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2004-095FILE REFERENCE FORM 2004-095 X Additional File Exists Additional File Contains Records Not Public, According to the Public Records Act Other care m¢~a~s Amended and Restated Facility Lease -Ordinance No. 2008-087 04/15/08 ~R ORDINANCE NO. 2004- 8t~.~~' AN ORDINANCE AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE A LANDFILL GAS RIGHTS AND COLLECTION FACILITY LEASE AND LICENSE AGREEMENT BETWEEN THE CITY OF DENTON AND DTE BIOMASS ENERGY, INC.; SAID AGREEMENT BEING FOR PROFESSIONAL SERVICES AND HIGH TECHNOLOGY PROCUREMENT FOR THE DESIGN, DEVELOPMENT, AND OPERATION OF A LANDFILL GAS COLLECTION FACILITY; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFORE AND PROV]I)ING AN EFFECTIVE DATE (RFP 3111). WHEREAS, after advertising for and receiving competitive sealed proposals in accordance with the law, City staff reviewed and rated the sealed proposals and recommends that the Landfill Gas Rights and Collection Facility Lease and License for the design, development, and operation of a landfill gas collection facility be awarded to DTE Biomass Energy, Inc. (the "Provider") as the proposal offering the best final offer based on the evaluation factors contained in the request for proposal, said agreement being attached hereto and made a part hereof as Exhibit "A" (the "Agreement"); and WHEREAS, the Agreement calls for a high technology' procurement of equipment and professional services of a highly technical nature; and WHEREAS, the City Council finds that the Provider's proposal as set forth in the Agreement is the proposal offering the best final offer based on the evaluation factors contained in the request for proposal WHEREAS, the Provider is qualified on the basis of its demonstrated competence and qualifications to perform the proposed professional services; and WHEREAS, the amount being charged for professional services under the Agreement are fair and reasonable and are consistent with and not higher than the recommended practices and fees published by the professional associations applicable to the Provider's profession and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference as if fully set forth herein. SECTION 2. The Agreement is hereby approved and the City Manager, or his designee is hereby authorized to enter into the Agreement on behalf of the City. SECTION 3. The City Manager is authorized to expend funds as required by the Agreement. SECTION 4. approval. PASSED AND APPROVED this the ~'~-d~day of ("~~-' EULINE BROCK MAYOR This ordinance shall become effective immediately upon its passage and ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROk~ED AS TO LEGAL FO : HERBERT L. PROUTY, CITY ATTORNEY LANDFILL AND DIGESTER GAS RIGHTS AND COLLECTION FACILITY LEASE This Landfill Gas and Digester Gas Rights and Collection Facility Lease ("Lease") is dated as of April ] , 2004 by and between the City of Denton, Texas, a home rule municipal corporation ("Owner" or "Lessor") and DTE Biomass Energy, Inc., a Michigan corporation ("DTE" 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 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 and Biodiesel Industries, Inc. 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, the Lessor and Lessee desire to enter into this Lease to set forth the terms and conditions of the leasing of Landfill and Digester Gas Rights and a Landfill Gas Collection System to be constructed by Lessor to collect landfill gas for a proposed landfill and digester gas to energy project, and; Whereas, this Lease provides, among other things, for the construction by Lessor of a Preliminary Gas Collection System sufficient in scope to supply the City's Biodiesel Production Facility ("BP Facility") with all the Landfill Gas required to operate the BP Facility and to provide for a Preliminary Gas Collection System sufficient in scope to allow DTE to do a feasibility study to determine whether or not Landfill Gas and Digester Gas can be extracted and sold in Commercial Quantities, and; Whereas, if Landfill Gas and Digester Gas can be sold in Commercial Quantities to a Customer, Lessor agrees to construct an expanded Gas Collection System by Lessor sufficient in scope and size to permit the consummation of a Landfill Gas and Digester Gas Project. Now, therefore, in consideration of the mutual covenants and agreements set forth herein, Lessor and Lessee agree as follows: 1. Definitions 1.1 "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 1.012. 1.2 "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 Preliminary Gas Collection System to sell Landfill Gas to a Customer. 1.3 "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 Commemial Quantities. 1.4 "Customer" shall mean any suitable Landfill Gas and Digester Gas Purchaser within a reasonable distance of the Landfill. 1.5 "Digester Gas" shall mean methane, carbon dioxide and other constituent products produced by the anaerobic decomposition of waste water and sludge at the sewage treatment plant adjacent to the Landfill. 1.6 "Delivery Point" shall be at a meter near a flare with blower on the Landfill. 1.7 "Gross Revenues" shall mean the total receipts from sales of Landfill and Digester Gas to Customer. 1.8 "Expanded Gas Collection System" means that portion of the Gas Collection System built or to be built in addition to the Preliminary Gas Collection System. 1.9 "Feasibility Study" shall mean a study performed by Lessee as soon as practicable after the Effective Date to determine whether or not Landfill or Digester Gas can be sold in Commercial Quantities. In no event shall such study be completed later than 2 years from the Effective Date minus the reasonable time necessary to complete construction of the Gas Collection System. 