HomeMy WebLinkAboutPlanergy Waterloo, LLC-Ground Lease Agreement-01.02.2007 2, . Ada?- 3
(RESERVED FOR RECORDING DATA)
GROUND LEASE
THIS GROUND LEASE is made and entered into this .2"I day ofi=ei';
200$ between the CITY OF WATERLOO, IOWA, ("Landlord"), and PLANERGY
WATERLOO, LLC, an Iowa limited liability company("Tenant").
Recitals
A. Landlord and Planergy Capital, LLC, ("PC") are parties to that certain Gas
Rights Purchase and Operation Agreement, dated May 1, 2006, as amended (the "Gas
Rights Agreement"), attached hereto as Exhibit A;
B. Pursuant to the Gas Rights Agreement, PC has certain rights to gas which
is the by-product of the anaerobic decomposition of organic materials deposited in the
Waterloo Lagoon Digester consisting primarily of methane and carbon dioxide with
lesser amounts of numerous other gases which rights are set forth in the Gas Rights
Agreement;
C. The Gas Rights Agreement provides that Landlord and PC shall sign a
lease under which Landlord shall lease to PC a two (2) acre portion of the Lagoon Area
under the terms and conditions hereinafter provided; and
D. PC has assigned all of its interests, rights and obligations to Planergy
Waterloo, LLC for the purpose of designing, constructing, owning and operating a gas
processing facility for transportation to a nearby end user.
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NOW, THEREFORE, in consideration of the parties' agreement to enter into the
Gas Agreement, and the mutual covenants and agreements contained herein, and for other
good and valuable consideration the receipt and sufficiency of which each party
acknowledges, Landlord and Tenant hereby agree as follows:
Agreement
1. Leased Premises: Landlord demises and leases to Tenant, and Tenant
leases from Landlord, that certain land described in Exhibit B attached hereto, with
appurtenant easements, if any, (collectively, the "Leased Premises"). Tenant may
propose to add land to the Leased Premises from time to time, provided that Tenant shall
first submit to Landlord a proposal to add and pay rent for such land and shall obtain
Landlord's prior approval of such proposal, which approval shall not be unreasonably
withheld. Upon obtaining Landlord's approval, the parties shall execute an amendment
to this Lease, incorporating the additional land into the Leased Premises and providing
for the agreed upon rental payments.
2. Lease Term: Tenant shall have and hold the Leased Premises for a term
beginning on October 25, 2006, and ending on December 31, 2020, unless extended for
such additional periods as may, from time to time, be agreed upon between the parties or
unless sooner terminated as under the Gas Rights Agreement.
3. Rent: Except as may be required for lands added to the Leased Premises
pursuant to Paragraph 1 above, Tenant shall have no liability for any rent whatsoever
during the term of this Lease or any extension thereof. For any lands added to the Leased
Premises, Tenant shall pay rent as approved by Landlord for those lands in excess of a
total of two (2) acres of Leased Premises and any additions, as stated in the Gas
Agreement.
4. Landlord's Warranties and Covenants: Landlord covenants, represents
and warrants that the Leased Premises, on the date the term begins, shall be free and clear
of all tenancies, whether oral or written, and that Tenant shall have sole and actual
possession of the Leased Premises.
5. Tenant's Covenants: Tenant covenants and agrees as follows:
a. Liens and Encumbrances: Not to allow the Leased Premises at any time
during the term, or any extension thereof, to become subject to any lien, charge or
encumbrance whatsoever, and to indemnify Landlord against all such liens, charges and
encumbrances. However, Tenant reserves the right to bond over any such lien, charge or
encumbrance if allowed by applicable law.
b. Insurance and Indemnity: At its own expense, to insure and keep
insured, from the date of actual possession, the buildings and improvements on the
Leased Premises against loss or damage by fire and other casualties normally covered by
standard fire and extended coverage policies issued by responsible insurance companies
licensed in the state of Iowa. Tenant shall also maintain and keep in force such other
insurance as is required of Tenant under the Gas Rights Agreement.
Tenant further agrees that it will protect, indemnify, and hold Landlord harmless
from and against all liabilities, actions, damages, claims, demands,judgments, losses,
costs, expenses, suits, or actions and attorneys' fees, and will defend Landlord in any suit,
including appeals, for personal injury to, or death of, any person or persons, or loss or
damage to property caused by its willful acts or to the extent of its negligence involving
negligent acts or omissions, or those of its agents, assignees, contractors or employees, in
connection with or as a result of this Lease or the performance of its obligations
hereunder. Landlord shall promptly notify Tenant of the assertion of any claim against
which it is indemnified hereunder, shall give Tenant the opportunity to defend such
claim, and shall not settle such claim without the approval of Tenant.
Notwithstanding any provision in the Lease to the contrary, Tenant may self-
insure for any insurance coverage not required of Tenant under the Gas Rights
Agreement.
c. Repairs: To keep the Leased Premises in a safe and good condition and
repair, subject to ordinary wear and tear and to Landlord's obligations under this Lease, if
any.
d. Utilities: To pay when due all charges for all utility services used on the
Leased Premises.
e. Compliance with Law: Tenant shall comply with all applicable local,
state, and federal laws, statues, ordinances, and regulations; and shall, at its sole expense,
obtain all necessary zoning approvals and permits required to exercise any of the rights
granted to it under this Lease; and shall, at its sole expense, maintain and comply with all
necessary governmental authorizations, permits (including those required from Landlord,
as applicable) and licenses required to conduct its operations under this Lease.
