HomeMy WebLinkAboutAppendix 3 - CEA FIW PPAExecution Version
POWER PURCHASE AGREEMENT
by and between
FIRE ISLAND WIND, LLC,
as Seller
and
CHUGACH ELECTRIC; ASSOCIATION, INC.
as Buyer
Dated as of June-2/, 2011
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS............................................................................................................2
1.1 Definitions......................................................................................................................2
1.2 Rules of Construction....................................................................................................9
ARTICLE 2 CONDITIONS PRECEDENT..................................................................................10
2.1 Buyer's Conditions Precedent......................................................................................10
2.2 Buyer's Right to Terminate.........................................................................................10
2.3 Seller's Conditions Precedent......................................................................................10
ARTICLE3 TERM........................................................................................................................11
3.1 Term............................................................................................................................. I I
ARTICLE 4 DEVELOPMENT AND OPERATION OF THE PROJECT...................................11
4.1 Project..........................................................................................................................11
4.2 Buyer's Rights and Obligations During Construction.................................................12
4.3 Commercial Operation Date........................................................................................12
4.4 Standard of Operation..................................................................................................12
4.5 Outages........................................................................................................................12
4.6 Metering.......................................................................................................................13
4.7 Ramp Rate....................................................................................................................14
ARTICLE 5 PURCHASE OF ENERGY BY BUYER.................................................................14
5.1
Sale and Purchase Obligations.....................................................................................14
5.2
Deliveries.....................................................................................................................14
5.3
Green-e Standard.........................................................................................................14
5.4
Renewable Portfolio Standard.....................................................................................14
5.5
Contract Price...............................................................................................................14
5.6
Curtailments.................................................................................................................14
5.7
Prices Not Subject to Review......................................................................................15
5.8
Title and Risk of Loss..................................................................................................15
5.9
Transmission and Ancillary Services...........................................................................15
5.10
Taxes............................................................................................................................16
5.11
System Supply Energy.................................................................................................16
5.12
Scheduling/Forecasts...................................................................................................16
5.13
Failure to Achieve Guaranteed 24-Month Quantity....................................................17
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.........................................................17
6.1 Representations and Warranties...................................................................................17
6.2 No Other Representations and Warranties...................................................................18
ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES; TERMINATION .............................18
7.1 Events of Default.........................................................................................................18
7.2 Termination Upon an Event of Default.......................................................................19
TABLE OF CONTENTS
(Continued)
ARTICLE 8 BILLING AND PAYMENT; RECORDS................................................................20
8.1 Billing and Payment.....................................................................................................20
8.2 Interest on Late Payments............................................................................................20
8.3 Disputed Amounts.......................................................................................................20
8.4 Records........................................................................................................................21
8.5 Audit............................................................................................................................21
ARTICLE 9 ASSIGNMENT; BINDING EFFECT......................................................................21
9.1
Assignment..................................................................................................................21
9.2
Change in Control........................................................................................................22
9.3
Binding Effect..............................................................................................................22
ARTICLE 10 FORCE MAJEURE; INDEMNITY; LIMITATION OF LIABILITY ...................22
10.1
Force Majeure..............................................................................................................22
10.2
Applicability of Force Majeure....................................................................................23
10.3
Limitations on Effect of Force Majeure.......................................................................23
10.4
Indemnification............................................................................................................23
10.5
Limitations of Remedies, Liability and Damages........................................................
10.6
Duty to Mitigate...........................................................................................................25
ARTICLE 11 CONFIDENTIALITY.............................................................................................25
11.1
Confidentiality.............................................................................................................25
11.2
Disclosure....................................................................................................................25
11.3
Injunctive Relief ..........................................................................................................25
ARTICLE12 SECURITY.............................................................................................................25
12.1
Security........................................................................................................................25
ARTICLE 13 NOTICES AND ADDRESSES FOR PAYMENT.................................................26
13.1
Notices.........................................................................................................................26
ARTICLE14 DISPUTES..............................................................................................................27
14.1 Negotiations.................................................................................................................27
14.2 Settlement Discussions................................................................................................27
14.3 Preliminary Injunctive Relief.......................................................................................28
14.4 Confidential Proceedings.............................................................................................28
ARTICLE 15 MISCELLANEOUS...............................................................................................28
15.1 Grants and Incentives...................................................................................................28
15.2 Forward Contract.........................................................................................................28
15.3 Entirety.........................................................................................................................28
15.4 Choice of Law and Forum...........................................................................................28
15.5 Non-Waiver..................................................................................................................28
ii
TABLE OF CONTENTS
(Continued)
Page
15.6 Headings; Attachments................................................................................................28
15.7 Counterparts.................................................................................................................29
15.8 Partial Invalidity...........................................................................................................29
15.9 Other............................................................................................................................29
15.10 Insurance......................................................................................................................29
15.11 No Third Party Beneficiaries.......................................................................................29
15.12 Relationship of the Parties...........................................................................................29
Exhibits
Exhibit A
Project Description
Exhibit B
Seller's Insurance Requirements
Exhibit C
Form of Commercial Operation Certificate
Exhibit D
Notice Addresses
Exhibit E
Construction Schedule
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POWER PURCHASE AGREEMENT
This POWER PURCHASE AGREEMENT is entered into as of the day of June,
2011 (the "Effective Date"), by and between FIRE ISLAND WIND, LLC, a Delaware limited
liability company ("Seller"), and CHUGACH ELECTRIC ASSOCIATION, INC., an Alaska
electric cooperative ("Buyer"), each of which are herein sometimes referred to individually as a
"Party" and collectively as the "Parties."
RECITALS
A. Seller desires to build a wind generation facility known as the "Fire Island Wind
Project," which will include eleven (11) General Electric 1.6xle wind turbine generators (or a
comparable successor model), with a total nameplate output capability of seventeen and six
tenths (17.6) MW, to be located on the Premises (as defined herein) and further described in
Exhibit A hereto (the "Project").
B. Transmission System Owner and Seller or an Affiliate of Seller will enter into a
Transmission Facilities Construction Agreement ("Transmission Construction Agreement")
pursuant to which Seller or an Affiliate of Seller will construct, and Transmission System Owner
will own, the AIA-FI Transmission System (as defined herein).
C. Transmission System Owner and Seller will enter into an Interconnection and
Integration Agreement, which shall set forth the terms and conditions with respect to the
interconnection and integration of the Project with the Transmission System (the
"Interconnection and Integration Agreement").
D. Seller has agreed to commit one hundred percent (100%) of the electric energy
output of the Project and the associated Project Capacity and Credits (as defined herein) to be
sold pursuant to the terms of this Agreement to Buyer, with the understanding that between ten
and one half percent (10.5%) and eighteen percent (18%) of the electric energy output of the
Project and the associated Project Capacity and Credits shall be assigned to a qualified purchaser
other than Buyer as described herein.
E. Buyer wishes to purchase its share and assign the remainder, and Seller wishes to
sell, the Net Electric Energy (as defined herein) and associated Project Capacity and Credits
from the Project in accordance with the terms hereof.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer agree as follows:
1
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below. Certain other capitalized terms are defined where they
appear in this Agreement.
"Affiliate" means any Person that directly or indirectly, through one of more
intermediaries, controls or is controlled by or is under common control with the Person specified.
For purposes of this definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by contract or
otherwise, or ownership of fifty percent (50%) or more of the voting securities or interests of
another Person.
"Agreement" means this Power Purchase Agreement, together with all exhibits and
appendices hereto.
"AIA-FI Transmission System" means the 34.5 kV transmission system, including two
(2) submarine circuits and two (2) land -based circuits, between the Transmission System
Owner's International Substation and the Delivery Point.
"ASCC Planning and Operating Guidelines" means the Alaska Systems Coordinating
Council Planning Guidelines and Operating Standards, dated 1992, as such may be amended,
modified, and replaced from time to time.
"Business Day" means any day on which banks in Alaska are open for business,
beginning at 8:00 a.m. and ending at 5:00 p.m. local time in Anchorage, Alaska.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
"Buyer's Guaranty" means a guaranty, in form and substance reasonably satisfactory to
Seller, from a Qualified Issuer or other guarantor reasonably satisfactory to Seller, in favor of
Seller, which guarantees Buyer's performance and payment obligations under this Agreement,
which is capped at the Required Security Amount or which in combination with any other form
of Buyer Security equals an amount equal to the Required Security Amount.
"Buyer's Security" means, with respect to .Buyer:
(a) a letter of credit from a Qualified Issuer in form and substance reasonably
satisfactory to Seller in a face amount equal to the Required Security Amount;
(b) cash (in immediately available funds) in the Required Security Amount,
which cash must be delivered to a Custodian to be held by the Custodian as security for Seller
pursuant to an escrow agreement reasonably satisfactory in form and substance to the Parties;
(c) Buyer's Guaranty; or
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(d) a combination of any of the above that provides security to Seller in a total
amount equal to the Required Security Amount.
"Cash Grant" means the grants pursuant to Section 1603 of the American Recovery and
Reinvestment Act of 2009, Pub. L. 111-5.
"Change in Control" means, solely with respect to Seller: (i) a transfer of a majority of
the ownership interests in Seller to an unaffiliated third party; or (ii) any consolidation or merger
of Seller in which Seller is not the continuing or surviving entity, other than a consolidation or
merger of an entity in which the holder of such entity's membership interests immediately before
the consolidation or merger shall, upon consummation of the consolidation or merger, owns at
least fifty percent (50%) of the equity of the surviving entity. A Change of Control shall not be
deemed to have occurred as a result of any financing of the Facility by Affiliates of Seller or a
non -controlling equity investment in Seller.
"CIRI" means Cook Inlet Region, Inc.
"Close of the Business Day" means 5:00 p.m. local time in Anchorage, Alaska on a
Business Day.
"Commercial Operation" means, with respect to any Project Turbine: (i) such Project
Turbine has been interconnected and Placed in Service with a written confirmation from a
qualified independent engineer, (ii) the Interconnection and Integration Agreement has been
executed, (iii) such Project Turbine has been tested according to the manufacturer's
commissioning procedures and Prudent Wind Generation Industry Practices, (iv) all related
facilities and rights necessary for continuous operation of such Project Turbine and the sale of
Net Electric Energy from such Project Turbine and the associated Project Capacity and Credits
have been completed, and (v) and each of the foregoing items (i)-(iv) have been evidenced by
Seller's Commercial Operation Certificate delivered to Buyer.
