-labor related marketing costs
such as media buy and collateral development expenses. For the avoidance of doubt,
Administrative Expenses do not include costs, expenses, fees, Taxes, liabilities, and other
amounts paid or incurred by SCE (or any successor thereof as Program Administrator that is a
Participating EDU) to the extent paid or incurred in its capacity as a Participating EDU as
opposed to in its capacity as Program Administrator. For purposes of illustrating the concept
underlying the preceding sentence only, and without any limiting purpose or effect, any Taxes
(including on any interest or other earnings on such account) incurred by the Program
Administrator (or its Affiliates) in connection with any Disbursement Account, Program Funds
Account, Collective Deposit Account, or Individual Deposit Account (except for the Program
Administrator's own Individual Deposit Account, if any), or any other Account opened or
maintained with the Financial Institution in connection with its role as Program Administrator
constitute Administrative Expenses, but any Taxes incurred by SCE (or any successor thereof as
Program Administrator that is a Participating EDU) on its own Individual Deposit Account into
which its EDU Contributions will be made in its capacity as a Participating EDU would not
constitute Administrative Expenses. To make the Program Administrator (unless it is a
43425759.3 29
Governmental Authority or not for profit entity exempt from income Tax)) whole on an after-
Tax basis, Taxes constituting Administrative Expenses shall be calculated as if the Program
Administrator were subject to Tax at, and any payment or reimbursement of Taxes constituting
Administrative Expenses shall be grossed-up at, the highest combined federal and state marginal
Tax rate for the applicable period in the Program Administrator's jurisdictions of operations, in
each case as reasonably determined by the Program Administrator. The Parties acknowledge and
agree that the Program Administrator (unless it is a Third Party Program Administrator) is
entitled to payment and reimbursement from Program Funds (including all required EDU
Contributions, but excluding, with respect to the Program Administrator's own internal costs that
constitute Administrative Expenses, any interests or earnings thereon) for all Administrative
Expenses, particularly in light of the fact that the Program Administrator is not requesting or
receiving any administrator fee or compensation for its services as Program Administrator.
Accordingly, each Participating EDU hereby covenants and agrees to make its respective EDU
Contributions and to pay all other amounts payable by such Participating EDU in accordance
with the terms and conditions of this Agreement,and CARB shall be tasked with monitoring
each Participating EDU's compliance with these obligations in its respective Program
Agreement and verifying the information received with the Financial Institution and GARB, as
applicable. For the avoidance of doubt, the foregoing Administrative Expense payment and
reimbursement rights shall not apply to any Program Administrator other than SCE or another
Participating EDU that is appointed by the Steering Committee to serve as Program
Administrator, as the Parties anticipate that any Third Party Program Administrator that may be
engaged would receive fees for its service in such role and any additional expense payments or
reimbursements to which it may be entitled would be expressly set forth in the engagement
agreement with such Third Party Program Administrator.
5.2. Payment/Reimbursement of Administrative Expenses. The Program
Administrator (unless it is a Third Party Program Administrator) upon approval by the Steering
Committee is hereby authorized to (i) pay Administrative Expenses directly from Program
Funds, and (ii)reimburse itself for any Administrative Expenses paid or incurred by the Program
Administrator (or any of its Affiliates), in each case from Program Funds in the Program Funds
Account or the Disbursement Account, as the case may be, and to transfer amounts from any
Deposit Account into the Disbursement Account in order to make such payments and
reimbursements, in each case in accordance with the provisions of ARTICLE 6 below and the
Master Account Agreement; provided that the total amount of such payments and
reimbursements of Administrative Expenses made by the Program Administrator in any calendar
year following approval of the invoice therefor by the Steering Committee or CARB in
accordance with the provisions of ARTICLE 6, shall in no event exceed ten percent (10%) (as
such percentage may be adjusted pursuant to the following provisions of this Section 5.2, the
"Percentage Target") of the total CFR Program budget of aggregate Program Funds for such
calendar year. The Program Administrator and the Steering Committee shall monitor the
aggregate amount of payments and reimbursements of Administrative Expenses approved and
made in each calendar year to ensure that aggregate Administrative Expenses payments and
reimbursements made in such calendar year do not exceed the Percentage Target. Given that the
Parties cannot predict with any degree of accuracy what the actual annual Administrative
Expenses will be until the RFP/RFI processes have concluded and the Implementers have been
engaged, upon the request of the Program Administrator, but subject to the prior submission to,
and approval by, the CPUC of a Tier 2 advice letter if still required in connection therewith by
43425759.3 30
the provisions of ordering paragraph 6 or ordering paragraph 7 of CPUC Resolution E-5015, the
Steering Committee is hereby authorized to increase (but not decrease) the Percentage Target
from time to time to ensure that all Administrative Expenses incurred in each calendar year are
authorized to be paid or reimbursed, as the case may be, in a timely fashion and when due.
Notwithstanding the foregoing, the provisions of this Section 5.2 shall not apply to any Third
Party Program Administrator, as the terms and conditions on which any Third Party
Administrator may handle or administrator any Program Funds or Accounts shall be set forth in
and governed by the applicable Program Agreement(s) entered into with such Third Party
Program Administrator.
5.3. Start-Up Funding. To fund the initial start-up costs of the CFR Program,
including the amounts necessary to pay all Administrative Expenses and all Reward Amount
reimbursement payments to ZEV dealers and to fund the initial Reserve Amount during the start-
up phase of the CFR Program, the Participating EDUs will contribute a total of Fifty Million
Dollars ($50,000,000) in initial EDU Contributions in the aggregate (assuming full participation
by all eligible EDUs in the CFR Program). Each Participating EDU shall be required to fund the
amount set forth opposite such Participating EDU's name on Appendix A hereto as its initial
EDU Contribution (the "Initial EDU Contributions"). Following the establishment of the
initial Account structure for the CFR Program in accordance with the provisions of Section 4.3,
each Large EDU shall be required to deposit the amount of its Initial EDU Contribution into its
EDU Contribution Account (which shall be the applicable Program Funds Account, Collective
Deposit Account or Individual Deposit Account designated for such Large EDU in accordance
with the instructions of the Program Administrator), no later than sixty (60) days following the
date on which the Master Account Agreement is executed by the Program Administrator and the
Financial Institution (the "Initial Funding Date"). In the event the Account structure includes
an Individual Deposit Account for such Large EDU, such Large EDU shall also execute and
deliver its Individual Deposit Agreement to the Financial Institution on or prior to the earlier to
occur of the Initial Funding Date and the date on which it makes its Initial EDU Contribution.
Each other Participating EDU besides the Large EDUs shall be required (a) to deposit the
amount of its Initial EDU Contribution into its EDU Contribution Account, which shall be the
applicable Program Funds Account, Collective Deposit Account or Individual Deposit Account
designated for such Participating EDU in accordance with the instructions of the Program
Administrator, and (b) if such Program Administrator instructions provide that an Individual
Deposit Account be established for such Participating EDU, such Participating EDU shall also
execute and deliver its Individual Deposit Agreement to the Financial Institution, in each case for
both clauses (a) and (b), no later than (i) January 31, 2021 for all Participating EDUs identified
as Medium Publicly-owned Utilities on Appendix A, and (ii) January 31, 2023 for all
Participating EDUs identified as Small Publicly-owned Utilities or Small Investor-owned
Utilities on Appendix A; provided that if such other Participating EDU has not executed and
delivered its Joinder to become a Party to this Agreement pursuant to Section 2.2 on or prior to
(x) January 31, 2021 for the Medium Publicly-owned Utilities, or (y) January 31, 2023 for the
Small Publicly-owned Utilities, then such Participating EDU shall have until the first anniversary
of the date of its Joinder to deposit the amount of its Initial EDU Contribution into its EDU
Contribution Account and, if applicable, to execute and deliver its Individual Deposit Account
Agreement to the Financial Institution.
43425759.3 31
5.4. Periodic Funding Requirements. Each Participating EDU hereby covenants and
agrees that, upon and following such Participating EDU's execution of this Agreement, in
addition to making its required Initial EDU Contribution, it will also make additional aggregate
EDU Contributions to its EDU Contribution Account during each calendar year in an amount
equal to or greater than the applicable required percentage for such year of LCFS Credit Revenue
generated by such Participating EDU during such calendar year as set forth opposite the name of
such Participating EDU on Appendix A (the "Required Percentage"), and in accordance with
the LCFS Regulation.
(a) Large EDUs' Periodic EDU Contributions. Each Large EDU shall be
responsible for (i) identifying and tracking all Earmarked Credits deposited into its LCFS
-balancing account by CARB at any time on or after the Final CPUC Approval Date, and (ii) no
later than the Initial Funding Date, depositing into its EDU Contribution Account the Required
Percentage of the LCFS Credit Revenue generated by such Large EDU from the sale of all
Earmarked Credits that have been deposited by CARB into such Large EDU's LCFS balancing
account at any time on or prior to the end of the calendar quarter immediately preceding the
quarter during which the Initial Funding Date occurs, and such Large EDU shall be required to
sell all such deposited Earmarked Credits prior to the Initial Funding Date (provided that with
respect to LCFS Credit Revenue generated by sales of any Earmarked Credits deposited into
such Large EDU's LCFS balancing account during the calendar quarter that immediately
precedes the quarter in which the Initial Funding Date occurs, the Large EDU shall have until the
last day of such quarter in which the Initial Funding Date occurs to deposit its Required
Percentage of such LCFS Credit Revenue generated therefrom into its EDU Contribution
Account as required under this Section 5.4(a)(ii)). Commencing with the quarter in which the
Initial Funding Date occurs, the Large EDUs will deposit their Required Percentage of their
respective LCFS Credit Revenue into their respective EDU Contribution Accounts, no less
frequently than on a quarterly basis in arrears and in one or more transactions that shall be made
no later than the end of the last business day of the following quarter. The following table sets
forth the required deposit schedule of the Large EDUs' LCFS Credit Revenue for an illustrative
year of the CFR Program:
43425759.3 32
Table X: Schedule of Large EDU Base Credit Revenue Transfer to CFR Program
14
bue Date for Large EDU Required Deposits mtp its EDU Contribution Account'`
_
June 30 Large EDU ydeposits into its EDU Contribution Account the Required
Percentage of its respective LCFS Credit Revenue from the sale of any
Earmarked Credits deposited in its LCFS balancing account in Ql of that
year.
September 30 Large EDU deposits into its EDU Contribution Account the Required
Percentage of its respective LCFS Credit Revenue from the sale of any
Earmarked Credits deposited in its LCFS balancing account in Q2 of that
year.
December 31 Large EDU deposits into its EDU Contribution Account the Required
Percentage of its respective LCFS Credit Revenue from the sale of any
Earmarked Credits deposited in its LCFS balancing account in Q3 of that
year.
March 31 Large EDU deposits into its EDU Contribution Account the Required
Percentage of its respective LCFS Credit Revenue from the sale of any
Earmarked Credits deposited in its LCFS balancing account in Q4 of the
previous year plus any"true tip"revenue from the previous calendar year.
