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Escrow Agreement for Security Deposits
This Escrow Agreement for Security Deposits (“Escrow Agreement”) is made and entered into as of , 2009 by and between: Modesto Irrigation District (“MID”), whose address is 1231 Eleventh Street, Modesto, California, 95354, and , [LLC], a [Limited Liability Company] registered in the State of , whose address is , , [STATE] [ZIP], (“Participant”), and BANK OF THE WEST, whose address is 3600 McHenry Avenue, Modesto, California, 95356 (“Escrow Agent”), referred to herein as the “Parties”. Recitals WHEREAS, MID, as part of its retail electric operations, purchases and sells electric power for the benefit of its customers; and WHEREAS, MID, in furtherance of its desire to procure renewable resources to meet its Renewable Portfolio Standard (“RPS”), has developed a Renewable Project Proposal Process; and WHEREAS, MID received a Renewable Project Application from the Participant pursuant to the Renewable Project Proposal Process; and WHEREAS, in order to engage MID in negotiations, Participant is required to pay a Security Deposit; and WHEREAS, MID, Participant, and Escrow Agent desire to establish Security Deposit procedures. FOR CONSIDERATION HEREINAFTER SET FORTH, MID, PARTICIPANT, AND ESCROW AGENT AGREE AS FOLLOWS: I. Security Deposit
In order to engage MID in negotiations regarding the Participant’s Renewable Project Application, Participant shall pay a security deposit of $2.00/kW (“Security Deposit”), in accordance with the terms set forth in this Escrow Agreement. The Security Deposit shall be placed into an account to be established with the Escrow Agent (the “Escrow Account”). II. Terms and Conditions A. Escrow Agent Fees and Costs
Participant shall be responsible for paying all fees and expenses of the Escrow Agent relating to administering the Escrow Account, and all expenses of MID relating to the Escrow Account. These expenses and payment terms shall be determined by the MID, Participant, and Escrow Agent.
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B.
Form of Security Deposit
The form of the Security Deposit may be cash or a Letter of Credit. MID will pay interest on each cash Security Deposit, calculated on a monthly basis and compounded at the end of each calendar month from the date the Security Deposit is fully deposited until the return of the cash Security Deposit to Participant. Funds deposited into the Escrow Account shall earn interest at the current rate at the time of deposit. In lieu of a cash deposit, Participant may provide a Security Deposit using an irrevocable, standby letter of credit, in a form acceptable to MID, issued by a U.S. commercial bank or foreign bank with a U.S. branch with such bank having total assets of at least $10 billion (U.S.) and a senior unsecured debt rating of no lower than A2 from Moody’s Investor Services, Inc., or its successor (“Moody’s”) or A from Standard & Poor’s Rating Group, or its successor (“S&P”). Costs of the letter of credit shall be borne by Participant. C. Disposition of Security Deposit
1. Upon approval and execution of a negotiated agreement (“RPS Agreement”) between MID and Participant, Participant shall submit the collateral as required under the RPS Agreement. The Security Deposit will be returned to Participant within five (5) business days of submission of the required collateral. 2. The Security Deposit shall be promptly returned to Participant under any of the following circumstances: a. If in the course of negotiations, MID and Participant cannot agree to the terms of an offer for an RPS Agreement and MID rejects the offer and any proposed RPS Agreement submitted by the Participant; b. If MID notifies Participant that MID will cease negotiations; or
c. Participant provides MID with written notice withdrawing Participant’s offer within thirty (30) days of executing this Escrow Agreement. 3. Participant shall forfeit the Security Deposit under any of the following circumstances: a. If there is any material misrepresentation of price or non-price information submitted to MID by Participant; b. Participant files for bankruptcy, or is involved in any other similar proceeding; or c. Participant is involved in a merger or buyout without the assumption of Participant’s obligations to MID under the Renewable Resource Project Proposal Process and any related agreements.
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In the event that forfeiture of the Security Deposit occurs, MID shall be entitled to draw upon the Security Deposit in its entirety as payment to MID for direct and indirect damages incurred in connection with such forfeiture. III. General Provisions A. Definitions
Capitalized terms used but not defined herein shall have the meaning set forth in the Renewable Resource Project Proposal Process. B. Assignment
Neither this Escrow Agreement nor any rights or obligations hereunder may be assigned by Participant to any other entity without MID’s prior written consent, which MID may withhold in its sole and absolute discretion. C. Authorized Representatives
The names of the persons who are authorized to give written notice or to receive written notice on behalf of MID and on behalf of the Participant in connection with the foregoing, and exemplars of their respective signatures are as follows: On behalf of MID: MODESTO IRRIGATION DISTRICT
Title: Assistant Treasurer Name: Don Dermond Signature: Address:
On behalf of Participant:
Title: Name: Signature:
1231 Eleventh Street Modesto, CA 95354
Address:
Phone Number: (209) 526-7472
Phone Number:
On behalf of Escrow Agent: BANK OF THE WEST Title: VP/Manager Name: Denise Duroy
Signature: Address:
3600 McHenry Avenue Modesto, CA 95356
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D.
Delivery of Escrow Agreement
At the time the Escrow Account is opened, MID and Participant shall deliver to the Escrow Agent an executed Escrow Agreement, which Escrow Agreement may be executed in counterparts. This Escrow Agreement may be executed and delivered by facsimile or electronic mail and the Parties agree that such facsimile or electronic mail execution and delivery shall have the same force and effect as delivery of an original document with original signatures, and that each party may use such facsimile or electronic mail signatures as evidence of the execution and delivery of this Escrow Agreement by the Parties to the same extent that an original signature could be used.
IN WITNESS WHEREOF, the MID, Participant, and Escrow Agent have executed this Agreement by their proper officers on the date first set forth above. On behalf of MID: MODESTO IRRIGATION DISTRICT:
Title: General Manager Name: Allen Short Signature:
On behalf of Participant:
Title: Name: Signature:
Approved as to Form:
Legal Counsel for Modesto Irrigation District Name: Ann L. Trowbridge Signature:
On behalf of Escrow Agent: BANK OF THE WEST Title: VP/Manager Name: Denise Duroy
Signature: Address:
DAY CARTER & MURPHY
3600 McHenry Avenue Modesto, CA 95356
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