*TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTION 200.80(b)(4),
200.83 AND 240.24b-2
Exhibit 10.16
EXECUTION VERSION
SECOND AMENDED AND RESTATED
RENEWABLE ENERGY PURCHASE AND SALE AGREEMENT
THIS SECOND AMENDED AND RESTATED RENEWABLE ENERGY PURCHASE AND SALE AGREEMENT
(hereinafter referred to as the "Agreement"), dated as of August 18, 2006 is
entered into by and between Snowflake White Mountain Power, LLC, a limited
liability company organized and existing under the laws of the State of Arizona
(hereinafter referred to as "Seller"), and Salt River Project Agricultural
Improvement and Power District, an agricultural improvement district organized
and existing under the laws of the State of Arizona (hereinafter referred to as
"Buyer").
TABLE OF CONTENTS
Article 1: Conditions Precedent; Term of Agreement....................... 2
Article 2: Definitions................................................... 4
Article 3: Tier One Purchase Provisions.................................. 8
Article 4: Tier Two Purchase Provisions.................................. 13
Article 5: Title and Risk of Loss; Indemnity............................. 15
Article 6: Billing and Terms of Payment.................................. 15
Article 7: Events of Default............................................. 16
Article 8: Remedies...................................................... 17
Article 9: Termination................................................... 18
Article 10: Limitation of Liability....................................... 19
Article 11: Relationship of the Parties................................... 19
Article 12: Taxes......................................................... 19
Article 13: Notices....................................................... 20
Article 14: Confidential Information...................................... 21
Article 15: Miscellaneous................................................. 22
EXHIBIT A: Contract Rates................................................ 29
EXHIBIT B: EA Certificate................................................ 30
RECITALS
Whereas, Seller has now, or will have in the future, a certain Renewable
Resource located in Snowflake, Arizona (the "Project");
Whereas, the Project will create certain Environmental Attributes that arise
from the generation of electricity;
Whereas, Seller is in the business of generating and marketing electricity,
capacity, and the associated Environmental Attributes; and
Whereas, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller certain quantities of energy, capacity, and corresponding Environmental
Attributes created by the Project; and
Whereas, Seller and Buyer previously entered into (i) that certain Renewable
Energy Purchase and Sale Agreement, dated as of February 24, 2005, that was
subsequently replaced in its entirety by (ii) that certain Amended and Restated
Renewable Energy
Purchase and Sale Agreement date as of May 25, 2006 pertaining to the purchase
and sale of the energy identified herein as "Tier One" for a term of twenty (20)
years; and
Whereas, Seller has entered into an agreement with Arizona Public Service
Company ("APS Agreement") for substantially all of the additional energy
produced by the Project for a term of fifteen (15) years; and
Whereas, Seller has offered to sell and Buyer desires to purchase additional
energy from the Project, commencing at the beginning of the sixteenth (16th)
Delivery Year and ending on the Termination Date of this Agreement. The amount
purchased shall consist of all of the remaining capacity and energy of the
Project after Tier One deliveries are made to Buyer.
NOW, THEREFORE, in consideration of the above recitals and the mutual promises
of the Parties set forth below, the Parties hereto and intending to be legally
bound hereby, agree as follows:
ARTICLE 1: CONDITIONS PRECEDENT; TERM OF AGREEMENT.
(a) Conditions Precedent. Each of Seller's and Buyer's obligations under this
Agreement shall become effective upon the satisfaction or waiver by Seller
of each of the following conditions precedent:
(i) Seller shall have obtained all governmental and regulatory
authorizations required for the construction, ownership, operation and
maintenance of the Project and for the sale of capacity and energy
therefrom;
(ii) Seller shall have obtained financing in connection with the
construction, ownership, operation and maintenance of the Project on
terms and conditions reasonably acceptable to Seller; and
(iii) Seller shall have entered into an interconnection arrangement on
terms and conditions reasonably acceptable to Seller.
(b) Termination Rights Upon Failure to Achieve Conditions Precedent. In the
event that any of the conditions precedent set forth in subsection (a) of
this Article 1 have not been satisfied or waived by Seller by May 1, 2006,
either Seller or Buyer shall have the right to terminate this Agreement
upon thirty (30) days written notice to the other Party if the conditions
precedent have not been satisfied or waived by Seller within such thirty
(30) day period. If Buyer elects to terminate this Agreement pursuant to
this Article 1, neither Party shall have any liability or obligation to the
other Party. If Seller elects to waive any of the conditions precedent set
forth in subsection (a) of this Article 1, such condition shall no longer
be a condition precedent to the effectiveness of Seller's and Buyer's
obligations under this Agreement. If Seller elects to terminate this
Agreement pursuant to this Article 1, Seller shall make a one-time payment
to Buyer for liquidated damages, within ten (10) days of such termination,
in the amount of $250,000.
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(c) Term: First Right of Refusal.
(i) The term of this Agreement shall commence on the date hereof and shall
remain in effect through and including the Termination Date.
(ii) Commencing on the beginning of the fifteenth (15th) Delivery Year but
not sooner, Seller may negotiate with third parties for proposed agreements
for the sale of the net energy, capacity and Environmental Attributes
generated by the Project during all or any portion of the period commencing
on the day after the Termination Date and ending on the ten (10) year
anniversary of the Termination Date, or, stated differently, for a period
from the end of the twentieth (20th) Delivery Year and ending on the day
before the thirty-first (31st) anniversary of the Delivery Commencement
Date (such period, the "Right of First Refusal Term" or "ROFR Term");
provided, however, that Buyer shall have a first right of refusal to match
any proposed agreement with any such third party for the sale of the net
energy, capacity and Environmental Attributes generated by the Project
during all or any portion of the ROFR Term, as follows. If Seller reaches a
bona fide proposed definitive agreement with a third party for the sale of
the net energy, capacity and Environmental Attributes generated by the
Project during all or any portion of the ROFR Term (a "Third Party Offer"),
Seller shall provide a copy of such proposed definitive agreement to Buyer
within ten (10) days of reaching agreement on the proposed Third Party
Offer. Buyer shall have thirty (30) days to notify Seller in writing
whether it wishes to exercise its right of refusal by entering into an
agreement with Seller for the sale of the net energy, capacity and
Environmental Attributes generated by the Project by Seller to Buyer on
essentially the same terms and conditions (including sources of fuel) as
set forth in the Third Party Offer (such notice, the "Election Notice").
Upon the timely and proper delivery of an Election Notice, Seller and Buyer
shall act in good faith to modify and execute any and all definitive
agreements required for Buyer to purchase the net energy, capacity and
Environmental Attributes on essentially the same terms and conditions
(including sources of fuel) as set forth in the Third Party Offer, it being
understood that the Third Party Offer shall be modified only as minimally
necessary to properly reflect the identification of the Buyer and to meet
Buyer's minimum standards for power purchase contracts, but shall be
essentially identical to the Third Party Offer with respect to all
financial terms. If Buyer shall fall to properly deliver an Election Notice
within the 30-day notification period, or if Buyer shall property deliver
such Election Notice within the 30-day notification period but, after
good-faith negotiations between Buyer and Seller to modify the Third Party
Offer agreements as provided above, shall fail to execute the necessary
definitive agreements within thirty (30) days following the date on which
the Election Notice is given to Seller, then in either event Seller shall
be free to execute definitive agreements with the third party who
originally made such offer to Seller. Buyer's right of refusal under this
Section 1(c) shall survive the Termination Date of this Agreement for the
ROFR Term.
(d) Prior Agreement Terminated. Seller and Buyer have previously entered into
the "Renewable Energy Purchase and Sale Agreement", dated as of February
24, 2005 that was replaced by and terminated pursuant to the Amended and
Restated Renewable Energy Purchase and Sale Agreement date as of May 25,
2006 (the "Prior Agreement"). It is the intention of the Parties that this
Second Amended and Restated Renewable Energy Purchase and Sale Agreement
shall
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replace the Prior Agreement in its entirety. Accordingly, upon the
execution by each of the Parties of this Second Amended and Restated
Renewable Energy Purchase and Sale Agreement, the Prior Agreement shall
terminate and have no further force and effect.
ARTICLE 2: DEFINITIONS. As used in this Agreement, the following terms have the
respective meanings set forth below. Other capitalized terms are defined
elsewhere in this Agreement.
"AGREEMENT" means all provisions, exhibits incorporated as part of this
Agreement, and documents incorporated by reference.
"ARIZONA FOREST THINNINGS" means forest thinnings and/or residues
associated with the harvest of trees, salvage timber, small diameter
timber, salt cedar and other phreatophyte or woody vegetation removed from
forest and woodlands, river basins or watersheds in the State of Arizona,
including sawdust and sawmill waste resulting from the processing of the
foregoing.
"ARIZONA FOREST THINNINGS CALCULATION" has the meaning set forth in Article
3(a)(i).
"AUTHORIZED REPRESENTATIVE" has the meaning set forth in Article 15(m).
