Exhibit 10.7

Execution Version

POWER PURCHASE AGREEMENT

by and between

FIRE ISLAND WIND, LLC,

as Seller

and

CHUGACH ELECTRIC ASSOCIATION, INC.

as Buyer

Dated as of June 21, 2011

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TABLE OF CONTENTS

 

         Page  

ARTICLE 1 DEFINITIONS

     2   

1.1

 

Definitions

     2   

1.2

 

Rules of Construction

     9   

ARTICLE 2 CONDITIONS PRECEDENT

     10   

2.1

 

Buyer’s Conditions Precedent

     10   

2.2

 

Buyer’s Right to Terminate

     10   

2.3

 

Seller’s Conditions Precedent

     10   

ARTICLE 3 TERM

     11   

3.1

 

Term

     11   

ARTICLE 4 DEVELOPMENT AND OPERATION OF THE PROJECT

     11   

4.1

 

Project

     11   

4.2

 

Buyer’s Rights and Obligations During Construction

     12   

4.3

 

Commercial Operation Date

     12   

4.4

 

Standard of Operation

     12   

4.5

 

Outages

     12   

4.6

 

Metering

     13   

4.7

 

Ramp Rate

     14   

ARTICLE 5 PURCHASE OF ENERGY BY BUYER

     14   

5.1

 

Sale and Purchase Obligations

     14   

5.2

 

Deliveries

     14   

5.3

 

Green-e Standard

     14   

5.4

 

Renewable Portfolio Standard

     14   

5.5

 

Contract Price

     14   

5.6

 

Curtailments

     14   

5.7

 

Prices Not Subject to Review

     15   

5.8

 

Title and Risk of Loss

     15   

5.9

 

Transmission and Ancillary Services

     15   

5.10

 

Taxes

     16   

5.11

 

System Supply Energy

     16   

5.12

 

Scheduling/Forecasts

     16   

5.13

 

Failure to Achieve Guaranteed 24-Month Quantity

     17   

ARTICLE 6 REPRESENTATIONS AND WARRANTIES

     17   

6.1

 

Representations and Warranties

     17   

6.2

 

No Other Representations and Warranties

     18   

ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES; TERMINATION

     18   

7.1

 

Events of Default

     18   

7.2

 

Termination Upon an Event of Default

     19   

 

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TABLE OF CONTENTS

(Continued)

 

         Page  

ARTICLE 8 BILLING AND PAYMENT; RECORDS

     20   

8.1

 

Billing and Payment

     20   

8.2

 

Interest on Late Payments

     20   

8.3

 

Disputed Amounts

     20   

8.4

 

Records

     21   

8.5

 

Audit

     21   

ARTICLE 9 ASSIGNMENT; BINDING EFFECT

     21   

9.1

 

Assignment

     21   

9.2

 

Change in Control

     22   

9.3

 

Binding Effect

     22   

ARTICLE 10 FORCE MAJEURE; INDEMNITY; LIMITATION OF LIABILITY

     22   

10.1

 

Force Majeure

     22   

10.2

 

Applicability of Force Majeure

     23   

10.3

 

Limitations on Effect of Force Majeure

     23   

10.4

 

Indemnification

     23   

10.5

 

Limitations of Remedies, Liability and Damages

     24   

10.6

 

Duty to Mitigate

     25   

ARTICLE 11 CONFIDENTIALITY

     25   

11.1

 

Confidentiality

     25   

11.2

 

Disclosure

     25   

11.3

 

Injunctive Relief

     25   

ARTICLE 12 SECURITY

     25   

12.1

 

Security

     25   

ARTICLE 13 NOTICES AND ADDRESSES FOR PAYMENT

     26   

13.1

 

Notices

     26   

ARTICLE 14 DISPUTES

     27   

14.1

 

Negotiations

     27   

14.2

 

Settlement Discussions

     27   

14.3

 

Preliminary Injunctive Relief

     28   

14.4

 

Confidential Proceedings

     28   

ARTICLE 15 MISCELLANEOUS

     28   

15.1

 

Grants and Incentives

     28   

15.2

 

Forward Contract

     28   

15.3

 

Entirety

     28   

15.4

 

Choice of Law and Forum

     28   

15.5

 

Non-Waiver

     28   

 

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TABLE OF CONTENTS

(Continued)

 

         Page  

15.6

 

Headings; Attachments

     28   

15.7

 

Counterparts

     29   

15.8

 

Partial Invalidity

     29   

15.9

 

Other

     29   

15.10

 

Insurance

     29   

15.11

 

No Third Party Beneficiaries

     29   

15.12

 

Relationship of the Parties

     29   

Exhibits

 

Exhibit A    Project Description Exhibit B    Seller’s Insurance Requirements
Exhibit C    Form of Commercial Operation Certificate Exhibit D    Notice
Addresses Exhibit E    Construction Schedule

 

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POWER PURCHASE AGREEMENT

This POWER PURCHASE AGREEMENT is entered into as of the 21st day of June, 2011
(the “Effective Date”), by and between FIRE ISLAND WIND, LLC, a Delaware limited
liability company (“Seller”), and CHUGACH ELECTRIC ASSOCIATION, INC., an Alaska
electric cooperative (“Buyer”), each of which are herein sometimes referred to
individually as a “Party” and collectively as the “Parties.”

RECITALS

A. Seller desires to build a wind generation facility known as the “Fire Island
Wind Project,” which will include eleven (11) General Electric 1.6xle wind
turbine generators (or a comparable successor model), with a total nameplate
output capability of seventeen and six tenths (17.6) MW, to be located on the
Premises (as defined herein) and further described in Exhibit A hereto (the
“Project”).

B. Transmission System Owner and Seller or an Affiliate of Seller will enter
into a Transmission Facilities Construction Agreement (“Transmission
Construction Agreement”) pursuant to which Seller or an Affiliate of Seller will
construct, and Transmission System Owner will own, the AIA-FI Transmission
System (as defined herein).

C. Transmission System Owner and Seller will enter into an Interconnection and
Integration Agreement, which shall set forth the terms and conditions with
respect to the interconnection and integration of the Project with the
Transmission System (the “Interconnection and Integration Agreement”).

D. Seller has agreed to commit one hundred percent (100%) of the electric energy
output of the Project and the associated Project Capacity and Credits (as
defined herein) to be sold pursuant to the terms of this Agreement to Buyer,
with the understanding that between ten and one half percent (10.5%) and
eighteen percent (18%) of the electric energy output of the Project and the
associated Project Capacity and Credits shall be assigned to a qualified
purchaser other than Buyer as described herein.

E. Buyer wishes to purchase its share and assign the remainder, and Seller
wishes to sell, the Net Electric Energy (as defined herein) and associated
Project Capacity and Credits from the Project in accordance with the terms
hereof.

 

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AGREEMENT

NOW THEREFORE, in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Buyer agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below. Certain other capitalized terms are defined
where they appear in this Agreement.

“Affiliate” means any Person that directly or indirectly, through one of more
intermediaries, controls or is controlled by or is under common control with the
Person specified. For purposes of this definition, control of a Person means the
power, direct or indirect, to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise, or ownership of
fifty percent (50%) or more of the voting securities or interests of another
Person.

“Agreement” means this Power Purchase Agreement, together with all exhibits and
appendices hereto.

“AIA-FI Transmission System” means the 34.5 kV transmission system, including
two (2) submarine circuits and two (2) land-based circuits, between the
Transmission System Owner’s International Substation and the Delivery Point.

“ASCC Planning and Operating Guidelines” means the Alaska Systems Coordinating
Council Planning Guidelines and Operating Standards, dated 1992, as such may be
amended, modified, and replaced from time to time.

“Business Day” means any day on which banks in Alaska are open for business,
beginning at 8:00 a.m. and ending at 5:00 p.m. local time in Anchorage, Alaska.

“Buyer” shall have the meaning set forth in the preamble to this Agreement.

“Buyer’s Guaranty” means a guaranty, in form and substance reasonably
satisfactory to Seller, from a Qualified Issuer or other guarantor reasonably
satisfactory to Seller, in favor of Seller, which guarantees Buyer’s performance
and payment obligations under this Agreement, which is capped at the Required
Security Amount or which in combination with any other form of Buyer Security
equals an amount equal to the Required Security Amount.

“Buyer’s Security” means, with respect to Buyer:

(a) a letter of credit from a Qualified Issuer in form and substance reasonably
satisfactory to Seller in a face amount equal to the Required Security Amount;

(b) cash (in immediately available funds) in the Required Security Amount, which
cash must be delivered to a Custodian to be held by the Custodian as security
for Seller pursuant to an escrow agreement reasonably satisfactory in form and
substance to the Parties;

(c) Buyer’s Guaranty; or

 

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(d) a combination of any of the above that provides security to Seller in a
total amount equal to the Required Security Amount.

“Cash Grant” means the grants pursuant to Section 1603 of the American Recovery
and Reinvestment Act of 2009, Pub. L. 111-5.

“Change in Control” means, solely with respect to Seller: (i) a transfer of a
majority of the ownership interests in Seller to an unaffiliated third party; or
(ii) any consolidation or merger of Seller in which Seller is not the continuing
or surviving entity, other than a consolidation or merger of an entity in which
the holder of such entity’s membership interests immediately before the
consolidation or merger shall, upon consummation of the consolidation or merger,
owns at least fifty percent (50%) of the equity of the surviving entity. A
Change of Control shall not be deemed to have occurred as a result of any
financing of the Facility by Affiliates of Seller or a non-controlling equity
investment in Seller.

“CIRI” means Cook Inlet Region, Inc.

“Close of the Business Day” means 5:00 p.m. local time in Anchorage, Alaska on a
Business Day.

“Commercial Operation” means, with respect to any Project Turbine: (i) such
Project Turbine has been interconnected and Placed in Service with a written
confirmation from a qualified independent engineer, (ii) the Interconnection and
Integration Agreement has been executed, (iii) such Project Turbine has been
tested according to the manufacturer’s commissioning procedures and Prudent Wind
Generation Industry Practices, (iv) all related facilities and rights necessary
for continuous operation of such Project Turbine and the sale of Net Electric
Energy from such Project Turbine and the associated Project Capacity and Credits
have been completed, and (v) and each of the foregoing items (i)-(iv) have been
evidenced by Seller’s Commercial Operation Certificate delivered to Buyer.

“Commercial Operation Certificate” means the certificate(s) substantially in the
form attached hereto as Exhibit C submitted to Buyer pursuant to Section 4.3
when Seller determines a Project Turbine has achieved Commercial Operation.

