May 13, 2008 FORM OF PURCHASE AND SALE AGREEMENT
______
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
[SELLER],
[PROJECT COMPANY]
AND
PACIFIC GAS AND ELECTRIC COMPANY
______
DATED AS OF [______], 2008
{00059413.DOC;9}OHS East:9397238.1
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “Agreement”) is made, as of [______], 2008, by and between [Name of Respondent], a [______] [______] (the “Seller”), [Name of Project Company], a [______] [______] (the “Project Company”), and Pacific Gas and Electric Company, a California corporation (the “Purchaser”). The Seller, the Project Company and the Purchaser are referred to herein sometimes individually as a “Party” and collectively as the “Parties.”
BACKGROUND
A.The Purchaser desires to purchase on a turnkey lump-sum basis a new, fully operational, fully-permitted power generating facility to be developed, constructed, commissioned and successfully tested as set forth in this Agreement (the “Project”, as further defined in Article 1 herein).
B.The Seller and the Project Company desire to develop, procure, construct, commission and test the Project, including obtaining all real property interests, permits and other authorizations and approvals required for construction and operation (except as otherwise noted herein) and sell the Project to the Purchaser, all on the terms and conditions hereinafter set forth.
C.The Seller, the Project Company and the Purchaser are entering into this Agreement to evidence their respective duties, obligations and responsibilities with respect to the Project.
NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and agreements contained in this Agreement, intending to be legally bound, each of the Seller, the Project Company and the Purchaser agrees as follows:
ARTICLE 1
DEFINITIONS
1.1Defined Terms. The following terms when used in this Agreement (or in the Schedules and Exhibits to this Agreement) with initial letters capitalized have the meanings set forth below:
“AAA” has the meaning set forth in Section 15.9(c).
“Additional Real Property” has the meaning set forth in Section 2.2(c)(1).
“Affiliate” of a Person means any other Person that (a) directly or indirectly controls the specified Person; (b) is controlled by or is under direct or indirect common control with the specified Person; or (c) is an officer, director, employee, representative or agent or subsidiary of the Person. For the purposes of this definition, “control”, when used with respect to any specified Person, means the power to direct the management or policies of the specified Person, directly or indirectly, whether through the ownership of voting securities, partnership or limited liability company interests, by contract or otherwise.
“Agreement” means this Purchase and Sale Agreement, together with the Appendices, Exhibits and Schedules hereto.
“Application Security” means Collateral equal to $15,000 per MW of Guaranteed Base Electrical Output.
“Approved Test Procedures” has the meaning set forth in Section 2.8(a).
“Arbitration” has the meaning set forth in Section 15.9(c).
“Article” means a numbered article of this Agreement. An Article includes all of the numbered sections of this Agreement that begin with the same number as that Article.
“Assigned Agreements” has the meaning set forth in Section 3.1(n).
“Assignment and Assumption Agreement” means the Assignment and Assumption Agreement in the form of Exhibit K to be executed by the Parties at Closing.
“Audited Financial Statements” has the meaning set forth in Section 6.8.
“Authorized Representative” means any person authorized to act on behalf of a Party with respect to the proceedings described in Section 15.9, as so designated by a Party in a written notice to the other Party made in accordance with Section 15.11 and specifying the scope of such person’s authority. Each Party may change its designation of “Authorized Representatives” from time to time by providing notice thereof as described in this definition.
“Availability” means the percentage of time during the Base Reliability Test period that the Project is producing the electrical output required of it by the Purchaser (such requirement not to exceed the Demonstrated Net Electrical Output and otherwise consistent with agreed operating parameters).
“Base Reliability Guarantee” has the meaning set forth in Section 2.7(a)(3).
“Base Reliability Test” has the meaning set forth in Section 2.7(a)(3).
“Bill of Sale” means the Bill of Sale described in Section 5.2(a)(1), to be executed by the Seller and the Project Company at Closing.
“Business Day” means a day other than Saturday, Sunday or a day on which banks are legally closed for business in the State of California.
“CAISO” means the California Independent System Operator.