"BIOMASS" means paper sludge, urban debris, agricultural waste and any
other "biomass," including Arizona Forest Thinnings and Out-of State Forest
Thinnings, falling within the definition thereof for purposes of qualifying
renewable generation and promulgated from time to time by the Arizona
Corporation Commission or any successor agency having regulatory
jurisdiction over renewable generation.
"BUSINESS DAY" means any day which is not (i) a Saturday, (ii) a Sunday or
(iii) a legal holiday in the State of Arizona or a federal holiday in the
United States of America.
"CAMD" means the Clean Air Markets Division of the Environmental Protection
Agency, any successor agency and any other state or federal entity that is
given jurisdiction over a program involving transferability of
Environmental Attributes.
"CLAIMS" means all third party claims or actions, threatened or filed and,
whether groundless, false, fraudulent or otherwise, that directly or
indirectly relate to the subject matter of an indemnity, and the resulting
losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are
threatened or filed prior to or after the termination of this AGREEMENT.
"DEFAULTING PARTY" has the meaning set forth in Article 7(a).
"DELIVERY COMMENCEMENT DATE" means the earlier to occur of (i) January 1,
2008 or (ii) the commercial operation date of the Project, as designated in
a written notice from Seller to Buyer; provided, however, that without
limiting the generality of the provisions of Article 15(i), and so long as
Seller has achieved Significant Construction Milestones by April 30, 2007,
if due to delays in construction of the Project that are beyond the
reasonable control of Seller, the commercial operation
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date of the Project does not occur on or prior to January 1, 2008, the
Services Commencement Date shall mean the earlier to occur of July 1, 2008
or such commercial operation date.
"DELIVERY TERM" means the period commencing at hour ending 0100 MST on the
Delivery Commencement Date through and including the hour ending 2400 MST
on the Termination Date.
"DELIVERY YEAR" means the consecutive twelve-month period commencing at
hour ending 0100 MST on the Delivery Commencement Date (and each subsequent
anniversary thereof) through and including the hour ending 2400 MST on the
final day of such twelve-month period.
"EA CERTIFICATE" means a certificate in the form attached hereto as Exhibit
B.
"ELECTION NOTICE" has the meaning set forth in Article 1(c).
"ENVIRONMENTAL ATTRIBUTE" means any and all fuel, emissions, air quality,
or other environmental characteristics, including green energy tags,
renewable energy credits or certificates (REC) (including as defined in any
legislation applicable in the Western Electricity Coordinating Council
region), credits, benefits, reductions, offsets, and allowances, howsoever
entitled or named, resulting from the use of renewable generation or the
avoidance of the emission of any gas, chemical, or other substance to the
air, soil or water attributable to the metered output generated by the
facility which generated the energy sold by Seller to Buyer during the
Delivery Term and in which the Seller has property rights or will have
property rights upon such attributes coming into existence, and includes
any of the same arising out of legislation or regulation concerned with
oxides of nitrogen, sulfur, or carbon, particulate matter, soot, or
mercury, or implementing the United Nations Framework Convention on Climate
Change (the "UNFCCC") or the Kyoto Protocol to the UNFCCC or crediting
"early action" with a view thereto, or laws or regulations involving or
administered by the CAMD, and all Environmental Attribute Reporting Rights,
but specifically excluding only the Production Tax Credits (PTC) or fuel
subsidies. One (1) MWh of electrical energy from the Project or another
applicable renewable energy generation facility corresponds to one (1) MWh
Environmental Attribute.
"ENVIRONMENTAL ATTRIBUTE REPORTING RIGHTS" means the right to report to any
agency, authority or other party, including without limitation under
Section 1605(b) of the Energy Policy Act of 1992, ownership of the
Environmental Attributes.
"FINANCIER" means any individual(s) or entity(ies) and any
representative(s) or trustee(s) for any such individual(s) or entity(ies)
providing financing to Seller or any entity controlling, controlled by or
under common control with such entity, in respect of the Project or the
transactions contemplated by this Agreement, including in the form of term
debt or Interim debt or subordinated debt financing, including any
refinancing or take-out of any such loan(s) or financings.
"FIRM TRANSMISSION SERVICE" means (i) with respect to Seller, firm
point-to-point transmission service provided by Arizona Public Service
Company under the Arizona Public Service Company Pro Forma Open Access
Transmission Tariff and (ii) with respect to Buyer, firm point-to-point
transmission service provided by Salt River
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Project Agricultural Improvement and Power District under the Salt River
Project Agricultural Improvement and Power District Open Access
Transmission Tariff.
"GUARANTOR" means, with respect to Seller, Xxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxx.
"LATE PAYMENT RATE" means a per annum rate of interest equal to the lesser
of (i) LIBOR plus two percent (2%) or (ii) the maximum rate permitted by
applicable law.
"LIBOR" means the London Interbank Offered Rate of interest per annum at
which deposits in U.S. Dollars are offered by prime banks as of 11:00 a.m.,
London time, on the date which is two (2) Business Days prior to the first
day of any period to which interest is applicable, for settlement on the
first day of such interest period as such rate is quoted on Telerate Page
3750, or a functionally equivalent successor thereto, to be agreed between
Buyer and Seller.
"MW" means megawatt(s).
"MWH" means megawatt hour(s).
"MINIMUM NET WORTH AMOUNT" has the meaning set forth in the Personal
Guaranty Agreement dated of even date herewith by Guarantor.
"XXXXX'X" means Xxxxx'x Investor Services, Inc.
"MST" means Mountain Standard Time, as applicable, in Phoenix, Arizona.
"NET-OUT-OF-STATE FUEL COST" has the meaning set forth in Article 3(a)(ii).
"NET-ARIZONA FUEL COST INCREASE" has the meaning set forth in
Article 3(a)(i).
"NON-DEFAULTING PARTY" has the meaning set forth in Article 7(a).
"OPTION" has the meaning set forth in Article 3(k).
"OPTION PERIOD" has the meaning set forth in Article 3(k)(i).
"OPTION PREMIUM" has the meaning set forth in Article 3(k)(iii).
"OUT-OF-STATE FOREST THINNINGS" means forest thinnings and/or residues
associated with the harvest of trees, salvage timber, small diameter
timber, salt cedar and other phreatophyte or woody vegetation removed from
forest and woodlands, river basins or watersheds outside the State of
Arizona, including sawdust and sawmill waste resulting from the processing
of the foregoing.
"PARTY" or "PARTIES" means Buyer and Seller, individually or collectively,
as applicable.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a governmental
authority or agency or political subdivision thereof.
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"PRODUCTION TAX CREDITS" means the federal renewable electricity production
tax credit allowed in conjunction with the sale of electricity from
qualified energy resources as most recently set forth in the Working
Families Tax Relief Act of 2004 (Public Law No. 108-311) and the American
Jobs Creation Act of 2004 (Public Law No. 108-357) and as it may be further
defined in subsequent legislation.
"PROJECT" has the meaning set forth in the recitals of this Agreement.
"RENEWABLE RESOURCE" means an electric power generator using Biomass to
produce electric energy.
"ROFR PERIOD" has the meaning set forth in Article 1(c).
"S&P" means Standard & Poor's Rating Group, a division of XxXxxx-Xxxx, Inc.
"SIGNIFICANT CONSTRUCTION MILESTONES" means (i) the boiler and steam
generator components of the Project have been delivered to the Project Site
and (ii) Seller has entered into contracts for installation and testing of
the Project with the major contractors for the construction of the Project.
"TEST ENERGY PRICE" has the meaning set forth in Article 3(k)(iv).
"TIER ONE DELIVERY POINT" has the meaning set forth in Article 3(e).
"TIER TWO DELIVERY POINT" has the meaning set forth in Article 4(e).
"TIER ONE DELIVERY TERM" means the period commencing at hour ending 0100
MST on the Delivery Commencement Date through and including the hour ending
2400 MST on the Termination Date.
"TIER TWO DELIVERY TERM" means the period commencing at hour ending 0100
MST on the first day of the sixteenth (16th) Delivery Year through and
including the hour ending 2400 MST on the Termination Date.
"TIER ONE MAXIMUM ANNUAL CONTRACT QUANTITY" means 87,600 MWh (of which
70,080 MWh must be Biomass energy); provided that, in any Delivery Year in
which the month of February has twenty-nine (29) days, the Tier One Maximum
Annual Contract Quantity shall be 87,840 MWh (of which 70,272 MWh must be
Biomass energy); provided further that, with respect to the Delivery Year
in which the Tier One Delivery Term terminates, the Maximum Annual Contract
Quantity shall be reduced accordingly based upon the ratio of (i) the total
number of days in such Delivery Year within the Delivery Term for such year
to (ii) 365.
"TIER ONE MINIMUM ANNUAL CONTRACT QUANTITY" means 78,840 MWh (of which
63,072 MWh must be Biomass energy); provided that, in any Delivery Year in
which the month of February has twenty-nine (29) days, the Tier One Minimum
Annual Contract Quantity shall be 79,056 MWh (of which 63,245 MWh must be
Biomass energy); provided further that, with respect to the Delivery Year
in which the Delivery Term terminates, the Tier One Minimum Annual Contract
Quantity shall be reduced accordingly based upon the ratio of (i) the total
number of days in such Delivery Year within the Delivery Term for such year
to (ii) 365.
