2008-087ORDINANCE NO. 2008- D~~
AN ORDINANCE APPROVING AN AMENDED AND RESTATED LANDFILL AND
DIGESTER GAS RIGHTS AND COLLECTION FACILITY LEASE BETWEEN DENTON
POWER, LLC. AND THE CITY OF DENTON, TEXAS PROVIDING FOR THE
EXTRACTION, COLLECTION, PROCESSING, USE, SALE, AND DELIVERY OF
LANDFILL GAS FROM THE CITY'S LANDFILL, AND DIGESTER GAS FROM THE
CITY'S WASTEWATER PLANT; AUTHORIZING THE EXPENDITURE OF FUNDS
THEREFOR; AND PROVIDING AN EFFECTIVE DATE (THE PUBLIC UTILITIES BOARD
RECOMMENDS APPROVAL 7-0.)
WHEREAS, on January 28, 2008 the Public Utilities Board of Denton considered this
amended and restated lease transaction and recommended approval thereof by a vote of 7-0.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. The City Manager, or his designee, is Hereby authorized to execute and
deliver the ``Amended and Restated Landfill and Digester Gas Rights and Collection Facility
Lease between Denton Power, LLC and the City of Denton, Texas" (hereafter the Amended
Lease), in substantially the form as set forth in the Amended Lease attached hereto and made a
part of this ordinance for all purposes.
SECTION 2. The City Manager is authorized to make the expenditures and perform
such duties as are set forth in the attached Amended Lease.
SECTION 3. That this ordinance shall become effective immediately upon its passage
and approval. ~j
PASSED AND APPROVED this the ~J~~'" day of April, 2008.
~ .~~~~
PERK R. McNEILL, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By: ~7.P~~~~~~~~~~.
APPROVED AS TO LEGAL FORM:
EDW~I~N~MQ. S~NYDER, CITY ATTORNEY
By: ~"'""
AMENDED AND RESTATED
LANDFILL AND DIGESTER GAS RIGHTS AND COLLECTION FACILITY LEASE
This Amended and Restated Landfill Gas and Digester Gas Rights and
Collection Facility Lease ("Lease"), dated as of April 15, 2008 (the "Effective Date") is by
and between the City of Denton, Texas, ahome-rule municipal corporation ("Owner" or
"Lessor") and Denton Power, LLC, a Michigan limited liability company ("DP" or
"Lessee").
WHEREAS, Lessor owns and operates the City of Denton Sanitary Landfill located in
the City of Denton, Texas at 1527 S. Mayhill Road (the "Landfill") and the City of Denton
Water Reclamation Plant located in the City of Denton, Texas at 1100 S. Mayhill Road (the
"Water Reclamation Plant Property"); and
WHEREAS, pursuant to a Request for Proposal by the City of Denton entitled
RFSP #3111 -Professional Services Contract for Design and Development of a Biodiesel
Production Facility, DTE Biomass Energy, Ina ("DTE") and Biodiesel Industries, [nc. made a
Proposal dated November 13, 2003, a copy of which is on file in the Offices of the Denton
City Engineer (the "Proposal"); and
WHEREAS, Lessor and DTE entered into that certain Landfill Gas and Digester Gas
Rights and Collection Facility Lease dated April 1, 2004 ("Original Lease"); and
WHEREAS, DTE has assigned the Original Lease to DP, its wholly-owned
subsidiary and Lessor and Lessee desire to amend the Original Lease to modify the terms and
conditions of the Original Lease;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, Lessor and Lessee agree as follows:
1. Definitions.
].1 "BP Facility" shall mean that certain Biodiesel Production Facility located
at the City of Denton Landfill.
1.2 "BTU/cf' shall mean British Thermal Units per cubic feet and is defined
as a unit of energy equal to the heat needed to raise the temperature of one pound of water
from sixty (60) degrees Fahrenheit to sixty-one (61) degrees Fahrenheit at a constant
pressure of one standard atmosphere. The BTU equivalent on a dry basis at 14.65 psia may be
obtained by multiplying the BTU so measured by the factor 1.072.
13 "Collection System or Gas Collection System" means the network of recovery
wells and interconnecting pipes together with attendant valves, pumps, monitoring devices
and other extraction related equipment installed for the purpose of extracting and
recovering Landfill Gas, including a blower sufficient to deliver the Landfill Gas to a
flare, a condensate recovery system, a flare, gas meter, including any expansions thereof,
including expansions to the Initial Gas Collection System to sell Landfill Gas to a Customer.