• f. Real Estate Taxes:
i. Tenant shall pay promptly and before they become delinquent all
general real estate taxes, if any, imposed at any time during the term of this Lease,
or any extension thereof, upon or against the Leased Premises by virtue of
Tenant's possession of the Leased Premises and exercise of its rights under this
Lease.
ii. A pro rata adjustment shall be made with respect to the
commencement and ending of Tenant's tax liability if the commencement or
ending of Tenant's liability does not coincide with the tax year.
iii. Tenant shall have the right, in its own name, to make and prosecute
application(s) for abatement of taxes, and Landlord agrees to reasonably
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cooperate with respect thereto. Landlord shall not settle any such application or
appeal without Tenant's prior written approval in each instance.
6. Use, Alterations and Title to Improvements:
a. Use: Tenant's use of the Leased Premises shall be limited solely to the
siting of gas recovery and related facilities as set forth in the Gas Rights Agreement.
b. Improvements: Tenant shall have the right to make alterations, additions
and improvements to the Leased Premises from time to time. All of such alterations,
additions and improvements constructed by Tenant during the term of this Lease and any
extension thereof, shall be and remain the property of Tenant at all times during the term
of this Lease and any extensions or renewals thereof Tenant has authority to make
applications and execute documents to secure permits and all authorizations that may be
required, and Landlord shall reasonably cooperate with respect thereto; provided,
however, that Landlord's duty of reasonable cooperation shall yield to its rights and
obligations to regulate matters within its governmental control and jurisdiction. Tenant
shall have the right to remove any alterations, additions and improvements at any time
during the term of this Lease, or any extension or renewal thereof, and for a period of
seven (7) months after its termination. Within seven (7) months after the expiration or
termination of this Lease, Tenant shall remove or have removed any and all property,
fixtures and improvements which it has placed on, in, or beneath the Leased Premises.
c. Surface Restoration: Within seven (7) months after the expiration or
termination of this Lease, and to the extent reasonably possible, Tenant shall restore or
have restored the Leased Premises affected by the operations of Tenant on the Leased
Premises to its condition at the commencement of this Lease as provided in the Gas
Agreement.
7. Assignment and Subletting: Tenant may sell, encumber, assign, sublet
or transfer this Lease or any interest it may have herein, with the express prior written
consent of Landlord, and the terms, conditions and provisions of this Lease shall extend
and apply to and shall be binding upon the respective successors, assigns and delegates of
Tenant. Notwithstanding the foregoing, Tenant shall have the right to assign this Lease
to Waterloo Gas Cleanup, LLC and/or Waterloo Gas Transport, LLC, limited liability
companies existing under the laws of the State of Iowa, or its affiliate, without the need
for written consent by Landlord. Approval of any other assignment shall not, however,
be unreasonably withheld. Tenant shall promptly deliver to Landlord a copy of any
document evidencing an assignment. Upon assignment of Tenant's interest herein,
Tenant shall be relieved of any and all further obligation of any kind hereunder as to the
interest assigned. Tenant, intending to bind itself and its successors and assigns under
this Lease, agrees that if Tenant should assign this Lease, then Tenant shall
contemporaneously assign to the assignee of this Lease Tenant's interest in the Gas
Rights Agreement.
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8. Holding Over: If Tenant continues to occupy the Leased Premises after
the last day of the term or after the last day of any extension of the term for any purpose
other than removal of its property, fixtures, and improvements as set forth in Section
6(b), and if Landlord elects to accept rent thereafter, a tenancy from month-to-month only
shall be created and not for any longer period. Rent during such holdover period shall be
set by Landlord unless previously agreed upon by the parties.
9. Option to Extend: The term of this Lease may be extended for such
additional periods as may, from time to time,be agreed upon between the parties
pursuant to the Gas Rights Agreement.
10. Tenant's Right of First Refusal to Lease: If at any time during the term
of this Lease or any extension thereof, Landlord desires to accept a bona fide offer
received by it to lease the Leased Premises for a term commencing at or after the
expiration of the term of this Lease or any extension thereof, Landlord shall notify Tenant
of such offer in the manner provided in this Lease for the giving of notice (such notice
shall include executed copies of all relevant documents and the name and address of the
offeror), and Tenant shall have the right to re-let the Leased Premises upon the terms and
conditions of such offer by giving Landlord notice of its election to do so within ninety
(90) days after receipt of Landlord's notice. In the event Tenant fails to notify Landlord
of its election within the ninety (90) day period, Landlord shall have the right to lease the
Leased Premises to any person on the terms and conditions contained in such notice to
Tenant. Tenant's right to re-let the Leased Premises or to any lease extension, pursuant
to this Paragraph 10, for single or multiple years or any combination thereof, shall not
extend for more than twenty-five (25) years beyond the beginning date of the original
term of this Lease.
11. Trade Fixtures, Machinery and Equipment: Landlord agrees that all
trade fixtures, machinery, equipment, furniture or other personal property of whatever
kind and nature kept or installed in the Leased Premises by Tenant or Tenant's subtenants
shall not become the property of Landlord or a part of the realty no matter how affixed to
the Leased Premises and may be removed by Tenant or Tenant's subtenants, in their
discretion, at any time and from time to time during the entire term of this Lease and any
extensions thereof.
12. Landlord's Right of Entry: Tenant will permit Landlord, or its
representatives, to enter the Leased Premises, to examine, inspect and protect the Leased
Premises, or to take any environmental response actions authorized or required by
applicable law or by governing regulatory authority. Landlord shall use reasonable
efforts not to unreasonably interfere with the conduct of Tenant's business, but Landlord
shall in no event be liable to Tenant for any damages in connection with such entry or
installation.