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"TIER TWO MINIMUM ANNUAL CONTRACT QUANTITY" means 78,840 MWh of Biomass
energy; provided that, in any Delivery Year in which the month of February
has twenty-nine (29) days, the Tier Two Minimum Annual Contract Quantity
shall be 79,056 MWh of Biomass energy; provided further that, with respect
to the Delivery Year in which the Delivery Term terminates, the Tier Two
Minimum Annual Contract Quantity shall be reduced accordingly based upon
the ratio of (i) the total number of days in such Delivery Year within the
Delivery Term for such year to (ii) 365. There is no maximum annual
quantity for Tier Two deliveries, which shall include all power and energy
generated by the Project that is not delivered as Tier One quantities.
"TERMINATION DATE" means, with respect to both Tier One and Tier Two, the
end of Delivery Year twenty (20), or such earlier date upon which this
Agreement is terminated in accordance with the provisions of this
Agreement.
ARTICLE 3: TIER ONE PURCHASE PROVISIONS.
Seller agrees to deliver and sell and Buyer agrees to accept and purchase,
during the Tier One Delivery Term, all right, title and interest of Seller in
and to the Tier One energy, capacity and associated Environmental Attributes as
set forth in this Article 3 to the extent (i) Seller has such right, title, and
interest in and to such Tier One energy, capacity and associated Environmental
Attributes under applicable law, and (ii) such transfer and sale to Seller is
not in violation of any applicable law at the time of such transfer and sale.
Seller shall take such action as may be necessary to transfer and evidence the
transfer of Environmental Attributes to Buyer.
(a) Tier One Contract Price. Subject to adjustment pursuant to clauses
(i)-(iii) of this Article 3(a), for the Tier One energy, capacity and
associated Environmental Attributes delivered by Seller to Buyer during
each hour of the Tier One Delivery Term, Buyer shall pay to Seller an
amount equal to the product of (i) the applicable Contract Rate (in dollars
per MWh) set forth in Exhibit A (which the Parties acknowledge contains an
escalation of [*] per Delivery Year) and (ii) the quantity of Tier One
energy (in MWh) delivered by or on behalf of Seller.
(i) No later than six (6) months prior to the end of the fifteenth (15th)
Delivery Year, Seller may (but shall not be obligated to) calculate
the increase (the "Net Arizona Fuel Cost Increase") in Seller's actual
fuel cost (determined consistent with past practices and net of any
subsidy for Arizona Forest Thinnings received by Seller from the
United States Department of Agriculture Forest Service) since the
Delivery Commencement Date for transporting to the Project Arizona
Forest Thinnings to generate the Tier One energy, capacity and
Environmental Attributes sold to Buyer under this Agreement (such
calculation, the "Arizona Forest Thinnings Calculation"), and deliver
the Arizona Forest Thinnings Calculation to Buyer. Buyer shall have
twenty (20) days from receipt of the Arizona Forest Thinnings
Calculation to review such calculations in accordance with its rights
under Article 3(h), and if a dispute arises between Seller and Buyer
as to such calculations, such dispute shall be resolved in
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accordance with the provisions of Article 3(i). If the Arizona Forest
Thinnings Calculation, as finally determined either by Buyer's
agreement or resolved after a dispute pursuant to the provisions of
Article 3(i), reflects that the Net Arizona Fuel Cost Increase exceeds
44.80% (which the Parties acknowledge is equivalent to an average
annual increase of 2.50%) Buyer shall elect, in its sole discretion,
by written notice to Seller within ten (10) Business Days of such
final determination, either (A) to increase the Contract Rate
applicable during Delivery Years sixteen (16) through twenty (20) by
an amount (expressed in dollars per megawatt-hour) by which the Net
Arizona Fuel Cost Increase exceeded 44.80%, or (B) exercise its rights
under Article 3(a)(ii) below. If Buyer falls to make an election
within such ten (10) Business Day period, Buyer shall be deemed to
have elected option (A). If Buyer elects or is deemed to have elected
option (A), the Parties shall amend this Agreement to reflect the new
Contract Rate for the remaining Delivery Years and to delete clauses
(I)-(iii) of this Article 3(a).
(ii) If Buyer elects under Article 3(a)(i) to exercise its rights under
this Article 3(a)(ii), Seller shall, within thirty (30) days after
Buyer's election, calculate the projected fuel cost (the "Net
Out-of-State Fuel Cost") (net of any subsidy for Out-of-State Forest
Thinnings payable by the United States Department of Agriculture
Forest Service) during the sixteenth (16th) Delivery Year for
transporting to the Project Out-of-State Forest Thinnings to generate
the energy, capacity and Environmental Attributes sold to Buyer under
this Agreement (such calculation, the "Out-of-State Forest Thinnings
Calculation"), and deliver the Out-of-State Forest Thinnings
Calculation to Buyer. Buyer shall have twenty (20) days from receipt
of the Out-of-State Forest Thinnings Calculation to review such
calculations in accordance with its rights under Article 3(h), and if
a dispute arises between Seller and Buyer as to such calculations,
such dispute shall be resolved in accordance with the provisions of
Article 3(i). If the Out-of-State Forest Thinnings Calculation, as
finally determined either by Buyer's agreement or resolved after a
dispute pursuant to the provisions of Article 3(i), reflects that the
Net Out-of-State Fuel Cost exceeds the first Delivery Year fuel cost
by more than 44.80%, Buyer shall elect, in its sole discretion, by
written notice to Seller within ten (10) Business Days of such final
determination, either (A) to increase the Contract Rate applicable
during Delivery Years sixteen (16) through twenty (20) by an amount
(expressed in dollars per megawatt-hour) by which the Net Out-of-State
Fuel Cost exceeds 44.80%, or (B) exercise its rights under Article
3(a)(iii) below. If Buyer fails to make an election within such ten
(10) Business Day period, Buyer shall be deemed to have elected option
(A). If Buyer elects or is deemed to have elected option (A), the
Parties shall amend this Agreement to reflect the new Contract Rate
for the remainder of the Term, to modify the provisions of Article
3(c) in order to allow Seller to utilize Out-of-State Forest Thinnings
as fuel at the Project rather than Arizona Forest Thinnings for the
remainder of the Term, and to delete clauses (i)-(iii) of this Article
3(a).
(iii) If Buyer elects under Article 3(a)(ii) to exercise its rights under
this Article 3(a)(iii), the Contract Rate shall not be increased, and
the Parties shall
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amend this Agreement to modify the provisions of Article 3(c) in order
to allow Seller to utilize any Biomass as fuel at the Project rather
than Arizona Forest Thinnings or Out-of-State Forest Thinnings during
the remainder of the Term and to delete clauses (i)-(iii) of this
Article 3(a).
(b) Tier One Contract Quantity. In Delivery Years one (1) through twenty (20),
Seller shall deliver at least the Tier One Minimum Annual Contract Quantity
of energy and associated Environmental Attributes to Buyer. If in Delivery
Year one (1) through nineteen (19), Seller delivers more than the Tier One
Minimum Annual Contract Quantity to Buyer, Seller may elect, upon written
notice to Buyer, to apply such excess quantities towards Seller's
obligation to deliver the Tier One Minimum Annual Contract Quantity to
Buyer in the immediately succeeding Delivery Year. Seller shall not deliver
more than the Tier One Maximum Annual Contract Quantity of energy and
associated Environmental Attributes to Buyer in Delivery Years one (1)
through fifteen (15), without the written consent of Buyer. In Delivery
Years sixteen (16) through twenty (20) Seller shall deliver the Tier One
Minimum Annual Contract Quantity and Tier Two Minimum Annual Contract
Quantity of energy and associated Environmental Attributes to Buyer prior
to making any election, as provided above in this subsection, to apply any
portion of any excess quantities towards Seller's obligation to deliver the
Tier One Minimum Annual Contract Quantity to Buyer in the immediately
succeeding Delivery Year.
(c) Tier One Sources of Fuel. Subject to Buyer's election to terminate the
applicability of this sentence pursuant to the provisions of Article 3(a),
at least eighty percent (80%) of the MWh of Tier One electric energy
delivered by Seller to Buyer under this Agreement shall be generated using
a fuel source comprised of Arizona Forest Thinnings. Arizona Forest
Thinnings shall be used in concentrations that will allow, on a monthly
basis, the Seller to meet the fuel requirement in this Article 3(c). Any
Tier One electric energy generated by the Project in excess of eighty
percent (80%) of the MWh of electric Tier One energy delivered by Seller to
Buyer under this Agreement may be generated using any fuel source,
Including construction debris, paper sludge, agricultural waste, tire
derived fuels, waste paper, plastics or other Biomass, including
Out-of-State Forest Thinnings.
