AMENDED AND RESTATED
GAS SALE AND PURCHASE AGREEMENT
This AMENDED AND RESTATED GAS SALE AND PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of this ____ day of June, 2001 and is
by and between GSF ENERGY L.L.C., a Delaware limited liability company
("Seller") and RIDGEWOOD POWER MANAGEMENT, LLC, a New Jersey limited liability
company ("Ridgewood"), acting on behalf of and as agent for BREA POWER PARTNERS,
L.P., a Delaware limited partnership ("Brea") and RIDGEWOOD OLINDA, LLC, a New
Jersey limited liability company ("Olinda") (collectively referred to as the
"Buyer"). Seller and Buyer shall be referred to herein as a "Party" and
collectively as the "Parties").
RECITALS
WHEREAS, Brea is the owner of a 5 MW electric generating facility and
related equipment (the "Brea Facility") located on a municipal solid waste
landfill owned by the County of Orange, California (the "Landfill"); and
WHEREAS, pursuant to a certain "Amended and Restated Gas Lease
Agreement" dated December 14, 1993, by and between Seller and the County of
Orange, Seller has certain rights to extract, process and sell landfill gas from
the Landfill; and
WHEREAS, Seller and Brea entered into a "Gas Sale and Purchase
Agreement" dated November 29, 1994, as subsequently amended by that certain
Amendment to Transaction Documents dated May 31, 1997 (as amended, the "Original
Agreement"), pursuant to which Brea would purchase from Seller certain
quantities of landfill gas in order to operate the Brea Facility; and
WHEREAS, Olinda has decided to expand the electric generating
capabilities at the Landfill by installing and operating a 2.5 MW electric
generating facility at the Landfill (the "Olinda Facility"), which facility may
be expanded in the future; and
WHEREAS, Olinda desires to purchase from Seller and Seller desires to
sell to Olinda certain quantities of landfill gas necessary to run the Olinda
Facility and any future expansions of the Olinda Facility; and
WHEREAS, Ridgewood, as agent for Brea and Olinda, and Seller desire to
amend and restate the terms of the Original Agreement to purchase from Seller
all of the landfill gas extracted and processed by Seller, all upon the terms
and conditions hereof.
NOW, THEREFORE, the Parties hereto agrees as follows:
ARTICLE I: TERM
1.1 Term. This Agreement shall be effective from the Effective Date and, unless
terminated earlier as provided herein, shall continue and remain in full force
and effect until December 31, 2018. Thereafter, the terms of this Agreement may
be extended at the Buyer's option, on a year-to-year basis. Buyer shall provide
written notice to Seller of its intention to extend this Agreement for an
additional year no later than 90 days prior to the expiration of the then
current term.
ARTICLE II: DEFINITIONS
2.1 Definitions. As used in this Agreement, the following terms shall have the
meanings ascribed to them (such meaning to be equally applicable to both the
singular and plural forms of the terms defined);
(a) "Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise"
(b) "Assignment" shall have the meaning set forth in Section 14.1.
(c) "Btu" means one (1) British thermal unit, which is the amount of heat
required to raise the temperature of one (1) pound of water from fifty-nine
degrees Fahrenheit (59(0)F) to sixty degrees Fahrenheit (60(0)F).
(d) "Brea Facility" means the 5 MW landfill gas electric generating facility
located at the Landfill and owned by Brea, as such facility may be expanded
pursuant to the terms hereof.
(e) "Business Day" shall have the meaning set forth in Section 7.3.
(f) "Buyer's Facilities" means the Brea Facility and the Olinda Facility.
(g) "Buyer's Taxes" shall have the meaning set forth in Section 3.4.
(h) "Claims" shall have the meaning set forth in Section 4.5.
(i) "Contract Year" means a calendar year, except with respect to the Contract
Year beginning with the Effective Date, which year shall commence on such
Effective Date and shall end on the following December 31.
(j) "Day or "day" shall mean a period of twenty-four (24) consecutive hours
beginning and ending at 8:00 am Pacific Prevailing Time ("PPT").
(k) "Delivery Point(s)" has the meaning assigned to that term in Section 4.1
hereof.
(l) "Effective Date" shall mean the day that the Olinda Facility commences
commercial operation. For purposes of this definition, commercial operation
shall mean that the Olinda Facility is capable of generating electric energy.
(m) "Environmental Claim" means claims, demands, administrative or judicial
proceedings, notices of noncompliance or violation, consent orders or consent
agreements (i) relating to the Landfill or Seller's Facilities, the operations
or activities thereon or the use or occupancy thereof, (ii) relating to the
Buyer's Facilities and the operations or activities thereon or the use or
occupancy thereof, and (iii) arising out of any (A) past or present violation of
any applicable Environmental Law, (B) action by a Governmental Entity for
enforcement, clean-up, removal, response or remedial action or damages, pursuant
to any Environmental Law, or (C) compensation, or injunctive relief resulting
from injuries to persons or property due to Hazardous Substances or alleged
violation of any Environmental Law.
(n) "Environmental Laws" means any applicable federal, state, or local
governmental law, statute, rule, regulation, order, consent decree, decree,
judgment, license, covenant, deed restriction, ordinance or other requirement or
standard relating to pollution or the regulation or protection of health,
safety, natural resources or the environment, including without limitation,
those relating to releases, discharges, emissions, injections, leachings or
disposal of Hazardous Substances or hazardous materials into the air, water,
land, or groundwater, or to the use, handling, treatment, removal, storage,
disposal, processing, distribution, transport or management of Hazardous
Substances.