"Commercial Operation Certificate" means the certificate(s) substantially in the form
attached hereto as Exhibit C submitted to Buyer pursuant to Section 4.3 when Seller determines a
Project Turbine has achieved Commercial Operation.
"Commercial Operation Date" means, in accordance with Section 4.3, the earlier of (i)
the first calendar day following receipt by Buyer of notice from Seller that at least nine (9) of
the Project Turbines have achieved Commercial Operation, or (ii) December 31, 2012.
"Compensable Deemed Generated Energy" means all Deemed Generated Energy that
accrues during Emergency Curtailments and Operational Curtailments, but not Force Majeure
Curtailments.
"Confidential Business Information" shall have the meaning set forth in Section 11.1.
"Construction Schedule" means the construction schedule attached as Exhibit E hereto,
which Seller may update from time to time by notice thereof to Buyer.
"Contract Price" shall mean One Hundred Seven Dollars and 85/100th Dollars ($107.85)
per MWh.
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"Contract Year" means (i) for the first Contract Year, the period beginning on the
Commercial Operation Date and ending on the following December 31, (ii) for every subsequent
Contract Year (except the last Contract Year), each year beginning on January 1 and ending on
December 31, and (iii) for the last Contract Year, the period beginning on January 1 of the last
year of the Term and ending on the date of expiration or termination of the Agreement.
"Credits" means any credits, credit certificates, environmental air quality credits, offsets,
allowances or similar items such as those for greenhouse gas reduction, or the generation of
green power or renewable energy, as well as any renewable energy credits (RECs) certified
under the Green-e Standard, tradable generation rights (TGRs), pollution/emission credits or
other associated benefits, in each case created and defined by a Governmental Entity and
associated with Net Electric Energy, but specifically excluding (i) any Tax Credits, or (ii) any
credits otherwise qualifying under this definition that are not transferable by Seller to Buyer, that
would require Seller to incur material transaction costs in order to transfer them, unless Buyer
pays or reimburses such costs, or that would require Seller to change the operation of the Project
in order to realize such credit, or (iii) any credits that are solely available to a wind energy
facility located on real property owned by a Native American entity, unless any such Credit
described in this clause (iii) is the only Credit available for any MWh of Net Electric Energy.
One (1) Credit is associated with one (1) MWh of Net Electric Energy.
"Curtailment" means an Operational Curtailment, Emergency Curtailment or Force
Majeure Curtailment.
"Custodian" means an institutional bank or other Person mutually agreeable to the
Parties.
"Deemed Generated Energy" means the quantity of electric energy, expressed in MWh,
that would have been produced by the Project and delivered to the Delivery Point during any
period, determined by taking into account (i) during such period, the actual 10-minute wind
speeds (interpolated over time intervals, if necessary) measured by wind monitoring equipment
located on each Project Turbine that was available for operation immediately prior to the
commencement of the period in question and expected to be available for the duration of the
period in question or prorated accordingly, or, if such monitoring equipment is unavailable
during a relevant interval, then using other available data or interpolated data determined using
industry standard practices, and (ii) the generation determined by the power curve provided by
the manufacturer of the Project Turbines reflecting the energy that would be produced by a
Project Turbine at all operational speeds, as applied to the wind speeds referred to in clause (i),
as adjusted for line losses to the Delivery Point, using historical data compiled by Seller.
"Defending Party" shall have the meaning set forth in Section 10.4(c).
"Delivery .Point" means the point where the Project is interconnected with the
Transmission System at the high side of the Project collector 34.5 kV bus on Fire Island, Alaska.
"Dispute" shall have the meaning set forth in Section 14.1.
"Dispute Notice" shall have the meaning set forth in Section 14.1.
G!
"Effective Date" shall have the meaning set forth in the preamble to this Agreement.
"Emergency" means any circumstance or combination of circumstances or any condition
affecting the Interconnection Facilities or the Transmission System (i) reasonably likely to
endanger life or property and necessitates immediate action to avert injury to persons or serious
damage to property, or (ii) reasonably likely to adversely affect, degrade or impair Transmission
System reliability.
"Emergency Curtailment" means any curtailments of all or part of Seller's deliveries of
Net Electric Energy directed by Buyer due to an Emergency to (i) preserve public health and
safety, (ii) preserve the reliability or security of, and avoid adverse impacts to, the Transmission
System or Interconnection Facilities, (iii) limit or prevent damage, and (iv) expedite restoration
of service.
"Financial Closing" means the closing of construction financing provided to, or for the
benefit of, Seller for the Project.
"Force Majeure" shall have the meaning set forth in Section 10.1
"Force Majeure Curtailment" means a curtailment of all or part of Seller's deliveries of
Net Electric Energy directed by Buyer due to a Force Majeure that causes Buyer to be unable to
receive the Net Electric Energy at the Delivery Point.
"Forced Outage" means any condition at the Project that requires immediate removal of
the Project, or some part thereof, from service, another outage state, or a reserve shutdown state.
This type of outage results from immediate mechanical/electrical/bydraulic control system trips
and operator -initiated trips in response to Project conditions and/or alarms.
"Governmental Entity" means any national, state or local government, any political
subdivision thereof or any other governmental, judicial, public or statutory instrumentality,
authority, board, commission, department, division, body, agency, bureau or entity, any of which
has the authority to bind a Party at Law.
"Green-e Standard" shall have the meaning set forth in Section 5.3.
"Guaranteed 24-Month uantit " means, for each Two -Contract Year Period, one
hundred fifty percent (150%) of the combined P50 Output for such Two -Contract Year Period.
"Guaranty" means (i) with respect to Buyer, a Buyer's Guaranty, and (ii) with respect to
Seller, a Seller's Guaranty.
"Indemnified Party" shall have the meaning set forth in Section 10.4(c).
"Indemnifying Party" shall have the meaning set forth in Section 10.4(c).
"Interconnection and Inte ration Agreement" shall have the meaning set forth in the
Recitals.
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"Interest Rate" means, on any date of determination, the (i) per annum rate of interest
equal to the prime lending rate as may from time to time be published in The Wall Street Journal
under "Money Rates" (the average thereof, if there is a range of such rates) as of such date of
determination, plus (ii) three percent (3%); provided, that the Interest Rate shall never exceed the
maximum rate permitted by Law.
'W" means kilovolt.
"Law" means all applicable laws and treaties, judgments, decrees, injunctions, writs and
orders of any court or Governmental Entity, and rules, regulations, orders, ordinances, licenses
and permits of any Governmental Entity.
"Liabilities" shall have the meaning set forth in Section 10.4(a).
"Maintenance Outage" means the removal of the Project or any portion thereof from
service to perform work on specific components, that will result in an interruption in delivery of
Net Electric Energy to Buyer, at a time when the Project or any such portion must be removed
from service before the next Planned Outage in the interest of safety or the prevention of injury
or undue wear and tear on the Project or such portion thereof.
"Material Event" shall have the meaning set forth in Section 12.1(d).
"Month" means one calendar month.
"Moody's" means Moody's Investor Services, Inc., and any successor thereto.
"MW" means megawatt.
"MWh" means megawatt -hour.
"Net Electric Energy" means the electric energy generated by the Project Turbines by
means of wind generation, delivered to the Delivery Point, excluding electric energy used in the
operation of the Project and excluding electrical losses up to the Delivery Point.
"NERC" means North American Electric Reliability Corporation.
"Non-Detending Party" shall have the meaning set forth in Section 10.4(c).
"Obligee" shall have the meaning set forth in Section 12.1(c).
"Obligor" shall have the meaning set forth in Section 12.1(c).
"Operating Procedures" means the protocols and procedures agreed to by the Parties prior
to the Commercial Operation Date for the nature and extent of information to be supplied to
Buyer by Seller in connection with the scheduling of the Project and the procedures for
scheduling and Curtailment of the Project.
C•i
"Operational Curtailment" means any curtailment directed by Buyer of all or part of
Seller's deliveries of Net Electric Energy, except for a Force Majeure Curtailment or an
Emergency Curtailment.
"P50 Output" means the amount of Net Electric Energy expected to be available for
delivery to the Delivery Point during the applicable Contract Year, with a probability of
exceedence of 50%, as calculated by a recognized wind expert to be selected by Seller, and
established as of the Commercial Operation Date and updated as of the date of Commercial
Operation of the last remaining Project Turbine.
"Party" shall have the meaning set forth in the preamble to this Agreement.
"Person" means any individual, entity, corporation, general or limited partnership, limited
liability company, joint venture, estate, trust, association or other entity or Governmental Entity.
"Placed in Service" means "placed in service" as defined in Section 45 of the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder.
"Planned Outage" means the removal of the Project from service to perform work on
specific components that will result in an interruption in delivery of Net Electric Energy to Buyer
(e.g., for annual overhaul, inspections or testing).
"Premises" means that certain real property located on Fire Island in Anchorage, Alaska,
as more particularly described on Exhibit A hereto, on which the Project Turbines will be
installed.
"Production Tax Credit" or "PTC" means the per kWh tax credit available to eligible
wind generators under Section 45 of the Internal Revenue Code of 1986.
"Project" shall have the meaning set forth in the Recitals hereto as described in
Exhibit A.
"Project Capacity" means the total nameplate power output capability of the Project,
expressed in MW.
"Project Turbines" means, collectively, the eleven (11) General Electric 1.6xle wind
turbine generators (or a comparable successor model), to be installed on the Premises, each with
the following GE -provided packages: (i) Cold Weather Extreme; (ii) Seismic towers, (iii) Inertia
Control, (iv) WindCONTROL, (v) WindRide-THRU, (vi) Voltage Control, and (vii) Ramp rate
control.
"Prudent Wind Generation Industry Practices" means the practices, methods, and acts
engaged in or approved by a significant portion of the wind energy generation industry for wind
facilities similar to the Project and in a similar location and with wind characteristics similar to
the Project that, at a particular time, in the exercise of reasonable judgment in light of the facts
known or that should reasonably have been known at the time a decision was made, would have
been expected to accomplish the desired result in a manner consistent with Law, codes,
standards, equipment manufacturers' recommendations, reliability, safety, environmental
VA
protection, economy, and expedition. With respect to the Project, Prudent Wind Generation
Industry Practices is not intended to be limited to the optimum practice, method or act to the
exclusion of all others, but rather to be a spectrum of possible practices, methods or acts.
