Exhibit 10.17
BC Hydro Bioenergy Call for Power (Phase I) EPA

*   CERTAIN NON-PUBLIC INFORMATION HAS BEEN OMITTED FROM THIS AGREEMENT PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON MARCH 2, 2009. SUCH NON-PUBLIC INFORMATION HAS BEEN FILED WITH THE
SEC ON A CONFIDENTIAL BASIS. THE LOCATION OF THESE OMISSIONS HAS BEEN NOTED BY
[*]

BC HYDRO
AND
ZELLSTOFF CELGAR LIMITED PARTNERSHIP
ELECTRICITY PURCHASE AGREEMENT
BIOENERGY CALL FOR POWER – PHASE I
Effective Date: January 27, 2009

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BC Hydro Bioenergy Call for Power (Phase I) EPA
TABLE OF CONTENTS

              Page No.  
1. INTERPRETATION
    1  
1.1 Definitions
    1  
1.2 Appendices
    1  
1.3 Headings
    2  
1.4 Plurality and Gender
    2  
1.5 Governing Law
    2  
1.6 Industry Terms
    2  
1.7 Statutory References
    2  
1.8 Currency
    2  
1.9 Reference Indices
    2  
1.10 Conversions
    2  
1.11 Acknowledgement
    3  
1.12 Additional Interpretive Rules
    3  
1.13 General Partner
    3  
 
       
2. TERM
    3  
2.1 Term
    3  
 
       
3. REGULATORY REVIEW
    4  
3.1 Regulatory Review Termination
    4  
3.2 Regulatory Filing
    4  
3.3 EPA Support
    4  
3.4 Termination
    4  
3.5 Effect of Termination
    4  
3.6 Exemption
    4  
 
       
4. DEVELOPMENT
    5  
4.1 Development and Construction of the Incremental Seller’s Plant
    5  
4.2 Permits
    5  
4.3 Development Reports
    5  
4.4 Buyer Cost Responsibilities
    5  
4.5 Changes to Seller’s Plant before COD
    5  
 
       
5. COMMERCIAL OPERATION DATE
    6  
5.1 Guaranteed COD
    6  
5.2 Requirements for COD
    6  
5.3 Buyer Right to Observe
    7  
5.4 COD Disputes
    7  
5.5 Early COD
    8  
5.6 No Liability for Delay
    8  
5.7 Early Network Upgrades
    8  
5.8 Postponement of Guaranteed COD
    8  
 
       
6. OPERATION OF SELLER’S PLANT
    8  
6.1 Owner and Operator
    8  
6.2 Standard of Operation
    8  

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6.3 Planned Outages
    9  
6.4 Records
    9  
6.5 Reports to the Buyer
    10  
6.6 Changes to Seller’s Plant
    12  
6.7 Exemption from Utility Regulation
    12  
6.8 Disclosure of Information by FortisBC and Transmission Authority
    12  
 
       
7. PURCHASE AND SALE OBLIGATIONS
    13  
7.1 Pre-COD Energy
    13  
7.2 Post-COD Sale of Energy
    13  
7.3 Post-COD Purchase of Energy
    13  
7.4 Exclusivity
    13  
7.5 Custody, Control and Risk of, and Title to, Energy
    14  
7.6 Price and Payment Obligation
    14  
7.7 Limitations on Delivery and Acceptance Obligations
    14  
7.8 Deemed Deliveries
    15  
7.9 Modification to Seasonally Firm Energy Amount
    15  
7.10 Modification to Seasonal GBL
    16  
7.11 Buyer Capacity Right
    16  
 
       
8. ENVIRONMENTAL ATTRIBUTES
    17  
8.1 Transfer of Environmental Attributes
    17  
8.2 Exclusivity
    17  
8.3 Representations and Warranties
    18  
8.4 EcoLogoM Certification
    18  
8.5 Alternate Certification
    18  
 
       
9. METERING
    18  
9.1 Installation of Metering Equipment
    18  
9.2 Operation of Metering Equipment
    19  
9.3 Duplicate Metering Equipment
    19  
9.4 Delivery Verification
    19  
 
       
10. STATEMENTS AND PAYMENT
    20  
10.1 Statements
    20  
10.2 Payment
    20  
10.3 Taxes
    20  
10.4 Billing Guideline
    20  
10.5 Set-off
    21  
 
       
11. INSURANCE/DAMAGE AND DESTRUCTION
    21  
11.1 Insurance
    21  
11.2 Damage or Destruction of the Seller’s Plant
    22  
 
       
12. FORCE MAJEURE
    22  
12.1 Invoking Force Majeure and Notice
    22  
12.2 Exclusions
    23  
 
       
13. LIQUIDATED DAMAGES
    24  
13.1 COD Delay
    24  
13.2 Delivery Shortfalls (Seasonal)
    24  

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13.3 Capacity Call Delivery Shortfalls (Hourly)
    25  
13.4 Hourly Firm Credit Table
    26  
13.5 Exclusive Remedies for Buyer
    27  
13.6 Exclusive Remedies for Seller
    27  
13.7 Limits of Liability
    27  
13.8 Consequential Damages
    27  
 
       
14. PERFORMANCE AND INTERCONNECTION SECURITY
    28  
14.1 Delivery
    28  
14.2 Return
    28  
14.3 Enforcement
    29  
14.4 Form
    29  
14.5 Replenishment
    29  
14.6 Right to Withhold Payment
    30  
14.7 Letter of Credit Failure
    30  
 
       
15. SUSPENSION
    30  
15.1 Buyer Suspension
    30  
15.2 Seller Suspension
    30  
15.3 Resuming Deliveries
    30  
 
       
16. TERMINATION
    30  
16.1 Termination by the Buyer
    30  
16.2 Termination by the Seller
    31  
16.3 Effect of Termination
    32  
16.4 Payment on Termination by the Buyer
    33  
16.5 Payment on Termination by the Seller
    33  
16.6 Calculation of Gains, Economic Losses and Costs
    34  
16.7 Interconnection Costs Payable on Termination
    35  
16.8 Termination Payment Date
    35  
16.9 Exclusive Remedies
    35  
 
       
17. ASSIGNMENT
    36  
17.1 Assignment
    36  
17.2 Preconditions to Assignment
    36  
17.3 Assignment to Facility Lender
    37  
17.4 No Implied Consent to Exercise of Rights
    37  
17.5 Costs
    37  
17.6 No Assignment Before COD
    37  
 
       
18. INSPECTION AND AUDIT
    37  
18.1 General Inspection and Audit Rights
    37  
18.2 Inspection and Audit Rights Regarding Environmental Attributes
    38  
18.3 Consents Regarding Clean or Renewable Electricity
    38  
 
       
19. REPRESENTATIONS AND WARRANTIES
    38  
19.1 By Seller
    38  
19.2 By Buyer
    39  
 
       
20. INDEMNITIES
    40  
20.1 Seller Indemnity
    40  

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20.2 Buyer Indemnity
    40  
20.3 Indemnification Conditions
    41  
20.4 Third Party Beneficiary Conditions
    41  
 
       
21. CONFIDENTIALITY
    41  
21.1 RFP Confidentiality Agreement
    41  
21.2 Additional Confidentiality Obligation
    41  
21.3 Freedom of Information and Protection of Privacy Act
    42  
21.4 Exemption from Disclosure
    42  
 
       
22. GENERAL PROVISIONS
    43  
22.1 Independence
    43  
22.2 Enurement
    43  
22.3 Notices
    43  
22.4 Entire Agreement and Amendment
    43  
22.5 No Waiver
    44  
22.6 Dispute Resolution
    44  
22.7 Eligible Financial Contract/Forward Contract
    44  
22.8 Further Assurances
    45  
22.9 Severability
    45  
22.10 Counterparts
    45  

 
APPENDIX 1 DEFINITIONS
 
APPENDIX 2 ENERGY PROFILE
 
APPENDIX 3 ENERGY PRICE – SEASONALLY FIRM
 
APPENDIX 4 SELLER’S PLANT DESCRIPTION
 
APPENDIX 5 FUEL PLAN
 
APPENDIX 6 COD CERTIFICATE
 
APPENDIX 7 SAMPLE FORM PERFORMANCE SECURITY / INTERCONNECTION SECURITY LETTER OF
CREDIT
 
APPENDIX 8 SAMPLE FORM LENDER CONSENT AGREEMENT
 
APPENDIX 9 SAMPLE FORM DEVELOPMENT PROGRESS REPORT
 
APPENDIX 10 ADDRESSES FOR DELIVERY OF NOTICES
 
APPENDIX 11 RFP CONFIDENTIALITY AGREEMENT

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BC HYDRO
ELECTRICITY PURCHASE AGREEMENT
THIS ELECTRICITY PURCHASE AGREEMENT (“EPA”) is made as of                     ,
2008 (the “Effective Date”)
BETWEEN:
ZELLSTOFF CELGAR LIMITED PARTNERSHIP, a limited partnership formed under the
laws of British Columbia represented by its general partner, Zellstoff Celgar
Limited, a corporation incorporated under the laws of British Columbia (the
“General Partner”), with its head office at Suite 2840, PO Box 11576, 650 West
Georgia Street, Vancouver, BC V6B 4N8
(“Seller”)
AND:
BRITISH COLUMBIA HYDRO AND POWER AUTHORITY, a corporation continued under the
Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, with its head office at
333 Dunsmuir Street, Vancouver, BC V6B 5R3
(“Buyer”).
WHEREAS:
A. The Buyer issued a Bioenergy Call for Power (Phase I) — Request for Proposals
on February 6, 2008 for the supply of electrical energy to the Buyer generated
from Forest-based Biomass by projects located in British Columbia.
B. A Proposal in respect of the Project was submitted in response to the RFP.
C. The Seller desires to sell to the Buyer, and the Buyer desires to purchase
from the Seller, Eligible Energy from the Seller’s Plant on the terms and
conditions set forth in this EPA.
1. INTERPRETATION
1.1 Definitions — Appendix 1 sets out or references the definitions applicable
to certain words and phrases used in this EPA.
1.2 Appendices — Attached to and forming part of this EPA are the following
Appendices:
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Appendix 1
  -   Definitions
Appendix 2
  -   Energy Profile
Appendix 3
  -   Energy Price – Seasonally Firm
Appendix 4
  -   Seller’s Plant Description
Appendix 5
  -   Fuel Plan
Appendix 6
  -   COD Certificate
Appendix 7
  -   Sample Form Performance Security / Interconnection Security Letter of
Credit
Appendix 8
  -   Sample Form Lender Consent Agreement
Appendix 9
  -   Sample Form Development Progress Report
Appendix 10
  -   Addresses for Delivery of Notices
Appendix 11
  -   RFP Confidentiality Agreement

1.3 Headings — The division of this EPA into Articles, sections, subsections,
paragraphs, subparagraphs and Appendices and the insertion of headings are for
convenience of reference only and do not affect the interpretation of this EPA.
1.4 Plurality and Gender — Words in the singular include the plural and vice
versa, and words importing gender include the masculine, feminine and neuter
genders, in each case as the context requires.
1.5 Governing Law — This EPA is made under, and shall be interpreted in
accordance with, the laws of the Province of British Columbia. Subject to
section 22.6, any suit, action or proceeding (a “Proceeding”) arising out of, or
relating to, this EPA may be brought in the courts of the Province of British
Columbia at Vancouver. Those courts have non-exclusive jurisdiction in respect
of any Proceeding. The Parties hereby irrevocably attorn to the jurisdiction of
such courts in respect of any Proceeding.
1.6 Industry Terms — Technical or industry specific words or phrases not
otherwise defined in this EPA have the well known meaning given to those terms
as of the date of this EPA in the industry or trade in which they are applied or
used.
1.7 Statutory References — Reference to a statute means, unless otherwise
stated, the statute and regulations, if any, under that statute, in force from
time to time, and any statute or regulation passed and in force which has the
effect of supplementing or superseding that statute or those regulations.
1.8 Currency — References to dollars or $ means Canadian dollars, unless
otherwise stated. References to US$ or US dollars means United States dollars.
1.9 Reference Indices — Except as otherwise provided in Appendix 3, if any
index, tariff or price quotation referred to in this EPA ceases to be published,
or if the basis therefor is changed materially, there shall be substituted an
available replacement index, tariff or price quotation that most nearly, of
those then publicly available, approximates the intent and purpose of the index,
tariff or price quotation that has so ceased or changed. This EPA shall be
amended as necessary to accommodate such replacement index, tariff or price
quotation, all as determined by written agreement between the Parties, or
failing agreement, by arbitration under section 22.6.
1.10 Conversions — If a value used in a calculation in this EPA must be
converted to another unit of measurement for purposes of consistency or to
achieve a meaningful answer, the value shall be converted to that different unit
for purposes of the calculation.
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1.11 Acknowledgement — The Seller and the General Partner as to itself only
hereby acknowledge, represent, warrant and agree that they have obtained their
own independent legal, financial, tax, technical and other advice on all issues
relating to this EPA and all transactions contemplated under this EPA. This EPA
shall be interpreted as would an agreement that has been negotiated and drafted
by, and entered into between, commercially sophisticated parties dealing at arms
length.
1.12 Additional Interpretive Rules — For the purposes of this EPA, except as
otherwise expressly stated:

  (a)   “this EPA” means this EPA as it may from time to time be supplemented or
amended and in effect, and includes the Appendices attached to this EPA;     (b)
  the words “herein”, “hereof” and “hereunder” and other words of similar import
refer to this EPA as a whole and not to any particular section, subsection or
other subdivision;     (c)   the word “including” or “includes” is not limiting
whether or not non-limiting language (such as “without limitation” or “but not
limited to” or words of similar import) is used with reference thereto;     (d)
  the words “year”, “month” and “day” refer to a calendar year, a calendar month
and a calendar day respectively;     (e)   any consent, approval or waiver
contemplated by this EPA must be in writing and signed by the Party against whom
its enforcement is sought, and may be given, withheld, delayed or conditioned in
the unfettered discretion of the Party of whom it is requested;     (f)   all
rights and remedies of either Party under this EPA are cumulative and not
exclusive of any other remedies to which either Party may be lawfully entitled,
and either Party may pursue any and all of its remedies concurrently,
consecutively and alternatively;     (g)   where a dollar amount in this EPA is
to be adjusted for CPI from January 1, 2008 to any date after 2008, such dollar
amount is to be multiplied by CPIJanuary 1, N / CPIJanuary 1, 2008, where N is
the year in which that date falls; and     (h)   any notice required or
permitted to be given, or other thing required or permitted to be done, under
this EPA on or before a day that is not a Business Day, shall be deemed to be
given or done when required or permitted hereunder if given or done on or before
the next following Business Day.

1.13 General Partner — All references to the “Seller” herein include the General
Partner, unless the contrary is expressly indicated.  Acts or omissions of the
General Partner in relation to this EPA are deemed to be acts or omissions of
the Seller.
2. TERM
2.1 Term — The term (“Term”) of this EPA commences on the Effective Date and
continues until the 10th anniversary of COD, subject to extension for the period
specified pursuant to subsection 11.2(c), unless it is terminated earlier as
authorized under this EPA.
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3. REGULATORY REVIEW
3.1 Regulatory Review Termination — Subject to section 3.4, either Party may
terminate this EPA if within 150 days after the Effective Date this EPA has not
been accepted for filing by the BCUC as an Energy Supply Contract without
conditions (such acceptance without conditions being herein called the “BCUC
Acceptance”).
3.2 Regulatory Filing — The Buyer, on behalf of itself and the Seller, shall
file this EPA with the BCUC within a reasonable time after the Effective Date.
3.3 EPA Support — The Buyer shall take all steps reasonably required to secure
BCUC Acceptance, which shall consist of those procedural steps related to filing
this EPA and providing argument and witnesses in support of the filing. The
Seller shall provide any assistance reasonably requested by the Buyer to secure
BCUC Acceptance. The Parties shall not take, and shall cause their Affiliates
not to take, any action inconsistent with the performance by the Parties of
their obligations under this section 3.3. If a Party fails to comply with this
section 3.3 (the “Breaching Party”) and, as a result, this EPA is terminated
under section 3.1, the Breaching Party shall pay the non-Breaching Party as
liquidated damages, by not later than 5 Business Days after the date of
termination, an amount equal to $2.50/MWh multiplied by the Annual Firm Energy
Amount. Notwithstanding any other provision of this EPA, the Breaching Party’s
liability for a breach of this section 3.3 is limited to the amount set out in
this section 3.3.
3.4 Termination — A Party entitled to terminate under section 3.1 must do so by
giving notice to terminate to the other Party at any time after the right to
terminate arises pursuant to section 3.1 and prior to the earlier of:

  (a)   the date of issuance of the BCUC Acceptance;     (b)   the date of
issuance of an Exemption; and     (c)   the date that is 180 days after the
Effective Date.

3.5 Effect of Termination — If this EPA is terminated by either Party in
accordance with sections 3.1 and 3.4, the following provisions shall apply:

  (a)   on or before the 30th day following the date of termination the Buyer
shall return the Performance Security to the Seller after deducting any amount
to which the Buyer is entitled but which has not been paid pursuant to
section 3.3 of this EPA; and     (b)   except as set out in section 16.3, the
Parties shall have no further liabilities or obligations under, or in relation
to, this EPA.

3.6 Exemption — Sections 3.1 to 3.5 are of no effect if an Exemption exists
before termination of this EPA under section 3.1. Nothing in this EPA obliges
either Party to seek an Exemption, and the Parties acknowledge that they have
entered into this EPA in the expectation that no Exemption will exist.
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4. DEVELOPMENT
4.1 Development and Construction of the Incremental Seller’s Plant — The Seller
shall:

  (a)   design, engineer, construct and commission the Incremental Seller’s
Plant, perform all additional work required to incorporate the Incremental
Seller’s Plant into the Seller’s Plant, and interconnect the Seller’s Plant to
the Fortis System, all in compliance with the Project Standards and all other
terms and conditions of this EPA; and     (b)   commence the work described in
subsection 4.1(a) by the date that is the later of (i) 30 days after BCUC
Acceptance or Exemption, as applicable, and (ii) if a right to terminate arises
under section 3.1, 30 days after that right to terminate has expired, and shall
thereafter diligently and continuously carry out such Project activities.

Without limiting the foregoing, all equipment and material installed in the
Seller’s Plant shall conform to the codes, standards and rules applicable to
power plants in British Columbia. The Seller shall ensure that the Seller’s
Plant is designed, engineered and constructed to operate in accordance with the
requirements of this EPA for the full term of this EPA.
4.2 Permits — The Seller shall promptly obtain, comply with and maintain in full
force and effect, all Permits. The Seller shall on request promptly provide to
the Buyer copies of all Material Permits. The Seller acknowledges that this EPA
and the terms and conditions of this EPA are not intended to, and do not, fetter
the discretion of any Governmental Authority with respect to any decision or
action by that Governmental Authority with respect to the Project and the Buyer
shall be entitled to exercise any rights and remedies available to it under this
EPA resulting from any such decision or action including, the right to terminate
this EPA if any of the circumstances described in section 16.1 occur as a result
of the decision or action and the right to receive any Termination Payment
payable by the Seller under section 16.4 as a result of such termination.
4.3 Development Reports — On each January 1, April 1, July 1 and October 1 after
the Effective Date and continuing until COD, the Seller shall deliver to the
Buyer a report in the form specified in Appendix 9 describing the progress of
development of the Project.
4.4 Buyer Cost Responsibilities — Except as otherwise expressly provided in this
EPA, the Buyer shall be responsible for paying all costs incurred by the
Transmission Authority for the design, engineering, procurement, construction
and commissioning of the Interconnection Network Upgrades.
4.5 Changes to Seller’s Plant before COD — The Seller shall not make any
material change to the Seller’s Plant, including any change in the Plant
Capacity or the POI or to any assets that would result in such assets being
materially different than as disclosed to the Transmission Authority for
purposes of the Seller Optional Study Report or to FortisBC for the purposes of
an interconnection study relating to the Project prepared by FortisBC, before
COD without the prior consent of the Buyer, such consent not to be unreasonably
withheld, delayed or conditioned, provided that the Seller, without such
consent, may implement any change reasonably required by the Seller in
connection with its pulp production operations to any portion of the Seller’s
Plant that is also used in the conduct of the Seller’s pulp production
operations and which does not materially and adversely affect the quantity or
reliability of the Firm Energy to be delivered. The Parties acknowledge that the
Buyer may require, as a condition of any consent, that:
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  (a)   any change, and all changes in the aggregate, in the Plant Capacity made
prior to COD do not exceed 6 MW;     (b)   the Seller obtain, and deliver to the
Buyer, a study report prepared by FortisBC confirming that the change is
technically feasible on the Fortis System;     (c)   that the Seller request,
and the Buyer obtain, a new study report prepared by the Transmission Authority
confirming that the change is technically feasible on the Transmission System,
including an estimate of the incremental cost, if any, of completing
Interconnection Network Upgrades;     (d)   the Seller provide a legally binding
written commitment to pay to the Buyer the amount of all incremental costs
incurred, or to be incurred, by the Buyer as a result of the change, including
any incremental Network Upgrade Costs; and     (e)   the Seller increase the
amount of the Interconnection Security by, or provide alternate security
reasonably acceptable to the Buyer in, an amount equal to the sum of the
estimate referenced in subsection 4.5(b) above plus the Buyer’s reasonable
estimate of any other incremental costs referenced in subsection 4.5(c) above.

5. COMMERCIAL OPERATION DATE
5.1 Guaranteed COD — The Seller shall ensure that the Seller’s Plant achieves
COD by the Guaranteed COD plus Force Majeure Days.
5.2 Requirements for COD — Subject to section 5.5, COD shall occur at 24:00 PPT
on the day on which all of the following conditions have been satisfied:

  (a)   the Seller has obtained all Material Permits and all such Material
Permits are in full force and effect;     (b)   the Seller’s Plant has generated
Energy in compliance with all Material Permits for 72 continuous hours in an
amount in each hour of not less than 90% of (i) the sum of the Seasonally Firm
Energy Amount for that Season and the corresponding Seasonal GBL, divided by
(ii) the number of hours in such complete Season;     (c)   the Seller is not:

  (i)   Bankrupt or Insolvent;     (ii)   in default of any payment obligation
or requirement to post security under this EPA;     (iii)   in material default
of any of its other covenants, representations, warranties or obligations under
this EPA, other than those defaults in respect of which the Seller has paid all
LDs owing under this EPA; or     (iv)   in material default under any Material
Permit, including any tenure agreement for the site on which the Seller’s Plant
is located, or the Interconnection Agreement;

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      and     (d)   the Seller has delivered to the Buyer:

  (i)   a Declaration of Compatibility-Generator (Operating), or such other
document(s) of similar effect as may be substituted therefor, in respect of the
Plant Capacity issued by FortisBC to the Seller under the Interconnection
Agreement;     (ii)   copies of all Material Permits in a form sufficient to
demonstrate the Seller’s compliance with subsection 5.2(a);     (iii)   data
from the Metering Equipment sufficient to demonstrate compliance by the Seller
with subsection 5.2(b);     (iv)   proof of registration by the Seller with
Measurement Canada as an electricity seller with respect to the Seller’s Plant;
and     (v)   a long-term firm point to point transmission service agreement
between the Seller and FortisBC of not less than one year in duration which,
subject to renewal from time to time, will provide for firm transmission service
to the Point of Interconnection for an amount not less than the Firm Energy to
be delivered under this EPA.

provided that, except as hereinafter provided, within 30 days after the last of
the requirements set out above is satisfied the Seller delivers to the Buyer:
(I) a COD Certificate; (II) the Long Term Operating Plan; and (III) the Annual
Operating Plan for the period from COD to December 31 next following COD or if
COD occurs after September 30, for the period from COD to December 31 in the
year following COD. If the COD Certificate, Long Term Operating Plan and Annual
Operating Plan are not delivered by that date, COD shall occur at 24:00 PPT on
the day of delivery to the Buyer of the last of the foregoing documents. For
greater certainty, the Parties acknowledge that, notwithstanding satisfaction of
all the conditions set out in subsections 5.2(a) to (d) above, the Seller may
defer delivery of the documents described in (I), (II) and (III) above until,
and COD shall not occur earlier than, the date determined under section 5.5.
5.3 Buyer Right to Observe — The Seller shall provide not less than 10 days’
prior notice to the Buyer of the commencement of any proposed testing under
subsection 5.2(b) and the Buyer may attend and observe each test under
subsection 5.2(b). If the Seller has given notice to the Buyer in accordance
with this section 5.3, the Seller shall not be required to give a notice to the
Buyer of any further tests which are commenced within 72 hours of the prior test
under subsection 5.2(b). The Seller shall provide a new notice in accordance
with this section 5.3 in respect of any test that commences more than 72 hours
after the end of an unsuccessful test under subsection 5.2(b).
5.4 COD Disputes — The Buyer may, by notice to the Seller within 10 Business
Days after the date of delivery to the Buyer of a COD Certificate, contest the
COD Certificate on the grounds that the Seller has not satisfied the
requirements for COD in section 5.2. Pending the final resolution of any dispute
relating to whether the requirements for COD have been satisfied, the Seller
shall not be required to remit any COD Delay LDs, provided that upon final
determination of the matter, if the determination is made that COD has not been
achieved, the Seller shall forthwith remit COD Delay LDs in accordance with
section 13.1 calculated from the Guaranteed COD plus Force Majeure Days, if any,
together with applicable interest in accordance with subsection 10.2(b). If the
Buyer does not deliver a notice to the
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Seller contesting the COD Certificate within the time specified in this section
5.4, COD shall be deemed to have occurred as provided in section 5.2.
5.5 Early COD — Except with the Buyer’s prior consent, not to be unreasonably
withheld, delayed or conditioned, and subject to section 5.7, COD may not occur
earlier than 180 days prior to the Guaranteed COD.
5.6 No Liability for Delay — The Buyer shall have no liability for delays in
completion of (i) any Network Upgrades, or (ii) any work undertaken by FortisBC
on the Fortis System or on the Seller’s Plant’s side of the point at which the
Seller’s Plant interconnects with the Fortis System, in each case howsoever
arising.
5.7 Early Network Upgrades — Rescheduling completion of any Interconnection
Network Upgrades prior to the Estimated Interconnection Facilities Completion
Date shall require the prior consent of each of the Transmission Authority, the
Buyer and the Seller. The Seller acknowledges that the Buyer may require as a
condition of any consent, any or all of the conditions set out in
subsection 4.5(b), 4.5(c) or
4.5(d).
5.8 Postponement of Guaranteed COD — If the Estimated Interconnection Facilities
Completion Date is later than 90 days prior to the Guaranteed COD, and unless
otherwise agreed by the Parties in writing, the Guaranteed COD shall be
postponed to the Estimated Interconnection Facilities Completion Date plus
90 days.
6. OPERATION OF SELLER’S PLANT
6.1 Owner and Operator — The Seller shall own the Seller’s Plant and shall
ensure that the Seller’s Plant is operated by qualified and experienced
individuals.
6.2 Standard of Operation -

  (a)   The Seller shall cause the Seller’s Plant to be operated and maintained
in compliance with the Project Standards.     (b)   Without limiting section 7.2
but subject to subsection 7.7(a), when the Seller is delivering Energy to the
Buyer, the Seller shall make commercially reasonable efforts to operate the
Seller’s Plant in a manner that ensures delivery of Energy at the point at which
the Seller’s Plant interconnects with the Fortis System at a uniform rate within
each hour during which Eligible Energy is delivered.     (c)   The Seller shall,
except with the Buyer’s prior consent, such consent not to be unreasonably
withheld, delayed or conditioned, comply in all material respects with the Fuel
Plan. The Buyer, in determining whether to grant any such consent, shall review
and consider in good faith the Seller’s reasonable requirements for any
variation from the Fuel Plan.     (d)   The Seller shall maintain during the
Term after COD a firm point to point transmission service agreement between the
Seller and FortisBC providing firm transmission service to the Point of
Interconnection for an amount not less than the Firm Energy to be delivered
under this EPA.

