UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 1, 1997
RIDGEWOOD ELECTRIC POWER TRUST I
(Exact name of Registrant as Specified in Charter)
Delaware 0-24240 22-3105824
(State or other (Commission (IRS Employer
jurisdiction file number) Identification Number)
of incorporation)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 447-9000
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
The audited historical and unaudited pro forma financial
statements required by Regulation S-K are being converted into electronic
format and cannot be furnished at this time. They will be provided by
amendment to this Current Report no later than August 14, 1997.
(c) Exhibits.
Exhibit No. Item
2.A Acquisition Agreement, by and between GSF Energy, L.L.C. and
Olinda, L.L.C., dated as of May 31, 1997.
2.B Letter, dated as of May 31, 1997, supplementing Acquisition
Agreement. [Previously filed.]
10.I Amendment to Transaction Documents, dated as of May 31, 1997,
by and among GSF Energy, L.L.C., Brea Power Partners, L.P. and Ridgewood
Electric Power Trust I.
10.J Parallel Generation Agreement, by and between Southern
California Edison Company and GSF Energy, Inc. (Brea Power Partners, L.P.,
assignee), as amended.
10.K Partial Assignment and Assumption Agreement, dated as of
November 29, 1994, by and between GSF Energy, Inc. and Brea Power Partners,
L.P.
10.L Amended and Restated Gas Lease Agreement, dated as of
December 14, 1993, by and between the County of Orange, California and GSF
Energy, Inc., as modified.
10.M Gas Sale and Purchase Agreement, dated November 29, 1994 by
and between GSF Energy, Inc. and Brea Power Partners, L.P.
10.N Support Agreement, dated as of November 29, 1994, by and
among Brea Power Partners, L.P., the Trust and GSF Energy, Inc.
Exhibits and schedules to these exhibits are omitted, and lists of the
omitted documents are found in their tables of contents. The Registrant
agrees to furnish supplementally a copy of any omitted exhibit or schedule
to these exhibits to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
RIDGEWOOD ELECTRIC POWER TRUST I
Date: July 24, 1997 By: /s/ Martin V. Quinn
Martin V. Quinn, Senior Vice
President and Chief Financial
Officer
ACQUISITION AGREEMENT
Between
GSF Energy, L.L.C.,
as Seller,
And
Olinda, L.L.C.,
as Buyer
Dated as of May 31, 1997
Acquisition of Common Stock
of Brea Power (I), Inc. and Limited Partnership Interests in
Brea Power Partners, L.P.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATIONS. . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.2 Interpretations. . . . . . . . . . . . . . . . . . . 6
ARTICLE 2
SALE AND PURCHASE OF BREA STOCK AND LP INTEREST;
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Sale of Brea Stock . . . . . . . . . . . . . . . . . 7
2.2 Sale of LP Interest. . . . . . . . . . . . . . . . . 7
2.3 Manner of Payment. . . . . . . . . . . . . . . . . . 7
ARTICLE 3
CLOSING DATE AND ACTIONS AT CLOSING. . . . . . . . . . . . . . 7
3.1 Closing Date . . . . . . . . . . . . . . . . . . . . 7
3.2 Actions at Closing . . . . . . . . . . . . . . . . . 7
3.2.1 Brea Stock Certificates . . . . . . . . . . . 7
3.2.2 Assignment of LP Interest . . . . . . . . . . 7
3.2.4 Payment of Brea Stock Purchase Price. . . . . 7
3.2.5 Payment of LP Interest Purchase Price . . . . 8
3.3 Additional Actions . . . . . . . . . . . . . . . . . 8
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
RELATING TO THE SELLER . . . . . . . . . . . . . . . . . . . . 8
4.1 Due Organization . . . . . . . . . . . . . . . . . . 8
4.2 Power and Authority. . . . . . . . . . . . . . . . . 8
4.3 Valid, Binding and Enforceable Obligations . . . . . 8
4.4 No Violations. . . . . . . . . . . . . . . . . . . . 8
4.5 Governmental Consents and Notices. . . . . . . . . . 9
4.6 Additional Consents and Notices. . . . . . . . . . . 9
4.7 Partner Interests. . . . . . . . . . . . . . . . . . 9
4.8 No Litigation. . . . . . . . . . . . . . . . . . . . 9
4.9 Bankruptcy . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES RELATING TO
BREA, THE PARTNERSHIP AND THE FACILITY . . . . . . . . . . . . 10
5.1 Due Organization; Capitalization . . . . . . . . . . 10
5.2 Power and Authority. . . . . . . . . . . . . . . . . 10
5.3 Business of Brea and the Partnership . . . . . . . . 10
5.4 No Violations. . . . . . . . . . . . . . . . . . . . 11
5.5 No Litigation. . . . . . . . . . . . . . . . . . . . 11
5.6 Bankruptcy . . . . . . . . . . . . . . . . . . . . . 11
5.7 Qualifying Facility Matters. . . . . . . . . . . . . 11
5.8 Intentionally Omitted. . . . . . . . . . . . . . . . 12
5.9 Financial Statements; Books of Account . . . . . . . 12
5.10 Absence of Certain Changes. . . . . . . . . . . . . 12
5.11 No Undisclosed Liabilities. . . . . . . . . . . . . 12
5.12 Partnership Assets. . . . . . . . . . . . . . . . . 13
5.12.1 Real Property Rights; Title Insurance. . . . 13
5.12.2 Fixtures and Improvements. . . . . . . . . . 13
5.12.3 Equipment and Other Personal Property. . . . 13
5.12.4 Title to Partnership Assets. . . . . . . . . 13
5.13 Project Documents . . . . . . . . . . . . . . . . . 13
5.14 No Employees, Etc . . . . . . . . . . . . . . . . . 14
5.15 Permits . . . . . . . . . . . . . . . . . . . . . . 14
5.16 General Legal Compliance. . . . . . . . . . . . . . 15
5.17 Environmental Legal Compliance. . . . . . . . . . . 15
5.18 Insurance . . . . . . . . . . . . . . . . . . . . . 15
5.19 Utilities . . . . . . . . . . . . . . . . . . . . . 15
5.20 Facility Construction and Condition . . . . . . . . 15
5.21 Securities Laws . . . . . . . . . . . . . . . . . . 15
5.22 Brokers . . . . . . . . . . . . . . . . . . . . . . 16
5.23 Tax Returns . . . . . . . . . . . . . . . . . . . . 16
5.24 Bank Accounts . . . . . . . . . . . . . . . . . . . 16
5.25 Projections . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 6
BUYER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 16
6.1 Due Organization . . . . . . . . . . . . . . . . . . 16
6.2 Power and Authority. . . . . . . . . . . . . . . . . 17
6.3 Valid, Binding and Enforceable Obligations . . . . . 17
6.4 No Violations. . . . . . . . . . . . . . . . . . . . 17
6.5 Bankruptcy . . . . . . . . . . . . . . . . . . . . . 17
6.6 No Litigation. . . . . . . . . . . . . . . . . . . . 18
6.7 Investment Intent. . . . . . . . . . . . . . . . . . 18
6.8 Accredited Investor. . . . . . . . . . . . . . . . . 18
6.9 Brokers' Fees. . . . . . . . . . . . . . . . . . . . 18
<PAGE>
ARTICLE 7
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS. . . . . . . . 19
7.1 No Termination . . . . . . . . . . . . . . . . . . . 19
7.2 Representations True and Correct; Certificate. . . . 19
7.3 Compliance with Covenants; Certificate . . . . . . . 19
7.4 No Adverse Proceedings . . . . . . . . . . . . . . . 19
7.5 Proceedings Satisfactory . . . . . . . . . . . . . . 19
7.6 No Adverse Changes . . . . . . . . . . . . . . . . . 19
7.7 Consents and Notices . . . . . . . . . . . . . . . . 19
7.8 Legal Opinion. . . . . . . . . . . . . . . . . . . . 20
7.9 Execution and Delivery of Closing Documents. . . . . 20
7.10 No Violations . . . . . . . . . . . . . . . . . . . 20
7.11 Closing Actions . . . . . . . . . . . . . . . . . . 20
7.12 Stock and Partnership Documents . . . . . . . . . . 20
ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS . . . . . . . . . 20
8.1 No Termination . . . . . . . . . . . . . . . . . . . 20
8.2 Representations True and Correct; Certificate. . . . 21
8.3 Compliance with Covenants; Certificate . . . . . . . 21
8.4 No Adverse Proceedings . . . . . . . . . . . . . . . 21
8.5 Proceedings Satisfactory . . . . . . . . . . . . . . 21
8.6 Consents and Notices . . . . . . . . . . . . . . . . 21
8.7 Legal Opinion. . . . . . . . . . . . . . . . . . . . 21
8.8 Execution and Delivery of Closing Documents. . . . . 21
8.9 No Violations. . . . . . . . . . . . . . . . . . . . 21
8.10 Closing Actions . . . . . . . . . . . . . . . . . . 22
ARTICLE 9
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 22
9.1 Indemnification by Seller. . . . . . . . . . . . . . 22
9.2 Indemnification by the Buyer.. . . . . . . . . . . . 22
<PAGE>
ARTICLE 10
ADDITIONAL COVENANTS AND TERMINATION . . . . . . . . . . . . . 22
10.1 Seller's General Pre-Closing Covenants. . . . . . . 22
10.1.1 Full Access. . . . . . . . . . . . . . . . . 23
10.1.2 Furnishing Information . . . . . . . . . . . 23
10.1.3 Consultation with Accountants. . . . . . . . 23
10.1.4 Discussions with Facility Participants . . . 23
10.1.5 Representations and Warranties . . . . . . . 23
10.1.6 Conduct of Business. . . . . . . . . . . . . 23
10.1.7 Preservation of Assets, Relationships, Etc.. 23
10.1.8 New Obligations. . . . . . . . . . . . . . . 24
10.1.9 No Defaults or Events of Default . . . . . . 24
10.1.10 No Solicitations, Etc.. . . . . . . . . . . 24
10.1.11 Notification. . . . . . . . . . . . . . . . 24
10.1.12 Spare Parts . . . . . . . . . . . . . . . . 24
10.2 Filings and Consents. . . . . . . . . . . . . . . . 24
10.3 Provision of Information. . . . . . . . . . . . . . 24
10.4 Partnership Financial Matters Before\
and After the Closing Date . . . . . . . . . . . . 24
10.5 Intentionally left blank. . . . . . . . . . . . . . 25
10.6 Further Assurances. . . . . . . . . . . . . . . . . 25
10.7 Termination . . . . . . . . . . . . . . . . . . . . 25
10.7.1 By Mutual Agreement. . . . . . . . . . . . . 25
10.7.2 By the Buyer . . . . . . . . . . . . . . . . 25
10.7.3 By the Seller. . . . . . . . . . . . . . . . 25
10.7.4 By Any Party . . . . . . . . . . . . . . . . 25
10.8 Seller's/Operator's Employees . . . . . . . . . . . 25
ARTICLE 11
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.1 Sales and Transfer Taxes. . . . . . . . . . . . . . 26
11.2 Income Tax Matters. . . . . . . . . . . . . . . . . 26
11.2.1 Certain Income Tax Effects of the Transactions 26
11.2.2 Closing of Books . . . . . . . . . . . . . . 27
11.2.3 Covenant of Consistent Reporting . . . . . . 27
11.2.4 Taxes and Tax Returns. . . . . . . . . . . . 27
11.2.4.1 Seller's Responsibility . . . . . . . 27
11.2.4.2 Buyer's Responsibility. . . . . . . . 27
11.2.5 Cooperation and Exchange of Information. . . 27
11.2.6 Tax Proceedings. . . . . . . . . . . . . . . 28
11.2.7 Survival . . . . . . . . . . . . . . . . . . 28
<PAGE>
ARTICLE 12
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 28
12.1 Transaction Costs . . . . . . . . . . . . . . . . . 28
12.2 Entire Agreement. . . . . . . . . . . . . . . . . . 28
12.3 Amendments. . . . . . . . . . . . . . . . . . . . . 29
12.4 Assignments . . . . . . . . . . . . . . . . . . . . 29
12.5 Binding Effect. . . . . . . . . . . . . . . . . . . 29
12.6 Headings. . . . . . . . . . . . . . . . . . . . . . 29
12.7 Notices . . . . . . . . . . . . . . . . . . . . . . 29
12.8 Severability. . . . . . . . . . . . . . . . . . . . 30
12.9 Waivers . . . . . . . . . . . . . . . . . . . . . . 30
12.10 Enforcement Costs. . . . . . . . . . . . . . . . . 30
12.11 Remedies Cumulative. . . . . . . . . . . . . . . . 30
12.12 Counterparts . . . . . . . . . . . . . . . . . . . 30
12.13 Governing Law. . . . . . . . . . . . . . . . . . . 31
12.14 Preparation of Agreement . . . . . . . . . . . . . 31
12.15 Survival . . . . . . . . . . . . . . . . . . . . . 31
12.16 Inducement to Transaction. . . . . . . . . . . . . 31
12.17 Receipt of Monies, Etc.. . . . . . . . . . . . . . 31
ARTICLE 13
EXECUTION CLAUSE . . . . . . . . . . . . . . . . . . . . . . . 32
<PAGE>
EXHIBITS:
Exhibit A - Form of Agreement of Waiver
Exhibit B - Form of Amendment to Transaction Documents
Exhibit C - Form of Assignment and Assumption Agreement
Exhibit D - Form of Assignment of LP Interest
SCHEDULES:
Schedule 4.5 - Governmental Consents and Notices
Schedule 4.6 - Additional Consents and Notices
Schedule 5.9 - Financial Statements
Schedule 5.12.1- Real Property, Easements, Title Insurance, Etc.
Schedule 5.12.2- Fixtures, Improvements, Etc.
Schedule 5.12.3- Equipment and Other Personal Property, Etc.
Schedule 5.13 - Project Documents
Schedule 5.14 - Employee Matters
Schedule 5.15 - Permits
Schedule 5.16 - Exceptions to General Legal Compliance
Schedule 5.17 - Exceptions to Environmental Legal Compliance
Schedule 5.18 - Insurance
Schedule 5.24 - Bank Accounts, Etc.
<PAGE>
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made and entered into
as of May 31, 1997, between GSF Energy, L.L.C., a Delaware limited
liability company and successor by merger to GSF Energy, Inc. (the
"Seller"), and Olinda, L.L.C., a Delaware limited liability company (the
"Buyer"), with reference to the following recitals:
RECITALS
A. Brea Power Partners, L.P. (the "Partnership") has been formed as a
limited partnership under the Delaware Revised Uniform Limited Partnership
Act (the "Act") pursuant to a Certificate of Limited Partnership of the
Partnership, as filed in the office of the Secretary of State of the State
of Delaware on October 12, 1994, and an Agreement of Limited Partnership
dated as of the 12th day of October, 1994 (the "Partnership Agreement").
B. Under the Partnership Agreement, Brea Power (I), Inc., a Delaware
corporation ("Brea"), is the sole general partner of the Partnership and
the Buyer and the Seller are each limited partners of the Partnership.
C. The Partnership owns and operates all of the assets comprising an
approximately 5 megawatt landfill gas fired electric generating facility
(the "Facility") located in the space above Olinda Canyon portion of the
municipal solid waste landfill owned by and located in Orange County,
California, which is generally referred to as the Olinda/Olinda Alpha
Sanitary Landfill. The Facility provides electrical energy and capacity to
Southern California Edison Company ("SCE") pursuant to the Power Purchase
Agreement (defined below).
D. At the closing described below, the Buyer will purchase from the
Seller the Brea Stock (as defined below) and the Seller will assign to the
Buyer the LP Interest (as defined below).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1 Defined Terms. Capitalized terms used in this Agreement without
other definition shall have the meanings specified in this Section 1.1,
unless the context requires otherwise.
"Additional Consents and Notices" has the meaning set forth in Section
4.6.
"Affiliate" of a specified Person means any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified. For
purposes of the foregoing, "control," "controlled by" and
<PAGE>
"under common control with," with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or by contract or otherwise.
"Aggregate Purchase Price" means an amount of Three Million Dollars
($3,000,000), consisting of the Brea Stock Purchase Price and the LP
Interest Purchase Price.
"Agreement" means this Acquisition Agreement, including all Exhibits
and Schedules.
"Agreement of Waiver" means the mutual waiver agreement in the form of
Exhibit A attached hereto.
"Amendment to Transaction Documents" means the amendment to certain
transaction documents relating to the Facility in the form of Exhibit B
attached hereto.
"Assignment and Assumption Agreement" means the assignment and
assumption agreement between Seller and Buyer in the form of Exhibit C
attached hereto.
"Assignment of LP Interest" means the Assignment of LP Interest
between the Seller and the Buyer in the form of Exhibit D attached hereto.
"Brea Stock" shall have the meaning given in Section 5.1.
"Brea Stock Purchase Price" means Three Hundred Thousand Dollars
($300,000).
"Buyer" has the meaning set forth in the Preamble.
"Closing" has the meaning given in Section 3.1.
"Closing Date" has the meaning given in Section 3.1.
"Closing Documents" means, collectively, this Agreement, the
Assignment of LP Interest, the Amendment to Transaction Documents, the
Assignment and Assumption Agreement, and the Agreement of Waiver.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted thereunder.
"CPUC" means the California Public Utilities Commission and its
successors.
"Default" means, when used with reference to any agreement without
other reference, any event or circumstances that, with the giving of notice
or lapse of time, or both, would, unless cured or waived, become an Event
of Default under such agreement.
<PAGE>
"Environmental Laws" means, collectively, all federal, state, local
and other applicable laws, statutes and regulations, which in any way
relates to health, safety or the environment, including the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. (
9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976, as amended by the Solid and
Hazardous Waste Amendments of 1984, 42 U.S.C. ( 6901 et seq.; the Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33
U.S.C. ( 1251 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C.
( 2601 et seq.; the Emergency Planning and Community Right-To-Know Act of
1986, 42 U.S.C. ( 11001 et seq.; the Clean Air Act of 1966, as amended, 42
U.S.C. ( 7401 et seq.; the National Environmental Policy Act of 1975, 42
U.S.C. ( 4231; the Rivers and Harbours Act of 1899, 33 U.S.C. ( 401 et
seq.; the Endangered Species Act of 1973, as amended, 16 U.S.C. ( 1531 et
seq.; the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.
( 651 et seq.; the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. (
300(f) et seq.; the Hazardous Materials Transportation Act, 42 U.S.C. ((
1471, 1472, 1655, 1801 et seq.; the Federal Insecticide, Fungicide &
Rodenticide Act, 7 U.S.C. ( 136 et seq.; and the Atomic Energy Act, 42
U.S.C. ( 3011 et seq.
"Event of Default means, when used with reference to any agreement
without other reference, an event of default or other similar event as
defined, or pursuant to, the terms of such agreement.
"Facility" has the meaning set forth in the Recitals.
"FERC" means the Federal Energy Regulatory Commission and its
successors.
"Financial Statements" has the meaning set forth in Section 5.9.
"FPA" means the Federal Power Act, as amended, and all rules and
regulations adopted thereunder.
"GAAP" means generally accepted accounting principles in effect in the
United States from time to time.
"Gas Agreement" means that certain Partial Assignment and Assumption
Agreement dated November 29, 1994 between the Seller and the Partnership.
"Gas Lease" means that certain Amended and Restated Gas Lease
Agreement dated December 14, 1993 by and between the County of Orange,
California and Seller.
"Governmental Approval" means any applicable authorization, approval,
consent, license, lease, ruling, permit, tariff, certification, exemption,
filing or registration by or with any Governmental Person.
<PAGE>
"Governmental Person" means any federal, state, local or other
government, any political subdivision or any governmental, judicial, public
or statutory instrumentality, tribunal, agency (including those pertaining
to health, safety or the environment), authority, body or entity, or other
regulatory bureau, authority, body or entity having legal jurisdiction over
the matter or Person in question.
"Governmental Rule" means any applicable federal, state, local or
other law, statute, treaty, rule, regulation, ordinance, order, code,
judgment, decree, directive, injunction, writ or similar action or decision
duly implementing any of the foregoing by any Governmental Person, but does
not include Governmental Approvals.
"Governmental Consents and Notices" has the meaning set forth in
Section 4.5.
"GP Interest" has the meaning set forth in Section 4.7.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and all of the rules and regulations thereunder.
"Knowledge," "known" and "knows," whether or not capitalized herein
and when used with respect to matters covered by representation, warranty,
covenant or other provision of this Agreement applicable to the Seller,
means the knowledge and beliefs of each of Jerrel D. Branson and John Hall,
but without any independent investigation.
"Lien" means any lien, mortgage, encumbrance, charge, pledge, lease,
security interest, claim, option or right of any kind (including any
conditional sale or other title retention agreement).
"LP Interest" shall have the meaning given in Section 4.7.
"LP Interest Purchase Price" means Two Million Seven Hundred Thousand
Dollars ($2,700,000).
"Operator" means Ecogas Corporation, a Delaware corporation.
"Partnership" has the meaning set forth in the Recitals.
"Partnership Agreement" has the meaning set forth in the Recitals.
"Partnership Assets" means all of the assets and rights of any kind or
character owned or leased or otherwise benefiting the Partnership,
including (i) the Site, and all easements, rights of way and other similar
rights in which the Partnership has any interest, (ii) the Facility and
related fixtures, improvements, equipment and other assets located on the
Site, (ii) the Power Purchase Agreement, Gas Agreement and all of the other
Project Documents, (iii) the Permits, (iv) all of the tangible and
intangible personal, real, mixed and
<PAGE>
other property and assets of any kind owned or leased by the Partnership or
in which the Partnership has any right or interest and (v) all assets
included in the balance sheet contained in the Financial Statements (other
than assets which have been disposed of in the ordinary course since the
date of the Financial Statements), but excluding the Excluded Assets and
excluding any assets transferred to the Seller under any of the Closing
Documents.
"Permits" has the meaning set forth in Section 5.15.
"Person" means any individual, corporation, partnership, trust, joint
venture, unincorporated association, limited liability company,
Governmental Person or other entity.
"Power Purchase Agreement" means that certain Parallel Generation
Agreement dated December 28, 1982 between the Seller (as successor to Getty
Synthetic Fuels, Inc.) and SCE, as amended by Amendment No. 1 executed as
of September 30, 1985, and as assigned to the Partnership pursuant to an
Assignment and Assumption Agreement dated November 29, 1994 between the
Seller and the Partnership, as consented to by SCE pursuant to a Consent
Agreement dated as of November 29, 1994 by and among SCE, the Seller and
the Partnership.
"Project Documents" has the meaning set forth in Section 5.13.
"Projections" means the financial projections attached hereto as
Schedule 5.25.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended, and all rules and regulations adopted thereunder.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended, and all rules and regulations adopted thereunder.
"Qualifying Facility" means a "qualifying facility" within the meaning
of PURPA.
"Ridgewood Trust" means Ridgewood Electric Power Trust I, a Delaware
business trust and limited partner of the Partnership.
"SCE" has the meaning set forth in the recitals of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted thereunder.
"Seller" has the meaning set forth in the Preamble.
"Site" means the property on which the Facility is located.
<PAGE>
"Tax Liabilities" means all income, excise, sales, unemployment,
employer and employee withholding, social security, occupation, franchise,
customs and other taxes, duties or charges levied, assessed or imposed upon
Brea or the Partnership, to the extent allocable to the Seller"s interest
in the Partnership, during any portion of the taxable year of Brea or the
Partnership ending on the Closing Date or that accrued or are attributable
to any portion of the taxable year of Brea or the Partnership ending on the
Closing Date.
"Tax Returns" has the meaning set forth in Section 5.23.
1.2 Interpretations. For purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise necessarily
requires:
1.2.1 the terms "herein," "herewith" and "hereof" are references
to this Agreement, taken as a whole;
1.2.2 the terms "include," "includes" and "including" shall mean
"including, without limitation";
1.2.3 references to a "Section," "Article," "Exhibit" or
"Schedule" shall mean a Section, Article, Exhibit or Schedule of this
Agreement, as the case may be;
1.2.4 references to a given agreement, instrument or other
document shall be a reference to that agreement, instrument or other
document as modified, amended, supplemented and restated through the date
as of which such reference is made;
1.2.5 references to a Person includes its permitted successors
and permitted assigns;
1.2.6 the singular shall include the plural and the masculine
shall include the feminine and neuter, and vice versa;
1.2.7 reference to a given Governmental Rule is a reference to
that Governmental Rule as amended, modified, supplemented or restated as of
the date on which the reference is made; and
1.2.8 accounting terms have the meaning given to them by GAAP
applied on a consistent basis by the Person to which they relate.
<PAGE>
ARTICLE 2
SALE AND PURCHASE OF BREA STOCK AND LP INTEREST;
PURCHASE PRICE
2.1 Sale of Brea Stock. Upon the terms and subject to the conditions
of this Agreement, at the Closing, the Seller shall sell, and the Buyer
shall purchase, the Brea Stock for a price equal to the Brea Stock Purchase
Price.
2.2 Sale of LP Interest. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Seller shall sell and the
Buyer shall purchase, the LP Interest for a purchase price equal to the LP
Interest Purchase Price.
2.3 Manner of Payment. At the Closing, the Buyer shall pay the
purchase prices specified in Section 2.1 and Section 2.2 in the manner
specified in Article 3.
ARTICLE 3
CLOSING DATE AND ACTIONS AT CLOSING
3.1 Closing Date. Subject to the other provisions of this Agreement,
the closing of the transactions contemplated by this Agreement (the
"Closing") shall be held at the offices of Reid & Priest, LLC, 40 West 57th
Street, New York, NY 10019 at 12:00 p.m. Pacific Daylight Time, on
Saturday May 31, 1997, or on such other date and at such other place as may
be mutually agreed upon by the parties. The date of the Closing is
sometimes referred to herein as the "Closing Date."
3.2 Actions at Closing. In addition to and without limiting any
other provisions of this Agreement, the Seller and the Buyer shall take the
following actions or cause the following actions to be taken at the
Closing:
3.2.1 Brea Stock Certificates. The Seller shall deliver to the
Buyer certificates representing the Brea Stock, duly endorsed in blank or
accompanied by duly executed stock powers in blank in proper form for
transfer.
3.2.2 Assignment of LP Interest. The Seller and the Buyer shall
execute and deliver the Assignment of LP Interest.
3.2.3 Other Closing Documents. The Seller and the Buyer shall
execute and deliver the other Closing Documents.
3.2.4 Payment of Brea Stock Purchase Price. The Buyer shall pay
or cause to be paid to the Seller the Brea Stock Purchase Price by wire
transfer or other credit of immediately available funds to an account
designated by the Seller.
<PAGE>
3.2.5 Payment of LP Interest Purchase Price. The Buyer shall
pay or cause to be paid to the Seller the LP Interest Purchase Price by
wire transfer or other credit of immediately available funds to an account
designated by the Seller.
3.3 Additional Actions. The Seller and the Buyer shall, on request,
on and after the Closing Date, take such further actions as may be
requested pursuant to Section 10.6.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
RELATING TO THE SELLER
The Seller hereby represents and warrants to the Buyer (regardless of
any examinations, inspections, audits or other investigations the Buyer has
heretofore made or may hereafter make with respect to such representations
and warranties) as of the Closing Date as follows:
4.1 Due Organization. The Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to transact business in the State of
California.
4.2 Power and Authority. The Seller has full power and authority to
enter into and perform its obligations hereunder and under the Closing
Documents to which it is or will be a party and to consummate the
transactions herein and therein contemplated in accordance with the terms,
provisions and conditions hereof and thereof. All proceedings required to
be taken by the Seller to authorize it to execute, deliver and perform the
terms of this Agreement and the other Closing Documents to which it is or
will be a party have been duly and validly taken.
4.3 Valid, Binding and Enforceable Obligations. Each of this
Agreement and the other Closing Documents to which the Seller is or will be
a party has been, or will be on the Closing Date, as the case may be, duly
and validly executed by the Seller and constitutes, or will constitute when
executed, a valid, binding, and enforceable obligation, enforceable against
the Seller in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors" rights and the enforcement of debtors"
obligations generally and by general principles of equity, regardless of
whether enforcement is pursuant to a proceeding in equity or at law.
4.4 No Violations. The execution and delivery by the Seller of this
Agreement and the other Closing Documents to which it is or will be a
party, and the Seller's consummation of the transactions contemplated
hereby and thereby will not (a) violate the organizational documents of the
Seller, (b) violate or constitute a Default or Event of Default under, or
cause or permit the acceleration of the maturity of, or give rise to any
right of termination, cancellation, imposition of fees or penalties under,
any debt, obligation, contract, commitment
<PAGE>
of fees or other agreement to which the Seller is a party or by which any
of the properties or assets of the Seller is or may be bound, (c) result in
the creation or imposition of any Lien upon any of the property or assets
of the Seller, or under any debt, obligation, contract, commitment or other
agreement to which the Seller is a party or by which any of its properties
or assets is or may be bound or (d) violate any Governmental Rule.
4.5 Governmental Consents and Notices. Except for the Governmental
Approvals set forth on Schedule 4.5 (collectively, the "Governmental
Consents and Notices"), no Governmental Approval is necessary or
appropriate in connection with the execution and delivery by the Seller of
this Agreement and the other Closing Documents, or the consummation by the
Seller of the transactions contemplated hereby and thereby, including the
transfer of the Brea Stock and the LP Interest. Except as expressly
described on Schedule 4.5, all of the Governmental Consents and Notices
have been duly obtained or made and none has been revoked or rescinded or
has expired. Without limiting the generality of the preceding provisions
of this Section 4.5, no consent, approval or filing is required under or in
connection with the HSR Act in connection with the transactions
contemplated by this Agreement.
4.6 Additional Consents and Notices. Except for the consents,
notices and other items set forth on Schedule 4.6 (collectively, the
"Additional Consents and Notices"), no filing, registration, qualification,
notice, consent, approval or authorization to, with or from any Person
(excluding Governmental Persons) is necessary or appropriate in connection
with the execution and delivery by the Seller of this Agreement and the
other Closing Documents, or the consummation by the Seller of the
transactions contemplated hereby and thereby, including the transfer by the
Seller of the Brea Stock and the LP Interest. Except as expressly
described on Schedule 4.6, all of the Additional Consents and Notices have
been duly obtained or made and none has been revoked or rescinded or has
expired.
4.7 Partner Interests. The Seller and Ridgewood Trust are the sole
limited partners of the Partnership, provided that no representation is
made as to whether Ridgewood has sold or otherwise transferred its interest
in the Partnership to any Person. Brea is the sole general partner of the
Partnership, holding a 1% interest therein (the "GP Interest"). The Seller
holds the interest described in the Partnership Agreement (the "LP
Interest"). Brea owns the GP Interest, and Seller owns the LP Interest, in
each case free and clear of all Liens. No other party has any rights to
acquire or otherwise holds any interest in or has any rights with respect
to (i) the Brea Stock, (ii) the GP Interest or (iii) the LP Interest,
except as may be otherwise provided in the Partnership Agreement. The
Seller will sell and transfer the Brea Stock and LP Interest to the Buyer
at the Closing free and clear of all Liens as herein provided.
4.8 No Litigation. There are no actions, suits or proceedings of any
type pending or, to the Seller's knowledge, threatened, against the Seller,
whether at law or in equity, including actions, suits or proceedings,
before or by any Governmental Person, which relate to the Facility or its
interest in Brea or the Partnership. Seller has no knowledge of any state
of
<PAGE>
facts or contemplated event which may reasonably be expected to give rise
to any such action, suit or proceeding.
4.9 Bankruptcy. The Seller has not filed any voluntary petition in
bankruptcy or been adjudicated a bankrupt or insolvent, filed any petition
or answer seeking any reorganization, liquidation, dissolution or similar
relief under any federal bankruptcy, insolvency, or other debtor relief
law, or sought or consented to or acquiesced in the appointment of any
trustee, receiver, conservator or liquidator of all or any part of its
properties. No court of competent jurisdiction has entered an order,
judgment or decree approving a petition filed against the Seller seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any federal bankruptcy act, or other
debtor relief law, and no other liquidator has been appointed of the Seller
or of all or any part of its properties.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES RELATING TO
BREA, THE PARTNERSHIP AND THE FACILITY
The Seller hereby represents and warrants to the Buyer (regardless of
any examinations, inspections, audits or other investigations the Buyer has
heretofore made or may hereafter make with respect to such representations
and warranties) as of the Closing Date as follows:
5.1 Due Organization; Capitalization. Brea is a corporation, and the
Partnership is a limited partnership, in each case duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Each of Brea and the Partnership is qualified to transact business in the
State of California and in all other jurisdictions where the ownership of
its properties or its operations require such qualifications. There are no
dissolution, winding-up or similar proceedings pending, or to the Seller's
knowledge, threatened against, Brea or the Partnership. The authorized
capital of Brea consists of 500 shares of capital stock, par value $1.00
per share, of which 100 shares are issued and outstanding, fully paid and
non-assessable, and owned by the Seller, free and clear of all Liens (the
"Brea Stock").