"Qualified Issuer" means a financial institution either organized under the laws of the
United States or a State therein or a United States branch of a foreign financial institution, in
each case, that has a current long-term credit rating (corporate or tong -term senior unsecured
debt) of (1) "Baa3" or higher by Moody's; and (2) `BBB-" or higher by S&P.
"RCA" means the Regulatory Commission of Alaska.
"RCA Approval" means a final and non -appealable order by the RCA without material
modification or conditions.
"Required Security Amount" means, (i) with respect to Seller's Security, (A) prior to
January 1, 2013, Five Hundred Thousand Dollars ($500,000), and (B) from January 1, 2013,
until the expiration or termination of this Agreement, One Million Dollars ($1,000,000), and
(ii) with respect to Buyer's Security, if Buyer's credit rating (corporate or long-term senior
unsecured debt) is below BBB- by Standard & Poor's or Baa3 by Moody's, One Million Dollars
($1,000,000).
"RPS" shall have the meaning set forth in Section 5.4.
"S&P" means Standard & Poor's Ratings Group (a division of The McGraw-Hill
Companies, Inc.), and any successor thereto.
"Security" means, (i) with respect to Buyer, Buyer's Security, and (ii) with respect to
Seller, Seller's Security.
"Seller" shall have the meaning set forth in the preamble to this Agreement.
"Seller's Guaranty" means a guaranty, in form and substance reasonably satisfactory to
Buyer, from a Qualified Issuer or other guarantor reasonably satisfactory to Buyer, in favor of
Buyer, which guarantees the payment and performance obligations of Seller, which is capped at
the Required Security Amount.
"Seller's Security" means, with respect to Seller:
(a) a letter of credit in form and substance reasonably satisfactory to Buyer in
a face amount equal to the Required Security Amount;
(b) cash (in immediately available funds) in the Required Security Amount,
which cash must be delivered to a Custodian to be held by the Custodian as security for Buyer
pursuant to an escrow agreement reasonably satisfactory in form and substance to the Parties;
(c) Seller's Guaranty; or
8
(d) a combination of any of the above that provides security to Buyer in a total
amount equal to the Required Security Amount.
"Tax Credits" means any state, local and federal production tax credit, tax deduction, and
investment tax credit specific to the production of renewable energy, including the PTC and
including any credits available to Seller as a result of the Project being owned by a Native
American entity or located on real property owned by a Native American entity.
"Term" shall have the meaning set forth in Section 3.1.
"Test Enemy" means all of the electric energy generated by each Turbine prior to the
Commercial Operation Date by means of wind generation as a result of the (i) initial
commissioning of any Project Turbine, or (ii) testing of any Project Turbine.
"Transmission Construction Agreement" shall have the meaning set forth in the Recitals.
"Transmission Provider" means Chugach Electric Association or other transmission
provider from time to time having authority to operate and provide transmission service on the
Transmission System.
"Transmission System" means the electric transmission system to which the Project is
connected.
"Transmission S stem Owner" means Chugach Electric Association.
"Two -Contract Year Period" means each two (2) Contract Year period, beginning with
the second full Contract Year (January 1, 2014 to December 31, 2014) and ending at the
expiration of the Term.
1.2 Rules of Construction. The following rules of interpretation shall apply unless
otherwise stated herein:
(a) The masculine shall include the feminine and neuter.
(b) References to "Articles," "Sections," or "Exhibits" shall be to articles,
sections, or exhibits of this Agreement.
(c) The words "herein," "hereof' and "hereunder" shall refer to this
Agreement as a whole and not to any particular article or section of this Agreement; the word
"including" shall mean "including, without limitation;" and the word "include" shall mean
"include, without limitation;" the word "until" shall mean "until, but not including;" the word
"from" shall mean "from and including."
(d) The Exhibits attached hereto are incorporated in and are intended to be a
part of this Agreement.
(e) This Agreement was negotiated and prepared by both Parties with the
advice and participation of counsel. The Parties have agreed to the wording of this Agreement
E
and none of the provisions hereof shall be construed against one Party on the ground that such
Party is the author of this Agreement or any part hereof.
(f) The Parties shall act reasonably and in accordance with the principles of
good faith and fair dealing in the performance of this Agreement. Unless expressly provided
otherwise in this Agreement, (i) where this Agreement requires the consent, approval or similar
action by a Party, such consent, approval or similar action shall not be unreasonably withheld,
conditioned or delayed, and (ii) wherever this Agreement gives a Party a right to determine,
require, specify or take similar action with respect to a matter, such determination, requirement,
specification or similar action shall be reasonable.
(g) All references to a particular entity shall include such entity's successors
and permitted assigns.
(h) All references herein to any contract, agreement, standard, document,
policy, instrument, or Law shall be to such contract, agreement, standard, document, policy,
instrument, or Law as amended, supplemented, modified, or replaced to the date of reference.
(i) The word "or" shall not be exclusive.
0) The singular shall include the plural and vice versa.
ARTICLE 2
CONDITIONS PRECEDENT
2.1 Buyer's Condition Precedent. Notwithstanding anything herein to the contrary,
Buyer's obligations under this Agreement (other than those set forth in this Section 2.1) shall be
conditioned upon receipt of RCA Approval. Buyer shall use commercially reasonable efforts to
obtain expedited RCA Approval, and Seller shall cooperate reasonably, with Buyer's efforts to
seek RCA Approval. If this Agreement does not receive RCA Approval, this Agreement shall be
terminated without any further financial or other obligation on behalf of either Party under this
Agreement.
2.2 Buyer's Right to Terminate. Notwithstanding anything herein to the contrary,
Buyer shall have the right, unless waived by Buyer in writing, to terminate this Agreement
without any further financial or other obligation to Seller under this Agreement if Transmission
System Owner and Seller have not executed an Interconnection and Integration Agreement on
terms and conditions reasonably acceptable to Buyer on or before September 15, 2011.
2.3 Seller's Conditions Precedent. Notwithstanding anything herein to the contrary,
Seller shall have the right, unless waived by Seller in writing, to terminate this Agreement
01
without any further financial or other obligation to Buyer under this Agreement in accordance
with the following provisions:
(a) Timing of RCA Approval Process. Seller shall have the right to terminate
this Agreement if Buyer fails to apply for RCA Approval within ten (10) days following
execution of this Agreement. If Buyer applies for RCA Approval within such ten (10) day
10
period, Seller shall have the right to terminate this Agreement if this Agreement does not receive
RCA Approval by September 15, 2011.
(b) Financing. Seller shall have the right to terminate this Agreement if,
within one hundred twenty (120) days after the Effective Date, Seller has not received a
commitment letter from a financing entity acceptable to Seller for the provision of non -recourse
financing for the construction and operation of the Project on terms acceptable to Seller in its
sole discretion, by providing notice to Buyer following the expiration of such 120-day period.
(c) Cash Grant. Seller shall have the right to terminate this Agreement at any
time before January 1, 2013 if Seller reasonably determines that, despite diligent efforts, it will
be unable to obtain the Cash Grant.
(d) Grant Documentation. Seller shall have the right to terminate this
Agreement if the Parties have not received a grant agreement from the Alaska Energy Authority
confirming an enforceable payment commitment on terms and conditions reasonably acceptable
to Seller for the Twenty Five Million Dollar ($25,000,000) grant from the State of Alaska for the
construction and completion of the AIA-FI Transmission System within one hundred eighty
(180) days after the Effective Date.
(e) Interconnection and Integration Agreement. Seller shall have the right to
terminate this Agreement if Seller and Transmission System Owner have not executed an
Interconnection and Integration Agreement on terms and conditions reasonably acceptable to
Seller on or before September 15, 2011.
ARTICLE 3
TERM
3.1 Term. The "Term" hereof shall begin on the Effective Date and shall be in force
and effect for twenty-five (25) years following the January 1 after the Commercial Operation
Date, unless sooner terminated as provided herein. The Parties may elect to extend the Term on
the same terms and conditions set forth herein in a writing mutually agreed to by the Parties
setting forth the length of the new term.
ARTICLE 4
DEVELOPMENT AND OPERATION OF THE PROJECT
4.1 Proieet. Seller shall use commercially reasonable efforts to site, develop, finance
and construct the Project. The Project is more fully described in Exhibit A. Seller shall
construct and install the Project in accordance with Prudent Wind Generation Industry Practices
and the applicable ASCC Planning and Operating Guidelines. Seller shall obtain all applicable
certifications, permits, licenses and approvals necessary for the construction, operation and
maintenance of the Project and the performance of its obligations under this Agreement during
the Term. Seller shall use commercially reasonable efforts to obtain reasonable and customary
warranties on project hardware, design, and workmanship. Prior to the Commercial Operation
Date, Seller shall provide Buyer with Monthly reports setting forth the status of the milestones
set forth in the Construction Schedule.
11
4.2 Buyer's Rights and Obligations During Construction. Buyer shall cooperate
with Seller to facilitate testing of the Project prior to Commercial Operation. Buyer shall have
the right, at its owri expense and after reasonable prior notice to Seller, to monitor the
construction, start-up and testing of the Project, and Seller shall comply with all reasonable
requests of Buyer with respect to the monitoring of these events. Seller shall cooperate in such
physical inspections of the Project as may be reasonably requested by Buyer during and after
completion of construction. All persons visiting the Project on behalf of Buyer shall comply
with all of Seller's applicable safety and health rules and requirements.
4.3 Commercial Operation Date. Seller shall take all reasonable steps necessary to
achieve the Commercial Operation Date by December 31, 2012. Seller shall notify Buyer when
the Project has achieved the Commercial Operation Date by submitting to Buyer the Commercial
Operation Certificate. If the Commercial Operation Date has not been achieved by December
31, 2012, for any reason, including delays in completion of the AIA-FI Transmission System, the
Commercial Operation Date shall be deemed to have been achieved with respect to all Project
Turbines that have been Placed in Service by such date. Seller shall use commercially
reasonable efforts to cause the remaining Project Turbines to achieve Commercial Operation
prior to October 1, 2013. If any remaining Project Turbine achieves Commercial Operation after
December 31, 2012, such Project Turbine shall be deemed a part of the Project as of the date of
Commercial Operation of such Project Turbine.