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6.3 Planned Outages — The Seller shall:

  (a)   give the Buyer not less than 90 days’ prior notice of any Planned
Outage, or such shorter period to which the Buyer may consent, such consent not
to be withheld, delayed or conditioned, and such notice, when reasonably
possible, shall state the start date and hour and the end date and hour for the
Planned Outage. Notwithstanding the foregoing, at any time prior to 48 hours
before the start of a Planned Outage that will be more than 7 days long, the
Seller may change the proposed start time for the Planned Outage by not more
than 48 hours and at any time prior to 48 hours before the end of the Planned
Outage, the Seller may change the proposed end time of the Planned Outage on
notice to, and without the consent of, the Buyer, provided that if as a result
of such notice from the Seller the Planned Outage starts later than originally
scheduled, there will be no deemed Eligible Energy under section 7.8 during the
period between the originally scheduled start time and the revised start time,
and if as a result of such notice from the Seller the Planned Outage ends
earlier than originally scheduled, the Energy produced between the originally
scheduled end time and the revised end time shall be purchased by the Buyer
pursuant to section 7.3;     (b)   in accordance with the Buyer’s written
instructions, use the Buyer’s web-based application or other system for
communicating Planned Outages to the Buyer;     (c)   make commercially
reasonable efforts to coordinate all Planned Outages with the Buyer’s
requirements as notified to the Seller; and     (d)   make commercially
reasonable efforts to coordinate all Planned Outages with the maintenance
schedules of the Transmission Authority and FortisBC where such schedules are
publicly available or otherwise notified to the Seller.

Not less than 30 days before a Planned Outage is scheduled to commence, the
Buyer may request the Seller to reschedule that Planned Outage. Within 14 days
after receipt of such a request, the Seller shall provide the Buyer with an
estimate, together with reasonable supporting detail, of the costs, if any, the
Seller expects to incur, acting reasonably, as a result of rescheduling the
Planned Outage in accordance with the Buyer’s request. Within 7 days after
receipt of such cost estimate, the Buyer shall notify the Seller if the Buyer
requires the Seller to reschedule the Planned Outage, and upon receipt of such
notice from the Buyer, the Seller shall adjust the schedule for the Planned
Outage as required by the Buyer, provided that the rescheduling is consistent
with Good Utility Practice and does not have a materially adverse effect on the
operation of the Seller’s Plant or on any facility that is a thermal host for
the Seller’s Plant. The Buyer shall reimburse the Seller for all costs
reasonably incurred by the Seller as a result of such rescheduling, but not
exceeding the estimate delivered by the Seller to the Buyer under this section
6.3.
For payment and all other purposes of this EPA, all Planned Outages shall be
deemed to start at the beginning of the hour in which that Outage actually
commences and to end at the start of the hour immediately following the hour in
which that Outage actually terminates.
6.4 Records — The Seller shall prepare and maintain all Records or duplicates of
such Records, at the Seller’s Plant, or following the expiry of the Term or the
earlier termination of this EPA, at such other location as may be agreed in
writing between the Parties, for a period of not less than 7 years from the date
on which each such Record is created.
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6.5 Reports to the Buyer

  (a)   Fuel Plan -

  (i)   Not less than 60 days prior to the fifth anniversary of COD (the
“Five-Year Anniversary”), the Seller shall deliver to the Buyer a Fuel Plan for
the remainder of the Term containing information of the type and detail set out
in the then existing Fuel Plan, any proposed variations from the then existing
Fuel Plan, and such other planning data relating to the Fuel as the Buyer may
reasonably request. Subject to the Buyer’s prior consent, which shall not be
unreasonably withheld, delayed or conditioned, such replacement Fuel Plan shall
replace the then existing Fuel Plan effective as of the Five-Year Anniversary.  
  (ii)   The Seller may revise the Fuel Plan at any time with the Buyer’s prior
consent, such consent not to be unreasonably withheld, delayed or conditioned.
The Seller shall give prompt and due consideration to any revisions to the Fuel
Plan that the Buyer may reasonably request.

  (b)   Annual Fuel Report — Not less than 60 days following the end of each
Contract Year, the Seller shall deliver to the Buyer a report setting out with
reference to the Fuel Plan:

  (i)   a description of the source and volume of Fuel consumed in that Contract
Year, together with such additional information relating to the Fuel as the
Buyer may reasonably require;     (ii)   a report on all material variances in
that Contract Year between the Fuel Plan and the Seller’s actual procurement and
consumption of Fuel;     (iii)   the total Forest-based Biomass, Auxiliary Fuel
and Start-up Fuel (all expressed in GJ) used to generate Eligible Energy in that
Contract Year; and     (iv)   the Auxiliary Fuel Overage and the Auxiliary Fuel
Energy Overage (determined by utilizing the average heat rate applicable to the
conversion of Fuel to Eligible Energy) for that Contract Year.

  (c)   Long Term Operating Plan - By the date specified in section 5.2, the
Seller shall provide to the Buyer an operating plan for the Seller’s Plant for a
five-year period commencing at COD and ending on December 31 of the year in
which the Five-Year Anniversary occurs, including the long-term major
maintenance schedule. On or before September 30 in each year during the Term
after the year in which COD occurs, the Seller shall provide the Buyer with an
updated plan for the five-year period commencing on the next succeeding January
1 or to the end of the Term, whichever is less. The Seller shall promptly
provide the Buyer with copies of any amendments or modifications to the Long
Term Operating Plan. The Long Term Operating Plan shall be consistent with Good
Utility Practice and is intended to assist the Buyer in planning activities and
is not a guarantee of the timing of Planned Outages;     (d)   Annual Operating
Plan - On or before September 30 in each year during the Term, the Seller shall
provide to the Buyer an operating plan for the Seller’s Plant for the 14-month
period commencing on the next succeeding November 1, including any necessary
update

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      in respect of the then current Annual Operating Plan, which plan may be
included in the Long Term Operating Plan. The plan shall include a schedule of
Planned Outages for that 14-month period which shall comply with the provisions
of section 6.3 and be consistent with Good Utility Practice. The Seller may, on
not less than 90 days’ prior notice to the Buyer, amend the Annual Operating
Plan, subject to the provisions of section 6.3. The Annual Operating Plan shall
be consistent with Good Utility Practice and is intended to assist the Buyer in
planning activities and is not a guarantee of the timing of Planned Outages;    
(e)   Notice of Outages - Other than for a Planned Outage for which notice has
been given pursuant to section 6.3, the Seller shall promptly notify the Buyer
of any Outage, or any anticipated Outage, of the Seller’s Plant. Any notice
under this subsection shall include a statement of the cause of the Outage, the
proposed corrective action and the Seller’s estimate of the expected duration of
the Outage, and the Seller shall promptly communicate such information to the
Buyer in such manner as the Buyer may instruct the Seller from time to time. The
Seller shall, except with the Buyer’s consent, such consent not to be
unreasonably withheld, delayed or conditioned, use best efforts to promptly
remove or mitigate any Forced Outage. The Seller shall deliver to the Buyer
concurrently with delivery of the statement described in subsection 10.1(a), a
report of all Outages during the month for which the statement described in
subsection 10.1(a) is issued, including a statement of the cause of each Outage;
    (f)   Interconnection Agreement Defaults - The Seller shall give promptly to
the Buyer a copy of any notice of a breach of, or default under, the
Interconnection Agreement, whether given or received by the Seller;     (g)  
Notice of Buyer Termination Event - The Seller shall notify the Buyer promptly
of any Buyer Termination Event, or any material risk that a Buyer Termination
Event or any default by the Seller under any agreement with a Facility Lender
may occur;     (h)   Energy Schedules - After COD:

  (i)   on each Thursday by 12:00 PPT, the Seller shall deliver to the Buyer a
schedule of the expected deliveries of Eligible Energy in each hour of each day
for the next succeeding week commencing at 00:00 PPT on Monday; and     (ii)  
on each day by 12:00 PPT, the Seller shall deliver to the Buyer a schedule of
the expected deliveries of Eligible Energy for the next succeeding 24 hour
period commencing at 00:00 PPT,

      provided that such schedules are provided for planning purposes only and
do not constitute a guarantee by the Seller that Energy shall be delivered in
accordance with the schedules and do not limit the amount of Energy the Seller
may deliver during the periods covered by the schedules. The Seller shall
deliver a revised schedule to the Buyer promptly after becoming aware of any
expected material change in a filed Energy schedule;     (i)   Reporting on
Clean or Renewable Electricity - The Seller shall within 10 Business Days after
a request from the Buyer, provide to the Buyer all information the Buyer

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      reasonably requires to verify qualification of the output from the
Seller’s Plant as Clean or Renewable Electricity;     (j)   Reporting on
Environmental Certification – The Seller shall within 10 Business Days after a
request from the Buyer, provide to the Buyer:

  (i)   all information the Buyer requires to verify the quantity of Energy
generated by the Seller’s Plant, qualification of the Seller’s Plant and all or
part of the Energy for the Environmental Certification, if any, the status of
the Environmental Certification, if any, and the existence, nature and quantity
of Environmental Attributes;     (ii)   any information required for the
purposes of any Environmental Attribute or energy tracking system as directed by
the Buyer; and     (iii)   any other information the Buyer requires to enable
the Buyer or its Affiliates to obtain or realize the full benefit of the
Environmental Attributes, including sales of the Environmental Attributes to
third Persons; and

  (k)   Reporting on Environmental Impacts – The Seller shall deliver to the
Buyer not later than February 28 in each year after COD, or in accordance with
any other periodic reporting requirement prescribed by Laws or terms and
conditions of Permits, environmental impact reports that comply with this
subsection, and any reasonable written guidelines issued by the Buyer from time
to time relative to the form and content of such reports. Environmental impact
reports shall provide annual data concerning the impact of the operation of the
Seller’s Plant on the environment, including GHG emissions, and the air and
water quality, land use, biota and habitat impacts. Data relative to GHG
emissions may include Fuel use by Fuel type, heat rate, and energy content of
fuel and other relevant data.

6.6 Changes to Seller’s Plant — The Seller shall not make any material change to
the Seller’s Plant after COD without the prior consent of the Buyer, such
consent not to be unreasonably withheld, delayed or conditioned, provided that
the Seller may implement any change reasonably required by the Seller, without
the Buyer’s consent, in connection with its pulp production operations, which
does not materially and adversely affect the quantity or reliability of the Firm
Energy to be delivered, to any portion of the Seller’s Plant that is also used
in the conduct of the Seller’s pulp production operations. The Seller
acknowledges that the Buyer may require, as a condition of any consent, any or
all of the conditions set out in subsection 4.5(b), 4.5(c), or 4.5(d), provided
that notwithstanding the foregoing, the Seller shall not make any change to the
Plant Capacity or the POI without the consent of the Buyer.
6.7 Exemption from Utility Regulation — Neither the Seller nor the General
Partner shall take any action that would cause the Seller or the General Partner
to cease to be exempt, or omit to take any action necessary for the Seller or
the General Partner to continue to be exempt, from regulation as a “public
utility”, as defined in the UCA, with respect to the Seller’s Plant, the sale of
Energy and the performance by the Seller of its obligations under this EPA if
such designation as a “public utility” could reasonably be expected to have an
adverse effect on the Buyer or its interests under this EPA.
6.8 Disclosure of Information by FortisBC and Transmission Authority — The
Seller consents to FortisBC and the Transmission Authority disclosing to the
Buyer on its request:
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  (a)   all information directly related to Network Upgrades, including any
information provided by the Seller to FortisBC or the Transmission Authority
that relates to, or affects, Network Upgrades including any interconnection
request, studies or reports that contain information reasonably related to
Network Upgrades;     (b)   any studies that FortisBC or the Transmission
Authority may have and applications that may be filed in respect thereof from
time to time with respect to the Seller’s Plant;     (c)   all metering data
collected by, or provided to, FortisBC or the Transmission Authority with
respect to the Seller’s Plant;     (d)   copies of any notice of a breach of, or
default under, the Interconnection Agreement given or received by FortisBC and
particulars of any such breach or default; and     (e)   any other information
provided by the Seller to the Transmission Authority or FortisBC, or by the
Transmission Authority or FortisBC to the Seller, that is relevant to the
administration of this EPA.

The Seller shall promptly on request by the Buyer provide to the Buyer written
confirmation of the foregoing consent for delivery by the Buyer to FortisBC and
the Transmission Authority.
7. PURCHASE AND SALE OBLIGATIONS
7.1 Pre-COD Energy — The Buyer shall make commercially reasonable efforts,
excluding any acceleration of the Estimated Interconnection Facilities
Completion Date, to accept delivery at the POI of all Pre-COD Energy. Prior to
the earlier of COD and the Guaranteed COD the Seller may, on prior notice to the
Buyer, sell any Energy to any Person other than the Buyer, and in that case such
Energy shall not be delivered, or be deemed to be delivered, to the Buyer.
7.2 Post-COD Sale of Energy — Subject to subsection 7.7(a) in each Season during
the Term after COD, the Seller shall sell and deliver to the Buyer at the POI,
the Seasonally Firm Energy Amount for the applicable Season.
7.3 Post-COD Purchase of Energy — Subject to subsection 7.7(b) in each Season
during the Term after COD, the Buyer shall purchase, and shall accept delivery
from the Seller at the POI of, all Eligible Energy.
7.4 Exclusivity — The Seller shall not at any time during the Term commit, sell
or deliver any Energy to any Person, other than the Buyer under this EPA,
except:

  (a)   Pre-COD Energy sold to third Persons in accordance with section 7.1;    
(b)   *     (c)   during any period in which the Buyer is in breach of its
obligations under section 7.3; and     (d)   during any period in which the
Buyer is not accepting deliveries of Eligible Energy from the Seller due to
Force Majeure invoked by the Buyer.

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7.5 Custody, Control and Risk of, and Title to, Energy — Custody, control and
risk of, and title to, all Pre-COD Energy delivered to the Buyer and all
Eligible Energy passes from the Seller to the Buyer at the POI. The Seller shall
ensure that all Eligible Energy delivered to the Buyer under this EPA is free
and clear of all liens, claims, charges and encumbrances. The Seller shall be
responsible for all transmission losses and costs, if any, relating to the
transmission of Eligible Energy from the Seller’s Plant to the POI.
7.6 Price and Payment Obligation — The Buyer shall pay for all Test Energy in
respect of which the Seller has not given a notice under section 7.1, and all
Eligible Energy, in accordance with Appendix 3.
7.7 Limitations on Delivery and Acceptance Obligations -

  (a)   Limitations on Delivery Obligations - The obligations of the Seller
under section 7.2 and subsection 7.11(c) are excused during the occurrence of:

  (i)   Force Majeure invoked by the Seller in accordance with Article 12;    
(ii)   any Transmission System Outage for reasons that are not attributable to
the Seller or the Seller’s Plant;     (iii)   disconnection of the Seller’s
Plant from the Fortis System for reasons that are not attributable to the Seller
or the Seller’s Plant;     (iv)   disconnection of the Fortis System from the
Transmission System or an Outage on the Fortis System, in either case for
reasons that are not attributable to the Seller or the Seller’s Plant;     (v)  
the exercise by the Seller of its right to suspend its performance under this
EPA in accordance with Article 15; and     (vi)   Authorized Planned Outages.

  (b)   Limitations on Acceptance Obligations - The obligations of the Buyer
under sections 7.1 and 7.3 are excused during the occurrence of:

  (i)   Force Majeure invoked by the Buyer in accordance with Article 12;    
(ii)   any Transmission System Outage for reasons not attributable to the Buyer;
    (iii)   disconnection of the Seller’s Plant from the Fortis System for
reasons not attributable to the Buyer;     (iv)   disconnection of the Fortis
System from the Transmission System or an Outage on the Fortis System, in either
case for reasons not attributable to the Buyer; and     (v)   the exercise by
the Buyer of its right to suspend the Seller’s performance under this EPA in
accordance with Article 15.

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7.8 Deemed Deliveries -

  (a)   If in any hour after COD the Seller is unable to deliver Eligible Energy
at the POI at any time during that hour solely as a result of a Transmission
System Outage not caused by (i) the Seller or the Seller’s Plant or (ii) events
beyond the control of the Buyer or the Transmission Authority (a “Delivery
Interruption Outage”), then notwithstanding that the Buyer is excused under
subsection 7.7(b) from its obligations to purchase under section 7.3, the
Eligible Energy that could have been generated and delivered to the POI in each
hour as Eligible Energy but for the occurrence of the Delivery Interruption
Outage shall be deemed to be Eligible Energy.     (b)   Deemed Eligible Energy
shall be determined based on the best available information, including the
Seller’s Energy schedule for each hour during the Delivery Interruption Outage
and readings of the Metering Equipment before and after the occurrence of the
Delivery Interruption Outage.     (c)   There shall be no deemed Eligible Energy
during any period specified as a Planned Outage in a notice delivered by the
Seller under section 6.3.     (d)   For greater certainty, the provisions of
this section 7.8 shall not apply during any period when either Party is excused,
in accordance with Article 12, from its obligation to deliver, or to accept
delivery of, Eligible Energy as a result of Force Majeure.

7.9 Modification to Seasonally Firm Energy Amount — At any time prior to the
first anniversary of COD, the Seller may, by exercising the election described
in subsection 7.9(b), elect to increase or decrease the Seasonally Firm Energy
Amount in each Season, subject to the following:

  (a)   any such increases or decreases in the Seasonally Firm Energy Amounts
must not result in:

  (i)   the Annual Firm Energy Amount increasing or decreasing by more than 10%;
    (ii)   the Seasonally Firm Energy Amount for the period from May 1 to
July 31, inclusive, exceeding one-quarter of the Annual Firm Energy Amount;    
(iii)   the sum of the resulting Seasonally Firm Energy Amount and the Seasonal
GBL exceeding the Plant Capacity then prevailing multiplied by the number of
hours in that Season; or     (iv)   the Seasonally Firm Energy Amount in Season
1 (February 1 to April 30) or Season 4 (November 1 to January 31) decreasing by
more than 10%;

  (b)   the Seller may only exercise its election to increase or decrease the
Seasonally Firm Energy Amounts by delivering to the Buyer prior to the first
anniversary of COD a Firm Energy Table that has been revised only to incorporate
the proposed increase or decrease in the Seasonally Firm Energy Amounts in a
manner that complies with subsection 7.9(a). The revised Firm Energy Table shall
be deemed to replace the then existing Firm Energy Table effective:

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  (i)   if the revised Firm Energy Table is delivered to the Buyer within
30 days of the end of the Season in which the delivery occurs, on the first day
of the second complete Season that immediately follows such delivery; and

  (ii)   if the revised Firm Energy Table is delivered to the Buyer more than
30 days before the end of the Season in which the delivery occurs, on the first
day of the first complete Season that immediately follows such delivery;

  (c)   concurrently with the delivery of a revised Firm Energy Table pursuant
to subsection 7.9(b), the Seller shall amend or replace the Performance Security
to adjust the amount thereof to reflect any change to the Annual Firm Energy
Amount that arises as a result of the Seller’s election to increase or decrease
any Seasonally Firm Energy Amount pursuant to this section 7.9; and     (d)  
the Seller may elect to increase or decrease the Seasonally Firm Energy Amounts
under this Section 7.9 only once.

7.10 Modification to Seasonal GBL — At any time after COD, the Seller may, with
the consent of the Buyer, such consent not to be unreasonably delayed, withheld
or conditioned, by exercising the election described in subsection 7.10(b),
elect to increase or decrease the Seasonal GBL subject to the following:

  (a)   any such increase or decrease in the Seasonal GBL must reconcile with
the Annual GBL, such that the aggregate Seasonal GBL following any such change
equals the Annual GBL;     (b)   the Seller may only exercise its election to
increase or decrease the Seasonal GBL by delivering to the Buyer in any month
other than December a Seasonal GBL Table that has been revised only to
incorporate the proposed increase or decrease in the Seasonal GBL in a manner
that complies with subsection 7.10(a). The revised Seasonal GBL Table shall be
deemed to replace the then existing Seasonal GBL Table effective on the first
day of January immediately following the date on which the Buyer provides its
consent to such revised Seasonal GBL Table; and     (c)   the Seller may elect
to increase or decrease the Seasonal GBL under this section 7.10 only once in
any year.

    For greater certainty, the Seller may not modify the Annual GBL without the
Buyer’s consent.

7.11 Buyer Capacity Right — The Buyer, in its sole discretion, may require the
Seller to deliver up to the Hourly Firm Energy Amount of Hourly Eligible Energy
in any hour during a period specified by the Buyer (in each case, a “Capacity
Call”), and the Seller shall comply with any such direction, subject to the
following:

  (a)   upon providing the Seller with at least 24 hours’ prior notice, the
Buyer may require a Capacity Call for a period of not less than one day and not
exceeding seven continuous days, provided that:

  (i)   the Capacity Call may only occur in the period from and including
November 1 through the last day of February in the following year (the “Capacity
Call Period”);

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  (ii)   the number of all Capacity Calls in any Capacity Call Period may not
exceed four, for a combined total of no greater than 14 days;     (iii)   during
a Capacity Call, Hourly Eligible Energy shall be deliverable only during On-Peak
Hours;     (iv)   the period between successive Capacity Calls must be not less
than the number of days of the previous Capacity Call or two days, whichever is
greater;     (v)   the Capacity Call may not occur during an Authorized Planned
Outage; and     (vi)   for the sake of clarity, the Energy delivered pursuant to
a Capacity Call shall be Eligible Energy and included in the calculation of the
Seasonally Firm Energy Amount;

  (b)   the Buyer shall provide notice of a Capacity Call by email (the
“Capacity Call Notice”), and shall include in its notice:

  (i)   the duration of the Capacity Call; and     (ii)   the Hourly Firm Energy
Amount which the Buyer requires the Seller to make available in each hour during
the Capacity Call (the “Capacity Call Amount”);

  (c)   subject to subsection 7.7(a), for the duration of a Capacity Call, the
Seller shall deliver Hourly Eligible Energy in each hour that is equal to or
greater than the Capacity Call Amount; and     (d)   the Parties will cooperate
with each other in discussing the schedule of expected Capacity Calls in each
Capacity Call Period, provided that the terms of this subsection 7.11(d) will
not in any way limit or constrain the Capacity Calls that the Buyer may require.

8. ENVIRONMENTAL ATTRIBUTES
8.1 Transfer of Environmental Attributes — The Seller hereby transfers, assigns
and sets over to the Buyer all right, title and interest in and to the
Environmental Attributes. The Buyer shall not be required to make any payment
for the Environmental Attributes. The Seller, upon the reasonable request of the
Buyer, shall do, sign and deliver to the Buyer, or cause to be done or signed
and delivered to the Buyer, all further acts, deeds, things, documents and
assurances required to give effect to this section 8.1.
8.2 Exclusivity — The Seller shall not at any time during the Term commit, sell
or deliver any Environmental Attributes to any Person, other than the Buyer. The
Seller shall not use or apply any Environmental Attributes for any purpose
whatsoever. The Seller shall ensure that all marketing materials produced by or
for the Seller, all public or other statements by the Seller and all other
communications by the Seller in any form whatsoever, contain no false or
misleading statements concerning the ownership of the Eligible Energy or
Environmental Attributes or the destination, end user or recipient of the
Eligible Energy or Environmental Attributes. The Seller acknowledges and agrees
that the exclusive rights conferred by this section 8.2 are of fundamental
importance, and that, without prejudice to any right to claim damages,
compensation or an accounting of profits, the granting of an
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interim, interlocutory and permanent injunction is an appropriate remedy to
restrain any breach or threatened breach by the Seller of the obligation set out
in this section 8.2.
8.3 Representations and Warranties — The Seller and the General Partner as to
itself only, represent and warrant to the Buyer and acknowledge that the Buyer
is relying on those representations and warranties in entering into this EPA,
that the Seller is the legal and beneficial owner of the Environmental
Attributes free and clear of all liens, claims, charges and encumbrances of any
kind whatsoever and no other Person has any agreement or right of any kind
whatsoever to purchase or otherwise to acquire or to claim or otherwise make any
use whatsoever of the Environmental Attributes.
8.4 EcoLogoM Certification — Without limiting the Seller’s obligation to comply
with subsection (e) of the definition of Project Standards, if required by the
Buyer, the Seller shall use commercially reasonable efforts to obtain EcoLogoM
Certification for the Seller’s Plant and all the Eligible Energy, other than
that attributable to the use of Auxiliary Fuel to the extent permitted under
this EPA, and shall use commercially reasonable efforts to maintain the EcoLogoM
Certification for such period during the remainder of the Term as the Buyer may
require. The Seller shall notify the Buyer forthwith if the Seller fails to
obtain EcoLogoM Certification as required hereunder or if, at any time during
the period of Term specified by the Buyer, the Seller does not have EcoLogoM
Certification. If the Buyer requires the Seller to obtain EcoLogoM
Certification, the Buyer shall be responsible for all certification, audit and
licensing fees required to obtain the EcoLogoM Certification, unless the Seller
requires the EcoLogoM Certification to comply with subsection (e) of the
definition of the Project Standards or the Seller fails to obtain or maintain
the EcoLogoM Certification, in either of which cases the Seller shall be
responsible for all such costs.
8.5 Alternate Certification — The Seller shall, at the Buyer’s request and at
the Buyer’s cost, use commercially reasonable efforts to apply for, and
diligently pursue and maintain, any certification, licensing or approval offered
by any Governmental Authority or independent certification agency evidencing
that the Seller’s Plant and the Eligible Energy has Environmental Attributes as
an addition or an alternative to the EcoLogoM Certification. Any failure by the
Seller to use commercially reasonable efforts pursuant to this section is a
“material default” for the purposes of this EPA, and the Buyer may terminate
this EPA under subsection 16.1(e).
9. METERING
9.1 Installation of Metering Equipment — The Seller shall ensure that revenue
metering equipment (the “Metering Equipment”) is installed, operated and
maintained in accordance with the requirements of FortisBC and the Transmission
Authority and the requirements of this section. The Seller shall ensure that the
Seller’s Plant is equipped with electronic meters and SCADA capability. The
Metering Equipment shall be installed at a location approved by the Buyer,
acting reasonably, which location shall be such that the Metering Equipment can
measure the Energy generated by the Seller’s Plant independent of any other
generation equipment or facilities. The Seller shall ensure that the Metering
Equipment is:

  (a)   capable of being remotely interrogated;     (b)   sufficient to
accurately meter the quantity of Test Energy and Eligible Energy;     (c)  
calibrated to measure the quantity of Test Energy and Eligible Energy delivered
to the interconnection between the Seller’s Plant and the Fortis System, after
adjusting for any line losses from the Seller’s Plant to that interconnection;
and

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  (d)   in compliance with all requirements set out in the Electricity and Gas
Inspection Act (Canada) and associated regulations.