(o) "Flare Facilities" means the flares and all related equipment used in
connection with the flares, including those existing as of the date of this
Agreement and those that may be constructed in the future.
(p) "Force Majeure" means any occurrence beyond the control of a Party which
would cause that Party to be unable to perform its obligations hereunder and
which the Party has been unable to overcome by the exercise of due diligence,
including but not limited to flood, drought, earthquake, storm, fire,
pestilence, lightning and other natural catastrophes, epidemic, war, riot, civil
disturbance or disobediance, strike, labor dispute, act or inaction of
Governmental Entity, fuel supply or material shortage, or failure, threat of
failure or sabotage of facilities, which have been maintained in accordance with
Good Engineering Practices.
(q) "Gas" means Landfill Gas or other gas of similar methane content meeting the
specifications set forth in Exhibit A, which is acquired by Seller and which may
be methane gas from landfill areas other than the Property.
(r) "Gas Collection System" shall mean the network of Landfill Gas collection
headers, interconnecting pipes, valves, monitoring and measuring equipment, and
any and all equipment, machinery and fixtures currently installed or to be
installed at, in or on the Landfill and used for or in connection with the
extraction, collection, production, treatment, selling or transporting of
Landfill Gas up to the Delivery Points, and all modifications, replacements,
additions and expansions thereof, but excluding in all cases (i) the Flare
Facilities and (ii) the Brea Facility and Olinda Facility and all equipment used
in the production of electrical power.
(s) "Gas Lease Agreement" means the Amended and Restated Gas Lease Agreement by
and between Seller and Landfill Owner dated as of December 14, 1993.
(t) "Good Engineering Practice" means any practices, methods and acts which, in
the exercise of reasonable judgment in light of the facts known, or which in the
exercise of due diligence, should have been known at the time a decision was
made, would have been expected to accomplish the desired result in manner
consistent with reliability, safety, environmental protection, expedition, and
applicable laws and regulations for similar facilities located in the State of
California.
(u) "Governmental Entity" means any federal, state, local or municipal
governmental body; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, policy, regulatory or taxing
authority or power; or any court or governmental tribunal.
(v) "Hazardous Substances" means any chemical, substance, material, or waste
which is now or becomes listed, defined or regulated in any manner by any
federal, state or local law based upon, directly or indirectly, such chemicals,
substances, materials or wastes being hazardous, harmful or potentially harmful
to human health or to the environment.
(w) "Interest Rate" means, for any date, the lesser of (a) 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%) and (b) the maximum rate permitted by applicable law.
(x) "Landfill" means the municipal solid waste landfill located in Orange
County, California and referred to as the Olinda/Olinda Alpha Sanitary Landfill
as described more fully in Exhibit B.
(y) "Landfill Gas" means gas, composed of methane and other gaseous substances,
generated from the decomposition of refuse and other solid wastes from the
Landfill and collected by Seller's Facility.
(z) "Landfill Owner" means the County of Orange, a political subdivision of the
State of California, which owns and operates the Landfill.
(aa) "Minimum Daily Quantity" shall have the meaning set forth in Section 3.2.
(bb) "MMBtu" means one million (1,000,000) Btus.
(cc) "MW" means one million (1,000,000) watts.
(dd) "Olinda Facility" means the proposed landfill gas electric generating
facility to be located at the Landfill, owned by Olinda, and which is intended
to produce 2.5 MW of electrical energy, as such facility may be expanded
pursuant to the terms hereof.
(ee) "Person" means any individual, Governmental Authority, corporation, limited
liability company, partnership, limited partnership, trust, association or other
entity.
(ff) "Residual Gas" shall mean all Landfill Gas purchased by Buyer that is not
used by Buyer to generate electricity at either the Brea Facility or Olinda
Facility.
(gg) "Royalty" means a payment equal to a percentage of the gross revenues
generated by the sale of electricity from the Brea Facility and/or the Olinda
Facility, as more fully described in Section 3.3.
(hh) "Seller's Facilities" means the Gas Collection System, the Flare Facilities
and all the equipment, fixtures and other assets located in the space above the
Property which are owned, operated, leased or otherwise used by Seller for the
purpose of collecting, processing, treating and delivering, or facilitating the
collection, processing and delivery of, Gas to Buyer (including without
limitation the Delivery Point) or for the purpose of disposing of Residual Gas.
(ii) "Seller's Taxes" shall have the meaning set forth in Section 3.4.
(jj) "Utility" shall mean Southern California Edison Company or any successor
thereto or any other entity that has the legal obligation of delivering
electricity to end-use electric customers in the geographic area in which the
Landfill is located.
2.2 References. References in this Agreement to Exhibit, Article, or Section
numbers shall be to Exhibits, Articles, or Sections of this Agreement, unless
expressly stated to the contrary. References in this Agreement to "hereby,"
"herein," "hereinafter," "hereof," "hereunder," and words of similar import
shall be to this Agreement in its entirety and not only to the particular
Exhibit, Article, or Section in which such reference appears.
ARTICLE III: PURCHASE AND SALE OF GAS
3.1 Purchase and Sale. Commencing on the Effective Date, Seller shall sell and
deliver or cause to be delivered exclusively to Buyer at the Delivery Points as
set forth in Section 4.1, and the Buyer shall purchase and receive, or cause to
be received, from Seller at the Delivery Points, all the Gas produced by the
Landfill and collected by Seller via the Gas Collection System. Seller shall be
deemed to be in control and possession of the Gas and responsible for any
Seller's Taxes (as described in Section 3.4), costs, losses or charges imposed
on or associated with the Gas prior to the Delivery Point. Except as set forth
in Article VIII, Buyer shall be deemed to be in control and possession of the
Gas and responsible for any Buyer's Taxes (as described in Section 3.4), costs,
losses or charges imposed on or associated with the Gas at and from the Delivery
Point.