If any Large EDU has any Earmarked Credits deposited into its LCFS balancing account by
CARB in any quarter that remain unsold at the end of such quarter, the Large EDU will track
such Earmarked Credits and contribute the Required Percentage of the LCFS Credit Revenue
generated therefrom to its EDU Contribution Account in the immediately following quarter, in
which quarter such Earmarked Credits must be sold. Each Large EDU will be required to sell all
Earmarked Credits deposited into its LCFS balancing account by CARB each quarter by no later
than the end of the following quarter. By March 31st of each year, each Large EDU will be
responsible for truing up and depositing into its EDU Contribution Account its aggregate
required EDU Contributions for the entire previous calendar year. Notwithstanding the
foregoing, the Steering Committee shall have the power and authority to waive or suspend the
aforementioned timing requirements for when sales of Earmarked Credits held in the respective
LCFS balancing accounts of the Large EDUs must take place should the Steering Committee
determine that market conditions or other extenuating factors make such waiver or suspensions
(which would apply as to all Large EDUs) prudent, and the Steering Committee shall promptly
notify all Large EDUs of any such waiver or suspension. The Steering Committee shall grant an
extension of the aforementioned timing requirements to any Large EDU, on an individual case-
by-case basis, if the Large EDU has demonstrated to the satisfaction of the Steering Committee
that it is utilizing all reasonable efforts to consummate the sale of its Earmarked Credits in a
diligent and timely manner, but needs additional time to complete all sales required in order to
deposit its full Required Percentage of LCFS Credit Revenue.
43425759.3 33
(b) Other Participating EDUs' Periodic EDU Contributions. Each EDU that
is not a Large EDU shall be responsible for (i) identifying and tracking all Earmarked Credits
deposited into its LCFS balancing account by CARB at any time on or after the Final CPUC
Approval Date, and (ii) within sixty (60) days following such EDU's execution of this
Agreement or a Joinder hereto, depositing into its EDU Contribution Account the Required
Percentage of the LCFS Credit Revenue generated by such EDU from the sale of all such
Earmarked Credits deposited into its LCFS balancing account by CARB at any time on or prior
to the end of the calendar year immediately preceding the year during which such EDU becomes
a Party to this Agreement, and each such EDU shall be required to sell all such deposited
Earmarked Credits prior to such 60`h day following such EDU's execution of this Agreement or a
Joinder hereto. Each other Participating EDU besides the Large EDUs will also deposit its
'Required Percentage of its respective LCFS Credit Revenue received in any calendar year
commencing with the calendar year in which it becomes a Participating EDU into its respective
EDU Contribution Account no less frequently than on an annual basis in arrears and in one or
more transactions that shall occur no later than March 31st of the following year. All such
Participating EDUs shall be required to sell all of the Earmarked Credits deposited by CARB
into its LCFS balancing account during any calendar year in such calendar year.
Notwithstanding the foregoing, the Steering Committee shall have the power and authority to
waive or suspend the aforementioned timing requirements for when sales of Earmarked Credits
held in the respective LCFS balancing accounts of the other Participating EDUs must take place
should the Steering Committee determine that market conditions or other extenuating factors
make such waiver or suspensions (which would apply as to all such other Participating EDUs)
prudent, and the Steering Committee shall promptly notify all such Participating EDUs of any
such waiver or suspension. The Steering Committee shall also have the power and authority to
grant an extension of the aforementioned timing requirements to any Participating EDU, on an
individual case-by-case basis, that has demonstrated to the satisfaction of the Steering
Committee that it is utilizing all reasonable efforts to consummate the sale of its Earmarked
Credits in a diligent and timely manner, but needs additional time to complete all sales required
in order to deposit its full Required Percentage of LCFS Credit Revenue.
(c) Steering.Committee. Notwithstanding the foregoing, the above annual
deposit schedules for the Participating EDUs set forth in Sections 5.4(a) and 5.4 above shall
be reviewed by the Steering Committee at a minimum of every three years, and whenever the
Program Administrator requests in good faith any modification to any such schedule, and the
deposit schedule shall be updated from time to time if necessary as determined by the Steering
Committee.
5.5. CFR Program Commencement. The Parties shall commence the CFR Program
following the satisfaction of the following conditions: (i) SCE, PG&E and SDG&E shall have
received any additional approval or consent of the CPUC to execute and deliver this Agreement
as may be required by the CPUC Approval; (ii) CARB Authorization shall have been received;
(iii) each Large EDU shall have duly executed and delivered this Agreement to the other Large
EDUs; (iv) Members holding at least a majority of the voting percentages specified to be held by
all Members as set forth in Section 3.3(h), shall have been appointed to the Steering Committee
pursuant to the provisions of Section 3.3(a); (v) the Financial Institution, Program Auditor and
the Program Implementer responsible for administering and paying Reward Amount
reimbursement payments to ZEV dealers shall have been selected and engaged through duly
43425759.3 34
executed and delivered Program Agreements, and any preconditions to commencement of the
CFR Program set forth in such Program Agreements shall have been satisfied or been duly
waived by the Steering Committee and the Program Administrator; (vi) each Large EDU shall
have deposited its Initial EDU Contribution into its EDU Contribution Account, the Liability
Reserve and the Operating Reserve shall have been funded using such Initial EDU Contributions,
and, to the extent instructed by the Program Administrator pursuant to Section 4.3(b), the
Financial Institution and each Large EDU shall have duly entered into their respective Individual
Deposit Account Agreement; (vii) the Steering Committee has approved the initial Reward
Amount pursuant to the provisions of Section 3.3(d)(iii); (viii) the Parties shall have received
approval or a legal opinion from CARB that the LCFS Credit Revenue may be used to
compensate all CFR Program costs and expenses including, subject to Section 5.2 and the other
provisions of this Agreement, any Administrative Expenses and any Indemnified Claims using
Reserve Amounts and other Program Funds under this Agreement; (ix) the Program
Administrator shall have made a solicitation to procure, or have otherwise approached insurance
or bonding providers to procure, a Policy or Bond to cover Claims pertaining to the CFR
Program and, to the extent commercially available, shall have procured such Policy or Bond in
accordance with the provisions of Section 7.4; and (x) at the written request of the Program
Administrator, the Steering Committee shall have issued its approval to commence the CFR
Program and to authorize the offer and payment of the initial Reward Amount thereunder by
issuance of a joint press release on behalf of all Participating EDUs announcing the official
commencement and launch of the CFR Program. The CFR Program shall officially commence
on the date specified in such joint press release as the official start date of the CFR Program (the
"Program Launch Date").
ARTICLE 6
APPROVAL AND PAYMENT OF INVOICES
6.1. Implementer Invoices. The Program Agreement with each Implementer shall set
forth the terms and conditions for submission of all Implementer invoices to the Program
Administrator for payment. Following receipt of any invoice from any Implementer, or from any
other contractor, vendor, attorney, accountant, or other third party in connection with the
Program Administrator's role and responsibilities as Program Administrator and that the
Program Administrator has not paid directly and submitted for reimbursement as an
Administrative Expense that was paid by the Program Administrator in accordance with the
provisions of Section 6.2 below, the Program Administrator shall submit such invoice (along
with any other supporting documents submitted therewith) to the Steering Committee and/or the
applicable Invoice Subcommittee. The CARB Representative shall receive copies of all invoices
submitted to the Steering Committee. Following final approval of any such invoice by the
Steering Committee or GARB, the Program Administrator shall authorize and instruct the
Financial Institution to pay such invoice as an Administrative Expense from the Program Funds
Account or the Disbursement Account, as applicable. Any amounts incurred in connection with
any delay in approval or payment of any invoice, including any interest, fees, charges, penalties
or other amounts, shall also be paid as an Administrative Expense from the Program Funds
Account or the Disbursement Account, as applicable.
6.2. Program Administrator Invoices. In the event that the Program Administrator
(or any Affiliate thereof) pays any Administrative Expenses directly, including any
43425759.3 35
Administrative Expenses paid or incurred by the Program Administrator prior to the Program
Launch Date, the Program Administrator shall submit an invoice therefor (along with any
reasonably requested supporting documentation)to the Steering Committee and/or the applicable
Invoice Subcommittee. The CARB Representative shall receive copies of all invoices submitted
to the Steering Committee. Following final approval of any such invoice by the Steering
Committee or CARB, the Program Administrator shall authorize and instruct the Financial
Institution to pay such invoice as an Administrative Expense from the Program Funds Account
or the Disbursement Account, as applicable.
6.3. Reward Amount Payments. For the avoidance of doubt, Reward Amount
payments and reimbursements shall not be subject to the invoice, approval and payment
procedures set forth in this ARTICLE 6, and shall in no event be deemed to be Implementer or
vendor invoices. Reward Amount payments and reimbursements shall be handled pursuant to
the provisions of Section 4.3(c)(i) and the applicable Program Agreements with the Program
Implementer and the Financial Institution, and shall in no event require any review or approval
of the Steering Committee or any subcommittee thereof, but are subject to audit by the Program
Auditor.
ARTICLE 7
RELEASE, COVENANT NOT TO SUE, INSURANCE AND INDEMNIFICATION
7.1. Release and Waiver.
(a) Each Party, on its own behalf, and on behalf of its successors, assigns,
direct and indirect subsidiaries and Affiliates (collectively, "Related Entities"), does hereby
irrevocably, unconditionally, voluntarily, knowingly, fully, finally, completely, and forever
waive and disclaim, and release and discharge:
(i) SCE, and each of its direct and indirect subsidiaries, Affiliates,
divisions, successors, assigns and predecessors and each of its and their direct and indirect
Representatives, successors, and assigns, individually and collectively (each, a "SCE Released
Party" and collectively, the "SCE Released Parties"), from, against and with respect to, any
and all Claims that such Party or its Related Entities ever had or now has, or may hereafter have
or acquire, against any of the Released Parties by reason of any and all acts, omissions, events,
circumstances or facts existing or hereafter occurring that, directly or indirectly, arise out of,
result from, relate to, or are otherwise connected with or involving SCE's performance or non-
performance in its role, capacity or status as Program Administrator, or its actions or inactions as
Program Administrator or with respect to the administration, management or oversight of the
CFR Program, including, without limitation, the RFP/RFI processes, the selection of the
Implementers, the performance or non-performance of any Implementer, and any management or
oversight of the hnplementers ("SCE Released Claims"); provided that in no event shall SCE
Released Claims include or be deemed to include Claims arising from the SCE Released Party's
own fraud, willful injury to the person or property of another, or violation of law whether willful
or negligent, or otherwise against public policy pursuant to California Civil Code Section 1668;
and
43425759.3 36
(ii) each Member, each Alternate and each EDU that appoints or
employs such Member or Alternate, individually and collectively(each, a "Steering Committee
Released Party" and collectively, the "Steering Committee Released Parties"), from, against
and with respect to, any and all Claims that such Party or its Related Entities ever had or now
has, or may hereafter have or acquire, against any of the Released Parties by reason of any and
all acts, omissions, events, circumstances or facts existing or hereafter occurring that, directly or
indirectly, arise out of, result from, relate to, or are otherwise connected with or involving such
Member's or Alternate's performance or non-performance in his or her role, capacity or status as
a Member or Alternate, or his or her actions or inactions as a Member or Alternate on the
Steering Committee or with respect to the Steering Committee's administration, management or
oversight of the CFR Program, including, without limitation, the RFP/RFI processes, the
selection of the Implementers, the performance or non-performance of any Implementer, and any
management or oversight of the Implementers ("Steering Committee Released Claims");
provided that in no event shall Steering Committee Released Claims include or be deemed to
include Claims arising from the Steering Committee Released Party's own fraud, willful injury
to the person or property of another, or violation of law whether willful or negligent, or
otherwise against public policy pursuant to California Civil Code Section 1668.
