TFOB9974 BIOCARBON FUND INITIATIVE FOR SUSTAINABLE FOREST LANDSCAPES First ERPA Phase Agreement Oromia Forested Landscape Program of the Federal Democratic Republic of Ethiopia between FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, AS TRUSTEE OF TRANCHE 3 OF THE BIOCARBON FUND OF THE BIOCARBON FUND INITIATIVE FOR SUSTAINABLE FOREST LANDSCAPES for ERPA Phase I (January 1, 2022 - December 31, 2024) under the BioCarbon Initiative for Sustainable Forest Landscapes ERPA Framework Agreement dated February 9, 2023 Dated: February 9, 2023 -1- TABLE OF CONTENTS ARTICLE I APPLICATION OF ERPA FRAMEWORK AGREEMENT AND GENERAL C O N D ITIO N S...................................................***........... ***... -. ---. -****........................................ .2 SECTION 1.01 APPLICATiON OF ERPA FRAMEWORK AGREEMENTAND GENERAL CONDITIONS..............................2 SECTION 1.02 INCONSISTENCY WITH ERPA FRAMEWORK AGREEMENT AND/OR GENERAL CONDITIONS............. 2 ARTICLE IL ERPA PHASE AGREEMENT AND ERPA FRAMEWORK AGREEMENT 2 ARTICLE III CONDITIONS OF EFFECTIVENESS OF SALE AND PURCHASE............2 SECTION 3.01 CONDITIONS OF EFFECTIVENESS TO BE FULFILLED.................................................- ..................- 2 SECTION 3.02 CONDITIONS FOR BENEFIT OF TRUSTEE .........................RUSTEE.. ...... .... ., . . - - .--.--...*2 ARTICLE IV CONTRACT ERS .................................................................................................3 ARTICLE V TRANSFER AND PAYMENT .............................................................................. 4 SECTION 5.01 ER TRANSFER, ER RE-TRANSFER AND PAYMENT..................................AM...T..................................4 SECTION 5.02 APPLICATION FOR PAYMENT YMEN4 ............................... ...........------.-...---..- 4.4 ARTICLE VI CALL OPTION .....................................................................................................4 SECTION 6.01 CALL OPTION SPECIFICATIONS..................................... ............................................................4 SECTION 6.02 CALL OPTION VOLUME AND EXERCISE PRICE......................................................... . . 5 ARTICLE VII DOCUMENTATION ........................................................................................ 6 ARTICLE VIIH TERM INATION ................................................................................................ 6 SCHEDULE 1 CONDITIONS OF EFFECTIVENESS OF SALE AND PURCHASE.......... 8 SCHEDULE 2 MINIMUM REPORTING PERIOD AMOUNTS........................................... 9 SCHEDULE 3 ISFL ER PROGRAM DOCUMENT ............................................................. 10 SCHEDULE 4 ER MONITORINGPLA N.............................................................................. 1 1 SCHEDULE 5 (ADVANCED DRAFT) BENEFIT SHARING PLAN.................................. 12 SCHEDULE 6 LETTER OF APPROVAL TEMPLATE....................................................... 13 .-..... BIOCARBON FUND INITIATIVE FOR SUSTAINABLE FOREST LANDSCAPES FIRST ERPA PHASE AGREEMENT ("ERPA Phase Agreement") PARTIES: FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA ("Program Entity"), REPRE- SENTED BY THE MINISTRY OF FINANCE and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("IBRD") IN ITS CAPACITY AS TRUSTEE ("Trustee") OF TRANCHE 3 OF THE BIOCARBON FUND ("BioCF T3") OF THE BIOCARBON FUND INITIATIVE FOR SUSTAINABLE FOREST LANDSCAPES ("ISFL") PURSUANT TO THE INSTRUMENT ESTABLISHING THE BIOCARBON FUND, AS AMENDED FROM TIME TO TIME ("Instrument"). RECITALS: A. Pursuant to the Instrument, the BioCarbon Fund was established to promote projects which demonstrate how agriculture, forestry and other land use activities (AFOLU) can generate Emission Reductions as well as measurable long term environmental and social benefits which can be measured, monitored and certified and contribute to the sustainable development of the Host Country. B. The ISFL ER Program is intended to be developed, implemented and operated in the Federal Democratic Republic of Ethiopia subject to a Letter of Approval to be issued by the Host Country. C. The Program Entity and the Trustee ("Parties") entered into the BioCarbon Initiative for Sustainable Forest Landscapes ERPA Framework Agreement dated February 9, 2023 ("ERPA Framework Agreement") to provide for framework terms under which certain amounts of Emission Reductions are to be generated, transferred and paid for with regard to the respective ERPA Phases. D. The Program Entity wishes to sell and the Trustee wishes to purchase and make payment for transferred Emission Reductions generated under the ISFL ER Program during this ERPA Phase upon the terms and conditions in the ERPA Framework Agreement, the General Conditions and this ERPA Phase Agreement. -1- NOW THEREFORE the Parties hereby agree as follows: Article I Application of ER-PA Framework Agreement and General Conditions Section 1.01 Application of ERPA Framework Agreement and General Conditions (a) The ERPA Framework Agreement and the IBRD's "General Conditions Applicable to ERPA Framework Agreements and ERPA Phase Agreements for BioCarbon Fund Initiative for Sustainable Forest Landscapes Emission Reductions Programs" dated May 31. 