1.4 ``Commercial Quantities'' shall mean volumes of Landfill and Digester Gas for
sale deemed by Lessee to be sufficient in amount for the Project to be economically viable.
Recovery and sale of Landfill Gas and Digester Gas in average monthly volumes of more
than 1000 SCFM and more than a heating value of 450 BTU/CF is presumptively deemed to
be Commercial Quantities, whether this gas is sold directly to an end use customer or used to
generate electricity.
1.5 "Customer' shall mean either (1) any suitable Landfill Gas and Digester Gas
Purchaser within a reasonable distance of the Landfill or (2) any purchaser of electricity
generated by Lessee at the Landfill.
1.6 "Delivery Point" shall be (1) for Landfill Gas, a meter near a flare with blower
on the Landfill and (2) for electricity, a meter near the interconnect site.
1.7 "Digester Gas" shall mean methane, carbon dioxide and other constituent
products produced by the anaerobic decomposition of waste water and sludge at the
Wastewater Treatment Plant adjacent to the Landfill.
].8 "Energy" shall mean Landfill Gas or Digester Gas sold to a Customer or
electricity produced from the Landfill Gas or Digester Gas and sold to a Customer
1.9 "Expanded Gas Collection System" means that portion of the Gas Collection
System built or to be built in addition to the Initial Gas Collection System.
1.10 ``Gross Revenues" shall mean the total money received by Lessee before any
adjustment thereto, from sales of Energy to the Customer.
1.11 "Initial Gas Collection System" shall mean that portion of the Collection
System built by the City of Denton in support of Biodiesel Production.
1.12 "Landfill Gas" shall mean methane, carbon dioxide and other constituent
products produced by the anaerobic decomposition of refuse material within the
Landfill It is personal property and does not include oil, gas, or other mineral interests in real
property.
7.13 "MMBtu" shall mean one million BTUs.
1.14 "Modifications" shall mean Gas Collection System modifications for the
expansion of the number of collection wells and the connection of such wells to the Gas
Collection System.
1.15 "Operate and Maintain" shall mean day-to-day operation and maintenance of
the Gas Collection System, any pipeline to an end use Customer, and any electrical
interconnection facilities (the "Facilities"). This day-to-day operation and maintenance shall
be done in accordance with air regulatory parameters, and shall include providing personnel
to operate the Facilities and perform Gas Collection System maintenance (excluding the
digester methane pipeline from the WWTP to the flare station connection), which shall
include changing filters, taking down system for rework, flare system maintenance repairs
including replacement of worn out components, repairs to wellheads and the piping systems
connecting them to the flare station, but shall not include any incremental capital investment
required to expand the Gas Collection System, which is expressly the obligation of Lessor
1.16 "Project" shall mean all activities and efforts associated with either (1) the
recovery and sale of Landfill Gas and Digester Gas and their delivery to a Customer or (2)
generation of electricity from Landfill Gas and delivery of the electricity to a Customer.
1.17 "Project Schedule" shall mean the proposed schedule attached hereto as
Exhibit "A" and made a part hereof by reference.
1.18 "SCFM" shall mean standard cubic feet of Landfill Gas and Digester Gas per
minute, measured at sixty degrees Fahrenheit (60 degrees F) and at a pressure of fourteen and
seventy-three one hundredths (14.73) pounds per square inch absolute (psia).
1.79 '`Wastewater Treatment Plant" (WWTP) shall mean that certain wastewater
treatment plant belonging to the City of Denton, Texas and more specifically located at 1100
S. Mayhill Road.
2. Term
This Lease is dated effective on the Effective Date as set forth in [he first paragraph
of this Lease and shall continue until March 31, 2024, which is a term of twenty (20)
years from the effective date of the Original Lease.
3. Riehts Granted to Lessee
Subject to the provisions of this Lease, Lessor hereby grants to Lessee the following:
3.1 Landfill Gas and Digester Gas. The exclusive right to explore for, extract,
collect, process, use, sell and deliver all Landfill Gas from the Landfill and Digester Gas from
the City's Wastewater Treatment Plant, except that Landfill Gas which is required for the
BP Facility, up to a maximum amount of 50 sefm, and Digester Gas used internally at the
Wastewater Treatment Plant. This right is subordinate to Lessor's right to use the Landfill for
landfill purposes and its right to use the Water Reclamation Plant Property for water
reclamation purposes. However, Lessor agrees to cooperate with Lessee in all reasonable
manners necessary to carry out Lessee's rights under this Lease. In the event that the BP
Facility is expected to require more landfill gas than the 50 scfm that the BP Facility is
capable of utilizing as of the effective date of this Lease, Lessee and Lessor shall work
together in good faith with each other and with the operator of the BP Facility to enter into
terms pursuant to which the BP Facility can utilize either excess Landfill Gas above what
Lessee is using or Digester Gas from the Wastewater Treatment Plant.
