HomeMy WebLinkAboutBiogas Supply Agreement - 5.6.2024CONFIDENTIAL
BIOGAS SUPPLY AGREEMENT
This Biogas Supply Agreement (this "Agreement') by and between City of Waterloo, an Iowa municipality
("Operator"), and Waterloo RNG 1 LLC, an Oklahoma limited liability company ("Developer"), is effective
as of May 6, 2024 (the "Effective Date"). Operator and Developer are hereafter sometimes collectively
referred to as the "Parties" and individually as a "Party."
RECITALS
A. Operator owns that certain parcel of land located in Black Hawk County, Iowa, as more
particularly described on Exhibit A (the "Subject Property") and owns and operates on the
Subject Property the City of Waterloo's primary wastewater treatment plant (the "WWTP
Business").
B. Operator produces quantities of biogas (the "Biogas"), generated from its operation of the
WWTP Business at the Subject Property.
C. Pursuant to that certain Ground Lease Agreement of even date herewith between Operator
and Developer (the "Lease"), Developer shall install, construct, own, and operate a biogas
conditioning facility comprised of equipment for the conditioning and sale of renewable
natural gas ("RNG") at a location on the Subject Property (as comprised of the Facility
Improvements more particularly described in the Lease, the "Facility").
D. The Facility will rely upon Biogas meeting the quality requirements in Exhibit B ("Suitable
Biogas") as a feedstock.
E. This Agreement is entered into pursuant to Operator's award of project contract to Developer
based on Developer's proposal dated April 21, 2023 ("Proposal") submitted in response to
Operator's Request for Qualifications/Proposals to Develop Renewable Natural Gas Projects
(the "RFQ/RFP").
F. Both Operator and Developer desire to enter into this Agreement regarding the provision of
Suitable Biogas from the WWTP Business to the Facility for the consideration as set forth
herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the foregoing Recitals, the mutual covenants, conditions,
and provisions set forth herein, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
1. Term. This Agreement shall be effective on the Effective Date and shall, unless earlier terminated in
accordance with its terms, continue for a term that is coterminous with the term of the Lease,
including any extensions thereof (the Term ). Any termination of the Lease shall also automatically
and simultaneously terminate this Agreement except in any case in which Operator, as Landlord under
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the Lease, is obligated pursuant to the Lease to grant a new lease to Tenant's Lender or its nominee,
as provided in the Lease.
2. Delivery and Acceptance of Suitable Biogas.
2.1. Quality. Operator shall ensure that all Biogas delivered to Developer pursuant to this Agreement
is Suitable Biogas that conforms to the specifications set forth in Exhibit B. In no event is
Developer obligated to accept delivery of Biogas that is not Suitable Biogas. In its discretion,
Operator may flare off or make alternate use for its own operational purposes of any Biogas that
is determined not to be Suitable Biogas.
2.2. Deliveries. Commencing on the date in which the Facility begins commercial operations injecting
gas into the supply pipeline, as determined by Developer in its sole and absolute discretion (the
'Commercial Operations Date"), Operator shall, subject to Section 2.4 and this Section 2.2, make
continuous deliveries exclusively to Developer of all Suitable Biogas generated by the WWTP
Business at the Subject Property to the delivery point, as further identified in the Site Plan
described in Section 2.4 of the Lease (the "Delivery Point"), and Developer shall accept all such
Suitable Biogas for processing. Developer shall take title to such Suitable Biogas when delivered
to the Delivery Point. As used in this Agreement, "deliver", "delivered", "delivery" or other
derivations thereof includes any means of conveying Suitable Biogas to the Delivery Point in
accordance with this Agreement. As provided in the RFQ/RFP, Operator will deliver Suitable
Biogas to Developer at least ninety percent (90%) of the time on an annual basis, subject to
reasons for non -delivery as provided in this Section 2.2 and 2.4. The Parties acknowledge that
the production of Biogas results from an organic process and is therefore subject to fluctuations
in the quantity of Suitable Biogas produced, and that such fluctuations shall be considered a
normal operating condition and shall not constitute a failure to perform under this Agreement.
2.3. Measurement. Upon delivery of Suitable Biogas to the Delivery Point, the Suitable Biogas shall
be measured by Developer using such method as it determines in its reasonable judgment,
consistent with commercially acceptable methods and standards then prevailing in the relevant
industry.
2.4. Shutdowns. Excluding temporary shutdowns due to planned or unplanned maintenance, repair,
emergencies, other events of Force Majeure, or in the ordinary course of business, Developer
shall, on a continuous basis, operate the Facility so as to not create any material disruption to
the operations of the Facility and in fulfillment of the terms and conditions of this Agreement.
Except in the case of unplanned outages or maintenance, or emergencies or events of Force
Majeure, Developer shall coordinate any scheduled shutdowns with Operator to minimize any
disruptions in the flow of Biogas to the Facility (each such event, an "Outage"). In the case of
unplanned Outages, maintenance, emergencies or events of Force Majeure, Developer shall
provide notice of such unplanned Outage to Operator promptly following the occurrence of such
unplanned Outage. Developer shall have no obligation to accept deliveries of Biogas during any
Outage, and any Biogas produced by Operator during such Outage will be the responsibility of
Operator to dispose of through the Operator's flare.
2.5. Temporary Suspension. Without limitation of any other provisions of this Agreement, Developer
may suspend operation of the Facility ("Suspension") upon ten (10) days' prior written notice in
the event of (i) Developer's loss of any permit or governmental approval required for the lawful
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operation of the Facility, not due to Developer's violation of or non-compliance with applicable
laws or any governmental approvals; or (ii) Developer receives a binding order from a
governmental authority, not based on Developer's violation of or non-compliance with
applicable laws or any governmental approvals, to suspend operation of the Facility; provided,
however that in the event the Suspension lasts for a continuous period of one hundred and eighty
(180) days, then either Party may terminate this Agreement upon sixty (60) days prior written
notice to the other Party.
2.6. Appropnate Training; Facility Rules. Operator shall ensure that all of its employees, agents, and
subcontractors delivering Suitable Biogas to the Delivery Point, are appropriately trained,
experienced, and qualified, and that all such employees, agents, and subcontractors comply with
any and all applicable laws, regulations, and permits pertaining to the Subject Property or the
Facility, along with any Facility rules (including with respect to health and safety) communicated
by Developer to the Operator in writing from time to time.
3. Transportation and Title.
3.1. Delivery Responsibility. Operator shall have the sole responsibility for delivering Suitable Biogas
to the Delivery Point as provided for in Section 2. Operator is not responsible to deliver Biogas to
Developer in a compressed state.
3.2. Risk of Loss, Responsibility and Title. Subject to Developer's right to reject deliveries of Biogas as
provided in Section 10 risk in and responsibility for (including responsibility for any Release of)
Suitable Biogas shall pass from Operator to Developer when delivered and accepted at the
agreed Delivery Point, which currently is presumed to be the point of connection to Developer's
gas conditioning unit. All RNG that is produced by Developer from such Suitable Biogas shall be
owned by Developer. Accordingly, any Release of Biogas prior to the Delivery Point shall be the
sole responsibility of Operator and any Release of Suitable Biogas at or after the Delivery Point
shall be the responsibility of Developer, except as provided in Section 5 of this Agreement with
respect to other Facility products and byproducts. As used in this Agreement, "Release(s)" shall
mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting storing,
escaping, leaching, dumping, discarding, burying, abandoning, or disposing into the environment.