2021 ("General Conditions") set forth the terms and conditions applicable to this ERPA Phase Agreement. This ERPA Phase Agreement constitutes an integral part of the ERPA Framework Agreement. (b) Unless otherwise defined in this ERPA Phase Agreement, any capitalized terms in this ERPA Phase Agreement shall have the meaning ascribed to such terms in the ERPA Framework Agreement and the General Conditions. (c) Any reference made in this ERPA Phase Agreement to a specific Article or Section shall, unless expressly provided for otherwise, be deemed to be a reference to the corresponding Article or Section in this ERPA Phase Agreement. Section 1.02 Inconsistency with ERPA Framework Agreement and/or General Conditions If any provision of this ERPA Phase Agreement is inconsistent with a provision of the General Conditions or the ERPA Framework Agreement, the provision of this ERPA Phase Agreement shall prevail to the extent of such inconsistency. Article II ERPA Phase Agreement and ERPA Framework Agreement This ERPA Phase Agreement supplements the ERPA Framework Agreement as it specifies the terms under which certain amounts of Emission Reductions are to be generated, transferred and paid for with regard to this ERPA Phase. Article HI Conditions of Effectiveness of Sale and Purchase Section 3.01 Conditions of Effectiveness to be fulfilled The obligations to sell and purchase Emission Reductions generated during this ERPA Phase in the ERPA will not take effect until all of the conditions included in Schedule I to this ERPA Phase Agreement ("Conditions of Effectiveness"), in form and substance satisfactory to the Trustee, have been fulfilled. Section 3.02 Conditions for benefit of Trustee The Conditions of Effectiveness are for the benefit of, and may only be waived or deferred by, the Trustee. -2- Section 3.03 Termination ofERPA Framework Agreement and ERPA Phase Agreement (a) If any of the Conditions of Effectiveness have not been fulfilled by the Program Entity within twelve (12) months from the date of this ERPA Phase Agreement, as may be extended by the Trustee in accordance with 0 below ("Conditions Fulfillment Date"), the Trustee may, at its discretion: (i) extend the Conditions Fulfillment Date and, possibly, reduce the Indicative Total ERPA Value and the Indicative Contract ER Volume specified in the ERPA Framework Agreement as well as the ERPA Phase Amount and the Minimum Reporting Period Amount(s) specified in this ERPA Phase Agreement by the amount of Emission Reductions that, in the Trustee's reasonable opinion, can no longer be expected to be generated and transferred during this ERPA Phase due to the delay in the Conditions Fulfillment Date; or (ii) terminate this ERPA Phase Agreement and the ERPA Framework Agreement by written notice to the Program Entity. Article IV Contract ERs (a) ERPA Phase: This ERPA Phase Agreement covers the ERPA Phase from January 1, 2022 - December 31, 2024. (b) ERPA Phase Amount: The first 1,807,229 ERs generated under the ISFL ER Program during this ERPA Phase as Contract ERs and to be transferred and paid for in accordance with the sale and purchase provisions under this ERPA Phase Agreement and the ERPA Framework Agreement. (c) Reporting Periods, See Schedule 2 to this ERPA Phase Agreement Minimum Reporting Period Amounts: (d) Unit Price: (i) A price of USD 7 for each Contract ER that is transferred to the Trustee and to be retransferred to the Program Entity to be used by the Host Country against its Nationally Determined Contributions under the Paris Agreement, if possible ("Unit Price 1"). The Unit Price I applies to 35% of Contract ERs generated during this ERPA Phase. (ii) A price of USD 9 for each Contract ER that is transferred to the Trustee and to be retained by the Trustee on behalf of BioCF T3 Participants ("Unit Price 2"), subject to Section 3.02(c) of the ERPA Framework Agreement. The Unit Price 2 applies to 65% of Contract ERs generated during this ERPA Phase. -3- The above Unit Prices are subject to Sections 3.02(b) and (c) of the ERPA Framework Agreement. Article V Transfer and Payment Section 5.01 ER Transfer, ER Re-Transfer and Payment The ER Transfer, ER Re-Transfer and payment fot Contract ERs and Additional ERs is subject to Article III of the ERPA Framework Agreement and Article V of the General Conditions. Section 5.02 Application for Payment (a) Subject to Section 3.05 of the Framework Agreement, the Program Entity may apply for Periodic Payments, in accordance with the terms of this ERPA Phase Agreement and the Disbursement and Financial Information Letter, to finance eligible expenditures consisting of payments