May 13, 2008
FORM OF PURCHASE AND SALE AGREEMENT
__________________________________________________
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
[SELLER],
[PROJECT COMPANY]
AND
PACIFIC GAS AND ELECTRIC COMPANY
__________________________________________________
DATED AS OF [_________], 2008
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May 13, 2008
FORM OF PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “Agreement”) is made, as
of [__________], 2008, by and between [Name of Respondent], a [__________] [________] (the
“Seller”), [Name of Project Company], a [_________] [____________] (the “Project
Company”), and Pacific Gas and Electric Company, a California corporation (the “Purchaser”).
The Seller, the Project Company and the Purchaser are referred to herein sometimes individually
as a “Party” and collectively as the “Parties.”
BACKGROUND
A.
The Purchaser desires to purchase on a turnkey lump-sum basis a new,
fully operational, fully-permitted power generating facility to be developed, constructed,
commissioned and successfully tested as set forth in this Agreement (the “Project”, as further
defined in Article 1 herein).
B.
The Seller and the Project Company desire to develop, procure, construct,
commission and test the Project, including obtaining all real property interests, permits and other
authorizations and approvals required for construction and operation (except as otherwise noted
herein) and sell the Project to the Purchaser, all on the terms and conditions hereinafter set forth.
C.
The Seller, the Project Company and the Purchaser are entering into this
Agreement to evidence their respective duties, obligations and responsibilities with respect to the
Project.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained in this Agreement, intending to be legally
bound, each of the Seller, the Project Company and the Purchaser agrees as follows:
ARTICLE 1
DEFINITIONS
1.1
Defined Terms. The following terms when used in this Agreement (or in the
Schedules and Exhibits to this Agreement) with initial letters capitalized have the meanings set
forth below:
“AAA” has the meaning set forth in Section 15.9(c).
“Additional Real Property” has the meaning set forth in Section 2.2(c)(1).
“Affiliate” of a Person means any other Person that (a) directly or indirectly
controls the specified Person; (b) is controlled by or is under direct or indirect common control
with the specified Person; or (c) is an officer, director, employee, representative or agent or
subsidiary of the Person. For the purposes of this definition, “control”, when used with respect
to any specified Person, means the power to direct the management or policies of the specified
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Person, directly or indirectly, whether through the ownership of voting securities, partnership or
limited liability company interests, by contract or otherwise.
“Agreement” means this Purchase and Sale Agreement, together with the
Appendices, Exhibits and Schedules hereto.
“Application Security” means Collateral equal to $15,000 per MW of Guaranteed
Base Electrical Output.
“Approved Test Procedures” has the meaning set forth in Section 2.8(a).
“Arbitration” has the meaning set forth in Section 15.9(c).
“Article” means a numbered article of this Agreement. An Article includes all of
the numbered sections of this Agreement that begin with the same number as that Article.
“Assigned Agreements” has the meaning set forth in Section 3.1(n).
“Assignment and Assumption Agreement” means the Assignment and
Assumption Agreement in the form of Exhibit K to be executed by the Parties at Closing.
“Audited Financial Statements” has the meaning set forth in Section 6.8.
“Authorized Representative” means any person authorized to act on behalf of a
Party with respect to the proceedings described in Section 15.9, as so designated by a Party in a
written notice to the other Party made in accordance with Section 15.11 and specifying the scope
of such person’s authority.
Each Party may change its designation of “Authorized
Representatives” from time to time by providing notice thereof as described in this definition.
“Availability” means the percentage of time during the Base Reliability Test
period that the Project is producing the electrical output required of it by the Purchaser (such
requirement not to exceed the Demonstrated Net Electrical Output and otherwise consistent with
agreed operating parameters).
“Base Reliability Guarantee” has the meaning set forth in Section 2.7(a)(3).
“Base Reliability Test” has the meaning set forth in Section 2.7(a)(3).
“Bill of Sale” means the Bill of Sale described in Section 5.2(a)(1), to be executed
by the Seller and the Project Company at Closing.
“Business Day” means a day other than Saturday, Sunday or a day on which
banks are legally closed for business in the State of California.
“CAISO” means the California Independent System Operator.
“CEMS” means the continuous emissions monitoring system to be installed as
part of the Project as further described in the Specifications.
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“CERCLA” means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. §§9601 et seq.).
“Change Order Certificate” has the meaning set forth in Section 2.2(e)(4)(ii).
“Change Order Proposal” has the meaning set forth in Section 2.2(e)(4)(ii).
“Closing” has the meaning set forth in Section 5.1.
“Closing Date” has the meaning set forth in Section 5.1.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated or issued from time to time thereunder.
“Collateral” shall mean cash via wire transfer in immediately available funds or
Letter of Credit.
“Commercial Availability Date” means the date on which those conditions
precedent to Closing set forth in Sections 13.1, 13.3, 13.4, 13.5, 13.7, 13.8, 13.10 and 13.11 have
been and remain satisfied.
“Commercially Reasonable Efforts” means efforts which are reasonably within
the contemplation of the Parties at the time of executing this Agreement and which do not
require the performing Party to expend any funds other than expenditures which are customary
and reasonable in transactions of the kind and nature contemplated by this Agreement in order
for the performing Party to satisfy its obligations hereunder.
“Completion” has the meaning set forth in Section 11.5(a)(1).
“Confidential Information” means information or data that the disclosing Party
considers to be a trade secret or competitively sensitive and may include written, verbal or visual
information. In order to be considered Confidential Information, written information has to be
identified at the time of the disclosure with an appropriate legend, marking, stamp or positive
written identification on the face thereof as Confidential Information. In order to be considered
Confidential Information, verbal or visual information has to be so identified at the time of the
verbal or visual disclosure and the disclosing Party will notify the receiving Party in writing
within thirty (30) days of the disclosure and specifically identify the Confidential Information
previously disclosed. Magnetic tape, computer software or any other similar type of machine
readable format will be considered as a verbal disclosure and will only be considered
Confidential Information to the extent the disclosing Party complies with the requirements for
verbal disclosures set forth above, including the thirty (30) day notification requirement.
Confidential Information does not include information or data that:
(a)
was in the public domain at the time of the disclosure or is subsequently
made available to the general public without restriction and without breach
of this Agreement by the receiving Party;
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(b)
was known by the receiving Party at the time of disclosure without
restrictions on its use or independently developed by the receiving Party,
as shown by adequate documentation; or
(c)
is disclosed to the receiving Party by a third Person without restriction and
without breach of any agreement or other duty to keep the information
confidential.
“Confidentiality Agreement” means that certain Confidentiality Agreement dated
[_______ __], 2005 between the Seller and the Purchaser.
“Consent” means any consent, approval or authorization of, notice to, or
designation, registration, declaration or filing with, any Person other than a Governmental
Authority.
“Construction Contracts” means the EPC Contract and each other contract
pursuant to which a portion of the Project is to be constructed (excluding subcontracts).
“Contract Approval Security” means Collateral in the amount of $85,000 per
MW of Guaranteed Base Electrical Output.
“Contractor” means the EPC Contractor and each other contractor party to a
Construction Contract.
“Corrective Action Plan” has the meaning set forth in Section 2.4.
“Corrective Action Plan Deadline” has the meaning set forth in Section 2.4.
“CPUC” means the California Public Utilities Commission, or its regulatory
successor, as applicable.
“CPUC Approval” has the meaning set forth in the definition of Regulatory
Approval in this Section 1.1.
“CPUC Approval Application” shall have the meaning set forth in Section
11.1(a).
“Credit Rating” means with respect to any entity, as of any Business Day, the
respective ratings then assigned to such entity’s unsecured, senior long term debt or deposit
obligations (not supported by third party enhancement) by S&P or Moody’s; if such entity does
not have an unsecured, senior long term debt rating, then the rating then assigned to such entity
as its issuer ratings by S&P and/or Moody’s.
“Critical Milestones” means those Project Milestones designated as “Critical
Milestones” on Schedule 2.4.
“Cure” has the meaning set forth in Section 11.2(e).
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“Date Certain” has the meaning set forth in Section 2.3(b).
“Deed” means the Deed described in Section 5.2(a)(4) to be executed by the
Seller and the Project Company at Closing.
“Deferred Component” has the meaning set forth in Section 3.4.
“Delay Damages” has the meaning set forth in Section 2.3(b).
“Delivery Date Security” means the aggregate of the Application Security and the
Contract Approval Security.
“Delivery Period” has the meaning given to such term in Exhibit S. [Commercial
operations date through Closing.]
“Demonstrated Net Electrical Output” means the average net electrical output of
the Project during the Performance Test used to determine the Project’s achievement of the
Guaranteed Base Electrical Output.
“Deposit Account Agreement” has the meaning set forth in Section 11.2(c).
“Design Warranty” has the meaning set forth in Section 9.3.
“Design Warranty Period” means the period beginning on the Commercial
Availability Date ending on the second anniversary thereof.
“Direct Claim” means any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim.
“Disclosing Party” has the meaning set forth in Section 11.3.
“Disclosure Order” has the meaning set forth in Section 11.3.
“Distributed Control System” means the distributed control system for the Project
described generally in Section 8 of the Specifications.
“Effective Date” has the meaning set forth in Section 4.1.
“Electrical
Section 2.2(c)(2).
Interconnection
Facilities”
has
the
meaning
set
forth
in
“Electrical Product” means all electrical energy and other electrical products
generated by the Facility.
“Emissions Rights” means all allowances, emission reduction credits and offsets
authorizing the emissions from the Project.
“Environmental Laws” means any Governmental Rules relating to or imposing
liability or standards of conduct with respect to the protection of human health, safety or the
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environment (including ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata), including Governmental Rules relating to (a) emissions, discharges, releases
or threatened releases of Hazardous Substances into the environment, (b) manufacture,
generation, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, and (b) human exposure to Hazardous Substances or conditions,
including CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101, et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251, et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Oil Pollution Act (33
U.S.C. §§ 2701 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. §§ 11001 et seq.), the
Endangered Species Act (16 U.S.C. §§ 1531, et seq.), the Porter-Cologne Water Quality Control
Act (Cal. Water Code §§ 13000 et seq.), the Safe Drinking Water and Toxic Enforcement Act of
1986 (Cal. Health & Safety Code §§ 25249.5, et seq.), the Hazardous Substance Account Act
(Cal. Health & Safety Code §§ 25300, et seq.), the Hazardous Waste Control Act (Cal. Health &
Safety Code §§ 25100, et seq.), the California Clean Air Act (Cal. Health & Safety Code
§§ 39000, et seq.), the California Endangered Species Act (Cal. Fish & Game Code §§ 2050, et
seq.) and the California Native Plant Protection Act (Cal. Fish & Game Code §§ 1900, et seq.).
“EPC Contract” has the meaning set forth in Section 2.2(e).
“EPC Contractor” has the meaning set forth in Section 2.2(e).
“Equipment Startup and Acceptance Period” has the meaning set forth in Section
8.16.
“Equivalent Unplanned Outage Factor” has the meaning set forth in Exhibit F of
the GADS Data Reporting Instructions issued by NERC and reported by the Purchaser to NERC
for the period in question.
“ERO” means the Electric Reliability Organization certified by FERC pursuant to
Section 215(c) of the Federal Power Act, as amended by the Energy Policy Act of 2005.
“Excluded Assets” has the meaning set forth in Section 3.2.
“Excluded Liabilities” has the meaning set forth in Section 3.3.
“Executive(s)” has the meaning set forth in Section 15.9(b).
“Extended Guaranteed Electrical Output” has the meaning set forth in Section
3.6(b).
“Extended Guaranteed Heat Rate” has the meaning set forth in Section 3.6(b).
“Extended Reliability and Performance Tests” means the performance tests for
the Facility set forth in Section 3.6.
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“Extended Reliability Test Period” means the period commencing on the
Commercial Availability Date and ending no earlier than the one-year anniversary thereof.
“Facility” means the [______]-unit integrated [_____]-fired electricity generating
facility with a nominal generating capacity of [___] MW (net) to be located on the Project Site
and all of the equipment and systems related to such power generation plant including associated
and ancillary systems, subsystems, assemblies, subassemblies, instruments, equipment,
apparatus, materials, structures, facilities, appliances, lines, conductors, and all other components
and documents comprising, describing and integrating the entire facility into a fully operational
power plant as described generally in the Specifications.
“FERC” means the Federal Energy Regulatory Commission, or its regulatory
successor, as applicable.
“Final As-Built Drawings and Documentation” means all drawings, specifications
and other documentation prepared by the Seller in accordance with the standards of performance
in Sections 9.1(b) and 9.3, which accurately and completely represent in detail the physical
placement of all Project components and systems as installed and/or constructed as at the time of
Project Completion, including “as-built” surveys illustrating the established building setback
lines, if any, and the location of the Facility and the other Project Assets on the Project Site and
the Additional Real Property and within any established boundaries and setback lines.
“Final Permitting Deadline” means the date that is eighteen (18) months after the
date of the Purchaser’s receipt of Regulatory Approval.
“Financing Arrangements” has the meaning set forth in Section 2.2(d).
“First Permitting Deadline” means the date that is three hundred and sixty five
(365) days after the date of the Purchaser’s receipt of Regulatory Approval.
“Force Majeure Event” means any event or circumstance to the extent beyond the
control of, and not the result of the negligence of, or caused by, the Party seeking to have its
performance obligation excused thereby, which by the exercise of due diligence such Party could
not reasonably have been expected to avoid and which by exercise of due diligence it has been
unable to overcome, including but not limited to: (1) acts of God, including but not limited to
landslide, lightning, earthquake, storm, hurricane, flood, drought, tornado, or other natural
disasters and weather related events affecting an entire region which caused failure of
performance; (2) fire or explosions; (3) transportation accidents affecting delivery of equipment
only if such accident occurs prior to the Commercial Operation Date; (4) sabotage, riot, acts of
terrorism, war and acts of public enemy; or (5) restraint by court order or other governmental
authority. Force Majeure Events shall not include (i) a failure of performance of any Third
Party, including any party providing electric transmission service or natural gas transportation,
except to the extent that such failure was caused by an event that would otherwise satisfy the
definition of a Force Majeure Event as defined above, (ii) failure to timely apply for or obtain
Permits, (iii) breakage or malfunction of equipment, (except to the extent that such failure was
caused by an event that would otherwise satisfy the definition of a Force Majeure Event as
defined above), (iv) a strike, work stoppage or labor dispute limited only to any one or more of
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Seller, Seller's affiliates, the EPC contractor or subcontractors thereof or any other third party
employed by Seller to work on the project, (v) lack of funds or change in economic
circumstance, or (vi) shortage or unavailability of labor or climatic conditions (including severe
or extreme weather that would not otherwise qualify as a satisfy the definition of a Force
Majeure Event as defined above) that are reasonably to be expected for the geographic area
where the Project Site or the Additional Real Property is located. A Party shall not be considered
to be in default in the performance of its obligations under this Agreement to the extent that the
failure or delay of its performance is due to a Force Majeure Event; and the non-affected Party
shall be excused from its corresponding performance obligations to the extent due to the affected
Party's failure or delay of performance. Notwithstanding the forgoing, a failure to make
payments accrued prior to the event of Force Majeure Event when due shall not be excused.
“Fuel Interconnection Facilities” has the meaning set forth in Section 2.2(c)(2).
“Fuel Interconnection Point” means [DESCRIBE FUEL INTERCONNECTION
LOCATION AND FACILITIES].
“GAAP” means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board that are applicable from time to time.
“General Warranty Period” means the period commencing on the Commercial
Availability Date and ending on the later to occur of (i) the first anniversary thereof, and (ii) with
respect to any component of the Project that is altered, repaired or replaced pursuant to the
Seller’s warranties set forth in Section 9.1, the first anniversary of the date of such alteration,
repair, or replacement, as the case may be, regardless of number, it being understood that the
General Warranty Period shall continue with respect to any such component until one year has
passed without any warranty claim being made.
“Generation Operating Characteristics” means those attributes of Facility
performance described in Exhibit E.
“Governmental Approvals” means all consents and approvals of Governmental
Authorities, other than Permits, necessary under applicable Governmental Rules for the
consummation of the transactions contemplated in this Agreement and the development and
operation of the Project, including Governmental Approvals relating to Water Rights, Emissions
Rights and property rights to the extent granted, approved or consented to by a Governmental
Authority.
“Governmental Authority” means any federal, state, local or other governmental,
regulatory or administrative agency, governmental commission, department, board, subdivision,
court, tribunal, or other governmental arbitrator; arbitral body or other authority.
“Governmental Rules” means all applicable laws, statutes, treaties, rules,
regulations, ordinances, codes, judgments, enactments, decrees, injunctions, writs and orders,
decisions, Permits, directives and agreements, authorizations or other restrictions of or enacted
by any Governmental Authority (including common law), or any binding interpretation or
administration of any of the foregoing.
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“Governing Documents” means the documents under which the applicable Person
is organized and existing, including, in the case of a Person that is a corporation, its articles of
incorporation and bylaws, in the case of a Person that is a limited liability company, the
certificate filed with the jurisdiction in which it was organized and any applicable limited
liability company agreement, or in the case of a Person that is a partnership, the certificate filed
with the jurisdiction in which it was organized and any applicable partnership agreement.
“Guaranteed Commercial Availability Date” has the meaning set forth in
Section 2.3(a).
“Guaranteed Base Electrical Output” has the meaning set forth in Section
2.7(a)(1).
“Guaranteed Emissions Limits” has the meaning set forth in Section 2.7(b)(5).
“Guaranteed Net Heat Rate” has the meaning set forth in Section 2.7(a)(2).
“Guaranteed Peak Electrical Output” has the meaning set forth in Section
2.7(a)(4).
“Hazardous Substance” means, collectively, (a) any chemical, material or
substance that is listed or regulated under applicable Governmental Rules as a “hazardous” or
“toxic” substance or waste, or as a “contaminant” or “pollutant” or words of similar import, (b)
any petroleum or petroleum products, flammable materials, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, and transformers or other equipment that contain
polychlorinated biphenyls ("PCBs"), and (c) any other chemical or other material or substance,
exposure to which is prohibited, limited or regulated by any Governmental Rules.
“Indemnifiable Loss” means any damages, losses, liabilities, obligations, costs,
fines, penalties, fees and expenses, and any claims, demands or suits (by any Person, including
any Governmental Authority), including the costs and expenses of any and all actions, suits,
proceedings, demands, assessments, judgments, settlements and compromises relating thereto
and including reasonable attorneys’ fees and expenses in connection therewith.
“Indemnitee” has the meaning set forth in Section 12.4.
“Indemnitor” has the meaning set forth in Section 12.4.
[INSERT THE FOLLOWING IF THE SELLER ELECTS TO INDEX THE
PURCHASE PRICE: “Indexed Portion” has the meaning set forth in the definition of Purchase
Price.]
[INSERT THE FOLLOWING IF THE SELLER ELECTS TO INDEX THE
PURCHASE PRICE: “Inflation Index” has the meaning set forth in Section 3.4.]
“Interest Calculation” has meaning set forth in Section 11.2(c).
“Initial Component” has the meaning set forth in Section 3.4.
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“Initial Negotiation End Date” has the meaning set forth in Section 15.9(b).
“Initial Offer Deposit” means a deposit equal to $5,000 per MW for a total of
$________ submitted by the Seller to the Purchaser in conjunction with the Seller’s proposal to
develop, procure, construct, commission and test the Project on behalf of the Purchaser in
conjunction with and as a response to the Purchaser’s 2008 Long Term Request for Offers.
“Initial Spare Parts” means the equipment and parts initially required for the
maintenance and operation of the Project described in Section 2.6.
“Intellectual Property” means all of the intellectual property described in
Section 3.1(l).
“Interconnection Facilities” has the meaning set forth in Section 2.2(c)(2).
“Interconnection Point” means [IDENTIFY POINT OF INTERCONNECTION
POINT FOR DELIVERY OF PROJECT POWER TO THE PURCHASER’S TRANSMISSION
SYSTEM].
“ISO Conditions” has the meaning set forth in Section 2.7(a)(1).
“Latent Defects” means a defect in the Project or any of the Project Assets which
has not been disclosed in writing to the Purchaser and is not readily observable by a person who:
(a) is generally knowledgeable in the operation, maintenance and management of power
generation stations of similar vintage, operating history, and design that are operated in
accordance with Prudent Utility Practices and (b) has not operated or maintained the Project or
the specific Project Asset.
“Letter of Credit” means an irrevocable, standby letter of credit in the form of
Exhibit H issued by (i) a U.S. commercial bank having total assets of at least $10 billion and a
senior unsecured long term debt rating of no lower than A2 from Moody’s or A from S&P, (ii) a
foreign financial institution having total assets of at least $10 billion and a senior unsecured long
term debt rating of no lower than A2 from Moody’s or A from S&P, provided such foreign
financial institution has a U.S. branch, or other U.S. presence acceptable to the Purchaser, in its
reasonable discretion, (iii) a U.S. affiliate of a foreign financial institution, provided such foreign
financial institution acts as the “confirming bank” and has total assets of at least $10 billion and a
senior unsecured long term debt rating of no lower than A2 from Moody’s or A from S&P.
“Liens” means (i) with respect to real property, liens, charges, pledges, options,
mortgages, deeds of trust, security interests, claims, easements, and other encumbrances
affecting title to real property and (ii) with respect to personal property, liens, charges, pledges,
options and security interests, in the case of (i) or (ii), whether imposed by law, agreement,
understanding, or otherwise.
“Manager” has the meaning set forth in Section 15.9(b).
“Maximum Heat Rate” means 105% of the Guaranteed Net Heat Rate.
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“Mechanical Completion” means the date on which each of the following has
occurred, as set forth in a certificate of the Seller, countersigned by the Purchaser: (a) except for
minor items of work that would not affect the safety and/or performance or operation of the
Project such as painting, landscaping and so forth, all materials and equipment required to be
installed by the EPC Contractor or any other Contractor for the Project have been installed in
accordance with the Specifications, calibrated, loop checked and checked for alignment,
lubrication, rotation and hydrostatic and pneumatic pressure integrity; (b) all systems required to
be installed by the EPC Contractor or any other Contractor have been installed and tested at
significant loads; (c) such systems have been flushed and cleaned out as necessary; (d) all such
equipment and systems have been fully operated in a safe and prudent manner at nominal ratings
on Operating Fuel and have been installed in a manner that does not (i) void any subcontractor or
vendor equipment, system or other warranties or (ii) violate any Governmental Approvals or
Governmental Rule; and (e) all systems required to be installed by the EPC Contractor or any
other Contractor and necessary for power generation are ready to commence Performance Tests
and operations, the Distributed Control System is operational and the CEMS has been installed,
tested and is fully functional (but need not be certified).
“Minimum Base Electrical Output” has the meaning set forth in Section 2.7(b)(2).
“Minimum Performance Guarantees” has the meaning set forth in Section 2.7(b).
“Moody’s” means Moody’s Investors Services, Inc..
“Monthly Report” has the meaning set forth in Section 2.2(k).
“MW” means megawatts.
“NERC” means the North American Electric Reliability Council.
“Notice of Claim” has the meaning set forth in Section 12.4.
“Operating Fuel” means [DESCRIBE FUEL TO BE USED BY PROJECT].
“Operator Staffing Agreement” has the meaning set forth in Section 8.16.
“Party” and “Parties” have the meanings set forth in the introductory paragraph
hereto.
“Performance Guarantees” has the meaning set forth in Section 2.7(a).
“Performance Testing Protocol” means the protocol for the Seller’s performance
of the Performance Tests set out in Exhibit F.
“Performance Test Results” has the meaning set forth in Section 2.8(b).
“Performance Tests” means the operation of the Project by the Seller in
accordance with Sections 2.7 and 2.8 and Exhibit F for the purpose of determining the Project’s
achievement of the Performance Guarantees. Except where the context otherwise requires, a
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reference to “Performance Tests” shall be deemed to include a reference to the Base Reliability
Test.
“Permits” means any waiver, exemption, variance, franchise, permit,
authorization, consent, ruling, certification, license or similar order of or from, or filing or
registration with, or notice to, any Governmental Authority that authorizes, approves, limits or
imposes conditions upon a specified activity.
“Permitted Encumbrances” means (a) Liens for Taxes and other governmental
charges and assessments which are not yet due and payable, (b) statutory Liens (including
mechanics’ and materialmen’s liens and other like Liens) arising in the ordinary course of
business securing payments not yet due and payable, (c) all exceptions set forth in the
Preliminary Title Report that the Purchaser deems, in its reasonable discretion, are not material
in amount, individually or in the aggregate, or could not detract other than in an immaterial
respect from the value of, or impair other than in an immaterial respect the existing or proposed
use of the Project or the Project Assets affected by such exception, (d) Liens, encumbrances or
title imperfections with respect to the Project or the Project Assets created by or resulting from
the acts or omissions of the Purchaser, and (e) subject to the last sentence of Section 2.2(d),
Liens in favor of the Project Lender.
“Permitting Milestone” has the meaning set forth in Section 2.4.
“Person” means an individual, partnership, joint venture, corporation, limited
liability company, trust, association or unincorporated organization, or any Governmental
Authority.
“Pre-Closing Environmental Conditions” means those Hazardous Substances
present in the soil or groundwater or both, or in above-ground or underground structures,
equipment, fixtures or personal property, at the Project Site or the Additional Real Property that
were present in the soil or groundwater or both, or in above-ground or underground structures,
equipment, fixtures or personal property, at the Project Site or the Additional Real Property on or
prior to the Closing Date, and any migration or release of those Hazardous Substances.
“Preliminary Title Report” has the meaning set forth in Section 11.6.
“Project” means the Facility, the Interconnection Facilities, the Project Site, the
Additional Real Property, and the other Project Assets as more fully described in Section 2.2
herein.
“Project Assets” has the meaning set forth in Section 2.2(c).
“Project Company” has the meaning set forth in the introductory paragraph
hereto.
“Project Completion” means the date on which each of the following has
occurred, as set forth in a certificate of the Seller, countersigned by the Purchaser: (a) the
conditions to Substantial Completion have been and remain satisfied; (b) Performance Tests have
been completed that satisfactorily demonstrate the Project has achieved the Performance
{00059413.DOC;9}OHS East:9397238.1
12
Guarantees, or, if the Performance Guarantees have not been fully achieved, the Purchase Price
has been reduced in accordance with Section 3.5; (c) “Project Completion” [INSERT OTHER
APPLICABLE TERM FROM EPC CONTRACT IF NECESSARY] shall have occurred under
the EPC Contract, and all punchlist items and other minor items of work associated with the
Project that were not completed as of Substantial Completion shall have been completed to the
Purchaser’s satisfaction; (d) the Seller shall have delivered to the Purchaser (i) all Final As-Built
Drawings and Documentations, and (ii) copies of final lien waivers executed by the EPC
Contractor, each other Contractor, and each subcontractor that has furnished more than $1
million of goods and services for the Project individually or in the aggregate; (e) there shall be
no Liens on the Project or any Project Assets other than Permitted Encumbrances; and (f) there
shall be no outstanding warranty claims under Article 9.
“Project Completion Component” means the Project Completion Withheld
Amount, plus (if the result of x – y below is a positive number) or minus (if the result of x – y
below is a negative number), the absolute value of ninety-five percent (95%) of the difference
between (x) the amount of the Purchase Price reduction determined pursuant to Section 3.5 as of
the Closing Date, and (y) the amount of the Purchase Price reduction determined pursuant to
Section 3.5 using the results of the final Performance Test, if any, conducted after the Closing
Date in accordance with Section 2.9, minus, if Project Completion has not occurred on or before
the Project Completion Deadline, the actual cost to Purchaser of (or, if not completed within one
hundred eighty (180) days after the Project Completion Deadline, Purchaser’s estimate of the
cost of) completing all punch list items, the other minor items of work at the Project that are not
completed as of the Project Completion Deadline, and the remaining costs of achieving Project
Completion.
“Project Completion Deadline” means the first to occur of (i) the Date Certain,
and (ii) the date that is ninety (90) days after the Closing Date.
“Project Completion Withheld Amount” means an amount determined by the
Purchaser as of the Closing Date that is equal to the sum of (x) two hundred percent (200%) of
the Purchaser’s estimate of the cost of completing all punch list items and other minor items of
work at the Project that are not completed as of the Closing Date, plus (y) the Purchaser’s
estimate of the remaining costs of achieving Project Completion.
“Project Lender” means one or more lenders, noteholders or bondholders (or
trustees therefor), credit enhancers or other Person that lends money or provides debt financing
to Seller or the Project Company in connection with the development and construction of the
Project.
“Project Milestones” means the events (and the corresponding dates by which
they must be achieved) set forth on Schedule 2.4 by which certain phases of the Project’s
development shall be completed.
“Project Site” has the meaning set forth in Section 2.2(c)(1).
“Proposal Request” has the meaning set forth in Section 2.2(e)(4)(ii).
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“Prudent Utility Practices” means any of the practices, methods and acts engaged
in or approved by a significant portion of the electric utility industry in the State of California
during the relevant time period, or any of the practices, methods or acts which, in the exercise of
reasonable judgment in light of the facts known at the time the decision was made, could have
been expected to accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety, expedition and compliance with Governmental Rules. Prudent
Utility Practice is not intended to be limited to the optimum practice, method or act to the
exclusion of all others, but rather to be a spectrum of reasonable and prudent practices, methods,
standards and procedures.
“Purchase Price” means [______________________] Dollars [($___________)],
[INSERT THE FOLLOWING IF THE SELLER ELECTS TO INDEX THE PURCHASE
PRICE: as such amount may be adjusted pursuant to the following formula:
[Unindexed Price] + [Indexed Price] * Inflation Index,
[Unindexed Price to be determined as the portion of the Purchase Price the Seller elects not to
index and Indexed Price to be determined as the portion of the Purchase Price the Seller elects to
index]
where:
The Inflation Index means the amount equal to the quotient of the Gross Domestic
Product Implicit Price Deflator, or GDP Deflator, as published by the United States Department
of Commerce, Bureau of Economic Analysis (“Deflator”) that is two quarters prior to [INSERT
A DATE SELECTED BY THE SELLER WHICH IS NO LATER THAN 30 DAYS AFTER
THE EXPECTED DATE OF THE CLOSING OF THE PROJECT’S CONSTRUCTION
FINANCING], divided by the Deflator for the quarter that is two quarters prior to the Effective
Date],
[and] as such amount may be [further] adjusted pursuant to Section 2.2(e)(4)(ii), 2.6, or 3.6.
[Should the Deflator be discontinued, an index specified by the appropriate government agency,
if any, shall be used. If no replacement index is specified, a new index that most accurately
reflects changes in the costs to permit, design, design and construct the Project shall be
substituted by agreement of the Parties’ authorized representatives. If no agreement regarding a
replacement index is reached in a timely manner, the dispute shall be resolved in accordance
with Section 15.9.]
“Purchaser” has the meaning set forth in the introductory paragraph of this
Agreement.
“Purchaser Claims” has the meaning set forth in Section 12.2(a).
“Purchaser Group” has the meaning set forth in Section 12.2(a).
“Purchaser Operations Staff” has the meaning set forth in Section 8.16.
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“Purchaser’s Written Approval” means the right of the Purchaser to review and
approve of an aspect of the development of the Project or another matter as expressly specified in
this Agreement, which approval this Agreement specifies is to be provided in writing. The
Seller shall seek in writing Purchaser’s Written Approval as specified in this Agreement by the
dates specified in this Agreement (or if a date is not specified, when the Seller reasonably
requests), and the Purchaser shall provide its approval, or its denial thereof, within twenty (20)
Business Days (unless another period is specified herein) of such submission. If the Purchaser
determines to deny its approval, it shall provide a brief written summary of the reasons for its
determination. The Purchaser’s Written Approval of any aspect of the development of the
Project (whether deemed or actual) shall not affect the Seller’s and the Project Company’s
obligation to provide the complete fully operational Project in accordance with the requirements
of this Agreement or any of the Seller’s or the Project Company’s other obligations hereunder, or
constitute a waiver of the Purchaser’s rights with respect thereto. Each Purchaser’s Written
Approval is given by the Purchaser in reliance upon, and subject to, full and satisfactory
performance by the Seller and the Project Company of its obligations hereunder.
“Qualified Institution” means a commercial bank or trust company organized
under the Laws of the United States or a political subdivision thereof, with (i) Credit Rating of at
least “A” by S&P and “A2” by Moody’s, if such entity is rated by both S&P and Moody’s or (b)
“A” by S&P or “A2” by Moody’s if such entity is rated by either S&P or Moody’s but not both,
and (ii) having total assets of at least $10,000,000,000 and capital and surplus of at least
$1,000,000,000.
“Referral Date” has the meaning set forth in Section 15.9(b).
“Regulatory Approval” means a final and non-appealable order or orders of each
regulatory or other governmental body designated by the Purchaser, including without limitation
the CPUC, without conditions or modifications unacceptable to the Purchaser, which, in the case
of Regulatory Approval by a governmental body other than the CPUC grants the approvals
requested in the application therefor, and in case of Regulatory Approval by the CPUC, does the
following (referred to herein as “CPUC Approval”):
1.
Approves this Agreement in its entirety, including payments to be made
by the Purchaser and timely cost recovery at the commencement of the Project’s
dedication to utility service, subject only to CPUC review with respect to the
reasonableness of the Purchaser’s administration of the Agreement, and finds the
Purchaser’s entry into and performance under the Agreement to be reasonable;
and
2.
Authorizes the Purchaser to recover payments under the Agreement in
utility revenue subject only to CPUC review with respect to the reasonableness of
the Purchaser’s administration of the Agreement.
“Regulatory Disclosure” has the meaning set forth in Section 11.3.
“Related Agreements” means the Confidentiality Agreement, [LIST OTHERS IF
APPLICABLE].
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15
“Remediation” means any or all of the following activities to the extent they
relate to or arise from the presence of Hazardous Substances in the soil or groundwater or both,
or in above-ground or underground structures, equipment, fixtures or personal property, at the
Project: (i) performing any activities that are remedial or removal actions under CERCLA, or
result in response costs as defined under CERCLA, including monitoring, investigation, cleanup,
containment, remediation, removal, mitigation, response or restoration work; (ii) obtaining any
Governmental Approvals, Permits or Consents necessary to conduct any such work; (iii)
preparing and implementing any plans or studies for such work; (iv) obtaining a written notice
from all Governmental Authorities with jurisdiction over the Project Site or the Additional Real
Property under Environmental Laws that no material additional work is required by such
Governmental Authority; and (v) any other activities reasonably determined by the Seller to be
necessary or appropriate or required under Environmental Laws to address the presence of
Hazardous Substances.
“Required Approval(s)” has the meaning set forth in Section 11.1(b).
“Required Design” means the design and construction of the Project such that it
complies with the Specifications, National Fire Protection Association guidelines, all
Governmental Rules, codes, and requirements of NERC, ERO, WECC, CAISO and Prudent
Utility Practices, and has a design and planned economic life of not less than thirty (30) years,
and otherwise complies with the requirements of this Agreement.
“S&P” means Standard and Poor’s Rating Group.
“Section 203 Approval” means an order issued by FERC approving the transfer
of any Project Asset to the Purchaser to the extent any Party determines that such approval is
required by Section 203 of the Federal Power Act and the regulations issued thereunder.
“Seller” has the meaning set forth in the introductory paragraph of this
Agreement.
“Seller Claims” has the meaning set forth in Section 12.3(a).
“Seller Group” has the meaning set forth in Section 12.3(a).
“Specifications” has the meaning set forth in Section 2.2(e).
“Substantial Completion” means the date on which each of the following has
occurred, as set forth in a certificate of the Seller, countersigned by the Purchaser: (a) the
conditions to Mechanical Completion have been and remain satisfied; (b) all services, materials
and equipment comprising part of the Project shall have been completed in accordance with the
requirements of this Agreement (other than minor punch list items acceptable to the Purchaser
that do not affect the performance or reliability of the Project and for which arrangements
satisfactory to the Purchaser are in place that will correct such items); (c) Performance Tests
have been completed that satisfactorily demonstrate the Project has achieved the Minimum
Performance Guarantees; (d) the CEMS is fully operational and is certifiable; and (e)
“Substantial Completion” [INSERT OTHER APPLICABLE TERM FROM EPC CONTRACT
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16
IF NECESSARY] shall have occurred under the EPC Contract, and care, custody and control of
the Project shall have been transferred to the Seller under the terms of the EPC Contract.
“Tax” means any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment, disability, real
property (including assessments, fees or other charges based on the use or ownership of real
property), personal property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated tax, or other tax of any kind whatsoever, including any interest, penalty or
addition thereto, whether disputed or not, including, without limitation, any item for which
liability arises as a transferee or successor-in-interest.
“Tax Claim” has the meaning set forth in Section 11.4(e).
“Termination Fee” means a sum equal to [_________________] [determined
using $20,000 per MW of Guaranteed Base Electrical Output] plus [____________] [determined
using $4,000 per MW of Guaranteed Base Electrical Output] multiplied by the number of
months elapsing between the Effective Date and the date the termination of this Agreement is
effective, minus three months, but in no event shall the Termination Fee exceed
[______________] [determined using $100,000 per MW of Guaranteed Base Electrical Output].
“Third Party Claim” means a claim by a Person that is not a member of the Seller
Group or the Purchaser Group, including any claim for the costs of conducting Remediation or
seeking an order or demanding that a Person undertake Remediation.
“Title Company” means [Chicago Title Insurance Company] or such other title
insurance company as shall be acceptable to the Purchaser.
“Tolling Agreement” means an agreement to be entered into between Purchaser
and the Project Company containing the terms set forth in Exhibit S (and such other terms and
conditions as are mutually acceptable to the Project Company and the Purchaser) pursuant to
which the Project Company will sell the Purchaser Electrical Product produced by the Facility
during the Delivery Period.
“Turnover Package” means the materials designated on Appendix 2 to be
provided by Seller to the Purchaser pursuant to Section 5.2.
“UCC” means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
“Voluntary Change Order” has the meaning set forth in Section 2.2(e)(4)(ii).
“Water Rights” means all Governmental Approvals, Permits and Consents and
other agreements and rights permitting or otherwise authorizing the consumption and other use
of water for the development, construction, testing and commercial operation of the Project as
contemplated in Exhibit R and related purposes (such as drinking water and sanitation).
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“WECC” means the Western Electricity Coordinating Council.
1.2
Interpretation. In this Agreement, unless a clear contrary intention appears:
(a)
the singular number includes the plural number and vice versa;
(b)
reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are permitted by this Agreement, and reference
to a Person in a particular capacity excludes such Person in any other capacity;
(c)
reference to any gender includes each other gender;
(d)
reference to any agreement (including this Agreement), document or
instrument means such agreement, document or instrument as amended or modified and in effect
from time to time in accordance with the terms thereof and, if applicable, the terms hereof;
(e)
reference to any Article, Section, Schedule or Exhibit means such Article,
Section, Schedule or Exhibit to this Agreement, and references in any Article, Section, Schedule,
Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit
or definition;
(f)
“hereunder,” “hereof,” “hereto” and words of similar import are references
to this Agreement as a whole and not to any particular Section or other provision hereof or
thereof;
(g)
“including” (and correlative terms) means “including without limitation”
and “including, but not limited to;”
(h)
relative to the determination of any period of time, “from” means “from
and including,” “to” means “to but excluding” and “through” means “through and including;”
(i)
examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;
(j)
reference to any law (including statutes and ordinances) means such law as
amended, modified codified or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder; and
(k)
except where the context otherwise requires, “or” shall have the inclusive
meaning frequently designated by “and/or”.
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ARTICLE 2
DEVELOPMENT AND CONSTRUCTION OF THE PROJECT
2.1
Development of Project for Sale to Purchaser. Subject to all the terms and
conditions of this Agreement, the Seller and the Project Company, jointly and severally, agree to
develop the Project (including obtaining the Project Site and all other necessary real property
interests, Governmental Approvals, Permits and Consents required to develop, construct, test and
operate the Project), finance the Project, and cause the Project to be constructed and
commissioned, to have achieved Mechanical Completion and Substantial Completion and be
ready for placement into regular commercial operation by the Guaranteed Commercial