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13. Dispute Resolution:
a. General: The parties agree to attempt to resolve all disputes
informally. If informal resolution is not successful, then the provisions of this Paragraph
13 shall apply.
b. Dispute Resolution: If a dispute arises as to any part of this
Lease, or regarding its implementation, either party may initiate dispute resolution by
providing to the other party a written statement setting forth the matter in dispute, the
positions of the party, and the information the party is relying upon to support its
position. The other party shall provide a written statement of its position within twenty-
one (21) days after receipt of the initial statement. Unless the parties are able to reach a
resolution of the dispute and to reduce such resolution to writing in a form agreed upon
by the parties within twenty-one (21) days after the initiating party receives the statement
of position from the responding party, Landlord shall issue a written decision to Tenant
resolving the dispute that takes into consideration the concerns of each party, and
includes an explanation of the reasons for the decision. Landlord's decision shall be
considered a final administrative action regarding the issue in dispute and may be
appealed to a court of appropriate jurisdiction within fourteen (14) days of the date of
issuance of the decision. Unappealed determinations of Landlord shall govern the
interpretation and implementation of this Lease with respect to the issues resolved by
such determinations. The parties each reserve all rights to seek temporary or permanent
injunctive relief in addition to or in lieu of the use of the provisions of this Lease, in a
court of appropriate jurisdiction, for any emergencies or other matters for which a party
believes it is appropriate to seek injunctive relief.
c. Litigation. The parties hereby consent to the exclusive
jurisdiction and venue of the Iowa District Court for Black Hawk County for the
resolution of any and all disputes between them that are not resolved by the other
procedures set forth in this Section and hereby waive any defense based upon
inconvenient forum.
14. Miscellaneous Provisions:
a. Force Majeure: If Landlord or Tenant is delayed, hindered, or prevented
from performing any act required hereunder by reason of strikes, lockouts, labor troubles,
inability to procure materials, failure of power, restrictive government laws or
regulations, riots, insurrection, war, or other reason beyond its control, then performance
of the act shall be excused for the period of the delay. In that event, the period for the
performance of the act shall be extended for a period equivalent to the period of the
delay.
b. No Personal Recourse: No personal liability shall attach to any of
Tenant's present or future shareholders, officers, or directors, for any obligation
hereunder or in connection herewith. Landlord's liability under this Lease is expressly
limited to the value of Landlord's interest in the Leased Premises and the rents and
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income accruing under this Lease, if any, and neither Landlord nor any of its members,
governors, officers or employees, shall have any other personal liability hereunder.
c. Income Tax Deductions and Credits: So long as this Lease remains in
full force and effect, only Tenant may take deductions and credits on its tax returns for
the buildings, structures, improvements, changes, alterations, repairs, additions and
installations, and for their deprecation or cost recovery.
d. Covenants Running with Land; Binding Effect: All covenants,
conditions, and obligations contained herein or implied by law are covenants running
with the land and shall attach and bind and inure to the benefit of Landlord and Tenant
and their respective heirs, legal representatives, successors, and assigns, except as
otherwise provided herein.
e. Non-waiver: No waiver of a breach of any covenant in this Lease shall be
construed to be a waiver of any succeeding breach of the same covenant. No delay or
failure in one instance by either party to exercise any right under this Lease, and no
partial or single exercise of that right, shall constitute a waiver of that or any other right
or in any other instance, unless otherwise expressly provided herein.
f. Landlord-Tenant Relationship Only: The relationship between the
parties is that of landlord and tenant only. The parties are not partners,joint venturers,
debtor/creditor, or any other relation other than landlord and tenant. Landlord and Tenant
specifically acknowledge that all statutory proceedings regulating the relationship of a
landlord and tenant respecting collection of rent or possession of the premises, apply to
this Lease.
g. Applicable Law: The laws of the State of Iowa(without regard to its
choice of law principles) shall govern the validity, interpretation, construction and
performance of this Lease.
h. Successors, etc: The terms, conditions and covenants of this Lease shall
be binding upon and shall inure to the benefit of each of the parties, their heirs, personal
representatives, successors or assigns, and shall run with the land; and where more than
one party shall be landlords under this Lease, the word "Landlord"whenever used in this
Lease shall be deemed to include all landlords jointly and severally.
Writing: No waivers, alterations or modifications of this Lease or any
agreements in connection with this Lease shall be valid unless in writing duly executed
by both Landlord and Tenant.
j. Notice: If at any time after the execution of this Lease, it shall become
necessary or convenient for one of the parties to serve any notice, demand, or
communication upon the other party, such notice, demand or communication shall be in
writing and shall be deemed to have been properly given and received (i) when delivered
in person to the authorized representative of the party to whom the notice is addressed, or
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(ii) on the date received as indicated on the return receipt when sent by prepaid certified
or registered mail, return receipt requested, to the party to be notified at its address, as
follows:
Mayor Copy to: Superintendent
City of Waterloo Waste Management Services
715 Mulberry Street 3505 Easton Ave.
Waterloo, IA 50703 Waterloo, IA 50702
Fax: 319- 291-4286 Fax: 319 291-4523
If intended for Tenant, the notice shall be addressed to:
Planergy Waterloo, LLC
710 Commerce Drive
Suite 205
Woodbury, MN 55125
Fax: 651 501-7759
or such other address as either party may have furnished to the other in writing as a place
for the service of notice. Notices and consents given by mail shall be deemed to have
been given five (5)business days after the date of mailing; notices and consents given by
any other means shall be deemed to have been given when delivered.
k. Headings: Headings in this Lease are for convenience and reference only
and shall not be used to interpret or construe its provisions.
