TURBINE SUPPLY AGREEMENT
By
and Between
▇▇▇▇▇▇,
INC.,
a
Nevada corporation (“Seller”)
and
XRG
DEVELOPMENT PARTNERS, LLC
an
Idaho limited liability company (“Owner”)
Dated
as of March 27, 2007
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ARTICLE
1 DEFINITIONS
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5
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1.1
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Defined
Terms
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5
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ARTICLE
2 INTERPRETATION
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5
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2.1
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Sections
and Exhibits
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5
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2.2
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Headings
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5
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2.3
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Gender
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5
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2.4
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Successors
and Assigns
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5
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2.5
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Construction
of Agreement
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5
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ARTICLE
3 SALE AND PURCHASE OF WIND TURBINES
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5
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3.1
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Sale
of Wind Turbines
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5
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3.2
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Compliance
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6
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ARTICLE
4 CONTRACT PRICE AND PAYMENT
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6
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4.1
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Contract
Price; Unit Price.
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6
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4.2
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Payment
Schedule and Method
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7
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4.3
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Change
Orders.
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7
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ARTICLE
5 DELIVERIES OF WIND TURBINES
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9
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5.1
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Delivery
of Notice to Proceed
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9
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5.2
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Delivery
of Wind Turbines
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9
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5.3
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Damages
for Late Deliveries.
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10
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5.4
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Packing
of Wind Turbines
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12
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5.5
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Transfer
of Title; Risk of Loss
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12
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5.6
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Other
Deliveries By Seller
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12
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5.7
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Storage
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12
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5.8
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Execution
and Delivery of the CTC Guaranty
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12
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5.9
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Owner
Rights with Respect to the Wind Turbines
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13
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ARTICLE
6 DESIGN, FOUNDATION REPORT AND MECHANICAL COMPLETION
CERTIFICATES
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13
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6.1
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Design.
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13
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6.2
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Power
Curve Demonstration and Design Certificates
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15
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6.3
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Mechanical
Completion, Mechanical Completion Certificate and Project Mechanical
Completion Certificate.
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15
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ARTICLE
7 INSURANCE
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16
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7.1
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Insurance.
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16
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ARTICLE
8 OWNER’S WORKS, SELLER’S TECHNICAL ASSISTANCE AND
VARIATION
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17
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8.1
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Owner’s
Work
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17
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8.2
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Technical
Assistance
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17
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8.3
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Variation
and Adjustment
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17
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8.4
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Right
of Access
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17
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8.5
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Owner’s
Representative
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18
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8.6
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Seller’s
Representative
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18
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8.7
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Training
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18
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ARTICLE
9 COMMISSIONING AND COMPLETION
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18
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9.1
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Commissioning
of WTGs
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18
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9.2
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Commissioning
Services
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19
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ARTICLE
10 WARRANTIES
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20
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10.1
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Warranty
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20
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10.2
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Warranty
Period
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20
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10.3
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Correction
of Deficiencies.
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20
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10.4
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Conformance
of Warranty Service to Specifications
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21
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10.5
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Warranty
Service at Seller's Cost; Survival
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21
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10.6
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Availability
Warranty
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21
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10.7
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Noise
Warranty
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22
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10.8
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Power
Curve Guarantee
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22
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10.9
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Limitations
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24
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10.10
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WARRANTY
DISCLAIMER
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25
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ARTICLE
11 INDEMNIFICATION AND INTELLECTUAL PROPERTY
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25
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11.1
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General
Indemnification.
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25
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11.6
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Intellectual
Property; License.
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26
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11.7
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Indemnification
Regarding Infringement
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27
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ARTICLE
12 REPRESENTATIONS AND WARRANTIES OF OWNER
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28
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12.1
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Owner
Representations and Warranties
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28
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12.2
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Seller
Representations and Warranties
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28
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ARTICLE
13 EXCUSABLE DELAY; DEFAULT; CURE
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30
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13.1
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Excusable
Delay
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30
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13.2
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Notice.
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30
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13.3
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Default.
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30
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ARTICLE
14 DISPUTES
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31
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14.1
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Disputes
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31
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14.2
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Jurisdiction
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31
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ARTICLE
15 GENERAL PROVISIONS
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32
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15.1
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Waiver
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32
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15.2
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Successors
and Assigns
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32
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15.3
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Notices
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32
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15.4
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Amendments
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33
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15.5
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Attachments
Incorporated
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33
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15.6
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Entire
Agreement
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33
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15.7
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No
Merger
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33
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15.8
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Attorneys’
Fees
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34
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15.9
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Site
Regulations
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34
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2 -
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15.10
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Confidentiality.
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34
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15.11
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Wind
Speed Projections
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35
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15.12
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Documentation
and Correspondence
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35
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15.13
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Counterparts
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35
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15.14
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Limitation
of Liability and Exclusions
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35
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15.15
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Cooperation
With Financing Parties
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35
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EXHIBIT
A
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Specifications
and Documentation for Wind Turbines
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EXHIBIT
A-1
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Scope
of Work and Parts
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EXHIBIT
B
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Site
Description
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EXHIBIT
C
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Composite
Technology Corporation Guaranty
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EXHIBIT
D
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Commissioning
Procedures
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EXHIBIT
E
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Delivery
Schedule [to come]
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EXHIBIT
F
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Erection
and Installation Manuals
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EXHIBIT
G
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Intentionally
Omitted
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EXHIBIT
H
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Description
of Owner’s Work
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EXHIBIT
I
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Form
of GL Certificate
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EXHIBIT
J
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Form
of Mechanical Completion Certificate
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EXHIBIT
K
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[not
used]
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EXHIBIT
L
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[not
used]
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EXHIBIT
M
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Insurance
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EXHIBIT
N
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Form
of Commissioning Certificate
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EXHIBIT
O
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Recommended
Spare Parts
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EXHIBIT
P
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Scope
of Technical Services
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EXHIBIT
Q
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Form
of Final Completion Certificate
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EXHIBIT
R
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Availability
Warranty Protocols
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EXHIBIT
S
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Power
Curve -- D8.2
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EXHIBIT
T
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Power
Curve Test Protocols
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EXHIBIT
U
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Reliability
Test Protocols
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APPENDIX
I
|
Definitions
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3 -
This
TURBINE SUPPLY AGREEMENT (this “Agreement”),
dated
as of March 27th, 2007 (the “Effective
Date”),
is
made and entered into by and between XRG DEVELOPMENT PARTNERS, LLC an Idaho
limited liability company (“Owner”)
and
▇▇▇▇▇▇, INC., a Nevada corporation (“Seller”
or
“Supplier”).
Each
of
Seller and Owner are referred to herein individually as, a “Party”
as
the
context requires, and collectively as, the “Parties.”
Recitals
A. Seller
sells, procures components and assembles Wind Turbines as described in
Exhibit
A
(the
“Wind
Turbines”),
and
Seller and Owner wish to enter into an agreement pursuant to which Owner agrees
to purchase and order from Seller and to pay for eighteen (18) Wind
Turbines.
B. The
Owner
informs Seller that the Wind Turbines to be purchased by Owner shall be used
for
the purpose of developing, constructing, building and installing the Big Blue
Windfarm Project,
located at the Site, as described in Exhibit B, in Blue Earth,
Minnesota.
C. Owner
informs Seller that Owner will enter into separate arrangements to erect and
install the Wind Turbines and Towers to be supplied by Seller to Owner pursuant
to this Agreement.
D. Seller
is
a wholly-owned subsidiary of Composite Technology Corporation, a holding company
with its principal place of business located in California, USA, which has
agreed to issue a payment and performance guaranty of Seller’s obligations under
this Agreement, substantially in the form attached as Exhibit
C
(“CTC
Guaranty”).
E. The
Parties are concluding and intend to enter into a Master Turbine Procurement
Agreement (“MTPA”) prior to April 30, 2007 whereby Seller will provide Owner
with options to acquire, over a period of five (5) years, wind turbines
manufactured by Seller, the first group of which is the subject of this
Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Owner agree as follows
intending to be legally bound:
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4 -
Article
1
Definitions
1.1 Defined
Terms.
For
purposes of this Agreement, capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms in Appendix
I
hereto.
Article
2
Interpretation
2.1 Sections
and Exhibits.
References to sections, subsections, articles, exhibits and appendices are,
unless otherwise indicated, to sections, subsections and articles of, and
exhibits and appendices to, this Agreement.
2.2 Headings.
The
headings of sections, subsections, articles, exhibits and appendices of this
Agreement are for ease of reference only and do not form part of this Agreement
and shall not in any way affect its construction.
2.3 Gender.
The
masculine gender shall include the feminine and neuter and the singular number
shall include the plural and vice versa.
2.4 Successors
and Assigns.
References to Parties to this Agreement shall include references to their
successors and permitted assigns.
2.5 Construction
of Agreement.
Each of
the Parties have participated in the drafting of this Agreement. This Agreement
shall, in the event of any dispute over its meaning or application, be
interpreted fairly and reasonably, and neither more strongly for or against
either Party.
Article
3
Sale
and Purchase of Wind Turbines
3.1 Sale
of Wind Turbines.
Upon
the terms and subject to the conditions of this Agreement, Seller hereby
agrees
to sell and deliver to Owner (a)
the
Wind Turbine blades at the Port of Milwaukee, WI; (b) the Wind Turbine tower
equipment at a factory located in the continental United States or at the
Port
of Milwaukee, WI; and (c) the Turbine Nacelles at Seller’s factory in Round
Rock, Texas (together, the “Designated
Delivery Location”).
Seller also agrees to deliver at its factory in Round Rock Texas
certain
ancillary equipment, tools and documentation for the assembly, erection,
maintenance and operation of the Wind Turbines, and operation and maintenance
manuals and other necessary documentation as specified in Exhibit
A
hereto,
and to perform all procedures necessary for the Commissioning of such Wind
Turbines. Owner hereby agrees to purchase, pay for and accept from Seller,
such
Wind Turbines and other equipment and services. Seller agrees to furnish
at its
own cost and expense all labor, materials, services and any other things
necessary to perform and complete the Seller’s Work substantially in accordance
with this Agreement, as modified from time-to-time in accordance with the
provisions hereof.
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5 -
3.2 Compliance.
In
performing the Seller’s Work, Seller shall comply with Prudent Wind Industry
Practices, Applicable Laws and this Agreement.
3.3 Wind
Turbine Serial Numbers
3.4 .Seller
shall assign an identity number to each Wind Turbine nacelle, blade, and
tower
section at the time of commencing manufacturing in a form and manner sufficient
to allow Owner to track the Wind Turbines and components during production.
Seller shall also assign an identity number to each Wind Turbine, including
correlations to component identity numbers, at the time of Commissioning
Completion and deliver such identity numbers to Owner.
3.5 Spare
Parts.
(a) Recommended
Inventory.
Attached hereto as Exhibit
O
is a
recommended list of types and quantities of spare parts for the
Project.
(b) Sale
of Spare Parts.
Spare
Parts shall be available for purchase by Owner for the Wind Turbines for
a
period of twenty (20) years after Commissioning Completion of the last Wind
Turbine. If Seller is no longer in the business of manufacturing wind turbines,
it shall use commercially reasonable efforts to arrange on behalf of Owner
appropriate alternative manufacturers. If Owner elects to purchase any
replacement parts from Seller for the Wind Turbines within such time period,
Seller shall sell such replacement Parts to Owner at Seller’s then effective
list price.
Article
4
Contract
Price and Payment
4.1 Contract
Price; Unit Price.
In full
and complete payment for all of the Wind Turbines, Towers and ancillary
equipment delivered to the Designated Delivery Locations in accordance with
the
provisions of this Agreement, and Seller’s other obligations under this
Agreement with respect thereto, Owner shall pay to Seller in the manner and
at
the time specified in Section 4.2, and Seller shall accept as payment in
full by
Owner, the sum of [ *
*]
(“Contract Price”), which price is calculated on a unit price of [ *
*]
for each
Wind Turbine (“Unit Price”). The Contract price includes any non-unit-specific
items included within the Scope of Work, as more fully described in Exhibit
A-1.
