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Resolution No. 9510 (4)EXECUTION VERSION LEASE AND GRANT OF EASEMENTS BY AND BETWEEN THE CITY OF VERNON, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California, as Landlord AND BICENT (CALIFORNIA) MALBURG LLC, a Delaware limited liability company as Tenant Dated April 10, 2008 LA\1 775778.13 LEASE AND GRANT OF EASEMENTS BY AND BETWEEN THE CITY OF VERNON, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California, as Landlord AND BICENT (CALIFORNIA) MALBURG LLC, a Delaware limited liability company as Tenant Dated April 10, 2008 INDEX Page ARTICLE 1. PREMISES AND GRANT OF EASEMENTS .......................................................... I Section 1.01 Premises Defined ............................................................................................ I Section1.02 "AS IS .. .......................................................................................................... 2 Section 1.03 Easeii�ents, Reservation of Oil, Gas, Mineral and Water Rights .................... 2 Section 1.04 Grant of Easements, etc . .................................................................................. 2 Section 1.05 Temporary Licenses ........................................................................................ 3 ARTICLE 11. TERM AND TERMINATION ................................................................................. 4 Section 2.01 Term Defined .................................................................................................. 4 Section2.02 Initial Term ..................................................................................................... 4 Section 2.03 Renewal Terms ............................................................................................... 4 Section 2.04 Commencement Date and Lease Year Defined . ............................................. 4 Section 2.05 Termination ..................................................................................................... 5 ARTICLE111. RENT ....................................................................................................................... 6 Section3.01 Base Rent ........................................................................................................ 6 Section 3.02 Additional Rent; Ren ..................................................................................... 6 Section 3.03 Renewal Option Rent ...................................................................................... 6 Section 3.04 Selection of Fair Market Values ..................................................................... 7 Section 3.05 Late Charge; Interest on Past Due Obligations ............................................... 7 LA\1775778.13 ARTICLE IV. TAXES AND UTILITY EXPENSES ..................................................................... 8 Section 4.01 Payment of Taxes and Assessments ................................... ; ........................... 8 Section 4.02 Separate Assessment ....................................................................................... 8 Section 4.03 Tenant's Right to Contest . .............................................................................. 9 Section4.04 Exemptions ..................................................................................................... 9 Section 4.05 Proof of Complianc ................................................................... 11 1 ................... 9 Section 4.06 Utility Expenses ..................................... ....... - .... **** ........... 9 Section4.07 Refunds ......................................................................................................... 10 ARTICLE V. CONDUCT OF BUSINESS BY TENANT ............................................................ 10 Section 5.01 Permitted Use ................................................................................................ 10 Section 5.02 Exclusive Control .......................................................................................... 10 Section 5.03 Compliance with Laws . ................................................................................ I I Section 5.04 Hazardous Substances ................................................................. I ....... I ........... I I ARTICLE VI. MAI`.NTENANCE, REPAIR AND ALTERATIONS OF PREMISES .................. 13 Section 6.01 Landlord's Obligations ................................................................................. 13 Section 6.02 Tenant's Obligations ...................................................................................... 13 Section 6.03 Alterations and Additions ............................................................................. 14 Section 6.04 Removal of Siiins and Movable Trade Fixtures and Other Items ................. 14 ARTICLE VII. INSURANCE AND INDEMNITY ...................................................................... 15 Section 7.01 Liabili!y Insurance ........................................................................................ 15 Section 7.02 Fire and Earthquake Insurance -. Fixtures, Equipment, Building and Improvements................................ I .......................................... I .............. 16 Section 7.03 Insurance Policies ....... ................................................................................. 17 .Section 7.04 Waiver of Subrogation .................................................................................. 17 .Section 7.05 Indeirmily ...................................................................................................... 18 Sec.tion 7.06 Exemption of Landlord .................................................................................. 18 Section 7.07 Subcontractors of Tenant .............................................................................. 19 ARTICLE VIII. ASSIGNMENT AND SUBLETTING ................................. 4 .............................. 19 Section 8.01 Assignment of this Lease and Subletting of the Premises ............................ 19 ARTICLE IX. MORTGAGE OF LEASEHOLD ESTATE .......................................................... 20 Section 9.01 Execution of Leasehold Mortgages ............................... ............................... 20 Section 9.02 Covenants of Landlord .......................... .......... I ............................................... 20 Section9.03 New Lease ..................................................................................................... 22 Section 9.04 Foreclosure Not a Default .................. ...................... ................................... 24 Section 9.05 Personal Liability ........................................................................................... 24 Section 9.06 Condemnation Proceeds ................................................................. .............. 24 Section 9.07 Notice of Proceedings ................................................................................... 24 LA\1 775778.13 Section 9.08 Consent Agreement ................ ....................................................................... 24 ARTICLE X. TRANSFERS BY LANDLORD ............................................................................. 24 Section 10.0 1 Transfer of Landlord's Interest ................................................................... 24 ARTICLE XI. DAMAGE AND CONDEMNATION ................................................................... 24 Section 11.0 1 Damage or Destruction . ............................................. i ............... ; ................ 24 Seetion 11.02 Condemnatio . ............................................................................................ 26 ARTICLE XIL DEFAULTS AND REMEDIES ........................................................................... 27 Section 12.01 Defaults by Tenant ...................................................................................... 27 Section12.02 Remedies... .................................................................................................. 28 Section 12.03 Default by Landlord .................................................................................... 30 Section 12.04 Nonrecourse to Landlord ............................................................................ 30 Section 12.05-Expense of Litigation .............. z: ................................................................... 30 Section 12.06 Dispute Resolution ...................................................................................... 31 ARTICLEXIII. HOLDING OVER ...................................................................... I .......................... 32 Section13.01 Holding Ove .............................................................................................. 32 ARTICLE XIV. RECORDING, LIENS AND SUBORDINATIONS .......................................... 32 Section14.01 Recording .................................................................................................... 32 Section14.02 Liens ................................... ......................................................................... 32 Section 14.03 Subordination ............................................................... I ................................ 34 ARTICLEXV. MISCELLANEOUS ............................................................................................... 34 Section 15.01 Landlord's Right of Access ........................................................................ 34 Section 15.02 Severability ................................................................................................. 34 Section15.03 Headings .............. .. ......... ......................................................................... 34 Section 15.04 Incorporation of Prior Agreements; Amendments .................... I .................. 35 Section15.05 Notices ........................................................................................................ 35 Section15.06 Waivers ........................................................................................................ 36 Section15.07 Force Maicure ............................................................................................. 36 .Section 15..08 Quitclaim ..................................................................................................... 36 Section15.09 Authori ..................................................................................................... 36 Section 15. 10 No Joint Venture ........................... ; .......................... .................................... 36 Section 15.11 Safe!y and Health ........................................................................................ 36 Section 15.12 Tenant Estoppel Certificates ....................................................................... 36 Section 15.13 Survival of Indemnities ............................................................................... 37 Section 15.14 Surrender or -Cancellation ........................................................................... 37 Section 15.15 Time of Essence .............................................. z ............................................ 37 Section 15.16 Intentionally Omitted . ................................................................................. 37 LA\ 1775778.13 Section15.17 Brokers ........................................................................................................ 37 Section 15.18 Waiver of Ju!y Trial .................................................................................... 38 Section 15.19 Applicable Law ............................................................................................ 38 Section 15.20 Gender, Successors in Interest .................................................................... 38 Section 15.21 Waiver of Sovereign Inununity .................................................................. 38 iv LA\1775778.13 EXHIBIT "A-l" - Legal Description of Land Premises EXHIBIT "A-2" - Site Plan Depicting Land Premises EXHIBIT "B-l" - Legal Description of Easement Area EXHIBIT "B-2" - Site Plan Depicting Easement Area EXHIBIT `C-l" - Legal Description of City Retained Utility Easement Area EXHIBIT "C-2" - Site Plan Depicting City Retained Utility Easement Area EXHIBIT "D" — Building Plan Identifying Location of Historical Premises EXHIBIT "E" - Form of Short Form Memorandum of Lease v LA\1 775778.13 GROUND LEASE AND GRANT OF EASEMENTS This GROUND LEASE AND GRANT OF EASEMENTS (this "Lease") is made and entered into as of April 10, 2008 (the "Effective Date"), between the CITY OF VERNON, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California ("Landlord"), and BICENT (CALIFORNIA) MALBURG LLC, a Delaware limited liability company ( "Tenan ') (both Landlord and Tenant may hereafter be referred to individually as a "Party" and collectively as the "Parties"). RECITALS A. Landlord and Tenant are parties to that certain Amended and Restated Purchase and Sale Agreement dated as of December 13, 2007 by and between Landlord and Tenant as amended by that certain First Amendment to Amended and Restated Purchase Agreement dated as of February 8, 2008 by and between Landlord and Tenant (the "Purchase and Sale Agreement"), pursuant to which (i) Landlord and Tenant have agreed to enter into this Lease, and (ii) Tenant will purchase in fee the Malburg Generating Station (the "MGS") and all buildings, turbines, other power station fixtures and all improvements (all of the items listed in this clause (11), together with, any further improvements as may hereafter be constructed or placed on the Land Premises, collectively the "MGS Improvements") located in, on or under the Land Premises (as defined below). B. Landlord desires to lease the Premises (as defined below) to Tenant, and Tenant desires to lease the Premises from Landlord. The Premises is a portion of an overall parcel owned by Landlord in fee. Landlord is retaining possession and control over the balance of such Parcel, including but not limited to portions of the historical power plant building (the "Historical Building"), the driveway around the Historical Building (the "Driveway") excluding East 50th Street, the electrical distribution facility (the "Distribution Facility '), and the heat exchanger and the cooling fan serving the Historical Building and the generators located therein (collectively, the "Retained Propert all as described more particularly in Article I below. C. The parties desire to enter into this Lease to set forth their rights and obligations relating to the Premises. AGREEMENT NOW, THEREFORE, in consideration of the rents and covenants hereafter set forth, and for other good and valuable consideration, Landlord hereby leases the Premises to Tenant and Tenant hereby takes and hires the Premises from Landlord, subject to all matters of record, upon the following terms and conditions: ARTICLE 1. PREMISES AND GRANT OF EASEMENTS Section 1.01 Premises Defined. The "Premises" consist of the following: LA\i 775778.13 (a) That certain real property located in the City of Vernon (the"City"), County of Los Angeles ("Counly'), State of California, more particularly described on Exhibit "A-F and depicted on Exhibit "A-2" attached hereto and incorporated herein by this reference (the "Land Promises"); (b) Those portions of the Historical Building depicted on Exhibit "D" attached hereto and incorporated heroin identifying the portions thereof designated as part of the Premises (collectively, the "Historical Premises"). Tenant acknowledges and agrees that Landlord may elect, in Landlord's sole and absolute discretion (but upon notice to Tenant if Landlord changes its election), to operate, maintain, repair or, repower electrical generation within the Historical Building, including but not limited to the two (2) existing Allison generators and the five (5) existing diesel generators currently located in the Historical Building, provided that Landlord will not take any action that will bind Tenant with respect to emissions without Tenant's consent (which consent shall not be unreasonably withheld, delayed or conditioned). Under no circumstances will Tenant have any right of use and/or access to any portion of the Historical Building and/or the Retained Property (except the Historical Premises) that has not been otherwise specificall-y designated herein for Tenant's use and/or f6r the common use of Tenant and Landlord. All references herein to the Premises shall, unless the context clearly indicates to the contrary, mean and include the Land Premises and the Historical Premises. Section 1.02 "AS IS". Notwithstanding anything to the contrary contained in this Lease, Tenant accepts the Premises "AS IS," "WHERE IS," and there is no obligation of Landlord to make an' y change in, modification of or improvement to the Premises. Except as expressly set forth herein to the contra I , Landlord makes no representations as to the Premises other than its ry title thereto. Tenant's execution of this Lease is based solely upon its own inspection and investigation of the Premises. Section 1.03 Easements; Reservation of Oil, Gas, Mineral and Water Rights. This Lease is subject to all covenants, conditions, easements, reservations, rights, rights of way and other matters of record, if any, in the Office of the County Recorder of Los Angeles County, California, to the extent the same relate to the Premises. Landlord reserves all oil, gas, hydrocarbons, mineral and water rights in the Premises but without right of entry on the surface or within two hundred (200) feet thereof, and provided further, that no such items shall be extracted in such manner as may cause or contribute to a lessening of the support of the Premises or the MGS Improvements (or any portion thereof). Section 1.04 Grant of Easements, etc. (a) Grant of Access and Utili!y Easements. Landlord hereby grants to Tenant non- exclusive easements (the "Easements") appurtenant to the Land Premises and the leasehold estate created by this Lease in, on, over, under and across that portion of certain adjacent property owned by Landlord as more particularly described on Exhibit "B- V and shown on Exhibit "B-2" attached hereto and incorporated herein by this reference (the "Easement Area") during the Tenn of this Lease for the purpose of (1) the construction, installation (including the right to connect to existing public facilities), maintenance and use of electric, gas, cable, 2 LA\1 775778-13 telephone, water, sewer, drainage and other utility facilities as necessary to serve the Land Premises for Tenant's use thereof (including overhead transmission of electricity), and (ii) vehicular and pedestrian ingress and egress over the Easement Area to and from the Land Premises as reasonably necessary for Tenant's use of the Land Premises, including, without limitation, for the construction, installation, maintenance and use of all improvements and other property of Tenant from time to time on the Land Premises; provided, however, nothing herein shall be interpreted as the transfer of any interest in and/or casement over any. dry and/or wet utilities maintained by the City in its capacity as the local utility service provider and/or any third party utility service provider. Any utility improvements serving the Premises that are owned, operated, installed and/or maintained by the City as the municipal utility service provider shall remain the sole and separate property of the City until such point on the Premises that they become the responsibility of the property owner pursuant to local regulation. (b) Landlord to Grant Further Easements, etc. Landlord shall, from time to time at the reasonable request of Tenant and at Tenant's cost and expense grant other non-exclusive easements and other non-exclusive rights in the nature of easements in, on, over, I across and under the Easement Area and/or the Land Premises for the benefit of any public or private utility provider during the Term of this Lease; as, in each case, may be reasonably necessary for Tenant's use of the Land Premises. Except as expressly set forth in Section 1.04(c), Landlord shall grant no other easements or other rights of the nature of easements relating to the.Premises, without the prior consent of Tenant in each instance. For purposes of the foregoing, the parties have agreed it would be unreasonable for Tenant to request any action which would (i) materially and adversely affect the value of Landlord's fee interest in the Premises, (11) materially and adversely affect the value of Landlord's fee interest in any adjacent real property owned by Landlord, or (iii) be in conflict with any then -existing encumbrances on the Property. Except for Tenant's express interest in the Histonical Premises pursuant to Section 1.0 1 (b) above, nothing in this Section 1.04(b) should be interpreted to require Landlord to grant an easement in, over or under any portion of the Historical Building. (c) Landlord Reservation of Easements. Landlord reserves unto itself any easements in, over, across and under the Premises reasonably necessary for the, construction, replacement, repair, maintenance and operation of any, facilities on the Retained Property, so long as such easements shall not materially interfere with Tenant's operations on the LandPremises, and for the delivery of emergency services to the Retained Property. Landlord further reserves unto itself, and any City owned and/or operated utility service provider, easements in, on, over, across and under the Premises for the construction, replacement, repair, maintenance and operation of ,existing dry and wet utilities over certain portions of the Premises, including but not limited to the existing water pipelines and gas lines, under the Premises, the locations of which are more particularly described on Exhibit "C-1" and shown on Exhibit "C-2" attached hereto and incorporated herein by this reference, so long as such easements shall not materially interfere with Tenant's operations on the Land Premises. Section 1.05 Landlord Reservation of Wastewater Discharge Rights. Landlord reserves unto itself the right to discharge wastewater under Industrial Wastewater Discharge Permit No. 16237, issued by the Los Angeles County Sanitation District, dated July 15, 2005 and expiring July 15, 2010 ("Industrial Wastewater Discharge Permit"), and any subsequent industrial wastewater LA\1 775778.13 discharge permits issued for the Premises (collectively, the "Wastewater Discharge Permits"). Tenant shall be responsible for compliance with the conditions of the Wastewater Discharge Permits. Furthermore, Tenant shall be responsible for all costs related to the Wastewater Discharge Permits, including the costs of repairing, maintaining and improving the industrial wastewater discharge system and any environmental costs attributable to the Wastewater Discharge Permits, subject, however, to Landlord's obligation to pay for those costs to the extent directly attributable to Landlord's operations. .Section 1.06 Temporary Licenses. (a) Control Room. No later than two (2) years following the Commencement Date (the "Control Room Deadline"), Landlord shall have relocated the Distribution Facility control room from its current location on the first floor of the Historical Building to the basement of the Historical Building. (b) Tenant License Obligations. Except as otherwise expressly set forth in this Section 1.06, Tenant's obligations under this Lease with respect to any portion of the Premises shall also apply to any of the �asements, and licenses granted to Tenant pursuant to this Lease, including but not limited to any indemnity and insurance obligations of Tenant. ARTICLE II. TERM AND TERMINATION Section 2.01 Term Defined. The term of this Lease (the "Tenn") shall mean the Initial Term (as defined below) and each Renewal Tenn (as defined below), if any. Section 2.02 Initial Term. The initial term of this Lease (the "Initial Tenn") shall b 0 from the Commencement Date (as defined below), and shall continue for a period of thirty (30) full Lease Years (as defined below), unless sooner terminated pursuant to the provisions of this Lease. Section 2.03 Renewal Terms. Tenant shall have the right and option (each such right and option, a "Renewal Option"), and so 'long as Tenant is not then in breach and/or default under the monetary or material non -monetary t erms and conditions of this Lease beyond applicable notice and cure periods, to extend the Term of this Leas I e upon the same t erms and conditions as this Lease, for two (2) additional five (5) Lease Year periods (each, a "Renewal Term") after 'the Initial Term expires. Tenant shall exercise each Renewal Option, if at all, by giving Landlord written notice of such exercise at least two (2) years before the expiration of the then current Term. Tenant shall have no other right to extend the Term beyond the Renewal Terms. The Renewal Options may only be exercised by Written notice delivered by Tenant to Landlord as provided in this Section 2.03. Section 2.04 Commencement Date and Lease Year Defined. (a) The Commencement Date of this Lease (the "Commencement Date") shall occur upon the mutual execution and delivery of this Lease by Landlord and Tenant the concurrent closing of the sale from Landlord to Tenant pursuant to the Purchase and Sale Agreement, and such closing is hereby a condition precedent to the effectiveness and enforceability of this Lease. Landlord shall deliver possession of the Premises to Tenant immediately upon the occurrence of 4 LA\ 1775778. 13 the Commencement Date. From and after the Commeneement Date, each of the parties shall observe and perform all of the obligations of such party pursuant to this Lease. (b) As used herein, the term "Lease Year" shall mean each period of twelve (12) full calendar months from and after the Commencement Date, unless the Commencement Date is a day other than the first day of a calendar month, in which, case, the first Lease Year shall be the th period commencing on the Commencement Date and ending on the last day of the twelfth (12 full calendar month following the calenda:r month inwhich the Commencement Date occurs and each subsequent Lease Year shall be each period of twelve (12) full calendar months, after the last day of the prior Lease Year. Section 2.05 Tennination. The date this Lease is terminated by either party under any provision hereof or the expiration of the Term of this Lease is referred to as the "Termination Date". On the Termination Date the following shall pertain: (a) Tenant shall have ninety (90) days after the Termination Date to, remove (at, Tenant's option) any or all of the MGS Improvements except for those in -ground improvements and those installed by Tenant (which are governed by subsection (b) below) and all of Tenant's personal property from the Premises and to vacate and surrender possession of the Premises to Landlord; (b) Tenant shall deliver to Landlord possession of MGS, the MGS Improvements and the Premises, in their then -current condition and state of repair, subject to Tenant's right to remove all or a portion of the MGS Improvements (other than in -ground improvements) and Tenant's personal property as provided above; provided, however, that except as otherwise provided in this Section 2.05, all of Tenant's improvements, fixtures and equipment placed on the Premises shall become the property of the Landlord pursuant to Section 6.03 below and shall remain on the Premises and Easement Area; (c) Tenant shall assign to Landlord (for One Dollar ($1.00) consideration), without recourse, and provide Landlord with copies or originals of, all Subleases (as defined below) and all assignable licenses, permits (including but not limited to any emission, reduction credit, RECLAIM allowances, or other environmental, renewable energy, greenhouse gas or similar credits or -allowances respecting the MGS or other equipment located on the Premises), contracts, warranties and guarantees then in effect for the Premises but only insofar as each. is specifically allocated or appurtenant to the MGS, the Premises and/or to MGS Improvements not removed by Tenant pursuant to this Section 2.05 (it being understood that all other licenses, permits, contracts, warranties and guaranties shall remain the property of Tenant); (d) the parties shall apportion all taxes, utility costs and other expenses of MGS and the Premises; (e) all of Tenant's right, title and interest in any portion of the MGS and the MGS Improvements not retained or removed by Tenant shall automatically be deemed converted back to Landlord for One Dollar ($ 1.00) consideration, the receipt and sufficiency of which are hereby acknowledged by Tenant, and Tenant shall cooperate to execute any document necessary to give effect to such automatic conveyance; and (f) Tenant shall repay the outstanding balance of any obligation secured by, or otherwise obtain the reconveyance, satisfaction or release of, any Leasehold Mortgage; provided that, notwithstanding, anything in the foregoing clauses (a) through (0 to the contrary, if the Termination Date shall occur at or after the expiration or termination of that certain Power Purchase Tolling Agreement of even date herewith (the "PPTA") between Landlord and Tenant (other than a termination of the PPTA as a result of a default by Tenant thereunder), Tenant shall have the right to remove, at Tenant's sole election, any or all of the MGS and the MGS Improvements. Any of the MGS and the MGS Improvements pursuant to subsection (a) (or the proviso thereto) above or Tenant's personal property not removed from the Premises within such LAk 1775778.13 ninety (90) day period after the Termination Date shall be deemed abandoned. During such ninety (90) day period: (1) Tenant may enter the Premises to remove the MGS and such MGS Improvements pursuant to subsection (a) above (or the proviso thereto) or personal property, without being deemed a holdover, except that Tenant shall pay Base Rent (as defined below) for any period of occupancy of the Premises while Tenant is removing its improvements as provided in this Section 2.05, on a per them basis, at the last rate in effect as of the Termination Date; (ii) Landlord shall have no obligation to preserve or protect such improvements, fixtures, equipment and other personal property; and (iii) in entering the Premises, Tenant shall comply with Landlord's reasonable instructions. ARTICLE 111. RENT Section 3.01 Base Rent. Subject to increase as and when provided in this Article III, Tenant shall pay to Landlord in advance without deduction or offset of any kind for each year following the Commencement Date annual "Base Rent." The Base Rent for the Initial Term is One Dollar ($ 1.00) per Lease Year. Base Rent for each Renewal Term, if applicable, will be. the amounts determined in accordance with Sections 3.03 and 3.04. Prorations pursuant to this Lease shall be made on the basis of a thirty (30) day month and a 360 day year. The first year's Base Rent shall be paid on or before the Commencement Date. Thereafter, annual Base Rent shall be payable in advance on or before the first (I") day of each Lease Year following the Commencement Date. Section 3.02 Additional Rent; Rent. As used in this Lease, the term "rent" shall mean Base Rent and additional rent, and the term "additional rent". shall mean all amounts payable by Tenant pursuant to this Lease other than Base Rent, including, without limitation,, the real property taxes payable by Tenant pursuant to Article IV below. All Base Rent and additional rent shall be paid without deduction or offset in lawful money of the United States of America which shall be legal tender at the time of payment. When no other time is stated herein for payment, payment of any amount due from Tenant to Landlord hereunder shall be made within ten (10) business days after Tenant's receipt of Landlord's invoice or statement therefor. Section 3.03 Renewal Option Rent. The Base Rent payable by Tenant during a Renewal Term shall be equal to the greater of (1) the fair market value of the Base Rent for the Premises excluding the market value of MGS taking into account the.entire five (5) year Renewal Term, and (n) six percent (6%) of the fair market value of the fee interest in the Premises excluding the market value of MGS at the beginning of such five (5) year period. Landlord shall deliver Landlord's determination of such fair market values to Tenant no later than twelve (12) months before the end of the then existing Tenn. If Tenant disputes Landlord's determination by written notice to Landlord as set forth below within thirty (30) days of Landlord's notice of the new Base Rent, the parties shall determine such fair market values pursuant to Section 3.04 below. If Tenant fails to dispute the Base Rent for the Renewal Term within such thirty (30) day period, the Base Rent for the Renewal Tenn shall be as determined by Landlord in its notice to Tenant. For the purposes of this Section 3.03, "fair market value" shall be determined with regard to the following factors, (i) comparable property that is (a) not subleased, (b) of comparable size, location and quality to the Premises, and (c) leased for a comparable term, (ii) the fact that, as a renewal, no costs such as brokerage commissions and no periods of non -tenancy shall occur, and (iii) other reasonably pertinent factors. In no event will the Base Rent during a second Renewal IMM&NATF&MR] Term be less than the Base Rent for the first Renewal Term, if any. Tenant shall be obligated. to pay the Base Rent for the Renewal Term as set forth in the last sentence of Section 3.01. Section 3.04 Selection of Fair Market Values. If Tenant disputes Landlord's determination of fair market values for an extension of the Tenn, Tenant will deliver notice of such, dispute, together with Tenant's proposed fair market values, to Landlord within thirty (30) days of Tenant's receipt of Landlord's determination.. The parties will then attempt in good faith to agree upon the fair market values. If the parties.fail to agree within thirty (30) days, then either party shall be entitled to give notice to the other electing to have the fair market values selected by an appraiser as provided in this section. Upon delivery and receipt of such notice, the parties will within fifteen (15) days thereafter mutually appoint an appraiser who will select (in the manner set forth below) the fair market values (the "Deciding Appraise '). The Deciding Appraiser must have at least five (5) years of ftill-time commercial appraisal experience with projects comparable to the Property and be a member of the American Institute �of Real Estate Appraisers or a similar appraisal association. The Deciding Appraiser shall be * independent and may not have any material financial.or business interest in common with either of the parties. If Landlord and Tenant are not able to agree upon a Deciding Appraiser within such fifteen (15) days, each party will within five days thereafter separately select an appraiser meeting the criteria set forth above, which two appraisers will, within seven (7) days of their selection, mutually appoint a third appraiser meeting the criteria set forth above (and who also shall be independent and does not have any material financial or business interest in common with either of the two selecting appraisers) to be the Deciding Appraiser. Within seven (7) days of the appointment (by either method) of the Deciding Appraiser, Landlord and Tenant will submit to the Deciding Appraiser their respective determinations of fair market values and any related information. f Within twenty-one (21) days of such appointment, the Deciding Appraiser will review each party's submittal (and such other information as the Deciding Appraiser deems necessary) and will select, in total and without modification, the submittal presented by either Landlord or Tenant as the fair market values; provided, however, that in no event will the Base Rent based on fair market values foran extension