1. Addenda and Exhibits: Attached hereto are Exhibits A and B, which are
hereby incorporated herein as an integral part of this Lease.
m. Integration: All negotiations, considerations, representations and
understandings between the parties are incorporated in this document.
n. Severability: In the event that any provision of this Lease shall, for any
reason, be determined to be invalid, illegal or unenforceable in any respect, the parties
hereto shall negotiate in good faith and agree as to such amendment, modification or
supplement of or to this Lease, that to the maximum extent practicable in light of such
determinations, implement and give effect to the intentions of the parties as reflected
herein, and other provisions of this Lease shall, as so amended, modified or
supplemented, or other wise affected by such action, remain in full force and effect.
k. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, when taken together, shall constitute
one and the same agreement. Counterpart signatures delivered by facsimile shall be
deemed originals.
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1. Authority. The parties to this Agreement represent and warrant that they
have full authority and capacity to enter into this Agreement.
LANDLORD and TENANT, by their execution below, indicate their consent to
the terms of this Ground Lease.
ATTACHMENTS: Exhibit A—Gas Rights Agreement
Exhibit B —Legal Description
LANDLORD:
CITY OF WATERLOO, IOWA
B
'mothy J. Hu ayor
Attest �
Nancy Lkert, 'ty Clerk
STATE OF IOWA )
) ss:
COUNTY OF BLACK HAWK
Astri
Acknowledged before me on " `' . v , 20067 by Timothy J. Hurley and
Nancy Eckert, as the Mayor and City Clerk, r-spectively, of the City of Waterloo, Iowa.
Oln � , ,
Notar ublic, State of Iowa
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TENANT:
Planergy Waterloo, LLC
By
Title aj; i'
STATE OF MINNESOTA )
(� , ',&J) ss:
COUNTY OF �p„�
On this \ day of December, 200 , before me a notary pulRlic within and for
said ounty and Sta e, personally appeared c\\� \( , the
X6( ��\AO, of Planergy Waterloo, LLC, to m ersonally known,
who, being duly sworn by me on oath, did say that he is the person who signed the
foregoing instrument and acknowledged that he signed the same as his free act and deed
for the uses and purposes therein set forth.
Notary Public (kJ Co ty, MN
LORIE!.WARDYN
.,...? NOTARY PUBLIC My commission expires: 1 I` A too
State of Minnesota
' 4,? ' M Commission bjires 1/31/2007
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GAS RIGHTS PURCHASE AND OPERATION AGREEMENT
This Gas Rights Purchase and Operation Agreement (the "Agreement") is entered into as
of May j ,2006, by and between Planergy Capital LLC, a limited liability corporation
existing under the laws of Minnesota(hereinafter"PC"), and the City of Waterloo, Iowa
("Waterloo").
In consideration of the covenants, obligations and provisions hereinafter contained, PC
and Waterloo hereby agree as follows:
ARTICLE I
DEFINITIONS
"Waterloo Lagoon"means the Waterloo municipally owned anaerobic waste treatment lagoon
facility situated on real estate described on Exhibit A to this Agreement.
"Collection System" means the gas collection system installed at the Waterloo Lagoon designed
specifically to collect waste gas from the Waterloo Lagoon and consisting of several major
components, including but not limited to the following: (a) gas collection system; (b) control
valves and taps; (c) lateral subheader and mainheader piping; (d) condensate collection and
removal system; (e) system meters and controls; (f)the existing flare; and (g) building and
blowers.
"PC Facilities" means the thermal and/or electric and related facilities owned or co-owned by PC
or its assigns to utilize Waste Gas for energy production.
"WG"or"Waste Gas"means gas which is the by-product of the anaerobic decomposition of
organic materials deposited in the Waterloo Lagoon consisting primarily of methane and carbon
dioxide with lesser amounts of numerous other gases.
"SCF"means a standard cubic foot of WG at the temperature and pressure that the Collection
System typically delivers WG.
"mmbtu"means one million British thermal units.
"net mmbtu of methane" means that part of the WG that is methane, excluding all other gases,
compounds, elements, or other components.
ARTICLE II
GAS RIGHTS AND RESPONSIBIILITIES
2.1 Grant of Rights. Waterloo grants to PC the rights to all the WG produced by the waste
deposited in, and recovered from, the Waterloo Lagoon for the term of this Agreement, and any
extension thereof PC and Waterloo hereby agree that PC, as the user/buyer/defacto producer of
the WG under this Agreement, may claim any available credit under the Internal Revenue Code
or other state or federal law with respect to the production of such WG.
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2.2 Delivery of Waste Gas. The parties intend that Waterloo shall operate the Collection
System in order to maintain compliance with applicable Iowa law or any successor standard.
The parties intend that the WG collected shall be metered and delivered to PC,prior to delivery
to the flare, to provide for PC's utilization in the PC Facilities. The WG flow and the methane
content of the WG will be measured pursuant to a mutually acceptable metering system. PC and
Waterloo may elect to have separate monitoring systems for this purpose.
2.3 No Guarantee of Waste Gas Quality or Quantity. Although it is expected that the
Waterloo Lagoon will generate a substantial quantity of gas for a period of several years, the gas
volume and composition may fluctuate over time in relation to the varying amounts and types of
effluent contributed to the Waterloo Lagoon from system users, and therefore neither party
warrants the availability, quantity, quality, or suitability for any purpose of the WG. At the time
of PC Facilities start up, Waterloo will sell the WG, in such quantities as may be available from
time to time, to PC for its thermal and/or electric and related facilities for a payment to Waterloo
of$.60 fixed per net mmbtu of methane, but Waterloo shall not be liable for any costs, damages,
or lost revenues associated with such use, whether the result of environmental response actions,
or any other cause. The WG will be sold to PC "AS IS,"without any scrubbing or pretreatment
of any kind by Waterloo.
