POWER PURCHASE AGREEMENT
DATED AS OF [________________, 200_]
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INTERPRETATION .................................................... 1
Section 1.1 Definitions............................................................................................ 1
Section 1.2 Interpretation ...................................................................................... 14
ARTICLE II EFFECTIVE DATE, TERM, AND EARLY TERMINATION .................... 15
Section 2.1 Effective Date .................................................................................... 16
Section 2.2 Agreement Term and Delivery Term ................................................. 17
Section 2.3 Survivability....................................................................................... 17
Section 2.4 Early Termination .............................................................................. 17
Section 2.5 Rights Vis a Vis the Other Buyers ..................................................... 17
ARTICLE III DEVELOPMENT OF THE FACILITY ........................................................ 18
Section 3.1 In General........................................................................................... 18
Section 3.2 Certification of Commercial Operation Date ..................................... 19
Section 3.3 Other Information .............................................................................. 19
Section 3.4 Milestone Schedule ............................................................................ 19
Section 3.5 Performance Damages ....................................................................... 19
Section 3.6 Decommissioning and Other Costs .................................................... 20
ARTICLE IV OPERATION AND MAINTENANCE OF THE FACILITY ....................... 20
Section 4.1 Compliance with Electrical Service Requirements............................ 20
Section 4.2 General Operational Requirements .................................................... 20
Section 4.3 Operation and Maintenance Plan ....................................................... 20
Section 4.4 Environmental Credits ....................................................................... 20
Section 4.5 Scheduling of Energy and Scheduled Outages .................................. 21
ARTICLE V COMPLIANCE DURING CONSTRUCTION AND OPERATION
PERIOD ......................................................................................................... 22
Section 5.1 In General........................................................................................... 22
Section 5.2 Compliance With Standards .............................................................. 23
Section 5.3 Quality Assurance Program ............................................................... 24
Section 5.4 Performance Security ......................................................................... 24
Section 5.5 Effect of Review by Buyer ................................................................ 24
ARTICLE VI PURCHASE AND SALE OF POWER ......................................................... 24
Section 6.1 Purchases by Buyer ............................................................................ 24
Section 6.2 Facility‟s Point of Delivery................................................................ 25
Section 6.3 Seller‟s Failure ................................................................................... 25
Section 6.4 Buyer‟s Failure................................................................................... 25
Section 6.5 Nature of Remedies............................................................................ 25
TABLE OF CONTENTS
Section 6.6 Energy to Come Exclusively from Facility ....................................... 25
Section 6.7 Sales to Third Parties ......................................................................... 25
Section 6.8 Ancillary Service Compensation ....................................................... 26
ARTICLE VII TRANSMISSION AND SCHEDULING; TITLE AND RISK OF
LOSS .............................................................................................................. 26
Section 7.1 In General........................................................................................... 26
Section 7.2 Costs................................................................................................... 26
Section 7.3 Title; Risk of Loss .............................................................................. 26
ARTICLE VIII ENVIRONMENTAL ATTRIBUTES; COMPLIANCE WITH
APPLICABLE REGULATORY REQUIREMENTS ................................... 26
Section 8.1 Transfer of Environmental Attributes ................................................ 26
Section 8.2 Reporting of Ownership of Environmental Attributes....................... 27
Section 8.3 Further Assurances............................................................................. 27
Section 8.4 Applicable State Program Compliance .............................................. 27
ARTICLE IX MAKEUP OF SHORTFALL ENERGY ....................................................... 27
Section 9.1 Makeup of Shortfall ........................................................................... 27
Section 9.2 Payment of Energy Rate During Shortfall Periods ............................ 27
Section 9.3 Replacement Energy .......................................................................... 28
Section 9.4 Application of Shortfall Energy or Replacement Energy .................. 28
ARTICLE X CAPACITY RIGHTS .................................................................................... 28
Section 10.1 Purchase and Sale of Capacity Rights ............................................... 28
Section 10.2 Representation Regarding Ownership of Capacity Rights ................ 28
Section 10.3 Further Assurances............................................................................. 28
ARTICLE XI BILLING; PAYMENT; AUDITS; METERING; ATTESTATIONS;
POLICIES ...................................................................................................... 28
Section 11.1 Billing and Payment ........................................................................... 28
Section 11.2 Calculation of Energy Delivered; Invoices and Payment .................. 29
Section 11.3 Disputed Invoices............................................................................... 29
Section 11.4 Buyer‟s Right of Setoff ...................................................................... 30
Section 11.5 Records and Audits ............................................................................ 30
Section 11.6 Electric Metering Devices.................................................................. 31
Section 11.7 Taxes .................................................................................................. 31
ARTICLE XII REPRESENTATIONS AND WARRANTIES; COVENANTS OF
SELLER ......................................................................................................... 32
Section 12.1 Representations and Warranties by Buyer ......................................... 32
Section 12.2 Representations and Warranties by Seller ......................................... 32
TABLE OF CONTENTS
Section 12.3 Covenant of Seller Related to Seller‟s Status as Special
Purpose Entity .................................................................................... 34
Section 12.4 Covenants of Seller Related to Lease ................................................ 34
ARTICLE XIII DEFAULT; TERMINATION AND REMEDIES; PERFORMANCE
DAMAGE ...................................................................................................... 36
Section 13.1 Default................................................................................................ 36
Section 13.2 Default Remedy ................................................................................. 38
Section 13.3 Termination for Default ..................................................................... 38
ARTICLE XIV MISCELLANEOUS ...................................................................................... 40
Authorized Representative ................................................................. 40
Notices ............................................................................................... 40
Alternative Dispute Resolution .......................................................... 41
Further Assurances............................................................................. 42
Force Majeure .................................................................................... 42
Assignment of Agreement ................................................................. 43
Ambiguity .......................................................................................... 44
Voluntary Execution .......................................................................... 45
Entire Agreement ............................................................................... 45
Governing Law .................................................................................. 45
Execution in Counterparts.................................................................. 45
Effect of Section Headings ................................................................ 45
Waiver ................................................................................................ 45
Relationship of the Parties ................................................................. 45
Third Party Beneficiaries ................................................................... 46
Indemnification; Damage or Destruction; Insurance; Limit of
Liability .............................................................................................. 46
Section 14.17 Severability ........................................................................................ 47
Section 14.18 Confidentiality ................................................................................... 47
Section 14.19 Fixed-Rate Contract: Mobile-Sierra Clause....................................... 48
Section 14.20 Financial Accounting Standards ........................................................ 49
Section 14.21 Equal Employment Opportunity Compliance Certification .............. 49
APPENDIX A PAYMENT SCHEDULE
APPENDIX B FACILITY
APPENDIX C BUYER AND SELLER BILLING, NOTIFICATION AND
SCHEDULING CONTACT INFORMATION
APPENDIX D FORM OF ATTESTATION
APPENDIX E FORM OF LETTER OF CREDIT
EXHIBIT I DEMAND FOR PAYMENT
TABLE OF CONTENTS
EXHIBIT II STATEMENT
EXHIBIT III AMENDMENT
APPENDIX F INSURANCE
APPENDIX G FORM OF GUARANTEE
APPENDIX H QUALITY ASSURANCE PROGRAM
APPENDIX I MILESTONE SCHEDULE
APPENDIX J OPTION AGREEMENT
APPENDIX K NON-CONSOLIDATION OPINION
APPENDIX L FORM OF LEASE
POWER PURCHASE AGREEMENT
THIS POWER PURCHASE AGREEMENT (“Agreement”) is entered into as of this
[___] day of [___________, 200_] by and between __________ (“Buyer”), and
[________________] (“Seller”), a [limited liability company/partnership/corporation] organized
and existing under the laws of the State of [____________]. Each of Buyer and Seller is referred
to individually in this Agreement as a “Party” and together they are referred to as the “Parties”.
WHEREAS, [BUYER] has adopted a “[Applicable State Program]” designed to increase
the amount of energy it provides to its retail customers from renewable power sources including
from solar power sources; to __% of its retail electricity sales by ___[date]___________;
WHEREAS, on [date], [BUYER] issued a request for proposals to acquire renewable
WHEREAS, Seller responded to the [date] request for proposals and following
negotiation has agreed to sell to [BUYER] and [BUYER] has agreed to purchase certain
renewable energy; and
WHEREAS, the Parties desire to set forth the terms and conditions pursuant to which
such sales and purchases shall be made.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
set forth, the Parties hereto agree as follows:
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. The following capitalized terms in this Agreement
and the appendices hereto shall have the following meanings:
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by or is under common control with such Person or is a director or
officer of such Person or of an Affiliate of such Person. As used in this Agreement, “control”
shall mean the possession, directly or indirectly, of the power to direct or cause the direction of
management, policies or activities of a Person, whether through ownership of voting securities,
by contract or otherwise.
“Agreement” means this Power Purchase Agreement, as it may be amended,
supplemented or otherwise modified from time to time hereafter in accordance with its terms.
“Agreement Term” has the meaning set forth in Section 2.2 hereof.
“Ancillary Documents” means the Option Agreement, all agreements and other
documents included in the Performance Security and all other instruments, agreements,
certificates and documents executed or delivered by or on behalf of Buyer or any Seller Party
pursuant to or in connection with any thereof or this Agreement.
“Approved Point of Interconnection on Buyer’s System” means any of the
interconnection points shown in Appendix [__].
“ASME” means American Society of Mechanical Engineers.
“Assumed Daily Deliveries” has the meaning set forth in Section 13.3(c).
“ASTM” means American Society for Testing and Materials.
“Authorized Auditors” means representatives of Buyer or Buyer‟s Agents who are
authorized to conduct audits on behalf of Buyer.
“Authorized Representative” means, with respect to each Party, the Person designated
as such Party‟s authorized representative pursuant to Section 14.1.
“AWS” means American Welding Society.
“Bankruptcy” means any case, action or proceeding under any bankruptcy,
reorganization, debt arrangement, insolvency or receivership law or any dissolution or
liquidation proceeding commenced by or against a Person and, if such case, action or proceeding
is not commenced by such Person, such case or proceeding shall be consented to or acquiesced
in by such Person or shall result in an order for relief or shall remain undismissed for sixty (60)
“Business Day” means any calendar day that is not a Saturday, a Sunday, or a day on
which commercial banks are authorized or required to be closed in New York, New York.
“Buyer’s Agent” means any Person authorized or designated by Buyer to make any
determination or perform, carry out or provide any function on behalf of Buyer under this
“Buyer’s Share” means Buyer‟s undivided pro rata __% share of the Facility Energy,
together with all associated Environmental Attributes, and Facility Capacity.
“CAMD” means the Clean Air Markets Division of the United States Environmental
Protection Agency, any successor agency and any other state or federal entity or Person that is
given jurisdiction over a program involving transferability of Environmental Attributes.
“Capacity Rights” means the rights, whether in existence as of the Effective Date or
arising hereafter during the Agreement Term, to capacity, resource adequacy, associated
attributes and/or reserves associated with the electric generating capability of the Facility,
including the right to resell such rights.
“Closing” has the meaning set forth in the Option Agreement.
"Closing Date" has the meaning set forth in the Option Agreement.
“Commercial Operation” means the date on which Seller shall have demonstrated to the
reasonable satisfaction of Buyer that all of the following have occurred:
(a) Construction of the Facility has been completed in accordance with the
terms and conditions of this Agreement and the Facility possesses all the characteristics, and
satisfies all of the requirements, set forth for the Facility in this Agreement;
(b) The Facility has successfully completed all testing required by Prudent
Utility Practices or any Requirement of Law to be completed prior to full commercial operations;
(c) Seller has obtained all Permits required for the construction, operation and
maintenance of the Facility in accordance with this Agreement (including those identified in
Appendix B), and all such Permits are final and non-appealable;
(d) The Facility is both authorized and able to operate and deliver Energy at
full capacity in accordance with Prudent Utility Practices, the requirements of this Agreement and
all Requirements of Law;
(e) Seller shall have entered into an interconnection agreement on terms and
conditions reasonably acceptable to Seller and the Host Control Area and all interconnection
facilities shall be complete and in operation and capable of accepting, transmitting and delivering
renewable energy to the Point of Delivery in accordance with the interconnection agreement;
(f) The Facility shall demonstrate performance in excess of ___MWh of output
and/or _____ percent (__%) Availability for a continuous ten (10) day operations period;
(g) Seller shall have established SCADA information and access to enable
[BUYER] to view Availability and/or production data for the Facility;
(h) Seller shall have installed all equipment needed to enable Dynamic
Scheduling of the Energy from the Facility to [BUYER], as may be necessary pursuant to the
interconnection agreement, and shall demonstrate that such equipment, if needed, is fully
(i) Seller shall have provided to [BUYER] an Energy dispatch and Scheduling
protocol, in accordance with Section ___, that is acceptable to [BUYER] in its sole and reasonable
(j) Seller has obtained Insurance coverage for the Facility as required by
“Commercial Operation Date” means the date on which Commercial Operation shall
“Contract Year” means (i) the twelve-month period beginning on the Commercial
Operation Date and ending on the first anniversary of the Commercial Operation Date, and (ii)
each succeeding period of twelve consecutive months following the period described in the
preceding clause (i).
“Costs” has the meaning set forth in Section 13.3(f).
“Default” has the meaning set forth in Section 13.1.
“Defaulting Party” has the meaning set forth in Section 13.1.
“Delivered Energy” means the MWh of Energy delivered by Seller and received by
Buyer at the Point of Delivery.
“Delivery Term” has the meaning set forth in Section 2.2 hereof.
"Dynamic Scheduling" means a telemetered reading or value that is updated in real time
and the integrated value of which is treated as a Schedule. Dynamic Scheduling is used for
Scheduling remote load to or from another Host Control Area.
“Early Termination Date” has the meaning set forth in Section 13.3(a).
“EEI” means Edison Electric Institute.
“Effective Date” means the date [BUYER] executes this Agreement, so long as the
conditions precedent set forth in Section 2.1 have been met by such date.
“Electric Metering Device(s)” means all meters, metering equipment, and data
processing equipment used to measure, record, or transmit data relating to the Energy output
from the Facility. Electric Metering Devices include the metering current transformers and the
metering voltage transformers.
“Energy” means electrical energy.
“Environmental Attribute” means environmental characteristics that are attributable to
renewable energy, including credits; credits towards achieving local, national or international
renewable portfolio standards; green tags; Renewable Energy Credits; greenhouse gas or
emissions reductions, credits, offset, allowances or benefits; actual SO2, NOx, CO2, CO,
Carbon, VOC, mercury, and other emissions avoided; and any and all other green energy or other
environmental benefits associated with the generation of renewable energy (regardless of how
any present or future law or regulation attributes or allocates such characteristics). Such
Environmental Attributes shall be expressed in MWh. Environmental Attributes does not
include Tax Benefits, or any energy, capacity, reliability, or other power attributes used by Seller
to provide electricity services. Environmental Attributes are also commonly known as
renewable energy credits (RECs) and green tags, and the terms shall have identical meanings for
the purposes of this Agreement.
“Environmental Attribute Reporting Rights” means all rights to report ownership of
the Environmental Attributes to any Person, under Section 1605(b) of the Energy Policy Act of
1992, as amended from time to time or any successor statute, or otherwise.
“Environmental Documents” has the meaning set forth in Section 3.1(a).
“EPA” means Environmental Protection Agency and any successor agency.
“[Applicable state regulation] Compliant,” when used with respect to the Facility or
any other facility at any time, means that the facility satisfies both the [Applicable state
regulatory standards] in effect at the time.
“[Applicable] Law” means Sections ____ of the [Applicable code/provisions] as
implemented and amended from time to time, or any successor laws or regulations in the State of
“Excess Energy” means, subject to Section 9.2, the portion of the Delivered Energy for
any Contract Year which is (i) Facility Energy and (ii) in excess of the Guaranteed Generation.
“Excess Energy Rate” means the $/MWh payment made to Seller by Buyer for Excess
Energy according to the provisions in Appendix A.
“Facility” means the concentrated solar thermal powered electric generating facility,
including all property interests and related transmission and other facilities described in
“Facility Energy” means Energy generated by the Facility, less Station Load and
transmission losses to the Facility‟s Point of Delivery.
“Facility Lender” means any lender providing senior or subordinated construction,
interim or long-term debt or equity financing or refinancing for or in connection with the
development, construction, purchase, installation or operation of the Facility, including any
equity and tax investor providing financing or refinancing for the Facility or purchasing equity
ownership interests of Seller and/or its Affiliates, and any trustee or agent acting on their behalf,
and any Person providing interest rate protection agreements to hedge any of the foregoing debt
“Facility’s Point of Delivery” means the interconnection facilities of Seller located at
the point of interconnection between the Facility‟s transmission line and the [______________].
“FERC” means the Federal Energy Regulatory Commission or any successor agency
"Final Order" means any action by [applicable state regulatory agency] as to which: (a)
no petition for rehearing, reconsideration or application for review of the action is pending and
the time for filing any such petition or application has passed; (b) the [agency] does not have the
action under reconsideration or subject to rehearing on its own motion or otherwise and the time
in which such reconsideration or rehearing is permitted has passed; and (c) no appeal to a court
of the [agency's] action is pending or in effect and the deadline for filing any such appeal has
“Firm Transmission” means transmission that cannot be curtailed within an operating
hour for economic reasons or for higher priority transmission within the operating hour.
“Force Majeure” has the meaning set forth in Section 14.6 hereof.
