contratospr_example_pages.py

example_1 = [{'number': 1, 'text': '2012-PF0055\nDEPARTAMENTO DE DESARROLLO COMUNAL Y VIVIENDA\nMUNICIPIO AUTONOMO DE MANATI\nESTADO LlBRE ASOCIADO PUERTO RICO\nEn la Ciudad de Manatf, Puerto Rico,\n\nnov\n\n1 de septiembre\n\ndel 2011.\n\nCOMPARECEN\nDE LA PRIMERA PARTE: EI Municipio\n\nde Manatf, representado\n\nAUBIN CRUZ MANZANO, con segura\ncasado\n\ny\n\nvecino\n\nde\n\nManatf,\n\nsocial patronal\n\nPuerto\n\nRico;\n\npor su ALCALDE JUAN\n\n660-43-3486, mayor\n\nen\n\nadelante\n\nde edad,\n\ndenominado\n\nLA\n\nADMINISTRACION.\nDE LA SECUNDA PARTE: EL SR. JESUS COLON DE JESUS nurnero\n05-5177,\n\nmayor\n\ndenominado\n\nde edad,\n\nsottero y vecino\n\nde segura social 599-\n\nruerto\n\nde Manatf,\n\nRico; en adelante\n\nEL CONTRATANTE.\nEXPONEN\n\nPRIMERO:\n\nEL CONTRATANTE se obliga\n\npor la presente\n\nacscrtto a 10SResidenciales publicos Administrados\n\nPINTOR\n\na prestar\n\nservlclos\n\npor el Gobierno\n\ncomo\n\nMunicipal\n\nde Manatf.\n\nSECUNDO:\n\nLOSservicios a ser prestados\n\nnor EL CONTRATANTE seran\n\nconforme\n\nAomrntstracton\n\nde Vivienda Publica y cuatquler\n\nLA ADMINISTRACION estime necesario.\n\nEL CONTRATANTE se compromete\n\nnorarto\n\nestlputaoo\n\npor la\n\nsu asistencia de la manera que se Ie indique,\nsu satarlo cuatquler ausencia no autorizada,\nseaun\n\ncontrato\n\nVivienda\n\nfirmado\n\nentre\n\nPUblica requlere\n\n10sresidentes\n\nautorlzado\n\npersonal:\n\nde Admlntstraclon\n\na\n\nsets\n\n(6)\n\nde ocno (8) noras por dfa,\n\n0 a menos que sea\n\nde la PRPHA inciuvenoo\n\ndomingos,\n\ny un Personal de Mantenimiento.\n\nel saoaco, que\n\ndel servicio\n\nsera de 8:00 AM hasta 2:00 P.M. con el personal\n\nsiguiente:\n\nEI Personal\n\nAdministrativa\n\ndisponibles\n\ndurante\n\nTERCERO:\n\nde\n\ny/o por requerimiento\n\nEL CONTRATANTE acuerca\n\nMantenimiento,\n\ndolares.\n\nCUARTO:\n\nun\n\nQue seran\n\nde Vivienda Publica (AVP) 10 de Aportacton\nmediante\n\npor LA ADMINISTRACION Y estaran sujetos a la retencion\n\nsegura social, ccntrinucton\n\ny estaran\n\ncon LA ADMINISTRACION a devengar\n\nZOR11800, Partida 02-13-01-91.06. Los pagos se ejecutaran\nseguido\n\nmfnimo\n\npor la PRPHA.\n\nsatarlo mensual de MIL CIENTO SETENTA Y NUEVE ($1,179.00)\noacacos con Fondos de la Admlnlstraclon\n\ncon el\n\nEsta oficina\n\net horario\n\ny Personal\n\nde\n\nestara abierta\n\ndebe abrlrse oesce tas 8:00 AM y cebera cerrar alas 5:00 P.M., excepto\n\nemergencias\n\nde\n\nlocales y sabados asignados.\n\nde dfas de fiesta oficiales federales\n\nAdministradora\n\na registrar\n\nde Manatf y la Aorntntstracton\n\nLa oficina\n\nde otra manera 0 por escrito\n\nsiguiente\n\ndfas feriados\n\ny al publico en general por un mfnimo\n\ndfas nor semana, a excepclon\n\nque\n\nacernas aceota que se Ie descuente\n\nel Municipio\n\n10 siguiente:\n\nnorarlo\n\nal\n\nsobre ingreso y otras retenciones\n\nel trarntte\n\nusual\n\npor concepto\n\nde\n\nsujetas por ley.\n\nEL CONTRATANTE acumuiara vacaciones regulares a razon de 2 1/2 dfas\n\npor caca mes y 1 1/2 dfas por licencia por enfermedad\n\npor cada mes de servicio\n\nmunicipal,\n\nacernas\n\nsiempre\n\ndisponible\n\n10s ronoos y ciento veinte ($120.00> dotares por aportaclon\n\nel Bono\n\nEL CONTRATANTE no tendra\n\nNavideno,\n\nderecho\n\nBono\n\nde Verano\n\na disfrutar\n\ny cuando\n\nde 10Sdfas feriados\n\nesten\n\nal plan medico.\ndel gobierno'}, {'number': 2, 'text': 'local y de ausentarse\ndescontara\n\nen estos eras no se Ie cargara a vacaciones\n\nregulares y st se Ie\n\nde su satarlo.\n\nQUINTO:\n\nEL CONTRATANTEse compromete\n\na curnptlr con 10Ssiguientes\n\ndeberes\n\ny obligaciones:\n•\n\ncumpura\n\ncon tas normas y filosoffa\n\n•\n\ncumpura\n\ncon 10Sreglamentos\n\n•\n\nMantendra\n\n•\n\nRealizara ias siguientes\n\ndel Municipio\n\nAutonorno\n\nde la Admlnlstraclon\n\nuna buena comuntcacton\ntareas:\n\nde Vivienda Publica.\n\ncon el Aominrstracor\n\nPintar\n\nde Manatf.\n\nvacantes,\n\ndel proyecto.\n\noficinas,\n\nareas cornunates,\n\ncancnas, areas de juego y otras tareas tales como:\na. operara\n\nla\n\nmaourna\n\nde podar grama (trimmer> y otro equtpo destinado\n\npara el mantenimiento\n\nde areas verdes, y 10Srnantendra\n\nb.\n\nAvucara al Albanil en 10Strabajos que asr 10 requieran.\n\nc.\n\nMantendra\n\numptos.\n\nsu area Iibre de grafitos y basura.\n\nd. Repartira toea la correspondencla\n\naorntnlstrattva\n\ne. Mantendra\n\numotas tas areas de deposito\n\nf.\n\nel centro\n\nMantendra\n\na 10s residentes.\n\nde basura.\n\nComunal, at igual que las Oficinas Administrativas\n\nurnotas y organizadas.\ng.\n\nizara tas banderas de P.R. y E.U. diariamente.\n\nh. Mantendra\ni.\n\numptas las escaleras del area\n\nRealizara cualquler\n\nasrcnaoa.\n\notra tarea relacionada\n\nque Ie sea encomendada.\n\n•\n\nsu ciasmcacton es considerada\n"Turnos Rotativos" Artrcuto 3 seccton 3.1\nJornada de rranalo del Reglamento Interno de Jornada de Trabajo y Asistencia\ndel Municipio Autonomo de Manatf.\n\n•\n\nEI mes aslqnado tenora el deber de responder tas lIamadas de emergencia\n24 horas seeun 10 requiere ra Aommtstracton de Vivienda Publica.\n\nde\n\nAcernas de cuatquter otra tarea aslqnada afines con la posicion.\n\nSEXTO:\n\nDurante\n\nla vigencia\n\nsolicitud\n\ndel Administrador\n\nde este contrato\n\ndel proyecto\n\nretaclone con ta oresentacton\n\npublicarse\n\n0\n\nconsentimiento\nel municipio\n\nSEPTIMO:\n\nponerse\n\na\n\n0 del Senor Alcalde,\n\nde sus servicios.\n\nEL CONTRATANTE,0 a su ctsoostcton,\n\ncuarquter\n\ninformacion\n\ninformacion\n\nasf como cuatquter informe\n\nctsoosicron\n\nde\n\nprevia del Administrador\n\notras\n\npersonas\n\ndel provecto\n\nse reserva el derecho de reoroouccton\n\nEste contrato\n\nEL CONTRATANTE, rendira\n\nsera interpretado\n\nque se\n\nrecoptlada\n\nal efecto,\n\nu orcantzacton\n\n0 del Senor Alcalde.\n\nacernas, son independientes\n\nmas de dichas ctausulas no afecta\ncondiciones\n\nOCTAVO:\n\nra\n\nnor\n\nno ooora\nsin\n\nel\n\nAdernas\n\nparcial 0 total de 10Smismos.\n\nde acuerdo\n\ncon tas leves del sstaoo\n\nLibre Asoclaoo de Puerto Rico y estara sujeto a euas. Las ctausutas y condiciones\neste contrato,\n\na\n\ny separadas entre sf y\n\nvalidez de ias oernas.\n\nra nulidad\n\nde\n\nde una 0\n\nArnbas partes aceptan\n\nlas\n\naqui establecidas las cuates se obligan a curnpur.\n\nEste contrato\n\nentrara\n\nen vigor\n\noesce el 1 de septiembre\n\nhasta el 31 de diciembre\n\nde 2011, mientras\n\nfondos\n\nde Vivienda Publica.\n\nde la Aomlnlstraclon\n\nel municipio\n\ncontinue\n\ndel 2011\n\nrecibiendo\n\n10S'}, {'number': 3, 'text': 'La parte contratada certifica y garantiza que al momenta de suscribir\n\nNOVENO:\n\neste contrato na rendido ptantuas contributivas durante 105 cinco (5) anos prevlos a\neste contrato y no aoeuda contribuciones al Estado Libre Asociado de Puerto Rico, 0\nse encuentra acogido a un plan de paso. con cuvos terrnlnos y condiciones esta\ncumpliendo.\n\nExpresamente se reconoce que esta es condlclon esencial del presente\n\ncontrato, y de no ser correcta en todo\ncausa suficiente\n\n0\n\nen parte la anterior certrncacton,\n\npara que la parte contratada\n\ntenga que reintegrar\n\nesto sera\na ra parte\n\ncontratante toea suma de dinero recibida balo este contrato.\n\nDECIMO:\n\ncertifica y garantiza que al momenta de la firmar del\n\nEL CONTRATANTE\n\npresente contrato\n\nno tiene pension alimentarfa en el Departamento\n\nde servlclos\n\nSociales (ASUMEL\n\nEL CONTRATANTE\n\ncum pie con tas disposiciones del Articulo 3.3 DyE de\n\nsuca Gubernamental,\n\naprobada el 24 de juuo de 1985 y no necesita dispensa\n\nUNDECIMO:\n\nla Ley de\n\noorque cum pie con tas excepciones contenidas en ra Ley y en el Articulo 12 (f) Y (g)\ndel Reglamento de\n\nDUODECIMA:\n\nsnca Gubernamental.\n\nNinguna prestactcn\n\ncontraprestacron\n\n0\n\nobjeto de este contrato podra\n\nexigirse hasta tanto el mismo se nava presentado para registro en la Oficina del\ncontrator a tenor con 10 dispuesto en ra Ley num. 18 del 30 de octubre de 1975,\nsecun enmendada.\n\nAmbas partes aceptan las condiciones\n\nDECIMOTERCERA:\n\nonuaan a cumpur.\n\nEste contrato\n\nexpuestas. las cuales se\n\npodra rescindirse por una\n\n0\n\narnbas partes\n\nnotmcancoto con 30 dfas de antetacton.\n\nDECIMOCUARTA:\n\nEL CONTRATANTE\n\ndebera informar a la Admlntstraclon Municipal de\n\nManatf si es residente en uno de 105 siguientes provectos: Los Murales, Brisas de\nCampo Alegre\n\n0\n\nEnrique zorrtna.\n\nEL CONTRATANTE\n\ntiene la responsabilidad\n\nde\n\nnotificarlo en la oficina administrativa del orovecto en que resida de inmediato para\nsu debida orlentaclon y acclon de su parte, de no cumpur\neste contrato.\n\nsera motivo para cancetar\n\nEn ra clausuta cuarta secclon D del contrato\n\nde Residentes de ta\n\nAdmlntstracton de Vivienda Publica estlpula que tooo ingreso debe ser notificado.\n\nDADO:\n\nEn Manatf, Puerto Rico: hov dfa 1 de septrembre del 2011.\n\nL·~CL\nAN A.\nANO\nV/O SU REPRESENTANTE\nCOBIERNO MUNICIPAL DE MANATI\n\n~OLON\n\nDE JESUS\n\nPINTOR\n\nResidenciales\n\nPLiblicos'}]

example_2 = [{'number': 1, 'text': 'NUMERO DE CONTRATO:\nNOMBRE CONTRATISTA:\n\n2017-000-205\nPES GENERAL CONTRACTOR, INC.\nWilliam Cintron Antonsanti\n\nNUMERO DE PARTIDA:\n\n02-03-04-94.32 CITY TAX\n\nESTADO LIBRE ASOCIADO DE PUERTO RICO\nGOBIERNO MUNICIPAL DE YAUCO\nSECRETARIA MUNICIPAL\nAPARTADO 1\nYAUCO, PUERTO RICO 00698\nTELEFONO (787) 856-1340\n\nCONTRATO POR SERVICIOS DE CONSTRUCCION\nEn la ciudad de Yauco, Puerto Rico, a 10 de abril de 2017.\n\nCOMPARECEN\ndo en adelante EL MUNICIPIO,\nDE UNA PARTE: El Municipio de Yauco, Puerto Rico, denomina\nmayor de edad, casado,\ny representado en este acto por su Alcalde, Angel Luis Torres Ortiz,\nos\nuna entidad gubernamental con personalidad juridica y existente bajo la Ley de Municipi\n1991,\nde\nagosto\nde\n30\ndel\n81\nNlarnero\nAutonomos del Estado Libre Asociado de Puerto Rico, Ley\nsegiin enmendada.\ncon oficinas en Yauco, Puerto\nDE LA SEGUNDA PARTE: PES GENERAL CONTRACTOR, INC.,\nmayor de edad y vecino de\nRico, representado en este acto por William Cintron Antonsanti,\nYauco, Puerto Rico, en adelante denominado La Segunda Parte.\ny\nAmbas partes con la capacidad legal necesaria para contratar y a tales efectos libre\nvoluntariamente.\n\nEXPONEN\ncontenido\nPRIMERO: Que la disposicion legal que autoriza la celebraciOn de este contrato esta\nda,\nenmenda\nen los Articulos 2.001 y 3.009 de la Ley NICImero 81 del 30 de agosto de 1991, segan\nn en\nLey de Municipios AutOnomos del Estado Libre Asociado de Puerto Rico, los cuales establece\nservicios\nlos\nr\ncontrata\npara\nos\nfacultad\nlo pertinente que el Alcalde y el Municipio est6n\nprofesionales y consultivos necesarios y convenientes para la realizacion de sus funciones.\n\nSEGUNDO: Que la Primera Parte se propone contratar los servicios de construccion de la\nSegunda Parte para "construccion puente en el Bo. Sierra Alta, Sector Quebrada Grande\n- El Buren en el Municipio de Yauco".\nTERCERO: Que con el proposito de cumplir con la politica y administracion vigente, el Municipio\nn.\nse propone contratar los servicios de la Segunda Parte, luego del debido proceso de cotizacio\nCUARTO: La Segunda Parte se compromete a realizar la labor acordada, sujeta a los terminos\nntos\ny condiciones que mas adelante se especifican y a las disposiciones de las Leyes y Reglame\ndel Estado Libre Asociado de Puerto, a las Cartas Circulares Directivas que emita el Secretario\nde Hacienda, la Oficina Central de Administracion de Personal, la Oficina de Etica Gubernamental\nlos\ny la Oficina del Comisionado de Asuntos Municipales, relativas a la contrataciOn y pago de\neste\nservicios, a las cuales quedan subordinados expresamente las clausulas y condiciones de\ncontrato.\n\nQUINTO: EL CONTRATISTA se compromete a cumplir con las Normas Laborales Federales:\ng\nForma 4010 "Federal Labor Standards Provisions", Escala Salarial PR-0001 (Buildin\nSafety\nHour\nWork\nt\nContrac\nConstruction), incluidas en Davis Bacon Act, Copeland y\nStandard Act.\nSEXTO: La Segunda Parte acepta realizar los servicios de construccion, asi como se compromete\na utilizar sus propios recursos o los servicios de cualquiera otra entidad profesional, para Ilevar a\ncabo los trabajos requeridos.'}, {'number': 2, 'text': 'SEPTIMO: La Segunda Parte es un Contratista Independiente y este contrato no surtir6 el efecto\n\nde conferirle a la Segunda Parte, a sus empleados, agentes o socios el status de empleado del\nMUNICIPIO, ni le dara derecho a acumular licencia, ni a participar de los beneficios de la Ley\nde Compensacion por Accidentes en el Trabajo, ni de leyes similares.\n\nOCTAVO: Queda entendido que la Segunda Parte no podra reclamar pago por concepto de\ngastos de viajes, dietas, ni por ningan otro gasto incurrido por el en el desempeno de funciones\ny/o gestiones contractuales.\nNOVENO: La Segunda Parte certifica que no recibe pago o compensaciOn alguna por servicios\nregulares prestados bajo nombramiento a otra entidad publica o municipio a menos que los\nmismos, esten autorizados por Ley.\nDECIMO: La Segunda Parte hace constar que no tiene otros contratos can municipios o agencias\ndel gobierno cuyos trabajos sean compatibles can lo que ha de realizar bajo este contrato y se\ncompromete a no aceptar durante la vigencia de este contrato, alguno que pueda acarrear un\nconflicto de interes con el trabajo a realizar en este contrato.\nLa Segunda Parte representa conflicto de interes, cuando en beneficio de un cliente es su deber\nproveer aquello a que debe oponerse en cumplimiento de sus obligaciones contractuales con otro\nclient& anterior, actual o potencial. Representa conflicto de intereses, ademas cuando su\nconducta es descrita como tal en las mismas eticas reconocidas en su profesion o en las Leyes y\nReglamentos del Estado Libre Asociado de Puerto Rico. En contratos con Sociedades o Firmas\nconstituira una violation de esta prohibition el que alguno de los directores, asociados o\nempleados incurra en la conducta aqui descrita. La parte contratada evitara toda apariencia de\nconflicto para con la parte contratada, le notificara por escrito sus hallazgos y su intencion de\nrescindir el contrato inmediatamente.\nUNDECIMO: La Segunda Parte certifica mediante este contrato el cumplimiento con la Ley\nNamero 12 del 24 de julio de 1985, segan enmendada, conocida como Ley de Etica\nGubernamental en el sentido de que ningan empleado y oficial del Municipio ni miembro alguno\nde su familia, hasta el cuarto grado de consanguinidad o hasta el segundo grado de afinidad,\ntendra interes pecuniario directo o indirecto en los trabajos encomendados, salvo que haya sido\nexpresamente autorizado por el Gobernador de Puerto Rico previa consulta con el Secretario de\nHacienda y el Secretario de Justicia del Estado Libre Asociado de Puerto Rico.\n\n?fi\n\nDUODECIMO: El presente contrato se otorga por un termino que comienza a partir del\nabril 2017 y termina el 25 de junio de 2017.\n\n12 de\n\nDECIMO TERCERO: EL CONTRATISTA se compromete a pagar a EL MUNICIPIO la cantidad\nde teen dolares ($100.00) por concepto de darios liquidos por cada clia calendario que\ntranscurra despues de la fecha de terminacion de este Contrato sin haber entregado la obra y\nque no sea debidamente justificado o aceptado por EL MUNICIPIO. La penalidad sera rebajada\nde las facturas sometidas por EL CONTRATISTA y/o de la cantidad retenida en cada certificacion\npagada.\nDECIMO CUARTO: NEGLIGENCIA Y ABANDONO: El desemperio negligente de sus\nobligaciones o el abandono de las mismas por la Segunda Parte, se considerara como una\nviolation a este contrato y sera causa suficiente para que el MUNICIPIO declare terminado, y\nsin ninguna limitaciOn y, no obstante, cualquier derecho en contrario queda relevado y descarga\nel MUNICIPIO de toda obligacion o responsabilidad. En este caso la Segunda Parte debera\nindemnizar a la Primera Parte por todos los darios y perjuicios ocasionados por su accion u\nomision.\nDECIMO QUINT(); La Segunda Parte hace constar que no tiene caso de pension alimentaria a\ntraves de la Administracion para el Sustento de Menores del Departamento de la Familia, Ley\nNam. 5 del 30 de diciembre de 1986, Ley Organica de la Administracion para el Sustento de\nMenores.\nDECIMO SEXTO: La Segunda Parte hace constar que mantendra poliza de la Corporacion del\nFondo del Seguro del Estado (CFSE) que cubra los servicios ofrecidos bajo este contrato.\nEntregara al MUNICIPIO la certificaciOn de no deuda otorgada por la CFSE o plan de pago\naprobado por la misma agencia, en o antes de diez (10) dias posterior a la firma de este contrato\no el mismo sera nulo e inexistente.\nDECIMO SEPTIMO: Las partes acuerdan que copia de este contrato sera sometido a la Oficina\ndel Contralor de Puerto Rico, antes que transcurran quince (15) dias de haber firmado el mismo\n(Ley [Varner° 10 del 30 de octubre de 1975, segun enmendada).'}, {'number': 3, 'text': 'DECIMO OCTAVO: La Segunda Parte manifiesta no tener interes pecuniario o de otra indole en\nning6n caso o reclamacion en la que el MUNICIPIO sea parte.\nDECIMO NOVENO: Este contrato no limita la facultad de la Segunda Parte para ejercer\nfunciones o dedicarse a otras actividades licitas que no conlleven ni aparenten un conflicto de\ninteres con el MUNICIPIO.\nVIGESIMO: Para la devolucion del diez porciento (10%) retenido la SEGUNDA PARTE\nsometera junto a Ia facturacion final de pago, una declaracion jurada donde indique que no tiene\ndeudas pendientes por concepto de compras de materiales, deudas a empleados, a\nsubcontratistas, si los hubiera, y sometera adernas la Carta de Relevo del Fondo del Seguro del\nEstado para dicho proyecto.\n\nVIGESIMO PRIMERO: La SEGUNDA PARTE cumplire con los siguientes requisitos:\nA)\nB)\nC)\nD)\nE)\nF)\nG)\nH)\nI)\nJ)\nK)\n\n"The Clean Air Act". Segan enmendada, 42 USC1857\n"The Federal Water Pollution Control Act", seg6n enmendada, 33\nUSC 1251\n"Environmental Protection Agency" con relacion a la parte 15 del 24\nCFR\nClean Water Act, con la Ley Copeland o "Anti Kick (18 USC874)\n"Inmigration Reform and Control Act".\n"Civil Rights Act"\n"Age Discrimination in Employment Act"\n"Drug-Free Workplace Act"\n"American with Disabilities Act (ADA)"\n"Occupational Safety and Health Act" (OSHA)\n"Buy America Act"\n\nVIGESIMO SEGUNDO: Al momento de firmar el presente contrato presentara las fianzas de\n"Payment & Performance Bond" en original, Ia poliza eventual de Ia Corporacion del\nFondo del Seguro del Estado y poliza de responsabilidad publica.\nVIGESIMO TERCERO: EL CONTRATISTA garantizara la obra por un periodo de un (1) aho\ndespues de la inspeccion final y aprobacion de EL MUNICIPIO. Si durante este periodo se\nencuentra algt:Jn defecto de construction o incumplimiento con alguna de las especificaciones EL\nCONTRATISTA reparara la misma sin costo alguno para EL MUNICIPIO. Dicha reparacion\nsera garantizada por un periodo de un (1) aho luego de aceptada por EL MUNICIPIO.\nVIGESIMO CUARTO: La Segunda Parte certifica que conoce las normas de etica de su profesion\ny asume responsabilidad por las mismas.\nVIGESIMO QUINTO: La Segunda Parte no ha sido convicto ni acusado de ningiln delito contra\nel erario, la fe y la fund& pt:Jblica o que envuelva propiedad o fondos ptblicos, ya sean estatales\no federales\nVIGESIMO SEXTO: La Segunda Parte certifica que al presente no esta excluido, suspendido o\nha sido propuesto a ser excluido, declarado inelegible o excluido voluntariamente de\ntransacciones cubiertos por cualquier departamento o agencia federal, estatal, municipal y que\nno se encuentra incluido en el listado denominado "Debarment and Suspension List".\nVIGESIMO SEPTIMO: Si durante la vigencia del presente contrato LA SEGUNDA PARTE fuera\nconvicta de alg6n delito contra el erario, la fe o la fund& publica o que envuelva propiedad o\nfondos pablicos, ya sean estatales o federales; sera esto causa suficiente para que LA PRIMERA\nPARTE de por terminado el presente contrato, para proteger los fondos e intereses pt:Jblicos.\nVIGESIMO OCTAVO: LA SEGUNDA PARTE hace constar que su propuesta es tipo "LUMP\nSUM" y la misma contempla todas las partidas espedficas sometidas en la cotizaciOn y/o\nespecificaciones tecnicas aplicables.\nVIGESIMO NOVENO: LA SEGUNDA PARTE exime y releva de toda responsabilidad a LA\nPRIMERA PARTE, sus empleados y funcionarios en cualquier reclamacion, pleitos o demandas\nque se presenten relacionado directa o indirectamente con la operacion, actividad o negocio\nobjeto de este contrato. Esta exoneracion y relevo se interpretaran de la forma mas favorable a\nLA PRIMERA PARTE, incluye el relevo de pago de cualquier sentencia, penalidad o transaccion\nasi como gastos de litigio, intereses y honorarios de abogado. LA PRIMERA PARTE no tendra\nresponsabilidad alguna, directa o indirectamente por perdida o daho alguno que pueda sufrir\ncualquier persona juriclica o natural, por razon o con motivo de la ejecucion, operacion o actividad\nobjeto de este contrato. LA SEGUNDA PARTE se compromete a proveer cualquier\nindemnizacion que proceda.'}, {'number': 4, 'text': 'TRIGESIMO: LA SEGUNDA PARTE sera responsable de preparar e instalar un rOtulo indicando\nel proyecto que se estara construyendo. El mismo debera estar instalado antes de comenzar la\nobra y el modelo sera provisto por el Municipio.\n\nARTICULO 1-RESPONSABILIDAD DEL MUNICIPIO\n1.1\n\nEL MUNICIPIO nombrara un inspector y/o representante quien sera responsable\nde:\n\n1.1.1 Mantener contacto directo y continuo con la Segunda Parte con relaciOn a los\nservicios objeto de este contrato. Asignara personal para la coordinacion e\ninspeccion de los servicios contratados por el MUNICIPIO y relacionados con este\ncontrato.\n1.1.2 Coordinar en todo lo que fuese necesario la comunicacion entre el MUNICIPIO y LA\n\nSEGUNDA PARTE.\n1.1.3 Sera responsabilidad del MUNICIPIO todo lo administrativo relacionado con el\ncontratista que realice los servicios contratados.\n1.1.4 Mantendra una Inspeccion durante la vigencia del contrato y la construed& de\nconformidad con las leyes, normas y reglamentaciones estatales y federales.\n\nARTICULO 2-RESPONSABILIDAD DE LA SEGUNDA PARTE\n2.1\n\nDescripcion del trabajo:\nEl contratista se compromete a efectuar los trabajos\ncorrespondientes en beneficio de EL MUNICIPIO segim se describen a continuacion:\n2.1.1\n\nConstruccien puente en el Bo. Sierra Alta, Sector Quebrada Grande —\nBuren, Municipio de Yauco\n\nPartida I\n■ Adquisicion de Seguros y fianzas (Bid bond), Poliza de Responsabilidad (CFSE) con\nendoso al Municipio de Yauco, pago de arbitrios y patentes municipales. Compra\ny transporte al Proyecto de cinco (5) vigas de 40\' de largo por 14" de alto por 6\n$15,000.00\n3/4" de ancho Tipo H, cap 30#pie\n\nPartida II\n•\n\nConstrued& de tres (3) muros de soporte de 20\' de largo por 12" de espesor con\nzapata de 20\' X 12" X 3\' de ancho con un alto aproximado de 4\' a 5\' reforzada\n$15,000.00\ncon varilla de 3/8", 1/2" 5", todo en concreto armado\n\nPartida III\n•\n\nConstrued& loza 50 pies de largo por 20 pies de ancho reforzado con varilla 3/8"\nX 1/2" X 5/8"; espesor de la loza 12"\n$20,000.00\n\nPartida IV\n•\n\nConstrued& 28 muros de seguridad (14 a cada lado) de 18" de alto por 12" de\nespesor y 36" de largo reforzado con varilla de 3/8 X 1/2 y 5/8. Todo el proyecto\nsere en concreto armado.\n$23,100.00\n\nPara este proyecto se incluye:\n• mano de obra\n•\nMateriales de construed&\n• Uso de equipo pesado\nTotal\n\n$73,100.00\n\n2.1.2 La Segunda Parte sere responsable de cumplir con los parametros de seguridad\nestablecidos por OSHA.\n2.1.3 La Segunda Parte tendra la responsabilidad absoluta del pago de horas extras\ndurante la construccion.\n2.1.4 Todo cambio necesario realized° en el diseno, producto de error u omisiOn para\natemperarlo a las condiciones fisicas del "site" es responsabilidad del contratista y'}, {'number': 5, 'text': 'disenador. Esto al igual que la creaciOn de un diserio final actual ("as-build") de\nla obra una vez terminada.\n2.1.5 El contratista se compromete a someter al Municipio un informe semanal del status\ndel proyecto.\n\nARTICULO 3 - COMPENSACION Y METODO DE PAGO\n3.1\n\nCOMPENSACION TOTAL\n\nPor los servicios antes descritos el MUNICIPIO acuerda pagar una compensacion igual a\nsetenta y tres mil cien dolares ($73,100.00). El MUNICIPIO certifica que posee los fondos\npara cubrir esta obligaciOn contractual y los mismos se cargaran a la Partida Presupuestaria\nNumero: 02-03-04-94.32 CITY TAX.\n3.1.1 Todas las facturas sometidas por la Segunda Parte para el cobro de sus servicios deberan\ncontener la siguiente certificacion:\n"Bajo pena de nulidad absoluta certifico que ningt:in servidor pUblico de el Municipio de\nYauco es parte o tiene algun interes en las ganancias o beneficios producto del contrato objeto\nde esta factura y de ser parte o tener interes en las ganancias o beneficios producto del contrato,\nha mediado una dispensa previa. La Unica consideraciOn para suministrar los bienes o servicios\nobjeto del contrato ha sido el pago acordado con el representante autorizado de la agencia. El\nimporte de esta factura es justo y correcto. Los servicios han sido prestados, y no han sido\npagados" Boletin Administrativo 0E-2001-73 Memorando Circular 2002-01\n3.1.2 De todas y cada una de las facturas de pago sometidas por el CONTRATISTA, el\nMUNICIPIO retendra el diez porciento (10%), el cual sera reembolsado al CONTRATISTA una\nvez cumpla con la clausula vigesimo primero de este contrato y el proyecto sea aceptado por el\nMUNICIPIO.\n3.1.3 Las facturas sometidas sera pagadas durante los siguientes cuarenta y cinco\n(45) dias laborables.\n3.1.4 La parte contratada se hace responsable de efectuar los pagos correspondientes al Seguro\nSocial Federal y por concepto de la Ley de Contribuciones sobre Ingresos de Puerto Rico, por\ncualquier cantidad tributable por tales conceptos, como resultado de los ingresos aqui acordados.\nEl MUNICIPIO sera responsable de notificar al Negociado de Contribucion sobre Ingresos las\ncantidades pagadas a la Segunda Parte por sus servicios.\n3.1.5 La Segunda Parte certifica y garantiza que al momento de suscribir este contrato ha\nrendido sus planillas de ContribuciOn sobre Ingresos durante los cinco (5) arios previos a este\ncontrato y no tiene deudas por tales conceptos, por ContribuciOn sobre la Propiedad Mueble o\nInmueble o por cualquier otro tipo de contribucion, arbitrio o licencia con el Estado Libre Asociado\nde Puerto Rico o con el MUNICIPIO. Expresamente se reconoce que esta es una condicion\nesencial del presente contrato y de no realizarse, sera causa suficiente para que el MUNICIPIO\npueda dejar sin efecto el mismo y la Segunda Parte tenga que reintegrar al MUNICIPIO toda\nsuma de dinero recibida bajo este contrato. (Memorando Circular OCAM 92-31).\n3.1.6 La Segunda Parte certifica y garantiza que no discriminara contra terceros por razones de\nraza, religion, color, sexo u origen nacional. El MUNICIPIO advierte que el faltar en el\ncumplimiento de estos terminos podria significar la cancelacion del contrato y la reclasificacion\nde la Segunda Parte como inelegible para futuros contratos.\n3.1.7 La Segunda Parte debera dar acceso por un termino de tres arios al MUNICIPIO, el\nContralor o a sus agentes autorizados a documentos directamente relacionados con este contrato.\n3.1.8 El MUNICIPIO podra en caso de que la Segunda Parte incurra en incumplimiento de\neste contrato, recurrir a remedios administrativos, contractuales o legales a fines de establecer\npenalidades. La Segunda Parte podra en caso de que el MUNICIPIO incurra en incumplimiento,\nrecurrir a remedios legales a fines de reclamar compensaciones.\nARTICULO 4-CANCELACION DEL CONTRATO\n4.1\nSi por alguna causa LA SEGUNDA PARTE incumpliere con sus responsabilidades en este\ncontrato o si violara cualquiera de los acuerdos, estipulaciones, o convenios del mismo,\nabandonara la obra, incurriera en conducta negligente o no fuera satisfactorio el progreso de la\nobra a juicio de LA PRIMERA PARTE; podra esta terminar este contrato de inmediato y asi lo\nnotificara por escrito a LA SEGUNDA PARTE. En dicho caso, todos los documentos terminados\no sin terminar, datos, estudios y reportes preparados por LA SEGUNDA PARTE bajo este\ncontrato seran, a °odor) de LA PRIMERA PARTE, propiedad de esta. No obstante lo arriba\nindicado LA SEGUNDA PARTE no estara relevado de sus responsabilidades conforme'}, {'number': 6, 'text': 'este contrato y LA PRIMERA PARTE podra retener cualquier pago a LA SEGUNDA PARTE\nhasta tanto se determine la cantidad exacta de darios causados a LA PRIMERA PARTE como\nconsecuencia del incumplimiento y/o de la conducta negligente de LA SEGUNDA PARTE.\nTodo lo anterior, sin perjuicio del derecho de LA PRIMERA PARTE a exigir el cumplimiento\nespecifico del contrato a traves de la compania de finanzas del proyecto y de la indemnizacion\na la que pudiera tener derecho por los darios y perjuicios que el incumplimiento del contrato le\nocasione a LA PRIMERA PARTE.\n4.2\nCualquiera de las partes puede dar por terminado este contrato durante la vigencia del\nmismo mediante previa notificacion por escrito a la otra parte, por correo certificado haciendole\nsaber su decision con por lo menos treinta (30) dias de antelacion a la fecha de terminacion.\nARTICULO 5 CERTIFICACION DE AUSENCIA DE CONFLICTO\n-\n\nNingun(a) servidor(a) publico(a) de esta agencia ejecutiva tiene interes pecuniario en este\ncontrato, compra o transaccion comercial, y tampoco ha tenido en los Ultimos cuatro (4) arms o\nindirectamente interes pecuniario en este negocio.\nNingt:in(a) servidor(a) pablico de esta agencia ejecutiva me solicito o acepto, directa o\nindirectamente para el (ella), para algtan miembro de su unidad familiar o para cualquier persona,\nregalos, gratificaciones, favores, servicios, donativos, prestamos o cualquier otra cosa de valor\nmonetario.\nNingtan(a) servidor(a) pLablico(a) me solicito, directa o indirectamente, para el(ella), para algtan\nmiembro de su unidad familiar, ni para cualquier otra persona, negocio o entidad, bien alguno de\nvalor economic°, vinculados a esta transaccion, de persona alguna de mi entidad como pago por\nrealizar los deberes y responsabilidades.\nNingtan(a) servidor(a) pLablico me solicito, directa o indirectamente, para el(ella), para algtan\nmiembro de su unidad familiar, ni para cualquier otra persona, negocio o entidad, bien alguno de\nvalor economic°, incluyendo regalos, prestamos, promesas, favores o servicios a cambio de que\nla actuaciOn de dicho servidor(a) ptablico(a) este influenciada a favor mio o de mi entidad.\nNo hago region de parentesco, dentro del cuarto grado de consanguinidad y segundo por\nafinidad, con ningan(a), servidor(a) piablico(a) que tenga facultad para influenciar y participar en\nlas decisiones institucionales de esta agenda ejecutiva.\nINTERPRETACION: Este contrato esta en todo tiempo sujeto a las Leyes del Estado Libre\nAsociado de Puerto Rico, sera interpretado de acuerdo con las mismas.\nACEPTACIONES\n\nLas partes libremente aceptan el documento como esta redactado y las condiciones aqui\ncontenidas, las cuales se obligan a cumplir fielmente. En testimonio de lo cual y para que aqui\nconste suscriben este contrato en Yauco, Puerto Rico hoy, 10 de abril de 2017.\n\nAngel Luis Torres Ortiz\nAlc\ne\n\n*Ulla C. troll Anton nti\nRepresentante\n\nPES GENERAL CONSTRACTOR, INC.\n\nP.O. Box 366\nYauco, Puerto Rico 00698\nTelefono: (787)640-143 / 404-1089 / 856-6847'}]

example_3 = [{'number': 1, 'text': '2020-PPP033\nExecution Version\nPRIVILEGED AND CONFIDENTIAL\n\nPUERTO RICO TRANSMISSION AND DISTRIBUTION SYSTEM\nOPERATION AND MAINTENANCE AGREEMENT\ndated as of\nJune 22, 2020\nby and among\nTHE PUERTO RICO ELECTRIC POWER AUTHORITY\nas Owner,\nTHE PUERTO RICO PUBLIC-PRIVATE PARTNERSHIPS AUTHORITY\nas Administrator,\nLUMA ENERGY, LLC\nas ManagementCo,\nand\nLUMA ENERGY SERVCO, LLC\nas ServCo'}, {'number': 2, 'text': 'CONFIDENTIAL\nTABLE OF CONTENTS\nPage\n\nARTICLE 1 DEFINITIONS; INTERPRETATION ................................................................ 2\nDefinitions........................................................................................................ 2\nInterpretation; Construction ........................................................................... 32\nARTICLE 2 PURPOSE; EFFECTIVE DATE; TERM ......................................................... 34\nPurpose ........................................................................................................... 34\nEffective Date ................................................................................................ 34\nTerm ............................................................................................................... 35\nARTICLE 3 OWNERSHIP OF THE T&D SYSTEM ........................................................... 36\nOwnership ...................................................................................................... 36\nEngagement of Operator ................................................................................ 36\nUse of T&D System ....................................................................................... 36\nLiens ............................................................................................................... 36\nRight of Access .............................................................................................. 36\nExclusivity ..................................................................................................... 37\nEssential Public Service ................................................................................. 37\nReporting Obligations .................................................................................... 37\nQualified Management Contract .................................................................... 37\nARTICLE 4 FRONT-END TRANSITION PERIOD............................................................. 40\nFront-End Transition Period Generally ......................................................... 40\nManagementCo Responsibilities ................................................................... 44\nOwner and Administrator Responsibilities .................................................... 49\nGovernmental Approvals and Tax Matters .................................................... 51\nConditions Precedent to Service Commencement Date ................................ 52\nFront-End Transition Period Compensation .................................................. 55\nClosing the Front-End Transition Period ....................................................... 57\nFailure of Service Commencement Date Conditions..................................... 57\nSubcontractors During the Front-End Transition Period ............................... 60\nARTICLE 5 O&M SERVICES ................................................................................................ 62\nServices Generally ......................................................................................... 62\nSystem Contracts ........................................................................................... 62\nBilling and Collection .................................................................................... 63\nSystem Remediation ...................................................................................... 64\n-i-'}, {'number': 3, 'text': 'CONFIDENTIAL\nTABLE OF CONTENTS\n(continued)\nPage\nCapital Improvements .................................................................................... 64\nSystem Regulatory Matters ............................................................................ 66\nSafety and Security ........................................................................................ 68\nLabor and Employment; Employee Benefits ................................................. 69\nProcurement and Administration of Federal Funding ................................... 69\nEnvironmental, Health and Safety Matters .................................................... 71\nAccounting and Financial Services ................................................................ 73\nLegal Matters ................................................................................................. 73\nGeneration-Related Services .......................................................................... 73\nEmergency Action ......................................................................................... 75\nInformation .................................................................................................... 76\nBill Payments ................................................................................................. 77\nCompliance with Obligations ........................................................................ 77\nEnergy Policy under Act 17 ........................................................................... 78\nAcquisition of Easements, Fee Interests and Concession Rights .................. 78\nOther Services ................................................................................................ 79\nARTICLE 6 RIGHTS AND RESPONSIBILITIES OF OWNER AND\nADMINISTRATOR ..................................................................................... 80\nRights and Responsibilities of Owner............................................................ 80\nRights and Responsibilities of Administrator ................................................ 82\nReporting; Audits ........................................................................................... 83\nStaffing Levels ............................................................................................... 84\nARTICLE 7 COMPENSATION; BUDGETS ......................................................................... 86\nService Fee ..................................................................................................... 86\nPass-Through Expenditures ........................................................................... 88\nBudgets .......................................................................................................... 88\nBudget Policy ................................................................................................. 90\nService Accounts ........................................................................................... 91\nDisallowed Costs ........................................................................................... 96\nUnfunded Amounts ........................................................................................ 97\nOwner Credit Rating ...................................................................................... 97\nOwner Payment of Administrator Costs ........................................................ 98\nARTICLE 8 CREDIT SUPPORT ............................................................................................ 99\nGuarantee ....................................................................................................... 99\nGuarantor Reports .......................................................................................... 99\n\n-ii-'}, {'number': 4, 'text': 'CONFIDENTIAL\nTABLE OF CONTENTS\n(continued)\nPage\nARTICLE 9 COMPLIANCE WITH APPLICABLE LAW ................................................ 100\nCompliance Obligations............................................................................... 100\nAnti-Corruption and Sanctions Laws........................................................... 100\nCommonwealth Requirements ..................................................................... 101\nNon-Discrimination Laws ............................................................................ 101\nNon-Collusion and Acceptance ................................................................... 101\nCommonwealth Tax Liabilities.................................................................... 101\nCertifications Required by Commonwealth Contractor Requirements ....... 101\nDuty to Inform of Criminal Investigations .................................................. 101\nAct 120 ......................................................................................................... 102\nARTICLE 10 INSURANCE.................................................................................................... 103\nInsurance Generally ..................................................................................... 103\nCommercial Availability .............................................................................. 103\nAdditional Named Insureds ......................................................................... 103\nWarranties .................................................................................................... 104\nCertificates of Insurance, Policies and Notice ............................................. 104\nARTICLE 11 SUBCONTRACTORS AND CONTRACTORS ........................................... 105\nAbility to Subcontract and Contract ............................................................ 105\nSubcontract and Contract Terms .................................................................. 106\nIndemnity for Subcontractor Claims ............................................................ 106\nARTICLE 12 TAXATION ...................................................................................................... 108\nWithholding Tax .......................................................................................... 108\nTax Obligations ............................................................................................ 108\nARTICLE 13 INTELLECTUAL PROPERTY; PROPRIETARY INFORMATION ...... 109\nIntellectual Property ..................................................................................... 109\nProprietary Information ............................................................................... 115\nData Security ................................................................................................ 119\nARTICLE 14 EVENTS OF DEFAULT; REMEDIES ......................................................... 121\nEvents of Default by Operator ..................................................................... 121\nTermination for Operator Event of Default ................................................. 122\nEvents of Default By Owner ........................................................................ 123\nTermination for Owner Event of Default..................................................... 124\n-iii-'}, {'number': 5, 'text': 'CONFIDENTIAL\nTABLE OF CONTENTS\n(continued)\nPage\nAdditional Termination Rights .................................................................... 125\nRemedies Upon Early Termination ............................................................. 126\nARTICLE 15 DISPUTE RESOLUTION .............................................................................. 129\nScope ............................................................................................................ 129\nCommencement of the Dispute Resolution Procedure ................................ 129\nNegotiation ................................................................................................... 129\nExpert Technical Determination Procedure for Technical Disputes ........... 130\nMediation ..................................................................................................... 131\nLitigation as a Final Resort .......................................................................... 132\nWaiver of Jury Trial ..................................................................................... 133\nProvisional Relief......................................................................................... 133\nContinuing Obligations ................................................................................ 133\nARTICLE 16 BACK-END TRANSITION ............................................................................ 134\nSuccessor Operator ...................................................................................... 134\nBack-End Transition Services...................................................................... 134\nTransfer Obligation ...................................................................................... 137\nBack-End Transition Period Compensation................................................. 137\nSurrender of the T&D System ..................................................................... 139\nARTICLE 17 FORCE MAJEURE EVENTS........................................................................ 140\nNotice; Mitigation ........................................................................................ 140\nRelief ............................................................................................................ 140\nARTICLE 18 INDEMNIFICATION ..................................................................................... 142\nIndemnification by Operator ........................................................................ 142\nIndemnification by Owner ........................................................................... 143\nLimitation on Liability ................................................................................. 144\nInsurance and Other Recovery ..................................................................... 145\nLiability Limitation for Certain Damages.................................................... 146\nAdditional Liability Limitation for Certain Damages ................................. 146\nARTICLE 19 REPRESENTATIONS AND WARRANTIES .............................................. 148\nRepresentations and Warranties of Owner .................................................. 148\nRepresentations and Warranties of Operator ............................................... 149\n\n-iv-'}, {'number': 6, 'text': 'CONFIDENTIAL\nTABLE OF CONTENTS\n(continued)\nPage\nARTICLE 20 MISCELLANEOUS ........................................................................................ 153\nFees and Expenses ....................................................................................... 153\nNotices ......................................................................................................... 153\nAmendments ................................................................................................ 154\nEntire Agreement ......................................................................................... 154\nRelationship of the Parties ........................................................................... 155\nAssignment and Transfer ............................................................................. 155\nInterest on Overdue Obligations .................................................................. 156\nWaivers ........................................................................................................ 156\nSeverability .................................................................................................. 156\nSurvival ........................................................................................................ 156\nNo Third-Party Beneficiaries ....................................................................... 156\nRemedies ...................................................................................................... 157\nCounterparts ................................................................................................. 157\nOffice of the Comptroller............................................................................. 157\nGoverning Law ............................................................................................ 157\nCommonwealth Obligations ........................................................................ 158\nPREB Authority ........................................................................................... 158\nANNEXES\nAnnex I Scope of Services\nAnnex II Front-End Transition Plan\nAnnex III Back-End Transition Plan\nAnnex IV Operator Employment Requirements\nAnnex V Front-End Transition Hourly Fully Allocated Rates\nAnnex VI GenCo Shared Services\nAnnex VII ManagementCo Costs\nAnnex VIII Service Fee\nAnnex IX Performance Metrics\nAnnex X Calculation of Incentive Fee\nAnnex XI T&D Pass-Through Expenditures\nAnnex XII Insurance Specifications\nAnnex XIII Operator Termination Fee Multiplier\nAnnex XIV Operator Marks\nAnnex XV Owner Marks\n\n-v-'}, {'number': 7, 'text': 'CONFIDENTIAL\nTABLE OF CONTENTS\n(continued)\nPage\nEXHIBITS\nExhibit A Form of Federal Funding Certifications\nExhibit B Form of Commonwealth Certifications\nExhibit C Form of Anti-Corruption Certifications\nExhibit D Form of Guarantee Agreement\nExhibit E Form of Sworn Statement\nExhibit F -1 Form of Tax Opinion – Effective Date\nExhibit F -2 Form of Final Tax Opinion\nExhibit G Form of Reliance Letter\nExhibit H Term Sheet for GridCo-GenCo PPOA\n\n-vi-'}, {'number': 8, 'text': 'CONFIDENTIAL\nPUERTO RICO TRANSMISSION AND DISTRIBUTION SYSTEM\nOPERATION AND MAINTENANCE AGREEMENT\nThis PUERTO RICO TRANSMISSION AND DISTRIBUTION SYSTEM\nOPERATION AND MAINTENANCE AGREEMENT (this “Agreement”) is made and entered\ninto as of this 22nd day of June, 2020 by and among: (i) the Puerto Rico Electric Power Authority\n(“Owner”), a public corporation and governmental instrumentality of the Commonwealth of\nPuerto Rico, created by Act No. 83 of the Legislative Assembly of Puerto Rico, enacted on\nMay 2, 1941; (ii) the Puerto Rico Public-Private Partnerships Authority (“Administrator”), a\npublic corporation of the Commonwealth of Puerto Rico, created by Act No. 29 of the Legislative\nAssembly of Puerto Rico, enacted on June 8, 2009; (iii) LUMA Energy, LLC (“ManagementCo”),\na limited liability company organized under the laws of Puerto Rico; and (iv) LUMA Energy\nServCo, LLC (“ServCo” and, together with ManagementCo, “Operator” and, together with Owner,\nAdministrator and ManagementCo, the “Parties” and each a “Party”), a limited liability company\norganized under the laws of Puerto Rico. Capitalized terms used but not otherwise defined herein\nshall have the meaning ascribed to them in Article 1 (Definitions; Interpretation).\nRECITALS\nWHEREAS, Owner owns and operates Owner’s transmission and distribution\nsystem and related facilities, equipment and other assets related to the transmission and distribution\nsystem in which Owner has an ownership or leasehold interest (the “T&D System”);\nWHEREAS, pursuant to, and under the terms and conditions contained in, Act\nNo. 29 of the Legislative Assembly of Puerto Rico, enacted on June 8, 2009 (“Act 29”) and\nAct No. 120 of the Legislative Assembly of Puerto Rico, enacted on June 21, 2018 (“Act 120”),\nOwner is authorized to execute and deliver this Agreement, perform its obligations hereunder and\nenter into the transactions contemplated hereby;\nWHEREAS, in accordance with Act 120, Owner desires to transform Puerto\nRico’s energy system into a modern, sustainable, reliable, efficient, cost-effective and resilient\nsystem;\nWHEREAS, Owner desires to engage Operator to provide the O&M Services for\nthe T&D System in accordance with the terms of this Agreement and has designated Administrator\nas a Representative of Owner for purposes of this Agreement; and\nWHEREAS, Operator desires to provide the O&M Services for the T&D System\nin accordance with the terms of this Agreement and ManagementCo has formed ServCo, a\nsubsidiary service company, to provide substantially all of the services required under this\nAgreement.\nNOW THEREFORE, in consideration of the mutual covenants, representations,\nwarranties and agreements contained herein and other valuable consideration, the receipt and\nsufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:'}, {'number': 9, 'text': 'CONFIDENTIAL\nARTICLE 1\nDEFINITIONS; INTERPRETATION\nDefinitions. As used in this Agreement, the following capitalized terms\nhave the respective meanings set forth below.\n“AAFAF” means the Puerto Rico Fiscal Agency and Financial Advisory Authority.\n“Act 2” means Act No. 2 of the Legislative Assembly of Puerto Rico, enacted on\nJanuary 4, 2018.\n“Act 3” means Act No. 3 of the Legislative Assembly of Puerto Rico, enacted on\nJanuary 23, 2017.\n“Act 17” means Act No. 17 of the Legislative Assembly of Puerto Rico, enacted on\nApril 11, 2019.\n“Act 26” means Act No. 26 of the Legislative Assembly of Puerto Rico, enacted on\nJanuary 27, 2017.\n“Act 29” has the meaning set forth in the Recitals.\n“Act 57” means Act No. 57 of the Legislative Assembly of Puerto Rico, enacted on\nMay 17, 2014.\n“Act 66” means Act No. 66 of the Legislative Assembly of Puerto Rico, enacted on\nJune 17, 2014.\n“Act 120” has the meaning set forth in the Recitals.\n“Act 173” has the meaning set forth in Section 9.3(a) (Commonwealth\nRequirements – Practice of Engineering, Architecture and Other Professions in the\nCommonwealth).\n“Administrative Determination” has the meaning set forth in Section 4.5(t)(i)\n(Conditions Precedent to Service Commencement Date – Tax Matters).\n“Administrator” has the meaning set forth in the introductory paragraph.\n“Administrator Dispute” has the meaning set forth in Section 6.2(a)(xi) (Rights and\nResponsibilities of Administrator – Disputes).\n“Affiliate” means, with respect to any Person, any other Person that, directly or\nindirectly, including through one or more intermediaries, Controls, is Controlled by or is under\ncommon Control with such Person; provided, that each Equity Participant and its Affiliates will\nbe deemed "Affiliates" of Operator.\n“Agreement” has the meaning set forth in the introductory paragraph.\n\n2'}, {'number': 10, 'text': 'CONFIDENTIAL\n“Anti-Corruption Laws” has the meaning set forth in Section 9.2(a) (AntiCorruption and Sanctions Laws – Anti-Corruption).\n“Applicable Law” means any foreign, national, federal, state, Commonwealth,\nmunicipal or local law, constitution, treaty, convention, statute, ordinance, code, rule, regulation,\ncommon law, case law or other similar requirement enacted, adopted, promulgated or applied by\nany Governmental Body, including any Environmental Law, PROMESA and any order issued by\nthe Title III Court, in each case applicable to the Parties.\n“Audit” means a review with respect to any matter relating to the T&D System, the\nO&M Services or this Agreement, including compliance with the terms of this Agreement,\nconducted in accordance with applicable United States audit practices customarily accepted in the\nelectric sector and the terms of this Agreement or as required by Applicable Law.\n“Authorized Inspector” has the meaning set forth in Section 6.3(a) (Reporting;\nAudits – Generally).\n“Back-End Transition Account” has the meaning set forth in Section 16.4(c)(i)\n(Back-End Transition Period Compensation – Funding).\n“Back-End Transition Commencement Date” has the meaning set forth in\nSection 16.1 (Successor Operator).\n“Back-End Transition Plan” has the meaning set forth in Section 4.2(i)\n(ManagementCo Responsibilities – Back-End Transition Plan).\n“Back-End Transition Service Fee” has the meaning set forth in Section 16.4(b)\n(Back-End Transition Period Compensation – Back-End Transition Service Fee).\n“Back-End Transition Service Fee Dispute” has the meaning set forth in\nSection 16.4(d)(ii) (Back-End Transition Period Compensation – Invoices).\n“Back-End Transition Service Fee Estimate Dispute” has the meaning set forth in\nSection 16.4(c)(iii) (Back-End Transition Period Compensation – Funding).\n“Back-End Transition Services” means services provided under this Agreement in\norder to complete the transition and handover of the O&M Services, and other rights and\nresponsibilities with respect to the T&D System, back to Owner or to a successor operator upon\nthe expiration or early termination of the Term, including the services contemplated by the\nBack-End Transition Plan; provided that the Back-End Transition Services shall not be O&M\nServices.\n“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. 101 et\nseq. “Bankruptcy Code” shall also include (i) Title III of PROMESA, (ii) any similar state or\nCommonwealth law relating to bankruptcy, insolvency, the rights and remedies of creditors, the\nappointment of receivers or the liquidation of companies and estates that are unable to pay their\ndebts when due and (iii) any similar insolvency or bankruptcy code applicable under the laws of\nany other jurisdiction.\n3'}, {'number': 11, 'text': 'CONFIDENTIAL\n“Baseline Environmental Study” has the meaning set forth in Section 4.5(f)\n(Conditions Precedent to Service Commencement Date – Pre-Existing Environmental Conditions).\n“Budget” means each of the Operating Budget, the Capital Budget – Federally\nFunded, the Capital Budget – Non-Federally Funded and the Generation Budget, and “Budgets”\nmeans, collectively, all of them.\n“Budget Dispute” has the meaning set forth in Section 7.3(f) (Budgets – Budget\nDisputes).\n“Business Day” means any day that is not a Saturday, a Sunday or a day observed\nas a holiday by either the Commonwealth or the United States federal government.\n“Capital Account – Federally Funded” has the meaning set forth in Section 7.5(b)(i)\n(Service Accounts – Capital Account – Federally Funded).\n“Capital Account – Non-Federally Funded” has the meaning set forth in\nSection 7.5(c)(i) (Service Accounts – Capital Account – Non-Federally Funded).\n“Capital Budget – Federally Funded” means, for any given Contract Year, the\ncapital budget for such Contract Year, together with the projected capital budget for the following\ntwo (2) Contract Years, in each case setting forth in detail planned Federally Funded Capital\nImprovements, including monthly budgets of such expenditures and cash flows, as such budget\nmay be amended or adjusted from time to time in accordance with the terms and conditions of this\nAgreement, which shall include, among other things: (i) a description of the proposed Federally\nFunded Capital Improvements; (ii) a schedule for the implementation of such Federally Funded\nCapital Improvements; (iii) an estimate of the costs for the project to be incurred in each Contract\nYear in the event the project requires more than a year to complete; (iv) the impact of such\nFederally Funded Capital Improvements on the T&D System, including rates charged to T&D\nCustomers; (v) an explanation of the relationship to other planned or subsequently required Capital\nImprovements; (vi) the anticipated useful life of each Federally Funded Capital Improvement; and\n(vii) the economic and engineering justifications for such project.\n“Capital Budget – Non-Federally Funded” means, for any given Contract Year, the\ncapital budget for such Contract Year, together with the projected capital budget for the following\ntwo (2) Contract Years, in each case setting forth in detail planned Non-Federally Funded Capital\nImprovements, including monthly budgets of such expenditures and cash flows, as such budget\nmay be amended or adjusted from time to time in accordance with the terms and conditions of this\nAgreement, which shall include, among other things: (i) a description of the proposed NonFederally Funded Capital Improvements; (ii) a schedule for the implementation of such NonFederally Funded Capital Improvements; (iii) an estimate of the costs for the project to be incurred\nin each Contract Year in the event the project requires more than a year to complete; (iv) the impact\nof such Non-Federally Funded Capital Improvements on the T&D System, including rates charged\nto T&D Customers; (v) an explanation of the relationship to other planned or subsequently\nrequired Capital Improvements; (vi) the anticipated useful life of each Non-Federally Funded\nCapital Improvement; and (vii) the economic and engineering justifications for such project.\n\n4'}, {'number': 12, 'text': 'CONFIDENTIAL\n“Capital Budgets” means, for any given Contract Year, collectively, the Capital\nBudget – Federally Funded and the Capital Budget – Non-Federally Funded.\n“Capital Costs” means, collectively, Capital Costs – Federally Funded and Capital\nCosts – Non-Federally Funded.\n“Capital Costs – Federally Funded” has the meaning set forth in Section 7.5(b)(i)\n(Service Accounts – Capital Account – Federally Funded).\n“Capital Costs – Non-Federally Funded” has the meaning set forth in\nSection 7.5(c)(i) (Service Accounts – Capital Account – Non-Federally Funded).\n“Capital Improvement” means any repair, replacement, improvement, removal and\nretirement, alteration and addition that (i) constitutes a capital property unit in accordance with the\nT&D System’s capitalization policy, consistently applied (other than any repair, replacement,\nimprovement, removal and retirement, alteration and addition constituting ordinary course repair\nor maintenance of the T&D System), including all Public Works Improvements that have been\napproved in accordance with this Agreement, and (ii) have an expected useful service life of more\nthan one (1) year from the date of installation. For the avoidance of doubt, (x) a “capital property\nunit” shall be understood to mean a capitalizable expenditure that adds to or increases the value of\nOwner’s capital assets and (y) the “T&D System capital policy” shall be understood to refer to the\nPREPA capitalization policy, adapted as needed and agreed to by Owner and Operator during the\nFront-End Transition Period.\n“Cash Management Agreement” shall mean an agreement reasonably satisfactory\nto Owner and Operator to be executed by Owner and Operator in lieu of a Servicing Contract at\nthe time that a Servicing Contract would have been required to be entered into hereunder.\n“CERCLA” shall mean the Comprehensive\nCompensation, and Liability Act of 1980, 42 U.S.C. § 9601 et seq.\n\nEnvironmental\n\nResponse,\n\n“Change in Law” means any of the following events or conditions occurring on or\nafter the Proposal Submission Date that has had, or is reasonably expected to have, a material\nadverse effect on the performance or the cost of performance by the Parties of their respective\nobligations under this Agreement (other than payment obligations), or on the operation or\nmaintenance of the T&D System:\n(i)\nthe adoption, promulgation or issuance of a modification or written change\nin the Applicable Law or the administrative or judicial interpretation thereof, unless such\nmodification or written change was duly adopted, promulgated or issued in final form prior to the\nProposal Submission Date and becomes effective without any further action by any Governmental\nBody or governmental official having jurisdiction;\n(ii)\nany order or judgment of any Governmental Body to the extent such order\nor judgment is not the result of willful misconduct or negligent action or omission or lack of\nreasonable diligence of the Party claiming the occurrence of a Change in Law; provided, however,\nthat the contesting in good faith or the failure in good faith to contest any such order or judgment\n\n5'}, {'number': 13, 'text': 'CONFIDENTIAL\nshall not constitute or be construed as such a willful misconduct or negligent action or omission\nof, or lack of reasonable diligence by, the Party; or\n(iii)\nthe denial of an application for, the delay in the review, issuance or renewal\nof, or the suspension, termination, interruption, imposition of a new condition in connection with\nthe issuance, renewal or the failure of issuance or renewal of any Governmental Approval to the\nextent that such denial, delay, suspension, termination, interruption, imposition of a new condition\nor failure (A) interferes with the performance of this Agreement and (B) is not the result of willful\nmisconduct or negligent action or omission or a lack of reasonable diligence of the Party claiming\nthe occurrence of a Change in Law; provided, however, that the contesting in good faith or the\nfailure in good faith to contest any such denial, delay, suspension, termination, interruption,\nimposition of a new condition or failure shall not be construed as such a willful misconduct or\nnegligent action or omission of, or lack of reasonable diligence by, the Party;\nprovided that “Change in Law” shall not include (x) the imposition of a Tax, or an increase in\nTaxes, unless such imposition or increase has a materially disproportionate impact on any of\nOperator, the T&D System or private operators of transmission and distribution systems in the\nCommonwealth or Contractors (as defined in Act 29) compared to any other entities that operate\nin the Power and Electricity sector in the Commonwealth; or (y) the delay or denial of any request\nto approve a Budget, Rate Order, a change in Performance Metrics or performance relief.\n“Change in Regulatory Law” means any change, amendment or modification to any\nCommonwealth Applicable Law (and not, for the avoidance of doubt, the Applicable Law of any\nother jurisdiction) or any adoption of, or change to, any administrative or judicial interpretation\n(having the force of law) of any Commonwealth Applicable Law or any regulation or regulatory\naction under any Commonwealth Applicable Law, in each case occurring on or after the Proposal\nSubmission Date, that:\n(i) alters the scope of PREB’s statutory oversight over Operator or Owner in a\nmanner that materially and adversely affects Operator’s ability to perform its obligations under\nthis Agreement;\n(ii) renders unenforceable or invalid, in whole or in part, any right or privilege\ngranted to Operator under this Agreement, including by invalidating Operator’s selection under\nthe RFP;\n(iii) subjects Operator (or any of its Affiliates or Subcontractors that provides O&M\nServices hereunder) to rate or other substantive regulation by PREB in a manner that materially\nand adversely affects Operator’s ability to perform its obligations under this Agreement to the\nextent not otherwise mitigated by the terms of this Agreement, or that constitutes a default by the\nFOMB under the terms of the FOMB Protocol Agreement, provided, that written notice of such\ndefault has been given to FOMB by Operator and such default continues unremedied for a period\nof thirty (30) days following such written notice, provided, further, that any such default by the\nFOMB shall constitute a Change in Regulatory Law regardless of whether the conditions in the\nintroductory paragraph of this definition are satisfied;\n\n6'}, {'number': 14, 'text': 'CONFIDENTIAL\n(iv) caps or has the effect of capping rates charged to T&D Customers, other than\na temporary cap on rates to address an Outage Event; or\n(v) rescinds, or in any way amends in a manner materially adverse to Operator, the\nLiability Waiver.\n“Change of Control” means, with respect to Operator, whether accomplished\nthrough a single transaction or a series of related transactions and whether accomplished directly\nor indirectly, (i) a change in ownership resulting in more than 50% of the direct or indirect voting\nor economic interests in Operator being transferred to another Person or group of Persons acting\nin concert that did not have such direct or indirect voting or economic interests immediately prior\nto such transaction or transactions, (ii) the power directly or indirectly to direct or cause the\ndirection of management and policy of Operator, whether through ownership of voting securities,\nby contract, management agreement or common directors, officers or trustees or otherwise, being\ntransferred to another Person or group of Persons acting in concert that did not have such power\nimmediately prior to such transaction or transactions or (iii) the merger, consolidation,\namalgamation, business combination involving Operator or sale of substantially all of the assets\nof Operator for the purpose of or with the effect contemplated in clauses (i) or (ii) above; provided,\nhowever, that, notwithstanding anything to the contrary set forth in this definition, so long as either\n(x) Operator continues to provide the Guarantee, or (y) Parent Company continues to directly or\nindirectly own or operate an electric utility (other than the T&D System) serving at least 250,000\ncustomers, none of the following shall constitute a “Change of Control” for the purposes of this\nAgreement:\n(A)\ntransfers of direct or indirect ownership, voting or economic interests in\nOperator between or among Persons that are Affiliates of each other or Persons who are under\ncommon Control;\n(B)\ntransfers or sales of shares of Operator or the direct or indirect shareholders\nof Operator pursuant to bona fide open market transactions (including block trades) on the New\nYork Stock Exchange, NASDAQ, London Stock Exchange or comparable United States or foreign\nsecurities exchange, including any such transactions involving an initial or “follow on” public\noffering;\n(C)\ntransfers of direct or indirect ownership interests in Operator by any Equity\nParticipant or its beneficial owner(s) to any Person so long as the Equity Participants or their\nrespective beneficial owner(s) having ownership interests in Operator (as of the later of (1) the\nEffective Date or (2) the date on which Administrator most recently approved a Change of Control)\ntogether retain, in the aggregate, 50% or more of the direct or indirect voting or economic interests\nin Operator or the power directly or indirectly to direct or cause the direction of management and\npolicy of Operator, through ownership of voting securities or common directors, officers or\ntrustees;\n(D)\na transfer of the direct or indirect ownership interest in Operator, including\nany events contemplated in (i), (ii) and (iii) of this definition above, or any Affiliates of Operator;\nand\n\n7'}, {'number': 15, 'text': 'CONFIDENTIAL\n(E)\n\na transfer of shares of Operator contemplated by Section 16.3 (Transfer\n\nObligation).\n“Claiming Party” has the meaning set forth in Section 17.1(a) (Notice; Mitigation\n– Notice).\n“Commencement Date Governmental Approvals” has the meaning set forth in\nSection 4.4(a) (Governmental Approvals and Tax Matters – Generally).\n“Commonwealth” means the Commonwealth of Puerto Rico.\n“Commonwealth Court” means the Commonwealth Court of First Instance, San\nJuan Part.\n“Confidential Information” means data or information in any form disclosed by one\nParty to the other Party by any means, if and for so long as the data and information are protectable\nas trade secrets by the disclosing Party or are otherwise confidential. As a non-exhaustive list of\nexamples, “Confidential Information” includes non-public information regarding a Party’s\nIntellectual Property, financial condition and financial projections, business and marketing plans,\nproduct plans, product and device prototypes, the results of product testing, research data, market\nintelligence, technical designs and specifications, secret methods, manufacturing processes, source\ncode of proprietary software, the content of unpublished patent applications, customer lists, vendor\nlists, internal cost data, the terms of contracts with employees and third parties, and information\ntending to embarrass the disclosing Party or tending to tarnish its reputation or brand. For the\navoidance of doubt, information in this list of examples is only considered “Confidential\nInformation” for so long as it has not been made known to the general public by the disclosing\nParty or through the rightful actions of a third party.\n“Contingency Reserve Account” has the meaning set forth in Section 7.5(f)\n(Service Accounts – Contingency Reserve Account).\n“Contingency Reserve Amount” means an amount equal to the average anticipated\nT&D Pass-Through Expenditures for one and a half (1.5) months in the initial Contract Year, as\ndetermined based on the initial Operating Budget.\n“Contract” means an agreement or purchase order between Operator, as agent for\nOwner, and a third party, including Contracts as defined in 2 CFR 200.22.\n“Contract Nullification or Cancellation” has the meaning set forth in\nSection 14.6(c)(i) (Remedies Upon Early Termination – Termination Fee).\n“Contractor” means a party that enters into a Contract with Operator, as agent for\nOwner, including Contractors as defined in 2 CFR 200.23.\n“Contractor Intellectual Property” has the meaning specified in Section 13.1(a)\n(Intellectual Property – Operator Intellectual Property, Contractor Intellectual Property and\nSubcontractor Intellectual Property)\n\n8'}, {'number': 16, 'text': 'CONFIDENTIAL\n“Contract Standards” means the terms, conditions, methods, techniques, practices\nand standards imposed or required by: (i) Applicable Law; (ii) Prudent Utility Practice;\n(iii) applicable equipment manufacturer’s specifications and reasonable recommendations;\n(iv) applicable insurance requirements under any insurance procured pursuant to this Agreement;\n(v) the Procurement Manuals, as applicable, and (vi) any other standard, term, condition or\nrequirement specifically contracted in this Agreement to be observed by Operator.\n“Contract Year” means the period from July 1 through June 30 for each year during\nthat portion of the Term commencing on the Service Commencement Date; provided, however,\nthat (i) the initial Contract Year shall commence on the Service Commencement Date and (ii) the\nfinal Contract Year shall end on the fifteenth (15th) anniversary of the Service Commencement\nDate. Any computation made on the basis of a Contract Year shall be adjusted on a Pro Rata basis\nto take into account any Contract Year of less than 365/366 days.\n“Control”, “Controlled by” and similar expressions mean the power, directly or\nindirectly, to direct or cause the direction of the management and policies of an entity, whether\nthrough the ownership of outstanding share capital (or equivalent interest), by contract or\notherwise. Without limiting the foregoing, a Person shall be deemed to control another Person (i) if\nsuch Person has directly or indirectly designated a majority of the board of directors (or equivalent\ngoverning body) of such other Person or (ii) if such Person has the direct or indirect power whether\nthrough ownership of outstanding share capital (or equivalent interest), by contract or otherwise\nto designate a majority of the board of directors (or equivalent governing body) of such other\nPerson.\n“Copyright” means the exclusive legal rights held by the owner of a copyright\nincluding the rights to copy, publicly perform, publicly display, distribute, adapt, translate, modify\nand create derivative works of copyrighted subject matter, including the rights to any registrations\nand applications therefor, together with all renewals, extensions, translations, adaptations,\nderivations and combinations therefor, works of authorship, publications, documentation, website\ncontent, rights in fonts and typefaces and database rights.\n“COR3” means the Central Office for Recovery Reconstruction and Resiliency of\nPuerto Rico.\n“Covered Contract” means any contract: (i) for management, service, or incentive\npayment arrangement between Owner, Administrator, or Operator and another Person under which\nsuch Person provides services involving all, a portion of, or any function of, the T&D System, (ii)\nfor the sale, lease, or use of assets of the T&D System and (iii) to sell electricity if the term of such\ncontract is in excess of three (3) years; provided that “Covered Contract” shall not include any (A)\nSubcontract in which the compensation to the Subcontractor is paid by Operator solely out of the\nService Fee, (B) contract for services that are solely incidental to the primary governmental\nfunction or functions of the T&D System (such as contracts for janitorial, tree trimming, equipment\nrepair, bookkeeping, physical security, or similar services), (C) contract for services performed\nexclusively during the Front-End Transition Period or pursuant to Article 16 (Back-End\nTransition), (D) contract to design, build, rehabilitate or purchase property, assets, equipment or\nsupplies, (E) contract to acquire electric capacity or energy, natural gas, coal or fuel oil, (F) contract\nfor management, service or incentive payment arrangement or for consulting services under which\n9'}, {'number': 17, 'text': 'CONFIDENTIAL\nthe compensation consists entirely of a fixed fee and/or fees at hourly rates, (G) a negotiated, arm’s\nlength contract with a term of less than fifty (50) days, and (H) sales of assets (other than real\nproperty) in the ordinary course of business at the end of their expected useful lives.\n“CPI Factor” means the amount equal to (i) CPI Value for the calendar year\nimmediately prior to the date of any adjustment divided by (ii) the CPI Value for the calendar year\ntwo (2) years prior to the date of such adjustment rounded to the fifth decimal place; provided,\nhowever, that in no case shall be the CPI Factor for any adjustment period be less than 1.000. For\nillustrative purposes only, if an amount is to be adjusted for inflation on July 1, 2019, for the oneyear period of July 1, 2019 through July 1, 2020, the amount shall be multiplied by a CPI Factor\nequal to 1.02140 or the CPI Value for calendar year 2018 (which is 257.565) divided by the CPI\nValue for calendar year 2017 (which is 252.169).\n“CPI Value” for any year means the “Annual Value” of such year obtained from\n“Consumer Price Index—All Urban Consumers—U.S. All Items Less Food and Energy\n(CUUR0000SA0L1E)” published by the Bureau of Labor Statistics of the United States\nDepartment of Labor, which is the calendar year 12-month average rounded to three decimal\nplaces; provided, however, that: (i) if such index is changed so that the base year thereof changes,\nsuch index shall be converted in accordance with the conversion factor published by the Bureau\nof Labor Statistics of the United States Department of Labor; (ii) if such index is discontinued or\nrevised during the Term, such other index or computation with which it is replaced shall be used\nin order to obtain substantially the same result as would be obtained if such index had not been\ndiscontinued or revised; and (iii) any such revision shall not result in the retroactive adjustment of\nany amounts paid or payable pursuant to this Agreement prior to such revision. For illustrative\npurposes only, the CPI Value for the calendar year 2018 is 257.565, which can be obtained directly\nas an annual value or computed using monthly values with data from the official website of the\nBureau of Labor Statistics of the United States Department of Labor.\n“Customer Database” has the meaning set forth in Section 5.15(a) (Information –\nSystem Information and Computer Database).\n“Cybersecurity Breach” means any successful act to gain unauthorized access to,\ndisrupt or misuse an Information System or information stored on such Information System.\n“Data Security Plan” has the meaning set forth in Section 4.2(h) (ManagementCo\nResponsibilities – Physical Security Plan, Data Security Plan and Vegetation Management Plan).\n“Declared Emergency or Major Disaster” means an event declared as an emergency\nor major disaster in accordance with the provisions of the Stafford Act.\n“Default Budget” has the meaning set forth in Section 7.3(d) (Budgets – Default\nBudget).\n“Delay Liquidated Damages” has the meaning set forth in Section 4.8(a) (Failure\nof Service Commencement Date Conditions – Remedy for Delay of Service Commencement Date\nConditions).\n\n10'}, {'number': 18, 'text': 'CONFIDENTIAL\n“Delay Period Date” has the meaning set forth in Section 4.8(a) (Failure of Service\nCommencement Date Conditions – Remedy for Delay of Service Commencement Date\nConditions).\n“Designated Person” means each Representative of Operator or Administrator who\nis designated as such for the purposes of Article 15 (Dispute Resolution).\n“DHS OIG” means U.S. Department of Homeland Security Office of Inspector\nGeneral.\n“Disallowed Costs” has the meaning set forth in Section 7.6(a) (Disallowed Costs\n– Generally).\n“Disallowed Costs Dispute” has the meaning set forth in Section 7.6(b)\n(Disallowed Costs – Disallowed Costs Disputes).\n“Dispute” has the meaning set forth in Section 15.1 (Scope).\n“Dispute Resolution Procedure” has the meaning set forth in Section 15.1 (Scope).\n“Easement” means those certain real property rights vested or to be vested in Owner\nor GridCo, whether or not recorded in the Registry of the Property of Puerto Rico, that: (i)\nencumber land portions or estates for the benefit of the T&D System to permit the ingress to and\negress from each T&D System Site to the public road; (ii) grant air rights; (iii) constitute restrictive\nuse and construction covenants (servidumbres en equidad) for the operation of the T&D System;\nand (iv) allow for the construction and installation of above- or below-ground improvements and\nequipment and for the addition to, or maintenance, repair, restoration, replacement or alteration of,\nthe T&D System or any other service for the T&D System.\n“Effective Date” has the meaning set forth in Section 2.2(a) (Effective Date –\nExecution of the Agreement).\n"Emergency" or "Emergency Event" means (i) any Outage Event, (ii) any Declared\nEmergency or Major Disaster and (iii) any other circumstance defined as an Emergency in the\nEmergency Response Plan to be prepared pursuant to Section 4.2(g) (ManagementCo\nResponsibilities – Emergency Response Plan).\n“Emergency Response Plan” has the meaning set forth in Section 4.2(g)\n(ManagementCo Responsibilities – Emergency Response Plan).\n“Energy Compliance Certificate” means the certificate issued by the PREB\ncertifying that this Agreement complies with Act 120 and the regulatory framework, including\nAct 17.\n“Environmental Claim and Cleanup Liability” means: (i) any liabilities, costs or\nexpenses arising from or relating to any claim by a Governmental Body or other third-party\npursuant to any Environmental Law for personal injury, property damage or damage to natural\nresources or the environment (whether based on negligent acts or omissions, statutory liability or\n11'}, {'number': 19, 'text': 'CONFIDENTIAL\nstrict liability without fault or otherwise) in connection with the T&D System or the O&M\nServices; (ii) any liabilities, costs or expenses arising from or relating to any investigation, study,\nremediation or abatement of any Release of Hazardous Materials, to the extent required by any\nEnvironmental Law or to meet the published cleanup standards of any Governmental Body with\njurisdiction over such Release, in connection with the T&D System or the O&M Services; (iii) any\nfines or penalties assessed for non-compliance with any Environmental Law in connection with\nthe T&D System or the O&M Services; or (iv) any liabilities, costs or expenses necessary to\nachieve or maintain compliance with any Environmental Law.\n“Environmental Law” means (i) any law, statute, ordinance, code, rule, regulation,\norder, writ, injunction, decree, ruling, determination, award, standard, permit or variance of any\nGovernmental Body, or any binding agreement with any Governmental Body, and (ii) any consent\norder or decree, settlement agreement or other similar agreement between Owner and the Puerto\nRico Department of Natural and Environmental Resources, EPA or other relevant Governmental\nBody, in each case having the force of law and applicable from time to time, relating to (A) the\nconservation, protection, pollution, contamination or remediation of the environment or natural\nresources, (B) any Hazardous Material, including investigation, study, remediation or abatement\nof such Hazardous Material, (C) the storage, treatment, disposal, recycling or transportation of any\nHazardous Material, or (D) human health or safety.\n“EPA” means the United States Environmental Protection Agency.\n“Equity Participant” means any Person who holds any shares of capital stock or\nsecurities of, or units, partnership interests, membership interests or other equity interests in,\nOperator.\n“Event of Default” means an Operator Event of Default or an Owner Event of\nDefault, as the case may be.\n“Excess Expenditures” has the meaning set forth in Section 7.3(b) (Budgets –\nFlexibility to Overrun).\n“Expert Technical Determination” has the meaning set forth in Section 15.4(a)\n(Expert Technical Determination Procedure for Technical Disputes – Generally).\n“Extension Term” has the meaning set forth in Section 2.3(b) (Term – Extension).\n“Federal Funding” means any funding for the repair, replacement, restoration,\nimprovement, resiliency, construction or hazard mitigation of the T&D System received or to be\nreceived by or for the benefit of Owner from any U.S. federal agency, including FEMA and HUD.\n“Federal Funding Procurement Manual” has the meaning set forth in Section 4.1(e)\n(Front-End Transition Period Generally – Federal Funding Procurement Manual).\n“Federal Funding Requirements” has the meaning set forth in Section 5.5(b)\n(Capital Improvements – Federal Funding Eligibility).\n\n12'}, {'number': 20, 'text': 'CONFIDENTIAL\n“Federally Funded Capital Improvement” means Capital Improvements that are\nfunded with Federal Funding.\n“Fees-and-Costs” means reasonable and documented fees and expenses of\nattorneys, expert witnesses, engineers and consultants with respect to any Legal Proceeding.\n“FEMA” means the U.S. Federal Emergency Management Agency.\n“Fixed Fee” has the meaning set forth in Section 7.1(b)(i) (Service Fee – Fixed\nFee).\n“Fitch” means Fitch Ratings, Ltd.\n“FOMB” means the Financial Oversight and Management Board for Puerto Rico.\n“FOMB Protocol Agreement” means a protocol agreement among Operator,\nAdministrator, Owner, and the FOMB, which shall include provisions governing the FOMB’s\ninteraction with the Parties with respect to the respective duties of the FOMB and Owner under\nPROMESA, which shall apply only during the period the FOMB is in existence and Owner is a\ncovered territorial instrumentality pursuant to PROMESA.1\n“Force Majeure Event” means any act, event, circumstance or condition (other than\nlack of finances) whether affecting the T&D System, the System Power Supply, Owner, Operator\nor any of Owner’s Contractors or subcontractors or Operator’s Subcontractors that (i) is beyond\nthe reasonable control of and unforeseeable by, or which, if foreseeable, could not be avoided in\nwhole or in part by the exercise of due diligence by, the Party relying on such act, event or\ncondition as justification for not performing an obligation or complying with any condition\nrequired of such Party under this Agreement, and (ii) materially interferes with or materially\nincreases the cost of performing such Party’s obligations hereunder, to the extent that such act,\nevent, circumstance or condition is not the result of the willful or negligent act, error or omission\nor breach of this Agreement by such Party; provided, however, that the contesting in good faith or\nthe failure in good faith to contest such action or inaction shall not be construed as a willful or\nnegligent act, error or omission or breach of this Agreement by such Party. Notwithstanding\nanything to the contrary in the foregoing, the imposition of a Tax or an increase in Taxes that is\nthe result of a revocation of the Tax Assurance or an amendment or other modification of the Tax\nAssurance that is materially adverse to Operator or its Equity Participants shall be deemed a Force\nMajeure Event.\nSubject to the requirements specified in the foregoing paragraph, Force Majeure\nEvent will include, by way of example and without limitation, the following acts, events or\nconditions:\n(A)\nan act of God, Outage Event, landslide, lightning, earthquake, fire,\nexplosion, flood or similar occurrence;\n\n1\n\nNote to Draft: The FOMB Protocol Agreement will have a set of rules for the period during Title III and a separate\nset of rules triggered by the Title III Exit.\n\n13'}, {'number': 21, 'text': 'CONFIDENTIAL\n(B)\nwar, armed conflict, invasion, acts of terror, acts of civil or military\nauthority, sabotage or similar occurrence, computer sabotage or virus, acts of a public enemy, acts\nof a foreign enemy, extortion, blockade, embargo, revolution, interference by military authorities,\nquarantine, epidemic, insurrection, riot or civil commotion or disturbance or civil disobedience;\n(C)\nto the extent not covered by (A) or (B) above, any event that causes any\nfederal or Commonwealth Governmental Body to declare any portion of the geographic area of\nthe T&D System part of a “disaster zone,” “disaster area,” “state of emergency” or any similar\npronouncement;\n(D)\n\na Change in Law;\n\n(E)\nthe failure of any appropriate Governmental Body or private utility having\noperational jurisdiction in the area in which the T&D System is located to provide and maintain\nservices to any facility comprising part of the T&D System, which services are required for the\nperformance of this Agreement, if such failure results in a delay or curtailment of the performance\nof any of the O&M Services, the Front-End Transition Services or the Back-End Transition\nServices;\n(F)\nany failure of title to any portion of the T&D System Sites, any revocation\nor termination or invalidity of any Easement or other access right, any other failure or restriction\nof access to the T&D System Sites, or any enforcement of any Lien on the T&D System Sites or\non any improvements thereon not consented to in writing by, or arising out of any action or\nagreement entered into by, the Party adversely affected thereby;\n(G)\nthe preemption of materials or services by a Governmental Body in\nconnection with a public emergency or any condemnation or other taking by eminent domain of\nany portion of the T&D System;\n(H)\nthe presence of archeological finds, endangered species or Hazardous\nMaterial at the T&D System Sites, except to the extent Operator caused or knew of such presence,\nor the Release of any reportable quantity, as defined under applicable Environmental Law, of\nHazardous Material or of any other Release that could reasonably be expected to result in material\nLosses to Owner;\n(I)\nstrikes, boycotts, work stoppages, lockouts or other labor or employment\ndisputes or disturbances with respect to the employees of ServCo, but only if occurring in the\neighteen (18) months immediately following the Service Commencement Date; and\n(J)\nan unanticipated, significant and sustained interruption or curtailment of\nSystem Power Supply outside the ordinary course.\nIt is specifically understood that none of the following acts, events or conditions\nshall constitute a Force Majeure Event:\n(1)\nreasonably anticipated weather conditions for the geographic area of the\nT&D System, except to the extent such weather condition otherwise falls under one of the\ncircumstances described in clauses (A) or (C) above;\n14'}, {'number': 22, 'text': 'CONFIDENTIAL\n(2)\ngeneral economic conditions, interest or inflation rates, increases in wage\nrates of Operator’s employees and Subcontractors, insurance costs, commodity prices or currency\nfluctuations, exchange rates or PREB-approved changes in T&D Customer rates;\n(3)\nthe financial condition of Owner, Operator, Guarantor(s), any of their\nAffiliates or any Contractors or Subcontractors;\n(4)\nany increase for any reason in premiums charged by Operator’s insurers or\nthe insurance markets generally for the required insurance that are compensated as T&D PassThrough Expenditures;\n(5)\nthe failure of Operator to secure Patents or licenses in connection with the\ntechnology necessary to perform its obligations under this Agreement, if available on\ncommercially reasonable terms;\n(6)\nequipment malfunction or failure (unless caused by an event that would\notherwise constitute a Force Majeure Event);\n(7)\nunion or labor work rules, requirements or demands relating to Operator’s\nemployees which have the effect of increasing the number of employees employed at the T&D\nSystem, reducing the operating flexibility of Operator or otherwise increasing the cost to Operator\nof performing the O&M Services;\n(8)\nany impact of prevailing wage laws on Operator’s operation and\nmaintenance costs with respect to wages and benefits;\n(9)\nthe failure of any Contractor or Subcontractor or supplier to furnish labor,\nmaterials, services or equipment for any reason (unless caused by an event that would otherwise\nconstitute a Force Majeure Event); and\n(10) strikes, boycotts, work stoppages, lockouts or other labor or employment\ndisputes or disturbances with respect to the employees of ServCo, but only if occurring from and\nafter the date that is eighteen (18) months immediately following the Service Commencement\nDate.\n“Force Majeure Event Dispute” has the meaning set forth in Section 17.1(c)\n(Notice; Mitigation – Burden of Proof).\n“Front-End Subcontractors” has the meaning set forth in Section 4.9(a)\n(Subcontractors During the Front-End Transition Period – General).\n“Front-End Transition Account” has the meaning set forth in Section 4.6(c)\n(Front-End Transition Period Compensation – Funding).\n“Front-End Transition Period” means the period of time from and including the\nEffective Date to and excluding the Service Commencement Date.\n\n15'}, {'number': 23, 'text': 'CONFIDENTIAL\n“Front-End Transition Plan” has the meaning set forth in Section 4.1(a) (Front-End\nTransition Period Generally – Role of ManagementCo).\n“Front-End Transition Service Fee” has the meaning set forth in Section 4.6(b)\n(Front-End Transition Period Compensation – Front-End Transition Service Fee).\n“Front-End Transition Service Fee Dispute” has the meaning set forth in\nSection 4.6(d)(ii) (Front-End Transition Period Compensation – Invoices).\n“Front-End Transition Service Fee Estimate Dispute” has the meaning set forth in\nSection 4.6(c)(ii) (Front-End Transition Period Compensation – Funding).\n“Front-End Transition Service Fixed Fee” has the meaning set forth in\nSection 4.6(b) (Front-End Transition Period Compensation - Front-End Transition Service Fee).\n“Front-End Transition Services” means services provided by ManagementCo under\nthis Agreement prior to the Service Commencement Date in order to complete the transition and\nhandover to Operator of the operation, management and other rights and responsibilities with\nrespect to the T&D System pursuant to this Agreement, including the services contemplated by\nthe Front-End Transition Plan; provided that the Front-End Transition Services shall not be O&M\nServices.\n“Fuel Account” has the meaning set forth in Section 7.5(e)(i) (Services Accounts –\nGeneration Expenditures Accounts).\n“Funding Shortage” has the meaning set forth in Section 7.5(f)(i) (Service Accounts\n– Contingency Reserve Account).\n“GAAP” means generally accepted accounting principles, as in effect in the United\nStates from time to time applied on a consistent basis.\n“GenCo” means the entity, which may be directly or indirectly owned by Owner or\nan Affiliate of Owner, that acquires or obtains ownership of the Legacy Generation Assets after\nthe reorganization of PREPA.\n“GenCo Shared Services” means those certain administrative services that Operator\nshall, on behalf of Owner, provide to GenCo in accordance with the terms and conditions of the\nShared Services Agreement and Applicable Law.\n“Generation Budget” means, for any given Contract Year, the budget of the\nGeneration Pass-Through Expenditures for such Contract Year, together with the projected budget\nof the Generation Pass-Through Expenditures for the following two (2) Contract Years, in each\ncase, including monthly budgets of such expenditures and cash flows, as such budget may be\namended or adjusted from time to time in accordance with the terms and conditions of the GridCoGenCo PPOA, the Shared Services Agreement and any Generation Supply Contract.\n“Generation Expenditures Accounts” has the meaning set forth in Section 7.5(e)(i)\n(Services Accounts – Generation Expenditures Accounts).\n16'}, {'number': 24, 'text': 'CONFIDENTIAL\n“Generation Pass-Through Expenditures” has the meaning set forth in\nSection 7.2(b) (Pass-Through Expenditures – Generation Pass-Through Expenditures).\n“Generation Project” means any and all projects or transactions with respect to any\nfunction, service or facility of Owner related to the generation of Power and Electricity, including\nthe repair, replacement, improvement, sale, removal and retirement, alteration and addition of any\ngeneration asset, and in respect of which Owner or the Government of Puerto Rico may enter into\na Partnership Contract (as defined in Act 29).\n“Generation Supply Contracts” means any contract between Owner and an IPP\nrelating to the sale and purchase of Power and Electricity, including power purchase agreements.\n“Governmental Approvals” means all orders of approval, permits, licenses,\nauthorizations, consents, certifications, exemptions, registrations, rulings and entitlements issued\nby a Governmental Body of whatever kind and however described that are required under\nApplicable Law to be obtained or maintained by any Person with respect to the performance of the\nO&M Services.\n“Governmental Body” means any U.S. federal, state, Commonwealth, regional,\nmunicipal or local legislative, executive, judicial or other governmental board, agency, authority,\ncommission, bureau, administration, court, instrumentality or other duly authorized body,\nincluding PREB and the FOMB (if then in existence), other than Owner and, in its capacity as such\nunder this Agreement, Administrator, or any official thereof having jurisdiction with respect to\nany subject of this Agreement.\n“Grant Manager” means the relevant Governmental Body and any third-parties, in\neither case, authorized by Owner, and reasonably acceptable to ManagementCo, to act as grant\nmanager to administer Federal Funding.\n“GridCo” means the entity, which may be directly or indirectly owned by Owner\nor an Affiliate of Owner, that acquires or obtains ownership of the T&D System after the\nreorganization of PREPA.\n“GridCo-GenCo PPOA” means the power purchase and operating agreement\nbetween GridCo and GenCo providing for expense reimbursement, power delivery and other\nservices related to the generation, sale and purchase of Power and Electricity from the Legacy\nGeneration Assets and the operation and maintenance thereof, which will have terms and\nconditions substantially consistent with those set forth in Exhibit H (Term Sheet for GridCoGenCo PPOA).\n“Guarantee” means the guarantee agreement, dated as of the date hereof, by and\nbetween Guarantor(s) and Owner in the form of Exhibit D (Form of Guarantee Agreement).\n“Guarantor” means each of Quanta Services, Inc., a corporation duly organized and\nvalidly existing under the laws of Delaware, and Canadian Utilities Limited, a federal company\nduly organized and validly existing under the laws of Canada, and, as determined pursuant to the\nterms and conditions of the Guarantee, any of their respective permitted successors and assigns.\n\n17'}, {'number': 25, 'text': 'CONFIDENTIAL\n“Handover Checklist” means the handover checklist set forth in Annex II\n(Front-End Transition Plan), which details all of the requirements for ManagementCo to complete\nthe Front-End Transition Services by the Target Service Commencement Date.\n“Handover Checklist Dispute” has the meaning set forth in Section 4.7(a) (Closing\nthe Front-End Transition Period – Notice of Service Commencement Date).\n“Hazardous Material” means: (i) any waste, substance, object or material deemed\nhazardous under Environmental Law, including “hazardous substances” as defined in CERCLA\nand “hazardous waste” as defined in RCRA and any local counterpart law; (ii) any oil or petroleum\nproduct, lead-based paint or polychlorinated biphenyl; and (iii) any other pollutant, contaminant,\nmaterial, substance or waste that is listed, defined or is subject to regulation under any\nEnvironmental Law.\n“Hired Former Employees of Owner” has the meaning set forth in Section 4.2(k)\n(ManagementCo Responsibilities – Employment Offers).\n“HUD” means the U.S. Department of Housing and Urban Development.\n“ICC” has the meaning set forth in Section 15.4(b)(i) (Expert Technical\nDetermination Procedure for Technical Disputes – Procedures).\n“Incentive Fee” has the meaning set forth in Section 7.1(c)(i) (Service Fee –\nIncentive Fee).\n“Incentive Fee Report” has the meaning set forth in Section 7.1(c)(ii) (Service Fee\n– Incentive Fee).\n“Indemnifying Party” means (i) in the case of a claim for indemnification by\nOperator Indemnitee, Owner and (ii) in the case of a claim for indemnification by an Owner\nIndemnitee, Operator.\n“Independent Expert” has the meaning set forth in Section 15.4(a) (Expert\nTechnical Determination Procedure for Technical Disputes – Generally).\n“Information System” means a discrete set of electronic information resources\norganized for the collection, processing, maintenance, use, sharing, dissemination or disposition\nof electronic information, including, such resources organized as any specialized system such as\nindustrial/process controls systems, telephone switching and private branch exchange systems, and\nenvironmental control systems, and “Information Systems” means more than one Information\nSystem.\n“Initial Budgets” means, collectively, the Operating Budget, the Capital Budgets\nand the Generation Budget, in each case, for the initial Contract Year, and together with the\nprojected budget for the following two (2) Contract Years.\n“Initial Term” has the meaning set forth in Section 2.3(a) (Term – Initial Term).\n\n18'}, {'number': 26, 'text': 'CONFIDENTIAL\n“Insurance Proceeds Account” has the meaning set forth in Section 10.3\n(Additional Named Insureds).\n“Integrated Resource Plan” means the integrated resource plan contemplated under\nAct No. 57 of the Legislative Assembly of Puerto Rico, enacted on May 27, 2014.\n“Intellectual Property” means all (i) Patents, (ii) Trademarks, (iii) domain names,\nURLs and any other addresses for use on the Internet or any other computer network or\ncommunication system, (iv) Copyrights, (v) rights of publicity, rights of privacy and moral rights,\n(vi) Know-How, (vii) other intellectual property or similar corresponding or equivalent right to\nany of the foregoing or other proprietary or contract right relating to any of the foregoing (including\nremedies against infringements thereof and rights of protection of interest therein under the laws\nof all jurisdictions) and (viii) copies and tangible embodiments thereof (including Software), in\neach case whether or not the same are in existence as of the date of this Agreement or developed\nafter such date and in any jurisdiction throughout the world.\n“Internal Revenue Code” means the United States Internal Revenue Code of 1986.\n“Interview Deadline” has the meaning set forth in Section 4.2(j) (ManagementCo\nResponsibilities – Employment Evaluations).\n“IPP” means a producer of electric power that is not owned by Owner, GenCo or\nany of their respective Affiliates.\n“Investment Grade Rating” means a rating of BBB- or higher by S&P, Baa3 or\nhigher by Moody’s, BBB- by Fitch, or the equivalent of such global ratings by S&P, Moody’s or\nFitch.\n“Key Performance Metrics” means the “Key Performance Metrics” to be agreed\nupon during the Front-End Transition Period and set forth in Annex IX (Performance Metrics).\n“Know-How” means proprietary rights in all, trade secrets, confidential or\nproprietary information, including confidential or proprietary concepts, ideas, knowledge, rights\nin research and development, financial, marketing and business data, pricing and cost information,\nplans (including business and marketing plans), algorithms, formulae, inventions, processes,\ntechniques, technical data, designs, drawings (including engineering and AutoCAD drawings),\nspecifications, databases, blueprints and customer and supplier lists and information, in each case\nwhether patentable or not and whether or not reduced to practice.\n“Legacy Generation Assets” means any power plants and any facilities, equipment\nand other assets related to the generation of Power and Electricity existing as of the date hereof\nand in which Owner or GenCo has an ownership or leasehold interest.\n“Legal Proceeding” means any claim, litigation, action, suit (whether civil,\ncriminal, administrative, judicial or investigative), audit, hearing, investigation, binding arbitration\nor mediation or proceeding, in each case commenced, brought, conducted, heard before or\notherwise involving any Governmental Body, arbitrator or mediator.\n\n19'}, {'number': 27, 'text': 'CONFIDENTIAL\n“Liability Waiver” has the meaning set forth in Section 4.1(g) (Front-End\nTransition Period Generally – Liability Waiver).\n“Lien” means any and every lien, pledge, security interest, claim, mortgage, deed\nof trust, lease, charge, option, right of first refusal, easement or other real estate declaration,\ncovenant, condition, restriction or servitude, transfer restriction under any encumbrance or any\nother restriction or limitation whatsoever, including mechanics’, materialmen’s, laborers’ and\nlenders’ liens.\n“Losses” means any and all actual out-of-pocket (i) losses, damages, costs,\nexpenses, liabilities, interest, deficiencies, awards, judgments, fines, assessments, penalties,\nforfeitures, obligations, deposits, Taxes, costs, offsets, expenses or other charges of any kind,\nincluding Fees-and-Costs, Environmental Claim and Cleanup Liability and costs of enforcing any\nright to indemnification hereunder or pursuing any insurance providers and (ii) settlements in\nconnection with Section 18.1 (Indemnification by Operator) and Section 18.2 (Indemnification by\nOwner), the amount of which either has been agreed by Operator and Administrator or is below a\nspecified amount to be agreed by Operator and Administrator from time to time.\n“Major Outage Event” has the meaning set forth in Annex IX (Performance\nMetrics).\n“Major Outage Event Performance Metrics” means the “Major Outage Event\nPerformance Metrics” to be agreed upon during the Front-End Transition Period and set forth in\nAnnex IX (Performance Metrics).\n“ManagementCo” has the meaning set forth in the introductory paragraph.\n“ManagementCo Service Commencement Date Conditions” has the meaning set\nforth in Section 4.5(a) (Conditions Precedent to Service Commencement Date – ManagementCo\nResponsibilities).\n“Material Contractor” has the meaning set forth in Section 11.1(b) (Ability to\nSubcontract and Contract – Contractors Generally).\n“Material Front-End Subcontractor” has the meaning set forth in Section 4.9(a)\n(Subcontractors During the Front-End Transition Period – General).\n“Material Subcontractor” has the meaning set forth in Section 11.1(a) (Ability to\nSubcontract and Contract – Subcontractors Generally).\n“Material System Contract” has the meaning set forth in Section 5.2(d) (System\nContracts – Additional System Contracts or Expired System Contracts After Service\nCommencement Date).\n“Mediation Rules” has the meaning set forth in Section 15.5(b) (Mediation –\nProcedures).\n\n20'}, {'number': 28, 'text': 'CONFIDENTIAL\n“Minimum Performance Threshold” means the “Minimum Performance Level” set\nforth in Annex IX (Performance Metrics) with respect to any Performance Metrics.\n“Minimum Performance Threshold Default” has the meaning set forth in\nSection 14.1(k) (Events of Default By Operator – Failure to Meet Minimum Performance\nThreshold).\n“Moody’s” means Moody’s Investors Services, Inc.\n“Negotiation Period” has the meaning set forth in Section 15.3(b)(i) (Negotiation –\nNegotiation Period).\n“Non-Federal Funding Procurement Manual” has the meaning set forth in\nSection 4.1(f) (Front-End Transition Period Generally – Non-Federal Funding Procurement\nManual).\n“Non-Federally Funded Capital Improvements” means all Capital Improvements\nother than Federally Funded Capital Improvements.\n“Notice of Dispute” has the meaning set forth in Section 15.2(a) (Commencement\nof the Dispute Resolution Procedure – Notice).\n“Notice of Mediation” has the meaning set forth in Section 15.5(a) (Mediation –\nGenerally).\n“O&M Services” has the meaning set forth in Section 5.1 (Services Generally).\n“Obligated” means a definite commitment that creates (i) a legal liability on the\npart of the government of the United States for the disbursement of Federal Funding or (ii) a legal\nduty on the part of the government of the United States that could mature into a legal liability by\nvirtue of actions on the part of the other party beyond the control of the government of the United\nStates.\n“Occupational Safety and Health Act” shall mean the Occupational Safety and\nHealth Act of 1970, 29 U.S.C. § 651 et seq.\n“Operating Account” has the meaning set forth in Section 7.5(a)(i) (Service\nAccounts – Operating Account).\n“Operating Budget” means, for any given Contract Year, the budget of the T&D\nPass-Through Expenditures required to perform the O&M Services (exclusive of the cost of\nCapital Improvements and Outage Events) for such Contract Year, together with the projected\nbudget for the following two (2) Contract Years, in each case, including monthly budgets of such\nexpenditures and cash flows, as such budget may be amended or adjusted from time to time in\naccordance with the terms and conditions of this Agreement.\n“Operating Budget Overrun Default” has the meaning set forth in Section 14.5(e)\n(Additional Termination Rights – Operating Budget Overrun).\n21'}, {'number': 29, 'text': 'CONFIDENTIAL\n“Operator” has the meaning set forth in the introductory paragraph.\n“Operator Confidential Information” has the meaning set forth in Section 13.2(a)\n(Proprietary Information – Confidentiality Obligation).\n“Operator Event of Default” has the meaning set forth in Section 14.1 (Events of\nDefault By Operator).\n“Operator Indemnitee” has the meaning specified in Section 18.2 (Indemnification\nby Owner).\n“Operator Intellectual Property” has the meaning specified in Section 13.1(a)\n(Intellectual Property – Operator Intellectual Property and Subcontractor Intellectual Property).\n“Operator Marks” means Operator’s Trademarks listed in Annex XIV (Operator\nMarks), as may be revised by Operator from time to time.\n“Operator Related Parties” means Operator, Parent Company, Guarantor(s), their\nAffiliates and any of their respective employees, directors and officers.\n“Operator Termination Fee” means an amount equal to (i) the sum of the Fixed Fee\nand the maximum Incentive Fee (in each case in 2020 Dollars, as defined in Annex VIII (Service\nFee)) for the Contract Year in which this Agreement is terminated multiplied by (ii) the multiplier\napplicable for such Contract Year as set forth in Annex XIII (Operator Termination Fee\nMultiplier).\n“Other Employees” has the meaning set forth in Section 4.2(k) (ManagementCo\nResponsibilities – Employment Offers).\n“Outage Event” means an event as a result of which (i) at least twenty thousand\nfive hundred (20,500) T&D Customers are interrupted or (ii) at least one hundred fifty (150) outage\njobs for the T&D System are logged, in each case within a twenty-four (24) hour period and due\nto an act of God or, in case of a storm, a storm that is designated as such by the U.S. National\nWeather Service, and shall end when a state in which fewer than one thousand (1,000) T&D\nCustomers remain interrupted for a continuous period of eight (8) hours following an Outage Event\nis achieved.\n“Outage Event Costs” has the meaning set forth in Section 7.5(d)(i) (Service\nAccounts – Outage Event Reserve Account).\n“Outage Event Reserve Account” has the meaning set forth in Section 7.5(d)(i)\n(Service Accounts – Outage Event Reserve Account).\n“Overdue Rate” means the lower of (i) the Prime Rate plus two percent (2%) and\n(ii) the highest rate permitted by Applicable Law.\n“Oversight” means, with respect to any matter relating to the T&D System, the\nO&M Services or this Agreement, the performance of such reviews, investigations, inspections,\n22'}, {'number': 30, 'text': 'CONFIDENTIAL\nor examinations relating to such matters as are reasonably necessary in the circumstances,\nconducted, in each case, in accordance with generally accepted contract administration practices\nused in the electric utility industry.\n“Owner” has the meaning set forth in the introductory paragraph.\n“Owner Confidential Information” has the meaning set forth in Section 13.2(a)\n(Proprietary Information – Confidentiality Obligation).\n“Owner Employees” has the meaning set forth in Section 4.2(j) (ManagementCo\nResponsibilities – Employment Evaluations).\n“Owner Event of Default” has the meaning set forth in Section 14.3 (Events of\nDefault By Owner).