2.4 Operation of Collection System. Waterloo shall operate, maintain, and repair the
Collection System in a reasonably prudent manner at its own cost and expense. The parties
acknowledge that the Collection System is currently in existence and that for purposes of this
Agreement Waterloo will not be required to expend additional sums to create,prepare, or
enhance the Collection System to make it useful for PC's purposes or to make it compatible with
the PC Facilities. Waterloo shall use its reasonable efforts in operating the Collection System to
maintain compliance with all applicable Iowa law or any successor standard while optimizing the
generation and collection of WG for PC,provided that Waterloo shall not be required to expand
or improve the Collection System beyond its condition on the date of this Agreement in order to
increase or improve WG collection. PC shall remove and Waterloo shall thereafter dispose of
any condensate generated from the Collection System or from the utilization of the WG recovery
and related facilities. Waterloo shall not be liable for any cost or expense relating to the
construction, operation, maintenance, or demolition or removal of the PC Facilities. Apart from
such expenditures as may be necessary from time to time hereafter to fulfill its duties under this
section to operate, maintain, and repair the Collection System, Waterloo will have no duty to
expend any sum or incur any debt to carry out the purposes of this Agreement.
2.5 Maintenance and Modification of Collection System. Waterloo shall provide any and all
long-term care or maintenance of the Waterloo Lagoon and have the right to expand or otherwise
modify the Collection System at any time at its own expense and shall undertake these activities
in a manner to minimize the impact on the recovery and use of the WG. Except in the case of
unscheduled maintenance or in the case of an emergency, Waterloo will provide PC with notice
at least four(4)hours prior to the shutdown of an essential component of the Collection System.
In the event of unscheduled maintenance or emergency, Waterloo shall provide PC with notice
as soon as possible. Waterloo shall notify PC immediately in the case of any unscheduled
shutdown and of any action taken, including the operation of the gas flare. Before any expansion
or improvement, or any other significant alteration of the Collection System by Waterloo or of
the WG recovery and related facilities, the parties agree to consult each other to jointly review
any proposal and attempt to reach agreement on manner and implementation of the proposal.
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Any structures or fixtures should be designed and located to minimize any potential hazard to the
installed item and response equipment. The parties also agree to consult each other, from time to
time, concerning the general operation and coordination of any activities subject to this
Agreement.
2.6 Operation of PC Facilities. PC shall construct, operate, maintain, and demolish or
remove the PC Facilities at its own cost and expense and shall provide all staffing required for
proper operation of the PC Facilities. The cost of an interconnection to the Collection System of
the Waterloo Lagoon for the benefit of PC's facilities shall be paid solely by PC. In the
construction, operation, maintenance, or demolition or removal of the PC Facilities,PC shall not
in any manner interfere with or cause damage to the Collection System, the Waterloo Lagoon, or
to any user of the municipal wastewater conveyance system either upstream or downstream of
the Waterloo Lagoon. PC shall notify Waterloo forty-eight(48)hours before any scheduled
shutdown or reduction in use of the WG and any action proposed to be taken so Waterloo may
comment upon such action or take other appropriate measures for disposition of the WG,
including operation of the gas flare. Waterloo represents, and PC hereby acknowledges, that
continuous venting of WG from the Waterloo Lagoon is critical to proper operation of the
Waterloo Lagoon. In the absence of any notification from PC, operation of the gas flare shall be
the default operating procedure when the PC Facilities do not, for whatever reason, make use of
the WG. If for whatever reason PC prevents the continuous venting of WG from the Waterloo
Lagoon, and if the Waterloo Lagoon or related facilities owned by Waterloo are in any way
damaged as a result, PC shall be liable for any and all cost or expense of repairing and restoring
the Waterloo Lagoon and related Waterloo facilities to their former condition and operability.
2.7 Connection Valve. The point of transfer from the Collection System to the PC Facilities
will be a T-connection valve placed between the Waterloo Lagoon and the gas flare at a point to
be mutually agreed upon by the parties hereafter, which point may be identified by addendum to
this Agreement. Such valve will serve as the point of transfer for responsibility and risk of loss
by the parties. Any cost or expense of installing or maintaining the connection valve will be
borne solely by PC. The connection valve will be subject to the mutual control of the parties,
subject to and consistent with the intent and objects of this Agreement.
ARTICLE III
TERM
The term of this Agreement is for a period of four(4) years, beginning upon the date that
PC acquires a leasehold interest in the property described in Article IV hereof. In the event that
LS Power or an affiliate chooses not to use the WG in connection with its proposed coal-
powered electric generation facility (the "Plant"), or chooses not to build the Plant, then this
Agreement shall automatically renew for an additional period of ten(10) years. In the event that
construction or completion of the Plant is delayed, then the term of this Agreement will extend
from year to year until the Plant is built. During any extension of the term of this Agreement
beyond the initial term, PC will pay a price for WG to be negotiated by the parties in good faith,
but such price shall be no less than $1.00 fixed per net mmbtu of methane and no more than
$1.50 fixed per net mmbtu of methane for the first five (5)years of any extension term.