“Commercial Operation Date” means, in accordance with Section 4.3, the earlier
of (i) the first calendar day following receipt by Buyer of notice from Seller
that at least nine (9) of the Project Turbines have achieved Commercial
Operation, or (ii) December 31, 2012.

“Compensable Deemed Generated Energy” means all Deemed Generated Energy that
accrues during Emergency Curtailments and Operational Curtailments, but not
Force Majeure Curtailments.

“Confidential Business Information” shall have the meaning set forth in
Section 11.1.

“Construction Schedule” means the construction schedule attached as Exhibit E
hereto, which Seller may update from time to time by notice thereof to Buyer.

“Contract Price” shall mean One Hundred Seven Dollars and 85/100th Dollars
($107.85) per MWh.

 

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“Contract Year” means (i) for the first Contract Year, the period beginning on
the Commercial Operation Date and ending on the following December 31, (ii) for
every subsequent Contract Year (except the last Contract Year), each year
beginning on January 1 and ending on December 31, and (iii) for the last
Contract Year, the period beginning on January 1 of the last year of the Term
and ending on the date of expiration or termination of the Agreement.

“Credits” means any credits, credit certificates, environmental air quality
credits, offsets, allowances or similar items such as those for greenhouse gas
reduction, or the generation of green power or renewable energy, as well as any
renewable energy credits (RECs) certified under the Green-e Standard, tradable
generation rights (TGRs), pollution/emission credits or other associated
benefits, in each case created and defined by a Governmental Entity and
associated with Net Electric Energy, but specifically excluding (i) any Tax
Credits, or (ii) any credits otherwise qualifying under this definition that are
not transferable by Seller to Buyer, that would require Seller to incur material
transaction costs in order to transfer them, unless Buyer pays or reimburses
such costs, or that would require Seller to change the operation of the Project
in order to realize such credit, or (iii) any credits that are solely available
to a wind energy facility located on real property owned by a Native American
entity, unless any such Credit described in this clause (iii) is the only Credit
available for any MWh of Net Electric Energy. One (1) Credit is associated with
one (1) MWh of Net Electric Energy.

“Curtailment” means an Operational Curtailment, Emergency Curtailment or Force
Majeure Curtailment.

“Custodian” means an institutional bank or other Person mutually agreeable to
the Parties.

“Deemed Generated Energy” means the quantity of electric energy, expressed in
MWh, that would have been produced by the Project and delivered to the Delivery
Point during any period, determined by taking into account (i) during such
period, the actual 10-minute wind speeds (interpolated over time intervals, if
necessary) measured by wind monitoring equipment located on each Project Turbine
that was available for operation immediately prior to the commencement of the
period in question and expected to be available for the duration of the period
in question or prorated accordingly, or, if such monitoring equipment is
unavailable during a relevant interval, then using other available data or
interpolated data determined using industry standard practices, and (ii) the
generation determined by the power curve provided by the manufacturer of the
Project Turbines reflecting the energy that would be produced by a Project
Turbine at all operational speeds, as applied to the wind speeds referred to in
clause (i), as adjusted for line losses to the Delivery Point, using historical
data compiled by Seller.

“Defending Party” shall have the meaning set forth in Section 10.4(c).

“Delivery Point” means the point where the Project is interconnected with the
Transmission System at the high side of the Project collector 34.5 kV bus on
Fire Island, Alaska.

“Dispute” shall have the meaning set forth in Section 14.1.

“Dispute Notice” shall have the meaning set forth in Section 14.1.

 

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“Effective Date” shall have the meaning set forth in the preamble to this
Agreement.

“Emergency” means any circumstance or combination of circumstances or any
condition affecting the Interconnection Facilities or the Transmission System
(i) reasonably likely to endanger life or property and necessitates immediate
action to avert injury to persons or serious damage to property, or
(ii) reasonably likely to adversely affect, degrade or impair Transmission
System reliability.

“Emergency Curtailment” means any curtailments of all or part of Seller’s
deliveries of Net Electric Energy directed by Buyer due to an Emergency to
(i) preserve public health and safety, (ii) preserve the reliability or security
of, and avoid adverse impacts to, the Transmission System or Interconnection
Facilities, (iii) limit or prevent damage, and (iv) expedite restoration of
service.

“Financial Closing” means the closing of construction financing provided to, or
for the benefit of, Seller for the Project.

“Force Majeure” shall have the meaning set forth in Section 10.1(a).

“Force Majeure Curtailment” means a curtailment of all or part of Seller’s
deliveries of Net Electric Energy directed by Buyer due to a Force Majeure that
causes Buyer to be unable to receive the Net Electric Energy at the Delivery
Point.

“Forced Outage” means any condition at the Project that requires immediate
removal of the Project, or some part thereof, from service, another outage
state, or a reserve shutdown state. This type of outage results from immediate
mechanical/electrical/hydraulic control system trips and operator-initiated
trips in response to Project conditions and/or alarms.

“Governmental Entity” means any national, state or local government, any
political subdivision thereof or any other governmental, judicial, public or
statutory instrumentality, authority, board, commission, department, division,
body, agency, bureau or entity, any of which has the authority to bind a Party
at Law.

“Green-e Standard” shall have the meaning set forth in Section 5.3.

“Guaranteed 24-Month Quantity” means, for each Two-Contract Year Period, one
hundred fifty percent (150%) of the combined P50 Output for such Two-Contract
Year Period.

“Guaranty” means (i) with respect to Buyer, a Buyer’s Guaranty, and (ii) with
respect to Seller, a Seller’s Guaranty.

“Indemnified Party” shall have the meaning set forth in Section 10.4(c).

“Indemnifying Party” shall have the meaning set forth in Section 10.4(c).

“Interconnection and Integration Agreement” shall have the meaning set forth in
the Recitals.

 

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“Interest Rate” means, on any date of determination, the (i) per annum rate of
interest equal to the prime lending rate as may from time to time be published
in The Wall Street Journal under “Money Rates” (the average thereof, if there is
a range of such rates) as of such date of determination, plus (ii) three percent
(3%); provided, that the Interest Rate shall never exceed the maximum rate
permitted by Law.

“kV” means kilovolt.

“Law” means all applicable laws and treaties, judgments, decrees, injunctions,
writs and orders of any court or Governmental Entity, and rules, regulations,
orders, ordinances, licenses and permits of any Governmental Entity.

“Liabilities” shall have the meaning set forth in Section 10.4(a).

“Maintenance Outage” means the removal of the Project or any portion thereof
from service to perform work on specific components, that will result in an
interruption in delivery of Net Electric Energy to Buyer, at a time when the
Project or any such portion must be removed from service before the next Planned
Outage in the interest of safety or the prevention of injury or undue wear and
tear on the Project or such portion thereof.

“Material Event” shall have the meaning set forth in Section 12.1(d).

“Month” means one calendar month.

“Moody’s” means Moody’s Investor Services, Inc., and any successor thereto.

“MW” means megawatt.

“MWh” means megawatt-hour.

“Net Electric Energy” means the electric energy generated by the Project
Turbines by means of wind generation, delivered to the Delivery Point, excluding
electric energy used in the operation of the Project and excluding electrical
losses up to the Delivery Point.

“NERC” means North American Electric Reliability Corporation.

“Non-Defending Party” shall have the meaning set forth in Section 10.4(c).

“Obligee” shall have the meaning set forth in Section 12.1(c).

“Obligor” shall have the meaning set forth in Section 12.1(c).

“Operating Procedures” means the protocols and procedures agreed to by the
Parties prior to the Commercial Operation Date for the nature and extent of
information to be supplied to Buyer by Seller in connection with the scheduling
of the Project and the procedures for scheduling and Curtailment of the Project.

 

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“Operational Curtailment” means any curtailment directed by Buyer of all or part
of Seller’s deliveries of Net Electric Energy, except for a Force Majeure
Curtailment or an Emergency Curtailment.

“P50 Output” means the amount of Net Electric Energy expected to be available
for delivery to the Delivery Point during the applicable Contract Year, with a
probability of exceedence of 50%, as calculated by a recognized wind expert to
be selected by Seller, and established as of the Commercial Operation Date and
updated as of the date of Commercial Operation of the last remaining Project
Turbine.

“Party” shall have the meaning set forth in the preamble to this Agreement.

“Person” means any individual, entity, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust,
association or other entity or Governmental Entity.

“Placed in Service” means “placed in service” as defined in Section 45 of the
Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder.

“Planned Outage” means the removal of the Project from service to perform work
on specific components that will result in an interruption in delivery of Net
Electric Energy to Buyer (e.g., for annual overhaul, inspections or testing).

“Premises” means that certain real property located on Fire Island in Anchorage,
Alaska, as more particularly described on Exhibit A hereto, on which the Project
Turbines will be installed.

“Production Tax Credit” or “PTC” means the per kWh tax credit available to
eligible wind generators under Section 45 of the Internal Revenue Code of 1986.

“Project” shall have the meaning set forth in the Recitals hereto as described
in Exhibit A.

“Project Capacity” means the total nameplate power output capability of the
Project, expressed in MW.

“Project Turbines” means, collectively, the eleven (11) General Electric 1.6xle
wind turbine generators (or a comparable successor model), to be installed on
the Premises, each with the following GE-provided packages: (i) Cold Weather
Extreme; (ii) Seismic towers, (iii) Inertia Control, (iv) WindCONTROL,
(v) WindRide-THRU, (vi) Voltage Control, and (vii) Ramp rate control.

“Prudent Wind Generation Industry Practices” means the practices, methods, and
acts engaged in or approved by a significant portion of the wind energy
generation industry for wind facilities similar to the Project and in a similar
location and with wind characteristics similar to the Project that, at a
particular time, in the exercise of reasonable judgment in light of the facts
known or that should reasonably have been known at the time a decision was made,
would have been expected to accomplish the desired result in a manner consistent
with Law, codes, standards, equipment manufacturers’ recommendations,
reliability, safety, environmental

 

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protection, economy, and expedition. With respect to the Project, Prudent Wind
Generation Industry Practices is not intended to be limited to the optimum
practice, method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts.

“Qualified Issuer” means a financial institution either organized under the laws
of the United States or a State therein or a United States branch of a foreign
financial institution, in each case, that has a current long-term credit rating
(corporate or long-term senior unsecured debt) of (1) “Baa3” or higher by
Moody’s; and (2) “BBB-” or higher by S&P.

“RCA” means the Regulatory Commission of Alaska.