of the Term be less than the Base Rent payable by Tenant immediately prior to commencement of the applicable extension period. Subject to the previous sentence; if the Deciding Appraiser timely receives one party's submittal, but not both, the Deciding Appraiser must designate the submitted proposal as the fair market values for the applicable extension of the Tenn. Any determination of fair market values made by the Deciding Appraiser in violation of the provisions of this section shall be beyond the scope of authority of the Deciding Appraiser and shall be null and void. In the event a Deciding Appraiser is selected, Landlord and Tenant will each pay, directly to the Deciding Appraiser, one-half (1/2) of all fees, costs and expenses of the Deciding Appraiser. Landlord and Tenant will each separately pay all costs, fees and expenses of their respective additional appraiser (if any) used to determine the Deciding Appraiser - Section 3.05 Late Charge; Interest on Past Due Obligations. Tenant hereby acknowledges that late payment by Tenant to Landlord of Base Rent or additional rent will cause Landlord to incur costs not contemplated hereunder, the exact amount of which is presently anticipated to be extremely difficult to ascertain. Accordingly, if any installment of Base Rent or additional rent shall not be paid within ten (10) business days after its due date, Tenant will pay Landlord on demand a late charge equal to the lesser of (1) five percent (5%) of the amount of such installment or (11) the maximum amount pennitted by law. The parties agree that this late charge LA\ 1775778.13 represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. The parties further agree that such late charge is rent and not interest and such assessment does not constitute a lender or borrower/creditor relationship between Landlord and Tenant. In addition, the amount unpaid, including any late charges, shall bear interest at the lesser of (1) ten percent (10%) per annurn or (1i) the maximum permissible interest rate permitted by law, in either case from,the date due until paid. The payment of such late charge or such interest shall not constitute waiver of, nor excuse or cure of, any default under this Lease, nor prevent Landlord from exercising any other rights and remedies available to Landlord. ARTICLE IV. TAXES AND UTILITY EXPENSES Section 4.01 Payment of Taxes and Assessments. Tenant agrees to pay all real and personal property taxes, general and special assessments and other charges of every description levied on or assessed against the Land Premises, improvements located on the Land Premises (which do not include the Historical Building or Distribution Facility), personal property located on or in the Premises or improvements, the leasehold estate created by this Lease or any subleasehold estate of said leaseliold estate, to the full extent of installments accrued during the Tenn; provided, however, that to the extent Landlord levies or assesses any of the foregoing taxes, assessments or other charges,. such taxes, assessments or other charges shall be levied or assessed only at the same rate imposed on, or applicable to, comparable lessees for comparable premises. Except as otherwise provided in Section 4.02 below, Tenant shall make all such payments directly to the taxing authority prior to delinquency and before Any fine, interest or penalty shall become due or be imposed by operation of law for nonpayment thereof. If, however, the law expressly permits the payment of any or all of the above items in installments (whether or not interest accrues on the unpaid balance), Tenant may, at Tenant's election, utilize,the permitted installment method, but shall pay each installment with any interest before delinquency. All payments of taxes, assessments or both (including any installment thereof) shall be prorated on the basis of a three hundred sixty (360) day year for eachLease Year or partial Lease Year. Section 4.02 Separate Assessment. In the event that the Land Premises are not separately assessed from other real property owned by Landlord, Landlord shall use its best efforts to cause the Land Premises to be separately assessed. If Landlord is unable to obtain a separate assessment, the assessor's valuation placed on the improvements which are a part of the Land Premises shall beused in determining the real property taxes. If such a valuation is unavailable, the parties shall equitably allocate the real property taxes between the improvements included in the tax bill. Real property taxes attributable. to the Land Premises shall be determined by the ratio that the total number of square feet of such Land Premises bears to the total number of square feet of land included in the tax bill. In the event that Landlord and Tenant are unable to obtain a separate assessment, Tenant shall pay directly to Landlord, within ten (10) days following written request therefor accompanied by all appropriate bills or copies thereof (but in no event more than thirty (30) days before the same are due to be paid to the taxing authority prior to delinquency and before any fine), the taxes due under this Article IV. LA\1 775778.13 Section 4.03 Tenant's Ri2ht to Contest. (a) Tenant may, at its own cost and expense, contest, in the name of Landlord if necessary, the legal validity or amount of any taxes, assessments, liens, penalties, claims or charges for which Tenant is responsible under this Lease, and may institute such proceedings as Tenant considers necessary to so contest. Landlord shall cooperate with Tenant in connection therewith. If Tenant contests any such tax, assessment, lien, penalty, claim or charge, Tenant may withhold or defer payment or pay under protest, but shall protect Landlord and the Premises from any lien by a reasonably adequate surety bond or other appropriate security. Notwithstanding the foregoing, (1) Tenant acknowledges and agrees that Tenant shall not claim Landlord's tax exempt status with respect to any portion of the Premises and/or improvements; and (ii) Tenant shall not have the right to contest any taxes, assessments, liens, penalties, claims 'or I charges which are imposed by the City, so long as such impositions are substantially consistent with similar impositions elsewhere in the City. (b) Except with respect to impositions by the City against the Premises and improvements, 'Landlord appoints Tenant as Landlord?s attomey-in-fact for the purpose of making all payments to any taxing authorities and for the purpose of contesting any taxes, assessments, liens, penalties, claims, or charges, conditioned on Tenant's preventing any liens from being levied on the Premises or on Landlord (other than the statutory lien of Revenue and Taxation Code Section 2187, as may be amended, or the lien of any supplemental tax imposed pursuant to the Revenue and Taxation Code and other than those liens as to which Tenant has furnished a reasonably adequate surety bond or other appropriate security). (c) Notwithstanding anything to the contrary contained in this Lease, if Tenant seeks a reduction or contests any taxes in acc I ordance with this Article IV, the Tenant shall timely pay such taxes "under protest". Section 4.04 Exemptions. Notwithstanding anything to the contrary contained in this Lease, Tenant's obligation to pay taxes or assessments levied or charged against the Premises or improvements or against specified personal property or the leasehold estate created by this Lease shall not include the following, whatever they may be called: (a) business income or profits taxes levied or assessed against Landlord by federal, state or other governmental agency; (b) estate, succession, gift or inheritance taxes of Landlord,' its successors or assigns; and (c) corporation, franchise or profits taxes imposed on the owner of the fee title of the Premises. Section 4.05 Proof of Compliance. Tenant shall, on written request from Landlord, famish to Landlord receipts or other appropriate evidence 'establishing payment of the taxes Tenant is obligated to pay under this Article IV. Tenant may, but shall not be required to, comply with this requirement by retaining a tax service to notify Landlord whether the taxes have been paid. Section-4.06 Utilijy Expenses. (a) Land Premises. Duning the Term of this Lease, Tenant shall pay any installation and/or connection fees for water and/or sewer imposed with respect to the Land Premises or any improvements thereon and Tenant shall pay all charges for sewer (sanitary and storm), water, 9 LA\1775778.13 electricity, gas, telephone or other services flurnshed to the Land Premises or the occupants thereof during the Term of this Lease. (b) Historical Premises. During the Tenn of this Le ase, Landlord shall pay all charges for sewer (sanitary and storm), water, electricity, and gas services furnished to the Historical Premises or the occupants thereof (c) Availabilijy of Utilities. Consistent with past practice and to the extent generally provided by Landlord, Landlord will make utility services available to Tenant on the terms generally applicable for the same, and Tenant agrees to accept such utility services from Landlord on such terms. (d) No Landlord Liabilfty. Except to the extent caused by the gross negligence or willful misconduct of Landlord or its agents or representatives, Landlord shall not be liable under this Lease for any failure or interruption of any utility service being furnished to the Premises and no such failure or interruption shall entitle Tenant to terminate this Lease or anabatement of rent hereunder. Tenant. acknowledges and agrees that Landlord has not made any representations and/or warranties regarding the sufficiency of the existing utilitiesfor the existing power plant on the Premises and/or any expansion of the existing power plant. Section 4.07 Refunds. Any refu ' rids ' or rebates of amounts paid by Tenant pursuant to this. Article IV shall belong to Tenant, and Landlord shall cooperate with Tenant in obtaining any such refund or rebate, provided that the cost of obtaining the same shall be paid by Tenant. ARTICLE V. CONDUCT OF BUSINESS BY TENANT Section 5.01 Permitted Use. The Premises may be used only for the generation of electricity and for any uses that are similar, related, ancillary or incidental thereto. Landlord may withhold in Landlord's sole, absolute and arbitrary discretion (or, if the PPTA has been terminated (other than as a result of a default by Tenant thereunder) or expired, in Landlord's reasonable discretion), its approval to any change in use of the Premises to any other lawful use. Nothing in this Lease shall impose on Tenant any obligation to actually operate the Premises or otherwise conduct business of any nature thereon. Tenant may discontinue operations on the Premises at any time or from time to time. Section 5.02 Exclusive, Control. Tenant shall have exPlusive control, possession, occupancy, and management of the Land Premises, subject only to the provisions of this Lease. Tenant may enter into, terminate, modify, amend, or waive any existing or future contracts I relating to the management or operation of the Land Premises and the provision of services to the Land Premises. Any such contract shall provide that it will automatically expire on the Termination Date. Landlord specifically consents to Tenant's cancellation and termination of any existing management contracts. 10 LA\1 775778.13 Section 5.03 Compliance with Laws. During the Term, Tenant covenants that Tenant will comply,at no cost or expense to Landlord, with all laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments and appropriate departments, commissions, boards and offices thereof, which may be applicable to the Premises, and the improvements thereon, and/or the use of the Premises during the Tenn of this Lease. Section 5.04 Hazardous Substances. (a) Tenant shall not introduce, store, release or discharge in, on or about the Premises or the Easement Area any Hazardous Substances (as hereinafter defined); provided, however, Tenant shall be permitted to use and store Hazardous Substances on the Land Premises in quantities and concentrations reasonably necessary to operate MGS so long as such use and storage is in compliance with all Environmental Laws (defined in Section 5.04(c) below) and is subject to all other terms and conditions of this Lease, including but not limited to Tenant's obligation to indemnify Landlord and Landlord's Inderrmitees pursuant,to Section 5.04(d) below. (b) If at any time, Tenant shall introduce, release or discharge in, on or about the Premises or the E asement Area any Hazardous Substance, Tenant shall, at its sole cost and expense, can-yout and complete any repair, closure, detoxification, decontamination or other clean-up of the Premises and/or the Easement Area from any Hazardous Substance introduced, released or discharged,by Tenant in, on or about the Premises or the Easement Area. If Tenant falls to implement and diligently pursue any such repair, closure, detoxification, decontamination or other clean-up of the Premises or the Easement Area, Landlord shall have the right, but not the obligation, to carry out such action and to recover the cost and expenses so incurred by Landlord from Tenant. (c) As used herein, the term "Hazardous Substances" means, collectively, any petroleum, petroleum product or byproduct or any substance, material or waste regulated or listed pursuant to any Environmental Law. The term "Enviromnental Law" means any and all federal, state, municipal and local laws, statutes, ordinances, rules, regulations, guidances, policies, orders, decrees, judgments, whether statutory or common law, as amended from time to time, now or hereafter in effect, or promulgated, pertaining to the environment, public health and safety and industrial hygiene, including the use, 'generation, manufacture, production, storage, release, discharge, disposal, handling, treatment, removal, decontamination, clean-up, transportation or regulation of any Hazardous Substance, including but not limited to the Clean Air Act, the Clean Water Act, the, Toxic Substances Control Act, the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide, Rodenticide Act, the Safe Drinking Water Act and the Occupational Safety and Health Act. (d) Tenant will indemnify, protect, defend and hold harmless Landlord and Landlord's employees, lenders, agents, contractors and each of their respective successors and assigns (individually and collectively "Landlord's Indemnitees") from all claims, judg M'ents, causes of action, damages, penalties, fines, taxes, costs, liabilities, losses and expenses arising (directly or indirectly) as a result of or in connection with Tenant's and/or its successors', and/or assignees', and/or its sublessees (individually and collectively "Tenant's Parties"), breach of any provision of this Section 5.04, or the presence of any Hazardous Substances on, under and/or LA\1 775778.13 about the Premises or the Easement Area resulting from or arising out of Tenant's or Tenant's Parties' activities on or in connection with the Premises and/or the Easement Area. The obligation by Tenant to indemnify, protect, defend and hold harmless Landlord and Landlord's Indernnitees mcludes without, limitation, the resulting costs and expenses -incurred for or in connection with any investigation, cleanup, remediation, monitoring, removal, restoration, or closure work required by federal, state or local government agencies because of Hazardous Substances present on, under, and/or about the Premises and/or the Easement Area resulting from or arising out of Tenant's or Tenant's Parties' activities on or in connection with the Premises and/or the Easement Area; the costs and expenses of restoring, replacing or acquiring the equivalent of the damaged natural resources if required under any Environmental Law; all foreseeable consequential damages; all reasonable damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises and/or the Easement Area; all reasonable sums paid in settlement of claims; reasonable attorneys' fees; litigation, arbitration and administrative proceeding costs; and reasonable expert, consultant and laboratory fees. The written consent of Landlord to the presence of Hazardous Substances on or about the Premises or the Easement Area by Tenant or Tenant's Parties will not excuse Tenant from its indemnification obligation under this subsection (d), This indemnity will survive the expiration or earlier termination of this Lease. Further, if Landlord detects a material deficiency in Tenant's performance under this indemnity and Tenant fails to correct the material deficiency pursuant to Environmental Law within thirty (30) days after receipt of written notice from Landlord, Landlord has the right but not the obligation to Join and participate in any legal proceedings or actions affecting the Premises or the Easement Area that are initiated in connection with Environmental Laws; provided, however, that if the correction of the material deficiency takes longer than thirty (30) days, Landlord may join and participate only if Tenant fails to commence corrective action within such thirty (30) day period or thereafter fails to diligently proceed to correct the deficiency pursuant to Environmental Law. (e) Landlord will indemnify, protect, defend and hold harmless, Tenant and Tenant's employees, lenders, agents, contractors and each of their respective successors and assigns (individually and collectively "Tenant's Indemnitees") from all claims, judgments, causes of action, damages, penalties, fines ' taxes, costs, liabilities, losses and expenses arising (directly or indirectly) as a result of or in connection with the presence of any subsurface Hazardous Substances under the Land Premises prior to the Effective Date, to the extent that the same do not result from, arise from or are contributed to by the activities of the Tenant and/or Tenant's Parties on or in connection with the Premises and/or the Easement Area; provided, that, the applicable Hazardous Substances are shown by Tenant (with the burden of proof on Tenant) to have predated the Closing Date. The obligation by Landlord to indemnify, protect, defend and hold harmless Tenant and Tenant's Inderruiltees includes without limitation, the resulting costs and expenses incurred for or in connection with any investigation, cleanup, remediation, monitoring, removal, restoration, or closure work required by federal, state or local government agencies because of subsurface Hazardous Substances present under the Land Premises prior to the Effective Date, to the extent that the same do not result from, arise from or are contributed to by the Tenant and/or Tenant's parties that Tenant's or Tenant's Parties' activities on or in connection with the Premises and/or the Easement Area; the costs and expenses of restoring, replacing or acquiring the equivalent of the damaged natural resources if required under any Environmental Law; all foreseeable consequential damages; all reasonable sums paid in settlement of claims; reasonable attorneys' fees; litigation, arbitration and administrative 12 LMI 775778.13 proceeding costs; and reasonable expert, consultant and laboratory fees. This indemnity. will survive the expiration or earlier termination of this Lease. Further, if Tenant detects a material deficiency in Landlord's performance under this indemnity and, Landlord fails to correct the material deficiency pursuant to Environmental Law within thirty (30) days after receipt of written notice from Tenant, Tenant has the right but not the obligation to join and participate in any legal proceedings or actions affecting the Land Premises that are initiated in connection with Environmental Laws; provided, however, that if the correction of the material deficiency takes longer than thirty (30) days, Tenant may join and participate only if Landlord fails to commence corrective action within such thirty (30) day period or thereafter falls to diligently proceed to correct the deficiency pursuant to Environmental Law. I ARTICLE VI. MAINTENANCE, REPAIR AND ALTERATIONS OF PREMISES Section 6.01 Landlord's ObI44ations Except with respect,to the Historical Premises, Landlord shall not be obligated or required at any time- to repair, or maintain the Premises or any part thereof or to make or bear any part of the expense of any improvement, alteration or change of any nature in or about the Premises or any part thereof. Landlord shall during the term of the Lease maintain and keep in commercially reasonable order, condition and repair the Historical Premises. Section 6.02 Tenant's Obligations (a) Subject to the provisions of Article XI, Tenant shall during the term of this Lease maintain and keep in commercially reasonable order, condition and repair all of the Land Premises and all improvements thereon and every part thereof, including buildings subsequently constructed by Tenant pursuant to Section 6.03 below (collectively, the "Building'), furnishings and other personal property of Tenant, and all landscaped and parking areas (which shall be kept free of weeds and debris), but not including any Retained Property. Subject to Section 6.03 below (in that a portion of the Land Premises and/or the improvements thereon may be subject to the making of alterations, improvements, remodeling or additions as permitted thereunder and may not be in first-class condition during -such process), Tenant shall promptly at Tenant's own cost and expense make all necessary repairs, interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and unforeseen, as necessary to maintain the Land Premises and all improvements thereon and every part thereof, in first-class condition (provided, however, . that at any time at or after the termination (other than the termination of the PPTA as a result of a default by Tenant thereunder) or expiration of the PPTA, Tenant shall be permitted to demolish and remove any portion of the MGS Improve I ments). Tenant shall provide whatever. treatment may be necessary, as often as may be required, to keep the Premises and all improvements thereon and every part thereof neat and attractive (consistent with their nature and use). Notwithstanding the foregoing, during terrn of the PPTA, in the event there is a conflict between the Tenant's maintenance obligations pursuant to this Section 6.02(a) and the PPTA, the terms and conditions of the PPTA shall prevail. (b) Subject to Section 2.05 above and Sections 6.03 and 6.04 below, within ninety (90) days, after the expiration of the term hereof, or within ninety (90) days after any earlier 13 LA\1 775778.13 termination hereof, Tenant shall surrender the Premises and all improvements thereon and every part thereof to Landlord (i) if the PPTA shall have concurrently or previously expired or terminated (other than a termination as a result of a default by Tenant thereunder), in its then - existing condition (provided such condition is safe and secure, and free of debn*s), or (11) otherwise in good working order and repair, reasonable wear and tear excepted. Section 6.03 Alterations and Additions (a) Tenant shall not, (1) without the prior written consent of Landlord, which consent shall not unreasonably be withheld, delayed or conditioned, make. any material alterations (including removals and demolition), improvements, remodeling or additions to the Land Premises during the term of the PPTA, and (ii) without the prior written consent of Landlord, which consent may be in Landlord's sole and absolute discretion, make any alterations, improvements, remodeling or additions to the Historical Premises, and shall not in any event during the term of the PPTA make any alterations, improvements, remodeling or additions to the Historical Building that are structural or affect the exterior appearance of the Historical Building or the outside of the Historical Building. Construction, alterations, improvements, remodeling and additions made b_y Tenant during the term hereof shall be done with reasonable diligence in a good and workmanlike manner, consistent with first-class construction, in compliance with all applicable laws and regulations of all governmenital authorities having jurisdiction. As' to all such work during the term of the PPTA which is structural to the Historical Building or affects the exterior appearance of the Historical Building or is outside of the Historical Building, Landlord shall have the same approval rights and Tenant shall have the same obligations with respect to the nature and quality of the improvements and construction, Landlord's approval of Tenant's plans, Tenant's obtaining of all necessary permits and licenses, payment and removal of liens by Tenant.. The cost of any construction, alteration, improvement, remo . deling or addition shall be paid or discharged by Tenant so that the Premises and all improvements thereon shall at all times be free of liens resulting therefrom, subject to the provisions of Article XIV. (b) The Building and all alterations, improvements, remodeling, additions or fixtures, other than trade fixtures not permanently affixed to the Premises or any improvements to such trade fixtures, which may be made or installed in the Premises or any improvements therconand which are attached to the floor, walls or ceiling of any improvements on the Premises and any floor covering which is cemented or otherwise affixed to the floor of any improvements on the Premises (collectively called "leasehold improvements") shall, during the Tenn of this Lease, be the property of Tenant. Subject to Sections 2.05 and 6.03(a) above, such leasehold improvements shall remain upon and be surrendered with the Premises at the termination of this Lease and shall, upon the expiration or earlier termination'of this Lease, become the property of Landlord. Tenant shall remove any leasehold improvements which Tenant is permitted or required to remove, pursuant to Section 6.04 below, or this subsection, at Tenant's sole cost, within ninety (90) days after the Termination Date. Section 6.04 Removal of Signs and Movable -Trade Fixtures and Other Items All interior and exterior signs and movable trade fixtures installed in or on the Premises during the term of the 'Lease by Tenant shall not be deemed part of the Premises and may be removed by Tenant at Tenant's sole discretion at any time or times during the term of 14 LMI 775778.13 this Lease or upon the termination of the term of this 'Lease, if Tenant shall not then be in monetary or material non -monetary default in the performance or observance of any of the agreements or conditions in this Lease contained on the part of Tenant to be performed or observed, beyond applicable notice and cure periods. Tenant shall promptly repair any damage to the Premises or any improvements thereon resulting from the installation or removal of any such signs or movable trade fixtures. Movable trade fixtures shall not include leasehold improvements as defined in Section 6.03(a) above. ARTICLE VII. INSURANCE AND INDEMNITY Section 7.01 Liability Insurance Tenant shall at all times during the term hereof and at Tenant's sole cost and expense, for the protection of Tenant and Landlord, as their interests may appear, maintain in full force and effect a policy or policies of insurance which afford the following,coverages: (a) Worker's Compensation in the statutorily required amount, including employer's liability with a liability limit of not less than $ 1,000,000 per occurrence. (b) Comprehensive General Liability Insurance or Commercial Liability Insurance with an aggregate liability amount not less than $5,000,000 combined single limit for both bodily injury and property damage, including blanket contractual liability (including Tenant's indemnification obligation under Section 7.05), broad form property damage, personal injury, ,completed operations, products liability, and owned and non -owned automobile coverage and acts or omissions of any security guards hired by Tenant. The liability insurance policy required to be maintained by Tenant pursuant to this subsection shall be on an occurrence or claims -made basis. Further, if such policy is an aggregate liability limit policy, not less than $5,000,000 of such limit per annurn shall be availablefor claims oniginatin,g at the Premises. The minimum limit on the coverage provided in subsection (b) above shall be adjusted upward or downward at the expiration of each third (3rd) full lease year as follows: Not less than sixty (60) days prior to the relevant adjustment date, Landlord may request such insurance brokerage firm as is then placing insurance for Landlord (the "Reviewing Broker"), to review Tenant's then existing liability insurance coverage, to review the then use of the Premises and the claims history with respect thereto and to recommend, in writing, the amount of coverage to be carried by Tenant pursuant to subsection (b). Such recommendation shall be based upon the then use of the Premises and the liability claims history with respect to the Premises and shall be certified by the Reviewing Broker to be consistent with amounts of coverage generally recommended by such Reviewing Broker for similar types of tenants or users of property with uses similar to that of the Premises in the geographical area which includes the Premises'. If the Reviewing Broker shall recommend an increase in the amount of coverage then provided by Tenant under subsection (b), Tenant shall promptly increase its coverage to the recommended amount. In no event shall there be any reduction in the amount of coverage provided by Tenant under subsection (b) below the initial amount set forth herein, notwithstanding any recommendation by the Reviewing Broker. 15 LA\1775778.13 Landlord, and any other persons designated by Landlord and having an insurable interest in the Premises, shall be added as additional insureds pursuant to such policies (although they shall not have any obligations of "named" insureds therein). The insurance required by this Section shall be the primary insurance as respects Landlord (and any other additional insureds designated by Landlord) and not contributory with any other available insurance. The policy or policies providing the coverage required by subsection (b) above shall contain an endorsement providing, in substance, that "such insurance as is afforded hereby for the benefit of Landlord and any additional insureds designated by Landlord shall be primary and any insurance carried by Landlord and any additional insureds designated by Landlord shall not be contributory." In no event shall the limits of any coverage maintained by Tenant pursuant to this Section be considered as limiting the liability of Tenant pursuant to this Lease. (c) Excess[Umbrella Liability Insurance. Excess/umbrella liability insurance covering claims in excess of the underlying insurance described in subsections (a) and (b) above, with a combined single limit and annual aggregate limit of $20,00 0,000. The excess/umbrella liability insurance policy or policies required to be maintained by Tenant pursuant to this Section 7.0 1 (c) shall be on an occurrence or claims -made basis. .Section 7.02 Fire and Earthquake Insurance - Fixtures, Equipment, Building and ImprovMents (a) Tenant shall at all times during the term, and at Tenant's cost and expense, maintain in effect policies of insurance covering (i) all improvements, including without limitation, the Building and all portions of the electrical generating plant, providing protection against any risk included within the classification "All Risk," including but not limited to insurance against fire, earthquake, flood, windstorm, cyclone, tornado, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke damage, sprinkler leakage, vandalism and malicious mischief, such insurance to be in an amount not less than the full replacement value of such improvements, as new, including debris removal and cleanup costs, which shall be determined at the time the policy is initilally'obtained, and not less � frequently than at the end of every third (3rd) full lease year thereafter in the same manner set forth in Section 7.01(b) above, and such other insurance as may be reasonably required by any Landlord lender; provided, however, such coverage may be customarily sub -limited and/or aggregated *in reasonable amoun ' ts consistent with then existing insurance industry practices with respect to similar risks,, including but not limited to earthquake and flood, insurance; (ii) all personal property of Tenant located in or on the Premises, including but not limited to fixtures, furnishings, equipment, furniture, inventory and stock in trade, in an amount consistent with then existing insurance industry practices with respect to such assets, providing protection against any peril included within the classification "All Risk," including but not limited to insurance against fire, earthquake, flood, sprinkler leakage, vandalism and malicious mischief, (111) boiler and machinery insurance covering physical loss and/or damage during the operation of the electrical generating plant on the Land Premises and Easement Area, with a, limit based on the replacement as new value, including debris removal and cleanup costs; provided, however, such coverage may be customarily sub - limited in reasonable amounts consistent with then existing insurance industry practices with respect to similar risks;, and (iv) all plate glass on the Premises; provided, however, such coverage may be customarily sub -limited and/or aggregated in reasonable amounts consistent with then existing insurance industry practices with respect to similar risks;, together with an umbrella policy to provide any liability coverage not included under Tenant's primary liability 16 LA\ 1775778.13 policy pursuant to Section 7.01. The -insurance required by this subsection shall be the primary insurance with respect to the property c overed thereby. (b) Except for the proceeds of such insurance with respect to the Historical Premises, the proceeds of such insurance, shall be made payable to Tenant and, so long as this Lease remains in effect, shall be used to repair or replace the parts of the Premises, any improvements thereto and thereon and personal property so insured. Upon any termination of this Lease pursuant to Section 7.02(d), Tenant may keep the insurance proceeds. Any insurance proceeds with respect to the Historical Premises shall be made payable to the Landlord. (c) [Intentionally Deleted.] (d) If the Building is destroyed or damaged during the last twenty-four (24) months of the term of this Lease, and the estimated cost of repair exceeds twenty-five percent (25%) or more of its then replacement value, either party shall have the option to ten-ninate this Lease by written notice given to the other within sixty (60) days after the date of such damage or destruction. Upon any termination of this Lease pursuant to this subsection, the insurance proceeds recovered pursuant to the policies maintained by Tenant pursuant to this Section shall be allocated and paid as follows: G) Tenant shall receive those portions, if any, of the proceeds speci ically allocated by the carrier to those items which Tenant permitted pursuant to this Lease to remove at the expiration of the term of this Lease. (ii) The balance of the proceeds shall be allocated to Landlord. In the event that neither party elects to terminate� this Lease pursuant to this Section, then Tenant shall rebuild pursuant to this Lease and all insurance proceeds shall be applied in accordance with subsection (b) above. Section 7.03 Insurance Policies All insurance required to be carried by Tenant hereunder shall be with companies rated A-:X, or better, in the then most recent version of Best's Insurance Guide. Tenant shall deliver to Landlord prior to the time such insurance is first required to be carried by Tenant, and thereafter at least thirty (30) days prior to the expiration or renewal date of any policy maintained by Tenant, copies of the policies or certificates evidencing such insurance. All policies and certificates delivered pursuant to this Section shall contain liability limits not less than those set forth in Sections 7.01 and 7.02, shall list the additional insureds and shall specify all endorsements and special coverages required by such Sections 7.01 and 7.02. Each such policy shall contain a provision (by endorsement or otherwise) requiring not less than'thirty (30) days written notice to Landlord prior to any cancellation, non -renewal or material amendment thereof If, on account of the failure of Tenant to comply with any provision of this Article VII, Landlord or any additional insured is adjudged a co-insurer by its insurance carrier, then any loss or damage Landlord or such additional insured shall sustain by reason thereof shall be borne by Tenant and shall be paid by Tenant upon receipt of a bill therefor and evidence of such loss. Section 7.04 Waiver of Subrogation 17 LA\1 775778.13 Landlord and Tenant each hereby waives any and all rights of recovery against the other, and against the officers, employees, agents, representatives, customers and business visitors of such other party, for loss of or damage to such waiving party or its property or the property of.others under its control, arising from any cause *insured against under any policy of insurance required to be carried by such waiving party pursuant to the provisions of this Lease at. the time of such loss or damage. The foregoing waiver shall be effective as to Tenant only so long as Tenant shall actually obtain and maintain the insurance which Tenant is required to obtain and maintam* pursuant to this Lease. Tenant shall, upon obtaining the policies of insurance which it is required to maintain hereunder, give notice to its insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease. Section 7.05 Indemnity To the fullest extent permitted by law, Tenant shall indemnify, defend and hold Landlord harmless from and against any liability, expense, claim, demand, damage (including but not limited to attorneys' fees and costs of defense) for any damage or injury to persons or property in or about the Premises or any improvements thereon which may result from the use or occupation of the Premises or any improvements thereon or the breach of the provisions of this Lease by Tenant, its agents, employees, invitees, licensees, franchisees, concessionaires or other persons claiming under Tenant. In addition, if any person not a party to this Lease shall institute any other type of action against Tenant in which Landlord, involuntarily and without cause, shall be made a party defendant, Tenant shall indemnify, hold Landlord harmless. from and defend Landlord from all liability by reason thereof It is understood and agreed that payment shall not be a condition precedent to enforcement of the foregoing indemnification obligations. Tenant's defense obligations hereunder shall include the obligation, upon demand, to defend Landlord against any claim or action of the types herein specified by legal counsel reasonably satisfactory to Landlord. Notwithstanding any provision of this Section 7.05 to the contrary, the foregoing shall not extend to any damage or injury to the extent Tenant establishes in a court of competent jurisdiction that such damage or injury was proximately caused by the gross negligence or willful misconduct of Landlord, its agents or employees or related to a period prior to the Commencement Date. Landlord shall not settle any claim for which it is indemnified hereunder without the prior consent of Tenant, which consent shall not be unreasonably withheld, conditioned or delayed. Section 7.06 Exemption of Landlord , Landlord and its partners and their respective partners, officers, agents . and employees shall not be liable for injury or damage which may be sustained by the person, goods, wares, merchandise or property of Tenant, its employees, invitees or customers or any other person in or about the Premises caused by or resulting from any peril which may affect the Premises, including, but not limited to fire, steam, electricity, gas, water or rain, which may leak or flow from orinto any part of the Premises, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures of the same, whether such damage or injury results from conditions arising upon the Premises, or from other sources. Landlord shall not be liable for any damages arising from any act or neglect of any occupant of any property adjacent to the Premises (other than the Retained Property), or any of their officers, employees, agents, representatives, customers, business visitors or invitees. 