3.2 Gas Collection System. The exclusive right to use and operate a Gas
Collection System at the Landfill other than that which is required for the BP Facility, subject
to the restrictions in 3.1 and the Lessor's rights set forth in Section 3.1. Such right and related
activities encompass the right to conduct all activities necessary and incidental to the
operation and maintenance of a Gas Collection System, which includes the right, but not the
obligation, to install underground gas transmission pipes, operate associated gas collection
equipment, and other related equipment The cost of additional well drilling to comply
with Texas environmental laws or to enhance Landfill Gas collection as recommended
by the Lessor's Landfill Gas System engineer or Lessee and agreed to by both parties,
will be borne by the Lessor. Lessee will notify Lessor in writing of Modifications, that
need to be made to enhance Landfill Gas collection or comply with Texas environmental
laws After receipt of notice from Lessee, Lessor will make such Modifications within six
(6) months (the "Modification Period"). If Lessor does not make such Modifications
within the Modification Period, then Lessee may make such Modifications and offset any
payments to Lessor under this Agreement by the cost of such Modifications, after
providing Lessor with fifteen (75) business days of written advance notification of its
intent to do so.
The cost to Operate and Maintain the Gas Collection Facility, and related pipeline or
electrical interconnection facilities, if any, to the Customer shall be borne by Lessee provided
that: (1) the Landfill Gas and Digester Gas volumes and quality produced by the Landfill
and Wastewater Treatment Plant, less the amount of Landfill Gas provided to the BP
Facility meet the standard of Commercial Quantities as defined in Paragraph 1.4, and (2)
the Gas Collection System is suitable for use by both the BP Facility and the Customer.
Lessor's failure to complete the entire Gas Collection System, as designed by the Lessor, over
and above the Gas Collection System portion required for the BP Facility, by one year from the
Effective Date of this Agreement is cause for termination by the Lessee.
33 Plant Site. For $7.00 per year and other good and valuable consideration,
Lessor shall make available to Lessee a mutually acceptable site of approximately two
hundred feet (200 ft.) by three hundred feet (300 ft.) in size to accommodate the
construction and operation of the gas processing plant and related facilities or electrical
generation facilities and related facilities. Lessee shall have the right of free ingress and
egress at all times to and from such site for itself and its Customers, provided that such
ingress and egress is consistent with appropriate security measures imposed by Lessor and is
subordinate to Lessor's use of the Landfill for landfill purposes. Lessor and Lessee shall in
good faith mutually agree on a suitable location or locations for such access that does not
interfere with Lessor's Landfill operations.
4. Payments to Lessor
4.1 Royalty/Lease Payment. Lessee agrees to pay Lessor twelve and one-half
percent (12.5%) of Gross Revenues from the sale of Energy, which shall additionally
include the value of any Renewable Energy Credits created through the generation of
electricity from Landfill Gas if the Renewable Energy Credits are sold under a
separate contract from the electricity, to all Customers exclusive of any applicable taxes
to the Project provided that Landfill Gas and Digester Gas volumes and quality conform with
the definition of Commercial Quantities found in Paragraph 1.4 hereof. Landfill Gas
provided to the BP Facility is not subject to royalty payments.
These royalty/lease payments shall be paid each calendar quarter to Lessor on or before the
last day of the month following the close of the calendar quarter (the "Payment Date") with
the first payment being due and payable by Lessee to Lessor on the Payment Date
immediately following the first calendar quarter in which the Gas Collection System
and gas processing plant or electric generating facility, as appropriate, become
operational. Along with such payments Lessee shall provide documentation to Lessor
evidencing all Gross Revenues. Lessor shall have the right at all reasonable times to
audit the records of Lessee to determine that the royalty/lease payments have been properly
computed.
