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Home My WebLink About6.m. Approval of Two Estoppel Agreements for Solar Subscriptions EXECUTIVE SUMMARY City Council Regular Meeting: December 15, 2020 AGENDA ITEM: Approval of Two Estoppel Agreements for Solar Subscriptions AGENDA SECTION: Consent PREPARED BY: Anthony Nemcek, Planner AGENDA NO. 6.m. ATTACHMENTS: Estoppel Agreements APPROVED BY: LJM RECOMMENDED ACTION: Staff is recommending Council take the following actions: Motion to Approve the Estoppel Agreement with Altus Power America, Inc., Virgo DW MM Holdco, LLC, and Dundas Solar Holdings, LLC and Authorize the Mayor and Clerk to Enter into Agreement. Motion to Approve the Estoppel Agreement with Altus Power America, Inc., Virgo-Helios III, LLC, Virgo Mangata MM Holdco, LLC, and Warsaw Solar LLC and Authorize the Mayor and Clerk to Enter into Agreement. BACKGROUND In an effort to support solar energy production and reduce long-term energy costs, the City has entered into subscriptions with multiple solar gardens. The cost savings to the City are derived from the bill credits Xcel Energy pays the City, which amount to more than the cost of the subscriptions. The City entered into subscription contracts with Renesola to purchase energy from two solar gardens, Warsaw Solar LLC and Dundas Solar Holdings LLC. One of the financing partners of the solar gardens is selling their interest to Altus Power America, Inc. As part of the closing of that sale, the buyer is requesting execution of the estoppel agreements to bring the buyer into the subscription contracts the City has with Warsaw Solar and Dundas Solar Holdings and the financing partners. Signing the estoppel agreements will not change any of the terms of the subscription contracts the City has with the Warsaw Solar and Dundas Solar Holdings. Similar estoppel agreements were signed in September, 2019, and April, 2020. The City Attorney has reviewed the estoppel agreements and found no reason not to sign the agreement. RECOMMENDATION Staff recommends the City Council authorize the execution of this estoppel agreement to extend the provisions of the subscription contracts to Altus Power America, Inc. ny-1995493 SUBSCRIBER ESTOPPEL CERTIFICATE This Subscriber Estoppel Certificate (this “Certificate”), dated as of November ___, 2020 is given by City of Rosemount, a political subdivision of the State of Minnesota (“Subscriber”) pursuant to each Subscription Agreement between Subscriber and Dundas Solar Holdings, LLC, a Minnesota limited liability company (“Project Company”) listed on Schedule A hereto (each, an “Agreement” and collectively, the “Agreements”) in connection with the project referred to in the Agreements (the “Project”). Altus Power America, Inc., a Delaware corporation, or its affiliate (“Buyer”), intends, subject to the satisfaction of certain terms and conditions, to purchase from Virgo – Helios II, LLC, a Delaware limited liability company (“Seller ), 100% of the membership interests of Virgo DW MM Holdco, LLC, a Delaware limited liability company (“Managing Member”), which is the managing member of Virgo DW Holdco, LLC, a Delaware limited liability company (“HoldCo,” and together with Seller and Buyer, the “Parties”), which is the sole member of Project Company (the “Transaction”). In connection with the Transaction, the Parties require that Subscriber confirm and acknowledge certain matters related to the Agreements. Capitalized terms used but not defined herein have their assigned meanings in the Agreements. Based on the foregoing, and recognizing that the Parties will rely hereon, Subscriber hereby confirms, agrees and represents and warrants to the Parties as follows: 1. Subscriber (a) is duly organized and validly existing under the laws of the State of Minnesota, (b) is duly qualified, authorized to do business and in good standing in every jurisdiction necessary to perform its obligations under each Agreement and (c) has all requisite power and authority to enter into and to perform its obligations under, and to carry out the terms of and the transactions contemplated by, each Agreement and this Certificate. 2. The execution and delivery by Subscriber of each Agreeme nt and this Certificate, and the performance by Subscriber of each Agreement, have been duly authorized by all necessary corporate or other action on the part of Subscriber and do not require any approvals, filings with or consents of any entity, governmental authority or person which have not previously been obtained or made. 3. Each of this Certificate and the Agreements is in full force and effect, has been duly executed and delivered on behalf of Subscriber and constitutes the legal, valid and binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally or general principles of equity, whether considered in a proceeding in equity or at law. 4. There is no litigation, action, proceeding or investigation pending or, to Subscriber’s knowledge, threatened against Subscriber before any court or governmental authority by, against, affecting or involving any of its business or assets that would affect Subscriber’s ability to carry out the transactions contemplated by any Agreement. 2 ny-1995493 5. The execution, delivery and performance by Subscriber of this Certificate and each Agreement, and the consummation of the transactions contemplated hereby and thereby, will not result in any violation of, breach of or default under, any term of its formation or governance documents, or of any contract or agreement to which it is a party or by which it or its property is bound, or any applicable laws. 6. Neither Subscriber nor, to Subscriber’s knowledge, Project Company is in default of any of its obligations under any Agreement or has breached any representation, warranty or covenant under any Agreement. 7. To Subscriber’s knowledge, (a) no event of force majeure exists under (and as defined in) any Agreement and (b) no event or condition exists which, with the passage of time or the giving of notice or both, would constitute a default or breach by either Subscriber or Project Company or enable either party to terminate or suspend its obligations under any Agreement. 8. All representations made by Subscriber in each Agreement were true and correct as of the effective date of each Agreement and continue to be true and correct in all material respects on the date hereof 9. Notwithstanding anything to the contrary in each Agreement, Subscriber’s current Allocation under each Agreement is 14.1%. 