On Owner’s written request, delivered not later than May 7, 2007, Seller shall
offer to provide the Cold Weather Extreme Package at a price of [*
*]
per wind
turbine generator. The Contract Price stated above is inclusive of any Seller
financing costs, packing costs, the costs of insurance for transportation
of the
Wind Turbines and Towers to the Designated Delivery Locations, technical
advice
during erection and mechanical completion to the extent set forth in
Exhibit
P,
Commissioning services, customs duties and other Taxes payable by Seller.
The
Contract Price does not include any sales or use tax, which sales or use
tax, if
any, shall be paid by Owner.
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange Commission.
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6 -
4.2 Payment
Schedule and Method.
Subject
to the requirements of Section
4.3
and
Section 4.4,
Owner
shall pay the Contract Price to Seller, by wire transfer, as follows:
(a) A
Reservation Payment not later than five (5) Business Days after the Effective
Date in the amount of [*
*]
for
the
Wind Turbines for the Big Blue Windfarm Project.
(b) A
Notice
to Proceed Payment in the amount of [*
*]
for
the
Wind Turbines on or before May 7, 2007, subject to Seller’s delivery of the
Certificate of Design Approval and subject to Seller and Buyer agreeing the
Delivery Schedule, as set forth in Section
5.1.
(c) A
Progress Payment in the amount of [*
*]
for
the
Wind Turbines not later than 60 days prior to the scheduled Delivery
Date.
(d) A
per-Wind Turbine Delivery Payment equal to forty percent (40%) of the Unit
Price
within
five (5) Business Days after Seller’s delivery to the Designated Delivery
Location of each item listed in the Delivery Schedule comprising such Wind
Turbine.
(e) A
per-Wind Turbine payment equal to fifteen percent (15%) of the Unit Price
of a
Wind Turbine within five (5) Business Days of Commissioning of each Wind
Turbine.
(f) A
Final
Completion payment in
the
amount of [*
*]
for
the
Wind Turbines
within
five (5) Business Days of Final Completion.
4.3 Change
Orders.
[*
*] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange
Commission.
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7 -
(a) Either
Party may make requests for changes within the general scope of work included
in
this Agreement (any such change being a "Change
Order")
by
giving the other Party written notice of any proposed Change Order. Within
thirty (30) days from the other Party’s receipt of any such request, the
receiving Party shall submit to the requesting Party the adjustments required
in
the Contract Price and any other terms and conditions of this Agreement that
would result from implementation of such Change Order. Seller and Owner shall
enter into a written agreement as to such modifications prior to the
implementation of any Change Order and no Party shall have an obligation
to
proceed with any Change Order until such written agreement has been executed
by
both Parties. Notwithstanding the foregoing, Seller shall be entitled to
a
Change Order to reflect its increased cost, schedule delays or modifications
to
the scope of the Work occasioned by an Excusable Delay or an Owner Caused
Delay.
Seller shall have no obligation to consider any Change Order that increases
the
number of Wind Turbines to be supplied and delivered pursuant to the terms
of
this Agreement, or that would impair Seller’s ability, in its sole discretion,
to achieve any of the performance guarantees, warranties or covenants of
Seller
set forth in this Agreement.
(b) At
any
time prior to delivery of the Wind Turbines to Owner, Owner may notify Seller
that some or all of such Wind Turbines shall be installed at another site.
If
any Wind Turbines will be installed at another site, the Parties shall mutually
agree upon the impact to the Delivery Schedule, the Wind Turbine Specifications,
the Contract Price (but only to the extent of changes in such specifications),
and other terms and conditions of this Agreement, and shall amend this Agreement
by Change Order to reflect any such changes.
4.4 Grant
of Security InterestSeller
hereby grants to Owner a security interest in and to the materials and
components acquired and fabricated by Seller for the performance of Seller’s
obligations under this Agreement, limited to the amount that Owner has paid
Supplier with respect to the Wind Turbines, including any modifications thereto
or replacements thereof, together with all proceeds of the foregoing
(“Collateral”), as security until title to the Wind Turbines has passed to Owner
pursuant to Section 5.5 of this Agreement. Seller authorizes Owner to make
any
and all UCC-1 filings with the appropriate Governmental Authorities it deems
necessary to evidence or to perfect and protect the security interest granted
pursuant to this Section
4.4.
If
requested by Owner, Seller shall, at its expense, promptly execute and deliver
to Owner, any and all documents or instruments to enable Owner to exercise
and
enforce its rights and remedies hereunder and as a secured party under the
Uniform Commercial Code in effect in any applicable jurisdiction and to perfect
and protect the security interest granted pursuant to this Section
4.4
including the execution of financing statements (and amendments thereto).
Owner
may exercise its remedies against some or all of the Collateral and in such
order as it shall choose in its sole discretion. Upon Seller’s request at any
time after passage of title with respect to any Wind Turbine, and in any
event
no later than Project Mechanical Completion, Owner shall deliver UCC-3
termination statements covering all Wind Turbines for which title has passed
to
Owner. For the avoidance of doubt, Seller’s grant of a security interest in the
Collateral shall not affect or be construed as a waiver of any statutory
contractor’s liens in favor of Seller.
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8 -
4.5 Effect
of Payment
4.6 Payment
of the Contract Price or any portion thereof shall not constitute Owner’s
approval or acceptance of any portion of the Wind Turbines or of Seller’s Work
or result in a waiver of any rights or remedies Owner may have with respect
to
any portion of the Wind Turbines or Seller’s Work that have been, or
subsequently are, determined not to conform to the Wind Turbine Specifications
and Scope of Supply.
4.6 Use
of
Funds.
Seller
shall apply not less than 80% of each payment made pursuant to Sections 4.2
(a),
(b), and (c) to the procurement of materials and components to be incorporated
in the manufacture of the Wind Turbines, but including payments to
TECO.
Article
5
Deliveries
of Wind Turbines
5.1 Notice
to Proceed
and
Delivery Schedule.
Owner
shall be deemed to have issued to Seller a notice to proceed with the
fabrication, delivery, and sale of the Wind Turbines on the Effective Date
(“Notice
to Proceed”).
On or
before May 7, 2007, Owner shall specify Owner’s proposed Delivery Schedule for
the Wind Turbines. On or before [March 15, 2007], Owner shall provide evidence
satisfactory to Seller that it has sufficient financing in place to pay the
Contract Price for the Wind Turbines (including in the consent document a
direct
obligation from lenders to fund Owner’s purchase of Wind Turbines hereunder, or
a letter of credit in the amount from time to time of all remaining unpaid
portions of the Contract Price) and to perform Owner’s other obligations under
this Agreement. Within 5 business days of receipt of the Owner’s proposed
Delivery Schedule, Seller shall confirm or reject Owner’s proposed delivery
schedule. With any rejection of Owner’s proposed delivery schedule, Seller shall
propose a delivery schedule acceptable to Seller, provided however, that
Seller’s proposed delivery schedule shall include a Delivery Date not later than
November 30, 2007. Owner shall have no obligation to make the Notice to Proceed
Payment until the parties have mutually confirmed a delivery schedule. The
Delivery Schedule for this Agreement shall be as specified by the Parties
pursuant to this Section 5.1, and shall comprise Exhibit
E
hereto
when agreed.
5.2 Delivery
of Wind Turbines.
(a) Seller
shall deliver all Wind Turbines to the Designated Delivery Location(s) in
accordance with the Delivery Schedule. Not less than three (3), nor more
the
five (5) Business Days prior to each scheduled Delivery Date, Seller shall
provide Owner with notice confirming expected delivery of the Wind Turbines.
Owner at its own cost and expense may inspect the Wind Turbines at the
Designated Delivery Locations prior to delivery, and may reject any defective
Wind Turbines. Owner’s inspection of the Wind Turbines shall not diminish
Seller’s obligations under Section 3.2, nor shall it constitute an “acceptance”
within the meaning of Section 2606 of the Uniform Commercial Code (“UCC 2606”).
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9 -
(b) Owner
shall arrange all shipments and pay all shipment costs and insurance for
transport of the Wind Turbines from Designated Delivery Locations to the
Site.
Seller shall at its own cost and expense re-inspect the Wind Turbines upon
delivery at the Site and either (i) accept the Wind Turbines within the meaning
of UCC 2606, which acceptance shall not constitute a waiver of Seller’s
warranties under Article 10 of this Agreement, or (ii) reject the Wind Turbines
as nonconforming goods and provide Owner with written notice of the reasons
for
the rejection including the appearance of changes in the condition of the
Wind
Turbines during shipment from Seller’s delivery points to the Site.
5.3 Liquidated
Damages for Late Deliveries.
(a) If
delivery of any Wind Turbine in accordance with the terms of this Agreement
occurs after the scheduled delivery date for said Wind Turbine as provided
in
the Delivery Schedule (“Wind
Turbine Delivery Delay”),
both
Seller and Owner acknowledge and agree that Owner will suffer damages as
a
result thereof and that said damages will be difficult to determine.
Accordingly, as a material element of this Agreement, Owner and Seller hereby
agree that Seller shall be liable for, and shall pay to Owner liquidated
damages
calculated in accordance with Section
5.3(b)
for each
Wind Turbine Delivery Delay other than delay which constitutes Excusable
Delay
or Owner Caused Delay, in which case the Delivery Schedule shall be adjusted
to
the extent Seller is affected by such delay. In addition, Owner and Seller
hereby agree that such liquidated damages calculated in accordance with
Section
5.3(b)
represent a fair and reasonable estimate by Owner and Seller, at the time
this
Agreement is made and in light of the circumstances and their knowledge at
such
time, of the actual damages Owner would likely suffer in the event of a Wind
Turbine Delivery Delay not exceeding 30 days.
(b) For
each
Day of Wind Turbine Delivery Delay (each such Day being a “WTG
Delay Day”),
if
Owner
suffers additional cost or delay as a result of Seller’s delay,
Seller
shall pay to Owner the amounts set forth below as liquidated damages provided,
however, that the amount of liquidated damages for each WTG Delay Day shall
be
reduced by 50% if Seller notifies Owner there will be a Wind Turbine Delivery
Delay applicable to particular Wind Turbines not less than 90 Days prior
to the
scheduled delivery date(s), and provided further, that such liquidated damages
shall be waived if Owner, using commercially reasonable efforts, is able
to
avoid additional cost or delay as a result of the advance notice given by
Seller
of its anticipated delay. In any such notice, Seller shall specify the new
date
for delivery of the Wind Turbines (“Revised Delivery Date”).
-
10 -
|
Number
of WTG Delay Days (for each WTG as to which there is a Wind Turbine
Delivery Delay)
|
Liquidated
Damages Payable Per WTG Delay Day Incurred
|
|
1
to 10 WTG Delay Days
|
US
[ *
*]
per WTG Delay Day
|
|
11
to 30 WTG Delay Days
|
US
[*
*]
per WTG Delay Day
|
(c) Seller
shall pay to Owner within ten (10) Business Days following demand by Owner
any
and all liquidated damages payable under Section
5.3.
If and
to the extent Seller fails to pay to Owner within such ten (10) Business
Days
any such damages, Owner shall be entitled to set off the amount of such damages
owed by Seller against the amount of the Contract Price for such Wind Turbines
payable by Owner pursuant to Section
4.2.
(d)
If
delivery of any Wind Turbine in accordance with the terms of this Agreement
occurs at any time after a Revised Delivery Date, Seller shall pay to Owner
the
amounts set forth below as liquidated damages:
|
Number
of WTG Delay Days (for each WTG as to which there is a Wind Turbine
Delivery Delay)
|
Liquidated
Damages Payable Per WTG Delay Day Incurred
|
|
1
to 10 WTG Delay Days
|
US$[*
*]
per WTG Delay Day
|
|
11
to 60 WTG Delay Days
|
US$[*
*]
per WTG Delay Day
|
(e) If
delivery of any Wind Turbine in accordance with the terms of this Agreement
occurs more than sixty (60) days after the Revised Delivery Date for said
Wind
Turbine, Seller shall be liable for all resulting damages except as expressly
limited and excluded by this Agreement.