(b) Each Party, itself and for its Related Entities, expressly acknowledges and
agrees that it has executed and delivered this Agreement with the intention that the release and
waiver set forth in this Section 7.1 (the "Release") be a general release and waiver to the full
extent provided herein. Each Party, itself and for its Related Entities, expressly acknowledges
and agrees that that there is a possibility that subsequent to the execution of this Agreement, it
will discover facts or incur or suffer Claims specifically related to Released Claims which were
unknown or unsuspected at the time this Agreement was executed, and which if known by it at
that time may have materially affected its decision to execute this Agreement or to grant the
Release provided for herein. Each Party, itself and for its Related Entities, expressly
acknowledges and agrees that it has by reason of this Agreement, and the Release contained
herein, it is assuming any risk of such unknown facts and such unknown and unsuspected
Released Claims. Each Party, itself and for its Related Entities, expressly acknowledges and
agrees that it has been advised of, and does hereby specifically and expressly waive and release
all rights under, the provisions of Section 1542 of the Civil Code of California, which provides
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND
THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED
HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
Notwithstanding any such provisions or similar laws, this Agreement shall constitute a full
release of Released Claims in accordance with its terms. Each Party, itself and for its Related
Entities, knowingly and voluntarily waives the provisions of Section 1542 and any other such
statutes, laws, or rules of similar effect, and acknowledges and agrees that this waiver is an
essential and material term of this Agreement and was separately bargained for, and without such
waiver (i) SCE would not have agreed to serve as Program Administrator and would not have
entered into this Agreement, and (ii) each Member and each Alternate would not have agreed to
43425759.3 37
serve as a Member or Alternate, as the case may be, on the Steering Committee. Each Party,
itself and for its Related Entities, hereby represents that it has been advised by its legal counsel,
and that it understands and acknowledges the significance and consequence of the Release set
forth herein and of,this waiver of Section 1542 and any other such statutes, laws, or rules of
similar effect.
7.2. Covenant Not To Sue.
Each Party, on its own behalf and on behalf of each of its Related Entities, irrevocably
covenants and agrees never to sue, commence or prosecute any action or other proceeding
against, or make any Claim or demand upon any Released Party, directly or indirectly, in respect
of any of the Claims or matters waived, disclaimed, released or discharged in respect of such
Released Party pursuant to Section 7.1 above, or in respect of any of the Claims or matters
purported to be waived, disclaimed, released or discharged in respect of such Released Party
pursuant to Section 7.1 above notwithstanding the failure of any court or arbitrator of competent
jurisdiction to enforce or validate any provision thereof.
7.3. Effect of Release and Covenant Not to Sue.
(a) Enforcement. Each of the Release set forth in Section 7.1 and the
covenant not to sue set forth in Section 7.2 (the"Covenant Not to Sue") may be pleaded by any
of the Released Parties as a full and complete defense and may be used as the basis for an
injunction against any action at law or equity instituted or maintained against any of them in
violation hereof.
(b) Complete Release. Each Party hereby warrants and represents that there
are no additional entities or persons affiliated with such Party that are necessary to effectuate the
release and extinguishment contemplated herein and this Agreement (including, without
limitation, the Release and the Covenant Not to Sue set forth herein) constitutes a valid and
binding obligation of such Party, enforceable against such Party in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other equitable remedies.
Each Party hereby warrants and represents that such Party has not heretofore assigned,
subrogated or transferred, or purported to assign, subrogate, or transfer to any Person whatsoever
any Released Claim. Each Party hereby agrees to indemnify, defend, and hold harmless each
Released Party from any such assignment, subrogation, or transfer of Released Claims.
(c) Knowledge and Investigation Of Release/Covenant Not to Sue. Each
Party granting the Release and making the Covenant Not to Sue has made such investigation of
the facts pertaining to the Release and the Covenant Not to Sue, and all of the matters pertaining
thereto, as such Party deems necessary. In agreeing to the Release and the Covenant Not to Sue,
each such Party assumes, on its own behalf and on behalf of each of its Related Entities, the risk
of any mistake. Should any such Party subsequently discover that such Party's understanding of
the facts or of the law in agreeing to such Release and Covenant Not to Sue was incorrect, such
Party(and its Related Entities) will not be entitled to any relief in connection therewith. Without
limiting the generality of the foregoing, each Party surrenders any alleged right or Claim to set
aside or rescind the Release or the Covenant Not to Sue on any ground whatsoever. Each of the
434257593 38
Release and the Covenant Not to Sue is intended to be and is final and binding upon each Party
and its Related Entities.
(d) Newly Discovered Facts Or Claims, Each Party is aware that such Party
may hereafter discover claims or facts in addition to or different from those such Party now
knows or believes to be true with respect to the matters related herein. Nevertheless, it is each
Party's intention to fully, finally, and forever waive, disclaim, settle and release all such matters
covered by the Release or Covenant Not to Sue, and all Released Claims relative thereto, which
now exist, heretofore have existed, or arise in the future between any Party or any Party's
Related Entities, on the one hand, and any Released Party, on the other hand. hi furtherance of
such intention, the waivers, disclaimers and releases given herein will remain in effect as full and
complete waivers, disclaimers and releases of all such matters notwithstanding the discovery or
existence of any additional or different claims or facts related thereto.
(e) Full Knowledge; Independent Legal Advice. Each Party hereby warrants
and represents that, in executing this Agreement, such Party does so with full knowledge of any
and all rights that such Party may have with respect to the matters set forth herein and the
Released Claims, and that such Party has received independent legal advice with respect to the
matters set forth herein and the Released Claims and with respect to the rights and asserted rights
arising out of such matters.
(f) Binding Effect. Each of the Release and the Covenant Not to Sue is
binding upon each Party and all of its Related Entities and will inure to the benefit of each of the
Released Parties.
7.4. Insurance.
To the extent commercially available, SCE shall procure and purchase, as an
Administrative Expense using Program Funds, one or more insurance policies (each a "Policy")
to cover any and all Claims pertaining to SCE's administration of the CFR Program, the Steering
Committee's administration of the CFR Program and any administrative activities and, to the
extent possible, Claims pertaining to the CFR Program itself and Claims against any
Participating EDU arising from or in connection with the CFR Program. In addition to or in lieu
of any such insurance policy, SCE may also procure and purchase, as an Administrative Expense
using Program Funds, one or more performance bonds to cover its obligations imder any
Program Agreement (each, a "Bond"). SCE shall have the authority to select, purchase,
maintain and replace, as the case may be, any such Policy or Bond and to make any and all
decisions with respect thereto including, without limitation; the providers, nature, amounts, and
other terms and conditions thereof; provided that if SCE is presented with more than one
quotation for any such Policy or Bond from different providers prior to purchasing such a Policy
or Bond, it shall present such quotations to the Steering Committee for review and approval in
accordance with the provisions of Section 4.1(c). Notwithstanding the foregoing, in no event
shall SCE or any other Released Party be liable or responsible to any Party or Person for any
failure to obtain, approve or maintain any such Policy or Bond, and the lack of any such Policy
or Bond shall in no event affect the right to indemnification of any Indemnified Person under the
indemnification provisions contained herein, including the right to be reimbursed or advanced
expenses or otherwise indemnified for Claims hereunder. If any Indemnified Person recovers any
43425759.3 39
amounts in respect of any Claim from any insurance coverage, then such Indemnified Person
shall, to the extent that such recovery is duplicative of amounts with respect to such Claim
received under the provisions of Section 7.5(c)below, reimburse the applicable Parties (on a pro
rata basis) for any amounts previously paid to such Indemnified Person by such Parties in respect
of such Claim.
7.5. Indemnification.
(a) Indemnified Claims.
(i) In the event that any Claims are made against or otherwise
incurred or suffered by SCE or any other SCE Released Party (SCE and the other SCE Released
Parties also being referred to herein collectively as, the "SCE Indemnified Persons", each an
"SCE Indemnified Person") at any time that, directly or indirectly, arise out of, result from,
relate to, or are otherwise connected with or involving SCE's role, capacity or status as Program
Administrator, SCE's actions or inactions as Program Administrator or with respect to the
administration, management or oversight of the CFR Program, the solicitation or RFP/RFI
processes, or any Program Agreement (each, an "SCE Indemnified Claim"), each SCE
Indemnified Person shall be entitled to reimbursement, advancement of expenses, defense,
protection, and payment from Program Funds for any such SCE Indemnified Claim.
(ii) In the event that any Claims are made against or otherwise
incurred or suffered by any Member, any Alternate or any other Steering Committee Released
Party (the Members, Alternates and the other Steering Committee Released Parties also being
referred to herein collectively as, the "Steering Committee Indemnified Persons", each a
"Steering Committee Indemnified Person") at any time that, directly or indirectly, arise out of,
result from, relate to, or are otherwise connected with or involving such Member's or Alternate's
role, capacity or status as a Member or Alternate on the Steering Committee, or such Member's
or Alternate's actions or inactions as a Member or Alternate on the Steering Committee, or with
respect to the Steering Committee's administration, management or oversight of the CFR
Program, the solicitation or RFP/RFI processes, or the Steering Committee's approval (or
disapproval) of any Program Agreement (each, a "Steering Committee Indemnified Claim"),
each Steering Committee Indemnified Person shall be entitled to reimbursement, advancement of
expenses, defense, protection, and payment from Program Funds .for any such Steering
Committee Indemnified Claim.
(b) Payment of Indemnified Claims.
(i) As a first resort, payment for any Indemnified Claim will come
from any Policy or Bond that may be then in effect and available to cover such Indemnified
Claim.
(ii) To the extent that any Indemnified Claim, or any portion thereof, is
not covered by any Policy or Bond that is then in effect and available, or to the extent the
amounts available and obtained therefrom are insufficient to fully cover and satisfy the entire
amount of such Indemnified Claim, then any and all Program Funds shall be used to pay and
satisfy the Indemnified Claim and all amounts associated therewith in the following order of
43425759.3 40
priority (and, for the avoidance of doubt, no Percentage Target limitation that may otherwise be
applicable as set forth in Section 5.2 shall apply), (A) if there is a Program Funds Account, (x)
first, all amounts held in such Program Funds Account (other than the Reserve Amounts), and
(y) second, the Reserve Amounts, and (B) if there is no Program Funds Account, (x) first, all
amounts held in the Disbursement Account, (y) second, all amounts held in any and all Deposit
Accounts (other than the Reserve Amounts), and (z) third, the Reserve Amounts.