\n“Owner Fault” means (i) any breach (including any breach of any representation\nand warranty set forth in any Transaction Document), (ii) any failure of compliance or\nnonperformance by Owner or Administrator with its respective obligations under any Transaction\nDocument or (iii) any negligence, tort or willful misconduct by Owner or Administrator with\nrespect to performance of its respective obligations under any Transaction Document (whether or\nnot attributable to any officer, trustee, member, agent, employee, representative, contractor,\nsubcontractor of any tier or independent contractor of Owner or Administrator other than Operator\nand its Subcontractors), which has had, or is reasonably expected to have, a material adverse effect\non Operator’s performance or cost of performance or on Operator’s rights or obligations under this\nAgreement or on the operation or maintenance of the T&D System.\n“Owner Indemnitee” has the meaning specified in Section 18.1 (Indemnification by\nOperator).\n“Owner Intellectual Property” means any Work Product and other Intellectual\nProperty owned by Owner or its Affiliates.\n“Owner Licensed Intellectual Property” means any Intellectual Property licensed\nby Owner from a third-party not a party to this Agreement.\n“Owner Marks” means Owner’s Trademarks listed in Annex XV (Owner Marks),\nas may be revised by Owner from time to time.\n“Owner Patents” has the meaning set forth in Section 13.1(d)(iv) (Intellectual\nProperty – Work Product).\n“Owner Personal Information” means any and all personally identifiable\ninformation, in any form, collected by or provided to Operator, Operator Related Parties or\nSubcontractors in connection with the provision of O&M Services or services under this\nAgreement and that, alone or in combination with other information, uniquely identifies a current,\nformer or prospective director, trustee, officer, employee, elected official, supplier, retiree of\nOwner, Owner Related Party or a T&D Customer (e.g., names, addresses, telephone numbers,\nother information in the Customer Database or any other personally identifiable information as\n23'}, {'number': 31, 'text': 'CONFIDENTIAL\notherwise defined under Applicable Law), including (i) copies of such information or materials to\nthe extent containing such information or (ii) such information Owner notifies Operator in advance\nin writing is subject to a duty of confidentiality that Owner owes to Owner’s customers or pursuant\nto contracts of Owner or Owner Related Parties.\n“Owner Related Parties” means Owner, its Affiliates and any of their respective\nemployees, directors, trustees, elected officials and officers.\n“Owner Service Commencement Date Conditions” has the meaning set forth in\nSection 4.5(b) (Conditions Precedent to Service Commencement Date – Owner and Administrator\nResponsibilities).\n“Owner Termination Fee” means the following: (a) during Contract Years one (1)\nthrough five (5), an amount equal to US$20,000,000 in 2020 Dollars; and (b) during any\nsubsequent Contract Year, an amount equal to US$10,000,000 in 2020 Dollars. For purposes of\nthis definition, the phrase “2020 Dollars” means that the relevant amount will be adjusted to\naccount for inflation, at the start of each Contract Year, by the respective annual CPI Factor(s) to\nreflect a nominal value for the Contract Year. For illustrative purposes only, if Contract Year four\n(4) starts in calendar year 2023, then the adjustment for inflation would be as follows: Contract\nYear four (4)’s Owner Termination Fee (as set forth in this definition, in 2020 Dollars) multiplied\nby the CPI Factor for 2021 multiplied by the CPI Factor for 2022 multiplied by the CPI Factor for\n2023.\n“Parent Company” means each of Quanta Services, Inc. and Canadian Utilities\nLimited and any of their respective successors and assigns.\n“Party” has the meaning set forth in the introductory paragraph.\n“Patents” means the exclusive legal rights held by the owner of a patent (including\nutility and design patents) to exclude others from using, making, having made, selling, offering to\nsell, and importing patented subject matter and to practice patented methods. Patents include all\nlegal rights in any patent applications, PCT filings, patent disclosures, issued patents and all related\nextensions, continuations, continuations-in-part, divisions, reissues and reexaminations, utility\nmodels, certificates of invention and design patents, and all extensions thereto.\n“Performance Metrics” has the meaning set forth in Section 7.1(c)(i) (Service Fee\n– Incentive Fee).\n“Permitted Liens” means (i) Liens arising by operation of law that are either\ncontested in good faith and for which Operator or any Subcontractor has established adequate\nreserves or that are discharged promptly, (ii) Liens existing as of the Effective Date, if any, (iii)\nLiens that result from any act or omission by any Owner Related Party, Administrator or any other\nGovernmental Body, (iv) purchase money Liens or similar Liens securing rental payments under\ncapital lease arrangements, and (v) Liens on System Revenues specified in or permitted under any\nTitle III Plan and its related implementing documents.\n\n24'}, {'number': 32, 'text': 'CONFIDENTIAL\n“Person” means any individual (including the heirs, beneficiaries, executors, legal\nrepresentatives or administrators thereof), firm, corporation, company, association, partnership,\nlimited partnership, limited liability company, joint stock company, joint venture, trust, business\ntrust, unincorporated organization or other entity or a Governmental Body.\n“Physical Security Plan” has the meaning set forth in Section 4.2(h)\n(ManagementCo Responsibilities – Physical Security Plan, Data Security Plan and Vegetation\nManagement Plan).\n“Power and Electricity” means the electrical energy, capacity and ancillary services\navailable from the System Power Supply.\n“PRDH” means the Puerto Rico Department of Housing, also known as the\nDepartamento de la Vivienda de Puerto Rico.\n“PREB” means the Puerto Rico Energy Bureau, also known as the Negociado de\nEnergia de Puerto Rico, an independent body created by Act No. 57 of the Legislative Assembly\nof Puerto Rico, enacted on May 27, 2014.\n“PREB Actions” has the meaning set forth in Section 3.9(c) (Qualified\nManagement Contract – PREB Actions).\n“Pre-Existing Environmental Condition” means the presence of Hazardous\nMaterials in environmental media anywhere in, at, from, as a result of, on or under the T&D\nSystem or the T&D System Sites on the Service Commencement Date.\n“Prime Rate” means a variable per annum rate equal, as of any date of\ndetermination, to the rate as of such date published in the “Money Rates” section of The Wall\nStreet Journal as being the “Prime Rate” (or, if more than one rate is published as the “Prime Rate,”\nthen the highest of such rates), or a mutually agreeable alternative source of the prime rate if it is\nno longer published in the “Money Rates” section of The Wall Street Journal or the method of\ncomputation thereof is substantially modified.\n“PRIRC” means the Internal Revenue Code for a New Puerto Rico of 2011.\n“Pro Rata” and similar expressions mean an adjustment to a cost, payment or other\namount due over a period of time to account for it accruing over only a portion of such period.\n“Procurement Manuals” means the Federal Funding Procurement Manual and the\nNon-Federal Funding Procurement Manual.\n“PROMESA” means the Puerto Rico Oversight, Management and Economic\nStability Act enacted on June 30, 2016 (P.L. 114-187).\n“Proposal” means the proposal submitted in response to the RFP.\n“Proposal Submission Date” means November 25, 2019.\n\n25'}, {'number': 33, 'text': 'CONFIDENTIAL\n“Prudent Utility Practice” means, at any particular time, the practices, methods,\ntechniques, conduct and acts that, at the time they are employed, are generally recognized and\naccepted by companies operating in the United States electric transmission and distribution\nbusiness as such practices, methods, techniques, conduct and acts appropriate to the operation,\nmaintenance, repair and replacement of assets, facilities and properties of the type covered by this\nAgreement. The interpretation of acts (including the practices, methods, techniques, conduct and\nacts engaged in or approved by a significant portion of the electrical utility industry prior thereto)\nshall take into account the facts and the characteristics of the T&D System and System Power\nSupply known at the time the decision was made. Prudent Utility Practice is not intended to be\nlimited to the optimum or minimum practice, method, technique, conduct or act, to the exclusion\nof all others, but rather to be a spectrum of possible practices, methods, techniques, conduct or acts\nthat a prudent operator would take to accomplish the intended objectives at just and reasonable\ncost consistent with reliability, safety, expediency and good customer relations.\n“Public Information Disclosure Requirements” means any Applicable Law\nrequiring the disclosure of public documents or information.\n“Public-Private Partnerships Authority’s Ethical Guidelines” means the\n“Public-Private Partnerships Authority’s Guidelines for the Evaluation of Conflicts of Interest and\nUnfair Advantages in the Procurement of Public-Private Partnership Contracts,” promulgated by\nthe Public-Private Partnerships Authority and dated as of December 19, 2009.\n“Public Works Improvements” means Capital Improvements performed as a result\nof requirements or requests of a Governmental Body.\n“Purchased Power Account” has the meaning set forth in Section 7.5(e)(i) (Services\nAccounts – Generation Expenditures Accounts).\n“Rate Order” has the meaning set forth in Section 5.6(g) (System Regulatory\nMatters – PREB Rate Proceedings).\n“Rating Agency” means each of S&P, Moody’s and Fitch.\n“Rating Downgrade” has the meaning set forth in Section 7.8(b) (Owner Credit\nRating – Reinstatement of Federal Funding).\n“RCRA” means the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et\nseq.\n“Regulation 6955” means Regulation 6955 of March 18, 2005.\n“Release” means any emission, spill, seepage, leak, escape, leaching, discharge,\ninjection, pumping, pouring, emptying, dumping, disposal, migration or release of Hazardous\nMaterials from any source into or upon the environment.\n“Reliance Letter” means a letter from tax counsel, substantially in the form set forth\nin Exhibit G (Form of Reliance Letter) that shall accompany a Tax Opinion and shall permit\nOperator to rely on such Tax Opinion.\n26'}, {'number': 34, 'text': 'CONFIDENTIAL\n“Remedial Action” means any investigation, clean-up, removal action, remedial\naction, restoration, repair, abatement, response action, corrective action, monitoring, sampling and\nanalysis, installation, reclamation, closure or post-closure in connection with the suspected,\nthreatened or actual Release of Hazardous Materials.\n“Representative” means, with respect to any Person, any director, officer,\nemployee, official, lender (or any agent or trustee acting on its behalf), partner, member, owner,\nagent, lawyer, accountant, auditor, professional advisor, consultant, engineer, contractor,\nSubcontractor, other Person for whom such Person is responsible at law or other representative of\nsuch Person and any professional advisor, consultant or engineer designated by such Person as its\n“Representative.”\n“Required Insurance” has the meaning set forth in Section 10.1 (Insurance\nGenerally).\n“Resource Adequacy” means the procurement obligations with regards to electric\ncapacity, energy and ancillary services of load serving entities.\n“Revenue Procedure 2017-13” means the revenue procedure issued by the United\nStates Internal Revenue Service that provides safe harbor conditions under which a management\ncontract does not result in private business use under § 141(b) of the Internal Revenue Code or\nsubsequent guidance from the United States Internal Revenue Service.\n“RFP” means the Puerto Rico Electric Power Transmission and Distribution\nSystem Request for Proposals 2019-2 issued by the Puerto Rico Public-Private Partnerships\nAuthority.\n“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill\nCompanies, Inc.\n“Sanctioned Country” has the meaning set forth in Section 19.2(h)(iv)\n(Representations and Warranties of Operator – Applicable Law Compliance).\n“Sanctioned Person” has the meaning set forth in Section 19.2(h)(iv)\n(Representations and Warranties of Operator – Applicable Law Compliance).\n“Sanctions” has the meaning set forth in Section 19.2(h)(iv) (Representations and\nWarranties of Operator – Applicable Law Compliance).\n“Securitization SPV” means any entity established by the Government of Puerto\nRico to issue secured debt in connection with Owner’s Title III Plan and its successors and assigns,\nas applicable.\n“ServCo” has the meaning set forth in the introductory paragraph.\n“ServCo Benefit Plans” has the meaning set forth in Section 5.8(a) (Labor and\nEmployment; Employee Benefits – Employee Plans).\n\n27'}, {'number': 35, 'text': 'CONFIDENTIAL\n“ServCo Employees” has the meaning set forth in Section 4.2(k) (ManagementCo\nResponsibilities – Employment Offers).\n“Service Accounts” means, collectively, the Operating Account, the Capital\nAccount – Federally Funded, the Capital Account – Non-Federally Funded, the Outage Event\nReserve Account, the Generation Expenditures Accounts and the Contingency Reserve Account,\neach of which is a “Service Account.”\n“Service Account Dispute” has the meaning set forth in Section 7.5(g) (Service\nAccounts – Service Account Disputes).\n“Service Commencement Date” has the meaning set forth in Section 4.7(b)\n(Closing the Front-End Transition Period – Establishment of Service Commencement Date).\n“Service Commencement Date Conditions” has the meaning set forth in Section 4.5\n(Conditions Precedent to Service Commencement Date).\n“Service Fee” has the meaning set forth in Section 7.1(a) (Service Fee – Generally).\n“Service Fee Dispute” has the meaning set forth in Section 7.1(e) (Service Fee –\nService Fee Disputes).\n“Servicing Contract” means any servicing contract by and between Operator and\nthe Securitization SPV, as applicable, in form and substance reasonably acceptable to Operator.\n“Shared Services Agreement” has the meaning set forth in Section 4.5(s)\n(ManagementCo Responsibilities – Shared Services Agreement).\n“Software” means computer programs, proprietary software, including any and all\nsoftware implementations of algorithms, models and methodologies, whether in source code or\nobject code, operating systems, design documents, website code and specifications, flow-charts,\nuser manuals and training materials relating thereto and any translations thereof.\n“Stafford Act” means the Robert T. Stafford Disaster Relief and Recovery Act,\nenacted on November 23, 1988.\n“Subcontract” means an agreement or purchase order by Operator to a\nSubcontractor or a Subcontractor to Operator, as applicable.\n“Subcontractor” means every Person (other than employees of Operator) employed\nor engaged by Operator or any Person directly or indirectly in privity with Operator for the\nperformance of any portion of the Front-End Transition Services, the O&M Services or the BackEnd Transition Services, whether for the furnishing of labor, materials, equipment, supplies,\nservices or otherwise. For the avoidance of doubt: (i) Subcontractors includes personnel from\nOperator’s Affiliates assigned to perform the Front-End Transition Services, the O&M Services\nor the Back-End Transition Services under this Agreement, and (ii) Subcontractors does not\ninclude third parties merely providing commercially available “off-the-shelf” Software or\nInformation Systems to Operator (directly or as a service).\n28'}, {'number': 36, 'text': 'CONFIDENTIAL\n“Subcontractor Intellectual Property” has the meaning specified in Section 13.1(a)\n(Intellectual Property – Operator Intellectual Property, Contractor Intellectual Property and\nSubcontractor Intellectual Property).\n“Sworn Statement” means a sworn statement in the form set forth as Exhibit E\n(Form of Sworn Statement).\n“System Contracts” means (i) the contracts, leases, licenses, permits and other\nsimilar arrangements of all types related to the T&D System that have been entered into by Owner\n(or pursuant to which Owner otherwise has rights) and remain in effect as of the Service\nCommencement Date and (ii) any other contracts, leases, licenses, permits and similar\narrangements of all types entered into by Owner, or by Operator on behalf and as agent of Owner,\nrelated to the T&D System or O&M Services pursuant to Section 4.3(d) (Owner and Administrator\nResponsibilities– Additional System Contracts and Generation Supply Contracts Between\nEffective Date and Service Commencement Date) and/or Section 5.2(d) (System Contracts –\nAdditional System Contracts or Expired System Contracts After Service Commencement Date),\nincluding contracts related to:\n(A)\n\nthe ownership and operation and maintenance of the T&D System\n(including interconnection and other related agreements);\n\n(B)\n\nthe ownership of or access to any T&D System Sites (including all right of\nway, crossing, access, Easement and other related agreements);\n\n(C)\n\nall information technology hardware and software used to operator or\nadministrate the T&D System;\n\n(D)\n\nvegetation management, fuel for fleet vehicles, fleet vehicles, meters, call\ncenters and engineering, procurement and construction;\n\n(E)\n\nT&D Customers; or\n\n(F)\n\nT&D System operation or ancillary services.\n\nFor the avoidance of doubt, System Contracts shall not include (x) any agreements between GenCo\nand a third party, Generation Supply Contracts, the GridCo-GenCo PPOA or collective bargaining\nagreements with union labor or (y) any arrangements that would have been considered System\nContracts under clauses (i) or (ii) above but which have been rejected by Owner in the Title III\nCase prior to the Title III Exit.\n“System Information” means any and all information relating to the T&D System,\nincluding: (i) income statements, balance sheets, statements of cash flow and changes in financial\nposition, details regarding revenues generated by the T&D System (including information\nregarding the collection thereof), operating income, expenses, capital expenditures and budgeted\noperating results relating to the O&M Services; (ii) all certificates, correspondence, data (including\ntest data), documents, facts, files, information, investigations, materials, notices, plans,\nprojections, records, reports, requests, samples, schedules, statements, studies, surveys, tests and\ntest results analyzed, categorized, characterized, created, collected, generated, maintained,\nprocessed, produced, prepared, provided, recorded, stored or used by Operator or any of its\nRepresentatives in connection with the T&D System or the O&M Services; and (iii) books,\n29'}, {'number': 37, 'text': 'CONFIDENTIAL\nrecords, accounts and documents relating to the O&M Services, including any information that is\nstored electronically or on computer-related media but not including (A) Operator Confidential\nInformation or other information that Operator reasonably believes is subject to attorney-client or\nother legal privilege, confidentiality restrictions or trade secret protections, (B) personally\nidentifiable information protected by Applicable Law, other than Owner Personal Information, (C)\ncorrespondence between employees or other Representatives of Operator, (D) information and\nrecords pertaining to the Service Fee, or (E) information or records pertaining to any dispute with\nOwner or Administrator or their respective Representatives.\n“System Operation Principles” has the meaning set forth in Section 4.1(h) (FrontEnd Transition Period Generally – System Operation Principles).\n“System Power Supply” means electric capacity, energy and ancillary services\nfrom any power supply sources authorized under Applicable Law to operate in the\nCommonwealth.\n“System Remediation Plan” has the meaning set forth in Section 4.1(d)(ii) (FrontEnd Transition Period Generally – Transition to Standard of Performance).\n“System Revenues” has the meaning set forth in Section 3.2 (Engagement of\nOperator).\n“T&D Customers” means customers of the T&D System.\n“T&D Pass-Through Expenditures” has the meaning set forth in Section 7.2(a)\n(Pass-Through Expenditures – T&D Pass-Through Expenditures).\n“T&D System” has the meaning set forth in the Recitals.\n“T&D System Sites” means the real property and interests therein upon which the\ncomponents of the T&D System are and will be located.\n“Target Service Commencement Date” means (i) January 1, 2021 in the event the\nEffective Date is on or before February 16, 2020 or (ii) the date that is 320 days after the Effective\nDate in the event the Effective Date is after February 16, 2020.\n“Tax” means all U.S. federal, state, Commonwealth, municipal, local and non-U.S.\ntaxes and similar governmental charges, imposts, levies, fees and assessments, however\ndenominated (including income taxes, business asset taxes, franchise taxes, net worth taxes, capital\ntaxes, estimated taxes, withholding taxes, use taxes, value added tax, gross or net receipt taxes,\nsales taxes, transfer taxes or fees, excise taxes, real and personal property taxes, ad valorem taxes,\npayroll related taxes, employment taxes, unemployment insurance, social security taxes, minimum\ntaxes and import duties and other obligations of the same or a similar nature), together with any\nrelated liabilities, penalties, fines, additions to tax or interest imposed by a Governmental Body.\n“Tax Assurance” has the meaning set forth in Section 4.5(t) (Conditions Precedent\nto Service Commencement Date – Tax Matters).\n\n30'}, {'number': 38, 'text': 'CONFIDENTIAL\n“Tax Opinion” means an opinion, substantially in the form set forth in Exhibit F-1\n(Form of Tax Opinion - Effective Date) or Exhibit F-2 (Form of Final Tax Opinion), as applicable,\nof Nixon Peabody LLP as counsel to the FOMB or other tax counsel reasonably acceptable to\nAdministrator, rendered in connection with this Agreement and providing that neither this\nAgreement nor any provision hereof, nor the performance by each Party of its obligations\nhereunder (including Operator’s administration of the System Contracts), adversely affects the\nexclusion from gross income of interest on obligations of Owner, its Affiliates or another\nGovernmental Body for federal income tax purposes under the Internal Revenue Code.\n“Tax Return” means any report, return, information return, form, declaration,\nstatement or other information (including any amendments thereto and including any schedule or\nstatement thereto) required to be filed or maintained by Applicable Law in connection with the\ndetermination, assessment or collection of any Tax.\n“Technical Dispute” has the meaning set forth in Section 15.3(b)(i) (Negotiation –\nNegotiation Period)\n“Term” means the Initial Term together with the Extension Term, if any.\n“Third-Party Intellectual Property” means Intellectual Property that is licensed to\nOperator by a third-party that is not an Affiliate of Operator or a Subcontractor and is used in the\nperformance of this Agreement.\n“Third-Party Payments” has the meaning set forth in Section 18.4(a) (Insurance\nand Other Recovery – Generally).\n“Title III Approvals” means any findings, approvals and protections of the Title III\nCourt or any other applicable court authorizing or approving Owner’s entry into and performance\nof this Agreement and that are otherwise necessary to the Parties’ performance of this Agreement.\n“Title III Case” means Owner’s case under Title III of PROMESA in the U.S.\nDistrict Court.\n“Title III Court” means the U.S. District Court presiding over the Title III Case.\n“Title III Exit” means the consummation and effectiveness of a confirmed Title III\nPlan.\n“Title III Plan” means a plan of adjustment in the Title III Case.\n“Trademarks” means the exclusive legal rights to use and display any marks, names\nor symbols in association with businesses, products or services as an indication of ownership,\norigin, affiliation, or sponsorship, including trademarks, service marks, trade dress, brand names,\ncertification marks, logos, slogans, rights in designs, industrial designs, corporate names, trade\nnames, business names, geographic indications and other designations of source, origin,\nsponsorship, endorsement or certification, together with the goodwill associated with any of the\nforegoing, in each case whether registered or unregistered, and all applications and registrations\ntherefor.\n31'}, {'number': 39, 'text': 'CONFIDENTIAL\n“Transaction Documents” means this Agreement, the Guarantee, the FOMB\nProtocol Agreement, any Servicing Contract and any other agreement entered into by Operator,\nOwner or Administrator from time to time in connection with the transactions contemplated hereby\nand expressly designated a “Transaction Document” by the parties thereto.\n“U.S. District Court” means the United States District Court for the District of\nPuerto Rico.\n“United States” or “U.S.” means the United States of America.\n“Vegetation Management Plan” has the meaning set forth in Section 4.2(h)\n(ManagementCo Responsibilities – Physical Security Plan, Data Security Plan and Vegetation\nManagement Plan).\n“Work Product” has the meaning set forth in Section 13.1(d)(i) (Intellectual\nProperty – Work Product).\nInterpretation; Construction.\n(a)\nHeadings. The table of contents, articles, titles and headings to sections\nherein are inserted for convenience of reference only and are not intended to be a part of or to\naffect the meaning or interpretation of this Agreement. Except as otherwise indicated, all\nreferences in this Agreement to “Articles”, “Sections”, “Annexes” and “Exhibits” are intended to\nrefer to Articles and Sections of this Agreement and Annexes and Exhibits to this Agreement.\n(b)\nAnnexes and Exhibits. The Annexes and Exhibits referred to herein shall be\nconstrued with and as an integral part of this Agreement to the same extent as if they were set forth\nverbatim herein. In the event of an irreconcilable conflict, discrepancy, error or omission, the\nfollowing descending order of precedence will govern: (i) this Agreement, (ii) the Annexes and\n(iii) the Exhibits.\n(c)\nConstruction. For purposes of this Agreement: (i) “include”, “includes” or\n“including” shall be deemed to be followed by “without limitation”; (ii) “hereof”, “herein”,\n“hereby”, “hereto” and “hereunder” shall refer to this Agreement as a whole and not to any\nparticular provision of this Agreement; (iii) “extent” in the phrase “to the extent” shall mean the\ndegree to which a subject or other item extends and shall not simply mean “if”; (iv) in the\ncomputation of periods of time from a specified date to a later specified date, the word “from”\nmeans “from and including”; the words “to” and “until” each mean “to but excluding”; and the\nword “through” means “to and including”; (v) “dollars” and “US$” shall mean United States\nDollars; (vi) the singular includes the plural and vice versa; (vii) reference to a gender includes the\nother gender; (viii) “any” shall mean “any and all”; (ix) “or” is used in the inclusive sense of\n“and/or”; (x) reference to any agreement, document or instrument means such agreement,\ndocument or instrument as amended, supplemented and modified in effect from time to time in\naccordance with its terms; (xi) reference to any Applicable Law means such Applicable Law as\namended from time to time and includes any successor legislation thereto and any rules and\nregulations promulgated thereunder; and (xii) reference to any Person at any time refers to such\nPerson’s permitted successors and assigns.\n\n32'}, {'number': 40, 'text': 'CONFIDENTIAL\n(d)\nDays and Time. All references to days herein are references to calendar\ndays, unless specified as Business Days, and, unless specified otherwise, all statements of or\nreferences to a specific time in this Agreement are to Atlantic Standard Time.\n(e)\nAccounting Principles. All accounting and financial terms used herein,\nunless specifically provided to the contrary, shall be interpreted and applied in accordance with\nthen generally accepted accounting principles in the United States, consistently applied.\n(f)\nNegotiated Agreement. The Parties have participated jointly in the\nnegotiation and drafting of this Agreement with the benefit of competent legal representation, and\nthe language used in this Agreement shall be deemed to be the language chosen by the Parties to\nexpress their mutual intent. In the event that an ambiguity or question of intent or interpretation\narises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption\nor burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any\nprovisions hereof.\n(g)\nReferences to Transmission and Distribution of Power. The phrases\n“transmit”, “transmitted”, “transmitting” and “transmission” and any similar phrases herein, when\nused with respect to Power and Electricity, shall mean and refer to the operation of the T&D\nSystem in accordance with this Agreement to transmit Power and Electricity. The phrases\n“distribute”, “distributed”, “distributing” and “distribution” and any similar phrases herein, when\nused with respect to Power and Electricity, shall mean and refer to the operation of the T&D\nSystem in accordance with this Agreement to distribute Power and Electricity.\n(h)\nActions Taken Pursuant to Agreement. The Parties acknowledge that this\nAgreement sets forth procedures and intended results with respect to various circumstances that\nmay arise during the Term. Such circumstances include the “wheeling”, “transmission” or\n“distribution” of Power and Electricity; Changes in Law and Force Majeure Events; the\npreparation, revision and updating of the Budgets, the Performance Metrics, the System\nRemediation Plan, the System Operation Principles, the Procurement Manuals and any other such\nplan, manual, schedule or similar document to be prepared or amended under Article 4 (Front-End\nTransition Period); the provision of the Front-End Transition Services and the Back-End\nTransition Services; the provision of the O&M Services and additional services; and the\nassignment and transfer of this Agreement. Unless otherwise agreed to by the Parties, any\ncorrespondence, report, submittal, revision update, consent or other document or communication\ngiven pursuant to this Agreement on account of such a circumstance shall be considered as among\nthe Parties to be an action taken pursuant to this Agreement and not an amendment hereto.\n(i)\nOwner as Applicant. Notwithstanding anything to the contrary in this\nAgreement, Owner shall remain the applicant for any requests for reimbursement from FEMA,\nunless formally amended and approved by FEMA.\n\n33'}, {'number': 41, 'text': 'CONFIDENTIAL\nARTICLE 2\nPURPOSE; EFFECTIVE DATE; TERM\nPurpose. Owner hereby contracts with Operator for the provision of (i)\nO&M Services, including the services listed in Article 5 (O&M Services) and Annex I (Scope of\nServices) commencing on the Service Commencement Date, (ii) the Front-End Transition Services\nand (iii) the Back-End Transition Services, in each case, subject to the terms and conditions of this\nAgreement. The Parties acknowledge and agree that (i) this Agreement is a “Partnership Contract”\nas defined in Act 29, (ii) Operator is a “Contractor” as defined in Act 29, entitled to all of the\nbenefits, rights and protections granted to a “Contractor” thereunder and (iii) Operator is not a\n“Contractor” as that term is defined in Section 1.1 (Definitions).\nEffective Date.\n(a)\nExecution of the Agreement. This Agreement shall become effective on the\ndate that it is executed by the Parties, by which execution the Parties acknowledge and agree that\nthe conditions in Section 2.2(b) (Effective Date – Conditions to Execution) have been satisfied (the\n“Effective Date”).\n(b)\nConditions to Execution. The following conditions shall have been satisfied\nprior to the Effective Date:\n(i)\n\nreceipt by the Parties of an Energy Compliance Certificate issued by\n\nPREB;\n(ii)\nreceipt by the Parties of a resolution adopted by the board of\ndirectors of Administrator, in form and substance reasonably acceptable to Administrator and\nManagementCo, authorizing the execution, delivery and performance of this Agreement and the\ntransactions contemplated hereby;\n(iii) receipt by the Parties of a resolution adopted by the board of\ndirectors of Owner, in form and substance reasonably acceptable to Administrator and\nManagementCo, authorizing the execution, delivery and performance of this Agreement and the\ntransactions contemplated hereby;\n(iv)\nreceipt by the Parties of authorization from the FOMB, in form and\nsubstance reasonably acceptable to Administrator and ManagementCo, of the execution, delivery\nand performance of this Agreement and the transactions contemplated hereby;\n(v)\nreceipt by the Parties of approval from the Governor of the\nCommonwealth or his/her delegate, in form and substance reasonably acceptable to Administrator\nand ManagementCo, for the execution, delivery and performance of this Agreement and the\ntransactions contemplated hereby;\n(vi)\n\nreceipt by Owner of the Guarantee;\n\n34'}, {'number': 42, 'text': 'CONFIDENTIAL\n(vii) receipt by Owner of a copy of a certificate as to certain matters of\nCommonwealth law in the form set forth as Exhibit B (Form of Commonwealth Certifications),\nduly executed by Operator;\n(viii) receipt by Owner of a Tax Opinion and receipt by ManagementCo\nof a Reliance Letter;\n(ix)\nevidence reasonably satisfactory to Operator that an amount equal\nto at least four and a half (4.5) months of the estimated Front-End Transition Service Fee has been\ndeposited by Owner in the Front-End Transition Account; and\n(x)\nreceipt by ManagementCo of (A) a list of the project worksheets\nrelated to the T&D System prepared by FEMA pursuant to Section 428 of the Stafford Act as of\nsuch date or (B) a summary of the costs estimates or preliminary costs estimates for Federally\nFunded Capital Improvements established as of such date.\n(c)\nOutside Date. If the Effective Date has not occurred by the date specified in\nthe RFP or such later date as the Parties may mutually agree in writing, the Bid Security (as defined\nin the RFP) shall be held, drawn or returned as provided in the RFP.\nTerm.\n(a)\nInitial Term. This Agreement shall be in effect from the Effective Date\nthrough the fifteenth (15th) anniversary of the Service Commencement Date (such period of time,\nthe “Initial Term”), unless extended or earlier terminated in accordance with the terms hereof.\n(b)\nExtension. Operator and Owner (or Administrator acting on Owner’s\nbehalf) may mutually agree to extend the Initial Term for an additional period to be determined at\nthe time and on terms and conditions to be agreed in good faith (the “Extension Term”); provided\nthat (i) the Extension Term shall not exceed the maximum term permitted under Act 29 at the time\nof such extension, (ii) a Tax Opinion shall have been delivered to Owner and a Reliance Letter\nshall have been received by ManagementCo in connection with such Extension Term and (iii) to\nthe extent required by Applicable Law, the Extension Term shall not be effective until approved\nby the PREB.\n\n35'}, {'number': 43, 'text': 'CONFIDENTIAL\nARTICLE 3\nOWNERSHIP OF THE T&D SYSTEM\nOwnership. The T&D System is and shall be owned by Owner throughout\nthe Term, and Operator shall have no ownership interest therein.\nEngagement of Operator. Operator shall perform the O&M Services as an\nindependent contractor and shall not have any legal, equitable, tax, beneficial or other ownership\nor leasehold interest in the T&D System. The only compensation payable by Owner to Operator\nfor providing the O&M Services for the T&D System shall be the Service Fee. Owner shall also\nfund the Service Accounts in the manner contemplated hereunder for Operator’s payment of T&D\nPass-Through Expenditures (including Excess Expenditures), Capital Costs and Outage Event\nCosts (without limiting Owner’s indemnity or other obligations hereunder). All amounts collected\nby Operator or any Contractor or Subcontractor on behalf of Owner from T&D Customers\npursuant to this Agreement or any Servicing Contract (the “System Revenues”) shall be the\nproperty of Owner (subject only to Liens on System Revenues specified in the Title III Plan and\nthe related disclosure statement) and shall be deposited by Operator daily in such account(s)\nspecified in accordance with the Servicing Contract or, if no Servicing Contract is in effect,\npursuant to the account structure as agreed to between Owner and Operator pursuant to Section\n4.5(n) (Conditions Precedent to Service Commencement Date – Account Structure). In collecting\nthe System Revenues, Operator and any Contractor or Subcontractor shall act solely as an agent\nfor Owner and shall have no right or claim to the System Revenues. Without limiting the generality\nof the foregoing, Operator and any Contractor or Subcontractor shall have no right to assert a claim\nof set-off, recoupment, abatement, counterclaim or deduction against System Revenues for any\namounts that may be owed to Operator hereunder or with respect to any other matter in dispute\nhereunder. Operator is unconditionally and absolutely obligated to pay or deposit the System\nRevenues as directed by Administrator.\nUse of T&D System. From the Service Commencement Date and for the\nremainder of the Term thereafter, Operator, Contractors and its Subcontractors shall have the\nexclusive right (except as set forth in this Agreement), subject to Section 3.5 (Right of Access), to\nenter upon, occupy and use the T&D System and the T&D System Sites for the sole purpose of\nperforming the O&M Services in accordance with the terms hereof. Owner shall ensure that\nOperator, Contractors and its Subcontractors are provided with all necessary access to exercise\nsuch right.\nLiens. From the Service Commencement Date and for the remainder of the\nTerm thereafter, Operator shall keep the T&D System free and clear of any and all Liens (other\nthan Permitted Liens) arising out of or in connection with any acts, omissions or debts of Operator,\nGuarantor(s) or their Affiliates that are unrelated and independent from the provision of O&M\nServices hereunder. Nothing in this Agreement shall be deemed to create any Lien in favor of\nOperator on any asset of Owner, including the T&D System, as security for the obligations of\nOwner hereunder.\nRight of Access. Upon reasonable notice to Operator, at reasonable times\nduring normal business hours and at their own respective cost and risk, each of Owner,\nAdministrator, PREB and their respective Representatives shall have the right to access the T&D\n36'}, {'number': 44, 'text': 'CONFIDENTIAL\nSystem assets and all System Information for Oversight of Operator’s performance of the O&M\nServices and to otherwise carry out their obligations under Applicable Law; provided that such\naccess shall not interfere with Operator’s performance of the O&M Services and may be provided\nby read-only access where available, or a reasonably equivalent form of access to such information.\nOwner, Administrator and their respective Representatives shall comply with all of Operator’s\naccess, security (including cybersecurity) and safety procedures when exercising such right of\naccess. Owner shall be responsible for the security of all access credentials provided to, and each\naccess made and use and disclosure of System Information by, Owner, Administrator, PREB and\ntheir respective Representatives hereunder. At Administrator’s request and sole cost and expense,\nOperator shall provide Administrator with dedicated on-site office space and access to and use of\noffice facilities and equipment located at Operator’s facilities in the Commonwealth or another\nsuitable site mutually agreed upon; provided that such space is reasonable and adequate to enable\nAdministrator to exercise its Oversight rights and responsibilities under this Agreement.\nExclusivity. The Parties covenant and agree that Operator, Contractors,\nSubcontractors and their respective Representatives shall be the sole and exclusive providers of\nO&M Services with respect to the T&D System and that Operator shall not (a) transmit or\ndistribute Power and Electricity using the T&D System other than Power and Electricity obtained\nby, on behalf of or with the approval of Owner (or Administrator, if applicable) or PREB in\naccordance with Applicable Law, or (b) use the T&D System (i) for any purpose other than the\npurposes contemplated hereby or (ii) to serve or benefit any person other than Owner and T&D\nCustomers.\nEssential Public Service. The Parties acknowledge that Owner’s provision\nof the Power and Electricity requirements of the Commonwealth constitutes an essential public\nservice; it being understood that such acknowledgement shall not impose any obligation on the\nParties other than those set forth in this Agreement. Owner acknowledges that Operator will rely\non (i) the certifications, resolutions, authorizations and approvals referred to in Section 2.2\n(Effective Date) and (ii) the funding of the Service Accounts by Owner in the manner contemplated\nhereunder, in each case in order for Operator to (A) perform the O&M Services under this\nAgreement and (B) have the opportunity to earn the Service Fee in full.\nReporting Obligations. In accordance with Section VI of Annex I (Scope\nof Services) Operator shall provide (i) System Information (both financial and operational), as\navailable, to support Owner’s financing activities, including Owner’s administration of debt\nservice and Owner’s required disclosure and tax requirements, and (ii) assistance to Owner and\nAdministrator in connection with Owner’s preparation of reports and other documents to satisfy\nOwner’s reporting requirements.\nQualified Management Contract.\n(a)\nGenerally. The T&D System has been financed with obligations the interest\non which is exempt from gross income for federal income tax purposes under Section 103 of the\nInternal Revenue Code. The Parties intend for this Agreement to constitute a “qualified\nmanagement contract” under Revenue Procedure 2017-13, such that the provision of O&M\nServices by Operator under this Agreement does not adversely affect the exclusion from gross\nincome for federal income tax purposes under the Internal Revenue Code of the interest on such\n37'}, {'number': 45, 'text': 'CONFIDENTIAL\nobligations. The Tax Opinion and the Reliance Letter delivered as of the Effective Date have been\ndelivered on such basis.\n(b)\n\nCovenants.\n\n(i)\nOperator covenants and agrees that: (A) neither it nor any direct or\nindirect owner of an equity interest in it is entitled to any U.S. federal income tax benefits relating\nto the T&D System that are available to an owner or lessor of the T&D System covered by this\nAgreement; (B) it shall not take any tax position inconsistent with it being a service provider with\nrespect to such T&D System; and (C) it shall not, and shall not permit or enable any direct or\nindirect owner of any equity interest in it to, claim any depreciation or amortization deduction,\ninvestment tax credit or deduction for any payment as rent, with respect to the T&D System.\n(ii)\nOwner, Administrator and Operator each covenant and agree that\nthe terms of this Agreement shall be construed so as to comply with the requirements of Revenue\nProcedure 2017-13. To the extent that this Agreement is determined to fail to comply with Revenue\nProcedure 2017-13 for any reason or otherwise is determined to result in private business use of\nthe T&D System within the meaning of Section 141 of the Internal Revenue Code, the Parties\nagree that they shall use reasonable efforts to amend the terms of this Agreement in order to comply\nwith Revenue Procedure 2017-13; provided, however, that if any such amendment shortens or has\nthe effect of shortening the Initial Term, including if any such amendment is required to secure the\ndelivery of the Tax Opinion required by Section 4.5(v) (Conditions Precedent to Service\nCommencement Date – Tax Opinion), then: (A) the Fixed Fee payable to ManagementCo under\nAnnex VIII (Service Fee) shall be adjusted by adding US$7,000,000 in 2020 Dollars per month to\neach month for that number of months equal to the number of months by which the Initial Term is\nless than fifteen (15) years counting back from the end of the as-amended Initial Term; and (B)\nthe maximum Incentive Fee payable to ManagementCo under Annex VIII (Service Fee) shall be\nadjusted by adding US$1,333,333 in 2020 Dollars per month to each month for that number of\nmonths equal to the number of months by which the Initial Term is less than fifteen (15) years\ncounting back from the end of the as-amended Initial Term. By way of illustration only, if the\nfifteen (15)-year anniversary of the Service Commencement Date is September 1, 2035, but the\nParties are required to amend this Agreement such that the Initial Term expires on June 1, 2035,\nthen the adjustments required by the preceding sentence shall be made in each of March, April and\nMay, 2035.\n(iii) The adjustments to the Fixed Fee and the Incentive Fee provided in\nsubsection (b)(ii) shall not apply if the Initial Term is subsequently extended as provided in this\nsubsection (b)(iii) to the term provided in Section 2.3(a) (Term - Initial Term). If the Initial Term\nhas been shortened as provided in subsection (b)(ii), the Initial Term shall automatically be\nextended to the term provided in Section 2.3(a) (Term - Initial Term) upon receipt by the Parties,\nat the expense of Owner or Administrator, of (A) an opinion of Sargent and Lundy or other\nnationally recognized engineering firm acceptable to the Parties, which sets forth, among other\nthings, the reasonably expected weighted average economic life of the T&D System as of the date\nof that opinion, (B) an opinion of Nixon Peabody LLP as counsel to the FOMB or other nationally\nrecognized tax counsel reasonably acceptable to Administrator, providing that the extension of the\nterm of this Agreement to the original Initial Term does not adversely affect the exclusion from\ngross income of interest on tax-exempt obligations of the Owner, its Affiliates or another\n38'}, {'number': 46, 'text': 'CONFIDENTIAL\nGovernmental Body for federal income tax purposes under Section 103 of the Internal Revenue\nCode, and (C) a Reliance Letter from such tax counsel accompanying the opinion described in\nclause (B).\n(c)\nPREB Actions. The Parties hereby acknowledge and agree that to the extent\nPREB (i) is not permitted under Applicable Law to carry out its rights, duties and obligations under\nthis Agreement (“PREB Actions”), all of which PREB is deemed to have acknowledged by\ndelivery of the Energy Compliance Certificate, or (ii) ceases to be an entity of the government of\nthe Commonwealth, the related PREB Actions shall automatically become the rights, duties and\nobligations of Administrator. In the event that such PREB Actions become the rights, duties and\nobligations of Administrator, Administrator shall exercise such rights, duties and obligations (x)\ntaking into account the standards, processes and procedures previously used by PREB with respect\nto the PREB Actions, (y) in a manner that does not adversely affect the exclusion from gross\nincome of interest on obligations of Owner, its Affiliates or another Governmental Body for federal\nincome tax purposes under the Internal Revenue Code and (z) taking into account any obligations\nunder Section 10.1 of Act 120, to the extent applicable.\n\n39'}, {'number': 47, 'text': 'CONFIDENTIAL\nARTICLE 4\nFRONT-END TRANSITION PERIOD\nFront-End Transition Period Generally.\n(a)\nRole of ManagementCo. Throughout the Front-End Transition Period,\nManagementCo shall not provide the O&M Services or otherwise be responsible for the T&D\nSystem, but shall, subject to and conditioned upon Owner providing funding pursuant to\nSection 4.6(b) (Front-End Transition Period Compensation – Front-End Transition Service Fee),\nsolely provide the Front-End Transition Services as described in the front-end transition plan set\nforth in Annex II (Front-End Transition Plan) (the “Front-End Transition Plan”). The Front-End\nTransition Services are intended to ensure an orderly transition of the responsibility for the\nmanagement, operation, maintenance, repairs, restoration and replacement of the T&D System to\nOperator by the Target Service Commencement Date, without disruption of customer service and\nbusiness continuity, and shall be provided in a manner consistent with the Front-End Transition\nPlan and Applicable Law.\n(b)\nOwner and Administrator Cooperation. Each of Owner and Administrator\nshall take all such actions as may be reasonably necessary to enable or assist ManagementCo in\nproviding the Front-End Transition Services, including (i) providing ManagementCo’s\nRepresentatives with a designated space and facilities at Owner’s principal offices for their use\nthroughout the Front-End Transition Period, (ii) allowing access, during normal business or\noperational hours (as may be applicable and relevant) and at such other times as are required, to\nOwner’s premises for the purpose of providing the Front-End Transition Services, (iii) cooperating\nwith and assisting, and causing its Representatives to cooperate with and assist, ManagementCo\nin its performance of the Front-End Transition Services and its efforts to timely satisfy the\nManagementCo Service Commencement Date Conditions and (iv) encouraging and facilitating a\npositive and cooperative working relationship with respect to the implementation and completion\nof the Front-End Transition Plan and the performance of the Front-End Transition Services.\n(c)\n\nAdministrative Expense Treatment.\n\n(i)\nNo later than ten (10) Business Days after the Effective Date, Owner\nshall file a motion with the Title III Court seeking administrative expense treatment for any accrued\nand unpaid amounts required to be paid by Owner under this Agreement during the Front-End\nTransition Period, including the Front-End Transition Service Fee.\n(ii)\nManagementCo shall have the right to terminate this Agreement\nupon not less than thirty (30) days’ prior written notice to Administrator (with a copy to PREB)\n(A) if such motion has not been approved by the Title III Court on or before the date that is ninety\n(90) days following the date on which such motion is filed, which ninety (90) day period may be\nextended for an additional forty-five (45) days by Administrator at its sole discretion, or such later\ndate as the Administrator and ManagementCo may agree or (B) if such approval has been reversed\non appeal.\n(iii) In the event of the termination of this Agreement pursuant to this\nSection 4.1(c) (Front-End Transition Period Generally – Administrative Expense Treatment),\n40'}, {'number': 48, 'text': 'CONFIDENTIAL\nManagementCo shall retain any Front-End Transition Service Fee earned as of the effective date\nof such termination, and shall within five (5) Business Days of the effective date of such\ntermination, return to Administrator any amounts held in the Front-End Transition Account in\nexcess of any earned Front-End Transition Service Fee. This Agreement (other than with respect\nto the aforementioned payment obligations and any limitations on liability set out elsewhere in this\nAgreement, each of which shall continue in effect) shall thereafter become void and have no effect,\nwithout any liability on the part of any Party or its Affiliates or Representatives in respect thereof,\nexcept that nothing herein shall relieve any party from liability that cannot be waived as a matter\nof Applicable Law, claims of fraud or intentional breach or misrepresentation; provided that, in\nany such event, the limitations of liability specified in this Agreement (including Section 14.6(d)\n(Remedies Upon Early Termination – Additional Remedies), Section 18.3(a) (Limitation on\nLiability – Operator General Limitations) and Section 18.3(b) (Limitation on Liability – Gross\nNegligence; Willful Misconduct)) shall, notwithstanding the foregoing, continue to apply.\nFurthermore, the remedies provided in this Section 4.1(c) (Front-End Transition Period Generally\n– Administrative Expense Treatment) shall be the sole and exclusive remedies of the Parties for\nany termination of this Agreement pursuant Section 4.1(c) (Front-End Transition Period\nGenerally – Administrative Expense Treatment).\n(d)\n\nTransition to Standard of Performance.\n\n(i)\nThe Parties acknowledge and agree that (A) certain components of\nthe T&D System and the manner in which the T&D System is operated do not currently meet the\nstandards of performance required under this Agreement, including the fact that certain matters\nrelated to the T&D System or T&D System Sites and certain general operating and administrative\npractices may not comply with Contract Standards, and (B) a period of review, planning,\nremediation, repair and replacement will be required to enable Operator to achieve the Contract\nStandards.\n(ii)\nIn light of such circumstances, promptly (and in any event within\nthirty (30) days) following the Effective Date, the Parties shall establish a planning team composed\nof representatives of each of the Parties, and ManagementCo, with input from such team, shall (A)\nreview the current state of the T&D System, including the control, monitoring and information\nequipment, systems, practices, services (including related hardware, Information Systems and\nSoftware) and general operating and administrative practices used in connection therewith,\n(B) develop a plan (taking into account the Capital Budgets and any Federally Funded Capital\nImprovements) to remediate, repair, replace and stabilize such equipment, systems, practices and\nservices, as may be needed, to enable Operator to perform the O&M Services in compliance with\nthe Contract Standards as soon as reasonably possible and at a reasonable cost to Owner (such\nplan, the “System Remediation Plan”) and (C) submit such System Remediation Plan to\nAdministrator for its review and approval, acting reasonably. The System Remediation Plan shall\ndetail the scope, resources, timelines, milestones, costs estimates and achievement criteria for each\nactivity or project required to enable Operator to perform the O&M Services in compliance with\nContract Standards, including the deadlines by which each such activity or project shall be fully\nimplemented. The Parties acknowledge and agree that any prior studies or reports of Owner\nrelating to the remediation, repair, replacement and stabilization of the T&D System may be\nconsidered for purposes of preparing the System Remediation Plan, but the findings of such studies\nor reports shall not limit the Parties’ discretion to develop the System Remediation Plan.\n41'}, {'number': 49, 'text': 'CONFIDENTIAL\n(iii) Within thirty (30) days following its receipt of such proposed\nSystem Remediation Plan, Administrator, acting reasonably, shall provide ManagementCo\ncomments on the appropriateness of the proposed System Remediation Plan and recommend any\nchanges or modifications it believes are necessary or appropriate. If Administrator does not\nrespond within such thirty (30) day period, Administrator shall be deemed to have no objection to\nsuch proposed System Remediation Plan being submitted by ManagementCo to PREB. The Parties\nagree that, within thirty (30) days following receipt of Administrator’s comments, if any, or the\nend of Administrator’s review period described in the immediately preceding sentence, if\nAdministrator has no comments, Operator shall submit for PREB’s review the proposed System\nRemediation Plan, incorporating or rejecting any of the modifications or changes suggested by\nAdministrator, together with an explanation of any of Administrator’s comments, as\nManagementCo shall reasonably deem appropriate in its sole discretion. PREB shall review and\napprove, deny or propose modifications to the proposed System Remediation Plan. Operator shall\nbe required to respond promptly to any changes or modifications from PREB to the System\nRemediation Plan and submit any updates to the proposed System Remediation Plan to PREB for\nits approval. If PREB does not respond within ninety (90) days after receipt of the proposed System\nRemediation Plan or any update thereto, ManagementCo may proceed for purposes of this\nAgreement as if PREB had approved such System Remediation Plan.\n(iv)\nThe Budgets, including the Initial Budgets, and the Performance\nMetrics, each as amended and approved from time to time, shall include the costs and expenses\nrequired by, and associated with, the preparation and implementation of the System Remediation\nPlan.\n(e)\n\nFederal Funding Procurement Manual.\n\n(i)\nPromptly (and in any event within sixty (60) days) following the\nEffective Date, the Parties shall establish a planning team composed of representatives of each of\nthe Parties and COR3, and ManagementCo, with input from such team, shall prepare a manual that\ndescribes (i) the procurement guidelines to be applied to, and contractual provisions to be included\nin, any contract involving Federal Funding and (ii) procedures for contract administration and\noversight, including standards and methods for (A) addressing employee and organization\nconflicts of interest, (B) avoiding acquisition of unnecessary or duplicative items, (C) granting\nawards to responsible contractors, (D) maintaining records of procurement history, (E) managing\ntime-and-materials contracts, (F) resolving disputes, (G) selecting transactions for procurement,\n(H) conducting technical evaluations and (I) if an Emergency Event relates, or could potentially\nrelate, to an event that may be or has been declared a Declared Emergency or Major Disaster,\nseeking to ensure that any response to such Emergency Event complies with the Federal Funding\nRequirements (such manual, the “Federal Funding Procurement Manual”). The Parties shall update\nthe Federal Funding Procurement Manual in accordance with Section 5.9(d) (Procurement and\nAdministration of Federal Funding – Federal Funding Procurement Manual) to reflect any\nchanges in Applicable Law that affect Federal Funding.\n(ii)\nUpon ManagementCo finalizing the Federal Funding Procurement\nManual, ManagementCo shall submit such Federal Funding Procurement Manual to\nAdministrator. Administrator, acting reasonably, shall provide ManagementCo comments on the\nappropriateness of the proposed Federal Funding Procurement Manual and recommend any\n42'}, {'number': 50, 'text': 'CONFIDENTIAL\nchanges or modifications it believes are necessary or appropriate. Within thirty (30) days following\nreceipt of Administrator’s comments, if any, or the end of forty-five (45) days following\nAdministrator’s receipt of the proposed Federal Funding Procurement Manual, if Administrator\nhas no comments, ManagementCo shall submit to COR3 for its review and approval the revised\nFederal Funding Procurement Manual, incorporating or rejecting any of the modifications or\nchanges suggested by Administrator, together with an explanation of any of Administrator’s\ncomments, as ManagementCo shall reasonably deem appropriate in its sole discretion.\n(f)\n\nNon-Federal Funding Procurement Manual.\n\n(i)\nPromptly (and in any event within sixty (60) days) following the\nEffective Date, the Parties shall establish a planning team composed of representatives of each of\nthe Parties, and ManagementCo, with input from such team, shall prepare a manual that describes\n(i) the procurement guidelines to be applied to, and contractual provisions to be included in, any\ncontract for a Non-Federally Funded Capital Improvement and (ii) procedures for contract\nadministration and oversight, including standards and methods for (A) addressing employee and\norganization conflicts of interest, (B) avoiding acquisition of unnecessary or duplicative items, (C)\ngranting awards to responsible contractors, (D) maintaining records of procurement history, (E)\nmanaging time-and-materials contracts, (F) resolving disputes, (G) selecting transactions for\nprocurement and (H) conducting technical evaluations (such manual, the “Non-Federal Funding\nProcurement Manual”). The Parties shall update the Non-Federal Funding Procurement Manual as\nnecessary to reflect any changes in Applicable Law that affect Non-Federally Funded Capital\nImprovements.\n(ii)\nUpon ManagementCo finalizing the Non-Federal Funding\nProcurement Manual, ManagementCo shall submit such Non-Federal Funding Procurement\nManual to Administrator for its review and approval. Administrator, acting reasonably, shall\nprovide ManagementCo comments on the appropriateness of the proposed Non-Federal Funding\nProcurement Manual and recommend any changes or modifications it believes are necessary or\nappropriate. Within thirty (30) days following receipt of Administrator’s comments, if any, or the\nend of forty-five (45) days following Administrator’s receipt of the proposed Non-Federal Funding\nProcurement Manual, if Administrator has no comments, ManagementCo shall submit to\nAdministrator for its review and approval the revised Non-Federal Funding Procurement Manual,\nincorporating or rejecting any of the modifications or changes suggested by Administrator,\ntogether with an explanation of any of Administrator’s comments, as ManagementCo shall\nreasonably deem appropriate in its sole discretion.\n(g)\nLiability Waiver. In connection with the submission of the Initial Budgets\nto PREB, the Parties agree to apply for inclusion in the Rate Order that the associated tariff or\nterms of service include: (i) a waiver of Owner’s, ManagementCo’s and ServCo’s liability to\ncustomers or any Person receiving Power and Electricity for any Losses arising in any way out of\nor in connection with the operation of the T&D System and the provision of Power and Electricity\nincluding any events of interrupted, irregular or defective electric service due to Force Majeure\nEvents, other causes beyond Owner’s, ManagementCo’s or ServCo’s control or ordinary\nnegligence, gross negligence or willful misconduct of Owner, ManagementCo or ServCo, or their\nrespective employees, agents or contractors; and (ii) a waiver in all cases of responsibility for any\nloss of profits or revenues, special, exemplary, punitive, indirect, incidental or consequential\n43'}, {'number': 51, 'text': 'CONFIDENTIAL\ndamages, including loss of revenue, loss of use of equipment, cost of capital, cost of temporary\nequipment, overtime, business interruption, spoilage of goods, claims of customers of electric\ncustomers or other economic harms, in each case howsoever and whensoever arising, including\nwhere caused by any of Owner’s, ManagementCo’s or ServCo’s ordinary negligence, gross\nnegligence or willful misconduct (collectively the “Liability Waiver”).\n(h)\nSystem Operation Principles. Promptly (and in any event within sixty (60)\ndays) following the Effective Date, the Parties shall establish a planning team composed of\nrepresentatives of each of the Parties, and ManagementCo, with input from such team, shall (i)\nprepare principles related to the dispatch of Power and Electricity (such principles, the “System\nOperation Principles”), which principles shall be generally consistent with those set forth in\nSchedule 1 (System Operation Principles) to Annex I (Scope of Services), and (ii) submit such\nproposed System Operation Principles to Administrator for its review and approval. Within thirty\n(30) days following its receipt of such proposed System Operation Principles, Administrator,\nacting reasonably, shall provide ManagementCo comments on the appropriateness of the proposed\nSystem Operation Principles and recommend any changes or modifications it believes are\nnecessary or appropriate. If Administrator does not respond within such thirty (30) day period,\nAdministrator shall be deemed to have no objection to such proposed System Operation Principles\nbeing submitted by ManagementCo to PREB. The Parties agree that, within thirty (30) days\nfollowing receipt of Administrator’s comments, if any, or the end of Administrator’s review period\ndescribed in the immediately preceding sentence, if Administrator has no comments, Operator\nshall submit for PREB’s review the proposed System Operation Principles, incorporating or\nrejecting any of the modifications or changes suggested by Administrator, together with an\nexplanation of any of Administrator’s comments, as ManagementCo shall reasonably deem\nappropriate in its sole discretion. PREB shall review and approve, deny or propose modifications\nto the proposed System Operation Principles. ManagementCo shall be required to respond\npromptly to any changes or modifications from PREB to the proposed System Operation Principles\nand submit any updates to the proposed System Operation Principles to PREB for its approval. If\nPREB does not respond within ninety (90) days after receipt of the proposed System Operation\nPrinciples or any update thereto, ManagementCo may proceed for purposes of this Agreement as\nif PREB had approved such proposed System Operation Principles. The System Operation\nPrinciples shall be subject to further review and update pursuant to Section 5.13(c) (GenerationRelated Services – Review of System Operation Principles).\nManagementCo Responsibilities. As soon as practicable after the\nEffective Date but in any event prior to the Target Service Commencement Date (subject to Owner\nand Administrator complying with their obligations set forth in Section 4.3 (Owner and\nAdministrator Responsibilities)), ManagementCo shall satisfy the following conditions precedent\nto (i) Owner’s obligations to handover to Operator the O&M Services and other rights and\nresponsibilities with respect to the T&D System pursuant to Section 4.7(b) (Closing the Front-End\nTransition Period – Establishment of Service Commencement Date) and (ii) the occurrence of the\nService Commencement Date:\n(a)\nFront-End Transition Plan. ManagementCo shall carry out and complete\nManagementCo’s obligations in the Front-End Transition Plan, and shall provide or Subcontract\nfor all management, technical, administrative, engineering, labor relations and other personnel\nnecessary in connection therewith.\n44'}, {'number': 52, 'text': 'CONFIDENTIAL\n(b)\nHandover Checklist. On or prior to the tenth (10th) day of each month,\nManagementCo shall provide Administrator (with copy to PREB) written monthly reports with\nrespect to ManagementCo’s performance of the Front-End Transition Services, including a copy\nof the Handover Checklist updated to reflect the progress of each item listed therein. From time to\ntime during the Front-End Transition Period, in light of experience developed up to such point in\nthe Front-End Transition Period, the Handover Checklist shall be adjusted, updated or otherwise\nmodified by ManagementCo and Administrator, each acting reasonably, as necessary to reflect\nsuch experience.\n(c)\nConfirmation of Guarantee. ManagementCo shall execute and deliver a\nconfirmation to Administrator that the Guarantee remains in full force and effect.\n(d)\nRequired Insurance. ManagementCo shall submit to Administrator\ncertificates of insurance for all Required Insurance to be effective as of the Service\nCommencement Date.\n(e)\nInitial Budgets. As soon as practicable following the Effective Date,\nManagementCo shall prepare and submit to Administrator the proposed Initial Budgets; provided\nthat for purposes of the Generation Budget, ManagementCo shall only be required to submit (if\nreceived by ManagementCo) the Generation Budget as prepared by Owner and delivered to\nManagementCo by Owner. ManagementCo shall have a reasonable time to review such\nGeneration Budget prior to completing and submitting the balance of the Initial Budgets to\nAdministrator hereunder. Within thirty (30) days following its receipt of such proposed Initial\nBudgets, Administrator, acting reasonably, shall provide ManagementCo comments on the\nappropriateness of the proposed Initial Budgets and recommend any changes or modifications it\nbelieves are necessary or appropriate. If Administrator does not respond within such thirty (30)\nday period, Administrator shall be deemed to have no objection to such proposed Initial Budgets\nbeing submitted by ManagementCo to PREB. The Parties agree that, within thirty (30) days\nfollowing receipt of Administrator’s comments, if any, or the end of Administrator’s review period\ndescribed in the immediately preceding sentence, if Administrator has no comments, Operator\nshall submit for PREB’s review the revised Initial Budgets, incorporating or rejecting any of the\nmodifications or changes suggested by Administrator, together with an explanation of any of\nAdministrator’s comments, as ManagementCo shall reasonably deem appropriate in its sole\ndiscretion. PREB shall review, and approve, deny or propose modifications to, such proposed\nInitial Budgets in accordance with Applicable Law. ManagementCo shall be required to respond\npromptly to any changes or modifications from PREB to the proposed Initial Budgets and submit\nany updates to the proposed Initial Budgets to PREB for its approval. If PREB does not respond\nwithin ninety (90) days after receipt of the proposed Initial Budgets or any update thereto,\nManagementCo may proceed for purposes of this Agreement as if PREB had approved such\nproposed Initial Budgets.\n(f)\nPerformance Metrics. Promptly (and in any event within sixty (60) days)\nfollowing the Effective Date, the Parties shall establish a planning team composed of\nrepresentatives of each of the Parties, and ManagementCo, with input from such team, shall\nprepare a revised Annex IX (Performance Metrics), including (i) proposed baseline, target and\nminimum performance levels for certain Performance Metrics, (ii) Key Performance Metrics and\n(iii) Major Outage Event Performance Metrics, together with an explanation of the basis for each\n45'}, {'number': 53, 'text': 'CONFIDENTIAL\nof the foregoing. ManagementCo shall submit to Administrator the proposed revised Performance\nMetrics and, within thirty (30) days following its receipt of such proposed revised Annex IX\n(Performance Metrics), Administrator, acting reasonably, shall provide ManagementCo\ncomments on the appropriateness of the proposed Annex IX (Performance Metrics) and\nrecommend any changes or modifications it believes are necessary or appropriate. If Administrator\ndoes not respond within such thirty (30) day period, Administrator shall be deemed to have no\nobjection to such proposed revised Annex IX (Performance Metrics) being submitted by\nManagementCo to PREB. The Parties agree that, within thirty (30) days following receipt of\nAdministrator’s comments, if any, or the end of Administrator’s review period described in the\nimmediately preceding sentence, if Administrator has no comments, Operator shall submit for\nPREB’s review the proposed revised Annex IX (Performance Metrics), incorporating or rejecting\nany of the modifications or changes suggested by Administrator, together with an explanation of\nany of Administrator’s comments, as ManagementCo shall reasonably deem appropriate in its sole\ndiscretion. PREB shall review, and approve, deny or propose modifications to, such proposed\nrevised Annex IX (Performance Metrics) in accordance with Applicable Law. ManagementCo\nshall be required to respond promptly to any changes or modifications from PREB to the proposed\nrevised Annex IX (Performance Metrics) and submit any updates to the proposed revised Annex\nIX (Performance Metrics)to PREB for its approval. If PREB does not respond within ninety (90)\ndays after receipt of the proposed revised Annex IX (Performance Metrics) or any update thereto,\nManagementCo may proceed for purposes of this Agreement as if PREB had approved such\nproposed revised Annex IX (Performance Metrics). The illustrative Performance Metrics, as\nidentified in Annex IX (Performance Metrics) shall be revised and replaced accordingly on, or\nprior to, the Service Commencement Date\n(g)\nEmergency Response Plan. Operator shall provide Administrator and\nPREB, for their information, with a plan of action meeting Contract Standards that takes effect\nfrom the Service Commencement Date and outlines the procedures and actions necessary for\nresponding to any emergency affecting or reasonably likely to affect the T&D System after the\nService Commencement Date (the “Emergency Response Plan”), including fire, weather,\nenvironmental, health, safety and other potential emergency conditions, which Emergency\nResponse Plan shall become effective on the Service Commencement Date. The Emergency\nResponse Plan shall (i) provide for appropriate notice of any such emergency to PREB and all\nother Governmental Bodies that ManagementCo is notified in writing have jurisdiction over the\nT&D System, (ii) establish measures that facilitate coordinated emergency response actions by all\nappropriate Governmental Bodies, (iii) specifically include outage minimization and response\nmeasures, and (iv) assure the timely availability of all personnel required to respond to any\nemergency in accordance with (A) Contract Standards and (B) the Federal Funding Procurement\nManual if the Emergency Event relates, or could potentially relate, to an event that may be or has\nbeen declared a Declared Emergency or Major Disaster. Such Emergency Response Plan shall be\nupdated by Operator from time to time as necessary or appropriate.\n(h)\nPhysical Security Plan, Data Security Plan and Vegetation Management\nPlan. ManagementCo shall develop and provide Administrator and PREB, for their information,\nwith plans of action meeting Contract Standards that outline the procedures and actions necessary\nfor maintaining (i) the physical security of the T&D System after the Service Commencement Date\n(the “Physical Security Plan”); (ii) data security, cyber security and information security relating\n\n46'}, {'number': 54, 'text': 'CONFIDENTIAL\nto the T&D System (the “Data Security Plan”); and (iii) a comprehensive vegetation management\nprogram (the “Vegetation Management Plan”), each of which shall become effective on the\nService Commencement Date; provided that as long as each of the Physical Security Plan, Data\nSecurity Plan, and Vegetation Management Plan are substantially complete on the Service\nCommencement Date, their finalization shall not delay the Service Commencement Date from\noccurring if all other Service Commencement Date Conditions have been satisfied or waived. For\nthe avoidance of doubt, the Data Security Plan shall be subject to the System Remediation Plan,\nincluding the approach for implementation outlined in Section 4.1(d) (Front-End Transition\nPeriod Generally – Transition to Standard of Performance).\n(i)\nBack-End Transition Plan. ManagementCo shall prepare and submit to\nAdministrator (with copy to PREB), for its information and approval, a detailed back-end\ntransition plan consistent with the back-end transition outline set forth in Annex III (Back-End\nTransition Plan), which plan shall: (i) include reasonably acceptable arrangements relating to the\n(A) possible hiring of ServCo Employees by a successor operator and (B) the treatment of\nseverance costs associated with any ServCo Employees not hired by a successor operator in\nconnection with the early termination or expiration of this Agreement; and (ii) provide for the\ntransition and handover of the O&M Services and other rights and responsibilities with respect to\nthe T&D System, back to Owner or to a successor operator upon the expiration or early termination\nof the Term (the “Back-End Transition Plan”), which Back-End Transition Plan shall become\neffective on the Service Commencement Date. Such Back-End Transition Plan shall be updated\nby Operator, subject to approval by Administrator, on an annual basis as necessary or appropriate.\n(j)\nEmployment Evaluations. As soon as reasonably practicable following the\nEffective Date but not less than ninety (90) days prior to the Target Service Commencement Date\n(the “Interview Deadline”), ManagementCo shall use commercially reasonable efforts to interview\nand evaluate as candidates for employment at ServCo, effective as of the Service Commencement\nDate, the regular employees of Owner and its Affiliates (other than Owner’s generation employees,\nincluding certain administrative and plant operations personnel) who (i) are currently and remain\nemployed by Owner and its Affiliates (other than Owner or its Affiliates generation station\nemployees) as of the Interview Deadline or are hired by Owner or its Affiliates on or after the\nEffective Date in the ordinary course of business consistent with the past practices of Owner and\nits Affiliates to replace any existing employee of Owner, and (ii) apply to ServCo in a job category\nServCo wishes to fill (collectively, the “Owner Employees”). For the avoidance of doubt, neither\nManagementCo nor ServCo shall be liable for severance or other pay or benefits for Owner\nEmployees who are not hired by ServCo, including those to whom an offer of employment is made\nbut who do not accept such offer. Owner and its Affiliates shall waive any non-competition,\nconfidentiality or other obligation arising under any employment contract between Owner or\nAffiliate and any Owner Employee that may otherwise restrict any of Owner Employee’s rights to\nbe employed by ServCo. Owner shall provide ManagementCo with the following information\nregarding Owner Employees promptly on request: (x) job description for current and any prior\npositions occupied by such Owner Employee, (y) date of employment and (z) current salary.\n(k)\nEmployment Offers. ServCo shall give priority in hiring to any Owner\nEmployees who meet Operator’s stated requirements for employment as set forth in Annex IV\n(Operator Employment Requirements) over other equally qualified and equally evaluated\napplicants for the same job category that are not Owner Employees, it being understood that (i)\n47'}, {'number': 55, 'text': 'CONFIDENTIAL\nServCo shall not be required to hire all or substantially all of the Owner Employees and (ii) the\ndetermination of which Owner Employees to hire shall be made by ServCo in ServCo’s sole\ndiscretion, acting in good faith. Each Owner Employee who accepts an offer of employment with\nServCo pursuant to this Section 4.2(k) (ManagementCo Responsibilities – Employment Offers)\nshall be referred to as a “Hired Former Employee of Owner.” On the Service Commencement Date\nand during the Term, ServCo shall employ such other employees, including any employees of\nOperator or any of its Affiliates as of the Effective Date hired for the operation of the T&D System\n(“Other Employees” and, together with the Hired Former Employees of Owner, the “ServCo\nEmployees”), as are necessary to provide the O&M Services. The following initial terms and\nconditions of employment shall apply to the Hired Former Employees of Owner, but not to any\nOther Employees:\n(i)\nOffers of employment shall remain open for a period of\nten (10) Business Days. Any such offer which is accepted within such ten (10) Business Day\nperiod shall thereafter be irrevocable until the Service Commencement Date.\n(ii)\nOffers of employment shall provide for employment with ServCo\non terms and conditions that are set at ServCo’s sole discretion, but shall in all cases provide for\n(A) a base salary or regular hourly wage rate at least equal to the base salary or wage rate provided\nby Owner or its Affiliates (as applicable) to the Owner Employee immediately prior to the Service\nCommencement Date and (B) the employee fringe benefits established in Act 26, and (C) any\nother benefits required to be offered to Owner Employees pursuant to Act 120, as any such benefits\nmay have been restricted, conditioned, modified or annulled by Act 3, Act 26 and Act 66.\n(l)\n\nPeriodic Reports.\n\n(i)\nManagementCo shall provide Administrator (with copy to PREB)\nwith detailed weekly, monthly and other periodic reports as Administrator may reasonably request\nfrom time to time with respect to ManagementCo’s performance of the Front-End Transition\nServices, including the progress against the Handover Checklist and any other completion\nschedules and milestones included in the Front-End Transition Plan. In connection therewith,\nManagementCo shall provide Administrator (with copy to PREB) with any other information that\n(A) Administrator may reasonably request, including performance reports related to any of the\nFront-End Transition Services, and (B) may be reasonably produced from records maintained by\nManagementCo in the normal course of business consistent with the provisions of this Agreement\nrelating to document retention.\n(ii)\nManagementCo shall promptly advise Administrator (with copy to\nPREB) of any actual or potential failure or inability to achieve milestones by the dates set forth in\nthe Front-End Transition Plan, and shall promptly report to Administrator (with copy to PREB)\nany problems encountered in performing the Front-End Transition Services that ManagementCo\nhas been unable to promptly and adequately resolve.\n(m)\nRepresentations. The representations of Operator set forth in Section 19.2\n(Representations and Warranties of Operator) and Guarantor(s) set forth in its Guarantee shall be\ntrue and correct in all material respects as of the Service Commencement Date (other than any\nrepresentations that are expressly made as of an earlier date), as if made on and as of the Service\n48'}, {'number': 56, 'text': 'CONFIDENTIAL\nCommencement Date, and both Operator and Guarantor(s) shall deliver to Administrator a\ncertificate of an authorized officer to that effect.\n(n)\nNotice of Default. ManagementCo shall provide to Administrator, promptly\nfollowing the receipt thereof, copies of any notice of default, breach or noncompliance received\nunder or in connection with any Governmental Approvals, if any, or Subcontract pertaining to the\nFront-End Transition Period.\nOwner and Administrator Responsibilities. As soon as practicable after\nthe Effective Date but in any event prior to the Target Service Commencement Date and at such\ntime and in such manner as to permit Operator to perform its obligations under Section 4.2\n(ManagementCo Responsibilities), Owner and Administrator shall, at Owner’s sole cost, satisfy\nthe following conditions precedent (i) to Operator’s obligations to take over the O&M Services\nand other rights and responsibilities with respect to the T&D System pursuant to Section 4.7(b)\n(Closing the Front-End Transition Period – Establishment of Service Commencement Date) and\n(ii) to the occurrence of the Service Commencement Date:\n(a)\nRepresentations. The representations of Owner set forth in Section 19.1\n(Representations and Warranties of Owner) shall be true and correct in all material respects as of\nthe Service Commencement Date as if made on and as of the Service Commencement Date (other\nthan any representations that are expressly made as of an earlier date), and Owner shall deliver to\nManagementCo a certificate of an authorized officer to that effect.\n(b)\nAccess. Owner shall provide ManagementCo, its Front-End Subcontractors\nand their Representatives with access to the T&D System and the T&D System Sites for the sole\npurpose of performing the Front-End Transition Services in accordance with the terms hereof.\n(c)\nIdentification of System Contracts and Generation Supply Contracts. From\nand after the Effective Date, but in any event by the date that is one hundred eighty (180) days\nfollowing the Effective Date, ManagementCo, Administrator and Owner shall together (i) identify\nall material existing System Contracts and all Generation Supply Contracts and provide\nManagementCo and Administrator with copies thereof and (ii) identify which of the material\nexisting System Contracts and Generation Supply Contracts do not comply with the Federal\nFunding Requirements and provide ManagementCo and Administrator with a list thereof.\n(d)\nAdditional System Contracts and Generation Supply Contracts Between\nEffective Date and Service Commencement Date. During the Front-End Transition Period, the\nParties agree that it is the intent that Owner and Administrator shall not amend or enter into any\nnew System Contracts or Generation Supply Contracts; provided, however, that:\n(i)\nprior to the date ManagementCo submits the Initial Budgets to\nPREB for its approval, if Owner and Administrator identify a need to do so, then Administrator\nshall notify ManagementCo of such need and work with ManagementCo to implement any such\namendment or new System Contract or Generation Supply Contract. Following such consultation\nprocess, Administrator shall ultimately determine if such amendment or new System Contract or\nGeneration Supply Contract is required;\n\n49'}, {'number': 57, 'text': 'CONFIDENTIAL\n(ii)\nafter the date ManagementCo submits the Initial Budgets to PREB\nfor its approval, if Owner and Administrator determine that an amendment or new System Contract\nor Generation Supply Contract is necessary, the Parties shall follow the process in clause (i) above;\nprovided that as part of such consultation process (A) the Parties shall review the impact of any\nsuch amendment or new System Contract and Generation Supply Contract on the Initial Budgets\nand (B) ManagementCo shall, as soon as practicable following receipt of Owner’s notice of such\nrequirement, prepare and submit to Administrator any proposed amendment to the Initial Budgets\narising therefrom. Following delivery of such proposed amendment, the Parties shall follow the\nsame process for such amendment to the Initial Budget that was followed for the Initial Budgets\nas set out in Section 4.2(e) (ManagementCo Responsibilities – Initial Budgets); and\n(iii) a Tax Opinion and a Reliance Letter shall have been obtained, at the\nexpense of Owner or Administrator, with respect to any System Contract that is a Covered Contract\nand is entered into, extended or amended after the Effective Date. Owner shall promptly deliver to\nOperator a copy of each executed System Contract entered into pursuant to clauses (i) and (ii)\nabove.\n(e)\nNotices with respect to System Contracts and Generation Supply Contracts.\nOwner shall (i) notify each counterparty to a System Contract and Generation Supply Contract in\nwriting of Owner’s delegation of authority to Operator with respect to such System Contract in the\nmanner contemplated by Section 5.2(a) (System Contracts – Generally) and with respect to such\nGeneration Supply Contract in the manner contemplated by Section 5.13(a) (Generation-Related\nServices – Power Supply Dispatch and Management) and (ii) have obtained all required consents\nfrom such counterparties as may be required thereby in connection with such delegation of\nauthority and (iii) take all such other actions as may be necessary for Operator to be able to comply\nwith its obligations under Section 5.2(a) (System Contracts – Generally) and Section 5.13\n(Generation-Related Services).\n(f)\nReview of Initial Budgets. Administrator, on behalf of Owner, shall review\nand, if applicable, provide comments on the Initial Budgets in the manner contemplated by\nSection 4.2(e) (ManagementCo Responsibilities – Initial Budgets).\n(g)\nFront-End Transition Plan. Owner and Administrator shall perform all\nobligations of Owner and Administrator specified in the Front-End Transition Plan.\n(h)\nLabor. Owner and Administrator shall use commercially reasonable efforts\nto provide Operator the opportunity to hire Owner Employees in a manner consistent with the\nProposal submitted by Operator or its Affiliate.\n(i)\nService Accounts. Owner shall provide evidence satisfactory to\nManagementCo that it has opened the Service Accounts and that each Service Account shall have\nbeen funded by such date and in an amount not less than the amount required to be funded in\naccordance with Section 7.5 (Service Accounts).\n(j)\nFederal Funding and Integrated Resource Plan Uncertainty. Owner\nacknowledges and agrees that details regarding (i) the nature and scope of Federal Funding\npotentially available for the T&D System and the availability of such Federal Funding to\n\n50'}, {'number': 58, 'text': 'CONFIDENTIAL\nimplement the System Remediation Plan, and (ii) the status of the Integrated Resource Plan and\nits potential effects on the T&D System or the O&M Services, remain uncertain. In light of such\nuncertainty, promptly (and in any event within thirty (30) days) following the Effective Date, the\nParties shall establish a planning team composed of representatives of each of the Parties and\nCOR3 to: (A) review the current status of the Federal Funding, including project worksheets\nrelated to the T&D System prepared by FEMA in connection with or pursuant to Section 428 of\nthe Stafford Act and estimated timing and schedules of Federal Funding to implement the System\nRemediation Plan and develop a plan (taking into account the System Remediation Plan) to utilize\nFederal Funding in the most efficient and effective way to enable Operator to perform the O&M\nServices in compliance with this Agreement, and (B) review the current status of the Integrated\nResource Plan and its impact on the T&D System and the O&M Services. ManagementCo, acting\nreasonably, may request, to the extent permitted under Applicable Law, changes or modifications\nto the Federal Funding (including modifications to, or reallocations between, the project\nworksheets related to the T&D System prepared by FEMA pursuant to Section 428 of the Stafford\nAct) or the Integrated Resource Plan.\n(k)\nDescription and Demarcation of the T&D System and Insurance\nSpecifications. Owner shall prepare and provide Operator a description and demarcation of the\nT&D System. The Parties will jointly consider any amendments, adjustments and refinements to\nAnnex XII (Insurance Specifications) in light of the description and demarcation of the T&D\nSystem.\nGovernmental Approvals and Tax Matters.\n(a)\nGenerally. The Parties intend that all Governmental Approvals shall\ncontinue to name Owner as the permittee or applicant and that Operator shall only be a permittee,\napplicant, co-permittee or co-applicant if and to the extent required by Applicable Law. Promptly\nfollowing the Effective Date, ManagementCo, Administrator and Owner shall coordinate\nidentifying the Governmental Approvals required for the commencement on the Service\nCommencement Date of the O&M Services (the “Commencement Date Governmental\nApprovals”). Once the Parties have identified the Commencement Date Governmental Approvals:\n(i) (A) ManagementCo shall coordinate with Owner and Administrator to prepare for and support\nOwner’s efforts related to the transfer or assignment, to the extent required by Applicable Law, or\nthe reissuance or assistance with the issuance of the Commencement Date Governmental\nApprovals, (B) Owner, with Operator’s assistance, shall submit complete applications and take all\nother steps necessary under Applicable Law to obtain and maintain all required Commencement\nDate Governmental Approvals, and (C) Owner shall provide ManagementCo and Administrator\nwith copies of any such Commencement Date Governmental Approvals; and (ii) ManagementCo\nand Administrator shall cooperate with Owner in good faith in identifying, preparing, applying\nfor, obtaining and maintaining the Commencement Date Governmental Approvals.\n(b)\nTax Assurance. From and after the Effective Date, the Parties agree that (i)\nOperator shall seek a Tax Assurance and (ii) at Operator’s expense, Owner and Administrator shall\ncooperate with Operator and use their commercially reasonable efforts to support and assist\nOperator in securing such Tax Assurance.\n\n51'}, {'number': 59, 'text': 'CONFIDENTIAL\nConditions Precedent to Service Commencement Date. The Service\nCommencement Date shall not occur, and the obligations of the Parties to proceed with their\nrespective obligations hereunder on, and after, the Service Commencement Date shall not\ncommence, until all of the following conditions precedent (the “Service Commencement Date\nConditions”) are, unless otherwise mutually agreed between the Parties in writing, either satisfied\nas determined, or waived in writing, by (i) Administrator, in the case of Section 4.5(a) (Conditions\nPrecedent to Service Commencement Date – ManagementCo Responsibilities), (ii)\nManagementCo, in the case of Section 4.5(b) (Conditions Precedent to Service Commencement\nDate – Owner and Administrator Responsibilities), or (iii) both Administrator and\nManagementCo, in the case of Section 4.5(c) (Conditions Precedent to Service Commencement\nDate – Governmental Approvals), Section 4.5(d) (Conditions Precedent to Service\nCommencement Date – Acceptability and Effectiveness of Documents), Section 4.5(e) (Conditions\nPrecedent to Service Commencement Date – No Governmental Prohibitions or Injunctions),\nSection 4.5(f) (Conditions Precedent to Service Commencement Date – Pre-Existing\nEnvironmental Conditions), Section 4.5(g) (Conditions Precedent to Service Commencement Date\n– Initial Budgets and Rate Order), Section 4.5(h) (Conditions Precedent to Service\nCommencement Date – Performance Metrics), Section 4.5(i) (Conditions Precedent to Service\nCommencement Date – Federal Funding), Section 4.5(j) (Conditions Precedent to Service\nCommencement Date – Federal Funding Procurement Manual), Section 4.5(k) (Conditions\nPrecedent to Service Commencement Date – System Remediation Plan), Section 4.5(l) (Conditions\nPrecedent to Service Commencement Date – System Operation Principles), Section 4.5(m)\n(Conditions Precedent to Service Commencement Date – Servicing Contract), Section 4.5(n)\n(Conditions Precedent to Service Commencement Date – Account Structure), Section 4.5(o)\n(Conditions Precedent to Service Commencement Date – Title III Approvals), Section 4.5(p)\n(Conditions Precedent to Service Commencement Date – Third Party Claims), Section 4.5(q)\n(Conditions Precedent to Service Commencement Date – PREPA Reorganization), Section 4.5(s)\n(Conditions Precedent to Service Commencement Date – Shared Services Agreement),\nSection 4.5(t) (Conditions Precedent to Service Commencement Date – Tax Matters),\nSection 4.5(u) (Conditions Precedent to Service Commencement Date – FOMB Protocol\nAgreement) and Section 4.5(v) (Conditions Precedent to Service Commencement Date – Tax\nOpinion).\n(a)\nManagementCo Responsibilities. ManagementCo shall have fulfilled all of\nits obligations with respect to the Front-End Transition Period under this Agreement, including\nSection 4.2 (ManagementCo Responsibilities) (the “ManagementCo Service Commencement\nDate Conditions”).\n(b)\nOwner and Administrator Responsibilities. Owner and Administrator shall\nhave fulfilled all of their respective obligations with respect to the Front-End Transition Period\nunder this Agreement, including Section 4.3 (Owner and Administrator Responsibilities) (the\n“Owner Service Commencement Date Conditions”).\n(c)\nGovernmental Approvals. All Commencement Date Governmental\nApprovals shall have been issued or obtained by the Parties and shall be in full force and effect.\n(d)\nAcceptability and Effectiveness of Documents. All of the documents and\ninstruments identified in this Article 4 (Front-End Transition Period) shall be in form and\n52'}, {'number': 60, 'text': 'CONFIDENTIAL\nsubstance reasonably satisfactory to Administrator and ManagementCo and shall be valid, in full\nforce and effect and enforceable against each party thereto on the Service Commencement Date.\nNo such document, instrument or agreement shall be subject to the satisfaction of any outstanding\ncondition precedent except those expressly waived in writing or to be satisfied after the Service\nCommencement Date. No party to any such document, instrument or agreement shall have\nrepudiated or be in default thereunder, and each Party shall have received such certificates or other\nevidence reasonably satisfactory to it of such facts as such Party shall have reasonably requested.\n(e)\nNo Governmental Prohibitions or Injunctions. No Governmental Body shall\nhave enacted, issued, promulgated or enforced any Applicable Law that shall be in effect, and no\ninjunction shall be in effect, which, in each case, would make it illegal for, or otherwise prohibit\nor enjoin, any Party’s performance of its obligations hereunder in accordance with the terms of\nthis Agreement from and after the Service Commencement Date.\n(f)\nPre-Existing Environmental Conditions. Owner shall have engaged a\nqualified environmental consultant, and such consultant shall have prepared and issued a final\nbaseline environmental study reasonably identifying Pre-Existing Environmental Conditions that\npresent a risk of material liability (the “Baseline Environmental Study”).\n(g)\nInitial Budgets and Rate Order. The Initial Budgets (including any\namendment thereto pursuant to Section 4.3(d)(ii) (Owner and Administrator Responsibilities –\nAdditional System Contracts and Generation Supply Contracts Between Effective Date and Service\nCommencement Date)) shall have been approved by PREB or otherwise finalized for purposes of\nthis Agreement in accordance with Section 4.2(e) (ManagementCo Responsibilities – Initial\nBudgets) and PREB shall have issued a Rate Order sufficient to fund the Initial Budgets.\n(h)\nPerformance Metrics. The proposed revised Annex IX (Performance\nMetrics) pursuant to Section 4.2(f) (ManagementCo Responsibilities – Performance Metrics) shall\nhave been approved by PREB or otherwise finalized for purposes of this Agreement in accordance\nwith Section 4.2(f) (ManagementCo Responsibilities – Performance Metrics).\n(i)\nFederal Funding. Owner shall have, or shall have access to, adequate\nfunding for Capital Costs for the first three (3) years of the Term, as such Capital Costs are detailed\nin the Initial Budgets approved by the Parties.\n(j)\nFederal Funding Procurement Manual. The Parties shall have finalized a\nmutually agreeable Federal Funding Procurement Manual, and COR3 shall have approved the\nFederal Funding Procurement Manual. The Parties shall have requested review and approval of\nthe Federal Funding Procurement manual from FEMA and DHS OIG.\n(k)\nSystem Remediation Plan. The System Remediation Plan shall have been\napproved by PREB or otherwise finalized for purposes of this Agreement in accordance with\nSection 4.1(d)(iii) (Front-End Transition Period Generally – Transition to Standard of\nPerformance).\n\n53'}, {'number': 61, 'text': 'CONFIDENTIAL\n(l)\nSystem Operation Principles. The System Operation Principles shall have\nbeen approved by PREB or otherwise finalized for purposes of this Agreement in accordance with\nSection 4.1(h) (Front-End Transition Period Generally – System Operation Principles).\n(m)\nServicing Contract. In the event a Title III Plan has been confirmed\nproviding for the Securitization SPV to issue new secured debt, Owner shall have received a copy\nof the Servicing Contract, duly executed by Operator.\n(n)\nAccount Structure. Consistent with the terms of either the Cash\nManagement Agreement or the Servicing Contract, as applicable, Owner and Operator shall have\nagreed on the manner in which System Revenues will be allocated into one or more accounts of\nOwner to be managed by Operator.\n(o)\nTitle III Approvals. Owner shall have received Title III Approvals from the\nTitle III Court reasonably acceptable to ManagementCo.\n(p)\nThird Party Claims. A Liability Waiver generally consistent with\nSection 4.1(g) (Front-End Transition Period Generally – Liability Waiver) shall have been\napproved and implemented by PREB and shall be in full force and effect.\n(q)\nPREPA Reorganization. A final plan for the reorganization of PREPA into\nGenCo and GridCo shall have been approved by the applicable Governmental Bodies, and the\nGridCo-GenCo PPOA shall have become effective.\n(r)\n\n[Reserved.]\n\n(s)\nShared Services Agreement. The Parties shall mutually develop and\nnegotiate in good faith a shared services agreement consistent with the provisions set forth in\nAnnex VI (GenCo Shared Services) (the “Shared Services Agreement”), which agreement shall\nprovide the terms and conditions pursuant to which Operator, as agent of Owner, shall provide the\nGenCo Shared Services to GenCo until the Legacy Generation Assets are retired or until certain\nof GenCo’s operations, including the operating, administrative and/or maintenance functions\nrelated to the Legacy Generation Assets, are transferred to one or more private partners, the term\nof which agreement not to exceed three (3) years from its effective date (unless otherwise extended\nwith the consent of Operator).\n(t)\nTax Matters. The Puerto Rico Treasury Department shall have issued one\nof the following (each a “Tax Assurance”):\n(i)\nOperator and the Secretary of the Puerto Rico Treasury Department\nshall have entered into a closing agreement in form and substance satisfactory to Operator, acting\nreasonably, executed pursuant to Section 6051.07 of the PRIRC among Operator, the Equity\nParticipants and the Puerto Rico Treasury Department that (A) incorporates all matters set forth in\nadministrative determination No. 20-06 issued by the Secretary of the Puerto Rico Treasury\nDepartment (the “Administrative Determination”) that are applicable to Operator and the Equity\nParticipants and (B) provides that (x) the Front-End Transition Service Fixed Fee, the Service Fee\nand the Back-End Transition Service Fee are treated in the same manner as management fees are\n\n54'}, {'number': 62, 'text': 'CONFIDENTIAL\ntreated under Section III(A) of the Administrative Determination and (y) the Operator Termination\nFee is treated in the same manner as termination payments are treated under Section III(A) of the\nAdministrative Determination; or\n(ii)\nOperator shall have received a private letter ruling in form and\nsubstance satisfactory to Operator, acting reasonably, from the Puerto Rico Treasury Department\nthat (A) incorporates all matters set forth in the Administrative Determination that are applicable\nto Operator and the Equity Participants and (B) provides that (x) the Front-End Transition Service\nFixed Fee, the Service Fee and the Back-End Transition Service Fee are treated in the same manner\nas management fees are treated under Section III(A) of the Administrative Determination and (y)\nthe Operator Termination Fee is treated in the same manner as termination payments are treated\nunder Section III(A) of the Administrative Determination.\n(u)\nFOMB Protocol Agreement. Each of Operator, Owner, Administrator and\nthe FOMB shall have duly executed a FOMB Protocol Agreement in form and substance\nsatisfactory to the Parties.\n(v)\nTax Opinion. At the expense of Owner or Administrator, Owner shall have\ncaused (i) Owner to have received a Tax Opinion and (ii) ManagementCo to have received a\nReliance Letter, including by having caused all conditions to the delivery of such Tax Opinion and\nReliance Letter to have been met.\nFront-End Transition Period Compensation.\n(a)\nGeneral. As compensation for the Front-End Transition Services provided\nby ManagementCo, Owner shall pay ManagementCo the Front-End Transition Service Fee. The\nParties acknowledge and agree that Federal Funding shall not be used to pay the Front-End\nTransition Service Fee. The Front-End Transition Service Fee shall not be subject to any\nabatement, deduction, counterclaim or set-off of any kind or nature.\n(b)\nFront-End Transition Service Fee. The “Front-End Transition Service Fee”\nshall be an aggregate amount equal to: (i) the hourly fully allocated cost rate for each category of\nManagementCo employee or Affiliate personnel providing Front-End Transition Services, as set\nout in Annex V (Front-End Transition Hourly Fully Allocated Rates); multiplied by (ii) the number\nof hours worked by each ManagementCo employee or Affiliate personnel in such category\nproviding Front-End Transition Services; plus (iii) a fixed fee in the amount of US$60,000,000\n(the “Front-End Transition Service Fixed Fee”) (payable in monthly installments equal to onetwelfth (1/12) of the Front-End Transition Service Fixed Fee, commencing on the Effective Date,\nand in the event of a partial month, the monthly installment shall be adjusted on a Pro Rata basis;\nprovided that: (A) in the event the first month is a partial month, then any balance of the FrontEnd Transition Service Fixed Fee outstanding in the twelfth month shall be paid with the last\ninstallment of the Front-End Transition Service Fixed Fee; and (B) if the Service Commencement\nDate occurs prior to the expiration of the twelfth (12th) month following the Effective Date, then\nany balance of the Front-End Transition Service Fixed Fee then outstanding shall be paid in full\nto Operator on the Service Commencement Date); plus (iv) all other reasonable and documented\ncosts and expenses incurred by ManagementCo (without markup for profit) that are necessary and\nreasonable in the course of providing the Front-End Transition Services and satisfying the Service\n55'}, {'number': 63, 'text': 'CONFIDENTIAL\nCommencement Date Conditions, including the cost of any Front-End Subcontractors providing\nFront-End Transition Services.\n(c)\n\nFunding.\n\n(i)\nOwner shall establish one or more accounts from which Owner shall\ndraw funds from time to time to pay Operator the Front-End Transition Service Fee (collectively,\nthe “Front-End Transition Account”). Promptly after the Effective Date (and in any event within\nfive (5) Business Days), Operator shall deliver to Administrator an estimate of the anticipated\nFront-End Transition Service Fee for the following four and a half (4.5) months, subject to\nSection 7.8 (Owner Credit Rating). Within ten (10) days of delivery of such estimate, and prior to\nand as a condition to the commencement of any Front-End Transition Services, Administrator shall\nprovide Operator evidence reasonably satisfactory to Operator that an amount equal to the sum of\nthe anticipated Front-End Transition Service Fee for the following four and a half (4.5) months,\nsubject to Section 7.8 (Owner Credit Rating), has been funded in the Front-End Transition\nAccount by Owner. Prior to the end of each month during the Front-End Transition Period,\nOperator shall deliver to Administrator an estimate of the anticipated Front-End Transition Service\nFee for the following four and a half (4.5) months, subject to Section 7.8 (Owner Credit Rating).\nNo later than the tenth (10th) Business Day of each month during the Front-End Transition Period,\nOwner shall replenish the Front-End Transition Account so as to maintain a balance in the FrontEnd Transition Account at the end of each calendar month equal to the sum of the anticipated\nFront-End Transition Service Fee for the subsequent four and a half (4.5) months, subject to\nSection 7.8 (Owner Credit Rating), and so on subsequently until the Front-End Transition Services\nconclude.\n(ii)\nIn the event a Dispute arises between Operator and Administrator in\nconnection with Operator’s estimate of the anticipated Front-End Transition Service Fee, the\nmatter shall be subject to resolution as a Technical Dispute in accordance with Article 15 (Dispute\nResolution) (any such Dispute, a “Front-End Transition Service Fee Estimate Dispute”).\n(d)\n\nInvoices.\n\n(i)\nOn or prior to the tenth (10th) day of each month during which\nOperator is performing the Front-End Transition Services, Operator shall provide Administrator\nwith a monthly invoice describing in reasonable detail the prior calendar month’s Front-End\nTransition Services and the corresponding Front-End Transition Service Fee for such prior\ncalendar month. All invoices shall comply with the requirements set forth in Section 9.2(c) (AntiCorruption and Sanctions Laws – Policies and Procedures).\n(ii)\nOperator shall provide promptly to Administrator such additional\nsupporting documentation evidencing the provision of the Front-End Transition Services, if any,\nand the calculation of the Front-End Transition Service Fee related thereto as Administrator may\nreasonably request and as may be required by Applicable Law. Administrator shall promptly\nadvise Operator of any disputed invoice amounts, and all such disputes which Operator and\nAdministrator are unable to resolve shall be subject to resolution as a Technical Dispute in\naccordance with Article 15 (Dispute Resolution) (any such Dispute, a “Front-End Transition\nService Fee Dispute”).\n56'}, {'number': 64, 'text': 'CONFIDENTIAL\n(iii) Payments of undisputed amounts under any invoice shall be due\nwithin thirty (30) days of Administrator’s receipt of such invoice.\n(e)\nAudits. At any time and from time to time during and until the expiration of\nsix (6) years following the end of the Front-End Transition Period, Administrator may, upon\nreasonable prior notice, Audit (or cause to be Audited) the books and records of Operator or any\nSubcontractor in connection with any requests for payment of the Front-End Transition Service\nFee, together with the supporting vouchers and statements, and the calculation of the Front-End\nTransition Service Fee. Subject to the dispute resolution provisions in Article 15 (Dispute\nResolution), each payment made by Owner hereunder shall be subject to subsequent adjustment.\nFollowing the determination that any such payment adjustment is required, the Party required to\nmake payment shall do so within thirty (30) days of the date of such determination.\nClosing the Front-End Transition Period.\n(a)\nNotice of Service Commencement Date. ManagementCo shall provide\nAdministrator with prompt written notice (with a copy to PREB), including a completed Handover\nChecklist, at such time as ManagementCo determines it has satisfactorily completed all items on\nthe Handover Checklist and is therefore ready to perform all O&M Services under this Agreement.\nAdministrator shall respond within ten (10) Business Days whether Administrator confirms or\ndisputes the completion of any item on the Handover Checklist, together with a written statement\nproviding reasonable detail and supporting evidence for the basis of any dispute. In the event\nAdministrator disputes completion of any item(s) on the Handover Checklist, ManagementCo may\nadvise Owner of its disagreement with Administrator’s decision. The Parties shall attempt to\nresolve in good faith any disputed item(s) and, in the event the Parties are unable to resolve such\ndisputed item(s) within thirty (30) days, such disputed item(s) only shall be subject to resolution\nas a Technical Dispute in accordance with Article 15 (Dispute Resolution) (any such Dispute, a\n“Handover Checklist Dispute”).\n(b)\nEstablishment of Service Commencement Date. The “Service\nCommencement Date” shall be the date on which a handover to Operator of the O&M Services\noccurs, which shall be (i) the first (1st) Business Day of a calendar month that is at least three (3)\nBusiness Days following the date on which Administrator delivers a certificate to Operator\nconfirming that all Service Commencement Date Conditions have been met or (ii) such other date\nas the Parties may agree. The satisfaction or waiver of all the Service Commencement Date\nConditions is required for the achievement of the Service Commencement Date.\nFailure of Service Commencement Date Conditions.\n(a)\nRemedy for Delay of Service Commencement Date Conditions. If any of\nthe ManagementCo Service Commencement Date Conditions are not satisfied or waived by\nAdministrator on or before the date that is three (3) months following the Target Service\nCommencement Date or such later date as Administrator and ManagementCo may agree (such\ndate, the “Delay Period Date”), and the failure to satisfy any outstanding ManagementCo Service\nCommencement Date Condition(s) is not caused by any Force Majeure Event or Owner Fault, and\nthe other Service Commencement Date Conditions have been or are immediately capable of being\nsatisfied or waived by the Delay Period Date, ManagementCo shall pay to Owner, as Owner’s sole\n57'}, {'number': 65, 'text': 'CONFIDENTIAL\nand exclusive remedy for all monetary damages, costs, losses and expenses of whatever type or\nnature arising from or related to such failure of ManagementCo Service Commencement Date\nConditions to occur by the Delay Period Date, liquidated damages (the “Delay Liquidated\nDamages”) in the amount of US$769,231 per week for each week (or for any portion of a week on\na Pro Rata basis) the Target Service Commencement Date is delayed beyond the Delay Period\nDate, up to a maximum of US$40,000,000. ManagementCo shall not be required to pay Delay\nLiquidated Damages after the earlier of (i) the date on which the ManagementCo Service\nCommencement Date Conditions are satisfied by ManagementCo or waived by Administrator or\n(ii) the date of termination of this Agreement pursuant to Section 4.8(b) (Failure of Service\nCommencement Date Conditions – Termination for Failure of Service Commencement Date\nConditions); provided that ManagementCo shall pay any accrued and unpaid Delay Liquidated\nDamages as of such earlier date. It is understood and agreed by the Parties that if any of the\nManagementCo Service Commencement Date Conditions are not satisfied or waived by the Delay\nPeriod Date, Owner’s damages would be difficult or impossible to quantify with reasonable\ncertainty, and accordingly, the payment provided for in this Section 4.8(a) (Failure of Service\nCommencement Date Conditions – Remedy for Delay of Service Commencement Date Conditions)\nis a payment of liquidated damages (and not penalties), which is based on the Parties’ estimate of\ndamages Owner would suffer or incur. ManagementCo hereby irrevocably waives any right it may\nhave to raise as a defense that the Delay Liquidated Damages are excessive or punitive.