18 LAU 775778.13 Provided, however, that the foregoing shall not apply to any damage or injury to the extent Tenant establishes in a court of competent jurisdiction that such damage or injury was proximately caused by the gross negligence or willful misconduct of Landlord, its employees or agents. Section 7.07 Subcontractors of Tenant Commencing on the Effective Date, Tenant shall at all times during the Term cause. every Subcontractor of, Tenant that is perfonning any work at the Premises and/or Easement Area to carry insurance of types and amounts necessary to cover risks inherent in the work or services being performed by such Subcontractor, including workers compensation insurance (as required by state law), employers' liability insurance, and automobile liability insurance. All such insurance will be carried in companies approved by Landlord, and each carrier or its authorized representative showing all such insurance to be in force. Tenant will use reasonable efforts to cause (a) its Subcontractors' insurance certificate or certificates to include a statement substantially in the following form "THE GENERAL LIABILITY INSURANCE CERTIFIED HEREUNDER INCLUDES CONTRACTOR'S ASSUMED LIABILITY COVERAGE FOR LIABILITY BY THE INSURED UNDER ALL WRITTEN CONTRACTS BETWEEN THE CITY OF VERNON AND THE INSURED."', and t (b) if available, its Subcontractors' insurance to be certified as providing contractual liability coverage in favor of the Landlord and Tenant as such terms are defined in this Lease. Each Subcontractor's certificate or certificates will reflect that the Subcontractor's insurance will not be canceled, materially changed, or not renewed until the expiration of at least 30 days after written notice of such cancellation, material change, or nonrenewal has been received by TenanL Each Subcontractor's insurance certificate or certificates will be furnished to Tenant before such Subcontractor commences any work at the Premises and/or Easement Area. Alternatively, Tenant may, at its own discretion, arrange any or all insurance policies on behalf of Tenant's Subcontractors. As used in this Lease, "Subcontractor" shall mean Any individual, a corporation, association, partnership, limited liability company, joint venture, organization or other business entity, or governmental or political unit or agency, or other legal entity contracting to furnish services and/or materials as a part of or related to any work at the request of or on behalf of the Tenant on the Premises and/or the Easement Area. ARTICLE VIII. ASSIGNMENT AND SUBLETTING Section 8.01 Assignment of this Lease and Subletting of the Premises by Tenant. (a) This Lease is binding upon and inures to the benefit of the successors and assigns of Tenant. However, during the term of the PPTA, Tenant shall not Assign this Lease or sublet the Premises to any person other than a permitted successor to Tenant's obligations under the PPTA concurrently with the assignment of Tenant's obligations under the PPTA to such successor in accordance with the terms and conditions of the PPTA. After the term of the PPTA shall have expired or terminated (other than a termination resulting from a default by Tenant thereunder), Tenant may Assign this Lease or sublet the Premises without the consent of Landlord. Any such Assignment is conditioned on the assignee's agreement in writing to assume the Tenant's duties and obligations under this Lease. For avoidance of doubt, nothing in this Section 8.01 shall limit 19 LA\l 775778.13 or otherwise modify the assignment provisions in any other agreements contemplated by this transaction. Any Assignment effected in accordance with this Section 8.01 shall not relieve the Tenant of its obligations and liabilities under this Lease unless Landlord shall expressly agree thereto in writing. As used in this Lease, "Assign' or "Assignmen ' shall mean any direct or indirect assignment, subcontracting or other transfer of this Lease by Tenant including any Change of Control of Tenant. As used in this Lease, "Change of Control" shall mean, with respect to any entity, the occurrence of either of the following: (1) any direct or indirect change in the ownership interest that has at least half of the ordinary voting power of such entity or (11) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of 50% or more of the assets,of such entity, or the liquidation or dissolution of such entity. (b) Notwithstanding anything to the contrary contained in this Section 8.01, Landlord's consent shall not be required in connection with an Assignment of Tenant's interest in this Lease to a wholly -owned subsidiary of Tenant. ARTICLE IX MORTGAGE OF LEASEHOLD ESTATE Section 9.01 Execution of Leasehold Mortgages. Provided that Tenant is not then in monetary or material non -monetary default under this Lease beyond applicable notice and cure periods, and subject to the subordination to any mortgage or deed of trust that may exist or hereafter be placed upon the Premises or any part thereof (other than a mortgage or deed of trust held by Landlord as mortgagee or beneficiary) and to any and all advances to be made thereunder and to the interest thereon and to all renewals, replacements and extensions thereof, Tenant shall have the right, from time to time, without obtaining Landlord's consent, to execute one or more Leasehold Mortgages encumbering Tenant's interest in this Lease and the Land Premises in order to secure any indebtedness related to the financing or refinancing of the transaction contemplated by the Purchase and Sale Agreement or, following the expiration or termination of the PPTA (other than the termination of the PPTA as a result of a default by Tenant thereunder), other bona fide obligations of Tenant. Any Leasehold Mortgage shall be subordinate to Landlord's interest in the Premises, Easement Area, and Improvements and subject to the provisions of this Lease. As used in this Lease, "Leasehold Mortgage" means a mortgage, deed of trust or other encumbrance, together with such associated financing statements, fixture filings, security agreements and related documentation as is typically utilized in California for the purpose of creating and perfecting a contractual security interest in real property, encumbering Tenant's interest in this Lease and the Land Premises, or any portion thereof. As used in this Lease, "Mortgagee" shall mean the mortgagee, beneficiary or other obligee of any indebtedness secured by a Leasehold Mortgage. Section 9.02 Covenants of Landlord. If Tenant shall execute a Leasehold Mortgage in accordance with this Article IX, Landlord agrees that so long as any Leasehold Mortgage shall remain unsatisfied of record or until written notice of satisfaction is given by the holders of any such Leaschold Mortgage to Landlord, the following provisions shall apply: (a) There shall be no cancellation (except as a result of Tenant's default, after compliance with the provisions of this Article IX), surrender or modification of this Lease by Joint action of Landlord and Tenant without the prior written consent in wnting of each Mortgagee. 20 LA\1 775778.13 (b) Landlord shall, upon serving Tenant with any notice of default, simultaneously serve a copy of the notice upon each Mortgagee who has delivered a written request for such notice to Landlord. (c) Each Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Lease, to pay all of the rent due hereunder, with all due interest and late charges, to effect any insurance, to pay any taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Tenant hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Lease. As against Landlord, any Mortgagee and its agents and contractors shall have full access to the Premises for purposes of accomplishing any of the foregoing, provided that the Mortgagee shall give Landlord not less than ten (10) days prior written notice of any work to be performed on the Premises by the Mortgagee or its. agents and contractors, to allow Landlord to post a notice of nonresponsibility or any similar notice on the Premises or the Easement Area, as applicable. Any of the foregoing done by any Mortgagee shall be as effective to prevent a termination of this Lease as the same would have been if done by Tenant. (d) Anything contained in this Lease notwithstanding, if any Event of Default shall occur which, pursuant to any provision of this Lease, purportedly entitles Landlord to terminate this Lease, Landlord shall not be entitled to terminate this Lease, and the notice shall be rendered void, if the Mortgagee shall j cure the default within (1) thirty (30) days after notice to such Mortgagee as to any failure of Tenant to perform a monetary obligation when due under this Lease (the parties agreeing, that for purposes of this Lease, a "monetary obligation" shall mean the payment of Base Rent and/or additional rent payable. under this Lease, or any other monetary obligation required of Tenant under this Lease whether payable to Landlord or to any third party), or (ii) ninety (90) days after notice to such Mortgagee as to any failure of Tenant to perform a non -monetary obligation when due under this Lease (except that if such non -monetary obligation is not reasonably susceptible of performance within ninety (90) days, then such longer time foll ' owing receipt of notice as is reasonably necessary to perform such non -monetary obligation, including, without limitation, the time required for the Mortgagee to perfect its right to cure any non -monetary default by obtaining possession of the Premises (including possession by a receiver) or by instituting Foreclosure proceedings, so long as the cure is promptly commenced and the Mortgagee acts with reasonable and continuous diligence through to completion of such cure). The foregoing cure periods shall run from the giving of notice of Tenant's failure by Landlord to the Mortgagee and may run concurrently (either in whole or in part) with the time provided for Tenant's cure of such failure. Except as provided 'in Section 9.02(o below, the foregoing cure periods shall -not be extended by the pendency of any bankruptcy or insolvency proceeding involving Tenant which precludes Landlord from terminating the Lease as against Tenant. As used in this Lease, "Foreclosure" shall mean j . udicial foreclosure of a Leasehold Mortgage, sale under a power of sale given in a Leasehold Mortgage, and all other remedies provided by law or equity or specified in the Leasehold Mortgage and enforceable in California at the time of the foreclosure for divesting the obligor of title in the event of the obligor's default under the Leasehold Mortgage or the obligation it secures. 21 LAU 775778.13 (e) All rights of Landlord to terminate this Lease as the result of the occurrence of any event of default under this Lease, shall be subject to, and con4itioned upon, Landlord having first given to each Mortgagee written notice of the event of default as required under Section 9.02(b), and such Mortgagees having failed to remedy such event of default or acquire Tenant's leasehold estate hereunder or commence foreclosure or other appropriate proceedings in the nature thereof as set forth in Section 9.02(d). (0 If any Mortgagee is prohibited from commencing or prosecuting Foreclosure or other appropriate proceedings in the nature thereof byany process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant, the times specified in Section 9.02(d) for commencing or prosecuting Foreclosure or other proceedings shall be extended for the period of the prohibition, provided that the Mortgagee shall have fully cured any Event of Default in the payment of any monetary obligations of Tenant under this Lease and shall continue to pay 'currently those monetary obligations as and when the same fall due. (g) Landlord agrees that the names of each Mortgagee may be added by Tenant to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant under this Lease on condition that the insurance proceeds are to be applied in the manner specified in the applicable Leasehold Mortgage. Section 9.03 New Lease. Landlord agrees that in the event of termination of this Lease by reason of the rejection hereof by Tenant or a trustee for Tenant in a voluntary or an involuntary case under the federal bankruptcy laws, or in the event of a Foreclosure by a Mortgagee, Landlord will enter into a new lease, of the Premises and Easement Area with the most senior Mortgagee requesting a new lease for the remainder of the Lease Tenn, effective as of the date of such termination, at the rent, and upon the terms, provisions, covenants and agreements as herein contained provided: (a)The senior Mortgagee shall make written request upon Landlord for the new lease within sixty (60) days after the date of termination, and the senior Mortgagee and Landlord will execute such new lease within sixty (60) days thereafter; (b) The senior Mortgagee shall pay to Landlord at the time of the execution and delivery of the new lease any and all sums which would, at the time of the execution and delivery thereof, be due and unpaid pursuant to this Lease but for its termination, and in addition thereto any reasonable expenses, including, without limitation, reasonable attorneys' fees, to which Landlord shall have been subjected by reason of the event of default; (c) The senior Mortgagee shall perform, and observe all covenants herein contained on Tenant's part to be performed, and shall further remedy any other conditions which Tenant under the terminated Lease was obligated to performinider its terrns, to the extent the same are curable or may be perfornied by the senior Mortgagee; (d) The tenant under the new lease shall have the same right, title and interest in and to all Improvements and Tenant's improvements located on the Premises as Tenant had under the terminated Lease immediately prior to its termination; 22 LA\1 775778.13 (e) Any new lease made pursuant to this Section shall provide appropriate documentation that the Landlord's fee interest in the Premises is prior to any Leasehold Mortgage or other lien, charge or encumbrance on the Premises. The rights granted any Mortgagee to a new lease pursuant to this Section shall survive any termination of this Lease by reason of the rejection hereof,by Tenant or a trustee for Tenant in a voluntary or an involuntary case under the federal bankruptcy laws; (f) Notwithstanding anything to the contrary contained in this Lease, a new lease executed pursuant to this Section in no event shall operate to subordinate the interest of Landlord in the Premises, Easement Area or this Lease to the interest of the Mortgagee; (g) As a condition precedent to Landlord's obligation to execute any new lease pursuant to this Section, the Mortgagee shall reimburse to Landlord all out-of-pocket costs actually and reasonably incurred by Landlord in, connection with the preparation, review and/or execution of any such new lease, including, without limitation, reasonable. attorneys' fees and expenses; and (h) Nothing herein contained shall require any Mortgagee to enter into, a new lease pursuant to this Section, or to cure any default of Tenant referred to above. Section 9.04 New Power Purchase Tolling Agreement. Landlord agrees that in the event of termination of the PPTA during the term thereof by reason of the rejection or termination thereof by Tenant or a trustee for Tenant in a voluntary or an involuntary case under the federal bankruptcy laws, or in the event of a Foreclosure by a Mortgagee, any party stepping into the shoes of the Tenant hereunder (the "New Tenant") will enter into a new power purchase tolling agreement (the "New PPTA") for the remaining balance of the term thereof with the Landlord upon terms, provisions, covenants and agreements the same as those of the original PPTA, provided: (a) The Landlord shall make Written request upon the New Tenant for the New PPTA within sixty (60) days after the date of termination, and the New Tenant and Landlord will execute such new PPTA within sixty (60) days thereafter; (b) The New Tenant shall pay to Landlord at the time of the execution and delivery of the New PPTA any and all sums which would, at the time of the execution and delivery thereof, be due and unpaid pursuant to the PPTA but for its termination, and in addition thereto any expenses, including, without limitation, reasonable attorneys' fees, to which Landlord shall have been subjected by reason of the event of default; (c) The New Tenant shall perform and observe all covenants therein contained on Tenant's part to be performed, and shall further remedy any other conditions which Tenant under the PPTA was obligated to perform under its terms, to the extent the same are curable or may be performed by the New Tenant; and (d) The New Tenant's obligations under the New PPTA shall be secured by a subordinated deed of trust, fixture filing and security interest against all of New Tenant's night, title and interest in and to all Improvements and Tenant's improvements located on the Premises as provided for in the New PPTA. 23 LA\1 775778.13 Section 9.05 Foreclosure Not a Default. Foreclosure of any Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of the leasehold estate hereunder from Tenant to any Mortgagee or its designee through, or 'in lieu of, Foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach of any prov I ision of or a default under this Lease, and upon such Foreclosure, sale or conveyance Landlord shall recognize the purchaser or other transferee in connection therewith as the Tenant hereunder. Section 9.06 Personal Liability. In the event any Mortgagee or its designee becomes the Tenant under this Lease or under any new lease obtained pursuant to Section 9.03, the Mortgagee or its designee shall be personally liable for the obligations of Tenant under this Lease or a new lease only for the period of time that the Mortgagee or its designee remains the actual beneficial holder of the leasehold estate hereunder, and only to the extent provided in this Lease or such new lease. Section 9.07 Condemnation Proceeds. The senior Mortgagee may reserve the right to apply to its Leasehold Mortgage debt all, or any part, of Tenant's share of the proceeds from any insurance policies arising from a conderrination pursuant to.the debts secured by such Leasehold Mortgage. Section 9.08 Notice of Proceedings. The parties hereto shall give all Mortgagees notice ofany arbitration, litigation, or condemnation proceedings, or of any pending adjustment of insurance claims as each may relate to the Premises and/or Easement Area, and any Mortgagee shall have the right to intervene therein and to be made a party to such proceedings. The parties hereto do hereby consent to such intervention. In the event that any such Mortgagee shall not elect to intervene or become a party to the proceedings, such Mortgagee shall receive notice and a copy of any award or decision made in connection therewith, but any such intervention shall not diminish Landlord's rights under this Lease. Section 9.09 Consent Agreement. If requested by Mortgagee, Landlord shall execute a written agreement ("Consent Agreement") between Landlord, Tenant and Mortgagee in a form attached to the Purchase and Sale Agreement as Exhibit F. ARTICLE X. TRANSFERS BY LANDLORD Section 10.01 Transfer of Landlord's Interest. Subject to this Lease, Landlord may sell or devise its fee interest in the Premises at any time; provided, that, the purchaser at such sale or any subsequent sale of the Premises, covenants in writing to carry out any and all of the covenants and obligations of the Landlord under this Lease. In the event of any sale of the Premises by Landlord, Landlord shall not be relieved of its liability under any of its covenants and unaccrued obligations contained in or derived from this Lease. ARTICLE XI. DAMAGE AND CONDEMNATION Section 11.0 1 Damage or Destruction. 24 LAU 775778.13 (a) Subject to the provisions of Section 7.02(d), in the event the Land Premises or improvements thereon shall, during the term, be damaged or destroyed in whole or in part by any cause whatsoever, and whether or not such cause shall be covered by any insurance maintained by Tenant, Tenant shall give Landlord prompt written notice thereof, and Tenant, without cost to Landlord, shall repair, replace and rebuild the same, at least to the extent sufficient, as reasonably determined by Landlord and Tenant, for Tenant to fulfill its obligations under the PPTA. At least thirty (30) days before the cmimencement of such repairs or rebuilding, Tenant shall notify Landlord in writing of Tenant's intention to commence the same, and Landlord shall have such rights with respect to such repair, replacement or rebuilding As are granted Landlord by Article VI with respect to construction, changes, alterations, and additions, including, without limitation, the right to approve (such approval not to be unreasonably withheld, delayed or conditioned) alterations, improvements, remodeling or additions (including applicable demolition or removal work). Landlord shall have no obligation to repair and/or reconstruct the Historical Building in the event of damage to and/or destruction of the Historical Building. (b) Such repair, replacement or rebuilding shall be commenced within a reasonable time after the occurrence of the event causing such damage or destruction and the adjustment of insurance claims, if applicable, but in no event later than one hundred twenty (120) days after such occurrence, even though insurance claims may not have then been settled, and shall thereafter be diligently prosecuted to completion. (c) All insurance monies recovered on account of damage or destruction, less the cost, if any, of such recovery, shall be paid to Landlord pursuant to Section 7.02(b) and shall be applied to the payment of the cost of repairing, replacing and rebuilding, and shall be paid out from time to time to Tenant as such work progresses upon the written request of Tenant supported by (i) the certificate of the architect or engineer in charge of such work, stating that the sums requested are justly due to those persons rendering services or furnishing materials in connection with such work or are justly required to reimburse Tenant for expenditures made by Tenant in connection with such work and (ii) lien releases from those persons rendering such services or furnishing such materials. If the insurance monies shall be insufficient to pay the entire cost of such work, Tenant shall pay the deficiency. Upon the completion of the work and payment in full therefor by Tenant, any insurance monies then remaining shall be turned over to and shall be the property of Tenant. (d) Notwithstanding anything in the foregoing subsections of this Section 11.0 1 to the contrary, in the event that the MGS or the MGS Improvements shall, after the expiration of the term of the PPTA, be damaged or destroyed in whole or in part by any cause whatsoever, Tenant shall have the option, in its sole discretion to use insurance proceeds, if any, (i) to repair, replace and rebuild the same or any portion of the same, or build or install any other improvements on the Land Premises in conformance with Sections 5.01 and 6.03 above; or (11) remove and/or raze such damaged or destroyed improvements in conformance with the terms of this Lease and maintain the Land Premises and every part thereof in a reasonably neat and attractive condition and free of debris for the remainder of the Term. Upon the completion of such work and payment in full therefor by Tenant, any insurance monies then remaining with respect to such damage or destruction shall be the property of Tenant. 25 LA\1775778.13 - (e) Except as otherwise expressly provided herein, this Lease shall not terminate or be affected in any way, and Tenant shall not be released from any of its liabilities or obligations hereunder by reason of damage to or destruction of the Premises or any improvements thereon. Except to such extent as may be expressly provided in this Lease, Tenant shall have no claim against Landlord for any damage suffered by Tenant by reason of any such damage, destruction, repair or restoration. Tenant hereby waives the provisions of California Civil Code Sections 1932(2) and 1933(4) and of any other statute, law or judicial decision now or hereafter in effect contrary to the obligations of Tenant under this Article XI or which relieve Tenant therefrom. Section 11.02 Condemnation. (a) Definition of Terms. (i) . The tenn "total taking" as used in this Section means the taking of the entire Premises under the power of eminent domain or the taking of so much thereof as will in Tenant's reasonable business judgment prevent or substantially impair the use of the Premises for the uses and purposes then being made or proposed to be made by Tenant, of the Premises. (ii) The term "partial taking" means the taking of a portion only of the Premises which does not constitute a total taking as defined in clause (i) above. (iii) The term "taking" shall include a voluntary conveyance by Landlord to an agency,, authority or public utility. under threat of a taking under the power of eminent domain in lieu of formal proceedings. (iv) The term "date of taking" shall be the date upon which title to the property or portion thereof passes and vests in the condemnor or the date of entry of an order for immediate, possession by a court of competent jurisdiction in connection with -any judicial proceedings in eminent domain or the date physical poss ession of the property is taken or interfered with, whichever first occurs. (v) The term "leased land" means the teal property belonging to Landlord and demised hereby, but exclusive of any and all improvements situated upon the Land Premises at the commencement of the Tenn of this Lease and also exclusive of all improvements constructed or placed thereon by or under Tenant and exclusive of any grading and other site work performed by or under Tenant. (b) Effect of Taking. If during the Term of this Lease there shall be a total or partial taking under the power of eminent domain, then the leasehold estate of Tenant in and to the Premises, in the event of a total taking, or the portion thereof taken, in the event of a partial taking, shall cease and terminate, as of the date of taking thereof. If this Leasd is so terminated in whole or in part, all rentals and other charges payable by Tenant to Landlord hereunder and attributable to the Premises, or portion thereof taken, shall be paid by Tenant up to and prorated through the date of taking by the condemnor, and the parties shall thereupon be released from all ftirther liability in relation thereto. (c) Allocation of Award. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such 26 LA\1 775778.13 power shall (x) first be applied to the payment of any Leasehold Mortgage and (y) thereafter be reasonably allocated between Landlord and Tenant in proportion to their respective interest in the Premises and its improvements. (d) Reduction of Rent on Partial Taking. In the event of a partial taking, the Base Rent payable by Tenant pursuant to this Lease shall be adjusted from the date of taking to the date of expiration of the Tenn of this Lease in a man-ner which prorates the amount of the Base Rent by the ratio of the manufacturer's plate rated capacity of the power plant on the Premises immediately prior to such taking and the manufacturer's plate rated capacity of power plant following such taking. (c) Rights of Mortgagees. In the event at the time of the taking the lea.schola estate of Tenant is mortgaged as security to any mortgagee, any award or portion thereof to which Tenant is entitled shall be subject to the prior claim of such mortgagee. ARTICLE XII. DEFAULTS AND REMEDIES Section 12.01 Defaults by Tenant. The following shall be "Events of Default" by Tenant: (a) Payment Default. If Tenant shall be in default with respect to any payment of money, and if such default is not cured by Tenant within thirty (30) days after Landlord has specifically notified (any such notice shall be in lieu of and not in addition to any notice required under California Code of Civil Procedure Sec. 1161, et seg., as amended) Tenant in writing of such default, Landlord may (exclusive of any rights of forfeiture) exercise any right or remedy provided by law or this Lease, including, without limitation, the remedy set forth in Section 1951.2 of the California Civil Code. (b) Performance Default. If Tenant shall be in default with respect to any of the express and/or implied obligations, covenants or agreements to be performed by Tenant as set forth herein other than those involving the payme I nt of money, and if such. default is not cured by Tenant within (i) sixty (60) days after Landlord has specifically notified (any such notice shall be in lieu of and not in addition to any notice required under California Code of Civil Procedure See. 1161, et seg., as amended) Tenant in writing of such default (excepting therefrom the event when Tenant may be in default but has undertaken to cure the default within such sixty (60) day period and thereafter dil ' igently pursues the cure to completion) and (ii) the applicable period after which such failure would also constitute an event of default under any Leasehold Mortgage, whichever is shorter, Landlord may (exclusive of any r ' ights of forfeiture) exercise any right or remedy provided by law or this Lease, including, without limitation, the remedy set forth in Section 1951.2 of the California Civil Code and the remedy of specific performance. Notwithstanding the foregoing, if any covenant or other provision of this Lease which is violated by Tenant cannot thereafter be perfon-ned (such as obtaining Landlord's prior written consent to an assignment of Tenant's interest in this Lease, a subletting of the Premises, a change in use or a physical alteration to the Premises, or a release of hazardous materials) by Tenant, then Landlord need not give the foregoing notice demanding performance to Tenant (or to any subtenant or assignee) for such violation to constitute a default under this Lease entitling Landlord to exercise its remedies upon a default by Tenant, including those set forth in this Article XII. 27 LA\J 775778.13 (c) Either Tenant shall have made a general assignment for the benefit of creditors, or shall have admitted in writing its inability to pay its debts as they become due or shall have filed a petition in bankruptcy, or shall have been adjudicated bankrupt or insolvent, or shall have filed a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, or shall have filed an answer admitting, or shall have failed reasonably to contest, the material allegations of a petition filed against it in any such proceeding or shall have sought or consented to or acquiesced in the appointment of any trustee, receiver or liquidator of such 'tenant or any material part of its properties; or (d) Either (1) within one hundred twenty (120) days after the commencement of any proceeding against Tenant seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any pr esent or future statute, law or regulation, such proceeding shall not have been dismissed, or (ii) if, within ninety (90) days after the appointment without the consent or acquiescence of Tenant of any trustee, receiver or liquidator of such Tenant or of any material part of its properties, such appointment shall not have been vacated. Section 12.02 Remedies (a) In the event of any Event of Default by Tenant as defined in Section 12.01 or elsewhere in this Lease, Landlord may exercise the following remedies: (i) Terminate Tenant's right to possession of the Premises by any lawfiil means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all amounts which Landlord is entitled to recover pursuant to Section 1951.2 of the California Civil Code (or any successor thereto), including, but not limited to: (A) The worth at the time o , f award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of such loss that Tenant proves could be reasonably avoided; and (B) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including brokerage commissions and any necessary repair, renovation and alteration of the Premises, reasonable attorneys' fees, and any other reasonable costs. The "worth at the time of award" of all rent other than that referred to in clause (A) above shall be computed by allowing interest at the rate per annum determined pursuant to Section 3.04 from the date such amounts accrue to Landlord. The worth at the time of award of the amount referred to in clause (A) above shall be computed by discounting such amount at one (1) percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. 