5.2 Power and Authority. Each of Brea and the Partnership has full
power and authority as a corporation and as a limited partnership,
respectively, to carry on its respective business as now conducted, to own
or hold under lease its properties and to enter into and perform its
obligations under each Project Document to which it is a party.
5.3 Business of Brea and the Partnership. Brea is not engaged in any
business or activities other than serving as the sole general partner of
the Partnership and matters incidental thereto. The Partnership is not
engaged in any business or activities other than the development,
ownership, operation and maintenance of the Facility and matters incidental
thereto. Without limiting the generality of the foregoing, neither Brea
nor the Partnership (a) owns any capital stock, partnership interest or
other interest of any type, directly or indirectly, in any other
corporation, partnership (other than the Partnership) or other Person, (b)
conducts
<PAGE>
any business other than the business contemplated by the Project Documents
to which it is a party, (c) is a party to or bound by any contract,
agreement, instrument or other document other than the Project Documents to
which it is a party (d) has outstanding debt or other liability of any type
other than pursuant to the Project Documents to which it is a party or as
otherwise disclosed on the Financial Statements.
5.4 No Violations. The execution and delivery by Brea and the
Partnership of this Agreement and the other Closing Documents, and the
consummation by such parties of the transactions contemplated hereby and
thereby will not (a) violate or constitute a Default or Event of Default
under, or cause or permit the acceleration of the maturity of, or give rise
to any right of termination, cancellation, imposition of fees or penalties
under, any Project Document, (b) result in the creation or imposition of
any Lien upon any of the property or assets of Brea or the Partnership, or
under the Project Documents or (c) violate any Governmental Rule.
5.5 No Litigation. There are no actions, suits or proceedings of any
type pending or, to the Seller's knowledge, threatened, against Brea, the
Partnership or any of their respective properties or business, whether at
law or in equity, including actions, suits, or proceedings before or by any
federal, state, municipal or other court or governmental department,
commission, board, bureau, agent, instrumentality or other Governmental
Person. The Seller has no knowledge of any state of facts or contemplated
event which may reasonably be expected to give rise to any such action,
suit or proceeding. Neither Brea nor the Partnership is operating under,
or subject to, or in default with respect to, any order, writ, injunction
or decree of any Governmental Person.
5.6 Bankruptcy. Neither Brea nor the Partnership has filed any
voluntary petition in bankruptcy or been adjudicated a bankrupt or
insolvent, filed any petition or answer seeking any reorganization,
liquidation, dissolution or similar relief under any federal bankruptcy,
insolvency, or other debtor relief law, or sought or consented to or
acquiesced in the appointment of any trustee, receiver, conservator or
liquidator of all or any part of their respective properties. No court of
competent jurisdiction has entered an order, judgment or decree approving a
petition filed against Brea or the Partnership seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any federal bankruptcy act, or other debtor relief law, and no
other liquidator has been appointed of Brea or the Partnership or of all or
any part of their respective properties.
5.7 Qualifying Facility Matters. The Facility is an electrical
generating facility that has been certified by the FERC as a Qualifying
Facility. The Facility is, and during all applicable periods has been, a
Qualifying Facility (except that (a) no representation or warranty is made
as to the effect, if any, on the status of the Facility as a Qualifying
Facility under PURPA, of Ridgewood Trust being a limited partner in the
Partnership) in compliance in all respects with all technical and ownership
requirements contained in all applicable FERC and CPUC rules and
regulations.
<PAGE>
5.8 Intentionally Omitted.
5.9 Financial Statements; Books of Account. Attached as Schedule 5.9
are the audited financial statements of the Partnership for the period
ending as of December 31, 1996 (collectively, the "Financial Statements").
The Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis, and present fairly the financial position and
results of operations of Brea and the Partnership at the dates and for the
periods indicated therein. Brea's only activities have been to serve as the
general partner of the Partnership and it has no assets (other than the
general partnership interest in the Partnership), revenues or liabilities
except for the contingent liabilities for the liabilities of the
Partnership shown in the Financial Statements.
5.10 Absence of Certain Changes. Since the date of the Financial
Statements:
5.10.1 neither Brea nor the Partnership has entered into any
transaction which was not in the ordinary course of its business;
5.10.2 there has been no material change in the business,
operations, finances, assets or liabilities of Brea or the Partnership;
5.10.3 there has been no material damage to, destruction of or
loss of or the Facility or any assets of Brea or the Partnership;
5.10.4 neither Brea nor the Partnership has declared, paid or
set aside for payment any amounts for distribution to the Seller or any
other Person; and
5.10.5 neither Brea nor the Partnership has made any change in
any method of accounting or accounting practice or any change in
depreciation or amortization policies or rates theretofore adopted.
5.11 No Undisclosed Liabilities. To the knowledge of the Seller (i)
as of the date of the most recent balance sheet included in the Financial
Statements, neither Brea nor the Partnership had any material liabilities
or obligations of any nature (whether accrued, absolute, fixed or unfixed,
known or unknown, asserted or unasserted, contingent, by guaranty, surety
or assumption or otherwise), which were not fully disclosed, reflected or
reserved against in such Financial Statements or the notes thereto, and
(ii) since the date of the most recent balance sheet included in the
Financial Statements, neither Brea nor the Partnership has incurred any
liability or obligation of any nature (whether accrued, absolute, fixed,
known, asserted, contingent, by guaranty, surety or assumption or
otherwise) except for current liabilities or obligations which have been
incurred in the ordinary course of business.
<PAGE>
5.12 Partnership Assets.
5.12.1 Real Property Rights; Title Insurance. Schedule 5.12.1
is a complete and accurate list of (i) all real property owned or leased by
Brea or the Partnership and of all easements, rights of way, rights of
interconnection and other similar agreements in which Brea or the
Partnership has any rights and (ii) all title insurance policies and
similar insurance policies issued to Brea or the Partnership or any of
their respective Affiliates relating to any of the property described in
preceding clause (i) or relating to the fixtures and improvements listed on
Schedule 5.12.2.
5.12.2 Fixtures and Improvements. Schedule 5.12.2 is a complete
and accurate list of all buildings, material fixtures and other
improvements owned by the Partnership and located on the Site or elsewhere.
The term "material," as used in this Section 5.12.2 and Section 5.12.3
below, means any such property having a value exceeding $1,000.
5.12.3 Equipment and Other Personal Property. To the extent not
included on Schedule 5.12.2, Schedule 5.12.3 is a complete and accurate
list of all material equipment, plant, machinery, installations, tools,
spare parts, furniture, supplies, vehicles and other personal property
owned by the Partnership, and Schedule 5.12.3 specifically indicates any
material item of property which is not located on or at the Site and
identifies the location thereof.
5.12.4 Title to Partnership Assets. The Partnership has a valid
leasehold interest in the Site, free and clear of all Liens, and the
Partnership has good and indefeasible title to the remainder of the
Facility and all of the other Partnership Assets, free and clear of all
Liens, in each case subject to customary and routine exceptions normally
found in title insurance policies. The Partnership Assets constitute all
of the assets necessary for the lawful operation and use of the Facility in
the ordinary course (including all easements, rights of way, rights of
interconnection and other similar rights and agreements required for the
operation of the Facility) and such assets include all assets required by
the Project Documents.
5.13 Project Documents.
5.13.1 Set forth on Schedule 5.13 is a true, correct and
complete list and brief description of all material agreements, contracts,
instruments, licenses, permits and franchises, including all amendments
thereto relating to Brea, the Partnership or the Facility, or to which
Brea, the Partnership or the Facility is subject (collectively, the
"Project Documents"). A true, correct and complete copy of each of the
Project Documents including all amendments, supplements, exhibits and
schedules, if any, thereto has been delivered to the Buyer.
5.13.2 Neither the Power Purchase Agreement nor the Gas
Agreement has been modified, supplemented, amended, waived or terminated in
any respect whatsoever, and none of the other Project Documents has been
modified, supplemented, amended, waived or
<PAGE>
terminated in any material respect, in any such case whether orally or in
writing, except by means of another Project Document.
5.13.3 Each of the Project Documents constituting an agreement,
contract, instrument or other similar document (including the Power
Purchase Agreement and the Gas Agreement) (a) has been duly authorized,
executed and delivered by the Seller, Brea and/or the Partnership, as the
case may be, and to the Seller's knowledge, by each of the other parties
thereto, (b) except to the extent fully performed in accordance with its
terms, is in full force and effect, and (c) to the Seller's knowledge, is a
valid obligation of such other parties enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application referring
to or affecting enforcement of creditor's rights and general principles of
equity.
5.13.4 No Default or Event of Default on the part of Brea or the
Partnership has occurred and is continuing under any Project Document
(including the Power Purchase Agreement or Gas Agreement), and neither
Seller, Brea nor the Partnership has received notice, oral or written, that
a Default or Event of Default on the part of any other Person has occurred
thereunder or that any Person has alleged or asserted any such Default or
Event of Default by an Person.
5.14 No Employees, Etc. Neither Brea nor the Partnership has any
employees, or any compensation, bonus, health, sick pay, disability,
vacation pay, group-term life insurance, dependant care assistance,
accidental death and dismemberment insurance, severance, employee welfare,
pension, profit sharing, retirement or other employee benefit plans, funds,
programs or arrangements. Schedule 5.14 sets forth a true and accurate
list of the employees of the Seller or the Operator who are employed in
connection with the Facility.
5.15 Permits. The Governmental Approvals listed on Schedule 5.15
(collectively, the "Permits") constitute, to the Seller's knowledge, all of
the material Governmental Approvals which are necessary or appropriate in
connection with the ownership, use, operation and maintenance of the
Facility and the conduct of Brea's and the Partnership's business and
activities. To the Seller's knowledge, except as set forth on Schedule
5.15, each Permit has been duly and validly issued, or transferred, to Brea
or the Partnership, as the case may be, and is in full force and effect,
and all rights and entitlements thereunder are vested exclusively in Brea
or the Partnership. Neither the Seller, Brea nor the Partnership has
received any notice that Brea or the Partnership has committed any act or
failed to act in any manner or under any circumstances which could result
in the revocation or suspension of any Permit or in any other disciplinary
action relating thereto. The consummation of the transactions provided for
in this Agreement and the other Closing Documents will not violate any of
the terms or provisions of the Permits or impose any material obligation on
the Partnership or Brea. Neither Seller, Brea nor the Partnership has
reason to believe that any of such Permits will not be renewed upon their
natural expiration in the ordinary course of business upon compliance with
normal and customary renewal procedures applicable to the respective
Permit.
<PAGE>
5.16 General Legal Compliance. Except as disclosed on Schedule 5.16
or 5.17, Brea, the Partnership and the Facility are in compliance in all
material respects with all Governmental Rules applicable to Brea, the
Partnership and/or the Facility, as the case may be, and with all Permits,
including all Governmental Rules applicable to the conduct of Brea's and
the Partnership's business and activities and to the construction,
ownership, operation, maintenance and use of the Facility, except where
failure to comply would not have a material adverse effect on Brea, the
Partnership or the Facility.
5.17 Environmental Legal Compliance. Without limiting the generality
of Section 5.16, and except as disclosed on Schedule 5.17, (a) Brea, the
Partnership, the Facility and the Site are in compliance in all material
respects with all Environmental Laws, and (b) to the Seller's knowledge,
there has not been (in connection with, the construction, fuel supply,
power generation and transmission, waste disposal, and other operations and
processes relating to the Facility) any release, emission, seepage,
disposal, spill or discharge at or to the Site or its environment, whether
onto or into the ground, water, air or otherwise, of any petroleum products
or of any substance considered a hazardous or toxic substance that would
give rise to liability to the owner or operator of the Facility under any
Environmental Law, and to the best of knowledge of the Seller, none is
reasonably expected to occur imminently, other than those which (i) are not
material, (ii) are permitted under all applicable Environmental Laws and
Permits, (iii) occur in the normal course of the operation of the Facility
or (iv) have not had and are not reasonably expected to have any material
adverse impact on Brea, the Partnership or the Facility.
5.18 Insurance. Schedule 5.18 contains a list and description of all
insurance policies of any type which are held by Brea or the Partnership
(or their Affiliates which relate to Brea, the Partnership or the Facility)
specifying the insurer, amount of coverage, type of insurance, policy
number and any pending claims thereunder. Except as disclosed on Schedule
5.18, no claim of any type has been made under any of such policies.
5.19 Utilities. All utility services necessary for the operation of
the Facility are available at the boundaries of the Site, including water
supply, sanitary and storm sewer facilities, and gas, electric and
telephone facilities.
5.20 Facility Construction and Condition. To the knowledge of the
Seller, the Facility is operating substantially as designed, all of the
Partnership Assets are in good operating condition, maintenance and repair
(subject only to normal wear and tear) and there are no material design or
other material defects in the Facility or any other Partnership Asset.
5.21 Securities Laws. Based upon and provided that the
representations of the Buyer in Sections 6.7 and 6.8 are true and correct,
the sale of the Brea Stock and the LP Interest is not required to be
registered pursuant to the Securities Act, or applicable state securities
laws or regulations.
<PAGE>
5.22 Brokers. Neither this Agreement nor the consummation of the
transactions contemplated hereby was induced by or procured through any
Person acting on behalf of, or representing, either Seller, Brea, the
Partnership or any of their Affiliates as a broker, finder, investment
banker, financial advisor or in any similar capacity.
5.23 Tax Returns. Each of Brea and the Partnership has properly,
accurately and timely completed and filed all federal, state and local tax
returns and reports, declarations and information returns ("Tax Returns")
required to be filed on or before the Closing Date by or on behalf of Brea
or the Partnership, and has withheld and paid over all amounts shown as due
on such returns, as well as other due and payable charges, assessments and
governmental charges of which the Seller has knowledge. To the knowledge
of the Seller, prior to the Closing Date, the Partnership is classifiable
as a partnership, and not as an association taxable as a corporation under
Section 7701 of the Code and the regulations promulgated thereunder, and
has been taxed as a partnership for federal income tax purposes under
subchapter "K" of the Code, provided, however, that no representation is
being made by Seller with respect to any adverse effect on such
classification which is attributable to the activities of Ridgewood Trust
as a limited partner of the Partnership. Except as provided on Schedule
5.23, no Tax Returns have been audited by any federal, state or local
taxing authorities and no representation as to tax matters are made for the
period commencing on and continuing after the Closing Date.
5.24 Bank Accounts. Schedule 5.24 sets forth an accurate and
complete list of (a) the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at which
Brea or the Partnership maintains accounts of any nature or safe deposit
boxes and the names of all Persons authorized to draw thereon, make
withdrawals therefrom or to have access thereto and (b) the names of all
Persons, if any, holding general or specific powers of attorney from Brea
or the Partnership and a summary of the terms thereof.
5.25 Projections. The Projections attached hereto as Schedule 5.25
were prepared by the Seller in good faith. The Seller has no knowledge of
any facts or circumstances or provisions of the Project Documents that are
inconsistent with the assumptions on which the Projections are based.
ARTICLE 6
BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer hereby represents and warrants to Seller (regardless of any
examinations, inspections, audits or other investigations the Seller has
heretofore made or may hereafter make with respect to such representations
and warranties) as of the Closing Date as follows:
6.1 Due Organization. The Buyer is a Delaware limited liability
company, duly organized, and validly existing under the laws of the State
of Delaware, and is qualified to
<PAGE>
transact business in all jurisdictions where the ownership of its
properties or its operations require such qualification, except where the
failure to so qualify would not have a material adverse effect on its
financial condition, its ability to own its properties or transact its
business, or to carry out the transactions contemplated hereby.
6.2 Power and Authority. The Buyer has full limited liability
company power and authority to enter into and perform its obligations
hereunder and under the other Closing Documents to which it is or will be a
party and to consummate the transactions herein and therein contemplated in
accordance with the terms, provisions and conditions hereof and thereof.
All limited liability company proceedings required to be taken by the Buyer
to authorize it to execute, deliver and perform the terms of this Agreement
and the other Closing Documents to which it is or will be a party have been
duly and validly taken.
6.3 Valid, Binding and Enforceable Obligations. Each of this
Agreement and the other Closing Documents to which the Buyer is or will be
a party has been, or will be on the Closing Date, as the case may be, duly
and validly executed by the Buyer and constitutes, or will when executed
constitute, a valid, binding, and enforceable obligation, enforceable
against the Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and
the enforcement of debtors' obligations generally and by general principles
of equity, regardless of whether enforcement is pursuant to a proceeding in
equity or at law.
6.4 No Violations. The execution and delivery by the Buyer of this
Agreement and the other Closing Documents to which it is or will be a
party, and the Buyer's consummation of the transactions contemplated hereby
and thereby will not (a) violate or be in conflict with the organizational
documents of the Buyer, (b) violate, be in conflict with, or constitute a
Default or Event of Default under, or cause or permit the acceleration of
the maturity of, or give rise to any right of termination, cancellation,
imposition of fees or penalties under, any debt, obligation, contract,
commitment of fees or other agreement to which the Buyer is a party or by
which any of the properties or assets of the Buyer is or may be bound, (c)
result in the creation or imposition of any Lien upon any of the property
or assets of the Buyer, or under any debt, obligation, contract, commitment
or other agreement to which the Buyer is a party or by which any of the
properties or assets is or may be bound, or (d) violate any Governmental
Rule.
6.5 Bankruptcy. The Buyer has not filed any voluntary petition in
bankruptcy or been adjudicated a bankrupt or insolvent, filed any petition
or answer seeking any reorganization, liquidation, dissolution or similar
relief under any federal bankruptcy, insolvency, or other debtor relief
law, or sought or consented to or acquiesced in the appointment of any
trustee, receiver, conservator or liquidator of all or any substantial part
of its properties. No court of competent jurisdiction has entered an
order, judgment or decree approving a petition filed against the Buyer
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any federal bankruptcy
act, or other debtor
<PAGE>
relief law, and no other liquidator has been appointed of the Buyer or of
all or any substantial part of its properties.
6.6 No Litigation. There are no actions, suits or proceedings of any
type pending or, to the Buyer's knowledge, threatened, against the Buyer or
any of its properties or business, whether at law or in equity, before or
by Governmental Person. The Buyer has no knowledge of any state of facts
or contemplated event which may reasonably be expected to give rise to any
such action, suit or proceeding. The Buyer is not operating under, or
subject to, or in default with respect to, any order, writ, injunction or
decree of any Governmental Person.
6.7 Investment Intent. The Buyer is acquiring the Brea Stock and the
LP Interest solely for the purpose of investment and not with a view to, or
for sale in connection with, any distribution thereof. The Buyer
acknowledges that the Brea Stock and the LP Interest are not registered
under the Securities Act and that the Brea Stock and the LP Interest may
not be transferred or sold except in compliance with the registration
provisions of the Securities Act or pursuant to an applicable exemption
therefrom and in compliance with applicable state securities laws and
regulations.
6.8 Accredited Investor. The Buyer is an "accredited investor" as
defined in Rule 501 of the Securities Act and is a sophisticated investor
with the capability of evaluating the merits and risks of entering into
this Agreement.
6.9 Brokers' Fees. Neither this Agreement nor the consummation of
the transactions contemplated hereby was induced by or procured through any
Person acting on behalf of, or representing, the Buyer or any of its
Affiliates as a broker, finder, investment banker, financial advisor or in
any similar capacity, except Monhegan Partners, pursuant to a separate
agreement for which the Buyer is solely responsible.
6.10 HSR Act. No consent, approval or filing is required under or in
connection with the HSR Act in connection with the transactions
contemplated by this Agreement.
6.11 Ridgewood Partnership Interest. Ridgewood Trust has not sold,
assigned or otherwise transferred all or any portion of its interest in the
Partnership to any Person. To the knowledge of Buyer, prior to the Closing
Date, the Partnership is classifiable as a partnership, and not as an
association taxable as a corporation under Section 7701 of the Code and the
regulations promulgated thereunder, and has been taxed as a partnership for
federal income tax purposes under Subchapter "K" of the Code, provided,
however that no representation is being made by Buyer with respect to any
adverse effect on such classification which is attributable to the
activities of the Seller as a limited partner of the Partnership or of Brea
as the general partner of the Partnership.
<PAGE>
ARTICLE 7
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
The obligation of the Buyer to consummate the transactions
contemplated hereby shall be subject to the fulfillment to the satisfaction
of, or waiver by, the Buyer, in its sole discretion, of each of the
following conditions on or prior to the Closing:
7.1 No Termination. This Agreement shall not have been terminated
pursuant to Section 10.7 hereof.
7.2 Representations True and Correct; Certificate. The
representations and warranties of the Seller contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as if made on and as of the Closing
Date, and the Seller shall have executed and delivered to the Buyer an
officer's certificate confirming the same.
7.3 Compliance with Covenants; Certificate. The Seller shall have
performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to
or on the Closing Date, and the Seller shall have executed and delivered to
the Buyer an officers' certificate confirming the same.
7.4 No Adverse Proceedings. On the Closing Date, no action or
proceeding shall be pending by any public authority or private individual
or entity before any court or administrative body to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby or to recover any damages or obtain other relief as a
result of the transactions proposed hereby.
7.5 Proceedings Satisfactory. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement and all documents incident thereto, shall be reasonably
satisfactory in form and substance to the Buyer and its counsel, and, the
Buyer and its counsel shall have received copies of such documents and
customary certificates as the Buyer and its counsel may reasonably request
in connection therewith.
7.6 No Adverse Changes. There shall have been no material adverse
change in the position, financial or otherwise, or the assets, liabilities
or results of operations of Brea, the Partnership or the Facility other
than in the ordinary course of business or as permitted or contemplated by
this Agreement, nor shall the business, assets and properties of Brea, the
Partnership, or the Facility have been materially and adversely affected in
any way as a result of fire, explosion, earthquake, disaster, accident,
flood, riot, civil disturbance, uprising, activity of armed forces, or act
of God or public enemy, whether or not covered by applicable insurance.
7.7 Consents and Notices. All Governmental Consents and Notices,
Additional Consents and Notices and other consents or notices required to
be obtained from or made to
<PAGE>
any Person shall have been duly obtained, made or provided, as the case may
be, and shall be in full force and effect.
7.8 Legal Opinion. The Buyer shall have received from Reid & Priest
LLP, legal counsel to the Seller, opinions as to the authorization,
delivery and performance of the Closing Documents and the other acts to be
performed by Seller at Closing in form reasonably acceptable to the Buyer
and its counsel.
7.9 Execution and Delivery of Closing Documents. This Agreement and
each of the other Closing Documents shall have been duly authorized,
executed and delivered by the parties thereto and shall be in full force
and effect on the Closing Date without any material Default or Event of
Default having occurred or existing thereunder or material breach thereof
or circumstance which would give any party thereto the right to terminate
any such Closing Document.
7.10 No Violations. The consummation of the transactions
contemplated hereby and by the other Closing Documents shall not violate
any Governmental Rule.
7.11 Closing Actions. Each of the actions required to be taken
pursuant to Section 3.2 or otherwise to effect the transactions
contemplated hereby shall have been duly performed and complied with, and
the Buyer shall have received satisfactory evidence of any and all such
actions.
7.12 Stock and Partnership Documents. The Buyer shall have received
(i) Certificates representing the Brea Stock endorsed in blank, (ii) a copy
of the certificate of limited partnership of the Partnership and the
Partnership Agreement, in each case certified by an officer of Brea, and
(iii) evidence as to the good standing of Brea and the Partnership in the
State of California.
7.13 Transfer of Bank Accounts. Seller will execute and deliver, or
cause to be executed and delivered, to Buyer such resignations and other
documentation of officers and representatives of Brea or the Partnership as
Buyer may reasonably request to effect the transfer of the bank accounts
referenced in Schedule 5.24 as of the Closing Date.
ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of the Seller to consummate the transactions
contemplated hereby shall be subject to the fulfillment to the satisfaction
of, or waiver by, the Seller, in its sole discretion, of each of the
following conditions on or prior to the Closing:
8.1 No Termination. This Agreement shall not have been terminated
pursuant to Section 10.7 hereof.
<PAGE>
8.2 Representations True and Correct; Certificate. The
representations and warranties of the Buyer contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date with the same force and effect as if made on and as of the Closing
Date, and the Buyer shall have executed and delivered to the Seller an
officer's certificate confirming the same.
8.3 Compliance with Covenants; Certificate. The Buyer shall have
performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to
or on the Closing Date, and the Buyer shall have executed and delivered to
the Seller an officers' certificate confirming the same.
8.4 No Adverse Proceedings. On the Closing Date, no action or
proceeding shall be pending by any public authority or private individual
or entity before any court or administrative body to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby or to recover any damages or obtain other relief as a
result of the transactions proposed hereby.
8.5 Proceedings Satisfactory. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement and all documents incident thereto, shall be reasonably
satisfactory in form and substance to the Seller and its counsel, and, the
Seller and its counsel shall have received copies of such documents and
customary certificates as the Seller and its counsel may reasonably request
in connection therewith.
8.6 Consents and Notices. All Governmental Consents and Notices,
Additional Consents and Notices and other consents or notices required to
be obtained from or made to any Person shall have been duly obtained, made
or provided, as the case may be, and shall be in full force and effect.
8.7 Legal Opinion. The Seller shall have received from Downs Rachlin
& Martin, PC, opinions as to the authorization, delivery and performance of
the Closing Documents and the other acts to be performed by the Buyer at
Closing in form reasonably acceptable to the Seller and its counsel.
8.8 Execution and Delivery of Closing Documents. This Agreement and
each of the other Closing Documents shall have been duly authorized,
executed and delivered by the parties thereto and shall be in full force
and effect on the Closing Date without any material Default or Event of
Default having occurred or existing thereunder or material breach thereof
or circumstance which would give any party thereto the right to terminate
any such Closing Document.
8.9 No Violations. The consummation of the transactions contemplated
hereby and by the other Closing Documents shall not violate any
Governmental Rule.
<PAGE>
8.10 Closing Actions. Each of the actions required to be taken
pursuant to Section 3.2 or otherwise to effect the transactions
contemplated hereby, including the payment of Brea Stock Purchase Price and
the LP Interest Purchase Price, shall have been duly performed and complied
with, and the Seller shall have received satisfactory evidence of any and
all such actions.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification by Seller. As the Buyer's sole monetary remedy
for any breach of this Agreement by Seller, the Seller shall to the maximum
extent not prohibited by law, indemnify, defend and hold harmless the Buyer
and all of its Affiliates, shareholders, partners, members, investors,
directors, officers, employees, agents and assignees, from and against any
and all losses, liabilities, damages, claims or expenses (including
reasonable attorneys' fees and expenses) suffered or incurred to third
parties by any such party by reason of or resulting from the inaccuracy of
any representation or warranty or the breach, nonfulfillment or
nonperformance of any covenant or agreement of the Seller under this
Agreement or any other Closing Document. All of Seller's representations,
warranties and covenants shall survive the Closing of this Agreement and
shall continue until the expiration of the applicable statute of
limitations; provided, however, that Buyer agrees that Seller shall have no
liability for any breach of the representations, warranties and covenants
set forth in section 5.3, 5.4, 5.5, 5.9, 5,10, 5.11, 5.12.1, 5.12.2,
5.12.3, 5.14, 5.15, 5.16, 5.18, 5.19, 5.20, 5.21, 5.24 or 5.25 unless Buyer
asserts a claim with respect thereto on or before May 31, 1998, in which
case Seller shall be liable only to the extent Buyer's claim exceeds
$50,000 in the aggregate. In no event shall Seller's liability hereunder
exceed the Aggregate Purchase Price.
9.2 Indemnification by the Buyer. As the Seller's sole monetary
remedy for any breach of this Agreement by the Buyer, the Buyer shall to
the maximum extent not prohibited by law, indemnify, defend and hold
harmless the Seller and all of its Affiliates, shareholders, partners,
members, investors, directors, officers, employees, agents and assignees,
from and against any and all losses, liabilities, damages, claims or
expenses (including reasonable attorneys' fees and expenses) suffered or
incurred to third parties by any such party by reason of or resulting from
the inaccuracy of any representation or warranty or the breach,
nonfulfillment or nonperformance of any covenant or agreement of the Buyer
under this Agreement or any other Closing Document.
ARTICLE 10
ADDITIONAL COVENANTS AND TERMINATION
10.1 Seller's General Pre-Closing Covenants. Until the Closing Date,
the Seller shall, and shall cause Brea and the Partnership to, unless the
Buyer shall otherwise agree in writing, do the following:
<PAGE>
10.1.1 Full Access. Permit the Buyer and its representatives,
agents, counsel and accountants to have full access to all properties,
books, accounts, records, contracts, files, correspondence, tax records and
documents of or relating to Brea or the Partnership, the Facility and the
Partnership Assets, and permit the Buyer to cause its agents to conduct
such reviews, inspections, surveys, tests and investigations of Brea and
the Partnership and the Facility and the Partnership Assets as the Buyer
deems necessary or advisable, provided that the Buyer shall take all
reasonable steps to minimize the disturbance to the operations of Brea and
the Partnership.
10.1.2 Furnishing Information. Promptly furnish to cause to be
furnished, at their sole cost and expense, to the Buyer and its
representatives, originals or copies of all Project Documents and other
documents, records, data and information concerning such businesses,
assets, finances and properties of or relating to Brea, the Partnership,
the Facility and the Partnership Assets that may be requested, including
copies of all environmental reports, and plans and specifications
pertaining to all or any portion of the Facility or the Site.
10.1.3 Consultation with Accountants. Permit the Buyer to
consult with the accountants for Brea and the Partnership, and said
accountants are hereby authorized to disclose all information in their
possession to the Buyer with respect to Brea and the Partnership.
10.1.4 Discussions with Facility Participants. Permit the Buyer
and its representatives and agents to discuss the proposed sale of the Brea
Stock and the LP Interest with any of the parties to the Project Documents
or any other Person who has any relationship to the Facility, except for
employees of the Operator, without the explicit consent of the Seller.
10.1.5 Representations and Warranties. Refrain from doing, or
causing to be done, anything which would cause the representations and
warranties set forth in Articles 4 or 5 hereof from being true, complete
and accurate on the Closing Date as if made on such date.
10.1.6 Conduct of Business. Except as expressly contemplated
hereby, carry on the business of Brea, the Partnership and the Facility in
the ordinary course, and not sell, transfer or otherwise dispose of any
Partnership Asset except in the ordinary course of business, and continue
to use, operate, maintain and repair the Facility and all Partnership
Assets in accordance with all Permits, all Project Documents and all
applicable Governmental Rules and otherwise in accordance with the
Partnership's prior practice.
10.1.7 Preservation of Assets, Relationships, Etc. Preserve the
business organization of Brea and the Partnership and the Facility and
Partnership Assets intact, and preserve Brea's and the Partnership's
present relationships with all other parties to the Project Documents and
others involved with or having any material relationship to the Facility.
<PAGE>
10.1.8 New Obligations. Not enter into any material contract,
agreement or instrument of any type, whether written or oral, or otherwise
incur any new liabilities, whether contingent or otherwise, except in the
ordinary course of business.
10.1.9 No Defaults or Events of Default. Refrain from doing any
act or omitting to do any act, or permitting any act or omission to act,
which will cause a Default or Event of Default under any Project Document.
10.1.10 No Solicitations, Etc. Refrain from soliciting or
encouraging (by way of furnishing information, or otherwise) any inquiries
or proposals for the acquisition of Brea Stock or the GP Interest or the LP
Interest or the Facility or any Partnership Assets.
10.1.11 Notification. Promptly notify the Buyer in writing of
any event, circumstance or condition that results or, with the passage of
time or notice, or both, would reasonably be likely to result, in (a) any
representation or warranty of the Seller under this Agreement being false
in any material respect at any time, (b) any condition to Closing for the
benefit of the Buyer being unable to be satisfied, or (c) the inability of
the Seller to perform any of its obligations hereunder.
10.1.12 Spare Parts. Contribute or cause to be contributed to
the Partnership, free and clear of any Liens and at no obligation to the
Partnership, all spare parts and other assets relating to or used in the
operation of the Facility which are owned or controlled by the Seller or
its Affiliates.
10.2 Filings and Consents. The Seller, on its own behalf and on
behalf of Brea and the Partnership, and the Buyer, as promptly as
practicable after the Effective Date shall each use their reasonable, good
faith and diligent efforts to make, or cause to be made, all such filings
and submissions and obtain or cause to be obtained all such consents and
approvals applicable to it, in order to consummate the transactions
contemplated by this Agreement in accordance with the terms hereof.
10.3 Provision of Information. The originals of all books and
records, accounts, contracts, and other documents held by the Seller or its
Affiliates and relating to Brea, the Partnership or the Facility (other
than documents wholly internal to the Seller or its Affiliates and not
reasonably necessary to the proper operation and management of the
Facility) shall be delivered by such parties to the Buyer at the Closing or
promptly after the Closing Date, but in no event later than fifteen days
after the Closing Date.
