DEVELOPMENT AND CONSTRUCTION SERVICES AGREEMENT
Exhibit
10.3
This
Development and Construction Services Agreement (“Contract”) is entered into
this 6th day of November, 2009 by and between Grant County Wind, LLC, a
Minnesota limited liability company (“GCW”) and the ten additional signature
parties hereto who are each individual wind generator companies and the members
of GCW (each a “Generator LLC”; the Generator LLCs and GCW, collectively
“Owner”) and ▇▇▇▇ Energy Development, Inc., a Minnesota corporation
(“Contractor” and collectively with the Owner, the “Parties”). This
Contract is intended to supersede any prior written or oral agreements or
understandings between the Parties and their respective predecessors and/or
affiliates with respect to the subject matter hereof.
RECITALS
A. Owner
wishes to obtain the services of Contractor for the development, design,
engineering, construction, procurement, installation, erection, and financing of
a commercial wind energy generation project (the “Project”) on property in which
Owner will have control or ownership interest (the “Project Site”), which
Project shall include, but is not limited to, the ten (10) [brand omitted] Wind
Turbine Generators and related equipment supplied pursuant to the Turbine Supply
Agreement (collectively, the “Turbine Equipment”), meteorological stations,
foundations (including those for transformers, met masts and Wind Turbines), a
collection system, a substation, all facilities necessary to interconnect the
Turbine Equipment to the Project’s substation, all access roads, interconnection
facilities, switchgear, transformers, pad transformers, grid interconnects,
electrical works (whether above ground or below ground), control works, cable
and pipe ducting, a communications system, communications system cables and
interface hardware, maintenance buildings, fiber-optic cabling, staging areas,
crane pads, fencing, barriers, and FAA warning lights.
B. Contractor
is willing to provide such services on the terms and for the consideration
described herein.
C. The
Parties wish to set forth the basic terms on which they will proceed with
development of the Project.
NOW, THEREFORE, in
consideration of the above premises, the mutual promises and covenants set forth
herein, and for other good and valuable consideration, receipt and sufficiency
of which are hereby acknowledged, the Parties hereto agree as
follows:
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AGREEMENTS
1. Contractor’s
Obligations.
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(a)
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Performance of the
Work. Contractor hereby covenants and agrees that it
shall, and shall cause its subcontractors and sub-subcontractors
(collectively, “Subcontractors”) to provide all of the items and services
necessary (collectively, the “Work”) for the proper and timely
development, design, engineering, construction, procurement, installation,
erection, financing and completion of the Project, all in accordance with
the terms of this Contract. Such Work shall also be done in
accordance with and as required by (a) the obligations of Owner under its
Amended and Restated Renewable Energy Purchase Agreement dated
May 12, 2009 (the “REPA”) and the Amended and Restated Small Generator
Interconnection Agreement dated as of September 23, 2009 (the “SGIA”)
including, but not limited to, achieving the Commercial Operation Date (as
such term is defined in the REPA) by March 25, 2010, and achieving a
nameplate capacity of 20 MW; and (b) the Turbine Specifications, [name
intentionally omitted] manuals, all applicable laws, codes, ordinances,
rules and regulations of Governmental Authorities (as defined below)
having jurisdiction over the Project and the Work (“Applicable
Law”). The Contractor further covenants and agrees that it
shall provide and pay for all items or services necessary for the proper
execution and completion of the Work and the Project (subject to the
Contract Price provisions contained herein), whether temporary or
permanent and whether or not incorporated or to be incorporated into the
Project, including, but not limited to, all development, design,
engineering, construction, procurement, installation, erection, financing
services, all administration, management, safety training for all persons
who enter the Project Site and coordination services
with respect to the Subcontractors and [name intentionally
omitted], all labor, materials, fixtures, equipment, supplies, insurance,
licenses, bonds (including road bonds), Permits, tests, inspections,
tools, machinery, water, heat, utilities and transportation, and all other
items, facilities and services necessary to complete the Project,
including, but not limited to, those items set forth in the Scope of Work
attached as Exhibit A hereto; provided, however, that the Work
specifically excludes the acquisition of Wind Turbine Generator (“WTG” or
“Turbine”) equipment which is subject to the Turbine Supply Agreement (the
“Turbine Supply Agreement”) between Owner and [name intentionally
omitted], but shall include the unloading, installation, erection, and
mechanical completion of such WTGs. Without limiting the
foregoing, Contractor shall be responsible for the
following:
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(i)
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Collecting
wind data at the Project Site.
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(ii)
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Negotiating
options/leases with site owners to allow development of the Project,
including related transmission and interconnection
facilities.
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(iii)
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Assisting
Owner in structuring direct ownership of the Project through a corporate
or other entity of which Owner is in control of ownership and operation
pursuant to which the Project will maintain its C-BED status pursuant to
Minnesota law.
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(iv)
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Applying
for, obtaining and maintaining throughout the course of the Project all
permits, certificates, licenses and approvals required by any Governmental
Authority for the performance of Work under this Contract and for the
operation of the Project as contemplated by the REPA and SGIA (the
“Permits”), including typical, local construction permits required for
Contractor’s performance of the
Work.
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(v)
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Performing
or causing its Subcontractors to perform the balance of plant construction
services identified in the scope of work attached hereto as Exhibit A (the
“BOP Work”) .
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(vi)
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Initiating,
maintaining and supervising all safety precautions and programs in
connection with the performance of the Work, including, without
limitation, appropriate precautions and programs for areas in and around
the Project Site. Contractor shall comply with all legal
requirements relating to safety and shall take all reasonable actions to
avoid injury, loss or damage to persons or property by taking reasonable
steps to protect employees and other persons at the Project Site,
materials and equipment stored at the Project Site or off-site locations
for use in performance of the Work, and the Project and all property
located at the Project Site and adjacent to work areas, whether or not
said property or structures are part of the Project or involved in the
Work. Contractor shall cooperate and coordinate with all other
contractors at the Project Site on safety precautions and programs for the
Project. Contractor shall report immediately in writing all
significant accidents and injuries occurring at the Project Site related
to the Work or in the performance of the Work to Owner. When
Contractor is required to file an accident report with any state, federal,
or local government agency or entity (“Governmental Authority”),
Contractor shall furnish a copy of the report to
Owner. Contractor shall comply with the requirements of any
Governmental Authority having jurisdiction over the safety related to the
Work, Project Site or Contractor. Contractor’s responsibility
for safety under this Section is not intended in any way to relieve the
Owner of its own contractual and legal obligations and responsibility for
complying with all legal
requirements.
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(vii)
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Installing
temporary or permanent telephone and data communication services to the
Project, as mutually agreed upon by the Owner and Contractor prior to the
completion of the Work.
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(viii)
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Obtaining
all maps, surveys, and other site information necessary for Contractor or
its Subcontractors to perform the
Work.
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(ix)
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Developing,
designing, engineering, constructing, procuring, installing, financing,
completing and designating the layout and setting of, as applicable, the
substations, collection system, each Turbine and other Project facilities,
including but not limited to roadways, entrances, and
crossings. Contractor shall ensure that Owner has secured all
necessary property rights with respect to
thereto.
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(x)
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Purchasing
and having delivered to the Project any necessary equipment, which
equipment will be delivered in general accordance with the
Schedule.
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(xi)
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Securing
private equity partners to fund up to ninety-nine percent (99%) of the
Project costs.
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(xii)
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Coordinating
and preparing application materials, negotiating and obtaining sources of
vendor, construction and permanent financing for the Project including,
but not limited to, funds available pursuant to the United States
Department of Agriculture’s loan guarantee programs, the U.S. Department
of Energy, the U.S. Department of Treasury or any other Governmental
Authority.
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(xiii)
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Negotiating
power purchase or sale agreements and related amendments and ancillary
agreements (as applicable) with utilities or others to purchase the entire
output of the Project at prices and terms which permit accomplishment of
the Project’s financial
obligations.
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(xiv)
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Negotiating
turbine supply, subcontract, design and warranty agreements and related
insurance and financing documents including, but not limited to, the
Turbine Supply Agreement and the related Financing Agreement with [name
intentionally omitted] dated as of the date hereof (as the same may be
refinanced, the “Financing Agreement”) and in designing the
Project.
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(xv)
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Obtaining
transmission capacity needed to deliver the Project output to the
provider, as necessary.
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(xvi)
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Negotiating,
executing and recording (as applicable) of financing and security
instruments and ancillary agreements and arrangements including, but not
limited to, consents and coordination agreements as may be
applicable.
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(xvii)
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Applying
and qualifying for available federal and state tax credits, incentive
payments, grants or other sources of revenue or capital to support the
Project.