3.2 Minimum Daily Quantity. (a) Seller shall be obligated to sell and deliver to
Buyer, Gas in sufficient quantities to enable the Buyer to operate the Brea
Facility and Olinda Facility at their current full rated capacity, such capacity
to be adjusted for expected and unexpected maintenance of the Buyer's Facilities
("Minimum Daily Quantity"). Seller's failure to deliver such Minimum Daily
Quantity shall subject Seller to damages in accordance with Section 4.8 hereof
(b) Notwithstanding anything contrary contained in this Section 3.2, if Buyer
desires to make any improvement or addition to the Buyer's Facilities that would
increase the then current capacity of the Buyer's Facilities, but does not
increase such facilities' Gas usage, then Buyer shall have the right without
Seller's consent or approval, to make such improvement or install such addition.
However, if such improvement or addition will increase the then current capacity
of the Buyer's Facilities, then Buyer and Seller shall confer in good faith to
determine whether and to what extent Gas of the required quality is available to
accommodate such increase. After such conference, Buyer shall have the right to
make such improvement or install such addition if such Gas of the required
quality is available or to alter its proposed improvement or addition to
accommodate such available Gas.
(c) If Buyer's Gas usage increases pursuant to Section 3.2(b), then such Gas
shall be part of the Minimum Daily Quantity.
3.3 Price. Buyer shall pay to Seller for delivery of Gas, and for disposal of
Residual Gas in accordance with Article VIII, the following:
(a) For the period beginning on the Effective Date through and including
December 31, 2004:
(i) $60,000 per month (escalating at 3.7% annually beginning June 1, 2002); plus
(ii) a monthly Royalty equal to 9.5% of the monthly gross revenues generated by
the sale of electricity from only the Olinda Facility (including such sales from
any future expansions of the Olinda Facility).
(b) For the period beginning on January 1, 2005 through December 31, 2018:
(i) a monthly Royalty equal to 19% of the monthly gross revenues generated by
the sale of electricity from both the Brea Facility and the Olinda Facility
(including such sales from any future expansions of the Olinda Facility and/or
the Brea Facility); provided however, that if in any Contract Year during this
period the annual Royalty paid to Seller under this Section 3.3(b)(i) does not
equal or exceed $720,000, then Buyer shall make a payment to Seller, no later
than the end of January of the next succeeding Contract Year, equal to $720,000
minus the annual Royalty paid by Buyer in such Contract Year.
(ii) Any liquidated damages owed by Seller to Buyer, and credited Buyer against
a Royalty due Seller as set forth in Section 7.1, shall be included as Royalty
paid for purposes of determining whether the Royalty equaled or exceeded
$720,000 in any Contract Year.
3.4 Taxes. All production (including ad valorem production taxes) gathering,
severance or other tax, excise or assessment upon the existence, extraction,
processing, treatment, production, transportation or disposal of Gas delivered
hereunder, now in existence or authorized in the future for collection by any
Governmental Entity or duly constituted authority ("Seller's Taxes") shall be
paid entirely by Seller. All sales, utility or other tax, excise or assessment
upon or measured by Gas sold to Buyer hereunder, or Buyer's purchase, ownership
or use of Gas, except for disposal of such Gas now in existence or authorized in
the future for collection by any Governmental Entity or duly constituted
authority ("Buyer's Taxes"), shall be paid entirely by Buyer. Each Party shall
indemnify, defend and hold harmless the other Party from and against any taxes
for which such Party is responsible pursuant to this Section 3.4.
3.5 Expansion of Buyer's Facilities. The Parties acknowledge that the Buyer may
expand either or both the Brea Facility and the proposed Olinda Facility beyond
their current rated capacity of 5 MW and 2.5 MW respectively. If Buyer
determines, in its sole discretion, to expand Brea and/or Olinda, it shall
provide such notice to Seller, whereupon the Parties shall determine, in good
faith and within a reasonable time period, whether sufficient Gas exists at the
Landfill to accommodate such expansion or expansions. Buyer shall have access to
any Seller's records or information reasonably necessary for making such
determination. If it is determined that sufficient Gas exists to accommodate the
expansion(s), then Buyer shall proceed with such expansion, at its sole
discretion, and the Gas quantities necessary to enable Buyer to operate the
expansion at full rated capacity shall be included in the Minimum Daily Quantity
Seller is required to deliver, the failure of which shall subject Seller to
damages in accordance with Section 4.8. If quantities of Gas sufficient to
accommodate the expansion, as contemplated by the Buyer, do not exist, Buyer
shall have the right to proceed with the expansion as amended and designed to
utilize the Gas that does exist on the Landfill or, in the alternative and at
Buyer's discretion, Buyer can proceed with the expansion as originally
contemplated notwithstanding insufficient supplies of Gas and, in such event,
the Seller shall have no obligation to deliver Gas related to such expansion in
quantities above those determined to exist at the Landfill. If as a result of
the natural expansion of the Landfill such Gas quantities become available,
Seller shall deliver such Gas to Buyer and such Gas quantities shall then become
part of and be included within the Minimum Daily Quantity. Buyer shall provide
Seller with notice of its intentions regarding any such expansion within a
reasonable time after the Parties have made the determinations required by this
Section 3.5.