10.4 Partnership Financial Matters Before and After the Closing Date.
The Buyer and the Seller agree that the results of operations of the
Partnership which are attributable to the GP Interest and the LP Interest
for the period from January 1, 1997 through the Closing Date shall be for
the account of the Seller, and that to the extent that the Partnership or
Brea receives the proceeds of any of the Excluded Assets after the Closing
Date, the Buyer shall promptly cause either Brea or the Partnership to pay
over such proceeds to Seller, subject,
<PAGE>
however, to Buyer's right of offset to the extent that Seller has not
discharged any of the Retained Liabilities. Similarly, if after the
Closing Date, the Seller receives any amounts which are attributable to
Brea, the Partnership or the Facility for periods commencing after the
Closing Date, Seller shall promptly pay over all such amounts to the Buyer
subject to Seller's right to offset the amount of such payment by any
amount owed to the Seller by the Buyer pursuant to this Agreement.
10.5 Intentionally left blank.
10.6 Further Assurances. The Seller and the Buyer shall, on request,
on and after the Closing Date, cooperate with each other by furnishing any
additional information, executing and delivering any additional documents
and/or instruments and doing any and all such other things as may be
reasonably requested by any of the parties or its counsel to consummate or
otherwise further implement or effectuate the transactions contemplated by
this Agreement and the other Closing Documents.
10.7 Termination. This Agreement may be terminated at any time prior
to the Closing as follows, and in no other manner:
10.7.1 By Mutual Agreement. By the mutual agreement of the
Buyer and the Seller in writing.
10.7.2 By the Buyer. By written notice the Buyer to the Seller
if (a) any condition set forth herein for the benefit of the Buyer shall
not have been timely satisfied, (b) Seller fails to perform any obligation
hereunder in a timely manner and fails to cure the same promptly after
written notice thereof from the Buyer to the Seller or (c) any
representation or warranty of the Seller hereunder proves to be false in
any material respect and is not promptly cured after written notice thereof
from the Buyer to the Seller.
10.7.3 By the Seller. By written notice from the Seller to the
Buyer if (a) any condition set forth herein for the benefit of the Seller
shall not have been timely satisfied, (b) the Buyer fails to perform any
obligation hereunder in a timely manner and fails to cure the same promptly
after written notice thereof from the Seller to the Buyer or (c) any
representation or warranty of the Buyer hereunder proves to be false in any
material respect and is not promptly cured after written notice thereof
from the Seller to the Buyer.
10.7.4 By Any Party. By written notice from any party to the
other parties if the Closing contemplated hereunder has not taken place on
or before April 30, 1997.
10.8 Seller's/Operator's Employees. Buyer covenants that for a
period of ten years after the Closing Date, Buyer will not solicit for
employment or otherwise employ any of Seller's or the Operator's employees
listed on Schedule 5.14, provided, however, that Buyer may solicit or
employ any of such persons during such period if Seller's/Operator's
<PAGE>
employment relationship with such person has been terminated prior to the
date of Buyer's first solicitation of such person.
ARTICLE 11
TAX MATTERS
11.1 Sales and Transfer Taxes. All transfer, sales, use, documentary
transfer, stamp or excise taxes, or other similar taxes of any type payable
in connection with the sale and transfer of the Brea Stock or the LP
Interest (or in connection with any deemed transfer of Partnership Assets
effected thereby or otherwise in connection with the consummation of the
transactions contemplated by this Agreement and the other Closing
Documents) shall be the exclusive responsibility of and shall be paid by
the Seller.
11.2 Income Tax Matters.
11.2.1 Certain Income Tax Effects of the Transactions. The
parties acknowledge and agree that the transactions contemplated by this
Agreement and the other Closing Documents relating to the Partnership will
have the following consequences, among other consequences, for income tax
purposes:
11.2.1.1 The Seller will take into account, and there will
be reported by the Seller to the Internal Revenue Service (and to the
appropriate state, local and foreign income tax authorities), the Seller's
allocable share (determined in accordance with Section 11.2.2) of the
Partnership's income, gains, deductions, losses, credits and other items
for the portion of the taxable year of the Partnership ending on the
Closing Date; and
11.2.1.2 Brea will take into account, and Brea will report
to the Internal Revenue Service (and to the appropriate state, local and
foreign income tax authorities) Brea's allocable share (determined in
accordance with Section 11.2.2) of the Partnership's income, gains,
deductions, losses, credits and other items for the portion of the taxable
year of the Partnership ending on the Closing Date. Seller will indemnify
and hold harmless Buyer, Brea and their respective Affiliates with respect
to all tax liabilities of Brea attributable to the portion of the taxable
year of the Partnership ending on the Closing Date.
11.2.1.3 The Buyer will take into account, and there will
be reported by the Buyer to the Internal Revenue Service (and to the
appropriate state, local and foreign income tax authorities), the Buyer's
allocable share (determined in accordance with Section 11.2.2) of the
Partnership's income, gains, deductions, losses, credits and other items
for the portion of the taxable year of the Partnership starting with the
day after the Closing Date.
<PAGE>
11.2.2 Closing of Books. The determination of the Seller's,
Brea's and the Buyer's allocable share of income, gains, deductions,
losses, credits and other items for the taxable period before or after the
Closing, as applicable, shall be made on the basis of each party's
percentage interest in the Partnership under the terms of the Partnership
Agreement, and a closing of the books of the Partnership as of the Closing.
For this purpose, the Partnership books shall be deemed to have closed
immediately after the purchase of all of the Brea Stock and the LP Interest
at Closing.
11.2.3 Covenant of Consistent Reporting. The Seller and the
Buyer each covenant that it will not take any action inconsistent with any
of the actions to be taken pursuant to this Agreement and will file, or
cause to be filed, all tax returns, reports and forms affected by such
consequences in a manner consistent with the requirement of this Agreement.
11.2.4 Taxes and Tax Returns.
11.2.4.1 Seller's Responsibility. The Seller and its
Affiliates shall cause to be prepared and filed, and shall pay any taxes,
interest or penalties associated therewith, any and all tax returns,
reports and forms relating to taxes which are required to be filed for, by,
on behalf of, or with respect to Brea and the Partnership on or before the
Closing, or after the Closing and relating to any taxable period of Brea
and the Partnership or portion thereof ending on or before the Closing.
The Seller shall indemnify the Buyer and Brea and their respective
Affiliates and hold the Buyer, Brea and their respective Affiliates
harmless from any and all liabilities associated with the failure by the
Seller or its Affiliates to comply with the obligations set forth in the
preceding sentence. Upon request of the Buyer made within 60 days after
the Closing, Seller will cause the Partnership to make an election under
Section 754 of the Code with respect to the final tax return of the
Partnership for the period ending on the Closing Date to the extent that
such taxable year ends as a result of a constructive termination of the
Partnership for federal income tax purposes by reason of Buyer's purchase
of interests of the Partnership under this Agreement.
11.2.4.2 Buyer's Responsibility. The Buyer and its
Affiliates shall cause to be prepared and filed, and shall pay any taxes,
interest or penalties associated therewith, each tax return, report or form
(other than any tax return, report or form described in Section 11.2.4.1)
which is required to be filed for, by, on behalf of or with respect to Brea
and the Partnership for the periods after the Closing. The Buyer shall
indemnify the Seller and its Affiliates and hold the Seller and its
Affiliates harmless from any and all liabilities associated with the
failure by the Buyer or any Affiliate thereof to comply with the
obligations set forth in the preceding sentence.
11.2.5 Cooperation and Exchange of Information. The Buyer and
the Seller shall furnish or cause to be furnished to each other and their
Affiliates (at reasonable times) upon request and as promptly as
practicable, such information (including, without limitation,
<PAGE>
access to personnel and books and records) pertinent to tax matters to
which this Agreement relates and assistance relating to such tax matters as
is reasonably necessary for the preparation, review, audit and filing of
any tax return, the preparation for any tax audit, or the defense or
prosecution of any assessment or other similar claim or any administrative
or court proceeding. The party requesting information shall reimburse the
other for the third party costs of providing such information. Any
information obtained by a party hereto or its Affiliates from another party
hereto or its Affiliates in connection with any tax matters to which this
Agreement relates shall be kept confidential, except as may be otherwise
necessary in connection with the filing of tax returns or claims for refund
or in conducting an audit or other proceeding.
11.2.6 Tax Proceedings. The Buyer shall give reasonably prompt
written notice to the Seller upon receipt by the Buyer or any of its
Affiliates of written notice of any audit of, assessment against, or
administrative, court or other proceeding against Brea or the Partnership
and with respect to which the Seller is required to indemnify, defend and
hold harmless under Section 11.2.4.1 or which may affect the determination
of taxes for which the Seller is obligated to indemnify, defend and hold
harmless under this Agreement. The Seller shall give reasonably prompt
written notice to the Buyer upon receipt by the Seller or any of its
Affiliates of written notice of any audit of, assessment against, or,
administrative, court or other proceeding against Brea or the Partnership
with respect to which the Seller or the Buyer is required to indemnify,
defend and hold harmless under Section 11.2.4.1 or Section 11.2.4.2,
respectively, or which may affect the determination of taxes for which the
Seller or the Buyer are obligated to indemnify, defend and hold harmless
under this Agreement.
11.2.7 Survival. Notwithstanding anything contained in this
Agreement to the contrary, each of the parties' representations and
warranties, covenants, agreements, rights, and obligations with respect to
any tax covered by this Agreement shall survive the Closing and shall not
terminate until the expiration of all statutes of limitation (including any
and all extensions thereof) applicable to such tax or the assessment
thereof.
ARTICLE 12
MISCELLANEOUS
12.1 Transaction Costs. Except as otherwise expressly provided
herein, the Buyer, on the one hand, and the Seller, on the other, shall pay
all of their own costs and expenses (including attorneys' fees and other
legal costs and expenses and accountants' fees and other accounting costs
and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. Expenses of Brea incurred with respect
to periods ending on or before the Closing Date shall be deemed to be
expenses of the Seller.
12.2 Entire Agreement. This Agreement represents the entire
understanding and agreement among the parties with respect to the subject
matter hereof, and supersedes all other negotiations, understandings and
representations (if any) made by and among such parties.
<PAGE>
12.3 Amendments. The provisions of this Agreement may not be
amended, supplemented, waived or changed orally, but only by a writing
signed by each of the parties hereto.
12.4 Assignments. No party shall assign its rights and/or
obligations hereunder without the prior written consent of each other party
to this Agreement.
12.5 Binding Effect. All of the terms and provisions of this
Agreement, whether so expressed or not, shall be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective
administrators, executors, legal representatives, heirs, successors and
permitted assigns.
12.6 Headings. The headings contained in this Agreement are for
convenience of reference only, are not to be considered a part hereof and
shall not limit or otherwise affect in any way the meaning or
interpretation of this Agreement.
12.7 Notices. All notices, requests, consents and other
communications required or permitted under this Agreement shall be in
writing and shall be (as elected by the person giving such notice) hand
delivered by messenger or courier service telefaxed, or mailed by
registered or certified mail (postage prepaid), return receipt requested,
addressed to:
To the Buyer: With a copy to:
Olinda, L.L.C.
c/o Ridgewood Power Corporation Downs Rachlin & Martin, PC
947 Linwood Drive 199 Main Street, P.O. Box 190
Ridgewood, New Jersey 07450 Burlington, VT 05402-0190
Attn: President Attn: Thomas H. Moody, Esq.
Fax: (201) 447-0474 Fax: (802) 862-7512
To the Seller: With a copy to:
GSF Energy, L.L.C. Reid & Priest LLC
3321 Bee Caves Road 40 West 57th Street
Suite 300 New York, NY 10019-4097
Austin, TX 78746 Attn: J. Anthony Terrell, Esq.
Attn: President Fax: (212) 603-2001
Fax: (512) 347-1551
or to such other address as any party may designate by notice complying
with the terms of this Section 12.7. Each such notice shall be deemed
delivered (a) on the date actually delivered if by messenger or courier
service; (b) on the date of confirmed answer-back if by telefax; and (c) on
the date upon with the return receipt is signed or delivery is refused or
the notice is designated by the postal authorities as not deliverable, as
the case may be, if mailed.
<PAGE>
12.8 Severability. If any provision of this Agreement or any other
Agreement entered into pursuant hereto is contrary to, prohibited by or
deemed invalid under applicable law or regulation, such provision shall be
inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and
shall be given full force and effect so far as possible. If any provision
of this Agreement may be construed in two or more ways, one of which would
render the provision invalid or otherwise voidable or unenforceable and
another of which would render the provision valid and enforceable, such
provision shall have the meaning which renders it valid and enforceable.
12.9 Waivers. The failure or delay or any party at any time to
require performance by another party of any provision of this Agreement,
even if known, shall not affect the right of such party to require
performance of that provision or to exercise any right, power or remedy
hereunder. Any waiver by any party of any breach of any provision of this
Agreement should not be construed as a wavier of any continuing or
succeeding breach of such provision, a waiver of the provision itself, or a
wavier of any right, power or remedy under this Agreement. No notice to or
demand on any party in any case shall, of itself, entitle such party to any
other or further notice or demand in similar or other circumstances.
12.10 Enforcement Costs. If any legal action or other proceeding is
brought for the enforcement of this Agreement or any other Closing
Document, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provision of this Agreement or any
other Closing Document, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees, sales and use taxes,
court costs and all out-of-pocket expenses even if not taxable as court
costs (including, without limitation, all such fees, taxes, costs and
expenses incident to arbitration, appellate, bankruptcy and post-judgment
proceedings), incurred in that action or proceeding, in addition to any
other relief to which such party or parties may be entitled. Attorneys'
fees shall include, without limitation, paralegal fees, investigative fees,
administrative costs, sales and use taxes and all other reasonable and
customary charges billed by the attorney to the prevailing party.
12.11 Remedies Cumulative. Except as otherwise expressly provided
herein, no remedy herein conferred upon any party is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder
or now or hereafter existing at law or inequity or by statute or otherwise.
No single or partial exercise by any party of any right, power or remedy
hereunder shall preclude any other or further exercise thereof.
12.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Confirmation of
execution by telefax of a signature page shall be binding upon any party so
confirming.
<PAGE>
12.13 Governing Law. This Agreement and all transactions
contemplated by this Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of New York,
without regard to principles of conflicts of laws.
12.14 Preparation of Agreement. This Agreement shall not be
construed more strongly against any party regardless of who is responsible
for its preparation. The parties acknowledge each contributed and is
equally responsible for its preparation.
12.15 Survival. All representations, warranties, covenants and
agreements made herein or otherwise referenced herein shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for the time periods herein provided.
12.16 Inducement to Transaction. All representations and warranties
made by any party of this Agreement shall be deemed made for the purpose of
inducing the other party to enter into this Agreement.
12.17 Receipt of Monies, Etc. Any monies, checks, drafts, money
orders, postal notes and other instruments received after the Closing Date
by the Seller or its Affiliates in payment of any amounts due the
Partnership with respect to any period beginning after the Closing Date
shall be promptly delivered to the Buyer.
<PAGE>
ARTICLE 13
EXECUTION CLAUSE
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
SELLER:
GSF ENERGY, LLC.
By: Ecogas Corporation, Manager
By: /S/ Jerrel D. Branson
Jerrel D. Branson, President
BUYER:
OLINDA, L.L.C.
By: Ridgewood Management Corporation, Manger
By: /s/ Mary Louise Olin
Mary Louise Olin, Vice President
AMENDMENT TO TRANSACTION DOCUMENTS
This Amendment to Transaction Documents (the "Agreement") is made as
of the 31st day of May, 1997, between and among GSF Energy, L.L.C., a
Delaware limited liability company and successor by merger to the interest
of GSF Energy, Inc. ("GSF"), Brea Power Partners, L.P., a Delaware limited
partnership (the "Partnership"), and Ridgewood Electric Power Trust I, a
Delaware business trust ("Ridgewood") with respect to the following
Recitals:
WHEREAS, the Partnership was formed as a limited partnership under the
Delaware Revised Uniform Limited Partnership Act pursuant to a Certificate
of Limited Partnership of the Partnership, as filed in the office of the
Secretary of State of the State of Delaware on October 12, 1994, and an
Agreement of Limited Partnership of the Partnership dated as of October 12,
1994 (the "Partnership Agreement") for the purpose of acquiring from GSF an
approximately 5 MW landfill gas fired electrical generating facility
located in the space above the Olinda/Olinda Alpha sanitary landfill in
Orange County, California (the "Facility");
WHEREAS, the original partners in the Partnership were Brea Power (I),
Inc., a Delaware corporation and wholly-owned subsidiary of GSF ("Brea"),
as sole general partner, and GSF and Ridgewood Electric Power Trust I, a
Delaware business trust ("Ridgewood"), as limited partners;
WHEREAS, in furtherance of the purposes for which the Partnership was
organized, the Partnership and GSF and, in certain cases third parties
entered into the following agreements:
(i) a certain Contribution Agreement dated as of November 29, 1994 by
and between GSF and the Partnership, pursuant to which GSF agreed to
contribute certain assets to the Partnership (the "Contribution
Agreement");
(ii) a certain Bill of Sale dated as of November 29, 1994 by and
between GSF and the Partnership pursuant to which GSF assigned certain
property to the Partnership (the "Bill of Sale");
(iii) a certain Assignment and Assumption Agreement dated as of
November 19, 1994 between GSF and the Partnership pursuant to which the
Parallel Generation Agreement (the "Power Contract") dated as of December
28, 1982 between GSF and Southern California Edison Company ("SCE") was
assigned to the Partnership (the "Power Contract Assignment");
(iv) a certain Consent to Assignment dated as of November 29, 1994
between and among GSF, the Partnership and SCE pursuant to which SCE
consented to the Power Contract Assignment (the "SCE Consent");
<PAGE>
(v) a certain Partial Assignment and Assumption Agreement dated as of
November 29, 1994 between GSF and the Partnership (the "Gas Lease
Assignment") pursuant to which GSF assigned to the Partnership, and the
Partnership assumed, certain rights and obligations of GSF under a certain
Amended and Restated Gas Lease Agreement dated as of December 14, 1993 by
and between Orange County, California ("Orange County") and GSF (the "Gas
Lease");
(vi) a certain Modification No. 1 to the Gas Lease dated November 29,
1994 between GSF, the Partnership and Orange County ("Modification No. 1")
pursuant to which Orange County consented to the Gas Lease Assignment;
(vii) a certain Gas Sale and Purchase Agreement dated as of November
29, 1994 by and between GSF and the Partnership (the "Gas Sale Agreement")
pursuant to which GSF agrees to sell and the Partnership agrees to purchase
gas to be used by the Facility to generate electricity; and
(viii) a certain Operating, Maintenance and Administrative Services
Agreement dated as of November 29, 1994 by and between GSF and the
Partnership (the "O&M Agreement");
WHEREAS, in connection with the formation of the Partnership, GSF and
Ridgewood entered into a certain Support Agreement dated as of November 29,
1994 pursuant to which GSF and Ridgewood undertook certain obligations with
respect to their respective interests in the Partnership (the "Support
Agreement");
WHEREAS, the agreements and documents referred to in clauses (i)
through (viii) of the third WHEREAS clause of this Agreement and the
Support Agreement are hereinafter collectively referred to as the
"Transaction Documents";
WHEREAS, pursuant to a certain Acquisition Agreement dated as of May
31, 1997 (the "Acquisition Agreement") by and between GSF and Olinda,
L.L.C., a Delaware limited liability company which is affiliated with
Ridgewood ("Olinda"), GSF has contracted to sell the stock of Brea and the
limited partnership interest in the Partnership to Olinda;
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to Olinda's obligations to close the transactions contemplated by
the Acquisition Agreement;
WHEREAS, the parties are entering into this Agreement in order to
induce Olinda to close the transactions contemplated by the Acquisition
Agreement.
NOW therefore, the parties agree as follows:
<PAGE>
1. Contribution Agreement. There are no amendments or modifications of
the Contribution Agreement and the Contribution Agreement continues in full
force and effect as written.
2. Bill of Sale. There are no amendments or modifications of the Bill of
Sale, and the Bill of Sale continues in effect as written; subject,
however, to the reconveyance by the Partnership to GSF of certain assets
described in the Bill of Sale pursuant to a certain Assignment and
Assumption of Contracts executed by the Partnership and GSF in connection
with the Acquisition Agreement.
3. Power Contract Assignment. There are no amendments or modifications
of the Power Contract Assignment, and the Power Contract Assignment
continues in full force and effect as written.
4. SCE Consent. There are no amendments or modifications of the SCE
Consent, and the SCE Consent continues in full force and effect as written.
5. Gas Lease Assignment. There are no amendments or modifications of the
Gas Lease Assignment, and the Gas Lease Assignment continues in full force
and effect as written.
6. Modification No. 1. There are no amendments or modifications of the
Modification No. 1, and Modification No. 1 continues in full force and
effect as written.
7. Gas Sale Agreement.
(a) Article I Term is hereby amended by deleting Section 1.01 in its
entirety and by substituting a new Section 1.01 in lieu thereof as follows:
"Section 1.01. This Agreement shall be effective from the
Effective Date and, unless terminated earlier as provided herein, shall
continue and remain in full force and effect until the later to occur of
(i) December 31, 2004 or (ii) the expiration of the stated term of the
Power Contract."
(b) Article II - Certain Definitions is hereby amended by deleting
the phrase "receiving and processing deliveries of Gas" from the second and
third lines of the definition of Buyer's Facility set forth in Section
2.01(b).
(c) Article III - Purchase and Sale is hereby amended by deleting the
second paragraph thereof in its entirety.
(d) Article IV - Delivery is hereby amended by deleting Section 4.01
in its entirety and inserting a new Section 4.01 in lieu thereof as
follows:
<PAGE>
"Section 4.01. All Gas delivered by Seller to Buyer
pursuant to this Agreement shall be delivered at the point which is
immediately upstream of the 3" - Flange Stub with Blind Flange on the pipe
labeled 3" - P-135A-1A and which is shown as the "Delivery Point" on the
engineering drawing attached hereto as Schedule 1 (the "Delivery Point").
Delivery of Gas hereunder shall commence upon the Effective Date."
Further, any other references to "Delivery Point" which are set
forth on the engineering drawings attached to the Gas Sale Agreement as
Exhibit A are deleted in their entirety.
(e) Article V - Operation and Maintenance is hereby amended by
deleting the words "GSF Energy Inc." in the third line of Section 5.02 and
inserting the words "Ridgewood Power Management Corporation" in lieu
thereof.
(f) Article V - Operations and Maintenance is hereby amended by
adding a new Section 5.04 as follows:
Section 5.04. In the event that Seller's monthly Capacity
Factor falls below 85%, the Seller agrees that Buyer may take or may cause
the Seller to take such steps as Buyer may reasonably conclude are
necessary or appropriate to restore and maintain the ability of Seller's
Facility to provide a Monthly Capacity Factor of 100%. Seller agrees to
cooperate with Buyer in such manner as Buyer requests in order to
facilitate the improvements in Seller's Facility contemplated by this
Section 5.04, and Seller agrees that to the extent that Buyer incurs any
out-of-pocket costs in connection with any such improvements, then Buyer
may offset any such costs against amounts otherwise due Seller hereunder."
(g) Article VI - Price is hereby amended by deleting the second
paragraph of Section 6.01 in its entirety and by adding the following
sentence at the end of the first paragraph of Section 6.01:
"In addition, from and after January 1, 1997 the Buyer shall
pay the Seller an additional amount for purchase of gas equal to $12,500
per month. Commencing on January 1, 1998 and for each subsequent calendar
year, such monthly payment shall be escalated at 3.7% over the amount paid
in the corresponding month in the preceding calendar year."
(h) Article X - Default, Termination and Liability is hereby amended
by deleting Sections 10.01, 10.02, 10.03, 10.04 and 10.05 in their
entirety.
<PAGE>
(i) Article XII - Miscellaneous is hereby amended by (i) deleting
clause (i) of Section 12.01 in its entirety, and (ii) substituting the
following addresses for the Buyer and Seller in Section 12.04(a):
To Buyer: Brea Power Partners, L.P.
c/o Ridgewood Power Management Corporation
947 Linwood Avenue
Ridgewood, New Jersey 07450
Phone: (201) 447-9000
Facsimile:(201) 447-0474
To Seller:GSF Energy, L.L.C.
3321 Bee Caves Road
Suite 300
Austin, TX 78746
Attn: President
Phone: (512) 347-1441
Facsimile:(512) 347-1551
(j) The Gas Sale Agreement, as amended and modified by the foregoing
provisions of this Paragraph 7, continues in full force and effect.
8. The O&M Agreement is hereby terminated and is of no further force and
effect (except to the extent specifically provided therein).
9. The Support Agreement is hereby amended as follows:
(a) Section 1 - Defined Terms shall be amended by deleting the term
"Ridgewood Interest Purchase Price" in its entirety and substituting a new
definition of, "Ridgewood Damage Amount." as follows:
"Ridgewood Damage Amount shall have the meaning given such term
in Section 3(b) hereof."
(b) Subsection 2(a)(iii) is hereby amended by deleting such
subsection in its entirety and substituting the following in lieu thereof:
"(iii) GSF shall pay liquidated damages to Ridgewood in
accordance with the provisions of Section 3 hereof."
(c) Section 3 is deleted in its entirety and the following
substituted in lieu thereof:
"Ridgewood Damage Amount
<PAGE>
(a) Ridgewood may require GSF to pay damages to Ridgewood
in an amount equal to the Ridgewood Damage Amount calculated in accordance
with Section 3(b) hereof in the following situations
(i) GSF has notified Ridgewood of its election to
terminate its Dissolution Payment obligation in accordance with Section
2(c) hereof; or
(ii) The Gas Supplier has fully expended the Maximum
Liability Cap.
Payment of the Ridgewood Damage Amount must be made
within 30 days after the occurrence of either of such events.
(b) The Ridgewood Damage Amount shall be an amount
necessary to make the sum of the discounted present values, discounted to
November 29, 1994, of the following three items equal to Three Million One
Hundred Thousand Dollars ($3,100,000):
(i) The Ridgewood Damage Amount,
(ii) Distributions made to Ridgewood (including
successors and assigns in accordance with Article V of the Partnership
Agreement); and
(iii)Distribution payments made to Ridgewood (if any).
For purposes of calculating the Ridgewood Damage
Amount, the applicable discount rate shall equal 1.17% per month, and cash
payment shall be deemed to have occurred at the end of the month in which
received."
(c) Section 4 - GSF Call Option is hereby amended by
deleting such section in its entirety.
(d) Section 6 - Notice of Claims continues in full force
and effect as written notwithstanding the termination of the Operating
Agreement upon the closing of the Acquisition Agreement.
(e) Section 7 - Notices is hereby amended by deleting the
address for GSF and substituting the following address in lieu thereof:
<PAGE>
To GSF: GSF Energy, L.L.C.
3321 Bee Caves Road, Suite 300
Austin, Texas 78746
Attn: President
Tel: (512) 347-1441
Fax: (512) 347-1551
(f) The Support Agreement, as amended and modified by the
foregoing provision of this Paragraph 9, continues in full force and
effect.
10. The amendments, modifications, and termination of the Transaction
Documents described in the foregoing provision of this Agreement shall
become effective on the closing of the Acquisition Agreement.
11. The provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. This
Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and
the same instrument. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
any choice or conflict of law provision or rule that would cause the
application of the laws of any other jurisdiction.
In witness whereof, the parties have executed this Agreement as of the date
first above written.
GSF ENERGY, L.L.C.
By: Ecogas Corporation, as Manager
By: /s/ Jerrel Branson
Name: Jerrel Branson
Title: President
<PAGE>
BREA POWER PARTNERS, L.P.
By BREA POWER (I), INC. - General Partner
(with respect to Transaction Documents other than
the Support Agreement)
By: /s/ Jerrel Branson
Name: Jerrel Branson
Title: President
RIDGEWOOD ELECTRIC POWER TRUST I
By RIDGEWOOD POWER CORPORATION
(with respect to the Support Agreement only)
By: /s/ Mary Louise Olin
Name: Mary Louise Olin
Title: Vice President
Each of the undersigned, in its capacity as a limited partner of Brea Power
Partners, L.P. hereby confirms that it approves and ratifies the execution
of this Agreement by Brea Power (I) Inc. as general partner, acting on
behalf of the Brea Power Partners, L.P.
GSF ENERGY, L.L.C.
By: /s/ Jerrel Branson
Name: Jerrel Branson
Title: President
Ridgewood Electric Power Trust I
By: Ridgewood Power Corporation,
its Managing Shareholder
By: /s/ Mary Louise Olin
Name: Mary Louise Olin
Title: Vice President
PARALLEL GENERATION AGREEMENT
BETWEEN
GETTY SYNTHETIC FUELS, INC.
AND
SOUTHERN CALIFORNIA EDISON COMPANY
December 28, 1982
1. PARTIES
The Parties to this Agreement are Getty Synthetic Fuels, Inc., a
Delaware corporation, hereinafter referred to as "Customer", and Southern
California Edison Company, a California corporation, hereinafter referred
to as "Edison", individually Party , collectively "Parties".
2. RECITALS
2.1 Customer desires to construct, own, Operate and Control a
Small Power Production Facility located at Customer's Brea facility.
Customer shall use as much of the electrical energy produced by the
Generating Facility to serve the electrical requirements of Customer's
Facility as is necessary and practicable.
2.2 Customer desires to Operate its Generating Facility in
parallel with Edison's electric system. Customer expects to generate 5625
KW and sell to Edison up to 4900 KW of Capacity and Energy from its
Generating Facility in accordance with Section 12.
2.3 Customer desires 600 KW Standby Demand.
2.4 Edison desires to purchase Capacity and Energy made available
by Customer and deliver to Edison from Customer's Generating Facility.
Edison desires that this source of electric power be as reliable as
reasonably possible.
2.5 The Parties desire, by this Agreement, to establish the terms,
conditions, and obligations pursuant to which they can accomplish the above
desires and needs.
2.6 Customer's facility is a Qualifying Facility.
<PAGE>
3. AGREEMENT
In consideration of the payments and agreements contained in this
Agreement, the Parties agree as follows:
4. DEFINITIONS
When used with initial capitalizations, whether in the singular or in
the plural, the following terms shall have the following meanings:
4.1 Agreement: This document, including its appendices, as amended
from time to time.
4.2 Capacity: That portion of the Generating Facility electric
power producing capability which is dedicated to and purchased by Edison
pursuant to Sections 12.2, and 12.4.
4.3 Commission: The Public Utilities Commission of the State of
California
4.4 Control: To establish the electrical output of the Generating
Facility through dispatching procedures including shutdown and startup.
4.5 Customer's Facility: The premises and equipment of Customer
located at the north end of Valencia Boulevard, Brea, California.
4.6 Edison Electric System Integrity: Operation of Edison's
electric system in a manner which minimizes risks of injury to persons
and/or property and enables Edison to provide reliable electric service to
its customers.
4.7 Emergency: A condition or situation which, in Edison's sole
judgment, affects Edison's ability to maintain safe and continuous
electrical service.
<PAGE>
4.8 Energy: Kilowatt hours generated by Customer's Generating
Facility which are purchased by Edison at the Point of Interconnection.
4.9 Firm Operation: The date in `1984 mutually agreed to by the
Parties on which the generating unit(s) of Customer's Generating Facility
is determined to be a reliable source of Energy and Capacity.
4.10 Generating Facility: The Generator, together with all
protective and other associated equipment and improvements, necessary to
produce electrical energy at Customer's Facility excluding associated land,
land rights and interests in land.
4.11 Generator: The generator(s) and associated prime mover(s)
which are a part of the Generating Facility.
4.12 Interconnection Facilities: Those protection, metering,
electric line(s), and other facilities required, in the opinion of Edison,
to permit an interface between the electric systems of Edison and Customer
at the Point of Interconnection in accordance with Edison's Interconnection
Standards (Rule No. 21) as filed with the Commission.
4.13 Interconnection Facilities Contract: That document which is
attached hereto as Appendix A and by this reference is incorporated herein.
4.14 Operate: To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection, operating, use,
management, replacement, retirement, reconstruction, and maintenance of and
for the Generating Facility and Interconnection Facilities in accordance
with applicable California utility standards and good engineering
practices.
<PAGE>
4.15 Operating Representatives: Individual(s) appointed by each
party for the purpose of securing effective cooperation and interchange of
information between the Parties in connection with administration and
technical matters related to this Agreement.
4.16 Point of Interconnection: The point where Edison's electrical
conductors connect with the Customer's electrical conductors and where
transfer of electrical energy between Edison and Customer takes place.
4.17 Project: The Generating Facility, Interconnection Facilities
and metering equipment required to permit operation of Customer's Generator
in parallel with Edison's electric system.
4.18 Protective Apparatus: That equipment and apparatus installed
by Customer and/or Edison pursuant to Section 7 and Section 10.