(f) Notwithstanding
any other provision of this Agreement, Seller agrees that the first eighteen
(18) Wind Turbines manufactured by or on behalf of Seller, other than test
or
prototype units, shall be made available to Owner pursuant to the terms of
this
Agreement. A breach of this Section 5.3(f) shall not be remedied by liquidated
damages and Seller shall be liable for all resulting damages except as otherwise
expressly limited and excluded by this Agreement.
[*
*] This material has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange
Commission.
-
11 -
5.4 Packing
of Wind Turbines.
The
Wind Turbines shall be properly packed in accordance with the standard practice
of Seller, consistent with Prudent Wind Industry Practice, and in such a
manner
as is necessary for safe intermodal transport and delivery to the Site pursuant
to Section
5.2
and as
required by the contract or contracts of carriage and policy or policies
of
insurance. The Wind Turbine packaging shall be marked
appropriately.
5.5 Transfer
of Title; Risk of Loss.
Risk of
loss of and damage to each Wind Turbine shall be transferred to Owner when
it
has been delivered to Owner at the Designated Delivery Location. Title to
each
Wind Turbine shall be transferred to Owner upon payment of the amount required
to be paid for such Wind Turbine pursuant to Section
4.2(e).
Seller
expressly agrees to cooperate with Owner and take such action as shall be
reasonably requested to permit the Financing Parties to acquire security
interests in the Wind Turbines and in this Agreement as required under any
loan
documentation entered into with the Financing Parties.
5.6 Other
Deliveries By Seller.
Seller
shall deliver to Owner the following documents:
(a) Not
later
than the thirty (30) days following the Notice to Proceed Payment, Seller
shall
deliver five (5) complete copies of the Erection and Installation Manuals.
In addition, if Seller modifies, amends or expands the Erection and Installation
Manuals, Seller shall promptly provide to Owner five (5) complete copies
of any
such modification, amendment or expansion.
(b) Not
later
than the thirty (30) days prior to the first scheduled Delivery of a 2007
Wind
Turbine, Seller shall deliver five (5) complete copies of the Seller’s O&M
Procedures Manual. In addition, if Seller modifies, amends or expands the
Seller’s O&M Procedures Manual, Seller shall provide to Owner, within thirty
(30) Days of adoption, five (5) complete copies of any such modification,
amendment or expansion.
(c) Prior
to
or with delivery of each Wind Turbine component to the Site, Seller shall
deliver to Owner the quality assurance and quality control documentation
with
respect
to each such Wind Turbine component.
5.7 Storage.
If
Owner
declines, or is unable, to accept delivery of any Wind Turbine at the date
established in the Delivery Schedule, Seller shall store or caused to be
stored
the Wind Turbines at Owner’s risk and at Owner’s expense.
-
12 -
5.8 Execution
and Delivery of the CTC Guaranty.
Concurrently with execution of this Agreement, Seller shall cause Composite
Technology Corporation to issue the CTC Guaranty.
5.9 Owner
Rights with Respect to the Wind Turbines.
During
the period from the time of delivery of each Wind Turbine to the Site until
the
commencement of the Warranty Period, if such Wind Turbine or any Part or
Parts
thereof shall not conform to the Warranty, Seller shall, at its own cost
and
expense, repair or replace each Wind Turbine or Part or Parts for which a
defect
in design, material and workmanship is apparent or that would not otherwise
meet
the requirements for such Wind Turbine or Parts pursuant to the Warranty,
and
otherwise undertake the work that would otherwise constitute Warranty
Work.
5.10 Financing
CooperationSeller
shall provide such assistance as Owner may reasonably request in connection
with
obtaining financing for the Project. Seller agrees that it shall make available
to Owner and any Financing Parties information relating to the status of
Seller’s Work, including non-proprietary information relating to the design,
engineering, fabrication, delivery, Commissioning and testing of the Turbine
Equipment, the performance of Seller’s Work, and such other matters as Owner may
reasonably request. Seller shall furnish such consents to assignment, estoppel
certificates, certifications and representations and opinions of counsel
addressed to Owner and such Financing Parties, as may be reasonably requested
by
Owner or such Financing Parties, and all reasonable costs incurred by Seller
in
executing and delivering such documents or providing other support shall
be
borne by Owner. At Owner’s request, Seller shall cooperate with the independent
engineer and technical advisors, if any, of any Financing Parties.
Article
6
Design,
Foundation Report and Mechanical Completion
Certificates
6.1 Design.
(a) On
or
before June 1, 2007, Owner will provide Seller with drawings illustrating
the
Site layout and placement of crane pads. Within ten (10) Business Days of
Seller’s receipt of the Site layout drawings, Seller shall provide to Owner, in
writing, any comments it may have on such drawings, including any suggested
modifications or adjustments. Seller’s failure to provide suggested
modifications or comments pursuant to this section shall preclude Seller
from
raising the consequences of the Site layout as a defense to any claim under
the
Warranty.
(b) On
or
before May 1, 2007, (a) Seller shall provide Owner with loading data on the
WTGs
and technical information necessary for the design of the foundations on
which
the WTGs shall be installed (“Foundation
Design”),
and
(b) Owner shall provide Seller with copies of geotechnical borings or other
soil
data reports obtained by Owner for the Site. Owner shall provide to Seller
the
Foundation Design within ten (10) Days of receipt of same by Owner. Within
ten
(10) Business Days following Seller’s receipt from Owner of the Foundation
Design, including the dimension data, Seller shall review, approve or take
other
appropriate action regarding the conformity of the Foundation Designs with
the
loading data in the Wind Turbine Specifications, and shall notify Owner of
Seller’s conclusions, repeating the process with respect to any revised
Foundation Designs Owner may provide to Seller for its review. Seller shall
not
be required to employ any soil specialists, engineers or other professionals
to
review the design of the foundation for compliance to Applicable Laws.
-
13 -
(c) Not
later
than 90 Days following the Effective Date, Seller shall demonstrate, to the
reasonable satisfaction of Owner which shall not be unreasonably withheld,
that
it has secured a sufficient supply of Wind Turbine components and material
to
satisfy the requirements of this Agreement. Components and material include,
but
are not limited to: steel, carbon fiber, Voith WinDrive’s Gearboxes, Towers, and
Blades.
(d) Acceptance
or approval by Owner of drawings or other documents provided by Seller in
respect of work proposed and/or designed by Seller or its Subcontractor(s)
(“Seller’s Documents”) shall not relieve Seller of responsibility for any errors
or omissions therein, nor for any of its other contractual and legal
obligations. If Owner identifies any discrepancy between Seller’s Documents and
documents related to the Owner’s Work, Owner shall notify Seller as soon as
possible, and in any event before the relevant Owner’s Work is
undertaken.
(e) Any
major
material changes to the WTGs or other equipment or materials made by Seller
or
its affiliates, after having been confirmed to Owner, are to be marked on
the
drawings with relevant dimensions, and provided to Owner as soon as reasonably
possible. A complete list of such supplier approved changes, together with
any
changes to the related drawings, shall be provided to Owner on or before
completion of the Seller’s Work.
(f) Both
Seller and Owner shall have a representative attend weekly Project meetings
(which meetings may be held telephonically) to discuss, in part:
(i) anticipated
requests to change the Project schedule and the reasons for each
request;
(ii) delays
and the reasons therefore and actions being taken;
(iii) shortages
of labor, plant or materials, and actions being taken;
-
14 -
(iv) difficulties
in the execution of subcontracts, if any, and actions being taken; and
(v) any
outstanding information previously requested by Owner or Seller,
respectively.
(g) Both
Seller and Owner shall have a representative attend monthly (or as otherwise
agreed) meetings and each shall inform their respective Subcontractors when
their presence at such meeting is required.
6.2 Power
Curve Demonstration and Design Certificates.
Seller
shall deliver to Owner a Certificate of Design Approval.
Owner
will work with Supplier to ensure that owner’s Financing Parties will accept
DEWI-OCC Certificate. Seller shall use its reasonable efforts to provide
a site
specific certification of the Wind Turbines in accordance with IEC Standard
61400-1 Ed.3 (2005) provided, however, the
delivery of said site specific certificate shall not be a condition precedent
to
Owner’s obligation to make any payment hereunder.
6.3 Mechanical
Completion, Mechanical Completion Certificate and Project Mechanical Completion
Certificate.
(a) Owner
shall be responsible for achieving Mechanical Completion of each individual
WTG
delivered to the Site including making available for its own use all tools
and
necessary equipment that is required to achieve Mechanical Completion,
including, without limitation, cranes. Seller also agrees to lend to Owner
free
of charge at the Designated Delivery Location one (1) set of special tools
necessary for the assembly and erection of the Wind Turbines, provided that
Owner at its expense shall return the special tools on the Final Completion
Date
to Seller at Seller’s factory in Round Rock, Texas in the same condition
tendered, normal wear and tear excepted.
(b) Beginning
on the date on which the first WTG achieves Mechanical Completion and on
every
date thereafter on which a WTG has achieved Mechanical Completion, Owner
shall
submit to Seller a certificate (“Mechanical
Completion Certificate”)
which
has been prepared by Owner’s Subcontractor, substantially in the form attached
as
Exhibit J,
with
respect to each such WTG as of such date.
(c) Within
one (1) Business Day following the date on which a Mechanical Completion
Certificate is received by Seller, Seller shall inspect each referenced WTG
for
compliance with the Mechanical Completion Checklist attached to such Mechanical
Completion Certificate and with the Erection and Installation Manuals. Within
two (2) Business Days following the date on which such Mechanical Completion
Certificate was received, Seller shall either: (i) countersign and deliver
to Owner the Mechanical Completion Certificate for such WTG to indicate its
agreement that such Mechanical Completion has been achieved; or (ii)
notify Owner of Seller’s belief that Mechanical Completion has not been achieved
with respect to a WTG specified therein. Any notice issued pursuant to clause
(ii) above shall state in detail Seller’s reasons for believing that any
such WTG has not achieved Mechanical Completion. In the event Seller delivers
the notice under the preceding clause (ii), Seller shall, pursuant to
Section
8.2,
advise
Owner of the actions required to achieve Mechanical Completion of such WTGs
and
Owner shall diligently complete the same in a professional and workmanlike
manner. Seller shall not unreasonably withhold its signature to the Mechanical
Completion Certificate and Seller’s failure to either countersign such
certificate or notify Owner of Seller’s reasons for the failure to do so within
such two (2) Business Day period shall constitute a deemed countersignature
by
Seller of the Mechanical Completion Certificate. By providing notice of Seller’s
belief that Mechanical Completion is not achieved, or providing such technical
support services, Seller does not assume any liability or responsibility
with
respect to any Owner’s Work or other matter for which Owner requests technical
support services. Upon completing such actions, Owner shall issue a new
Mechanical Completion Certificate for such WTG for reconsideration by Seller.
Such procedures shall be repeated as necessary until Mechanical Completion
has
been achieved for such WTG. For the purpose of this Agreement, the date of
achievement of Mechanical Completion for any individual WTG shall be the
date on
which both Owner and Seller have signed the respective Mechanical Completion
Certificate.
-
15 -
Article
7
Insurance
7.1 Insurance.
(a) Seller
and Owner shall maintain the insurance policies set forth in Exhibit M, hereto,
in accordance with Prudent Wind Industry Practices, and Seller shall provide
the
insurance required under the terms of the MTPA. Such insurance policies shall
be
in place no later than the Delivery of the first Wind Turbine
component.
(b) Owner
and
Seller intend that all policies purchased in accordance with Section 7.1(a)
will
protect Owner, Seller and all other customary parties as insureds or additional
insureds in such policies and will provide primary coverage for all losses
and
damages caused by the perils or causes of loss covered thereby. All such
policies shall contain waivers of subrogation in favor of the other
Party.