“CEMS” means the continuous emissions monitoring system to be installed as part of the Project as further described in the Specifications.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§9601 etseq.).
“Change Order Certificate” has the meaning set forth in Section 2.2(e)(4)(ii).
“Change Order Proposal” has the meaning set forth in Section 2.2(e)(4)(ii).
“Closing” has the meaning set forth in Section 5.1.
“Closing Date” has the meaning set forth in Section 5.1.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated or issued from time to time thereunder.
“Collateral” shall mean cash via wire transfer in immediately available funds or Letter of Credit.
“Commercial Availability Date” meansthe date on which those conditions precedent to Closing set forth in Sections 13.1, 13.3, 13.4, 13.5, 13.7, 13.8, 13.10 and 13.11 have been and remain satisfied.
“Commercially Reasonable Efforts” means efforts which are reasonably within the contemplation of the Parties at the time of executing this Agreement and which do not require the performing Party to expend any funds other than expenditures which are customary and reasonable in transactions of the kind and nature contemplated by this Agreement in order for the performing Party to satisfy its obligations hereunder.
“Completion” has the meaning set forth in Section 11.5(a)(1).
“Confidential Information” means information or data that the disclosing Party considers to be a trade secret or competitively sensitive and may include written, verbal or visual information. In order to be considered Confidential Information, written information has to be identified at the time of the disclosure with an appropriate legend, marking, stamp or positive written identification on the face thereof as Confidential Information. In order to be considered Confidential Information, verbal or visual information hasto be so identified at the time of the verbal or visual disclosure and the disclosing Party will notify the receiving Party in writing within thirty (30) days of the disclosure and specifically identify the Confidential Information previously disclosed. Magnetic tape, computer software or any other similar type of machine readable format will be considered as a verbal disclosure and will only be considered Confidential Information to the extent the disclosing Party complies with the requirements for verbal disclosures set forth above, including the thirty (30) day notification requirement. Confidential Information does not include information or data that:
(a)was in the public domain at the time of the disclosure or is subsequently made available to the general public without restriction and without breach of this Agreement by the receiving Party;
(b)was known by the receiving Party at the time of disclosure without restrictions on its use or independently developed by the receiving Party, as shown by adequate documentation; or
(c)is disclosed to the receiving Party by a third Person without restriction and without breach of any agreement or other duty to keep the information confidential.
“Confidentiality Agreement” means that certain Confidentiality Agreement dated [______], 2005 between the Seller and the Purchaser.
“Consent” means any consent, approval or authorization of, notice to, or designation, registration, declaration or filing with, any Person other than a Governmental Authority.
“Construction Contracts” means the EPC Contract and each other contract pursuant to which a portion of the Project is to be constructed (excluding subcontracts).
“Contract Approval Security” means Collateral in the amount of $85,000 per MW of Guaranteed Base Electrical Output.
“Contractor” means the EPC Contractor and each other contractor party to a Construction Contract.
“Corrective Action Plan” has the meaning set forth in Section 2.4.
“Corrective Action Plan Deadline” has the meaning set forth in Section 2.4.
“CPUC” means the California Public Utilities Commission, or its regulatory successor, as applicable.
“CPUC Approval” has the meaning set forth in the definition of Regulatory Approval in this Section 1.1.
“CPUC Approval Application” shall have the meaning set forth in Section 11.1(a).
“Credit Rating” means with respect to any entity, as of any Business Day, the respective ratings then assigned to such entity’s unsecured, senior long term debt or deposit obligations (not supported by third party enhancement) by S&P or Moody’s; if such entity does not have an unsecured, senior long term debt rating, then the rating then assigned to such entity as its issuer ratings by S&P and/or Moody’s.
“Critical Milestones” means those Project Milestones designated as “Critical Milestones” on Schedule 2.4.
“Cure” has the meaning set forth in Section 11.2(e).
“Date Certain” has the meaning set forth in Section 2.3(b).
“Deed” means the Deed described in Section5.2(a)(4) to be executed by the Seller and the Project Company at Closing.