4.19 Qualifying Facility: Cogeneration or Small Power Production
Facility which meets the criteria as defined in Title 18, Code of
Federation Regulations (CFR), Section 292.201 through 292.207 as provided
on March 20, 1980 and as may be amended.
4.20 Small Power Production Facility: The facilities and equipment
which use biomass, waste or renewable resources, including wind, solar and
water to produce electrical energy as defined in Title 18, Code of Federal
Regulations (CFR), Section 292.201 through 292.207, as provided on March
20, 1980 and as may be amended.
<PAGE>
4.21 Standby Demand: Customer's electrical load requirement that
Edison is expected to serve when Customer's Generating Facility is not
available.
4.22 Tariff Schedule No. TOU-8: Edison's time-of-use tariff for
electric service exceeding 500 KW, as now in effect or as may hereafter be
authorized by the Commission to be revised.
4.23 Time Periods: The on-peak, mid-peak, off-peak hours as
defined in Edison's Tariff Schedule No. TOU-8.
4.24 Uncontrollable Forces: Any occurrence beyond the control of a
Party which would cause that Party to be unable to perform its obligations
hereunder and which the Party has been unable to overcome by the exercise
of due diligence, including, but not limited to, flood, drought,
earthquake, storm, fire, pestilence, lightning and other natural
catastrophes, epidemic, war, riot, civil disturbance or disobedience,
strike, labor dispute, act or inaction of government or other proper
authority, restraint by court order or public authority, and action or
nonaction by or inability to obtain the necessary authorizations or
approvals from any governmental agency or authority, fuel supply or
material shortage, or failure, threat of failure or sabotage of facilities,
which have been maintained in accordance with good engineering and
operating practices.
5. TERM AND TERMINATION
5.1 This Agreement, once executed by the Parties, shall become
effective as provided by the terms of Section 18 and shall remain in effect
unless terminated pursuant to any of the following:
<PAGE>
5.1.1 Upon not less than five (5) years prior written
notification by either Party to the other Party and which notification
shall not be given prior to the expiration of fifteen (15) years from the
date of Firm Operation of the last generating unit.
5.1.2 If Qualifying Facility status is not maintained, Edison
shall have the right to terminate this Agreement.
5.1.3 If Customer fails to obtain and maintain necessary
government authorization(s) and permit(s) pursuant to Sections 7 and 10.
Edison'shall have the right to terminate this Agreement.
5.1.4 Performance of the Parties obligations under the
Agreement may require the consent and cooperation of a third party
including those having an interest in the land on which the Project is
located. Customer shall negotiate all agreements required for said
performance and provide copies of the agreements to Edison on Edison's
request. If all agreements which in the view of both Parties are necessary
to effect the aforementioned performance of obligations have not been
executed or substantially agreed upon in writing by December 31, 1983,
either Party shall have the right to terminate this Agreement. However,
such termination shall not terminate Customer's liability for the payment
of costs of Interconnection Facilities as provided in the Interconnection
Facilities Contract.
6. OWNERSHIP AND CONTROL OF GENERATING FACILITY
6.1 The Generating Facility shall be owned by Customer.
<PAGE>
6.2 Customer shall Control the Generating Facility except that
Customer shall, at any time if requested by Edison to facilitate
maintenance of Edison facilities, during periods of Emergency, or to
maintain Edison Electric System Integrity, (i) disconnect the Generator
from the Edison electric system, or (ii) reduce the electrical output of
the Generator to the level of the Customer's total electrical requirement.
6.2.1 Each Party shall endeavor to correct, within a
reasonable period, the conditions on its system which necessitated the
disconnect obligation or reduction of output.
6.2.2 The disconnect obligation or reduction of electrical
output shall be limited to the period of time such a condition exists.
7. DESIGN AND CONSTRUCTION OF GENERATING FACILITY
7.1 Customer, at no cost to Edison, shall acquire all permits and
approvals, and complete or have completed all environmental impact studies
necessary for the construction, operation, and maintenance of the Project.
7.2 Edison shall have the right to review the electrical drawings
pertaining to the design of the Generating Facility. Such review shall be
done in a timely manner and may include, but not be limited to, the
Generator, governor, excitation system, synchronizing equipment, protective
relays and neutral grounding.
7.3 Edison shall have the right to require reasonable
modifications to the design as it deems necessary for proper and safe
operation of the Project in accordance with California utility standards
and good engineering practices when in parallel with
<PAGE>
the Edison electric system. If Customer does not agree to such
modifications, the differences between the Parties shall be resolved
pursuant to Section 19 prior to design approval.
7.4 Customer shall furnish, install, operate and maintain in good
order and repair and without cost to Edison, the relays, meters, power
circuit breakers, synchronizer and other control and Customer Protective
Apparatus as shall be agreed to by the Parties as being necessary for
proper and safe operation of the Project in parallel with Edison's electric
system.
7.5 Future changes on the Edison electric system and/or Customer's
system may require modification of the design of Customer's Generating
Facility or the Point of Interconnection. Any such modification, whether
proposed by Edison or Customer, shall be subject to the provisions of this
Section 7.
7.6 Edison shall have the right to monitor the construction,
start-up, operation, and maintenance of the Project and have the right to
consult with and make recommendations to Customer.
7.7 Edison shall have the right to review the construction
schedule. Customer shall notify Edison of changes in this schedule which
affect the Firm Operation when such change is determined.
8. OPERATION OF GENERATING FACILITY
Customer shall Operate the Generating Facility, Subject to the
following provisions:
<PAGE>
8.1 Customer shall not commence initial parallel operation of the
Generating Facility until written authorization has been given by Edison.
Edison shall not unreasonably withhold such authorization.
8.2 Customer shall notify Edison at least fourteen (14) calendar
days prior to: (1) the initial testing of Customer's Protective Apparatus,
(2) the initial energizing of the Point of Interconnection, and (3) the
initial parallel operation of each of the Generators. Edison shall have
the right to have a representative present at such times.
8.3 The Generating Facility and Customer Protective Apparatus
shall be operated and maintained in accordance with applicable California
utility industry standards and good engineering practices with respect to
synchronizing, voltage and reactive power control.
8.4 The Generating Facility shall be operated with all of
Customer's Protective Apparatus in service whenever the Generator is
connected to or is operated in parallel with the Edison electric system.
Any deviation for brief periods of emergency or maintenance shall only be
by mutual agreement.
8.5 Each Party shall use its best efforts to keep the other
Party's Operating Representative informed as to the operating schedule of
their respective facilities affecting each other's operation hereunder,
including any reduction in Capacity availability related to this Agreement.
In addition, Customer shall provide Edison with reasonable advance notice
regarding its scheduled outages including any reduction in Capacity
availability. Reasonable advance notice is as follows:
<PAGE>
SCHEDULED OUTAGE ADVANCE NOTICE
EXPECTED DURATION TO EDISON
Less than one day 24 Hours
One day or more
(except major overhaul) 1 Week
Major overhaul 6 Months
Customer shall inform Edison's Operating Representative of any
unscheduled outage relative to this Agreement as soon as practicable after
the outage begins.
8.6 Notification by Customer of outage and reduction of Capacity
date(s) and duration should be directed to the Edison switching center by
telephone:
Olinda Substation
Station Chief
Telephone No. (714) 529-3557
8.7 Customer shall deliver electricity to Edison at a nominal 4160
volts.
8.8 Customer shall perform routine maintenance during Edison's
off-peak Time Period.
8.9 Customer shall make all reasonable efforts to schedule outages
of the Generating Facility during Edison's off-peak Time Period and
coordinate planned outages with Edison.
8.10 Customer shall maintain an operating log at Customer's
Facility with records of: real and reactive power production, changes in
operating status, outages, Protective Apparatus operations and any unusual
conditions found during
<PAGE>
inspections. In addition, Customer shall maintain records applicable to
the Generating Facility, including the electrical characteristics of the
Generator and settings or adjustments of the Generator control equipment
and protective devices. Such information shall be available to Edison upon
request and copies of such operating log and records shall be provided, if
requested, to Edison within thirty (30) days of Edison's request.
8.11 If, at any time, Edison has reason to doubt the integrity of
any of Customer's Protective Apparatus and believes that such loss of
integrity would be hazardous to the Edison Electric System Integrity,
Customer shall demonstrate, to Edison's satisfaction, the correct
calibration and operation of the equipment in question.
8.12 Customer shall test all protective devices specified in
Section 7.4 with qualified personnel at intervals not to exceed four (4)
years.
8.13 Customer shall, to the extent possible, provide reactive
power for its own requirements and where applicable the reactive power
losses of interfacing transformers. Customer shall not deliver excess
reactive power to Edison unless otherwise agreed to by the Parties.
9. METERING
9.1 Edison shall provide, own and maintain, at Customer's expense,
all necessary meters and associated equipment for the project in accordance
with Rule No. 21 as filed with the Commission. A description of the
metering equipment to be installed and the estimated cost of such equipment
shall be incorporated in and be subject to the provisions of the
Interconnection Facilities Contract.
<PAGE>
9.2 Edison's meters shall be sealed and the seals shall be broken
only when the meters are to be inspected, tested, or adjusted by Edison.
Customer shall be given reasonable notice of testing and have the right to
have its representative present on such occasions.
9.3 Edison's meters installed pursuant to this agreement shall be
tested by Edison, at Edison's expense, at least once each year and at any
reasonable time upon request by either Party, at the requesting Party's
expense. If Customer makes such request, Customer shall reimburse said
expense to Edison within thirty (30) days after presentation of a bill
therefor.
9.4 Metering equipment found to be inaccurate shall be repaired,
adjusted, or replaced by Edison such that the metering accuracy of said
equipment shall be within two percent (2%). If metering equipment
inaccuracy exceeds two percent (2%), the correct amount of Energy delivered
during the period of said inaccuracy shall be estimated and payment
adjusted as agreed to by the Parties.
10. INTERCONNECTION FACILITIES
10.1 Customer, at no cost to Edison, shall acquire all permits and
approvals, and complete or have completed all environmental impact studies
necessary for construction, operation and maintenance of the
Interconnection Facilities.
10.2 Edison shall design, purchase, construct, own, operate, and
maintain all Interconnection Facilities. Payment for the Interconnection
Facilities shall be made by Customer in accordance with the provisions of
the Interconnection Facilities Contract which shall be executed by the
Parties concurrent with this
<PAGE>
Agreement. A description of the equipment to be installed and the
estimated cost of such equipment shall be included in the Interconnection
Facilities Contract and provided for Customer's review and approval prior
to the execution of said contract by the Parties.
10.3 Edison may make changes in the design, installation,
operation and maintenance of the Interconnection Facilities which Edison
determines necessary to effect the provisions of this Agreement.
11. DISCLAIMER
Any review by Edison of the design, construction, operation, or
maintenance of the Project is solely for the benefit of Edison. By making
such review, Edison makes no representation as to the economic and
technical feasibility, operational capability, or reliability of the
Project. Customer shall in no way represent to any third party that any
such review by Edison of the Project, including but not limited to, any
review of the design, construction, operation, or maintenance of the
Project by Edison is a representation by Edison as to the economic and
technical feasibility, operational capability, or reliability of said
facilities. Customer is solely responsible for economic and technical
feasibility, operational capability, or reliability thereof. Edison shall
not be liable to Customer for, and Customer shall defend and indemnify
Edison from, any claim, cost, loss, damage, or liability arising from any
contrary representation concerning the effect of Edison's review of the
Project.
<PAGE>
12. POWER PURCHASE
12.1 Customer hereby agrees to sell to Edison and Edison hereby
agrees to purchase from Customer the Energy delivered by Customer to Edison
hereunder. Customer shall notify Edison of the initial date of delivery of
Energy in accordance with the provisions of Section 8.2 herein. The Energy
shall be paid for by Edison pursuant to the terms and conditions in
Appendix B. Estimated maximum annual delivery is 42,924,000 kwh.
12.2 Customer hereby agrees to sell to Edison and Edison hereby
agrees to purchase from Customer the Capacity provided to Edison pursuant
to the terms and conditions of this Agreement. The Capacity shall be
provided pursuant to the following schedule or as adjusted pursuant to
Sections 12.3 and 12.4. Capacity shall be paid for pursuant to the
provisions of Appendix C except that Edison shall make no payment for
Capacity provided prior to Firm Operation.
Effective Date Capacity
At Time of Firm Operation ____ KW
12 Months After Firm Operation 4900 KW
12.3 Customer shall notify Edison of the date of Firm Operation
for each generating unit at least six (6) months in advance of such date.
Customer shall demonstrate, pursuant to Section 13.5, the ability to
provide Edison with Capacity within three (3) months following Firm
Operation of each generating unit. If Customer fails to provide Capacity,
a new Capacity shall be established by written agreement of the Parties.
<PAGE>
12.4 During the term of this Agreement, Customer shall have a one-
time option to reduce the level of Capacity by no more than 980 KW. If
Customer exercises this option:
12.4.1 Customer shall give written notification of such
election to Edison at least five (5) years prior to the effective date of
the change in Capacity.
12.4.2 Customer shall reimburse Edison for Capacity payments
which Customer did not earn due to Customer's election to reduce Capacity
pursuant to Section 12.4.1. Such reimbursement by Customer for Capacity
payments received shall be made in accordance with Section 12.7.
12.5 If Customer's Time Period Capacity Factor, as calculated
pursuant to Appendix C., is less than 0.51 for either (1) three consecutive
billing periods, or (2) four billing periods within a year, Edison shall
have the right to terminate this Agreement upon 120 days written notice to
Customer. No Capacity payment shall be made during such 120 day period
except for any monthly billing period in which the Time Period Capacity
Factor is determined to be 1.0. If the Time Period Capacity Factor equals
1.0 for two monthly billing periods during such 120 day period and Customer
performs a demonstration of availability pursuant to Section 13.5, Edison's
notice shall not be effective for termination of this Agreement.
12.6 If this Agreement is terminated prior to the expiration of
twenty (20) years following the date of Firm Operation of the last
generating unit, Customer shall reimburse Edison for the Capacity payments
which Customer did not earn
<PAGE>
because of early termination. Such reimbursement for Capacity payments
received by Customer under this Agreement shall be in accordance with the
following formula: [(1 - (x/n)] times the total amount of Capacity
payments paid, where "x" is the number of completed years of service from
the date of Firm Operation of the last generating unit, and "n" equals
twenty (20). Customer shall make such reimbursement to Edison within
thirty (30) days after presentation of a bill therefore.
12.7 If Customer elects to reduce the level of Capacity pursuant
to Section 12.4, Customer shall reimburse Edison for the Capacity payment
which Customer did not earn because of such reduction. Such reimbursement
for Capacity payments received by Customer under this Agreement shall be in
accordance with the following formula: [(1 - (x/n)] times the total amount
of Capacity payments made for that amount of reduction in Capacity
resulting from Customer's election to reduce Capacity pursuant to Section
12.4 herein, where "x" is the number of completed years of service from the
date of Firm Operation of the last generating unit to the date of the
reduction in Capacity and "n" equals twenty (20). Customer shall make such
reimbursement to Edison within thirty (30) days after presentation of a
bill therefor.
12.8 Prior to Firm Operation, Customer shall provide evidence, to
Edison's satisfaction, of Customer's financial ability to comply with its
obligations pursuant to Section 12.6 and 12.7.
<PAGE>
13. AVAILABILITY
13.1 Customer shall make all reasonable effort to maintain
operation of the Generating Facility during the on-peak and mid-peak Time
Periods.
13.2 Capacity Request: At Edison's request Customer shall, within
30 minutes of such request, make all reasonable effort to deliver Energy at
an average rate of delivery at least equivalent to Capacity during periods
of Emergency. In the event that Customer has previously scheduled an
outage coincident with an Emergency, Customer shall make all reasonable
efforts to reschedule the outage. The notification periods listed in
Section 8 shall be waived by Edison if Customer reschedules an outage
pursuant to this Section 13.
13.3 Failure to Comply: Failure of Customer to provide Energy at
an average rate of delivery at least equivalent to Capacity in accordance
with the provisions of Section 13.2 during such period of Emergency when
first requested by Edison, following the date of Firm Operation, shall not
result in a reduction of Capacity payments as provided for in Appendix C.
However, after said initial request by Edison, whether or not said request
has been complied with by Customer, any failure by Customer to comply with
a subsequent request by Edison shall result in a reduction of Capacity
payments pursuant to Appendix C.
13.4 Periodic Demonstration: Whether or not Customer has failed
to respond to an Edison request for delivery of Energy at a rate equivalent
to Capacity, Edison shall have the right to require a demonstration of the
availability of the Generating Facility at least once per year in a manner
as provided in Section 13.5.
<PAGE>
If Customer fails a demonstration, Customer shall perform additional
demonstration(s) until Capacity is provided pursuant to Section 13.5.
Demonstrations pursuant to Section 13.5 shall be performed at Customer's
expense.
13.5 Demonstration of Availability: Customer shall demonstrate
the availability of Capacity by increasing the power output from a level
not higher than one-half the Capacity of the Generating Facility to full
Capacity. Customer's Generating Facility must provide full Capacity within
30 minutes of the start of the demonstration and maintain an average
Capacity during the next 72 hour time period. Customer may request
demonstrations to satisfy the Availability Factor requirement pursuant to
Paragraph B.5, Appendix C. Such demonstration shall be conducted at a time
and under procedures mutually agreed upon by the Parties.
14. BILLING
14.1 Electric service shall be provided in accordance with
Edison's Tariff Schedule No. SCG-1 as now in effect or as may hereafter be
authorized by the Commission.
14.1.1 The Standby Demand for calculation of the standby
charge in SCG-1 shall be 600 KW.
14.1.2 The Generating Facility capacity rating for the
determination of standby waiver qualifications under Tariff Schedule No.
SCG-1 shall be 5625 KW.
14.2 Charges associated with the Interconnection Facilities shall
be billed pursuant to the Interconnection Facilities Contract.
<PAGE>
15. PROPERTY AND LAND RIGHTS
15.1 Edison shall, as it deems necessary, build only those
electric lines, facilities and other equipment, both overhead and
underground, on and off Customer's Facility, for the purpose of effecting
the arrangements contemplated in this Agreement. The physical location of
such electrical line, facilities and other equipment on Customer's Facility
shall be determined by agreement of the Parties. Such electrical lines,
facilities and other equipment shall be included in the Interconnection
Facilities Contract.
15.2 Customer shall reimburse Edison for the cost of acquiring any
property rights off Customer's Facility which are reasonably required by
Edison to meet its obligations to Customer under this Agreement.
15.3 Customer shall grant to Edison, without cost to Edison, and
by a mutually acceptable instrument of conveyance, the following with
respect to property under the control of Customer:
15.3.1 Rights of way, easements and other property interests
necessary to construct, reconstruct, use, maintain, alter, add to, enlarge,
repair, replace, inspect and remove, at any time, the electric lines,
facilities and other equipment, both overhead and underground, which are
required by Edison to effect the arrangements contemplated in this
Agreement.
15.3.2 The rights of ingress and egress at all reasonable
times necessary for Edison to perform the activities contemplated in this
Agreement.
<PAGE>
15.4 The electric lines, facilities, and other equipment referred
to in this Section 15 installed by Edison on and off Customer's Facility
shall be and remain the property of Edison.
15.5 Edison shall have no obligation to Customer for any delay or
cancellation of this Project due to inability to acquire a satisfactory
right of way. Edison shall, however, use its best efforts to obtain such
rights of way.
16. LIABILITY
16.1 Each party (First Party) releases the other Party (Second
Party), its directors, officers, employees and agents from any loss,
damage, claim, cost, charge, or expense of any kind or nature (including
any direct, indirect or consequential loss, damage, claim, cost, charge, or
expense) including Attorney's fees and other cost of litigation incurred by
the First Party in connection with damage to property of the First party
caused by or arising out of the Second Party's construction, engineering,
repair, supervision, inspection, testing, protection, operation,
maintenance, replacement, reconstruction, use or ownership of its
facilities, to the extent that such loss, damage, claim, cost, charge, or
expense is caused by the negligence of Second Party, its directors,
officers, employees, agents, or any person or entity whose negligence would
be imputed to Second Party.
16.2 Each party shall indemnify and hold harmless, the other
Party, its directors, officers and employees or agents from and against any
loss, damage, claim,
<PAGE>
cost, charge, (including direct, indirect or consequential loss, damage,
claim, cost, charge, or expense), including attorney's fees and other costs
of litigation incurred by the other Party in connection with the injury to
or death of any person or damage to property of a third party arising out
of the indemnifying Party's construction, engineering, repair, supervision,
inspection, testing, protection, operation, maintenance, replacement,
reconstruction, use, or ownership of its facilities, to the extent that
such loss, damage, claim, cost, charge or expense is caused by the
negligence of the indemnifying Party, its directors, officers, employees,
agents, or any person or entity whose negligence would be imputed to the
indemnifying Party; provided, however, that each Party shall be solely
responsible for and shall bear all cost of claims brought by its
contractors or its own employees and shall indemnify and hold harmless the
other Party for any such costs including costs arising out of any workers
compensation law.
16.3 The provisions of this Section 16 shall not be construed so
as to relive any insurer of its obligations to pay any insurance claims in
accordance with the provisions of any valid insurance policy.
17. INSURANCE
17.1 During the term of this Agreement, the Parties shall obtain
and maintain in force as hereinafter provided comprehensive general
liability insurance, including contractual liability coverage, with a
combined single limit of not less
<PAGE>
than $5,000,000 each occurrence; however, the Parties reserve the option to
self-insure to meet the requirements of this Section.
17.2 Prior to the date Customer's Generating Facility is first
operated in parallel with Edison's electric system, each Party shall (i)
furnish certificate of insurance to the other Party, which certificate
shall provide that such insurance shall not be terminated nor expire except
on thirty (30) days prior written notice to the other Party, and (ii)
maintain such insurance in effect for so long as this Agreement remains in
effect.
17.3 If one Party fails to comply with the provisions of this
Section 17, such Party shall, at its own cost, defend, indemnify, and hold
harmless the other Party, its directors, officers, employees, agents,
assigns, and successors in interest from and against any and all loss,
damage, claim, cost, charge, or expense of any kind of nature (including
direct, indirect or consequential loss, damage, claim, cost, charge or
expense, including attorney's fees and other costs of litigation) resulting
from the death or injury to any person or damage to any property, including
the personnel and property of the other Party, to the extent that the other
Party would have been protected had such Party complied with all of the
provisions of this Section 17.
18. REGULATORY AUTHORITY
18.1 This Agreement shall be effective on the date of execution if
Edison determines that the terms of this Agreement are consistent with
Commission approval guidelines. However, if Edison does not make the above
determination, this
<PAGE>
Agreement shall not become effective until approved by the Commission.
Edison shall notify Customer in writing of Edison's decision regarding the
filing for Commission approval within ninety (90) days of execution of this
Agreement.
18.2 Should Edison elect to file for Commission approval, Edison
shall so file as soon as reasonably practicable after Edison decides to
file, and provide Customer with a copy of the application for approval
concurrently with Edison's filing with the Commission.
19. DISPUTES
19.1 Any dispute arising between the Parties relating to
interpretation of the provisions of this Agreement or to performance of the
Parties hereunder shall be reduced to writing stating the complaint and
proposed solution and submitted by the disputing Party to the other Party's
representative who is responsible for administration of this Agreement and
whose interpretation and decision thereon shall be incorporated into a
written document which shall specify the other Party's position and that it
is the final decision of such representative and a copy of such document
shall be furnished to the disputing Party's representative within ten (10)
days following the receipt of the disputing Party's written complaint.
19.2 The decision of the other Party's representative pursuant to
Section 19.1 shall be final and conclusive within thirty (30) days from the
date of receipt of such copy by the disputing Party, unless, within such
thirty (30) day period the
<PAGE>
disputing Party furnishes a written appeal to the other Party's
representative delivered pursuant to Section 20.
19.2.1 Following receipt of such appeal, a joint hearing
shall be held within fifteen (15) days of said appeal, at which time the
Parties shall each be afforded an opportunity to present evidence in
support of their respective positions.
19.2.2 Such joint hearing shall be conducted by one
authorized representative of Customer and one authorized representative of
Edison which representative may be assisted by other persons deemed
necessary by either Party. Pending final decision of a dispute hereunder,
the Parties shall proceed diligently with the performance of their
obligations under this Agreement.
19.3 The final decision by the Parties authorized representatives
shall be made within fifteen (15) days after presentation of all evidence
affecting the dispute, and shall be reduced to writing. The decision shall
be final and conclusive.
19.4 If the authorized representatives fail to reach a final
decision within the fifteen (15) day period, any remedies which are
provided by law may be pursued.
20. NOTICES
Except as otherwise specifically provided herein, any notice from one
Party to the other, shall be given in writing and shall be deemed to be
given as of the date the same is enclosed in a sealed envelope, addressed
to the other by certified first class mail, postage prepaid, and deposited
in the United States Mail. For the purposes of
<PAGE>
this Section 20, such notices shall be mailed to the following respective
addresses or to such others as may be hereafter designated by either Party:
Southern California Edison Company
Post Office Box 800
Rosemead, California 91770
Attention: Secretary
Getty Synthetic Fuels, Inc.
2750 Signal Parkway
P.O. Box 9900
Long Beach, CA 90801
Attention: Senior Vice President
21. NON-DEDICATION OF FACILITIES
Neither Party, by this Agreement, dedicates any part of its facilities
involved in this Project to the public or to the service provided under
this Agreement, and such service shall cease upon termination of this
Agreement.
22. AMENDMENT
If at any time during the term of this Agreement a change in
circumstances not anticipated at the time this Agreement was executed
significantly alters the rights or obligations of either Party, the terms
of this Agreement which are directly affected by the change may be
renegotiated in good faith by both Parties. However, Edison shall have the
right to submit such change to the Commission for approval before the
changes become effective and, in such event, Commission approval shall be a
condition precedent to such change becoming effective unless such condition
is waived by Edison by a written instrument.
23. PREVIOUS COMMUNICATIONS
<PAGE>
This Agreement contains the entire agreement and understanding between
the Parties, their agents and employees as to the subject matter of this
Agreement, and merges and supersedes all prior agreements, commitments,
representations and discussions between the Parties.
24. NON-WAIVER
None of the provisions of this Agreement shall be considered waived by
either Party except when such waiver is given in writing. The failure of
either Party to insist in any one or more instances upon strict performance
of any of the provisions of this Agreement or to take advantage of any of
its rights hereunder shall not be construed as a waiver of any such
provisions or the relinquishment of any such rights for the future, but the
same shall continue and remain in full force and effect.
25. SUCCESSORS & ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Parties. No assignment of this
Agreement, or any part thereof, by either Party shall be valid unless
approved in advance by the other Party and until the obligations of the
assigning Party so assigned have been assumed in writing by the assignee.
Such approval shall not be unreasonably withheld.
26. NO THIRD PARTY BENEFICIARIES
Except as otherwise specifically provided in this Agreement, the
Parties do not intend to create rights in, or grant remedies to, any third
party as a beneficiary of this Agreement or of any duty, covenant,
obligation or understanding established under this Agreement.
<PAGE>
27. EFFECT OF SECTION HEADINGS
Section headings appearing in this Agreement are inserted for
convenience only, and shall not be construed as interpretations of text.
28. GOVERNING LAW
This Agreement shall be interpreted, governed and construed under the
laws of the State of California or the United States as applicable as if
executed and to be performed wholly within the State of California.
29. UNCONTROLLABLE FORCES
Neither Party shall be considered to be in default in the performance
of any of its obligations hereunder (other than an obligation to pay money)
when a failure of performance is due to Uncontrollable Forces. Nothing
contained herein shall be construed as requiring a Party to settle any
strike or labor dispute in which it may be involved.
30. DUPLICATE ORIGINALS
This Agreement is executed in two counterparts, each of which shall be
deemed an original. The signatories hereto represent that they have been
appropriately authorized to enter into this Agreement on behalf of the
Party for whom they sign. This Agreement is hereby executed as of this
31st day of December, 1982.
<PAGE>
GETTY SYNTHETIC FUELS, INC.
By: /s/ Robert H. Collins, III
Robert H. Collins, III
President
SOUTHERN CALIFORNIA EDISON COMPANY
By: /s/ G. J. Bjorklund
G. J. Bjorklund
Vice President
APPENDIX B
ENERGY PURCHASE PROVISIONS
A. PURCHASE OF ENERGY
Customer agrees to sell to Edison, and Edison agrees to purchase from
Customer, the Energy produced by Customer Project and delivered to Edison.
The monthly Energy payment shall be calculated pursuant to the provisions
of this Appendix B.
B. DEFINITIONS
B.1 Avoided Fuels: Fuel or fuels that Edison would have otherwise
used if it had not made purchases of Energy from Customer, but instead
generated an equivalent amount of energy itself.
B.2 Discount Factor: This shall be 1.0 for the first five (5)
years from the date of initial Energy delivered pursuant to Section 12.1.
For the balance of the term of this Agreement, the discount factor shall be
0.87.
B.3 Edison's Average Boiler Fuel Oil Cost: The average purchase
cost shall be determined by averaging Edison's cost in dollars per million
Btu's for the boiler fuel oil purchased during the previous three (3) month
period.
B.4 Edison's Average Natural Gas Cost: The average purchase cost
shall be determined by averaging Edison's cost in dollars per million Btu's
for the natural gas purchased during the previous three (3) month period.
B.5 Energy: Net kilowatthours generated by Customer's Generating
Facility which are purchased by Edison at the Point of Interconnection.
<PAGE>
B.6 Heat Rate: The average value, expressed in Btu's per net kWh,
calculated for the Avoided Fuel during each Time Period.
B.7 kWh's Delivered to Edison: The metered value of Energy
transmitted to Edison by Customer during each Time Period.
B.8 System Average Cost: Edison's cost for power as reported to
the Commission and determined by dividing Edison's recorded costs of fuel
used and purchased power for each calendar month by energy generated by
Edison (in kWh) during said month, with adjustment for losses incurred by
the transmission of electric energy from the generation source to the load.
B.9 Transmission Factor: The average value calculated and filed
with the Commission to compensate (Customer) for losses incurred by the
transmission of electric energy from the generation source to the load.
C. ENERGY PAYMENT
The monthly Energy payment shall be the sum of the payments for the
on-peak, mid- peak and off-peak Time Periods as calculated pursuant to
Paragraphs C.1 and C.2.
C.1 The monthly Energy payment shall be calculated as follows:
MONTHLY ENERGY PAYMENT =
On-Peak Period Energy Payment
+ Mid-Peak Period Energy Payment
- Off-Peak Period Energy Payment
C.2 Energy Payment Calculation
<PAGE>
The Time Period Energy payment shall be based on Edison's Average
Boiler Fuel Oil Cost and/or Edison's Average Natural Gas Cost during hours
when boiler fuel oil and/or natural gas is avoided. If a fuel other than
boiler fuel oil or natural gas is avoided, the Time Period Energy Payment
shall be based on Edison's System Average Cost.
TIME PERIOD ENERGY PAYMENT =
[(kWh's Delivered to Edison by Time Period)
x (Hours Boiler Fuel Oil is Avoided by Time Period)
Time Period Hours)*
x (Discount Factor)
x (Edison's Boiler Fuel Oil Heat Rate by Time Period)
x (Edison's Average Boiler Fuel Oil Cost)
x (Transmission Loss Factor by Time Period)]
+
x [(kWh's Delivered to Edison by Time Period)
x (Hours Natural Gas is Avoided by Time Period)
Time Period Hours)*
x (Discount Factor)
x (Edison's Natural Gas Heat Rate by Time Period)
x (Edison's Average Natural Gas Cost)
x (Transmission Loss Factor by Time Period)]
+
[(kWh's Delivered to Edison by Time Period)
<PAGE>
x (Hours other Fuel(s) is Avoided, by Time Period)
(Time Period Hours)*
x (Edison's System Average Cost)]
*Time Period Hours are defined in Edison's Tariff Schedule TOU-8.
C.3 If the monthly Energy payment in Paragraph C.1 for any monthly
billing period would result in an average payment which is less than
5.8>/kWh, then the Energy payment shall be based on 5.8>/kWh for those
kWh's delivered to Edison.
<PAGE>
APPENDIX C
CAPACITY PAYMENT PROVISIONS
A. PURCHASE OF CAPACITY:
Customer agrees to sell to Edison and Edison agrees to purchase from
Customer Capacity provided to Edison. The Capacity payment shall be
calculated pursuant to the provisions of this Appendix.
B. DEFINITIONS:
B.1 Annual Capacity Payment is based on Edison's published Annual
Capacity Payment Schedule for Firm Power Purchase as filed with and
approved by the Commission. This payment shall be $133/kW-year for a
minimum term of twenty (20) years commencing in 1984.
B.2 Conversions to Monthly Time Period Payments convert the Annual
Capacity Payment to a monthly Time Period payment and weighs the value of
Capacity based on seasonal periods. These factors are adjusted
periodically to reflect the value of Capacity delivered during each season
and Time Period. The adjustment does not alter the total value of the
Annual Capacity Payment.