for transferred Contract ERs under this ERPA Phase Agreement in the maximum amount specified and, if applicable, up to the percentage set forth against the category of the following table: Category Maximum Percentage of expenditures to be allocated amount** financed (exclusive ofTaxes)*** (1) Transferred Contract ERs* USD 15,000,000 100% Total Amount USD 15,000,000 100% * For the avoidance of doubt, no payment will be made for Contract ERs generated but not transferred prior to the date of this ERPA Phase Agreement. * This maximum amount is the total value of the ERPA Phase Amount contracted for under this ERPA Phase Agreement (ie. 632,530 Contract ERs X Unit Price I plus 1.174,699 Contract ERs X Unit Price 2), subject to the actual Contract ER amounts generated and transferred in accordance with the terms of this ERPA Phase Agreement. * For the avoidance of doubt, any Taxes, if applicable, shall be borne by each Party in accordance with Section 5.04(b) of the General Conditions. (b) In addition, in the event that the Trustee exercises a Call Option under Article VI, the Program Entity may apply for Periodic Payments for such amount of transferred Additional ERs for which the Call Option has been exercised. For the avoidance of doubt, in the event that the Trustee exercises a Call Option, the table in paragraph (a) above may be amended to include the allocated amount for such Additional ERs. (c) Any time period provided for in this ERPA Phase Agreement, the Framework Agreement or the General Conditions for such payment to become due shall not start running before such Application for Payment has been submitted by the Program Entity. Article VI Call Option Section 6.01 Call Option Specifications (a) The Grantee is: Trustee -4- (b) The Grantor is: Program Entity Section 6.02 Call Option Volume and Exercise Price (a) The Additional ERs are: In the event that the ISFL ER Program generates in a Reporting Period ERs in excess of the ERPA Phase Amount the Parties agree to grant the Grantee a Call Option to purchase such additional ERs ("Additional ERs"), subject to Aricle IV of the ERPA Framework Agreement. Subject to the Maximum Call Option Volume (see below), the Grantee may exercise the Call Option for all or part of the Additional ERs. (b) Maximum Call Option 558,333 Additional ERs generated by the ISFL ER Program during Volume is: the ERPA Phase after the ERPA Phase Amount has been generated by the ISFL ER Program during the ERPA Phase in full. (c) Exercise Price is: (i) A price of USD 7 for each Additional ER that is transferred to the Trustee and to be retransferred to the Program Entity to be used by the Host Country against its Nationally Determined Contributions under the Paris Agreement, if possible ("Exercise Price 1"). The Exercise Price 1 applies to 35% of Additional ERs generated during this ERPA Phase. (ii) A price of USD 9 for each Additional ER that is transferred to the Trustee and to be retained by the Trustee on behalf of BioCF T3 Participants ("Exercise Price 2"). The Exercise Price 2 applies to 65% of Additional ERs generated during this ERPA Phase. The above Exercise Prices are subject to Sections 3.02(b) and (c) of the ERPA Framework Agreement. (d) Exercise Period: Subject to Sections 3.02(b) and (c) of the ERPA Framework Agreement, the Trustee must notify the Program Entity of its decision to exercise the Call Option ("Exercise Notice") within the later of (i) sixty (60) calendar days following receipt of a final Verification Report for a Reporting Period indicating that Additional ERs have been generated under the ISFL ER Program in a Reporting Period of this ERPAPhase or (ii) thirty (30) calendar days following receipt of a Third Party Offer under Section 3.02(b) of the ERPA Framework Agreement, if applicable. -5- (e) Exercise Completion Ninety (90) calendar days following receipt by the Grantor of the Date is: Exercise Notice. The transfer and payment for Additional ERs is subject to Sections 3.02 and 3.03 of the ERPA Framework Agreement. (f) Increase of Maximum In the event that the Maximum Option Volume is increased by the Option Volume: Trustee under Sections 12.02(c) and/or 15.03 of the General Conditions, the Grantee may exercise the portion of the Call Option increased due to the exercise of the remedies first before it exercises the portion of the Call Option granted under Section 6.02(a). For the avoidance of doubt, the Exercise Price payable for the Additional ERs increased due to the exercise of the remedies will be the Unit Price (applying the percentages for the different Unit Price modalities specified in this ERPA Phase Agreement). Article VII Documentation In accordance with the terms of the ERPA Framework Agreement, the Program Entity has provided the ISFL ER Program Document (see Schedule 3), the ER Monitoring Plan (see Schedule 4) and the (advanced draft) Benefit Sharing Plan (see Schedule 5), in form and substance satisfactory to the Trustee, to