\n(b)\n\nTermination for Failure of Service Commencement Date Conditions.\n\n(i)\nAdministrator shall have the right, subject to approval by PREB, to\nterminate this Agreement upon not less than thirty (30) days’ prior written notice to\nManagementCo if all of the Owner Service Commencement Date Conditions are satisfied but any\nof the ManagementCo Service Commencement Date Conditions are not satisfied by\nManagementCo or waived by Administrator (unless such failure to satisfy the ManagementCo\nService Commencement Date Conditions is the result of the acts, omissions or breach of Owner)\nby the date that is six (6) months following the Target Service Commencement Date or such later\ndate as Administrator and ManagementCo may agree.\n(ii)\nManagementCo shall have the right to terminate this Agreement\nupon not less than thirty (30) days’ prior written notice to Administrator (with copy to PREB) if\nall of the ManagementCo Service Commencement Date Conditions are satisfied but any of the\nOwner Service Commencement Date Conditions are not satisfied by Owner or waived by Operator\n(unless such failure to satisfy the Owner Service Commencement Date Conditions is the result of\nthe acts, omissions or breach of Operator) by the date that is six (6) months following the Target\nService Commencement Date or such later date as Administrator and ManagementCo may agree.\n(iii) Each of Administrator and ManagementCo shall have the right to\nterminate this Agreement upon not less than thirty (30) days’ prior written notice to Operator or\nAdministrator (with copy to PREB), respectively, if any of the Service Commencement Date\nConditions (other than those referred to in Section 4.8(b)(i) (Failure of Service Commencement\nDate Conditions – Termination for Failure of Service Commencement Date Conditions) and\nSection 4.8(b)(ii) (Failure of Service Commencement Date Conditions – Termination for Failure\nof Service Commencement Date Conditions)) are not satisfied or waived by each of Administrator\n\n58'}, {'number': 66, 'text': 'CONFIDENTIAL\nand Operator by the date that is nine (9) months following the Target Service Commencement\nDate or such later date as Administrator and ManagementCo may agree.\n(iv)\nNotwithstanding anything to the contrary in this Section 4.8(b)\n(Failure of Service Commencement Date Conditions – Termination for Failure of Service\nCommencement Date Conditions), if the Service Commencement Date Conditions are satisfied or\nwaived prior to any such termination right being exercised, then neither Administrator nor\nOperator shall have the right to terminate this Agreement pursuant to this Section 4.8(b) (Failure\nof Service Commencement Date Conditions – Termination for Failure of Service Commencement\nDate Conditions).\n(v)\nIn the event of the termination of this Agreement pursuant to this\nSection 4.8(b) (Failure of Service Commencement Date Conditions – Termination for Failure of\nService Commencement Date Conditions), (A) ManagementCo shall retain any Front-End\nTransition Service Fee earned as of the effective date of such termination, and shall within five (5)\nBusiness Days of the effective date of such termination, return to Administrator any amounts held\nin the Front-End Transition Account in excess of any earned Front-End Transition Service Fee and\n(B) ManagementCo shall pay any accrued and unpaid Delay Liquidated Damages as of the\neffective date of such termination. This Agreement (other than with respect to the aforementioned\npayment obligations and any limitations on liability set out elsewhere in this Agreement, each of\nwhich shall continue in effect) shall thereafter become void and have no effect, without any\nliability on the part of any Party or its Affiliates or Representatives in respect thereof, except that\nnothing herein shall relieve any party from liability that cannot be waived as a matter of Applicable\nLaw, claims of fraud or intentional breach or misrepresentation; provided that, in any such event,\nthe limitations of liability specified in this Agreement (including Section 14.6(d) (Remedies Upon\nEarly Termination – Additional Remedies), Section 18.3(a) (Limitation on Liability – Operator\nGeneral Limitations) and Section 18.3(b) (Limitation on Liability – Gross Negligence; Willful\nMisconduct)) shall, notwithstanding the foregoing, continue to apply. Furthermore, the remedies\nprovided in this Section 4.8(b) (Failure of Service Commencement Date Conditions – Termination\nfor Failure of Service Commencement Date Conditions) shall be the sole and exclusive remedies\nof the Parties for any termination of this Agreement pursuant to Section 4.8(b) (Failure of Service\nCommencement Date Conditions – Termination for Failure of Service Commencement Date\nConditions).\n(vi)\nIn addition to and notwithstanding anything to the contrary in this\nSection 4.8(b) (Failure of Service Commencement Date Conditions – Termination for Failure of\nService Commencement Date Conditions), in the event this Agreement is terminated prior to the\nService Commencement Date other than as a result of the acts, omissions or breach of Operator,\n(A) any balance of the Front-End Transition Service Fixed Fee then outstanding shall be deemed\nto have been earned and shall be paid in full to ManagementCo and (B) ManagementCo shall be\nreimbursed for any reasonable and documented costs and expenses incurred by ManagementCo\n(without markup for profit) that are necessary and reasonable in the course of terminating the\nactivities undertaken in connection with the Front-End Transition Services, including reasonable\nand documented breakage fees for Front-End Subcontractors providing Front-End Transition\nServices.\n\n59'}, {'number': 67, 'text': 'CONFIDENTIAL\n(c)\nEffect of Force Majeure Events or Owner Fault. The dates in Section 4.8(b)\n(Failure of Service Commencement Date Conditions – Termination for Failure of Service\nCommencement Date Conditions) shall each be extended on a day-for-day basis for the period of\nany Force Majeure Event or any Owner Fault (except in the case of clauses (ii) and (iii) of\nSection 4.8(b) (Failure of Service Commencement Date Conditions – Termination for Failure of\nService Commencement Date Conditions), in which case Owner shall not receive any such\nextension where the delay is caused by any Owner Fault).\nSubcontractors During the Front-End Transition Period.\n(a)\nGeneral. ManagementCo shall have the right to engage Subcontractors to\nperform certain Front-End Transition Services (the “Front-End Subcontractors”); provided that\nSubcontracts related to the provision of any Front-End Transition Services that are eligible for\nreimbursement with Federal Funding, if any, shall comply with the Federal Funding Requirements,\nincluding any competitive bidding processes required for the award of any such Subcontracts.\nOperator shall provide Administrator (with copy to PREB) with a list of Front-End Subcontractors\nthat Operator has engaged or intends to engage for the performance of any of the Front-End\nTransition Services in excess of US$250,000 (each, a “Material Front-End Subcontractor”).\nAdministrator shall have the right to approve any Material Front-End Subcontractor engaged by\nManagementCo, which approval shall not be unreasonably withheld, delayed or conditioned. If\nAdministrator does not respond to Operator within ten (10) Business Days after being notified of\nOperator’s engagement or intention to engage a Front-End Subcontractor, Administrator shall be\ndeemed to have no objection to the engagement of such Front-End Subcontractor.\n(b)\nIdentification. Promptly following the Effective Date, as part of its\nSubcontractor background checks, ManagementCo shall provide Administrator all information\nrequested by Administrator, to the extent reasonably available to ManagementCo, pertaining to\nthe proposed Front-End Subcontractors in the following areas: (i) any conflicts of interest, (ii) any\nrecord of felony criminal convictions or pending felony criminal investigations and (iii) any final\njudicial or administrative finding or adjudication of non-performance of contracts with Owner or\nAdministrator, in each case, to the knowledge of ManagementCo. In addition, to the extent any\nconflicts of interest may be identified, ManagementCo, Owner and Administrator shall cooperate\nin good faith to avoid, mitigate and neutralize any such conflicts.\n(c)\nApproval. If a proposed Material Front-End Subcontractor is approved for\nthe Front-End Transition Period, such Subcontractor shall be deemed to be approved for the\nspecified categories of potential work for the duration of the Front-End Transition Period, unless\nAdministrator otherwise notifies ManagementCo. Subject to the foregoing, the approval or\nrejection by Administrator of any proposed Material Front-End Subcontractor shall not create any\nliability of Owner or Administrator to ManagementCo, such Material Front-End Subcontractor,\nany third-parties or otherwise. When engaging Front-End Subcontractors, ManagementCo shall\nnot be relieved from its responsibility under this Agreement and liability for any error, fault or\ninconsistency in the provisions of the Front-End Transition Services hereunder. All such\nsubcontracts shall be subject to Applicable Law and shall be assignable to Owner at\nAdministrator’s sole discretion following termination of this Agreement. All Front-End\nSubcontractors shall be required to furnish a Sworn Statement.\n\n60'}, {'number': 68, 'text': 'CONFIDENTIAL\n(d)\nAffiliate Personnel. ManagementCo shall have the right to use personnel\nfrom its Affiliates to perform the Front-End Transition Services at the hourly fully allocated cost\nrate for each category of Affiliate personnel providing Front-End Transition Services, as set out in\nAnnex V (Front-End Transition Hourly Fully Allocated Rates).\n\n61'}, {'number': 69, 'text': 'CONFIDENTIAL\nARTICLE 5\nO&M SERVICES\nServices Generally. Commencing on the Service Commencement Date,\nand in exchange for Owner’s payment to Operator of all amounts owing to Operator under this\nAgreement, Operator shall (i) provide management, operation, maintenance, repair, restoration\nand replacement and other related services for the T&D System, in each case that are customary\nand appropriate for a utility transmission and distribution system service provider, including the\nservices set forth in this Article 5 (O&M Services) (excluding the GenCo Shared Services) and\nAnnex I (Scope of Services), and (ii) establish policies, programs and procedures with respect\nthereto (all such services, the “O&M Services”), in each case, in accordance with the Contract\nStandards. It is the Parties’ intent that except for the rights and responsibilities reserved to Owner\nand Administrator as set forth in Article 6 (Rights and Responsibilities of Owner and\nAdministrator) or as may otherwise be expressly provided in this Agreement, Operator shall (A)\nbe entitled to exercise all of the rights and perform the responsibilities of Owner in providing the\nO&M Services, and (B) have the autonomy and responsibility to operate and maintain the T&D\nSystem and establish the related plans, policies, procedures and programs with respect thereto as\nprovided in this Agreement. The Parties acknowledge that Operator’s obligations to provide O&M\nServices under this Agreement are subject to the System Remediation Plan.\nSystem Contracts.\n(a)\nGenerally. Operator, as agent for and on behalf of Owner, shall administer\nand perform System Contracts and Owner’s payment obligations thereunder, which shall be an\nexpense that is paid by Operator as a T&D Pass-Through Expenditure. Notwithstanding the\nforegoing, (i) Operator shall administer and perform Owner’s rights and obligations under such\nSystem Contracts in such a manner so as not to expand or increase the liabilities assumed by Owner\nthereunder, other than with respect to an amendment, renewal or expansion of existing System\nContracts as required to provide the O&M Services hereunder, and in compliance with the\nrequirements described in the Federal Funding Procurement Manual to the extent such System\nContract involves Federal Funding, and (ii) Owner shall administer and perform any rights and\nobligations under such System Contracts to the extent that Applicable Law requires Owner’s\nperformance of such functions or Applicable Law or such System Contract prohibits Owner from\ndelegating such functions. Owner hereby authorizes Operator to enforce Owner’s rights under any\nsuch System Contracts.\n(b)\nAgent Designation. Owner hereby designates and appoints Operator as its\nagent, and Operator hereby accepts such designation and appointment, for the purpose of entering\ninto System Contracts on behalf of and for the account of Owner, as may be necessary or\nappropriate to operate and maintain the T&D System and to make such additions and extensions\nthereto in accordance with the terms of this Agreement.\n(c)\nPowers. In such capacity as Owner’s designated agent pursuant to\nSection 5.2(b) (System Contracts – Agent Designation), Operator shall have full power and\nauthority to act on Owner’s behalf and to legally bind Owner, subject, in each case, to\n(i) Operator’s action in such regard being consistent with Prudent Utility Practice and (ii) Owner’s\nrights and responsibilities provided in Section 6.1 (Rights and Responsibilities of Owner) and the\n62'}, {'number': 70, 'text': 'CONFIDENTIAL\nother terms of this Agreement. Operator and Owner shall promptly implement such policies and\nprocedures as may be necessary or appropriate to effect the activities contemplated by this\nSection 5.2 (System Contracts) and to separately identify and segregate the equipment, material,\nsupplies and services that Operator is purchasing as agent of Owner from those Operator (or its\nAffiliates) may be purchasing for its own or another Person’s account. Where necessary or required\nby a Governmental Body or Person, Operator and Owner shall execute and deliver such\ninstruments, agreements, certificates or other evidence confirming Operator’s designation,\nappointment and authority to act as Owner’s agent as provide in this Section 5.2 (System\nContracts).\n(d)\nAdditional System Contracts or Expired System Contracts After Service\nCommencement Date. After the Service Commencement Date, if any System Contracts are\nrequired: (i) for the operation and maintenance of the T&D System, to deliver services to T&D\nCustomers or to comply with the provisions of this Agreement or Contract Standards or (ii) to\nreplace any existing System Contract that has expired or has been terminated, then, in each case,\nOperator shall be responsible for obtaining such System Contract in Owner’s name and on\nOwner’s behalf; provided that any new or replacement System Contract that provides for payments\nin excess of US$10,000,000 in any Contract Year or US$30,000,000 in the aggregate (each a\n“Material System Contract”) shall be subject to approval by Administrator, such approval not be\nunreasonably withheld, delayed or conditioned, following which such proposed System Contract\nshall be executed by Owner; provided further that a Tax Opinion and a Reliance Letter shall have\nbeen obtained, at the expense of Owner or Administrator, with respect to any new, extended,\namended or replacement System Contract that is a Covered Contract. Operator shall ensure that\nany System Contract involving Federal Funding and obtained in Owner’s name and on Owner’s\nbehalf under this Section 5.2(d) (System Contracts – Additional System Contracts or Expired\nSystem Contracts After Service Commencement Date) complies with the Federal Funding\nRequirements, including the Federal Funding Procurement Manual.\n(e)\nReporting Obligations. Operator shall on or about the fifth (5th) Business\nDay of each Contract Year provide to Administrator a report documenting each Material System\nContract, Material Contractor and Material Subcontractor, which report shall include the name of\nthe third-party, the term, if applicable, of the System Contract, Contract or Subcontract, a\ndescription of the services or goods to be procured and the estimated amount payable thereunder.\n(f)\nConditions on Term. Any System Contract entered into by Operator on\nbehalf of Owner in connection with the O&M Services, including contracts with Subcontractors,\nshall, unless otherwise approved in writing by Administrator, such approval not to be unreasonably\nwithheld, delayed or conditioned, either (i) be for a term that is no longer than the Term or (ii)\nprovide that such contract is terminable at will (subject to any notice requirements) without cost\nor penalty.\nBilling and Collection.\n(a)\nGenerally. Operator shall perform all billing and collection services for the\nT&D System in accordance with the Contract Standards, including the requirements set forth in\nAnnex I (Scope of Services).\n\n63'}, {'number': 71, 'text': 'CONFIDENTIAL\n(b)\nCollection of Charges. All funds received by Operator from billing and\ncollection services hereunder shall be deposited on the same day as receipt in one or more bank\naccounts designated by Administrator. Any funds received after 4:00 p.m. on any given day or on\na day that is not a Business Day shall be deposited at the opening of business on the immediately\nfollowing Business Day. All such funds and any revenues generated by the T&D System are and\nshall remain the property of Owner at all times (subject only to Liens on System Revenues\nspecified in the Title III Plan and the related disclosure statements).\n(c)\nEnforcement of Collections. Owner and Administrator shall cooperate with\nOperator and use commercially reasonable efforts to take all actions requested by Operator in all\ncollection matters and, to the extent Applicable Law does not permit delegation thereof to\nOperator, shall exercise its statutory powers pertaining to any and all remedies granted to it under\nApplicable Law for purposes of collection, including the imposition of interest and penalties on\nunpaid charges and the termination of services. Subject to Applicable Law, Operator may suspend\nor terminate services to any customer of the T&D System who has failed to comply with its\nobligations to pay the established rates in accordance with their terms, including suspensions\nprovided for under Regulation 8818 of September 27, 2016 (Reglamento Sobre la Contribucion\nen Lugar de Impuestos (CELI).\n(d)\nServicing Contract. Operator shall at all times conduct the billing and\ncollection services in compliance with the terms of any Servicing Contract then in effect. In the\nevent of any conflict or issue of interpretation between such Servicing Contract and this Agreement\nin connection with Operator’s obligations for billing and collection services, the Servicing\nContract shall prevail over this Agreement.\nSystem Remediation. Operator shall implement the System Remediation\nPlan in accordance with such plan. All costs associated with the implementation of the System\nRemediation Plan, and the activities and projects thereunder, shall be T&D Pass-Through\nExpenditures. Notwithstanding any provision to the contrary herein: (i) Operator shall perform the\nO&M Services in accordance with Contract Standards, taking into account the implementation of\nthe System Remediation Plan and the characteristics of the T&D System at a particular time, and\n(ii) under no circumstances shall Operator be held responsible hereunder for the performance of\nany commercially available third-party control, monitoring or information equipment, systems or\nservices (including, related hardware and Software), to the extent any Losses result from any defect\ntherein. Any amendments to the System Remediation Plan approved by PREB or otherwise\nfinalized in accordance with Section 4.1(d)(iii) (Front-End Transition Period Generally –\nTransition to Standard of Performance) shall be subject to approval by PREB.\nCapital Improvements.\n(a)\nGenerally. Subject to Section 4.1(c) (Front-End Transition Period\nGenerally – Transition to Standard of Performance), Operator shall:\n(i)\nrecommend (A) Federally Funded Capital Improvements in\ncompliance with Obligated projects, (B) Non-Federally Funded Capital Improvements and (C)\ncapital projects related to new generation in accordance with the Integrated Resource Plan;\n\n64'}, {'number': 72, 'text': 'CONFIDENTIAL\n(ii)\nmonitor the approved annual Capital Budget – Federally Funded and\nCapital Budget – Non-Federally Funded;\n(iii) prepare risk assessments and analyses in support of prioritization\nand planning for Capital Improvements and other capital projects, which shall take into account\nthe Integrated Resource Plan, load and energy forecasts, fuel price and quantity forecasting, long\nand short range system plans, and proposed annual operating and maintenance plan (and which\nassessments and analyses PREB may request from time to time);\n(iv)\nprepare long and short range transmission and distribution planning\nanalyses and forecasts to determine the need for Federally Funded Capital Improvements and NonFederally Funded Capital Improvements, including the introduction of smart grid and other\nemerging technologies and project management services to ensure the technical performance and\nreliability of the T&D System, which shall take into account the Integrated Resource Plan to the\nextent applicable (and which analyses and forecasts PREB may request from time to time);\n(v)\nprepare analyses and forecasts to determine the need for generationrelated capital projects, if applicable, in accordance with Section 5.13(d) (Generation-Related\nServices – Procurement of Generation Projects and Generation Supply Contracts) and the Shared\nServices Agreement, including the need for Owner to enter into new Generation Supply Contracts;\nand\n(vi)\nperform and supervise Capital Improvements, including engineering\nand related design and construction management services.\n(b)\nFederal Funding Eligibility. Owner shall notify Operator in writing of any\nCapital Improvements that may be eligible for Federal Funding. In such case, Owner and Operator\nshall cooperate with each other to address and comply with federal agency requirements, including\nany requirements set forth in the Federal Funding Procurement Manual (all such requirements, the\n“Federal Funding Requirements”), so as not to jeopardize the T&D System’s eligibility to receive\nFederal Funding. Such cooperation shall include Owner (i) providing Operator with such\ndocuments and information it requests with respect to the Federal Funding Requirements, (ii)\nsharing with Operator any specific requirements imposed by the relevant funding agency to\nmaintain eligibility to receive Federal Funding and (iii) making requests to such federal agencies\nto review Owner and Operator’s systems and plans to comply with Federal Funding Requirements.\n(c)\nCapital Asset Control. In each Contract Year, Operator shall conduct a\nreview of the Capital Improvements made in the prior Contract Year. Such review shall measure\nthe accuracy of the plant records, maps and maintenance databases concerning capital assets.\nOperator shall also conduct a physical inventory of all capital assets from time to time in\naccordance with the Contract Standards. Operator shall provide the results of each such review to\nOwner and Administrator promptly following the completion of such reviews.\n(d)\nOption to Propose Operator-Owned Capital Improvements. Operator may\nfrom time to time during the Term propose to PREB certain Capital Improvements that would be\nmade, owned and funded by Operator or its designated Affiliate; provided, however, that (i) the\ncosts and expenses relating to any such Capital Improvements shall not be considered, or otherwise\n\n65'}, {'number': 73, 'text': 'CONFIDENTIAL\ntreated as, T&D Pass Through Expenditures and (ii) no such Capital Improvements shall be made\nthat would in any manner jeopardize the exclusion from gross income of interest on Owner’s or\nits Affiliates’ obligations under the Internal Revenue Code. Operator shall provide PREB, with\ncopy to Administrator, with a description of the Operator-owned Capital Improvement in sufficient\ndetail to enable PREB to make a fully informed assessment and analysis thereof; provided that any\nsuch proposal shall contemplate Operator having the opportunity to earn a reasonable rate of return\nthereon consistent with the returns permitted to be earned by companies operating in the United\nStates electric transmission and distribution business on similar investments. Any such proposed\nCapital Improvement shall be subject to review, and approval or rejection, by PREB in accordance\nwith Applicable Law and shall be accompanied by an opinion of tax counsel to Administrator\nproviding that such Capital Improvement shall not adversely affect the exclusion from gross\nincome of interest on obligations of Owner, its Affiliates or another Governmental Body for federal\nincome tax purposes under the Internal Revenue Code. In reviewing any such proposed Capital\nImprovement, PREB may request additional information or reports from Operator, and may\nrequire that any such proposed Capital Improvement be presented as part of a rate review\nproceeding. The inclusion of the provisions of this Section 5.5(d) (Capital Improvements – Option\nto Propose Operator-Owned Capital Improvements) shall in no way constitute an obligation by\nany of PREB, Owner or Administrator to agree to or pursue any Operator-owned Capital\nImprovement or require Owner or Administrator to pay for or reimburse the cost or expenses of\npursuing any proposed Operator-owned Capital Improvement or an obligation of Operator to\npropose or pursue any Operator-owned Capital Improvement.\nSystem Regulatory Matters.\n(a)\nGeneral. From the Service Commencement Date and during the duration of\nthe Term thereafter, Operator shall function as agent of Owner, and Owner hereby irrevocably\nauthorizes Operator to (i) represent Owner before PREB with respect to any matter related to the\nperformance of any of the O&M Services provided by Operator under this Agreement, (ii) prepare\nall related filings and other submissions before PREB and (iii) represent Owner before any\nGovernmental Body and any other similar industry or regulatory institutions or organizations\nhaving regulatory jurisdiction.\n(b)\nApplications and Submittals. Operator, as agent of Owner, shall make all\nfilings and applications and submit all reports necessary to obtain and maintain all Governmental\nApprovals in the name of Owner or, if required by Applicable Law, Operator. Owner and\nAdministrator shall cooperate with Operator in fulfilling such obligations, including by promptly\n(and in any event within thirty (30) days) providing any necessary information to Operator and\nmaking all such filings and applications and submitting such reports requested by Operator in cases\nwhere Applicable Law does not permit Operator to do so. With respect to Governmental Approvals\nthat are obtained or maintained in the name of Owner, Operator shall: (i) prepare the application\nand develop and furnish all necessary supporting material, data and information that may be\nrequired; (ii) familiarize itself with the terms and conditions of such Governmental Approvals; (iii)\nattend all meetings and hearings required to obtain such approvals; and (iv) take all other action\nnecessary or otherwise reasonably requested by Administrator in order to assist and support Owner\nin obtaining, maintaining, renewing, extending and complying, as may be relevant, with the terms\nof such Governmental Approvals. Operator shall agree to be named as a co-permittee on any\nGovernmental Approval if so required by the issuing Governmental Body.\n66'}, {'number': 74, 'text': 'CONFIDENTIAL\n(c)\nData and Information. All data and information required to be supplied and\nactions required to be taken in connection with the Governmental Approvals required for the O&M\nServices shall be supplied and taken by Operator on a timely basis considering the requirements\nof Applicable Law, the System Remediation Plan and the responsibilities of Owner as the legal\nand beneficial owner of the T&D System. The data and information supplied by Operator (as agent\nfor Owner) to Owner, Administrator and all regulatory agencies in connection therewith shall be\ncorrect and complete in all material respects; provided, however, that Operator shall be entitled to\nrely upon, and shall not be liable for, any such data and information derived from or comprising\ndata and information supplied by or on behalf of Owner or Administrator. For the avoidance of\ndoubt, the requirement that all data and information supplied by Operator be correct shall be\nsubject to the System Remediation Plan, including the process for implementation outlined in\nSection 4.1(d) (Front-End Transition Period Generally – Transition to Standard of Performance);\nprovided that Operator shall nevertheless be required to identify to Owner any known material\ninaccuracies in the information supplied to Owner at the time such information is provided.\n(d)\nNon-Compliance and Enforcement. Operator shall, subject to the System\nRemediation Plan, report to Administrator in writing, as soon as possible upon obtaining actual\nknowledge thereof (but in no event more than forty-eight (48) hours (or such shorter period within\nwhich notice is required to be given to a Governmental Body under Applicable Law) after\nobtaining such knowledge), all material violations of the terms and conditions of any\nGovernmental Approval.\n(e)\nReports to Governmental Bodies. Operator, as agent for Owner and subject\nto the System Remediation Plan, shall prepare all periodic and annual reports, make all information\nsubmittals and provide, on a timely basis, all notices to all Governmental Bodies required by all\nGovernmental Approvals and under Applicable Law with respect to the T&D System; provided,\nhowever, that Operator shall be entitled to rely upon, and shall not be liable for, any such data and\ninformation derived from or comprising data and information supplied by or on behalf of Owner\nor Administrator or from errors or omissions in such information. Such reports shall contain all\ninformation required by the Governmental Body and may be substantially similar or identical to\ncomparable reports previously prepared for Administrator if such are acceptable to the\nGovernmental Body.\n(f)\nIntegrated Resource Plan. From time to time, or as otherwise required by\nApplicable Law or ordered by PREB, Operator, as agent for Owner, shall prepare a proposed\nIntegrated Resource Plan for review and approval by PREB. PREB shall review, and approve,\ndeny or propose modifications to, such proposed Integrated Resource Plan. The proposed\nIntegrated Resource Plan shall comply with all Applicable Law requirements. The proposed\nIntegrated Resource Plan shall be designed in accordance with Applicable Law and in a manner to\nensure that, if approved by PREB and subject to the assumptions specified therein, Operator is\nable to provide safe and adequate transmission and distribution service at the lowest reasonable\nrates consistent with budgetary and T&D System requirements, and with sound fiscal operating\npractices.\n(g)\nPREB Rate Proceedings. From time to time, or as otherwise required by\nApplicable Law or ordered by PREB, Operator may apply to PREB to request that a change in\ncustomer rates or charges be made, which, if approved by PREB pursuant to Applicable Law, may\n67'}, {'number': 75, 'text': 'CONFIDENTIAL\nresult in a change in customer rates or charges consistent with the scope of PREB’s approval. Any\nsuch application shall be prepared and undertaken in accordance with the relevant requirements\nset forth under Applicable Law. Each of Owner and Administrator shall support Operator’s\nproposed rate changes to ensure that adequate amounts are available for inclusion in any Budget\nand provided that the rates are reasonable and customary. Each of Operator, Owner and\nAdministrator shall abide by any rate order reflecting determinations and directives of, and\nrequirements established by, PREB through its review of such application and the rate review\nproceeding (a “Rate Order”). Any Budget submitted by Operator to Administrator and approved\nby Administrator in accordance with Section 7.3(a) (Budgets – Generally), shall be consistent with\nany then-current Rate Order.\n(h)\nAuthority to Adjust Rates. Nothing in this Agreement is intended to, nor\nshall it in any way, impair or restrict PREB’s right to approve final rates and charges to T&D\nCustomers in accordance with Applicable Law.\n(i)\nTemporary Rate. In the event that Operator files a rate modification request,\nPREB shall exercise its discretion in establishing a temporary rate as provided for in\nSection 6.25(d) of Act 57 or any other Applicable Law.\nSafety and Security.\n(a)\nSafety. Consistent with the Contract Standards, Operator shall: (i) take all\nreasonable precautions for the health and safety of, and provide all reasonable protection to prevent\nphysical damage, bodily injury or loss as a result of the operation of the T&D System to, (A) all\nmembers of the public, including Persons involved in providing the O&M Services, (B) all\nmaterials and equipment used in the provision of the O&M Services and under the care, custody\nor control of Operator and (C) other property constituting part of the T&D System and under the\ncare, custody or control of Operator; (ii) establish and enforce all reasonable applicable safeguards\nfor health and safety and protection, including posting danger signs and other warnings against\nhazards and promulgating health and safety regulations; (iii) provide all notices and comply with\nall Applicable Law relating to the health and safety of Persons or property or their protection from\nphysical damage, bodily injury or loss; (iv) designate qualified and responsible employees, in such\nnumbers as Operator shall determine at its sole discretion in accordance with Prudent Utility\nPractice, whose duty shall be the supervision of health and safety at the T&D System; (v) operate\nall equipment in a manner consistent with the manufacturer’s safety recommendations; (vi)\nprovide for safe and orderly vehicular movement; and (vii) develop and carry out a site-specific\nhealth and safety program, including employee training and periodic inspections, designed to\nimplement the requirements of this Section 5.7(a) (Safety and Security – Safety).\n(b)\nOSHA. Operator shall take all actions which may be required in order to\nbring the T&D System into and maintain compliance with the applicable Commonwealth and\nfederal requirements in accordance with and related to the Occupational Safety and Health Act.\n(c)\nSecurity. Operator shall implement the Physical Security Plan in accordance\nwith such plan. In accordance with the Physical Security Plan, Operator shall guard against and be\nresponsible for all physical damage to the T&D System caused by trespass, theft, negligence,\nvandalism, malicious mischief or cyber-attacks of third-parties. For the avoidance of doubt,\n68'}, {'number': 76, 'text': 'CONFIDENTIAL\nOperator’s responsibility for physical damage to the T&D System caused by cyber-attacks shall\nbe subject to the System Remediation Plan, including the process for implementation outlined in\nSection 4.1(d) (Front-End Transition Period Generally – Transition to Standard of Performance).\nOperator shall guard against and be responsible for, in each case to the extent of Operator’s\nnegligence, all physical damage to the T&D System caused by trespass, theft, vandalism or\nmalicious mischief of third-parties. Any cost arising therefrom shall be treated as T&D PassThrough Expenditures hereunder, except to the extent such costs are costs are Disallowed Costs.\nThe Physical Security Plan shall be updated by Operator from time to time as necessary or\nappropriate.\nLabor and Employment; Employee Benefits.\n(a)\nEmployee Plans. ServCo shall provide employee benefits to ServCo\nEmployees pursuant to the plans created by ServCo to provide benefits to ServCo Employees\n(collectively, the “ServCo Benefit Plans”). Operator shall not assume nor shall it be responsible\nfor any obligations or debts of Owner under Owner’s retirement plans. ServCo shall, pursuant to\nAct 29, make any employer contributions it is permitted to make under Applicable Law to Owner’s\nretirement plan with respect to any Hired Former Employee of Owner that elects to continue\nparticipating in Owner’s defined benefit retirement plan.\n(i)\nHired Former Employees of Owner shall not receive credit for their\nservice prior to the Service Commencement Date for purposes of benefit accrual except as\notherwise required by Act 120.\n(ii)\nServCo shall exercise commercially reasonable efforts to cause the\nServCo Benefit Plans to waive all limitations as to pre-existing conditions and actively-at-work\nexclusions and waiting periods for transitioned employees (and their eligible dependents).\n(b)\nExclusivity. Operator shall not, without the prior written approval of\nAdministrator, such approval not to be unreasonably withheld, delayed or conditioned, utilize\nServCo or its employees for any purpose other than providing the O&M Services under this\nAgreement and the GenCo Shared Services to be provided pursuant to the Shared Services\nAgreement, nor may it hire, for any other business of Operator or an Affiliate, any existing ServCo\nemployees without Owner’s prior written consent not to be unreasonably withheld, delayed or\nconditioned.\n(c)\nOther. Nothing in this Agreement is intended to amend any employee\nbenefit plan or affect the applicable plan sponsor’s right to amend or terminate any employee\nbenefit plan pursuant to the terms of such plan.\nProcurement and Administration of Federal Funding.\n(a)\nGeneral. As among the Parties, Owner shall retain the exclusive right to\nreceive amounts from all Federal Funding for the T&D System. Subject to the requirements of\nSection 5.5 (Capital Improvements), Operator shall (i) take steps to ensure that, except for Systems\nContracts existing as of the Service Commencement Date, the O&M Services are performed in\ncompliance with the Federal Funding Requirements, (ii) be responsible for contracting for any\n\n69'}, {'number': 77, 'text': 'CONFIDENTIAL\nCapital Improvement financed in full or in part with available Federal Funding, and (iii) ensure\nthat all contracting and work performed by Contractors related to such Capital Improvements the\ncost of which may be submitted for Federal Funding with the mutual agreement of Operator and\nAdministrator in accordance with Article 7 (Compensation; Budgets), is done in compliance with\nthe Federal Funding Requirements to maximize the potential realization of the Federal Funding\nanticipated or received and ensure such funding is administered in accordance with all such\nrequirements.\n(b)\nCooperation and Participation. The Parties shall cooperate and participate\nwith any relevant Governmental Body and any Grant Manager in order to help seek, procure,\nadminister, manage, deploy and apply any Federal Funding for the restoration of the T&D System\nand related costs. The Parties shall cooperate and participate in any audits or investigations\nperformed by Commonwealth or federal authorities in connection with Federal Funding.\n(c)\nCompliance with Applicable Law, Regulation and Policy. Operator shall\nensure that any work related to the T&D System, the cost of which may, with the mutual agreement\nof Operator and Administrator in accordance with Article 7 (Compensation; Budgets), be\nsubmitted for Federal Funding, shall be performed in compliance with (i) Applicable Law,\nincluding the procurement rules set forth in 2 C.F.R. Part 200 applicable to Owner, (ii) the\nprovisions set forth in the Federal Funding Procurement Manual, as applicable, and each of (iii)\nexisting and applicable Owner policy, (iv) existing and applicable COR3 policy and (v) existing\nand applicable PRDH policy, in the case of clauses (iii), (iv) and (v), to the extent Operator has\nreceived copies of such policies. Operator shall require any Contractors or Subcontractors engaged\nto complete work eligible for Federal Funding to execute a certification substantially in the form\nof Exhibit A (Form of Federal Funding Certifications) at the commencement of the Contract or\nSubcontract. Owner and Operator shall cooperate in good faith and take all steps reasonably\nrequired to ensure that Federal Funding Requirements, including the requirements described in the\nFederal Funding Procurement Manual, are met in relation to the performance of any Federally\nFunded Capital Improvements.\n(d)\nFederal Funding Procurement Manual. The Parties shall update the Federal\nFunding Procurement Manual every three (3) months, or as otherwise deemed necessary by the\nParties, to reflect any changes in Applicable Law that affect Federal Funding.\n(e)\n\nAcknowledgments. The Parties hereby acknowledge and agree that:\n\n(i)\nOwner may, in accordance with Applicable Law, transfer its right to\nreceive amounts from Federal Funding for the T&D System to Administrator or another\nGovernmental Body (provided that any such transferee shall, as part of any such transfer, agree to\nbe bound by Owner’s obligations hereunder);\n(ii)\nOperator shall, with the prior written consent of Administrator and\nOwner, act as agent of Owner (and any permitted transferee) in connection with any Federal\nFunding requests related to the T&D System submitted to federal agencies;\n(iii) COR3 is the “Recipient” (as such term is defined in 2 C.F.R.\nPart 200.86) of all Federal Funding received from FEMA; and\n\n70'}, {'number': 78, 'text': 'CONFIDENTIAL\n(iv)\nPRDH is the “Recipient” (as such term is defined in 2 C.F.R.\nPart 200.86) of all HUD Community Development Block Grant – Disaster Recovery Federal\nFunding.\nEnvironmental, Health and Safety Matters.\n(a)\nGenerally. Operator shall perform the following environmental health and\nsafety activities related to the provision of electric service to T&D Customers: (i) managing an\nenvironmental, health and safety program for the T&D System in accordance with the Contract\nStandards; (ii) coordinating, overseeing, ensuring and maintaining compliance of the T&D System\nwith Environmental Law, including documentation thereof; (iii) monitoring emerging federal,\nstate, Commonwealth, municipal and local Environmental Law to ensure future and ongoing\ncompliance and operational efficiencies; (iv) performing analyses of proposed Environmental Law\nto ensure future compliance thereunder; and (v) providing environmental permitting services to\nsupport operations; provided, however, that Operator shall not be responsible for any of the\nforegoing activities with respect to any Pre-Existing Environmental Condition, all of which shall\nbe obligations of Owner, except to the extent Operator exacerbates a Pre-Existing Environmental\nCondition and such exacerbation is attributable to Operator’s gross negligence or willful\nmisconduct.\n(b)\n\nPre-Existing Environmental Conditions.\n\n(i)\nOperator shall perform the O&M Services so as not to exacerbate\nthe effect or costs of any Pre-Existing Environmental Condition disclosed with reasonable\nspecificity by Owner pursuant to Section 4.5(f) (Conditions Precedent to Service Commencement\nDate – Pre-Existing Environmental Conditions). Discovery of a Pre-Existing Environmental\nCondition by Operator shall not be deemed an exacerbation of such condition. If at any time a\nPre-Existing Environmental Condition is determined to exist that (A) requires an action under\nApplicable Law, (B) materially interferes with the performance of the O&M Services or\n(C) materially increases the cost of performing the O&M Services, then Administrator shall, as\nsoon as reasonably practicable given the condition in question, after written notice from any\nGovernmental Body or Operator of the presence or existence thereof, commence and diligently\nprosecute such actions as are required by Applicable Law or to prevent future material interference\nwith the performance of the O&M Services or material increases in costs of performing the O&M\nServices.\n(ii)\nAdministrator shall have the right to contest any determination of a\nPre-Existing Environmental Condition and shall not be required to take any action under this\nSection 5.10 (Environmental, Health and Safety Matters) so long as (A) it is contesting any\ndetermination of a Pre-Existing Environmental Condition in good faith by appropriate proceedings\nconducted with due diligence and (B) Applicable Law permits continued operation of the T&D\nSystem pending resolution of the contest. In any contest regarding whether the presence of\nHazardous Material is a Pre-Existing Environmental Condition, Administrator (or Owner, as the\ncase may be), if Operator submits a sworn certification that, to the best of its knowledge, after due\ninquiry (which inquiry shall not require any further Environmental Studies (including any phase I\nor phase II studies)), the alleged Pre-Existing Condition did not arise from facts, circumstances,\nconditions, actions or omissions first occurring after the Service Commencement Date, then Owner\n71'}, {'number': 79, 'text': 'CONFIDENTIAL\nshall bear the burden of proof by a preponderance of the evidence that the presence of such\nHazardous Material is not a Pre-Existing Environmental Condition.\n(iii) Operator shall not be responsible for any Losses resulting from or\nrelated to any Pre-Existing Environmental Conditions, except to the extent such Losses are based\nin whole or in part on Operator’s exacerbation of a Pre-Existing Environmental Condition resulting\nfrom Operator’s gross negligence or willful misconduct with respect to the exacerbation of such\nPre-Existing Environmental Condition that was disclosed by Owner or Administrator to Operator\nhereunder and then only to the extent attributable to such gross negligence or willful misconduct.\n(c)\n\nNotice and Remedial Action Requirements.\n\n(i)\nOperator shall, promptly upon obtaining knowledge thereof, report\nto Administrator, on a per occurrence basis, the Release of any reportable quantity, as defined\nunder applicable Environmental Law, of Hazardous Material or of any other Release that could\nreasonably be expected to result in material Losses to Owner or Operator, and the location at which\nthe Release has occurred, the time, the agencies involved, the damage that has occurred and the\nRemedial Action alternatives to be considered for decision-making by Administrator. Notice of\nany such Release, if initially delivered orally, shall be delivered to Administrator in writing\npromptly following Operator’s actual knowledge of such Release. This reporting obligation shall\nbe in addition to any other reporting obligation under Environmental Laws. Upon such notification,\nAdministrator shall promptly propose the Remedial Action to Operator for its consideration.\nOperator and Administrator shall work in good faith to reach a prompt, written agreement for the\npursuit of the Remedial Action, including terms assuring the pre-funding and prompt\nreimbursement of all of Operator’s costs in effectuating the Remedial Action determined by\nAdministrator, which costs shall be treated as T&D Pass-Through Expenditures hereunder, except\nto the extent such costs are Disallowed Costs. If such an agreement cannot be reached within ten\n(10) Business Days, or such other time as Administrator and Operator may agree, Administrator\n(or Owner, as the case may be) may proceed with the Remedial Action at its cost, including at such\ntimes and in a manner so as to not materially interfere with the performance of the O&M Services\nand Operator shall have no responsibility for such Remedial Action. In the event of a Pre-Existing\nEnvironmental Condition, Administrator and Operator may also reach an agreement whereby\nOperator is compensated for effectuating the Remedial Action proposed by Administrator after the\npresentation of Remedial Action alternatives by Operator for such condition. Subject to Applicable\nLaw, in no event shall ownership of any Hazardous Material, including as stated on manifests, be\nin the name of Operator, or Operator’s employees, contractors, guests or invitees, nor shall\nOperator be deemed to be arranging for any disposal of any Hazardous Material associated with\nsuch Remedial Action or otherwise.\n(ii)\nWith respect to any Release caused by the gross negligence or\nwillful misconduct of Operator or Operator’s employees, contractors, guests or invitees in\nconnection with the O&M Services, Operator shall promptly obtain the necessary Governmental\nApprovals for, and then commence and diligently pursue to completion all Remedial Action\nnecessary to comply with Environmental Law. Operator shall keep Administrator reasonably\ninformed of the progress of such Remedial Action and the schedule for completing it. In addition,\nin connection with such Remedial Action, Operator shall: (A) provide Administrator with a\nreasonable opportunity to comment in advance upon any material written communications, filings,\n72'}, {'number': 80, 'text': 'CONFIDENTIAL\nreports, correspondence or other writings given to any Governmental Body and consider accurate\nand timely provided comments in good faith; (B) to the extent practical, provide Administrator\nwith a reasonable opportunity to participate in any meetings with any Governmental Body\nregarding the Remedial Action; (C) comply with Applicable Law; (D) within five (5) Business\nDays of sending or receipt, use commercially reasonable efforts to provide to Administrator copies\nof all non-privileged material written communications, filings, reports, correspondence or other\nwritings, photographs or materials sent by Operator to or received by Operator from any Person\n(including any Governmental Body) in connection with any such Remedial Action.\n(iii) Operator shall promptly notify Administrator, and any other\nGovernmental Body as may be required by Environmental Law, in writing of its intention to\nhandle, transport or dispose of Hazardous Material, other than in the ordinary course of business.\nOperator shall cause such Hazardous Material to be handled, transported and disposed of in\naccordance with Environmental Law.\nAccounting and Financial Services. Operator shall provide accounting\nand financial services in respect of the T&D System, including those services listed in Annex I\n(Scope of Services).\nLegal Matters. Operator shall manage Owner’s legal matters in respect of\nthe O&M Services, other than with respect to any dispute with, or other legal matters involving,\nOperator pursuant to this Agreement, and Owner’s related reporting obligations, including those\nservices listed in Annex I (Scope of Services). In performing this Agreement, nothing shall require,\nor shall be construed as requiring, Operator to act as legal counsel to, or to provide legal advice or\nrepresentation to, Owner.\nGeneration-Related Services.\n(a)\nPower Supply Dispatch and Management. As further detailed in, and in\naccordance with, the System Operation Principles, Operator, as agent for Owner, shall: (i)\ndispatch, schedule and coordinate Power and Electricity from available generation assets and\nprovide related services; (ii) coordinate the scheduling of load requirements and Power and\nElectricity with IPPs pursuant to their respective Generation Supply Contracts and with GenCo\npursuant to the GridCo-GenCo PPOA; (iii) implement and apply, on a continuous basis on the\nrelevant time basis applicable, the System Operation Principles in order to ensure and coordinate\nthe delivery of Power and Electricity; (iv) develop load and energy forecasts (including daily\nforecasts), scheduling requirements and capacity requirements taking into consideration unit\noutages; (v) request and consider information with respect to operational constraints; and (vi)\nperform any other services related to the dispatch, scheduling or coordination of Power and\nElectricity from existing and future available generation assets.\n(b)\nPower Supply Information. In connection with Operator’s performance of\nthe dispatch, scheduling and coordination of Power and Electricity, Operator shall have the right,\nwith regards to Owner and GenCo, and may request the right from any IPP, as applicable, to\nreasonable access to information consistent with Prudent Utility Practice required to perform the\ndispatch and scheduling of Power and Electricity, which includes fuel availability, fuel cost, fuel\ninventory, unit availability, unit marginal cost, unit outage schedules, electric system reliability\n73'}, {'number': 81, 'text': 'CONFIDENTIAL\nrequirements, reserve requirements, identification of must-run generation resources and any other\ninformation reasonably requested by Operator consistent with Prudent Utility Practice required to\nperform the dispatch, scheduling and coordination of Power and Electricity.\n(c)\nReview of System Operation Principles. In connection with Operator’s\nperformance of the dispatch, scheduling and coordination of Power and Electricity, Operator and\nAdministrator shall have the right from time to time to review the System Operation Principles, in\ncoordination with Administrator or Operator, as applicable, taking into account Applicable Law,\nload and energy forecasts, long and short range system plans, proposed annual operating and\nmaintenance plan, any limitation criteria, and the condition of the entire electric system. If\nOperator and Administrator determine upon review that the System Operation Principles should\nbe revised, Operator shall prepare and submit revised System Operation Principles to PREB. PREB\nshall have the right to approve, deny or propose modifications to such revised System Operation\nPrinciples. Subject to and conditioned on PREB approval, Operator shall perform the services\ndescribed in Section 5.13(a) (Generation-Related Services – Power Supply Dispatch and\nManagement) in accordance with the revised System Operation Principles. In the event of an\nEmergency Event and on a temporary basis throughout the duration of the relevant emergency,\nOperator may deviate from the System Operation Principles as required to ensure public safety,\nemployee safety and while minimizing customer outages. In such an Emergency Event, Operator\nshall notify Administrator ten (10) Business Days prior to submitting revised temporary System\nOperation Principles that reflect such deviation to PREB for its review. Such notice shall include\na draft of the revised temporary System Operation Principles, and PREB shall have the right to\napprove, deny or propose modifications thereto.\n(d)\nProcurement of Generation Projects and Generation Supply Contracts.\nOperator shall maintain Resource Adequacy that may require new generation procurement for\nGeneration Projects or Generation Supply Contracts, which procurement shall be done in\naccordance with the Integrated Resource Plan and Applicable Law. Any such Generation Project\nor Generation Supply Contract shall be subject to the applicable procurement processes and\napproval by PREB in accordance with Applicable Law. With respect to any such procurement,\nOperator shall:\n(i)\nprepare risk assessments and analyses in support of Resource\nAdequacy and Generation Project or Generation Supply Contract procurement prioritization and\nplanning, which shall take into account the Integrated Resource Plan and Applicable Law (and\nwhich assessments and analyses PREB may request from time to time);\n(ii)\nprepare long and short-range transmission and distribution planning\nanalyses and forecasts to determine the need for Generation Project or Generation Supply Contract\nprocurement which shall take into account the Integrated Resource Plan to the extent applicable\n(and which analyses and forecasts PREB may request from time to time);\n(iii) meet with PREB on an annual basis to review and assess the\nprepared analyses, demand projections (prepared in accordance with the Integrated Resource\nPlan), existing System Power Supply, Legacy Generation Assets and generation assets owned by\nIPPs related to the supply of Power and Electricity, and determine whether additional power supply\nsources are needed; and\n74'}, {'number': 82, 'text': 'CONFIDENTIAL\n(iv)\ncoordinate any start-up related services required from Owner in\nconnection with any such Generation Project or Generation Supply Contract.\nFor the avoidance of doubt, in the event that Operator recommends new generation\nprocurement for a Generation Project subject to Act 120, Operator shall undertake (i) through (iv)\nabove, but Administrator (or any other entity required by Applicable Law to undertake such\nprocurement) shall manage all aspects of the procurement process with the support of Operator, as\nnecessary.\n(e)\nGenCo Shared Services. As requested by GenCo and approved by\nAdministrator in its reasonable discretion, Operator, as agent for Owner, shall provide the GenCo\nShared Services listed in Annex VI (GenCo Shared Services) pursuant to the Shared Services\nAgreement. As set forth in Section 4.5(s) (ManagementCo Responsibilities – Shared Services\nAgreement), the Parties shall negotiate in good faith, and enter into, the Shared Services Agreement\nduring the Front-End Transition Period. Subject to the approval of Administrator, any GenCo\nShared Service may be terminated or suspended earlier by GenCo for convenience, including as a\nresult of GenCo contracting or engaging a third-party entity to provide such GenCo Shared\nService; provided that GenCo Shall provide written notice to Operator at least sixty (60) days prior\nto the proposed effective date of any termination or suspension of a GenCo Shared Service.\n(f)\nPowers Under GridCo-GenCo PPOA and Generation Supply Contracts.\nOwner shall provide Operator with copies of all Generation Supply Contracts and the GridCoGenCo PPOA. Pursuant to the terms and conditions of each Generation Supply Contract and the\nGridCo-GenCo PPOA, Operator shall have such power and authority as delegated to it pursuant\nto the respective agreement; provided that no agreement relating to the supply of Power and\nElectricity may be terminated, modified or amended without the consent of Administrator in its\nreasonable discretion, such consent not to be unreasonably withheld, delayed or conditioned, and\nOwner shall give PREB notice of such termination, modification or amendment ten (10) Business\nDays before it is effective.\nEmergency Action.\n(a)\nAccidents. Operator shall promptly notify Administrator in writing of any\nmaterial accident or incident related to the T&D System within twenty-four (24) hours of receiving\nknowledge of the occurrence thereof and promptly notify Administrator in writing of all material\nclaims made by or against Operator of which Operator has knowledge, or potential material claims\nthat Operator reasonably expects to make against, or to be made against it by, third-parties.\n(b)\nEmergencies. Operator shall promptly notify Administrator and PREB in\nwriting of all Emergencies related to the T&D System upon receiving knowledge thereof.\nNotwithstanding anything to the contrary in this Agreement, if at any time Operator determines in\ngood faith that an Emergency Event exists with respect to the T&D System such that immediate\naction must be taken to (i) protect the safety of the public, Owner’s employees and Operator’s\nemployees, (ii) protect the safety or integrity of the T&D System or prevent or limit environmental\nharm, or (iii) mitigate the immediate consequences of such Emergency Event, Operator shall take\nall such action that it deems in good faith to be reasonable and appropriate under the circumstances\nin accordance with the Emergency Response Plan. As promptly thereafter as is reasonable,\n75'}, {'number': 83, 'text': 'CONFIDENTIAL\nOperator shall notify Administrator and PREB in writing of Operator’s response to such\nEmergency Event. For so long as the Emergency Event continues, Operator shall provide a weekly\nwritten update to Administrator and PREB (provided that PREB may otherwise request more\nfrequent updates in accordance with Applicable Law) specifying the nature of the Emergency\nEvent, the remediation measures being taken by Operator, the expected duration of the Emergency\nEvent and an estimate of any increases in costs resulting therefrom. Operator shall notify\nAdministrator and PREB in writing as soon as the Emergency Event has ended. All costs related\nto the remediation of the Emergency Event shall be T&D Pass-Through Expenditures and Operator\nshall be entitled to draw upon any Service Account, except the Capital Account – Federally\nFunded, to pay for such costs. As soon as practicable following the end of such Emergency Event,\nall such costs incurred shall be reflected in a proposed amendment to the approved Operating\nBudget or Capital Budgets, as applicable, subject to the provisions of Section 7.3(e) (Budgets –\nAmendments to Budgets).\nInformation.\n(a)\nSystem Information and Computer Database. Operator shall, subject to the\nSystem Remediation Plan, maintain (i) an Information System to record, and to the extent\npracticable, provide retrieval for Administrator’s review and copying of System Information, and\n(ii) a computer database containing information related to T&D Customers (the “Customer\nDatabase”) that, at a minimum, shall specify each customer served by the T&D System, the service\nclassification applicable to each customer, payment records and inquiries or complaints from, and\nany special services requested by or provided to, each customer. Subject to the provisions of\nSection 13.1 (Intellectual Property) and Section 13.2 (Proprietary Information), the information\nand content contained in the System Information and the Customer Database, exclusive of\nOperator’s Confidential Information, Operator Intellectual Property, Subcontractor Intellectual\nProperty and Third-Party Intellectual Property, shall constitute Intellectual Property and\nConfidential Information of Owner.\n(b)\nOwnership of Owner Personal Information. Any Owner Personal\nInformation in existence as of the Service Commencement Date of this Agreement shall be\nconsidered Confidential Information of Owner and, as among the Parties, shall at all times remain\nthe Intellectual Property of Owner. Any Owner Personal Information created during the Term shall\nconstitute Work Product.\n(c)\n\nInformation Access.\n\n(i)\nOperator shall, subject to the System Remediation Plan, provide\nOwner with timely read-only access where available, or a reasonably equivalent form of access to\nall information necessary to (A) maintain, protect and preserve the T&D System assets or (B) carry\nout any of Owner’s responsibilities related to the T&D System under Applicable Law. For the\navoidance of doubt, the access to information provided under this Section 5.15(c)(i) (Information\n– Information Access) shall be on the same basis as set out in Section 5.15(c)(ii) (Information –\nInformation Access).\n(ii)\nTo the extent necessary for Owner to carry out its responsibilities\nunder this Agreement, Operator shall, subject to the System Remediation Plan, provide\n76'}, {'number': 84, 'text': 'CONFIDENTIAL\nAdministrator and its Representatives with (A) unrestricted read-only access where available, or a\nreasonably equivalent form of access to such information, to all System Information and all Owner\nPersonal Information, in each case contained either in the Customer Database or any other database\nor system created or managed by Operator hereunder, and (B) to the extent that Operator has\ndeveloped, compiled, collected, prepared or archived such information in the conduct of its\nservices under this Agreement, full and complete access to such information, subject to\nconfidentiality obligations applicable to Operator Confidential Information and provided that\nAdministrator and its Representatives shall comply with all of Operator’s access, security\n(including cybersecurity) and safety procedures when exercising such right of access.\nAdministrator shall be responsible for the security of all access credentials provided to and each\naccess made and use and disclosure of System Information by Administrator or its Representatives\nhereunder.\n(d)\nRestrictions. Operator may not use any System Information or Owner\nPersonal Information for any purpose unrelated to the O&M Services without the prior written\nconsent of Administrator, such approval not to be unreasonably withheld, delayed or conditioned.\nTo the extent such consent is granted, Operator shall comply with all Applicable Law, and\notherwise obtain any necessary consents, prior to any such permitted use. Notwithstanding the\nforegoing, unless required by Applicable Law or by a Governmental Body (in which case Operator\nshall provide Administrator with such advance notice as is practicable), none of Operator, an\nOperator Related Party or any Affiliate shall, or shall authorize any third-party to, (i) use the\nCustomer Database or other customer Information Systems of Owner to extract, sort or otherwise\nuse any information related to T&D Customers (including name, address, telephone number and\nenergy usage or any other information contained in the Customer Database) or (ii) use mechanisms\nfor customer access (including meter reading, customer representatives and service call centers),\navailable solely as a result of Operator’s role hereunder, to market any services unrelated to the\nT&D System to T&D Customers. To the extent information related to T&D Customers is available\nfrom other sources, neither Operator nor its Affiliates shall be precluded by this Agreement from\nusing in its business such data obtained from other sources.\nBill Payments. Subject to Section 7.5 (Service Accounts) and Section 7.7\n(Unfunded Amounts) and to the extent not prevented from doing so by Owner Fault, Operator shall\n(i) timely pay all bills related to the T&D System, that are proper, appropriate and not otherwise\ndisputed and (ii) assure that, to the extent within Operator’s control, no mechanics’ or similar Liens\nare filed against any portion of the T&D System. In the event that Operator fails to timely pay any\nsuch bill, Administrator shall have the right, but not the obligation, to instruct Owner to pay such\nbill and deduct an administrative fee in an amount of US$500 from the Incentive Fee otherwise\ndue to Operator.\nCompliance with Obligations. Each Party shall use reasonable efforts to\nprovide all representations, certifications, records and other documents necessary or appropriate\nfor it and other Parties to comply with any obligations under Applicable Law (including\nobligations (i) with respect to PREB, (ii) with respect to the FOMB under PROMESA, (iii) related\nto the federal securities laws and (iv) related to maintaining the exclusion from gross income of\ninterest on Owner’s or its Affiliates’ obligations for federal income tax purposes) or any of the\nagreements that Owner or its Affiliates may be party to from time to time that relate to the O&M\nServices.\n77'}, {'number': 85, 'text': 'CONFIDENTIAL\nEnergy Policy under Act 17. As further detailed in Annex I (Scope of\nServices), in accordance with the Budget then in effect, Operator shall coordinate and assist with\nthe services and operations contemplated under Act 17, including services and operations related\nto microgrids, distributed generation, renewable energy sources, net metering and energy\ncooperatives.\nAcquisition of Easements, Fee Interests and Concession Rights.\n(a)\nIdentification and Constitution of New Easement Areas. Operator shall\nidentify the areas that are required to be encumbered by Easements for the operation, maintenance,\nrepair, restoration, replacements, improvements, additions and alterations of the T&D System.\nWith respect to each Easement constitution, Operator shall: (i) develop all reasonably necessary\nsupporting material, data and information that may be required, including surveys for the\ncorresponding Easement areas that shall benefit the corresponding T&D System Site and the\nrequired appraisals under Regulation 6955; (ii) negotiate with fee owners and any lienholder or\noccupant of the servient tenements the terms and conditions of the instrument that shall constitute\nthe Easement as a first priority lien on the servient tenement and establish the rights, obligations,\nundertakings and indemnification of the parties; (iii) procure any required Governmental\nApprovals and attend all meetings and hearings related to their procurement, with Operator named\nas a co-permittee on any Governmental Approval if legally required by the issuing Governmental\nBody; (iv) prepare the petition of condemnation to be filed by Owner or GridCo at the\nCommonwealth Court, if a consensual agreement is not reached and deliver the funds of the award\nto be deposited at the aforesaid Court, as required by Applicable Law; (v) cause the recordation of\nthe Easements; and (vi) take all other action necessary or otherwise reasonably required to\nconstitute the Easements. Owner shall either exercise or enable Operator to exercise Owner’s\nrights under the Owner’s regulations with respect to acquisition and constitution of new easements.\n(b)\nEnforcement of Easement Rights. Owner hereby authorizes Operator to\nenforce Owner’s rights under the Easements. Operator, to the extent permitted by Applicable Law,\nmay remove any obstruction of any kind or form hindering the area encumbered by an Easement.\n(c)\nIdentification and Acquisition of Target Properties. Operator shall identify\nreal properties or rights that need to be acquired for the O&M Services. With respect to each target\nproperty, Operator shall: (i) develop all reasonably necessary supporting material, data and\ninformation that may be required, including surveys for the target property and the required\nappraisals under Regulation 6955; (ii) negotiate with the fee owner or grantee of any real property\nrights, including leasehold estates, and any lienholder of the target property the terms and\nconditions of the purchase and sale transaction or assignment of rights and the release or\ncancellation of any lien or encumbrance affecting the target property or any real property rights,\nincluding leasehold estates; (iii) procure any required Governmental Approvals and attend all\nrequired meetings and hearings related to their procurement, with Operator being named as a copermittee on any Governmental Approval if legally required by the issuing Governmental Body;\n(iv) prepare the petition of condemnation to be filed at the Commonwealth Court by Owner,\nGridCo, the Commonwealth or the Department of Transportation and Public Works, as the case\nmay be, if a consensual agreement is not reached; (v) cause the recordation of the deed vesting\ntitle on Owner or the Commonwealth, as the case may be; and (vi) take all other action necessary\n\n78'}, {'number': 86, 'text': 'CONFIDENTIAL\nor otherwise reasonably required to acquire such fee interests or real property rights, including\nleasehold estates.\n(d)\nPublic Domain Real Estate Assets and Procurement of Concession Rights.\nOperator shall procure the required concession rights permitting the use of real estate assets under\nthe public domain, including submerged lands, wetlands and areas designated as part of the\nmaritime terrestrial zone by the Puerto Rico Department of Natural and Environmental Resources\nfrom time to time that are necessary for the operation, maintenance, repair, restoration,\nreplacements, improvements, additions and alterations of the T&D System. With respect to each\nsuch real property, Operator shall: (i) develop all reasonably necessary supporting material, data\nand information that may be required, including surveys for the concession areas; (ii) negotiate\nwith the corresponding Governmental Body the terms and conditions of the concession agreement;\n(iii) procure any required Governmental Approvals and attend all required meetings and hearings\nrelated to their procurement, with Operator being named as a co-permittee on any Governmental\nApproval if legally required by the issuing Governmental Body; (iv) cause the recordation of the\nconcession over public lands and waterbodies, as the case may be; and (v) take all other action\nnecessary or otherwise reasonably required to secure the grant of a recordable concession,\nincluding evaluation of any Pre-Existing Environmental Conditions.\nOther Services.\n(a)\nImplied Services. If any services, functions or responsibilities not\nspecifically described in this Agreement are reasonably required for the proper performance and\nprovision of the O&M Services in accordance with Contract Standards, they shall be deemed to\nbe implied by and included within the O&M Services, except to the extent they are rights and\nresponsibilities reserved to Owner or Administrator as set forth in Article 6 (Rights and\nResponsibilities of Owner and Administrator) or as otherwise expressly provided in this\nAgreement.\n(b)\nAdditional Services. If requested by Administrator, Operator may perform\nsuch additional services reasonably related to the T&D System not included within O&M Services,\nbased upon terms and conditions, including price and additional fees payable to Operator, agreed\nto by Operator and Administrator.\n(c)\nExclusivity. Without the prior approval of Administrator, ServCo may not\nengage in any other business or activity other than to employ ServCo employees and to provide\nthe O&M Services pursuant to this Agreement and the GenCo Shared Services to be provided\npursuant to the Shared Services Agreement.\n\n79'}, {'number': 87, 'text': 'CONFIDENTIAL\nARTICLE 6\nRIGHTS AND RESPONSIBILITIES OF OWNER AND ADMINISTRATOR\nRights and Responsibilities of Owner.\n(a)\nGenerally. From and after the Service Commencement Date, Owner shall\nhave the following rights and responsibilities with respect to the operation, management and\nmaintenance of the T&D System:\n(i)\ngrant and assure Operator access to the T&D System for the\nperformance of Operator’s obligations hereunder;\n(ii)\npay the Service Fee and any other amounts due Operator, and fund\nthe Service Accounts, all in accordance with the terms and conditions of this Agreement;\n(iii) ensure that, to the extent PROMESA requires Owner to submit any\nbudget to the FOMB for approval, such budget provides that Owner is authorized to pay amounts\ndue to Operator under this Agreement and fund the Service Accounts in accordance with\nSection 7.5 (Service Accounts);\n(iv)\ncooperate with Operator such that the budgets and funds in support\nof O&M Services are sufficient in amount to enable Operator to meet the Contracts Standards and\nprovide a reasonable opportunity for Operator to achieve the Performance Metrics;\n(v)\n(A) respond promptly (and in any event within thirty (30) days or\nshorter period required by this Agreement) to all requests of Operator with respect to all matters\nrequiring the approval, review or consent of Owner (and in each such case, unless otherwise\nspecifically stated in this Agreement, Owner shall not unreasonably withhold, delay or condition\nany such approval, review or consent) and as to such other matters relating to the obligations of\nOperator hereunder in respect of which Operator shall reasonably request the response of Owner\nin accordance with the provisions of this Agreement, (B) provide Operator with such information,\ndata and assistance as may be reasonably necessary or appropriate for Operator to perform its\nobligations (including with respect to any PREB rate or other proceeding or requirement)\nhereunder, and (C) from time to time, as and when requested by Operator, execute and deliver, or\ncause to be executed and delivered, all such documents and instruments and take, or cause to be\ntaken, all such reasonable actions, as may be reasonably necessary for Operator to perform its\nobligations under this Agreement;\n(vi)\nexcept as otherwise contemplated by Section 5.12 (Legal Matters),\nmanage Owner’s legal matters, including Owner’s reporting and related legal compliance;\n(vii) cooperate with Operator and Administrator in obtaining and\nmaintaining all Governmental Approvals;\n(viii) audit Operator’s compliance with Federal Funding Requirements;\nprovided that Owner shall reasonably coordinate with Administrator to avoid duplicative audits;\n\n80'}, {'number': 88, 'text': 'CONFIDENTIAL\n(ix)\nensure that Operator, as an independent contractor, remains at all\ntimes during the Term a beneficiary to all Easements vested on Owner as provided in Regulation\n7282 of January 25, 2007;\n(x)\nexecute and file any condemnation proceeding reasonably requested\nby Operator to acquire any fee interest, real property right, including leasehold estates, or\nEasement; provided that (A) Operator shall submit a request to Administrator to approve such\ncondemnation proceeding, including a statement of reasons supporting, and justification of\nOwner’s right to initiate, any such proceeding, and (B) the cost and expense related to such\ncondemnation proceeding shall be included in an amendment to then-current approved Budgets in\naccordance with Section 7.3(e) (Budgets – Amendments to Budgets);\n(xi)\ntake all other actions, and cause its employees and other\nRepresentatives to take all other actions, reasonably required or reasonably requested by Operator\nto permit Operator to perform the O&M Services in compliance with the Contract Standards and\nthis Agreement, including with respect to (A) the constitution of Easements and enforcement of\nrights thereunder and (B) the acquisition of fee interests or real property rights, including leasehold\nestates;\n(xii) exercise its statutory powers pertaining to any and all rights and\nremedies granted to it under Applicable Law, including doing so promptly when requested by\nOperator;\n(xiii) comply with all Applicable Law;\n(xiv) coordinate any Audits that Owner is entitled to perform hereunder\nwith any Audits being undertaken by Administrator and any other Governmental Body that has\nthe right under Applicable Law to perform an Audit; and\n(xv) to the extent reasonably requested by Operator, and to the extent\nconsistent with Applicable Law, cooperate with Operator in its efforts to obtain and effectuate\napprovals of any Governmental Body having competent jurisdiction for the establishment of\nmeasures to prevent erosion of revenue associated with the T&D System or to enhance System\nRevenues, including attending meetings with appropriate officials of Governmental Bodies as may\nbe reasonably requested by Operator for such purposes, identifying historical and potential\ngovernmental and quasi-governmental measures relevant to such purposes, and providing other\ncooperation, as may be reasonably requested by Operator, in pursuit of such purposes.\n(b)\nAuthorization of Administrator. Owner hereby assigns and delegates to\nAdministrator the rights and responsibilities under this Agreement necessary for Administrator to\nadminister this Agreement and act as Owner’s liaison with Operator in connection with the O&M\nServices; provided that such assignment and delegation shall not release Owner from any of its\nobligations set forth herein; and provided, further, that Owner shall be responsible for all acts and\nomissions of Administrator in connection with this Agreement and the other Transaction\nDocuments, and the transactions contemplated hereby and thereby, in the same manner as if such\nacts and omissions were those of Owner.\n\n81'}, {'number': 89, 'text': 'CONFIDENTIAL\nRights and Responsibilities of Administrator.\n(a)\nGenerally. Operator shall be entitled to rely on the written directions of\nAdministrator. Administrator shall be responsible for overseeing, in the manner provided for and\nsubject to the terms and conditions of this Agreement, Operator’s performance of the O&M\nServices under this Agreement. Without limiting the generality of the foregoing, from and after\nthe Service Commencement Date, Administrator shall have the following rights and\nresponsibilities with respect to the operation, management and maintenance of the T&D System:\n(i)\nas set forth in Section 7.3 (Budgets), review and approve Budgets,\nincluding modifications thereto, to ensure compliance with a Rate Order;\n(ii)\nreview and approve the Incentive Fee payable to ManagementCo for\na given Contract Year, including based on Administrator’s evaluation of Operator’s satisfaction of\nthe Performance Metrics;\n(iii) cooperate with Operator such that the budgets and funds in support\nof O&M Services are sufficient in amount to enable Operator to meet the Contracts Standards and\nprovide a reasonable opportunity for Operator to achieve the Performance Metrics;\n(iv)\nexercise Oversight in relation to Operator’s compliance with\nBudgets, including T&D Pass-Through Expenditures and Generation Pass-Through Expenditures,\nin accordance with the procedures set forth in this Agreement; provided that, Administrator shall\n(i) reasonably coordinate with Owner to avoid duplicative Oversight and (ii) except to the extent\nprovided under this Agreement, avoid exercising Oversight with respect to items that fall within\nthe scope of PREB’s statutory oversight;\n(v)\nexercise Oversight in relation to Operator’s performance of its\nobligations hereunder, including performance of the O&M Services;\n(vi)\nexercise Oversight, as agent of Owner, in relation to Operator’s\ncompliance with Federal Funding Requirements;\n(vii) respond promptly (and in any event within thirty (30) days or shorter\nperiod required by this Agreement) to all requests of Operator with respect to matters requiring\nthe approval, review or consent of Administrator (and in each such case, unless otherwise\nspecifically stated in this Agreement, Administrator shall not unreasonably withhold, delay or\ncondition any such approval, review or consent) and as to such other matters relating to the\nobligations of Operator hereunder in respect of which Operator shall reasonably request the\nresponse of Administrator in accordance with the provisions of this Agreement;\n(viii) (A) cooperate with Operator by providing Operator such\ninformation, data and assistance as may be reasonably necessary for Operator to perform its\nobligations hereunder and (B) from time to time, as and when requested by Owner, execute and\ndeliver, or cause to be executed and delivered, all such documents and instruments and take, or\ncause to be taken, all such reasonable actions, as necessary for Operator to perform its obligations\nunder this Agreement;\n\n82'}, {'number': 90, 'text': 'CONFIDENTIAL\n(ix)\ndeclare an Event of Default and exercise remedies under this\nAgreement, including termination of this Agreement upon the occurrence of an Operator Event of\nDefault in accordance with Section 14.1 (Events of Default By Operator);\n(x)\ncoordinate any Audits that Administrator is entitled to perform\nhereunder with any Audits being undertaken by Owner and any other Governmental Body that has\nthe right under Applicable Law to perform an Audit; and\n(xi)\nto the extent reasonably requested by Operator, and to the extent\nconsistent with Applicable Law, cooperate with Operator in its efforts to obtain and effectuate\napprovals of any Governmental Body having competent jurisdiction for the establishment of\nmeasures to prevent erosion of revenue associated with the T&D System or to enhance System\nRevenues, including attending at meetings with appropriate officials of Governmental Bodies as\nmay be reasonably requested by Operator for such purposes, identifying historical and potential\ngovernmental and quasi-governmental measures relevant to such purposes, and providing other\ncooperation, as may be reasonably requested by Operator, in pursuit of such purposes.\n(b)\nDisputes. In the event of a Dispute among the Parties with respect to clauses\n(ii) through (xi) of Section 6.2(a) (Rights and Responsibilities of Administrator – Generally), such\nDispute shall be subject to resolution as a Technical Dispute in accordance with Article 15\n(Dispute Resolution) (any such Dispute, an “Administrator Dispute”).\n(c)\nApprovals and Consents. When any approval or consent by Owner to an\nOperator submission, request or report is required pursuant to the terms of this Agreement, the\napproval or consent shall be given by Administrator in writing, and such writing shall be\nconclusive evidence of such approval or consent and shall be binding on Owner.\n(d)\nConsultants. Subject to budgetary requirements and recognizing that\npriority shall be given to funding the Service Accounts and payment of the Service Fee,\nAdministrator shall have the right, at Owner’s or Administrator’s sole expense, to engage\nthird-party consultants to advise on its obligations under this Agreement; provided that\nAdministrator shall not have the right to retain a consultant that (i) carries on business as a utility\ncompany or company providing utility services, Front-End Transition Services or O&M Services\nand (ii) may be a competitor to Operator, Operator’s Affiliates or any Parent Company that may\nbe a competitor to Operator or any Parent Company.\nReporting; Audits.\n(a)\nGenerally. At the reasonable request of Administrator or its relevant\nconsultant (each, an “Authorized Inspector”), at Administrator’s sole cost and expense, at\nreasonable times during normal business hours, Operator shall: (i) make available or cause to be\nmade available to such Authorized Inspector all information related to this Agreement or the T&D\nSystem as may be specified in such request and as shall be in the possession or control of Operator\nor its Representatives; (ii) permit such Authorized Inspector, upon ten (10) Business Days’ prior\nnotice to Operator, which notice shall identify the persons such Authorized Inspector requests to\nbe present for an interview and describe with reasonable specificity the subject matter to be raised\nin the interview, to discuss the obligations of Operator under this Agreement with any of the\n\n83'}, {'number': 91, 'text': 'CONFIDENTIAL\ndirectors, chief executive officer and chief financial officer of Operator and its Representatives,\nfor the purpose of enabling such Authorized Inspector to determine whether Operator is in\ncompliance with this Agreement; and (iii) otherwise provide such cooperation as may reasonably\nbe required by such Authorized Inspector in connection with any such Audit of the information\nrequired to be maintained or delivered by Operator under this Agreement or required by Applicable\nLaw. Such Authorized Inspector shall be entitled to make copies of the information related to the\nconduct of such Audit and to take extracts therefrom at such Authorized Inspector’s sole cost and\nexpense. Absent good cause or as may be required by Applicable Law, audits shall occur no more\nthan once every Contract Year. In the course of performing its Audits hereunder, each Authorized\nInspector and its Representatives shall avoid any disruption to Operator’s performance of the\nO&M Services or Operator’s rights or responsibilities under this Agreement, having regard to the\nnature of the Audits being performed, and when accessing the T&D System each Authorized\nInspector and its Representatives shall do so at its own risk and shall comply with all of Operator’s\nsafety procedures.\n(b)\nTesting. At all reasonable times during normal business hours and subject\nto Operator’s policies and procedures, upon reasonable prior notice, any Authorized Inspector\nshall, with the prior consent of Operator, be entitled to perform or cause to be performed any test,\nstudy or investigation in connection with the T&D System or the O&M Services as such\nAuthorized Inspector may determine to be reasonably necessary under the circumstances and at\nthe sole cost and expense of such Authorized Inspector. Operator shall, and shall cause its\nRepresentatives to, furnish such Authorized Inspector or its Representatives with every reasonable\nassistance in connection with the carrying out of such tests, procedures, studies and investigations.\nIn connection with the foregoing, such Authorized Inspector shall, with the prior written consent\nof Operator, be entitled to install machines, equipment, systems, monitors, counters and other\ndevices in, on, under, over or adjacent to the T&D System to permit and facilitate any test, study,\nmonitor or Audits of or relating to the T&D System to the extent that the same does not interfere\nwith the O&M Services or damage the T&D System.\n(c)\nAdditional Audit Rights. At any time and from time to time, Owner,\nAdministrator, PREB, COR3 or the DHS OIG may conduct a partial or full Audit related to all\nFederally Funded Capital Improvements and the Parties shall maintain all related records for such\namount of time as may be necessary for any such Audit; provided that such records shall be\nmaintained by the Parties for a minimum of at least three (3) years following the transmission of\nthe final expenditure report by COR3 to FEMA pursuant to Public Law 105-124, Section 1216.\nFor the avoidance of doubt, any costs incurred by the Operator in responding to an Audit under\nthis Section 6.3(c) (Reporting; Audits – Additional Audit Rights) (including costs of Operator’s\nContractors’ Subcontractors and Affiliates) shall be T&D Pass-Through Expenditures, except to\nthe extent such costs are Disallowed Cost.\n(d)\nNo Other Audit Rights. This Agreement does not provide any\nGovernmental Body any rights to undertake any Audit other than those stated herein, and, without\nrestricting the foregoing, this Agreement does not provide any regional, municipal or local body\nwith any rights to perform any Audit in addition to those permitted by Applicable Law.\nStaffing Levels. From and after the Service Commencement Date and at all\ntimes during the Term, Owner and Administrator, including any of their Subcontracts, shall\n84'}, {'number': 92, 'text': 'CONFIDENTIAL\nmaintain staffing in connection with the O&M Services only at those levels strictly necessary for\nOwner and Administrator to timely and efficiently perform their obligations under this Agreement.\nBefore the Service Commencement Date, Owner shall maintain staffing necessary to continue to\nperform its obligations at the same or higher level than it performed such obligations as of the\nProposal Submission Date.\n\n85'}, {'number': 93, 'text': 'CONFIDENTIAL\nARTICLE 7\nCOMPENSATION; BUDGETS\nService Fee.\n(a)\nGenerally. In addition to Owner’s funding or payment of T&D PassThrough Expenditures, Generation Pass-Through Expenditures, Capital Improvements, Outage\nEvent Costs and any other amounts that become due and owing to Operator hereunder, from and\nafter the Service Commencement Date, as compensation for the performance of the O&M\nServices, Owner shall, in accordance with this Agreement, pay ManagementCo a management\nservice fee consisting of the Fixed Fee and the Incentive Fee (collectively, the “Service Fee”). The\nParties acknowledge and agree that: (i) the following costs and expenses shall be paid by\nManagementCo from the Fixed Fee (or otherwise absorbed or paid for by ManagementCo without\nreimbursement hereunder): (A) the costs and expenses listed in Annex VII (ManagementCo\nCosts), (B) ManagementCo’s corporate overhead costs and (C) any subcontract with respect to\nany service to be provided by ManagementCo between the Service Commencement Date and the\nexpiration or early termination of the Agreement; and (ii) no Federal Funding shall be used to pay\nthe Service Fee. The Service Fee shall not be subject to any abatement, deduction, counterclaim\nor set-off of any kind or nature.\n(b)\n\nFixed Fee.\n\n(i)\nThe fixed fee payable to ManagementCo for each Contract Year\nshall be as set forth in Annex VIII (Service Fee), adjusted on a Pro Rata basis for a partial Contract\nYear (the “Fixed Fee”). Owner and Administrator agree that an amount equal to the maximum\namount of the Fixed Fee available in any given Contract Year shall be included in the Operating\nBudget for such Contract Year.\n(ii)\nOwner shall pay the Fixed Fee in monthly installments equal to (i)\none-twelfth (1/12) of the Fixed Fee for a Contract Year of twelve (12) months or (ii) in the case of\nany partial Contract Year, an amount equal to one (1) divided by the number of months in such\nContract Year. In the event of a partial month, the monthly installment shall be adjusted on a Pro\nRata basis.\n(iii) On or prior to the tenth (10th) Business Day of each month of the\nTerm, Operator shall submit to Administrator an invoice for the Fixed Fee payable in respect of\nthe prior month. The invoice shall specify the monthly portion of the Fixed Fee for the relevant\nmonth, together with (A) the aggregate portion of the annual Fixed Fee paid through such month\nand (B) the accumulated payments to the date of such invoice. Owner shall pay the invoice by the\nlast Business Day of the month on which the invoice was submitted. All invoices shall comply\nwith the requirements set forth in Section 9.2(c) (Anti-Corruption and Sanctions Laws – Policies\nand Procedures) hereto.\n(c)\n\nIncentive Fee.\n\n(i)\nBased on Operator’s ability to timely achieve or exceed the\nperformance metrics set forth in Annex IX (Performance Metrics) (the “Performance Metrics”),\n\n86'}, {'number': 94, 'text': 'CONFIDENTIAL\nOperator shall be entitled to earn the incentive fee in any given Contract Year (“Incentive Fee”),\nwhich fee shall be set forth in Annex VIII (Service Fee), adjusted on a Pro Rata basis for a partial\nContract Year and calculated as set forth in Annex X (Calculation of Incentive Fee). Owner and\nAdministrator agree that an amount equal to the maximum amount of the Incentive Fee available\nin any given Contract Year shall be included in the Operating Budget for such Contract Year.\n(ii)\nNo later than sixty (60) days following the end of a Contract Year,\nOperator shall submit a report (the “Incentive Fee Report”) to Administrator (with copy to PREB)\nwith (A) supporting performance data, information and reports evidencing its achievement of one\nor more of the Performance Metrics and (B) based thereon, its good faith calculation of the\nproposed Incentive Fee, in each case for such Contract Year. The Incentive Fee Report shall\ncomply with the requirements set forth in Section 9.2(c) (Anti-Corruption and Sanctions Laws –\nPolicies and Procedures).\n(iii) Administrator shall have a period of sixty (60) days after receipt to\nreview the Incentive Fee Report. During this period, Operator shall grant to Administrator\nreasonable access during normal business hours to all relevant personnel, Representatives of\nOperator, books and records of Operator and other items reasonably requested by Administrator\nin connection with the review of the Incentive Fee Report.\n(iv)\nIf Administrator delivers to Operator a written statement describing\nany disagreements with the Incentive Fee Report during such sixty (60) day review period, then\nOperator and Administrator shall attempt to resolve in good faith any such disagreements. If\n(A) Administrator does not deliver such statement during such sixty (60) day review period (in\nwhich case it shall be deemed to have agreed with the Incentive Fee Report), (B) if Operator and\nAdministrator reach a resolution with respect to such matters or (C) if Administrator has no\ndisagreements with the Incentive Fee Report, then Owner shall pay the Incentive Fee in accordance\nwith Section 7.1(c)(v) (Service Fee – Incentive Fee).\n(v)\nOnce determined in accordance with Section 7.1(c)(iv) (Service Fee\n– Incentive Fee), Owner shall pay the Incentive Fee, or any portion thereof that is not subject to a\nDispute, for a given Contract Year within ten (10) days of such determination and in any event\nwithin six (6) months following the end of the given Contract Year or, in the event of an early\ntermination of this Agreement, six (6) months following the date of such termination.\n(vi)\nIf any Major Outage Event (including, for the avoidance of doubt, a\nMajor Outage Event that is a Force Majeure Event) prevents Operator from achieving one or more\nof the Performance Metrics, Operator shall be entitled to earn the Incentive Fee for the period that\nsuch Major Outage Event continues as long as, and to the extent that, Operator achieves the Major\nOutage Event Performance Metrics during such period of time.\n(vii) If any Force Majeure Event (other than a Force Majeure Event that\nis a Major Outage Event) prevents Operator from achieving one or more of the Performance\nMetrics, Operator shall be entitled to earn the Incentive Fee for the period that such Force Majeure\nEvent continues as long as, and to the extent that, Operator achieves the Key Performance Metrics\nduring such period of time.\n\n87'}, {'number': 95, 'text': 'CONFIDENTIAL\n(viii) If any Owner Fault or additional requirement imposed by Owner,\nAdministrator or any other Governmental Body prevents Operator from achieving any\nPerformance Metric, such Performance Metric shall be deemed to have been met for purposes of\ncalculating the Incentive Fee for the applicable period.\n(d)\nAmendments to Performance Metrics. The Parties acknowledge and agree\nthat PREB and Operator shall have the right to propose amendments to the Performance Metrics\nfrom time to time and that the Parties shall consider any proposed amendments in good faith\n(provided that such amendments do not reduce the likelihood of Operator’s earning the Incentive\nFee). In the event such an amendment is proposed, Operator shall prepare and submit to PREB\nproposed amended Performance Metrics, which amendment shall require and be subject to\napproval by PREB; provided that to the extent a new category of metrics is added or the\nmethodology for calculating a given metric is modified as part of the amendment, a Tax Opinion\nand a Reliance Letter shall be obtained, at the cost of Owner or Administrator, with respect to any\nsuch amendment.\n(e)\nService Fee Disputes. The Parties hereby agree that, in the event that a\nDispute arises between Operator and Administrator in connection with the Service Fee (including\nany adjustments thereto as permitted by this Agreement), the matter shall be subject to resolution\nas a Technical Dispute in accordance with Article 15 (Dispute Resolution) (any such Dispute, a\n“Service Fee Dispute”).\nPass-Through Expenditures.\n(a)\nT&D Pass-Through Expenditures. For purposes of this Agreement, “T&D\nPass-Through Expenditures” shall be the costs and expenses incurred by ServCo in the course of\nproviding O&M Services pursuant to this Agreement (without markup for profit), including the\ncosts and expenses set forth in Annex XI (T&D Pass-Through Expenditures); provided that T&D\nPass-Through Expenditures shall not include any (i) Disallowed Costs, (ii) Generation PassThrough Expenditures or (iii) costs payable by ManagementCo from the Fixed Fee pursuant to\nSection 7.1(a) (Service Fee – Generally). Operator shall pay T&D Pass-Through Expenditures in\naccordance with Section 7.5 (Service Accounts).\n(b)\nGeneration Pass-Through Expenditures. For purposes of this Agreement,\n“Generation Pass-Through Expenditures” shall be the costs and expenses (without markup for\nprofit) incurred by Owner in the course of providing Power and Electricity, including the costs and\nexpenses under the GridCo-GenCo PPOA and Generation Supply Contracts. Subject to and\nconditioned on the Generation Expenditures Accounts being funded in accordance with\nSection 7.5(e) (Service Accounts – Generation Expenditures Accounts), Operator shall pay\nGeneration Pass-Through Expenditures in accordance with Section 7.5 (Service Accounts).\nBudgets.\n(a)\nGenerally. For any Contract Year (other than the initial Contract Year, for\nwhich the procedures for the Initial Budgets set forth in Section 4.2(e) (ManagementCo\nResponsibilities – Initial Budgets) shall apply, or a year in which a rate adjustment approved by\nPREB enters into effect, in which case the Budgets used in connection with obtaining such rate\n\n88'}, {'number': 96, 'text': 'CONFIDENTIAL\nadjustment shall be used), Operator shall, no later than ninety (90) days prior to the commencement\nof such Contract Year, submit to Administrator the proposed Budgets for such Contract Year;\nprovided that if any proposed Budget requires a rate adjustment to be approved by PREB, Operator\nshall have the right, at its sole discretion, to submit the proposed Budgets for such Contract Year\ndirectly to PREB rather than to Administrator. As promptly as practicable in any Contract Year,\nand sufficiently in advance to allow Operator to comply with the ninety (90) day period set forth\nabove, Owner shall prepare and deliver to Operator the Generation Budget for consolidation with\nthe Operating Budget and the Capital Budgets submitted to Administrator. Administrator shall,\nacting reasonably, review such proposed Budgets to ensure compliance with the applicable Rate\nOrder and Section 7.4 (Budget Policy). Within forty-five (45) days following its receipt of such\nBudgets, Administrator shall notify Operator whether the proposed Budgets are compliant with\nthe applicable Rate Order and Section 7.4 (Budget Policy), and shall request, acting reasonably,\nany changes or modifications to the proposed Budgets to conform the proposed Budgets with the\napplicable Rate Order and Section 7.4 (Budget Policy). Administrator and Operator shall\ncollaborate in good faith to resolve any differences with respect to such proposed Budgets as\npromptly as practicable.\n(b)\nFlexibility to Overrun. Each Budget shall include up to a maximum of two\npercent (2%) in excess of the total amount for excess expenditures that may arise in any Contract\nYear (“Excess Expenditures”); provided that such Excess Expenditures shall at all times be\notherwise compliant with the applicable Rate Order. Any Excess Expenditures incurred by\nOperator during a Contract Year shall be treated as T&D Pass-Through Expenditures and as if\ninitially budgeted for such Contract Year. Each reference herein to a Budget or Default Budget\nshall be deemed to include such Excess Expenditures to the extent such Excess Expenditures are\nincurred.\n(c)\nFlexibility to Reallocate. Operator shall have complete flexibility, subject\nto compliance with the Contract Standards and prior consultation with, but not subject to approval\nby, Administrator or PREB, to (i) reallocate, accelerate or postpone expenditures within the\napproved Operating Budget, (ii) reallocate, accelerate or postpone expenditures within the\napproved Capital Budget – Federally Funded, subject to the Federal Funding Requirements, and\n(iii) reallocate, accelerate or postpone expenditures within the approved Capital Budget – NonFederally Funded, in each case, (x) in order to address changed operational or commercial\ncircumstances or new legal or regulatory requirements and (y) in such a manner that the\nreallocations do not exceed five percent (5%) of the Budget in which such reallocations are made\nor the expenditures are not postponed for a period longer than one (1) year. Any such reallocated\namounts shall be treated as if initially budgeted in the Budget in which such reallocations are\nmade in all respects, including with respect to the associated Performance Metrics set forth in\nAnnex IX (Performance Metrics).\n(d)\nDefault Budget. In the event any Budget for a given Contract Year has not\nbeen finalized in accordance with Section 7.3(a) (Budgets – Generally) by July 1 of such Contract\nYear, the applicable approved Budget for the immediately preceding Contract Year (as the same\nmay have been amended) as adjusted for inflation based on the CPI Factor (such Budget, a “Default\nBudget”) shall remain in effect until such time as the applicable Budget for such Contract Year is\nso finalized.\n\n89'}, {'number': 97, 'text': 'CONFIDENTIAL\n(e)\nAmendments to Budgets. Operator may, from time to time, propose to\namend the approved Operating Budget and Capital Budget for a given Contract Year, including to\naccount for any for Federally Funded Capital Improvements that have been Obligated since the\ndate the Capital Budget – Federally Funded then in effect was approved; provided that any such\namendment shall be compliant with the applicable Rate Order. If, during a Contract Year, Operator\nbecomes aware that T&D Pass-Through Expenditures or Generation Pass-Through Expenditures\nfor such Contract Year are expected to exceed a Budget for such Contract Year (taking into account\nthe allowances for Excess Expenditures), then (i) with respect to the Operating Budget and Capital\nBudget, Operator shall promptly notify PREB and Administrator and prepare and submit to PREB\na proposed amended Operating Budget or Capital Budget for such Contract Year, as the case may\nbe, which amendment shall require and be subject to approval by PREB, and (ii) with respect to\nthe Generation Budget, (x) Operator shall notify PREB, Administrator and Owner and (y) Owner\nshall, as promptly as practical, prepare and submit to PREB a proposed amended Generation\nBudget, which amendment shall require and be subject to approval by PREB.\n(f)\nBudget Disputes. The Parties hereby agree that, in the event that a dispute\narises between Operator, Owner and Administrator in connection with a Budget (including\nproposed amendments thereto or the need for amendments thereto), the matter shall be subject to\nresolution as a Technical Dispute in accordance with Article 15 (Dispute Resolution) (any such\nDispute, a “Budget Dispute”). The Parties acknowledge and agree that, in connection with a\nproposed Budget pursuant to Section 7.3(a) (Budgets - Generally) or an amended Budget pursuant\nto Section 7.3(e) (Budgets – Amendments to Budgets), Owner, Administrator and Operator shall\nhave the right to present to PREB any Expert Technical Determination pursuant to Section 15.4\n(Expert Technical Determination Procedure for Technical Disputes) with respect to a Budget\nDispute; provided that this shall in no way (i) limit PREB’s right to approve, deny or propose\nmodifications to such proposed or amended Budgets or (ii) otherwise affect PREB’s statutory\nrights and responsibilities under Applicable Law.\nBudget Policy. The Budgets and the related ServCo staffing levels for each\nContract Year shall be designed to be adequate in both scope and amounts to reasonably assure\nthat Operator is able to carry out the related O&M Services in accordance with the Contract\nStandards and have a reasonable opportunity to earn the Incentive Fee for achieving the\nPerformance Metrics. The Parties further acknowledge and agree that, from time to time, it may\nbe necessary or appropriate to amend or otherwise adjust the Performance Metrics or the Budgets\nas a result of (i) Force Majeure Events, (ii) Owner Fault, (iii) Outage Events or (iv) additional\nrequirements imposed by Owner, Administrator or any other Governmental Body after approval\nof the Budgets, in the case of each of clauses (i) to (iv), which (A) have resulted (or are reasonably\nlikely to result) in schedule delays or increased work scope or costs and (B) are not be attributable\nto Operator’s gross negligence or willful misconduct. Operator shall provide notice to\nAdministrator and PREB promptly following the occurrence of an event contemplated above and\nthe Parties shall, in good faith and acting reasonably, consider necessary adjustments to the\nPerformance Metrics or the Budgets that are based on rates that are reasonable and customary.\n\n90'}, {'number': 98, 'text': 'CONFIDENTIAL\nService Accounts.\n(a)\n\nOperating Account.\n\n(i)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall establish one or more operating accounts from which Operator\nshall draw funds from time to time to pay for T&D Pass-Through Expenditures actually incurred\nby Operator in performing the O&M Services and from which Owner shall pay the Service Fee\n(collectively, the “Operating Account”). Owner shall pay Operator the Service Fee in accordance\nwith the terms of Section 7.1 (Service Fee) from funds available in the Operating Account.\n(ii)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall fund the Operating Account with an amount equal to the sum\nof (A) anticipated T&D Pass-Through Expenditures for the following four and a half (4.5) months,\nsubject to Section 7.8 (Owner Credit Rating), based on the then-currently approved Operating\nBudget or the relevant Default Budget then in effect plus (B) the anticipated Service Fee for the\nfollowing four and a half (4.5) months, subject to Section 7.8 (Owner Credit Rating). Thereafter,\nno later than the tenth (10th) Business Day of each month (beginning in the month following that\nin which the Service Commencement Date occurs), Owner shall replenish the Operating Account\nso as to maintain a funding level equal to the sum of anticipated T&D Pass-Through Expenditures\nfor the subsequent four and a half (4.5) months, subject to Section 7.8 (Owner Credit Rating),\nunder the Operating Budget or the relevant Default Budget then in effect and the anticipated\nService Fee for the subsequent four and a half (4.5) months, subject to Section 7.8 (Owner Credit\nRating).\n(iii) In each Contract Year, Operator shall be entitled to withdraw funds\nfrom the Operating Account for T&D Pass-Through Expenditures actually incurred under the\napproved Operating Budget or the relevant Default Budget then in effect; provided, however, that\nOperator shall notify Administrator in writing at least ten (10) Business Days in advance of any\nwithdrawal related to any Excess Expenditure withdrawal, providing the details thereof and\nrecommendations to mitigate any additional excess costs. Operator shall not withdraw funds from\nthe Operating Account for T&D Pass-Through Expenditures that are not included in the thencurrently approved Operating Budget or the relevant Default Budget then in effect; provided that\nsuch approval shall not be required in case of: (A) a Force Majeure Event, Owner Fault, Outage\nEvent, Declared Emergency or Major Disaster; and (B) any circumstance, event or condition\nunforeseeable by Operator or which, if foreseeable, could not be avoided in whole or in part by\nthe exercise of due diligence by Operator, requiring funding in excess of the amounts available for\nsuch matter in the then-currently approved Operating Budget or the relevant Default Budget then\nin effect and for which a prudent Person in the business of operating and managing the T&D\nSystem would expend funds prior to the time that the applicable Budget could reasonably be\nexpected to be amended (including, by way of example, removal of trees having fallen on or\notherwise damaged T&D System transmission and distribution lines); provided further, however,\nthat Operator shall (x) notify Administrator in writing promptly upon Operator becoming aware\nof the occurrence of such circumstance, event or condition and (y) provide the details of such\ncircumstance, event or condition and the amount of any withdrawal related thereto that Operator\nintends to make from the Operating Account.\n\n91'}, {'number': 99, 'text': 'CONFIDENTIAL\n(iv)\nSimultaneous with each withdrawal of funds from the Operating\nAccount, Operator shall provide Administrator with written notice of such withdrawal, including\na summary of T&D Pass-Through Expenditures being paid. Not later than ten (10) Business Days\nfollowing each month end, Operator shall furnish Administrator with a full accounting setting forth\nin reasonable detail the T&D Pass-Through Expenditures actually incurred and paid during the\nprior month.