4.2 Contineent Lease Payments. Lessee represents that the sale of Landfill Gas
from the Landfill does not currently entitle Lessee to claim Internal Revenue Code Section
29 Production Tax Credits. In the event Congress enacts Production Tax Credits, entitling
Lessee to claim such credits or benefits or if Lessee is able to claim Section 45 Production
Tax Credits for electricity generation, Lessee agrees to pay Lessor a further additional Lease
payment equal to twenty (20%) percent of the value of those new tax credits or benefits to the
Lessee no later than ninety (90) days after the calendar year for which the tax credit, if
applicable, is claimed by Lessee. If no tax return is yet filed, then such additional payment
shall be nonetheless be calculated by Lessee and be due and payable to Lessor no later than
ninety (90) days following the end of the applicable calendar year.
5. Lessee's Oblieations. Provided Commercial Quantities are available, Lessee agrees to
Operate and Maintain the Gas Collection System. Lessor shall have to right to monitor
Lessee's performance of such. Nothing in this Lease shall be construed as Lessee assuming
any of those obligations imposed by law upon Lessor as owner of the Landfill, including
compliance with environmental laws, unless such obligations are caused by Lessee or are
expressly assumed by Lessee, or any obligation to drill wells, re-work wells or connect any
wells to the Collection System.
6. Lessor's Oblieations. Lessor agrees to (a) cooperate in the construction,
development and operation of its Landfill, its Wastewater Treatment Plant, and the Gas
Collection System so as to maximize the production of Landfill Gas and Digester Gas and
the transportation of Landfill Gas and Digester Gas or electricity, as applicable, to the
Delivery Point; (b) not unreasonably interfere with the Lessee's operation of the Project or
cause the disruption or destruction of the biological decomposition of refuse material within
the Landfill; (c) prevent any of its independent contractors from committing such
interference, disruption, or destruction; (d) promptly repair all cracks, fissures, erosion
or physical changes in, of, or to, the interim and final covers at the Landfill which have an
adverse material effect on the production of Landfill Gas; (e) cooperate in the construction,
development, operation and maintenance of the Project and the Collection System at the
Landfill; (f) comply with all applicable federal, state, county, municipal and local laws,
statutes, rules, regulations, ordinances, codes, restrictions, requirements, obligations and
permitting requirements relating to the management and operation of the Landfill, including
all environmental laws pertaining to the Collection System, provided such laws are
specifically imposed upon Lessor and have not been imposed upon Lessee or expressly
assigned and accepted by Lessee (g) approve in a timely manner all reasonable and
appropriate Project design plans, specifications, and requisite construction activities which
involve Lessor's property; (h) construct the pipeline from the Waste Water Treatment plant to
the Landfill flare; (i) construct the Expanded Gas Collection System as designed by Lessor, to
be completed by June 3Q 2008 at the latest; and (j) update the Gas Collection System from
time to time as determined by Lessor or as requested by Lessee pursuant to Section 3.2 hereof,
in order to maximize the production of Landfill Gas.
7. Emission Credits
To the extent Pollution Control Emission Credits or Carbon Credits through a voluntary
or non-voluntary program are available to the Project, the value of such Emission Credits or
Carbon Credits, if any, shall belong to Lessee.
8. Construction and Maintenance of Facilities
8.1. Lessee shall not be responsible in any way for the construction, operation,
or maintenance of the BP Facility. Such construction, operation, and maintenance is
covered and addressed by a separate agreement between the Lessor and Biodiesel Industries,
Inc.
8.2. Lessee shall be responsible for reviewing the design of the Gas Collection
System and the construction of the pipeline from the Delivery Point to the Customer or the
power delivery facilities, as applicable, at its expense. As otherwise provided in this
Agreement, Lessee has the responsibility to Operate and Maintain the Gas Collection System.
8.3. Lessor shall be responsible for the design and construction of the Initial Gas
Collection System and the Expanded Gas Collection System, including any Modifications,
related infrastructure lying within the Landfill property boundaries and the pipeline from
the Wastewater Treatment Plant to the landfill flare, at its expense.
9. Surrender.
Upon thirty (30) days notice to Lessor, Lessee may at any time or times, surrender and
terminate this Lease without liability, if (]) Lessee is prevented due to no fault of its own
from meeting the milestones set forth in Exhibit A entitled Project Schedule, or (2) Landfill
Gas cannot be recovered or sold from the Landfill in Commercial Quantities In the event
that Lessee terminates this Lease pursuant to this section, Lessee will be relieved of all
obligations except for surrendering the Gas Collection System in good operational condition
and transferring any of the Improvements (as defined in Section ]0.4) that Lessor elects to
purchase from Lessee as described in Section 10.4 hereof, in good operational condition,
performing removal and restoration activities in accordance with Section 10, as applicable,
and making full payment to Lessor for obligations incurred as of the date of termination, as set
forth in Section 4 of this Lease.