4. Operator Operations.
4.1. Collection of Biogas. Operator shall use commercially reasonable efforts to ensure that all
Suitable Biogas delivered under this Agreement is collected in accordance with the systems that
Operator is currently using for the collection of Biogas except that Operator shall not be
precluded from replacing, repairing or upgrading its systems so long as the system continues to
have at least the capacity that it possessed upon the execution of this Agreement ("Biogas
Production Facilities"). Operator will reasonably maintain its Biogas Production Facilities as
necessary in order to provide the supply of Suitable Biogas provided for in this Agreement and
will use best efforts to return the Biogas Production Facilities to operations in the event of a
planned or unplanned shutdown.
4.2. Continuous Operation. Operator will be responsible for all Operator operational costs, including
production, collection, and transportation of Suitable Biogas to the Delivery Point. Excluding
temporary shutdowns due to planned or unplanned maintenance, repair, emergencies, events
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of Force Majeure, or in the ordinary course of business, Operator shall, on a continuous basis,
operate the WWTP Business so as to not create any material disruption to the operations of the
Facility and in fulfillment of the terms and conditions of this Agreement. Except in the case of
emergencies, Operator shall coordinate any scheduled shutdowns with Developer so as to
minimize any disruptions in the flow of Biogas to the Facility.
5. Other Facility Products. The Parties recognize that in addition to RNG, the Facility will produce a
mixture of other products (the "Other Products"), including but not limited to hydrocarbons, and
noncombustible gases in a gaseous state consisting primarily of methane combustible gas but
excluding any Environmental Attributes (as defined below). All products of the Facility derived from
the processing of Suitable Biogas, including bio-methane, RNG, electricity, any Other Products, and
physical or financial products that Developer produces through the use of the Suitable Biogas as a
feedstock or input, shall belong solely and exclusively to Developer.
6. Operator Compensation. After the Commercial Operations Date, and throughout the remainder of
the Term, Developer shall pay to Operator, on a quarterly basis in arrears, within thirty (30) days after
the end of each calendar quarter, as full consideration for Operator's performance of its obligations
under this Agreement and subject to any adjustments as set forth in Section 7, a quarterly payment
("Quarterly Payment") based on net revenue from the sale of RNG, Other Products Environmental
Attributes and other sale or exploitation of Suitable Biogas (as further defined below, "Net Market
Revenues") from the Facility at the royalty rate set forth in Exhibit C ("Royalty Rate"). The Quarterly
Payment shall be prorated for any partial calendar quarter after the Commercial Operations Date and
based on the actual sales of RNG and Environmental Attributes. RNG and Environmental Attributes
that cannot be sold in the period generated, will be accrued and payment will be made following the
calendar quarter in which the revenues associated with such RNG or Environmental Attributes are
received by Developer. As used in this Agreement, "Net Market Revenues" means for a given calendar
quarter, Developer's total revenue attributable to sales of RNG and Environmental Attributes less any
fixed or variable rates or fees payable to fuel dispensers, end users, brokers, audit and verification
service providers (including but not limited to Quality Assurance Plan administration, carbon intensity
measurement and other compliance -related activities), intermediaries or other entities participating
in the placement of RNG into the market, or involved in the generation and monetization of
Environmental Attributes attributable to such RNG through use as transportation fuel or other
methods of utilizing the biogas, RNG or the related Environmental Attributes, including placement in
non-compliance (`voluntary') markets or the use as feedstock or process fuel in the production of
other materials, products, or fuels. Net Market Revenues do not include or incorporate operational
and maintenance costs associated with physical operation of the Project.
7. Deferment of Royalty.
7.1. Within 60 days of the Commercial Operations Date, Developer shall document the total realized
costs to build the Project ("Realized Project Construction Cost") in a form acceptable to the
Operator, and such amount shall be compared to the estimate provided in the Developer's
Proposal ('Initial Construction Cost Estimate"). The positive amount (if any) by which the
Realized Project Construction Cost exceeds the Initial Construction Cost Estimate (the
"Construction Cost Overage") shall be paid to the Developer from funds comprising the
Quarterly Payment less the Quarterly Natural Gas Passthrough Amount (defined below), and
such payments will continue until the Construction Cost Overage has been fully paid to
Developer, at which time the Quarterly Payments to Operator pursuant to Section 6 shall
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commence. For the avoidance of doubt, the Initial Construction Cost Estimate is six million, three
hundred seventy-five thousand and six hundred dollars ($6,375,600.00), an itemization of which
is included as Exhibit E.
7.2. During such time as the Construction Cost Overage remains outstanding and subject to payment
to the Developer as described in Section 7.1 Developer shall pay Operator a portion of the
Quarterly Payment that matches Operator's actual natural gas costs to fuel the boilers that
provide heat to the Operator's digesters ("Quarterly Natural Gas Passthrough Amount"), as
evidenced by monthly natural gas statements from Operator's natural gas supplier. Once the
Construction Cost Overage has been fully recovered by the Developer, the Quarterly Natural Gas
Passthrough Amount will no longer be applicable or payable to Operator.
7.3. For the avoidance of doubt, a sample calculation of the Quarterly Payment with adjustments
related to the Construction Cost Overage and the Quarterly Natural Gas Passthrough Amount is
provided as Exhibit D.
8. Environmental Attributes and Incentives. All Environmental Attributes (as defined herein) and
Environmental Incentives (as defined below) shall belong to or become the property of Developer.
Developer agrees that it will apply for or claim any Environmental Attributes or Incentives that arise
because of or are related to this Agreement. Operator agrees to assist and cooperate with Developer
in securing Environmental Attributes or Incentives, including but not limited to providing all
documentation as reasonably requested by Developer and assisting with account and pathway
registration activities with the U.S. Environmental Protection Agency under the Renewable Fuel
Standard ("RFS") program and related reporting obligations associated with Operator's production of
Biogas. In the event Operator is the sole or primary entity that is authorized or otherwise empowered
to claim such benefit in the form of specific Environmental Attributes or Incentives, then Operator
shall secure all or a portion of the value of the benefit of such Environmental Attributes or Incentives
and transfer such benefit to Developer. Operator shall ensure such Environmental Attributes and
Environmental Incentives are vested in Developer, including by executing all necessary documents
(including documents transferring such Environmental Attributes or Incentives to Developer, without
further compensation); provided, however, that Developer agrees to pay for all reasonable out-of-
pocket costs associated with such efforts. As used in this Agreement, "Environmental Attributes"
means any and all environmental benefits, air quality credits, emissions reductions, investment or
production tax credits, offsets, and allowances, howsoever entitled, attributable to energy generation
by a renewable fuel source, including RNG and renewable compressed natural gas (RCNG) and its
displacement of energy generation by conventional, nonrenewable, and/or carbon -based fuel
sources, related to the construction, ownership, or operation of the Facility. Environmental Attributes
include, but are not limited to, (1) any benefit accruing from the renewable nature of the Biogas; (2)
any avoided emissions of pollutants to the air, soil, or water (such as sulfur oxides (SOx), nitrogen
oxides (NOx), carbon monoxide (CO), and other pollutants other than those that are regulated
pursuant to state or federal law); (3) any avoided emissions of carbon dioxide (CO2), methane (CH4),
and other greenhouse gases that have been determined by the United Nations Intergovernmental
Panel on Climate Change to contribute to the actual or potential threat of altering the Earth's climate
by trapping heat in the atmosphere; (4) any property rights that may exist with respect to the
foregoing attributes howsoever entitled; (5) any green tags, renewable energy credits or similar
credits ("RECs"), including without limitation low carbon fuel standard credits ("LCFS Credits") or
similar state programs and renewable identification number credits ("RIN Credits"); (6) any reporting
rights to these avoided emissions, including, but not limited to, green tag or REC reporting rights; (7)
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any energy (kWh), capacity, reliability, or other energy attributes that may be created through the use
of RNG as a physical feedstock or through financial energy (book -and -claim) accounting
methodologies; (8) Environmental Incentives (as defined below). Environmental Attributes do not
include emission reduction credits encumbered or used for compliance with local, state, or federal
operating and/or air quality permits; and (9) any future attribute, credit or other similar mechanism
that may be created pursuant to applicable law. "Environmental Incentives" means any and all
financial incentives, from whatever source, related to the construction, ownership, or operation of
the Facility. Environmental Incentives include, but are not limited to, (i) federal, state, or local tax
credits; (ii) any other financial incentives in the form of credits, reductions, or allowances that are
applicable to a local, state, or federal income taxation obligation; and (iii) other grants, rebates, or
subsidies, including utility incentive programs.