\n(b)\n\nCapital Account – Federally Funded.\n\n(i)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall establish one or more capital accounts from which Owner shall\ndraw funds from time to time, in accordance with the Federal Funding Procurement Manual, to\npay Operator, as agent of Owner, for the cost of Federally Funded Capital Improvements (“Capital\nCosts – Federally Funded”) related to the O&M Services (collectively, the “Capital Account –\nFederally Funded”).\n(ii)\nOwner shall fund the Capital Account – Federally Funded with any\nor both of (A) Federal Funding received for the T&D System and (B) proceeds from any other\nfinancings or funds of Owner the use of which are designated for Capital Costs – Federally Funded.\n(iii) Prior to Operator commencing any Federally Funded Capital\nImprovement on behalf of Owner: (A) Owner shall ensure that either (x) the Capital Account –\nFederally Funded contains funds equal to the sum of anticipated Capital Costs – Federally Funded\nfor Federally Funded Capital Improvements that have been Obligated and scheduled as of such\ndate in accordance with the Federal Funding Requirements for the following four and a half (4.5)\nmonths, subject to Section 7.8 (Owner Credit Rating) based on the then-currently applicable and\napproved Capital Budget – Federally Funded or the relevant Default Budget then in effect, or (y)\na credit facility reasonably acceptable to Operator is available to be drawn for Federally Funded\nCapital Improvements; and (B) Operator shall ensure that such Federally Funded Capital\nImprovement is within the approved scope consistent with the Federal Funding Requirements.\nThereafter, no later than the tenth (10th) Business Day of each month, Owner shall replenish the\nCapital Account – Federally Funded so as to maintain a funding level equal to, or ensure the\navailability of a credit facility in an amount equal to or greater than, the sum of anticipated Capital\nCosts – Federally Funded for Federally Funded Capital Improvements that have been Obligated\nand scheduled as of such date in accordance with the Federal Funding Requirements for the\nsubsequent four and a half (4.5) months, subject to Section 7.8 (Owner Credit Rating), under the\nCapital Budget – Federally Funded or the relevant Default Budget then in effect.\n(iv)\nIn each Contract Year, Owner shall be entitled to withdraw funds\nfrom the Capital Account – Federally Funded to reimburse costs for Capital Costs – Federally\nFunded actually incurred under the approved Capital Budget – Federally Funded or the relevant\nDefault Budget then in effect. Subject to Section 5.14(b) (Emergency Action – Emergencies),\nwithout the prior written approval of Administrator, which approval shall not be unreasonably\nwithheld, delayed or conditioned, Owner shall not withdraw funds from the Capital Account –\nFederally Funded for Capital Costs – Federally Funded that are not included in the then-currently\napproved Capital Budget – Federally Funded or the relevant Default Budget then in effect.\n\n92'}, {'number': 100, 'text': 'CONFIDENTIAL\n(v)\nNot later than ten (10) Business Days following each month end\nduring which Operator received funds withdrawn from the Capital Account – Federally Funded,\nOperator shall furnish Administrator with a full accounting setting forth in reasonable detail the\nCapital Costs – Federally Funded actually incurred and paid during the prior month.\n(c)\n\nCapital Account – Non-Federally Funded.\n\n(i)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall establish one or more capital accounts from which Operator\nshall draw funds, from time to time, to pay for the cost of Non-Federally Funded Capital\nImprovements (“Capital Costs – Non-Federally Funded”) related to the O&M Services\n(collectively, the “Capital Account – Non-Federally Funded”).\n(ii)\nOwner shall fund the Capital Account – Non-Federally Funded with\nany or both of (A) proceeds from draws on financing provided by Operator or its Affiliates, on\nterms to be agreed on by Operator and Owner and (B) proceeds from any other financings or any\nfunds of Owner the use of which are designated for Capital Costs – Non-Federally Funded.\n(iii) Prior to Operator commencing any Non-Federally Funded Capital\nImprovement, Owner shall ensure that the Capital Account – Non-Federally Funded contains funds\nequal to the sum of anticipated Capital Costs – Non-Federally Funded for the following four and\na half (4.5) months, subject to Section 7.8 (Owner Credit Rating), based on the then-currently\napproved Capital Budget – Non-Federally Funded or the relevant Default Budget then in effect.\nThereafter, no later than the tenth (10th) Business Day of each month, Owner shall replenish the\nCapital Account – Non-Federally Funded so as to maintain a funding level equal to the sum of\nanticipated Capital Costs – Non-Federally Funded for the subsequent four and a half (4.5) months,\nsubject to Section 7.8 (Owner Credit Rating), under the Capital Budget – Non-Federally Funded\nor the relevant Default Budget then in effect.\n(iv)\nIn each Contract Year, Operator shall be entitled to withdraw from\nthe Capital Account – Non-Federally Funded funds for Capital Costs – Non-Federally Funded\nactually incurred under the approved Capital Budget – Non-Federally Funded or the relevant\nDefault Budget then in effect; provided, however, that Operator shall notify Administrator in\nwriting at least ten (10) Business Days in advance of any Excess Expenditure withdrawal, together\nwith the details thereof and recommendations for mitigating any additional excess costs. Subject\nto Section 5.14(b) (Emergency Action – Emergencies), without the prior written approval of\nAdministrator, which approval shall not be unreasonably withheld, delayed or conditioned,\nOperator shall not withdraw from the Capital Account – Non-Federally Funded funds for Capital\nCosts – Non-Federally Funded that are not included in the then-currently approved Capital Budget\n– Non-Federally Funded or the relevant Default Budget then in effect.\n(v)\nSimultaneous with each withdrawal of funds from the Capital\nAccount – Non-Federally Funded, Operator shall provide Administrator with written notice of\nsuch withdrawal, including a summary of Capital Costs – Non-Federally Funded being paid. Not\nlater than ten (10) Business Days following each month end during which funds were withdrawn\nfrom the Capital Account – Non-Federally Funded, Operator shall furnish Administrator with a\n\n93'}, {'number': 101, 'text': 'CONFIDENTIAL\nfull accounting setting forth in reasonable detail the Capital Costs – Non-Federally Funded actually\nincurred and paid during the prior month.\n(d)\n\nOutage Event Reserve Account.\n\n(i)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall establish one or more Outage Event Reserve Accounts from\nwhich Operator shall draw funds from time to time to pay for costs in connection with an Outage\nEvent (“Outage Event Costs”) incurred by Operator (collectively, the “Outage Event Reserve\nAccount”).\n(ii)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall fund the Outage Event Reserve Account with an amount equal\nto US$30,000,000. Promptly following a withdrawal, Owner shall replenish the Outage Event\nReserve Account so as to maintain an amount equal to US$30,000,000.\n(iii) Subject to the terms of this Section 7.5(d) (Service Accounts –\nOutage Event Reserve Account), Operator shall be entitled to withdraw funds from the Outage\nEvent Reserve Account from time to time as necessary to fund payment for Outage Event Costs.\nSimultaneous with each such withdrawal, Operator shall provide Administrator with written notice\nof such withdrawal, including a summary of Outage Event Costs being paid. Not later than ten\n(10) Business Days following each month end during which funds were withdrawn from the\nOutage Event Reserve Account, Operator shall furnish Administrator with a full accounting setting\nforth in reasonable detail the Outage Event Costs actually incurred and paid during the prior month.\n(e)\n\nGeneration Expenditures Accounts.\n\n(i)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall establish one or more generation expenditures accounts from\nwhich Operator shall draw funds from time to time to pay for actual Generation Pass-Through\nExpenditures, including:\n(A)\na Purchased Power Account from which Operator shall draw\nfunds from time to time to pay for operation and management expenses incurred in connection\nwith the GridCo-GenCo PPOA, any expenses incurred in connection with the Shared Services\nAgreement and any expenses incurred in connection with the Generation Supply Contracts, as\napplicable (the “Purchased Power Account”); and\n(B)\na Fuel Account from which Operator shall from time to time\npay fuel supply expenses incurred in connection with the GridCo-GenCo PPOA and expenses\nincurred in connection with any fuel supply arrangement between GridCo and GenCo, as\napplicable (the “Fuel Account,” and together with the Purchased Power Account and any other\ngeneration expenditure accounts, the “Generation Expenditures Accounts”).\n(ii)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall fund the Purchase Power Account with an amount equal to\nanticipated, applicable Generation Pass-Through Expenditures for the following two (2) months,\n\n94'}, {'number': 102, 'text': 'CONFIDENTIAL\nsubject to Section 7.8 (Owner Credit Rating), based on the then-currently approved Generation\nBudget or the relevant Default Budget then in effect. Thereafter, no later than the tenth (10th)\nBusiness Day of each month (beginning in the month following that in which the Service\nCommencement Date occurs), Owner shall replenish the Purchased Power Account so as to\nmaintain a funding level equal to the sum of anticipated, applicable Generation Pass-Through\nExpenditures for the subsequent two (2) months, subject to Section 7.8 (Owner Credit Rating),\nunder the Generation Budget or the relevant Default Budget then in effect. Owner shall fund the\nFuel Account with an amount to be determined in accordance with the minimum working capital\nlevel set forth under the GridCo-GenCo PPOA and any fuel supply arrangement between GridCo\nand GenCo, as applicable.\n(iii) In each Contract Year, Operator shall be entitled to withdraw funds\nfrom the Generation Expenditures Accounts for Generation Pass-Through Expenditures actually\nincurred under the approved Generation Budget or the relevant Default Budget then in effect.\nOperator shall not withdraw funds from the Generation Expenditures Accounts for Generation\nPass-Through Expenditures that are not included in the then-currently approved Generation\nBudget or the relevant Default Budget then in effect; provided that such approval shall not be\nrequired in case of any circumstance, event or condition unforeseeable by Operator or which, if\nforeseeable, could not be avoided in whole or in part by the exercise of due diligence by Operator,\nrequiring funding in excess of the amounts available for such matter in the then-currently approved\nGeneration Budget or the relevant Default Budget then in effect and for which a prudent Person in\nthe business of operating and managing the T&D System would expend funds prior to the time\nthat the applicable Budget could reasonably be expected to be amended; provided further,\nhowever, that Operator shall (x) notify Administrator in writing promptly upon Operator becoming\naware of the occurrence of such circumstance, event or condition and (y) provide the details of\nsuch circumstance, event or condition and the amount of any withdrawal related thereto that\nOperator intends to make from the Generation Expenditures Account.\n(iv)\nSimultaneous with each withdrawal of funds from the Generation\nExpenditures Accounts, Operator shall provide Administrator with written notice of such\nwithdrawal, including a summary of Generation Pass-Through Expenditures being paid. Not later\nthan ten (10) Business Days following each month end, Operator shall furnish Administrator with\na full accounting setting forth in reasonable detail the Generation Pass-Through Expenditures\nactually incurred and paid during the prior month.\n(f)\n\nContingency Reserve Account.\n\n(i)\nNo later than ten (10) Business Days prior to the Service\nCommencement Date, Owner shall establish an account (the “Contingency Reserve Account”)\nfrom which Operator shall be entitled to draw funds from time to time in the event that at any time\nduring the Term there are insufficient funds in the Operating Account, Capital Account – Federally\nFunded, Capital Account – Non Federally Funded, Outage Event Reserve Account or Generation\nExpenditures Accounts to pay for T&D Pass-Through Expenditures, Capital Costs, Outage Event\nCosts or Generation Pass-Through Expenditures (any such event, a “Funding Shortage”)\n(ii)\nNo later than the tenth (10th) Business Day of each month (beginning\nin the month in which the Service Commencement Date occurs) Owner shall fund the Contingency\n95'}, {'number': 103, 'text': 'CONFIDENTIAL\nReserve Account in an amount equal to 1/24 of the Contingency Reserve Amount, until such time\nas the Contingency Reserve Account is funded to the level of the Contingency Reserve Amount;\nprovided that if, in any given month, Owner does not have sufficient funds to fund the Contingency\nReserve Account in the required amount, the failure to so fund shall not constitute a default\nhereunder if Owner promptly funds the Contingency Reserve Account to the level that would have\nbeen maintained in the Contingency Reserve Account had no such insufficiencies occurred as soon\nas Owner has sufficient funds to do so.\n(iii) From time to time, Operator shall be entitled to withdraw such\namounts of funds from the Contingency Reserve Account as is necessary to address a Funding\nShortage; provided, however, that Operator shall (A) notify Administrator in writing immediately\nupon Operator becoming aware of a Funding Shortage and (B) provide the details of such Funding\nShortage and the amount of any withdrawal that Operator intends to make from the Contingency\nReserve Account.\n(iv)\nFollowing a withdrawal from the Contingency Reserve Account,\nOwner shall replenish the Contingency Reserve Account by depositing no later than the tenth (10th)\nBusiness Day of each month (beginning in the month following that in which the withdrawal\noccurred) an amount equal to 1/24 of the Contingency Reserve Amount until such time as the\nContingency Reserve Account is funded to the level of the Contingency Reserve Amount;\nprovided that if, in any given month, Owner does not have sufficient funds to fund the Contingency\nReserve Account in the required amount, the failure to so fund shall not constitute a default\nhereunder so long as the Contingency Reserve Account is topped up to the level at which it should\nbe in at any given point as soon as Owner has sufficient funds to do so.\n(g)\nService Account Disputes. The Parties hereby agree that, in the event that a\ndispute arises in connection with a Service Account, the Front-End Transition Account or the\nBack-End Transition Account, the matter shall be subject to resolution as a Technical Dispute in\naccordance with Article 15 (Dispute Resolution) (any such Dispute, a “Service Account Dispute”).\n(h)\nWithdrawals by Owner. Owner shall not withdraw funds held in (i) any\nService Account (other than from the Operating Account for payment of the Service Fee due to\nOperator), (ii) the Front-End Transition Account (other than for payment of the Front-End\nTransition Service Fee due to Operator) or (iii) the Back-End Transition Account (other than for\npayment of the Back-End Transition Service Fee due to Operator), in each case without\nAdministrator’s and Operator’s prior written approval.\nDisallowed Costs.\n(a)\nGenerally. Subject to the limitations on liability in Section 18.3 (Limitation\non Liability), none of the following shall be treated as T&D Pass-Through Expenditures for\npurposes of payment from Owner to Operator, and each shall be the sole responsibility of Operator\n(collectively, “Disallowed Costs”):\n(i)\nany and all T&D Pass-Through Expenditures, Capital Costs, Outage\nEvent Costs or Excess Expenditures incurred as a result of Operator’s negligence (including gross\nnegligence) or willful misconduct, except in connection with Section 5.10 (Environmental, Health\n\n96'}, {'number': 104, 'text': 'CONFIDENTIAL\nand Safety Matters) where the applicable standard shall be gross negligence or willful misconduct\nto the extent provided therein;\n(ii)\nany and all fines, penalties or other similar payments or charges\nimposed by PREB on Operator, except to the extent Operator is performing its obligations under\nthis Agreement in accordance with this Agreement; and\n(iii) other than as a result of Owner Fault, any and all Losses resulting\nfrom a denial by FEMA, HUD or a similar Governmental Body (such as COR3 or PRDH) of\nreimbursement of all or a portion of Capital Costs – Federally Funded on the grounds that actions\ntaken by Operator were in violation of any Federal Funding Requirements, which denial becomes\nfinal, except that any Capital Costs – Federally Funded that were incurred in accordance with the\nFederal Funding Procurement Manual or approved by FEMA shall not be treated as a Disallowed\nCost.\n(b)\nDisallowed Costs Disputes. The Parties hereby agree that, in the event that\na dispute arises in connection with Disallowed Costs, the matter shall be subject to resolution as a\nTechnical Dispute in accordance with Article 15 (Dispute Resolution) (any such Dispute, a\n“Disallowed Costs Dispute”). In such event, Operator may continue to withdraw such T&D PassThrough Expenditures from the applicable Service Account; provided Operator shall be\nresponsible to reimburse Owner promptly (and in any event within five (5) Business Days) any\nT&D Pass-Through Expenditures that are determined to be Disallowed Costs pursuant to\nresolution as a Technical Dispute in accordance with Article 15 (Dispute Resolution).\nUnfunded Amounts. Notwithstanding anything contained in this\nAgreement to the contrary, the Parties acknowledge and agree that Operator shall have no\nobligation or responsibility to incur or pay any costs or make expenditures in providing the O&M\nServices hereunder (other than Disallowed Costs) to the extent any of the Service Accounts do not\ncontain sufficient funds to pay such costs and expenditures. Without limiting Operator’s\ntermination rights hereunder, and except to the extent Operator exercises its rights to cease\nproviding the O&M Services pursuant to Section 14.4 (Termination for Owner Event of Default),\nto the extent sufficient funds are not available for withdrawal by Operator from the Service\nAccounts, the Front-End Transition Account or the Back-End Transition Account, as applicable,\nOperator shall take reasonable measures to maintain the continuity of the O&M Services in\naccordance with the Contract Standards to the extent possible in the absence of its receipt of such\nsufficient funding.\nOwner Credit Rating.\n(a)\nInvestment Grade Rating. Notwithstanding anything contained in this\nAgreement to the contrary, the Parties acknowledge and agree that to the extent (i) any direct\nobligations of any Owner or any of its Affiliates or successors secured by System Revenues are\nassigned an Investment Grade Rating or (ii) any direct obligations of the Securitization SPV\nsecured by System Revenues are assigned a rating of AA or the equivalent, in each case by two or\nmore of the Rating Agencies, then (A) the level of pre-funding required pursuant to\nSection 4.6(c)(i) (Front-End Transition Period Compensation – Funding), Section 7.5(a)(ii)\n(Service Account – Operating Account), Section 7.5(b)(iii) (Service Account – Capital Account –\n97'}, {'number': 105, 'text': 'CONFIDENTIAL\nFederally Funded), Section 7.5(c)(iii) (Service Account – Capital Account – Non-Federally\nFunded), Section 7.5(e)(ii) (Service Account – Generation Expenditures Accounts) and\nSection 16.4(c)(ii) (Back-End Transition Period Compensation – Funding) shall be reduced from\nfour and a half (4.5) months to three (3) months and (B) there shall be no further obligation to\ndeposit funds into the Contingency Reserve Account. Any funds that are released from any Service\nAccount as a result of the operation of this Section 7.8(a) (Owner Credit Rating – Investment\nGrade Rating) shall, at Owner’s sole discretion, be used for the repayment of existing debt of\nOwner, refunds to T&D Customers or other similar purposes.\n(b)\nReinstatement of Pre-Funding. If at any time, (i) any direct obligations of\nany Owner or any of its Affiliates or successors secured by System Revenues are downgraded\nfrom an Investment Grade Rating by any Rating Agency that had provided an Investment Grade\nRating or (ii) any direct obligations of the Securitization SPV secured by System Revenues are\ndowngraded from a rating of AA or the equivalent by any Rating Agency that had provided such\nrating (in each case, a “Rating Downgrade”), then (A) the level of pre-funding required pursuant\nto Section 4.6(c)(i) (Front-End Transition Period Compensation – Funding), Section 7.5(a)(ii)\n(Service Account – Operating Account), Section 7.5(b)(iii) (Service Account – Capital Account –\nFederally Funded), Section 7.5(c)(iii) (Service Account – Capital Account – Non-Federally\nFunded), Section 7.5(e)(ii) (Service Account – Generation Expenditures Accounts) and\nSection 16.4(c)(ii) (Back-End Transition Period Compensation – Funding) shall be increased from\nthree (3) months to four and a half (4.5) months and (B) the obligation to deposit funds into the\nContingency Reserve Account pursuant to Section 7.5(f) (Service Accounts – Contingency Reserve\nAccount) shall be reinstated; provided that if Owner does not have sufficient funds to fund FrontEnd Transition Account, the Service Accounts or the Back-End Transition Account in the required\namount, the failure to so fund shall not constitute a default hereunder so long as the Front-End\nTransition Account, the Service Accounts and the Back-End Transition Account are topped up to\nthe level at which it should be at any given point as soon as Owner has sufficient funds to do so\nand in any event within six (6) months of the date of the Rating Downgrade.\nOwner Payment of Administrator Costs. Owner shall be solely\nresponsible for all costs and expenses of Administrator in connection with the performance of\nAdministrator’s obligations under this Agreement, and shall pay or reimburse Administrator\npromptly for any out-of-pocket or third-party costs and expenses.\n\n98'}, {'number': 106, 'text': 'CONFIDENTIAL\nARTICLE 8\nCREDIT SUPPORT\nGuarantee. Operator shall cause the Guarantee to be provided on or prior\nto the Effective Date and maintained thereafter throughout the Term.\nGuarantor Reports. While any Guarantee is outstanding, Operator shall\ndeliver to Administrator (with copy to PREB): (i) within sixty (60) days after the end of the second\nquarter of a Guarantor’s fiscal year, a copy of the unaudited balance sheets of such Guarantor at\nthe end of each such period and the related unaudited statements of income, changes in equity and\ncash flows for each such period, in a manner and containing information consistent with such\nGuarantor’s current practices; and (ii) within one hundred twenty (120) days after the end of such\nGuarantor’s fiscal year, a copy of the audited balance sheets of such Guarantor at the end of each\nsuch fiscal year, and the related audited statements of income, changes in equity and cash flows\nfor such fiscal year, including, in each case, the notes thereto, in each case prepared in accordance\nwith generally accepted accounting principles consistently applied in the United States (or the\nequivalent jurisdiction of such Guarantor), together with a certificate from such Guarantor’s chief\nfinancial officer that such financial statements fairly present, in all material respects, the financial\ncondition and the results of operations, changes in equity and cash flows of such Guarantor as at\nthe respective dates of and for the periods referred to in such financial statements, all in accordance\nwith generally accepted accounting principles in the United States (or the equivalent jurisdiction\nof such Guarantor) consistently applied. Such financial statements shall reflect the consistent\napplication of such accounting principles throughout the periods involved, except as disclosed in\nthe notes to such financial statements. In addition to the foregoing, Operator shall provide an\nopinion thereon of an independent public accountant of national stature in the United States (or\nthe equivalent jurisdiction of such Guarantor) engaged by such Guarantor. If applicable, Operator\nshall also furnish Administrator copies of the quarterly and annual reports of Guarantor(s) filed\nwith the U.S. Securities and Exchange Commission or with any other comparable international\nsecurities regulatory agency.\n\n99'}, {'number': 107, 'text': 'CONFIDENTIAL\nARTICLE 9\nCOMPLIANCE WITH APPLICABLE LAW\nCompliance Obligations. Operator shall perform, and shall cause all\nContractors and Subcontractors to perform, the O&M Services in accordance with the Contract\nStandards and Applicable Law.\nAnti-Corruption and Sanctions Laws.\n(a)\nAnti-Corruption. Neither Operator, its subsidiaries, nor, when acting on\nbehalf of Operator or its subsidiaries, any director or officer or employee of Operator or its\nsubsidiaries, nor, in connection with this Agreement or the O&M Services, any Affiliates of\nOperator shall violate, conspire to violate, aid and abet the violation of any anti-bribery,\nanti-corruption or anti-money laundering law or regulation, including Act 2 and any other laws or\nregulation related to political activity, conflicts of interest, embezzlement, the misuse of public\nfunds, or property or bidding on or otherwise seeking government contracts (collectively, the\n“Anti-Corruption Laws”). No funds transferred by Owner to Operator shall be transferred by\nOperator, directly or indirectly, in violation of any Anti-Corruption Laws. Operator acknowledges\nand agrees that it shall be subject to Title III of Act 2, known as the Code of Ethics for\nSubcontractors, Suppliers and Applicants for Economic Incentives of the Government of Puerto\nRico.\n(b)\nSanctions. Neither Operator, its subsidiaries or Parent Company, nor any\ndirector or officer of Operator, its subsidiaries or Parent Company are Sanctioned Persons or are\nlocated, organized or resident in a Sanctioned Country. Neither Operator nor its subsidiaries, nor\nany director, or officer or employee of Operator, its subsidiaries (when acting on behalf of Operator\nor its subsidiaries), shall directly or, knowingly, indirectly, engage in any transactions or business\nactivity of any kind with a Sanctioned Person or a Person located, organized or resident in a\nSanctioned Country. No funds transferred by Owner to Operator or its subsidiaries shall be\ntransferred by Operator or its subsidiaries, directly or indirectly, to a Sanctioned Person, a Person\nlocated, organized or resident in a Sanctioned Country, or in violation of Sanctions.\n(c)\nPolicies and Procedures. Operator and its subsidiaries shall maintain and\nimplement policies, procedures and controls reasonably designed to ensure compliance by\nOperator and its subsidiaries with the Anti-Corruption Laws and Sanctions. Operator shall include\nin all invoices to Administrator a written certification substantially in the form of Exhibit C (Form\nof Anti-Corruption Certification), and acknowledges that any invoice not including such\ncertification shall not be accepted by Administrator. Operator shall require any Contractors and\nSubcontractors engaged by Operator to execute at the commencement of the Contract or\nSubcontract (i) a Sworn Statement and (ii) a certification substantially in the form of Exhibit C\n(Form of Anti-Corruption Certification).\n(d)\nNotice. Operator shall promptly notify Administrator in writing in\naccordance with Section 20.2 (Notices) if, to Operator’s knowledge, Operator, its subsidiaries, any\ndirector, officer or employee of Operator or its subsidiaries, or, in connection with this Agreement\nor the O&M Services, any Affiliates of Operator becomes subject to any investigation by law\nenforcement or regulatory authorities in connection with the Anti-Corruption Laws or Sanctions.\n100'}, {'number': 108, 'text': 'CONFIDENTIAL\nCommonwealth Requirements.\n(a)\nPractice of Engineering, Architecture and Other Professions in the\nCommonwealth. To the extent that performance of the O&M Services involves performance of\narchitectural, engineering, land surveying and landscape architecture services governed by Act No.\n173 of the Legislative Assembly of Puerto Rico, enacted on August 12, 1988 (“Act 173”), then\n(i) Operator shall comply (and shall require Contractors and Subcontractors or agents, if any, to\ncomply) with Act 173 and (ii) Operator shall require that its Subcontractors and agents comply\nwith Act 173.\n(b)\nContractor and Supplier Contracts. To the extent permitted by Applicable\nLaw, Operator shall include the provisions of this Article 9 (Compliance with Applicable Law) and\nExhibit B (Form of Commonwealth Certifications) in every Contract, Subcontract and supply\ncontract in order for such provisions to be binding on each Contractor, Subcontractor or supplier.\n(c)\nLocal Goods and Services. As required by Article 10 of Act No. 14 of the\nLegislative Assembly of Puerto Rico, enacted on January 8, 2004, Operator shall use commercially\nreasonable efforts to use, to the extent available and applicable to the services provided hereunder,\nand to the extent permitted by Applicable Law and the Federal Funding Requirements, goods\nextracted, produced, assembled, packaged, bottled or distributed in the Commonwealth by\nbusinesses operating in the Commonwealth or distributed by agents established in the\nCommonwealth.\nNon-Discrimination Laws. Operator shall comply with all Applicable Law\nregarding non-discrimination.\nNon-Collusion and Acceptance. Operator attests, subject to the penalties\nfor perjury, that no Representative of Operator, directly or indirectly, to the best of Operator’s\nknowledge, entered into or offered to enter into any combination, conspiracy, collusion or\nagreement to receive or pay any sum of money or other consideration for the execution of this\nAgreement other than that which is expressly set forth in this Agreement.\nCommonwealth Tax Liabilities. Operator shall inform Administrator if, at\nany time during the Term, there are any material tax disputes with any Governmental Body of the\nCommonwealth (other than Commonwealth Tax liabilities for which Operator is not responsible\nunder this Agreement, if any).\nCertifications Required by Commonwealth Contractor Requirements.\nOperator has (i) certified that it has complied and is in compliance with the provisions of the\nPublic-Private Partnerships Authority’s Ethical Guidelines and (ii) delivered the Sworn Statement\nupon execution hereof.\nDuty to Inform of Criminal Investigations. Operator shall inform\nAdministrator if, at any time during the Term, it becomes aware that it is subject to investigation\nin connection with criminal charges related to acts of corruption, the public treasury, the public\ntrust, a public function or charges involving public funds or property.\n\n101'}, {'number': 109, 'text': 'CONFIDENTIAL\nAct 120. Pursuant to Section 5(f) of Act 120 and subject to the provisions\nof this Agreement, Operator shall at all times comply with the public policy and regulatory\nframework applicable to the T&D System.\n\n102'}, {'number': 110, 'text': 'CONFIDENTIAL\nARTICLE 10\nINSURANCE\nInsurance Generally. From the Service Commencement Date and for the\nremainder of the Term thereafter, and for such additional periods as may be specified, Operator\nshall maintain in effect, and cause any Contractor and Subcontractor performing any of the O&M\nServices to maintain in effect, for the benefit of Owner and Operator, as applicable, the insurance\npolicies and limits of coverage specified in Annex XII (Insurance Specifications), and such\nadditional coverage (i) as may be required by Applicable Law and (ii) that a prudent Person in the\nbusiness of operating and managing the T&D System would maintain (the “Required Insurance”),\nand shall provide insurance management services, including placing insurance with carriers, and\nclaims management and processing, as more fully described in Annex I (Scope of Services). All\nRequired Insurance shall be in a form reasonably acceptable to Administrator and shall only be\nissued by generally recognized financially responsible insurers that (x) are authorized to do\nbusiness in the Commonwealth or are otherwise authorized or permitted by the Office of the\nCommissioner of Insurance of Puerto Rico and (y) at a minimum have a rating of A(VIII) or better\nby A.M. Best Company or an equivalent rating by another similarly recognized insurance rating\nagency (unless Administrator consents to waive this requirement). All premiums, deductibles, and\nother fees, costs and expenses (including uninsured Losses that are not Disallowed Costs and losses\nin excess of insurance) shall be T&D Pass-Through Expenditures.\nCommercial Availability. Notwithstanding anything to the contrary\nherein, if any Required Insurance policy shall not be available at commercially reasonable rates,\nOperator shall promptly notify Administrator, in writing, but in no event less than sixty (60) days\nprior to the expiration of any Required Insurance and Operator shall have the right to request that\nAdministrator consent to waive such requirement, which consent shall not be unreasonably\nwithheld, delayed or conditioned. In the event that any Required Insurance policy is not available\nat commercially reasonable rates, as reasonably determined by Administrator, and Administrator\nconsents to waive such requirement, any such waiver shall be effective only for so long as such\ninsurance shall not be available at commercially reasonable rates; provided that during the period\nof such waiver, (i) Operator shall maintain the maximum amount of such insurance otherwise\navailable at commercially reasonable rates and (ii) Administrator shall have the right to seek\nalternative coverage acceptable to Administrator. During the period of any such waiver, any loss\nthat would otherwise have been insured shall be treated as a T&D Pass-Through Expenditure, and\nthe Parties shall consider appropriate adjustments to the Budgets in accordance with Section 7.4\n(Budget Policy). If Administrator elects to purchase alternative coverage for the period of such\nwaiver (x) Operator shall use its commercially reasonable efforts to ensure that Administrator is\nable to timely obtain such coverage and (y) any excess cost of such alternative coverage shall be\ntreated as a T&D Pass-Through Expenditure.\nAdditional Named Insureds. Operator, Operator Indemnitees and Owner\nshall be included as additional named insureds, where commercially applicable and pertinent to\nthe coverage, including as provided in Annex XII (Insurance Specifications), along with waivers\nof subrogation, breach of warranties or separation of insureds and contractual liability\nendorsements on any Required Insurance policies, which policies shall require thirty (30) days\nprior written notice to Administrator by Operator prior to the effective date of any change in or\nnon-renewal or cancellation of such policies. Insurance coverage required pursuant to this\n103'}, {'number': 111, 'text': 'CONFIDENTIAL\nSection 10.3 (Additional Named Insureds) shall be maintained with generally recognized\nfinancially responsible insurers that (i) are authorized to do business in the Commonwealth or are\notherwise authorized or permitted by the Office of the Commissioner of Insurance of Puerto Rico\nand (ii) at a minimum have a rating of A(VIII) or better by A.M. Best Company or an equivalent\nrating by another similarly recognized insurance rating agency (unless Administrator consents to\nwaive this requirement). In addition, Operator shall be named as a “loss payee” for each of the\npolicies of insurance contemplated herein and shall be entitled to receive all proceeds of the\nRequired Insurance. In the event of a Loss relating to the O&M Services, the T&D System or any\nT&D System Site, Owner shall open an account in which to deposit any proceeds of insurance for\nany such Losses (the “Insurance Proceeds Account”). If Operator receives any proceeds of\ninsurance for any Losses relating to the O&M Services, the T&D System or any T&D System Site,\nOperator shall deposit such amounts into the Insurance Proceeds Account within three (3) Business\nDays of receipt of such proceeds. If Owner receives any proceeds of insurance for any Losses\nrelating to the O&M Services, the T&D System or any T&D System Site, Owner shall hold such\namounts in trust, for the benefit of Operator, and Owner shall deposit such amounts in the\nInsurance Proceeds Account within three (3) Business Days following the request of Operator.\nFunds in the Insurance Proceeds Account shall be used to remediate the T&D System in a manner\nconsistent with Prudent Utility Practice and reasonably approved by Administrator.\nWarranties. Operator shall maintain and enforce any warranties or\nguarantees on any facilities, vehicles, equipment or other items owned or leased by Owner (to the\nextent made known to Operator), or purchased or leased on behalf of Owner and used by Operator\nin performing O&M Services under this Agreement. Operator shall not, by act or omission,\nnegligently or knowingly invalidate in whole or part such warranties or guarantees without the\nprior approval of Administrator, such approval not to be unreasonably withheld, delayed or\nconditioned.\nCertificates of Insurance, Policies and Notice. Operator shall supply\nAdministrator with copies of certificates of insurance promptly following issuance by the insurers.\nNot later than sixty (60) days prior to the beginning of each Contract Year following the Service\nCommencement Date and for the remainder of the Term thereafter, Operator shall furnish\ncertificates of insurance to Administrator to confirm the continued effectiveness of the Required\nInsurance. Whenever a Contractor or Subcontractor is utilized, Operator shall either obtain and\nmaintain on behalf of the Contractor or Subcontractor, or require the Contractor or Subcontractor\nto obtain and maintain, insurance in accordance with the applicable requirements of Annex XII\n(Insurance Specifications). Administrator’s receipt of certificates that do not comply with the\nrequirements stated herein, or Operator’s failure to provide certificates, shall not limit or relieve\nOperator of the duties and responsibility of maintaining insurance in compliance with the\nrequirements in this Article 10 (Insurance) and shall not constitute a waiver of any of the\nrequirements in this Article 10 (Insurance).\n\n104'}, {'number': 112, 'text': 'CONFIDENTIAL\nARTICLE 11\nSUBCONTRACTORS AND CONTRACTORS\nAbility to Subcontract and Contract.\n(a)\nSubcontractors Generally. Operator shall have the right, but not the\nobligation, to engage Subcontractors to perform the O&M Services, subject to Section 11.1(c)\n(Ability to Subcontract and Contract – Federally Funded Capital Improvements) in the case of\nFederally Funded Capital Improvements. Operator’s payment obligations under any Subcontract\nshall be a T&D Pass-Through Expenditure (except to the extent Operator elects to subcontract any\nservice to be provided by ManagementCo between the Service Commencement Date and the\nexpiration or early termination of this Agreement, in which case any such payment obligation shall\nbe paid by ManagementCo from the Fixed Fee). Operator shall provide Administrator (with copy\nto PREB) with a list of Subcontractors that Operator has engaged or intends to engage for the\nperformance of any of the O&M Services the cost of which is expected to exceed US$10,000,000\nper year or US$30,000,000 in the aggregate (each a “Material Subcontractor”). Administrator shall\nhave the right to approve any Material Subcontractor engaged by Operator to perform any O&M\nServices, which approval shall not be unreasonably withheld, delayed or conditioned. ServCo shall\nbe required to update such list on or about the fifth (5th) Business Day of each Contract Year.\nOperator shall ensure that: (i) any Subcontractor engaged by it exercises due diligence in the\nperformance of the services subcontracted to such Subcontractor; (ii) any Subcontractor\nperforming O&M Services shall be a licensed professional with experience in the performance of\nthe work subcontracted to it; and (iii) Administrator receives any information that it reasonably\nrequests in respect of any Subcontractor.\n(b)\nContractors Generally. Operator shall have the right, but not the obligation,\nto engage Contractors as agent for Owner to perform the O&M Services, subject to Section 11.1(c)\n(Ability to Subcontract and Contract – Federally Funded Capital Improvements) in the case of\nFederally Funded Capital Improvements. Owner’s payment obligations under any Contract shall\nbe a T&D Pass-Through Expenditure. Operator shall provide Administrator (with copy to PREB)\nwith a list of Contractors that Operator has engaged or intends to engage for the performance of\nany of the O&M Services the cost of which is expected to exceed US$10,000,000 per year or\nUS$30,000,000 in the aggregate (“Material Contractor”). Administrator shall have the right to\napprove any Material Contractor engaged by Operator to perform any O&M Services, which\napproval shall not be unreasonably withheld, delayed or conditioned. ServCo shall be required to\nupdate such list on or about the fifth (5th) Business Day of each Contract Year. Operator shall\nensure that: (i) any Contractor engaged by it exercises due diligence in the performance of the\nservices subcontracted to such Subcontractor; (ii) any Contractor performing O&M Services shall\nbe a licensed professional with experience in the performance of the work subcontracted to it; and\n(iii) Administrator receives any information that it reasonably requests in respect of any\nContractor. Operator agrees that any Contractors engaged to perform O&M Services shall be\nrequired to comply with the applicable provisions of the Federal Funding Procurement Manual or\nNon-Federal Funding Procurement Manual, as applicable. For the avoidance of doubt, as permitted\nby Section 6(d)(ii) of Act 120, Operator, as agent for Owner, may engage Contractors to perform\nthe O&M Services in a manner consistent with the Procurement Manuals notwithstanding any\nprocurement requirements that would otherwise be applicable to Owner under Act No. 83 of May\n2, 1941 (including any rules or regulations issued thereunder).\n105'}, {'number': 113, 'text': 'CONFIDENTIAL\n(c)\nFederally Funded Capital Improvements. Owner acknowledges and agrees\nthat Operator may hire Contractors, as agent for and on behalf of Owner, to perform any Federally\nFunded Capital Improvements; provided that any Contracts related to the performance of any\nFederally Funded Capital Improvement shall comply with the Federal Funding Requirements,\nincluding the requirements described in the Federal Funding Procurement Manual and any\ncompetitive bidding processes required for the award of any such Contracts.\n(d)\nNon-Federally Funded Capital Improvements. Owner acknowledges and\nagrees that Operator may hire Contractors, as agent for and on behalf of Owner, to perform any\nNon-Federally Funded Capital Improvements; provided that any Contracts related to the\nperformance of any Non-Federally Funded Capital Improvement shall comply with the NonFederal Funding Procurement Manual.\nSubcontract and Contract Terms. A Tax Opinion and a Reliance Letter\nshall be obtained, at the expense of Owner or Administrator, with respect to any Subcontract or\nContract that is entered into, extended or amended and is a Covered Contract. Operator shall use\ncommercially reasonable efforts to ensure that all agreements with third-parties entered into after\nthe Service Commencement Date in its own name or as agent for Owner that are material to\nOperator’s performance of its obligations hereunder grant Owner or a Person designated by\nAdministrator the right to own or license the goods and services to be provided thereunder. All\ncontracts entered into with Subcontractors by Operator or with Contractors by Operator as agent\nfor Owner, and all warranties and other rights related thereto, with respect to the T&D System\nshall be assignable to Administrator or a Person designated by Administrator, solely at\nAdministrator’s election and without cost or penalty, at the end of the Term or upon early\ntermination of this Agreement, and each Subcontractor and Contractor shall acknowledge in\nwriting the rights of Administrator to take such assignments. Operator shall be responsible for\nsettling and resolving with all Subcontractors and Contractors all claims arising out of delay,\ndisruption, interference, hindrance or schedule extension caused by Operator or inflicted on\nOperator or a Subcontractor or a Contractor by the actions of another Subcontractor or Contractor.\nIndemnity for Subcontractor Claims. Operator shall retain full\nresponsibility to Owner and Administrator under this Agreement for all matters related to the\nO&M Services notwithstanding the execution or terms and conditions of any Subcontract. Subject\nto the limitations on liability set forth in Section 18.3 (Limitation on Liability), no failure of any\nSubcontractor used by Operator in connection with the provision of the O&M Services shall\nrelieve Operator from its respective obligations hereunder to perform the O&M Services. Subject\nto Section 7.6 (Disallowed Costs) and Section 7.7 (Unfunded Amounts), Operator shall pay when\ndue all undisputed claims and demands of Subcontractors, mechanics, materialmen, laborers and\nothers for any work performed on, or materials delivered for incorporation into any part of, the\nT&D System by or on behalf of Operator, and shall promptly discharge all mechanics’,\nmaterialmen’s and other construction Liens registered against the T&D System. All such costs\n(other than Disallowed Costs) shall be treated as T&D Pass-Through Expenditures. No\nSubcontractor shall have any right against Owner or Administrator for labor, services, materials\nor equipment furnished after the Service Commencement Date for the O&M Services. Operator\nacknowledges that its indemnity obligations under Section 18.1 (Indemnification by Operator)\nshall extend to all claims for payment or damages by any Subcontractor that furnishes or claims to\n\n106'}, {'number': 114, 'text': 'CONFIDENTIAL\nhave furnished any labor, services, materials or equipment in connection with the O&M Services\nafter the Service Commencement Date.\n\n107'}, {'number': 115, 'text': 'CONFIDENTIAL\nARTICLE 12\nTAXATION\nWithholding Tax. Owner shall be entitled to (i) deduct and withhold (or\ncause to be deducted or withheld) from any consideration payable or otherwise deliverable\npursuant to this Agreement, such amounts as may be required to be deducted or withheld therefrom\nunder any provision of the U.S. federal, state, Commonwealth, municipal, local or non-U.S. Tax\nlaw or under any applicable legal requirement and (ii) request any necessary Tax forms or\ninformation, from Operator or any other Person to whom a payment is required to be made\npursuant to this Agreement. To the extent such amounts are so deducted or withheld and paid to\nthe applicable taxing authority, such amounts shall be treated for all purposes under this Agreement\nas having been paid to the Person to whom such amounts would otherwise have been paid. The\nParties agree to cooperate in good faith to reduce or eliminate the amount of any applicable\nwithholding Taxes. In the event any withholding Taxes are paid by Owner in respect of amounts\npayable to Operator, Owner shall use commercially reasonable efforts to provide Operator (x)\nreceipts or other evidence of payment of such withholding taxes and (y) all informative statements\nrequired by Applicable Law.\nTax Obligations.\n(a)\nPayment of Taxes. Operator and each of its subsidiaries shall prepare and\ntimely file, or cause to be prepared and filed at its cost, all Tax Returns required to be filed by it\nunder any Applicable Law and shall pay any Taxes required to be paid by it under Applicable Law\n(whether or not shown as due on such Tax Returns). Such Tax Returns shall be true, correct and\ncomplete in all material respects.\n(b)\nExemption from Taxes. During the Term, Operator shall not be responsible\nfor, and Operator and the T&D System shall not be subject to, (i) any real property Tax imposed\non or measured by the value of the T&D System (including any real property constituting part of\nthe T&D System) that is imposed by any Governmental Body of the Commonwealth or that is\nimposed on the “owner” of the T&D System (including relating to future expenditures for real\nproperty) or (ii) any personal property tax that is imposed by any Governmental Body of the\nCommonwealth on property owned by Owner and used by Operator exclusively for the T&D\nSystem or for the services or functions subject to this Agreement, all of which shall be obligations\nof Owner, if and to the extent any such Taxes are payable.\n(c)\nTax Deductions. Operator and each of its subsidiaries shall comply with all\napplicable withholding, employment, social security and similar provisions of applicable U.S.\nfederal, state, Commonwealth, municipal, local and foreign laws, and timely withhold and pay all\nTaxes that it is required to withhold and pay from any Person, including its employees and\nindependent contractors. Owner shall not make any such withholdings or deductions on behalf of\nOperator.\n\n108'}, {'number': 116, 'text': 'CONFIDENTIAL\nARTICLE 13\nINTELLECTUAL PROPERTY; PROPRIETARY INFORMATION\nIntellectual Property.\n(a)\nOperator Intellectual Property, Contractor Intellectual Property and\nSubcontractor Intellectual Property. Any Intellectual Property owned by or licensed to Operator,\nits Affiliates, a Contractor or a Subcontractor, that is (i) used in the performance of the O&M\nServices or in connection with the T&D System and (ii) is embedded in or otherwise necessary for\nthe use of the Work Product (as defined herein) or for the operation of the T&D System, but which\ndoes not constitute “Work Product”, shall remain the Intellectual Property of the owner thereof,\nand shall be referred to, as the case may be, as “Operator Intellectual Property” (if owned by, or\nlicensed to, Operator or its Affiliates), “Contractor Intellectual Property” (if owned by, or licensed\nto, a Contractor) or “Subcontractor Intellectual Property” (if owned by, or licensed to,\nSubcontractor). Operator Intellectual Property and Subcontractor Intellectual Property include all\nderivatives and improvements thereto or therein (other than those constituting Work Product). For\nthe sake of clarity, “improvements” means all developments and improvements Operator, its\nAffiliates or Subcontractors may make with respect to their Intellectual Property, respectively, and\n“derivatives” means any work based on or derived from one or more already existing works.\nNotwithstanding the foregoing, for certainty, Operator Intellectual Property, Contractor\nIntellectual Property and Subcontractor Intellectual Property do not include Third-Party\nIntellectual Property.\n(b)\nLicense of Operator Intellectual Property, Contractor Intellectual Property,\nand Subcontractor Intellectual Property. Except as Administrator and Operator may otherwise\nmutually agree, Operator and its Affiliates hereby grant to Owner, and shall cause its Affiliates to\ngrant to Owner, a perpetual, non-exclusive, fully paid-up, royalty-free license and sublicense,\nunder Operator Intellectual Property, Subcontractor Intellectual Property and Contractor\nIntellectual Property (as the case may be) solely in connection with the T&D System and related\nfacilities and their related operations (including the O&M Services) by or on behalf of Owner or\nany successors or operators thereto to (i) make, have made, use, sell, offer for sale, export or import\nany product, service or apparatus and practice any method, and (ii) use, reproduce, distribute,\nperform, display, execute and create derivative works in any medium or format, whether now\nknown or later developed, in connection with any of the foregoing. Owner shall not and shall\nensure that its Affiliates do not sublicense, rent, lease, distribute or otherwise authorize the use of\nOperator Intellectual Property, Contractor Intellectual Property or Subcontractor Intellectual\nProperty to, by or on behalf of anyone other than Owner and its Affiliates, any successors or\noperators thereto or any other third-party with whom Owner, its Affiliates or any successors or\noperators thereto contract solely for purposes of operating the T&D system and related facilities.\nOperator Intellectual Property and Subcontractor Intellectual Property are Operator Confidential\nInformation to the extent disclosed to Owner and for so long as they are protectable as trade secrets\nor are otherwise confidential. Contractor Intellectual Property is Owner Confidential Information\nfor so long as the information is protectable as trade secrets or are otherwise confidential.\n(c)\nThird-Party Intellectual Property. Operator shall use commercially\nreasonable efforts to ensure that any Third-Party Intellectual Property is sublicensable to Owner\nunder terms substantially similar to those obtained by Operator for the use thereof in connection\n109'}, {'number': 117, 'text': 'CONFIDENTIAL\nwith the T&D System and related facilities and their related operations. The use of Third-Party\nIntellectual Property shall be subject to the license terms governing the use of such Intellectual\nProperty. To the extent Operator wishes to use any non-commercially available Intellectual\nProperty of any third-party in the provision of the O&M Services, the Front-End Transition\nServices or the Back-End Transition Services, Operator shall identify to Administrator, in writing\nin advance of any use of any such Intellectual Property, whether or not Operator has a right to\nsublicense same to Owner under the same terms as those of the foregoing license requirements.\n(i)\nIf, despite using commercially reasonable efforts, Operator cannot\nsecure such license or sublicense rights, then Operator shall (A) assist Owner in obtaining any\nnecessary license directly from such third-party or (B) pursue licensing of a non-infringing\nalternative capable of accomplishing the same purpose in substantially the same manner, and, in\nthe case of clause (A) and (B), Operator shall not use such Third-Party Intellectual Property or\nsuch alternative prior to Owner obtaining a sufficient license thereto.\n(ii)\nIn no event shall Operator’s inability to obtain a right to license or\nsublicense any non-commercially available Intellectual Property of any third-party excuse\nOperator’s inability to perform or meet any deadline under this Agreement. Any applicable license\nof Operator or its Affiliates in connection with any non-commercially available third-party\nIntellectual Property relevant to the provision of the O&M Services, the Front-End Transition\nServices or the Back-End Transition Services hereunder shall be subject to Administrator’s prior\napproval; provided that such approval shall not be unreasonably withheld, delayed or conditioned,\nand a complete copy of such licenses shall be provided to Administrator. Operator shall be excused\nfor performance hereunder only to the extent such performance is impacted by Administrator’s\nunreasonable withholding, conditioning or delaying of such approval. For the avoidance of doubt,\nnothing in this Section 13.2(c)(ii) (Intellectual Property – Third Party Intellectual Property) shall\nbe interpreted to require Operator to infringe any Third-Party Intellectual Property.\n(d)\n\nWork Product.\n\n(i)\nThe Parties hereby acknowledge and agree that, as between them,\nOwner shall own all right, title and interest in and to (A) all Intellectual Property, and derivatives\nthereof, regardless of format, created or produced in the performance of the O&M Services, the\nFront-End Transition Services or the Back-End Transition Services by Operator and its Affiliates\nif the cost of such creation or development is a T&D Pass-Through Expenditure and (B) to the\nextent the applicable third-party contracts so provide, any such Intellectual Property created by\nany of their Contractors or Subcontractors in connection therewith (collectively, “Work Product”),\nall of which shall, to the fullest extent under Copyright law, be considered works made for hire.\nFor the avoidance of doubt, Work Product shall not include: (x) any Intellectual Property created\nor produced (A) prior to the Effective Date, (B) outside the performance of the O&M Services, the\nFront-End Transition Services or the Back-End Transition Services or (C) if the cost of such\ncreation or development is not a T&D Pass-Through Expenditure; and (y) Operator Intellectual\nProperty, Subcontractor Intellectual Property Contractor Intellectual Property or Third-Party\nIntellectual Property (which for certainty, includes all derivatives or improvements thereto or\ntherein the cost of which is not a T&D Pass-Through Expenditure).\n\n110'}, {'number': 118, 'text': 'CONFIDENTIAL\n(ii)\nUnless otherwise agreed by the Parties, to the extent that ownership\nin any Work Product does not automatically vest in Owner, Operator shall transfer and assign, and\nshall cause its Affiliates to transfer and assign, and shall use commercially reasonable efforts to\ncause any Contractors or any of its or their Subcontractors to transfer and assign, and Operator\ndoes hereby assign all right, title and interest (including all Intellectual Property) in and to such\nWork Product to Owner. Operator shall, and shall cause its Affiliates and shall use commercially\nreasonable efforts to cause any applicable Contractors or Subcontractors to, execute all documents\nand take all actions requested by Administrator to transfer such ownership and otherwise assist\nOwner to register, patent and otherwise maintain and protect Owner’s Intellectual Property rights\nin and to such Work Product anywhere in the world.\n(iii) Operator shall (A) use commercially reasonable efforts to ensure\nthat relevant contracts with Contractors or Subcontractors properly reflect Owner’s ownership of\nWork Product, and (B) in any event, ensure that contracts with Contractors or Subcontractors\nproperly reflect the grant of licenses from such Contractors or Subcontractors (and Operator’s right\nto sublicense) pursuant to Section 13.1(b) (Intellectual Property – License of Operator Intellectual\nProperty, Contractor Intellectual Property or Subcontractor Intellectual Property) or, where\nOperator is not a party to the agreement with the respective Contractor, use commercially\nreasonable efforts to ensure where relevant that the contract between Owner and the Contractor\nincludes a license from the Contractor to Owner of a scope consistent with the license granted in\nSection 13.1(b) (Intellectual Property – License of Operator Intellectual Property, Contractor\nIntellectual Property or Subcontractor Intellectual Property). For the avoidance of doubt, to the\nextent Operator arranges for a Contractor to perform any of its obligations under this Agreement,\nOperator shall negotiate terms of such contract that comply with, and are in accordance with, the\nterms of this paragraph. If any Contractor or Subcontractor refuses to include such a provision in\na relevant contract, Operator shall notify Administrator in writing and, at Administrator’s request,\nprovided such request does not contravene Federal Funding Requirements, Operator shall not use\nsuch Contractor or Subcontractor for the provision of the O&M Services, the Front-End Transition\nServices or the Back-End Transition Services; provided that any increase in costs arising therefrom\nshall be deemed approved by Owner and Administrator as a T&D Pass-Through Expenditure so\nlong as Operator uses commercially reasonable efforts to minimize such increase in costs.\n(iv)\nOperator shall promptly and fully disclose in writing to Owner all\npatentable Work Product and shall deliver to Owner all other Work Product created during the\nTerm. Upon notification, Owner shall have the right, at its sole discretion and sole cost and\nexpense, to patent such Work Product (the resulting Patents shall be “Owner Patents”); provided\nthat such patenting shall not result in a disclosure of any of Operator, Contractor or Subcontractor’s\nConfidential Information. Pursuant to this Section 13.1(d) (Intellectual Property – Work Product),\nOperator shall provide all necessary assistance for Owner to obtain, sustain and, from time to time,\nenforce such Owner Patents. The cost of such assistance shall be a T&D Pass-Through\nExpenditure.\n(v)\nNotwithstanding the foregoing, Owner acknowledges that nothing\nin this Agreement is intended to prevent Operator from developing, researching, or distributing\nany products or offerings similar to, and separate from, any Work Product developed for Owner.\nTo the extent required to avoid Operator being prevented from using such Intellectual Property,\nOwner hereby grants to Operator a royalty-free, paid-up, non-exclusive, irrevocable, perpetual\n111'}, {'number': 119, 'text': 'CONFIDENTIAL\nlicense to (A) use, make, have made, sell, offer to sell, import, and further sublicense such\nIntellectual Property, and (B) reproduce, distribute, create derivative works of, publicly perform\nand publicly display such Intellectual Property in any medium or format, whether now known or\nlater developed, solely provided that Owner shall not be required under this Section to deliver to\nOperator any such Intellectual Property that is not Work Product. Operator acknowledges that\nnothing in this Agreement is intended to prevent Owner from developing, researching, or\ndistributing any products or offerings similar to any such items developed by Operator.\n(e)\nLicense of Owner Intellectual Property. Subject to the terms and conditions\nof this Agreement, Owner hereby grants, and shall cause its Affiliates to grant, to Operator and its\nAffiliates a fully paid-up, royalty-free, nonexclusive, non-transferable, sub-licensable (only to\nSubcontractors), limited license and sublicense, under the Owner Intellectual Property and, to the\nextent sub-licensable, Owner Licensed Intellectual Property, during the Term, to: (i) use, sell, offer\nfor sale, export or import any product, service or apparatus and practice any method, and (ii) use,\nreproduce, distribute, perform, display, execute and create derivative works, in the case of each of\nclause (i) and (ii), solely as necessary for Operator and its Affiliates to perform their obligations\npursuant to this Agreement. The use of Owner Licensed Intellectual Property shall be subject to\nthe license terms governing the use of such Intellectual Property. To the extent any Owner\nLicensed Intellectual Property cannot be licensed to Operator or its Affiliates, their Subcontractors\nor any Contractors for any reason, and where such Owner Licensed Intellectual Property is\nreasonably required for the performance of this Agreement, then Operator or its Affiliates, their\nSubcontractors or any Contractors shall promptly obtain their own third-party license for the\nrelevant Intellectual Property at Owner’s sole cost and expense.\n(i)\nOperator shall not and shall ensure that its Affiliates do not\nsublicense, rent, lease, distribute or otherwise authorize the use of Owner Intellectual Property or\nOwner Licensed Intellectual Property to, by or on behalf of anyone other than Operator and its\nAffiliates and Subcontractors or any Contractors, for the sole purpose of this Agreement, and\notherwise shall not use Owner Intellectual Property or Owner Licensed Intellectual Property for\nany other purpose.\n(ii)\nAny sublicensee of Operator or any of its Affiliates with respect to\nOwner Intellectual Property or Owner Licensed Intellectual Property shall be approved in advance\nin writing by Administrator, such approval shall not be unreasonably withheld, delayed or\nconditioned. Unless Administrator otherwise agrees, sublicensee shall expressly agree in writing\nto be bound by any applicable terms of this Agreement. Operator shall be responsible for\ncompliance by all of its Affiliates, and shall take commercially reasonable steps to ensure the\nContractors’ and Subcontractors’ compliance, with the terms and conditions of this Section 13.1\n(Intellectual Property) as if undertaken by Operator.\n(iii) Operator agrees to use commercially reasonable efforts to enforce,\nand shall cause all of its Affiliates to enforce, the terms of any sublicense agreement with respect\nto Owner Intellectual Property or Owner Licensed Intellectual Property against the sublicensee. It\nis understood and agreed, however, that Owner shall be a third-party beneficiary of all sublicense\nagreements relating to Owner Intellectual Property and Owner Licensed Intellectual Property, with\nthe power to enforce relevant terms directly against any sublicensee. Each sublicense shall include\n\n112'}, {'number': 120, 'text': 'CONFIDENTIAL\na provision that, in the event this Agreement terminates, at Administrator’s option, the sublicense\nshall become a direct license with Owner or Owner’s designees.\n(iv)\nIf Operator or any of its Affiliates becomes aware of any\ninfringement or unauthorized use of Owner Intellectual Property or Owner Licensed Intellectual\nProperty, then Operator shall promptly notify and shall cause its Affiliates to promptly notify\nAdministrator thereof in writing and shall provide commercially reasonable assistance and\ncooperation as may be requested by Administrator, but at Owner’s sole cost and expense. Any\nsublicense entered into between Operator or any of its Affiliates and a Contractor or Subcontractor\npursuant to this Agreement with respect to Owner Intellectual Property or Owner Licensed\nIntellectual Property shall contain a notification provision consistent with the foregoing.\n(v)\nReverse Engineering and Other Restrictions. Each Party shall not,\nand shall ensure that its Affiliates do not, and shall take commercially reasonable efforts to ensure\nthat the Contractors and Subcontractors do not: (A) decompile, disassemble, decrypt or reverse\nengineer or attempt to reconstruct or discover any source code or underlying ideas or algorithms\nof any Software that is part of any Intellectual Property owned or licensed by the other Party, or\nprovide any third-party with access to any such Software (including any source code therein)\nwithout the other Party’s advance written consent, which may be withheld, delayed or conditioned\nin such Party’s sole discretion; (B) except to the extent permitted under this Agreement or by\nApplicable Law, remove, alter or obscure any product identification, copyright or other intellectual\nproperty notices embedded within or on the Intellectual Property; or (C) publish, disclose, sell,\nrent, lease, lend, distribute, sublicense or provide Intellectual Property of the other Party to any\nthird party, except as expressly permitted herein.\n(f)\nOwner Trademark License Grant. Notwithstanding the terms and conditions\nof Section 13.1(g) (Intellectual Property – Branding; Customer and Public Communications), and\nsubject to the other terms and conditions of this Agreement, Owner hereby grants to Operator a\nfully paid-up, royalty-free, nonexclusive, non-transferable, sub-licensable (to Affiliates and\nSubcontractors of Operator or any Contractors), limited license for a period of one hundred and\neighty (180) days following the Service Commencement Date of this Agreement (provided that,\nupon Operator’s request, Owner shall not unreasonably withhold its consent to extend such 180day period if Operator requires such extension for purposes of the rebranding described below) to\nuse the Owner Marks to perform its obligations hereunder in accordance with the terms and\nconditions of this Agreement; provided that Operator rebrands the O&M Services to a mark that\nis not confusingly similar to any of the Owner Marks. Such license shall be subject to the\nfollowing:\n(i)\nThe Owner Marks are owned solely and exclusively by Owner, and\nall use of the Owner Marks by Operator, its Affiliates and any Contractor or Subcontractor, and\nall goodwill associated with the Owner Marks, shall inure to the benefit of Owner.\n(ii)\nOperator shall adhere, and shall use commercially reasonable efforts\nto cause its Affiliates and Subcontractors and any Contractors to adhere, to all quality control\nstandards and trademark usage guidelines as established from time to time by Owner and\nAdministrator, including as relating to the review and approval of any proposed new uses of the\nOwner Marks by Operator in connection with the O&M Services, the Front-End Transition\n113'}, {'number': 121, 'text': 'CONFIDENTIAL\nServices or the Back-End Transition Services (such as any advertising or marketing campaigns).\nSubject to the System Remediation Plan, Operator shall and shall use commercially reasonable\nefforts to cause its Affiliates and Subcontractors and any Contractors to: (A) comply with\nApplicable Law in performing the services under the Owner Marks; (B) refrain from any actions\nthat would harm the reputation of Owner or otherwise cause Owner or its Affiliates to fall into\ndisrepute; and (C) not modify the Owner Marks, or file for any registration or application\n(including domain names or social media handles) using, incorporating or confusingly similar to\nany Owner Marks, other than with the prior consent of Owner (in which case any such registrations\nor applications shall be deemed Work Product hereunder and be deemed used solely under license\nfrom and under permission by Administrator during the term of this Agreement).\n(iii) Operator shall, and shall cause its Affiliates to, police any permitted\nsublicensee’s use of the Owner Marks, promptly notify Administrator in writing of any\nnoncompliance, and enforce the terms of the sublicense agreement relating to the Owner Marks\nagainst such sublicensee at Operator’s own expense. It is understood and agreed, however, that\nOwner shall be a third-party beneficiary of all sublicense agreements relating to the Owner Marks,\nwith the power to enforce the terms of this Section 13.1(f) (Intellectual Property – Owner\nTrademark License Grant) directly against any sublicensee.\n(iv)\nIf Operator or any of its Affiliates learns of any infringement or\nunauthorized use of the Owner Marks, then Operator shall promptly notify Administrator in\nwriting and shall provide commercially reasonable assistance and cooperation as may be requested\nby Administrator, at Owner’s cost and expense.\n(g)\n\nBranding; Customer and Public Communications.\n\n(i)\nCommencing no later than the Service Commencement Date, the\nOperator and its management shall become publicly associated with the T&D System for the Term.\nTo that end, the Operator Marks shall within one hundred and eighty (180) days of the Service\nCommencement Date, and for the duration of the Term, replace the Owner Marks, including on\nall signage, customer bills, vehicles, equipment, uniforms, letterhead, and on utility-related\ncommunications, advertisements, public announcements, websites and similar areas and the\nOperator shall have full authority to determine policies and procedures with respect to the use of\nthe Operator Marks. Upon the expiration or earlier termination of this Agreement, the Operator\nMarks shall, as promptly as practicable and in any event within one hundred and eighty (180) days,\nbe removed from the aforementioned areas, and all rights to the Operator Marks granted by the\nOperator to Owner (or to any entity other than the Operator and its Affiliates) under this\nAgreement, including any licenses or sublicenses with respect thereto, subject to the foregoing\nphase-out period, shall terminate, in each case unless otherwise agreed to in writing by the\nOperator.\n(ii)\nThe Operator shall have direct responsibility for media and other\npublic communications on all utility related matters, including communications with public\nofficials and local municipalities and counties regarding storm preparation, management,\ncoordination and response, customer communications, programs and complaints and related\nmatters. Accordingly, the Operator shall have authority to determine communications policies and\nprocedures relating to its provision of O&M Services under this Agreement; provided that\n114'}, {'number': 122, 'text': 'CONFIDENTIAL\nAdministrator may elect to review and approve (i) official press releases and (ii) statements to the\nmedia concerning Owner or any of its employees.\n(iii) Operator shall use the Operator Marks to perform its obligations\nhereunder in accordance with the terms and conditions of this Agreement, including with respect\nto the O&M Services, the Front-End Transition Services or the Back-End Transition Services\n(including any advertising or marketing campaigns).\n(iv)\nThe Operator Marks are owned solely and exclusively by Operator.\nNone of Owner, Administrator or any of their respective Affiliates shall use any of the Operator\nMarks without the written agreement of Operator. Upon request of Administrator, prior to the\nexpiration or early termination of this Agreement, Operator shall be responsible for re-branding\nthe T&D System to an Owner Mark or another trademark designated by Administrator, as part of\nthe Back-End Transition Services.\n(h)\nOther. Notwithstanding anything to the contrary in this Agreement, any\nnon-compliance, error or mistake of any Party with respect to any of its obligations under\nSection 5.15 (Information) or this Section 13.1 (Intellectual Property) shall not constitute an event\nof default or a breach under this Agreement if such non-compliance, error or mistake is (i)\ninadvertent, (ii) does not have, or would not reasonably be expected to have, a material and adverse\neffect on the performance by any Party of its obligations under this Agreement and (iii) is cured\nwithin thirty (30) days of such Party becoming aware of such non-compliance, error or mistake,\nor such longer period as may be required in light of the System Remediation Plan.\n(i)\nFeedback. Each Party may from time to time provide suggestions,\ncomments or other feedback (“Feedback”) to the other Party regarding the Intellectual Property of\nthe Party receiving the Feedback. Each Party agrees that all Feedback is and shall be given entirely\nvoluntarily. Feedback, even if designated as confidential by the Party offering Feedback, shall not,\nabsent a separate written agreement, create any confidentiality obligation for the receiver of the\nFeedback. Furthermore, except as otherwise provided in a separate subsequent written agreement\nbetween the Parties, the receiver of the Feedback shall be free to use, disclose, reproduce, license\nor otherwise distribute, and exploit the Feedback provided to it, royalty free, entirely without\nobligation or restriction of any kind on account of intellectual property rights or otherwise.\nProprietary Information.\n(a)\n\nConfidentiality Obligation.\n\n(i)\nSubject to the remainder of this Section 13.2 (Proprietary\nInformation), any and all written, recorded or oral System Information furnished or made available\nin connection with this Agreement, or that constitutes Work Product, shall be deemed “Owner\nConfidential Information”. Work Product shall be deemed Owner Confidential Information with\nrespect to which Operator shall be deemed to be the receiving Party and Owner shall be deemed\nto be the disclosing Party. “Operator Confidential Information” includes Confidential Information\npertaining to Operator Intellectual Property, Contractor Intellectual Property or Subcontractor\nIntellectual Property, or to Operator’s policies and strategies. Confidential Information shall not\ninclude any of the foregoing that: (A) is when furnished, or thereafter becomes, available to the\n\n115'}, {'number': 123, 'text': 'CONFIDENTIAL\npublic other than as a result of a disclosure by the receiving Party or its Representatives; (B) is\nalready in the possession of or become available to the receiving Party or its Representatives on a\nnon-confidential basis from a source other than the disclosing Party or its Representatives;\nprovided, that to the actual knowledge of the receiving Party or its Representatives, as the case\nmay be, such source is not and was not bound by an obligation of confidentiality to the disclosing\nParty or its Representatives; or (C) the receiving Party or its Representatives can demonstrate has\nbeen independently developed without a violation of this Agreement.\n(ii)\nSubject to the remainder of this Section 13.2 (Proprietary\nInformation), each receiving Party shall, and shall cause its Representatives to, (A) keep strictly\nconfidential and take reasonable precautions to protect against the disclosure of all Confidential\nInformation of the disclosing Party, and (B) use all Confidential Information of the disclosing\nParty solely for the purposes of performing its obligations under the Transaction Documents and\nnot for any other purpose; provided, that:\n(A)\na receiving Party may disclose Confidential Information of\nthe disclosing Party to those of its Representatives who need to know such information for the\npurposes of performing the receiving Party’s obligations under this Agreement if, but only if, prior\nto being given access to such Confidential Information, such Representatives are informed of the\nconfidentiality thereof and the requirements of this Agreement and are obligated to comply with\nthe requirements of this Agreement;\n(B)\nthe foregoing shall not limit any rights or licenses granted\nunder Article 13 (Intellectual Property; Proprietary Information); provided that the licensee shall\ntreat any Confidential Information included in such license in a manner consistent with this\nSection 13.2 (Proprietary Information) and in any event with the same care as it would treat its\nown comparable information, acting reasonably; and\n(C)\nAgreement by its Representatives.\n\neach Party shall be responsible for any breach of this\n\n(iii) Operator may designate conspicuously any documents or other\nmaterials that it believes contain privileged, trade secret, commercially sensitive or other\ninformation that may be exempted from disclosure in response to a public records request under\napplicable Public Information Disclosure Requirements by placing “CONFIDENTIAL” in the\nheader or footer of such page or record affected.\n(b)\n\nPermitted Disclosures.\n\n(i)\nSubject to the terms of this Section 13.2 (Proprietary Information),\neach receiving Party may disclose Confidential Information of the disclosing Party to a duly\nauthorized Governmental Body where required to do so by Applicable Law. None of the Parties\nshall have any liability whatsoever to the other Party in the event of any unauthorized use or\ndisclosure by a Governmental Body of any Confidential Information of another Party to the extent\nsuch disclosure was required by Applicable Law and was in accordance with the requirements of\nthis Section 13.2 (Proprietary Information).\n\n116'}, {'number': 124, 'text': 'CONFIDENTIAL\n(ii)\nSubject to the terms of this Section 13.2 (Proprietary Information),\neach Party may disclose Confidential Information of the other Party to the extent necessary to\ncomply with any subpoena or order of any Commonwealth Court or other judicial entity having\njurisdiction over the receiving Party, or in connection with a discovery or data request of a party\nto any proceeding before any of the foregoing.\n(iii) For the avoidance of doubt, nothing is this Agreement shall prevent\nAdministrator from disclosing Owner Confidential Information in its sole discretion; provided that\nAdministrator shall not disclose Operator Intellectual Property, to the extent constituting\nConfidential Information, unless specifically authorized under this Section 13.2 (Proprietary\nInformation). Additionally, nothing is this Agreement shall prevent Operator from disclosing\nOperator Confidential Information in its sole discretion; provided that Operator shall not disclose\nany Confidential Information derived from or embodying Owner Intellectual Property, to the\nextent confidential, unless specifically authorized under this Section 13.2 (Proprietary\nInformation).\n(c)\n\nDuty to Seek Protection. To the extent permitted under Applicable Law:\n\n(i)\nif a request is made for disclosure of any document or other\nmaterials (A) that have been designated by Operator as “CONFIDENTIAL” or (B) which Owner,\nin exercising reasonable judgment, determines is likely to contain privileged, trade secret,\ncommercially sensitive or other information of Operator, its Affiliate or Subcontractors or any\nContractors then Owner shall notify Operator if it intends to disclose any such documents in\naccordance with Applicable Law, including any applicable Public Information Disclosure\nRequirements;\n(ii)\nin connection with requests or orders to produce Confidential\nInformation protected by this Agreement in the circumstances provided in Section 13.2(b)\n(Proprietary Information – Permitted Disclosures), each Party receiving such a request or order\n(A) shall promptly notify the disclosing Party of the existence, terms and circumstances of such\nrequirement(s) so that the disclosing Party may seek an appropriate protective order or waive\ncompliance with the provisions of this Agreement, and (B) shall, and shall cause its\nRepresentatives to, cooperate fully with the disclosing Party in seeking to limit or prevent such\ndisclosure of such Confidential Information; and\n(iii) if a receiving Party or its Representatives are, in the written opinion\nof its legal counsel, and notwithstanding compliance with Section 13.2(c)(i) (Proprietary\nInformation – Duty to Seek Protection) compelled to make disclosure of Confidential Information\nof a disclosing Party in response to a requirement described in Section 13.2(c)(i) (Proprietary\nInformation – Duty to Seek Protection) or stand liable for contempt or suffer other penalty, the\ncompelled Person may disclose only that portion of such Confidential Information that it is legally\nrequired to disclose and shall exercise its best efforts to obtain reliable assurance that confidential\ntreatment shall be accorded to such Confidential Information.\n(d)\nOwnership and Return of Information. Subject to the remainder of this\nSection 13.2 (Proprietary Information), Confidential Information shall be and remain the property\nof the Party disclosing it. Nothing in this Agreement shall be construed as granting any rights in\n117'}, {'number': 125, 'text': 'CONFIDENTIAL\nor to Confidential Information to the Party or Representatives receiving it, except the right to use\nit in accordance with the terms of this Agreement. Notwithstanding the foregoing, the Parties and\nAdministrator shall have the right to retain copies of Confidential Information, subject to the\nconfidentiality obligations in this Section 13.2 (Proprietary Information).\n(e)\n\nPublic Information Disclosure Requirements-Related Obligations.\n\n(i)\nOperator acknowledges and agrees that any documents or other\nmaterials relating to this Agreement in Owner’s possession may be considered public information\nsubject to disclosure in accordance with applicable Public Information Disclosure Requirements.\nOperator shall then have the opportunity to either consent to the disclosure or assert its basis for\nnon-disclosure and claimed exception under Applicable Law to Owner within the time period\nspecified in the notice issued by Owner. Notwithstanding the foregoing, it is the responsibility of\nOperator to monitor requests for disclosure issued by Owner and related proceedings and make\ntimely filings. Owner may make filings of its own concerning possible disclosure; provided,\nhowever, Owner shall be under no obligation to support Operator’s positions.\n(A)\nBy entering this Agreement, Operator consents to, and\nexpressly waives any right to contest, the provision by Owner to Owner’s counsel of all or any\npart of any documents or materials in Owner’s possession in accordance with the Public\nInformation Disclosure Requirements. Owner shall have no responsibility or obligation for\nOperator’s failure to respond or to respond timely to any request for disclosure in accordance with\nthe Public Information Disclosure Requirements, and other than the obligations of Owner\nexpressly stated hereunder, Owner shall not be required, except where required under Applicable\nLaw, to wait for a response before making a disclosure or otherwise taking action under the Public\nInformation Disclosure Requirements.\n(B)\nUnder no other circumstances shall Owner be responsible or\nliable to Operator or any other party as a result of disclosing any such documents or materials,\nincluding materials marked “CONFIDENTIAL”, where the disclosure is required by Applicable\nLaw or by an order of court.\n(ii)\nNothing contained in this Section 13.2(e) (Proprietary Information\n– Public Information Disclosure Requirements-Related Obligations) shall modify or amend\nrequirements and obligations imposed on Owner by the Public Information Disclosure\nRequirements, and the provisions of the Public Information Disclosure Requirements shall control\nto the extent of a conflict with the procedures under this Agreement or Owner’s obligations with\nrespect to Confidential Information. Owner shall not advise a submitting party or Operator as to\nthe nature or content of documents or materials that may be entitled to protection from disclosure\nunder the Public Information Disclosure Requirements, as to the interpretation thereof, or as to\nrelevant definition (e.g., “trade secret”).\n(iii) In the event of any proceeding or litigation concerning the disclosure\nof any documents or other materials in accordance with the Public Information Disclosure\nRequirements to third-parties, Owner’s sole involvement shall be as a stakeholder retaining the\nmaterial until otherwise ordered by a Commonwealth Court or other court or authority having\njurisdiction. Operator shall be responsible for prosecuting or defending any action, acting on its\n118'}, {'number': 126, 'text': 'CONFIDENTIAL\nown behalf, concerning such documents or materials at its sole expense and risk; provided,\nhowever, that Owner may intervene or participate in the litigation in such manner as it deems\nnecessary or desirable.\n(f)\nCustomer Information. Notwithstanding anything contained in this\nSection 13.2 (Proprietary Information) or otherwise in this Agreement to the contrary, the Parties\nagree that Operator shall not, and shall ensure that Operator Related Parties do not, use or disclose\nany Owner Personal Information except as required in the performance of this Agreement or as\notherwise directed by Administrator in accordance with Applicable Law or as may be required by\nApplicable Law.\n(g)\nOwner Confidential Information. Notwithstanding anything to the contrary\nin this Agreement, System Information shall be deemed Confidential Information of Owner. For\ncertainty, such information shall not include any information comprising Operator Intellectual\nProperty, Contractor Intellectual Property, Subcontractor Intellectual Property or Third-Party\nIntellectual Property.\n(h)\nIndependent Development; Residuals. The disclosing Party acknowledges\nthat the receiving Party may currently or in the future be developing information independently,\nor receiving information from other parties, that is similar or identical to the Confidential\nInformation provided by the disclosing Party. Accordingly, nothing in this Agreement shall be\nconstrued as a representation or agreement that the receiving Party shall not develop or have\ndeveloped for itself products, concepts, systems or techniques that are similar to or compete with\nthe products, concepts, systems or techniques contemplated by or embodied in the Confidential\nInformation, provided that the receiving Party does not violate any of its obligations under this\nAgreement in connection with such development. Additionally, Operator shall be free to use the\nresiduals resulting from access to or work with Owner’s Confidential Information for any purpose,\nprovided that Operator shall not disclose Confidential Information (which excludes, for clarity,\nresiduals) except as permitted pursuant to the terms of this Agreement, and Owner shall be free to\nuse the residuals resulting from access to or work with Operator’s Confidential Information for\nany purpose, provided that Owner shall not disclose Confidential Information (which excludes, for\nclarity, residuals) except as permitted pursuant to the terms of this Agreement. The term\n“residuals” means information retained in the unaided memory of persons employed or retained\nby either Party who have had access to or worked with the Confidential Information, including\nideas, concepts, Know-How or techniques contained therein. Neither Party shall have any\nobligation to limit or restrict the assignment of such persons.\nData Security.\n(a)\nCybersecurity Breaches. Subject to Section 4.1(c) (Front-End Transition\nPeriod Generally – Transition to Standard of Performance) and the System Remediation Plan,\nOperator shall comply with, and shall use commercially reasonable efforts to ensure that all\nOperator Related Parties and all Contractors and Subcontractors comply with the Data Security\nPlan, any other Contract Standards and all requirements of Applicable Law regarding data security,\ncyber security and information security in respect of the System Information and related\nInformation Systems. Operator shall promptly notify, and shall use commercially reasonable\nmeasures to ensure that all Operator Related Parties, Contractors and Subcontractors promptly\n119'}, {'number': 127, 'text': 'CONFIDENTIAL\nnotify, Administrator and PREB (if possible, in writing) of any material Cybersecurity Breaches\nor any other material losses or theft of any data of which it has knowledge. At Administrator’s\ndirection, Operator shall (i) perform an analysis of the cause, (ii) remedy any Cybersecurity Breach\nincluding notification of consumers or government entities when required by Applicable Law, and\n(iii) cooperate fully with any civil or criminal authority in any investigation or action relating to\nsuch breach or attempted breach.\n(b)\nCybersecurity Program. Without limiting the foregoing and subject to\nSection 4.1(c) (Front-End Transition Period Generally – Transition to Standard of Performance)\nand the System Remediation Plan, Operator shall update the Data Security Plan from time to time\nto be consistent with industry standards and such that the Data Security Plan: (A) incorporates\nreasonable and appropriate organizational, administrative, physical and technical measures in\nplace to maintain the security of and to protect the internal and external integrity of the System\nInformation and related Information Systems against any unlawful or unauthorized use,\nprocessing, destruction, loss, alteration, disclosure, theft or access (including to any data or\ninformation contained in or stored on such systems); (B) establishes and maintains backup,\nsecurity and disaster recovery measures to safeguard the System Information and related\nInformation Systems; (C) limits the risk of introducing or knowingly permitting the introduction\nof any virus, worm, bomb, Trojan horse, trap door, stop code or other harmful code, timer, clock,\ncounter or other limiting design, instruction or routine, device, feature or function into the System\nInformation and related Information Systems; and (D) requires security audits, at a frequency\nconsistent with industry standards, to assess and confirm compliance with Section 13.3 (Data\nSecurity), (including using reputable third-party vendors to perform, penetration testing,\ncybersecurity audits and vulnerability assessments) and requires taking prompt measures to\nremedy any gaps that may be identified. Operator shall provide a summary of the security program\nas well as a copy of any written audit reports and remedial measures to Administrator. Any security\naudit information is Confidential Information of Owner, and neither Party shall disclose such\nsecurity audit information without the consent of the other Party.\n\n120'}, {'number': 128, 'text': 'CONFIDENTIAL\nARTICLE 14\nEVENTS OF DEFAULT; REMEDIES\nEvents of Default by Operator. Each of the following shall constitute an\nevent of default by Operator (an “Operator Event of Default”):\n(a)\nInvoluntary Bankruptcy. An involuntary proceeding shall be commenced or\nan involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect\nof Operator or Guarantor(s) or its debts, or of a substantial portion of its respective assets, under\nthe Bankruptcy Code or (ii) the appointment of a receiver, trustee, custodian, sequestrator,\nconservator or similar official for Operator or Guarantor(s) or for a substantial portion of its assets,\nand, in any such case, such proceeding or petition shall continue undismissed for a period of sixty\n(60) or more days or an order or decree approving or ordering any of the foregoing shall be entered;\n(b)\nVoluntary Bankruptcy. Operator or Guarantor(s) shall (i) voluntarily\ncommence any proceeding or file any petition seeking liquidation, reorganization or other relief\nunder the Bankruptcy Code, (ii) consent to the institution of, or fail to contest in a timely and\nappropriate manner, any proceeding or petition described in Section 14.1(a) (Events of Default by\nOperator – Involuntary Bankruptcy), (iii) apply for or consent to the appointment of a receiver,\ntrustee, custodian, sequestrator, conservator or similar official for Operator or Guarantor(s) or for\na substantial portion of its respective assets, (iv) file an answer admitting the material allegations\nof a petition filed against it in any such proceeding, (v) make a general assignment for the benefit\nof creditors or (vi) take any action for the purpose of effecting any of the foregoing;\n(c)\nFailure to Provide or Maintain the Guarantee. Operator shall fail to provide\nor maintain in full force and effect the Guarantee, which failure shall not be cured in a manner\nacceptable to Administrator within five (5) Business Days following receipt of written notice\nthereof;\n(d)\nFailure to Perform a Material Obligation. Operator shall fail to perform any\nmaterial obligation, covenant, term or condition under this Agreement or Guarantor(s) shall fail to\nperform any material obligation, covenant, term or condition under the Guarantee (in each case\nother than a payment obligation as provided in Section 14.1(e) (Events of Default By Operator –\nFailure to Pay)), which failure shall not be cured within sixty (60) days following receipt of written\nnotice thereof by Administrator; provided, however, that as long as Operator or such Guarantor,\nas the case may be, is diligently attempting in good faith to cure such failure and it is reasonably\nexpected that such failure is curable, then Operator or such Guarantor, as the case may be, shall\nhave an additional thirty (30) days to cure such default; provided, further, that any failure to\nperform which is not curable shall not be deemed an Operator Event of Default if (i) within sixty\n(60) days following receipt of written notice thereof, Operator or such Guarantor shall have\ndiligently and in good faith taken measures to prevent such failure to perform from recurring and\n(ii) such failure to perform which is not curable is not a recurring failure for the same issue as a\nprior failure to perform that has previously (A) occurred and (B) not been deemed an Operator\nEvent of Default;\n(e)\nFailure to Pay. Operator or Guarantor(s) shall fail to pay any undisputed\namount required to be paid by Operator under this Agreement or by Guarantor(s) under the\n121'}, {'number': 129, 'text': 'CONFIDENTIAL\nGuarantee, which failure shall not be cured within sixty (60) days following written notice thereof\nby Administrator; provided that if such payment relates to a T&D Pass-Through Expenditure\n(including any Excess Expenditures), Capital Cost or Outage Event Costs, an Operator Event of\nDefault shall not be deemed to have occurred if sufficient funds for such payment are not available\nin the relevant Service Account;\n(f)\nFalse or Inaccurate Representation or Warranty. Any representation or\nwarranty of Operator under this Agreement or any other document delivered in connection\nherewith or of Guarantor(s) under the Guarantee shall prove to have been false, inaccurate or\nmisleading in any material respect when made, and the legality of this Agreement or such\nGuarantee or the ability of Operator or Guarantor(s) to carry out its obligations hereunder or\nthereunder shall thereby be materially and adversely affected, which condition shall not be cured\nwithin thirty (30) days following written notice thereof by Administrator;\n(g)\nFailure to Obtain or Maintain Insurance. Operator shall fail to obtain or\nmaintain the Required Insurance, unless such failure is due to carrier insolvency or the fact that\nthe Required Insurance is not available at commercially reasonable rates but only for such period\nof time and to the extent specified in Section 10.2 (Commercial Availability) (in which case no\nfailure shall be understood to have occurred), which failure shall not be cured within\nten (10) Business Days following written notice thereof by Administrator;\n(h)\nChange of Control. A Change of Control of Operator that is not permitted\nby this Agreement shall occur on or after the Effective Date;\n(i)\nIllegal Transfer. Operator shall enter into an agreement to, or shall assign,\ntransfer, convey, lease, encumber or otherwise dispose of all or any portion of its rights or\nobligations under this Agreement other than (i) in accordance with the express terms of this\nAgreement or (ii) with the consent of Administrator and PREB;\n(j)\nViolation of Law. A court of competent jurisdiction shall have determined\nthat Operator shall have violated any of the provisions of Article 3.2 of Act 2 or Operator shall be\nconvicted by a court of competent jurisdiction, or shall enter a plea of nolo contendere with such\ncourt, with respect to any of the crimes listed in Section 19.2(h)(i)(B) (Representations and\nWarranties of Operator – Applicable Law Compliance); or\n(k)\nFailure to Meet Minimum Performance Threshold. Operator shall fail to\nmeet the Minimum Performance Threshold for any three (3) Key Performance Metrics during\nthree (3) or more consecutive Contract Years and no such failure shall have been excused by a\nForce Majeure Event, an Outage Event or Owner Fault (a “Minimum Performance Threshold\nDefault”).\nTermination for Operator Event of Default\n(a)\nTermination for Involuntary Bankruptcy, Voluntary Bankruptcy or\nViolation of Law. Upon the occurrence of an Operator Event of Default under Section 14.1(a)\n(Events of Default By Operator – Involuntary Bankruptcy), Section 14.1(b) (Events of Default By\nOperator – Voluntary Bankruptcy) or Section 14.1(j) (Events of Default By Operator – Violation\n\n122'}, {'number': 130, 'text': 'CONFIDENTIAL\nof Law), this Agreement shall immediately terminate without further action by Administrator,\nwithout need for a court decision or arbitral award confirming Administrator’s right to terminate.\n(b)\nTermination for Other Operator Event of Default. Upon the occurrence of\nany other Operator Event of Default, Administrator may terminate this Agreement upon not less\nthan one hundred twenty (120) days prior written notice to Operator, subject, to the extent required\nby Applicable Law, to the prior approval of PREB or the FOMB (if then in existence), without\nneed for a court decision or arbitral award confirming Administrator’s right to terminate; provided,\nhowever, that any such notice of termination with respect to an Operator Event of Default under\nSection 14.1(h) (Events of Default By Operator – Change of Control) must be given no later than\nthirty (30) days following Administrator’s receipt of written notice from Operator of the\noccurrence of such Change of Control. If Administrator fails to give such notice to Operator within\nsuch thirty (30) day period, Administrator shall be deemed to have waived the Operator Event of\nDefault with respect to such Change of Control and its termination rights with respect thereto (but\nnot with respect to any subsequent Change of Control) shall expire and be of no further force or\neffect. For the avoidance of doubt, nothing in this Section 14.2 (Termination for Operator Event\nof Default) shall limit Operator’s right to contest, pursuant to Article 15 (Dispute Resolution),\nwhether an Operator Event of Default has occurred, or any of its other rights herein.\nEvents of Default By Owner. Each of the following shall constitute an\nevent of default by Owner (an “Owner Event of Default”):\n(a)\nInvoluntary Bankruptcy. An involuntary proceeding shall be commenced or\nan involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect\nof Owner or its debts, or of a substantial portion of its respective assets, under the Bankruptcy\nCode or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar\nofficial for Owner or for a substantial portion of its assets, and, in any such case, such proceeding\nor petition shall continue undismissed for a period of sixty (60) or more days or an order or decree\napproving or ordering any of the foregoing shall be entered; provided, however, that the pursuit\nby creditors of Owner of relief from the automatic stay extant pursuant to section 362(a) of the\nBankruptcy Code in the current Title III Case for the purpose of seeking appointment of a receiver\nunder applicable law shall not constitute an Owner Event of Default unless and until any such\nreceiver is duly appointed;\n(b)\nVoluntary Bankruptcy. Owner shall (i) voluntarily commence any\nproceeding or file any petition seeking liquidation, reorganization or other relief under the\nBankruptcy Code (other than the current Title III Case), (ii) consent to the institution of, or fail to\ncontest in a timely and appropriate manner, any proceeding or petition described in Section 14.3(a)\n(Events of Default By Owner – Involuntary Bankruptcy), (iii) apply for or consent to the\nappointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for\nOwner or for a substantial portion of its respective assets, (iv) file an answer admitting the material\nallegations of a petition filed against it in any such proceeding, (v) make a general assignment for\nthe benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;\n(c)\nFailure to Perform a Material Obligation. Owner shall fail to perform any\nmaterial obligation, covenant, term or condition under this Agreement (other than a payment\nobligation as provided in Section 14.3(d) (Events of Default By Owner – Failure to Pay Service\n123'}, {'number': 131, 'text': 'CONFIDENTIAL\nFee) or Section 14.3(e) (Events of Default By Owner – Failure to Pay Other Undisputed Amount)\nor a failure to fund the Front-End Transition Account or Service Account, or as provided in\nSection 14.3(f)) (Events of Default By Owner – Failure to Fund Front-End Transition Account or\nService Account)), including the obligation to keep System Revenues free and clear of Liens other\nthan Liens specified in the Title III Plan and the related disclosure statement, which failure shall\nnot be cured within sixty (60) days following written notice thereof by Operator; provided,\nhowever, that as long as Owner is diligently attempting in good faith to cure such failure and it is\nreasonably expected that such failure is curable, then Owner shall have an additional thirty (30)\ndays to cure such default; provided, further, that any failure to perform which is not curable shall\nnot be deemed an Owner Event of Default if (i) within sixty (60) days following receipt of written\nnotice thereof, Owner shall have diligently and in good faith taken measures to prevent such failure\nto perform from recurring and (ii) such failure to perform which is not curable is not a recurring\nfailure for the same issue as a prior failure to perform that has previously (A) occurred and (B) not\nbeen deemed an Owner Event of Default;\n(d)\nFailure to Pay Service Fee. Owner shall fail to pay any undisputed Service\nFees to be paid to Operator under this Agreement, which failure shall continue for thirty (30) days\nfollowing written notice thereof by Operator;\n(e)\nFailure to Pay Other Undisputed Amount. Owner shall fail to pay any other\nundisputed amount required to be paid by Owner to Operator under this Agreement (other than as\nprovided in Section 14.3(d) (Events of Default By Owner – Failure to Pay Service Fee)), which\nfailure shall not be cured within sixty (60) days following written notice thereof by Operator;\n(f)\nFailure to Fund Front-End Transition Account or Service Account. Owner\nshall fail to fund the Front-End Transition Account or any Service Account in an amount equal to\nat least two-thirds (2/3) of the requisite funding for such Front-End Transition Account or Service\nAccount, which failure shall not be cured within five (5) Business Days following written notice\nthereof by Operator; or\n(g)\nFalse or Inaccurate Representation or Warranty. Any representation or\nwarranty of Owner under this Agreement or any other document delivered in connection herewith\nshall prove to have been false, inaccurate or misleading in any material respect when made, and\nthe legality of this Agreement or the ability of Operator to carry out its obligations hereunder shall\nthereby be materially and adversely affected, which condition shall not be cured within\nthirty (30) days following written notice thereof by Operator.\nTermination for Owner Event of Default. Upon the occurrence of an\nOwner Event of Default under Section 14.3 (Events of Default By Owner), Operator may terminate\nthis Agreement upon not less than one hundred twenty (120) days prior written notice to\nAdministrator, without need for a court decision or arbitral award confirming Operator’s right to\nterminate; provided that upon the occurrence of an Owner Event of Default under Section 14.3(f)\n(Events of Default By Owner – Failure to Fund Front-End Transition Account or Service Account)\nrelating to funding of the Front-End Transition Account or the Operating Account, the Agreement\nshall terminate and, subject to Article 16 (Back-End Transition), Operator’s obligation to perform\nthe Front-End Transition Services or the O&M Services, as applicable, shall cease, upon the earlier\nof (i) the date that is one hundred twenty (120) days following the date on which Administrator\n124'}, {'number': 132, 'text': 'CONFIDENTIAL\nreceives written notice from Operator or (ii) the date on which there is no funding in the FrontEnd Transition Account or the Operating Account, as applicable, in each case without need for a\ncourt decision or arbitral award confirming Operator’s right to terminate. For the avoidance of\ndoubt, nothing in this Section 14.4 (Termination for Owner Event of Default) shall limit Owner’s\nright to contest, pursuant to Article 15 (Dispute Resolution), whether an Owner Event of Default\nhas occurred, or any of its other rights herein. Owner agrees the automatic stay extant in the Title\nIII Case pursuant to section 362(a) of the Bankruptcy Code shall not apply to the exercise by\nOperator of its termination rights or other remedies under this Section 14.4 (Termination for Owner\nEvent of Default), Section 14.5 (Additional Termination Rights) or Section 14.6 (Remedies Upon\nEarly Termination).\nAdditional Termination Rights.\n(a)\nT&D System Sale. Each of Administrator and Operator shall have the right\nto terminate this Agreement upon not less than one hundred twenty (120) days’ prior written notice\nto Operator or Administrator, respectively, in the event ownership of the T&D System is sold,\ntransferred or assigned, in whole or in part, to a private entity.\n(b)\nFailure of Service Commencement Date Conditions. As set forth in\nSection 4.8(b) (Failure of Service Commencement Date Conditions – Termination for Failure of\nService Commencement Date Conditions), each of Administrator and Operator shall have the right\nto terminate this Agreement for failure to satisfy the Service Commencement Date Conditions, in\naccordance with and subject to the terms set forth in Section 4.8(b) (Failure of Service\nCommencement Date Conditions – Termination for Failure of Service Commencement Date\nConditions) in all respects.\n(c)\nExtended Force Majeure Event. Each of Administrator and Operator shall\nhave the right to terminate this Agreement upon not less than one hundred twenty (120) days’ prior\nwritten notice to Operator or Administrator, respectively, in the event that a Force Majeure Event\ncontinues for a period in excess of eighteen (18) consecutive months and materially interferes with,\ndelays or increases the cost of the Front-End Transition Services or the O&M Services.\n(d)\nFailure to Agree on Budget. Each of Administrator and Operator shall have\nthe right to terminate this Agreement upon not less than one hundred twenty (120) days’ prior\nwritten notice to Operator or Administrator, respectively, if (i) Operator has performed the O&M\nServices under a Default Budget with respect to an Operating Budget during three (3) or more\nconsecutive Contract Years or (ii) Administrator and Operator shall fail to agree on the Operating\nBudget, and such failure results in an Budget Dispute, during three (3) or more consecutive\nContract Years.\n(e)\nOperating Budget Overrun. Owner shall have the right to terminate this\nAgreement upon not less than one hundred twenty (120) days’ prior written notice to Operator if\nOperator shall exceed, during three (3) or more consecutive Contract Years, the Operating Budget\ninitially approved for a given Contract Year pursuant to Section 7.3(a) (Budgets – Generally),\nother than as a result of (i) Force Majeure Events, (ii) Owner Fault, (iii) Outage Events or (iv)\nadditional requirements imposed by Owner, Administrator or any other Governmental Body after\napproval of the Budget, in each case, which (A) have resulted in schedule delays or increased work\n125'}, {'number': 133, 'text': 'CONFIDENTIAL\nscope or costs and (B) are not attributable to Operator’s gross negligence or willful misconduct\n(an “Operating Budget Overrun Default”).\n(f)\nChange in Regulatory Law. Operator shall have the right to terminate this\nAgreement upon not less than one hundred twenty (120) days’ prior written notice to Administrator\nin the event of a Change in Regulatory Law.\nRemedies Upon Early Termination.\n(a)\nAccrued and Unpaid Amounts. In the event of an early termination of this\nAgreement for any reason, Owner shall pay Operator any accrued and unpaid amounts required to\nbe paid by Owner under this Agreement, including the Front-End Transition Service Fee, the T&D\nPass-Through Expenditures, the Generation Pass-Through Expenditures, any Capital Costs, any\nOutage Event Costs, the Fixed Fee and the Incentive Fee, in each case, as of the effective date of\nsuch termination.\n(b)\nBack-End Transition Service Fee. In the event of an early termination of\nthis Agreement pursuant to Section 14.2, (Termination for Operator Event of Default),\nSection 14.4 (Termination for Owner Event of Default) or Section 14.5, (Additional Termination\nRights), and if Operator is performing the Back-End Transition Services, Owner shall be\nresponsible for payment of the Back-End Transition Service Fee.\n(c)\n\nTermination Fee.