70. Lessor and Lessee ffiehts
10.1. Landfill Use. Lessee shall be authorized to use the Landfill, upon notification
to Lessor, without cost, to the extent reasonably necessary or convenient for Lessee to carry
out its obligations hereunder. Such use is subordinate to Lessor's use of the Landfill for
Landfill purposes.
10.2. Oil, Natural Gas. Mineral Rights. This Lease shall not be deemed to grant
Lessee any rights or interests in any oil, natural gas, or other minerals located in the Laudfill
real property but is only a lease of Landfill Gas and Digester Gas.
10.3. Cooperation in Obtaining Authorization. Upon request by Lessee, Lessor shall
.reasonably assist Lessee in any proceedings, hearings or other procedures necessitated by any
required zoning laws, environmental impact reports, governmental permits,
authorizations and similar type requirements, related to the Project and the construction and
operation of the Facilities. Upon request, Lessee shall assist Lessor in briefing the
officials of any governmental agency or body, or any other interested party, with
respect to the status of the Project.
10.4. Removal of Facilities. If Lessor does not exercise its right to purchase
Lessee's above-ground property, fixtures and improvements, as described below, then Lessee
shall have an obligation, within six (6) months after the expiration or termination of this
Lease, to remove the above-ground property, fixtures and improvements which Lessee has
placed on or adjacent to the Landfill and to cap any transmission gas lines at the
boundary of the Landfill. Lessee has no obligation to remove any underground property,
fixtures and improvements which Lessee has placed underground in or adjacent to the
Landfill, and upon termination or expiration of this Lease, all such underground property,
fixtures and improvements revert automatically to Lessor. Lessee hereby grants to Lessor
an option to purchase any of such above-ground property, fixtures and improvements (the
"Improvements") at a price equal to Lessee's cost of the Improvements. The cost of the
Improvements will be established within 90 days after the completion of any and all of the
Improvements by written notice from Lessee to Lessor along with supporting documentation
to establish such cost (the "Improvements Price"). Within 90 days after the expiration or
termination of this Lease, Lessor may elect to purchase the Improvements, or any part
thereof, for the Improvements Price, or applicable price of a part thereof, by providing
Lessee written notice of the election of the option. The purchase of the Improvements will be
consummated within 90 days thereafter. At closing, in exchange for the Improvements
Price, Lessee shall deliver to Lessor a bill of sale transferring the Improvements to Lessor,
free and clear of all debts and liens. Lessee grants an option only on that equipment which was
installed by Lessee.
70.5. Surface Restoration. Lessee shall, upon expiration or termination of this
Lease, generally restore the surface of the Landfill affected by its operations to its
condition at the commencement of this Lease to the extent reasonably possible. Pipes on
landfill easements shall be sealed and capped at Landfill property boundary, unless Lessor
elects to purchase the Improvements as provided in Section ]0.4 above.
10.6. Return to Landfill Mattes Lessee shall, in connection with its operations on
the Landfill, have the right in its sole discretion, to return to the Landfill consistent with
Lessor's Landfill operating permits and environmental regulations any and all matter
either solid or liquid (including all condensate from the Project resulting from the Lessee's
Gas Collection System operation and maintenance).
11. Warranty
Lessor represents and warrants that it has title to the Landfill Gas and Digester
Gas. Lessor covenants to Lessee the right of quiet enjoyment of the use of the Gas
Collection System so long as Lessee is not in default. Lessee acknowledges that the
Landfill Gas and Digester Gas is personalty and not an oil, gas, or mineral interest in real
property.