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(xviii)
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Establishing
or contracting for necessary operation, maintenance and management
capabilities for the Project.
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(xix)
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Unloading
the Turbine Equipment. Owner shall provide Contractor with at
least five (5) days (on an estimated basis) prior written notice of the
date of delivery of any Turbine Equipment. If Contractor
receives such notice and any Turbine Equipment is delivered to the Project
Site prior to 5:30 p.m. CST on the date indicated in the notice,
Contractor shall unload (or cause to be unloaded) such Turbine Equipment
during the same calendar day. If any Turbine Equipment is
delivered to the Project Site after 5:30 p.m. CST, Contractor shall unload
such Turbine Equipment within four (4) hours of the start of the next day
that is a business day. For purposes of this Section, the start
of the day shall be no later than 7:00 a.m. CST. All costs and
expenses associated with Contractor’s failure to timely unload the Turbine
Equipment (including, without limitation, all unloading, storage,
demurrage and insurance costs) shall be borne solely by Contractor, and
Contractor shall reimburse Owner for all such costs and expenses within
ten (10) days of receipt of an invoice for the same from
Owner.
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(b)
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Compliance with
Laws. Contractor shall comply with all Applicable Laws
in performing its obligations under this Contract. The
Contractor covenants and agrees that all drawings, specifications and
other documents developed by Owner, or its Subcontractors in connection to
the Work (the “Project Documents”) shall be accurate and free from any
errors or omissions, and shall be in compliance with and accurately
reflect all Applicable Laws. The Contractor shall, at no
expense to the Owner, promptly modify any such documents which are not in
accordance with such legal requirements or are inaccurate or contain
errors or omissions.
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(c)
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Performance and
Payment Bond.
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(i)
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If
requested by Owner, Contractor shall deliver to Owner a performance and
payment bond (the “Bond”) in an initial amount equivalent to the Contract
Price (as hereinafter defined). Within five (5) days of Owner’s
request, Owner shall pay all costs of obtaining such bond, plus pay
Contractor a fee of seven and one half percent (7.5%) for obtaining such
bond, such fee to be calculated by multiplying seven and one half percent
(7.5%) times the cost of the bond.
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(ii)
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The
Bond shall (i) secure Contractor’s obligations to complete the Work in
accordance with this Contract and (ii) shall secure Contractor’s
obligations to pay its
Subcontractors.
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(d)
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Contractor’s Project
Manager. Contractor shall appoint a representative to
act as the manager and coordinator of the Contract on Owner’s behalf
(“Contractor’s
Project Manager”). The Contractor’s Project Manager
shall act as the liaison for Owner’s communications with Contractor and
its Subcontractors, and [name intentionally omitted]. As of the
date of this Contract, ▇▇▇▇ ▇▇▇▇▇▇ will be the Contractor’s Project
Manager (subject to Contractor having the discretion to identify a
replacement Contractor Project
Manager).
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(e)
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Substantial
Completion.
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(i)
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Turbine Mechanical
Completion. When Contractor believes it has achieved
Turbine Mechanical Completion for any Turbine, Contractor shall notify
Owner with the submittal of a Turbine Mechanical Completion Certificate in
the form of Exhibit B
applicable to the identified Turbine, stating the date of Turbine
Mechanical Completion and identifying the Turbine completed, which shall
include the Turbine Mechanical Completion Checklist, in the form of Exhibit
B. Thereafter, Owner and [name intentionally omitted]
shall determine whether Turbine Mechanical Completion has in fact been
achieved for such Turbine pursuant to the Turbine Supply Agreement and
Owner shall thereafter either (i) notify Contractor that Turbine
Mechanical Completion for the identified Turbine has been achieved or (ii)
notify Contractor that Turbine Mechanical Completion has not been achieved
and stating the reasons therefor. In the event Owner provides
written notice that Turbine Mechanical Completion has not been achieved,
Contractor shall take action to correct any defective work adversely
affecting the achievement of Turbine Mechanical Completion of such
Turbine. Upon completion of such corrective and remedial
actions, if any are necessary, Contractor shall notify Owner that it
believes Turbine Mechanical Completion has been achieved and the foregoing
procedures shall be repeated until Turbine Mechanical Completion has in
fact been achieved for such Turbine. In the event Turbine
Mechanical Completion has not been achieved and the reason(s) the Turbine
Mechanical Completion has not been achieved is the result of defects in
the Turbine, the negligent acts or omissions of Owner, or any
Person under its control (other than Contractor and its Subcontractors),
or events of Force Majeure which so prevent Turbine Mechanical Completion
from being achieved for the Turbine(s) covered by the notice, Contractor
shall be entitled to a Change Order with respect to the Schedule and the
Contract Price.
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(ii)
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If
Contractor fails to achieve Turbine Mechanical Completion of (i) at least
four (4) Turbines by December 31, 2009 (the “Initial Scheduled Mechanical
Completion Date”), as such date may be extended in accordance with the
terms of this Contract, or (ii) the remaining Turbines by February 25,
2010 (the “Scheduled Mechanical Completion Date”), as such date may be
extended in accordance with the terms of this Contract, and the reason for
such delay is solely attributable to Contractor or Subcontractor caused
delays, then after taking into account any adjustments to the Schedule,
Contractor shall pay to Owner an amount equal to One Hundred Dollars
($100.00) per day for each Turbine that Contractor has failed to achieve
Turbine Mechanical Completion (“Delay Liquidated Damages”). The
Delay Liquidated Damages are Owner’s sole and exclusive remedy and
Contractor’s sole and exclusive liability with respect to Contractor’s
failure to timely achieve Turbine Mechanical Completion. This
remedy shall include damages which Owner may incur for lost revenues, lost
profits, additional project management costs, extended or increased
overhead of Owner and all other delay or time related
costs. Owner and Contractor further agree that (i) the Delay
Liquidated Damages are a good faith estimate of the damages Owner would
suffer; and (ii) Contractor shall in no event be responsible for payment
of any other liquidated damages, of any kind, to
Owner.
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(iii)
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When
Substantial Completion is achieved, Contractor shall deliver to Owner an
executed “Certificate of Substantial Completion” a form of which is
attached hereto as Exhibit C, which certificate shall be set forth the
date of Substantial Completion and be accompanied by the Punch List.
Within three (3) business days after the receipt of the Certificate of
Substantial Completion, Owner shall either (i) notify Contractor that
Substantial Completion has been achieved, or (ii) notify Contractor that
Substantial Completion has not been achieved and state the reasons
therefore.
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(iv)
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“Substantial
Completion” of the Work shall be achieved when each of the following has
occurred: (i) Contractor has achieved Turbine Mechanical
Completion of all of the Turbines, (ii) the underground collection system
is complete in accordance with the terms and standards set forth in this
Contract, (iii) the substation is completed in accordance in accordance
with the terms and standards set forth in this Contract; (vi) the
remainder of the Work has been fully and properly completed (excluding
Punch List Items), (v) the Project is capable of safe, reliable and
continuous commercial operation, (vi) all associated performance tests
required under the Contract have been successfully performed with respect
to the Project, (vii) the project has been permanently energized,
synchronized to the utility’s grid, and capable of safe, reliable and
continuous commercial operation, (viii) the Owner and Contractor have
mutually agreed as to the corresponding Punch List (as defined below),
(ix) all Permits necessary to use the Project for its intended purpose
have been obtained by Contractor, (x) all deliverables required to have
been delivered to the Owner have been so delivered to the Owner; and (xi)
Contractor has submitted a draft Certificate of Project Substantial
Completion to Owner. For purposes of this Contract, “Punch
List” means that list to be prepared by Contractor and Owner of any minor
items of Work designated as remaining to be performed or corrected by the
date of Final Completion and which will not affect the safe and reliable
operation of the Project.
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(f)
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Final
Completion.
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(i)
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When
Final Completion has been achieved, Contractor shall submit the Final
Completion Certificate, stating the date of Final
Completion. Within three (3) business days after the receipt of
the Final Completion Certificate, Owner shall either (i) notify Contractor
that Final Completion has been achieved, or (ii) notify Contractor that
Final Completion has not been achieved stating the reasons
therefore.
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(ii)
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“Final
Completion” of the Work shall be achieved when each of the following has
occurred: (i) Substantial Completion has occurred; (ii) all construction
debris, rubbish and foreign material, and all of Contractor’s and its
Subcontractors’ tools and equipment, have been removed from and around the
Project Site, except as otherwise reasonably agreed to by the Parties
resulting from seasonal weather conditions; (iii) all items on the Punch
List have been completed to Owner’s reasonable satisfaction, except those
which must be delayed as a result of seasonal weather conditions; and (iv)
Contractor has delivered an executed Certificate of Final Completion to
Owner, a form of which is set forth in Exhibit
D.