\n\n(i)\nIn the event this Agreement is (A) terminated, revoked, nullified,\ncancelled or otherwise rendered invalid by any duly enacted law of the Commonwealth, as\ndetermined by a final non-appealable judgment by a court of competent jurisdiction (a “Contract\nNullification or Cancellation”), (B) terminated by Operator or Administrator pursuant to\nSection 14.5(a) (Additional Termination Rights – T&D System Sale) or (C) terminated by Operator\npursuant to Section 14.5(f) (Additional Termination Rights – Change in Regulatory Law), but only\nif such termination is as a result of the circumstances described in clauses (ii), (iii) or (iv) of the\ndefinition of “Change in Regulatory Law”, Owner shall pay Operator the Operator Termination\nFee. For the avoidance of doubt, Owner shall have no obligation to pay the Operator Termination\nFee other than in the circumstances described in clauses (A), (B) and (C) of the preceding sentence.\n(ii)\nIn the event of an early termination of this Agreement by\nAdministrator due to either (A) a Minimum Performance Threshold Default or (B) an Operating\nBudget Overrun Default, Operator shall pay Owner the Owner Termination Fee. For the avoidance\nof doubt, Operator shall have no obligation to pay the Owner Termination Fee other than in the\nevent of an early termination of this Agreement by Administrator due to a Minimum Performance\nThreshold Default or an Operating Budget Overrun Default.\n(iii) The Parties hereby acknowledge and agree that, notwithstanding\nanything to the contrary in this Agreement:\n(A)\nif this Agreement is (1) terminated due to a Contract\nNullification or Cancellation, (2) terminated by Operator pursuant to Section 14.5(a) (Additional\n\n126'}, {'number': 134, 'text': 'CONFIDENTIAL\nTermination Rights – T&D System Sale) or (3) terminated by Operator pursuant to Section 14.5(f)\n(Additional Termination Rights – Change in Regulatory Law) (but only if such termination is as a\nresult of the circumstances described in clauses (ii), (iii) or (iv) of the definition of “Change in\nRegulatory Law”), Operator’s damages would be difficult or impossible to quantify with\nreasonable certainty, and accordingly, the payment to Operator of the Operator Termination Fee\n(x) is a payment of liquidated damages (and not penalties), which is based on the Parties’ estimate\nof damages Operator would suffer or incur, and (y) shall constitute Operator’s sole and exclusive\nremedy for all monetary damages, costs, losses and expenses of whatever type or nature arising\nfrom or related to this Agreement due to the events described in clauses (1), (2), and (3) of this\nsentence; and\n(B)\nif this Agreement is terminated by Administrator due to a\nMinimum Performance Threshold Default or an Operating Budget Overrun Default, Owner’s\ndamages would be difficult or impossible to quantify with reasonable certainty, and accordingly,\nthe payment to Owner of the Owner Termination Fee (x) is a payment of liquidated damages (and\nnot penalties), which is based on the Parties’ estimate of damages Owner would suffer or incur,\nand (y) shall constitute Owner’s sole and exclusive remedy for all monetary damages, costs, losses\nand expenses of whatever type or nature arising from or related to termination of this Agreement\ndue to a Minimum Performance Threshold Default or an Operating Budget Overrun Default.\n(iv)\nEach of Operator and Owner hereby irrevocably waives any right it\nmay have to raise as a defense that the Owner Termination Fee and Operator Termination Fee,\nrespectively, are excessive or punitive.\n(d)\nAdditional Remedies. The Parties agree that, except as otherwise provided\nin this Agreement (including the sole and exclusive remedies set forth in Section 4.1(c) (FrontEnd Transition Period Generally – Administrative Expense Treatment), Section 4.8 (Failure of\nService Commencement Date Conditions) and Section 14.6(c) (Remedies Upon Early Termination\n– Termination Fee)) in which cases the remedy specified in such provision shall be the sole remedy\navailable, in the event that the Agreement is terminated early due to an Event of Default in\naccordance with the terms hereof, any other Party may exercise any rights it has under this\nAgreement and under Applicable Law to recover damages, secure specific performance or obtain\ninjunctive relief. Notwithstanding anything to the contrary herein, including any Party’s rights\notherwise available under this Agreement or Applicable Law:\n(i)\nexcept as specified in Section 18.3(a) (Limitation on Liability –\nOperator General Limitations) and Section 18.3(b) (Limitation on Liability – Gross Negligence,\nWillful Misconduct) for the Losses specified in each such provision, in which event the caps\nspecified in Section 18.3(a) (Limitation on Liability – Operator General Limitations) and\nSection 18.3(b) (Limitation on Liability – Gross Negligence, Willful Misconduct), respectively,\nshall apply regardless of how or when any such Losses arise or occur, and except for the exclusive\nremedies set forth in the first sentence of this Section 14.6(d) (Remedies Upon Early Termination\n– Additional Remedies), any Losses payable by Operator to Owner howsoever and whensoever\narising pursuant to this Agreement, including whether for breach of contract or otherwise, shall be\nlimited to US$10,000,000; and\n\n127'}, {'number': 135, 'text': 'CONFIDENTIAL\n(ii)\nany Losses payable by Owner to Operator howsoever and\nwhensoever arising pursuant to this Agreement, including whether for breach of contract or\notherwise, shall be limited to the amount equal to the lesser of (A) the Fixed Fee paid to Operator\nin the immediately preceding Contract Year plus the Incentive Fee earned by Operator in the\nimmediately preceding Contract Year and (B) an amount equal to the net present value of the Fixed\nFee payable over the remainder of the Term discounted at a rate of six percent (6%) plus the\nIncentive Fee earned by Operator in the immediately preceding Contract Year, except for Losses\nrelated to gross negligence or willful misconduct of the Owner Indemnitees, which shall not be\nsubject to any cap.\n(e)\nDebarment. Upon the termination of this Agreement pursuant to\nSection 14.2 (Termination for Operator Event of Default), Operator shall be disqualified from\ncontracting with any Commonwealth Governmental Body for ten (10) years in accordance with\nSection 10(a)(15)(c) of Act 29.\n\n128'}, {'number': 136, 'text': 'CONFIDENTIAL\nARTICLE 15\nDISPUTE RESOLUTION\nScope. Except as otherwise expressly provided in this Agreement, any\ndispute among the Parties arising out of, relating to or in connection with this Agreement or the\nexistence, interpretation, breach, termination or validity thereof (a “Dispute”) shall be resolved in\naccordance with the procedures set forth in this Article 15 (Dispute Resolution), which shall\nconstitute the sole and exclusive procedures for the resolution of such Disputes (the “Dispute\nResolution Procedure”), including as to the validity of any termination or effective date of any\ntermination. Operator acknowledges and agrees that Administrator (or any Designated Person\nappointed by Administrator) shall be authorized to participate in or act for and on behalf of Owner\nin any Dispute Resolution Procedure contemplated by this Article 15 (Dispute Resolution). For the\navoidance of doubt, the Dispute Resolution Procedures set forth in this Agreement shall not apply\nto any dispute between a Party and PREB, which disputes shall be subject to resolution in\naccordance with Applicable Law. Notwithstanding anything to the contrary herein, in the event\nthat Operator disagrees with a decision of PREB, nothing shall prejudice, limit or otherwise impair\nOperator’s right to exercise its rights pursuant to Act No. 38 of June 30, 2017 and Section 6.5(c)\nof Act 57.\nCommencement of the Dispute Resolution Procedure.\n(a)\nNotice. If a Dispute arises, any Party may initiate the Dispute Resolution\nProcedure by giving a written notice of the Dispute to the other Party (a “Notice of Dispute”). The\nNotice of Dispute shall contain a brief statement of the nature of the Dispute, set out the relief\nrequested and request that the Dispute Resolution Procedure of this Article 15 (Dispute Resolution)\nbe commenced.\n(b)\nTolling. Any limitation period imposed by this Agreement or by Applicable\nLaw in respect of a Dispute shall be tolled upon the delivery of a Notice of Dispute pursuant to\nthis Section 15.2 (Commencement of the Dispute Resolution Procedure) for the duration of any\nDispute Resolution Procedure pursuant to this Article 15 (Dispute Resolution).\nNegotiation.\n(a)\nGenerally. Upon receipt of a Notice of Dispute from a Party, the Parties\nshall refer the dispute to the Designated Person of each Party. The Designated Persons shall\nnegotiate in good faith and attempt to resolve the Dispute within thirty (30) days after the date on\nwhich the Notice of Dispute was issued, or such longer period as the Designated Persons may\notherwise agree. All communications, negotiations and discussions pursuant to this Section 15.3\n(Negotiation) shall be (i) confidential, (ii) without prejudice privileged, (iii) treated as compromise\nsettlement discussions and negotiations and (iv) not used, offered or admissible as evidence in any\nsubsequent proceeding without the mutual consent of the Parties.\n(b)\n\nNegotiation Period.\n\n(i)\nIf the Dispute remains unresolved thirty (30) days after the Notice\nof Dispute is issued (or such longer period as Operator and Administrator may mutually agree in\n\n129'}, {'number': 137, 'text': 'CONFIDENTIAL\nwriting) (the “Negotiation Period”), then any Front-End Transition Service Fee Estimate Dispute,\nFront-End Transition Service Fee Dispute, Back-End Transition Service Fee Estimate Dispute,\nBack-End Transition Service Fee Dispute, Handover Checklist Dispute, Administrator Dispute,\nService Fee Dispute, Budget Dispute, Service Account Dispute, Disallowed Costs Dispute or\nForce Majeure Event Dispute (each a “Technical Dispute”), or any engineering or technical dispute\nOperator and Administrator mutually agree in writing is a Technical Dispute shall be referred to\nthe Expert Technical Determination procedure set forth in Section 15.4 (Expert Technical\nDetermination Procedure for Technical Disputes) for a final and binding determination.\n(ii)\nIf the Dispute, other than a Technical Dispute, remains unresolved\nafter the end of the Negotiation Period, then the Dispute shall proceed to mediation pursuant to\nSection 15.5 (Mediation), and if necessary, litigation pursuant to Section 15.6 (Litigation as a\nFinal Resort), for a final and binding determination.\nExpert Technical Determination Procedure for Technical Disputes.\n(a)\nGenerally. Any Technical Disputes unresolved within the Negotiation\nPeriod shall be referred to an independent expert (the “Independent Expert”) for a final and binding\nexpert determination (“Expert Technical Determination”).\n(b)\n\nProcedures.\n\n(i)\nFor the purposes of this Section 15.4 (Expert Technical\nDetermination Procedure for Technical Disputes), the Independent Expert shall be a reputable\nPerson or Persons possessing expert knowledge and experience for the Expert Technical\nDetermination of the Technical Dispute in question and shall be independent of and impartial as\namong the Parties. Operator and Administrator shall, in the first instance, attempt to agree on an\nIndependent Expert through their respective Designated Persons. If Operator and Administrator\ncannot so agree within ten (10) days after the end of the Negotiation Period, the Parties shall\npromptly (and in any event within five (5) Business Days) apply to the ICC International Centre\nfor ADR (the “ICC”) for the appointment of an Independent Expert in accordance with the ICC\nRules for the Appointment of Experts and Neutrals.\n(ii)\nOnce selected by Operator and Administrator, neither Party shall\ncommunicate independently with the expert, and all communications the Parties make with the\nIndependent Expert must be simultaneously copied to all other Parties.\n(iii) The Independent Expert shall, in consultation with the parties,\ndetermine the procedure to be undertaken in the Expert Technical Determination. The Independent\nExpert shall determine the Technical Dispute within sixty (60) days after his or her appointment\nor as otherwise agreed by the Parties. This sixty (60) day time period may be extended by the\nIndependent Expert or by the agreement of the Parties. A failure to determine the matter within\nsixty (60) days shall not be a ground to challenge any award or determination by the Independent\nExpert.\n(iv)\nThe determination by the Independent Expert on any Technical\nDispute shall be final and binding on the Parties hereto. The costs of the Independent Expert shall\n\n130'}, {'number': 138, 'text': 'CONFIDENTIAL\nbe borne by Operator (and, for the avoidance of doubt, shall not be a T&D Pass-Through\nExpenditure), to the extent that the Independent Expert resolves any dispute in Owner’s favor, and\nby Owner, to the extent that the Independent Expert resolves any dispute in Operator’s favor, or\nas determined by the Independent Expert if the dispute is not resolved entirely in favor of Owner\nor Operator. Notwithstanding any other provisions of this Article 15 (Dispute Resolution),\nenforcement of any determination of an Independent Expert may be sought by either of the Parties\nbefore any court of competent jurisdiction. To the extent permitted by law, any rights to appeal\nfrom or cause a review of any such determination by any Independent Expert are hereby waived\nby the Parties.\n(c)\nNot an Arbitrator. The Independent Expert is not an arbitrator and shall not\nbe deemed to be acting in an arbitral capacity.\n(d)\nConfidentiality. The Parties agree that any Expert Technical Determination\ncarried out pursuant to this Section 15.4 (Expert Technical Determination Procedure for Technical\nDisputes) shall be kept private and confidential, and that the existence of the Expert Technical\nDetermination and any element of it (including the identity of the Parties, the identity of all\nwitnesses and experts who may be called upon in the Expert Technical Determination, all materials\ncreated for the purposes of the Expert Technical Determination, all testimony or other oral\nsubmissions in the Expert Technical Determination, and all documents produced by a Party in\nconnection with an Expert Technical Determination that were not already in the possession of the\nother Party) shall be kept confidential, except (i) with the consent of the Parties, (ii) to the extent\ndisclosure may be lawfully required in bona fide judicial proceedings relating to the Expert\nTechnical Determination, (iii) where disclosure is lawfully required by a legal duty, and (iv) where\nsuch information is already in the public domain other than as a result of a breach of this clause.\nThe Parties also agree not to use any information disclosed to them during the Technical Dispute\nfor any purpose other than in connection with the Expert Technical Determination.\nMediation.\n(a)\nGenerally. If a Dispute, other than a Technical Dispute, remains unresolved\nafter the Negotiation Period, either Operator or Administrator may refer the Dispute to mediation\nthrough a written notice of mediation (the “Notice of Mediation”). Each Party to this Agreement\nagrees that it may not initiate a civil action as provided in Section 15.6 (Litigation as a Final\nResort) (other than provisional relief sought on an expedited basis) unless (i) the matter in question\nhas first been submitted to mediation in accordance with the provisions of this Section 15.5(a)\n(Mediation – Generally) or (ii) such Party would be barred from asserting its claim in a civil action\nif it were required to submit to mediation pursuant to Section 15.3 (Negotiation).\n(b)\n\nProcedures.\n\n(i)\nThe Parties shall, in the first instance, attempt to agree on a mediator\nthrough their respective Designated Persons. If the Parties cannot so agree within thirty (30) days\nafter the Notice of Mediation is sent, either of the Parties may promptly apply to the ICC for\nappointment of a single mediator in accordance with the Mediation Rules of the International\nChamber of Commerce (the “Mediation Rules”). Absent any written agreement to the contrary by\nthe Parties, the mediator shall be an attorney or mediator authorized to practice law in the United\n131'}, {'number': 139, 'text': 'CONFIDENTIAL\nStates or the Commonwealth of Puerto Rico. The mediator shall be paid for the mediation services,\nand shall be reimbursed for all reasonable and documented out-of-pocket costs incurred in carrying\nout the mediation duties hereunder, including the costs of consultants. All Fees-and-Costs of the\nmediation shall be shared equally by the Parties (and, for the avoidance of doubt, shall not be a\nT&D Pass-Through Expenditure). The Parties shall request that the mediator schedule the\nmediation within thirty (30) days of the mediator’s appointment, and shall comply with all\nprocedures the mediator establishes for the conduct of the mediation. Absent any written\nagreement to the contrary by the Parties, if the Dispute is not resolved within ninety (90) days of\nthe Notice of Mediation, the mediation shall be terminated.\n(ii)\nFor the avoidance of doubt, absent the written agreement of the\nParties, the Mediation Rules shall not apply to any mediation carried out pursuant to this\nSection 15.5(b) (Mediation – Procedures). Rather, the reference to the ICC and the Mediation\nRules above should be understood as referring solely to the designation of the ICC as an appointing\nauthority to appoint a mediator pursuant to the procedures set forth in the Mediation Rules in the\nevent the Parties are unable to agree on a mediator within the timeframe specified.\n(c)\nConfidentiality. The Parties agree that any mediation carried out pursuant\nto this Section 15.5(b) (Mediation – Procedures) shall be kept private and confidential, and that\nthe existence of the mediation and any element of it (including the identity of the Parties, the\nidentity of all witnesses and experts who may be called upon at the mediation, all materials created\nfor the purposes of the mediation, all testimony or other oral submissions at the mediation, and all\ndocuments produced by a Party in connection with a mediation that were not already in the\npossession of the other Party) shall be kept confidential, except (i) with the consent of the Parties,\n(ii) to the extent disclosure may be lawfully required in bona fide judicial proceedings relating to\nthe mediation, (iii) where disclosure is lawfully required by a legal duty and (iv) where such\ninformation is already in the public domain other than as a result of a breach of this clause. The\nParties also agree not to use any information disclosed to them during the mediation for any\npurpose other than in connection with the mediation.\nLitigation as a Final Resort.\n(a)\nCivil Action. In the event that the Parties fail to resolve any Dispute, other\nthan a Technical Dispute, within ninety (90) days after the date the mediator is selected pursuant\nto the procedures set forth in Section 15.5(b) (Mediation – Procedures) (or such longer period as\nthe Parties may mutually agree), either Party may initiate a civil action in the Commonwealth\nCourt and in accordance with all applicable rules of civil procedure. The Parties acknowledge and\nunderstand that, to resolve any and all claims arising out of this Agreement (other than any\nTechnical Dispute), they may file a civil action, including actions in equity, in the Commonwealth\nCourt. Owner and Operator each irrevocably consents to the exclusive jurisdiction of such courts\nin any such actions or proceedings, waives any objection it may have to the jurisdiction of any\nsuch action or proceeding, as well as objections or defenses based on sovereign immunity. The\nParties acknowledge and agree that the terms and conditions of this Agreement have been freely,\nfairly and thoroughly negotiated.\n(b)\nCosts and Expenses. Except as required by Operator’s indemnity\nobligations under Section 18.1 (Indemnification by Operator), each Party shall bear its own costs\n132'}, {'number': 140, 'text': 'CONFIDENTIAL\nand expenses in any Legal Proceeding where it is the named defendant or in any Legal Proceeding\namong the Parties (and, for the avoidance of doubt, such costs and expenses shall not be a T&D\nPass-Through Expenditure). Notwithstanding the foregoing, each Party retains its rights to bring\nany Legal Proceeding or to implead the other Party as to any matter arising hereunder.\nWaiver of Jury Trial. EACH PARTY HEREBY WAIVES, TO THE\nFULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO\nA TRIAL BY JURY IN RESPECT OF ANY PROCEEDING BROUGHT UNDER THIS\nAGREEMENT. Each Party (i) certifies that no representative of any other Party has represented,\nexpressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce\nthe foregoing waiver, and (ii) acknowledges that it and each other Party has been induced to enter\ninto this Agreement by, among other things, the mutual waivers and certifications in this\nAgreement.\nProvisional Relief. Notwithstanding any other provision in this Agreement,\nno Party shall be precluded from initiating a proceeding in the Commonwealth Court for the\npurpose of obtaining any emergency or provisional remedy to protect its rights that may be\nnecessary and that is not otherwise available under this Agreement, including temporary and\npreliminary injunctive relief, restraining orders and other remedies to avoid imminent irreparable\nharm, provide uninterrupted electrical and other services or preserve the status quo pending the\nconclusion of such negotiation, mediation or litigation. The commencement of or participation in\nan action for provisional relief with regard to Technical Disputes shall not constitute a waiver of\nthe requirements or procedures of Section 15.5 (Mediation).\nContinuing Obligations. The Parties agree that during the resolution of a\nDispute pursuant to the Dispute Resolution Procedure, the Parties shall continue to perform their\nobligations under this Agreement; provided that such performance shall (i) be without prejudice\nto the rights and remedies of any of the Parties and (ii) not be read or construed as a waiver of a\nParty’s right to claim for recovery of any loss, costs, expenses or damages suffered as a result of\nthe continued performance of this Agreement.\n\n133'}, {'number': 141, 'text': 'CONFIDENTIAL\nARTICLE 16\nBACK-END TRANSITION\nSuccessor Operator. After the Service Commencement Date, upon\n(i) Operator’s receipt of a termination notice from Owner or Administrator’s receipt of a\ntermination notice from Operator, in each case under Article 14 (Events of Default; Remedies) or\n(ii) twelve (12) months prior to the expiry of the later of (A) the Initial Term or (B) the Extension\nTerm (such date, the “Back-End Transition Commencement Date”), Administrator, on behalf of\nOwner, shall initiate efforts, including such procurement process as may be required, to identify\nand select a successor operator as promptly as practicable. Operator shall have the right to submit\na proposal in such procurement on the same basis as other proponents. For the avoidance of doubt,\nif this Agreement is terminated prior to the Service Commencement Date, the Back-End Transition\nCommencement Date shall not occur.\nBack-End Transition Services.\n(a)\nGenerally. Subject to Section 16.2(c) (Back-End Transition Services –\nTransition Expiry Date) and Section 16.4(c)(ii) (Back-End Transition Period Compensation –\nFunding), upon the occurrence of the Back-End Transition Commencement Date, Operator, in\naddition to providing the O&M Services, shall (i) perform the Back-End Transition Services\nspecified in the Back-End Transition Plan, (ii) comply with the obligations set forth in\nSection 16.2(b) (Back-End Transition Services – Certain Obligations), (iii) reasonably cooperate\nwith Administrator during any procurement process to identify a successor operator and (iv)\ncommence preparations for an orderly transition of ServCo and the T&D System to Owner or\nAdministrator (or their designee); provided that to the extent the Back-End Transition Services\ninclude performance of O&M Services after the Initial Term or, if applicable, the Extension Term,\na Tax Opinion and a Reliance Letter shall be obtained, at the cost of Owner or Administrator, with\nrespect to any such Back-End Transition Services.\n(b)\nCertain Obligations. Without limiting the generality of the Back-End\nTransition Services specified in the Back-End Transition Plan, Operator shall, in addition to or as\npart of the Back-End Transition Services:\n(i)\nsubject to, and except as provided in Section 14.4 (Termination for\nOwner Event of Default), cease to perform the O&M Services on the date and to the extent\nspecified by Administrator;\n(ii)\ncollect all documentation and materials in Operator’s care, custody\nor control associated with work in progress and provide a reasonably detailed status report on each\nsuch item to Administrator;\n(iii) sell at fair market value all existing materials and supplies utilized\nby Operator in the operation and maintenance of the T&D System (to the extent not owned by\nOwner or paid for as a T&D Pass-Through Expenditure) to Owner or the successor operator, as\nAdministrator shall direct, if any;\n\n134'}, {'number': 142, 'text': 'CONFIDENTIAL\n(iv)\nin accordance with Prudent Utility Practice, promptly take all action\nas reasonably necessary to protect and preserve all materials, equipment, tools, facilities and other\nproperty at the T&D System Sites;\n(v)\nremove from the T&D System Sites all equipment, implements,\nmachinery, tools, temporary facilities of any kind and other property owned or leased by Operator,\nif any, which are not to be transferred to Owner or any successor operator, and reasonably repair\nany damage caused by such removal;\n(vi)\nin accordance with Prudent Utility Practice, leave the T&D System\nSites in a neat, safe, orderly and fully operational condition, subject to reasonable wear and tear;\n(vii) leave the T&D System Sites with consumables and spare parts in\nquantities consistent with Prudent Utility Practice and return to Owner any non-fixed assets in\ngood working order and condition, subject to reasonable wear and tear;\n(viii) remove all employees of ManagementCo or its Affiliates (excluding\nServCo) and any Subcontractors from the T&D System Sites;\n(ix)\nwith respect to any ongoing Capital Improvements, promptly deliver\nto Administrator a list of all material supplies, materials, machinery, equipment, property and\nspecial order items previously delivered or fabricated by Operator or any Contractor or\nSubcontractor but not yet incorporated in the T&D System Sites;\n(x)\ndeliver to Administrator all computer programs used at the T&D\nSystem Sites in the performance of O&M Services under the care, custody or control of Operator,\nincluding all revisions and updates thereto;\n(xi)\ndeliver to Administrator a list of all books, records, customer lists,\naccount information, personnel information, drawings, reports, plans and other data in Operator’s\npossession or control relating to the performance of the O&M Services and copies thereof;\n(xii)\nin the custody of Operator;\n\ndeliver to Administrator copies of current maps of the T&D System\n\n(xiii) provide Administrator with a list of all files, and access and security\ncodes under Operator’s care, custody or control with instructions and demonstrations which show\nhow to open and change such codes;\n(xiv) promptly deliver to Administrator copies of all Contracts and\nSubcontracts, together with a statement of (A) the items ordered and not yet delivered pursuant to\neach such Contract or Subcontract, (B) the expected delivery date of all such items, (C) the total\ncost of each agreement and the terms of payment, and (D) the estimated cost of canceling each\nContract or Subcontract;\n(xv) as Administrator shall direct, terminate or assign to Owner all\nContracts and Subcontracts and make no additional agreements with Contractors or Subcontractors\nwith respect to the T&D System without the prior written approval of Administrator;\n135'}, {'number': 143, 'text': 'CONFIDENTIAL\n(xvi) advise Administrator promptly of any special circumstances that\nmight limit or prohibit cancellation of any System Contract, Contract or Subcontract;\n(xvii) as reasonably directed by Administrator, transfer to Owner by\nappropriate instruments of title, and deliver to the T&D System Sites (or such other place as\nAdministrator may specify), all special order items pursuant to this Agreement for which Owner\nhas made or is obligated to make payment;\n(xviii) as directed by Administrator, transfer or assign to Owner all\nwarranties given by any manufacturer, Contractor or Subcontractor with respect to particular\ncomponents of the O&M Services;\n(xix) notify Administrator in writing of any legal proceedings against\nOperator by any Contractor, Subcontractor or other third-parties relating to the termination of the\nO&M Services or any Contracts or Subcontracts;\n(xx) as directed by Administrator, provide written notice of termination,\neffective as of the date of termination of this Agreement, under each policy of Required Insurance\n(with a copy of each such notice to Owner and Administrator); provided that if Administrator\nelects to continue such policies in force thereafter for Owner and at Owner’s expense, Operator\nshall use its commercially reasonable efforts to ensure that Administrator is able to do so;\n(xxi) to the extent requested by Administrator, and at the sole cost and\nexpense of Owner, retain any or all senior management employees and make them available, for\nup to six (6) months following expiration or earlier termination of the Term, to provide on-site,\nreal time consulting advice to a successor operator for the T&D System or Owner;\n(xxii) provide Owner, Administrator and, at Administrator’s discretion,\nsuccessor operator with copies of and access to all System Information, Customer Databases and\nother Work Product or tangible embodiments of Intellectual Property of Owner in Operator’s care,\ncustody or control in a form and medium that is reasonably acceptable to the successor operator\nand in a manner that such information and material may be accessed and used on same basis by\nthe successor operator that it was used and accessed by Operator;\n(xxiii) provide reasonable technological and design advice and support, for\nup to six (6) months following expiration or earlier termination of the Term, and deliver any plans,\ndrawings, renderings, blueprints, operating and training manuals, computer programs, spare parts\nor other information in ManagementCo’s care, custody or control useful or necessary for Owner\nor any successor operator to perform the O&M Services; and\n(xxiv) take such other actions, and execute such other documents as may\nbe necessary to effectuate and confirm the foregoing matters, or as may be otherwise necessary or\ndesirable to provide for a safe, effective and efficient transition of the O&M Services to Owner or\na successor operator, minimize Owner’s costs, and take no action which shall increase any amount\npayable to Owner under this Agreement.\n\n136'}, {'number': 144, 'text': 'CONFIDENTIAL\n(c)\nTransition Expiry Date. Operator shall have no obligation to continue\nperforming any Back-End Transition Services as of the earlier of (i) the date which is twelve (12)\nmonths following the expiration or early termination of the Term and (ii) the date on which there\nare no funds available in the Back-End Transition Account, without need for a court decision or\narbitral award confirming Operator’s right to terminate.\nTransfer Obligation. Immediately upon the expiration or earlier\ntermination of this Agreement, at Administrator’s election, in its sole discretion, ManagementCo\nshall transfer all the ownership interests in ServCo and all ServCo corporate books and records to\nOwner or, at Administrator’s direction, its designee free and clear of all Liens and Administrator\nshall accept such transfer at no cost to Owner, Administrator or their designees. If Administrator\nelects such a transfer, the Parties shall mutually agree upon such instruments, agreements and other\ndocuments as may be reasonably necessary to effect such transfer. Following such transfer of the\nServCo ownership interests, ManagementCo shall have no further legal or financial responsibility\nwith respect to the performance of any contracts, leases or licenses held by or in the name of\nServCo, or in relation to any pension, “other post-employment benefits” and other employee and\nvendor obligations, other than for liabilities or obligations which ManagementCo (distinguished\nfrom ServCo) may have specifically assumed for periods prior to such transfer that remain\noutstanding. In addition to and notwithstanding anything to the contrary in the foregoing, the\nParties shall, immediately upon the expiration or earlier termination of this Agreement, implement\nany arrangements contemplated by the Back-End Transition Plan, including arrangements relating\nto (i) the possible hiring of ServCo Employees by a successor operator and (ii) the treatment of\nseverance costs associated with any ServCo Employees not hired by a successor operator. For the\navoidance of doubt, any properly incurred and ordinary course costs related to ServCo Employees\nthat are (x) incurred up to the date of early termination or expiration of this Agreement and (y)\nreflected in then-currently approved Budget shall be T&D Pass-Through Expenditures in\naccordance with Section 7.2 (Pass-Through Expenditures) and Section 7.3 (Budgets).\nBack-End Transition Period Compensation.\n(a)\nGeneral. As compensation for the Back-End Transition Services provided\nby Operator, Owner shall pay Operator the Back-End Transition Service Fee. The Parties\nacknowledge and agree that Federal Funding shall not be used to pay the Back-End Transition\nService Fee. The Back-End Transition Service Fee shall not be subject to any abatement,\ndeduction, counterclaim or set-off of any kind or nature.\n(b)\nBack-End Transition Service Fee. The “Back-End Transition Service Fee”\nshall be an aggregate amount equal to (i) the hourly fully allocated cost rate for each category of\nOperator employee or Affiliate personnel providing Back-End Transition Services multiplied by\n(ii) the number of hours worked by each Operator employee or Affiliate personnel in such category\nproviding Back-End Transition Services plus (iii) ten percent (10%)of the product of (i) and (ii),\nplus (iv) all other reasonable and documented costs and expenses incurred by Operator (without\nmarkup for profit) that are necessary and reasonable in the course of providing the Back-End\nTransition Services, including the cost of any Subcontractors providing Back-End Transition\nServices.\n\n137'}, {'number': 145, 'text': 'CONFIDENTIAL\n(c)\n\nFunding.\n\n(i)\nOwner shall establish one or more accounts from which Owner shall\ndraw funds from time to time to pay Operator the Back-End Transition Service Fee (collectively,\nthe “Back-End Transition Account”).\n(ii)\nPromptly after the Back-End Transition Commencement Date (and\nin any event within five (5) Business Days), Operator shall deliver to Administrator an estimate of\nthe anticipated Back-End Transition Service Fee for the following four and a half (4.5) months,\nsubject to Section 7.8 (Owner Credit Rating). Within ten (10) days of delivery of such estimate,\nand prior to and as a condition to the commencement of any Back-End Transition Services,\nAdministrator shall provide Operator evidence reasonably satisfactory to Operator that an amount\nequal to the sum of the anticipated Back-End Transition Service Fee for the following four and a\nhalf (4.5) months, subject to Section 7.8 (Owner Credit Rating), has been funded in the Back-End\nTransition Account by Owner. Prior to the end of each month during the period in which Operator\nperforms the Back-End Transition Services, Operator shall deliver to Administrator an estimate of\nthe anticipated Back-End Transition Service Fee for the following four and a half (4.5) months,\nsubject to Section 7.8 (Owner Credit Rating). No later than the tenth (10th) Business Day of each\nmonth during the period in which Operator performs the Back-End Transition Services, Owner\nshall replenish the Back-End Transition Account so as to maintain a balance in the Back-End\nTransition Account at the end of each calendar month equal to the sum of the anticipated BackEnd Transition Service Fee for the subsequent four and a half (4.5) months, subject to Section 7.8\n(Owner Credit Rating), and so on subsequently until the Back-End Transition Services conclude.\n(iii) In the event a Dispute arises between Operator and Administrator in\nconnection with Operator’s estimate of the anticipated Back-End Transition Service Fee, the\nmatter shall be subject to resolution as a Technical Dispute in accordance with Article 15 (Dispute\nResolution) (any such Dispute, a “Back-End Transition Service Fee Estimate Dispute”).\n(d)\n\nInvoices.\n\n(i)\nOn or prior to the tenth (10th) day of each month during which\nOperator is performing the Back-End Transition Services, Operator shall provide Administrator\nwith a monthly invoice describing in reasonable detail the prior calendar month’s Back-End\nTransition Services and the corresponding Back-End Transition Service Fee for such prior\ncalendar month. All invoices shall comply with the requirements set forth in Section 9.2(c) (AntiCorruption and Sanctions Laws – Policies and Procedures).\n(ii)\nOperator shall provide promptly to Administrator such additional\nsupporting documentation evidencing the provision of the Back-End Transition Services, if any,\nand the calculation of the Back-End Transition Service Fee related thereto, as Administrator may\nreasonably request and as may be required by Applicable Law. Administrator shall promptly\nadvise Operator of any disputed invoice amounts, and all such disputes which Operator and\nAdministrator are unable to resolve shall be subject to resolution as a Technical Dispute in\naccordance with Article 15 (Dispute Resolution) (any such Dispute, a “Back-End Transition\nService Fee Dispute”).\n\n138'}, {'number': 146, 'text': 'CONFIDENTIAL\n(iii) Payments of undisputed amounts under any invoice shall be due\nwithin thirty (30) days of Administrator’s receipt of such invoice.\n(e)\nAudits. At any time and from time to time during and until the expiration of\nsix (6) years following the end of the period during which Operator performs the Back-End\nTransition Services, Administrator may, upon reasonable prior notice, Audit (or cause to be\nAudited) the books and records of Operator or any Subcontractor in connection with any requests\nfor payment of the Back-End Transition Service Fee, together with the supporting vouchers and\nstatements, and the calculation of the Back-End Transition Service Fee. Subject to the dispute\nresolution provisions in Article 15 (Dispute Resolution), each payment made by Owner hereunder\nshall be subject to subsequent adjustment. Following the determination that any such payment\nadjustment is required, the Party required to make payment shall do so within thirty (30) days of\nthe date of such determination.\nSurrender of the T&D System. Upon completion or the earlier expiration\nof the obligation to provide the Back-End Transition Services in accordance with this Article 16\n(Back-End Transition), Operator and, if and to the extent Administrator requests, its Contractors\nand Subcontractors shall peaceably leave and surrender the T&D System to Owner or its designee\nin a condition consistent with Operator’s responsibilities hereunder.\n\n139'}, {'number': 147, 'text': 'CONFIDENTIAL\nARTICLE 17\nFORCE MAJEURE EVENTS\nNotice; Mitigation.\n(a)\nNotice. The Party claiming a Force Majeure Event (the “Claiming Party”)\nshall notify the other Party in writing, on or promptly after the date it first becomes aware of such\nForce Majeure Event, followed within five (5) Business Days by a written description of (i) the\nForce Majeure Event and the cause thereof (to the extent known), (ii) the date the Force Majeure\nEvent began and its estimated duration, (iii) the manner in which and the estimated time during\nwhich the performance of the Claiming Party’s obligations hereunder will be affected, and the\nimpact, if any, on any scheduled completion dates for Capital Improvements, and (iv) mitigating\nactions that the Claiming Party plans to take in order to reduce the impact of the Force Majeure\nEvent; provided that the Claiming Party’s failure to promptly notify the other Party shall not\npreclude the Claiming Party from obtaining relief with respect to the Force Majeure Event if the\nother Party has not been prejudiced by the Claiming Party’s delay to provide prompt notice.\n(b)\nMitigation. Whenever a Force Majeure Event shall occur, the Claiming\nParty shall, as promptly as reasonably possible, use commercially reasonable efforts to mitigate or\neliminate the cause therefor, reduce costs resulting therefrom, mitigate and limit damage to the\nother Party and resume full performance under this Agreement.\n(c)\nBurden of Proof. The Claiming Party shall bear the burden of proof as to\nthe existence and impact of the Force Majeure Event, and shall furnish promptly in writing (if and\nto the extent available to it) any additional documents or other information relating to the Force\nMajeure Event reasonably requested by the other Party. While the Force Majeure Event continues,\nthe Claiming Party shall give notice to the other Party before the first day of each succeeding\nmonth updating the information previously submitted with respect to the nature, cause, impact and\npotential duration of the Force Majeure Event pursuant to this Section 17.1 (Notice; Mitigation).\nThe Parties hereby agree that, in the event that a Dispute arises between the Parties in connection\nwith whether and to the extent an event, circumstance or condition constitutes a Force Majeure\nEvent, or whether such Force Majeure Event continues, the matter shall be subject to resolution as\na Technical Dispute in accordance with Article 15 (Dispute Resolution) (any such Dispute, a\n“Force Majeure Event Dispute”).\n(d)\nNotice of Cessation of Force Majeure Event. Upon the cessation of a Force\nMajeure Event, including a determination by the Independent Expert that a Force Majeure Event\nno longer exists, the Claiming Party shall (i) promptly (but in any event within five (5) Business\nDays) provide notice to the other Party and (ii) promptly thereafter resume compliance with this\nAgreement.\nRelief.\n(a)\nGenerally. If and to the extent a Force Majeure Event interferes with, delays\nor increases the cost of, a Party’s performance of its obligations under this Agreement, and such\nParty has given timely notice and description as required by Section 17.1 (Notice; Mitigation),\nsuch Party shall be excused from performance and any associated Events of Default except to the\n\n140'}, {'number': 148, 'text': 'CONFIDENTIAL\nextent contemplated in Section 17.2(c) (Relief – Extended Event). In the event Operator is the party\nclaiming the Force Majeure Event, Operator shall be (i) excused with respect to the achievement\nof any Performance Metrics affected by the Force Majeure Event and (ii) entitled to request\nappropriate adjustments to the Budgets or the Performance Metrics in accordance with Section 7.4\n(Budget Policy).\n(b)\nLimitations. The occurrence of Force Majeure Event shall not excuse or\ndelay the performance of (i) a Party’s obligation to pay amounts previously accrued and owing\nunder this Agreement, including any earned but unpaid Service Fees, (ii) Owner’s obligation to\ncontinue to pay the Fixed Fee and to deposit and make funds available for Operator’s use in the\nService Accounts in accordance with Article 7 (Compensation; Budgets) and (iii) any obligation\nhereunder not affected by the occurrence of the Force Majeure Event.\n(c)\nExtended Event. In addition to all other relief pursuant to this Agreement,\nincluding under Section 4.1(f) (Front-End Transition Period Generally – Liability Waiver),\nSection 4.8(c) (Failure of Service Commencement Conditions – Effect of Force Majeure Events or\nOwner Fault) and Section 7.4 (Budget Policy), if and to the extent a Force Majeure Event continues\nfor a period in excess of one hundred twenty (120) consecutive days and materially interferes with,\ndelays or increases the cost of the O&M Services in accordance herewith, and a Party has given\ntimely notice and description as required by Section 17.1 (Notice; Mitigation), Administrator and\nOperator shall negotiate in good faith to determine whether modifications to the Service Fee, Term\nor other provisions of this Agreement are appropriate under the circumstances; provided any such\nmodification (i) shall not be effective until Administrator has obtained, at the cost of Owner or\nAdministrator, a Tax Opinion and a Reliance Letter with respect to any such modification and (ii)\nshall be subject to approval by PREB in accordance with Applicable Law.\n\n141'}, {'number': 149, 'text': 'CONFIDENTIAL\nARTICLE 18\nINDEMNIFICATION\nIndemnification by Operator.\n(a)\nGenerally. Subject to the limitations on liability set forth in this Section 18.1\n(Indemnification by Operator), Section 18.3 (Limitation on Liability), Section 18.4 (Insurance and\nOther Recovery), Section 18.5 (Liability Limitation for Certain Damages) and Section 18.6\n(Additional Liability Limitation for Certain Damages), Operator shall indemnify, defend and hold\nharmless Owner, Administrator and their respective Affiliates and Representatives (each,\nincluding Owner, an “Owner Indemnitee”), from and against (and pay the full amount of) any and\nall Losses incurred by an Owner Indemnitee to the extent arising or resulting from, in each case,\nas determined by a final and non-appealable judgment by a court of competent jurisdiction: (i) any\nbreach by Operator of any representation or warranty of Operator in this Agreement that has a\nmaterial adverse effect on the T&D System or on the performance or the cost of performance by\nany Party of its respective obligations under this Agreement; or (ii) the negligence (including gross\nnegligence) or willful misconduct of Operator Indemnitees in connection with the performance of\nOperator’s obligations under this Agreement, except in connection with Section 5.10\n(Environmental Health and Safety Matters) where the applicable standard shall be gross\nnegligence or willful misconduct to the extent provided therein. Operator’s indemnification\nobligations hereunder shall not be limited by any coverage exclusions or other provisions in any\ninsurance policy maintained by Operator which is intended to respond to such events.\n(b)\nLimitations. Notwithstanding the foregoing, Operator shall not be required\nto reimburse or indemnify any Owner Indemnitee for any Losses to the extent caused by or due to\n(i) Owner Fault, (ii) a Force Majeure Event, other than to the extent caused by the gross negligence\nor willful misconduct of any Operator Indemnitee in responding to such Force Majeure Event, (iii)\nthe negligence (including gross negligence) or willful misconduct of any Owner Indemnitee), (iv)\nany matter for which Owner expressly indemnifies Operator pursuant to Section 18.2\n(Indemnification by Owner), or (v) events or circumstances arising prior to the Service\nCommencement Date, in each case as determined by a final and non-appealable judgment by a\ncourt of competent jurisdiction.\n(c)\nNotice, Defense and Survival. An Owner Indemnitee shall promptly notify\nOperator in writing pursuant to Section 20.2 (Notices) of this Agreement of the assertion of any\nclaim against it for which it is entitled to be indemnified hereunder, and Operator shall have the\nright to assume the defense of the claim in any Legal Proceeding and to approve any settlement of\nthe claim, such approval not to be unreasonably withheld, delayed or conditioned. For the\navoidance of doubt, any Fees-and-Costs associated with Operator defending Owner Indemnitees\npursuant to this Section 18.1 (Indemnification by Operator) shall be T&D Pass-Through\nExpenditures, except to the extent Operator’s liability to pay such Fees-and-Costs is determined\nby a final and non-appealable judgment by a court of competent jurisdiction. The indemnification\nprovisions in this Section 18.1 (Indemnification by Operator) are (i) for the protection of Owner\nIndemnitees only and shall not establish, of themselves, any liability to any Person not party to\nthis Agreement and (ii) shall survive termination of this Agreement.\n\n142'}, {'number': 150, 'text': 'CONFIDENTIAL\nIndemnification by Owner.\n(a)\nGenerally. Subject to the limitations on liability set forth in this Section 18.2\n(Indemnification by Owner), Section 18.3 (Limitation on Liability), Section 18.4 (Insurance and\nOther Recovery), Section 18.5 (Liability Limitation for Certain Damages) and Section 18.6\n(Additional Liability Limitation for Certain Damages), Owner shall indemnify, defend and hold\nharmless Operator and the Equity Participants and its and their respective Affiliates and\nRepresentatives (each, including Operator, an “Operator Indemnitee”), from and against (and pay\nthe full amount of) any and all Losses incurred by an Operator Indemnitee to the extent arising or\nresulting from, in each case, as determined by a final and non-appealable judgment by a court of\ncompetent jurisdiction: (i) any breach by Owner or Administrator of any of its respective\nrepresentations or warranties in this Agreement that has a material adverse effect on the T&D\nSystem or on the performance or the cost of performance by any Party of its respective obligations\nunder this Agreement; (ii) any failure by Owner or Administrator to perform its obligations under\nthis Agreement or resulting from any Owner Fault; (iii) claims of any nature relating to the T&D\nSystem, Owner’s operation thereof or any matter in the nature of the services to be provided by,\nor any other obligations imposed on, Operator hereunder, in each case based on events or\ncircumstances to the extent arising prior to the Service Commencement Date or relating to Legacy\nGeneration Assets, or any fiber optic cable infrastructure or other facilities, equipment and other\nassets related to telecommunications in which Owner or PREPA Networks, LLC has an ownership\nor leasehold interest (other than in connection with Operator’s obligations under Section I.A(6) of\nAnnex I (Scope of Services)); (iv) the negligence (including gross negligence) or willful\nmisconduct of Owner Indemnitees in connection with this Agreement; (v) claims brought by\nOwner employees or former employees with respect to the non-payment or underfunding of\nbenefits under Owner’s pension or other employee benefit plans; (vi) claims brought against\nOperator by a T&D Customer in connection with the T&D System or Operator’s performance of\nthe O&M Services; (vii) claims brought against Operator by a Person not party to this Agreement\nin connection with the T&D System or Operator’s performance of the O&M Services for loss of\nprofits or revenues or special, exemplary, punitive, indirect or consequential damages, howsoever\nor whensoever arising and whether or not caused by the negligence of any Operator Indemnitee;\nor (viii) Pre-Existing Environmental Conditions, other than an exacerbation of such Pre-Existing\nEnvironmental Conditions to the extent caused by the gross negligence or willful misconduct of\nany Operator Indemnitee.\n(b)\nLimitations. Owner’s indemnification obligations hereunder shall not be\nlimited by any coverage exclusions or other provisions in any insurance policy maintained by\nOwner which is intended to respond to such events. Notwithstanding the foregoing, other than\nwith respect clauses (vii) and (viii) of Section 18.2(a) (Indemnification by Owner – Generally), to\nwhich the following statement shall not apply, Owner shall not be required to reimburse or\nindemnify any Operator Indemnitee for any Losses to the extent caused by or due to: (i) a Force\nMajeure Event, other than to the extent caused by the gross negligence or willful misconduct of\nany Owner Indemnitee in responding to such Force Majeure Event; (ii) the negligence (including\ngross negligence) or willful misconduct of any Operator Indemnitee; or (iii) any matter for which\nOperator expressly indemnifies Owner pursuant to Section 18.1 (Indemnification by Operator), in\neach case as determined by a final and non-appealable judgment by a court of competent\njurisdiction.\n\n143'}, {'number': 151, 'text': 'CONFIDENTIAL\n(c)\nNotice, Defense and Survival. An Operator Indemnitee shall promptly\nnotify Owner in writing pursuant to Section 20.2 (Notices) of this Agreement of the assertion of\nany claim against it for which it is entitled to be indemnified hereunder, and Owner shall have the\nright to assume the defense of the claim in any Legal Proceeding and to approve any settlement of\nthe claim, such approval not to be unreasonably withheld, delayed or conditioned. Any amount\npayable by Owner to any Operator Indemnitee pursuant to this Section 18.2 (Indemnification by\nOwner) that remains unsatisfied for a period of sixty (60) days shall be treated as a T&D PassThrough Expenditure; provided, however, that the foregoing shall not limit Owner’s ability to\ncontest whether such payment is due. The provisions in this Section 18.2 (Indemnification by\nOwner) (i) are for the protection of Operator Indemnitees only and shall not establish, of\nthemselves, any liability to any Person not party to this Agreement and (ii) shall survive\ntermination of this Agreement.\nLimitation on Liability. Notwithstanding anything contained in this\nAgreement to the contrary:\n(a)\n\nOperator General Limitations.\n\n(i)\nExcept as set forth in Section 18.3(b) (Limitation on Liability –\nGross Negligence; Willful Misconduct), Operator’s liability to Owner Indemnitees under\nSection 18.1 (Indemnification by Operator), including Disallowed Costs, shall be limited to\nUS$35,000,000 in the aggregate for Losses occurring in any Contract Year; and US$105,000,000\nin the aggregate for all Losses during the Term.\n(ii)\nFrom the Effective Date until the end of the second (2nd) Contract\nYear, Operator shall not be liable for any Loss incurred by an Owner Indemnitee pursuant to\nSection 18.1 (Indemnification by Operator) unless and until the aggregate amount of such Losses\nin such Contract Year exceeds US$5,000,000 (as adjusted on a Pro Rata basis for a partial Contract\nYear), in which event Operator shall then be liable for all Losses in excess of US$5,000,000 (as\nadjusted on a Pro Rata basis for a partial Contract Year), subject to the limitation on liability set\nforth in Section 18.3(a) (Limitations on Liability – Operator General Limitations).\n(iii) From the beginning of the third (3rd) Contract Year until the end of\nthe Term, Operator shall not be liable for any Loss incurred by an Owner Indemnitee pursuant to\nSection 18.1 (Indemnification by Operator) unless and until the aggregate amount of such Losses\nin such Contract Year exceeds US$2,500,000 (as adjusted on a Pro Rata basis for a partial Contract\nYear), in which event Operator shall then be liable for all Losses in excess of US$2,500,000 (as\nadjusted on a Pro Rata basis for a partial Contract Year), subject to the limitation on liability set\nforth in Section 18.3(a) (Limitations on Liability – Operator General Limitations).\n(iv)\nFor the avoidance of doubt, Operator shall not be liable to Owner\nIndemnitees to the extent Owner is determined, by a final and non-appealable judgment by a court\nof competent jurisdiction, to have acted or refrained from acting in accordance with the terms of\nthis Agreement.\n(b)\n\nGross Negligence; Willful Misconduct.\n\n144'}, {'number': 152, 'text': 'CONFIDENTIAL\n(i)\nOperator’s liability to Owner Indemnitees for any Losses\nattributable to any Operator Indemnitee’s gross negligence or willful misconduct under this\nAgreement, including under Section 18.1 (Indemnification by Operator) and any Disallowed Costs\nattributable to Operator Indemnitees’ gross negligence or willful misconduct, shall be limited to:\nUS$35,000,000 for all Losses occurring in each Contract\n(A)\nYear for each of the first five (5) Contract Years;\n(B)\nUS$52,500,000 for all Losses occurring in each Contract\nYear for each subsequent Contract Year, and\n(C)\n\na total maximum of US$105,000,000 in the aggregate for all\n\nLosses during the Term.\n(ii)\nIf any liability for Losses is attributable in part to gross negligence\nand in part to negligence, then such liability shall be apportioned such that the portion of the Loss\nattributable to negligence shall be subject to the limitation on liability set forth in set forth in\nSection 18.3(a)(i) (Limitations on Liability – Operator General Limitations).\n(c)\nNo Administrator Liability. Administrator shall not be liable to Operator\nIndemnitees under this Agreement.\nInsurance and Other Recovery.\n(a)\nGenerally. The amount of any Losses that are subject to indemnification,\ncompensation or reimbursement under this Agreement shall be reduced by the amount of any\ninsurance proceeds and any indemnity, contribution or other similar payment actually received by\nOwner Indemnitee or Operator Indemnitee, as applicable, in respect of such Losses or any of the\nevents, conditions, facts or circumstances resulting in or relating to such Losses (“Third-Party\nPayments”). If an Owner Indemnitee or Operator Indemnitee, as applicable, receives any\nThird-Party Payment with respect to any Losses for which it has previously been indemnified\n(directly or indirectly) by an Indemnifying Party, Owner Indemnitee or Operator Indemnitee, as\napplicable, shall promptly (and in any event within five (5) Business Days after receiving such\nThird-Party Payment) pay to the Indemnifying Party an amount equal to such Third-Party Payment\nor, if it is a lesser amount, the amount of such previously indemnified Losses. Owner Indemnitee\nor Operator Indemnitee, as applicable, shall use commercially reasonable efforts to recover under\ninsurance policies or indemnity, contribution or other similar agreements other than this\nAgreement for any Losses to the same extent such Party would if such Losses were not subject to\nindemnification, compensation or reimbursement hereunder.\n(b)\nSubrogation of Claims. If a Party makes any indemnity payment for any\nLosses suffered or incurred by an Owner Indemnitee or Operator Indemnitee, as applicable,\npursuant to the provisions of this Article 18 (Indemnification), such indemnifying Party shall be\nsubrogated, to the extent of such payment, to all rights and remedies of the Owner Indemnitee or\nOperator Indemnitee, as applicable, to any insurance benefits or other claims of the Owner\nIndemnitee or Operator Indemnitee, as applicable, with respect to such Losses and with respect to\nthe matter giving rise to such Losses.\n\n145'}, {'number': 153, 'text': 'CONFIDENTIAL\nLiability Limitation for Certain Damages. TO THE FULLEST EXTENT\nPERMITTED BY LAW, NEITHER OPERATOR INDEMNITEES NOR OWNER\nINDEMNITEES SHALL BE LIABLE, WHETHER IN CONTRACT, INDEMNITY, TORT\n(INCLUDING NEGLIGENCE, GROSS NEGLIGENCE AND STRICT LIABILITY) OR\nOTHERWISE, FOR ANY LOSS OF PROFITS OR REVENUES (OTHER THAN\nCOMPENSATION DUE BY OWNER TO OPERATOR UNDER THIS AGREEMENT), OR\nANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT, INCIDENTAL OR\nCONSEQUENTIAL DAMAGES WHICH ARISE FROM, RELATE TO OR ARE CONNECTED\nWITH THIS AGREEMENT OR THE PERFORMANCE OF OR FAILURE TO PERFORM\nTHEIR RESPECTIVE OBLIGATIONS HEREUNDER EXCEPT FOR CLAIMS OF FRAUD OR\nINTENTIONAL MISREPRESENTATION.\nAdditional Liability Limitation for Certain Damages.\n(a)\nOWNER AND ADMINISTRATOR UNDERSTAND THAT OPERATOR\nMAY BE PROVIDING O&M SERVICES THAT:\n(i)\nAS OF THE SERVICE COMMENCEMENT DATE,\nINCORPORATE OR ARE RELIANT UPON ASSETS (INCLUDING THE T&D SYSTEM)\nTHAT ARE IN A CONDITION REQUIRING REPAIRS OR IMPROVEMENTS; AND\n(ii)\nINCORPORATE OR ARE RELIANT UPON INFORMATION,\nSYSTEMS, DATA OR INSTRUCTIONS THAT HAVE BEEN, ARE OR ARE TO BE\nPROVIDED BY OWNER OR THIRD-PARTIES.\n(b)\nAS SUCH, OWNER AND ADMINISTRATOR ACKNOWLEDGE AND\nAGREE THAT, EXCEPT TO THE EXTENT ARISING OR RESULTING FROM THE\nNEGLIGENCE (INCLUDING GROSS NEGLIGENCE) OR WILLFUL MISCONDUCT OF\nOPERATOR INDEMNITEES IN CONNECTION WITH THIS AGREEMENT, OPERATOR\nINDEMNITEES:\n(i)\nSHALL HAVE NO RESPONSIBILITY OR LIABILITY FOR\nANY MATTER THAT IS THE SUBJECT OF THE SYSTEM REMEDIATION PLAN DURING\nTHE PERIOD OPERATOR IS REPAIRING OR IMPROVING THE T&D SYSTEM ASSETS,\nBUSINESS PROCESS OR CONTROLS, WHETHER FORMAL OR INFORMAL, INCLUDING\nACCOUNTING, INFORMATION, TECHNOLOGY AND ADMINISTRATIVE FUNCTIONS,\nIN EACH CASE RELATED TO SUCH MATTER IN ACCORDANCE WITH THE SYSTEM\nREMEDIATION PLAN (FOR THE AVOIDANCE OF DOUBT, OPERATOR SHALL NOT BE\nLIABLE FOR DAMAGES ARISING FROM CYBERSECURITY BREACHES OCCURING\nDURING THE PERIOD OPERATOR IS REPAIRING OR IMPROVING THE T&D SYSTEM\nASSETS, BUSINESS PROCESS OR CONTROLS, WHETHER FORMAL OR INFORMAL, IN\nACCORDANCE WITH THE IMPLEMENTATION OF THE SYSTEM REMEDIATION PLAN\nIN SECTION 4.1(D) (FRONT-END TRANSITION PERIOD GENERALLY – TRANSITION TO\nSTANDARD OF PERFORMANCE).); AND\n(ii)\nSHALL HAVE NO LIABILITY HEREUNDER FOR ANY\nDEFECT, ERROR, DEFAULT, DELAY OR LOSSES ARISING AS A RESULT OF ANY\n\n146'}, {'number': 154, 'text': 'CONFIDENTIAL\nPROCESSING DEFICIENCY, INACCURACY, ERROR OR OMISSION TO THE EXTENT\nCAUSED BY A THIRD-PARTY OR BY INFORMATION, SYSTEMS, DATA OR\nINSTRUCTIONS PROVIDED BY A THIRD-PARTY, OWNER, ADMINISTRATOR OR\nTHEIR RESPECTIVE REPRESENTATIVES.\n\n147'}, {'number': 155, 'text': 'CONFIDENTIAL\nARTICLE 19\nREPRESENTATIONS AND WARRANTIES\nRepresentations and Warranties of Owner. Owner hereby represents and\nwarrants to Operator that:\n(a)\nExistence and Powers. Owner is a public corporation and instrumentality of\nthe Commonwealth duly organized, validly existing and in good standing under the laws of the\nCommonwealth. Owner has the required corporate power and authority to enter into this\nAgreement, carry out its obligations hereunder and consummate the transactions contemplated\nhereby. Administrator has the required corporate power and authority to carry out its obligations\nunder this Agreement and on behalf of Owner, including the power and authority to bind Owner\nwith respect to any matter contemplated under this Agreement.\n(b)\nDue Authorization and Binding Obligation. The execution and delivery by\nOwner of this Agreement, the performance by Owner of its obligations hereunder and the\nconsummation by Owner of the transactions contemplated hereby have been duly and validly\nauthorized and approved by the required corporate or other similar action on the part of Owner.\nThis Agreement has been duly and validly executed and delivered by Owner, and (assuming due\nauthorization, execution and delivery by Operator) this Agreement constitutes a legal, valid and\nbinding obligation of Owner enforceable against Owner in accordance with its terms, except as\nsuch enforceability may be limited by bankruptcy, insolvency, moratorium or similar Applicable\nLaw affecting creditors’ rights generally and by general equity principles.\n(c)\nNo Conflicts. Neither the execution, delivery or performance by Owner of\nthis Agreement, nor the consummation of the transactions contemplated hereby will: (i) result in a\nmaterial violation or breach of, or material default under, any provision of the organizational\ndocuments of Owner; (ii) result in a violation of, or give any Governmental Body the right to\nchallenge any of the transactions contemplated hereby under, any Applicable Law applicable to\nOwner; (iii) (A) result in a violation or breach of, (B) constitute a default under, (C) result in the\nacceleration of or create in any party the right to accelerate, terminate or cancel or (D) require the\nconsent of any other Person under, any material contract to which Owner is a party; or (iv) result\nin the creation or imposition of any Lien on any properties or assets of Owner.\n(d)\nNo Consents. No consent, declaration or filing with, or notice to, any\nGovernmental Body is required by or with respect to Owner in connection with (i) the execution\nand delivery of this Agreement or (ii) the performance by Owner of its obligations hereunder,\nexcept (A) such as have been duly obtained or made and (B) in the case of clause (ii), for those\nGovernmental Approvals to be obtained after the Effective Date but before the Service\nCommencement Date.\n(e)\nNo Litigation. There is no action, suit or other proceeding, at law or in\nequity, before or by any court or Governmental Body pending against Owner or, to Owner’s\nknowledge, threatened against Owner, which if determined adversely against Owner would\nreasonably be expected to materially and adversely affect (i) the validity or enforceability of this\nAgreement or (ii) the performance by Owner or Operator of their respective obligations hereunder.\n\n148'}, {'number': 156, 'text': 'CONFIDENTIAL\n(f)\nNo Legal Prohibition. There is no Applicable Law in effect on the date\nhereof that would prohibit the execution, delivery or performance by Owner of this Agreement\nand the transactions contemplated hereby.\n(g)\nTitle III Approval. No approval of the Title III Court is required for Owner\nto enter into this Agreement. Owner’s entry into, and the Parties’ performance of, this Agreement,\nconstitutes use or enjoyment by Owner of its revenue-producing property within the meaning of\nsection 305(3) of PROMESA.\n(h)\nCharges. As of the Service Commencement Date, there will be no Liens on\nthe System Revenues other than those specified in or permitted under any Title III Plan and its\nrelated implementing documents.\n(i)\nIntellectual Property. Owner has the right to grant the Intellectual Property\nlicenses that are granted and conveyed to Operator in this Agreement, and Operator’s exercise of\nthe rights granted to it in this Agreement as contemplated in this Agreement will not infringe,\nviolate or misappropriate the Intellectual Property of any third party. There are no suits or other\nlegal actions pending or, to Owner’s knowledge, threatened in writing against Owner alleging\ninfringement, violation or misappropriation of any Owner Intellectual Property.\n(j)\nSystem Contracts. To Owner’s knowledge and except as otherwise\ndisclosed to Operator, (i) each material System Contract is in full force and effect and was procured\nin accordance with applicable Commonwealth law, (ii) there are no pending claims by or against\nany counterparty to a material System Contract, (iii) neither Owner nor any counterparty to a\nmaterial System Contract is in default of its obligations under any material System Contract and\n(iv) Operator is permitted to administer and perform Owner’s obligations under each material\nSystem Contract on Owner’s behalf.\n(k)\nOperation of T&D System. Without limiting any other representations or\nwarranties set out herein, from the Effective Date to the Service Commencement Date, Owner has,\nexcept as otherwise permitted by this Agreement or required by Applicable Law (including\nrequirements related to the Title III Case), operated the T&D System in the ordinary course.\n(l)\nPre-Existing Environmental Conditions. As of the Service Commencement\nDate, after commercially reasonable inquiry, Owner is not aware of any Pre-Existing\nEnvironmental Conditions on or at the T&D System Site which has not been disclosed to Operator\npursuant to the Baseline Environmental Study.\nRepresentations and Warranties of Operator. Operator hereby\nrepresents and warrants to Owner that:\n(a)\nExistence and Powers. ManagementCo is a limited liability company duly\norganized, validly existing and in good standing under the laws of Puerto Rico, and is qualified to\ndo business and in good standing in the Commonwealth. ServCo is a limited liability company\nduly organized, validly existing and in good standing under the laws of Puerto Rico, and is\nqualified to do business and in good standing in the Commonwealth. Each of ManagementCo and\n\n149'}, {'number': 157, 'text': 'CONFIDENTIAL\nServCo has the required corporate power and authority to enter into this Agreement, carry out its\nobligations hereunder and consummate the transactions contemplated hereby.\n(b)\nDue Authorization and Binding Obligation. The execution and delivery by\nOperator of this Agreement, the performance by Operator of its obligations hereunder and the\nconsummation by Operator of the transactions contemplated hereby have been duly and validly\nauthorized and approved by the required corporate or other similar action on the part of Operator.\nThis Agreement has been duly and validly executed and delivered by Operator, and (assuming due\nauthorization, execution and delivery by Owner) this Agreement constitutes a legal, valid and\nbinding obligation of Operator enforceable against Operator in accordance with its terms, except\nas such enforceability may be limited by bankruptcy, insolvency, moratorium or similar\nApplicable Law affecting creditors’ rights generally and by general equity principles.\n(c)\nNo Conflicts. Neither the execution, delivery or performance by Operator\nof this Agreement, nor the consummation of the transactions contemplated hereby will: (i) result\nin a material violation or breach of, or material default under, any provision of the organizational\ndocuments of Operator; (ii) result in a violation of, or give any Governmental Body the right to\nchallenge any of the transactions contemplated hereby under, any Applicable Law applicable to\nOperator; (iii) (A) result in a violation or breach of, (B) constitute a default under, (C) result in the\nacceleration of or create in any party the right to accelerate, terminate or cancel or (D) require the\nconsent of any other Person under, any material contract to which Operator is a party; or (iv) result\nin the creation or imposition of any Lien on any properties or assets of Operator.\n(d)\nNo Consents. No consent, declaration or filing with, or notice to, any\nGovernmental Body is required by or with respect to Operator in connection with (i) the execution\nand delivery of this Agreement or (ii) the performance by Operator of its obligations hereunder,\nexcept (A) such as have been duly obtained or made and (B) in the case of clause (ii), for those\nGovernmental Approvals to be obtained after the Effective Date but before the Service\nCommencement Date.\n(e)\nNo Litigation. There is no action, suit or other proceeding, at law or in\nequity, before or by any court or Governmental Body pending against Operator or, to Operator’s\nknowledge, threatened against Operator, which if determined adversely against Operator would\nreasonably be expected to materially and adversely affect (i) the validity or enforceability of this\nAgreement or (ii) the performance by Operator or Owner of their respective obligations hereunder.\n(f)\nNo Legal Prohibition. There is no Applicable Law in effect on the date\nhereof that would prohibit the execution, delivery or performance by Operator of this Agreement\nand the transactions contemplated hereby.\n(g)\nIntellectual Property. Operator has the right to grant the Intellectual\nProperty licenses that are granted and conveyed to Owner in this Agreement, and Owner’s exercise\nof the rights granted to it in this Agreement as contemplated in this Agreement will not infringe,\nviolate or misappropriate the Intellectual Property of any third party. There are no suits or other\nlegal actions pending or, to Operator’s knowledge, threatened in writing against Operator alleging\ninfringement, violation or misappropriation of any Operator Intellectual Property.\n\n150'}, {'number': 158, 'text': 'CONFIDENTIAL\n(h)\n\nApplicable Law Compliance.\n\n(i)\nNone of Operator or its subsidiaries or, when acting on behalf of\nOperator or its subsidiaries, any director, officer, manager, administrator or employee of Operator\nor its subsidiaries or, in connection with this Agreement or the O&M Services, any Affiliates of\nOperator has:\n(A)\nviolated, conspired to violate, aided and abetted the violation\nof any Anti-Corruption Laws or committed any felonies or misdemeanors under Articles 4.2, 4.3\nor 5.7 of Act No. 1-2012, known as the Organic Act of the Office of Government Ethics of Puerto\nRico, any of the crimes listed in Articles 250 through 266 of Act 146-2012, known as the Puerto\nRico Penal Code, any of the crimes typified in Act 2, or any other felony that involves misuse of\npublic funds or property, including the crimes mentioned in Article 6.8 of Act 8-2017, known as\nthe Act for the Administration and Transformation of Human Resources in the Government of\nPuerto Rico;\n(B)\nfailed to comply at any time with the Anti-Corruption Laws\nand any other Applicable Law that prohibit corruption and regulate criminal acts involving public\nfunctions or public funds applicable to Operator under state, Commonwealth or federal law, or\nsolely with respect to Operator, failed to furnish a Sworn Statement; or\n(C)\nbeen convicted of offenses against public integrity, as\ndefined in the Puerto Rico Penal Code, or of embezzlement of public funds, or has been found\nguilty of any such type of offense in the courts of the Commonwealth, the courts of the United\nStates or any court of any jurisdiction.\n(ii)\nOperator has not, directly or indirectly, made or received, and will\nnot make or receive, any payments in connection with this Agreement or the O&M Services in\norder to illegally or improperly to obtain business or other rights.\n(iii) Operator is not aware that it is being investigated as part of a\ncriminal or civil process by any law enforcement or regulatory authority in connection in any way\nwith the Anti-Corruption Laws or any criminal laws or regulations.\n(iv)\nNone of Operator, its subsidiaries, Parent Company or any directors,\nofficers or employees of any thereof is (A) a Person, or is a Person owned or controlled by a Person\n(a “Sanctioned Person”), with whom dealings are restricted or prohibited by, or are sanctionable\nunder, any economic sanctions or trade restrictions administered or enforced by the U.S.\ngovernment (including the Office of Foreign Assets Control of the U.S. Department of the\nTreasury, the U.S. Department of State or the Bureau of Industry and Security of the U.S.\nDepartment of Commerce), the United Nations Security Council, the European Union or Her\nMajesty’s Treasury or any other authority with jurisdiction over Operator, its subsidiaries or its\nAffiliates (collectively, “Sanctions”) or (B) located, organized or resident in a country or territory\nwith which dealings are broadly restricted, prohibited or made sanctionable under any Sanctions\n(currently, the Crimea, Cuba, Iran, North Korea and Syria) (each, a “Sanctioned Country”).\nOperator and its subsidiaries have not violated and have not engaged in any conduct sanctionable\nunder Sanctions. There are not now, nor have there been within the past five (5) years, any formal\n\n151'}, {'number': 159, 'text': 'CONFIDENTIAL\nor informal proceedings, allegations, investigations or inquiries pending, expected or, to the\nknowledge of the Parent Company, threatened against the Parent Company, Operator, its\nsubsidiaries, or any of their respective officers or directors concerning violations or potential\nviolations of, or conduct sanctionable under, any Sanctions.\n(v)\nNo official or employee of Owner has a direct or indirect economic\ninterest in Operator’s rights under this Agreement in accordance with the provisions of Act 2,\nwhich Operator herein certifies it has received a copy of, read, understood and complied with at\nall times prior to the execution of this Agreement and will subsequently comply with it in its\nentirety.\n(vi)\nOperator does not represent particular interests in cases or matters\nthat imply conflicts of interest, or of public policy, between Owner and the particular interests it\nrepresents.\n(i)\nAccuracy of Information. All of the information relating to Operator or any\nof its Affiliates delivered by or on behalf of Operator to Owner and Administrator in connection\nwith the execution of this Agreement was true, accurate and complete in all material respects when\ndelivered.\n(j)\nAbility to Perform Obligations. Operator has the required authority, ability,\nskills, access to funds, technical support and capacity to perform all its obligations with respect to\nthe O&M Services and all of its other obligations under this Agreement, all in accordance with the\nTransaction Documents.\n(k)\nKnowledge of Requirements. Operator has knowledge in all material\nrespects of all legal requirements and business and engineering practices that must be followed in\nperforming its obligations under this Agreement.\n(l)\nNo Litigation with Owner. Neither Operator nor any of its shareholders or\nits or their Affiliates are involved in any litigation, arbitration or claim against Owner,\nAdministrator, AAFAF or the FOMB.\n\n152'}, {'number': 160, 'text': 'CONFIDENTIAL\nARTICLE 20\nMISCELLANEOUS\nFees and Expenses. Except as otherwise expressly provided in this\nAgreement, all costs and expenses incurred, including fees and disbursements of counsel, financial\nadvisors and accountants, in connection with the negotiation and execution of this Agreement shall\nbe borne by the Party incurring such costs and expenses; provided, however, that, in the event this\nAgreement is terminated in accordance with its terms, the obligation of each Party to bear its own\ncosts and expenses shall be subject to any rights of such Party arising from a breach of this\nAgreement by the other Party prior to such termination.\nNotices. All notices or other communications to be delivered in connection\nwith this Agreement shall be in writing and shall be deemed to have been properly delivered, given\nand received (a) on the date of delivery if delivered by hand during normal business hours of the\nrecipient during a Business Day, otherwise on the next Business Day, (b) on the date of successful\ntransmission if sent via email (with return receipt) during normal business hours of the recipient\nduring a Business Day, otherwise on the next Business Day, or (c) on the date of receipt by the\naddressee if sent by a nationally recognized overnight courier or by registered or certified mail,\nreturn receipt requested, if received on a Business Day, otherwise on the next Business Day. Such\nnotices or other communications must be sent to each respective Party at the address, email address\nset forth below (or at such other address, email address as shall be specified by a Party in a notice\ngiven in accordance with this Section 20.2 (Notices)):\nIf to Owner:\n\nPuerto Rico Electric Power Authority\nPO BOX 364267\nSan Juan, Puerto Rico 00936-4267\nAttention: Chief Executive Officer – José F. Ortiz\nVázquez\nTelephone: (787) 521-4666\nEmail: Jose.Ortiz@prepa.com\nwith copies to:\nAdministrator\nPO BOX 42001\nSan Juan, Puerto Rico 00940-2001\nAttention: Executive Director – Fermín E. Fontanés\nGómez\nTelephone: (787) 722-2525 Ext. 15330\nEmail: Fermin.Fontanes@p3.pr.gov and\nAdministrator@p3.pr.gov\nand\nPREB\n268 Avenida Muñoz Rivera\nEdificio World Plaza\nPiso 7, Suite 704\nHato Rey, Puerto Rico 00918\nAttention: President - Edison Avilés Deliz\n153'}, {'number': 161, 'text': 'CONFIDENTIAL\nTelephone: (787) 523-6262\nEmail: eavilesdeliz@energia.pr.gov\nIf to Administrator:\n\nAdministrator\nPO BOX 42001\nSan Juan, Puerto Rico 00940-2001\nAttention: Executive Director – Fermín E. Fontanés\nGómez\nTelephone: (787) 722-2525 Ext. 15330\nEmail: Fermin.Fontanes@p3.pr.gov and\nAdministrator@p3.pr.gov\n\nIf to Operator:\n\nLUMA Energy, LLC\n644 Fernandez Juncos Ave., Suite 301\nSan Juan, Puerto Rico 00907\nAttention: General Counsel\nEmail: Legal@lumamc.com\nwith copies to:\nLUMA Energy, LLC\n644 Fernandez Juncos Ave., Suite 301\nSan Juan, Puerto Rico 00907\nAttention: President/CEO\n\nAmendments. Neither this Agreement nor any provision hereof may be\nchanged, modified, amended or waived, except by written agreement duly executed by the Parties.\nAny such amendment shall not be effective until (i) to the extent required by Applicable Law,\napproved by PREB and the FOMB (if then in existence) and (ii) Administrator has obtained a Tax\nOpinion and a Reliance Letter, at the cost of Owner or Administrator, with respect to any such\namendment. Wherever this Agreement requires the Parties to use good faith, reasonable,\ncommercially reasonable or other efforts to amend the terms of this Agreement, Operator shall not\nbe deemed to be in breach of such requirement as a result of its insistence that such amendment\nnot adversely affect Operator’s compensation under, or its return on investment or other economic\ninterests with respect to, this Agreement, except to the extent such adverse effect results solely\nfrom inflation or the imposition of a Tax or an increase in Taxes of general application.\nEntire Agreement. This Agreement, together with the Annexes and\nExhibits attached hereto, constitutes the entire agreement of the Parties with respect to the subject\nmatter hereof and supersedes any and all prior oral or written agreements, understandings,\nproposals, representations or warranties relating to this Agreement. Without limiting the generality\nof the foregoing, this Agreement shall completely and fully supersede all other understandings and\nagreements among the Parties with respect to such transactions, including those contained in the\nRFP, the Proposal by Operator or its Affiliate and any amendments or supplements to the RFP or\nthe Proposal.\n\n154'}, {'number': 162, 'text': 'CONFIDENTIAL\nRelationship of the Parties. Nothing in this Agreement is intended to\ncreate, or shall be deemed or construed as creating, any partnership, joint venture or other legal\nentity, or give rise to any fiduciary duty, among the Parties. Except as otherwise expressly provided\nin this Agreement, no Party shall have the authority or right, or hold itself out as having the\nauthority or right, to assume, create or undertake any obligation of any kind whatsoever, express\nor implied, on behalf of or in the name of any other Party, except as expressly provided herein. No\nprovision in this Agreement shall result in Operator or any of its employees, Subcontractors, agents\nor Representatives being considered an employee, contractor or Representative of Owner.\nOperator shall be an independent contractor and shall be responsible for and have control over the\nperformance of the O&M Services hereunder, subject to the standards set forth in this Agreement.\nNothing in this Agreement shall be interpreted to create a relationship of co-employer between\nOwner and Operator or Administrator and Operator as to the employees of Operator or any of its\nrespective subcontractors, nor to make Operator an alter ego or a successor employer of Owner.\nAssignment and Transfer.\n(a)\nBy Operator. Except as provided in Section 16.3 (Transfer Obligation),\nOperator shall not assign, transfer, convey, lease, encumber or otherwise dispose of its rights or\nobligations under this Agreement or related to the O&M Services without the prior written consent\nof Administrator, which consent shall not be unreasonably withheld, delayed or conditioned, and\nto the extent required by Applicable Law, PREB; provided, however, that Operator may, without\nthe prior written consent of Administrator, assign or otherwise dispose of any of its rights and\nobligations hereunder to an Affiliate of Operator so long as: (i) such Affiliate is (A) a Controlled\ndirect or indirect subsidiary of the Parent Company, (B) reasonably capable of discharging the\nduties and obligations of Operator hereunder and (C) assumes in writing all of Operator’s\nobligations hereunder; and (ii) such assignment is otherwise permitted under, and in compliance\nwith, Applicable Law. Any such consent given in one instance shall not relieve Operator of its\nobligation to obtain the prior written consent of Administrator to any further assignment. Any\nassignment of this Agreement that is approved by Administrator shall require the assignee of\nOperator to assume the performance of and observe all obligations, representations and warranties\nof Operator under this Agreement, and no such assignment shall relieve Guarantor(s) of any of its\nobligations under the Guarantee. The consent to any assignment, transfer or conveyance shall not\noperate to release Operator in any way from any of its obligations under this Agreement unless\nsuch consent specifically provides otherwise. Any amendments to this Agreement requested by a\npotential assignee or transferee of Operator shall be submitted to and approved by the board of\ndirectors of Administrator pursuant to Section 10(a)(19) of Act 29.\n(b)\nBy Owner. Owner shall not assign, transfer, convey, lease, encumber or\notherwise dispose of its rights or obligations under this Agreement without the prior written\nconsent of Operator; provided, however, that Owner may, without the prior written consent of\nOperator, assign or otherwise dispose of any of its rights and obligations hereunder: (i) to\nAdministrator; or (ii) with prior approval of the FOMB (if then in existence and to the extent such\napproval is required by Applicable Law), to another Governmental Body if such assignee assumes,\nand is reasonably and legally, operationally and financially capable of discharging, the duties and\nobligations of Owner hereunder.\n\n155'}, {'number': 163, 'text': 'CONFIDENTIAL\nInterest on Overdue Obligations. Except as otherwise provided herein, all\namounts due hereunder, whether as fees, damages, credits, revenue, charges or reimbursements,\nthat are not paid when due shall bear interest at the Overdue Rate, on the amount outstanding from\ntime to time, and all such interest accrued at any time shall, to the extent permitted by Applicable\nLaw, be deemed added to the amount due, as accrued.\nWaivers. Either Operator or Administrator may, at any time, (i) extend the\ntime for the performance of any of the obligations or other acts of the other Party, (ii) waive any\ninaccuracies in the representations and warranties of the other Party contained herein or (iii) waive\ncompliance by the other Party with any of the agreements or conditions contained herein. No\nwaiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in\na written instrument executed and delivered by the Party so waiving. No waiver by any Party of\nany breach of this Agreement shall operate or be construed as a waiver of any preceding or\nsubsequent breach, whether of a similar or different character, unless expressly set forth in such\nwritten waiver. Neither any course of conduct or failure or delay of any Party in exercising or\nenforcing any right, remedy or power hereunder shall operate or be construed as a waiver thereof,\nnor shall any single or partial exercise of any right, remedy or power hereunder, or any\nabandonment or discontinuance of steps to enforce such right, remedy or power, or any course of\nconduct, preclude any other or further exercise thereof or the exercise of any other right, remedy\nor power.\nSeverability. If any term or provision of this Agreement is invalid, illegal\nor incapable of being enforced in any situation or in any jurisdiction, such invalidity, illegality or\nunenforceability shall not affect the validity, legality or enforceability of any other term or\nprovision hereof or the offending term or provision in any other situation or any other jurisdiction,\nso long as the economic or legal substance of the transactions contemplated hereby is not affected\nin any manner materially adverse to any Party. Upon any such determination that any term or other\nprovision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith\nto modify this Agreement so as to effect the original intent of the Parties as closely as possible, in\na mutually acceptable manner, in order that the transactions contemplated hereby be consummated\nas originally contemplated to the fullest extent possible.\nSurvival. The rights and obligations of the Parties pursuant to this\nSection 20.10 (Survival), Article 13 (Intellectual Property; Proprietary Information), Article 15\n(Dispute Resolution), Article 16 (Back-End Transition), Article 18 (Indemnification), Section 20.2\n(Notices) and Section 20.15 (Governing Law) shall survive the expiration or termination of this\nAgreement. No expiration or early termination of this Agreement shall (i) limit or otherwise affect\nthe respective rights and obligations of the Parties accrued prior to the date of such termination or\n(ii) preclude any Party from impleading any other Party in any Legal Proceeding originated by a\nthird-party as to any matter occurring during the Term.\nNo Third-Party Beneficiaries. Unless specifically set forth herein, this\nAgreement is exclusively for the benefit of the Parties and shall not provide any third-parties with\nany remedy, claim, liability, reimbursement, cause of action or other rights.\n\n156'}, {'number': 164, 'text': 'CONFIDENTIAL\nRemedies.\n(a)\nCumulative and Non-Exclusive Remedies. Except as otherwise provided in\nthis Agreement, any and all remedies herein expressly conferred upon a Party shall be deemed\ncumulative with and not exclusive of any other remedy expressly conferred hereby, and the\nexercise by a Party of any one such remedy shall not preclude the exercise of any other such\nremedy.\n(b)\nIrreparable Damage and Harm. The Parties agree that irreparable damage\nand harm would occur in the event that any provision of this Agreement were not performed in\naccordance with its terms and that, although monetary damages may be available for such a breach,\nmonetary damages would be an inadequate remedy therefor. Accordingly, each of the Parties\nagrees that, in the event of any breach or threatened breach of any provision of this Agreement by\nsuch Party, the other Party shall be entitled to an injunction or injunctions, specific performance\nand other equitable relief to prevent or restrain breaches or threatened breaches hereof and to\nspecifically enforce the terms and provisions hereof. A Party seeking an order or injunction to\nprevent breaches of this Agreement or to enforce specifically the terms and provisions hereof shall\nnot be required to provide, furnish or post any bond or other security in connection with or as a\ncondition to obtaining any such order or injunction, and each Party hereby irrevocably waives any\nright it may have to require the provision, furnishing or posting of any such bond or other security.\nIn the event that any Legal Proceeding should be brought in equity to enforce the provisions of\nthis Agreement, each Party agrees that it shall not allege, and each Party hereby waives the defense,\nthat there is an adequate remedy available at law.\nCounterparts. This Agreement may be executed in one or more\ncounterparts, each of which shall be deemed to be an original and all of which, when taken\ntogether, shall be deemed to be one and the same agreement or document. A signed copy of this\nAgreement transmitted by email or other means of electronic transmission shall be deemed to have\nthe same legal effect as delivery of an original executed copy of this Agreement for all purposes.\nOffice of the Comptroller. Owner agrees to file this Agreement with the\nComptroller of the Commonwealth promptly after its execution and to provide Operator with\nevidence of its filing within fifteen (15) days following the Effective Date. The Parties\nacknowledge and agree that the obligations and considerations under this Agreement shall not be\nenforceable until this Agreement shall have been registered with the Office of the Comptroller of\nthe Commonwealth as provided by Act No. 18 of the Legislative Assembly of Puerto Rico, enacted\non October 30, 1975.\nGoverning Law. This Agreement and all matters, claims, controversies,\ndisputes, suits, actions or proceedings arising out of or relating to this Agreement and the\nnegotiation, execution or performance of this Agreement or any of the transactions contemplated\nhereby, including all rights of the Parties (whether sounding in contract, tort, common or statutory\nlaw, equity or otherwise) in connection therewith, shall be interpreted, construed and governed by\nand in accordance with, and enforced pursuant to, the internal laws of the Commonwealth\n\n157'}, {'number': 165, 'text': 'CONFIDENTIAL\n(excluding any conflict of laws rule or principle which might refer such interpretation to the laws\nof another jurisdiction), except where the federal supremacy clause requires otherwise.\nCommonwealth Obligations. THE OBLIGATIONS OF OWNER AND\nADMINISTRATOR UNDER THIS AGREEMENT SHALL NOT BE DEEMED\nOBLIGATIONS OF THE COMMONWEALTH OR ANY INSTRUMENTALITY OF THE\nCOMMONWEALTH OTHER THAN OWNER AND ADMINISTRATOR.\nPREB Authority. Notwithstanding anything to the contrary herein, no\nprovision of this Agreement shall be interpreted, construed or deemed to limit, restrict, supersede,\nsupplant or otherwise affect, in each case in any way, the rights, responsibilities or authority\ngranted to PREB under Applicable Law with respect to the T&D System, Owner or Operator.\n[Signature page follows]\n\n158'}, {'number': 166, 'text': 'CONFIDENTIAL\n\nIN WITNESS WHEREOF, Owner, Administrator, ManagementCo and ServCo each has\ncaused this Agreement to be duly executed as of the day and year first above written.\nPUERTO RICO ELECTRIC POWER AUTHORITY\nBy:\nName:\nTitle:\n\nPUERTO RICO PUBLIC-PRIVATE\nPARTNERSHIPS AUTHORITY, solely in its\ncapacity as ADMINISTRATOR\nBy:\nName:\nTitle:\n\n[Signature Page lo Puerto Rico Transmission and Distribution System Opera/ion and Maintenance Agreement]'}, {'number': 167, 'text': 'CONFIDENTIAL\n\nLUMA ENERGY, LLC\nBy:\nName:\nTitle:\n\nBy:\nName:\n\n4i;2 2::7==\n\nTitle:\n\n[Signature Page to Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement}'}, {'number': 168, 'text': 'CONFIDENTIAL\n\nLUMA ENERGY SERVCO, LLC\nBy:\nName:\nTitle:\n\nr\n\nI\n\nBy:\nName:\nTitle:\n\n[Signature Page to Puerto Rico Transmission and Distribution System Opera/ion and lvlaintenance Agreement}'}, {'number': 169, 'text': 'CONFIDENTIAL\nAnnex I\nScope of Services\nThis Annex I (Scope of Services) is designed to set forth certain O&M Services in addition to those\ncontained in Article 5 (O&M Services) to the Agreement. This Annex I (Scope of Services) is not\nintended, nor should it be deemed, to be an exclusive list of O&M Services. However, the\nAgreement, including this Annex I (Scope of Services), absent subsequent changes agreed to by\nthe Parties, sets forth the entire scope of O&M Services to be provided by pursuant to the\nAgreement. Capitalized terms used but not defined in this Annex I (Scope of Services) have the\nrespective meanings set forth in the Agreement. All obligations of Operator set forth herein shall\nbe performed in accordance with and are subject to the requirements of the main body of the\nAgreement.\nI.\n\nT&D System Operation Services.\n\nA.\nGeneral. Operator shall be responsible for all electric transmission, distribution,\nload serving and related activities for the safe and reliable operation and maintenance of the T&D\nSystem, subject to the terms and conditions of the main body of the Agreement, including (1)\nexpansions and replacements to meet the Contract Standards, including fleet, asset management,\nasset acquisition/procurement, IT infrastructure, as further provided in this document and\npreparation and implementation of required components of the Integrated Resource Plan, while\nprioritizing expansion and replacement projects that improve the safe, reliable and economic\ndispatch of the T&D System’s connected generating units; (2) management and performance of\nconstruction of improvements thereto, including compliance with approved FEMA scope of work\nfor projects that are eligible for Federal Funding and required maintenance; (3) delivery of\nelectricity to customers, including the implementation of the activities set forth in Sections II.A\nand II.B of this Annex I (Scope of Services); (4) billing and collections implementation and\noptimization; (5) maintenance and improvement of public lighting system; (6) maintenance of\nfiber optic cable structure infrastructure, as set forth in lease agreement between Owner and\nPREPA Networks, LLC, a wholly-owned subsidiary of Owner incorporated in April 2004 to\nexecute the Optical Telecommunications Infrastructure Lease Agreement for dedicated provision\nof local wholesale telecommunication services (for the avoidance of doubt, the Parties\nacknowledge and agree that, except as specified in this item (6), Operator shall have no other\nresponsibility relating to PREPA Networks, LLC); (7) compliance with interconnection of\nrenewables in accordance with Applicable Law; (8) management of the System Operation\nPrinciples to meet safe and reliable system operations in accordance with Prudent Utility Practices\nand the System Operation Principles; and (9) recordkeeping and reporting in accordance with\nApplicable Law or Prudent Utility Practices.\nB.\nDay-to-Day Operation. Operator shall be responsible for the day-to-day operation\nof the T&D System, including: (1) maintaining, improving and developing a culture of safety; (2)\nmanagement of all aspects of customer relationships, as required under Contract Standards and\nApplicable Law; (3) physical operation and maintenance of the T&D System; (4) maintaining\nT&D System reliable electric service (including any changes thereto as a result of reconstruction\nof any section thereof to address reliability, resiliency, efficiency and/or compliance with\nApplicable Law); (5) maintenance of applicable communications equipment and protocols with\nI-1'}, {'number': 170, 'text': 'CONFIDENTIAL\ngenerating units and contracted power plants as needed; (6) operating within the Contract\nStandards while operating to improve: reliability, cost of electricity to end users, cost and impact\nof planned maintenance and use of load shedding if required; (7) producing, reviewing and\nmaintaining all operating logs and maintenance records to meet regulatory and contractual\nrequirements; (8) all human resources functions, including hiring and training employees; and (9)\nmaintaining and improving information technology systems that satisfies the needs of the business\nin accordance with the requirements of the Agreement.\nC.\nSystem Operator Activities. Operator shall serve the role of T&D System operator,\nincluding (1) managing control center operations, including generation scheduling and\neconomic/reliable T&D System dispatch; (2) balancing the supply and demand of electricity,\nincluding reacting to changes in demand in real time, adjusting generation dispatch to be in balance\nwith demand and maintaining the T&D System at safe operating levels in accordance with Prudent\nUtility Practices and System Operation Principles; (3) conduct T&D System planning activities;\n(4) develop and implement reliability standards appropriate for the conditions in Puerto Rico; and\n(5) manage a transparent, equitable and open generator interconnection process.\nD.\nEngineering Activities. Operator shall be responsible for all engineering activities\nrelated to the operation of the T&D System, including: (1) analyses related to, and maintenance of\nrecords and standards for design and engineering, design standards, construction standards, system\nmapping and related information, system performance, reliability, root cause analysis, equipment\nratings, customer contact and needs assessment; (2) administration of customer contribution in aid\nof construction; (3) managing an effective environmental, health and safety program;\n(4) maintenance of environmental, health, safety, regulatory and other compliance and the\ndocumentation thereof; (5) process to serve (evaluate and approve) new customers (distribution\nengineering); and (6) expansions and replacements to meet the Contract Standards and Owner’s\nthen applicable Integrated Resource Plan, prioritizing expansion or replacement projects that are\nidentified by Owner that will reduce System Power Supply costs by improving the\neconomic/reliable dispatch of all generating units connected to the T&D System.\nE.\nMaintenance of Technical Documentation. Operator shall be responsible for the\nimprovement of existing, or development of additional/new, and the on-going maintenance of\nrevisions to all T&D System drawings, specifications, construction manuals, equipment diagrams\nand other technical documentation, including: (1) management of T&D System generation\ninterconnection applications and processing thereof (including negotiation and administration of\ngeneration interconnection agreements of any voltage class connected to the T&D System); and\n(2) preparing capital project close-out reports.\nF.\nEnergy Efficiency Activities. Operator shall be responsible for promoting,\nadministering, planning, developing and implementing energy efficiency, demand response, load\nmanagement and renewable energy programs and policies for the T&D System as required under\nApplicable Law, regulation or the Owner’s then applicable Integrated Resource Plan, including:\n1.\nresearch and demonstration projects for the T&D System and Owner’s\ncustomers, coordination with third parties or other resources necessary or desirable to develop and\nimplement such programs and responding to customer inquiries with respect to such programs or\nservice; and\n\nI-2'}, {'number': 171, 'text': 'CONFIDENTIAL\n2.\nimplementing the customer energy efficiency programs and customer-sited\nrenewable energy programs, as well as any other customer incentive programs that are intended to\npromote (a) customer adoption of energy and/or capacity saving measures; and/or\n(b) customer-sited green and/or alternative generation or storage technologies (the “Energy\nEfficiency Programs”) pursuant thereto.\nG.\nPlanning, Environmental and Regulatory. Operator shall be responsible for\n(1) preparing, presenting, defending current or future Integrated Resource Plans, rate cases or other\nregulatory or legal matters as they relate to the Agreement, as the Owner’s representative before\nthe PREB and any other local, state or federal government agencies, (2) environmental\ncompliance, maintenance of documentation and acquisition of permitting and Easements as\nrequired for the T&D System operations, (3) compliance with applicable regulatory and legislative\nrequirements such as energy efficiency mandates and renewable portfolio standards subject to\noperating constraints and Prudent Utility Practice, and (4) any allocated management obligations\nof existing power purchase agreements, including the coordination with and support of the Puerto\nRico Public-Private Partnerships Authority procurement activities for new power purchases. In\nperforming these services and any other services under the Agreement, nothing shall require, or\nshall be construed as requiring, Operator to act as legal counsel to, or to provide legal advice or\nrepresentation to, Owner.\nH.\nLegal Services. Operator shall be responsible for (1) day-to-day legal\nresponsibilities relating to the O&M Services, in coordination with Owner and Administrator in\naccordance with processes set forth in this Annex I (Scope of Services), and (2) preparing,\npresenting, defending current or future Integrated Resource Plan, rate cases, or other regulatory or\nlegal matters as they relate to the Agreement, as the Owner’s representative before the PREB and\nany other local, state or federal government agencies, as well as preparing, presenting, and\ndefending any non-compliance with local legislative requirements such as energy efficiency\nmandates. In performing these services and any other services under this Agreement, nothing shall\nrequire, or shall be construed as requiring, Operator to act as legal counsel to, or to provide legal\nadvice or representation to, Owner.\nI.\nInsurance and Claims. Operator shall maintain the appropriate level of insurance as\nto cover claims that arise after executing the Agreement and following the Service Commencement\nDate, consistent with Prudent Utility Practices and with the requirements of the Agreement. As\npart of the Front-End Transition Plan, Operator shall develop a comprehensive insurance program,\nto be reviewed and approved by Administrator, which approval shall not be unreasonable withheld,\ndelayed or conditioned. The insurance program shall be provided to PREB for its knowledge.\nOperator shall be responsible for preparing and submitting insurance claims (including claims that\nmay have arisen prior to the Effective Date and/or the Service Commencement Date) on behalf of\nOwner as well as keeping Administrator timely informed of such claims processes.\nJ.\nOutsourcing. Operator shall evaluate opportunities for the outsourcing of any\nspecific activities associated with this Annex I (Scope of Services) that will provide greater\nefficiencies and value to customers and the T&D System’s operation and seek to implement such\nactivities within budget and regulatory constraints (e.g., fleet management, vegetation\nmanagement and/or customer service call center).\n\nI-3'}, {'number': 172, 'text': 'CONFIDENTIAL\nK.\nOther. Operator shall be responsible for other activities necessary, appropriate or\nadvisable, including research and development, to operate and maintain the T&D System in\naccordance with the Contract Standards, including cooperation, as specified in the Agreement, of\nOperator’s performance of the O&M Services under the Agreement, with third parties providing\nservices to Owner with respect to Owner’s provision of electric service, provided Owner shall\nimpose similar obligations on such third parties to also cooperate with Operator.\nII.\n\nAsset Management and Maintenance Services.\n\nA.\nGeneral. Operator shall be responsible for managing and maintaining all assets of\nthe T&D System, including machinery, equipment, structures, improvements and condition\nassessment of the electrical system components, in accordance with the Contract Standards,\nincluding the following: (1) development and implementation of asset management strategies and\nrisk optimization for combined technical performance, life cycle cost, safety, customer satisfaction\nand regulatory compliance; (2) real estate management, Easements, leases and agreements, pole\nattachments (including billing and collection for pole attachment fees, as well as maintaining a\ncomplete inventory of type and location of each attachment and plans for revenue optimization),\njoint use agreements and telecommunications for the provision of electric service, including\ncybersecurity in the manner specified and subject to the provisions set forth in the main body of\nthe Agreement; (3) meter strategy development, maintenance or replacement; (4) fleet\nmanagement, including evaluation of potential outsourcing; (5) materials and services\nprocurement and inventory management; (6) T&D System security in accordance with Applicable\nLaw and to protect the T&D System from vandalism, terrorism or other acts; (7) emergency\npreparedness and planning; (8) warehousing; (9) maintenance of the PREPA fiber optic\ninfrastructure; (10) vegetation management in accordance with Prudent Utility Practice and\nApplicable Law; and (11) preparation of T&D condition assessment report.\nB.\nInventory Control. Operator shall, consistent with the Contract Standards, the\nAgreement and this Annex I (Scope of Services): (1) maintain an inventory of equipment, spare\nparts, materials and supplies (appropriate for day-to-day operations and Emergencies), and shall\nmaintain and document an inventory control program; (2) comply with the inventory policy\nprovided in this Annex I (Scope of Services); (3) purchase, maintain and store inventory in a\nmanner also consistent with the T&D System policies and procedures adopted from time to time\nby Operator in accordance with Prudent Utility Practice and provided in writing to Owner and\nAdministrator and the Emergency Response Plan, and/or the Federal Funding Procurement\nManual as applicable and agreed to between Operator and Owner and/or approved by FEMA; and\n(4) complete, on an agreed-upon cycle count basis, a physical inventory and a condition assessment\nof the equipment, spare parts, materials and supplies and reconcile the same with the inventory\nassets carried on the balance sheet and provide the information to Owner and Administrator, in\naccordance with its reporting obligations set forth in Section 6.3 (Reporting: Audits) of the main\nbody of the Agreement.\nC.\nFleet Management; Refueling. Operator shall, consistent with the Contract\nStandards, the Agreement and this Annex I (Scope of Services), provide fleet management and\nvehicle refueling operations, including scheduling of vehicle replacements, specification of\ntechnical requirements, compliance with Commonwealth and federal alternative fuel\n\nI-4'}, {'number': 173, 'text': 'CONFIDENTIAL\nenvironmental compliance programs, performance of maintenance activities, maintenance of\nvehicle signage and other similar functions.\nD.\nNecessary Equipment and Systems. Operator shall, consistent with the Contract\nStandards, the Agreement and this Annex I (Scope of Services), determine, acquire, deploy and\nmaintain tools, equipment and Information Systems necessary to perform all O&M Services under\nthe Agreement.\nE.\nInformation Technology. Operator shall, consistent with the Contract Standards,\nthe Agreement and this Annex I (Scope of Services), be responsible for providing information\ntechnology systems maintenance support and improvements in accordance with (1) strategic goals\nof achieving interoperability and flexibility of open design and standard-based data architecture\nand in compliance with requirements for applicable technical architecture, data modeling and\nsoftware development life cycle; and safeguarding the system software and data; (2) cybersecurity\nrequirements that support network and day-to-day activities; and (3) developing and maintaining\na business continuity plan in the event of natural, man-made or cyber-attack incidents. Operator\nshall periodically provide Administrator (with copy to PREB) the most current versions of the\nbusiness continuity plan.\nF.\nPublic Lighting. Operator shall be responsible for operating and maintaining the\npublic lighting system, as well as pursuing the installation of highly efficient Light-Emitting Diode\n(LED) technology in accordance with Prudent Utility Practices and Applicable Law.\nG.\nGenerator Interconnection. Operator shall be responsible for the furtherance or\ndevelopment of (1) necessary generator interconnection agreements for new generation or in the\nevent of the sale of an Owner generating unit, (2) appropriate points of generator interconnections\ndemarcation points, where the point is not clearly defined, and (3) a work plan to delineate the\ngenerator interconnection points as part of the Front-End Transition Plan.\nIII.\nContinuous Improvement Services. Operator shall be responsible for continuous\nimprovement of the T&D System, including the implementation of the following activities:\n(A) development and administration of research and development, the goal of which is to increase\noperational efficiency and effectiveness, reduction of line losses (technical and non-technical\nlosses), prevention of congestion and improvement of maintenance practices in accordance with\nPrudent Utility Practices; (B) establishing and conducting a continuous improvement program\ndesigned to enhance Operator’s performance, operational efficiency and the cost-effective delivery\nof services to customers; and (C) monitoring industry advancements and technological changes in\nthe operation, maintenance, repair and expansion of transmission and distribution systems,\nincluding customer care and related services, by electric utilities.\nIV.\n\nGovernment, Community and Media Relations.\n\nA.\nGeneral. Operator shall be responsible for (1) conducting government, community\nand media relations with respect to the management, operation and maintenance of the T&D\nSystem in accordance with such policies and procedures as Operator may from time to time adopt\nin accordance with Applicable Law; and (2) staffing public events and presenting workshops,\nseminars and similar activities during normal business hours, evenings, weekends and holidays.\n\nI-5'}, {'number': 174, 'text': 'CONFIDENTIAL\nB.