“RCA Approval” means a final and non-appealable order by the RCA without
material modification or conditions.

“Required Security Amount” means, (i) with respect to Seller’s Security,
(A) prior to January 1, 2013, Five Hundred Thousand Dollars ($500,000), and
(B) from January 1, 2013, until the expiration or termination of this Agreement,
One Million Dollars ($1,000,000), and (ii) with respect to Buyer’s Security, if
Buyer’s credit rating (corporate or long-term senior unsecured debt) is below
BBB- by Standard & Poor’s or Baa3 by Moody’s, One Million Dollars ($1,000,000).

“RPS” shall have the meaning set forth in Section 5.4.

“S&P” means Standard & Poor’s Ratings Group (a division of The McGraw-Hill
Companies, Inc.), and any successor thereto.

“Security” means, (i) with respect to Buyer, Buyer’s Security, and (ii) with
respect to Seller, Seller’s Security.

“Seller” shall have the meaning set forth in the preamble to this Agreement.

“Seller’s Guaranty” means a guaranty, in form and substance reasonably
satisfactory to Buyer, from a Qualified Issuer or other guarantor reasonably
satisfactory to Buyer, in favor of Buyer, which guarantees the payment and
performance obligations of Seller, which is capped at the Required Security
Amount.

“Seller’s Security” means, with respect to Seller:

(a) a letter of credit in form and substance reasonably satisfactory to Buyer in
a face amount equal to the Required Security Amount;

(b) cash (in immediately available funds) in the Required Security Amount, which
cash must be delivered to a Custodian to be held by the Custodian as security
for Buyer pursuant to an escrow agreement reasonably satisfactory in form and
substance to the Parties;

(c) Seller’s Guaranty; or

 

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(d) a combination of any of the above that provides security to Buyer in a total
amount equal to the Required Security Amount.

“Tax Credits” means any state, local and federal production tax credit, tax
deduction, and investment tax credit specific to the production of renewable
energy, including the PTC and including any credits available to Seller as a
result of the Project being owned by a Native American entity or located on real
property owned by a Native American entity.

“Term” shall have the meaning set forth in Section 3.1.

“Test Energy” means all of the electric energy generated by each Turbine prior
to the Commercial Operation Date by means of wind generation as a result of the
(i) initial commissioning of any Project Turbine, or (ii) testing of any Project
Turbine.

“Transmission Construction Agreement” shall have the meaning set forth in the
Recitals.

“Transmission Provider” means Chugach Electric Association or other transmission
provider from time to time having authority to operate and provide transmission
service on the Transmission System.

“Transmission System” means the electric transmission system to which the
Project is connected.

“Transmission System Owner” means Chugach Electric Association.

“Two-Contract Year Period” means each two (2) Contract Year period, beginning
with the second full Contract Year (January 1, 2014 to December 31, 2014) and
ending at the expiration of the Term.

1.2 Rules of Construction. The following rules of interpretation shall apply
unless otherwise stated herein:

(a) The masculine shall include the feminine and neuter.

(b) References to “Articles,” “Sections,” or “Exhibits” shall be to articles,
sections, or exhibits of this Agreement.

(c) The words “herein,” “hereof” and “hereunder” shall refer to this Agreement
as a whole and not to any particular article or section of this Agreement; the
word “including” shall mean “including, without limitation;” and the word
“include” shall mean “include, without limitation;” the word “until” shall mean
“until, but not including;” the word “from” shall mean “from and including.”

(d) The Exhibits attached hereto are incorporated in and are intended to be a
part of this Agreement.

(e) This Agreement was negotiated and prepared by both Parties with the advice
and participation of counsel. The Parties have agreed to the wording of this
Agreement and none of the provisions hereof shall be construed against one Party
on the ground that such Party is the author of this Agreement or any part
hereof.

 

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(f) The Parties shall act reasonably and in accordance with the principles of
good faith and fair dealing in the performance of this Agreement. Unless
expressly provided otherwise in this Agreement, (i) where this Agreement
requires the consent, approval or similar action by a Party, such consent,
approval or similar action shall not be unreasonably withheld, conditioned or
delayed, and (ii) wherever this Agreement gives a Party a right to determine,
require, specify or take similar action with respect to a matter, such
determination, requirement, specification or similar action shall be reasonable.

(g) All references to a particular entity shall include such entity’s successors
and permitted assigns.

(h) All references herein to any contract, agreement, standard, document,
policy, instrument, or Law shall be to such contract, agreement, standard,
document, policy, instrument, or Law as amended, supplemented, modified, or
replaced to the date of reference.

(i) The word “or” shall not be exclusive.

(j) The singular shall include the plural and vice versa.

ARTICLE 2

CONDITIONS PRECEDENT

2.1 Buyer’s Condition Precedent. Notwithstanding anything herein to the
contrary, Buyer’s obligations under this Agreement (other than those set forth
in this Section 2.1) shall be conditioned upon receipt of RCA Approval. Buyer
shall use commercially reasonable efforts to obtain expedited RCA Approval, and
Seller shall cooperate reasonably, with Buyer’s efforts to seek RCA Approval. If
this Agreement does not receive RCA Approval, this Agreement shall be terminated
without any further financial or other obligation on behalf of either Party
under this Agreement.

2.2 Buyer’s Right to Terminate. Notwithstanding anything herein to the contrary,
Buyer shall have the right, unless waived by Buyer in writing, to terminate this
Agreement without any further financial or other obligation to Seller under this
Agreement if Transmission System Owner and Seller have not executed an
Interconnection and Integration Agreement on terms and conditions reasonably
acceptable to Buyer on or before September 15, 2011.

2.3 Seller’s Conditions Precedent. Notwithstanding anything herein to the
contrary, Seller shall have the right, unless waived by Seller in writing, to
terminate this Agreement without any further financial or other obligation to
Buyer under this Agreement in accordance with the following provisions:

(a) Timing of RCA Approval Process. Seller shall have the right to terminate
this Agreement if Buyer fails to apply for RCA Approval within ten (10) days
following execution of this Agreement. If Buyer applies for RCA Approval within
such ten (10) day period, Seller shall have the right to terminate this
Agreement if this Agreement does not receive RCA Approval by September 15, 2011.

 

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(b) Financing. Seller shall have the right to terminate this Agreement if,
within one hundred twenty (120) days after the Effective Date, Seller has not
received a commitment letter from a financing entity acceptable to Seller for
the provision of non-recourse financing for the construction and operation of
the Project on terms acceptable to Seller in its sole discretion, by providing
notice to Buyer following the expiration of such 120-day period.

(c) Cash Grant. Seller shall have the right to terminate this Agreement at any
time before January 1, 2013 if Seller reasonably determines that, despite
diligent efforts, it will be unable to obtain the Cash Grant.

(d) Grant Documentation. Seller shall have the right to terminate this Agreement
if the Parties have not received a grant agreement from the Alaska Energy
Authority confirming an enforceable payment commitment on terms and conditions
reasonably acceptable to Seller for the Twenty Five Million Dollar ($25,000,000)
grant from the State of Alaska for the construction and completion of the AIA-FI
Transmission System within one hundred eighty (180) days after the Effective
Date.

(e) Interconnection and Integration Agreement. Seller shall have the right to
terminate this Agreement if Seller and Transmission System Owner have not
executed an Interconnection and Integration Agreement on terms and conditions
reasonably acceptable to Seller on or before September 15, 2011.

ARTICLE 3

TERM

3.1 Term. The “Term” hereof shall begin on the Effective Date and shall be in
force and effect for twenty-five (25) years following the January 1 after the
Commercial Operation Date, unless sooner terminated as provided herein. The
Parties may elect to extend the Term on the same terms and conditions set forth
herein in a writing mutually agreed to by the Parties setting forth the length
of the new term.

ARTICLE 4

DEVELOPMENT AND OPERATION OF THE PROJECT

4.1 Project. Seller shall use commercially reasonable efforts to site, develop,
finance and construct the Project. The Project is more fully described in
Exhibit A. Seller shall construct and install the Project in accordance with
Prudent Wind Generation Industry Practices and the applicable ASCC Planning and
Operating Guidelines. Seller shall obtain all applicable certifications,
permits, licenses and approvals necessary for the construction, operation and
maintenance of the Project and the performance of its obligations under this
Agreement during the Term. Seller shall use commercially reasonable efforts to
obtain reasonable and customary warranties on project hardware, design, and
workmanship. Prior to the Commercial Operation Date, Seller shall provide Buyer
with Monthly reports setting forth the status of the milestones set forth in the
Construction Schedule.

 

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4.2 Buyer’s Rights and Obligations During Construction. Buyer shall cooperate
with Seller to facilitate testing of the Project prior to Commercial Operation.
Buyer shall have the right, at its own expense and after reasonable prior notice
to Seller, to monitor the construction, start-up and testing of the Project, and
Seller shall comply with all reasonable requests of Buyer with respect to the
monitoring of these events. Seller shall cooperate in such physical inspections
of the Project as may be reasonably requested by Buyer during and after
completion of construction. All persons visiting the Project on behalf of Buyer
shall comply with all of Seller’s applicable safety and health rules and
requirements.

4.3 Commercial Operation Date. Seller shall take all reasonable steps necessary
to achieve the Commercial Operation Date by December 31, 2012. Seller shall
notify Buyer when the Project has achieved the Commercial Operation Date by
submitting to Buyer the Commercial Operation Certificate. If the Commercial
Operation Date has not been achieved by December 31, 2012, for any reason,
including delays in completion of the AIA-FI Transmission System, the Commercial
Operation Date shall be deemed to have been achieved with respect to all Project
Turbines that have been Placed in Service by such date. Seller shall use
commercially reasonable efforts to cause the remaining Project Turbines to
achieve Commercial Operation prior to October 1, 2013. If any remaining Project
Turbine achieves Commercial Operation after December 31, 2012, such Project
Turbine shall be deemed a part of the Project as of the date of Commercial
Operation of such Project Turbine.

4.4 Standard of Operation. Seller shall operate, or shall cause the operation
of, the Project in accordance with Prudent Wind Generation Industry Practices
and the ASCC Planning and Operating Guidelines. Seller shall maintain a
reasonable inventory of spare parts and have a heavy duty, high lift crane
available for deployment as needed, which high lift crane may be located on or
off the Premises. Upon reasonable prior notice and subject to the safety rules
and regulations of Seller, Seller shall provide Buyer and its authorized agents,
employees and inspectors with reasonable access to the Premises and the Project:
(i) for the purpose of reading or testing metering equipment in accordance with
Section 4.6, (ii) in connection with the operation and maintenance of the AIA-FI
Transmission System, (iii) to provide tours of the Project to customers and
other guests of Buyer as reasonably requested, and (iv) for other reasonable
purposes requested by Buyer.