“Deferred Component” has the meaning set forth in Section 3.4.
“Delay Damages” has the meaning set forth in Section 2.3(b).
“Delivery Date Security” means the aggregate of the Application Security and the Contract Approval Security.
“Delivery Period” has the meaning given to such term in Exhibit S. [Commercial operations date through Closing.]
“Demonstrated Net Electrical Output” means the average net electrical output of the Project during the Performance Test used to determine the Project’s achievement of the Guaranteed Base Electrical Output.
“Deposit Account Agreement” has the meaning set forth in Section 11.2(c).
“Design Warranty” has the meaning set forth in Section 9.3.
“Design Warranty Period” means the period beginning on the Commercial Availability Date ending on the second anniversary thereof.
“Direct Claim” means any claim by an Indemnitee on account of an Indemnifiable Loss which does not result from a Third Party Claim.
“Disclosing Party” has the meaning set forth in Section 11.3.
“Disclosure Order” has the meaning set forth in Section 11.3.
“Distributed Control System” means the distributed control system for the Project described generally in Section 8 of the Specifications.
“Effective Date” has the meaning set forth in Section 4.1.
“Electrical Interconnection Facilities” has the meaning set forth in Section2.2(c)(2).
“Electrical Product” means all electrical energy and other electrical products generated by the Facility.
“Emissions Rights” means all allowances, emission reduction credits and offsets authorizing the emissions from the Project.
“Environmental Laws” means any Governmental Rules relating to or imposing liability or standards of conduct with respect to the protection of human health, safety or the environment (including ambient air, soil, surface water, ground water, wetlands, land or subsurface strata), including Governmental Rules relating to (a) emissions, discharges, releases or threatened releases of Hazardous Substances into the environment, (b) manufacture, generation, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, and (b) human exposure to Hazardous Substances or conditions, including CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. §§5101, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §§6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§1251, et seq.), the Clean Air Act (42 U.S.C. §§7401 et seq.), the Toxic Substances Control Act (15 U.S.C. §§2601 et seq.), the Oil Pollution Act (33 U.S.C. §§2701 et seq.), the Occupational Safety and Health Act (29U.S.C. §§651 et seq.), the Emergency Planning and Community Right-to-Know Act (42U.S.C. §§11001 et seq.), the Endangered Species Act (16 U.S.C. §§1531, et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code §§13000 et seq.), the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code §§25249.5, et seq.), the Hazardous Substance Account Act (Cal. Health & Safety Code §§25300, et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code §§25100, et seq.), the California Clean Air Act (Cal. Health & Safety Code §§39000, et seq.), the California Endangered Species Act (Cal. Fish & Game Code §§ 2050, et seq.) and the California Native Plant Protection Act (Cal. Fish & Game Code §§1900, et seq.).
“EPC Contract” has the meaning set forth in Section 2.2(e).
“EPC Contractor” has the meaning set forth in Section 2.2(e).
“Equipment Startup and Acceptance Period” has the meaning set forth in Section 8.16.
“Equivalent Unplanned Outage Factor” has the meaning set forth in ExhibitF of the GADS Data Reporting Instructions issued by NERC and reported by the Purchaser to NERC for the period in question.
“ERO” means the Electric Reliability Organization certified by FERC pursuant to Section 215(c) of the Federal Power Act, as amended by the Energy Policy Act of 2005.
“Excluded Assets” has the meaning set forth in Section 3.2.
“Excluded Liabilities” has the meaning set forth in Section 3.3.
“Executive(s)” has the meaning set forth in Section 15.9(b).
“Extended Guaranteed Electrical Output” has the meaning set forth in Section 3.6(b).
“Extended Guaranteed Heat Rate” has the meaning set forth in Section 3.6(b).
“Extended Reliability and Performance Tests” means the performance tests for the Facility set forth in Section 3.6.
“Extended Reliability Test Period” means the period commencing on the Commercial Availability Date and ending no earlier than the one-year anniversary thereof.
