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HomeMy WebLinkAboutUnalaska Municipal Power Sales Agreements 1992DRAFT January 9,1992 . 3610.2014 TFK/cf Rev.#10 INDUSTRIAL/COMMERCIAL CUSTOMER POWER SALES AGREEMENT Between THE CITY OF UNALASKA,ALASKA and Dated as of :1,1992 DRAFT January 9,1992 ' 3610.2014 TFK/ct Rev.#10 TABLE OF CONTENTS Page Recitals 20...cc ce eee eee teen eee eee 1 Section 1 -Definitions ...0....eeeeeeeas 2 Section 2 -Term of Agreement Sc eee eee eee ee eee nett e teens 3 Section 3 -Electric Service To Be Furnished .........obec eeeeeeeee.4 Section 4 -Connecting Equipment;Easements;Rights of Access ..........4 Section 5 -Payment Obligation ........02...cc ccc ee eee ee nee 5 Section 6 -Sales of Power to City wee eee eeseeeeeeeeeeeeeeeeee 6 Section 7 -Default;Remedies ..2.2.....0...ccc eee eee eee eee 6 Section 8 -Indemnity ............Lecceeeeeeeteeneeeeee 6 Section 9 -No Damages for Interruption of Service ...............200008 7 Section 10 -Operation and Maintenance of Purchaser's Facility............7 Section 11 -Applicable Law;Effect of Tariff ......2.0...cee eee eee 7 Section 12 -Availability Of Information;Inspections ...............6..ve 7 Section 13 -Disclaimer of Warranty of Purchaser's Equipment ............8 Section 14 -Severability ..............Lo cece eee eee eens eeueees «8 Section 15 -Remedies Cumulative ..........0...cee eee eee eee ee 8 Section 16 -Waiver Not Continuing ............0...cece eee ee eee 8 Section 17 -AssignmentS .........02.ccc ee eee eee entree ees 9 Section 18 -Notices ..2.2.....cee cc ec ce ee ete eee ee 9 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 TABLE OF CONTENTS (Continued) Page Section 19 -Section Headings ......2...0...cc ec ee ee eee eens 9 Section 20 -Multiple Copies ..........0..cee eee ee ee teens 9 Exhibit A -Project Description Exhibit B -Line Diagram of Project Exhibit C -Connecting Equipment Exhibit D -Description of Purchaser's Facility Exhibit E -Calculation of Contract and Interruptable Rates UNALASKA Table of Contents AFFO1A88 Page 3 DRAFT January 9,1992 3610.2014 TFK/ct Rev.#10 POWER SALES AGREEMENT -THIS AGREEMENT is executed this __day of ,1992,by the CITY OF UNALASKA,ALASKA,an Alaska municipal corporation (the "City"),and ,a (the "Purchaser'). WITNESSETH: The City recites,agrees,represents,and covenants as follows: (1)The City is a municipal corporation duly organized and existing under the laws of the State of Alaska,has duly authorized the execution and delivery of this Agreement,and this Agreement is the legal,valid,and binding obligation of the City enforceable in accordance with its terms. (2)The City's execution and performance of this Agreement will not conflict with,violate or constitute an event of default under any other resolution,contract, agreement,bond,note,mortgage,or other obligation of the City or with respect to any order,ruling or decree of any court or regulatory agency to which the City is subject at the time the City executes this Agreement. (3)The Gity has agreed to purchase power from a power generation project to be constructed at Unalaska,Alaska,and will have power available for sale as a result of the purchase.) The Purchaser recites,agrees,represents,and covenants as follows: (1)|The Purchaser is a corporation duly incorporated and in good standingunderthelawsoftheStateof__,iS qualified to do business in the State of Alaska,has all corporate power and authority necessary to conduct its business as presently being conducted and to own and operate its property,has duly authorized the execution and delivery of this Agreement,and this Agreement is the legal,valid,and binding obligation of the Purchaser enforceable in accordance with its terms. (2)|The Purchaser's execution and performance of this Agreement will not conflict with,violate or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Purchaser or with respect to any order,ruling or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 NOW,THEREFORE,the parties agree as follows: Section 1 -Definitions.For the purposes of this Agreement,the following definitions apply: "Agreement”means this Power Sales Agreement. "Authority"means the Alaska Energy Authority and its successors and assigns. "Authority Aqreement"means the Power Sales Agreement between the City and the Authority dated the __day of __ ,1992. "Base Amount"means kilowatt hours (kWh). "City”means the City of Unalaska,Alaska,and its successors and assigns. _"City's System"means the City's electric utility system. "Connecting Equipment"means the equipment and machinery used by the City to connect the Purchaser's Facility with the City's System,which equipment and . machinery are anticipated as of the date of execution of this Agreement to include,but are not limited to,the equipment and machinery described in Exhibit C hereto. "Date of Commercial Operation"means the date,which occurs after Necessary Approvals have been obtained,on which engineers retained for this purpose by the Authority have reasonably declared that the Project is fully available to be operated at not less than megawatts (__MW),and its output can be scheduled on a commercial basis. "Delivery Point"means the point identified as such in Exhibit B hereto. "Fiscal Year"means any twelve-month period ending on June 30. "Interruptable Power"means electric energy produced by the City's System in excess of that which,in the City's judgment;is required to meet the requirements of the City's electric utility customers under tariff provisions or contracts that do not provide for interruptions of delivery. UNALASKA Industrial/Commercial Customer Power Sales Agreement AFFO1A8 Page 2 DRAFT January 9,1992 3610.2014 TFK/ct Rev.#10 "Necessary Approvals"means the approval or consent in writing of each governmental entity,regulatory body,or other person which approval is required in order for the Project to be constructed and operated in accordance with the Authority Agreement. "Payment Obligation”has the meaning set forthin Section 5(A). "Project"means the project described in Exhibit "A"hereto. "Purchaser”means ,a - ,and its successors and assigns. "Purchaser's Facility"means the Purchaser's commercial or industrial facility located at ,and described in Exhibit D hereto. Section 2 -Term of Agreement.(A)The term of this Agreement shall commence upon its execution by the manager of the City and an authorized officer of the Purchaser,and its ratification by the city council of the City. (B)This Agreement shall terminate 30 years after the Date of Commercial ;Operation;provided,however,that: (1)the Purchaser may elect to terminate this Agreement upon (i)90 days written notice to the City,and (ii)the Purchaser's Facility permanently having ceased to operate for a continuous period of not less than 365 days; and ; (2)the City may elect to terminate this Agreement upon 90 days written notice to the Purchaser if the Authority ceases to sell electric energy from the Project to the City. (C)The obligation of the Purchaserto purchase power under this Agreement shall commence on the later of (i)the date construction and installation of the © Connecting Equipment is completed,and (ii)the Date of Commercial Operation. UNALASKA industrial/Commercial Customer Power Sales Agreement . AFFO1A8S Page 3 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 Section 3 -Electric Service To Be Furnished.(A)The City hereby agrees to sell to the Purchaser,and the Purchaser hereby agrees to take or pay for,electric energy from the City's System at the Delivery Point for the Purchaser's Facilityin anamountnotlessthantheBaseAmounteachmonth.The Purchaser agrees to pay for the Base Amount of electric energy at the rate calculated under Section 5(C)of this Agreement,whether or not the Purchaser actually takes and/or uses that electric energy. (B)Inaddition to electric energy which the Purchaser is obligated to take or pay for under Section 3(A)of this Agreement,commencing on the later of (i)the date construction and installation of the Connecting Equipment is completed,and (ii)the Date of Commercial Operation,the City agrees to sell Interruptable Power to the Purchaser,and the Purchaser agrees to pay for such Interruptable Power that it may elect to purchase,at the rate calculated under Section 5(D)of this Agreement. (C)The Purchaser's demand on the City's System shall at no time exceed kW;provided that the City may from time to time,at its option,make Interrupt- able Power available to the Purchaser in excess of this amount. Section 4 -Connecting Equipment;Easements;Rights of Access.(A)The City shall construct and install the Connecting Equipment at its own expense.The Purchaser shall provide space for,and shall be responsible for,the safekeeping of the Connecting Equipment,including the City's meter installation,on the Purchaser's premises,including meters,wires and other metering facilities installed by and remaining the property of the City.In the event of loss or damage to the City's property due to the negligence of the Purchaser,the Purchaser shall be liable to the City for the cost of repairs or replacement. . (B)The Purchaser shall,without charge to the City,convey a temporary easement to the City for the entire period of this Agreement providing for a suitable right-of-way for the City's distribution lines crossing the Purchaser's property. (C)The Purchaser hereby grants the City's authorized employees or agents free access to all equipment connected with the provision of electricity under this Agreement at all reasonable times for the purpose of reading meters and testing,repairing or replacing any equipment which is the property of the City. UNALASKAindustrial/Commercial Customer Power Sales Agreement AFFO1A88 Page 4 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 (D)The City does not assume any responsibility for protection of the Purchaser's generators or of any other portion of Purchaser's electrical equipment. The Purchaser is fully responsible for protecting its equipment in such a manner that faults or other disturbances on the interconnected system do not cause damage to the Purchaser's equipment. Section 5 -Payment Obligation.(A)The obligation of the Purchaserto make payments under this Agreement shall commence in the first month commencing after the later of (i)the date construction and installation of the Connecting Equipment is completed,and (ii)the Date of Commercial Operation.On or before the fifth day of each month the City shall deliver a bill to the Purchaser setting forth the amount of the Payment Obligation due with respect to the preceding month,and the Purchaser shall pay the amount set forth in such bill on or before the 20th day of such month.The Payment Obligation for a month shall consist of the sum of (i)the payment due for the Base Amount for that month calculated under Section 5(C)of this Agreement,and (ii) the payment due for Interruptable Power purchased in that month,calculated under. Section 5(D)of this Agreement. (B)Subsequent to the Date of Commercial Operation,the Purchaser shall pay the City for the Base Amount of electric energy in the amounts and at the times required by this Agreement notwithstanding a suspension or reduction in the amount of power delivered to the Purchaser from the Project or the City's System.Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional and unaffected by any interruption, interference,or curtailment in whole or in part of power supplied by the Project or the City's System. (C)The payment due for the Base Amount for a:month shall be the product of the Base Amount multiplied by the contract rate calculated as provided in Exhibit E. (D)|The payment for Interruptable Power for a month shall be (i)the amount,if any,of Interruptable Power delivered to the Purchaser during the month,(ii)reducedbytheexcessoftheBaseAmountsforallpriormonthsintheFiscalYearovertheamountofelectricenergydeliveredtothePurchaserinthosepriormonths(but not paid for as Interruptable Power),(iii)multiplied by the interruptable rate calculated as provided in Exhibit E. UNALASKA Industrial/Commercial Customer Power Sales Agreement AFFO1AaS Page 5 DRAFT January 9,1992 3610.2014 TFK/ct Rev.#10 Section 6 -Sales of Power to City.The Purchaser agrees to sell non-firm electric power from the Purchaser's Facility to the City in such amounts as the City may request from time to time,at the rate for such purchases set forth in the City's electric utility tariff in effect at the time of the purchase. Section 7 -Default;Remedies.(A)Upon failure of the Purchaser to perform any of its obligations hereunder,the City may bring any suit,action or proceeding at law or in equity,including mandamus,injunction,and action for specific performance, as may be necessary or appropriate to enforce any covenant,agreement or obligation of this Agreement against the Purchaser.The City may bring such suit (1)thirty days after giving the Purchaser a written demand for performance,in the case of default - by the Purchaser on any obligation other than a payment obligation,and (2) immediately,in the case of default by the Purchaser on any payment obligation..The Purchaser shall continue to make payments in the event of any dispute regarding performance of any obligation by any party under this Agreement,and this obligation of continued payment pending resolution of disputes shall be immediately enforceable - by the City upon application to any court of competent jurisdiction. (B)In addition to the City's rights under (A)of this Section,if the Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the City may terminate or suspend the delivery of power to the Purchaser if the City reasonably determines that such termination or suspension is more effective than other available alternatives in minimizing adverse impacts on the City. (C)Upon failure of the City to perform any of its obligations hereunder,the Purchaser may,upon thirty days written notice to the City,or immediately with respect to any payment obligation,bring any suit,action,or proceeding,at law or in equity, including mandamus,injunction,and action for specific performance,as may be. necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the City.No payment obligation of the Purchaser under this Agreement is subject to offset,however. Section 8 -Indemnity.The Purchaser shall indemnify the City,its officers, agents and employees,past,present and future,against claims arising out of theoperationofthePurchaser's facilities and the sale of electric powerbytheCityto the Purchaser under this Agreement,other than claims arising from willful misconduct or negligence on the part of the City. UNALASKA Industrial/Commercial Customer Power Sales Agreement AFFOIAS8 Page 6 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 Section 9 -No Damages for Interruption of Service.(A)The City and the Purchaser agree that the City shall not be liable for any injury,loss,casualty or damage resulting in any way from the supply or use of electricity or interruption in service of said electricity,or from the presence or operation of the City's structures, wires,conduit,appliances or devices on the Purchaser's premises except injuries or damages resulting solely from the negligence of the City. (B).If the electricity supplied pursuant to this Agreement is interrupted or irregular or defective or fails from Causes beyond the control of the City (including,but not limited to,acts of God,inclement weather,equipment failure or executive or administrative rules or orders),the City will not be liable therefor unless the interruption of service is caused solely by the City's failure to exercise reasonable care. (C)The City reserves the right to temporarily interrupt service to make system repairs or system upgrades.In event such interruptions are required,the City will give advance notice to the Purchaser and schedule such interruptions to be as short as practicable and at times of least inconvenience. Section 10 -Operation and Maintenance of Purchaser's Facility.The Purchaser shall comply with applicable federal and state laws and regulations in theoperationandmaintenanceoftheelectricgenerationandrelatedequipmentatthe Purchaser's Facility,and obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of such equipment.The Purchaser shall modify or add to its electric generation and related equipment at the Purchaser's Facility as requested by the City to protect the City's System and Connecting Equipment from damage caused by such equipment. Section 11 -Applicable Law;Effect of Tariff.The laws of the State of Alaska shall govern the interpretation and application of this Agreement and the actions of the parties hereunder.Service shall be provided to the Purchaser pursuant to the terms of this Agreement in accordance with all applicable City ordinances and electrical tariffs now existing or hereafter adopted and the Purchaser expressly agrees to abide by the terms of said ordinances and tariffs.In the event of any conflict between the terms of this Agreement and the terms of said ordinances and tariffs,the terms of this Agreement shall govern.: UNALASKA Industrial/Commercial Customer Power Sales Agreement AFFO1A88 Page 7 DRAFT January 9,1992 3610.2014 TFK/ct Rev.#10 Section 12 -Availability Of Information;Inspections.(A)The parties shall make available to each other,for inspection and copying during business hours,all books, records,plans,and other information relating to any calculation or determination to be made pursuant to this Agreement. (B)The Purchaser shall permit the City,at all reasonable times during business hours,upon reasonable notice,to inspect the electric generation and relatedequipmentatthePurchaser's Facility. Section 13 -Disclaimer of Warranty of Purchaser's Equipment.Neither by inspection or non-rejection or in any other way does the City give any warranty, expressed or implied,as to the adequacy,safety or characteristics or any structures, equipment,wires,conduit,appliances or devices owned,installed or maintained by the Purchaser or leased by the Purchaser from third parties. Section 14 -Severability.(A)If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication,and all the remaining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause,or provision or any part thereof so adjudicated to be invalid had not been included herein. (B)If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,then and in such event the parties agree that they shall exercise their best efforts to correct such invalidation and - substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. Section 15 -Remedies Cumulative.No remedy conferred upon or reserved to the parties hereto is intended to be exclusive of any other remedy or remedies available hereunder or now or hereafter existing at law,in equity,by statute,or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 16 -Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or UNALASKA industrial/Commercial Customer Power Sales Agreement AFFOTAg8 Page 8 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right,or matter. Section 17 -Assignments.The Purchaser shall not assign or delegate any of its rights or duties under this Agreement,without obtaining the prior written consent of the City,which consent will not be unreasonably withheld,provided that (i)theassigneeshallassumetheobligationsofthePurchaserhereundertotheextentofthe interest assigned,and (ii)the Purchaser shall furnish a true and complete copy of each such assignment to Utility within five (5)days after the delivery thereof. Section 18 -Notices.Notice hereunder shall be given in writing,either by mail or facsimile transmission,to be deemed effective on receipt,or by telephone, confirmed in writing,addressed as follows: City -- Telephone:(907) Facsimile:(907) Attn: Purchaser -- Telephone:(907) Facsimile:(907) Attn: Section 19 -Section Headings.The section headings in this Agreement are for convenience only,and do not purport to,and shall not be deemed to,define,limit, or extend the scope or intent of the section to which they pertain. Section 20 -Multiple Copies.This Agreement shall be executed in several counterparts,each of which shall be an original,but all of which shall constitute one and the same instrument. UNALASKA industria/Commercial Customer Power Sales Agreement AFFOIAS8 Page 9 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 IN WITNESS WHEREOF,the parties have caused this Agreement to be executed the day and year first above written. CITY OF UNALASKA By By As As UNALASKA industria/Commercial Customer Power Sales Agreement AFFOIASS Page 10 DRAFT January 9,1992 3610.2014 TFK/cf Rev.#10 EXHIBIT E -CALCULATION OF CONTRACT AND AND INTERRUPTABLE RATES 1.Contract Rate. The Contract Rate for a Fiscal Year shall be determined by the following formula: CR =PC/FS +CC Where: CR =The Contract Rate in cents per kWh. PC =The City's Annual Payment Obligation for the Fiscal Year undertheAuthorityAgreement.e FS =Total sales in kWh of non-interruptable power from the Project during the Fiscal Year. The cost in cents per kWh of operating the City's System,whichCC= during the initial Fiscal Year of sales under this Agreement shall by 1.5 cents,and in each subsequent Fiscal Year shall be:1.5 cents adjusted by [describe formula for adjustment]. 2.interruptable Rate. The Interruptable Rate for a Fiscal Year shall be determined by the following formula: |=1/2(CR +FF/PS) Where: |=The Interruptable Rate in cents per kWh. FF =The total fluid fee payable for the Project during the Fiscal Year. UNALASKA EXHIBIT E AFFO1A88 DRAFT January 9,1992 3610.2014 TFK/ct Rev.#10 PS =Total sales in kWh of power from the Project during the Fiscal Year. The other terms are defined as provided for the Contract Rate above. During a Fiscal Year,PC and FF shall be estimated as stated in the Annual Project Budget for that Fiscal Year,and FS and PS shall be estimated as stated in the City's estimate of sales of Project power for the Fiscal Year.In the following Fiscal Year,the Contract Rate and the Interruptable Rate shall be adjusted to compensate for any difference between the estimates of these quantities and the actual quantities determined as of the end of the Fiscal Year. UNALASKA EXHIBIT E AFFO1A88 Cond WOHLFORTH,ARGETSINGER,JOHNSON &BRECHT PETER ARGETSINGER JULIUS J.BRECHT CYNTHIA L.CARTLEDGE ROBERT M.JOHNSON BARBARA E.KISSNER THOMAS F,KLINKNER ANOREW M.LEBO BRADLEY E.MEYEN JAMES A.SARAFIN KENNETH E.VASSAR ERIC E.WOHLFORTH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 900 WEST STH AVENUE,SUITE 600 ANCHORAGE,ALASKA 99501 MEMORANDUM TO:Distribution List FROM:Thomas F.Klinkner DATE:October 21,1991 TELEPHONE (907)276-6401 - TELECOPY (907)276-5093 OF COUNSEL - ROGER G.CONNOR RECEIVED OCT 21 1991 ALASKA ENERGY AUTHORITY SUBJECT:Alaska Energy Authority/Unalaska Geothermal Project Our File No.3610.2014 Enclosed is a revised draft of the Power Sales Agreement betweentheAlaskaEnergyAuthorityandtheCityofUnalaska.|understand that we will discuss this draft at our meeting in Seattle on Thursday,October 24. AFFOIB45 19-fBYeyaditanYSI"7 DISTRIBUTION LIST ALASKA ENERGY AUTHORITY POWER REVENUE BONDS,SERIES 1992 (Unalaska Geothermal Project) 3610.2014 October 21,1991 ISSUER Alaska Energy Authority P.O.Box 190869 701 East Tudor Road Anchorage,Alaska 99519-0869 Telephone (907)261-7262 Telecopy (907)561-8584 Charlie Bussell,Executive Director Brent Petrie,Director of Agency Operations Dick Emerman,Senior Economist BOND COUNSEL Wohlforth,Argetsinger,Johnson &Brecht 900 West 5th Avenue,Suite 600 Anchorage,Alaska 99501 Telephone (907)276-6401 Telecopy (907)276-5093 Eric Wohlforth,Esq. UNDERWRITER John Nuveen &Co.Incorporated 2740 Pacific First Centre 1420 Fifth Avenue Seattle,Washington 98101-2333 Telephone (206)587-0959 Telecopy (206)382-1589 Jim Seagraves UNDERWRITER''S COUNSEL Katten Muchin &Zavis 525 West Monroe Street,Suite 1600 Chicago,Illinois 60606-3693 Telephone (312)902-5418 Telecopy (312)902-1061 Lew Greenbaum,Esq. PROJECT ENGINEER OES!Power Corporation 610 East Glendale Sparks,Nevada 98431 Telephone (702)355-5666 Telecopy (702)355-5656 Daniel N.Schochet Vice President -Marketing Cliff Philips Vice President -Finance PROJECT ENGINEER'S COUNSEL Perkins-Coie 1029 West 3rd Avenue Suite 300 Anchorage,Alaska 99501 Telephone (907)279-8561 Telecopy (907)276-3108 Richard Johannsen,Esq. CITY OF UNALASKA P.O.Box 89 Unalaska,Alaska 99685 Telephone:(907)581-1251 Telecopy:(907)581-1417 Polly Prchal,City Manager Roe Sturgulewski,Director of Public Works R.W.BECK AND ASSOCIATES,INC. 2121 4th Avenue,Suite 600 Seattle,Washington 98121 Telephone:(206)441-7500 Telecopy:(206)441-4964 Mr.Ray Benish AEA/Unalaska Geothermal Project Distribution List -3610.2014 AFFO198F CiTy'S COUNSEL Hicks,Boyd,Chandler &Falconer 550 West 7th Avenue,Suite 1530 Anchorage,Alaska 99501 Telephone (907)272-8401 Telecopy (907)274-3698 Brooks Chandler,Esq. LERESCHE &CO. 4270 Glacier Hy. Juneau,Alaska 99801 Telephone:(907)586-8338 Telecopy:(907)586-8338 Mr.Robert LeResche Page 2 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 POWER SALES AGREEMENT Between ALASKA ENERGY AUTHORITY and CITY OF UNALASKA,ALASKA Dated as of 1991 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 TABLE OF CONTENTS Page Section 1 -Definitions .......0.0...eeeeeee 2 Section 2 -Term of Agreement...0...20...0.ee eee 5 Section 3 -Electric Service to be Furnished...................2.--40.-6 Section 4 -Annual Project Costs .......0....2.eee eee ee eee 6 Section 5 -Payment Obligation.....2.2...2...eeeeee 8 Section 6 -Obligations Under Indenture;Completion of Project............9 Section 7 -ObligationstntheEventofDefautt Default;Dispute Resolution; RemedieS .......2...0...eeteeeee 10 Section 8 -Purchaser's Systeras System .......0.0...eee ee 12 Section 9 -Indenture ..1...eeeeae 13 Section 10 -Purchaser's Consent to Supplemental Indentures to Construct or Operate the Project ....2....eeees 14 Section 11 -Authority Responsibilities ....0...0.0...0.0.0.eee ee eee 14 Section 12 -Reeerds-Insurance ........2.2...ee es 16 Section 13 -Records......0...eeeeee 18 Section +8-14 -Inspection of Facilities ...0.2....0...ee ee 18 Section +4 15 -Covenants to Maintain Integrity of Agreement .............19 Section 45 16 -Assignment ....20...0...2 ee ee ee eee eee 20 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 Section 46 17 -Exhibits...2...ee ne et ee eee 21 Section +4 18 -Notices,Computation of Time and Holidays ..............22 Section +8 19 -Applicable Law...6...ee nee 22 Section +9 20 -Availability of Information...2.0...2.0.0.0...0.ee ee eee 22 Section 26 21 -Severability 2.0...0...ee ee eee 22 Section 24+22 -Remedies Cumulative ..1...0...0...es 23 Section 22 23 -Waiver Not Continuing ............2.0.0.0...ee eee 23 Section 23 24 -Covenant To Act In Good Faith .............6...02005.23 Section 24 25 -No Third-Party Beneficiaries ..........0.0.0.0 0 0 eee 23 Section 25 26 -Section HeadingS ...........0.cee ee ee ee ee 24 Section 26 27 -Multiple Copies .......0.0...0...cee ee eee ee 24 o”Nee 4ExhibitA-Indenture Exhibit B -Description of the Project Exhibit C -Form of Commercial Contract Exhibit D -Form of Certain Supplemental Indentures. AEA/Unalaska Geothermal Project Table of Contents AFFO18ED Page ii DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 POWER SALES AGREEMENT THIS AGREEMENT dated as of ,19 ,is entered into by and amerng between the Alaska Energy Authority (the "Authority")and the City of Unalaska,Alaska,(the "Purchaser'). WITNESSETH: The Authority recites,agrees,represents,and covenants as follows: (1)The Authority is a public corporation of the State of Alaska duly created, organized,and existing pursuant to AS 44.83; (2)|The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and bylaws of the Authority,to enter into this Agreement and to comply fully with the terms hereof; (3)|The Authority desires to fulfill its legislatively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of power and an adequate,economic,and reliable long-term supply of power;and (4)The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Authority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. The Purchaser recites,agrees,represents,and covenants as follows: (1)|The Purchaser is a duly organized and constituted municipal corporation under the Constitution and laws of the State of Alaska; (2)The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and other applicable laws and regulations,and pursuant to its ehasterand code of ordinances,to enter into this Agreement and to comply fully with the terms thereof; DRAFT October 21,1991 3610.2014 TFK/ct Rev.#13 v.#19 (3)|The Purchaser performs the functions of a utility and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)|The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other eRarer, ordinance,resolution,contract,agreement,bond,note,mortgage,or other obligation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. NOW,Therefore,the parties agree as follows: Section 1 -Definitions.For the purposes of this Agreement,the following definitions apply: (a)"Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. (b)"Agreement"means this Power Sales Agreement. (c)"Annual Payment Obligation"means the total amount payable by the Purchaser in or for a Fiscal Year pursuant to this Agreement. (d)"Annual Project Budget"means the budget for the Project as adopted or in effect for a particular Fiscal year and amended or supplemented from time to time. (e)"Annual Project Costs"shall have the meaning given it in Section 4 of this Agreement. (f)"Authority"means the Alaska Energy Authority as established by the Act and any subsequent successor agency thereto. (g)"Bonds"means bonds,notes,or other evidences of indebtedness (including refunding bonds)issued pursuant to the Indenture,the proceeds of which AEA/Unalaska Geothermal Project Power Sales Agreement AFFOIBED Page 2 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 are used to pay or reimburse Costs of Acquisition and Construction and Required Project Work. (h)"Capability of the Project"means the entire capability of the Project to generate electric power at any and all times from the Date of Commercial Operation until the termination of this Agreement (or any renewal thereof),including periods when the Project may not be operating or inoperable or the operation thereof is curtailed,in each case in whole or in part,for any reason whatsoever. (i)"Consultant"means an independent individual or firm of nationwide and favorable reputation,having demonstrated expertise in the field or the matter or the item referred to it under various specific provisions of this Agreement,approved by the Authority,and acceptable to the Purchaser. (j)"Cost of Acquisition and Construction"means the Cost of Acquisition and Construction (as defined in Section of the Indenture)of the Project. (k)"Date of Commercial Operation"means the date,which occurs after Necessary Approvals have been obtained,on which _engineers retained for this purpose by the Authority declares have reasonably declared that the Projectis fully available to perferm-atneHess-thanitsdesigncapacity be operated at notless than Coasis. (I)"Debt Service"means amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds under the Indenture. (m)"Fiscal Year"means that 12-month period starting on July 1 of a calendar year through and including June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the 12-month period starting on the Date of Commercial Operation through and including the following June 30. (n)"Indenture”means the indenture securing the Bonds in substantially the form attached hereto as Exhibit A. (o)"Purchaser"means the City of Unalaska,Alaska. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 3 meqawatts (__MW),and its output can be scheduled on a commercial ” DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (p)"Project"means the Unalaska Geothermal Project as described in Exhibit (q)"Prudent Utility Practice"means at a particular time any of the practices, methods,and acts engaged in or approved by a significant portion of the electric utility industry at such time,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the desired results at the lowest reasonable cost consistent with good business practices,reliability,safety ;and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method ;or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods,or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety ;and expedition.Prudent Utility Practice includes due regard for manufacturers'warranties and the requirements of governmental agencies of competent jurisdiction and shall apply not only to functional parts of a Project,but also to appropriate structures, landscaping,painting,signs,lighting ;and other facilities. (r)"Purchaser's System"means the Purchaser's electric utility system for the distribution,transmission ;and generation of electrical power and which is owned and operated by the Purchaser. (s)"Necessary Approvals"means the approval or consent in writing of each governmental entity,regulatory body,or other person which approval is required in order for the Project to be constructed and operated in accordance with this Agreement.As of the date of execution of this Agreement,the Necessary Approvals include but are not limited to approvals necessary under AS 44.88,approvals requiredbytheAlaskaPublicUtilitiesCommission("APUC"),approval of the Agreement by thegoverningbodyofthePurchaserandtheBoardofDirectorsoftheAuthority,and approval of necessary environmental permits by the Alaska Department of Environ- mental Conservation and the U.S.Environmental Protection Agency.Necessary approvals also include the availability,as determined by the Authority,of sufficient funds to complete the Project. (t)"Renewal and Contingency Reserve Fund"means the Renewal and Contingency Reserve Fund established pursuant to Section of the Indenture. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 4 DRAFT October 21,1991 3610.2014 TFK/ct Rev.#13 v.#19 (u)"Required Action"means an action that must be taken in order for the Authority to comply with federal or state law,the orders of licensing and regulatory agencies,the Indenture,or this Agreement. (v)"Required Project Work"means repairs,maintenance,renewals, replacements,or improvements required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or this Agreement,or otherwise necessary to keep the Project in good and efficient operating condition,consistent with: (1)|sound economics for the Project and the Purchaser;and (2)national standards for the industry. (w)"Revenue Fund"means the Revenue Fund established pursuant to Section of the Indenture. (x)"Trustee"means the Trustee acting under the Indenture or that Trustee's successor or successors and any other corporation which may,at any time,be substituted in that Trustee's place under the Indenture. (y)Capitalized Terms used in this Agreement which are not defined herein have the definition given in the Indenture. Section 2 -Term of Agreement.yr exec”fren. (a)Effectiveness.This Agreement shall take effect immediately- (b)Commencement of Payment Obligations.The payment obligations of the Purchaser,as set forth in Section 5 of this Agreement,to pay Annual Project Costs,as defined in Section 4 of this Agreement,shall commence on the Date of Commercial Operation. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 5 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 Section 3 -Electric Service to be Furnished. (a)Sale and Purchase.The Authority hereby sells,and the Purchaser hereby purchases,the Capability of the Project (together with associated energy)from the Project and the Purchaser agrees to pay the Annual Project Costs therefor in accordance with this Agreement. (b)Available Power.The Authority shall at all times,except when prevented by a cause or event not within the control of the Authority,make power available to the Purchaser from the Project in an amount equal to the amount the Purchaser may schedule from the Project within the limitations imposed by available Capability of the Project. (c)Required Project Work.The Authority shall perform or cause to be performed all Required Project Work provided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 4(a)(4)of this Agreement.The Authority shall give reasonable notification to the Purchaser prior to making performing or causing to be made performed any Required Project Work. Section 4 -Annual Project Costs. (a)Annual Project Costs Defined.Annual Project Costs mean all of the costs resulting from the ownership,operation ;and maintenance of,and renewals and replacements to,the Project properly incurred or paid during each Fiscal Year, including: (1)|amounts required to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Construc- tion; (2)|amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with this Agreement; AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 6 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (3)amounts required to restore the funds established under the Indenture to the levels required by the Indenture to be maintained therein; (4)|amounts which may be required to pay for Required Project Work to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (5)other amounts determined by the Authority to be necessary or appropriate to supplement and to be paid into the Funds established under the Indenture; (6)all other costs of producing and delivering Project power including,without limitation,fluid feereyaky fees and-eests-obvell maintenance -- (but excluding depreciation),not accounted for by the payments out of funds and reserves specified in the foregoing sections and properly chargeable to the Project under the Uniform System of Accounts,less any credits against said costs by reason of revenues from sources other than the direct sale of power to the Purchaser,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain said reserve funds in the amounts required under the Indenture or in such greater amounts as may be determined by the Authority,or to reduce Annual Project Costs.Such other costs shall include: (A)project operating and maintenance costs}ip-accerdance--withtheAnnualProjectBudget; (B)costs of Project-related insurance;and (C)Project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations. (b)Proceeds of aTaking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,or output of the Project by any state or federal government agency shall be used by the Authority to: (1)reduce Annual!Project Costs;or AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 7 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (2)retire Bonds. (c)Reduction of Annual Project Costs. (1)Prior to the beginning of each Fiscal Year,the Authority will prepare an Annual Project Budget for that year.The Annual Project Budget shall contain all Annual Project Costs as defined in subparagraph (a)above. It shall further specify the estimated unit cost of power from the Project derived from dividing the Annual Project Costs by 88 million kilowatt-hours of energy (the "Basic Rate").!f the Purchaser notifies the Authority at least 30 days prior to the effective date of an Annual Project Budget that it expects to seltless than 88 million kilowatt-hours in the impending Fiscal Year because of a reduction in demand,the Authority shall adjust the Basic Rate in the Annual Project Budget to reflect the reduced power sales (the "Adjusted Rate").In no event, however,shall the Adjusted Rate exceed the Basic Rate for such Fiscal Year by more than percent (%).If,due to the limitation set forth in the preceding sentence,the result of multiplying the Adjusted Rate times the Purchaser's projected power sales in a Fiscal Year does not result in sufficient revenue from the Purchaser to pay all Annual Project Costs,the Authority shall draw upon reserve funds to the extent available. (2)If at the end of a Fiscal year the Purchaser's actual power sales have exceeded its estimate for that year,the Purchaser shall make payments to the Authority during the subsequent Fiscal Year to restore amounts drawn from reserves in proportion to the revenues that would have been paid had actual power sales been used to calculate the Annual Project Budget. "\vex "¢w/e 5 0F cay? Section 5 -Payment Obligation.The Purchaser shall pay Annual Project Costs and other payments required hereunder in the amounts and at the times required by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional and unaffected by any interruption,interference,or curtailment in whole or in part of power supplied by the Project. AEA/Unalaska Geothermal Project Power Sales Agreement -|AP ;(\: AFFO18ED LlosS Aeferenct C we Page 8 | DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 Section 6 -Obligations Under Indenture:Completion of Project. (a)Assignment or Payment to Trustee.The parties recognize and agree: (1)that the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Indenture for the benefit of the holders of the Bonds;and (2)that the Authority may direct that amounts payable to it under this Agreement to be paid directly to the Trustee. (b)Project Funding.The Authority shall use its best efforts to issue Bonds in an amount sufficient to pay the Cost of Acquisition and Construction. (c)Covenants of the Authority.The Authority covenants that it will not cause rates for Project power to increase by reason of any bond resolution,covenant,or agreement contained in any trust indenture or trust agreement entered into by the Authority in connection with a power project other than the Project,nor on account of any inadequacy in its actual or projected aggregate revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. (d)Project Completion and Operation.The Authority agrees to use its best efforts to complete the Project expeditiously and in accordance with sound engineer- ing practice and with the provisions of the Indenture.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance) to provide power at the lowest reasonable cost to the Purchaser in a manner that is compatible with the Purchaser's System and consistent with the Act,the Indenture, and this Agreement. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 9 DRAFT October 21,1991 3610.2014 TFK/ct Rev.#13 v.#19 Section 7 -Obleatierns-intheFventofDefault Default:Dispute Resolution: Remedies. (a)EnforcementUponfaitire-of Default.Each of the following events constitutes an event of default under this Agreement: M)failuree by the Purchaser to Perform any cbigation herein the and Purehaser-theAuinerty may brag such Sutthin:(2)failure by either party to observe and perform any covenant,condition or agreement on its part to be observed or performed under this Agreement,other than as described in Section 7(a)(1)of this Agreement,for a period of 30 days after receipt of written notice from the other party,specifying such failure and requesting that it be remedied. Purchaser.(b)Arbitration.Upon the written demand of either party,any AEA/Unalaska Geothermal Project Power Sales Agreement AFFOIBED Page 10 hkCMSbearpdited aks ba daenGSi)bs onDRAFTOctober21,1991 vl x 3610.2014 TFK/ct Rev.#13 v.#19 matter in dispute under this agreement,other than an event of default described in Section 7(a)(1),shall be referred to arbitration,Arbitration shall be conducted before an arbitrator having education and experience in the particular matter referred for arbitration,selected under the quidelines of the American Arbitration Association.The arbitration shall be conducted _in_accordance with the commercial arbitration rules of the American Arbitration Association then in effect.The arbitrator shall have no authority,power or jurisdiction to alter, amend,change,modify,add to or delete any of the provisions of this Agree- ment.The costs of the arbitration shall be apportioned between the parties as the arbitrator deems appropriate. (c)DefauitbytheAuthortytathe Remedies. (1)Upon the occurrence of an event of any default by theAuthorityuaderany-covenantagreementofobligation under this Agreement with+respecttethe-Purchaser,_the Purchasermay_upen-3e-_dayswrtiten_netice-te the Authorty,,except where arbitration is available under Section 7(b)of this Agreement and has been demanded within 10 days of the occurrence of the event of default,the aggrieved party may bring any suit,action,or proceeding ef at law or in equity,including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the AutherityRepaymentobligatern-oHthePurchaserdefaulting party. (2)Upon the occurrence of an event of default under Section 7(a)(1)of this Agreement,the Authority,in addition to its other remedies under this Agreement,shall be entitled as of right to the appointment of a receiver for all or any part of the Purchaser's System,and the Authority and any receiver so appointed shall have such rights and powers and be subject to such limitations and restrictions as are prescribed by the laws of the State of Alaska. (3)'If the Purchaser has for any reason suspended or reduced, or has failed to make or has been prevented from making,payments required under this Agreement,the Authority,in addition to its other remedies under this Agreement,may terminate or suspend the delivery of power to the Purchaser. AEA/Unalaska Geothermal Project Power Sales Agreement AFFOI8ED Page 11 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (d)Performance in the Event of a Dispute.Where a dispute under this Agreement isnethas been referred to arbitration in accordance with Section 7(b) of this Agreement,the Authority shall not terminate or suspend the delivery of power to the purchaser except as authorized by the arbitrator's decision.The Purchaser shall continue to make payments required under this Agreement in the event of any dispute under this Agreement or in the event of any dispute under the Indenture,and this obligation of continued payment pending resolution of disputes shall be immediately enforceable by the Authority or the Trustee upon application to any court of competent jurisdiction.No payment obligation of the Purchaser under this Agreement is subject to offset. Section 8 -Purchaser's Systems System. (a)Character of Expense.The amounts payable under this Agreement are _operating expensesof the Purchaser's System by the Purchaser and are valid andbindingobligationsofthePurchaser,payable only from the gross revenues of the Purchaser's System as-e-cost of purchased electric poweyy and not payable from anytaxes. (b)Purchaser's Rate Covenants.In order to afford,permit,and make timely payments as specified in this Agreement,the Purchaser agrees that it will establish, charge,and collect rates,fees,and charges with respect to the Purchaser's System in accordance with applicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay,together with any other funds or moneysAavailabletherefor,any and all other amounts payable from or which constitute or may constitute a charge and lien upon such revenues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Purchaser to finance the Purchaser's System. (c)Operation and Maintenance of Purchaser's System.The Purchaser covenants and agrees that it will operate and maintain its System in good repair, working order and condition,and in accordance with Prudent Utility Practice. (d)Limitation on Certain Contracts.The Purchaser covenants and agrees not to enter voluntarily into any other contract or agreement to take or pay for power, ether-thanthisAgreement_payable under which the Purchaser's obligation to AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 12 S45 whlHy yw naeDRAFTOctober21,1991 "a Jt3610.2014 fl vw”' TFK/ct Rev.#13 v.#19 Nye make payments from the revenues of the Purchaser's System is on a parity with or superior to the its payment efits obligations under this Agreement,except that the Purchaser may enter into such a contract or agreement: (1)of a_duration not te-exceed exceeding two years-duration years,and under which the Purchaser's igatiort Hy the-paymentoHis-obligation to make payments from the revenues of the Purchaser's System is on a parity with its payment obligations under this Agreement er-may-enter-a-centract: (3)under which the Purchaser's obligation to make payments from_the revenues of the Purchaser's System_is on_a_parity with its payment obligations under this Agreement,if a written opinion from a Consultant is rendered +: 44)that (i)the contract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice;and €2)}4hat(ii)the contract or agreem- ent will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. Section 9 -Indenture. (a)Amendment or Supplementation of Indenture.Except as provided in Section 10 of this Agreement,the Authority will not amend or supplement the Indenture in any manner,or adopt a new Indenture in connection with the refunding of the Bonds,which would materially adversely affect the ability of the Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation, financial or otherwise,on the Purchaser,without the consent of the Purchaser. (b)Insurance.The Authority will maintain physical loss insurance to the extent required by the Indenture. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 13 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (c)Information.The Authority shall provide the Purchaser with a copy of any report,certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Indenture or that the Trustee furnishes to the Authority. Section 10 -Purchaser's Consent to Supplemental_Indentures_to Construct or Operate the Project.The Purchaser hereby consents to the adoption by the Authority of supplemental Indentures pursuantie-SectionGa}eHthis Agreement as necessary to comply with the Authority's obligation to finance and construct the Project and to provide for its continued operation pursuant to Section 6(d)of this Agreement and to use its best efforts to complete the Project expeditiously and to provide for its continued operation and in accordance with sound engineering practices and with the provisions of the Indenture.The Authority shall consult with the Purchaser regarding the provisions to be included in such supplemental!Indenture,and shall use its reasonable best efforts to comply with the requests of the Purchaser with respect thereto.Unless otherwise approved in accordance with Section 9(a)of this Agreement,such supplemental Indentures shall: (a)Provide that the total amounts required for the payment of Debt Service when due shall be,on an annual basis,as nearly equal as practicable;_and (6)be substantially in the form attached hereto as Exhibit D,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis-and. Section 11 -Authority Responsibilities.The Authority shall take the following actions, subject to the provisions of thetadenturefederal and state law,and the requirements of licensing and regulatory agencies: (a)Arrange for the operation and maintenance of the Project and the scheduling,production,and dispatch of Project power. (6)Adopt in each Fiscal Year (and revise as necessary or prudent during such Fiscal Year)a budget of Annual Project Costs for that Fiscal Year,which budget AEA/Unalaska Geothermal Project Power Sales Agreement AFEO1BED Page 14 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 shall be in an amount estimated by the Authority to be sufficient to pay all Annual Project Costs. (c)Establish for each Fiscal Year the estimated Annual Payment Obligation of the Purchaser,together with a schedule for the Purchaser of equal monthly payments that the Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be: (1)designed to recover such estimated Annual Payment Obligation from the Purchaser during the Fiscal Year;and (2)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year. (d)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of the Purchaser for that Fiscal Year,and the amount of any additional payment required from (or the amount of any refund to be returned to)the Purchaser to ensure that the total of all payments received from the Purchaser for each that Fiscal Year is equal to the Purchaser's actual Annual Payment Obligation for that Fiscal Year. (e)Evaluate and select among alternative methods (if any)of carrying out and funding (including through issuance of -eerds}Bonds)Required Project Work. {Rh}Adopt maintenance schedules for the Project that do not interfere unreasonably with the operations of the Purchaser. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 15 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 {}(g)Consider the need for and approve any additional amount to be added to the Renewal and Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement provided under the Indenture. #)(h)If and when no Bonds are outstanding under the Indenture,and the Indenture is therefore no longer effective,the Authority shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. Section 12 -Reeerds.Insurance. (a)The Authority shall keep and maintain the Project at_all times insured against such risks and in such amounts,with such deductible provisions,or provide for a source of self insurance,as is customary in connection with the operation of facilities of a type and size comparable to the Project and as may reasonably and economically be obtained or secured.The determination of what is "customary"and what may be "reasonably and economically obtained or secured"within the meaning of the prior sentence shall be made by an independent insurance consultant employed by the Authori- ty or by the State division of risk management.Without limiting the foregoing, but only if required under the preceding sentences,the Authority shall carry and maintain,or cause to be carried and maintained,and pay or cause to be paid timely the premiums for,the following insurance with respect to the Project and the Authority: (1)='Insurance coverage for buildings,works,plants and facilities comprising the Project for all risks of direct physical loss,at all times in an amount not less than an amount necessary giving regard to co-insur- ance provisions to pay and retire and redeem all the Outstanding Bonds. (2)General public liability insurance (other than as set forth insubsection(c)of this Section)in minimum amounts per occurrence,for annual aggregate claims,and with a deductible amount,to the same extent that other entities comparable to the Authority and owning or operating facilities of the size and type comparable to the Project carry such insurance. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 16 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (3)Comprehensive automobile liability insurance. (4)Workers'compensation insurance _or_self-insurance as required by the laws of the State of Alaska. (b)Each insurance policy required by this Section (1)shall be issued or written by a financially responsible insurer (or insurers),or by an insurance fund established by the United States of America or State of Alaska or_an agency or instrumentality thereof,(2)shall be in such form and with such provi- sions (including,without limitation and where applicable,loss payable clauses payable to the Trustee,waiver of subrogation clauses,provisions relieving the insurer of liability to the extent of minor claims and the designation of the named assureds)as are generally considered standard provisions for the type of insurance involved,and (3)shall prohibit cancellation or substantial modifica- tion by the insurer without at least thirty days'prior written notice to the Trustee and the Authority.Without limiting the generality of the foregoing,all insurance policies,and other arrangements to the extent feasible,carried pursuant to this Section 12 shall name the Trustee,the Authority and the Purchaser as parties insured thereunder as the respective interest of each of such parties may appear,and loss thereunder shall be made payable and shall be applied as provided in the Indenture. (c)The Authority covenants to review each year the insurance carried by the Authority with respect to the Authority and the Project and,to the extent feasible and economically prudent,will carry insurance insuring against the risks and_hazards specified in this Section to the same extent that other entities comparable to the Authority and owning or operating facilities of the size and type comparable to the Project,and taking into account any special circum- stances of the Project,carry such insurance.In the event that the AuthoritydeterminesthattheinsurancerequiredbythisSectionisnotavailabletothe eaeAuthorityatreasonablecost,and,in any case,every two years,from _and after ewesJanuary1,1993,the Authority shall employ an independent insurance consultant aortheStatedivisionofriskmanagement(the "consultant')for the purpose of < reviewing the insurance coverage of,and the insurance required for,the eaAuthorityandtheProjectandmakingrecommendationsrespectingthetypes,>Aamountsandprovisionsofinsurancethatshouldbecarriedwithrespecttothe Authority and the Project and their operation,maintenance and administration. AEA/Unalaska Geothermal Project Power Sales Agreement AFFOI8ED Page 17 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 A signed copy of the report of the consultant shail be filed with the Trustee and copies thereof shall be sent to the Authority,and the insurance requirements specified hereunder,including any and all of the dollar amounts set forth in this Section,shall be deemed modified or superseded as necessary to conform with the recommendations contained in said report. (d)TheAuthority may establish a fund to provide self-insurance against the risks and hazards relating to the properties of the Project and the interests of the Authority and the Bondholders as described in this Section,and,in con- nection therewith,may specify and determine the matters and things set forth in paragraph (c)of this Section. (e)Insurance maintained pursuant to this Section may be part of one or more master policies maintained by the State of Alaska so long as the form of such policy and the coverage is the same as if a separate policy was in effect. (f)The Authority shall on or before January 1 of each year,commenc- ing January 1,1993,submit to the Trustee a certificate verifying that all minimum insurance coverages required by this Indenture are in full force and effect as of the date of such Authority certificate. Section 13 -Records.!n addition to meter records,the parties shall keep log sheets and other records as may be needed for the purposes of this Agreement. Section +3--14 -Inspection of Facilities.For purposes of this Agreement,each party may,but shall not be obligated to,inspect any other party's facilities relating to the Project at any time upon reasonable notice,but such inspection or failure to inspect shall not render the inspecting party,its officers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation,or for violation of this Agreement. yt aa it flan,rere AEA/Unalaska Geothermal Project .(arin 5aad Power Sales Agreement Jer f a7 MG ©AFFO18ED Page 18 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 Section 44 15 -Covenants to Maintain Intearity of Agreement. (a)Compliance with Law.The Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses,and permits relating to the use and operation of the Purchaser's System. (bo)Sales,Mergers,and Assignments.The Purchaser shall not abandon, sell,mortgage,lease,or otherwise dispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest thereunder to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any each of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes,or other evidences of indebtedness relating to the abandonment,sale,mortgage,lease or other disposition of property of the Purchaser's System;and (2)such disposal or assignment is: (A)consented to in writing by the Authority which consent shall not be unreasonably withheld;or (B)limited to assets that the Purchaser determines to be surplus to the needs of the Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or (C)evaluated by a Consultant and that Consultant certifies that,taking into account the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have: (i)substantially the same or greater ability to produce sufficient revenues to meet its payment obligations under this Agreement as would the Purchaser absent the transaction;and AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 19 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 (ii)the ability to perform all obligations under this Agreement. Any assignee of this Agreement must assume in writing all of the Purchaser's obligations hereunder,must pay amy amounts due and owing from the Purchaser hereunder,and must provide the Authority with an opinion of counsel that this Agreement is enforceable against the assignee. (c)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is originally issued on a tax-exempt basis to become taxable under the Internal Revenue Code of 1986,as the same may be amended from time to time. (d)Licenses and Permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of the Project. Section +5 16 -Assignment. (a)Assignment Generally.This Agreement shall inure to the benefit of,and shall be binding upon the respective successors and assigns of the parties to this Agreement;provided,that this Agreement or any interest herein may be transferred or assigned by the Purchaser only in accordance with the provisions of Sections +4{6} 15(b)and +5f6}16(b)of this Agreement. (b)Assignments to Secured Lenders.A party may assign this Agreement, together with all of its rights and obligations thereunder: (1)to or in trust for any secured lenders of such party for the purpose of securing obligations for borrowed money;or (2)pursuant to the exercise by any such secured lender of any of the rights,powers,or privileges provided for by the mortgages or other security instruments of such party for borrowed money;provided,that no such assignment shall in any way relieve such party of any obligations hereunder. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 20 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 No such secured lender shall,as a result of such assignment or the subse- quent exercise of its rights with respect to this Agreement under any mortgage, deed of trust,or other security instrument,be construed to have assumed,or otherwise to have become personally liable for,the assignor's obligations hereunder,but such secured lender's ability to exercise the rights of its assignor hereunder shall be subject to performance of the assignor's corresponding obligations under this Agreement.In the event any such secured lender exercises any of its rights,powers,or privileges with respect to this Agreement under said mortgages or other security agreements,such secured lender may thereafter assign this Agreement,together with all the rights and obligations thereunder,to any entity authorized and able to perform the obligations under this Agreement,which entity shall succeed to all the rights and assume all the obligations of the borrower-assigner under this Agreement. Prior to the exercise by any secured lender of any rights or remedies under any mortgages or security agreements with respect to this Agreement,such secured lender shall give the parties hereto reasonable notice that it intends to exercise such rights or remedies. (c)The Purchaser's agreement to resell power from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall any such resale of Project power relieve the Purchaser of any payment obligation under this Agreement. Section +6 17 -Exhibits.The following exhibits are incorporated by referencé into this Agreement: (a)Exhibit "A"is the Indenture; (b)Exhibit "B"is the Description of the Project; (c)Exhibit "C"is the Form of Commercial Contract; (d)Exhibit "D"is the Form of Certain Supplemental Indentures. AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 21 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 Section +7 18 -Notices,Computation of Time and Holidays.Any notice required by this Agreement to be given to any party shall be effective when it is received by such party,and in computing any period of time from such notice,such period shall commence at 12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever this Agreement calls for notice to or notification by any party,the same (unless otherwise specifically provided)shall be in writing directed to the Authority's executive director or the Purchaser's general city manager.If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place. Section +8 19 -Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section +9 20 -Availability of Information.The parties shall make available to each other,for inspection and copying during business hours,all books,records,plans, and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 20 21 -Severability. (a)Severability Generally.