4.5 Outages.

(a) Planned Outages. On or before October 1 of each Contract Year, Seller shall
provide to Buyer a non-binding Planned Outage schedule for the forthcoming
Contract Year. Seller shall use commercially reasonable efforts to avoid
scheduling any Planned Outages during the months of October through April. To
the extent possible, Seller will provide Buyer with reasonable advance notice of
any material change in the Planned Outage schedule. Seller shall be excused from
providing Net Electric Energy during any Planned Outage.

(b) Maintenance Outages. If, during the Term, Seller needs to schedule a
Maintenance Outage, Seller shall notify Buyer, as far in advance as is
practicable under the circumstances, of such proposed Maintenance Outage, and
the Parties shall plan such outage of capacity to mutually accommodate the
reasonable requirements of Seller and service obligations of Buyer; provided,
however, Buyer’s requirements shall not unduly prejudice or jeopardize the

 

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operation and maintenance of the Project. Notice of a proposed Maintenance
Outage shall include the expected start date of the outage, the amount of
Project Capacity that will be affected by the Maintenance Outage, and the
expected completion date of the Maintenance Outage. Buyer shall promptly respond
to such notice and may request reasonable modifications in the schedule for the
Maintenance Outage. Subject to its operational and maintenance needs, Seller
shall use reasonable efforts to comply with Buyer’s request to reschedule a
Maintenance Outage. Seller shall notify Buyer of any subsequent changes in such
Project Capacity not available to Buyer or any subsequent changes in such
Maintenance Outage completion date. As soon as reasonably practical, any such
notifications given orally shall be confirmed in writing.

(c) Forced Outages. Seller shall, as promptly as is practicable under the
circumstances following the commencement of a Forced Outage, provide to Buyer a
report by telephone, fax, or electronic mail of such Forced Outage, which report
shall include the amount of the Project Capacity affected by such Forced Outage
and the expected end date and/or time of the Forced Outage. Seller shall update
such report as necessary to advise Buyer of any changed circumstances with
respect to such Forced Outage. As soon as reasonably practical, all such reports
transmitted by telephone, fax, or electronic mail shall be confirmed in writing.

(d) Reports. Seller shall provide Buyer with a quarterly report summarizing the
results of maintenance performed during each Planned Outage, Maintenance Outage
or Forced Outage occurring during such quarter, and any of the technical data
obtained in connection with such maintenance.

4.6 Metering.

(a) Seller shall design, construct, install, operate, calibrate and maintain
revenue grade metering devices at the Delivery Point as needed to measure the
Net Electric Energy from the Project and in conformance with all applicable
regulatory requirements, at Seller’s cost and expense. As necessary for purposes
of scheduling delivery of the Net Electric Energy from the Delivery Point, such
metering facilities shall include communication equipment that allows Buyer to
read the meter devices from a remote location. The metering devices shall
provide Buyer and Transmission System Owner the ability to continuously monitor
generation and Project Turbine status from the Project. Seller shall test the
metering devices upon Buyer’s request and at Buyer’s expense (except as set
forth in this Section 4.6). Seller shall notify Buyer of the date and time of
such tests and Buyer shall be allowed to have a representative present to
witness such tests. Metering equipment that fails to register, or is found upon
testing to be inaccurate by more than 1%, shall be repaired, adjusted or
replaced by Seller, at Seller’s sole expense, and Seller shall be responsible
for the costs associated with the testing that revealed such inaccuracy. Any
correction in the billing resulting from such repairs, adjustments or
replacements shall be made in the accounting rendered for the next Month; and
such correction, when made, shall constitute full resolution of any claim
between the Parties arising out of such inaccuracy of metering equipment.

(b) Buyer may, at its own expense, install and maintain additional metering
equipment for purposes of monitoring, recording or transmitting data relating to
its purchase of Net Electric Energy from the Project. Upon Buyer’s reasonable
request, Seller shall arrange for a location at the Delivery Point for such
additional Buyer equipment.

 

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4.7 Ramp Rate. Seller shall use commercially reasonable efforts to observe a
ramp rate restriction of 2.5 MW per minute.

ARTICLE 5

PURCHASE OF ENERGY BY BUYER

5.1 Sale and Purchase Obligations. Commencing on the Commercial Operation Date,
Seller shall sell and deliver, or cause to be delivered, and Buyer shall
purchase and receive, or cause to be received, all Net Electric Energy, and
concurrently with such sale, Seller shall transfer to Buyer for no additional
consideration, all associated Project Capacity and Credits. Seller shall not
deliver energy or Credits from any other electric generation facility to meet
its requirements to deliver Net Electric Energy or Credits pursuant to this
Agreement.

5.2 Deliveries. Delivery of all Net Electric Energy sold and purchased hereunder
shall be made at the Delivery Point.

5.3 Green-e Standard. Seller shall use all commercially reasonable efforts to
qualify the Project and the Credits under the Green-e Energy National Standard
2.0 administered by the non-profit Center for Resource Solutions or any
successor system (the “Green-e Standard”).

5.4 Renewable Portfolio Standard. If a renewable portfolio standard or similar
requirement applicable to Buyer is implemented by the State of Alaska or the
United States (an “RPS”), Seller shall take all commercially reasonable steps to
ensure that the Net Electric Energy qualifies as a renewable resource under such
RPS and that the Credits qualify as renewable energy credits or the equivalent
under such RPS. In the event of conflict between the Green-e Standard and the
RPS, the terms of the RPS shall control.

5.5 Contract Price.

(a) Buyer shall accept delivery of all Test Energy produced by a Project Turbine
and shall purchase all such Test Energy delivered to the Delivery Point during
the six (6) Month period prior to the anticipated Commercial Operation Date, as
set forth on the Construction Schedule, and the Credits and Project Capacity
associated therewith at the Contract Price.

(b) Commencing on the Commercial Operation Date, Buyer shall pay Seller for each
MWh of Net Electric Energy delivered to the Delivery Point and the Credits and
Project Capacity associated therewith at the Contract Price.

5.6 Curtailments.

(a) Buyer shall have the right to direct Curtailments by notice to Seller (or
Seller’s designated scheduling agent) by telephone, and Seller shall cause the
output of the Project to be curtailed (in whole or in part) as directed by
Buyer, all in accordance with the Operating Procedures.

(b) Seller shall use reasonable efforts to determine the quantity of Deemed
Generated Energy that accrues during each Curtailment. For all Compensable
Deemed Generated Energy, Buyer shall pay Seller the Contract Price for such
Compensable Deemed Generated Energy as if production of Net Electric Energy had
not been curtailed by Buyer.

 

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(c) Notwithstanding anything contained herein, Buyer shall use commercially
reasonable efforts to minimize the number and extent of Curtailments directed
hereunder.

5.7 Prices Not Subject to Review. Following RCA Approval, the prices for energy
specified in this Article 5, and the other terms and conditions specified in
this Agreement, shall remain in effect for the Term, and shall not be subject to
change by Buyer or Seller for any other reason, including regulatory review.
Absent the Parties’ written agreement, (a) this Agreement shall not be subject
to change by application of either Party pursuant to Section 205 or 206 of the
Federal Power Act, and (b) the standard of review for any changes to this
Agreement, whether proposed by a Party, a non-party, or the Federal Energy
Regulatory Commission acting sua sponte, shall be the “public interest” standard
of review set forth in United Gas Pipe Line v. Mobile Gas Service Corp., 350
U.S. 332 (1956), and Federal Power Commission v. Sierra Pacific Power Co., 350
U.S. 348 (1956).

5.8 Title and Risk of Loss. As between Buyer and Seller, Seller shall be deemed
to be in exclusive control of, and responsible for, any damage or injury caused
by Net Electric Energy prior to delivery at the Delivery Point, and Buyer shall
be deemed to be in exclusive control of, and responsible for, any damages or
injury caused by Net Electric Energy delivered hereunder at, on and after
Buyer’s side of the Delivery Point. Title to, and risk of loss of, all Net
Electric Energy delivered under this Article 5 shall transfer from Seller to
Buyer upon delivery of such Net Electric Energy to the Delivery Point.

5.9 Transmission and Ancillary Services.

(a) Seller shall arrange and be responsible for delivery of the Net Electric
Energy to the Delivery Point. Seller shall be responsible for all applicable
transmission charges, electrical losses, integration and any other
transmission-related charges attributable to or assessed for Net Electric Energy
delivered to Buyer before the Delivery Point.

(b) Buyer shall obtain transmission service from the Delivery Point necessary to
take the Net Electric Energy at and from the Delivery Point to Buyer’s load or
to such other location Buyer may determine beyond the Delivery Point. Buyer
shall be responsible for all applicable transmission charges, electrical losses,
integration, regulation, ancillary services and any other transmission-related
charges attributable to or assessed for Net Electric Energy delivered to Buyer
at and after the Delivery Point.

(c) Pursuant to the Interconnection and Integration Agreement, Seller shall pay
to Transmission System Owner an integration charge equal to $10.85 per MWh of
Net Electric Energy delivered to the Delivery Point and $10.85 per MWh of
Compensable Deemed Generated Energy, which shall represent all of Seller’s costs
and responsibilities associated with the integration of the Project into the
Transmission System, including, but not limited to costs and responsibilities
associated with regulation, operation, balancing, ancillary services and
curtailment.

 

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5.10 Taxes. Buyer shall be responsible for all sales, use, excise, ad valorem or
other similar tax, imposed or levied by any Governmental Entity on the sale or
receipt of Net Electric Energy. Seller shall be responsible for payment of all
taxes on the income of Seller or inventory tax (if any) related to the Project
and any real and personal property taxes, assessments, and payments in lieu of
taxes on the Project and the Premises. To the extent permitted by Law, each
Party shall indemnify, release, defend and hold harmless the other Party from
and against any and all liability for taxes imposed or assessed by any taxing
authority with respect to Net Electric Energy sold, delivered and received
hereunder that are its responsibility pursuant to this Section 5.10.

5.11 System Supply Energy. At all times when the Project is not operating or is
otherwise not providing energy for the Project’s internal use, Seller shall be
responsible for obtaining any and all energy that may be required for the
Project, including energy for starting up the Project Turbines and for the
Project’s internal use. Seller shall request, and Buyer shall seek to provide,
station service for Seller for the Project at Seller’s sole cost and expense
pursuant to the applicable retail rate tariff.