“Facility” means the [______]-unit integrated [_____]-fired electricity generating facility with a nominal generating capacity of [___] MW (net) to be located on the Project Site and all of the equipment and systems related to such power generation plant including associated and ancillary systems, subsystems, assemblies, subassemblies, instruments, equipment, apparatus, materials, structures, facilities, appliances, lines, conductors, and all other components and documents comprising, describing and integrating the entire facility into a fully operational power plant as described generally in the Specifications.
“FERC” means the Federal Energy Regulatory Commission, or its regulatory successor, as applicable.
“Final As-Built Drawings and Documentation” means all drawings, specifications and other documentation prepared by the Seller in accordance with the standards of performance in Sections 9.1(b) and 9.3, which accurately and completely represent in detail the physical placement of all Project components and systems as installed and/or constructed as at the time of Project Completion, including “as-built” surveys illustrating the established building setback lines, if any, and the location of the Facility and the other Project Assets on the Project Site and the Additional Real Property and within any established boundaries and setback lines.
“Final Permitting Deadline” means the date that is eighteen (18) months after the date of the Purchaser’s receipt of Regulatory Approval.
“Financing Arrangements” has the meaning set forth in Section 2.2(d).
“First Permitting Deadline” means the date that is three hundred and sixty five (365) days after the date of the Purchaser’s receipt of Regulatory Approval.
“Force Majeure Event” meansany event or circumstance to the extent beyond the control of, and not the result of the negligence of, or caused by, the Party seeking to have its performance obligation excused thereby, which by the exercise of due diligence such Party could not reasonably have been expected to avoid and which by exercise of due diligence it has been unable to overcome, including but not limited to: (1) acts of God, including but not limited to landslide, lightning, earthquake, storm, hurricane, flood, drought, tornado, or other natural disasters and weather related events affecting an entire region which caused failure of performance; (2) fire or explosions; (3) transportation accidents affecting delivery of equipment only if such accident occurs prior to the Commercial Operation Date; (4) sabotage, riot, acts of terrorism, war and acts of public enemy; or (5) restraint by court order or other governmental authority. Force Majeure Events shall not include (i)a failure of performance of any Third Party, including any party providing electric transmission service or natural gas transportation, except to the extent that such failure was caused by an event that would otherwise satisfy the definition of a Force Majeure Event as defined above, (ii)failure to timely apply for or obtain Permits, (iii)breakage or malfunction of equipment, (except to the extent that such failure was caused by an event that would otherwise satisfy the definition of a Force Majeure Event as defined above), (iv) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller's affiliates, the EPC contractor or subcontractors thereof or any other third party employed by Seller to work on the project, (v) lack of funds or change in economic circumstance, or (vi) shortage or unavailability of labor or climatic conditions (including severe or extreme weather that would not otherwise qualify as a satisfy the definition of a Force Majeure Event as defined above) that are reasonably to be expected for the geographic area where the Project Site or the Additional Real Property is located. A Party shall not be considered to be in default in the performance of its obligations under this Agreement to the extent that the failure or delay of its performance is due to a Force Majeure Event; and the non-affected Party shall be excused from its corresponding performance obligations to the extent due to the affected Party's failure or delay of performance. Notwithstanding the forgoing, a failure to make payments accrued prior to the event of Force Majeure Event when due shall not be excused.
“Fuel Interconnection Facilities” has the meaning set forth in Section 2.2(c)(2).
“Fuel Interconnection Point” means [DESCRIBE FUEL INTERCONNECTION LOCATION AND FACILITIES].
“GAAP” means generally accepted accounting principles of the Accounting Principles Board of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board that are applicable from time to time.
“General Warranty Period” means the period commencing on the Commercial Availability Date and ending on the later to occur of (i) the first anniversary thereof, and (ii) with respect to any component of the Project that is altered, repaired or replaced pursuant to the Seller’s warranties set forth in Section 9.1, the first anniversary of the date of such alteration, repair, or replacement, as the case may be, regardless of number, it being understood that the General Warranty Period shall continue with respect to any such component until one year has passed without any warranty claim being made.