(iii) In the event that existing Program Funds are insufficient to fully
cover and satisfy the entire amount of any such Indemnified Claim, then each Party (including,
for the avoidance of doubt, SCE in its capacity as a Participating EDU) shall, on a pro rata basis
according to the respective Contribution Percentages (as defined in Section 1.1) of the Parties at
such time, promptly deposit into its respective EDU Contribution Account such amounts of(A)
additional LCFS Credit Revenue held by such Party in excess of its Required Percentage of
LCFS Credit Revenue required to be contributed by such Party to Program Funds pursuant to
Section 5.4 ("Holdback Funds"), and (B) revenue from the sale of any other credits issued by
CARB pursuant to the LCFS Regulation ("LCFS Non-Base Credit Revenue"),up to an amount
equal to the aggregate sum of all Holdback Funds and LCFS Non-Base Credit Revenue then held
by such Party along with any and all future LCFS Credit Revenue received by such Party from
the sale(s) of LCFS Base Credits (including all future Holdback Funds and not limited to such
Party's Required Percentage of its LCFS Credit Revenue) and any and all future LCFS Non-Base
Credit Revenue received by such Party from the sale(s) of such other LCFS credits issued by
GARB, until each such Indemnified Claim and all amounts associated therewith have been paid
and satisfied in full. In the event that the total amount of any Party's LCFS Non-Base Credit
Revenue contributed with respect to any Indemnified Claim is insufficient to cover its respective
Contribution Percentage of the amount of any such Indemnified Claim (each such Party, a
"Shortfall Party"), each Party that is required to contribute aggregate Holdback Funds or LCFS
Non-Base Credit Revenue pursuant to the preceding sentence or pursuant to the provisions of
Section 7.5(c) below that is in excess of its respective Contribution Percentage of the amount of
any such Indemnified Claim (each such Party, an "Excess Party"), shall be entitled to be
reimbursed by each Shortfall Party, on a pro rata basis in proportion to its respective share of
such excess contributions of Holdback Funds and LCFS Non-Base Credit Revenues made by all
Excess Parties, and the Steering Committee (with oversight from CARB and, with respect to the
IOUs only, the CPUC) shall determine the appropriate timing, manner and amounts of such
reimbursements (including an appropriate interest factor to take into account the time value of
money) required to be made by any Shortfall Party to any Excess Party, and each Party shall
comply with the instructions of the Steering Committee with respect thereto.
(c) Shortfall Indemnity. Solely in the event that the amount of any
Indemnified. Claim has not been fully and finally satisfied pursuant to the provisions of Section
7.5 b , and the amounts available to pay such Indemnified Claim under Section 7.5(b) are
insufficient or exhausted, all of the Parties (including, for the avoidance of doubt, SCE in its
capacity as a Participating EDU), on a pro rata basis according to their respective Contribution
Percentages, shall indemnify, defend, and hold each Indemnified Person harmless from and
against any such Indemnified Claim that has been made, brought or asserted against any
Indemnified Person by any other Person, except to the extent that such Indemnified Claim arises
out of such Indemnified Person's gross negligence or reckless or willful misconduct, as
determined by a final arbitration award or final judgment or judicial decree issued by an
43425759.3 41
arbitrator or court of competent jurisdiction. The Parties acknowledge and agree that the
obligations of any POU to make such payments under this Section 7.5(c) constitute an expense
of the POU payable from its electric revenue fund.
7.6. Maximum Liability.
(a) IN ADDITION TO, AND WITHOUT ANY LIMITATION (EXPRESS
OR IMPLIED) ON THE FOREGOING PROVISIONS OF THIS ARTICLE 7, IN NO EVENT
SHALL THE AGGREGATE LIABILITY OF SCE AND THE OTHER SCE RELEASED
PARTIES WITH RESPECT TO ANY AND ALL CLAIMS DESCRIBED IN SECTION 7.1 OR
SECTION 7.2 ABOVE, WHETHER ARISING OUT OF OR RELATED TO BREACH OF
CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED FIVE
THOUSAND DOLLARS ($5,000.00) TO ANY PARTY AND ITS RELATED ENTITIES OR
FIFTY THOUSAND DOLLARS ($50,000) IN THE AGGREGATE TO ALL PARTIES (AND
THEIR RESPECTIVE RELATED ENTITIES) FOR ANY AND ALL SUCH CLAIMS
ARISING OUT OF OR RELATED TO THIS AGREEMENT. FOR THE AVOIDANCE OF
DOUBT, THIS SECTION 7.6(a) DOES NOT APPLY TO ANY LIABILITY THAT SCE MAY
HAVE UNDER SECTION 7.5(b) OR SECTION 7.5(c) IN ITS CAPACITY AS A
PARTICIPATING EDU.
(b) IN ADDITION TO, AND WITHOUT ANY LIMITATION (EXPRESS
OR IMPLIED) ON THE FOREGOING PROVISIONS OF THIS ARTICLE 7, IN NO EVENT
SHALL THE AGGREGATE LIABILITY OF ANY MEMBER OR ANY ALTERNATE (OR
THEIR RESPECTIVE RELATED STEERING COMMITTEE RELEASED PARTIES) WITH
RESPECT TO ANY AND ALL CLAIMS DESCRIBED IN SECTION 7.1 OR SECTION 7.2
ABOVE WITH RESPECT TO SUCH STEERING COMMITTEE RELEASED PARTIES,
WHETHER ARISING OUT OF OR RELATED TO BREACH OF CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED FIVE THOUSAND DOLLARS
($5,000.00) TO ANY PARTY AND ITS RELATED ENTITIES OR FIFTY THOUSAND
DOLLARS ($50,000) IN THE AGGREGATE TO ALL PARTIES (AND THEIR RESPECTIVE
RELATED ENTITIES) FOR ANY AND ALL SUCH CLAIMS ARISING OUT OF OR
RELATED TO THIS AGREEMENT. FOR THE AVOIDANCE OF DOUBT, THIS SECTION
7.6 DOES NOT APPLY TO ANY LIABILITY THAT ANY STEERING COMMITTEE
RELEASED PARTY MAY HAVE UNDER SECTION 7.5 OR SECTION 7.5(c) IN ITS
CAPACITY AS A PARTICIPATING EDU.
7.7. Savings.
If this ARTICLE 7 or any portion hereof shall be invalidated on any ground by any
arbitrator or court of competent jurisdiction, then the Parties shall nevertheless release and
covenant not to sue each Released Party pursuant to Sections 7.1 through 7_3, and the Parties
shall nevertheless indemnify, defend and hold harmless each Indemnified Person pursuant to
Section 7.5(c), in each case to the fullest extent permitted by any applicable portion of this
ARTICLE 7 that shall not have been invalidated and to the fullest extent permitted by applicable
law.
7.8. New Program Administrator; Amendment.
43425759.3 42
(a) hi the event that a new Program Administrator that is a Participating EDU
is appointed to replace or succeed SCE following the date of expiration or termination of SCE's
appointment as Program Administrator in accordance with the provisions of Section 3.1(b), then
unless the Steering Committee otherwise determines and the Parties amend this Section 7.8(a) in
connection with the replacement administrative and governance structure for the CFR Program
that is implemented at such time in accordance with the provisions of 3.1(c), any such
replacement or successor Program Administrator to SCE that is a Participating EDU shall
receive and be entitled to the same rights and protections as are provided to SCE under this
ARTICLE 7 and on the same terms and conditions as are applicable to SCE hereunder. For the
avoidance of doubt, in the event that a Third Party Program Administrator replaces or succeeds
SCE or any other Participating EDU as Program Administrator, any such Third Party Program
Administrator shall not be entitled hereunder to any of the rights or protections that are provided
to SCE (or to any other Released Party or Indemnified Person)under this ARTICLE 7.
(b) The provisions of this ARTICLE 7 shall be a contract among all of the
Parties, on the one hand, and each Program Administrator (and the other Released Parties and
Indemnified Persons with respect to such Program Administrator) who served in such capacity,
in each case other any Third Party Program Administrator, at any time while this ARTICLE 7 is
in effect, on the other hand, pursuant to which each of the Parties and each such Program
Administrator, Released Party, and Indemnified Person intend to be legally bound. No
amendment, modification, or repeal of this ARTICLE 7 that adversely affects the rights of any
former, current or future Program Administrator (excluding any Third Party Program
Administrator), Released Party or Indemnified Person to waiver, disclaimer, discharge, release,
or the covenant not sue with respect to any or all Released Claims, or to indemnification and
defense for and protection from any or all Indemnified Claims, incurred or relating to a state of
facts existing, or to any Program Administrator's service, status or capacity as Program
Administrator (excluding any Third Party Program Administrator), prior to such amendment,
modification, or repeal shall apply in such a way as to eliminate or reduce such Program
Administrator's (and the other Released Parties' and Indemnified Persons' with respect to such
Program Administrator) entitlement to waiver, disclaimer, discharge, release, or the covenant not
sue with respect to any or all such Released Claims, or to indemnification and defense for and
protection from any or all such Indemnified Claims, or to any other rights or privileges under this
ARTICLE 7, in each case without such Program Administrator's or former Program
Administrator's (but excluding any Third Party Program Administrator)prior written consent.
7.9. Survival.
The provisions of this ARTICLE 7 shall survive and continue to apply and bind each Party
(including each former, current and future Party) hereto in perpetuity notwithstanding any
termination of this Agreement, any termination of the CFR Program, or any withdrawal of any
Party from this Agreement or the CFR Program; provided, however, that the provisions of
Section 7.5(c) shall terminate on the date (the "Shortfall Indemnity Termination Date") that is
ninety(90) days after the latest to occur of(i) the fourth anniversary of the date of termination of
this Agreement, (ii) the fourth anniversary of the date of termination of the CFR Program, and
(iii) the expiration of the longest federal, state, local or foreign statute of limitations (including
extensions thereof) applicable to any Indemnified Claim (or, if written notice of such
43425759.3 43
Indemnified Claim shall have been given prior to such date, indefinitely until such Indemnified
Claim is finally resolved and paid in full).
ARTICLE 8
PROGRAM MATERIALS; PUBLIC ANNOUNCEMENTS
8.1. Ownership of Program Materials
The Parties hereby acknowledge and agree that, because the CFR Program is a CARB
program created by the LCFS Regulation, any and all intellectual property rights (including any
copyright, trademark, service mark, and patent rights) in and to any materials, webpages,
software, databases, project data, documentation, reports, logos, works of authorship, other
works, or other intellectual property materials developed, created, produced or invented in the
performance of the CFR Program, by any Implementer, whether solely or jointly with any other
Implementer or with any employees, contractors, or agents of any Party in connection with the
CFR Program (collectively, "Program Material"), will be assigned to GARB; provided that in
no event shall Program Material (or any assignment thereof) include, or be deemed to include,
any Party's proprietary intellectual property or confidential information that may be incorporated
into or included in any Program Material. All Program Agreements shall (a) contain or require
the delivery of such an assignment by the Implementer to CARB of all intellectual property
rights in any and all Program Material developed, created, produced or invented thereunder, and
(b) require that the Implementer deliver to CARB or its designee all Program Material in its
possession upon any termination of the applicable Program Agreement with such Implementer,
and provide all reasonable and necessary assistance to CARB or its designee as needed to ensure
a smooth transition to a new Implementer, in each.case in a form approved by the Steering
Committee. It is the Parties' intention that rebate access and redemption be seamless to ZEV
purchasers and lessees during the term of the CFR Program.
8.2. Public Announcements
The Steering Committee or its designee(s) will approve the content and timing of any and
all joint press releases or announcements regarding the CFR Program on behalf of all
Participating EDUs, and all Participating EDUs shall be required to sign on to such joint press
releases and announcements in the time and manner so approved by the Steering Committee or
its designee. No Party may issue any other press release or announcement regarding this
Agreement, any Program Agreement, the CFR Program, or any Program Material unless (i) such
press release is issued jointly by the Participating EDUs in the form approved by the Steering
Committee or its designee (including any subcommittee established for such purpose or the
applicable Program Implementer) in accordance with the immediately preceding sentence, or (ii)
before the release of the press release such Party furnishes the other Parties with a copy of such
press release, and (A) obtains the prior written approval of the Steering Committee or such
designee of such press release, or (B) the press release by such Party complies and is in strict
accordance with the terms, conditions and substance of a pre-approved form of such press
release that has already been approved by the Steering Committee or such designee for purposes
of issuances of such press release(s) by any Party; provided that, notwithstanding any failure to
obtain such approval, no Party is prohibited from issuing or making any press release or other
announcement or notification if it is necessary to do so in order to comply with applicable laws,
43425759.3 44
legal or regulatory proceedings or the rules and regulations of any stock exchange having
jurisdiction over such Party.