12. Default
12.1 Default by Lessee. In the event that Lessor concludes that Lessee's
operations, excluding the provisions of the Project Schedule, are at any time not being
conducted in material compliance with the provisions of this Lease, or Lessee fails to
actively and diligently pursue or operate the Facilities under this Lease, Lessor shall notify
Lessee in writing of the facts relied upon as constituting a default hereunder, and Lessee, if in
default, shall have sixty (60) days after receipt of such notice in which to complete or
substantially complete compliance with such provisions. Lessor shall have the right to
terminate this Lease upon written notice to Lessee if Lessee fails to complete or
substantially complete such compliance efforts within the sixty (60) day period, unless such
failure is excused by the provisions of Section 15 hereof. If compliance within sixty (60)
days is not reasonably possible and Lessee has commenced and is diligently pursuing
such compliance efforts, Lessee shall be allowed additional time to complete compliance, not
to exceed an additional ninety (90) days, but only if written notice of an extension is given to
Lessor by Lessee within the first sixty (60) day period. Notwithstanding anything
contained herein to the contrary, upon termination of this Lease, due to a default by Lessee the
Gas Collection System shall revert back to Lessor in good operating condition at no cost to the
Lessor, the Lessor shall have the option to purchase the Improvements as set forth in Section
10.4, and the Landfill Gas rights shall be surrendered to Lessor.
12.2 Default by Lessor. In the event that Lessee concludes that Lessor at any time
is failing to perform or observe any of the provisions of this Leasc required to be performed or
observed by Lessor, Lessee shall notify Lessor in writing of the facts relied upon as
constituting a default hereunder, and Lessor, if in default, shall have ninety (90) days after
receipt of such notice in which to complete or substantially complete compliance with such
provisions. Lessee shall have the right to terminate this Lease upon written notice to Lessor
if Lessor fails to complete or substantially complete such compliance efforts within the ninety
(90) day period, unless such failure is excused by the provisions of Section ]J hereof. If
compliance with ninety (90) days is not reasonably possible and Lessor has commenced and
is diligently pursuing such compliance efforts, Lessor shall be allowed additional time to
complete compliance, not to exceed an additional ninety (90) days, but only if written
notice of an extension is given to Lessee by Lessor within the first ninety (90) day period.
13. Indemnification
13.1 Lessor shall defend, indemnify and hold Lessee harmless to the extent
permitted by applicable law from and against any and all claims, demands, actions,
proceedings, liability or losses, of whatsoever nature (including reasonable attorney's fees)
for injury or death to person(s) or for damage or loss to property arising out of or caused
by Lessor's operations or activities in connection with the Landfill, or any contiguous or
non-adjacent property under Lessor's control except to the extent such injury, damage
or loss is caused by the wrongful acts or negligence of Lessee.
13.2 Lessee shall defend, indemnify and hold Lessor harmless from and against
any and all claims, demands, actions, proceedings, liability or losses, of whatsoever nature
(including reasonable attorney's fees) for injury or death to person(s) or for damage or
loss to property arising out of or caused by Lessee's operations or activities in connection
with the Project or any contiguous or non-adjacent property under Lessee's control
except to the extent such injury, damage or loss is caused by the wrongful acts or
negligence of Lessor.
13.3 Lessor, to the extent permitted by applicable law, and Lessee agree that in
any action based on an allegation of joint negligence on the part of Lessor and Lessee
that each party shall only be responsible for that portion or percentage of any damages
awarded which is directly attributable to the negligence of that party.
13.4 Lessor and Lessee must provide the other prompt and timely notice of any
event covered which, in any way, directly, indirectly, contingently or otherwise, affects
or might affect the other. Lessor may compromise and defend the same to the extent of its
own interests.
14. Insurance. Lessee shall, during the term of this Lease, maintain adequate insurance
coverage as follows:
]4.1 General Insurance. Certificates of insurance covering all of the insurance
required to be maintained by Lessee shall be filed with the Lessor . Lessor shall be named as
an additional insured under the commercial general liability policy, using ISO-Form CG 2010
(latest edition, or equivalent). All such policies shall be from insurance companies which are
reasonably acceptable to Lessor . All insurance policies shall contain the provision that the
insurance company will provide written notice to the Lessor no less than thirty (30) days
prior to any material change, termination or cancellation of coverage. All insurance policies
shall provide that all deductibles shall be for Lessee's account, and all such insurance
policies shall be primary and not contributory with Lessor's insurance.
14.2 Workers' Compensation Insurance. Workers' Compensation including
occupational disease in accordance with the statutory requirements set forth by the state in
which the Work is to be performed and employer's liability insurance covering all of
Lessee's employees engaged in the performance of this Agreement, shall be maintained
continuously for the term of this Lease..
143 Comprehensive Public Liability and Property Damage Liability Insurance.
Lessee shall secure and maintain during the term of this Lease a commercial general
public liability and property damage liability insurance policy. The policy shall protect
Lessee and Lessor from claims for damages for personal injury, including accidental
death, and from claims for property damage which may arise from Lessee's operations
under this Lcase, whether any such operation be by the Lessee or by anyone directly or
indirectly employed by Lessee. The minimum limits of such insurance shall be $2,000,000
per occurrence and $5,000,000 in the aggregate.