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ARTICLE IV
AGREEMENT TO LEASE PROPERTY
PC and Waterloo, as soon as practicable after the time of signing of this Agreement,
shall sign a Lease in a form mutually acceptable to both, which shall lease to PC a portion of
Waterloo land not to exceed two (2) acres in area(the "Leased Premises"). The use of the
Leased Premises shall be limited solely to the siting of the PC Facilities, which may include
electric power generation and co-generation facilities, gas pipelines and facilities, or operations.
It shall also include any other operations not listed above utilizing WG if approved in writing by
Waterloo, which approval shall not be unreasonably withheld. The Leased Premises may not be
used for any other general commercial activity, or for any activity that is open to members of the
general public. Said Lease shall have the same term as this Agreement and extensions thereof.
In the event that this Agreement is terminated,the Lease shall also terminate contemporaneously.
If PC desires to add to the area subject to the Lease, it shall submit for the Waterloo's approval a
proposal to do so together with its proposal to pay adequate rent. A site plan for such addition
shall be developed by PC and submitted to Waterloo for its approval prior to construction of any
improvements. In the event that the Waterloo land is not of sufficient area for proper siting of
the PC Facilities, Waterloo will provide assistance to PC in negotiating PC's lease or purchase of
adjoining land for this purpose.
ARTICLE V
SURRENDER OR TERMINATION WITH CAUSE
5.1 PC's Right to Terminate. At any time during the term of this Agreement and upon ninety
(90) days advance written notice to Waterloo, PC may, in its sole discretion, terminate this
Agreement if the volume of WG being recovered by the Collection System falls below 200,000
SCF per day for more than ninety(90) consecutive days. The termination date shall be effective
ninety (90) days after the date the notice of termination is received by Waterloo. FURTHER,
within 130 days from the signing of this Agreement, PC, for any reason, including but not
limited to inability to obtain equipment or secure a suitable thermal or power sale agreement,
may terminate this Agreement without any liability whatsoever, including any payment for the
WG.
5.2 Waterloo's Right to Terminate.
(a) If at any time during the term of this Agreement Waterloo determines that PC's
activities under this Agreement are in violation of any federal, state, or local laws, statutes,
ordinances, or regulations, Waterloo shall give written notice to PC describing the nature of the
violation and giving PC ninety(90) days from the date of said notice, or such longer period as
may be reasonably necessary, to cure said violation. If PC is unable to correct said violation,
Waterloo may terminate this Agreement by giving PC a written notice of termination. The
termination date shall be effective ninety(90) days after the date the notice of termination is
received by PC. If PC disagrees with the Waterloo determination there is a violation, that any
violation has not been corrected, or that the period of time to correct the violation is sufficient, PC
may submit the matter to arbitration pursuant to the terms of Article XIV hereof.
4
(b) In addition, Waterloo may terminate this Agreement if the PC Facilities are not in
active operation within nine (9)months after the date that PC acquires ownership or a leasehold
interest in real property for siting the PC Facilities. This Agreement will terminate thirty (30)
days after Waterloo gives written notice of termination to PC, unless PC provides to Waterloo
assurances, satisfactory in the reasonable discretion of Waterloo, that active operation will be
achieved within an additional thirty(30) days.
ARTICLE VI
PROPERTY RIGHTS
6.1 Use of Waste Gas. Subject to compliance with all applicable federal, state, and local
laws, statutes, ordinances, and regulations and the receipt of appropriate permits, if any, PC shall
be authorized to use the WG to the extent reasonably necessary or convenient for it to perform its
obligations and enjoy its rights under this Agreement, including the right of piping to transport
WG, to install such fixtures and equipment on the Waterloo site as may be necessary, including
utility poles and piping to support WG use and recovery and related facilities at the Leased
Premises. Notwithstanding anything to the contrary elsewhere in this Agreement, the parties
intend that PC shall use all WG made available to it by Waterloo. PC shall also have, subject to
at least 48 hours' prior notification to Waterloo, the free right of ingress and egress to, from, and
across the Waterloo Lagoon site to access and service the WG transfer and related facilities;
provided, that if PC disturbs or damages the Waterloo Lagoon, then at its own expense PC shall
restore, or have restored, the Waterloo Lagoon to its original condition as soon as possible.
Before installing any such fixture or equipment, PC agrees to consult with Waterloo to jointly
review any proposal and attempt to reach agreement on manner and implementation of the
proposal.
6.2 Other Property Rights. This Agreement shall not be deemed to grant to PC any rights to
or interests in any oil, minerals or substances other than WG produced by the Waterloo Lagoon
site. PC shall surrender all right, title, interest or claim to WG at the Waterloo Lagoon to
Waterloo by either of the following actions: (i) conclusion of the term of this Agreement and any
extensions, pursuant to Article III; or (ii)termination of this Agreement, pursuant to Article V.
6.3 Use of Alternate Fuels. PC shall have the right to use alternate fuels, including but not
limited to natural gas or propane, for the operation of the PC Facilities to be located on the
Leased Premises described in Article IV, if an adequate amount of WG from the Waterloo
Lagoon is not available. PC shall solely bear all cost or expense of purchasing any alternate
fuels and delivering them to the PC Facilities.