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(g)
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Legal
Requirements. The Contractor shall comply, and shall
cause its Subcontractors, architects, and engineers to comply, with all
Applicable Laws and shall give all applicable notices pertaining
thereto.
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(h)
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Cooperation and
Coordination.
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(i)
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Contractor
shall be responsible for coordinating, managing, and communications
related to: (i) the performance of the services and provision of equipment
under the Turbine Supply Agreement and all other the Project contracts,
including obtaining information and consents as needed from the Owner
thereunder; and (ii) the application process for all Permits, including
obtaining information and consents as needed from the Owner as part of
such process.
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(ii)
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On
or before the expiration date or each calendar month throughout the
duration of this Contract, Contractor shall prepare and submit to the
Owner a status report, which report shall include, but shall not be
limited to: (i) a detailed description of the progress of the Project;
(ii) a statement of any significant issues with the development or
construction of the Project (including, but not limited to issues that
could impact the cost or schedule of the development of the Project); and
(iii) a summary of the Permits obtained and
outstanding.
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(i)
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Cooperation. Contractor
shall be responsible for coordinating and managing Owner’s obligations
under the various agreements with suppliers, government and
quasi-government agencies, power companies, insurance companies and
Subcontractors. Contractor shall provide Owner with all
information concerning these agreements and Owner’s obligations
thereunder.
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(j)
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Performance of
Duties. Contractor agrees that it shall perform at all times
faithfully, industriously, and to the best of its ability, experience, and
talents all of the duties that may reasonably be assigned to it hereunder
and, shall devote such time to the performance of such duties as may be
necessary therefore.
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(k)
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Equipment. Contractor
shall be responsible for the purchase and delivery of all equipment
necessary for the completion of the Project, including, without
limitation, electrical and communications equipment and related
controls. For this purpose, the equipment shall not include the
WTGs and related towers, blades, and turbine components which shall be the
responsibility of [name intentionally
omitted].
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(l)
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No
Liens. Contractor shall not assume, create or suffer to
exist or be created any mechanics, materialmen’s or other lien on (i) the
Work, the Project Site, the Project, or any portion thereof, by, through
or under Contractor or any Subcontractor (or any of their respective
employees). If there arises a lien by, through or under
Contractor, any Subcontractor or any of their respective employees that
violates Contractor’s obligations under this Section, then Contractor
shall: (i) promptly, following receipt of written notice of
such lien or of Contractor’s becoming aware of the existence of such lien,
provide written notice thereof to the Owner; and (ii) as soon as
reasonably practicable, but in no event later than thirty (30) days after
the date that Contractor receives written notice that such lien was filed,
recorded or asserted or otherwise becomes aware of such lien, pay or
discharge, and discharge of record, any such lien. Upon the
failure of Contractor to perform its obligations under this Section, the
Owner may, but shall not be obligated to, either (i) obtain a bond, letter
of credit or other security for such lien and, upon posting of such
security therefor, shall be entitled to recover promptly from Contractor
the reasonable costs and expenses incurred by the Owner in connection
therewith, or (ii) offset the amount of any such lien (and all associated
costs) from any amounts otherwise due to Contractor hereunder and
thereafter pay, release, satisfy and discharge such
lien.
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(m)
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Taxes. The
Contractor shall pay all sales, consumer, use, excise, transit, district,
real estate, personal property and other taxes, duties and tariffs
(whether direct or indirect) relating to, or incurred in connection with,
the performance of the Work and/or the occupancy, possession, ownership
and/or use of the Project. Notwithstanding the foregoing, the
Parties acknowledge and agree that the Contract Price does not include any
amounts for the payment of sales tax with respect to any materials or
equipment to be incorporated into the Project that fall within the wind
energy conversion systems (“WECS”) category for which an exemption is
available under Minnesota law.
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(n)
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Responsibility. The
Contractor shall be responsible to the Owner for acts and omissions of the
Contractor, and the Contractor’s Subcontractor, architects, engineers, and
their respective subcontractors, agents and employees, and any other
persons performing portions of the Work under a contract or other
arrangement with the Contractor, or claiming by, through or under the
Contractor, and for any damages, losses, costs and expenses resulting from
such acts or omissions.
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(o)
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Cleaning
Up. The Contractor shall at all times keep the Project
Site and surrounding streets, properties, sidewalks and other areas free
from waste materials, rubbish, debris and other garbage, and shall employ
adequate dust control measures. Prior to Substantial Completion
of the Work, the Contractor shall (except as otherwise reasonably agreed
to by the Parties resulting from seasonal weather conditions) remove from
the Project Site all tools, equipment, machinery, surplus and waste
materials, and rubbish. If the Contractor fails to clean up as
provided herein, the Owner may do so and the cost thereof shall be charged
to the Contractor.
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2. Owner’s Rights;
Obligations.
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(a)
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Owner’s
Obligations. To enable Contractor and its Subcontractors
to complete the Work in accordance with the construction schedule agreed
to by the Parties (which is attached hereto as Exhibit E) (the
“Schedule”), Owner, at its sole cost and expense, shall perform the
following:
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(i)
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Administer
payment requests and cause the Contract Price (as hereinafter defined) to
be paid;
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(ii)
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Acquire
the Turbines and cause [name intentionally omitted] to deliver the
Turbines to the Project Site at the specified Turbine pad, in accordance
with the schedule set forth in the Turbine Supply
Agreement;
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(iii)
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Provide
Contractor and its Subcontractors access to the Project Site and
sufficient land within the Project Site to enable Contractor to perform
the Work; and
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(iv)
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Communicate
and coordinate with respect to any and all issues or concerns raised by
the owners of the real estate comprising the Project Site (collectively
the “Landowners”) with respect to the
Work.
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(b)
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Schedule
Requirements. Owner and Contractor acknowledge that the
milestone dates agreed to by the Parties in the Schedule are of material
importance to the success of completing the Work, and the timely
completion of the Work is based on the timely delivery of the WTGs in
accordance with the delivery schedule in the Turbine Supply Agreement, and
that Contractor may be entitled, in accordance with the change order
provisions of this Contract, to an adjustment to the Contract Price (as
hereinafter defined) or the Schedule to the extent the WTGs are not
delivered by the dates set forth in the Turbine Supply
Agreement.
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(c)
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Inspection of the Work
by Owner.
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(i)
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During
the term of this Contract, Contractor shall permit Owner and its engineers
and representatives (including [name intentionally omitted) (a) to inspect
the Work and the progress of the Work in order to verify material
compliance with the requirements for the
Work.
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(ii)
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The
Owner shall have the right and the authority to reject Work which is
defective or deficient, or which otherwise does not conform to this
Contract. If the Contractor fails to correct defective or
nonconforming Work as and when required under this Contract, or fails to
carry out the Work in accordance with this Contract, the Owner may, by a
written directive, order the Contractor to stop the Work, or any portion
thereof, until the cause for such order has been
eliminated. The Contractor shall not have any claim for a
reimbursement of costs or expenses from the Owner, or any extension in the
Schedule, due to a stoppage in the Work as provided in this
Section.
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3. Contract
Price. In consideration for complete, proper and timely
performance of the Work, Owner shall pay Contractor the following fees (the
“Contract Price”):
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(a)
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A
fixed fee for development services that are not directly related to BOP
Work and provision of turbines in the amount of $1,847,000 (the “Deferred
Fee”).
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(b)
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A
fixed fee for the performance of the scope of work set forth in Exhibit A
in the amount of $8,544,735 (the “BOP
Fee”).
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The
Parties acknowledge and agree that the Deferred Fee and the BOP Fee represent
Contractor’s aggregate compensation for the performance of the Work and
completion of the Project. Such amounts are subject to adjustment
only: (i) pursuant to the change order process set forth in Section 5 herein;
and (ii) with respect to the Deferred Fee only, may be adjusted (without a
change order) to include reasonable out-of-pocket travel expenses of Contractor
or other fees which become payable to third parties that: (x) are actually
incurred by Contractor, (y) are not included in the Deferred Fee because they
could not have been reasonably foreseen by Contractor as of the date of this
Contract and (z) in no circumstance exceed $80,000 in the individual or $150,000
in the aggregate.