(c) Seller
and Owner each shall, within thirty (30) days following a request for same,
deliver to the other Party certificates of insurance evidencing the coverages
specified in this Section 7. All policies of insurance to be procured and
maintained hereunder shall be procured from an insurer carrying a Best’s
Insurance rating of A or higher or a financial institution carrying a ▇▇▇▇▇’▇ or
Standard & Poor’s bond rating of AA or higher, and shall provide, by
endorsement, that the other Party and any additional insured shall be provided
thirty (30) days' prior written notice of any material policy changes or
cancellations, and that no such cancellation or change shall be effective
without such notice.
-
16 -
Article
8
Owner’s
Works, Seller’s Technical Assistance and Variation
8.1 Owner’s
Work.
Owner
shall undertake and complete the Owner’s Work set forth in Exhibit
H
in
accordance with the Wind Turbine Specifications and the Erection and
Installation Manuals.
8.2 Technical
Assistance.
Seller’s representative shall be present at the Site for reasonable periods, at
Seller’s expense (to the extent of the scope set forth in Exhibit
P,
but
otherwise at Owner’s expense at pricing to be agreed by the Parties), during the
assembly, erection and installation of the WTGs by Owner in order to observe,
monitor and technically assist in the assembly, erection and installation
of the
WTGs in compliance with the Wind Turbine Specifications and the Erection
and
Installation Manuals. Seller’s representative shall reasonably cooperate and
coordinate with Owner and Owner’s contractors with respect to Seller’s technical
assistance, Seller’s commissioning of the Wind Turbines and the construction of
the balance of plant. Upon reasonable request by Owner, Seller shall provide
clarification or other instructions regarding procedures for assembly and
erection. Seller shall forthwith notify Owner in writing if it obtains actual
knowledge that any assembly, installation or erection of any WTG is not being
performed in accordance with the Wind Turbine Specifications or the Erection
and
Installation Manuals and advise Owner of the same in writing and as to those
procedures of the Wind Turbine Specifications or Erection and Installation
Manuals that have not been correctly performed. In the event that Owner,
Owner’s
employees or Subcontractors fail to comply with any such advice given by
Seller,
Seller shall not have any liability or responsibility with respect to any
subsequent malfunction of that WTG to the extent attributable to such failure
to
follow Seller’s advice.
8.3 Variation
and Adjustment.
If the
progress of Seller’ Work, or any part thereof, shall be delayed as a result of
any variation (“Variation”)
in
Seller’s Work agreed to by Owner and Seller, or any Excusable Delay, or a change
of Applicable Laws, then provided that Seller and Owner have taken all
reasonable steps to avoid or minimize the delay or the effects of such
Variation, Excusable Delay, or change of Applicable Laws, Owner and Seller
shall
negotiate in good faith and mutually agree on an extension of the scheduled
delivery and Commissioning dates as necessary to accommodate the Variation,
Excusable Delay, or change in Applicable Laws while preserving, to the extent
reasonably possible and economically feasible, the parties’ respective benefits
hereunder. Such mutual agreement shall include an adjustment in the Contract
Price to reflect any increased or decreased costs of performance resulting
from
the Variation, Excusable Delay or change in Applicable Laws.
-
17 -
8.4 Right
of Access.
Owner
hereby grants to Seller and to such persons or entities as Seller may reasonably
designate in connection with the performance of Seller’s Work under this
Agreement, full right of access to the Site during the performance of Seller’s
Work hereunder; provided,
however,
that
Seller shall be obligated to abide by the applicable Site safety, security
and
access rules.
8.5 Owner’s
Representative.
Owner
shall appoint an individual to act as the representative and coordinator
with
respect to this Agreement and the Site on Owner’s behalf (“Owner’s
Representative”)
and
shall so notify Seller in writing. The Owner’s Representative shall act as the
agent for Owner’s communications with Seller.
8.6 Seller’s
Representative.
Seller
shall appoint an individual to act as the representative and coordinator
with
respect to this Agreement and the Site on Seller’s behalf (“Seller’s
Representative”)
and
shall so notify Owner in writing. The Seller’s Representative shall act as the
agent for Seller’s communications with Owner.
8.7 Training.
Seller
shall, within the scope of Exhibit
P,
provide
at least seven (7) Days of operations and maintenance training for Owner’s
designated personnel at the Site and/or at Seller’s facility near the Site. Such
training shall begin at a mutually
agreed time, but
not
later than commencement of Commissioning of the Wind Turbines and shall be
completed before the Final Completion Date. Travel and living expenses incurred
for Owner’s personnel in connection with the training shall be borne by
Owner.
Article
9
Commissioning
and Completion
9.1 Commissioning
of WTGs.
Upon
confirmation of the Mechanical Completion of each WTG, Seller shall promptly
commence Commissioning of such WTG. Upon completion of Commissioning of such
WTG, Seller shall submit a Commissioning certificate (“Commissioning
Certificate”)
to
Owner in accordance with the form attached as Exhibit
N,
and
Owner or Owner’s representatives shall either: (a) deliver to Seller such
Commissioning Certificate countersigned; or (b) notify Seller that Commissioning
has not been achieved with respect to the specified WTG. Any notice issued
pursuant to clause (b) above shall state in detail the reasons for the failure
to countersign the Commissioning Certificate and advise Seller of the actions
Owner believes necessary to achieve Commissioning. In the event Owner delivers
notice under the preceding clause (b), Seller promptly shall take such action
as
to achieve Commissioning with respect to any WTG. Upon completing such actions,
Seller shall submit a new Commissioning Certificate for the applicable WTG
for
reconsideration by Owner. Such procedures shall be repeated as necessary
until
Commissioning is achieved with respect to such WTG. For purposes of this
Agreement, the date of achievement of Commissioning for any individual WTG
shall
be the submission date of the Commissioning Certificate that is countersigned
by
Owner with respect to a WTG. Seller shall cause Commissioning to occur in
accordance with the milestone date specified in the Delivery Schedule. Seller
shall have the right to use its own employees or any Subcontractor for purposes
of completing the Commissioning. Owner shall not unreasonably withhold its
signature to the Commissioning Certificate and Owner’s failure to either
countersign such certificate or notify Seller of Owner’s reasons for the failure
to do so within such two (2) Business Day period shall constitute a deemed
countersignature by Owner of the Commissioning Certificate.
-
18 -
9.2 Commissioning
Services.
Seller
shall provide qualified individuals for Commissioning services on the WTGs
sufficient to complete Commissioning by the scheduled Commercial Operation
Date,
it being understood that Owner shall deliver Wind Turbines to Seller for
Commissioning at a uniform rate, and shall deliver no more than two (2) Wind
Turbines per day for Commissioning. If Owner’s personnel are required by Seller
to assist Seller’s personnel in satisfying Seller’s Commissioning obligations
under this Agreement, such services shall be performed by both Seller’s
personnel and Owner’s personnel under the direct control and supervision of
Seller’s personnel, provided,
however,
that
the foregoing shall not diminish Seller’s obligations or liabilities under this
Agreement. Seller’s personnel shall also have the capability to train Owner’s
personnel for such Commissioning services.
9.3 Final
Completion
9.4.
“Final
Completion”
shall
be achieved when all of the following have been achieved in accordance with
this
Agreement:
(a) Commissioning
Completion has been achieved;
(b) All
punch
list items have been completed;
(c) the
Reliability Test has been successfully completed;
(d) All
Seller Documents required to be delivered hereunder to Owner have been delivered
to Owner; and
(e) The
Final
Completion Certificate described below has been executed and delivered by
both
Parties.
(f) Upon
achieving Final Completion, Seller shall submit to Owner a certificate
(“Final
Completion Certificate”)
which
has been prepared by Owner’s Subcontractor, substantially in the form attached
as
Exhibit Q.
Within
two (2) Business Days following the date on which the Final Completion
Certificate is received by Owner, Owner shall either: (i) countersign and
deliver to Seller the Final Completion Certificate; or (ii) notify Seller
of
Owner’s belief that Final Completion has not been achieved, specifying Owner’s
reasons therefor. Seller shall undertake such action necessary to address
Owner’s concern and issue a new Final Completion Certificate to Owner for
countersignature. Owner shall not unreasonably withhold its signature to
the
Final Completion Certificate and Owner’s failure to either countersign such
certificate or notify Seller of Owner’s reasons for the failure to do so within
such two (2) Business Day period shall constitute a deemed countersignature
by
Owner of the Final Certificate.
-
19 -
Article
10
Warranties
10.1 Warranty.
Seller
warrants that the Wind Turbines shall be (i) made of new materials in compliance
with the terms of this Agreement, Prudent Wind Industry Practices and the
Wind
Turbine Specifications, (ii) free of all material defects in design,
engineering, materials, manufacture, assembly and workmanship, and in compliance
with the Wind Turbine Specifications under the climatic and normal operating
conditions described in the Wind Turbine Specifications, and (iii) free of
liens
and encumbrances except as otherwise permitted in this Agreement (the
“Warranty”).
Any
portion of the Turbine Equipment or other services required of Seller under
this
Agreement which fail to meet this standard shall be deemed “Defective
Work”.
Further, Seller warrants that Commissioning work shall be performed in a
good
and workmanlike manner and in accordance with the requirements of this Agreement
and the Type Certificate.
10.2 Warranty
Period.
The
Warranty shall continue for a period (the “Warranty
Period”)
that
commences on the Final Completion Date and ends on the date that is the second
(2nd) anniversary thereof. Owner may extend the Warranty Period to a total
of
five (5) years from the Final Completion Date (“Extended Warranty”). The cost of
the Extended Warranty shall be US[ *
*]
per
Turbine per year for year 3, payable ninety (90) days prior to the beginning
of
the second anniversary of the Final Completion Date. For years 4 and 5, the
price of the Extended Warranty shall be adjusted by the Consumer Price Index
and
will be payable in ninety (90) days prior to the beginning of the each
anniversary of the Final Completion Date. To exercise its right to extend
the
Warranty Period, Owner shall notify Seller of its intent to exercise the
extension no later than 180 days prior to the scheduled expiration of the
initial two year period.
10.2.1
Service
Agreement.
As a
condition to the effectiveness of the Warranty, Owner must execute and maintain
in effect a Service Agreement, in form reasonably agreeable to Owner and
Seller
(the “Service
Agreement”),
for a
term that coincides with the Warranty Period and any Extended Warranty Period.
The Warranty shall be void if the Service Agreement between Seller and Owner
expires or terminates for any reason during the Extended Warranty Period.
If the
Service Agreement is terminated, and provided the Warranty Period or any
Extended Warranty period has not expired of its own terms, the Warranty shall
be
automatically reinstated if the Service Agreement is reinstated.
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange
Commission.
-
20 -
10.3 Correction
of Deficiencies.
(a) Seller
shall, upon discovery or other notification of any Defective Work, at its
sole
cost and expense (including the cost of labor and equipment), use all
commercially reasonable efforts to correct the Defective Work and repair
or
replace any defective part or equipment with materials of new and good quality
(the “Warranty
Service”).
If
Seller fails to complete the correction of any Defective Work of which it
has
been notified or which it has discovered, including the repair or replacement
of
defective parts or equipment, within a reasonable period of time, which shall
not in any case be less than __ weeks, Owner may notify Seller in writing
that
it intends to initiate required repairs one week after the date of notice.
If
Seller fails to promptly initiate the required Warranty Service after such
notice, Owner may proceed to have the necessary repairs made and Seller shall
be
responsible for the reasonable costs and expenses incurred by Owner for such
repairs. Any part or equipment that is repaired or replaced under the Warranty
and all associated labor shall be covered by the Warranty for a term equal
to
the greater of one (1) year from completion of repairs or the remaining Warranty
Period.
(b) In
the
event Seller becomes aware during the Warranty Period of a design,
manufacturing, component or other defect occurring in twenty percent (20%)
or
more of the Wind Turbines installed at the Site, or twenty percent (20%)
or more
of wind turbine generators in operation which are manufactured by Seller,
covered by a warranty from Seller similar to the Warranty, and have the same
design or components as the Wind Turbines, and which defect, if occurring
in any
of the Wind Turbines would constitute Defective Work, Seller shall devise
a plan
for correction of the defect or possible defect in all of the Wind Turbines
if
it would reasonably be expected to be present therein, at Seller’s expense, and
the Parties shall agree on the means for implementation of the plan. All
such
work performed shall be at Seller’s expense.