4.4 Standard of Operation. Seller shall operate, or shall cause the operation of, the
Project in accordance with Prudent Wind Generation Industry Practices and the ASCC Planning
and Operating Guidelines. Seller shall maintain a reasonable inventory of spare parts and have a
heavy duty, high lift crane available for deployment as needed, which high lift crane may be
located on or off the Premises. Upon reasonable prior notice and subject to the safety rules and
regulations of Seller, Seller shall provide Buyer and its authorized agents, employees and
inspectors with reasonable access to the Premises and the Project: (i) for the purpose of reading
or testing metering equipment in accordance with Section 4.6, (ii) in connection with the
operation and maintenance of the AIA-FI Transmission System, (iii) to provide tours of the
Project to customers and other guests of Buyer as reasonably requested, and (iv) for other
reasonable purposes requested by Buyer.
4.5 Outa¢es.
(a) Planned Outages. On or before October 1 of each Contract Year, Seller
shall provide to Buyer a non -binding Planned Outage schedule for the forthcoming Contract
Year. Seller shall use commercially reasonable efforts to avoid scheduling any Planned Outages
during the months of October through April. To the extent possible, Seller will provide Buyer
with reasonable advance notice of any material change in the Planned Outage schedule. Seller
shall be excused from providing Net Electric Energy during any Planned Outage.
(b) Maintenance Outages. If, during the Term, Seller needs to schedule a
Maintenance Outage, Seller shall notify Buyer, as far in advance as is practicable under the
circumstances, of such proposed Maintenance Outage, and the Parties shall plan such outage of
capacity to mutually accommodate the reasonable requirements of Seller and service obligations
of Buyer; provided, however, Buyer's requirements shall not unduly prejudice or jeopardize the
12
operation and maintenance of the Project. Notice of a proposed Maintenance Outage shall
include the expected start date of the outage, the amount of Project Capacity that will be affected
by the Maintenance Outage, and the expected completion date of the Maintenance Outage.
Buyer shall promptly respond to such notice and may request reasonable modifications in the
schedule for the Maintenance Outage. Subject to its operational and maintenance needs, Seller
shall use reasonable efforts to comply with Buyer's request to reschedule a Maintenance Outage.
Seller shall notify Buyer of any subsequent changes in such Project Capacity not available to
Buyer or any subsequent changes in such Maintenance Outage completion date. As soon as
reasonably practical, any such notifications given orally shall be confirmed in writing.
(c) Forced Outages. Seller shall, as promptly as is practicable under the
circumstances following the commencement of a Forced Outage, provide to Buyer a report by
telephone, fax, or electronic mail of such Forced Outage, which report shall include the amount
of the Project Capacity affected by such Forced Outage and the expected end date and/or time of
the Forced Outage. Seller shall update such report as necessary to advise Buyer of any changed
circumstances with respect to such Forced Outage. As soon as reasonably practical, all such
reports transmitted by telephone, fax, or electronic mail shall be confirmed in writing.
(d) Reports. Seller shall provide Buyer with a quarterly report summarizing
the results of maintenance performed during each Planned Outage, Maintenance Outage or
Forced Outage occurring during such quarter, and any of the technical data obtained in
connection with such maintenance.
4.6 Metering.
(a) Seller shall design, construct, install, operate, calibrate and maintain
revenue grade metering devices at the Delivery Point as needed to measure the Net Electric
Energy from the Project and in conformance with all applicable regulatory requirements, at
Seller's cost and expense. As necessary for purposes of scheduling delivery of the Net Electric
Energy from the Delivery Point, such metering facilities shall include communication equipment
that allows Buyer to read the meter devices from a remote location. The metering devices shall
provide Buyer and Transmission System Owner the ability to continuously monitor generation
and Project Turbine status from the Project. Seller shall test the metering devices upon Buyer's
request and at Buyer's expense (except as set forth in this Section 4.6). Seller shall notify Buyer
of the date and time of such tests and Buyer shall be allowed to have a representative present to
witness such tests. Metering equipment that fails to register, or is found upon testing to be
inaccurate by more than 1%, shall be repaired, adjusted or replaced by Seller, at Seller's sole
expense, and Seller shall be responsible for the costs associated with the testing that revealed
such inaccuracy. Any correction in the billing resulting from such repairs, adjustments or
replacements shall be made in the accounting rendered for the next Month; and such correction,
when made, shall constitute full resolution of any claim between the Parties arising out of such
inaccuracy of metering equipment.
(b) Buyer may, at its own expense, install and maintain additional metering
equipment for purposes of monitoring, recording or transmitting data relating to its purchase of
Net Electric Energy from the Project. Upon Buyer's reasonable request, Seller shall arrange for
a location at the Delivery Point for such additional Buyer equipment.
13.
4.7 Ramp Rate. Seller shall use commercially reasonable efforts to observe a ramp
rate restriction of 2.5 MW per minute.
ARTICLE 5
PURCHASE OF ENERGY BY BUYER
5.1 Sale and Purchase OPlizations. Commencing on the Commercial Operation
Date, Seller shall sell and deliver, or cause to be delivered, and Buyer shall purchase and receive,
or cause to be received, all Net Electric Energy, and concurrently with such sale, Seller shall
transfer to Buyer for no additional consideration, all associated Project Capacity and Credits.
Seller shall not deliver energy or Credits from any other electric generation facility to meet its
requirements to deliver Net Electric Energy or Credits pursuant to this Agreement.
5.2 Deliveries. Delivery of all Net Electric Energy sold and purchased hereunder
shall be made at the Delivery Point.
5.3 Green-e Standard. Seller shall use all commercially reasonable efforts to qualify
the Project and the Credits under the Green-e Energy National Standard 2.0 administered by the
non-profit Center for Resource Solutions or any successor system (the "Green-e Standard").
5.4 Renewable Portfolio Standard. If a renewable portfolio standai d or similar
requirement applicable to Buyer is implemented by the State of Alaska or the United States (an
"RPS"), Seller shall take all commercially reasonable steps to ensure that the Net Electric Energy
qualifies as a renewable resource under such RPS and that the Credits qualify as renewable
energy credits or the equivalent under such RPS. .In the event of conflict between the Green-e
Standard and the RPS, the terms of the RPS shall control.
5.5 Contract Price.
(a) Buyer shall accept delivery of all Test Energy produced by a Project
Turbine and shall purchase all such Test Energy delivered to the Delivery Point during the six (6)
Month period prior to the anticipated Commercial Operation Date, as set forth on the
Construction Schedule, and the Credits and Project Capacity associated therewith at the Contract
Price.
(b) Commencing on the Commercial Operation Date, Buyer shall pay Seller
for each MWh of Net Electric Energy delivered to the Delivery Point and the Credits and Project
Capacity associated therewith at the Contract Price.
5.6 Curtailments.
(a) Buyer shall have the right to direct Curtailments by notice to Seller (or
Seller's designated scheduling agent) by telephone, and Seller shall cause the output of the
Project to be curtailed (in whole or in part) as directed by Buyer, all in accordance with the
Operating Procedures.
(b) Seller shall use reasonable efforts to determine the quantity of Deemed
Generated Energy that accrues during each Curtailment. For all Compensable Deemed
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Generated Energy, Buyer shall pay Seller the Contract Price for such Compensable Deemed
Generated Energy as if production of Net Electric Energy had not been curtailed by Buyer.
(c) Notwithstanding anything contained herein, Buyer shall use commercially
reasonable efforts to minimize the number and extent of Curtailments directed hereunder.
5.7 Prices Not Subject to Review. Following RCA Approval, the prices for energy
specified in this Article 5, and the other terms and conditions specified in this Agreement, shall
remain in effect for the Term, and shall not be subject to change by Buyer or Seller for any other
reason, including regulatory review. Absent the Parties' written agreement, (a) this Agreement
shall not be subject to change by application of either Party pursuant to Section 205 or 206 of the
Federal Power Act, and (b) the standard of review for any changes to this Agreement, whether
proposed by a Party, a non-party, or the Federal Energy Regulatory Commission acting sua
sponte, shall be the "public interest" standard of review set forth in United Gas Pipe Line v.
Mobile Gas Service Corp., 350 U.S. 332 (1956), and Federal Power Commission v. Sierra
Pacific Power Co., 350 U.S. 348 (1956).
5.8 Title and Risk of Loss. As between Buyer and Seller, Seller shall be deemed to
be in exclusive control of, and responsible for, any damage or injury caused by Net Electric
Energy prior to delivery at the Delivery Point, and Buyer shall be deemed to be in exclusive
control of, and responsible for, any damages or injury caused by Net Electric Energy delivered
hereunder at, on and after Buyer's side of the Delivery Point. Title to, and risk of loss of, all Net
Electric Energy delivered under this Article 5 shall transfer from Seller to Buyer upon delivery
of such Net Electric Energy to the Delivery Point.
5.9 Transmission and Ancillary Services.
(a) Seller shall arrange and be responsible for delivery of the Net Electric
Energy to the Delivery Point. Seller shall be responsible for all applicable transmission charges,
electrical losses, integration and any other transmission -related charges attributable to or
assessed for Net Electric Energy delivered to Buyer before the Delivery Point.
(b) Buyer shall obtain transmission service from the Delivery Point necessary
to take the Net Electric Energy at and from the Delivery Point to Buyer's load or to such other
location Buyer may determine beyond the Delivery Point. Buyer shall be responsible for all
applicable transmission charges, electrical .losses, integration, regulation, ancillary services and
any other transmission -related charges attributable to or assessed for Net Electric Energy
delivered to Buyer at and after the Delivery Point.
(c) Pursuant to the Interconnection and Integration Agreement, Seller shall
pay to Transmission System Owner an integration charge equal to $10.85 per MWh of Net
Electric Energy delivered to the Delivery Point and $10.85 per MWh of Compensable Deemed
Generated Energy, which shall represent all of Seller's costs and responsibilities associated with
the integration of the Project into the Transmission System, including, but not limited to costs
and responsibilities associated with regulation, operation, balancing, ancillary services and
curtailment.
15
5.10 Taxes. Buyer shall be responsible for all sales, use, excise, ad valorem or other
similar tax, imposed or levied by any Governmental Entity on the sale or receipt of Net Electric
Energy. Seller shall be responsible for payment of all taxes on the income of Seller or inventory
tax (if any) related to the Project and any real and personal property taxes, assessments, and
payments in lieu of taxes on the Project and the Premises. To the extent permitted by Law, each
Party shall indemnify, release, defend and hold harmless the other Party from and against any
and all liability for taxes imposed or assessed by any taxing authority with respect to Net Electric
Energy sold, delivered and received hereunder that are its responsibility pursuant to this
Section 5.10-
5.11 System Supply Enemy. At all times when the Project is not operating or is
otherwise not providing energy for the Project's internal use, Seller shall be responsible for
obtaining any and all energy that may be required for the Project, including energy for starting
up the Project Turbines and for the Project's internal use. Seller shall request, and Buyer shall
seek to provide, station service for Seller for the Project at Seller's sole cost and expense
pursuant to the applicable retail rate tariff.