4. Timing and Method of
Payment. Furthermore, the Parties acknowledge
that:
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(a)
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The
Deferred Fee shall not become due and payable and shall in no way be
deemed earned by Contractor unless and until (i) the Project has achieved
Substantial Completion, (ii) all amounts owed by Owner under the Financing
Agreement have been paid in full and there are no amounts remaining due
and outstanding under the Financing Agreement, and (iii) any other payment
subordination restrictions on the payment of the Deferred Fee have been
satisfied; provided that, at such time as conditions (i), (ii) and (iii)
are satisfied, Contractor may, if the BOP Fee has been paid in cash in
full or converted into equity of each Generator LLC as contemplated
hereunder, convert the Deferred Fee into equity in a form and subject to
terms and conditions to be mutually agreed by the Parties at the time of
such conversion.
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|
|
(b)
|
(i) Payment
of the BOP Fee shall be paid partially by a junior secured convertible
promissory note from Owner to Contractor (the “Note”) in the form as
attached in Exhibit F, the amount to become due and owing shall be
advanced to a maximum amount of $8,200,000 (the “Maximum Amount”) (and
thus the advanced amount shall become the balance due under the Note)
solely through Applications for Payment (as defined below) in accordance
with the following:
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|
|
(1)
|
An
initial Application for Payment in the amount of Seven Hundred Fifty
Thousand Dollars ($750,000), as a mobilization fee, upon execution of this
Contract.
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11
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|
(2)
|
On
or before the tenth (10th) day of each subsequent month, Contractor shall
request payment (the “Application for Payment”) for all Work performed and
not paid for during the previous calendar month (the “Pay
Period”). Each Application for Payment shall be accompanied by
the following, all in form and substance satisfactory to Owner: (A) a duly
executed and acknowledged sworn statement showing all Subcontractors with
whom Contractor or any Subcontractor of Contractor has entered into
subcontracts, the amount of any such subcontracts and the amount to be
paid for such Pay Period as part of the BOP Fee from any such
Subcontractors; (B) Duly executed waivers of mechanics’, materialmen’s and
construction liens in the form of Exhibit G (“Partial Lien Waivers”)
related to the amount requested in the Application for Payment,
conditioned solely, and immediately effective, upon the Owner’s payment of
such amount due; and (C) Partial Lien Waivers from each of the
Subcontractors and suppliers for the BOP Work establishing satisfaction of
payment for the Application for Payment that immediately preceded the Pay
Period.
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(3)
|
The
Application for Payment shall constitute Contractor’s representation that
the Work has been performed consistent with this Contract and the Project
Documents (collectively, the “Contract Documents”) and has progressed to
the point indicated in the Application for
Payment.
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(4)
|
Within
ten (10) days after Owner’s receipt of each Application for Payment, Owner
shall make a payment to Contractor of all amounts properly due, but in
each case less the total of payments previously made to
Contractor.
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(5)
|
The
Application for Payment may request payment for: (i) completed Work; and
(ii) prepayments for materials or equipment for the Project when such
prepayment request is accompanied by an invoice from the manufacturer or
supplier of such materials or equipment demonstrating that prepayment is
required for such materials or
equipment.
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(6)
|
Notwithstanding
the foregoing, an Application for Payment may not be made for amounts
associated with the following: engineering work and drawings completed by
Contractor prior to the date hereof, payment made by contractor for a
transmission interconnection switch acquired prior to the date hereof;
work related to the SWPPP permit that was not a portion of the original
scope of the work; and a Contractor construction hold-back in the amount
of $639,500. Such amounts shall become due and owing, and shall
be eligible for conversion in accordance with, the provisions set forth
Section 4(a).
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12
|
|
(7)
|
On
or before the then applicable payment date set forth in Subsection
4(b)(i)(2), Owner shall pay Contractor all amounts properly due for which
an Application for Payment has been provided. If Owner
reasonably believes that Contractor is not entitled to all or part of an
Application for Payment, Owner will notify Contractor in writing at least
five (5) days prior to the date payment is due. The notice
shall indicate the specific amounts Owner intends to withhold, the reasons
and contractual basis for the withholding, and the specific measures
Contractor must take to rectify Owner’s concerns. Contractor
and Owner will attempt to resolve the concerns prior to the date payment
is due. If the Parties cannot resolve such concerns, Contractor
may pursue its rights under the Contract
Documents. Notwithstanding anything to the contrary in the
Contract Documents, Owner shall pay Contractor all undisputed amounts in
an Application for Payment within the times required
hereunder.
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(8)
|
Contractor
shall deliver to Owner a request for final payment (the “Final Application
for Payment”) when Final Completion has been achieved in accordance with
the Contract Documents, including Application for Payment for all amounts
due Subcontractors. Owner shall make final payment within ten (10) days
following receipt of the Final Application for Payment (“Final
Payment”). Such Final Payment may only be made pursuant to the
Note.
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(9)
|
The
Final Application for Payment shall be accompanied by the following, all
in form and substance satisfactory to Owner: (A) a duly executed and
acknowledged sworn statement showing all Subcontractors with whom
Contractor or any Subcontractor of Contractor has entered into
subcontracts, the amount of any such subcontracts and the amount to be
paid as part of the BOP Fee from any such Subcontractors; (B) Duly
executed waivers of mechanics’, materialmen’s and construction liens in
the form of Exhibit G (“Final Lien Waivers”) related to the amount
requested in the Final Application for Payment,; and (C) Final Lien
Waivers from each of the Subcontractors and suppliers for the BOP Work
establishing satisfaction of payment for the Final Application for
Payment.
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13
(ii) Notwithstanding
Subsection 4(b)(i), the Parties agree that the BOP Fee up to the Maximum Amount
shall be deemed paid pursuant to a borrowing under the Note, in a corresponding
amount of the payment due under each Application for Payment as the same become
due pursuant to Subsection 4(b)(i). The portion of the BOP Fee up to
the Maximum Amount shall (and may only) be paid via the Note and all amounts due
under the Note shall be secured by a security agreement between Owner and
Contractor, in the form attached hereto as Exhibit H (the “Security
Agreement”). The Note and Security Agreement shall be subordinate to
the Financing Agreement, as the same may be refinanced by any means, extended,
renewed, defeased, supplemented, restructured, replaced, refunded or repaid or
replaced with other indebtedness in exchange or replacement for such
indebtedness, in whole or in part, whether with the same or different lenders,
arrangers or agents, including but not limited to replacement in whole or in
party by any “take-out” financing (collectively,
the “Senior Obligations”) by [name intentionally omitted] or any other person
(the “Senior Lender”) and a pledge of Contractor’s proportionate share
(as such share has been determined by and between [name intentionally omitted]
and Contractor in a separate Intercreditor and Subordination Agreement (the
“Intercreditor Agreement”)) of amounts due from the United States Treasury
Department as a tax grant under Section 65 of the Internal Revenue
Code. For the avoidance of doubt, Contractor covenants with Owner
that Contractor will not grant [name intentionally omitted] a security interest
in the Note. In addition, Contractor
shall request and Owner shall grant, subject to the terms and conditions
of the Financing Agreement and related Security Documents (as such term is
defined therein) within ten (10) days of the date hereof, a second leasehold
mortgage on the real property that comprises the Project Site to Contractor to
secure the Note (the “Junior Mortgage”). The Junior Mortgage shall be
in a form agreed to by Contractor, Owner and [name intentionally omitted] (in
their reasonable discretion) and shall be, at all times, subordinate to any
mortgage, lien, pledge, security interest, charge or encumbrance held by [name
intentionally omitted] or and any other Senior Lender.
