Res 070-99 7/6/1999RESOLUTION NO.d I (:).—q�'f
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WICHITA
FALLS, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE
ON BEHALF OF THE CITY A WATER AGREEMENT BETWEEN THE
CITY, THE WICHITA COUNTY WATER IMPROVEMENT DISTRICT
NO. 2, AND ARCHER POWER PARTNERS, L.P.; FINDING AND
DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION
WAS PASSED WAS OPEN TO THE PUBLIC AS REQUIRED BY LAW.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WICHITA
FALLS, TEXAS:
SECTION 1. That the City Manager be and is hereby authorized to execute on
behalf of the City of Wichita Falls a water supply contract between the City, the Wichita
County Water Improvement District No. 2 and Archer Power Partners, L.P., in
accordance with the terms and conditions of said contract, attached hereto and made a
part hereof for all purposes.
SECTION 2. It is hereby officially found and determined that the meeting at
which this resolution was passed was open to the public as required by law.
PASSED AND APPROVED this the 6th day of July, 1999.
ATTEST:
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City Clerk
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WATER AGREEMENT BETWEEN
CITY OF WICHITA FALLS, TEXAS,
WICHITA COUNTY WATER IMPROVEMENT
DISTRICT NUMBER TWO
AND ARCHER POWER PARTNERS, L.P.
This Agreement between the City of Wichita Falls, Texas (the "City "), a municipal
corporation, acting by and through its Mayor, hereunto duly authorized by its City Council,
and the Wichita County Water Improvement District Number Two (the "Water District "),
acting by and through the President of the Board of Directors, hereunto duly authorized,
(hereinafter collectively referred to as the "Seller "), Archer Power Partners, L.P., a Delaware
limited partnership (hereinafter referred to as the "Company ") (this "Agreement ") is made and
entered into as of the day of , 1999. The Seller, Company and
their respective successors and assigns as allowed herein, may also be referred to as "Party" or
"Parties."
RECITALS
Company is currently developing an electricity producing power plant located in
Archer County, Texas.
The Company will require an adequate water supply for generating, cooling and other
purchases necessary for the operation of such plant. Seller is desirous of said Power Plant
being constructed and of furnishing such water supply for use in connection with said Power
Plant, the construction and operation of such Power Plant constituting a material benefit to
Seller, and being a sufficient consideration for the obligation undertaken by Seller.
AGREEMENT
For and in consideration of the mutual promises, covenants, obligations, and benefits
described in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller and Company agree as follows:
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ARTICLE I
DEFINED TERMS AND INTERPRETATION
Section 1.01. Defined Terms. As used in this Agreement, including the exhibits
and other attachments hereto, each term with its initial letter capitalized and not otherwise
defined shall have the meaning assigned to such term as set forth below:
(a) "Affiliate" shall mean, in relation to any Person, any Person: (i) which directly
or indirectly controls, or is controlled by, or is under common control with, such other Person;
or (ii) which directly or indirectly beneficially owns or holds fifty (50 %) percent or more of
any class of voting stock of such other Person; or (iii) which has fifty (50 %) percent or more
of any class of voting stock that is directly or indirectly beneficially owned or held by such
other Person; or (iv) who either holds a general partnership interest in such other Person or
such other Person holds a general partnership interest in the Person.
(b) "Approvals" shall mean any and all permits, clearances, licenses, visas,
authorizations, consents, decrees, waivers, privileges, filings, exemptions or approvals of any
Person or any federal, state, city, county, local or regional authorities, departments, bodies,
commissions, corporations, branches, agencies, courts, tribunals, judicial authorities,
legislative bodies, administrative bodies or regulatory bodies.
(c) "Commercial Operations Date" shall mean the date that the Plant commences
commercial operations as stated in a written notice from Company to the Seller.
(d) "Day" shall mean a twenty -four (24) hour period commencing at 12:00
midnight, Wichita Falls, Texas time.
(e) "Facilities" shall mean the Water Supply Facilities.
(f) "Financial Closing" shall mean the date on which financing (debt and/or
equity) sufficient to complete construction of the Plant has been obtained and the first draw
thereunder has been made.
(g) "Financing Persons" shall mean the lenders, security holders, investors, equity
providers and others providing financing or refinancing to or on behalf of the Company, for
the development, construction, ownership, operation and maintenance of the Plant or any
portion thereof, or any trustee or agent acting on behalf of any of the foregoing.
(h) "Force Majeure Events" shall mean all events and occurrences which (i) arise
after the date hereof, (ii) are beyond the reasonable control of the Party claiming Force
Majeure, (iii) are unforeseen, unavoidable or insurmountable, and (iv) prevent total or partial
performance by any Party of this Agreement. Such events shall include, without limitation,
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earthquakes, tornadoes, typhoons, flood, fire, lightning, severe drought, political disturbances,
war and other events that are generally accepted as Force Majeure Events in commercial
practice; such events specifically shall exclude any labor strikes, work stoppages or similar
labor action.
(i) "Invoice" shall have the meaning set forth in Section 5.02.
0) "Lakes" shall mean Lake Kemp and Lake Diversion.
(k) "Meters" shall mean the meters installed as part of the Facilities as set forth in
this Agreement.