(d) Tier One Delivery Rate. During the Tier One Delivery Term Seller may
schedule and deliver to Buyer at the Tier One Delivery Point up to ten (10)
MWhs of energy per hour up to the Tier One Maximum Annual Contract Quantity
of Tier One energy; provided that in Delivery Years one (1) through fifteen
(15) such delivery rate may be Increased up to a maximum of 20 MWhs of
energy per hour upon mutual agreement of Buyer and Seller.
(e) Tier One Delivery Point. The delivery point for Tier One energy delivered
by or on behalf of Seller to Buyer under this Agreement shall be the Cholla
500 kV Switchyard, or any other delivery point mutually agreed to by Seller
and Buyer (the "Tier One Delivery Point").
(f) Tier One Energy Sourcing. Unless otherwise noted and mutually agreed to by
both Parties in writing, the Tier One energy and associated Environmental
Attributes delivered by Seller to Buyer pursuant to this Agreement shall be
generated from the Project.
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(g) Tier One Reporting. On or before the 30th day following the end of each
Delivery Year during the Tier One Delivery Term, Seller shall complete and
provide to Buyer an EA Certificate designating, for the previous Delivery
Year: (i) the quantity of Tier One energy generation and Environmental
Attributes created In MWh by month; (ii) the location and name of the
generator used to create the Environmental Attributes; and (iii) the date
the generator used to create the Environmental Attributes began operation.
In addition, if in any Delivery Year during the Tier One Delivery Term
Seller delivers Buyer Tier One electric energy under this Agreement from
any Renewable Resource other than the Project, Seller shall be obligated to
provide to Buyer a signed copy of an EA Certificate completed by such
Renewable Resource for such Tier One Delivery Year.
(h) Tier One Audit Rights. Upon reasonable advance notice to Seller, Buyer
shall have the right to designate its own employee representative(s) or its
contracted representative(s) to audit and to examine at its own expense the
supporting documentation concerning Seller's source of the Arizona Forest
Thinnings, the Out-of-State Forest Thinnings or other Biomass used by
Seller to generate Tier One electric energy delivered by Seller to Buyer
under this Agreement and, subject to the limitations of time set forth in
Article 3(a), Seller's calculations regarding costs of Arizona Forest
Thinnings, Out-of-State Forest Thinnings and other Biomass pursuant to the
provisions of Article 3(a). Buyer or Its representative(s) shall undertake
any such audit(s) at reasonable times and appropriate locations and in
conformance with generally accepted auditing standards. Seller agrees to
fully cooperate with any such audit(s). During the term of this Agreement,
Seller agrees to retain all records and documentation subject to audit by
Buyer in accordance with this Article 3(h). Buyer shall promptly notify
Seller in writing of any exception taken as a result of an audit and Seller
shall respond In writing to such notification within thirty (30) days of
receipt of Buyer's notice.
(i) Tier One Dispute Resolution - Fuel Costs. If a dispute arises between the
Parties regarding either the Arizona Forest Thinnings Calculation under
Article 3(a)(i) or the Out-of-State Forest Thinnings Calculation under
Article 3(a)(ii) hereof, the Parties shall, within ten (10) days of
Seller's response to Buyer's exceptions to either such calculation, engage
an independent accounting firm or electric industry consultant (or both) as
mutually agreed by the Parties to finally and conclusively determine the
accuracy or inaccuracy of such documentation or calculations. The Parties
shall instruct such firm or consultant (or both) to make such determination
as soon as practicable and in any event within thirty (30) days of such
engagement. The Parties shall share the cost of such engagement equally,
The conclusions of such firm or consultant (or both) shall be binding on
the Parties for all purposes under this Agreement. The foregoing procedures
shall be applicable to Article 3(a)(i) or (ii) calculation disputes only.
(j) Tier One Transmission of Energy. Seller shall, during the Tier One Delivery
Term, arrange for and maintain Firm Transmission Service for the
transmission of all Tier One energy that is delivered to Buyer hereunder at
the Tier One Delivery Point and be responsible for paying for all
associated transmission charges to the Tier One Delivery Point. Buyer
shall, during the Tier One Delivery Term, accept all energy that is
delivered by Seller hereunder at the Tier One Delivery Point.
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(k) Test Energy. Prior to the Delivery Commencement Date, Seller may, but shall
have no obligation to, purchase real time put options from Buyer pursuant
to which Buyer agrees to purchase non-firm test energy delivered by Seller
in accordance with this Article 3(k). Each real time put option ("Option")
will provide Seller the right, but not the obligation, to deliver or put
non-firm test energy from the Project to Buyer. Seller shall notify Buyer
of its intent to purchase the initial Option no less than ninety (90) days
prior to the first day Seller anticipates delivering test energy to Buyer.
Within ten (10) days of receipt of such notice, Buyer shall provide to
Seller (a) the email address required pursuant to Article 3(k)(vi) below,
(b) the real-time traders phone number required pursuant to Article
3(k)(vi) below, and (c) the wire transfer instructions for the payment
required pursuant to Article 3(k)(iii) below. Seller may purchase
additional Options by paying the Option Premium to Buyer in accordance with
Article 3(k)(iii) below.
(i) Option Period: Each Option purchased by Seller shall give Seller the
right to delivery test energy to Buyer for a period of thirty (30)
days commencing on the day that Seller first delivers test energy to
Buyer (each such period an "Option Period").
(ii) Quantity: Seller has the option during each hour of each Option Period
to deliver to Buyer at the Delivery Point the full output of the
Project, provided the Project's nominal rating is not in excess of 20
MW.
(iii) Option Premium: Seller shall pay to Buyer $[*] for each Option.
Such premium shall be due three (3) Business Days prior to the first
day of each Option Period and shall be payable by wire transfer.
(iv) Test Energy Price: For the energy delivered by Seller to Buyer during
each hour of each Option Period, Buyer shall pay to Seller an amount
equal to the product of (A) $45.00 and (B) the quantity of test energy
(in MWh) delivered by Seller to Buyer.
(v) Delivery of Test Energy:
(A) Buyer agrees to accept delivery of non-firm test energy up to
those quantities identified in Article 3(k)(ii) for all hours,
during each Option Period, on days when Seller chooses to
exercise the option.
(B) The Seller's obligation to deliver energy to Buyer hereunder is
non-firm and can be interrupted or curtailed at any time for any
reason. The Buyer's obligation to receive energy from Seller
hereunder is firm, and can be interrupted without any liability
only if the interruption is: (1) allowed by conditions mutually
agreed to by Seller and Buyer, or (2) due to an Uncontrollable
Force, or (3) to meet Buyer's public utility or statutory
obligations to its customers. If Buyer interrupts for any other
reason (other than those in the preceding sentence), Buyer shall
pay damages as calculated in Article 3(k)(viii) below.
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(vi) Scheduling: Within two (2) weeks after Seller notifies Buyer of
Seller's desire to purchase an Option pursuant to this Article 3(k),
Seller and Buyer shall meet to develop appropriate scheduling
procedures for implementing the delivery of test energy to Buyer. Such
scheduling procedures shall be consistent with Western Electricity
Coordinating Council and North American Electric Reliability Council
procedures and guidelines, as either may be amended from time to time.
All costs for implementing such scheduling procedures including but
not limited to the cost of all necessary metering and communication
equipment shall be the responsibility of Seller.
(vii) Billing: Within ten (10) days of the end of each Option Period,
Seller shall prepare and deliver to Buyer an invoice setting forth a
calculation of the amount owed by Buyer for the test energy delivered
by Seller during such test period and any damages owed by Buyer
pursuant to Article 3(k)(viii). Buyer shall pay such invoice in
accordance with the terms of Article 6(b).
(viii) Damages: If during any Option Period Buyer interrupts the delivery
of test energy for any reason other than those reasons listed in
Article 3(k)(v)(B) above, then for each hour during the Option Period
that delivery of test energy was interrupted Buyer shall pay Seller an
amount equal to (A) the product of (1) $[*] and (2) the positive
difference between the quantity of test energy (in MWh) scheduled by
Seller and the quantity of test energy (in MWh) received by the Buyer;
plus (B) any charges imposed on the Seller under open access
transmission tariffs as a result of Buyer's non-performance.
(l) Third Party Sales. Buyer acknowledges and agrees that (i) prior to the
Delivery Commencement Date, Seller shall have the right to sell energy,
capacity and associated Environmental Attributes generated by the Project
to any third party and (ii) during any Delivery Year during the Delivery
Term, Seller shall have the right to sell energy, capacity and associated
Environmental Attributes generated by the Project in excess of the Minimum
Annual Contract Quantity to any third party.
ARTICLE 4: TIER TWO PURCHASE PROVISIONS.
Seller agrees to deliver and sell and Buyer agrees to accept and purchase,
during the Tier Two Delivery Term, all right, title and interest of Seller in
and to the Tier Two energy, capacity and associated Environmental Attributes as
set forth in this Article 4 to the extent (i) Seller has such right, title, and
interest in and to such Tier Two energy, capacity and associated Environmental
Attributes under applicable law, and (ii) such transfer and sale to Seller is
not in violation of any applicable law at the time of such transfer and sale.
Seller shall take such action as may be necessary to transfer and evidence the
transfer of Environmental Attributes to Buyer.