10.4 Conformance
of Warranty Service to Specifications.
Seller
warrants in favor of Owner that all Warranty Service, including all repaired
or
replace parts or equipment, shall meet and conform to the requirements of
the
Wind Turbine Specifications, Prudent Wind Industry Practices and this
Agreement.
10.5 Warranty
Service at Seller's Cost; Survival.
Seller
shall perform all Warranty Service at its own cost and expense. Seller's
obligation to correct, repair, replace or re-perform Defective Work pursuant
to
this Section 10 shall survive the termination or expiration of this Agreement,
so long as the Defective Work was identified to Seller in accordance with
the
provisions of this Section 10 and within the Warranty Period.
-
21 -
10.6 Availability
Warranty.
During
the Warranty Period, Seller warrants that the Wind Turbines, when installed
in
accordance with the Erection and Installation Manual, will achieve not less
than
[ *
*]
percent
Availability for the six-month period after the Final Completion Date and
not
less than [*
*]
Availability for the six-month period thereafter, and for each of the subsequent
years of the Warranty Period (“Guaranteed
Availability”).
Availability shall be measured in accordance with Exhibit
R.
To the
extent the Wind Turbines fail to achieve the minimum levels of Availability
stated in this Section 10.6 during any applicable period, Seller agrees and
acknowledges that Owner will suffer damages in the form of lost revenues
and
income and agrees to pay Owner damages in amounts calculated in the manner
set
forth in Exhibit
R
(the
“Availability
Liquidated Damages”).
The
parties agree that the Availability Liquidated Damages are a reasonable
approximation of the losses and damages likely to be suffered by Owner and
are
not intended to be punitive or excessive, and shall be payable notwithstanding
any provision of this Agreement otherwise limiting consequential damages.
Seller’s aggregate liability for liquidated damages under this Section 10.6
shall not exceed an amount equal to [*
*]
of
the
Contract Price actually paid by Owner to Seller.
10.7 Noise
Warranty.
(a) Seller
warrants that the noise created by each Wind Turbine, measured at the Turbine
Nacelle, shall not at any time exceed a sound pressure level of 106 dB(A)
at a
wind speed of 10 meters per second. In addition, the Turbine Equipment shall
emit no pure tones (all such requirements the “Noise
Warranty”).
(b) The
first
test of noise levels at any one or more Turbines shall be conducted by a
qualified expert at Owner’s expense. Testing protocols shall be as set forth in
IEC 61400-11. Ed. 12-2002, amended and revised.
(c) If
testing reveals that any Wind Turbine fails to meet the Noise Warranty
established in Section 10.7(a), Seller shall undertake, at its expense, to
make
such improvements to the applicable Wind Turbine(s) as are necessary to cause
each such Wind Turbine to meet the warranted noise level. Seller shall make
its
improvements as soon as practicable. Seller shall be responsible for the
subsequent noise testing of any such Wind Turbines until compliance is attained
with the Noise Warranty, and all related expenses.
(d) In
the
event that any Wind Turbine is required to cease or curtail operations to
meet
the requirements of Permits or Applicable Laws, and the cessation or curtailment
is required due to the failure of the Wind Turbine to meet the Noise Warranty,
any such lost operating hours shall be considered to be hours during which
the
Wind Turbine is unavailable for purposes of calculating the Availability
Warranty.
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange
Commission.
-
22 -
10.8 Power
Curve Guarantee.
Seller
hereby guarantees, based on the performance of a Power Curve Test and at
the
time thereof, that the Turbine Measured Power Curve of
the
Nominated Turbine will be not less than [ *
*]
of the
power curve for the Wind Turbines set forth in Exhibit
S,
calculated and adjusted
in accordance with the testing protocol set forth in Exhibit
T
(the
“Power
Curve Guarantee”).
(a) Performance
of Power Curve Test.
Owner
may retain a third party, qualified engineer acceptable to Seller to perform
the
Power Curve Test in accordance with Exhibit
T
on one
(1) Wind Turbine designated by Seller and Owner (the “Nominated Turbine”). Owner
shall pay all costs of any such Power Curve Test if the Wind Turbine passes
the
test, and Seller shall pay the costs of any such Power Curve Test if the
Wind
Turbine fails the test. The Power Curve Test shall be performed under normal
operating conditions in accordance with the Power Curve Test Procedures.
If
Owner elects to conduct the Power Curve Test, it shall begin no earlier than
the
date of Final Completion, and shall be concluded no later than twelve (12)
months thereafter. Owner will give Seller at least fourteen (14) days prior
written notice of its intent to perform any Power Curve Test. No later than
fourteen (14) days following the administration of the initial Power Curve
Test,
Owner shall notify Seller in writing whether the Wind Turbines have met or
failed the Power Curve Test. Seller shall have the right to be present at
each
Power Curve Test. The Power Curve Test for the Nominated Turbine shall determine
the compliance of all Wind Turbines with the Power Curve Guarantee.
(b) Failure
to Perform the Power Curve Test.
If Owner
does not complete the Power Curve Test on the Turbines on or before the end
of
the period specified in Section 10.8(a), the Wind Turbines shall be deemed
to
have satisfied the Power Curve Test and Owner will not be entitled to any
damages as a result of any failure of the Wind Turbines to meet the Power
Curve
Guarantee.
(c) Procedures
on Power Curve Test Failure.
If the
Wind Turbines fail the initial Power Curve Test, then for up to ninety (90)
days
after Owner notifies Seller of such failure, Seller shall have the right
to
cause repairs or replacements to be made to the Turbine Equipment designed
to
cause the Turbines to pass the Power Curve Test, at Seller’s expense. Seller may
request in writing at any time during such ninety (90) day period that Owner
cause an additional Power Curve Test to be conducted as soon as practicable
following the expiration of such ninety (90) day period. If the Turbines
fail
any such second Power Curve Test, then for up to ninety (90) days after Owner
notifies Seller of such failure, Seller shall have the right to cause repairs
or
replacements to be made to the Turbine Equipment designed to cause the Turbines
to pass the Power Curve Test, at Seller’s expense. Any such repairs or
replacements elected to be made by Seller shall be made as soon as is
practicable. Upon completion of such repairs and replacements, Seller may
(within 90 days of the failure of the second Power Curve Test) request Owner
to
conduct a third Power Curve Test. Each Power Curve Test shall be conducted
in
accordance with the requirements of this section and Exhibit
T,
and
shall be conducted by the same engineer as conducted the first Power Curve
Test.
Not later than twenty-one (21) days following the completion of the third
Power
Curve Test, Owner shall notify Seller in writing whether the Wind Turbines
have
passed or failed to pass the Power Curve Test. If Seller fails to request
a
second or third Power Curve Test within the applicable ninety (90) day period,
then no later than ten (10) Business Days following the expiration of the
applicable ninety (90) day period, Seller shall pay to Owner the Power Curve
Liquidated Damages in accordance with the provisions of Section 10.8(d) based
on
the results of the immediately preceding Power Curve Test. If a second or
third
Power Curve Test is conducted at Seller’s request, and the Wind Turbines fail
the second Power Curve Test (and Seller does not timely exercise its right
for a
third Power Curve Test) or the Wind Turbines fail the third Power Curve Test,
then Seller shall pay to Owner, no later than thirty (30) Business Days
following receipt of notice of such failure, the Power Curve Liquidated Damages
due to Owner in accordance with the provisions of Section 10.8(d) based on
the
results of the second or third, as applicable, Power Curve Test. If the
nominated Wind Turbine passes the second or third Power Curve Test, Seller
shall
perform the same repair to all other Wind Turbines having the same defect,
but
no further testing of the Wind Turbines shall be required.
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange
Commission.
-
23 -
(d) Damages
for Failure to Achieve Power Curve Guarantees.
If the
Turbine Measured Power Curve (as determined pursuant to Exhibit
T)
for the
Nominated Turbine with respect to the applicable Power Curve Test is less
than
[ *
*]
of the
Turbine Guaranteed Power Curve, Seller shall pay Owner, for each year until
the
Wind Turbines pass the Power Curve Test, subject to the limitation set forth
below and as liquidated damages, the sum of [*
*]
for each
percent, pro-rated for each fraction of a percent (to one one-thousandth
of a
percent), that the Turbine Measured Power Curve is less than [*
*]
of
the
Power Curve Guarantee; and, to the extent the Turbine Measured Power Curve
(as
determined pursuant to Exhibit
T)
for the
Nominated Turbine with respect to the applicable Power Curve Test is less
than
[*
*]of
the
Turbine Guaranteed Power Curve, Seller shall pay Owner, for each year until
the
Wind Turbines pass the Power Curve Test, subject to the limitation set forth
below and as liquidated damages, the sum of [*
*]
for
each
percent, pro-rated for each fraction of a percent (to one one-thousandth
of a
percent), that the Turbine Measured Power Curve is less than [*
*]
of the
Power Curve Guarantee (collectively, the “Power
Curve Liquidated Damages”).
The
Power Curve Liquidated Damages shall be based on the applicable Power Curve
Test
referenced in Section 10.8(c). This Section 10.8 (d) and the repairs
contemplated by Section 10.8 (c), represent Owner’s sole and exclusive remedies
for Seller’s failure to achieve the Power Curve Guarantee. Seller’s aggregate
liability hereunder for Power Curve Liquidated Damages shall not exceed an
amount equal to [ *
*]
of the
Contract Price actually paid by Owner to Seller.
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange
Commission.
-
24 -
10.9 Limitations.
The
duties, liabilities and obligations of Seller under Sections 10.1 through
10.8
apply only to failures relating to the applicable warranties and do not extend
to any correction, repair or replacement caused or necessitated by: (a) the
failure of the Wind Turbines to be constructed and installed by Owner at
the
Site in accordance with the Wind Turbine Specifications and the Erection
and
Installation Manual; (b) the failure of the Site infrastructure to be installed
or constructed in accordance with Prudent Wind Industry Practices; (c) the
failure by Owner to operate and maintain the Wind Turbines in accordance
with
the Erection and Installation Manual and the O&M Procedures Manual; and/or
(d) any changes in the Permits and/or Applicable Laws that occur or take
effect
after the Effective Date. In connection with satisfaction of the Warranty
or the
Availability Warranty, Seller shall be given an opportunity to make such
diagnostic tests and perform such remedial services as Seller deems appropriate
in connection with the satisfaction of any warranty claim made by Owner
hereunder; provided that any such tests and services shall not permit Seller
to
delay or avoid its correction obligations under Section 10.3, and the results
of
any such tests shall be shared with Owner.
10.10 WARRANTY
DISCLAIMER.
OWNER
ACKNOWLEDGES AND AGREES THAT SELLER’S WARRANTIES SET FORTH IN THIS AGREEMENT ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
FOR TITLE, PERFORMANCE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR OTHERWISE. ON THAT BASIS, THERE
ARE NO
OTHER WARRANTIES, AGREEMENTS, ORAL OR WRITTEN, OR UNDERSTANDINGS WHICH EXTEND
BEYOND THOSE SET FORTH IN THIS AGREEMENT WITH RESPECT TO THE MATERIALS,
EQUIPMENT AND SERVICES PROVIDED BY SELLER.
10.11 Assignment
of Manufacturer Warranties Seller agrees to assign to Owner, effective as of
the expiration of the Warranty Period, any and all beneficial interest in,
to
and under any warranties for the Wind Turbine components received by Seller
from
the relevant manufacturer, in each case to the extent still in effect, and
to
the extent permitted pursuant to the terms of such warranties.
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange
Commission.
-
25 -
Article
11
Indemnification
and Intellectual Property
11.1 General
Indemnification.