5.12 Scheduling/Forecasts.
(a) Scheduling. Commencing on the Commercial Operation Date, Buyer or
Buyer's designee shall be responsible for scheduling the Net Electric Energy from the Delivery
Point during the Term. All generation scheduling shall be performed in accordance with the
Operating Procedures, ASCC Planning and Operating Guidelines, and any other applicable
power scheduling and operating policies and guidelines.
(b) Availability Forecasts. On or before October 1 of each Contract Year,
Seller shall provide to Buyer a good faith estimate of the availability of the Project for each hour
of the next Contract Year. On or before the twentieth (20th) day of each Month, Seller shall
provide an updated good faith estimate of the availability of the Project for each hour of the next
Month. By such time as mutually agreed to by the Parties on the Business Day immediately
preceding the day on which the Net Electric Energy is to be delivered, Seller shall provide Buyer
with an updated good faith estimate of the availability of the Project for each hour of the next
day; provided, however, that a forecast provided on a day before any non -Business Day shall
include forecasts for each day to and including the next Business Day. Seller shall provide
Buyer with a good faith estimate of the updated expected hourly availability for the Project for
each hour of the day on which Net Electric Energy is to be delivered one hour Prior to the hour in
which Net Electric Energy is to be delivered. The Parties shall cooperate to implement and use
automatic availability updates.
(c) Meteorological Data. Seller shall provide Buyer with meteorological
forecasts of a type typically found in the utility scale wind power generation industry and
consistent with Prudent Wind Generation Industry Practices throughout the Term and with
access to real time wind speed data from the Project and one (1) nearby meteorological station
upstream from the Project in not longer than ten (10) minute intervals, as reasonably available to
Seller and consistent with Prudent Wind Generation Industry Practices.
16
5.13 Failure to Achieve Guaranteed 24-Month Ouantity . If during any Two -
Contract Year Period, the amount of (i) Net Electric Energy delivered to the Delivery Point plus
(ii) all Deemed Generated Energy associated with any Force Majeure, Curtailment, Planned
Outages less than fifty (50) hours per year per Project Turbine, or any other failure of Seller to
deliver Net Electric Energy to the Delivery Point due to the acts or omissions of Buyer,
Transmission Provider or Transmission System Owner, is less than the Guaranteed 24-Month
Quantity for such Two -Contract Year Period, then Seller shall cause the amount of (i) Net
Electric Energy plus (ii) all Deemed Generated Energy associated with any Force Majeure,
Curtailment, Planned Outages less than fifty (50) hours per year per Project Turbine, or any other
failure of Seller to deliver Net Electric Energy to the Delivery Point due to the acts or omissions
of Buyer, Transmission Provider or Transmission System Owner delivered (or deemed
delivered) during the Contract Year immediately following such Two -Contract Year Period to be
equal to or greater than seventy-five percent (75%) of the P50 Output for such Contract Year.
Seller's failure to cause such amount to be equal to or greater than seventy-five percent (75%) of
the P50 Output during such Contract Year, shall be an Event of Default, and Buyer shall have the
rights and remedies set forth in Article 7.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties. As a material inducement to execution of this
Agreement each Party hereby represents and warrants to the other Party that:
(a) It is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, and is qualified to conduct its business in all jurisdictions
necessary to perform its obligations hereunder;
(b) The execution, delivery and performance of this Agreement do not violate
any of the terms or conditions in any agreement to which it is a Party, or any Law applicable to
such Party;
(c) This Agreement constitutes a legal, valid and binding obligation of such
Party, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and with regard to equitable
remedies, to the discretion of the court before which proceedings to obtain the same may be
pending;
(d) There are no bankruptcy, insolvency, reorganization, receivership or other
arrangement proceedings pending or being contemplated by it, or to its knowledge, threatened
against it;
(e) To such Party's knowledge, there are no actions, proceedings, judgments,
rulings or orders, issued by or pending before any Governmental Entity that would materially
adversely affect its ability to perform under and in accordance with this Agreement; and
(f) Except as set forth in Section 2.1 or Section 2.3, no consent, approval or
authorization of, or registration, filing or declaration with, any Governmental Entity or any other
Person that has not been received, waived by such Governmental Entity or other Person or
17
satisfied as of the date hereof, is required for the valid execution and delivery of this Agreement,
the consummation and performance of the transactions contemplated hereby or compliance with
the terms and provisions hereof.
6.2 No Other Representations and Warranties. Each Party acknowledges that it
has entered into this Agreement in reliance upon only the representations and warranties set forth
in this Agreement.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES; TERMINATION
7.1 Events of Default. The following occurrences shall constitute Events of Default:
(a) Failure by a Party to make any payment required hereunder when due if
such failure is not remedied within ten (10) days after receipt by the defaulting Party of written
notice of such failure.
(b) Failure by a Party to perform any other material obligation hereunder, and
such failure is not remedied within thirty (30) days after receipt by the defaulting Party of written
notice of such failure, provided that so long as a defaulting Party has initiated and is diligently
attempting to effect a cure, the defaulting Party's cure period shall extend for an additional sixty
(60) days or such longer period as is reasonably necessary to effect such cure.
(c) Any representation or warranty made by a Party pursuant to Article 6 shall
have been false in any material respect when made, and has materially and adversely affected the
relying Party and has not been remedied within thirty (30) days after receipt by the defaulting
Party of written notice of such falsity, provided that so long as a Party has initiated and is
diligently attempting to effect a cure, the Party's cure period shall extend for an additional sixty
(60) days.
(d) A Party or, subject to Section 12.1(d), any Qualified Issuer of any Security
hereunder (i) makes an assignment for the benefit of its creditors, (ii) files a petition or otherwise
commences, authorizes or acquiesces in the commencement of a proceeding or cause of action
under any bankruptcy or similar Law for the protection of creditors, (iii) has such petition filed
against it and such petition is not withdrawn or dismissed for sixty (60) days after such filing,
(iv) becomes insolvent or, (v) is unable to pay its debts when due.
(e) A Party assigns this Agreement in violation of Section 9.1.
(f) Failure by a Qualified Issuer or guarantor of Seller's Security or Buyer's
Security, as the case may be, to make any payment when due under a guaranty provided as
Security hereunder.
(g) Failure by Seller to deliver (or be deemed to deliver) Net Electric Energy
and Deemed Generated .Energy in the amount required pursuant to Section 5.13 during a
Contract Year following Seller's failure to deliver the Guaranteed 24-Month Quantity.
18
7.2 Termination Upon an Event of Default.
(a) Upon the occurrence of, and during the continuation of, an Event of
Default, and following the expiration of any applicable cure period for such Event of Default, the
non -defaulting Party may terminate this Agreement by notice to the other Party, designating the
date of termination, delivered to the defaulting Party no less than ten (10) Business Days before
such termination date.
(b) In the event of a termination of this Agreement in its entirety, (i) the
Parties' respective obligations under this Agreement shall terminate (other than those obligations
that are to be performed after termination by their express terns), and (ii) each Party shall pay
the amounts described in Section 7.2(c); provided, however, that termination pursuant to Section
2.1, 2.2, 2_3, or 10.3 shall not give rise to any obligation to pay damages under Sections 7.2(c).
(c) Termination Payments.
(i) In the event of a termination of this Agreement upon an Event of
Default, each Party shall pay to the other all amounts due the other under this Agreement for all
periods prior to termination.
(1) In the case of an Event of Default by Buyer, Buyer shall
pay to Seller the net present value of costs to cover direct actual damages incurred by Seller in
not being able to sell to Buyer, for the remainder of the Term, Net Electric Energy and Credits
contracted for under this Agreement. Such costs shall include (but not be limited to), for the
applicable period, if applicable, an amount equal to the Tax Credits associated with the Net
Electric Energy contracted for under this Agreement, on a grossed -up basis.
(2) In the case of an Event of Default by Seller, Seller shall pay
to Buyer the net present value of costs to cover direct actual damages incurred by Buyer in not
being able to purchase from Seller, for the remainder of the Term, Net Electric Energy and
Credits contracted for under this Agreement.
(3) In no event shall the non -defaulting Party owe damages
provided for in this Section 7.2 to the defaulting Party. In the event of a termination by either
Party under this Section 7.2, the non -defaulting Party will use commercially reasonable efforts to
mitigate its damages resulting from the other Party's Event of Default.
(ii) The amounts due pursuant to Section 7.2(c)(i) shall be paid within
thirty (30) days of the applicable termination date of this Agreement notified to the defaulting
Party, plus interest thereon from such date of termination until the date paid. Interest shall be
calculated at the Interest Rate.
(d) Except for any damages that may be incurred due to a breach of or the
application of the provisions specified in Section 7.2(e), the amounts payable under this
Section 7.2 shall constitute the only amounts due upon the termination of this Agreement by
either Party, and no Party shall be required to pay any amounts upon termination in excess of the
amounts specified in this Section 7.2.
19
(e) The provisions of Section 5.10 {Taxes} (with respect to all periods prior
to termination), Section 8.4 {Records}, Section 8.5 {Audit}, Section 10.4 {Indemnification},
Section 10.5 {Limitations of Remedies, Liability and Damages}, Section 10.6 {Duty to
Mitigate}, Section 15.4 {Choice of Law and Forum} and Article 11 {Confidentiality} and
Article 14 {Disputes} shall survive the termination of this Agreement.
ARTICLE 8
BILLING AND PAYMENT, RECORDS
8.1 Billing and Payment.
(a) For each Month during the Term, commencing on the Month in which
Test Energy is delivered, Seller shall send to Buyer, within the first ten (10) Business Days of the
following Month, a statement setting forth:
(i) The quantity of Net Electric Energy that was delivered to the
Delivery Point in the immediately preceding Month;
(ii) The total amount due for Net Electric Energy, associated Credits
and Project Capacity during the immediately preceding Month (which amount shall be the
product of the Net Electric Energy delivered to the Delivery Point and the Contract Price);
(iii) Any amounts due for any Compensable Deemed Generated
Energy;
(iv) Any other amounts due to Seller or credited to Buyer under this
Agreement.
(b) No later than twenty (20) days after the date such statement is received, or
if such day is not a Business Day, the immediately following Business Day, Buyer shall remit to
Seller, by check or wire transfer in accordance with Section 13.1, the amount due pursuant to
such statement.