9.2 Operation of Metering Equipment — The Metering Equipment shall be used for
purposes of calculating the amount of Test Energy and Eligible Energy. In the
event of any failure of the Metering Equipment, the Parties shall, until such
time as the Metering Equipment has been repaired or replaced, rely upon
information provided by any back-up meter installed pursuant to section 9.3, or,
in the absence of such back-up meter, the Seller’s metering equipment, if any,
for purposes of calculating payments due under this EPA. If there is any dispute
regarding the accuracy of the Metering Equipment, either Party may give notice
to the other Party of the dispute, in which case the Buyer and the Seller shall
proceed to rectify the matter in accordance with the Electricity and Gas
Inspection Act (Canada). The Seller shall allow the Buyer to access the Seller’s
Plant at any time during normal business hours on reasonable advance notice for
purposes of inspecting the Metering Equipment. The Seller shall, on the Buyer’s
request, cause the Metering Equipment to be inspected, tested and adjusted
provided that, except as set out below, the Buyer shall not make such a request
more than once in each year during the Term. The Seller shall give the Buyer
reasonable prior notice of all inspections, tests and calibrations of the
Metering Equipment and shall permit a representative of the Buyer to witness and
verify such inspections, tests and calibration. If either Party has reason to
believe that the Metering Equipment is inaccurate, the Seller shall cause the
Metering Equipment to be tested forthwith upon becoming aware of the potential
inaccuracy. The Seller shall provide the Buyer with copies of all meter
calibration test results and all other results of any test of the Metering
Equipment. If any test of the Metering Equipment discloses an inaccuracy outside
the inaccuracies permitted under the Electricity and Gas Inspection Act
(Canada), any payments or adjustments made or calculated under this EPA that
would have been affected by the inaccuracy shall, so far as practicable, be
recalculated to correct for the inaccuracy. For purposes of such correction, if
the inaccuracy is traceable to a specific event or occurrence at a reasonably
ascertainable time, then the adjustment shall extend back to that time;
otherwise, it shall be assumed that the error has existed for a period equal to
one half of the time elapsed since COD or one half of the time since the last
meter test, whichever is shorter, but in any event shall not extend back more
than 36 months. Any amounts which are determined to be payable or subject to
refund as a result of such re-computations shall be paid to the Party entitled
to such amounts within 30 days after the paying Party is notified of the
re-computation.
9.3 Duplicate Metering Equipment — The Buyer may at any time at the Buyer’s sole
cost, on not less than 30 days’ prior notice to the Seller, install a duplicate
revenue meter at the Seller’s Plant at a location to be agreed upon by the Buyer
and the Seller, acting reasonably, and the Seller shall allow the Buyer to
access the Seller’s Plant for such purpose and for the purpose of inspecting and
maintaining such equipment. The Seller shall make transformers, transformer
connections and telephone access available to the Buyer, as required, if the
Buyer elects to install a duplicate revenue meter. Any duplicate revenue meter
and metering equipment installed by the Buyer shall remain the property of the
Buyer, and the Seller shall not tamper with, remove or move such meter or
equipment.
9.4 Delivery Verification — The Buyer, in consultation with FortisBC and the
Seller, shall establish and implement a system (the “Tracking System”), to be
recorded in writing, for verifying deliveries of Eligible Energy at the POI,
which may include e-tagging. Notwithstanding any other provision of this EPA and
in the absence of any manifest error in the Tracking System, in the event of any
inconsistency between the quantity of Eligible Energy verified by the Tracking
System and the Metered Energy, the Tracking System will govern.
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10. STATEMENTS AND PAYMENT
10.1 Statements -

  (a)   Subject to the provisions of Articles 4 and 5 of Appendix 3, in each
month after the month in which Pre-COD Energy is first delivered to the Buyer,
the Seller shall, by the 15th day of the month, deliver to the Buyer a statement
prepared by the Seller for the preceding month. The statement must comply with
Articles 4 and 5 of Appendix 3 and any billing guideline issued by the Buyer
pursuant to section 10.4 and must indicate, among other things, (i) the amount
of Test Energy and/or Eligible Energy, (ii) the price payable for the Test
Energy and/or Eligible Energy, (iii) any LDs payable by the Seller to the Buyer,
(iv) any Auxiliary Fuel Overage Credit, (v) any Avoidable Costs, and (vi) any
Final Amounts owing by either Party to the other Party, and set out in
reasonable detail the manner by which the statement and the amounts shown
thereon were computed. To the extent not previously delivered pursuant to the
requirements of this EPA, the statement must be accompanied by sufficient data
to enable the Buyer, acting reasonably, to satisfy itself as to the accuracy of
the statement.     (b)   Either Party may give notice to the other Party of an
error, omission or disputed amount on a statement within 36 months after the
statement was first issued together with reasonable detail to support its claim.
After expiry of that 36 month period, except in the case of wilful misstatement
or concealment, amounts on a previously issued statement shall be deemed to be
accurate and amounts which were omitted shall be deemed to be nil, other than
amounts disputed in accordance with this subsection 10.1(b) within the 36 month
period, which shall be resolved in accordance with this EPA.

10.2 Payment -

  (a)   Within 30 days after receipt of a statement delivered pursuant to
subsection 10.1(a) and subject to sections 10.5 and 14.6, the Buyer shall pay to
the Seller the amount set out in the statement, except to the extent the Buyer
in good faith disputes all or part of the statement by notice to the Seller in
compliance with subsection 10.1(b). If the Buyer disputes any portion of a
statement, the Buyer must nevertheless pay the undisputed net amount payable by
the Buyer pursuant to the statement.     (b)   Any amount required to be paid in
accordance with this EPA, but not paid by either Party when due, shall accrue
interest at an annual rate equal to the Prime Rate plus 2%, compounded monthly.
Any disputed amount that is found to be payable shall be deemed to have been due
within 30 days after the date of receipt of the statement which included or
should have included the disputed amount.

10.3 Taxes — All dollar amounts in this EPA do not include any value added,
consumption, commodity or similar taxes applicable to the purchase by the Buyer
of the Test Energy or the Eligible Energy, including GST and PST, which, if
applicable, shall be borne by the Buyer and added to each statement.
10.4 Billing Guideline — The Seller shall comply with any reasonable written
billing guideline, including any requirements with respect to the form of
statements pursuant to section 10.1, issued by the Buyer, provided that any such
billing guideline shall not vary the express terms of this EPA. If there is any
conflict between a billing guideline and this EPA, this EPA shall govern.
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10.5 Set-off — If the Buyer and the Seller each owe the other an amount under
this EPA in the same month, then such amounts with respect to each Party shall
be aggregated and the Parties may discharge their obligations to pay through
netting, in which case the Party, if any, owing the greater aggregate amount
shall pay to the other Party the difference between the amounts owed, provided
that:

  (a)   this section 10.5 applies only to:

  (i)   any purchase price for Test Energy and/or Eligible Energy owing by the
Buyer to the Seller;     (ii)   any LDs owing by the Seller to the Buyer;    
(iii)   any amount owing by the Seller to the Buyer under Article 5 of
Appendix 3;     (iv)   any Termination Payment or Final Amount owing by either
Party to the other Party; and     (v)   any amount owing by the Seller to the
Buyer in respect of any Auxiliary Fuel Overage Credit; and

  (b)   no LD, Termination Payment or Final Amount shall be added to or deducted
from the price owing by the Buyer to the Seller for Eligible Energy unless the
LD, Termination Payment or Final Amount remains unpaid 15 days after the Party
owed the LD, Termination Payment or Final Amount gives notice to the other
Party. For greater certainty, this subsection (b) does not apply to any amount
owing by the Seller to the Buyer under Article 5 of Appendix 3.

Except as otherwise expressly provided herein, each Party reserves all rights,
counterclaims and other remedies and defences which such Party has or may be
entitled to arising from or related to this EPA.
11. INSURANCE/DAMAGE AND DESTRUCTION
11.1 Insurance — The Seller shall, by the date specified in section 4.1 for the
commencement of the Project activities necessary to construct the Incremental
Seller’s Plant, obtain, maintain and pay for (i) policies of commercial general
liability insurance with a per occurrence limit of liability not less than
$10,000,000 applicable to the Mill separate from all other projects and
operations of the Seller, and (ii) Construction Insurance and, in respect of the
Seller’s Plant, property insurance, with limits of liability and deductibles
consistent with those a prudent owner of a facility similar to the Seller’s
Plant would maintain and those the Facility Lender requires. All commercial
general liability policies must include the Buyer, its directors, officers,
employees and agents as additional insureds and must contain a cross liability
and severability of interest clause. All policies of insurance must be placed
with insurers that have a minimum rating of A- (or equivalent) by A.M. Best
Company and are licensed to transact business in the Province of British
Columbia and must be endorsed to provide to the Buyer 30 days’ prior written
notice of cancellation, non-renewal or any material amendment that results in a
reduction in coverage. The Seller shall give the Buyer a copy of the insurance
certificate(s) for the insurance required to be maintained by the Seller under
this section 11.1 not more than 30 days after the effective date of coverage and
immediately upon renewal thereafter. The Seller shall be responsible for the
full amount of all deductibles under all insurance policies required to be
maintained by the Seller under this section 11.1.
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11.2 Damage or Destruction of the Seller’s Plant -

  (a)   Major Damage - If the Seller’s Plant suffers Major Damage caused by
Force Majeure in respect of which the Seller has invoked Force Majeure in
accordance with Article 12, then the Seller may at its option exercisable by
notice to the Buyer within 120 days after the occurrence thereof, either
(i) proceed diligently and expeditiously to repair the Major Damage and restore
the Seller’s Plant to at least the condition in which it was in immediately
prior to the Major Damage and resume deliveries of Energy hereunder, or
(ii) terminate this EPA, and in that event, the provisions of section 16.3 and
subsection 16.5(c) apply. If the Seller fails to give notice exercising its
option within such 120-day period, it shall be deemed to have exercised the
option described in (i) above. Nothing in this section 11.2 limits the rights of
either Party to terminate this EPA under any other section of this EPA.     (b)
  Non-Major Damage - If the Seller’s Plant is damaged or destroyed, in whole or
in part, by any cause or peril, then, except in the case of Major Damage caused
by Force Majeure in respect of which the Seller has invoked Force Majeure in
accordance with Article 12, the Seller shall within 30 days after the date of
the damage or destruction provide notice to the Buyer setting out the date by
which the Seller, acting reasonably, can resume delivering Energy to the Buyer
which date shall be not more than 365 days after the date of occurrence of the
damage or destruction. The Seller shall diligently and expeditiously repair the
Seller’s Plant and restore the same to at least the condition in which it was
immediately prior to the damage or destruction and shall complete such work not
later than the date specified in the notice delivered by the Seller to the Buyer
under this subsection 11.2(b).     (c)   Extension of Term - Provided the Seller
complies with its obligations under this section 11.2, the Term shall be
extended by the number of days from the date of the event of damage or
destruction to the date on which the Seller resumes delivering Energy to the
Buyer.

12. FORCE MAJEURE
12.1 Invoking Force Majeure and Notice -

  (a)   Neither Party shall be in breach or default as to any obligation under
this EPA if that Party is unable to perform that obligation due to an event or
circumstance of Force Majeure, of which notice is given as required in this
section 12.1. Subject to any limitations expressly set out in this EPA, the time
for performance of such obligation shall be extended by the number of days that
Party is unable to perform such obligation as a result of the event or
circumstance of Force Majeure of which notice is so given.     (b)   If there is
a Force Majeure preventing a Party from performing an obligation under this EPA,
that Party shall promptly notify the other Party of the Force Majeure. The
notice must identify the nature of the Force Majeure, its expected duration and
the particular obligations affected by the Force Majeure. The affected Party
shall provide reports to the other Party with respect to the Force Majeure at
such intervals as the other Party may reasonably request while the Force Majeure
continues. A Party shall be deemed to have invoked Force Majeure from the later
of:

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  (i)   the date when that Party gives notice of the Force Majeure in accordance
with this subsection 12.1(b); and     (ii)   if such date is not a Business Day,
the next following Business Day;

      provided that if such notice is given by 17:00 PPT on the first Business
Day following the later of:

  (iii)   the day on which the Force Majeure occurs; and     (iv)   the day when
the Party knew, or reasonably ought to have known, of the occurrence of the
Force Majeure;

      the Party shall be deemed to have invoked Force Majeure from the date on
which the event of Force Majeure occurred. The Party invoking Force Majeure
shall promptly respond to any inquiry from the other Party regarding the efforts
being undertaken to remove the Force Majeure. The Party invoking Force Majeure
shall give prompt notice of the end of the Force Majeure.

12.2 Exclusions — A Party may not invoke Force Majeure:

  (a)   for any economic hardship, or for lack of money, credit or markets;    
(b)   if the Force Majeure is the result of a breach by the Party seeking to
invoke Force Majeure of a Permit or of any applicable Laws;     (c)   for a
mechanical breakdown or control system hardware or software failure, unless the
Party seeking to invoke Force Majeure can demonstrate that the breakdown or
failure was caused by a latent defect in the design or manufacture of the
equipment, hardware or software, which could not reasonably have been identified
by normal inspection or testing of the equipment, hardware or software;     (d)
  if the Force Majeure was caused by a breach of, or default under, this EPA or
a wilful or negligent act or omission by the Party seeking to invoke Force
Majeure;     (e)   for any acts or omissions of third Persons, including any
Affiliate of the Seller, or any vendor, supplier, contractor or customer of a
Party, but excluding Governmental Authorities, unless such acts or omissions are
themselves excused by reason of Force Majeure as defined in this EPA;     (f)  
for any disconnection of the Seller’s Plant from the Fortis System, or the
Fortis System from the Transmission System, or any outage on the Fortis System,
or any Transmission System Outage; or     (g)   based on the cost or
unavailability of Fuel for any reason, including natural causes, unless
transport of the Fuel to the Seller’s Plant is prevented by an event or
circumstance that constitutes Force Majeure as defined in this EPA.

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13. LIQUIDATED DAMAGES
13.1 COD Delay — If the Seller’s Plant fails to achieve COD by the Guaranteed
COD plus Force Majeure Days, the Seller shall pay COD Delay LDs to the Buyer
calculated in the same manner as for LDs under section 13.2 until the Buyer’s
right to terminate this EPA arises under subsection 16.1(b), whether or not such
right is exercised. The Seller shall pay any COD Delay LDs owing by the Seller
to the Buyer in respect of the immediately preceding Season on the 30th day
after the last day of the Season. If the commencement date for COD Delay LDs
under this section 13.1 is any day other than the first day of a Season, the
Seasonally Firm Energy Amount for that Season will be prorated based on the
number of days remaining in the Season from and after the commencement date for
COD Delay LDs.
13.2 Delivery Shortfalls (Seasonal) — If in any complete Season after the expiry
of four consecutive complete Seasons following COD, the Delivered Eligible
Energy (as defined in this section 13.2) in that Season is less than the
Seasonally Firm Energy Amount for that Season, the Seller shall pay LDs to the
Buyer calculated as follows:

    LD Amount = (LD Factor * (Designated SFE Amount – Delivered Eligible Energy)
* (1-L)) – Capacity LD Factor       where:

  (a)   “Capacity LD Factor” means the lesser of:

  (i)   LDs owing and paid by the Seller to the Buyer pursuant to section 13.3,
where the delivery shortfall associated with such LDs occurs in the relevant
Season; and     (ii)   LD Factor * (Designated SFE Amount – Delivered Eligible
(Energy) * (I-L);

  (b)   “Designated SFE Amount” means (i) the Seasonally Firm Energy Amount for
the relevant Season minus (ii) an amount equal to the Seasonally Firm Energy
Amount for the relevant Season, divided by the number of minutes in that Season,
multiplied by the number of minutes in the Season for which the Seller is
excused under subsection 7.7(a) from the obligation to deliver Energy;     (c)  
“Delivered Eligible Energy” means in each Season the amount of Eligible Energy
determined pursuant to subsection (i) of the definition of Eligible Energy for
that Season, but excluding any Energy delivered after the start time and prior
to the end time for an Authorized Planned Outage as set out in the notice with
respect to the Authorized Planned Outage under section 6.3;     (d)   “L” or
“Losses” has the meaning given in Appendix 3;     (e)   “LD Factor” = the
greater of: (i) A and (ii) Mid-C Price – [(EFEP * STDF)/(1-L)]

      where:         “A” = $5.00/MWh * (CPIJan 1, N/CPIJan 1, 2008);         “N”
= the year for which “A” is being calculated;

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      “EFEP” or “Escalated Firm Energy Price” has the meaning given in
Appendix 3;         “STDF” or “Seasonal Time of Delivery Factor” means the
time-weighted average of the TDFs based on Peak Hours, Super-Peak Hours and
Off-Peak Hours for each month in the Season;         “TDF” or “Time of Delivery
Factor” has the meaning given in Appendix 3; and         “Mid-C Price” = [(the
number of On-Peak Hours in the Season * the simple average of the Dow Jones
Mid-C Daily Firm On-Peak Index in the Season) + (the number of Off-Peak Hours in
the Season * the simple average of the Dow Jones Mid-C Daily Firm Off-Peak Index
in the Season)] / the total number of hours in the Season;

      where:         each of the Dow Jones Mid-C Daily Firm On-Peak Index and
the Dow Jones Mid-C Daily Firm Off-Peak Index shall be expressed in US$/MWh and
converted to Canadian dollars using the average Bank of Canada Daily “noon rate”
for the Season in which the delivery shortfall occurred.

Any LDs owing by the Seller to the Buyer pursuant to this section 13.2 shall be
payable on the 15th day of the first month following the end of the Season in
which the delivery shortfall occurred.
13.3 Capacity Call Delivery Shortfalls (Hourly) — If in any hour after the first
anniversary of COD, the Delivered Hourly Eligible Energy (as defined in this
section 13.3) in that hour is less than the Capacity Call Amount for that hour,
the Seller shall pay LDs to the Buyer calculated as follows:

    Capacity LD Amount = LD Factor * (Designated CC Amount – Delivered Hourly
Eligible Energy) * (1-L)       where:

  (a)   “Designated CC Amount” means (i) the Capacity Call Amount for the
relevant hour minus (ii) an amount equal to the Capacity Call Amount for the
relevant hour, divided by 60 minutes multiplied by the number of minutes in the
hour for which the Seller is excused under subsection 7.7(a) from the obligation
to deliver Energy;     (b)   “Delivered Hourly Eligible Energy” means in each
hour the amount of Hourly Eligible Energy determined pursuant to subsection
(i) of the definition of Hourly Eligible Energy for that hour, but excluding any
Energy delivered after the start time and prior to the end time for an
Authorized Planned Outage as set out in the notice with respect to the
Authorized Planned Outage under section 6.3;     (c)   “L” or “Losses” has the
meaning given in Appendix 3;     (d)   “LD Factor” = the greater of: (i) A and
(ii) Mid-C Price – [(EFEP * TDF)/(1-L) — HFC * (CPIJan 1, N/CPIJan 1, 2008)]    
    where:

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      “A” = $5.00/MWh * (CPIJan 1, N/CPIJan 1, 2008);         “N” = the year for
which “A” is being calculated;         “EFEP” or “Escalated Firm Energy Price”
has the meaning given in Appendix 3;         “TDF” or “Time of Delivery Factor”
has the meaning given in Appendix 3;         “HFC” or “Hourly Firm Credit” means
the applicable $/MWh from the Hourly Firm Credit Table set forth in section
13.4; and         “Mid-C Price” means:

  (i)   For Off-Peak Hours, the Dow Jones Mid-C Daily Firm Off-Peak Index;    
(ii)   For Peak Hours, the Dow Jones Mid-C Daily Firm On-Peak Index multiplied
by the quotient of the Peak TDF for the relevant month divided by the On-Peak
TDF for the same month; and     (iii)   For Super-Peak Hours, the Dow Jones
Mid-C Daily Firm On-Peak Index multiplied by the quotient of the Super-Peak TDF
for the relevant month divided by the On-Peak TDF for the same month.        
where:         each of “Peak TDF”, “Super-Peak TDF” and “On-Peak TDF” has the
meaning given in Appendix 3; and         each of the Dow Jones Mid-C Daily Firm
On-Peak Index and the Dow Jones Mid-C Daily Firm Off-Peak Index shall be
expressed in US$/MWh and converted to Canadian dollars using the Bank of Canada
Daily “noon rate” for the day in which the delivery shortfall occurred.

Any LDs owing by the Seller to the Buyer pursuant to this section 13.3 shall be
payable on the 15th day of the month following the month in which the delivery
shortfall occurred.
13.4 Hourly Firm Credit Table — The “Hourly Firm Credit Table” is as follows,
where each value is shown in $/MWh (in January 1, 2008 dollars):

                                                                               
                      Jan.   Feb.   Mar.   Apr.   May   Jun.   Jul.   Aug.  
Sep.   Oct.   Nov.   Dec.
Super-Peak
    20.0       13.3       4.0       2.1       0.0       0.0       2.0       4.0
      4.1       4.0       8.3       20.0  
Peak
    20.0       13.3       4.0       2.1       0.0       0.0       2.0       4.0
      4.1       4.0       8.3       20.0  
Off-Peak
    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
    0.0       0.0       0.0       0.0  

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13.5 Exclusive Remedies for Buyer — Except in the case of Deliberate Breach,
payment by the Seller of the LDs in this Article 13 is the exclusive remedy to
which the Buyer is entitled for:

  (a)   the Seller’s failure to achieve COD by the Guaranteed COD;     (b)   the
Seller’s failure to deliver the Seasonally Firm Energy Amount;     (c)   the
Seller’s failure, during the duration of a Capacity Call, to deliver Hourly
Eligible Energy in each hour in an amount equal to the Capacity Call Amount; and
    (d)   any other failure to comply with section 7.2, subsection 7.11(c) or
subsection 6.2(b);

provided that the foregoing does not limit or otherwise affect any right to
receive interest on LDs, any right to terminate this EPA, or any right to
receive a Termination Payment, in each case as expressly set out in this EPA, or
the exercise of any other right or remedy expressly set out in this EPA,
including any rights under section 10.5, or Article 14, or any right to apply
any invoice adjustments in accordance with Appendix 3.
13.6 Exclusive Remedies for Seller — The Seller’s exclusive remedy for the
Buyer’s failure to take or pay for Eligible Energy is the right to recover the
price payable by the Buyer for Eligible Energy pursuant to Appendix 3 and any
interest on any such amount owing by the Buyer to the Seller, provided that the
foregoing does not limit or otherwise affect any right to terminate this EPA,
any rights under section 10.5, or any right to receive a Termination Payment
expressly set out in this EPA.
13.7 Limits of Liability — Except in the case of Deliberate Breach, in each year
the Seller’s liability for damages for all breaches of, or defaults under, this
EPA in that year is limited to an amount equal to 200% of the required amount of
the Performance Security for the relevant year, provided that the foregoing does
not apply to:

  (a)   any invoice credit owing by the Seller under Appendix 3;     (b)   any
liability under section 20.1;     (c)   interest on any amount owing under this
EPA;     (d)   any payment commitment of the Seller for incremental costs
pursuant to section 4.5, 5.7 or 6.6;     (e)   any right to receive a
Termination Payment expressly set out in this EPA; and     (f)   any other
provision in this EPA that is expressly excluded from the limit of liability in
this section 13.7.

13.8 Consequential Damages — Neither Party shall be liable to the other Party
for any special, incidental, exemplary, punitive or consequential damages with
respect to, arising out of, relating to or in any way connected with a Party’s
performance or non-performance under this EPA.
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14. PERFORMANCE AND INTERCONNECTION SECURITY
14.1 Delivery -

  (a)   The Parties acknowledge that the Seller has delivered the Performance
Security to the Buyer concurrently with execution and delivery of this EPA. The
Seller shall maintain the Performance Security until the time provided in
subsection 14.2(a), and shall amend or replace the Performance Security to
ensure that the Performance Security at all times complies with (i) the
requirements set forth in the definition of Performance Security in Appendix 1,
and (ii) the requirement set forth in subsection 7.9(c).     (b)   The Seller
shall deliver the Interconnection Security to the Buyer by not later than
15 days after written request from the Buyer. The Seller shall maintain such
Interconnection Security until the time provided in subsection 14.2(b), and
shall amend or replace the Interconnection Security to ensure that the
Interconnection Security complies at all times with (i) the requirements set
forth in the definition of Interconnection Security in Appendix 1, and (ii) the
requirements of any conditional consent given under sections 4.5, 5.7 and 6.6.  
  (c)   The Performance Security and the Interconnection Security do not limit
the Seller’s liability in respect of any breach of, or default under, this EPA.

14.2 Return -

  (a)   The Buyer shall return or release the Performance Security to the
Seller, without deduction, other than prior deductions, if any, properly made
hereunder on the earlier of:

  (i)   in the case of termination of this EPA under section 3.1, by the date
specified in subsection 3.5(a); or     (ii)   30 Business Days after the later
of (I) termination of this EPA under subsection 11.2(a), section 16.1 or
section 16.2, and (II) discharge of all obligations and liabilities of the
Seller to the Buyer under this EPA.

  (b)   The Buyer shall return or release the Interconnection Security to the
Seller, without deduction, other than prior deductions, if any, properly made
hereunder on the earlier of:

  (i)   the Five-Year Anniversary;     (ii)   the end of any four consecutive
complete Seasons following COD in which the Seller has delivered an amount of
Firm Energy not less than 95% of the Annual Firm Energy Amount for that four
Season period, provided that for the purposes of this subsection 14.2(b)(ii),
“Firm Energy” in any applicable period shall be deemed to include:

  (I)   deemed Eligible Energy pursuant to section 7.8 that would have
constituted Firm Energy if actually delivered; and

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  (II)   all other amounts of Firm Energy that could have been generated and
delivered to the Buyer during that period but for the Seller being excused under
subsection 7.7(a) from its obligations under section 7.2; and

  (iii)   30 Business Days after the later of (I) termination of this EPA under
subsection 11.2(a), section 16.1 or section 16.2, and (II) discharge of all
obligations and liabilities of the Seller to the Buyer under subsection 14.3(b).