(a) Seller
shall indemnify Owner and their successors and permitted assigns, and their
officers, directors, members, partners, agents and employees, and shall defend,
save and hold each of them harmless from and against all losses and claims
for
bodily injury to or death of any individual or damage to any tangible property
of a third party and against all losses, claims, demands, proceedings, damages,
liabilities, costs, charges and expenses (including, but not limited to,
reasonable attorneys’ fees) whatsoever incurred by or asserted against any of
them arising out of or in consequence of the conduct of Seller or of Seller’s
employees, agents, or Subcontractors on the Site.
(b) Owner
shall indemnify Seller, its successors and permitted assigns, and their
officers, directors, agents and employees, and shall defend, save and hold
each
of them harmless from and against all losses and claims for bodily injury
to or
death of any individual or damage to any tangible property of a third party
and
against all claims, demands, proceedings, damages, liabilities, costs, charges
and expenses (including reasonable legal fees) whatsoever in respect thereof
or
in relation thereto incurred by or asserted against any of them arising out
of
or in consequence of the conduct of Owner or of Owner’s employees, agents or
Subcontractors on the Site.
11.2 Owner’s
Hazardous Substance Indemnity
11.3 .
Owner
shall indemnify, defend and hold harmless Seller, its officers, directors,
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, costs, expenses, damages or penalties,
including court costs and reasonable attorneys’ fees, arising out of, or
resulting from, or occasioned by or in connection with any Hazardous Substance
existing at the Site as of the Effective Date, or introduced to the Site
after
the Effective Date by any Person other than Seller, its Affiliates, or their
respective agents and employees.
11.4 Seller’s
Hazardous Substance Indemnity
-
26 -
11.5 .
Seller
shall indemnify, defend and hold harmless Owner, its officers, directors,
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, costs, expenses, damages or penalties,
including court costs and reasonable attorneys’ fees, arising out of, or
resulting from, or occasioned by or in connection with any Hazardous Substance
introduced to and released at the Site by Seller, its Affiliates or their
respective agents and employees.
11.6 Intellectual
Property; License.
(a) Seller
agrees to procure and acquire all necessary patents, copyrights, trade names,
trademarks, trade dress service marks, trade secrets, and applications for
any
of the foregoing, software, firmware, mask works, industrial design rights,
rights of priority, know-how, design flows, methodologies and any and all
other
intangible proprietary information whose protection is legally recognized
(the
“Intellectual
Property”)
which
to Seller’s knowledge is necessary for it to meet its obligations under this
Agreement, including the obligations to sell and Deliver the Turbine Equipment
free of any adverse claims by any other Person, or which is necessary for
Owner
to install, use, operate and maintain the Turbine Equipment. Seller expressly
reserves all other intellectual property rights with respect to the Turbine
Equipment and otherwise.
(b) The
Intellectual Property and any other drawings, specifications, designs, plans
and
other documents prepared by or on behalf of Seller and/or its Subcontractors
in
connection with the Turbine Equipment (collectively, the “Design
Materials”)
are
and shall remain the exclusive property of Seller or the Subcontractors,
as the
case may be. Effective upon execution of this Agreement with respect to Design
Materials necessary for installation of the Turbine Equipment, and upon
Commissioning with respect to all other Design Materials, Seller hereby grants
and will cause to be granted and delivered to Owner from Subcontractors,
whichever is appropriate, a paid-up, non-exclusive license for Owner to use,
reproduce and have reproduced such Design Materials, subject to the restrictions
set forth below:
(i)
All
rights with respect to the Intellectual Property or any of the Design Materials
shall remain the property of Seller or the appropriate subcontractor, whether
or
not the Turbine Equipment is installed, and Owner recognizes that Seller
may be
entitled to injunctive or other equitable or preliminary relief in order
to
protect the integrity or confidentiality of the Design Materials;
and
(ii)
Owner
shall not, without the prior written consent of Seller, use such Design
Materials, in whole or in part, in relation to any project other than the
facilities for Owner on and near the Project Site. Owner may only use that
portion of the Design Materials related solely to the operation, maintenance
and
repair of the Turbine Equipment after Commissioning.
(iii) Owner
shall provide to Seller prompt access to all technical, operational and
maintenance and other information it receives or collects in connection with
the
Turbines.
-
27 -
11.7 Indemnification
Regarding Infringement.
Seller
warrants and represents that the Wind Turbines provided to Owner for use
at the
Site and the Intellectual Property will not infringe on any patent, trademark,
copyright or other intellectual property right of any other Person. In the
event
any Person brings a claim, suit or proceeding against Owner or Owner’s
Subcontractors alleging any such infringement, Seller shall indemnify, defend
and hold Owner and Owner’s Subcontractors harmless against any and all losses,
damages, charges, costs and expenses (including reasonable attorneys’ fees)
incurred by Owner or Owner’s Subcontractors as a result of or arising from any
such claim of infringement, whether rightful or otherwise. In the event any
Intellectual Property or Wind Turbine is held to constitute infringement
and/or
its use is enjoined, Seller shall, at its sole expense, either procure for
Owner
an irrevocable, royalty-free license to continue using such Intellectual
Property or Turbine Equipment, replace the applicable rights or equipment
with
substantially equal but noninfringing rights or equipment, or modify the
infringing equipment so as to make it noninfringing, provided that no such
replacement or modification shall in any way relieve Seller of its obligations
under this Agreement. Seller shall assume on behalf of Owner and control
and
conduct with due diligence and in good faith the defense and settlement of
any
such claim against Owner, whether or not Seller shall be joined therein,
and
Owner shall cooperate with Seller in such defense and settlement. Owner shall
notify Seller within a reasonable period of time of receipt of knowledge
of such
claim and Owner shall promptly provide to Seller all information that it
has
received with respect to such claim.
11.8 Escrow
AgreementWithin
ninety (90) days following the Effective Date, Owner and Supplier shall enter
into the Escrow Agreement and Supplier shall deliver all documents required
thereunder.
Article
12
Representations
and Warranties of Owner
12.1 Owner
Representations and Warranties.
Owner
represents and warrants to Seller as follows:
(a) Due
Organization: Good Standing.
Owner
is an Idaho limited liability company duly organized, validly existing and
in
respect of which no action relating to insolvency, liquidation or suspension
of
payments has, to the knowledge of Owner, been taken.
(b) Due
Authorization.
The
execution, delivery and performance of this Agreement by Owner have been
duly
authorized by all necessary action on the part of Owner in accordance with
Owner’s charter documents and do not and shall not require the consent of any
trustee or holder of any indebtedness or other obligation of Owner or any
other
Party to any other agreement with Owner.
-
28 -
(c) Execution
and Delivery.
This
Agreement has been duly executed and delivered by Owner, and constitutes
the
legal, valid, binding and enforceable obligations of Owner.
(d) Governmental
Approvals.
No
governmental authorization, approval, order, license, permit, franchise or
consent, and no registration, declaration or filing with any Governmental
Authority is required on the part of Owner in connection with the execution,
delivery and performance of this Agreement which has not already been obtained
or which Owner anticipates shall be timely obtained in the ordinary course
of
performance of this Agreement.
(e) Site
Access.
No
lease, easement or right of way from any third party is required on the part
of
Owner in connection with the execution, delivery and performance of this
Agreement which has not already been obtained or which Owner anticipates
shall
be timely obtained in the ordinary course of performance of this
Agreement.
12.2 Seller
Representations and Warranties.
Seller
hereby represents and warrants to Owner as follows:
(a) Due
Organization Good Standing.
Seller
is a corporation duly organized and validly existing under the laws of the
State
of Nevada and in respect of which no action relating to insolvency, liquidation
or suspension of payments has, to the knowledge of Seller, been
taken.
(b) Due
Authorization.
The
execution, delivery and performance of this Agreement by Seller have been
duly
authorized by all necessary corporate action on the part of Seller and do
not
and shall not require the consent of any trustee or holder of any indebtedness
or other obligation of Seller or any other Party to any other agreement with
Seller.
(c) Execution
and Delivery.
This
Agreement has been duly executed and delivered by Seller, and constitutes
the
legal, valid, binding and enforceable obligations of Seller.
(d) Governmental
Approvals.
No
governmental authorization, approval, order, license, permit, franchise or
consent, and no registration, declaration or filing with any Governmental
Authority is required on the part of Seller in connection with the execution,
delivery and performance of this Agreement which has not already been obtained
or which Seller anticipates shall be timely obtained in the ordinary course
of
performance of this Agreement.
(e) Title
to
Wind Turbines.
When
the title of the Wind Turbines is transferred to Owner from Seller under
Section
5.5:
(a)
Owner shall have good and marketable title to the Wind Turbines free and
clear
of all claims, liens or other encumbrances, other than any such liens or
other
encumbrances arising in connection with the performance of the Owner’s Work and
any security interest granted in favor of Seller as described in Section
5.5;
(b) no
instrument or other document shall be required to be delivered to Owner in
order
to effect the sale of the Wind Turbines from Seller to Owner, or if any such
instrument or other document is so required, then Seller shall have delivered
such instrument or other document to Owner; and (c) no component Part or
the
whole of any Wind Turbine shall be the subject of any retention of title
in
favor of any supplier thereof.
-
29 -
Article
13
Excusable
Delay; Default; Cure
13.1 Excusable
Delay.
Except
as specified in Section
5.2
with
respect to the Delivery Schedule, no delay in performance by any Party hereunder
shall constitute a default under this Agreement if, and to the extent, such
delay is caused by an Excusable Delay. In the event of an Excusable Delay,
the
Parties shall negotiate in good faith for equitable adjustments in price
and
schedule necessary and appropriate to mitigate as much as possible the effect
of
such Excusable Delay.
13.2 Notice.
(a) Any
Party
delaying performance hereunder as a result of an Excusable Delay shall give
written notice to the other Party as soon after becoming aware of the Force
Majeure Event constituting such Excusable Delay as is reasonably possible,
but
in all events within five (5) Business Days after the Party delaying performance
becomes aware of such event.
(b) Seller
shall give written notice to Owner as soon after Seller becomes aware of
any
strikes, lockouts or other labor disputes occurring, or threatened or scheduled
to occur, with respect to any of the factories, offices or other facilities
of
any of Seller’s or its Affiliates’ suppliers or subvendors.
13.3 Default.
(a) Event
of Default.
If
during the term of this Agreement, either Party breaches any of the material
covenants or conditions of this Agreement, or if Composite Technology
Corporation breaches any of its material obligations under the Composite
Technology Corporation Guaranty, and as a direct and proximate result of
any
such material breach another Party hereunder (the Owner, in the case of such
a
breach by Composite Technology Corporation under the Composite Technology
Corporation Guaranty) suffers material harm or damage (except in the case
of an
Excusable Delay of such Party), then the other Party shall give notice to
such
breaching Party (including the Seller in the case of such a breach by Composite
Technology Corporation under the Composite Technology Corporation Guaranty)
of
the material event of default, specifying in detail the nature thereof, and
the
amount thereof if it is a default which may be cured by the payment of
money.
-
30 -
(b) Bankruptcy
Event of Default.
It
shall be an event of default hereunder with respect to a Party hereto if
such
Party (and, in the case of Seller, if Composite Technology Corporation) becomes
insolvent, or generally does not pay its debts as they become due, or admits
in
writing its inability to pay its debts, or makes a general assignment for
the
benefit of creditors, or if insolvency, receivership, reorganization or
bankruptcy proceedings are commenced by or against such Party (or, in the
case
of Seller, against Composite Technology Corporation).
(c) Cure
Rights.
In the
case of an event of default under Section
13.3(a),
if,
after the expiration of a grace period of thirty (30) Days after the service
of
notice as provided therein, the event of default upon which such notice was
based shall continue to exist (or in the case of an event of default which
cannot with due diligence be remedied within a period of thirty (30) Days,
the
breaching Party fails to commence within a period of thirty (30) Days after
the
service of such notice to remedy such event of default and to proceed with
all
due diligence thereafter to remedy such event of default within a reasonable
period of time), then the breaching Party (including Seller in the case of
such
a breach by Composite Technology Corporation under the Composite Technology
Corporation Guaranty) shall be in default under this Agreement, and the
non-breaching Party shall be entitled to the remedies set forth in Section
13.3(d).