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the remaining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause,or provision or any part thereof so adjudicated to be invalid had not been included herein. (b)Correction and Substitution.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 22 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, then and in such event,the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. section 24 22 -Remedies Cumulative.No remedy conferred upon or reserved to the parties hereto is intended to be exclusive of any other remedy or remedies available hereunder or now or hereafter existing by law,in equity,by statute,or otherwise,but each and every such remedy shall be cumulative and shall be in additionto every other such remedy. Section 22 23 -Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right,or matter. Section 23 24 -Covenant To Act In Good Faith.In order to permit this Agreement to be fully effective throughout its term in accordance with the original intent of the parties,each party agrees that it shall at all times act in good faith in performing its obligations and in exercising its rights under this Agreement. Section 24 25 -No Third-Party Beneficiaries.Notwithstanding that the operation of this Agreement may and is intended to confer benefits on third parties who are not signatories to this Agreement,this Agreement shall be enforceable only in accordance with its provisions expressly governing enforcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obligations to and rights of enforcement in: (a)one another;and (6b)|such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virtue of provisions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into this AEA/Unalaska Geothermal Project Power Sales Agreement AFFO1BED Page 23 DRAFT October 21,1991 3610.2014 TFK/cf Rev.#13 v.#19 Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party,nor have the parties created for any other third party any right to enforce this Agreement. Section 25 26 -Section Headings.The section headings in this Agreement are for convenience only,and do not purport to,and shall not be deemed to,define,limit,or extend the scope or intent of the section to which they pertain. Section 26 27 -Multiple Copies.This Agreement shall be executed in several counter- parts,each of which shall be an original,but both of which shall constitute one and the same instrument. IN WITNESS WHEREOF,the parties have caused this Agreement to be executed the day and year first above written. ALASKA ENERGY AUTHORITY By NAME AND TITLE CITY OF UNALASKA,ALASKA By NAME AND TITLE AEA/Unalaska Geothermal Project Power Sales Agreement AFFO18ED Page 24 Date:10-11-91 3:49pm From:ITomory:Anch:AEA To:aea Subj:[No Subject] Hey guys,how about an autumn break.Are you game for a potluck on Halloween?Everybody will dress up,bring a dish and we'll have a really good time. The date is October 31,the time is 11:30 to 1:00,the place is our conference room and dress is something in Halloween attire. I've got a sign-up sheet on the door of the break room,put your name down,come on now,don't be last to sign up.Start thinking of something to dress up as,and since no one said anything about dressing down,use your judgement.Heck,I'1ll even get some prizes and AEAEA can pick a "best costume"winner,1 from each directorate.I don't want to be the only one dressed up and looking silly,I'd rather have some company. Come on now,we've all been busy working hard and could use a few laughs and a get together.We used to have a good Halloween turnout at the old building with some neat costumes. If you have any questions,call me.Thanks and get those thinking caps - on!!!!Irene X240 WOHLFORTH,ARGETSINGER,JOHNSON &BRECHT A PROFESSIONAL CORPORATIONPETERARGETSINGER TELEPHONE (907)276-640)JULIUS J.BRECHT CYNTHIA L.CARTLEOGE ATTORNEYS AT LAW TELECOPY (907)276-5093 ROBERT M.JOHNSON BARBARA E.KISSNER 900 WEST STH AVENUE,SUITE 600 huoney FY SE LNRNER ANCHORAGE,ALASKA 99501 OF COUNSEL BRADLEY E.MEYEN ROGER G.CONNOR JAMES A.SARAFIN KENNETH E.VASSAR ERIC E.WOHLFORTH RECEIVED TRANSMITTAL SEP 20 1991 ALASKA ENERGY AUTHORITY TO:Avent Petrie,Alaska Energy Authority Richard Johannsen,Esq.,Perkins-Coie Jim Seagraves,John Nuveen Lewis Greenbaum,Katten Muchin &Zavis Dan Schochet,OESI Power Corp. FROM:Eric E.Wohlforth DATE:September 24,1991 SUBJECT:AEA/Unalaska Geothermal Power Project FILE NO.:3610.2014 MESSAGE:Enclosed for your review and comment is Rev.10 v.Rev.13 (blacklined)Power Sales Agreement for the above-referenced project. gmt Hand Deliver/Telecopy kes CB DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 POWER SALES AGREEMENT Between ALASKA ENERGY AUTHORITY and CITY OF UNALASKA,ALASKA Dated as of 1991 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 TABLE OF CONTENTS Page Section 1 -Definitions ©......eeeeeeens 2 Section 2 -Term of Agreement ..........0...cect ee eee nee 5 Section 3 -Electric Service to be Furnished............0.cece eee eee 6 Section 4 -Payment Obligation.Section S-Annual Project Costs ...........7 Section 5 -Payment Obligation...2...0...ee ee ee ee ee 9 Section 6 -Obligations Under Indenture;Completion of Project............10 Section 7 -Obligations in the Event of Default ..........0..0.0.20 eee eee 11 Section 8 -Purchaser's SysteMS .......0...cee eee eee eee eens 12 Section 9 -Indenture...2.eeeeeeeeeeeee 13 Section 10 -Purchaser's Consent to Supplemental Indentures to Construct or Operate the Project...0......eee ee eee ee eee 13 Section 11 -Authority Responsibilities ....0...0.0.0...ee ee eee 14 Section 12 -Records ..1...ee ee ee ee ee ee ee 15 Section 13 -Inspection of Facilities ......eee e eee eevee eee ne eee 15 Section 14 -Covenants to Maintain Integrity of Agreement ...............16 Section 15 -Assignment ............0.0.eee eee ee eeebees,17 AEA/Unalaska Geothermal!Power Project Power Sales Agreement AFFO18ED Page i DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Section 16 -Exhibits 2.0...ee eee ee teen nee 18 Section 17 -Notices,Computation of Time and Holidays .......oe 19 Section 18 -Applicable Law ..0.0.....eee ee ene 19 Section 19 -Availability of Information ..1...0...0...ceeeeeee 19 Section 20 -Severability...eeeeeeeeeees 19 Section 21 -Remedies Cumulative 2...20....eeens 20 Section 22 -Waiver Not Continuing..........0.00.cee ee ene 20 Section 23 -Covenant To Act In Good Faith ................02.02 eee 20 Section 24 -No Third-Party Beneficiaries .....0...0.0.0...cee eee eens 20 Section 25 -Section Headings .........eeeeeeeeeeeeeneees 21 Section 26 -Multiple Copies ..0...el ceeene 21 Exhibit A -Indenture Exhibit B -Description of the Project Exhibit C -Form of Commercial Contract Exhibit D -Form of Certain Supplemental Indentures. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page ii DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 POWER SALES AGREEMENT THIS AGREEMENT dated as of ,19 ,is entered into by and among the Alaska Energy Authority (the "Authority")and the City of Unalaska,Alaska, (the "Purchaser'). WITNESSETH: The Authority recites,agrees,represents,and covenants as follows: (1)|The Authority is a public corporation of the State of Alaska duly created, organized,and existing pursuant to AS 44.83; (2)The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and bylaws of the Authority,to enter into this Agreement and to comply fully with the terms hereof; (3)|The Authority desires to fulfill its legislatively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of power and an adequate,economic,and reliable long-term supply of power;and (4)|The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Authority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. The Purchaser recites,agrees,represents,and covenants as follows: (1)|The Purchaser is a duly organized and constituted municipal corporation under the Constitution and laws of the State of Alaska; (2)The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and other applicable laws and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 1 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 regulations,and pursuant to its charter and ordinances,to enter into this Agreement and to comply fully with the terms thereof; (3)|The Purchaser performs the functions of a utility and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)|The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other charter, ordinance,resolution,contract,agreement,bond,note,mortgage,or other obligation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. NOW,Therefore,the parties agree as follows: Section 1 -Definitions.For the purposes of this Agreement,the following definitions apply: (a) "Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. (b)"Agreement”means this Power Sales Agreement. (c)"Annual Payment Obligation"means the total amount payable by the Purchaser in or for a Fiscal Year pursuant to this Agreement. (d)"Annual Project Budget"means the budget for the Project as adopted or in effect for a particular Fiscal year and amended or supplemented from time to time., (e)"Annual Project Costs"shall have the meaning given it in Section #4 of this Agreement. (f)"Authority"means the Alaska Energy Authority as established by the Act and any subsequent successor agency thereto. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 2 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (g)"Bonds”means bonds,notes,or other evidences of indebtedness (including refunding bonds)issued pursuant to the Indenture,the proceeds of which are used to pay or reimburse Costs of Acquisition and Construction and Required or Optienat Project Work. (h)"Capability of the Project"means the entire capability of the Project to generate electric power at any and all times from the Date of Commercial Operation until the termination of the this Agreement (or any renewal thereof),including periods when the Project may not be operating or inoperable or the operation thereof is curtailed,in each case in whole or in part,for any reason whatsoever. (i)"Consultant"means an independent individual or firm of nationwide and favorable reputation,having demonstrated expertise in the field or the matter or the item referred to it under various specific provisions of this Agreement,approved by the Authority,and acceptable to the Purchaser.' (j)"Cost of Acquisition and Construction"means the Cost of Acquisition and Construction (as defined in Section of the Indenture)of the Project. (k)"Date of Commercial Operation"means the date,which occurs after Necessary Approvals have been obtained,on which the Authority declares that the Project is fully available to perform at not less than its design capacity. (I)"Debt Service"means amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds under the Indenture. (m)"Fiscal Year"means that 12-month period starting on July 1 of a calendar year through and including June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the 12-month period starting on the Date of Commercial Operation through and including the following June 30. (n)"Indenture"means the indenture securing the Bonds in substantially the form attached hereto as Exhibit A. (0)"Purchaser"means the City of Unalaska,Alaska. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 3 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (p)"Project”means the Unalaska Geothermal Project as described in Exhibit (q)"Prudent Utility Practice"means at a particular time any of the practices, methods,and acts engaged in or approved by a significant portion of the electric utilityindustryatsuchtime,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the desired results at the lowest reasonable cost consistent with good business practices,reliability,safety, and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method,or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods,or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety,and expedition.Prudent Utility Practice includes due regard for manufacturers'warranties and the requirements of governmental agencies of competent jurisdiction and shall apply not only to functional parts of a Project,but also to appropriate structures, landscaping,painting,signs,lighting,and other facilities. (r)"Purchaser's System”means the Purchaser's electric utility system for the distribution,transmission,and generation of electrical power and which is owned and operated by the Purchaser. (s)"Necessary Approvals"means the approval or consent in writing of each governmental entity,regulatory body,or other person which approval is required inorderfortheProjecttobeconstructedandoperatedinaccordancewiththis Agreement.As of the date of execution of this Agreement,the Necessary Approvals include but are not limited to approvals necessary under AS 44.88,approvals required by the Alaska Public Utilities Commission ("APUC"),approval of the Agreement by the governing body of the Purchaser and the Board of Directors of the Authority,and approval of necessary environmental permits by the Alaska Department of Environ- mental Conservation and the U.S.Environmental Protection Agency.Necessary approvals also include the availability,as determined by the Authority,of sufficient funds to complete the Project. (t)"Renewal and Contingency Reserve Fund"means the Renewal and Contingency Reserve Fund established pursuant to Section of the Indenture. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 4 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (u)"Required Action”means an action that must be taken in order for the Authority to comply with federal or state law,the orders of licensing and regulatory agencies,the Indenture,or this Agreement. (v)"Required Project Work"means repairs,maintenance,renewals, replacements,or improvements required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or this Agreement,or otherwise necessary to keep the Project in good and efficient operating condition,consistent with: (1)|sound economics for the Project and the Purchaser;and (2)national standards for the industry. (w)"Revenue Fund"means the Revenue Fund established pursuant to Section of the Indenture. (x)"Trustee"means the Trustee acting under the Indenture or that Trustee's successor or successors and any other corporation which may,at any time,be substituted in that Trustee's place under the Indenture. (y)Capitalized Terms used in this Agreement which are not defined herein have the definition given in the Indenture. Section 2 -Term of Agreement. (a)Effectiveness.This Agreement shall take effect +mmedately immediate- ly. (6)Commencement of Payment Obligations.The payment obligations of the Purchaser,as set forth in Section 6 5 of this Agreement,to pay Annual Project Costs,as defined in Section 8 4 of this Agreement,shall commence on the Date of Commercial Operation. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 5 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Section 3 -Electric Service to be Furnished. (a)Sale and Purchase.The Authority hereby sells,and the Purchaser hereby purchases,Prejeet the Capability of the Project (together with associated energy)from the Project and the Purchaser agrees to pay the Annual Project Costs therefor in accordance with this Agreement. (b)Available Power.The Authority shall at all times,except when prevented by a cause or event not within the control of the Authority,make power available to the Purchaser from the Project in an amount equal to the amount the Purchaser may schedule from the Project within the limitations imposed by available Prejeet Capability of the Project. (c)Required Project Work.The Authority shall perform or cause to be performed all Required Project Work provided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included inAnnualProjectCostsinthemannersetforthinSection{a}4(a)(4)of this Agreement. The Authority shall give reasonable notification to the Purchaser prior to making or Causing to be made any Required Project Work. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOI8ED Page 6 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Section 4 -Payment Obligation. Section-5-Annual Project Costs. (a)Annual Project Costs Defined.Annual Project Costs mean all of the costs resulting from the ownership,operation,maintenance of,and renewals and replacements to,the Project properly incurred or paid during each Fiscal Year, including: (1)|amounts required to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Construc- tion; (2)|amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with this Agreement; (3)|amounts required to restore the funds established under the Indenture to the levels required by the Indenture to be maintained therein; (4)|amounts which may be required to pay for Required Project Work to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (5)other amounts determined by the Authority to be necessary or appropriate to supplement and to be paid into the Funds established under the Indenture; AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 7 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (6)all other costs of producjrig and delivering Project power including,without limitation,fluid fee Coyaltyand costs of well maintenance (but excluding depreciation)not accounted for by the payments out of funds and reserves specified in the foregoing sections and properly chargeable to the Project under the Uniform System of Accounts,less any credits against said costs by reason of revenues from sources other than the direct sale of power to the Purchaser,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain said reserve funds in the amounts required under the Indenture or in such greater amounts as may be determined by the Authority,or to reduce Annual Project Costs.Such other costs shall include: (A)project operating and maintenance costs in accordance with the Annual Project Budget; (B)costs of Project-related insurance;and (C)preject Project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations. (6)Proceeds ofa Taking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,or output of the Project by any state or federal government agency shall be used by the Authority to: (1)reduce Annual Project Costs;or (2)retire Bonds. (c)Reduction of Annual Project Costs. fthe-Rate-imit},the(1)Prior to the beginning of each Fiscal Year,the AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 8 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Authority will prepare an Annual Project Budget for that year.The Annual Project Budget shall contain all Annual Project Costs ferthatFisealYearshall Fiseal-Year,Annual PrejectGesis-_shaltbe_determined-witheutregard-te-thisparagraphasdefinedinsubparagraph(a)above._It shall further specify the estimated unit cost of power from the Project derived from dividing the Annual Project Costs by 88 million kilowatt-hours of ener the "Basic Rate').If the Purchaser notifies the Authority at least 30 days prior to the effective date of an Annual Project Budget that it expects to sell less than 88 million kilowatt-hours in the impending Fiscal Year,the Authority shall adjust the Basic Rate in the Annual Project Budget to reflect the reduced power sales (the "Adjusted Rate").In no event however,shall the Adjusted Rate exceed the Basic Rate for such Fiscal Year by more than ercent %)._If,due to the limitation set forth in the preceding sentence,the result of multiplying the Adjusted Rate times the Purchaser's projected power sales in a Fiscal Year does not result in sufficient revenue from the Purchaser to pay all Annual Project Costs,the Authority shall draw upon reserve funds to the extent available. (2)'If.at the end of a Fiscal year the Purchaser's actual power sales have exceeded its estimate for that year,the Purchaser shall make payments to the Authority during the subsequent Fiscal Year to restore amounts drawn from reserves in proportion to the revenues that would have been paid had actual power sales been used to calculate the Annual Project Budget. Section 5 -Payment Obligation.The Purchaser shall pay Annual Project Costs and other payments required hereunder in the amounts and_at the times required by this Agreement notwithstanding a suspension or reduction in theamountofpowersuppliedbytheProject.Such payments shall not be subject to_any reduction in the amount _of power supplied by the Project.Such payments shall not be subject to any reduction,by offset or otherwise.The AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 9 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional and unaffected by any interruption,interference,or curtailment in_whole or in partofpowersuppliedbytheProject. Section 6 -Obligations Under Indenture;Completion of Project. (a)Assignment or Payment to Trustee.The parties recognize and agree: (1)that the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Indenture for the benefit of the holders of the Bonds;and (2)-that the Authority may direct that amounts payable to it under this Agreement to be paid directly to the Trustee. (6)Project Funding.The Authority shall use its best efforts to issue Bonds in an amount sufficient to pay the Cost of Acquisition and Construction. (c)Covenants ofthe Authority.The Authority covenants that it will not causeratesforProjectpowertoincreasebyreasonofanybondresolution,covenant,or agreement contained in any trust indenture or trust agreernent entered into by the Authority in connection with a power project other than the Project,nor on account of any inadequacy in its actual or projected aggregate revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. (d)Project Completion and Operation.The Authority agrees to use its best efforts to complete the Project expeditiously and in accordance with sound engineer- ing practice and with the provisions of the Indenture.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance) to provide power at the lowest reasonable cost to the Purchaser in a manner that is compatible with the Purchaser's System and consistent with the Act,the Indenture, and this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOISED .Page 10 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Section 7 -Obligations in the Event of Default. (a)Enforcement.Upon failure of the Purchaser to perform any obligation herein,the Authority may bring any suit,action,or proceeding of law or in equity ("Suit"),including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Purchaser.The Authority may bring such Suit within: (1)30 days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obligation;and (2)immediately,in the case of default by the Purchaser on any payment obligation. The Purchaser shall continue to make payments in the event of any dispute regarding performance of any obligation by any party under this Agreement or in the event of any dispute under the Indenture,and this obligation of continued payment pending resolution of disputes shall be immediately enforceable by any party upon application to any court of competent jurisdiction. (b)Additional Rights and Remedies.In addition to the Authority's rights under Section 7(a)of this Agreement,if the Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to the Purchaser. (c)Default by the Authority.In the event of any default by the Authority under any covenant,agreement of obligation under this Agreement with respect to the Purchaser,the Purchaser may,upon 30 days'written notice to the Authority,bring any suit,action,or proceeding of law or in equity,including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Authority.The payment obligation of the Purchaser under this Agreement is not subject to offset. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 11 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 tion 8 -Purchaser'tems. (a)Character of Expense.The amounts payable under this Agreement are operating expenses of the Purchaser's System by the Purchaser and are valid and binding obligations of the Purchaser,payable only from the gross revenues of the Purchaser's System asa costoe eenspurchased electric power,and not payable from anytaxesyothMeowof (b)Purchaser's Rate Covenants.In order to afford,permit,and make timely payments as specified in this Agreement,the Purchaser agrees that it will establish, charge,and collect rates,fees,and charges with respect to the Purchaser's System in accordance with applicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay,together with any other funds or moneys available therefor,any and all other amounts payable from or which constitute or mayconstituteachargeandlienuponsuchrevenuesincluding,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Purchaser to finance the Purchaser's System. (c)Operation and Maintenance of Purchaser's System.The Purchaser covenants and agrees that it will operate and maintain its System in good repair, working order and condition,and in accordance with Prudent Utility Practice. (d)Limitation on Certain Contracts.The Purchaser covenants and agrees not to enter voluntarily into any contract or agreement to take or pay for power,other than this Agreement,payable from the revenues of the Purchaser's System on a parity with or superior to the payment of its obligations under this Agreement,except that the Purchaser may enter into such a contract or agreement of not to exceed two years'duration under which the Purchaser's payment obligation is on a parity with the payment of its obligations under this Agreement or may enter a contract with a commercial customer in the form annexed hereto as Exhibit A C.The limitations of Section 8(d)of this Agreement shall not apply to contracts or agreements creating obligations on a parity with obligations under this Agreement if a written opinion from a Consultant is rendered: (1)that the contract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice;and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOI8ED Page 12 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (2)that the contract or agreement will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. Section 9 -Indenture. (a)Amendment or Supplementation of Indenture.Except as provided in Section 10 of this Agreement,the Authority will not amend or supplement the Indenture in any manner,or adopt a new Indenture in connection with the refunding of the Bonds,which would materially adversely affect the ability of the Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation, financial or otherwise,on the Purchaser,without the consent of the Purchaser. (b)Insurance.The Authority will maintain physical loss insurance to the extent required by the Indenture. (c)Information.The Authority shall provide the Purchaser with a copy of any report,certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Indenture or that the Trustee furnishes to the Authority.: Section 10 - Purchaser's Consent to Supplemental_Indentures to Construct or Operate the Project.The Purchaser hereby consents to the adoption by the Authority of supplemental Indentures pursuant to Section 9(a)of this Agreement,as necessary to comply with the Authority's obligation to finance and construct the Project and to provide for its continued operation pursuant to Section Se}6(d)of this AgreementtouseitsbesteffortstocompletetheProjectexpeditiouslyandt0provideforitscontinuedoperationandinaccordancewithsoundengineeringpracticesandwiththeprovisionsofthe Indenture.The Authority shall consult with the Purchaser regarding the provisions to be included in such supplemental Indenture,and shall use its reasonable best efforts to comply with the requests of the Purchaser with respect thereto.Unless otherwise approved in accordance with Section 9(a)of this Agreement,such supplemental Indentures shall: AEA/Unalaska Geothermal Power Project Power Sales Agreement : AFFOI8ED Page 13 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (a)Provide that the total amounts required for the payment of Debt Service when due shall be,on an annual basis,as nearly equal as practicable; (6)be substantially in the form attached hereto as Exhibit G D,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis;and section 11 -Authority Responsibilities.The Authority shall take the following actions, subject to the provisions of the Indenture,federal and state law,and the requirements of licensing and regulatory agencies: (a)Arrange for the operation and maintenance of the Project and the scheduling,production,and dispatch of Project power. (b)Adopt in each Fiscal Year (and revise as necessary or prudent during such Fiscal Year)a budget of Annual Project Costs for that Fiscal Year,which budget shall be in an amount estimated by the Authority to be sufficient to pay all Annual Project Costs. (c)Establish for each Fiscal Year the estimated Annual Payment Obligation of the Purchaser,together with a schedule for the Purchaser of equal monthly payments that the Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be: (1)designed to recover such estimated Annual Payment Obligation from the Purchaser during the Fiscal Year;and (2)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year. (d)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of the Purchaser for that Fiscal Year,and the amount of any additional payment requiredfrom(or the amount of any refund to be returned to)the Purchaserto ensure that the total of all payments received from the Purchaser for each Fiscal Year is equal to the Purchaser's actual Annual Payment Obligation for that Fiscal Year. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 14 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (e)Evaluate and select among alternative methods (if any)of carrying out and funding (including through issuance of bonds)Required Project Work. (f)Adopt procedures for the resolution of disputes that may arise between or among the Purchaser and the Authority concerning the interpretation of this Agreement,the obligations created by this Agreement,or the performance of such obligations. (g)|Make aninitial determination of "customary"insurance within the meaningofSection_of the Indenture and determine the appropriate amount of,and obtain, insurance for or related to the Project,in addition to such insurance as may be required by the Indenture. (h)Adopt maintenance schedules for the Project that do not interfereunreasonablywiththeoperationsofthePurchaser. (i)Consider the need for and approve any additional amount to be added 0 to the Renewal and Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement provided under the Indenture. (j)If and when no Bonds are outstanding under the Indenture,and the Indenture is therefore no longer effective,the Authority shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. Section 12 -Records.In addition to meter records,the parties shall keep log sheets and other records as may be needed for the purposes of this Agreement. Section 13 -Inspection of Facilities.For purposes of this Agreement,each party may, but shall not be obligated to,inspect any other party's facilities relating to the Project at any time upon reasonable notice,but such inspection or failure to inspect shall not render the inspecting party,its officers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation, or for violation of this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 15 MuDuintVBceXe A § 4 * DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Section 14 -Covenants to Maintain Integrity of Agreement.