14.3 Enforcement -

  (a)   In the case of Performance Security, if:

  (i)   the Seller fails to pay any Final Amount owing by the Seller to the
Buyer; or     (ii)   the Seller fails to pay any LDs owing by the Seller to the
Buyer; or     (iii)   the Seller fails to pay any Termination Payment owing by
the Seller to the Buyer,

      and, in each case, the Seller fails to cure such failure to pay within
15 days after notice from the Buyer to the Seller, then the Buyer may enforce
the Performance Security and apply the proceeds thereof on account of amounts
owing to the Buyer in respect of any or all of the foregoing.     (b)   In the
case of Interconnection Security, if the Seller fails to pay any amounts owing
by the Seller under commitments given pursuant to section 4.5, 5.7 or 6.6, or
under section 16.7, and, in each case, the Seller fails to cure such failure to
pay within 15 days after notice from the Buyer to the Seller, then the Buyer may
enforce the Interconnection Security and apply the proceeds thereof on account
of the amounts owing to the Buyer in respect of any or all of the foregoing.

14.4 Form — The Seller shall maintain each of the Performance Security and the
Interconnection Security in the form of a letter of credit that is:

  (a)   issued or advised by a branch in Canada of a financial institution
having a credit rating not less than Standard & Poor’s A-, Moody’s A3 or
Dominion Bond Rating Service A (low) and if such credit rating agencies publish
differing credit ratings for the same financial institution, the lowest credit
rating of any of the credit rating agencies shall apply for purposes of this
section 14.4;     (b)   in the form set out in Appendix 7, or in such other form
to which the Buyer may consent; and     (c)   for a term of not less than one
year and providing that it is renewed automatically, unless the issuing or
confirming financial institution advises otherwise by the date specified in
Appendix 7.

14.5 Replenishment — If the Buyer draws on the Performance Security, as
permitted hereunder, then the Seller shall within 3 Business Days after such
draw provide additional security in the form specified in section 14.4
sufficient to replenish or maintain the aggregate amount of the Performance
Security at the amount required hereunder.
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14.6 Right to Withhold Payment — If the Seller has failed to maintain the
Performance Security or the Interconnection Security in the amount required
hereunder, subject, in the case of the Performance Security, to the cure period
specified in section 14.5, the Buyer shall be entitled to withhold payment of
any amount owing by the Buyer to the Seller under this EPA until 5 days after
the date when the Seller has delivered the required amount of Performance
Security or the Interconnection Security, as the case may be, to the Buyer. Any
amounts withheld by the Buyer in accordance with this section 14.6 shall not
bear interest.
14.7 Letter of Credit Failure — The Buyer shall be entitled to enforce the
Performance Security or the Interconnection Security in the event of a Letter of
Credit Failure and the Buyer shall be entitled to hold the proceeds of such
enforcement until such time as the Seller delivers replacement Performance
Security or Interconnection Security, as the case may be, in the amount and in
the form required under this EPA. Upon receipt of such replacement security, the
Buyer shall return the proceeds of enforcement of the original Performance
Security or Interconnection Security, as the case may be, to the Seller without
interest after deducting any amounts the Buyer is entitled to deduct under this
EPA. The Seller shall notify the Buyer promptly of any Letter of Credit Failure.
15. SUSPENSION
15.1 Buyer Suspension — If a Buyer Termination Event occurs and is continuing,
the Buyer may, upon notice to the Seller, suspend performance and payment by the
Buyer under this EPA, provided that:

  (a)   the suspension may not continue for longer than 90 days;     (b)   the
suspension shall not affect the obligations of the Buyer or the Seller to pay
any amount owing by it to the other in respect of performance of, or failure to
perform, obligations under this EPA prior to the date of suspension by the
Buyer; and     (c)   the suspension shall not limit any right the Buyer may have
under this EPA to terminate this EPA as a result of the occurrence of the Buyer
Termination Event.

15.2 Seller Suspension — If a Seller Termination Event occurs and is continuing,
the Seller may, upon notice to the Buyer, suspend performance by the Seller
under this EPA, provided that the suspension shall not affect the obligations of
the Seller or the Buyer to pay any amount owing by it to the other in respect of
performance of, or failure to perform, the Seller’s obligations under this EPA
prior to the date of suspension by the Seller. The suspension shall not limit
any right the Seller may have under this EPA to terminate this EPA as a result
of the occurrence of the Seller Termination Event.
15.3 Resuming Deliveries — The non-defaulting Party’s right to suspend
performance pursuant to this Article 15 shall cease when the defaulting Party
has demonstrated to the satisfaction of the non-defaulting Party, acting
reasonably, that the defaulting Party has cured the cause for the suspension.
16. TERMINATION
16.1 Termination by the Buyer — In addition to any other right to terminate this
EPA expressly set out in any other provision of this EPA, the Buyer may
terminate this EPA, by notice to the Seller if:
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  (a)   the Seller has failed to obtain all Material Permits on or before the
date that is the earlier of:

  (i)   Guaranteed COD; and     (ii)   the third anniversary of the Effective
Date;

      provided that the Buyer may terminate this EPA under this provision only
if the Buyer delivers a termination notice before the date on which the Seller
has secured all Material Permits, and if the Seller has not already delivered a
notice of termination under subsection 16.2(a);     (b)   COD does not occur by
Guaranteed COD plus 365 days plus all Force Majeure Days (not exceeding 180
Force Majeure Days), provided that if the Seller can demonstrate on or before
such date by clear and convincing evidence acceptable to the Buyer, acting
reasonably, that construction of the Incremental Seller’s Plant and the
integration of the Incremental Seller’s Plant into the Seller’s Plant is 80%
complete by such date, the Buyer may terminate this EPA under this provision, by
notice to the Seller, only if the Seller fails to achieve COD within a further
180 days plus any further Force Majeure Days (not exceeding 180 Force Majeure
Days) after such date, and provided further that the Buyer shall be entitled to
terminate this EPA under this provision only if the Buyer delivers a termination
notice before COD;     (c)   either Party has received a notice from the other
Party invoking Force Majeure and the Force Majeure has not been terminated by
the date that is 730 days after the date of notice invoking Force Majeure,
provided that the Buyer may terminate this EPA under this provision only if the
Buyer delivers a termination notice before the end of the Force Majeure;     (d)
  a Transmission System Outage that is directly caused by a Force Majeure has
persisted continuously for 730 or more days after the commencement of Force
Majeure, provided that the Buyer may terminate this EPA under this provision
only if the Buyer delivers a termination notice before the end of such
Transmission System Outage; or     (e)   a Buyer Termination Event occurs.

Any termination pursuant to this section 16.1 shall be effective immediately
upon delivery of the notice of termination to the Seller.
16.2 Termination by the Seller — In addition to any other right to terminate
this EPA expressly set out in any other provision of this EPA, the Seller may
terminate this EPA by notice to the Buyer if:

  (a)   the Seller, after using commercially reasonable efforts, has failed to
obtain all Material Permits on terms satisfactory to the Seller, acting
reasonably, on or before the date that is the earlier of:

  (i)   180 days before the Guaranteed COD; and     (ii)   the second
anniversary of the Effective Date;

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      provided that if the Seller has not given notice of termination pursuant
to this subsection 16.2(a) by the date that is 15 days after the Seller’s right
to terminate arises under this subsection 16.2(a), the Seller shall be deemed to
have elected not to terminate this EPA and may not thereafter terminate this EPA
under this subsection 16.2(a);     (b)   either Party has received a notice from
the other Party invoking Force Majeure and the Force Majeure has not been
terminated by the date that is 730 days after the date of notice invoking Force
Majeure, provided that the Seller shall be entitled to terminate this EPA under
this provision only if the Seller delivers a termination notice before the end
of the Force Majeure;     (c)   a Transmission System Outage that is directly
caused by a Force Majeure has persisted continuously for 730 or more days after
the commencement of Force Majeure, provided that the Seller may terminate this
EPA under this provision only if the Seller delivers a termination notice before
the end of such Transmission System Outage; or     (d)   a Seller Termination
Event occurs.

Any termination pursuant to this section 16.2 shall be effective immediately
upon delivery of the notice of termination to the Buyer.
16.3 Effect of Termination — Upon expiry of the Term or if this EPA is
terminated pursuant to section 3.1, subsection 11.2(a) or this Article 16:

  (a)   the Parties may pursue and enforce any rights and remedies permitted by
law or equity in respect of any prior breach or breaches of this EPA, and may
enforce any liabilities and obligations that have accrued under this EPA prior
to the expiry of the Term or the date of termination, including any claims by
the Buyer for amounts that would have been payable by the Seller under
commitments given pursuant to any of section 4.5, 5.7 or 6.6 but for the expiry
or termination of this EPA, subject to any express restrictions on remedies and
limitations or exclusions of liability set out in this EPA; and     (b)  
(i) with respect to a termination under section 3.1 only, both Parties shall
remain bound by (I) Article 20, Article 21 and section 22.6, and (II) sections
3.3 (if applicable), 3.5, 14.2 and 14.3, in respect of the satisfaction of
residual obligations specified to arise on termination only;

  (i)   upon expiry of the Term or upon any termination other than a termination
under section 3.1:

  (A)   both Parties shall remain bound by: (I) Article 10 in respect of any
final billing and resolution of disputed amounts only; (II) Article 14 and
Article 16, in respect of the satisfaction of residual obligations specified to
arise on termination only; (III) Article 20, Article 21 and section 22.6; and
(IV) Article 8 with respect only to Environmental Attributes associated with
Eligible Energy delivered prior to termination of this EPA; and

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  (B)   the Seller shall remain bound by: (I) section 6.4; and (II) for a period
of 36 months following expiry of the Term or termination of this EPA,
Article 18, with respect to Records only,

      and, in all such cases, both Parties shall remain bound by any other
provisions necessary for the interpretation and enforcement of the foregoing
provisions.

16.4 Payment on Termination by the Buyer -

  (a)   If the Buyer terminates this EPA under subsection 16.1(a), 16.1(b) or
16.1(e), the Seller shall pay to the Buyer an amount equal to the lesser of:

  (i)   the then required amount of the Performance Security; and     (ii)   an
amount equal to the positive amount, if any, by which the Buyer’s Economic
Losses and Costs exceed the aggregate of the Buyer’s Gains.

  (b)   If the Buyer terminates this EPA under subsection 16.1(c) or 16.1(d), no
Termination Payment is payable by either Party to the other, except as set out
in section 16.7.

16.5 Payment on Termination by the Seller -

  (a)   If the Seller terminates this EPA under subsection 16.2(a), the Seller
shall pay to the Buyer an amount equal to $2.50/MWh multiplied by the Annual
Firm Energy Amount and any amount payable under section 16.7.     (b)   If the
Seller terminates this EPA under subsection 16.2(b) or 16.2(c), no Termination
Payment is payable by either Party to the other, except as set out in section
16.7.     (c)   If the Seller terminates this EPA under subsection 11.2(a), no
Termination Payment is payable by the Seller to the Buyer, except as set out in
section 16.7.     (d)   If the Seller terminates this EPA under
subsection 16.2(d) prior to COD, the Buyer shall pay to the Seller an amount
equal to:

  (i)   115% of the Development Costs; less     (ii)   the Net Realizable Value
of the Project Assets that comprise the Incremental Seller’s Plant (the
“Incremental Project Assets”), where “Net Realizable Value” means the amount
that the Seller receives, or could reasonably be expected to receive, after the
exercise of commercially reasonable efforts, from a disposition of the
Incremental Project Assets, net of transaction costs, as of the date of
termination.

  (e)   If the Seller terminates this EPA under subsection 16.2(d) on or after
COD, the Buyer shall pay to the Seller an amount equal to the positive amount,
if any, by which the Seller’s Economic Losses and Costs exceed the Seller’s
aggregate Gains.

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16.6 Calculation of Gains, Economic Losses and Costs — For the purposes of
calculating the Gains, Economic Losses and Costs of a Party that is terminating
this EPA (the “Terminating Party”) pursuant to subsection 16.4(a)(ii) or
16.5(e), the following conditions shall apply:

  (a)   The Terminating Party’s Gains, Economic Losses and Costs shall be
determined by comparing the value of the remaining Term, contract quantities and
price payable under this EPA had it not been terminated to the relevant market
prices for equivalent quantities for the remaining Term either quoted by a bona
fide arm’s length third Person or which are reasonably expected to be available
in the market under a replacement contract for this EPA. Market prices shall be
adjusted for differences between the product subject to the market prices and a
product, inclusive of Environmental Attributes, equivalent to that specified
under this EPA available from a generator meeting the eligibility requirements
set forth in section 14 of the RFP, including with respect to quantity, place of
delivery and length of term and each element of those eligibility requirements.
    (b)   The Terminating Party shall not be required to enter into a
replacement transaction in order to determine the amount payable by the other
Party.     (c)   The Terminating Party shall determine the amount of any
Termination Payment owed by the other Party, and shall notify the other Party of
such amount and provide reasonable particulars with respect to its determination
within 120 days after the effective date of termination of this EPA, failing
which the Terminating Party shall not be entitled to any Termination Payment
under such section.     (d)   If the Terminating Party’s aggregate Gains exceed
its aggregate Economic Losses and Costs, if any, resulting from the termination
of this EPA, the amount of the Termination Payment shall be zero.     (e)   The
Terminating Party’s Gains, Economic Losses and Costs shall be discounted to the
date of termination of this EPA using the Present Value Rate applicable at the
date of termination of this EPA.     (f)   In this Article 16:

  (i)   “Costs” means brokerage fees, commissions and other similar transaction
costs and expenses reasonably incurred, or that would reasonably be expected to
be incurred, by the Terminating Party in entering into new arrangements which
replace this EPA, and legal fees, if any, incurred in connection with enforcing
the Terminating Party’s rights under this EPA;     (ii)   “Economic Losses”
means an amount equal to the present value of the economic loss, exclusive of
Costs, if any, to the Terminating Party resulting from the termination of this
EPA, determined in a commercially reasonable manner; and     (iii)   “Gains”
means an amount equal to the present value of the economic benefit, exclusive of
Costs, if any, to the Terminating Party resulting from the termination of this
EPA, determined in a commercially reasonable manner.

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16.7 Interconnection Costs Payable on Termination - If this EPA is terminated
under section 11.2, 16.1 or 16.2, but excluding any termination under subsection
16.2(d), the Seller shall pay to the Buyer within 30 days after delivery by the
Buyer of an invoice, the sum of the following amounts:

  (a)   if notice of termination is given before the Five-Year Anniversary, an
amount equal to:

      INU Costs * [1 – (X/60)]

      where:

      “INU Costs” means all reasonable costs incurred or committed by the
Transmission Authority and/or the Buyer for design, engineering, construction
and commissioning of Interconnection Network Upgrades;         X means the
number of months, prorated for any portion of a month, from COD to the date on
which notice of termination of this EPA is given; and

  (b)   all reasonable incremental costs payable by the Seller pursuant to any
commitment given pursuant to section 4.5, 5.7 or 6.6, less any such costs paid
by the Seller.

16.8 Termination Payment Date — A Party required to make a Termination Payment
to the other Party shall, except in the case of a Termination Payment payable
pursuant to subsection 16.4(a), 16.5(d) or 16.5(e), pay the Termination Payment
within 30 Business Days after the effective date of termination of this EPA. The
Seller shall pay any Termination Payment owing by the Seller pursuant to
subsection 16.4(a), or the Buyer shall pay any Termination Payment owing by the
Buyer pursuant to subsection 16.5(d) or (e), in either case within 30 Business
Days after the date of delivery of an invoice by the payee. At the time for
payment of the Termination Payment, each Party shall pay to the other Party all
additional amounts payable by it pursuant to this EPA, but all such amounts
shall be netted and aggregated with any Termination Payment.
16.9 Exclusive Remedies -

  (a)   Termination under Section 3.1 - Subject to section 16.3, the payments
and actions contemplated by sections 3.3 and 3.5 are the exclusive remedies to
which the Parties are entitled for termination of this EPA pursuant to
section 3.1.     (b)   Termination under Section 16.1 - Except in the case of
Deliberate Breach or as otherwise expressly set out in this EPA, and subject to
section 16.3:

  (i)   payment by the Seller of the Termination Payment and any payment payable
under section 16.7 is the exclusive remedy to which the Buyer is entitled for
termination of this EPA pursuant to subsection 16.1(a), (b) or (e); and     (ii)
  payment by the Seller of any amount payable pursuant to section 16.7 is the
exclusive remedy to which the Buyer is entitled for termination of this EPA
pursuant to subsection 16.1(c) or 16.1(d).

  (c)   Termination under Subsection 16.2(a) – Subject to section 16.3, payment
by the Seller of the Termination Payment and any amount payable under section
16.7 is the exclusive

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      remedy to which the Buyer is entitled for termination of this EPA pursuant
to subsection 16.2(a).

  (d)   Termination under Section 11.2, or Subsection 16.2(b) or 16.2(c) –
Subject to section 16.3, payment by the Seller of any amount payable under
section 16.7 is the exclusive remedy to which the Buyer is entitled for
termination of this EPA pursuant to section 11.2, or subsection 16.2(b) or
16.2(c).     (e)   Termination under Subsection 16.2(d) – Subject to section
16.3, payment by the Buyer of the Termination Payment is the exclusive remedy to
which the Seller is entitled for termination of this EPA pursuant to
subsection 16.2(d).

17. ASSIGNMENT
17.1 Assignment — A Party (which in the case of the Seller, includes the General
Partner) may not assign or dispose of this EPA or any direct or indirect
interest in this EPA, in whole or in part, for all or part of the Term, except:

  (a)   with the consent of the other Party, such consent not to be unreasonably
withheld, delayed or conditioned; or     (b)   to an Affiliate, on notice to,
but without the consent of, the other Party, provided that the assignor shall
remain liable for the obligations of the assignee under this EPA, unless
otherwise agreed in writing by the other Party.

Notice of intent to assign, and where applicable a request for consent to
assign, must be given by the assignor to the other Party not less than 30 days
before the date of assignment, and, except in the case of assignment to a
Facility Lender, must be accompanied by a proposed form of assignment and
assumption agreement, and, in the case of an assignment pursuant to
subsection 17.1(a), other than to a Facility Lender, evidence of the capability
of the assignee as required by subsection 17.2(b). Consent to an assignment to a
Facility Lender shall not be given, or be deemed to be given, until full
execution and delivery of the agreement contemplated by section 17.3. Any sale
or other disposition of the Seller’s Plant that results in the Seller holding
less than a 50% interest in the Seller’s Plant, any sale or other disposition of
all or any interest of the Seller or the General Partner in this EPA or revenue
derived from this EPA, and any mortgage, pledge, charge or grant of a security
interest in all or any part of the Seller’s or the General Partner’s ownership
interest in the Project Assets and any change of Control, merger, amalgamation
or reorganization of the Seller or the General Partner is deemed to be an
assignment of this EPA by the Seller or the General Partner for the purpose of
this Article 17, including section 17.2, provided that where Control is
transferred to an Affiliate or where the Seller or the General Partner merges or
amalgamates with an Affiliate or enters into a reorganization with an Affiliate,
subsection 17.1(b) shall apply.
17.2 Preconditions to Assignment — Without limiting subsection 17.1(a), any
assignment pursuant to section 17.1, other than an assignment to a Facility
Lender, is subject to:

  (a)   the assignee entering into and becoming bound by this EPA, assuming all
the obligations and liabilities of the assignor under this EPA arising both
before and after the assignment of this EPA, providing any Performance Security,
Interconnection Security, or other security then required under any conditional
consent given under section 4.5, 5.7 or 6.6,

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      as applicable at the time of assignment and providing the representations
and warranties set out in section 19.1 effective as at the time of assignment;
and

  (b)   except for an assignment under subsection 17.1(b), the assignee
demonstrating to the reasonable satisfaction of the other Party its capability
(financial, technical and otherwise) to fulfil the obligations of the assignor
under this EPA or, in the case of a change of Control, merger, amalgamation or
reorganization of the Seller or the General Partner, the parties to that
transaction demonstrating to the reasonable satisfaction of the Buyer, the
continued ability of the Seller to perform its obligations under this EPA and,
in the case only of an assignment of 100% of the assignor’s interest in the
Project Assets, the Seller’s Plant, or this EPA or revenue derived from this
EPA, upon such demonstration and concurrently with the agreement providing for
the assumption of liabilities and obligations and the provision of Performance
Security and Interconnection Security and any other security required under
subsection 17.2(a), the assignor shall be released from all future obligations
and liabilities under this EPA and the Performance Security and Interconnection
Security and any other security provided by it shall be returned or released.

17.3 Assignment to Facility Lender — If the Seller seeks consent to assign this
EPA to a Facility Lender, the Seller acknowledges that the Buyer is entitled to
require, as a condition of the Buyer’s consent to such assignment, that the
Seller and the Facility Lender enter into an agreement with the Buyer
substantially in the form attached as Appendix 8.
17.4 No Implied Consent to Exercise of Rights — No consent to any assignment
given by the Buyer under this Article 17 implies or constitutes a consent to the
exercise by the assignee, or any Affiliate of the assignee, whether or not a
Facility Lender, of any right if the exercise of that right, at the time it was
acquired, would require the consent of the Buyer under this Article 17, and the
exercise of any such right shall require the further consent of the Buyer.
17.5 Costs — The assignor shall reimburse the other Party for all costs
reasonably incurred by the other Party in connection with an assignment.
17.6 No Assignment Before COD — Notwithstanding subsection 17.1(a), the Seller
or the General Partner shall not assign, including any event or action that is
deemed under section 17.1 to be an assignment, or otherwise dispose of any
interest in this EPA prior to COD, except: (i) to an Affiliate as permitted
under subsection 17.1(b); (ii) to a Facility Lender as permitted under
subsection 17.1(a) and section 17.3; or (iii) with the prior consent of the
Buyer.
18. INSPECTION AND AUDIT
18.1 General Inspection and Audit Rights — For the sole purpose of verifying:

  (a)   compliance with this EPA, including verifying (i) the Seller’s
compliance with the Fuel Plan, and (ii) that Eligible Energy, excluding Energy
generated from Auxiliary Fuel to the extent the use of which is permitted
hereunder, qualifies as Clean or Renewable Electricity;     (b)   the portion,
if any, of Energy delivered to the Buyer in any Season during the Term that is
equal to or less than the Seasonal GBL applicable in that Season;

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  (c)   the accuracy of invoices and other statements or calculations delivered
by the Seller to the Buyer under this EPA;     (d)   the Seller’s right to rely
on any relief claimed by the Seller under this EPA; and     (e)   the
Development Costs;

on reasonable prior notice to the Seller, the Seller shall provide the Buyer and
the Buyer’s representatives and advisors with prompt access during normal
business hours to the Seller’s Plant and to all Records and the Seller shall
promptly provide copies of any Records to the Buyer on request by the Buyer at
any time. The Buyer and the Buyer’s representatives and advisors may take copies
of any Records. The Buyer shall exercise any access under this Article 18 at the
Buyer’s cost and in a manner that minimizes disruption to the operation of the
Seller’s Plant. Any review, inspection or audit by the Buyer of the Seller’s
Plant, its design, construction, operation, maintenance, repair, records or
other activities of the Seller may not be relied upon by the Seller, or others,
as confirming or approving those matters.
18.2 Inspection and Audit Rights Regarding Environmental Attributes — The Buyer,
any Affiliate of the Buyer and any third Person who has entered into a contract
with the Buyer or any Affiliate of the Buyer to purchase Environmental
Attributes may at any time conduct or have a third Person with the necessary
expertise conduct, at the Buyer’s expense, an audit of the Project Assets and
Records to verify compliance with the requirements for the Environmental
Certification. The Seller shall promptly provide any consents required to enable
the Buyer, any Affiliate of the Buyer or any third Person who has entered into a
contract with the Buyer to purchase Environmental Attributes to:

  (a)   make enquiries with Governmental Authorities concerning the status of
compliance by the Seller and the Seller’s Plant with applicable Laws and
Permits;     (b)   make enquiries of TerraChoice Environmental Marketing or any
other third Person regarding the status of the Environmental Certification; and
    (c)   obtain copies of all audits, reviews or inspections conducted by the
Seller, TerraChoice Environmental Marketing or any other third Person in
connection with the application by the Seller to obtain and maintain the
Environmental Certification.

18.3 Consents Regarding Clean or Renewable Electricity — The Seller shall
promptly provide to the Buyer any consents required to enable the Buyer to make
enquiries with, and obtain information from, any Governmental Authorities
concerning the qualification of the output from the Seller’s Plant as Clean or
Renewable Electricity.
19. REPRESENTATIONS AND WARRANTIES
19.1 By Seller — The Seller and the General Partner as to itself only, represent
and warrant to the Buyer, and acknowledge that the Buyer is relying on those
representations and warranties in entering into this EPA, as follows as of the
Effective Date:

  (a)   Corporate Status - The General Partner is duly incorporated, organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, is registered or otherwise lawfully authorized to carry on
business in British Columbia, and has full

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      power, capacity and authority to own its assets and to carry on its
business as now conducted and to enter into and to perform its obligations under
this EPA;

  (b)   Bankruptcy - No actions are threatened, or have been taken or authorized
by the General Partner or any other Person to initiate proceedings for, or in
respect of, the bankruptcy, insolvency, liquidation, dissolution or winding-up
of the Seller or the General Partner or to appoint a receiver, liquidator,
trustee or assignee in bankruptcy in respect of the Seller or the General
Partner;     (c)   Assets - No appropriation, expropriation or seizure of all or
any portion of the Seller’s Plant, or any of its material properties or assets,
is pending or threatened;     (d)   No Conflict - Neither the signing of this
EPA, nor the carrying out of the Seller’s obligations under this EPA shall
(i) constitute or cause a breach of, default under, or violation of, the
constating documents or bylaws of the General Partner, any permit, franchise,
lease, license, approval or agreement to which the General Partner is a party,
or any other covenant or obligation binding on the Seller of the General Partner
or affecting any of their properties, (ii) cause a lien or encumbrance to attach
to the Seller’s Plant, other than a security interest granted in respect of
financing the design, construction or operation of the Seller’s Plant, or
(iii) result in the acceleration, or the right to accelerate, any obligation
under, or the termination of, or the right to terminate, any permit, franchise,
lease, license, approval or agreement related to the Seller’s Plant;     (e)  
Binding Obligation - This EPA constitutes a valid and binding obligation of the
Seller and the General Partner enforceable against the Seller and the General
Partner in accordance with its terms;     (f)   Authorization, Execution and
Delivery - This EPA has been duly authorized, executed and delivered by the
General Partner;     (g)   Proposal Documents - All material information in the
Proposal Documents is true and correct in all material respects and there is no
material information omitted from the Proposal Documents which makes the
information in the Proposal Documents misleading or inaccurate in any material
respect;     (h)   Appendix 4 – There is no material inconsistency between the
description of the Seller’s Plant on which the Seller Optional Study Report was
based and the information contained in Appendix 4; and     (i)   Exemption From
Regulation - The Seller and the General Partner are exempt from regulation as a
“public utility”, as defined in the UCA, with respect to the Seller’s Plant, the
sale of Energy and the performance by the Seller of its obligations under this
EPA.