ARTICLE IV: DELIVERY
4.1 Delivery Point. All Gas delivered by Seller to the Brea Facility and Olinda
Facility shall be delivered to the points further specified in Exhibit C.
4.2 Delivery Pressure. Seller shall deliver Gas to the Brea Facility at a
pressure of not less than seventy-five pounds per square inch gauge (75 psig) at
the Delivery Point and shall deliver Gas to the Olinda Facility at a pressure of
not less than one-half pounds per square inch gauge (0.5 psig).
4.3 Seller's Electricity. During any time in which the Brea Facility is
generating electrical power, Buyer shall provide to Seller, at no cost to
Seller, the lesser of (i) all electrical power required by Seller for operation
and maintenance of Seller's Gas Collection System (but not to exceed 1,000 KW)
or (ii) the total amount (net of internal use) of electrical power being
produced at the Brea Facility. In addition, Buyer shall, at Seller's request,
pass through electrical power from the Utility to Seller, across Buyer's
electric transmission lines, at any time Seller requires more electrical power
than the Buyer is required to supply under this Section 4.3. Seller shall
promptly reimburse the Brea Facility for the cost of any such electric power
passed through from the Utility to the Seller. Buyer may offset any such amounts
owed by Seller from amounts owed to Seller hereunder. Notwithstanding anything
contrary in this Section, the Olinda Facility shall have no obligation to supply
Seller electrical power.
4.4 Title/Risk of Loss. Except as set forth in Section 8.1, title and risk of
loss to Gas shall pass to Buyer at the Delivery Points. Seller warrants title to
all Gas delivered hereunder, that Seller has the right to sell and receive
payments for such Gas and that such Gas shall be free from liens, encumbrances,
and adverse claims of every kind prior to delivery at the Delivery Points,
including, but not limited to, liens to secure payment of production, severance
and other taxes.
4.5 Indemnity. Subject to Section 8.2, each Party shall indemnify, defend and
hold harmless the other Party from any Claims arising from any act or incident
occurring during the period when control and title to Gas is vested, as between
the Parties as provided in Section 4.4, in the indemnifying Party. "Claims"
means all claims or actions, including Environmental Claims, threatened or filed
and, whether groundless, false or fraudulent, that directly or indirectly relate
to the subject matter of an indemnity, and the resulting losses, damages,
expenses, attorneys' fees and court costs, whether incurred by settlement or
otherwise, and whether such claims or actions are threatened or filed prior to
or after termination of this Agreement.
4.6 Quality/Specifications. All Gas purchased from and delivered to Buyer by
Seller hereunder shall meet the quality specifications set forth in Exhibit A.
Seller shall monitor Gas quality in accordance with Section 6.2. Buyer shall
have the right to reject, without obligation, any Gas not in conformance with
such specifications, and, upon such rejection by Buyer, Seller shall have the
right to reprocess, if possible, or shall otherwise be required to dispose of or
use such non-conforming Gas. Seller shall retain title to and the risk of loss
of all such rejected non-conforming Gas. Buyer's rejection of Gas in accordance
with this Section 4.6 shall not relieve Seller of its obligations under Section
3.1. In the event of such rejection, Seller shall be liable to Buyer pursuant to
Section 4.8 for any damages caused by such non-conforming Gas. Buyer may, at its
option, elect to accept, at any time or from time to time, Gas not meeting any
or all of such specifications; provided however, that (i) such acceptance shall
not constitute a waiver of Buyer's continuing right to refuse to take Gas not
meeting such specifications and (ii) Seller shall not be liable for any damage
to Buyer's Facility resulting in whole or in part from Buyer's use of
non-conforming Gas.
4.7 Operator. Seller acknowledges that Ridgewood is the operator of the Brea
Facility and Olinda Facility. Seller agrees that Ridgewood shall be permitted to
act on behalf of Brea and Olinda under this Agreement in connection with the
performance of such services for Buyer, subject to the terms and conditions of
this Agreement. Brea and Olinda shall be responsible for the acts or omissions
of Ridgewood, and Seller shall be entitled to rely on any notice or direction
given to it by Ridgewood.
4.8 Remedies for Seller's Failure to Deliver. If Seller fails to deliver the
Minimum Daily Quantity and such failure is not excused by Force Majeure or by
Buyer's failure to perform, then Seller shall pay Buyer, on the date payment
would otherwise be due in respect of the month in which the failure occurred,
liquidated damages in an amount equal to the actual out-of-pocket losses
incurred by Buyer due to such failure to deliver, provided however, that (a) for
the period from the Effective Date hereof through and including December 31,
2004, such liquidated damage payment shall not exceed $60,000 per month and (b)
for the period from January 1, 2005 through December 31, 2018, such liquidated
damages payment shall not exceed in any one month fifty (50%) percent of the
Royalty. The invoice for such amount shall include a written statement
explaining in reasonable detail the calculation of any such amount.
Notwithstanding anything contrary in this Section 4.8, Seller shall not be
subject to liquidated damages, as set forth herein, for failure to deliver the
Minimum Daily Quantity for a total of twenty-four (24) hours during any month
due specifically and only to either an unplanned outage of the Gas Collection
System or to minor routine maintenance, provided however, that such minor
maintenance shall be taken (a) upon twenty-four hours prior notice to Buyer, (b)
in no less than one hour increments, and (c) only during non-peak hours, defined
as the hours between 11:00 pm PPT and 7:00 am PPT and weekends and holidays. In
the event of an unplanned outage, Seller shall provide notice to Buyer providing
sufficient detail regarding the outage, including the causes thereof and the
period of such outage. Seller shall not be entitled to utilize such twenty-four
hour period, or any un-used portion thereof, for any other failure to deliver
other than an unplanned outage or minor routine maintenance.