ARTICLE VII
REMOVAL AND RESTORATION
7.1 Removal of Facilities. Within six (6)months after the expiration or termination date of
this Agreement, PC shall remove or have removed any above-ground property, fixtures and
improvements which it has placed on the Waterloo Lagoon site (including the Leased Premises
described in Article IV). PC grants to Waterloo a right of first refusal to purchase said above-
ground equipment fixtures and improvements and PC agrees that if a bona fide offer to purchase
5
from a third party is received by PC then PC shall promptly give written notice of such offer to
Waterloo, and Waterloo shall have ninety(90) days from receipt of such notice to notify PC in
writing of Waterloo's election either(i)to purchase said property, fixtures and improvements, by
matching the bona fide offer noted above, or(ii)to decline such purchase. The failure of
Waterloo to notify PC within said ninety (90) days shall be deemed an election by Waterloo to
decline said purchase. In any event, if PC has a use or a need for any of the improvements or
equipment defined herein at other gas recovery locations it may remove the equipment without
an option to Waterloo to purchase such improvements or equipment. If the PC Facilities, or any
part thereof, remain on the Leased Premises after the date that is six (6)months following the
expiration or termination date of this Agreement, such fixtures and personal property shall be
deemed abandoned by Planergy and shall become the sole property of Waterloo.
7.2 Surface Restoration. Within six (6) months after the expiration or termination of this
Agreement, and to the extent reasonably possible, PC shall restore or have restored the Leased
Premises affected by the operations of PC on the Leased Premises to its condition at the
commencement of this Agreement; provided, however, that if PC has removed structure from
the Leased Premises, PC need not restore such structures but shall, instead, remove all
foundations and grade the site to contours matching the surrounding area.
7.3 Default by PC. If PC fails to discharge its obligations under this Article VII, then
Planergy shall be liable for any cost or expense incurred by Waterloo to remove the PC Facilities
or any part thereof, to dispose of any fixtures, equipment, or other personal property, and/or to
restore the Leased Premises to its condition as of the date of this Agreement. In such event, PC
shall also be liable to reimburse Waterloo for its reasonable attorneys' fees in connection with
such activities and/or in any lawsuit to recover such costs and expenses.
ARTICLE VIII
COMPLIANCE OF OPERATIONS WITH LAW
8.1 PC Shall Comply. PC shall comply with all applicable local, state, and federal laws,
statutes, ordinances, and regulations and shall at its sole expense obtain all necessary zoning and
permits required to exercise any of the rights granted to it under this Agreement, and shall, at its
sole expense, maintain and comply with all necessary governmental authorizations,permits and
licenses required to conduct operations under this Agreement.
8.2 Waterloo Has No Obligation. Waterloo shall have no obligation for the operation,repair,
maintenance, or alteration of any equipment or facilities used by PC in its utilization of WG in
thermal and/or electric and related facilities or the compliance of the same with local, state, and
federal laws, statutes, ordinances, and regulations.
6
• 1. •
ARTICLE IX
INDEMNIFICATION
PC agrees that it will protect, indemnify, and hold Waterloo harmless from any liabilities,
actions, damages, claims, demands,judgments, losses, costs, expense, suits or actions and
attorneys' fees, and will defend Waterloo in any suit, including appeals, for personal injury to, or
death of, any person or persons, or loss or damage to property caused by willful acts or to the
extent of its negligence involving negligent acts or omissions, or those of its agents, assignees,
contractors or employees, in connection with or as a result of this Agreement or the performance
of its obligations hereunder. Waterloo shall promptly notify PC of the assertion of any claim
against which it is indemnified hereunder, shall give PC the opportunity to defend such claim,
and shall not settle such claim without the approval PC.
ARTICLE X
REQUIRED INSURANCE
PC shall, at its own cost and expense, furnish Waterloo with a Certificate(s) of Insurance
and evidence of renewal indicating proof of all the following insurance from companies licensed
to do business in the State of Iowa for the full term of this agreement:
(a) Worker's compensation in compliance with the Iowa workers' compensation law,
Iowa Code chapters 85 et seq.
(b) General Liability Insurance with a minimum combined single limit of liability per
occurrence for bodily injury and property damage of$3,000,000, and$5,000,000
annual aggregate. This insurance shall include on the Certificate of Insurance the
following coverage:
(1) Premises- Operations
(2) Products and Completed Operations
(3) Broad Form Property Damage
(4) Blanket Contractual
(5) Personal Injury
(6) Professional Liability, if applicable
(c)Automobile Liability Insurance with a minimum combined single limit of liability
per occurrence of$1,000,000 for bodily injury and property damage. This
insurance shall include bodily injury and property damage for the following
coverage:
(1) Owned Automobiles, if applicable
(2) Hired Automobiles
(3) Non-Owned Automobiles
Such insurance shall include Waterloo as an additional insured. Such insurance shall
include a thirty(30) day written notice to Waterloo prior to cancellation or a material policy
change. PC and its affiliates and subcontractors shall furnish identical certificates of insurance to
Waterloo prior to doing any work at the Waterloo Lagoon site. PC agrees that, notwithstanding
the policy limits stated above,policy limits shall be increased upon any renewal or extension of
the term of this Agreement to adjust for inflation, to take account of special or increased risks not
currently contemplated by the parties, or to conform to standard industry practice, if necessary.
7
ARTICLE XI
ASSIGNMENT
PC may sell, encumber, assign or transfer this Agreement or any interest it may have
herein, with the express prior written consent of the Waterloo, and the terms, conditions and
provisions of this Agreement shall extend and apply to and shall be binding upon the respective
successors, assigns and delegates of PC. Notwithstanding the foregoing, PC shall have the right
to assign this Agreement to Planergy Waterloo, Inc., a corporation existing under the laws of the
State of Minnesota, or its affiliate, without the need for written consent by Waterloo. Approval
of any other assignment shall not, however, be unreasonably withheld. Upon assignment of PC's
interest herein, PC shall be relieved of any and all future obligations of any kind hereunder as to
the interest assigned.