8.2 Interest on Late Payments. Undisputed amounts not paid when due shall accrue
interest from and including the due date, to and excluding the date of payment, at the Interest
Rate.
8.3 Disputed Amounts. If either Party, in good faith, disputes any amount due
pursuant to a statement rendered hereunder, such Party shall pay such disputed amount on or
before the due date and notify the other Party of the specific basis for the dispute. Any such
notice shall be provided within ninety (90) days of the date of the statement in which the
disputed amount first appeared. The Parties shall resolve the dispute pursuant to the dispute
resolution provisions set forth in Article 14. If any amount disputed by a Party is determined not
to have been due to the other Party, such amount shall be reimbursed to the disputing Party
within five (5) Business Days of such determination or resolution, along with interest accrued at
the Interest Rate from the original date due until the date paid.
20
8.4 Records. Each Party shall keep and maintain all records as may be necessary or
useful in performing or verifying any calculations made pursuant to this Agreement, or in
verifying such Party's performance hereunder. All such records shall be retained by each Party
for at least three (3) calendar years (or such longer period as may be required by applicable Law)
following the calendar year in which such records were created.
8.5 Audit. Each Party, through its employees, authorized agents and/or professional
advisors, shall have the right, at its sole expense and upon reasonable advance notice to the other
Party, during normal business hours of the other Party, to examine and copy the records of the
other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or
computation made hereunder. Upon request, each Party shall provide to the other Party
statements evidencing the quantities of energy delivered at the Delivery Point. If any statement
is found to be inaccurate, a corrected statement shall be issued and any amount due thereunder
will be promptly paid and shall bear interest calculated at the Interest Rate from the date of the
overpayment or underpayment to the date of receipt of the reconciling payment.
Notwithstanding the above, no adjustment shall be made with respect to any statement or
payment hereunder unless a Party asserts its challenge to the accuracy of such payment or
statement within one year after the date of such statement or payment.
ARTICLE 9
ASSIGNMENT• BINDING EFFECT
9.1 Assignment.
(a) Except as expressly permitted herein, neither Party shall assign this
Agreement or any of its rights or obligations hereunder without the prior written consent of the
other Party, such consent not to be unreasonably withheld, conditioned, or delayed, except in
accordance with this Section 9.1.
(b) Seller may assign this Agreement or any of its rights hereunder without
the prior written consent of Buyer (i) in favor of any party providing financing or other financial
accommodations to or for the benefit of the Project, Seller, or Seller's Affiliates; or (ii) to an
Affiliate of Seller. Upon Seller's request from time to time in connection with its financing of
the Project or other financial accommodation for Seller, Buyer agrees to execute and deliver
promptly a consent or other agreements with debt or equity financing parties reasonably
requested by such financing parties, containing customary terms and conditions, and otherwise to
cooperate in a timely manner with the due diligence efforts of such financing parties.
(c) Prior to receipt of RCA Approval, Buyer shall make commercially
reasonable efforts to partially assign this Agreement with respect to not more than eighteen
percent (18%) and not less than ten and one-half percent (10.5%) of the Net Electric Energy and
associated Project Capacity and Credits to another qualified utility purchaser, provided that
Seller is reasonably satisfied with the creditworthiness of the qualified utility purchaser or that
the qualified utility purchaser provides security to Seller from a Qualified Issuer in an amount
equal to at least fifty (50%) of the estimated annual gross revenues to be received by Seller from
qualified utility purchaser. Any such assignment shall be made pursuant to an assignment and
assumption agreement agreed to by Seller, Buyer and qualified utility purchaser.
21
(d) In the event that Buyer fails to partially assign this Agreement pursuant to
Section 9(c) above, then Buyer shall remain obligated to purchase all the Net Electric Energy and
all associated Project Capacity and Credits pursuant Section 5.1 above.
9.2 Change in Control. Any Change of Control of Seller, whether voluntary or by
operation of law, shall require the prior written consent of Buyer, which shall not be
unreasonably withheld. No consent of Buyer shall be required, however, to any Change of
Control resulting from (i) transactions among Affiliates of Seller, or (ii) any exercise by any
party providing financing or other financial accommodations to or for the benefit of the Project,
Seller or Seller's Affiliates, of its rights and remedies under the financing documents. Without
limiting Buyer's obligation to consider reasonably any other circumstances, Buyer shall be
required to give its consent to any Change of Control of Seller if at least one of the ultimate
parent entities of Seller following the Change of Control, (i) enjoys creditworthiness not worse
than Seller or CIRI, prior to the Change of Control and (ii) has demonstrable experience in the
power generation industry not less than Seller or CIRI.
9.3 Binding Effect. This Agreement shall inure to the benefit of, and be binding
upon, the Parties and their respective successors and permitted assigns.
ARTICLE 10
FORCE MAJEURE• INDEMNITY• LIMITATION OF LIABILITY
10.1 Force Majeure
(a) The term "Force Majeure," as used in this Agreement, means causes or
events beyond the reasonable control of, and without the fault or negligence of the Party
(including, in the case of Buyer, Transmission System Owner and Transmission Provider)
claiming Force Majeure, including, acts of God, sudden actions of the elements such as floods,
earthquakes, hurricanes, blizzards, volcanic activity, or tornadoes; severe weather; complete
failure of the AIA-FI Transmission System, high winds of sufficient strength or duration to
materially damage a Project Turbine or significantly impair its operation for a period of time
longer than normally encountered in similar businesses under comparable circumstances;
lightning; ice storms; sabotage; vandalism; terrorism; war; riots; fire; explosion; blockades;
insurrection; strike; slow down or labor disruptions (even if such difficulties could be resolved
by conceding to the demands of a labor group); actions or inactions by any Governmental Entity
taken after the date hereof but only if such actions, or inactions prevent or delay performance of
a Party hereunder; inability, despite due diligence, to obtain any licenses, permits, or approvals
required by any Governmental Entity; and the issuance of any order, injunction, or other legal or
equitable decree interfering with the performance of a Party's obligations hereunder.
(b) The term Force Majeure does not include (i) any acts or omissions of any
third party, including, without limitation, any vendor, materialman, customer, or supplier of
Seller, unless such acts or omissions are themselves excused by reason of Force Majeure or are
in and of themselves events of Force Majeure; (ii) any full or partial curtailment in the electric
output of the Project that is caused by or arises from (1) a mechanical or equipment breakdown
unless such mechanical or equipment breakdown is caused by an event of Force Majeure, or
(2) conditions attributable to normal wear and tear; or (iii) changes in market conditions that
22
affect the cost of Buyer's or Seller's supplies, or that affect demand or price for any of Buyer's
or Seller's products.
10.2 Applicability of Force Majeure.
(a) Neither Party shall be responsible or liable for any delay or failure in its
performance under this Agreement, nor shall any delay, failure, or other occurrence or event
become an Event of Default, to the extent such delay, failure, occurrence or event is substantially
caused by conditions or events of Force Majeure, provided that:
(i) the non -performing Party gives the other Party prompt written
notice describing the particulars of the occurrence of the Force Majeure;
(ii) the suspension of performance is of no greater scope and of no
longer duration than is required by the Force Majeure;
(iii) the non -performing Party proceeds with reasonable diligence to
remedy its inability to perform and provides progress reports to the other Party describing actions
taken to end the Force Majeure; and
(iv) when the non -performing Party is able to resume performance of
its obligations under this Agreement, such Party shall give the other Party written notice to that
effect.
(b) Except as otherwise expressly provided for in this Agreement, the
existence of a condition or event of Force Majeure shall not relieve the Parties of their
obligations under this Agreement (including, but not limited to, payment obligations) to the
extent that performance of such obligations is not precluded by the condition or event of Force
Majeure.
10.3 Limitations on Effect of Force Mai eure. In the event that any delay or failure
of performance caused by conditions or events of Force Majeure continues for an uninterrupted
period of three hundred sixty-five (365) days from its occurrence or inception, as noticed
pursuant to Section 10.2(a), the Party not claiming Force Majeure may, at any time following the
end of such three hundred sixty-five (365) day period, terminate this Agreement upon written
notice to the affected Party, without further obligation by either Party except as to costs and
balances incurred prior to the effective date of such termination. The Party not claiming Force
Majeure may, but shall not be obligated to, extend such three hundred sixty-five (365) day
period, for such additional time as it, at its sole discretion, deems appropriate, if the affected
Party is exercising due diligence in its efforts to cure the conditions or events of Force Majeure.
10.4 Indemnification.
(a) To the extent permitted by Law, each Party shall indemnify and hold
harmless the other Party and its Affiliates, and each of their respective officers, directors, agents,
employees, members, managers, shareholders, partners and other equity holders from and against
any and all claims, demands, actions, losses, liabilities, expenses (including reasonable legal fees
and expenses), suits and proceedings of any nature whatsoever for personal injury, death or
23
property damage to the other Party's property or facilities, or personal injury, death or property
damage to third parties (collectively "Liabilities") to the extent caused by the negligence or
willful misconduct of the indemnifying Party in connection with the performance of its
obligations under this Agreement.
(b) Without limiting the foregoing and to the extent permitted by Law,
(i) Buyer shall indemnify Seller for all Liabilities related to Net Electric Energy and associated
Credits, once sold and delivered to .Buyer at the Delivery Point, and (ii) Seller shall indemnify
Buyer for all Liabilities related to Net Electric Energy and associated Credits prior to its delivery
by Seller at the Delivery Point, except, in the case of either (i) or (ii) to the extent such injury or
damage is attributable to the negligence or willful misconduct or breach of this Agreement by the
Party (or any of its Affiliates) seeking indemnification hereunder.
(c) If a claim is made against a Party entitled to indemnification under this
Section 10.4 (the "Indemnified Party") that could reasonably be expected to result in Liabilities,
or if an Indemnified Party discovers any inquiry or investigation that the Indemnified Party
believes may involve or expect to lead to Liabilities, the Indemnified Party shall promptly give
the other Party (the "Indemnifying Party") written notice of such claim, inquiry or investigation,
provided that any delay in providing notice will not serve as a bar to indemnification hereunder
except to the extent that the Indemnifying Party's ability to defend against or avoid claims has
been prejudiced by such delay. The Indemnifying Party shall promptly (and in any event no later
than 30 days after receiving notice from the Indemnified Party) decide whether to assume control
of the defense of the claim, and if the Indemnifying Party does not elect to control such defense,
then the Indemnified Party may assume control of the defense, and the Indemnifying Party shall
reimburse the Indemnified Party as expenses are incurred in connection with such defense. The
Party that is defending the claim (the "Defending Party") will use counsel that is reasonably
approved in writing by the other Party. The Party that is not controlling the defense (the "Non -
Defending Party") may have its own counsel present at its own cost to monitor proceedings and
will cooperate as reasonably requested with the Defending Party in defending the claim. The
Defending Party shall not settle or compromise any claim without the prior written consent of the
Non -Defending Party.