(a) Tier Two Contract Quantity. In Delivery Years sixteen (16) through twenty
(20), Seller shall deliver the full output of the Project, net of the Tier
One purchases, but not less than the Tier Two Minimum Contract Quantity,
and associated
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Environmental Attributes to Buyer. If in Delivery Year sixteen (16) through
twenty (20), Seller delivers more than the Tier One Maximum Contract
Quantity and Tier Two Minimum Annual Contract Quantity to Buyer, Seller may
elect, upon written notice to Buyer, to apply such excess quantities
towards Seller's obligation to deliver the Tier Two Minimum Annual Contract
Quantity to Buyer in the immediately succeeding Delivery Year.
(b) Tier Two Contract Price. For the Tier Two energy, capacity and associated
Environmental Attributes delivered by Seller to Buyer during each hour of
the Tier Two Delivery Term, Buyer shall pay to Seller an amount equal to
the product of (i) the applicable Contract Rate (in dollars per MWh) set
forth in Exhibit A (Delivery Year sixteen (16) through twenty (20)), that
the Parties acknowledge contains an escalation of 2.50% per Delivery Year)
and (ii) the quantity of Tier Two energy (in MWh) delivered by or on behalf
of Seller. The Contract Rates set forth in Exhibit A shall apply to Tier
Two Purchases, notwithstanding any adjustments that may be made pursuant to
the Tier One pricing provisions.
(c) Tier Two Sources of Fuel. One hundred percent (100%) of the MWh of Tier Two
electric energy delivered by Seller to Buyer under this Agreement shall be
generated using Biomass, as defined in Article 2 of this Agreement.
(d) Tier Two Delivery Rate. During the Tier Two Delivery Term, Seller shall
schedule and deliver to Buyer at the Tier Two Delivery Point the full
energy output of the Project (approximately twenty (20) MWhs per hour),
provided that unless and until the Tier One Maximum Annual Contract
Quantity is met for each Delivery Year all the deliveries in the month up
to a maximum of ten (10) MWhs per hour times the number of hours in each
month shall be deemed to be Tier One deliveries.
(e) Tier Two Delivery Point. The delivery point for Tier Two energy delivered
by or on behalf of Seller to Buyer under this Agreement shall be the Cholla
500 kV Switchyard, or any other delivery point mutually agreed to by Seller
and Buyer (the Tier Two Delivery Point").
(f) Tier Two Energy Sourcing. Unless otherwise noted and mutually agreed to by
both Parties in writing, the Tier Two energy and associated Environmental
Attributes delivered by Seller to Buyer pursuant to this Agreement shall be
generated from the Project.
(g) Tier Two Reporting. On or before the 30th day following the end of each
Delivery Year during the Tier Two Delivery Term, Seller shall complete and
provide to Buyer an EA Certificate designating, for the previous Delivery
Year: (i) the quantity of Tier Two energy generation and Environmental
Attributes created in MWh by month; (ii) the location and name of the
generator used to create the Environmental Attributes; and (iii) the date
the generator used to create the Environmental Attributes began operation.
In addition, if in any Delivery Year during the Tier Two Delivery Term
Seller delivers Buyer Tier Two electric energy under this Agreement from
any Renewable Resource other than the Project, Seller shall be obligated to
provide to Buyer a signed copy of an EA Certificate completed by such
Renewable Resource for such Tier Two Delivery Year.
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(h) Tier Two Audit Rights. Upon reasonable advance notice to Seller, Buyer
shall have the right to designate its own employee representative(s) or its
contracted representative(s) to audit and to examine at its own expense the
supporting documentation concerning Seller's source of the Biomass used by
Seller to generate Tier Two electric energy delivered by Seller to Buyer
this Agreement and, subject to the limitations of time set forth in Article
4(a), Seller's calculations regarding costs of Biomass pursuant to the
provisions of Article 4(a). Buyer or its representative(s) shall undertake
any such audit(s) at reasonable times and appropriate locations and in
conformance with generally accepted auditing standards. Seller agrees to
fully cooperate with any such audit(s). During the term of this Agreement,
Seller agrees to retain all records and documentation subject to audit by
Buyer in accordance with this Article 4(h). Buyer shall promptly notify
Seller in writing of any exception taken as a result of an audit and Seller
shall respond in writing to such notification within thirty (30) days of
receipt of Buyer's notice.
(i) Tier Two Transmission of Energy. Seller shall, during the Tier Two Delivery
Term, arrange for and maintain Firm Transmission Service for the
transmission of all energy that is delivered to Buyer hereunder at the Tier
Two Delivery Point and be responsible for paying for all associated
transmission charges to the Tier Two Delivery Point. Buyer shall, during
the Tier Two Delivery Term, accept all energy that is delivered by Seller
hereunder at the Tier Two Delivery Point.
ARTICLE 5: TITLE AND RISK OF LOSS; INDEMNITY.
Title to and the risk of loss on any electric energy generated from the Project
and transmitted to Buyer in accordance with this Agreement shall pass to Buyer
at the Tier One Delivery Point and Tier Two Delivery Point. Each Party shall
indemnify, defend and hold harmless the other Party from any Claims arising from
or out of any event, circumstance, act or incident related to such electric
energy first occurring or existing during the period when control and title to
such electric energy is vested in such Party as provided in this Article 5.
ARTICLE 6: BILLING AND TERMS OF PAYMENT.
(a) Billing. On or before the tenth (10th) day of each month during the
Delivery Term, Seller shall prepare and deliver to Buyer an invoice setting
forth: (i) a calculation of the quantity of energy (in MWh) delivered by
Seller to Buyer in the immediately preceding month multiplied by the
applicable rate set forth in Exhibit A and (ii) any other payment due and
owing from one Party to the other Party under this Agreement. For any
billing period in which both Tier One and Tier Two deliveries are, or may
be, made, Seller shall specify the amounts of Tier One and Tier Two
deliveries made during the billing period.
(b) Terms of Payment. On or before the twentieth (20th) day following receipt
of such invoice, Buyer shall (i) pay, by wire transfer of immediately
available funds into an account designated by Seller, the full amount
stated in such invoice, or (ii) if Buyer objects to all or a portion of
such invoice, Buyer shall (A) pay the
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undisputed portion of such invoice by wire transfer of immediately
available funds into an account designated by Seller and (B) provide an
itemized statement of its objections to such invoice setting forth in
reasonable detail the basis for such objections and supporting
documentation therefore. If Buyer does not object to an invoice prior to
the date payment of such invoice is due, Buyer shall pay the full amount of
such invoice; provided however, that Buyer may subsequently object to such
invoice and, if such objection proves to be correct Seller shall refund to
Buyer the disputed amount within ten (10) days of the date the objection is
proven to be correct. Any amounts due by either Party under this Agreement
not paid when due shall bear interest at the Late Payment Rate. Such
interest shall accrue daily from the due date until the date upon which
such payment is made.
Article 7: Events of Default.
(a) Events of Default, As used in this Agreement an "Event of Default" shall
mean any of the events set forth below in this Article 7 with respect to
either Party, as the case may be (the "Defaulting Party"):
(i) the Delivery Commencement Date has not occurred on or before January
1, 2008 (or, if delayed for the reasons set forth in the definition
thereof, July 1,2008); or
(ii) the failure by the Defaulting Party to make, when due, any payment
required under this Agreement if such failure is not remedied within
five (5) Business Days after written notice of such failure is given
to the Defaulting Party by the other Party (the "Non-Defaulting
Party"); or
(iii) any representation or warranty made by the Defaulting Party in this
Agreement shall prove to have been false or misleading in any material
respect when made, and such breach is not remedied within ten (10)
days after written notice thereof is given to the Defaulting Party by
the Non-Defaulting Party; or
(iv) at any time after the first Delivery Year, the failure by Seller,
other than due to an Uncontrollable Force, to deliver to Buyer during
the immediately preceding Delivery Year the Tier One Minimum Annual
Contract Quantity and, if applicable, the Tier Two Minimum Annual
Contract Quantity and such failure to deliver is not corrected by one
of the following:
(A) delivering, within sixty (60) days following the end of such
Delivery Year, a quantity of energy (in MWh) from the Project
that is sufficient to satisfy such shortfall, or
(B) delivering, within sixty (60) days following the end of such
Delivery Year, a quantity of energy (in MWh) from a source (other
than the Project) reasonably acceptable to Buyer that is
sufficient to satisfy such shortfall; or
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(v) the failure by the Defaulting Party to perform any covenant or
material obligation set forth in this Agreement (other than events
that are otherwise specifically covered in this Article 7 as a
separate Event of Default, including the failure to make any payment
when due and the failure to deliver as required by this Agreement),
and such failure is not excused by an Uncontrollable Force, or is not
cured within sixty (60) days after written notice thereof to the
Defaulting Party; or
(vi) the Defaulting Party:
(A) makes an assignment or any general arrangement for the benefit of
creditors,
(B) files a petition or otherwise commence, authorize or acquiesce in
the commencement of a proceeding or cause under any bankruptcy or
similar law for the protection of creditors, or has such petition
filed against it and such proceeding remains undismissed for
sixty (60) days,
(C) otherwise becomes bankrupt or insolvent (however evidenced), or
(D) acknowledges in writing that it is unable to pay its debts as
they fall due.