(1) "Party" shall mean a party to this Agreement and its successor and permitted
assigns.
(m) "Person" shall mean any natural person, corporation, company, partnership,
limited liability company, joint venture, trust, unincorporated organization, organization,
association, sole proprietorship, government (or any agency, instrumentality or political
subdivision thereof, including autonomous and quasi- autonomous entities) or other entity.
(n) "Plant" shall mean the electricity producing power plant to be constructed by
Company at the site reflected on Figure 1 to Exhibit "A" attached hereto.
(o) "Raw Water" shall mean water that is appropriated for industrial purposes that
has not been treated.
(p) "Regulatory Requirements" shall mean all requirements and provisions of
federal, regional, state, city, county and local constitutional, laws, statutes, rules, regulations
and ordinances enacted or issued from time to time, and all judicial and administrative orders,
judgments and decrees of any governmental authority having jurisdiction concerning the
matters contained herein issued from time to time.
(q) "Source" shall mean the Lake Kemp - Lake Diversion system or such other
source of surface water acceptable to Company and the Seller.
(r) "Supply Delivery Point" shall mean the point in the canal system at which the
raw water is delivered by Seller to the Company's Water Supply Facilities. Such point in the
canal shall be described on Figure 1 to Exhibit "A" attached hereto.
(s) "Term" shall mean the period commencing on the date hereof and terminating
on the termination date of this Agreement.
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(t) "Water Supply Facilities" shall mean all meters, pumps, pumping stations,
pipelines, canals, valves and equipment provided by the Company necessary for the
transporting of water from the Supply Delivery Point to the plant.
ARTICLE 2
CONDITIONS PRECEDENT
Section 2.01. Conditions Precedent. The obligations of Company under this
Agreement shall become effective on and Company shall have no obligations hereunder until
the date specified in a notice from Company to the Seller stating that the following conditions
precedent shall have been fulfilled to Company's satisfaction or waived in writing by
Company:
(a) If necessary, the Seller shall have received legal, valid and enforceable rights -
of -way, easements and such other real property rights or interests as may be required to
perform its obligations hereunder.
(b) The Company shall have obtained, as applicable: (i) financing sufficient to
complete construction of the Facilities, or any applicable portion thereof, or commitments
therefor in form and substance satisfactory to Company and the Financing Persons, and (ii) all
necessary Approvals for the construction and operation of the Facilities.
(c) The Company and the Financing Persons shall have received an opinion of
legal counsel, to each of the City and the Water District, in form and substance acceptable to
Company and the Financing Persons, to the effect that this Agreement constitutes the legal,
valid and binding obligations of the Seller and may be enforced according to its terms in
conformity with applicable law; and
(d) The Financial Closing shall have occurred.
ARTICLE 3
PURCHASE AND SUPPLY OF RAW WATER
Section 3.01. Purchase and Supply of Raw Water. The Seller agrees to make
available for sale to Company at the Supply Delivery Point up to eight million (8,000,000)
gallons per day of Raw Water from the Source, and Company agrees to purchase from the
Seller all or part of such raw water, subject to the terms and conditions set forth herein. The
Seller shall deliver the Raw Water to Company at the Supply Delivery Point through one or
more Meters, which will measure the volume delivered. The Raw Water shall be owned by
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the Seller until it is delivered to the Supply Delivery Point, and thereafter the Raw Water shall
be owned by Company. The Raw Water shall be used by Company at the Plant in connection
with the generation of electricity, including, without limitation, as cooling water for the
cooling towers associated with the Plant. Company shall not permit any Raw Water furnished
hereunder to be used to supply any other Person for use other than in regard to the operation
of the Plant without specific Approval of the Seller.
Section 3.02. Commencement of Delivery. Company shall notify the Seller at least
thirty (30) days in advance of when it desires the Seller to commence the initial delivery of
Raw Water to the Supply Delivery Point for purchase and sale hereunder; provided that such
delivery shall commence no earlier than January 1, 2001, and no later than the Commercial
Operations Date. Notwithstanding anything contained herein to the contrary, in no event will
Company be obligated to purchase Raw Water hereunder until the Commercial Operations
Date.
Section 3.03. Quantit . The Seller agrees to deliver to Company, at the Supply
Delivery Point, the quantity of Raw Water requested by Company (up to and including eight
million [8,000,000] gallons per Day).To facilitate this process, the Seller and Company shall
cooperate and coordinate in the control of the equipment that regulates the delivery of Raw
Water pursuant to this Agreement.
Section 3.04. Withdrawal of Water. Seller further grants to Company the right to
withdraw water from the Lake Kemp -Lake Diversion system in connection with the operation
of said power plant.
Section 3.05. Easements and Rights -of -Way. The Company shall have the right of
ingress and egress over Seller's easements adjacent to the supply delivery point for the
purpose of maintaining the Company's Facilities, including but not limited to take and
discharge canals, pumps, meters and other related equipment.
Section 3.06. Allocation of Water During Drought. During severe drought conditions
when water cannot be supplied to meet the demands of all customers, the water to be
distributed shall be divided among all customers of water from the Source pro rata, according
to the amount each may be entitled to, subject to reasonable conservation and drought
management plans and requirements based on particular purposes of use of the water, so that
preference is given to no one and everyone suffers alike, save and except the priority granted
to others in that water supply contracted dated January 1, 1977, by and between the City of
Wichita Falls, the Wichita County Water Improvement District Number Two, and West Texas
Utilities.