“Forced Outage” means the removal of service availability of the Facility, or any portion
of the Facility, for emergency reasons or conditions in which the Facility, of any portion thereof,
is unavailable due to unanticipated failure, including as a result of Force Majeure.
“GAAP” means Generally Accepted Accounting Principles which are accepted
accounting principles set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants applicable to a government-
owned utility applying all statements and interpretations issued by the Governmental Accounting
Standards Board (GASB) and statements and pronouncements of the Financial Accounting
Standards Board which are not in conflict with the statements and interpretations issued by the
GASB or in such other statements by such other entity as may be approved by a significant
segment of the accounting profession, that are applicable to the circumstances as of the date of
“Gains” has the meaning set forth in Section 13.3(f).
“Governmental Authority” means any Federal, state, local, or other governmental,
regulatory or administrative agency, court, commission, department, board, or other
governmental subdivision, legislature, rulemaking board, tribunal, or other governmental
“Guaranteed Generation” means [____] MWh.
"Host Control Area" means (a) a control area that confirms and implements interchange
transactions for a purchasing-selling entity that operates generation or serves customers directly
within the control area‟s metered boundaries; and (b) the control area within whose metered
boundaries the Facility is physically located.
“IEEE” means Institute of Electrical and Electronics Engineers.
“Independent Manager” means a manager who is not at the time of initial appointment,
or at any time while serving as Independent Manager, and has not been at any time during the
preceding five (5) years: (a) a member, stockholder, equityholder, director, manager (except as
such Independent Manager of Seller), officer, employee, partner, attorney or counsel of any
member of Seller, Seller or any Affiliate of Seller; (b) a customer, supplier or other Person who
derives any of its purchases or revenues from its activities with any member of Seller, Seller or
any Affiliate of Seller (other than for serving as Independent Manager of Seller); (c) a Person
controlling or under common control with any such stockholder, equityholder, partner, manager,
customer, supplier or other Person, or (d) a member of the immediate family of any such
member, stockholder, equityholder, director, officer, employee, manager, partner, customer,
supplier or other Person.
“Insurance” means the policies of insurance as set forth in Appendix F.
“Interconnection Agreement” means the separate agreement between Seller and the the
appropriate entity for interconnection of the Facility to the regional Transmission System, as
such agreement may be amended from time to time.
“Interest Rate” has the meaning set forth in Section 11.3.
“ISA” means Instrument Society of America and any successor thereto.
“Lease” means the land lease agreements between Seller and (i) [___________], dated
[_________________, 200_], and (ii) [____________________], dated [____________, 200_],
and all other property holders leasing property rights for the Facility, each as amended,
supplemented or otherwise modified from time to time.
“Lessor” means [____________________].
“Lien” means any mortgage, deed of trust, lien, security interest, retention of title or lease
for security purposes, pledge, charge, encumbrance, equity, attachment, claim, easement, right of
way, covenant, condition or restriction, leasehold interest, purchase right or other right of any
kind, including an option, of any other Person in or with respect to any real or personal property.
“Losses” has the meaning set forth in Section 13.3(f).
“Major Maintenance Blockout” has the meaning set forth in Section 4.5(e).
“Makeup Deadline” has the meaning set forth in Section 9.3.
“Milestone” has the meaning set forth in Section 3.4.
“Milestone Date” has the meaning set forth in Section 3.4.
“Mortgage” has the meaning set forth in Section 2.1(d).
“MW” means megawatt.
“MWh” means megawatt-hours.
“NERC” means the North American Electric Reliability Council or its successor
organization, if any.
“Newly Available Facility Capacity” means any Facility Capacity, Capacity Rights and
associated Facility Energy (together with all associated Environmental Attributes) available to
Seller following a Default or Notice of Termination by any Other Buyer.
“Non-Consolidation Opinion” means a reasoned opinion of Seller‟s legal counsel,
[______________], addressed to Buyer on [(date)], in form and substance acceptable to Buyer,
as to the non-consolidation of Seller in a bankruptcy proceeding of [_______________], attached
hereto as Appendix K.
“Non-Defaulting Party” has the meaning set forth in Section 13.3(a).
“Option Agreement” means that certain Option Agreement of even date herewith in the
form set forth in Appendix J, as amended, supplemented or otherwise modified from time to
time, which will govern Buyer's purchase of an equity interest in the Facility.
“OSHA” means Occupational Safety & Health Administration and any successor thereto.
“Other Buyer” means any entity that has or will enter into a purchased power agreement
with Seller for the purchase of shares of the Energy (together with all associated Environmental
Attributes) and Capacity from the Facility.
“Pacific Prevailing Time” means the local time in Los Angeles, California.
“Performance Security” means the performance security described in Section 5.4 that is
required to be provided by Seller to Buyer to secure Seller‟s performance under this Agreement.
“Permit” means any permit, license, franchise, concession, consent, authorization,
approval, registration, filing or similar acts of or made with any Governmental Authority,
including, without limitation, those described in Appendix B.
“Permitted Encumbrances” means (i) the Mortgage and any other Lien approved by
Buyer in a writing separate from this Agreement which expressly identifies the Lien as a
Permitted Encumbrance, (ii) Liens for taxes not yet due or for taxes being contested in good faith
by appropriate proceedings, so long as such proceedings do not involve a risk of the sale,
forfeiture, loss or restriction on the use of the Facility or any part thereof, provided that such
proceedings end by the expiration of the Agreement Term, (iii) suppliers‟, vendors‟, mechanics‟,
workman‟s, repairman‟s, employees‟ or other like Liens arising in the ordinary course of
business for work or service performed or materials furnished in connection with the Facility for
amounts the payment of which is either not yet delinquent or is being contested in good faith by
appropriate proceedings so long as such proceedings do not involve a risk of the sale, forfeiture,
loss or restriction on use of the Facility or any part thereof, provided that such proceedings end
by expiration of the Agreement Term, and (iv) easements, rights of way, use rights, exceptions,
encroachments, reservations, restrictions, conditions or limitations listed as items ___ of
Schedule B of the title insurance policy insuring the Mortgage, and provided further that in the
case of Liens being contested under subsections (ii) or (iii), Seller has provided additional
security of a letter of credit substantially in the form attached hereto as Appendix E to Buyer and
the Facility Lender jointly in an amount equal to or greater than the amount of such lien
multiplied by 1.25.
“Person” means any individual, corporation, partnership, joint venture, limited liability
company, association, joint stock company, trust, unincorporated organization, entity,
government or other political subdivision.
“Point of Delivery” means, when used with respect to any Energy sold and purchased
under this Agreement, the point where that Energy is required to be delivered by Seller to Buyer
under this Agreement.
“Point of Interconnection” means, the physical point at which electrical interconnection
is made between the Facility and the Transmission System.
“Present Value Rate” means, at any date, the sum of 0.50% plus the yield reported on
page “USD” of the Bloomberg Financial Markets Services Screen (or, if not available, any other
nationally recognized trading screen reporting on-line intraday trading in United States
government securities) at 11:00 a.m. (New York City, New York time) for the United States
government securities having a maturity that most nearly matches the Remaining Term at that
“Production Tax Credits” or “PTCs” means the Production Tax Credit under Section
45 of the Internal Revenue Code, as the same may be amended, supplemented, extended or
replaced from time to time, and including all successor enactments or legislation relating thereto,
the value of which shall be based on the Delivered Energy.
“Project Purchase Option” means the right, but not the obligation, of Buyer, in its sole
discretion, to purchase all or part of the Purchased Assets and certain related assets from Seller in
accordance with the provisions of an Option Agreement to be separately negotiated by the
Parties to purchase all or part of the Purchased Assets.
“Prudent Utility Practices” means any of the practices, methods and acts engaged in or
approved by a significant portion of the electric utility industry during the relevant time period,
or any of the practices, methods and 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 of the lowest reasonable cost consistent with good business practices,
reliability, safety and expedition. 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 generally accepted
and consistently adhered to acceptable practices, methods, or acts.
“[Applicable State] Code” means the [Applicable State Code] of the State of
“[Applicable state agency]” means the [applicable state agency] and any successor
“[Applicable state agency] Performance Standard” means, at any time, the
greenhouse gases emission performance standard in effect at such time for baseload generation
of load-serving entities other than local publicly owned electric utilities, as established by the
[applicable state agency] under the [applicable state law].
“Purchased Assets” has the meaning set forth in Exhibit 1.1 to the Option Agreement.
“Quality Assurance Program” has the meaning set forth in Appendix H.
“Remaining Term” means, at any date, the remaining portion of the Delivery Term at
"Renewable Energy Credit" ("REC") means: (i) the Environmental Attributes
associated with the generation of power from a renewable energy source and (ii) the REC
reporting rights arising therefrom or connected therewith. One (1) REC represents the
Environmental Attributes and REC reporting rights associated with one (1) MWh generated from
one or more renewable energy source.
“Replacement Energy” has the meaning set forth in Section 9.3.
“Replacement Price” has the meaning set forth in Section 6.3.
“Requirement of Law” means federal, state and local laws, statutes, regulations, rules,
codes or ordinances enacted, adopted, issued or promulgated by any federal, state, local or other
Governmental Authority (including those pertaining to electrical, building, zoning,
environmental and occupational safety and health requirements).
“[Applicable state] Law” means Sections [applicable sections] of the Public Utilities
Code [or applicable state code], as implemented and amended from time to time, and any
“Sales Price” has the meaning set forth in Section 6.4.
“SCADA” means “supervisory control and data acquisition” and shall refer to that
category of software application program that can be used to gather data from the Project
remotely in real time in order to monitor Project equipment and conditions.
“Schedule or Scheduling” means the actions of Seller and Buyer or their Authorized
Representatives, including each Party‟s Transmission Providers, if applicable, of notifying,
requesting and confirming to each other the quantity of energy to be delivered hourly at the Point
of Delivery on any given date during the Delivery Term.
“Scheduled Outage” means any outage with respect to the Facility other than a Forced
“Scheduled Outage Projection” has the meaning set forth in Section 4.5(e).
“Scheduler” means the Persons doing Scheduling for each Party. The contact
information for Buyer‟s Scheduler and Seller‟s Scheduler at the Effective Date is set forth in
item 4, Appendix C which will be revised by the Parties as needed.
“Seller Parties” means Seller and all other Persons, excluding Buyer, executing any
Ancillary Document, including without limitation any obligors providing Performance Security,
now or hereafter in effect.
“Shortfall Energy” has the meaning set forth in Section 9.1.
“Site” means the physical location of the Facility as set forth in Appendix B.
“Special Purpose Entity” means a limited liability company which at all times prior to,
on and after the date hereof:
(a) shall not (i) engage in any dissolution, liquidation or consolidation or
merger with or into any other business entity, (ii) acquire by purchase or otherwise all or
substantially all of the business or assets of or beneficial interest in any other entity, (iii) transfer,
lease or sell, in one transaction or any combination of transactions, all or substantially all of its
properties or assets except to the extent permitted herein, (iv) modify, amend or waive any
provisions of its organizational documents related to its status as a Special Purpose Entity, or (v)
terminate its organizational documents or its qualifications and good standing in any jurisdiction.
(b) was, is and will be organized solely for the purpose of acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging, managing and operating
the Facility, entering into this Agreement with Buyer and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing;
(c) has not been, is not, and will not be engaged in any business unrelated to
the acquisition, development, ownership, management or operation of the Facility.
(d) has not had, does not have and will not have, any assets other than those
related to the Facility;
(e) has held itself out and will hold itself out to the public as a legal entity
separate and distinct from any other entity and has not failed and will not fail to correct any
known misunderstanding regarding the separate identity of such entity;
(f) has maintained and will maintain its financial statements, bank accounts,
accounts, books, resolutions, agreements and records separate from any other Person and has filed
and will file its own tax returns (except to the extent treated as a “disregarded entity” for tax
purposes and it not required to file tax returns under applicable law);
(g) has held itself out and identified itself and will hold itself out and identify
itself as a separate and distinct entity under its own name or in a name franchised or licensed to it
by an entity other than an Affiliate of Seller and not as a division, department or part of any other
(h) has maintained and will maintain its assets in such a manner that it will not
be costly or difficult to segregate, ascertain or identify its individual assets from those of any other
(i) has not made and will not make loans or advances to any Person or hold
evidence of indebtedness issued by any other Person (other than cash and investment-grade
securities issued by an entity that is not an Affiliate of or subject to common ownership with such
entity) or made any gifts or fraudulent conveyances to any Person;
(j) has not identified and will not identify its members, or any Affiliate of any
member, as a division or department or part of it, and has not identified itself and shall not identify
itself as a division or department of any other Person;
(k) has not entered into or been a party to, and will not enter into or be a party
to, any transaction with its members or Affiliates, except in the ordinary course of its business and
on terms which are intrinsically fair, commercially reasonable and are no less favorable to it than
would be obtained in a comparable arm‟s-length transaction with an unrelated third party;
(l) has not had and will not have any obligation to indemnify, and has not
indemnified and will not indemnify its officers, managers or members, as the case may be, other
than the Independent Manager;
(m) it has considered and shall consider the interests of its creditors in
connection with all limited liability company actions;
(n) does not and will not have any of its obligations guaranteed by any Affiliate
and will not hold itself out as being responsible for the debts or obligations of any other Person;
(o) has complied and will comply with all of the terms and provisions
contained in its organizational documents including the provision requiring that there be an
Independent Manager at all times and has done or caused to be done and will do all things
necessary to preserve its existence;
(p) has not commingled, and will not commingle, its funds or assets with those
of any Person and has not participated and will not participate in any cash management system
with any other Person;
(q) has held and will hold its assets in its own name and conducted and will
conduct all business in its own name;
(r) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other Person and has not permitted and will
not permit its assets to be listed as assets on the financial statement of any other entity except as
required by GAAP; provided, however, that any such consolidated financial statement shall
contain a note indicating that its separate assets and liabilities are neither available to pay the debts
of the consolidated entity nor constitute obligations of the consolidated entity;
(s) has paid and will pay its own liabilities and expenses, including the salaries
of its own employees, out of its own funds and assets, and has maintained and will maintain a
sufficient number of employees in light of its contemplated business operations;
(t) has observed and will observe all limited liability company formalities;
(u) has not assumed or guaranteed or become obligated for, and will not
assume or guarantee or become obligated for the debts of any other Person and has not held out
and will not hold out its credit as being available to satisfy the obligations of any other Person
except as permitted pursuant to this Agreement;
(v) has not acquired and will not acquire obligations or securities of its
members or any Affiliate;
(w) has allocated and will allocate fairly and reasonably any overhead expenses
that are shared with any Affiliate, including, but not limited to, paying for shared space and
services performed by any employee of an Affiliate;
(x) has maintained and used, now maintains and uses, and will maintain and
use separate stationery, invoice and checks bearing its name; such stationery, invoices and checks
utilized by it or utilized to collect its funds or pay its expenses have borne and shall bear its own
name and have not borne and shall not bear the name of any other entity unless such entity is
clearly designated as being its agent;
(y) has not pledged and will not pledge its assets for the benefit of any other
(z) has had, now has, and will have articles of organization, a certificate of
formation and/or an operating agreement, as applicable, that provides that it will not: (A) dissolve,
merge, liquidate or consolidate; (B) sell, transfer, lease or otherwise convey all or substantially all
of its assets; (C) engage in any other business activity, or amend its organizational documents with
respect to the matters set forth in this definition without the affirmative vote of its Independent
Manager; or (D) without the affirmative vote of its Independent Manager, file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership interest;
(aa) has been, is and intends to remain solvent and has paid and intends to
continue to pay its debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall have or become due, and has maintained, is
maintaining and intends to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its contemplated business
(bb) has and will have no indebtedness other than (i) the loan made by the
Facility Lender providing construction financing for the Facility and any loan in replacement or
substitution thereof, (ii) Taxes and Insurance premiums, (iii) liabilities incurred in the ordinary
course of business relating to its ownership, leasing and operation of the Facility and its routine
administration, which liabilities are not more than sixty (60) days past due, are not evidenced by a
note and are paid when due, and which amounts are normal and reasonable under the
circumstances, and in any event not in excess of $[x] in the aggregate, and (iv) such other
liabilities that are permitted pursuant to this Agreement.
“Specified Transmission Path” means [to be defined].
“System Emergency” means any abnormal interconnection or system condition
(including, without limitation, equipment or transmission limitations and constraints caused by
thermal limits, stability, voltage, or loop flows) that Buyer determines, in its sole discretion
(exercised in accordance with Prudent Utility Practices): (a) requires automatic or immediate
manual operation to prevent or limit loss of Buyer‟s system or generation supply; (b) could
adversely affect the reliability of Buyer‟s system or generation supply; (c) could adversely affect
the reliability of any interconnected electric system; or (d) could otherwise pose a threat to public
“Tax” or “Taxes” means each federal, state, county, local and other (a) net income,
gross income, gross receipts, sales, use, ad valorem, business or occupation, transfer, franchise,
profits, withholding, payroll, employment, excise, property or leasehold tax and (b) customs,
duty or other fee, assessment or charge of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amount with respect thereto.
"Tax Benefits" means, Renewable Energy related tax credits established under Section
45 of the Internal Revenue Code, as amended, or any similar or successor provision of the
Internal Revenue Code, except for any credits or other tax benefits that are associated with any
carbon tax or other assessment (regardless of how any present or future law or regulation
attributes or allocates such characteristics).