\nCommunications. It is the Parties’ intention that, to enable Operator to effectively\ncommunicate with the customers and government officials regarding T&D System matters,\nOperator shall have direct responsibility for media and other public communications on all T&D\nutility-related matters, including communications with public officials, regulators and local\nmunicipalities and counties regarding storm preparation, management, coordination and response,\ncustomer communications, programs and complaints and related matters. Accordingly, Operator\nshall have full authority to determine all communications policies and procedures relating to its\nprovision of O&M Services under the Agreement. Nevertheless, Operator agrees that (i) during\nEmergency Operating Conditions as defined and described in the System Operation Principles\ninclusive of major events (e.g., Outage Events and Declared Emergency or Major Disaster) or (ii)\nif it takes actions in Operator’s capacity as Operator, that could be reasonably be expected to have\nbroader impacts on public safety and/or public health, Operator will endeavor to keep Owner and\nAdministrator, and, as appropriate, other local, state, and federal government entities, informed\nand act in consultation with Owner and Administrator. These communications will be made in\naccordance with the System Operation Principles.\nC.\nGovernment Relations. Operator shall be responsible for coordinating, conducting\nand formulating communications with municipal, local, state and federal representatives and\norganizations relating to operation and maintenance of the T&D System and provision of\nutility-related services by Operator, in accordance with such policies and procedures as Operator\nmay from time to time adopt in its sole and absolute discretion.\nD.\nCommunity and Media Relations. Operator shall be responsible for the\nperformance of customer service functions related to the provision of electric service, except as\notherwise provided in the Agreement or herein, including the following: (1) achieving a high level\nof customer satisfaction, as defined in the relevant Performance Metrics; (2) maintaining customer\ncontact; (3) marketing and sales for retail system expansion, retail customer retention, and\ncustomer care and service programs; and (4) performing other activities necessary, appropriate or\nadvisable to implement customer service programs in accordance with Sections IV.E of this Annex\nI (Scope of Services), the Contract Standards or as Applicable Law may require.\nE.\nCustomer Contact. Operator shall be responsible for establishing and maintaining\ncustomer contact by performing the following customer service functions at minimum:\n1.\nmaintaining customer contact through call centers with toll free service\nnumbers, customer offices, authorized payment centers; this customer contact should include\nmaintaining a phone line for outage calls, until there is an alternative communication system or\ntechnology that makes this information otherwise available. The information provided by the\ncustomer will be necessary to verify that the outage/emergency has been corrected and power\nrestored;\n2.\nmaintaining and overseeing a customer online and mobile website, mobile\napplications including iPhone and Android, and other electronic media, inbound and outbound\ncustomer communication systems;\n\nI-6'}, {'number': 175, 'text': 'CONFIDENTIAL\n3.\nmanagement of customer loyalty and satisfaction programs, customer\nservices field operations and customer care and institutional communications and responding to\ncustomer inquiries regarding services;\n4.\nmarketing and sales for retail system expansion, retail customer retention\nand customer care and service programs, including all aspects of marketing planning and\nimplementation activities, promotion and communications; market research; account relationship\nmanagement; economic development; field sales; trade ally relations; and demand response,\nrenewable and Energy Efficiency Programs;\n5.\ndeveloping and maintaining customer education programs for customer\nprograms, including cost of service, demand side management, net energy metering, etc.; and\n6.\ndevelopment of plan to enhance the existing outage management system\nthat connects to the customer service interface so customers can be kept apprised of system status\nand individual service orders in real-time.\nV.\nTesting, Reports and Records. Operator shall be responsible for (A) preparing a monthly\noperations report; (B) producing and delivering to Administrator information as Administrator\nmay reasonably request to determine Operator’s performance under the Agreement; and\n(C) developing and maintaining a comprehensive document management program with records\nstorage, retention and destruction guidelines and procedures, in accordance with applicable\nCommonwealth and federal guidelines and regulations, and as otherwise provided for under the\nAgreement.\nVI.\n\nFinance and Accounting Services.\n\nA.\nGeneral. Operator shall be responsible for all finance, accounting, budgeting,\nlonger-term financial forecasting and treasury operations related to the T&D System, including the\nimplementation of the activities set forth in Sections VI.A through VI.F of this Annex I (Scope of\nServices). In the exercise of the responsibilities described in this Section VI of this Annex I (Scope\nof Services), the Operator may utilize Owner’s existing accounting system.\nB.\nAccounting and Reporting. Operator shall be responsible for accounting and\nreporting operations including the following activities:\n1.\nmaintenance of a complete and separate set of financial and accounting\nrecords relating to the O&M Services, in accordance with GAAP and other applicable standards\n(including with FERC’s Uniformed System of Accounts, the 1974 Puerto Rico Electric Power\nAuthority Trust Agreement and other accounting best practices);\n2.\nmaintenance of a general ledger and all subledgers in accordance with\nApplicable Law regarding accounts necessary to support the preparation of monthly financial\nstatements and management reports for Operator;\n3.\non a monthly basis, provision of (i) a balance sheet, an income statement\n(including a revenue analysis) and a cash flow statement for Operator, and (ii) budget to actuals\nanalyses to explain the month’s results with explanations; in each case not later than five (5)\nI-7'}, {'number': 176, 'text': 'CONFIDENTIAL\nBusiness Days following Operator’s receipt thereof from Administrator until the expiration or\nearlier termination of the Front-End Transition Period;\n4.\nyear-end and interim unaudited financial statements for Operator within one\nhundred twenty (120) days after the end of each fiscal year and forty-five (45) days after the end\nof each fiscal quarter;\n5.\nanalysis of all accounts, providing variance analysis of and explanations for\nboth actual period-to-period variances (on a quarterly basis) and budget versus actual variances\n(on a monthly basis) to the extent reasonably requested by Administrator;\n6.\n(i) performance of all accounting and reporting functions necessary to\nsupport the T&D System operations, (ii) performance of federal and commonwealth tax and\nContribution in Lieu of Taxes (“CILT”), subsidies and public lighting reporting functions,\nprovision of information to Owner and Administrator in connection with Owner’s contesting of\nCILT-related assessments and (iii) the maintenance of the fixed assets records in accordance with\nPREB and other applicable regulatory or accounting requirements;\n7.\nseparate accounting and reporting that may be required from time to time\nfor any federal and Commonwealth grants received by Owner to the extent reasonable prior notice\nof any such grants obtained is provided to Operator;\n8.\ndevelopment and management of billing, tracking, reporting, managing and\ncollecting of all attachment fees, rents and other “non-product” revenues due to Owner associated\nwith services provided or related to lighting, telecommunications and other equipment attached to\nor located on the T&D System sites and structures/infrastructure for which Operator has\nresponsibilities pursuant to this Agreement;\n9.\nprovision of accounting memorandum documenting procedures used in\ncreating journal entries related to the T&D System;\n10.\naccounting for and documenting the costs and revenues resulting from\nOperator’s performance under the Agreement in accordance with GAAP and any other applicable\naccounting requirements as determined necessary by Administrator (including in accordance with\nFERC’s Uniformed System of Accounts, the 1974 Puerto Rico Electric Power Authority Trust\nAgreement, and other accounting best practices, as applicable) in compliance with Section 6.3\n(Reporting: Audits) of the main body of the Agreement;\n11.\nreconciliations (including bank account reconciliations), which will be\nperformed monthly, quarterly or annually based on the risk associated with the account being\nreconciled, in each case (i) if the month in which the reconciliation is being performed is a\nquarter-ending month (other than December), by the end of the subsequent month or (ii) if the\nmonth in which the reconciliation is being performed is a non-quarter ending month or December,\nwithin forty-five (45) days after the end of such month; and\n12.\npreparation from time to time as requested by PREB, but no less frequently\nthan every three (3) years, of a depreciation study, the goal of which is to determine consolidated\n\nI-8'}, {'number': 177, 'text': 'CONFIDENTIAL\nannual depreciation accrual rates for preparation of financial statements and factors that relate to\nthe fair and timely recovery of capital invested in the assets of Owner, including the T&D System.\nC.\nBudgeting and Financial Forecasting. Operator shall be responsible for budgeting\nand longer-term financial forecasting operations, including the following activities:\n1.\npreparing and monthly monitoring of budgets necessary for both capital and\noperating expenses for the services provided by Operator under the Agreement;\n2.\nanalyzing monthly and year-to-date budget to actual variances, and\nexplanations thereof and formulating financial projections based on the variance analyses;\n3.\nanalyzing revenue and expenditure projections for the annual or multi-year\nperiod beyond the period of actual results;\n4.\npreparing and delivering sales, revenues and costs budget input data for the\nannual budgeting processes, the Integrated Resource Plan and Owner’s and Administrator’s other\nlong-range financial planning processes; and\n5.\nrisk management operations consistent with Parent Company enterprise risk\nmanagement practices covering the potential risks involved in the conduct of the O&M Services,\nincluding the following activities: (i) managing counterparty credit risk, (ii) managing commodity\nmarket risk, and (iii) conducting a risk management program.\nD.\nAuditing. Operator shall be responsible for auditing operations, including the\nfollowing activities:\n1.\nauditing of third-party pole-attachment rents and other revenues due to\nOwner associated with services provided on or related to public lighting, telecommunications and\nother equipment attached to or located on the T&D System Site;\n2.\ninternal audit function to perform annual risk assessment related to the T&D\nSystem for the purpose of developing the appropriate risk-based audit universe and associated\nannual audit plan as well as performing financial, regulatory and third-party contract compliance\nand operational audits and reviews, including review of the associated internal controls, based on\nthe results of the annual risk assessment and associated annual audit plan;\n3.\nprovision of all necessary information and assistance to Owner’s external\nauditors in connection with their audit of the financial statements and underlying financial records\nmaintained by Operator related to the services provided under the Agreement; and\n4.\nprovision of copies of, and reasonable access to, the risk based audit\nuniverse and associated annual audit plan referenced in Section VI.D.2 of this Annex I (Scope of\nServices); and the right of Administrator to inspect, during normal business hours and upon\nreasonable prior notice, internal audit reports and recommendations of Operator and management\nresponses thereto; it being agreed, however, that the foregoing information shall be deemed to be\nconfidential and shall therefore not be used by Owner or Administrator except with respect to any\nfraudulent conduct or willful misconduct identified in such reports and recommendations.\nI-9'}, {'number': 178, 'text': 'CONFIDENTIAL\nE.\nTreasury. Operator shall be responsible for treasury operations, including the\nfollowing activities:\n1.\ntimely and accurate collection of customer remittances and other\n“non-product” revenue on Owner’s behalf through lockbox operations, customer centers and other\nsources, and transfer of funds as required for operations and other necessary payments;\n2.\ntimely and accurate payment of vendor invoices, including power purchase\nagreements and technical and professional outsourced services, and acting as servicer to collect\nand deposit transition charges, as may be required to satisfy legacy obligations for bonded debt\nand unfunded pension liability,\n3.\nmonthly or as requested cash flow projections (including daily, weekly and\nmonthly forecasts of customer cash receipts) and cash management services; and\n4.\nmonthly reconciliations of Owner bank accounts that are managed on behalf\nof Owner by Operator for the provision of O&M Services.\nF.\nOther. any other accounting and finance related activities necessary or advisable to\nsupport the operations of a stand-alone electric transmission and distribution business as\nAdministrator may request from time to time, including:\n1.\nprovision of information and data (both financial and operational) to support\nOwner’s financing activities and the administration of Owner’s and its Affiliates’ debt service and\nrequired disclosure requirements;\n2.\nprovision of assistance (including provision of information and data (both\nfinancial and operational)) to Owner and Administrator in connection with the preparation of\nreports and other documents to satisfy Owner’s reporting requirements including: quarterly and\nannual (year-end) financial reporting; monthly and annual federal agency reporting requirements;\nPREB reporting requirements, Budget Reconciliation Act of 2017 and other federal and\nCommonwealth stimulus or funding program reporting requirements; Department of Energy\nreporting requirements; and filings relating to O&M Services in compliance with Applicable Law,\nand in accordance with Section 6.3 (Reporting: Audits) of the main body of the Agreement; and\n3.\nVII.\n\nrecord keeping in compliance with Applicable Law.\n\nEmergency Response.\n\nA.\nCurtailments and Shutdowns. If delivery of electricity through the T&D System is\ntemporarily reduced, curtailed or shut down for any reason, including due to an Emergency\nincluding storms, Operator shall, with due consideration of its responsibility for safety and system\nreliability, as promptly as possible, advise Owner and Administrator (and other Stakeholders as\ndefined in the Emergency Response Plan) as to the nature, reason and probable duration thereof\nand the expected effect thereof on the operation of the T&D System. Such notices shall be given\nas provided in this Annex I (Scope of Services). Any announcement concerning such events made\nto the public or the media shall be made by Operator in accordance with the provisions of the\nEmergency Response Plan and Section IV of this Annex I (Scope of Services).\nI-10'}, {'number': 179, 'text': 'CONFIDENTIAL\nB.\nImplementation of the Emergency Response Plan. Operator will be responsible for\ndeveloping (in consultation with Administrator) and implementing an Emergency Response Plan\nthat addresses, disaster recovery and emergency response and restoration, and all necessary\nemergency response, business continuity, reporting and communication functions relating to the\nT&D System, and coordinating such plans with the plans of Owner and Administrator’s other\nservice providers for business continuity and disaster recovery, including response, reporting and\npublic communications relating to storms, other unusual weather occurrences and other\nEmergencies as follows, including the following activities:\n1.\n(i) timely reporting to such Governmental Bodies as may be necessary,\nappropriate or advisable of such emergency conditions including timely regular updates as to the\ncourses of action taken in response thereto or in anticipation thereof and progress made in\nresponding to such emergency conditions and (ii) periodic reporting to Administrator of such\nemergency conditions as necessary or appropriate to permit Administrator to exercise proper\nOversight of Operator’s response to emergency conditions;\n2.\nstorm monitoring and mobilization of Operator or Subcontractor’s\nworkforce (including workforce available under any Mutual Assistance Agreements) in\nconnection with anticipated storms and other electrical system emergencies. Operator shall have\nthe responsibility to negotiate Mutual Assistance Agreements with the US Mainland’s Regional\nMutual Assistance Groups (RMAG’s). The closest RMAG’s being Southeastern Electric\nExchange (SEE), North Atlantic Mutual Assistance (NAMA) or the Texas Mutual Assistance\nGroup (TMAG);\n3.\n\nmedia, fire, police and government coordination (municipal, state and\n\nfederal);\n4.\ncustomer communications, including all inbound and outbound customer\ncommunication systems;\n5.\n\nsystem condition monitoring;\n\n6.\nrepair and replacement of damaged components of the T&D System,\nincluding due to Outage Events or Declared Emergencies or Major Disasters;\n7.\n\npublic safety activities;\n\n8.\n\nrestoration of the T&D System to pre-emergency conditions;\n\n9.\nconducting periodic drills, including as required by Applicable Law; at a\nminimum, Operator shall conduct at least one system wide test of the Emergency Response Plan\nprocesses and procedures, technical and communications equipment, and personnel readiness (a\n“Emergency Mock Drill”) per year, which shall take place three (3) months prior to the\ncommencement of the Atlantic Hurricane Season2. The Emergency Mock Drill taking place before\nthe Atlantic Hurricane Season will replicate a Category 5 Hurricane with a planned direct hit to\n2\n\nJune 1 through November 30.\n\nI-11'}, {'number': 180, 'text': 'CONFIDENTIAL\nPuerto Rico. Senior management of Operator and Owner, as well as many office employees and\nrelevant outside observers, will participate and simulate the necessary actions that will be taken,\nand the appropriate internal and external communications needed. Operator will document all\nissues observed and follow-up on all measures and steps to remedy identified deficiencies that\nshould be completed in advance of future events. This will test the validity of the Emergency\nResponse Plan. Operator will also conduct post-event analysis and incorporate lessons learned\nfrom all drills and actual events to improve the overall state of readiness, including periodic drills\nwith federal, state, Commonwealth, municipal, local and private critical load stakeholders\n(including hospital, police, telecommunication, water and sewer and critical manufacturing\noperations); and\n10.\npreparing and analyzing all information and data required to support\nqualification for, and/or claims for reimbursement from, FEMA, CDBG (HUD), and similar\nfederal funds, for costs incurred due to Outage Events (including funds for emergency response\nand/or permanent work). This preparation should be completed within ninety (90) days of total\nrestoration.\nVIII.\n\nMaintenance.\n\nA.\nGenerally. Operator shall perform all normal and ordinary maintenance of all\nproperty constituting the T&D System, including machinery, structures, improvements and\nelectrical system components, keep the T&D System in operational condition and repair, in a neat\nand orderly condition and in accordance with the Contract Standards. This provision includes the\nentire fleet of T&D System vehicles and machinery/tools used for the daily operation of the electric\nutility. Operator shall provide or make provisions for all labor, materials, supplies, equipment,\nspare parts, consumables and services that are necessary for the normal and ordinary maintenance\nof the T&D System consistent with Contract Standards and Prudent Utility Practice and its\nvehicle/machinery assets and conduct predictive, preventive and corrective maintenance of the\nT&D System as required by the Contract Standards. Operator shall consider the adoption and\nimplementation of the Electric Power Research Institute’s (EPRI) Reliability Center Maintenance\n(RCM) principles, as relevant and applicable.\nB.\nMaintenance Logs. Operator shall keep maintenance logs in accordance with the\nContract Standards.\nC.\nSafety and Security. Operator shall maintain the T&D System with due regard for\npublic health and safety and at a safe level at least consistent with Contract Standards, including\nthe following:\n1.\nestablishing and prioritizing workplace safety initiatives to bring the current\nT&D System up to Prudent Utility Practices, by systematically evaluating all T&D System sites\nto address immediate safety issues, including grounding, tripping hazards and lighting;\n2.\ntaking reasonable precautions in the performance of the O&M Services for\nthe health and safety of all persons working at the T&D System, to prevent damage, injury or loss\nto the T&D System and to other T&D System property;\n\nI-12'}, {'number': 181, 'text': 'CONFIDENTIAL\n3.\nestablishing and enforcing all reasonable safeguards for health and safety\nand protection, including fencing, posting danger signs and other warnings against hazards and\npromulgating safety regulations;\n4.\ngiving all notices and complying with all Applicable Law relating to the\nhealth and safety of persons or property or their protection from damage, injury or loss;\n5.\ndesignating qualified and responsible employees whose duty shall be the\nsupervision of T&D health and safety, the prevention of fires and accidents and the coordination\nof such activities as shall be necessary with federal and local officials;\n6.\ndesigning and implementing cybersecurity measures in accordance with\nContract Standards and in the manner specified and subject to the provisions set forth in the main\nbody of the Agreement; and\n7.\ndeveloping and maintaining a physical security program in accordance with\nPrudent Utility Practice and other application regulations/law for the protection of the T&D\nSystem critical infrastructure, other assets and persons.\nIX.\n\nCustomer Service.\n\nA.\nGenerally. Operator shall provide customer service for the T&D System in\ncompliance with the requirements of Section IX of this Annex I (Scope of Services). Operator shall\nupdate and implement the customer service manual which shall be consistent with the Contract\nStandards, as well as this Annex I (Scope of Services) and Annex IX (Performance Metrics) within\none hundred eighty (180) days after the Service Commencement Date and shall deliver a certificate\nto Administrator to the effect that such customer service manual has been so updated. The manual\nshall be revised as necessary or appropriate from time to time.\nB.\nCustomer Service Requirements. Operator shall perform the customer services in\naccordance with the following minimum requirements, in accordance with the Contract Standards:\n1.\nOperator shall maintain a staff dedicated to assisting customers. The\ncustomer service staff shall be trained, as needed, to answer questions related to the T&D System\nand customer bills, based on having appropriate visibility into the T&D System to address\ncustomer questions and complaints.\n2.\nOperator shall establish and maintain toll-free customer service hotlines to\nallow customers to ask questions, raise issues and lodge complaints.\n3.\nOperator shall establish and maintain a twenty-four (24) hour per day\ntoll-free hotline, with adequate capacity and personnel (personnel that Operator deems qualified\nfor customer service), that will be answered at all times by a Person and not a voicemail or other\nautomated recorder, for the receipt of reports of emergencies relating to the T&D System.\n4.\nOperator shall establish and maintain a website that is capable of receiving\ncustomer inquiries and complaints.\n\nI-13'}, {'number': 182, 'text': 'CONFIDENTIAL\n5.\nOperator shall respond to customer questions and complaints that Operator\nreceives (however received) pertaining to its Scope of Services.\n6.\nOperator shall respond to emergencies in the T&D System, including\ntemporary reductions, curtailments or shut downs of deliveries of electricity for any reason,\nincluding due to an Outage Event.\n7.\nOperator shall develop and update a customer service manual explaining\nprocesses and procedures followed in the performance of customer services, in accordance with\nPrudent Utility Practice.\nC.\nReports. Operator shall submit as part of its reports delivered pursuant to Section\nIV of this Annex I (Scope of Services), and the information required with respect to the public\noutreach education campaign.\nD.\nPublic Outreach and Education Campaign. Operator shall develop public outreach\nand education campaigns designed to inform customers generally and first responders specifically,\nabout the scope, nature and extent of the T&D System programs and operations as required by the\nPREB or Administrator.\nE.\nCustomer Service Surveys. No later than three (3) months following the Service\nCommencement Date, Operator, on behalf of Owner, will engage the services of an independent,\nqualified professional survey firm selected mutually by Administrator and Operator to develop\nand implement a customer satisfaction survey. If the Parties are not able to agree on a survey firm,\neither Party may refer the matter to an Independent Expert as a Technical Dispute in accordance\nwith Article 15 (Dispute Resolution) in the main body of the Agreement. The initial customer\nsatisfaction survey shall be used to develop an overall customer satisfaction rating, which shall\nprovide the basis for evaluating and measuring Operator’s performance of its customer service\nobligations. Operator is required to perform its customer service obligations in a manner that\nimproves the overall customer satisfaction rating determined each Contract Year through\nsubsequent annual customer service satisfaction surveys conducted by the independent, qualified\nprofessional survey firm.\nF.\nCustomer Satisfaction. Operator shall be responsible for achieving a level of\ncustomer satisfaction consistent with the agreed to Performance Metrics by performing the\nfollowing customer service functions at minimum:\n1.\ndetermining the approach and methodology for measuring, monitoring and\noptimizing customer satisfaction;\n2.\n\nmonitoring customer satisfaction results;\n\n3.\noverseeing the performance of perception-based and transactional-based\ncustomer satisfaction surveys for other service providers; and\n4.\ninterpreting and communicating the results of customer surveys; and\ncoordinating initiatives aimed at improving the product portfolio, service delivery mechanisms and\noverall customer satisfaction across the full spectrum of services provided, such as system\nI-14'}, {'number': 183, 'text': 'CONFIDENTIAL\noperations and electronic transaction and self-help options, customer interactions and back-office\nfunctions.\nG.\nMeter-Related Services. Operator shall perform all residential and commercial\ncustomer meter reading, installation, replacement and maintenance functions, including checking\nfor open meter bypasses within the T&D System, in accordance with the requirements of Section\nIX of this Annex I (Scope of Services). Operator shall, within one hundred eighty (180) days of\nthe Service Commencement Date, develop a quality assurance program for meter functions as part\nof the manuals and related computer programs developed by Operator in accordance with Contract\nStandards which shall (i) provide a detailed description of the means and methods of properly\noperating and managing the applicable managed asset and all sampling, testing and measurement\nprocedures; (ii) document predictive, preventive and corrective maintenance procedures, practices\nand schedules for the managed assets; and (iii) be reviewed and approved by any relevant\nGovernmental Body, in accordance with Applicable Law and shall provide a certificate to\nAdministrator as to the existence of such program. Such program shall also include the planned\nmeter replacement program. The quality assurance program shall be revised as necessary from\ntime to time.\n1.\nMeter-Related Requirements. Operator shall perform existing and future\nmetering system-related services in accordance with, and the quality assurance program shall\naddress, the following minimum requirements:\n(a)\nTo the extent Operator uses meter readers, Operator shall establish\nand maintain a staff dedicated to reading meters. All such employees shall be skilled in\nreading meters, and in performing meter reading services, and shall always carry proper\nidentification.\n(b)\nOperator shall read residential meters on a monthly basis or such\nother frequency as mutually agreed by the Parties during the Term.\n(c)\nOperator shall read commercial, industrial and government accounts\nmeters on a monthly basis.\n(d)\nOperator shall, upon request and reasonable notice, obtain final\nmeter readings and render closing bills for property title transfers.\n(e)\nOperator shall, upon request and reasonable notice, obtain\nre-readings for residential and commercial customers.\n(f)\nOperator shall provide the meter readings in an electronic format\ncompatible with the billing system for the T&D System.\n(g)\nOperator shall be responsible for all repairs and services required to\nmaintain the proper operation and accurate reporting of all new and existing meters, meter\nreading systems and associated components.\n\nI-15'}, {'number': 184, 'text': 'CONFIDENTIAL\n(h)\nFor both existing and new meters installed by Operator, Operator\nshall maintain, repair, replace or otherwise take action to resume proper meter operation as\nsoon as practicable but not later than the requirements of Annex IX (Performance Metrics).\n(i)\nOperator shall maintain a sufficient supply of spare parts for meter\nand all ancillary components.\n(j)\nOperator shall inspect all meters upon receipt of meter data that\nindicates unusually high or low energy usage compared to historical usage to ensure proper\ncalibration of all components of the meter system, as well as reduce the amount of nontechnical losses (e.g., theft).\n(k)\nOperator shall develop a practice that assures new meters are within\nthe established tolerance level for accuracy.\n(l)\nOperator shall agree a plan with Administrator for the periodic\ninspection of commercial and industrial meter installations to check proper operation and\nto check that devices to prevent tampering of a meter or bypassing of a meter are intact and\nshall maintain all records and provide a Certificate to Administrator that such inspection\nhas been completed.\n(m)\nOperator shall, as part of the overall meter related services, maintain\nand train its crews to be able to detect and prosecute infrastructure misuse, and shall keep\nrecords of and remedy any meter that has not been measuring the correct energy usage\nbecause of unauthorized or willfully intended damage, defacing or tampering with any\nmeter component. Such cases shall also be timely processed by Operator for the\ncorresponding enforcement action in accordance with Applicable Law.\n(n)\nOperator shall, upon request by customers and reasonable notice,\ndisconnect and reconnect meters.\nH.\nRepair and Replacement of Meters. Operator shall be responsible for all repairs,\nreplacements, upgrades and maintenance of the meters, transmitters and appurtenant wiring,\ncomputer system and software necessary to ensure the proper operation and accurate reporting of\nthe meters, transmitters, computer system and remote reading equipment during the Term,\nfollowing the Service Commencement Date.\n\nI-16'}, {'number': 185, 'text': 'CONFIDENTIAL\nSchedule 1 to Annex I\nSystem Operation Principles\nDefinitions.\n“Agreed Operating Procedures” means detailed written operating procedures that are\nestablished between the Operator and Generating Facility Operators to facilitate dispatch\noperations.\n“Dependable Generation Capacity” means the net electrical generating capacity of the\ngenerating facility (gross electric generating capacity less station use) expressed in kilowatts as\ndetermined pursuant to testing (as may be conducted from time to time by the generating facility)\nand made available from the generating facility at the interconnection point.\n“Economic Dispatch” means the distribution of available supply sources to meet the total\nelectricity demand in consideration of total, average and marginal per-unit generation costs,\ngenerator capabilities and constraints, and the operational limits of the T&D System.\n“Energy Control Center” means the central control center for the power system.\n“Emergency Operating Conditions” means a condition or situation which in the sole\njudgement of the Operator is likely to result in imminent significant disruption of service to a\nsignificant number of customers or is imminently likely to endanger life or property.\n“Energy Management System” means supervisory and data acquisition system that is\nused to balance and operate the power system.\n“Forced Outage” means unplanned disconnection or stoppage of a generating unit due to\nfailure or defect of the unit, its equipment or other event.\n“Frequency Response” means services provided to restore grid frequency when there is a\nmismatch in the energy added to the electrical supply system by generators and the energy\nwithdrawn from the electrical supply system by consumers.\n“Generating Facility Operators” means either the operator(s) of Legacy Generation\nAssets or IPP-Owned Generation Assets connected to the electricity supply system.\n“Integrated Resource Plan” or “IRP” means the 20-year long range plan for the Puerto\nRico power system and supporting infrastructure.\n“IPP-Owned Generation Assets” means any existing or future generation assets and\ngeneration facilities in which Owner, GenCo or their respective affiliates have no ownership\ninterest.\n“Load Shed” means the controlled reduction of load by shutting off non-critical demand\nareas.\n\nI-17'}, {'number': 186, 'text': 'CONFIDENTIAL\n“Net Electrical Output” means the net electricity energy output (expressed in kWh) from\na generating facility measured at the interconnection point.\n“Non-Scheduled Outage” means an interruption of all or a portion of the electrical output\nof a generating facility that is required for any purpose including inspection, preventative\nmaintenance or corrective maintenance and which has not been designated as a Scheduled\nOutage.\n“Operating Reserves” means available generating capacity available to supply electricity\nor reactive power services on short notice and includes the following:\n\uf0b7\uf020 “Synchronized Spinning Reserve” means the capacity of online spinning reserve\nthat is synchronized with the electrical supply system and ready to meet the\ndemand in a period no longer than ten minutes of an interruption.\n\uf0b7\uf020\n\n“Supplemental Reserves” means the non-spinning and non-synchronized reserve\ncapacity that is obtained using units that are not online but that can enter service\nand reach their available power in less than ten minutes.\n\n“Power Purchase and Operating Agreements” or “PPOA” means any contract relating to\nthe generation, sale and purchase of Power and Electricity by, and operation of, IPP-Owned\nGeneration Assets or Legacy Generation Assets.\n“Puerto Rico Energy Board” or “PREB” means the regulator that provides oversight of\nall of the Puerto Rico power system to ensure compliance with policy and regulations.\n“Reactive Power” means the capacity of generating facilities available to provide voltage\nsupport to maintain a constant voltage level and ensure system stability.\n“Reliability Target” means the power system is operated with a N-1 contingency. The\nelectrical supply system is to be operated to withstand the loss of the largest unit that is running.\n“Scheduled Outage” means a planned interruption of the Net Electrical Output of a\ngenerating facility that has been coordinated in advance with the Operator with a mutually\nagreed start and duration.\n“Target System Frequency” means 60Hz, managed within 59.8 Hz - 60.2 Hz (+/-0.2 Hz).\n“Operator” means the third-party transmission and distribution operator selected by\nAdministrator who will provide planning, operations and communication services on behalf of\nPREPA to the people of Puerto Rico, pursuant to this Agreement. The Operator will control the\nday-to-day dispatch and transmission of electricity throughout Puerto Rico and will be\nresponsible for ensuring that the T&D System and all IPP-Owned Assets and Legacy Generation\nAssets operate in a reliable and economic fashion, and that sufficient generation capacity is\navailable and maintained to meet resource adequacy goals.\n\nI-18'}, {'number': 187, 'text': 'CONFIDENTIAL\nIntroduction.\nThe Operator will operate the electricity supply system in a safe and reliable manner. It will also\nuse Economic Dispatch principles and Prudent Utility Practices to operate the electricity supply\nsystem as economically as possible in consideration of the electricity supply system constraints\nand PPOA obligations.\nThe Operator will be expected to balance electricity supply from available generating facilities and\ncoordinate and communicate with Generating Facility Operators in regards to the system planning\nand operations functions outlined below.\nDuring the Front-End Transition Period, the Parties shall prepare and agree to System Operation\nprinciples, which shall be generally consistent with this Schedule I (System Operation Principles)\nto Annex I (Scope of Services). Such System Operation Principles shall be subject to the review\nand approval of Administrator and PREB. The System Operation Principles shall be subject to\nfurther review and update pursuant to Section 5.13(c) (Generation-Related Services – Review of\nSystem Operation Principle of the Agreement.\nSystem Planning.\nThe Operator will be responsible for short and long-term supply and demand forecasting,\nreliability planning studies, the economic and technical assessment of new projects, deactivation\nstudies for generating facilities and other assets, and other studies and evaluations that identify and\naddress the reliability needs of the electricity supply system, and the current and future state of the\nPuerto Rico electricity supply system.\nThe Operator will manage the new interconnection process and implement procedures as required\nfor large and small generators, and will periodically update the Integrated Resource Plan, all of the\naforementioned as required by the PREB.\nAgreed Operating Procedures.\nThe Operator and Generating Facility Operators shall maintain detailed written operating\nprocedures based on the Operator’s standard operating procedures, taking into consideration the\ndesign of each generating facility and its interconnection to the electricity supply system. These\nwritten operating procedures shall also take into account security-constrained economic dispatch,\nensuring non-discriminatory treatment of resources. The Agreed Operating Procedures shall define\nthe procedures to be used to integrate the generating facility’s output into the electricity supply\nsystem. Topics shall include, but not be limited to:\n1. A method of day-to-day and real-time communications;\n2. Clearances and switching practices;\n3. Outage scheduling;\n4. Daily available energy reports;\n\nI-19'}, {'number': 188, 'text': 'CONFIDENTIAL\n5. Economic Dispatch of Dependable Capacity, Spinning Reserve Capacity and Excess\nCapacity;\n6. The generating facility’s operating log;\n7. Reactive power support;\n8. Voltage scheduling; and\n9. Emergency procedures.\nThe Agreed Operating procedures may be modified only with the written consent of both the\nOperator and Generation Facility Operators.\nGenerating Unit Scheduling.\nThe Operator and Generating Facility Operators shall coordinate on the availability of and need\nfor each generating facility’s Net Electric Output. Planning shall include target dispatch levels\n(annual basis), daily dispatch scheduling (monthly basis) and hourly dispatch scheduling (weekly\nbasis). The Operator will record Non-Scheduled Outages for purposes of calculating compensation\nand will coordinate Scheduled Outages with the Generating Facility Operators to allow for\nmaintenance and repairs, according to each party’s respective PPOA. The Operator shall also\nreceive from each generating facility a weekly fuel availability report specifying the existing and\nplanned fuel inventory.\nDispatch Operations.\nThe Operator shall utilize the Agreed Operating Procedures and other operational principles to\nensure that the Dependable Generating Capacity is sufficient to cover the hourly demand for\nelectricity.\nThe Operator will determine the appropriate level of dispatch for each generating facility by means\nof its AGC system and the use of Prudent Utility Practices.\nThe Operator shall, using AGC, or by directing the Generating Facility Operator on a manual basis,\nadjust the Reactive Power generation and/or the terminal voltage of generating facilities, as well\nas obtain Frequency Response services to maintain the Target System Frequency. These ancillary\nservices will be in consideration of generating facility design limits and PPOA contractual terms.\nReserve Operations.\nThe Operator shall operate the electricity supply system with a level of Operating Reserves above\nthe scheduled load that is sufficient to protect the power system against the uncertain occurrence\nof operating events that include unplanned loss of generation or load forecasting errors. Operating\nReserves shall include both Synchronized Spinning Reserves and Supplemental Reserves (nonsynchronized and non-spinning).\n\nI-20'}, {'number': 189, 'text': 'CONFIDENTIAL\nThe level of Synchronized Spinning Reserves and Supplemental Reserves shall be determined\ndaily by the Energy Control Center as a function of:\n1. The availability of generating units;\n2. Agreed upon Operating Reserve availability specified in PPOAs;\n3. Energy not supplied due to capacity limitations;\n4. Deviations from the forecasted demand;\n5. The schedule planned environmental inspections;\n6. The level of fuel inventory in the different generating stations;\n7. Compliance with the Mercury and Toxics Emission Standards (“MATS”); and\n8. Any other material considerations.\nDuring Normal Operating Conditions, the minimum target level of Synchronized Spinning\nReserves shall be equal to the generating unit with the highest dispatched capacity in order to\ncover the potential s electricity supply system outage in the event of a forced outage of the\nlargest generator running on the electricity supply system.\nDuring periods in which the reliability of the electricity supply system is compromised by\noperational issues with generating units, substations, transmission lines, and/or distribution, the\nSynchronized Spinning Reserve may be increased to more than the capacity of the generating\nunit with the highest dispatched capacity.\nSynchronized Spinning Reserves and Supplemental Reserves shall be established and maintained\nin consideration of Economic Dispatch principals and Prudent Utility Practices.\nCommunications.\nThe Generating Facility Operator shall supply and maintain at all times appropriate radio, voice\nand data communication facilities linking the generating facility with the Operator for the\npurpose of planning, telemetering, data acquisition, AGC, Remote Terminal Unit\ncommunication, emergency response and other exchanges of information.\nDuring Emergency Operating Conditions, the Operator shall implement the Emergency\nResponse Plan per established protocols. After Emergency Operating Conditions have passed,\nthe Operator shall conduct post-event reviews with stakeholders, gather and analyze data from\nthe Energy Management System to determine appropriateness of actions taken during the\nEmergency Event, and communicate and implement lessons learned.\nThe Operator shall maintain and enhance the customer outage data and information on the\nOperator managed web page and in other communication channels consistent with the\nEmergency Response Plan.\n\nI-21'}, {'number': 190, 'text': 'CONFIDENTIAL\nThe Operator will develop a plan as part of the System Remediation Plan designed to attain\ncybersecurity compliance with appropriate NERC Critical Infrastructure Protection (“CIP”)\nstandards, including reporting as required by NERC, and implement said plan to the extent this\ncan be achieved taking into consideration the time and Budget constraints and other adjustments\nbeing made to the electricity supply system.\nThe Operator will collect and analyze NERC Generating Availability Data System (“GADS”)\nand Transmission Availability Distribution System data in order to support and report on the\nstate of the electricity supply system and generator reliability trends.\n\nI-22'}, {'number': 191, 'text': "CONFIDENTIAL\nAnnex II\nFront-End Transition Plan\nINTRODUCTION\nOperator acknowledges the goal to complete the Front-End Transition Services in a timely\nmanner and as soon as practical. Operator’s schedule achieves a January 1, 2021 Service\nCommencement Date, based on:\n\uf0b7\n\uf0b7\n\nAn Effective Date of February 16, 2020, corresponding to Operator’s scheduled\ncompletion of the Front-End Transition Services by December 3, 2020; and\nMeaningful participation by existing Owner and Administrator employees and/or\ncontractors, as applicable, including Owner and Administrator management, all of whom\nwill be required to dedicate significant time and resources during the Front-End\nTransition period.\n\nThe Front- End Transition Plan is as follows:\n\uf0b7\n\uf0b7\n\uf0b7\n\n\uf0b7\n\n\uf0b7\n\n\uf0b7\n\nDeveloping a post-commencement strategy that appropriately balances near- and\nlonger-term initiatives;\nImmediately addressing the urgent issues of storm response planning as well as\ncritical safety and operational deficiencies;\nWorking towards accelerating (where reasonably practical) the timing for\ncompletion of the various work streams set out herein by drawing upon Operator's\nequity holders to supplement (under appropriate Subcontracts) the transition team\nduring the initial months;\nDrawing upon Operator's equity holders' (under appropriate Subcontracts):\no proven internal processes that have been employed to support such equity\nholders respective acquisition strategy, and\no collaborative, proven P3 model;\nWorking to developing an internal culture around project management skills,\naccountability, elevating issues as they occur, developing work-around solutions\nand communicating frequent status updates to internal and external stakeholders;\nand\nDeveloping a communication plan that works to create a well-orchestrated and\nconsistent message to Operator's employees regarding expectations.\n\nAll of Operator's obligations herein are subject to terms of the main body of the O&M\nAgreement including Section 2.2 (Effective Date) and Section 4.6 (Front-End Transition Period\nCompensation).\n\nII-23"}, {'number': 192, 'text': "CONFIDENTIAL\nMobilization\nFollowing the Effective Date and Owner's compliance with Section 4.6(c) (Front-End Transition\nPeriod Compensation – Funding), the Operator's transition teams will commence their work in\norder to complete the critical path activities identified in this Annex II. Team leaders will be\ndrawn from Operator's pool of experienced managers. A number of these professionals will also\nbe designated to serve as senior leadership for the Operator after the Service Commencement\nDate and will be moving to Puerto Rico on a permanent basis.\nThe manhour budgets assigned to each team reflect the level of change management associated\nwith most of the workstreams. These are illustrated in the Figure 1 below:\n\nFigure 1: Transition Estimate by Workstream\nThe overall Front-End Transition Plan has been divided into three primary phases:\n1. Assess,\n2. Analyze,\n3. Act.\nThese are not distinct phases with clear separation between them, but rather they indicate the\ngeneral focus of activities that will gradually evolve as Operator arrives on site in Puerto Rico\nfollowing commencement of the Front-End Transition Services. Operator will work toward\ncompleting our assessments and work with the Owner's and Administrator's respective\nemployees to develop our improvement initiatives.\n\nII-24"}, {'number': 193, 'text': "CONFIDENTIAL\nThis approach is summarized in Table 1 below.\n\nTable 1: Mobilization Phases\n1.0\n2.0\nPHASE 1\n5.0\n9.0\n\n6.0\nTasks\n\n\uf0a7\n\uf0a7\n\uf0a7\n\uf0a7\n\n10.0\n\nMajor\nAttributes\nof Each\nPhase\n\n3.0\n\nASSESS\n\n7.0\n\nDetailed data review\nInterview Owner rank\n& file\nAssess performance\ntrends & issues\nConfirm or modify\nhypotheses\n\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\uf0a7\n\nLarge team\nsupplemented from\nOperator affiliate\nCompile\nperformance data\non consistent basis\nfor future\nSet expectation that\nhow business is\nconducted is being\ntransformed\nIdentify internal\nchampions &\nleaders\n\n\uf0a7\n\uf0a7\n\n\uf0a7\n\nPHASE 2\n\n4.0\n\nANALYZE\n\n8.0\n\nUnderstand root causes\nof performance issues\nIdentify potential\nsolutions\nWork with employees\nto understand\nconstraints &\nimplementation\nchallenges\nInvest time to\nunderstand local\nconstraints, but always\ndriving schedule\nprogress\nCatalog potential issues\n& initiatives\nStart work in\ncollaborative teams with\nrank & file; internal\nchampions emerge and\nassume more active\nroles\nBusiness process reengineering\nrequirements being\nidentified\n\n\uf0a7\n\uf0a7\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\n\uf0a7\n\nPHASE 3\nACT\nConsolidate solutions\ninto initiatives\nQuantify costs and\nbenefits of solutions\nPrioritize initiatives\ninto near– and longerterm schedule\n\nInternal champions\ntake leadership roles\nas new attitude\nbecomes understood\nDevelop\nimplementation plans\nthat cut across\norganization for\nefficiency\nGather input and\nperspective from\nbroad set of internal\n& external\nstakeholders\n\nOperator's staffing ramp-up plan recognizes the phased approach and is designed to coordinate\nstaff resources, logistics, and to interface with Administrator and Owner (and their respective\nemployees) to support the required deliverables.\nThe time to receive regulatory approvals creates a schedule where most workstreams of both\nOperator and each of Administrator and Owner will quickly ramp up to full resource loading,\nand thereafter involve work on full-time basis to achieve the mid-year milestones identified\nherein. While there is a critical path to completion, there are several other secondary and tertiary\ncritical paths that are to be addressed as well. While, when viewed on a roll-up basis by\nconsolidating major activities, it can look as if each workstream is running full-out to completion\nII-25"}, {'number': 194, 'text': "CONFIDENTIAL\n(because activity scheduling is done on a “finish as early as possible” basis) there are a number\nof key activities that will drive the overall timeline. These key activities are:\n\uf0b7\n\n\uf0b7\n\uf0b7\n\n\uf0b7\n\nMobilization of transition team members after commencement of Front-End Transition\nServices (which will depend on scheduled date for Effective Date and satisfaction of\nrequirements of Section 4.6 (Front-End Transition Period Compensation) being met (i.e.\nto permit early kick-off).\nSeveral IT-related system development tasks, but most critically, the path to implement\nand stand up the new payroll module;\nIn accordance with the terms of the Agreement development of the following as\ncontemplated in Article IV of the main body of the Agreement:\no Emergency Response Plan;\no Physical Security Plan;\no Data Security Plan; and\no Vegetation Management Plan;\nIn accordance with the terms of the Agreement development of, and work towards\nobtaining the requisite approvals as per main body of the Agreement for the items\nspecified in Article IV of the main body of the Agreement including:\no the System Remediation Plan;\no the Federal Funding Procurement Manual and Non-Federal Funding Procurement\nManual;\no the Systems Operation Principles;\no Initial Budgets;\no Performance Metrics matters as contemplated by Section 4.2(f) of the main body\nof the Agreement;\no Liability Waiver,\no Governmental Approvals, and\no Back-End Transition Plan.\n\nViews on Feasibility of 2020 Target Commencement\nThe overarching indicative schedule for completion of the Front-End Transition Services set out\nherein in Appendix 1 (herein the “Schedule”) for completion of the Front-End Transition\nServices will depend on the full, timely and complete support of Administrator and Owner, and\non the assumption that this same support will also be obtained from PREB, all in accordance\nwith the requirements of the Agreement as a whole. Operator will collaborate to obtain\nalignment from Administrator, Owner and PREB in order to not adversely impact Operator's\nability to meet the proposed Schedule. In addition, predecessor and successor activities have\n\nII-26"}, {'number': 195, 'text': 'CONFIDENTIAL\nbeen identified and a critical path analysis has been conducted to ensure the robustness of the\noverall Schedule.\n\nTransition Communications Plan\nA robust communications plan (the "Transition Communications Plan") will be developed and\nimplemented early following commencement of Front-End Transition Services. A well-designed\ncommunications plan, which will deliver communications in Spanish and English, will help meet\nthe goal of ensuring the Front-End Transition Services can be performed efficiently and will help\nprepare both Owner\'s employees who may be hired by Operator and the public at large for the\ntransition to Operator performing the O&M Services as contemplated in the Agreement once\nService Commencement Date is achieved.\nKey milestones in the Front-End Transition period will be identified by Operator as the provision\nof the Front-End Transition Services progresses and targeted messages will be delivered by\nOperator to coincide with those milestones. At a very high level, these messages will include\nintroductory materials, periodic status updates and a report on transition period achievements\nthat includes a plan for the future.\nThe Transition Communications Plan will also define our management vision and expectations,\nmission statement and core values. We will seek input from Administrator and Owner in\ndeveloping this Transition Communications Plan. Generally the Transition Communications Plan\nis intended to feature the following:\n\uf0b7\n\n\uf0b7\n\n\uf0b7\n\nA commitment from the Operator’s senior leadership to communicate with its current and\nprospective employees transparently and frequently. Communications will work to\nexpress empathy for these employees in the face of the uncertainty arising from the\nchanges. The Operator will also communicate plans for increased on-going dialogue with\nemployees to keep them motivated and productive in the provision of the O&M Services.\nThe use of multiple communication channels to reinforce our key messages. This will\ninclude townhall meetings, one-on-one meetings with prospective employees, group\nsessions, intranet updates and posting of frequently asked questions (FAQs), memos and\nother forms of media to communicate applicable information.\nThe development of an employee value proposition that defines why prospective\nemployees will want to work for ServCo if offered employment.\n\nTo enhance communications, we will include the following meetings and status reporting:\n\uf0b7\n\nDaily meetings between transition team leaders and the transition program manager to\nidentify and resolve any emergent items and assist with other teams’ data, analytical or\nother issues\n\nII-27'}, {'number': 196, 'text': "CONFIDENTIAL\n\uf0b7\n\nBi-weekly progress meetings between the Operator and the Administrator's and Owner\nleads involved with the transition program. These meetings will be action oriented, with\nsummary progress reported. Materials widely reported may be edited to protect\nOperator's confidential information.\n\n\uf0b7\n\nMonthly progress meetings with Administrator and Owner and the Operator’s transition\nprogram leadership\n\n\uf0b7\n\nSupplemental progress meetings with Administrator and Owner executives as appropriate\n\n\uf0b7\n\nGeneral public progress reporting updates every three months with other stakeholders as\ndetermined following consultation with Administrator and Owner (and potentially PREB\nand interested political leaders as deemed appropriate by Operator)\n\nFigure 2 below shows the structure, purpose and proposed frequency of transition program\nmeetings.\n\nFigure 2: Transition Program Meetings\n\nII-28"}, {'number': 197, 'text': "CONFIDENTIAL\n\nManagement Transition Plan\nTo set a new management tone, and to increase expectations of how the Operator will operate in\nthe future, Operator's management transition plan reflects Operator's philosophy, approach and\nmajor themes. Based on Operator's understanding of the drivers behind Owner’s operating track\nrecord, Operator is not looking to focus on prior faults. Instead Operator's focus, as a new\npermanent organization, will be towards improving service and rebuilding the system together\nwith Owner.\nAs part of the transition towards Operator providing O&M Services, Operator intends to tap into\nthe institutional knowledge of Owner's employees that it ultimately hires to help increase overall\nbuy-in. The transformation of the T&D System operations will depend on further developing the\ntalents and resourcefulness of these Owner employees that are offered positions with and that\nchoose to join the Operator. Operator will work to improve the employee experience in order to\nstem the rate of attrition and increase employee morale.\n\nApproach to Interacting with Spanish-Speaking Workforce\nOperator's transition team has a number of fluent Spanish speakers, including several senior\nmembers who have lived and managed businesses in several different Latin American countries.\nIt is envisioned that these bilingual senior team members should be able to handle most\ninteractions with senior officials, regulators, politicians, or members of the media where\nimportant internal employee messaging in the Spanish language would be more productive.\nOperator anticipates that those meetings could be led by our native-speaking or fluent non-native\nsenior team members as necessary.\nInteracting with the broader Owner employee workforce does represent some potential\nchallenges, but Operator anticipates these can be overcome in several ways. Operator's plan to do\nso will include mandatory internal training sessions for all transition members regarding personal\nand professional manners and expectations, an orientation on Puerto Rico’s history and culture,\nand sensitivity to language issues.\n\nHandover Check List\nOperator's plan to manage the Handover Checklist is to continually maintain a checklist and\nsubmit updates on or before the 10th of every month to the Administrator. These updates will\ninclude reporting checklist items that have been completed, as well as identifying any checklist\nitems that might have emergent issues or problems that need to be escalated for resolution. In\naddition, if any new emergent items are identified that are not currently known, they will be\nproposed to be added to the handover checklist to be reviewed with Administrator.\n\nII-29"}, {'number': 198, 'text': 'CONFIDENTIAL\nThe current handover checklist is shown in Table 2 below. During the course of the Front-End\nTransition Period, the Handover Checklist may be adjusted or otherwise modified by mutual\nagreement of ManagementCo and Administrator.\nTable 2: Handover Checklist\nPRELIMINARY HANDOVER CHECKLIST\nITEM\n☐ I.\n\nGeneral & Transition Management\n\n☐\n\n1.\n\nGovernment Approvals\n\n☐\n\n2.\n\nPlan to Address Gaps in Assets,\nTechnology, Processes, etc. (plan to include\ncost estimates)\n\n☐\n\n3.\n\nPREB Rate Order Filing (Initial Budgets\nand Liability Waiver approvals)\n\n☐ II. T&D Services Milestones\n☐\n\n1.\n\nDevelopment and Implementation of an\nOperations Takeover Plan for Transmission\nand Sub-Transmission Inside and Outside of\nthe Plant\n\n☐\n\n2.\n\nDevelopment and Implementation of an\nOperational Takeover Plan for the Electric\nDistribution System\n\n☐\n\n3.\n\nDevelopment and Implementation of\nAdditional Takeover plans\n\n☐\n\nA. Transition Plan for T&D Control\nCenters\n\n☐\n\nB. Transition Plan for Operations and\nMaintenance (O&M) Activities\n\n☐\n\nC. Emergency Response/Disaster\nRecovery/Business Continuity Plans\n\n☐\n\nD. Fleet Management Plan\n\n☐\n\nE. Asset Management (included in 8.\nEngineering and Asset Management)\n\nII-30\n\nREQUIRED FOR\nCOMMENCEMENT?\n(Y/N)\n\nCOMPLETED?\n(Y/N)'}, {'number': 199, 'text': 'CONFIDENTIAL\nPRELIMINARY HANDOVER CHECKLIST\nITEM\n☐\n\nF. Workforce Management & Training\nPlan\n\n☐\n\nG. Safety Management Plan\n\n☐\n\nH. Engineering and Asset Management\n\n☐\n\nI. Identification of Real Estate\n\n☐\n\nJ. Materials Management & Warehouse\nPlan\n\n☐\n\nK. System Operations Plan\n\n☐\n\nL.\n\nVegetation Management Plan\n\n☐\n\n4.\n\nUpdate Emergency Operations Manual and\nBusiness Continuity/Disaster Recovery Plan\n\n☐\n\n5.\n\nEnvironmental Exposure Management Plan\n\n☐\n\nIII. System Remediation Plan Milestones\n\n☐\n\n1.\n\nRemediation Plan Proposal\n\n☐\n\n2.\n\nDevelopment of Improvement Initiatives\n\n☐\n\n3.\n\nConsolidate Plans from All Areas\n\n☐\n\n4.\n\nDevelopment of System Remediation Plan\n\n☐\n\n5.\n\nApproval of System Remediation Plan\n\n☐\n\nIV. Customer Services\n\n☐\n\n1.\n\nEvaluating Customer Service Facilities and\nAssets\n\n☐\n\n2.\n\nEvaluating and Updating Customer Service\nPolicies and Procedures\n\n☐\n\n3.\n\nDevelopment of a Meter Reading Plan\n\n☐\n\n4.\n\nDevelopment of a Customer Service\nTransition Plan\n\n☐\n\n5.\n\nDevelopment and Implementation of a\nService Start and Shut-Off Plan\n\nII-31\n\nREQUIRED FOR\nCOMMENCEMENT?\n(Y/N)\n\nCOMPLETED?\n(Y/N)'}, {'number': 200, 'text': 'CONFIDENTIAL\nPRELIMINARY HANDOVER CHECKLIST\nITEM\n☐\n\n6.\n\nDevelopment of a Meter Asset Management\n(MAM) Plan\n\n☐\n\n7.\n\nDevelopment and Implementation of a\nCustomer Service Technology\n\n☐\n\n8.\n\nDevelop and Implement a Non-Technical\nEnergy Loss Reduction Plan\n\n☐\n\n9.\n\nEstablish Integration Between Customer\nServices & T&D Ops\n\n☐ V.\n\nIT\n\n☐\n\n1.\n\nDevelopment of IT/OT Communication\nPlan and Acceptance Criteria\n\n☐\n\n2.\n\nIdentification and Gap Analysis\n\n☐\n\n3.\n\nEvaluating IT/OT Applications and\nInfrastructure\n\n☐\n\n4.\n\nDevelopment of Cyber Security and\nBusiness Continuity Plan\n\n☐\n\n5.\n\nDevelopment of an IT Asset Management\nProgram\n\n☐\n\n6.\n\nDevelopment of an IT/OT Transition Plan\nand Schedule\n\n☐\n\n7.\n\nCommencement Cutover Planning\n\n☐\n\n8.\n\nTraining and Communication Plan\n\n☐ VI.\n\nFinancial Management\n\n☐\n\n1.\n\nDetailed Description of Approach to\nBudgeting and Reporting\n\n☐\n\n2.\n\nDescription of Approach to Complying with\nInitial Budget Obligations\n\n☐\n\n3.\n\nApproach to Formalizing Changes to\nControl Processes\n\n☐\n\n4.\n\nEstablishing a Financial Accounting System\nand Account Structure\n\nII-32\n\nREQUIRED FOR\nCOMMENCEMENT?\n(Y/N)\n\nCOMPLETED?\n(Y/N)'}, {'number': 201, 'text': 'CONFIDENTIAL\nPRELIMINARY HANDOVER CHECKLIST\nITEM\n☐\n\n5.\n\nPreparing Initial Budgets and Other\nFinancial Forecasts\n\n☐\n\n6.\n\nEstablishing Bank Accounts\n\n☐\n\n7.\n\nEvaluating and Updating Payroll and Labor\nCost Reporting systems\n\n☐\n\n8.\n\nEstablishing a Delegation of Authority\nMatrix and Process\n\n☐\n\n9.\n\nProcesses & Procedures and Overall Internal\nControls\n\n☐ VII. FEMA Funds and Federal Funding\nProcurement Manual\n☐\n\n1.\n\nSet Up Governance Framework\n\n☐\n\n2.\n\nPolicies and Procedures\n\n☐\n\n3.\n\nStaffing Plan\n\n☐\n\n4.\n\nSurge Staffing\n\n☐\n\n5.\n\nProject Worksheet Assessment (also\ncovered under Section 4.3)\n\n☐\n\n6.\n\nHandoff of Project Worksheet Activity from\nCOR3 and Vendors\n\n☐\n\n7.\n\nProject Procurement Planning\n\n☐\n\n8.\n\nDrafting, Revising and Finalizing Federal\nFunding Procurement Manual\n\n☐ VIII.\n\nStaffing for Front-End Transition Period\n\n☐\n\n1.\n\nDraft, Revise and Finalize Operator\nEmployment Requirements\n\n☐\n\n2.\n\nRecruiting and Staffing\n\n☐\n\n3.\n\nRedesign and Staff New Organization\n\n☐\n\n4.\n\nProposed Recruitment and Staffing Plan\n\n☐\n\n5.\n\nStand Up Human Capital Management\n(HCM) System\n\nII-33\n\nREQUIRED FOR\nCOMMENCEMENT?\n(Y/N)\n\nCOMPLETED?\n(Y/N)'}, {'number': 202, 'text': 'CONFIDENTIAL\nPRELIMINARY HANDOVER CHECKLIST\nITEM\n☐\n\n6.\n\nCommunication Plan\n\n☐\n\n7.\n\nTraining (Workforce Development) Plan\n\n☐\n\n8.\n\nDevelop Employee Retirement Plan\n\n☐\n\n9.\n\nOccupational Health and Wellness\n\n☐\n\n10. Compliance Plan\n\n☐\n\n11. Engagement Plan\n\n☐\n\n12. Develop a Community Investment Plan\n\nAdditional Front-End Transition Period\n☐ IX.\nActivities\n☐\n\n1.\n\nGenco Shared Services Agreement\nApproval\n\n☐\n\n2.\n\nEmergency Response Plan Approval\n\n☐\n\n3.\n\nNon-Federal Funding Procurement Manual\nApproval\n\n☐\n\n4.\n\nPhysical Security Plan Approval\n\n☐\n\n5.\n\nData Security Plan Approval\n\n☐\n\n6.\n\nVegetation Management Plan Approval\n\n☐\n\n7.\n\nSystem Operation Principles Regulatory\nApproval\n\n☐ X.\n\nAsset Acquisition (Supply Chain)\n\n☐\n\n1.\n\nEvaluating Existing Procurement and\nSubcontracting Policies, Procedures and\nSystems\n\n☐\n\n2.\n\nAssuming Responsibility for Securing Use\nof Assets, Facilities, IT / OT, etc.\n\n☐\n\n3.\n\nAssuming Existing Subcontracts\n\n☐ XI. Back-End Transition Plan\n☐\n\n1. Develop Back-End Transition Plan\n\nII-34\n\nREQUIRED FOR\nCOMMENCEMENT?\n(Y/N)\n\nCOMPLETED?\n(Y/N)'}, {'number': 203, 'text': 'CONFIDENTIAL\nPRELIMINARY HANDOVER CHECKLIST\nITEM\n\nREQUIRED FOR\nCOMMENCEMENT?\n(Y/N)\n\nCOMPLETED?\n(Y/N)\n\n☐ XII. Front-End Transition Plan (Additional\nRequirements)\n☐\n\n1.\n\nConfirmation of Acceptable Operator\nSecurity\n\n☐\n\n2.\n\nRequired Insurance\n\n☐\n\n3.\n\nBaseline Performance Levels\n\n☐\n\n4.\n\nBack-End Transition Plan\n\n☐\n\n5.\n\nRepresentations\n\n☐\n\n6.\n\nOperator Representations and Warranties\n\n☐\n\n7.\n\nSection 4.3: Owner and Administrator\nResponsibilities\n\n☐\n\n8.\n\nOwner Representations and Warranties\n\n9.\n\nSection 4.4 Governmental Approvals\n\n☐\n\n10. Section 4.5: Conditions Precedent to Service\nCommencement Date\n\n☐\n\n11. Section 4.7: Closing the Front-End\nTransition Period\n\n☐\n\n12. Service Commencement Begins\n\nI.\n\nGeneral Transition Management\n\nThe General Transition Management activities are comprised of the contents of this Annex.\n\nII.\n\nT&D Services Milestones\n\nThe T&D group will be one of the largest teams during the Front-End Transition period in terms\nof the number of people involved and sites and facilities visited. The primary critical path\n\nII-35'}, {'number': 204, 'text': "CONFIDENTIAL\nactivities that determine the portion of the Schedule applicable to this process for the T&D\ntransition program are as follows:\n\uf0b7\n\nLogistical requirements to visit and assess the large number of physical sites and assets\nthroughout Puerto Rico;\n\uf0b7 Time required to interview and assess the large Owner employee base currently\nworking for Owner in relation to the T&D System and to reorganize and staff the new\nT&D organization within Operator;\n\uf0b7 Time required to conduct a thorough assessment of all capital and O&M work\nrequirements and to identify, quantify and prioritize improvement initiatives; and\n\uf0b7 Completion of key work products needed to ensure no impact to reliability or resiliency\nafter Service Commencement Date (such as the Emergency Response Plan).\nWithin this section (T&D services), Operator has developed a comprehensive operational\ntakeover plan for all the identified items. Operator's fundamental approach is to assemble its\nteam to finalize the necessary due diligence, identify any gaps, and develop a robust plan to\nensure continuity of service to the business, employees and our customers. The Front-End\nTransition Project Office established by Operator will work to implement controls to deal with\nthe expected large volume of activity occurring from workstream to workstream that will be\nseeking similar information with the goal of reducing the burdens and additional costs this might\notherwise create.\n\nIII.\n\nSystem Remediation Plan Milestones\n\nThe current state of the T&D System as viewed through site visits and our review of information\nin the data room and the Q&A log during the RFP process is that the current T&D System\nconsists of aging infrastructure that has been poorly maintained due to lack of funding and\ninconsistent maintenance practices that are largely undocumented. The control, monitoring and\ninformation equipment is aged, underutilized and in some cases obsolete. Hardware, Information\nSystems and software are underutilized, fragmented and unsupported. Therefore, these systems\nlack the ability to provide the required visibility of the system and implement programs such as\nDistribution Automation (DA), condition monitoring/analytics and situational awareness\nregarding outage management. Strategies to manage assets over their life cycle have not been\ndeveloped. System Planning tools to effectively model the system, which is an industry best\npractice, are not being used due to a lack of confidence in their accuracy.\nOperator's approach to developing the System Remediation Plan will be a collaborative effort\nwith key stakeholders generally but also including the Administrator and Owner. The plan\nshould align with various reports such as the GridMod Plan, the IRP, Sargent & Lundy’s Capital\nPlan, Build Back Better, and the Energy Resiliency Solutions for the Puerto Rico Grid (from the\nDepartment of Energy).\n\nII-36"}, {'number': 205, 'text': 'CONFIDENTIAL\nIV.\nCustomer Service Milestones\nOperator views Customer Service as an integral component in the Operator’s transformation of\nthe T&D System. The Front-End Transition period will be used by Operator to thoroughly assess\nthe existing T&D Customer service organization of Owner, with a focus on customer experience\nquality and operational efficiency. Operator will take the opportunity during the Front-End\nTransition period to help it implement quick "wins" following the Service Commencement Date\nthat will enable T&D Customers to see and feel post-commencement improvements in the\ncustomer experience. These quick "wins" will act as a catalyst for T&D Customer engagement\nand the launch of the Voice of the Customer program.\nIn addition to assessing Owner\'s existing operations and identifying opportunities for\nimprovement, Operator\'s Customer Service group will be fundamentally transforming the\nmanner in which the Operator will deliver the customer experience. Operator will need time to\ncommunicate the changes and train the workforce on how things will be different. It is critically\nimportant to make T&D Customers aware immediately after commencement that a new priority\nhas been established to improve their interactions with the Operator.\nThe primary critical path activities that determine the schedule for the proposed T&D Customer\nservice transition program are as follows:\n\uf0b7\n\uf0b7\n\n\uf0b7\n\uf0b7\n\nVisit and assess the large number of physical sites and assets throughout Puerto Rico.\nInterview Owner\'s current T&D Customer service employees to identify key leaders\nwho can implement the transformed customer service vision and reorganize and staff\nthe new organization as required.\nWork to instill the culture and values of the transformed T&D Customer Service\ngroup throughout the workforce.\nEnsure a consistent message is communicated to T&D Customers beginning on the\nfirst day of Service Commencement Date.\n\nV.\nInformation Technology (IT)/Operation Technology (OT) Systems\nThe scope and schedule of Operator\'s IT group are driven by the need to begin defining new\nrequirements for a large number of critical systems and processes. These new systems and\nprocesses will represent a massive degree of change in how every employee performs his or her\ndaily job.\nThis level of change requires a structured, well-defined multi-year time frame for\nimplementation. The primary critical path activities that determine the schedule for the IT\ntransition program are as follows:\n\uf0b7\n\nA comprehensive assessment and due diligence review of over 15 major systems, which\nbegins on immediately on commencement of the Front-End Transition Services and\n\nII-37'}, {'number': 206, 'text': "CONFIDENTIAL\n\n\uf0b7\n\n\uf0b7\n\uf0b7\n\nincludes each team (including Owner's and Administrator's) running full out for the first\nthree months following start of the Front-End Transition Services.\nA high degree of coordination between the IT team and other functional area teams (both\nwithin Operator and by Owner and Administrator's teams as well) to ensure the future\nowners of these new systems within Operator have the chance to fully define their\nrequirements.\nA thorough workforce assessment to identify any skill gaps that must be addressed to\nmeet the organization’s strategic objectives.\nA concentrated focus on the large number of system cutovers that will be required to\nsupport the transfer after commencement. It is essential that these cutovers be well\nplanned and executed.\n\nVI.\nFinancial Management Milestones\nThe Financial Management group’s scope and schedule are driven by assessing and improving\nrisk management, the internal control environment and underlying business processes. This is\ncritical to setting the overall financial foundation, evaluating the integrity of the financial\ncompilation and reporting processes, mitigation of fraud and other risks, and the transition,\ndesign and implementation of the capital and operating budgets for the organization.\nThe primary critical path activities that determine the schedule are as follows:\n\uf0b7\n\nRedesign the budgeting process and have each functional team restructure its operational\nareas and adjust staffing size. Roll these inputs into a new approved budget, including the\nInitial Budgets;\n\uf0b7 Beginning immediately on commencement of the Front-End Transition Services and\nrunning full-out for the first three months, perform a comprehensive assessment and due\ndiligence review of all major systems; and\n\uf0b7 Recognize the high degree of coordination that will be required from the IT team and the\nother functional area teams (both within Operator and by Owner and Administrator's\nteams as well) to ensure that owners of these new systems within Operator have the\nchance to fully define their requirements.\nThe Operator’s approach to financial management during the front-end transition will continue to\nevolve as we gain a deeper understanding of Owner’s administrative and operational routines.\nOur efforts will be focused on understanding and evaluating Owner’s:\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\nSignificant financial risks;\nManagement and operational reporting;\nRegulatory reporting and compliance requirements;\nBusiness processes; and\nResources for matters that could affect the seamless transition of services at\ncommencement.\n\nII-38"}, {'number': 207, 'text': "CONFIDENTIAL\nOur plan will leverage current Owner management and financial personnel to analyze the\nexisting state of department processing and output, transition risks and stakeholder needs\n(customers, operations, regulators) in the following major areas:\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\nAll significant financial statement accounts and assertions;\nAll significant accounting and reporting processes, including:\nCash management and controls;\nPayroll and benefits;\nTransaction processing;\nFixed asset management;\nJob costing for projects;\nDebt/credit management;\nAccounting close;\nManagement; and\nRegulatory reporting\n\nVII. FEMA Funds and Federal Funding Procurement Manual\nOperator will engage and be working with IEM (as its Subcontractor) to deal with federal funds\nmanagement. The Operator’s first step following commencement of the Front-End Transition\nServices is to ensure a proper governance framework is established before it can manage a longterm recovery using federal funding on behalf of the Owner. The IEM team is best suited to\nensure that the Operator is operating under a federal funds management framework with an\neffective procurement policy that is inclusive of all federal, territorial, and COR3 requirements\nthat also emphasizes performance. Further, IEM’s own monitoring and internal controls included\nin the newly created Owner Disaster Recovery Federal Funds Management Guide (Operator\nDRFFMG) will ensure that the procurement policy is not merely aspirational but in fact is used\nfor procurement and for the management and monitoring of the Operator’s contractors.\nVIII. Staffing for Front-End Transition Period Milestones\nOperator's current organization chart for its transition team is shown in the Figure 3 below.\n\nII-39"}, {'number': 208, 'text': "CONFIDENTIAL\n\nFigure 3: Front End Transition Organization Chart\nIX.\nAdditional Front-End Transition Period Milestones\nAs requested by the Administrator, Operator will create specific teams to provide an extra focus\non seven key items that are important to a successful transition which are:\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\nGenCo Shared Services\nEmergency Response Plan\nNon-Federal Funding Procurement Manual\nPhysical Security Plan\nData Security\nVegetation Management Plan\nSystem Operation Principles.\n\nX.\nAsset Acquisition\nOperator's procurement team will review existing procurement and subcontracting policies,\nprocedures and systems governing and implemented by Owner. Once Operator is able to execute\na more granular review of the contracts (including System Contracts), procedures and systems\nthat Owner has in place, Operator will develop a more robust plan and recommendation for\n\nII-40"}, {'number': 209, 'text': "CONFIDENTIAL\nenhancements or improvements. Upon completion of procurement procedure documentation for\ngoods and services, a training plan will be established for procurement staff as required.\nSubsequently, documentation will be integrated into the compliance strategy and procurement\nprocedure manuals.\nThe Operator will collaborate with Owner to identify assets related to the facilities, furnishings,\nmaterial, supplies, equipment and IT systems required for T&D System operations. Upon\ncompletion of asset identification, the Operator, by performing due diligence in each functional\narea, plans on identifying and documenting these assets (with the assistance and reliance on\nOwner for appropriate information) and develop a detailed plan and recommendation for\nsecuring them. The plan will be submitted to the Owner and Administrator for review and\napproval as required by the Agreement. Operator will coordinate with the Owner on executing\nthe approved plan. The completion of the Front-End Transition Services is dependent on timely\nalignment between the Operator and each of the Administrator and the Owner on the assets\nrequired to run the operation.\nUpon completion of the identification and assumption of responsibility for Owner's existing\ncontracts, including System Contracts and subcontracts, the Operator will work to evaluate\nOwner's identified contractors, subcontractors and vendors and perform outreach and evaluation.\nOperator will work with Owner and the applicable Operator functional areas to determine which\ncontracts and subcontracts should be continued and assumed by the Operator or provided by\nother means. The Operator's procurement team will develop a plan and recommendation for\nassuming responsibilities for Owner's existing contracts and subcontracts and submit the plan for\nOwner and Administrator review and approval as required by the Agreement. Upon approval, the\nOperator's procurement team will assume the applicable existing contracts and subcontracts with\nappropriate assignment from Owner and further develop the Operator approval process for\ncontractors and subcontractors.\n\nXI.\nBack-End Transition Plan\nA key component of the Agreement is the development and execution of a Back-End Transition\nPlan (the “BET Plan”). The BET Plan will enable the seamless, safe and effective transfer of the\nmanagement of the T&D System and O&M Services either back to the Owner or to a successor\noperator at the expiration of the Agreement or, under certain conditions, an earlier time.\nWe have identified the members of the team, our approach and implementation, and proposed a\ndetailed outline of the plan. This BET Plan outline in its entirety can be viewed in Annex III of\nthe Agreement.\n\nII-41"}, {'number': 210, 'text': 'CONFIDENTIAL\nAPPENDIX 1\nIndicative schedule of activity listing is contained on following pages.\nFront End Transition Plan Schedule*\n\nII-42'}, {'number': 211, 'text': 'CONFIDENTIAL\n\nII-43'}, {'number': 212, 'text': 'CONFIDENTIAL\n\nII-44'}, {'number': 213, 'text': 'CONFIDENTIAL\n\nII-45'}, {'number': 214, 'text': 'CONFIDENTIAL\n\nII-46'}, {'number': 215, 'text': 'CONFIDENTIAL\nAnnex III\nBack-End Transition Plan\nThe Back-End Transition Services shall include any of the following.\nOwner Rights\n\uf0b7 Audit\n\uf0b7 Engagement of Subcontractors\nOperator Rights\n\uf0b7 Baseline Environmental Study\n\uf0b7 Engagement of Subcontractors\n\uf0b7 Use of Affiliate Personnel\nOwner Responsibilities\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\nAccess to Office Space, Facilities\nCooperation with Operator\nEstablishment of New Bank Accounts\nNotification of Customers to New Payment Accounts\nTimely Payment of Back-End Transition Fees\n\nOperator Responsibilities\n\uf0b7 Safety\n▪ Review of Overall Safety Program\n\uf0b7 T&D Operations\n▪ Review of Current State of System\n▪ Review of System Operator Principles and Emergency Response Plans\n▪ Review of Vegetation Management Plan and Physical Security Plan\n▪ Review of Integrated Resource Plan\n▪ Delivery of List of Fleet Vehicles\n▪ Review of System Remediation Plan (if Applicable)\n▪ Sale of Materials and Supplies\n▪ Preservation of Materials, Tools and Equipment\n▪ Removal of Equipment and Tools from T&D System Sites\n▪ Maintenance of Consumable and Spare Part Inventory at Sites\n▪ Removal of Operator Employees from T&D Sites upon Exit\n▪ Condition of T&D Sites Upon Exit\n▪ Delivery of Current Maps of the T&D System\n\nIII-1'}, {'number': 216, 'text': 'CONFIDENTIAL\n▪ Provision of Technological and Design Support\n\n\uf0b7 Regulatory\n▪ Review of any Regulatory Reporting and Compliance Requirements and\nOpen Discussions with PREB\n▪ Review of Regulatory Filing Priorities and Timeline\n\uf0b7 Customer Service\n▪ Review of Policies, Processes and Procedures Captured Under the\nDocument and Record Control Register\n\uf0b7 Human Resources\n▪ Delivery of Information Regarding Staffing, Benefits and Labor Contracts\n▪ Retention of Senior Management for Six Month Period\n▪ Stability of ServCo employees - fair and appropriate treatment of the\nServCo employees, including possible sale of ServCo to facilitate stability\n▪ Evaluate circumstances and consider other appropriate options to facilitate\nemployee stability in transition\n\uf0b7 Capital Projects\n▪ Delivery of List of Materials and Equipment Delivered to Work Sites\n▪ Status of Federally Funded Projects\n\uf0b7 Information Technology\n▪ Review of the Data Security Plan\n▪ Delivery of all Computer Programs used at T&D Sites\n▪ List of Files, Access and Security Codes\n▪ Delivery of System Information and Customer Databases\n▪ Delivery of a Document Management Program\n\uf0b7 Finance\n▪ Estimate of Back-End Transition Service fee for 4.5 Months\n▪ Monthly Invoice for Back-End Transition Services\n▪ Review of Current Budgets\n\uf0b7 Risk Management\n▪ Notice of Termination of Insurance Policies\n\uf0b7 Environmental\n▪ Review of Status of Environmental Work\n▪ Review of Pending Permitting and Reporting\n\uf0b7 Legal\n▪ List of Legal Proceedings Involving Contractors or Subcontractors\n▪ Provision of Work Product and Owner Intellectual Property\n\uf0b7 Supply Chain\n▪ Review of Procurement Manuals\n▪ Delivery of Copies of All Contracts and Subcontracts\n▪ Termination or Assignment of Contracts and Subcontracts\n▪ Cessation of Entering into New Contracts\nIII-2'}, {'number': 217, 'text': 'CONFIDENTIAL\n▪ Transfer of Title to Special Order items\n▪ Transfer of Warranties\n\n\uf0b7 Administrative\n▪ Removal of Branding\n▪ Termination of Shared Service Agreements (if Applicable)\n▪ Milestone Reporting\n▪ Delivery of all Books, Records, Customer Lists and Other Information\n▪ Delivery of List of all Facilities\n▪ Develop and Execute a Handover Checklist\n\nIII-3'}, {'number': 218, 'text': 'CONFIDENTIAL\nAnnex IV\nOperator Employment Requirements\nTo be eligible for employment, all applicants must:\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\uf0b7\n\nBe legally authorized to work in the United States;\nBe at least 18 years of age (some positions may have other age requirements);\nBe able to pass a thorough background check (including criminal history record checks, previous\nemployment verifications and references);\nBe able to pass a drug screening and medical assessment (where necessary); and\nHave a safe driving record (if applicable to the position).\n\nIn addition to the above list, a comprehensive list of individual job requirements will be listed on\neach job description. A preliminary listing of job descriptions for core, strategic, and support\njobs has been developed. These job descriptions have been assembled to reflect the needs of the\nbusiness.\nAlthough these job descriptions are industry standard and reflective of the roles outlined,\nOperator intends to finalize all individual job descriptions as early as practical during the FrontEnd Transition Period.\n\nIV-1'}, {'number': 219, 'text': 'CONFIDENTIAL\nAnnex V\nFront-End Transition Hourly Fully Allocated Rates\nEmployee Category\n\nHourly Rates (US$)\n\nVice President\n\n325\n\nSr. Director\n\n300\n\nDirector\n\n275\n\nSenior Manager\n\n210\n\nField Crew Leader\n\n205\n\nTrainer\n\n200\n\nManager\n\n200\n\nField Technician\n\n195\n\nSenior Analyst\n\n160\n\nEngineer / Field Supervisor\n\n160\n\nAnalyst\n\n125\n\nAdministrative Support\n\n50\n\nV-1'}, {'number': 220, 'text': 'CONFIDENTIAL\nAnnex VI\nGenCo Shared Services\nI.\n\nCurrent Owner Services.\n\nIn addition to the power supply dispatch, scheduling and coordination currently performed\nby the Puerto Rico Electric Power Authority (“PREPA”), PREPA performs certain administrative,\nmanagerial and operational services in connection with the operation and management of the\nLegacy Generation Assets and their delivery of Power and Electricity, and certain fuel supply and\nprocurement functions.\nII.\n\nPREPA Reorganization.\n\nPrior to the Service Commencement Date, PREPA shall be reorganized into two entities:\n(1) GenCo, acquiring or obtaining ownership of the Legacy Generation Assets, and (2) GridCo,\nacquiring or obtaining ownership of the T&D System. GenCo may eventually transfer to one or\nmore private partners certain of GenCo’s operations, including the operating, administrative and/or\nmaintenance functions in connection with the Legacy Generation Assets prior to the end of their\nremaining useful life. The period prior to such transfer is referred to as the “Shared Services\nPeriod.” During the Shared Services Period, Operator shall, on behalf of Owner, provide certain\nadministrative, managerial and operational services (the “Shared Services”) to GenCo, which were\nhistorically provided by PREPA. The Shared Services shall be performed according to the\nstandards set forth in the Shared Services Agreement (as defined below), thereby ensuring the\ncontinuity of operations by GenCo and complying with the Contract Standards and Prudent Utility\nPractice as defined in the Agreement.\nIII.\n\nShared Services Agreement.\n\nPrior to the Service Commencement Date, Operator shall be required to enter into a shared\nservices agreement consistent with the terms and conditions summarized in this Annex VI (GenCo\nShared Services) and reasonably acceptable to Operator (the “Shared Services Agreement” or\n“SSA”) to provide the Shared Services to GenCo, on behalf of Owner, and in accordance with the\nContract Standards, utilizing GridCo assets as necessary, and throughout the term of the SSA,\nwhich term shall not exceed three (3) years from the effective date of the SSA (unless otherwise\nextended with the consent of the Operator); provided that any Shared Service may be terminated\nor suspended earlier by GenCo for convenience following at least sixty (60) days prior written\nnotice to Operator.\nA.\nShared Services. Pursuant to the Shared Services Agreement, Operator shall\nprovide the Shared Services to GenCo in a manner, amount and quality substantially consistent\nwith the manner, amount or quality of the Shared Services currently provided by PREPA or\notherwise in accordance with Prudent Utility Practice, unless otherwise specified in the Shared\nServices Agreement. Operator and GenCo shall cooperate in good faith with each other on all\nmatters relating to the provision and receipt of the Shared Services. Operator shall cause its\nemployees, or the employees of Owner, as the case may be, to devote such time and effort to the\nbusiness of GenCo as shall be reasonably necessary to perform the Shared Services; provided that\nVI-1'}, {'number': 221, 'text': 'CONFIDENTIAL\nthe employees shall not be precluded from engaging in other business activities for or on behalf of\nOperator, Owner or their affiliates and no Shared Services will be provided in contravention of\nApplicable Law.\nThe Shared Services may include any of the following:\n1. Administrative\na. Human Resources\ni. Recruiting\nii. Labor Relations\niii. Payroll and Benefits Administration\n2. Regulatory and Public Affairs\na. File, execute and prosecute applications with Governmental\nAuthorities for the acquisition, construction, ownership and\noperation of power generation facilities\nb. Provide or cause to be provided services for governmental and\npublic affairs, including, but not limited to press releases,\ncommunity events, contacts with county, state and federal\nofficials, and communications with landowners\n3. Finance and Accounting\na. Internal Audit and Tax\nb. Risk Management (including financial risk management and\nenterprise risk management)\nc. Treasury and Controller\nd. Insurance Renewals and Claims\ne. Loss Control Inspections\nf. Vendor payments and Contract Administration\ng. Insurance\n4. Information Technology\na. Communications\nb. Hardware/Software/Licensing Support\nc. Cyber-Security\n5. Legal\n6. Bookkeeping\n7. Environmental\na. Permitting and Reporting\nb. Mitigation\nc. Compliance\n8. Procurement and Supply Chain\n\nVI-2'}, {'number': 222, 'text': 'CONFIDENTIAL\n9. Outage Support\n10. Fleet Vehicle Services\n11. Capital Improvements Analysis and Determination\n12. Real Estate\na. Bidding/ Selling Property\nb. Lease Management\nc. Portfolio Optimization\n13. Facilities\na. Facilities and Property\nMaintenance\nb. Food / Mail Services\n14. Physical Security\n\nAdministration/\n\nManagement/\n\nThe parties may agree to modify the terms and conditions of Operator’s performance of\nany Shared Service in order to reflect new procedures, processes or other methods of providing\nsuch service. The parties shall negotiate in good faith the terms and conditions upon which\nOperator would be willing to implement such change.\nB.\nAdditional, Reduced or Modified Services. In the event that GenCo requests an\nincrease or decrease in the manner, amount or quality of any Shared Service, GenCo shall notify\nOperator and request such modification of service, and Operator shall (x) in the case of a decrease,\nfollowing the expiration of the relevant notice period, decrease the manner, amount or quality of\nsuch Shared Service and (y) in the case of an increase, consider GenCo’s request, in accordance\nwith terms to be set forth in the Shared Services Agreement.\nC.\nLiability. Operator shall not have any liability, whether direct or indirect, to GenCo\nfor or in connection with the Shared Services or any other services provided or to be provided by\nOperator pursuant to the Shared Services Agreement except to the extent of (i) any negligence or\nwillful misconduct of Operator or any of its Affiliates, or any of their employees, representatives,\nagents, contractors, subcontractors or suppliers or (ii) any failure to comply with the Shared\nServices Agreement (including a failure to deliver such Shared Servces in accordance with the\nContract Standards).\nIV.\n\nCompensation; Set-off.\n\nAs compensation for the performance of the Shared Services, GenCo shall pay a shared\nservice fee (without markup for profit) to be determined in, and in accordance with, the allocation\nmethodology of the Shared Services Agreement; provided that payments of the service fee to the\nOperator may, at the request of GenCo or the Administrator at any time and from time to time, be\nreduced by amounts owed by GridCo to GenCo consisting of Generation Pass-Through\nExpenditures and applied by Operator in accordance with the allocation methodology. The\nallocation methodology shall seek to reflect the amount of Shared Services actually provided to\nGenCo (as opposed to GridCo or other parties) and may be (i) based on the following approaches,\n(ii) assigned, distributed or allocated on a service-by-service basis, and (iii) further developed and\ndetermined subsequent to input from the relevant Owner or GenCo personnel and Operator:\n\nVI-3'}, {'number': 223, 'text': 'CONFIDENTIAL\nA. internal resource time allocation, e.g., full-time equivalent or employee hours;\nB. employee count (considering pending retirements and anticipated recruiting); and\nC. equipment, data or inventory volume, e.g., number of workstations, vehicles or\ngigabytes used.\nAllocators may be based on either budget or historical data, which shall be assessed and determined\nwith inputs from PREPA personnel and Operator.\n\nVI-4'}, {'number': 224, 'text': 'CONFIDENTIAL\nAnnex VII\nManagementCo Costs\nThe costs listed below shall be paid by ManagementCo from the Fixed Fee (or otherwise absorbed\nor paid for by ManagementCo without reimbursement hereunder) as set forth in Section 7.1(a)\n(Service Fee – Generally) of the main body of the Agreement. Capitalized terms used but not\ndefined in this Annex VII (ManagementCo Costs) have the respective meanings set forth in the\nAgreement. For the avoidance of doubt, these costs shall be the sole responsibility of\nManagementCo and shall not be treated as T&D Pass-Through Expenditures or as Generation\nPass-Through Expenditures.\n1.\nWages, salaries, bonuses, employer contributions to pension and employee medical plans,\nany mandatory employment related insurance and taxes, vacation, sick leaves and other mandatory\nleaves with pay, overtime compensation and associated benefits and other post-employment\nbenefits incurred in connection with the following roles (or any substantially similar role or\nposition): (i) Chief Executive Officer, (ii) Chief Financial Officer, (iii) Head of Human Resources,\n(iv) Head of Capital Programs, (v) Head of Information Technology and (vi) Head of Customer\nService.\n2.\nEstablishment and maintenance of a ManagementCo Board of Directors to provide strategy\nand oversight.\n3.\nCosts incurred with any third party advisors hired by ManagementCo for the purposes of\nfulfilling ManagementCo’s responsibilities set forth in this Agreement.\n4.\n\nAny costs relating to the Puerto Rico Lineworkers College.\n\n5.\nAdministration of ManagementCo, including bookkeeping, contract administration,\nfilings, financial / operational audits, etc.\n\nVII-1'}, {'number': 225, 'text': 'CONFIDENTIAL\nAnnex VIII\nService Fee\n\nContract Year\n\n\uf0b7\n\nFixed Fee\n\nContract Year\n\nIncentive Fee\n\n1\n\nUS$70,000,000\n\n1\n\nUS$13,000,000\n\n2\n\nUS$90,000,000\n\n2\n\nUS$17,000,000\n\n3\n\nUS$100,000,000\n\n3\n\nUS$19,000,000\n\n4\n\nUS$105,000,000\n\n4\n\nUS$20,000,000\n\n5\n\nUS$105,000,000\n\n5\n\nUS$20,000,000\n\n6\n\nUS$105,000,000\n\n6\n\nUS$20,000,000\n\n7\n\nUS$105,000,000\n\n7\n\nUS$20,000,000\n\n8\n\nUS$105,000,000\n\n8\n\nUS$20,000,000\n\n9\n\nUS$105,000,000\n\n9\n\nUS$20,000,000\n\n10\n\nUS$105,000,000\n\n10\n\nUS$20,000,000\n\n11\n\nUS$105,000,000\n\n11\n\nUS$20,000,000\n\n12\n\nUS$105,000,000\n\n12\n\nUS$20,000,000\n\n13\n\nUS$105,000,000\n\n13\n\nUS$20,000,000\n\n14\n\nUS$105,000,000\n\n14\n\nUS$20,000,000\n\n15\n\nUS$105,000,000\n\n15\n\nUS$20,000,000\n\n16\n\nUS$105,000,000\n\n16\n\nUS$20,000,000\n\nThe amounts set forth above are in 2020 Dollars. For purposes of this Annex VIII, the phrase “2020\nDollars” means that the relevant amount will be adjusted to account for inflation, at the start of each\nContract Year, by the respective annual CPI Factor(s) to reflect a nominal value for the Contract Year. For\nillustrative purposes only, if Contract Year four (4) starts in calendar year 2023, then the adjustment for\ninflation to yield the Fixed Fee for Contract Year four (4) would be as follows: Contract Year four (4)’s\nFixed Fee or Incentive Fee, as applicable (as set forth in this Annex VIII, in 2020 Dollars), multiplied by\nthe CPI Factor for 2021 multiplied by the CPI Factor for 2022 multiplied by the CPI Factor for 2023.\n\nVIII-1'}, {'number': 226, 'text': 'CONFIDENTIAL\nAnnex IX\nPerformance Metrics\nI.\n\nGeneral.\n\nFor each Contract Year, the Operator shall be eligible to receive financial incentive\ncompensation (“Incentive Fee”) based on the Operator’s performance during the Contract Year as\nmeasured against the performance goals set forth by the Performance Metrics as described in this\nAnnex IX (Performance Metrics). The Incentive Fee calculation is described in Annex X\n(Calculation of Incentive Fee) with a maximum amount that can be earned (the “Incentive\nCompensation Pool”).\nII.\n\nPerformance Categories.\n\nTo ensure that all performance goals are met, the Operator will be evaluated in three major\nPerformance Categories: (i) Customer Satisfaction, (ii) Technical, Safety and Regulatory, and\n(iii) Financial Performance. Likewise, the Incentive Compensation Pool will be allocated across\nthe Performance Categories in such a way as to align the Operator’s incentive compensation with\nthe performance goals.\nTable 1. Summary of Performance Categories\nPerformance Category\n1.\n\nCustomer Satisfaction\n\n2.\n\nTechnical,\nRegulatory\n\n3.\n\nFinancial Performance\n\nSafety\n\nPerformance Goal\n\nand\n\nAllocation of Incentive\nCompensation Pool\n\nAchieve a high-level of customer\nsatisfaction across all customer\nclasses.\n\n25%\n\nOperate a safe, reliable electric grid\nwhile remaining complaint with\napplicable safety, environmental\nand other regulations.\n\n50%\n\nMeet the approved Operating\nBudget, Capital Budget – Federally\nFunded and Capital Budget – NonFederally Funded.\n\n25%\n\nIX-1'}, {'number': 227, 'text': 'CONFIDENTIAL\nIII.\n\nIn Compliance with Docket NEPR – MI – 2019 – 0014.\n\nA.\nFor each Contract Year, the level of performance in each Performance Category\nshall be measured based on actual results achieved for the Contract Year. Levels of performance\nand achievement of results will be adjusted proportionately during the initial Contract Year\ncommencing on the Service Commencement Date and ending on the following June 30. For this\npurpose, one or more Performance Metrics shall be associated with each Performance Category.\nB.\nFor all Performance Categories the Operator performance shall be determined by\nthe level of achievement of the Performance Objective for each Performance Metric under a\nPerformance Category as described in Section V. Such level of achievement will determine the\nportion of the allocated Incentive Compensation Pool earned by the Operator as described in\nAnnex X (Calculation of Incentive Fee).\nC.\nEach Performance Metric will have an assigned point weighting (“Base Points”).\nFor all Performance Metrics except for the Binary Metrics as described in Section III(D), a baseline\nperformance level will be established prior to the beginning of the first Contract Year (the\n“Baseline Performance Level”). The Baseline Performance Level will be based on either historical\noperating data confirmed during the Front-End Transition Period, performance during the FrontEnd Transition Period, or through independent analysis. The initial baseline levels will be agreed\nupon by the Operator and PREB in the manner set forth in the main body of the Agreement. The\nBaseline Performance Level sets the starting point for each metric relative to the target\nperformance level to be achieved in the fifth Contract Year (the “Target Performance Level”). The\nbaseline target over the initial five-year period is determined by a straight line between the Baseline\nPerformance Level and the Target Performance Level. The Minimum Performance Level set for\neach Performance Metric establishes the value that must be exceeded to qualify for Base Points\nand is established as the straight line between the Baseline Performance Level and achieving the\nTarget Performance Level in the tenth Contract Year. In Contract Years where the Minimum\nPerformance Level is exceeded, the Operator has the ability of earning 25%, 50%, 100%, 125%\nor 150% (the “Base Point Multipliers”) of the Base Points depending on the metric result relative\nto the established baseline for the Contract Year. That is, for a result between the Minimum\nPerformance Level and the 25% tier, the Operator would receive points equal to 25% of the Base\nPoints, for a result between the 25% threshold and the 50% threshold, the Operator would receive\npoints equal to 50% of the Base Points, etc.\nPerformance ranges for determination of Base Points earned shall be based on achieving\nperformance improvement from the Baseline Performance Level to the Target Performance Level\nover the initial five-year period.\n\nIX-2'}, {'number': 228, 'text': 'CONFIDENTIAL\nChart 1. Example of Performance Metric Mechanism\n\nD.\nSeveral Performance Metrics are evaluated differently than the mechanism outlined\nabove either because there is a binary nature to the result or because the baseline is independent\nyear to year (the “Binary Metrics”). For the Occupational Safety and Health Administration\n(“OSHA”) Fatalities and OSHA Severe Injuries metrics, a value of zero results in full Base Points\nand a value other than zero results in no points. For the three approved budget-related metrics,\nOperating Budget, Capital Budget – Federally Funded and Capital Budget – Non-Federally\nFunded, exceeding 102% of the applicable Budget results in no points while spending less than or\nequal to 100% of the applicable Budget results in awarding full Base Points. The Operator can\nearn full Base Points by spending up to 102% of the budget, pending Administrator approval.\nIV.\n\nSummary of Performance Metrics.\n\nThe Performance Metrics that form the basis for the Incentive Compensation Pool are\nsummarized in Table 2. Details of these Performance Metrics are described in the text following\nTable 2.\n\nIX-3'}, {'number': 229, 'text': 'CONFIDENTIAL\nTable 2. Summary of Performance Metrics\nNote: Any Baseline Performance Level set using PREPA historical data will be subject to\nconfirmation during the Front-End Transition Period.\nPerformance Metric\nA. Customer Satisfaction\n1. J.D. Power Customer\nSatisfaction Survey\n(Residential Customers)\n2. J.D. Power Customer\nSatisfaction Survey\n(Business Customers)\n3. Average Speed of Answer\n(minutes)*\n\nDescription\n\nEffective\nWeight\n\nSet during Front-End\nTransition Period\n\n5.0\n\n4%\n\n3rd party measure of\ncustomer satisfaction\n\nSet during Front-End\nTransition Period\n\n5.0\n\n4%\n\nTime it takes on phone to\nreach an agent\n\nPREPA historical data\nverified during Front-End\nTransition Period\nPREPA historical data\nverified during Front-End\nTransition Period\nSet during Front-End\nTransition Period\n\n5.0\n\n4%\n\n5.0\n\n4%\n\n5.0\n\n4%\n\nPREPA historical data\nverified during Front-End\nTransition Period\n\n5.0\n\n4%\n\nPREPA historical data\nverified during Front-End\nTransition Period\nIndustry standard\nspecified herein\n\n5.0\n\n6%\n\n5.0\n\n6%\n\nSet during the Front-End\nTransition Period\n\n5.0\n\n6%\n\nSet during Front-End\nTransition Period\n\n5.0\n\n6%\n\nPREPA historical data\nverified during Front-End\nTransition Period\nPREPA historical data\nverified during Front-End\nTransition Period\nPREPA historical data\nverified during Front-End\nTransition Period\n\n5.0\n\n6%\n\n5.0\n\n6%\n\n5.0\n\n6%\n\nTotal monthly complaints\nregistered with PREB\n\n5. First Call Resolution*\n\n% of calls with issues that\nare escalated\n\n6. Abandonment Rate\n\n# of abandoned calls per\ncalls received\n\nB. Technical, Safety & Regulatory\n1. OSHA Recordable\n# of work-related OSHA\nIncidence Rate\nrecordable injury cases\n2. OSHA Fatalities*\n\n# of work-related fatalities\n\n3. OSHA Severe Injuries*\n\n# of total work-related\ninjury cases with severity\ndays\n# of work-related injury\ncases incidents resulting in\n1 or more lost days\nMeasures avg. outage\nfrequency\n\n5. System Average\nInterruption Frequency\nIndex (SAIFI)*\n6. Customer Average\nInterruption Duration Index\n(CAIDI)*\n7. System Average\nInterruption Duration Index\n(SAIDI)*\n\nBase\nPoints\n\n3rd party measure of\ncustomer satisfaction\n\n4. Customer Complaint Rate\n\n4. OSHA DART Rate\n\nBaseline Performance\nLevel Derivation\n\nMeasures avg. restoration\ntime\nMeasures avg. outage\nduration\n\nIX-4'}, {'number': 230, 'text': 'CONFIDENTIAL\n\nPerformance Metric\n\nBaseline Performance\nLevel Derivation\n\nDescription\n\nBase\nPoints\n\nEffective\nWeight\n\n8. Customers Experiencing\nMultiple Interruptions\n(CEMI)\n9. Momentary Average\nInterruption Frequency\nIndex (MAIFI)\nC. Financial Performance\n1. Operating Budget*\n\nMeasures multiple outages\nin a given period\n\nSet during Front-End\nTransition Period\n\n5.0\n\n6%\n\nMeasures avg. # of\nmomentary interruptions\n\nPREPA historical data\nverified during Front-End\nTransition Period\n\n5.0\n\n6%\n\nMeasures ability to stay\nwithin budget\n\nBudget agreed by PREB,\nP3A and Operator\n\n7.5\n\n5%\n\n2. Capital Budget –\nFederally Funded*\n\nMeasures ability to stay\nwithin budget\n\nBudget agreed by PREB,\nP3A and Operator\n\n7.5\n\n5%\n\n3. Capital Budget – NonFederally Funded*\n\nMeasures ability to stay\nwithin budget\n\nBudget agreed by PREB,\nP3A and Operator\n\n7.5\n\n5%\n\n4. Days Sales Outstanding\n\nMeasures ability to collect\nbills\n\n5.5\n\n4%\n\n5. Reduction in Network\nLine Losses\n\nMeasures ability to reduce\nelectric losses\n\nPREPA historical data\nverified during Front-End\nTransition Period\nSet during Front-End\nTransition Period\n\n5.0\n\n3%\n\n6. Overtime\n\nMeasures ability to manage\nsalary expense\n\nSet during Front-End\nTransition Period\n\n5.0\n\n3%\n\n*These Performance Metrics are also Key Performance Metrics (as defined below).\n\nV.\n\nPerformance Metrics.\nA.\n\nCustomer3 Satisfaction\n\n1. J.D. Power Customer Satisfaction Survey (Residential)\nPerformance Objective: To incentivize sufficient customer service.\nDescription: The metric measures customer satisfaction through a third-party survey that\nexamines six (6) factors (power quality and reliability, price, billing and payment, corporate\ncitizenship, communications and customer service). The Baseline Performance Level will be\nset during the Front-End Transition Period. The Target Performance Level has been set as the\n“South Large Utility” average, as defined by J.D. Power.\nPoints Assigned: 5\n\n3\n\nA customer is a metered electrical service point for which an active bill account is established at a specific\nlocation, per IEEE 1366-2012.\n\nIX-5'}, {'number': 231, 'text': 'CONFIDENTIAL\nBaseline Performance Level: TBD.\nTarget Performance Level: J.D. Power Residential Score of 714.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of\nYear 5.\nCalculation: Third party survey that examines six (6) factors (power quality and reliability,\nprice, billing and payment, corporate citizenship, communications and customer service).\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\n714\nTBD\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\n714\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\n2. J.D. Power Customer Satisfaction Survey (Business)\nPerformance Objective: To incentivize sufficient customer service.\nDescription: The metric measures customer satisfaction through third party survey that\nexamines six (6) factors (power quality and reliability, price, billing and payment, corporate\ncitizenship, communications and customer service). The Baseline Performance Level will be\nset during the Front-End Transition Period. The Target Performance Level has been set as the\n“South Large Utility” average.\nPoints Assigned: 5\nBaseline Performance Level: TBD.\nTarget Performance Level: J.D. Power Business Score of 760.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of\nYear 5.\nCalculation: Third party survey that examines six factors (power quality and reliability, price,\nbilling and payment, corporate citizenship, communications and customer service).\n\nIX-6'}, {'number': 232, 'text': 'CONFIDENTIAL\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\n760\nTBD\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\n760\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\n3. Average Speed of Answer (minutes)\nPerformance Objective: To incentivize efficient call center service.\nDescription: The average speed of answer is measured as a combination of those customers\nwho have their question or issue resolved via the automated Integrated Voice Response system\n(“IVR”) and those customers who opt out of the IVR and wait to speak with a customer. The\nBaseline Performance Level has been set using PREPA historical data subject to confirmation\nduring the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: Average of 10.0 minutes.\nTarget Performance Level: Average of 1.0 minutes.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of\nYear 5.\nCalculation: Average number of minutes from when the customer goes through the integrated\nvoice response system until reaching an agent.\n\nIX-7'}, {'number': 233, 'text': 'CONFIDENTIAL\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nYear 1\nYear 2\nYear 3\nYear 4\nYear 5\n\n10.0\n10.0\n8.5\n7.5\n5.0\n2.5\n\n10.0\n10.0\n9.1\n8.2\n7.3\n6.4\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\nN/A\n4.0\n2.5\n1.0\n0.5\n\nN/A\nN/A\n6.3\n5.0\n3.0\n1.5\n\n10.0\n10.0\n8.5\n7.5\n5.0\n2.5\n\nN/A\nN/A\n8.8\n7.8\n6.0\n4.3\n\nN/A\nN/A\n9.0\n8.0\n7.0\n6.0\n\n4. Customer Complaint Rate\nPerformance Objective: To incentivize enough customer service.\nDescription: This metric measures the total number of initial customer complaints registered\nwith the Puerto Rico Energy Bureau (“PREB”). The Baseline Performance Level will be set\nbased on PREPA historical data subject to confirmation during the Front-End Transition\nPeriod.\nPoints Assigned: 5\nBaseline Performance Level: 11.3% complaint rate.\nTarget Performance Level: 2.5% complaint rate.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of\nYear 5.\nCalculation: The monthly value is calculated by taking the total number of initial complaints\ndivided by the total utility customer population and then multiplying by 100,000.\n\nIX-8'}, {'number': 234, 'text': 'CONFIDENTIAL\n\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nYear 1\nYear 2\nYear 3\nYear 4\nYear 5\n\n11.3%\n11.3%\n10.7%\n10.0%\n7.5%\n5.0%\n\n11.3%\n11.3%\n10.4%\n9.5%\n8.7%\n7.8%\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\nN/A\n5.0%\n4.0%\n3.0%\n2.0%\n\nN/A\nN/A\n7.8%\n7.0%\n5.3%\n3.5%\n\n11.3%\n11.3%\n10.7%\n10.0%\n7.5%\n5.0%\n\nN/A\nN/A\n10.3%\n9.5%\n7.8%\n6.0%\n\nN/A\nN/A\n10.0%\n9.0%\n8.0%\n7.0%\n\nIX-9'}, {'number': 235, 'text': 'CONFIDENTIAL\n5. First Call Resolution\nPerformance Objective: To incentivize efficient call center service.