B.3 Time Period Capacity Factor shall be calculated as follows:
TIME PERIOD CAPACITY FACTOR (cannot exceed 1) =
kWh purchased by Edison
(Capacity expressed in kW) x (No. of hours)*
*See Credits provided in Paragraph B.3.1.
<PAGE>
B.3.1 "No. of hours" refers to the total number of hours in
each Time Period in a specific monthly billing period less the following
adjustments: (a) Up to a maximum of 480 hours per year due to the
Generating Facility scheduled maintenance pursuant to Section 8 and the
disconnection from the Edison electric system pursuant to Section 6, during
the Time Period in which it occurs, and (b) up to an additional 1080
consecutive hours for major overhauls at a frequency no more than once
every three years.
B.3.2 In the event the number of hours in the aforementioned
adjustments equal the number of hours in the Time Period, the Period
Capacity Factor shall be 1.0.
B.4 Hurdle Factor shall be 1 if the Period Capacity Factor
calculation is greater than 0.51. If the Period Capacity Factor is less
than 0.51, the Hurdle Factor shall be 0.5.
B.5 Availability Factor shall equal 1 unless Customer fails to
respond to Capacity request pursuant to Section 13.2. If Customer fails to
respond, the Availability Factor shall be 0.5 for either (a) the six (6)
months following said request and until Customer demonstrates the ability
to deliver Capacity pursuant to Section 13.5, or (b) until Customer
complies with a subsequent Emergency request. If Customer fails to comply
with a subsequent Edison Emergency request during an existing six (6) month
period, the reduced Availability Factor shall continue for six (6) months
following said latest failure, subject to the terms and conditions of the
preceding sentence. In all cases the reduced Availability
<PAGE>
Factor shall apply for the month(s) that Customer failed to respond to a
Capacity request. If Customer has notified Edison of a scheduled outage or
reduction of Capacity availability pursuant to Section 8.5, the reduced
Availability Factor shall not apply.
C. CAPACITY PAYMENT
Capacity shall be calculated as the sum of the on-peak, mid-peak and
off-peak period Capacity payments.
C.1 The monthly Capacity payment shall be calculated as follows:
MONTHLY CAPACITY PAYMENT =
On-Peak Period Capacity Payment
+ Mid-Peak Period Capacity Payment
+ Off-Peak Period Capacity Payment
C.2 The Time Period Capacity payments shall be calculated as
follows:
CAPACITY PAYMENT =
(Annual Capacity Payment)
x (Conversion to Monthly Time Period Payment)
x (Capacity)
x (Time Period Capacity Factor)
x (Hurdle Factor by Time Period)
x (Availability Factor)
D. EXAMPLE
<PAGE>
For example, as of December 1982, the summer monthly Capacity payment
would be calculated as the sum of the following Time Period Capacity
payments:
SUMMER:
On-Peak = $133 x .13125 x 4900 kW x 0.9 x 1 x
1
Mid-Peak = $133 x .00267 x 4900 kW x 0.9 x 1 x
1
Off-Peak = $133 x .00000 x 4900 kW x 0.9 x 1
x 1
NOTE: The above example assumes Hurdle, Availability Factors of 1
and Period Capacity Factors of 0.9.
<PAGE>
APPENDIX D
PROCEDURE FOR ENERGY AND CAPACITY PAYMENT
The method by which Customer is paid for Energy and Capacity is based on
the following:
1. Edison shall determine from monthly meter readings the Energy and
Capacity purchased by Edison during the various Time Periods for the
preceding monthly billing period.
2. Edison shall calculate the amount owed Customer for Energy and
Capacity purchased in accordance with Appendix B and Appendix C.
3. If the monthly billing period involves portions of two different
published Energy payment schedule periods, the monthly Energy payment shall
be prorated on the basis of the percentage of days at each price.
4. Within twenty (20) days following each monthly meter reading Edison
shall request a cash voucher in order to initiate payment to Customer and
mail a statement to Customer indicating the amount of Energy and Capacity
purchased during the billing period and the amount to be paid. If within
thirty (30) days of receipt of the statement, Customer does not report, in
writing, to Edison of an error, then the payment will be considered correct
and complete.
5. Edison shall prepare and mail check to Customer within ten (10) days
of mailing of the statement.
<PAGE>
APPENDIX E
APPLICABLE TARIFF SCHEDULE(S) NO. TOU-8,
SCG-1, AND RULE NO. 21
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No._____
Rosemead, California 91770
Schedule No. TOU-8
GENERAL SERVICE--LARGE
APPLICABILITY
Applicable to general service, including lighting and power.
This schedule is mandatory for all customers whose monthly maximum
demand extends 500 KW for any three months during the preceding 12 months.
Any customer whose monthly maximum demand has fallen below 450 KW for 12
consecutive months may elect to take service on any other applicable
schedule.
TERRITORY
Within the entire territory served, excluding Santa Catalina Island
RATES
Per Meter
Per Month
Customer Charge $550.00
Demand Charge (to be added to Customer Charge):
All KW of on-peak billing demand, per KW 5.05
Plus all KW of mid-peak billing demand, per KW 0.65
Plus all KW of off-peak billing demand, per KW No Charge
(Subject o Minimum Demand Charge.
See Special Condition No. 6)
Energy Charge (to be added to Demand Charge):
All on-peak kWh, per kWh 1.256
Plus all mid-peak kWh 0.919
Plus all off-peak kWh, per kWh 0.583
SPECIAL CONDITIONS
1. Voltage: Service will be supplied at the standard voltage
2. Off-peak: 1:00pm to 7:00pm summer weekday - except holidays
5:00pm to 10:00pm winter weekday - except holidays
Mid-peak: 9:00am to 1:00pm and 7:00pm to 11:00pm summer
weekday - except holidays
8:00am to 5:00pm winter weekday - except holidays
Off-peak: All other hours
Off-peak holidays are New Year's Day, Washington's
Birthday, Memorial Day, Independence Day, Labor Day,
Veterans Day, Thanksgiving Day, and Christmas
When any holiday listed above fall on Sunday, the following Monday will be
recognized as off-peak period. No changes in off-peak period will be made
for holidays falling on Saturday.
The summer season shall commence at 12:01 am on the last Sunday in April
and continue until 12:01 am of the last Sunday in October of each year.
The winter season shall commence at 12:01 am on the last Sunday in October
of each year and continue until 12:01 am of the last Sunday in April of the
following year.
(Continued)
Advice Letter No. 596-E Edward A. Myers Jr. Date Filed: August 27, 1982
Effective: September 26, 1982
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No.____
Rosemead, California 91770
Schedule No. TOU-8
GENERAL SERVICE--LARGE
(Continued)
SPECIAL CONDITIONS (Continued)
3. Maximum Demand: Maximum demands shall be established for the
on-peak, mid-peak, and off-peak periods. The maximum demand for each
period shall be the measured maximum average kilowatt input indicated or
recorded by instruments to be supplied by the Company, during any 15-minute
metered interval, but (except for new customers or existing customers
electing Contract Demand as defined in these Special Conditions) not less
than the diversified resistance welder load computer in accordance with the
section designated Welder Service in Rule No. 2. Where the demand is
intermittent or subject to violent fluctuations, a 5-minute interval may be
used.
4. Billing Demand: Separate billing demands for the on-peak, mid-
peak, and off-peak time periods shall be established for each monthly
billing period. The billing demand for each time period shall be the
maximum demand for that time period occurring during the respective monthly
billing period.
5. Contract Demand: A contract demand will be established by the
Company, based on applicant's demand requirements for any customer newly
requesting service on this schedule and for any customer of record on this
schedule who requests an increase or decrease in transformer capacity in
accordance with Rule No. 22 D. A contract demand arrangement is available
upon request for all customers of record on this schedule. The contract
demand will be used only for purposes of establishing the minimum demand
charge for facilities required to provide service under the rate and will
not be otherwise used for billing purposes. Contract demand is based upon
the nominal kilowatt-ampere rating of the Company's serving transformer(s)
or the standard transformer size determined by the Company as required to
serve the Customer's stated measurable kilowatt demand, whichever is less
and is expressed in kilowatts.
6. Minimum Demand Charge: Where no contract demand is involved,
the monthly minimum demand charge shall be not less than the charge for 25%
of the maximum on-peak demand established during the preceding 11 months.
Where a contract demand is involved, the monthly minimum demand charge
shall be the greater of:
a. The charge as computed by multiplying 25% of the maximum
on-peak demand, established during the preceding 11 months by the demand
charge per kilowatt; or
b. A facilities charge of $1.00 per kW of contract demand.
7. Excess Transformer Capacity. The customer capacity in excess
of a customer's contract demand which is either required by the Company
because of the nature of the customer's load or requested by the customer.
Excess transformer capacity shall be billed at $1.00 per kVA per month.
8. Voltage Discount: The charges before adjustments will be
reduced by 3% for service delivered and metered at voltages of from 2kV to
10kV; by 4% for service delivered and metered at voltages of from 11 kV to
50kV; and by 5% for service delivered and metered at voltages over 50 kV;
except that when only one transformation from a transmission voltage level
is involved, a customer normally entitled to a 3% discount will be
entitled to a 4% discount.
9. Power Factor Adjustment:
a. Service Delivered and metered at 4 kV or Greater:
The charges will be adjusted each month for reactive demand.
The charges will be increased by 20 cents per kilowatt of maximum reactive
demand imposed on the Company in excess of 20% of the maximum number of
kilowatts.
The maximum reactive demand shall be the highest measured
maximum average kilovar demand indicated or recorded by metering to be
applied by the Company during any 15-minute metered interval in the month.
The kilovars shall be determined to the nearest unit. A device will be
installed on each kilovar meter to prevent reverse operation of the meter.
b. Service Delivered and Metered at Less than 4 kV:
The charges will be adjusted each month for the power factor
as follows:
The charges will be decreased by 20 cents per kilowatt of
measured maximum demand and will be increased by 20 cents per kilovar of
reactive demand. However, in no case shall the kilovars used for the
adjustment be less than one-fifth the number of kilowatts.
The kilovars of reactive demand shall be calculated by
multiplying the kilowatts of measured maximum demand by the ratio of the
kilovar-hours to the kilowatthours. Demands in kilowatts and kilovars
shall be determined to the nearest unit. A ratchet device will be
installed on the kilovar-hour meter to prevent its reverse operation on
leading power factors.
(Continued)
Advice Letter No. 565-E Edward A. Myers Jr. Date Filed: July 2, 1981
Effective: August 1, 1981
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No._____
Rosemead, California 91770
Schedule No. TOU-8
GENERAL SERVICE--LARGE
(Continued)
SPECIAL CONDITIONS (Continued)
10. Temporary Discontinuance of Service. Where the use of energy
is seasonal or intermittent, no adjustments will be made for a temporary
discontinuance of service. Any customer prior to resuming service within
twelve months after such service was discontinued will be required to pay
all charges which would have been billed if service had not been
discontinued.
11. Supplemental Visual Demand Meter: Subject to availability,
and upon written application by the customer, the Company will, within 180
days, supply and install a Company-owned supplemental visual demand meter.
The customer shall provide the required space and associated wiring beyond
the point of interconnection for such installation. Said supplemental
visual demand meter shall be in parallel with the standard billing meter
delineated in Special Condition 3 above. The readings measured or recorded
by the supplemental visual demand meter are for customer information
purposes only and shall not be used for billing purposes in lieu of meter
readings established by the standard billing meter. If a meter having
visual display capacity is installed by Edison as the standard billing
meter, no additional metering will be installed pursuant to this Special
Condition.
One of the following types of supplemental visual demand meters will
be provided in accordance with provisions above at no additional cost to
the customer: Dial Wattmeter, Recording Wattmeter, or Paper-Tape Printing
Demand Meter.
If the customer desires a supplemental visual demand meter having
features not available in any of the above listed meters, such as an
electronic microprocessor-based meter, the Company will provide such a
supplemental visual demand meter subject to a monthly charge of the meter
and its associated equipment have been approved for use by the Company.
Upon receipt from the customer of a written application the Company will
design the installation and will thereafter supply, install, and maintain
the supplemental visual demand meter subject to all conditions stated in
the first and last paragraph of this Special Condition. For purposes of
computing the monthly charge, any such supplemental visual demand meter and
associated equipment shall be treated as Added Facilities in accordance
with Rule No. 2 Paragraph H Section 1 and 2 of the tariff rules. Added
investment for computing the monthly charge shall be reduced by the
Company's estimated total installed cost at the customer location of the
Paper Tape Printing Demand Meter offered otherwise herein at no additional
cost.
The Company shall have the sole access for purposes of maintenance and
repair to any supplemental visual demand meter installed pursuant to this
Special Condition and shall provide all required maintenance and repair.
Periodic routine maintenance shall be provided at no additional cost to the
customer. Such routine maintenance includes changing charts, inking pens,
making periodic adjustments, lubricating moving parts and making minor
repairs. Non routine maintenance and major repairs or replacement shall be
performed on an actual cost basis with the customer reimbursing the Company
for such cost.
12. Contracts: An initial three-year facilities contract may be
required where applicant requires new or added serving capacity exceeding
2,000 kVA.
13. Energy Cost Adjustment: The rates above are subject to
adjustment as provided for in Part G of the Preliminary Statement. The
applicable Energy Cost Adjustment Clause rates set forth therein will be
applied to all kWh billed under this schedule.
14. Conservation Load Management Adjustment: The rates above are
subject to adjustment as provided for in Part I of the Preliminary
Statement. The applicable Conservation Load Management Adjustment Billing
Factors set forth therein will be applied to kWh billed under this
schedule.
Advice Letter No. 576-E Edward A. Myers Jr. Date Filed: October 20, 1981
Effective: October 20, 1981
Decision No. 93640
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No._____
Rosemead, California 91770
Schedule No. SCG-1
STANDBY FOR COGENERATION
AND SMALL POWER PRODUCTION
APPLICABILITY
Applicable to customers whose applicable regular service rate
schedule, based on load regularly supplied by the Company, in any rate
schedule which includes a demand charge, and where a part or all of the
electrical requirements or the customer can be supplied from a cogeneration
or small power production source which meets the criteria for Qualifying
Facility as defined under 18 CFR Chapter 1, part 292, subpart B of the
Federal Energy Regulatory Commission (FERC) regulations. The cogeneration
of small power production source may be connected for (1) parallel
operation with the service of the Company or (2) isolated operation with
standby or breakdown service provided by the Company by means of a double-
throw switch.
TERRITORY
Within the entire territory served.
RATES
Per Month
Standby Charge:
All kW of standby demand, per kW $1.00
Applicable Schedule Charges to be added to Standby Charge
All charges and provisions of the applicable regular service rate
schedule designated in the generation agreement except that any portion of
the minimum demand charge under that rate schedule based on demand
previously recorded shall not apply.
SPECIAL CONDITIONS
1. Generation Agreement: This schedule shall apply only where the
customer signs a cogeneration or small power production generation
agreement.
2. Standby Demand: The level of standby demand shall be set forth
in the generation agreement.
3. Allowance for Maintenance: After a customer has received
service under this schedule for a period of six months, the added demand
created by scheduled maintenance outages of the cogeneration or small power
production source will be ignored for purposes of determining demand
charges under the applicable regular service schedule in the months of
February or March or other months acceptable to the Company upon advance
notice and subject to prevailing system peak conditions where to the
conditions stated herein Conditions are (1) customer submits to the Company
90 days prior notice of intent to perform maintenance and (2) following the
period of scheduled maintenance, customer shows to the satisfaction of the
Company, what part of the recorded maximum demand utilized for billing in
any of the months was added demand due to outage for such scheduled
maintenance. This provision is applicable for one continuous outage per
year of up to 30 consecutive days.
The Company may, at its sole option, require that the customer defer
scheduled maintenance. If so, the Company will allow an outage for
maintenance at a later date with allowance for maintenance in accordance
herewith. Notice of such deferral, if required, shall be provided to the
customer not less than 60 days prior to customer's scheduled outage date,
except in the event of emergency.
(Continued)
Advice Letter No. 592-E Edward A. Myers Jr. Date Filed: May 12, 1982
Effective: May 12, 1982
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No._____
Rosemead, California 91770
Schedule No. SCG-1
STANDBY FOR COGENERATION
AND SMALL POWER PRODUCTION
(Continued)
SPECIAL CONDITIONS (continued)
4. Standby Charge Waiver: Standby Charge shall be waived in its
entirety for any billing period in which the customer's generator attains
an 85% or greater on-peak capacity factor. The on-peak capacity factor for
the customer's generator is defined as
On-Peak Capacity Factor = kWh generated
during on-peak hours
(capacity rating) on
peak hours
Capacity rating for this calculation shall be set forth in the generation
agreement. On-peak hours shall be the total hours, as defined for the on-
peak period in Schedule No. TOU-8 which occur during the billing period
minus any such on-peak hours which occur during scheduled maintenance
periods as set forth on special Condition No. 3.
The Company shall install, own, and maintain at customer's expense the
necessary meter to record energy delivered by the customer's generator so
as to implement this provision. The Company shall be allowed reasonable
lead time to acquire and install the meter.
5. Excess Energy: For parallel connections, the customer may sell
power to the Company under terms of the generation agreement and the
Company's standard price offer as applicable.
Advice Letter No. 592-E Edward A. Myers Jr. Date Filed: May 12, 1982
Effective: May 12, 1982
Decision No. 82-01-103
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No._____
Rosemead, California 91770
Rule No. 21
COGENERATION AND SMALL POWER PRODUCTION
INTERCONNECTION STANDARDS
A. General. This rule sets forth requirements and conditions for
interconnected non Company-owned generation where such generation may be
connected for (1) parallel operation with the service of the Company or (2)
isolated operation with standby or breakdown service provided by the
Company. For purposes of this rule, the interconnecting entity shall be
designated the Producer.
B. Conditions.
1. An agreement executed by the Company and the Producer shall be
required for interconnected service. Terms for the purchase of power by
the Company, if applicable, shall be included therein.
2. Interconnection with the Company's system may not be made until
and unless the Company has determined that the interconnection complies
with the design and operating requirements set forth herein.
3. Where interconnection protective equipment is owned, operated
and maintained by the Producer, the Producr shall be responsible for damages
to the Company or to others arising out of the misoperation or malfunction
of the Producer-owned equipment.
4. The Producer is solely responsible for providing adequate
protection for the Producer's facilities interconnected with the Company's
system.
C. Design and Operating Requirements. Each generation facility which
is or can be connected to the Company's electric system shall be designed
and operated so as to prevent or protect against the following adverse
conditions on the Company's system. These conditions can cause electric
service degradation, equipment damage, or harm to persons.
1. Inadvertent and unwanted re-energization of a utility dead line
or bus
2. Interconnection while out of synchronization
3. Overcurrent
4. Utility system load imbalance
5. Ground faults
6. Generated alternating current frequency outside permitted safe
limits
(Continued)
Advice Letter No. 592-E Edward A. Myers Jr. Date Filed: May 12, 1982
Effective: May 12, 1982
Decision No. 82-01-103 Vice President Resolution No. ________________
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY Revised Cal. PUC Sheet No._____
2244 Walnut Grove Avenue Cancelling Revised Cal. PUC Sheet No._____
Rosemead, California 91770
Rule No. 21
COGENERATION AND SMALL POWER PRODUCTION
INTERCONNECTION STANDARDS
(Continued)
C. Design and Operating Requirements. (Continued)
7. Voltage generated outside permitted limits
8. Poor Power factor
9. Harmful wave forms
The necessary protective equipment: (relays, switchcar,
transformers, etc.) can be provided by the Producer or by the Company.
Explanatory information, operating rules and guidelines for
meeting the above requirements for _______ medium 100-1000kW, and large
(above 1000 kW facilities are contained in the Company's ______ small power
producers. Copies of said guidelines are available from the Company.
D. Interconnection Facilities.
1. Interconnection facilities include all required means, and
apparatus installed, to interconnect the ____ with the Company's system.
When the Producer desires to sell power to the Company, interconnection
_____ also all required means, and apparatus installed to enable the
Company to receive power deliveries from the Producer Interconnection
facilities may include, but are not limited to
a. Connection, transformation, switching metering,
communication, control, protective and safety equipment and
b. Any necessary enforcements and additions to the Company's
system.
2. Interconnection facilities will be installed as per the terms
and conditions of the applicable agreement.
3. The Producer shall pay for costs of interconnection with the
Company's facilities as provided in the agreement.
4. The use of interconnection facilities shall be accessible to
Company personnel.
Advice Letter No. 592-E Edward A. Myers Jr. Date Filed: Maya 12, 1982
Effective: May 12, 1982
Decision No. 82-01-103 ___________________ Production No. __________
PARTIAL ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT made as of the 29th day of November, 1994 is between
GSF ENERGY INC., a corporation incorporated under the laws of Delaware (the
"Assignor") and BREA POWER PARTNERS, L.P., a limited partnership organized
under the laws of Delaware (the "Assignee").
RECITALS
A. Assignor and the County of Orange a political subdivision of the State
of California ("County"), are parties to an Amended and Restated Gas Lease
Agreement dated as of December 14, 1993 (the "Gas Lease Agreement"),
pursuant to which Assignor is granted certain rights to extract, process
and sell "Refuse Gas" and "Constituent Products" (each as defined in the
Gas Lease Agreement) and certain rights to use and occupy portions of the
"Landfill" (as defined in the Gas Lease Agreement).
B. On or about the date hereof, Assignor is selling and conveying to
Assignee and Assignee is purchasing certain electric generating and related
equipment located at the Landfill ("Assignee's Facility").
C. Assignor is a limited partner of Assignee and is entering into this
Agreement as a contribution to Assignee.
NOW, THEREFORE, THIS AGREEMENT WITNESSES that, in consideration of the
premises and the mutual covenants and agreements hereinafter set forth and
contained, the parties hereto mutually covenant and agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings
given such terms in the Gas Lease Agreement.
2. The Assignor hereby assigns, transfers and conveys to the Assignee,
effective as of the date first written above, the following rights and
obligations of Assignor under the Gas Lease Agreement:
<PAGE>
(a) all rights of Assignor under Sections 8.1 and 8.2 of the Gas Lease
Agreement with respect to the use and occupancy of that portion of the
Plant Site on which Assignee's Facility is located, as more fully described
in Exhibit A hereto ("Assignee's Facility Site") including the free right
of ingress and egress at all times to and from Assignee's Facility Site;
(b) the rights of use and ingress and egress granted Assignor pursuant to
Sections 8.1 and 8.2 of the Gas Lease Agreement to the extent reasonably
necessary or convenient for Assignee's Facility and Assignee's operations;
(c) the right to obtain rights of way and easements from County with
respect to Assignee's operations as specifically described in Section 8.5
of the Gas Lease Agreement;
(d) the right to receive cooperation from County as specifically described
in Section 8.6 of the Gas Lease Agreement;
(e) the obligation to install and maintain landscaping at Assignee's
Facility Site and Assignee's Facility, as required by Section 8.7 of the
Gas Lease Agreement;
(f) the right and obligation to remove Assignee's Facility and restore
that area of the surface of the Landfill upon which Assignee's Facility was
situated as specifically described in Sections 9.1 and 9.2 of the Gas Lease
Agreement;
(g) the right to return matter removed from Refuse Gas by Assignee's
Facility (if any) as specifically described in Section 6.6 of the Gas Lease
Agreement; and
(h) the obligation to pay taxes and assessments upon Assignee's Facility
and any other facilities, equipment and improvements constructed or
installed by Assignee in, on or adjacent to the Landfill, as specifically
described in Section 19.1 of the Gas Lease Agreement.
The rights specifically assigned and conveyed to Assignee pursuant to this
Agreement (the "Assigned Rights") and the Assignee's activities and
operations at the Landfill shall be subject to, and undertaken in
accordance with, the Gas Lease Agreement, which is hereby incorporated by
reference into this Agreement. The obligations specifically assigned and
conveyed pursuant to this Agreement, including the obligation to exercise
the Assigned
<PAGE>
Rights and Assignee's activities and operations at the Landfill subject to,
and in accordance with, the Gas Lease Agreement, are collectively referred
to as the "Assumed Obligations."
3. Assignor represents and warrants to Assignee as of the date hereof
that: (a) attached hereto as Exhibit B is a true, correct and complete
copy of the Gas Lease Agreement; (b) the Gas Lease Agreement is in full
force and effect, free and clear of any liens or encumbrances created by or
through Assignor, and no amendments other than Modification No. 1 dated
even date herewith are pending, and (c) Assignor is not in default of the
Gas Lease Agreement and, to Assignor's knowledge, County is not in default
of the Gas Lease Agreement. Assignor shall indemnify and hold Assignee and
its successors and assigns harmless from and against any and all claims,
expenses, liabilities or losses arising out of a material inaccuracy of any
of the foregoing representations and warranties.
4. Assignee hereby accepts the assignment to it of the Assigned Rights and
agrees to assume, perform and be liable for each and every Assumed
Obligation. Assignee shall indemnify and hold Assignor and its successors
and assigns, harmless from and against any and all third party claims and
the expenses, liabilities or losses incurred in connection therewith or
resulting therefrom, to the extent arising out of the performance or non-
performance of the Assumed Obligations. If Assignor is required by county
to perform, or pay any amounts in respect of, any or all of the Assumed
Obligations, the Assignor shall be subrogated to all rights and remedies of
county against Assignee with respect to such Assumed Obligations.
5. Assignor shall be solely entitled to exercise and enjoy all rights
under the Gas Lease Agreement other than the Assigned Rights (collectively
"Assignor's Lease Rights") and shall be solely responsible for performing
all obligations under the Gas Lease Agreement other than the Assumed
Obligations (collectively, "Assignor's Lease Obligations"). Assignor shall
indemnify and hold Assignee and its successors and assigns harmless from
and against any and all third party claims and the expenses, liabilities or
losses incurred in connection therewith or resulting therefrom to the
extent arising out of the performance or non-performance of the Assignor's
Lease Obligations.
6. Assignee shall comply with all provisions of Section 15 of the Gas
Lease Agreement.
7. The term of this Agreement shall commence as of the date first above
written and shall continue until the expiration or termination of the Gas
Lease Agreement.
<PAGE>
8. All notices, requests, consents, approvals, elections, demands, and
other communications (collectively referred to as "Notices") required or
permitted to be given under this Agreement shall be in writing and shall be
given to a party at the address set forth on the signature page hereof, or
at such other address as such party may hereafter specify for such purpose
by notice to the other parties hereto. Such Notices shall be deemed to be
delivered on the fifth business day after deposit thereof in the United
States mail, first class postage prepaid, or when received if sent by
overnight courier service, telex or telegraph or delivered by hand.
9. This Agreement shall be interpreted, governed, and construed under the
laws of the State of California as if executed and to be performed wholly
within the State of California.
10. Any amendments or waivers to this Agreement must be in writing and
signed by each of the parties.
IN WITNESS WHEREOF, the parties have executed this agreement on the
date and year first mentioned.
GSF ENERGY, INC.
By: /s/ Wayne A. Hinmin
Title: President
Address: 7201 Hamilton Boulevard
Allentown, PA 18195-1501
BREA POWER PARTNERS, L.P.
By its general partner:
Brea Power (I), Inc.
By: /s/ Jean P. Desnouee
Title: Vice President
Address: 7201 Hamilton Boulevard
Allentown, PA 18195-1501
AMENDED AND RESTATED GAS
LEASE AGREEMENT
OLINDA/OLINDA ALPHA
LANDFILL
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BOARD OF SUPERVISORS
ORANGE COUNTY, CALIFORNIA MINUTES December 14, 1993
PUBLIC HEARING -- AMENDED AND RESTATED GAS LEASE AGREEMENT WITH GSF ENERGY,
INC. FOR OLINDA/OLINDA ALPHA LANDFILL: Integrated Waste Management
Department requests approval of an amended and restated gas lease agreement
for development of the landfill gas rights and landfill gas utilization
systems at the Olinda/Olinda Alpha Landfill.
Supervisor Vasquez commented that the amendment provides for the
construction of a flare to comply with regulations and to protect public
health and safety. Also, the amendment extends the lease to match the
terms of GSF's agreement with Southern California Edison and gives GSF
additional incentives to sell electricity generated by its gas collection
system.
Chairman Wieder opened the public hearing and asked if anyone wished to
address the board on the matter. Hearing no response, she declared the
public hearing closed.
Supervisor Vasquez pointed out that the County was receiving in excess of
$350,000 a year in royalties from the project, and that the amendment and
restated gas lease agreement would help to ensure future proceeds.
MOTION: On motion by Supervisor Vasquez, seconded by Supervisor Riley, the
Board moved to: 1. Find that the construction of the flare facility is
categorically exempt, Class 1(f) and 29, from the provisions of the
California Environmental Quality Act. 2. Find that: (a) the anticipated
cost to the County for electrical energy provided by the energy
conservation facility under the proposed Amended and Restated Gas Lease
Agreement will be less than the anticipated marginal cost to the County of
electrical energy that would have been consumed by the county in the
absence of those purchases, and (b) the difference, if any, between the
fair rental value of the real property subject to the facility ground lease
and the agreed rent, is anticipated to offset by below-market energy
purchases or other benefits provided under the Amended and Restated Gas
Lease Agreement. 3. Authorize execution of the Amended and Restated Gas
Lease Agreement with GSF Energy, Inc., to: (a) construct the flare facility
for the County, and (b) pursue construction of additional electrical
generation capacity if GSF Energy, Inc. is successful in its bid to
Southern California Edison. MOTION UNANIMOUSLY CARRIED.
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AMENDED AND RESTATED
GAS LEASE AGREEMENT
THIS AMENDED AND RESTATED GAS LEASE AGREEMENT is made December 14, 1993, by
and between the COUNTY OF ORANGE, a political subdivision of the state of
California, hereinafter referred to as "LESSOR" and GSF ENERGY INC., a
Delaware corporation (successor in interest to Getty Synthetic Fuels, Inc.)
hereinafter referred as "LESSEE".
RECITALS
I. LESSOR and LESSEE entered into a Gas Lease Agreement ("Original
Lease") dated for reference February 12, 1981, granting LESSEE the right to
the Refuse Gas and/or Constituent Products produced and recovered from
LESSOR's Olinda Canyon portion of the Landfill.
II. LESSOR and LESSEE entered into a First Amendment to Gas Lease
Agreement ("First Amendment") on May 2, 1989, which extended the scope of
the Lease interest to include the Alpha Canyon portion of the Landfill on
an interim basis.
III. LESSOR and LESSEE entered into a Second Amendment to the Gas Lease
Agreement ("Second Amendment") on March 30, 1993, which extended the term
of the Original Lease and provided for certain modifications and
maintenance work to be performed thereunder with respect to the Alpha
Canyon Refuse Gas Collection System.
IV. LESSOR is the owner and operator of the municipal solid waste
Landfill and is required by various regulatory entities to control
migration and emission of Refuse Gas produced by the decomposition of
refuse within the Landfill. LESSOR desires to expand the current Refuse
Gas Collection System so as to meet regulatory requirements and utilize the
energy potential of the Refuse Gas in a more efficient manner than would
result if the Refuse Gas were simply flared.
V. LESSOR and LESSEE now desire to further amend the Original Lease as
amended by the First Amendment and the Second Amendment ("Amended Lease")
in order to create an integrated Refuse Gas recovery program at the
Landfill that will more efficiently utilize the energy potential of the
Refuse Gas and will also include a Refuse Gas Flare Facility required to
comply with regulations and to protect public health and safety.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, LESSOR and LESSEE, intending to be legally bound, do
mutually agree that, effective as of the date written above, the Lease
shall be further amended and restated, and this Amended and Restated Gas
Lease Agreement (the "Lease") shall supersede and replace all prior
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leases and amendments thereto between LESSOR and LESSEE and their
predecessors concerning Refuse Gas at the Landfill as follows:
1. Lease Interest. LESSOR hereby grants and leases exclusively to
LESSEE, it successors and assigns, all rights to the Refuse Gas and/or
Constituent Products (solely for the purposes of collecting, testing,
treating, processing, selling, operating for, and producing said Refuse Gas
and/or Constituent Products), which are produced and recovered from the
land utilized as a landfill located in the County of Orange, State of
California, and described in Exhibit "I" (attached hereto and made a part
hereof and herein referred to as the "Landfill").
Notwithstanding anything herein to the contrary, LESSOR and LESSEE
recognize that LESSOR may be required to install and operate a migration
control system at the Landfill which, if so installed and operated, shall
be compatible with LESSEE's recovery system to the extent feasible.
2. Definitions.
2.1 Refuse Gas. "Refuse Gas" shall mean the mixture of methane,
carbon dioxide and other gases produced by the anaerobic decomposition of
refuse material within the Landfill.
2.2 Constituent Products. "Constituent Products" shall mean any and
all components or products recovered in association with Refuse Gas.