14.4 Automobile Public Liability Insurance. Comprehensive automobile liability
insurance covering Lessee for claims arising from owned, hired and non-owned vehicles
covering death or bodily injury and property damage with a combined single limit of a
minimum sum of $1,000,000 pcr occurrence. .
14.5 Environmental Impairment Liability Insurance. Lessee shall secure and
maintain during the term of this Lease Environmental Impairment Liability insurance with
limits not less than $1,000,000 per occurrence, covering liability and cleanup costs
associated with discharges or releases of chemicals or other forms of pollution.
15. Force Maieure
'15.1 If by reason of Force Majeure either party is unable to carry out, either in
whole or in part, its obligations herein contained, such party shall not be deemed in default
during the continuation of such inability. In this clause, "Force Majeure" means an
exceptional event or circumstance: (a) which is beyond a party's control, (b) which such party
could not reasonably have provided against before entering into this contract, (c) which,
having arisen, such party could not reasonably have avoided or overcome, and (d) which is not
substantially attributable to the other party.
15.2 Force Majeure may include, but is not limited to, the following events or
circumstances, so long as all these conditions (a) through (d) above are satisfied: (i) acts of
God, including but not limited to, winds, hurricanes, tornadoes, fires, epidemics,
landslides, floods or earthquakes; (ii) strikes, lock-outs or other industrial disturbances by
persons other than personnel and other employees of the parties; (iii) acts of public enemies;
and (iv) military action, war, whether or not it is declared, sabotage, riots, civil disturbances or
explosions.
15.3 Lessor and Lessee agree that: (a) the non-performing party, within two weeks
after the occurrence of the Force Majeure, shall give the other party written notice
describing the particulars of the occurrence; (b) the suspension of performance shall be of
no greater scope and of no longer duration than is' required by the Force Majeure; (c) no
obligations of either party which arose prior to the occurrence causing the suspension of
performance shall be excused as a result of the occurrence, and; (d) the non-performing
party shall use its best efforts to remedy with all reasonable dispatch the cause or
causes preventing it from carrying out its obligations. Notwithstanding the foregoing,
the other party may, at its option, terminate this Lease after six months of any such
suspension of performance.
76. Assignment
16.1 Assignment. Neither party hereto may sell, encumber, assign or transfer this
Lease or any interest it may have herein, without the express written consent of the other
party, and upon such written notice the terms, conditions and provisions of this Lease shall
extend and apply to and shall be binding upon the respective heirs, administrators,
executors, successors, assigns and delegates of said party. Upon any such sale, assignment
of transfer of a party's interest herein, the transferring party shall be relieved of any
further obligation hereunder as to the interest sold, assigned or transferred.
Notwithstanding the foregoing, either party may assign this Lease to an affiliate at least
fifty percent (50%) owned by Lessee without first obtaining the other party's consent.
16.2 Change of Ownership of Landfill. No change or division in ownership of the
Landfill or assignment of the amounts due hereunder shall operate to enlarge the obligations
or diminish the rights of Lessee, and no change, division or assignment of such rights
shall be binding upon Lessee until thirty (30) days after Lessee has been furnished with the
original or a certified copy of the recorded instrument evidencing the same.
17. Notices
Any notice to be given under this Lease shall be in writing and shall be deemed to
have been properly given and received (i) when delivered in person or via facsimile to the
authorized representative of the party to whom the notice is addressed, or (ii) on the date
received as indicated on the return receipt when sent by prepaid certified or registered mail,
return receipt requested, or by recognized overnight courier, such as Federal Express, to the
party to be notified at its address, as follows:
To Lessee: President
Denton Power, LLC
425 South Main Street, Suite 201
Ann Arbor, Michigan 48104
Fax No. 734 668-1541
Assistant General Counsel
DTE Biomass Energy, Inc.
425 South Main Street, Suite 20]
Ann Arbor, Michigan 48104
Fax No. 734-9'13-5582
To Lessor: Vance Kemler
General Manager, Solid Waste Services
City of Denton
1527 S. Mayhill Road
Denton, TX 76208
Fax No. 940-349-8057
George C. Campbell, City Manager
City of Denton
215 East McKinney Street
Denton, Texas 76201
Fax No. 940-349-8057
Either party may change such representative or address by written notice of said change of
representative or address given to the other party.