5.12 Scheduling/Forecasts.

(a) Scheduling. Commencing on the Commercial Operation Date, Buyer or Buyer’s
designee shall be responsible for scheduling the Net Electric Energy from the
Delivery Point during the Term. All generation scheduling shall be performed in
accordance with the Operating Procedures, ASCC Planning and Operating
Guidelines, and any other applicable power scheduling and operating policies and
guidelines.

(b) Availability Forecasts. On or before October 1 of each Contract Year, Seller
shall provide to Buyer a good faith estimate of the availability of the Project
for each hour of the next Contract Year. On or before the twentieth (20th) day
of each Month, Seller shall provide an updated good faith estimate of the
availability of the Project for each hour of the next Month. By such time as
mutually agreed to by the Parties on the Business Day immediately preceding the
day on which the Net Electric Energy is to be delivered, Seller shall provide
Buyer with an updated good faith estimate of the availability of the Project for
each hour of the next day; provided, however, that a forecast provided on a day
before any non-Business Day shall include forecasts for each day to and
including the next Business Day. Seller shall provide Buyer with a good faith
estimate of the updated expected hourly availability for the Project for each
hour of the day on which Net Electric Energy is to be delivered one hour prior
to the hour in which Net Electric Energy is to be delivered. The Parties shall
cooperate to implement and use automatic availability updates.

(c) Meteorological Data. Seller shall provide Buyer with meteorological
forecasts of a type typically found in the utility scale wind power generation
industry and consistent with Prudent Wind Generation Industry Practices
throughout the Term and with access to real time wind speed data from the
Project and one (1) nearby meteorological station upstream from the Project in
not longer than ten (10) minute intervals, as reasonably available to Seller and
consistent with Prudent Wind Generation Industry Practices.

 

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5.13 Failure to Achieve Guaranteed 24-Month Quantity. If during any Two-Contract
Year Period, the amount of (i) Net Electric Energy delivered to the Delivery
Point plus (ii) all Deemed Generated Energy associated with any Force Majeure,
Curtailment, Planned Outages less than fifty (50) hours per year per Project
Turbine, or any other failure of Seller to deliver Net Electric Energy to the
Delivery Point due to the acts or omissions of Buyer, Transmission Provider or
Transmission System Owner, is less than the Guaranteed 24-Month Quantity for
such Two-Contract Year Period, then Seller shall cause the amount of (i) Net
Electric Energy plus (ii) all Deemed Generated Energy associated with any Force
Majeure, Curtailment, Planned Outages less than fifty (50) hours per year per
Project Turbine, or any other failure of Seller to deliver Net Electric Energy
to the Delivery Point due to the acts or omissions of Buyer, Transmission
Provider or Transmission System Owner delivered (or deemed delivered) during the
Contract Year immediately following such Two-Contract Year Period to be equal to
or greater than seventy-five percent (75%) of the P50 Output for such Contract
Year. Seller’s failure to cause such amount to be equal to or greater than
seventy-five percent (75%) of the P50 Output during such Contract Year, shall be
an Event of Default, and Buyer shall have the rights and remedies set forth in
Article 7.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

6.1 Representations and Warranties. As a material inducement to execution of
this Agreement each Party hereby represents and warrants to the other Party
that:

(a) It is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, and is qualified to conduct its business
in all jurisdictions necessary to perform its obligations hereunder;

(b) The execution, delivery and performance of this Agreement do not violate any
of the terms or conditions in any agreement to which it is a Party, or any Law
applicable to such Party;

(c) This Agreement constitutes a legal, valid and binding obligation of such
Party, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws affecting creditors’
rights generally, and with regard to equitable remedies, to the discretion of
the court before which proceedings to obtain the same may be pending;

(d) There are no bankruptcy, insolvency, reorganization, receivership or other
arrangement proceedings pending or being contemplated by it, or to its
knowledge, threatened against it;

(e) To such Party’s knowledge, there are no actions, proceedings, judgments,
rulings or orders, issued by or pending before any Governmental Entity that
would materially adversely affect its ability to perform under and in accordance
with this Agreement; and

(f) Except as set forth in Section 2.1 or Section 2.3, no consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Entity or any other Person that has not been received, waived by such
Governmental Entity or other Person or

 

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satisfied as of the date hereof, is required for the valid execution and
delivery of this Agreement, the consummation and performance of the transactions
contemplated hereby or compliance with the terms and provisions hereof.

6.2 No Other Representations and Warranties. Each Party acknowledges that it has
entered into this Agreement in reliance upon only the representations and
warranties set forth in this Agreement.

ARTICLE 7

EVENTS OF DEFAULT AND REMEDIES; TERMINATION

7.1 Events of Default. The following occurrences shall constitute Events of
Default:

(a) Failure by a Party to make any payment required hereunder when due if such
failure is not remedied within ten (10) days after receipt by the defaulting
Party of written notice of such failure.

(b) Failure by a Party to perform any other material obligation hereunder, and
such failure is not remedied within thirty (30) days after receipt by the
defaulting Party of written notice of such failure, provided that so long as a
defaulting Party has initiated and is diligently attempting to effect a cure,
the defaulting Party’s cure period shall extend for an additional sixty
(60) days or such longer period as is reasonably necessary to effect such cure.

(c) Any representation or warranty made by a Party pursuant to Article 6 shall
have been false in any material respect when made, and has materially and
adversely affected the relying Party and has not been remedied within thirty
(30) days after receipt by the defaulting Party of written notice of such
falsity, provided that so long as a Party has initiated and is diligently
attempting to effect a cure, the Party’s cure period shall extend for an
additional sixty (60) days.

(d) A Party or, subject to Section 12.1(d), any Qualified Issuer of any Security
hereunder (i) makes an assignment for the benefit of its creditors, (ii) files a
petition or otherwise commences, authorizes or acquiesces in the commencement of
a proceeding or cause of action under any bankruptcy or similar Law for the
protection of creditors, (iii) has such petition filed against it and such
petition is not withdrawn or dismissed for sixty (60) days after such filing,
(iv) becomes insolvent or, (v) is unable to pay its debts when due.

(e) A Party assigns this Agreement in violation of Section 9.1.

(f) Failure by a Qualified Issuer or guarantor of Seller’s Security or Buyer’s
Security, as the case may be, to make any payment when due under a guaranty
provided as Security hereunder.

(g) Failure by Seller to deliver (or be deemed to deliver) Net Electric Energy
and Deemed Generated Energy in the amount required pursuant to Section 5.13
during a Contract Year following Seller’s failure to deliver the Guaranteed
24-Month Quantity.

 

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7.2 Termination Upon an Event of Default.

(a) Upon the occurrence of, and during the continuation of, an Event of Default,
and following the expiration of any applicable cure period for such Event of
Default, the non-defaulting Party may terminate this Agreement by notice to the
other Party, designating the date of termination, delivered to the defaulting
Party no less than ten (10) Business Days before such termination date.

(b) In the event of a termination of this Agreement in its entirety, (i) the
Parties’ respective obligations under this Agreement shall terminate (other than
those obligations that are to be performed after termination by their express
terms), and (ii) each Party shall pay the amounts described in Section 7.2(c);
provided, however, that termination pursuant to Section 2.1, 2.2, 2.3, or 10.3
shall not give rise to any obligation to pay damages under Sections 7.2(c).

(c) Termination Payments.

(i) In the event of a termination of this Agreement upon an Event of Default,
each Party shall pay to the other all amounts due the other under this Agreement
for all periods prior to termination.

(1) In the case of an Event of Default by Buyer, Buyer shall pay to Seller the
net present value of costs to cover direct actual damages incurred by Seller in
not being able to sell to Buyer, for the remainder of the Term, Net Electric
Energy and Credits contracted for under this Agreement. Such costs shall include
(but not be limited to), for the applicable period, if applicable, an amount
equal to the Tax Credits associated with the Net Electric Energy contracted for
under this Agreement, on a grossed-up basis.

(2) In the case of an Event of Default by Seller, Seller shall pay to Buyer the
net present value of costs to cover direct actual damages incurred by Buyer in
not being able to purchase from Seller, for the remainder of the Term, Net
Electric Energy and Credits contracted for under this Agreement.

(3) In no event shall the non-defaulting Party owe damages provided for in this
Section 7.2 to the defaulting Party. In the event of a termination by either
Party under this Section 7.2, the non-defaulting Party will use commercially
reasonable efforts to mitigate its damages resulting from the other Party’s
Event of Default.

(ii) The amounts due pursuant to Section 7.2(c)(i) shall be paid within thirty
(30) days of the applicable termination date of this Agreement notified to the
defaulting Party, plus interest thereon from such date of termination until the
date paid. Interest shall be calculated at the Interest Rate.

(d) Except for any damages that may be incurred due to a breach of or the
application of the provisions specified in Section 7.2(e), the amounts payable
under this Section 7.2 shall constitute the only amounts due upon the
termination of this Agreement by either Party, and no Party shall be required to
pay any amounts upon termination in excess of the amounts specified in this
Section 7.2.

 

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(e) The provisions of Section 5.10 {Taxes} (with respect to all periods prior to
termination), Section 8.4 {Records}, Section 8.5 {Audit}, Section 10.4
{Indemnification}, Section 10.5 {Limitations of Remedies, Liability and
Damages}, Section 10.6 {Duty to Mitigate}, Section 15.4 {Choice of Law and
Forum} and Article 11 {Confidentiality} and Article 14 {Disputes} shall survive
the termination of this Agreement.

ARTICLE 8

BILLING AND PAYMENT; RECORDS

8.1 Billing and Payment.

(a) For each Month during the Term, commencing on the Month in which Test Energy
is delivered, Seller shall send to Buyer, within the first ten (10) Business
Days of the following Month, a statement setting forth:

(i) The quantity of Net Electric Energy that was delivered to the Delivery Point
in the immediately preceding Month;

(ii) The total amount due for Net Electric Energy, associated Credits and
Project Capacity during the immediately preceding Month (which amount shall be
the product of the Net Electric Energy delivered to the Delivery Point and the
Contract Price);

(iii) Any amounts due for any Compensable Deemed Generated Energy;

(iv) Any other amounts due to Seller or credited to Buyer under this Agreement.

(b) No later than twenty (20) days after the date such statement is received, or
if such day is not a Business Day, the immediately following Business Day, Buyer
shall remit to Seller, by check or wire transfer in accordance with
Section 13.1, the amount due pursuant to such statement.