(iii) In
addition Contractor may, pursuant to the terms and conditions of the Note and
Security Agreement, convert the portion of the BOP Fee that is paid via a Note
into equity of each of the Generator LLCs as provided below; provided, however,
that: (A) absent the express written consent of [name intentionally
omitted] to such conversion and the documents related to such conversion,
including the member controlagreement, which consent, so long as Contractor
shall include a pledge of such equity interest to [name intentionally omitted]
incident to such conversion, shall not be unreasonably withheld, no such
conversion shall occur unless and until all amounts owed by Owner to [name
intentionally omitted] under the Financing Agreement have been paid in full and
there are no amounts remaining due and outstanding under the Financing
Agreement; and (B) no conversion may take place prior to the time the Note is in
default pursuant to the terms thereof if, in the reasonable opinion of Owner,
such conversion would have a material adverse impact on the ability of the Owner
to receive financing or additional equity investment for the
Project. The following provisions shall apply to any permitted
conversion of the Note by Contractor (pursuant to this paragraph):
|
|
A.
|
Owner
hereby irrevocably consents to the transfer and assignment of Contractor’s
rights under this Contract, the Note and the Security
Agreement. Such transfer and assignment shall not, however,
relieve Contractor of any of its obligations hereunder. Any
transferee or assignee under the Note shall have the same rights with
respect to this Contract, the Note and the Security Agreement as
Contractor has and as are set forth in the Note and Security
Agreement;
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14
|
|
B.
|
Each
Generator LLC hereby covenants with Contractor that it shall, upon written
request from Contractor and subject to the restrictions set forth above
and in the Financing Agreement, as conditioned by the Intercreditor
Agreement, issue such equity in a manner equivalent and on a par with
other equity investors providing cash investment into the Project and
shall credit Contractor with the total amount due under the Note in such
conversion, including any interest due or payable under the
Note. Such equity shall be delivered in the name designated by
Contractor or its transferee or assignee of this Contract, the Note and
the Security Agreement. Owner shall not take any action (or
fail to take any action) that would prevent the issuance of such equity as
contemplated under the Note and Security
Agreement.
|
5. Change
Orders. Contractor may only seek changes to the Work,
the Contract Price, and Schedule (each a “Change Order”) pursuant to the
provisions and conditions set forth in Sections 5(a) and 5(d) of this
Contract. In the event there shall be a Change Order, the Parties
hereto shall work to minimize the economic and Schedule impact of any such
change. All Change Orders shall be set forth in a written change
order stating: (i) the change in the Work; (ii) the amount of the adjustment in
the Contract Price broken out as part of the Deferred Fee and, if
applicable, the BOP Fee, and (iii) the adjustment to the
Schedule. The Change Order will be agreed upon by the Parties and
executed by both Parties prior to either Party being bound by any
change. For the avoidance of doubt, it is understood and agreed by
the parties hereto that there shall be no permissible Change Order for the
provision of an additional Manitowac 999 crane that Contractor has agreed to
supply as a portion of the Work pursuant to this Agreement.
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|
(a)
|
Change Order
Process. Owner or Contractor may request changes in the
Work within the general scope of this Contract consisting of additions,
deletions, or other revisions. Should either Party so desire to
change the Work or observe a change to the Work such Party shall submit a
change request to the other Party in writing. If Contractor
requests a change, it shall propose the change to Owner who may either
accept or reject the request for a change in its discretion, and such
decision shall be final with respect to such request. If Owner
requests a change, within five (5) business days of
receipt of such request or such reasonable time as required to complete an
estimate, Contractor shall submit a proposal to the Owner stating the
adjustment to the Contract Price which would result from such change, and
the effect, on the Schedule by reason of such proposed
change. The Owner shall promptly accept or reject in writing
Contractor’s proposals in relation to the change. If the Owner
agrees with the proposal for the change, the Parties shall execute a
Change Order reflecting the change in the Work and proposed adjustments to
the Contract Price (stating which adjustments are Deferred Fee amounts and
which are BOP Fee amounts, respectively) and the Schedule. In
the event that the Owner rejects Contractor’s proposal for the change, the
Owner may notify Contractor that the Owner has decided to withdraw or
modify its requested change. Should the Owner fail to respond
to Contractor in writing within five (5) business days of Owner’s receipt
of the proposal, the Owner shall be deemed to have withdrawn its requested
change, if such was the circumstances that initiated the
discussion.
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15
|
|
(b)
|
[Name intentionally
omitted] Consent. Notwithstanding the foregoing, in the
event that: (i) any single Change Order could have the result of (X)
changing any of the Schedule milestones within this Contract by ten (10)
or more business days or (Y) increase the Contract Price by $80,000 or
more; or (ii) that the cumulative effect of all Change Orders under the
Contract could have the result of (X) changing any of the Schedule
milestones within this Contract by fifteen (15) or more business days or
(Y) increase the Contract Price by $150,000 or more, then, except if the
Change Order is a result of a delay in Turbine delivery, such Change Order
shall not be effective under this Contract absent the prior written
consent of [name intentionally omitted]. Such consent shall be
granted in [name intentionally omitted] reasonable discretion, based on
its evaluation of the change and the impacts on the Schedule and economics
of the Project; provided, if [name intentionally omitted] has not provided
its consent or written evidence of its rejection of such change within two
(2) business days after [name intentionally omitted] receipt of written
notice of the same, [name intentionally omitted] shall be deemed to have
consented to such change.
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(c)
|
Disputes Regarding
Change Orders. If Owner requests a Change Order, but the
Parties are unable to mutually agree upon a Change Order, Contractor shall
(if Owner so directs) perform the Work on a cost-reimbursable basis to
comply with Owner’s requested requirements (and identify whether the costs
are Deferred Fee amounts or BOP Fee amounts) and be entitled to an
equitable adjustment in the Schedule, including reimbursement for all
costs, including labor costs, (all at Contractor’s cost) actually incurred
by Contractor (“Reimbursable
Costs”).
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(d)
|
Procedures upon a
Force Majeure Event. If Owner or Contractor is rendered
wholly or partially unable to perform its obligations under the Contract
Documents (defined below) as a result of an act of God, Weather Delays (as
defined below) or other unforeseen condition beyond the reasonable control
of such Party which could not have been avoided, prevented or resolved by
such Party’s commercially reasonable efforts and which was not caused by
such Party’s negligence or a breach or failure to perform its obligations
hereunder (a “Force Majeure Event”), such Party shall comply with the
following conditions precedent to the right to seek an equitable
adjustment:
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|
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(i)
|
The
affected Party shall give the other Party written notice describing the
particulars of the occurrence, such notice to be given promptly after the
occurrence of the Force Majeure Event and no more than three (3) calendar
days after the affected Party becomes aware of such occurrence, which
notice shall include an estimate of the Force Majeure Event’s expected
duration and probable impact on the performance of the affected Party’s
obligations hereunder, and the affected Party shall continue to furnish
timely, regular reports during the continuation of the Force Majeure
Event;
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16
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(ii)
|
The
suspension of performance shall be of no greater scope and of no longer
duration than is reasonably required by the Force Majeure Event and all
Parties shall work to minimize the impact of the Force Majeure
Event;
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(iii)
|
No
liability of any Party which arose before the occurrence of the Force
Majeure Event causing the suspension of performance shall be excused as a
result of the occurrence;
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(iv)
|
The
affected Party shall exercise all reasonable efforts to mitigate or limit
damages to the other Party as a result of the Force Majeure Event by
promptly taking appropriate and sufficient corrective action, including
the expenditure of all reasonable sums of
money;
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(v)
|
The
affected Party shall use reasonable efforts to continue to perform its
obligations hereunder and to correct or cure the Force Majeure Event
excusing performance;
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(vi)
|
When
the affected Party is able to resume performance of the Work, the affected
Party shall give the other Party written notice to that effect, and a
Change Order shall be executed by Owner and Contractor to account for the
adverse effects, if any, on Contractor’s performance of its obligations by
the Force Majeure Event; and
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(vii)
|
Calculation
of the change to the Contract Price as a result of a Force Majeure Event
shall be computed as Contractor’s total additional out-of-pocket costs,
including labor costs, without additional
▇▇▇▇-up.
|
For the
purposes of this Contract, “Weather Delays” shall be defined as delays that
impact the performance at the Project Site caused by any of the following
weather conditions at the Project Site: natural disasters, fire,
hurricanes, unusually severe and not reasonably anticipatable rain or other
inclement weather, tornadoes, extreme high winds, dust or sand storms,
mudslides, subsidence, lightning, floods or earthquakes, which create (or are
reasonably anticipated to create) unsafe conditions or otherwise prevent
performance of the Work.
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(e)
|
Weather
Delay. Notwithstanding anything to the contrary in
Section 5(d), the Parties acknowledge and agree that, in the event of a
Force Majeure Event which is in the nature of a Weather Delay, Contractor
shall be entitled to a Change Order solely with respect to the Schedule
and shall not be entitled to any adjustment in the Contract
Price.