28 LA\1 775778-13 (ii) , In the event of the abandonment of the Premises by Tenant, and without terminating or effecting a forfeiture of this Lease or otherwise relieving Tenant of any obligation hereunder in the absence of express written notice of Landlord's election to do so, Landlord may, but need not, relet the Premises or any portion thereof at any time or from time to time and for such terms and upon such conditions and rental as Landlord in its discretion may deem proper, with the right to make alterations or repairs to the Premises. If Landlord relets the Premises or any portion thereof, then rent received by Landlord from such reletting shall be applied: first, to the payment of any indebtedness other than rent hereunder from Tenant to Landlord; second, to the payment of any cost of reletting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future amounts as the same may become due and payable hereunder. Should the rent for such reletting' during any month for which the payment of rent is required hereunder, be less than the rent payable during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rentals received from such Teletting. Landlord may execute any lease made pursuant hereto in its own name, and the lessee thereunder shall be under no obligation to see to the application by Landlord of any proceeds to Landlord, nor shall Tenant have any right to collect any such proceeds. Landlord shall not by any re-entry or other act, be deemed to have accepted any surrender by Tenant of the Premises or Tenant's interest therein, or be deemed to have terminated this Lease, or to have relieved Tenant of any obligations hereunder, unless Landlord shall have given Tenant express written notice of Landlord's election to do so as set forth herein. Election by Landlord to proceed pursuant to this paragraph shall be made upon written notice to Tenant and shall be deemed an election of the remedy described in Calif6mia Civil Code Section 1951.4 (lessor may continue a lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). If Landlord elects to pursue such remedy, unless Landlord relets the Premises, Tenant shall have the right to sublet the Premises and to assign its interest in this Lease, subject to all of the standards and conditions set forth in Article VIII. Landlord may elect to terminate the prosecution of such remedy at any time by written notice to Tenant, and the right of Tenant to assign shall terminate upon receipt by Tenant of such notice, and Landlord's remedies thereafter shall be governed by Section 12.02(a)(111) below. (111) Landlord may terminate this Lease by express written notice to Tenant of its election to do so. Such termination shall not relieve Tenant of any obligation hereunder which has accrued prior to the date of such termination. In the event of r such termination, Landlord shall be entitled to recover from Tenant the amounts determined pursuant to clause (i) above. (b) Landlord shall be under no obligation to observe or perform any covenant of this Lease on its part to be observed or performed during the continuance of any Event of Default by Tenant hereunder. (c) In any action for unlawful detainer commenced by Landlord against Tenant by reason of any Event of Default hereunder, the reasonable rental value of the Premises for the period of 29 LA\1 775778.13 the unlawful detainer shall be deemed to be the amount of rent and additional rent reserved in this Lease for such period, unless Landlord shall prove to the contrary by competent evidence. (d) The rights and remedies reserved to Landlord herein, including those not specifically described, shall be cumulative, and except as provided by California statutory law in effect at the time, Landlord may pursue any or all of such rights and remedies, at the same time or otherwise. (e) No delay or omission of Landlord to I exercise any right or remedy shall be construed as a waiver of any such right or remedy or of any Event of Default by Tenant hereunder.. The acceptance by Landlord of any renthereunder shall not be a waiver of any preceding breach or default by Tenant of any- provision hereof, other than the failure of Tenant to pay the particular rent accepted, regardless of Landlord's knowledge of such preceding breach or default at the time of acceptance of such rent, or a waiver of Landlord's right to exercise . any remedy available to Landlord by virtue of such breach or default. The acceptance of any payment from a debtor in possession, a trustee, a receiver or. any other person acting on behalf of Tenant or Tenant's estate shall not waive or cure an Event of Default under Section 12.0 1. (f) Tenant hereby waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, and under any present or future statutes or case decisions to the same effect, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of any default by Tenant hereunder. Section 12.03 Default by Landlord. Should the Landlord default in the payment of any obligation under any mortgage, trust deed, judgment, assessment, tax or other encumbrance affecting the Premises, or fail to perform any obligation specified under this Lease, Tenant shall have the right, but shall not be obligated, to pay or discharge any such obligation. Should Tenant elect to pay or discharge any such obligation, Landlord shall reimburse Tenant in the full amount thereof together with Tenant's. expenses incurred in connection therewith, including but not limited to, reasonable attorneys' fees. Section 12.04 Nonrecourse to Landlord. Notwithstanding anything to the contrary in this Lease, any liability under this Lease of Landlord (including its successors or assigns), for damages or otherwise, shall be enforceable against, and shall not extend beyond its interest in the Premises. No property or assets whatsoever, other than Landlord's interest in the Premises, shall be subject to levy, execution or any other enforcement procedure for the satisfaction of any remedies (monetary or otherwise) of Tenant arising under or in connection with this Lease. The limitation of liability and limitation of remedy provided for in t , his Section shall not apply in any way to, and shall not be construed to limit or preclude, personal liability (if any) arising under any supplementary agreement. No shareholder, partner, member, officer, director, agent or employee of Landlord shall have any liability under this Lease. Section 12.05 Expense of Litigation. If either party incurs any expense, including reasonable attorneys' fees, in connection with any action or proceeding instituted by either party by reason of any default or alleged default of the other party hereunder, the party prevailing in such action or proceeding shall be entitled to recover its said reasonable expenses from the other party. For purposes of this provision, in any unlawful detainer or other action or proceeding instituted by 30 LA\1 775778.13 Landlord based upon any default or alleged default by Tenant hereunder, Landlord shall be deemed the prevailing party on ly if judgment is entered in favor of Landlord. Section 12.06 Dispute Resolution (a) Dispute. Any and all disputes, claims or controversies arising out of, relating to, concerning or pertaining to the terms of this Lease, or to either Party's performance or failure of nance under this Lease ("Dispute'), which Dispute the Parties have been unable to resolve perfon by informal methods after undertaking a good faith effort to do so, shall first be submitted to an informal dispute resolution under the procedure described in Section 12.06(b) below; if the matter is not resolved through such procedures, it shall be referred for final and binding arbitration under the procedures described in Section 12.06(c). (b) Informal Resolution. Any unresolved Disputes shall initially be referred to Landlord's City Administrator, or designee, and an officer of Tenant for resolution. Such executives or their respective designees shall meet at least � once, and shall negotiate in a commercially reasonable manner for a period of fifteen (15) business days in an effort to resolve the Dispute. Neither Party shall seek to commence any litigation or arbitration proceeding without first satisfying this Section 12.06(b), and any failure of a Party to do so shall constitute a sufficient basis for termination of such proceeding without prejudice to any proceeding so attempted. (c) Arbitration. Either Party may initiate binding arbitration with respect to the Dispute by making a written demand for binding arbitration before a single, neutral arbitrator that is a former judge or attorney with experience resolving major commercial disputes within.the electric industry with JAMS, its successor, or any other mutually agreeable arbitrator (the "Arbitrator") at any time following the unsuccessful conclusion of the informal resolution provided for in Section 12.06(b). The Parties will cooperate with one another in promptly selecting the Arbitrator and in scheduling the arbitration to commence no later than 180 calendar days from the date of the initial written demand for binding arbitration. If, notwithstanding their good faith efforts, the Parties are unable to agree upon a mutually acceptable Arbitrator, the Arbitrator shall be appointed as provided for in California Code of Civil Procedure Section 1281.6. Upon a Party's written demand for binding arbitration, such Dispute, including the determination of1the scope or applicability of this agreement to arbitrate, shall be determined by binding arbitration before the Arbitrator, in accordance with the laws of the State of California, without regards to principles of conflicts of laws. Except as provided for herein, the arbitration shall be conducted by the Arbitrator in accordance with the rules and procedures for arbitration of complex business disputes for the organization with which the Arbitrator is associated; absent the existence of such rules and procedures, the arbitration shall be conducted in accordance with the California Arbitration Act, California Code of Civil Procedure Section 1280 et seq. However, notwithstanding the rules and procedures that would otherwise apply to the arbitration, and unless the Parties agree to a different arrangement, the place of the arbitration shall be in Los Angeles County, Calif6mia, each side in the arbitration shall be entitled to take up to three depositions, and all direct testimony in the arbitration shall be submitted in the form of affidavits or declarations under penalty of perjury. Each Party shall cooperate in making ava ilable for cross-examination at the arbitration hearing its witnesses whose direct testimony has been so submitted. Judgment on the award may be entered in any court having jurisdiction. The 31 LA\1775778-13 Arbitrator, shall, in any award, allocate all of the costs of the binding arbitration (other than each Party's individual attorneys' fees and costs related to the Party's participation in the arbitration, which fees and costs shall be bome by such Party), including the fees of the Arbitrator, against the Party who did not prevail. Until such award is made, however the Parties shall share equally in paying the costs of the arbitration. (d) Waiver of Ju!y Trial. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING UNDER THIS AGREEMENT. ARTICLE XIII. HOLDING OVER Section 13.01 Holding Over. If Tenant or anyone claiming under Tenant shall remain in possession of the Premises or any part thereof after expiration of the Term of this Lease or any earlier termination of this Lease without an agreement in writing between Landlord and Tenant with respect thereto, Tenant shall occupy upon all of the terms and conditions of this Lease except that the monthly Base Rent due from Tenant shall be equal to one hundred fifty percent (150%) of the monthly Base Rent in effect at the end of the Term of this Lease. Landlord's acceptance of rent shall create only a month -to -month tenancy, in either case upon the terms set forth in this,Section. Any such month -to -month tenancy shall be terminable at the end of any calendar month by either party by written noticeto the other party given not less than thirty (30) days prior to the end of such month. Nothing contained in this Section shall be deemed or construed to waive Landlord's right of re-entry or any other right of Landlord hereunder or at law. ARTICLE XIV. RECORDING, LIENS AND SUBORDINATIONS Section 14.01 Recording. Concurrently with their execution of this Lease, Landlord and Tenant shall execute land acknowledge a short form memorandum of lease in the form attached hereto as Exhibit "17". The parties shall, concurrently with the Commencement Date of this Lease, fill in the Commencement Date and record against the Land Premises the short form memorandum as part of the overall closing of the Purchase and Sale Agreement, and, upon recordation, Tenant shall furnish to Landlord a copy thereof bearing the stamp of the Los Angeles County Recorder. .Section 14.0 2 Liens. (a) Tenant will not,directly or indirectly create any mortgage, lien, security interest, encumbrance or charge on, pledge of or conditional sale or other title retention agreement with respect to the Premises and/or Easement Area, or any part thereof, other than (a) this Lease and ancillary rights in favor of third parties as permitted herein; (b) a Leasehold Mortgage which is permitted under the terms of Article IX of this Lease; (c) liens for Impositions not yet payable, or payable without the addition of any fine, penalty, interest or cost for nonpayment; and (d) liens of mechanics, matenialmen, suppliers or vendors, or rights thereto, incurred in the ordinary course of business for sums which under the terms of the related contracts are not at the time due if adequate provision for the payment thereof shall have been made by Tenant. Tenant will promptly remove and discharge any mortgage, lien, security interest, encumbrance or charge 32 LA\1 775778.13 created by Tenant (or by any third party as a result of Tenant's conduct) in violation of.the preceding sentence. In the event that Tenant's leasehold interest under this Lease, is encumbered ,by a Leasehold Mortgage pursuant to the provisions of Article IX hereof, Tenant shall pay promptly when due all principal and intereston the indebtedness secured thereby and strictly comply with all of the terms, covenants and conditions contained in the Leasehold Mortgage or in any other instrument evidencing or securing the indebtedness secured thereby. Notwithstanding anything to the contrary contained in this Article XIV, Tenant may enter into fixture financing arrangements for fixtures and equipment located on the Premises, and Landlord agrees that Landlord's claims to such fixtures and equipment, if any, shall be subordinate to any such fixture financing arrangements. (b) Tenant hereby indemnifies and holds harmless Landlord and the Premises against any loss or damage due to any lien filed against the Premises, if any, as the case may be, on account of non-payment or dispute with respect to labor or materials furnished in connection with Tenant's work on or about the Premises or any adjacent property and Tenant shall cause no judgment to lie against the Premises or any such adjacent property. Tenant shall notify Landlord within fifteen (15) days of Tenant's receipt of notice of filing and said lien shall be removed within twenty (20) days thereafter or protected by bond or surety should such party so affected desire to contest such lien. Tenant shall notify Landlord prior to any material work taking place Qn the Premises, so that Landlord may post and record a so-called notice of nonresponsibility. 33 LA\1 775778.13 .Section 14.03 Subordination. This Lease shall, at Landlord's option, be subordinate to any mortgage or deed of trust that may exist or hereafter be placed upon the Premises or any part thereof and to any and all advances to be made thereunder and to the interest thereon and to all renewals, replacements and extensions thereof. If, however, Landlord requires that this Lease be subordinated to any such encumbrance, this Lease shall be subordinate to such encumbrance only if Landlord first obtains from such prospective tender a written agreement that is commercially reasonable -in form and substance and provides substantially the following non - disturbance provision: "So long As Tenant is not in monetary or material non -monetary default of its obligation under this Lease (beyond applicable notice and cure periods), no foreclosure of, deed in lieu of foreclosure of, or sale under this encumbrance, and no steps or procedures taken under this encumbrance, shall affect Tenant's rights under this Lease." Tenant shall upon written demand by Landlord (a) execute such instruments as may be required at any time and from time to time to subordinate the rights and interest of Tenant. under this Lease to the lien of any such mortgage or deed of trust, or if requested by Landlord, to subordinate any such mortgage of deed of trust to this Lease, provided that in either such case, the instruments shall be commercially reasonable in form and substance, and (b) supply such financial information concerning Tenant as may be requested by any lessor or tender. Provided, however, that Tenant shall, in the event any proceedings are brought for the foreclosure of any such mortgage or deed of trust, attorn.to the purchaser upon foreclosure sale or sale under power of sale, and shall recognize said purchaser as landlord under this Lease, and, so long as, Tenant is not in default hereunder (beyond applicable notice and cure periods), such foreclosure shall not terminate this Lease or otherwise affect Tenant's rights hereunder. ARTICLE XV. MISCELLANEOUS Section 15.01 Landlord's Right of Access. Landlord and its agents shall have the right to enter the Premises upon reasonable notice to Tenant during regular business hours, and in accordance with Tenant's reasonable instructions, solely to (a) ascertain whether Tenant is complying with this Lease; (b) cure Tenant's defaults of which Landlord shall have given Tenant prior notice and opportunity to cure pursuant to Section 12.01 above; or (c) exhibit the Premises in contemplation of a transfer in compliance with this Lease. In entering the Premises pursuant to this Article, Landlord and its agents shall not unreasonably interfere with the conduct of the operations on the Premises and shall comply with Tenant's reasonable instructions. Landlord shall indemnify, defend and hold harmless Tenant against any claims arising from Landlord's entry upon the Premises pursuant to this Section or any other provision of this Lease permitting Landlord to enter the Premises (except upon termination of this Lease). Section 15.02 Severability. Any provision of this Lease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provision hereof, and such remaining provisions shall remain in full force and effect. Section 15.03 Headings. The Article and Section captions contained in this Lease are for convenience only and shall not be considered in the construction and interpretation of any provision hereof. 34 LA\1 775778.13 Section 15.04 Incorporation of Prior Agreements; Amendments. This Lease and the exhibits hereto contain all of the agreements of the parties hereto with respect, to any matter covered or mentioned in this Lease, and all preliminary negotiations, agreements or understandings pertaining to any such matter, except those contained herein, shall not be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. Section 15.05 Notices. Any notice, consent or approval (collectively, "notice") pursuant to this Agreement shall be given in writing by (a) personal delivery, (b) reputable overnight delivery service with proof of delivery, (c) United States Mail, postage prepaid, registered or certified mail, return receipt requested, or (d) legible facsimile transmission, sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith. Any notice so given shall be deemed to have been given upon receipt or refusal to accept delivery, or, in the case of facsimile transmission, as of the date of the facsimile transmission provided that an original of such facsimile is also sent on the same day to the intended addressee by means described in clauses (a), (b) or (c) above. Unless changed in accordance with the preceding sentence,- the addresses for notices given pursuant to this Agreement shall be as follows:: To Landlord: City of Vernon 4305 Santa Fe Avenue With a copy to: To Tenant: With a copy to: LA\1 775779.13 Vernon, CA 90058 Attn: City Attorney Fax No: (323) 826-1438 Latham & Watkins LLP 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071-2007 Attn: David B. Rogers, Esq. Fax No: (213) 891-8763 Bicent (California) Malburg LLC c/o Bicent (California) Power LLC All NY XIr L., I as ngLOn OffeeL Easton, MD 21601 Attn: Douglas Halliday Fax No: (410) 770-9705 Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 100 19 Attn: Carl Reisner Fax No: (212) 492-0017 35 .Section 15.06 Waivers. No waiver of any provision hereof shall be deemed a waiver of any other provision hereof Consent to or approval of any act by one of the parties hereto shall not be deemed to render unnecessary the obtaining of such party's consent to or approval of any subsequent act. Sectionl5.07 Force Maieure. In the event that either Landlord or Tenant is delayed in performing any non -monetary obligation of Landlord or Tenant pursuant to this Lease by any cause beyond the reasonable control of the party required to perform such obligation, the time period for performing such obligation shall be extended by a period of time equal to the period of the delay. For the purpose of this Section, a cause shall be beyond the reasonable control of a party to this Lease when such cause would affecuany person similarly situated (such as a power outage, labor strike or truckers' strike) but shall not be beyond the reasonable control of such party when peculiar to such party (such as financial inability). Section 15.08 Quitclaim. At the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within fifteen (15) days after written demand from Landlord to Tenant, any quitclaim deed or other document, which may be reasonably requested by any reputable title company to remove this Lease as a matter affecting title to the Premises. Section 15.09 Authorijy. Each individual executing this Lease on behalf of Landlord and Tenant represents and warrants that the execution and delivery, of this Lease on behalf of the party for whom such person is executing is duly authorized and that this Lease is binding upon such party in accordance with its terms. Section 15. 10 No Joint Venture. It is the intention of Landlord and Tenant to create hereby the relationship of landlord and tenant. Nothing in this Lease shall be construed to make Landlord and Tenant partners or Joint venturers or to render either Landlord or Tenant liable for any obligation of the other. Section 15. 11 Safety and Health. Tenant covenants at all times during the term of this Lease to comply with the requirements of the Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq. and any analogous legislation in California (collectively, the "Act"), to the extent that the Act applies to the Premises and any activities thereon. Without limiting the generality of the foregoing, Tenant covenants to maintain all working areas, all machinery, structures, electrical facilities and the like upon the Premises in a condition that fully complies with the requirements of the Act, including such requirements as would be applicable with respect to agents, employees or contractors of Landlord who may from time to time be present upon the Premises, and Tenant agrees to indemnify and hold harmless Landlord from any liabilities, claims or damages anising as a result of a breach of the foregoing covenant and from all costs, expenses and charges anising therefrom including, without limitation, attorneys' fees and court costs incurred by Landlord in connection therewith. Section 15.12 Tenant Estoppel C.ertificates. (a) Tenant agrees at any time and from time to time upon not less than twenty (20) days' prior notice by Landlord to execute, acknowledge and deliver to Landlord a statement in writing 36 LA\1 775778.13 certifying (i) that this Lease is unmodified and in full force and effect (or if, there have been modifications that the same is in full force and effect as modified and stating the modifications); (11) whether or not to the best knowledge of Tenant there are then existing any offsets or defenses against the enforcement of any of the terms, covenants or conditions, hereof upon the part of Tenant to be performed and, if so, specifying the same; (iii) the dates to which the rent and other charges have been paid, it being intended that any such statement delivered pursuant to this Section may be relied upon. by any prospective purchaser of the fee of the real property comprising the Premises; and (iv) such other statements as may be reasonably requested by Landlord. (b) Landlord agrees at any time and from time to time upon not less than twenty (20) days' prior notice by Tenant to execute, acknowledge and deliver to Tenant a statement in writing certifying (i) that this Lease is unmodified and in full force and effect (or if there have been modifications that the same is in ftill force and effect as modified and stating the modifications); (ii) whether or not to the best knowledge of Landlord there are then existing any offsets or defenses against the enforcement of any of the tenns, covenants or conditions hereof upon the part of Landlord to be performed and, if so, specifying the same; (iii) the dates to which the rent and other charges have been paid, it being intended that any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser of the leasehold interest under this Lease and Tenant's interest in the Premises and the improvements thereon; and (iv) such other statements as may be reasonably requested by Tenant. Section 15.13 Survival of Indemnities. ; The obligations of the indemnifying party under each and every indemnification and hold harmless provision contained in this Lease shall survive the expiration or earlier termination of this Lease to and until the last to occur of (a) the last date permitted by law for the bringing of any claim or action with respect to which indemnification may be claimed by the indemnified party against the indemnifying party under such provision or (b) the date on which any claim or action for which indemnification may be clai med under such provision is fully and finally resolved and, if applicable, any compromise thereof or judgment or award thereon is paid in full by the indemnifying party and the indemnified party is reimbursed by the indemnifying party for any amounts paid by the indemnified party in compromise thereof or upon a j ' udgment or award thereon and in defense of such action or claim, including reasonable attorneys' fees incurred. Payment shall not be a condition precedent to recovery upon any indemnification provision contained herein. Section 15.14 Surrender or Cancellation. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall terminate all or any existing Subleases, unless Landlord elects to treat such surrender or cancellation as an assignment to Landlord of any or all of such subleases. Section 15.15 Time of Essence. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Section 15.16 Intentionally Omitted. Section 15.17 Brokers. Tenant and Landlord each represent and warrant to the other that they have had no dealings with any real estate brokers or agents in connection with the negotiation of 37 LA\1 775778.13 this Lease other than Lehman Brothers and BondLogistix ("Brokers") and that no other broker, agent or other person retained by either of them is entitled to a fee or commission in connection with the execution of this Lease. Landlord agrees to pay any and all fees, commissions or other amounts payable to Brokers as and when due. Each party hereby expressly agrees and covenants to defend, indemnify and hold harmless the other from and against any and all claims, threatened or asserted, by any broker, finder or agent claiming under or through such indemnifying party in connection with the negotiation and execution of this Lease. The foregoing indemnification by La dlord shall also include the obligation to indemnify, defend and hold harmless Tenant from and against any and all commissions or fees payable to Brokers as provided above. Section 15.18 Waiver of JuKy Trial. TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF TIES LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. Section 15.19 Applicable Law. This Lease shall be governed by and construed in accordance with the laws of the State in which the Premises are situated. Section 15.20 Gender; Successors in Interest. The use of the masculine pronoun includes the feminine and neuter genders; the use of the singular form of a pronoun includes the plural and vice -versa. The terms, conditions and covenants contained herein shall be binding upon and inure to the benefit of the heirs, successors, executors, administrators, marital communities, if any, and assigns of the parties hereto. Section 15.21 Waiver of Sovereign Immunity. Landlord warrants and covenants with respect to its contractual obligations hereunder and performance thereof, it will riot claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (a) suit, (b) Jurisdiction or court (including a court located outside, the jurisdiction of its ,organization), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment. [Signature Page Follows] 38 LA\1 775778.13 IN WITNESS WHEREOF the parties hereto have executed this Lease as of the day and year first above wtitten. "Landlord" CITY OF VERNON, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California By: Name: Eric T. Fresch Title: City Adm�inistrator "Tenant" BICENT (CALIFORNIA) M-ALBURG LLC, a Delaware limited liability company By: Name: Paul Prager Title: President (Signature Page to Lease — Bicent (California) Malburg LLC] IN WITNESS WHEREOF the parties hereto have executed this Lease as of the day and year first above written. "Landlord" CITY OF VERNON, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California By: Name: Eric T. Fresch Title: City Administrator "Tenant" BICENT (CALIFORNIA) MALBURG LI.C, a Delawam-limited Inabbility company B Name: Paul Prager Title: President ISignaLure Page to Lease - fficent (Cafiforriia) Malburg LLCJ The execution of this Lease by the City of Vernon is hereby affirmed and attested to by: CITY By: Nam�. Manuela Giron Title: City Clerk [Attestation to Lease — Bicent (California) Malburg LLCJ EXHIBIT "A -I' LEGAL DESCRIPTION OF LAND PREMISES [Attached Hereto.] A-1 LA\1 775778.13 A PORTION OF LOT 7, TRACT NUMBER 6452 IN THE CITY OF VERNON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 94 PAGES 77 AND 78 OF MAPS, RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST NORTHERLY CORNER OF SAID LOT 7, SAID CORNER ALSO BEING THE BEGINNING OF A CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 367.83 FEET, A RADIAL LINE PASSING THROUGH SAID CORNER BEAR SOUTH 58*03,33 WEST; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 59*37'38" AN ARC DISTANCE OF 382.79 FEET; THENCE NORTH 88'25'55" EAST 323.79 FEET ALONG THE NORTHERLY LINE OF SAID LOT 7 TO A POINT ON THE SOUTHERLY LINE OF A PORTION DEEDED FOR THE WIDENING OF THE LOS ANGELES JUNCTION RAILROAD RIGHT—OF—WAY AS SHOWN ON LOS ANGELES COUNTY FIELD MAP NUMBER 10287 PAGE A3, RECORDS OF SAID COUNT, SAID POINT ALSO BEING THE BEGINNING OF A CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 906.21 FEET; THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 4'45'51" AN ARC DISTANCE OF 75.35 FEET TO THE BEGINNING OF A COMPOUND CURVE HAVING A RADIUS OF 294.44 FEET; TH.ENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 13*28'39" AN ARC DISTANCE OF 69.26 FEET TO A POINT ON THE EASTERLY LINE OF A PORTION DEEDED FOR THE WIDENING OF SOTO STREET AS SHOWN ON SAID LOS ANGELES COUNTY FIELD MAP; THENCE SOUTH 1'37'37" EAST 186.27 FEET ALONG SAID EASTERLY LINE; THENCE SOUTH 88*10'26" WEST 33.20 FEET; THENCE NORTH 01*49'34" WEST 6.00 FEET; THENCE SOUTH 88'10'26" WEST 6.00 FEET; THENCE SOUTH 01'49'34" EAST 6.00 FEET; THENCE SOUTH 88*10'26" WEST 439.07 FEET; THENCE NORTH 01*27'57" WEST 115.24 FEET; THENCE SOUTH 89*10'17" WEST 193.60 FEET; THENCE NORTH 02'51'27" WEST 42.65 FEET; THENCE NORTH 87*47'00" EAST 11.55 FEET; THENCE THENCE NORTH 01*54'17" WEST 24.22 FEET; THENCE SOUTH 87,28'16" WEST 10.26 FEET; THENCE NORTH 01*06'15" WEST 13.30 FEET; THENCE SOUTH 88*48'42" WEST 81.59 FEET; THENCE SOUTH 01*26'34" EAST 79.61 FEET; THENCE SOUTH 89'10'17" WEST 37.82 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 7; THENCE NORTH 00*09'03" WEST 267.99 FEET ALONG SAID WESTERLY LINE TO THE POINT OF BEGINNING. CONTAINING 3.10 ACRES MORE OR LESS. AS SHOWN ON EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE APART HEREOF. 0111 DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08 DAVID T. RaSELL EV. 9--30--W A-2 LA\] 775778-13 9 -, POIN T OF E NNING POINT OF BEGINNING B G R Mo TH N ' y C ORN 'R Lo ' 7 MORTH N'LY CORNER LOT 7 SOUTHERLY LIN� AND WESTE Y SOU TH E Rl� YL LIN� AND WE STIER L y LI NE RL IN On _ P 0 T, THE PORTIONS DEEDED FIOR'TH L,J ol MDENING OF SOTO STREET AND LIO ol ANGELES JUNCTION RAILWAY CO. A Ss NN HOWN ON F.M. 10287/A3 S S OW M 0 7/, Lij I LA JUN ION RY CO- L JU C T, 0 Y C 0 -01 110 L8 N88'25'55"E 323.79' Of 0 L9 C.) (D z 1p L6 193.60' L12 S119-10'17"W LEASE AREA o L T 7 In TRACT 1\10. '64 cn 0 .- C2 - I"= 140' 1\11,D, -1 C) lz S88'10'26"W 439.07' - VARIES 20' E A S T 5 0 T H S T R E E T (40' WIDE PUBLIC RIGHT-OF-WAY) 20' LINE TABLE -LINE LENGTH BEARING Li 33.20 S88'10'26-W —L 2 6 00 NOI-49-34"W L3 600 —�8 10�26-Wy L4 600 L5 42.65 S02*51 * 2 7E L6 1155 S87*47'00"W L 7 24-22 SOI'54'1 7"E L8 10-26 S87'28'16-W L 13.30 SOI *06'1 5E L10 81.59 S88*48'42-W L" — 79 61 - �01-2634-E L12 37�821 S89-10'1 7"W CURVE TABLE -EU R VE DELTA ADIUS LENGTH cl 59'37'38" 367.83 382.79' C2 4 -4 5'51 - 906.21 75.35' C3 13'28*39" --�94 44 69 26' > T Q 6 < 0 0 1 0 V) u iJ EXHIBIT "B-1" LEGAL DESCRIPTION OF EASEMENT AREA [Attached Hereto.] B-1 LA\ 1775778.13 A PORTION OF LOT, 7, TRACT NUMBER 6452 IN THE CITY OF VERNON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER 'MAP RECORDED IN BOOK 94 PAGES 77 AND 78 OF MAPS, RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE WEST LINE OF SAID LOT 7, SAID POINT BEING NORTH 00'09'03" WEST 194.65 FROM THE SOUTHWESTERLY CORNER OF SAID LOT 7, THENCE NORTH 88'22'12" EAST 238.52 FEET; THENCE SOUTH 01'37'48" EAST 18.06 FEET; THENCE NORTH 88'22'12 EAST 42.43 FEET; THENCE SOUTH 01'23'22" EAST 176.85 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID LOT 7; THENCE NORTH 88'26'12" EAST 32.59 FEET ALONG SAID SOUTHERLY LINE; THENCE NORTH 01'27'57" WEST 211.35 FEET; THENCE SOUTH 89'10'17" WEST 312.89 FEET TO A POINT ON SAID WESTERLY LINE; THENCE SOUTH 00'09'03" EAST 20.76 FEET ALONG SAID EASTERLY LINE TO THE POINT OF BEGINNING. AS SHOWN ON EXHIBIT "B ATTACHED HERETO AND BY THIS REFERENCE MADE APART HEREOF. DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08 N DAVID T. ROSELL * EXP. 9-30-08 No. 6281 EXHIBIT "B-2" SITE PLAN DEPICTING EASEMENT AREA [Attached Hereto.] B-2 LA\ 1775778.13 i I LOT r 1"=50' >- W Q _ z o S89'10' 17 ° W 312. 