8.2 Interest on Late Payments. Undisputed amounts not paid when due shall accrue
interest from and including the due date, to and excluding the date of payment,
at the Interest Rate.

8.3 Disputed Amounts. If either Party, in good faith, disputes any amount due
pursuant to a statement rendered hereunder, such Party shall pay such disputed
amount on or before the due date and notify the other Party of the specific
basis for the dispute. Any such notice shall be provided within ninety (90) days
of the date of the statement in which the disputed amount first appeared. The
Parties shall resolve the dispute pursuant to the dispute resolution provisions
set forth in Article 14. If any amount disputed by a Party is determined not to
have been due to the other Party, such amount shall be reimbursed to the
disputing Party within five (5) Business Days of such determination or
resolution, along with interest accrued at the Interest Rate from the original
date due until the date paid.

 

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8.4 Records. Each Party shall keep and maintain all records as may be necessary
or useful in performing or verifying any calculations made pursuant to this
Agreement, or in verifying such Party’s performance hereunder. All such records
shall be retained by each Party for at least three (3) calendar years (or such
longer period as may be required by applicable Law) following the calendar year
in which such records were created.

8.5 Audit. Each Party, through its employees, authorized agents and/or
professional advisors, shall have the right, at its sole expense and upon
reasonable advance notice to the other Party, during normal business hours of
the other Party, to examine and copy the records of the other Party to the
extent reasonably necessary to verify the accuracy of any statement, charge or
computation made hereunder. Upon request, each Party shall provide to the other
Party statements evidencing the quantities of energy delivered at the Delivery
Point. If any statement is found to be inaccurate, a corrected statement shall
be issued and any amount due thereunder will be promptly paid and shall bear
interest calculated at the Interest Rate from the date of the overpayment or
underpayment to the date of receipt of the reconciling payment. Notwithstanding
the above, no adjustment shall be made with respect to any statement or payment
hereunder unless a Party asserts its challenge to the accuracy of such payment
or statement within one year after the date of such statement or payment.

ARTICLE 9

ASSIGNMENT; BINDING EFFECT

9.1 Assignment.

(a) Except as expressly permitted herein, neither Party shall assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other Party, such consent not to be unreasonably
withheld, conditioned, or delayed, except in accordance with this Section 9.1.

(b) Seller may assign this Agreement or any of its rights hereunder without the
prior written consent of Buyer (i) in favor of any party providing financing or
other financial accommodations to or for the benefit of the Project, Seller, or
Seller’s Affiliates; or (ii) to an Affiliate of Seller. Upon Seller’s request
from time to time in connection with its financing of the Project or other
financial accommodation for Seller, Buyer agrees to execute and deliver promptly
a consent or other agreements with debt or equity financing parties reasonably
requested by such financing parties, containing customary terms and conditions,
and otherwise to cooperate in a timely manner with the due diligence efforts of
such financing parties.

(c) Prior to receipt of RCA Approval, Buyer shall make commercially reasonable
efforts to partially assign this Agreement with respect to not more than
eighteen percent (18%) and not less than ten and one-half percent (10.5%) of the
Net Electric Energy and associated Project Capacity and Credits to another
qualified utility purchaser, provided that Seller is reasonably satisfied with
the creditworthiness of the qualified utility purchaser or that the qualified
utility purchaser provides security to Seller from a Qualified Issuer in an
amount equal to at least fifty (50%) of the estimated annual gross revenues to
be received by Seller from qualified utility purchaser. Any such assignment
shall be made pursuant to an assignment and assumption agreement agreed to by
Seller, Buyer and qualified utility purchaser.

 

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(d) In the event that Buyer fails to partially assign this Agreement pursuant to
Section 9(c) above, then Buyer shall remain obligated to purchase all the Net
Electric Energy and all associated Project Capacity and Credits pursuant
Section 5.1 above.

9.2 Change in Control. Any Change of Control of Seller, whether voluntary or by
operation of law, shall require the prior written consent of Buyer, which shall
not be unreasonably withheld. No consent of Buyer shall be required, however, to
any Change of Control resulting from (i) transactions among Affiliates of
Seller, or (ii) any exercise by any party providing financing or other financial
accommodations to or for the benefit of the Project, Seller or Seller’s
Affiliates, of its rights and remedies under the financing documents. Without
limiting Buyer’s obligation to consider reasonably any other circumstances,
Buyer shall be required to give its consent to any Change of Control of Seller
if at least one of the ultimate parent entities of Seller following the Change
of Control, (i) enjoys creditworthiness not worse than Seller or CIRI, prior to
the Change of Control and (ii) has demonstrable experience in the power
generation industry not less than Seller or CIRI.

9.3 Binding Effect. This Agreement shall inure to the benefit of, and be binding
upon, the Parties and their respective successors and permitted assigns.

ARTICLE 10

FORCE MAJEURE; INDEMNITY; LIMITATION OF LIABILITY

10.1 Force Majeure

(a) The term “Force Majeure,” as used in this Agreement, means causes or events
beyond the reasonable control of, and without the fault or negligence of the
Party (including, in the case of Buyer, Transmission System Owner and
Transmission Provider) claiming Force Majeure, including, acts of God, sudden
actions of the elements such as floods, earthquakes, hurricanes, blizzards,
volcanic activity, or tornadoes; severe weather; complete failure of the AIA-FI
Transmission System, high winds of sufficient strength or duration to materially
damage a Project Turbine or significantly impair its operation for a period of
time longer than normally encountered in similar businesses under comparable
circumstances; lightning; ice storms; sabotage; vandalism; terrorism; war;
riots; fire; explosion; blockades; insurrection; strike; slow down or labor
disruptions (even if such difficulties could be resolved by conceding to the
demands of a labor group); actions or inactions by any Governmental Entity taken
after the date hereof but only if such actions, or inactions prevent or delay
performance of a Party hereunder; inability, despite due diligence, to obtain
any licenses, permits, or approvals required by any Governmental Entity; and the
issuance of any order, injunction, or other legal or equitable decree
interfering with the performance of a Party’s obligations hereunder.

(b) The term Force Majeure does not include (i) any acts or omissions of any
third party, including, without limitation, any vendor, materialman, customer,
or supplier of Seller, unless such acts or omissions are themselves excused by
reason of Force Majeure or are in and of themselves events of Force Majeure;
(ii) any full or partial curtailment in the electric output of the Project that
is caused by or arises from (1) a mechanical or equipment breakdown unless such
mechanical or equipment breakdown is caused by an event of Force Majeure, or
(2) conditions attributable to normal wear and tear; or (iii) changes in market
conditions that affect the cost of Buyer’s or Seller’s supplies, or that affect
demand or price for any of Buyer’s or Seller’s products.

 

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10.2 Applicability of Force Majeure.

(a) Neither Party shall be responsible or liable for any delay or failure in its
performance under this Agreement, nor shall any delay, failure, or other
occurrence or event become an Event of Default, to the extent such delay,
failure, occurrence or event is substantially caused by conditions or events of
Force Majeure, provided that:

(i) the non-performing Party gives the other Party prompt written notice
describing the particulars of the occurrence of the Force Majeure;

(ii) the suspension of performance is of no greater scope and of no longer
duration than is required by the Force Majeure;

(iii) the non-performing Party proceeds with reasonable diligence to remedy its
inability to perform and provides progress reports to the other Party describing
actions taken to end the Force Majeure; and

(iv) when the non-performing Party is able to resume performance of its
obligations under this Agreement, such Party shall give the other Party written
notice to that effect.

(b) Except as otherwise expressly provided for in this Agreement, the existence
of a condition or event of Force Majeure shall not relieve the Parties of their
obligations under this Agreement (including, but not limited to, payment
obligations) to the extent that performance of such obligations is not precluded
by the condition or event of Force Majeure.

10.3 Limitations on Effect of Force Majeure. In the event that any delay or
failure of performance caused by conditions or events of Force Majeure continues
for an uninterrupted period of three hundred sixty-five (365) days from its
occurrence or inception, as noticed pursuant to Section 10.2(a), the Party not
claiming Force Majeure may, at any time following the end of such three hundred
sixty-five (365) day period, terminate this Agreement upon written notice to the
affected Party, without further obligation by either Party except as to costs
and balances incurred prior to the effective date of such termination. The Party
not claiming Force Majeure may, but shall not be obligated to, extend such three
hundred sixty-five (365) day period, for such additional time as it, at its sole
discretion, deems appropriate, if the affected Party is exercising due diligence
in its efforts to cure the conditions or events of Force Majeure.

10.4 Indemnification.

(a) To the extent permitted by Law, each Party shall indemnify and hold harmless
the other Party and its Affiliates, and each of their respective officers,
directors, agents, employees, members, managers, shareholders, partners and
other equity holders from and against any and all claims, demands, actions,
losses, liabilities, expenses (including reasonable legal fees and expenses),
suits and proceedings of any nature whatsoever for personal injury, death or

 

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property damage to the other Party’s property or facilities, or personal injury,
death or property damage to third parties (collectively “Liabilities”) to the
extent caused by the negligence or willful misconduct of the indemnifying Party
in connection with the performance of its obligations under this Agreement.

(b) Without limiting the foregoing and to the extent permitted by Law, (i) Buyer
shall indemnify Seller for all Liabilities related to Net Electric Energy and
associated Credits, once sold and delivered to Buyer at the Delivery Point, and
(ii) Seller shall indemnify Buyer for all Liabilities related to Net Electric
Energy and associated Credits prior to its delivery by Seller at the Delivery
Point, except, in the case of either (i) or (ii) to the extent such injury or
damage is attributable to the negligence or willful misconduct or breach of this
Agreement by the Party (or any of its Affiliates) seeking indemnification
hereunder.

(c) If a claim is made against a Party entitled to indemnification under this
Section 10.4 (the “Indemnified Party”) that could reasonably be expected to
result in Liabilities, or if an Indemnified Party discovers any inquiry or
investigation that the Indemnified Party believes may involve or expect to lead
to Liabilities, the Indemnified Party shall promptly give the other Party (the
“Indemnifying Party”) written notice of such claim, inquiry or investigation,
provided that any delay in providing notice will not serve as a bar to
indemnification hereunder except to the extent that the Indemnifying Party’s
ability to defend against or avoid claims has been prejudiced by such delay. The
Indemnifying Party shall promptly (and in any event no later than 30 days after
receiving notice from the Indemnified Party) decide whether to assume control of
the defense of the claim, and if the Indemnifying Party does not elect to
control such defense, then the Indemnified Party may assume control of the
defense, and the Indemnifying Party shall reimburse the Indemnified Party as
expenses are incurred in connection with such defense. The Party that is
defending the claim (the “Defending Party”) will use counsel that is reasonably
approved in writing by the other Party. The Party that is not controlling the
defense (the “Non-Defending Party”) may have its own counsel present at its own
cost to monitor proceedings and will cooperate as reasonably requested with the
Defending Party in defending the claim. The Defending Party shall not settle or
compromise any claim without the prior written consent of the Non-Defending
Party.