10.5 Limitations of Remedies, Liability and Damaues. The Parties agree that the
remedies and measures of damages provided in this Agreement satisfy the essential purposes
hereof. IF NO MEASURE OF DAMAGES OR OTHER REMEDY IS EXPRESSLY
PROVIDED HEREIN, A PARTY'S LIABILITY SHALL BE LIMITED TO DIRECT
ACTUAL DAMAGES ONLY, WHICH DIRECT ACTUAL DAMAGES SHALL BE THE
SOLE AND EXCLUSIVE REMEDY OF THE INJURED PARTY, AND ALL OTHER
REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE HEREBY EXPRESSLY
WAIVED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, WHETHER SUCH DAMAGES
ARE ALLOWED OR PROVIDED BY STATUTE, IN TORT, UNDER ANY INDEMNITY
PROVISION OR OTHERWISE, EXCEPT THAT ANY DAMAGES SPECIFICALLY
PROVIDED IN THIS AGREEMENT SHALL BE VALID NOTWITHSTANDING THE
FOREGOING PROVISION, AND EXCEPTING SUCH TYPES OF DAMAGES THAT
MAY BE DUE BY A PARTY TO A THIRD PARTY FOR AN OBLIGATION THE
24
NATURE OF WINCH THE OWING PARTY IS ENTITLED TO INDEMNIFICATION
UNDER THIS AGREEMENT.
10.6 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages and
covenants that it will use commercially reasonable efforts to minimize any damages that it may
incur as a result of the other Party's default or non-performance of this Agreement.
ARTICLE 11
CONFIDENTIALITY
11.1 Confidentiality. The Parties agree that the Parties' proposals, communications,
negotiations and information exchanged prior to the Effective Date concerning this Agreement,
and technical and other information regarding the Project provided by Seller to Buyer marked, or
otherwise clearly communicated to the receiving Party as, "Confidential," constitute the
"Confidential Business Information" of the disclosing Party. Seller and Buyer each agree to hold
such Confidential Business Information wholly confidential. Such Confidential Business
Information may only be used by the Parties for purposes related to the approval, administration
or enforcement of this Agreement, and Seller's financing and construction of the Project, or its
obtaining any other financial accommodation, and for no other purposes. Other information
about the Project may be disclosed upon the mutual consent of the Parties.
11.2 Disclosure. Each Party agrees not to disclose Confidential Business Information
of the other Party to any other Person (other than its Affiliates, counsel, consultants, lenders,
partners, members, employees, officers and directors, and then only to Persons subject to similar
confidentiality restrictions as those set forth herein), without the prior written consent of the
other Party, provided that either Party may disclose Confidential Business Information, if such
disclosure is required by Law, including without limitation, pursuant to an order of a court or
regulatory agency or in order to enforce this Agreement or to seek approval of this Agreement.
In the event a Party is required by Law or by a Governmental Entity to disclose Confidential
Business Information, such Party, prior to such disclosure, shall provide reasonable advance
notice to the other Party of the time and scope of the intended disclosure in order to permit such
disclosing Party the opportunity to obtain a protective order or otherwise seek to prevent or limit
the scope or otherwise impose conditions upon such disclosure.
11.3 Injunctive Relief. Each Party agrees that violation of the terms of this Article 11
constitutes irreparable harm to the other, and that the harmed Party may seek any and all
remedies available to it at law or in equity, including but not limited to injunctive relief.
ARTICLE 12
SECURITY
12.1 Security.
(a) Seller's Security. Seller shall provide Seller's Security as follows: On or
before January 1, 2012, Seller shall provide to Buyer Seller's Security in an amount equal to the
Required Security Amount. On or before January 1, 2013, Seller shall increase Seller's Security
to the Required Security Amount required as of such date, and shall thereafter maintain such
Security at such Required Security Amount until the end of the Term.
25
(b) Buyer's Security. If at any time during the Term, Buyer's credit rating
(corporate or long-term senior unsecured debt) is below BBB- by Standard & Poor's or Baa3 by
Moody's, Buyer shall provide to Seller, within five (5) Business Days of any such determination,
Buyer's Security in the Required Security Amount and shall maintain such Security at the
Required Security Amount until the end of the Term, so long as Buyer's credit rating is below
BBB- by Standard & Poor's or Baa3 by Moody's. If and when Buyer's credit rating is equal to
or above BBB- by Standard & Poor's and Baa3 by Moody's, Buyer shall not be required to post
Buyer's Security and Seller shall promptly release any Buyer's Security held by Seller to Buyer.
(c) In addition to any other remedy available to it, a Party ("Obligee") may,
before or after termination of this Agreement or upon the occurrence and during the continuance
of an Event of Default, draw on the Security in such amounts as are necessary to recover
amounts owing to it by the other Party ("Obligor") pursuant to this Agreement, including any
damages due to Obligee and/or any amounts for which Obligee is entitled to indemnification
hereunder. Obligee may, in its sole discretion, draw all or any part of such amounts due to it
from any form of Security to the extent available to Obligee pursuant to this Section 12.1, and
from all such forms and in any sequence that Obligee may select. Subject to Section 10.,
following a draw on all or any part of the Security pursuant to this Section 12.1, Obligor shall,
within thirty (30) days following such draw, replenish or reinstate the Security to the full
Required Security Amount.
(d) Security shall be maintained at the expense of the Party providing such
Security. A Party may change the form of Security provided by it to the other Party hereunder at
any time and from time to time upon reasonable prior notice. If at any time hereunder any
Person providing Security on behalf of a Party hereunder fails to meet the requirements of a
Qualified Issuer, is subject to the commencement of involuntary or voluntary bankruptcy,
insolvency, reorganization, arrangement, composition, readjustment, liquidation, dissolution, or
similar proceeding (whether under any present or future statute, law, or regulation), or takes any
action to terminate, cancel or repudiate such Security (each, a "Material Event"), then the Party
providing such Security shall replace the Security with other Security from a Qualified Issuer
and otherwise meeting the requirements of this Agreement no later than thirty (30) days after the
occurrence of such Material Event.
(e) Promptly following the end of the Term and the satisfaction of all of the
Parties' obligations under this Agreement, or upon the earlier termination of this Agreement
pursuant to Sections 2.1, 2_2, 2_3, or 10.3, each Party shall release any remaining Security held
by it to the other Party.
ARTICLE 13
NOTICES AND ADDRESSES FOR PAYMENT
13.1 Notices. All notices, requests, statements or invoices shall be made to the
addresses set forth in, and all payments shall be made in accordance with the wire transfer
instructions provided for in Exhibit D hereto. Any notice, request, consent, or other
communication required or authorized under this Agreement to be given by one Party to the
other Party shall be in writing. It shall be either be hand delivered or mailed first-class or by
overnight delivery, postage prepaid, to the other Party. If mailed, the notice request, consent or
Q�
other communication shall be simultaneously sent by facsimile or other electronic means. Any
such notice, request, consent, or other communication shall be deemed to have been received by
the Close of the Business Day on which it was hand delivered or transmitted electronically
(unless hand delivered or transmitted after such close in which case it shall be deemed received
as of the Close of the next Business Day). Real-time or routine communications concerning
Project operations shall be exempt from this Section. A Party's address or addressee to which
notices or invoices shall be delivered, or amounts paid, may be changed from time to time by
such Party by notice served as hereinabove provided.
ARTICLE 14
DISPUTES
14.1 Negotiations. In the event of any dispute arising under this Agreement (a
"Dispute"), within ten (10) days following the delivered date of a written request by either Party
(a "Dispute Notice"), (i) each Party shall appoint a representative (individually, a "Party
Representative," and together, the "Parties' Representatives"), and (ii) the Parties'
Representatives shall meet, negotiate and attempt in good faith to resolve the Dispute quickly,
informally and inexpensively. In the event the Parties' Representatives cannot resolve the
Dispute within thirty (30) days after commencement of negotiations, within ten (10) days
following any request by either Party at any time thereafter, senior officers of the Parties with
authority to irrevocably bind the Party to a resolution of the Dispute shall meet to negotiate in
good faith to resolve the Dispute. If the Parties are unable to resolve the Dispute within fourteen
(14) days following a meeting of the senior officers, the Disputes shall be submitted for non-
binding mediation. Mediation of any Dispute shall be initiated by either Party by making a
written demand to the other Party. The Parties shall, within (10) days after delivery of such
written demand for mediation, appoint a mediator who is (i) a reputable attorney or jurist with
ample experience in utility law, and (ii) is in no way affiliated or had material business dealings
with either Party or an Affiliate thereof. If the Parties are unable to agree upon a mediator within
such ten (10) day period, a mediator having the qualifications set forth above shall be appointed
by the applicable service provided by the Alaska State Bar Association. Such mediation shall
occur within thirty (30) days after- the mediator has been appointed and shall occur at a mutually
acceptable location in Anchorage, Alaska. The costs of such mediation services shall be shared
equally, but each Party shall bear the cost of its own travel expenses and attorneys' fees. If the
Parties are unable to resolve the Dispute within fourteen (14) days following the commencement
of mediation, each Party may pursue such rights as may be available to such Party at law or
equity. Notwithstanding any provision in this Agreement to the contrary, if no Dispute Notice
has been issued within twenty-four (24) Months following the occurrence of all events and the
existence of all circumstances giving rise to the Dispute (regardless of the knowledge or potential
knowledge of either Party of such events and circumstances), the Dispute and all claims related
thereto shall be deemed waived and the aggrieved Party shall thereafter be barred from
proceeding thereon.
14.2 Settlement Discussions. The Parties agree that no statements of position or
offers of settlement made in the course of the Dispute process described in this Article 14 will be
offered into evidence for any purpose in any litigation or arbitration between the Parties, nor will
any such statements or offers of settlement be used in any manner against either Party in any
such litigation or arbitration. Further, no such statements or offers of settlement shall constitute
27
an admission or waiver of rights by either Party in connection with any such litigation or
arbitration. At the request of either Party, any such statements and offers of settlement, and all
copies thereof, shall be promptly returned to the Party providing the same.