| (a)Compliance with Law.The Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses,and permits relating to the use and operation of the Purchaser's System. (b)Sales,Mergers,and Assignments.The Purchaser shall not abandon, sell,mortgage,lease,or otherwise dispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest thereunder to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes,or other evidences of indebtedness relating to the abandonment, sale,mortgage,lease or other disposition of property of the Purchaser's System;and (2)such disposal or assignment is: (A)consented to in writing by the Authority which consent shall not be unreasonably withheld;or , (B)limited to assets that the Purchaser determines to be surplus to the needs of the Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or (C)evaluated by a Consultant and that Consultant certifies that,taking into account the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have: (i)substantially the same or greater ability to produce sufficient revenues to meet its payment obligations as would the Purchaser absent the transaction;and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED ) Page 16 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 (ii)|the ability to perform all obligations under this Agreement. Any assignee of this Agreement must assume in writing all of the Purchaser's obligations hereunder,must pay amy amounts due and owing from the Purchaser hereunder,and must provide the Authority with an opinion of counsel that this Agreement is enforceable against the assignee. (c)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is originally issued on a tax-exempt basis to become taxable under the Internal Revenue Code of 1986,as the same may be amended from time to time. (d)Licenses and Permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of the Project. Section 15 -Assignment. (a)Assignment Generally.This Agreement shall inure to the benefit of,and shall be binding upon the respective successors and assigns of the parties to this Agreement;provided,that this Agreement or any interest herein may be transferred or assigned by the Purchaser only in accordance with the provisions of Seetiern Sections 14(b)and 15(c)of this Agreement. (b)Assignments to Secured Lenders.A party may assign this Agreement, together with all of its rights and obligations thereunder: (1)to or in trust for any secured lenders of such party for the purpose of securing obligations for borrowed money;or (2)pursuant to the exercise by any such secured lender of any of the rights,powers,or privileges provided for by the mortgages or other security instruments of such party for borrowed money;provided,that no such assignment shall in any way relieve such party of any obligations hereunder. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 17 DRAFT September 24,1991 3610.2014 FEW/gt Rev.10 v.13 No such secured lender shall,as a result of such assignment or the subse- quent exercise of its rights with respect to this Agreement under any mortgage, deed of trust,or other security instrument,be construed to have assumed,or otherwise to have become personally liable for,the assignor's obligations hereunder,but such secured lender's ability to exercise the rights of its assignor hereunder shall be subject to performance of the assignor's corresponding obligations under this Agreement.In the event any such secured lender exercises any of its rights,powers,or privileges with respect to this Agreement under said mortgages or other security agreements,such secured lender may thereafter assign this Agreement,together with all the rights and obligations thereunder,to any entity authorized and able to perform the obligations under this Agreement,which entity shall succeed to all the rightsandassumealltheobligationsoftheborrower-assigner under this Agreement. Prior to the exercise by any secured lender of any rights or remedies under any mortgages or security agreements with respect to this Agreement,such secured lender shall give the parties hereto reasonable notice that it intends to exercise such rights or remedies. (c)The Purchaser's agreement to resell power from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall any such resale of Project power relieve the Purchaser of any payment obligation under this Agreement. Section 16 -Exhibits.The following exhibits are incorporated by reference into this Agreement: (a)Exhibit "A"is the Indenture; (b)Exhibit "B"is the Description of the Project; (c)Exhibit "C"is the Form of Commercial Contract; (d)Exhibit "D"is the Form of Certain Supplemental!Indentures. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 18 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Section 17 -Notices,Computation of Time and Holidays.Any notice required by this Agreement to be given to any party shall be effective when it is received by such party,and in computing any period of time from such notice,such period shall commence at 12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever this Agreement calls for notice to or notification by any party,the same (unless otherwise specifically provided)shall be in writing directed to the Authority's executive director or the Purchaser's general manager.If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place. Section 18 -Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section 19 -Availability of information.The parties shall make available to each other, for inspection and copying during business hours,all books,records,plans,and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 20 -Severability. (a)Severability Generally.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the remaining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause,or provision or any part thereof so adjudicated to be invalid had not been included herein. (b)Correction and Substitution.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOIBED Page 19 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, then and in such event,the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. Section 21 -RemediesCumulative.No remedy conferred upon or reserved to the parties hereto is intended to be exclusive of any other remedy or remedies available hereunder or now or hereafter existing by law,in equity,by statute,or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 22 -Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right,or matter. Section 23 -Covenant To Act In Good Faith.In order to permit this Agreement ;to be fully effective throughout its term in accordance with the original intent of the parties,each party agrees that it shall at all times act in good faith in performing its obligations and in exercising its rights under this Agreement. Section 24 -No Third-Party Beneficiaries.Notwithstanding that the operation of this Agreement may and is intended to confer benefits on third parties who are not signatories to this Agreement,this Agreement shall be enforceable only in accordance with its provisions expressly governing enforcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obligations to and rights of enforcement in: (a)one another;and (b)such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virtue of provisions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into this AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 20 DRAFT September 24,1991 3610.2014 EEW/gt Rev.10 v.13 Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party,nor have the parties created for any other third party any right to enforce this Agreement. Section 25 -Section Headings.The section headings in this Agreement are for convenience only,and do not purport to,and shall not be deemed to,define,limit,or extend the scope or intent of the section to which they pertain. Section 26 -Multiple Copies.This Agreement shall be executed in several counter- parts,each of which shall be an original,but af both of which shall constitute one and the same instrument. IN WITNESS WHEREOF,the parties have caused this Agreement to be executed the day and year first above written. ALASKA ENERGY AUTHORITY By NAME AND TITLE CITY OF UNALASKA,ALASKA By NAME AND TITLE © AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1SED Page 21 SEP-18-1391 18:22 FROM JOHN NUVEEN 2 CO-SEATTLE To PER P.a1 ee ek es os ate an 5 - 4 ”PANAFAX COVER PAGE ,Please deliver to:biter Feaeie Transmitted.trom:NE mM SanseA es "John Nuveen &Co.Incorporated Seattle,Washington :S ) Number of pages,Including cover page:__<_cA Date:A LAG | Time:6720 2 _'If there are any problems with transmission,please call: iat(208)587-ore) "Thank youl _Uea Z," eat the =Si Suen ST° SEP-18-1991 18:20 FROM JOHN NUVEEN &CO-SEATTLE TO REA P.@2 (1)Prior to the beginning of each Fiscal Year,the Authority will prepare an Annual Project Budget for that year.The Annual Project Budget shall contain all Annual Project Costs as defined in subparagraph (a)above.It shall further specify the estimated unit cost of power from the Project derived from dividing the Annual Project costs by 88 million kilowatt-hours of energy (the "Basic Rate").If the City notifies the Authority at least 30 days prior to the effective date of an Annual Project Budget that it expects to sell less than 88 million kilowatt-hours in the impending Fiscal Year,the Authority shall adjust the Basic Rate in the Annual Project Budget to reflect the reduced power sales (the "Adjusted Rate”).In no event,however,shall the Adjusted Rate exceed the Basic Rate for such Fiscal Year by more than _-s_-s%.-:«If,due to the limitation set forth in the preceding sentence,the result of multiplying the Adjusted Rate times the City's projected power sales in a Fiscal Year does not result in sufficient revenue from the City to pay all Annual Project Costs,the Authority shall draw upon reserve funds to the extent available. (2)If at the end of a Fiscal Year the City's actual power sales have exceeded its estimate for that year,the City shall make payments to the Authority during the subsequent Fiscal Year to restore amounts drawn from reserves in proportion to the revenues that would have been paid had actual power sales been used to calculate the Annual Project Budget. TOTAL P.@2 SENT BY:WOHLFORTH ARGETSINGER +9-24-91 5 B:43AM ° WOHLFORTH,ARGETSINGER,JOHNSON &BRECHT a id RESRATIONPETERAROETSINGERPROPERNZONALCO°TELEPHONE (967)876-640! JULIUS Jo BRECHTCYNTHIAieCARTLEOGe ATTORNEYS AT LAW TELECOPY (907)878-8009 .tale ip] BARBARA EC,RIGSNER O00 WEST ETH AVENVE,SUITE 600 THOMAS F RLINANEA ANCHORAGE,ALABKA 9980!or aounsenANDREWM,LZBd BRADLEY E.MEYEN ROGER G,CONNOR JAMES A.SARAFIN MENNETS E.VAESAR FILENO.3610.2014 DATE 9-24-91 V3 PLEASE DELIVER THE FOLLOWING PAGES TO:nm NAME Brent Petrie 3 FIRM AEA S CITY TELEPHONE NUMBER () TELECOPY NUMBER- ()561-8584 FROM Eric Wohlforth TOTAL NUMBER OF PAGES INCLUDING THIS PAGE 9 COMMENTS Power Sales AGreement comments from Le Resche and Richard Johannsen. ORIGINAL DOCUMENT TO FOLLOW VIA: Regular Mail:DHL or Other Courier System: Express Mail:Hand Delivery:_. No Document will follow this Transmission:xX WAAR AHAEAKCAHARRERERREREAKREWKEKERRAARKAKARRANKARRAAREAAAEARAREAHA If you do not receive all pages,please call back as soon as possible. OPERATOR Gina Taylor AT (907)276-6401 HARAAHAKAKRARARHEREARNKRKWWRRRRRRERARAKak 9072765093 AK ENERGY AUTHORITY:#1 wuaiAiss SENT BY!WOHLFORTH,ARGETSINGER +9-24-91 +8:44AM 90727850939 AK ENERGY AUTHORITY:#2 LERRESCHE &CO.eeTsecessea P.01 310.R20K) LeResche &Co. 4270 Glacier Hy.Juneau,Alaska 99801 USA 907.586-6338 FAX Cover Shezt Date: Number of Pages:4 Please Deliver To:Eric Wohiforth Anchorage Eric- This is my crack at the Payment Obligations section.You'll note I've done two things: 1.Included Jim Seagraves'"safety net"idea,but added an inflated-present-cost-of-generation Iimitadon on the "Adjusted Rate,”2..Added a further Limitation on the City's obligation to pay if theprojectisunabletoproduceaccordingtoexpectationsordemand. Together,these limitadons on the City's obligations are prettygenerous,They take into account two real factors,however:First,I don'tthinktheCitywillcooperatawithanless.Second,any City guaranteesabovethislevelwouldbeessentiallyworthlessanyhow,and that factorcertainlywon't escape the notice of the market What do you think? Best regards, wo LeResche &Co, SENT BY:WOHLFORTH,ARGETSINGER +9-24-91 3 G:44AM +9072785093%AK ENERGY AUTHORITY:#3 . , LERESCHE &CO.9O7TSB68SSS P,@2 ABA-Unalaska Geothermal Power Sales Agreementdraft0/23/92Page1 Saction 4 -Paymant Obligation (a)FPurchasez's Obligations,Purchaser shall pay Annual Project Coats and other payments required hereunder in the amounts and at the times required by this Agreement notwithstanding @ suspension or reduction in the amount of power eupplied by the project.Such payments shall not be subject to any reduction in the amount oft power supplies by thepian orAgtaamant..Buch payments shall not be subject to any reduction,by offset or otherwise except ana provided in Sections 4(b)_and d{(clof this Agreement, The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments as defined herein shall be absolute and unconditional. LeResche &Ca. >OB44AM ¢9072785093 AK ENERGY AUTHORITY:#4aeVe&®ca.e@aTsaeaz25a P.asisSENTBY:WOHLFORTH,ARGETSINGER + oe AEA-Unalaska Geothermal Power Sates Agreementdraft0/23/92Page2 Add to definitions: (ce)"Alternatve Diesel Rate”means,for any Fiscal Year,that rate per kilowatt-hour derived by multiplying the cost of energy at Purchaser's busa during calendar year 1991 (GO.XXXX per kilowatt+hour)by the ratio of the Producer Price Index at December 31 of the preceding Fiscal Year to the Producer Price Index at December 31,1991.(This could be defined in a mare LeResche &Ca. « SENT BY:WOHLFORTH ARGETSINGER +9-24 +B 45AM +90727850939 AK ENERGY AUTHORITY:#515 WE &CO.ea7Tsecgzas P.a4 AEA-Unalaska Geotherntal Power Sales Agreement drafe 23/91 " Page5 complicated --but maybe more relevant --way by invoking the cost of fusl FOS Dutch Harbor and the PPI for non-fuel costs) LeResche &Co. SENT BY!:WOHLFORTH:ARGETSINGER +9-24-01 +B:ASAM +90727650934 AK ENERGY AUTHORITY+#& SENT BY:Xerex Telecopior 7020 ¢0-23-91 S10535AM 5 QOTZTESIOBAWOHLFORTH ET AL.»AKi®2 SUGGESTED CXANGES TO POWER BALES AGREEMENT {Araft Gated Saptember i6,1991) Change to section 1(@)on page 2!;X che reference to Section 7 should be Saction &.yo Changa to Section 1(g)on page 3: tional Project Work is not a defined term.The words |,--- Aor optiunat-ereridbadeleted)or Optional Project Workahouldbedefinad. Change to Section 1(h)on page 3: Xchange "the Agréenent®on the third line to "this a,Agreenent." Changa to Section 1(x)on page 3: Rewrite the definition to read as follows: "Date of Commercial Cperation”maans the date upon whichtheProjecthaaauccessfullycompleteditsacceptanceprocassasdefinedintheagreementorContractunderwhichtheProjectisconstructed. Comment to Section 1(1)on page 33% Tha words "payment of principal of"sean awkward.Isthiswhatyouintendad?? Change to Saction 1(s)on paga 43 The definition cf "Necessary Approvals"can be eliminatedasaraegultoftheraviasiantothetearm"Date of Commercial Operation."We found the "NecessaryApprovals”definition to ba awkward because of itareterencetosomebutnotalloftheapprovalsthat willbeobtained.Also,many of the necessary regulatorypermitsmustbeobtainedpriortothecomnancamentofconstrustionanditthereforeseensavkwardtcrefarence them in the context of commercial operation. Change to Baction a(b)on page 5: Xt believe the reference on iine 2 should be to Section 4 aandnotSection6angthatthereferenceonlina3shouldbetoSection§and not Saction 8. (PLAIN.OL]9123/01 SENT BY:WOHLFORTH ARGETSINGER +9-24-91 +Gs45AM +9072765099 AK ENERGY AUTHORITY:7 SENT BY!Xerox Telecopier 7020 +9-28-91 T10835AM 3 Q07276S108*WOMLFORTH ET AL.»AKi#8 Changes to Bactiens 3(a)and 3(b)on page 6: Project Capability is not a defined term,but "CapabilityefthaProject"igs.The sacond and third lines ofection3(a)should read;"hereby purchagas,theXeapabinityofthePreject(togethar with associatednergy)and the Purchaser agraas to pay the...-" or the same reason,the last line of Saction 3(b)shouldread:"schedule from the Project within the limitationsimposedbytheavailableCapabilityoftheProject." Comments on Saction 4 on page 6: To avoid shocking the reader,parhaps Section 4 couldinoludeasubdivision(b)entitled "Cradits AgainetPurchaser's Obligation"with language referring tocreditsspecifiedinSection5. Commenta on Section 53 on pages 7 and 8! {1)Section 5(a)(5)contains a reference to Funds,whichisnotadafinedterm. (2)Saction 5(a)(6)should refer to a "fluid fee"andnota"fluid fee royalty.” (3)We are unfamiliar with the Uniform Systen ofAcscuntareferencedinSection3(a)(6).We would like toknowwhetherthisisatearmofartand,if so,what it naans. (4)Perhaps the reference in Section 8(a)(6)to"credits”should be set up as a new subparagraph whicheapecificallymentianathesourcesofcredits,such as thepraceadsofbusinessinterruptioninsurance.It seems tousthat&Haw section should then be included somewhere in the agreement to specifically set forth the requiredbusinessinterruptioninsurancecoveragegothatthefaceofthedocumentwillreflectthecovaragethatwillbemaintainedandapromiseonbehalfoftheAEAtodoso. (5)Should we include the cost of tha anticipated loanfromthecomniagionerofrevenueasaspecificAnnual Project Cost,rather than relying on the "all othercosta"provision??It scems to me that the more costs wespecificallyreference,the lags likely we are to beacousedofhidingsomethinginthecatchallprovision.Are we atatutorily required to provide for a "debtservicecoveragefactor”(saa AS 44,.83.090(a)(2))orwouldaadescriptionoftheeastoftheleanbe [PLAIN.O1)-2-Wa3/F1 188SENTBY:WOHLFORTH,ARGETSINGER +9-24-91 +B45AM >90727850934 AK ENERGY AUTHORITY SENT BY!Xerox Telecopier 7020 §9-29-91 5105 3GAM 'SO72TBS108WOHLFORTH ET AL,»AKi®4 auffioient??What if our efforts to obtain the loan from the commissioner of revenue are unsuccesaful?? (6)How do wa handle the cost of upgrading the city's@lectricaldistributionsystem?If thia upgrade isdefinedaspaxtoftheProject(which is necessary toinoludathis"interesnnection cost"within the meaning ofAnnualProjectCosts),then we need to make sure that theAEAhasnoongoingobligationforoperation,maintenance,renewal or replacemant af this component of the Project.I think Dan 6ehochet doas plan to include theinterconnectionupgradeinhisdesoriptionof the Project(Exhibit B). 7)Section 5(a)(6)(A)should refer to tha "Annual a [+]Budget *-8)Section 5(a)(6)(¢)should refer ta "Projecteapecific | dministrativa ...." (9)We previously diacussed relecating the "cap"provision in ita own seotion wo that it will stand out and net be hidden in the body of the documant, Changes to Sactien 8(da)on page 11: The reference to Exhibit A needs to be changad to ypuExhibit¢(and the subsequent reference in Section 10(»)7 fo | on paga 13 to Exhibit ¢should be changed to Exhibit D)..,Hy -|A summary of exhibits in Section 16 on page 18 should 'es >alao be changed accordingly,tt Changes to Sactioen 10 on page 12:3 The heAding should be changed to cover "Construct or 'Cparats."The fourth through sixth lines of tha text should also be changed to read as follows: -»«provide for its continuad operation pursuant teSection6(d)of this Agreement and to uge its basteffortstocompletatheProjectexpeditiouslyand.... a Comment on Seotion 11(4)on page 14:PA difrrd pwr Renewal and Con serve Ragiiremant/ia not agenewastearm.Perhaps it is Tatended ta be defined intheIndenture.If 60,the provision should state "as dafined in the Indenture," ' ORITY+#9 SENT BY:WoHLFORTH:ARGETSINGER +97-24-91 +B:47AM +9072785099 AK ENERGY AUTHORI ,"SENT BY!Xorox Telecenier 7020 $9-29-91 3 10°S8AR i QOT2763108-WOHLFORTH ET AL.)AKi#§ Changes to Section 13(a)on page 16: It seems to me that the reference te §2beatoSactionsath)and 15{b)ection 15 (3)should % Change to Seation 23 on page 19: The comma aftar the werd "Agreament" re ror gr t*on line 1 shovld ba Change to Section 26 on page 20: This paragraph should probably be changed to reflect thatthereareonlytwopartiestothisagreement: This Agreement may be executed in counterparts,sach ofwhichshallbeanoriginal,but both of which shallsonatituteoneandthesameinetrument. (PLAIN,OY)wén , 9/23/01 Definitions: Dis[a "Basic Rate"=Annual Project Costs for a Fiscal Year divided by 88,000,000. "Computed Rate"actual sales from the Project. =Annual Project Costs for a Fiscal Year divided by "Adjusted Rate"=Annual Project Costs for a Fiscal Year divided by 785,000,000. "Inflated Basic Rate"=Basic Rate for the first full year of commercial eperation of the Project multiplied by the GNP Deflator Index. "GNP Deflator Index"=average GNP deflator for a Fiscal Year divided bytheaverageGNPdeflatorduringthefirstfullyearofcommercial operation of the Project. --Possible substitute for Section 5(c)<= Reduction of Annual Payment Obligation If the Purchaser purchases Tess than 75,000,000 ktlowatt hours of energy from the Project tn a Fiscal Year,calculate the Purchaser's Annual Payment Obligation unless the InflatedIfthePurchaserpurchaseslessthan75,000,000 kilowatt hours of energy from the Project in a FiscalBasicRateexceedstheAdjustedRate. Year and the Inflated Basic Rate exceeds the Adjusted Rate, the Adjusted Rate shall be used to then the Inflated Basic Rate shall be used to calculate the Purchaser's Annual Payment Obligation.However,the Computed Rate shall always be thePaymentmaximumrateusedtocalculatethePurchaser's Annual Obligation. TRANSMISSION REPORT THIS DOCUMENT WAS SENT *K COUNT *% #61 *KK SEND oe (REDUCED SAMPLE ABOVE) NO REMOTE STATION If.D.START TIME DURATION #PAGES COMMENT 1 206 382 1589 9-18-91 17:18 1°13"1 TOTAL 0:01'°13°1 XEROX TELECOPIER 7020 -Ote far Definitions: "Basic Rate"=Annual Project Costs for a Fiscal Year divided by 88,000,000. "Computed Rate”=Annual Project Costs for a Fiscal Year divided byactualsaiesfromtheProject. "adjusted Rate"=Annual Project Costs for a Fiscal Year divided by 75,000,000. "Inflated Basic Rate”= Sastc Rate for the first full year of commercialoperationoftheProjectmultipliedbytheGNPDeflatorIndex. "GNP Deflater Index"=average GNP deflator for a Fiscal Year divided bytheaverageGNPdeflatcrduringthefirstfullyearofcommercialoperationoftheProject. --Possible substitute for Sectton S(c)a= Reduction of Annual Payment Obligation If the Purchaser purchases less than 75,000,000 kilowatt hours of enersyfromtheProjectinaFiscalYear,the Adjusted Rate shatt be used tocalculatethePurchaser's Annual Payment Obligation untess the InflatedBasicRateexceedstheAdjustedRate.If the Purchaser purchases lessthan75,000,000 kilowatt hours of energy from the Project in a FiscalYearandtheInflatedBasicRateexceedstheAdjustedRate,then theInflatedBasicRateshallbeusedtocalculatethePurchaser's AnnualPaymentObligation.However,the Computed Rate shalt always be themaximumrateusedtocatculatethePurchaser's Annual Payment Obligation. Poet-it™prand fax transmittal memo 7ert {os Pages ©oT As f=wr =a every OO ee ee OT re tao A °freXrrenVesSFrieane&>a "Z '.-->Zz=F 2Fhe-SOF7 TRANSMISSION REPORT THIS DOCUMENT (REDUCED SAMPLE ABOVE) WAS SENT #*K COUNT ** #1 *kK SEND 4% NO REMOTE STATION I.D.START TIME DURATION #PAGES COMMENT 1]WCHLFCRTH ET AL.;AK 9-16-91 10:42 1°05"1 TOTAL 0:01'°05"1 XEROX TELECOPIER 7020 Fre fa Definitions: "Basic Rate"=Annual Project Costs for a Fiscal Year divided by 88,000,000. "Computed Rate"=Annual Project Costs for a Fiscal Year divided byactualsalesfromtheProject. "Adjusted Rate"=Annual Project Costs for a Fiscal Year divided by 75,000,000. "Inflated Basic Rate"=Basic Rate for the first full year of commercialoperationoftheProjectmultipliedbytheGNPDeflatorIndex. "GNP Deflator Index"=average GNP deflator for a Fiscal Year divided bytheaverageGNPdeflatorduringthefirstfullyearofcommercial operation of the Project. --Possible substitute for Section 5(c)-- Reduction of Annual Payment Obligation If the Purchaser purchases less than 75,000,000 kilowatt hours of energyfromtheProjectinaFiscalYear,the Adjusted Rate shall be used tocalculatethePurchaser's Annual Payment Obligation unless the InflatedBasicRateexceedstheAdjustedRate.If the Purchaser purchases lessthan75,000,000 kilowatt hours of energy from the Project in a FiscalYearandtheInflatedBasicRateexceedstheAdjustedRate,then theInflatedBasicRateshallbeusedtocalculatethePurchaser's AnnualPaymentObligation.However,the Computed Rate shall always be themaximumrateusedtocalculatethePurchaser's Annual Payment Obligation. Post-It™brand fax transmittal memo 7671 [+of pages >FT AJ f= To=Eric lOpNL Foret FO Bye NT VET'WADA o AEA Depry malasica Phone #7 Fax #¥SA oF ZEEE ZL Aterd246-5053% Fe a1 Definitions: "Basic Rate"=Annual Project Costs for a Fiscal Year divided by 88,000,000. "Computed Rate"=Annual Project Costs for a Fiscal Year divided by actual sales from the Project. "Adjusted Rate"=Annual Project Costs for a Fiscal Year divided by 75,000,000. "Inflated Basic Rate"=Basic Rate for the first full year of commercial operation of the Project multiplied by the GNP Deflator Index. "QNP Deflator Index"=average GNP deflator for a Fiscal Year divided by the average GNP deflator during the first full year of commercial operation of the Project. --Possible substitute for Section 5(c)-- Reduction of Annual Payment Obligation If the Purchaser purchases less than 75,000,000 kilowatt hours of energy from the Project in a Fiscal Year,the Adjusted Rate shall be used to calculate the Purchaser's Annual Payment Obligation unless the Inflated Basic Rate exceeds the Adjusted Rate.If the Purchaser purchases less than 75,000,000 kilowatt hours of energy from the Project in a Fiscal Year and the Inflated Basic Rate exceeds the Adjusted Rate,then the Inflated Basic Rate shall be used to calculate the Purchaser's Annual Payment Obligation.However,the Computed Rate shall always be the maximum rate used to calculate the Purchaser's Annual Payment Obligation. cout teEvic w ahs Jum Ss afig WOHLFORTH,ARGETSINGER,JOHNSON &BRECHT PETER ARGETSINGER YULIUS J,BRECHT CYNTHIA L.CARTLEOGE ROBERT M.JOHNSON BARBARA E.KISSNER THOMAS F.KLINKNER ANDREW M.LEBO BRAOLEY E.MEYEN JAMES A,SARAFIN JAMES R.SZENOER KENNETH E.VASSAR ERIC E.WOHLFORTH TO: FROM: DATE: SUBJECT: &PROFESSIONAL CORPORATION ATTORNEYS AT LAW 900 WEST STH AVENUE,SUITE 600 ANCHORAGE,ALASKA 9950! MEMORANDUM Charlie Bussell,Alaska Energy AuthorityBrentPetrie,Alaska Energy Authority Y Jim Seagraves,John Nuveen &Co.Incorporated Lewis Greenbaum,Katten Muchin &Zavis Daniel Schochet,OESI Power Corporation Cliff Phillips,OES!Power Corporation Richard Johannsen,Perkins Coie Eric E.Wohiforth 7 G L) September 16,1991 Alaska Energy Authority Unalaska Geothermal Project Our File Number 3610.2014 TELEPHONE (907)276-6401 TELECOPY (907)276-8093 OF COUNSEL ROGER G.CONNOR RECEIVED SEP 17 1991 FLESKA EXERGY AUTHORITY. Enclosed is a further draft dated September 16,1991 (Rev.7 v.10)of the Power Sales Agreement with a modest few changes resulting from our last meeting.Jim Seagraves is working on a revision of the Reduction of Annual Power Costs section on page 8.Please let me have any of your comments as soon as possible. gmt Enclosure DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 POWER SALES AGREEMENT Between ALASKA ENERGY AUTHORITY and CITY OF UNALASKA,ALASKA Dated as of 1991 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 TABLE OF CONTENTS Page Section 1 -Definitions ..0....ceeeene 2 Section 2 -Term of Agreement...2...0.0...eeeeeeeeee 5 Section 3 -Electric Service to be Furnished............0.0000 eee ns) Section 4 -Payment Obligation...1.2...kees 6 Section 5 -Annual Project Costs .........0...cee eee ee eens 6 Section 6 -Obligations Under Indenture;Completion of Project............9 Section 7 -Obligations in the Event of Default .....................005 9 Section 8 -Purchaser's SystemS ......0...0.0.cece eee 10 Section 9 -Indenture...0...ee eee 12 Section 10 -Purchaser's Consent to Supplemental Indentures to Construct the Project 2.ee eee eee ene 12 Section 11 -Authority Responsibilities ....0...0.0...0...cee eee eee ee 13 Section 12 -Records ..1...2...ee eee 14 Section 13 -Inspection of Facilities ©....eeeeee 14 Section 14 -Covenants to Maintain Integrity of Agreement ...............15 Section 15-Assignment .....2.0...ee ee eee eee eens 16 AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page i DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 Section 16-Exhibits 2.0...ce ee eee 18 Section 17 -Notices,Computation of Time and Holidays ................18 Section 18 -Applicable Law ..0....eceeeee 18 Section 19 -Availability of Information ...2...0.0...0.cc ee eee 18 Section 20 -Severability...0...ee eens 19 Section 21 -Remedies Cumulative 2...2.0...ee eee 19 Section 22 -Waiver Not Continuing...0.0.0.0...02 eee 19 Section 23 -Covenant To Act In Good Faith ...............0.....008.19 Section 24 -No Third-Party Beneficiaries ...0.0.2...0.0.0...eee eee 20 Section 25 -Section HeadingS ........0...ce ee eee 20 Section 26 -Multiple Copies...2...2.eeeeee 20 Exhibit A -Indenture Exhibit B -Description of the Project Exhibit C -Form of Certain Supplemental Indentures. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page ii DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 POWER SALES AGREEMENT THIS AGREEMENT dated as of ,19 ,is entered into by and among the Alaska Energy Authority (the "Authority")and the City of Unalaska,Alaska, (the "Purchaser'). WITNESSETH: The Authority recites,agrees,represents,and covenants as follows: (1)|The Authority is a public corporation of the State of Alaska duly created, organized,and existing pursuant to AS 44.83; (2)The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and bylaws of the Authority,to enter into this Agreement and to comply fully with the terms hereof; (3)|The Authority desires to fulfill its legislatively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of power and an adequate,economic,and reliable long-term supply of power;and (4)|The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Authority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. The Purchaser recites,agrees,represents,and covenants as follows: (1)The Purchaser is a duly organized and constituted municipal corporation under the Constitution and laws of the State of Alaska; (2)|The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and other applicable laws and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOIBED Page 1 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 regulations,and pursuant to its charter and ordinances,to enter into this Agreement and to comply fully with the terms thereof; (3)|The Purchaser performs the functions of a utility and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)|The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other charter, ordinance,resolution,contract,agreement,bond,note,mortgage,or other obligation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. NOW,Therefore,the parties agree as follows: Section 1 -Definitions.For the purposes of this Agreement,the following definitions apply: (a)"Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. (b)"Agreement"means this Power Sales Agreement. (c)"Annual Payment Obligation”means the total amount payable by the Purchaser in or for a Fiscal Year pursuant to this Agreement. (d)"Annual Project Budget"means the budget for the Project as adopted or in effect for a particular Fiscal year and amended or supplemented from time to time. (e)"Annual Project Costs"shall have the meaning given it in Section 7 of this Agreement. (f)"Authority"means the Alaska Energy Authority as established by the Act and any subsequent successor agency thereto. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 2 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 (g)"Bonds"means bonds,notes,or other evidences of indebtedness (including refunding bonds)issued pursuant to the Indenture,the proceeds of which are used to pay or reimburse Costs of Acquisition and Construction and Required or Optional Project Work. (h)"Capability of the Project"means the entire capability of the Project to generate electric power at any and all times from the Date of Commercial Operation until the termination of the Agreement (or any renewal thereof),including periods when the Project may not be operating or inoperable or the operation thereof is curtailed, in each case in whole or in part,for any reason whatsoever. (i)"Consultant"means an independent individual or firm of nationwide and favorable reputation,having demonstrated expertise in the field or the matter or the item referred to it under various specific provisions of this Agreement,aad approved by the Authority,and acceptable to the Purchaser. (j)"Cost of Acquisition and Construction”means the Cost of Acquisition and Construction (as defined in Section of the Indenture)of the Project. (k)"Date of Commercial Operation"means the date,which occurs after Necessary Approvals have been obtained,on which the Authority declares that the Project is fully available to perform at not less than its design capacity. (I)"Debt Service"means amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds under the Indenture. (m)"Fiscal Year"means that 12-month period starting on July 1 of a calendar year through and including June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the 12-month period starting on the Date of Commercial Operation through and including the following June 30. (n)"Indenture"means the indenture securing the Bonds in substantially the form attached hereto as Exhibit A. (0)"Purchaser"means the City of Unalaska,Alaska. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 3 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 (0)"Project"means the Unalaska Geothermal Project as described in Exhibit (q)"Prudent Utility Practice"means at a particular time any of the practices, methods,and acts engaged in or approved by a significant portion of the electric utility industry at such time,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the desired results at the lowest reasonable cost consistent with good business practices,reliability,safety, and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method,or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods,or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety,and expedition.Prudent Utility Practice includes due regard for manufacturers'warranties and the requirements of governmental agencies of competent jurisdiction and shall apply not only to functional parts of a Project,but also to appropriate structures, landscaping,painting,signs,lighting,and other facilities. (r)"Purchaser's System"means the Purchaser's electric utility system for the distribution,transmission,and generation of electrical power and which is owned and operated by the Purchaser. (s)"Necessary Approvals"means the approval or consent in writing of each governmental entity,regulatory body,or other person which approval is required in order for the Project to be constructed and operated in accordance with this Agreement.As of the date of execution of this Agreement,the Necessary Approvals include but are not limited to approvals necessary under AS 44.88,approvals required by the Alaska Public Utilities Commission ("APUC"),approval of the Agreement by the governing body of the Purchaser and the Board of Directors of the Authority,and approval of necessary environmental permits by the Alaska Department of Environ- mental Conservation and the U.S.Environmental Protection Agency.Necessary approvals also include the availability,as determined by the Authority,of sufficient funds to complete the Project. (t)"Renewal and Contingency Reserve Fund"means the Renewal and Contingency Reserve Fund established pursuant to Section of the Indenture. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 4 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 (u)"Required Action"means an action that must be taken in order for the Authority to comply with federal or state law,the orders of licensing and regulatory agencies,the Indenture,or this Agreement. (v)"Required Project Work"means repairs,maintenance,renewals, replacements,or improvements required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or this Agreement,or otherwise necessary to keep the Project in good and efficient operating condition,consistent with: (1)sound economics for the Project and the Purchaser;and (2)national standards for the industry. (w)"Revenue Fund”means the Revenue Fund established pursuant to Section of the Indenture. (x)"Trustee"means the Trustee acting under the Indenture or that Trustee's successor or successors and any other corporation which may,at any time,be substituted in that Trustee's place under the Indenture. Section 2 -Term of Agreement. (a)Effectiveness.This Agreement shall take effect immedately become (b)Commencement of Payment Obligations.The payment obligations of the Purchaser,as set forth in Section 6 of this Agreement,to pay Annual Project Costs,as defined in Section 8 of this Agreement,shall commence on the Date of Commercial Operation. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 5 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 Section 3 -Electric Service to be Furnished. (a)Sale_and Purchase.The Authority hereby sells,and the Purchaser hereby purchases,Project Capability (together with associated energy)from the Project and the Purchaser agrees to pay the Annual Project Costs therefor in accordance with this Agreement. (b)Available Power.The Authority shall at all times,except when prevented by a cause or event not within the control of the Authority,make power available to the Purchaser from the Project in an amount equal to the amount the Purchaser may schedule from the Project within the limitations imposed by available Project Capability. (c)Required Project Work.The Authority shall perform or cause to be performed all Required Project Work provided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 6fa}5(a)(4)of this Agreement. The Authority shall give reasonable notification to the Purchaser prior to making or causing to be made any Required Project Work. Section 4 -Payment Obligation. (a)Purchaser's Obligations.The Purchaser shall make pay Annual Project Costs and other payments required hereunder in the amounts and at the times required by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional and unaffected by any interruption,interference,or curtailment in whole or in part of power supplied by the Project. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED .Page 6 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 Section 5 -Annual Project Costs. (a)Annual Project Costs Defined.Annual Project Costs mean all of the costs resulting from the ownership,operation,maintenance of,and renewals and replacements to,the Project properly incurred or paid during each Fiscal Year, including: (1)|amounts required to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Construc- tion; (2)|amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with this Agreement; (3)|amounts required to restore the funds established under the Indenture to the levels required by the Indenture to be maintained therein; (4)amounts which may be required to pay for Required Project Work to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (5)other amounts determined by the Authority to be necessary or appropriate to supplement and to be paid into the Funds established under the Indenture; (6)all other costs of producing and delivering Project power fexeluding including,without limitation,fluid fee royalty and costs of well maintenance (but excluding depreciation)not accounted for by the payments out of funds and reserves specified in the foregoing sections and properly chargeable to the Project under the Uniform System of Accounts,less any credits against said costs by reason of revenues from sources other than the direct sale of power to the Purchaser,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain said reserve funds in the amounts required under AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOIBED Page 7 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 the Indenture or in such greater amounts as may be determined by the Authority,or to reduce Annual Project Costs.Such other costs shall include: (A)project operating and maintenance costs in accordance with the Annual Budget; (B)costs of Project-related insurance;and (C)project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations. (b)Proceeds ofa Taking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,or output of the Project by any state or federal government agency shall be used by the Authority to: (1)reduce Annual Project Costs;or (2)retire Bonds. (c)Reduction of Annual Project Costs.If,as a result of the Purchaser selling less than kilowatt hours of energy in a Fiscal Year,the average per kilowatt-hour cost of energy to the Purchaser (as determined by dividing the Annual Project Cost for that Fiscal Year by 88 million kilowatt hours)(the "Basic Rate") increases by percent (the "Rate Limit"),the Annual Project Costs for that Fiscal Year shall be adjusted to the amount which results from an average per kilowatt hour cost of the Basic Rate plus the Rate Limit times the Basic Rate (the "Adjusted Rate"). The Adjusted Rate shall remain in effect until more than kilowatt hours of energy have been sold by the Purchaser in a subsequent Fiscal Year.In that Fiscal Year, Annual Project Costs shall be determined without regard to this paragraph. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 8 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 Section 6 -Obligations Under Indenture:Completion of Project. (a)Assignment or Payment to Trustee.The parties recognize and agree: (1)that the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Indenture for the benefit of the holders of the Bonds;and (2)that the Authority may direct that amounts payable to it under this Agreement to be paid directly to the Trustee. (b)Project Funding.The Authority shall use its best efforts to issue Bonds in an amount sufficient to pay the Cost of Acquisition and Construction. (c)Covenants of the Authority.The Authority covenants that it will not cause rates for Project power to increase by reason of any bond resolution,covenant,or agreement contained in any trust indenture or trust agreement entered into by the Authority in connection with a power project other than the Project,nor on account of any inadequacy in its actual or projected aggregate revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. (d)Project Completion and Operation.The Authority agrees to use its best efforts to complete the Project expeditiously and in accordance with sound engineer- ing practice and with the provisions of the Indenture.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance) to provide power at the lowest reasonable cost to the Purchaser in a manner that is compatible with the Purchaser's System and consistent with the Act,the Indenture, and this Agreement. Section 7 -Obligations in the Event of Default. (a)Enforcement.Upon failure of the Purchaser to perform any obligation herein,the Authority may bring any suit,action,or proceeding of law or in equity AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 9 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 ("Suit"),including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Purchaser.The Authority may bring such Suit within: (1)30 days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obligation;and (2)immediately,in the case of default by the Purchaser on any payment obligation. The Purchaser shall continue to make payments in the event of any dispute regarding performance of any obligation by any party under this Agreement or in the event of any dispute under the Indenture,and this obligation of continued payment pending resolution of disputes shall be immediately enforceable by any party-upon application to any court of competent jurisdiction. (b)Additional Rights and Remedies.In addition to the Authority's rights under Section 7(a)of this Agreement,if the Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to the Purchaser. (c)Default by the Authority.In the event of any default by the Authority under any covenant,agreement of obligation under this Agreement with respect to the Purchaser,the Purchaser may,upon 30 days'written notice to the Authority,bring any Suit,action,or proceeding of law or in equity,including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Authority.The payment obligation of the Purchaser under this Agreement is not subject to offset. Section 8 -Purchaser's Systems. (a)Character of Expense.Tne amounts payable under this Agreement are operating expenses of the Purchaser's System by the Purchaser and are valid and binding obligations of the Purchaser,payable only from the gross revenues of the AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOI8ED Page 10 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 Purchaser's System as a cost of purchased electric power,and not payable from any taxes. (6)Purchaser's Rate Covenants.!n order to afford,permit,and make timely payments as specified in this Agreement,the Purchaser agrees that it will establish, charge,and collect rates,fees,and charges with respect to the Purchaser's System in accordance with applicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay,together with any other funds or moneys available therefor,any and all other amounts payable from or which constitute or may constitute a charge and lien upon such revenues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Purchaser to finance the Purchaser's System. (c)Operation and Maintenance of Purchaser's System.The Purchaser covenants and agrees that it will operate and maintain its System in good repair, working order and condition,and in accordance with Prudent Utility Practice. (d)Limitation on Certain Contracts.The Purchaser covenants and agrees not to enter voluntarily into any contract or agreement to take or pay for power,other than this Agreement,payable from the revenues of the Purchaser's System on a parity with or superior to the payment of its obligations under this Agreement,except that the Purchaser may enter into such a contract or agreement of not to exceed two years'duration under which the Purchaser's payment obligation is on a parity with the payment of its obligations under this Agreement or may enter a contract with a commercial customer in the form annexed hereto as Exhibit A.The limitations of Section 8(d)of this Agreement shall not apply to contracts or agreements creating obligations on a parity with obligations under this Agreement if a written opinion from a Consultant is rendered: (1)that the contract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice;and (2)that the contract or agreement will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 11 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 Section 9 -Indenture. (a)Amendment or Supplementation of Indenture.Except as provided in Section 10 of this Agreement,the Authority will not amend or supplement the Indenture in any manner,or adopt a new Indenture in connection with the refunding of the Bonds,which would materially adversely affect the ability of the Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation, financial or otherwise,on the Purchaser,without the consent of the Purchaser. (b)Insurance.The Authority will maintain physical loss insurance to the extent required by the Indenture. (c)Information.The Authority shall provide the Purchaser with a copy of any report,certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Indenture or that the Trustee furnishes to the Authority. Section 10 -Purchaser's Consent to Supplemental _Indentures to Construct the Project.The Purchaser hereby consents to the adoption by the Authority of supplemental Indentures pursuant to Section 9(a)of this Agreement,as necessary to comply with the Authority's obligation to finance and construct the Project and to provide for its continued operation pursuant to Section 6(b)of this Agreement and the Authority's obligation under Section 6(d)of this Agreement to use its best efforts to complete the Project expeditiously and to provide for its continued operation and in accordance with sound engineering practices and with the provisions of the Indenture.The Authority shall consult with the Purchaser regarding the provisions to be included in such supplemental Indenture,and shall use its reasonable best efforts to comply with the requests of the Purchaser with respect thereto.Unless otherwise approved in accordance with Section 9(a)of this Agreement,such supplemental Indentures shall: (a)Provide that the total amounts required for the payment of Debt Service when due shall be,on an annual basis,as nearly equal as practicable; AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 12 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 fe}be substantially in the form attached hereto as Exhibit C,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis;and Section 11 -Authority Responsibilities.The Authority shall take the following actions, subject to the provisions of the Indenture,federal and state law,and the requirements of licensing and regulatory agencies: (a)Arrange for the operation and maintenance of the Project and the scheduling,production,and dispatch of Project power. (b)Adopt in each Fiscal Year (and revise as necessary or prudent during such Fiscal Year)a budget of Annual Project Costs for that Fiscal Year,which budget shall be in an amount estimated by the Authority to be sufficient to pay all Annual Project Costs. (c)Establish for each Fiscal Year the estimated Annual Payment Obligation of the Purchaser,together with a schedule for the Purchaser of equal monthly payments that the Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be: (1)designed to recover such estimated Annual Payment Obligation from the Purchaser during the Fiscal Year;and (2)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year. (d)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of the Purchaser for that Fiscal Year,and the amount of any additional payment required AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 13 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 from (or the amount of any refund to be returned to)the Purchaser to ensure that the total of all payments received from the Purchaser for each Fiscal Year is equal to the Purchaser's actual Annual Payment Obligation for that Fiscal Year. (e)Evaluate and select among alternative methods (if any)of carrying out and funding (including through issuance of bonds)Required Project Work. (f)Adopt procedures for the resolution of disputes that may arise between or among the Purchaser and the Authority concerning the interpretation of this Agreement,the obligations created by this Agreement,or the performance of such obligations. (g)Make an initial determination of "customary”insurance within the meaning of Section _of the Indenture and determine the appropriate amount of,and obtain, insurance for or related to the Project,in addition to such insurance as may be required by the Indenture. (nh)Adopt maintenance schedules for the Project that do not interfere unreasonably with the operations of the Purchaser. (i)Consider the need for and approve any additional amount to be added to the Renewal and Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement provided under the Indenture. (i)If and when no Bonds are outstanding under the Indenture,and the Indenture is therefore no longer effective,the Authority shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. Section 12 -Records.In addition to meter records,the parties shall keep log sheets and other records as may be needed for the purposes of this Agreement. Section 13 -Inspection of Facilities.For purposes of this Agreement,each party may, but shall not be obligated to,inspect any other party's facilities relating to the Project at any time upon reasonable notice,but such inspection or failure to inspect shall not AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 14 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 render the inspecting party,its officers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation, or for violation of this Agreement. Section 14 -Covenants to Maintain Intearity of Agreement. {8}Compliance with Law.The Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses,and permits relating to the use and operation of the Purchaser's System. fe}(b)Sales,Mergers,and Assignments.The Purchaser shall not abandon, sell,mortgage,lease,or otherwise dispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest thereunder to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes,or other evidences of indebtedness relating to the abandonment, sale,mortgage,lease or other disposition of property of the Purchaser's _System;and . (2)such disposal or assignment is: (A)consented to in writing by the Authority which consent shall not be unreasonably withheld;or (B)limited to assets that the Purchaser determines to be surplus to the needs of the Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 15 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 (C)evaluated by a Consultant and that Consultant certifies that,taking into account the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have: (i)substantially the same or greater ability to produce sufficient revenues to meet its payment obligations as would the Purchaser absent the transaction;and (ii)the ability to perform all obligations under this Agreement. Any assignee of this Agreement must assume in writing all of the Purchaser's obligations hereunder,must pay amy amounts due and owing from the Purchaser hereunder,and must provide the Authority with an opinion of Counsel that this Agreement is enforceable against the assignee. fa}(c)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is Originally issued on a tax-exempt basis to become taxable under the Internal Revenue Code of 1986,as the same may be amended from time to time. fe}(d)Licenses and Permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of the Project. Section 15 -Assignment. (a)Assignment Generally.This Agreement shall inure to the benefit of,and shall be binding upon the respective successors and assigns of the parties to this Agreement;provided,that this Agreement or any interest herein may be transferred or assigned by the Purchaser only in accordance with the provisions of Section 15(c) of this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFEO1BED Page 16 DRAFT September 16,1991 3610.2014 EEW/agt Rev.7v 10 (b)Assignments to Secured Lenders.A party may assign this Agreement, together with all of its rights and obligations thereunder: (1)to or in trust for any secured lenders of such party for the purpose of securing obligations for borrowed money;or (2)pursuant to the exercise by any such secured lender of any of the rights,powers,or privileges provided for by the mortgages or other security instruments of such party for borrowed money;provided,that no such assignment shall in any way relieve such party of any obligations hereunder. No such secured lender shall,as a result of such assignment or the subse- quent exercise of its rights with respect to this Agreement under any mortgage, deed of trust,or other security instrument,be construed to have assumed,or otherwise to have become personally liable for,the assignor's obligations hereunder,but such secured lender's ability to exercise the rights of its assignor hereunder shall be subject to performance of the assignor's corresponding obligations under this Agreement.In the event any such secured lender exercises any of its rights,powers,or privileges with respect to this Agreement under said mortgages or other security agreements,such secured lender may thereafter assign this Agreement,together with all the rights and obligations thereunder,to any entity authorized and able to perform the obligations under this Agreement,which entity shall succeed to all the rights and assume all the obligations of the borrower-assigner under this Agreement. Prior to the exercise by any secured lender of any rights or remedies under any mortgages or security agreements with respect to this Agreement,such secured lender shall give the parties hereto reasonable notice that it intends to exercise such rights or remedies. (c)The Purchaser's agreement to resell power from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall any such resale of Project power relieve the Purchaser of any payment obligation under this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 17 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 Section 16 -Exhibits.The following exhibits are incorporated by reference into this Agreement: (a)Exhibit "A"is the Indenture; (b)Exhibit "B"is the Description of the Project; (c)Exhibit "C"is the Form of Certain Supplemental Indentures. section 17 -Notices,Computation of Time and Holidays.Any notice required by this Agreement to be given to any party shall be effective when it is received by such party,and in computing any period of time from such notice,such period shall commence at 12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever this Agreement calls for notice to or notification by any party,the same (unless otherwise specifically provided)shall be in writing directed to the Authority's executive director or the Purchaser's general manager.If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place. Section 18 -Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section 19 -Availability of Information.The parties shall make available to each other, for inspection and copying during business hours,all books,records,plans,and other information relating to any calculation or determination to be made pursuant to this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO.BED Page 18 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7 v 10 Section 20 -Severability. (a)Severability Generally.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the remaining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause,or provision or any part thereof so adjudicated to be invalid had not been included herein. (6)Correction and Substitution.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, then and in such event,the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. Section 21 -Remedies Cumulative.No remedy conferred upon or reserved to the parties hereto is intended to be exclusive of any other remedy or remedies available hereunder or now or hereafter existing by law,in equity,by statute,or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 22 -Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right,or matter. Section 23 -Covenant To Act In Good Faith.In order to permit this Agreement,to be fully effective throughout its term in accordance with the original intent of the parties, each party agrees that it shall at all times act in good faith in performing its obligations and in exercising its rights under this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 19 DRAFT September 16,1991 3610.2014 EEW/gt Rev.7v 10 Section 24 -No Third-Party Beneficiaries.Notwithstanding that the operation of this Agreement may and is intended to confer benefits on third parties who are not signatories to this Agreement,this Agreement shall be enforceable only in accordance with its provisions expressly governing enforcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obligations to and rights of enforcement in: (a)|one another;and (6)such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virtue of provisions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into this Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party,nor have the parties created for any other third party any right to enforce this Agreement. Section 25 -Section Headings.The section headings in this Agreement are for convenience only,and do not purport to,and shall not be deemed to,define,limit,or extend the scope or intent of the section to which they pertain. Section 26 -Multiple Copies.This Agreement shall be executed in several counter- parts,each of which shall be an original,but all of which shall constitute one and the same instrument. ALASKA ENERGY AUTHORITY By NAME AND TITLE AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 20 DRAFT September 16,1991 3610.2014 EEW/oat Rev.7 v 10 CITY OF UNALASKA,ALASKA By NAME AND TITLE AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 21 «> DRA September 3,1991 POWER SALES AGREEMENT Between ALASKA ENERGY AUTHORITY and CITY OF UNALASKA,ALASKA Dated as of 1991 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 TABLE OF CONTENTS Page Section 1 -Definitions ©...2...ee ee ce ee ee ee ees 2 Section 2 -Term of Agreement ...2...2...ee eee ee ee eee 5 Section 3 -Electric Service to be Furnished...............202 eee ee eee 6 Section 4 -Payment Obligation.....2...0...ee ee ee eee 6 Section 5 -Annual Project Costs .........2...2.cece eee ees 6 Section 6 -Obligations Under Indenture;Completion of Project............8 Section 7 -Obligations in the Event of Default ...................0..0..9 Section 8 -Purchaser's SystemS ........0...eee ee ee eee ee ee eee 10 Section 9 -Indenture ...2...22.eeeeeteeeeee 11 Section 10 -Purchaser's Consent to Supplemental Indentures to Construct the ad ©)[=]0)12 Section 11 -Authority Responsibilities .......2...0.ee ee eee ee eee 13 Section 12 -Records .........ce ee et ee ete eee 14 Section 13 -Inspection of Facilities .......2...0...eee eee ee eee 14 Section 14 -Covenants to Maintain Integrity of Agreement ...............14 Section 15 -Assignment ..........2.ee ee cee eee eee eee 16 AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOIBED Page i DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Section 16 -Exhibits 2.2...2....ee ee ee eee eee 17 Section 17 -Notices,Computation of Time and Holidays ................17 Section 18 -Applicable Law ....2.......eee ee ee ee ee eee 18 Section 19 -Availability of Information ............0...eee ee ene 18 Section 20 -Severability...0...ee eee teens 18 Section 21 -Remedies Cumulative .........2.2...cee ee eee eee 19 Section 22 -Waiver Not Continuing....2.2....2...eee ee ee ee ee es 19 Section 23 -Covenant To Act In Good Faith .................--2--06.-19 Section 24 -No Third-Party Beneficiaries ...................-02eeeee 19 Section 25 -Section HeadingS ...........0...eee eee ee eens 20 Section 26 -Multiple Copies ....2...cc ee tee eens 20 Exhibit A -Indenture Exhibit B -Description of the Project Exhibit C -Form of Certain Supplemental Indentures. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOI8ED Page ii DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 POWER SALES AGREEMENT THIS AGREEMENT dated as of ,19 ,is entered into by and among the Alaska Energy Authority (the "Authority")and the City of Unalaska,Alaska, (the "Purchaser"). WITNESSETH: The Authority recites,agrees,represents,and covenants as follows: (1)The Authority is a public corporation of the State of Alaska duly created, organized,and existing pursuant to AS 44.83; (2)|The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and bylaws of the Authority,to enter into this Agreement and to comply fully with the terms hereof; (3)|The Authority desires to fulfill its legislatively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of power and an adequate,economic,and reliable long-term supply of power;and (4)The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Authority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. The Purchaser recites,agrees,represents,and covenants as follows: (1)|The Purchaser is a duly organized and constituted municipal corporation under the Constitution and laws of the State of Alaska; (2)|The Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and other applicable laws and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 1 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 regulations,and pursuant to its charter and ordinances,to enter into this Agreement and to comply fully with the terms thereof; (3)|The Purchaser performs the functions of a utility and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)|The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other charter, ordinance,resolution,contract,agreement,bond,note,mortgage,or other obligation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. NOW,Therefore,the parties agree as follows: Section 1 -Definitions.For the purposes of this Agreement,the following definitions apply: (a)"Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. (6)"Agreement”means this Power Sales Agreement. (c)"Annual Payment Obligation"means the total amount payable by the Purchaser in or for a Fiscal Year pursuant to this Agreement. (d)"Annual Project Budget"means the budget for the Project as adopted or in effect for a particular Fiscal year and amended or supplemented from time to time. (e)"Annual Project Costs"shall have the meaning given it in Section 7 of this Agreement. (f)"Authority”means the Alaska Energy Authority as established by the Act and any subsequent successor agency thereto. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 2 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 (g)"Bonds"means bonds,notes,or other evidences of indebtedness (including refunding bonds)issued pursuant to the Indenture,the proceeds of which are used to pay or reimburse Costs of Acquisition and Construction and Required or Optional Project Work. (h)"Capability of the Project”means the entire capability of the Project to generate electric power at any and all times from the Date of Commercial Operation until the termination of the Agreement (or any renewal thereof),including periods when the Project may not be operating or inoperable or the operation thereof is curtailed, in each case in whole or in part,for any reason whatsoever. (i)"Consultant"means an independent individual or firm of nationwide and favorable reputation,having demonstrated expertise in the field or the matter or the item referred to it under various specific provisions of this Agreement,and approved by the Authority. (j)"Cost of Acquisition and Construction"means the Cost of Acquisition and Construction (as defined in Section of the Indenture)of the Project. (k)"Date of Commercial Operation"means the date on which the Authority declares that the Project is fully available to perform at not less than its design capacity. (I)"Debt Service"means amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds under the Indenture. (m)"Fiscal Year"means that 12-month period starting on July 1 of a calendar year through and including June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the 12-month period starting on the Date of Commercial Operation through and including the following June 30. (n)"Indenture"means the indenture securing the Bonds in substantially the form attached hereto as Exhibit A. (0)"Purchaser"means the City of Unalaska,Alaska. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 3 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 (p)"Project"means the Unalaska Geothermal Project as described in Exhibit (q)"Prudent Utility Practice"means at a particular time any of the practices, methods,and acts engaged in or approved bya significant portion of the electric utility industry at such time,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the desired results at the lowest reasonable cost consistent with good business practices,reliability,safety, and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method,or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods,or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety,and expedition.Prudent Utility Practice includes due regard for manufacturers'warranties and the requirements of governmental agencies of competent jurisdiction and shall apply not only to functional parts of a Project,but also to appropriate structures, landscaping,painting,signs,lighting,and other facilities. (r)"Purchaser's System"means the Purchaser's electric utility system for the distribution,transmission,and generation of electrical power and which is owned and operated by the Purchaser. (s)Necessary Approvals”means the approval or consent in writing of each governmental entity,regulatory body,or other person which approval is required in order for the Project to be constructed and operated in accordance with this Agreement.As of the date of execution of this Agreement,the Necessary Approvals include but are not limited to approvals necessary under AS 44.88,approvals required by the Alaska Public Utilities Commission ("APUC"*),approval of the Agreement by the governing body of the Purchaser and the Board of Directors of the Authority,and approval of necessary environmental permits by the Alaska Department of Environ- mental Conservation and the U.S.Environmental Protection Agency.Necessary approvals also include the availability,as determined by the Authority,of sufficient funds to complete the Project. (t)"Renewal and Contingency Reserve Fund"means the Renewal and Contingency Reserve Fund established pursuant to Section of the Indenture. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 4 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 (u)"Required Action"means an action that must be taken in order for the Authority to comply with federal or state law,the orders of licensing and regulatory agencies,the Indenture,or this Agreement. (v)"Required Project Work"means repairs,maintenance,renewals, replacements,or improvements required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or this Agreement,or otherwise necessary to keep the Project in good and efficient operating condition,consistent with: (1)sound economics for the Project and the Purchaser;and (2)national standards for the industry. (w)"Revenue Fund"means the Revenue Fund established pursuant to Section of the Indenture. (x)"Trustee"means the Trustee acting under the Indenture or that Trustee's successor or successors and any other corporation which may,at any time,be substituted in that Trustee's place under the Indenture. section 2 -Term of Agreement. (a)Effectiveness.This Agreement shall become effective on the first date when: (1)the Agreement has been executed and delivered by the Purchaser and by the Authority;and (2)all Necessary Approvals have been obtained. (6)Commencement of Payment Obligations.The payment obligations of the Purchaser as set forth in Section 6 of this Agreement to pay Annual Project Costs, as defined in Section 8 of this Agreement,shall commence on the Date of Commercial Operation. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 5 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Section 3 -Electric Service to be Furnished. (a)Sale and Purchase.The Authority hereby sells,and the Purchaser hereby purchases,Project Capability (together with associated energy)from the Project and the Purchaser agrees to pay the Annual Project Costs therefor in accordance with this Agreement. (6)Available Power.The Authority shall at all times,except when prevented by a cause or event not within the control of the Authority,make power available to the Purchaser from the Project in an amount equal to the amount the Purchaser may schedule from the Project within the limitations imposed by available Project Capability. (c)Required Project Work.The Authority shall perform or cause to be performed all Required Project Work provided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 6(a)(4)of this Agreement.The Authority shall give reasonable notification to the Purchaser prior to making or causing to be made any Required Project Work. Section 4 -Payment Obligation. (a)Purchaser's Obligations.The Purchaser shall make payments in the amounts and at the times required by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional and unaffected by any interrup- tion,interference,or curtailment in whole or in part of power supplied by the Project. a jaeBagme(laE /hy Lok AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 6 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Section 5 -Annual Project Costs. (a)Annual Project Costs Defined.Annual Project Costs mean all of the costs resulting from the ownership,operation,maintenance of,and renewals and replacements to,the Project properly incurred or paid during each Fiscal Year, including: (1)|amounts required to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Construc- tion; (2)|amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with this Agreement; (3)|amounts required to restore the funds established under the Indenture to the levels required by the Indenture to be maintained therein; (4)|amounts which may be required to pay for Required Project Work to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (5)other amounts determined by the Authority to be necessary or appropriate to supplement and to be paid into the Funds established under the Indenture; (6)all other costs of producing and delivering Project power (excluding depreciation)not accounted for by the payments out of funds and reserves specified in the foregoing sections and properly chargeable to the Project under the Uniform System of Accounts,less any credits against said costs by reason of revenues from sources other than the direct sale of power to the Purchaser,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain said reserve funds in the amounts required under the Indenture or in such greater amounts as may be determined by the Authority,or to reduce Annual Project Costs.Such other costs shall include: AEA/Unalaska Geothermal Power Project Power Saies Agreement AFFO18ED Page 7 DRAFT September 3,1991 3610.2014EEW/gt KsRev.7 &we"aéwearet . (A)project operating and maintenance costs in accordanceyeSPwiththeAnnualBudget; \eCbf (B)costs of Project-related insurance;and (C)project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations. (6)Proceeds of aTaking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,or output of the Project by any state or federal government agency shall be used by the Authority to: (1)|reduce Annual Project Costs;or (ay (2)'retire Bonds. (4 ye (c)Reduction of Annual Project Costs.If,as a result of the Purchaser \Y in |selling less than kilowatt hours of energy in a Fiscal Year,the average per cf kilowatt-hour cost of energy to the Purchaser (as determined by dividing the Annual Ca Vet Project Cost for that Fiscal Year by 88 million kilowatt hours)(the "Basic Rate") yy Sie increases by percent (the "Rate Limit"),the Annual Project Costs for that Fiscal ¢Year shall be adjusted to the amount which results from an average per kilowatt hour cost of the Basic Rate plus the Rate Limit times the Basic Rate (the "Adjusted Rate").|The Adjusted Rate shall remain in effect until more than kilowatt hours of energy \have been sold by the Purchaser in a subsequent Fiscal Year.In that Fiscal Year, 'Annual Project Costs shall be determined without regard to this paragraph. Section 6 -Obligations Under Indenture:Completion of Project. (a)Assignment or Payment to Trustee.The parties recognize and agree: (1)that the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Indenture for the benefit of the holders of the Bonds;and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 8 DRAFT September 3,1991 3610.2014 EEW/st Rev.7 (2)that the Authority may direct that amounts payable to it under this Agreement to be paid directly to the Trustee. (b)Project Funding.The Authority shall use its best efforts to issue Bonds in an amount sufficient to pay the Cost of Acquisition and Construction. (c)Covenants ofthe Authority.The Authority covenants that it will not cause rates for Project power to increase by reason of any bond resolution,covenant,or agreement contained in any trust indenture or trust agreement entered into by the Authority in connection with a power project other than the Project,nor on account of any inadequacy in its actual or projected aggregate revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. (d)Project Completion and Operation.The Authority agrees to use its best efforts to complete the Project expeditiously and in accordance with sound engineer- ing practice and with the provisions of the Indenture.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance) to provide power at the lowest reasonable cost to the Purchaser in a manner that is compatible with the Purchaser's System and consistent with the Act,the Indenture, and this Agreement. Section 7 -Obligations in the Event of Default. (a)Enforcement.Upon failure of the Purchaser to perform any obligation herein,the Authority may bring any suit,action,or proceeding of law or in equity ("Suit"),including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Purchaser.The Authority may bring such Suit within: (1)30 days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obligation;and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 9 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 (2)immediately,in the case of default by the Purchaser on any payment obligation. The Purchaser shall continue to make payments in the event of any dispute regarding performance of any obligation by any party under this Agreement or in the event of any dispute under the Indenture,and this obligation of continued payment pending resolution of disputes shall be immediately enforceable by any party upon application to any court of competent jurisdiction. (6)Additional Rights and Remedies.!n addition to the Authority's rights under Section 7(a)of this Agreement,if the Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to the Purchaser. (c)Default by the Authority.In the event of any default by the Authority under any covenant,agreement of obligation under this Agreement with respect to the Purchaser,the Purchaser may,upon 30 days'written notice to the Authority,bring any suit,action,or proceeding of law or in equity,including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Authority.The payment obligation of the Purchaser under this Agreement is not subject to offset. Section 8 -Purchaser's Systems. (a)Character of Expense.The amounts payable under this Agreement are operating expenses of the Purchaser's System by the Purchaser and are valid and binding obligations of the Purchaser,payable only from the gross revenues of the Purchaser's System as a cost of purchased electric power,and not payable from any taxes. (6)Purchaser's Rate Covenants.In order to afford,permit,and make timely payments as specified in this Agreement,the Purchaser agrees that it will establish, charge,and collect rates,fees,and charges with respect to the Purchaser's System in accordance with applicable law to provide revenues sufficient to meet its obligations under this Agreement and sufficient to pay,together with any other funds or moneys AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 10 DRAFT September 3,1991 3610.2014 EEW/at Rev.7 available therefor,any and all other amounts payable from or which constitute or may constitute a charge and lien upon such revenues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Purchaser to finance the Purchaser's System. (c)Operation and Maintenance of Purchaser's System.The Purchaser covenants and agrees that it will operate and maintain its System in good repair, working order and condition,and in accordance with Prudent Utility Practice. (d)Limitation on Certain Contracts.The Purchaser covenants and agrees not to enter voluntarily into any contract or agreement to take or pay for power,other than this Agreement,payable from the revenues of the Purchaser's System on a parity with or superior to the payment of its obligations under this Agreement,except that the Purchaser may enter into such a contract or agreement of not to exceed two years'duration under which the Purchaser's payment obligation is on a parity with the wo payment of its obligations under this Agreement or may enter a contract with acommercialcustomerintheformannexedheretoasExhibitA.The limitations of Section 8(d)of this Agreement shall not apply to contracts or agreements creating obligations on a parity with obligations under this Agreement if a written opinion from a Consultant is rendered: (1)that the contract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in an efficient and economical manner consistent with Prudent Utility Practice;and (2)that the contract or agreement will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. Section 9 -Indenture. (a)Amendment or Supplementation of Indenture.Except as provided in Section 10 of this Agreement,the Authority will not amend or supplement the Indenture in any manner,or adopt a new Indenture in connection with the refunding of the Bonds,which would materially adversely affect the ability of the Purchaser to AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 11 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 fulfill the terms of this Agreement or impose any increased burden or obligation, financial or otherwise,on the Purchaser,without the consent of the Purchaser. (b)Insurance.The Authority will maintain physical loss insurance to the extent required by the Indenture. (c)Information.The Authority shall provide the Purchaser with a copy of any report,certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Indenture or that the Trustee furnishes to the Authority. Section 10 -Purchaser's Consent to Supplemental Indentures to Construct the Project.The Purchaser hereby consents to the adoption by the Authority of supplemental Indentures pursuant to Section 9(a)of this Agreement,as necessary to comply with the Authority's obligation to finance and construct the Project pursuant to Section 6(b)of this Agreement and the Authority's obligation under Section 6(d)ofthisAgreementtouseitsbesteffortstocompletetheProjectexpeditiouslyandin accordance with sound engineering practices and with the provisions of the Indenture. The Authority shall consult with the Purchaser regarding the provisions to be included in such supplemental Indenture,and shall use its reasonable best efforts to comply with the requests of the Purchaser with respect thereto.Unless otherwise approved in accordance with Section 9(a)of this Agreement,such supplemental Indentures shall: (a)Provide that the total amounts required for the payment of Debt Service when due shall be,on an annual basis,as nearly equal as practicable; (b)provide_that the final_maturity of Bonds issued *pursuant to.suchsupplementalIndentures.shall not beearlier than 25 years frcfrom the date vwhen the first\_ef such Bonds is issued;™N (c)be substantially in the form attached hereto as Exhibit C,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis;and (d)be adopted no earlier than January 1, AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 12 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Section 11 -Authority Responsibilities.The Authority shall take the following actions, subject to the provisions of the Indenture,federal and state law,and the requirements of licensing and regulatory agencies: (a)Arrange for the operation and maintenance of the Project and the scheduling,production,and dispatch of Project power. (b)|Adopt in each Fiscal Year (and revise as necessary or prudent during such Fiscal Year)a budget of Annual Project Costs for that Fiscal Year,which budget shall be in an amount estimated by the Authority to be sufficient to pay all Annual Project Costs. (c)Establish for each Fiscal Year the estimated Annual Payment Obligation of the Purchaser,together with a schedule for the Purchaser of equal monthly payments that the Purchaser shall be required to make during that Fiscal Year,which payment schedule shall be: (1)designed to recover such estimated Annual Payment Obligation from the Purchaser during the Fiscal Year;and (2)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year. (d)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of the Purchaser for that Fiscal Year,and the amount of any additional payment required from (or the amount of any refund to be returned to)the Purchaser to ensure that the total of all payments received from the Purchaser for each Fiscal Year is equal to the Purchaser's actual Annual Payment Obligation for that Fiscal Year. (e)Evaluate and select among alternative methods (if any)of carrying out and funding (including through issuance of bonds)Required Project Work. (f)Adopt procedures for the resolution of disputes that may arise between or among the Purchaser and the Authority concerning the interpretation of this Agreement,the obligations created by this Agreement,or the performance of such obligations. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 13 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 (9)|Make an initial determination of "customary"insurance within the meaningofSection_of the Indenture and determine the appropriate amount of,and obtain, insurance for or related to the Project,in addition to such insurance as may be required by the Indenture. (nh)Adopt maintenance schedules for the Project that do not interfere unreasonably with the operations of the Purchaser. (i)Consider the need for and approve any additional amount to be added to the Renewal and Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement provided under the Indenture. (i)If and when no Bonds are outstanding under the Indenture,and the Indenture is therefore no longer effective,the Authority shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. Section 12 -Records.In addition to meter records,the parties shall keep log sheets and other records as may be needed for the purposes of this Agreement. Section 13 -Inspection of Facilities.For purposes of this Agreement,each party may, but shall not be obligated to,inspect any other party's facilities relating to the Project at any time upon reasonable notice,but such inspection or failure to inspect shall not render the inspecting party,its officers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation, or for violation of this Agreement. Section 14 -Covenants to Maintain Integrity of Agreement. (a)Retail Rate Approval.The Purchaser will affirmatively and promptly pursue all administrative and judicial remedies necessary to secure APUC approval of retail rates required to meet the terms of this Agreement where APUC approval is required. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 14 - DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 (6)Compliance with Law.The Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses,and permits relating to the use and operation of the Purchaser's System. (c)Sales,Mergers,and Assignments.The Purchaser shall not abandon, sell,mortgage,lease,or otherwise dispose of the Purchaser's System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest thereunder to any assignee or successor in interest,unless: (1)|such disposal or assignment accords with the terms of any of the Purchaser's covenants or agreements with the holders of the Purchaser's bonds,notes,or other evidences of indebtedness relating to the abandonment, sale,mortgage,lease or other disposition of property of the Purchaser's System;and (2)such disposal or assignment is: (A)consented to in writing by the Authority which consent shall not be unreasonably withheld;or (B)limited to assets that the Purchaser determines to be surplus to the needs of the Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent of the depreciated value of the assets of the Purchaser's System prior to the disposal or assignment;or (C)evaluated by a Consultant and that Consultant certifies that,taking into account the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have: (i)substantially the same or greater ability to produce sufficient revenues to meet its payment obligations as would the Purchaser absent the transaction;and (ij)|the ability to perform all obligations under this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 15 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Any assignee of this Agreement must assume in writing all of the Purchaser's obligations hereunder,must pay amy amounts due and owing from the Purchaser hereunder,and must provide the Authority with an opinion of counsel that this Agreement is enforceable against the assignee. (d)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is originally issued on a tax-exempt basis to become taxable under the Internal Revenue Code of 1986,as the same may be amended from time to time. (e)Licenses and Permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of the Project. Section 15 -Assignment. (a)Assignment Generally.This Agreement shall inure to the benefit of,and shall be binding upon the respective successors and assigns of the parties to this Agreement;provided,that this Agreement or any interest herein may be transferred or assigned by the Purchaser only in accordance with the provisions of Section 15(c) of this Agreement. (6)Assignments to Secured Lenders.A party may assign this Agreement, together with all of its rights and obligations thereunder: (1)to or in trust for any secured lenders of such party for the purpose of securing obligations for borrowed money;or (2)pursuant to the exercise by any such secured lender of any of the rights,powers,or privileges provided for by the mortgages or other security instruments of such party for borrowed money;provided,that no such assignment shall in any way relieve such party of any obligations hereunder. No such secured lender shall,as a result of such assignment or the subse- quent exercise of its rights with respect to this Agreement under any mortgage, deed of trust,or other security instrument,be construed to have assumed,or AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 16 "N DRAFT September 3,1991 be3610.2014 EEW/gt Rev.7 otherwise to have become personally liable for,the assignor's obligations hereunder,but such secured lender's ability to exercise the rights of its assignor hereunder shall be subject to performance of the assignor's corresponding obligations under this Agreement.In the event any such secured lender exercises any of its rights,powers,or privileges with respect to this Agreement under said mortgages or other security agreements,such secured lender may thereafter assign this Agreement,together with all the rights and obligations thereunder,to any entity authorized and able to perform the obligations under this Agreement,which entity shall succeed to all the rights and assume all the obligations of the borrower-assigner under this Agreement. Prior to the exercise by any secured lender of any rights or remedies under any mortgages or security agreements with respect to this Agreement,such secured lender shall give the parties hereto reasonable notice that it intends to exercise such rights or remedies. (c)The Purchaser's agreement to resell power from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall any such resaleofProjectpowerrelievethePurchaserofanypaymentobligationunderthis Agreement. Section 16 -Exhibits.The following exhibits are incorporated by reference into this Agreement: (a)Exhibit "A"is the Indenture; (b)Exhibit "B"is the Description of the Project; (c)Exhibit "C"is the Form of Certain Supplemental Indentures. Section 17 -Notices,Computation of Time and Holidays.Any notice required by this Agreement to be given to any party shall be effective when it is received by such party,and in computing any period of time from such notice,such period shall commence at 12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever this Agreement calls for notice to or notification by any AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 17 DRAFT September 3,1991 bs3610.2014 EEW/gt Rev.7 party,the same (unless otherwise specifically provided)shall be in writing directed totheAuthority's executive director or the Purchaser'g general manager.»If the date formakinganypaymentorperforminganyactisadayonwhichbankinginstitutionsare closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place. Section 18 -Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section 19 -Availability of Information.The parties shall make available to each other, for inspection and copying during business hours,all books,records,plans,and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 20 -Severability. (a)Severability Generally.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the remaining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause,or provision or any part thereof so adjudicated to be invalid had not been included herein. (b)Correction and Substitution.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, then and in such event,the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 18 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Section 21 -Remedies Cumulative.No remedy conferred upon or reserved to the parties hereto is intended to be exclusive of any other remedy or remedies available hereunder or now or hereafter existing by law,in equity,by statute,or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. Section 22 -Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right,or matter. Section 23 -Covenant To Act In Good Faith.In order to permit this Agreement,to be fully effective throughout its term in accordance with the original intent of the parties, each party agrees that it shall at all times act in good faith in performing its obligations and in exercising its rights under this Agreement. Section 24 -No Third-Party Beneficiaries.Notwithstanding that the operation of this Agreement may and is intended to confer benefits on third parties who are not signatories to this Agreement,this Agreement shall be enforceable only in accordance with its provisions expressly governing enforcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obligations to and rights of enforcement in: (a)|one another;and (b)such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virtue of provisions of this Agreement that expressly create such a right in such assignees or successors in interest.By entering into this Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party,nor have the parties created for any other third party any right to enforce this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 19 DRAFT September 3,1991 3610.2014 EEW/gt Rev.7 Section 25 -Section Headings.The section headings in this Agreement are for convenience only,and do not purport to,and shall not be deemed to,define,limit,or extend the scope or intent of the section to which they pertain. Section 26 -Multiple Copies.This Agreement shall be executed in several counter- parts,each of which shall be an original,but all of which shall constitute one and the same instrument. ALASKA ENERGY AUTHORITY By NAME AND TITLE CITY OF UNALASKA,ALASKA By NAME AND TITLE AEA/Unalaska Geothermal!Power Project Power Sales Agreement AFFO1aED Page 20 AUG-15-91 THU 15:43 SPPCo Kates FAX NO.iUebx444y4 Pr.UZ ELECTRIC SERVICE AGREEMENT This Agreement made and entered into this day of ,19__,between SIERRA PACIFIC POWER COMPANY,a Nevada corporation,having its principal place of business in the City of Reno,County of Washoe,State of Nevada (hereinafter referred to as "Utility"),and ra corporation,having its principal place of business in the City of ',(hereinafter referred to as n my, WITNESSETH: WHEREAS,,a company,is developing the Project in the County of ,State of Nevada (hereinafter referred to as "Project"); WHEREAS,has requested Utility to provide the necessary electric service to the Project and to waive the advance deposit for costs of construction in accordance with Rule No.9 filed with the Public Service Commission of Nevada ("PSCN"), attached and made a part hereof; WHEREAS,Utility is willing to provide the level of electric service requested by and to waive the customer advance for construction in accordance with Utility's Rule No.9; WHEREAS,during the term of this Agreement,Utility will derive revenues in providing electric service to the Project which AUG-15-$1 THU 15:44 SPPCo Rates FAX NO,7026894484 P,03 are adequate to support Utility's cost of construction required to serve Project's ultimate load; NOW,THEREFORE,for and in consideration of the mutual covenants and agreements herein contained,Utility and do hereby covenant and agree as follows: (1)Service Obligation.Utility's duty to perform under this Agreement is expressly conditioned upon the acqui- sition of required environmental permits and rights-of- way,as well as approval by the Federal Bureau of Land Management ("BLM").Utility shall furnish,sell and Geliver to at a mutually agreed-upon delivery point on Project's premises,located generally on or near Section __,Township __North,Range __East MDB&M,-,@lectricity as required by for the start-up and operation of the Project,on or about 1 19...Utility agrees to use its best efforts to meet the target date of 1 19;however,it assumes no liability for failure to meet the target date. (2)Payment and Rate Schedule.shall purchase,receive,use and pay for utility service in accordance with Utility's GS-3 or successor rate sched- ule as currently in effect and as may be amended and approved from time to time by the PSCN. understands that it may be subject to a rate schedule other than GS-3 depending on electrical requirements and usage.A copy of the current Rate AUG-15-91 THU 15:45 SPPCo Rates FAX NO,7026894484 P,04 (3) (4) (5) Schedule GS-3 is attached hereto and incorporated herein by reference. Service/Capacity Requirements.The electricity to be delivered hereunder shall be three phase,alternating at a frequency of approximately sixty (60)hertz, delivered and metered at a nominal voltage of volts line-to-line and shall be wire. Utility will install and maintain such meter(s)as shall be necessary to measure and record the electricity delivered hereunder.'s projected peak demand for the Project is _-ss-«kW.