10.5 Limitations of Remedies, Liability and Damages. The Parties agree that the
remedies and measures of damages provided in this Agreement satisfy the
essential purposes hereof. IF NO MEASURE OF DAMAGES OR OTHER REMEDY IS EXPRESSLY
PROVIDED HEREIN, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES
ONLY, WHICH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY OF THE
INJURED PARTY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE HEREBY
EXPRESSLY WAIVED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, WHETHER SUCH DAMAGES ARE ALLOWED OR PROVIDED BY STATUTE,
IN TORT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE, EXCEPT THAT ANY DAMAGES
SPECIFICALLY PROVIDED IN THIS AGREEMENT SHALL BE VALID NOTWITHSTANDING THE
FOREGOING PROVISION, AND EXCEPTING SUCH TYPES OF DAMAGES THAT MAY BE DUE BY A
PARTY TO A THIRD PARTY FOR AN OBLIGATION THE NATURE OF WHICH THE OWING PARTY IS
ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT.

 

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10.6 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants that it will use commercially reasonable efforts to minimize any
damages that it may incur as a result of the other Party’s default or
non-performance of this Agreement.

ARTICLE 11

CONFIDENTIALITY

11.1 Confidentiality. The Parties agree that the Parties’ proposals,
communications, negotiations and information exchanged prior to the Effective
Date concerning this Agreement, and technical and other information regarding
the Project provided by Seller to Buyer marked, or otherwise clearly
communicated to the receiving Party as, “Confidential,” constitute the
“Confidential Business Information” of the disclosing Party. Seller and Buyer
each agree to hold such Confidential Business Information wholly confidential.
Such Confidential Business Information may only be used by the Parties for
purposes related to the approval, administration or enforcement of this
Agreement, and Seller’s financing and construction of the Project, or its
obtaining any other financial accommodation, and for no other purposes. Other
information about the Project may be disclosed upon the mutual consent of the
Parties.

11.2 Disclosure. Each Party agrees not to disclose Confidential Business
Information of the other Party to any other Person (other than its Affiliates,
counsel, consultants, lenders, partners, members, employees, officers and
directors, and then only to Persons subject to similar confidentiality
restrictions as those set forth herein), without the prior written consent of
the other Party, provided that either Party may disclose Confidential Business
Information, if such disclosure is required by Law, including without
limitation, pursuant to an order of a court or regulatory agency or in order to
enforce this Agreement or to seek approval of this Agreement. In the event a
Party is required by Law or by a Governmental Entity to disclose Confidential
Business Information, such Party, prior to such disclosure, shall provide
reasonable advance notice to the other Party of the time and scope of the
intended disclosure in order to permit such disclosing Party the opportunity to
obtain a protective order or otherwise seek to prevent or limit the scope or
otherwise impose conditions upon such disclosure.

11.3 Injunctive Relief. Each Party agrees that violation of the terms of this
Article 11 constitutes irreparable harm to the other, and that the harmed Party
may seek any and all remedies available to it at law or in equity, including but
not limited to injunctive relief.

ARTICLE 12

SECURITY

12.1 Security.

(a) Seller’s Security. Seller shall provide Seller’s Security as follows: On or
before January 1, 2012, Seller shall provide to Buyer Seller’s Security in an
amount equal to the Required Security Amount. On or before January 1, 2013,
Seller shall increase Seller’s Security to the Required Security Amount required
as of such date, and shall thereafter maintain such Security at such Required
Security Amount until the end of the Term.

 

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(b) Buyer’s Security. If at any time during the Term, Buyer’s credit rating
(corporate or long-term senior unsecured debt) is below BBB- by Standard &
Poor’s or Baa3 by Moody’s, Buyer shall provide to Seller, within five
(5) Business Days of any such determination, Buyer’s Security in the Required
Security Amount and shall maintain such Security at the Required Security Amount
until the end of the Term, so long as Buyer’s credit rating is below BBB- by
Standard & Poor’s or Baa3 by Moody’s. If and when Buyer’s credit rating is equal
to or above BBB- by Standard & Poor’s and Baa3 by Moody’s, Buyer shall not be
required to post Buyer’s Security and Seller shall promptly release any Buyer’s
Security held by Seller to Buyer.

(c) In addition to any other remedy available to it, a Party (“Obligee”) may,
before or after termination of this Agreement or upon the occurrence and during
the continuance of an Event of Default, draw on the Security in such amounts as
are necessary to recover amounts owing to it by the other Party (“Obligor”)
pursuant to this Agreement, including any damages due to Obligee and/or any
amounts for which Obligee is entitled to indemnification hereunder. Obligee may,
in its sole discretion, draw all or any part of such amounts due to it from any
form of Security to the extent available to Obligee pursuant to this
Section 12.1, and from all such forms and in any sequence that Obligee may
select. Subject to Section 10.5, following a draw on all or any part of the
Security pursuant to this Section 12.1, Obligor shall, within thirty (30) days
following such draw, replenish or reinstate the Security to the full Required
Security Amount.

(d) Security shall be maintained at the expense of the Party providing such
Security. A Party may change the form of Security provided by it to the other
Party hereunder at any time and from time to time upon reasonable prior notice.
If at any time hereunder any Person providing Security on behalf of a Party
hereunder fails to meet the requirements of a Qualified Issuer, is subject to
the commencement of involuntary or voluntary bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar proceeding (whether under any present or future statute,
law, or regulation), or takes any action to terminate, cancel or repudiate such
Security (each, a “Material Event”), then the Party providing such Security
shall replace the Security with other Security from a Qualified Issuer and
otherwise meeting the requirements of this Agreement no later than thirty
(30) days after the occurrence of such Material Event.

(e) Promptly following the end of the Term and the satisfaction of all of the
Parties’ obligations under this Agreement, or upon the earlier termination of
this Agreement pursuant to Sections 2.1, 2.2, 2.3, or 10.3, each Party shall
release any remaining Security held by it to the other Party.

ARTICLE 13

NOTICES AND ADDRESSES FOR PAYMENT

13.1 Notices. All notices, requests, statements or invoices shall be made to the
addresses set forth in, and all payments shall be made in accordance with the
wire transfer instructions provided for in Exhibit D hereto. Any notice,
request, consent, or other communication required or authorized under this
Agreement to be given by one Party to the other Party shall be in writing. It
shall be either be hand delivered or mailed first-class or by overnight
delivery, postage prepaid, to the other Party. If mailed, the notice request,
consent or

 

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other communication shall be simultaneously sent by facsimile or other
electronic means. Any such notice, request, consent, or other communication
shall be deemed to have been received by the Close of the Business Day on which
it was hand delivered or transmitted electronically (unless hand delivered or
transmitted after such close in which case it shall be deemed received as of the
Close of the next Business Day). Real-time or routine communications concerning
Project operations shall be exempt from this Section. A Party’s address or
addressee to which notices or invoices shall be delivered, or amounts paid, may
be changed from time to time by such Party by notice served as hereinabove
provided.

ARTICLE 14

DISPUTES

14.1 Negotiations. In the event of any dispute arising under this Agreement (a
“Dispute”), within ten (10) days following the delivered date of a written
request by either Party (a “Dispute Notice”), (i) each Party shall appoint a
representative (individually, a “Party Representative,” and together, the
“Parties’ Representatives”), and (ii) the Parties’ Representatives shall meet,
negotiate and attempt in good faith to resolve the Dispute quickly, informally
and inexpensively. In the event the Parties’ Representatives cannot resolve the
Dispute within thirty (30) days after commencement of negotiations, within ten
(10) days following any request by either Party at any time thereafter, senior
officers of the Parties with authority to irrevocably bind the Party to a
resolution of the Dispute shall meet to negotiate in good faith to resolve the
Dispute. If the Parties are unable to resolve the Dispute within fourteen
(14) days following a meeting of the senior officers, the Disputes shall be
submitted for non-binding mediation. Mediation of any Dispute shall be initiated
by either Party by making a written demand to the other Party. The Parties
shall, within (10) days after delivery of such written demand for mediation,
appoint a mediator who is (i) a reputable attorney or jurist with ample
experience in utility law, and (ii) is in no way affiliated or had material
business dealings with either Party or an Affiliate thereof. If the Parties are
unable to agree upon a mediator within such ten (10) day period, a mediator
having the qualifications set forth above shall be appointed by the applicable
service provided by the Alaska State Bar Association. Such mediation shall occur
within thirty (30) days after the mediator has been appointed and shall occur at
a mutually acceptable location in Anchorage, Alaska. The costs of such mediation
services shall be shared equally, but each Party shall bear the cost of its own
travel expenses and attorneys’ fees. If the Parties are unable to resolve the
Dispute within fourteen (14) days following the commencement of mediation, each
Party may pursue such rights as may be available to such Party at law or equity.
Notwithstanding any provision in this Agreement to the contrary, if no Dispute
Notice has been issued within twenty-four (24) Months following the occurrence
of all events and the existence of all circumstances giving rise to the Dispute
(regardless of the knowledge or potential knowledge of either Party of such
events and circumstances), the Dispute and all claims related thereto shall be
deemed waived and the aggrieved Party shall thereafter be barred from proceeding
thereon.

14.2 Settlement Discussions. The Parties agree that no statements of position or
offers of settlement made in the course of the Dispute process described in this
Article 14 will be offered into evidence for any purpose in any litigation or
arbitration between the Parties, nor will any such statements or offers of
settlement be used in any manner against either Party in any such litigation or
arbitration. Further, no such statements or offers of settlement shall
constitute

 

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an admission or waiver of rights by either Party in connection with any such
litigation or arbitration. At the request of either Party, any such statements
and offers of settlement, and all copies thereof, shall be promptly returned to
the Party providing the same.

14.3 Preliminary Injunctive Relief. Nothing in this Article 14 shall preclude,
or be construed to preclude, the resort by either Party to a court of competent
jurisdiction solely for the purposes of securing a temporary or preliminary
injunction to preserve the status quo or avoid irreparable harm pending
negotiation or mediation pursuant to this Article 14.