“Termination Notice” has the meaning set forth in Section 13.3(a).
“Termination Payment” has the meaning set forth in Section 13.3(d).
“Transmission Provider” means the Person(s) operating the Transmission System(s)
providing Transmission Services to or from the Point of Delivery.
“Transmission Services” means the transmission and other services required to transmit
Energy to or from the Point of Delivery.
“Transmission System” means the facilities utilized to provide Transmission Services.
“UCC” means the Uniform Commercial Code as enacted and in effect in the state where
the Facility is located (and as it may from time to time be amended); provided, however, that if,
by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of,
or remedies with respect to, Buyer‟s Lien on the Facility is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the state where the Facility
is located, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for the purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions related to such
“WECC” means the Western Electricity Coordinating Council, or any successor entity
Other terms defined herein have the meanings so given them in this Agreement.
Section 1.2 Interpretation. In this Agreement, unless a clear contrary
(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person‟s successors and assigns but,
in case of a Party hereto, 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 or
(c) reference to any gender includes the other;
(d) reference to any agreement (including this Agreement), document,
instrument or tariff means such agreement, document, instrument or tariff 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, or Appendix means such Article of this
Agreement, Section of this Agreement, or such Appendix to this Agreement, as the case may be,
and references in any Article or Section or definition to any clause means such clause of such
Article or Section or definition;
(f) “hereunder”, “hereof”, “hereto” and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular Article or Section or
other provision hereof or thereof;
(g) “including” (and with correlative meaning “include”) means including
without limiting the generality of any description preceding such term;
(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”; and
(i) reference to time shall always refer to Pacific Prevailing Time; and
reference to any “day” shall mean a calendar day unless otherwise indicated.
(j) The Parties recognize that Seller will enter into a separate Interconnection
Agreement to interconnect the Facility with the transmission system. The Parties acknowledge
and agree that the Interconnection Agreement shall be a separate and free-standing contract and
that nothing in the Interconnection Agreement shall alter or modify Seller's or Buyer's rights,
duties and obligations under this Agreement. This Agreement shall not be construed to create
any rights between Seller and the Interconnection Provider. Seller expressly recognizes that, for
purposes of this Agreement, the Interconnection Provider shall be deemed to be a separate entity
and separate contracting party whether or not the Interconnection Agreement is entered into with
Buyer or an Affiliate of Buyer.
(k) All matters pertaining to the supply of electric energy and capacity to
operate the Facility (“Station Load”) shall occur separate and apart from this Agreement. Seller
shall be obligated to make all necessary arrangements for the supply of Station Load. Seller‟s
self-generation of Station Load (if any) shall not reduce Seller‟s obligation to deliver the
Guaranteed Generation to Buyer.
EFFECTIVE DATE, TERM, AND EARLY TERMINATION
Section 2.1 Effective Date. This Agreement is effective as of the Effective
Date. On or prior to the Effective Date, each of the following has occurred1:
(a) Buyer received the Non-Consolidation Opinion;
(b) Buyer and Seller executed and delivered the Option Agreement;
(c) Seller granted to and perfected in favor of Buyer a valid Lien on the
Facility, under one or more documents in form and substance satisfactory to Buyer, including
without limitation UCC filings and financing statements (collectively, as each of the same may
be amended or supplemented from time to time in accordance with its terms, the “Mortgage”) to
secure all obligations of Seller to Buyer under the Option Agreement, and such Mortgage has
been recorded in the Official Records of [___________] County, [applicable state];
(d) The Lessor under the Lease executed and delivered to Buyer (i) an
intercreditor agreement, in form and substance satisfactory to Buyer, granting Buyer, among
other things, cure and step-in rights under the Lease, and (ii) a memorandum of Lease which was
recorded in the Official Records of [___________] County, [applicable state];
(e) Buyer received a valid, binding and enforceable ALTA 1970 Form B (or
equivalent) mortgage policy of title insurance with respect to the real property subject to the
Mortgage issued by a company or companies acceptable to Buyer, in an amount acceptable to
Buyer, with reinsurance and endorsements as Buyer may require, containing no exceptions to
title (printed or otherwise) other than Permitted Encumbrances or other exceptions that are
acceptable to Buyer, and insuring that such real property is free of Liens or other exceptions to
title other than Permitted Encumbrances (or other exceptions that are acceptable to Buyer) and
providing full coverage against Liens of all materialmen and mechanics, whether filed or
(f) Buyer received copies of all requisite resolutions and incumbency
certificates of each Seller Party and any other documents evidencing all actions taken by each
Seller Party to authorize the execution and delivery of this Agreement and all Ancillary
Documents requiring execution by such Seller Party, such resolutions to be certified as of the
Effective Date by an authorized representative of Seller Party;
(g) Buyer has obtained all necessary internal approvals necessary for Buyer to
proceed with the transactions contemplated hereby.
(h) The Performance Security required under Section 5.4 was executed and
delivered to Buyer;
(i) Buyer received all certificates and other documents required to establish
that the insurance policies required by Appendix F are in full force and effect upon the Effective
([BUYER] Comment: Subsections 2.1(a) through (f) apply to the Buyer‟s Project Purchase Option.)
(j) Buyer received satisfactory evidence that Seller has obtained all Permits
described in Appendix B, except for any such Permits not yet required to be obtained but which
can reasonably be expected to be obtained when needed, and each such Permit is final and non-
(k) Buyer received true, correct and complete copies of all documents relating
to the environmental condition of the real property subject to the Mortgage in form, scope and
substance reasonably satisfactory to Buyer, including but not limited to any Phase I
Environmental Site Assessment prepared relative to that real property.
(l) The [applicable state regulatory agency] shall have issued one or more
orders, which shall be acceptable in all respects to [Buyer] in its sole and absolute discretion and
each of which shall have become a Final Order, approving the transaction contemplated hereby
including, without limitation, the timely recovery by [Buyer] of all prudently incurred costs of
purchasing energy and Renewable Energy Credits pursuant to this Agreement.
Section 2.2 Agreement Term and Delivery Term. This Agreement shall
have a delivery term (the “Delivery Term”) of [___________ (__)] Contract Years
commencing on the Commercial Operation Date and ending on the __ anniversary thereof,
unless sooner terminated in accordance with the terms of this Agreement. The term of this
Agreement (the “Agreement Term”) shall commence on the Effective Date and shall end
upon the expiration or earlier termination of the Delivery Term.
Section 2.3 Survivability. Certain provisions of this Agreement shall survive
its termination[To be negotiated by the Parties prior to execution.]
Section 2.4 Early Termination.
(a) Early Termination by Mutual Agreement. This Agreement may be
terminated by mutual written agreement of the Parties.
(b) Early Termination for Failure to Achieve Milestones. Buyer, in its sole
discretion, may terminate this Agreement effective upon notice to Seller if Seller fails to achieve
any Milestone by the applicable Milestone Date, unless such failure is otherwise excused by the
terms of this Agreement.
(c) Early Termination for Failure to Achieve Commercial Operation Date.
Buyer, in its sole discretion, may terminate this Agreement effective upon notice to Seller if
Seller fails to achieve Commercial Operation on or before [________], without exception,
suspension or extension for reasons of Force Majeure or otherwise.
Section 2.5 Rights Vis a Vis the Other Buyers.
(a) Buyer and Seller acknowledge that the Buyer‟s Share sold under this
Agreement is not intended to be the entire output of the Facility and that Seller has or will
contract to sell the remaining shares of the Facility to Other Buyers.
(b) Buyer shall incur no obligations to the Other Buyers through this
Agreement and the rights and obligations of this Agreement shall be separate and independent of
any agreements entered in with Other Buyers except as explicitly set forth herein.
(c) Seller hereby gives Buyer a right of first refusal to purchase a share of
Newly Available Facility Capacity in an amount equivalent to i) the current Buyer‟s Share of
Facility Capacity in MW divided by ii) A) the total Facility Capacity in MW less ii B) total
amount of Newly Available Facility Capacity in MW., Seller shall also include a right of first
refusal obligation in all of its power purchase agreements requiring Other Buyers, who decide to
terminate their purchase of Facility Energy for any reason, to offer their share of Newly
Available Facility Capacity for sale to the Buyer and remaining Other Buyers in the above
amount at the same price and terms as the agreement with Seller before that share of Newly
Available Facility Capacity is sold to any other person. Seller shall give Buyer, or shall cause
such Other Buyer to give Buyer, written notice of any such Facility Energy for sale, and Buyer
shall have ten (10) Business Days from the receipt of the notice in which to accept or reject the
additional purchase of Newly Available Facility Capacity. If Buyer or any Other Buyer
remaining elects not to purchase its share of Newly Available Facility Capacity, then that amount
shall be reoffered to the Buyer or Other Buyers remaining, until all Newly Available Capacity is
purchased or declined by Buyer and the remaining Other Buyers under the same procedure as
DEVELOPMENT OF THE FACILITY
Section 3.1 In General.
(a) Permitting. Seller, at its expense, shall timely take all steps necessary to
obtain all Permits required to construct, maintain or operate the Facility in accordance with the
requirements of this Agreement and all applicable Requirements of Law (the “Environmental
Documents”). Seller shall conduct a Phase 1 environmental investigation of the Site which must
confirm that, based upon such investigation and to the best of Seller‟s knowledge, no conditions
involving environmental contamination exist at or under the Site which conditions cannot
adequately be remediated by Seller at Seller‟s sole cost consistent with the Milestones.
(b) Project Design. Seller shall determine the design, configuration and
capacities of the Facility as it deems appropriate, subject only to the requirements of this
Agreement and all applicable Requirements of Law, including but not limited to the
characteristics and other requirements for the Facility set forth in Appendix B.
(c) Meetings With Governmental Authorities. Seller shall represent the
Facility as necessary in all meetings with and proceedings before all Governmental Authorities.
(d) Ownership of the Facility. Seller shall use commercially reasonable and
diligent efforts to site, develop, finance and construct the Facility. The Facility shall be owned
by Seller during the Agreement Term [subject to any right by Buyer to purchase an equity
interest in the Facility, as may be negotiated between Buyer and Seller]. Seller shall develop,
operate and maintain the Facility, at its sole risk and expense, and in compliance with the
requirements of this Agreement, all applicable Requirements of Law, Prudent Utility Practices,
and applicable manufacturer‟s and operator‟s specifications and recommended procedures;
provided, meeting these requirement shall not relieve Seller of its other obligations under this
(e) Location. The Facility shall be located on the Site and shall be identified
as Seller‟s “__________” [Solar Generation] Facility. The address of the Facility is
; the latitude and longitude are ___°N ___°W. A scaled
map that identifies the Site, the location of the Facility at the Site, the location of the Point of
Interconnection and the location of the important ancillary facilities, is included in Appendix B
to this Agreement..
Section 3.2 Certification of Commercial Operation Date. Seller shall
provide Buyer with a notice when Seller believes that all conditions precedent to achieving
Commercial Operation of the Facility as specified in the definition of “Commercial
Operation” in Section 1.1 have been satisfied. Seller shall present to [BUYER] a
certificate from an independent engineer, who shall be mutually agreed upon by the
Parties, verifying that each of the foregoing conditions has been satisfied or waived in
writing by the Parties.
Section 3.3 Other Information. Seller shall provide to Buyer such other
information regarding the permitting, engineering, construction or operations, of Seller, its
subcontractors or the Facility, financial or otherwise, and other data concerning Seller, its
subcontractors or the Facility as Buyer may, from time to time, reasonably request. Until
the Commercial Operation Date, Seller shall provide to Buyer quarterly written reports
describing permitting and development activities in the previous quarter and anticipated
progress and activities for the upcoming quarter. Buyer shall be permitted to inspect the
Facility from time to time upon reasonable notice to Seller and during reasonable business
hours; provided that Buyer is accompanied by Seller‟s employees.
Section 3.4 Milestone Schedule. Seller has provided a milestone schedule
with deadlines for the development of the Facility through the Commercial Operation Date
in Appendix I. Seller shall provide Buyer a quarterly report setting forth the status of each
milestone, including any slippage in any deadline. Seller shall achieve each milestone set
forth on Appendix I (each, a “Milestone”) by the date specified therefor, subject to
extension for Force Majeure delays (each such date as so extended (if at all), a “Milestone
Section 3.5 Performance Damages.
(a) If Seller fails to achieve a Milestone by its respective Milestone Date, Seller
shall pay liquidated damages to Buyer in an amount equal to [$____________] per day, up to a
maximum of $[x] in the aggregate, for each day intervening between the Milestone Date and the
earlier of (x) the date the Milestone is achieved, and (y) the date, if any, on which this
Agreement is terminated by Buyer.
(b) If Seller fails to achieve Commercial Operation by [_________], Seller
shall pay liquidated damages to Buyer in an amount equal to [$____________] per day, up to a
maximum of $[x] in the aggregate, for each day intervening between that date and the earlier of
(x) the date Commercial Operation is achieved, and (y) the date, if any, on which this Agreement
is terminated by Buyer.
Section 3.6 Decommissioning and Other Costs. Unless a Closing occurs
pursuant to the exercise by Buyer of the Project Purchase Option, Buyer shall not be
responsible for any cost of decommissioning or demolition of the Facility or any
environmental or other liability associated with the decommissioning or demolition
without regard to the timing or cause of the decommissioning or demolition.
OPERATION AND MAINTENANCE OF THE FACILITY
Section 4.1 Compliance with Electrical Service Requirements. Seller shall,
at its sole expense, operate and maintain the Facility (i) in accordance with Prudent Utility
Practices, the requirements of this Agreement and all applicable Requirements of Law, and
(ii) in a manner that is reasonably likely to maximize the output of Energy from the
Facility and result in a useful life for the Facility of not less than [_______] years.
Section 4.2 General Operational Requirements.
In addition to the requirements set forth in Section 4.1 and elsewhere in this Agreement,
Seller shall, at all times:
(a) Employ qualified and trained personnel for managing, operating and
maintaining the Facility and for coordinating with Buyer and Buyer‟s Agent. Seller shall ensure
that necessary personnel are available on-site or on-call twenty-four (24) hours per day during
the Delivery Term.
(b) Operate and maintain the Facility with due regard for the safety, security
and reliability of the interconnected facilities and Transmission System.
(c) Comply with operating and maintenance standards recommended by, and
required by, the Facility‟s equipment suppliers.
Section 4.3 Operation and Maintenance Plan. Seller shall devise and
implement a plan of inspection, maintenance, and repair for the Facility and the
components thereof in order to maintain such equipment in accordance with Prudent
Utility Practices, and shall keep records with respect to inspections, maintenance, and
repairs thereto. The aforementioned plan and all records of such activities shall be
available for inspection by Buyer during Seller‟s regular business hours upon reasonable
Section 4.4 Environmental Credits. Seller shall, if applicable, obtain in its
own name and at its own expense any and all pollution or environmental credits or offsets
necessary to operate the Facility in compliance with the Requirements of Law.
Section 4.5 Scheduling of Energy and Scheduled Outages.
(a) Seller or Seller‟s designee shall be responsible for scheduling the forecast
of Facility Energy to the Point of Delivery during the Agreement Term in accordance with the
dispatch and scheduling procedures that may be updated from time to time by Buyer or Buyer‟s
Agent. Seller shall submit schedules, and any updates to such schedules, to Buyer or Buyer‟s
Agent designated by Buyer based on the most current forecast of Energy. All generation
scheduling and Transmission Services shall be performed in accordance with the applicable
NERC and WECC operating policies, criteria, and any other applicable guidelines. Seller shall
also fulfill the contractual, metering and interconnection requirements so as to be able to deliver
Energy to the Point of Delivery.
(b) No later than forty-five (45) days before the beginning of each calendar
year, Seller or Seller‟s designee shall provide, or cause to be provided, a non-binding forecast of
each month‟s average-day deliveries of Energy, by hour, for the following eighteen (18) months.
(c) Ten (10) Business Days before the beginning of each month, Seller or
Seller‟s designee shall provide, or cause to be provided, a non-binding forecast of each day‟s
average deliveries of Energy, by hour, for the following month.
(d) By 5:30 AM Pacific Prevailing Time on the Business Day immediately
preceding the date of delivery of Energy, Seller or Seller‟s designee shall cause the Facility‟s
Scheduling coordinator to provide Buyer or Buyer‟s Agent with a copy of a non-binding hourly
forecast of deliveries of Energy for each hour of the immediately succeeding day. A forecast
provided a day prior to any non-Business Day(s) shall include forecasts for the immediate day,
each succeeding non-Business Day and the next Business Day. Seller shall provide Buyer or
Buyer‟s Agent with a copy of any and all updates to such forecast indicating a change in
forecasted Energy from the then current forecast.