9. Representations, Warranties and Covenants.
9.1. Representations and Warranties. As of the Effective Date, and on an ongoing basis throughout
the Term, each of Operator and Developer:
9.1.1.Each of Operator and Developer represents and warrants that it is duly formed or
incorporated, as applicable, validly existing, and in good standing under the laws of
the state of its formation or incorporation, as applicable, and is fully qualified to do
business in the State of Iowa;
9.1.2.Each of Operator and Developer represents and warrants that it has the right and
authority to enter into this Agreement and to perform its obligations hereunder. The
execution and delivery by it of this Agreement, and the performance of its obligations
hereunder, will not result in the breach, contravention, or violation of any applicable
law, its organizational documents, or other material agreement or arrangement
between it and any other person, entity, or party;
9.1.3.Each of Operator and Developer represents and warrants that each of the individuals
whose signature is set forth at the end of this Agreement have been duly authorized
by all necessary entity action on its part to execute and deliver this Agreement on its
behalf; and
9.1.4.Without limitation of any other provisions of this Agreement, Operator represents
and warrants that it has obtained all consents, approvals, permits and other third -
party authorizations necessary for its performance of this Agreement, including but
not limited to: Permit to Operate and all related requirements to remain in
compliance to hold such permit; Air Permit (administered by the relevant regulatory
bodies); Waste Discharge permit; General Orders and other rules promulgated by the
relevant regulatory bodies.
9.2. Covenants.
9.2.1.Each of Developer and Operator covenants that it will diligently pursue, obtain,
maintain, keep in full force and effect, and comply, in all material respects, with all
provisions of all licenses and permits which it is required to obtain in the operation of
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its business, and comply with all laws, rules, and regulations, which may now or in the
future be applicable to or required by its operations;
9.2.2.The Operator shall, to the extent reasonably requested by Developer or its Affiliates;
9.2.2.1. Use reasonable efforts to assist Developer in obtaining such licenses,
permits and other approvals as may be required by Developer and its
Affiliates in order to commence operation of the Facility and perform
testing, operation, maintenance, management thereof, each as set forth
in this Agreement;
9.2.2.2. Facilitate introductions by Operator or its Affiliates, in person, by phone
or via electronic communication, to any prospective off takers,
transportation providers, or other service providers with whom the
Operator or its Affiliates have an existing relationship;
9.2.2.3. Provide information within the possession of Operator or its Affiliates (as
defined in the Lease) (other than information, if any, that cannot be
disclosed pursuant to applicable law or pursuant to any contract to which
Operator or its Affiliate is party, or that is subject to any attorney -client or
attorney -work product privilege) in response to any question or request
for information from Developer regarding the Subject Property;
9.2.3.Operator covenants that it will not use or allocate any Suitable Biogas produced at the
Subject Property for purposes other than deliveries under this Agreement, except if
such Suitable Biogas is rejected by Developer at the Delivery Point;
9.2.4.Operator covenants that it will deliver the Suitable Biogas to the Delivery Point free
and clear of any liens or encumbrances of any type;
9.2.5.Each Party covenants that it will at all times comply with the covenants, terms and
conditions of the Lease and will cause its members, representatives, employees,
agents, and invitees not to disturb or interfere with the operation of the WWTP
Business by Operator, its representatives, employees, agents and invitees, or the
Facility by Developer or Developer's representatives, employees, agents and invitees;
9.2.6.Operator shall not take any action or suffer any omission that would have the effect
of impairing the value to Developer of the Environmental Incentives or Environmental
Attributes. Operator shall be solely responsible for notifying Developer of any action
or omission that could impair such value and for consulting with Developer as
necessary to prevent impairment of the value of Environmental Incentives or
Environmental Attributes; and
9.2.7.Each Party covenants that it shall at all times during the Term comply with all
applicable laws, permits and governmental approvals pertaining to the WWTP
Business or Facility business, as applicable, shall immediately notify the other Party in
the event of any violation thereof, and shall, at its own cost and expense, commence
to cure any such violations immediately.
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10. Records Testing and Rejection.
10.1. Records. Developer shall use commercially reasonable efforts to maintain true and
accurate records reflecting the amount of Suitable Biogas received and accepted. The records
shall be available for inspection or review by Operator upon reasonable notice and no more than
once in each ninety (90) day period.
10.2. Quantity Disputes. If either Party has reason to believe that the recorded quantity of
Suitable Biogas delivered and accepted is inaccurate by an amount in excess of one percent (1%),
that Party shall, within five (5) days after discovery of the discrepancy, present the other Party
with documentation supporting such determination and the Parties will confer, in good faith,
within ten (10) business days of delivery of the supporting documentation, on the causes for the
discrepancy and shall proceed to correct such causes and correct the record of the quantity if
warranted.
10.3. Testing and Inspection. Developer shall have the right (but no obligation) to inspect or
test any quantity of Biogas delivered to the Delivery Point, but Developer's exercise or failure to
exercise such testing and inspection rights shall not relieve Operator of its responsibility to
deliver only Suitable Biogas meeting the specifications in Exhibit B. All testing conducted by
Developer shall be at the sole cost of Developer, but Operator shall have the option to collect
duplicate samples of the material tested by Developer and have such samples tested at
Operator's sole cost and expense. Developer shall maintain records and supporting
documentation of any such testing, including sampling, chain -of -custody documents, and
laboratory testing results. In addition, Developer shall have the right, but no obligation, to
conduct periodic inspections of the WWTP Business's facilities in order to observe and confirm
compliance by Operator with the requirements of this Agreement, which right, and Developer's
exercise or non -exercise of it, shall not relieve Operator of its obligations under this Agreement.
10.4. Quality Disputes and Remedies for Non -Suitable Biogas. If, within a reasonable time
following delivery, Developer determines that any Biogas delivered by Operator does not comply
with the specifications in Exhibit B or otherwise with the terms of this Agreement or cannot
lawfully be processed or used by Developer (the "Non -Suitable Biogas"), Developer may, after
providing notice to Operator and after affording Operator a two (2) day window to meet and
confer with Developer, do any or all of the following:
10.4.1. Suspend acceptance of deliveries by Operator under this Agreement until
Developer is satisfied, in its sole and absolute discretion, that the non-compliance
with Exhibit B or other quality issues have been resolved;
10.4.2. Inform Operator of its rejection (or revocation of acceptance) of such Non -
Suitable Biogas, and Operator shall be solely responsible for the handling, loading,
transportation, and disposal of such Non -Suitable Biogas within a reasonable time of
such notice of rejection or revocation of acceptance. If such handling, loading,
transportation, and disposal of such Non -Suitable Biogas is not complete within a
reasonable time of such notice of rejection or revocation of acceptance, Operator
shall reimburse Developer as provided in Section 10.5.