89'- ``' I > = I SOO'09'03"E 20.76' ACCESS EASEMENT Q N88'22'12"E 238.52' N88'22'12"E S01'37'48"E 18.06' --42.43'-j W J J m POINT OF BEGINNING J d I Ln — W W co N 3: W Ln r O N N Z I o O Z N SOUTHWEST CORNER LOT 7 �o TR T M B 94 77 78 00 20' AC N0. 6452, / - I ! O N E A S T 5 0 T H S T R E E T (40' WIDE PUBLIC RIGHT-OF-WAY) EXHIBIT "C-1" LEGAL DESCRIPTION OF CITY RETAINED UTILITY EASEMENT AREA [Attached Hereto.] C-1 LA\ 1775778.13 A 10' WIDE STRIP OF LAND BEING A PORTION OF LOT 7, TRACT NUMBER 6452 IN THE CITY OF VERNON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 94 PAGES 77 AND 78 OF MAPS, RECORDS OF SAID COUNTY, THE CENTERLINE IS DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE WEST LINE OF SAID LOT 7, SAID POINT BEING NORTH 00.09'03" WEST 245.99 FROM THE SOUTHWESTERLY CORNER OF SAID LOT 7, THENCE NORTH 88.36'21" EAST 117.81 FEET TO THE POINT OF TERMINUS. THE SIDELINES OF SAID 10' STRIP OF LAND, SHALL BE SHORTENED OR PROLONGATED SO AS TO TERMINATE WESTERLY AT THE WESTERLY LINE OF SAID LOT 7 AND EASTERLY AT A LINE THAT PASSES THROUGH SAID POINT OF TERMINUS BEARING SOUTH 02.51'27" EAST. AS SHOWN ON EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE APART HEREOF. DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08 DAVID T. ROSELL DCP. 9-30-9e No. 6281 r.. EXHIBIT "C-2" SITE PLAN DEPICTING CITY RETAINED UTILITY EASEMENT AREA [Attached Hereto.] C-2 LA\ 1775778.13 cn O d- 20' 1 I L-r r TRACT 1\10, 64 J�Jll), DAV77J 1 20 1 "=30' PIPELINE EASEMENT POINT OF TERMINUS N88'36'21"E _117.81' S02'51'27"E 1 ------------------- POINT OF BEGINNING SOUTHWEST CORNER, LOT 7, TRACT No. 6452, M.B. 94/77-78 0 N E A S T 5 0 T H S T R E E T (40' WIDE PUBLIC RIGHT-OF-WAY) 0 N EXHIBIT "D" BUILDING PLAN IDENTIFYING LOCATION OF HISTORICAL PREMISES [Attached Hereto.] D-1 LA\ 1775779.13 � O C O fA o E E m I N O N N � c o .off E� � � o � 2a UQ r { -tk i S �qq T %. "a jt i EXHIBIT "E" Recording Requested by City of Vernon and when recorded, mail to: SPACE ABOVE FOR RECORDER'S USE Recording Fee: Exempt pursuant to California Government Code § 27383 MEMORANDUM OF LEASE AND EASEMENTS THIS LEASE HEREIN IS FOR A PERIOD LESS THAN 99 YEARS. A.P.N. A.P.N. The City of Vernon, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California ("Landlord'), hereby leases and grants easements to Bicent (California) Malburg LLC, a Delaware limited liability company ("Tenant"), that certain real property located in the City of Vernon, California (the "City"), and more particularly described on Exhibit "A- I" and depicted on Exhibit "A-2" attached hereto (the "Land Premises"). l . The rent payable by Tenant and the other terms of the tenancy are set forth in a certain unrecorded Lease and Grant of Easements between Landlord and Tenant dated April 2008 (the "Lease"), the provisions of which Lease are incorporated herein by this reference, ? , and covering the Premises. Unless otherwise defined herein, any term with initial capitalization herein shall have the definition set forth in the Lease. E-1 LA\ 1775778-13 2.The Initial Term of this Lease commences on the Commencement Date (as defined in the Lease) and expires thirty (30) full Lease Years (as defined in the Lease) thereafter. In addition, Tenant has two (2) options to extend this Lease for five (5)-Lease Years each. 3. Pursuant to the Lease, Landlord has also granted to Tenant non-exclusive Easements (as defined in the Lease) appurtenant to the leasehold estate created by this Lease in, on, over, under and across that, portion of adjacent property owned by Landlord in. the City as more particularly described on Exhibit "I3" and depicted on Exhibit "C", each attached hereto and incorporated herein by this reference (the "Easement Area") for the purpose of (i) the construction, installation. (including the right to connect to existing public facilities), maintenance and. use of electric, gas, cable, telephone, water, sewer, drainage and other utility facilities as necessary to serve the Premises for Tenant's use thereof (including overhead transmission of electricity), and (ii) vehicular and pedestrian , ingress and egress over the Easement Area to and from the Premises as reasonably necessary for Tenant's use of the Premises, including, without limitation, for the construction, installation, maintenance and use of all improvements and other property of Tenant constructed, installed, placed or located from time to time on the Premises. 4. Landlord has reserved unto itself any easements in, on, over, across and under the Premises reasonably necessary for the construction, replacement, repair, maintenance and operation of any facilities on the Retained Property, so long as such easements shall not materially interfere with Tenant's operations on the Premises, and for the delivery of emergency services to the Retained Property. Landlord further has reserved unto itself, and any City owned and/or operated utility service provider, easements in, on, over, across and under the Premises for E-2 LA\1775778.13 the construction, replacement, repair, maintenance and operation of existing dry and wet utilities over certain portions of the Premises, including but not limited to the existing water pipelines and gas lines under the Premises, the locations of which are more particularly described on Exhibit "D" and shown on Exhibit "E" attached hereto and incorporated herein by this reference. 5. Landlord and Tenant have further agreed that in the event that that certain power purchase tolling agreement between Landlord and Tenant (the "PPTA") of even date herewith is terminated in connection with any bankruptcy or insolvency proceedings with respect to the Tenant, any successor in interest to the Tenant shall be obligated to enter into a new power purchase tolling agreement with Landlord on substantially the same terms as the PPTA. 6. This instrument is executed solely for recording purposes and nothing herein shall be deemed or construed to modify or vary the terms of the Lease or the easements granted therein. In the event of any conflict between the Lease and this memorandum, the terms and conditions of the Lease shall prevail. E-3 LA\1775778.13 t IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease and Easements as of the _ day of April 2008. "Landlord" THE CITY OF VERNON, a California Charter City By: Print Name: Eric T. Fresch Title:. City Administrator "Tenant" BICENT (CALIFORNIA) MALBURG LLC, a Delaware limited liability company By: Print Name: Paul Prager Title: President By: Print Name: E-4 LAU 775778.13 The execution of this Memorandum of Lease and Easement by the City of Vernon is hereby affirmed and attested to by: CITY OF VERNON By: Name: Manuela Giron Title: City Clerk E-5 LA\ 1775778. 13 STATE OF COUNTY OF On , before me, , Notary Public, personally appeared and ❑ personally known to me OR ❑ proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary STATE OF COUNTY OF On , before me, , Notary Public, personally appeared and , ❑ personally known to me OR ❑ proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary E-6 LA\1775778.13 STATE OF COUNTY OF [ On , before me, _, Notary Public, personally appeared and , ❑ personally known to me OR ❑ proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. Signature of Notary E-7 LA\ 1775778.13 EXHIBIT "A" TO MEMORANDUM OF LEASE AND EASEMENTS LEGAL DESCRIPTION OF THE PREMISES [Attached Hereto.] Exhibit "A" to Memorandum of Lease and Easements LA\1775778.13 EXHIBIT "B" TO MEMORANDUM OF LEASE AND EASEMENTS LEGAL DESCRIPTION OF EASEMENT AREA [Attached Hereto.] Exhibit "B" to Memorandum of Lease and Easements LA\ 1775778.13 EXHIBIT "C" TO MEMORANDUM OF LEASE AND EASEMENTS DEPICTION OF EASEMENT AREA [Attached Hereto.] Exhibit "C" to Memorandum of Lease and Easements 1,A\l775778.13 EXHIBIT "D" TO MEMORANDUM OF LEASE AND EASEMENTS LEGAL DESCRIPTION OF CITY RETAINED UTILITY EASEMENT AREA [Attached Hereto.] Exhibit "D" to"Memorandum'of Lease and Easements LA\ 1775778.13 EXHIBIT "E" TO MEMORANDUM OF LEASE AND EASEMENTS SITE PLAN DEPICTING CITY RETAINED UTILITY EASEMENT AREA [Attached Hereto] F-1 LA\ 1775778.13 EXECUTION COPY CONSENT TO ASSIGNMENT (PPTA AND ITSA) This CONSENT TO ASSIGNMENT.(PPTA and ITSA)("Consent") is entered into as of April 10, 2008 among the City of Vernon, California, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California and its Charter ("Vernon"), Bicent (California) Malburg LLC, a Delaware limited liability company (the "Assignor"), and Union Bank of California, N.A., as Collateral Agent for the Secured Parties defined in the Credit Agreement referred to below (in such capacity, and together with its successors and permitted assignees, the "Assignee"). RECITALS WHEREAS, the Assignor and Vernon have entered into (a) that certain Power Purchase Tolling Agreement dated as of the date hereof (the "Tolling Agreement"), pursuant to which Vernon has agreed to purchase certain products from the Malburg Generating Station owned by the Assignor (the "Facili ") and (b) that certain Interconnection and Transmission Service Agreement dated as of the, date hereof (the "Interconnection Agreement" and, together with the Tolling Agreement, the "Assigned Agreements"); WHEREAS, pursuant to a Guarantee and Collateral Agreement dated as of ,the date hereof (the "Security Agreement"), the Assignor has granted to, the Assignee a lien on and a security interest in, to and under all of its right, title and interest in the Assigned Agreements, as collateral security for the Assignor's obligations under that certain Credit Agreement dated as of the date hereof among Bicent (California) Power LLC, as borrower, the Assignor, as subsidiary guarantor, Bicent (California) Hoover LLC, as subsidiary guarantor, the banks and other financial institutions from time to time party thereto, Union Bank of California, N.A., as sole lead arranger and sole bookrunner, Union. Bank of California, N.A., as :administrative agent, Union Bank of California, N.A., as syndication agent, and the Assignee, as collateral agent (the "Credit Agreement") and the related financing documents (collectively, together with the Credit Agreement, the "Financing Documents'). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows: Section 1. Definitions: Any capitalized term used but not defined herein shall have the meaning specified for such term in the respective Assigned Agreement, as applicable, except that the terms "Obligations", "Secured Parties" and "Lender" shall have the meanings specified for such terms in the Credit Agreement as it exists on the date hereof and the term "Seller Subordinate Deed of Trust" shall have the, meaning set forth in that certain Amended and Restated Purchase and Sale Agreement, dated as of December 13, 2007, as amended by that certain First Amendment to Amended and Restated Purchase Agreement dated as of February 8, 2008, by and among Vernon, Bicent (California) Power LLC, Assignor and Bicent (California) Hoover LLC, and that certain Second Amendment to Amended and Restated Purchase Agreement dated as of April 8, 2008, by and among Vernon, Bicent (California) Power LLC, Assignor and B icent .(California) Hoover LLC (the "PSA"). NY3 - 465757.08 Section 2. Consent to Assienment. (a) Under the terms and conditions set forth in this Consent, Vernon hereby consents to: (i) the assignment by the Assignor of all its right, title and interest in, to and under the Assigned Agreements to the Assignee, as collateral security for the obligations as and to the extent provided in the Security Agreement; and (ii) the transfer of any Assigned Agreement to any Qualified Person (including any Qualified Person Controlled by the Secured Parties) in connection with the Assignee's or any successor. transferee's exercise of its rights and remedies under the Credit Agreement and Financing Documents following the occurrence of an event of default by the Assignor under the Credit Agreement, including any public or private sale or any deed in lieu of foreclosure, and including any transfer from a Qualified Person that is Controlled by the Secured Parties to another Qualified Person. Such Qualified Person shall be (x) in the case of the Tolling Agreement, the "Seller under, and shall be entitled to all of the benefits of, the Tolling Agreement and (y) in the case of the Interconnection Agreement, the "MGS Owner" under, and shall be entitled to all of the benefits of, the Interconnection Agreement. "Control" shall mean, with respect to any Person, a direct or indirect interest in at least half of the ownership interest having ordinary voting power in such Person. "Qualified Person" shall mean a Person with the requisite experience and financial capability to reliably own and operate the Facility. (b) The Assignor agrees that it shall remain liable to Vernon for all obligations of the Assignor under each of the Assigned Agreements, notwithstanding the collateral assignment contemplated in the Security Agreement. (c) If the Assignee elects to exercise its remedies under the Security Agreement (1) to foreclose on its lien on the Facility or to transfer the Facility by a deed in lieu of foreclosure or otherwise to the Assignee or its designee, or (2) otherwise to foreclose on its lien on any Assigned Agreement, the Assignee shall notify Vernon pursuant to Section 7(fl of this Consent. Upon (x) a foreclosure described in clause (1) above, with respect to the Tolling Agreement only, but provided that, if at such time there is a dispute with respect to a payment default by Vernon under the Tolling Agreement, as a condition to any assumption by Assignee described below, upon not later than 30 days after written request from Assignee delivered to Vernon, Vernon shall have deposited the amount in bona fide dispute into escrow, on terms reasonably satisfactory to Vernon and the Assignee, or (y) a foreclosure described in clause (2) above, subject to the rights of Vernon under Section 4, with respect to the applicable Assigned Agreement, the Assignee (or its assignee or transferee or successor thereof) (i) (x) in the case of the Tolling Agreement, shall be the "Seller" under, and shall be entitled to all of the benefits of, the Tolling Agreement and (y) in the case of the Interconnection Agreement, the "MGS Owner" under, and shall be entitled to all of the benefits of, the Interconnection Agreement, (ii) shall assume in writing and be liable for each and every duty, obligation and liability of (x) in the case of the Tolling Agreement, "Seller" under the Tolling Agreement and (y) in the case of the Interconnection Agreement, "MGS Owner" under the Interconnection Agreement, from and after the date of such assumption, and shall, in the case of any foreclosure described .in clause (2) NY3 - 465757.08 above only, cure any and all then existing Seller Events of Default (in the case of the Tolling Agreement) or default under the Interconnection, Agreement (in the case of the Interconnection Agreement), as applicable, that have arisen prior to the date of the assumption of such Assigned Agreement by Assignee except for any Seller Events of Default (in the case of the Tolling Agreement) or default under the Interconnection Agreement (in the case of the Interconnection Agreement), as applicable, that, by their nature, are not capable of being cured by Assignee, and (iii) in the case of the Tolling Agreement shall execute a deed of trust on substantially the same terms as the Seller Subordinate Deed of Trust. (d) The consent given by Vernon under Section 2(a) will only be effective with respect to a Qualified Person that is not controlled by the Secured Parties if (i) such Qualified Person executes a written assumption of the applicable Assigned Agreement whereby it agrees to assume and be liable for each and every duty, obligation and liability of "Seller" (in the case of the Tolling Agreement) or WGS Owner" (in the case of the Interconnection Agreement), as applicable, under such Assigned Agreement from and after the date of such assumption, and cures any and all then existing Seller Events of Default (in the case of the Tolling Agreement) or default under the Interconnection Agreement (in the case of the Interconnection Agreement), as applicable, that have arisen prior to the date of the assumption of such Assigned Agreement by such Qualified Person except for any Seller Events of Default (in the case of the Tolling Agreement) or default under the Interconnection Agreement (in the case of the Interconnection Agreement), as applicable, that, by their nature, are not capable of being cured by such Qualified Person and (ii) in the case of the Tolling Agreement, upon Vernon's written request, such Qualified Person shall promptly execute a deed of trust on substantially the same terms as the Seller Subordinate Deed of Trust. Section 3. Representations and Warranties. Vernon hereby represents and warrants to the Assignee that, as of the date of this Consent: (a) The execution and delivery by Vernon of each of the Assigned Agreements and this Consent, and the performance by Vernon of its obligations under each of the Assigned Agreements and this Consent, have been duly authorized by all necessary corporate action, and do not and will not require any further consents or approvals which have not been obtained, or violate any provision of any law, regulation, order, judgment, injunction or similar' matters or breach any material agreement presently in effect with respect to or binding upon Vernon. (b) All government approvals necessary for the execution and delivery by Vernon of each of the Assigned Agreements and this Consent, and the performance by Vernon of its obligations under each of the Assigned Agreements and this Consent, have been obtained and are in full force and effect. (c) Each of this Consent and the Assigned Agreements has been duly executed and constitutes legal, valid and binding obligations of Vernon, enforceable against it in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of 3 NY3 - 465757.08 creditors' rights generally or by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law, or by principles of public policy. (d) To the knowledge of Vernon, the Assignor is not in default under any material covenant or obligation under any Assigned Agreement, and each of the Assigned Agreements is in full force and effect and has not been amended. (e) In the event of an Unscheduled Outage, the Assignor's obligation to cover the costs of replacement energy pursuant to the Tolling Agreement only applies from the beginning of such Unscheduled Outage through the end of the second Business Day after the beginning of such Unscheduled Outage. Section 4. Consent and Agreement. Vernon and the Assignor hereby agree that, so long as any obligations of the Assignor under the Credit Agreement and the Security Agreement remain outstanding: (a) Notice of Material Amendments. Vernon and the Assignor will not enter into any, amendment, supplement or other modification of any Assigned Agreement other than ministerial amendments, supplements and modifications (an "Amendment") until after the Assignee has been . given at least twenty (20) days' prior written notice of the proposed Amendment by the Assignor (a copy of which notice will be provided to Vernon by .the Assignor). (b) Notices of Default and Right to Cure. (i) Vernon shall deliver to the Assignee at the address set forth on Section 7M or at such other address as the Assignee may designate in writing from time to time to Vernon, concurrently with the delivery thereof to the Assignor, a copy of each notice of default under each Assigned Agreement, Notwithstanding anything to the contrary contained in the Assigned Agreements, Assignee shall have the right, but not the obligation, without thereby assuming Assignor's obligations under any Assigned Agreement (except upon completion of a foreclosure of its security interest in any Assigned Agreement to the extent provided in Section 2 c)), to cure any such default within sixty (60) days after the later of the date of such notice or the last day of the cure period available to the Assignor in such Assigned Agreement (except with respect to payment defaults, which cure must be made within thirty (30) days after the later of the date of such notice or the last day of the cure period available to the Assignor in such Assigned Agreement with respect to payment defaults). If possession of the Facility is necessary to cure any non-payment Seller Event of Default (in the case of the Tolling Agreement) or non- payment default under the Interconnection Agreement (in the case of the Interconnection Agreement), as applicable, by the Assignor under the applicable Assigned Agreement, and the Assignee commences foreclosure proceedings against the Assignor within sixty (60) days after the occurrence of such Seller Event of Default (in the case of the Tolling Agreement) or such default under, the Interconnection Agreement (in the case of the Interconnection Agreement), as applicable, the Assignee will be allowed an additional one hundred twenty (120) days after such sixty (60) day period to complete such proceedings; provided, however, that the aggregate cure 4 NY3 - 465757.08 period available to the, Assignee under this Section 4(b), in addition to the cure period available to the Assignor in the applicable Assigned Agreement for such non-payment Seller Event of Default (in the case of the , Tolling Agreement) or such non-payment default under the Interconnection Agreement (in the case of the Interconnection Agreement), as applicable, shall not exceed one hundred eighty (180) days after notice is given to ,the Assignee); provided, further, that if the Assignee is prohibited by court order or bankruptcy; insolvency or similar proceedings from curing any default under such Assigned Agreement, the foregoing time periods will be extended by the period of such prohibition, but in no event more than an additional twelve (12) month period. (ii) No cancellation, suspension or termination of any Assigned Agreement by Vernon shall be binding upon the Assignee without such notice and the opportunity to cure during the applicable extended cureperiods specified in this Section 4(b). If the Assignee fails to cure a default to the extent provided in Section 2(c) within the extended cure periods specified in this Section 4(b), Vernon shall have all its rights and remedies with respect to such default, action or omission as set forth in such Assigned Agreement. (c) New Agreement upon a Rejection or Termination of the Assigned Agreements. In the event any Assigned Agreement is rejected or terminated as a result of any bankruptcy or insolvency proceeding with respect to the Assignor, Vernon will, at the option of the Assignee (or its transferee or designee), exercised within forty-five (45) days after such rejection or termination, enter into a new agreement with the Assignee (or its transferee or designee) having identical terms as such Assigned Agreement (subject to any conforming changes necessitated by the substitution of parties and other changes as the parties may mutually agree); provided, that (i) the term under such new agreement shall be no longer than the remaining balance of the term specified in such Assigned Agreement, (ii) (x) in the case of the Tolling Agreement, the Assignee (or its transferee ordesignee) agree to perform all of the duties and obligations of "Seller" under the new agreement and execute a deed of trust on substantially the same terms as the Seller Subordinate Deed of Trust and (y) in the case of the Interconnection Agreement, the Assignee (or its transferee or designee) agree to perform all of the duties and obligations of "MGS Owner under the new agreement, and (iii) the Assignee (or its transferee or designee) shall be required to cure any and all Seller Events of Default under the Tolling Agreement or default under the Interconnection Agreement, as applicable,that was terminated (except for any such Seller Events of Default under the Tolling Agreement or default under the Interconnection Agreement, as applicable, that, by their nature, are not capable of being cured by Assignee or its transferee or designee, as applicable) as promptly as possible after the execution of the new agreement, but no later than sixty (60) days after the execution of such new agreement. (d) Right to Terminate as a Forward Contract Merchant. Assignor acknowledges and agrees that the Tolling Agreement constitutes a "forward contract' and that Vernon and Assignor are each "forward contract merchants" within the meaning of the United States Bankruptcy Code. As such, under current applicable law; if an Event of Bankruptcy occurs with respect to Assignor, Vernon may be entitled to exercise certain remedies, including, but not limited to, termination of the assigned agreement, without regard to an automatic stay NY3 - 465757.08 L imposed under the Bankruptcy Code. Vernon agrees that if an Event of Bankruptcy occurs with respect to Assignor, Vernon will not exercise its right to terminate the Tolling Agreement if (i) within forty-five (45) days of the initiation or commencement of such Event of Bankruptcy, Assignor files a motion with the Bankruptcy Court to assume the Tolling Agreement and (ii) such motion is granted within one hundred twenty (1'20) days of such Event of Bankruptcy. Nothing in this Section 4(d) shall affect the remedies of the Assignee under Section 4(c) above. (e) Payments to Designated Account. The Assignor and Vernon acknowledge and agree that all payments to be made by Vernon to the Assignor (if any) under any Assigned Agreement shall be made in lawful money of the United States of America in immediately available funds, to the following account: - Union Bank of California, N.A. Monterey Park, CA ABA No.: 122-000-496 Credit Account No.: 44300-04099 Attn: Commercial Customer Service Unit Re: Bicent (California) Power LLC -- Project Revenues Collection Account or to such other account and/or such other person or entity and/or at such other address as the Assignee may from time to time specify in writing to Vernon. In making such payments, Vernon shall be entitled to rely conclusively on instructions that it may receive from time to time from the Assignee without any duty to make inquiry into the authority of the Assignee to give such instructions or the authenticity of any signatures placed upon such instructions. Section 5. Damages Limitation. NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY UNDER THIS CONSENT FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE, REMOTE, OR SPECULATIVE DAMAGES OR LOST PROFITS. Section 6. Seller's Debt. In the case of the Tolling Agreement, Vernon agrees that, prior to the termination of this Consent pursuant to Section 7(g), for purposes of calculating the ratio of Seller's Debt to Seller's Equity under the Tolling Agreement, Seller's Debt shall not include any amounts advanced by Assignee to cure any breach or default by Assignor under the Tolling Agreement. Section 7. Miscellaneous. (a) This Consent shall be binding upon the successors and permitted assigns of each party and shall inure, together with the rights and remedies of the Assignee hereunder, to the benefit of the successors and permitted assigns of the parties hereto, including, without limitation, any entity that refinances all or any portion of the obligations, under or secured by, m the Financing Documents. Vernon agrees to confirsuch continuing obligation in writing upon the reasonable request of Assignor, Assignee or any of their respective successors, transferees or assigns. 6 NY3 - 465757.08 (b) No amendment or waiver of any provisions of this Consent or consent to any departure by any party hereto from any provisions of this Consent shall in any event be effective unless the same shall be in writing and signed by the Assignee and Vernon. (c) (i) This Consent shall be governed by, and construed under, the laws of the State of California applicable to contracts made and to be performed in such State and without reference to conflicts of laws. The parties hereto agree that any legal action or proceeding arising out of this Consent may be brought in the courts of the State of California, in and for the County of Los Angeles, or of the United States of America for the Central District of California. By execution and delivery of this Consent, the parties hereto accept, for themselves and in respect of their property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto irrevocably consent to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified airmail, postage prepaid, to the Assignee, Vernon and the Assignor, as the case may be, at their respective addresses for notices in Section 7(f) below and that such service shall be effective five (5) Business Days after such mailing. Nothing herein shall affect the right to serve process in any other manner permitted by law or the right of any party hereto to bring legal action or proceedings in any other competent jurisdiction. The parties hereto hereby waive any right to stay or dismiss any action or proceeding under or in connection with any or all of this Consent or the transactions contemplated hereby brought before the foregoing courts on the basis of forum non-conveniens. (i i) Notwithstanding anything to the contrary in clause (i) of this Section 7(c), the parties hereto acknowledge and agree that any disputes that arise out of any Assigned Agreement (as distinct from disputes that arise out of this Consent) shall be resolved pursuant to the procedures (x) in the case of the Tolling Agreement; set forth in Article XIX of the Tolling Agreement and (y) in the case of the. Interconnection Agreement, set forth in the Interconnection Agreement. Vernon and the Assignor acknowledge that the Assignee may have an interest in the outcome of such disputes and agree that the Assignee is entitled to participate in the resolution of such disputes. The parties hereto acknowledge and agree that the outcome of any dispute resolution under any Assigned Agreement shall be binding upon all of the parties hereto. (d) EACH OF VERNON, THE ASSIGNEE AND THE ASSIGNOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS CONSENT AND AGREEMENT. (e) This Consent may be executed in one or more counterparts with the same effect as if such signatures were upon the same instrument. This Consent may be delivered by facsimile transmission. NY3 - 465757.08 i (f) All notices to be given under this Consent shall be in writing and shall be delivered personally, sent by certified mail return receipt requested or registered first-class mail, postage prepaid, or sent by facsimile, or courier to the intended recipient at its address as set forth below, and all payments to be made under this Consent shall be made by wire transfer of immediately available funds or check representing immediately collectible funds to the account or address of the intended recipient as set forth below (subject to Section 4(e)), unless the recipient has given notice of another address or account for receipt of notices or payments. All such notices and other communications required or permitted under this Consent are effective upon delivery. If to Vernon: City of Vernon Attn Director of Light and Power Department 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 With copies to: Latham & Watkins LLP Attention: David B. Rogers, Esq. 