ARTICLE V: OPERATION AND MAINTENANCE
5.1 Seller. Seller shall, at its own expense and regardless of who may be the
operator of Seller's Facilities (which operator shall be a prudent operator in
the industry), maintain, operate, and preserve Seller's Facilities in good
working order and condition, ordinary wear and tear excepted, and in conformity
with Good Engineering Practices, applicable laws, rules and regulations. Seller
shall obtain or cause to be obtained, and shall comply with, any and all
governmental and other authorizations or permits necessary to locate and operate
Seller's Facilities and to collect, process, treat and sell Gas and dispose of
Residual Gas, as required hereunder.
5.2 Buyer. Buyer shall, at its own expense, maintain, operate, and preserve
Buyer's Facilities at all times in good working order and condition, ordinary
wear and tear excepted, and in conformity with Good Engineering Practices,
applicable laws, rules and regulations. Buyer shall obtain or cause to be
obtained, and shall comply with, any and all governmental and other
authorizations or permits necessary to locate and operate Buyer's Facilities and
conduct Buyer's business, and purchase and use Gas.
5.3 Scheduled Major Maintenance. The Parties shall use reasonable efforts to
schedule major maintenance for their respective facilities and, to the extent
possible, coordinate major maintenance to minimize interruptions in the delivery
and acceptance of Gas hereunder or in the production and sale of electrical
energy from Buyer's Facilities. The Parties shall establish and agree to a
schedule of major maintenance for each Contract Year at the beginning of such
year. Any changes to such schedule shall be made upon not less than thirty (30)
days notice.
ARTICLE VI: MEASUREMENT AND TESTING
6.1 Metering.
(a) Seller shall install and maintain metering and other appropriate facilities
for the purpose of measuring the volume and Btu content of all Gas delivered by
Seller to Buyer pursuant to this Agreement. Buyer shall have access to such
metering and Seller shall continuously measure the volume of Gas delivered to
Buyer at the Delivery Points and shall sample such Gas to determine its Btu
content on a daily basis.
(b) Seller shall calibrate the metering facilities, and adjust, clean or repair
such facilities to eliminate any inaccuracy, on the first working day of each
calendar quarter or more frequently as Seller may determine. Buyer shall have
the right to request a special calibration of Seller's metering facilities at
any reasonable time; however, if any such special calibration shows that such
metering facilities were registering within five percent (5%) accuracy, then the
cost of such special calibration shall be borne by Buyer. In the event any
calibration of a metering facility does not register within five percent (5%)
accuracy, then the volume and/or Btu content of Gas theretofore delivered and
received shall be recalculated and corrected to eliminate the entire inaccuracy
for any period of inaccuracy definitely known. If any such period of inaccuracy
is not definitely known, then such recalculation shall only be made for a period
covering one-half of the elapsed time since the last calibration, not to exceed
a period of forty-five (45) days.
6.2 Testing.
(a) Seller shall monitor and test the Gas at the Delivery Points daily at its
expense for purposes of determining whether the quality specifications set forth
in Exhibit A are being met. The results thereof shall promptly be made available
to Buyer and will be deemed conclusive unless Buyer requests a re-test. Buyer
shall have the right to test or re-test the Gas for said purposes through the
services of an outside independent laboratory. If Buyer requests a test or
re-test of the Gas, Buyer shall pay the cost of such test or re-test if Gas is
found to meet the quality specifications set forth in Exhibit A; otherwise the
Seller shall pay the costs. It is understood and agreed that both parties shall
have access to any test results and shall have the right to be represented and
to witness all tests as well as the right to inspect and test any equipment in
determining Gas quality.
(b) Each Party shall have the right to have its representatives and agents
present at any installing, changing, inspecting, testing, calibrating or
adjusting done in connection with the metering facilities used in measuring
deliveries of Gas hereunder. The records and charts from such metering
facilities shall remain the property of Seller, but Buyer, upon reasonable prior
notice to Seller, shall have rights to full access to such records and charts
together with calculations for inspection and verification, and may, at its
expense, copy such records or charts.
(c) The Btu content of the Gas delivered in any month hereunder shall be equal
to the sum of the MMBtus delivered in each day during such month. The MMBtus
delivered in each day shall be calculated by taking the product of (i) the
volume of Gas delivered during each day (as such information is obtained from
the meters) and (ii) the Btu content of the Gas sample taken on such day.
ARTICLE VII: PAYMENT
7.1 Statement/Payment. On or before the twenty-fifth (25th) day of each month
Buyer shall furnish to Seller a statement and payment for deliveries of Gas made
during the prior month. Such statement shall provide, in reasonable detail, the
methodology used by Buyer to calculate the payment and/or Royalty for such
month. In addition, such statement shall also show whether any liquidated
damages, as set forth in Section 4.8, are due for the preceding month from
Seller, which damages, if any, shall be credited against amounts due Seller
under such statement. Any amounts not paid by Buyer by the due date will accrue
interest at the Interest Rate, such interest to be calculated from and including
the due date to, but excluding, the date the delinquent amount is paid.
7.2 Estimated Statement. If all information required for statement purposes for
any month is not available in time for Buyer to prepare the statement, Buyer
shall prepare a statement and pay Seller based upon an estimated statement.