ARTICLE 9
PROGRAM TERM; TERMINATION; WITHDRAWAL
9.1. Term
(a) Term. This Agreement will be effective as of the Effective Date and will
remain in effect until the earlier to occur of(i) CARB's termination of the CARB-authorized and
endorsed CFR Program, or (ii) the unanimous approval of the termination of this Agreement by
all Members of the Steering Committee.
(b) Effect of Termination. Notwithstanding any expiration or termination of
this Agreement, the provisions of ARTICLE 1, Section 4.3, ARTICLE 7, ARTICLE 8, this
ARTICLE 9, and ARTICLE 10 shall survive any such expiration or termination and shall remain
in full force and effect and each Party and each former Party shall continue to be obligated and
bound thereafter by the provisions thereof. Any Program Funds shall remain in the respective
Accounts in which they are held at the time of such termination and shall be used thereafter in
order to pay for any Administrative Expenses, Reward Amount payment reimbursements,
Indemnified Claims, or other expenses and liabilities (contingent or otherwise) of the CFR
Program or with respect to its administration that exist as of or arise following the date of
termination (collectively, "Remaining Liabilities"). After the payment and satisfaction of all
Remaining Liabilities, and in no event before the occurrence of the Shortfall Indemnity
Termination Date, but in all events subject to the requirements of the LCFS Regulation, any
remaining Program Funds shall be distributed in the following manner and order of priority:
(i) To the extent that any payments have been made pursuant to the
provisions of Section 7.5(c) at any time prior to the Shortfall Indemnity Termination Date
("Shortfall Payments"), any remaining Program Funds shall first be distributed to the Parties
that made such Shortfall Payments on a pro rata basis in proportion to each such Party's
respective percentage of the aggregate total amount of all Shortfall Payments made by all of the
Parties, in each case until each such Party has received the total amount of such Party's Shortfall
Payments returned to it in full (without interest);
(ii) After satisfaction in full of any amounts payable under Section
9.1 i above, to the extent that any payments have been made pursuant to the provisions of
Section 7.5(b)(iii) at any time prior to the Shortfall Indemnity Termination Date ("Additional
LCFS Revenue Payments"), any remaining Program Funds shall next be distributed to the
Parties that made such Additional LCFS Revenue Payments on a pro rata basis in proportion to
each such Party's respective percentage of the aggregate total amount of all Additional LCFS
Revenue Payments made by all of the Parties, in each case until each such Party has received the
total amount of such Party's Additional LCFS Revenue Payments returned to it in full (without
interest); and
(iii) After satisfaction in full of any amounts payable under Section
9.1 b i and 9.1 ii above, all remaining Program Funds shall be distributed in the manner
43425759.3 45
required by the LCFS Regulation or, if no such manner is specified, to the Parties on a pro rata
basis in proportion to each such Party's respective percentage of the aggregate total amount of all
EDU Contributions made by all Parties during the term of the CFR Program.
(c) LADWP Term. Notwithstanding the provisions of Section 9.1(a) above,
the term of LADWP's participation as a Participating EDU under this Agreement shall
commence on the Effective Date and terminate on the earlier to occur of(x) the fifth anniversary
of the Effective Date unless, not less than ninety (90) days prior to such fifth anniversary,
LADWP delivers written notice to the Program Administrator and the Steering Committee that
LADWP elects not to terminate its participation as a Participating EDU under this Agreement on
the date of such fifth anniversary, or (y) the date on which LADWP withdraws as a Party
pursuant to the provisions of Section 9.2 below or is removed as a Party pursuant to the
provisions of Section 9.3 below.
9.2. Withdrawal by a Party
(a) Withdrawal by a Party. Any Party may cancel its participation in this
Agreement and withdraw as a Party hereunder with or without cause, upon (i) such Party's
compliance with any procedures and requirements set forth in the LCFS Regulation governing
such Party's withdrawal from the CFR Program and this Agreement, and such Party's delivery of
advanced written notice to GARB, the Program Administrator and the Members of such Party's
intent to withdraw as a Party (a "Withdrawal Notice"), which advance written notice must be
delivered within the timeframe set forth in the LCFS Regulation or, if none is provided, not less
than ninety (90) calendar days prior to the Party's intended date of withdrawal; and (ii) such
Party's satisfaction of the following conditions to such withdrawal:
(A) Within ten(10) days of the date of its Withdrawal
Notice, such Party must deposit into its EDU Contribution Account the Required Percentage of
any LCFS Credit Revenue held by such Party;
(B) Within the timeframe required for such Party to sell
its Earmarked Credits and contribute the Required Percentage of the LCFS Credit Revenue
generated therefrom into to its EDU Contribution Account pursuant to the provisions of Section
5_4, or such shorter timeframe as may be required by the LCFS Regulation, such Party must sell
any remaining Earmarked Credits received or held by such Party and deposit into its EDU
Contribution Account the Required Percentage of any LCFS Credit Revenue received by such
Party from such sale(s) of LCFS Base Credits; and
(C) Immediately following the date of its Withdrawal,
Notice or, if later,the date on which the Program Administrator delivers to such Party a notice of
an Indemnified Claim under Sections 7.5(b)(iii)or 15 c , such Party shall deposit into its EDU
Contribution Account the additional amount of LCFS Credit Revenue demanded from such Party
in any outstanding notice of Indemnified Claim delivered to such Party by the Program
Administrator.
(b) Effect of Withdrawal. Following any withdrawal or attempted withdrawal
by any Party from this Agreement, the provisions of ARTICLE 1, Section 4.31 ARTICLE 7,
43425759.3 46
ARTICLE 8, this ARTICLE 9, and ARTICLE 10 shall survive, remain in full force and effect,
and continue to apply to such Party, and such Party shall continue to be obligated and bound by
the provisions thereof at all times thereafter. Following a Party's delivery of a Withdrawal
Notice, such Party shall promptly complete and satisfy in full any procedures, requirements or
other conditions for such Party's withdrawal from the CFR Program or this Agreement as are set
forth in the LCFS Regulation. In addition, following any Party's delivery of a Withdrawal
Notice, the Program Administrator may thereafter instruct the Financial Institution to transfer
any and all amounts held in such Party's Individual Deposit Account at such time or at any tune
thereafter into the Disbursement Account (or any Collective Deposit Account) on a priority basis
at any time, and from time to time, thereafter, notwithstanding such Party's respective pro rata
share of any outstanding Reward Amount payment reimbursements or Administrative Expenses.
Notwithstanding the foregoing provisions of this Section 9.2(b), following the second
anniversary of the date of a Party's valid withdrawal as a Party to this Agreement in accordance
with the requirements set forth in this Section 9.2, and subject to such former Party's continued
compliance with its obligations hereunder following such withdrawal, such former Party's
obligations under Sections 7.5(b)(iii), 7.5 c or 9.2(a)(0 shall no longer apply with respect to
any Indemnified Claim that arises solely from activities, omissions, events or circumstances
occurring following such second anniversary.
9.3. Removal of a Party
(a) Post-Breach Removal. Any Party may be removed as a Party under this
Agreement if, following notice by the Program Administrator, upon the agreement and
concurrence of the Steering Committee, of such Party's material breach of such Party's
obligations under this Agreement (including any failure by such Party to make any of its
Required EDU Contributions in strict accordance with the requirements of this Agreement), such
Party does not cure such breach to the satisfaction of the Steering Committee within thirty (30)
days of the date of such notice of breach and the Steering Committee thereafter votes to remove
such Party as a Party under this Agreement ("Removal Vote"). Following the occurrence of a
Removal Vote with respect to a Party, such Party shall immediately be removed as a Party from
this Agreement, and shall further be required to act as follows (provided that such action is
consistent with the LCFS Regulation as in effect at such time):
(i) Within three (3) days of the date of the Removal Vote, such Party
must deposit into its EDU Contribution Account all LCFS Credit Revenue held by such Party;
and
(ii) Within ten (10) days of the date of the Removal Vote, such Party
must sell any remaining LCFS Base Credits received or held by such Party and deposit into its
EDU Contribution Account all of the LCFS Credit Revenue received by such Party from such
sale(s) of LCFS Base Credits.
(b) Effect of Removal. Following any Removal Vote with respect to any
Party, the provisions of ARTICLE 11 Section 4.3. ARTICLE 7, ARTICLE 81 this ARTICLE 9,
and ARTICLE 10 shall survive, remain in full force and effect, and continue to apply to such
Party, and such Party shall continue to be obligated and bound by the provisions thereof at all
times thereafter. Following the Removal Vote, such Party shall forfeit any and all rights to
43425759.3 47
receive any LCFS Base Credits and shall no longer receive any LCFS Base Credits from CARB,
and such Party's forfeited LCFS Base Credits it would have otherwise received thereafter had it
not been removed as a Party shall be allocated to the other remaining Participating EDUs pro
rata, in each case in accordance with the provisions of the LCFS Regulation. In addition,
following the Party's removal, the Program Administrator may thereafter instruct the Financial
Institution to transfer any and all amounts held in such Party's Individual Deposit Account at
such time or at any time thereafter into the Disbursement Account (or any Collective Deposit
Account) on a priority basis at any time, and from time to time, thereafter, notwithstanding such
Party's respective pro rata share of any outstanding Reward Amount payment reimbursements or
Administrative Expenses.
ARTICLE 10
MISCELLANEOUS
10.1. Governing Law; Waiver of Jury Trial.
(a) The construction, validity, performance, and effect of this Agreement for
all purposes will be governed by the laws of the State of California, without giving effect to
otherwise applicable principles of conflicts of law that would give effect to the laws of another
jurisdiction.
(b) EACH PARTY (OTHER THAN A PARTY LISTED ON SCHEDULE
10.9 d ) HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY MATTERS RELATED TO THIS
AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE
OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.1(b).
10.2. Use of Name or Endorsements.
No Party will use the name or intellectual property of any other Party on or with regard to
any product or service, which is directly or indirectly related to this Agreement, without the prior
written approval of the affected Party or Parties. By entering into this Agreement no Party
directly or indirectly endorses any product or service, of or by any Party, its successors or
assignees.
10.3. Damages Limitation.
EXCEPT FOR AMOUNTS PAYABLE UNDER SECTION 7.5(c), IN NO EVENT
SHALL ANY PARTY OR ANY OF ITS REPRESENTATIVES BE LIABLE UNDER THIS
AGREEMENT TO ANY OTHER PARTY OR ANY THIRD PARTY FOR ANY
CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL OR PUNITIVE
43425759.3 48
DAMAGES, INCLUDING ANY DAMAGES FOR BUSINESS INTERRUPTION, LOSS OF
USE, REVENUE OR PROFIT, WHETHER ARISING OUT OF BREACH OF CONTRACT,
TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, REGARDLESS OF (A) WHETHER
SUCH DAMAGES WERE FORESEEABLE, (B) WHETHER OR NOT THE LIABLE PARTY
WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (C) THE LEGAL OR
EQUITABLE THEORY (CONTRACT, TORT OR OTHERWISE) UPON WHICH THE
CLAIM IS BASED..
10.4. Survival.
Notwithstanding the expiration or termination of this Agreement, the Parties will
continue to be bound by the provisions of this Agreement which, by their nature, will survive
such expiration or termination as set forth in Section 9.1(b).
10.5. Headings.
Titles and headings of the Sections and Subsections of this Agreement are for the
convenience of reference only and do not form a part of this Agreement and will in no way affect
the interpretation thereof.