10.5. Non -Suitable Biogas Costs and Title. Without prejudice to any other remedies available to
Developer at law or in equity, Operator shall reimburse Developer (within sixty (60) days after
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receipt of an invoice) for Developer's reasonable costs and expenses relating to any remedy
under Section 10.4, including, but not limited to, any cover or handling, loading, transportation,
contamination, equipment damage, cleaning or disposal of any Non -Suitable Biogas. If Developer
is in possession of Non -Suitable Biogas at any time, title and risk of loss to such Non -Suitable
Biogas shall not pass to Developer at the Delivery Point but shall at all times remain with
Operator.
11, Force Maieure.
11.1. Definition of Force Maieure. As used in this Agreement, "Force Majeure" shall mean, with
respect to either Party, any events, occurrences or circumstances, insofar as the same are beyond
the reasonable control of that Party and that prevents, impedes, or delays fulfillment by that
Party of its obligations or the satisfaction of a condition under this Agreement, including, without
limitation, the following: (a) fires, explosions, earthquakes, droughts, floods, tornados, and other
natural disasters or extreme weather conditions; (b) war, hostilities, invasion, act of foreign
enemies, governmental requisition, or embargo; (c) rebellion, revolution, insurrection, or civil
war; (d) riot, commotion, strikes, slow -downs, lock outs, or public disorder, unless solely
restricted to the employees of either Party; (e) acts or threats of terrorism; (g) shortages of or
inability to procure materials or equipment; or (h) epidemic, pandemic, public health emergency,
and governmental orders or regulations relating to same Provided, "Force Majeure" does not
include the lack of funds of either Party.
11.2. Notice of Force Maieure. If performance by either Party is delayed or precluded by an
event of Force Majeure, the affected Party shall notify the other Party as soon as reasonably
practicable of the nature and extent of the event and the expected impact on performance under
this Agreement, including the expected length of time the Force Majeure is anticipated to
interfere with performance.
11.3. Effect of Force Maieure. Notwithstanding any other provisions of this Agreement, neither
Party shall be deemed to be in breach of this Agreement or otherwise be liable to the other Party
for any delay in performance or non-performance of any of its obligations under this Agreement
to the extent that the delay or non-performance is due to Force Majeure, and the time for
performance of that obligation shall be extended accordingly. The Party invoking Force Majeure
shall use reasonable efforts to remedy the situation so far as reasonably possible and, in the
meantime, will comply with its other obligations under this Agreement. The Party invoking Force
Majeure shall give prompt written notice to the other Party of the cessation of the cause thereof.
12. Regulatory Event.
12.1 Regulatory Event Notice to Terminate Reformation. If a Regulatory Event (as defined
below) occurs, a Party affected by the Regulatory Event may provide the other Party with no less than
thirty (30) days' notice of its intent to terminate the Agreement ("Regulatory Event Notice to
Terminate"), along with the detailed rationale of the basis for asserting that a Regulatory Event has
occurred. Following receipt of the Regulatory Event Notice to Terminate, during such thirty (30) day
period, the Parties shall use their commercially reasonable efforts to attempt to resolve the impact of
the Regulatory Event on either or both Parties' ability to perform their obligations under this
Agreement or to reform this Agreement so that the impact of the Regulatory Event is mitigated or
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eliminated while preserving, to the greatest extent practicable, the economic assumptions of the
Parties as of the Effective Date.
12.1.1 "Regulatory Event" means a Change in Law which has a material adverse effect
on this Agreement, the national markets for Biogas, RNG and Environmental Attributes,
or that otherwise renders performance by a Party of its obligations under this
Agreement illegal or impossible. Regulatory Events include, but are not limited to,
permanent market rate caps, the repeal of the RFS or similar state program, the
disqualification of Biogas from eligibility to generate Environmental Attributes under
the RFS or similar state program, multi -state or national prohibitions on the use of
Biogas or RNG as a motor vehicle fuel, or any such event that makes operation of a
project or the sale of Biogas, RNG or Environmental Attributes illegal. Notwithstanding
the foregoing, Regulatory Events shall not include (i) the imposition of new taxes, (ii)
any requirement to procure a new permit, license or other governmental authorizations
(unless a Party is ineligible and cannot procure the same within a reasonable period of
time using commercially reasonable efforts), (iii) any EPA rulemaking relating to the
setting of renewable fuel volume obligations or standards under the RFS, including by
way of a reset of renewable fuel volume obligations by EPA, or any delay of an EPA
rulemaking relating to the setting of renewable fuel volume obligations or standards,
(iv) any revision to the pricing formula for cellulosic waiver credits under the RFS, (v)
any change in the point of obligation under the RFS program, (vi) any EPA rulemaking
relating to the rules for RIN carry forwards, or (vii) any change in compliance procedures
in respect of the generation, trading or retirement.
12.1.2 "Change in Law" means an action imposed by a governmental authority
requiring compliance occurring or promulgated after the Effective Date, including,
without limitation, any Applicable Law, a court order, ruling, law, statute, ordinance,
rule, regulation or policy having the effect of law, or any change to Applicable Laws,
orders, rulings, laws, statutes, ordinances, rules, regulations or policies having the effect
of law existing as of the Effective Date that occurs or is promulgated after the Effective
Date.
12.2 Failure to Reach Agreement. If a mutual agreement is not reached on how the Regulatory
Event can be mitigated or eliminated, or on reformation of this Agreement, within the thirty (30) day
period, and provided the Party receiving the Regulatory Event Notice to Terminate did not dispute
whether a Regulatory Event has occurred by providing notice to the other Party within fifteen (15)
days after receipt of the Regulatory Event Notice to Terminate, this Agreement will terminate
immediately following the thirty (30) day period. An early termination due to a Regulatory Event will
be deemed a no-fault termination. If the Party receiving the Regulatory Event Notice to Terminate
disputes that such a Regulatory Event has occurred, the Parties will resolve such dispute in accordance
with Section 17.2 of this Agreement.
13. Events of Default and Termination.
13.1. Events of Default. Subject to Section 13.2, the following shall constitute an "Event of
Default" under this Agreement:
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13.1.1. A failure by either Party to perform any material covenant, condition, or
obligation under this Agreement or the material breach by either Party of any
representation or warranty under this Agreement where such failure continues for
thirty (30) days after such Party's receipt of written notice from the other Party;
provided that, if the nature of the subject failure or breach is such that it cannot
reasonably be cured within such 30-day period but the defaulting Party commences
and diligently pursues such cure within such 30-day period, then the cure period for
such default shall be extended for such additional period of time as is reasonably
necessary to effect such cure, up to a maximum of ninety (90) days;
13.1.2. The commencement of any bankruptcy, insolvency, liquidation, or similar
proceeding by or against either Party; the consent by either Party to the appointment
of or taking possession by a receiver, liquidator, trustee in bankruptcy, or custodian
of such Party or any substantial part of its assets; or any assignment of all or
substantially all of the assets of either Party for the benefit of its creditors; provided,
in the case of the commencement of an involuntary petition or proceeding or entry of
a judgment or judicial order that includes or seeks to cause any of the above events,
such petition, proceeding, judgment, or order is not discharged or dismissed within
ninety (90) days; and
13.1.3. A failure by either Party to comply with any federal, state, or local law or
regulation related to either Party's performance of this Agreement or to the
acceptance, handling, storage, treatment, use, management, or disposition of the
Biogas, provided that there is a failure to cure such non-compliance within thirty (30)
days after receiving written notice from the other Party or any agency or court with
jurisdiction thereof.