Availability Date in accordance with the standards described in this Agreement, all on a turnkey
basis at its own risk and at no cost or expense to the Purchaser other than indirectly through its
payment of the Purchase Price, all as further described in Article 2 of this Agreement. Subject to
the satisfaction of the conditions precedent to Closing set forth in Articles 13 and 14, including
achievement of Substantial Completion, at the Closing the Seller and the Project Company will
sell, transfer, assign and deliver the Project to the Purchaser, and the Purchaser will purchase and
accept the Project and pay to the Seller the Initial Component of the Purchase Price (minus the
Project Completion Withheld Amount, in accordance with Section 3.4(a)), all as further
described in Article 3 of this Agreement.
2.2
Seller’s and Project Company’s Development Obligations. As among the Parties,
the Seller and the Project Company shall be solely responsible for and the Purchaser shall have
no obligation or liability with respect to, the development, financing, construction, completion,
testing and readying for commercial operation and transfer to the Purchaser of the completed,
integrated, fully operational Project, it being understood that the Purchaser has engaged the
Seller to perform all such activities at Seller’s sole risk, as well as all other activities and services
that may be necessary or appropriate for the Seller to provide the completed Project to the
Purchaser. The Seller’s and the Project Company’s development obligations shall include the
following:
(a)
Project Ownership. Causing the Project and all Project Assets to be held
by the Project Company; at the Purchaser’s election, at the Closing, in lieu of conveying the
Project and the Project Assets, the Seller shall sell and transfer to the Purchaser all ownership
interests in the Project Company free and clear of all Liens and encumbrances other than
Permitted Encumbrances and those in favor of any lenders under the Financing Arrangements if
assumed by the Purchaser as provided under Section 2.2(d);
(b)
Project Planning and Administration. Preparing all Project development
plans and studies, entering into all arrangements for professional and development services,
negotiating and entering into all contracts, agreements and leases (including the Assigned
Agreements, each of which shall be subject to Purchaser’s Written Approval), maintaining the
books, documents and records of the Project and the Project Company, and performing or causing
to be performed all administrative services, in each case necessary or appropriate for the Seller to
provide the completed Project to the Purchaser;
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(c)
Asset Acquisition. The acquisition by the Project Company of all assets
(whether tangible or intangible), rights, agreements, Governmental Approvals, Permits, Consents
and other interests required for the construction, commissioning, completion, testing and
operation of the Project by the Seller or the Project Company and for the ownership, maintenance
and commercial operation of the Project by the Purchaser (the “Project Assets”), all as
contemplated by this Agreement, including, but not limited to:
(1)
All real property rights and interests, including fee simple title
(or a leasehold interest under a ground lease having a term of not less than seventy-five (75)
years and other terms and conditions acceptable to the Purchaser in its sole discretion) with
respect to the real property on which the Facility will be located (the “Project Site”), and all other
easements, rights-of-way and interests in real property on which the other physical components
of the Project are located, including interests on which any Interconnection Facilities are located,
on terms acceptable to the Purchaser in its sole discretion (collectively, the “Additional Real
Property”);
(2)
All improvements, buildings, structures and equipment,
including the Facility, all interconnection and transmission facilities required to deliver Electrical
Product from the Facility to the Interconnection Point, including those described in Exhibit A
(the “Electrical Interconnection Facilities”), and all pipelines, compressors and other facilities
and equipment necessary to transport fuel to the Facility from the Fuel Interconnection Point,
including those described in Exhibit B (the “Fuel Interconnection Facilities” and, collectively
with the Electrical Interconnection Facilities, the “Interconnection Facilities”);
(3)
All Water Rights required for operation of the Project, all
Emission Rights required for construction and operation of the Project, other than those that may
only be obtained on an annual (or other periodic) basis, including all emission reduction credits
and offsets, all other Emissions Rights required for operation of the Project through the Closing,
and all Intellectual Property;
(4)
All books, records, documents, drawings, reports, operating
data, computer programs, Initial Spare Parts and other tangible and intangible personal property
necessary for the Project and its components to operate as contemplated by this Agreement
including subcontracts, correspondence, commissioning turnover packages, startup logs, test
results and as-builts; and
(5)
All Governmental Approvals, Permits and Consents (other than
any thereof for which the Purchaser is responsible under Section 11.1(a)), each of which shall be
subject to Purchaser’s Written Approval.
(d)
Project Financing. Arranging and entering into (or causing the Project
Company to enter into) any financing arrangements necessary to allow the Seller to cause the
Project to be constructed, completed, tested, readied for commercial operation and otherwise be
prepared for transfer to the Purchaser at the Closing as provided in this Agreement (the
“Financing Arrangements”). To the extent any Financing Arrangements entered into by the
{00059413.DOC;9}OHS East:9397238.1
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Project Company include any debt component that would remain in effect after the Closing, the
Seller shall cause the terms of such debt component to provide that, at the Purchaser’s election,
the Purchaser may in its sole discretion assume such financing without the payment of any
premium or the imposition of any terms that are less favorable than those that would be applicable
to the Project Company in the absence of any assumption by the Purchaser. If the Purchaser does
not elect to assume any such financing, any Liens on the Project associated with such financing
must be released prior to the Project’s being transferred to the Purchaser at the Closing.
(e)
EPC Contract; Facility Construction. Entering into, performing the
owner’s obligations under, and causing the Facility to be constructed pursuant to, a lump-sum,
fixed-price turnkey engineering, procurement and construction contract (the “EPC Contract”)
with a qualified and creditworthy contractor (the “EPC Contractor”). The Purchaser agrees that
the EPC Contractor (and any guarantor of the EPC Contractor under a payment and performance
guaranty acceptable to the Purchaser in its sole discretion) shall be an entity acceptable to the
Purchaser in its sole discretion based on the Purchaser’s assessment of the EPC Contractor’s (or
its guarantor’s) creditworthiness, past performance and general suitability to construct the Project.
The EPC Contract must at a minimum include terms and conditions at least as favorable to the
Seller and the Purchaser as those set forth on Appendix 1 hereto [NOTE: APPENDIX 1 WILL
BE THE TERM SHEET NEGOTIATED BETWEEN THE SELLER AND THE EPC
CONTRACTOR, WHICH MUST BE CONSISTENT WITH THE TERM SHEET ATTACHED
TO THIS FORM AGREEMENT AS APPENDIX 1], including warranties regarding materials,
workmanship and design of the Facility consistent with those set forth in Sections 9.1 and 9.3
below. The EPC Contract shall also include a detailed Scope of Work/Technical Specification for
the Project that is consistent in form and substance with the Technical Specifications set forth in
Exhibit C (the “Specifications”) and the Generation Operating Characteristics set forth in Exhibit
E. Not less than sixty (60) days prior to its planned execution of the EPC Contract, the Seller
shall submit the proposed form of the EPC Contract (including its Scope of Work/Technical
Specification) to the Purchaser. Within twenty (20) days of receipt, the Purchaser shall notify the
Seller of any changes to the EPC Contract that it believes are necessary in order for the Facility
and the EPC Contract to comply with the requirements of this Agreement. The Seller and the
Purchaser also agree with respect to the EPC Contract as follows:
(1)
The Seller may not amend or permit the Project Company to
amend the EPC Contract, including entering into any supplements or change orders or granting
any waivers to the EPC Contractor, in any manner that would modify or have the effect of
modifying the Specifications, performance standards, or tests or the EPC Contractor’s
obligations under the EPC Contract, or are otherwise inconsistent with the Terms and Conditions
set forth in Appendix 1.
(2)
The Seller shall afford the Purchaser reasonable opportunity to
review and comment on any materials submitted by the EPC Contractor to the Seller for review.
Seller shall not approve any of the documents specified in Schedule 2.2(e) without receiving the
Purchaser’s Written Approval. The Seller shall promptly, and in no event later than five (5)
Business Days after receipt thereof, forward to the Purchaser copies of any materials submitted
by the EPC Contractor for the Seller’s review with an explanation from the Seller of the contents
of such submittals and any pertinent deadlines, time constraints or other considerations relevant
{00059413.DOC;9}OHS East:9397238.1
21
for the Purchaser’s review of such materials. As promptly as possible thereafter using
Commercially Reasonable Efforts (and taking into account the quantity of materials submitted
for the Purchaser’s review at the time), the Purchaser shall provide the Seller with its comments
or suggestions to the materials submitted by the EPC Contractor or the Purchaser’s Written
Approval of the same to the extent required above in this paragraph.
(3)
The Seller shall cause the EPC Contractor to provide the
Purchaser (including any engineering or other consultant engaged by the Purchaser) with rights
to inspect the work performed under the EPC Contract, including the manufacture of major
equipment components of the Facility, to confirm that such work complies with the
Specifications, the Required Design and the other requirements of this Agreement. In
connection with such rights, the Seller grants to the Purchaser a specific right of access to the
Project and the Project Site and the Additional Real Property to monitor and inspect the
development and operation of the Project, as further described in Section 8.1. The Seller will
additionally cause the EPC Contractor to grant the Purchaser a specific right of access to the
Project and the Project Site and Additional Real Property during any time period in which EPC
Contractor has control of the Project consistent with the Purchaser’s right of access set forth in
Section 8.1. The Purchaser’s inspection rights described hereunder shall include, but not be
limited to, receipt of regular (at least monthly) construction reports, attendance at regular (at least
monthly) design review meetings and progress meetings, and the right to inspect the work
physically (on-site and at equipment manufacturing facilities).
(4)
(i)
If the Purchaser determines that any work under the EPC
Contract and other Construction Contracts is not being performed consistent with the
Specifications, the Required Design and the other requirements of this Agreement, the Purchaser
may so notify the Seller, and the Seller shall cause the EPC Contractor or other Contractor, as
applicable, to revise, modify or reperform such work such that it will comply with the
Specifications, the Required Design and the other requirements of this Agreement.
(ii)
If the Purchaser desires to initiate a change order that is not
necessary to ensure that the Project complies with the Specifications, the Required Design, the
terms and conditions set forth in Appendix 1 and the other requirements of this Agreement (a
“Voluntary Change Order”), the Purchaser shall give the Seller a written request (each, a
“Proposal Request”) setting forth in detail the nature of the requested change. Upon receipt of a
Proposal Request, the Seller shall initiate discussions with the EPC Contractor to implement the
Voluntary Change Order and return to the Purchaser two (2) completed copies of a written
proposal (each, a “Change Order Proposal”) setting forth in detail a stipulated sum negotiated
with the EPC Contractor as an adjustment to the Purchase Price to cover the additional costs of
implementing the Voluntary Change Order set forth in the Proposal Request, together with any
other proposed adjustments resulting from such proposed Voluntary Change Order. The
stipulated sum set forth in each Change Order Proposal shall equal the amount obtained by (a)
calculating the difference of (i) the Seller’s good faith estimate of the actual costs of the
proposed Voluntary Change Order, but including only such costs as are attributable to and
necessarily incurred as part of the proposed Voluntary Change Order, and (ii) the Seller’s good
faith estimate of the cost savings, if any, that will result from the replacement or obviation of
previously planned work by the performance or supply of the proposed Voluntary Change Order.
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Adjustments, if any, shall be limited to those directly attributable to and necessarily incurred as a
result of the proposed Voluntary Change Order. Each Change Order Proposal shall be
accompanied by appropriate data reasonably acceptable to the Purchaser supporting the proposed
adjustments therein, including bids, cost estimates, quotations from suppliers and wage
schedules. The Purchaser shall be obligated to pay the Seller’s reasonable and actual costs of
preparing a Change Order Proposal for a Voluntary Change Order prepared in response to a
Proposal Request if the same does not result in the issuance of a Change Order Certificate.
If the Purchaser accepts a Change Order Proposal, one or more of the Purchase Price (or
the timing of the portion of the Purchase Price attributable to the Voluntary Change Order), the
Project Milestones, the Performance Guarantees, the Minimum Performance Guarantees, the
Guaranteed Commercial Availability Date or any other affected provision of the Agreement shall
be adjusted accordingly, if necessary to implement the Voluntary Change Order, as mutually
agreed by the Purchaser and the Seller. To the extent that a Voluntary Change Order (whether
individually or cumulatively with other Voluntary Change Orders) adversely affects or enhances
the Seller’s ability to develop the Project or any obligation under this Agreement or increases or
decreases the cost of developing the Project, or causes a delay or shortening of the completion of
the Project, the Seller or the Purchaser, as applicable, shall be entitled to an equitable adjustment
to, as applicable, the Purchase Price, the Project Milestones, the Performance Guarantees, the
Minimum Performance Guarantees, the Guaranteed Commercial Availability Date or any other
affected provision of the Agreement to account for such effect. Notwithstanding the foregoing,
if the Seller does not achieve Substantial Completion or otherwise satisfy the conditions
precedent to Closing set forth in Article 13, and the Agreement is subsequently terminated,
within thirty (30) days of such termination the Seller shall reimburse the Purchaser for any
amounts paid by the Purchaser in connection with any Voluntary Change Order or work
performed thereunder and such repayment obligation(s) shall be guaranteed or otherwise covered
by the credit support set forth in Section 11.2.
Acceptance of a Change Order Proposal shall be indicated through a Change Order
Certificate in the form of Exhibit D that is approved and signed by each of the Seller and the
Purchaser (“Change Order Certificate”), and the adjustments shall be as set forth in such Change
Order Certificate. Notwithstanding any other provision hereof, each Voluntary Change Order
must be authorized by a Change Order Certificate. Any work performed by or on behalf of the
Seller pursuant to a proposed Voluntary Change Order for which the Seller has not received a
Change Order Certificate shall be done at the Seller’s own risk, and the Seller shall not be
entitled to any compensation for such work unless and until a Change Order Certificate is
approved. If any unauthorized work does not meet the requirements of the Agreement, Seller
shall cause Contractor to correct, replace or repair, as applicable, such work at its own expense.
The requirements of this Section 2.2(e) shall not excuse the Seller from acting in an emergency
to prevent imminent personal injury or property damage. If the Purchaser and the Seller agree to
a Change Order Certificate, the Seller shall submit to the Purchaser no later than the fifth (5th)
Business Day of each calendar month invoices, statements, payroll data and other evidence of the
actual cost of the work attributable to the Voluntary Change Order in respect of the immediately
preceding calendar month that the Purchaser may reasonably require as provided in the Change
Order Proposal. Agreement on any Voluntary Change Order shall constitute a final settlement
{00059413.DOC;9}OHS East:9397238.1
23
on all items covered therein, subject to performance thereof and payment therefor pursuant to
this Agreement.
(5)
No observations or inspections by the Purchaser (including any
engineering or other consultant engaged by the Purchaser), nor any approval, acceptance or
comment by the Purchaser, shall be construed to impose on the Purchaser any control of any
portion of the work of the Seller under this Agreement, or relieve the Seller or the EPC
Contractor of any of its duties, liabilities or obligations under this Agreement or the EPC
Contract, as applicable. The Purchaser shall not be liable to the Seller, the Project Company, the
EPC Contractor or any other Person in connection with the rendering of any statement, comment,
approval or other service contemplated under this Agreement or the EPC Contract.
(6)
The Seller shall cause the terms of the EPC Contract to provide
that the EPC Contract may be assigned to the Purchaser at the request of the Purchaser following
a default hereunder by the Seller entitling the Purchaser to terminate this Agreement pursuant to
Section 15.13. Upon any such assignment, the Purchaser will perform and be responsible for any
obligation of the owner thereunder arising from and after the date of the assignment, and the
Seller shall remain responsible for the payment and performance of any liabilities and
obligations arising prior to the date of the assignment.
(f)
Electrical Interconnection Facilities. Constructing or causing to be
constructed the Electrical Interconnection Facilities, and arranging and entering into all
interconnection and related agreements (including special facilities agreements) required to
interconnect the Project and deliver electricity to the Purchaser’s transmission system at the
Interconnection Point. The Seller shall be responsible for paying all costs due under such
agreements incurred or payable through and including the Closing Date, including costs of any
required interconnection facilities and system upgrades payable under each interconnecting
utility’s and the CAISO’s tariffs.
(g)
Fuel Interconnection Facilities and Consumables. Constructing or causing
to be constructed the Fuel Interconnection Facilities, and arranging and entering into all
agreements required to interconnect the Project such that fuel may be supplied to the Facility from
the Fuel Interconnection Point in quantities sufficient to allow the Facility to operate at its
maximum design capacity (including duct firing, if applicable), including payment of costs of any
required Fuel Interconnection Facilities and associated systems upgrades. Prior to the Purchaser’s
purchase of the Project, the Seller shall be responsible for arranging, securing and obtaining all
contract rights, real property rights, Governmental Approvals and Permits required and paying for
the supply and transportation to the Project of all fuel, water, chemicals and other consumables
required by the Project, including fuel for the commissioning, start-up and Performance Tests of
the Project.
(h)
Other Project Components. Constructing or causing to be constructed, or
installing or causing to be installed, each other physical component of the Project that is not
subsumed within the Facility, the Electrical Interconnection Facilities or the Fuel Interconnection
Facilities.
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(i)
Operating and Maintenance Manual. Not later than thirty (30) days prior to
the commencement of training of the Purchaser Operations Staff pursuant to Section 2.2(j), the
Seller shall submit for Purchaser’s Written Approval a draft of the complete equipment and
system instructions and procedures for the operation and maintenance of the Project (or specified
subset of equipment, as the context requires) at the capacity, efficiency, safety and reliability
levels contemplated by this Agreement, including the Specifications, each Contractor’s,
manufacturer’s, vendor’s, and supplier’s recommended spare parts lists, all safety information and
any precautionary measures for the Project. If the Purchaser does not approve the draft, it shall
provide comments thereon to Contractor within ten (10) days after receipt, and the Seller
promptly shall incorporate or otherwise respond to the Purchaser’s comments and submit a
revised draft for Purchaser’s Written Approval. Such procedure shall be repeated until receipt of
Purchaser’s Written Approval therefor. Not later than ten (10) days before such scheduled
commencement, the Seller shall prepare in individually numbered bound volumes and deliver to
the Purchaser ten (10) sets of such approved operating manual for the Project; however, the Seller
shall be required to provide only five (5) sets of books, manuals and other documents generated
by equipment manufacturers or vendors.
(j)
Training. The Seller shall provide comprehensive training prior to the
commissioning of the Project as set forth in Exhibit Q. The Seller shall cause the EPC Contractor
to coordinate all training sessions in a manner sufficient to provide the Purchaser’s designated
operating personnel with an adequate understanding of the basic and principal design, and the
operation and maintenance aspects, of each dimension of the Project as an integrated whole. The
Seller shall notify the Purchaser of the scheduled duration of the Purchaser Operations Staff
training; provided, that the training may not commence earlier than two months prior to the
beginning of the Equipment Startup and Acceptance Period. The Seller’s training of the
Purchaser Operations Staff shall include training on Project-specific operating information, Seller
and EPC Contractor procedures and guidelines and other information relevant or necessary for the
Purchaser Operations Staff to assist in the operation and testing of the Project during the
Equipment Startup and Acceptance Period.
(k)
Development Schedules and Monthly Reporting.
The
Seller,
in
coordination with the EPC Contractor, shall develop an integrated level 3 schedule covering the
engineering, design, procurement, manufacturing, construction, start-up and testing, and
commissioning activities for the Project to be provided to the Purchaser. Such schedule shall also
show the Project’s critical path(s) and include all Project Milestones and Purchaser interfaces.
The Seller, in coordination with the EPC Contractor, shall develop and maintain additional
schedules related to engineering, design, permitting, procurement, manufacturing of major
components, and start-up and testing as required to monitor, manage and control the development
of the Project, covering work to be performed by the Seller, the EPC Contractor and other
Contractors and third parties. These additional schedules shall be provided to the Purchaser for
informational purposes to the extent such schedules do not include Seller-proprietary
information. The Seller shall also provide reasonably detailed and updated written progress
reports to the Purchaser not less than once per month (“Monthly Reports”) regarding the status of
development activities and describing the work performed and all milestones achieved during the
month, including (1) procurement, permitting and engineering status, (2) change order status, (3)
quality issues including non-conformances and dispositions, (4) safety and industrial relations, (5)
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descriptions of the work and related milestones anticipated to be performed or achieved by the
next month and (6) identifying significant achievements and describing development problems or
other matters that could result in any delays (and proposed mitigation efforts to overcome such
development problems or delays). The Monthly Reports shall also include a schedule showing
progress to date, any failures to meet the current schedule of activities and a forecast of activities
remaining to be performed according to the schedules described in this Section 2.2(k), the
monthly progress reports of the EPC Contractor and other material Contractors (including the
turbine manufacturer), any technical bulletins for the class of turbines to be installed as part of the
Project, and any other information reasonably requested by the Purchaser. The Seller shall meet
with the Purchaser on a monthly basis to discuss the contents of the Monthly Reports and other
aspects of the work on the Project and shall also timely meet with the Purchaser at such other
times as the Purchaser requests to discuss the Project and its development.
2.3
Guaranteed Commercial Availability Date.
(a)
Guaranteed Commercial Availability Date. The Seller agrees to cause the
Commercial Availability Date to occur not later than [________] (as the same may be adjusted
pursuant to Section 2.3(c), 2.2(e)(4)(ii) or 10.1, the “Guaranteed Commercial Availability Date”).
(b)
Delays in Commercial Availability Date. For each day (or part thereof)
that the Commercial Availability Date is delayed beyond the Guaranteed Commercial Availability
Date, the Seller shall pay to the Purchaser, as liquidated damages and not as a penalty, an amount
equal to $250 per MW of Guaranteed Base Electrical Output for days in the months of June
through September and $62.25 per MW of Guaranteed Base Electrical Output for days in the
months of October through May (“Delay Damages”). If Delay Damages accrue in any calendar
month, the Seller shall pay such accrued Delay Damages by fifth (5th) Business Day of the next
calendar month. In addition to receiving Delay Damages, subject to Section 2.3(c), if the
Commercial Availability Date does not occur on or before the date that is twelve (12) months
after the Guaranteed Commercial Availability Date (the “Date Certain”), the Purchaser may, upon
five (5) days’ prior written notice to the Seller, elect to terminate this Agreement without liability
or further obligation of any kind on the part of the Purchaser, and the Seller within ten (10) days
after the effective date of such termination shall pay the Termination Fee as liquidated damages to
the Purchaser for the Seller’s failure to provide the Project and the Project Assets.
(c)
Force Majeure Extension of Guaranteed Commercial Availability Date.
The Guaranteed Commercial Availability Date and each Project Milestone shall be extended on a
day-for-day basis, not exceeding an aggregate extension of 365 days, to the extent that such
Project Milestone(s) or the Commercial Availability Date is delayed as a result of a Force
Majeure Event invoked by the Seller in accordance with Section 11.7. If such extensions exceed
365 days in the aggregate, then the Purchaser may terminate this Agreement by providing written
notice of the same to the Seller.
2.4
Project Milestones. The Seller shall cause the development and construction of
the Project to meet the schedule of Project Milestones set forth on Schedule 2.4. In the event that
completion of a particular Project Milestone is not achieved by the date such Project Milestone is
{00059413.DOC;9}OHS East:9397238.1
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to be completed as set forth on Schedule 2.4, the Purchaser and Seller shall agree on a revised
completion date for such Project Milestone that will allow the Commercial Availability Date to
be achieved before the Date Certain (each, a “Corrective Action Plan Deadline”), and the Seller
shall implement a corrective action plan acceptable to the Purchaser to meet the revised
completion date for such Project Milestone (each, a “Corrective Action Plan”). The Seller
thereafter shall diligently comply with such Corrective Action Plan and use its best efforts to
make any required changes or modifications to the EPC Contract to implement the Corrective
Action Plan. The Purchaser and the Seller’s agreement with such Corrective Action Plan shall
not affect any of the Purchaser’s rights or the Seller’s obligations under this Agreement. One
Project Milestone shall be that the Seller secures all Governmental Approvals and Permits
necessary to construct the Project on or before the First Permitting Deadline (the “Permitting
Milestone”), provided, that the Seller may extend the Permitting Milestone to the Final
Permitting Deadline by giving the Purchaser written notice in accordance with Section 15.11 of
such extension. Such written notice shall constitute the Seller’s waiver of its right to terminate
this Agreement under Section 15.13(a)(4).
2.5
Long-Term Service Agreements. At the Purchaser’s election, the Seller shall
arrange for (or enter into and assign to the Purchaser at Closing) long-term service agreements
with respect to major Project equipment on terms acceptable to the Purchaser. If such
agreements have not been entered into prior to the Effective Date, the Seller shall provide the
finalized agreements to the Purchaser and obtain Purchaser’s Written Approval of the same prior
to its execution as described below. Such agreements must at a minimum include terms and
conditions at least as favorable to the Seller and the Purchaser as those set forth on Appendix 3
hereto. Not less than sixty (60) days prior to its planned execution of any such agreement, the
Seller shall submit the proposed form thereof to the Purchaser to obtain the Purchaser’s Written
Approval. Within twenty (20) days of receipt, the Purchaser shall notify the Seller that it does
not object to the form of the such agreement and provide the Purchaser’s Written Approval, or
shall specify changes to such agreement that it believes are necessary or appropriate. The Seller
shall be responsible for causing changes to such agreement specified by the Purchaser to be
included in the executed agreement.
2.6
Spare Parts. As between the Seller and the Purchaser, the Seller shall procure the
start-up and operating spare parts needed for construction, start-up, testing and initial operation
of the Project through the Closing. In addition, the Seller shall at the Closing convey to the
Purchaser the operating spare parts that would customarily be maintained for facilities similar to
the Project in accordance with Prudent Utility Practices (including those set forth on Schedule
3.1(e)), as well as a list of spare parts that may be required under the terms of any long-term
service agreement the Purchaser requires pursuant to Section 2.5 (collectively, the “Initial Spare
Parts”). The Seller shall submit to the Purchaser for the Purchaser’s Written Approval a
recommended list of Initial Spare Parts at least six (6) months prior to the Closing Date. The
Purchaser may require the Seller to purchase additional Initial Spare Parts, provided that the
Purchase Price shall be increased by the supplier-invoiced cost thereof to the extent the total cost
of all Initial Spare Parts exceeds the amount specified in the previous sentence. The Seller shall
use all reasonable efforts to secure the lowest pricing obtainable for such additional Initial Spare
Parts. All Initial Spare Parts supplied hereunder shall be new and properly packaged for storage
and shall be subject to the warranty provisions in Article 9 herein.
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2.7
Performance Guarantees.
(a)
Performance Guarantees. At Closing the Seller guarantees that the Project
(or each piece of major equipment, if applicable) will satisfy the following performance
specifications as demonstrated during the applicable Performance Test other than the Base
Reliability Guarantee, which shall be achieved during a separate Base Reliability Test
(collectively, the “Performance Guarantees”), including any adjustments to reflect deviations
from base conditions to be calculated as set forth in the Approved Test Procedures. The Seller
agrees to exhaust all reasonable repair and replacement alternatives in order that the Project (or
the designated components thereof, as applicable) fully attains the Performance Guarantees. If
the Seller exhausts all reasonable repair and replacement alternatives but only the Minimum
Performance Guarantees are satisfied, then the Purchase Price shall be reduced as set forth in
Section 3.5.
(1)
Guaranteed Base Electrical Output. The Project shall produce
average net base electrical output (as measured at the Interconnection Point) of not less than
[_________] kW at one hundred percent (100%) output and corrected to 59° Fahrenheit and 60%
relative humidity (“ISO Conditions”) at the mean site elevation (the “Guaranteed Base Electrical
Output”) while satisfying the Guaranteed Emissions Limits (as defined below) continuously
throughout the entire Performance Test.
(2)
Guaranteed Net Heat Rate. The Project shall achieve an
average net heat rate of not more than [_________] Btu/kWh (HHV) at one hundred percent
(100%) combustion turbine[s] output operating on base load temperature control curve and
corrected to ISO Conditions at the mean site elevation (the “Guaranteed Net Heat Rate”) while
satisfying the Guaranteed Emissions Limits continuously throughout the entire Performance
Test. The Guaranteed Net Heat Rate shall be determined during the same Performance Test in
which the Guaranteed Base Electrical Output is determined.
(3)
Base Reliability Guarantee. The Project shall achieve during a
period of at least seven (7) consecutive days of uninterrupted operation (the “Base Reliability
Test”) an Availability of not less than ninety-seven percent (97%) while satisfying the
Guaranteed Emissions Limits continuously throughout the entire Performance Test (the “Base
Reliability Guarantee”). During such Base Reliability Test period, if the operation of the Project
is interrupted or shut down for any reason, other than due to the occurrence of a Force Majeure
Event, the Base Reliability Test shall be restarted for another period of seven (7) consecutive
days. If the interruption or shut down is caused by a Force Majeure Event or as a result of the
Project’s being dispatched off-line, the test period shall be extended for a period equal to the
duration of the interruption or shutdown.
(4)
Guaranteed Peak Electrical Output. [If Applicable: The Project
shall produce peak net electrical output (as measured at the Interconnection Point) during the
Performance Test of not less than [_____] kW at one hundred percent (100%) of the output of
the combustion turbine[s] [with full power augmentation ][if applicable] and corrected to the
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conditions specified in Exhibit F while satisfying the Guaranteed Emissions Limits (“Guaranteed
Peak Electrical Output”) continuously throughout the entire Performance Test.]
(b)
Minimum Performance Guarantees. The Seller guarantees that the Project
(or each piece of major equipment, if applicable) will satisfy all of the minimum performance
specifications listed below in this Section 2.7(b) during the applicable Performance Test (other
than the Base Reliability Guarantee, which shall be achieved during a separate Base Reliability
Test) (collectively, the “Minimum Performance Guarantees”), including any adjustments to
reflect deviations from base conditions to be calculated as set forth in the Approved Test
Procedures. The Seller agrees to exhaust all repair and replacement alternatives in order that the
Project (or the designated components thereof, as applicable) fully attains the Minimum
Performance Guarantees. The Seller shall continue repair and replacement efforts required to
satisfy the Minimum Performance Guarantees until all such guarantees are met. If the Seller
exhausts all repair and replacement alternatives but the Minimum Performance Guarantees are not
satisfied on or before the Date Certain, then the Purchaser shall have no obligation to purchase the
Project and pay the Purchase Price, and shall have the other rights and remedies set forth in
Section 15.13.
(1)
Generation Operating Characteristics. The Project shall have
the Generation Operating Characteristics set forth in Exhibit E.
(2)
Minimum Base Electrical Output. The Project shall produce
average net base electrical output (as measured at the Interconnection Point) of not less than
ninety-five percent (95%) of Guaranteed Base Electrical Output (the “Minimum Base Electrical
Output”) while satisfying the Guaranteed Emissions Limits (as defined below) continuously
throughout the Performance Test.
(3)
Maximum Heat Rate. The Project shall achieve an average net
heat rate of not more than one hundred five percent (105%) of the Guaranteed Net Heat Rate (the
“Guaranteed Maximum Net Heat Rate”) while satisfying the Guaranteed Emissions Limits
continuously throughout the Performance Test and while achieving an average net electrical
output that is the same or greater than (a) the Guaranteed Base Electrical Output, and (b) if
applicable, the average net electrical output used to determine the amount of the Purchase Price
reduction as a result of the Project’s failure to achieve the Guaranteed Base Electrical Output set
forth in Section 3.5.
(4)
Minimum Reliability. The Project shall satisfy during the Base
Reliability Test the Base Reliability Guarantee while satisfying the Guaranteed Emissions Limits
continuously throughout the Performance Test.
(5)
Guaranteed Emissions Limits. The emissions of the Project
shall not exceed [IDENTIFY APPLICABLE EMISSIONS AND LIMITS] and shall in any event
comply with all Governmental Rules and Permits (the “Guaranteed Emissions Limits”). In cases
where Permit requirements or Governmental Rules are applicable to periods exceeding the
duration of a Performance Test, the actual performance of the Project shall be projected through
{00059413.DOC;9}OHS East:9397238.1
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the compliance period under such Permit or Governmental Rule by the Seller using the actual
measured performance characteristics of the Project during such Performance Test and
extrapolating those results for the compliance period in order to determine compliance with this
Section 5, as determined by the Purchaser in its sole discretion.
(6)
2.8
[SPECIFY ANY SPECIFIC EQUIPMENT REQUIREMENTS]
Procedures For Performance Testing.
(a)
Approved Test Procedures. At least one hundred twenty (120) days prior
to the date the Seller wishes to commence the Performance Tests the Seller shall submit for the
Purchaser’s Written Approval complete test procedures and measuring tolerances for conducting
the Performance Tests consistent with the Specifications and the Performance Testing Protocol
and otherwise in accordance with the requirements of this Agreement (the “Approved Test
Procedures”). Such submission shall be repeated until receipt of Purchaser’s Written Approval
therefor.
(b)
Commencement and Completion of Performance Tests. After Seller
achieves Mechanical Completion it may commence the Performance Tests. The Seller shall give
the Purchaser at least five (5) Business Days’ prior written notice of the date on which the Seller
intends to commence any Performance Tests; provided, however, that no Performance Test shall
be commenced unless the Project is capable of safe and prudent continuous operation in
accordance with the requirements of this Agreement and Prudent Utility Practices and unless the
Project is in its permanent operational configuration with no temporary equipment in place. The
Purchaser may have its representatives observe each Performance Test and monitor measurements
taken to determine the level of achievement of the Performance Guarantees and the Minimum
Performance Guarantees. The Seller shall conduct the Performance Tests, and provide final
reports regarding all completed Performance Tests with the associated fuel and emissions data, all
in accordance with the Approved Test Procedures and the Performance Testing Protocol. When
the Seller believes it has completed the sequence of tests comprising a Performance Test, the
Seller shall provide the Purchaser a written report of the test results (“Performance Test Results”)
in accordance with the Approved Test Procedures. The Performance Test Results will be
calculated in accordance with the Approved Test Procedures and the Performance Testing
Protocol, including any adjustments to reflect deviations from base conditions to be calculated as
set forth therein. All fuel consumed and all output generated by the Project during the
Performance Testing shall be for the account of the Seller.
(c)
Verification of Successful Performance Testing. The Purchaser shall,
within ten (10) Business Days following receipt of the Performance Test Results, inspect the
Project and all work completed by the Seller with respect thereto, review the Performance Test
Results submitted by the Seller with respect to such Performance Tests and either (i) provide the
Purchaser’s Written Approval to the Seller certifying that one or more of the Performance
Guarantees was satisfied in the Performance Tests, or (ii) if reasonable cause exists for doing so,
notify the Seller in writing that one or more of the Performance Guarantees was not achieved. If
the Seller receives a notice under the preceding clause (ii), the Seller promptly shall take such
{00059413.DOC;9}OHS East:9397238.1
30
action or perform such additional work as will permit achievement of the Performance Guarantees
in question, conduct another Performance Test or Performance Tests, as the case may be, and
issue to the Purchaser another Performance Test Results pursuant to Section 2.8(b). Subject to
Section 2.3(b), such procedure shall be repeated as necessary until all of the Performance
Guarantees have been met; provided, however, that the Purchaser shall use all reasonable efforts
to complete its inspection and deliver the Purchaser’s Written Approval to the Seller regarding
satisfaction of the Performance Guarantees within seven (7) Business Days following receipt of
re-submitted Performance Test Results.
(d)
Base Reliability Test. The Seller may commence the Base Reliability Test
contemporaneously with commencement of the other Performance Tests described in Section 2.7.
The Seller shall give the Purchaser at least five (5) Business Days’ prior written notice of the date
on which the Purchaser intends to commence the Base Reliability Test. The Purchaser may have
its representatives observe each Base Reliability Test and monitor measurements taken to
determine the level of achievement of the Base Reliability Guarantee. The Seller shall conduct
the Base Reliability Test, and provide Performance Test Results regarding the completed Base
Reliability Test, all in accordance with the Approved Test Procedures and the Performance
Testing Protocol. When the Seller believes it has completed the Base Reliability Test, the Seller
shall provide the Purchaser Performance Test Results for the Base Reliability Test in accordance
with the Approved Test Procedures and the Performance Testing Protocol. The performance
results of the Base Reliability Test will be calculated in accordance with the Approved Test
Procedures, including any adjustments to reflect deviations from base conditions to be calculated
as set forth in therein.
2.9
Post-Closing Access to Project. So long as the Closing has occurred on or prior to
the Date Certain, then, subject in all events to the other terms and conditions of this Agreement
and to the Purchaser’s right to dispatch and otherwise control operation of the Project subsequent
to the Closing Date in order to satisfy its requirements for Electrical Product and its obligations
(including its obligation to provide spinning reserves) to the ERO, WECC and CAISO and any
other applicable organization, the Seller and its Contractors shall have reasonable access the
Project until the Project Completion Deadline for the purpose of causing the conditions to Project
Completion (as set forth in the definition thereof) to be satisfied and to conduct Performance
Tests in order to minimize the amount of Purchase Price reductions applicable pursuant to
Section 3.5. The conduct of such Performance Tests (including the cost of fuel) shall be entirely
at Seller’s cost and expense, and the Seller also shall reimburse the Purchaser for any material
operational costs incurred by the Purchaser resulting from the activities of the Seller under this
Section 2.9. The Seller shall minimize any interference to Purchaser’s operation of the Project.
If the Seller elects to conduct any Performance Tests after the Closing Date, the results of such
Performance Tests shall be used to determine the amount of any Purchase Price adjustments
applicable pursuant to Section 3.5.
ARTICLE 3
PURCHASE AND SALE OF PROJECT
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3.1
Purchase and Sale of Project. At the Closing, subject to the terms and conditions
of this Agreement, including satisfaction (or waiver by the Party entitled thereto) of the
conditions precedent to Closing set forth in Articles 13 and 14, the Seller will (or cause the
Project Company to) sell, convey, assign, transfer and deliver, and the Purchaser will purchase
and acquire from the Seller or the Project Company, as applicable, free and clear of any Liens or
encumbrances other than Permitted Encumbrances, all of the Seller’s and the Project Company’s
right, title and interest in and to the Project and the Project Assets, including the following:
(a)
the Facility;
(b)
Schedule 3.1(b);
the Electrical Interconnection Facilities, including those items described on
(c)
Schedule 3.1(c);
the Fuel Interconnection Facilities, including those items described on
(d)
all equipment (including turbines, generators, transformers, tractors,
trailers, vehicles and communications equipment), facilities, inventory, machinery, engines,
goods, supplies, furniture, fixtures, keys, furnishings, tools, spare parts, computer hardware,
software and other tangible personal property relating to the operation of the Facility, the
Electrical Interconnection Facilities, the Fuel Interconnection Facilities or the Project, and all
warranties and guarantees, express or implied, existing for the benefit of the Seller in connection
with the foregoing, including those items listed on Schedule 3.1(d);
(e)
the spare parts and equipment initially required for the ongoing
maintenance or operation of the Project, consistent with Prudent Utility Practices, including the
Initial Spare Parts listed on Schedule 3.1(e);
(f)
all real property interests and real property leasehold interests required for
or associated with the ownership or operation of the Project, including the Project Site and the
other items listed on Schedule 3.1(f)(1) and the Additional Real Property described on Schedule
3.1(f)(2), together with all buildings, improvements, structures and fixtures thereon, including
those listed on Schedule 3.1(f)(3), and all easements, privileges, rights-of-way, lands underlying
any adjacent streets or roads, appurtenances, licenses and other rights pertaining to or accruing to
the benefit of such property, subject only to Permitted Encumbrances;
(g)
all Governmental Approvals associated with or necessary for the
development, construction, ownership or operation of the Project and all pending applications
therefor or renewals thereof, including those Governmental Approvals listed on Schedule 3.1(g) (
subject to Section 11.1(c) hereof);
(h)
all Permits associated with or necessary for the development, construction,
ownership or operation of the Project and all pending applications therefor or renewals thereof,
including those Permits listed on Schedule 3.1(h) (subject to Section 11.1(c) hereof);
{00059413.DOC;9}OHS East:9397238.1