10.6. Severability.
In the event any one or more of the provisions of the Agreement shall for any reason be
held or determined by any Governmental Authority (or any arbitrator appointed pursuant to
Section 10.9(c))to be invalid, illegal or unenforceable under any law, statute,regulation, order or
decision of any Governmental Authority, the remaining provisions of this Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a provision,
which, being valid, legal and enforceable, comes closest to the intention of the Parties underlying
the invalid, illegal or unenforceable provision.
10.7. Amendments.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than (a) with the prior written approval of (i) the Steering Committee, (ii)
CARB, and (iii) to the extent required under applicable law or resolution, the CPUC, and (b)
following receipt of the foregoing required approvals, by means of a written instrument
referencing this Agreement and signed by (i) the Program Administrator and (ii) Parties with
Members on the Steering Committee holding a majority of the aggregate voting percentages held
by all Members; provided, however, that if any amendment, waiver, discharge or termination
operates in a manner that treats any Party materially different from the other Parties, the consent
of such Party shall also be required for such amendment, waiver, discharge or termination. Any
such amendment, waiver, discharge or termination effected in accordance with this Section shall
be binding upon each Party that has entered into this Agreement; provided, however, that any
such amendment, waiver, discharge or termination of the terms of(A) ARTICLE 7, 8 or 9 or
Sections 10.1, 10.3, 10.4, 10.7 or 10.9 that adversely affects the rights or obligations of any
Participating EDU thereunder will not be binding on such Participating EDU without its consent
thereto unless such amendment, waiver, discharge or termination (x) has been approved by the
Steering Committee by the vote of Members (or of their respective Alternates or designated
43425759.3 49
proxies therefor) holding an aggregate voting percentage of at least eighty percent (80%) of the
aggregate voting percentage held by all Members, or (y) has been approved by the Steering
Committee pursuant to the regular voting requirements set forth in Sections 3.3(i) and 3.3(j) in
response to an order or request made by a Governmental Authority or in order to comply with a
legal requirement, or (B) the provision of Section 4.1(c) setting forth the voting requirement for
approval of each Program Implementer and the Program Auditor must be approved by the same
approval vote of the Steering Committee set forth in such provision.
10.8. Assignment.
Neither this Agreement nor any rights or obligations of any Party will be assigned or
otherwise transferred by any Party without the prior written consent of the Steering Committee,
except that assignment will be permitted in the event of merger, acquisition or change in control
of any Party.
10.9. Dispute Resolution.
Any dispute arising under or related to this Agreement shall be resolved exclusively as
follows, with the costs of any mediation and arbitration to be shared equally by all Parties to such
dispute:
(a) Initial Resolution by Meeting. The Parties shall first attempt to resolve
amicably the dispute by meeting with each other, by telephone or in person at a mutually
convenient time and location, within thirty(30) days after written notice of a dispute is delivered
from one Party to any other Party. Subsequent meetings may be held upon mutual agreement of
the Parties to the dispute.
(b) Mediation. If the dispute is not resolved within sixty(60) days of the first
meeting, the Parties to the dispute shall submit the dispute to mediation by an organization or
company specializing in providing neutral, third-party mediators. The mediation shall be
conducted within sixty (60) days of the date the dispute is submitted to mediation, unless the
Parties to the dispute mutually agree on a later date.
(c) Arbitration. Any dispute that is not otherwise resolved by meeting or
mediation shall, subject to the provisions of Section 10.9(d) below, be exclusively resolved by
arbitration between the Parties to the dispute in accordance with the Comprehensive Arbitration
Rules &Procedures of JAMS, with the arbitration to be conducted in Los Angeles, California, or
another location mutually agreed by the Parties to the dispute. The results of such arbitration
shall be binding on the Parties, and judgment may be entered in any court having jurisdiction.
Notwithstanding the foregoing, any Party may seek interim injunctive relief from any court of
competent jurisdiction.
(d) Venue in Limited Circumstances. Solely in the event that LADWP,
SMUD, or any other POU that is added to Schedule 10.9(d) after the Effective Date by approval
of the Steering Committee after having documented to the satisfaction of the Steering Committee
concurrently with executing and delivering such POU's Joinder hereto that such POU is
prohibited by (i) applicable law or (ii) written city or municipal policy that is binding on such
POU and that has been in effect since before the Effective Date, from agreeing to participate in
43425759.3 50
binding arbitration, is a necessary and non-severable party to the applicable dispute, then solely
in such event shall such dispute not be resolved pursuant to binding arbitration as set forth in
Section 10.9(c) above, but rather shall be submitted to the exclusive jurisdiction of the federal
and state courts located in Los Angeles, California. Each Party hereby waives, and agrees not to
assert in any such dispute, controversy or proceeding, in each case to the fullest extent permitted
by applicable law, any claim that (a) such Party is not personally subject to the jurisdiction of
such courts, (b) such Party and such Party's property is immune from any legal process issued by
such courts or (c) any Proceeding commenced in such courts is brought in an inconvenient
forum.
10.10. No Third Party Beneficiaries.
This Agreement will be binding upon and inure solely to the benefit of each Party hereto
and their permitted successors and assigns, and, except as expressly set forth in ARTICLE 7,
nothing in this Agreement, express or implied, is intended to or will confer upon any other
Person that is not a Party to this Agreement(or a permitted successor or assign thereof) any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
10.11. Independent Parties.
For the purposes of this Agreement, the Parties are jointly funding the development of the
CFR Program. The relationship of the Parties is that of independent parties and not as agents of
each other or as joint venturers or partners. Nothing contained in this Agreement shall ever be
construed to create an association, joint venture, trust or partnership, or impose a trust or
partnership duty, obligation or liability on or with regard to any one or more of the Parties. Each
Party shall be individually responsible for its own duties and obligations under this Agreement,
and shall maintain sole and exclusive control over its respective personnel and operations. No
Party or group of Parties shall be under the control of or shall be deemed to control any other
Party or the Parties as a group. Except as expressly provided in this Agreement, no Party shall
have a right or power to bind any other Party without its or their express written consent.
10.12. Counterparts.
This Agreement may be executed in any number of identical counterparts, each of which
shall be deemed to be an original, and all of which together shall be deemed to be one and the
same instrument when each Party has signed one such counterpart.
10.13. Full Performance Required.
Performance of any duty imposed on a Party by this Agreement is conditioned on each
other Parties' full performance of all duties imposed on this Agreement.
10.14. Notices.
All notices, requests, consents, claims, demands, waivers, and other communications to a
Party under this Agreement, or to any Member or Alternate of such Party on the Steering
Committee, shall be in writing and shall be deemed to have been given: (a) when delivered by
hand (with written confirmation of receipt); (b) when received by the addressee if sent by a
43425759.3 51
i
nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or
email of a PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next business day if sent after normal business hours of the
recipient; or (d) on the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be sent to the Party addressed to
the individual(s) and at the address(es) for such Party specified on Schedule 10.14 hereto (or to
such replacement individual(s) at such other address(es) for a Party as shall be specified in a
notice given in accordance with this Section 10.14). The Steering Committee shall have the
power and authority to amend Schedule 10.14 hereto to incorporate any such modifications made
by a Party to its contact information in accordance with the provisions hereof and to add the
contact information for each new Party to this Agreement following the Effective Date,but in the
absence of the inclusion of a Party's contact information on Schedule 10.14 hereto, then the
contact information for such Party shall be the contact information for such Party set forth on its
Joinder delivered when it became a Party to this Agreement.
10.15. Construction.
This Agreement has been negotiated by the Parties, and their respective legal counsel,
and legal or equitable principles that might require the construction of this Agreement or any
provision hereof against the party drafting this Agreement will not apply in any construction or
interpretation of this Agreement. The provisions of this Agreement will be interpreted in a
reasonable manner to effect the intentions of the Parties and beneficiaries hereto and of this
Agreement.
10.16. Time of Essence.
With regard to all dates and time periods set forth or referred to in this Agreement,time is
of the essence.
10.17. Specific Performance.
Each of the Parties acknowledges and agrees that the other Parties would be damaged
irreparably in the event any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached or violated. Accordingly, each of the Parties
agrees that, without posting bond or other undertaking, the other Parties will be entitled to an
injunction or injunctions to prevent breaches or violations of the provisions of this Agreement
and to enforce specifically this Agreement and the terms and provisions hereof in any claim,
action, cause of action or suit(whether in contract or tort or otherwise), litigation (whether at law
or in equity, whether civil or criminal), controversy, assessment, arbitration, investigation,
hearing, charge, complaint, demand, notice or proceeding to, from, by or before any
Governmental Authority having jurisdiction over the Parties and the matter in addition to any
other remedy to which it may be entitled, at law or in equity. Each Party hereto further agrees
that, in the event of any action for specific performance in respect of such breach or violation, it
will not assert the defense that a remedy at law would be adequate or that the consideration
reflected in this Agreement was inadequate or that the terms of this Agreement were not just and
reasonable.
43425759.3 52
10.18. Legal Matters.
SCE has retained its own outside legal counsel, Munger,Tolles & Olson LLP, in connection with
the CFR Program, SCE's intention to serve as the initial Program Administrator, and the drafting
and negotiation of this Agreement, and SCE expects to retain additional legal counsel following
approval thereof by the Steering Committee (collectively, including Munger, Tolles & Olson
LLP, the "Law Firms") following the execution of this Agreement in connection with SCE's
role as Program Administrator in administering, managing and overseeing the CFR Program.
The Law Firms do not, have not and will not represent any Party other than SCE solely in its role
as Program Administrator in connection with (i) the CFR Program or the formation thereof, (ii)
the drafting and negotiation of this Agreement or any Program Agreement, (iii) the solicitation
process or the operation, administration, management or oversight of the CFR Program, or (iv)
any dispute which may arise between any Party or Person other than SCE, on the one hand, and
the CFR Program, the Program Administrator, SCE or any other SCE Indemnified Person or
SCE's Steering Committee Indemnified Persons in connection with the CFR Program, on the
other hand (each matter described in any of the foregoing clauses (i) through (iv), a "Program
Legal Matter"). Each Party may, if it wishes to have counsel on a Program Legal Matter, retain
its own independent counsel at its own expense with respect thereto. Each Party agrees that the
Law Firms may represent one or more SCE Indemnified Persons, and/or one or more of SCE's
Steering Committee Indemnified Persons, in connection with any and all Program Legal Matters
(including any dispute between the CFR Program, the Program Administrator, SCE or any other
SCE Indemnified Person or SCE's Steering Committee Indemnified Persons, on the one hand,
and any Party (other than SCE), any other Steering Committee Indemnified Person or any other
Person, on the other hand) and hereby waives any present or future conflict of interest with the
Law Firms regarding Program Legal Matters arising by virtue of any representation or deemed
representation of any Party or the CFR Program on account of the Law Firms' representation of
one or more SCE Indemnified Persons or SCE Steering Committee Indemnified Persons in
connection with any Program Legal Matter; provided that each Law Firm shall be responsible for
abiding by the Rules of Professional Conduct applicable to it and its attorneys in connection with
any such representation including their duty to keep any client information received from any
Party confidential and not disclose it to others and to ensure that appropriate ethical walls or
other safeguards that are necessary for them to abide by such Rules of Professional Conduct are
implemented. Amounts paid or payable by SCE to the Law Firms in connection with Program
Legal Matters that arise or have risen during or prior to SCE's service as Program Administrator,
or that arise following SCE's service as Program Administrator involving or otherwise relating
to events or circumstances that occurred, in whole or in part, during SCE's service as Program
Administrator and that involve or otherwise relate to SCE's role as Program Administrator, shall
be reimbursed to SCE as Administrative Expenses.