(e) Buyer and Seller shall cooperate to minimize Scheduled Outages during
certain consecutive or nonconsecutive weeks of each Contract Year (not to occur during the
months of June, July or August and not to exceed twelve (12) weeks per Contract Year) specified
by Buyer (the “Major Maintenance Blockout”), but in accordance with Prudent Utility
Practices. No later than one hundred twenty (120) days prior to the Commercial Operation Date
and the commencement of each Contract Year thereafter, Buyer shall provide Seller with its
specified Major Maintenance Blockout. Seller shall attempt to minimize its Scheduled Outages
during the Major Maintenance Block-Out consistent with Prudent Utility Practices. No later than
sixty (60) days prior to the Commercial Operation Date, and the commencement of each
Contract Year thereafter, Seller shall provide Buyer or Buyer‟s Agent with its non-binding
written projection of all Scheduled Outages for the succeeding three (3) years (the “Scheduled
Outage Projection”) reflecting a minimized schedule of scheduled maintenance during the
Major Maintenance Blockout. In addition, Seller shall cooperate in good faith with Buyer‟s
maintenance scheduling requests consistent with Prudent Utility Practices. The Scheduled
Outage Projection shall include information concerning all projected Scheduled Outages during
such period, including (i) the anticipated start and end dates of each Scheduled Outage; (ii) a
description of the maintenance and/or repair work to be performed during the Scheduled Outage;
and (iii) the anticipated MW capacity, if any, during the Scheduled Outage. Seller shall notify
Buyer or Buyer‟s Agent of any change in the Scheduled Outage Projection as soon as
practicable, but in no event later than thirty (30) days prior to the originally scheduled date of the
Scheduled Outage. Seller will use commercially reasonable efforts to accommodate reasonable
requests of Buyer with respect to the timing of Scheduled Outages and Seller will, to the extent
feasible and consistent with Prudent Utility Practices, arrange for Scheduled Outages to occur
between October 1 and May 1 of each year and coincident with planned transmission outages. In
the event of a System Emergency, Seller shall make all reasonable efforts to reschedule any
Scheduled Outage previously scheduled to occur during the System Emergency.
(f) In the event of a Forced Outage affecting at least 10% of the capacity of the
Facility, to the extent practicable, Seller shall notify Buyer or Buyer‟s Agent within two (2)
hours of the Forced Outage and provide detailed information concerning the Forced Outage,
including (i) the start and anticipated end dates of the Forced Outage; (ii) a description of the
cause of the Forced Outage; (iii) a description of the maintenance and/or repair work to be
performed during the Forced Outage; and (iv) the anticipated MW capacity, if any, during the
Forced Outage. Seller shall take all reasonable measures and exercise commercially reasonable
efforts to avoid Forced Outages and to limit the duration and extent of any such outages.
COMPLIANCE DURING CONSTRUCTION AND OPERATION PERIOD
Section 5.1 In General.
(a) The Facility. Seller warrants and guarantees that it will perform, or cause
to be performed, all engineering, design and construction in a good and workmanlike manner and
in accordance applicable standards, Prudent Utility Practice, all applicable Requirements of Law,
Seller‟s Quality Assurance Program, the Milestones and all other requirements of this
Agreement. Seller warrants and guarantees that throughout the Delivery Term and at the time (if
any) that Buyer exercises the Project Purchase Option: (i) the Facility, its engineering, design
and construction, its components and related work, shall be free from material defects caused by
errors or omissions in design, engineering and construction, (ii) the Facility will be free and clear
of all Liens other than Permitted Encumbrances, and (iii) the Facility will comply in all respects
with the requirements of this Agreement and all applicable Requirements of Law. Seller also
warrants and guarantees that throughout the Agreement Term it will monitor the operation and
maintenance of the Facility and that said operation and maintenance is, and will be, in full
compliance of all applicable standards, Prudent Utility Practices, Requirements of Law. Seller‟s
Quality Assurance Program, and other provisions of this Agreement. Without limiting the
foregoing, Seller shall promptly repair and/or replace, consistent with Prudent Utility Practice,
any component of the Facility that may be damaged or destroyed or otherwise not operating
properly and efficiently. Seller shall at all times exercise commercially reasonable efforts to
undertake all recommended or required updates or modifications to the Facility, its equipment
and materials, including procedures, programming and software in a timely manner. Seller shall,
at its expense, maintain throughout the Agreement Term an inventory of spare parts for the
Facility in a quantity that is consistent with manufacturer‟s recommendations and Prudent Utility
(b) Buyer’s Right To Monitor In General. Buyer shall have the right and
Seller shall permit Buyer and its representatives, advisors, engineers and consultants to observe,
inspect and monitor all operations and activities at the Facility site, including the performance of
the contractor(s) under the construction contract(s) pertaining to the Facility, the design,
engineering, procurement and installation of the equipment, start up and testing, and Commercial
(c) Startup and Testing. Prior to the Commercial Operation Date and as a
condition precedent to the achievement of the Commercial Operation Date, Buyer shall have the
(1) review and monitor the contractors‟ performance and achievement
of all initial performance tests and all other tests required under the Facility
construction contracts that must be performed in order to achieve completion,
with respect to which the construction contracts shall provide that at least ten (10)
Business Days before such tests begin the contractors shall deliver to Buyer a
schedule for the performance of such tests;
(2) be present to witness the such initial performance tests and review
the results thereof; and
(3) perform such detailed examinations, inspections, quality
surveillance and tests as, in the judgment of Buyer, are appropriate and advisable
to determine that the turbines and all ancillary components of the Facility have
been installed in accordance with this Agreement and the Facility construction
contracts, all applicable standards, Prudent Utility Practice, Requirements of Law,
Seller‟s Quality Assurance Program and the Milestones.
(d) Contract Provisions. Seller shall cause to be included in the Facility
construction contract(s) provisions, in form and substance satisfactory to Buyer, whereby the
contractor(s) and Seller:
(1) grant to Buyer such rights of access to the Facility at all reasonable
times (but subject to reasonable safety precautions) and to inspect, make notes
about and copy (and make such copies and notes available to Buyer) all
documents, drawings, plans, specifications, permits, test results and information
as Buyer may reasonably request;
(2) make the personnel of, and consultants to, the contractor(s) and Seller
available to Buyer and its consultants at reasonable times and with prior notice for
purpose of discussing any aspect of the Facility or the development, engineering,
construction, installation, testing or performance thereof; and
(3) otherwise cooperate in all reasonable respects with Buyer and its
Authorized Representatives, advisors, engineers and consultants in order to allow
Buyer to exercise its rights under this Section 5.1.
Section 5.2 Compliance With Standards. Seller shall cause the Facility and
all parts thereof to be designed, constructed, tested, operated and maintained to meet all of
the requirements of this Agreement, all applicable requirements of the latest revision of the
ASTM, ASME, AWS, EPA, EEI, IEEE, ISA, National Electrical Code, National Electric
Safety Code, OSHA, Uniform Building Code, Uniform Plumbing Code, and the applicable
local County Fire Department Standards of the applicable county, and other codes and
standards and operations and maintenance requirements applicable to the services,
equipment, and work as generally shown in this Agreement, as well as all applicable
Requirements of Law not specifically mentioned in this Section.
Section 5.3 Quality Assurance Program. Seller agrees to maintain and
comply with a written quality assurance policy (“Quality Assurance Program”) attached
hereto as Appendix H, and Seller shall cause all work performed on or in connection with
the Facility to comply with said Quality Assurance Program.
Section 5.4 Performance Security. Seller shall furnish and maintain a letter
of credit or guarantee, in the form attached hereto as Appendices E and G, respectively, [or
other form(s) of security as may be required by Buyer prior to the execution of this
Agreement] which will secure the performance of Seller‟s obligations under this
Section 5.5 Effect of Review by Buyer. Any review by Buyer of the design,
construction, engineering, operation or maintenance of the Facility is solely for the
information of Buyer. Buyer shall have no obligation to share the results of any such
review with Seller, nor shall any such review or the results thereof (whether or not the
results are shared with Seller) nor any failure to conduct any such review relieve Seller
from any of its obligations under this Agreement. By making any such review, Buyer
makes no representation as to the economic and technical feasibility, operational capability
or reliability of the Facility. Seller shall in no way represent to any third party that any
such review by Buyer of the Facility, including, but not limited to, any review of the
design, construction, operation or maintenance of the Facility by Buyer, is a representation
by Buyer as to the economic and technical feasibility, operational capability or reliability
of the Facility. Seller is solely responsible for the economic and technical feasibility,
operational capability and reliability thereof.
PURCHASE AND SALE OF POWER
Section 6.1 Purchases by Buyer.
(a) Prior to the Commercial Operation Date, Seller shall sell and deliver, and
Buyer shall receive and purchase Buyer‟s Share for the price forth in paragraph 2 of Appendix
(b) On and after the Commercial Operation Date and continuing for the
Delivery Term, Seller shall sell and deliver, and Buyer shall purchase and receive, Buyer‟s Share
for the price set forth in paragraph 1 (for Excess Energy) or paragraph 3 (for other Facility
Energy) of Appendix A.
Section 6.2 Facility’s Point of Delivery. Seller shall deliver Buyer‟s Share to
Buyer, and Buyer, or its designee, shall receive all Facility Energy from Seller, under this
Agreement at the Point of Delivery.
Section 6.3 Seller’s Failure. Unless excused by Force Majeure or Buyer‟s
failure to perform, if Seller fails to deliver at the Point of Delivery all or any part of any
Energy or associated Environmental Attributes required to be delivered by Seller under
this Article VI or Article VIII, Seller shall pay Buyer, on the date payment would
otherwise be due to Seller, an amount for each MWh of such deficiency equal to the
positive difference, if any, obtained by subtracting the price per MWh which would have
been payable by Buyer for the Energy and associated Environmental Attributes not
delivered from the Replacement Price. “Replacement Price” means the price at which
Buyer, acting in a commercially reasonable manner, purchases substitute Energy and
associated Environmental Attributes equivalent to those not delivered by Seller or, absent
a purchase, the market price for the quantity of Energy and associated Environmental
Attributes not delivered at the Point of Delivery (adjusted for transmission differences, if
Section 6.4 Buyer’s Failure. Unless excused by Force Majeure or Seller‟s
failure to perform, if Buyer fails to receive at the Point of Delivery all or any part of any
Energy required to be received by Buyer under this Article VI or Article VIII, Buyer shall
pay Seller, on the date payment would otherwise be due to Seller, an amount for each
MWh of such deficiency equal to the positive difference, if any, obtained by subtracting
the Sales Price from price per MWh which would have been payable by Buyer for the
Energy not received by Seller. “Sales Price” means the price at which Seller, acting in a
commercially reasonable manner, resells the Energy or, absent a resale, the market price
for the quantity of Energy not received by Buyer (adjusted for transmission differences, if
Section 6.5 Nature of Remedies. The remedy set forth in Section 6.3 is in
addition to, and not in lieu of, any other right or remedy of Buyer, under this Agreement or
otherwise, for failure of Seller to sell and deliver Energy and Environmental Attributes as
and when required by this Agreement. The remedy set forth in Section 6.4 is the sole and
exclusive remedy of Seller for any failure by Buyer to receive Energy as and when
required by this Agreement, and all other remedies and damages for any such failure are
hereby waived by Seller.
Section 6.6 Energy to Come Exclusively from Facility. Except as provided
in Article IX, in no event shall Seller have the right to procure energy from sources other
than the Facility for sale and delivery pursuant to this Agreement.
Section 6.7 Sales to Third Parties. Seller may sell to Persons other than
Buyer any Facility Energy or Replacement Energy that Seller is required to deliver to
Buyer, but which Buyer is excused from receiving, or otherwise unable to receive, at the
Point of Delivery. Except as provided in the preceding sentence, Seller shall not sell any
Facility Energy or Replacement Energy to any Person other than Buyer during the
Section 6.8 Ancillary Service Compensation. The compensation that Seller receives
from Buyer for the Buyer‟s Share includes full compensation for the fixed and variable costs
associated with providing Energy, Capacity, and all ancillary services associated with Buyer‟s
Share. Therefore, Seller shall credit Buyer monthly, as a separate line item reduction to Seller's
invoice, for any compensation that Seller receives, apart from that provided under this
Agreement, for the provision of ancillary services associated with Buyer‟s Share during the
TRANSMISSION AND SCHEDULING; TITLE AND RISK OF LOSS
Section 7.1 In General. Seller shall arrange and be responsible for any
Transmission Services required to deliver Energy to the Point of Delivery, and shall
Schedule or arrange for Scheduling services with its Transmission Providers to so deliver
the Energy to the Point of Delivery. Buyer shall arrange and be responsible for
Transmission Services at and from the Point of Delivery, and shall Schedule or arrange for
Scheduling services with its Transmission Providers to receive Energy at the Point of
Delivery. Each Party shall designate an authorized Scheduler to effect the Scheduling of
Section 7.2 Costs. Seller shall be responsible for any costs or charges imposed
on or associated with the delivery of Energy up to the Point of Delivery, including but not
limited to control area services, inadvertent energy flows, transmission losses and charges
relating to the transmission of Energy. Buyer shall be responsible for any costs or charges
imposed on or associated with the delivery of Energy at and from the Point of Delivery,
including but not limited to control area services, inadvertent energy flows, transmission
losses and charges relating to the transmission of Energy; provided, if Buyer is not the
Transmission Provider receiving Facility Energy at the Point of Delivery, then Seller shall
pay all such costs and charges for which Buyer would otherwise be responsible to the
extent of those which would reasonably be incurred by Buyer to transmit the Facility
Energy to an Approved Point of Interconnection on Buyer‟s System regardless whether the
Facility Energy is in fact transmitted there.
Section 7.3 Title; Risk of Loss. As between the Parties, Seller shall be
deemed to be in exclusive control (and responsible for any damages or injury caused
thereby) of all Energy prior to the Point of Delivery, and Buyer shall be deemed to be in
exclusive control (and responsible for any damages or injury caused thereby) of all Energy
at and from the Point of Delivery. Seller warrants that it will deliver all Energy to Buyer
free and clear of all Liens created by any Person other than Buyer. Title to and risk of loss
as to all Energy shall pass from Seller to Buyer at the Point of Delivery.
ENVIRONMENTAL ATTRIBUTES; COMPLIANCE WITH APPLICABLE
Section 8.1 Transfer of Environmental Attributes. For and in consideration
of Buyer entering into this Agreement, and in addition to the agreement by Buyer and
Seller to purchase and sell Energy on the terms and conditions set forth herein, Seller shall
transfer to Buyer, and Buyer shall receive from Seller, all right, title, and interest in and to
all Environmental Attributes, whether now existing or acquired by Seller or that hereafter
come into existence or are acquired by Seller during the Agreement Term, for all
Delivered Energy and Replacement Energy. Seller agrees to transfer and make such
Environmental Attributes available to Buyer immediately to the fullest extent allowed by
applicable law upon Seller‟s production or acquisition of the Environmental Attributes.
Seller shall not assign, transfer, convey, encumber, sell or otherwise dispose of all or any
portion of such Environmental Attributes to any Person other than Buyer. Buyer and
Seller acknowledge and agree that the consideration for the transfer of Environmental
Attributes is contained within the relevant prices for Delivered Energy under Articles VI
and IX and Appendix A.
Section 8.2 Reporting of Ownership of Environmental Attributes. During
the Agreement Term, Seller shall not report to any Person or entity that the Environmental
Attributes granted hereunder to Buyer belong to any Person other than Buyer, and Buyer
may report under any program that such Environmental Attributes purchased hereunder
belong to it.
Section 8.3 Further Assurances. Seller will document the production of
Environmental Attributes by delivering with each invoice to Buyer an attestation for
Environmental Attributes (i) produced by the Facility or (ii) included with Replacement
Energy for the preceding calendar month. The form of attestation is set forth as Appendix
Section 8.4 [Applicable State Program]Compliance. Seller warrants and
guarantees that when complete, and at all times thereafter to and including the Closing
Date (if it occurs), the Facility will be both [Applicable State Program] Compliant.
From time to time and at any time requested by Buyer, Seller will furnish to the Buyer or
Governmental Authorities or other Persons designated by Buyer, all certificates and other
documentation reasonably requested by Buyer in order to establish compliance with the
MAKEUP OF SHORTFALL ENERGY
Section 9.1 Makeup of Shortfall. If Seller fails during any Contract Year to
deliver Facility Energy in an amount equal to the Guaranteed Generation, then Seller shall
make up that shortfall of Facility Energy (“Shortfall Energy”) in accordance with this
Section 9.2 Payment of Energy Rate During Shortfall Periods. During any
period in which there is Shortfall Energy due to Buyer, any Facility Energy that would
otherwise be designated as Excess Energy shall be applied to make up the Shortfall Energy
until all Shortfall Energy is provided to Buyer. Provided, however, that all such Facility
Energy delivered by Seller and received by Buyer and received that would otherwise be
considered Excess Energy shall be paid for at the price specified in Paragraph 3 of
Section 9.3 Replacement Energy. If Seller fails to make up the full amount
of any Shortfall Energy by the end of the one (1) Contract Year following the Contract
Year in which the shortfall occurs, or the two (2) Contract Years following the Contract
Year in which the shortfall occurs if the shortfall is caused solely by one or more Force
Majeure events (the “Makeup Deadline”), Seller shall within ninety (90) days after the
Makeup Deadline provide Buyer with (i) that quantity of Replacement Energy that is
sufficient to make up the shortfall in full, and (ii) associated Environmental Attributes
comparable to those which would be acquired by Buyer if the Replacement Energy had
been produced by the Facility. The Replacement Energy shall be delivered to Buyer on a
fixed twenty-four (24) hour per day delivery schedule specified by Buyer and at one or
more points of interconnection on Buyer‟s transmission system as specified by Buyer, and
Seller shall bear any and all additional transmission costs associated with such delivery.
As employed in this Agreement, “Replacement Energy” means electrical energy produced
by a facility other than the Facility that is at the time the Replacement Energy is delivered
to Buyer [applicable state program] Compliant.