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(i)
all Consents associated with or necessary for the development, ownership
or operation of the Project and all pending applications therefor or renewals thereof, including
those Consents listed on Schedule 3.1(i);
(j)
all Emissions Rights associated with or necessary for the development,
construction, ownership or operation of the Project and all pending applications therefor or
renewals thereof (other than those that, under applicable Governmental Rules, cannot be acquired
on or prior to the Closing), including those Emissions Rights listed on Schedule 3.1(j) (subject to
Section 11.1(c) hereof);
(k)
all riparian and other Water Rights associated with the Project or required
for the development, ownership or operation of the Project and all pending applications therefor
or renewals thereof, including the Water Rights set forth on Schedule 3.1(k) (subject to
Section 11.1(c) hereof);
(l)
all intellectual property rights associated with the Project or required for the
ownership or operation of the Project, including licenses, patents, trademarks, copyrighted
materials, know-how, trade secrets, confidential or proprietary information, technical information,
blueprints, software and process technology, including the Intellectual Property set forth on
Schedule 3.1(l);
(m)
all rights and entitlements under any written or oral contract, agreement,
plans or specifications, instrument, registration, license, franchise, certificate of occupancy, or
other document, commitment, arrangement, undertaking, practice, or authorization and any
intangible property rights (including goodwill and going concern value) primarily associated with
or constituting a part of the Project;
(n)
to the extent requested by the Purchaser, all of the Seller’s and the Project
Company’s right, title and interest in, to and under each of those contracts, agreements, purchase
commitments for materials and other services and personal property leases, whether or not entered
into in the ordinary course of business, relating principally to the Project (including utility supply
agreements, operation and maintenance agreements, repair contracts, communication system and
services agreements, license agreements, telephone system and services agreements and computer
system and services agreements and all rights and entitlements under or with respect thereto), and
any contracts, agreements, purchase orders or commitments for materials and other services and
personal property leases entered into by the Seller or the Project Company relating principally to
the Project after the date hereof, including the Assigned Agreements set forth on Schedule 3.1(n)
hereto (the “Assigned Agreements”); [and]
(o)
all information, files, books, records, as-builts, correspondence (including
with Governmental Authorities), data, plans, specifications, procedures, contracts, emails,
addresses and recorded knowledge relating to the Project (in each case whether in electronic or
paper form), including, but not limited to, construction and development, operation, generation
and hydrological records, service and repair records, equipment logs, operating documents,
specifications, operating guides, service and warranty records, insurance claims and reports,
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33
safety, compliance and maintenance manuals, studies, reports, diagrams and other similar
documents relating to the development, construction, operation, and maintenance of the Project,
including those items listed on Schedule 3.1(o)[; and
(p)
at the Purchaser’s request, one hundred percent (100%) of the ownership
interests in the Project Company].
3.2
Excluded Assets. Nothing in this Agreement will constitute or be construed as
conferring on the Purchaser, and the Purchaser is not acquiring, any right, title or interest in or to
the assets listed or described on Schedule 3.2, which are associated with the development of the
Project but are specifically excluded from the sale (the “Excluded Assets”).
3.3
Excluded Liabilities. Except as otherwise expressly set forth in this Agreement,
the Purchaser does not assume or agree to pay, satisfy, discharge or perform, and shall not be
deemed by virtue of the execution and delivery of this Agreement or any document delivered in
connection with this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay, satisfy, discharge or
perform, any liability, obligation or indebtedness of the Seller or the Project Company, whether
primary or secondary, direct or indirect, known or unknown, contingent or absolute, determined
or indeterminable (all such liabilities and obligations not assumed by the Purchaser being
referred to herein as the “Excluded Liabilities”).
3.4
Purchase Price and Payment. The sole consideration for the purchase of the
Project and the Project Assets, is the Purchase Price. The Purchase Price shall be payable by the
Purchaser by wire transfer in U.S. dollars in immediately available funds to the account or
accounts the Seller designates to the Purchaser in accordance with the notice provisions of
Section 15.11. The Purchase Price shall be paid by the Purchaser to the Seller in three
increments as follows:
(a)
An amount equal to ninety-five percent (95%) of the Purchase Price (as
adjusted by any reductions in the Purchase Price made in accordance with Section 3.5 reflecting
Performance Tests conducted prior to the Closing) (the “Initial Component”), minus the Project
Completion Withheld Amount, shall be payable to the Seller at the Closing;
(b)
The Project Completion Component shall be payable to the Seller within
thirty (30) days after Project Completion or, if Project Completion does not occur on or before the
Project Completion Deadline, within one hundred eighty (180) days after the Project Completion
Deadline;
(c)
An amount equal to five percent (5%) of the Purchase Price (as adjusted by
any reductions in the Purchase Price made in accordance with Section 3.5 reflecting post-Closing
Performance Tests conducted pursuant to Section 2.9) (the “Deferred Component”) shall be
payable to the Seller within thirty (30) days after the successful completion of the Extended
Reliability and Performance Test described in Section 3.6.
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34
3.5
Purchase Price Reductions For Performance Shortfalls.
(a)
Guaranteed Base Electrical Output. For each kilowatt by which average
net base electrical output (without applying uncertainty as set forth in the Approved Test
Procedures) during the Performance Test is less than the Guaranteed Base Electrical Output, the
Initial Component will be reduced by [$_______][determined using 1.5 x Purchase Price [(or 1.0
x Purchase Price if peak electrical output is also guaranteed)]/Guaranteed Base Electrical Output
in kW].
(b)
Guaranteed Peak Electrical Output. [If Applicable: For each kilowatt by
which peak net electrical output (without applying uncertainty as set forth in the Approved Test
Procedures) during the Performance Test is less than the Guaranteed Peak Electrical Output, the
Initial Component will be reduced by $[________] [determined using 0.5 x Purchase
Price/Guaranteed Peak Electrical Output in kW].]
(c)
Heat Rate. For each Btu/KWh (HHV) by which the Project’s average net
heat rate exceeds the Guaranteed Net Heat Rate (without applying uncertainty as set forth in the
Approved Test Procedures), as established during the Performance Tests, the Initial Component
will be reduced by $[____][(i) for Projects providing shaping generation, the product of (x) $0.78
per Btu/kWh, multiplied by (y) Guaranteed Base Electrical Output in kW, or (ii) for Projects
providing peaking generation, the product of (x) $0.29 per Btu/kWh, multiplied by (y)
Guaranteed Base Electrical Output in kW].
3.6
Extended Reliability and Performance Tests. The Deferred Component of the
Purchase Price shall be payable to the Seller if and only if the Project has achieved the following
performance benchmarks (“Extended Reliability and Performance Tests”):
(a)
Equivalent Unplanned Outage Factor [and Successful Project Starts]. For a
period commencing on the first day of the fourth full calendar month beginning after the calendar
month in which the Commercial Availability Date occurs and ending on the last day of the
fifteenth (15th) full calendar month beginning after the calendar month in which the Commercial
Availability Date occurs (1) an Equivalent Unplanned Outage Factor of not more than four
percent (4%) (provided, that to the extent such Equivalent Unplanned Outage Factor exceeds four
percent (4%) due to the Purchaser’s failure to operate the Project in accordance with Prudent
Utility Practices, such excess shall be disregarded for purposes of calculating the Equivalent
Unplanned Outage Factor) and (2) in at least ninety-eight percent (98%) of all attempted starts the
Project is brought from non-operation to operation at the minimum load specified in Exhibit E no
later than [__] minutes after the start is initiated][Note: Requirement for successful Project starts
only applies to peaking facilities].
(b)
Average Net Electrical Output and Heat Rate. At a performance test
conducted approximately fifteen (15) months following the Commercial Availability Date,
average net base electrical output (as measured at the Interconnection Point) of [___________]
kW at one hundred percent (100%) of [combustion turbine] output determined using base
electrical output demonstrated in the Performance Test less degradation listed in Exhibit C
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(“Extended Guaranteed Electrical Output”), while satisfying the Guaranteed Emissions Limits
continuously throughout the Extended Reliability and Performance Test and achieving an average
net heat rate of not more than [____]Btu/kW (HHV) at one hundred percent (100%) output and
ISO Conditions determined using the heat rate demonstrated in the Performance Test plus
degradation listed in Exhibit C (“Extended Guaranteed Heat Rate”).
(c)
Compliance with Generation Operating Characteristics. Demonstration
over the Extended Reliability Test Period of compliance with the Generation Operating
Characteristics while satisfying the Guaranteed Emissions Limits continuously throughout the
Extended Reliability Test Period.
3.7
Allocation of Purchase Price. The Purchase Price will be allocated among the
components of the Project as set forth on Schedule 3.7. The Parties will file all tax returns
consistent with the allocation of the Purchase Price set forth on Schedule 3.7.
ARTICLE 4
EFFECTIVE DATE
4.1
Effective Date. The date on which all of the items described in Section 4.2 have
been delivered (or delivery thereof has been waived by the receiving Party) and the Agreement
has been executed and delivered by the Parties shall be referred to as the “Effective Date.”
4.2
Deliverables in Connection with the Effective Date.
(a)
Deliveries by the Seller and the Project Company. On or prior to the
Effective Date, the Seller and the Project Company shall deliver to the Purchaser the items
described in this Section 4.2(a):
(1)
Copies (certified by an authorized officer or representative of
the Seller) of the Governing Documents of the Seller, and a certificate of good standing of the
Seller issued by the state in which the Seller is organized and, if applicable, a certificate of good
standing as a foreign entity doing business in the State of California issued by the Secretary of
State of the State of California, in each case dated within three (3) Business Days of the Effective
Date;
(2)
Copies (certified by an authorized officer or representative of
the Project Company) of the Governing Documents of the Project Company, and a certificate of
good standing of the Project Company issued by the state in which the Project Company is
organized and, if applicable, a certificate of good standing as a foreign entity doing business in
the State of California issued by the Secretary of State of the State of California, in each case
dated within three (3) Business Days of the Effective Date;
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(3)
such resolutions (or other authorizations) of the board of
directors (or equivalent governing authority) of the Seller as may be required to authorize the
transactions contemplated by this Agreement and the Related Agreements and authorizing
officers of the Seller to execute and deliver this Agreement, the Related Agreements and any
other documents or instruments which they deem necessary and appropriate in connection with
this Agreement;
(4)
such resolutions (or other authorizations) of the board of
directors (or equivalent governing authority) of the Project Company as may be required to
authorize the transactions contemplated by this Agreement and the Related Agreements and
authorizing officers of the Project Company to execute and deliver this Agreement, the Related
Agreements and any other documents or instruments which they deem necessary and appropriate
in connection with this Agreement;
(5)
a certificate of the Seller’s secretary (or other authorized officer
or representative) certifying in such detail as the Purchaser may reasonably request that (i) the
Governing Documents of the Seller delivered to the Purchaser pursuant to Section 4.2(a)(1) are
true and complete and in full force and effect, (ii) the resolutions (or other authorizations) of the
board of directors (or equivalent governing authority) of the Seller delivered to the Purchaser
pursuant to Section 4.2(a)(3) are true and complete and in full force and effect, and (iii) the
officer(s) or representative(s) of the Seller executing and delivering this Agreement and the other
documents delivered by the Seller in connection with the execution of the Agreement have been
duly authorized to execute and deliver such documents on behalf of the Seller;
(6)
a certificate of the Project Company’s secretary (or other
authorized officer or representative) certifying in such detail as the Purchaser may reasonably
request that (i) the Governing Documents of the Project Company delivered to the Purchaser
pursuant to Section 4.2(a)(2) are true and complete and in full force and effect, (ii) the
resolutions (or other authorizations) of the board of directors (or equivalent governing authority)
of the Project Company delivered to the Purchaser pursuant to Section 4.2(a)(4) are true and
complete and in full force and effect, and (iii) the officer(s) or representative(s) of the Project
Company executing and delivering this Agreement and the other documents delivered by the
Project Company in connection with the execution of the Agreement have been duly authorized
to execute and deliver such documents on behalf of the Project Company;
(7)
a certificate executed on behalf of the Seller by an authorized
officer or representative of the Seller, dated as of the Effective Date, representing and certifying
in such detail as the Purchaser may reasonably request that (i) the conditions specified in Article
4.2(a) hereof have been fulfilled, and (ii) the representations and warranties made by the Seller
under Article 6 of the Agreement are true and correct as of the Effective Date, except to the
extent any such representation or warranty is to be made exclusively as of the Closing Date;
(8)
a certificate executed on behalf of the Project Company by an
authorized officer or representative of the Project Company, dated as of the Effective Date,
representing and certifying in such detail as the Purchaser may reasonably request that (i) the
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37
conditions specified in Article 4.2(a) hereof have been fulfilled, and (ii) the representations and
warranties made by the Project Company under Article 6 of the Agreement are true and correct
as of the Effective Date, except to the extent any such representation or warranty is to be made
exclusively as of the Closing Date;
(9)
an opinion of counsel to the Seller and the Project Company
(such counsel to be reasonably satisfactory to the Purchaser) in substantially the form of Exhibit
G attached hereto;
(10)
the Seller’s Audited Financial Statements;
(11)
the Project Company’s Audited Financial Statements or the
Project Company’s unaudited financial statements if its Audited Financial Statements are
unavailable; and
].
(b)
Deliveries by the Purchaser. On or prior to the Effective Date, the
Purchaser shall deliver to the Seller the items described in this Section 4.2(b):
(1)
a certificate executed on behalf of the Purchaser by an
authorized officer or representative of the Purchaser, dated as of the Effective Date, representing
and certifying in such detail as the Seller may reasonably request that (i) the conditions specified
in Section 4.2(b) hereof have been fulfilled, and (ii) the representations and warranties made by
the Purchaser under Article 7 of the Agreement are true and correct as of the Effective Date,
except to the extent any such representation or warranty is to be made exclusively as of the
Closing Date.
(2)
an opinion of [the Purchaser’s counsel] (or such other counsel
reasonably acceptable to the Seller) in substantially the form of Exhibit I attached hereto.
ARTICLE 5
CLOSING
5.1
Closing. Subject to the satisfaction or waiver of the conditions set forth in this
Agreement, the consummation of the purchase of the Seller’s right, title and interest in and to the
Project contemplated hereby (the “Closing”) shall take place at the offices of [__________], as
soon as practicable following the satisfaction or waiver of all conditions precedent to the Closing
(the “Closing Date”).
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5.2
Deliveries at Closing.
(a)
Deliveries By the Seller and the Project Company. At the Closing, the
Seller and the Project Company shall deliver to the Purchaser the items described below:
(1)
a bill of sale and assignment, in the form of Exhibit J (the “Bill
of Sale”), with respect to the Project and Project Assets to be conveyed by the Seller or the
Project Company, as applicable, at the Closing duly executed by the Seller or the Project
Company, as applicable;
(2)
an assignment and assumption agreement, in the form of
Exhibit K (the “Assignment and Assumption Agreement”), with respect to the Assigned
Agreements duly executed by the Seller or the Project Company, as applicable;
(3)
described in Section 3.1;
the information and documents comprising Project Assets
(4)
[if Seller or the Project Company, as applicable, owns in fee
simple] a Deed in the form of Exhibit L (the “Deed”) with respect to the Project Site and the
Additional Real Property [or] if Seller or the Project Company, as applicable, leases: an estoppel
certificate from each lessor of the Project Site and the Additional Real Property in the form of
Exhibit M];
(5)
evidence in form and substance reasonably acceptable to the
Purchaser that, at or prior to the Closing hereunder, all Liens on the personal and real property
included in the Project, other than Permitted Encumbrances, have been discharged by the Seller,
the Project Company or by the Person in whose favor such Liens exist, which evidence shall in
any case be satisfied by UCC termination statements or the equivalent instruments or documents
previously delivered to and approved by the Purchaser, and at no expense to the Purchaser;
(6)
Copies (certified by an authorized officer or representative of
the Seller) of the Governing Documents of the Seller, and a certificate of good standing of the
Seller issued by the state in which the Seller is organized and, if applicable, a certificate of good
standing as a foreign entity doing business in the State of California issued by the Secretary of
State of the State of California, in each case dated within three (3) Business Days of the Closing;
(7)
Copies (certified by an authorized officer or representative of
the Project Company) of the Governing Documents of the Project Company, and a certificate of
good standing of the Project Company issued by the state in which the Project Company is
organized and, if applicable, a certificate of good standing as a foreign entity doing business in
the State of California issued by the Secretary of State of the State of California, in each case
dated within three (3) Business Days of the Closing;
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(8)
such resolutions (or other authorizations) of the board of
directors (or equivalent governing authority) of the Seller as may be required to authorize the
transactions contemplated by this Agreement and the Related Agreements and authorizing
officers of the Seller to execute and deliver this Agreement, the Related Agreements and any
other documents or instruments which they deem necessary and appropriate in connection with
this Agreement;
(9)
such resolutions (or other authorizations) of the board of
directors (or equivalent governing authority) of the Project Company as may be required to
authorize the transactions contemplated by this Agreement and the Related Agreements and
authorizing officers of the Project Company to execute and deliver this Agreement, the Related
Agreements and any other documents or instruments which they deem necessary and appropriate
in connection with this Agreement;
(10)
a certificate of the Seller’s secretary (or other authorized officer
or representative) certifying in such detail as the Purchaser may reasonably request that (i) the
Governing Documents of the Seller delivered to the Purchaser pursuant to Section 4.2(a)(1) are
true and complete and in full force and effect, (ii) the resolutions (or other authorizations) of the
board of directors (or equivalent governing authority) of the Seller delivered to the Purchaser
pursuant to Section 4.2(a)(3) are true and complete and in full force and effect, and (iii) the
officer(s) or representative(s) of the Seller executing and delivering this Agreement, the Related
Agreements and the other documents delivered by the Seller in connection with the Closing have
been duly authorized to execute and deliver such documents on behalf of the Seller;
(11)
a certificate of the Project Company’s secretary (or other
authorized officer or representative) certifying in such detail as the Purchaser may reasonably
request that (i) the Governing Documents of the Project Company delivered to the Purchaser
pursuant to Section 4.2(a)(2) are true and complete and in full force and effect, (ii) the
resolutions (or other authorizations) of the board of directors (or equivalent governing authority)
of the Project Company delivered to the Purchaser pursuant to Section 4.2(a)(4) are true and
complete and in full force and effect, and (iii) the officer(s) or representative(s) of the Project
Company executing and delivering this Agreement, the Related Agreements and the other
documents delivered by the Project Company in connection with the Closing have been duly
authorized to execute and deliver such documents on behalf of the Project Company;
(12)
a certificate executed on behalf of the Seller by an authorized
officer or representative of the Seller, dated as of the Closing Date, representing and certifying in
such detail as the Purchaser may reasonably request that (i) the Seller or the Project Company
has received the Governmental Approvals, Permits and Consents referred to in Schedules 3.1(g),
3.1(h) and 3.1(i), (ii) the conditions specified in Article 13 hereof have been fulfilled, (iii) the
representations and warranties made by the Seller under Article 6 of the Agreement are true and
correct as of the Closing Date with the same effect as though those representations and
warranties had been made again at and as of that time, except to the extent any such
representation or warranty is made as of a specified date, (iv) the information in the Schedules
has been updated to the Closing Date and is accurate and true and correct as of the Closing Date,
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and (v) all of the terms, covenants and conditions to be complied with and performed by the
Seller on or prior to the Closing Date have been complied with or performed in all material
respects;
(13)
a certificate executed on behalf of the Project Company by an
authorized officer or representative of the Project Company, dated as of the Closing Date,
representing and certifying in such detail as the Purchaser may reasonably request that (i) the
Project Company or the Seller has received the Governmental Approvals, Permits and Consents
referred to in Schedules 3.1(g), 3.1(h) and 3.1(i), (ii) the conditions specified in Article 13 hereof
have been fulfilled, (iii) the representations and warranties made by the Project Company under
Article 6 hereof are true and correct as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that time, except to the extent
any such representation or warranty is made as of a specified date, (iv) the information in the
Schedules has been updated to the Closing Date and is accurate and true and correct as of the
Closing Date, and (v) all of the terms, covenants and conditions to be complied with and
performed by the Project Company on or prior to the Closing Date have been complied with or
performed in all material respects;
(14)
an opinion of [counsel to the Seller and the Project Company]
(such counsel to be reasonably satisfactory to the Purchaser) in substantially the form of Exhibit
N attached hereto;
(15)
an opinion of [regulatory counsel to the Seller and the Project
Company] (such counsel to be reasonably satisfactory to the Purchaser) in substantially the form
of Exhibit O hereto;
(16)
such documents, affidavits, or other instruments required by the
Title Insurance Company in order to issue the title policies required by Section 13.8;
(17)
copies of interim lien waivers executed by the EPC Contractor,
and each other Contractor, and each subcontractor that has furnished more than $1 million of
goods and services for the Project individually or in the aggregate, in each case for all services
and materials provided through the Closing Date;
(18)
documentation of investigations of Hazardous Substances and
compliance with Environmental Laws in form and substance satisfactory to the Purchaser in its
sole discretion, including at a minimum a current environmental site assessment report with
respect to the Project prepared by a reputable technical consultant acceptable to the Purchaser;
(19)
All Collateral required pursuant to Section 11.2;
(20)
The complete Turnover Package; and
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(21)
such other documents as the Purchaser may reasonably request
for the purpose of evidencing the accuracy of the Seller’s and the Project Company’s
representations and warranties, the Seller’s and the Project Company’s performance or
compliance with covenants and obligations required hereunder, the satisfaction of any condition
under Article 13 or otherwise facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
(b)
Deliveries by the Purchaser. At the Closing, the Purchaser shall deliver the
items described below:
(1)
the Initial Component of the Purchase Price, minus the Project
Completion Withheld Amount, in accordance with Section 3.4(a);
(2)
a certificate executed on behalf of the Purchaser by an
authorized officer or representative of the Purchaser, dated as of the Closing Date, representing
and certifying in such detail as the Seller may reasonably request that (i) the conditions specified
in Article 14 hereof have been fulfilled, (ii) the representations and warranties made by the
Purchaser under Article 7 hereof are true and correct as of the Closing Date with the same effect
as though those representations and warranties had been made again at and as of that time,
except to the extent any such representation or warranty is made as of a specified date, and
(iii) all of the terms, covenants and conditions to be complied with and performed by the
Purchaser on or prior to the Closing Date have been complied with or performed in all material
respects; and
(3)
an opinion of [the Purchaser’s counsel] (or such other counsel
reasonably acceptable to the Seller) in substantially the form of Exhibit P attached hereto.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller and the Project Company, jointly and severally, represent and warrant to the
Purchaser as of the Closing Date and, with respect to the representations and warranties set forth
in Sections 6.1, 6.2, 6.3(c), 6.3(d), 6.3(e), 6.3(g), 6.4, 6.6, 6.7, 6.8, 6.9, 6.16, 6.18, and 6.19 also
as of the Effective Date, as follows, which representations and warranties will survive the
Closing. The Seller shall update the Schedules at such times as the Seller deems appropriate, but
at a minimum as of the date(s) of the closing of a financing for the Project and as of the Closing
Date, such updates to be reasonably acceptable to the Purchaser and not evidencing any material
change adverse to the Purchaser or any material diminution in the value or utility of the Project
to the Purchaser. When the Seller provides updated Schedules to the Purchaser, it shall also
provide such supporting evidence as is reasonably appropriate to allow the Purchaser to make the
determination that such updated Schedules do not evidence any material change adverse to the
Purchaser or any material diminution in the value or utility of the Project to the Purchaser. The
Purchaser shall review the updated Schedules and such evidence as is provided by the Seller, and
within fifteen (15) days after its receipt of the same, shall advise the Seller that such updated
Schedules are acceptable, or shall specify to the Purchaser why the updated Schedules are not
acceptable.
6.1
Transaction Representations.
[NOTE: ADDITIONAL REPS WILL BE NEEDED IF PURCHASER ELECTS TO
ACQUIRE THE PROJECT COMPANY]
(a)
Organization and Existence. The Seller is a duly organized and validly
existing [___________] in good standing under the laws of the State of [__________] and is
qualified to transact business in the State of California and in all jurisdictions where the
ownership of its properties or its operations require such qualification, except where the failure to
so qualify would not have a material adverse effect on its financial condition, its ability to own its
properties or transact its business, or to carry out the transactions contemplated hereby. The
Project Company is a duly organized and validly existing [___________] in good standing under
the laws of the State of [__________] and is qualified to transact business in the State of
California and in all jurisdictions where the ownership of its properties or its operations require
such qualification, except where the failure to so qualify would not have a material adverse effect
on its financial condition, its ability to own its properties or transact its business, or to carry out
the transactions contemplated hereby.
(b)
Execution, Delivery and Enforceability. Each of the Seller and the Project
Company has full power and authority to carry on its business as now conducted, and to enter
into, and carry out its obligations under this Agreement and the Related Agreements. The
execution, delivery and performance by the Seller and the Project Company of this Agreement
and the Related Agreements, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate or company action required on the
part of the Seller and the Project Company. This Agreement and the Related Agreements have
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been duly and validly executed and delivered by the Seller and the Project Company and
constitute the valid and legally binding obligations of the Seller and the Project Company,
enforceable against the Seller and the Project Company in accordance with its and their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general application relating to or affecting the enforcement of
creditors’ rights and by general equitable principles. At the Closing, the Seller and the Project
Company will convey to the Purchaser good and marketable title to the Project and all of the
Project Assets, free and clear of any and all Liens other than Permitted Encumbrances.
(c)
No Violation. None of the execution and delivery of this Agreement or any
of the Related Agreements executed by the Seller or the Project Company, the performance of
compliance with any provision hereof or thereof, or the consummation of the transactions
contemplated hereby or thereby will:
(1)
violate, or conflict with, or result in a breach of any provisions
of the Governing Documents of the Seller or the Project Company;
(2)
violate any Governmental Rule, Governmental Approval,
Permit or Consent applicable to the Seller, the Project Company or the Project, or result in the
termination of, or require the material modification of, any Governmental Approval, Permit or
Consent; or
(3)
result in the creation or imposition of any Lien upon the Project,
the Project Company or any of the Project Assets, or a breach of, or constitute a default under, or
give to any other Persons any rights of termination, amendment, acceleration or cancellation of
any agreement to which the Seller or the Project Company is a party or by which any of its
respective properties (including any of the Project Assets) is bound or affected.
(d)
No Consents. No Consent or approval of, filing with or notice to any
Person is required to be obtained or made in connection with the Seller’s and the Project
Company’s execution, delivery and performance of this Agreement or the Related Agreements or
the consummation of the transactions contemplated hereby or thereby, which, if not obtained or
made, will prevent the Seller or the Project Company from performing its obligations hereunder
or thereunder.
6.2
Compliance with Laws. Except as set forth on Schedule 6.2, each of the Seller
and the Project Company has at all times complied in all material respects with all Governmental
Rules and with all Governmental Approvals and Permits applicable to the conduct of its
respective business and activities and the construction, ownership, operation, maintenance and
use of the Project and the Project Assets.
6.3
Permits, Governmental Approvals and Consents.
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(a)
Schedules 3.1(g), (h), (i), (j) and (k) list all Governmental Approvals,
Permits and Consents (including Emissions Rights and Water Rights), respectively, which are
required for the development, construction, use, operation and maintenance of the Project by the
Seller and the Project Company and the Purchaser’s and/or the Project Company’s ownership and
operation of the Project as contemplated by this Agreement, true and correct copies of which have
been provided to the Purchaser.
(b)
Except as set forth on Schedule 6.3(b), each of the Seller and the Project
Company has obtained and holds all Governmental Approvals which are necessary under
Governmental Rules for such Person’s construction, ownership, use, occupation, and operation of
the Project and the Project Assets, and the conduct of its respective business and activities in
accordance with this Agreement. Except as set forth on Schedule 6.3(b), each of such
Governmental Approvals has been issued in the name of the Seller or the Project Company as
appropriate, is in full force and effect, and any fixed period for appeal or review of the issuance
thereof has elapsed. No such Governmental Approval is subject to any pending suit, action,
investigation, proceeding or appeal (whether judicial, administrative or otherwise) and, to the best
knowledge of the Seller and the Project Company, no such suit, action, investigation, proceeding
or appeal is threatened.
(c)
Except as set forth on Schedule 6.3(c), each of the Seller and the Project
Company has obtained and holds all Permits which are necessary under Governmental Rules for
such Person’s construction, ownership, use, occupation, and operation of the Project and the
Project Assets, and the conduct of its respective business and activities in accordance with this
Agreement. Except as set forth on Schedule 6.3(c), each of such Permits has been issued in the
name of the Seller or the Project Company as appropriate, is in full force and effect, and any fixed
period for appeal or review of the issuance thereof has elapsed. No such Permit is subject to any
pending suit, action, investigation, proceeding or appeal (whether judicial, administrative or
otherwise) and, to the best knowledge of the Seller and the Project Company, no such suit, action,
investigation, proceeding or appeal is threatened.
(d)
Except as set forth on Schedule 6.3(d), neither the Seller nor the Project
Company has (i) received any notice of violation or other notification from any Governmental
Authority or from any other Person, alleging that it has committed any act, or failed to act, in any
manner or under any circumstances which could result in the revocation, modification or
suspension of any Governmental Approval, Permit or Consent related to the Project or in any
other enforcement action, and (ii) failed to make any governmental filings required with respect
the Governmental Approvals and Permits described in Sections 6.3(b) and 6.3(c).
(e)
Except as set forth on Schedule 6.3(e), neither the Seller nor the Project
Company has any reason to believe that (i) any Governmental Approval, Permit or Consent
related to the Project that has not yet been obtained will not be obtained upon due application
therefore; (ii) any Governmental Approval, Permit or Consent related to the Project will not be
renewed upon its stated expiration in the ordinary course of business upon compliance with
normal and customary renewal procedures applicable to the respective Governmental Approval,
Permit or Consent; or (iii) any Governmental Approval, Permit or Consent will be modified to
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impose more restrictive conditions or requirements which may hinder the operation, production
capacity, or revenue of the Project, or which would increase the costs of operating the Project, or
which could otherwise, individually or collectively, adversely impact the Project.
(f)
[Intentionally omitted].
(g)
Neither the Seller nor Project Company is an “investment company” or an
“affiliated person” of an “investment company” within the meaning of the Investment Company
Act of 1940.
6.4
Litigation. Except as set forth on Schedule 6.4, there are no pending or, to
Seller’s or the Project Company’s knowledge, threatened, actions, suits, proceedings,
investigations or requests for information by any Governmental Authority or other Person which
could result, or has resulted, in (a) the institution of legal proceedings to prohibit or restrain the
performance of this Agreement or any of the Related Agreements, the development,
construction, financing, completion or readying for commercial operation of the Project or any
portion thereof, or the consummation of the transactions contemplated hereby or thereby, or (b) a
claim for damages as a result of this Agreement or any of the Related Agreements, the
development, construction, financing, completion or readying for commercial operation of the
Project or any portion thereof, or the consummation of the transactions contemplated hereby or
thereby. The Seller has no knowledge of the existence of any reasonable basis for such a
litigation, claim, investigation or proceeding, which directly and specifically relates to the
Project or any of the Project Assets.
6.5
Zoning and Condemnation. To the knowledge of the Seller and the Project
Company, there are no pending or threatened proceedings or governmental actions to modify the
zoning classification of, or to condemn or take by power of eminent domain or to classify as a
landmark or otherwise impose any similar restraint or restriction on, all or any part of the Project
or the Project Assets.
6.6
Brokers. All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on by the Seller without the intervention of any other
Person and in such a manner as not to give rise to any valid claim against the Purchaser (by
reason of the Seller’s actions) for a brokerage commission, finder’s fee or other like payment to
any Person.
6.7
Bankruptcy. Neither the Seller nor the Project Company has filed any voluntary
petition in bankruptcy or been adjudicated bankrupt or insolvent, filed any petition or answer
seeking any reorganization, liquidation, dissolution or similar relief under any bankruptcy,
insolvency or other debtor relief law, or sought or consented to or acquiesced in the appointment
of any trustee, receiver, conservator or liquidator of all or any substantial part of its respective
properties. No court of competent jurisdiction has entered an order, judgment or decree
approving a petition filed against the Seller or the Project Company seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar relief under any
bankruptcy, insolvency, or other debtor relief law, and no other liquidator has been appointed for
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the Seller or all or any substantial part of the Seller’s properties. To the knowledge of the Seller
and the Project Company, no proceedings or actions of the types described in this Section 6.7 are
being contemplated by the Seller or the Project Company or are threatened against the Project
Company or the Seller.
6.8
Financial Statements. The Seller has delivered to the Purchaser true and complete
copies of the audited balance sheet of the Seller and the Project Company as of the last day of its
most recently completed fiscal year, and the related audited statements of operations,
stockholders’ equity and cash flows for the year then ended (collectively, “Audited Financial
Statements”), together with the related auditors’ report and the Seller’s and the Project
Company’s quarterly financial statements for each of the fiscal quarters ended after the date of
its most recent Audited Financial Statements. Except as may otherwise be indicated in the
auditor’s report accompanying the Audited Financial Statements, the Audited Financial
Statements have been prepared in conformity with generally accepted accounting principles,
consistently applied, and present fairly the financial position and results of the Seller’s or the
Project Company’s (as applicable) operations and its cash flows at the dates and for the periods
stated.
6.9
Absence of Certain Changes. Except as set forth on Schedule 6.9:
(a)
since the date of its most recent Audited Financial Statement, the Project
Company has not entered into any transaction which was not in the ordinary course of its
business;
(b)
since the date of its most recent Audited Financial Statement, neither the
Seller nor the Project Company has suffered any material adverse change in its business,
operations finances, assets or liabilities;
(c)
there has been no material damage to, destruction of or loss of or to the
Project or any of the Project Assets; or
(d)
none of the Seller, the Project Company or any of its or their respective
Affiliates has mortgaged or pledged or subjected to any Lien the Project or any of the Project
Assets (except for Permitted Encumbrances).
6.10
Assets.
(a)
Real Property Rights; Title Insurance. Schedule 3.1(f)(1) and Schedule
3.1(f)(2) together are a complete and accurate list, with respect to the Project and the Project
Assets, of all real property owned or leased by the Seller or the Project Company and of all
easements, rights of way, rights of interconnection and other similar agreements in which the
Seller or the Project Company has any rights. Schedule 6.10(a) is a complete and accurate list of
all title insurance policies and similar insurance policies issued to the Seller or any of its Affiliates
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relating to any of the property described in this Section 6.10(a) or relating to the fixtures and
improvements listed on Schedule 3.1(f)(3).
(b)
Fixtures and Improvements. Schedule 3.1(f)(3) is a complete and accurate
list of all buildings, fixtures, structures and other improvements owned by the Seller or the Project
Company and located on the Project Site or the Additional Real Property.
(c)
Condemnation or Other Proceedings. Except as set forth on Schedule
6.10(c), there is no pending or threatened condemnation or other similar proceeding of any part of
the Project Site or the Additional Real Property that would be reasonably likely to have a material
adverse effect on the operations of the Project or any of the Project Assets, and no items set forth
on Schedule 6.10(c) has had or will have a material adverse effect on the Project or any of the
Project Assets.
(d)
Equipment and Other Personal Property. To the extent not included on
Schedule 3.1(f)(3), Schedules 3.1(b), 3.1(c), 3.1(d) and 3.1(e) completely and accurately list all
equipment, plant, machinery, installations, tools, spare parts, furniture, supplies, and vehicles
owned by the Seller or the Project Company and related to the Project or the Project Assets,
excluding only those items which have a fair market value of less than $5,000 individually, and
such schedules specifically indicate any such item of Project Assets which is not located on or at
the Project Site and identifies the location thereof.
(e)
Intellectual Property. Schedule 3.1(l) contains a complete and accurate list
and summary description, including any royalties paid by the Seller, of Project Assets constituting
Intellectual Property.
(f)
Title to Assets. The Seller or the Project Company has good, marketable
and insurable title to the Project Site and the Additional Real Property, free and clear of all Liens
(other than Permitted Encumbrances), and has good and marketable title in the remainder of the
Project and all of the other Project Assets free and clear of all Liens (other than Permitted
Encumbrances). The Project Assets constitute all of the assets necessary for the safe, lawful and
proper operation and use of the Project (including all easements, rights of way, rights of
interconnection and other similar rights and agreements required for the operation of the Project)
in the manner contemplated by this Agreement, the Specifications and Prudent Utility Practices.
6.11 Assigned Agreements. Schedule 3.1(n) attached hereto sets forth a list of all of
the Assigned Agreements, including all amendments, supplements, exhibits, if any, thereto. A
true, correct and complete copy of each of the written Assigned Agreements has been delivered
to the Purchaser.
(a)
Except as set forth on Schedule 6.11(a), the Project Company is not a party
to or subject to any material agreement, contract, instrument, license or franchise of any kind
other than the Assigned Agreements.
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(b)
None of the Assigned Agreements have been modified, supplemented,
amended or terminated, in any such case whether orally or in writing, except by means of another
Assigned Agreement or as scheduled on Schedule 3.1(n).
(c)
Each of the Assigned Agreements has been duly authorized, executed and
delivered by the Seller or the Project Company, as the case may be, and, to the knowledge of the
Seller and the Project Company, by each of the other parties thereto and, except to the extent fully
performed in accordance with its terms, is in full force and effect and is valid and enforceable in
accordance with its terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights and the
enforcement of debtors’ obligations generally and by general principles of equity, regardless of
whether enforcement is pursuant to a proceeding in equity or at law.
(d)
Except as set forth on Schedule 6.11(d), no default or event of default on
the part of the Seller or the Project Company has occurred and is continuing under any Assigned
Agreement which could reasonably be expected to have a material adverse effect on the
Purchaser, the Project or the Project Assets, and neither the Seller nor the Project Company has
received any notice, oral or written, or has knowledge, that a default or event of default on the
part of any other party thereto has occurred and is continuing thereunder or that any other Person
has alleged or asserted any such default or event of default by any other party thereto.
6.12 Environmental Governmental Approvals and Permits. Without limiting the
application of Section 6.3 hereof to any Governmental Approval, Permit, Consent, Emissions
Rights or Water Rights: (a) Schedule 6.12 contains a true and complete list of all Governmental
Approvals and Permits related to Environmental Laws that are necessary for, or are material to,
the ownership or operation of the Project or any of the Project Assets; (b) Schedule 6.12
identifies which of those Governmental Approvals and Permits related to Environmental Laws
requires Consent, waiver, approval or authorization, license, order or Permit of, or declaration,
filing or registration with, any Governmental Authority or any other Person, in connection with
the execution, delivery and performance of this Agreement or the Related Agreements and the
consummation of the transactions contemplated hereby or thereby; and (c) the Governmental