13.2. Remedies for Event of Default.
13.2.1. Upon the occurrence of an Event of Default, the non -defaulting Party shall be
entitled to terminate this Agreement upon ten (10) days' prior written notice to the
defaulting Party of its intent to exercise its termination rights.
13.2.2. To the extent that more than two (2) Events of Default with respect to the same
defaulting Party occur within a twelve (12) month period (even if such Events of
Default are cured within applicable cure periods provided in Section 13.1.1), the
occurrence of a third Event of Default within such 12-month period shall be deemed
incapable of cure and the non -defaulting Party shall be entitled to immediate
termination of this Agreement following such third Event of Default by delivering
written notice to the defaulting Party of its termination, which notice shall include the
date of such termination.
13.2.3. The rights to terminate this Agreement given by this Section 13.2 shall not prejudice
any other and the Parties shall have all remedies available under applicable law.
13.3. Termination by Agreement. The Parties may terminate this Agreement by mutual written
agreement at any time.
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CONFIDENTIAL
14. Insurance.
14.1. Obligation to Obtain and Maintain Insurance. Throughout the Term, each Party shall, at its sole
cost and expense obtain and maintain in full force and effect insurance in accordance with the
requirements of Section 12 of the Lease and in the type and amounts of coverage as set forth in
Exhibit B of the Lease. Each Party shall provide the other Party with copies of the certificates of
insurance and additional insured endorsements for all insurance coverage required by this
Section 14. This Section 14 shall not be construed in any manner as waiving, restricting, or limiting
the liability of either Party for any obligations imposed under this Agreement (including but not
limited to, any provisions requiring a Party to indemnify, defend, or hold the other harmless
under this Agreement).
14.2. Violations Cancellations or Reductions of Insurance. Neither Party shall do or permit to be
done anything that will violate or invalidate any insurance policy maintained by said Party
hereunder. Any cancellation or reduction (or threatened cancellation or reduction) of any
insurance coverage carried by a Party by reason of the conduct or activity of the Party, if that
Party fails to remedy such condition within five (5) business days after notice thereof, shall be an
Event of Default subject to Section 13 2
14.3. Mutual Release and Waiver of Right of Recovery and Insurer's Subrogation Rights.
Notwithstanding anything in this Agreement to the contrary, neither Party, nor its Related
Parties, nor, in case of Developer, its sublessees, shall be liable to the other Party or to any
insurance company (by way of subrogation or otherwise) insuring the other Party, for any loss or
damage to any building, structure or other property (whether real or personal) arising from any
cause that (i) would be insured against under the terms of any property insurance required to be
carried hereunder, or (ii) is insured against under the terms of any property insurance actually
carried, regardless of whether the same is required hereunder, even though such loss or damage
might have been occasioned by the negligence of such Party or its Related Parties. Each Party
shall notify their respective insurance companies of this waiver of any rights of subrogation that
such companies may have against Operator or Developer, as the case may be and shall obtain
any necessary endorsement to avoid such waiver's invalidating the policy in whole or in part.
15. Inspection of Books and Records.
15.1. Maintenance of Books and Records. Each Party shall keep full and accurate books and records
relating to its performance under this Agreement as are necessary for the other Party to verify
such compliance, including, without limitation, records relating to quantities of Biogas delivered
to or received at the Delivery Point. All financial records shall be kept in accordance with GAAP.
15.2. Inspection. At any time during the Term, and for a period of twelve (12) months after the Term,
a Party may, upon notice to the other Party, designate an independent third party that is
reasonably satisfactory to the other Party to inspect such other Party's books and records that
relate solely to performance of obligations under this Agreement. The other Party shall not
unreasonably withhold or delay its approval of the inspector and shall cooperate with such
inspector. Any inspection shall (a) require fifteen (15) business days' advanced written notice,
(b) be conducted during normal business hours, (c) be at the inspecting Party's sole cost and
expense and (d) occur no more frequently than once per year, and no more than 5 times during
the Term of this Agreement. Whichever Party orders the inspection shall pay for the inspection.
12
CONFIDENTIAL
15 3 Confidentiality. All books and records, and any copies thereof, shall be considered the
Confidential Information of the Party to whom such books and records belong, and be handled
in the same manner as other Confidential Information in Section 19.1, and neither Party shall use
such information of the other Party for any reason other than validating the other Party's proper
performance under this Agreement.
15.4. Survival. This Section 15 shall survive for one (1) year following the last day of the Term or until
completion of any inspection initiated within such period.
16. Indemnification. To the greatest extent permitted by applicable law, each Party (the "Indemnitor")
shall indemnify, defend, and hold harmless the other Party and its members, managers, directors,
contractors, employees, agents, officers, elected officials, representatives, successors, and assigns
("Indemnitees") from and against all liability, loss, penalty, claim, demand, fine, judgment, action,
costs, and expenses (including reasonable attorneys' fees and expenses), and proceedings of any
nature whatsoever based upon or arising out of damage to property, injury to persons (including
death) or violation of law, to the extent the same is caused by the Indemnitor s, or its employees',
agents', contractors', or representatives' (a) failure to perform any obligation under this Agreement,
(b) negligent, intentional, or wrongful acts or omissions relating to this Agreement, or (c) violation of
applicable law in its performance hereunder, provided, that neither Party shall be obligated to
indemnify an Indemnitee against such Indemnitee's own negligence or intentional wrongful acts or
omissions. The Parties' obligations under this Section 16 shall survive termination of this Agreement.
17. Miscellaneous.
17.1. Public Statements; Confidentiality. Neither Party shall make any public disclosure, including any
press release or announcement, either in writing or orally, with respect to this Agreement or the
transactions contemplated herein without the prior written consent of the other Party. Neither
Party shall publish, release, disclose, or disseminate to any third party any Confidential
Information, as defined below, without the prior written consent of the other Party; provided,
however, that Confidential Information may be disclosed to a Party's affiliates and its and their
directors, partners, officers, employees, members, managers, advisors, attorneys, accountants,
financing sources (including equity providers and Lenders, as defined in Section 16.14) or
representatives (collectively, "Representatives"), provided that (a) such Representatives shall be
informed by the Party of the confidential nature of such Confidential Information and shall be
directed to keep such information confidential, and (b) each Party shall be liable for any breaches
of this Section 17.1 by any of its Representatives. The confidentiality obligations of this Section
17.1 do not apply to any information, knowledge, or data (i) that is or becomes publicly available
through no act or omission of the Party wishing to disclose the information, knowledge, or data,
(ii) is known by or was in the possession of the receiving Party (as evidenced in written
documentation), through no wrongdoing and prior to it being furnished by the disclosing Party
under this Agreement; (iii) becomes available to the receiving Party (as evidenced in written
documentation) on a non -confidential basis from a source other than the disclosing Party or its
Representatives; or (iv) is or was independently developed by the receiving Party without the use
of Confidential Information (and such independent development is documented in writing). In
the event any request or demand (including, but not limited to, by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process) for disclosure of Confidential Information is made to the
receiving Party regarding the Confidential Information then the receiving Party shall promptly
13
CONFIDENTIAL
provide written notice of any such request or demand (as legally permissible) so that the
disclosing Party may seek a protective order or other appropriate remedies or restrictions on
disclosure and use and/or waive the provisions of this Agreement. In the event a protective order
or other remedy is not obtained, or disclosing Party waives compliance with this Section 17.1
receiving Party shall only furnish that portion of Confidential Information for which disclosing
Party has expressly waived compliance or that receiving Party is legally required to disclose, and
receiving Party shall exercise reasonable efforts to obtain assurance that such Confidential
Information will be treated as confidential to the maximum extent possible. The provisions of
this Section 17.1 shall survive termination of this Agreement. As used in this Agreement,
"Confidential Information" means (a) any information, knowledge, or data that is not generally
known or readily attainable by third parties which is disclosed by either Party to the other
pursuant to or in connection with this Agreement (whether orally or in writing, and whether or
not such information is expressly stated to be confidential or marked as such) and (b) the terms
and conditions of this Agreement.