Section 9.4 Application of Shortfall Energy or Replacement Energy. In the
event of shortfalls in multiple Contract Years, any Shortfall Energy or Replacement
Energy delivered by Seller shall be applied in priority to the earliest outstanding shortfalls
hereunder until all shortfalls are satisfied.
Section 10.1 Purchase and Sale of Capacity Rights. Seller hereby transfers to
Buyer, and Buyer hereby accepts from Seller, all of the Capacity Rights.
Section 10.2 Representation Regarding Ownership of Capacity Rights.
Seller represents and covenants that it has not sold and will not in the future sell or attempt
to sell any of the Capacity Rights to any Person other than Buyer. Seller shall not report to
any Person that any of the Capacity Rights belong to any Person other than Buyer. Buyer
may, at its own risk and expense, report to any Person that the Capacity Rights belong to
Section 10.3 Further Assurances. At Buyer‟s request, the Parties shall execute
and deliver such documents and instruments as may be reasonably required to effect
recognition and transfer of the Capacity Rights to Buyer. Seller shall bear the costs
associated with preparing and executing any such documents and instruments.
BILLING; PAYMENT; AUDITS; METERING; ATTESTATIONS; POLICIES
Section 11.1 Billing and Payment. Billing and payment for all Delivered
Energy (including startup and test Energy) shall be as set forth in this Article XI.
Section 11.2 Calculation of Energy Delivered; Invoices and Payment.
(a) Delivered Quantity. For each calendar month during the Agreement
Term, commencing with the first calendar month in which Energy is delivered by Seller to and
received by Buyer under this Agreement, Seller shall calculate the amount of Energy so
delivered and received during such calendar month as determined (i) in the case of Facility
Energy, from recordings produced by Seller‟s meters maintained pursuant to Section 11.6, at or
near midnight on the last day of the calendar month in question, and (ii) in the case of
Replacement Energy supplied pursuant to Section 9.3, by a recordable means acceptable to
Buyer in its sole discretion.
(b) Invoice. Not later than the tenth (10th) day of each calendar month,
commencing with the calendar month next following the calendar month in which Energy is first
delivered by Seller and received by Buyer under this Agreement, Seller shall deliver to Buyer a
proper invoice showing the amount of Energy delivered by Seller and received by Buyer during
the preceding calendar month and Seller‟s computation of the amount due Seller in respect
thereof. Monthly invoices shall be sent to the address set forth in Appendix C or such other
address as Buyer shall provide to Seller.
(1) Monthly invoices shall contain a statement that the representations
and warranties set forth in this Agreement remain true and correct as of the date of the
invoice and that there exists no Default by Seller or any event that, after notice or with
the passage of time or both, would constitute a Default. If any such Default or potential
Default then exists, Seller shall list, in detail, the nature of the condition or event, the
period during which it has existed and the action which Seller has taken, is taking, or
proposes to take with respect to each such condition or event,
(2) Seller shall deliver to Buyer attestations of Environmental
Attribute transfers to Buyer concurrently with monthly invoices sent pursuant to Section
(3) Buyer shall not be required to make invoice payments if the
invoice is received more than six (6) months after the billing period. Each invoice shall
show the Agreement number, the vendor code number, and the identification of material,
equipment and/or services covered by the invoices.
(c) Payment. Not later than the _____ day after receipt by Buyer of Seller‟s
monthly invoice (or the next succeeding Business Day, if such _____ day is not a Business Day)
Buyer shall pay to Seller, by wire transfer of immediately available funds to an account specified
by Seller or by any other means agreed to by the Parties from time to time, the amount set forth
as due in such monthly invoice, subject to Section 11.3.
Section 11.3 Disputed Invoices. In the event any portion of any invoice is in
dispute, the undisputed amount shall be paid when due. The Party disputing a payment
shall promptly notify the other Party of the basis for the dispute. Disputes shall be
discussed by the Authorized Representatives, who shall use their commercially reasonable
efforts to amicably and promptly resolve the disputes, and any failure to agree shall be
subject to resolution in accordance with Section 14.3. Upon resolution of any dispute, if
all or part of the disputed amount is later determined to have been due, then the Party
owing such payment or refund shall pay within ten (10) days after receipt of notice of such
determination the amount determined to be due plus interest thereon at the Interest Rate
from the due date until the date of payment. For purposes of this Section 11.3, “Interest
Rate” shall mean the lesser of (i) the per annum rate of interest equal to the prime lending
rate as may from time to time be published in The Wall Street Journal under "Money
Rates" on such day (or if not published on such day on the most recent preceding day on
which published), plus two percent (2%), or (ii) the maximum rate permitted by applicable
Requirements of Law. Buyer may dispute an invoice at any time, provided that Buyer
provides Seller with a notification of such dispute, setting forth the details of such dispute
in reasonable specificity.
Section 11.4 Buyer’s Right of Setoff. In addition to any right now or hereafter
granted under applicable law and not by way of limitation of any such rights, Buyer shall
have the right at any time or from time to time without notice to Seller or to any other
Person, any such notice being hereby expressly waived, to set off against any amount due
Seller from Buyer under this Agreement or otherwise any amount due Buyer from Seller
or any Seller Party under this Agreement or otherwise, including but not limited to any
amounts due because of breach of this Agreement or any other obligation and any costs
payable by Seller under Section 7.2 if and to the extent paid in the first instance by Buyer.
Section 11.5 Records and Audits. Seller shall be subject at any time with
seven (7) days‟ prior notice to audits by Authorized Auditors, relating to the accuracy of
all billings and of all costs for which Buyer is required to reimburse Seller pursuant to
Article XI. Seller shall cause the Authorized Auditors to have access to all records and
data relating to such billings, costs, metering, and Environmental Attribute attestations.
Seller shall maintain and the Authorized Auditors will have the right to examine and audit
all books, records, documents, accounting procedures and practices, and other evidence,
regardless of form (e.g., machine readable media such as disk, tape, etc.) or type (e.g.,
databases, applications software, database management software, utilities, etc.), sufficient
to properly reflect all such billings and costs. Any information provided on machine-
readable media shall be provided in a format accessible and readable by the Authorized
Auditors. The Authorized Auditors will also have the right to reproduce, photocopy,
download, or transcribe, such billing and cost records. Seller shall make such records, or
to the extent accepted by the Authorized Auditors, photographs, micro-photographs etc. or
other authentic reproductions thereof available to the Authorized Auditors at Seller‟s
offices at all reasonable times and without charge. Buyer and Buyer‟s Agents shall have
the right to discuss such billings and costs with Seller‟s officers and independent public
accountants (and by this provision Seller authorizes said accountants to discuss such
billings and costs), all at such times and as often as may be reasonably requested. Seller
shall keep and preserve all such records for a period of not less than three (3) years from
and after final payment under the Agreement or, if the Agreement is terminated in whole
or in part, until three (3) years after the Delivery Term.
Notwithstanding the foregoing, if the audit reveals that the overpayment is more than five
percent (5.0%) of the billing, Seller shall pay all expenses and costs incurred by the Authorized
Auditors arising out of or related to the audit.
Section 11.6 Electric Metering Devices.
(a) The Facility Energy made available to Buyer or Buyer‟s Agent by Seller
under this Agreement shall be measured using Electric Metering Devices installed, owned and
maintained by Seller. If the Electric Metering Devices are not installed at the Point of Delivery,
meters or meter readings will be adjusted to reflect losses from the Electric Metering Devices to
the Facility‟s Point of Delivery. All Electric Metering Devices used to provide data for the
computation of payments shall be sealed and Seller or its designee shall only break the seal when
such Electric Metering Devices are to be inspected and tested or adjusted in accordance with this
Section 11.6. Seller or its designee shall specify the number, type, and location of such Electric
(b) Seller or its designee, at no expense to Buyer, shall inspect and test all
Electric Metering Devices upon installation and at least annually thereafter. Seller shall provide
Buyer with reasonable advance notice of, and permit a representative of Buyer to witness and
verify, such inspections and tests. Upon request by Buyer, Seller or its designee shall perform
additional inspections or tests of any Electric Metering Device and shall permit a qualified
representative of Buyer to inspect or witness the testing of any Electric Metering Device. The
actual expense of any such requested additional inspection or testing shall be borne by Seller.
Seller shall provide copies of any inspection or testing reports to Buyer.
(c) Adjustment for Inaccurate Meters. If an Electric Metering Device fails
to register, or if the measurement made by an Electric Metering Device is found upon testing to
be inaccurate by more than one percent (1.0%), an adjustment shall be made correcting all
measurements by the inaccurate or defective Electric Metering Device for both the amount of the
inaccuracy and the period of the inaccuracy. The adjustment period shall be determined by
reference to Seller‟s check-meters, if any, or as far as can be reasonably ascertained by Seller
from the best available data, subject to review and approval by Buyer. If the period of the
inaccuracy cannot be ascertained reasonably, any such adjustment shall be for a period equal to
one-third of the time elapsed since the preceding test of the Electric Metering Devices. To the
extent that the adjustment period covers a period of deliveries for which payment has already
been made by Buyer, Buyer shall use the corrected measurements as determined in accordance
with this Section 11.6 to recompute the amount due for the period of the inaccuracy and shall
subtract the previous payments by Buyer for this period from such recomputed amount. If the
difference is a positive number, the difference shall be paid by Buyer to Seller; if the difference
is a negative number, that difference shall be paid by Seller to Buyer, or at the discretion of
Buyer, may take the form of an offset to payments due to Seller from Buyer. Payment of such
difference by the owing Party shall be made not later than thirty (30) days after the owing Party
receives notice of the amount due, unless Buyer elects payment via an offset.
Section 11.7 Taxes. Seller shall be responsible for and shall pay, before the due
dates therefore, any and all federal, state and local Taxes incurred by it as a result of
entering into this Agreement and all Taxes imposed or assessed with respect to the
Facility, the Facility site, or any other assets of Seller the sale or use of Energy and
Environmental Attributes and all taxes related to Seller‟s income.
REPRESENTATIONS AND WARRANTIES; COVENANTS OF SELLER
Section 12.1 Representations and Warranties by Buyer. Buyer makes the
following representations and warranties to Seller:
(a) Buyer is a validly existing [corporate form] and has the legal power and
authority to carry on its business as now being conducted and to enter into this Agreement and
each Ancillary Document to which Buyer is a party and carry out the transactions contemplated
hereby and thereby and perform and carry out all covenants and obligations on its part to be
performed under and pursuant to this Agreement and all Ancillary Documents.
(b) The execution, delivery and performance by Buyer of this Agreement and
each Ancillary Document to which Buyer is a party have been duly authorized by all necessary
action, and do not and will not require any consent or approval of Buyer‟s regulatory/governing
bodies, other than that which has been obtained.
(c) This Agreement and each of the Ancillary Documents to which Buyer is a
party constitute the legal, valid and binding obligation of Buyer enforceable in accordance with
its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting the enforcement of creditors‟ rights generally or by
general equitable principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
Section 12.2 Representations and Warranties by Seller. Seller makes the
following representations and warranties to Buyer:
(a) Seller and Seller Party is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of its respective state of
incorporation or organization, is qualified to do business in the State of _______ [and (the state
where Facility is located, as applicable),] and has the legal power and authority to own its
properties, to carry on its business as now being conducted and (in the case of Seller) to enter
into this Agreement and (in the case of each Seller Party) each Ancillary Document to which it
may be party and, carry out the transactions contemplated hereby and thereby and perform and
carry out all covenants and obligations on its part to be performed under and pursuant to this
Agreement and all Ancillary Documents.
(b) The execution, delivery and performance by the Seller Parties of this
Agreement and all Ancillary Documents have been duly authorized by all necessary action, and
do not and will not require any consent or approval other than those which have already been
(c) The execution and delivery of this Agreement and all Ancillary Documents,
the consummation of the transactions contemplated hereby and thereby and the fulfillment of and
compliance with the provisions of this Agreement and the Ancillary Documents, do not and will
not conflict with or constitute a breach of or a default under, any of the terms, conditions or
provisions of any Requirement of Law, or any organizational documents, agreement, deed of
trust, mortgage, loan agreement, other evidence of indebtedness or any other agreement or
instrument to which any Seller Party is a party or by which it or any of its property is bound, or
result in a breach of or a default under any of the foregoing or result in or require the creation or
imposition of any Lien upon any of the properties or assets of any Seller Party (except as
contemplated hereby), and each Seller Party has obtained or shall timely obtain all permits,
licenses, approvals and consents of Governmental Authorities required for the performance of its
obligations hereunder and thereunder and operation of the Facility in accordance with Prudent
Utility Practices, the requirements of this Agreement, the Ancillary Documents and all applicable
Requirements of Law.
(d) Each of this Agreement and the Ancillary Documents constitutes the legal,
valid and binding obligation of each Seller Party which is party thereto enforceable in
accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors‟
rights generally or by general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) There is no pending, or to the knowledge of Seller, threatened action or
proceeding affecting any Seller Party before any Governmental Authority, which purports to
affect the legality, validity or enforceability of this Agreement or any of the Ancillary
(f) None of the Seller Parties is in violation of any Requirement of Law, which
violations, individually or in the aggregate, would reasonably be expected to result in a material
adverse effect on the business, assets, operations, condition (financial or otherwise) or prospects
of any Seller Party, or the ability of any Seller Party to perform any of its obligations under this
Agreement or any Ancillary Document.
(g) Seller shall inform all investors in Seller of the existence of this Agreement
and all Ancillary Documents on or before the date of such investment in Seller.
(h) Seller has always been, is and will be a Special Purpose Entity.
(i) The Seller Parties have (i) not entered into this Agreement or any Ancillary
Document with the actual intent to hinder, delay or defraud any creditor, and (ii) received
reasonably equivalent value in exchange for their respective obligations under this Agreement
and the Ancillary Documents. No petition in bankruptcy has been filed against any of the Seller
Parties, and none of the Seller Parties nor any of their respective constituent Persons have ever
made an assignment for the benefit of creditors or taken advantage of any insolvency act for its
benefit as a debtor.
(j) All of the assumptions made in the Non-Consolidation Opinion, including,
but not limited to, any exhibits attached thereto, are true and correct. Seller has complied with
all of the assumptions made with respect to Seller in the Non-Consolidation Opinion.
(k) All requirements of the [applicable state environmental program] for the
Facility and any related transmission have been complied with prior to the execution of this
Agreement by the Parties.2 None of the Seller Parties has any reason to believe that any of the
[other] Permits required to construct, maintain or operate the Facility in accordance with the
requirements of this Agreement and all applicable Requirements of Law will not be timely
obtained in the ordinary course of business.
(l) All Tax returns and reports of each Seller Party required to be filed by it
have been timely filed, and all Taxes shown on such Tax returns to be due and payable and all
assessments, fees and other governmental charges upon the Seller Parties and upon its properties,
assets, income, business and franchises that are due and payable have been paid when due and
payable. None of the Seller Parties knows of any proposed Tax assessment against any of the
Seller Parties that is not being actively contested by it in good faith and by appropriate
Section 12.3 Covenant of Seller Related to Seller’s Status as Special
Purpose Entity. Seller shall at all times comply with the requirements of, and qualify as,
a Special Purpose Entity.
Section 12.4 Covenants of Seller Related to Lease3.
(a) Seller shall at all times keep, perform, observe and comply with, or cause to
be kept, performed, observed and complied with, all covenants, agreements, conditions and other
provisions required to be kept, performed, observed and complied with by or on behalf of Seller
from time to time pursuant to the Lease, and Seller shall not do or permit anything to be done,
the doing of which, or refrain from doing anything, the omission of which, could impair or tend
to impair the rights of Seller under the Lease, or could be grounds for the Lessor to terminate the
(b) Seller shall give Buyer immediate notice of (i) any default or of any event
which, with the giving of notice or passage of time, or both, would become a default under the
Lease or of the receipt by Seller of any notice from the Lessor thereof, or (ii) the commencement
or threat of any action or proceeding or arbitration pertaining to the Lease. Buyer, at its option,
may take any action (but shall not be obligated to take any action) from time to time deemed
necessary or desirable by Buyer to prevent or cure, in whole or in part, any default by Seller
under the Lease. Seller shall deliver to Buyer, immediately upon service or delivery thereof on,
to or by Seller, a copy of each petition, summons, complaint, notice of motion, order to show
cause and other pleading or paper, however designated, which shall be served or delivered in
connection with any such action, proceeding or arbitration.
(c) As long as this Agreement is in effect, there shall be no merger of the Lease
or of the leasehold estate created thereby with the fee estate in the property subject to the Lease
and Seller will not acquire any interest in such fee estate without the consent of Buyer.
See Section 3.1(d) if this is not the case.
3 ([BUYER] Comment: Applies to proposals that offer: (1)[BUYER] the option to purchase the Facility; and (2) the
Facility is located on leased land owned by a third party. )
(d) Seller shall not modify, subordinate or amend the Lease in any respect,
either orally or in writing, and Seller shall not terminate, cancel, sever or surrender, or permit or
suffer the modification, subordination, amendment, termination, cancellation, severance or
surrender of, the Lease and shall not waive, excuse, condone or in any way release or discharge
the Lessor of or from the obligations, covenants, conditions and agreements by the Lessor to be
kept, performed, observed or complied with thereunder, and any such action taken by Seller
without the prior consent of Buyer shall be void and of no force and effect.