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6. Owner’s Right to Terminate
for Cause.
|
|
(a)
|
The
occurrence of any one of more of the following matters constitutes a
default by the Contractor under this Contract (a “Contractor Event of
Default”):
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17
|
|
(i)
|
Contractor
becomes insolvent or generally fails to pay, or admits in writing its
inability or unwillingness to pay, its debts as they become
due;
|
|
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(ii)
|
Contractor
makes a general assignment for the benefit of its
creditors;
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(iii)
|
Contractor
shall commence or consent to any case, proceeding or other action (x)
seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of Contractor or of Contractor’s debts, under any law
relating to bankruptcy, insolvency, reorganization or relief of debts, or
(y) seeking appointment of a receiver, trustee or similar official for
Contractor, or for all or any part of Contractor’s
property;
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|
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(iv)
|
any
case, proceeding or other action against Contractor shall be commenced (x)
seeking to have an order for relief entered against Contractor as debtor,
(y) seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of Contractor or of Contractor’s debts, under
any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or (z) seeking appointment of a receiver, trustee or similar
official for Contractor or for all or any part of Contractor’s
property;
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|
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(v)
|
the
breach of any representation or warranty made by Contractor
herein;
|
|
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(vi)
|
Contractor
attempts to assign, convey or transfer this Contract or any interest
herein in any manner inconsistent with the terms of this
Contract;
|
|
|
(vii)
|
Contractor
fails to pay any monies or other funds when due and payable under this
Contract; or
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|
(viii)
|
Contractor
fails to observe or perform any other covenant, agreement, obligation,
duty or provision of this Contract, and such failure continues for five
(5) days after Contractor’s receipt of written notice thereof from
Owner.
|
|
|
(b)
|
Upon
the occurrence of a Contractor Event of Default, Owner shall provide
written notice to Contractor that a Contractor Event of Default has
occurred and Contractor must correct such deficiency within five (5) days
of Contractor’s receipt of such notice. If Contractor fails to
cure within such five (5) day period, then Owner may, without prejudice to
any other right or remedy the Owner may have under this Contract or at law
and/or equity, declare the Contract terminated for default by providing
written notice to Contractor of such
declaration.
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18
|
|
(c)
|
Upon
declaring the Contract terminated for default, pursuant to Section 6(b),
Owner may, without prejudice to any other right or remedy, enter upon the
premises and take possession, for the purpose of completing the Work, of
the Project Site and all materials and equipment which have been purchased
by Owner for the performance of the Work, all of which Contractor hereby
transfers, assigns and sets over to Owner for such purpose, and to employ
a qualified third party to complete the Work. Materials and
equipment noted here do not include any equipment rented or owned by
Contractor. If the cost of finishing the Work exceeds the
unpaid balance of the Contract Price, the Contractor shall immediately pay
the difference to the Owner. The cost of Owner completing the
Work shall include, without limitation, the cost of any additional design,
engineering, managerial and administrative services required thereby,
reasonable attorneys’ fees and expenses, and any other costs, expenses or
damages the Owner may incur in order to complete the
Work.
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(d)
|
Owner’s Right to
Termination for Convenience. Upon ten (10) days’ prior
written notice to Contractor, Owner may, for its convenience and without
cause, elect to terminate this Contract. In such event, Owner
shall pay Contractor for the following: (i) to the extent not already
paid, all Work executed, and for proven loss, cost or expense in
connection with the Work; (ii) the reasonable costs and expenses
attributable to such termination, including demobilization costs; and
(iii) out-of-pocket costs and amounts due in settlement of terminated
contracts with Subcontractors and suppliers. All such amounts
shall not be subject to payment by installments or pursuant to the Note,
but rather must be paid on the date of termination by wire
transfer. A schedule outlining the aggregate termination
payments is attached hereto as Exhibit
J.
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7. Insurance.
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(a)
|
Owner’s
Insurance. Contractor shall procure and maintain, for and on behalf
of Owner, from insurance companies authorized to do business in the state
in which the Project is located, and maintain through Final Completion,
All-Risk Builder’s Risk property insurance upon the entire
Project. The policy shall be primary to all other insurance
supplied by Contractor or its Subcontractors. The Builder’s
Risk policy shall include Owner, Contractor, Contractor’s Subcontractors
and [name intentionally omitted] as additional insureds. [Name
intentionally omitted] shall be named as a loss payee under the Builder’s
Risk Policy. Such policy shall insure against the perils of
fire and extended coverage, theft, vandalism, malicious mischief,
collapse, flood, earthquake, debris removal and other perils or causes of
loss and without application of any deductible, retention or retrospective
premium. The builder’s risk policy shall be written on a
replacement cost basis. The property insurance shall be
endorsed to cover physical loss or damage to the Work and all goods in
transit including the Turbines, materials and equipment in transit, at the
Project Site or at another location. Contractor shall provide a
copy of the All-Risk Builder’s Risk policy to Owner upon execution of this
Contract. Any loss covered under Owner’s property insurance
shall be adjusted by [name intentionally omitted] and made payable to the
insureds in accordance with the terms of the
Financing.
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(b)
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Contractor’s
Insurance.
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(i)
|
Contractor
shall procure and maintain in force through the Final Completion Date the
following insurance coverages with the policy limits indicated, and
otherwise in compliance with the provisions of this
Contract:
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19
|
Commercial
General Liability:
|
||||
|
General
Aggregate
|
$ | 2,000,000 | ||
|
Products-Comp/Op
AGG
|
$ | 2,000,000 | ||
|
Personal
& Adv Injury
|
$ | 1,000,000 | ||
|
Each
Occurrence
|
$ | 1,000,000 | ||
|
Fire
Damage (Any one fire)
|
$ | 50,000 | ||
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Med
Exp (Any one person)
|
$ | 5,000 | ||
|
Automobile
Liability:
|
||||
|
Combined
Single Limit
|
||||
|
Each
Occurrence
|
$ | 1,000,000 | ||
|
Excess
Liability – Umbrella Form:
|
||||
|
Each
Occurrence
|
$ | 9,000,000 | ||
|
Aggregate
|
$ | 9,000,000 | ||
Workers’
Compensation - Statutory limits as required by the state in which the Work is
performed.
|
Employers’
Liability:
|
||||
|
Each
Accident
|
$ | 1,000,000 | ||
|
Disease-Policy
Limit
|
$ | 1,000,000 | ||
|
Disease-Each
Employee
|
$ | 1,000,000 | ||
|
Professional
Errors and Omissions:
|
||||
|
Per
Claim
|
$ | 1,000,000 | ||
|
Annual
|
$ | 1,000,000 | ||
Owner and
[name intentionally omitted] shall be named as an additional insureds under the
preceding Commercial General Liability, Employers’ Liability and Excess Umbrella
Policies.
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|
(ii)
|
Insurance
Certificates. Contractor shall provide Owner upon Owner’s request
with copies of the insurance certificates reflecting coverages evidencing
that (i) Contractor’s insurance obligations are in full force and in
effect and will remain in effect until Contractor has completed all of the
Work and has received the final payment from Owner, and (ii) no insurance
coverage will be canceled, renewal refused, or changed unless at least
thirty (30) days prior written notice is given to Owner. All
insurance certificates provided by Contractor pursuant to this Contract
shall, as applicable, clearly identify in writing as additional insureds
(and expressly include the interests of) Owner and [name intentionally
omitted].
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20
8. Warranties.
|
|
(a)
|
Contractor
agrees to provide the following
warranties:
|
|
|
(i)
|
All
materials, supplies and equipment furnished under this Contract will be of
good quality and new, that the Work will be of good and workmanlike
quality and free from faults, defects and deficiencies, and that the Work
will conform with the requirements of this Contract (the “Project
Warranty”);
|
|
|
(ii)
|
Each
Turbine will be properly assembled, erected, installed, and mechanically
completed on the Project Site in accordance with the Turbine
Specifications and the instruction manual provided by [name intentionally
omitted] (the “Turbine Installation Warranty”);
and
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|
|
(iii)
|
The
Work (i) will be performed in accordance with generally accepted
professional standards for each such relevant profession and will be
performed in a good and workmanlike manner (including, without limitation,
the construction work, which shall also be performed in accordance with
sound construction practices), (ii) will conform to, and be performed in
accordance with, all Applicable Laws, (iii) will be performed in
accordance with prudent utility practices and the requirements, and (iv)
will meet the requirements and specifications provided by Contractor, the
Permits, the Turbine specifications, the REPA (including Appendix C) and
the SGIA (the “Work Warranty”, and together with the Project Warranty and
the Turbine Installation Warranty, the
“Warranty”).
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|
|
(b)
|
Contractor
shall, after discovery of any breach of the Warranty during the Warranty
Period or notice of the same to Contractor by Owner or Owner’s contractors
during the Warranty Period, at its sole cost and expense (including the
cost of labor and equipment) and as promptly as reasonably practicable,
correct such breach of Warranty and repair or replace any defective Work,
material, or equipment with materials of new and good quality and correct
any material damage caused by such breach of the Warranty. The
Warranty shall commence on the date the Work is completed and shall remain
in full force and effect for a period of twelve (12) months from the date
the Work is completed (the “Warranty Period”). Any portion of
the Work which has been repaired, replaced or otherwise corrected during
the preceding Warranty Period shall be warranted by the Contractor for an
additional twelve (12) month period from the date of completion of such
repair, replacement or correction. If Contractor does not so
commence and diligently pursue a remedy within seven (7) business days
after receipt of written notice from Owner, Owner may, at Contractor’s
expense, perform or have performed by a qualified and experienced third
party the necessary remedy consistent with the requirements set forth in
this Contract with respect to the Work. Contractor shall have
no warranty obligation for warranty claims that are caused by: (i) normal
wear and tear; (ii) Owner’s or subsequent Owner’s misuse or negligence;
(iii) Owner’s use, without Contractor’s approval, of spare parts other
than those supplied or recommended by Contractor or [name intentionally
omitted]; (iv) use or services of the facility (or any relevant part
thereof) other than in conformance in all material respects with [name
intentionally omitted] operations
manuals.