19.2 By Buyer — The Buyer represents and warrants to the Seller, and
acknowledges that the Seller is relying on those representations and warranties
in entering into this EPA, as follows as of the Effective Date:

  (a)   Corporate Status - The Buyer is a corporation continued under the Hydro
and Power Authority Act, R.S.B.C. 1996, c. 212, is validly existing and is in
good standing under the laws of British Columbia, is lawfully authorized to
carry on business in British Columbia,

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      and has full corporate power and capacity to own its assets and to carry
on its business as now conducted and to enter into and to perform its
obligations under this EPA;

  (b)   Bankruptcy - No actions are threatened, or have been taken or authorized
by the Buyer or any other Person to initiate proceedings for, or in respect of,
the bankruptcy, insolvency, liquidation, dissolution or winding-up of the Buyer
or to appoint a receiver, liquidator, trustee or assignee in bankruptcy in
respect of the Buyer;     (c)   Assets - There is no appropriation,
expropriation or seizure of any of the material assets of the Buyer pending or
threatened;     (d)   No Conflict - Neither the signing of this EPA nor the
carrying out of the Buyer’s obligations under this EPA shall constitute or cause
a breach of, default under, or violation of, the Hydro and Power Authority Act
(British Columbia), any permit, franchise, lease, license, approval or agreement
to which the Buyer is a party, or any other covenant binding on the Buyer or
affecting any of its properties;     (e)   Binding Obligation - This EPA
constitutes a valid and binding obligation of the Buyer enforceable against the
Buyer in accordance with its terms; and     (f)   Authorization, Execution and
Delivery - This EPA has been duly authorized, executed and delivered by the
Buyer.

20. INDEMNITIES
20.1 Seller Indemnity — The Seller and the General Partner shall indemnify,
defend and hold harmless the Buyer and its Affiliates, and their respective
directors, officers, employees, agents, representatives, successors and
permitted assigns (the “Buyer Indemnified Parties”) from and against all claims,
demands, actions, causes of action, suits, orders and proceedings made or
brought against any of the Buyer Indemnified Parties:

  (a)   with respect to any emissions from the Seller’s Plant; or     (b)   for
personal injury, including death, to third Persons and for damage to property of
third Persons, to the extent caused or contributed to by the wilful act or
omission or negligence of the Seller or the General Partner, any contractor or
subcontractor or supplier to the Seller or the General Partner or any director,
officer, employee or agent of the Seller or the General Partner or any other
Person for whom the Seller or the General Partner is responsible at law where
such wilful act or omission or negligence is in connection with the Project or
the performance of, or the failure to perform, any of the Seller’s obligations,
or the exercise of any of the Seller’s rights, under this EPA.

20.2 Buyer Indemnity — The Buyer shall indemnify, defend and hold harmless the
Seller and the General Partner and their Affiliates, and their respective
directors, officers, employees, agents, representatives, successors and
permitted assigns (the “Seller Indemnified Parties”) from and against all
claims, demands, actions, causes of action, suits, orders and proceedings made
or brought against any of the Seller Indemnified Parties for personal injury,
including death, to third Persons and for damage to property of third Persons,
to the extent caused or contributed to by the wilful act or omission or
negligence of the Buyer, any contractor or subcontractor or supplier to the
Buyer or any director, officer,
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employee or agent of the Buyer or any other person for whom the Buyer is
responsible at law while the Buyer or any such Person is at the Seller’s Plant.
20.3 Indemnification Conditions — The right of a Party (“Indemnitee”) to be
indemnified by the other Party (“Indemnitor”) under any indemnity contained in
this EPA in respect of a claim by a third Person is subject to the conditions
that:

  (a)   the Indemnitee gives the Indemnitor prompt notice of such claim, the
right to select and instruct counsel, and all reasonable cooperation and
assistance, including the availability of documents and witnesses within the
control of the Indemnitee, in the defence or settlement of the claim; and    
(b)   the Indemnitee does not compromise or settle the claim without the prior
consent of the Indemnitor.

20.4 Third Party Beneficiary Conditions — The Parties acknowledge that the Buyer
holds the benefit of section 20.1 for itself, and on behalf of the Buyer
Indemnified Parties, which are not party to this EPA, and the Seller holds the
benefit of section 20.2 for itself, and on behalf of the Seller Indemnified
Parties, which are not party to this EPA. The Parties further acknowledge that
each of the Buyer Indemnified Parties and the Seller Indemnified Parties may
enforce those sections respectively for their own benefit by action taken
directly against the Seller or the Buyer respectively, and/or such actions may
be taken by the Buyer or the Seller against the other for the benefit of their
respective indemnified parties.
21. CONFIDENTIALITY
21.1 RFP Confidentiality Agreement — The RFP Confidentiality Agreement continues
in full force and effect, and section 2.5 thereof is amended to provide that the
obligations of the Parties thereunder shall expire two years following the
Effective Date.
21.2 Additional Confidentiality Obligation — Without limiting the effect of the
RFP Confidentiality Agreement, during the Term and for two years thereafter
(i) the Buyer shall treat as confidential, and shall not disclose to any third
Person, Seller Confidential Information, and (ii) the Seller shall treat as
confidential, and shall not disclose to any third Person, Buyer Confidential
Information, provided however that the foregoing obligations, and nothing in
this EPA, prevents or restricts:

  (a)   disclosures that are expressly authorized under any section of this EPA,
or as otherwise set out in this EPA;     (b)   disclosures that are necessary to
enable either Party to fulfill its obligations under this EPA, including under
section 3.3;     (c)   in the case of the Buyer, disclosure of Seller
Confidential Information:

  (i)   to any ministers, deputy ministers or servants or employees of the
Province of British Columbia; and     (ii)   to its directors, officers,
employees and Affiliates, consultants and advisors;

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      provided that each of the foregoing to whom Seller Confidential
Information is disclosed is advised of the confidential nature thereof;     (d)
  in the case of the Buyer, disclosure of Seller Confidential Information in any
regulatory proceeding, whether in respect of this EPA or in respect of other
matters, to the extent that the Buyer considers disclosure necessary or
desirable to support its position in any such proceeding, provided that, to the
extent reasonably practicable, the Buyer gives reasonable notice to the Seller
before making the disclosure, and, to the extent requested by the Seller,
requests the relevant tribunal to treat all or any part of the disclosure as
confidential or to limit its further disclosure;     (e)   in the case of the
Buyer, disclosure to any Person or any Governmental Authority of any Seller
Confidential Information with respect to:

  (i)   the Seller’s Plant that the Buyer is required to disclose to verify
qualification of the output of the Seller’s Plant as Clean or Renewable
Electricity or to provide confirmation to any such Person or Governmental
Authority that the output from the Seller’s Plant qualifies as Clean or
Renewable Electricity; or     (ii)   the Energy and/or the Seller’s Plant that
the Buyer is required to disclose to enable the Buyer to obtain or realize the
full benefit to the Buyer of the Environmental Attributes, including sales of
Environmental Attributes to third Persons;

  (f)   in the case of the Seller, disclosure of the Buyer Confidential
Information to its directors, officers, employees and Affiliates, consultants
and advisors, provided that each of the foregoing to whom Buyer Confidential
Information is disclosed is advised of the confidential nature thereof;     (g)
  without limiting the Buyer’s disclosure rights under subsection 21.2(d) above,
disclosures required to be made by a Party by an order of a court or tribunal or
under any law, regulatory requirement or requirement of any stock exchange that
is binding upon it, provided that (i) to the extent reasonably practicable, the
Party making such disclosure gives reasonable notice to the other Party before
making the disclosure, and (ii) limits the disclosure to that required by the
applicable order, law, or regulatory or stock exchange requirement;     (h)  
disclosures in any legal proceedings for the enforcement of this EPA or other
agreement entered into by the Seller pursuant to the RFP process; or     (i)  
disclosures of the Seller Confidential Information or the Buyer Confidential
Information, as the case may be, by written agreement or consent of both
Parties.

     21.3 Freedom of Information and Protection of Privacy Act — The Seller
acknowledges that the Buyer is subject to the Freedom of Information and
Protection of Privacy Act (British Columbia) and agrees that the Buyer’s
non-disclosure obligations under this EPA are subject to the provisions of that
legislation, as amended from time to time.
     21.4 Exemption from Disclosure — The Parties confirm that Seller
Confidential Information constitutes commercial and financial information of the
Seller, which has been supplied, or may be
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supplied, in confidence and the disclosure of which could reasonably be expected
to harm significantly the competitive position and/or interfere significantly
with the negotiating position of the Seller. Accordingly, the Parties confirm
their intention that, subject to section 21.2, all Seller Confidential
Information disclosed by the Seller to the Buyer shall be deemed to be
confidential and exempt from disclosure to third Persons in accordance with
section 21 of the Freedom of Information and Protection of Privacy Act (British
Columbia), as amended from time to time.
22. GENERAL PROVISIONS
22.1 Independence — The Parties are independent contractors and nothing in this
EPA or its performance creates a partnership, joint venture or agency
relationship between the Parties.
22.2 Enurement — This EPA enures to the benefit of the Parties, their successors
and their permitted assigns.
22.3 Notices — Any notice, consent, waiver, declaration, request for approval or
other request, statement or bill (a “notice”) that either Party may be required
or may desire to give to the other Party under this EPA must be in writing
addressed to the other Party at the address stated in subsection 22.3(c) or
(d) and:

  (a)   may be delivered by hand or by a courier service during normal business
hours on a Business Day, in which case the notice shall be deemed to have been
delivered on that Business Day;     (b)   notices, other than notices under
section 3.4, 7.9 or any of Articles 12, 14, 15, 16 or 17, may be sent by email
or fax during normal business hours on a Business Day, in which case provided
that the Party delivering the notice obtains a confirmation of delivery, the
notice shall be deemed to have been delivered on that Business Day;     (c)  
subject to subsection 22.3(e), the address of the Buyer for notices is as set
out in Appendix 10;     (d)   subject to subsection 22.3(e), the address of the
Seller for notices is as set out in Appendix 10 and the Buyer may, but is not
required to (except as otherwise provided in a Lender Consent Agreement, if
any), provide a copy of any such notice to the Facility Lender; and     (e)  
either Party may change its address or fax number for notices under this EPA by
notice to the other Party.

22.4 Entire Agreement and Amendment — This EPA contains the entire agreement
between the Parties with respect to the purchase and sale of Energy and all
other matters addressed in this EPA, and supersedes all previous communications,
understandings and agreements between the Parties with respect to the subject
matter hereof including, without limitation, the RFP issued by the Buyer on 6
February 2008 and all Addenda, questions and answers and any other
communications of any kind whatsoever by the Buyer in connection therewith or
relating thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements express, implied or statutory between the
Parties other than as expressly set out in this EPA. This EPA may not be
amended, except by an agreement in writing signed by both Parties.
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22.5 No Waiver — Other than in respect of the specific matter or circumstance
for which a waiver is given, and except as otherwise specified in this EPA, no
failure by a Party to enforce, or require a strict observance and performance
of, any of the terms of this EPA shall constitute a waiver of those terms or
affect or impair those terms or the right of a Party at any time to enforce
those terms or to take advantage of any remedy that Party may have in respect of
any other matter or circumstance.
22.6 Dispute Resolution — If any dispute arises under or in relation to this
EPA, that dispute shall be referred to and finally resolved by arbitration by a
single arbitrator. The arbitration shall be administered by the British Columbia
International Commercial Arbitration Centre (“BCICAC”) pursuant to its rules.
The place of arbitration shall be Vancouver, British Columbia. If at the time a
dispute arises the BCICAC does not exist, the dispute shall be finally settled
by arbitration by a single arbitrator who, failing written agreement of the
Parties, shall be appointed under the Commercial Arbitration Act (British
Columbia) or under the International Commercial Arbitration Act (British
Columbia), as applicable, and the arbitrator shall conduct the arbitration in
accordance with such rules as the Parties may agree in writing, or failing
agreement, such rules as may be determined or adopted by the arbitrator. The
decision of the arbitrator shall be final and binding on the Parties. The
arbitrator shall have, and the Parties shall execute and deliver all such
documents, deeds and assurances as may be necessary to ensure that the
arbitrator has, jurisdiction and power to make interim, partial or final awards
ordering specific performance, injunctions and any other equitable remedy. The
Parties are entitled to seek interim measures of protection, including relief by
way of a mandatory injunction, from a court of competent jurisdiction pending
commencement or completion of any arbitration. The Parties also may seek from a
court of competent jurisdiction any equitable relief or remedy that the
arbitrator does not have the jurisdiction to grant. All performance required
under this EPA by the Parties and payments required under this EPA shall
continue during the dispute resolution proceedings contemplated by this
section 22.6, provided that this section may not be interpreted or applied to
delay or restrict the exercise of any right to suspend performance under or
terminate this EPA pursuant to the express terms hereof. Any payments or
reimbursements required by an arbitration award shall be due as of the date
determined in accordance with section 10.2 or, where section 10.2 is not
applicable, as of the date determined in the award, and, without duplication
with subsection 10.2(b), shall bear interest at an annual rate equal to the
Prime Rate plus 3% compounded monthly, from the date such payment was due until
the amount is paid. To the fullest extent permitted by law, the Parties shall
maintain in confidence the fact that an arbitration has been commenced, all
documents and information exchanged during the course of the arbitration
proceeding, and the arbitrators’ award, provided that each of the Parties shall
be entitled to disclose such matters to its own officers, directors,
shareholders and employees, its professional advisors and other representatives,
and may make such disclosures in the course of any Proceedings required to
pursue any legal right arising out of or in connection with the arbitration and
may make such disclosures as are required by law or for regulatory purposes.
Nothing in this EPA precludes either Party from bringing a Proceeding in any
jurisdiction to enforce an arbitration award or any judgment enforcing an
arbitration award, nor shall the bringing of such Proceedings in any one or more
jurisdictions preclude the bringing of enforcement Proceedings in any other
jurisdiction. In connection with any court proceedings, each Party waives its
respective rights to any jury trial.
22.7 Eligible Financial Contract/Forward Contract — The Parties agree and intend
that this EPA constitutes an eligible financial contract under the Bankruptcy
and Insolvency Act (Canada) and the Companies’ Creditors Arrangement Act
(Canada) and that this EPA and the transactions contemplated under this EPA
constitute a “forward contract” within the meaning of section 556 of the United
States Bankruptcy Code and that the Parties are “forward contract merchants”
within the meaning of the United States Bankruptcy Code.
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22.8 Further Assurances — Each Party shall, upon the reasonable request of the
other Party, do, sign or cause to be done or signed all further acts, deeds,
things, documents and assurances required for the performance of this EPA.
22.9 Severability — Any provision of this EPA, which is illegal or unenforceable
shall be ineffective to the extent of the illegality or unenforceability without
invalidating the remaining provisions of this EPA.
22.10 Counterparts — This EPA may be executed in counterparts, each of which is
deemed to be an original document and all of which are deemed one and the same
document.
IN WITNESS WHEREOF each Party by its duly authorized representative(s) has
signed this EPA as of the Effective Date.
For ZELLSTOFF CELGAR LIMITED PARTNERSHIP by its general partner, Zellstoff
Celgar Limited:

          /s/ David Gandossi     
Name:
  David M. Gandossi    
Title:
  Secretary    
 
        January 27, 2009     
Date
       
 
        For BRITISH COLUMBIA HYDRO AND POWER AUTHORITY:    
 
        /s/ Robert Elton     
Name:
  Robert G. Elton    
Title:
  President and Chief Executive Officer    
 
        January 27, 2009     
Date
       

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APPENDIX 1
DEFINITIONS
     References in an Appendix to a section or subsection mean a section or
subsection of this EPA, and not an Appendix, unless otherwise stated. The
following words and expressions wherever used in this EPA have the following
meaning:

1.   “Affiliate” means, with respect to the Seller or the General Partner, any
Person directly or indirectly Controlled by, Controlling, or under common
Control with, the Seller or the General Partner and with respect to the Buyer,
any Person directly or indirectly Controlled by the Buyer and, if at any time
the Buyer is not Controlled, directly or indirectly, by the Province of British
Columbia, shall include any Person directly or indirectly Controlling, or under
common Control with, the Buyer.   2.   “Annual Firm Energy Amount” means, at any
time, whether before or after COD, the aggregate of all Seasonally Firm Energy
Amounts the Seller is required to deliver in any four consecutive complete
Seasons after COD as set out in the Firm Energy Table.   3.   “Annual GBL” means
the generator baseline for the Project in each year during the Term, and is *
GWh/year.   4.   “Annual Operating Plan” means each plan delivered by the Seller
to the Buyer under subsection 6.5(d) and all amendments to such plan in
accordance with subsection 6.5(d).   5.   “Authorized Planned Outage” means a
Planned Outage that is scheduled in accordance with Good Utility Practice,
complies with the requirements of section 6.3 and includes only the duration of
the Planned Outage set out in the notice of the Planned Outage delivered by the
Seller under section 6.3.   6.   “Auxiliary Fuel” means any combustible fuel
other than Forest-based Biomass.   7.   “Auxiliary Fuel Annual Baseline” has the
meaning given in Appendix 3.   8.   “Auxiliary Fuel Energy Overage” has the
meaning given in Appendix 3.   9.   “Auxiliary Fuel Overage” has the meaning
given in Appendix 3.   10.   “Auxiliary Fuel Overage Credit” has the meaning
given in Appendix 3.   11.   “Avoidable Costs” has the meaning given in
Appendix 3.   12.   “Bankrupt or Insolvent” means, with respect to a Person
(which in the case of the Seller includes either or both of the Seller or the
General Partner):

  (a)   the Person has started proceedings to be adjudicated a voluntary
bankrupt or consented to the filing of a bankruptcy proceeding against it; or  
  (b)   the Person has filed a petition or similar proceeding seeking
reorganization, arrangement or similar relief under any bankruptcy or insolvency
law; or

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  (c)   a receiver, liquidator, trustee or assignee in bankruptcy has been
appointed for the Person or the Person has consented to the appointment of a
receiver, liquidator, trustee or assignee in bankruptcy; or     (d)   the Person
has voluntarily suspended the transaction of its usual business; or     (e)   a
court has issued an order declaring the Person bankrupt or insolvent.

13.   “BCICAC” has the meaning given in section 22.6.   14.   “BCUC” means the
British Columbia Utilities Commission or any successor thereto.   15.   “BCUC
Acceptance” has the meaning given in section 3.1.   16.   “Breaching Party” has
the meaning given in section 3.3.   17.   “Business Day” means any calendar day
which is not a Saturday, Sunday or other day recognized as a statutory holiday
in British Columbia.   18.   “Buyer” means British Columbia Hydro and Power
Authority and its successors and permitted assigns.   19.   “Buyer Confidential
Information” means technical or commercial information disclosed by the Buyer to
the Seller that the Buyer directs, and clearly marks, as confidential, including
this EPA whether or not so directed and marked, but excluding information that
(i) is or becomes in the public domain, other than as a result of a breach of
this EPA by the Seller, or (ii) is known to the Seller before disclosure to it
by the Buyer, or becomes known to the Seller, thereafter by way of disclosure to
the Seller by any other person who is not under an obligation of confidentiality
with respect thereto.   20.   “Buyer Indemnified Party” has the meaning given in
section 20.1.   21.   “Buyer Termination Event” means any one of the following:

  (a)   any one of the Seller or the General Partner is Bankrupt or Insolvent;  
  (b)   a Letter of Credit Failure has occurred and the Seller has failed to
cure that failure within 5 Business Days after the Letter of Credit Failure
occurred;     (c)   an amount due and payable by the Seller to the Buyer under
this EPA remains unpaid for 15 days after its due date and such default has not
been cured within 15 days after the Buyer has given notice of the default to the
Seller;     (d)   any one of the Seller or the General Partner is in material
default of any of its covenants, representations, warranties or other
obligations under the RFP Confidentiality Agreement; or     (e)   any one of the
Seller or the General Partner is in material default of any of its covenants,
representations and warranties or other obligations under this EPA, other than
as set out above, unless within 30 days after the date of notice by the Buyer to
the Seller of the default, the Seller has cured the default or, if the default
cannot be cured within that 30 day period, the Seller demonstrates to the
reasonable satisfaction of the Buyer that the

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      Seller is working diligently and expeditiously to cure the default and the
default is cured within a further reasonable period of time. A “material
default” includes any of the following:

  (i)   any Deliberate Breach by the Seller of its obligations under
section 7.2;     (ii)   any failure by the Seller to comply with (I) subsection
4.1(a) or 6.2(a) in respect of subsection (e) or (f) of the Project Standards
definition, (II) section 7.4, (III) section 8.4 or (IV) section 8.5, and    
(iii)   any purported assignment of this EPA without the consent of the Buyer if
such consent is required under Article 17.

      A “material default” does not include any failure to deliver either the
Seasonally Firm Energy Amount in respect of which the Seller has paid any LDs
owing under section 13.2 or the Capacity Call Amount in respect of which the
Seller has paid any LDs owing under section 13.3, other than a failure resulting
from a Deliberate Breach.

22.   “Capacity Call” has the meaning given in section 7.11.   23.   “Capacity
Call Amount” has the meaning given in subsection 7.11(b)(ii).   24.   “Capacity
Call Notice” has the meaning given in subsection 7.11(b).   25.   “Capacity Call
Period” has the meaning given in subsection 7.11(a)(i).   26.   “Clean or
Renewable Electricity” means electricity that meets the requirements for clean
or renewable electricity set out in the guidelines issued by the British
Columbia Ministry of Energy, Mines and Petroleum Resources in June 2008,
including any amendments thereto from time to time.   27.   “COD” or “Commercial
Operation Date” means the time when the Seller’s Plant achieves COD pursuant to
section 5.2.   28.   “COD Certificate” means a certificate in the form set out
in Appendix 6, completed and accompanied by attachments reasonably satisfactory
to the Buyer and signed by a senior officer of each of the General Partner and
the Seller.   29.   “COD Delay LDs” means the LDs specified in section 13.1.  
30.   “Construction Insurance” means all insurance customarily maintained by
prudent owners in connection with the construction of a facility similar to the
Incremental Seller’s Plant, including course of construction insurance.   31.  
“Contract Year” means the full year period initially measured from COD to the
first anniversary of COD, and to and from successive anniversaries thereafter
until the termination or expiry of this EPA, provided that a Contract Year shall
also mean the partial year following any such anniversary during which this EPA
expires or is terminated.

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32.   “Control” of any Person means:

  (a)   with respect to any corporation or other Person having voting shares or
the equivalent, the ownership or power to vote, directly or indirectly, shares,
or the equivalent, representing 50% or more of the power to vote in the election
of directors, managers or persons performing similar functions;     (b)  
ownership of 50% or more of the equity or beneficial interest in that Person; or
    (c)   the ability to direct the business and affairs of any Person by acting
as a general partner, manager or otherwise.

33.   “CPI” has the meaning given in Appendix 3.   34.   “Deliberate Breach”
means:

  (a)   any failure by the Seller to achieve COD by Guaranteed COD plus 365 days
plus all Force Majeure Days (not exceeding 180 Force Majeure Days) resulting
from any wilful or grossly negligent act or omission of the Seller;     (b)  
any breach of or default under any provision of this EPA by the Seller resulting
from any wilful or grossly negligent act or omission by the Seller;     (c)   a
Buyer Termination Event constituting a repudiation of this EPA by the Seller; or
    (d)   any sale or transfer by the Seller of Energy to any Person, other than
the Buyer, except where such sale or transfer is expressly permitted under this
EPA.

35.   “Delivery Interruption Outage” has the meaning given in subsection 7.8(a).
  36.   “Development Costs” means all costs reasonably incurred or committed by
the Seller after the date of issuance of the RFP for the Project and all costs
reasonably incurred, or that are reasonably likely to be incurred by the Seller,
after taking reasonable mitigation measures, to terminate all contractual
commitments with respect to the Project and to otherwise cease development of
the Project, but excluding any lost profits, loss of opportunity costs or
damages and all other special, incidental, indirect or consequential losses.  
37.   “EcoLogoM Certification” means certification pursuant to Environment
Canada’s Environmental ChoiceM program confirming that the Seller’s Plant and
all or part of the Energy complies with the certification criteria document
“Electricity – Renewable Low-Impact”, as amended from time to time and is
therefore entitled to the EcoLogoM designation.   38.   “EFEP”, or “Escalated
Firm Energy Price”, has the meaning given in Appendix 3.   39.   “Effective
Date” means the date set out on page one hereof.   40.   “Eligible Energy” means
in any Season after COD, the total of (i) the amount of Metered Energy delivered
by the Seller at the POI in that Season, and (ii) Energy that is deemed to be
“Eligible Energy” in that Season pursuant to section 7.8, but subject to the
following limitations:

  (a)   if such total Energy is less than or equal to the Seasonal GBL
applicable in that Season (the “Applicable Seasonal GBL”), Eligible Energy is
zero;

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  (b)   if such total Energy is greater than the Applicable Seasonal GBL, but
less than or equal to the Total Allowable Energy, then Eligible Energy is equal
to such total Energy minus the Applicable Seasonal GBL;     (c)   if such total
Energy is greater than the Total Allowable Energy, then Eligible Energy is equal
to the Total Allowable Energy minus the Applicable Seasonal GBL; and     (d)  
in the case of any Season which is not a complete Season, the Applicable
Seasonal GBL and Seasonally Firm Energy Amount for the purposes of the foregoing
calculations shall be prorated on a daily basis.

41.   “Energy” means electric energy expressed in MWh generated by the Seller’s
Plant, excluding Station Service.   42.   “Energy Supply Contract” means an
energy supply contract under section 71 of the UCA.   43.   “Environmental
Attributes” means:

  (a)   all attributes directly associated with, or that may be derived from,
the Eligible Energy having decreased environmental impacts relative to energy
generated by certain other generation facilities or technologies, including any
existing or future credit, allowance, “green” tag, ticket, certificate or other
“green” marketing attribute or proprietary or contractual right, whether or not
tradeable;     (b)   any credit, reduction right, off-set, allowance, allocated
pollution right, certificate or other unit of any kind whatsoever, whether or
not tradeable, and any other proprietary or contractual right, whether or not
tradeable, resulting from, or otherwise related to the actual or assumed
reduction, displacement or offset of emissions at any location other than the
Seller’s Plant as a result of the generation, purchase or sale of the Eligible
Energy, but excluding one half of: (i) any divisible portion of; and (ii) the
benefits or proceeds from any indivisible portion of, any of the foregoing that
are demonstrated by the Seller to the Buyer’s satisfaction, acting reasonably,
to directly result from or relate to incremental costs incurred by the Seller
after COD, whether those costs are capital expenditures, operational expenses,
or otherwise;     (c)   On-Site Emission Reduction Rights related to the
generation of Eligible Energy, which for clarity do not include attributes
related to pulp mill process steam or black liquor process inputs, but excluding
one half of: (i) any divisible portion of; and (ii) the benefits or proceeds
from any indivisible portion of, any of the foregoing that are demonstrated by
the Seller to the Buyer’s satisfaction, acting reasonably, to directly result
from or relate to incremental costs incurred by the Seller after COD, whether
those costs are capital expenditures, operational expenses, or otherwise; and  
  (d)   all revenues, entitlements, benefits and other proceeds arising from or
related to the foregoing, but for certainty not including:

  (i)   benefits or proceeds from environmental incentive programs offered by
Governmental Authorities that do not require a transfer of the attributes in
subsections (a) to (c) above; or

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  (ii)   benefits or proceeds from social programs, including programs relating
to northern or rural development, employment or skills training, or First
Nations, that do not require a transfer of the attributes in subsections (a) to
(c) above.