17.2. Dispute Resolution.
17.2.1. Management Negotiations. The Parties shall use all reasonable efforts to settle
disputes through negotiation between authorized members of each Party's senior
management. Either Party may, by written notice to the other Party, request a
meeting to initiate negotiations to be held within fifteen (15) business days after the
other Party's receipt of such request, at a mutually agreed time and place. If the
matter is not resolved within thirty (30) business days after their first meeting, either
Party may pursue arbitration in accordance with Section 17.2.2.
17.2.2. Arbitration. Any controversy or dispute not amicably resolved by the Parties or
through management negotiations shall be settled by binding arbitration. Either Party
may initiate arbitration by giving written notice to the other Party. The notice shall
state the nature of the claim or dispute, the amount involved, if any, and the remedy
sought. The dispute shall be submitted to an independent arbitrator mutually selected
by the Parties. The decision of the appointed independent arbitrator shall be final and
binding on the Parties. In rendering a decision, the arbitrator shall comply with the
Rules of the American Arbitration Association ("AAA") then in effect. Notwithstanding
that the AAA Rules may provide otherwise, the prevailing Party in any such arbitration
shall be entitled to recover its arbitration costs, inclusive of counsel, expert,
arbitrators' and administrative fees, from the losing Party, as determined by the
arbitrator(s) in accordance with this Agreement. Any such arbitration shall be
conducted in Waterloo, Iowa. The Parties hereby irrevocably submit to the
jurisdiction of the federal and state courts having jurisdiction for Black Hawk County,
Iowa for the enforcement of any decision of the arbitrator or for any other matter
provided by applicable law.
17.2.3. Performance to Continue. Unless otherwise agreed in writing, each Party shall
diligently continue to perform its obligations under this Agreement during the
pendency of any disputes or arbitration proceedings so long as all undisputed
amounts payable hereunder have been paid.
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CONFIDENTIAL
17.2.4. Notwithstanding anything to the contrary in this Section 17.2, nothing herein
limits the Parties from immediately seeking injunctive relief or specific performance
of a breach or threatened breach of this Agreement.
17.3. LIMITATION OF LIABILITY. OTHER THAN FOR QUARTERLY PAYMENTS DUE AND OWING,
DEVELOPER'S ENTIRE AND AGGREGATE LIABILITY TO OPERATOR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED ONE MILLION DOLLARS
($1,000,000.00). OPERATOR'S ENTIRE AND AGGREGATE LIABILITY TO DEVELOPER ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED ONE MILLION DOLLARS
($1,000,000.00). NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), INCLUDING BUT NOT LIMITED TO LOSS
OF REVENUE OR ANTICIPATED PROFITS.
17.4. Intellectual Property. Both Parties agree that nothing set forth in this Agreement will vest in
the other Party any right, title, or interest in or to any intellectual property, patents, process
designs, or inventions associated with the other Party's operations ("Intellectual Property').
Both Parties acknowledge and agree that it has no rights, title, or claim to any Intellectual
Property of the other Party and both Parties agree to maintain as Confidential Information any
Intellectual Property it might learn or obtain in relation to the other Party's operations.
17.5. Application of Law. This Agreement shall be construed and enforced in accordance with the
laws of the State of Iowa without regard to conflict of law principles. Further, the parties stipulate
that this Agreement is deemed to have been made or entered into by them in the State of Iowa.
17.6. Attorney's Fees and Costs. In the event of any action at law or in equity between the Parties,
including arbitration to enforce any of the provisions hereof, any unsuccessful Party to such
litigation (as determined by the tribunal thereof) shall pay to the prevailing Party all costs and
expenses, including reasonable attorneys' fees (including costs and expenses incurred in
connection with all appeals and in any Bankruptcy or similar proceeding) incurred by the
prevailing or non -defaulting party, and these costs, expenses and attorneys' fees may be included
in and as part of the judgment.
17.7. Waiver of Jury Trial. OPERATOR AND DEVELOPER EACH WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER AGAINST
THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS AGREEMENT, THE RELATIONSHIP OF OPERATOR AND DEVELOPER, OR DEVELOPER'S USE OR
OCCUPANCY OF THE PREMISES.
17.8. Headings; Interpretation. The headings in this Agreement are inserted for convenience only and
are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this
Agreement or any provision of this Agreement. This Agreement has been reviewed and
negotiated by the Parties and their respective legal counsel and it shall be given a fair and
reasonable interpretation in accordance with the words contained in it without any weight being
given to whether a provision was drafted by that Party or its legal counsel. All documents
incorporated into this Agreement shall be construed and interpreted as a whole and to
harmonize and give effect to all of the provisions of such documents. As used in this Agreement,
15
CONFIDENTIAL
"including" shall mean "including without limitation," and "shall" means mandatory and
imperative.
17.9. Calculation of Time Periods. If the final day of a period or date of performance under this
Agreement falls on other than a business day, then the final day of the period or the date of
performance shall be deemed to fall on the next business day. As used herein, a "business day,"
whether capitalized or not, is any day other than a Saturday, Sunday, or a bank or federal or state
(in the state in which performance is to be delivered or received) legal holiday.
17.10. Independent Contractor; No Partnership. Each Party is and shall perform this Agreement as an
independent contractor, and, as such, shall have and maintain complete control over all of its
employees, agents, and operations. Neither Party, nor any of its agents or employees, shall be,
represent, act, purport to act, or be deemed to be the agent, representative, employee, partner,
or servant of the other Party. Nothing in this Agreement shall be construed as constituting a joint
venture or partnership between the Parties.
17.11. Notices. All notices, requests, demands, and other communications hereunder shall be given
in writing and shall be: (a) personally delivered; (b) sent by email or other electronic means of
transmitting written documents; or (c) sent to the Parties at their respective addresses indicated
herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by
private overnight mail courier service. All such notices, demands, or requests shall be to the
following addresses, or to such other address as either Party may designate, in writing, from time
to time:
If to Operator:
If to Developer:
City of Waterloo
3505 Easton Avenue
Waterloo, IA 50702
Attention: Waste Management Operations Director
Telephone: (319) 291-4553
Email: brian.bowman@waterloo-ia.org
With a copy to:
City of Waterloo
715 Mulberry Street
Waterloo, IA 50703
Attention: City Attorney
Telephone: (319) 291-4327
Trillium Transportation Fuels, LLC
2929 Allen Parkway, Suite 4100
Houston TX 77019
Attention: Charles Love
Telephone: (304) 947-2174
Email: Charles.Love@TrilliumEnergy.com
16
CONFIDENTIAL
With a copy to:
Trillium Transportation Fuels, LLC
2929 Allen Parkway, Suite 4100
Houston TX 77019
Attention: Legal Department
Telephone: (405) 302-6793
Email: Morns.Collie@loves.com
Notices shall be deemed given on the earlier of actual delivery or refusal of a Party to accept
delivery thereof provided that notices sent electronically shall be deemed given on the date
delivered, but only if delivered before 5:00 PM Central Standard Time as shown on an electronic
transmittal confirmation sheet and simultaneously transmitted by another means allowed
hereunder. Notices may be given by counsel to a Party.