Section 3.07. Maintenance and Operation of Lakes and Canal System for Delivery of
Water to the Company. The Water District shall be solely responsible for the maintenance
and operation of the Lakes and canal system for the supply of raw water to the Company. Any
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alterations or improvements to the canal system to implement the delivery of water to the
Company shall be performed by the Water District. The parties agree that the cost of
improvements to the canal system and the additional yearly operation expense necessary to
supply the water to the Company shall be covered by a separate agreement between the
Company and the Water District. Any consideration paid by the Company for the
improvements and alterations shall be paid to and for the benefit of the Water District for the
performance of such services. The consideration paid by the Company for the yearly operation
expense set forth in the separate agreement between the District and the Company shall be
paid to and for the benefit of the District so long as the operating agreement dated December
20, 1988, and any renewals and Extensions thereto between the City of Wichita Falls and the
Water Improvement District No. 2 provides that the Water Improvement District has full and
complete control of all the operations of said jointly -owned facilities. If at any time in the
future the operations of said jointly -owned facilities should become the responsibility of the
City, the consideration paid by the Company for the yearly operation expense shall be paid to
the City.
ARTICLE 4
SYSTEM IMPROVEMENTS
Section 4.01. System Improvements. The Seller's canals and other facilities
necessary to deliver raw water to the Supply Delivery Point will require upgrades and
improvements in order to service the Plant. The Seller agrees to provide the necessary
improvements, the cost of which shall be the subject of a separate agreement between the
Company and the Wichita County Water Improvement District #2. The Company agrees to
pay for such improvements. The Company shall have review and approval rights for the
contracts dealing with the improvements.
ARTICLE 5
CHARGES AND INVOICING
Section 5.01. Raw Water Charges. For the supply of Raw Water to the Supply
Delivery Point, Company will pay Seller as follows:
(a) Beginning when water is actually consumed for the production of electricity,
the Company shall take or pay for a total of 1,460 million gallons of water per year.
(b) For water actually consumed, the Company shall pay Seller at the rate of .4040
cents per one thousand (1,000) gallons ( "Base Rate "). The Base Rate for water purchased
pursuant to this Agreement shall be adjusted on January 1 of each calendar year subsequent to
the calendar year 1999 by an amount determined by multiplying such Base Rate by an
Adjustment Factor. Such Adjustment Factor shall be calculated by dividing the weighted
average price paid per one thousand gallons of water actually purchased and consumed in the
generation of electrical power by the use of fossil fuels (in quantities in excess of 1,000 acre -
feet per year but no more than 30,000 acre -feet per year) during the immediately preceding
calendar year within the State of Texas, by the weighted average price paid per thousand
gallons of water consumed for the same purpose, in the same range of quantities in the State
of Texas during the calendar year 1999. Only the purchase and consumption of water from
third parties from man -made lakes will be considered in arriving at the weighted average. The
City and the Water District will provide the Company with complete information concerning
how the rate adjustment is calculated each year, including without limitation the methodology
used and copies of the data supporting the calculation. For purposes of computing the
weighted average price paid, the price paid pursuant to this Agreement shall be excluded.
(c) By the 13th month after the first generating unit is producing electricity and
annually thereafter, if the amount billed for the preceding twelve (12) month period, is less
than the annual minimum amount as specified in Section 5.01(a) above, then the difference
will be billed in addition to the preceding month's actual consumption.
Section 5.02. Invoices. The Seller shall prepare and deliver a monthly invoice to
Company (an "Invoice "), which shall include charges for the Raw Water delivered during the
previous month. Company shall pay the amounts due pursuant to each Invoice in accordance
with the payment instructions contained therein within thirty (30) days after receipt thereof.
Company shall notify the Seller of any disputed amounts indicating the amount of the dispute
and the basis therefor. In the event that the Seller agrees with Company, it shall notify
Company and reflect the appropriate adjustments in the next Invoice delivered to Company.
Otherwise, the Seller shall have written notice to Company of its disagreement with Company
regarding the disputed amount, stating the reasons therefor, within thirty (30) days after
receipt of the notification of the disputed amount by Company. If the Parties fail to reach an
agreement with respect to such Invoice dispute within sixty (60) days after delivery of the
Seller's notice to Company, the provisions of Article 15 shall apply with respect thereto.
Section 5.03. Construction. Water used during construction, prior to the time of
actual use of water for the production of electricity, shall be paid for at the same rate as water
consumed for the production of electricity.
Section 5.04. Water Payments. All amounts due and payable under this Article shall
be due and payable to the respective Sellers in Wichita County, Texas. Fifty (50 %) percent of
the amount due shall be payable to the City and fifty (50 %) percent of the amount due shall be
payable to the Water District, unless otherwise modified by the Sellers.
ARTICLE 6
TERM AND TERMINATION
Section 6.01. Term and Termination.