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(c)
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The
Contractor shall use its best efforts to obtain warranties for the benefit
of the Contractor and the Owner from the Subcontractors and material and
equipment suppliers in relation to their respective portions of the
Work. The Contractor shall similarly use its best efforts to
obtain warranties from such individuals which (i) warrant against defects
and deficiencies in each such party’s work, and (ii) are ultimately
assignable to the Owner if they do not run to the Owner in the first
instance. Contractor shall assign to Owner any warranty it
receives from the Subcontractors, including, without limitation, the
warranty provided as part of its contract with its primary
Subcontractor.
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(d)
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The
Contractor shall have primary liability with respect to the warranties set
forth in this Contract, whether or not any defect, deficiency or other
matter is also covered by a warranty of another party, and the Owner need
only look to the Contractor for corrective action. In addition
thereto, the Contractor’s warranties expressed herein shall not be
restricted in any manner by any warranty of a third party and the refusal
of any third party to correct defective, deficient or nonconforming Work
shall not excuse the Contractor from its liability as to the warranties
provided herein.
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(e)
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ALL
OTHER CONTRACT PROVISIONS NOTWITHSTANDING, THE WARRANTIES SET FORTH IN
THIS AGREEMENT ARE EXCLUSIVE AND IN LIEU OF ALL WARRANTIES, EXPRESS OR
IMPLIED, OF PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, CUSTOM, USAGE OR OTHERWISE AND ALL OTHER CAUSES OF
ACTION. CONTRACTOR DOES NOT WARRANT OR GUARANTEE THAT THE
DESIGN, ENGINEERING, SPECIFICATIONS, EQUIPMENT OR MATERIALS, INCLUDING THE
TURBINES, SUPPLIED OR SPECIFIED BY OTHERS WILL PRODUCE ANY INTENDED RESULT
OR ACHIEVE ANY INTENDED PURPOSE.
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(f)
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The
Warranty provided herein shall survive the termination or expiration of
this Contract.
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9. Representations and
Warranties of Contractor. Contractor hereby represents and
warrants the following to the Owner, which representations and warranties shall
survive the execution and delivery of this Contract, any termination of this
Contract and the final completion of the Work:
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(a)
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Contractor
is able to furnish the tools, materials, supplies, equipment, labor and
development, design, engineering, construction procurement, installation,
erection, and financing services required to complete the Work and perform
its obligations hereunder, and has sufficient experience and competence to
do so;
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(b)
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(c)
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Contractor
is authorized to do business in the State of Minnesota and properly
licensed by all Governmental Authorities having jurisdiction over
Contractor, the Work and/or the
Project;
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(d)
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Contractor
has familiarized itself with the Project Site and the local
conditions. Any cost risk related thereto (including that
associated with concealed, latent or unknown conditions) shall be borne by
the Contractor and Contractor shall not be entitled to an adjustment in
the Contract Price or the Schedule as a result of the same;
and
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(e)
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The
execution, delivery and performance of each of the Contract and any the
contracts between Contractor and its Subcontractor, is or is to be a party
as contemplated hereby, will not (i) violate or conflict with any
application, eligibility or other requirement of any loan guarantee,
grants or other similar government funding opportunity available or
already obtained from the United States Department of Agriculture, the
U.S. Department of Energy, the U.S. Department of Energy or any other
Governmental Authority (each, a "Governmental Support
Opportunity"), (ii) result
in the disqualification of Owner, any of its affiliates, or the Project
from eligibility for any Governmental Support Opportunity, (iii) result in
the loss of any potential Governmental Support Opportunity for which
Owner, any of its affiliates or the Project is eligible as of the date
hereof, or (iv) result in the requirement that the Owner shall incur any
additional costs or delay as a condition for Owner, any of its Affiliates,
or the Project to be awarded any Governmental Support
Opportunity
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10. Indemnification.
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(a)
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The
Contractor shall (and shall cause its Subcontractors to) indemnify, defend
and hold harmless the Owner, [name intentionally omitted] and their
officers, directors, board members, employees, agents, affiliates and
representatives, from and against any and all claims, demands, suits,
liabilities, injuries (personal or bodily), property damage, causes of
action, losses, expenses, damages or penalties, including, without
limitation, court costs and reasonable attorneys’ fees, arising or
resulting from, or occasioned by or in connection with (i) the performance
by the Contractor of its duties and obligations under this Contract, (ii)
the inaccuracy of any warranty or representation of the Contractor
contained in this Contract, (iii) the use, generation, storage, release,
threatened release, discharge, disposal, existence or presence of any
Hazardous Substances or underground storage tanks in, under, at, upon or
from the Project Site, (iv) the placement upon or against any property of
the Owner of any liens, claims, security interests, mortgages or other
encumbrances as a result of this Contract, and/or (v) any negligent,
willful or wrongful act or omission to act by the Contractor, its
Subcontractors, architects, engineers, anyone directly or indirectly
employed by any of them or anyone for whose acts they may be
liable. This indemnification, defense and hold harmless
obligation shall survive the termination or expiration of this
Contract.
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(b)
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In
claims against any person or entity indemnified under Section 10(a) by an
employee of the Contractor, a Subcontractor, anyone directly or indirectly
employed by any of them or anyone for whose acts they may be liable, the
indemnification obligation under such Section 10(a) shall not be limited
by a limitation on the amount or type of damages, compensation or benefits
payable by or for the Contractor, the Subcontractor or any other
above-referenced party under workers’ or workmen’s compensation acts,
disability benefit acts, other employee benefit acts, or by common law or
case law.
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(c)
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For
purposes of this Section, “Hazardous Substances” means (a) any substance
which is listed, defined, designated or classified under any Environmental
Law as a (i) hazardous material, substance, constituent or waste, (ii)
toxic material, substance, constituent or waste, (iii) radioactive
material, substance, constituent or waste, (iv) dangerous material,
substance, constituent or waste, (v) pollutant, (vi) contaminant, or (vii)
special waste; (b) an material (including radioactive material),
substance, constituent or waste regulated under any Environmental Laws; or
(c) petroleum, petroleum products, polychlorinated biphenyl, pesticides,
asbestos, or asbestos-containing materials. “Environmental Law”
means any law which relates to environmental quality, health, safety,
pollution, contamination, cleanup, or the protection of human health,
ambient air, waters (including ground waters) or land; including the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901 et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq; the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq; the Clean Water
Act, as amended, 33 U.S.C. Section 1251 et seq; and the Occupational
Safety and Health Act, as amended, 29 U.S.C. Section 651 et
seq.
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11. Limitation of
Liability.
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(a)
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Overall Limitation of
Liability. The aggregate liability of Contractor, its
Subcontractors, agents and employees, to Owner (or any successor thereto
or assignee thereof) for any and all claims and/or liabilities arising out
of or relating in any manner to the BOP Work as is set forth on Exhibit A
or to Contractor’s performance or non-performance of its obligations with
respect to the BOP Work, whether based in contract, tort (including
negligence), strict liability, or otherwise, shall not exceed, in the
aggregate, fifteen percent (15%) of the Contract Price; provided, however,
that upon Substantial Completion, such aggregate liability shall be
limited to ten percent (10%) of the Contract
Price. Notwithstanding the foregoing, the preceding limits of
liability shall (i) exclude any liability satisfied by the proceeds of
insurance maintained by Contractor in accordance with this Contract, or
which would have been satisfied by insurance had Contractor maintained
proper insurance in accordance with this Contract; (ii) not apply to any
claims for fraud, gross negligence or willful misconduct, or failure to
pay Subcontractors; (iii) not apply with respect to the indemnification
obligations pursuant to Section 10; and (iv) exclude the Contractor's
warranty obligations under Section
8.