17.12. Non -Waiver. Any failure of either Party to enforce any of the provisions of this Agreement, or
to require compliance with any of its terms, shall in no way affect the validity of this Agreement,
or any part here of, and shall not be deemed a waiver of the right of such Party thereafter to
enforce any part of this Agreement.
17.13. Assignment. This Agreement shall extend to, be binding upon, and inure to the benefit of the
Parties' respective heirs, legal representatives, successors, and assigns. No assignments of this
Agreement or any part of this Agreement shall be made by a Party without the prior written
consent of the other Party, except as expressly provided in this Section. Each of the Parties shall
have the same rights with respect to the assignment of this Agreement as they have with respect
to the Lease, as such rights are set forth in the Lease.
17.14. Accommodation of Lenders. Notwithstanding anything to the contrary herein, Operator
hereby consents to the assignment by Developer of this Agreement and any or all of its rights
hereunder to one or more Lenders, and the granting of a security interest therein, provided the
Operator receives notice of such assignment. Operator shall cooperate with Developer in
connection with any such financing (including permitting Lender a mortgage of the property
subject of the Lease), provided that written notice of such financing has been delivered to the
Operator in advance. In addition, Operator shall execute and deliver to any such Lenders such
consents, agreements, opinions, or other such other documentation as shall be typically
requested by lenders in limited recourse project financings. Any Lender to whom this Agreement
is assigned shall be a third party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party hereto. As used
in this Agreement, "Lender(s)" means any person(s) (or mortgagees, trustees, or agents on such
Lender's behalf) providing money or extending credit (including any capital lease) to Developer
for (a) the construction, term, or permanent financing of the Facility or (b) working capital or
other ordinary business requirements of Developer or the Facility.
17.15. Severabilitv. If any provision of this Agreement or the application thereof to any person or
circumstance shall be invalid, illegal, or unenforceable to any extent, the remainder of this
Agreement and the application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
17
CONFIDENTIAL
17.16. Contract Documents. The "Contract Documents" consist of the following:
a. This Agreement
b. Proposal
c. RFQ/RFP
d. Addenda
These documents form the Contract Documents and are all fully incorporated as a part of this Agreement
as if attached to this Agreement or set forth in full herein. In the event of any conflict or ambiguity among
the Contract Documents, the document in the order set forth above that first addresses the issue or
provision in question shall govern.
17.17. Entire Agreement; Amendment. This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes any and all other
communications, representations, proposals, understandings, or agreements, either written or
oral, between the Parties with respect to such subject matter, except as set forth in Section
17.16. This Agreement may not be modified or amended, in whole or in part, except by a written
agreement signed by the Parties.
17.18. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall, for all purposes, be deemed an original and all of such counterparts, taken together, shall
constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE(S) FOLLOW]
18
CONFIDENTIAL
IN WITNESS WHEREOF, the Parties have executed this Biogas Supply Agreement by their duly
authorized representatives as of the date first written above,
Operator: City of Waterloo, Iowa
By: Quentin Hart
Title: Mayor
Developer:
Waterloo RNG 1 LLC
n Erickson
`Vice President
CONFIDENTIAL
EXHIBIT A
SUBJECT PROPERTY
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EXHIBIT A TO BIOGAS SUPPLY AGREEMENT
CONFIDENTIAL
EXHIBIT B
SUITABLE BIOGAS
1. As used in this Agreement, "Suitable Biogas" shall mean Biogas that is produced from wastewater
sludge at the City's municipal wastewater treatment facility and that complies with all of the
requirements of this Exhibit B, as measured at the Delivery Point:
a. Methane content: 55 percent by weight (wt%) minimum
b. Oxygen content: 0.35 percent by weight (wt%) maximum
c. Carbon dioxide content: 45 percent by weight (wt%) maximum
d. Hydrogen sulfide: 1000 parts per million (ppm) maximum (as measured instantaneously) or 500
parts per million (based on a rolling 12-month average)
e. Nitrogen content: 1.4 percent by weight (wt%) maximum
f. Siloxanes: 20 mg per cubic meter (m3) maximum
2. Additional feedstocks: Prior to the introduction of any feedstock that is not wastewater sludge or
other cellulosic feedstocks, the parties agree to discuss and evaluate the impact of the introduction
of such new feedstock sources to evaluate any potential negative impact to the quantity or type of
environmental attributes.
3. Exclusion: Exclusion for Hazardous Materials: Suitable Biogas specifically excludes any and all
Hazardous Materials.
a. As used in this Agreement, "Hazardous Materials" means each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance which is defined,
determined or identified as hazardous or toxic under any Environmental Law.
b. "Environmental Law" shall mean any federal or applicable state or local statute, regulation or
ordinance or any applicable judicial or administrative decree or decision, whether now existing or
hereinafter enacted, promulgated or issued, with respect to any Hazardous Materials, drinking
water, groundwater, wetlands, landfills, open dumps, storage tanks, underground storage tanks,
solid waste, waste water, storm water runoff, waste emissions or wells. Without limiting the
generality of the foregoing, the term "Environmental Law" shall encompass each of the following
statutes, and regulations, orders, decrees, permits, licenses and deed restrictions now or
hereafter promulgated thereunder, and amendments and successors to such statutes and
regulations as may be enacted and promulgated from time to time: (i) the Comprehensive
Environmental Response, Compensation and Liability Act (codified in scattered sections of 26
U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C. Section 9601 et seq.) ("CERCLA") (ii) the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) ("RCRA"); (iii) the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.); (iv) the Toxic Substances Control
Act (15 U.S.C. Section 2061 et seq.); (v) the Clean Water Act (33 U.S.C. Section 1251 et seq.); (vi)
the Clean Air Act (42 U.S.C. Section 7401 et seq.); (vii) the Safe Drinking Water Act (21 U.S.C.
Section 349, 42 U.S.C. Section 201 and Section 300f et seq.); (viii) the National Environmental
Policy Act (42 U.S.C. Section 4321 et seq.); (ix) the Superfund Amendments and Reauthorization
Act of 1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.); (x) Title
EXHIBIT B TO BIOGAS SUPPLY AGREEMENT
CONFIDENTIAL
III of the Superfund Amendment and Reauthorization Act (40 U.S.C. Section 1101 et seq.); (xi) the
Uranium Mill Tailings Radiation Control Act (42 U.S.C. Section 7901 et seq.); (xii) the Occupational
Safety and Health Act (29 U.S.C. Section 655 et seq.); (xiii) the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. Section 136 et seq.); (xiv) the Noise Control Act (42 U.S.C. Section 4901
et seq.); and (xv) the Emergency Planning and Community Right to Know Act (42 U.S.C. Section
1100 et seq.).
c. Without limiting the generality of Subsection (a), the term "Hazardous Materials" shall mean and
include:
i. "Hazardous Substance(s)" as defined in CERCLA, the Superfund Amendments and
Reauthorization Act of 1986, or Title III of the Superfund Amendment and Reauthorization
Act, each as amended, and regulations promulgated thereunder including, but not limited to,
asbestos or any substance containing asbestos, polychlorinated biphenyls, any explosives,
radioactive materials, chemicals known or suspected to cause cancer or reproductive toxicity,
pollutants, effluents, contaminants, emissions, infectious wastes, any petroleum or
petroleum -derived waste or product or related materials and any items defined as hazardous,
special or toxic materials, substances or waste;
ii."Hazardous Waste" as defined in the Resource Conservation and Recovery Act of 1976, as
amended, and regulations promulgated thereunder;
iii. "Materials" as defined as "Hazardous Materials" in the Hazardous Materials Transportation Act,
as amended, and regulations promulgated thereunder; and
iv. "Chemical Substance or Mixture" as defined in the Toxic Substances Control Act, as amended,
and regulations promulgated thereunder.