(a) This Agreement shall continue for an initial term of fifteen (15) years from the
date hereof and shall be renewable for a second term of fifteen (15) years at Company's
option, and if so extended, all of the terms and provisions of the Agreement will be applicable
throughout such extended term. At the end of said terms, this Agreement may be extended for
successive five (5) year terms. The terms of each additional five (5) year extension must be
agreeable to both Seller and Company. In the event Seller and Company are unable to agree to
the terms and conditions of any five (5) year extension as authorized herein prior to at least
ninety (90) days from the effective date of the proposed five (5)year term, then this
Agreement shall be deemed null and void. The Parties agree that they shall negotiate in good
faith with regard to the provisions in this Section.
(b) Company may terminate this Agreement at any time by giving the Seller
written notice of termination three hundred sixty -five (365) days prior to the date of
termination and by paying the Seller the amounts due and owing to the Seller through the
termination date.
(c) Before terminating this Agreement or curtailing the delivery of water because
of any violation or breach by Company, the Seller shall give Company written notice of the
violation or breach. Company shall have sixty (60) days from the date it receives such notice
to cure the violation or breach if it is the failure to pay amounts to the Seller which are due
and payable under this Agreement, and Company shall have ninety (90) days from the date it
receives such notice to cure the violation or breach if it cannot be cured by the payment of
money to the Seller.
ARTICLE 7
METERING
Section 7.01. Meters.
(a) Meters. The supply of Raw Water pursuant to this Agreement shall be
measured by an appropriate Meter(s) supplied and maintained by the Company which shall be
certified to American Water Works Association Standards. Company and Seller shall have
access to the Meter(s) for inspection, invoicing or any other reasonable purposes.
(b) Invoicing Corrections. In the event any inspection of Meters reflects an error
greater than two (2 %) percent, Company and the Seller shall reasonably determine the point in
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time the error developed and adjust the applicable Invoices accordingly. If a point in time
cannot be determined and a basis for adjustment is not agreed upon between the Seller and
Company within thirty (30) days of the inspection, adjustments to the applicable Invoices
shall be made on the basis that the error has applied to one -half (50 %) of the time since the
last determination of accuracy.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.01. Representations and Warranties.
(a) Representations and Warranties of the Seller.
The Seller hereby represents and warrants to Company that the following are
true, legal, and correct as of the date hereof-
(i) The Seller is a municipal corporation and a County Water Improvement
District, which are validly existing in good standing under the laws of
the State of Texas. The Seller has all requisite power and authority to
conduct its business, own its properties and execute and deliver this
Agreement and perform its obligations hereunder in accordance with
the terms hereof. This Agreement has been duly executed and delivered
by a representative(s) of the Seller who has the requisite power and
authority to execute and deliver this Agreement in the name of and on
behalf of the Seller.
(ii) This Agreement constitutes the legal, valid and binding obligations of
the Seller, enforceable against the Seller in accordance with its terms to
the extent allowed by applicable law.
(iii) Neither the execution, delivery or performance of this Agreement (i)
conflicts with, or results in a violation or breach of the terms,
conditions or provisions of, or constitutes a default under, the
constitutive law, statutes or regulations of the Seller, or any agreement,
Approval, treaty, convention, franchise, contract, indenture, or other
instrument under which the Seller or its assets are bound, nor (ii)
violates or conflicts with any applicable Approval, law, rule, ordinance
or regulation or any judgment, decree, order, writ, injunction, or award
applicable to the Seller. There is no pending legislation and no legal
actions, arbitration proceedings, administrative proceedings or
investigations instituted or threatened or adversely affecting, or that
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could adversely affect, (i) the legality, validity and enforceability of this
Agreement against the Seller, (ii) the performance by the Seller of its
obligations under this Agreement, (iii) any Approval of the Seller, or
(iv) the condition (financial or otherwise), business or operations of the
Seller, nor does the Seller know of any basis for any such action,
proceeding or investigation.
(iv) Seller warrants that it has and will maintain in force for the life of this
Agreement legal title to the water sold hereunder and all permits,
contracts, licenses and legal agreements necessary to maintain legal
title to the water sold hereunder.
b. Representations and Warranties of Company.
Company hereby represents and warrants to the Seller that the following are
true, legal, and correct as of the date hereof:
(i) Company is a limited partnership validly existing and in good standing
under the laws of the State of Delaware. Company has all requisite
power and authority to conduct its business, own its properties and
execute and deliver this Agreement and perform its obligations
hereunder in accordance with the terms hereof. This Agreement has
been duly executed and delivered by Company.
(ii) This Agreement has been duly executed and delivered on behalf of
Company and constitutes the legal, valid and binding obligations of
Company, enforceable against Company in accordance with its terms to
the extent allowed by applicable law.
(iii) Neither the execution, delivery or performance of this Agreement (i)
conflicts with, or results in a violation or breach of the terms,
conditions or provisions of, or constitutes a default under, the charter
documents of Company, or any agreement, contract, indenture or other
instrument under which Company or its assets are bound, nor (ii)
violates or conflicts with applicable law, rule, ordinance or regulation
or any judgment, decree, order, writ, injunction or award applicable to
Company. There is no pending legislation and no legal actions,
arbitration proceedings, administrative proceedings or investigations
instituted or threatened or adversely affecting, or that could adversely
affect, (i) the legality, validity and enforceability of this Agreement
against Company, (ii) the performance by Company of its obligations
under this Agreement or (iii) the condition (financial or otherwise),
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business or operations of Company, nor does Company know of any
basis for any such action, proceeding or investigation.