10. To Subscriber’s knowledge, Subscriber has no existing counterclaims, offsets or defenses against Project Company under any Agreement. Subscriber has no present knowledge of any facts entitling Subscriber to any material claim, counterclaim or offset against Project Company in respect of any Agreement. 11. The Agreements are the only agreements between Project Company and Subscriber with respect to the Project, and all conditions precedent to effectiveness under the Agreements have been satisfied or waived. 12. This C ertificate shall be governed by the laws of the State of Minnesota. This Certificate may be executed in two or more counterparts and by different parties on separate counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original. To the extent permitted by applicable laws, this Certificate may be executed electronically and delivered by electronic transmission, and such electronic signatures shall be deemed original signatures for all purposes. [Signature page follows] [Signature Page to Subscriber Estoppel – Dundas – Rosemount] ny-1995493 IN WITNESS WHEREOF, Subscriber has caused this Certificate to be duly executed as of the day and year first above written. City of Rosemount By: _______________________ Name: _______________________ Title: _______________________ By: _______________________ Name: _______________________ Title: _______________________ A-1 ny-1995493 Schedule A Subscription Agreements As used in this Schedule A, “Dundas Project Company” means Dundas Solar Holdings, LLC, a Minnesota limited liability company. ny-1996584 SUBSCRIPTION AGREEMENT ESTOPPEL CERTIFICATE Warsaw Solar LLC This Subscription Agreement Estoppel Certificate (this “Estoppel Certificate”) is delivered as of November ___, 2020 (the “Effective Date”) by the C ITY OF ROSEMOUNT, a political subdivision of the State of Minnesota (“Subscriber”), in favor of ALTUS P OWER AMERICA, INC., a Delaware corporation, or its affiliate (together with its successors and assigns, “Buyer”), VIRGO – HELIOS III, LLC, a Delaware limited liability company (“Seller”), and VIRGO MANGATA MM HOLDCO, LLC, a Delaware limited liability company (“Owner,” and together with Buyer and Seller, the “Parties”). WHEREAS, Subscriber entered into that certain (i) Subscription Agreement – SRC #040823 dated April 4, 2019, and (ii) Subscription Agreement — SRC #040824 dated April 4, 2019, each with Warsaw Solar LLC, a Minnesota limited liability company (“Company”) (together with all amendments and modifications thereto, collectively, the “Subscription Agreement”), a copy of which is attached hereto as Exhibit A; and WHEREAS, Subscriber executed that certain Subscriber Agency Agreement and Consent Form dated May 6, 2019 (together with all amendments and modifications thereto, collectively, the “Agency Agreement,” together with the Subscription Agreement, the “Agreement”), a copy of which is attached hereto as Exhibit B; and WHEREAS, Buyer intends to purchase from Seller 100% of the membership interests in Owner, which is the managing member of Virgo Mangata Holdco, LLC, which is the sole member and managing member of Company (the “Transaction”); and WHEREAS, in connection with the Transaction, the Parties require that Subscriber confirm and acknowledge certain matters related to the Agreement. Capitalized terms used but not defined herein have their assigned meanings in the Agreement. Based on the foregoing, and recognizing that the Parties will rely hereon, Subscriber hereby confirms and agrees as follows: 1. Exhibits A and B set forth a true and complete copy of all documents constituting the Agreement, including the Agreement and any amendments or modifications of the same. The Agreement is in full force and effect, has not been modified, changed, altered, or amended in any respect except as indicated in Exhibit A and B. 2. As of the Effective Date: a. all payments and deposits required to be paid or posted to Subscriber under the Agreement (if any) by Company have been so paid or posted; b. all obligations and conditions of Company to be performed under the Agreement (if any) have been performed by Company; 2 ny-1996584 c. there are no Events of Default existing under the Agreement on the part of Company or Subscriber, and no events have occurred that, with the passage of time or the giving of notice, or both, would constitute an Event of Default by Company or Subscriber under the Agreement; d. there is no existing basis for Subscriber or Company to cancel or terminate the Agreement; e. there is no litigation, action, proceeding or investigation pending or, to Subscriber’s knowledge, threatened against Subscriber before any court or governmental authority by, against, affecting or involving any of its business or assets that would affect Subscriber’s ability to carry out the transactions contemplated by the Agreement; and f. there are no defenses, offsets, credits, rent increases, or claims of Subscriber pursuant to any of the terms or conditions of the Agreement. 3. Subscriber’s CSG Allocation is 0.80 MW AC , which is approximately 39.88% of the Project’s projected output. 4. All representations made by Subscriber under the Agr eement are true and correct as of the date hereof. 5. Subscriber ratifies and confirms the Agreement in all respects. 6. To the Subscriber’s actual knowledge, there are no actions, whether voluntary or otherwise, pending against Subscriber under the Bankruptcy Laws of the United States or any state thereof. 7. Subscriber acknowledges and agrees that its consent is not required to consummate the Transaction. 8. The Agreement is the only agreement between the Company and Subscriber with respect to the Project. 9. Subscriber has read this Estoppel Certificate and acknowledges and understands the certifications and representations made herein. The undersigned signatory represents and warrants that he or she is duly authorized to execute this Estoppel Certificate on behalf of Subscriber. [Signature Page Follows Immediately] Warsaw Solar LLC (City of Rosemount) Subscriber Agreement Estoppel Certificate – Signature Page ny-1996584 IN WITNESS WHEREOF, Subscriber has executed this Estoppel Certificate as of the Effective Date. SUBSCRIBER: CITY OF ROSEMOUNT, a political subdivision of the State of Minnesota By: Name: Its: ny-1996584 EXHIBIT A COPY OF SUBSCRIPTION AGREEMENT ny-1996584 EXHIBIT B COPY OF AGENCY AGREEMENT