ARTICLE 8: REMEDIES.
(a) Remedies in General. If an Event of Default occurs with respect to either
Party at any time during the term of this Agreement, the Non-Defaulting
Party may (i) terminate this Agreement pursuant to Article 9, (ii) withhold
any payments or energy due in respect of this Agreement to the extent of
its damages pursuant to this Agreement and (iii) exercise such other
remedies as may be available at law or in equity or as otherwise provided
in this Agreement.
(b) Buyer's Liability. If an Event of Default occurs with respect to Buyer and
Seller elects to terminate this Agreement, then notwithstanding termination
hereof, Buyer shall be obligated to pay Seller termination damages equal to
the sum of (i) all amounts payable by Buyer to Setter for any energy and
Environmental Attributes delivered by Seller to Buyer which have not been
paid, plus (ii) an amount equal to the present value, as of the termination
date, of the net economic loss, if any, to Seller resulting from the
termination of this Agreement, such loss to be determined in a commercially
reasonable manner and based on a comparison of (A) the amount that Seller
would have received from Buyer under this Agreement (assuming deliveries of
energy for the remainder of the Delivery Term are equal to the average
quantities of energy delivered to Buyer from the Delivery Commencement Date
through the date on which such Event of Default occurred; provided that in
no event shall such assumed deliveries be less than the Minimum Annual
Contract Quantity for the remainder of the Delivery Term) and (B) an amount
equal to the market value of the energy and Environmental Attributes
remaining to be delivered to Buyer under this
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Agreement as of the termination date (assuming deliveries of energy for the
remainder of the Delivery Term are equal to the average quantities of
energy delivered to Buyer from the Delivery Commencement Date through the
date on which such Event of Default occurred; provided that in no event
shall such assumed deliveries be less than the Minimum Annual Contract
Quantity for the remainder of the Delivery Term), based on market prices as
of the termination date for energy and Environmental Attributes of the same
vintage and quality, such market prices to be determined based on the
average of prices quoted by at least two independent third party brokerage
services reasonably selected by Seller, plus (iii) all costs (including
reasonable attorneys' fees and expenses) reasonably incurred by Seller in
connection with the termination of this Agreement.
(c) Seller's Liability. If an Event of Default occurs with respect to Seller
and Buyer elects to terminate this Agreement, then notwithstanding
termination hereof, Seller shall be obligated to pay Buyer termination
damages equal to the sum of (i) all amounts prepaid by Buyer to Seller for
any energy and Environmental Attributes that have not been delivered by
Seller to Buyer, Plus (ii) an amount equal to the present value, as of the
termination date, of the net economic loss, if any, to Buyer resulting from
the termination of this Agreement, such loss to be determined in a
commercially reasonable manner and based on a comparison of (A) the amount
that Buyer would have paid to Seller under this Agreement (assuming
deliveries of energy by Seller at the Minimum Annual Contract Quantity for
the remainder of the Delivery Term) and (B) an amount equal to the market
value of the energy and Environmental Attributes remaining to be delivered
to Buyer under this Agreement as of the termination date (assuming
deliveries of energy at the Minimum Annual Contract Quantity), based on
market prices as of the termination date for energy and Environmental
Attributes of the same vintage and quality, such market prices to be
determined based on the average of prices quoted by at least two
independent third party brokerage services reasonably selected by Buyer,
plus (iii) all costs (including reasonable attorneys' fees and expenses)
reasonably incurred by Buyer in connection with the termination of this
Agreement.
(d) No Penalty. Both Parties hereby stipulate that the payment obligations set
forth above are reasonable in light of the anticipated harm and the
difficulty of estimation or calculation of actual damages, and each Party
hereby waives the right to contest such payments as an unreasonable
penalty.
(e) Bankruptcy - Forward Contract, Forward Contract Merchants. The Parties
acknowledge and agree that this Agreement is a forward contract and that
the Parties are forward contract merchants, as those terms are used in the
United States Bankruptcy Code.
ARTICLE 9: TERMINATION.
If an Event of Default occurs with respect to either Party at any time during
the term of this Agreement, the Non-Defaulting Party has the right, but not the
obligation, to deliver a written notice to the Defaulting Party designating a
day, no earlier than the day such notice Is effective and no later than twenty
(20) days after such notice is effective, as an early termination date of this
Agreement. Upon the occurrence of any Event of Default
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listed in clauses (i) or (vi) of the definition of "Event of Default" above as
it may apply to any Party, the Non-Defaulting Party shall have the right to
terminate this Agreement immediately. Notwithstanding any termination under this
Article 9, any and all remedies provided to the Parties under this Agreement or
available in equity or under other applicable law may be pursued by the affected
Party. Any amounts owed under this Agreement shall be immediately due and
payable.
ARTICLE 10: LIMITATION OF LIABILITY.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NEITHER SELLER NOR ANY OF ITS
AFFILIATES OR REPRESENTATIVES HAS MADE OR IS MAKING ANY REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING ANY IMPLIED
REPRESENTATION AS TO THE CONDITION, MERCHANTABILITY, USAGE, SUITABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ENVIRONMENTAL ATTRIBUTES,
EXCEPT THOSE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE 3. IT IS
UNDERSTOOD AND AGREED THAT EXCEPT AS PROVIDED IN ARTICLE 15 BELOW, NEITHER PARTY
HAS MADE OR IS MAKING ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WRITTEN OR ORAL, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SERVICES EACH PARTY
WILL PROVIDE PURSUANT TO THIS AGREEMENT. NEITHER PARTY TO THIS AGREEMENT SHALL
BE LIABLE TO THE OTHER PARTY FOR ANY UNFORESEEABLE INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR SPECIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY LOSS OF
REVENUES OR LOSS OF PROFITS.
ARTICLE 11: RELATIONSHIP OF THE PARTIES.
The relationship of the Parties under this Agreement is that of independent
contractors. The Parties specifically state their intention that this Agreement
is not intended to create a partnership or any other co-owned enterprise unless
specifically agreed to by the Parties in a separate written instrument. Except
as specifically provided herein, each Party shall continue to have the right to
contract independent of the other Party with individuals and entities. Each
Party shall be responsible for its own operating expenses and personnel
expenses.
ARTICLE 12: TAXES.
Seller is liable for and shall pay, or cause to be paid, all taxes applicable to
the sale of energy, capacity and associated Environmental Attributes hereunder
arising prior to the Delivery Point. Buyer is liable for and shall pay, or cause
to be paid, all taxes applicable to the sale of energy, capacity and associated
Environmental Attributes hereunder arising at and from the Delivery Point.
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ARTICLE 13: NOTICES.
All notices required or permitted to be given hereunder in writing shall, unless
expressly provided otherwise, be in writing, properly addressed, postage
pre-paid and delivered by hand, facsimile, certified or registered mail, courier
or by facsimile to the appropriate address as either Party may designate from
time to time by providing notice thereof to the other Party.
If to Buyer: If to Seller:
Salt River Project Agricultural Snowflake White Mountain Power, LLC
Improvement and Power District [on file with Registrant]
Mail Station ISB 669 [on file with Registrant]
X.X. Xxx 00000 Xxxxxxxxx: Xxxxxx X. Xxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000 Telephone: [on file with Registrant]
0000 Xxxxx Xxxxxx Xxxxx Fax: (480) [on file with Registrant]
Xxxxx, Xxxxxxx 00000-0000
Attn: Manager, Resource Planning &
Development
Telephone: 000-000-0000
FAX: 000-000-0000
Copy to:
Salt River Project Agricultural
Improvement and Power District
Mail Station PAB 215
X.X. Xxx 00000
Xxxxxxx, Xxxxxxx 00000-0000
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attn: Corporate Secretary's Office
Telephone: 000-000-0000
Fax: 000-000-0000
Any such notice shall be effective only upon actual delivery or receipt thereof.
All notices given by facsimile shall be deemed received when confirmed by the
sending Party's facsimile machine, when sent on a Business Day before 5:00 p.m.
in the receiving Party's place of business. Facsimile transmissions received
after 5:00 p.m. shall be deemed received on the following Business Day.
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ARTICLE 14: CONFIDENTIAL INFORMATION.