Buyer shall, as soon as thereafter possible, submit a corrected statement. Any
overpayment by Buyer pursuant to such estimated statement shall be credited,
with interest at the Interest Rate, against Buyer's payment obligations for the
next month, and any underpayment, with interest at the Interest Rate, shall be
included in the next monthly statement.
7.3 Disputes and Adjustments. A Party may, in good faith, dispute the
correctness of any statement or any adjustment thereto rendered under this
Agreement or adjust any statement for any arithmetic or computational error
within twelve (12) months of the date the statement, or adjustment, was
rendered. If a statement or portion thereof, or any other claim or adjustment
arising hereunder, is disputed, payment of the undisputed portion of the
statement shall be required to be made when due, with notice of the objection
given to the other Party. Any dispute or adjustment shall be made in writing and
shall state the basis for the dispute or adjustment. Payment of the disputed
amount shall not be required until the dispute is resolved. Upon resolution of
the dispute, any required payment shall be made within two (2) Business Days of
such resolution along with interest accrued at the Interest Rate from and
including the due date to but excluding the date paid. Inadvertent overpayments
shall be returned upon request or deducted by the Party receiving such
overpayment from subsequent payments, with interest accrued at the Interest Rate
from and including the date of such overpayment to but excluding the date repaid
or deducted by the Party receiving such overpayment. Any dispute with respect to
an invoice is waived unless the other Party is notified in accordance with this
Section 7.3 within twelve (12) months after the invoice is rendered or any
specific adjustment to the invoice is made. "Business Day" means any day except
a Saturday, Sunday, or a Federal Reserve Bank holiday.
7.4 Audit. Each Party (and its Representatives) shall have the right, at its
sole expense and during normal working hours, to examine the records of the
other Party relating to this Agreement but only to the extent reasonably
necessary to verify the accuracy of any statement, charge or computation made
pursuant to this Agreement. If requested, each Party shall provide to the other
Party statements evidencing the quantities of Gas delivered or received at the
Delivery Points. If any such examination reveals any inaccuracy in any
statement, the necessary adjustments in such statement and the payments thereof
will be promptly made and shall bear interest calculated at the Interest Rate
from the date the overpayment or underpayment was made until paid; provided,
however, that no adjustment for any statement or payment will be made unless
objection to the accuracy thereof was made prior to the lapse of one year from
the delivery of such Gas at the Delivery Points; and provided further, that this
Section will survive any termination of this Agreement for a period of one year
from the date of such termination for the purpose of such statement and payment
objections.
ARTICLE VIII: RESIDUAL GAS
8.1 Residual Gas. As partial consideration for the provision of Gas hereunder,
Seller shall assume full responsibility for and shall perform all obligations of
Buyer to transport and combust or otherwise dispose of such Residual Gas
purchased by Buyer all in compliance with applicable laws, including
Environmental Laws, regulations and permits.
8.2 Environmental Indemnity. Notwithstanding Section 4.5 hereof, Seller shall
protect, defend, indemnify and save harmless Buyer, from, against and in respect
of, any and all Claims, including Environmental Claims, and reasonable expenses
for accounting, consulting, engineering, investigation, cleanup, response,
removal and/or disposal and other remedial costs, directly or indirectly imposed
upon, incurred by or asserted against Buyer arising out of or in connection with
any Claim(s) by any other party or parties (including, without limitation, a
Governmental Entity), arising out of or in connection with Seller's possession,
transportation, use or disposal of Residual Gas, except to the extent such
Claims are due to Buyer's negligence or willful misconduct.
ARTICLE IX: LIMITATIONS
9.1 Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH HEREIN,
THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND
ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE
EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE
ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF
DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL BE
LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW
OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER
ANY INDEMNITY PROVISION OR OTHERWISE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE
PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE
DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY
IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS.
ARTICLE X: FORCE MAJEURE
10.1 Force Majeure. If either Party is rendered unable by Force Majeure to carry
out, in whole or part, its obligations (other than the obligation to make
payments due and outstanding) under this Agreement, such Party shall give notice
orally to the other Party as soon as reasonably practicable, followed within
five (5) Business Days thereafter by a written notice setting forth the full
details of the cause or causes constituting such Force Majeure. The obligations
of the Party affected by such Force Majeure (other than the obligation to make
payments then due or becoming due with respect to performance prior to the
event) shall be suspended to the extent made necessary, and for no longer than
is required, by the cause or causes constituting such Force Majeure. The other
Party, within ten Business Days after receipt of such written notice, may give
written notice that it disputes the existence of Force Majeure.
10.2 Remedy for Force Majeure. The Party affected by the Force Majeure shall
initiate and continue commercially reasonable good faith efforts to remedy the
Force Majeure with all reasonable dispatch; provided, however, that the
settlement of strikes, lockouts or other labor disputes shall be totally within
the discretion of the affected Party.
10.3 Continuance of Force Majeure. If an event of Force Majeure affecting
performance by either Party persists for a continuous period of more than 12
months, the other Party shall have the right, upon not less than three Business
Days' prior written notice, to terminate this Agreement and the obligations of
the Parties hereunder, except those rights and obligations specifically stated
to continue after termination.
ARTICLE XI: SALE OF SELLER'S FACILITIES
11.1 Sale of Seller's Facilities. If Seller, for any reason and within its sole
and exclusive judgment, determines that its continued ownership, operation or
use of Seller's Facilities is no longer is in its best interest, economic or
otherwise, Seller shall provide written notice to Buyer of such determination.