44.   “Environmental Certification” means:

  (a)   EcoLogoM Certification; or     (b)   any alternate certification the
Buyer requires the Seller to obtain under section 8.5.

45.   “EPA” means this Electricity Purchase Agreement, including all Appendices
attached hereto, all as amended, supplemented or otherwise modified from time to
time.   46.   “Estimated Interconnection Facilities Completion Date” means the
Transmission Authority’s most recent estimated date for completing the
Interconnection Network Upgrades.   47.   “Exemption” means a lawful exemption
from the requirement under section 71 of the UCA that this EPA be filed
thereunder as an Energy Supply Contract.   48.   “Facility Lender” means any
lender(s) providing any debt financing for the Project and any successors or
assigns thereto.   49.   “Final Amount” means an amount owing by either Party to
the other Party pursuant to this EPA, including as a result of a breach of this
EPA, where such amount is (i) undisputed by the Party owing such amount; or
(ii) has been finally determined by an arbitration award pursuant to
section 22.6 or by a court order and all rights of appeal in respect of such
award or order have been exhausted or have expired.   50.   “Firm Energy” means,
in each Season after COD, all Eligible Energy in that Season not exceeding the
Seasonally Firm Energy Amount for that Season, but excluding any Eligible Energy
delivered after the start time and prior to the end time for an Authorized
Planned Outage as set out in the notice with respect to the Authorized Planned
Outage under section 6.3 and all such excluded Eligible Energy shall be
considered Non-Firm Energy.   51.   “Firm Energy Table” means the table in
Appendix 2 that sets out the Seasonally Firm Energy Amount, or as revised under
section 7.9.   52.   “Five-Year Anniversary” has the meaning given in subsection
6.5(a).   53.   “Force Majeure” means, subject to the exclusions in
section 12.2, (i) in the case of Force Majeure invoked by the Buyer, any event
or circumstance not within the control of the Buyer, or (ii) as to Force Majeure
invoked by the Seller, any event or circumstance not within control of either
the Seller or FortisBC, and, to the extent not within that Person’s control,
includes:

  (a)   acts of God, including wind, ice and other storms, lightning, floods,
earthquakes, volcanic eruptions and landslides;     (b)   strikes, lockouts and
other industrial disturbances, provided that settlement of strikes, lockouts and
other labour disturbances shall be wholly within the discretion of the Person
involved;

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  (c)   epidemics, war (whether or not declared), blockades, acts of public
enemies, acts of sabotage, civil insurrection, riots and civil disobedience;    
(d)   acts or omissions of Governmental Authorities, including delays in
regulatory process and orders of a regulatory authority or court of competent
jurisdiction;     (e)   explosions and fires; and     (f)   notwithstanding
subsection 12.2(f), an inability of the Seller to achieve COD solely as a result
of a delay by the Transmission Authority in completion of Network Upgrades, if
and to the extent such delay is not attributable to the Seller or the Seller’s
Plant;         but does not include:     (g)   any refusal, failure or delay of
any Governmental Authority in granting any Material Permit to the Seller,
whether or not on terms and conditions that permit the Seller to perform its
obligations under this EPA, except where such failure or delay is a result of an
event described in subsection (a), (b), (c) or (e) above.

54.   “Force Majeure Days” means the number of days the Seller is delayed in
achieving COD as a result of Force Majeure invoked by the Seller in accordance
with Article 12.   55.   “Forced Outage” means a partial or total interruption
in the delivery of, or ability to deliver, Energy that is not a result of an
Authorized Planned Outage or a Force Majeure invoked in accordance with this
EPA.   56.   “Forest-based Biomass” means mill solid wood residues (hog fuel,
sawdust, chips and/or chunks), pulp mill residues (hog fuel and black liquor),
roadside and landing residues, and biomass derived from standing timber, without
access to new timber harvesting tenure.   57.   “Fortis Interconnection Report”
means the report(s), if any, issued to the Seller by FortisBC related to the
interconnection of the Project with the Fortis System.   58.   “Fortis System”
means the transmission, substation, protection, control and communication
facilities owned and operated by FortisBC in British Columbia, and includes all
additions and modifications thereto and repairs or replacements thereof.   59.  
“FortisBC” means FortisBC Inc., and its successors and assigns.   60.   “Fuel”
means Forest-based Biomass, and any Auxiliary Fuel, used to generate Energy at
the Seller’s Plant.   61.   “Fuel Plan” means the Seller’s five-year plan for
the supply and consumption of Fuel, as specified in Appendix 5, and each
subsequent plan approved by the Buyer in accordance with this EPA, provided that
for any period after the expiry of the five-year plan and before the Buyer’s
approval of a replacement plan, the “Fuel Plan” means a plan for the supply and
consumption of Fuel applicable to the last year of the Seller’s immediately
preceding five-year plan.   62.   “GHG” or “Greenhouse Gas(es)” means: (i) one
or more of the following gases: carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride; and (ii) any
other gas that is identified as having significant global warming potential and
is

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    added, at any time before the expiry of the Term, to Schedule 1 to the
Canadian Environmental Protection Act, 1999, or to the Greenhouse Gas Reduction
Targets Act (British Columbia), or to any other regulation(s) governing the
emission of the gases noted in (i) from the Seller’s Plant.   63.   “GJ” means
gigajoule.   64.   “Good Utility Practice” means any of the practices, methods
and acts engaged in or approved by a significant portion of the electric utility
industry in the WECC region during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgement in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with
good business practices, reliability, safety and expedition. Good Utility
Practice is not intended to be limited to the optimum practice, method or act to
the exclusion of all others, but rather to be acceptable practices, methods or
acts generally accepted in the WECC region.   65.   “Governmental Authorities”
means any federal, provincial, local or foreign governments or any of their
boards or agencies, or any regulatory authority, other than the Buyer and
entities controlled by the Buyer.   66.   “GST” means the goods and services tax
imposed under the Excise Tax Act (Canada) as that Act may be amended or replaced
from time to time.   67.   “Guaranteed COD” means May 1, 2010, or as revised
pursuant to section 5.8.   68.   “GWh” means gigawatt-hour.   69.   “Hourly
Eligible Energy” means in any hour after COD, the total of (i) the amount of
Metered Energy delivered by the Seller at the POI in that hour, and (ii) Energy
that is deemed to be “Eligible Energy” in that hour pursuant to section 7.8, but
subject to the following limitations:

  (a)   if such total Energy is less than or equal to the Hourly GBL applicable
in that Season (the “Applicable Hourly GBL”), Hourly Eligible Energy in that
hour is zero;     (b)   if such total Energy is greater than the Applicable
Hourly GBL, but less than or equal to the Plant Capacity multiplied by one hour,
then Hourly Eligible Energy in that hour is equal to such total Energy minus the
Applicable Hourly GBL; and     (c)   if such total Energy is greater than the
Plant Capacity multiplied by one hour, then Hourly Eligible Energy is equal to
the Plant Capacity multiplied by one hour minus the Applicable Hourly GBL.

70.   “Hourly Firm Energy Amount” means for each hour after COD, the amount of
Energy the Seller is required to deliver in the applicable Season as set out in
the Firm Energy Table divided by the number of the hours in that Season.   71.  
“Hourly GBL” means the generator baseline for the Project in each hour during
the Term, and for each hour is the amount determined by dividing the Seasonal
GBL applicable to the Season in which that hour occurs by the number of hours in
that Season.   72.   “Incremental Project Assets” has the meaning given in
subsection 16.5(d)(ii).

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73.   “Incremental Seller’s Plant” has the meaning given in Appendix 4.   74.  
“Indemnitee” has the meaning given in section 20.3.   75.   “Indemnitor” has the
meaning given in section 20.3.   76.   “Interconnection Agreement” means the
agreement between the Seller and FortisBC relative to the Seller’s Plant, as
amended or replaced from time to time.   77.   “Interconnection Network
Upgrades” means those additions, modifications and upgrades to the Transmission
System identified in the Seller Optional Study Report, and as further refined in
subsequent optional studies, as determined by the Transmission Authority (for
Transmission System impacts related to the interconnection of the Project).  
78.   “Interconnection Security” means a letter of credit in the form specified
in section 14.4 in an amount equal to the costs that the Transmission Authority,
as set out in the Seller Optional Study Report, estimates are required to
design, construct and commission the Interconnection Network Upgrades, as such
letter of credit is amended or replaced from time to time.   79.   “Laws” means
any and all statutes, laws (including common law), ordinances, rules,
regulations, codes, orders, bylaws, policies, directions, standards, guidelines,
protocols and other lawful requirements of any Governmental Authority in effect
from time to time.   80.   “LDs” means liquidated damages payable by the Seller
to the Buyer under Article 13.   81.   “Lender Consent Agreement” means an
agreement referred to in section 17.3.   82.   “Letter of Credit Failure” means:

  (a)   the Seller fails to renew or replace the Performance Security or
Interconnection Security by no later than 30 days prior to the expiry thereof;  
  (b)   the Seller fails to amend or replace the Performance Security or
Interconnection Security as required under section 14.1 by no later than 30 days
prior to the requirement to amend or replace such Performance Security or
Interconnection Security arises;     (c)   the issuer of the Performance
Security or Interconnection Security:

  (i)   fails to maintain a credit rating of at least the minimum rating
specified in subsection 14.4(a);     (ii)   fails to comply with or perform its
obligations under the Performance Security or Interconnection Security; or    
(iii)   disaffirms, disclaims, repudiates, terminates, rejects, in whole or in
part, or challenges the validity of, the Performance Security or Interconnection
Security; or

  (d)   the Performance Security or Interconnection Security ceases to be in
full force and effect for purposes of this EPA, whether or not in accordance
with its terms, prior to the date specified in Article 14 for return of the
Performance Security or Interconnection Security, as applicable, to the Seller.

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83.   “Line Losses” means FortisBC transmission losses as determined from time
to time in accordance with FortisBC Rate Schedule 109 for Large General Service
– Transmission.   84.   “Long Term Operating Plan” means the plan referred to in
subsection 6.5(c) as amended by the Seller from time to time.   85.   “Major
Damage” means damage having a reasonably estimated repair and/or restoration
cost exceeding the present value, using the Present Value Rate effective as of
the date on which the damage occurs, of the projected revenues under this EPA
from the projected Energy deliveries from the Seller’s Plant for the remainder
of the Term, less a present value amount, using the aforesaid Present Value
Rate, representing the projected operating and maintenance costs for the
Seller’s Plant, including Fuel costs.   86.   “Material Permits” means the
following if and as required for the Seller’s Plant:

  (a)   environmental assessment certificate;     (b)   any forest license or
other right to harvest timber;     (c)   air emissions permit;     (d)   any
permit, license or approval required with respect to the discharge of any type
of waste from the Seller’s Plant;     (e)   water license;     (f)   zoning
appropriate for the Seller’s Plant;     (g)   any subdivision approval required
to create separate legal title to the site on which the Seller’s Plant is or
shall be located;     (h)   any permits or approval required with respect to the
storage of the Fuel at the Seller’s Plant; and     (i)   any lease, license of
occupation, certificate of title, or similar agreement or instrument required
with respect to the Seller’s Plant, including all access roads to the Seller’s
Plant;

    on terms and conditions that permit the Seller to comply with its
obligations under this EPA.   87.   “Material Permits Expiry Date” means the
date that is 15 days after the Seller’s right to terminate this EPA arises under
subsection
16.2(a).   88.   “Metered Energy” means Energy recorded by the Metering
Equipment, less an amount equal to Line Losses.   89.   “Metering Equipment”
means the metering equipment described in section 9.1.   90.   “Mill” means the
Seller’s pulp mill and other industrial facilities at which the Seller’s Plant
is located.   91.   “Mill Load” means the electric energy consumed by the Mill.

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92.   “MW” means megawatt.   93.   “MWh” means megawatt-hour.   94.   “Network
Upgrade Costs” means the costs associated with the design, engineering,
construction and commissioning of Network Upgrades.   95.   “Network Upgrades”
means the Interconnection Network Upgrades and the Transmission Network
Upgrades.   96.   “Non-Firm Energy” means in each Season after COD all Eligible
Energy in that Season in excess of the Seasonally Firm Energy Amount for that
Season, and all Eligible Energy deemed to be Non-Firm Energy pursuant to the
definition of Firm Energy in this Appendix 1, expressed in MWh.   97.   “OATT”
means the Transmission Authority’s Open Access Transmission Tariff, as filed
with and accepted by the BCUC, as amended and refiled from time to time.   98.  
“Off-Peak Hours” has the meaning given in Appendix 3.   99.   “On-Peak Hours”
has the meaning given in Appendix 3.   100.   “On-Site Emission Reduction
Rights” means any credit, reduction right, off-set, allowance, allocated
pollution right, certificate or other unit of any kind whatsoever whether or not
tradeable resulting from or otherwise related to the reduction, removal, or
sequestration of emissions at or from the Seller’s Plant.   101.   “Outage”
means:

  (a)   in the case of the Seller’s Plant, a partial or total interruption in
the delivery of, or ability to deliver, Energy; and     (b)   in the case of the
Fortis System or Transmission System, a partial or total interruption in the
transmission of, or ability to transmit, Energy from the Seller’s Plant.

102.   “Party” means (i) the Buyer and its successors and permitted assigns; or
(ii) the Seller and its successors and permitted assigns, and “Parties” means
both the Buyer and the Seller and their respective successors and permitted
assigns.   103.   “Peak Hours” has the meaning given in Appendix 3.   104.  
“Performance Security” means a letter of credit in the form specified in
section 14.4 in an amount at any particular time equal to:

  (a)   prior to the Material Permits Expiry Date, $2.50/MWh multiplied by the
Annual Firm Energy Amount;     (b)   from and after the Material Permit Expiry
Date, and prior to the first anniversary of COD, $8.00/MWh multiplied by the
Annual Firm Energy Amount;

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  (c)   from and after the first anniversary of COD, and prior to the first
Performance Security Anniversary, $6.00/MWh (adjusted for CPI from January 1,
2008 to the first anniversary of COD) multiplied by the Annual Firm Energy
Amount; and     (d)   from and after each Performance Security Anniversary, and
prior to the next occurring Performance Security Anniversary:

  (i)   if the average annual Firm Energy delivered in the five-year period
immediately preceding the date that is 30 days prior to the most recent
Performance Security Anniversary is less than 95% of the Annual Firm Energy
Amount, $6.00/MWh (adjusted for CPI from January 1, 2008 to the just attained
Performance Security Anniversary) multiplied by the Annual Firm Energy Amount;
or     (ii)   if the average annual Firm Energy delivered in the five-year
period immediately preceding the date that is 30 days prior to the most recent
Performance Security Anniversary is at least 95% of the Annual Firm Energy
Amount, $4.00/MWh (adjusted for CPI from January 1, 2008 to the just attained
Performance Security Anniversary) multiplied by the Annual Firm Energy Amount;

      provided that for the purposes of this subsection (d), Firm Energy
delivered to the Buyer in any period described in subsection (i) or (ii) above
shall include:

  (iii)   deemed Eligible Energy pursuant to section 7.8 that would have
constituted Firm Energy if actually delivered to the Buyer in that period; and  
  (iv)   all other amounts of Firm Energy that could have been generated and
delivered to the Buyer during that period but for (I) Force Majeure in respect
of which either Party has invoked Force Majeure in accordance with section 12.1,
(II) Authorized Planned Outages or (III) other events specified in this EPA that
expressly excuse the Seller from its obligations to deliver Firm Energy to the
Buyer, in each case calculated in the same manner as deemed Eligible Energy in
section 7.8.

105.   “Performance Security Anniversary” means the date that is 30 days after
the fifth anniversary of the end of the first four complete Seasons after COD
and the anniversary of such date that occurs at the end of each five year period
thereafter.   106.   “Permits” means permits, certificates, licences, and other
approvals required for the design, construction, ownership, operation and
maintenance of the Seller’s Plant and the delivery of Eligible Energy at the
POI, including all Material Permits.   107.   “Person” means an individual, body
corporate, firm, partnership, joint venture, trust, legal representative or
other legal entity.   108.   “Planned Outage” means an Outage for purposes of
scheduled inspection, repair and/or maintenance in the Seller’s Plant.   109.  
“Plant Capacity” means the electrical capacity of the Seller’s Plant expressed
in MW, determined as the nameplate capacity if expressed in MW, or as the
nameplate capacity if expressed in MVA multiplied by a power factor of 0.95, as
set out in Appendix 4, as amended in accordance with section 4.5 or 6.6.

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110.   “POI” or “Point of Interconnection” means the following interconnections,
which are deemed for the purposes of this EPA to be a single point of
interconnection between the Fortis System and the Transmission System:

  (a)   the Buyer’s Kootenay Canal Plant as follows:

  (i)   the point where the Buyer-owned 63 kV Line 60L225 interconnects with the
69 kV Line 13 at the first structure outside South Slocan substation fence
(60L225 – Line 13 interconnection);     (ii)   the point where the Buyer-owned
63 kV Line 60L227 interconnects with the FortisBC-owned 69 kV Line 12 at the
first structure outside Kootenay Canal Plant G.S. switchyard fence (60L227 –
Line 12 interconnection); and     (iii)   the point where the Buyer-owned 230 kV
Line 2L288 interconnects with the FortisBC-owned 230 kV Line 79 at the first
structure outside Kootenay Canal Plant G.S. switchyard fence (2L288 – Line 79
interconnection);

  (b)   the point where the transmission line owned by Arrow Lakes Power
Corporation (Line 2L289) interconnects with the Buyer-owned Selkirk substation;
    (c)   the point where the Teck Cominco Metals Ltd. (“Teck”)-owned 230 kV
Line 71 (referred to by the Buyer as Line 2L277) from Teck’s Waneta Plant enters
into the Buyer-owned Nelway substation, and since the Buyer has authority from
Teck to configure the path of Line 71 at the Nelway substation, such point at
the Nelway substation is part of the POI regardless of how Line 71 is
configured; and     (d)   such other point of interconnection between the
Transmission System and the Fortis System as may be agreed between the Buyer and
FortisBC or as specified from time to time as the “Kootenay Interconnection”
under the terms of the Canal Plant Agreement dated July 1, 2005 among the Buyer,
FortisBC and others, and notified to the Seller.

111.   “PPT” means Pacific Prevailing Time, being Pacific Daylight Time or
Pacific Standard Time, as applicable.

112.   “Pre-COD Energy” means the amount of Metered Energy delivered by the
Seller at the POI in each hour before COD, including Test Energy, but excluding:

  (a)   that portion of the Metered Energy delivered in any hour (a “Delivery
Hour”) that is less than the amount equal to the Hourly GBL applicable to that
hour;     (b)   any portion of the Metered Energy that at any time exceeds the
Plant Capacity multiplied by one hour; and     (c)   that portion of the Metered
Energy that is sold to third Persons in accordance with section 7.1.

113.   “Present Value Rate” means the annual yield on a Government of Canada
Bond having a maturity date that most closely matches the date on which the Term
would have expired but for the termination of this EPA, plus 3%.

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114.   “Prime Rate” means the floating prime interest rate announced from time
to time by the main branch of Bank of Montreal in Vancouver, British Columbia,
or any successor thereto, expressed as an annual rate, as the reference rate it
shall use to determine rates of interest payable on Canadian dollar commercial
loans made in Canada.   115.   “Proceeding” has the meaning given in
section 1.5.   116.   “Project” means the financing, design, engineering,
procurement, construction and commissioning of the Incremental Seller’s Plant,
and the operation and maintenance of the Seller’s Plant for the purpose of
supplying Eligible Energy to the Buyer.   117.   “Project Assets” means the
Seller’s Plant and all rights, property, assets, equipment, materials and
contracts required to design, engineer, procure, construct, commission, operate
and maintain the Seller’s Plant, whether real or personal and whether tangible
or intangible, including equipment and other warranties, Permits, supply and
other contracts, the goodwill in and right to use the name by which the Seller’s
Plant is commonly known, the books, records and accounts with respect to the
Seller’s Plant, and all land tenure and land tenure agreements with respect to
the Seller’s Plant.   118.   “Project Standards” mean:

  (a)   all applicable Laws;     (b)   the terms and conditions of all Permits,
including land tenure agreements, issued in connection with the Seller’s Plant;
    (c)   Good Utility Practice;     (d)   the Seller’s Plant Description;    
(e)   the requirement that Energy, excluding Energy generated from Auxiliary
Fuel, must qualify as Clean or Renewable Electricity;     (f)   the requirement
that Auxiliary Fuel, excluding Start-up Fuel and determined in GJ, used in any
year must not exceed the Auxiliary Fuel Annual Baseline for that year;     (g)  
the terms and conditions of this EPA and the Interconnection Agreement; and    
(h)   the Code of Conduct Guidelines Applicable to BC Hydro Contracts in effect
as of the date specified for submission of Proposals under the RFP.

119.   “Proposal” means the Proposal submitted by the Seller pursuant to the
RFP.   120.   “Proposal Documents” means the Proposal and all documents and
information provided by the Seller to the Buyer in connection with such
Proposal, whether concurrently with or after the date of submission of the
Proposal to the Buyer.   121.   “PST” means British Columbia provincial social
service or sales tax.   122.   “Records” means all records and logs required to
properly administer this EPA, including:

  (a)   Energy generation records and operating logs;

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  (b)   a log book of all Outages and other reductions in Energy output,
specifying the date, time, duration and reasons for each Outage and each
reduction in Energy output;     (c)   meter readings,     (d)   maintenance
reports;     (e)   invoice support records;     (f)   documents concerning
compliance with Permits and applicable Laws;     (g)   records related to
Development Costs;     (h)   all information the Buyer requires to verify
qualification of the output from the Seller’s Plant as Clean or Renewable
Electricity; and     (i)   records of the total Energy generated in each
Contract Year from each of Auxiliary Fuel, Start-up Fuel and Forest-based
Biomass, and records of any Auxiliary Fuel Overage, Auxiliary Fuel Energy
Overage and Auxiliary Fuel Overage Credit in any Contract Year;

    all consistent with Good Utility Practice.   123.   “RFP” means the
“Bioenergy Call for Power – Phase I – Request for Proposals” issued by the Buyer
on 6 February 2008, together with all Addenda thereto, and all other documents
and forms referenced therein as forming part of the RFP.   124.   “RFP
Confidentiality Agreement” means the confidentiality agreement entered into
between the Seller and the Buyer as part of the RFP process, a copy of which is
attached as Appendix 11 to this EPA.   125.   “Season” means any one of the
following four periods in any Contract Year or part thereof:

  (a)   Season 1 – February 1 through April 30;     (b)   Season 2 – System
Freshet Season – May 1 through July 31;     (c)   Season 3 – August through
October 31; and     (d)   Season 4 – November 1 through January 31;

126.   “Seasonal GBL” means the generator baseline for the Project in each
Season during the Term, and is the amount for each Season set out in the
Seasonal GBL Table, which amount will be prorated in the case of a partial
Season by the ratio equal to the number of days in such partial Season divided
by the number of days in a complete Season.   127.   “Seasonal GBL Table” means
the table in Appendix 2 that sets out the Seasonal GBL, or as revised under
section 7.10.   128.   “Seasonal Weighting Ratio” has the meaning given in
Appendix 3.   129.   “Seasonally Firm Energy Amount” means in any Season after
COD, the amount of Energy the Seller is required to deliver in that Season as
set out in the Firm Energy Table, which amount will

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    be prorated in the case of a partial Season by the ratio equal to the number
of days in such partial Season divided by the number of days in a complete
Season.   130.   “Seller” means the Party so identified on page one of this EPA,
and its successors and permitted assigns.   131.   “Seller Confidential
Information” means technical or commercial information disclosed by the Seller
to the Buyer that the Seller treats, and clearly marks, as confidential prior to
its disclosure to the Buyer, but excluding:

  (a)   this EPA; and     (b)   information that (i) is or becomes in the public
domain, other than as a result of a breach of this EPA by the Buyer, or (ii) is
known to the Buyer before disclosure to it by the Seller, or becomes known to
the Buyer thereafter by way of disclosure to the Buyer by any other Person who
is not under an obligation of confidentiality with respect thereto.

132.   “Seller Indemnified Party” has the meaning given in section 20.2.   133.
  “Seller Optional Study Report” means the report titled “Optional Study for
Zelstoff Celgar Limited Partnership” prepared by the Transmission Authority for
the Buyer in respect of the Project describing the interconnection upgrade
requirement on the Transmission System related to the Project and associated
interconnection costs.   134.   “Seller Termination Event” means:

  (a)   the Buyer is Bankrupt or Insolvent;     (b)   except where an amount has
been disputed in the manner specified in subsection 10.2, an amount due and
payable by the Buyer to the Seller under this EPA remains unpaid for 15 days
after its due date and such default has not been cured within 15 days after the
Seller has given notice of the default to the Buyer; or     (c)   the Buyer is
in material default of any of its covenants, representations and warranties or
other obligations under this EPA, other than as set out above, and such default
has not been cured within 30 days after the Seller has given notice of the
default to the Buyer or, if the default cannot be cured within that 30 day
period, the Buyer fails to demonstrate to the reasonable satisfaction of the
Seller that the Buyer is working diligently and expeditiously to cure the
default or the default is not cured within a further reasonable period of time.

135.   “Seller’s Plant” means:

  (a)   before COD, the electrical generators as described in Appendix 4 and in
any applicable study data, and all of the Seller’s facilities and equipment
meeting the description on which the Seller Optional Study Report was based that
support (i) the generation and transmission of electrical energy from such
generators, and (ii) the delivery of Eligible Energy at the POI;     (b)   after
COD, the electrical generators as described in Appendix 4 and all of the
Seller’s facilities and equipment that support (i) the generation and
transmission of electrical

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      energy from such generators, and (ii) the delivery of Eligible Energy at
the POI, all as built;

    in each case as may be modified in accordance with this EPA.   136.  
“Seller’s Plant Description” means the specifications in Appendix 4, as revised
from time to time with the prior consent of the Buyer.   137.   “Start-up Fuel”
means that quantity of Auxiliary Fuel, expressed in GJ, that is used in a “black
start” or “cold start” of generation facilities, from the time when Fuel is
first combusted until the time when generation is stabilized.   138.   “Station
Service” means electrical energy required to service the Seller’s Plant,
including electrical energy required for fuel preparation.   139.   “Super-Peak
Hours” has the meaning given in Appendix 3.   140.   “Term” has the meaning
given in section 2.1.   141.   “Terminating Party” has the meaning given in
section 16.6.   142.   “Termination Payment” means the amount payable by the
Seller to the Buyer or the amount payable by the Buyer to the Seller pursuant to
section 16.4 or 16.5, as the case may be.   143.   “Test Energy” means Metered
Energy delivered at the POI (i) during any successful test pursuant to
subsection 5.2(b), and (ii) if COD is achieved at 24:00 PPT on the day on which
such test is concluded, during the period after the test and before COD, but
excluding:

  (a)   all Metered Energy that at any time exceeds the Plant Capacity
multiplied by one hour; and     (b)   that portion of Metered Energy delivered
in any Season that is less than the Applicable Seasonal GBL, provided that in
the case of any Season which is not a complete Season, the Applicable Seasonal
GBL shall be prorated on a daily basis.