(a) The provisions of this Agreement and any information provided by either
Party to the other Party pursuant to this Agreement or which is otherwise
derived as a result of a Party's performance under this Agreement shall be
utilized by the receiving Party solely in connection with the purposes of
this Agreement and shall not be disclosed by the receiving party to any
third party. Notwithstanding the foregoing, any such information may be
disclosed: (i) to the extent required by applicable laws and regulations or
by any subpoena or similar legal process of any court or agency of federal,
state or local government so long as the receiving Party gives the
non-disclosing Party written notice at least three (3) Business Days prior
to such disclosure, if practicable, and files for a protective order, if
possible, limiting access to such information to specific Persons, (ii) to
sources that provide or may provide capital or credit to Buyer or Seller
and their respective successors, assigns, participants, trustees or agents
of such sources to the extent any such Person agrees to be bound by
standard confidentiality provisions, (iii) to agents, trustees, advisors
and accountants of the Parties, (iv) to the extent the non-disclosing Party
shall have consented in writing prior to any such disclosure, (v) by Buyer
to a potential assignee of this Agreement; provided that Purchaser shall
require such potential assignee or prospective buyers to keep such
information confidential, (vi) by Seller to a potential assignee of this
Agreement; provided that Seller shall require such potential assignee or
prospective suppliers to keep such information confidential, (vii) to the
mediators and/or arbitrators in accordance with any dispute resolution
procedures involving this Agreement or (viii) to the holder of the Party's
debt obligations, any trustee or agent for such holder, any surety, any
energy transmitter or supplier and, if such holder, surety, transmitter or
supplier is a nominee for one or more beneficial holders, with such
beneficial holders. Nothing in this Agreement shall limit either Party's
use or disclosure of information which: (i) is now generally known or
available on an unrestricted basis to the public or becomes so known or
available on an unrestricted basis through no fault of the receiving Party;
(ii) is already in the receiving Party's possession without restriction as
to its use or disclosure prior to its receipt from the disclosing Party;
(iii) is acquired by the receiving Party on an unrestricted basis from any
third party, provided that the receiving party does not know or have reason
to know, or is not informed subsequent to disclosure by such third party
and prior to disclosure by the disclosing Party, that such information was
acquired under an obligation of confidentiality, or (iv) information that
was developed by or for the receiving Party independently of and without
reference to the information of the disclosing Party.
(b) In addition, neither Party shall use the name, tradename, trademarks,
service marks of or owned by the other Party, or logos of the other Party
in any publicity releases, news releases, annual reports, product
packaging, signage, stationery, print literature, advertising, websites or
other media without securing prior written approval from the other Party,
Neither Party shall, without prior written consent of the other Party,
represent, directly or indirectly, that any product or service offered by
that Party has been approved or endorsed by the other Party.
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ARTICLE 15: MISCELLANEOUS.
(a) Representations and Warranties. Each Party represents and warrants to the
other Party that (i) it is duly organized or registered, as applicable,
validly existing and in good standing under the laws of the jurisdiction of
its formation; (ii) It has, or in the case of Seller will have as of the
first date Seller delivers electric energy to Buyer from the Project, all
authorizations, licenses and consents necessary for it to legally perform
its obligations under this Agreement; (iii) the execution, delivery and
performance of this Agreement are within its powers, have been duly
authorized by all necessary action and do not violate any of its governing
documents, any contracts to which it is a party or any law, rule,
regulation, or order applicable to it; (iv) this Agreement and every other
document executed and delivered in accordance with this Agreement
constitutes its legally valid and binding obligation enforceable against it
in accordance with its terms, except to the extent such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and subject to any equitable
defenses; (v) it is not bankrupt and there are no proceedings pending or
being contemplated by it or, to its knowledge, threatened against it which
would result in it being or becoming bankrupt; (vi) there is not pending
nor, to its knowledge, threatened against it or any of its affiliates any
legal proceedings that could materially adversely affect its ability to
perform its obligations under this Agreement; (vii) no Event of Default, or
any event that with the passage of time would constitute an Event of
Default, with respect to it has occurred and is continuing and no such
event or circumstance would occur as a result of its entering into or
performing its obligations under this Agreement; (viii) it is acting for
its own account, and it has made its own independent decisions to enter
into this Agreement and as to whether this Agreement is appropriate or
proper for it based upon its own judgment and upon advice from such
advisors, as it deems necessary; (ix) it is not relying on any
communication (written or oral) of the other Party as investment advice or
as a recommendation to enter into this Agreement; it being understood that
information and explanations related to the terms and conditions of this
Agreement shall not be considered investment advice or a recommendation to
enter into this Agreement; (x) no communication (written or oral) received
from the other Party shall be deemed to be an assurance or guarantee as to
expected results of this Agreement; (xi) it is capable of assessing the
merits of and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions
and risks of this Agreement; and (xii) it is capable of assuming, and
assumes, the risks of this Agreement.
(b) Governing Law and Venue. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Any legal action brought by
either Party against the other pertaining to this Agreement shall be
commenced and prosecuted in a state or federal court of proper jurisdiction
located in Maricopa County, Arizona. Both Parties irrevocably consent to
the jurisdiction of any such court.
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(c) Entire Agreement. This Agreement constitutes the entire agreement between
the Parties relating to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations, whether oral or written, of the
Parties.
(d) Amendments. Except to the extent herein provided, no amendment, supplement,
modification, termination or waiver of this Agreement shall be enforceable
unless executed in writing by the Party to be bound thereby.
(e) Assignment. This Agreement is binding on any successors and assigns of the
Parties, Neither Party may transfer or assign its rights, title or interest
in this Agreement, in whole or in part, without the other Party's written
consent, such consent not to be unreasonably withheld. Notwithstanding
anything to the contrary in this Agreement, Seller may, without the consent
of Buyer, assign its interest in this Agreement as collateral to any
Financier.
(f) Non-Waiver; No Third Party Beneficiaries. No waiver by any Party of any of
its rights with respect to the other Party or with respect to this
Agreement or any matter or default arising in connection with this
Agreement, shall be construed as a waiver of any other right, matter or
default. Any waiver shall be in writing signed by the waiving Party. This
Agreement is made and entered into for the sole benefit of the Parties, and
their permitted successors and assigns, and no other Person shall be a
direct or indirect legal beneficiary of, have any rights under, or have any
direct or indirect cause of action or claim in connection with this
Agreement.
(g) Counterparts. This Agreement may be executed in counterparts, all of which
shall constitute one agreement binding on both Parties and shall have the
same force and effect as an original instrument, notwithstanding that both
Parties may not be signatories to the same original or the same
counterpart.
(h) Severability. In the event that any provision of the Agreement shall be
found to be void or unenforceable, such findings shall not be construed to
render any other provision of the Agreement either void or unenforceable,
and all other provisions shall remain in full force and effect unless the
provisions which are void or unenforceable shall substantially affect the
rights or obligations granted to or undertaken by either Party.
(i) Uncontrollable Force. To the extent either Party is prevented by an
Uncontrollable Force from carrying out, in whole or in part, its
obligations under this Agreement, such Party shall be excused from the
performance of its obligations under this Agreement to the extent affected
by such Uncontrollable Force (other than the obligation to make payments
then due or becoming due with respect to performance prior to the
Uncontrollable Force). Neither Party shall, however, be relieved of
liability for failure of performance to the extent that such failure is due
to causes arising out of Its own negligence or due to removable or
remediable causes which it fails to remove or remedy within a reasonable
time period. The term "Uncontrollable Force" means an event or circumstance
which prevents one Party from performing its obligations under this
Agreement, which event or circumstance is not within the reasonable control
of, or the result of the negligence of the claiming Party, and which by the
exercise of due diligence, the claiming Party is unable to avoid, cause to
be avoided, or
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overcome. "Uncontrollable Forces" may include and are not restricted to
flood, drought, earthquake, storm, lightning and other acts of God, fire,
epidemic, war, riot, civil disturbance or disobedience, labor dispute,
labor or material shortage, sabotage, terrorism, change in applicable law
or regulation and restraint by court order or public authority. The
following shall not be considered "Uncontrollable Forces": (i) the price of
electricity paid to Seller; or (ii) Buyer's Inability due to price to use
or resell the power purchased hereunder. Nothing contained herein shall be
construed to require a Party to settle any strike or labor dispute In which
it may be involved. Either Party rendered unable to fulfill any of its
obligations by reason of an Uncontrollable Force shall give prompt notice
of such fact and shall exercise due diligence, as provided above, to remove
such inability within a reasonable time period. If oral notice is provided,
it shall be promptly followed by written notice.
(j) Creditworthiness.
(i) If at any time during the term of this Agreement, Buyer fails to
maintain a rating of BBB or higher by S&P and Baa2 or higher by
Xxxxx'x for its revenue bonds, unless Buyer is only rated by one of
S&P or Xxxxx'x as of the date of this Agreement, in which case, unless
and until Buyer becomes rated by both S&P and Xxxxx'x, a rating of BBB
or higher by S&P or Baa2 by Xxxxx'x, Seller may require Buyer to
provide (1) a letter of credit from a bank or trust company with a
combined capital and surplus of at least $1 billion and whose
long-term unsecured senior debt is rated at least "A-" by S&P and "A3"
by Xxxxx'x or (2) such other collateral or security as Seller may
require. Buyer's obligation under this provision shall be limited to
providing a letter of credit or other collateral or security in an
amount equal to a reasonable estimate of the damages that Seller would
be entitled to recover in accordance with Article 8(b) if Seller was
entitled to terminate this Agreement. If Buyer fails to provide the
assurances required by this Article 15(j)(i) within twenty (20)
Business Days of demand therefore, such failure will be considered an
Event of Default by Buyer under Article 7 and Seller shall have the
right to exercise any of the remedies provided for under this
Agreement.