10.19. Entire Agreement.
This Agreement constitutes the entire agreement between the Parties concerning the
subject matter hereof and supersedes any prior understanding or written or oral agreement
relative to said matter. This Agreement and other related documents may be photocopied,
scanned and stored on computer storage media (the "Imaged Agreement"). The Imaged
Agreement, if introduced as evidence, and all computer records of the foregoing, if introduced as
evidence, and all computer records of the foregoing, if introduced as evidence in any format, in
43425759.3 _ 53
any judicial, arbitration, mediation or administrative proceedings, will be admissible as between
the Parties to the same extent and under the same conditions as other business records originated
and maintained in documentary form. No Party shall object to the admissibility of the Imaged
Agreement (in electronic, printed, or photocopied format) on the basis that the Agreement or
other related documents were not originated or maintained in documentary or written form under
either the hearsay rule or the best evidence rule. However, nothing in this Section shall preclude
a.Party from challenging the admissibility of that evidence on some other ground, without
limitation, the basis that the evidence has been materially or substantially altered from the
original
10.20. Representations by the Parties.
Each Party hereby represents and warrants to the Program Administrator and to each
other Party that (a) it has the power and authority, and the legal right, to make, deliver and
perform this Agreement and it has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, (b) other than the approvals of the CPUC set forth in the
definition of Final CPUC Approval Date in Section 1.1(gg), which approvals have been
requested but not yet received, no consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person that has not been obtained,
made or completed is required in connection with the execution, delivery and performance,
validity or enforceability of this Agreement, (c) this Agreement has been duly and validly
executed and delivered on behalf of such Party,(d) the execution, delivery and performance of
this Agreement by such Party will not violate, conflict with, require consent under or result in
any breach or default under (i) any of such Party's organizational, governing or charter
documents, (ii) any applicable law, or (iii) with or without notice or lapse of time or both, the
provisions of any material contract or agreement to which such Party is a party or to which any
of its material assets are bound, and (e) this Agreement constitutes a legal, valid and binding
obligation of such Party enforceable against it in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
[THIS SPACE INTENTIONALLY LEFT BLANK]
43425759.3 54
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of the
Parties by their respective authorized officers (or respective designee) as of the year and dates first
written above.
Pacific Gas and Electric Company
By; �� � ' Approved as to Legal Form and Content(optional)
Namest
Title.�`�-� ���` . �''�41 Name:
Address for Notice:
Title:
�r��
Los Angeles Department of Water &Power
Approved as to Legal Form and Content(optional)
By:
Name: By:
Title: Name:
Address for Notice: Title:
Southern California Edison Company
Approved as to Legal Form and Content(optional)
By:
Name: By.
Title: Name:
Address for Notice: Title:
43425759.3 55
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of the
Parties by their respective authorized officers (or respective designee) as of the year and dates first
written above.
Pacific Gas and Electric Company
By: Approved as to Legal Form and Content(optional)
Name:
By:
y� Title: Name:
Address for Notice:
Title:
C"J oo Los Angeles Department of Water&Power
CCQ
n Approved as to Legal Form and Content(optional)
Lu Z By:
ac Q
an Name: M0�+d L. 4 p+"6 By: APPROVED AS TO FORM AND LEGALTTY
MICRAEL N.FEVER,CITY ATTORNEY
Title: ��� �'� �� Name:
oAddress for Notice: Title:
nY
� d �UIUpE 13ERTfwT
DEPUTY CITY ATTORNEY
Southern California Edison Company
Approved as to Legal Form and Content(optional)
By:
Name: By.
Title: Name:
Address for Notice: Title:
43425759.3 55
DocuSign Envelope ID:01A174D4-9122-4EED-AC5C-A4096912C730
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of the
Parties by their respective authorized officers (or respective designee) as of the year and dates first
written above.
Pacific Gas and Electric Company
By: Approved as to Legal Form and Content (optional)
Name:
By:
Title:
Name:
Address for Notice:
Title:
Los Angeles Department of Water & Power
By:
Approved as to Legal Form and Content (optional)
Name: By:
Title: Name:
Address for Notice: Title:
Southern California Edison Company
Docusigned by: Approved as to Legal Form and Content(optional)
By; "V1 Wai.(,I W
Name yKevin�70 By:
E. Walker
Title: Senior Vice President Name:
Address for Notice:
Title:
43425759.3 55
San Diego s &Electric Company
Approved as to Legal Form and Content(optional)
By. a�
Name: L O-nob
By:
Title: \ e, ,-25, Name:
CKY eyl./ c< Title:
Address for Notice:
ri 3?)o C e34t,-ry Po,1(-k
�J c��n ►7i e.ctt�. C 4�� , �
Sacramento Municipal Utility District
Approved as to Legal Form and Content(optional)
By:
Name: By:
Title: Name:
Address for Notice: Title:
43425759.3 56
San Diego Gas & Electric Company
Approved as to Legal Form and Content (optional)
By:
Name: By:
Title: Name:
Address for Notice: Title:
Sacramento Municipal Utility District
Approved as to Legal Form and Content (optional)
By:
Name: By:
Title: c [ 42 CY e.�.,.Y 1►�,..� - -i Name:Title: E GAL
Address for Notice: Title:
6101 S Sffae-t !w- _ 83v 8
�A e raane-t cAQst�i?
43425759.3 56
SCHEDULE 1.1
NORTHERN EDUS AND SOUTHERN EDUS
Northern EDUs
Alameda Municipal Power
City of Healdsburg
Lodi Electric Utility
City of Palo Alto
City of Roseville Electric Utility
Silicon Valley Power
Truckee Donner Public Utilities District
Turlock Irrigation District
City of Ukiah
Southern EDUS
Anaheim Public Utilities
Azusa Light and Water
Burbank Water and Power
Colton Electric Utility
Glendale Water and Power
Pasadena Water and Power
Riverside Public Utilities
43425759.3
SCHEDULE 3.4(a)
ANTICIPATED ADVISORY COMMITTEE MEMBERSHIP
Set forth below is a list of all of the individual stakeholders and/or stakeholder groups that the Parties
anticipate will be invited to participate on the Advisory Committee. This list is not intended to be
comprehensive and additional organizations may be invited by any Participating EDU and are free to
attend. Information regarding how to participate on and join the Advisory Committee will be provided on
the Program Implementer's website for the CFR Program.
EDUs ZEV Manufacturers
PG&E, SCE, SDG&E, LADWP, SMUD, Tesla,Honda, BMW,Nissan, Toyota,Volvo,
Silicon Valley Power, Glendale, Palo Alto, Hyundai, Jaguar, MINI Mercedes,Volkswagen,
Anaheim Public Utilities, Pasadena, Burbank, Honda, General Motors,Ford
Alameda,Riverside, Roseville, Turlock, Azusa,
Healdsburg, Colton, Lodi, Truckee Donner, CommunitOrganizations
Ukiah Plug-in America, Greenlining Institute
Note: EDU representatives on the Advisory
Committee are anticipated to be different Industry GMuRs
individuals from the EDU representatives then Dealerships/Dealership Associations
serving on the Steering Committee as Members. Charging Station Providers (ChargePoint,
Greenlots, EVGo, Electrify America,
California State A eg ncies EVConnect), CALSTART, CALETC, CMUA,
Air Resources Board, Public Utilities NCPA, SCPPA
Commission- Energy Division, Governor's
Office Environmental NGOs
National Resources Defense Council,
Public Advocacy Organizations Environmental Defense Fund, Union of
Public Advocates Office, The Utility Reform Concerned Scientists, Sierra Club
Network
43425759.3
SCHEDULE 10.9(d)
POUs WHOSE DISPUTES SHALL BE RESOLVED PURSUANT TO
SECTION 10.9(d)RATHER THAN SECTION 10.9(c)
LADWP
SMUD
43425759.3
SCHEDULE 10.14
PARTY NOTICE INFORMATION
(INCLUDING,IF APPLICABLE, SUCH PARTY'S STEERING COMMITTEE MEMBER)
PG&E:
Pacific Gas & Electric Company
77 Beale Street—B9F
San Francisco, CA 94105
Attn: Suncheth Bhat, Director, Clean Energy Transportation
Email: Suncheth.bhat@pge.com
And to:
Pacific Gas &Electric Company
77 Beale Street—B9F
San Francisco, CA 94105
Attn: Chris Warner, Chief Counsel
Email: Chris.Wamer@pge.com
PG&E Steering Committee Member: Suncheth Bhat
SCE:
Southern California Edison
1515 Walnut Grove Avenue, 4th Floor
Rosemead, CA 91770
Attn: Katie Sloan, Director, eMobility
Email: katie.sloan@sce.com
And to:
Southern California Edison
2244 Walnut Grove Avenue
Rosemead, CA 91770
Attn: Rebecca A. Meiers-De Pastino, Senior Attorney
Email: Rebecca.Meiers.DePastino@SCE.com
SCE Steering Committee Member: Katie Sloan
PA Representative: Carter Prescott
Contact Information:
Southern California Edison
eMobility—Customer Programs & Services
1515 Walnut Grove Ave, GO5 4th Floor, 4D4-01
Rosemead, CA 91770
43425759.3
Attn: Carter Prescott, Principal Manager, Operations
E-mail: Carter.Prescott@sce.com
SDG&E:
San Diego Gas &Electric
8335 Century Park Court
San Diego, CA 92111
Attn: Brittany Applestein Syz, Director- Clean Transportation
Email: bsyz@semprautilities.com
And to:
San Diego Gas &Electric
8335 Century Park Court
San Diego, CA 92111
Attn: Abby Snyder, Senior Counsel - Commercial
Email: ASnyder@sdge.com
SDG&E Steering Committee Member: Brittany Applestein Syz
LADWP:
Los Angeles Department of Water&Power
111 N. Hope Street,Room 804
Los Angeles, CA 90012
Attn: Scott Briasco, P.E.