\nDescription: This metric is a measure of efficiency of the call center. It also impacts customer\nsatisfaction because the customer will notice a difference in how they are treated while on the\ncall and the company’s willingness to address their questions/concerns quickly and without\nescalation. The Baseline Performance Level will be set during the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: To be determined (“TBD”).\nTarget Performance Level: 15% first calls resolved.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: The metric is calculated as the percentage of calls with issues that are escalated.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\n15.0%\nTBD\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\n15.0%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\n6. Abandonment Rate\nPerformance Objective: To incentivize efficient call center service.\nDescription: Abandoned calls occur when customers waiting for service on the phone, after\nopting to speak with a person, hang up before receiving service. The Baseline Performance\nLevel has been set using PREPA historical data and the S&L report. The Target Performance\nLevel has been set using the S&L report recommendations.\nPoints Assigned: 5\nBaseline Performance Level: 50% calls abandoned.\nTarget Performance Level: 25% calls abandoned.\n\nIX-10'}, {'number': 236, 'text': 'CONFIDENTIAL\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: The metric is calculated as abandoned calls divided by calls received.\nMetric Schedule:\nTarget\nThreshold\n\nMinimum\nPerformance\nLevel\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nBaseline\n\n50.0%\n\n50.0%\n\nN/A\n\nN/A\n\n50.0%\n\nN/A\n\nN/A\n\nYear 1\n\n50.0%\n\n50.0%\n\nN/A\n\nN/A\n\n50.0%\n\nN/A\n\nN/A\n\nYear 2\n\n45.0%\n\n47.5%\n\n25.0%\n\n35.0%\n\n45.0%\n\n46.0%\n\n47.0%\n\nYear 3\n\n40.0%\n\n45.0%\n\n20.0%\n\n30.0%\n\n40.0%\n\n42.0%\n\n44.0%\n\nYear 4\n\n35.0%\n\n42.5%\n\n15.0%\n\n25.0%\n\n35.0%\n\n37.5%\n\n40.0%\n\nYear 5\n\n30.0%\n\n40.0%\n\n12.5%\n\n21.3%\n\n30.0%\n\n33.8%\n\n37.5%\n\nB.\n\nTechnical, Safety & Regulatory\n\nThe Technical Performance Metrics will be measured and calculated in accordance with IEEE\n1366-2012, including the terms as defined therein. The calculation of Technical Performance\nMetrics excludes (i) interruptions associated with Outage Event days using the IEEE 2.5 Beta\nMethod, (ii) planned interruptions and (iii) interruptions caused by generation events.\n1. OSHA Recordable Incident Rate (“OSHA IR”)4\nPerformance Objective: To incentivize employee safety.\nDescription: OSHA requires Recordable Incident Rate be reported to OSHA on a yearly basis.\nAn OSHA recordable incident is a work-related injury or illness that results in one of more of\nthe following: death, days away from work, restricted work or transfer to another job, medical\ntreatment beyond first aid, loss of consciousness, a significant injury or illness diagnosed by a\nphysician or other licensed health care professional. The Baseline Performance Level has been\nset using PREPA historical data subject to confirmation during the Front-End Transition\nPeriod.\nPoints Assigned: 5\nBaseline Performance Level: OSHA IR of 11.3.\nTarget Performance Level: OSHA IR of 6.28.\n\n4\n\nAs defined by OSHA.\n\nIX-11'}, {'number': 237, 'text': 'CONFIDENTIAL\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: The metric is calculated as the total number of recordable incident cases over a\nset time period multiplied by a scaling factor and divided by the total number of labor hours\nthe company recorded during that time period (OSHA uses 200,00 as a scaling factor, which\nequates to one hundred (100) employees working forty (40) hours per week, fifty (50) weeks\nof the year).\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n11.30\n11.30\nYear 1\n10.68\n10.80\nYear 2\n10.05\n10.30\nYear 3\n8.79\n9.79\nYear 4\n7.34\n9.29\nYear 5\n6.28\n8.79\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\n7.00\n6.00\n5.00\n4.00\n3.00\n\nN/A\n8.84\n8.03\n6.90\n5.67\n4.64\n\n11.30\n10.68\n10.05\n8.79\n7.34\n6.28\n\nN/A\n10.59\n10.03\n9.15\n8.04\n7.14\n\nN/A\n10.50\n10.00\n9.50\n8.75\n8.00\n\n2. OSHA Fatalities5\nPerformance Objective: To incentivize employee safety.\nDescription: OSHA requires all work-related fatalities be reported to OSHA within eight (8)\nhours. The industry standard target is 0 fatalities, which has determined the Baseline and Target\nPerformance Levels.\nPoints Assigned: 5\nBaseline Performance Level: 0 fatalities.\nTarget Performance Level: 0 fatalities.\nMinimum Performance Level: 0 fatalities.\nCalculation: This metric measures the number of OSHA-reportable fatalities (i.e. employee\nfatalities that occur on the job within OSHA jurisdictions).\n\n5\n\nAs defined by OSHA.\n\nIX-12'}, {'number': 238, 'text': 'CONFIDENTIAL\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n0\n0\nYear 1\n0\n0\nYear 2\n0\n0\nYear 3\n0\n0\nYear 4\n0\n0\nYear 5\n0\n0\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n0\n0\n0\n0\n0\n0\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n3. OSHA Severity Rate6\nPerformance Objective: To incentivize employee safety\nDescription: Utilized as a metric to measure the severity of workplace injuries, the OSHA\nSeverity Rate is commonly used to measure safety performance across the utility industry. The\nSeverity Rate takes into account the total number of restricted and lost time days incurred as a\nresult of a work-related injury. The Baseline and Target Performance Levels will be set during\nthe Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: TBD\nTarget Performance Level: TBD\nMinimum Performance Level: TBD\nCalculation: This metric is calculated by dividing the product of the total number of severity\ndays (both restricted and lost time days) and 200,000 (OSHA scaling factor) by the total\nnumber of work hours.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\n\n6\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\n\nAs defined by OSHA.\n\nIX-13'}, {'number': 239, 'text': 'CONFIDENTIAL\n\nYear 4\nYear 5\n\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nTBD\nTBD\nTBD\nTBD\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\n\nTBD\nTBD\n\nTBD\nTBD\n\nTBD\nTBD\n\nTBD\nTBD\n\n4. OSHA Days Away Rate (Severity) (“DART”)7\nPerformance Objective: To incentivize employee safety.\nDescription: Utilized as a metric to measure the severity of workplace injuries, the OSHA\nDART Rate is commonly used to measure safety performance across the utility industry. The\nDART Rate takes into account the total number of injury cases that resulted in either lost time,\nrestricted time, or a transfer from the employee’s regular job. The Baseline Performance Level\nwill be set during the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: TBD\nTarget Performance Level: DART of 4.0.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated by dividing the product of the total number of DART\nCases (OSHA injury cases with either lost time days, restricted days, or results in a job transfer)\nand 200,000 (OSHA scaling factor) and the total number of work hours.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\n4.0\nTBD\n\n7\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\n4.0\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nAs defined by OSHA.\n\nIX-14'}, {'number': 240, 'text': 'CONFIDENTIAL\n5. System Average Interruption Frequency Index (“SAIFI”)8\nPerformance Objective: To incentivize system reliability.\nDescription: This metric indicates how often the average customer experiences a sustained\ninterruption over a predefined period of time. The baseline target level has been set using\nPREPA historical data subject to confirmation during the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: 4.6 outages per year.\nTarget Performance Level: 1.89 outages per year.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated by dividing the total number of customers interrupted by\nthe total number of customers served. Each sustained interruption experienced by a specific\ncustomer counts towards the total in the numerator. A sustained interruption is defined as “Any\ninterruption not classified as a part of a momentary event. That is, any interruption that lasts\nmore than five minutes.”\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n4.60\n4.60\nYear 1\n4.19\n4.33\nYear 2\n3.77\n4.06\nYear 3\n2.94\n3.79\nYear 4\n2.42\n3.52\nYear 5\n1.89\n3.25\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\n2.00\n1.75\n1.50\n1.25\n1.00\n\nN/A\n3.09\n2.76\n2.22\n1.84\n1.45\n\n4.60\n4.19\n3.77\n2.94\n2.42\n1.89\n\nN/A\n4.24\n3.89\n3.32\n2.84\n2.45\n\nN/A\n4.30\n4.00\n3.70\n3.25\n3.00\n\n6. Customer Average Interruption Duration Index (“CAIDI”)9\nPerformance Objective: To incentivize system reliability.\n\n8\n\nAs defined in IEEE Guide for Electric Power Distribution Reliability Indices, IEEE P1366-2012.\n\n9\n\nAs defined in IEEE Guide for Electric Power Distribution Reliability Indices, IEEE P1366-2012.\n\nIX-15'}, {'number': 241, 'text': 'CONFIDENTIAL\nDescription: This metric measures the average restoration time a customer may experience.\nThe Baseline Performance Level has been set using PREPA historical data subject to\nconfirmation during the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: 147 minutes.\nTarget Performance Level: 147 minutes.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated by summing the product of the length of each\ninterruption and the number of customers impacted by that interruption for all sustained\ninterruptions during the measurement period then dividing by the total number of customers\ninterrupted. Note that each interruption experienced by a specific customer counts towards the\ntotal in the denominator.\nThis is a sustained interruption index. A sustained interruption is defined as “Any interruption\nnot classified as a part of a momentary event. That is, any interruption that lasts more than five\nminutes.” It also represents SAIDI divided by SAIFI.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n147\n147\nYear 1\n147\n147\nYear 2\n147\n147\nYear 3\n147\n147\nYear 4\n147\n147\nYear 5\n147\n147\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\n120\n115\n110\n105\n100\n\nN/A\n134\n131\n129\n126\n124\n\n147\n147\n147\n147\n147\n147\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n7. System Average Interruption Duration Index (“SAIDI”)10\nPerformance Objective: To incentivize system reliability\nDescription: This metric indicates the total duration of interruption for the average customer.\nThe Baseline Performance Level has been set using PREPA historical data.\nPoints Assigned: 5\n10\n\nAs defined in IEEE Guide for Electric Power Distribution Reliability Indices, IEEE P1366-2012.\n\nIX-16'}, {'number': 242, 'text': 'CONFIDENTIAL\nBaseline Performance Level: 675 minutes.\nTarget Performance Level: 277 minutes.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated by summing of the of each interruption and the number\nof customers impacted by that interruption divided by the total number of customers served.\nEach interruption experienced by a specific customer counts towards the total in the\ndenominator. This is a sustained interruption index. A sustained interruption is defined as any\ninterruption not classified as a part of a momentary event. That is any interruption that lasts\nmore than five minutes.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n675\n675\nYear 1\n615\n635\nYear 2\n554\n595\nYear 3\n432\n556\nYear 4\n355\n516\nYear 5\n277\n476\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\n550\n450\n375\n250\n150\n\nN/A\n582\n502\n404\n303\n214\n\n675\n615\n554\n432\n355\n277\n\nN/A\n622\n570\n466\n403\n339\n\nN/A\n630\n585\n500\n450\n400\n\n8. Customers Experiencing Multiple Interruptions (“CEMI”)11\nPerformance Objective: To incentivize system reliability.\nDescription: This metric indicated the ratio of individual customers experiencing one or more\nsustained interruptions to the total number of customers served. The Baseline Performance\nLevel will be set during Year 3. It is anticipated that the number of interruptions to be tracked\nare three (3), five (5) and eight (8) interruptions (i.e., CEMI-3, CEMI-5 and CEMI-8).\nPoints Assigned: 6\nBaseline Performance Level: TBD.\nTarget Performance Level: TBD\n\n11\n\nAs defined in IEEE Guide for Electric Power Distribution Reliability Indices, IEEE P1366-2012.\n\nIX-17'}, {'number': 243, 'text': 'CONFIDENTIAL\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated by dividing the total number of customers that have\nexperienced some number of outages more sustained interruptions by the total number of\ncustomers served. This is sustained interruption index. A sustained interruption is defined as\nany interruption not classified as a part of a momentary event. That is, any interruption that\nlasts more than five minutes.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\nTBD\nTBD\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\n9. Momentary Average Interruption Frequency Index (“MAIFI”)12\nPerformance Objective: To incentivize system reliability.\nDescription: This metric indicates the average frequency of momentary interruptions\nexperienced by the average customer. It is calculated from customer level data but it is not a\ncustomer specific index – it is a system level index. MAIFI is typically caused by natural causes\nsuch as animal contacts, lightning strikes, or vegetation temporarily contacting a power line.\nThe Minimum Performance Level and Target Performance Level will be set in Year 3.\nPoints Assigned: 5\nBaseline Performance Level: 6 events per year.\nTarget Performance Level: 2 events per year.\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated by dividing the total number of customer interruptions,\nwhich last less than a set amount of time, by the total number of customers served. This is\n12\n\nAs defined in IEEE Guide for Electric Power Distribution Reliability Indices, IEEE P1366-2012.\n\nIX-18'}, {'number': 244, 'text': 'CONFIDENTIAL\nmomentary interruption index. A momentary interruption is an interruption of duration limited\nto the period required to restore service by an interrupting device. Such switching operations\nmust be completed within a specified time of five minutes or less. This definition includes all\nreclosing operations that occur within five minutes of the first interruption. If a recloser or\ncircuit breaker operates two, three, or four times and then holds (within five minutes of the\nfirst operation), those momentary interruptions shall be considered one momentary\ninterruption event.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n6.00\n6.00\nYear 1\n5.50\n5.60\nYear 2\n5.00\n5.20\nYear 3\n4.00\n4.80\nYear 4\n3.00\n4.40\nYear 5\n2.00\n4.00\nC.\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\n4.50\n4.00\n3.00\n2.00\n1.00\n\nN/A\n5.00\n4.50\n3.50\n2.50\n1.50\n\n6.00\n5.50\n5.00\n4.00\n3.00\n2.00\n\nN/A\n5.53\n5.08\n4.25\n3.50\n2.75\n\nN/A\n5.55\n5.15\n4.50\n4.00\n3.50\n\nFinancial Performance\n\n1. Operating Budget\nPerformance Objective: To incentivize accurate cost management.\nDescription: This metric measures the utility’s ability to stay within its Operating Budget\ninitially approved at the start of the Contract Year. The Baseline and Target Performance\nLevels have been set at 100% of the approved Operating Budget.\nPoints Assigned: 7.5\nBaseline Performance Level: 100% of Operating Budget.\nTarget Performance Level: 100% of Operating Budget.\nMinimum Performance Level: 100% of Operating Budget.13\nCalculation: This metric will be evaluated as actual operating spend divided by Operating\nBudget.\nMetric Schedule:\n\n13\nThe Operator can earn 100% of Base Points by spending up to 102% of the Operating Budget pending\nAdministrator approval.\n\nIX-19'}, {'number': 245, 'text': 'CONFIDENTIAL\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n100%\n100%\nYear 1\n100%\n100%\nYear 2\n100%\n100%\nYear 3\n100%\n100%\nYear 4\n100%\n100%\nYear 5\n100%\n100%\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n100%\n100%\n100%\n100%\n100%\n100%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n2. Capital Budget – Federally Funded\nPerformance Objective: To incentivize accurate cost management.\nDescription: This metric measures the utility’s ability to stay within its Capital Budget –\nFederally Funded initially approved at the start of the Contract Year. The Baseline and Target\nPerformance Levels have been set at 100% of the approved Capital Budget – Federally Funded.\nPoints Assigned: 7.5\nBaseline Performance Level: 100% of Capital Budget – Federally Funded.\nTarget Performance Level: 100% of Capital Budget – Federally Funded.\nMinimum Performance Level: 100% of Capital Budget – Federally Funded.14\nCalculation: This metric will be evaluated as actual operating spend divided by Capital Budget\n– Federally Funded.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n100%\n100%\nYear 1\n100%\n100%\nYear 2\n100%\n100%\nYear 3\n100%\n100%\nYear 4\n100%\n100%\nYear 5\n100%\n100%\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n100%\n100%\n100%\n100%\n100%\n100%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n14\nThe Operator can earn 100% of Base Points by spending up to 102% of the Capital Budget – Federally\nFunded pending Administrator approval.\n\nIX-20'}, {'number': 246, 'text': 'CONFIDENTIAL\n3. Capital Budget – Non-Federally Funded\nPerformance Objective: To incentivize accurate cost management.\nDescription: This metric measures the utility’s ability to stay within its Capital Budget – NonFederally Funded initially approved at the start of the Contract Year. The Baseline and Target\nPerformance Levels have been set at 100% of the Capital Budget – Non-Federally Funded.\nPoints Assigned: 7.5\nBaseline Performance Level: 100% of Capital Budget – Non-Federally Funded.\nTarget Performance Level: 100% of Capital Budget – Non-Federally Funded.\nMinimum Performance Level: 102% of Capital Budget – Non-Federally Funded.15\nCalculation: This metric will be evaluated as actual operating spend divided by Capital Budget\n– Non-Federally Funded.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n100%\n100%\nYear 1\n100%\n100%\nYear 2\n100%\n100%\nYear 3\n100%\n100%\nYear 4\n100%\n100%\nYear 5\n100%\n100%\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n100%\n100%\n100%\n100%\n100%\n100%\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\nN/A\nN/A\nN/A\nN/A\nN/A\nN/A\n\n4. Days Sales Outstanding16\nPerformance Objective: To incentivize accurate cash management.\nDescription: This metric is a measure of the average number of days that it takes a company to\ncollect payment after a sale has been made. It is a measure of cash management. The Baseline\nPerformance Level has been set using PREPA historical data subject to confirmation during\nthe Front-End Transition Period. The Target Performance Level has been set at an appropriate\nlevel for adequate cash management.\n\n15\n\nThe Operator can earn 100% of Base Points by spending up to 102% of the Capital Budget – Non-Federally\nFunded pending Administrator approval.\n16\n\nThis metric will reflect the impact of government collections, including critical service installations as\ndefined in Law 57-2014, as amended by Law 17-2019, and CILT organizations.\n\nIX-21'}, {'number': 247, 'text': 'CONFIDENTIAL\nPoints Assigned: 5.5\nBaseline Performance Level: 150 days\nTarget Performance Level: 50 days\nMinimum Performance Level: Set as a straight-line calculation using the Baseline Performance\nLevel in Year 0 and assuming the Target Performance Level is met in Year 10 instead of Year\n5.\nCalculation: This metric is calculated as average annual Accounts Receivable divided by\naverage annual Total Credit Sales, multiplied by 365.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\n150.00\n150.00\nYear 1\n137.50\n140.00\nYear 2\n125.00\n130.00\nYear 3\n100.00\n120.00\nYear 4\n75.00\n110.00\nYear 5\n50.00\n100.00\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nN/A\n125.00\n100.00\n75.00\n65.00\n50.00\n\nN/A\n131.25\n112.50\n87.50\n70.00\n50.00\n\n150.00\n137.50\n125.00\n100.00\n75.00\n50.00\n\nN/A\n138.25\n125.38\n107.50\n87.50\n62.50\n\nN/A\n139.00\n125.75\n115.00\n100.00\n75.00\n\n5. Reduction in Network Line Losses\nPerformance Objective: To incentivize efficient line usage.\nDescription: This metric measures the utility’s ability to reduce line losses, which occur due to\nresistance along the electrical lines. The baseline and target performance metrics will be set\nduring the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: TBD.\nTarget Performance Level: TBD.\nMinimum Performance Level: TBD.\nCalculation: Set as a straight-line calculation using the Baseline Performance Level in Year 0\nand assuming the Target Performance Level is met in Year 10 instead of Year 5.\n\nIX-22'}, {'number': 248, 'text': 'CONFIDENTIAL\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\nTBD\nTBD\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\n6. Overtime\nPerformance Objective: To incentivize efficient payroll expense.\nDescription: This metric measures the utility’s ability to manage salary expense. The Baseline\nand Target Performance Levels will be set during the Front-End Transition Period.\nPoints Assigned: 5\nBaseline Performance Level: TBD.\nTarget Performance Level: TBD.\nMinimum Performance Level: TBD.\nCalculation: The sum of all hours worked beyond scheduled hours in a given period.\nMetric Schedule:\nMinimum\nTarget\nPerformance\nThreshold\nLevel\nBaseline\nTBD\nTBD\nYear 1\nTBD\nTBD\nYear 2\nTBD\nTBD\nYear 3\nTBD\nTBD\nYear 4\nTBD\nTBD\nYear 5\nTBD\nTBD\nVI.\n\n150%\n\n125%\n\n100%\n\n50%\n\n25%\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nTBD\nTBD\nTBD\nTBD\nTBD\nTBD\n\nOperator Event of Default.\n\nSection 14.1(k) (Events of Default by Operator – Failure to Meet Minimum Performance\nThreshold) of the Agreement provides for an Operator Event of Default if, during three (3) or more\nconsecutive Contract Years, Operator fails to meet the Minimum Performance Level for any three\nIX-23'}, {'number': 249, 'text': 'CONFIDENTIAL\n(3) of the following Performance Metrics and no such failure has been excused by a Force Majeure\nEvent, Outage Event or Owner Fault: (i) Average Speed of Answer; (ii) First Call Resolution; (iii)\nOSHA Fatalities; (iv) OSHA Severe Injuries; (v) System Average Interruption Frequency Index\n(SAIFI); (vi) System Average Interruption Duration Index (SAIDI); (vii) Customer Average\nInterruption Duration Index (CAIDI); (viii) Operating Budget; (ix) Capital Budget – Federally\nFunded; and (x) Capital Budget – Non-Federally Funded (each a “Key Performance Metric” and\ntogether the “Key Performance Metrics”).\nSection 7.1(c)(vii) (Service Fee – Incentive Fee) provides that if any Force Majeure Event\n(other than a Force Majeure Event that is a Major Outage Event) prevents Operator from achieving\none or more of the Performance Metrics, Operator shall be entitled to earn the Incentive Fee for\nthe period that such Force Majeure Event continues as long as, and to the extent that, Operator\nachieves the Key Performance Metrics during such period of time.\nVII.\n\nOperating Budget Overrun Default.\n\nSection 14.5(e) (Additional Termination Rights – Operating Budget Overrun) of the\nAgreement provides Owner with an additional termination right in the event of an Operating\nBudget Overrun Default.\nVIII.\n\nMajor Outage Event Performance Metrics\n\n“Major Outage Event” means an event as a result of which (i) at least two hundred and five\nthousand (205,000) T&D Customers are interrupted or (ii) at least one thousand five hundred\n(1,500) outage jobs for the T&D System are logged, in each case within a twenty-four (24) hour\nperiod and due to an act of God or, in case of a storm, a storm that is designated as such by the\nU.S. National Weather Service, and shall end when a state in which fewer than ten thousand\n(10,000) T&D Customers remain interrupted for a continuous period of eight (8) hours following\na Major Outage Event is achieved.\nSection 7.1(c)(vi) (Service Fee – Incentive Fee) of the Agreement provides that if any\nMajor Outage Event (including, for the avoidance of doubt, a Major Outage Event that is a Force\nMajeure Event) prevents Operator from achieving one or more of the Performance Metrics,\nOperator shall be entitled to earn the Incentive Fee for the period that such Major Outage Event\ncontinues as long as, and to the extent that, Operator achieves certain performance metrics to be\nagreed upon during the Front-End Transition Period and set forth below (the “Major Outage Event\nPerformance Metrics”) during such period of time.\nThe Major Outage Event Performance Metrics that form the basis for the Incentive\nCompensation Pool in such circumstances are summarized in Table 3.\nTable 3. Summary of Major Outage Event Performance Metrics\nNote: The Major Outage Event Performance Metrics will be subject to confirmation during the\nFront-End Transition Period and review and approval by PREB.\n\nIX-24'}, {'number': 250, 'text': "CONFIDENTIAL\nMajor Outage Event\nPerformance Metric\n\nDescription\n\nBase\nPoints\n\nEffective\nWeight\n\n1. Event Application\n\nCompletion of steps to provide timely and\naccurate emergency event preparation\nfollowing an alert from U.S. National\nWeather Service or the company's private\nweather service, in accordance with the\nEmergency Response Plan, for an event\nexpected to impact the company's service\nterritory.\n\nTBD\n\nTBD\n\n2. Down Wires\n\nResponse to downed wires reported by\nmunicipal public officials.\n\nTBD\n\nTBD\n\n3. Preliminary Damage\nAssessment\n\nCompletion of preliminary damage\nassessment.\n\nTBD\n\nTBD\n\n4. Crewing\n\n80% of the forecast crewing committed to\nthe utility.\n\nTBD\n\nTBD\n\n5. Estimated Time of\nRestoration (made available by\nutility on web, IVR, to CSR's,\netc.)\n\nPublication of regional ETRs in accordance\nwith guidelines.\n\nTBD\n\nTBD\n\nTBD\n\nTBD\n\n6. ETR Accuracy\n\nPublication of municipal ETRs in accordance\nwith guidelines.\nRegional ETR accuracy as published in\naccordance with ETR requirement time.\nMunicipal ETR accuracy as published in\naccordance with ETR requirement time.\n\n7. Municipality Coordination\n\nCoordination with municipalities regarding\nroad clearing, down wires, critical customers,\netc.\n\nTBD\n\nTBD\n\n8. Municipal EOC Coordination\n\nCoordination with municipal EOCs.\n\nTBD\n\nTBD\n\n9. Utility Coordination\n\nCoordination with other utilities\n(communications, water, etc.).\n\nTBD\n\nTBD\n\n10. Safety\n\nMeasure of any employee or contractor\ninjured doing hazard work during\nstorm/outage and restoration.\n\nTBD\n\nTBD\n\n11. Mutual Assistance\n\nCrew requests made through all sources of\nmutual assistance.\n\nTBD\n\nTBD\n\nIX-25"}, {'number': 251, 'text': 'CONFIDENTIAL\nMajor Outage Event\nPerformance Metric\n\nDescription\n\nBase\nPoints\n\nEffective\nWeight\n\n12. Call Answer Rates\n\nCustomer calls answered by properly staffing\ncall centers (use of IVR and other technology\nis an acceptable answer).\n\nTBD\n\nTBD\n\n13. Municipal Calls\n\nMunicipal call must be properly managed\nand provide, at minimum, baseline\ninformation (outages, ETRs, contact\ninformation, etc.), road clearing activities,\nand allow for Q&A.\n\nTBD\n\nTBD\n\n14. Web Availability\n\nCompany’s web site, specifically the section\npertaining to outage impact and restoration,\nmust be available around the clock during a\nmajor storm event and information must be\nupdated hourly until final restoration. In the\nevent no new information is available, the\nweb site must display the last time and date\nthat information was updated. The web site\nand/or section pertaining to outage impact\nand restoration may be taken offline for a\nshort period during off peak hours to perform\nsystem maintenance.\n\nTBD\n\nTBD\n\n15. PREB and Administrator\nReporting\n\nProvide storm event information to PREB\nand Administrator in accordance with\nElectric Outage Reporting System (EORS)\nguideline requirements.\n\nTBD\n\nTBD\n\n16. Customer Communications\n\nPress releases, text messaging, email and\nsocial media.\n\nTBD\n\nTBD\n\n17. Outgoing message on\ntelephone line\n\nRecorded message providing callers with\noutage information is updated within two\nhours of communication of press releases.\n\nTBD\n\nTBD\n\n18. PREB and Administrator\nComplaints\n\nNumber of storm/outage related PREB and\nAdministrator complaints received.\n\nTBD\n\nTBD\n\nIX.\n\nMonitoring.\n\nThe set of Performance Metrics and the Target Performance Levels for the sixth Contract\nYear will be evaluated during the fifth Contract Year collectively by the Operator and\nAdministrator to determine reasonability for subsequent years. Beginning in the sixth Contract\nYear Performance Metrics and the Target Performance Levels will be reevaluated on an annual\nbasis. At this time, it will be determined whether additional metrics should be included, Base Points\n\nIX-26'}, {'number': 252, 'text': 'CONFIDENTIAL\nreallocated, and Target Performance Levels modified. The Operator and PREB may also consider\nwhether adjustments to the Performance Metrics are appropriate prior to the fifth Contract Year\nbased on business, operational or other considerations. Any adjustments will be dealt with in\naccordance with Section 7.1(c)(vi) (Service Fee – Amendments to Performance Metrics).\n\nIX-27'}, {'number': 253, 'text': 'CONFIDENTIAL\nAnnex X\nCalculation of Incentive Fee\nI.\n\nGeneral.\n\nFor each Contract Year, the Operator shall be eligible to receive an Incentive\nCompensation Pool based on the Operator’s performance during the Contract Year as measured\nagainst the performance goals set forth by the Performance Metrics.\nII.\n\nPerformance Categories.\n\nThe Incentive Compensation Pool will be allocated across the three Performance\nCategories in such a way as to align the Operator’s incentive compensation with the performance\ngoals.\nTable 1. Summary of Performance Categories\nPerformance Category\n1.\n\nCustomer Satisfaction\n\n2.\n\nTechnical,\nRegulatory\n\n3.\n\nFinancial Performance\n\nIII.\n\nSafety\n\nPerformance Goal\n\nand\n\nAllocation of Incentive\nCompensation Pool\n\nAchieve a high-level of customer\nsatisfaction across all customer\nclasses.\n\n25%\n\nOperate a safe, reliable electric grid\nwhile remaining complaint with\napplicable safety, environmental\nand other regulations.\n\n50%\n\nMeet the approved Operating\nBudget, Capital Budget – Federally\nFunded and Capital Budget – NonFederally Funded.\n\n25%\n\nCalculation Methodology.\n\nA.\nEach Performance Metric is assigned a Base Point level with the sum of Base Points\nof all Performance Metrics within a Performance Category representing the maximum number of\nBase Points the Operator can earn within a single Performance Category. As described in Annex\nIX (Performance Metrics), except for the Binary Metrics, assuming the Operator reaches the\nMinimum Performance Level it has the potential to earn either 25%, 50%, 100%, 125% or 150%\nof the Base Points for each Performance Metric. If the sum of the points awarded in a Performance\nCategory meets or exceeds the sum of the Base Points, the Operator will receive 100% of the\nIncentive Pool Allocation for that Performance Category. In the event the Operator is awarded\npoints less than the sum of the possible Base Points, the Operator would receive a Pro Rata portion\nof the Incentive Pool Allocation equal to the ratio of actual points received by the Operator to the\ntotal Base Points in the Performance Category.\nX-1'}, {'number': 254, 'text': 'CONFIDENTIAL\nIV.\n\nIncentive Fee Calculation Example.\n\nA.\nThe table below includes an illustrative example of how the incentive compensation\nmechanism works. The metrics, base points and weightings are consistent with Annex IX\n(Performance Metrics), but the dollar values included in the table are for example only and are not\nmeant to represent actual magnitude of payments or Operator scoring in any Contract Year.\n\nX-2'}, {'number': 255, 'text': 'CONFIDENTIAL\nTable 2. Incentive Fee Calculation Example\nNote: The example below assumes an illustrative total Incentive Compensation Pool of US$10M.\n\nScenario 1: Top Performance\n\n$ in millions\nPerformance Metrics\n\nScenario 2: Selective\nPerformance\n\nScenario 3: Poor Performance\n\nBase Points\n\n% Achieved\n\nPoints\nAwarded\n\n% Achieved\n\nPoints\nAwarded\n\n% Achieved\n\nPoints\nAwarded\n\n5.0\n\n150%\n\n7.5\n\n150%\n\n7.5\n\n50%\n\n2.5\n\n5.0\n\n150%\n\n7.5\n\n150%\n\n7.5\n\n50%\n\n2.5\n\n5.0\n5.0\n5.0\n5.0\n30.0\n\n150%\n150%\n150%\n150%\n150%\n\n7.5\n7.5\n7.5\n7.5\n45.0\n\n0%\n150%\n150%\n0%\n100%\n\n0.0\n7.5\n7.5\n0.0\n30.0\n\n50%\n50%\n50%\n50%\n50%\n\n2.5\n2.5\n2.5\n2.5\n15.0\n\n5.0\n5.0\n5.0\n5.0\n5.0\n5.0\n5.0\n\n150%\n100%\n100%\n150%\n150%\n150%\n150%\n\n7.5\n5.0\n5.0\n7.5\n7.5\n7.5\n7.5\n\n150%\n100%\n100%\n150%\n150%\n150%\n150%\n\n7.5\n5.0\n5.0\n7.5\n7.5\n7.5\n7.5\n\n50%\n0%\n0%\n50%\n50%\n50%\n50%\n\n2.5\n0.0\n0.0\n2.5\n2.5\n2.5\n2.5\n\nCustomer Satisfaction\nJD Power Customer Satisfaction Survey\n(Residential)\nJD Power Customer Satisfaction Survey\n(Business)\nAverage Speed of Answer (minutes)\nCustomer Complaint Rate\nFirst Call Resolution\nAbandonment Rate\nCustomer Satisfaction Points Available\nTechnical, Safety & Regulatory\nOSHA Recordable Incidence Rate\nOSHA Fatalities\nOSHA Severe Injuries\nOSHA Days Away Rate (Severity)\nSystem Average Interruption Frequency\nCustomer Average Interruption Duration\nSystem Average Interruption Duration\nCustomers Experiencing Multiple\nInterruptions (CEMI)\nMomentary Average Interruption\n\n5.0\n\n150%\n\n7.5\n\n50%\n\n2.5\n\n50%\n\n2.5\n\n5.0\n45.0\n\n150%\n139%\n\n7.5\n62.5\n\n0%\n111%\n\n0.0\n50.0\n\n50%\n39%\n\n2.5\n17.5\n\nOperating Budget\nCapital Budget ‐ Federally Funded\nCapital Budget ‐ Non‐Federally Funded\nDays Sales Outstanding\nReduction in Network Losses\nOvertime\nFinancial Performance Subtotal\n\n7.5\n7.5\n7.5\n5.5\n5.0\n5.0\n38.0\n\n100%\n100%\n100%\n150%\n150%\n150%\n120%\n\n7.5\n7.5\n7.5\n8.3\n7.5\n7.5\n45.8\n\n0%\n100%\n100%\n150%\n150%\n150%\n101%\n\n0.0\n7.5\n7.5\n8.3\n7.5\n7.5\n38.3\n\n0%\n0%\n100%\n50%\n50%\n50%\n40%\n\n0.0\n0.0\n7.5\n2.8\n2.5\n2.5\n15.3\n\nTotal\n\n113.0\n\nTechnical, Safety & Regulatory Subtotal\nFinancial Performance\n\n153.3\nScenario 1: Top Performance\n\nPerformance Category ( $ in millions )\nCustomer Satisfaction\nTechnical, Safety and Regulatory\nFinancial Performance\n\nAvailable\nIncentive\nCompensation\n$2.50\n5.00\n2.50\n\nBase Points\n\nPoints\nAwarded\n\n30.0\n45.0\n38.0\n\n45.0\n62.5\n45.8\n\nIllustrative Total Incentive Compensation ‐ Sample Year\n\nIncentive\nCompensation\nAwarded\n$2.50\n5.00\n2.50\n$10.00\n\nX-3\n\n118.3\nScenario 2: Selective\nPerformance\nPoints\nAwarded\n30.0\n50.0\n38.3\n\nIncentive\nCompensation\nAwarded\n$2.50\n5.00\n2.50\n$10.00\n\n47.8\nScenario 3: Poor Performance\nPoints\nAwarded\n15.0\n17.5\n15.3\n\nIncentive\nCompensation\nAwarded\n$1.25\n1.94\n1.00\n$4.20'}, {'number': 256, 'text': 'CONFIDENTIAL\nAnnex XI\nT&D Pass-Through Expenditures\nT&D Pass-Through Expenditures shall be the types of costs and expenses incurred by ServCo in\nthe course of providing O&M Services (without markup for profit and shall include all such costs\nexcept to the extent any such costs are determined to be Disallowed Costs in the manner set forth\nin Section 7.6 (Disallowed Costs) of the main body of the Agreement. Capitalized terms used but\nnot defined in this Annex XI (T&D Pass-Through Expenditures) have the respective meanings set\nforth in the Agreement. Except as otherwise provided in the Agreement, T&D Pass-Through\nExpenditures shall include but are not limited to, the following items:\n1.\nwages, salaries, bonuses, employer contributions to pension and employee medical plans\n(including employer contributions for Hired Former Employees of Owner that elect to continue\nparticipating in Owner’s defined benefit retirement plan), employer contributions to workmen’s\ncompensation, non-occupational disability and other mandatory employment related insurance and\ntaxes, vacation, sick leaves and other mandatory leaves with pay, overtime and meal period\ncompensation and associated benefits and other post-employment benefits incurred by ServCo in\nperforming the O&M Services, including Capital Improvements, but excluding all costs resulting\nfrom noncompliance by ServCo with wage and hour, discrimination, wrongful dismissal or with\nany other applicable labor or employment related legislation, as well as the costs of defending such\nclaims if such claims are found to be true by a final non-appealable judgment or administrative\ndetermination by a court of competent jurisdiction or other Governmental Body (including costs\narising out of or related to additional compensation, damages, penalties, court costs and attorney’s\nfees but excluding, for the avoidance of doubt, any costs incurred by Operator, including defense\nrelated costs, which are incurred at the direction or with the consent of Administrator);\n2.\ncosts incurred by ServCo in performing the O&M Services, including costs of all\nsubcontracted and seconded employees, all goods and services (including all materials, supplies,\nspare parts, vehicles and mileage, equipment rental, other transportation, freight, purchased\nservices, training, Subcontractor costs, employee per diems, administrative costs such as dues,\nsubscriptions, meals and entertainment, office supplies, postage, rent and travel communications,\nutilities and other costs), repair and maintenance costs, and the costs (including fees) incurred or\npayable with respect to banking services and accounts, cash management, leases, equipment\nrentals, easements, licenses, permits, consents and similar instruments;\n3.\ncosts related to Capital Improvements to the system, including project management costs\nincurred by ServCo Employees and the cost of debt for long-lived assets and all other costs\nassociated with funding these improvements, except for Capital Improvements owned by Operator\nas contemplated by Section 5.5(d) (Capital Improvements – Option to Propose Operator-Owned\nCapital Improvements) of the main body of the Agreement;\n4.\ncosts incurred with respect to professional services, including legal, engineering,\naccounting, financial, auditing, information technology, telecommunication and other contracted\nservices;\n\nXI-1'}, {'number': 257, 'text': 'CONFIDENTIAL\n5.\ncosts incurred with respect to the security of physical assets, information technology,\noperational technology and processes;\n6.\nclaims, lawsuits, litigations, losses, fines, penalties, costs and expenses, judgments, liens,\nsettlements, appeals, disbursements and similar expense (including reasonable and documented\nfees of external counsel; provided that ServCo shall not be required to provide documentation that\nwould waive any privilege between ServCo and its external counsel), incurred in connection with\nthe performance of the O&M Services;\n7.\n\ncosts related to Outage Events;\n\n8.\ncosts associated with the System Remediation Plan, the Emergency Operations Plan, and\nthe other plans required under the Agreement;\n9.\nany Tax related to Owner-owned, leased or licensed assets or revenues, and costs incurred\nin connection with any tax audits of Owner;\n10.\nany Commonwealth sales or use taxes (including the additional taxes of Sections 4210.01\nand 4210.02 of the Puerto Rico Internal Revenue Code of 2011, as amended (PRIRC)), municipal\nsales or use taxes, Commonwealth excise taxes, municipal license taxes, municipal excise taxes\nand any other taxes imposed by the Commonwealth, a municipality or any other Governmental\nBody on Owner or ServCo, if ServCo is acting on behalf of Owner pursuant to the Agreement, to\nthe extent that Owner ever becomes subject to the payment of such taxes; provided that any\n(i) income taxes imposed on Operator by the PRIRC or Act 29, or (ii) other taxes imposed on\nOperator as a result of the establishment of its operations in the Commonwealth or the continuation\nthereof (including sales and use taxes and excise taxes on goods or services that are not required\nto be acquired by Operator on behalf of Owner for the performance of the O&M Services under\nthe Agreement) shall not be T&D Pass-Through Expenditures;\n11.\nany municipal construction excise taxes related to construction work performed by ServCo\nin connection with the O&M Services;\n12.\n\nrefunds to T&D Customers;\n\n13.\ncosts to obtain and maintain in effect Required Insurance, including premium, claims and\ndeductible payments;\n14.\ncosts incurred in connection with Intellectual Property, including licensing of Intellectual\nProperty for use in connection with this agreement, registration or maintenance fees, costs and\nexpenses incurred in the enforcement or defense of Owner Intellectual Property but excluding any\ncosts associated with developing, registering, enforcing, defending or maintaining Operator\nIntellectual Property (including Operator Marks), Subcontractor Intellectual Property or ThirdParty Intellectual Property;\n15.\ncosts incurred in connection with data security, including the implementation, operation\nand maintenance of a cybersecurity program;\n\nXI-2'}, {'number': 258, 'text': 'CONFIDENTIAL\n16.\ncosts incurred in connection with ServCo’s performance serving in the role of the T&D\nSystem operator, including the services set forth in Section I.C of Annex I (Scope of Services) to\nthe Agreement;\n17.\ncosts incurred in connection with ServCo’s performance of the Back-End Transition\nServices;\n18.\nthe costs of compliance with PREB or other regulatory requirements to which Owner or\nOperator is subject, including programmatic energy efficiency initiatives and demand response\nrequirements mandated and approved by PREB;\n19.\ninitial and ongoing costs necessary to achieve cost reductions, performance improvements,\nor operating initiatives for the benefit of T&D Customers, including the services set forth in\nSection VIII.C of Annex I (Scope of Services) to the Agreement;\n20.\n\ncosts incurred in connection with branding and customer and public communications;\n\n21.\ncosts incurred in connection with Owner’s community service programs and community\nengagement; and\n22.\ncosts incurred in connection with the administration and performance of the System\nContracts including as required by Section 5.2 (System Contracts) in the main body of the\nAgreement.\nFor the avoidance of doubt, in no event shall Operator be responsible for any cost or expense\nrelated to the Title III Case.\n\nXI-3'}, {'number': 259, 'text': 'CONFIDENTIAL\nAnnex XII\nInsurance Specifications\nI.\nOperator shall purchase and maintain, on Owner’s behalf, the following insurance coverage\nfor the benefit of Owner from the Service Commencement Date and for the remainder of the Term\nthereafter, without limitation:\nA.\nproperty damage, business interruption coverage and extra expense coverage for\nthe T&D System covering direct damage from all perils (excluding overhead transmission\nand distribution lines), which shall, among other things, (i) comply with any requirements\nresulting from the T&D System’s receipt of Federal Funding and (ii) provide at least\nUS$550 million in coverage or the minimum amount of property and casualty insurance\ncoverage required in connection with the T&D System’s receipt of Federal Funding,\nwhichever is greater; provided that coverage shall have no more than a US$2 million per\noccurrence deductible;\nB.\nprimary general liability insurance with limits of not less than US$10 million per\noccurrence and US$10 million aggregate, and a deductible/self-insured retention no greater\nthan US$1 million;\nC.\nexcess general liability insurance with limits of not less than US$65 million in\nexcess liability insurance;\nD.\ncyber insurance with limits of not less than US$20 million, and a deductible or selfinsured retention of no more than US$1 million, for first and third-party losses, liabilities,\njudgments, settlements, lawsuits, regulatory actions, remediation and other costs or\ndamages arising out of or resulting from any Cybersecurity Breach relating to the operation\nof the T&D system or non-compliance with Applicable Law relating to privacy or data\nprotection, including coverage for breach response costs, PCI-DDS assessments,\nransomware and denial of service, property damage and business interruption, and extra\nexpense, as well as third-party claims and investigations arising out cyber incidents,\nincluding any negligent or otherwise wrongful acts or omissions by Operator or any\nemployee or agent thereof;\nE.\npollution legal liability insurance covering third-party bodily injury, property\ndamage and other losses caused by pollution during the Term with limits of not less than\nUS$5 million per occurrence and US$25 million in aggregate; provided that coverage shall\ninclude environmental cleanup, remediation, transportation and disposal;\nF.\nboiler and machinery insurance with at least US$200 million in limits per accident,\nwith repair and/or replacement included; at least US$10 million in debris removal limits;\nand at least US$5 million in additional extra expense limits; provided that coverage shall\n(i) be comprehensive and (ii) cover boilers, pressure vessels, electrical machines including\nair conditioning, refrigeration equipment, electrical apparatus and electronic data\nprocessing equipment including production machines;\n\nXII-1'}, {'number': 260, 'text': 'CONFIDENTIAL\nG.\ncommercial auto insurance, providing at least US$15,000 in coverage per accident\nfor liability, medical payments, and physical damage;\nH.\n(i) aviation liability and physical damage insurance, including liability coverage of\nat least US$100 million per occurrence and US$250,000 per passenger/crewmember, (ii)\nreplacement cost coverage for physical damage to each scheduled aircraft, (iii) at least\nUS$2.2 million in coverage for physical damage to spare engines and/or spare parts not\nattached to or forming a part of any aircraft and being property of others for which the\nnamed insured is legally liable and (iv) rental expense coverage of at least US$50,000 per\naccident;\nI.\ncrime insurance providing limits of at least US$10 million in coverage per incident\nand in the aggregate, and covering employee dishonesty, forgery or alteration, dissolution\nof assets, computer fraud fund transfer, theft of client property, and credit card coverage;\nJ.\nbuilder’s risk/installation floater insurance covering losses arising out of Operator’s\nand or Operator’s subcontractors’ construction, maintenance or repairs to T&D and fiber\noptic infrastructure, including improvements and betterments pursuant to the Agreement;\nprovided that limits for such coverage for each project shall be in amounts consistent with\nmarket practice and the magnitude of each construction project;\nK.\nprotective liability insurance for Owner’s contractors with a limit of not less than\nUS$2 million per occurrence, including coverage for bodily injury and/or property damage\nclaims arising out of negligent acts or omissions of independent contractors or\nsubcontractors of Operator;\nL.\nmanagement liability/EPL/fiduciary liability coverage, including at least\nUS$65 million in wrongful acts coverage for Owner and directors and officers of Owner,\nand US$5 million in fiduciary liability and employment practices liability coverage; and\nM.\nbusiness travel accident insurance, providing at least US$150,000 in coverage per\naccident and at least US$3 million in aggregate limits.\nOperator shall be listed as an additional insured on all aforementioned coverages, and Operator\nshall provide evidence of coverage through additional insured endorsements on or before the\nService Commencement Date. Moreover, all the aforementioned coverages shall apply on a\nprimary and non-contributory basis.\nII.\nIn addition to and separate from the foregoing, Operator shall maintain, on its own behalf,\nthe following insurance coverage from the Service Commencement Date and for the remainder of\nthe Term thereafter, without limitation:\nA.\nCommonwealth of Puerto Rico’s Workmen’s Compensation Insurance (as required\nby the Workmen’s Compensation Act 45-1935 of the Commonwealth of Puerto Rico),\nemployer’s liability insurance and all other employee required insurance; and\nB.\nfiduciary liability insurance, providing limits not less than US$5 million per claim\nand in the aggregate; and\nXII-2'}, {'number': 261, 'text': 'CONFIDENTIAL\nC.\nprofessional liability insurance, with limits of not less than US$5 million per\noccurrence and US$5 million in the aggregate, covering work performed by any architects,\nengineers, project managers, construction managers or other professional consultants\npursuant to the Agreement. In addition, any architects, engineers or other consultants\nengaged by Operator with respect to any construction project undertaken by Operator\npursuant to the Agreement shall maintain separate coverage with limits of not less than the\ncompletion cost of the construction project undertaken. When any policies purchased\npursuant to this paragraph are renewed or replaced, the retroactive date in any new or\nreplacement policy shall coincide with or precede the start of work in connection with the\nAgreement and any claims-made policy that is not renewed shall have an extended\nreporting period of at least six years.\n\nXII-3'}, {'number': 262, 'text': 'CONFIDENTIAL\nAnnex XIII\nOperator Termination Fee Multiplier\nContract Year\n\nMultiplier\n\n1\n\n1.00x\n\n2\n\n1.00x\n\n3\n\n1.00x\n\n4\n\n1.00x\n\n5\n\n1.00x\n\n6\n\n1.00x\n\n7\n\n0.95x\n\n8\n\n0.90x\n\n9\n\n0.85x\n\n10\n\n0.80x\n\n11\n\n0.75x\n\n12\n\n0.70x\n\n13\n\n0.65x\n\n14\n\n0.60x\n\n15\n\n0.55x\n\n16\n\n0.50x\n\nXIII-1'}, {'number': 263, 'text': 'CONFIDENTIAL\nAnnex XIV\nOperator Marks\nLUMA\nLUMA ENERGY\n\nXIV-1'}, {'number': 264, 'text': 'CONFIDENTIAL\nAnnex XV\nOwner Marks\n\nName (Spanish):\n\nAutoridad de Energía Eléctrica de Puerto Rico\nAutoridad de Energía Eléctrica\nAEE\n\nName (English):\n\nPuerto Rico Electric Power Authority\nPREPA\nThe link ed image cannot be display ed. The file may hav e been mov ed, renamed, or deleted. Verify that the link points to the correct file and location.\n\nLogo:\nLetterhead:\n\nWebpage:\n\nhttps://aeepr.com\n\nEmail:\n\nFirstName.LastName@prepa.com\n\nFacebook:\n\n@aeepronline\n\nTwitter:\n\n@aeeonline\n\nInstagram:\n\naeeonline\n\nYouTube:\n\naeeonline\n\nXV-1'}, {'number': 265, 'text': 'CONFIDENTIAL\nExhibit A\nForm of Federal Funding Certifications\nTo the extent Owner and Operator determine to submit any of the costs incurred by Contractors or\nSubcontractors under the Agreement for Federal Funding reimbursement, such Contractors and\nSubcontractors will be required to comply with all applicable federal certifications and\nrequirements, including the execution by Contractors and Subcontractors of these two (2)\ncertifications. Contractors and Subcontractors shall be required to apply these certifications and\nrequirements to any federally funded lower-tier contracts and subcontracts. Capitalized terms used\nbut not otherwise defined herein shall have the meaning ascribed to them in the Puerto Rico\nTransmission and Distribution System Operation and Maintenance Agreement dated\n__________________.\nCERTIFICATION REGARDING DEBARMENT, SUSPENSION AND OTHER\nRESPONSIBILITY MATTERS\nINSTRUCTIONS FOR CERTIFICATION\n1. By executing the Agreement, [Contractor or Subcontractor] (referred to herein as the\n“prospective lower tier participant”) is providing the certification set out below.\n2. The certification in this Exhibit A (Form of Federal Funding Certifications) is a material\nrepresentation of fact upon which reliance was placed when this transaction was entered into.\nIf it is later determined that the prospective lower tier participant knowingly rendered an\nerroneous certification, in addition to other remedies available to the United States federal\ngovernment, the department or agency with which this transaction originated may pursue\navailable remedies, including suspension and/or debarment.\n3. The prospective lower tier participant shall provide immediate written notice to the person to\nwhich this proposal is submitted if, at any time, the prospective lower tier participant learns\nthat its certification was erroneous when submitted or had become erroneous by reason of\nchanged circumstances.\n4. The terms covered transaction, debarred, suspended, ineligible, lower tier covered transaction,\nparticipant, person, primary covered transaction, principal, Agreement and voluntarily\nexcluded, as used in this Exhibit A (Form of Federal Funding Certifications), have the\nrespective meanings set out in the Definitions and Coverage sections of rules implementing\nExecutive Order 12549.\n5. The prospective lower tier participant agrees by executing the Agreement that, should the\nproposed covered transaction be entered into, it shall not knowingly enter into any lower tier\ncovered transaction with a person who is proposed for debarment under 48 CFR part 9,\nsubpart 9.4, debarred, suspended, declared ineligible or voluntarily excluded from\nparticipation in this covered transaction, unless authorized by the department or agency with\nwhich this transaction originated.\n\nA-1'}, {'number': 266, 'text': 'CONFIDENTIAL\n6. The prospective lower tier participant further agrees by executing the Agreement that it will\ninclude this clause titled “Certification Regarding Debarment, Suspension, Ineligibility and\nVoluntary Exclusion-Lower Tier Covered Transaction,” without modification, in all lower tier\ncovered transactions and in all solicitations for lower tier covered transactions.\n7. A participant in a covered transaction may rely upon a certification of a prospective participant\nin a lower tier covered transaction that it is not proposed for debarment under 48 CFR part 9,\nsubpart 9.4, debarred, suspended, ineligible or voluntarily excluded from covered transactions,\nunless it knows that the certification is erroneous. A participant may decide the method and\nfrequency by which it determines the eligibility of its principals. Each participant may, but is\nnot required to, check the List of Parties Excluded from Federal Procurement and\nNon-procurement Programs.\n8. Nothing contained in the foregoing shall be construed to require establishment of a system of\nrecords in order to render in good faith the certification required by this clause. The knowledge\nand information of a participant is not required to exceed that which is normally possessed by\na prudent person in the ordinary course of business dealings.\n9. Except for transactions authorized under paragraph 5 of these instructions, if a participant in a\ncovered transaction knowingly enters into a lower tier covered transaction with a person who\nis proposed for debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, ineligible\nor voluntarily excluded from participation in this transaction, in addition to other remedies\navailable to the United States federal government, the department or agency with which this\ntransaction originated may pursue available remedies, including suspension and/or debarment.\nCERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND\nVOLUNTARY EXCLUSION LOWER TIER COVERED TRANSACTIONS\n(1)\n\nThe prospective lower tier participant certifies, by execution of the Agreement, that neither\nit, nor its principals, is presently debarred, suspended, proposed for debarment, declared\nineligible or voluntarily excluded from participation in this transaction by any Federal\ndepartment or agency.\n\n(2)\n\nWhere the prospective lower tier participant is unable to certify to any of the statements in\nthis certification, such prospective participant shall attach an explanation to the Agreement.\n\n[CONTRACTOR OR SUBCONTRACTOR]\nCompany Name\n\nContract Number\n\nName of [Contractor or Subcontractor’s]\nAuthorized Official\nTitle\n\nA-2'}, {'number': 267, 'text': 'CONFIDENTIAL\n\nSignature of [Contractor or Subcontractor’s]\nAuthorized Official\n\nDate\n\nCERTIFICATION REGARDING LOBBYING FOR\nCONTRACTS, GRANTS, LOANS AND COOPERATIVE AGREEMENTS\nThe undersigned [Contractor or Subcontractor] certifies, to the best of its knowledge and belief,\nthat:\n1. No Federal appropriated funds have been paid or will be paid, by or on behalf of [Contractor\nor Subcontractor] or any Affiliate, to any person for influencing or attempting to influence an\nofficer or employee of an agency, a member of the United States Congress, an officer or\nemployee of the United States Congress, or an employee of a member of the United States\nCongress in connection with the awarding of any Federal contract, the making of any Federal\ngrant, the making of any Federal loan, the entering into of any cooperative agreement and the\nextension, continuation, renewal, amendment or modification of any Federal contract, grant,\nloan or cooperative agreement.\n2. If any funds other than Federal appropriated funds have been paid or will be paid to any person\nfor influencing or attempting to influence an officer or employee of any agency, a member of\nthe United States Congress, an officer or employee of the United States Congress, or an\nemployee of a member of the United States Congress in connection with this Federal contract,\ngrant, loan or cooperative agreement, the undersigned shall complete and submit Standard\nForm- LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.\n3. The undersigned shall require that the language of this certification be included in the award\ndocuments for all subawards at all tiers (including subcontracts, subgrants and contracts under\ngrants, loans and cooperative agreements) and that all subrecipients shall certify and disclose\naccordingly.\nThis certification is a material representation of fact upon which reliance was placed when this\ntransaction was made or entered into. Submission of this certification is a prerequisite for making\nor entering into this transaction imposed by 31 U.S.C. § 1352 (as amended by the Lobbying\nDisclosure Act of 1995). Any person who fails to file the required certification shall be subject to\na civil penalty of not less than US$10,000 and not more than US$100,000 for each such failure.\n[CONTRACTOR OR SUBCONTRACTOR] certifies or affirms the truthfulness and accuracy of\neach statement of its certification and disclosure, if any. In addition, [CONTRACTOR OR\n\nA-3'}, {'number': 268, 'text': 'CONFIDENTIAL\nSUBCONTRACTOR] understands and agrees that the provisions of 31U.S.C. § 3801 et seq., apply\nto this certification and disclosure, if any.\n[CONTRACTOR OR SUBCONTRACTOR] Name\nSignature of [Contractor or Subcontractor’s]\nAuthorized Official\nName and Title of [Contractor or Subcontractor’s]\nAuthorized Official\n\nA-4\n\nDate'}, {'number': 269, 'text': 'CONFIDENTIAL\nExhibit B\nForm of Commonwealth Certifications\nOperator, for itself and Parent Company (if Operator is a partnership under the\nPuerto Rico Internal Revenue Code), represents that as of the Effective Date (i) neither it nor Parent\nCompany has any outstanding debts for unemployment insurance, temporary disability\n(workmen’s compensation), or chauffeur’s social security with the Department of Labor and\nHuman Resources of the Commonwealth, income taxes with the Department of Treasury of the\nCommonwealth or real or personal property taxes with the Municipal Revenues Collection Center\n(“CRIM”) or (ii) it or Parent Company have a payment plan in place with respect to any\noutstanding debt for the foregoing items and have complied therewith.\nOperator shall deliver to Owner prior to the Effective Date a copy of its Certificate\nof Incorporation, Certificate of Organization and Certificate of Authorization to do Business in\nPuerto Rico issued by the Puerto Rico Department of State, as applicable.\nOperator shall also obtain and deliver to Owner, in each case dated no earlier than\nsixty (60) days prior to the Effective Date, the following:\n(i)\n\na copy of Operator’s Merchant’s Registration Certificate (Form SC 2918);\n\n(ii)\n\na Certificate of Good Standing issued by the Puerto Rico Department of\n\nState;\n(iii)\na certification issued by the Puerto Rico Treasury Department indicating\nthat Operator and Parent Company (if Operator is a Partnership under the Puerto Rico\nInternal Revenue Code) do not have any debts under any concept, including income tax,\nwith the Commonwealth (Form SC 6096);\n(iv)\na Puerto Rico Sales and Use Tax Filing Certification issued by the Puerto\nRico Treasury Department reflecting that Operator has filed its Puerto Rico Sales and\nUse Tax returns for the last sixty (60) tax periods (Form SC 2942);\n(v)\nan all concepts debt certification issued by CRIM reflecting that Operator\ndoes not owe any taxes to CRIM with respect to real or personal property; and\n(vi)\na certification issued by the Puerto Rico Child Support Administration for\nOperator reflecting that Operator is in compliance with the withholdings required to be\nmade by employers under Applicable Law.\nCapitalized terms used but not otherwise defined herein shall have the meaning ascribed to them\nin the Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement\ndated __________________.\nBy:_________________________\nName:\nTitle:\nB-1'}, {'number': 270, 'text': 'CONFIDENTIAL\nExhibit C\nForm of Anti-Corruption Certifications\nWe certify under penalty of nullity that no public servant of Owner will derive or obtain any benefit\nor profit of any kind from the contractual relationship which is the basis of this invoice. If such\nbenefit or profit exists, the required waiver has been obtained prior to entering into the Agreement.\nThe only consideration to be received in exchange for the delivery of goods or for the O&M\nServices provided is the agreed-upon price that has been negotiated with Owner or its\nRepresentatives. The total amount shown on this invoice is true and correct. The O&M Services\nhave been rendered, and no payment has been received.\nCapitalized terms used but not otherwise defined herein shall have the meaning ascribed to them\nin the Puerto Rico Transmission and Distribution System Operation and Maintenance Agreement\ndated __________________.\nBy:_________________________\nName:\nTitle:\n\nC-1'}, {'number': 271, 'text': 'CONFIDENTIAL\nExhibit D\nForm of Guarantee Agreement\nTHIS GUARANTEE AGREEMENT (the “Guarantee”) is made and entered into as of this\n[\uf097] day of [\uf097], 2020 by and among: (i) [\uf097] (“Guarantor”), a [\uf097] organized under the laws of [\uf097];\nand (ii) the Puerto Rico Electric Power Authority (“Owner” and, together with Guarantor, the\n“Parties” and each a “Party”), a public corporation and governmental instrumentality of the\nCommonwealth of Puerto Rico, created by Act No. 83 of the Legislative Assembly of Puerto Rico,\nenacted on May 2, 1941.\nRECITALS\nWHEREAS, Owner, the Puerto Rico Public-Private Partnerships Authority\n(“Administrator”), a public corporation of the Commonwealth of Puerto Rico, created by Act No.\n29 of the Legislative Assembly of Puerto Rico, enacted on June 8, 2009, LUMA Energy, LLC\n(“ManagementCo”), a limited liability company organized under the laws of Puerto Rico, and\nLUMA Energy ServCo, LLC (“ServCo” and, together with ManagementCo, “Operator”) a limited\nliability company organized under the laws of Puerto Rico, have entered into the Puerto Rico\nTransmission and Distribution System Operation and Maintenance Agreement (as amended,\nmodified or supplemented from time to time in accordance with its terms, the “O&M Agreement”),\nwhereby Operator has agreed to provide the O&M Services for the T&D System in accordance\nwith the terms of the O&M Agreement;\nWHEREAS, Guarantor [indirectly] owns [●]% of the equity interests of each of\nManagementCo and ServCo; and\nWHEREAS, Owner and Administrator will enter into the O&M Agreement only if\nGuarantor guarantees the performance by Operator of all of Operator’s responsibilities and\nobligations, including amounts payable by, and the covenants and agreements of, Operator under\nthe O&M Agreement, but in all cases subject to the limitations set forth herein, including Section\n3.10 (Limitation on Liability) (all such obligations and responsibilities, the “Obligations”) as set\nforth in this Guarantee.\nNOW THEREFORE, in order to induce the execution and delivery of the O&M\nAgreement by Owner and Administrator and in consideration thereof, Guarantor agrees as follows:\n\nD-1'}, {'number': 272, 'text': 'CONFIDENTIAL\nARTICLE 1\nDEFINITIONS; INTERPRETATION\nSection 1.1 Definitions. Capitalized terms used but not defined herein shall have the\nrespective meanings set forth in the O&M Agreement.\nSection 1.2\n\nInterpretation; Construction.\n\n(a)\nHeadings. Articles, titles and headings to sections herein are inserted for\nconvenience of reference only and are not intended to be a part of or to affect the meaning or\ninterpretation of this Guarantee. Except as otherwise indicated, all references in this Guarantee\nto “Articles” and “Sections” are intended to refer to Articles and Sections of this Guarantee.\n(b)\nConstruction. For purposes of this Guarantee: (i) “include”, “includes” or\n“including” shall be deemed to be followed by “without limitation”; (ii) “hereof”, “herein”,\n“hereby”, “hereto” and “hereunder” shall refer to this Guarantee as a whole and not to any\nparticular provision of this Guarantee; (iii) “extent” in the phrase “to the extent” shall mean the\ndegree to which a subject or other item extends and shall not simply mean “if”; (iv) in the\ncomputation of periods of time from a specified date to a later specified date, the word “from”\nmeans “from and including”; the words “to” and “until” each mean “to but excluding”; and the\nword “through” means “to and including”; (v) “dollars” and “US$” shall mean United States\nDollars; (vi) the singular includes the plural and vice versa; (vii) reference to a gender includes\nthe other gender; (viii) “any” shall mean “any and all”; (ix) “or” is used in the inclusive sense of\n“and/or”; (x) reference to any agreement, document or instrument means such agreement,\ndocument or instrument as amended, supplemented and modified in effect from time to time in\naccordance with its terms; (xi) reference to any Applicable Law means such Applicable Law as\namended from time to time and includes any successor legislation thereto and any rules and\nregulations promulgated thereunder; and (xii) reference to any Person at any time refers to such\nPerson’s permitted successors and assigns.\n(c)\nDays and Time. All references to days herein are references to calendar\ndays, unless specified as Business Days, and, unless specified otherwise, all statements of or\nreferences to a specific time in this Guarantee are to Atlantic Standard Time.\n(d)\nAccounting Principles. All accounting and financial terms used herein,\nunless specifically provided to the contrary, shall be interpreted and applied in accordance with\nthen generally accepted accounting principles in the United States, consistently applied.\n(e)\nNegotiated Agreement. The Parties have participated jointly in the\nnegotiation and drafting of this Guarantee with the benefit of competent legal representation, and\nthe language used in this Guarantee shall be deemed to be the language chosen by the Parties to\nexpress their mutual intent. In the event that an ambiguity or question of intent or interpretation\narises, this Guarantee shall be construed as if drafted jointly by the Parties, and no presumption\nor burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of\nany provisions hereof.\nD-2'}, {'number': 273, 'text': 'CONFIDENTIAL\n(f)\nPayments. All payments required to be made by Guarantor hereunder\nshall be made in dollars.\n\nD-3'}, {'number': 274, 'text': 'CONFIDENTIAL\nARTICLE 2\nREPRESENTATIONS AND WARRANTIES\nSection 2.1 Representations and Warranties of Guarantor. Guarantor hereby\nrepresents and warrants that:\n(a)\nExistence and Powers. Guarantor is a [\uf097] duly organized, validly existing\nand in good standing under the laws of [\uf097]. Guarantor has the required corporate power and\nauthority to enter into this Guarantee, carry out its obligations hereunder and consummate the\ntransactions contemplated hereby.\n(b)\nDue Authorization and Binding Obligation. The execution and delivery\nby Guarantor of this Guarantee, the performance by Guarantor of its obligations hereunder and\nthe consummation by Guarantor of the transactions contemplated hereby have been duly and\nvalidly authorized and approved by the required corporate or other similar action on the part of\nGuarantor. This Agreement has been duly and validly executed and delivered by Guarantor, and\n(assuming due authorization, execution and delivery by Owner) this Guarantee constitutes a\nlegal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance\nwith its terms, except as such enforceability may be limited by bankruptcy, insolvency,\nmoratorium or similar Applicable Law affecting creditors’ rights generally and by general equity\nprinciples.\n(c)\nNo Conflicts. Neither the execution, delivery or performance by\nGuarantor of this Guarantee, nor the consummation of the transactions contemplated hereby will:\n(i) result in a material violation or breach of, or material default under, any provision of the\norganizational documents of Guarantor; (ii) result in a violation of, or give any Governmental\nBody the right to challenge any of the transactions contemplated hereby under, any Applicable\nLaw applicable to Guarantor; (iii) (A) result in a violation or breach of, (B) constitute a default\nunder, (C) result in the acceleration of or create in any party the right to accelerate, terminate or\ncancel or (D) require the consent of any other Person under, any material contract to which\nGuarantor is a party; or (iv) result in the creation or imposition of any Lien on any properties or\nassets of Guarantor.\n(d)\nNo Consents. No consent, declaration or filing with, or notice to, any\nGovernmental Body is required by or with respect to Guarantor in connection with (i) the\nexecution and delivery of this Guarantee or (ii) the performance by Guarantor of its payment or\nother obligations hereunder, except such as have been duly obtained or made.\n(e)\nNo Litigation. There is no action, suit or other proceeding, at law or in\nequity, before or by any court or Governmental Body pending against Guarantor or, to\nGuarantor’s knowledge, threatened against Guarantor, which if determined adversely against\nGuarantor would reasonably be expected to materially and adversely affect (i) the validity or\nenforceability of this Guarantee or (ii) the performance by Guarantor of its respective obligations\nhereunder.\nD-4'}, {'number': 275, 'text': 'CONFIDENTIAL\n(f)\nNo Legal Prohibition. There is no Applicable Law in effect on the date\nhereof that would prohibit the execution, delivery or performance by Guarantor of this Guarantee\nand the transactions contemplated hereby.\n(g)\nConsent to Agreements. Guarantor is fully aware of the terms and\nconditions of the O&M Agreement.\n(h)\nConsideration. The Guarantee is made in furtherance of the purposes for\nwhich Guarantor has been organized, and the assumption by Guarantor of its obligations\nhereunder will result in a material benefit to Guarantor.\n\nD-5'}, {'number': 276, 'text': 'CONFIDENTIAL\nARTICLE 3\nGUARANTEE COVENANTS\nSection 3.1 Guarantee to Owner. Subject to Section 3.10 (Limitation on Liability),\nGuarantor hereby absolutely, presently, irrevocably and unconditionally guarantees to Owner:\n(i) the full and prompt payment when due of each and all of the payments required to be credited\nor made by Operator under the O&M Agreement to, or for the account of, Owner, as the case may\nbe, when the same shall become due and payable pursuant to this Guarantee; and (ii) the full and\nprompt performance and observance of each and all of the Obligations. Notwithstanding the\nunconditional nature of Guarantor’s obligations as set forth herein, Guarantor shall have the right\nto assert the defenses provided in Section 3.4 (Defenses, Set-Offs and Counterclaims) against\nclaims made under this Guarantee.\nSection 3.2\n\nRight of Owner to Proceed Against Guarantor.\n\n(a)\nGenerally. This Guarantee shall constitute a guarantee of payment and of\nperformance and not of collection, and Guarantor specifically agrees that in the event of a failure\nby Operator to pay or perform any Obligation guaranteed hereunder, subject to any notice and\ncure periods under the O&M Agreement, Owner shall have the right to proceed first and directly\nagainst Guarantor under this Guarantee and without proceeding against Operator or exhausting\nany other remedies against Operator which Owner may have.\n(b)\nNo Conditions for Enforcement. Without limiting the foregoing,\nGuarantor agrees that it shall not be necessary, and that Guarantor shall not be entitled to require,\nas a condition of enforcing the liability of Guarantor hereunder, that Owner:\n(i)\nfile suit or proceed to obtain a personal judgment against Operator\nor any other person that may be liable for the Obligations or any part of the Obligations;\n(ii)\nmake any other effort to obtain payment or performance of the\nObligations from Operator other than providing Operator with any notice of such payment or\nperformance as may be required by the terms of the O&M Agreement or required to be given to\nOperator under Applicable Law;\n(iii)\n\nforeclose against or seek to realize upon any security for the\n\nObligations; or\n(iv)\nexercise any other right or remedy to which Owner or Administrator\nis or may be entitled in connection with the Obligations or any security therefor or any other\nguarantee thereof, except to the extent that any such exercise of such other right or remedy may\nbe a condition to the Obligations of Operator or to the enforcement of remedies under the O&M\nAgreement.\n(c)\nUnexcused Failure; Single Full Performance. Upon any unexcused failure\nby Operator in the payment or performance of any Obligation and the giving of such notice or\ndemand, if any, to Operator and Guarantor as may be required in connection with such Obligation\nD-6'}, {'number': 277, 'text': 'CONFIDENTIAL\nand this Guarantee, the liability of Guarantor shall be effective and shall immediately be paid or\nperformed. Notwithstanding Owner’s right to proceed directly against Guarantor and subject to\nSection 3.10 (Limitation on Liability), Owner (or any successor) shall not be entitled to more\nthan a single full performance of the Obligations in regard to any breach or non-performance\nthereof.\nSection 3.3\n\nGuarantee Absolute and Unconditional.\n\n(a)\nGenerally. The obligations of Guarantor hereunder are absolute, present,\nirrevocable and unconditional and shall remain in full force and effect until Operator shall have\nfully discharged the Obligations in accordance with their respective terms and conditions and,\nexcept as provided in Section 3.4 (Defenses, Set-Offs and Counterclaims), shall not be subject\nto any counterclaim, set-off, deduction or defense (other than full and strict compliance with, or\nrelease, discharge or satisfaction of, such Obligations) based on any claim that Guarantor may\nhave against Operator, Owner, Administrator or any other person. Without limiting the\nforegoing, the obligations of Guarantor hereunder shall not be released, discharged or in any way\nmodified by reason of any of the following (whether with or without notice to, knowledge by, or\nfurther consent of, Guarantor):\n(i)\nthe extension or renewal of this Guarantee or the O&M Agreement\nup to the specified term of each agreement;\n(ii)\nany exercise or failure, omission or delay by Owner or\nAdministrator in the exercise of any right, power or remedy conferred on Owner or Administrator,\nas the case may be, with respect to this Guarantee or the O&M Agreement except to the extent\nsuch failure, omission or delay gives rise to an applicable statute of limitations defense with respect\nto a specific claim;\n(iii) any permitted transfer or assignment of rights or obligations under\nthe O&M Agreement or under any other Transaction Document by any party thereto, or any\npermitted assignment, conveyance or other transfer of any of their respective interests in the O&M\nAgreement or in, to or under any of the Transaction Documents;\n(iv)\nany permitted assignment for the purpose of creating a security\ninterest or mortgage of all or any part of the respective interests of Owner or any other person in\nany Transaction Document or in the T&D System;\n(v)\nany renewal, amendment, change or modification in respect of any\nof the Obligations or terms or conditions of any Transaction Document;\n(vi)\nany failure of title with respect to all or any part of the respective\ninterests of any person in the T&D System;\n(vii) the voluntary or involuntary liquidation, dissolution, sale or other\ndisposition of all or substantially all the assets, marshaling of assets and liabilities, receivership,\ninsolvency, bankruptcy, assignment for the benefit of creditors, reorganization, moratorium,\nD-7'}, {'number': 278, 'text': 'CONFIDENTIAL\narrangement, composition with creditors or readjustment of, or other similar proceedings against\nor affecting Operator or Guarantor, or any of the property of either of them, or any allegation or\ncontest of the validity of this Guarantee or the O&M Agreement in any such proceeding (it being\nspecifically understood, consented and agreed to that, to the extent permitted by Applicable Law,\nthis Guarantee shall remain and continue in full force and effect and shall be enforceable against\nGuarantor to the same extent and with the same force and effect as if any such proceeding had not\nbeen instituted and as if no rejection, stay, termination, assumption or modification has occurred\nas a result thereof, it being the intent and purpose of this Guarantee that Guarantor shall and does\nhereby waive all rights and benefits which might accrue to it by reason of any such proceeding);\n(viii) except as permitted by Section 4.1 (Maintenance Of Corporate\nExistence), Section 4.2 (Guarantor Reports) or the O&M Agreement, any sale or other transfer by\nGuarantor or any Affiliate of any of the capital stock or other interest of Guarantor or any Affiliate\nin Operator now or hereafter owned, directly or indirectly, by Guarantor or any Affiliate, or any\nchange in composition of the interests in Operator;\n(ix)\nany failure on the part of Operator for any reason to perform or\ncomply with any agreement with Guarantor;\n(x)\nthe failure on the part of Owner to provide any notice to Guarantor\nwhich is not required to be given to Guarantor pursuant to this Guarantee and to Operator as a\ncondition to the enforcement of Obligations pursuant to the O&M Agreement;\n(xi)\nany failure of any party to the O&M Agreement to mitigate damages\nresulting from any default by Operator or Guarantor under the O&M Agreement;\n(xii) the merger, consolidation or amalgamation of any party to the O&M\nAgreement into or with any other person, or any sale, lease, transfer, abandonment or other\ndisposition of any or all of the property of any of the foregoing to any person;\n(xiii) any legal disability or incapacity of Operator or Guarantor with\nrespect to the O&M Agreement; or\n(xiv) the fact that entering into the O&M Agreement by Operator or\nGuarantor was invalid or in excess of the powers of such party.\n(b)\nRecovery of Money Due or Owing. Should any money due or owing\nunder this Guarantee not be recoverable from Guarantor due to any of the matters specified in\nSection 3.3(a) (Guarantee Absolute and Unconditional - Generally), then, in any such case, such\nmoney, together with all additional sums due hereunder, shall nevertheless be recoverable from\nGuarantor as though Guarantor were principal obligor in place of Operator pursuant to the terms\nof the O&M Agreement and not merely a guarantor and shall be paid by Guarantor forthwith\nsubject to the terms of this Guarantee.\n\nD-8'}, {'number': 279, 'text': 'CONFIDENTIAL\n(c)\nScope. Notwithstanding anything to the contrary expressed in this\nGuarantee, nothing in this Guarantee shall be deemed to amend, modify, clarify, expand or\nreduce Operator’s rights, benefits, duties or obligations under the O&M Agreement.\nSection 3.4 Defenses, Set-Offs and Counterclaims. Notwithstanding any provision\ncontained herein to the contrary, Guarantor shall be entitled to exercise or assert any and all legal\nor equitable rights or defenses which Operator may have under the O&M Agreement or under\nApplicable Law (other than bankruptcy or insolvency of Operator and other than any defense\nwhich Operator has expressly waived in the O&M Agreement or Guarantor has expressly waived\nin Section 3.5 (Waivers by Guarantor) or elsewhere hereunder), and the obligations of Guarantor\nhereunder are subject to such counterclaims, set-offs or deductions which Operator is permitted to\nassert pursuant to the O&M Agreement, if any.\nSection 3.5\nwaives:\n(a)\n\nWaivers by Guarantor. Guarantor hereby unconditionally and irrevocably\nnotice from Owner of its acceptance of this Guarantee;\n\n(b)\nnotice of any of the events referred to in Section 3.3 (Guarantee Absolute\nand Unconditional), except to the extent that notice is required to be given as a condition to the\nObligations or the enforcement of remedies under the O&M Agreement;\n(c)\nto the fullest extent lawfully possible, all notices that may be required by\nstatute, rule of law or otherwise to preserve intact any rights against Guarantor, except any notice\nto Operator required pursuant to the O&M Agreement or Applicable Law as a condition to any\nObligation or the enforcement of remedies under the O&M Agreement;\n(d)\nto the fullest extent lawfully possible, any statute of limitations defense\nbased on a statute of limitations period which may be applicable to guarantors (or parties in\nsimilar relationships) which would be shorter than the applicable statute of limitations period for\nthe underlying claim;\n(e)\n\nany right to require a proceeding first against Operator;\n\n(f)\nany right to require a proceeding first against any person or the security\nprovided by or under the O&M Agreement, except to the extent the O&M Agreement\nspecifically requires a proceeding first against any person (except Operator) or security;\n(g)\nany requirement that Operator be joined as a party to any proceeding for\nthe enforcement of any term of the O&M Agreement;\n(h)\nthe requirement of, or the notice of, the filing of claims by Owner or\nAdministrator in the event of the receivership or bankruptcy of Operator; and\n(i)\nall demands upon Operator or any other person and all other formalities\nthe omission of any of which, or delay in performance of which, might, but for the provisions of\nD-9'}, {'number': 280, 'text': 'CONFIDENTIAL\nthis Section 3.5 (Waivers by Guarantor), by rule of law or otherwise, constitute grounds for\nrelieving or discharging Guarantor in whole or in part from its absolute, present, irrevocable,\nunconditional and continuing obligations hereunder.\nSection 3.6 Payment of Costs and Expenses. Guarantor agrees to pay Owner and\nAdministrator on demand all Fees-and-Costs incurred by or on behalf of Owner in successfully\nenforcing by Legal Proceeding observance of the covenants, agreements and obligations contained\nin this Guarantee against Guarantor, other than the Fees-and-Costs that Owner or Administrator\nincurs in performing any of its obligations under the O&M Agreement where such obligations are\na condition to performance by Operator of its Obligations.\nSection 3.7 Subordination of Rights. Guarantor agrees that any right of subrogation or\ncontribution which it may have against Operator as a result of any payment or performance\nhereunder is hereby fully subordinated to the rights of Owner and Administrator hereunder and\nunder the O&M Agreement and that Guarantor shall not recover or seek to recover any payment\nmade by it hereunder from Operator until Operator and Guarantor shall have fully and satisfactorily\npaid or performed and discharged the Obligations giving rise to a claim under this Guarantee.\nSection 3.8\n\nSeparate Obligations; Reinstatement.\n\n(a)\nSeparate Obligations. The obligations of Guarantor to make any payment\nor to perform and discharge any other duties, agreements, covenants, undertakings or obligations\nhereunder shall: (i) to the extent permitted by Applicable Law, constitute separate and\nindependent obligations of Guarantor from its other obligations under this Guarantee; (ii) give\nrise to separate and independent causes of action against Guarantor; and (iii) apply irrespective\nof any indulgence granted from time to time by Owner.\n(b)\nReinstatement. Guarantor agrees that this Guarantee shall be\nautomatically reinstated if and to the extent that for any reason any payment or performance by\nor on behalf of Operator is rescinded or must be otherwise restored by Owner, whether as a result\nof any proceedings in bankruptcy, reorganization or similar proceeding, unless such rescission\nor restoration is pursuant to the terms of the O&M Agreement or Operator’s enforcement of such\nterms under Applicable Law.\nSection 3.9 Term. This Guarantee shall remain in full force and effect from the date of\nexecution and delivery hereof until all of the Obligations of Operator have been fully paid and\nperformed.\nSection 3.10 Limitation on Liability. Notwithstanding anything herein or otherwise to\nthe contrary, the aggregate liability of Guarantor under or with respect to this Guarantee with\nrespect to all matters whatsoever or howsoever arising, including where arising from gross\nnegligence and willful misconduct of Operator, any Operator Indemnitee or Guarantor, and\nregardless of any other rights and remedies that Owner or Administrator may have against\nOperator under the O&M Agreement, under Applicable Law or otherwise, shall in no event\nexceed, when added to the aggregate liability of any other guarantor of the Obligations,\nUS$105,000,000. Without limiting the foregoing, to the fullest extent permitted by law, in no event\nD-10'}, {'number': 281, 'text': 'CONFIDENTIAL\nshall Guarantor be liable, whether in contract, indemnity, tort (including negligence, gross\nnegligence and strict liability) or otherwise, for any loss of profits or revenues, special, exemplary,\npunitive, indirect, incidental or consequential damages which arise from, relate to or are connected\nwith this Guarantee or the performance of or failure to perform the Obligations except for claims\nof fraud or intentional misrepresentation.\n\nD-11'}, {'number': 282, 'text': 'CONFIDENTIAL\nARTICLE 4\nGENERAL COVENANTS\nSection 4.1\n\nMaintenance Of Corporate Existence\n\n(a)\nConsolidation, Amalgamation, Merger, Sale or Transfer. Guarantor\ncovenants that during the term of this Guarantee it will maintain its corporate existence, will not\ndissolve or otherwise dispose of all or substantially all of its assets and will not consolidate or\namalgamate with or merge into another entity or permit one or more other entities to consolidate\nor amalgamate with or merge into it unless the successor is Guarantor; provided, however, that\nGuarantor may consolidate or amalgamate with or merge into another entity, or permit one or\nmore other entities to consolidate or amalgamate with or merge into it, or sell or otherwise\ntransfer to another entity all or substantially all of its assets as an entirety and thereafter dissolve\nif the successor entity (if other than Guarantor) (i) is acceptable to Owner, acting reasonably, (ii)\nassumes in writing all the obligations of Guarantor hereunder and (iii) delivers to Owner an\nopinion of counsel to the effect that its obligations under the Guarantee are legal, valid, binding\nand enforceable subject to applicable bankruptcy and similar insolvency or moratorium laws.\n(b)\nContinuance of Obligations. If a consolidation, amalgamation, merger or\nsale or other transfer is made as permitted by this Section 4.1 (Maintenance Of Corporate\nExistence), the provisions of this Section 4.1 (Maintenance Of Corporate Existence) shall\ncontinue in full force and effect and no further consolidation, amalgamation, merger or sale or\nother transfer shall be made except in compliance with the provisions of this Section 4.1\n(Maintenance Of Corporate Existence). No such consolidation, amalgamation, merger or sale or\nother transfer shall have the effect of releasing the initial Guarantor from its liability hereunder\nunless a successor entity has assumed responsibility for this Guarantee in accordance with this\nSection 4.1 (Maintenance Of Corporate Existence).\nSection 4.2 Guarantor Reports. While this Guarantee is outstanding, Guarantor shall\nassist Operator in delivering to Administrator the reports required pursuant to Section 8.2\n(Guarantor Reports) of the O&M Agreement.\nSection 4.3 Assignment. Except as permitted pursuant to Section 4.1 (Maintenance Of\nCorporate Existence), Guarantor shall not assign, transfer, convey, lease, encumber or otherwise\ndispose of its rights or obligations under this Guarantee without the prior written consent of\nAdministrator, which consent shall not be unreasonably withheld, delayed or conditioned.\n\nD-12'}, {'number': 283, 'text': 'CONFIDENTIAL\nARTICLE 5\nMISCELLANEOUS\nSection 5.1 Consent to Jurisdiction. Any dispute between the Parties arising out of,\nrelating to or in connection with this Guarantee or the existence, interpretation, breach, termination\nor validity thereof shall be resolved in accordance with the procedures set forth in Article 15\n(Dispute Resolution) of the O&M Agreement as if it were a Dispute, mutatis mutandis; provided\nthat, for the avoidance of doubt, Guarantor hereby irrevocably: (i) agrees that any Legal Proceeding\nrelated to this Guarantee or to any rights or relationship between the Parties arising therefrom\n(other than any negotiation between the Parties in accordance with Section 15.3 (Negotiation) of\nthe O&M Agreement) shall be solely and exclusively initiated and maintained in the\nCommonwealth Court; (ii) consents to the jurisdiction of the Commonwealth Court in any such\nLegal Proceeding; (iii) waives any objection which it may have to the laying of the jurisdiction of\nany such Legal Proceeding in the Commonwealth Court; and (iv) waives its right to a trial by jury\nin any Legal Proceeding in the Commonwealth Court.\nSection 5.2 Notices. All notices or other communications to be delivered in connection\nwith the Guarantee shall be in writing and shall be deemed to have been properly delivered, given\nand received (i) on the date of delivery if delivered by hand during normal business hours of the\nrecipient during a Business Day, otherwise on the next Business Day, (ii) on the date of successful\ntransmission if sent via email (with return receipt) during normal business hours of the recipient\nduring a Business Day, otherwise on the next Business Day, or (iii) on the date of receipt by the\naddressee if sent by a nationally recognized overnight courier or by registered or certified mail,\nreturn receipt requested, if received on a Business Day, otherwise on the next Business Day. Such\nnotices or other communications must be sent to each respective Party at the address, email address\nset forth below (or at such other address, email address as shall be specified by a Party in a notice\ngiven in accordance with this Section 5.2 (Notices)):\nIf to Owner:\n\nPuerto Rico Electric Power Authority\n[\uf097]\n[\uf097]\nAttention: [\uf097]\nTelephone: [\uf097]\nEmail: [\uf097]\nwith a copy to:\nAdministrator\n[\uf097]\n[\uf097]\nAttention: [\uf097]\nTelephone: [\uf097]\nEmail: [\uf097]\n\nD-13'}, {'number': 284, 'text': 'CONFIDENTIAL\nIf to Guarantor:\n\n[\uf097]\n[\uf097]\n[\uf097]\nAttention: [\uf097]\nTelephone: [\uf097]\nEmail: [\uf097]\n\nSection 5.3 Amendments. Neither this Guarantee nor any provision hereof may be\nchanged, modified, amended or waived except by written agreement duly executed by the Parties.\nTo the extent required by Applicable Law, any such amendment shall not be effective until\napproved by the FOMB (if then in existence) and PREB.\nSection 5.4 Entire Agreement. This Guarantee constitutes the entire agreement of the\nParties with respect to the subject matter hereof and supersedes any and all prior oral or written\nagreements, understandings, proposals, representations or warranties relating to this Guarantee.\nWithout limiting the generality of the foregoing, this Guarantee shall completely and fully\nsupersede all other understandings and agreements among the Parties with respect to such\ntransactions, including those contained in the RFP, the Proposal by Operator or its Affiliate and\nany amendments or supplements to the RFP or the Proposal.\nSection 5.5 Interest on Overdue Obligations. Except as otherwise provided herein, all\namounts due hereunder, whether as fees, damages, credits, revenue, charges or reimbursements,\nthat are not paid when due shall bear interest at the Overdue Rate, on the amount outstanding from\ntime to time, and all such interest accrued at any time shall, to the extent permitted by Applicable\nLaw, be deemed added to the amount due, as accrued.\nSection 5.6 Waivers. Either Guarantor or Owner may, at any time, (a) extend the time\nfor the performance of any of the obligations or other acts of the other Party, (b) waive any\ninaccuracies in the representations and warranties of the other Party contained herein or (c) waive\ncompliance by the other Party with any of the agreements or conditions contained herein. No\nwaiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in\na written instrument executed and delivered by the Party so waiving. No waiver by any Party of\nany breach of this Guarantee shall operate or be construed as a waiver of any preceding or\nsubsequent breach, whether of a similar or different character, unless expressly set forth in such\nwritten waiver. Neither any course of conduct or failure or delay of any Party in exercising or\nenforcing any right, remedy or power hereunder shall operate or be construed as a waiver thereof,\nnor shall any single or partial exercise of any right, remedy or power hereunder, or any\nabandonment or discontinuance of steps to enforce such right, remedy or power, or any course of\nconduct, preclude any other or further exercise thereof or the exercise of any other right, remedy\nor power.\nSection 5.7 Survival. The rights and obligations of the Parties pursuant to Section 5.1\n(Consent to Jurisdiction), Section 5.2 (Notices) and Section 5.12 (Governing Law) shall survive\nthe expiration or termination of this Guarantee. No expiration or early termination of this\nD-14'}, {'number': 285, 'text': 'CONFIDENTIAL\nGuarantee shall (i) limit or otherwise affect the respective rights and obligations of the Parties\naccrued prior to the date of such termination or (ii) preclude any Party from impleading any other\nParty in any Legal Proceeding originated by a third-party as to any matter occurring during the\nterm of this Guarantee.\nSection 5.8 Severability. If any term or provision of this Guarantee is invalid, illegal or\nincapable of being enforced in any situation or in any jurisdiction, such invalidity, illegality or\nunenforceability shall not affect the validity, legality or enforceability of any other term or\nprovision hereof or the offending term or provision in any other situation or any other jurisdiction,\nso long as the economic or legal substance of the transactions contemplated hereby is not affected\nin any manner materially adverse to any Party. Upon any such determination that any term or other\nprovision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith\nto modify this Guarantee so as to effect the original intent of the Parties as closely as possible, in\na mutually acceptable manner, in order that the transactions contemplated hereby be consummated\nas originally contemplated to the fullest extent possible.\nSection 5.9\n\nRemedies\n\n(a)\nCumulative and Non-Exclusive Remedies. Except as otherwise provided\nin this Guarantee, any and all remedies herein expressly conferred upon a Party shall be deemed\ncumulative with and not exclusive of any other remedy expressly conferred hereby, and the\nexercise by a Party of any one such remedy shall not preclude the exercise of any other such\nremedy.\n(b)\nIrreparable Damage and Harm. The Parties agree that irreparable damage\nand harm would occur in the event that any provision of this Guarantee were not performed in\naccordance with its terms and that, although monetary damages may be available for such a\nbreach, monetary damages would be an inadequate remedy therefor. Accordingly, each of the\nParties agrees that, in the event of any breach or threatened breach of any provision of this\nGuarantee by such Party, the other Party shall be entitled to an injunction or injunctions, specific\nperformance and other equitable relief to prevent or restrain breaches or threatened breaches\nhereof and to specifically enforce the terms and provisions hereof. A Party seeking an order or\ninjunction to prevent breaches of this Guarantee or to enforce specifically the terms and\nprovisions hereof shall not be required to provide, furnish or post any bond or other security in\nconnection with or as a condition to obtaining any such order or injunction, and each Party hereby\nirrevocably waives any right it may have to require the provision, furnishing or posting of any\nsuch bond or other security. In the event that any Legal Proceeding should be brought in equity\nto enforce the provisions of this Guarantee, each Party agrees that it shall not allege, and each\nParty hereby waives the defense, that there is an adequate remedy available at law.\nSection 5.10 Counterparts. This Agreement may be executed in one or more\ncounterparts, each of which shall be deemed to be an original and all of which, when taken\ntogether, shall be deemed to be one and the same agreement or document. A signed copy of this\nGuarantee transmitted by email or other means of electronic transmission shall be deemed to have\nthe same legal effect as delivery of an original executed copy of this Guarantee for all purposes.\nD-15'}, {'number': 286, 'text': 'CONFIDENTIAL\nSection 5.11 Office of the Comptroller. Owner agrees to file this Guarantee with the\nComptroller of the Commonwealth promptly after its execution and to provide Guarantor with\nevidence of its filing within fifteen (15) days following the execution of this Guarantee. The Parties\nacknowledge and agree that the obligations and considerations under this Guarantee shall not be\nenforceable until this Guarantee shall have been registered with the Office of the Comptroller of\nthe Commonwealth as provided by Act No. 18 of the Legislative Assembly of Puerto Rico, enacted\non October 30, 1975.\nSection 5.12 Governing Law. This Agreement and all matters, claims, controversies,\ndisputes, suits, actions or proceedings arising out of or relating to this Guarantee and the\nnegotiation, execution or performance of this Guarantee or any of the transactions contemplated\nhereby, including all rights of the Parties (whether sounding in contract, tort, common or statutory\nlaw, equity or otherwise) in connection therewith, shall be interpreted, construed and governed by\nand in accordance with, and enforced pursuant to, the internal laws of the Commonwealth\n(excluding any conflict of laws rule or principle which might refer such interpretation to the laws\nof another jurisdiction), except where the federal supremacy clause requires otherwise.\nSection 5.13 COMMONWEALTH OBLIGATIONS. THE OBLIGATIONS OF\nOWNER UNDER THIS AGREEMENT SHALL NOT BE DEEMED OBLIGATIONS OF THE\nCOMMONWEALTH OR ANY INSTRUMENTALITY OF THE COMMONWEALTH OTHER\nTHAN OWNER.\n\nD-16'}, {'number': 287, 'text': 'CONFIDENTIAL\nIN WITNESS WHEREOF, Guarantor has caused this Guarantee to be duly executed as\nof the day and year first above written.\n[GUARANTOR]\nBy:\n\n________________________________\n\nName:\n\n________________________________\n\nTitle:\n\n________________________________\n\nAccepted and agreed to by:\nPUERTO RICO ELECTRIC POWER AUTHORITY\nBy:\n\n________________________________\n\nName:\n\n________________________________\n\nTitle:\n\n________________________________\n\nD-17'}, {'number': 288, 'text': 'CONFIDENTIAL\nExhibit E\nForm of Sworn Statement\nSWORN STATEMENT\nACT 2-2018\nI, ___________________, of legal age, single/married, _________________ and resident\nof the __________________________, hereby solemnly swear:\n1.\n\nThat my personal status is the one stated above.\n\n2.\nThat\nI\nhold\nthe\nposition\nof\n_____________________________\n______________________ (hereinafter referred to as the “Company”) organized as a\n________________________ under the laws of ______________________ with the Federal\nIdentification No. ____________________.\n3.\nThat I am authorized to represent the Company and all of its partners and owners for\npurposes of this affidavit.\n4.\nThat neither the Company nor any of its presidents, vice-presidents, directors, managers,\nexecutive directors or members of its Board of Directors, or persons that fulfil similar tasks, have\nbeen convicted of, nor have they pleaded guilty to, any of the crimes in Article 6.8 of Puerto Rico\nAct No. 8-2017, as amended, known as the “Act for the Management and Transformation of the\nHuman Resources of the Government of Puerto Rico” or for any of the crimes listed in Puerto Rico\nAct No. 2-2018, known as the “Anti-Corruption Code for a New Puerto Rico”.\n5.\nNo commissions or bonuses have been paid, in cash or in kind, and there is not commitment\nfor the future payment of any such commissions or bonuses to any public official, employee or\nany former public official that participated in the negotiations and transactions contemplated by\nthe Company’s agreement with _____________ while working for the Government of Puerto\nRico.\n6.\nThat everything stated above is true to the best of my knowledge, information and belief\nand thus, to make it public I sign this declaration in __________________, this ____ day of\n________________, 20___.\n\nBy:_________________________\nName:\nTitle:\nAffidavit No. ____\n\nE-1'}, {'number': 289, 'text': 'CONFIDENTIAL\nSworn and subscribed before me by ___________________, of the personal circumstances stated\nabove, in his/her capacity as _____________________ of _________________________; who is\npersonally known to me or whom I have identified pursuant the following form of identification:\n_______________________________, this ___ day of _______, 20___.\n\nE-2'}, {'number': 290, 'text': 'CONFIDENTIAL\nExhibit F-1\nForm of Tax Opinion – Effective Date\n_________, 202_\nLadies and Gentlemen:\nWe have served as tax counsel to the Federal Oversight and Management Board for Puerto\nRico (“FOMB”) with respect to the Puerto Rico Transmission and Distribution System Operation\nand Maintenance Agreement dated as of ____, 2020 (the “Agreement”) by and among the Puerto\nRico Electric Power Authority (the “Authority”), as owner, the Puerto Rico Public-Private\nPartnerships Authority, as administrator (the “Administrator”), LUMA Energy, LLC\n(“ManagementCo”), and LUMA Energy ServCo, LLC (“ServCo” and, together with\nManagementCo, the “Operator” and, together with Authority, Administrator and ManagementCo,\nthe “Parties”). Pursuant to the terms of the Agreement, the Operator will provide management,\noperation, maintenance, repair, restoration and replacement and other related services for the\nAuthority’s transmission and distribution system (the “T&D System”). In addition, pursuant to the\nPuerto Rico Transmission and Distribution System Supplemental Terms Agreement dated as of\n____, 2020 (the “Supplemental Agreement”) by and among the Parties, the Operator will provide\nthe O&M Services prior to the Service Commencement Date. The Authority, its Affiliates, and\nother Governmental Bodies currently have outstanding obligations the interest on which is\nexcluded from gross income for federal income tax purposes (the “Existing Bonds”). On the date\nof issuance of each of the bond issues comprising the Existing Bonds, the respective bond counsel\nfor each such issuance delivered an opinion (each an “Approving Opinion”) that interest on the\nrelated Existing Bonds is excluded from gross income for federal income tax purposes under\nSection 103 of the Internal Revenue Code (the “Code”). Capitalized terms not otherwise defined\nherein shall have the meanings ascribed thereto in the Agreement.\nPursuant to Section 4.5 of the Agreement, the handover to the Operator of the O&M\nServices shall not occur until all of the conditions precedent listed therein (the “Service\nCommencement Date Conditions”) have been satisfied as specified in the Agreement. Among the\nService Commencement Date Conditions set forth in Section 4.5 of the Agreement are the\nfollowing: all Commencement Date Governmental Approvals have been issued, no Governmental\nBody shall have enacted any Applicable Law that would make it illegal, or otherwise prohibit, the\nParties’ performance of their obligations from or after the Service Commencement Date, the\nAuthority shall have received Title III Approvals from the Title III Court reasonably acceptable to\nthe Operator, PREB shall have approved a Rate Order within the parameters detailed therein, and\nthe Puerto Rico Treasury Department shall have issued certain tax assurances, among others.\nUnder Section 4.7 of the Agreement, the satisfaction or waiver of the Service Commencement\nDate Conditions is required for the achievement of the Service Commencement Date. In addition,\nthe Supplemental Agreement requires that the Operator commence the O&M Services even if the\nAuthority has not exited the Title III Case and to agree to other changes to the form of the\nAgreement. Accordingly, pursuant to Section 2.2 thereof, the Supplemental Agreement shall\nautomatically become effective, on the date on which all the Service Commencement Date\nConditions shall have been satisfied or waived in accordance with the requirements of the\nAgreement, except that the Title III Exit shall have not yet occurred and the Tax Opinion and\nF-1-1'}, {'number': 291, 'text': 'CONFIDENTIAL\nReliance Letter required by Section 4.5(v) of the Agreement shall have not yet been delivered. As\na result, our final opinions with respect to the Agreement and the Supplemental Agreement cannot\nbe delivered until, in the case of the Agreement, the Service Commencement Date Conditions are\nfully satisfied or waived and, in the case of the Supplemental Agreement, the conditions set forth\nin the preceding sentence are satisfied and the Supplemental Agreement becomes automatically\neffective, and this opinion is subject to certain caveats described below.\nThis opinion is being delivered in accordance with Section 2.2(b)(viii) of the Agreement.\nIn rendering the opinion set forth herein, we have reviewed (i) the Agreement, including\nthe exhibits thereto, (ii) the Supplemental Agreement, (iii) the System Contracts in effect as of the\ndate hereof, (iv) the opinion of Sargent and Lundy or another nationally recognized engineering\nfirm acceptable to the Parties, dated ____, 202_, which sets forth, among other things, the\nreasonably expected weighted average economic life of the T&D System, and (v) such other\nopinions, certificates and documents as have been provided to us by the Authority and others in\nconnection with the Agreement. We have also relied upon the facts set forth in the representations\nmade by the Parties to the Agreement and such other documents and opinions to the extent we\ndeemed necessary to render the opinions set forth herein. We have not undertaken an independent\naudit or investigation of the matters set forth in any of the foregoing and our opinion assumes the\naccuracy of the information and any conclusions set forth therein and compliance with any\ncovenants and directions set forth in said documents, including the Agreement and the\nSupplemental Agreement.\nIn addition, the Code and the Revenue Procedure (as defined below), impose certain\nrequirements that must be met subsequent to the issuance and delivery of the Existing Bonds and\nsubsequent to the execution of the Agreement and the Supplemental Agreement for interest on the\nExisting Bonds thereon to be and remain excluded from gross income for federal income tax\npurposes. Noncompliance with such requirements could cause the interest on the Existing Bonds\nto be included in gross income for federal income tax purposes retroactive to the date of issue of\neach issue of the Existing Bonds.\nSection 103 of the Code provides generally that interest on a “private activity bond” is not\nexcluded from gross income. Section 141 of the Code, in part, provides that a private activity bond\nis an obligation issued as part of an issue that meets the private business tests. Under the private\nbusiness tests, bonds are treated as private activity bonds if the issue of which those bonds are a\npart satisfy both the private business use test and the private security or payment test. The private\nbusiness use test is met if more than 10 percent of the proceeds of an issue are used in the trade or\nbusiness of a nongovernmental person (“private business use”). Under Treasury regulation section\n1.141-3, private business use can result from the use of the facilities financed by the issue,\nincluding as a result of a lease of such property to a nongovernmental person or a management\ncontract with respect to such property. The private security or payment test is generally met if the\npayment of the principal of, or the interest on, more than 10 percent of the proceeds of an issue is\n(under the terms of such issue or any underlying arrangement) directly or indirectly: (A) secured\nby any interest in property used or to be used for a private business use, or payments in respect of\nsuch property, or (B) to be derived from payments (whether or not to the issuer) in respect of\nproperty, or borrowed money, used or to be used for a private business use.\n\nF-1-2'}, {'number': 292, 'text': 'CONFIDENTIAL\nUnder Treasury regulation section 1.141-3(b)(4), a management contract with respect to\nfinanced property may result in private business use of that property, based on all of the facts and\ncircumstances. The regulations provide that a management contract with respect to financed\nproperty generally results in private business use of that property if the contract provides for\ncompensation for services rendered with compensation based, in whole or in part, on a share of\nnet profits from the operation of the facility, or if the service provider is treated as the lessee or\nowner of financed property for federal income tax purposes.\nTreasury regulation section 1.141-3 defines a management contract as a management,\nservice, or incentive payment contract between a governmental person and a service provider\nunder which the service provider provides services involving all, a portion of, or any function of,\na facility. For example, a contract for the provision of management services for an entire hospital,\na contract for management services for a specific department of a hospital, and an incentive\npayment contract for physician services to patients of a hospital are each treated as a management\ncontract.\nIn Revenue Procedure 2017-13 (the “Revenue Procedure”) the Internal Revenue Service\nprovided a safe harbor under which a management contract can be treated as not resulting in private\nbusiness use. The Revenue Procedure refers to the governmental owner of the related facilities as\nthe “qualified user” and the manager or operator as the “service provider.” Under the Revenue\nProcedure, a management contract that satisfies the following conditions will not be treated as\nresulting in private business use:\n(1) The payments to the service provider under the contract must be reasonable\ncompensation for services rendered during the term of the contract. “Compensation”\nincludes payments to reimburse actual and direct expenses paid by the service provider\nand related administrative overhead expenses of the service provider.\n(2) The contract must not provide to the service provider a share of net profits from the\noperation of the managed property. Compensation to the service provider will not be\ntreated as providing a share of net profits if no element of the compensation takes into\naccount, or is contingent upon, either the managed property’s net profits or both the\nmanaged property’s revenues and expenses (other than any reimbursements of direct\nand actual expenses paid by the service provider to unrelated third parties) for any fiscal\nperiod. For this purpose, the elements of the compensation are the eligibility for, the\namount of, and the timing of the payment of the compensation. Incentive compensation\nis not treated as providing a share of net profits if eligibility is determined by the service\nprovider’s performance in meeting one or more standards that measure quality of\nservices, performance or productivity.