ARTICLE 9
ADDITIONAL OBLIGATIONS AND COVENANTS
Section 9.01. Approvals: Assistance. The Seller agrees to acquire and maintain in full
force and effect throughout the Term all Approvals necessary for it to fulfill its obligations
hereunder and to comply with all Regulatory Requirements in its performance of its
obligations hereunder. The Seller agrees to secure all modifications to its Approvals as
necessary and maintain compliance with all its Approvals as necessary for it to fulfill its
obligations hereunder in compliance with all Regulatory Requirements. The Seller agrees to
issue or cause to be issued to Company all Approvals that are within its jurisdiction that are
necessary for Company to collect and use the Raw Water as contemplated herein and perform
other operations of the Plant relating to the subject matter of this Agreement. The Seller
agrees to give reasonable assistance to Company as requested in connection with obtaining
Approvals that are necessary for Company to collect and use the Raw Water as contemplated
herein and perform other operations of the Plant relating to the subject matter of this
Agreement.
Section 9.02. Sufficiency of Supply of Raw Water and Facilities. The Seller agrees
that it will at all times during the Term have sufficient rights to and supply of Raw Water to
satisfy its obligations hereunder. The Seller shall promptly notify Company immediately of
any proposed or enacted legislation or regulations (either federal, regional, state, city, county
or local level), or agreement, which comes to the attention of the Seller and which could
adversely affect the operation of the Facilities or the ability of the Seller to perform any of its
obligations hereunder. The Seller will not take any action or omit to take any action that
would or could impair, restrict or adversely affect the ability of the Seller to perform its
obligations hereunder.
Section 9.03. Emergencies. Company shall be entitled to work on or interfere with
the Facilities without the prior written consent of the Seller where such actions are taken to
prevent immediate injury, death or property damage. In such event, Company shall promptly
inform the Seller of such work or interference.
Section 9.04. Waiver of Immunity. As a part of the consideration for this
Agreement, the Seller represents and warrants that it is subject to suit for any breach of this
Agreement or to enforce any covenant contained herein, consents to such suit, and waives any
immunity it may have from suit for breach or enforcement of this Agreement.
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Section 9.05. The Seller holds a valid Certificate issued by the appropriate Federal,
Regional or State agencies in regard to the Raw Water to be delivered hereby. The Seller
owns the rights to an amount of appropriated and uncommitted surface water dedicated for
industrial use from the Lake Kemp -Lake Diversion system, to allow the Seller to fulfill its
obligations to supply Raw Water hereunder. All contracts hereafter made and entered into by
Seller (either jointly or severally) with other parties for water rights for said Lakes shall be
subject to and subordinate to Company's rights hereunder.
ARTICLE 10
DEFAULT AND REMEDIES
Section 10.01. Events of Default. The occurrence of any one of the following shall
constitute an Event of Default under this Agreement:
(a) the failure of either Party to perform any material covenant, condition or
obligation under this Agreement, which failure continues for thirty (30) days
after receipt of written notice from the other Party,
(b) the breach by either Party of a material warranty or representation made by that
Party in this Agreement, which failure continues for ninety (90) days after
receipt of written notice from the other Party, or
(c) with respect to a breach or breaches by the Seller of the provisions of Article 3
herein, if such breach or breaches, in the aggregate, result in the unexcused
failure of the Seller to timely deliver Raw Water in the quantities required
pursuant to this Agreement.
Section 10.02. Remedies and Waiver. Upon the occurrence of any Event of Default,
subject to the cure periods in Articles 6 and 14, the non - defaulting party may pursue any
available remedy, at law or in equity, including but not limited to specific performance. The
pursuit by either Party of any remedy available under this agreement shall not constitute an
election or waiver of any other remedy available to that party, at equity or in law. No waiver
of any violation or breach shall be deemed or construed to constitute a waiver of any other
violation or breach, and forbearance to enforce one or more of the remedies available for a
violation or breach shall not be deemed to constitute a waiver of that or any other violation or
breach.
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ARTICLE 11
FORCE MAJEURE
Section 11.01. Notification Obligations. In the event a Party claims a Force Majeure
Event hereunder, such Party shall promptly, but in no event more than thirty (30) days after it
knows or should have known of the occurrence of the Force Majeure Event, give the other
Party written notice describing the details of the occurrence and the anticipated length of
delay due to the Force Majeure Event; provided that if the Force Majeure Event results in a
breakdown of communications rendering it not reasonably practicable to give notice within
the applicable time limit specified herein, then the Party claiming a Force Majeure Event shall
give such notice as soon as reasonably practicable after the reinstatement of communications,
but no later than thirty (3 0) days after such reinstatement. Within fifteen (15) days after initial
notification, such Party shall provide sufficient proof of the occurrence and duration of such
Force Majeure Event to the other Party and shall thereafter provide the other Party with
periodic supplemental updates to reflect any change in information given to the other Party.