(e) In the event of the termination, rejection, or disaffirmance by Lessor (or by
any receiver, trustee, custodian, or other party that succeeds to the rights of the Lessor) under the
Lease pursuant to the Bankruptcy Code, Seller hereby presently, absolutely, irrevocably and
unconditionally grants and assigns to Buyer the sole and exclusive right to make or refrain from
making any election available to lessees under the Bankruptcy Code (including the election
available pursuant to Section 365(h) of the Bankruptcy Code, 11 U.S.C. § 365(h), and any
successor provision), and Seller agrees that any such election, if made by Seller without the prior
consent of Buyer (which Buyer would not anticipate granting due to the importance of the Lease
as security), shall be void and of no force or effect. Without limiting the generality of the
foregoing sentence, Seller shall not, without Buyer's prior consent, elect to treat the Lease or the
leasehold estate created thereby as terminated under Section 365 of the Bankruptcy Code, after
rejection or disaffirmance of the Lease by the Lessor (whether as debtor in possession or
otherwise) or by any trustee of the Lessor, and any such election made without such consent
shall be void and of no force or effect. At the request of Buyer, Seller will join in any election
made by Buyer under the Bankruptcy Code and will take no action in contravention of the rights
granted to Buyer pursuant to this Section 12.4.
(f) In the event there is a termination, rejection, or disaffirmance by the Lessor
(whether as debtor in possession or otherwise) or by any trustee of the Lessor pursuant to the
Bankruptcy Code and Buyer elects to have Seller remain in possession under any legal right
Seller may have to occupy the property pursuant to the Lease, then Seller shall remain in such
possession and shall perform all acts necessary for Seller to retain its right to remain in such
possession, whether such acts are required under the then existing terms and provisions of the
Lease or otherwise.
(g) In the event that a petition under the Bankruptcy Code shall be filed by or
against Seller and Seller or any trustee of Seller shall decide to reject or disaffirm the Lease
pursuant to the Bankruptcy Code (or allow same), Seller shall give Buyer at least ten (10) days
prior notice of the date on which application shall be made to the court for authority to reject or
disaffirm the Lease or the Lease will be otherwise rejected. Buyer shall have the right, but not
the obligation, to serve upon Seller or such trustee within such ten (10) day period a notice
stating that (i) Buyer demands that Seller (whether as debtor in possession or otherwise) or such
trustee assume and assign the Lease to Buyer pursuant to the Bankruptcy Code, and (ii) Buyer
covenants to cure, or to provide adequate assurance of prompt cure of, all defaults (except
defaults of the type specified in Section 365(b)(2) of the Bankruptcy Code) and to provide
adequate assurance of future performance under the Lease. In the event that Buyer serves any
such notice as provided above, neither Seller (whether as debtor in possession or otherwise) nor
such trustee shall seek to reject or disaffirm the Lease and Seller (whether as debtor in possession
or otherwise) and such trustee shall comply with such demand within thirty (30) days after such
notice shall have been given, subject to Buyer's performance of such covenant.
(h) Upon any payment by Buyer, as [Security Assignee] under Section [__] of
the Lease, to cure any default of Seller, as lessee thereunder, pursuant to Section [__] of the
Lease and thereby prevent termination of the Lease or the exercise of any other remedy of the
Lessor thereunder arising out of such default, Seller, as such lessee, within ten (10) days
following receipt of notice from Buyer that it made such payment, shall pay the amount of such
payment to Buyer plus interest accruing thereon at the Interest Rate, from and including the date
of the payment by Buyer to cure such default to but excluding the date of such payment by
(i) The Lease shall be substantially in the form of Appendix L and a
memorandum thereof shall be recorded in the applicable county.
DEFAULT; TERMINATION AND REMEDIES; PERFORMANCE DAMAGE
Section 13.1 Default. Each of the following events or circumstances shall
constitute a “Default” by the responsible Party (the “Defaulting Party”):
(a) Buyer Payment or Performance Default. Failure by Buyer to make any
payment or perform any of its other duties or obligations under this Agreement or any of the
Ancillary Documents when and as due which is not cured within thirty (30) days after receipt of
notice thereof from Seller.
(b) Seller Payment or Performance Default. Failure by any Seller Party to
make any payment or perform any of its other duties or obligations under this Agreement or any
of the Ancillary Documents when and as due (other than any failure described in Section 13.1(i))
which is not cured within thirty (30) days after receipt of notice thereof from Buyer.
(c) Buyer Breach of Representation and Warranty. Inaccuracy in any material
respect at the time made or deemed to be made of any representation, warranty, certification or
other statement made by Buyer herein or in any Ancillary Document.
(d) Seller Breach of Representation and Warranty. Inaccuracy in any material
respect at the time made or deemed to be made of any representation, warranty, certification or
other statement made by Seller herein or by any Seller Party in any Ancillary Document.
(e) Buyer Bankruptcy. Bankruptcy of Buyer.
(f) Seller Bankruptcy. Bankruptcy of any Seller Party.
(g) Mortgage Default. A default shall have occurred under the Mortgage or the
Mortgage shall fail to be in full force and effect in accordance with the terms of this Agreement
or Buyer shall not have or shall cease to have a valid and perfected Lien in the collateral
purported to be covered by the Mortgage, or Seller or any other Person shall contest the validity
or enforceability of the Mortgage or any provision thereof in writing or deny that it has any
further liability thereunder.
(h) Commercial Operation Date Default. Seller shall fail to achieve the
Milestone Date for Commercial Operation.
(i) Performance Security Failure. The failure of Seller to maintain the
Performance Security in compliance with Section 5.4 or replace such Performance Security at
least _______ (___) Business Days prior to its expiration, unless alternative Performance
Security that complies with the requirements of Section 5.4 is provided within ten (10) Business
Days after notice from Buyer of any such failure; or, with respect to any obligor providing the
Performance Security for the benefit of Buyer:
(1) the failure of such obligor to honor a drawing or make a payment
(2) such obligor fails to meet the acceptance of Buyer or there shall
have occurred a material adverse effect on the business, assets, operations, condition
(financial or otherwise) or prospects of such obligor;
(3) the Performance Security issued by such obligor shall fail to be in
full force and effect in accordance with the terms of this Agreement prior to the
satisfaction of all obligations of Seller under this Agreement and each of the Ancillary
(4) such obligor shall repudiate, disaffirm, disclaim, or reject, in whole
or in part, or challenge the validity of its Performance Security and in any such event,
Seller fails to provide replacement Performance Security.
(j) Material Adverse Effect. There shall have occurred a material adverse
effect on the business, assets, operations, condition (financial or otherwise) or prospects of any
(k) Lease Default. The Lease fails to be in effect or a default under the Lease
has occurred or the Lease is terminated for any reason or amended in any material respect.
(l) Seller Delay Default. Seller‟s failure to achieve the Commercial Operation
Date within ________( ) days after the Milestone date;
(m) Chronic Underdelivery. Seller's failure to deliver at least _______ percent
(__%) of the Guaranteed Generation from the Facility in any rolling twelve-month period
(“Period”) beginning on or after the first anniversary of COD, shall constitute an Event of
Default of Seller upon its occurrence, provided that
(1) to the extent such failure is attributable to an event of Force
Majeure, such event of Force Majeure shall be imputed into the calculation of Guaranteed
Generation for the purposes of, and only for the purposes of, establishing an Event of
Default of Seller under this paragraph, and
(2) this default shall be curable by providing Shortfall Energy in
accordance with Article 9, provided that if the failure to deliver a minimum of
_____percent (__%) of the Guaranteed Generation for a second consecutive Period shall
constitute a default regardless whether Seller has provided Shortfall Energy.
Section 13.2 Default Remedy.
(a) If Buyer is in Default for nonpayment, subject to any duty or obligation
under this Agreement, Seller may continue to provide services pursuant to its obligations under
this Agreement; provided that nothing in this Section 13.2(a) shall affect Seller‟s rights and
remedies set forth in this Section 13.2. Seller‟s continued service to Buyer shall not act to
relieve Buyer of any of its duties or obligations under this Agreement.
(b) Notwithstanding any other provision herein, if any Default has occurred
and is continuing, the affected Party may, whether or not the dispute resolution procedure set
forth in Section 14.3 has been invoked or completed, bring an action in any court of competent
jurisdiction as set forth in Section 14.12 seeking injunctive relief in accordance with applicable
rules of civil procedure.
(c) Except as expressly limited by this Agreement, if a Default has occurred
and is continuing and Buyer is the Defaulting Party, Seller may without further notice exercise
any rights and remedies provided herein or otherwise available at law or in equity, including the
right to terminate this Agreement pursuant to Section 13.3. No failure of Seller to exercise, and
no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise by Seller of any other right, remedy or power hereunder
preclude any other or future exercise of any right, remedy or power.
(d) Except as expressly limited by this Agreement, if a Default has occurred
and is continuing and Seller is the Defaulting Party, Buyer may without further notice exercise
any rights and remedies provided for herein, or otherwise available at law or equity, including (i)
application of all amounts available under the Performance Security against any amounts then
payable by Seller to Buyer under this Agreement, (ii) termination of this Agreement pursuant to
Section 13.3, (iii) exercise its rights under the Mortgage, subject to the provisions of this
Agreement and such subordination and other intercreditor arrangements as it may have agreed to
with the Facility Lender, and (iv) exercise of the Project Purchase Option. No failure of Buyer to
exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Buyer of any right, remedy or power
hereunder preclude any other or future exercise of any right, remedy or power.
Section 13.3 Termination for Default.
(a) If Default occurs, the Party that is not the Defaulting Party (the “Non
Defaulting Party”) may, for so long as the Default is continuing and without limiting any other
rights or remedies available to the Non-Defaulting Party under this Agreement, by notice
(“Termination Notice”) to the Defaulting Party (i) establish a date (which shall be no earlier
than the date of such notice and no later than twenty (20) days after the date of such notice)
(“Early Termination Date”) on which this Agreement shall terminate, and (ii) withhold any
payments due in respect of this Agreement; provided, upon the occurrence of any Default of the
type described in Sections 13.1(e) or (e), if the Non-Defaulting Party so elects, this Agreement
shall automatically terminate, without notice or other action by either Party as if an Early
Termination Date had been declared immediately prior to such event.
(b) If an Early Termination Date has been designated, the Non-Defaulting
Party shall in good faith calculate its Gains, Losses and Costs resulting from the termination of
this Agreement. The Gains, Losses and Costs relating to the Energy and Environmental
Attributes which would have been required to be delivered under this Agreement had it not been
terminated shall be determined by comparing the amounts Buyer would have paid therefor under
this Agreement to the amounts Buyer reasonably expects to be available in the market under a
replacement contract for this Agreement covering the same products and having a term equal to
the Remaining Term at the date of the Termination Notice adjusted to account for differences in
transmission, if any. It is expressly agreed that the Non-Defaulting Party shall not be required to
enter into any such replacement agreement in order to determine its Gains, Losses and Costs or
the Termination Payment.
(c) For purposes of the Non-Defaulting Party‟s determination of its Gains,
Losses and Costs and the Termination Payment, it shall be assumed, regardless of the facts, that
Seller would have sold, and Buyer would have purchased, each day during the Remaining Term
(i) Facility Energy in an amount equal the Assumed Daily Deliveries, and (ii) the Environmental
Attributes associated therewith. The “Assumed Daily Deliveries” is an amount equal to the
quotient of “a” divided by 365, where “a” is equal to the greater of (x) the Guaranteed
Generation, and (y) the average daily deliveries of Facility Energy during the Delivery Term, if
(d) The Non-Defaulting Party shall aggregate its Gains, Losses and Costs as so
determined into a single net amount (the “Termination Payment”) and notify the Defaulting
Party thereof. If the Non-Defaulting Party‟s aggregate Losses and Costs exceed its aggregate
Gains, the Defaulting Party will, within five (5) Business Days of receipt of such notice, pay the
net amount to the Non-Defaulting Party, which amount shall bear interest at the Interest Rate
from the Early Termination date until paid.
(e) If the Defaulting Party disagrees with the calculation of the Termination
Payment and the Parties cannot otherwise resolve their differences, the calculation issue shall be
submitted to informal non-binding dispute resolution as provided in Section 14.3(a). Pending
resolution of the dispute, the Defaulting Party shall pay the full amount of the Termination
Payment calculated by the Non-Defaulting Party as and when required by this Agreement,
subject to the Non-Defaulting Party refunding, with interest, at the Interest Rate, any amounts
determined to have been overpaid.
(f) For purposes of this Agreement:
(i) “Gains” means, with respect to a Party, an amount equal to the
present value of the economic benefit (exclusive of Costs), if any, resulting from the
termination of its obligations under this Agreement, determined in a commercially
(ii) “Losses” means, with respect to a Party, an amount equal to the
present value of the economic loss (exclusive of Costs), if any, resulting from the
termination of its obligations under this Agreement, determined in a commercially
(iii) “Costs” means, with respect to a Party, brokerage fees,
commissions and other similar transaction costs and expenses reasonably incurred in
terminating any arrangement pursuant to which it has hedged its obligations or entering
into new arrangements which replace this Agreement, excluding attorneys‟ fees, if any,
incurred in connection with enforcing its rights under this Agreement. Each Party shall
use reasonable efforts to mitigate or eliminate its Costs.
(iv) In no event shall a Party‟s Gains, Losses or Costs include any
penalties or similar charges imposed by the Non Defaulting Party.
(v) The Present Value Rate shall be used as the discount rate in all
present value calculations required to determine Gains, Losses and Costs.
(g) At the time for payment of any amount due under this Section, each Party
shall pay to the other Party all additional amounts, if any, payable by it under this Agreement.
Section 14.1 Authorized Representative. Within thirty (30) days after
execution of this Agreement, each Party shall notify the other Party of the identity of its
Authorized Representative, (each an "Authorized Representative" to represent it on a
committee (the "Operating Committee") and an alternate if designated, and shall promptly
notify the other Party of any subsequent changes in such designation. The Authorized
Representatives shall have no authority to alter, modify, or delete any of the provisions of
this Agreement. The Operating Committee shall hold regular meetings on a Monthly
basis, or as often as the Parties may mutually agree or as requested by either Party. All
meetings shall be held at a mutually convenient time and place as determined by the
members of the Operating Committee. The agenda for the meetings shall include, but not
be limited to: (i) Scheduling, operations and maintenance of the Facility; (ii) Scheduling of
Scheduled Outages or other maintenance of the Facility; (iii) any necessary or requested
revisions to the dispatch and Scheduling protocols; or (iv) any other issues which either
Party considers necessary or appropriate. The Operating Committee shall not have the
right to alter, amend or rescind any portion of this Agreement.
Section 14.2 Notices. With the exception of billing invoices pursuant to Section
11.2(b) hereof, all notices, requests, demands, consents, waivers and other
communications which are required under this Agreement shall be in writing and shall be
deemed properly sent if delivered in person or sent by facsimile transmission, reliable
overnight courier, or sent by registered or certified mail, postage prepaid to the persons
specified in Appendix C.
Section 14.3 Alternative Dispute Resolution. All disputes arising under this
Agreement are subject to the provisions of this Section.
(a) Mediation. Any disputes between the Parties shall first be submitted to a
non-binding mediation. The mediation shall be commenced by written request of either Party
and shall begin within thirty (30) days of such written Notice. The mediator shall be chosen by
mutual agreement of the Parties within fifteen (15) days of submission of the above written
Notice. Any discussions or materials presented during or for purposes of the mediation shall be
confidential and governed by the limitations and restrictions of Rule 408 of the Federal and
Arizona Rules of Evidence and/or any like regulatory rules. The compensation and any costs
and expenses of the mediation shall be borne equally by the Parties. Any arbitration commenced
under this Section shall not be initiated until following the completion of the mediation detailed
herein; provided, however, that if a Party refuses to participate in the mediation process as
provided herein, the other Party may immediately initiate arbitration as set forth in this Section
14.3. Any dispute that remains unresolved thirty (30) days after the appointment of a mediator
shall be settled by binding arbitration in accordance with the procedures set forth in this Section
(b) Arbitration. Any disputes between the Parties and/or their respective
representatives involving or arising under claim, counterclaim, demand, cause of action, dispute,
and/or controversy relating to the terms of this Agreement, or the breach thereof (collectively
„Claims‟), shall be submitted to [binding] arbitration [Buyer preferences vary on whether the
arbitration should be binding or non-binding], whether such Claims sound in contract, tort or
otherwise. The arbitration shall be conducted in accordance with the Federal Arbitration Act and
the then prevailing Commercial Arbitration Rules of the American Arbitration Association. The
validity, construction, and interpretation of this agreement to arbitrate and all procedural aspects
of the arbitration conducted pursuant hereto shall be decided by the arbitrator(s). Submission
shall be made upon the request of either Party. Within twenty (20) calendar days of the receipt
by the respondent of service of the Notice of arbitration, the Parties shall select one (1) arbitrator
by mutual consent. If the Parties are unable to agree upon a single arbitrator, there shall be three
(3) arbitrators. Specifically, in the event the Parties cannot agree upon a single arbitrator, both
the claimant and the respondent shall appoint one (1) arbitrator within ten (10) calendar days
after written Notice by either Party that three (3) arbitrators shall be necessary. The two (2)
arbitrators so appointed shall then select the third arbitrator within twenty (20) calendar days,
who shall be the chairperson, of the tribunal. The chairperson shall be a person who has over
eight (8) years of experience in energy-related transactions, and none of the arbitrators shall have
been previously employed by either Party or have any direct interest in either Party or the subject
matter of the arbitration, unless such conflict is expressly acknowledged and waived in writing
by both Parties. The chairperson shall be bound to schedule and hear the dispute within six (6)
months after his/her appointment and shall render the panel‟s decision within thirty (30) calendar
days after the hearing concludes. It is agreed that the arbitration proceeding shall be conducted
in a neutral location mutually agreed to by the Parties. It is further agreed that the arbitrator(s)
shall have no authority to award consequential, treble, exemplary, or punitive damages of any
type or kind regardless of whether such damages may be available under any law or right, with
the Parties hereby affirmatively waiving their rights, if any, to recover or claim such damages.