(d) Remedies.
In the
case of a bankruptcy event of default pursuant to Section 13.3(b)
or a
default after any applicable cure period pursuant to Section
13.3(c),
the
non-breaching Party shall be entitled to all remedies in law or in equity
on
account of such default, including, without limitation, the right, in the
non-breaching Party’s sole discretion, to either continue its rights and
obligations under this Agreement in full force and effect or, by written
notice
to the breaching Party, to terminate its obligations under this Agreement
and
all obligations of the non-breaching Party hereunder. In any event, the
non-breaching Party shall continue to be entitled to any and all remedies
under
this Agreement or at law or in equity.
(e) Financing
Party Cure Rights.
Seller
shall, conditioned upon prior receipt of the name and address of the Financing
Parties for the Project, give such Party or Parties notice of any default
at the
same time as providing notice to the defaulting Party under Section
13.3(a).
Following receipt of such notice, the Financing Parties shall, for the same
period provided to the defaulting Party, have the right (but not the obligation)
to cure such default, and if so cured, this Agreement shall continue in full
force and effect.
-
31 -
Article
14
Disputes
14.1 Dispute
Resolution.
Any
controversy or claim arising out of, or relating to, this Agreement, or to
the
making, performance, or interpretation thereof, shall be tried by a single
referee in San Francisco, California, pursuant to the provisions of Title
8,
Chapter 6 of the California Code of Civil Procedure (commencing with Section
638).
14.2 Applicable
Law.
This
Agreement shall be interpreted and governed by the laws of the State of
California and/or the laws of the United States, as applicable..
Article
15
General
Provisions
15.1 Waiver.
Unless
expressly provided herein no delay or omission by the Parties hereto in
exercising any right or remedy provided for herein shall constitute a waiver
of
such right or remedy nor shall it be construed as a bar to or waiver of any
such
right or remedy on any future occasion.
15.2 Successors
and Assigns.
This
Agreement shall be binding upon and shall inure to the benefit of the Parties’
successors and assigns. Seller agrees that Owner may, at any time, grant
Financing Parties a security interest in this Agreement. Owner may, at any
time,
assign this Agreement to an Affiliate of Owner, provided the requirements
of
Section 5.1 for a lender’s funding obligation or a letter of credit are
satisfied. Except as expressly provided in this Section
15.2,
no
Party may assign or transfer this Agreement, in whole or in part, except
upon
the prior written consent of the other Party hereto, which consent shall
not be
unreasonably withheld. It shall be deemed reasonable for Owner to withhold
consent to an assignment by Seller absent any agreement by Composite Technology
Corporation to guarantee performance by Seller’s assignee or the provision by
the assignee of a replacement guaranty in form and substance and from an
entity
reasonably acceptable to Owner and the Financing Parties. In connection with
any
permitted full or partial assignment under this Section
15.2,
the
Parties agree to execute one or more consents to assignment with terms and
conditions as may be reasonably requested by such assignee; provided that
no
Party shall be under an obligation to amend or modify this Agreement as a
condition to such assignment; and provided further that each such assignee
of
this Agreement shall expressly acknowledge the rights and remedies of the
Financing Parties hereunder (to the extent applicable) and shall assume any
of
the assigning Party’s obligations related thereto. In the event Financing
Parties, whether pursuant to a security interest or otherwise, succeed to
the
rights and obligations of Owner hereunder, Seller shall recognize such Financing
Parties as a Party to this Agreement.
15.3 Notices.
Any
notice required or authorized to be given hereunder or any other communications
between the Parties provided for under the terms of this Agreement shall
be in
writing (unless otherwise provided) and shall be served personally or by
reputable express courier service or by facsimile addressed to the relevant
Party at the address stated below herein or at any other address notified
by
that Party to the other as its address for service. Any notice so given
personally shall be deemed to have been served on delivery, any notice so
given
by express courier service shall be deemed to have been served two (2) Business
Days after the same shall have been delivered to the relevant courier, and
any
notice so given by facsimile shall be deemed to have been served on dispatch.
As
proof of such service it shall be sufficient to produce a receipt showing
personal service, the receipt of a reputable courier company showing the
correct
address of the addressee or an activity report of the sender’s facsimile machine
showing the correct facsimile number of the Party on whom notice is served
and
the correct number of pages transmitted. The Parties’ addresses for service
are:
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|
To
Owner:
|
XRG
Development Partners, LLC
|
|
c/o
Exergy Development Group of Idaho,
LLC
|
|
▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
|
| Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ |
|
Email:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
To
Seller:
|
▇▇▇▇▇▇,
Inc.
|
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
| Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ |
| Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ |
|
Email:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
15.4 Amendments.
This
Agreement may be modified or amended only by an instrument in writing signed
by
all Parties hereto.
15.5 Attachments
Incorporated.
The
exhibits and appendices attached hereto are hereby incorporated and made
a part
of this Agreement.
15.6 Entire
Agreement.
The
terms and conditions set forth herein, together with those set forth on all
exhibits and appendices attached hereto, constitute the complete statement
of
the agreement between Owner and Seller relating to the subject matter hereof
and
thereof. No prior statement, correspondence or parole evidence shall modify
or
affect the terms and conditions hereof or thereof nor shall such prior
statements, correspondence or parole evidence be introduced or considered
in any
judicial or arbitral proceeding. Prior representations, promises, warranties
or
statements by any agent or employee of Seller or Owner that differ in any
way
from the terms and conditions hereof or thereof shall be given no
effect.
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33 -
15.7 No
Merger.
All
covenants, representations and warranties of the Parties hereto provided
in this
Agreement shall survive, and shall not merge into the conveyances, assigns,
deeds or any other documents or transactions.
15.8 Attorneys’
Fees.
In
any
proceeding to enforce the provisions of this Agreement, the prevailing Party
in
such proceeding shall be entitled to recover reasonable legal fees, costs
and
expenses (including at trial and appellate levels and in bankruptcy proceedings)
from the losing Party.
15.9 Site
Regulations.
All
pertinent regulations and rules which may be in effect at the Site regarding
passes, badges, safety and proper conduct on the property shall be observed
by
Seller and its agents and employees.
15.10 Confidentiality.
(a) Seller
hereby undertakes to keep confidential, except as may be explicitly approved
by
Owner, or as may be necessary for the proper discharge by Seller of its duties
under this Agreement, or as may be necessary to be disclosed to taxing
authorities and accountants preparing Seller’s tax reports and filings or as may
be necessary to respond to legal process, all details of Owner’s business, the
location and identification of the Project and the Site or any potential
Site,
the progress of any construction activities, and the business of any member
of
Owner.
(b) Owner
hereby undertakes to keep confidential, except as may be explicitly approved
by
Seller, or as may be necessary for the proper discharge by Owner of its duties
under this Agreement, or as may be necessary to be disclosed to taxing
authorities and accountants preparing Owner’s tax reports and filings or as may
be necessary to respond to legal process, or as previously disclosed to the
public, this Agreement and all documentation and data, including but not
limited
to all Intellectual Property and Design Data.
(c) Notwithstanding
the provisions of subsections (a) and (b) above, Seller and Owner shall be
entitled to the extent necessary for the performance of its respective duties
hereunder to allow access to details relating to the business of the other
Party
exclusively to such of its employees and consultants who are directly concerned
with the carrying out of its duties under this Agreement provided that each
Party shall inform each of such persons of the confidential nature of such
information and of that Party’s obligations of confidentiality in respect
thereof and such Party shall be responsible for any breach of such obligations
by any of its employees or consultants.
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34 -
(d) All
public announcements in relation to the subject matter of this Agreement
shall
be subject to the prior notification to the other Party by the Party desiring
to
make such announcement and such other Party shall have three (3) Business
Days
to comment on and/or approve such announcement (such approval not to be
unreasonably withheld); provided that such approval shall be deemed given
if
such approval, comment or other response is not received by the announcing
Party
within such three (3) Business Day period. The Parties consent in advance
to the
reference to the Project and/or the use of the Seller’s Wind Turbines in such
Project in each Party’s publicly distributed materials.
15.11 Wind
Speed Projections.
Seller
shall have no responsibility or liability for any purposes hereunder for
the
collection or evaluation of the wind data collected prior to the Effective
Date,
or for the accuracy of the wind speed projections and financial
projections.
15.12 Documentation
and Correspondence.
All
documentation and correspondence to be delivered between the Parties pursuant
to
this Agreement shall be in the English language.
15.13 Counterparts.
This
Agreement may be executed by the Parties in one or more counterparts, all
of
which taken together, shall constitute one and the same instrument. Facsimile
signatures shall have the same effect as original signatures. A Party delivering
facsimile counterpart signature pages shall promptly thereafter deliver original
counterpart signature pages.
15.14 Limitation
of Liability and Exclusions.
Except
as otherwise provided in this Agreement the following limitations of liability
apply: no Party shall be liable for any indirect, special, incidental or
consequential damages, including without limitation, loss of profit, loss
of
revenue, loss of use, loss of power, cost of replacement power, or cost of
capital, or for punitive damages, arising out of or in relation to the
performance of this Agreement whether or not such liability is claimed in
contract, equity, tort or otherwise. The foregoing limitation shall not:
(x)
preclude recovery, where applicable, of liquidated amounts or refunds hereunder;
(y) limit recovery under any indemnity in Article
11,
or (z)
limit Owner’s recovery of actual damages under Sections 5.3 (e) and (f).
Seller’s entire liability to Owner under this Agreement (including, without
limitation, liability for breach of contract, breach of warranty, negligence
or
any other legal or equitable theory) shall in no event exceed the Contract
Price
for whatever and all reasons whatsoever. Notwithstanding the foregoing, in
the
case of liquidated damages payable under this Agreement pursuant to Sections
5.3, 10.6 or 10.8, the aggregate liability of Seller for all such damages
shall
not exceed [ *
*]
of the
Contract Price, as adjusted pursuant to this Agreement. Owner hereby expressly
waives and releases Seller from any and all losses, damages or remedies in
excess of such amounts.
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35 -
15.15 Cooperation
With Financing Parties.
Seller
shall, at the Financing Parties request: (a) enter into and deliver to Owner
a
customary consent agreement and related documentation; and (b) procure the
legal
opinion of its counsel, each in a form and substance reasonably acceptable
to
the Financing Parties.
[SIGNATURE
PAGE FOLLOWS]
[*
*]
This
material has been omitted pursuant to a request for confidential treatment
and
filed separately with the Securities and Exchange
Commission.
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36 -
IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the duly
authorized representatives of Owner and Seller as of the date of the first
written above.
|
XRG DEVELOPMENT PARTNERS, LLC
an
Idaho limited liability company
|
▇▇▇▇▇▇,
INC.,
a
Nevada corporation
|
|||||
| By: | /s/ | By: | /s/ | |||
| Name: |
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
Name: |
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
|||
| Title: | Manager | Title: | President | |||
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37 -
APPENDIX
I TO TURBINE SUPPLY AGREEMENT
DEFINITIONS
“Affiliate”
means
any Person who (whether through one or more intermediaries) directly or
indirectly controls, is controlled by, or is under common control with, any
other Person.
“Agreement”
means
this Turbine Supply Agreement.
“Applicable
Laws”
means
all laws, treaties, ordinances, codes, judgments, decrees, directives,
guidelines, policies, injunctions, writs, orders, rules, regulations,
interpretations, Permits and all similar forms of decisions of any Governmental
Authority having jurisdiction over the Wind Turbines, the Site, or affecting
the
performance of the obligations of the Parties hereunder.
“Availability”
shall
have the meaning ascribed to such term in Exhibit R.
“Availability
Liquidated Damages”
shall
have the meaning ascribed to such term in Section
10.6.
“Business
Day”
means
every Day other than a Saturday, Sunday or a Day on which the Federal Reserve
Bank of New York is closed for a scheduled holiday.