14.4 Confidential Proceedings. The fact that either Party has invoked the
provisions of this Article 14, the mediation proceedings and related
communications, and the efforts of the mediator shall all be considered
Confidential Business Information subject to Article 11, and the mediator shall
make no disclosure of any confidential information that would not be permitted
by a Party under Article 11.

ARTICLE 15

MISCELLANEOUS

15.1 Grants and Incentives. Each Party shall make commercially reasonable
efforts to cooperate with the other Party’s efforts to secure additional grants
or incentives related to the Project.

15.2 Forward Contract. The Parties acknowledge and agree that this Agreement
constitutes a “forward contract” within the meaning of the United States
Bankruptcy Code.

15.3 Entirety. This Agreement and the Exhibits hereto constitute the entire
agreement between the Parties and supersede any prior or contemporaneous
agreements, proposal, solicitation, terms and conditions, or representations of
the Parties affecting the same subject matter.

15.4 Choice of Law and Forum. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of Alaska, without regard
to principles of conflicts of law. All disputes arising out of this Agreement
will be subject to the exclusive jurisdiction of the state and federal courts
located in Anchorage, Alaska, and each Party consents the personal jurisdiction
of these courts.

15.5 Non-Waiver. No consent or waiver, either expressed or implied, by any Party
to or of any breach or default by any other Party in the performance by such
other Party of the obligations thereof under this Agreement shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such other Party of the same or any other obligations of such
other Party under this Agreement. The failure of either Party to this Agreement
to enforce or insist upon compliance with or strict performance of any of the
terms or conditions hereof, or to take advantage of any of its rights hereunder,
shall not constitute a waiver or relinquishment of any such terms, conditions or
rights, but the same shall be and remain at all times in full force and effect.

15.6 Headings; Attachments. The headings used for the sections and articles
herein are for convenience and reference purposes only, and shall in no way
affect the meaning or

 

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interpretation of the provisions of this Agreement. Any and all exhibits and
attachments referred to in this Agreement are, by such reference, incorporated
herein and made a part hereof for all purposes.

15.7 Counterparts. This Agreement may be executed in several counterparts, each
of which is an original and all of which constitute one and the same instrument.
A facsimile or electronic signature to this Agreement shall be deemed an
original and binding upon the party against whom enforcement is sought.

15.8 Partial Invalidity. If any provision of this Agreement is found illegal or
unenforceable, such provision will be deemed restated in accordance with Law, to
reflect as nearly as possible the original intention of the Parties, and the
remainder of the Agreement will continue unaffected in full force and effect.

15.9 Other. This Agreement (i) shall not be altered or amended except by an
instrument in writing executed by authorized officers of the Parties; (ii) does
not confer any rights upon any Person other than the Parties and their
respective successors and permitted assigns; and (iii) may be performed by the
Parties through the use of agents and subcontractors (but such use shall not
relieve a Party of any of its obligations hereunder). The Parties shall execute
and deliver all documents and perform all further acts that may be reasonably
necessary to effectuate the provisions of this Agreement. This Agreement was
prepared jointly by the Parties, each Party having had access to advice of its
own counsel, and not by either Party to the exclusion of the other Party, and
shall not be construed against one Party or the other as a result of the manner
in which this Agreement was prepared, negotiated or executed.

15.10 Insurance.

(a) Seller, at its own cost and expense, shall maintain the insurance on and
with respect to the Project set forth in Exhibit B hereto. Prior to mobilization
at the Project Site, Seller shall provide to Buyer copies of certificates of
insurance evidencing the coverages required under this Agreement. Buyer shall
have the right to inspect any insurance policies upon five (5) Business Day’s
notice, including original copies of such policies.

(b) If requested by Buyer, Seller shall, within ten (10) days following such
request, deliver to Buyer evidence of insurance held by its subcontractors.

15.11 No Third Party Beneficiaries. Nothing in this Agreement, whether expressed
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any other person other than the Parties and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to either Party, nor
shall any provision give any third party any right of subrogation or actions
over or against either Party. This Agreement is not intended to and does not
create any third party rights.

15.12 Relationship of the Parties. This Agreement shall not be interpreted or
construed to (a) create an association, joint venture or partnership between the
Parties or impose any partnership obligation or liability on either Party,
(b) create any agency relationship between the Parties or impose any fiduciary
duty of any kind on either Party, (c) create a trust or impose

 

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any trust obligations of any kind on either Party, or (d) constitute a lease of
property of any kind. Other than as expressly set forth herein, neither Party
shall have any right, power or authority to enter into any agreement or
undertaking for, or act on behalf of, or act as or be an agent or representative
of, or otherwise bind, the other Party.

[signatures on following page]

 

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The Parties have executed this Power Purchase Agreement as of the date first set
out above, to be effective for all purposes hereof as of the Effective Date.

 

SELLER:     BUYER:

FIRE ISLAND WIND, LLC

by Cook Inlet Region Inc., its managing member

    CHUGACH ELECTRIC ASSOCIATION, INC. By:  

/s/ Margaret L. Brown

    By:  

/s/ Bradley W. Evans

Name:   Margaret L. Brown     Name:   Bradley W. Evans Title:   President and
CEO     Title:   CEO Date:  

June 21, 2011

    Date:  

June 21, 2011

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EXHIBIT A

PROJECT DESCRIPTION

 

A-1

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EXHIBIT B

SELLER’S INSURANCE REQUIREMENTS

Seller shall maintain the following insurance coverages:

 

  •  

Worker’s Compensation: $1MM minimum

 

  •  

Employment Liability: $1MM minimum

 

  •  

Commercial General Liability: $10MM minimum

 

  •  

Commercial Automobile Liability Insurance: $5MM minimum

 

  •  

Umbrella/Excess Liability Insurance: $10MM minimum

 

  •  

All Risk Property Insurance: replacement cost of property beginning on the
Commercial Operation Date

In addition to the aforementioned insurance requirements, Seller or Seller’s
subcontractors shall maintain the following:

 

  •  

Aircraft Liability: $5MM minimum

 

  •  

Watercraft Liability: $1MM minimum

 

  •  

Seller’s Pollution Liability: $1MM minimum

 

  •  

Professional Liability Insurance: $2MM minimum

 

1) The certificates of insurance provided by insurers shall verify:

 

  a. Name of insurance company, policy number, and expiration date; and

 

  b. Coverage required and limits on each, including the amount of deductibles
or self-insured retentions.

 

2) The policies shall provide that insurer must provide 30 days notice to Buyer
of cancellation, modification, or expiration of policy.

 

3) Seller and Insurer shall waive the right of subrogation.

 

4) The Commercial General Liability and Umbrella/Excess Liability policies shall
name Buyer, its subsidiaries and affiliates, and its respective officers,
directors, shareholders, agents, and employees as additional insureds for
liability arising out of Seller’s construction, ownership, operation, etc. The
other insurance policies may, but are not required to, name such parties as
additional insureds.

 

5) Each insurer shall be rated “A” or better by A.M. Best or have a comparable
rating from another recognized rating entity.

 

6) Policies subject to annual review by the Buyer.

 

7) Seller agrees that Seller’s insurances are primary to any insurances carried
by Buyer.

 

8) Seller is responsible for any premiums associated with Seller’s policies.

 

9) Seller or its subcontractors are responsible for additional insurance (if
any) to cover tools and equipment used to perform the work but not incorporated
into the Project.

 

B-1

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EXHIBIT C

FORM OF COMMERCIAL OPERATION CERTIFICATE

This certification (“Commercial Operation Certificate”) is delivered by Fire
Island Wind, LLC (“Seller”) to Chugach Electric Association, Inc. (“Buyer”) in
accordance with the terms of that certain Power Purchase Agreement dated
             (“Agreement”) by and between Seller and Buyer. All capitalized
terms used in this Certification but not otherwise defined herein shall have the
respective meanings assigned to such terms in the Agreement. Seller hereby
certifies and represents to Buyer the following:

With respect to Project Turbine [INSERT SERIAL NUMBER OR OTHER IDENTIFYING
NUMBER]:

 

  (i) such Project Turbine has been interconnected and Placed in Service with a
written confirmation from a qualified independent engineer attached hereto,

 

  (ii) the Interconnection and Integration Agreement has been executed,

 

  (iii) such Project Turbine has been tested according to the manufacturer’s
commissioning procedures and Prudent Wind Generation Industry Practices,

 

  (iv) all related facilities and rights necessary for continuous operation of
such Project Turbine and the sale of Net Electric Energy from such Project
Turbine and the associated Project Capacity and Credits have been completed and

 

  (v) This Commercial Operation Certificate has been executed by a duly
authorized office of the Seller.

IN WITNESS WHEREOF, the undersigned has executed this Commercial Operation
Certificate on behalf of the Seller as of the      day of              20    .

 

Fire Island Wind, LLC, a Delaware limited liability company By:  

 

  Name:  

 

  Title:  

 

 

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EXHIBIT D

NOTICE ADDRESSES

 

To Buyer:   

Chugach Electric Association, Inc.

5601 Electron Drive

Anchorage, AK 99519

 

CONTRACTUAL NOTICES and INVOICES:

Attn: Lee Thibert, Sr. VP, Strategic Planning & Corporate Affairs

Phone: (907) 762-4517

Facsimile: (907) 762-4514

E-mail: lee_thibert@chugachelectric.com

 

INVOICES:

Chugach Electric Association, Inc.

Attention: Marina Mccoy-Casey

Phone: (907) 762-4369

Fax: (907) 762-4315

Email: marina_mccoy-casey@chugachelectric.com

 

OPERATIONAL MATTER NOTICES:

Chugach Electric Association, Inc.

Attention: Burke Wick, Director, System Control

Phone: (907) 762-4779

Fax: (907) 762-4540

E-mail: burke_wick@chugachelectric.com

To Seller:   

Fire Island Wind, LLC

c/o Cook Inlet Region, Inc., its managing member

2525 C Street; Suite 500

Anchorage, AK 99509

ATTN: Bruce Anders, General Counsel

Telephone: 907-263-5503

Fax: 907-263-5182

 

With a copy to:

Suzanne Gibson

Sr. Director Energy Development

2525 C Street; Suite 500

Anchorage, AK 99509

Telephone: 907-263-5150

Fax: 907-263-6861

 

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EXHIBIT E

CONSTRUCTION SCHEDULE

 

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