The compensation and any costs and expenses of the arbitrators shall be borne equally by the
Parties. Any arbitration proceedings, decision or award rendered hereunder and the validity,
effect and interpretation of this arbitration provision shall be governed by the Federal Arbitration
Act. The award shall be final and binding on the Parties and judgment upon any award may be
entered in any court of competent jurisdiction. The Parties agree that all information exchanged
as a result of any proceeding as described herein shall be deemed Confidential Information.
(c) Judicial Relief. Either Party may petition a court of appropriate
jurisdiction, as described in Section 14.__, for non-monetary relief relating to any claim of
breach of this Agreement in order to prevent undue hardship relating to any such claimed breach
pending the appointment of an arbitration panel as described in this Section 14.3.
Section 14.4 Further Assurances. Each Party agrees to execute and deliver all
further instruments and documents, and take all further action not inconsistent with the
provisions of this Agreement that may be reasonably necessary to effectuate the purposes
and intent of this Agreement.
Section 14.5 Force Majeure.
(a) A Party shall not be considered to be in default in the performance of any of
its obligations under this Agreement when and to the extent such Party‟s performance is
prevented by a Force Majeure that, despite the exercise of commercially reasonable efforts, such
Party is unable to prevent or mitigate, provided the Party has given a written detailed description
of the Force Majeure to the other Party reasonably promptly after becoming aware thereof,
which notice shall include information with respect to the nature, cause and date of
commencement of such event, and the anticipated scope and duration of the delay. The Party
providing such notice shall be excused from fulfilling its obligations under this Agreement until
such time as the Force Majeure has ceased to prevent performance or other remedial action is
taken, at which time the Party shall promptly notify the other Party of the resumption of its
obligations under this Agreement. If Seller is unable to deliver, or Buyer is unable to receive,
Energy due to a Force Majeure, Buyer shall have no obligation to pay Seller for the Energy not
delivered or received by reason thereof. It is understood by the Parties that the foregoing
provisions shall not excuse any obligations of Seller with respect to Shortfall Energy and
Replacement Energy, as provided under Article IX, whether or not caused by Force Majeure.
(b) The term “Force Majeure” means an event or circumstance, which
prevents one Party from performing any of its obligations under this Agreement, which event or
circumstance could not reasonably be anticipated as of the date of this Agreement, which is not
within the reasonable control of, or the result of negligence, willful misconduct, breach of
contract, intentional act or omission or wrongdoing on the part of the affected Party, and which
by the exercise of due diligence the affected Party is unable to overcome or avoid or cause to be
avoided. So long as the requirements of the preceding sentence are met, a "Force Majeure" event
may include, but shall not be limited to, flood, drought, earthquake, storm, fire, lightning,
epidemic, war or riot. Notwithstanding the foregoing, Force Majeure shall not be based on (i)
the loss of Buyer's market; (ii) Buyer's inability economically to use or resell the Energy
purchased hereunder; (iii) the loss or failure of Seller's supply, including materials or equipment,
such as the procurement of solar units and other specialty equipment for the Facility; (iv) the
delay in or inability of Seller to obtain financing or economic hardship of any kind; (v) Seller's
ability to sell the Energy at a price greater than the Sales Price; or (vi) strike or labor dispute.
Any Party rendered unable to fulfill any of its obligations by reason of a Force Majeure shall
exercise due diligence to remove such inability within a reasonable time period and mitigate the
effects of the Force Majeure; or (vii) weather events or sudden actions of the natural elements
within _____ -year normal weather patterns. Without limiting the generality of the foregoing, a
Force Majeure does not include any of the following (i) any requirement to meet a renewable
portfolio standard or any change (whether voluntary or mandatory) in any renewable portfolio
standard that may affect the value of the Energy purchased hereunder;; (ii) failure of third parties
to provide goods or services essential to a Party‟s performance, unless such failure is caused by a
Force Majeure; or (iii) curtailment or other interruption of any Transmission Service except as
otherwise expressly provided in Section 14.6(c).
(c) Neither Party may raise a claim of Force Majeure based in whole or in part
on curtailment or other interruption of Transmission Service for any Energy at any time unless
(i) such Party has contracted for Firm Transmission to be provided for the Energy on the
Specified Transmission Path at the time, and (ii) the curtailment or interruption is due to “force
majeure” or “uncontrollable force” or a similar term as defined under the Transmission
Provider‟s tariff; provided, the existence of the foregoing factors shall not be sufficient to
conclusively or presumptively prove the existence of Force Majeure absent a showing of other
facts and circumstances which in the aggregate with such factors establish that a Force Majeure
as defined in Section 14.6(b) has occurred.
(d) For purposes of this Agreement, a Force Majeure shall be deemed to
prevent and excuse Buyer from receiving Energy at the Point of Delivery under either of the
following two circumstances: (i) if Buyer is the Transmission Provider providing Transmission
Services from the Point of Delivery to the Approved Point of Interconnection on Buyer‟s
System, and the Force Majeure prevents Buyer from receiving Energy at the Point of Delivery;
or (ii) if Buyer is not the Transmission Provider providing Transmission Services from the Point
of Delivery to the Approved Point of Interconnection on Buyer‟s System, either (x) the Force
Majeure prevents the Transmission Provider from receiving Energy at the Point of Delivery, or
(y) the Force Majeure prevents Buyer from receiving Energy at the Approved Point of
Interconnection on Buyer‟s System.
(e) Limitations on Effect of Force Majeure. In no event will any delay or
failure of performance caused by Force Majeure extend this Agreement beyond its stated Term.
In the event that any delay or failure of performance caused by Force Majeure affecting Seller
continues for an uninterrupted period of _____ Days from its inception (with respect to Force
Majeure occurring prior to the Commercial Operation Date) or _____ Days from its inception
(with respect to Force Majeure occurring after the Commercial Operation Date), Buyer may, at
any time following the end of such period, terminate this Agreement upon written notice to
Seller, without further obligation by either Party except as to costs and balances incurred prior to
the effective date of such termination.
Section 14.6 Assignment of Agreement.
(a) Buyer may from time to time and at any time assign any or all of its rights,
and delegate any or all of its obligations, under this Agreement in whole or in part without the
consent of Seller. No such assignment or delegation shall relieve Buyer from any of its
obligations under this Agreement.
(b) Except as set forth in this Section 14.6, Seller shall not assign any of its
rights, or delegate any of its obligations, under this Agreement without the prior consent of
Buyer. It shall be deemed an “assignment” as that term is used herein if there is any change in
the membership interests in the Seller. Any purported assignment or delegation in violation of
this provision shall be null and void and of no force or effect.
(c) Buyer‟s consent shall not be required for Seller to assign this Agreement for
collateral purposes to any Facility Lender; provided however neither Party shall have the right to
assign the Agreement or its respective rights and obligations thereunder without the prior written
consent of the other Party; provided, however, that either Party may, without such consent but
with prior written notice to the other Party (and without relieving itself from liability hereunder),
transfer, sell, pledge, encumber or assign the Agreement or the accounts, revenues or proceeds
thereof in connection with any financing or other financial arrangements; provided, further, that
any such assignee shall agree in writing to be bound by the terms and conditions of the
Agreement and such assignee shall be afforded no additional rights or remedies beyond those
specifically granted to Seller in the Agreement. Seller shall provide Buyer with thirty (30) days
prior written notice of any such assignment to any Facility Lender. Notwithstanding the
foregoing or anything else expressed or implied herein to the contrary, Seller shall not assign,
transfer, convey, encumber, sell or otherwise dispose of all or any portion of the Energy or
Environmental Attributes (not including the proceeds thereof) to any Facility Lender.
(d) To facilitate Seller‟s obtaining of financing to construct and operate the
Facility, Buyer may, in its sole discretion, provide such consents to assignment or other
documents as may be requested by Seller or any Facility Lender in connection with the financing
of the Facility, including the acquisition of equity for the development, construction and
operation of the Facility; provided however neither Party shall have the right to assign the
Agreement or its respective rights and obligations thereunder without the prior written consent of
the other Party; provided, however, that either Party may, without such consent but with prior
written notice to the other Party (and without relieving itself from liability hereunder), transfer,
sell, pledge, encumber or assign the Agreement or the accounts, revenues or proceeds thereof in
connection with any financing or other financial arrangements; provided, further, that any such
assignee shall agree in writing to be bound by the terms and conditions of the Agreement and
such assignee shall be afforded no additional rights or remedies beyond those specifically
granted to Seller in the Agreement. Seller shall reimburse, or shall cause the Facility Lender to
reimburse, Buyer for the incremental direct expenses (including the reasonable fees and expenses
of outside counsel) incurred by Buyer in the preparation, negotiation, execution and/or delivery
of any documents requested by Seller or the Facility Lender, and provided by Buyer, pursuant to
this Section 14.6(d).
Section 14.7 Ambiguity. The Parties acknowledge that this Agreement was
jointly prepared by them, by and through their respective legal counsel, and any
uncertainty or ambiguity existing herein shall not be interpreted against either Party on the
basis that the Party drafted the language, but otherwise shall be interpreted according to
the application of the rules on interpretation of contracts.
Section 14.8 Voluntary Execution. Both Parties hereto acknowledge that they
have read and fully understand the content and effect of this Agreement that the provisions
of this Agreement have been reviewed and approved by their respective counsel. The
Parties to this Agreement further acknowledge that they have executed this Agreement
voluntarily, subject only to the advice of their own counsel, and do not rely on any
promise, inducement, representation or warranty that is not expressly stated herein.
Section 14.9 Entire Agreement. This Agreement (including all Appendices
and Exhibits) contains the entire understanding concerning the subject matter herein and
supersedes and replaces any prior negotiations, discussions or agreements between the
Parties, or any of them, concerning that subject matter, whether written or oral, except as
expressly provided for herein. This is a fully integrated document. Each Party
acknowledges that no other party, representative or agent, has made any promise,
representation or warranty, express or implied, that is not expressly contained in this
Agreement that induced the other Party to sign this document. This Agreement may be
amended or modified only by an instrument in writing signed by each Party.
Section 14.10 Governing Law. This Agreement shall be interpreted, governed
by, and construed under the laws of the State of New York without consideration of
conflicts of law principles. Subject to the mandatory arbitration provisions herein, the
venue for any litigation relating to this Agreement shall be in ______________and each
Party hereby waives any objections on the basis of forum non-conveniens or otherwise
with respect to the venue of any such action being heard in ______________,
Section 14.11 Execution in Counterparts. This Agreement may be executed in
counterparts and upon execution by each signatory, each executed counterpart shall have
the same force and effect as an original instrument and as if all signatories had signed the
same instrument. Any signature page of this Agreement may be detached from any
counterpart of this Agreement without impairing the legal effect of any signature thereon,
and may be attached to another counterpart of this Agreement identical in form hereto by
having attached to it one or more signature pages.
Section 14.12 Effect of Section Headings. Section headings appearing in this
Agreement are inserted for convenience only and shall not be construed as interpretations
Section 14.13 Waiver. The failure of either Party to this Agreement to enforce
or insist upon compliance with or strict performance of any of the terms or conditions
hereof, or to take advantage of any of its rights hereunder, shall not constitute a waiver or
relinquishment of any such terms, conditions or rights, but the same shall be and remain at
all times in full force and effect.
Section 14.14 Relationship of the Parties. This Agreement shall not be
interpreted to create an association, joint venture or partnership between the Parties hereto
or to impose any partnership obligation or liability upon either such Party. Neither Party
shall have any right, power or authority to enter into any agreement or undertaking for, or
act on behalf of, or to act as an agent or representative of, the other Party.
Section 14.15 Third Party Beneficiaries. This Agreement shall not be
construed to create rights in, or to grant remedies to, any third party as a beneficiary of this
Agreement or any duty, obligation or undertaking established herein.
Section 14.16 Indemnification; Damage or Destruction; Insurance; Limit of
(a) Indemnification. Seller undertakes and agrees to indemnify and hold
harmless Buyer, its board members, and all of its officers and employees of each, and, at the
option of Buyer, defend Buyer, and any and all of its board members, officers, agents,
employees, advisors, assigns and successors in interest from and against any and all suits and
causes of action, claims, charges, damages, demands, judgments, civil fines and penalties, or
losses of any kind or nature whatsoever, for death, bodily injury or personal injury to any person,
including Seller‟s employees and agents, or damage or destruction to any property of either
Party, or third persons in any manner arising by reason of any breach of this Agreement by
Seller, any failure of a representation of Seller to be true in all material respects or the negligent
acts, errors, omissions or willful misconduct incident to the performance of this Agreement on
the part of Seller, or any of Seller‟s officers, agents, employees, or subcontractors of any tier,
except to the extent caused by the gross negligence or willful misconduct of Buyer, its board
members, officers, agents, or employees.
(b) Damage or Destruction. In the event of any damage or destruction of the
Facility or any part thereof, the Facility or such part thereof shall be diligently repaired, replaced
or reconstructed by Seller so that the Facility or such part thereof shall be restored to
substantially the same general condition and use as existed prior to such damage or destruction,
unless a different condition or use is approved by Buyer. Proceeds of Insurance with respect to
such damage or destruction maintained as provided in this Agreement shall be applied to the
payment for such repair, replacement or reconstruction of the damage or destruction.
(c) Insurance. Seller shall obtain and maintain the Insurance coverages listed
in Appendix F on substantially the terms set forth in Appendix F.
(d) Condemnation Or Other Taking. For the Agreement Term, Seller shall
immediately notify Buyer of the institution of any proceeding for the condemnation or other
taking of the Facility, or any portion thereof. Buyer may participate in any such proceeding and
Seller will deliver to Buyer all instruments necessary or required by Buyer to permit such
participation. Without Buyer‟s prior consent, Seller (i) shall not agree to any compensation or
award, and (ii) shall not take any action or fail to take any action which would cause the
compensation to be determined. All awards and compensation for the taking or purchase in lieu
of condemnation of the Facility, or any portion thereof shall be applied toward the repair,
restoration, reconstruction or replacement of the Facility.
(e) Limitation of Liability. Except to the extent included in the liquidated
damages, expressly provided for herein, neither Party hereunder shall be liable for special,
incidental, exemplary, indirect, punitive or consequential damages arising out of a Party‟s
performance or non-performance under this Agreement, whether based on or claimed under
contract, tort (including such Party‟s own negligence) or any other theory at law or in equity.
Section 14.17 Severability. In the event any of the terms, covenants or
conditions of this Agreement, or the application of any such terms, covenants or
conditions, shall be held invalid, illegal or unenforceable by any court having jurisdiction,
all other terms, covenants and conditions of this Agreement and their application not
adversely affected thereby shall remain in force and effect, provided that the remaining
valid and enforceable provisions materially retain the essence of the Parties‟ original
Section 14.18 Confidentiality.
(a) The Parties will make commercially reasonable efforts to safeguard
Confidential Information against disclosure by employing the same means to protect such
Confidential Information as that Party uses to protect its own non-public, confidential or
proprietary information, and otherwise in accordance with the provisions of this Section ___, but
in no event less than reasonable care. Specifically, no receiving Party shall itself, or permit its
employees, consultants and/or agents to disclose to any person, corporation or other entity the
Confidential Information without the prior written consent of the Party providing the
Confidential Information, except a receiving Party may distribute the Confidential Information to
its board members, officers, employees, agents and consultants and others who have a need for
such Confidential Information.
The provisions of this Section 14.18 shall survive and shall continue to be binding
upon the Parties for period of one (1) year following the date of termination of this Agreement.
Notwithstanding the foregoing, information shall not be considered confidential which (i) was in
the public domain prior to disclosure, (ii) was lawfully in a Party‟s possession or acquired by a
Party outside of this Agreement, which acquisition was not known by the receiving Party to be in
breach of any confidentiality obligation, or (iii) developed independently by a Party based solely
on information that is not considered confidential under this Agreement.
(b) The Parties acknowledge, however, that Buyer may need to disclose the
Confidential Information in connection with its regulatory filings or to otherwise satisfy its
regulatory requirements. In the event that [BUYER] intends to disclose any of the Confidential
Information to its regulatory authorities including, but not limited to, the [applicable state and
regulatory agency], FERC, or any employee, staff member, consultant, and/or agent of the
foregoing, it shall give Seller prompt prior written Notice of its intention so that Seller may seek
a protective order or other appropriate remedy. In the event that a protective order or other
remedy is not obtained, Seller waives compliance with the terms hereof with respect to such
Confidential Information. Nothing herein shall be deemed to permit Seller to disclose the
Confidential Information to the foregoing regulatory agencies, or any other party, unless such
disclosure is otherwise permitted by this Agreement. In addition, Seller specifically agrees not to
use [BUYER]'s‟ name in connection with this Agreement or the Facility in any press releases,
public meetings or hearings, or other public communications, including any release to any
newswire service, without the express written consent of [BUYER]. The Parties anticipate that
at some future time it may be in the best interests of one or both of them to disclose Confidential
Information to the media and the Parties anticipate entering into a subsequent agreement that will
govern the terms of such disclosure. The Parties expressly agree, however, that unless and until
such subsequent agreement is executed between the Parties, the terms of this Agreement shall be
binding with respect to such disclosure.