2.3 Project. The "Project" shall include all facilities, activities,
and efforts associated with the recovery and sale of Refuse Gas and/or
Constituent Products from the Landfill, including the New Project.
The "New Project" shall include all facilities, activities, and efforts
associated with the recovery and sale of Refuse Gas and/or Constituent
Products from the Landfill, not including the Flare Facilities and not
including the existing 5.0 Megawatt (MW) power generating facility which
achieved firm operation on or about January 1, 1985.
2.4 Commercial Quantities. "Commercial Quantities" shall mean
amounts deemed by LESSEE in its sole judgment to be sufficient to pay for
all costs of the Project, including operation and maintenance expenses
associated therewith, plus a reasonable profit.
2.5 Force Majeure. The term "Force Majeure" as used herein shall
mean any act of God or the elements, accident, casualty, labor
disturbances, unavailability or delays in delivery of any product, labor,
fuel, service or materials, or any other event or condition beyond the
control of either party.
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2.6 New Project Schedule. The "New Project Schedule" (attached
hereto as Exhibit "II" and by reference made a part hereof) is the schedule
of LESSEE's progressive milestones for the New Project.
2.7 Accounting Year. "Accounting Year" shall mean a period of twelve
(12) consecutive months commencing January 1 and terminating thereafter at
midnight, December 31.
2.8 Excess Gas. "Excess Gas" shall mean that quantity of Refuse Gas
which is flared or not otherwise utilized by LESSEE's Project, that is,
Refuse Gas which is not (a) sold by LESSEE, (b) consumed in the production
of Refuse Gas and/or Constituent Products, or (c) used, consumed, or lost
in LESSEE's recovery and processing system as contemplated by Section 6.4
(Use of Gas/Products).
2.9 Cost Index. "Cost Index" shall mean the Employment Cost Index
for Total Compensation - Electric, Gas and Sanitary Services, Private
Industry Workers, Table 5, as published by the US Department of Labor,
Bureau of Labor Statistics, in its Employment Cost Index Quarterly News
Release. For purposes of the adjustments, the most current index number
available (whether preliminary or final) at the time of the adjustment will
be used. If this index ceases to be available as presently constituted,
LESSOR and LESSEE agree to substitute a suitable and reasonably comparable
index. The calculation of the adjustments shall be accomplished as
follows:
latest quarterly Cost Index
indexed value x ------------------------------------------
December 1993 Cost Index
2.10 Routine Flare Operation and Maintenance. "Routine Flare
Operation and Maintenance" shall mean routine activities performed by
LESSEE's technicians and operators to operate and maintain the Flare
Facility, to allow the equipment to perform at rated capacity, and to allow
equipment to meet or exceed designed service life. Routine Flare Operating
and Maintenance activities include, but are not limited to, those listed in
Exhibit "IX".
2.11 Flare Facility. "Flare Facility" shall mean LESSOR's flare and
all equipment used in connection with the flare as described in Exhibit
"VI".
2.12 Director. Director means the Director of Lessor's Integrated
Waste Management Department or the Director's designee.
2.13 Refuse Gas Collection System. Refuse Gas Collection System will
consist of all vertical extraction wells, horizontal collectors, laterals,
headers and all associated devices required to extract Refuse Gas from the
Landfill and convey said Refuse Gas to the Plant Site.
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2.14 Plant Site. The Plant site shall mean the site currently in use
by LESSEE in connection with the Project and such adjoining areas as
required for the New Project and Flare Facility. The Plant Site is not
expected to exceed two and one half (2 1/2) acres.
3. Term.
3.1 Term. This Lease shall become effective upon the date first
above written and shall continue for a primary period ending on January 1,
2005, and thereafter for succeeding periods of one (1) year each,
terminable upon written notice by either party to the other not less than
ninety (90) days before the end of the primary period or before the end of
any succeeding yearly period.
3.2 Term Extension. Southern California Edison is currently
soliciting bids pursuant to Final Standard Offer 4 as contemplated by
Section 6.2. In the event that LESSEE is successful in negotiating and
entering into a contract with Southern California Edison pursuant to said
Final Standard Offer 4 or in obtaining a suitable alternative purchaser,
the Director shall extend the term of this Agreement to coincide with the
term of the purchase agreement. In no event shall the extended term exceed
the term of such contract between Southern California Edison or other
purchaser and LESSEE.
4. Revenues
4.1 Royalty Payments. LESSEE hereby agrees to pay LESSOR a royalty
equal to twelve and one-half percent (12 1/2%) of the (i) gross proceeds
(including the fair market value of all goods, products, and/or services
obtained by LESSEE in lieu of sales revenues) and (ii) entitlement (under
Title 10 Code of Federal Regulation Section 211.67 as may be amended or
superseded) received solely from the sale of all processed Refuse Gas
and/or Constituent Products produced by the Landfill or energy derived
therefrom (including, by way of illustration and not limitation, electrical
generation), less property taxes, less casinghead gas or natural gas
purchases, and less tax obligations, if any, described in Sections 19.1 or
19.2 below. The royalty shall be paid to LESSOR on or before the last day
of each month based on the previous month's sales.
4.2 Charge for Late Payment. LESSEE hereby acknowledges that the
late payment of rent or royalties will cause LESSOR to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include but are not limited to costs
such as administrative processing of delinquent notices and increased
accounting costs. Accordingly, if any payment of royalty as specified in
Section 4.1, is not received by LESSOR or postmarked within ten (10) days
after the due date, a late charge of one (1%) of the payment due and unpaid
plus twenty-five dollars ($25) shall be added for the payment, and the
total sum shall become immediately due and payable to LESSOR. An
additional charge of one percent (1%) of said payment, excluding late
charges, shall be added to each additional month that said payment remains
unpaid. LESSEE and LESSOR hereby agree that such late charges represent a
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fair and reasonable estimate of the costs that LESSOR will incur by reason
of LESSEE's late payment. Acceptance of such late charges (and/or any
portion of the overdue payment) by LESSOR shall in no event constitute a
waiver of LESSEE's default with respect to such overdue payment, nor
prevent LESSOR from exercising any of the other rights and remedies granted
hereunder.
4.3 Records and Financial Statements.
(a) Records.
LESSEE shall, at all times during the term hereof, keep or cause
to be kept true and complete books, records, and accounts, together with
applicable supporting documentation, of all financial sales transactions in
connection with the Project and LESSEE's operations hereunder. LESSOR
shall have the right through an independent certified public accounting
firm or otherwise through duly authorized and similarly qualified
agents/representatives, to examine and audit said books, records, and
accounts, upon thirty (30) days advance written notice to LESSEE, during
normal business hours at LESSEE's place of business. Such inspections shall
relate to the operations of LESSEE during any Accounting year and shall be
conducted within a sixty (60) month period following the end of said
Accounting Year.
(b) Discrepancies.
Full cost of any audit conducted under Section 4.3(a) shall be
borne by LESSEE if the audit reveals either (i) a discrepancy in the amount
of royalty payments due LESSOR of greater than two percent (2%), or (ii)
LESSEE has failed to maintain true and complete books, records, accounts
and/or supportive source documents as required by Section 4.3(a) hereof.
Otherwise, LESSOR shall bear the cost of said audit.
(c) Financial Statements.
Within ninety (90) days after the end of each Accounting Year,
LESSEE shall, at LESSEE's expense, submit to LESSOR a statement, certified
as to accuracy by a Certified Public Accountant or a similarly qualified
corporate accountant/auditor employed by LESSEE or an affiliate, wherein
the total gross proceeds and entitlements, and amounts permitted to be
offset therefrom, for such Accounting Year are set forth and categorized
according to the Royalty classification set forth in the above Section 4.1.
Moreover, LESSEE shall make available to LESSOR, upon request, necessary
base data to assist LESSOR in complying with requirements of the State of
California or the United States of America or any governing body for
information relating to LESSEE's operations under the Lease.
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4.4 Used/Consumed/Lost Gas Products. Nothing contained herein shall
be deemed to obligate LESSEE to account to LESSOR for, or pay a royalty on,
any Refuse Gas and/or Constituent Products which are actually and
reasonably used, consumed or lost in LESSEE's operations hereunder;
provided, however, should LESSEE so alter its recovery and processing
system to cause a significant increase in usage, LESSEE, upon LESSOR's
written request, shall prepare and furnish LESSOR with an accounting of
such usage to verify its reasonableness.
4.5 Use of Excess Gas. LESSOR shall have the right to take or
otherwise use Excess Gas for energy recovery purposes with the approval of
LESSEE. Such approval shall not be unreasonably withheld. Excess Gas
shall be recovered in such a manner so as not to negatively impact LESSEE's
energy recovery operations. In the event the recovery of such Excess Gas
is required to comply with any applicable public laws, including federal,
state, and local statutes and regulations and any order of a regulatory
agency or authority, LESSOR and LESSEE agree to work together to develop
Refuse Gas Collection System additions, operational methods, and techniques
in order for LESSOR to meet applicable public law. In the event LESSOR and
LESSEE cannot agree on such remediation approach, LESSOR maintains its
right to proceed with such action.
5. Testing and Evaluation Program.
5.1 Testing and Evaluation. LESSEE shall conduct such tests as it
deems appropriate in order to determine whether Refuse Gas and/or
Constituent Products can economically be recovered from the Landfill in
Commercial Quantities. LESSEE, at its sole expense, will commence testing
and evaluation of the Landfill for Refuse Gas and/or Constituent Products
and complete a technical and economic feasibility study in accordance with
the New Project Schedule. A copy of said feasibility study will be
provided LESSOR upon completion, with materials deemed proprietary by
LESSEE deleted, or at LESSOR's option, with such materials included subject
to the prior execution by LESSOR of a suitable confidentiality agreement.
5.2 Reversion. In the event that LESSEE has not entered into a
binding agreement with a suitable purchaser for additional Refuse Gas
and/or Constituent Products on terms and conditions satisfactory to LESSEE
by January 31, 1995, LESSOR shall have the right to terminate LESSEE's
right to collect and process Refuse Gas from the Alpha Canyon portion of
the Landfill by deleting the description of Alpha Canyon from Exhibit "I"
upon thirty (30) days advance written notice given by the Director. It is
expressly understood that if the right of LESSEE to collect gas from Alpha
Canyon portion of the Landfill is terminated, LESSEE shall have no further
operating or maintenance obligations for the Refuse Gas Collection System
in the Alpha Canyon portion of the Landfill. In the event of LESSOR's
termination of LESSEE's right to collect and process Refuse Gas from the
Alpha Canyon portion, all other terms and conditions of the Lease shall
remain in full force and effect.
5.3 Commercial Recovery. Should LESSEE determine in its sole
judgment, following completion of its testing and evaluation program, that
the results of said testing and evaluation program indicate the Landfill is
suitable for the economic recovery and processing of Refuse Gas
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and/or Constituent Products in Commercial Quantities as the New Project,
LESSEE shall provide LESSOR with written notice of such judgment in
accordance with the "Go/No Go" decision as specified in the New Project
Schedule, and this Lease shall continue in effect.
6. Operations.
6.1 Security for Construction of Facilities. Upon notice of an
election under Section 5.3 hereof to proceed, LESSEE shall furnish LESSOR
(i) a Performance Bond or equivalent Letter of Credit in the amount of one
hundred thousand dollars ($100,000) for the faithful performance of the
construction of New Project plant and related Refuse Gas Collection System
provided herein, and (ii) a simultaneously issued Labor and Material
Payment Bond or equivalent Letter of Credit, in the amount of fifty percent
(50%) of said Performance Bond, with respect to said construction. Such
bonds or letters of credit shall be forfeited in form and shall terminate
or shall be drawn upon nine (9) months subsequent to the later of June 1,
1997, or the completion of said construction.
Within sixty (60) days after receipt of the permit to construct the Flare
Facility, LESSEE shall furnish LESSOR (i) a Performance Bond or equivalent
Letter of Credit in the amount of eight hundred ninety five thousand and
one hundred dollars ($895,100) for the faithful performance of the
construction of the Flare Facility, and (ii) a simultaneously issued Labor
and Material Payment Bond or equivalent Letter of Credit, in the amount of
fifty percent (50%) of said Performance Bond, with respect to said
construction. Such bonds or letters of credit shall be forfeited in form
and shall terminate or shall be drawn upon nine (9) months subsequent to
the later of January 31, 1995, or the completion of said construction.
6.2 Construction of Facilities. In order to maximize gross proceeds
and LESSOR's resulting royalty revenues and LESSOR's other associated
benefits under this Lease, LESSEE is interested in pursuing opportunities
to increase the capacity of its energy recovery activities at the Landfill
through the New Project and has submitted a bid to Southern California
Edison on November 9, 1993. Subject to LESSEE's confirmation that the
Landfill can support sufficient additional energy recovery capacity over a
term commercially attractive to LESSEE, to the giving of notice pursuant to
Section 5.3 above, to the attainment of a suitable purchaser for additional
Refuse Gas and/or Constituent Products on terms and conditions satisfactory
to LESSEE, and to LESSEE's entering into a binding agreement with such
purchaser for the purchase of such additional Refuse Gas and/or Constituent
Products, (a) LESSOR and LESSEE shall extend the lease as provided in
Section 3 (Term) above; and (b) LESSEE shall, at its sole expense, commence
the engineering, design, procurement of requisite governmental
authorization, and construction of necessary additional facilities for
collecting and processing increased quantities of Refuse Gas and/or
Constituent Products in accordance with the project schedule set forth in
the binding agreement with such purchaser for the purchase of additional
Refuse Gas and/or Constituent Products. After completion of the
construction and required break-in of these additional facilities, LESSEE
will collect, process, and sell the additional Refuse Gas and/or
Constituent Products obtained from the Landfill in accordance with the
terms of the Lease.
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6.3 Status Reports and Plant Completion. LESSEE will provide to
LESSOR written monthly status reports on LESSEE's progress with respect to
the New Project Schedule and Flare Facility project schedule. Subject to
the provisions of Section 11 and Section 13.1 hereof, if LESSEE fails to
complete said work in accordance with the New Project Schedule or Flare
Facility project schedule within such time, and if LESSEE has not cured or
substantially cured such failure within the time period specified in
Section 13.1, LESSOR may, by written notice to LESSEE, terminate LESSEE's
right to proceed with the work or such part of the work as to which there
has been delay. In such event, LESSOR may take over the work and pursue
the same to completion, by contract or otherwise, and in order to
effectuate said completion, LESSEE shall, insofar as its right to proceed
is terminated, promptly surrender to LESSOR all completed work and work-in-
progress, and all non-proprietary materials, records, and notes procured
and/or produced pursuant to the Lease.
6.4 Use of Gas/Products. Subject to Section 4.4 hereof, LESSEE shall
have free use of that portion of the Refuse Gas and/or Constituent Products
produced by the Landfill which is necessary to conduct its operations and
to market Refuse Gas under this Lease. Nevertheless, LESSEE shall use its
best efforts to maximize the efficiency of its operations and marketing
activities to lessen such use to the extent reasonably practicable.
If LESSOR at any time shall have reason to question the accuracy of any
gauge or device used in measuring or computing the Refuse Gas (i) used for
operating LESSEE's facilities, and/or (ii) sold hereunder, LESSOR shall so
notify LESSEE in writing, and, thereafter, such gauge or device shall be
tested in the presence of both parties. Should such tests reveal an
inaccuracy of two percent (2%) or greater, the quantity shall be
recalculated and corrected for the period beginning thirty (30) days
immediately prior to the date of said notice (or beginning on the date such
inaccuracy commenced, if ascertainable). If the gauge or device is found
to be accurate within two percent (2%), then LESSOR shall bear the expense
of tests made at its request; otherwise, LESSEE will be responsible for the
costs of such tests.
6.5 Prudent Operations. Subject to the provisions of this Lease,
LESSEE shall test for, collect, treat, process and market the Refuse Gas
and/or Constituent Products produced by the Landfill as a reasonably
prudent operator. In discharging this obligation, LESSEE shall be
responsible, in its sole discretion, for determining all operational plans
and details (excepting the placement of wells and collection facilities on
the Landfill) directly affecting production and processing to ensure a
workable system having the greatest recovery potential; provided, however,
that LESSEE shall conduct its testing program, construction activities and
operations in such a manner so as not to interfere with LESSOR's use and/or
maintenance of the Landfill, unless LESSOR otherwise consents.
LESSOR shall inform LESSEE of all significant planning, design, expansion,
and construction meetings concerning any Refuse Gas collection activities.
LESSOR shall invite LESSEE to attend and provide comments concerning all
Refuse Gas collection activities at the Landfill.
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As to placement of wells and collection facilities including the Refuse Gas
Collection System, it is agreed that prior to testing and before
installation of any equipment or operational facilities in or upon the
Landfill, LESSEE shall furnish LESSOR with the Refuse Gas collection System
grid-well layout and development plans attendant thereto. LESSOR shall
have fifteen (15) working days from such submittal in which to review such
plans and advise LESSEE of LESSOR's approval (which shall not be
unreasonably withheld) or any specific objections, silence being deemed an
approval. The parties shall endeavor in good faith to resolve said
objection(s) within ten (10) working days thereafter, but should the
parties be unable to resolve such objection(s), LESSOR and LESSEE shall
mutually designate, within ten (10) working days thereafter, a
disinterested third person arbitrator who shall, within thirty (30) days
thereafter, formulate a resolution which will be binding upon LESSOR and
LESSEE.
It is further understood that LESSEE shall use its best efforts to procure
the highest sales revenues reasonably obtainable for the Refuse Gas and/or
Constituent Products produced and marketed from the Landfill. Although the
implementation of a gas enhancement or stimulation program is unanticipated
by the parties with respect to Refuse Gas production, it is agreed that any
such enhancement type program will be undertaken only with LESSOR's prior
written consent, such consent shall not be unreasonably withheld. It is
understood that the wet-weather area, also known by the parties as the
third level portion of the Landfill, has not been brought to final grade,
and the parties hereto agree to cooperate in minimizing the impact of such
condition on the Project.
6.6 Return of Landfill Liquids. LESSEE shall, in connection with its
activities on the Landfill hereunder, have the right in its sole
discretion, without cost to LESSEE, to return to the Landfill any and all
matter either solid or liquid (including condensate) removed from the
Refuse Gas and/or Constituent Products collected from the Landfill provided
such return is lawful under applicable federal, state, and local
governmental authority.
Upon installation by LESSOR of a leachate treatment facility, condensate
disposal will be provided by LESSOR's leachate treatment facility, at no
cost to LESSEE. If LESSOR is not able or willing to dispose of Refuse Gas
condensate after December 31, 1995, LESSEE shall reduce the royalty payment
described in Section 4 by LESSEE's direct cost of the Refuse Gas condensate
disposal.
6.7 Installation of Refuse Gas Collection System. LESSEE and LESSOR
agree to work together to develop operational methods and techniques in
order to optimize the quality and quantity of gas recovered from LESSOR's
horizontal gas collectors in the Landfill. To the extent reasonably
practicable LESSEE agrees to utilize LESSOR's horizontal gas extraction
system, vertical gas wells, and header to produce and recover Refuse Gas
therefrom and transport Refuse Gas therefrom and transport Refuse Gas to
LESSEE's Olinda electrical generating facilities.
All work required for capital additions (new wells, new collectors, new
laterals, new headers, and all associated devices) to the Refuse Gas
Collection System and major maintenance (as
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described in Exhibit "X") to the Refuse Gas Collection System prior to the
time the New Project, contemplated by Section 6.2 (Construction of
Facilities), is placed in service, shall be performed by LESSEE and paid
for by LESSOR under the terms and conditions of Exhibit "VT". LESSEE shall
provide LESSOR with a written cost estimate of such work. LESSEE shall not
proceed with this work prior to the approval of LESSOR. If LESSOR and
LESSEE cannot agree on such costs, LESSOR maintains its right to obtain
such work from other sources at LESSOR's option.
After the New Project has been placed into service, LESSEE will pay the
first $40,000 per year, adjusted annually in accordance with Paragraph 2.9
(Cost Index), of Refuse Gas Collection System capital additions and major
maintenance. All additional work required for capital additions (new
wells, new collectors, new laterals, new headers, and all associated
devices) to the Refuse Gas Collection System and major maintenance (as
described in Exhibit "X") performed on the Refuse Gas Collection System
after the time the New Project, contemplated by Section 6.2 (Construction
of Facilities), is placed in service, shall be performed by LESSEE and paid
for by LESSOR under the terms and conditions of Exhibit "V". LESSEE shall
provide LESSOR with a written cost estimate of such work. LESSEE shall not
proceed with this work prior to the approval of LESSOR. If LESSOR and
LESSEE cannot agree on such costs, LESSOR maintains its right to obtain
such work from other sources at LESSOR's option.
If LESSEE is not successful in obtaining a Final Standard Offer 4 contract
with Southern California Edison or in obtaining an acceptable alternative
energy purchaser, LESSEE will continue to perform capital additions in
accordance with Exhibits "V" and "VIII" and major maintenance as defined
herein when requested by LESSOR.
6.8 Flare Facility Installation and Related Services. LESSOR has
proposed, and LESSEE has agreed to certain work and services to be
performed by LESSEE with respect to a Flare Facility to be installed at the
Landfill adjacent to LESSEE's existing gas processing facilities, that will
allow Refuse Gas and condensate to be incinerated reliably over the long-
term (the "Flare Work") as contemplated in Section 6.7 (Installation of
Refuse Gas Collection System) of the Lease. Notwithstanding any other
provisions of the Lease to the contrary, (i) LESSEE has proposed and LESSOR
has agreed to the particular Flare Facility described in Exhibit "VI"
attached hereto; (ii) LESSEE shall provide such Flare Facility for a lump
sum price of one million three hundred thousand dollars ($1,300,000) of
which one million ninety two thousand six hundred dollars ($1,092,600)
shall be for the Flare Facility described herein and of which two hundred
seven thousand four hundred dollars ($207,400) shall be for owner
enhancements beyond the scope of the Flare Facility design, such
enhancements to be at the sole discretion of LESSOR and authorized in
writing by LESSOR; and (iii) LESSOR shall pay for the Flare Facility in
cash payments to LESSEE payable upon completion of the project schedule
deliverables indicated in Exhibit "VII".
Following completion of the health risk assessment and Flare Facility
design and prior to submitting an application for a permit to construct to
the South Coast Air Quality Management District (SCAQMD), LESSEE shall
submit the health risk assessment and Flare Facility design to the Director
of the County Environmental Management Agency (EMA) for review and
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approval to ensure that the Flare Facility is designed so its operation
would cause no significant adverse air quality impact.
6.9 The Flare Facility Operations and Maintenance. The Flare
Facility Work will be treated for all purposes under the Lease as, and
shall become, part of the facilities operated by LESSEE, and owned by
LESSOR and shall be maintained as described in Exhibit "IX".
Notwithstanding any other provisions of the Lease to the contrary, LESSEE
will be responsible for providing Routine Flare Facility Operation and
Maintenance as defined in Exhibit "IX" at its expense, and LESSOR will
reimburse LESSEE for the purchase of electrical power, propane, and
condensate disposal for the Flare Facility. LESSEE will perform non-
routine operation and maintenance activities on the Flare Facility on
behalf of LESSOR. LESSEE shall provide LESSOR, in advance, cost estimates
pertaining to any non-routine operating and maintenance services for which
LESSEE will be reimbursed by LESSOR according to the fee schedule described
in Exhibit "VIII" attached hereto. If the two parties cannot agree on such
costs, LESSOR maintains its right to obtain such work from other sources at
LESSOR's option. If electrical power is produced for sale by the New
Project, LESSEE shall provide electrical power to operate the Flare
Facility when feasible and at no cost to LESSOR, however, LESSOR shall pay
all charges by Southern California Edison related to Southern California
Edison's supply of electrical power and/or the services to provide
electrical power for the Flare Facility.
7. Title To Facilities, Surrender of Facilities, and Lease. LESSOR
shall have title to existing components of the Refuse Gas Collection System
for which LESSOR has paid the cost of installation. LESSOR shall have
title to all future components of the Refuse Gas Collection System and to
the Flare Facility upon acceptance of said Flare Facility as complete.
LESSEE shall have title to all other components of the Refuse Gas
Collection System existing at the time of execution of this Amended and
Restated Gas Lease Agreement. LESSEE shall have title to all future
components of the Project for which LESSEE pays the cost of installation
and that are not part of the Refuse Gas Collection System subject to terms
of this Amended and Restated Gas Lease Agreement. At any time during the
term hereof that LESSEE determines that the Project and/or New Project, or
the continuation thereof, is not technically, economically, or practically
feasible, LESSEE, at its option, may surrender and terminate this Lease
subject to the following obligations: (i) LESSEE shall have the
responsibility under Section 9.1 below, at the request of LESSOR, to remove
above ground property, fixtures, and improvements owned by LESSEE and
placed on the Landfill; (ii) LESSEE shall provide LESSOR at time of
surrender with a written explanation of the basis for LESSEE's decision to
terminate the Lease; (iii) LESSEE shall provide LESSOR with summaries of
any test results and the results of operation; and (iv) LESSEE shall
transfer ownership of the Refuse Gas Collection System, owned by LESSEE,
constructed hereunder, to LESSOR without charge to LESSOR.
8. Property Rights.
8.1 Land Use. LESSEE shall be authorized to use the Landfill,
including the Alpha Canyon portion, and any adjacent or contiguous land
owned or controlled by LESSOR without cost except as otherwise provided
herein, to the extent reasonably necessary or convenient for
<PAGE>
LESSEE's facilities and operations hereunder, including the construction
and maintenance of all necessary wells, pipelines, and utility lines, and
the free right of ingress and egress at all times to and from said
property; however, the rights herein granted should be exercised by LESSEE
in a way which shall not unreasonably interfere or be inconsistent with
LESSOR's ongoing Landfill activities.
8.2 Plant Site. LESSOR shall make available to LESSEE if requested
without cost, immediately adjacent to but not upon the surface of the
Landfill, a mutually acceptable site sufficient in size to accommodate the
construction and operation by LESSEE of the gas processing plant(s) and
related facilities for the Project, and LESSEE shall have the free right of
ingress and egress at all times to and from said Plant Site.
8.3 Underground Wells and Pipelines. All gas collection wells (below
the wellhead) and gas gathering pipelines shall be placed below the surface
of the Landfill. LESSOR shall use its best efforts to avoid damaging
wellheads necessarily protruding during continuation of landfill
activities. Upon completion of said landfill activities, LESSEE shall
place the wellheads below the surface unless LESSOR otherwise consents.
8.4 Oil and Gas Rights. This Lease shall not be deemed to grant to
LESSEE any rights to or interests in any oil or natural gas located under
the Landfill which is not produced by the Landfill.
8.5 Easements. LESSOR agrees to grant such rights of way and
easements as may be necessary for the purchaser of the Refuse Gas and/or
Constituent Products to accept delivery thereof at LESSEE's gas processing
plant(s).
8.6 Cooperation in Obtaining Authorization. Upon reasonable request
by LESSEE, LESSOR shall make documents available, attend and otherwise
assist LESSEE in proceedings, hearings, or other procedures necessitated by
any required environmental impact reports, governmental permits,
authorizations and similar type requirements, related to the Project and
the construction and operation of LESSEE's wells, Refuse Gas Collection
System, and gas processing facilities. Upon reasonable request of LESSOR,
LESSEE shall assist LESSOR in briefing the officials of a governmental
agency or body, or other interested party, with respect to the status of
the Project.
8.7 Landscaping. LESSEE shall, upon written request from LESSOR, be
obligated to install and maintain such landscaping as may be required for
adequate screening of the plant site and appurtenant equipment which are
utilized by LESSEE in its operations hereunder. LESSOR shall be
responsible for any landscaping which is located on LESSOR's property
external to said plant site.
8.8 LESSOR's Activities. LESSOR agrees to conduct its Landfill
activities, and the Landfill activities of its agents, representatives,
tenants, contractors, or assignees, so as not to unreasonably interfere
with LESSEE's programs, construction activities, and/or operations
<PAGE>
hereunder, unless LESSEE otherwise consents, subject to a Letter of Intent
of February 12, 1981 (a copy of which is attached hereto as Exhibit "III"
and by reference made a part hereof).
It is understood that LESSEE will exercise its best efforts to operate the
Refuse Gas Collection System and Project so as to permit effective
utilization of the system for both environmental and energy recovery
purposes to the greatest extent possible. In the event that both goals
cannot be met simultaneously, the collection of Refuse Gas for the purpose
of environmental compliance will not be considered interference with
LESSEE's right to collect Refuse Gas for energy recovery purposes under the
terms of this Lease and any action by LESSOR necessary to comply with any
environmental statues, laws, ordinances, regulations, decisions, or orders
by any regulatory authority or entity will not be deemed a breach of this
Lease.
9. Removal and Restoration.
9.1 Removal of Facilities. LESSEE shall notify LESSOR, upon expiration
or termination of this Lease, of LESSEE's intention to either remove or
abandon the above-ground property, fixtures, and improvements owned by
LESSEE which LESSEE has placed on the Landfill. LESSEE shall within six
(6) months after said expiration or termination remove such above- ground
property, if LESSOR requests that such above-ground property be removed.
Upon said expiration or termination, any and all wells, together with
attendant collection facilities, constituting LESSEE's below surface
recovery system will, at LESSOR's election, either be transferred to LESSOR
without further liability to LESSEE, or will be modified and/or abandoned
at LESSEE's cost in a manner necessary to render such recovery system safe
under the then applicable regulations.
9.2 Surface Restoration. LESSEE shall within six (6) months after
the expiration or termination of this Lease restore the surface of the
Landfill affected by LESSEE's operations to render such areas generally
compatible with the unimproved and unlandscaped portions of the Landfill
surface not so affected.
10. Compliance with Law. LESSEE shall, at its sole expense, obtain,
maintain, and comply with all necessary governmental authorizations,
permits and licenses required to conduct its operations under this Lease.
In addition, LESSEE shall comply with all applicable federal, state and
local laws, rules, regulations, and orders in its operations hereunder
including compliance with all applicable safety and health requirements as
to LESSEE's employees.
11. Laws and Force Majeure.
11.1 Laws and Force Majeure. The provisions of this Lease shall be
subject to all valid and applicable federal, state, county, municipal, and
other governmental laws, executive orders, ordinances, rules, regulations,
and acts, and this Lease shall not be terminated, in whole or in part, nor
shall LESSEE be held liable in damages, for failure to comply herewith, if
compliance is prevented by, or the failure is the result of, any such law,
order, ordinance, rule, regulation, or act, or due to Force Majeure.
<PAGE>
11.2 Effect on Operations. If LESSEE's operations are at any time
prevented or affected by any of the causes referred to in Section 11.1, the
performance of its operations to the extent so prevented or affected shall
be excused without liability hereunder, and this Lease shall continue in
full force and effect until LESSEE is permitted to resume its operations
and thereafter for the balance of the primary term and for as long
thereafter as Refuse Gas and/or Constituent Products are produced to be
sold from the Landfill.
12. Warranty of Title.
12.1 General. LESSOR hereby warrants and agrees to defend the title
to the Landfill and the Refuse Gas and/or Constituent Products produced by
the Landfill.
12.2 LESSOR's Interest. It is agreed that if LESSOR owns an interest
in the Refuse Gas and/or Constituent Products produced by the Landfill
which is less than the entire and undivided ownership or fee simple estate
therein, the royalties due hereunder to LESSOR shall be reduced to the
proportion thereof which the interest actually owned by LESSOR bears to the
whole and undivided ownership or fee therein.
12.3 Protection of LESSEE's Interest. If and whenever it shall be
necessary, in order to protect LESSEE's interest hereunder, LESSEE may at
its option, upon sixty (60) days prior to written notice, pay and discharge
at any time any mortgage, taxes, or other liens now or hereafter attaching
to the Landfill or any part thereof in the event of default of payment by
LESSOR. In such event LESSEE shall be subrogated to all of the enforcement
rights of the owner or holder thereof, and LESSEE shall have the right to
apply royalties accruing hereunder toward satisfying the same.
13. Default.
13.1 Default by LESSEE. In the event that LESSOR concludes LESSEE's
operations are at any time not being conducted in compliance with the
provisions of this Lease, LESSOR shall notify LESSEE in writing of the
facts relied upon as constituting a breach hereof, and LESSEE, if in
default, shall have ninety (90) days after receipt of such notice in which
to substantially complete compliance with such provisions. LESSOR shall
have the right to terminate this Lease upon written notice to LESSEE if
LESSEE fails to complete or substantially complete such compliance efforts
within the ninety (90) day period, unless such failure is excused by the
provisions of Section 11 hereof.
13.2 Default by LESSOR. In the event that LESSEE concludes LESSOR at
any time is failing to perform or observe any of the provisions of this
Lease required to be performed or observed by LESSOR, LESSEE shall notify
LESSOR in writing of the facts relied upon as constituting a breach hereof,
and LESSOR, if in default, shall have ninety (90) days after receipt of
such notice in which to complete or substantially complete compliance with
such provisions. LESSEE shall have the right to terminate this Lease upon
written notice to LESSOR if LESSOR
<PAGE>
fails to complete or substantially complete such compliance efforts within
the ninety (90) day period, unless such failure is excused by the
provisions of Section 11 hereof.