1.10 "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. 1.11 MMBTU shall mean one million BTUs. 1.12 "Preliminary Gas Collection System" shall mean that portion of the Collection System built by the City of Denton in support of Biodiesel Production. 1.13 "Project" shall mean all activities and efforts associated with the recovery and sale of Landfill Gas and Digester Gas and their delivery to a Customer. 1.14 "Project Schedule" shall mean the proposed schedule attached hereto as Exhibit "A" and made a part hereof by reference. 1.15 "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). 2. Term This Lease shall become effective on the Effective Date and shall continue for a term of twenty (20) years. 3. Rights Granted to Lessee Subject to the provisions of this Lease, Lessor hereby grants to Lessee the following: 3.1 Landfill and Digester Gas. The exclusive fight to explore for, extract, collect, process, use, sell and deliver all Landfill Gas in the Landfill and Digester Gas fi.om the City's Wastewater Treatment Plant, except that Landfill Gas which is required for the Biodiesel Production Facility. This fight is subordinate to Lessor's fight to use the Landfill for landfill purposes and its fight 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 fights under this Lease. 3.2 Gas Collection System. The exclusive fight to use and operate a Gas Collection System at the Landfill other than that which is required for the BP Facility, subject to the Lessor's fights set forth in Section 3.1. Such fight and related activities encompasses the fight to conduct all activities necessary and incidental to the operation and maintenance of a Gas Collection System, which includes the fight, 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 environmental laws or to enhance Landfill Gas collection will be bom by the Lessor. The cost of operation and maintenance of the Gas Collection Facility, and related pipeline, if any, to the Customer shall be bom by Lessee provided that: (1) the Landfill Gas and Digester Gas volumes and quality produced by the Landfill and Wastewater Treatment Plant meet the standard of Commercial Quantities as defined in Paragraph 1.3, and; (2) The Gas Collection System is suitable for use by both the BP Facility and the Customer. Failure to complete the entire Gas Collection System, as designed by the Lessee, over and above the Gas Collection System portion required for the BP Facility, within two years aRer Lessee's determination that Landfill Gas and Digester Gas can be economically recovered as provided in Section 8 is cause for termination by the Lessee. Failure to complete that portion of the Gas Collection System portion required for the BP Facility, within six months of the Effective Date of this Lease is also cause for termination by the Lessee. 3.3 Plant Site. Lessor shall make available to Lessee, a mutually acceptable site of approximately two hundred feet (200 ti.) by three hundred feet (300 fi.) in size to accommodate the construction and operation of the gas processing plant and related facilities for $1.00 per year and other good and valuable consideration. 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 Landfill Gas and Digester Gas 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 1.3 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 "End of the Quarter") with the first payment being due and payable at the End of the Quarter immediately after the Gas Collection System and gas processing plant become operational. Along with such payments Lessee shall provide documentation to Lessor evidencing all Gross Revenues and deductions for taxes. Lessor shall have the fight at all reasonable times to audit the records of Lessee to determine that the royalty/lease payments have been properly computed. 4.2 Contingent 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, 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. 5. Lessee's Obligations Lessee agrees to: (a) Conduct a Feasibility Study to confirm that Landfill Gas and Digester Gas are available in Commercial Quantities. (b) Provided Commercial Quantities are available, design, 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. 6. Lessor's Obligations Lessor agrees to: (a) cooperate in the construction, development and operation of its Landfill, Wastewater Treatment Plant and the Collection System so as to maximize the production of Landfill Gas and Digester Gas and the transportation of Landfill Gas and Digester Gas 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 and; (g) approve in a timely manner all 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 and construct the entire Gas Collection System as designed by Lessee following the conclusion ora favorable Feasibility Study by Lessee. 7. Emission Credits To the extent Pollution Control Emission Credits are available to the Project, the value of such Emission Credits, if any, shall belong to Lessee. 8. Special Right to Terminate Within two years after the Effective Date of this Lease, Lessee, at its sole expense, shall conduct a Feasibility Study as it deems appropriate in order to determine whether Landfill Gas and Digester Gas can be economically recovered from the Landfill and Wastewater Treatment Plant in Commercial Quantities and whether such Commercial Quantities can be economically delivered to a Customer. In the event that Lessee's Feasibility Study establishes, in its sole judgment, that the Landfill Gas from the Landfill and Digester Gas from the Wastewater Treatment Plant are not suitable for the economic recovery and processing in Commercial Quantities for the Customer, Lessee shall give written notice to Lessor of such judgment. Thereafter, all rights of Lessee under this Lease shall terminate without further liability on the part of either party to the other hereunder. 