“Certificate
of Design Approval”
means
a
DEWI-OCC certificate based on Germanischer Lloyd’s 2004 standards (GL Wind
Guideline for the Certification of Wind Turbines - Edition 2003 with Supplement
2004)) and on IEC 61400-1 Third Edition 2005 for Class IIa
conditions.
“Change
Order”
shall
have the meaning ascribed to such term in Section 4.3(a).
“Commissioned”
and
“Commissioning”
means,
with respect to each WTG: (i) Mechanical Completion for such WTG has
occurred; and (ii) Owner or Owner’s representative has countersigned the
Commissioning Certificate for such WTG.
“Commissioning
Certificate”
has
the
meaning ascribed to such term in Section 9.1.
“Commissioning
Procedures”
means
the Commissioning Procedures set forth in Exhibit D.
“Contract
Price”
has
the
meaning ascribed to such term in Section 4.1.
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“Consumer
Price Index”
means…
“Day”
or
“Days”
means
a
calendar day or days.
“Defective
Work”
has
the
meaning ascribed to such term in Section
10.1.
“Delivery
Date”
means
the date for delivery of the Wind Turbines to the Designated Delivery Locations
as set forth in the Delivery Schedule.
“Delivery
Schedule”
means
the detailed Wind Turbine delivery shipment schedule to be set forth in
Exhibit
E.
“Design
Materials”
has
the
meaning ascribed to such term in Section
11.2(b).
“Designated
Delivery Location”
has
the
meaning ascribed to such term in Section
3.1.
“DEWI”
means Deutsches Windenergie-Institute.
“DEWI-OCC”
means DEWI Offshore Certification Center.
“Effective
Date”
has
the
meaning ascribed to it in the preamble of this Agreement.
“Erection
and Installation Manuals”
means
the Seller’s erection and installation manuals attached as Exhibit F.
“Composite
Technology Corporation Guaranty”
has
the
meaning set forth in the recitals.
“Excusable
Delay”
means
a
delay in performance resulting from a Force Majeure Event, provided
that:
(i) the
affected Party gives the other Party written notice describing the Force Majeure
Event promptly after the affected Party becomes aware of such occurrence, the
affected Party shall give the other Party as soon as reasonably possible after
the Force Majeure Event written notice estimating the Force Majeure Event’s
expected duration and probable impact on the performance of such Party’s
obligations under this Agreement, and such affected Party shall periodically
furnish timely reports of any material developments with respect thereto during
the continuation of the Force Majeure Event;
(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;
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39 -
(iii) no
liability of either Party which arose before the occurrence of the Force Majeure
Event shall be excused as a result of the occurrence;
(iv) the
affected Party shall exercise all reasonable efforts to mitigate or limit
damages to the other Party;
(v) the
affected Party shall use all reasonable efforts to continue to perform its
obligations under this Agreement and to correct or cure the event or condition
excusing performance; and
(vi) when
the
affected Party is able to resume performance of the affected obligations under
this Agreement, that Party shall give the other Party written notice to that
effect, and the affected Party promptly shall resume performance under this
Agreement.
“Final
Completion”
has
the
meaning set forth in Section
9.3.
“Final
Completion Certificate”
has
the
meaning set forth in Section
9.3(e).
“Final
Completion Date”
means
the date on which Final Completion is achieved.
“Financing
Parties”
means
any parties providing interim or permanent financing for the Project or for
its
development or construction, and any trustee or agent acting on behalf of any
of
them.
“Force
Majeure Event”
means
any event that wholly or partly prevents or delays the performance of any
obligation arising under this Agreement, but only if and to the extent:
(i) such event is not within the reasonable control, directly or
indirectly, of the Party affected; (ii) such event cannot be or be caused
to be prevented, avoided or removed by such Party by the exercise of reasonable
care; and (iii) such event is not the direct or indirect result of a
Party’s fault, negligence or the failure of such Party to perform any of its
obligations under this Agreement; and shall also include, without limitation:
acts of war, sabotage, terrorism, rebellion, insurrection, acts of foreign
enemies, military or usurped power or martial law, expropriation or confiscation
of facilities or property by order of any Governmental Authority, fires, floods,
hail, explosions, winds over twenty-five (25) meters per second, lightning,
lightning-induced surges, unexpected high and low voltage, transmission outages
or sudden or disruptive electrical events or disturbances on the Grid or delays
in the Project’s interconnection to the Grid, extraordinary airborne debris,
surface water, waves, tidal water or tidal wave, overflow of streams or other
bodies of water, water below the surface of the ground, earth movement
including, but not limited to, earthquake, landslide, mud flow, earth sinking,
earth rising or shifting, and other acts of God, strikes, crashing vehicles
or
aircraft, unavoidable casualties, vandalism, malicious mischief, theft and
attempted theft, but expressly excluding, as to Seller or any of its affiliates,
any failure of performance of any contractual provision by Seller (except to
the
extent caused by a Force Majeure Event), unavailability, late delivery or
breakage of equipment or materials (except to the extent caused by a Force
Majeure Event) and economic hardship.
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“Germanischer
▇▇▇▇▇”
means
Germanischer ▇▇▇▇▇ ▇▇, with headquarters in Hamburg, Germany (or if Germanischer
▇▇▇▇▇ ▇▇ ceases to exist or to perform design assessments and certifications
for
wind turbine generators, another reputable wind turbine generator certification
agency or entity mutually, reasonably approved by Owner and
Seller).
“Governmental
Authority”
means
any federal, state, local or other governmental, judicial, public or statutory
instrumentality, tribunal, agency, authority, body or entity, or any political
subdivision thereof, having legal jurisdiction over the matter or person in
question.
“Guaranteed
Availability”
shall
have the meaning set forth in Section
10.6.
“Guarantor”
means
Composite Technology Corporation.
“Intellectual
Property”
shall
have the meaning set forth in Section
11.2(a).
“MTPA”
shall
have the meaning set forth in Recital E.
“Mechanical
Completion”
means
with respect to an individual WTG, that a Mechanical Completion Certificate
has
been issued in respect of such WTG by the Owner and confirmed by Seller without
any outstanding work indicated pursuant to Section 6.3(c).
“Mechanical
Completion Certificate”
means
the certificate to be issued by Owner pursuant to Section 6.3(b).
“Noise
Warranty”
shall
have the meaning ascribed to such term in Section
10.7.
“Notice
to Proceed”
has
the
meaning ascribed to such term in Section 5.1.
“O&M
Procedures Manual”
means
the O&M procedures manual prepared by Owner as well as all operating manuals
supplied by all vendors or manufacturers for all material Parts, components
and
systems of the Project.
“Owner”
means
Big
Blue
Windfarm, LLC,
an
Idaho limited liability company.
“Owner
Caused Delay”
means
an
event that wholly or partly prevents or delays Seller’s performance of any
obligation arising under this Agreement due to any suspension for convenience
by
Owner, or due to the delay or default of any Owner obligation hereunder, whether
by Owner or by any of Owner’s Subcontractors.
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41 -
“Owner’s
Representative”
has
the
meaning ascribed to such term in Section 8.5.
“Owner’s
Work”
means
the design, supply, and construction of all improvements to and components
of
the Project other than Seller’s Work.
“Parts”
means
all appliances, parts, instruments, appurtenances, accessories, furnishings,
materials and other equipment described in Exhibit A-1.
“Party”
or
“Parties”
refer
to the entities identified as such in the preamble to the agreement in which
the
term is used.
“Permits”
means
a
waiver, exemption, variance, certificate, franchise, permit, authorization,
license or similar order of or from, or filing or registration with, or notice
to, any Governmental Authority having jurisdiction over the Project, the Site,
or the operations related thereto.
“Person”
means
any individual, corporation, association, partnership, limited liability
company, joint stock company, trust, unincorporated organization, joint venture,
government or political subdivision or agency thereof.
“Power
Curve Guarantee”
shall
have the meaning set forth in Section
10.8.
“Power
Curve Liquidated Damages”
shall
have the meaning set forth in Section
10.8(d).
“Power
Curve Test”
means
the
test conducted in accordance with Section 10.8 to determine the output
performance of the Wind Turbines.
“Project”
means
the integrated
36
megawatt
wind-powered electricity generating plant to be located on the Site, consisting
of all structures, facilities, appliances, lines, conductors, instruments,
equipment, apparatus, components, roads and other property comprising and
integrating the entire facility described in the Wind Turbine Specifications
and
all other equipment, labor, services and materials to be furnished under this
Agreement and the balance-of-plant agreement for the Project
“Project
Mechanical Completion”
means
that Mechanical Completion has been achieved with respect to all of the WTGs
included in the Project.
“Project
Mechanical Completion Certificate”
has
the
meaning ascribed to such term in Section 6.3(d).
“Prudent
Wind Industry Practices”
means
those practices, methods, standards and acts that are generally accepted in
the
wind power industry in the United States that at a particular time in the
exercise of reasonable judgment in light of the facts known at the time a
decision was made, would have been expected to accomplish the desired result
in
a manner consistent with Applicable Laws and the Wind Turbine
Specifications.
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“Reliability
Test”
means
the 100-hour test to be performed on the Wind Turbines, in accordance with
Exhibit
U.
“Seller”
means
▇▇▇▇▇▇, Inc., a Nevada corporation, in its capacity as Seller under this
Agreement.
“Seller’s
Documents”
has
the
meaning ascribed to such term in Section
6.1(d).
“Seller’s
Representative”
has
the
meaning ascribed to such term in Section 8.6.
“Seller’s
Work”
means
the design, manufacture, delivery, technical assistance, and Commissioning
of
the Wind Turbines pursuant to this Agreement.
“Service
Agreement”
has
the
meaning ascribed to such term in Section
10.2
of this
Agreement.
“Site”
has
the
meaning ascribed to such term in Exhibit
B
to this
Agreement.
“Subcontractor”
means
any Person which performs work for, or provides materials or equipment to,
Seller or Owner, as the case may be, in connection with the such Party’s
respective work to be performed under this Agreement.
“Taxes”
means
any and all forms of taxation, charges, duties, imposts, levies and rates
whenever imposed by the United States, any U.S. State, or any other governmental
entity, including without limitation, income tax, withholding taxes, corporation
tax, capital gains tax, capital transfer tax, inheritance tax, rates, water
rates, value added tax, customs duties, capital duty, excise duties, betterment
levy, community charges, development land tax, stamp duty, stamp duty reserve
tax, national insurance, social security or other similar contributions, and
generally any tax, duty, impost, levy or rate or other amount and any interest,
penalty or fine in connection therewith.
“TECO”
means
TECO Westinghouse, a subcontractor to Seller.
“Tower”
means
each steel tubular tower with a hub height of approximately eighty (80) meters
on which a Wind Turbine shall be mounted, including all ladders, platforms,
internal lighting, safety equipment and all parts and assemblies necessary
for a
complete turbine tower, all as further described in Exhibit A.
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43 -
“Turbine
Measured Power Curve”
means
the tested power curve of the Nominated Turbine, as measured during the Power
Curve Test.
“Turbine
Nacelle”
means
the turbine nacelle component of a Wind Turbine Generator, including gearbox,
generator and nacelle yaw controls, and associated control and ancillary
equipment.
“Unit
Price”
has
the
meaning ascribed to such term in Section 4.1.
“Warranty”
has
the
meaning ascribed to such term in Section 10.1.
“Warranty
Period”
has
the
meaning ascribed to such term in Section
10.2.
“Warranty
Service”
has
the
meaning ascribed to such term in Section 10.3(a).
“Wind
Turbine”,
“Wind
Turbine Generator”
or
“WTG”
has
the
meaning ascribed to such term in Recital A.
“Wind
Turbine Delivery Delay”
has
the
meaning ascribed to such term in Section 5.3(a).
“Wind
Turbine Specifications”
or
“WTG
Specifications”
mean
the technical design and manufacturing specifications for the Wind Turbines
upon
which the Certificate of Design Approval is based, summarized in Exhibit A.
“WTG
Delay Day”
has
the
meaning ascribed to such term in Section 5.3(b).
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