14. Indemnification. LESSOR shall defend, indemnify, and hold LESSEE,
its officers, agents, and employees harmless from and against any and all
claims, demands, actions, proceedings, liability, or losses of whatsoever
nature (including reasonable attorney's fees) for injury or death to
person(s) or for damage or loss to property arising out of or caused by
LESSOR's operations or activities in connection with the Landfill or any
contiguous or non- adjacent property under LESSOR's control unless such
injury, death, damage or loss is caused by the willful misconduct or
negligence of LESSEE. LESSEE shall defend, indemnify, and hold LESSOR, its
officers, agents, and employees, harmless from and against any and all
claims, demands, actions, proceedings, liability, or losses of whatsoever
nature (including reasonable attorney's fees) for injury or death to
person(s) or for damage, or loss to property arising out of or caused by
LESSEE's operations or activities in connection with the Landfill or any
contiguous or non-adjacent property under LESSEE's control unless such
injury, death, damage, or loss is caused by the willful misconduct or
negligence of LESSOR.
15. Insurance.
(a) Worker's Compensation Insurance.
Before entering upon the performance of this Lease, LESSEE shall
furnish LESSOR satisfactory evidence that LESSEE has secured, for the term
of the Lease, full worker's compensation insurance from a responsible
insurance company authorized to do business in the State of California and
approved by LESSOR's Risk Management Officer. Such insurance shall be
maintained in full force and effect at LESSEE's own expense during the life
of the Lease.
(b) Liability Insurance.
LESSEE shall maintain, in full force during the term of this
Lease, comprehensive general liability insurance, comprehensive automobile
liability insurance (including coverage for owned, non-owned, and hired
automobile hazards) and contractual liability insurance. Liability
insurance required by this Section shall contain at least a $1,000,000
combined single limit. LESSOR shall be added as an additional insured on
all liability insurance policies required by this Section, as respects work
done by LESSEE under the terms of this Lease. All liability insurance
policies required by this Section shall be primary insurance (for claims
arising out of LESSEE's operations), and any insurance maintained by the
LESSOR shall be excess insurance. Moreover, LESSEE shall file with LESSOR,
prior to commencement of work required by this Lease, a certificate of
insurance stating that the liability coverages required by this Section are
in effect and containing the following clauses:
<PAGE>
(i) "It is agreed that this policy shall not be canceled,
non-renewed, or reduced in scope of coverage until after 30 days written
notice has been given the Risk Management Officer, County of Orange."
(ii) "County of Orange is an additional insured under
insurance policies evidenced by this certificate, as respects work done by
the named insured for the County of Orange."
(iii) "Insurance evidenced by this certificate is primary
insurance for claims arising out of the named insured's operations, and any
insurance maintained by the County of Orange shall only provide coverage in
excess of the insurance evidenced by this certificate."
Insurance coverage in the minimum amounts set forth herein shall not
be construed to relieve LESSEE for liability in excess of such coverage.
16. LESSEE's Interests. LESSEE is not a public utility and does not
intend to dedicate to public use the Refuse Gas and/or Constituent Products
produced by the Landfill or any of its facilities. Nothing contained in
this Lease shall be deemed a dedication by LESSEE to the public of any
Refuse Gas and/or Constituent Products or of any of LESSEE's facilities.
If any regulatory body shall at any time assert jurisdiction over LESSEE as
a public utility by reason of this Lease, LESSEE shall have the right at
such time, on at least thirty (30) days written notice to LESSOR, to be
relieved of all obligations hereunder not theretofore accrued (except as
provided in Section 9 hereof), and this Lease shall thereupon terminate.
17. Assignment.
17.1 Assignment. No performance of this Lease or any portion thereof
may be assigned or subcontracted (other than subcontracting for
engineering, fabrication, and construction of LESSEE's gas recovery
facilities) by LESSEE without the express written consent of LESSOR, which
consent shall not be unreasonably withheld. Any attempt by LESSEE to
assign or subcontract (other than subcontracting for said engineering,
fabrication, and construction services) any performance of this Lease
without the express written consent of LESSOR, which consent shall not be
unreasonably withheld, shall be void and shall constitute a breach of this
Lease. Said subcontracting shall not relieve LESSEE of its obligations
under this Lease. Whenever LESSEE is otherwise authorized to subcontract
or assign, such subcontract or assignment shall incorporate and be subject
to the terms of this Lease. The encumbrance of any stock or interests of
LESSEE in the aggregate exceeding twenty-five percent (25%) shall be deemed
an assignment within the meaning of this Section.
17.2 Change of Ownership. No change or division in the ownership of
the Landfill or assignment of the royalties shall operate to enlarge the
obligations or diminish the rights of either LESSOR or LESSEE, and no
change, division, or assignment of such rights shall be binding
<PAGE>
upon either LESSOR or LESSEE until thirty (30) days after LESSOR or LESSEE
has been furnished with the original or a certified copy of the recorded
instrument evidencing the same.
17.3 LESSEE Restructuring. It may be necessary or desirable for
LESSEE to assign or pledge all or some of its Lease interest under this
Lease, and/or all or some of LESSEE's other rights and obligations
hereunder including those rights involving Refuse Gas and/or Constituent
Products, to a related or unrelated third party or to a successor in
interest to LESSEE's business and/or activities at the Landfill.
Notwithstanding any other provisions of this Lease to the contrary, LESSOR
agrees that such assignments or pledge shall be permitted under the terms
of this Lease, and that upon LESSEE's request, LESSOR will not unreasonably
withhold its consent in accordance with this Section 17.3 to the particular
terms and conditions of such assignment or pledge through the written
consent of LESSOR; provided, however, that no such assignment or pledge
shall relieve LESSEE of its primary responsibility to LESSOR for
performance of its obligations under this Lease, without the written
consent of LESSOR.
18. Notices. Any notice to be given under the Lease shall be in
writing and shall be deemed to have been properly given and received (i)
when delivered in person to the authorized representative of the party to
whom the notice is addressed, or (ii) on the date received as indicated on
the return receipt when sent by prepaid certified or registered mail,
return receipt requested, to the party to be notified at its address, as
follows:
To LESSEE:
GSF Energy Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Attention: General Manager,
Landfill Gas Systems
Copy: Corporate Secretary
To LESSOR as to other than Royalty Payments:
County of Orange
Integrated Waste Management Department
320 North Flower Street, Suite 400
Santa Ana, CA 92703
Attention: Engineering Manager
and
<PAGE>
County of Orange
General Services Agency/Real Estate
14 Civic Center Plaza, Third Floor
Post Office Box 4106
Santa Ana, CA 92702-4106
To LESSOR as to Royalty Payments:
County of Orange
Office of Auditor-Controller
Post Office Box 1955
Santa Ana, CA 92702
LESSOR or LESSEE may change such representative or address by written
notice of said change of representative or address given to the other.
19. Taxes.
19.1 Taxes Paid by LESSEE. LESSEE shall, during the term of the
Lease, pay all taxes that may be levied upon or assessed against the
facilities, equipment, and improvements constructed or installed by LESSEE
in, on, or adjacent to the Landfill under this Lease. It is understood and
agreed that all taxes and assessments (including but not limited to a
possessory interest tax) which become due and payable upon said facilities,
equipment, and improvements shall be the full responsibility of LESSEE, and
LESSEE shall cause said taxes and assessments to be paid promptly.
19.2 Shared Taxes. Pursuant to California Revenue and Taxation Code
Section 107.6, LESSEE has been advised that any possessory property
interest in the quantity or value of Refuse Gas and/or Constituent Products
in place or recovered and/or produced from the Landfill may be subject to
taxation. If and to the extent property taxes (as differentiated from
income, sales, or franchise type assessments) are levied on said interest,
LESSEE shall pay all of such taxes levied against LESSEE's 7/8ths share,
and LESSOR shall be responsible for paying, or be declared exempt from
paying a 1/8th share of said taxes.
20. Liquidated Damages. Time is of the essence in the performance of
this Lease. Subsequent to commencement of gas sales hereunder, in addition
to amounts payable under Section 4.0 above, it is agreed by and between
LESSOR and LESSEE hereto that in the event the operational services
thereafter are not provided within the number of calendar days as agreed
upon herein, damage will be thereby sustained by LESSOR, and that it is and
will be impracticable and extremely difficult to ascertain and determine
the actual damage which LESSOR will sustain by reason of such delay; and it
is therefore agreed that LESSEE will pay to LESSOR the sum of one hundred
dollars ($100) per day for each and every day's delay in providing the
operational services thereafter in excess of the number of days prescribed;
and LESSEE agrees to said liquidated damages as herein provided. Neither
LESSOR nor LESSEE
<PAGE>
shall be assessed with liquidated damages during any delay subsequent to
commencement of gas sales caused shall LESSEE be assessed with liquidated
damages for delay caused by failure of LESSOR to provide or perform those
items of work required of LESSOR in this Lease; provided, however, LESSEE
shall have no claims for any compensation for any such LESSOR delay.
Should LESSEE be delayed by reason of alterations, including Lease
amendments, ordered by LESSOR or by any act of LESSOR, not contemplated by
the Lease, the time of completion will be extended appropriately by LESSOR,
and LESSEE will not be assessed liquidated damages for such extension;
provided, however, LESSEE shall have no claim for any other compensation
for any such extension unless specifically set forth on a change order.
21. Disputes. Should LESSEE and LESSOR fail to agree on an issue
involving Lease interpretation, either LESSOR or LESSEE may submit a
written explanation to the other, specifying in detail the particulars of
the Lease requirements which are not being correctly interpreted. LESSOR
and LESSEE shall thereafter utilize their best efforts to mutually resolve
any potential claim within thirty (30) County of Orange Integrated Waste
Management Department working days after receipt of such written
explanation. Should they fail to resolve the matter, the parties may
proceed with a mutually agreed upon form of arbitration.
22. Compliance with Civil Rights Laws. LESSEE shall comply with all
state and federal laws relating to civil rights. LESSEE further agrees
that no person shall be excluded from employment on the grounds of race,
color, religion, sex, national origin, marital status, age, or as an
otherwise qualified physically disabled individual.
23. General Provisions.
23.1 Successors. Subject to Sections 17.1 and 17.3 hereof, the
provisions of this Lease shall inure to the benefit of and be binding upon
LESSOR or LESSEE and their respective representatives, successors, assigns,
and delegatees.
23.2 Covenants and Conditions. Each provision of this Lease
performable by LESSOR or LESSEE, respectively, shall be deemed both a
covenant and condition.
23.3 Entire Contract. All obligations of LESSEE and LESSOR under
this Lease are expressly stated herein, and no other obligations or
covenants are to be implied hereunder.
23.4 Modifications. No changes to Lease terms, conditions or
schedules for any purpose shall be made unless approved in writing by both
the LESSOR and LESSEE.
23.5 Waiver. The waiver by either LESSOR or LESSEE of any failure on
the part of the other to perform in accordance with any of the terms or
conditions of this Lease shall not be construed as a waiver of any future
or continuing failure, whether similar or dissimilar thereto.
23.6 Affiliates. In determining whether LESSEE has complied with its
obligations hereunder, the acts of corporations or other firms,
organizations, and persons bearing the
<PAGE>
relationship to LESSEE of parent, subsidiary, affiliate, representative, or
associate shall be deemed the acts of LESSEE.
23.7 Captions. Section numbers and Section captions are inserted for
identification purposes only and are not a part hereof.
23.8 Recording. This Lease shall not be recorded, but the parties
shall execute and acknowledge a short memorandum of this Lease for
recording purposes in a form mutually agreed by LESSOR and LESSEE.
23.9 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall be cumulative, wherever possible, with all other
remedies at law or in equity.
IN WITNESS WHEREOF, LESSOR and LESSEE hereto have executed this Amended and
Restated Lease Agreement on these dates opposite their respective
signatures.
COUNTY OF ORANGE
By /s/ Harriett M. Wieder Date Dec 14 1993
Chairman, Board of Supervisors
APPROVED AS TO FORM:
Terry C. Andrus, County Counsel
By /s/ [illegible] Date 11/23/93
Deputy
APPROVED AS TO AUDIT & ACCOUNTING
S.E. Lewis, Auditor-Controller
By /s/ Mary K. Franks Date 1-11-94
Deputy
RECOMMENDED FOR APPROVAL:
General Services Agency
Real Estate
By /s/ Donna [illegible] Date 11/23/93
Integrated Waste Management Department
By Murryl [illegible] Date 11/23/93
<PAGE>
SIGNED AND CERTIFIED THAT A COPY OF
THIS DOCUMENT HAS BEEN DELIVERED TO
THE CHAIRMAN OF THE BOARD
By /s/ Phyllis A. Henderson Date Dec 14 1993
PHYLLIS A. HENDERSON
Clerk of the Board of Supervisors
Orange County, California
GSF ENERGY INC.
By Wayne A. Hinmin Date 11 November 1993
President
GAS SALE AND PURCHASE AGREEMENT
This Gas Sale and Purchase Agreement (the "Agreement") is made and
entered into as of the 29th day of November, 1994, by and between GSF
ENERGY INC., a Delaware corporation ("Seller"), and BREA POWER PARTNERS,
L.P., a Delaware limited partnership ("Buyer").
RECITALS
WHEREAS, Seller is the lessee under a Gas Lease Agreement having
certain rights to extract, process and sell Landfill Gas pursuant to the
terms and conditions of such Gas Lease Agreement, including the payment of
Royalties;
WHEREAS, Buyer owns or shall acquire from Seller certain electric
generating and related equipment located on or adjacent to a portion of the
property subject to the gas Lease Agreement and possesses rights to occupy
and use portions of such property pursuant to a Partial Assignment of Gas
Lease Agreement;
WHEREAS, Seller owns certain landfill gas collection, processing and
distribution equipment which will deliver Gas to Buyer's Facility, which
Buyer's Facility has been designed to consume the Gas collected and
delivered by Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, Gas for Buyer's Facility;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I - TERM
Section 1.01 This Agreement shall be effective from the Effective Date
and, unless terminated earlier as provided herein, shall continue and
remain in full force and effect until December 31, 2004. The term of this
Agreement may be extended at the Buyer's option, on a year-to-year basis,
upon the following terms and conditions:
(a) Buyer shall provide written notice to Seller of its intention to
extend this Agreement for an additional year no later than 90 days prior to
expiration of the then-current term.
(b) Unless the parties agree otherwise in writing, the term of this
Agreement shall not be extended for more than 5 additional years; and
<PAGE>
(c) If this Agreement has been extended, it shall automatically
terminate upon the "Flip Date" (as defined in the Agreement of Limited
Partnership of Brea Power Partners, L.P., dated on or about the date
hereof).
ARTICLE II - CERTAIN DEFINITIONS
Section 2.01 As used in this Agreement, the following terms shall have
the following meanings (such meaning to be equally applicable to both the
singular and plural forms of the terms defined):
(a) "Btu" means one (1) British thermal unit, which is the amount
of heat required to raise the temperature of one (1) pound of water from
fifty-nine degrees Fahrenheit (59(F) to sixty degrees Fahrenheit (60(F).
(b) "Buyer's Facility" means all of the equipment, fixtures and
other assets owned or leased by Buyer and located on the Property for the
purpose of receiving and processing deliveries of Gas, the conversion of
Gas into electric power and the delivery of such electric power to the
Utility.
(c) "Contract Year" means a calendar year, except that the first
Contract Year shall commence on the Effective Date and shall end on the
following December 31 and the last Contract Year shall commence on January
1 and shall end concurrently with the expiration or termination of this
Agreement.
(d) "Day" or "day" shall mean a period of twenty-four (24)
consecutive hours beginning and ending with 8:00 a.m. Pacific Time.
(e) "Delivery Point" has the meaning assigned to that term in
Section 4.01 hereof.
(f) "Effective Date" means the date first above written.
(g) "Force Majeure" means any occurrence beyond the control of a
Party which would cause that Party to be unable to perform its obligations
hereunder and which the Party has been unable to overcome by the exercise
of due diligence, including but not limited to flood, drought, earthquake,
storm, fire, pestilence, lightning and other natural catastrophes,
epidemic, war, riot, civil disturbance or disobedience, strike, labor
dispute, act or inaction of government or other proper authority, restraint
by court order or public authority, and action or nonaction by or inability
to obtain the necessary authorizations or approvals from any governmental
agency or authority, fuel supply or material shortage, or failure, threat
of failure or sabotage of facilities, which have been maintained in
accordance with good engineering and operating practices.
(h) "Gas" means Landfill Gas or other gas of similar methane
content meeting the specifications set forth in Exhibit D, which is
acquired by Seller and which may be natural gas or methane gas from
landfill areas other than the Property.
<PAGE>
(i) "Gas Lease Agreement" means the Amended and Restated Gas Lease
Agreement by and between Seller and Landfill Owner dated as of December 14,
1993.
(j) "Gas Shortfall Liquidated Damages" has the meaning specified
in Section 3.04, as more fully described in Exhibit C.
(k) "Landfill" means the municipal solid waste landfill located in
Orange County, California and referred to as the Olinda/Olinda Alpha
Sanitary Landfill, as described more fully in Exhibit B.
(l) "Landfill Gas" means gas, composed of methane and other
gaseous substances, generated from the decomposition of refuse and other
solid wastes in the Property and collected by Seller's Facility.
(m) "Landfill Owner" means the County of Orange, a political
subdivision of the State of California, which owns and operates the
Landfill.
(n) "Material Performance Failure" means that Seller's Monthly
Capacity Factor falls below 60% in 3 consecutive months during a Billing
Year or in a total of 4 months during a Billing Year.
(o) "Maximum Liability Cap" has the meaning specified in Section
10.08(c).
(p) "Minimum Daily Quantity" has the meaning specified in Section
3.01.
(q) "MMBtu" means one million (1,000,000) Btu.
(r) "Monthly Capacity Factor" means, with respect to each calendar
month during the term of this Agreement, the quotient of the following
formula:
Aggregate Btu Content of Gas Tendered By Seller in Month1
1,650 MMBtu x Actual No. of Days in Month
1 Aggregate Btu content of Gas tendered by Seller shall be determined
in accordance with Section 8.02 except that (a) Btus of Gas tendered
in any one day in excess of the Minimum Daily Quantity shall only be
included if such excess Btus are requested by Buyer and (b) the Btus
of Gas tendered by Seller in any day in which Buyer is unable to
accept delivery of all Gas tendered by Seller (up to the Minimum
Daily Quantity) shall be deemed to equal the average daily Btu
content of Gas delivered by Seller during the most recent 15 days in
which Buyer was able to accept delivery of all Gas tendered by Seller
(up to the Minimum Daily Quantity) or 1650 until 15 such days of full
acceptance have occurred.
<PAGE>
(s) "Monthly Commitment of Gas" means, with respect to each
calendar month during the term of this Agreement, an amount of Gas
containing an aggregate Btu content that equals the product of the
following formula: 1,650 MMBtu x (Actual Number of Days in the calendar
month - [Number of Days in such month in which Buyer's Facility is
undergoing scheduled outages + 1 Day]).
(t) "Partial Assignment of Gas Lease Agreement" means the Partial
Assignment of Gas Lease Agreement by and between Seller, as assignor, and
Buyer, as assignee, dated as of the date hereof, pursuant to which Buyer is
granted certain rights to use and occupy portions of the Property.
(u) "Power Contract" means the Parallel Generation Agreement
between Seller (as successor to Getty Synthetic Fuels, Inc.) and Utility,
executed as of December 31, 1982, as amended.
(v) "Property" means the Olinda Canyon portion of the Landfill, as
described more fully in Exhibit B.
(x) "Royalties" means all royalties and other payments due to the
Landfill Owner or its assignee or legal successor under the Gas Lease
Agreement.
(y) "Seller's Facility" means all the equipment, fixtures and
other assets located in the space above the Property which are owned or
leased by Seller for the purpose of collecting, processing and delivering,
or facilitating the collection, processing and delivery of, Gas to Buyer
(including without limitation the Delivery Point).
(z) "Utility" means Southern California Edison Company.
ARTICLE III - PURCHASE AND SALE
Section 3.01 Subject to the terms, conditions and limitations of this
Agreement, Buyer shall purchase and receive, if and to the extent that
Seller delivers the same at the Delivery Point, a quantity of Landfill Gas
on each day equal to 100% of the Gas requirements of Buyer's Facility for
such day; provided, that except as specifically provided in Section 3.02,
Buyer shall purchase, if and to the extent delivered at the Delivery Point,
not less than 1,650 MMBtu per day (the "Minimum Daily Quantity") of
Landfill Gas.
During any extension of this Agreement beyond December 31, 2004,
Seller shall be obligated to use its reasonable efforts to deliver
quantities of Gas equal to the Gas requirements of Buyer's Facility, but
shall not be obligated to guaranty Gas amounts or be subject to damages,
liquidated or otherwise (including Gas Shortfall Liquidated Damages under
Section 3.04) for failure to deliver Buyer's Gas Requirements.
<PAGE>
Section 3.02 Notwithstanding anything to the contrary contained herein,
Buyer shall not be required to accept and purchase the Minimum Daily
Quantity of Landfill Gas, during periods when (i) events of Force Majeure
or scheduled maintenance of Buyer's Facility undertaken in accordance with
Section 5.03 prevent Buyer from using such quantities of Landfill Gas in
the operation of Buyer's Facility and (ii) events of Force Majeure or the
fault of third parties prevent Buyer from otherwise utilizing or disposing
of such quantity of Landfill Gas. During periods when both clauses (i) and
(ii) apply, Buyer shall only be required to accept and purchase Landfill
Gas delivered to the Delivery Point in such quantities as Buyer can use in
Buyer's Facility and/or otherwise use or dispose of.
Section 3.03 Subject to the terms, conditions and limitations of this
Agreement, Seller shall sell and deliver to Buyer at the Delivery Point a
quantity of Landfill Gas on each day equal to 100% of the Gas requirements
of Buyer's Facility for such day; provided that Seller's obligation to sell
and deliver Landfill Gas on any day shall not exceed the Minimum Daily
Quantity. If Seller is unable for any reason to deliver Landfill Gas in
such quantities it may, at its election, deliver substitute Gas to Buyer at
the Deliver Point; provided however, that Seller's right to deliver
substitute Gas, and Buyer's obligation to accept and purchase the same,
shall be limited to that quantity of substitute Gas that Buyer can use at
Buyer's Facility and still maintain "qualifying facility" status for
Buyer's Facility under the Public Utility Regulatory Policies Act of 1978
and the regulations, orders and decisions of the Federal Energy Regulatory
Commission promulgated pursuant thereto.
Section 3.04 Notwithstanding anything to the contrary contained herein,
Seller shall be required to tender to Buyer at the Delivery point, unless
instructed otherwise by Buyer, the Monthly Commitment of Gas for each month
during the term of this Agreement. If Seller fails to tender the Monthly
Commitment of Gas, Seller shall pay to Buyer, as liquidated damages, an
amount calculated in accordance with Exhibit C (the "Gas Shortfall
Liquidated Damages"). Buyer shall provide Seller with access to records
pertaining to the sale of electrical power for the purpose of calculating
such Gas Shortfall Liquidated Damages. Payment of the Gas Shortfall
Liquidated Damages shall be Seller's sole liability and Buyer's sole remedy
for costs, liabilities and damages incurred by Buyer as a result of
Seller's failure to deliver Landfill Gas or substitute Gas in accordance
with this Agreement; provided that this Section shall not limit Buyer's
rights of termination and specific performance set forth in Sections 10.03
and 10.07, respectively, of this Agreement.
Section 3.05 Seller shall have the right of first refusal to supply any
requirements Buyer may have for Gas in addition to its requirements for
Buyer's Facility.
ARTICLE IV - DELIVERY
Section 4.01 All Gas delivered by Seller to Buyer pursuant to this
Agreement shall be delivered at the delivery point immediately prior to 72-
E-115 Gas/Gas Exchanger as
<PAGE>
specified in Exhibit A (the "Delivery Point"). Deliveries of Gas hereunder
shall commence upon the Effective Date.
Section 4.02 Seller shall supply Gas to Buyer at a pressure of not less
than seventy five pounds per square inch gauge (75 psig) at the Delivery
Point.
Section 4.03 During any period in which Buyer's Facility is generating
electrical power, Buyer shall provide to Seller, at no cost to Seller, the
lesser of (i) all electrical power required by Seller for operation and
maintenance of Seller's Facility (but not to exceed 1,500 KW) or (ii) the
total amount (net of internal use) of electrical power being produced by
Buyer's Facility. In addition, Buyer shall, at Seller's request, pass
through electrical power from the Utility to Seller, across Buyer's
electric transmission lines, at any time Seller requires more electrical
power the Buyer is able to supply. Seller shall promptly reimburse Buyer
for the cost of any such electric power passed through from the Utility to
Seller.
Section 4.04 Title and risk of loss to Gas shall pass to Buyer at the
Deliver point. Seller warrants title to all Gas delivered hereunder, that
Seller has the right to sell and receive payment for the same, and that
such Gas shall be free from liens and adverse claims of every kind at time
of delivery, including but not limited to liens to secure payment of
production, severance and other taxes.
Section 4.05 All Gas delivered to Buyer hereunder shall meet the
quality specifications set forth in Exhibit D. Seller shall monitor Gas
quality in accordance with conformance with said specifications, and, upon
any such rejection, Seller shall have the right to reprocess, if possible,
or shall otherwise be required to dispose of or use such non-conforming
Gas. Buyer's rejection of Gas in accordance with this Section 4.05 shall
not relieve Seller of its obligations under Section 3.04. Buyer may, at
its option, elect to accept, at any time or from time to time, Gas not
meeting any or all of said specifications; provided however that (i) such
acceptance shall not constitute a waiver of Buyer's continuing right to
refuse to take Gas not meeting said specifications and (ii) Seller shall
not be liable for any damage to Buyer's Facility resulting in whole or in
part form Buyer's use of nonconforming Gas.
Section 4.06 EXCEPT FOR THE EXPRESS WARRANTIES OF TITLE AND QUALITY SET
FORTH IN SECTIONS 4.04 AND 4.05 ABOVE, SELLER MAKES NO WARRANTY OR
REPRESENTATION OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED. ALL IMPLIED
WARRANTIES, INCLUDING THOSE OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, ARE HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES.
Section 4.07 As between the parties hereto, (i) Seller shall be deemed
to be in control and possession of the Gas prior to delivery hereunder and
responsible for any injuries, claims, liabilities or damages caused thereby
prior to delivery at the Delivery
<PAGE>
Point and (ii) Buyer shall be deemed to be in control and possession of the
Gas delivered hereunder and responsible for any injuries, claims,
liabilities or damages caused thereby after delivery at the Delivery Point.
The party in control and possession of the Gas shall indemnify and hold
harmless the other party with respect to any injuries, claims, liabilities
or damages occurring while the Gas is in the former's control and
possession.
Section 4.08 Seller shall make Gas available, and Buyer shall accept
such Gas, throughout the term of this Agreement, on a twenty-four (24) hour
per day basis at the Delivery point. In addition, Seller shall use its
reasonable efforts to provide Gas during the course of each day at volumes
consistent with operation of Buyer's Facility.
ARTICLE V - OPERATION AND MAINTENANCE
Section 5.01 Seller shall, at its own expense and regardless of who may
be the operator of Seller's Facility (which operator shall be a prudent
operator in the industry), maintain, operate, and preserve Seller's
Facility in good working order and condition, ordinary wear and tear
excepted, and in conformity with applicable laws, rules and regulations.
Seller shall obtain or cause to be obtained, and shall comply with, any and
all governmental and other authorizations or permits necessary to locate
and operate Seller's Facility and to collect, process and sell Landfill Gas
as required hereunder.
Section 5.02 Buyer shall, at its own expense and regardless of who may
be the operator of Buyer's Facility (which operator shall be a prudent
operator in the industry, it being acknowledged that GSF Energy Inc. is a
prudent operator), maintain, operate, and preserve Buyer's Facility at all
times in good working order and condition, ordinary wear and tear excepted,
and in conformity with applicable laws, rules and regulations. Buyer shall
obtain or cause to be obtained, and shall comply with, any and all
governmental and other authorizations or permits necessary to locate and
operate Buyer's Facility and conduct Buyer's business, and purchase and use
Landfill Gas.
Section 5.03 The parties shall use reasonable efforts to schedule
downtime for their respective facilities during the same time period
(anticipated to occur during the months of April through June) so as to
minimize interruptions in the delivery and acceptance of Gas hereunder.
The parties shall establish a schedule of downtime for each Contract Year
at the beginning of such year and shall each give the other party not less
than 30 days prior notice of changes in such schedule.
ARTICLE VI - PRICE
Section 6.01 The purchase price for all Gas delivered by Seller to, and
purchased by, Buyer during the first Contract Year shall be $0.63 per
MMBtu. For each subsequent Contract Year, the purchase price for all Gas
delivered and purchased shall be escalated at 3.7% over the prior Contract
Year's price.
<PAGE>
The purchase price for Gas delivered by Seller to Buyer during any
extension of this Agreement beyond December 31, 2004 shall be based upon
(i) Seller's total costs (internal and third party expenses, including
royalty payments) of extracting, processing and delivering Gs to Buyer and
operating and maintaining Seller's Facility including administrative costs
and allocated overheads plus (ii) 10% of the total cost determined under
clause (i) of this sentence. The detailed price terms shall be negotiated
by the parties of the time of the first extension of this Agreement.
Section 6.02 Seller shall be responsible for payment of the Royalties
and Seller shall indemnify Buyer against any claims, costs, losses or
expenses incurred by Buyer in connection with such Royalties. Buyer shall
provide to Seller the information Seller reasonably requires, or is
required to furnish to the Landfill Owner under the Gas Lease Agreement,
with respect to the calculation and payment of Royalties, including records
pertaining to sales of electrical power, and shall permit Seller and the
Landfill Owner reasonable access on at least five (5) days prior written
notice to electrical power sales records for such purpose.
Section 6.03 All production (including ad valorem type production
taxes), gathering, severance or other tax, excise or assessment upon the
existence or production of Gas delivered hereunder, now in existence or
authorized in the future for collection by any governmental agency or duly
constituted authority ("Seller's Taxes"), shall be paid entirely by Seller.
All sales, utility or other tax, excise or assessment upon or measured by
Gas sold or delivered to Buyer hereunder, or Buyer's purchase, ownership or
use of Gas, now in existence or authorized in the future for collection by
any governmental agency or duly constituted authority ("Buyer's Taxes"),
shall be paid entirely by Buyer. Should Seller be required at any time to
pay Seller's Taxes on behalf of Seller, then the party required to pay the
other party's taxes shall notify such other party in writing, stating the
amount thereof, and such other party shall reimburse the paying party said
amount within fifteen (15) days from date of notice. Further, nothing
herein shall be construed to obligate either party to reimburse the other
for any federal or state capital stock, net income, windfall or excess
profits taxes or general franchise taxes imposed on corporations on account
of their corporate existence or on their right to do business within the
state as a foreign corporation.
ARTICLE VII - MEASUREMENT AND TESTING
Section 7.01 Buyer shall install and maintain mutually agreeable
metering and other appropriate facilities for the purpose of measuring the
volume and Btu content of all Gas delivered by Seller to Buyer pursuant to
this Agreement. Seller shall have access to such metering and Seller shall
continuously measure the volume of gas delivered to Buyer and shall sample
such Gas to determine its Btu content on a daily basis.
Section 7.02 Buyer shall calibrate the metering facilities, and adjust,
clean or repair such facilities to eliminate any inaccuracy, on the first
working day of each
<PAGE>
calendar quarter or more frequently as Buyer may determine. Seller shall
have the right to request a special calibration of Buyer's metering
facilities at any reasonable time; however, if any such special calibration
shows that such metering facilities were registering with five percent (5%)
accuracy, then the cost of such special calibration shall be borne by
Buyer. In the event any calibration of a metering facility does not
register within Five (5%) accuracy, then the volume and/or Btu content of
Gas theretofore delivered and received shall be recalculated and corrected
to eliminate the entire inaccuracy for any period of inaccuracy definitely
known. If any such period of inaccuracy is not definitely known, then such
recalculation shall only be made for a period covering one-half of the
elapsed time since the last calibration, not to exceed a period of forty-
five (45) days.
Section 7.03 Each party shall have the right to have its
representatives and agents present at any installing, reading, cleaning,
changing, repairing, inspecting, testing, calibrating, or adjusting done in
connection with the metering facilities used in measuring deliveries of Gas
hereunder. The records and charts from such metering facilities shall
remain the property of Seller, but Seller shall permit Buyer reasonable
access upon at least five (5) days' prior written notice to such records
and charts, together with calculations therefrom, for inspection and
verification.