(ii) If at any time during the term of this Agreement Guarantor falls to
maintain an aggregate net worth equal to or in excess of the Minimum
Net Worth Amount, Buyer may require Seller (or its successors or
assigns) to provide (1) a letter of credit from a bank or trust
company with a combined capital and surplus of at least $1 billion and
whose long-term unsecured senior debt is rated at least "A-" by S&P
and "A3" by Xxxxx'x or (2) such other collateral or security as Buyer
may require. Seller's obligation under this Article 15(j)(ii) shall be
limited to providing a letter of credit or other collateral or
security in an amount equal to a reasonable estimate of the damages
that Buyer would be entitled to recover in accordance with Article
8(c) of this Agreement if Buyer was entitled to terminate this
Agreement. If Seller fails to provide the assurances required by this
Article 15(j)(ii) within twenty (20) Business Days of demand
therefore, such failure will be considered an Event of Default by
Seller under Article 7 and Buyer shall have the right to exercise any
of the remedies provided for under this Agreement.
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(iii) In the event the Personal Guaranty Agreement dated of even date
herewith and delivered by Guarantor has been terminated and is no
longer in effect, should Seller's creditworthiness, financial
responsibility, or performance viability become unsatisfactory to
Buyer in Buyer's reasonably exercised discretion with regard to this
Agreement, Buyer may require Seller (or its successors and assigns) to
provide, at the Seller's option (but subject to Buyer's acceptance
based upon reasonably exercised discretion), either (1) the posting of
a letter of credit, (2) a cash prepayment, (3) the posting of other
acceptable collateral or security, (4) a guarantee agreement executed
by a creditworthy entity; or (5) some other mutually agreeable method
of satisfying Buyer. Seller's obligations under this provision shall
be limited to a reasonable estimate of the damages to Buyer
(consistent with Article 8 of this Agreement) if Seller were to fail
to perform its obligations under this Agreement. If Seller fails to
provide such reasonably satisfactory assurances of its ability to
perform a transaction hereunder within twenty (20) Business Days of
demand therefore, such failure will be considered an Event of Default
under Article 7 of this Agreement and Buyer shall have the right to
exercise any of the remedies provided to it under this Agreement.
(k) Scheduling. No less than three (3) months prior to the date Seller
anticipates the Project to be placed into commercial operation, Seller and
Buyer shall meet to develop appropriate scheduling procedures for
implementing the delivery of energy under this Agreement. Such scheduling
procedures shall be consistent with Western Electricity Coordinating
Council and North American Electric Reliability Council procedures and
guidelines, as either may be amended from time to time. All costs for
implementing such scheduling procedures including but not limited to the
cost of all necessary metering and communication equipment shall be the
responsibility of Seller.
(l) Cure By Financier. During the term of this Agreement, Seller shall provide
Buyer with current information regarding the name(s) and address(es) of any
Financier. As long as Seller has outstanding and unpaid financing
liabilities, Buyer agrees to promptly furnish to all Financiers, then known
to Buyer, (i) if in any Delivery Year Seller fails, other than due to an
Uncontrollable Force, to deliver to Buyer one-half of the Minimum Annual
Contract Quantity by the end of the seventh (7th) month of such Delivery
Year, notice that Seller may not meet its obligation to deliver Buyer the
Minimum Annual Contract Quantity, (ii) if in any Delivery Year Seller
fails, other than due to an Uncontrollable Force, to deliver to Buyer the
Minimum Annual Contract Quantity by the end of such Delivery Year, notice
that Seller has not delivered the Minimum Annual Contract Quantity during
such Delivery Year and (iii) a copy of any default pursuant to Article 7
given to Seller. Prior to any exercise by Buyer of any remedies it may have
under this Agreement, including termination or suspension of Buyer's
performance hereunder, Buyer shall give Financier written notice of the
event, occurrence or omission (any such event, occurrence, or omission, a
"Breach") giving rise to the Buyer's right to exercise such remedies and
will afford the Financier or its designees a period of thirty (30) days in
addition to any cure period provided to Seller under this Agreement to cure
any Breaches.
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(m) Authorized Representatives. As a means of securing effective and timely
cooperation here under and as a means of dealing on a prompt and orderly
basis with various problems which may arise in connection with system
coordination and operation hereunder, the Parties shall each appoint a
representative (each an "Authorized Representative") and an alternate
representative to act in the absence of the Authorized Representative.
(i) The responsibilities of the Authorized Representatives are as follows:
(A) To establish, review, approve, and/or modify procedures and
standard practices, consistent with the provisions hereof, for
the guidance of traders or power schedulers as to matters
affecting transactions hereunder.
(B) To establish, review, approve, and/or modify any scheduling
procedures required in connection with transactions hereunder.
(C) To do such other things and carry out such duties as specifically
required or authorized by this Agreement; provided, however, that
the Authorized Representatives shall have no authority to amend
or modify this Agreement.
(ii) Each Party shall give written notice to the other Party of the name of
its designated Authorized Representative and alternate Authorized
Representative within one hundred and eighty (180) days after the date
of execution of this Agreement. Notice of any change of Authorized
Representative or alternate Authorized Representative shall be given
by written notice to the other Party. Each Party's designated
Authorized Representative shall be authorized to act on behalf of such
Party with respect to those responsibilities provided herein.
(n) Waiver of Jury Trial. Each Party hereby irrevocably waives any and all
rights to trial by jury with respect to any legal proceeding arising out of
or relating to this Agreement.
(o) Headings. The headings contained in this Agreement are solely for the
convenience of the Parties and should not be used or relied upon in any
manner in the construction or interpretation of this Agreement.
(p) Further Assurances. If either Party determines in its reasonable discretion
that any further instruments, assurances or other things are necessary or
desirable to carry out the terms of this Agreement the other Party shall,
at the expense of the requesting Party, execute and deliver all such
instruments and assurances and do all things reasonably necessary or
desirable to carry out the terms of this Agreement.
(q) Survival. Termination of this Agreement for any reason shall not relieve
either Party of any obligation accruing or arising with respect to the
period prior to such termination and required by the terms of this
Agreement to be performed at a date subsequent to the date of termination.
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(r) Construction of Certain Terms and Phrases. Unless context of this Agreement
otherwise requires:
(i) words of any gender include each other gender;
(ii) words singular and plural in number will be deemed to include the
other;
(iii) the terms "hereof," "herein," "hereby," and similar words refer to
this entire Agreement and not any particular article, section,
exhibit, appendix or schedule or any other subdivision of this
Agreement;
(iv) all article, section, schedule and exhibit references used in this
Agreement are to articles, sections, schedules and exhibits to this
Agreement unless otherwise specified. The schedules and exhibits
attached to this Agreement constitute a part of this Agreement and are
incorporated herein for all purposes;
(v) The term "includes" or "including" shall mean "including without
limitation";
(vi) References to "this Agreement" or any other agreement or document
shall be construed as a reference to this Agreement or such agreement
or document as amended, modified or supplemented and in effect from
time to time and shall include a reference to any document which
amends, modifies or supplements it, or is entered into, made or given
pursuant to or in accordance with its terms.
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IN WITNESS WHEREOF, each of the Parties hereto acknowledge that they have read
the terms and conditions contained herein, understand and agree to the same and
agree to be bound thereby and have caused this Agreement to be executed In
duplicate originals by its duly authorized representative on the respective
dates entered below.
SNOWFLAKE WHITE MOUNTAIN POWER, LLC
("SELLER")
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
(Signature)
Xxxxxx X. Xxxxxxx
(Name typed or printed)
Title: CEO
Date: 8-17-06
SALT RIVER PROJECT AGRICULTURAL AND
IMPROVEMENT DISTRICT ("BUYER")
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
(Signature)
Xxxx X. Xxxxxxx
(Name typed or printed)
Associate General Manager
Title:
8/29/06
Date:
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EXHIBIT A: CONTRACT RATES
(I) CONTRACT RATE: The rate for deliveries of energy by Seller to Buyer under
this Agreement shall be priced as follows:
Contract Rate*
Period Per MWh
---------------- --------------
Delivery Year 1 $ [*]
Delivery Year 2 $ [*]
Delivery Year 3 $ [*]
Delivery Year 4 $ [*]
Delivery Year 5 $ [*]
Delivery Year 6 $ [*]
Delivery Year 7 $ [*]
Delivery Year 8 $ [*]
Delivery Year 9 $ [*]
Delivery Year 10 $ [*]
Delivery Year 11 $ [*]
Delivery Year 12 $ [*]
Delivery Year 13 $ [*]
Delivery Year 14 $ [*]
Delivery Year 15 $ [*]
Delivery Year 16 $ [*]
Delivery Year 17 $ [*]
Delivery Year 18 $ [*]
Delivery Year 19 $ [*]
Delivery Year 20 $ [*]
* This Contract Rate is subject to adjustment as provided in Article 3(a).
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