9. Construction and Maintenance of Facilities 9.1. Lessee shall not be responsible for the construction, operation and maintenance of the BP Facility. Such construction, operation and maintenance being under separate agreement between the Lessor and Biodiesel Industries, Inc. 9.2. Lessee shall be responsible for the design, operation, and maintenance of the Gas Collection System and the construction of the pipeline from the Delivery Point to the Customer at its expense, following the conclusion of a favorable Feasibility Study. 9.3. Lessor shall be responsible for the construction of the Preliminary Gas Collection System and, assuming the conclusion of a favorable Feasibility Study by Lessee, shall also be responsible for constructing the Expanded Gas Collection System, related infi'astmcture lying within the Landfill property boundaries and the pipeline from the Waste Water Treatment Plant to the landfill flare, at its expense. 10. Surrender. Upon thirty (30) days notice to Lessor, Lessee may at any time or times, surrender and terminate this Lease without liability, if (1) Lessee is prevented due to no fault of its own to meet 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, and Lessee thereby is relieved of all obligations except for surrendering the Gas Collection System and gas processing plant and related facilities in good operational condition, performing removal and restoration activities in accordance with Section 12, and making full payment to Lessor for obligations in Section 4 of this lease. 1 i. Lessor and Lessee Rights 11.1. 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. 11.2. 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 Landfill real property but is only a lease of Landfill Gas and Digester Gas. 11.3. 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 Lessor's wells, collection system, and gas processing equipment. 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. 11.4. Removal of Facilities. At Lessor's option, 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. There will be no Lessee obligation to remove underground property, fixtures and improvements which Lessee has placed underground in or adjacent to the Landfill. Lessee hereby grants to Lessor an option to purchase any of such above-ground property, fixtures and improvements (the "Option Improvements") at a price equal to Lessee's cost of the Option Improvements. The cost of the Option Improvements will be established within 90 days after the completion of any and all of the Option Improvements by written notice fi.om Lessee to Lessor along with supporting documentation to establish such cost (the "Option Improvements Price"). Within 90 days after the expiration or termination of this Lease, Lessor may elect to purchase the Option Improvements, or any part thereof, for the Option Improvements Price, or applicable price of a part thereof, by providing Lessee written notice of the election of the option. The purchase of the Option Improvements will be consummated within 90 days thereafter. At closing, in exchange for the Option Improvements Price, Lessee shall deliver to Lessor a bill of sale transferring the Option Improvements to Lessor, free and clear of all debts and liens. Lessee grants an option only on that equipment which was installed by Lessee. 11.5. 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. 11.6. Return to Landfill Matter. 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 fi.om the Project). 12. Warranty Lessor makes no warranty of title express or implied to the Landfill Gas and Digester Gas. Lessor covenants to Lessee the fight 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 personality and not an oil, gas, or mineral interest in real property. 13. Default 13.1 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 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 ninety (90) 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 ninety (90) day period, unless such failure is excused by the provisions of Section 16 hereof. If compliance within ninety (90) days is not reasonably possible and Lessee has commenced and is diligently pursuing suer compliance efforts, Lessee may 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 within the first ninety (90) 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 and the Landfill Gas rights shall be surrendered to Lessor. 13.2 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 Lease 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 17 hereof. If compliance with ninety (90) days is not reasonably possible and Lessor has commenced and is diligently pursuing such compliance efforts, Lessor may 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 within the first ninety (90) day period. 14. Indemnification 14.1 Lessor shall defend, indemnify and hold Lessee 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 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. 14.2 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. 14.3 The Lessor and the Lessee agree that in any action based on an allegation of joint negligence on the part of the Lessor and the 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. 14.4 The Lessor and the 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. The Lessor may compromise and defend the same to the extent of its own interests. 