Approvals and Permits listed on Schedule 6.12 are valid, in good standing, final and nonappealable and in full force and effect and will not be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated hereby.
6.13
Environmental Legal Compliance. Except as set forth on Schedule 6.13:
(a)
Each of the Seller and the Project Company has complied with, and is in
compliance with: (x) the terms and conditions of all Governmental Approvals and Permits issued
or required with respect to the Project pursuant to any Environmental Law, and (y) all other
limitations, restrictions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Law, as related to the development, construction,
ownership, use, operation or maintenance of the Project or any of the Project Assets;
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(b)
Neither the Seller nor the Project Company has received any notice or
claim from any Person alleging any liability for personal injury or property damage relating to the
Facility or the Project Assets, or any notice of any violation under Environmental Law, any
request for information pursuant to CERCLA, or any notice of any order, penalty, investigation,
action, suit, claim, proceeding or other action from any Governmental Authority or any other
Person with respect to the actual or alleged violation by the Seller, the Project Company, the
Project or any of the Project Assets, or liability of any Person with respect to the Project or any of
the Project Assets under, any Environmental Law, Governmental Approval or Permit and neither
the Seller nor the Project Company has knowledge of any circumstances, events or conditions that
could result in such a notice;
(c)
None of the Project Company, the Project, the Project Site, the Additional
Real Property nor any of the Project Assets is the subject of any administrative or judicial actions,
complaints, suits, proceedings or investigations pursuant to any Environmental Law;
(d)
Neither the Project Site, the Additional Real Property, the Facility, nor any
other of the Project Assets (including any above-ground or underground storage tanks located on
or a part thereof) contains any Hazardous Substance (including polychlorinated biphenyls,
asbestos, lead or urea formaldehyde) that, under any Environmental Law, (1) imposes or could
reasonably be expected to impose on any Person a liability for fines or penalties for noncompliance with Environmental Law, or for the performance or reimbursement of the costs of
removal, Remediation, or other cleanup, or liability for or obligation to reimburse damages to
natural resources; (2) has had or could reasonably be expected to have a material adverse effect on
the value of the Project or the Project Assets or its or their ownership, use or operation; or (3)
could reasonably be expected to result in the imposition of a Lien on the Project Site, the
Additional Real Property, the Project or any of the other Project Assets;
(e)
Neither the Seller nor the Project Company has disposed of, discharged, or
released any Hazardous Substance at the Project Site or the Additional Real Property, or has
arranged for the disposal of any Hazardous Substance to, at or from the Project Site, the
Additional Real Property or at any other location in connection with the Project;
(f)
Neither the Seller nor the Project Company has made, and is not currently
obligated to make, file or give any report or notification to any Governmental Authority regarding
the release or discharge of any Hazardous Substances;
(g)
Other than Permitted Encumbrances, no Lien in favor of any Person
imposed under Environmental Law relating to or in connection with any claim under an
Environmental Law has been filed or has been attached to the Project or any of the Project Assets
and, to the knowledge of the Seller and the Project Company, no response action or other
Remediation by any Governmental Authority has taken place that could form the basis for such a
Lien under an Environmental Law; and
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(h)
Each of the Seller and the Project Company has provided to the Purchaser
each environmental investigation, study, audit, test, review and other analysis conducted in
relation to any property or facility that is part of the Project.
6.14 Utilities. At the Closing Date, all utility services and interconnections currently
necessary for the operation of the Project as contemplated herein, including water supply,
sanitary and storm sewer facilities, and electric and telephone facilities have been installed and
are functional consistent with Prudent Utility Practices and all development or connection
charges have been paid.
6.15 Project Construction and Condition. At the Closing Date, except as set forth on
Schedule 6.15, (i) the Project and all of the Project Assets are in good operating condition,
maintenance and repair, (ii) the Project is capable of operating as designed in accordance with
the Required Design, the Specifications and with this Agreement, and (iii) neither the Project nor
any of the Project Assets has any Latent Defects.
6.16 No Third Party Options. There are no existing agreements, options or
commitments granting to any Person the right to acquire the Seller’s or the Project Company’s
right, title or interest in or to the Project or any of the Project Assets or any interest therein or the
Seller’s interest in the Project Company.
6.17
Taxes.
(a)
Except as disclosed on Schedule 6.17:
(1)
There are no Liens for Taxes upon the Project or any of the
Project Assets, except for Permitted Encumbrances;
(2)
Neither the Project nor any of the Project Assets is (i) property
required to be treated as being owned by another Person pursuant to the provisions of
Section 168(f)(8) of the Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property” within the meaning of
Section 168(h)(1) of the Code, (iii) “tax-exempt bond financed property” within the meaning of
Section 168(g) of the Code, (iv) subject to Section 168(g)(1)(A) of the Code, (v) in the case of
property owned by the Seller subject to a lease in which the Seller is the lessor thereunder,
“limited use property” within the meaning of Rev. Proc. 76-30, or (vi) subject to any provision of
state or local law comparable to any of the provisions listed above;
(3)
Neither the Seller nor the Project Company is a foreign person
within the meaning of Section 1445 of the Code;
(4)
All of the leases listed on Schedules 3.1(f)(1) and 3.1(f)(2) are
true leases for U.S. federal income tax purposes; and
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(5)
None of the Project Assets is an interest (other than
indebtedness within the meaning of Section 163 of the Code) in an entity taxable as a
corporation, partnership, trust, or real estate mortgage investment conduit for federal income tax
purposes.
6.18 Sufficiency of Project Assets. The Project Assets (a) constitute all of the assets,
tangible and intangible, necessary to fully operate the Project for its intended purpose without
temporary equipment or personnel, other than fuel and normal labor, and (b) constitute (i) all of
the assets, tangible and intangible, of the Project Company and (ii) all of the assets, tangible and
intangible, of the Seller relating to the Project.
6.19 Accuracy of Information. The information submitted by the Seller and the Project
Company in filings made in connection with obtaining Governmental Approvals, Permits and
Consents was and is true and correct. None of the information and documents which have been
or will be furnished by Seller or the Project Company or any representative thereof to the
Purchaser or any of its representatives in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary in order to make the statements therein not misleading in light
of the circumstances in which they were made. The Seller has disclosed to the Purchaser all
material information relating to the Project and the Project Assets.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Seller as of the Effective Date and as of the
Closing Date as follows, which representations and warranties will survive the Closing:
7.1
Transaction Representations.
(a)
Organization and Existence. The Purchaser is a duly organized and validly
existing corporation in good standing under the laws of the State of California and is qualified to
transact business in all jurisdictions where the ownership of its properties or its operations require
such qualification, except where the failure to so qualify would not have a material adverse effect
on its financial condition, its ability to own its properties or transact its business, or to carry out
the transactions contemplated hereby.
(b)
Execution, Delivery and Enforceability. The Purchaser has full corporate
power and authority to carry on its business as now conducted, enter into, and to carry out its
obligations under this Agreement and the Related Agreements which are executed by the
Purchaser. The execution, delivery and performance by the Purchaser of this Agreement and the
Related Agreements which are executed by the Purchaser, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized by all necessary
corporate action required on the part of the Purchaser. This Agreement and the Related
Agreements which are executed by the Purchaser have been duly and validly executed and
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delivered by the Purchaser and constitute the valid and legally binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with its and their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general application relating to or affecting the enforcement of creditors’ rights and
by general equitable principles.
(c)
No Violation. Neither the execution and delivery of this Agreement or any
of the Related Agreements executed by the Purchaser, nor the compliance with any provision
hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby will:
(1)
violate or conflict with, or result in a breach of any provisions
of the Articles of Incorporation or Bylaws of the Purchaser; or
(2)
violate any Governmental Rule, Governmental Approval,
Permit or Consent, or result in the termination of, or require the material modification of any
Governmental Approval, Permit or Consent, in each case applicable to the Purchaser as of the
Effective Date.
(d)
No Consents. No consent or approval of, filing with or notice to any
Person is required to be obtained or made by the Purchaser in connection with the Purchaser’s
execution, delivery and performance of any of this Agreement or the Related Agreements, or the
consummation of the transactions contemplated hereby or thereby, which, if not obtained or
made, will prevent the Purchaser from performing its obligations hereunder or thereunder.
7.2
Litigation. The Purchaser has no knowledge of any pending or threatened action,
suit, proceeding investigation or request for information by any Governmental Authority or other
Person which could result, or has resulted, in (a) the institution of legal proceedings to prohibit or
restrain the performance of this Agreement or any of the Related Agreements, or the
consummation of the transactions contemplated hereby or thereby, or (b) a claim for damages as
a result of this Agreement or any of the Related Agreements, or the consummation of the
transactions contemplated hereby or thereby. The Purchaser has no knowledge of any pending or
threatened litigation, claim, investigation or proceeding, private or governmental, or the
existence of a reasonable basis for such a litigation, claim, investigation or proceeding, which
directly and specifically relates to the Project or the Project Assets.
7.3
Brokers. All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on by the Purchaser without the intervention of any other
Person and in such a manner as not to give rise to any valid claim against the Seller (by reason of
the Purchaser’s actions) for a brokerage commission, finder’s fee or other like payment to any
Person.
ARTICLE 8
CERTAIN COVENANTS
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The Seller and the Project Company, jointly and severally, covenant and agree for the
benefit of the Purchaser as follows in Sections 8.1 through 8.15 hereof, and the Purchaser
covenants and agrees for the benefit of the Seller and the Project Company as follows in Section
8.15:
8.1
Access and Investigation. Between the Effective Date and the Closing Date,
consistent with the Seller’s and the Project Company’s obligations set forth in Section 2.2(e)(2)
and 2.2(e)(3), and upon reasonable advance notice received from the Purchaser, the Seller and
the Project Company shall (a) afford the Purchaser and its representatives full and free access,
during regular business hours, to the Project and all of the Project Assets then-existing, including
contracts, Governmental Approvals, Permits and Consents, books and records and other
documents and data, such rights of access to be exercised in a manner that does not unreasonably
interfere with the activities of the Seller, the Project Company or their contractors; (b) furnish the
Purchaser and its representatives with copies of all such contracts, Governmental Approvals,
Permits and Consents, books and records and other existing documents and data related to the
Project or any of the Project Assets as the Purchaser may reasonably request; (c) furnish the
Purchaser and its representatives with such additional financial, operating and other relevant data
and information related to the Project or any of the Project Assets as the Purchaser may
reasonably request; and (d) otherwise cooperate and assist, to the extent reasonably requested by
the Purchaser, with the Purchaser's investigation of the Project. In addition, the Purchaser shall
have the right to have the Project Site and the Additional Real Property and any tangible personal
property comprising any part of the Project or the Project Assets, inspected by the Purchaser or
its representatives (including subsurface testing), at the Purchaser's sole cost and expense, for
purposes of determining the physical condition and legal characteristics of the Project Site,
Additional Real Property and any relevant tangible personal property.
8.2
Conduct and Preservation of the Transferred Assets. Except as provided in this
Agreement, and unless otherwise consented to in writing by the Purchaser, during the period
from the Effective Date to the Closing, the Seller and the Project Company shall use best efforts
to (i) preserve, maintain, and protect the assets, rights, and properties of the Project; (ii) maintain
the books and records of the Project in the ordinary course of business consistent with GAAP;
(iii) comply with all contractual and other obligations applicable to the development,
construction and operation of the Project; (iv) comply with all Governmental Rules,
Governmental Approvals, Permits and Consents insofar as they relate to the Project and the
Project Assets; and (v) operate and maintain the Project and the Project Assets in accordance
with Prudent Utility Practices.
8.3
Restrictions on Certain Actions. Without limiting the generality of Section 8.2,
prior to the Closing, neither the Seller nor the Project Company shall, without the prior written
consent of the Purchaser:
(1)
mortgage, pledge or subject to any Liens the Project or any of the Project
Assets (except for Permitted Encumbrances); or
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(2)
agree to do anything prohibited by this Section 8.3 or anything which
would make any of the representations and warranties of the Seller and the
Project Company in this Agreement or the Related Agreements to which
either is a party untrue or incorrect in any material respect as of any time
through and including the Closing Date.
8.4
Required Governmental Approvals, Permits and Consents. As further described
in Section 11.1 and as promptly as practicable after the Effective Date, each of the Seller and the
Project Company shall use its best efforts to obtain, and to cooperate with the Purchaser in
obtaining, all Governmental Approvals, Permits and Consents required to consummate the
transactions contemplated by this Agreement, including maintaining and renewing the same, and
make all filings required by Governmental Rules to be made in order to consummate the
transactions contemplated by this Agreement (including all filings required to obtain Section 203
Approval). Each of the Seller and the Project Company shall cooperate with the Purchaser and its
representatives with respect to all filings that the Purchaser elects to make or, pursuant to
Governmental Rules, shall be required to make in connection with the transactions contemplated
by this Agreement.
8.5
Governmental Approvals, Permits, Consents and Agreements; Post Closing.
Seller shall assist the Purchaser in obtaining any Governmental Approvals, Permits, Consents
and agreements necessary or desirable for the Purchaser’s construction, ownership, use,
operation and maintenance of the Project, including such Governmental Approvals, Permits,
Consents, agreements and rights required to be conveyed or otherwise transferred by the Seller to
the Purchaser at the Closing but which were not issued in the name of the Purchaser at or before
Closing. In the event that any such required Governmental Approvals, Permits, Consents and
agreements cannot be transferred or obtained prior to the Closing Date, the Seller agrees to
maintain in effect such Governmental Approvals, Permits, Consents and agreements in respect of
the Project for the benefit of the Purchaser until amendments or replacement Governmental
Approvals, Permits, Consents and agreements have been approved by the relevant Governmental
Authority or Person and such amendments or replacements have been issued to or received by
the Purchaser as the Person authorized under such Governmental Approval, Permit or Consent,
as applicable.
8.6
Payment of Liabilities. The Seller and the Project Company shall pay or
otherwise satisfy in the ordinary course of business all of the liabilities and obligations related to
the Project accruing prior to and including the Closing Date.
8.7
Notification.
(a)
The Seller and the Project Company shall promptly notify the Purchaser of
any proceeding, actions, claims, suits or investigations pending or threatened against the Project
Company or the Project, as well as any thereof against the Seller that challenges or could affect
the Project or transactions contemplated hereby.
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(b)
The Seller and the Project Company shall provide prompt written notice to
the Purchaser of any change in any of the information contained in the representations and
warranties made in Article 6 hereof or any Exhibits or Schedules and shall promptly furnish any
information which the Purchaser may reasonably request in relation to such change; provided,
however, that such notice shall not operate to cure any breach of the representations and
warranties made in Article 6 hereof or any Exhibits or Schedules referred to herein or attached
hereto.
(c)
The Seller and the Project Company shall promptly, and in any event
within three (3) Business Days after receipt thereof, provide to the Purchaser (i) all notices,
correspondence and other communications from any Governmental Authority with respect to the
Project, and (ii) all material notices, correspondence and other communications from any
Contractor or counterparty to an Assigned Agreement with respect to the Project.
(d)
The Seller and the Project Company shall promptly notify the Purchaser of
the occurrence of any event which has had or could possibly have a material adverse effect on the
Project Company, the Project, any of the Project Assets or the transactions contemplated hereby.
8.8
Payment of Prevailing Wages. With respect to all construction work performed
as part of the Project, the Seller shall pay, and shall cause the EPC Contractor (and its
subcontractors performing construction work on the Project) and each other Contractor
performing construction work on the Project on behalf of the Seller to pay, “prevailing wages” to
the respective employees thereof in compliance with CPUC Decision 04-12-056, issued
December 16, 2004, as the same may be amended or supplemented from time to time.
8.9
Insurance. Commencing with the beginning of work on the Project Site, or on the
Effective Date in the case of the insurance described in Section 8.9(b), the Seller shall, at its sole
cost and expense, procure and maintain the following insurance coverages and be responsible for
the EPC Contractor and the other Contractors maintaining sufficient limits of the appropriate
insurance coverage, in each case in a form of policy, and with insurance carrier(s), satisfactory to
the Purchaser.
(a)
Workers’ Compensation and Employers’ Liability.
(1)
Workers’ Compensation insurance indicating compliance with
applicable Governmental Rules where the Seller performs work.
(2)
Employers’ Liability insurance shall not be less than $1,000,000
for injury or death occurring as a result of each accident.
(b)
Commercial General Liability.
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(1)
Coverage shall be at least as broad as the Insurance Services
Office (ISO) Commercial General Liability Coverage “occurrence” form, with no alterations to
the coverage form.
(2)
The limit shall not be less than $10,000,000 each occurrence for
bodily injury, property damage, personal injury and products/completed operations. Defense
costs shall be provided as an additional benefit and not included within the limits of liability.
Coverage limits may be satisfied using an umbrella or excess liability policy or an Owners
Contractors Protective (OCP) policy. Limits shall be on a per project basis.
(3)
Coverage shall:
(i)
by “Additional Insured” endorsement add as insureds the
Purchaser, its directors, officers, agents and employees with respect to
liability arising out of the Work performed by or for the Seller (Insurance
Services Office (ISO) Form CG2010 1185, or equivalent form). In the
event the Commercial General Liability policy includes a “blanket
endorsement by contract,” the following language added to the certificate
of insurance will satisfy the Purchaser’s requirement: “PG&E, its
directors, officers, agents and employees with respect to liability arising
out of the work performed by or for the Seller has been endorsed by
blanket endorsement;”
(ii)
be endorsed to specify that the Seller’s insurance is primary
and that any insurance or self-insurance maintained by the Purchaser shall
not contribute with it; and
(iii)
(c)
include a severability of interest clause.
Business Auto.
(1)
Coverage shall be at least as broad as the Insurance Services
Office (ISO) Business Auto Coverage form covering Automobile Liability, code 1 “any auto.”
(2)
The limit shall not be less than $5,000,000 each accident for
bodily injury and property damage.
(3)
If the Project scope of work involves hauling hazardous
materials, coverage shall be endorsed in accordance with Section 30 of the Motor Carrier Act of
1980 (Category 2) and the CA 99 48 endorsement.
(d)
Aircraft Liability.
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(1)
If the Project scope of work involves aircraft, coverage for
bodily injury, property damage, including injury sustained by any passenger, applying to all
aircraft owned, furnished or used by the Seller in the performance of this Agreement shall be
maintained. Work that involves chemical spraying shall include coverage for pesticide and
herbicide application.
(2)
The limit shall not be less than $5,000,000 single limit for
bodily injury and property damage including passenger liability.
(3)
Coverage shall: (i) by “Additional Insured” endorsement add as
insureds the Purchaser, its directors, officers, agents and employees with respect to liability
arising out of work performed by or for the Seller; (ii) be endorsed to specify that the Seller’s
insurance is primary and that any insurance or self-insurance maintained by the Purchaser shall
not contribute with it; and (iii) all rights of subrogation against the Purchaser shall be waived
with respect to all physical damage to any aircraft used during the performance of this
Agreement.
(e)
Watercraft Liability.
(1)
If the Project scope of work involves watercraft, Marine
protection and indemnity or other liability coverage including coverage for injury sustained by
any passenger, applying to all watercraft used in the performance of this Agreement.
(2)
The limit shall not be less than $1,000,000 for each occurrence
for bodily injury and property damage including passenger legal liability.
(3)
Coverage shall: (i) by “Additional Insured” endorsement add as
insureds the Purchaser, its directors, officers, agents and employees with respect to liability
arising out of the work by or for the Seller; (ii) be endorsed to specify that the Seller’s insurance
is primary and that any insurance or self-insurance maintained by the Purchaser shall not
contribute with it.
(f)
Seller’s Pollution Liability.
(1)
Coverage for bodily injury, property damage, including clean
up costs and defense costs resulting from sudden, accidental and gradual pollution conditions
including the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis,
toxic chemicals, hydrocarbons, liquids or gases, waste materials or other irritants, contaminants
or pollutants into or upon land, the atmosphere or any water course or body of water shall be
maintained.
(2)
The limit shall not be less than $1,000,000 each occurrence for
bodily injury and property damage.
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(3)
(g)
The policy shall endorse the Purchaser as additional insured.
All Risk Property Insurance.
(1)
An All Risk Property insurance policy including earthquake and
flood shall be maintained during the course of work being performed and include start-up and
testing for installed equipment and delayed opening coverage. The policy shall include coverage
for materials and equipment while under the care, custody and control of the Seller during the
course of work at the Project, offsite or while in transit to the Project.
(2)
Coverage shall be written to cover the full replacement cost of
the property. Limits and deductibles shall be approved by the Purchaser.
(h)
Professional Liability Insurance.
(1)
Errors and Omissions Liability insurance appropriate to the
Seller’s profession. Coverage shall be for a professional error, act or omission arising out of the
scope of services shown in the Agreement, including coverage for bodily injury, property
damage, and consequential financial loss.
(2)
The limit shall not be less than $10,000,000 per claim.
(3)
Coverage shall: (i) be endorsed to specify that the Seller’s
insurance is primary and that any insurance or self-insurance maintained by the Purchaser shall
not contribute with it, and (ii) be endorsed to specify that the selection of counsel, paid for by the
insurer, to defend the Purchaser and its officers, directors, agents, and employees against covered
or potentially covered claims shall be by mutual consent of the Purchaser and insurer.
(i)
Additional Insurance Provisions.
(1)
Before commencing performance of the Work, the Seller shall
furnish the Purchaser with certificates of insurance and endorsements of all required insurance
for the Seller.
(2)
The documentation shall state that coverage shall not be
cancelled except after thirty (30) days prior written notice has been given to the Purchaser.
(3)
The documentation must be signed by a person authorized by
that insurer to bind coverage on its behalf and shall be submitted to:
Pacific Gas and Electric Company
Insurance Department—Suite 2400
One Market, Spear Tower
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San Francisco, CA 94105
(4)
The Purchaser may review the insurance required by this
Section 8.9 on an annual basis and may inspect the original policies or require complete certified
copies, at any time.
(5)
Upon request, the Seller shall furnish the Purchaser evidence of
insurance for the EPC Contractor and any of the Contractors.
(j)
Form and Content.
All policies or binders with respect to insurance maintained by the Seller
shall:
(1)
waive any right of subrogation of the insurers hereunder against
the Purchaser, its officers, directors, employees, agents and representatives of each of them, and
any right of the insurers to any setoff or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any such person insured under such policy;
and
(2)
With respect to any additional insured, provide that such
insurance will not be invalidated by any action or inaction of each such insured and will insure
each such insured regardless of any breach or violation of any warranty, declaration or condition
contained in such insurance by the primary named insured.
8.10 Publicity.
Prior to (i) the Closing or (ii) if this Agreement is terminated
pursuant to Section 15.13, the close of business on the date that constitutes the six-month
anniversary of the date of such termination, none of the Seller or any of its Affiliates shall issue
any press release or otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby without prior Purchaser’s Written Approval, except as may be
required by Governmental Rule or stock exchange rule (in which case the Seller shall consult
with the Purchaser regarding the content of any such press release or announcement prior to its
release).
8.11 No Negotiation. Unless and until such time as this Agreement shall be terminated
pursuant to Section 15.13, the Seller shall not directly or indirectly solicit, initiate, encourage or
entertain any inquiries or proposals from, discuss or negotiate with, provide any nonpublic
information to or consider the merits of any inquiries or proposals from any Person (other than
the Purchaser) relating to the sale or transfer of the Project Company, the Project or any of the
Project Assets. The Seller shall promptly notify the Purchaser of any such inquiry or proposal.
8.12 Best Efforts. Upon the terms and subject to the conditions of this Agreement,
each of the Seller and the Project Company will use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or advisable consistent
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with Governmental Rules to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby, including satisfying the conditions precedent to
the consummation of such transactions as set forth herein.
8.13 Power of Attorney with Respect to Project and Project Assets. On the Closing
Date, each of the Seller and the Project Company will constitute and appoint the Purchaser the
true and lawful attorney of the Seller, with full power of substitution, in the name and on behalf
of the Seller but for the benefit of and at the sole cost and expense of the Purchaser, to institute
and prosecute all proceedings that the Purchaser may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to the Project and the Project Assets, or to
defend or compromise any action, suit or proceeding at law or in equity, arbitration, inquiry,
investigation or governmental, administrative, regulatory or other proceeding by or before any
arbitrator, court or other Governmental Authority in respect of the Project or any of the Project
Assets, and to take all such action in relation thereto as the Purchaser shall deem advisable,
except that this provision shall not apply to any actions with respect to any Excluded Assets or
Excluded Liabilities; provided, however, that the Purchaser shall have no obligation to do or
perform any of the acts authorized by this Section 8.13. Each of the Seller and the Project
Company acknowledges that such powers will be coupled with an interest and will not be
revocable by the Seller for any reason. The Purchaser will retain for its own account any amount
collected as a result of any action relating to the Project or any of the Project Assets taken
pursuant to the foregoing powers. No exercise by the Purchaser of rights under such powers of
attorney shall diminish or otherwise effect any obligation or liability that the Seller or the Project
Company may have under this Agreement.
8.14 Further Assurances; Post-Closing Assignments. From time to time following the
Closing, each of the Seller and the Project Company shall execute, acknowledge and deliver such
additional documents, instruments of conveyance, transfer and assignment or assurances and
take such other action as the Purchaser may reasonably request to more effectively assign,
convey and transfer to the Purchaser, and fully vest title in the Purchaser, with respect to the
Project and the Project Assets. Without limiting the generality of the foregoing, after the Closing
Date and upon the discovery by the Seller or the Project Company of any items included within
the definitions of the Project, Project Assets or the Assigned Agreements, but not transferred,
conveyed or assigned to or assumed by the Purchaser in the Bill of Sale, the Assignment and
Assumption Agreement or any other applicable instrument of conveyance, the Seller and the
Project Company shall (i) immediately deliver written notice to the Purchaser of the existence
and non-transfer or non-assumption of such item and provide the Purchaser with all the
information about and with access to such item as the Purchaser may reasonably request and (ii)
if notified in writing by the Purchaser within sixty (60) days after the delivery of such notice by
the Seller or the Project Company, transfer, convey or assign to the Purchaser such item in the
manner and on the terms and conditions consistent with this Agreement as if it were a part of
assets transferred under the Agreement as of the Closing Date.
8.15 Purchaser Staffing Prior to Closing. The Purchaser and the Seller shall enter into
an operator staffing agreement in the form of Exhibit T (the “Operator Staffing Agreement”)
pursuant to which the Purchaser will provide the Seller with the Purchaser’s operating
technicians, supervisors and other plant personnel listed in Schedule 1 to the Operator Staffing
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Agreement (the “Purchaser Operations Staff”) to assist the Seller and the EPC Contractor in
operating the Project during the period beginning with the commencement of commissioning
activities until Closing (the “Equipment Startup and Acceptance Period”). The Seller shall notify
the Purchaser (i) at least five (5) months prior to the projected beginning of the training period
for the Purchaser Operations Staff to be conducted by the Seller pursuant to Section 2.2(j), (ii)
ninety (90) days prior to the projected beginning of the Equipment Startup and Acceptance
Period, and (iii) no fewer than thirty (30) days prior to the actual beginning of the Equipment
Startup and Acceptance Period in written notices delivered to the Purchaser in accordance with
Section 15.11. Pursuant to the Operator Staffing Agreement, and subject to the Seller’s training
obligations set forth in Section 2.2(j), each of the Purchaser’s employees on the Purchaser
Operations Staff will have the requisite skills and qualifications to perform the roles listed for
such employees on Schedule 1 to the Operator Staffing Agreement and will be selected in the
sole discretion of the Purchaser. The Seller shall be responsible for paying the full salaries,
wages and benefits of the Purchaser Operations Staff as listed on Schedule 1 to the Operator
Staffing Agreement commencing at the start of training of the Purchaser Operations Staff as
described in Section 2.2(j) until the end of the Equipment Startup and Acceptance Period and for
any additional costs incurred in connection with the Purchaser Operations Staff during such
period. Throughout the Equipment Startup and Acceptance Period, the Purchaser Operations
Staff shall follow the rules, procedures and directives of the Seller. The Purchaser shall
indemnify the Seller for liabilities resulting from the gross negligence or willful misconduct of
any member of the Purchaser Operations Staff and will not be subject to any other liabilities
associated with the Purchaser Operations Staff’s actions with respect to the Project during the
Equipment Startup and Acceptance Period.
The Seller shall cause the EPC Contract to be consistent with the provisions of this
Section 8.16 and the training requirements for the Purchaser Operations Staff in Section 2.2(j),
including the limitations on liability and the use of the Purchaser Operations Staff during the
Equipment Startup and Acceptance Period as set forth herein.
8.16 Purchase of Power During Delivery Period. During the Delivery Period the
Seller shall sell to the Purchaser, and the Purchaser shall purchase from the Seller, the Project’s
Electrical Product, all on the terms and conditions set forth in the Tolling Agreement. During
the Delivery Period the Purchaser shall have the right to dispatch and otherwise control
operation of the Project in order to satisfy its requirements for Electrical Product and its
obligations (including its obligation to provide spinning reserves) to the ERO, WECC and
CAISO and any other applicable organization. If the Seller desires to perform work on the
Project during the Delivery Period, it shall do so in a manner that minimizes interference with
operation of the Project. If the Seller desires to conduct Performance Tests during the Delivery
Period, then notwithstanding any provision of the Tolling Agreement to the contrary, the costs
of conducting such Performance Tests (including the cost of fuel) shall be entirely at Seller’s
cost and expense, and the Seller also shall reimburse the Purchaser for any material operational
costs incurred by the Purchaser resulting from the conduct of such Performance Tests.
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ARTICLE 9
PROJECT WARRANTIES
9.1
General Warranty. The Seller and the Project Company, jointly and severally,
hereby warrant and guarantee to the Purchaser as follows, such warranties to apply during the
General Warranty Period:
(a)
Equipment Warranty. All materials, equipment and systems incorporated
into the Project and the Project Assets will be new, unused and undamaged when installed, shall
be free of defects and deficiencies in materials, assembly and workmanship, suitable for use under
the climatic and normal operating conditions extant at the Project Site and the Additional Real
Property (as applicable), and shall be otherwise consistent with and in compliance with the
Required Design, the Specifications and the requirements of this Agreement.
(b)
Workmanship Warranty. The construction, procurement and installation
services included in the Project and the Project Assets shall be performed with the Seller’s and, to
the extent constructed pursuant to any Construction Contract, the Contractor’s, best skill and
judgment, in a good and workmanlike manner, in compliance with the requirements of this
Agreement and the Construction Contracts, and shall otherwise be consistent with and in
compliance with the Required Design, the Specifications and the requirements of this Agreement.
Project Performance. The completed Project shall perform its intended
functions as a complete, integrated operating system as explicitly described and as can be
reasonably inferred from this Agreement.
(c)
9.2
Breach of General Warranty. If the Purchaser notifies the Seller in writing during
the General Warranty Period, or no later than thirty (30) days after the expiration of the General
Warranty Period, that a breach of any of the foregoing warranties set forth in Section 9.1 has
occurred during the General Warranty Period, the Seller shall correct (or cause to be corrected)
the defects and deficiencies promptly at no cost to the Purchaser. The Seller’s obligation to
correct defects and deficiencies shall include labor, parts, transportation, factory repair and
testing, dismantling, re-erecting, re-testing and commissioning. The terms “defects” and
deficiencies” shall not include damage arising from the Purchaser’s misuse or negligence, a
Force Majeure Event or normal wear and tear. In the event the Purchaser notifies the Seller that
the Project has ceased operating or is materially and adversely affected in its operations (as
demonstrated by either a decrease in net electrical output of at least ten percent (10%) or an
increase in net heat rate of at least ten percent (10%), in either case as a result of the alleged
defect or deficiency, the Seller shall respond to any such notice as soon as possible but in any
event not later than twenty-four (24) hours after receipt of any such notice. In all other cases, the
Seller shall commence its remedy as provided promptly, but in any event within ten (10) days. If
the Seller does not commence and diligently pursue a remedy within the applicable time
specified in this Section 9.2, the Purchaser, after notice to the Seller, may perform or have
performed by third parties the necessary remedy and the Seller shall be liable for all reasonable
direct costs (including overhead), charges and expenses (including transportation and expediting
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fees) incurred by the Purchaser in connection with such remedy. The undisputed value of such
costs shall be payable within twenty-five (25) Days of the Seller’s receipt of Purchaser’s invoice
for such costs, and the Purchaser shall be entitled to offset the cost of such remedial work from
any amounts which are or become payable to the Seller.
9.3
Design Warranty. The design and engineering of the Project shall be performed
in accordance with the standards of care, skill and diligence as would be provided by an
engineering firm experienced in supplying similar services nationally in the United States of
America to entities owning projects of technology, complexity and size similar to that of the
Project, and otherwise in compliance with the Required Design and the Specifications (the
“Design Warranty”).
9.4
Breach of Design Warranty. If the Purchaser notifies the Seller in writing during
the Design Warranty Period, or no later than thirty (30) days after expiration of the Design
Warranty Period, that a breach of the design warranty described in Section 9.3 has occurred, the
Seller promptly shall investigate and determine the source of the deficiency or defect, promptly
correct or cause to be corrected any defective design which resulted therefrom, promptly issue
corrected final as-built drawings, if applicable, and promptly replace or cause to be replaced all
equipment and materials associated with the defective design and re-perform all other work
necessary to cure the breach of the Design Warranty, all at no cost to the Purchaser.
9.5
Enforcement and Assignment of Vendor Warranties. Until the end of the General
Warranty Period, at the Purchaser’s request, the Seller and the Project Company shall promptly
enforce all warranties provided by the EPC Contractor and other equipment vendors and third
parties with respect to materials and equipment comprising part of the Project, and if the Seller
or the Project Company fails to do so, then in addition to enforcing the warranties provided by
the Seller and the Project Company under this Agreement, the Purchaser shall have the right to
enforce such warranties directly against the EPC Contractor and equipment vendors, all at the
Seller’s cost. At any time requested by the Purchaser, and in any event upon the expiration of
the General Warranty Period, the Seller and the Project Company shall assign to the Purchaser
pursuant to the Assignment and Assumption Agreement all warranties and guarantees provided
by the EPC Contractor and other contractors, vendors and suppliers with respect to the Project
and materials and equipment comprising part of the Project.
ARTICLE 10
REGULATORY APPROVAL
10.1
Regulatory Approval and CPUC Approval.
(a)
CPUC Approval and Continuing Obligations. The Parties acknowledge
and agree that the Purchaser’s obligations under this Agreement are expressly contingent upon
and subject to the Purchaser’s receipt of Regulatory Approval (including the CPUC Approval).
If the CPUC has not issued any decision on the merits in response to the CPUC Approval
Application within eight (8) months after the date on which the Purchaser files the CPUC
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Approval Application pursuant to Section 11.1(a) below, then the Guaranteed Commercial
Availability Date and each Project Milestone shall be extended on a day-for-day basis until the
date the CPUC has issued a decision on the merits in response to the CPUC Approval
Application. If the CPUC has not issued any decision on the merits in response to the CPUC
Approval Application within one (1) year after the date on which the Purchaser files the CPUC
Approval Application pursuant to Section 11.1(a) below, then either Party may elect to terminate
this Agreement by providing notice of termination to the other Party in accordance with Section
15.11, to be effective upon receipt of such notice, provided that the CPUC has not issued a
decision on the merits in response to the CPUC Approval Application prior to the date on which
the termination notice is delivered. In the event the Agreement is terminated pursuant to this
Section 10.1(a), the Parties shall have no further rights or obligations to each other except as set
forth in Section 11.3 and Article 12.
(b)
Review of CPUC Order. If the CPUC, or an applicable appellate body
reviewing the CPUC order issued in response to the CPUC Approval Application, issues an order
that with the passage of time necessary for such order to be deemed final and non-appealable
constitutes a CPUC Approval as determined by the Purchaser in its sole discretion, without
condition or modification, then none of the Seller or its Affiliates, directly or in cooperation with
others, shall seek further review of the order. If the CPUC order issued in response to the
Approval Application denies the relief requested by the Purchaser, grants it with conditions or
requires modification of the Agreement in a manner that has an adverse effect on the Purchaser,
then the Purchaser may seek judicial review of the decision. In the event that judicial review is
sought pursuant to the prior sentence or by a third party, then: (i) each of the Parties agrees that it
will remain bound to this Agreement for the additional period of one (1) year from the date of the
petition for judicial review; and (ii) commencing on the date such petition for judicial review is
filed or, if later, the date that is eight (8) months after the date on which the Purchaser files the
CPUC Approval Application pursuant to Section 11.1(a) below, the Guaranteed Commercial
Availability Date and each Project Milestone shall be extended on a day-for-day basis until the
first to occur of (x) the date of receipt of a final, non-appealable order granting the relief requested
by the Purchaser, and (y) the date the Purchaser provides to the Seller the notice contemplated in
the immediately following sentence. In the event that a final, non-appealable order (of the CPUC,
on remand, or appellate body) denies the relief requested by the Purchaser, conditions its approval
or requires modification of the Agreement in a manner that has an adverse effect on the Purchaser
or fails to issue such final non-appealable order within the one-year period, then the Purchaser
may (in its sole discretion) elect to notify the Seller in writing after thirty (30) days of the
issuance of such order that it will accept the terms of this Agreement as so conditioned or
modified; and, after giving notice thereof in accordance with Section 15.11, the order shall be
deemed to be a CPUC Approval. Absent delivery of such notice by the Purchaser within thirty
(30) days of such order, or receipt of an order within the one-year period that by its terms, and
with the passage of time, is a CPUC Approval as determined by the Purchaser in its sole
discretion, this Agreement shall terminate automatically without further liability or obligation of
the Parties to one another, except as set forth in Section 11.3 and Article 12.
ARTICLE 11
CERTAIN AGREEMENTS
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11.1
Regulatory Matters.
(a)
CPUC Approval. The Purchaser will use Commercially Reasonable
Efforts to obtain the CPUC Approval, including filing an application (“CPUC Approval
Application”) with the CPUC seeking an order that with the passage of time after issuance would
constitute CPUC Approval.
(b)
Required Governmental Approvals, Permits and Consents. Except as
provided in Section 11.1(a), the Seller and the Project Company shall be responsible for
obtaining, and shall use Commercially Reasonable Efforts to obtain, the following (collectively,
the “Required Approvals”) on or before the Closing at no cost or expense to the Purchaser:
(1)
all Governmental Approvals, Permits and Consents required for
the development of the Project and the Seller’s and the Project Company’s consummation of the
transactions contemplated by this Agreement and the Related Agreements, including the Section