The Party claiming the Force Majeure Event shall give notice to the other Party of (a) the
cessation of the relevant Force Majeure event and (b) the cessation of the effects of such Force
Majeure Event on the performance by it of its obligations under this Agreement as soon as
practicable after becoming aware of each of (a) and (b) above.
Section 11.02. Duty to Mitigate. The Parties shall use their reasonable efforts to
mitigate the effects of such Force Majeure Event and to cooperate to develop and implement a
plan of remedial and reasonable alternative measures to remove the Force Majeure Event;
provided further that the Party not claiming a Force Majeure Event shall not be required to
expend any amount of money in connection with such Force Majeure Event.
Section 11.03. Delay Caused by Force Majeure Event. To the extent provided in this
Section 11.03 and subject to Section 11.04, neither Party shall be responsible or liable for or
deemed in breach of this Agreement because of any failure or delay in complying with its
obligations under or pursuant to this Agreement to the extent that such failure has been
caused, or contributed to, by one or more Force Majeure Events or its effects or by any
combination thereof, and in such event.
(a) except as otherwise provided herein, the performance by the Party claiming the
Force Majeure Event of its obligations hereunder shall be suspended, and in
the event that such Party is required to start or complete an action during a
specific period of time, such start date or period for completion shall be
extended, on the condition that: (i) such suspension of performance and
extension of time shall be of no greater scope and of no longer duration than is
required by the effects of the Force Majeure Event; (ii) the Party claiming the
Force Majeure Event complies with Section 11.01; and (iii) the Party claiming
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the Force Majeure Event uses its reasonable efforts to remedy its inability to
perform; and,
(b) except as otherwise provided herein, the performance by the Party not claiming
the Force Majeure Event of its obligations hereunder shall be suspended, and
in the event that such Party is required to start or complete an action during a
specific period of time, such start date or period for completion shall be
extended; provided that such suspension of performance and extension of time
shall be of no greater scope and of no longer duration than is required by any
suspension of performance or extension of time pursuant to the preceding
clause (a) or other effects of the Force Majeure Event.
Section 11.04. Performance Not Excused. The payment of money owed hereunder
shall not be excused because of a Force Majeure Event. In addition, a Party shall not be
excused under this Article from timely performance of its obligations hereunder to the extent
that the claimed Force Majeure Event was caused by any negligent or intentional acts, errors,
or omissions, or for any breach or default of this Agreement by such Party. Furthermore, no
suspension of performance or extension of time shall relieve the Party benefiting therefrom
from any liability for any breach of the obligations that were suspended or failure to comply
with the time period that was extended to the extent such breach or failure occurred prior to
the occurrence of the applicable Force Majeure Event.
ARTICLE 12
INDEMNIFICATION
Section 12.01. Indemnification.
(a) During the Term of this Agreement, Company agrees to hold harmless the
Seller and its respective employees and agents from all losses or claims arising directly from
actions of Company's employees or agents under this Agreement; provided that Company
shall have no such obligation where the negligence of any employee or agent of the Seller
contributed to any such loss or claim.
(b) during the Term of this Agreement, Seller agrees to hold harmless the
Company and its respective employees and agents from all losses or claims arising directly
from actions of Seller's employees or agents under this Agreement; provided that Seller shall
have no such obligation where the negligence of any employee or agent of the Company
contributed to any such loss or claim.
ARTICLE 13
INSURANCE
Section 13.01. Insurance.
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(a) The Seller agrees to either maintain insurance applicable to its performance
under this Agreement with the Texas Municipal League or any other appropriate and
equivalent insurance carrier during the term of this Agreement, or to self - insure its
performance under this Agreement.
(b) Company agrees to maintain general liability insurance applicable to its
performance under this Agreement with a reputable insurance company.
ARTICLE 14
FINANCING PERSONS' REQUIREMENTS
Section 14.01. Financing Persons' Requirements.
(a) The Seller acknowledges that Company will borrow certain funds from the
Financing Persons ( "Financing Persons" shall mean the lenders, security holders, investors,
equity providers and others providing financing or refinancing to or on behalf of company for
the development, construction, ownership, operation and maintenance of the Plant) for the
construction of the Plant and that, as a condition to making loans to Company, the Financing
Persons may, from time to time, request documents from the Seller. In connection therewith,
the Seller agrees to furnish to the Financing Persons such written information, certificates,
copies of invoices and receipts, lien waivers (upon payment), affidavits and other like
documents as the Financing Persons may reasonably request.
(b) The Seller shall promptly execute any additional documentation as may be
mutually agreed on, in form and substance reasonably requested by the Financing Persons,
including, but not limited to, documents evidencing the Seller's consent to assignment of this
Agreement as a security to the Financing Persons or otherwise upon the occurrence of events
specified in such documents and any reasonable modifications to this Agreement.
(c) In the event of Company's default under this Agreement, the Financing
Persons shall have the right to cure Company's default and, in such event, the Seller's duties
and obligations under this Agreement shall be unaffected. In that regard, the Financing
Persons shall have (i) thirty (30) days from the date notice of default is delivered to the
Financing Persons to cure such default if such default is the failure to pay amounts to the
Seller which are due and payable under this Agreement, or (ii) not fewer than ninety (90) days
to cure such default if the breach or default cannot be cured by the payment of money to the
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Seller so long as the Financing Persons or their designee shall have commenced to cure the
default within such ninety (90) days period and thereafter diligently pursues such cure to
completion and continues to perform any monetary obligations under this Agreement and all
other obligations under this Agreement are performed by Company or the Financing Persons.