ARTICLE XII
NOTICES
Any notice, designation, consent, approval, invoice, or other communication that is
required, permitted or otherwise delivered under this Agreement shall be in writing and shall be
deemed to have been properly given and received (i) when delivered in person to the authorized
representative of the party to whom the notice is addressed, or(ii) on the date received as
indicated on the return receipt when sent by prepaid certified or registered mail, return receipt
requested, to the party to be notified at its address, as follows:
If to Waterloo: Mayor Copy to: Superintendent
City of Waterloo Waste Management Services
715 Mulberry Street 3505 Easton Avenue
Waterloo, IA 50703 Waterloo, IA 50702
Fax: 319-291-4286 Fax: 319-291-4523
If to PC: James Sprangers
710 Commerce Drive
Woodbury, MN 55125
Fax: 651 501-7759
Either party may change such representative or address by written notice of said change of
representative or address given to the other party. Notices and consents given by mail shall have
deemed to have been given five (5) business days after the date of mailing; notices and consent
given by any other means shall be deemed to have been given when delivered.
ARTICLE XIII
TAXES PAID BY PC
PC shall, during the term of this Agreement, be responsible for all general real estate taxes,
all special assessments, and all other taxes or levies of any type or nature whatsoever that may be
8
imposed upon or against the Leased Premises or fixtures or personal property located thereon.
Waterloo shall not levy any tax or fee on the WG.
ARTICLE XIV
DISPUTE RESOLUTION
14.1 General. The parties agree to attempt to resolve all disputes informally within thirty(30)
days. If informal resolution is not successful, then the provisions of this Article shall apply.
14.2 Dispute Resolution. If a dispute arises as to any part of this Agreement, or regarding the
implementation, either party may initiate dispute resolution by providing to the other party a
written statement setting forth the matter in dispute, the positions of the party, and the
information the party is relying upon to support its position. The other party shall provide a
written statement of its position within twenty-one (21)days after receipt of the initial statement.
Unless the parties are able to reach a resolution of the dispute and to reduce such resolution to
writing in a form agreed upon by the parties within twenty-one (21) days after the initiating party
receives the statement of position from the responding party, Waterloo shall issue a written
decision to PC resolving the dispute that takes into consideration the concerns of each party, and
includes an explanation of the reasons for the decision. Waterloo's decision shall be considered a
final administrative action regarding the issue in dispute and may be appealed to a court of
appropriate jurisdiction within fourteen(14) days of the date of issuance of the decision.
Unappealed determinations of Waterloo shall govern the interpretation and implementation of
this Agreement with respect to the issues resolved by such determinations. The parties each
reserve all rights to seek temporary or permanent injunctive relief in addition to or in lieu of the
use of the provisions of this Agreement, in a court of appropriate jurisdiction, for all emergencies
or other matters for which a party believes it is appropriate to seek injunctive relief
14.3 Litigation. The parties hereby consent to the exclusive jurisdiction and venue of the Iowa
District Court for Black Hawk County for the resolution of any and all disputes between them
that are not resolved by the other procedures set forth in this Article and hereby waive any
defense based upon inconvenient forum.
ARTICLE XV
GENERAL PROVISIONS
15.1 Applicable Law. The laws of Iowa (without regard to its choice of law principles) shall
govern the validity, interpretation, construction and performance of this Agreement.
15.2 Relationship of the Parties. Neither party to this Agreement shall have any responsibility
whatsoever with respect to services provided or contractual obligations assumed by the other
party, and nothing in this Agreement shall constitute or be deemed to constitute one party the
partner, agent or legal representative of the other party or to create any fiduciary relationship
between the parties.
15.3 Severability. In the event that any provision of this Agreement shall, for any reason, be
determined be invalid, illegal or unenforceable in any respect, the parties hereto shall negotiate
9
in good faith and agree as to such amendment, modification or supplement of or to this
Agreement, that to the, maximum extent practicable in light of such determinations, implement
and give effect to the intentions of the parties as reflected herein, and other provisions of this
Agreement shall, as amended,modified or supplemented, or otherwise affected by such action,
remain in full force and effect. If, for any reason, a court finds that any provision of this
Agreement is invalid, illegal, or unenforceable as written, but that by limiting such provision it
would become valid, legal, and enforceable, then such provision shall be deemed to be written
and shall be construed and enforced as so limited.
15.4 Entire Agreement; Amendment. This Agreement and the exhibits hereto represent the
entire agreement between the parties with respect to the subject matter hereof and supersede all
prior and contemporaneous oral and written agreements and discussions. This Agreement may
be amended only by an agreement in writing signed by the parties.
15.5 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of
the parties and the respective successors and assigns of each.
15.6 Captions. The title or captions of paragraphs in this Agreement are provided for
convenience of reference only and shall not be considered a part hereof for purposes of
interpreting or applying this Agreement, and such titles or captions do not define, limit, extend,
explain, or describe the scope or extent of this Agreement or any of its terms or conditions.
15.7 Time of Essence. Time is of the essence with respect to performance of the terms of this
Agreement.
15.8 Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, when taken together, shall constitute one and the same
agreement. Counterpart signatures delivered by facsimile shall be deemed originals.
15.9 Authority. The parties to this Agreement represent and warrant that they have full
authority and capacity to enter into this Agreement.
IN WITNESS WHEREOF, the parties have executed this Gas Rights Purchase and
Operation Agreement as of the date first set forth above.
CITY OF WATERLOO, IOWA PLANERGY CAPITAL LLC
By: By:
Timothy J. Hur ayor Title: t
Attest
Nancy Eckert, ity Clerk
10
•
•
EXHIBIT B
Legal Description of Leased Premises
See attached "Exhibit of Leased Property" and aerial depiction.
•
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