203 Approval;
(2)
without limiting the generality of clause (1) above, the specific
consents to the assignment from the Seller or the Project Company to the Purchaser of (or, as
applicable, the reissuance in the name of the Purchaser of) the Governmental Approvals, Permits
and Consents listed in Schedule 11.1(b); and
(3)
without limiting the generality of clause (1) above, the
assignment by the Seller or the Project Company to the Purchaser of the Assigned Agreements.
Promptly following any request by the Purchaser, the Seller will provide a detailed report as to
the status of each Required Approval and the Seller’s efforts to obtain the same. After the
Closing, the Seller will notify promptly all relevant Governmental Authorities and all third
Persons from whom Consents have been obtained or to whom notice must otherwise be given of
the change in ownership of the Project and the Project Assets resulting from the transactions
contemplated herein, in each case to the extent required by Governmental Rules or the
agreements to which the Consents relate.
(c)
Transfer and Amendment. To the extent that Governmental Rules do not
permit the transfer, amendment or issuance in the name of the Purchaser of any Governmental
Approval or Permit required to be transferred from the Seller or the Project Company to the
Purchaser hereunder prior to or at Closing, then the Seller shall, or shall cause the Project
Company to, prepare and submit prior to or at Closing all applications, documentation,
amendments, certifications or other filings requested or required by Governmental Rules or
Governmental Authorities to obtain such transfer, amendment or re-issuance of such
Governmental Approval or Permit, and shall provide to the Purchaser at Closing evidence
satisfactory in form and substance to the Purchaser in the Purchaser’s sole discretion that such
transfer, amendment or re-issuance (i) will occur not later than thirty (30) days after the Closing,
and (ii) will not result in aggregate costs to the Purchaser in excess of $100,000 or any adverse
changes in the terms of such Governmental Approval or Permit.
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(d)
Cooperation. Each Party will provide such cooperation as the other Party
may reasonably request to assist such other Party’s efforts to obtain the Governmental Approvals,
Permits and Consents required pursuant to this Section 11.1 and will cooperate with the other
Party in executing such applications and other documents as are required to effectuate any
transfers (or reissuance, as applicable) thereof to the Purchaser. Each Party will bear its own costs
for these applications and proceedings.
11.2
Credit and Collateral Requirements.
(a)
Collateral Posting Requirements. As of the Effective Date, the Seller shall
deliver to the Purchaser, and thereafter maintain with the Purchaser until such time as the Seller
delivers the Delivery Date Security, Collateral in the amount of the Application Security. Within
five (5) Business Days of the date Regulatory Approval has be obtained, the Seller shall deliver
to the Purchaser Collateral equal to the amount of the Delivery Date Security, and thereafter
maintain with the Purchaser Collateral in the amount of the Delivery Date Security through the
end of the General Warranty Period. In the event that the Delivery Date Security or any portion
thereof is drawn by the Purchaser, the Seller shall not be obligated to replenish the amount
drawn; provided, however, that the Seller shall replenish the Delivery Date Security to the extent
necessary to maintain it in an amount at least equal to $[_______] from the Closing Date through
the end of the General Warranty Period. Collateral required under this Agreement shall not be
deemed a limitation of damages.
(b)
Use and Return of Collateral. The Purchaser shall be entitled to draw
upon the Collateral for any obligation of the Seller arising under this Agreement that is not fully
satisfied when due. All Collateral drawn by the Purchaser shall be applied toward satisfaction of
the obligations of the Seller to the Purchaser under this Agreement. Within ten (10) Business
Days of each date on which the Seller’s obligation to post Collateral under this Agreement
expires or is reduced, the Purchaser shall return to the Seller any and all Collateral that, in
combination with any other Collateral then posted with the Purchaser by the Seller, exceeds the
Seller’s then current posting obligation; provided, however, that if the Purchaser is entitled to
indemnification by the Seller under Section 12.2, then the Purchaser’s obligation to return
Collateral shall be deferred until ten (10) Business Days after the date on which the Seller has
satisfied its obligations under Section 12.2. Within ten (10) Business Days of the Effective Date,
provided that the Seller is not in breach of its obligations under the first sentence of Section
11.2(a), the Purchaser shall return to the Seller its Initial Offer Deposit.
(c)
Cash Collateral. If the Seller elects to post cash, the Seller shall have the
option to either post cash directly with the Purchaser or post such cash in a Qualified Institution
in accordance with a Deposit Account Agreement (“DAA”), substantially in the form attached
hereto as Exhibit V. The Purchaser may draw against the cash Collateral for the reasons set forth
in Section 11.2(b), under the conditions set forth in the Deposit Account Agreement. If the
Purchaser is holding Collateral in the form of cash which is not held under a Deposit Account
Agreement, and provided that the Purchaser is not entitled to indemnification by the Seller under
Section 12.2, the Purchaser shall pay interest on Collateral in the form of cash on the third
Business Day of the calendar year following the calendar year used in the most recent Interest
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Calculation (or upon the date on which the Collateral is returned to the Seller, if earlier). Interest
shall be accrued on a monthly basis and compounded at the end of each calendar month from the
date the cash is fully deposited through the date one day prior to its return, or conversion to
another form of Collateral, at the Interest Rate (“Interest Calculation”). The Interest Rate shall
be calculated based on a 360-day year. The Purchaser may draw against the cash collateral for
the reasons set forth in Section 11.2(b).
(d)
Additional Credit Support. The Seller’s obligations under the Agreement
during the period after the end of the General Warranty Period, including its obligations with
respect to the warranties set forth in Article 9, shall be supported by cash Collateral, a Letter of
Credit, a parent guaranty, or other credit support, in each case acceptable to the Purchaser in its
sole discretion.
(e)
Letters of Credit. If the Seller has provided a Letter of Credit pursuant to
this Agreement, then not later than thirty days prior to the stated expiration date of each
outstanding Letter of Credit, the Seller shall renew (or cause the renewal of) each such Letter of
Credit, or replace (or cause the replacement of) each such Letter of Credit with one or more
replacement Letters of Credit in the amount required by this Agreement at the time of such
renewal or replacement, or shall replace such Letter of Credit with cash in an amount equal to the
required face amount of the Letter of Credit, to be held in a DAA pursuant to Section 11.2(c). In
the event (A) the issuer of a Letter of Credit shall fail to maintain a Credit Rating of at least an
A2 by Moody’s or at least an A by S&P; or (B) the issuer of an outstanding Letter of Credit
indicates its intent not to renew such Letter of Credit; or (C) an issuer of a Letter of Credit shall
fail to honor the Purchaser’s’s properly documented request to draw on an outstanding Letter of
Credit, then, within five (5) Business Days thereafter, the Seller shall (1) provide a substitute
Letter of Credit meeting the requirements of this Section 11.2(e) from a bank other than the bank
that has been downgraded, refused to renew or failed to honor the outstanding Letter of Credit, or
(2) post cash, in each case in an amount equal to the outstanding Letter of Credit (“Cure”). If the
Purchaser does not receive replacement Collateral within the time specified in either of the two
preceding sentences, it may draw on the full available amount of the Letter of Credit. Amounts
drawn in such circumstances will be held in accordance with a Deposit Account Agreement if
one has been established and is currently in effect and in the absence of a Deposit Account
Agreement, in accordance with Section 11.2(c). Amounts drawn shall be available to be applied
by the Purchaser for the reasons set forth in Section 11.2(b) under the conditions set forth in the
Letter of Credit. If the Seller fails to Cure or if a Letter of Credit expires or terminates without a
full draw thereon by the Purchaser, or such Letter of Credit fails or ceases to be in full force and
effect at any time that such Letter of Credit is required pursuant to the terms of this Agreement,
then the Seller shall have failed to meet its obligations pursuant to this Section 11.2.
(f)
Costs of Posting Collateral; Termination. In all cases, the costs and
expenses of establishing, renewing, substituting, canceling, increasing, reducing or otherwise
administering a Letter of Credit or other form of Collateral shall be borne by the Seller. If the
Purchaser draws on a Letter of Credit due to a failure by the Seller to satisfy a payment
obligation under the Agreement, the Purchaser shall not terminate this Agreement or declare a
default hereunder if the proceeds from the draw satisfy in full the payment obligation (subject to
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the Seller satisfying its other obligations under this Agreement, including any further
requirements to post Collateral under this Agreement).
11.3 Confidentiality. Neither Party shall disclose any Confidential Information to a
third party, other than (i) such Party’s employees, lenders, counsel, accountants, advisors, rating
agencies, equity investors, potential lenders or potential equity investors who have a need to
know such information and have agreed to keep such terms confidential, (ii) for disclosure to the
Purchaser’s Procurement Review Group, as defined in CPUC Decision (D) 02-08-071 and made
applicable to this Agreement by D.04-06-015, subject to a confidentiality agreement, (iii) to the
CPUC under seal for purposes of review, (iv) disclosure of terms specified in and pursuant to
this Section 11.3; (v) in order to comply with any applicable Law, regulation, or any exchange,
control area or CAISO rule, or order issued by a court or entity with competent jurisdiction over
the disclosing Party (“Disclosing Party”), other than to those entities set forth in subsection (vi);
(vi) in order to comply with any applicable regulation, rule, or order of the CPUC, the California
Energy Commission or FERC; or (vii) as the Purchaser deems necessary in order to demonstrate
the reasonableness of its actions to duly authorized governmental or regulatory agencies
including the CPUC or any division thereof. In connection with requests made pursuant to
clause (v) of this Section 11.3 (“Disclosure Order”) and disclosures pursuant to clause (vi) or
(vii) (“Regulatory Disclosures”) each Party shall, to the extent practicable, use reasonable efforts
to: (i) notify the other Party prior to disclosing the Confidential Information and (ii) prevent or
limit such disclosure. After using such reasonable efforts, the Disclosing Party shall not be: (i)
prohibited from complying with a Disclosure Order or making the Regulatory Disclosures or (ii)
liable to the other Party for monetary or other damages incurred in connection with such
disclosures of the confidential information. Except as provided in the preceding sentence, the
Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in
connection with, this confidentiality obligation. The confidentiality obligation hereunder shall
not apply to any information that was or hereafter becomes available to the public other than as a
result of a disclosure in violation of this Section 11.3. If this Agreement is terminated pursuant
to Section 15.13, each Party will promptly return or certify the destruction of, if so requested by
the other Party, any Confidential Information provided to it and will use Commercially
Reasonable Efforts to return any copies thereof that may have been provided to others in
accordance with this Section 11.3. The obligations of the Parties in this Section 11.3 will survive
the termination of this Agreement, the discharge of all other obligations owed by the Parties to
each other, any transfer of title to the Project and the Project Assets and the Closing of the
transactions contemplated in this Agreement.
11.4
Taxes.
(a)
Transfer and Sales Taxes. The Seller shall be responsible for the payment
of any sales, use, transfer, documentary and other Taxes arising in connection with the sale of the
Project and the Project Assets to the Purchaser and any Taxes on the Project or the development
of the Project arising prior to and including the Closing Date.
(b)
Property Taxes. State and local real and personal property Taxes relating
to the Project and the Project Assets for the tax year in which the Closing occurs will be prorated
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between the Purchaser and the Seller on the following basis: the Seller is to be responsible for all
such Taxes for the period up to and including the Closing Date; and the Purchaser is responsible
for all such Taxes for the period after the Closing Date. All Taxes assessed on an annual (whether
calendar or other 12-month) basis will be prorated on the assumption that an equal amount of
Taxes applies to each day of the tax year, regardless of how many installment payments are billed
or made.
(c)
Tax Refunds. The Seller will be entitled to any refunds or credits of Taxes
relating to the Project and the Project Assets for the period prior to and including the Closing
Date. The Purchaser will promptly notify and forward to the Seller the amounts of any such
refunds or credits to the Seller within sixty (60) days after receipt thereof.
(d)
Pending or Threatened Actions. After the Closing Date, the Purchaser will
notify the Seller in writing, within fifteen (15) days after its receipt of any correspondence, notice
or other communication from a taxing authority or any representative thereof, of any pending or
threatened tax audit, or any pending or threatened judicial or administrative proceeding that
involves Taxes relating to the Project and the Project Assets for the period prior to and including
the Closing Date, and furnish the Seller with copies of all correspondence received from any
taxing authority in connection with any audit or information request with respect to any such
Taxes relating to the Project and the Project Assets for the period prior to and including the
Closing Date.
(e)
Cooperation and Defense of Tax Claims. Notwithstanding any provision of
this Agreement to the contrary, with respect to any claim for refund, audit, examination, notice of
deficiency or assessment or any judicial or administrative proceeding that involves Taxes relating
to the Project and the Project Assets for the period either entirely prior to and including the
Closing Date or both prior to and after, the Closing Date (collectively, “Tax Claim”), the
Purchaser will reasonably cooperate in contesting any Tax Claim, including making available
original books, records, documents and information for inspection, copying and, if necessary,
introduction as evidence at any such Tax Claim contest and making employees available on a
mutually convenient basis to provide additional information or explanation of any material
provided hereunder with respect to such Tax Claim or to testify at proceedings relating to such
Tax Claim. The Seller will control all proceedings taken in connection with any Tax Claim that
pertains entirely to the period prior to the Closing Date, and the Seller and the Purchaser will
jointly control all proceedings taken in connection with any Tax Claim pertaining to the period
both prior to and after the Closing Date. The Purchaser has no right to settle or otherwise
compromise any Tax Claim which pertains entirely to the period prior to the Closing Date; and
neither Party has the right to settle or otherwise compromise any Tax Claim which pertains to the
period both prior to and after the Closing Date without the other Party’s prior written consent.
11.5
Environmental Matters.
(a)
Seller’s and Project Company’s Rights and Responsibilities.
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(1)
Each of the Seller and the Project Company agrees to undertake
any Remediation relating to any Pre-Closing Environmental Condition that is required by any
Governmental Authority with jurisdiction over the Project, the Project Site and/or the Additional
Real Property under Environmental Laws, and to continue such Remediation until Completion.
“Completion” means, with respect to any Pre-Closing Environmental Condition, that the Seller
has received written notice from each Governmental Authority exercising jurisdiction under
Environmental Laws over the Remediation of such Pre-Closing Environmental Condition that no
additional Remediation of such Pre-Closing Environmental Condition is required at that time;
provided, however, if residual Hazardous Substances have been left in place with the written
consent of such Governmental Authority, the residual Hazardous Substances will be deemed to
be a separate Pre-Closing Environmental Condition that has not achieved Completion.
(2)
Each of the Seller and the Project Company has the right to
undertake: (i) the Remediation described in Section 11.5(a)(1); and (ii) any additional
Remediation relating to Pre-Closing Environmental Conditions as the Seller reasonably deems
necessary or appropriate with the Purchaser’s consent.
(b)
Remediation Procedures. With respect to any Remediation required or
permitted to be undertaken by the Seller or the Project Company under Section 11.5(a):
(1)
The Seller and the Project Company agree that prior to
proposing any work plan for Remediation to a Governmental Authority with jurisdiction over the
Pre-Closing Environmental Condition under Environmental Laws, the Seller will provide the
Purchaser with a copy of the work plan for the Purchaser’s review and obtain the Purchaser’s
Written Approval. The work plan will set forth the type and nature of the Remediation, the
specific locations at the Project Site and/or the Additional Real Property where the Remediation
will be conducted, and the type and nature of any equipment that will be used on or installed at
the Project Site and/or the Additional Real Property for purposes of conducting the Remediation.
Any work plan shall minimize to the greatest degree possible any disruption of the Purchaser’s
use or operation of the Project, and shall not interfere with any expansion or repowering of the
Project disclosed in writing by the Purchaser to the Seller. All work will be done in a good and
workmanlike manner, in substantial compliance with Environmental Law, with a minimum of
disruption to Purchaser’s ownership, use, maintenance and operation of the Facility.
(2)
If the Seller or the Project Company is undertaking the
Remediation under the supervision of a Governmental Authority with jurisdiction over the PreClosing Environmental Condition under Environmental Laws, the Seller will use Commercially
Reasonable Efforts to obtain written evidence of such Governmental Authority’s approval of
such work plan and, if and when obtained, will provide the Purchaser with such evidence.
(3)
The Seller will inform the Purchaser in writing at least one (1)
month in advance of all material actions to be taken on the Project Site or the Additional Real
Property. The Seller will observe the Purchaser’s procedures for protection of health and safety,
and will ensure compliance with all health, safety and other Governmental Rules applicable to
the Remediation, including those applicable to emergencies.
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(4)
After the completion of any Remediation, the Seller and the
Project Company will restore the surface to a condition substantially similar to that existing at
the time immediately prior to any such Remediation, except to the extent that the Purchaser has
taken actions at the Project Site so as to make such restoration impracticable using Commercially
Reasonable Efforts.
(5)
After the completion of all or part of any Remediation, the
Seller will provide to the Purchaser evidence that Completion has been achieved in accordance
with applicable Governmental Approvals, Permits, and Environmental Laws.
(c)
Purchaser’s Responsibilities.
(1)
The Purchaser agrees to use Commercially Reasonable Efforts
to cooperate with any Remediation undertaken by the Seller or the Project Company, provide
access to the Project Site and the Additional Real Project as necessary at reasonable times and
upon reasonable notice, and assist the Seller and the Project Company in obtaining access to
offsite property if necessary for the implementation of the Remediation work.
(2)
The Purchaser will promptly notify the Seller of any
information received by the Purchaser from any Person other than the Seller regarding the
presence or suspected presence of Hazardous Substances that the Purchaser believes to be a PreClosing Environmental Condition.
(3)
Until such time as the Seller provides to the Purchaser evidence
that the Seller has achieved Completion with respect to a Pre-Closing Environmental Condition,
the Seller and the Purchaser will, upon the written request of the other Party, provide to the
requesting Party copies of all material reports, correspondence, notices and communications
regarding any Pre-Closing Environmental Condition or the Remediation thereof sent to or
received from any Governmental Authority with respect to such Remediation or Pre-Closing
Environmental Condition.
11.6 Title Report. Not later than sixty (60) days prior to the estimated Closing Date,
the Seller shall provide to the Purchaser a preliminary title report (“Preliminary Title Report”)
issued by the Title Company with respect to all real property comprising part of the Project.
11.7
Force Majeure
(a)
Effect of Force Majeure. A Party shall not be considered to be in default in
the performance of its obligations to the extent that the failure or delay of its performance is due
to a Force Majeure Event, and the non-affected Party shall be excused from its corresponding
performance obligations to the extent due to the affected Party’s failure or delay of performance.
Notwithstanding the forgoing, a failure to make payments accrued prior to the Force Majeure
Event when due shall not be excused. The burden of proof for establishing the existence and
consequences of a Force Majeure Event lies with the Party initiating the claim.
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(b)
Notice of Force Majeure. As soon as possible, but in any event within five
(5) Business Days of the occurrence of an event the affected Party believes is a Force Majeure
Event the Party desiring to invoke a Force Majeure Event as a cause for delay in its performance
of, or failure to perform, any obligation (other than the payment of money) hereunder, shall
provide the other Party notice in the form of a letter describing in detail the particulars of the
occurrence giving rise to the Force Majeure Event including the expected duration and effect of
such Force Majeure Event. Failure to provide timely notice constitutes a waiver of a claim of a
Force Majeure Event. Promptly, but in any event within ten (10) days, after a notice is given
pursuant to the preceding sentence, the Parties shall meet to discuss the basis and terms upon
which the arrangements set out in this Agreement shall be continued taking into account the
effects of such Force Majeure Event.
(c)
Mitigation of Force Majeure. The suspension of performance due to a
claim of a Force Majeure Event must be of no greater scope and of no longer duration than is
required by the Force Majeure Event. Each Party suffering a Force Majeure Event shall take, or
cause to be taken, such action as may be necessary to void, or nullify, or otherwise to mitigate, in
all material respects, the effects of such Force Majeure Event. The Parties shall take all reasonable
steps to ensure resumption of normal performance under this Agreement after the cessation of any
Force Majeure Event.
ARTICLE 12
SURVIVAL AND INDEMNIFICATION
12.1 Survival of the Parties’ Representations, Warranties and Covenants. The
representations and warranties of the Seller and the Purchaser contained in this Agreement or in
any instrument delivered in connection herewith shall survive the Closing until the expiration of
two (2) years after the Closing Date; provided, however, the Seller’s representations and
warranties in Section 6.12 and Section 6.13 shall not be subject to such two-year survival period
and the Seller’s representations and warranties in Section 6.17 and elsewhere concerning Taxes
related to the Project and the consummation of the transactions contemplated hereby shall
survive until the expiration of any applicable statute of limitations relating to such Taxes. Unless
a specified survival period is otherwise set forth in this Agreement (in which event such
specified period will control), the covenants in this Agreement or in any instrument delivered in
connection herewith will survive the Closing and remain in effect until two (2) years after the
Closing Date. Any indemnification claim with respect to any of such matters which is not
asserted by a Notice of Claim (given as herein provided) relating thereto within the survival
period set forth below may not be pursued and is hereby irrevocably waived after such period.
Any Third Party Claim for an Indemnifiable Loss asserted within such period of survival as
herein provided will be timely made for purposes hereof.
12.2
Indemnification by the Seller.
(a)
Purchaser Claims. Except as otherwise provided in Section 12.2(b), the
Seller will indemnify, defend and hold harmless the Purchaser and its parents and Affiliates, and
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each of their officers, directors, employees, attorneys, agents and successors and assigns
(collectively, the “Purchaser Group”), from and against any and all damages, claims, losses,
liabilities, obligations, costs and expenses, including reasonable legal, accounting and other
expenses, and the costs and expenses of any and all actions, suits, proceedings, demands,
assessments, judgments, settlements and compromises, which arise out of or relate to the
following (collectively, “Purchaser Claims”):
(1)
any breach or violation by the Seller or the Project Company of
this Agreement, the Related Agreements or any agreement executed in connection with the
transactions contemplated by this Agreement;
(2)
any breach or inaccuracy of the representations or warranties of
the Seller or the Project Company set forth herein;
(3)
any Third Party Claims resulting from or arising out of the
development, financing, construction, testing and preparation of the Project for commercial
operation or out of the Seller’s or the Project Company’s ownership, use or operation of the
Project or any Project Assets prior to and through the Closing Date, including without limitation
actions or claims with respect to tax liabilities, claims by third parties in respect of contract, tort
and other liabilities, and liabilities arising under the Financing Arrangements;
(4)
any Indemnifiable Loss resulting from or arising out of any PreClosing Environmental Conditions;
(5)
any Indemnifiable Loss resulting from or arising out of the
disposal, release or threatened release of Hazardous Substances by or on behalf of the Seller or
the Project Company or at the Seller’s or the Project Company’s direction or by its or their
arrangement;
(6)
any loss or damages resulting from or arising out of the Seller’s
or the Project Company’s ownership or operation of the Excluded Assets after the Closing or that
are related to the Excluded Liabilities;
(7)
any Taxes for which the Seller or the Project Company is
responsible pursuant to Section 11.4; or
(8)
any additional costs, liabilities or loss of revenues attributable to
modifications to any Governmental Approval, Permit or Consent occurring in connection with
the transfer of such Governmental Approval, Permit or Consent to the Purchaser, if such transfer
is not completed on or prior to Closing.
(b)
Seller’s Exceptions. The Purchaser Claims will not include any damages,
claims, losses, liabilities and expenses to the extent the Purchaser has agreed to provide
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indemnification therefor pursuant to Section 12.3 or which the Purchaser has agreed to assume
pursuant to this Agreement.
12.3
Indemnification by the Purchaser.
(a)
Seller Claims. Except as otherwise specifically provided in Section
12.3(b), the Purchaser will indemnify, defend and hold harmless the Seller and its parents and
Affiliates and each of their officers, directors, employees, attorneys, agents and successors and
assigns (collectively, the “Seller Group”), from and against any and all damages, claims, losses,
liabilities, obligations, costs and expenses, including reasonable legal, accounting and other
expenses, and the costs and expenses of any and all actions, suits, proceedings, demands,
assessments, judgments, settlements and compromises, which arise out of or relate to the
following (collectively, “Seller Claims”):
(1)
any breach or violation by the Purchaser of this Agreement, the
Related Agreements or any agreement executed in connection with the transactions contemplated
by this Agreement;
(2)
any breach or inaccuracy of any of the representations or
warranties of the Purchaser set forth herein; or
(3)
any Third Party Claims resulting from or arising out of the
Purchaser’s ownership, use or operation of the Project or any Project Assets after the Closing,
including without limitation actions or claims with respect to tax liabilities and claims by third
parties in respect of contract, tort and other liabilities, and excluding any claim arising from the
presence or release of Hazardous Substances to the extent attributable to Pre-Closing
Environmental Conditions.
(b)
Purchaser Exceptions. The Seller Claims will not include any damages,
claims, losses, liabilities and expenses to the extent the Seller has agreed to provide
indemnification therefor pursuant to Section 12.2 or which the Seller has agreed to assume
pursuant to this Agreement.
12.4 Notice of Claim. Subject to the terms of this Agreement and upon obtaining
knowledge of a claim for which it is entitled to indemnity under this Article 12, the Party seeking
indemnification hereunder (the “Indemnitee”) will promptly notify the Party against whom
indemnification is sought (the “Indemnitor”) in writing of any damage, claim, loss, liability or
expense which the Indemnitee has determined has given or could give rise to a claim under
Section 12.2 or Section 12.3 (The written notice is referred to as a “Notice of Claim”). A Notice
of Claim will specify, in reasonable detail, the facts known to the Indemnitee regarding the
claim. Subject to the terms of this Agreement, the failure to provide (or timely provide) a Notice
of Claim will not affect the Indemnitee’s rights to indemnification, except as otherwise provided
by the specific time frames set forth in Section 12.2 and Section 12.3; provided, however, the
Indemnitor is not obligated to indemnify the Indemnitee for the increased amount of any claim
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which would otherwise have been payable to the extent that the increase resulted from the failure
to deliver timely a Notice of Claim.
12.5
Defense of Third Party Claims.
(a)
Notice of Claim. If an Indemnitee receives notice of the assertion or
commencement of a Third Party Claim against it with respect to which an Indemnitor is obligated
to provide indemnification under this Agreement, such Indemnitee will give such Indemnitor a
Notice of Claim as promptly as practicable, but in any event not later than seven (7) calendar days
after such Indemnitee’s receipt of notice of such Third Party Claim. Such Notice of Claim will
describe the Third Party Claim in reasonable detail, will include copies of all material written
evidence thereof and will indicate, if reasonably practicable the estimated amount of the
Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnitor will
have the right to participate in, or, by giving written notice to the Indemnitee, to assume the
defense of any Third Party Claim at such Indemnitor’s own expense and by such Indemnitor’s
own counsel (as is reasonably satisfactory to the Indemnitee), and the Indemnitee will cooperate
in good faith in such defense.
(b)
Defense of Claim. If, within ten (10) calendar days after giving a Notice of
Claim regarding a Third Party Claim to an Indemnitor pursuant to Section 12.5(a), an Indemnitee
receives written notice from such Indemnitor that the Indemnitor has elected to assume the
defense of such Third Party Claim as provided in the last sentence of Section 12.5(a), the
Indemnitor will not be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the Indemnitor fails to take
reasonable steps necessary to defend diligently such Third Party Claim within ten (10) calendar
days after receiving written notice from the Indemnitee that the Indemnitee believes the
Indemnitor has failed to take such steps, or if the Indemnitor has not undertaken fully to
indemnify the Indemnitee in respect of all Indemnifiable Losses relating to the matter, the
Indemnitee may assume its own defense, and the Indemnitor will be liable for all reasonable costs
or expenses, including attorneys’ fees, paid or incurred in connection therewith. Without the prior
written consent of the Indemnitee, the Indemnitor will not enter into any settlement of any Third
Party Claim which would lead to liability or create any financial or other obligation on the part of
the Indemnitee for which the Indemnitee is not entitled to indemnification hereunder; provided,
however, that the Indemnitor may accept any settlement without the consent of the Indemnitee if
such settlement provides a full release to the Indemnitee and no requirement that the Indemnitee
acknowledge fault or culpability. If a firm offer is made to settle a Third Party Claim without
leading to liability or the creation of a financial or other obligation on the part of the Indemnitee
for which the Indemnitee is not entitled to indemnification hereunder and the Indemnitor desires
to accept and agrees to such offer, the Indemnitor will give written notice to the Indemnitee to
that effect. If the Indemnitee fails to consent to such firm offer within ten calendar days after its
receipt of such notice, the Indemnitee may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnitor to such Third Party Claim will be the
amount of such settlement offer, plus reasonable costs and expenses paid or incurred by the
Indemnitee up to the date of such notice.
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(c)
Failure to Provide Notice. A failure to give timely notice or to include any
specified information in any notice as provided in Sections 12.5(a) or 12.5(b) will not affect the
rights or obligations of any Party hereunder except and only to the extent that, as a result of such
failure, any Party which was entitled to receive such notice was deprived of its right to recover
any payment under its applicable insurance coverage or was otherwise materially damaged as a
direct result of such failure.
(d)
Direct Claims. Any Direct Claim must be asserted by giving the
Indemnitor written notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable. The Indemnitor will have a period of sixty (60)
calendar days from receipt of such notice within which to respond to such Direct Claim. If the
Indemnitor does not respond within such sixty-day period, the Indemnitor will be deemed to have
accepted such Direct Claim. If the Indemnitor rejects such Direct Claim, the Indemnitee will be
free to seek enforcement of its rights to indemnification under this Agreement.
(e)
Subrogation of Rights. Upon making any indemnity payment, the
Indemnitor will, to the extent of such indemnity payment, be subrogated to all rights of the
Indemnitee against any third party in respect of the Indemnifiable Loss to which the indemnity
payment relates; provided that (i) the Indemnitor is in compliance with its obligations under this
Agreement in respect of such Indemnifiable Loss, and (ii) until the Indemnitee recovers full
payment of its Indemnifiable Loss, any and all claims of the Indemnitor against any such third
party on account of said indemnity payment are hereby made expressly subordinated and
subjected in right of payment to the Indemnitee’s rights against such third party. Without limiting
the generality or effect of any other provision hereof, each such Indemnitee and Indemnitor shall
execute upon request all instruments reasonably necessary to evidence and perfect the abovedescribed subrogation and subordination rights.
ARTICLE 13
CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER AT THE CLOSING
The obligations of the Purchaser under this Agreement to pay the Initial Component of
the Purchase Price (minus the Project Completion Withheld Amount, in accordance with Section
3.4(a)), purchase the Project and the Project Assets and to take the other actions required to be
taken by the Purchaser at Closing are subject to the satisfaction (or waiver by the Purchaser in its
sole discretion), on or prior to the Closing and by no later than the Date Certain, of each of the
following conditions precedent:
13.1 Compliance with Provisions. Each of the Seller and the Project Company shall
have performed or complied with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed or complied with at or prior to the Closing and
shall not otherwise be in breach of any of its covenants and agreements contained herein.
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13.2 No Conflict. Neither the consummation nor the performance of any of the
transactions contemplated by this Agreement will, directly or indirectly (with or without notice
or lapse of time), contravene or conflict with or result in a violation of or cause the Purchaser or
any Affiliate of the Purchaser to suffer any adverse consequences under any applicable
Governmental Rule.
13.3 Representations and Warranties. All representations and warranties of the Seller
contained herein shall have been true and accurate as of the Effective Date and shall be true and
correct at and as of the Closing Date, except as provided in the first paragraph of Article 6, with
the same effect as though those representations and warranties had been made again at and as of
that time, except to the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and correct in all
respects as of such specified date.
13.4
Project Requirements.
(a)
Substantial Completion. Substantial Completion shall have occurred.
(b)
Performance Guarantees. The Performance Guarantees and the Minimum
Performance Guarantees shall have been achieved in accordance with Section 2.7 or, if the
Minimum Performance Guarantees shall have been achieved but the Performance Guarantees
shall not have been achieved, the Purchase Price shall be reduced as provided in Section 3.5.
(c)
Operating Manuals. The Seller shall have delivered to the Purchaser (i)
completed operating manuals for the Project and its major components, and (ii) manufacturers’
recommended operating and maintenance procedures required for maintenance of manufacturers’
warranties, and in each case obtained the Purchaser’s Written Approval of the same.
(d)
Assignment of Warranties. The Seller and the Project Company shall have
assigned to the Purchaser all guarantees and warranties provided by the EPC Contractor and its
other equipment vendors providing warranties on products or services related to the Project and
any of the Project Assets, subject to the Seller’s and the Project Company’s retained right to
enforce such warranties directly during the period the Seller’s or the Project Company’s
corresponding warranties under Article 9 remain in effect.
(e)
Operational Training.
program required under Section 2.2(j).
The Seller shall have completed the training
(f)
Interconnection Arrangements. The Seller shall have entered into all
interconnection arrangements necessary to permit the Purchaser to deliver Electrical Product from
the Project and receive fuel and utilities necessary to operate the Project, all in accordance with
Prudent Utility Practices.
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(g)
Project Operation. No condition shall exist (other than changes in the
market for electricity following the Effective Date of this Agreement) that would render the
Project incapable of being operated commercially as an integrated whole to produce Electrical
Product consistent with the Project’s Required Design and as contemplated in this Agreement.
13.5 Purchaser’s Receipt of Governmental Approvals, Permits and Consents. The
Purchaser shall have received Regulatory Approval, in form and substance satisfactory to the
Purchaser in its sole discretion, and, subject to Section 11.1(c) hereof, shall have received in
form and substance satisfactory to the Purchaser in its sole discretion all Governmental
Approvals, Permits and Consents that the Seller or the Project Company is obligated to transfer
(or cause to be reissued) to the Purchaser, including the specific Governmental Approvals,
Permits, Consents, Emissions Rights and Water Rights listed in Schedules 3.1(g), 3.1(h), 3.1(i),
3.1(j) and 3.1(k) and all other Governmental Approvals, Permits and Consents (including those
listed in Schedule 6.3(b) and 6.3(c)) as are necessary or desirable for the Seller’s sale and
transfer to the Purchaser (or the Project Company, if applicable) of the Project or to allow the
Purchaser (or the Project Company, if applicable) to own, operate, use and maintain the Project,
all of which shall be in full force and effect when transferred.
13.6 No Adverse Proceedings or Events. No suit, action or other proceeding against
any Party or its Affiliates is pending before any court or Governmental Authority (including
administrative proceedings) which seeks to restrain or prohibit one or more of the transactions
contemplated by this Agreement or to obtain damages or other relief in connection with this
Agreement or the transactions contemplated hereby or any contracts to be transferred to the
Purchaser under the Agreement, or that, if successful, could result in a material adverse effect on
the Purchaser, the Project or the Purchaser’s ability to operate the Project as contemplated. No
event has occurred that has had or could reasonably be expected to have a material adverse effect
on the Purchaser, the Project or the Purchaser’s ability to operate the Project as contemplated.
13.7 Deliveries. The Seller and the Project Company shall have delivered, or caused to
be delivered, to the Purchaser at the Closing the documents, payments and other deliverables
listed in Section 5.2, including the Deed, Bill of Sale and Assignment and Assumption
Agreement.
13.8 Title Policy. The Title Company shall have issued to the Purchaser a California
Land Title Association policy of title insurance naming the Purchaser as insured, showing title to
the real property interests listed on Schedules 3.1(f)(1) and 3.1(f)(2) conveyed to the Purchaser at
the Closing, subject only to the Permitted Encumbrances.
13.9 No Termination. Neither Party shall have exercised any termination right such
Party is entitled to exercise pursuant to Section 15.13.
13.10 Payment of Delay Damages.
Damages as set forth in Section 2.3(b).
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79
13.11 Schedules and Exhibits. The Seller shall have updated all Schedules and Exhibits
to reflect information current as of the Closing Date, and such information shall be satisfactory to
the Purchaser.
ARTICLE 14
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SELLER AT THE CLOSING
The obligations of the Seller under this Agreement to complete the sale of the Project and
transfer the Project to the Purchaser and to take the other actions required to be taken by the
Seller at Closing are subject to the satisfaction (or waiver by the Seller in its sole discretion) of
each of the following conditions precedent:
14.1 Compliance with Provisions. The Purchaser shall have performed or complied in
all material respects with all covenants, agreements and conditions contained in this Agreement
on its part required to be performed or complied with at or prior to the Closing.
14.2 No Adverse Proceedings or Events. No suit, action or other proceeding against
any Party or its Affiliates shall be pending before any court or Governmental Authority which
seeks to restrain or prohibit one or more of the transactions contemplated by this Agreement or to
obtain material damages or other material relief in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE 15
MISCELLANEOUS AGREEMENTS AND ACKNOWLEDGMENTS
15.1 Expenses. Except as otherwise provided herein, each Party is responsible for its
own costs and expenses (including attorneys’ and consultants’ fees, costs and expenses) incurred
in connection with this Agreement and the consummation of the transactions contemplated by
this Agreement.
15.2 Entire Document. This Agreement (including the Exhibits and Schedules to this
Agreement) and the Related Agreements contain the entire agreement between the Parties with
respect to the transactions contemplated hereby, and supersede all negotiations, representations,
warranties, commitments, offers, contracts and writings prior to the execution date of this
Agreement, written or oral. No waiver and no modification or amendment of any provision of
this Agreement is effective unless made in writing and duly signed by the Parties referring
specifically to this Agreement, and then only to the specific purpose, extent and interest so
provided.
15.3 Schedules. The Schedules delivered pursuant to the terms of this Agreement are
an integral part of this Agreement to the same extent as if they were set forth verbatim herein.
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15.4 Counterparts. This Agreement may be executed in one or more counterparts, each
of which is an original, but all of which together constitute one and the same instrument.
15.5 Severability. If any provision hereof is held invalid or unenforceable by any
arbitrator or as a result of future legislative action, this holding or action will be strictly
construed and will not affect the validity or effect of any other provision hereof. To the extent
permitted by law, the Parties waive, to the maximum extent permissible, any provision of law
that renders any provision hereof prohibited or unenforceable in any respect.
15.6 Assignability. This Agreement is binding upon and inures to the benefit of the
successors and assigns of the Parties, but is not assignable by any Party without the prior written
consent of the other Party, which consent may be granted or withheld in such Party’s sole
discretion. Any such assignment is conditioned on the assignee’s agreement in writing to
assume the assigning Party’s duties and obligations under this Agreement and the Related
Agreements. Any assignment effected in accordance with this Section 15.6 will not relieve the
assigning Party of its obligations and liabilities under this Agreement and the Related
Agreements. Notwithstanding the foregoing, the Seller and the Project Company may
collaterally assign this Agreement to Persons providing debt financing as part of the Financing
Arrangements and, at the Seller’s request and cost, the Purchaser will execute and deliver a
consent to such assignment in the form of Exhibit U hereto.
15.7 Captions. The captions of the various Articles, Sections, Appendices, Exhibits
and Schedules of this Agreement have been inserted only for convenience of reference and do
not modify, explain, enlarge or restrict any of the provisions of this Agreement.
15.8 Governing Law. The validity, interpretation and effect of this Agreement are
governed by and will be construed in accordance with the laws of the State of California
applicable to contracts made and performed in such State and without regard to conflicts of law
doctrines except to the extent that certain matters are preempted by Federal law or are governed
by the law of the jurisdiction of organization of the respective parties.
15.9
Dispute Resolution.
(a)
Intent of the Parties. Except as provided in the next sentence, the sole
procedure to resolve any claim arising out of or relating to this Agreement or any Related