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071-2007 Facsimile: • (213) 891-8763 City of Vernon Attn: City Attorney 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 If to Assignor: Bicent (California) Malburg LLC c/o Beowulf Energy LLC 103 N. Washington Street Easton, Maryland- 21601 Attn: Douglas Halliday Telephone: (410) 770-9500 Facsimile: (410) 770-9705 With copies to: 8 NY3 - 465757.08 If to Assignee: Bicent (California) Power LLC c/o Bicent Power LLC 575 Broadway, 3rd Floor New York, New York 10012 Facsimile: (212) 343-9949 and Bicent Power LLC Attn: General Counsel 575 Broadway, 3rd Floor New York, New York 10012 Facsimile: (212) 343-9949 and Paul, Weiss, Rifkind, Wharton & Garrison LLP Attn: Dale M. Sarro, Esq. 1285 Avenue of the Americas New York, New York 10019 Facsimile: (212) 492-0393 Union Bank of California, N.A. Energy Capital Services 445 South Figueroa Street, 15th Floor Los Angeles, California 90071 Attn: Susan K. Johnson Telephone: (213) 236-4125 Facsimile: (213) 236-4096 (g) This Consent shall terminate in its entirety upon written notice by the Assignee to the Assignor and Vernon of the earlier of (i) the indefeasible payment in full in cash of all obligations of the Assignor under the Credit Agreement and other Financing Documents and the termination of all commitments thereunder and in respect of any indebtedness incurred in respect of any refinancing thereof, and (ii) the termination of the Assigned Agreements in accordance with the terms thereof and the terms of this Consent. (h) The captions or headings at the beginning of each Section of this Consent are for convenience only and are not'a part of this Consent. . NY3 - 465757.08 Li- [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 9 IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (PPTA) as of the date first above written. VERNON THE CITY OF VERNON By: (�:L ' Name: Eric T. Fresch Title City Administrator i ASSIGNOR BICENT (CALIFORNIA) MALBURG LLC . By: Name: Paul Prager Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A., as Collateral Agent By: Name: Title: [Signature Page to Consent to Assignment (PPTA)— Bicenl (California) Malburg LLCI IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (PPTA and ITSA) as of the date first above written. VERNON THE CITY OF VERNON By: Name: Eric T. Fresch Title: City. Administrator ASSIGNOR BICE LIFO MALBURG LLC By: Name: Paul Prager Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A. By: Name: Kevin M. Zitar Title: Senior Vice President [Signature Page to Consent to Assignment (PPTA and ITSA) — Bicent (Ca)ifornia) Malburg LLCI IN WITNESS WHEREOF, each of Vernon, the Assigneeand the Assignor has duly executed this Consent and Agreement (PPTA and ITSA) as of the date first above written. VERNON THE CITY OF VERNON By: Name: Eric T. Fresch Title: City Administrator ASSIGNOR BICENT (CALIFORNIA) MALBURG LLC By: Name: Paul Prager Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A. By: Name: evtn r Title: Senior Vice President [Signature Page to Consent to Assignment (PPTA and ITSA) — Bicent (California) MalburgLLCJ The execution of this Consent to Assignment (PPTA) by the City of Vernon is hereby affirmed and attested to by: CITY F VERNON By: blame: Manuela Giron Title: City Clerk (Attestation to Consent to Assignment (PPTA) — Bicent (California) Malburg LLC] EXECUTION COPY CONSENT TO ASSIGNMENT (Lease) This CONSENT TO ASSIGNMENT (Lease) ("Consent") is entered into as of April 10, 2008 among the City of Vernon, California, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California and its, Charter ("Vernon"), Bicent (California) Malburg LLC, a Delaware limited liability company (the "Assignor"), and Union Bank of California, N.A.; as Collateral Agent for the Secured Parties defined in the Credit Agreement referred to below (in such capacity, and together with its successors and permitted assignees, the "Assignee"). RECITALS WHEREAS, pursuant to the Lease and Grant of Easements dated as of the date hereof between the Assignor and Vernon (the "Assigned Agreement'), Vernon leased certain real property to Assignor. WHEREAS, pursuant to a Guarantee and Collateral Agreement dated as of the date hereof between the Assignor and the Assignee and a Deed of Trust, Fixture Filing, Security Agreement and Assignment of Leases and Rents dated as of the date hereof from the Assignor to First American Title Insurance Company of California, as trustee, for the use and benefit of the Assignee. (collectively, the "_Security_ Agreement"), the Assignor has granted to the Assignee a lien on and a security interest in, to and under all of its right, title and interest in the Assigned Agreement, as collateral security for the Assignor's obligations under that certain Credit Agreement dated as of the date hereof among Bicent (California) Power LLC, as borrower, the Assignor, as subsidiary guarantor, Bicent (California) Hoover LLC, as subsidiary guarantor, the banks and other financial institutions from time to time party, thereto, Union Bank of California, N.A., as sole lead arranger and sole bookrunner, Union Bank of California, N.A., as administrative agent, Union Bank of California, N.A., as syndication agent, and the Assignee, as collateral agent (the "Credit Agreement") and the related financing documents (collectively, together with the Credit Agreement, the "Financing Documents"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows: Section 1. Definitions. Any capitalized term used but not defined herein shall have the meaning specified for such term in the Assigned Agreement, except that the terms "Obligations","Secured Parties" and "Lender shall have the meanings specified for such terms in the Credit Agreement as it exists on the date hereof. Section 2. Consent to Assignment. (a) Under the terms and conditions set forth in this Consent, Vernon hereby consents to: NY3 - 465766.06 (i) the assignment by the Assignor of all its right, title and interest in, to and under the Assigned Agreement to the Assignee, as collateral security for the,obligations as and to the extent provided in the Security Agreement; and (ii) the transfer of the Assigned Agreement to any Qualified Person (including any Qualified Person Controlled by the Secured Parties) in connection with the Assignee's or any successor transferee's exercise of its rights and remedies under the Credit Agreement and Financing Documents following the occurrence of an event of default by the Assignor under the Credit Agreement, including any public or private sale or any deed in lieu of foreclosure, and including any transfer from a Qualified Person that is Controlled by the Secured Parties to another Qualified Person. Such Qualified Person shall be the "Tenant" under, and shall be entitled to all of the benefits of, the Assigned Agreement. "Control" shall mean, with respect to any Person, a direct or indirect interest in at least half of the ownership interest having ordinary voting power in such Person'. "_Qualified Person" shall mean a Person with the requisite experience and financial capability to reliably own and operate the Facility. (b) The Assignor agrees that it shall remain liable to Vernon for all obligations of the Assignor under the Assigned Agreement, notwithstanding the collateral assignment contemplated in the Security Agreement. (c) If the Assignee elects to exercise its remedies under the Security Agreement to foreclose on its lien on the Assigned Agreement or otherwise effect a transfer of the Assigned Agreement to the Assignee or its designee, the Assignee shall notify Vernon pursuant to Section 7(I) of this Consent. Subject to the rights of Vernon under Section 4 of this Consent, upon the occurrence of the foregoing, the Assignee (or its 'assignee or transferee or successor thereof) (i) shall be the "Tenant" under, and shall be entitled to all of the benefits of, the Assigned Agreement, and (ii) shall assume in writing and be liable for each and every duty, obligation and liability of "Tenant" under the Assigned Agreement from and after the date of such assumption, and shall cure any and all then existing Events of Default of Tenant that have arisen prior to the date of the assumption of the Assigned Agreement by Assignee except for any Events of Default of Tenant that, by their nature, are not capable of being cured by Assignee. (d) The consent given by Vernon under Section 2(a) will only be effective with respect to a Qualified Person that is not controlled by the Secured Parties if such Qualified Person executes a written assumption of the Assigned Agreement whereby it agrees to assume and be liable for each and every duty, obligation and liability of "Tenant" under the Assigned Agreement from and after the date of such assumption, and cures any and all then existing Events of Default of Tenant that have arisen prior to the date ofthe assumption of the Assigned Agreement by such Qualified Person except for any Events of Default of Tenant that, by their nature, are not capable of being cured by such Qualified Person. Section 3. Representations and Warranties. Vernon hereby represents and warrants to the Assignee that, as of the date of this Consent: (a) The execution and delivery by Vernon of the Assigned Agreement and this Consent, and the performance by Vernon of its obligations under the Assigned Agreement 2 NY3 - 465766.06 and this Consent, have been duly authorized by all necessary corporate action, and do not and will not require any further consents or approvals which have not been obtained, or violate any provision of any law, regulation, order, judgment, injunction or similar matters or breach any material agreement presently in effect with respect to or binding upon Vernon. (b) All government approvals necessary for the execution and delivery by Vernon of the Assigned Agreement and this Consent, and the performance by Vernon of its obligations under the Assigned Agreement and this Consent, have been obtained and are in full force and effect. (c) Each of this Consent. and the Assigned Agreement has been duly executed and constitutes legal, valid and ,binding obligations of Vernon, enforceable against it in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights generally or by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law, or by principles of public policy. (d) To the knowledge of Vernon, the Assignor is not in default under any material covenant or obligation under the Assigned Agreement, and the Assigned Agreement is in full force and effect and has not been amended. Section 4. Consent and Agreement. Vernon and the Assignor hereby agree that, so long as any obligations of the Assignor under the Credit Agreement and the Security Agreement remain outstanding: (a) Notice of Material Amendments. Vernon and the Assignor will not enter into any amendment, supplement or other modification of the Assigned Agreement other than ministerial amendments, supplements and modifications (an "Amendment") until after the Assignee has been given at least twenty (20) days' prior written notice of the proposed Amendment by the Assignor (a copy of which notice will be provided to Vernon by the Assignor). (b) Notices of Default and Right to Cure (i) Vernon shall deliver to the Assignee at the address set forth on Section 7(j) or at such other address as the Assignee may designate in writing from time to time to Vernon, concurrently with the delivery thereof to the Assignor, a copy of each notice of default under the Assigned Agreement. Notwithstanding anything to the contrary contained in the Assigned Agreement, Assignee shall have the right, but not the obligation, without thereby assuming Assignor's obligations under the Assigned Agreement (except upon completion of a foreclosure of its security interest in the Assigned Agreement to the extent provided in Section 2(c)), to cure any such default within sixty (60) days after the later of the date of such notice or the last day of the cure period available to the Assignor in the Assigned Agreement (except with respect to payment defaults, which cure must be made within thirty (30) days after the later of the date of such notice or the last day of the cure period available to the Assignor in the Assigned NY3 - 465766.06 Agreement with respect to payment defaults). If possession of the Facility is necessary to cure any non-payment Event of Default of Tenant by the Assignor under the Assigned Agreement, and the Assignee commences foreclosure proceedings against the Assignor within sixty (60) days after the occurrence of such Event of Default of Tenant, the Assignee will be allowed an additional one hundred twenty (120) days after such sixty (60) day period to complete such proceedings; provided, however; that the aggregate cure period available to the Assignee under this Section 4(b) in addition to the cure period available to the Assignor in the Assigned Agreement for such non-payment Event of Default of Tenant, shall not exceed one hundred eighty (180) days after notice is given to the Assignee); provided, further, that if the Assignee is prohibited by court order or bankruptcy, insolvency or similar proceedings from curing any default under the Assigned Agreement, the foregoing time periods will be extended by the period of such prohibition, but in no event more than an additional twelve (12) month period. (ii) No cancellation, suspension or termination of the Assigned Agreement by Vernon shall be binding upon the Assignee without such notice and the opportunity to cure during the applicable extended cure periods specified in this Section 4(b). If the Assignee fails to cure a default to the extent provided in Section 2(c) within the extended cure periods specified in this Section 4(b), Vernon shall have all its rights and remedies with respect to such default, action or omission as set forth in the Assigned Agreement. (c) New Agreement upon a Rejection or Termination of the Assigned Agreement. In the event the Assigned Agreement is rejected or terminated as a result of any bankruptcy or insolvency proceeding with respect to the Assignor, Vernon will, at the option of the Assignee (or, its transferee or designee), exercised within forty-five (45) days after such rejection or termination, enter into a new agreement with the Assignee (or its transferee or designee) having identical terms as the Assigned Agreement (subject to any conforming changes necessitated by the substitution of parties and other changes as the parties may mutually agree); provided, that (i) the term under such new agreement shall be no longer than the remaining balance of the term specified in the Assigned Agreement, (ii) the Assignee (or its transferee or designee) agree to perform all of the duties and obligations of "Tenant" under the new agreement and (iii) the Assignee (or its transferee or designee) shall be required to cure any and all Events of Default of Tenant under the Assigned Agreement that was terminated (except for any such Events of Default of Tenant that, by their nature, are not capable of being cured by Assignee or its transferee or designee, as applicable) as promptly as possible after the execution of the new agreement, but no later than sixty (60) days after the execution of such new agreement. (e) Payments to Designated Account. The Assignor and Vernon acknowledge and agree that all payments to be made by Vernon to the Assignor (if any) under the Assigned Agreement shall be made in lawful money of the United States of America in immediately available funds, to the following account: Union Bank of California, N.A. Monterey Park, CA ABA No.: 122-000-496 Credit Account No.: 44300-04099 NY3 - 465766.06 Attn: Commercial Customer Service Unit Re: Bicent (California) Power LLC -- Project Revenues Collection Account or to such other account and/or such other person or entity and/or at such other address as the Assignee may from time to time specify in writing to Vernon. In making such payments, Vernon shall be entitled to rely conclusively on instructions that it may receive from time to time from the Assignee without any duty to make inquiry into the authority of the Assignee to give such instructions or the authenticity of any signatures placed upon such instructions. Section 5. Damages Limitation. NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY UNDER THIS CONSENT FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE, REMOTE, OR SPECULATIVE DAMAGES OR LOST PROFITS. Section 6. Omitted. Section 7. Miscellaneous. i. (a) This Consent shall be binding upon the successors and permitted assigns of each party and shall inure, together with the rights and remedies of the Assignee hereunder, to the benefit of the successors and permitted assigns of the parties hereto, including, without limitation, any entity that refinances all or any portion of the obligations, under or secured by, the Financing Documents. Vernon agrees to confirm such continuing obligation in writing upon the reasonable request of Assignor, Assignee or any of their respective successors, transferees or assigns. (b) No amendment or waiver of any provisions of this Consent or consent to any departure by any party hereto from any provisions of this Consent shall in any event be effective unless the same shall be in writing and signed by the Assignee and Vernon. (c) (i) This Consent shall be governed by, and construed under, the laws of the State of California applicable to contracts made and to be performed in such State and without reference to conflicts of laws. The parties hereto agree that any legal action or proceeding arising out of this Consent may be brought in the courts of the State of California, in and for the County of Los Angeles, or of the United States of America for the Central District of California. By execution and delivery of this Consent, the parties hereto accept, for themselves and in respect of their property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto irrevocably consent to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified airmail, ,postage prepaid, to the Assignee, Vernon and the Assignor, as the case may be, at their respective addresses for notices in Section 7(fl below and that such service shall be effective five (5) Business Days after such mailing. Nothing herein shall affect the right to serve process in any other manner permitted by law or the right of the parties hereto to bring NY3 - 465766.06 5 legal action or proceedings in any other competent jurisdiction. The parties hereto hereby waive any right to stay or dismissany action or proceeding under or in connection with any or all of this Consent or the transactions contemplated hereby brought before the foregoing courts on the basis offorum non-conveniens. (ii) Notwithstanding anything to the contrary in clause (i) of this Section 7(c), the parties hereto acknowledge and agree that any disputes that arise out of the Assigned Agreement (as distinct from disputes that arise out of this Consent) shall be resolved pursuant to the procedures set forth in Section 12.06 of the Assigned Agreement. Vernon and the Assignor acknowledge that the Assignee may have an interest in the outcome of such disputes and agree that the Assignee is entitled to participate in the resolution of such disputes. The parties hereto acknowledge and agree that the outcome of any dispute resolution under the Assigned Agreement shall be binding upon all of the parties hereto. (d) EACH OF VERNON, THE ASSIGNEE AND THE ASSIGNOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS CONSENT AND AGREEMENT. (e) This Consent may be executed in one or more counterparts with the same effect as if such signatures were upon the same instrument. This Consent` may be delivered by facsimile transmission: (f) All notices to be given under this Consent shall be in writing and shall be delivered personally, sent by certified mail return receipt requested or registered first-class mail, postage prepaid, or sent by facsimile, or courier to the intended recipient at its address as set forth below, and all payments to be made under this Consent shall be made by wire transfer of immediately available funds or check representing immediately collectible funds to the account or address of the 'intended recipient as set forth below (subject to Section 41e)), unless the recipient has given notice of another address or account for receipt of notices or payments. All such notices and other communications required or permitted under this Consent are effective I pon delivery. If to Vernon: City of Vernon Attn: Director of Light and Power Department 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 With copies to: 6 N Y3 - 465766.06 Latham & Watkins LLP Attention: David B. Rogers, Esq. 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071-2007 Facsimile: (213) 891-8763 City of Vernon Attn: City Attorney 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 If to Assignor: Bicent (California) Malburg LLC c/o Beowulf Energy LLC 103 N. Washington Street Easton, Maryland 21601 Attn: Douglas Halliday Telephone: (410) 770-9500 Facsimile: (410) 770-9705 With copies to: Bicent (California) Power LLC c/o Bicent Power LLC 575 Broadway, 3rd Floor New York, New York 10012 Facsimile: (212) 343-9949 and Bicent Power LLC Attn: General Counsel 575 Broadway, 3rd Floor New York, New York 10012 Facsimile: (212) 343-9949 and Paul, Weiss, Riflcind, Wharton & Garrison LLP Attn: Dale M. Sarro, Esq. 1285 Avenue of the Americas New York, New York 10019 Facsimile: (212) 492-0393 7 NY3 - 465766.06 If to Assignee: Union Bank of California, N.A. Energy Capital Services 445 South Figueroa Street, 15th Floor Los Angeles, California 90071 Attn: Susan K. Johnson Telephone: (213) 236-4125 Facsimile: (213) 236-4096 (g) This Consent shall terminate in its entirety upon written notice by the Assignee to the Assignor and Vernon of the earlier of (i) the indefeasible payment in full in cash of all obligations of the Assignor under the Credit Agreement and other Financing Documents and the termination of all commitments thereunder and in respect of any indebtedness incurred in respect of any refinancing thereof, and (ii) the termination of the Assigned Agreement in accordance with the terms thereof and the terms of this Consent. (h) The captions or headings at the beginning of each Section of this Consent are for convenience only and are -not apart of this Consent. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] S NY3 - 465766.06 IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (Lease) as of the date first above written. .VERNON THE CITY OF VERNON By: ZIA Name: Eric T. Fresch �— Title: City Administrator ASSIGNOR BICENT (CALIFORNIA) MALBURG LLC By: Name: Paul Prager Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A., as Collateral Agent By: Name: _ Title: [Signature Page to Consent to Assignment (Lease) -- Bicent (California) Malburg LLCI IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (Lease) as of the date first,above written. VERNON THE CITY OF VERNON By: Name: Eric T. Fresch Title: City Administrator ASSIGNOR BIC LIF A) MALBURG LLC By: Name: Paul Prager 61 Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A. By: Name: Kevin M. Zitar Title: Senior Vice President [Signature Page to Consent to Assignment (Lease)'— Bicent (California) Malburg LLCI IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (Lease) as of the date first above written. VERNON THE CITY OF VERNON By: Name: Eric T. Fresch Title: City Administrator ASSIGNOR BICENT (CALIFORNIA) MALBURG LLC By: Name: Paul Prager Title: President ASSIGNEI UNION BANK OF CALIFORNIA, N.A By: .;.• Name: Kevin Title: Senior Vice President [Signatme Page to Consent to Assignment (Lease) — Bicent (California) Marburg LLC] The execution of this Consent to Assignment (Lease) by the City of Vernon is hereby affirmed and attested to by: CITY F VERNON By: \ Name: Manuela Giron Title: City Clerk [Attestation to Consent to Assignment (Lease) — Bicent (California) Malburg LLC) EXECUTION COPY CONSENT TO ASSIGNMENT (CFD). This CONSENT TO ASSIGNMENT (CFD) ("Consent') is entered into as of April 10, 2008 among the City of Vernon, California, a municipal corporation and a chartered city duly organized and existing under and by virtue of the .Constitution and laws of the State of California and its Charter ("Vernon"), Bicent (California) Hoover LLC, a Delaware limited liability company (the "Assignor"), and Union Bank of California, N.A., as Collateral Agent for the Secured Parties defined in the Credit Agreement referred to below (in such, capacity, and together with its successors and permitted assignees, the "Assignee'). RECITALS WHEREAS, the Assignor and Vernon have entered into that certain Hoover Contract for Differences dated as of the date hereof (the "Assigned Agreement"); WHEREAS, pursuant to a Guarantee and Collateral Agreement dated as of the date hereof (the "Security Agreement"), the Assignor has granted to the Assignee a lien on and. a . security interest in, to and under all of its right, title and interest in the Assigned Agreement, as ' collateral security for the Assignor's obligations under that certain Credit Agreement dated as of the date hereof among Bicent (California) Power LLC, as borrower, Bicent (California) Malburg LLC, as subsidiary guarantor, the Assignor, as subsidiary .guarantor, the banks and other financial institutions from time to time party thereto, Union Bank of California, N.A., as sole lead arranger and sole bookrunner, Union Bank of California, N.A., as administrative agent, Union Bank of California, N.A., as syndication agent, and the Assignee, as collateral agent (the "Credit Agreement") and the related financing documents (collectively, together with the Credit Agreement, the "Financing Documents"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows: Section 1. Definitions. Any capitalized term used but not defined herein shall have the meaning specified for such term in the Assigned Agreement, except that the terms "Obligations", "Secured Parties" and "Lender" shall have the meanings specified for such terms in the Credit Agreement as it exists on the date hereof. Section 2. Consent.to Assignment. (a) Under the terms and conditions set forth in this Consent, Vernon hereby consents to: (i) the assignment by the Assignor of all its right, title and interest in, to and under the Assigned Agreement to the Assignee, as collateral security for the obligations as and to the extent provided in the Security Agreement; and (ii) the transfer of the Assigned Agreement to any Qualified Person (including any Qualified Person Controlled by the Secured Parties) in connection with the Assignee's or any successor transferee's exercise of its rights and remedies_ under the Credit 3 NY3 - 465839.06 Agreement and Financing Documents following the occurrence of an event of default by the Assignor under the Credit Agreement, including any public or private sale or any deed in lieu of foreclosure, and including any transfer from a Qualified Person that is Controlled by the Secured Parties to another Qualified Person. Such Qualified Person'shall be "Bicent" under, and shall be entitled to all of the benefits of, the Assigned Agreement. "Control" shall mean, with respect to any Person, a direct or indirect interest in at least half of the ownership interest having ordinary voting power in such Person. "Qualified Person" shall mean a Person with the requisite experience and financial capability to reliably own and operate the Facility. (b) The Assignor agrees that it shall remain liable to Vernon for all obligations of the Assignor under the Assigned Agreement, notwithstanding the collateral assignment contemplated in the Security Agreement. (c) If the Assignee elects to exercise its remedies under the Security Agreement to foreclose on its lien on the Assigned Agreement or otherwise effect a transfer of the Assigned Agreement to the Assignee or its designee, the Assignee shall notify Vernon pursuant to Section 7(f) of this Consent. Subject to the rights of Vernon under Section 4 of this Consent, upon the occurrence of the foregoing, the Assignee (or its assignee or transferee or successor thereof) (i) shall be `Bicent" under, and shall be entitled to all of the benefits of, the Assigned Agreement and (ii) shall assume in writing and be liable for each and every duty, obligation and liability of "Bicent" under the Assigned Agreement from and after the date of such assumption, and shall cure any and all then existing Events of Default that have arisen prior to the date of the assumption of the Assigned Agreement by Assignee except for any Events of Default that, by their nature, are not capable of being cured by Assignee. (d) The consent given by Vernon under Section 2(a) will only be effective with respect to a Qualified Person that is not controlled by the Secured Parties if such Qualified Person executes a written assumption of the Assigned Agreement whereby it agrees to assume and be liable for each and every duty, obligation and liability of "Bicent under the Assigned Agreement from and after the date of such assumption, and cures any and all then existing Events of Default that have arisen prior to the date of the assumption of the Assigned Agreement by such Qualified Person except for any Events of Default that, by their nature, are not capable of being cured by such Qualified Person. Section 3. Representations and Warranties. Vernon hereby represents and warrants to the Assignee that, as of the date of this Consent: (a) The execution and delivery by Vernon of the Assigned Agreement and this Consent, and the performance by Vernon of its obligations under the Assigned Agreement and this Consent, have been duly authorized by all necessary corporate action, and do not and will not require any further consents or approvals which have not been obtained, or violate any provision of any law, regulation, order, judgment, injunction or similar matters or breach any material agreement presently in effect with respect to or binding upon Vernon. 2 NY3 - 465839.06 (b) All government approvals necessary for the execution and delivery by Vernon of the Assigned Agreement and this Consent, and the performance by Vernon of its obligations under the Assigned Agreement and this Consent, have been obtained and are in full force and effect. (c) Each of this Consent and the Assigned Agreement has been duly executed and constitutes legal, valid and binding obligations of Vernon, enforceable against it in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights generally or by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law, or by principles of public policy. (d) To the knowledge of Vernon, the Assignor is not in default under any material covenant or obligation under the Assigned Agreement, and the Assigned Agreement is in full force and effect and has not been amended. Section 4.. Consent and Agreement. Vernon and the Assignor hereby agree that, so long as any obligations of the Assignor under the Credit Agreement and the Security Agreement remain outstanding: (a) Notice of Material Amendments. Vernon and the Assignor will not enter into any amendment, supplement or other modification of the Assigned Agreement other than ministerial amendments, supplements and modifications (an "Amendment") until after the Assignee has been given at least twenty (20) days' prior written notice of the proposed Amendment by the Assignor (a copy of which notice will be provided to Vernon by the Assignor). (b) Notices of Default and Right to Cure. (i) Vernon shall deliver to the Assignee at the address set forth on Section 7(f), or at such other address as the Assignee may designate in writing from time to time to Vernon, concurrently with the delivery thereof to the Assignor, 'a copy of each notice of default under the Assigned Agreement. Notwithstanding anything to the contrary contained in the Assigned Agreement, Assignee shall have the right, but not the obligation, without thereby assuming Assignor's obligations under the Assigned Agreement (except upon completion of a foreclosure of its security interest in the Assigned Agreement to the extent provided in Section 2fq)) to cure any such default within sixty (60) days after the later of the date of such notice or the last day of the cure period available to the Assignor in the Assigned Agreement (except with respect to payment defaults, which cure must be made within thirty (30) days after the later of the date of such notice or the last day of the cure period available to the Assignor in the Assigned Agreement with respect to payment defaults). If possession of the Facility is necessary to cure any non-payment Event of Default by the Assignor under the Assigned Agreement, and the Assignee commences foreclosure proceedings against the Assignor within sixty (60) days after the occurrence of such Event of Default, the Assignee will be allowed an additional one hundred twenty (120) days after such sixty (60) day period to complete such proceedings; provided, NY3 - 465839.06 however, that the aggregate cure period available to the Assignee under this Section 4(b), in addition to the cure period available to the Assignor in the Assigned Agreement for such non- payment Event of Default, shall not exceed one hundred eighty (180) days after notice is given to the Assignee); provided, further, that if the Assignee is prohibited by court order or bankruptcy, insolvency or similar proceedings from curing any default under the Assigned Agreement, the foregoing time periods will be extended by the period of such prohibition, but in no event more than an additional twelve (12) month period: (ii) No cancellation, suspension or termination of the Assigned Agreement by Vernon shall be binding upon the Assignee without such notice and the opportunity to cure during the applicable extended cure periods specified in this Section 4(b); If the Assignee fails to cure a default to the extent provided in Section 2(c) within the extended cure periods specified in this Section 4(b), Vernon shall have all its rights and remedies with respect to such default, action or omission as set forth in the Assigned Agreement. (c) New Agreement upon a Rejection or Termination of the Assigned Agreement. In the event the Assigned Agreement is rejected or terminated as a result of any bankruptcy or insolvency proceeding with respect to the Assignor, Vernon will, at the option of the Assignee (or its transferee or designee), exercised within forty-five (45) days after such rejection or termination, enter into a new agreement .with the Assignee (or its transferee or designee) having identical terms as the Assigned Agreement (subject to any conforming changes necessitated by the substitution of parties and other changes as the parties may mutually agree); provided, that (i) the term under such new agreement shall be no longer than the remaining balance of the term specified in the Assigned Agreement, (ii) the Assignee (or its transferee or designee) agree to perform all of the duties and obligations of `Bicent" under the new agreement, and (iii) the Assignee (or its transferee or designee) shall be required to cure any and all Events of Default under the Assigned Agreement that was terminated (except for any such Events of Default that, by their nature, are not capable of being cured by Assignee or its transferee or designee, as applicable) as promptly as possible after the execution of the new agreement, but no later than sixty (60) days after the execution of such new agreement. (d) Right to Terminate as a Forward Contract Merchant. Assignor acknowledges and agrees that the Assigned Agreement constitutes a "forward contract" and that Vernon and Assignor are each "forward contract merchants" within the meaning of the United States Bankruptcy Code. As such, under current applicable law, if an Event of Bankruptcy occurs with respect to Assignor, Vernon may be entitled to exercise certain remedies, including, but not limited to; termination of the assigned agreement, without regard to an automatic stay imposed under the Bankruptcy .Code. Vernon agrees that if an. Event of Bankruptcy occurs with respect to Assignor, Vernon will not exercise its right to terminate the Assigned Agreement if (i) within forty-five (45) days of the initiation or commencement of such Event of. Bankruptcy, Assignor files a motion with the Bankruptcy Court to assume the Assigned Agreement and (ii) such motion is granted within one hundred twenty (120) days of such Event of Bankruptcy. Nothing in this Section 4(d) shall affect the remedies of the Assignee under Section 4(c) above. (e) Payments to Designated Account. The Assignor and Vernon acknowledge NY3 - 465839.06 and agree that all payments to be made by Vernon to the Assignor (if any) under the Assigned Agreement shall be made in lawful money of the United States of America in immediately available funds, to the following account: Union Bank of California, N.A. Monterey Park, CA ABA No.: 122-000-496 Credit Account No.: 44300-04099 Attn: Commercial Customer Service Unit Re: Bicent (California) Power LLC -- Project Revenues Collection Account or to such other account and/or such other person or entity and/or at such other address as the Assignee may from time to time specify in writing to Vernon. In making such payments, Vernon shall be entitled to rely conclusively on instructions that it may receive from time to time from the Assignee without any duty to make inquiry into the authority of the Assignee to give such instructions or the authenticity of any signatures placed upon such instructions. Section 5. Damages Limitation. NO PARTY SHALL BE LIABLE TO . ANY OTHER PARTY UNDER THIS CONSENT FOR ANY CONSEQUENTIAL, EXEMPLARY, PUNITIVE, REMOTE, OR SPECULATIVE DAMAGES OR LOST PROFITS. Section 6. [Reserved]. Section 7. Miscellaneous. (a) This Consent shall be binding upon the successors and permitted assigns of each party and shall inure, together with the rights and remedies of the Assignee hereunder, to the benefit of the successors and permitted assigns of the parties hereto, including, without limitation, any entity that refinances all. or any portion of the obligations, under or secured by, the Financing Documents. Vernon agrees to confirm such continuing obligation in writing upon the reasonable request of Assignor, Assignee or any of their respective successors, transferees or assigns. (b) No amendment or waiver of any provisions of this Consent or consent to any departure by any party hereto from any provisions of this Consent shall in any event be effective unless the same shall be in writing and signed by the Assignee and Vernon. (c) (i) This Consent shall be governed by, and construed under, the laws of the State of California applicable to contracts made and to be performed in such State and without reference to conflicts of laws. The parties hereto agree that any legal action or proceeding arising out of this Consent may be brought in the courts of the State of California, in and for the County of Los Angeles, or of the United States of America for the Central District of 5 NY3 - 465839.06 California. By execution and delivery ofthis Consent, the parties hereto accept, for themselves and in respect of their property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto irrevocably consent to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified airmail, postage prepaid, to the Assignee, Vernon and the Assignor, as the case may be, at their respective addresses for notices in Section 7(f) below and that such service shall be effective five (5) Business Days after such mailing. Nothing herein shall affect the right to serve process in any other manner permitted by law or the right of any party hereto to bring legal action or proceedings in any other competent jurisdiction. The parties hereto hereby waive any right to stay or dismiss any action or proceeding under or in connection with any or all of this Consent or the transactions contemplated hereby brought before the foregoing courts on the basis'offorum non-conveniens. (ii) Notwithstanding anything to the contrary in clause (i) of this Section 7(c), the parties hereto acknowledge and agree that any disputes that arise out of the Assigned Agreement (as distinct from disputes that arise out of this Consent) shall be resolved pursuant to the procedures set forth in the Assigned Agreement. Vernon and the Assignor acknowledge that.the Assignee may have an interest in the outcome of such disputes and agree that the Assignee is entitled to participate in the resolution of such disputes. The parties hereto acknowledge and agree that the outcome of any dispute resolution under the Assigned Agreement shall be binding upon all of the parties hereto. (d) EACH OF VERNON, THE ASSIGNEE AND THE ASSIGNOR HEREBY IRREVOCABLY WAIVES, TO. THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS CONSENT AND AGREEMENT. (e) This Consent may be executed in one or more counterparts with the same effect as if such signatures were upon the same instrument. This Consent may be delivered by facsimile transmission. (f) All notices to be given under this Consent shall be in writing and shall be delivered personally, sent by certified mail return receipt requested or registered first-class mail, postage prepaid, or sent by facsimile, or courier to the intended recipient at its address as set forth below, and all payments to be made under this Consent shall be made by wire transfer of immediately available funds or check representing immediately collectible funds to the account or address of the intended recipient as set forth below (subject to Section 4(e)), unless the recipient has given notice of another address or account for receipt of notices or payments. All such notices and other communications required or permitted under this Consent are effective upon delivery. 