Upon receipt of such written notice, Buyer shall have ninety (90) days to
determine whether it desires, for a purchase price of one dollar ($1.00), to
purchase Seller's Facilities and assume Seller's rights and obligations with
respect to such facilities. If Buyer decides not to make such purchase, it shall
provide Seller with written notice of such determination and, in such event,
within thirty (30) days from Seller's receipt of such notice, this Agreement
shall terminate without liability or penalty, except as otherwise may be set
forth in this Agreement.
11.2 Buyer's Due Diligence. During the ninety (90) day period described in
Section 11.1, Seller shall provide Buyer with access to all Seller's records,
books and accounts as Buyer may reasonably request, including but not limited
to, any filings, reports or other documents filed with the Landfill Owner or any
Governmental Entity regarding the Landfill or Seller's Facilities or any
Environmental Claim relating thereto. In addition, Buyer shall have full access
to Seller's Facilities and shall be permitted to conduct any tests, assessments
or investigations it determines is necessary, at its sole cost and in its sole
discretion. Seller shall cooperate fully with Buyer during this period and shall
be reimbursed by Buyer for the reasonable and verifiable costs incurred by
Seller with respect to such cooperation.
ARTICLE XII: EVENTS OF DEFAULT AND REMEDIES
12.1 Event of Default Defined. Any one or more of the following shall be an
"Event of Default" under this Agreement:
(a) Failure by Seller or Buyer to pay any amount due on the date specified that
such payment is due and payable which failure shall have continued for a period
of five (5) Business Days after written notice of such failure shall have been
given to the defaulting party by the non-defaulting party.
(b) Failure by Seller or Buyer to observe or perform to a material extent any
covenant, condition, or agreement on their part to be observed or performed
hereunder, other than a payment default by Seller or Buyer as described in the
foregoing subsection (A), for a period of ten (10) Days after the non-defaulting
party has given written notice specifying such failure, requesting that it be
remedied, and stating that it is a notice of default; provided, however, that if
the default is such that it cannot be corrected within the applicable period, it
shall not constitute an Event of Default until ninety (90) Days after said
default if corrective action is instituted by the party in default within such
ten (10) day period and diligently pursued until the default is corrected. The
foregoing notwithstanding, the defaulting party shall remain liable to the other
party for any damages incurred during the period beginning on the date on which
the failure of performance occurred through the date on which performance is
cured.
(c) The institution by Seller or Buyer of proceedings to be adjudicated bankrupt
or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing of a petition or answer or
consent seeking reorganization or relief under the federal Bankruptcy Code or
any other applicable federal or state law, or the consent by it to the filing of
such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, or similar official or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its inability
to pay its debts generally as they become due, or the taking of action by any of
them in furtherance of any such action.
(d) Any material breach of any representation made in this Agreement by a Party.
12.2 Termination Remedies on Default. In addition to any other right or remedy
of the Parties, Buyer and Seller shall each have the right, by notice to the
other Party, to terminate this Agreement if the other Party commits an Event of
Default.
ARTICLE XIII: INSURANCE
13.1 Insurance Policies. During the Term, Buyer shall keep Buyer's Facilities
and activities, and Seller shall keep Seller's Facilities and activities,
insured against loss or damage by fire or other casualty, with extended coverage
as shall from time to time be commercially available and customary for
facilities of a similar type, and otherwise in the type and amount of coverage
required under the Landfill Gas Lease. As of the Effective Date, and thereafter
for the Term, each Party, at its sole cost and expense, shall maintain broad
form general public liability insurance against all claims for bodily injury,
death or property damage, occurring upon, in or about the such Party's
facilities, in the minimum amount of $2 million per occurrence. such insurance
shall include coverage for premises operations, contractual liability,
explosion, collapse, underground property damage and broad form comprehensive
general liability.
13.2 Additional Insured. All policies described in Section 13.1 obtained by
Buyer shall name Seller, and the Landfill Owner if required by the Gas Lease
Agreement, and all policies described in Section 13.1 obtained by Seller shall
name Buyer as additional insureds as their interests may appear, inclusive of
third party claims for bodily injury or property damage arising from the
insuring party's performance under the Agreement. All insurance to be provided
by each Party hereunder is primary and not in excess of, or contributing with
any insurance of the other Party, nor does such insurance create a limitation on
any liability under this Agreement. Buyer shall provide Seller its certificate
of insurance evidencing the insurance required hereunder at the beginning of
each policy period.
ARTICLE XIV: MISCELLANEOUS
14.1 Assignment. (a) Neither Party shall assign, delegate or otherwise transfer
(collectively, an "Assignment") this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other Party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, either Party may, without the need for consent from the other Party
(and, except as hereinafter provided, without relieving itself from liability
hereunder), make an Assignment of this Agreement to (i) an Affiliate of such
Party, or (ii) any Person acquiring or succeeding to all or substantially all of
the assets of such Party. Any assignee of all or any portion of a Party's
interest hereunder shall assume and agree in writing to perform all of the
obligations of its assignor arising hereunder after the effective date of such
Assignment. No Assignment of all or any portion of a Party's interest under this
Agreement shall relieve such Party from obligations or liability hereunder,
except that an Assignment pursuant to Section 14.1(a)(ii) shall relieve the
assigning Party of any obligation or liability arising hereunder after the
effective date of the Assignment, provided that the assignee has assumed the
obligations of the assigning Party as provided in the preceding sentence. Any
Party making an Assignment pursuant to this Section 12.1 shall promptly notify
the other Party thereof and furnish such Party a copy of such Assignment.