Agreement is the dispute resolution procedure set forth in this Section 15.9. Either Party may
seek a preliminary injunction or other provisional judicial remedy if such action is necessary to
prevent irreparable harm or preserve the status quo, in which case both Parties nonetheless will
continue to pursue resolution of the dispute by means of this procedure.
(b)
Management Negotiations.
(1)
The Parties will attempt in good faith to resolve any controversy or
claim arising out of or relating to this Agreement or any Related Agreements by prompt
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negotiations between each Party’s Authorized Representative, or such other person designated in
writing as a representative of the Party (each a “Manager”). Either Manager may request a
meeting (in person or telephonically) to initiate negotiations to be held within ten (10) Business
Days of the other Party’s receipt of such request, at a mutually agreed time and place. If the
matter is not resolved within fifteen (15) Business Days of their first meeting (“Initial
Negotiation End Date”), the Managers shall refer the matter to the designated senior officers of
their respective companies (“Executive(s)”), who shall have authority to settle the dispute.
Within five (5) Business Days of the Initial Negotiation End Date (“Referral Date”), each Party
shall provide one another written notice confirming the referral and identifying the name and title
of the Executive who will represent the Party.
(2)
Within five (5) Business Days of the Referral Date the Executives
shall establish a mutually acceptable location and date, which date shall not be greater than thirty
(30) calendar days from the Referral Date, to meet. After the initial meeting date, the Executives
shall meet, as often as they reasonably deem necessary to exchange relevant information and to
attempt to resolve the dispute.
(3)
All communication and writing exchanged between the Parties in
connection with these negotiations shall be confidential and shall not be used or referred to in
any subsequent binding adjudicatory process between the Parties.
(4)
If the matter is not resolved within forty-five (45) calendar days of
the Referral Date, or if the Party receiving the written request to meet, pursuant to Section
15.9(b)(1) above, refuses or does not meet within the ten (10) Business Day period specified in
Section 15.9(b)(1) above, either Party may initiate mediation of the controversy or claim
according to the terms of the following Section 15.9(c).
(c)
Mediation and Arbitration.
If the dispute cannot be so resolved by
negotiation as set forth in Section 15.9(b) above, it shall be resolved at the request of any Party
through a two-step dispute resolution process administered by the American Arbitration
Association (“AAA”). As the first step the Parties agree to mediate any controversy before a
mediator from the AAA panel, pursuant to AAA’s commercial mediation rules, in San Francisco,
California. Either Party may begin mediation by serving a written demand for mediation. The
mediator shall not have the authority to require, and neither party may be compelled to engage in,
any form of discovery prior to or in connection with the mediation. If within sixty (60) days after
service of a written demand for mediation, the mediation does not result in resolution of the
dispute, then the controversy shall be settled by arbitration conducted by a retired judge or justice
from the AAA panel conducted in San Francisco, California, administered by and in accordance
with AAA’s Commercial Arbitration Rules (“Arbitration”). The period commencing from the
date of the written demand for mediation until the appointment of a mediator shall be included
within the sixty (60) day mediation period. Any mediator(s) and arbitrator(s) shall have no
affiliation with, financial or other interest in, or prior employment with either Party and shall be
knowledgeable in the field of the dispute. Either Party may initiate arbitration by filing with the
AAA a notice of intent to arbitrate within sixty (60) days of service of the written demand for
mediation.
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(d)
Arbitration Procedures.
At the request of a Party, the arbitrator shall
have the discretion to order depositions of witnesses to the extent the arbitrator deems such
discovery relevant and appropriate. Depositions shall be limited to a maximum of three per Party
and shall be held within thirty (30) days of the making of a request. Additional depositions may
be scheduled only with the permission of the arbitrator, and for good cause shown. Each
deposition shall be limited to a maximum of six hours duration unless otherwise permitted by the
arbitrator for good cause shown. All objections are reserved for the arbitration hearing except for
objections based on privilege and proprietary and confidential information. The arbitrator shall
also have discretion to order the Parties to exchange relevant documents. The arbitrator shall also
have discretion to order the Parties to answer interrogatories, upon good cause shown.
(1)
Each of the Parties shall submit to the arbitrator, in accordance
with a schedule set by the arbitrator, offers in the form of the award it considers the arbitrator
should make. If the arbitrator requires the Parties to submit more than one such offer, the
arbitrator shall designate a deadline by which time the Parties shall submit their last and best
offer. In such proceedings the arbitrator shall be limited to awarding only one of the two “last
and best” offers submitted, and shall not determine an alternative or compromise remedy.
(2)
The arbitrator shall have no authority to award punitive or
exemplary damages or any other damages other than direct and actual damages and the other
damages contemplated by this Agreement.
(3)
The arbitrator’s award shall be made within nine months of the
filing of the notice of intention to arbitrate (demand) and the arbitrator shall agree to comply with
this schedule before accepting appointment. However, this time limit may be extended by
agreement of the Parties or by the arbitrator, if necessary. The California Superior Court of the
City and County of San Francisco may enter judgment upon any award rendered by the
arbitrator. The Parties are aware of the decision in Advanced Micro Devices, Inc. v. Intel Corp.,
9 Cal. 4th 362 (1994), and, except as modified by this Agreement, intend to limit the power of
the arbitrator to that of a Superior Court judge enforcing California law. The prevailing Party in
this dispute resolution process is entitled to recover its costs and reasonable attorneys’ fees.
(4)
The arbitrator shall have the authority to grant dispositive motions
prior to the commencement of or following the completion of discovery if the arbitrator
concludes that there is no material issue of fact pending before him.
Except as may be required by law, neither a Party nor an arbitrator may disclose the
existence, content, or results of any arbitration hereunder without the prior written consent of
both Parties.
15.10 Limitations on Liability.
UNLESS EXPRESSLY HEREIN PROVIDED,
NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER
BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT,
UNDER ANY INDEMNITY PROVISION OR OTHERWISE, EXCEPT UNDER ARTICLE 12
IN RESPECT OF THIRD PARTY CLAIMS FOR DAMAGE TO OR DESTRUCTION OF
PROPERTY (WHICH FOR PURPOSES HEREOF SHALL BE DEEMED TO INCLUDE
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AMOUNTS PAID TO THIRD-PARTIES AS A RESULT OF OR RELATING TO PRECLOSING ENVIRONMENTAL CONDITIONS AND OTHER ENVIRONMENTAL
LIABILITIES) OF, OR DEATH OF OR BODILY INJURY TO, ANY PERSON. UNLESS
EXPRESSLY HEREIN PROVIDED, AND SUBJECT TO THE PROVISIONS OF ARTICLE
12, IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED
ON REMEDIES AND THE MEASURE OF DAMAGES, INCLUDING THE LIMITATIONS
OF LIABILITY AND THE EXCLUSION OF CONSEQUENTIAL DAMAGES, BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE, AND SHALL APPLY IRRESPECTIVE OF
WHETHER A PARTY OR ANY AFFILIATE THEREOF, OR ANY PARTNER, MEMBER,
SHAREHOLDER, OFFICER, DIRECTOR OR EMPLOYEE OF A PARTY OR AN
AFFILIATE THEREOF, ASSERTS A THEORY OF LIABILITY IN CONTRACT, TORT,
NEGLIGENCE,
MISREPRESENTATION
(INCLUDING
NEGLIGENT
MISREPRESENTATION), STRICT LIABILITY, STATUTORY LIABILITY, OR ANY
THEORY OF LIABILITY. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID
HEREUNDER ARE LIQUIDATED, INCLUDING TERMINATION FEES, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS
INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A
REASONABLE APPROXIMATION OF THE HARM OR LOSS.
15.11 Notices. All notices, requests, demands and other communications under this
Agreement must be in writing and must be delivered in person or sent by overnight delivery
using a nationally recognized delivery service, and properly addressed as follows:
If to the Seller or the Project Company:
______________________
______________________
______________________
Attention: _____________
With a copy to:
______________________
______________________
______________________
Attention: _____________
If to the Purchaser:
Pacific Gas & Electric Company
______________________
______________________
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With a copy to:
______________________
______________________
______________________
Any Party may from time to time change its address for the purpose of notices to that
Party by a similar notice specifying a new address, but no such change is effective until it is
actually received by the Party sought to be charged with its contents.
All notices and other communications required or permitted under this Agreement which
are addressed as provided in this Section 15.11 are effective upon delivery.
15.12 Time is of the Essence. Time is of the essence for each term of this Agreement.
Without limiting the generality of the foregoing, all times provided for in this Agreement for the
performance of any act will be strictly construed.
15.13 Termination.
(a)
Rights To Terminate. This Agreement may, by written notice given on or
prior to the Closing Date, in the manner provided in Section 15.11, be terminated at any time
prior to the Closing Date as provided below:
(1)
by the Seller and the Project Company jointly (but not
individually) if there has been a material misrepresentation or a material default or breach by the
Purchaser with respect to any of the Purchaser’s representations and warranties in this
Agreement or in any Related Agreement or the due and timely performance of any of the
Purchaser’s covenants and agreements contained in this Agreement or in any Related
Agreement, and such misrepresentation, default or breach is not cured (i) within ten (10) days of
written notice from the Seller specifying particularly such misrepresentation, default or breach in
the case of any of the Purchaser’s payment obligations, or (ii) within thirty (30) days of written
notice from the Seller specifying particularly such misrepresentation, default or breach in all
other cases, provided, however, no right of termination shall arise under this subsection (ii) if
such misrepresentation, default or breach is not able to be cured in such thirty-day period, and
the Purchaser is in the process of curing the misrepresentation, default or breach in such thirtyday period and shall have cured the misrepresentation, default or breach within ninety (90) days
of written notice from the Seller thereof;
(2)
by the Purchaser if there has been a material misrepresentation
or a material default or breach by the Seller or the Project Company with respect to the Seller’s
or the Project Company’s representations and warranties in this Agreement or in any Related
Agreement or the due and timely performance of any of the Seller’s or the Project Company’s
covenants and agreements contained in this Agreement or in any Related Agreement, and such
misrepresentation, default or breach is not cured (i) within ten (10) days of written notice from
the Purchaser specifying particularly such misrepresentation, default or breach in the case of any
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of the Seller’s or the Project Company’s payment obligations, or (ii) within thirty (30) days of
written notice from the Purchaser specifying particularly such misrepresentation, default or
breach in all other cases, provided, however, no right of termination shall arise under this
subsection (ii) if such misrepresentation, default or breach is not able to be cured in such thirtyday period, and the Seller or the Project Company is in the process of curing the
misrepresentation, default or breach in such thirty-day period and shall have cured the
misrepresentation, default or breach within ninety (90) days of written notice from the Purchaser
thereof;
(3)
by the Seller or the Purchaser as provided in Section 10.1;
(4)
subject to Sections 2.4 and 15.13(b), by the Seller if it has made
all Commercially Reasonable Efforts to do so but it is unable to secure the Governmental
Approvals and Permits necessary to construct the Project by the First Permitting Deadline, with
the Seller’s termination notice to be delivered to the Purchaser not later than five (5) Business
Days after such Permitting Deadline;
(5)
by the Purchaser if the Seller has not extended the Permitting
Milestone pursuant to Section 2.4 and the Seller fails to secure the Governmental Approvals and
Permits necessary to construct the Project prior to the First Permitting Deadline;
(6)
by mutual agreement of the Seller and the Purchaser;
(7)
by the Purchaser if (i) the Project fails to meet any Critical
Milestone within sixty (60) days after the date specified in Schedule 2.4 by which such Critical
Milestone is to be achieved, (ii) the Project fails to meet any other Project Milestone within
twelve (12) months after the date specified in Schedule 2.4 by which such Project Milestone is to
be achieved, (iii) the Seller gives Purchaser written notice in accordance with Section 15.11 that
it is unable to cause any Project Milestone to be achieved on or before the date specified therefor
in Schedule 2.4, or (iv) the Seller fails to achieve the Minimum Performance Guarantees during a
single Performance Test (or, in the case of the failure to satisfy the Base Reliability Guarantee,
during the Base Reliability Test) prior to the Date Certain;
(8)
by the Purchaser as provided in Section 2.3(c);
(9)
by the Purchaser if the Commercial Availability Date has not
occurred on or before the Date Certain, as described in Section 2.3(b) or
(10)
by the Purchaser if the Seller extends the Permitting Milestone
to the Final Permitting Deadline pursuant to Section 2.4 and fails to secure the Governmental
Approvals and Permits necessary to construct the Project by the Final Permitting Deadline.
(b)
Effect of Termination. If this Agreement is terminated pursuant to
Section 15.13(a), all further obligations and liabilities of the Parties hereunder will terminate,
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except (i) as otherwise contemplated by this Agreement, (ii) for the obligations set forth in
Sections 8.10, 11.3 and Article 12, and (iii) for the obligations of the Parties set forth in the
Confidentiality Agreement. In addition:
(1)
If Purchaser terminates the Agreement pursuant to Section
15.13(a)(2), 15.13(a)(5), 15.13(a)(7) or 15.13(a)(9), the Seller shall within ten (10) days of
receiving written notice of such termination from the Purchaser, pay to the Purchaser as
liquidated damages an amount equal to the sum of (x) the aggregate maximum amount of Delay
Damages the Seller would be obligated to pay under Section 2.3(b) if the Commercial
Availability Date were to occur on the date that is twelve months and one day after the
Guaranteed Commercial Availability Date, less the amount of Delay Damages actually paid by
the Seller, if any, through the date of termination, plus (y) the Termination Fee;
(2)
If the Seller terminates the Agreement pursuant to Section
15.13(a)(4), the Seller shall, within ten (10) days of giving written notice of such termination to
the Purchaser, pay to the Purchaser as liquidated damages an amount equal to the Termination
Fee; and
(3)
If the Purchaser terminates the Agreement pursuant to Section
15.13(a)(10), the Seller shall within ten (10) days of receiving written notice of such termination
from the Purchaser, pay to the Purchaser as liquidated damages an amount equal to the
Termination Fee.
Upon termination, the originals of any items, documents or written materials provided by one
Party to the other Party will be returned by the receiving Party to the providing Party, and any
Confidential Information retained by the receiving Party will be kept confidential.
(c)
No Third Party Beneficiaries. Except as may be specifically set forth in
this Agreement, nothing in this Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any Persons other than the Parties and
their respective permitted successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third Persons to any Party, nor give any third
Persons any right of subrogation or action against any Party.
15.14 No Joint Venture. Nothing contained in this Agreement creates or is intended to
create an association, trust, partnership, or joint venture or impose a trust or partnership duty,
obligation, or liability on or with regard to any Party.
15.15 Construction of Agreement. Ambiguities or uncertainties in the wording of this
Agreement will not be construed for or against any Party, but will be construed in the manner
that most accurately reflects the Parties’ intent as of the date they executed this Agreement.
{00059413.DOC;9}OHS East:9397238.1
87
15.16 Conflicts. In the event of any conflicts or inconsistencies between the terms of
this Agreement and the terms of any of the Related Agreements, the terms of this Agreement will
govern and prevail.
15.17 CONSENT TO JURISDICTION. EACH OF THE SELLER AND THE
PURCHASER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF ANY LOCAL,
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF SAN FRANCISCO,
STATE OF CALIFORNIA FOR ADJUDICATION OF A PRELIMINARY INJUNCTION OR
OTHER PROVISIONAL JUDICIAL REMEDY AS PROVIDED IN SECTION 15.9. EACH
OF THE SELLER AND THE PURCHASER ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS. IF NOT A RESIDENT OF THE STATE OF
CALIFORNIA, THE SELLER MUST APPOINT AND MAINTAIN AN AGENT FOR
SERVICE OF PROCESS IN THE STATE OF CALIFORNIA. NOTHING IN THIS SECTION
15.19 IS INTENDED TO MODIFY OR EXPAND THE TERMS AND PROVISIONS OF
SECTION 15.9(a).
[Remainder of Page Intentionally Left Blank]
{00059413.DOC;9}OHS East:9397238.1
88
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
[SELLER]
By
____________________________
Name:
Title:
[PROJECT COMPANY]
By
____________________________
Name:
Title:
PACIFIC GAS & ELECTRIC COMPANY
By
____________________________
Name:
Title:
{00059413.DOC;9}OHS East:9397238.1
TABLE OF CONTENTS
ARTICLE 1
1.2
DEFINITIONS ..................................................................................... 1
Interpretation ........................................................................................................ 18
ARTICLE 2
DEVELOPMENT AND CONSTRUCTION OF THE
PROJECT........................................................................................... 19
2.1
Development of Project for Sale to Purchaser ..................................................... 19
2.2
Seller’s and Project Company’s Development Obligations................................. 19
2.3
Guaranteed Commercial Availability Date .......................................................... 26
2.4
Project Milestones ................................................................................................ 26
2.5
Long-Term Service Agreements .......................................................................... 27
2.6
Spare Parts ........................................................................................................... 27
2.7
Performance Guarantees ...................................................................................... 28
2.8
Procedures For Performance Testing ................................................................... 30
2.9
Post-Closing Access to Project ............................................................................ 31
ARTICLE 3
PURCHASE AND SALE OF PROJECT .......................................... 31
3.1
Purchase and Sale of Project ................................................................................ 31
3.2
Excluded Assets ................................................................................................... 34
3.3
Excluded Liabilities ............................................................................................. 34
3.4
Purchase Price and Payment ................................................................................ 34
3.5
Purchase Price Reductions For Performance Shortfalls ...................................... 35
3.6
Extended Reliability and Performance Tests ....................................................... 34
3.7
Allocation of Purchase Price ................................................................................ 36
ARTICLE 4
EFFECTIVE DATE ........................................................................... 36
4.1
Effective Date ...................................................................................................... 36
4.2
Deliverables in Connection with the Effective Date............................................ 36
ARTICLE 5
CLOSING .......................................................................................... 38
5.1
Closing ................................................................................................................. 38
5.2
Deliveries at Closing ............................................................................................ 39
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER ............ 43
6.1
Transaction Representations ................................................................................ 43
6.2
Compliance with Laws ........................................................................................ 44
6.3
Permits, Governmental Approvals and Consents ................................................ 44
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6.4
Litigation .............................................................................................................. 46
6.5
Zoning and Condemnation ................................................................................... 46
6.6
Brokers ................................................................................................................. 46
6.7
Bankruptcy ........................................................................................................... 46
6.8
Financial Statements ............................................................................................ 47
6.9
Absence of Certain Changes ................................................................................ 47
6.10
Assets ................................................................................................................... 47
6.11
Assigned Agreements .......................................................................................... 48
6.12
Environmental Governmental Approvals and Permits ........................................ 49
6.13
Environmental Legal Compliance ....................................................................... 49
6.14
Utilities................................................................................................................. 51
6.15
Project Construction and Condition ..................................................................... 51
6.16
No Third Party Options ........................................................................................ 51
6.17
Taxes .................................................................................................................... 51
6.18
Sufficiency of Project Assets ............................................................................... 52
6.19
Accuracy of Information ...................................................................................... 52
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF
PURCHASER .................................................................................... 52
7.1
Transaction presentations..................................................................................... 52
7.2
Litigation .............................................................................................................. 53
7.3
Brokers ................................................................................................................. 53
ARTICLE 8
CERTAIN COVENANTS ................................................................. 53
8.1
Access and Investigation...................................................................................... 54
8.2
Conduct and Preservation of the Transferred Assets ........................................... 54
8.3
Restrictions on Certain Actions ........................................................................... 54
8.4
Required Governmental Approvals, Permits and Consents ................................. 55
8.5
Governmental Approvals, Permits, Consents and Agreements; Post
Closing ................................................................................................................. 55
8.6
Payment of Liabilities .......................................................................................... 55
8.7
Notification .......................................................................................................... 55
8.8
Payment of Prevailing Wages .............................................................................. 56
8.9
Insurance .............................................................................................................. 56
8.10
Publicity ............................................................................................................... 60
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8.11
No Negotiation ..................................................................................................... 60
8.12
Best Efforts .......................................................................................................... 60
8.13
Power of Attorney with Respect to Project and Project Assets ........................... 61
8.14
Further Assurances; Post-Closing Assignments .................................................. 61
8.15
Purchaser Staffing Prior to Closing ..................................................................... 61
8.16
Purchase of Power During Delivery Period……………………………………..62
ARTICLE 9
PROJECT WARRANTIES ............................................................... 63
9.1
General Warranty ................................................................................................. 63
9.2
Breach of General Warranty ................................................................................ 63
9.3
Design Warranty .................................................................................................. 64
9.4
Breach of Design Warranty ................................................................................. 64
9.5
Enforcement and Assignment of Vendor Warranties .......................................... 64
ARTICLE 10
10.1
REGULATORY APPROVAL .......................................................... 64
Regulatory Approval and CPUC Approval. ........................................................ 64
ARTICLE 11
CERTAIN AGREEMENTS .............................................................. 65
11.1
Regulatory Matters............................................................................................... 66
11.2
Credit Support ...................................................................................................... 67
11.3
Confidentiality ..................................................................................................... 69
11.4
Taxes .................................................................................................................... 69
11.5
Environmental Matters......................................................................................... 70
11.6
Title Report .......................................................................................................... 72
11.7
Force Majeure ...................................................................................................... 72
ARTICLE 12
SURVIVAL AND INDEMNIFICATION ..................................... 73
12.1
Survival of the Parties’ Representations, Warranties and Covenants .................. 73
12.2
Indemnification by the Seller ............................................................................... 73
12.3
Indemnification by the Purchaser ........................................................................ 75
12.4
Notice of Claim .................................................................................................... 75
12.5
Defense of Third Party Claims ............................................................................ 76
ARTICLE 13
CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER AT THE CLOSING................................................... 77
13.1
Compliance with Provisions ................................................................................ 77
13.2
No Conflict........................................................................................................... 78
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13.3
Representations and Warranties ........................................................................... 78
13.4
Project Requirements ........................................................................................... 78
13.5
Purchaser’s Receipt of Governmental Approvals, Permits and Consents ........... 79
13.6
No Adverse Proceedings or Events...................................................................... 79
13.7
Deliveries ............................................................................................................. 79
13.8
Title Policy. .......................................................................................................... 79
13.9
No Termination. ................................................................................................... 79
13.10 Payment of Delay Damages ................................................................................. 79
13.11 Schedules and Exhibits ........................................................................................ 80
ARTICLE 14
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SELLER AT THE CLOSING ........................................................... 80
14.1
Compliance with Provisions ................................................................................ 80
14.2
No Adverse Proceedings or Events...................................................................... 80
ARTICLE 15
MISCELLANEOUS AGREEMENTS
ANACKNOWLEDGEMENTS ......................................................... 80
15.1
Expenses .............................................................................................................. 80
15.2
Entire Document .................................................................................................. 80
15.3
Schedules ............................................................................................................. 80
15.4
Counterparts ......................................................................................................... 81
15.5
Severability .......................................................................................................... 81
15.6
Assignability ........................................................................................................ 81
15.7
Captions ............................................................................................................... 81
15.8
Governing Law .................................................................................................... 81
15.9
Dispute Resolution ............................................................................................... 81
15.10 Limitations on Liability ....................................................................................... 83
15.11 Notices ................................................................................................................. 84
15.12 Time is of the Essence ......................................................................................... 85
15.13 Termination .......................................................................................................... 85
15.14 No Joint Venture .................................................................................................. 87
15.15 Construction of Agreement .................................................................................. 87
15.16 Conflicts ............................................................................................................... 90
15.17 CONSENT TO JURISDICTION ......................................................................... 90
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APPENDIX
TITLE
1
2
3
EPC Contract Term and Conditions
Turnover Package Materials
Long-Term Service Agreement Terms and Conditions
EXHIBITS
TITLE
A
B
C
D
E
F
G
P
Q
R
S
T
U
V
Electrical Interconnection Facilities
Fuel Interconnection Facilities
Technical Specification
Form of Change Order Certificate
Generation Operating Characteristics
Performance Testing Protocol
Form of Opinion of Counsel to Seller and Project Company
At Effective Date
Form of Letter of Credit
Form of Opinion of Purchaser’s Counsel At Effective Date
Form of Bill of Sale
Form of Assignment and Assumption Agreement
Form of Deed
Form of Estoppel Certificate
Form of Opinion of Counsel to Seller and Project Company
At Closing Date
Form of Opinion of Regulatory Counsel to Seller and
Project Company at Closing Date
Form of Opinion of Purchaser’s Counsel At Closing Date
Training Program
Assumed Operating Parameters
Tolling Agreement
Operator Staffing Agreement
Form of Consent to Assignment
Deposit Account Agreement
SCHEDULES
TITLE
2.2(e)
2.4
3.1(b)
3.1(c)
3.1(d)
3.1(e)
3.1(f)(1)
3.1(f)(2)
EPC Documents for Purchaser’s Approval
Project Milestones
Electrical Interconnection Facilities
Fuel Interconnection Facilities
Certain Project Equipment and Personal Property
Initial Spare Parts
Project Site
Additional Real Property
H
I
J
K
L
M
N
O
{00059413.DOC;9}DOCSDC1:244758.3
J-94
3.1(f)(3)
3.1(g)
3.1(h)
3.1(i)
3.1(j)
3.1(k)
3.1(l)
3.1(n)
3.1(o)
3.2
3.7
6.2
6.3(b)
6.3(c)
6.3(d)
6.3(e)
6.4
6.9
6.10(a)
6.10(c)
6.11(a)
6.11(d)
6.12
6.13
6.15
6.17
11.1(b)
{00059413.DOC;9}DOCSDC1:244758.3
Buildings, Improvements, Structures and Fixtures
Governmental Approvals
Permits
Consents
Emissions Rights
Water Rights
Intellectual Property Rights
Assigned Agreements
Project Records and Operating Information
Excluded Assets
Allocation of Purchase Price
Non-compliance With Governmental Rules, Governmental
Approvals and Permits
Governmental Approvals Not Obtained or Not Issued to the
Seller
Permits Not Currently Effective or Held By the Seller
Notice of Violations
Permits Subject to Non-renewal or Modification
Pending or Threatened Litigation
Seller Business Changes
Seller Title Insurance Policies
Condemnation Proceedings
Seller Agreements Not Assigned
Events of Default Under Assigned Agreements
Environmental Permits and Government Approvals
Non-compliance with Environmental Laws
Project Condition
Tax Disclosures
Certain Permits, Governmental Approvals and Consents to
be Obtained by the Seller
J-95
APPENDIX 1
KEY COMMERCIAL TERMS OF
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
FOR ELECTRIC GENERATING FACILITY
CONFIDENTIAL SUMMARY OF PRINCIPAL COMMERCIAL TERMS
Contracting
Approach
Engineering, procurement, construction, start-up, and commissioning of
power block, switchyard, and other balance of plant (“BOP”) systems on a
lump sum turn key (“LSTK”) basis that cover all aspects of the Project
consistent with what has been the historical norm in the industry. [However,
PG&E also recognizes that other models are common in the California
market, such as a target and incentive-based pricing model. Consequently,
PG&E will entertain offers that include EPC terms with an appropriate
contractor which are based on target and incentive-based pricing, inclusive
of all labor, material, equipment, and services for the complete Project or
BOP. Any offer based on non-fixed price turn key EPC terms must include
a mark-up of this Appendix to reflect the proposed terms.]
Contractor’s Scope
The work to be performed by Contractor (the “Work”) will include, on an
LSTK basis, any and all work and services required or appropriate in
connection with the design, engineering, procurement, construction,
commissioning, start-up, demonstration, testing and completion of the
Project, as well as the provision of all materials, equipment, machinery,
tools, labor, supervision, transportation, administration, training and other
services and items required to complete and deliver to Owner, and allow
Owner or PG&E to commence operation of, the Project, fully tested,
integrated and operational, designed and constructed to comply with Good
Utility Standards and to have a useful economic life of not less than 30 years,
and complying fully with all applicable laws, permits, codes and standards,
and the requirements of the Purchase and Sale Agreement (the “PSA”) to be
entered into between Owner and PG&E (the “Standard of Care”). As part of
the scope of Work, Contractor shall, among other things to be specifically set
forth in the definitive Contract:
Provide detailed design engineering of the Project, including equipment
specifications, all required civil works and Project structures, drawings,
schedules, and coordination of engineering efforts of subcontractors;
Procure all materials and equipment to be incorporated in the Project;
Procure all subcontracts required to construct, start-up, and test the Project;
Provide handling of material, equipment and construction equipment,
including, as necessary, inspection, expediting, shipping, unloading,
receiving and customs clearance, transportation to and storage at the Project
site (the “Site”);
Ensure that all equipment, material, and articles and operating and safety
control systems incorporated into the Project are new, unless otherwise
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agreed to by Owner, PG&E and Contractor;
Provide all labor and personnel required to construct, startup, and test the
Project in accordance with Owner-and PG&E-approved test procedures;
Have full responsibility for care, custody and control and risk of loss of
Project until Substantial Completion;
Provide Site security until Final Completion.
A complete scope of Work will be developed and attached to the definitive
Contract, subject to Owner’s and PG&E’s approval. All Work shall be
carried out in accordance with the requirements defined in the technical
specifications developed and attached to the definitive Contract (the
“Technical Specifications”). For the purposes hereof, “turn-key basis” shall
be understood by the parties to mean that Contractor shall be obligated to
perform all tasks required or contemplated by the scope of Work to deliver to
Owner a completed and fully operational Facility, including any and all work
that is expressed or can be reasonably inferred from the Contract and/or
necessary to complete the Project, including any and all testing through
Project Completion, all in accordance with the Standard of Care.
Training Services
Operators shall be provided by Owner, but trained and supervised by
Contractor during start-up.
Notice To Proceed
(“NTP”)
Unless authorized by pursuant to an Interim Notice to Proceed issued by
Owner (“INTP”), Contractor shall not initiate activities and Owner shall
have no obligations to Contractor until such time Owner has issued a full
Notice to Proceed to Contractor.
Index Pricing
Contractor may supply a bid utilizing indexed pricing between contract
execution and NTP. An indexed offer shall use only the Gross Domestic
Product (“GDP”) Implicit Price Deflator as the index and must be otherwise
consistent with any index pricing in the Purchase and Sale Agreement
between Owner and PG&E.
Milestones
Contractor shall provide a detailed schedule of development and major
milestones with its bid, which shall be incorporated in the EPC Agreement.
Each milestone shall include a specific “no later than” date, which may be
denoted by reference to the EPC Agreement effective date (e.g., “no later
than 6 months following the effective date.”)
Retention
In lieu of retention of [TBD] percent, Contractor may provide security in the
form of an unconditional letter of credit or unconditional surety bond in the
amount of [TBD] in a form, and issued by a financial institution, acceptable
to Owner.
Parent Guaranty
As a condition precedent to NTP Contractor must supply a surety bond from
an “A” rated or better insurer in a form acceptable to Owner or otherwise
demonstrate to the reasonable satisfaction of the Owner that it or an affiliate
providing a full guaranty of its obligations (in a form acceptable to Owner)
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is creditworthy.
Capital Spares
Contractor shall, within [TBD] days after NTP provide recommended spare
parts listings. With respect to each listing, Owner shall select applicable
spare parts within [TBD] days after Contractor provides same. Contractor
shall obtain pricing that shall be valid for [TBD] months after NTP. The
cost for Contractor’s services for such Work shall be part of the EPC price.
The cost of the capital spares shall be to the account of Owner. Owner shall
make spare parts available to support start-up of the Facility and Contractor
shall promptly order replacement parts. To the extent that any such spare
part used by Contractor is of a category of parts that may impact Owner’s
Facility availability after Substantial Completion, Contractor shall promptly
order its replacement part for an expedited delivery. Contractor shall be
responsible for all costs associated with the replacement of the spare parts
used by Contractor (part of target price if target pricing used).
Subcontracts
The EPC Agreement will include an agreed Approved Vendor List (“AVL”)
for major or critical subcontractors and suppliers.
Purchase Order
Assignment
If Contractor is required to purchase any Specified Major Equipment prior to
NTP, the Parties shall mutually agree on the format of, and security for,
Contractor’s purchase (e.g. as Owner’s agent with full assignment at NTP).
Specified Major
Equipment
To extent Contractor procures Specified Major Equipment, Contractor shall
negotiate purchase orders for the generation equipment specified in the RFO
either on Contractor’s own behalf or on behalf of Owner, as Owner’s agent.
Should Contractor act as Owner’s agent it is with the understanding that
such purchase orders shall be assigned to Contractor for execution of
Owner’s responsibilities at NTP. Owner and Contractor shall work together
cooperatively, thus attempting to eliminate disconnects between work
controlled by supplier and work controlled by Contractor. Based on the
outcome of such joint negotiations and the alignment of supplier obligations
imposed under the EPC Agreement, Contractor’s obligations to Owner for
Facility performance guarantees, liquidated damages, and other supplierimpacted Contract obligations may be adjusted. These purchase orders for
the foregoing Specified Major Equipment suppliers will contain the
following principles:
1. Purchase orders provide for alignment of supplier interests
(performance motivation) with the EPC Agreement and the Owner’s
operation and maintenance criteria with the effective supplier control
managed by Contractor.
2. Supplier bears primary risk for performance deficiencies in its scope
of supply. Contractor risk associated with Performance Guarantees,
warranties and liquidated damages will be limited to residual risk
following supplier primary risk assumption and Contractor shall be
responsible to manage supplier to maximize performance of supplier
obligations in purchase order. Otherwise, Contractor shall remain
fully responsible for the obligations and liabilities as set forth in the
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EPC Agreement.
3. Examples of specific types of provisions that will be targeted for
inclusion in the Specified Major Equipment purchase orders to meet
these principles include but are not necessarily limited to:
A provision stating how an arm-in-arm cooperation for the
achievement of Substantial Completion will be implemented after
first ignition and during commissioning.
For delays in Substantial Completion and performance shortfalls
solely attributable to the supplier, LD’s commence when
Contractor’s commence and rate is equal to the Contractor’s rate.
Suppliers LD rate or equivalent measurement rate shall be equal
to Contractor’s rate for Net Output Guaranteed, Net Heat Rate
Guaranteed, Reliability Guaranteed, and Substantial Completion
Date Guaranteed, additionally supplier shall be obligated to
provide an emissions guarantee and noise guarantee sufficient to
support Contractor’s EPC obligations. If supplier’s LD rate or
equivalent measurement rate is less than Contractor’s rate then
Contractor pays at the supplier rate until the supplier’s cap is
reached, and thereafter Contractor will pay at Contractor’s LD
rate up to Contractor’s cap. If multiple parties are determined to
be at fault there will be a proportional distribution of the
liquidated damage liability based on contribution or fault of the
involved parties such that the involved parties share in the
payment of the full value of the Contractor LD which shall be
paid ultimately by Contractor to Owner, Contractor will then
collect payment from other involved parties.
Meaningful LD’s for late drawings, late deliveries, and impacts on
Substantial Completion, payable solely to Contractor.
The supplier’s schedule guarantee delivery point will be at least
through customs at the port of import, and the supplier will be
responsible for shipment. Either Owner or Contractor will
provide the marine cargo insurance, and supplier will meet ship
age and other marine cargo insurance requirements.
Detailed testing procedures including tolerance and commercial
netting that are aligned with Contractor’s overall plant testing
procedures. Consistency of Contractor and supplier grace or test
periods.
Warranty obligations (including but not limited to, responsibility for
“in and out” costs) at least as broad and warranty period at least
as long as Contractor’s obligations (but with a reasonable cut off
after shipment of equipment in view of the likely commencement
and end date of the EPC warranty period).
Total liability cap of 100% of the purchase order price, with
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appropriate liability exclusions (e.g., indemnity, proceeds of
insurance, etc.).
Intellectual property indemnities and remedies at least as broad as
those provided by Contractor.
Right of Contactor to backcharge for specific reasons, and some
form of supplier performance and payment guarantee associated
therewith.
Adequate definition of “delivery” and delivery schedule consistent
with Contractor’s schedule requirements.
Adequate liability insurance coverage for damage to plant or other
persons or property caused by supplier.
Assignment of supplier purchase order to Contractor in total at NTP
for execution of all Owner liabilities under the purchase order(s),
except to the extent for tax purposes Owner must retain title and
payment responsibilities for an improved tax position, in which
case the parties will renegotiate all affected terms and conditions
to reflect a revised contract structure.
The parties will also attempt to obtain agreement from such vendors
that, depending on the component(s) and application, if there are
any replaced components of the combustion turbines or the steam
path of the steam turbines during the First or Second Cure Period
(as defined later in this term sheet), such replacement of
components shall cause the associated degradation value applied
to the test values to be adjusted appropriately for the replacement
of such components.
Key Personnel
Contractor’s key personnel shall be approved by Owner.
Completion
Guarantees
Contractor guarantees that it will: (i) cause the Facility to achieve Mechanical
Completion by a specified date, (ii) achieve Substantial Completion by the
Guaranteed Substantial Completion Date and (iii) achieve Final Completion by
the Project Completion Deadline.
Performance
Guarantees
The following Contractor’s “Performance Guarantees” shall be provided, as
necessary, depending on the configuration being offered:

Net Electrical Output Guarantee
Emissions Guarantee.

Base Reliability Guarantee –7 day test availability of not less than
97%, while meeting Emissions Guarantee.

If applicable, Guaranteed Peak Electrical Output [TBD] kW at
100%, while meeting Emissions Guarantee.
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[TBD] kW, while meeting
Minimum
Performance
Criteria
Substantial
Completion (“SC”)

Heat Rate Guarantee [TBD] Btu/kWh, while meeting Emissions
Guarantee.

Emissions Guarantee covering air emissions in order to comply with
Facilities Air Permits and facility-level, far field noise.

Other demonstration tests necessary for acceptance as negotiated
based on configuration offered.
The following comprise Contractor’s “Minimum Performance Criteria” for
purpose of achieving Substantial Completion, as necessary, depending on the
configuration being offered:

Minimum (95%) Net Electrical Output Guarantee (as measured
while meeting emissions measured by a certified or certifiable
CEMS); and

Maximum (105%) Heat Rate Guarantee (as measured while meeting
emissions measured by a certified or certifiable CEMS).

Satisfaction of the Reliability Test requirements.

Satisfaction of the Emissions and Noise Guarantees.
Completion of the following criteria will constitute Substantial Completion:

Mechanical Completion has been achieved. Mechanical
Completion is defined as all Work being mechanically, electrically
and structurally complete and properly incorporated into the Facility
except for Punch List items (those being items which (i) do not
prevent the Facility from being used for its specified purpose or in
accordance with Applicable Laws, (ii) do not prevent the Project
from being legally, safely and reliably placed in Commercial
Operation, and (iii) will not have a material adverse effect on the
operation or reliability of the Facility).

Contractor has provided a Punch List (provided in the event the
Owner has additional items which are in dispute Contractor shall
post a bond in the amount of 100% of the disputed item within 15
days of SC).

Performance Tests have been completed demonstrating that the
Facility meets all the Minimum Performance Criteria.

Operations personnel have received the training set forth in the
Scope Book and the necessary Operations & Maintenance manuals
have been provided.

The facility performed and passed all required demonstration tests
defined in the EPC Agreement.
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
Continuous Emissions Monitoring equipment is fully operational
and certified.
Improving
Performance Levels
and Payment of
Liquidated Damages
Contractor shall have the right to undertake at its cost Work to improve the
performance of the Facility during a [TBD] day period after the Guaranteed
Substantial Completion date (the “First Cure Period”). Contractor shall
provide notice of the exercise of such right to Owner and shall coordinate
with Owner the scheduling, nature and scope of the proposed cure plan for
improvement of Facility performance and the efforts to expeditiously pursue,
implement and complete such performance improvement efforts. Owner
shall provide Contractor with reasonable access to the Facility for the
purposes of such Work and retesting. Contractor's plan and conduct of Work
related thereto shall be subject to the prior consent of Owner not to be
unreasonably withheld or delayed keeping in mind both Owner’s objectives
of providing reliable power to the electric grid and Contractor’s objectives to
achieve/fulfill its contractual obligations in a timely manner. The results of
such Work shall be delivered to Owner within the earlier of (i) [TBD] days
after completion of the Work or (ii) the end of the Cure Period.
Notwithstanding anything to the contrary, Contractor may buy down the
Performance Guarantees at any time Contractor has made all commercially
and technically reasonable efforts to achieve the Performance Guarantees.
Notwithstanding anything to the contrary, Performance LDs will be paid at
the end of the First Cure Period if not bought down earlier by Contractor, or
secured with a financial instrument if a Second Cure Period is justified and
granted by Owner.
Final Completion
(“FC”)
Completion of the following will constitute Final Completion:
Schedule Liquidated
Damages

Mechanical Completion has been achieved.

Substantial Completion has been achieved.

All Punch List Items have been completed.

Performance Guarantees have been achieved or payment of LDs has
been received by Owner.

Emissions (i.e. EPA stack test emissions) and Noise Guarantees
have been achieved

Delivery of final lien waivers from Contractor and all subcontractors
who have provided.

Delivery of final as-builts and all remaining documentation.

The Contractor has left the Site free from waste materials or rubbish
caused by it, or its Subcontractors activities.
Contractor shall have TBD% of Fee at risk as Schedule Liquidated
Damages for late achievement of the Guaranteed Substantial Completion
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Date at the rate of $[TBD] per day.
Performance
Liquidated Damages
Liquidated Damages
Cap
Performance Liquidated Damages shall be TBD % Fee at risk as follows:

Unfired Unit Electrical Output: $[TBD]/kW less than Guarantee.

Fired Unit Electrical Output: $[TBD]/kW less than Incremental
Guarantee.

Unfired Heat Rate $[TBD]/ Btu/kWh greater than Guarantee

Schedule LD cap of [TBD] of Fee.