6 NY3 - 465839.06 If to Vernon: City of Vernon Attn: Director of Light and Power Department 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 With copies to: Latham & Watkins LLP Attention: David B. Rogers, Esq. 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071-2007 Facsimile: (213) 891-8763 City of Vernon Attn: City Attorney 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 If to Assignor: With copies to: Bicent (California) Hoover LLC c/o Beowulf Energy LLC 103 N. Washington Street Easton, Maryland 21601 Attn: Douglas Halliday Telephone: (410) 770-9500 Facsimile: (410) 770-9705 Bicent (California) Power LLC c/o Bicent Power LLC 575 Broadway, 3rd Floor New York, New York 10012 Facsimile: (212) 343-9949 and 7 ' NY3 - 465839.06 If to Assignee: Bicent Power LLC Attn: General Counsel 575 Broadway, 3rd Floor New York, New York 10012 Facsimile: (212) 343-9949 and Paul, Weiss, Rilkind, Wharton & Garrison LLP Attn: Dale M. Sarro, Esq. 1285 Avenue of the Americas New York, New York 10019 Facsimile: (212) 492-0393 Union Bank of California, N.A. Energy Capital Services 445 South Figueroa Street, 15th Floor Los Angeles, California 90071 Attn: Susan K.Johnson Telephone: (213) 236-4125 Facsimile: (213) 236-4096 (g) This Consent shall terminate in its entirety upon written notice by the Assignee to the Assignor and Vernon of the earlier of (i) the indefeasible payment in full in cash of all obligations of the Assignor under the Credit Agreement and other Financing Documents and the termination of all commitments thereunder and in respect of any indebtedness incurred in respect of any refinancing thereof, and (ii) the termination of the Assigned Agreement in accordance with the terms thereof and the terms of this Consent. (h) The captions or headings at the beginning of each Section of this Consent are for convenience only and are not a part of this Consent. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8 NY3 - 465839.06 IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (CFD) as of the date first above written. VERNON THE CITY OF VERNON By. 1z Name: ZMC F(tE$GN Title: CITY ADMWIWATok ASSIGNOR BICENT (CALIFORNIA) HOOVER LLC By: Name: Title: ASSIGNEE By: _ Name: Title: [City Consent to CFD — Bicent (California) Hoover LLCI IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (CFD) as of the date first above written. VERNON THE CITY OF VERNON By: Name: Eric T. Fresch Title: City Administrator ASSIGNOR BICENT (CALIFOR A) HOOVER LLC By: Name: Paul Prager Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A. By: Name: Kevin M. Zitar Title: Senior Vice President [Signature Page to Consent to Assignment (CFD) — Bicent (California) Malburg LLC] IN WITNESS WHEREOF, each of Vernon, the Assignee and the Assignor has duly executed this Consent and Agreement (CFD) as of the date first above written. VERNON THE CITY OF VERNON By: Name: Eric T. Fresch Title: City Administrator ASSIGNOR BICENT (CALIFORNIA) HOOVER LLC By: Name: Paul Prager Title: President ASSIGNEE UNION BANK OF CALIFORNIA, N.A. By. Name: Kevin Title: Senior Vice President [Signature Page to Consent to Assignment (CFD) — Bicent (California) Malburg LLC] I The execution of this Consent to Assignment (CFD) by the City of Vernon is hereby affirmed and attested to by: CITY F VERNON By: Name: Manuela Giron Title: City Clerk [Attestation to Consent to Assignment (CFD) — Bicent (California) Hoover LLC] FIRST AMERICAN TITLE INSURANCE COMPANY EXECUTION VERSION NATIONAL COMMERCIAL SERVICES LOS ANGELES OFFICE Recording Requested by City of Vernon and when r cqrded, mail to: 16ftlr (CALIF01MAM PM 103 0. v twumo Sr 04111/08 lIILIIII II III�I I�llllllll�lillll�lllllll.Illlllll FAMhl' D 20080629749 WESIDE Attn: - 2�285`1-LA2 SPACE ABOVE FOR RECORDER'S USE Recording Fee: Exempt pursuant to California Government Code § 27383 MEMORANDUM OF LEASE AND EASEMENTS THIS LEASE HEREIN IS FOR A PERIOD LESS THAN 99 YEARS. A.P.N. 009-00"00 A.P.N. The City of Vernon, a municipal corporation and a chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California ("Landlord'), hereby leases and grants easements to Bicent (California) Malburg LLC, a' Delaware limited liability company ("Tenant"), that certain real property located in the City of Vernon, California (the "C ), and more particularly described on Exhibit "A- I" and depicted on Exhibit "A-2" attached hereto hereto (the "Land Premises"). I. The rent payable by Tenant and the other terms of the tenancy are set forth in a certain unrecorded Lease and Grant of Easements between Landlord and Tenant dated April IQ , 2008 (the "Lease"), the provisions of which Lease are incorporated herein by this reference, and covering the Premises. Unless otherwise defined herein, any term with initial capitalization herein shall have the definition set forth in the Lease. LA\1780236.4 2. The Initial Term of this Lease commences on the Commencement Date (as defined in the Lease) and expires thirty (30) full Lease Years (as defined in the Lease) thereafter. In addition, Tenant has two (2) options to extend this Lease for five (5) Lease Years each. 3. Pursuant to the Lease, Landlord has also granted to Tenant non-exclusive Easements (as defined in the Lease) appurtenant to the leasehold estate created by this Lease in, on, over, under and across that portion of adjacent property owned by Landlord in the City as more particularly described on Exhibit "B" and depicted on Exhibit "C", each attached hereto and incorporated herein by this reference (the "Easement Area") for the purpose of (i) the construction, installation (including the right to connect to existing public facilities), maintenance and use of electric, gas, cable, telephone, water, sewer, drainage and other utility facilities as necessary to serve the Premises for Tenant's use thereof (including overhead transmission of electricity), and (ii) vehicular and pedestrian ingress and egress over the Easement Area to and from the Premises as reasonably necessary for Tenant's use of the Premises, including, without limitation, for the construction, installation, maintenance and use of all improvements and other property of Tenant constructed, installed, placed or located from time to time on the Premises. 4. Landlord has reserved unto itself any easements in, on, over, across and under the Premises reasonably necessary for the construction, replacement, repair, maintenance and operation of any facilities on the Retained Property, so long as such easements shall not i materially interfere with Tenant's operations on the Premises, and for the delivery of emergency services to the Retained Property. Landlord further has reserved unto itself, and any City owned ra 01 and/or operated utility service provider, easements in, on, over, across and under the Premises for l�) 2 LAMS0236.4 the construction, replacement, repair, maintenance and operation of existing dry and wet utilities over certain portions of the Premises, including but not limited to the existing water pipelines and gas lines under the Premises, the locations of which are more particularly described on Exhibit "D" and shown on Exhibit"E" attached hereto and incorporated herein by this reference. 5. Landlord and Tenant have further agreed that in the event that that certain power purchase tolling agreement between Landlord and Tenant (the "PPTA") of even date herewith is terminated in connection with any bankruptcy or insolvency proceedings with respect to the Tenant, any successor in interest to the Tenant shall be obligated to enter into a new power purchase tolling agreement with Landlord on substantially the same terms as the PPTA. 6. This instrument is executed solely for recording purposes and nothing herein shall be deemed or construed to modify or vary the terms of the Lease or the easements granted therein. In the event of any conflict between the Lease and this memorandum, the terms and conditions of the Lease shall prevail. C'4 fJl t>a 14 t>i 3 LAU 780236.4 I IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease as of the day of, 2008. "Landlord" THE CITY OF VERNON, a California Charter City By: v Name: Eric T. Fresch Title:. City Administrator "Tenant" BICENT (CALIFORNIA) MALBURG LLC, a Delaware limited liability company - By: Name: Paul Prager Title: President By: Print Name: Title: (a CO (Signature Page to Memorandum of Lease and Easements— Bicent (California) Malburg LLC] 1` J IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Lease as of the Co day of /�� 2008. "Landlord" THE CITY OF VERNON, a California Charter City By; Name: Eric T. Fresch Title:. City Administrator "Tenant" BICENT (CALIFORNIA) MALBURG LLC, a Delaware limited liability company Name: Paul Prager Title: President C:5 {Signature Page to Memorandum of Lease and Easements— Bicent (California) Malburg LLC) tjl 1! L� .14 STATE OF CALIFORNIA ) ss. COUNTY OF L c S &6-CIC 5 ) On Iqf4 L- 7 2008, before me, �u��f1, A personally appeared CCR C t- FKE5 N J ' who proved to me on the basis of satisfactory evidence to be the person(o whose name(A) is/are— subscribed to the within instrument and acknowledged to me that heJslic/dIcy executed the same in his/her/heir authorized capacity(}*, and that by his/her/tkeir signature(g) on the instrument the person(j), or the entity upon behalf of which the person( acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. otary Public [SEAL] R101M /4 W Corr m utbn # 16OU15 La ►Jotory KtAC - CaWWj0 * Ct "Vn 6PN Fhb 19 201 [Notary Page to Memorandum of Lease and Easements — Bicent (California) Malburg LLC) r� ,tea Ua State of New York County off On the 7Ah day o , 2008, before me, the undersigned, personally appeared ( personally known to me or proved to me on the basis of satisfacto evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person on behalf of which the individual(s) acted, executed the instrument. WITNESS my hand and official seal. t Signature Z (Seal) BROOKE SPIEGEL j Notary Puttlic, State of Now York y` No. 01 SP4964267 OueBNed In Nord York County GG + Oowmdwton Eqk- Aug. 7. 2001 l� [Notary Page to Memorandum of Lease and Easements— Bicent (California) Malburg LLC] o to The execution of this Memorandum of Lease and Easement by the City of Vernon is hereby affirmed and attested to by. CITY OF VERNON By: v� Nam , Manuela Giron Title: City Clerk Q Cb [Attestation to Memorandum of Lease and Easements — Bicent (California) Malburg LLC] M Q U7 1.) Sz� fn LAU 77577 B.13 EXHIBIT "A-1" LEGAL DESCRIPTION OF LAND PREMISES [Attached Hereto.] A-1 A PORTION OF LOT 7, TRACT NUMBER 6452 IN THE CITY OF VERNON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 94 PAGES 77 AND 78 OF MAPS, RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST NORTHERLY CORNER OF SAID LOT 7, SAID CORNER ALSO BEING THE BEGINNING OF A CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 367.83 FEET, A RADIAL LINE PASSING THROUGH SAID CORNER BEAR SOUTH 58'03'33 WEST; THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 59'3738" AN ARC DISTANCE OF 382.79 FEET; THENCE NORTH 88'25'55" EAST 323.79 FEET ALONG THE NORTHERLY LINE OF SAID LOT 7 TO A POINT ON THE SOUTHERLY LINE OF A PORTION DEEDED FOR THE WIDENING OF THE LOS ANGELES JUNCTION RAILROAD RIGHT —OF --WAY AS SHOWN ON LOS ANGELES COUNTY FIELD MAP NUMBER 10287 PAGE A3, RECORDS OF SAID COUNT, SAID POINT ALSO BEING THE BEGINNING OF A CURVE CONCAVE SOUTHERLY HAVING A RADIUS OF 906.21 FEET; THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 4'45'51" AN ARC DISTANCE OF 75.35 FEET TO THE BEGINNING OF A COMPOUND CURVE HAVING A RADIUS OF 294.44 FEET; THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 13'28'39" AN ARC DISTANCE OF 69.26 FEET TO A POINT ON THE EASTERLY LINE OF A PORTION DEEDED FOR THE WIDENING OF SOTO STREET AS SHOWN ON SAID LOS ANGELES COUNTY FIELD MAP; THENCE SOUTH 1'37'37" EAST 186.27 FEET ALONG SAID EASTERLY LINE; THENCE SOUTH 88'10'26" WEST 33.20 FEET; THENCE NORTH 01'49'34" WEST 6.00 FEET: THENCE SOUTH 88'10'26" WEST 6.00 FEET; THENCE SOUTH 01'49'34" EAST 6.00 FEET; THENCE SOUTH 88'10'26" WEST 439.07 FEET; THENCE NORTH 01*27*57" WEST 115.24 FEET; THENCE SOUTH 89'10'17" WEST 193.60 FEET; THENCE NORTH 02'51'27" WEST 42.65 FEET; THENCE NORTH 87'47'00" EAST 11.55 FEET; THENCE THENCE NORTH 01'54'17" WEST 24.22 FEET; THENCE SOUTH 87'28'16" WEST 10.26 FEET; THENCE NORTH 01'06'15" WEST 13.30 FEET; THENCE SOUTH 88'48'42" WEST 81.59 FEET; THENCE SOUTH 01'26'34" EAST 79.61 FEET; THENCE SOUTH 89'10'17" WEST 37.82 FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 7; THENCE NORTH 00'09'03" WEST 267.99 FEET ALONG SAID WESTERLY LINE TO THE POINT OF BEGINNING. CONTAINING 3.10 ACRES MORE OR LESS. AS SHOWN ON EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE APART HEREOF. DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08 0 co DAVID T. ROSELL Dom. 9-30-00 No. 6281 4� C) is LAU775778.13 EXHIBIT "A-2" SITE PLAN DEPICTING LAND PREMISES [Attached Hereto.] A-2 aA0 }�f I "= 140' ahg0 POINT OF BEGINNING MORTH N'LY CORNER LOT 7 SOUTHERLY LINE AND WESTERLY LINE O THE PORTIONS DEEDED FOR THE W Q WIDENING Of SOTO STRL D LOS ^ ANGElES JUNCTION RACO. AS I N SHOWN ON F87/A W ILA JUNY CO > X p Ix ¢ ¢ o L109 L8 - N88'25'55"E 323.79' �'-C2' 3_. > o _ L6 1 LiU Z W j ul W W Q Go -A- 193.60' S -1 0- L12 S89'10'17"W 1 .1 n LEASE AREA k6 1 tY >- W M m F- ¢ n > PORTION OF LOT -f � N� ~ `^ J ly W TRACT 1\10. �'; i z Lai L, I a v •1 04/71-73 - S88'10'26"W 439.07' VARIES _U —20' oID � U J E A S T 5 0 T H S T R E E T} (40' WIDE PUBLIC RIGHT-OF-WAY) LL 20' LINE TABLE LINE LENGTH FEARING Ll 33.20 58810'26'W L2 6.00 N01'49'34"W l3 6.00 588'10'26"w CURVE TABLE l+ 6.00 SOt'49' 34"E CURVE DELTA RADIUS LENGTH l5 42.65 502'51'27"E Ct 59'37'8" 367.83 382.79' l6 11.55 T4T00"w L7 2+.22 SOt'54'17"E L8 10.26 S8T28'16-w L9 13.30 SOI-06-15-El Lt0 81.59 S88'48'42"w ll! 79.61 SOt'26'34"E L12 37.82 S89'10'17"W C2 4'45'S1' 906.21 75.35' C3 13'28'39" 29a.aa 69.26' EXHIBIT "B" TO MEMORANDUM OF LEASE AND EASEMENTS LEGAL DESCRIPTION OF EASEMENT AREA [Attached Hereto.] Exhibit "B" to Memorandum of Lease and Easements LAN 1780236.4 A PORTION OF LOT 7, TRACT NUMBER 6452 IN THE CITY OF VERNON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 94 PAGES 77 AND 78 OF MAPS, RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE WEST LINE OF SAID LOT 7, SAID POINT BEING NORTH 00'09'03" WEST 194.65 FROM THE SOUTHWESTERLY CORNER OF SAID LOT 7, THENCE NORTH 88'22'12" EAST 238.52 FEET; THENCE SOUTH 01'37'48" EAST 18.06 FEET; THENCE NORTH 88'22'12" EAST 42.43 FEET; THENCE SOUTH 01'23'22" EAST 176.85 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID LOT 7; THENCE NORTH 88'26'12" EAST 32.59 FEET ALONG SAID SOUTHERLY LINE; THENCE NORTH 01.27'57" WEST 211.35 FEET; THENCE SOUTH 89'10'17" WEST 312.89 FEET TO A POINT ON SAID WESTERLY LINE; THENCE SOUTH 00'09'03" EAST 20.76 FEET ALONG SAID EASTERLY LINE TO THE POINT OF BEGINNING. AS SHOWN ON EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE APART HEREOF. DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08 DAVID T. ROSELL M. 4-3Q-M No. 6281, EXHIBIT "C" TO MEMORANDUM OF LEASE AND EASEMENTS DEPICTION OF EASEMENT AREA [Attached Hereto.] N cU Exhibit "C" to Memorandum of Lease and Easements LA11780236.4 i i J-V �� I 20' rRAC r J\j0, 64 i\Jj,j, J'f/ f -' 13 1 "— 50' I W � Q z o S89'10'17"W 312.89' u' ACCESS EASEMENT > = I S00'09'03"E 20.76' a N8B'22'12"E 238.52' N88'22" 2"E W J S01'37'48"E 18.06._42.43'-i m POINT OF BEGINNING �oI L -W > o W lli In N En O d O) 0 r � W N N r N O N rn r� W O N N Z O O O SOUTHWEST CORNER LOT 7 N bo TRACT No 6452 M B 94/77-78 00 20' I � Il O N E A S T 5 0 T H S T R E E T (40' WIDE PUBLIC RIGHT-OF-WAY) r� °I cc� L.;.a LAU 780236.4 EXHIBIT "D"TO MEMORANDUM OF LEASE AND EASEMENTS LEGAL DESCRIPTION OF CITY RETAINED UTILITY EASEMENT AREA [Attached Hereto.] Exhibit "D" to Memorandum of Lease and Easements A 10' WIDE STRIP OF LAND BEING A PORTION OF LOT 7, TRACT NUMBER 6452 IN THE CITY OF VERNON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 94 PAGES 77 AND 78 OF MAPS, RECORDS OF SAID COUNTY, THE CENTERLINE IS DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE WEST LINE OF SAID LOT 7, SAID POINT BEING NORTH 00'09'03" WEST 245.99 FROM THE SOUTHWESTERLY CORNER OF SAID LOT 7, THENCE NORTH 88'36'21" EAST 117.81 FEET TO THE POINT OF TERMINUS. THE SIDELINES OF SAID 10' STRIP OF LAND, SHALL BE SHORTENED OR PROLONGATED SO AS TO TERMINATE WESTERLY AT THE WESTERLY LINE OF SAID LOT 7 AND EASTERLY AT A LINE THAT PASSES THROUGH SAID POINT OF TERMINUS BEARING SOUTH 02'51'27" EAST. AS SHOWN ON EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE APART HEREOF. DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08 N AVID T. . ROSLL E, -30Mt EXHIBIT "E" TO MEMORANDUM OF LEASE AND EASEMENTS SITE PLAN DEPICTING CITY RETAINED UTILITY EASEMENT AREA [Attached Hereto] 0 ea O `4 E-1 LA\1780236.4 I I 20' I I 1' =30' IJr1 6'f 94/ 11J 18 W } Z, Q, z o PIPELINE EASEMENT POINT OF TERMINUS —N88'36'21_'E——117.81' S02'51'27"E cr POINT OF BEGINNING W J I J 0 J CL I O> — W � > 0 I � W N UJ O �t s O o O O 2 SOUTHWEST CORNER LOT 7 TRACT No. 6452, M.B. 94/77-78 20' 0 N E A S T 5 0 T H S T R E E T (40' WIDE PUBLIC RIGHT-OF-WAY) EXECUTION VERSION POWER PURCHASE TOLLING AGREEMENT BETWEEN BICENT (CALIFORNIA) MALBURG LLC AND THE CITY OF VERNON AS OF APRIL 10, 2008 LAU 845906.2 TABLE OF CONTENTS ARTICLE I DEFINITIONS; INTERPRETATION...................................................................I Section 1.1 General Definitions . ...................................................................................... I Section 1.2 Interpretation...............................................................................................12 ARTICLE II TERM; SERVICE COMMENCEMENT DATE .................................. Section 2.1 Service Term...............................................................................................13 Section 2.2 Service Commencement Date.....................................................................13 ARTICLE III OBLIGATIONS AND PRODUCT DELIVERIES..........................................13 Section 3.1 Purchase and Sale Generally.......................................................................13 Section 3.2 Contract Energy..........................:.:........................................... ...13 ................ Section 3.3 Adjusted Contract Capacity.........................................................................14 Section 3.4 Ancillary Services.......................................................................................14 Section 3.5 Resource Adequacy Benefits.......................................................................14 Section 3.6 Exclusivity and Priority...............................................................................16 Section 3.7 Compliance with Applicable Law...............................................................16 Section 3.8 Transmission...............................................................................................16 ARTICLE IV PRODUCT PRICE..............................................................................................16 Section 4.1 Contract Price..............................................................................................16 Section 4.2 Energy Payment.......................................................................:...................17 Section 4.3 Capacity Payment........................................................................................18 Section4.4 Escalation....................................................................................................18 Section 4.5 Costs and Charges.......................................................................................18 ARTICLE V REMEDIES FOR FAILURE TO DELIVER OR RECEIVE ..........................19 Section 5.1 Failure to Deliver Contract Energy.............................................................19 Section 5.2 Failure to Receive Contract Energy............................................................19 Section 5.3 Failure to Deliver Adjusted Contract Capacity...........................................19 ARTICLE VI FORCE MAJEURE............................................................................................20 Section 6.1 Force Majeure..............................................................................................20 Section 6.2 Termination.................................................................................................20 ARTICLEVII TESTING............................................................................................................20 Section7.1 Testing.........................................................................................................20 Section 7.2 Adjusted Contract Capacity Test.................................................................21 Section 7.3 Effect of Adjusted Contract Capacity Test..................................................21 ARTICLE VIII OPERATIONS AND MAINTENANCE........................................................21 Section 8.1 Seller's Operation Obligations....................................................................21 Section 8.2 Seller's Maintenance and Repair Obligations.............................................22 Section8.3 Records........................................................................................................22 i LA11845906.2 ARTICLE IX TOLLING AND FUEL.....................................................:.................................22 Section9.1 Tolling........................................................................................................22 Section 9.2 Title and Risk of Loss..................................................................................22 Section 9.3 Seller's Gas Events......................................................................................23 ARTICLE X SCHEDULING COORDINATOR......................................................................23 Section 10.1 Buyer Scheduling Coordinator............................::...................................23 Section 10.2 Scheduling Coordinator Obligations.........................................................23 Section 10.3 CAISO Costs and Revenues......................................................................23 Section 10.4 Terminating Buyer's Designation as Scheduling Coordinator..................23 Section 10.5 CAISO Sanctions......................................................................................24 ARTICLE XI DISPATCH NOTICES AND OPERATING LIMITATIONS ........................24 Section 11.1 Availability Notice.....:..............................................................................24 Section 11.2 Dispatch Notice.........................................................................................25 Section 11.3 Dispatch Notice Updates...........................................................................25 Section 11.4 Operating Limitations .............................. .................................................. 25 Section 11.5 Writing Requirements...............................................................................25 Section 11.6 Communications Protocols..................::....................................................25 Section 11.7 Operating Records.....................................................................................26 ARTICLEXII METERING.......................................................................................................26 Section 12.1 Ownership, Operation and Maintenance of Meters...................................26 Section12.2 Meter Reading..........:................................................................................26 Section 12.3 Alternatives in Event of Non-Operability.................................................26 Section12.4 Calibration.................................................................................................26 Section 12.5 Shared Access and Meter Data..................................................................27 ARTICLEXIII OUTAGES .........,...........................................................................................27 Section 13.1 Scheduled Outages........................................................... .:.:.:... .:.:...... 27 Section 13.2 Affect of Scheduled Outages on Delivery Obligations .............................27 Section 13.3 No Scheduled Outages During Summer Months......................................28 Section 13.4 Notice of Unscheduled Outages ........................................ ......................28 Section13.5 Inspection..................................................................................................28 Section 13.6 Reports of Outages...........................................:........................................28 ARTICLE XIV EVENTS OF DEFAULT; REMEDIES..........................................................28 Section 14.1 Events of Default ........................... ......... ......... ......... ......................28 Section 14.2 Seller Events of Default ............................. .................... ......................29 Section 14.3 Declaration of an Early Termination Date................................................29 Section 14.4 Termination Payment................................................................................29 Section 14.5 Notice of Payment of Termination Payment.............................................30 Section 14.6 Disputes With Respect to Termination Payment.......................................30 Section 14.7 Suspension of Performance and Other Remedies.....................................30 ARTICLE XV PAYMENT AND BILLING..............................................................................30 Section'15.1 Billing Period............................................................................................30 n LA\I845906.2 Section 15.2 . Timeliness of Payment........................:.....................................................30 Section 15.3 Disputes and Adjustments of Invoices......................................................30 Section 15.4 Netting of Payments..................................................................................31 Section 15.5 Payment Obligations Absent Netting........................................................31 ARTICLE XVI LIMITATIONS................................................................................................31 Section 16.1 Limitation of Remedies, Liability and Damages.......................................31 ARTICLE XVII CREDIT SUPPORT.......................................................................................32 Section 17.1 Financial Information................................................................... ......32 Section 17.2 Subordinated Security Interest and Mortgage...........................................32 Section 17.3 Debt Covenant.......:...................................................................................33 ARTICLE XVIII GOVERNMENTAL CHARGES.................................................................33 Section 18.1 Cooperation...............................................................................................33 Section 18.2 Governmental Charges..............................................................................33 Section 18.3 Greenhouse Gas Charges...........................................................................34 ARTICLE XIX DISPUTE RESOLUTION...............................................................................34 Section 19.1 Dispute Resolution....................................................................................34 Section 19.2 Informal Resolution...................................................................................34 Section 19.3 Arbitration.................................................................................................34 Section 19.4 Waiver of Jury Trial.........................................................................:........35 ARTICLE XX MISCELLANEOUS.........................................................................................35 Section 20.1 Representations and Warranties...............................................................35 Section 20.2 Title and Risk of Loss...............................................:.................:..............36 Section20.3 Indemnity...................................................................................................36 Section 20.4 Assignment...........................................................................I.....................36 Section 20.5 Governing Law..............:...........................................................................37 Section 20.6 Notices ..................... ...................: .................:.............................37 Section 20.7 Entire Agreement ..... ................... .............................. ......... ..........38 Section 20.8 Obligations Surviving Termination...........................................................38 Section 20.9 Amendment...............................................................................................38 Section 20.10 No Waiver...............................................................................................38 Section 20.11 Regulatory Review..................................................................................39 Section 20.12 Insurance..................................................................................................39 Section 20.13 Headings and Captions............................................................................39 Section 20.14 No Third Party Beneficiaries...................................................................40 Section 20.15 Audit..........................................:.............................................................40 Section 20.16 Forward Contract.....................................................................................40 Section 20.17 Construction of Agreement.....................................................................40 Section 20.18 Counterparts............................................................................................40 Section 20.19 Confidentiality.........................................................................................40 Section 20.20 No Immunity Claim.................................................................................40 Section 20.21 Cooperation Regarding Possible Future Alternative Power Source ........ 