Section 7.04 Seller shall monitor and test the Gas periodically (at
least twice monthly) at its expense for purposes of determining whether the
quality specifications set forth in Exhibit D are being met. The results
thereof shall promptly be made available to Buyer and will be deemed
conclusive unless Buyer requests a re-test. Buyer shall have the right to
test or re-test the Gas for said purposes through the services of an
outside independent laboratory. If Buyer requests a test or re-test of the
Gas, Buyer shall pay the cost of said test or re-test if Gas is found to
meet the quality specifications set forth in Exhibit D; otherwise the costs
shall be paid by the Seller. It is understood and agreed that both parties
shall have access to any test results and shall have the right to be
represented and to witness all tests as well as the right to inspect and
test any equipment in determining Gas quality.
ARTICLE VIII - PAYMENT
Section 8.01 On or before the fifteenth day of each month following the
first month of deliveries of Gas pursuant to this Agreement, Seller will
furnish to Buyer a billing certificate for the preceding month, signed by
an appropriate representative of Seller and showing the volume and Btu
content of Gas sold, the relevant price for such Gas, the aggregate
purchase price payable for such month for all Gas, and any adjustments to
previous billings pursuant to Sections 7.03 and 8.04 hereof. Seller's
billing certificate shall also show any Gas Shortfall Liquidated Damages
due for the preceding month, which damages, if any, shall be credited
against amounts due Seller.
Section 8.02 For payment purposes, the Btu content of the Gas delivered
in any month hereunder shall be equal to the sum of the MMBtus delivered in
each day during
<PAGE>
such month. The MMBtus delivered in each day shall be calculated by taking
the product of (i) the volume of Gas delivered during such day and (ii) the
Btu content of the Gas sample taken on such day. Such calculations of Btu
content shall be subject to any recalculation pursuant to Section 7.02
hereof.
Section 8.03 Buyer shall pay Seller on the basis of its billing
certificate within fifteen (15) days of receipt. All undisputed sums
payable hereunder which are not timely paid as set forth herein shall bear
interest calculated from the date when due until such sums are paid at one
and one-half percent (1.5%) per annum above the fluctuating rate of
interest announced publicly by Chase Manhattan Bank N.A. in New York, New
York from time to time as its prime commercial rate. Interest shall be
calculated on the basis of a thirty (30) day month, three hundred sixty
(360) day year. In no event shall the rate of interest charged hereunder
exceed the maximum rate allowed by applicable law.
Section 8.04 If all information required for payment and statement
purposes for any month is not available, Buyer shall nevertheless pay on
the basis of the estimated billing certificate. Seller shall, as soon
thereafter as possible, submit a corrected billing certificate. Any
overpayment by Buyer pursuant to such estimated statement shall be credited
against Buyer's payment obligations for the next month, and any
underpayment shall be paid within fifteen (15) days of receipt.
Section 8.05 If any party shall dispute an amount owing to the other
party, such party shall (a) give notice to the other party of such disputed
amount together with sufficient information to allow the other party to
understand the nature of the dispute, which notice shall contain
substantiation and shall be delivered on or before the due date of the
amount disputed; and (b) pay undisputed amounts on the due date. Interest
at the rate specified in Section 8.03 shall accrue from the original due
date on disputed amounts, or the portions thereof, ultimately determined to
be due and payable.
Section 8.06 Each party shall have the right to inspect and examine at
all reasonable times and upon reasonable prior notice the records and
charts of the other party pertaining to the purchase and sale of Gas
hereunder or any other charge or fee arising under this Agreement. If any
overcharge or undercharge in any amount whatsoever shall at any time be
found and the bill therefore has been paid, Seller shall refund the amount
of the overcharge or Buyer shall pay the amount of the undercharge within
thirty days after the final determination thereof; provided, however, that
no retroactive adjustment will be made for any overcharge or undercharge
beyond a period of twenty-four months from the date the discrepancy
occurred.
ARTICLE IX - LAWS AND FORCE MAJEURE
Section 9.01 The parties shall comply with all laws, rules and
regulations, whether federal, state, or local, which are now or which may
in the future become applicable to the processing, sale, delivery and use
of Gas delivered hereunder.
<PAGE>
Section 9.02 this Agreement shall not be terminated, in whole or in
part, nor shall either party be held liable in damages, for failure to
comply herewith, if compliance is prevented by, or the failure is the
result of, any valid and applicable federal, state, county, municipal and
other governmental laws, executive orders, ordinances, rules, regulations
and acts (including any change in environmental permit limits, rules or
regulations affecting either party), or due to Force Majeure.
Section 9.03 If Seller's operations are at any time prevented or
affected by any of the causes referred to in Section 9.02, then, subject to
the provisions of Section 3.04, the performance of its obligations to the
extent so prevented or affected shall be excused without liability
hereunder, and this Agreement shall continue in full force and effect until
Seller is permitted to resume its operations and thereafter for the balance
of the Term hereof. If Buyer's operations are at any time prevented or
affected by any of the causes referred to in Section 9.02, then, subject to
the provisions of Section 3.02, the performance of Buyer's obligations to
the extent so prevented or affected shall be excused without liability
hereunder.
ARTICLE X - DEFAULT, TERMINATION AND LIABILITY
Section 10.01 The Seller shall be in default of this Agreement, if and
only if one or more of the following occur:
(a) Seller fails to pay (through credit against amounts owed
Seller hereunder or otherwise) liquidated damages due to Buyer pursuant to
Section 3.04 hereof within 60 days after the same shall become due; or
<PAGE>
(b) Seller fails to perform a material obligation of this
Agreement, including the occurrence of a Material Performance Failure, and
such causes Buyer to default under, and suffer a termination of the Power
Contract; provided, it is agreed that Seller's failure to deliver Gas shall
not constitute a default unless and until a Material Performance Failure
shall have occurred; or
(c) Seller becomes insolvent or ceases to pay its debts as they
mature or makes an arrangement with or for the benefit of its creditors or
consents to or acquiesces in the appointment of a receiver, trustee or
liquidator for any substantial part of its property, or a bankruptcy,
winding up, reorganization, insolvency, arrangement or similar proceeding
is instituted by or against the Seller under the laws of any jurisdiction
which is not dismissed within sixty (60) days of its institution.
Section 10.02 The Buyer shall be in default of this Agreement, if and
only if one or more of the following occur:
(a) Buyer fails to pay amounts due to Seller hereunder within 60
days after the same shall become due;
(b) Buyer fails to perform a material obligate of this Agreement
and does not remedy such failure within sixty (60) days after receiving
written notice from Seller describing such failure and its materiality (or
if such failure cannot reasonably be remedied within such sixty day period,
Buyer does not commence a remedy within such sixty day period and
diligently complete such remedy within a reasonable time period under the
circumstances); or
(c) Buyer becomes insolvent or ceases to pay its debts as they
mature or makes an arrangement with or for the benefit of its creditors or
consents to or acquiesces in the appointment of a receiver, trustee or
liquidator for any substantial part of its property, or a bankruptcy,
winding up, reorganization, insolvency, arrangement or similar proceeding
is instituted by or against the Buyer under the laws of any jurisdiction
which is not dismissed within sixty (60) days of its institution.
Section 10.03 If Seller or Buyer shall be in default of this Agreement,
as provided in Section 10.01 or Section 10.02 respectively, then the non-
defaulting party may, upon not less than 30 days prior written notice,
terminate this Agreement. Any such termination shall be without liability
or either party to the other (except for payment obligations owed through
the termination date) and such right of termination shall be in addition to
the right of specific performance contained in Section 10.07.
Section 10.04 Buyer shall have the right to terminate this Agreement
upon sixty (60) days' Notice to Seller upon the full expenditure by Seller
of its Maximum Liability Cap (including any increase as provided below)
over the Term of this Agreement as set forth in Section 10.08 (c), unless
Seller agrees within said sixty (60) day Notice period to increase said
aggregate limit of liability by $500,000 above the amount of liability for
which Seller would otherwise then be liable (without giving effect to such
Maximum Liability Cap). Termination pursuant to this Section 10.04 shall
be without liability of either Party to the other except for liability
previously accrued which expressly survives termination of this Agreement.
Section 10.05 Should either party at any time during the term hereof be
declared a public utility or public service corporation by any governmental
body and thereby become regulated as such, this Agreement shall, either (i)
at the option of the party subject to such regulation or (ii) if the non-
regulated party will be materially, adversely affected by reason of such
other party's being subject to such regulation, at the option of the non-
regulated party, be terminated upon thirty (30) days written notice to the
other party without resulting liability of either party to the other
hereunder.
Section 10.06 It is understood that the Buyer has entered into this
Agreement as a result of obtaining Buyer's Facilities and an assignment of
the Power Contract. Buyer shall immediately notify Seller in the event of
termination of the Power Contract. In the event that the Power Contract is
terminated through no fault of the Buyer, and provided Buyer has exercised
reasonable efforts for at least 180 days to obtain a substitute agreement
for the purchase of power from Buyer's Facility, Buyer may terminate this
<PAGE>
Agreement without liability (except for payment obligations owed through
the termination date) hereunder to Seller. For the purpose of this
Agreement, Buyer will be deemed to have "no fault" if Buyer has not
defaulted in any of its obligations under the Power Contract, and Buyer has
taken all reasonable actions to exercise options, renew or extend the terms
of the Power contract so as to provide for the continued sale of
electricity during the term of this Agreement. If Buyer terminates this
Agreement due to the termination of the Power contract, Buyer shall provide
Seller with the maximum notice available to Buyer of such termination and
further shall provide Seller with substantial evidence that said
termination is through "no fault" of Buyer. Said evidence shall be
provided to Buyer prior to the date of termination.
Section 10.07 Due to the unique relationship of the Buyer and Seller as
purchaser and seller, in the event of breach of this Agreement, pecuniary
damages would be inadequate compensation and there would be no adequate
remedy at law. Consequently, the parties agree that (i) if Landfill Gas is
being recovered at the Property and sold by Seller, then Buyer shall be
entitled to a decree of specific performance and (ii)if Buyer's Facility is
operating, then Seller shall be entitled to a decree of specific
performance, in each such case without necessity of proof of irreparable
injury.
Section 10.08 Limitation of Liability.
(a) Limitation of Seller Liability. Notwithstanding any provision
of the Agreement to the contrary except for the provisions of subsection
(e) hereof, the liability of Seller, Seller's agents, contractors,
subcontractors and suppliers, and each of their respective employees,
officers and shareholders to Buyer or Buyer's insurers with respect to any
and all claims arising out of the performance ore nonperformance of the
Seller's obligations hereunder shall in no event include damages for loss
of profits or revenue or the loss of use of either; loss by reason of
shutdown of Buyer's Facility or inability to operate Buyer's Facility at
rated capacity; increased expense of operation of Buyer's Facility or its
equipment; increased costs of purchasing or providing equipment, materials,
supplies, or services outside the Seller's scope of supply; costs of
replacement capital; claims of Buyer's customers; interest during
construction; inventory or use charges; or incidental, special, indirect or
consequential damage of any kind resulting from the Seller's performance or
failure to perform its obligations hereunder.
(b) Limitation of Buyer Liability. Notwithstanding any provision
of this Agreement to the contrary except for the provisions of subsection
(e) hereof, the liability of Buyer, Buyer's agents, contractors,
subcontractors and suppliers and each of their respective partners
employees, officers and shareholders to the Seller or the Seller's insurers
with respect to any and all claims arising out of the performance or
nonperformance of the Buyer's obligations hereunder shall in no event
include damages for loss of profits or revenue or the loss of use of
either; loss by reason of shutdown of Seller's Facility or inability to
operate Seller's Facility at rated capacity; increased expense of operation
of Seller's Facility or its equipment; increased costs of purchasing or
providing equipment, materials, supplies, or services outside Buyer's scope
of supply;
<PAGE>
costs of replacement capital; claims of Seller's customers; interest during
construction; inventory or use charges; or incidental, special, indirect or
consequential damage of any kind resulting from the Buyer's performance or
failure to perform its obligations hereunder.
(c) Maximum Liability Cap. Notwithstanding any provision of this
Agreement to the contrary, Buyer agrees that the aggregate liability of
Seller to Buyer for Gas Shortfall Liquidated Damages over the term of this
Agreement, shall not exceed $3,000,000.
(d) Survival of Limitation of Liability. As used in this Section
10.08, the terms "liable" and "liability" mean liability of any kind
whether based in contract (including breach of warranty), tort (including
negligence whether of Seller or others), strict liability or otherwise.
The provisions of this Section 10.08 providing for limitations of or
protections against the Seller's and Buyer's liability shall survive
completion of the services hereunder or termination, cancellation, or
expiration of the Agreement, and such provisions shall apply to the full
extent permitted by law.
(e) Exceptions. (i) Paragraph (a) of this Section 10.08 shall not
limit or abrogate the obligation of the Seller to pay the Gas Shortfall
Liquidated Damages and (ii) paragraph (b) of this Section 10.08 shall not
limit or abrogate the obligation of the Buyer to pay the purchase price for
Gas (including the purchase price for the Minimum Daily Quantity).
ARTICLE XI - DISPUTES
Section 11.1 Dispute Resolution. If any dispute as to the construction
or application of this Agreement arises between the parties, then the
parties shall negotiate in good faith to resolve such dispute. If the
parties are unable to resolve the dispute to their mutual satisfaction
within thirty (30) days after one party gives Notice to such effect to the
other party, then either party may submit the dispute to arbitration for
final settlement, which arbitration shall be conducted in accordance with
the following procedures:
(a) Any controversy or dispute arising out of or relating to this
Agreement shall be settled by arbitration in accordance with the then-
current Commercial Arbitration Rules of the American Arbitration
Association, by a panel of three (3) arbitrators to be selected as follows:
each party shall select one (1) arbitrator from a list provided by the
American Arbitration Association, and the two (2) arbitrators thus selected
by the parties shall together select the third (3rd) arbitrator from such
list. Each arbitrator shall be qualified by education, experience and
training to decide the issues to be arbitrated.
(b) Any such arbitration shall be held in New York, New York. The
majority decision of the arbitrators shall be final, binding and conclusive
upon the parties and judgment may be entered thereon in any federal or
state court having jurisdiction.
<PAGE>
Section 11.2 Enforcement of Arbitration Award. Any arbitration award
rendered in accordance with this Article XI shall be enforceable by each
party in any court having jurisdiction over the party against which the
award has been rendered or having jurisdiction at the place where assets of
the party against which the award has been rendered can be located.
ARTICLE XII - MISCELLANEOUS
Section 12.01 Assignment. All of the terms, conditions and limitations
contained herein by which either of the parties hereto is bound shall in
like manner be binding upon the legal successors and permitted assigns of
the parties so bound, and those which are for the benefit of either of the
parties hereto shall in like manner inure to the benefit of the legal
successors and assigns of the parties so benefited; provided, however, that
neither party hereto shall assign this Agreement nor any interest herein
without first obtaining the written consent of the other party hereto
except that (i) Seller, upon notice to Buyer, may assign this Agreement to
its parent company Air Products and Chemicals, Inc. or to another
subsidiary or affiliate of Air Products without obtaining Buyer's consent
and (ii) each party, upon notice to the other party, may assign this
Agreement for collateral security purposes to an institutional lender
providing financing for such party's facilities without obtaining the
consent of the other party. No assignment shall release the assigning
Party of liability hereunder unless the other Party releases the assigning
Party in writing.
Section 12.02 Applicable Law. This Agreement shall be interpreted in
accordance with and governed by the substantive and procedural law of the
State of California.
Section 12.03 Amendments. No amendment or waiver of any provision of
this Agreement, nor consent to any departure therefrom, shall in any event
be effective unless the same shall be in writing and signed by the party to
be bound and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 12.04 Notices.
(a) Manner of Giving Notice. All Notices and all other writings
expressly required to be given in accordance with this Section 12.04(a)
shall be in writing and shall be sent by registered or certified United
States mail (return receipt requested), by facsimile or by overnight
courier, as follows (or at such other address or facsimile number as
Notified in writing to the Parties hereto):
To Buyer: Brea Power Partners, L.P.
c/o Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
<PAGE>
Allentown, PA 18195-1501
Attention: Vice President and General Manager
Facsimile No: (610) 481-5084
To Seller: GSF Energy Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Attention: General Manager
Facsimile No: (610) 481-5765
with a copy to: GSF Energy Inc.
1942 Valencia Avenue
Brea, CA 92621
Attention: Plant Manager
Facsimile No. (714) 961-8954
Notices and other writings given under this subsection (a) shall be
deemed given effective (a) in the case of registered or certified United
States mail, on the third (3rd) Business Day following the date of deposit
thereof in the United States mail, (b) in the case of a facsimile, on the
same Business Day if sent prior to 2:00 p.m., New York City time, or on the
next Business Day if sent thereafter, and (c) in the case of an overnight
courier, on the second (2nd) Business Day following the date of deposit
thereof with such courier.
(b) Other Communications. All communications given under this
Agreement other than those Notices and other writings governed by
subsection (a) shall be given in a manner such that such communication is
likely to be received in a timely manner by a responsible representative of
the receiving party.
(c) Change in Address. Either Party shall have the right at any
time to notify the other in writing of a different address, facsimile
number or addressee to whom a particular type of notice or other writing is
to be sent under Section 18.1 hereof.
Section 12.05 No Waivers; Remedies. No failure on the part of either
party to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof.
Section 12.06 Computing Days. Except as expressly stated to the
contrary elsewhere herein, in computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
legal holidays; provided, however, that if the final day of any time period
falls on a Saturday, Sunday or legal
<PAGE>
holiday, the final day shall be deemed to be the next day which is not a
Saturday, Sunday or legal holiday.
Section 12.07 Integration. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof,
supersedes all prior agreements and understandings, whether oral or
written, which the parties may have in connection herewith and may not be
amended or modified except by written agreement of the parties.
Section 12.08 Exhibits. Exhibits A, B, C, and D, which are attached
hereto shall constitute parts of this Agreement.
Section 12.09 Attorneys' Fees. If there is any arbitration or legal
action or proceeding among the parties arising from or based on this
Agreement, the unsuccessful party to such arbitration, legal action or
proceeding shall pay to the prevailing party all costs reasonable and
expenses (including reasonable attorney's fees) incurred by the prevailing
party in such arbitration, legal action or proceeding and in any appeal in
connection therewith. If such prevailing party recovers a judgment in any
such arbitration, legal action, proceeding or appeal, such costs and
expenses shall be included in and as part of such judgment. If each party
to any arbitration, legal action or proceeding prevails upon some, but not
all, of its claims in such arbitration, legal action or proceeding, the
"prevailing party" and the "unsuccessful party" shall be determined by the
arbitrators or by the court, in their reasonable judgment, based on the
number and importance of the claims upon which party prevailed, it being
understood that the arbitrators or the court may apportion the costs and
expenses on the parties in any manner that is fair and equitable based upon
each party's prevailing claims.
Section 12.10 Severability. If any provision of this Agreement should
become fully or partially invalid or unenforceable for any reason
whatsoever, or violate any applicable law, this Agreement is to be
considered divisible as to such provision and such provision is to be
deleted from this Agreement, and the remainder of this Agreement shall be
valid and binding as if such provision were not included herein.
Section 12.11 Counterparts. More than one counterpart of this
Agreement may be executed by the Parties, and each fully executed
counterpart will be deemed an original.
Section 12.12 Interpretation. Headings appearing in this Agreement are
used for convenience only and shall not be used in any manner whatsoever
for purposes of interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
BREA POWER PARTNERS, L.P.
By: Brea Power (I), Inc., as its general partner
By: /s/ Jean P. Desnouee
Title: Vice President
GSF ENERGY INC.
By: /s/ Wayne A. Hinmin
Title: President
Support Agreement
This Support Agreement (the "Agreement") is made as of the 29th day of
November, 1994, by and between GSF Energy Inc., a Delaware corporation
("GSF"), and Ridgewood Electric Power Trust I, a Delaware business trust
("Ridgewood").
BACKGROUND
[Capitalized terms used herein are defined, unless otherwise
indicated, in Section 1 of this Agreement]
WHEREAS, GSF and Ridgewood are limited partners in the Partnership;
and
WHEREAS, the Partnership will contract with GSF for the supply of fuel
to the Partnership, and the Partnership will acquire business assets of
GSF's and succeed to a portion of GSF's business; and
WHEREAS, as a condition to Ridgewood's becoming a limited partner in
the Partnership, Ridgewood is requiring GSF to indemnify Ridgewood against
certain environmental and fuel supply matters, all as more fully set forth
in this Agreement; and
WHEREAS, GSF anticipates deriving certain economic benefits from
Ridgewood's becoming a limited partner in the Partnership and is willing to
undertake such indemnification obligations.
<PAGE>
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. DEFINED TERMS. The following capitalized terms shall have the
following meanings when used in this Agreement.
"Contamination" shall mean any Hazardous Material that actually or
allegedly as of the date hereof is, or at any time prior to the date hereof
was, located on or at the Facility Site or emanates or has emanated from
the Facility Site, and any Hazardous Material that actually or allegedly
has migrated or migrates onto the Facility Site from the Landfill either
before or after the date hereof; provided however, that "Contamination"
shall not include any Hazardous Material that is located on or at the
Facility Site or has emanated or emanates from the Facility Site (including
without limitation any Hazardous Material that actually or allegedly has
migrated or migrates onto the Facility Site from the Landfill), to the
extent resulting from either (a) an act by Ridgewood, its successors or
assigns, or (b) the operation of the Facility after the date of the
partnership's formation, other than the operation of the Selexol Equipment
(as more fully described on Schedule A to the Bill of Sale dated even date
herewith between GSF and the Partnership).
"Distribution Payment" shall have the meaning given such term in
Section 2(a)(ii) hereof.
"Environmental Losses" shall mean any and all damages, fines,
penalties, liabilities and expenses (including reasonable attorneys' fees
and investigation and court costs) arising out of claims, suits, awards of
damages and orders that arise or are alleged to have arisen from any
Contamination; provided however, that the term "Environmental Losses" shall
not include, or be deemed to include, any damage, fine, penalty, liability
or expense arising out of any claim, suit, award of damage or order brought
against Ridgewood or any affiliate of Ridgewood by one or more investors in
Ridgewood or its affiliates, in its or their capacity as such, including
without limitation any claims or suits involving a violation of any state
or federal securities law.
<PAGE>
"Facility" shall mean the electric generating facility, fired by
landfill or other gas, and related equipment, located on the Facility Site
and owned by the Partnership.
"Facility Site" shall mean have the meaning given such term in the Gas
Supply contract.
"Fiscal Year" shall have the meaning given such term in the
Partnership Agreement.
"Gas Supply Contract" shall mean the Gas Sale and Purchase Agreement
dated even date herewith between the Gas Supplier and the Partnership,
pursuant to which the Partnership purchases landfill gas from the Gas
Supplier to fuel the Facility.
"Gas Supplier" shall mean GSF Energy Inc., in its capacity as supplier
of landfill gas under the Gas Supply Contract and not in its capacity as a
partner in the Partnership.
"GSF Obligations" shall have the meaning given such term in Section 2
hereof.
"Hazardous Material" shall mean any substance or waste that is
regulated by any federal, state or local law as a substance or waste that
may present a risk of endangering human health or safety or of degrading
the environment, and shall include, but is not limited to, the following
materials, including those specified in the regulations adopted pursuant to
the following laws:
"Hazardous substance," as defined in Section 9601 of title 42
of the United States Code, and in Section 25281 of the
California Health and Safety Code, including, but not limited
to, petroleum products.
"Waste," as defined in Subdivision (d) of Section 13050 of the
California Water Code, that is discharged or deposited where it
is, or probably will be, discharged into the waters of the
state and which creates or threatens to create, a condition of
pollution or nuisance, as specified in Section 13304 of the
California Water Code.
"Indemnification Payment" shall have the meaning given such term in
Section 2(a)(i) hereof.
<PAGE>
"Landfill" shall mean the municipal solid waste landfill located in
Orange County, California, and referred to as the Olinda/Olinda Alpha
Sanitary Landfill, as described more fully in Appendix B to the Gas Supply
Contract.
"Maximum Liability Cap" shall have the meaning given such term in the
Gas Supply Contract.
"Net Cash Flow" shall have the meaning given such term in the
Partnership Agreement.
"Operating Agreement" shall mean the Operating, Maintenance and
Administrative Services Agreement dated even date herewith, between the
Partnership and the Operator, pursuant to which the Operator operates,
maintains and provides administrative services for the Facility, all for
the benefit of the Partnership.
"Operator" shall mean GSF Energy Inc., in its capacity as operator
under the Operating Agreement and not in its capacity as partner in the
Partnership.
"Partnership" shall mean Brea Power Partners, L.P., a Delaware limited
partnership.
"Partnership Agreement" shall mean the Agreement of Limited
Partnership dated 12 October 1994, among Ridgewood, GSF and Brea Power (I),
Inc., pursuant to which the Partnership was formed and is governed.
"Ridgewood Interest" shall mean the interests in the Partnership owned
by Ridgewood.
"Ridgewood Interest Purchase Price" shall have the meaning given such
term in Section 3(b) hereof.
<PAGE>
2. OBLIGATIONS OF GSF.
(a) GSF hereby undertakes the following obligations with respect to
Ridgewood (collectively, the "GSF Obligations"):
(i) GSF shall indemnify, defend and hold Ridgewood harmless from and
against any Environmental Losses asserted or levied against Ridgewood
in its capacity as a limited partner of the Partnership (the
"Indemnification Payment");
(ii) If the Partnership suffers any Environmental Losses for a
Fiscal Year, GSF shall, subject to Section 2(c) hereof, make payments
to Ridgewood calculated in accordance with Section 2(b) hereof (the
"Distribution Payment"); and
(iii) GSF shall purchase the Ridgewood Interest under the scenarios
set forth at, and in accordance with the provisions of, Section 3
hereof.
(b) The Distribution Payment shall equal the following:
(i) The amount that would have been distributed to Ridgewood,
calculated for the fourth quarter of the Fiscal Year, in accordance
with Article V of the Partnership Agreement, if Net Cash Flow during
the fourth quarter of such Fiscal Year had been increased by the
amount of Environmental Losses suffered by the Partnership during
such Fiscal Year; less
(ii) the amount actually distributed to Ridgewood, calculated for
the fourth quarter of the Fiscal Year, in accordance with Article V
of the Partnership Agreement.
The Distribution Payment shall be calculated annually, promptly after the
close of the Partnership's Fiscal Year (as determined in accordance with
the Partnership Agreement), and shall be paid in full within thirty (30)
calendar days of such calculation.
<PAGE>
(c) If Environmental Losses, in the aggregate, either cumulative from time
to time or at one time, asserted or levied against the Partnership from
equals or exceeds Four Million Dollars ($4,000,000), GSF shall have the
option to terminate its obligation to pay any further Distribution Payment.
GSF shall exercise such option by giving written notice to Ridgewood.
3. RIDGEWOOD PUT OPTION.
(a) Ridgewood may require GSF to purchase the Ridgewood Interest in the
following situations, for the Ridgewood Interest Purchase Price calculated
in accordance with Section 3(b) hereof:
(i) GSF has notified Ridgewood of its election to terminate its
Distribution Payment obligation in accordance with Section 2(c)
hereof;
(ii) The Partnership has terminated the Gas Supply Contract in
accordance with Section 10.03 thereof; or
(iii) The Gas Supplier has fully expended the Maximum Liability Cap
(as such Cap may have been increased in accordance with Section 10.04
of the Gas Supply Contract); or
(iv) The Gas Supplier has terminated the Gas Supply Contract in
accordance with Section 10.05 thereof and the Partnership is unable
to secure an adequate supply of landfill or other gas for use by the
Facility on terms substantially similar to the material terms of the
Gas Supply Contract.
Ridgewood's option must be exercised within sixty (60) calendar days of
notice to Ridgewood of the occurrence of the event triggering such option
right, which notice shall expressly state that an even triggering such
option right has occurred and that Ridgewood must exercise its right within
sixty (60) days, after which time such option, if unexercised, shall
expire.
(b) The purchase price for the Ridgewood Interest (the "Ridgewood Interest
Purchase Price") shall be an amount such that the sum of the discounted
present values, discounted to the date of
<PAGE>
the Partnership's formation, of the following three amounts equals Three
Million One Hundred Thousand Dollars ($3,100,000), which amount shall, once
calculated, be adjusted to reflect any reductions in Ridgewood's interest
in Partnership distributions subsequent to the formation of the Partnership
to arrive at the final Ridgewood Interest Purchase Price:
(i) The Ridgewood Interest Purchase Price; and
(ii) Distributions made to Ridgewood (including its successors and
assigns) in accordance with Article V of the Partnership Agreement;
and
(iii) Distribution Payments made to Ridgewood, if any.
For purposes of calculating the Ridgewood Interest Purchase Price, the
applicable discount rate shall equal 1.17% per month, and each cash flow
shall be deemed to have occurred at the end of the month in which it was
received.
4. GSF CALL OPTION.
(a) GSF may require Ridgewood to sell the Ridgewood Interest to GSF in the
following situations, for a purchase price calculated in accordance with
Paragraph (b) of this Section 4:
(i) The Fuel Contract is terminated; or
(ii) The Power Contract is terminated.
GSF's option must be exercised within sixty (60) calendar days of the
occurrence of the event triggering such option right, after which time such
option, if unexercised, shall expire.
(b) If GSF exercises its right to purchase the Ridgewood Interest, it
shall pay Ridgewood a purchase price equal to the greater of (i) the fair
market value, on the date of transfer, of the Ridgewood Interest or (ii)
the Ridgewood Interest Purchase Price, as calculated in accordance with
Section 3(b) hereof.
<PAGE>
5. TERM. This Agreement shall commence as of the date set forth above
and shall continue in full force and effect until such time as Ridgewood
(or any successor or assign thereof) no longer owns the Ridgewood Interest,
at which time this Agreement shall terminate. Upon such termination, all
obligations of GSF hereunder not yet due and owing shall cease and be of no
further force and effect, except for any indemnification obligation, which
shall continue in full force and effect.
6. NOTICE OF CLAIMS. The provisions of Section 12.4 of the Operating
Agreement, "Obligations of the Indemnitor and Indemnitee," are hereby
incorporated into this Agreement as if set forth in full herein, and shall
govern all aspects of Ridgewood's assertion of a claim for indemnification
hereunder.
7. NOTICES. Any notice, demand, request or other communication given
hereunder shall be deemed sufficient if in writing and delivered personally
against receipt or by private carrier or registered or certified mail,
return receipt requested, postage prepaid, or telecopied, delivered to the
addresses or telecopy numbers set forth below or such other address or
telecopy numbers as shall be designated by notice given in accordance with
this Section 7. Any notice given pursuant to this Section 7 shall be
effective (i) if given by U.S. postal service, upon the fifth (5th)
business day after posting and (ii) if given by overnight or personal
courier service or telecopied, upon the business day immediately following
posting or telecopying.
To GSF: GSF Energy Inc.
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
Attention: Corporate Secretary
Telecopy: (610) 481-5765
Copy to: Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
Attention: Vice President and General Manager,
Environmental and Energy Systems
Telecopy: (610) 481-5084
<PAGE>
To Ridgewood: Ridgewood Electric Power Trust I
c/o Ridgewood Power Corporation
947 Linwood Avenue
Linwood, New Jersey 07450
Attention: President
Telecopy: (201) 447-0474
8. ASSIGNMENT. This Agreement may not be assigned by either party
hereto without the prior written consent of the other, which consent may be
withheld in such party's sole discretion; provided however, that
notwithstanding the foregoing, Ridgewood shall have the right to assign its
right, title and interest hereunder for collateral security purposes in
connection with debt financing without the consent of GSF. Ridgewood is
the sole beneficiary of this Agreement, it being expressly understood that
no third-party beneficiary rights are or shall be deemed to be created
hereby.
9. SEVERABILITY. If any provision of this Agreement is held for any
reason to be invalid or unenforceable, the invalidity or unenforceability
of such provision shall not affect any of the remaining provisions hereof,
and this Agreement shall be enforced as if such invalid and unenforceable
provision had not been contained herein.
10. HEADINGS. The Section headings contained in this Agreement are for
convenience and ease of reference only and in no way define, describe,
extend or limit the scope or intent of this Agreement or of any provision
hereof.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.
12. AMENDMENT. No amendment, alteration, modification or waiver of any
terms or provisions of this Agreement shall in any event be effective
unless the same shall be in writing and signed by each of the parties
hereto.
<PAGE>
13. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws (but not the law of conflict of laws) of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Support
Agreement to be executed as of the day and year first above written.
GSF ENERGY INC.
By: /s/ Wayne A. Hinman
Name: Wayne A. Hinman
Title: President
RIDGEWOOD ELECTRIC POWER TRUST I,
by Ridgewood Power Corporation, its managing
shareholder
By: /s/ Robert E. Swanson
Name: Robert E. Swanson
Title: President