EXHIBIT B TO BIOGAS SUPPLY AGREEMENT
CONFIDENTIAL
EXHIBIT C
ROYALTY RATES
For every MMBtu (or portion thereof) of RNG produced and injected in the MAE pipeline system, the
Operator shall receive the Royalty Rate multiplied by the realized Net Market Revenues associated with
placing the RNG and Environmental Attributes in the market as provided in Section 6 of the Agreement.
In the event that Trillium dispenses the RNG into transportation fuel markets through its own compressed
natural gas fueling stations, the Parties acknowledge that Trillium shall be compensated for providing such
services at the then -current market -based rates for similar third -party dispensing services utilizing RNG
with similar characteristics to the RNG produced by the Project, such rates determined by Trillium in its
sole but reasonable discretion and supported by documentation demonstrating the then -prevailing rates
for similar dispensing services, including executed transactions, viable market offers for such services, or
other commercially reasonable methods.
For the avoidance of doubt, two sample calculations are included below based on the following
assumptions:
D3 RIN price:
RINs per MMBtu:
RIN dispensing rate (market -based):
natural gas price:
voluntary market premium.
$2.25/RIN
11.7 (per current RFS program rules)
10%(of total RIN revenue)
$2.50/MMBtu
$17.50/M M Btu
Example 1: Sale into Renewable Fuel Standard program (D3 RIN)
For each MMBtu of RNG produced at the Project that Trillium sends to the transportation fuel markets,
the City will earn 18% of the Net Market Revenue, comprised of the sum of (i) RIN revenue and (ii)
natural gas revenue, where:
• RIN revenue is $2.25/RIN multiplied by 11.7 RIN/MMBtu, minus 10% RIN Dispensing Cost =
$23.69/MMBtu; and
• natural gas revenue is $2.50/MMBtu; and
• Net Market Revenue is $26.19/MMBtu.
The City's royalty is equal to 18% of Net Market Revenue $26.19/MMBtu = $4.71/MMBtu.
Example 2: Sale into voluntary markets
For each MMBtu of RNG produced at the Facility that Trillium sends to the voluntary market, Net
Market Revenues are comprised of the sum of (i) voluntary market premium $17.50 per MMBtu, and (ii)
natural gas revenue $2.50/MMBtu, for Net Market Revenues of $20.00/MMBtu.
The City's royalty is equal to 18% of Net Market Revenues $20.00/MMBtu = $3.60/MMBtu.
EXHIBIT C TO BIOGAS SUPPLY AGREEMENT
CONFIDENTIAL
EXHIBIT D: SAMPLE CALCULATIONS OF QUARTERLY PAYMENT
Pursuant to Sections 6 and 7 of the Agreement and for the avoidance of doubt, the following sample
calculations are provided to demonstrate the methodology for determining the amount of the Quarterly
Payment to the Operator.
Assumptions:
Initial Construction Cost Estimate: $6,250,000
Realized Protect Construction Cost (actual): $7 000,000
Construction Cost Overage (initial): $750,000
Net Market Revenues: $450,000 (for 3-month activity period)
Operator's 18% Royalty (unadjusted): $81,000 (for 3-month activity period)
Boiler fuel volume. 4 MMBtu/hour
Natural gas price: $3/MMBtu
Quarterly Natural Gas Passthrough Amount: 4 MMBtu/hour * 24 hours/day * 30 days/month * 3
months * $3/MMBtu = $25,920 (for 3-month activity
period)
Example 1: Quarterly Payment (with Construction Cost Overage -related adjustments applicable):
Each quarter, Operator shall receive: (i) the positive amount (if any) resulting from the calculation of Net
Market Revenues multiplied by the Royalty Rate (18%), minus the then -outstanding amount of
Construction Cost Overage; plus (ii) the Natural Gas Passthrough Amount (if applicable due to existence
of any outstanding Construction Cost Overage).
Numerically, this can be shown as:
Quarterly Payment (adjusted) = (Maximum of zero or ($81,000 - $750,000)) + $25,920
= $0 + $25,920
= $25,920
As a result of the quarterly settlement in this Example 1, the outstanding Construction Cost Overage would
be reduced by the net amount retained by Trillium for such 3-month activity period, or $81,000 less
$25,920 = $55,080. Calculations for settlement for the subsequent 3-month activity period would thus
utilize the updated Construction Cost Overage amount of $750,000 less $55,080 = $694,920.
This process would continue each quarter until the Construction Cost Overage is reduced to zero, at which
time the Construction Cost Overage would be fully paid to Trillium and any related adjustments to the
Quarterly Payment and the Natural Gas Passthrough Amount would be discontinued.
Example 2: Quarterly Payment (with no Construction Cost Overage -related adjustments or Natural
Gas Passthrough Amount):
Using the assumptions provided in this Exhibit D, the Quarterly Payment with no outstanding Construction
Cost Overage applicable would be $81,000.
EXHIBIT D TO BIOGAS SUPPLY AGREEMENT
TRILLIUM DRAFT 4/16/2024
CONFIDENTIAL
EXHIBIT E: INITIAL CONSTRUCTION COST ESTIMATE
Project Name:
Description:
Revision No.:
Revision Date:
Waterloo Lagoon RNG Plant
Capital Cost Estimate • Scenario . WWTP Average Biogas Production
2
4/14/2023
180 sc f m
System
1.41 VTP RNG Plant
Item
Biogas Cooling & Blower
Description
Dehydration and Blower
Capital Cost
$0
Cost Basis
Quotation - SysAdvanc
:': WTP RNG Plant
H25 Removal
Two Vessel Lead -Lag Media System
$150,000
Quotation • SysAdvanc
\VWTP RNG Plant
Compression
Compressor and Dehydrator
$0
Quotation - SysAdvanc
1.41WTP RNG Plant
VOC/Siloxane Removal
Filter System
$200,000
Quotation - SysAdvarc
Biogas Upgrading
VPSA System
$2,114,000
Quotation - SysAdvanc
WWTP RNG Plant
V TP RNG Plant
Thermal Cooling
Chiller
SO
Quotation - SysAdvanc.
WWTP Flare Gas
Flare Gas Pipeline
300 LF 6" SS Flare Gas Pipeline
$36,000
RS Means
A%'TP Product Gas
Product Gas Pipeline
1,500 LF4" CS Product Gas Pipeline
537,500
RS Means
Power Supply
Transformer
12KV to 480V Transformer
530,000
RS Means
:':1'VTP M&R Station
Interconnect
Utility Fee
5570,000
Quotation - MAE
Backup Power Generatio
Diesel Generator Sets
D100 GC Diesel Generator
Costs
Freight and taxes
(15%)
Sets
$50,000
Quotation
50%
Factored
Equipment Base
Freight & Taxes
$3,187,500
S478,200
Installation Cost
Demolition, Foundations,
interconnections,
power supply, controls
(6(r ))
mechanical
electrical connections and
and instrumentation
S1,912,500
Factored
Engineering & Permitting
Fees (1O%)
5319,000
Factored
Permitting and Engineering
Construction Management and Commissioning
Construction Management Fees I5Qo)
5159,400
Factored
Contingency
Construction/Overheads
Total Preliminary Estimated Capital
Continency (1O%)
Requirements
$319,000
$3,188,100
56,375,600
Factored
50%
EXHIBIT E TO BIOGAS SUPPLY AGREEMENT