be applied under the ERPA Framework Agreement and this ERPA Phase Agreement during this ERPA Phase. Article VIII Termination Unless terminated earlier in accordance with Section 6.01 of the ERPA Framework Agreement, the General Conditions or this ERPA Phase Agreement, this ERPA Phase Agreement shall terminate upon the generation of the ERPA Phase Amount and any Additional ERs, if any, under this ERPA Phase Agreement, the payment of Periodic Payments in respect thereof, and the repayment of any yet unrecovered and outstanding Taxes, if applicable, subject to the survival of provisions as identified in Section 17.11 of the General Conditions, but in any event by no later than twelve (12) months following the end of this ERPA Phase (December 31, 2025). -6- IN WITNESS WHEREOF, the Parties hereto have caused this ERPA Phase Agreement to be duly executed as of the date first above written. FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA, REPRESENTED BY THE MI ISTRY OF FINANCE By: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Title: ________________________ INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT, AS TRUSTEE OF TRANCHE 3 OF THE BIOCARBON FUND By: bo5m&nc- Oovq7 Tidle: cc A nc'c&±Ak' 'A 5dav SC0vtt V-A V' -7- SCHEDULE 1 CONDITIONS OF EFFECTIVENESS OF SALE AND PURCHASE (1) Submission of a Letter of Approval; (2) Submission of a final Benefit Sharing Plan for this ERPA Phase which, based on the advanced draft version of the Benefit Sharing Plan provided by the date of this ERPA Phase Agreement, takes into account specific guidance to be provided by the Trustee, following consultations with BioCF T3 Participants, on the outstanding issues that need further clarification in the final version of the Benefit Sharing Plan, as may be updated from time to time with prior agreement of the Trustee; (3) Submission of a letter confirming the application of the ISL Buffer, the ISFL Buffer Requirements and the Registry; (4) Submission of copies of one or more executed Sub-Project Arrangement(s) between the Program Entity and the Sub-Project Entities required to implement the ISFL ER Program during this ERPA Phase; and (5) Submission of evidence demonstrating the Program Entity's ability to transfer Title to ERs for this ERPA Phase, free of any interest, Encumbrance or claim of a Third Party. SCHEDULE 2 MINIMUM REPORTING PERIOD AMOUNTS ERPA Phase 1 (January 1, 2022 - December 31, 2024) Reporting Period Minimum Reporting Period Cumulative Amount of Contract Amount of Contract ERs to be ERs to be generated by the end generated in this Reporting Period of this Reporting Period and and subsequently transferred in subsequently transferred in accordance with the ERPA accordance with the ERPA January 1, 2022 -1,204,819 1,204,819 December 31, 2023 January 1, 2024 - 602,410 1,807,229 December 31, 2024 -9- SCHEDULE 3 ISFL ER PROGRAM DOCUMENT [INSERTED THROUGH REFERENCE] - 10 - SCHEDULE 4 ER MONITORING PLAN [INSERTED THROUGH REFERENCEI - 11 - SCHEDULE 5 (ADVANCED DRAFT) BENEFIT SHARING PLAN [INSERTED THROUGH REFERENCE] -12- SCHEDULE 6 LETTER OF APPROVAL TEMPLATE [LETTER HEAD OF APPROVING ENTITYJ To: International'Bank for Reconstruction and Development acting as Trustee of the BioCF T3 [place, date] Dear [__, Ref: Oromia Forested Landscape Program of the Federal Democratic Republic of Ethiopia 1. I wish to refer to the request by the [Program Entity] that the above mentioned [Name ofISFL ER Program] (ISFL ER Program) be considered for funding by Tranche'3 of the BioCarbon Fund (BioCF T3) under the BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL), administered as a trust fund by the International Bank for Reconstruction and Development (IBRD)[, during the ERPA Phase from [INSERT DATE] to [INSERT DATE]]. 2. As authorized representative of the designated national authority of [Host Country] I hereby: (a) endorse the further development of the ISFL ER Program and approve this ISFL ER Program to being implemented in [Host Country]; and (b) approve and authorize the voluntary participation of the [Host Country], the IBRD as trustee of the BioCF T3, the BioCF T3 participants, and the [Program Entitylin the ISFL ER Program. 3. By this endorsement and approval [Host Country] is committing itself to facilitate and render such assistance as may be necessary in any iotential future process related to ISFL ER Program registration as well as verification and transfer to the BioCF T3 of greenhouse gas emission reductions generated by the ISFL ER Program. 4. [Host Country] also confirms that the jProgram EntityJ is authorized to enter into project agreements with regard to the ISFL ER Program, which may include the transfer of and payment for greenhouse gas emission reductions generated by the ISFL ER Program. 5. This letter of approval is done in two originals in the [English] language. Sincerely By Authorized Representative of the [Name ofauthorized entity] [Name of Signatory] [Title] - 13 -