The Seller further agrees to perform its obligations hereunder for the benefit of the Financing
Persons in the event of Company's default under this Agreement or under the applicable
financing documents, provided that the Financing Persons (or their assignee) shall have cured
all defaults of Company's obligations hereunder and shall have paid all amounts then due,
including costs to cure. In such event, the Financing Persons (or their assignee) shall have the
rights and obligations of Company under this Agreement, provided the Financing Persons
shall have no personal liability to the Seller for the performance of such obligations, and the
sole recourse of the Seller in seeking the enforcement of such obligations shall be to such
Parties' interest in the Plant.
ARTICLE 15
RESOLUTION OF DISPUTES
Section 15.01. Friendly Consultation. Mediation. In the event of any dispute,
controversy or claim between the Parties arising out of or relating to this Agreement, or the
breach, termination or invalidity thereof (collectively, a "Dispute "), the Parties shall attempt
in the first instance to resolve such Dispute through friendly consultations or mediation
between the Parties. If such consultations or mediations do not result in a resolution of the
Dispute within thirty (30) days, then the Dispute may be submitted to judicial proceedings by
either Party. The Parties agree to attempt to resolve all disputes arising hereunder promptly,
equitably and in a good faith manner. The Parties further agree to provide each other with
reasonable access during normal business hours to any and all non - privileged records,
information and data pertaining to any such Dispute.
Section 15.02. Tolling of Statute of Limitations. All applicable statutes of limitation
and defenses based upon the passage of time and similar contractual limitations shall be tolled
while the procedures specified in this Article 15 are pending. The Parties will take such
action, if any, required to effectuate such tolling. Without prejudice to the procedures
specified in this Article 15, a Party may file a complaint for statute of limitations purposes, if
in its sole judgment such action may be necessary to preserve its claims or defenses. Despite
such action, the Parties will continue to participate in good faith in the procedures specified in
this Article 15.
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ARTICLE 16
CONFIDENTIALITY
Section 16.01. Confidentiality. The Parties agree that the contents of this Agreement
and any information provided to a Party by the other Party whether of a business, technical,
engineering, economic or other nature relating to the Plant or the disclosing Party and its
affiliates, relating to the negotiations or performance of this Agreement or otherwise provided
pursuant to this Agreement (the "Confidential Information ") shall be treated as confidential
and secret and that the receiving Party, without the prior written consent of the disclosing
Party, shall not disclose Confidential Information to any Person, except as permitted herein.
Upon the request of the disclosing Party and to the extent reasonably practicable to do so, the
receiving Party shall return all written and electronic information containing Confidential
Information of the disclosing Party. Notwithstanding the above, the Parties acknowledge and
agree that (a) Company may disclose Confidential Information to the Financing Persons,
potential lenders or investors for the Plant, contractors, Company's affiliates, agents,
representatives and contractors, suppliers and manufacturers (and potential suppliers and
manufacturers) of equipment, materials or other goods for the Plant and other Persons as may
be necessary or advisable for Company to perform its obligations under this Agreement and
the other agreements entered into in connection with the Plant, and (b) the Seller may disclose
Confidential Information to its agents, contractors and other Persons as may be necessary or
advisable for the Seller to perform its obligations under this Agreement. To the extent that
such disclosures are necessary, each Party shall endeavor in disclosing Confidential
Information to seek to preserve the confidentiality of such disclosures. Notwithstanding the
foregoing, this Section shall not prevent either Party from disclosing any such Confidential
Information, including the contents of this Agreement, if and to the extent: (a) required to do
so by applicable law or any court, governmental or regulatory authority, provided that, if
feasible, the disclosing Party shall give prior notice to the other Party of such required
disclosure and, if so requested by such other Party, shall use all reasonable efforts to oppose
the requested disclosure, appropriate under the circumstances; (b) disclosed to the
professional advisers, consultants or auditors of such Party; (c) disclosed to the existing or
potential lenders, shareholders, partners and equity investors of such Party; (d) such disclosure
is reasonably deemed necessary by the disclosing Party pursuant to the rules and regulations
of any securities commission, securities exchange, securities trading market or similar body or
agency; or (e) Confidential Information has come into the public (except as a result of a
breach of this Section).
ARTICLE 17
RELATIONSHIP OF THE PARTIES
Article 17.01. Relationship of the Parties. This Agreement is by and between the
Seller and Company and is not intended, and shall not be construed to create, the relationship
of agent, servant, employee, partnership, joint venture or association as between the Seller and
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Company, nor between the Seller and any officer, employee, contractor or representative of
Company. No joint employment is intended or created by this Agreement for any purpose.
Company agrees to so inform its employees, agents, contractors, and subcontractors who are
involved in the implementation of or construction under this Agreement. Company
understands and agrees that all persons furnishing services in implementing this Agreement
are, for purposes of Worker's Compensation liability, employees solely of Company and not
of the Seller. Company shall bear the sole responsibility and liability for furnishing and shall
furnish Worker's Compensation benefits to any person for injuries from or connected with
services performed pursuant to this Agreement.