Performance LD caps of [TBD] of Fee for Heat Rate and Output.

Aggregate LD cap of [TBD] of Fee.
Liability Limitations Total Aggregate Liability Cap for all damages shall be [TBD] of a value
equal to EPC Agreement Price excluding (i) achievement of Mechanical
Completion, (ii) liability associated with third party personal injury and
property damage caused by Contractor’s fault or negligence, (iii) Patent
Infringement, and (iv) proceeds from insurance.
Waiver of
Consequential
Damages
Mutual waiver from consequential, incidental, special and indirect damages
and including each party’s subcontractors.
Incentive Bonus
Shall be agreed later for schedule, heat rate and output.
Indemnities
Contractor shall indemnify and hold harmless Owner from:

Third party personal injury to the extent caused by negligent,
tortuous acts or omissions of Contractor, subcontractors or their
agents, and employees, during performance of the Work

Third party property damage to the extent caused by negligent,
tortious acts or omissions of Contractor, subcontractors or their
agents, and employees, during performance of the Work

Patent Infringement arising from Contractor’s Work

Taxes that it is responsible for under the EPC Agreement.

Hazardous materials brought to Site by Contractor or Contractor’s
subcontractors

Government fines and penalties associated with noncompliance with
laws by Contractor or Contractor’s subcontractors
Owner will provide parallel indemnities to Contractor (except for patent).
{00059413.DOC;9}DOCSDC1:244758.3
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Warranty
Contractor warrants: (i) it will at all times be fully qualified and capable of
performing the Work to complete the Facility according with the terms of
the EPC Agreement and all Work shall be in accordance with the
manufacturer or vendor’s warranty requirements, (ii) the design,
engineering, construction and commissioning of the Facility has and will be:
(a) carried out using skill, care and diligence expected of experienced
professional engineers and constructors in the independent power production
industry, (b) in accordance with good modern engineering principles and
practices of a standard equivalent to similar US power projects and all codes
and standards of the EPC Agreement, and (iii) the Facility including
Equipment and other items furnished by Contractor shall be new, of good
quality, free from defects in materials and workmanship and shall conform
with all applicable laws regarding construction effective at NTP (or INTP, as
applicable). The Design Warranty shall be for a period of two (2) years from
SC (“Design Warranty Period”). The General Warranty shall extend for a
period of one year from SC (“General Warranty Period”) on all Work with a
one year re-warranty, not to exceed two years from SC, for any Work
replaced or reworked during the Warranty Period. Contractor shall repair or
replace all Work, which does not conform to the foregoing warranty at its
sole cost and expense and shall have full responsibility for all “in and out”
efforts and cost associated with any warranty Work (including differential
cost not covered by suppliers of Specified Major Equipment associated with
“in and out” for warranty defects and deficiencies). Contractor shall
negotiate in good faith with vendors and suppliers to obtain extended
Equipment warranties beyond the Warranty Period. Such extensions shall be
for the benefit of Owner.
Risk of Loss
It shall be the intent of the parties to secure the most commercially
competitive insurance program that provides adequate and typical coverages
for an EPC Agreement financed on a project-financed basis for the benefit of
the Project. The Builders All Risk (“BAR”) Policy and Marine Cargo Policy
shall give Contractor preference due to the Parties’ preference for risk of loss
(excluding terrorism/sabotage) obligations through SC to rest solely with
Contractor or Specified Major Equipment suppliers as the case may be. The
BAR Policy and the Marine Cargo Policy secured will each have Delay in
Start Up (“DSU”) coverages in amounts (1) typically secured for projects
financed in the manner described herein and (2) that are acceptable to the
Project’s financiers. The parties will acknowledge that the Owner may have
to disclose sensitive financial information to complete the placement of the
DSU coverages. The parties will work together cooperatively to ensure that
such sensitive information is shared directly with the insurance providers,
with Contractor having access only to the extent necessary to carry out any
remaining insurance placement/support obligations. In the event the
Owner’s credit agreement requires loss payee to be the Owner for proceeds
of the BAR, Marine Cargo or their respective DSU insurances, Contractor
agrees to execute the necessary documents to allow such payment to be
made through the Owner for distribution to the Contractor or Specified
Major Equipment supplier; provided, to the extent that Contractor has risk of
loss, the policy will provide that the proceeds of the Builder’s Risk and
Marine Cargo policies up to an agreed amount per occurrence (e.g. $10
million) shall be payable directly to Contractor. For BAR and Marine Cargo
{00059413.DOC;9}DOCSDC1:244758.3
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claims over the pre-agreed amount paid directly to Owner, Contractor shall
be excused for any repair/replacement obligation and may be entitled to a
Change (unless Owner or Lenders make funds available to Contractor to
commence and carry out such repair/replacement obligation). If it is agreed
by the Parties that if it is beneficial for the Project that Owner obtains the
BAR Policy, Owner shall have the risk of loss for the Facility. Contractor’s
liability for physical loss of damage to the Facility shall be limited to
reasonable deductibles not to exceed $[TBD] per event/aggregate, for loss or
damage caused by Contractor’s fault or negligence. Both Contractor and
Owner shall cooperate to encourage timely payment from the insurance
carriers of property damage claim invoices and receipt of insurance proceeds
regardless of who places the insurance.
Insurance
Contractor Provided Insurance:

Workers Compensation and Employer’s Liability Insurance.

Commercial General Liability Insurance

Automobile Liability Insurance

Excess Liability Insurance

**Builders “All Risk” and Marine Cargo Insurance.
**may be procured by either Contractor or Owner based on Project
economic considerations or directions of Lender
Owner Provided Insurance:

Workers Compensation and Employer’s Liability Insurance.

Commercial General Liability Insurance

Automobile Liability Insurance

Excess Liability Insurance

**Delay in Start Up Coverage
**may be procured by either Contractor or Owner based on Project
economic considerations or directions of Lender
To the extent that Owner procures the Builder’s All Risk policy, reasonable
deductibles not to exceed $[TBD] for losses or damages caused by
Contractor’s or Contractor’s suppliers or subcontractors fault or negligence
prior to SC shall be to the Contractors account.
To extent that Contractor procures Builder’s All Risk policy, deductibles
thereto prior to SC shall be to the Contractor’s account (except as to force
{00059413.DOC;9}DOCSDC1:244758.3
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majeure shall be to Owner’s account as defined in force majeure).
All Contractor-provided insurance (except workers compensation) shall
include Owner as additional insureds. All Contractor policies shall include a
waiver of subrogation in favor of Owner, assignees, affiliates agents, officers
and employees. All Owner insurance shall include the foregoing in favor of
the Contractor, its subcontractors, suppliers and their respective affiliates.
After SC, Contractor shall be responsible for deductibles but only up to
$[TBD] per occurrence/aggregate on policies covering physical loss or
damage to the Facility for any claims while performing warranty Work or
Punch List items to the extent caused by Contractor. Owner releases
Contractor from any other liability.
Proceeds from the Delay in Start-Up coverage will offset Contractor’s
obligation to pay schedule LDs, or if previously paid by Contractor, Owner
shall reimburse Contractor with proceeds therefrom.
Changes
Changes shall result in an adjustment to the time and/or cost or other
affected provisions of the EPC Agreement. Changes shall include but not be
limited to changes in law, suspension or termination for reasons not
attributable to Contractor, delay in Owner deliverables or as otherwise
mutually agreed by the Parties.
Force Majeure
Force majeure events shall include events beyond the reasonable control and
reasonable ability to avoid w/o fault or negligence including acts of God,
terrorism or sabotage, etc., strikes (excluding lawful strikes at the Site involving
Contractor’s or its subcontractor’s employees, unless such strike is national,
regional, industry-wide), accidents at Facility, or other events of similar severity
or magnitude (which in all event shall require Contractor to mitigate).
Contractor’s obligations shall be suspended for the period of time and/or
equitably adjusted to the extent required, as a direct result of a force majeure
event. Contractor shall be entitled to schedule changes and price adjustments.
Site Conditions and
Hazardous Material
Contractor is responsible for (i) hazardous waste it, or the parties it is
responsible for, brings to the Site and (ii) subsurface risk disclosed in
exhibits, geological reports, except for archeological artifacts, man-made
subsurface obstructions, geotechnical or subsurface matters which it could
not have reasonably foreseen based upon the available soils analysis or what
a party exercising prudent practices could not have reasonably foreseen. If
Owner provides the Site, Owner is responsible for existing hazardous
waste/material and other subsurface conditions. If Contractor or a third
party identifies the Site, Contractor is responsible for existing hazardous
waste/material and other subsurface conditions.
Termination for
Owner Convenience
& Termination for
Default
Owner reserves the right to terminate for convenience and Contractor shall
be paid the following sums:

{00059413.DOC;9}DOCSDC1:244758.3
Termination after the effective release of Work pursuant to a newly
negotiated EPC Agreement (or other interim agreement) = auditable
and documented costs of Contractor plus Termination Fee to be
J-106
determined.
Both parties shall have normal and customary rights of termination, after
adequate cure periods have lapsed, against the other party as a result of
default(s) committed by one party and impacting the other party.
Governing Law
California Law
{00059413.DOC;9}DOCSDC1:244758.3
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EXHIBIT D
Form of Change Order Certificate
CHANGE ORDER CERTIFICATE
[PROJECT NAME]
[DATE]
Change Order Certificate No. [__]
Seller has delivered this Change Order Certificate, completed except for signature by
Purchaser, to Purchaser’s duly authorized representative on the above date. Capitalized terms
used herein have the meanings set forth in that certain Purchase and Sale Agreement, dated as of
[___________] (the “Agreement”), by and between [Seller], a ______________ (the “Seller”),
[Project Company], a _____________ (the “Project Company”), and Pacific Gas and Electric
Company, a California corporation (the “Purchaser”).
Pursuant to Section 2.2(e)(4)(ii), the following adjustments shall, upon execution of this
Change Order Certificate, become part of the Agreement and shall be subject to the same terms
and conditions contained therein:
1.
Development of Project. Seller and Project Company are hereby authorized/instructed to
make or authorize the additions and/or deletions to the Agreement and/or the equipment,
material, services and extent of development of the Project as follows:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
____________________________________________________________
2.
Guaranteed Dates. The Guaranteed Commercial Availability Date shall be adjusted as
follows:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
____________________________________________________________ Indicate
“unchanged” if applicable.
3.
Project Milestones. The Project Milestones set forth on Schedule 2.4 to the Agreement
shall be adjusted as follows:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
____________________________________________________________ Indicate
“unchanged” if applicable.
{00059413.DOC;9}DOCSDC1:244758.3
J-108
4.
Performance Guarantees. The [Base Reliability Guarantee][Guaranteed Net Heat
Rate][Guaranteed Base Electrical Output][ Guaranteed Peak Electrical Output][Minimum
Performance Guarantees] shall be adjusted as follows:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
____________________________________________________________Indicate
“unchanged” if applicable.
5.
Purchase Price. The Purchase Price shall be adjusted as follows:
_____________________________________________________________________
Indicate “unchanged” if applicable.
6.
The following attachments are hereby incorporated into this Change Order Certificate:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
The above represents full and final compensation, including but not limited to the impact of any
adjustments to the Agreement, for the changes described herein and the cumulative effect of all
previously approved changes.
Delivered as of the date first written above,
[SELLER]
By:___________________________
Name:
Title:
PROJECT COMPANY]
By:___________________________
Name:
Title:
{00059413.DOC;9}DOCSDC1:244758.3
J-109
Agreed and Accepted.
PACIFIC GAS AND ELECTRIC COMPANY
By:___________________________
Name:
Title:
APPENDIX H
Form of Letter Of Credit
ISSUING BANK LETTERHEAD
ADDRESS
Date: _________
Irrevocable Standby Letter of Credit Number:________
Beneficiary:
[Pacific Gas and Electric Company
77 Beale Street, Mail Code B28L
Applicant: [Seller]
Address:
____________
San Francisco, CA 94105
____________
Attn: Credit Risk Management]
[Advising Bank, if applicable]
[Confirming Bank, if applicable]
Amount: USD [Amount]
US Dollars [Spell out amount in words]
We hereby issue our Irrevocable Standby Letter of Credit at this office in your favor for
the account of Applicant by sight payment against the following documents:
1.
Your sight draft drawn on us marked “drawn under [Issuing Bank] [Letter of Credit Number]
dated [Date]”;
AND
{00059413.DOC;9}DOCSDC1:244758.3
J-110
2.
Beneficiary’s signed statement certifying:
“Applicant is in default under that certain Agreement dated ___ by and
between Applicant and Beneficiary and the amount drawn hereunder is not greater than the
amount due and owing to Beneficiary pursuant to that Agreement.”
OR
“Under that certain Agreement dated _____ by and between Applicant and
Beneficiary, Beneficiary is making a draw hereunder and, as of the date hereof, the amount
drawn is not greater than the amount due and owing to Beneficiary pursuant to that
Agreement.”
OR
“This Letter of Credit will expire in thirty (30) calendar days or less and
Applicant has not provided alternate security acceptable to the Beneficiary.”
This Letter of Credit expires at our counters located at [INSERT ADDRESS] on
[INSERT DATE], (“Expiration Date”) but the Expiration Date shall be automatically extended without
amendment for a period of one year and on each successive Expiration Date, unless at least sixty (60)
days before the then current Expiration Date, we notify you by registered mail or courier that we elect not
to renew this Letter of Credit for such additional period.
Special Conditions:
1.
2.
account of the Applicant.
3.
Partial drawing(s) are permitted.
All banking charges associated with this Letter of Credit are for the
This Letter of Credit is not transferable.
We hereby engage with you that draft(s) drawn under and in compliance with the terms
of this Letter of Credit will be duly honored if drawn and presented for payment at any time before the
close of business [INSERT TIME] at our counters located at [INSERT ADDRESS] on or before the
Expiration Date or in the event of Force Majeure, as defined under Article 36 of the Uniform Customs
and Practice for Documentary Credits (2007 Revision) International Chamber of Commerce Publication
No. 600 (“UCP”), interrupting our business, within fifteen (15) days after resumption of our business,
whichever is later.
Except as otherwise stated herein, this credit is subject to the UCP and, with respect to
matters not so covered, this Letter of Credit is subject to and governed by the Laws of the State of New
York.
If you have any questions regarding this Letter of Credit, please call [Telephone No.].
By: __________________
Authorized Signature
{00059413.DOC;9}DOCSDC1:244758.3
J-111
Name: _________________
Title: __________________
{00059413.DOC;9}DOCSDC1:244758.3
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EXHIBIT J
Form of Bill of Sale
BILL OF SALE
This BILL OF SALE (“Bill of Sale”) is made as of [____________], 200[__] by [Seller],
a __________ [Project Company], a _______ (“[Seller][Project Company]”), for the benefit of
Pacific Gas and Electric Company, a California corporation (the “Purchaser”).
RECITALS
A.
Pursuant to that certain Purchase and Sale Agreement dated as of
[___________] (the “Purchase and Sale Agreement”) by and between Seller, Project Company,
and Purchaser, [Seller][Project Company] has agreed to sell, assign, convey, transfer and deliver
all of its right title and interest in and to the Project and the Project Assets to Purchaser, and
Purchaser has agreed to purchase, assume and acquire the Project and the Project Assets from
[Seller][Project Company].
B.
Pursuant to Section 5.2(a)(1) of the Purchase and Sale Agreement,
[Seller][Project Company] has entered into this Bill of Sale as evidence of such conveyance.
NOW THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which is hereby acknowledged,
[Seller][Project Company] hereby agrees as follows:
1.
Defined Terms. Unless the context hereof shall otherwise require,
capitalized terms used in this Bill of Sale, including those in the recitals hereto, and not
otherwise defined herein shall have the respective meanings as defined in the Purchase and Sale
Agreement.
2.
Sale and Assignment. [Seller][Project Company] for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby grant,
sell, assign, convey, transfer and deliver to Purchaser all of [Seller][Project Company]’s right,
title and interest in and to the Project and the Project Assets, including, but not limited to, the
real property, personal property and other interests set forth on Schedule I hereto.
3.
Warranty. [Seller][Project Company] does hereby warrant and covenant
that, (i) it is the true and lawful owner of the Project and the Project Assets and has good right to
sell the Project and the Project Assets, and that except for Permitted Encumbrances, title to the
Project and the Project Assets is on the date of execution hereof free and clear of all claims,
Liens and encumbrances of any nature, (ii) good, record and marketable title to the Project and
the Project Assets is hereby conveyed to Purchaser free and clear of all claims, Liens and
encumbrances of any nature, except for any existing Permitted Encumbrances, and (iii)
[Seller][Project Company] will forever warrant and defend such title against the claims of all
{00059413.DOC;9}DOCSDC1:244758.3
J-113
Persons.
4.
Binding Effect; Assignment. This Bill of Sale and all of the provisions
hereof shall be binding upon [Seller][Project Company] and its respective successors and assigns
and shall inure to the benefit of Purchaser and its successors and assigns.
5.
Further Action. [Seller][Project Company] agrees that it will, from time to
time, execute and deliver such further instruments of conveyance and transfer as may be
reasonably required to implement and effectuate the sale set forth in the Purchase and Sale
Agreement.
6.
No Third Party Beneficiary. Nothing in this Bill of Sale is intended to
confer upon any other person except Purchaser any rights or remedies hereunder or shall create
any third party beneficiary rights in any person.
7.
Governing Law. This Bill of Sale shall be governed by and construed in
accordance with the laws of the State of California (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).
8.
Construction. This Bill of Sale is delivered pursuant to and is subject to
the terms of the Purchase and Sale Agreement. In the event of any conflict or ambiguity between
the terms of the Purchase and Sale Agreement and the terms of this Bill of Sale, the terms of the
Purchase and Sale Agreement shall control.
9.
Counterparts. This Bill of Sale may be executed in any number of
counterparts, all such counterparts together constituting but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
{00059413.DOC;9}DOCSDC1:244758.3
J-114
IN WITNESS WHEREOF, this Bill of Sale has been duly executed and delivered
by [Seller][Project Company]’s duly authorized officer, as of the date first above set forth.
[Seller][Project Company]
By:__________________________
Name:
Title:
ACCEPTED AND AGREED TO
THIS ____ DAY OF [_________], 200[__]
PACIFIC GAS AND ELECTRIC COMPANY
By:__________________________
Name:
Title:
{00059413.DOC;9}DOCSDC1:244762.3
1390-163
K-115
EXHIBIT K
Form of Assignment and Assumption Agreement
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”),
dated as of [
] (the “Effective Date”), by and between [Seller], a ______________
(“Assignor”), and Pacific Gas and Electric Company, a California corporation (“Assignee”).
W I T N E S S E T H:
WHEREAS, the Assignor has entered into or possesses rights under certain
contracts, agreements, leases, warranties, guarantees and other agreements as set forth in
Schedule 1 hereto (the “Assigned Agreements”) in connection with the electricity generation
facility that is the subject of that certain Purchase and Sale Agreement, dated as of [
]
by and between Assignor, [Project Company], a _______________, and Assignee (the “Purchase
and Sale Agreement”); and
WHEREAS, pursuant to Sections 3.1 and 13.7 of the Purchase and Sale
Agreement, the Assignor desires to assign and transfer to the Assignee, and the Assignee desires
to assume and accept, all of the Assignor’s rights and duties under the Assigned Agreements and
all of Assignor’s obligations under the Assigned Agreements arising after the Closing Date.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby
covenant and agree as follows:
1.
Definitions. Capitalized terms used herein without other definition have
the meanings given to them in the Purchase and Sale Agreement.
2.
Assignment. The Assignor hereby irrevocably assigns and transfers to the
Assignee all of its right, title and interest in, to and under, and all of its duties, liabilities and
obligations under or pursuant to, the Assigned Agreements, except for any liabilities under the
Assigned Agreements resulting from Assignor’s performance or failure to perform its obligations
under the Assigned Agreements on or prior to the Closing Date, which liabilities are retained by
and remain the responsibility of the Assignor (the “Retained Liabilities”).
3.
Assumption. The Assignee hereby assumes and accepts all of Assignor’s
right, title and interest in, to and under, and all of Assignor’s duties, liabilities and obligations
under or pursuant to, the Assigned Agreements, except for the Retained Liabilities, and agrees to
perform under and be bound by the terms of the Assigned Agreements.
4.
Non-Interference. Each of the Assignor and the Assignee agrees that the
assignment and assumption of the assigned rights and responsibilities hereunder is irrevocable
and that neither party shall take any action or make any other assignment or direction which
could prejudice the other’s rights hereunder, and that any such action or assignment shall be
void.
{00059413.DOC;9}DOCSDC1:244762.3
1390-163
K-116
5.
Representations and Warranties. The Assignor hereby represents and
warrants to the Assignee that neither its execution, delivery or performance of this Agreement,
nor the consummation by it of the transactions contemplated hereby will (a) require any consent,
agreement or acknowledgement of any Person that has not been obtained, (b) require any
Governmental Approval that it has not obtained, or (c) violate any Governmental Rules
applicable to the Assignor.
6.
Effectiveness. This Assignment shall become effective as of the Closing.
7.
Further Assurances. Each of the parties will, from time to time and at all
times hereafter, upon every reasonable request to do so by another party hereto, promptly make,
do, execute and deliver, or cause to be made, done, executed and delivered, all such further acts,
deeds, assurances and things as may be legally required or reasonably necessary in order to
further implement and carry out the intent and purposes of this Agreement.
8.
Successor and Assigns. The provisions of this Assignment are binding
upon, and will inure to the benefit of, the successors and assigns of the Assignor and Assignee,
respectively.
9.
Governing Law. The validity, interpretation and effect of this Assignment
shall be governed by and will be construed in accordance with the laws of the State of California
applicable to contracts made and performed in such State and without regard to conflicts of law
doctrines except to the extent that certain matters are preempted by Federal law or are governed
by the law of the jurisdiction of organization of the respective parties.
10.
Severability. If one or more of the provisions of this Assignment shall be
deemed invalid, illegal or unenforceable in any respect, such provisions shall be deemed to be
severed from this Assignment, and the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired in any way thereby.
11.
Counterparts. This Assignment may be executed in any number of
counterparts, all such counterparts together constituting but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
{00059413.DOC;9}DOCSDC1:244762.3
1390-163
K-117
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
officers, have executed and delivered this Assignment as of the day and year first above
set forth.
[SELLER]
By:__________________________
Name:
Title:
PACIFIC GAS AND ELECTRIC
COMPANY
By:__________________________
Name:
Title:
{00059413.DOC;9}DOCSDC1:244786.1
118
EXHIBIT M
Form of Estoppel Certificate
This Lessor’s Estoppel (“Estoppel”) dated as of [
] is executed
by [
], a [
] (“Lessor”), in favor of Pacific Gas and
Electric Company, a California corporation (“Purchaser”).
RECITALS
A.
Pursuant to that certain Lease dated as of [
], 200[ ], by
and between Lessor and [Project Company, a __________ ] [Seller, a _______ ]
(“Lessee”), of which a Notice of Lease was recorded on [
], 200[ ] in the [
] Registry of Deeds in Book [
] , Page [ ], (the “Lease”), the Lessor
leases real property located in [
], [
], described on Attachment I
attached hereto and incorporated herein by this reference, (which property, together with
all improvements now or in the future located on the property, is referred to as the
“Property”).
B.
Pursuant to that certain Purchase and Sale Agreement dated as of [
] (the “Purchase and Sale Agreement”), Lessee has agreed, among other things, to
sell certain assets and to assign all of its right, title and interest in, to and under the Lease
and the Property to Purchaser.
AGREEMENT
NOW, THEREFORE, with the understanding that Purchaser will be
relying on each of the statements contained in this Estoppel and that Purchaser would not
consummate its transaction under the Purchase and Sale Agreement without having
received this Estoppel, Lessor hereby certifies, acknowledges and agrees as follows:
1.
The Lease constitutes the only agreement between Lessor and
Lessee with respect to the interests described therein, and there have been no further
amendments or modifications, oral or written, thereof.
2.
The Lease is in full force and effect and is the valid and binding
obligation of Lessor. Lessor has no claim of offset or defense to any of its obligations
under the Lease.
3.
Any improvements, space and facilities required to be constructed,
furnished to, or provided under the Lease have been completed in accordance with the
provisions thereof and otherwise in all respects to the satisfaction of Lessor.
4.
To the best of Lessor’s knowledge, Lessee is not in default in the
performance of the Lease and no event has occurred which with the passage of time or
the giving of notice, or both, would constitute a default by Lessee under the Lease, other
than the failure by Lessee to pay [
] due [
], 200 .
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119
5.
Lessor is not in default in the performance of the Lease and no
event has occurred which with the passage of time or the giving of notice, or both, would
constitute a default by Lessor under the Lease.
6.
paid through [
Rent under the Lease is presently $
], 200 .
per year and has been
7.
[Except as to the security interests currently held by
]Lessor
has not assigned, hypothecated, or otherwise transferred its interests, or any portion
thereof, under the Lease.
[8.
Lessor has received Prepaid Rent in the amount of $
constituting prepayment of the last [
] payable during the [
] (as such
terms are defined in the Lease).]
9.
The current term of the Lease will expire on [
], 200 . The
tenant under the Lease has the option to extend the Lease for [
] ( ) additional
periods of [ ] ( ) years each.
10.
This Estoppel shall be binding upon and benefit the successors and
assigns of Lessor, Lessee, and Purchaser and their respective successors, transferees and
assigns.
IN WITNESS WHEREOF, Lessor, by its officer thereunto duly
authorized, has duly executed this Estoppel as of the date first set forth above.
LESSOR:
By:
[
]
[
]
By:
Name:
Title:
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120
Attachment I
PROPERTY DESCRIPTION
All that certain real property located in [
], described as follows:
{00059413.DOC;9}DOCSDC1:244786.1
], County of [
121
], State of [
Schedule 1
Assigned Agreements
{00059413.DOC;9}DOCSSF1:217694.1
Schedule I to Bill of Sale
A.
Facility
B.
Electrical Interconnection Facilities
C.
Fuel Interconnection Facilities
D.
Buildings, Improvements, Structures and Fixtures
E.
Equipment, Machinery, and Engines
F.
Inventory, Goods, and Supplies
G.
Tools and Spare Parts
H.
Computer Hardware and Software
I.
Furniture and Furnishings
J.
Intellectual Property
K.
Records, As-Builts, Plans, Specifications, and Other Information and Documents
Related to Project
L.
Other Personal Property
M.
Real Property Interests and Real Property Leasehold Interests (including easements
and rights of way)
EXHIBIT V
Form of Deposit Account Agreement
DEPOSIT ACCOUNT AGREEMENT
This Deposit Account Agreement (Agreement) is made by and among: (a)
______________________ (Posting Party); (b) _____________________ (Bank); and
(c)_Pacific Gas and Electric Company (Secured Party), each of which is a Party and all of which
are Parties.
1. Posting Party solely owns the following account at Bank (the Deposit Account): Account
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i
number ____________. Additional amounts may be deposited into this account from
time to time.
2. Pursuant and subject to the terms of the Purchase and Sale Agreement, dated
______________, 200_ (PSA), Posting Party and Secured Party intend that Secured Party
have a first priority perfected security interest in and sole and exclusive control over the
Deposit Account and all property, including interest and dividends credited thereto and
all proceeds thereof.
3. Posting Party, Secured Party and Bank agree that, during the term of this Agreement,
Bank shall comply with the instructions originated by Secured Party directing disposition
of the funds in the Deposit Account and that Bank shall comply with such instructions
without any further consent by Posting Party. Such instructions shall be in the form of a
written document signed by an authorized representative of Secured Party and shall be
effective upon receipt by Bank. Delivery may be by facsimile. Secured Party agrees to
provide contemporaneously a copy of any such instruction to Posting Party; however,
Bank’s obligation to comply with Secured Party’s instructions is not conditioned upon
Posting Party’s receipt of a copy. Bank shall comply with Secured Party’s instructions
within forty-eight (48) hours of receipt of the same. Though Bank shall have no
obligation to verify the existence of a default in honoring Secured Party’s instructions,
Secured Party agrees that (a) it shall not draw on the funds in the Deposit Account except
on the occasion of a default by Posting Party under the PSA (b) Secured Party shall
instruct Bank to release funds from the Deposit Account to Posting Party periodically if
the amount of collateral required for transactions between the Parties under the PSA is
less than the then-current amount in the Deposit Account.
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ii
4. Posting Party shall pay all fees, charges, and costs to establish, maintain, and close the
Deposit Account. Posting Party shall also pay any taxes on interest income generated by
the Deposit Account and shall receive all related tax information and forms from Bank.
5. Bank shall pay interest at Bank’s usual rate for such accounts on the balance in the
Deposit Account by crediting such interest to the account. Bank may invest the amount
in the Deposit Account into an institutional money market fund or into a demand deposit
account at Bank paying Bank’s current rate of interest thereon.
6. Posting Party agrees to indemnify Bank against and hold Bank harmless from all costs,
liability, damages, claims, suits and expenses (including reasonable attorney’s fees and
costs) arising from or related to Bank’s release of funds from the Deposit Account to
Secured Party, except to the extent such cost, liability, damage, claim, suit, or expense
results from Bank’s negligence or willful misconduct. Secured Party agrees to indemnify
Posting Party against and hold Posting Party harmless from all costs and expenses
(including reasonable attorney’s fees and costs) arising from or related to Secured Party’s
erroneous, negligent or faulty instructions to Bank resulting in an improper release of
funds by Bank.
7. In performing its duties hereunder, Bank shall not be liable to any Party for consequential
damages, including lost profits, losses, or expenses except to the extent any of the same
result from Bank’s negligence or willful misconduct. Bank shall not incur any such
liability for (a) any act or failure to act made or omitted in good faith, or (b) any action
taken or omitted in reliance on any instrument or written statement that Bank believes in
good faith to be genuine. Bank shall not be responsible for verifying the authority of any
person acting or purporting to act on behalf of a Party.
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iii
8. All notices and instructions entitled or required to be given under this Agreement shall be
in writing and shall be sent via a commercial courier service guaranteeing next-day
delivery and requiring a receipt of delivery (such as Federal Express) or by facsimile to
the following addresses or fax numbers:
If to Bank:
Contact Person:
Address:
E-Mail Address:
Phone:
Fax:
If to Posting Party:
Contact Person:
Address:
E-Mail Address:
Phone:
Fax:
If to Secured Party:
Contact Person:
Address:
E-Mail Address:
Phone:
Fax:
9. Bank shall act only as the holder of the Deposit Account and shall have no fiduciary duty
to Secured Party. During the term of this Agreement, Bank shall be entitled to rely on
any written instruction signed by an authorized representative of Secured Party that it
reasonably believes to be genuine and shall not be required to investigate the legitimacy
of such written instruction or the authority of the person executing the same.
10. Bank may resign as the holder of the Deposit Account at any time upon giving both the
Secured Party and Posting Party at least thirty (30) days’ written notice; provided that,
such resignation shall not be effective until a successor Bank has accepted in writing its
appointment as the holder of the Deposit Account and has signed this Agreement and
{00059413.DOC;9}OHS East:9397238.1
iv
agreed to succeed to the duties and obligations of Bank hereunder. Upon receipt by the
Parties of the successor bank’s written acceptance, Bank shall be discharged from any
further duties and liability under this Agreement.
11. Any entity into which Bank may be merged or with which it may be consolidated, or any
entity to which Bank may transfer a substantial portion of its business of maintaining
accounts such as the Deposit Account, shall be the successor to Bank hereunder without
the execution or filing of any paper or any further act by any Party.
12. The Secured Party and Bank shall not disclose the balance in the Deposit Account or any
associated financial information to any non-Party other than to a governmental agency or
authority with jurisdiction over the disclosing Party. The disclosing Party shall, if
practicable, immediately notify the other Parties of any request or demand to disclose
before such disclosure is made.
13. Bank represents and warrants to Secured Party that the Deposit Account and all
agreements between Bank and Posting Party related thereto are governed by the law of
the State of New York. Bank covenants that it will not, without Secured Party’s prior
written consent, amend those account agreements to change their governing law or to
provide that secured transactions relating to the Deposit Account are governed by the law
of another jurisdiction [see, Section 9304 of Revised UCC].
14. This Agreement is governed by the laws of the State of New York.
15. The initial term of this Agreement is through June 30, 2008 . This Agreement may be
terminated by any Party on or after that date by written notice to the other Parties, such
termination to be effective the earlier of (a) thirty (30) days following delivery date of
such notice. This Agreement sets forth the entire agreement among the Parties regarding
{00059413.DOC;9}OHS East:9397238.1
v
the subject matter hereof and, as such, supersedes any prior and contemporaneous oral or
written agreements of the Parties with respect to the subject matter hereof. To the extent
this Agreement conflicts with the provisions of any other agreement between Bank and
Posting Party, the provisions of this Agreement shall control.
16. No amendment of this Agreement will be binding unless it is in writing and signed by
Posting Party, Bank, and Secured Party, and no waiver of any right under this Agreement
will be binding unless it is in writing and signed by the waiving Party.
17. The provisions of this Agreement shall be binding on and shall inure to the benefit of
Bank, Posting Party, Secured Party and their respective successors and permitted assigns.
18. Nothing in this Agreement shall be deemed to create any agency, fiduciary, joint venture,
or partnership relationship between or among Bank, Posting Party, and Secured Party.
19. This Agreement may be executed in counterparts, each of which shall be an original and
all of which taken together shall constitute a single instrument.
20. The effectiveness of this Agreement is conditioned on the execution of it by each Party
and the subsequent delivery of the signed document to the other Parties. Execution may
be in counterparts, and a facsimile copy shall have the same legal effect as an original.
This Agreement shall be effective as of the date of the last signature.
This Agreement shall be executed by an authorized representative of each Party.
BANK
By: ____________________________
Name: _________________________
Title: __________________________
Date: __________________________
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vi
SELLER
By: ____________________________
Name: __________________________
Title: __________________________
Date: __________________________
PACIFIC GAS AND ELECTRIC COMPANY
By: ____________________________
Name: __________________________
Title: ___________________________
Date: ___________________________
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vii