«=Facilities necessary to provide service and capacity as herein described shall be constructed substantially in accordance with the description of work attached hereto as Exhibit "A. Extensions and Alterations.In accordance with Rule No.9,Utility shall make all extensions and alterations of existing electric distribution and transmission facilities necessary to provide service to the Project and sufficient capacity to meet 's projected peak demands as set forth in Paragraph 3 above. Construction Costs.Based on the demand levels speci- fied herein,Utility estimates its cost to extend and improve its existing electric system to provide capacity to serve Project's projected peak demand of kW to be §.Utility represents that the cost stated herein is its estimated cost of making such extensions and improvements by the least expensive AUG-15-31 THU 15:45 SPPCo Rates FAX NO,7026894484 P,05 (6) (7) (8) method which is in accordance with sound engineering and construction practices,and that the stated cost does not include the extra cost of facilities of greater capacity or length than would be adequate to provide the reguested service. Waiver of Advance.In consideration of execution of this Agreement which incorporates a minimum purchase obligation as set forth in Paragraph 8 and the security provisions as set forth in Paragraph 12, Utility agrees to waive the advance payment of estimated construction costs in accordance with Rule No.9, Sections C and D. Property of Utility.All facilities constructed or installed hereunder shall become property owned,main- tained,and controlled by Utility.Title to any facility constructed under this Agreement,at all times,shall be vested in Utility. Minimum Purchase Obligation."s minimum twelve-month purchase requirement excluding the Base Tariff Energy Rate (BTER)and Deferred Energy Accounting Adjustment (DEAA)portions of payments shall be $and shall commence upon completion of the installation of facilities by Utility and shall continue for subsequent twelve-month periods during the term of this Agreement unless the termination charge has been assessed pursuant to Paragraph 10 prior to the expiration of the term of this Agreement or unless AUG-15-91 THU 15:46 SPPC-Rates FAX NO.7026894484 P,06 Utility has previously recovered the fixed costs of its investment herein as provided.In the event that 's payments excluding the Base Tariff Energy Rate (BTER)and Deferred Energy Accounting Adjustment (DEAA)portions of payments for electric service fall below §$in any twelve-month period, shall pay to Utility,within thirty (30)days'written demand,the amount by which $exceeds its actual payments for electric service,excluding the Base Tariff Energy Rate (BTER)and Deferred Energy Accounting Adjustment (DEAA)portions of such payments.'s failure to pay this amount within thirty (30)days shall permit Utility to terminate service and collect the termination charge. (9)Initiation of Service.shall be obligated to receive electricity delivered hereunder and initiate service for the start-up and operation of the Project on or about the target date of ,19. shall be liable to Utility for any expenses incurred by Utility due to inability to meet the target date including,but not limited to,any expenses incurred by Utility due to suspension of activities by Utility in the normal performance of its obligations under the terms of this Agreement. (10)Termination Charge.In the event that service is terminated during the term of this Agreement, shall pay to Utility the present value at termination of or AUG-15-91 THU 15:46 SPPCo Rates FAX NO.7026894484 P.O? its remaining fixed costs related to its investment of $,less the present value,at termination,of the non-BTER,non-DEAA portions of its payments for electric service prior to termination which exceeded Utility's fixed costs in each year prior to termination. An annual discount rate of 11.475%shall be used for all present value calculations under this paragraph.An illustration of the termination charge calculation described herein,including the annual fixed cost and discount rates to be utilized is attached hereto as Exhibit "B"and made a part hereof. (11)Adjustment to Reflect Actual Cost of Construction. Amounts specified in Paragraphs (8)and (10)will be adjusted upward or downward to reflect Utility's actual cost of construction.An adjustment under this Para- graph shall not constitute a modification under Para- graph 16. (12)Guaranty.As a condition precedent to waiving the advance payment in accordance with Rule No.9, agrees to deliver to Utility a financial guarantee which assures payment for the termination charge obligation set forth in Paragraph 10.Utility agrees that the guarantee may be an irrevocable letter of credit or other instrument acceptable to Utility.The amount of such guarantee will be decreased annually to reflect the current termination charge obligation pursuant to Paragraph 10.The amount of the guarantee shall also be - +3 AUG-15-91 THU 15:47 SPPCo Rates FAX NO.7026894484 P,08 (13) (14) (15) reduced by the excess contribution to the fixed costs of the investment to serve any new customer hereafter serviced from facilities installed to serve the Project. Easements.hereby agrees to grant to Utility all necessary easements and rights-of-way that it may legally grant for the installation,operation, maintenance,repair and replacement of the facilities or any portion thereof,and further agrees to execute in the name of Utility such other and further grants,conveyances,deeds or other documents together with such other easements and rights-of-way as may be deemed necessary by Utility to protect or effectuate the rights herein granted. Liability.Each party agrees to defend and indemnify the other against third party claims for damages (ex- cluding consequential damages)resulting from the breach of its obligations hereunder or its negligent acts or omissions.Utility,however,shall incur no liability of any type whatsoever for any damage to resulting from voltage fluctuations beyond its reason- able control.Utility shall not be liable to for any delays in construction of the facilities which are beyond its control.The prevailing party shall be entitled to attorney's fees and other costs incurred in enforcing the terms of this Agreement. Term.This Agreement expires five years following establishment of service as set forth in Paragraph 3. AUG-15-$1 THU 15:47 SPPCa Rates FAX NO.7026894484 P,09 (16) (17) (18) (19) Modification.This Agreement represents the entire understanding of the parties and any modification shall not be effective unless in writing signed by both Parties.In the event of any inconsistency or conflict not otherwise expressly set forth herein,between this Agreement and the terms of Rule No.9 or the applicable rate schedule,the provisions of Rule No.9 or the applicable rate schedule shall control. Choice of Law.This Agreement and any other related documents shall be deemed to have been entered into and interpreted in accordance with the laws of the State of Nevada,including its conflict of law rules,and in the event of any litigation,litigation shall be tried ina court of competent jurisdiction in Washoe County, Nevada. Assignment.This Agreement shall bind and benefit the successors and assigns of the respective parties,and the parties agree that no assignment shall be effective without the prior written consent of the noneassigning Party. PSCN Approval.This Agreement has been made by Utility pursuant to its rules and regulations filed with and approved by the PSCN and is subject to any changes or modifications by the PSCN from time to time as the PSCN may direct in the exercise of its jurisdiction. AUG-15-81 THU 15:48 SPPCr Rates FAX NO.7026294484 P,10 (20)Independent Contractor.Each party is not in any way the agent or employee of the other during the term of this Agreement. (21)Notice Requirement.All notices or other official correspondence relating to this Agreement shall be made by U.S.Postal Service,first-class mail,to the follow- ing names and addresses: Sierra Pacific Power Company P.O.Box 10100 Reno,Nevada 89520 Attn: Attn: SIERRA PACIFIC POWER COMPANY By By Title;Title: Date:Date: WOHLFORTH,ARGETSINGER,JOHNSON &BRECHT PETER ARGETSINGER JULIUS J.BRECHT CYNTHIA L.CARTLEDGE ROBERT M.JOHNSON BARBARA E.KISSNER THOMAS F.KLINKNER ANDREW M.LEBO BRAOLEY E.MEYEN JAMES A.SARAFIN KENNETH E.VASSAR ERIC E.WOHLFORTH A PROFESSIONAL CORPORATION ATTORNEYS AT LAW 900 WEST STH AVENUE,SUITE 600 ANCHORAGE,ALASKA 9950! MEMORANDUM TO:Charlie Bussell,Executive DirectorBrentPetrie,Director of Agency OperationsY Alaska Energy Authority Lew Greenbaum,Esq. Katten Muchin &Zavis James F.Seagraves John Nuveen &Co.Incorporated FROM: DATE: SUBJECT:Alaska Energy Authority/Unalaska Geothermal Project Eric E.Wohlforth August 23,1991 Our File Number 3610.2014 TELEPHONE (907)276-6401 TELECOPY (907)276-5093 OF COUNSEL ROGER G.CONNOR RECEIVED AUG 23 VWI ALASKA ENERGY AUTHORITY In preparation for our Monday meeting,|enclose a preliminary draft Power Sales Agreement for the above-described project.To be complete,a Bond Resolution needs to be attached;however,this will give us start towards fleshing out details of the transaction. gmt Enclosure Fax/Hand Delivery DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 POWER SALES AGREEMENT Between ALASKA ENERGY AUTHORITY and CITY OF UNALASKA,ALASKA Dated as of 1991 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 TABLE OF CONTENTS Page Section 1 -Definitions ......0...2...0 ee eens 2 Section 2 -Term of Agreement ....2.2...ee ens 6 Section 3 -Exhibits 2...ee ee tenes 8 Section 4 -Electric Service to be Furnished.................020002 eee 8 Section 5 -Obligations Under Indenture;Completion of Project............9 Section 6 -Payment Obligation.2...0.0.0...eeeeee 10 Section 7 -Annual Project Costs ...2.2...0.cc eee ee eee 11 Section 8 -Obligations in the Event of Default ................0200008:12 Section 9 -Municipal Purchaser's Systems ..........-...000 e eee eeee 15 Section 10 -Indenture ......eeeeeeeens 16 Section 11 -Purchasers'Consent to Supplemental Indentures to Construct the Project...2...2.ec ee ene 17 Section 12 -Authority Responsibilities ...0.0.0.0...0...eee eee 17 Section 13 -End of Project.©...eeeeeees 19 Section 14 -Records ...0...ee eee teens 20 Section 15 -Inspection of Facilities ..0...2...eee eee ee eee 20 AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page i DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 16 -Covenants to Maintain Integrity of Agreement ...............20 Section 17 -Assignment ..0.0...0.2...eeeeeeeeees 22 Section 18 -Notices,Computation of Time and Holidays ................23 Section 19 -Applicable Law ..0...ee ee eens 24 Section 20 -Availability of Information ..........2.0...cc eee eee eet 24 Section 21 -Severability 0...0...eeeee 24 Section 22 -Remedies Cumulative ..0...0...0.eee eee ee eee 24 Section 23 -Waiver Not Continuing.........2.0...cece ee eee eee 25 Section 24 -Covenant To Act In Good Faith ....................02065 25 Section 25 -No Third-Party Beneficiaries ...2....eeeees 25 Section 26 -Section Headings ......eeeeeeeeee 25 Section 27 -Multiple Copies ..6.0...ee ee ees eee 26 Exhibit A Indenture Exhibit B Description of the Project Exhibit C Form of Certain Supplemental Indentures. Exhibit D Purchaser's Percentage Shares of Project Capability and of Annual Project Costs. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page ii DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 POWER SALES AGREEMENT THIS AGREEMENT dated as of ,19 ,is entered into by and among the Alaska Energy Authority (the "Authority")and the City of Unalaska,Alaska, (the "Municipal Purchaser"),and (together with the "Municipal Purchaser"the "Purchasers'). WITNESSETH: The Authority recites,agrees,represents,and covenants as follows: (1)|The Author'ty is a public corporation of the State of Alaska duly created, organized,and existing pursuant to AS 44.83; (2)The Authority is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and the regulations and bylaws of the Authority,to enter into this Agreement and to comply fully with the terms hereof; (3)|The Authority desires to fulfill its legislatively established duty of providing residents of the State of Alaska with long-term,stable,and economic sources of power and an adequate,economic,and reliable long-term supply of power;and (4°The Authority's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Authority,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Authority is subject at the time the Authority executes this Agreement. Each Purchaser recites,agrees,represents,and covenants as follows: (1)|The Purchaser is authorized,and has taken all steps necessary pursuant to its articles of incorporation and bylaws and applicable laws and regulations,to enter into this Agreement and to comply fully with the terms hereof;and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 1 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (2)|The Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other resolution, contract,agreement,bond,note,mortgage,or other obligation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. The Municipal Purchaser recites,agrees,represents,and covenants as follows: (1)|The Municipal Purchaser is a duly organized and constituted municipal corporation under the Constitution and laws of the State of Alaska; (2)The Municipal Purchaser is authorized,and has taken all steps necessary pursuant to the Constitution and laws of the State of Alaska and other applicable laws and regulations,and pursuant to its charter and ordinances,to enter into this Agreement and to comply fully with the terms thereof; (3)|The Municipal Purchaser performs the functions of a utility and is a wholesale power customer eligible to purchase power produced from a project pursuant to AS 44.83;and (4)|The Municipal Purchaser's execution and performance of this Agreement will not conflict with,violate,or constitute an event of default under any other charter, ordinance,resolution,contract,agreement,bond,note,mortgage,or other obligation of the Purchaser,or with respect to any order,ruling,or decree of any court or regulatory agency to which the Purchaser is subject at the time the Purchaser executes this Agreement. NOW,Therefore,the parties agree as follows: Section 1 -Definitions.For the purposes of this Agreement,the following definitions apply: (a)"Act"or references to AS 44.83 mean Title 44,Chapter 83 of the Alaska Statutes (AS 44.83)as the same may be amended or supplemented from time to time. (b)"Agreement"means this Power Sales Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 2 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (c)"Annual Payment Obligation”means the total amount payable by a Purchaser in or for a Fiscal Year pursuant to this Agreement. (d)"Annual Project Budget"means the budget for the Project as adopted or in effect for a particular Fiscal year and amended or supplemented from time to time. (e)"Annual Project Costs”shall have the meaning given it in Section 8 of this Agreement. (f)"Authority"means the Alaska Energy Authority as established by the Act and any subsequent successor agency thereto. (g)"Bonds"means bonds,notes,or other evidences of indebtedness (including refunding bonds)issued pursuant to the Indenture,the proceeds of which are used to pay or reimburse Costs of Acquisitions and Construction and Required or Optional Project Work. (h)"Capability of the Project"means the entire capability of the Project to generate electric power at any and all times from the Date of Commercial Operation until the termination of the Agreement (or any renewal thereof),including periods when the Project may not be operating or inoperable or the operation thereof is curtailed, in each case in whole or in part,for any reason whatsoever. (i)"Consultant"means an independent individual or firm of nationwide and favorable reputation,having demonstrated expertise in the field or the matter or the item referred to it under various specific provisions of this Agreement,and approved by the Authority. (j)"Cost of Acquisition and Construction"means the Cost of Acquisition and Construction (as defined in Section of the Indenture)of the Project. (n)"Date of Commercial Operation"means the date on which the Authority declares that the Project is fully available to perform at not less than its design Capacity. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 3 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (I)"Debt Service"means amounts that the Authority is required to set aside for the payment of principal of,premium,if any,sinking fund payments,and interest on the Bonds under the Indenture. (m)"Fiscal Year"means that 12-month period starting on July 1 of a calendar year through and including June 30 of the succeeding calendar year.The initial Fiscal Year for purposes of this Agreement is that portion of the 12-month period starting on the Date of Commercial Operation through and including the following June 30. (n)"Indenture"means the indenture securing the Bonds in substantially the form attached hereto as Exhibit A. (0)"Municipal Purchaser"means the City of Unalaska,Alaska. (Pp)"Optional Project Work"means Project repairs,renewals and replace- ments,improvements,betterments,additions,or expansions that do not constitute Required Project Work. (q)"Percentage Share"means the fraction,expressed as a percent and set forth for each Purchaser in Exhibit D as that Exhibit may be amended from time to time,used to compute the amount of each Purchaser's entitlement to Project Capability and obligation to pay Annual Project Costs. (r)"Project"means the Unalaska Geothermal Project as described in Exhibit (s)"Prudent Utility Practice"means at a particular time any of the practices, methods,and acts engaged in or approved bya significant portion of the electric utility industry at such time,or which,in the exercise of reasonable judgment in light of facts known at such time,could have been expected to accomplish the desired results at the lowest reasonable cost consistent with good business practices,reliability,safety, and reasonable expedition.Prudent Utility Practice is not required to be the optimum practice,method,or act to the exclusion of all others,but rather to be a spectrum of possible practices,methods,or acts which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with reliability,safety,and expedition.Prudent Utility Practice includes due regard for manufacturers'warranties and the requirements of governmental agencies of competent jurisdiction and shall AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 4 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 apply not only to functional parts of a Project,but also to appropriate structures, landscaping,painting,signs,lighting,and other facilities.In evaluating whether any matter conforms to Prudent Utility Practice,the parties shall take into account: (1)|the nature of the parties hereto under the laws of the State of Alaska and their statutory duties and responsibilities;and (2)the objective of integrating Project Capacity with the generating resources of the Purchasers,including resources available under contract,to achieve optimum utilization of the resources and achieve efficient and economical operation of each Purchaser's System.For purposes of this Agreement,"national standards for the industry"means Prudent Utility Practice. (t)"Purchaser"means,as of any particular time,such of the City of Unalaska,Alaska;Alyeska Seafood,Inc.;Unisea Westward Seafoods;(Others? )as have executed this Agreement. (u)"Municipal Purchaser's System"means the Municipal Purchaser's electric utility system for the distribution,transmission,and generation of electrical power and which is owned and operated by the Municipal Purchaser.If the Municipal Purcha- ser's electric utility system is combined with other utilities of the Municipal Purchaser, then the "Municipal Purchaser's System"includes only those facilities,activities,and revenues properly allocable to the Municipal Purchaser's electric utility service. "Municipal Purchaser's System"does not include the Project,regardiess of whether the Municipal Purchaser operates the Project under a separate agreement with the Authority. (v)Necessary Approvals"means the approval or consent in writing of each governmental entity,regulatory body,or other person which approval is required in order for: (1)this Agreement or any amendment thereof to become effective; and (2)the Project to be constructed and operated in accordance with this Agreement.As of the date of execution of this Agreement,the Necessary Approvals include but are not limited to approvals necessary under AS 44.88, AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 5 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 approvals required by the Alaska Public Utilities Commission ("APUC'), approval of the Agreement by the Boards of Directors or governing body of the Purchasers and the Authority,and approval of necessary environmental permits by the Alaska Department of Environmental Conservation and the U.S. Environmental Protection Agency.Necessary approvals also include the availability,as determined by the Authority,of sufficient funds to complete the Project. (w)"Renewal and Contingency Reserve Fund"means the Renewal and Contingency Reserve Fund established pursuant to Section of the Indenture. (x)"Required Action”means an action that must be taken in order for the Authority to comply with federal or state law,the orders of licensing and regulatory agencies,the Indenture,or this Agreement. (y)"Required Project Work"means repairs,maintenance,renewals, replacements,improvements,or betterments required by federal or state law,a licensing or regulatory agency with jurisdiction over the Project,or this Agreement,or otherwise necessary to keep the Project in good and efficient operating condition, consistent with: (1)|sound economics for the Project and the Purchasers;and (2)national standards for the industry. (z)"Revenue Fund"means the Revenue Fund established pursuant to Section of the Indenture. (aa)"Trustee"means the Trustee acting under the Indenture or that Trustee's successor or successors and any other corporation which may,at any time,be substituted in that Trustee's place under the Indenture. section 2 -Term of Agreement. (a)Effectiveness.This Agreement shall become effective on the first date when: AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 6 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (1)the Agreement has been executed and delivered by all Purchasers and by the Authority;and (2)all necessary approvals have been obtained. (6)Commencement of Payment Obligations.The payment obligations of each Purchaser as set forth in Section 5 of this Agreement to pay Annual Project Costs,as defined in Section 7 of this Agreement,shall commence on the Date of Commercial Operation. (c)Termination.This Agreement shall terminate: (1)50 years after the Date of Commercial Operation;or (2)when no Bonds are Outstanding under the Indenture and all payment obligations under this Agreement have been satisfied or provided for, whichever occurs later;provided,that if the Date of Commercial Operation does not occur before ,then this Agreement shall terminate on .The parties may mutually agree to terminate or to renew this Agreement prior to termination,subject, however,to the terms and conditions of covenants and agreements between the Authority and holders of Bonds. (d)Renewal.Any Purchaser may renew this Agreement on the same terms and conditions as provided herein for successive additional terms (such terms to equal 40 years or,if shorter,the remaining useful life of the Project),upon written notice to the Authority by the Purchaser given no less than 6 and no more than 24 months prior to the end of the term of this Agreement.Purchasers electing to renew this Agreement shall be entitled to have their Percentage Shares adjusted pro-rata, based on their Percentage Shares as set forth in Exhibit D as that Exhibit exists 24 months prior to the end of the initial term of this Agreement,so that the adjusted Percentage Shares of Purchasers renewing this Agreement total 100 percent.No renewing Purchaser shall be required to accept the entirety of the Percentage Share to which that Purchaser becomes entitled,but if the Percentage Shares of all renewing Purchasers do not total 100 percent,the Authority may sell to any other utility that is a qualified purchaser of power under the Act any remaining Percentage Share or portion thereof upon the same terms and conditions applicable to the renewing AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 7 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Purchasers,if the Authority reasonably determines that such utility is able to carry out the obligations of a Purchaser under this Agreement and that such sale to such utility will not adversely affect the tax exemption of interest on any Bonds Outstanding under the Indenture that originally were issued on a tax-exempt basis.The Authority shall not be obligated to renew this Agreement,if,after reasonable notice to the renewing Purchasers,Percentage Shares that total 100 percent have not been sold to such Purchasers or to other qualified utility purchasers. Section 3 -Exhibits.The following exhibits are incorporated by reference into this Agreement: (a)-Exhibit "A"is the Indenture; (6)Exhibit "B"is the Description of the Project; (c)Exhibit "C"is the Form of Certain Supplemental Indentures. (d)Exhibit "D"sets out the Purchaser's Percentage Shares of Project Capability and of Annual Project Costs. Section 4 -Electric Service to be Furnished. (a)Sale and Purchase.The Authority hereby sells,and each Purchaser hereby purchases,that Purchaser's Percentage Share of Project Capability (together with associated energy)from the Project in accordance with this Agreement. (b)Available Power.The Authority shall at all times,except when prevented by a cause or event not within the control of the Authority,make power available to the Purchasers from the Project in an amount equal to the amount the Purchasers may schedule from the Project within the limitations imposed by available Project Capability. (C)Required Project Work.The Authority shall perform or cause to be performed all Required Project Work provided that funds are legally available to the Authority for this purpose.The costs of Required Project Work shall be included in Annual Project Costs in the manner set forth in Section 7(a)(4)of this Agreement.The AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 8 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Authority shall give reasonable notification to all Purchasers prior to making or causing to be made any Required Project Work. (d)Optional Project Work.The Authority shall not make or cause to be made Optional Project Work unless such Optional Project Work is approved by a majority in percentage share of the Capability of the Purchaser.Any Optional Project Work shall be at the expense of the benefitted Purchaser(s),as determined in advance by the Authority,in proportion to the value of the benefit conferred upon each such Purchaser. Section 5 -Obligations Under Indenture:Completion of Project. (a)Assignment or Payment to Trustee.The parties recognize and agree: (1)that the Authority may assign its rights to receive payments under this Agreement as security for the payment of the Bonds to the Trustee under the Indenture for the benefit of the holders of the Bonds;and (2)that the Authority may direct that amounts payable to it under this Agreement to be paid directly to the Trustee. (b)Project Funding.The Authority shall use its best efforts to issue Bonds in an amount sufficient to pay the Cost of Acquisition and Construction.The parties agree to undertake their best efforts to obtain funds to pay the total Cost of Acquisition and Construction. (b)Covenants ofthe Authority.The Authority covenants that it will not cause rates for Project power to increase by reason of any bond resolution,covenant,or agreement contained in any trust indenture or trust agreement entered into by the Authority in connection with a power project other than the Project,nor on account of any inadequacy in its actual or projected aggregate revenues,other than revenues from the Project,nor will the Authority include in Annual Project Costs debt service payable on debt incurred for any purpose except in respect of the Project as provided herein. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 9 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (c)Project Completion and Operation.The Authority agrees to use its best efforts to complete the Project expeditiously and in accordance with sound engineer- ing practice and with the provisions of the Indenture.The Authority shall also use its best efforts consistent with Prudent Utility Practice to construct and complete,and to operate and maintain the Project (or to arrange for such operation and maintenance) to provide power at the lowest reasonable cost to the Purchasers in a manner that is compatible with the Purchaser's Systems and consistent with the Act,the Indenture, and this Agreement. Section 6 -Payment Obligation. (a)Payment Obligation.Each Purchaser agrees to pay its Percentage Share of Annual Project Costs for each Fiscal Year.The procedures for determining the amount of and for making such payments are set forth in Section 12 of this Agreement. (b)Purchaser's Obligations.Each Purchaser shall make payments in the amounts and at the times required by this Agreement notwithstanding a suspension or reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction in the amount of power supplied by the Project.Such payments shall not be subject to any reduction,by offset or otherwise.The parties intend and interpret the foregoing two sentences to mean that the obligation to make such payments shall be absolute and unconditional and unaffected by any interrup- tion,interference,or curtailment in whole or in part of power supplied by the Project. In the event that: (1)the Project is no longer operable,or its operation is interrupted or curtailed for any reason whatsoever in whole or in part;and (2)the Authority does not restore the Project to full operation within a reasonable time, then the Purchasers may upon reasonable notice to the Authority and at their own expense take such action as they deem necessary to so restore the Project.The taking of such action by the Purchasers shall not alter each Purchaser's obligation to pay its Percentage Share of the Annual Project costs. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1SED Page 10 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 7 -Annual Project Costs. (a)Annual Project Costs Defined.Annual Project Costs mean all of the costs resulting from the ownership,operation,maintenance of,and renewals and replacements to the Project properly incurred or paid during each Fiscal Year, including: (1)amounts required to be set aside by the Authority for the payment of Debt Service on Bonds issued to pay the Cost of Acquisition and Construc- tion; (2)|amounts required to be set aside for the payment of Debt Service on other Bonds and debt service on other obligations approved in accordance with Sections 10 and 12 of this Agreement; (3)|amounts required to restore the funds established under the Indenture to the levels required by the Indenture to be maintained therein; (4)|amounts which may be required to pay for Required Project Work to the extent that such costs are not covered by insurance or Bond proceeds or by the Renewal and Contingency Reserve Fund; (5)other amounts determined by the Authority to be necessary or appropriate to supplement and to be paid into the Funds established under the Indenture; (6)all other costs of producing and delivering Project power (excluding depreciation)not accounted for by the payments out of funds and reserves specified in the foregoing sections and properly chargeable to the Project under the Uniform System of Accounts,less any credits against said costs by reason of revenues from sources other than the direct sale of power to Purchasers,and also less any credits for interest earned during construction and available for Project purposes;provided,that income from interest earned on reserve funds shall be used at least annually to accumulate and maintain said reserve funds in the amounts required under the Indenture or in such greater amounts as may be determined by the Authority,or to reduce Annual Project Costs.Such other costs shall include: AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOI8ED ,Page 11 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (A)project operating and maintenance costs in accordance with the Annual Budget; (B)costs of Project-related insurance;and (C)project-specific administrative and general expenses of the Authority,such as costs of safety inspections and investigations. (b)Proceeds of a Taking.Any payment received by the Authority as a result of a taking of the whole or any portion of the capacity,facilities,or output of the Project by any state or federal government agency shall be used by the Authority to: (1)reduce Annual Project Costs;or (2)'retire Bonds. Section 8 -Obligations in the Event of Default. (a)Enforcement.Upon failure of a Purchaser to perform any obligation herein,the Authority may bring any suit,action,or proceeding of law or in equity ("Suit"),including mandamus,injunction,and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against that Purchaser.The Authority may bring such Suit within: (1)30 days after giving the Purchaser a written demand for performance,in the case of default by the Purchaser on any obligation other than a payment obligation;and (2)immediately,in the case of default by the Purchaser on any payment obligation.: Each Purchaser shall continue to make payments in the event of any dispute regarding performance of any obligation by any party under this Agreement or in the event of any dispute under the Indenture,and this obligation of continued payment pending resolution of disputes shall be immediately enforceable by any party upon application to any court of competent jurisdiction. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 12 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (b)Additional Rights and Remedies.In addition to the Authority's rights under Section 8(a)of this Agreement,if a Purchaser has for any reason suspended or reduced,or has failed to make or has been prevented from making,payments required under this Agreement,the Authority may terminate or suspend the delivery of power to that non-paying Purchaser if,after consulting with the other Purchasers, the Authority reasonably determines that such termination or Suspension is more effective than other available alternatives in minimizing adverse impacts on such other Purchasers. (1)If the Authority so terminates or suspends deliveries,the Authority shall: (A)offer to other Purchasers,on terms and conditions applicable to other power sold under this Agreement,any power not delivered to the non-paying Purchaser,and if necessary, allocate such power pro rata on the basis of Percentage Shares among Purchasers accepting such offer; (B)offer any power not sold under Section 8(b)(1)(A)of this Agreement to any qualified utility (includ- ing the other Purchasers)on terms and conditions deemed favorable by the Authority;and (C)_if the Authority projects that the amounts to be deposited into the Revenue Fund will nonetheless be insufficient to pay Annual Project Costs,increase every other Purchaser's Percentage Share of Annual Project Costs and Project Capability pro rata to the extent and for the period necessary to compensate for such insufficiency; (2)If the Authority determines that the process of offering power to others under Sections 8(b)(1)(A)or (B)of this Agreement would delay exercise of the Authority's rights under this Section 8(b)(1)(C),and that as a result,the Authority will be unable to make deposits when required under the Indenture,the Authority may exercise its rights under (C)immediately and take the actions required under (A) and (if necessary)under (B)as soon as practicable thereafter.No AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 13 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 exercise by the Authority of any of its rights (or any failure by the Authority to exercise any of its rights)under this Section 8(b)shall relieve any non-paying Purchaser of any payment obligation under this Agreement or relieve such Purchaser of any liability for damages resulting from non-payment.In particular,sales of power under this Section 8(b)(1)(A)and (B)are intended to reduce the financial impact of any Purchaser's non-payment on other paying Purchasers.Such sales are not intended to,nor shall they,reduce the payment obligations of the non-paying Purchaser or the damages for which such non-paying Purchaser may be liable. (3)To the extent that the Authority uses Project reserve funds to permit it to make timely payments under the Indenture following non- payment by a Purchaser,the amount needed to replenish such reserve funds shall be added to the Annual Payment Obligation of the non- paying Purchaser,and if the non-paying Purchaser fails to make payment of its Annual Payment Obligation as so increased,the Authority may exercise any of the rights available to it under Section 8(b)of this Agreement. (c)Litigation.If Purchasers'Percentage Shares are increased pursuant to Section 8(b)(1)(C)of this Agreement,then the Authority shall,and any other Purchaser(s)may,immediately initiate and diligently pursue litigation in any court of competent jurisdiction to compel full and timely payment by the non-paying Purchaser, to recover amounts needed to compensate Purchasers who Percentage Shares have been increased,and to obtain such other relief as shall be fair and equitable.The same or similar litigation against any non-paying Purchaser may also be initiated and pursued by the Authority and/or by any paying Purchaser if in response to any non- payment the Authority takes action pursuant to these Sections 8(b)(1)(A)or (B). (d)Default by the Authority.In the event of any default by the Authority under any covenant,agreement of obligation under this Agreement with respect to a Purchaser,that Purchaser may,upon 30 days'written notice to the Authority,bring any suit,action,or proceeding of law or in equity,including mandamus,injunction, and action for specific performance,as may be necessary or appropriate to enforce any covenant,agreement,or obligation of this Agreement against the Authority.No payment obligation of a Purchaser under this Agreement is subject to offset. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 14 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 9 -Municipal Purchaser's Systems. (a)Character of Expense.The amounts payable under this Agreement are operating expenses of the Municipal Purchaser's System by the Municipal Purchaser and are valid and binding obligations of the Municipal Purchaser,payable only from the gross revenues of said Municipal Purchaser's System as a cost of purchased electric power,and not payable from any taxes. (b)Municipal Purchaser's Rate Covenants.In order to afford,permit,and make timely payments as specified in this Agreement,the Municipal Purchaser agrees that it will establish,charge,and collect rates,fees,and charges with respect to the Municipal Purchaser's System in accordance with applicable law to provide revenues sufficient to meet its Jdligations under this Agreement and sufficient to pay,together with any other funds or moneys available therefore,any and all other amounts payable from or which constitute or may constitute a charge and lien upon such revenues including,but not limited to,amounts sufficient to meet obligations to service debt incurred by the Municipal Purchaser to finance the Municipal Purchaser's System. (c)Operation and Maintenance of Municipal Purchaser's Systems.The Municipal Purchaser covenants and agrees that it will operate and maintain its System in good repair,working order and condition,and in accordance with Prudent Utility Practice. (d)Limitation on Certain Contracts.The Municipal Purchaser covenants and agrees not to enter voluntarily into any contract or agreement to take or pay for power,other than this Agreement,payable from the revenues of the Municipal Purchaser's System on a parity with or superior to the payment of its obligations under this Agreement,except that the Municipal Purchaser may enter into such a contract or agreement of not to exceed two years'duration under which the Municipal Purchaser's payment obligation is on a parity with the payment of its obligations under this Agreement.The limitations of Section 9(d)of this Agreement shall not apply to contracts or agreements creating obligations on a parity with obligations under this Agreement if a written opinion from a Consultant is rendered: (1)that the contract or agreement is reasonably expected to contribute to the conduct of the business of the Purchaser's System in and efficient and economical manner consistent with Prudent Utility Practice;and AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO1BED Page 15 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (2)that the contract or agreement will not impair the ability of the Purchaser to raise revenues sufficient to meet its obligations under this Agreement. Section 10 -Indenture. (a)Amendment or Supplementation of Indenture.Except as provided in Section 11 of this Agreement,the Authority will not amend or supplement the Indenture in any manner,or adopt a new Indenture in connection with the refunding of the Bonds,which would materially adversely affect the ability of a Purchaser to fulfill the terms of this Agreement or impose any increased burden or obligation,financial or otherwise,on a Purchaser,without the consent of the Purchaser,unless: (1)the Purchasers consent to the Authority's proposed action by an instrument approved by members whose Percentage Shares equal or exceed 80 percent of Project Capacity and of Annual Project Costs;or (2)|Amajority of the Purchasers request that Required Project Work be paid for out of the proceeds of Bonds,and such Work is projected to cost in excess of the amount of money then available in the Renewal and Contingency Reserve Fund established pursuant to the Indenture,plus available insurance proceeds,in which event,if such bonds can then be legally issued and can be sold,the Authority shall issue such Bonds,payable from the Revenues of the Project (as defined in the Indenture),to pay the portion of such costs which exceed insurance proceeds,if any,and to restore said Reserve Fund to its required level. (0)Insurance.The Authority will maintain physical loss insurance to the extent required by the Indenture, (c)Information.The Authority shall provide each Purchaser a copy of any report,Certificate,letter,or other communication which the Authority is required to furnish to the Trustee under the Indenture or that the Trustee furnishes to the Authority. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOI8ED Page 16 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 11 -Purchasers'Consent to Supplemental Indentures to Construct the Project.The Purchasers hereby consent to the adoption by the Authority of supplemental Indentures pursuant to Section 10(a)of this Agreement,as necessary to comply with the Authority's obligation to finance and construct the Project pursuant to Section 5(b)of this Agreement and the Authority's obligation under Section 5(d)of this Agreement to use its best efforts to complete the Project expeditiously and in accordance with sound engineering practices and with the provisions of the Indenture. The Authority shall consult with the Purchasers regarding the provisions to be included in such supplemental Indenture,and shall use its reasonable best efforts to comply with the requests of the Purchasers with respect thereto.Unless otherwise approved in accordance with Section 10(a)(1)of this Agreement,such supplemental Indentures shall: (a)Provide that the total amounts required for the payment of Debt Service when due shall be,on an annual basis,as nearly equal as practicable; (b)provide that the final maturity of Bonds issued pursuant to such supplemental Indentures shall not be earlier than 25 years from the date when the first of such Bonds is issued; (c)be substantially in the form attached hereto as Exhibit C,except to the extent that the Authority finds that modifications are necessary to sell the Bonds on a tax-exempt basis;and (d)be adopted no earlier than January 1, section 12 -Authority Responsibilities.The Authority shall take the following actions, subject to the provisions of the Indenture,federal and state law,and the requirements of licensing and regulatory agencies: (a)Arrange for the operation and maintenance of the Project and the scheduling,production,and dispatch of Project power. (b)|Adopt in each Fiscal Year (and revise as necessary or prudent duringsuchFiscalYear)a budget of Annual Project Costs for that Fiscal Year,which budget AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 17 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 shall be in an amount estimated by the Authority to be sufficient to pay all Annual Project Costs. (c)Establish for each Fiscal Year the estimated Annual Payment Obligation of each Purchaser,together with a schedule for each Purchaser of equal monthly payments that such Purchaser shall be required to make during that Fiscal Year, which payment schedule shall be: (1)designed to recover such estimated Annual Payment Obligation from that Purchaser during the Fiscal Year;and (2)revised during such Year to reflect any revisions to the budget of Annual Project Costs for that Fiscal Year. (d)Determine after the conclusion of each Fiscal Year the actual Annual Project Costs for that Fiscal Year,the actual Annual Payment Obligation of each Purchaser for that Fiscal Year,and the amount of any additional payment required from (or the amount of any refund to be returned to)each Purchaser to ensure that the total of all payments received from each Purchaser for each Fiscal Year is equal to that Purchaser's actual Annual Payment Obligation for that Fiscal Year. (e)Evaluate and select among alternative methods (if any)of carrying out and funding (including through issuance of bonds)Required Project Work. (f)Adopt provisions to evaluate and approve Optional Project Work and to determine the compensation (if any)to be provided in accordance with Section 4(d) of this Agreement. (g)|Adopt procedures for the resolution of disputes that may arise between or among the Purchasers and the Authority concerning the interpretation of this Agreement,the obligations created by this Agreement,or the performance of such obligations. (h)Make an initial determination of "customary"insurance within the meaning of Section __of the Indenture and determine the appropriate amount of,and obtain, insurance for or related to the Project,in addition to such insurance as may be required by the Indenture. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 18 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (i)'|Adopt maintenance schedules for the Project that do not interfere unreasonably with the operations of the Purchasers. (j)Consider the need for and approve any additional amount to be added to the Renewal and Contingency Reserve Fund over and above the Renewal and Contingency Reserve Requirement provided under the Indenture. (k)If and when no Bonds are outstanding under the Indenture,and the Indenture is therefore no longer effective,the Authority shall provide for the establishment of such accounts and the taking of such actions as may be necessary to manage the Project. Section 13 -End of Project. (a)Authority's Declaration.The Authority shall declare the Project ended, and the Authority's obligations to make power available to the Purchasers and to operate and maintain (or to assure the operation and maintenance of)the Project shall also end,if and when: (1)such a declaration is required under Section 13(b)of this Agreement;or (2)the Project can no longer be operated in accordance with Prudent Utility Practice. (b)Consultant's Report.The Authority shall make the declaration described in Section 13(a)of this Agreement if all of the following conditions are met: (1)the Project cannot be operated at full capacity in a manner consistent with Prudent Utility Practice absent repairs,modifications,or additions ("Repairs")to the Project; (2)a Consultant retained by the Authority concludes that such Repairs are not cost effective in comparison with other power supply alterna- tives then available to the Purchasers;and AEA/Unalaska Geothermal Power Project Power Sales Agreement . AFFO1BED Page 19 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 (3)|Purchasers whose Percentage Shares total eighty percent (80%) vote that such Repairs should not be undertaken. (c)Consequences of Authority's Declaration.After the Authority has declared the Project ended,each Purchaser shall pay its Percentage Share of Annual Project Costs until all Bonds have been paid or provision has been made for the payment of the Bonds in accordance with the Indenture;provided,that from the date on which the Authority declares the Project ended,Annual Project Costs shall no longer include costs other than those set forth in Sections 7(a)(1),7(a)(2),7(a)(3),and 7(a)(6)(C)of this Agreement. Section 14 -Records.In addition to meter records,the parties shall keep log sheets and other records as may be needed for the purposes of this Agreement. Section 15 -Inspection of Facilities.For purposes of this Agreement,each party may, but shall not be obligated to,inspect any other party's facilities relating to the Project at any time upon reasonable notice,but such inspection or failure to inspect shall not render the inspecting party,its officers,agents or employees,liable or responsible for any injury,loss,damage,or accident resulting from defects in such electric installation, or for violation of this Agreement. Section 16 -Covenants to Maintain Integrity of Agreement. (a)Retail Rate Approval.The Municipal Purchaser will affirmatively and promptly pursue all administrative and judicial remedies necessary to secure APUC approval of retail rates required to meet the terms of this Agreement where APUC approval is required. (6b)Compliance with Law.Each Purchaser will take all necessary steps to comply with applicable federal and state laws and regulations,licenses,and permits relating to the use and operation of the Purchaser's System. (c)Sales,Mergers,and Assignments.The Municipal Purchaser shall not abandon,sell,mortgage,lease,or otherwise dispose of the Municipal Purchaser's AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 20 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 System or any assets of that System (including by sale to or merger with any other utility),or assign this Agreement or any interest thereunder to any assignee or successor in interest,unless: (1)such disposal or assignment accords with the terms of any of the Municipal Purchaser's covenants or agreements with the holders of the Municipal Purchaser's bonds,notes,or other evidences of indebtedness relating to the abandonment,sale,mortgage,lease or other disposition of property of the Municipal Purchaser's System;and (2)such disposal or assignment is: (A)consented to in writing by the Authority which consent shall not be unreasonably withheld;or (B)made to another entity that is that is already a Purchaser under this Agreement and is able to meet the obligations resulting from the disposal or assignment;or (C)limited to assets that the Purchaser determines to be surplus to the needs of the Municipal Purchaser's System,but the depreciated value of assets so disposed of or assigned in any given year shall not exceed five percent of the depreciated value of the assets of the Municipal Purchaser's System prior to the disposal or assignment; or (D)evaluated by a Consultant and that Consultant certifies that,taking into account the other obligations of the Purchaser or of the assignee or successor in interest (as the case may be),the Purchaser or the assignee or successor in interest will have: (i)substantially the same or greater ability to produce sufficient revenues to meet its payment obligations as would the Purchaser absent the transaction;and (ii)the ability to perform all obligations under this Agreement. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 21 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Any assignee of this Agreement must assume in writing all of the assigning Purchaser's obligations hereunder,must pay amy amounts due and owing from the assigning Purchaser hereunder,and (unless the assignee is already a Purchaser) must provide the Authority and the Purchasers with an opinion of counsel that this Agreement is enforceable against the assignee. (d)Status of Bonds.The parties will not take any action,including entry into power sales agreements,which would cause the interest on any Bond which is originally issued on a tax-exempt basis to become taxable under the Internal Revenue Code of 1986,as the same may be amended from time to time. (e)Licenses and Permits.The parties will take all necessary steps within their control to comply with applicable federal and state laws and regulations,and to obtain and thereafter comply with all applicable licenses and permits relating to the use and operation of the Project. Section 17 -Assignment. (a)Assignment Generally.This Agreement shall inure to the benefit of,and shall be binding upon the respective successors and assigns of the parties to this Agreement;provided,that this Agreement or any interest herein may be transferred or assigned by a Purchaser only in accordance with the provisions of Section 16(c) of this Agreement. (b)Assignments to Secured Lenders.A party may assign this Agreement, together with all of its rights and obligations thereunder: (1)to or in trust for any secured lenders of such party for the purpose of securing obligations for borrowed money;or (2)pursuant to the exercise by any such secured lender of any of the rights,powers,or privileges provided for by the mortgages or other security instruments of such party for borrowed money;provided,that no such assignment shall in any way relieve such party of any obligations hereunder. No such secured lender shall,as a result of such assignment or the subse- quent exercise of its rights with respect to this Agreement under any mortgage, AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 22 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 deed of trust,or other security instrument,be construed to have assumed,or otherwise to have become personally liable for,the assignor's obligations hereunder,but such secured lender's ability to exercise the rights of its assignor hereunder shall be subject to performance of the assignor's corresponding obligations under this Agreement.In the event any such secured lender exercises any of its rights,powers,or privileges with respect to this Agreement under said mortgages or other security agreements,such secured lender may thereafter assign this Agreement,together with all the rights and obligations thereunder,to any entity authorized and able to perform the obligations under this Agreement,which entity shall succeed to ail the rights and assume all the obligations of the borrower-assigner under this Agreement. Prior to the exercise by any secured lender of any rights or remedies under any mortgages or security agreements with respect to this Agreement,such secured lender shall give the parties hereto reasonable notice that it intends to exercise such rights or remedies. (c)A Purchaser's agreement to resell power from the Project shall not be deemed a transfer or assignment of this Agreement,but neither shall any such resale of Project power relieve the Purchaser of any payment obligation under this Agreement. Section 18 -Notices,Computation of Time and Holidays.Any notice required by this Agreement to be given to any party shall be effective when it is received by such party,and in computing any period of time from such notice,such period shall commence at 12:01 p.m.prevailing time at the place of receipt on the date of receipt of such notice.Whenever this Agreement calls for notice to or notification by any party,the same (unless otherwise specifically provided)shall be in writing directed to the Authority's executive director or a Purchaser's general manager.If the date for making any payment or performing any act is a day on which banking institutions are closed in the place where payment is to be made or a legal holiday,payment may be made or the act performed on the next succeeding day which is neither a legal holiday nor a day when banking institutions are closed in such place. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 23 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 19 -Applicable Law.The laws of the State of Alaska (including without limitation the equal opportunity laws set forth in AS 18.80.220,as the same may be amended from time to time)shall govern the interpretation and application of this Agreement and the actions of the parties hereunder. Section 20 -Availability of Information.The parties shall make available to each other, for inspection and copying during business hours,all books,records,plans,and other information relating to any calculation or determination to be made pursuant to this Agreement. Section 21 -Severability. (a)Severability Generally.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable,the remainder of this Agreement shall be unaffected by such adjudication and all the remaining provisions of this Agreement shall remain in full force and effect as if such section,paragraph,clause,or provision or any part thereof so adjudicated to be invalid had not been included herein. (b)Correction and Substitution.If any section,paragraph,clause,or provision of this Agreement or any agreement referred to in this Agreement shall be finally adjudicated by a court of competent jurisdiction to be invalid or unenforceable, then and in such event,the parties agree that they shall exercise their best efforts to correct such invalidation and substitute appropriate agreements and contractual arrangements to achieve the intent of this Agreement. Section 22 -Remedies Cumulative.No remedy conferred upon or reserved to the parties hereto is intended to be exclusive of any other remedy or remedies available hereunder or now or hereafter existing by law,in equity,by statute,or otherwise,but each and every such remedy shall be cumulative and shall be in addition to every other such remedy. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 24 DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 23 -Waiver Not Continuing.Any waiver at any time by either party to this Agreement of its rights with respect to any default of the other party hereto,or with respect to any other matter arising in connection with this Agreement,shall not be considered a waiver with respect to any subsequent default,right,or matter. Section 24 -Covenant To Act In Good Faith.In order to permit this Agreement,to be fully effective throughout its term in accordance with the original intent of the parties, each party agrees that it shall at all times act in good faith in performing its obligations and in exercising its rights under this Agreement. Section 25 -No Third-Party Beneficiaries.Notwithstanding that the operation of this Agreement may and is intended to confer benefits on third parties who are not signatories to this Agreement,this Agreement shall be enforceable only in accordance with its provisions expressly governing enforcement.In promising performance to one another under this Agreement,the parties intend to create binding legal obligations to and rights of enforcement in: (a)one another;and (6)such assignees or successors in interest of the parties as may enjoy a right to enforce this Agreement by virtue of provisions of this Agree- ment that expressly create such a right in such assignees or successors in interest.By entering into this Agreement,the parties expressly do not intend to create any obligation or promise any performance to any other third party, nor have the parties created for any other third party any right to enforce this Agreement. Section 26 -Section Headings.The section headings in this Agreement are for convenience only,and do not purport to,and shall not be deemed to,define,limit,or extend the scope or intent of the section to which they pertain. AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFO18ED Page 25 a'DRAFT August 23,1991 3610.2014 EEW/gt Rev.4 Section 27 -Multiple Copies.This Agreement shall be executed in several counter- parts,each of which shall be an original,but all of which shall constitute one and the same instrument. ALASKA ENERGY AUTHORITY By NAME AND TITLE CITY OF UNALASKA,ALASKA By NAME AND TITLE OTHER SIGNERS AEA/Unalaska Geothermal Power Project Power Sales Agreement AFFOIBED Page 26