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(b)
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Consequential
Damages. Owner and Contractor hereby waive all claims
against each other (and against each other’s parent company and affiliates
and [name intentionally omitted]) for any consequential, incidental,
indirect, special, exemplary or punitive damages (including, but not
limited to, loss of actual or anticipated profits, revenues or product;
loss by reason of shutdown or non-operation; increased expense of
operation, borrowing or financing; loss of use or productivity; or
increased cost of capital), and regardless of whether any such claim
arises out of breach of contract or warranty, tort (including negligence),
product liability, contribution, strict liability or any other legal
theory.
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12. Offset
Right. In the event Contractor fails to perform any obligation
or covenant under this Contract and such failure causes Owner to incur any cost
or expense, Owner shall be authorized, to the fullest extent permitted by law,
to set off and apply the amount of any and all such costs and expenses against
any and all obligations due and owing under the Note. Owner, upon
making any such setoff and application pursuant to this Section 12, shall
promptly notify Contractor thereof.
13. Title and Risk of
Loss. Title, with respect to all Work and the various
materials, equipment and other components of the Work (including, for the
avoidance of doubt the Work and various materials, equipment and other
components of the Work provided pursuant to the contract between Contractor and
its primary Subcontractor) shall transfer to Owner upon the incorporation of
such equipment into the Project. Regardless of the passage of title,
upon the delivery of such equipment to the Project Site, care, custody and
control of, and risk of loss or damage to, such component or part shall
thereupon transfer to Owner.
14. Documents. The
Project Documents and any other drawings, including “as built” drawings,
specifications, designs, plans, logos, trademarks, names, service marks,
photographs, marketing materials or other documents, prepared by or on behalf of
the Owner and/or the Contractor in relation to this Project shall be deemed the
property of the Owner. Contractor hereby assigns, transfers,
releases, and conveys to Owner (and shall cause Owner’s Subcontractor and each
sub-subcontractors to assign, transfer, release and convey to Owner) all right,
title and interest in the Project Documents (including any
copyrights). All copies of such documents shall be delivered to the
Owner upon Substantial Completion. The preceding documents and copies
thereof are for use solely with respect to this Project.
15. Royalties. The
Contractor shall pay all royalties and other fees for any patents, trademarks,
copyrights or other proprietary rights necessary for the execution and
completion of the Work.
25
16. Independent Agent. In
performing services and duties hereunder, Contractor shall do so as independent
agent for the Owner and is not, and is not to be deemed an employee of Owner, or
any other person acting on behalf of Owner. Contractor shall be
responsible for meeting any legal requirements imposed on Contractor as a result
of this Contract, including but not limited to the filing of income tax returns
and the payment of taxes; and Contractor agrees to indemnify Owner for the
failure to do so.
17. No Third-Party
Beneficiary. Except with respect to [name intentionally
omitted] as provided herein, no provision of the Contract is intended to nor
shall it in any way inure to the benefit of any customer, property owner or any
other third party, so as to constitute any such person a third-party beneficiary
under the Contract, or of any one or more of the terms hereof, or otherwise give
rise to any cause of action in any person not a Party
hereto. Notwithstanding the foregoing, [name intentionally omitted]
is intended to be and is a third party beneficiary of this
Contract.
18. Previous Agreement.
This Contract supersedes the Development Agreement dated December 30, 2005
between Grant County Wind and DanMar & Associates, Inc., which agreement has
been terminated in all respects.
19. Governing
Law. The Contract is made in the State of Minnesota and shall
be interpreted and governed by the laws of the State of Minnesota and/or the
laws of the United States, as applicable, without regard to choice of law
principles.
20. Entire
Agreement. This Contract represents the entire agreement
between the Owner and Contractor with respect to the subject matter hereof, and
supersedes all prior negotiations, representations or agreements, whether
written or oral. No amendment hereto shall be valid or binding unless
it is in writing and signed by the Parties.
21. Successors and
Assigns. Except as otherwise set forth herein with respect to
the Note and Security Agreement or otherwise, Contractor may not assign, convey
or transfer this Contract or any part hereof, or delegate any of its duties or
obligations hereunder, without the Owner’s prior written
consent. This Contract shall be binding upon, and inure to the
benefit of, the successors and permitted assigns of the Parties
hereto. Contractor acknowledges and understands that the Owner
intends to collaterally assign the Contract to various financing sources, and
hereby agrees that it shall execute a consent to the Owner’s collateral
assignment of the Contract to any such financing sources; further Contractor
hereby expressly consents to the assignment of this Contract to [name
intentionally omitted] pursuant to the financing arrangements set forth in the
Financing Agreement and related documents.
22. Intercreditor
Agreement. Anything herein to the contrary
notwithstanding, the liens and security interests securing the obligations
evidenced hereby, the exercise of any right or remedy with respect thereto, and
certain of the rights of the holder hereof are subject to the provisions of the
Intercreditor Agreement. In the event of any conflict between the
terms hereof and the Intercreditor Agreement, the terms of the Intercreditor
Agreement shall govern and control.
23. Severability. In
case any provision in this Contract is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected.
26
24. Headings. The
headings and captions used in this Contract are inserted for reference and
convenience only and the same shall not limit or construe the sections, articles
or paragraphs to which they apply or otherwise affect the interpretation
thereof.
25. Authority to
Execute. Each Party represents and warrants to the other that
this Contract has been duly authorized, executed and delivered by and on behalf
of each such Party, and constitutes the legal, valid and binding agreement of
said Parties.
26. Execution in
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall he deemed to be an original and all of which taken
together shall constitute one and the same agreement.
27. Signatures. The
exchange of copies of this Agreement and of signature pages by facsimile or
other electronic transmission shall constitute effective execution and delivery
of this Agreement as to the parties and may be used in lieu of the original
Agreement for all purposes. Signatures of the parties transmitted by
facsimile or other electronic means shall be deemed to be their original
signatures for all purposes.
28. Time is of the
Essence. Time is of the essence with regard to the achievement
of the Initial Mechanical Completion Date, Scheduled Mechanical Completion Date,
Scheduled Substantial Completion Date and Scheduled Final Completion Date, as
such date may be extended herein, where “Scheduled Substantial Completion Date”
means February 25, 2010 and “Scheduled Final Completion Date” means March 31,
2010.
27
IN
WITNESS WHEREOF, the parties have caused this Contract to be executed by their
duly authorized officers as of the day and year first written
above.
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GRANT
COUNTY WIND, LLC
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▇▇▇▇
ENERGY DEVELOPMENT, INC.
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a
Minnesota limited liability company
|
a
Minnesota corporation
|
|||
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By:
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/s/ ▇▇▇▇▇ Persons
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By:
|
/s/ ▇▇▇ ▇▇▇▇
|
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Its:
|
Chief Manager
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Its:
|
Chief Executive Officer
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Roseville Wind 1
L.L.C.,
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Western Minnesota Wind 1
LLC,
|
|||
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a
Minnesota limited liability company
|
a
Minnesota limited liability company
|
|||
|
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
|
By:
|
/s/▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇ ▇. ▇▇▇▇▇
|
Name:
|
▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Its:
|
Manager
|
Its:
|
Manager
|
|
|
Roseville Wind 2
LLC,
|
Western Minnesota Wind 2
LLC,
|
|||
|
a
Minnesota limited liability company
|
a
Minnesota limited liability company
|
|||
|
By:
|
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇
|
By:
|
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
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Name:
|
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
Name:
|
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
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Its:
|
Chief Manager
|
Its:
|
Manager
|
|
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Roseville Wind #3,
LLC,
|
Western Minn Wind 3
LLC,
|
|||
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a
Minnesota limited liability company
|
a
Minnesota limited liability company
|
|||
|
By:
|
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
By:
|
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
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Name:
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
Name:
|
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
|
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Its:
|
Manager
|
Its:
|
Manager
|
|
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Roseville Wind 4,
LLC,
|
Western Minn Wind 4
LLC,
|
|||
|
a
Minnesota limited liability company
|
a
Minnesota limited liability company
|
|||
|
By:
|
/s/▇▇▇▇▇ ▇▇▇▇▇
|
By:
|
/s/▇▇▇▇ ▇▇▇▇▇▇▇
|
|
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Name:
|
▇▇▇▇▇ ▇▇▇▇▇
|
Name:
|
▇▇▇▇ ▇▇▇▇▇▇▇
|
|
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Its:
|
Manager
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Its:
|
Manager
|
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28
|
Rafter P Wind,
LLC,
|
Western Minn Wind 5
LLC,
|
|||
|
a
Minnesota limited liability company
|
a
Minnesota limited liability company
|
|||
|
By:
|
/s/▇▇▇▇▇ Persons
|
By:
|
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇ Persons
|
Name:
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|
|
Its:
|
Chief Manager
|
Its:
|
Manager
|
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29