144.   “Time of Delivery Table” has the meaning given in Appendix 3.

145.   “Tracking System” has the meaning given in section 9.4.   146.   “Total
Allowable Energy” means in each Season, the product of the Plant Capacity and
the number of hours in that Season.   147.   “Transmission Authority” means the
British Columbia Transmission Corporation or any successor thereto.   148.  
“Transmission Network Upgrades” means those additions, modifications and
upgrades that are integrated with and support the Transmission System for the
general benefit of all users of the Transmission System identified in the
Network Integration Transmission Service study, initiated by the Buyer and as
determined by the Transmission Authority.   149.   “Transmission System” means
the transmission, substation, protection, control and communication facilities
(i) owned by the Buyer or by the Transmission Authority, and (ii)

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    operated by the Transmission Authority in British Columbia, and includes all
additions and modifications thereto and repairs or replacements thereof.   150.
  “Transmission System Outage” means any Outage, suspension, constraint or
curtailment in the operation of the Transmission System preventing or limiting
physical deliveries of Eligible Energy at the POI.   151.   “UCA” means the
Utilities Commission Act (British Columbia).   152.   “WECC” means the Western
Electricity Coordinating Council or any successor organization of which the
Buyer is a member.

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APPENDIX 2
ENERGY PROFILE
Part I – Seasonally Firm Energy Profile
The Seasonally Firm Energy Amounts are set forth in this Part I.

          Seasonally Firm Energy     (MWh)
Season 1
  *
(February 1 to April 30)
   
Season 2 – System Freshet
  *
(May 1 to July 31)
   
Season 3
  *
(August 1 to October 31)
   
Season 4
  *
(November 1 to January 31)
   

Part II – Seasonal GBL Table
The Seasonal GBL Table is as set out in this Part II.

          Seasonal GBL     (MWh)
Season 1
  *
(February 1 to April 30)
   
Season 2 – System Freshet
  *
(May 1 to July 31)
   
Season 3
  *
(August 1 to October 31)
   
Season 4
  *
(November 1 to January 31)
   

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APPENDIX 3
ENERGY PRICE – SEASONALLY FIRM

1.   Definitions and Interpretation   1.1   Definitions - In this Appendix 3 or
elsewhere in this EPA, the following words and phrases have the following
meanings:

  (a)   “Auxiliary Fuel Annual Baseline” means *GJ.     (b)   “Auxiliary Fuel
Energy Overage” means Eligible Energy generated in any Contract Year from any
Auxiliary Fuel Overage for that Contract Year.     (c)   “Auxiliary Fuel
Overage” means that portion, if any, of Auxiliary Fuel, excluding Start-up Fuel,
and determined in GJ per Contract Year, that is used in any Contract Year to
generate Eligible Energy and that exceeds the Auxiliary Fuel Annual Baseline for
that Contract Year.     (d)   “Auxiliary Fuel Overage Credit” means, with
respect to any Contract Year, the amount (in dollars) equal to:

  (i)   the Auxiliary Fuel Energy Overage for that Contract Year, if any;
multiplied by     (ii)   the EFEP for that Contract Year (or “EFEPCY”)
calculated as follows:

EFEPCY = {(P1 * M) + [P2 * (12 — M)]} / 12

      where:

      P1 = EFEP in the period of the Contract Year preceding January 1 in that
Contract Year;         P2 = EFEP in the period of the Contract Year following
January 1 in that Contract Year;         M = the number of months or portion
thereof of the Contract Year preceding January 1 in that Contract Year.

  (e)   “Avoidable Costs” means, where the Seller is deemed to have generated
Eligible Energy in any month pursuant to section 7.8:

  (i)   the dollar amount equal to (A) the average heat rate applicable to the
conversion of Fuel to Energy in that month (in GJ/MWh), multiplied by (B) the
average unit cost of the Fuel in that month (in $/GJ), multiplied by (C) the
amount of such deemed Eligible Energy; plus     (ii)   the dollar amount of any
other costs the Seller avoided, or could have avoided through commercially
reasonable efforts, as a result of not generating Eligible Energy equal to such
deemed Eligible Energy.

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  (f)   “CPI” means the Consumer Price Index for British Columbia, All Items
(Not Seasonally Adjusted) as published by Statistics Canada, adjusted or
replaced in accordance with subsection 1.2(f) of this Appendix.     (g)  
“EFEP”, or “Escalated Firm Energy Price”, has the meaning given in section 3.1
of this Appendix.     (h)   “Interim Monthly Firm Energy Amount” means either:

  (i)   in any month where the number of hours during which the Seller’s Plant
was subject to an Outage does not exceed 24, the lesser of (A) the Eligible
Energy in that month, and (B) one-third of the Seasonally Firm Energy Amount for
the Season in which the month occurs; or     (ii)   in any month where the
number of hours during which the Seller’s Plant was subject to an Outage exceeds
24, the lesser of (A) the Eligible Energy in that month, and (B) an amount equal
to one-third of the Seasonally Firm Energy Amount for the Season in which the
month occurs divided by the number of hours in that month multiplied by the
number of hours in that month during which the Seller’s Plant was not subject to
an Outage.

  (i)   “Interim Monthly Non-Firm Energy Amount” means the total Eligible Energy
in the month less the Interim Monthly Firm Energy Amount.     (j)   “Monthly
Firm Energy Weighting Ratio” means, in any month, the ratio of the Interim
Monthly Firm Energy Amount to the total Eligible Energy in that month.     (k)  
“NFEPA Table” means the table set forth at Part II of Schedule A to this
Appendix.     (l)   “NFEPB”, or “Option B Non-Firm Energy Price”, means, in any
month:

  (i)   for Non-Firm Energy delivered during Off-Peak Hours in that month, the
lesser of:

  (A)   the average Dow Jones Mid-C Daily Non-Firm Off-Peak Index for the month
and converted to Canadian dollars using the monthly average Bank of Canada Daily
“noon rate” for the month; and     (B)   US$250/MWh escalating at CPI from
January 1, 2008;

  (ii)   for Non-Firm Energy delivered during Peak Hours in that month, the
lesser of:

  (A)   the average Dow Jones Mid-C Daily Non-Firm On-Peak Index for the month
and converted to Canadian dollars using the monthly average Bank of Canada Daily
“noon rate” for the month multiplied by the quotient of the Peak TDF (as defined
in section 3.1 of this Appendix) for the month divided by the On-Peak TDF (as
defined in section 3.1 of this Appendix) for the month; and     (B)   US$250/MWh
escalating at CPI from January 1, 2008;

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  (iii)   for Non-Firm Energy delivered during Super-Peak Hours in that month,
the lesser of:

  (A)   the average Dow Jones Mid-C Daily Non-Firm On-Peak Index for the month
and converted to Canadian dollars using the monthly average Bank of Canada Daily
“noon rate” for the month multiplied by the quotient of the Super-Peak TDF (as
defined in section 3.1 of this Appendix) for the month divided by the On-Peak
TDF (as defined in section 3.1 of this Appendix) for the month; and     (B)  
US$250/MWh escalating at CPI from January 1, 2008;

      provided that if, in any month, the applicable average Dow Jones Index is
less than zero, the NFEPB in that month shall be deemed to be zero.     (m)  
“Off-Peak Hours” means all hours other than Super-Peak Hours and Peak Hours.    
(n)   “On-Peak Hours” means all Peak Hours and Super-Peak Hours.     (o)   “Peak
Hours” means the hours commencing at 06:00 PPT and ending at 16:00 PPT, and
commencing at 20:00 PPT and ending at 22:00 PPT, Monday through Saturday
inclusive, but excluding British Columbia statutory holidays.     (p)  
“Seasonal Firm Energy Weighting Ratio” means, in any Season, the ratio of the
Seasonally Firm Energy Amount for that Season to the total Eligible Energy in
the Season.     (q)   “Super-Peak Hours” means the hours commencing at 16:00 PPT
and ending at 20:00 PPT Monday through Saturday inclusive, but excluding British
Columbia statutory holidays.     (r)   “Time of Delivery Table” means the table
set forth in Part I of Schedule A to this Appendix.

1.2   Interpretation - All payments shall be calculated applying the following
principles:

  (a)   all payment calculations shall be rounded to the nearest cent;     (b)  
all prices shall be expressed in $/MWh rounded to two decimal places;     (c)  
Eligible Energy shall be expressed in MWh rounded to two decimal places;     (d)
  any escalators or percentages shall be expressed as a percentage and shall be
rounded to one decimal place (i.e., 0.0%);     (e)   each of the average Dow
Jones Mid-C Daily Non-Firm On-Peak Index and average Dow Jones Mid-C Daily
Non-Firm Off-Peak Index shall be expressed in US$/MWh; and     (f)   if
Statistics Canada, or the then recognized statistical branch of the Canadian
Government:

  (i)   computes, at any time after the Effective Date, the CPI on a basis
different to that employed at the Effective Date, then the CPI shall be
converted using the appropriate formula recommended by Statistics Canada, or the
then recognized statistical branch of the Canadian Government;

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  (ii)   at any time ceases to publish or provide the CPI, then the provisions
of section 1.9 shall apply;     (iii)   has not published the CPI for a relevant
period at the time the Seller is required to provide the Buyer with an invoice,
the Seller shall prepare the invoice based on the CPI in effect at the time the
invoice is issued and when the CPI for the relevant period is published, the
Seller shall recalculate the invoice amounts in the next succeeding invoice and
shall include a credit or debit, without interest, in the next succeeding
invoice based on the results of the recalculation; or     (iv)   recalculates
the CPI within 36 months after an invoice affected by that CPI calculation has
been issued, then the Seller shall recalculate the invoice amounts for the
relevant period in the next succeeding invoice and shall include a credit or
debit, without interest, in the next succeeding invoice based on the results of
the recalculation.

2.   Pre-COD Energy   2.1   No price is payable by the Buyer for Energy, if any,
delivered to the Buyer before COD, except as set out in section 2.2 of this
Appendix.   2.2   The price payable by the Buyer for Test Energy in respect of
which the Seller has not given a notice under section 7.1 is $50.00/MWh. If the
Seller’s Plant does not satisfy the requirements of section 5.2, no price is
payable by the Buyer for any Energy generated during the test period specified
in subsection 5.2(b).   3.   Post-COD Energy   3.1   Firm Energy - The price
payable by the Buyer, for each MWh of Firm Energy in each hour during any year
“N” of the Term is the “EFEPN” (or “Escalated Firm Energy Price” for year N)
multiplied by the applicable TDF, calculated as follows:

      “EFEPN” = EFEP0, adjusted pursuant to section 3.2 of this Appendix;

    where:

      “EFEP0” = FEP + (CIS * ISA / $1,000,000) expressed in $/MWh;         “TDF”
(or “Time of Delivery Factor”) means, for each hour, the applicable % from the
Time of Delivery Table in Part I of Schedule A to this Appendix, and provided
further that:

  (a)   “Off-Peak TDF” means the applicable % from the Time of Delivery Table
for all Off-Peak Hours of the month;     (b)   “Peak TDF” means the applicable %
from the Time of Delivery Table for all Peak Hours of the month;     (c)  
“Super-Peak TDF” means the applicable % from the Time of Delivery Table for all
Super-Peak Hours of the month; and

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  (d)   “On-Peak TDF” means the applicable % from the Time of Delivery Table for
all On-Peak Hours of the month;

      “FEP” (or “Firm Energy Price”) = */MWh;         “CIS” (or “Cost of
Interconnection Security”) =*/MWh;         “ISA” (or “Interconnection Security
Amount”) = (a) the amount of the cost estimate of Interconnection Network
Upgrades that is set out in the Seller Optional Study Report, minus (b) the
amount of all incremental costs incurred by the Buyer as a result of any change
to the Seller’s Plant, as described in section 4.5 and including any incremental
Network Upgrade Costs.

3.2   CPI Adjustment for EFEP – EFEP0 shall be adjusted effective as of January
1 in each year “N” after the Effective Date in accordance with the following
applicable formula:

      EFEPN (or EFEP for year N) = EFEP0 * {[FEPPPRE * (CPIY / CPIJan 1, 2008 –
1)] + 1}         * {[FEPPPOST * (CPIJan 1, N / CPIY – 1)] + 1}

    where:

      “Y” = first day of the month in which the earlier of COD and Guaranteed
COD occurs;         “N” = all years after the year in which date Y occurs;      
  “FEPPPRE” (or “Firm Energy Price Percentage Pre-COD”) = *, being the % of EFEP
that is subject to escalation from January 1, 2008 to date Y;         “FEPPPOST”
(or “Firm Energy Price Percentage Post-COD”) = *, being the % of the EFEP that
is subject to escalation from date Y;         “CPIJan 1, N” = CPI applicable on
January 1 of year N;         “CPIY” = CPI applicable on date Y.

3.3   Non-Firm Energy - The price payable by the Buyer, for each MWh of Non-Firm
Energy in each hour of the month during any year of the Term shall be calculated
as follows:

      (1 — L) * [(NFEPPA * ENFEPA * TDF) + (NFEPPB * NFEPB)], expressed in
$/MWh.

    where:

      “L” (or “Losses”) = *;         “NFEPPA” (or “Option A Non-Firm Energy
Price Percentage”) = *, being the % of Non-Firm Energy that is paid the NFEPA;  
      “ENFEPA” (or “Option A Escalated Non-Firm Energy Price”) means, for each
year of the Term, the NFEPA, as adjusted pursuant to section 3.4 of this
Appendix;

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      “NFEPA” means the price from the NFEPA Table in Part II, Schedule A to
this Appendix for the applicable year, expressed in $/MWh;         “TDF” has the
meaning given in section 3.1 of this Appendix;         “NFEPPB” (or “Option B
Non-Firm Energy Price Percentage”) = *, being the % of Non-Firm Energy that is
paid the NFEPB;         “NFEPB” has the meaning given in section 1.1 of this
Appendix.

3.4   CPI Adjustment for NFEPA — NFEPA shall be adjusted effective as of January
1 in each year after the Effective Date in accordance with the following
applicable formula:

      (ENFEPA)N = (NFEPA)N * CPIJan 1, N / CPIJan 1, 2008

    where:

      (NFEPA)N = NFEPA for year N from the NFEPA Table in Part II, Schedule A to
this Appendix;         N               =  all years after 2008;         CPIJan
1, N   = the CPI applicable on January 1 of year N.

3.5   Auxiliary Fuel Overage Credit - The Seller shall pay to the Buyer the
Auxiliary Fuel Overage Credit arising in any Contract Year not later than the
15th day of the second month following the end of such Contract Year. The Seller
may satisfy any Auxiliary Fuel Overage Credit that arises in any Contract Year
by showing such Auxiliary Fuel Overage Credit as a credit owing to the Buyer in
the statement delivered to the Buyer pursuant to section 10.1 in the second
month following the end of such Contract Year.   3.6   Avoidable Costs - There
shall be deducted from the price payable for deemed Eligible Energy under
section 7.8 in each month an amount equal to Avoidable Costs in respect of such
deemed Eligible Energy. On each monthly statement delivered to the Buyer
pursuant to section 10.1, which includes an amount for such deemed Eligible
Energy, the Seller shall show as a credit owing to the Buyer the Avoidable Costs
for the month to which that statement relates.   4.   Interim Monthly Volume
Allocation for Billing   4.1   Volume Allocation – For the first two months of
each Season the Seller shall prepare the monthly invoice described in section
10.1 in accordance with the following provisions:

  (a)   the amount of Firm Energy in the Peak Hours, Super-Peak Hours, and
Off-Peak Hours in each of the first two months of each Season will be calculated
by multiplying the Monthly Firm Energy Weighting Ratio by the Eligible Energy in
each time of delivery period in the month (Peak Hours, Super-Peak Hours and
Off-Peak Hours). The amount of Non-Firm Energy in the Peak Hours, Super-Peak
Hours, and Off-Peak Hours in each of the first two months of each Season is the
total Eligible Energy in the month minus the amount of Firm Energy in that month
determined in accordance with the immediately preceding sentence;

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  (b)   the Buyer shall pay the amount determined in accordance with section 3.1
of this Appendix 3 for the Interim Monthly Firm Energy Amount in each of the
first two months of each Season; and     (c)   for the Interim Monthly Non-Firm
Energy Amount in each of the first two months of each Season, the Buyer shall
pay the amount that would be payable for that Energy pursuant to section 3.3 of
this Appendix 3 if NFEPPA were equal to 100%.

4.2   Partial Seasons – The interim monthly volume allocation and payment
provisions set out in this Article 4 will apply only to full months during the
Term. Energy deliveries during a partial month in the Term will not be
calculated or paid for until the end of the applicable Season and will be
included in the final statement for the Season prepared in accordance with
Article 5 of this Appendix.   5.   Seasonal Reconciliation

5.1   Following the end of the third month in each Season the Seller shall
prepare an invoice for the Season in accordance with the provisions of section
10.1 and in accordance with the following:

  (a)   The amount of Firm Energy in the Peak Hours, Super-Peak Hours, and
Off-Peak Hours in each month of the Season will be calculated by applying the
Seasonal Firm Energy Weighting Ratio to the Eligible Energy in each time of
delivery period (Peak Hours, Super-Peak Hours, and Off-Peak Hours) in each month
in that Season. The amount of Non-Firm Energy in the Peak Hours, Super-Peak
Hours, and Off-Peak Hours in each month of each Season is the total Eligible
Energy in the month minus the amount of Firm Energy in that month determined in
accordance with the immediately preceding sentence;     (b)   The price payable
by the Buyer for each MWh of Firm Energy and Non-Firm Energy in each time of
delivery period as determined in accordance with this Article 5 shall be as set
out in Article 3 of this Appendix 3.     (c)   The statement shall set out the
total amount owing for the Eligible Energy in the Season calculated in
accordance with subsections 5.1(a), (b) and (d) of this Appendix 3 less the
interim amounts paid by the Buyer for the previous two months of the Season
calculated in accordance with section 4 of this Appendix 3. If the interim
amounts paid by the Buyer for the previous two months of the Season exceed the
final amount owing for the Eligible Energy in the Season calculated in
accordance with this Article 5, the Seller shall refund the excess payments to
the Buyer by the 30th day of the first month of the Season immediately following
the Season in which the overpayments occurred. If the interim amounts paid by
the Buyer for the previous two months of the Season are less than the final
amount owing for the Eligible Energy in the Season calculated in accordance with
this Article 5, the Buyer shall pay the Seller the difference in accordance with
the provisions of section 10.2.     (d)   The statement shall set out the amount
of Eligible Energy to be purchased by the Buyer in the Season (“Net Purchase
AmountS”) determined in accordance with the following formula:

      Net Purchase AmountS = Total Metered EnergyS – [Seasonal GBL * (1 – Line
Losses]

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    where:

      “S” = the applicable Season; and         “Total Metered EnergyS” = the
total Metered Energy in the Season, as measured by the Metering Equipment.

      If the Net Purchase AmountS is negative, no amount is payable by the Buyer
to the Seller.

6.   No Further Payment

6.1   The amounts payable by the Buyer as specified in this Appendix 3 are the
full and complete payment and consideration payable by the Buyer for all
Eligible Energy under this EPA.

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SCHEDULE A
Tables
Part I – Time of Delivery Table
The Time of Delivery Table is as set forth in this Part I. The On-Peak column
represents a time-weighted average of Super-Peak TDF and Peak TDF.

                                  Month   Time of Delivery Factor (TDF)        
Super-Peak   Peak   Off-Peak   On-Peak
January
    141 %     122 %     105 %     127 %
February
    124 %     113 %     101 %     116 %
March
    124 %     112 %     99 %     115 %
April
    104 %     95 %     85 %     97 %
May
    90 %     82 %     70 %     84 %
June
    87 %     81 %     69 %     83 %
July
    105 %     96 %     79 %     98 %
August
    110 %     101 %     86 %     103 %
September
    116 %     107 %     91 %     109 %
October
    127 %     112 %     93 %     116 %
November
    129 %     112 %     99 %     116 %
December
    142 %     120 %     104 %     126 %

Part II – NFEPA Table
The NFEPA Table is as set out in this Part II. All amounts are expressed in
$/MWh, and are to be escalated at CPI from January 1, 2008 in accordance with
section 3.4 of Appendix 3.

                                                                               
      NTH YEAR OF THE DECADE Decade   0   1   2   3   4   5   6   7   8   9
200N
    n/a       n/a       n/a       n/a       n/a       n/a       n/a       n/a  
    49.6       49.9  
201N
    43.5       40.2       43.0       45.4       48.5       48.5       45.6      
47.8       49.7       53.6  
202N
    59.1       59.2       59.5       60.2       60.3       61.7       62.6      
63.8       64.6       65.6  
203N
    66.6       67.6       68.6       69.3       70.0       70.7       71.4      
72.1       72.8       73.6  

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APPENDIX 4
SELLER’S PLANT DESCRIPTION
For clarity, the Seller’s Plant includes or will include only the equipment and
structures listed in sections 2 and 3 of this Appendix 4.
1. Location: The Seller’s Plant is situated on a portion of the property located
at: 1921 Arrow Lakes Drive, PO Box 1000, Castlegar, British Columbia, Canada,
V1N 3H9.
The approximate latitude and longitude of the site of the power house(s) forming
part of the Seller’s Plant is: 49.33 (49°20’) (latitude) and 117.72 (-117°43’)
(longitude).
2. Principal Equipment: The Seller’s Plant includes the following principal
equipment:

              Description of     Type of Equipment   Function/Location   Key
Technical Parameters
*
  *   * *   *   * *   *   * *   *   *

     3. Key Structures: The Seller’s Plant includes the following key
structures:

          Structure   Location   Description of Structure *   *   * *   *   *

4. Access Roads: Access to the site on which the Seller’s Plant is located is
via “Mill Road” which is owned by: Zellstoff Celgar Limited Partnership. Mill
Road is connected to Arrow Lakes Drive, which is owned by the British Columbia
Ministry of Transportation and Infrastructure.
5. Interconnection Facilities: As described in the Seller Optional Study Report
dated June 2008.

  •   The POI (of the Transmission System/Fortis System) has the meaning given
to it in Appendix 1 of the EPA;     •   A description of the infrastructure
between the Seller’s Plant and the FortisBC point of Interconnection and a copy
of the wheeling agreement between the Seller and FortisBC for delivery of energy
to the POI. The point of Interconnection between the Seller and the Fortis
System will be the FortisBC side of the load disconnect switch near the Celgar
substation which is located near the Mill. The point of Interconnection with
FortisBC and the Transmission System is the POI. Please see the Interconnection
Study and FortisBC letter for further details; and

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  •   Description of metering facilities and configuration: A revenue quality
metering installation at each of the generator breakers of the existing and the
proposed new turbo-generators.     •   There are two existing revenue quality
metering installations at the 63 kV Point of Interconnection with the Fortis
System, one owned by FortisBC and one owned by the Seller. The Buyer will
consult with the Seller in order to verify that the installation is adequate and
acquire the necessary access to remotely interrogate that metering installation.
The Seller will pay for any improvements that may be required to achieve the
desired functionality. Alternatively if the Buyer determines the Seller’s
metering installation to be inadequate the Buyer will coordinate and consult
with FortisBC in order to assure that the installation is adequate and acquire
the necessary access to remotely interrogate such metering installation. The
Seller will facilitate such coordination and consultation, and pay for any
improvements that may reasonably be required to achieve the desired
functionality.

6.   Plant Capacity: *MW.   7.   Incremental Seller’s Plant: A description of
the alterations that the Seller is proposing to make to the Seller’s Plant to
enable the generation of Firm Energy (the “Incremental Seller’s Plant”) is
attached as Schedule 1 hereto.   8.   Site Layout: A depiction of the layout of
the key facilities in the Seller’s Plant is attached as Schedule 2 hereto.   9.
  Seller Interconnection Reports: The data and assumptions set forth in the
Seller Optional Study Report, the Fortis Interconnection Report and the Fortis
BC letter are attached as Schedule 3 hereto.   10.   Electricity Distribution
and Generation System: A depiction of the electricity distribution and
generation system at the Seller’s Plant, including all metering points, is
attached as Schedule 4 hereto.

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SCHEDULE 1
Incremental Seller’s Plant
*
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SCHEDULE 2
Site Layout
*
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SCHEDULE 3
Seller Interconnection Reports – Data and Assumptions
*
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SCHEDULE 4
Electricity Distribution and Generation System
*
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APPENDIX 5
FUEL PLAN
Fuel Plan No. 1
Part I – Forest-based Biomass Volumes

1.   Definitions - In this Appendix 5, the following words and phrases have the
following meanings:

  (a)   “Category A” means Forest-based Biomass that is comprised of mill solid
wood residues (hog fuel, sawdust, chips and/or chunks) and pulp mill residues
(hog fuel and black liquor);     (b)   “Category B” means Forest-based Biomass
that is comprised of roadside and landing residues;     (c)   “Category C” means
Forest-based Biomass that is comprised of biomass derived from standing timber;
    (d)   “X” indicates the approximate volume of the relevant category of
Forest-based Biomass that is expected to be consumed in Energy generation up to
the Annual GBL; and     (e)   “Y” indicates the approximate volume of the
relevant category of Forest-based Biomass that is expected to be consumed in
Energy generation in excess of the Annual GBL.

                              Category A   Category B   Category C Year  
(metric tonnes)   (metric tonnes)   (metric tonnes)     X   Y   X   Y   X   Y
2010
  *   *   *   *   *   *
2011
  *   *   *   *   *   *
2012
  *   *   *   *   *   *
2013
  *   *   *   *   *   *
2014
  *   *   *   *   *   *
2015
  *   *   *   *   *   *

Part II – Fuel Allocation

          Year   Forest-based Biomass   Auxiliary Fuel     (GJs)   (GJs)
2010
  *   *
2011
  *   *
2012
  *   *
2013
  *   *
2014
  *   *
2015
  *   *

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APPENDIX 6
COD CERTIFICATE
CELGAR GREEN ENERGY PROJECT
TO: British Columbia Hydro and Power Authority (the “Buyer”)
RE: Electricity Purchase Agreement (“EPA”) made as of    •   , 2008 between the
Buyer and Zellstoff Celgar Limited Partnership represented by its general
partner, Zellstoff Celgar Limited (the “Seller”) for Celgar Green Energy Project
I, [name of senior officer], in my capacity as [title of senior officer] of the
Seller, and not in my personal capacity, certify on behalf of the Seller that:
1. Defined Terms — Words and phrases having initial capitalized letters in this
Certificate have the meanings given in the EPA.
2. COD Requirements — The Seller has satisfied the requirements for COD as set
out in section 5.2 of the EPA. Attached to this Certificate is all evidence
required to demonstrate that the Seller has satisfied all such requirements.
3. No Material Default — No event which constitutes a Buyer Termination Event
under subsection (a) or (g) of the definition of Buyer Termination Event in
Appendix 1 to the EPA has occurred. The Seller has obtained all Material Permits
and is not in material default under any Material Permit (and all Material
Permits are in full force and effect), any tenure agreement for the site on
which the Seller’s Plant is located or the Interconnection Agreement.
          Dated this                      day of
                                         , 2___.