ARTICLE 18
WAIVER AND AMENDMENT
Section 18.01. Waiver and Amendment. Failure to enforce or the waiver of any
provision of this Agreement or any breach or nonperformance by Company or the Seller shall
not be deemed a waiver by the Seller or Company of the right in the future to demand strict
compliance and performance of any provision of this Agreement. No officer or agent of the
Seller or Company is authorized to waive or modify any provision of this Agreement. No
modifications to or recision of this Agreement may be made except by a written document
signed by the Seller's and Company's authorized representatives. A copy of any such
document shall be provided to the Financing Persons at least 30 days prior to execution by the
Parties.
ARTICLE 19
ASSIGNMENT
Section 19.01. Assignment.
(a) Except as expressly permitted in this Agreement, neither Party shall assign this
Agreement or any portion hereof, or any of the rights or obligations hereunder, whether by
operation of law or otherwise, without the prior written consent of the other Party. This
Agreement shall inure to the benefit of, and be binding upon, the successors and permitted
assigns of the Parties.
(b) Company shall be entitled to assign this Agreement and its rights herein
without the consent of the Seller to any of Company's Affiliates that has a direct or indirect
interest in the Plant. In addition, the Seller hereby consents to the granting of a security
interest in and an assignment by Company of this Agreement and its rights herein to the
Financing Persons and their successors, assigns and designees in connection with any
financing or refinancing related to the development, construction, operation and maintenance
of the Plant. In furtherance of the foregoing, the Seller acknowledges that the Financing
19
persons may under certain circumstances assume the interests and rights of Company under
this Agreement.
(c) The Seller acknowledges that the Financing Persons may under certain
circumstances foreclose upon and sell, or cause Company to sell or lease the Plant and cause
any new lessee or purchaser of the Plant to assume all of the interests, rights and obligations
of Company arising under this Agreement. In such event, the Seller agrees to the assignment
by Company and the Financing Persons of this Agreement and its rights herein to such
purchaser or lessee and, provided that all amounts due at that time under this Agreement are
fully paid, shall release the Financing Persons from all obligations hereunder upon any such
assignment.
ARTICLE 20
SEVERABILITY
Section 20.01. SeverabilitX. The provisions of this Agreement are severable and if,
for any reason, any one or more of the provisions contained in the Agreement shall be held to
be invalid, illegal or unenforceable in any respect, the invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement and this Agreement shall remain in
effect and be construed as if the invalid, illegal or unenforceable provision had never been
contained in the Agreement.
ARTICLE 21
NO THIRD PARTY BENEFICIARIES
Section 21.01. No Third Party Beneficiaries. Except with respect to the rights of the
Financing Persons as provided above, this Agreement does not create any third -party benefits
to any person or entity other than the signatories hereto, and is solely for the consideration
herein expressed.
ARTICLE 22
ENTIRE AGREEMENT
Section 22.01. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the Parties, and supersedes all other communications with respect
to this Agreement. This document may be modified only through further written agreement
between the Parties.
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ARTICLE 23
GOOD FAITH DEALINGS
Section 23.01. Good Faith Dealing. The Parties undertake to act in good faith in
relation to the performance and implementation of this Agreement and to take such other
reasonable measures as may be necessary for the realization of its purposes and objectives.
ARTICLE 24
GOVERNING LAW
Section 24.01. Governing Law. This Agreement shall be construed under the laws of
the State of Texas. This Agreement is not a waiver of any permit, inspection or other legal
requirements, and does not assure approval based upon any circumstances other than
compliance with the law. Company shall conform to and abide by all federal, state and local
laws and regulations.
ARTICLE 25
NOTICES
Section 25.01. Notices. All notices, payments and communications ( "notices ")
required or allowed by this Agreement shall be in writing and be given by depositing the
notice in the United States mail, postpaid and registered or certified, with return receipt
requested, and addressed to the Party to be notified. Notice deposited in the mail in the
previously described manner shall be conclusively deemed to be effective from and after the
expiration of three days after the notice is deposited in the mail. For purposes of notice, the
addresses of and the designated representative for receipt of notice for each of the Parties shall
be as follows:
For the Seller:
City of Wichita Falls
Attention: City Manager
1300 Seventh Street
Wichita Falls, Texas 76301
Wichita County Water Improvement District No. 2
Attention: District Manager
402 E. Scott
Wichita Falls, Texas 76301
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4
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And for Company
Archer Power Partners, L.P.
Attention: General Counsel
4100 Spring Valley, Suite 1001
Dallas, Texas 75244
Either Party may change its address by giving written notice of the change to the other
Party at least fourteen (14) days before the change becomes effective.
ARTICLE 26
COUNTERPARTS
Section 26.01. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto, acting under the authority of the
respective governing bodies, have caused this Agreement to be duly executed in multiple
counterparts, each of which shall constitute an original.
Attest:
By:
City Clerk
Attest:
City of Wichita Falls, Texas
James Berzina, City Manager
Wichita County Water Improvement
District No. 2
By:
Jimmy Banks, District Manager
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By: Archer Power I, LLC
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22