Email: scott.briasco@ladwp.com
With a copy to:
Jean-Claude Bertet, Deputy City Attorney
Office of the Los Angeles City Attorney, Water&Power Division
221 N Figueroa Street, Suite 1000
Los Angeles, CA 90012
E-mail: Jean-Claude.Bertet@ladwp.com
LADWP Steering Committee Member: Scott Briasco
SMUD:
Sacramento Municipal Utility District
6201 S Street Mail Stop B305
Sacramento, CA 95817
Attn: Rachel Huang,Director, Energy Strategy Research and Development
43425759.3
Email: Rachel.Huang@smud.org
With a copy to:
Sacramento Municipal Utility District
Office of General Counsel
6201 S Street,Mail Stop B406
Sacramento, CA 95817
SMUD Steering Committee Member: Rachel Huang
43425759.3
APPENDIX A
CFR PROGRAM EDU CONTRIBUTION REQUIREMENTS
Required Required
Electric Distribution CVRP % Initial EDU Percentage Percentage
Utility("EDU") All EDUs Contribution EDU Category Contribution Contribution
in years in 2023 and
2019-2022 thereafter
Pacific Gas &Electric 022 Investor-owned
Company 39.78% $19,892, Utilities 67% 67%
Southern California 039 Investor-owned
Edison 31.11% $15,553, Utilities 67% 67%
San Die o Gas & Investor-owned
Electric 9.99% $4,994,827 Utilities 67% 67%
Los Angeles
Department of Water 10.50% $5,252,360 Large Publicly-owned 35% 45%
& Power Utilities
Sacramento Municipal 2 06% Large Publicly-owned o 0
UtilityDistrict $1 032 214 35/0 45/o
Utilities
Silicon Valley Power 0.88% $438,511 Medium Publicly- 20% 25%
owned Utilities _
Glendale Water& 0.76% $382,455 Medium Publicly- 20% 25%
Power owned Utilities
City of Palo Alto 0.73% $364,198 Medium Publicly- 20% 25%
owned Utilities
City of Anaheim
Public Utilities 0.73% $363,397 Medium Publicly- 20% 25%
Department owned Utilities
Pasadena Water& 0.61% Medium Publicly-
Power $306,221 y 20% 25%
owned Utilities
Burbank Water & 0.41% Medium Publicly-
Power $204,841 Y 20% 25%
owned Utilities
City of Riverside 0.34% $168,485 Medium Publicly- 20% 25%
owned Utilities
Roseville Electric 0.27% $136,614 Medium Publicly- 20% 25%
owned Utilities
Modesto Irrigation 0 37% $183,861 Medium Publicly- 20% 25%
District owned Utilities
Imperial Irrigation 0.16% $81 039 Medium Publicly- 20% 25%
District owned Utilities
Turlock Irrigation 0.14% $69,028 Medium Publicly- 20% 25%
District owned Utilities
43425759.3
Required Required
Electric Distribution CVRP % Initial EDU Percentage Percentage
Utility(IEDU") All EDUs Contribution EDU Category Contribution Contribution
in years in 2023 and
2019-2022 thereafter
Redding Electric 0.05% $23 Medium Publicly-
Utility ,544 owned Utilities 20% 25%
City of Vernon Public 0.01% Medium Publicly- o 0
Utilities $4,485 20% 25/0
owned Utilities
Alameda Municipal 0 37% Small Publicly-owned o 0
Power $184,822 0/0 2/o
Utilities
City of Cerritos 0.29% $1421700 Small Publicly-owned 0% 2%
Utilities
Modesto Irrigation 0 08% $40,680 Small Publicl owned 0% 2%
District Y
Utilities
Merced Irrigation 0.06% Small Publicly-owned o 0
District $28,348 0/0 2/o
Utilities
Azusa Light& Power 0.06% Small Publicly-owned o 0
gh $28,188 Utilities 0% 2/0
Moreno Valley Utility 0.04% $20,820 Small Publicly-owned 0% 2%
Utilities
City of Healdsburg 0.04% $19 Small Publicly-owned
Electric Department ,700 Utilities0% 2%
Colton Electric Utility 0.03% $15 Small Publicly-owned
Department ,055 Utilities 0% 2%
Lodi Electric Utility 0.03% $14,574 Small Publicly-owned 0% 2%
Utilities
Liberty Utilities 0.03% $12,973 Small Investor-owned 0% 2%
Utilities
PacifiCor 0.02% Small Investor-owned
p $9,289 0% 2%
Utilities
Truckee Donner 0.01% Small Publicly-owned o 0
Public Utilities District $6,086 0/0 2/o
Utilities
City of Lompoc 0.01% $5 766 Small Publicly-owned 0% 2%
Electric Division Utilities
City of Ukiah Electric bli Small Publicly-owned 0.01% $5,125, Y 0% 2%
Utilities Division
Utilities
Rancho Cucamonga 0.01% Small Publicly-owned o 0
Municipal Utility $5,125 Utilities 0% 2/0
43425759.3
Required Required
Electric Distribution CVRP% Initial EDU Percentage Percentage
EDU Category Contribution Contribution
Utility ("EDU") All EDUs Contribution in years in 2023 and
2019-2022 thereafter
Bear Valley Electric 0.01% Small Investor-owned
Service $2,563 0% 2%
Utilities
City of Corona
Department of Water 0.01% $2,563 Small Publicly-owned 0% 2%
& Power Utilities
City of Banning o Small Publicly-owned
Electric Department 0.00% $1,441 y 0% 2%
P Utilities
Trinity Public Utilities Small Publicly-owned 0.00% $1,281 y 0% 2%
District
Utilities
City of Shasta Lake 0.00% $1,121 Small Publicly-owned 0% 2%
Utilities
Lassen Municipal 0.00% $320 Small Publicly-owned 0% 2%
Utility District Utilities
Gridley Electric Utility 0.00% $160 Small Publicly-owned 0% 2%
Utilities
Shelter Cove Resort 0.00% $160 Small Publicly-owned 0% 2%
Improvement District Utilities
Total 100.00% $50,000,000
4342,5759.3
APPENDIX B
PRELIMINARY DATA COLLECTION TEMPLATE
Additional data items may be added to the template below during program development. Some
data requested may not be required for participation in the program.
Category Element Sample Value
Identification First Name (Must be same name as John
the person the vehicle is DMV
registered)
Identification Last Name (Must be same name as Doe
the person the vehicle is DMV
registered)
Identification Driver's License Number A1234567
Location &Contact Vehicle Registration Home Street 123
Information Number
Location & Contact Vehicle Registration Home Street 1st Street
Information Name
Location & Contact Vehicle Registration State CA
Information
Location & Contact Car Registration Home Zip Code 12345
Information
Location & Contact Email Address JohnDoe@email.com
Information
Location & Contact Phone Number (555)555-5555
Information
Vehicle Information Vehicle Identification Number 1HGCM82633A004352
(VIN)
Vehicle Information Make Chevrolet
Vehicle Information Model Bolt
Vehicle Information Vehicle Model Year 2019
Vehicle Information Dealership vehicle was EV California Dealers
purchased/leased at
Vehicle Information Date Vehicle Purchased/Leased 12/25/2019
Vehicle Information Vehicle Purchase/Lease Price $XX,XXX.00
Utility Information Utility Provider (electric) Southern California
Edison
43425759.3
EXHIBIT A
PARTICIPATING EDU JOINDER
This JOINDER AGREEMENT ("Joinder Agreement"), dated as of [DATE] is made by
[JOINING EDU], a [STATE OF ORGANIZATION] [ENTITY TYPE] (the "Joining EDU"),
and delivered to [NAME OF PROGRAM ADMINISTRATOR], in its capacity as Program
Administrator (in such capacity and together with any successors in such capacity, the "Program
Administrator") under that certain Governance Agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Governance Agreement';
capitalized terms used but not otherwise defined herein shall have the meanings assigned to such
terms in the Governance Agreement), dated as of[DATE] made by and among Pacific Gas and
Electric Company, San Diego Gas & Electric Company, Southern California Edison Company,
Los Angeles Department of Water & Power, Sacramento Municipal Utility District, and the
other electric distribution utilities("EDUs)party thereto.
WHEREAS, the Joining EDU is an EDU operating in the State of California and desires
to participate in the CFR Program developed and implemented by the EDUs that are parties to
the Governance Agreement and, in order to participate in the CFR Program, the Joining EDU is
required by the terms of the Governance Agreement and the LCFS Regulation to be joined as a
party to the Governance Agreement as a Participating EDU; and
WHEREAS, this Joinder Agreement supplements the Governance Agreement and is
delivered by the Joining EDU pursuant to Section 2.2 of the Governance Agreement; and
WHEREAS, the Joining EDU will materially benefit directly and indirectly from (i) the
CFR Program and from the LCFS Base Credits made available and to be made available by
CARB to the Joining EDU as a participant in the CFR Program and a Participating EDU under
the Governance Agreement, and (ii) from the Program Administrator's administration of the
CFR Program on behalf of the Joining EDU and all Participating EDU; and
NOW THEREFORE, the Joining EDU hereby agrees as follows with the Program
Administrator and each other Party to the Governance Agreement:
1. Joinder. The Joining EDU hereby irrevocably, absolutely and unconditionally
becomes a party to the Governance Agreement as a Participating EDU, as a Party, and in each
other capacity (e.g., POU, IOU, Northern EDU, Southern EDU, etc.) under the Governance
Agreement that is applicable to the Joining EDU as a Participating EDU and Party thereunder,
and agrees to be bound by all the terms, conditions, covenants, obligations, liabilities and
undertakings applicable to any such Participating EDU or Party, or to which any such
Participating EDU or Party is subject thereunder, all with the same force and effect as if the
Joining EDU were an original signatory to the Governance Agreement. Without limiting the
generality of the foregoing, (a) the Joining EDU hereby designates and authorizes the Program
Administrator to act on its behalf as the Program Administrator under the Governance
Agreement and under any Program Agreement, and authorizes the Program Administrator to
take such actions on its behalf and to exercise such powers as are delegated to the Program
Administrator by the terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto or as otherwise determined by the Steering Committee, in each case
43425759.3
in accordance with the terms and conditions of and for the time period set forth in the
Governance Agreement, and (b) the Joining EDU, on its own behalf and on behalf of its Related
Entities, does hereby irrevocably, unconditionally, voluntarily, knowingly, fully, finally,
completely, and forever grant and make the Release and Covenant Not to Sue, and agrees to the
indemnification and other obligations, set forth in ARTICLE 7 of the Governance Agreement
with full knowledge and in full agreement with all of the terms, conditions and obligations set
forth therein and without limiting the generality of the foregoing expressly acknowledges and
agrees that it has been advised of, and does hereby specifically and expressly waive and release
all rights under, the provisions of Section 1542 of the Civil Code of California, which provides
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND
THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED
HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."
2. Affirmations. The Joining EDU hereby makes each of the representations and
warranties and agrees to each of the covenants contained in the Governance Agreement that is
made by any Participating EDU, Party, and in each other capacity under the Governance
Agreement that is applicable to the Joining EDU as a Participating EDU and Party thereunder.
The Joining EDU also represents and warrants to the Program Administrator and to each other
Party that(a) it has the power and authority, and the legal right, to make, deliver and perform this
Joinder Agreement and has taken all necessary action to authorize the execution, delivery and
performance of this Joinder Agreement, (b) no consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other Person that has not
been obtained, made or completed is required in connection with the execution, delivery and
performance, validity or enforceability of this Joinder Agreement, (c) this Joinder Agreement has
been duly and validly executed and delivered on behalf of the Joining EDU, (d) the execution,
delivery and performance of this Agreement by such Joining EDU will not violate, conflict with,
require consent under or result in any breach or default under (i) any of such Joining EDU's
organizational, governing or charter documents, (ii) any applicable law, or (iii) with or without
notice or lapse of time or both, the provisions of any material contract or agreement to which
such Joining EDU is a party or to which any of its material assets are bound, and (e)this Joinder
Agreement constitutes a legal, valid and binding obligation of the Joining EDU enforceable
against such Joining EDU in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
3. Miscellaneous. ARTICLE 10 of the Governance Agreement is hereby incorporated
into this Joinder Agreement by reference and shall be a part hereof, mutatis mutandis.
[Signature page follows]
43425759.3
IN WITNESS WHEREOF, the parties hereto have caused this Joinder Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
[NAME OF JOINING EDU]
By
Name:
Title:
Contact Information for Notices:
If not already listed on Schedule 1.1 to the Governance Agreement, the Joining EDU
hereby elects to be listed thereon as a [Northern EDU/Southern EDU] [Pick one only].
AGREED TO AND ACCEPTED:
[NAME OF PROGRAM ADMINISTRATOR][, as Program Administrator]
By
Name:
Title:
Contact Information for Notices:
43425759.3