14.3 Preliminary Injunctive Relief-. Nothing in this Article 14 shall preclude, or be
construed to preclude, the resort by either Party to a court of competent jurisdiction solely for the
purposes of securing a temporary or preliminary injunction to preserve the status quo or avoid
irreparable harm pending negotiation or mediation pursuant to this Article 14.
14.4 Confidential Proceedings. The fact that either Party has invoked the provisions
of this Article 14, the mediation proceedings and related communications, and the efforts of the
mediator shall all be considered Confidential Business Information subject to Article 11, and the
mediator shall make no disclosure of any confidential information that would not be permitted by
a Party under Article 11.
ARTICLE 15
MISCELLANEOUS
15.1 Grants and Incentives. Each Party shall make commercially reasonable efforts
to cooperate with the other Party's efforts to secure additional grants or incentives related to the
Project.
15.2 Forward Contract. The Parties acknowledge and agree that this Agreement
constitutes a "forward contract" within the meaning of the United States Bankruptcy Code.
15.3 Entirety. This Agreement and the Exhibits hereto constitute the entire agreement
between the Parties and supersede any prior or contemporaneous agreements, proposal,
solicitation, terms and conditions, or representations of the Parties affecting the same subject
matter.
15.4 Choice of Law and Forum. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of Alaska, without regard to principles of
conflicts of law. All disputes arising out of this Agreement will be subject to the exclusive
jurisdiction of the state and federal courts located in Anchorage, Alaska, and each Party consents
the personal jurisdiction of these courts.
15.5 Non -Waiver. No consent or waiver, either expressed or implied, by any Party to
or of any breach or default by any other Party in the performance by such other Party of the
obligations thereof under this Agreement shall be deemed or construed to be a consent or waiver
to or of any other breach or default in the performance by such other Party of the same or any
other obligations of such other Party under this Agreement. The failure of either Party to this
Agreement to enforce or insist upon compliance with or strict performance of any of the terms or
conditions hereof, or to take advantage of any of its rights hereunder, shall not constitute a
waiver or relinquishment of any such terms, conditions or rights, but the same shall be and
remain at all times in full force and effect.
15.6 Headings; Attachments. The headings used for the sections and articles herein
are for convenience and reference purposes only, and shall in no way affect the meaning or
28
interpretation of the provisions of this Agreement. Any and all exhibits and attachments referred
to in this Agreement are, by such reference, incorporated herein and made a part hereof for all
purposes.
15.7 Counterparts. This Agreement may be executed in several counterparts, each of
which is an original and all of which constitute one and the same instrument. A facsimile or
electronic signature to this Agreement shall be deemed an original and binding upon the party
against whom enforcement is sought.
15.8 Partial Invalidity. If any provision of this Agreement is found illegal or
unenforceable, such provision will be deemed restated in accordance with Law, to reflect as
nearly as possible the original intention of the Parties, and the remainder of the Agreement will
continue unaffected in full force and effect.
15.9 Other. This Agreement (i) shall not be altered or amended except by an
instrument in writing executed by authorized officers of the Parties; (ii) does not confer any
rights upon any Person other than the Parties and their respective successors and permitted
assigns; and (iii) may be performed by the Parties through the use of agents and subcontractors
(but such use shall not relieve a Party of any of its obligations hereunder). The Parties shall
execute and deliver all documents and perform all further acts that may be reasonably necessary
to effectuate the provisions of this Agreement. This Agreement was prepared jointly by the
Parties, each Party having had access to advice of its own counsel, and not by either Party to the
exclusion of the other Party, and shall not be construed against one Party or the other as a result
of the manner in which this Agreement was prepared, negotiated or executed.
15.10 Insurance.
(a) Seller, at its own cost and expense, shall maintain the insurance on and
with respect to the Project set forth in Exhibit B hereto. Prior to mobilization at the Project Site,
Seller shall provide to Buyer copies of certificates of insurance evidencing the coverages
required under this Agreement. Buyer shall have the right to inspect any insurance policies upon
five (5) Business Day's notice, including original copies of such policies.
(b) If requested by Buyer, Seller shall, within ten (10) days following such
request, deliver to Buyer evidence of insurance held by its subcontractors.
15.11 No Third Party Beneficiaries. Nothing in this Agreement, whether expressed or
implied, is intended to confer any rights or remedies under or by reason of this Agreement on
any other person other than the Parties and their respective successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or liability of any third
person to either Party, nor shall any provision give any third party any right of subrogation or
actions over or against either Party. This Agreement is not intended to and does not create any
third party rights.
15.12 Relationship of the Parties. This Agreement shall not be interpreted or
construed to (a) create an association, joint venture or partnership between the Parties or impose
any partnership obligation or liability on either Party, (b) create any agency relationship between
the Parties or impose any fiduciary duty of any kind on either Party, (c) create a trust or impose
29
any trust obligations of any kind on either Party, or (d) constitute a lease of property of any kind.
Other than as expressly set forth herein, neither Party shall have any right, power or authority to
enter into any agreement or undertaking for, or act on behalf of, or act as or be an agent or
representative of, or otherwise bind, the other Party.
[signatures on following page]
30
The Parties have executed this Power Purchase Agreement as of the date first set out
above, to be effective for all purposes hereof as of the Effective Date.
SELLER:
FIRE ISLAND WIND, LLC
By: — &��
Name: Ethan Schutt
Title: President
Date: _.�►-�.'i'LOVt �Y_
BUYER:
CHUGACH ELECTRIC ASSOCIATION, INC.
By,
'_Name: Bradley W. s
Title: CEO
Date:i _ t
EXHIBIT A
PROJECT DESCRIPTION
A- I
EXHIBIT R
SELLER'S INSURANCE REQUIREMENTS
Seller shall maintain the following insurance coverages:
• Worker's Compensation: $1 MM minimum
• Employment Liability: $1 MM minimum
• Commercial General Liability: $1 OMM minimum
• Commercial Automobile Liability Insurance: $5MM minimum
• Umbrella/Excess Liability Insurance: $1 OMM minimum
• All Risk Property Insurance: replacement cost of property beginning on the Commercial
Operation Date
In addition to the aforementioned insurance requirements, Seller or Seller's subcontractors shall
maintain the following:
• Aircraft Liability: $5MM minimum
• Watercraft Liability: $1 MM minimum
• Seller's Pollution Liability: $1MM minimum
• Professional Liability Insurance: $2MM minimum
1) The certificates of insurance provided by insurers shall verify:
a. Name of insurance company, policy number, and expiration date; and
b. Coverage required and limits on each, including the amount of deductibles or self -insured
retentions.
2) The policies shall provide that insurer must provide 30 days notice to Buyer of cancellation,
modification, or expiration of policy.
3) Seller and Insurer shall waive the right of subrogation.
4) The Commercial General Liability and Umbrella/Excess Liability policies shall name Buyer,
its subsidiaries and affiliates, and its respective officers, directors, shareholders, agents, and
employees as additional insureds for liability arising out of Seller's construction, ownership,
operation, etc. The other insurance policies may, but are not required to, name such parties
as additional insureds.
5) Each insurer shall be rated "A" or better by A.M. Best or have a comparable rating from
another recognized rating entity.
6) Policies subject to annual review by the Buyer.
7) Seller agrees that Seller's insurances are primary to any insurances carried by Buyer.
8) Seller is responsible for any premiums associated with Seller's policies.
9) Seller or its subcontractors are responsible for additional insurance (if any) to cover tools and
equipment used to perform the work but not incorporated into the Project.
EXHIBIT C
FORM OF COMMERCIAL OPERATION CERTIFICATE
This certification ("Commercial Operation Certificate") is delivered by Fire
Island Wind, LLC ("Seller") to Chugach Electric Association, Inc. ("Buyer") in
accordance with the terms of that certain Power Purchase Agreement dated
("Agreement") by and between Seller and Buyer. All capitalized terms used in this
Certification but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Agreement. Seller hereby certifies and represents to
Buyer the following:
With respect to Project Turbine [INSERT SERIAL NUMBER OR OTHER
IDENTIFYING NUMBER]:
(i) such Project Turbine has been interconnected and Placed in Service with a written
confirmation from a qualified independent engineer attached hereto,
(ii) the Interconnection and Integration Agreement has been executed,
(iii) such Project Turbine has been tested according to the manufacturer's
commissioning procedures and Prudent Wind Generation Industry Practices,
(iv) all related facilities and rights necessary for continuous operation of such Project
Turbine and the sale of Net Electric Energy from such Project Turbine and the
associated Project Capacity and Credits have been completed and
(v) This Commercial Operation Certificate has been executed by a duly authorized
office of the Seller.
IN WITNESS WHEREOF, the undersigned has executed this Commercial
Operation Certificate on behalf of the Seller as of the day of _ _ 20
Fire Island Wind, LLC, a Delaware
limited liability company
M.
Name:
Title:
C-1
F.XAiRIT it
NOTICE ADDRESSES
To Buyer: Chugach Electric Association, Inc.
5601 Electron Drive
Anchorage, AK 99519
CONTRACTUAL NOTICES and INVOICES:
Attn: Lee Thibert, Sr. VP, Strategic Planning &
Corporate Affairs
Phone: (907) 762-4517
Facsimile: (907) 762-4514
E-mail: lee_thibert@chugachelectric.com
INVOICES:
Chugach Electric Association, Inc.
Attention: Marina Mccoy-Casey
Phone: (907) 762-4369
Fax: (907) 762-4315
Email: marina_mccoy-casey@chugacl-electric.com
OPERATIONAL, MATTER NOTICES:
Chugach Electric Association, Inc.
Attention: Burke Wick, Director, System Control
Phone: (907) 762-4779
Fax: (907) 762-4540
E-mail: burke_wick@chugachelectric.com
To Seller: Fire Island Wind, LLC
c/o Cook Inlet Region, Inc., its managing member
2525 C Street; Suite 500
Anchorage, AK 99509
ATTN: Bruce Anders, General Counsel
Telephone: 9 0 7 -2 6 3- 5 5 0 3
Fax: 907-263-5182
With a copy to:
Suzanne Gibson
Sr. Director Energy Development
2525 C Street; Suite 500
Anchorage, AK 99509
Telephone: 907-263 -5150
Fax: 907-263 -6861
D-1
EXHIBIT E
CONSTRUCTION SCHEDULE
E-1