     
 
   
 
   
 
  [name of senior officer]
 
   
 
  [title of senior officer]

[Note to Seller: Attach to the COD Certificate in tabbed format all documents
and evidence required under section 5.2 of the EPA. Where documents have
previously been provided to the Buyer, so indicate and attach a copy of the
letter transmitting such documents to the Buyer.]
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APPENDIX 7
SAMPLE FORM PERFORMANCE SECURITY / INTERCONNECTION
SECURITY LETTER OF CREDIT
\[Issuing Financial Institution Name & Address] Date of Issue: [Date]

     
 
  Irrevocable Standby Letter of Credit
 
   
 
  [Number]
 
   
Applicant:
  Beneficiary:
 
   
[Seller Name and Address]
  British Columbia Hydro and Power Authority

At the request and for the account of the Applicant, we hereby establish in
favour of the Beneficiary our irrevocable standby Letter Of Credit
No. ([Number]) (hereinafter called the “Letter of Credit”) for an amount not
exceeding [Currency and Amount both in letters and numbers].
We, [Financial Institution Name and Address] hereby unconditionally and
irrevocably undertake and bind ourselves, and our successors and assigns, to pay
you immediately, the sum, which you claim upon receipt of the following
documents:

(1)   your signed written demand specifying the amount claimed (not exceeding
[Dollar Amount]), and certifying that such amount is due to you by the Applicant
under the terms of an Electricity Purchase Agreement between you and the
Applicant made as of [Date]; and   (2)   this original Letter of Credit must be
presented with your demand for payment for endorsement purposes.

Partial drawings are allowed. The amount of this Letter of Credit shall be
automatically reduced by the amount of any drawing paid hereunder.
This Letter of Credit takes effect from the date of issue set forth above, and
shall remain valid until [Date]. However, it is a condition of this Letter of
Credit that it shall be automatically extended without notice for a further one
year period from the present or any future expiry date unless at least ninety
(90) days prior to such expiry date we notify you in writing by courier or
registered mail at your address above that we elect not to consider this Letter
of Credit to be extended for any additional period.
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
(Publication No. 500). This Letter of Credit is governed
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by the laws applicable in the Province of British Columbia. The parties hereby
irrevocably attorn to the non-exclusive jurisdiction of the courts of British
Columbia. The number of this Letter of Credit must be quoted on all documents
required hereby. Notwithstanding Article 18 of said publication, if this Letter
of Credit expires during an interruption of business as described in Article 18,
we agree to effect payment if this Letter of Credit is drawn within 15 days
after resumption of normal business.

     
 
   
 
   
Authorized Signing Officer
  Authorized Signing Officer
 
   
[Financial Institution Name]
  [Financial Institution Name]

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APPENDIX 8
SAMPLE FORM LENDER CONSENT AGREEMENT
(See section 17.3)
THIS AGREEMENT is made as of                      ___, 20 ,
AMONG:
BRITISH COLUMBIA HYDRO AND POWER AUTHORITY, a corporation continued under the
Hydro and Power Authority Act, R.S.B.C. 1996, c. 212, having its head office at
333 Dunsmuir Street, Vancouver, British Columbia, V6B 5R3,
(the “Buyer”)
AND:
[COMPANY], a company under the laws of                      having an address at
                                                            _,
(the “Company”)
AND:
[LENDER], a                      under the laws of                      having
an address at                                                             ,
(the “Lender”).
WHEREAS:
A. The Buyer and the Company entered into an Electricity Purchase Agreement made
as of                                          (as amended from time to time,
the “EPA”);
B. The Company has obtained certain credit facilities (the “Credit”) from the
Lender for the purposes of financing the design and construction of the
Incremental Seller’s Plant, and the operation and maintenance of the Seller’s
Plant (as defined in the EPA);
C. To secure the due payment of all principal, interest (including interest on
overdue interest), premium (if any) and other amounts payable in respect of the
Credit and the due performance of all other obligations of the Company under the
Credit, the Company has granted certain security to and in favour of the Lender,
including an assignment of the right, title and interest of the Company under
the EPA and security on the Seller’s Plant (collectively, the “Lender
Security”); and
D. The Lender has requested the Buyer to enter into this Agreement confirming
certain matters.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the sum of $10 and other good and valuable consideration now paid by each of
the Company and the Lender
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to the Buyer (the receipt and sufficiency of which are hereby acknowledged by
the Buyer), the parties covenant and agree that:
1. Additional Definitions: In this Agreement, including the recitals:

  (a)   “Assumption Notice” means a notice given by the Lender to the Buyer
pursuant to subsection 6.1(a) of this Agreement;     (b)   “Default or
Termination Notice” means a notice given to the Company by the Buyer under the
EPA that, with or without the lapse of time, entitles, or shall entitle, the
Buyer to terminate the EPA, subject to rights, if any, of the Company to cure
the default or other circumstance in respect of which the notice is given;    
(c)   “Receiver” means a receiver, manager or receiver-manager appointed or
designated by, or on the initiative of, the Lender; and     (d)   words and
phrases defined in the EPA, and not otherwise defined herein, when used herein
have the meanings given in the EPA.

2. EPA Amendments: The Buyer and the Company acknowledge and agree that the EPA
is in full force and effect, and that the EPA, as originally executed, has been
amended only by the documents attached hereto as Schedule A.
3. Buyer Confirmations Concerning the EPA: The Buyer confirms to the Lender
that:

  (a)   the EPA has been duly authorized, executed and delivered by the Buyer;  
  (b)   the Buyer has not received any notice of assignment by the Company of
all or any part of their right, title and interest in and to the EPA, except to
the Lender;     (c)   the Buyer has not given any Default or Termination Notice;
    (d)   the Buyer is not aware of any default or other circumstance that would
entitle the Buyer to give a Default or Termination Notice, provided however that
the Buyer has not undertaken any investigation or due diligence in respect of
this confirmation; and     (e)   the Buyer shall not enter into any agreement
with the Company to materially amend the EPA, or enter into any agreement with
the Company to terminate the EPA, without giving the Lender not less
than 30 days’ prior written notice.

4. Assignment of EPA to Lender:
4.1 Buyer Acknowledgement: The Buyer acknowledges receipt of notice of, and
consents to, the assignment by the Company to the Lender of all the right, title
and interest of the Company in and to the EPA made pursuant to and in accordance
with the Lender Security.
4.2 Lender Acknowledgement: The Lender acknowledges that:

  (a)   it has received a copy of the EPA; and

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  (b)   the assignment by the Company to the Lender of the EPA pursuant to the
Lender Security is subject in all respects to the terms and conditions of the
EPA and this Agreement.

4.3 Confidentiality: The Lender covenants and agrees with the Buyer to be bound
by the provisions of Article 21 of the EPA regarding confidentiality, as if an
original signatory thereto.
4.4 Company Representation: The Company represents and warrants to the Buyer
that the Lender is the only person, other than the Buyer, to whom it has granted
a security interest in the EPA or the Seller’s Plant.
5. EPA Notices: The Buyer covenants and agrees with the Lender that, except as
hereinafter otherwise permitted, the Buyer:

  (a)   shall give the Lender a copy of any Default or Termination Notice
concurrently with, or promptly after, any such notice is given to the Company;  
  (b)   shall not exercise any right it may have to terminate the EPA or any
right pursuant to Article 15 of the EPA until the later of: (i) the date that is
45 days after the date on which the Buyer delivered to the Lender a copy of the
Default or Termination Notice entitling the Buyer to terminate or exercise any
right pursuant to Article 15 of the EPA; and (ii) the date on which the Buyer is
entitled to terminate or exercise any right pursuant to Article 15 of the EPA;  
  (c)   shall not, provided that there is no other Buyer Termination Event under
the EPA, terminate the EPA based on the Bankruptcy or Insolvency of the Seller
if the Lender is promptly and diligently prosecuting to completion enforcement
proceedings under the Lender Security until 30 days after the expiry of any
court ordered period restricting the termination of the EPA; and     (d)   shall
not exercise any right it may have under section 10.5 of the EPA to deduct any
amounts owing by the Seller to the Buyer under the EPA from amounts owing by the
Buyer to the Seller under the EPA until the date that is 15 days after the date
the Buyer provides the Lender with a copy of the notice delivered by the Buyer
to the Seller under section 10.5 of the EPA.

Nothing in this Agreement prevents or restricts: (i) the exercise by the Buyer
of any other right or remedy that it may be entitled to exercise under or in
relation to the EPA; or (ii) the right of the Lender to cure, or cause the cure
of, any default of the Company under the EPA that would be curable by the
Company, whether or not an Assumption Notice is given.
6. Realization by Lender:
6.1 Assumption Notice and/or Sale: If the Company has defaulted under the Credit
or the Lender Security and the Lender has elected to take possession of the
Seller’s Plant, either by a Receiver or in any other way, pursuant to the
Security, the Lender shall either:

  (a)   give the Buyer written notice (an “Assumption Notice”) stating that the
Lender is assuming the EPA, whereupon:

  (i)   the Lender shall be entitled to all the rights and benefits, and shall
have assumed, and shall perform and discharge, all the obligations and
liabilities, of the

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      Company under the EPA, and the Lender shall be a party to, and bound by,
the EPA as if an original signatory thereto in the place and stead of the
Company;     (ii)   notwithstanding subparagraph (i), the Lender shall not be
liable to the Buyer for defaults of the Company occurring before the Assumption
Notice is given, except to the extent that such defaults continue thereafter;
provided however that the Buyer may at any time before or after such notice is
given exercise any rights of set-off in respect of any such prior default under
or in relation to the EPA which the Buyer would otherwise be entitled to
exercise; or

  (b)   give written notice to the Buyer that the Lender wishes to cause the
Company to assign all of the Company’s right, title and interest in and to the
EPA and the Seller’s Plant to a third person or persons, subject however to the
Company and the assignee complying with all provisions of the EPA relative to
such assignment.

The Buyer agrees that if the Lender enters the Seller’s Plant for the purpose of
viewing or examining the state of repair, condition or operation thereof such
shall not constitute taking possession thereof.
6.2 Lender Liability and Release: The Lender assumes no liability to the Buyer
under the EPA unless and until the Lender gives an Assumption Notice.
Thereafter, if the Lender completes an assignment to a third person or persons
pursuant to and in accordance with the applicable provisions of the EPA, the
Lender shall be released from all liability and obligations of the Company to
the Buyer under the EPA accruing from and after completion of that assignment.
6.3 Company not Released: Nothing in this Agreement, and neither the giving of
an Assumption Notice, nor any assignment pursuant to subsection 6.1(b) of this
Agreement releases the Company from its obligations and liabilities to the Buyer
under and in relation to the EPA.
6.4 Receiver Included: References in this section 6 to the Lender include a
Receiver.
7. Notices: Any notice required or permitted to be given under this Agreement
must be in writing and may be given by personal delivery, or by transmittal by
facsimile, addressed to the respective parties as follows:

                 
 
  (a)   Buyer at:        
 
                        British Columbia Hydro and Power Authority    
 
                             
 
                             
 
      Attention:        
 
         
 
   
 
      Facsimile No.:        
 
         
 
   
 
                    (b)   [Company] at:    
 
                             
 
                             
 
      Attention:        
 
         
 
   
 
      Facsimile No.:        
 
         
 
   

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  (c)   [Lender] at:          
 
           
 
           
 
      Attention:        
 
         
 
   
 
      Facsimile No.:        
 
         
 
   

Notices given by facsimile shall be deemed to be received on the Business Day
next following the date of transmission.
8. Choice of Law: This Agreement is governed by British Columbia law, and the
laws of Canada applicable therein.
9. Jurisdiction: Each party to this Agreement attorns irrevocably and
unconditionally to the courts of the Province of British Columbia, and to courts
to which appeals therefrom may be taken, in connection with any action, suit or
proceeding commenced under or in relation to this Agreement. Notwithstanding the
foregoing, the Lender acknowledges that upon an Assumption Notice being given,
the Lender shall become party to, and bound by, the agreements to arbitrate
contained in section 22.6 of the EPA.
10. Termination: This Agreement, and all rights and liabilities among the
parties hereunder shall terminate upon the full and final discharge of all of
the Lender Security. The Lender shall give the Buyer prompt notice of the full
and final discharge of all of the Lender Security.
11. Amendment: This Agreement may be amended only by an instrument in writing
signed by each of the parties hereto.
12. Enurement: This Agreement enures to the benefit of, and is binding upon, the
parties hereto, and their respective successors and permitted assigns.
13. Counterparts: This Agreement may be executed by facsimile and in any number
of counterparts, each of which is deemed an original, and all of which together
constitute one and the same document.
14. Effective Date: This Agreement is not binding upon any party unless and
until executed and delivered by all parties, whereupon this Agreement shall take
effect as of the day first above written.
          IN WITNESS WHEREOF each of the parties have duly executed this
Agreement as of the day and year first above written.

              BRITISH COLUMBIA HYDRO AND
POWER AUTHORITY   [COMPANY]
 
           
By:
      By:    
 
           
 
  (Signature)       (Signature)
 
           
Name:
      Name:    
 
           
 
           
Title:
      Title:    
 
           

Celgar Green Energy

Appendix 8- 5

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          [LENDER]    
 
       
By:
       
 
 
 
(Signature)    
 
       
Name:
       
 
 
 
   
 
       
Title:
       
 
 
 
   

Celgar Green Energy

Appendix 8- 6

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APPENDIX 9
SAMPLE FORM DEVELOPMENT PROGRESS REPORT
BC Hydro Quarterly Development Report
For the quarter ending:                                Report Number:
                    
Project Name:                                                             

                                                  Tasks:   Percentage of
Completion     Comments       5%     25%     50%     75%     100%          
Permitting:
                                               
Air Permit
                                               
Effluent Permit
                                               
Refuse Permit
                                               
Water Licence
                                               
Zoning Approval
                                               
Subdivision Approval
                                               
Leave to Construct
                                               
Other Permits
                                               
Financing:
                                               
Construction
                                               
Project Equity
                                               
Long Term Financing
                                               
Project Design:
                                               
Preliminary
                                               
Final
                                               
Interconnection:
                                               
Studies (Please describe the status of each interconnection study)
                                               
Construction
                                               
Major Equipment:
                                               
Ordering
                                               
Delivery
                                               
Installation
                                               

Celgar Green Energy

Appendix 9- 1

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                                                  Tasks:   Percentage of
Completion     Comments       5%     25%     50%     75%     100%          
Construction:
                                               
Road
                                               
Powerhouse
                                               
Other
                                               

                          Key Project Tasks:   Original Estimate     Current
Estimate     Actual  
Permitting Complete
                       
Financing Complete
                       
Interconnection Agreement Signed
                       
Major Equipment Ordered
                       
Commence Construction
                       
Begin Commissioning
                       
COD
                       

         
Prepared by:
       
 
 
 
   
Submitted by:
       
 
 
 
   

Celgar Green Energy

Appendix 9- 2

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APPENDIX 10
ADDRESSES FOR DELIVERY OF NOTICES
     Subject to subsection 22.3(e), the address for each of the Parties for
notices is as follows:

     
Buyer: BC Hydro
  Seller: Zellstoff Celgar Limited Partnership
 
   
All Notices (Except as set out below)
   
To: Manager, Contract Management
  To:
Address:
  Address:
     333 Dunsmuir Street, 10th floor
 
Suite 2840, PO Box 11576
Vancouver, B.C.
 
650 West Georgia Street
     V6B 5R3
 
Vancouver, B.C.
      Attention:

Fax: 604-623-4335
       V6B 4N8
Attention: Brian Merwin, Director of Strategic
& Business Initiatives
 
Email: IPP.contract@bchydro.com
  Fax: 604-684-1094

 
  Email: bmerwin@mercerint.com
 
   
Development Reports
   
 
   
To: Manager, Contract Management
Address:
  N/A
     333 Dunsmuir Street, 10th floor
   
     Vancouver, B.C.
   
     V6B 5R3
   
 
   
Fax: 604-623-4335
   
 
   
Email: IPP.contract@bchydro.com
   
 
    Planned Outages, Operating Plans, Notice of Outages, Energy Schedules
 
   
To: IPP Operations Planning Engineer
  To:
Address:
  Address:
     6911 Southpoint Drive, E15
       1921 Arrow Lakes Drive
     Burnaby, B.C.
       P.O. Box 1000, Castlegar, BC
     V3N 4X8
     Attention: Paul Cheng
        V1N 3H9

  Attention: Utilities Manager
 
   
Fax: 604-528-8149
  Fax: 250-365-5769
 
   
Email: paul.cheng@bchydro.com
  Email: colinn@celgar.com
 
   
Copy to: Contract Management, as per all Notices
address
   

Celgar Green Energy

Appendix 10- 1

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Buyer: BC Hydro
  Seller: Zellstoff Celgar Limited Partnership
 
   
Invoices and Statements
   
 
   
To: IPP Invoicing
  To:
Address:
  Address:
     333 Dunsmuir Street, 16th floor
       1921 Arrow Lakes Drive
     Vancouver, B.C.
       P.O. Box 1000, Castlegar, BC
     V6B 5R3
       V1N 3H9
 
   
Fax: 604-623-4203
  Attention: Controller / Assistant Controller
Fax: 250-365-4211
 
   
Email: IPP.invoicing@bchydro.com
   
 
  Email: lornea@celgar.com susanb@celgar.com
 
   
Performance Security and Interconnection Security
   
 
   
To: Customer Care & Conservation, Finance &
Business Services
  To:
Address:
Address:
       Suite 2840, PO Box 11576
     333 Dunsmuir Street
       650 West Georgia Street
     9th floor
       Vancouver, B.C.
     Vancouver, B.C.
       V6B 4N8
     V6B 5R3
     Attention: Alvin Tse
 
Attention: Treasurer
     
  Fax: 604-684-1094
 
   
Fax: 604-623-4224
  Email: gstannus@mercerint.com
 
   
Email: alvin.tse@bchydro.com
   
 
   
Copy to: Contract Management, as per all Notices
address
   
 
   
Insurance
   
 
   
To: Manager, Contract Management
Address:
  To:
Address:
     333 Dunsmuir Street, 10th floor
       Suite 2840, PO Box 11576
     Vancouver, B.C.
       650 West Georgia Street
      V6B 5R3
       Vancouver, B.C.
     V6B 4N8
Fax: 604-623-4335
       Attention: Controller  
Email: IPP.contract@bchydro.com
  Fax: 604-684-1094
 
   
 
  Email: dure@mercerint.com

A notice given in accordance with the foregoing provisions is deemed to have
been given to the Seller and to each of its partners.
Celgar Green Energy

Appendix 10- 2

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APPENDIX 11
RFP CONFIDENTIALITY AGREEMENT
Celgar Green Energy
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (the “Agreement”) is made as of ___, 2008 [Note:
Date to be completed by BC Hydro at time of signing by BC Hydro.]
BY AND BETWEEN

      Zellstoff Celgar Limited Partnership, of P.O. Box 1000, Castlegar, BC, V1N
3H9         (“Proponent”)

AND

      BRITISH COLUMBIA HYDRO AND POWER AUTHORITY, a British Columbia Crown
Corporation, having an office at 333 Dunsmuir Street, Vancouver, British
Columbia, V6B 5R3         (“BC Hydro”)

(the foregoing may be referred to individually as a “Party” or collectively as
the “Parties”)
WHEREAS:
A.     BC Hydro has issued a Bioenergy Call for Power (Phase I) — Request for
Proposals dated February 6, 2008 (as may be amended from time to time) for the
supply of electrical energy generated from Forest-based Biomass by Projects
located in British Columbia (the “RFP”);
B.     The Proponent has registered under the RFP and intends to participate in
the procurement process therein described (the “RFP Process”);
C.     The Proponent may submit to BC Hydro a Proposal, and further information
relative thereto; and
D.     BC Hydro may conduct discussions, which may include negotiations, with
the Proponent after receipt of Proposals.
NOW THEREFORE, in consideration of the Parties entering into this Agreement and
the mutual promises and agreements contained in this Agreement, the Parties
agree as follows:
1.     DEFINITIONS
1.1     Definitions. Capitalized terms used but not defined herein shall have
the meanings given in the RFP.
1.2     Confidential Information. “Confidential Information” means the
Proponent’s Proposal that the Proponent submits to BC Hydro, or any
pre-submission or post-submission information regarding the Proposal, the
Project described therein, or related industrial facilities or businesses of the
Proponent, whether or not designated expressly as confidential, that is
disclosed or expressed, whether orally, in writing, electronically or by any
other media, by the Proponent to BC Hydro during the course, or in

            Issue April 22, 2008 1  

 

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furtherance, of the RFP Process, but excluding any executed and delivered EPA or
related agreement, and also excluding information that:

  (a)   is or becomes in the public domain, other than as a result of a breach
of this Agreement by BC Hydro; or     (b)   is known to BC Hydro before
disclosure to it by the Proponent, or becomes known to BC Hydro thereafter by
way of disclosure to BC Hydro by any other person who is not under an obligation
of confidentiality with respect thereto.

1.3     Discussions. “Discussions” means discussions, including negotiations,
between BC Hydro and the Proponent occurring after submission of the Proponent’s
Proposal and pertaining thereto until such discussions are terminated or an EPA,
if any, between the Parties is fully executed and delivered.
2.     CONFIDENTIALITY OBLIGATION
2.1     Confidentiality Obligation. BC Hydro shall treat as confidential, and
shall not disclose to any third person, Confidential Information, and both
Parties shall treat as confidential and shall not disclose to any third person,
all or any part of the Discussions, provided however that the foregoing
obligations, and nothing in this Agreement, prevents or restricts:

  (a)   disclosure of the fact that Discussions, if any, are occurring, or have
occurred, and/or the fact that this Agreement exists and the general nature
hereof;     (b)   in the case of BC Hydro, disclosure of the Discussions and/or
Confidential Information:

  (i)   to any ministers, deputy ministers or servants or employees of the
Province of British Columbia; and     (ii)   to its directors, officers,
employees and subsidiaries, consultants and advisors;

      provided that each of the foregoing to whom Discussions and/or
Confidential Information is disclosed is advised of the confidential nature
thereof;     (c)   in the case of BC Hydro, disclosure of Discussions and/or
Confidential Information in any regulatory proceeding, whether in respect of an
EPA entered into with the Proponent pursuant to the RFP Process or in respect of
other matters, to the extent that BC Hydro considers disclosure necessary or
desirable to support its position in any such proceeding, provided that, to the
extent reasonably practicable, BC Hydro gives reasonable notice to the Proponent
before making the disclosure, and, to the extent requested by the Proponent,
requests the relevant tribunal to treat all or any part of the disclosure as
confidential or to limit its further disclosure;     (d)   in the case of BC
Hydro, disclosure of:

  (i)   the Proponent’s questions in the Q&A process under the RFP; and     (ii)
  the Proponent’s participation in the RFP Process, or the location of any
Project proposed by the Proponent;

            Issue April 22, 2008 2  

 

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  (e)   in the case of the Proponent, disclosure of Discussions to its
directors, officers, employees and Affiliates, consultants and advisors,
provided that each of the foregoing to whom Discussions are disclosed is advised
of the confidential nature thereof;     (f)   without limiting BC Hydro’s
disclosure rights under section 2.1(c) above, disclosures required to be made by
BC Hydro or the Proponent by an order of a court or tribunal or under any law,
regulatory requirement or requirement of any stock exchange that is binding upon
it, provided that, (i) to the extent reasonably practicable, the Party making
such disclosure gives reasonable notice to the other Party before making the
disclosure, and (ii) limits the disclosure to that required by the applicable
order, law, or regulatory or stock exchange requirement;     (g)   disclosures
in any legal proceedings for the enforcement of any agreement referenced in
section 2.2; or     (h)   disclosures of the Discussions and/or Confidential
Information by agreement or consent of both Parties, including pursuant to the
consents contained in the Registration Form.

2.2     Disclosure of EPA. Disclosure of any executed EPA and/or other
agreement(s) entered into with the Proponent pursuant to the RFP Process, or any
summary thereof or information contained therein, will be governed by the EPA
and/or other agreement(s), if any.
2.3     Freedom of Information and Protection of Privacy Act. The Proponent
acknowledges that BC Hydro is subject to the British Columbia Freedom of
Information and Protection of Privacy Act and associated regulations, and agrees
that BC Hydro’s non-disclosure obligations under this Agreement are subject to
the provisions of that legislation, as the same may be amended or replaced from
time to time.
2.4     Liability Exclusion. In no event will either Party be liable to the
other Party in connection with any breach of this Agreement for any indirect,
incidental or consequential damages, including loss of profits.
2.5     Term. The obligations of the Parties under this section 2 expire upon
the earlier of (i) full execution and delivery of an EPA, if any, entered into
between the Parties pursuant to the RFP Process (whereupon matters of
confidentiality shall be governed exclusively by any such agreement), and
(ii) three years after the date hereof.
3.     MISCELLANEOUS
3.1     Governing Law. This Agreement shall be interpreted, governed and
construed under the laws of the Province of British Columbia and the laws of
Canada applicable therein as if it were executed and to be performed wholly
within the Province of British Columbia.
3.2     Equitable Relief. Each Party agrees that in the event of a breach of
this Agreement, or to prevent a breach or contemplated breach, by that Party,
the other Party shall be entitled to equitable relief, including injunction and
specific performance, in addition to all other remedies available at law or
equity.
3.3     Entire Agreement. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and supersedes and
cancels all prior agreements and communications relative to such subject matter.

            Issue April 22, 2008 3  

 

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3.4     Amendments. This Agreement shall not be modified, except by a written
agreement dated after the date of this Agreement and signed by both Parties.
3.5     Assignment. This Agreement may not be assigned by either Party without
the prior written consent of the other Party.
3.6     Enurement. This Agreement shall be binding upon and enure to the benefit
of the Parties and their respective successors and permitted assigns.
3.7     Execution In Counterpart. This Agreement may be executed in
counterparts, and each counterpart shall for all purposes be an original, and
all such counterparts shall together constitute one and the same Agreement.
Execution by either Party of a facsimile copy of this Agreement will be deemed
to constitute effective execution of this Agreement by that Party.
3.8     Effect. For greater certainty, this Agreement supersedes and replaces
Sections 22.8 and 22.11 of the RFP.
3.9     Relationship. Entering into this Agreement shall in no way be construed
to:

  (a)   preclude in any way either Party from pursuing any business
opportunities;     (b)   establish any relationship between BC Hydro and the
Proponent with respect to such business opportunities; or     (c)   establish
any other relationship between BC Hydro and the Proponent with respect to the
Project.

            Issue April 22, 2008 4  

 

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IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of
the date first above written.
BRITISH COLUMBIA HYDRO AND
POWER AUTHORITY

      By:           Name:           Title:    

Zellstoff Celgar Limited
as General Partner for Zellstoff Celgar Limited Partnership
Full legal name of Proponent

      Signature             Name:   David M. Gandossi             Title:   EVP,
CFO & Secretary

            Issue April 22, 2008 5