\n(3) The contract must not, in substance, impose upon the service provider the burden of\nbearing any share of net losses from the operation of the managed property.\n(4) The term of the contract, as of the beginning of the term of the contract, including all\nrenewal options must not be greater than the lesser of 30 years or 80 percent of the\nweighted average reasonably expected economic life of the managed property.\n\nF-1-3'}, {'number': 293, 'text': 'CONFIDENTIAL\n(5) The qualified user must exercise a significant degree of control over the use of the\nmanaged property. This control requirement is met if the contract requires the qualified\nuser to approve the annual budget of the managed property, capital expenditures with\nrespect to the managed property, each disposition of property that is part of the\nmanaged property, rates charged for the use of the managed property, and the general\nnature and type of use of the managed property (for example, the type of services).\n(6) The qualified user must bear the risk of loss upon damage or destruction of the managed\nproperty (for example, due to force majeure).\n(7) The service provider must agree that it is not entitled to and will not take any tax\nposition that is inconsistent with being a service provider to the qualified user with\nrespect to the managed property. For example, the service provider must agree not to\nclaim any depreciation or amortization deduction, investment tax credit, or deduction\nfor any payment as rent with respect to the managed property.\n(8) The service provider must not have any role or relationship with the qualified user that,\nin effect, substantially limits the qualified user’s ability to exercise its rights under the\ncontract, based on all the facts and circumstances. A service provider will not be treated\nas having a role or relationship prohibited by this provision if: (a) no more than 20\npercent of the voting power of the governing body of the qualified user is vested in the\ndirectors, officers, shareholders, partners, members, and employees of the service\nprovider, in the aggregate; (b) the governing body of the qualified user does not include\nthe chief executive officer of the service provider or the chairperson (or equivalent\nexecutive) of the service provider’s governing body; and (c) the chief executive officer\nof the service provider is not the chief executive officer of the qualified user or any of\nthe qualified user’s related parties.\nBased upon our review of the foregoing documents, and assuming the accuracy of the\ninformation and certifications, and compliance with the covenants, representations, and directions\nset forth therein, and assuming compliance with the terms of the Agreement and the Supplemental\nAgreement, but subject to the conditions provided in the following sentence, we are of the opinion\nthat neither the Agreement nor the Supplemental Agreement nor any provision thereof, nor the\nperformance by each Party to the Agreement and the Supplemental Agreement of its respective\nobligations thereunder (including Operator’s administration of the System Contracts), adversely\naffects the exclusion from gross income of interest on the Existing Bonds of the Authority, its\nAffiliates or another Governmental Body for federal income tax purposes under Section 103 of the\nCode. This opinion is not final and is subject to the following conditions to be determined as of\nthe Service Commencement Date that: (1) there have been no amendments to the Agreement or\nthe Supplemental Agreement that would adversely affect the exclusion from gross income of\ninterest on the Existing Bonds of the Authority, its Affiliates or another Governmental Body for\nfederal income tax purposes under Section 103 of the Code, (2) there have been no changes in\nfederal income tax law that apply to the Agreement or the Supplemental Agreement, (3) there has\nbeen no breach of any provision of the Agreement or the Supplemental Agreement that would\nadversely affect the exclusion from gross income of interest on the Existing Bonds of the\nAuthority, its Affiliates or another Governmental Body for federal income tax purposes under\nSection 103 of the Code, in particular, but not limited to, the provisions relating to the Service\nF-1-4'}, {'number': 294, 'text': 'CONFIDENTIAL\nCommencement Date Conditions, and (4) Sargent and Lundy or another nationally recognized\nengineering firm acceptable to the Parties has confirmed as of the Service Commencement Date\nthat the reasonably expected weighted average economic life of the T&D System is at least 19\nyears. Accordingly, this opinion will be redelivered in final form as of the Service Commencement\nDate taking into account the foregoing conditions.\nThis opinion is limited to the specific matter addressed herein and shall not be construed\nas confirming or restating the Approving Opinions. We have not been engaged to, nor have we\nundertaken to, determine whether the interest on the Existing Bonds continues to qualify as of this\ndate for exclusion from gross income for federal income tax purposes. Accordingly, we express\nno opinion on such matter.\nThis opinion is delivered as of the date hereof and relates solely to the Internal Revenue\nCode and Treasury regulations as in effect on the date hereof. We disclaim any obligation to\nadvise you or any other person of developments of law or fact covered by this opinion that may\noccur after the date hereof, including any amendments made subsequent to the date hereof to the\ndocuments described above. Furthermore, we express no opinion as to any federal, state or local\ntax law consequences with respect to the Existing Bonds, or the interest thereon, if any action is\ntaken with respect to the Agreement or the Supplemental Agreement or the proceeds thereof upon\nthe advice or approval of other counsel.\n\nF-1-5'}, {'number': 295, 'text': 'CONFIDENTIAL\nThis opinion is being delivered by us as tax counsel to the FOMB in connection with the\nAgreement or the Supplemental Agreement and may not be relied upon by any other person, or\nused or reproduced for any other purpose, without our prior written consent.\n\nSincerely,\n\nNixon Peabody LLP\n\nF-1-6'}, {'number': 296, 'text': 'CONFIDENTIAL\nExhibit F-2\nForm of Final Tax Opinion\n_________, 202_\nLadies and Gentlemen:\nWe have served as tax counsel to the Federal Oversight and Management Board (“FOMB”)\nwith respect to the Puerto Rico Transmission and Distribution System Operation and Maintenance\nAgreement dated as of ____, 2020 (the “Agreement”) by and among the Puerto Rico Electric\nPower Authority (the “Authority”), as owner, the Puerto Rico Public-Private Partnerships\nAuthority, as administrator (the “Administrator”), __________ (“ManagementCo”), and\n____________ (“ServCo” and, together with ManagementCo, the “Operator” and, collectively\nwith the Authority and the Administrator, the “Parties”). Pursuant to the terms of the Agreement,\nthe Operator will provide operation and management services relating to the Authority’s\ntransmission and distribution system (the “T&D System”). The Authority, its Affiliates, and other\nGovernmental Bodies currently have outstanding obligations the interest on which is excluded\nfrom gross income for federal income tax purposes (the “Existing Bonds”). On the date of issuance\nof each of the bond issues comprising the Existing Bonds, the respective bond counsel for each\nsuch issuance delivered an opinion (each an “Approving Opinion”) that interest on the related\nExisting Bonds is excluded from gross income for federal income tax purposes under Section 103\nof the Internal Revenue Code (the “Code”). Capitalized terms not otherwise defined herein shall\nhave the meanings ascribed thereto in the Agreement.\nThis opinion is being delivered in accordance with Section 4.5(v) of the Agreement.\nIn rendering the opinion set forth herein, we have reviewed (i) the Agreement, including\nthe exhibits thereto, (ii) the Puerto Rico Transmission and Distribution System Supplemental\nTerms Agreement dated as of ____, 202_ (the “Supplemental Agreement”) by and among the\nParties, (iii) the System Contracts in effect as of the date hereof, (iv) the opinion of Sargent and\nLundy or another nationally recognized engineering firm acceptable to the Parties, dated ____,\n202_, which sets forth, among other things, the reasonably expected weighted average economic\nlife of the T&D System, and (v) such other opinions, certificates and documents as have been\nprovided to us by the Authority and others in connection with the Agreement. We have also relied\nupon the facts set forth in the representations made by the Parties to the Agreement and such other\ndocuments and opinions to the extent we deemed necessary to render the opinions set forth herein.\nWe have not undertaken an independent audit or investigation of the matters set forth in any of the\nforegoing and our opinion assumes the accuracy of the information and any conclusions set forth\ntherein and compliance with any covenants and directions set forth in said documents, including\nthe Agreement.\nIn addition, the Code and the Revenue Procedure (as defined below), impose certain\nrequirements that must be met subsequent to the issuance and delivery of the Existing Bonds and\nsubsequent to the execution of the Agreement for interest on the Existing Bonds thereon to be and\nremain excluded from gross income for federal income tax purposes. Noncompliance with such\n\nF-2-1'}, {'number': 297, 'text': 'CONFIDENTIAL\nrequirements could cause the interest on the Existing Bonds to be included in gross income for\nfederal income tax purposes retroactive to the date of issue of each issue of the Existing Bonds.\nSection 103 of the Code provides generally that interest on a “private activity bond” is not\nexcluded from gross income. Section 141 of the Code, in part, provides that a private activity bond\nis an obligation issued as part of an issue that meets the private business tests. Under the private\nbusiness tests, bonds are treated as private activity bonds if the issue of which those bonds are a\npart satisfy both the private business use test and the private security or payment test. The private\nbusiness use test is met if more than 10 percent of the proceeds of an issue are used in the trade or\nbusiness of a nongovernmental person (“private business use”). Under Treasury regulation section\n1.141-3, private business use can result from the use of the facilities financed by the issue,\nincluding as a result of a lease of such property to a nongovernmental person or a management\ncontract with respect to such property. The private security or payment test is generally met if the\npayment of the principal of, or the interest on, more than 10 percent of the proceeds of an issue is\n(under the terms of such issue or any underlying arrangement) directly or indirectly: (A) secured\nby any interest in property used or to be used for a private business use, or payments in respect of\nsuch property, or (B) to be derived from payments (whether or not to the issuer) in respect of\nproperty, or borrowed money, used or to be used for a private business use.\nUnder Treasury regulation section 1.141-3(b)(4), a management contract with respect to\nfinanced property may result in private business use of that property, based on all of the facts and\ncircumstances. The regulations provide that a management contract with respect to financed\nproperty generally results in private business use of that property if the contract provides for\ncompensation for services rendered with compensation based, in whole or in part, on a share of\nnet profits from the operation of the facility, or if the service provider is treated as the lessee or\nowner of financed property for federal income tax purposes.\nTreasury regulation section 1.141-3 defines a management contract as a management,\nservice, or incentive payment contract between a governmental person and a service provider\nunder which the service provider provides services involving all, a portion of, or any function of,\na facility. For example, a contract for the provision of management services for an entire hospital,\na contract for management services for a specific department of a hospital, and an incentive\npayment contract for physician services to patients of a hospital are each treated as a management\ncontract.\nIn Revenue Procedure 2017-13 (the “Revenue Procedure”) the Internal Revenue Service\nprovided a safe harbor under which a management contract can be treated as not resulting in private\nbusiness use. The Revenue Procedure refers to the governmental owner of the related facilities as\nthe “qualified user” and the manager or operator as the “service provider.” Under the Revenue\nProcedure, a management contract that satisfies the following conditions will not be treated as\nresulting in private business use:\n(1) The payments to the service provider under the contract must be reasonable\ncompensation for services rendered during the term of the contract. “Compensation”\nincludes payments to reimburse actual and direct expenses paid by the service provider\nand related administrative overhead expenses of the service provider.\n\nF-2-2'}, {'number': 298, 'text': 'CONFIDENTIAL\n(2) The contract must not provide to the service provider a share of net profits from the\noperation of the managed property. Compensation to the service provider will not be\ntreated as providing a share of net profits if no element of the compensation takes into\naccount, or is contingent upon, either the managed property’s net profits or both the\nmanaged property’s revenues and expenses (other than any reimbursements of direct\nand actual expenses paid by the service provider to unrelated third parties) for any\nfiscal period. For this purpose, the elements of the compensation are the eligibility for,\nthe amount of, and the timing of the payment of the compensation. Incentive\ncompensation is not treated as providing a share of net profits if eligibility is\ndetermined by the service provider’s performance in meeting one or more standards\nthat measure quality of services, performance or productivity.\n(3) The contract must not, in substance, impose upon the service provider the burden of\nbearing any share of net losses from the operation of the managed property.\n(4) The term of the contract, as of the beginning of the term of the contract, including all\nrenewal options must not be greater than the lesser of 30 years or 80 percent of the\nweighted average reasonably expected economic life of the managed property.\n(5) The qualified user must exercise a significant degree of control over the use of the\nmanaged property. This control requirement is met if the contract requires the\nqualified user to approve the annual budget of the managed property, capital\nexpenditures with respect to the managed property, each disposition of property that\nis part of the managed property, rates charged for the use of the managed property,\nand the general nature and type of use of the managed property (for example, the type\nof services).\n(6) The qualified user must bear the risk of loss upon damage or destruction of the\nmanaged property (for example, due to force majeure).\n(7) The service provider must agree that it is not entitled to and will not take any tax\nposition that is inconsistent with being a service provider to the qualified user with\nrespect to the managed property. For example, the service provider must agree not to\nclaim any depreciation or amortization deduction, investment tax credit, or deduction\nfor any payment as rent with respect to the managed property.\n(8) The service provider must not have any role or relationship with the qualified user\nthat, in effect, substantially limits the qualified user’s ability to exercise its rights under\nthe contract, based on all the facts and circumstances. A service provider will not be\ntreated as having a role or relationship prohibited by this provision if: (a) no more than\n20 percent of the voting power of the governing body of the qualified user is vested in\nthe directors, officers, shareholders, partners, members, and employees of the service\nprovider, in the aggregate; (b) the governing body of the qualified user does not\ninclude the chief executive officer of the service provider or the chairperson (or\nequivalent executive) of the service provider’s governing body; and (c) the chief\nexecutive officer of the service provider is not the chief executive officer of the\nqualified user or any of the qualified user’s related parties.\n\nF-2-3'}, {'number': 299, 'text': 'CONFIDENTIAL\nBased upon our review of the foregoing documents, and assuming the accuracy of the\ninformation and certifications, and compliance with the covenants, representations, and directions\nset forth therein, and assuming compliance with the terms of the Agreement, we are of the opinion\nthat neither the Agreement nor any provision thereof, nor the performance by each Party to the\nAgreement of its respective obligations thereunder (including Operator’s administration of the\nSystem Contracts), adversely affects the exclusion from gross income of interest on the Existing\nBonds of the Authority, its Affiliates or another Governmental Body for federal income tax\npurposes under Section 103 of the Code.\nThis opinion is limited to the specific matter addressed herein and shall not be construed\nas confirming or restating the Approving Opinions. We have not been engaged to, nor have we\nundertaken to, determine whether the interest on the Existing Bonds continues to qualify as of this\ndate for exclusion from gross income for federal income tax purposes. Accordingly, we express\nno opinion on such matter.\nThis opinion is delivered as of the date hereof and relates solely to the Internal Revenue\nCode and Treasury regulations as in effect on the date hereof. We disclaim any obligation to\nadvise you or any other person of developments of law or fact covered by this opinion that may\noccur after the date hereof, including any amendments made subsequent to the date hereof to the\ndocuments described above. Furthermore, we express no opinion as to any federal, state or local\ntax law consequences with respect to the Existing Bonds, or the interest thereon, if any action is\ntaken with respect to the Agreement or the proceeds thereof upon the advice or approval of other\ncounsel.\n\nF-2-4'}, {'number': 300, 'text': 'CONFIDENTIAL\nThis opinion is being delivered by us as tax counsel to the FOMB in connection with the\nAgreement and may not be relied upon by any other person, or used or reproduced for any other\npurpose, without our prior written consent.\n\nSincerely,\n\nNixon Peabody LLP\n\nF-2-5'}, {'number': 301, 'text': 'CONFIDENTIAL\nExhibit G\nForm of Reliance Letter\n\n_____, 2020\n\nPuerto Rico Transmission and Distribution System Operation and\nMaintenance Agreement dated as of ____, 2020\n\nLadies and Gentlemen:\nIn connection with the execution of the Puerto Rico Transmission and Distribution System\nOperation and Maintenance Agreement dated as of ____, 2020 by and among the Puerto Rico\nElectric Power Authority, the Puerto Rico Public-Private Partnerships Authority, ________, and\n_______ (the “Agreement”) we have delivered our [final] legal opinion relating to the impact of\nthe Agreement on the federal income tax status of interest on bonds issued by the Authority, its\nAffiliates, and other Governmental Bodies (the “Bonds”), dated the date hereof and addressed to\nthe Federal Oversight and Management Board. Capitalized terms not otherwise defined herein\nshall have the meanings ascribed thereto in the Agreement.\n\nG-1'}, {'number': 302, 'text': 'CONFIDENTIAL\nYou may rely on said opinion as though the same were addressed to you. No attorney-client\nrelationship has existed or exists between any addressee of this letter and our firm in connection\nwith the Agreement or the Bonds or by virtue of this letter.\n\nVery truly yours,\n\nG-2'}, {'number': 303, 'text': 'CONFIDENTIAL\nExhibit H\nTerm Sheet for GridCo-GenCo PPOA\nTERM SHEET FOR\nGRIDCO-GENCO POWER PURCHASE & OPERATING AGREEMENT\nThe summary of terms and conditions is provided for discussion purposes only and is not a commitment to enter into\na power purchase and operating agreement (the “PPOA”). The terms and conditions contained below are an\nindication of the terms and conditions that the Puerto Rico Public-Private Partnerships Authority (the “Authority”)\nand the Puerto Rico Electric Power Authority (“PREPA”) believe should be included in any negotiated PPOA for\ncapacity and energy purchased from PREPA’s legacy generation assets. It is the intention to use the terms and\nconditions below as the basis for a definitive PPOA; provided, however, that the terms and conditions set forth below\nare subject to change.\nNeither this term sheet (the “Term Sheet”) nor any of its contents may be used for any other purpose without the\nprior written consent of the Authority. No legal obligation or liability shall arise between the parties with respect to\nthe subject matter hereof unless and until the PPOA shall have been finalized in mutually acceptable form, approved\nby the parties’ respective governing bodies and by the relevant Puerto Rico governmental authorities and executed\nby both parties, and then only in accordance with the terms and conditions thereof.\n1. GENERAL\n1.1.\n\nParties:\n\nThe owner of the transmission and distribution system (“GridCo”), as buyer,\n[the owner of PREPA’s legacy generation assets (“GenCo”)]17, as seller, the\nAuthority, as contract administrator (the “Administrator”), and the operator\nof the T&D System (the “T&D Operator”), as agent of GridCo and dispatch\nmanager (together, the “Parties”).\n\n1.2.\n\nProposed Project:\n\nPursuant to the PPOA, GenCo agrees to sell and GridCo agrees to accept\ndelivery of and purchase the Energy and/or Dependable Capacity of the\nGenerating Facilities (as defined below), which shall not be reduced except as\nprovided by the PPOA.\n\n1.3.\n\nTerm:\n\nThe PPOA shall become effective on the date on which it is executed and the\nConditions to Effectiveness (as defined below) have been satisfied (the\n“Effective Date”),18 and shall remain in full force and effect for the remaining\nuseful life of the Generating Facilities, unless earlier terminated19 in\naccordance with the terms of the PPOA (the “Term”).\n\n1.4.\n\nConditions to\nEffectiveness:\n\nThe PPOA shall come into full force and effect upon receipt of approvals from\nthe board of directors of each of GridCo and GenCo; the applicable regulatory\nbodies; and all other relevant governmental authorities under applicable law\n\n17\n\nThe creation of one or more GenCo entities subject to PR law provisions currently under analysis.\n\n18\n\nThe PPOA contemplates becoming effective the same date as the T&D O&M Agreement.\n\n19 Early termination provisions expected to consider, among others, the retirement, decommissioning, sale or concession\nof the Generating Facilities as part of PPP or other transactions, or if required by the Puerto Rico Energy Bureau\n(“PREB”) or for purposes of complying with the Integrated Resource Plan (“IRP”).\n\nH-1'}, {'number': 304, 'text': 'CONFIDENTIAL\n(including the Fiscal Oversight and Management Board) (the “Conditions to\nEffectiveness”).\n1.5.\n\nGenerating\nFacilities\n\nFor purposes of the PPOA, “Generating Facilities” means the electric\ngenerating facilities owned and operated by GenCo listed below:\n\uf0b7\uf020 [List of generating facilities subject to this PPOA to be included].\nThe Generating Facilities shall include: (a) all systems, structures, equipment\nand appurtenances associated with each Generating Facility’s operation and\nforming a part thereof; (b) permanent administrative offices and building\nstructures housing Generating Facilities equipment; (c) the land on which each\nGenerating Facility is located and all site improvements such as roads,\ndrainage, fencing and landscaping therein; and (d) structures, pipelines and\nequipment for: (i) the delivery of fuel from the fuel delivery point to the\nGenerating Facility; (ii) the transport of water, waste water and other waste\ndisposal; and (iii) other materials, supplies and commodities required to\noperate the Generating Facilities.\n\n1.6.\n\nProducts and\nQuantities\n\nEach Generating Facility will be assigned a “Dependable Capacity” which is\nthe net electric generating capacity (gross electric generating capacity less\nstation use) in kW, as determined by testing to be performed from time to time\npursuant to the PPOA, which shall also determine the optimal output to meet\nsystem load requirements at the lowest possible cost to reliably service\ncustomers while recognizing the operational limits of the generation facilities,\nand made available from each Generating Facility to GridCo at their applicable\ninterconnection point; provided that any excused or unexcused failure by\nGenCo to the make available the contractually-required quantity of\nDependable Capacity shall be promptly notified in writing to GridCo, the\nAuthority, the T&D Operator and PREB, which notice shall be for\nadministrative purposes only, and shall not give rise to any rights or\nobligations.\nUpon the retirement or decommissioning or ramp-down of any Generating\nFacility, or unit within a Generating Facility, the Dependable Capacity relating\nto such Generating Facility will be automatically adjusted as necessary and\nremoved for all purposes from the PPOA.\n“Energy”, defined as the net electrical output of each Generating Facility\nmeasured in kWh at the interconnection point, in amounts up to the Dependable\nCapacity of each Generating Facility.\nGenCo will also provide ancillary services as required by GridCo, consistent\nwith Prudent Utility Standards and within each Generating Facility’s\noperational limits.\n\n2. BUDGETS AND PAYMENTS\n2.1.\n\nBudgets\n\nGeneral\n\nH-2'}, {'number': 305, 'text': 'CONFIDENTIAL\nFor any contract year20 (other than the first contract year, or a year in which a\nrate adjustment approved by PREB21 enters into effect, in which case the\nBudgets used in connection with obtaining such rate adjustment shall be used),\nGenCo shall prepare and deliver to the T&D Operator (with copy to GridCo),\nnot less than one hundred (100) days prior to the commencement of such\ncontract year and sufficiently in advance to allow the T&D Operator to comply\nwith the applicable budget delivery requirements under the T&D O&M\nAgreement, its proposed operations and maintenance budget (the “Operating\nBudget”) and proposed capital budget (the “Capital Budget”, together with\nthe Operating Budget, the “Budgets”) for such year, together with financial\nforecasting for the following two (2) contract years.\nPromptly following the Effective Date, GenCo shall prepare and deliver to the\nT&D Operator (with copy to GridCo), the proposed Budgets for the initial\ncontract year.\nThe T&D Operator and the Administrator, as applicable, shall promptly notify\nGenCo of any changes needed to make the proposed Operating Budget and\nproposed Capital Budget compliant with the applicable rate order. GenCo shall\ncooperate with the T&D Operator and Administrator to resolve any differences\nwith respect to the proposed budgets.\nOperating Budget\nThe Operating Budget for any contract year shall include a month-by-month\nestimate of (i) the working capital reasonably determined by GenCo to be\nneeded for the day-to-day operation of GenCo, (ii) fixed and variable\noperations and maintenance costs and (iii) costs and expenses associated with\nfuel purchases (including a two percent (2%) in excess of the total amount for\nexcess expenditures that may arise in any contract year), in each case for the\nfollowing contract year. Within forty-five (45) days following its receipt of\nsuch Operating Budget, Administrator shall notify GenCo (with copy to\nGridCo) whether the proposed Operating Budget is compliant with the\napplicable rate order.\nGenCo shall be entitled to supplement or adjust any month of the Operating\nBudget by delivering to the T&D Operator (with copy to GridCo) revisions to\nthe Operating Budget at least 30 days prior to the beginning of such monthly\nperiod; provided that such revisions will be subject to approval by the\nAdministrator acting reasonably, or, if such adjustment or supplement would\ncause the Operating Budget to not comply with the applicable rate order,\nPREB. Such revisions may include any additional working capital or fuel\n20\n\nA contract year shall means the period from July 1 through June 30 for each year during that portion of the Term\ncommencing on the Effective Date. The initial contract year shall be a partial contract year commencing on the Effective\nDate and ending on the following June 30.\n21 As discussed in Section 5.6(g) of the T&D O&M Agreement, a rate adjustment approved by PREB constitutes a change\nin customer rates or charges as required by Applicable Law or proposed by the Operator. If approved by PREB pursuant\nto Applicable Law, it may result in a change in customer rates or charges consistent with the scope of PREB’s approval.\nAny Budget prepared by GenCo and submitted by the T&D Operator to the Authority and approved by the Authority\nshall be consistent with the determinations, directives and requirements established by PREB through a rate review\nproceeding.\n\nH-3'}, {'number': 306, 'text': 'CONFIDENTIAL\ncharges that may be necessary, as well as adjustments on account of the ramp\ndown or retirement of units and/or Generating Facilities.\nCapital Budget\nThe Capital Budget for any contract year shall include a month-by-month\nestimate of the capital expenditures and working capital needed to maintain the\nGenerating Facilities and justify how each expenditure is required to maintain\nlegal and regulatory compliance, personnel and public safety, electric system\nor Generating Facility reliability, to improve plant efficiency or to retire or\ndemolish a Generating Facility, and associated facilities, which is selected for\ndecommissioning (in accordance with the IRP or as otherwise approved by\nPREB) and remediate and restore the related site in accordance with the\ndirections of the Administrator or otherwise in accordance with applicable law\nand the IRP.\nThe Parties intend that the amounts provided in each approved Capital Budget\nfor capital expenditures will be sufficient to enable GenCo to continue\nproviding Dependable Capacity and to otherwise maintain the Generating\nFacilities in good working order consistent with Prudent Utility Practice.\nHowever, GenCo will promptly notify Administrator and GridCo when an\nunplanned event occurs, or is anticipated to occur, which would result in any\nrequired unbudgeted expenditures.\n2.2.\n\nFuel Charges22\n\nDuring the Term, GenCo shall (directly or through one or more agents or\nmanagers appointed by it) be responsible for managing, procuring, nominating,\nscheduling, and coordinating the transportation and delivery of all the fuel\nrequirements of each Generating Facility. GridCo shall pay for all fuel\npurchases after GenCo certifies receipt and quality, and authorizes payment.\nAll charges in connection with the foregoing shall be “Fuel Charges”, which\nshall be payable on a monthly basis in arrears.\nOn or before the first day of the Term, GridCo will advance to GenCo an\namount equal to [US$[\uf097] million]23 to finance GenCo fuel purchases for the\nfirst month of the Term, which shall be deposited in an account specifically\ncreated or designated by GenCo for such purpose (which may be increased as\nreasonably requested by GenCo). Excess or unused amounts shall be credited\nto the following Billing Period’s Fuel Charges.\n\n2.3.\n\nGeneration\nCharges\n\nGridCo shall pay GenCo a monthly amount based on the approved budgets,\nincluding any costs and expenses for approved capital improvements relating\nto the Generating Facilities and related supplemental working capital and all\ncosts and expenses associated with the operation and maintenance of a ramped\n\n22\n\nAlthough subject to further discussions and analysis by the P3 advisory team, fuel supply and procurement\nresponsibilities may continue through PREPA’s existing fuel procurement and supply office assumed by GenCo (e.g.,\nFuelCo). Upon dissolution of GenCo (i.e., legacy generation assets are sold, retired or useful life runs out), only FuelCo\noperations remain procuring and selling fuel to GridCo. To the extent PREPA’s reorganization includes the formation of\nmultiple GenCo entities, fuel procurement and supply functions may need to be channeled through an independent\nFuelCo, or transferred to a private partner, and the payment of fuel charges under the PPOA may need to be modified\naccordingly.\n\n23\n\nAmount should reflect estimated non-fuel working capital costs for the first four months of the Term.\n\nH-4'}, {'number': 307, 'text': 'CONFIDENTIAL\ndown unit and/or Generating Facility (the “Monthly Generation O&M\nCharge”). The Monthly Generation O&M Charge will be determined based on\nthe approved Operating Budget and Capital Budget, in each case as adjusted or\nrevised pursuant to the PPOA.\nVariable costs and expenses of the Generating Facilities that vary according to\nthe dispatched output of Energy and any interim adjustments to the Monthly\nGeneration O&M Charge and rates due to emergency and unforeseen expenses\nwill be made as directed by the Administrator and included as an adjustment\ncharge (“Monthly O&M Adjustment Charge”) in the invoice delivered for\nthe following Billing Period.\nAny reconciliation of actual payments and actual costs will be performed as\ndirected by the Administrator pursuant to the terms of the PPOA.\n2.4.\n\nWorking Capital\n\nNo later than ninety (90) days before the Effective Date, GridCo will advance\nto GenCo an amount equal to the estimated non-fuel working capital costs for\nthe first twelve (12) months of the Term, of which the first month of working\ncapital shall be deposited in an account specifically created or designated by\nGenCo for such purpose (the “Operating Account”) and the remaining\namounts intended to cover the rest of months shall be deposited in a separate\noperating reserve account (the “Operating Reserve Account”).\nOn the last day of each calendar month after the first calendar year of the Term,\nGridCo shall deposit in the Operating Account an amount of “working capital”\nequal to (x) the following calendar month’s estimated working capital as set\nforth in the Budgets less (y) the sum of (A) the Monthly Generation O&M\nCharge, Monthly O&M Adjustment Charge (if any) and Fuel Charge and (z)\nany funds remaining in the Operating Account on such date.\n\n2.5.\n\nInvoices\n\nInvoices for the Monthly Generation O&M Charge, Fuel Charge and the\nMonthly O&M Adjustment Charge (if any), shall be delivered by GenCo to\nGridCo no more than 15 days after the conclusion of each Billing Period, and\nGridCo shall pay such charges no later than the last day of the month following\nsuch monthly period. GridCo shall have no obligation to verify any invoice\nsubmitted by GenCo.\n\n3. OPERATING PROVISIONS\n3.1.\n\nDispatching\n\nThe T&D Operator, as agent of GridCo and dispatch manager, shall at its sole\ndiscretion have the right to dispatch the units at the Generating Facilities within\ntheir operational limits and in accordance with the principles related to the\ndispatch of power and electricity set forth in Schedule 1 to Annex I (Scope of\nServices) of the T&D O&M Agreement.\nGridCo’s operations center will determine the appropriate level of dispatch by\nmeans of its automatic generation control (“AGC”) system and the use of\nPrudent Utility Practices. GenCo will give the dispatcher a status report every\neight (8) hours regarding each Generating Facility’s conditions, including any\nGenerating Facility restrictions and the hourly integrated net generation.\nGenCo shall notify the dispatcher immediately if there is any significant\nchange in the Facility’s status. GenCo shall make available through the\n\nH-5'}, {'number': 308, 'text': 'CONFIDENTIAL\nFacility’s Remote Terminal Unit (RTU) the actual Facility load limit\nadjustment.\nBy the Friday of each week, T&D Operator, as agent of GridCo and dispatch\nmanager, shall provide GenCo with an estimated schedule of operations for the\nsucceeding week. The actual schedule shall be determined by the requirements\nfor operation in accordance with “economic dispatch” principles or GridCo’s\nAGC system, which may be substantially different than the estimated schedule\npreviously provided for such week.\nIf the cost of the Energy from the Generating Facilities becomes more costly\non an incremental basis than other sources available to GridCo, the output from\nthe Generating Facilities shall be reduced to zero, if GridCo so requests, and\nthe Budgets shall be adjusted accordingly to account for the effect for this\nreduced output; provided that that such output reduction shall not affect the\npayment of charges (as adjusted pursuant to the revised Budgets) as described\nabove except as it relates to any variable component tied to making such output\navailable.\n3.2.\n\nAgreed Operating\nProcedures24\n\nThe Parties shall mutually develop written operating procedures (the “Agreed\nOperating Procedures”). Topics covered shall include, but not necessarily be\nlimited to, method of day-to-day communications, key personnel lists for both\nGenCo and GridCo’s dispatching centers, clearances and switching practices,\noutage scheduling, daily available capacity and energy reports, Generating\nFacility operations log, reactive power support, operation of the ACG system,\neconomic dispatch practices and emergency procedures. The Parties shall\njointly establish plans for operating the Generating Facilities during an\nemergency.\nThe Agreed Operating Procedures shall be consistent with the principles\nrelated to the dispatch of power and electricity set forth in the System Operation\nPrinciples (as defined in the T&D O&M Agreement).\n\n3.3.\n\nInterconnection\nFacilities\n\nThe Parties shall take such actions and execute such agreements and other\ndocuments as may be necessary or appropriate to provide for the continued\ninterconnection of the Generating Facilities to the T&D System.\n\n3.4.\n\nMaintenance\n\nGenCo shall inspect, maintain and repair the Generating Facilities in\naccordance with Prudent Utility Practices. GenCo shall maintain, and deliver\nto GridCo upon request, maintenance and repair records of the Generating\nFacilities.\n\n3.5.\n\nRecords\n\nEach Party shall keep complete and accurate records and all other data required\nby each of them for the purposes of proper administration of the PPOA. Such\nrecords shall be maintained until the expiration of the Term. Either Party shall\nhave the right from time to time, upon written notice to the other Party and\nduring regular business hours, to examine the relevant records and data of the\nother Party.\n\n24\n\nThe Agreed Operating Procedures are expected to largely track analogous procedures included in the AES and\nEcoElectrica PPOAs, on which PREPA’s system operations currently relies.\n\nH-6'}, {'number': 309, 'text': 'CONFIDENTIAL\n3.6.\n\nOutages\n\nGenCo shall, at least thirty (30) Days prior to the Effective Date, submit a\nwritten scheduled outage program (the “Scheduled Outage Program”) for the\nremaining portion of the first year of each Generating Facility’s operations, and\nby September 1 of each year, its desired Scheduled Outage Program for the\nnext year. If GridCo cannot accept any of the requested scheduled outage\nperiods in the Scheduled Outage Program, GridCo shall advise GenCo of the\ntime period closest to the requested period when the outage can be scheduled.\nGenCo shall use all reasonable efforts to comply with the Scheduled Outage\nProgram.\nGenCo shall use reasonable efforts to notify GridCo of and coordinate all\nnon-scheduled outages with GridCo. To the extent possible, GenCo shall use\nreasonable efforts to have such non-scheduled outages occur during times\nwhen the applicable Generating Facility is not projected to be dispatched,\nduring scheduled outages or at such other times as will minimize any adverse\neffect on the operation of GridCo’s electric system. Should a forced outage\noccur at any of the Generating Facilities, GenCo shall use commercially\nreasonable efforts to notify GridCo of the forced outage, the cause of the\noutage, and provide a schedule to make the applicable Generating Facility\navailable for dispatch.\n\n3.7.\n\nMetering\n\nAll Energy and Capacity delivered by GenCo and supplied to GridCo shall be\nmeasured by meters, which shall be used for administrative purposes only.\nGenCo may also install meters and metering devices on each Generating\nFacility site for backup purposes; provided that such meters and metering\ndevices shall be subject to GridCo’s approval. GridCo shall own and maintain\nall meters and metering devices.\nUnless otherwise specified, all meters and metering devices shall be located at\nthe interconnection point of each Generating Facility and GridCo shall\nreimburse GenCo for all reasonable expenses incurred by the GenCo for the\ninstallation and testing of meters and metering devices; provided that GenCo\nshall relocate to the applicable interconnection point of each Generating\nFacility the meters and metering devices not otherwise located therein as of the\nEffective Date.\nAt least once a year at GridCo’s cost and, in addition, from time to time upon\ntwo (2) weeks prior written notice by GenCo, at GenCo’s cost, GridCo will test\nand calibrate the meter(s), including any backup meters, in accordance with the\nprovisions for meter testing as established in American National Standards\nInstitute (ANSI) Code for Electricity Metering Standard. GridCo shall read the\nmeters monthly to determine the amount of Energy delivered to GridCo during\nthe prior month (the “Billing Period”). GenCo may be present, at its option,\nduring all meter readings.\n\n3.8.\n\nBilling\n\nFollowing each meter reading, and continuing through and including the first\nmonth following the end of the Term, GenCo shall provide to GridCo a report\ncovering the actual Energy and Capacity delivered, and actual Fuel Charges\nincurred, during the prior month (the “Billing Period”).\n\nH-7'}, {'number': 310, 'text': 'CONFIDENTIAL\n3.9.\n\nCapacity Ramp\nDown\n\nDuring the Term, GridCo shall have the right, subject to the IRP, to reduce all\nor any portion of Generating Facility capacity which GridCo accepts from\nGenCo pursuant to the terms of the PPOA (“Ramp Down”).\nFollowing the receipt of a Ramp Down notice from GridCo, GenCo shall\nprovide written notice to GridCo on whether it will continue operating or\notherwise retire the applicable Generating Facility.\nCosts and expenses associated with the operation and maintenance of a ramped\ndown unit and/or Generating Facility shall be included in the Operating\nBudget, which shall be modified or adjusted as necessary to account for ramped\ndown units and/or Generating Facilities.\n\n3.10. Retirements,\nDecommissioning,\nSales or Transfers\nof Generating\nFacilities\n\nGenCo shall notify GridCo, the Authority, the T&D Operator and the PREB of\nits intent to retire, decommission, sell or transfer to an private operator all or\ncertain units of a Generating Facility, including due to catastrophic failures\nand/or legal and regulatory compliance requirements.\n\n4. TERMINATION\n4.1.\n\nTermination of\nAgreement\n\nTermination of the PPOA shall only occur upon the expiration of the Term\n(subject to early termination) or the mutual written consent of the Parties.\n\n5. INDEMNIFICATION AND FORCE MAJEURE\n5.1.\n\nIndemnification\nGenerally\n\nAs of the Effective Date and for the Term (subject to the survival provisions),\neach Party shall indemnify and hold harmless the other Party and each of its\naffiliates and each of their respective directors, officers, shareholders, partners,\nemployees, agents and representatives and each of their respective heirs,\nsuccessors and assigns from and against any and all damages, claims, losses,\nliabilities, actions, causes of action, costs, expenses and obligations (including,\nwithout limitation, all reasonable attorneys’ fees) whether arising in contract,\ntort or otherwise to third parties for or on account of injury, bodily or otherwise,\nto or death of persons or for damage to or destruction of property, in each case\nresulting from, arising out of or in connection with such indemnifying Party’s\nnegligent performance or failure to perform under the PPOA.\n\n5.2.\n\nEnvironmental\nCompliance\n\nGenCo shall comply in all material respects with all applicable environmental\nlaws including all applicable laws regulating or affecting any spill, discharge,\nor release of any hazardous substances.\n\n5.3.\n\nNo Consequential\nor Punitive\nDamages\n\nIn no event shall any Party or any affiliate thereof or any of their respective\ndirectors, officers, agents, or employees be liable to any other Party or any\naffiliate thereof or any of their respective directors, officers, agents, or\nemployees for any indirect, consequential, punitive, special, incidental or\nexemplary losses or damages (including without limitation lost profits or lost\nbusiness opportunity), whether such liability arises in contract, tort or\notherwise.\n\nH-8'}, {'number': 311, 'text': 'CONFIDENTIAL\n5.4.\n\nForce Majeure\nEvent\n\nA Force Majeure Event shall excuse the performance of the Party claiming a\nForce Majeure Event if such event causes the non-performance or inability to\nperform. The burden of proof as to whether a Force Majeure Event has caused\na non-performance or inability to perform shall be on the Party claiming the\nForce Majeure Event. The Parties shall be excused from performing under the\nPPOA and shall not be liable in damages or otherwise to the extent the nonperformance or inability to perform is due to a Force Majeure Event.\n“Force Majeure Event” means any event or circumstance to the extent beyond\nthe control of, and not the result of the negligence of, or caused by, the Party\nseeking to have its performance obligation excused thereby, which by the\nexercise of due diligence such Party could not reasonably have been expected\nto avoid and which by exercise of due diligence it has been unable to overcome.\n\n6. MISCELLANEOUS\n6.1.\n\nGridCo\nRepresentations\nand Warranties\n\nGridCo (for the sake of clarity, GridCo for itself and not T&D Operator acting\nas GridCo’s agent) shall provide representations and warranties covering the\nfollowing matters (among others), as shall be further specified in the PPOA:\n\uf0b7\uf020 organization, power and authority;\n\uf0b7\uf020 enforceability of the PPOA;\n\uf0b7\uf020 compliance with law; and\n\uf0b7\uf020 no adverse legal proceedings.\n\n6.2.\n\nGenCo\nRepresentations\nand Warranties\n\nGenCo shall provide representations and warranties covering the following\nmatters (among others), as shall be further specified in the PPOA:\n\uf0b7\uf020 organization, power and authority;\n\uf0b7\uf020 enforceability of the PPOA;\n\uf0b7\uf020 compliance with law;\n\uf0b7\uf020 no adverse legal proceedings; and\n\uf0b7\uf020 contractual commitments for or access to a reliable supply of fuel.\n\n6.3.\n\nInsurance\n\nGenCo shall maintain, from a reputable insurance company or other providers\nreasonably acceptable to GridCo, policies of insurance as set forth in the\nPPOA, including, without limitation:\n\uf0b7\uf020 workmen’s compensation insurance;\n\uf0b7\uf020 comprehensive or commercial general liability insurance;\n\uf0b7\uf020 excess liability insurance;\n\uf0b7\uf020 all risk physical damage insurance;\n\uf0b7\uf020 marine cargo insurance; and\n\uf0b7\uf020 pollution legal liability insurance.\n\nH-9'}, {'number': 312, 'text': 'CONFIDENTIAL\n6.4.\n\nAssignment\n\nGenCo shall not assign or transfer its rights and obligations under the PPOA\nwithout the prior written consent of GridCo and the Administrator. Any attempt\nby GenCo to assign its rights or obligations under the PPOA without the prior\nwritten consent of the corresponding Party shall be void. Notwithstanding the\nforegoing, GridCo may assign, without the consent of GenCo, its rights, duties,\nobligations and benefits, in their entirety to any entity that is designated or\napproved as the lawful operator of an electricity transmission and/or\ndistribution system in the Commonwealth of Puerto Rico.\n\n6.5.\n\nGoverning Law\n\nThe PPOA shall be governed by, construed and enforced in accordance with\nthe laws of the Commonwealth of Puerto Rico and, to the extent applicable,\nthe laws of the United States of America, in each case without regard to the\nprinciples of conflicts of law.\n\n6.6.\n\nSeverability\n\nIf a court of competent jurisdiction declares any of the provisions of the PPOA\nas invalid, illegal or unenforceable, such holding will not affect the validity,\neffectiveness or enforceability of the remaining provisions of the PPOA.\n\n6.7.\n\nSurvival\n\nAll indemnification rights shall survive the end of the Term for an additional\ntwelve (12) months and all post-closing obligations shall survive the end of the\nTerm.\n\nH-10'}, {'number': 313, 'text': 'Execution Version\nCONFIDENTIAL\nPUERTO RICO TRANSMISSION AND DISTRIBUTION SYSTEM\nSUPPLEMENTAL TERMS AGREEMENT\nThis PUERTO RICO TRANSMISSION AND DISTRIBUTION SYSTEM\nSUPPLEMENTAL TERMS AGREEMENT (this “Supplemental Agreement”) is made and\nentered into as of this 22nd day of June, 2020 by and among: (i) the Puerto Rico Electric Power\nAuthority (“Owner”), a public corporation and governmental instrumentality of the\nCommonwealth of Puerto Rico, created by Act No. 83 of the Legislative Assembly of Puerto Rico,\nenacted on May 2, 1941; (ii) the Puerto Rico Public-Private Partnerships Authority\n(“Administrator”), a public corporation of the Commonwealth of Puerto Rico, created by Act\nNo. 29 of the Legislative Assembly of Puerto Rico, enacted on June 8, 2009; (iii) LUMA Energy,\nLLC (“ManagementCo”), a limited liability company organized under the laws of Puerto Rico;\nand (iv) LUMA Energy ServCo, LLC (“ServCo” and, together with ManagementCo, “Operator”\nand, together with Owner, Administrator and ManagementCo, the “Parties” and each a “Party”), a\nlimited liability company organized under the laws of Puerto Rico. Capitalized terms used but not\notherwise defined herein shall have the respective meanings ascribed to them in Article 1\n(Definitions; Interpretation), and any such capitalized terms used herein but not defined herein\nshall have the respective meanings ascribed to them in the O&M Agreement, as the same may be\namended or supplemented by this Supplemental Agreement.\nRECITALS\nWHEREAS, the Parties are party to that certain Puerto Rico Transmission and\nDistribution System Operation and Maintenance Agreement, dated as of the date hereof (as\namended, supplemented or restated from time to time in accordance with its terms, the “O&M\nAgreement”);\nWHEREAS, the Parties have agreed to enter into this Supplemental Agreement,\nwhich shall be applicable to the Parties only upon the Supplemental Agreement Effective Date and\nfor the duration of the Interim Period, including through the date of any termination of the O&M\nAgreement during the Interim Period pursuant to the terms of this Supplemental Agreement;\nWHEREAS, all conditions to the Effective Date of the O&M Agreement have been\nsatisfied as of the date hereof; and\nWHEREAS, the Parties’ execution, delivery and performance of this\nSupplemental Agreement have been authorized and/or approved by all Governmental Bodies\nrequired to have authorized and/or approved the Parties’ execution, delivery and performance of\nthe O&M Agreement as a condition to the Effective Date, including by the FOMB.\nNOW THEREFORE, in consideration of the mutual covenants, representations,\nwarranties and agreements contained herein and other valuable consideration, the receipt and\nsufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:'}, {'number': 314, 'text': 'CONFIDENTIAL\nARTICLE 1\nDEFINITIONS; INTERPRETATION\nSection 1.1 Definitions. As used in this Supplemental Agreement, the following\ncapitalized terms have the respective meanings set forth below.\n“Administrator” has the meaning set forth in the introductory paragraph.\n“Interim Costs and Expenses” has the meaning set forth in Section 3.4 (Operator’s\nTitle III Costs and Expenses).\n“Interim Period” has the meaning set forth in Section 2.4 (Term).\n“Interim Period Service Commencement Date” has the meaning set forth in Section\n2.3 (Interim Period Service Commencement Date).\n“Interim Period Service Fee” has the meaning set forth in Section 3.3 (Operator’s\nCompensation).\n“Interim Period Services” has the meaning set forth in Section 3.1 (Operator’s\nServices During Interim Period).\n“Interim Period Termination Date” has the meaning set forth in Section 7.1(a)\n(Additional Termination Events – Interim Period Termination Date).\n“ManagementCo” has the meaning set forth in the introductory paragraph.\n“O&M Agreement” has the meaning set forth in the Recitals.\n“Operator” has the meaning set forth in the introductory paragraph.\n“Owner” has the meaning set forth in the introductory paragraph.\n“Party” has the meaning set forth in the introductory paragraph.\n“ServCo” has the meaning set forth in the introductory paragraph.\n“Service Fee” has the meaning set forth in Section 3.3 (Operator’s Compensation).\n“Supplemental Agreement” has the meaning set forth in the introductory paragraph.\n“Supplemental Agreement Effective Date” has the meaning set forth in Section 2.2\n(Effectiveness).\n“Supplemental Agreement Reliance Letter” means a letter from tax counsel,\nsubstantially in the form set forth in Exhibit B hereto (Form of Supplemental Agreement Reliance\nLetter) that shall accompany a Supplemental Agreement Tax Opinion and shall permit Operator\nto rely on such Supplemental Agreement Tax Opinion.\n\n2'}, {'number': 315, 'text': 'CONFIDENTIAL\n“Supplemental Agreement Tax Opinion” means an opinion, substantially in the\nform set forth in Exhibit A hereto (Form of Supplemental Agreement Tax Opinion), of Nixon\nPeabody LLP as counsel to the FOMB or other tax counsel reasonably acceptable to Administrator,\nrendered in connection with this Supplemental Agreement and providing that neither this\nSupplemental Agreement nor any provision hereof, nor the O&M Agreement nor any provision\nthereof, nor the performance by each Party of its obligations hereunder and thereunder during the\nInterim Period (including Operator’s administration of the System Contracts), adversely affects\nthe exclusion from gross income of interest on obligations of Owner, its Affiliates or another\nGovernmental Body for federal income tax purposes under the Internal Revenue Code.\nSection 1.2 Interpretation; Construction. Section 1.2 (Interpretation; Construction)\nof the O&M Agreement is incorporated herein by reference, mutatis mutandis.\nARTICLE 2\nEFFECT OF AGREEMENT; EFFECTIVENESS; TERM\nSection 2.1 Effect of this Supplemental Agreement. This Supplemental Agreement\nconstitutes an integral part of the O&M Agreement. On and after the Supplemental Agreement\nEffective Date, each reference in the O&M Agreement to “this Agreement,” “hereunder,” “hereof”\nor “herein” shall mean and be a reference to the O&M Agreement, as supplemented and amended\nby this Supplemental Agreement, unless the context otherwise requires. The Parties hereby agree\nthat this Supplemental Agreement constitutes an amendment to the O&M Agreement and\nconstitutes and shall be deemed a Transaction Document. The O&M Agreement, except as\nsupplemented and amended by this Supplemental Agreement, is in full force and effect and is in\nall respects hereby ratified and confirmed. In the event of any conflict during the Interim Period\nbetween a provision of the O&M Agreement and a provision of this Supplemental Agreement, the\nprovisions of this Supplemental Agreement shall control.\nSection 2.2 Supplemental Agreement Effective Date; Agreement Regarding\nService Commencement Date. This Supplemental Agreement shall automatically become\neffective, without further action by the Parties, on the date on which all Service Commencement\nDate Conditions shall have been satisfied or waived in accordance with the requirements of the\nO&M Agreement, except that the Title III Exit shall have not yet occurred and the Tax Opinion\nand Reliance Letter required by Section 4.5(v) (Conditions Precedent to Service Commencement\nDate – Tax Opinion) of the O&M Agreement shall have not yet been delivered (such date, if it\noccurs, the “Supplemental Agreement Effective Date”). If the Supplemental Agreement Effective\nDate does not occur, this Supplemental Agreement shall not become effective and shall be deemed\nvoid ab initio and terminated automatically without any further action by the Parties. Upon the\noccurrence of the Supplemental Agreement Effective Date, notwithstanding anything to the\ncontrary in the O&M Agreement, the Parties agree that the Service Commencement Date shall not\nbe deemed to have occurred and that this Supplemental Agreement shall govern the process for\ndetermining whether the Service Commencement Date has occurred.\nSection 2.3 Interim Period Service Commencement Date. The “Interim Period\nService Commencement Date” shall be the first (1st) Business Day of a calendar month that is at\nleast three (3) Business Days following the date on which the Administrator delivers a certificate\n\n3'}, {'number': 316, 'text': 'CONFIDENTIAL\nto Operator confirming that the following conditions have been met to the satisfaction of each of\nOperator and Administrator:\n(a)\nthe O&M Agreement shall remain in full force and effect, subject to this\nSupplemental Agreement;\n(b)\nthe Title III Court shall have entered, on a final and non-appealable basis,\nan order or orders (i) to the extent required by Applicable Law, authorizing Owner’s entry into and\nperformance of this Supplemental Agreement, and (ii) granting administrative expense treatment\nfor any amounts required to be paid by Owner under this Supplemental Agreement and the O&M\nAgreement during the Interim Period, and in the case of each of (i) and (ii), such approvals and\norders shall be reasonably acceptable to Operator;\n(c)\na number of Owner Employees and Other Employees necessary for\nOperator to perform the Interim Period Services shall have accepted offers to commence\nemployment as ServCo Employees beginning on the Interim Period Service Commencement Date\nand, without limiting the generality of the foregoing, Owner shall have provided communications\nto all Owner Employees regarding Owner’s pension obligations going forward reasonably\nacceptable to Owner and Operator;\n(d)\nOwner shall have provided Operator with written notice of the System\nContracts and Generation Supply Contracts that have been assumed and those that have been\nrejected as at the Interim Period Service Commencement Date;\n(e)\nall Service Accounts shall have been established, and all Service Accounts\nother than the Contingency Reserve Account shall have been funded, in each case as required by\nSection 4.7 (Establishment and Funding of Service Accounts);\n(f)\nOwner shall have received a Supplemental Agreement Tax Opinion and\nManagementCo shall have received a Supplemental Agreement Reliance Letter, at the expense of\nOwner or Administrator; and\n(g)\nall Service Commencement Date Conditions, other than delivery of the Tax\nOpinion and Reliance Letter required by Section 4.5(v) (Conditions Precedent to Service\nCommencement Date – Tax Opinion) of the O&M Agreement, shall have been satisfied after\ngiving effect to the amendments to the O&M Agreement set forth herein.\nSection 2.4 Term. This Supplemental Agreement shall be in effect from the\nSupplemental Agreement Effective Date through the earlier of (a) the Service Commencement\nDate and (b) the Interim Period Termination Date (such period of time, the “Interim Period”),\nunless earlier terminated in accordance with the terms hereof. Notwithstanding anything to the\ncontrary herein or in the Transaction Documents, the occurrence of the Interim Period shall not in\nany way reduce or be applied against the Initial Term.\n\n4'}, {'number': 317, 'text': 'CONFIDENTIAL\nARTICLE 3\nINTERIM PERIOD SERVICES; COMPENSATION; COSTS AND EXPENSES\nSection 3.1 Operator’s Services During Interim Period. Commencing on the Interim\nPeriod Service Commencement Date and for the duration of the Interim Period thereafter, subject\nto the terms and conditions of this Supplemental Agreement and for the compensation described\nherein, Operator shall perform all services with respect to the T&D System constituting O&M\nServices under the O&M Agreement (the “Interim Period Services”), notwithstanding the fact that\nthe Service Commencement Date has not yet occurred. Operator shall perform the Interim Period\nServices subject to the terms and conditions of the O&M Agreement, except as the same may be\namended or supplemented by this Supplemental Agreement. For purposes of the foregoing\nsentence, each term and condition with respect to the O&M Services referring to “during each\nContract Year,” “after the Service Commencement Date” or any similar term, shall be read to refer\nto the Interim Period and Interim Period Service Commencement Date, as applicable, with respect\nto the Interim Period Services.\nSection 3.2 System Contracts and Generation Supply Contracts. During the Interim\nPeriod, Sections 4.3(d) (Owner and Administrator Responsibilities – Additional System Contracts\nand Generation Supply Contracts) and 4.3(e) (Owner and Administrator Responsibilities – Notices\nwith respect to System Contracts and Generation Supply Contracts) of the O&M Agreement shall\ncontinue to apply to System Contracts and Generation Supply Contracts that have not yet been\nassumed or rejected in the Title III Case.\nSection 3.3 Operator’s Compensation. In addition to Owner’s funding or payment of\nT&D Pass-Through Expenditures, Generation Pass-Through Expenditures, Capital Improvements,\nOutage Event Costs and any other amounts that become due and owing to Operator hereunder and\nunder the O&M Agreement (other than the Service Fee, as defined in the O&M Agreement), as\ncompensation for Operator’s performance of the Interim Period Services, and solely for the\nduration of the Interim Period, Owner shall pay ManagementCo an annual fixed management\nservice fee equal to One Hundred Fifteen Million Dollars (US$115,000,000.00) in 2020 Dollars,\nsuch amount to be adjusted for inflation in the manner set forth in Annex VIII (Service Fee) to the\nO&M Agreement on the Interim Period Service Commencement Date and each twelve (12) month\nanniversary of the Interim Period Service Commencement Date thereafter (such fee, as adjusted,\nthe “Interim Period Service Fee”). The Interim Period Service Fee shall be invoiced and paid on\nthe same terms as the Fixed Fee as set forth in the O&M Agreement, provided that notwithstanding\nanything to the contrary in the O&M Agreement, the Interim Period Service Fee shall be paid in\nmonthly installments, each due and payable by Owner monthly in advance on the first Business\nDay of each month following the month in which Operator has submitted an invoice pursuant to\nSection 7.1(b)(iii) (Service Fee – Fixed Fee) of the O&M Agreement, which invoice shall specify\nthe monthly portion of the Interim Period Service Fee for the next succeeding month.\nSection 3.4 Operator’s Title III Costs and Expenses. Without limitation or\nduplication of Owner’s indemnification obligation in Section 18.2(a)(ix) (Indemnification by\nOwner – Generally) of the O&M Agreement, during the Interim Period, all of the following\n(without duplication) shall be considered T&D Pass-Through Expenditures and shall be deemed\nadministrative expenses of Owner: all costs and expenses, including Fees-and-Costs, arising from,\nrelated to or in connection with any participation by Operator in, or any other action taken by\n5'}, {'number': 318, 'text': 'CONFIDENTIAL\nOperator in connection with, PROMESA, the Title III Case or any other Legal Proceeding related\nthereto (“Interim Costs and Expenses”). Notwithstanding anything to the contrary herein or in the\nO&M Agreement, (a) Operator’s inclusion in any applicable Operating Budget of any line item\nrelated to the Interim Costs and Expenses shall not be held against Operator for purposes of\ndetermining whether an Operator Event of Default has occurred, (b) any Interim Costs and\nExpenses in excess of the applicable Operating Budget line item shall not be counted against any\nlimitation on Excess Expenditures and (c) all Interim Costs and Expenses shall be deemed to be\nincluded in the applicable Operating Budget regardless of whether such Interim Costs and\nExpenses are delineated in such Operating Budget.\nSection 3.5 Administrative Expense Treatment. All amounts payable by Owner to\nOperator hereunder and under the O&M Agreement during the Interim Period shall be deemed to\nbe administrative expenses of Owner.\nSection 3.6 Contract Principles. Each of the Parties hereby agrees, during the Interim\nPeriod, to uphold the principles of good faith and fair dealing in performing their obligations\nthroughout the term of and under this Supplemental Agreement, and that any dispute with respect\nto the interpretation of this Supplemental Agreement or the O&M Agreement shall be determined\nconsistent with the foregoing.\nARTICLE 4\nADJUSTMENTS TO O&M AGREEMENT\nSection 4.1 Effect of Amendments and Modifications. Any amendments or\nsupplements to the O&M Agreement made herein shall be effective only during the Interim Period,\nprovided that such amendments or supplements shall survive if the O&M Agreement is terminated\nduring the Interim Period pursuant to the terms of this Supplemental Agreement.\nSection 4.2 Defined Terms. Section 1.1 (Definitions) of the O&M Agreement is\namended by making the changes below.\n(a)\nAdditional Defined Terms. The following defined terms are added to\nSection 1.1 (Definitions) of the O&M Agreement in the appropriate alphabetical order:\n“Interim Costs and Expenses” has the meaning set forth in the Supplemental\nAgreement.\n“Interim Period” has the meaning set forth in the Supplemental Agreement.\n“Interim Period Service Commencement Date” has the meaning set forth in\nthe Supplemental Agreement.\n“Interim Period Service Fee” has the meaning set forth in the Supplemental\nAgreement.\n“Material Adverse Effect” means a material adverse effect on (i) the ability\nof Operator or Owner, as applicable, to perform its obligations under the\nSupplemental Agreement and/or this Agreement or (ii) the rights of\n6'}, {'number': 319, 'text': 'CONFIDENTIAL\nOperator or Owner, as applicable, under the Supplemental Agreement\nand/or this Agreement.\n“Postpetition Financing” means any financing facility entered into by\nOwner during the administration of the Title III Case pursuant to section\n364 of the Bankruptcy Code, provided that any Liens or priority payment\nterms granted under such facility under section 364(c) or (d) of the\nBankruptcy Code shall be subject and subordinate to any amounts required\nto be paid by Owner under this Agreement.\n“Supplemental Agreement” means that certain Supplemental Terms\nAgreement among the Parties, dated as of the Effective Date.\n(b)\n\nChange in Law. The definition of “Change in Law” is amended by:\n(i)\n\nadding the following text as a new clause (iv):\n\n“any event or circumstance, or order or judgment of any Governmental Body,\nrequiring Operator or any Operator Related Parties to become a party to any Legal\nProceeding related to the Title III Case or if Operator commences or becomes a\nparty to any action or contested matter in the Title III Case in order to protect its\nrights under the Supplemental Agreement.”; and\n(ii)\n\ninserting the following text immediately preceding the period at the\n\nend of the proviso:\n“, except where arising out of the Title III Case”.\n(c)\n\nForce Majeure Event. The definition of “Force Majeure Event” is amended\n\nby:\n(i)\n\ndeleting and restating the text of clause (I) as follows:\n\n“strikes, boycotts, work stoppages, lockouts or other labor or employment\ndisputes or disturbances with respect to the employees of ServCo occurring\nduring the Interim Period; and”\n(ii)\ndeleting the text “increases in wage rates of Operator’s employees\nand Subcontractors, insurance costs,” in clause (2);\n(iii)\n\nadding the word “and” to the end of clause (8);\n\n(iv)\n\ndeleting the text “; and” at the end of clause (9) and replacing it with\n\n(v)\n\ndeleting clause (10).\n\n“.”; and\n\n7'}, {'number': 320, 'text': 'CONFIDENTIAL\n(d)\nOperator Termination Fee. The definition of “Operator Termination Fee” is\namended by adding the following text immediately preceding the period at the end of such\ndefinition:\n“provided, that during the Interim Period, the Operator Termination Fee\nshall equal the Interim Period Service Fee”.\n(e)\nPermitted Liens. The definition of “Permitted Liens” is amended by\ndeleting and restating the text thereof as follows:\n““Permitted Liens” means (i) Liens arising by operation of law that are\neither contested in good faith and for which Operator or any Subcontractor\nhas established adequate reserves or that are discharged promptly, (ii) Liens\nexisting as of the Effective Date, if any, (iii) Liens that result from any act\nor omission by any Owner Related Party, Administrator or any other\nGovernmental Body, (iv) purchase money Liens or similar Liens securing\nrental payments under capital lease arrangements, (v) Liens to secure\nPostpetition Financing, and (vi) Liens on System Revenues specified in or\npermitted under any Title III Plan and its related implementing documents,\nprovided that in the case of each of clauses (v) and (vi), such Permitted\nLiens would not reasonably be expected to have a Material Adverse Effect\non the rights of Operator hereunder or the ability of Owner or Operator to\nperform their respective obligations under this Agreement.”.\n(f)\nService Fee. The definition of “Service Fee” is amended by adding the\nfollowing text immediately preceding the period at the end of such definition:\n“provided, that during the Interim Period, no Service Fee shall be payable\nhereunder and, in lieu thereof, the Interim Period Service Fee shall be\npayable, subject to the terms and conditions of the Supplemental\nAgreement.\n(g)\nTransaction Documents. The definition of “Transaction Documents” is\namended by adding the following text after the words “means this Agreement,”:\n“the Supplemental Agreement,”.\nSection 4.3 Ownership of System Revenues. Section 3.2 (Engagement of Operator)\nof the O&M Agreement is amended by deleting the text reading “(subject only to Liens on System\nRevenues specified in the Title III Plan and the related disclosure statement)” and replacing it with\nthe following text:\n“(subject only to Permitted Liens)”.\nSection 4.4 Tax Assurance. Section 4.5(t) (Conditions Precedent to Service\nCommencement Date - Tax Matters) of the O&M Agreement is amended by adding the following\ntext after the words “the Service Fee” in each of clauses (i) and (ii):\n\n8'}, {'number': 321, 'text': 'CONFIDENTIAL\n“(including the Interim Period Service Fee)”.\nSection 4.5 Front-End Transition Service Fixed Fee. Section 4.6(b) (Front-End\nTransition Period Compensation - Front-End Transition Service Fee) is amended by deleting the\ntext “Service Commencement Date” in the two places where it appears in clause (iii)(B) and\nreplacing it with the following text:\n“Interim Period Service Commencement Date”.\nSection 4.6 Collection of Charges. Section 5.3(b) (Billing and Collection – Collection\nof Charges) of the O&M Agreement is amended by deleting the text reading “(subject only to\nLiens on System Revenues specified in the Title III Plan and the related disclosure statement)” and\nreplacing it with the following text:\n“(subject only to Permitted Liens)”.\nSection 4.7\n\nEstablishment and Funding of Service Accounts.\n\n(a)\nContingency Reserve Account. Notwithstanding anything to the contrary\nin the O&M Agreement, Owner shall (i) establish the Contingency Reserve Account not less than\nten (10) Business Days prior to the Interim Period Service Commencement Date, (ii) no later than\nthe tenth (10th) Business Day of each month during the Interim Period (beginning in the month in\nwhich the Interim Period Service Commencement Date occurs) Owner shall fund the Contingency\nReserve Account in an amount equal to 1/24 of the Contingency Reserve Amount, (iii) following\nany withdrawal from the Contingency Reserve Account during the Interim Period, Owner shall\nreplenish the Contingency Reserve Account by depositing no later than the tenth (10th) Business\nDay of each month (beginning in the month following that in which the withdrawal occurred) the\namount withdrawn, which shall be in addition to the funding required by the preceding clause (ii),\nand (iv) the failure to fund and replenish the Contingency Reserve Account as required by this\nSection shall constitute an Owner Event of Default. For the avoidance of doubt, except as amended\nby this Section, the provisions of Section 7.5(f) (Service Accounts - Contingency Reserve Account)\nof the O&M Agreement continue to apply.\n(b)\nAll Other Service Accounts. Notwithstanding anything to the contrary in\nthe O&M Agreement, Owner shall establish each Service Account other than the Contingency\nReserve Account, and shall fund each such Service Account other than the Contingency Reserve\nAccount, in the full amount required by the O&M Agreement to be in place as of the Service\nCommencement Date, in each case not less than ten (10) Business Days prior to the Interim Period\nService Commencement Date.\nSection 4.8 Owner Event of Default. Section 14.3(c) (Events of Default by Owner –\nFailure to Perform a Material Obligation) of the O&M Agreement is amended by deleting the\ntext reading “including the obligation to keep System Revenues free and clear of Liens other than\nLiens specified in the Title III Plan and the related disclosure statement” and replacing it with the\nfollowing text:\n“including the obligation to keep System Revenues free and clear of Liens other than\nPermitted Liens”.\n9'}, {'number': 322, 'text': 'CONFIDENTIAL\nSection 4.9\n(a)\n\nBack-End Transition Services.\nSpecific Amendments to O&M Agreement.\n\n(i)\nIn Section 14.6(b) (Remedies Upon Early Termination – Back-End\nTransition Service Fee) of the O&M Agreement, prior to the words “Section 14.2”, the following\nwords are inserted: “the Supplemental Agreement,”.\n(ii)\nIn Section 16.1 (Successor Operator) of the O&M Agreement: (A)\nthe words “Interim Period” should be added before the words “Service Commencement Date” in\ntwo places; and (B) after the words “Article 14 (Events of Default; Remedies)” in clause (i) thereof,\nthe following words are inserted: “, or Administrator’s receipt of a termination notice from\nOperator under the Supplemental Agreement (or upon the automatic termination of this Agreement\npursuant to the terms of the Supplemental Agreement),”.\n(b)\nBack-End Transition Period Compensation. If the Back-End Transition\nCommencement Date occurs as a result of the termination of the O&M Agreement pursuant to this\nSupplemental Agreement, then notwithstanding anything to the contrary in the O&M Agreement,\nOperator shall invoice Owner on or prior to the tenth (10th) day of each month for both (i) the\nprior calendar month’s or months’ Back-End Transition Services and the corresponding Back-End\nTransition Service Fee, as applicable, to the extent not previously paid, and (ii) the next succeeding\nmonth’s anticipated Back-End Transition Services and the corresponding Back-End Transition\nService Fee. Owner shall pay the Back-End Transition Service Fee monthly in advance on the first\nBusiness Day of each calendar month, subject to deduction by the amount of any overage in the\nBack-End Transition Service Fee paid by Owner in the previous month. The Back-End Transition\nService Fee shall be prorated for any partial monthly period during the Back-End Transition\nPeriod.\nSection 4.10 Indemnification. Section 18.2(a) (Indemnification by Owner – Generally)\nof the O&M Agreement is amended to delete the word “or” immediately preceding clause (viii),\nand to insert the following text immediately preceding the period at the end of such section:\n“; or (ix) all claims brought against Operator after the Interim Period Service\nCommencement Date by any creditor or other Person (A) in connection with\nor related to the Title III Case or (B) in connection with or arising out of the\nnegotiation and execution of the Supplemental Agreement.”.\nSection 4.11 Representations and Warranties of Owner. Section 19.1(h) (Charges) of\nthe O&M Agreement is amended by deleting the text reading “other than those specified in or\npermitted under any Title III Plan and its related implementing documents” and replacing it with\nthe following text:\n“other than Permitted Liens”.\n\n10'}, {'number': 323, 'text': 'CONFIDENTIAL\nARTICLE 5\nRESPONSIBILITIES OF OWNER AND ADMINISTRATOR\nSection 5.1 Responsibilities of Owner and Administrator. In addition to and not in\nlimitation of their respective responsibilities set forth in the O&M Agreement, each of Owner and\nAdministrator, as applicable, shall (a) exercise all reasonable efforts to cause the Title III Exit to\noccur as promptly as possible after the Supplemental Agreement Effective Date, (b) keep Operator\ninformed with respect to the Title III Case, (c) provide Operator with copies of all of Owner’s\nfinancial statements and reports concurrently with its provision of same to the Title III Court or\nany creditors, (d) agree to Operator’s assertion of standing and appearance in the Title III Case and\n(e) allow Operator to speak on behalf of Owner with respect to the Interim Period Services. Neither\nOwner nor Administrator shall take any steps to appoint Operator or any Affiliate of Operator as\na receiver in the Title III Case without the prior written consent of Operator in its sole and absolute\ndiscretion, and notwithstanding anything to the contrary in the O&M Agreement, any other\nTransaction Document or any other document, neither Operator nor any Affiliate of Operator shall\nhave any obligation to act as a receiver in the Title III Case without its prior written consent in its\nsole and absolute discretion.\nARTICLE 6\nCLOSING THE INTERIM PERIOD\nSection 6.1 Confirming Service Commencement Date. The Parties agree that,\nnotwithstanding anything to the contrary in the O&M Agreement, in order for the Service\nCommencement Date to occur, all Service Commencement Date Conditions must be satisfied or\nwaived in accordance with their terms and for purposes of the foregoing, in addition to the Service\nCommencement Date Conditions set forth in the O&M Agreement, it shall be a Service\nCommencement Date Condition that the Title III Exit shall have occurred and that the Title III\nPlan and order of the Title III Court confirming same shall be reasonably acceptable to Operator.\nThe Parties shall follow the process set forth in the O&M Agreement for establishing the Service\nCommencement Date, upon which date this Supplemental Agreement shall terminate and be null\nand void.\nARTICLE 7\nTERMINATION\nSection 7.1\n\nAdditional Termination Events and Rights.\n\n(a)\nInterim Period Termination Date. This Supplemental Agreement and the\nO&M Agreement shall automatically terminate without further action by Operator, and without\nneed for a court decision or arbitral award confirming such termination, in the event that the\nService Commencement Date does not occur on or prior to the date that is eighteen (18) months\nafter the Supplemental Agreement Effective Date (such date, the “Interim Period Termination\nDate”), which Interim Period Termination Date may, if requested by Administrator, be extended\nby the mutual agreement of the Parties prior to the then-current Interim Period Termination Date.\n(b)\nOperator Termination Right Due to Material Adverse Effect. In addition to\nOperator’s termination rights set forth in the O&M Agreement, which shall continue to apply,\n\n11'}, {'number': 324, 'text': 'CONFIDENTIAL\nOperator may terminate this Supplemental Agreement and the O&M Agreement during the Interim\nPeriod upon the occurrence of a Material Adverse Effect arising out of the Title III Case as a result\nof a filing in the Title III Case or a ruling or order of the Title III Court, upon not less than one\nhundred twenty (120) days prior written notice to Administrator, without need for a court decision\nor arbitral award confirming Operator’s right to terminate.\n(c)\nCross-Termination. In the event that, during the Interim Period, either\nOperator or Administrator exercises its rights to terminate the O&M Agreement pursuant to the\nterms thereof, this Supplemental Agreement shall terminate concurrently with the termination of\nthe O&M Agreement.\n(d)\nNo Termination or Liquidated Damages Under O&M Agreement for\nFailure of Service Commencement Date Conditions. From and after the Interim Period Service\nCommencement Date and continuing after the Service Commencement Date, each Party hereby\npermanently waives its rights and remedies set forth in Section 4.8 (Failure of Service\nCommencement Date Conditions) of the O&M Agreement, except that any Delay Liquidated\nDamages that may have accrued and become payable thereunder prior to the Interim Period Service\nCommencement Date shall continue to be payable and shall be paid pursuant to the terms thereof.\nSection 7.2\n\nRemedies Upon Early Termination.\n\n(a)\nAccrued and Unpaid Amounts. In addition to the payment of all accrued\nand unpaid amounts required to be paid by Owner under the O&M Agreement, in the event of an\nearly termination of this Supplemental Agreement and the O&M Agreement, Owner shall\nindefeasibly pay any accrued and unpaid amounts required to be paid to Operator pursuant to this\nSupplemental Agreement, including the Interim Period Service Fee, in each case, as of the\neffective date of such termination.\n(b)\nBack-End Transition Service Fee. In the event of an early termination of\nthis Supplemental Agreement and the O&M Agreement pursuant to Section 7.1 of this\nSupplemental Agreement (Additional Termination Events and Rights), and if Operator is\nperforming the Back-End Transition Services, Owner shall be responsible for payment of the\nBack-End Transition Service Fee, which shall be deemed to be an administrative expense of\nOwner.\n(c)\n\nTermination Fee.\n\n(i)\nNotwithstanding anything to the contrary in the O&M Agreement,\nin the event this Supplemental Agreement and the O&M Agreement are terminated pursuant to\nSection 7.1(a) of this Supplemental Agreement (Additional Termination Events and Rights –\nInterim Period Termination Date), Owner shall pay Operator the Operator Termination Fee, which\nshall be deemed to be an administrative expense of Owner.\n(ii)\nThe Parties hereby acknowledge and agree that, notwithstanding\nanything to the contrary in this Supplemental Agreement or the O&M Agreement, in the event this\nSupplemental Agreement and the O&M Agreement are terminated pursuant to Section 7.1(a)\n(Additional Termination Events and Rights – Interim Period Termination Date), Operator’s\ndamages would be difficult or impossible to quantify with reasonable certainty, and accordingly,\n12'}, {'number': 325, 'text': 'CONFIDENTIAL\nthe payment to Operator of the Operator Termination Fee (x) is a payment of liquidated damages\n(and not penalties), which is based on the Parties’ best estimate of damages Operator would suffer\nor incur, and (y) shall constitute Operator’s sole and exclusive remedy for all monetary damages,\ncosts, losses and expenses of whatever type or nature arising from or related to this Supplemental\nAgreement due to the events described in this sentence, with any and all other rights and remedies\nhereunder, at law, in equity or otherwise, being herein irrevocably waived by the Operator.\n(iii) Each of Administrator and Owner hereby irrevocably waives any\nright it may have to raise as a defense that the Operator Termination Fee is excessive or punitive.\nARTICLE 8\nREPRESENTATIONS AND WARRANTIES\nSection 8.1 Representations and Warranties of Owner. Owner hereby represents and\nwarrants to Operator that:\n(a)\nExistence and Powers. Owner is a public corporation and instrumentality of\nthe Commonwealth duly organized, validly existing and in good standing under the laws of the\nCommonwealth. Owner has the required corporate power and authority to enter into this\nSupplemental Agreement, carry out its obligations hereunder and consummate the transactions\ncontemplated hereby. Administrator has the required corporate power and authority to carry out\nits obligations under this Supplemental Agreement and on behalf of Owner, including the power\nand authority to bind Owner with respect to any matter contemplated under this Supplemental\nAgreement.\n(b)\nDue Authorization and Binding Obligation. The execution and delivery by\nOwner of this Supplemental Agreement, the performance by Owner of its obligations hereunder\nand the consummation by Owner of the transactions contemplated hereby have been duly and\nvalidly authorized and approved by the required corporate or other similar action on the part of\nOwner. This Supplemental Agreement has been duly and validly executed and delivered by\nOwner, and (assuming due authorization, execution and delivery by Operator) this Supplemental\nAgreement constitutes a legal, valid and binding obligation of Owner enforceable against Owner\nin accordance with its terms, except as such enforceability may be limited by bankruptcy,\ninsolvency, moratorium or similar Applicable Law affecting creditors’ rights generally and by\ngeneral equity principles.\n(c)\nNo Conflicts. Neither the execution, delivery or performance by Owner of\nthis Supplemental Agreement, nor the consummation of the transactions contemplated hereby will:\n(i) result in a material violation or breach of, or material default under, any provision of the\norganizational documents of Owner; (ii) result in a violation of, or give any Governmental Body\nthe right to challenge any of the transactions contemplated hereby under, any Applicable Law\napplicable to Owner; (iii) (A) result in a violation or breach of, (B) constitute a default under, (C)\nresult in the acceleration of or create in any party the right to accelerate, terminate or cancel or (D)\nrequire the consent of any other Person under, any material contract to which Owner is a party; or\n(iv) result in the creation or imposition of any Lien on any properties or assets of Owner.\n\n13'}, {'number': 326, 'text': 'CONFIDENTIAL\n(d)\nNo Consents. No consent, declaration or filing with, or notice to, any\nGovernmental Body is required by or with respect to Owner in connection with (i) the execution\nand delivery of this Supplemental Agreement or (ii) the performance by Owner of its obligations\nhereunder, except (A) such as have been duly obtained or made and (B) in the case of clause (ii),\nfor those Governmental Approvals to be obtained after the Effective Date but before the Interim\nPeriod Service Commencement Date.\n(e)\nNo Litigation. There is no action, suit or other proceeding, at law or in\nequity, before or by any court or Governmental Body pending against Owner or, to Owner’s\nknowledge, threatened against Owner, which if determined adversely against Owner would\nreasonably be expected to materially and adversely affect (i) the validity or enforceability of this\nSupplemental Agreement or (ii) the performance by Owner or Operator of their respective\nobligations hereunder.\n(f)\nNo Legal Prohibition. There is no Applicable Law in effect on the date\nhereof that would prohibit the execution, delivery or performance by Owner of this Supplemental\nAgreement and the transactions contemplated hereby.\nSection 8.2 Representations and Warranties of Operator. Operator hereby\nrepresents and warrants to Owner that:\n(a)\nExistence and Powers. ManagementCo is a limited liability company duly\norganized, validly existing and in good standing under the laws of Puerto Rico, and is qualified to\ndo business and in good standing in the Commonwealth. ServCo is a limited liability company\nduly organized, validly existing and in good standing under the laws of Puerto Rico, and is\nqualified to do business and in good standing in the Commonwealth. Each of ManagementCo and\nServCo has the required corporate power and authority to enter into this Supplemental Agreement,\ncarry out its obligations hereunder and consummate the transactions contemplated hereby.\n(b)\nDue Authorization and Binding Obligation. The execution and delivery by\nOperator of this Supplemental Agreement, the performance by Operator of its obligations\nhereunder and the consummation by Operator of the transactions contemplated hereby have been\nduly and validly authorized and approved by the required corporate or other similar action on the\npart of Operator. This Supplemental Agreement has been duly and validly executed and delivered\nby Operator, and (assuming due authorization, execution and delivery by Owner) this\nSupplemental Agreement constitutes a legal, valid and binding obligation of Operator enforceable\nagainst Operator in accordance with its terms, except as such enforceability may be limited by\nbankruptcy, insolvency, moratorium or similar Applicable Law affecting creditors’ rights\ngenerally and by general equity principles.\n(c)\nNo Conflicts. Neither the execution, delivery or performance by Operator\nof this Supplemental Agreement, nor the consummation of the transactions contemplated hereby\nwill: (i) result in a material violation or breach of, or material default under, any provision of the\norganizational documents of Operator; (ii) result in a violation of, or give any Governmental Body\nthe right to challenge any of the transactions contemplated hereby under, any Applicable Law\napplicable to Operator; (iii) (A) result in a violation or breach of, (B) constitute a default under,\n(C) result in the acceleration of or create in any party the right to accelerate, terminate or cancel or\n\n14'}, {'number': 327, 'text': 'CONFIDENTIAL\n(D) require the consent of any other Person under, any material contract to which Operator is a\nparty; or (iv) result in the creation or imposition of any Lien on any properties or assets of Operator.\n(d)\nNo Consents. No consent, declaration or filing with, or notice to, any\nGovernmental Body is required by or with respect to Operator in connection with (i) the execution\nand delivery of this Supplemental Agreement or (ii) the performance by Operator of its obligations\nhereunder, except (A) such as have been duly obtained or made and (B) in the case of clause (ii),\nfor those Governmental Approvals to be obtained after the Effective Date but before the Interim\nPeriod Service Commencement Date.\n(e)\nNo Litigation. There is no action, suit or other proceeding, at law or in\nequity, before or by any court or Governmental Body pending against Operator or, to Operator’s\nknowledge, threatened against Operator, which if determined adversely against Operator would\nreasonably be expected to materially and adversely affect (i) the validity or enforceability of this\nSupplemental Agreement or (ii) the performance by Operator or Owner of their respective\nobligations hereunder.\n(f)\nNo Legal Prohibition. There is no Applicable Law in effect on the date\nhereof that would prohibit the execution, delivery or performance by Operator of this\nSupplemental Agreement and the transactions contemplated hereby.\nARTICLE 9\nDISPUTE RESOLUTION\nSection 9.1 Disputes. Any dispute among the Parties arising out of, relating to or in\nconnection with this Supplemental Agreement or the existence, interpretation, breach, termination\nor validity thereof shall constitute a Dispute and shall be resolved pursuant to the Dispute\nResolution Procedure.\nARTICLE 10\nMISCELLANEOUS\nSection 10.1 Fees and Expenses; Notices; Amendments; Relationship of the Parties.\nSections 20.1 (Fees and Expenses), 20.2 (Notices), 20.3 (Amendments) and 20.5 (Relationship of\nthe Parties) of the O&M Agreement are incorporated herein by reference, mutatis mutandis.\nSection 10.2 Entire Agreement. This Supplemental Agreement, together with the O&M\nAgreement, constitutes the entire agreement of the Parties with respect to the subject matter hereof\nand supersedes any and all prior oral or written agreements, understandings, proposals,\nrepresentations or warranties relating to this Supplemental Agreement. Without limiting the\ngenerality of the foregoing, this Supplemental Agreement taken together with the O&M\nAgreement shall completely and fully supersede all other understandings and agreements among\nthe Parties with respect to such transactions, including those contained in the RFP, the Proposal\nby Operator or its Affiliate and any amendments or supplements to the RFP or the Proposal. If this\nSupplemental Agreement does not become effective pursuant to its terms, then this Supplemental\nAgreement shall not be deemed to amend or supplement the O&M Agreement and shall not be\nconsulted or used by the Parties to interpret any terms or conditions of the O&M Agreement.\n\n15'}, {'number': 328, 'text': 'CONFIDENTIAL\nSection 10.3 Assignment and Transfer.\n(a)\nBy Operator. Operator shall not assign, transfer, convey, lease, encumber\nor otherwise dispose of its rights or obligations under this Supplemental Agreement except to the\nsame Person or Persons to which it assigns, transfers, conveys, leases, encumbers or otherwise\ndisposes of its rights or obligations under the O&M Agreement, provided such action is permitted\nby the O&M Agreement.\n(b)\nBy Owner. Owner shall not assign, transfer, convey, lease, encumber or\notherwise dispose of its rights or obligations under this Supplemental Agreement except to the\nsame Person or Persons to which it assigns, transfers, conveys, leases, encumbers or otherwise\ndisposes of its rights or obligations under the O&M Agreement, provided such action is permitted\nby the O&M Agreement.\nSection 10.4 Interest on Overdue Obligations; Waivers; Severability; Survival; No\nThird Party Beneficiaries; Remedies; Counterparts; Office of the Comptroller; Governing\nLaw; Commonwealth Obligations. Sections 20.7 (Interest on Overdue Obligations), 20.8\n(Waivers), 20.9 (Severability), 20.10 (Survival), 20.11 (No Third Party Beneficiaries), 20.12\n(Remedies), 20.13 (Counterparts), 20.14 (Office of the Comptroller), 20.15 (Governing Law) and\n20.16 (Commonwealth Obligations) of the O&M Agreement are incorporated herein by reference,\nmutatis mutandis.\n[Signatures follow on next page]\n\n16'}, {'number': 329, 'text': 'CONFIDENTIAL\n\nIN WITNESS WHEREOF, Owner, Administrator, ManagementCo and ServCo each has\ncaused this Supplemental Agreement to be duly executed as of the day and year first above written.\nPUERTO RICO ELECTRIC POWER AUTHORITY\nBy:\nName:\nTitle:\nPUERTO RICO PUBLIC-PRIVATE\nPARTNERSHIPS AUTHORITY, solely in its capacity\nas ADMINISTRATOR\nBy:\nName:\nTitle:\nLUMA ENERGY, LLC\nBy:\nName:\nTitle:\n\nBy:\nName:\nTitle:\n\nÍ:.���\n\nLUMA ENERGY SERVCO, LLC\nBy:\nName:\nTitle:\n\n& , eot\n\nBy:\nName:\nTitle:\n\n[Signature Page to Puerto Rico Transmission and Distribution System Supp/emental Terms Agreement]'}, {'number': 330, 'text': 'CONFIDENTIAL\n\nExhibit A\nForm of Supplemental Agreement Tax Opinion\n_________, 202_\nLadies and Gentlemen:\nWe have served as tax counsel to the Federal Oversight and Management Board (“FOMB”)\nwith respect to the Puerto Rico Transmission and Distribution System Operation and Maintenance\nAgreement dated as of ____, 2020 (the “Agreement”) by and among the Puerto Rico Electric\nPower Authority (the “Authority”), as owner, the Puerto Rico Public-Private Partnerships\nAuthority, as administrator (the “Administrator”), __________ (“ManagementCo”), and\n____________ (“ServCo” and, together with ManagementCo, the “Operator” and, collectively\nwith the Authority and the Administrator, the “Parties”). Pursuant to the terms of the Agreement,\nthe Operator will provide operation and management services relating to the Authority’s\ntransmission and distribution system (the “T&D System”). In addition, pursuant to the Puerto Rico\nTransmission and Distribution System Supplemental Terms Agreement dated as of ____, 2020\n(the “Supplemental Agreement”) by and among the Parties, the Operator is commencing the O&M\nServices as of the date hereof, although the Service Commencement Date has not occurred. The\nAuthority, its Affiliates, and other Governmental Bodies currently have outstanding obligations\nthe interest on which is excluded from gross income for federal income tax purposes (the “Existing\nBonds”). On the date of issuance of each of the bond issues comprising the Existing Bonds, the\nrespective bond counsel for each such issuance delivered an opinion (each an “Approving\nOpinion”) that interest on the related Existing Bonds is excluded from gross income for federal\nincome tax purposes under Section 103 of the Internal Revenue Code (the “Code”). Capitalized\nterms not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.\nThis opinion is being delivered in accordance with Section 2.3(f) of the Supplemental\nAgreement.\nIn rendering the opinion set forth herein, we have reviewed (i) the Agreement, including\nthe exhibits thereto, (ii) the Supplemental Agreement, (iii) the System Contracts in effect as of the\ndate hereof, (iv) the opinion of Sargent and Lundy or another nationally recognized engineering\nfirm acceptable to the Parties, dated ____, 202_, which sets forth, among other things, the\nreasonably expected weighted average economic life of the T&D System, and (v) such other\nopinions, certificates and documents as have been provided to us by the Authority and others in\nconnection with the Agreement. We have also relied upon the facts set forth in the representations\nmade by the Parties to the Agreement and such other documents and opinions to the extent we\ndeemed necessary to render the opinions set forth herein. We have not undertaken an independent\naudit or investigation of the matters set forth in any of the foregoing and our opinion assumes the\naccuracy of the information and any conclusions set forth therein and compliance with any\ncovenants and directions set forth in said documents, including the Agreement.\n\nA-1'}, {'number': 331, 'text': 'CONFIDENTIAL\nIn addition, the Code and the Revenue Procedure (as defined below), impose certain\nrequirements that must be met subsequent to the issuance and delivery of the Existing Bonds and\nsubsequent to the execution of the Agreement for interest on the Existing Bonds thereon to be and\nremain excluded from gross income for federal income tax purposes. Noncompliance with such\nrequirements could cause the interest on the Existing Bonds to be included in gross income for\nfederal income tax purposes retroactive to the date of issue of each issue of the Existing Bonds.\nSection 103 of the Code provides generally that interest on a “private activity bond” is not\nexcluded from gross income. Section 141 of the Code, in part, provides that a private activity bond\nis an obligation issued as part of an issue that meets the private business tests. Under the private\nbusiness tests, bonds are treated as private activity bonds if the issue of which those bonds are a\npart satisfy both the private business use test and the private security or payment test. The private\nbusiness use test is met if more than 10 percent of the proceeds of an issue are used in the trade or\nbusiness of a nongovernmental person (“private business use”). Under Treasury regulation section\n1.141-3, private business use can result from the use of the facilities financed by the issue,\nincluding as a result of a lease of such property to a nongovernmental person or a management\ncontract with respect to such property. The private security or payment test is generally met if the\npayment of the principal of, or the interest on, more than 10 percent of the proceeds of an issue is\n(under the terms of such issue or any underlying arrangement) directly or indirectly: (A) secured\nby any interest in property used or to be used for a private business use, or payments in respect of\nsuch property, or (B) to be derived from payments (whether or not to the issuer) in respect of\nproperty, or borrowed money, used or to be used for a private business use.\nUnder Treasury regulation section 1.141-3(b)(4), a management contract with respect to\nfinanced property may result in private business use of that property, based on all of the facts and\ncircumstances. The regulations provide that a management contract with respect to financed\nproperty generally results in private business use of that property if the contract provides for\ncompensation for services rendered with compensation based, in whole or in part, on a share of\nnet profits from the operation of the facility, or if the service provider is treated as the lessee or\nowner of financed property for federal income tax purposes.\nTreasury regulation section 1.141-3 defines a management contract as a management,\nservice, or incentive payment contract between a governmental person and a service provider\nunder which the service provider provides services involving all, a portion of, or any function of,\na facility. For example, a contract for the provision of management services for an entire hospital,\na contract for management services for a specific department of a hospital, and an incentive\npayment contract for physician services to patients of a hospital are each treated as a management\ncontract.\nIn Revenue Procedure 2017-13 (the “Revenue Procedure”) the Internal Revenue Service\nprovided a safe harbor under which a management contract can be treated as not resulting in private\nbusiness use. The Revenue Procedure refers to the governmental owner of the related facilities as\nthe “qualified user” and the manager or operator as the “service provider.” Under the Revenue\nProcedure, a management contract that satisfies the following conditions will not be treated as\nresulting in private business use:\n\nA-2'}, {'number': 332, 'text': 'CONFIDENTIAL\n(1) The payments to the service provider under the contract must be reasonable\ncompensation for services rendered during the term of the contract. “Compensation”\nincludes payments to reimburse actual and direct expenses paid by the service provider\nand related administrative overhead expenses of the service provider.\n(2) The contract must not provide to the service provider a share of net profits from the\noperation of the managed property. Compensation to the service provider will not be\ntreated as providing a share of net profits if no element of the compensation takes into\naccount, or is contingent upon, either the managed property’s net profits or both the\nmanaged property’s revenues and expenses (other than any reimbursements of direct\nand actual expenses paid by the service provider to unrelated third parties) for any fiscal\nperiod. For this purpose, the elements of the compensation are the eligibility for, the\namount of, and the timing of the payment of the compensation. Incentive compensation\nis not treated as providing a share of net profits if eligibility is determined by the service\nprovider’s performance in meeting one or more standards that measure quality of\nservices, performance or productivity.\n(3) The contract must not, in substance, impose upon the service provider the burden of\nbearing any share of net losses from the operation of the managed property.\n(4) The term of the contract, as of the beginning of the term of the contract, including all\nrenewal options must not be greater than the lesser of 30 years or 80 percent of the\nweighted average reasonably expected economic life of the managed property.\n(5) The qualified user must exercise a significant degree of control over the use of the\nmanaged property. This control requirement is met if the contract requires the qualified\nuser to approve the annual budget of the managed property, capital expenditures with\nrespect to the managed property, each disposition of property that is part of the\nmanaged property, rates charged for the use of the managed property, and the general\nnature and type of use of the managed property (for example, the type of services).\n(6) The qualified user must bear the risk of loss upon damage or destruction of the managed\nproperty (for example, due to force majeure).\n(7) The service provider must agree that it is not entitled to and will not take any tax\nposition that is inconsistent with being a service provider to the qualified user with\nrespect to the managed property. For example, the service provider must agree not to\nclaim any depreciation or amortization deduction, investment tax credit, or deduction\nfor any payment as rent with respect to the managed property.\n(8) The service provider must not have any role or relationship with the qualified user that,\nin effect, substantially limits the qualified user’s ability to exercise its rights under the\ncontract, based on all the facts and circumstances. A service provider will not be treated\nas having a role or relationship prohibited by this provision if: (a) no more than 20\npercent of the voting power of the governing body of the qualified user is vested in the\ndirectors, officers, shareholders, partners, members, and employees of the service\nprovider, in the aggregate; (b) the governing body of the qualified user does not include\n\nA-3'}, {'number': 333, 'text': 'CONFIDENTIAL\nthe chief executive officer of the service provider or the chairperson (or equivalent\nexecutive) of the service provider’s governing body; and (c) the chief executive officer\nof the service provider is not the chief executive officer of the qualified user or any of\nthe qualified user’s related parties.\nBased upon our review of the foregoing documents, and assuming the accuracy of the\ninformation and certifications, and compliance with the covenants, representations, and directions\nset forth therein, and assuming compliance with the terms of the Supplemental Agreement, we are\nof the opinion that neither the Supplemental Agreement nor any provision thereof, nor the\nperformance by each Party to the Supplemental Agreement of its respective obligations thereunder\n(including Operator’s administration of the System Contracts), adversely affects the exclusion\nfrom gross income of interest on the Existing Bonds of the Authority, its Affiliates or another\nGovernmental Body for federal income tax purposes under Section 103 of the Code.\nThis opinion is limited to the specific matter addressed herein and shall not be construed\nas confirming or restating the Approving Opinions. We have not been engaged to, nor have we\nundertaken to, determine whether the interest on the Existing Bonds continues to qualify as of this\ndate for exclusion from gross income for federal income tax purposes. Accordingly, we express\nno opinion on such matter.\nThis opinion is delivered as of the date hereof and relates solely to the Internal Revenue\nCode and Treasury regulations as in effect on the date hereof. We disclaim any obligation to\nadvise you or any other person of developments of law or fact covered by this opinion that may\noccur after the date hereof, including any amendments made subsequent to the date hereof to the\ndocuments described above. Furthermore, we express no opinion as to any federal, state or local\ntax law consequences with respect to the Existing Bonds, or the interest thereon, if any action is\ntaken with respect to the Supplemental Agreement or the proceeds thereof upon the advice or\napproval of other counsel.\n\nA-4'}, {'number': 334, 'text': 'CONFIDENTIAL\nThis opinion is being delivered by us as tax counsel to the FOMB in connection with the\nSupplemental Agreement and may not be relied upon by any other person, or used or reproduced\nfor any other purpose, without our prior written consent.\n\nSincerely,\n\nNixon Peabody LLP\n\nA-5'}, {'number': 335, 'text': 'CONFIDENTIAL\n\nExhibit B\nForm of Supplemental Agreement Reliance Letter\n\n_____, 2020\n\nPuerto Rico Transmission and Distribution System Supplemental Terms\nAgreement dated as of ____, 202_\n\nLadies and Gentlemen:\nIn connection with the execution of the Puerto Rico Transmission and Distribution System\nSupplemental Terms Agreement dated as of ____, 202_ by and among the Puerto Rico Electric\nPower Authority, the Puerto Rico Public-Private Partnerships Authority, ________, and _______\n(the “Supplemental Agreement”) we have delivered our final legal opinion relating to the impact\nof the Supplemental Agreement on the federal income tax status of interest on bonds issued by the\nAuthority, its Affiliates, and other Governmental Bodies (the “Bonds”), dated the date hereof and\naddressed to the Federal Oversight and Management Board. Capitalized terms not otherwise\ndefined herein shall have the meanings ascribed thereto in the Supplemental Agreement.\n\nB-1'}, {'number': 336, 'text': 'CONFIDENTIAL\nYou may rely on said opinion as though the same were addressed to you. No attorney-client\nrelationship has existed or exists between any addressee of this letter and our firm in connection\nwith the Supplemental Agreement or the Bonds or by virtue of this letter.\n\nVery truly yours,\n\nB-2'}]

example_4 = [{'number': 1, 'text': 'uut.uv1y1 I CIIVt:=IUJJt= IU. L,/"\\O"t:::,/ ou-r I/ L.-"tocu-:::,:::,00-.JOL.l\'\\l"\\"tO/"\\\\...tO/"\\U\n\n2022-00105\n24-2022-0105\n\nGOBIERNO DE PUERTO RICO\nDEPARTAMENTO DE HACIENDA\n\nCONTRATO DE SERVICIOS PROFESIONALES\n\nCOMPARECEN\n\nDE LA PRIMERA PARTE: El Departamento de Hacienda del Gobierno de Puerto\n\nRico, representado en este acto por Josue Cardona Hernandez, en su caracter de\nSecretario Auxiliar del Area de Administraci6n, mayor de edad, soltero y vecino de San\nJuan, Puerto Rico, autorizado en virtud de la Orden Administrativa 17-02 para\nrepresentar a la PRIMERA PARTE, en adelante denominado "DEPARTAMENTO DE\nHACIENDA".\nDE LA SEGUNDA PARTE: Evertec Group LLC, una compafifa de responsabilidad\n\nlimitada, con fines de lucro y debidamente organizada bajo las leyes del Gobierno de\nPuerto Rico, representada en este acto por Carlos J. Ramirez Padilla, en calidad de\nVicepresidente Ejecutivo, mayor de edad, casado y vecino de San Juan, Puerto Rico,\nsegun consta en el Certificado Unico de Proveedores emitido por la Administraci6n de\nServicios Generales ("ASG") con fecha de vigencia hasta el 4 de mayo de 2022 el cual la\nSEGUNDA PARTE certifica esta vigente a la fecha de la firma de este Contrato, de aquf\n\nen adelante denominado el CONTRATISTA.\nLa PRIMERA PARTE y SEGUNDA PARTE (en conjunto, "LAS PARTES"),\naseguran estar capacitadas para realizar este acto y otorgamiento, lo cual se comprometen\na acreditar cuando y donde fuere necesario, yen tal capacidad, libre y voluntariamente:\nEXPONEN\nPOR CUANTO: El DEPARTAMENTO DE HACIENDA, de conformidad con los\n\npoderes y facultades que le confiere la Constituci6n del Estado Libre Asociado de Puerto\nRico, segun enmendada, Art. IV, Sec. 6, Const. E.L.A, L.P.R.A., Torno 1, el Plan de\nReorganizaci6n Num. 3 de 1994, 3A L.P.R.A. Capftulo IXF y las !eyes fiscales que\nadministra, en particular la Ley 1-2011, segun enmendada, conocida como el "C6digo de\nRentas lnternas de Puerto Rico de 2011" (en adelante "C6digo de Rentas lnternas"), esta\n\n1'}, {'number': 2, 'text': 'UUt,.;U.:>1y1 I CIIVt:::IUf.Jt::: IU. L,/"\\OLf,:::1/ ou-r I/ L-qocu-:::1:::100-..JOLtv\\Lf,Q/"\\L,O/"\\U\n\n2022-00105\n24-2022-0105\n\nautorizado a contratar los servicios que sean necesarios y convenientes para realizar las\nactividades, programas y operaciones del DEPARTAMENTO DE HACIENDA y/o para\ncumplir con cualquier fin publico autorizado por ley.\nPOR CUANTO: La Ley 75-2019, conocida coma la "Ley de la Puerto Rico\n\nInnovation and Technology Service" (en adelante, "PRITS"), otorga a PRITS la\nresponsabilidad de evaluar los contratos de servicios y bienes relacionados a tecnologias\nde informa