15. Insurance Lessee shall, during the term of this Lease, maintain adequate insurance coverage as follows: In General. All policies of insurance provided shall be issued by insurance companies qualified to do business in the State of Texas and either (1) listed on the U.S. Department of the Treasury's Listing of Approved Sureties (Depa~hnent Circular 570) (as amended), or (2) having a current rating of "A-" or better in the most current available A.M. Best Co., Inc.'s, Best's Insurance Reports, Property and Casualty Edition. Except in the case of workers' compensation insurance, Lessor shall be included as an additional named insured on all insurance policies. Lessee shall cause copies of certificates of insurance to be furnished to Lessor concurrently with or prior to conducting construction-related site inspections, surveys, etc. associated with this Lease. The certificates shall name Lessor as the certificate holder and as an additional named insured (except in the ease of workers' compensation insurance). If requested, Lessee shall also cause copies of the insurance policies required by this Lease to be provided to Lessor. Workers' Compensation Insurance. Lessee shall obtain and maintain during the term of this Lease workers' compensation insurance as required by laws and regulations for all of Lessee's employees employed at the Project. 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 Lease, whether any such operation be by the Lessee or by anyone directly or indirectly employed by Lessee. The minimum amounts of such insurance shall be not less than $1,000,000 for each occurrence, 9 and $3,000,000 general aggregate, and $2,000,000 products/completed operations aggregate. Automobile Public Liability Insurance. Lessee shall secure and maintain during the term of this Lease comprehensive automobile public liability insurance with limits not less than $1,000,000 per occurrence, covering owned, hired, and non- owned automobiles. 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. Property Insurance. Lessee shall secure and maintain during the term of this Lease Property Insurance on an All-Risk basis, providing for 100% of the replacement cost of the Gas Collection System and associated buildings and · equipment. 16. Force Majeure 16.1 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, "Fome 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. 16.2 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. 16.3 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 10 obligations. Notwithstanding the foregoing, the other party may, at its option, terminate this Lease after six months of any such suspension of performance. 17. Assignment 17.1 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 without first obtaining the other party's consent. 17.2 Change of Ownership of Landfill. No change or division in ownership of the Landfill or assigmnent 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. 18. 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, to the party to be notified at its address, as follows: To Lessee: Mr. Curtis T. Ranger, P.E. President DTE Biomass Energy, Inc. 425 South Main Street, Suite 201 Ann Arbor, Michigan 48104 Fax No. 734 668-1541 To Lessor: Charles W. Fiedler, P.E. Director of Engineering City of Denton 601 E. Hickory, Suite B Denton, TX 76205 Fax No. 940 349-8951 11 Either party may change such representative or address by written notice of said change of representative or address given to the other party. 19. General Provisions 19.1 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. 19.2 Express Obligations. All obligations of Lessee and Lessor under this Lease are expressly stated, and no other obligations or covenants are to be implied hereunder. 19.3 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. 19.4 Modifications. This Lease shall not be changed or modified except by a subsequent agreement in writing signed by both parties. 19.5 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. 19.6 Captions. Section and paragraph captions are inserted for identification purposes only and are not a part hereof. 19.7 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. 19.8 Council Approval. This lease shall become effective upon its approval by the Denton City Council. 12 The parties hereto have executed this Lease as of the day and year first above written. CITY OF DENTON, TEXAS Mmhael A Conduff ~d City Manager ATTEST: Je~'/er Wa~r; Cit~ Secretary APPROVED AS~ BY ~ - City Attorney DTE BIOMASS ENERGY, INC. Curtis T. Ranger President 13 AKNOWLEDGEMENTS STATE OF TEXAS § is acknowledged before me, on this ~_~_Z"- day of , 2004 by Michael A. Conduff, City Manager of the City of Denton, ~ municipal corporation, on behalf of said municipal corporation. COUNTY OF DENTON This instrument ~, ~?z:~4% JANE E. RICHARDSON ~"'~' ".~ Notan/Public, State of Texas ii:~..~' '~ My Commission Expires ,~I ~ ....... June 27,2005 Notary Public in and for State of Texas STATE OF ]~_~ § COUNTY OF i~.~t.n~u~ This instrument was acknowledged before me on this g,t~ day of llQm ~ ,2004 by Curtis T. Ranger, President ofDTE Biomass Energy, a .k_.- corporation, on behalf of said corporation. ~l~otary Public in and for State of~ No'am] Public, Was~naw Counly, ~1 My Commlsslon Expires 09/02/2007 14 Exhibi! A PROJECT SCHEDULE The following schedule lists several significant activities that are included within the Project Scope. These dates represent milestone targets as described in the City of Denton's Landfill Gas Rights and Collection Facility Lease. Date 04/1/04 07/1/04 10/1/04 10/1/06 12/1/06 04/1/07 Activity Execute the Landfill Gas Rights and Collection Facility Lease Approve preliminary wellfield and plant site design Begin operation of Preliminary Wellfield Execute a Landfill Gas Sales Agreement Permit pipeline and plant site construction Initiate commercial Landfill Gas sales