18. General Provisions
18.1 Successors. The provisions of this Lease shall insure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors, personal
representatives, administrators, successors and assigns.
]8.2 Express Obli atg_ions. All obligations of Lessee and Lessor under this Lease
are expressly stated, and no other obligations or covenants are to be implied hereunder.
18.3 Entire Lease. This Lease is intended by the parties to constitute a complete
and exclusive expression of the agreement with respect to the subject matter hereof.
18.4 Modifications. This Lease shall not be changed or modified except by a
subsequent agreement in writing signed by both parties.
18.5 Waiver. The waiver by either party of any failure on the part of the other
party to perform in accordance with any of the terms or conditions of this Lease shall not be
construed as a waiver of any future or continuing failure, whether similar or dissimilar
thereto.
'18.6 Captions. Section and paragraph captions are inserted for identification
purposes only and are not a part hereof
18.7 Law and Venue. This Lease shall be construed under the laws of the State of
Texas and is fully performable in Denton County, Texas or the appropriate U.S. District
Court. Exclusive venue for a lawsuit enforcing the terms and conditions of the Lease shall be
a court of competent jurisdiction in Denton County, Texas.
18.8 Alternative Dispute Resolution. The parties agree that, if necessary, they will
first use their best efforts to resolve any disputes regarding this Agreement through the use of
mediation or other form of alternate dispute resolution in Denton County, Texas, as set forth
in Chapter 154 of the Texas Civil Practice and Remedies Code (V.A.T.C.A.). Only if there is
a dispute involving a serious immediate material breach or a threat of serious immediate
material breach of this Agreement by either side, where to engage in alternate dispute
resolution would be futile, are the parties justified in seeking injunctive relief from a Court of
competent jurisdiction in Den[on County, Texas.
18.9 Audit Rights. Lessor shall have the right to audit and make copies of the
books, records, and computations pertaining to this Lease. Lessee shall retain all books,
records, documents, and other evidence pertaining to this Lease for a period of three (3)
years, except if an audit is in progress or audit findings are yet unresolved, in which case
records shall be kept until all audit tasks are completed and resolved. These books, records,
documents, and other evidence shall be available for Lessor's review, within ten (70)
business days of Lessor's written request. All books and records will be made available
within a fifty (50) mile radius of the City of Denton, Texas, provided, however, that Lessee
shall have the right to send records via mail or electronic files. The cost of any audit will be
borne by the Lessor unless the audit reveals an overpayment or underpayment of 2% or
greater, in which case the reasonable cost of the audit shall be borne by the party in error.
Any payment due under this provision shall be made within thirty (30) business days of
receipt of an invoice therefor, provided that if Lessee has an issue with the invoice, it shall let
Lessor know within fifteen (15) business days of receipt of such invoice.
Each of the terms "books," "records," "documents," and "other evidence", as used in this
section, shall be construed to include drafts and electronic files, even if such drafts or
electronic files are subsequently used to generate or prepare a final printed document.
{The next page is the signature page}
The parties hereto have executed this Lease as of the day and year first above written.
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
By: /' G-~
Name: CaEr<I2GE ~, ~~~1lYIf~~FLL
Title: Girt 1'19,9Nfi ~E2.
ATTEST:
Jennifer Walter;, City Secretary
By: w ,i '~Z ,~ ~ „~~.
APPROVED AS TO LEGAL FORM:
EDWI D R C A RNEY
By:
DENTON POWER, LLC
By:
`~O Name: M111~ l DU5((711
Q~`~- v Title: ~P~S.fi~~l
~~. ~~~P
Exhibit A
PROJECT SCHEDULE
The following schedule lists several significant activities that are included within the
Project Scope. These dates represent milestone target as described in the Amended and
Restated Landfill Gas Rights and Collection Facility Lease. These milestones are targets
only and any failure to meet any one or more of the specific dates set forth below shall not be
deemed, by itself, to be an event of default under the Amended and Restated Landfill Gas
Rights and Collection Facility Lease.
Date Activity
April, 2008 Execute the Amended and Restated Landfill Gas Rights and
Collection Facility Lease
April -May, 2008 Begin operation of Initial Wellfield
June, 2008 Execute an Energy Sales Agreement with purchaser of electricity
Fall, 2008 Permit and construct plant
December 37, 2008 Initiate commercial Energy sales