(c) In the event that any Party receiving the Confidential Information becomes
legally compelled (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose any of the Confidential Information, the
legally compelled Party shall give the other Party providing the Confidential Information prompt
prior written notice of such requirement so that the providing Party may seek a protective order
or other appropriate remedy and/or waive compliance with the terms of this Agreement. In the
event that such protective order or other remedy is not obtained, the providing Party waives
compliance with the terms hereof.
(d) Each Party acknowledges that the unauthorized disclosure of any
Confidential Information may cause irreparable harm and significant injury that may be difficult
to ascertain. Each Party therefore agrees that specific performance or injunctive relief, in
addition to other legal and equitable relief, are appropriate remedies for any actual or threatened
violation or breach of this Agreement, although neither Party shall be entitled to any special,
consequential, indirect or punitive damages as a result of a breach of this Agreement, whether a
claim is based in contract, tort or otherwise. The Parties agree that the respondent in any action
for an injunction, specific performance decree or similar relief shall not allege or assert that the
initiating Party has an adequate remedy at law in respect to the relief sought in the proceeding,
nor shall the respondent seek the posting of a bond by the Party initiating the action. Under no
circumstances will either Party‟s directors, management, employees, agents or consultants be
individually liable for any damages resulting from the disclosure of Confidential Information in
violation of the terms of this Agreement.
Section 14.19 Fixed-Rate Contract: Mobile-Sierra Clause. The Parties hereby
stipulate and agree that this Agreement was entered into as a result of arms‟-length
negotiations between the Parties. Further, the Parties believe that the rates, terms and
conditions of this Agreement are just and reasonable within the meaning of Sections 205
and 206 of the Federal Power Act, 16 U.S.C. Sections 824d or 824e, and that the rates,
terms and conditions of this Agreement will remain so over the life of the Agreement. The
Parties waive all rights to challenge the validity of this Agreement or whether it is just and
reasonable for and with respect to the entire term thereof, under Sections 205 and 206 of
the Federal Power Act and to request the FERC to revise the terms and conditions and the
rates or services specified in this Agreement, and hereby agree to make no filings at the
FERC or with any other state or federal agency, board, court or tribunal challenging the
rates, terms and conditions of this Agreement as to whether they are just and reasonable or
in the public interest under the Federal Power Act. The Parties hereby further stipulate and
agree that neither Party may bring any action, proceeding or complaint under Section 205
or 206 of the Federal Power Act, 16 U.S.C. 824d or 824e, seeking to modify, cancel,
suspend, or abrogate the rates, terms and conditions of this Agreement, or to prevent this
Agreement from taking effect. It is further agreed that, in the event either Party
challenges this Agreement for any other reason, such Party will not dispute the
applicability of the public interest standard as that term has been defined and interpreted
under the Federal Power Act and the cases of United Gas Pipe Line Co. v. Mobile Gas
Corp., 350 U.S. 332 (1956) and FPC v. Sierra Pacific Power Co., 350 U.S. 348 (1956),
and subsequent cases.
Section 14.20 Financial Accounting Standards. Under the latest interpretations
of the Financial Accounting Standards Board‟s Interpretation No. 46(R) (FIN No. 46(R)),
“Consolidation of Variable Interest Entities,” Buyer may be required to consolidate a
Seller‟s entity for which Buyer has entered into a long-term power-purchase agreement.
Seller agrees to provide all information needed in order for Buyer to determine whether or
not the special purpose entity which owns Seller‟s generating facility must be consolidated
by Buyer under FIN No. 46(R). If it is determined that Buyer needs to consolidate such
special purpose entity, Seller agrees to provide all information needed to comply with the
consolidation requirements of FIN 46(R) in a timely manner every calendar quarter. If
Buyer is required to consolidate the special purpose entity that owns Seller‟s generating
facility in its financial statements, Seller agrees to provide access to any needed records
and personnel, as requested, so Buyer‟s independent auditor can conduct financial
statement audits in accordance with generally accepted auditing standards, as well as
internal control audits in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
Seller agrees to have adequate controls over financial information.
Section 14.21 [Equal Employment Opportunity Compliance Certification [as
applicable]. Seller acknowledges that as a government contractor Buyer is subject to various
federal laws, executive orders, and regulations regarding equal employment opportunity and
affirmative action. These laws may also be applicable to Seller as a subcontractor to Buyer. All
applicable equal opportunity and affirmative action clauses shall be deemed to be incorporated
herein as required by federal laws, executive orders, and regulations, including 41 C.F.R.
IN WITNESS WHEREOF, each Party was represented by legal counsel during the
negotiation and execution of this Agreement and the Parties hereto have executed this
Agreement as of the date set forth at the beginning of this Agreement.
_____ or Buyer _______ or Seller
1. Excess Energy. The purchase price for Delivered Energy that is Excess Energy is $[x]
2. Startup and Test Energy. The purchase price for Delivered Energy that is startup or
test Energy is $[x] per MWh.
3. Monthly Delivered Energy Payment. The purchase price for Delivered Energy that is
not Excess Energy or startup or test Energy is $[x] per MWh.
Buyer shall pay Seller for Buyer‟s Share delivered to Buyer by Seller in each Contract Year, for
up to ______ percent (____%) of the Committed Solar Energy, at a price equal to the applicable
Solar Energy Payment Rate. For all Solar Energy delivered by Seller to Buyer at the Point of
Delivery in a Commercial Operation Year in excess of ________ percent (___%) of the
Committed Solar Energy, Buyer shall pay Seller at a price equal to _____ percent (__%) of the
Solar Energy Payment Rate.
1. Name of Facility: [name]
(a) Location: [city, county and state]
2. Owner: [owner name]
3. Operator: [operator name]
(a) Type of Facility: [generation type]
Total nominal gross nameplate capacity (under expected average site conditions):
Total nominal net capacity (under expected average site conditions): [XX] MW
5. Planned Commercial Operation Date: [XXXX 1, 200X]
Other information and requirements to be specified in the definitive Agreement.
BUYER AND SELLER BILLING, NOTIFICATION AND SCHEDULING CONTACT
1. Authorized Representative. Correspondence pursuant to Section 14.1 shall be
transmitted to the following addresses:
1.1 If to Buyer:
1.2 If to Seller:
2. Billings and payments pursuant to Section 11.1 and Appendix A shall be transmitted to
the following addresses:
2.1 If Billing to Buyer:
2.1 If Payment to Buyer:
3. All notices (other than Scheduling notices) required under the Agreement shall be sent by
facsimile transmission, reliable overnight courier, and registered or certified mail,
postage prepaid, to the address specified below.
If to Buyer:
If to Seller:
4. All notices related to scheduling of the Facility shall be sent to the following address:
If to Buyer:
If to Seller:
FORM OF ATTESTATION
_________________ ("Seller") hereby sells, transfers and delivers to ________________________
("Buyer") the Environmental Attributes associated with the generation of renewable energy at the
Facility for delivery to the Point of Delivery, as detailed in the POWER PURCHASE AND SALE
AGREEMENT between the Parties dated _____________ (the "Agreement"). Terms used, but not
defined herein, shall have the meaning set forth in the Agreement.
Name of Renewable Energy Facility
Fuel Type Capacity (MW) Operation Date
Dates MWh generated
__________________, 20___ __________________
One (1) REC represents the Environmental Attributes and REC reporting rights associated with one (1)
MWh generated from the Renewable Energy resource.
Seller further attests, warrants and represents as follows:
i) to the best of its knowledge, the information provided herein is true and correct;
ii) its sale to Buyer is its one and only sale of the Environmental Attributes with respect to
the energy referenced herein and no third party has claimed nor can claim any
interest in such Environmental Attributes;
iii) the Facility identified above produced the number of MWh above during the
period indicated above;
iv) Seller has title to and ownership of the RECs sold hereunder; and
iv) Seller owns the .
Name of the Renewable Energy Facility
This serves as a bill of sale, transferring from Seller to Buyer all of Seller's right, title and interest in and
to the Environmental Attributes associated with the generation of the above referenced Energy for
delivery to the Point of Delivery.
Contact Person: ____________________ phone: ____________; fax: ____________
FORM OF LETTER OF CREDIT
[TO BE PROVIDED]
[TO BE PROVIDED]
FORM OF GUARANTEE
[TO BE PROVIDED]
QUALITY ASSURANCE PROGRAM
Seller shall implement a Quality Assurance (“Q/A”) Program to ensure that the performance of
the development, design and construction of the Facility fulfills the requirements of this
Agreement. The Q/A Program shall provide assurance that design, purchasing, manufacturing,
shipping, storage, construction, testing and examination of all equipment, materials, services and
maintenance of the Facility will comply with the requirements of this Agreement, all applicable
Requirements of Law and the manufacturers and/or suppliers requirements for successful
operation of the Facility.
Quality at Seller
What is quality? Seller believes that quality is the unit of measure for assessing fulfillment of
project goals. A quality project meets or exceeds the contract requirements and accepted
standards of professional and industry practice. Furthermore, high quality projects are those that
address client and societal needs more successfully than “low” quality projects. While this may
seem like a straightforward definition, the process to ensure quality is much more involved and
includes quality management, quality planning, quality control, quality assurance, a quality
system, and total quality management.
“Quality assurance” refers to a process that reduces the potential for error throughout the phases
of a project. On projects with a Q/A Program, the chances of producing a poor quality
deliverable are substantially reduced. Quality control procedures are an integral part of quality
assurance. Historically, industry has used the term “quality control” to indicate a checking
procedure for verifying the quality of deliverables. This checking commonly occurs at the end of
the process, long after an error may have been made and compounded by subsequent work.
While quality control checks at the end of a project are an essential exercise, scheduled periodic
reviews at each phase of project conceptual and final design are integral to Seller‟s Q/A
Program. In addition, quality maintenance which meet or exceed manufacturers‟ and/or
suppliers‟ requirements and best industry practices must be an integral part of Sellers‟ Q/A
The Quality Management Process
The surest way to achieve satisfactory quality is to adhere to a proven quality process. The term
“quality” most accurately refers to a project‟s ability to satisfy needs when considered as a whole
and each part of the process meets or exceeds the standards of Prudent Utility Practices.
The Seller project management team is responsible for proactively planning and directing the
quality of the work process, services, and deliverables. The Seller project management team
targets six areas to monitor quality:
1) A written work plan with accompanying Q/A Manual.
2) Detailed review of the project design at the planning and conceptual design phase
3) Detailed review of project final design prior to construction.
4) A quality control program during construction to verify implementation is in
compliance with design documents and document any changes.
5) Independent engineering review of the entire project process, from design review
through commercial operation.
6) A written maintenance manual for the Project for the duration of the commercial
operation that complies with the maintenance manuals of the manufacturers and
suppliers from whom Seller has purchased equipment and/or material and best
Written Work Plan and Q/A Manual
The idea of a written work plan and Q/A manual is to incorporate quality assurance in all areas
of project execution. Seller has found that quality needs to be institutionalized into the project
process, not only in the budgeting process, but everywhere. For example, specific tasks and
duties need to be allocated to specific individuals; roles and interface points need to be clearly
defined; individual assignments need to be realistic; special attention needs to be paid to complex
areas within projects; schedules need to be realistic and achievable; and lastly the work culture
needs to be enjoyable and open so that employees are empowered to react quickly to symptoms
of quality problems before they actually manifest.
Seller‟s quality program shall be documented in a written work plan and Quality Assurance
manual (the “Q/A Manual”). The form and the format of the Q/A Manual shall be developed by
Seller, but must comply with Prudent Utility Practices and follow manufacturers and suppliers
recommendations without deviation. The content of the Q/A Manual shall provide written
descriptions of policies, procedures and methodology to accomplish a quality project. Seller shall
submit three (3) copies of the Q/A Manual within ninety (90) days after the Effective Date to
Buyer or Buyer‟s Agent. The Q/A Manual shall be kept current by Seller throughout the term of
this Agreement through the submittal of revisions, as appropriate, by Seller to Buyer or Buyer‟s
The Q/A Manual shall describe the authority and the responsibility of the Persons in charge of
the Q/A Program and inspection activities. It shall also provide the plan for detailed review of
project conceptual design and final design, hold points, and methodology for document control
and comment. Furthermore, it shall provide the plan and strategy for quality control and review
during the construction project and for maintenance and operations during commercial operation.
The Q/A Manual shall strive; at a minimum, to define control procedures or methods to assure
(a) The design documents, drawings, specifications, Q/A procedures, records,
inspection procedures and purchase documents are maintained to be
current, accurate and in compliance with all applicable Laws.
(b) The purchased materials, equipment and services comply with the
requirements of this Agreement and all applicable Requirements of Law.
(c) The materials received at the site are inspected for compliance with
(d) The subcontracted work is adequately inspected by third parties.
(e) Proper methods are employed for the qualification of personnel who are
performing work for the development, design and construction of the
(f) Proper documentation, control and disposition of nonconforming equipment
and materials is maintained.
(g) Proper records are kept and available following project completion to
ensure accurate documentation of as-built conditions.
(h) Detailed and complete plan for maintenance and operation during
commercial operations consistent with manufacturers and suppliers
recommendations and best industry practices.
Conceptual Design Review
Seller has a team of professionals who develop and review the project layout and project
conceptual design. The team consists of specialists in land-use and planning, permitting,
meteorology, engineering, construction, project management, and finance. A preliminary site
plan is developed and meetings are held to assess optimization of [________] resource,
constructability, minimization of cultural and biological impacts, land use restrictions, and
landowner requirements. Preliminary road design will also be started and access to the site will
be reviewed in detail. When this plan is ready for review, a formal plan and map is created and a
final internal review is conducted. Following that is detailed studies for biological, cultural and
other types of impacts by third parties. The site plan is then reviewed, modified as necessary,
and then used to begin the permitting and public review process. The site plan is further
modified based on comments in that process. At that point, the site plan can be issued for
construction, and final engineering can commence.
In parallel with this process, preliminary conceptual design is started for the major areas of the
project, including the substation, transmission line, foundations, underground collection system,
communications system, and road and grading is done to develop construction estimates as well
as materials specifications. All of these areas of conceptual designs are used to check and verify
the assumptions used for development of the site plan.
Final Engineering Design
Following finalization of the site plan, the detailed design is done for the collection system,
fiber-optic network, foundations, roads & grading, transmission line, and substation by third
party engineering firms licensed to practice in the state in which the project is to be constructed.
Each firm has their own quality assurance and checking procedures, however Seller reviews the
final work products in detail to check with conformance with this Agreement and provides
comments as a second round of quality assurance. When Seller‟s comments have been
incorporated, the design of each area is considered final, that design is then submitted to an
independent engineer for review and comment. This ensures that another entity, in addition to
Seller has done a comprehensive review of all project areas and details to ensure conformance
with this Agreement.
In parallel with final design and checking activities, final geotechnical studies will be conducted
at the site, and a final [_________] resource assessment will be performed with the issued-for-
construction project layout. If existing subsurface conditions are different from what is
expected, the foundation locations could be slightly modified or the foundation design on a
specific turbine could be modified. Any changes of this nature would be documented in as-built
design drawings and approved in advance by Seller.
Quality Assurance at the Construction Site
Seller will hire a third party general contractor to construct the project. This contractor will be
required to have its own quality assurance program in place using its own staff, as well as third
party inspectors. The two primary areas of focus at the site are assuring conformance of
construction to design drawings, and conformance of materials to specifications. The general
contractor will be required to provide third party inspectors and testing for materials including
concrete slump testing; rebar and concrete placement; cable trenching, soil compaction testing,
etc. The general contractor will also be required to maintain a set of red-line drawings during the
course of construction to document any changes to the design documents. Proposed project
changes would be reviewed and approved in the field by the Seller construction management
team prior to implementation.
Quality assurance of turbine erection is achieved through a combination of procedures and
processes. The general contractor will provide rigorous inspection of its installation crew. The
turbine supplier will have technical advisors on site to inspect and sign off on turbine
components received, oversee and monitor turbine erection, and approve mechanical completion.
In addition, Seller will have its own construction management team on site consisting of a
construction manager and quality inspectors who will observe performance of all areas of the
work and ensure compliance with design documents. A team consisting of the turbine supplier,
Seller, and the general contractor will walk down each turbine at mechanical completion to
develop a comprehensive punchlist of any un-finished or incorrect work. This punchlist is
maintained by the contractor, and is signed off by Seller upon completion of the punchlist items.
Lastly, the independent engineer performs periodic audits during construction to oversee critical
items, spot checks individual turbines, confirms construction progress, reports on any perceived
issues, and provides independent reporting and assessments to the project stakeholders.
Following completion of the project, the general contractor will be required to provide as-built
all design drawings and records of all materials testing conducted at the site. This documentation
will be maintained at the project site during operations of the Facility.
Quality Assurance During Commercial Operations
[To Be Supplied by Seller]
([BUYER] Comment: Appendix J is reserved for proposals that provide a Buyer‟s Project Purchase Option and
shall be supplemented accordingly by [BUYER] at a later date.)
FORM OF LEASE