(b) This Agreement shall inure to the benefit of and be binding upon the Parties
and their respective successors and permitted assigns.
14.2 Integration; Amendment. This Agreement constitutes the entire agreement of
the Parties relating to the subject matter hereof. There are no promises, terms,
conditions, obligations, or warranties other than those contained herein. This
Agreement supersedes all prior communications, representations, or agreements,
oral or written, among the Parties relating to the subject matter hereof. This
Agreement may not be amended except in writing signed by the Parties.
14.3 Severability. Any provision of this Agreement, which is prohibited or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction
14.4 Notices and Consents. All notices, requests, demands, claims, consents and
other communications or deliveries hereunder shall be in writing and (a)
delivered in person or by courier, (b) sent by facsimile transmission, or (c)
mailed certified first class mail, postage prepaid, return receipt requested, to
the appropriate party at the following addresses:
Ridgewood Power Management, LLC
c/o Chief Operating Officer
947 Linwood Avenue
Ridgewood, NJ 07450
(201) 447-9000
(201) 447-0474 (Fax)
GSF Energy, LLC
c/o LFG Management Services, LLC
400 Fairway Drive, Suite 150
Moon Township, PA 15108
Fax: 412-393-1262
Attn: President
or such other address as a Party may designate to the other Party by notice
given as provided herein. Such notices shall be effective (i) if delivered in
person or by courier, upon actual receipt by the intended recipient, (ii) if
sent by facsimile transmission, when the sender receives confirmation that such
notice was received at the facsimile number of the addressee, or (iii) if
mailed, upon the date of delivery as shown by the return receipt therefore.
14.5 Multiple Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it will not be
necessary in making proof of this Agreement or the terms of this Agreement to
produce or account for more than one of such counterparts, provided that the
counterpart produced bears the signature of the party sought to be bound.
14.6 No Third Party Beneficiary Rights. Nothing in this Agreement shall be
deemed to grant any third party beneficiary or similar rights to any Person not
a signatory to or contemplated by this Agreement.
14.7 Waiver. Any waiver at any time by either Party of its rights, duties,
and/or obligations with respect to any default under this Agreement, or with
respect to any other matter arising out of or in connection with this Agreement,
shall not be deemed a continuing waiver nor a waiver with respect to any
subsequent default or other matter.
14.8 Governing Law. This Agreement shall be interpreted in accordance with and
governed by the laws of the State of California, without giving effect to
principles of conflicts of law.
14.9 Survival. The rights and obligations of the Parties as described
in Section 4.5, Section 8.2 and Section 9.1 shall survive termination of this
Agreement, including but not limited to, termination pursuant to Section 11.1.
IN WITNESS WHEREOF, the Parties have set their hands as of the date
first above written.
RIDGEWOOD POWER MANAGEMENT, L.L.C.
By:_______________________________
Name: Martin V. Quinn
Title: Executive Vice President and Chief Operating Officer
GSF ENERGY, L.L.C.
By: LFG Management Services, LLC, Its Manager
By:_____________________________
Name:___________________________
Title:____________________________
EXHIBIT A
Landfill Gas Specifications
BREA FACILIITY OLINDA FACILITY
Methane (CH4) Minimum of 50% Minimum of 43%
Nitrogen (N2) ( 0% - 6%) (10% - 15%)
Oxygen (O2) (0% - 3%) ( 0% - 5%)
Carbon Dioxide (CO2) Minimum of 40% Minimum of 36%
Heating Value BTU / SCF
(Dry) (Minimum of 500 Minimum of 430
Delivery Pressure to Plant
(psig) 75 maximum 0.5 Minimum
Typical operations of the Brea Facility will require the landfill gas stream
delivered by the Seller to be treated by the selexol process, which is currently
implemented within the Seller's Gas Collection System.
EXHIBIT B
Description of the Landfill and the Property
(See Attachment)
The Landfill is comprised of the two portions described below. The two portions
are collectively known as the Olinda/Olinda Alpha Sanitary Landfill. Following
is a general description of the refuse fill area within the Olinda/Olinda Alpha
Sanitary Landfill located in the County of Orange, State of California as well
as an outline of the general location of such canyons on a plot plan.
The Olinda Canyon portion of the Landfill contains one hundred thirty - eight
(138) acres, more or less; described as:
The South half of Northeast quarter and the North half of the Southeast quarter
and the East half of the Southwest quarter and a portion of the Northwest
quarter of Section 5, Township 3 South, Range 9 West, S.B.B. & M., and the
Southwest quarter of the Northwest quarter of Section of 4, Township 3 South,
Range 9 West, S.B.B. & M.
The Alpha Canyon portion of the Landfill contains one hundred fifty - seven
(157) acres, more or less; described as:
The Southeast quarter of Section 5, Township 3 South, Range 9 West, S.B.B. & M.,
and the South half of the Northwest quarter and a portion of the Southwest
quarter Section 4, Township 3 South, Range 9 West, S.B. B. & M., and a portion
of the Northeast quarter of Section 8, Township 3 South, Range 9 West, S.B.B. &
M.
EXHIBIT C
Delivery Point Description
(See Attachment)
BREA FACILITY Flow Element 101 is located between the GSF Gas Recovery Plant and
the Brea Facility. The flow element consists of a flanged mass flow meter with a
304 Stainless Steel meter run, pressure and temperature transducers.
OLINDA FACILITY Flow Element 202 is located between the Flare Facility and the
Olinda Facility. The flow meter consists of a flanged mass flow meter with a 304
Stainless Steel meter run, pressure and temperature transducers.