40 LA11845906.2 Appendices: Appendix A (Operating Limitations) Appendix B (Degradation Schedule) Appendix C (Heat Rate) Appendix D (Form of Availability Notice) Appendix E (Form of Dispatch Notice) iv LAU 845906.2 POWER PURCHASE TOLLING AGREEMENT This Power Purchase Tolling Agreement (this "Agreement") is made and entered into on this 10th day of April, 2008 (the "Effective Date"), between Bicent (California) Malburg LLC, a Delaware limited liability company ("Seller"), and the City of Vernon, a municipal corporation and chartered city duly organized and existing under and by virtue of the Constitution and laws of the State of California that is also a local publicly -owned electric utility as defined in Section 9604 of the California Public Utilities Code ("Buyer"). Each of Seller and Buyer are referred to herein individually as a "Party" and jointly as the "Parties." RECITALS A. Seller has acquired Buyer's interest in the Malburg Generating Station (as more particularly defined below, the "Facili ") located at 2715 East 50`h Street, Vernon, California 90058 (the "Transaction"). B. Upon consummation of the Transaction, Seller wishes to sell and deliver exclusively to Buyer, and Buyer wishes to purchase and receive, on a tolling basis, Contract Capacity, Contract Energy, Ancillary Services and Resource Adequacy Benefits from the Facility under the terms and conditions set forth in this Agreement. NOW, THEREFORE, and in consideration of the foregoing, and of the mutual promises, covenants and conditions set forth herein, and other good and valuable consideration, the Parties hereto, intending to be legally bound by the terms and conditions set forth in this Agreement, hereby agree as follows: ARTICLE I DEFINITIONS; INTERPRETATION Section 1.1 General Definitions. "Adjusted Contract Capacity" means, for any Contract Year, the number derived from Appendix B based upon the cumulative number of Equivalent Operating Hours of the Facility as of the end of the prior Contract Year, as may be adjusted by the results of an Adjusted Contract Capacity Test pursuant to Section 7.2 of this Agreement; .provided, that Appendix B shall be read by the Parties to take into account whether major maintenance actually occurs at the Equivalent Operating Hours projected in Appendix B. "Adjusted Contract Capacity Test" has the meaning set forth in Section 7.2. "Affiliate" means, with respect to a Person, any other Person that (a) directly or indirectly controls the specified Person; or (b) is controlled by or is under direct or indirect common control with the specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management or policies of the specified Person, directly or indirectly, whether through the ownership of voting securities, partnership or limited liability company interests, by contract or otherwise. LA\ 1845906.2 "Agreement" has the meaning set forth in the introductory paragraph hereto, together with all appendices attached hereto. "Ancillary Services" means any of the services identified in the CAISO Tariff as "ancillary services" including, but not limited to, Regulation, Spinning Reserve, Non -Spinning Reserve, Replacement Reserve, Voltage Support, and Black Start, as each such term is defined in the CAISO Tariff. "Ancillary Services Notice" has the meaning set forth in Section 3.4. "Applicable Law" means all applicable statutes, laws, court decisions, ordinances, rules, order, writ, subpoena or regulations of a Governmental Authority, or the rules or regulations of any exchange or regional transmission entity that has operational control over high voltage transmission facilities within the State of California. As of the Effective Date, this regional transmission entity is the CAISO. "Applicable Limitations" means Operating Limitations and/or Permit Limitations. "Applicable Standards" means all legal, regulatory or industry standards applicable to owners, operators and the ownership and/or operation of generating facilities within the State of California, including the applicable NERC mandatory reliability standards as in effect from time to time. "Arbitrator" has the meaning set forth in Section 19.3. "Assign" or "Assignment" has the meaning set forth in Section 20.4.1. "Availability Notice" has the meaning set forth in Section 11.1. . "Available Capacity" means the maximum (subject to Operating Limitations) amount of Capacity that is available on average during a given hour from the Facility when the Facility is not unavailable as a result of a Scheduled Outage. For purposes of clarity, the Available Capacity may exceed the Adjusted Contract Capacity. "Average Energy Replacement Price" means the average Energy Replacement Price as calculated by the summation of each MWh of replacement Energy for Contract Energy not delivered by Seller multiplied by its respective Energy Replacement Price, divided by the total amount of MWh of replacement Energy for Contract Energy not delivered by Seller.. "Bankrupt" means with respect to any entity, such entity (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it and such involuntary petition is not dismissed within sixty (60) Calendar Days, (ii) makes an assignment or any general arrangement for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however . evidenced), (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due. - LA\I 8459062 01 2 "Bankruptcy Event" has the meaning set forth in Section 14.1.4. "Base Load" means the steady state operation of the Facility at its Available Capacity, excluding duct firing and with evaporative coolers on, in accordance with the Operating Limitations and Good Utility Practice: "Business Day" means any Calendar Day except a Saturday, Sunday, or a legal holiday in the State of California. A Business Day shall open at 8:00 am and close at 5:00 pm PPT. "Buyer" has the meaning set forth in the introductory paragraph hereto. "Buyer Resource Adequacy Rulings" means any Resource Adequacy rules or provisions established by Buyer as a local publicly -owned electric utility serving end use customers pursuant to California Assembly Bill 380, and/or as a Local Regulatory Authority within the meaning of the CAISO Tariff. "CAISO" means the California Independent System Operator, a state chartered, nonprofit, public benefit corporation that controls certain transmission facilities of all participating transmission owners and dispatches certain electric generation units and loads, or any successor entity performing the same functions. "CAISO Tariff' means the tariff and protocol provisions, as amended or supplemented from time to time, of the CAISO. "Calendar Day" means the period of twenty-four (24) consecutive hours, beginning at 12:00 am PPT. - "Capacity" means the maximum net dependable operating capability of a generating resource to produce or generate Energy or Ancillary Services. "Capacity Delive Point" means the connection on the switchyard side of the generator transformer high voltage air isolator located on the Facility site. "CEC" means the California Energy Commission. "Claiming Party" has the meaning set forth in Section 6.1. "Claims" means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys' fees and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. "Commodity Reference Point" means "the "Midpoint" price for the day the gas flows as published by Gas Daily or any successor publication reasonably agreed to by the Parties, for "Natural Gas - California Southern. Border SoCal — NGI" per MMBtu. "Contract Capacity" means the 134 MW aggregate Capacity of the Generating Units 3 LA\l 845906.2 "Contract Energy" means, the Energy associated with the Available Capacity dispatched by Buyer and required to be delivered by Seller to Buyer either as Net Facility Output or as Substitute Energy pursuant to Section 3.2. "Contract Price" means the price in UnitedStates dollars (unless otherwise expressly provided for) to be paid by Buyer to Seller for the purchase of the Product pursuant to this Agreement. "Contract Year" means each of the successive twelve (12) month periods commencing with the Service Commencement Date. "Costs" means, with respect to the Non -Defaulting Party, brokerage fees, commissions and other similar third party transaction costs and expenses reasonably incurred by the Non - Defaulting Party either in terminating any arrangement pursuant ,to which it has hedged its obligations under the Agreement, or entering into new arrangements; which replace the Product, including any costs or penalties imposed upon Buyer as Non -Defaulting Party for the loss of Capacity required to meet Buyer's Resource Adequacy obligations or for replacing such Capacity to fulfill Buyer's Resource Adequacy obligations; and all reasonable attorneys' fees and expenses incurred by the Non -Defaulting Party in connection with the termination of the Agreement. "CPUC" means the California Public Utilities Commission or any successor thereto. "Day -Ahead Market" has the meaning set forth in the CAISO Tariff. "Defaulting Party" has the meaning set forth in Section 14.1. "Delivered Fuel Quantity" has the meaning set forth in Section 4.2.2(b). "Deliver Point" means the Energy Delivery Point and the Capacity Delivery Point. "Differential" has the meaning set forth in Section 4.2.2. "Dispatch Notice" means the operating instruction, and any subsequent updates, given by Buyer to Seller, directing the Facility to operate a specified megawatt output. Dispatch Notices may be communicated electronically, via facsimile, telephonically or through other verbal means. Telephonic or other verbal communication shall be documented (either recorded by tape, electronically or in writing) and such recordings shall be made available to both Buyer and Seller upon request for settlement purposes.. "Dispute" has the meaning set forth in Section 19.1. "Disqualified Stock" means any capital stock that, by its terms (or by the term of any security instrument into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the capital stock), or upon the happening of any event, matures or its mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the capital stock, in whole or in part, on or prior to the date that is ninety- one (91) Calendar Days after the last Calendar Day of the Service Term. 4 LA\l 845906.2 "Early Termination Date" has the meaning set forth in Section 14.3.1. "Effective Date" has the meaning set forth in the introductory paragraph hereto. "Energy means three-phase, 60-cycle alternating current electric energy, expressed in MWh. "Energy Delivery Point" means, for Net Facility Output, the connection on the switchyard side of the generator transformer high voltage air isolator located on the Facility site, and for Substitute Energy, SP-15 or, after the implementation of the Market Redesign and Technology Upgrade, the load aggregation point(s) for the area in which Buyer serves load, or in each case, such other delivery 'point as the Parties may agree. In the event that there is a change in Applicable Law that causes the Energy Delivery Point for Substitute Energy to be inapplicable to Buyer, the Parties shall negotiate in good faith to determine an appropriate replacement Energy Delivery Point for Substitute Energy. "Energy Replacement Price" means the price at which Buyer, acting in a commercially reasonable manner, obtains delivery at the Energy Delivery Point of replacement Energy for any Contract Energy not delivered by Seller, plus (i) costs reasonably incurred by Buyer in purchasing such replacement Energy, including CAISO charges, and (ii) additional transmission charges, if any, reasonably incurred by Buyer to receive such replacement Energy at the Energy Delivery Point, or at Buyer's option, the market price at the 'Energy Delivery Point for such replacement Energy as determined by Buyer in a commercially reasonable manner, less Buyer's avoided cost of fuel (but including costs reasonably incurred by Buyer in connection with reselling or remarketing such fuel); provided however, that in no event shall such price include any penalties, ratcheted demand or similar charges, nor shall Buyer be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize Seller's liability; and provided further that nothing in this Agreement shall diminish any duty to mitigate damages applicable to Buyer under common law. "Equitable Defenses" means any bankruptcy, insolvency, reorganization and other laws affecting creditors' rights generally, and with regard to equitable remedies, the discretion of the court before which proceedings to obtain same may be pending. "Equivalent Operating Hours" has the meaning set forth in the Services Agreement between Siemens. Demag Delaval Turbomachinery, Inc., a Delaware corporation, and Buyer, dated September 26, 2007. "Escalation Percentage" means the annual percentage change (rounded to four (4) decimal places) in the Gross Domestic Product Implicit Price Deflator, as reported in the Survey of Current Business published in January of each year, and revised thereafter, by the Bureau of Economic Analysis, United States Department of Commerce, Washington, D.C., or any replacement index reasonably agreed upon by the Parties if such index is no longer available; provided, however, that the Escalation Percentage shall not be less then zero. "Event of Default" has, the: meaning set forth in Section 14.1. "Excess Differential" has the meaning set forth in Section 4.2.2. LA\ 1845906.2 "Facility" means that certain 134 MW (nominal) gas fired 2 x 1 combined cycle generating facility located in Vernon, California known as the Malburg Generation Station that is interconnected to Buyer's 66 kV transmission system. "Failure to Pay" has the meaning set forth in Section 14.1.1. "FC" has the meaning set forth in Section 4.2.2. "FERC" means the Federal Energy Regulatory Commission or any successor government agency. "Fixed Energy Price" has the meaning set forth in Section 4.2.1. "Force Majeure" means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's inability economically to use or resell the Product purchased hereunder; (iii) Seller's ability to sell the Product at a price greater than the Contract Price; or (iv) financial hardship. With respect to Net Facility Output,. Seller may not raise a claim of Force Majeure based in whole or in part on curtailment by Buyer unless such curtailment is due to an event on Buyer's 66 kV transmission system which, if it occurred under this Agreement, would constitute a Force Majeure. With respect to Substitute Energy, Seller may not raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (i) such Party has contracted for firm transmission with a Transmission Provider for the Product to be delivered to or received at the Delivery Point and (ii) such curtailment is due to "force majeure" or "uncontrollable force" or a similar term as defined under the Transmission Provider's tariff. The existence of the factors set forth in the previous two sentences shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred. "Fuel Delivery Point" means the first metered control valve located on the west side of the Facility: "Generating Unit" means each of the two combustion turbines and the steam turbine generator comprising the combined -cycle power plant at the Facility. "Good Utility Practice" means the practices, methods and acts engaged in or approved by a significant portion of the energy industry, including Applicable Standards, that, at a particular time, in the exercise of reasonable judgment in light of the facts known or that reasonably should have been known at the time a decision was made, would have been expected to accomplish the desired result in a manner consistent with law, regulation, reliability, safety, environmental protection, economy and expedition. "Governmental Authority" means any federal, state, local, municipal, or other governmental, executive, administrative, judicial or regulatory entity, and the CAISO or any 6 LMI 845906.2 other transmission authority having or asserting jurisdiction over a Party, the Facility or this Agreement. "Governmental Charges" has the meaning set forth in Section 18.2. "Greenhouse Gas" means emissions into the atmosphere of carbon dioxide (CO2), nitrous oxide (N20) and methane (CH4), which are produced as the result of combustion or transport of fossil fuels. Other greenhouse gases may include hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6), which are generated in a variety of industrial processes. Greenhouse gases may be defined, or expressed, in terms of a ton of CO2-equivalent, in order to allow comparison between the different effects of gases on the environment. "Heat Rate Payment/Bonus" has the meaning set forth in Section 4.2.2. "HR Ratio' has the meaning set forth in Section 4.2.2. "Initial Term" has the meaning set forth in Section 2.1. "Interest Rate" means, for any date, the lesser of (a) the per amnum rate of interest equal to the prime lending rate as may from time to time be published in The Wall Street Journal under "Money Rates" on such Calendar Day (or if not published on such Calendar Day on the most recent preceding Calendar Day on which published), plus two percent (2%) and (b) the maximum rate permitted by Applicable Law, "JAMS" means Judicial Arbitration and Mediation Services, Inc. "Laguna Bell Substation" means the 230/66/16 kV substation owned by Southern California Edison Company located at the intersection of Gage and Garfield Avenues in the City of Commerce, California. "Lease" means that certain Lease and Grant of Easements dated as of the Effective Date by and between Buyer, as lessor, and Seller, as lessee. "Lender" means any financial institution that provides debt financing or refinancing for the Facility. "License" means that certain license issued for the Facility by the CEC on May 20, 2003. "Local Regulatory Authority" has the meaning set forth in the CAISO Tariff. "Losses" means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination or liquidation of the Agreement, determined in a commercially reasonable manner. "Market Quotation" means an amount, determined on the basis of quotations from Reference Market -Makers,. that would be paid to a Non -Defaulting Party, in consideration of an agreement between such Non -Defaulting Party and the quoting Reference Market -Maker for.the 7 LA\ 1845906.2 amount in MWh of the Product delivered at the Delivery Point for what would have -been the remainder of the Service Term, but for the occurrence of the Early Termination Date. "Measured HR" has the meaning set forth in Section 4.2.2. "Meter" means all of the standard instruments(s) and equipment used to measure and record (i) the Energy delivered to Buyer at the Energy Delivery Point, (ii) the Energy delivered to the Facility to serve its own load and (iii) fuel delivered to the Facility at the Fuel Delivery Point. "Moody's" means Moody's Investor Services, Inc. or its successor. "MW" means megawatt(s). "MWh" means megawatt-hour(s). "NERC" means of the North American Electric Reliability Council, or any successor organization thereto. "Net Facility Output" means Energy from the Facility delivered to Buyer at the Energy Delivery Point, minus Energy delivered to Seller from the Vernon distribution system to serve internal Facility load. "NGP" means any limited partnership, limited liability company or other Person for which NGP Energy Capital Management or any other fund management company that is a successor to, an Affiliate of, or under common control with NGP Energy Capital Management acts as investment manager. "NGP Energy Capital Management" means NGP Energy Capital Management, L.L.C.,.a Texas limited liability company. "Non -Defaulting Party" has the meaning set forth in Section 14.3.1. "Operating Limitations" means the operating limitations of the Facility that are identified on Appendix A to this Agreement. "Option Term" has the meaning set forth in Section 2.1. "Outage Schedule" has the meaning set forth in Section 13.1. "Party" has the meaning set forth in the introductory paragraph hereto "Permit Limitations" means limitations imposed on, or applicable to, the operation of the Facility as a result of Applicable Law or Required Permits. "Person" means an individual, partnership, joint venture, corporation, limited liability company, trust, association or unincorporated organization or any Governmental Authority. 8 LA\ 18459062 "Petition" means that certain petition filed by the City with the California Energy Commission on December 19, 2007 to amend the License. "PPT" or "Pacific Prevailing Time" means Pacific Standard Time or PacificDaylight Time, whichever is in effect on the relevant date. "Product" means Adjusted Contract Capacity, Contract Energy, Ancillary Services and Resource Adequacy Benefits. "PSA" means that certain Amended and Restated Purchase and Sale Agreement dated as of December 13, 2007 by and between Buyer and Seller as amended by that certain First Amendment to Amended and Restated Purchase Agreement dated as of February 8, 2008 by and among Buyer, Seller, Bicent (California) Hoover LLC, a Delaware limited liability company and Bicent (California) Power LLC, a Delaware limited liability company. "Real Time Market" has the meaning set forth in the CAISO Tariff. "Reference Conditions" means ambient air temperature of 75 degrees F and relative humidity of 50%. "Reference Market -Makers" means four leading dealers in the relevant market selected by the Non -Defaulting Party in good faith. "Re ug latory Event" has the meaning set forth in Section 20.11.1. "Requested Ancillary Services" has the meaning set forth in Section 3.4. "Required Permits" means all permits, licenses and approvals necessary for the construction, operation and maintenance of each Generating Unit. "Resource Adequacy" has the meaning set forth in California Assembly Bill 380. "Resource Adequacy Benefits" means the rights and privileges attached to any generating resource that satisfy any entity's Resource Adequacy Requirements under any Resource Adequacy Rules. "Resource Adequacy Requirements or "RAW" means the Resource Adequacy obligations applicable to an entity as set forth in the Resource Adequacy Rules. "Resource Adequacy Rules" means (a) the provisions of CAISO Tariff relating to Resource Adequacy; and/or (b) the Buyer Resource Adequacy Rulings; provided, however, that in the event of any conflict between the terms of the CAISO Tariff provisions and the terms of Buyer Resource Adequacy Rulings, the CAISO Tariff provisions shall govern. "S&P" means the Standard & Poor's Rating Group (a division of McGraw-Hill, Inc.) or its successor. E LA\ 1845906.2 "Scheduling Coordinator" means an entity certified by the CAISO for the purposes of undertaking the functions specified in Article X. "Scheduled Outage" means a period during which any Generating Unit is not capable of providing service due to planned maintenance that has been scheduled in advance in accordance with the terms and conditions of this Agreement. "SC Replacement Date" has the meaning set forth in Section 10.4. "Section 1368 Requirements" means that Substitute Energy shall comprise no more than fifteen percent (15%) of the Energy associated with Adjusted Contract Capacity during the Service Term, and shall be procured only (i) if the Facility is unavailable due to a forced outage, scheduled maintenance or other temporary unavailability for operational or efficiency reasons, or (ii) to meet operating conditions of the Facility such as provisions for the number of start-ups, ramp rates, or minimum operation hours. "Security Documents" means those agreements, documents, instruments or certifications in a form reasonably acceptable to Buyer that grant and perfect Buyer's Subordinated Security. Interest. "Seller" has the meaning set forth in the introductory paragraph hereto. "Seller's Debt" means, without duplication, each of the following: (i) all indebtedness of Seller for borrowed money; (ii) all obligations of Seller for the deferred purchase price of property or service, which purchase price is due more than six (6) months after the date of placing such property in service or taking delivery or title thereto or the completion of such services (other than trade payables not overdue by more than ninety (90) Calendar Days incurred in the ordinary course of Seller's business); (iii) all obligations of Seller evidenced by notes, bonds, debentures, Disqualified Stock or other similar instruments; (iv) all obligations of Seller created or arising under any conditional sale or other title retention agreement with respect to property acquired by Seller (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (v) all monetary obligations of Seller under (a) a lease of any property (whether real, personal, or mixed) by Seller as lessee that, in conformity with Generally Acceptable Accounting Principles, is accounted for as a capital lease on the balance sheet of Seller, (b) a so-called synthetic, off - balance sheet or tax retention lease, or (c) an agreement for the use or possession of property creating obligations which do not appear on the balance sheet of Seller but which, upon the insolvency or bankruptcy of Seller, would be characterized as indebtedness of Seller (without regard to accounting treatment); (vi) all obligations, contingent or otherwise, of Seller under acceptance, letter of guaranty, letter of credit or similar facilities; (vii) all obligations of Seller with respect to any redeemable equity interests in Seller, including in the case of preferred stock, at the greater of the voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (viii) all indebtedness of others referred to in clauses (i) through (vii) above guaranteed by Seller, or in effect guaranteed by Seller through an agreement (a) to pay or purchase such indebtedness or to advance or supply funds for the payment or purchase of such indebtedness, (b) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such indebtedness 10 LA\ 1845906.2 or to assure the holder of such indebtedness against loss; (c) to supply funds to or invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered), or (d) otherwise to assure a creditor against loss; and (ix) without duplication of the foregoing, all indebtedness referred to in clauses (i) through (viii) above secured by any lien on property (including amounts and contract rights) owned by Seller. The outstanding amount of indebtedness as described above at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations as described above, the maximum liability upon the occurrence of the contingency giving rise to the obligation. Notwithstanding the foregoing, the term "Seller's Debt" as used herein shall not include (a) Seller's obligations under this Agreement, (b) interest rate hedges entered into by Seller solely for the purposes of hedging and not speculation and (c) debt of a Person other than Seller that (X) is secured by a pledge of the equity interests in Seller and (Y) is not otherwise an obligation of Seller described in any of clauses (i) through (ix) above. "Seller's Gas Event" means any event, circumstance, change or condition related to the Facility, whether by reason of Force Majeure or otherwise, including an Unscheduled Outage that may affect the availability of the Facility, or any other operational constraint affecting the Facility that may increase or decrease the fuel requirements of the Facility. A Seller's Gas Event shall not include any event, circumstance, change or condition ,not related to the Facility or due to any action of the Buyer. "Service Commencement Date" has the meaning set forth in Section 2.L "Service Term" means the Initial Term and the Option Term, if applicable. "Subordinated Security Interest" has the meaning set forth in Section C 17.2. "Substitute Energy" means Contract Energy not produced at the Facility, but delivered to the Buyer at the Energy Delivery Point, which is compliance with the Section 1368 Requirements. "Tax" means any (i) local tax with respect to: income, gross receipts, license, .payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property (including assessments,_ fees or other charges based on the use or ownership of real property), personal property, sales, use, transfer, registration, value added, alternative or add -on minimum, estimated tax, or other tax of any kindwhatsoever, including any interest, penalty or addition thereto or (ii) local licensing fees in the nature of taxes. "Termination Payment" has the meaning set forth in Section 14.4. "Threshold Capacity" has the meaning set forth in Section 5.3. "Transaction" has the meaning set forth in the recitals hereto. 11 CA\1845906.2 "Unscheduled Outage" means a period during which all or part of a Generating Unit is not capable of providing service due to the need to maintain or repair a component thereof, which period has not been scheduled in advance in accordance with Section 13.1. "Vernon Gas Transportation Tariff' means Schedule G-MGS, Electric Generation Gas Transportation Tariff of the City of Vernon Gas Municipal Utilities Department, or any successor tariff thereto. "Waived Claims" has the meaning set forth in Section 20.11.2. Section 1.2 Interpretation. In this Agreement, unless a clear contrary intention appears: Section 1.2.1 The singular number includes the plural number and vice versa; Section 1.2.2 Reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement,' and reference to a Person in a particular capacity excludes such Person in any other capacity; Section 1.2.3 Reference to any gender includes the other gender; Section 1.2.4 Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, Section 1.2.5 Reference to any Article, Section, Schedule or Exhibit means such Article, Section, Schedule or Exhibit to this Agreement, and references in any Article, Section, Schedule, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit or definition; Section 1.2.6 "Hereunder," "hereof," "hereto" and words of similar import are references to this Agreement as a whole and not to any particular Section or other provision hereof or thereof, unless otherwise specified; Section 1.2.7 "Including" (and correlative terms) means_ "including without limitation" and "including, but not limited to;" Section 1.2.8 Relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding" and "through means "through and including;" Section 1.2.9 Examples shall not be construed to limit, expressly or by implication, the matter they illustrate; Section 1.2.10 Reference to any law (including statutes and ordinances) means such law as amended, modified codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder; 12 LA\ 1845906.2 Section 1.2.11 Except where the context otherwise requires, "or" shall have the inclusive meaning frequently designated by "and/or" and Section 1.2.12 All capitalized terms used but not defined herein shall have the meaning set forth in the PSA. ARTICLE II TERM; SERVICE COMMENCEMENT DATE Section 2.1 Service Term. The initial term of this Agreement shall commence on the Effective Date and shall terminate fifteen (15) years following the Service Commencement Date, unless terminated earlier in accordance with the terms and conditions of this Agreement (the "Initial Term"). Seller shall have the option, at its sole and absolute discretion, to extend the term of this Agreement (the "Option Term"); provided, that Seller must give written notice to Buyer of its intent to exercise such option no less than thirty (30) months prior to the expiration of the Initial Term. The Option Term shall commence on the day immediately following the expiration of the Initial Term and shall terminate twenty (20) years following the Service Commencement Date, unless terminated earlier in accordance with the terms and conditions of this Agreement. Section 2.2 Service Commencement Date, Commencement of delivery of the Products under this Agreement shall occur on the date on which the Transaction is consummated (the "Service Commencement Date"). ARTICLE III OBLIGATIONS AND PRODUCT DELIVERIES Section 3.1 Purchase and Sale Generally. During the Service Term, Seller shall sell and deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the Product pursuant to the terms and conditions of this Agreement. Seller represents and warrants that it will deliver the Product to Buyer free and clear of all liens, security interests, claims and encumbrances. Section 3.2 Contract Energy. Seller shall sell and deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the Contract Energy dispatched by Buyer pursuant to a Dispatch Notice at the Energy Delivery Point. Section 3.2.1 The amount of Contract Energy under this Agreement shall be equal to, for each Calendar Day during the Service Term, the amount of Energy to be delivered by Seller to the Energy Delivery Point pursuant to the Dispatch Notice for such Calendar Day; provided, however, that Seller shall not be required to deliver Energy to Buyer to the extent any Dispatch Notice would require Seller to exceed or otherwise violate the Operating Limitations. 13 LA11845906.2 Section 3.2.2 Seller may provide Contract Energy to Buyer through the delivery of Substitute Energy from any source of supply in the market that meets all legal requirements applicable to Buyer and Seller, including the Section 13.68. Requirements. Section 3.3 Adjusted Contract Capacity. During the Service Term, Seller shall deliver, or cause to be delivered, to Buyer all of the Capacity of the Facility at the Capacity Delivery Point. If within three (3) years of the Effective Date, Seller successfully implements the "Prod Mod" by Siemens, as evidenced to Buyer's reasonable satisfaction by an Adjusted Contract Capacity Test pursuant to Section 7.2 of this Agreement, Buyer shall purchase from Seller any additional Energy and Capacity resulting from the "Prod Mod" implementation at the Contract Price described herein for the remainder of the Service Term, and the Contract Capacity and Adjusted Contract Capacity under this Agreement shall be increased to reflect the results of such Adjusted Contract Capacity Test. Section 3.4 Ancillary Services. By 8:00 am PPT each Business Day, Buyer shall deliver to Seller a notice (the "Ancillary Services Notice") indicating any Ancillary Services requested by Buyer ("Requested Ancillary Services") for each hour of the time period commencing on the next Calendar Day and extending through and including the next Business Day. Seller shall provide to Buyer any Requested Ancillary Services to the extent that no violation of the Operating Limitations of the Generating Units would result therefrom. Seller shall promptly notify Buyer to the extent that the Requested Ancillary Services cannot be provided without violating the Operating Limitations of the Generating Units. Section 3.5 Resource Adequacy Benefits. _ Section 3.5.1 Seller grants, pledges, assigns and otherwise commits to Buyer the Adjusted Contract Capacity of the Generating Units in order for Buyer to meet its Resource Adequacy Requirements and, if applicable, local RAR under any Resource Adequacy Rulings. For avoidance of doubt, the Parties acknowledge and agree that Buyer is .entitled to all rights, entitlements and benefits that are related to the RAR, including capacity tags, capacity credits, and all Capacity -related products. Section 3.5.2 Seller represents, warrants and covenants to Buyer that Seller (i) has not used, granted, pledged, assigned or otherwise committed, and (ii) will not use, grant; pledge, assign or otherwise commit any Capacity of the Generating Units to meet the Resource Adequacy Requirements or local RAR of, or confer Resource Adequacy Benefits upon, any entity other than Buyer during the Service Term. Section 3.5.3 Throughout the. Service Term, Seller shall take all commercially reasonable actions to execute any and all documents or .instruments reasonably necessary to ensure the availability and qualification of each Generating Unit and the Adjusted Contract Capacity to meet Buyer's Resource Adequacy Requirements and Buyer's or CAISO's right to the use each Generating Unit for the benefit of Buyer's Resource Adequacy Requirements. Section 3.5.4 Seller shall be required to implement any change or improvement, including to its operations, a Generating Unit, or the Facility, on or after the. Service Commencement Date in order to provide Resource Adequacy Benefits to Buyer pursuant to this LA\1845906.2 9 14 Section 3.5.4; provided, however, that, to the extent that capital costs and operating expenses for such change or improvement exceeds $500,000 Buyer shall reimburse Seller for the percentage (%) of the net present value of such costs and expenses equal to: Remaining Contract Years in the Service Term (or fraction thereof) Expected life in years of change or improvement (or fraction thereof) * 100 provided further, that (a) the expected life in years of any change or improvement shall not exceed ten (10) years, (b) Buyer shall have the right to delay, in its sole discretion, such change or improvement, and (c) Buyer shall only be required to make such reimbursement if, in its sole discretion, it agrees that such change or improvement is necessary to provide Resource Adequacy Benefits. Subject to the preceding sentence, the commercially reasonable actions required of Seller pursuant to this Section 3.5.4 may include the following: (a) Cooperating with Buyer, and cooperating with and encouraging the entity or entities responsible for resource adequacy administration, to certify or qualify each Generating Unit and all of the Adjusted Contract Capacity of the Generating Units for Resource Adequacy Requirements purposes, (b) Meeting requirements established in the Resource Adequacy Rules, including demonstration of the ability to deliver all of the Adjusted Contract Capacity over all hours required for full Resource Adequacy Requirements eligibility, and demonstrating that all of the Adjusted Contract Capacity can be delivered pursuant to any deliverability standards established by the Resource Adequacy Rules or other regional entity or entities responsible for Resource Adequacy Requirements administration; (c) Negotiating in good faith to make necessary amendments, if any, to this Agreement to conform this Agreement to subsequent clarifications, revisions or decisions rendered by the entity or entities responsible for Resource Adequacy Requirements administration, so as to maintain the benefits of the bargain struck by the Parties; and (d) Taking all commercially reasonable measures necessary to comply with any applicable requirements for meeting Resource Adequacy Requirements, including by way of example, complying with all requirements associated with the Resource Adequacy Requirements that are imposed through the Resource Adequacy Rules, including, for example, requirements related to bidding and/or dispatch including those imposed for the day -ahead, hour -ahead and real-time markets,. installing communication equipment, complying with communication protocols (provided that nothing herein shall require or permit Seller to undertake communications that are the responsibility of the Scheduling Coordinator), making capital improvements and incurring operating expenses, and changing operations. 15 LA\1845906.2 Section 3.6 Exclusivity and Priority. During the Service Term, the relationship between Buyer and Seller with respect to the Products is exclusive. Seller shall not offer, sell or make available any Products to any person other than Buyer or its successors or permitted assigns. Section 3.7 Compliance with Applicable Law. Throughout the Service Term, in order to ensure that Seller is able to meets it obligations to provide Contract Energy, Adjusted Contract Capacity, Ancillary Services and Resource Adequacy Benefits to Buyer under this Agreement, Seller shall take all actions necessary to remain in compliance with Applicable Law, including compliance with the requirements of Seller's FERC market -based rate authorization. Section 3.8 Transmission. Transmission service for any sales by Seller of Energy or Ancillary Services from the Facility into the CAISO markets shall be supplied by Vernon pursuant to and consistent with the terms and conditions of that certain Interconnection and Transmission Services Agreement between Seller and Buyer, dated as of even date herewith. Section 3.9 CEC Petition. The Parties shall use commercially reasonable efforts to support the approval of the Petition. Until such time as the Petition is approved, Buyer shall, subject to the Availability Notice, dispatch the Facility continuously between the minimum and maximum load of the Facility, except: (i) as otherwise directed by CAISO; (ii) in an emergency situation or (iii) as other dispatch instructions would not violate Applicable Law. In the event' that the Petition is not approved, Buyer shall use commercially reasonable efforts to continuously dispatch the Facility between the minimum and maximum load of the Facility on a daily basis and shall work with Seller to seek a substantially similar amendment to the License. ARTICLE IV PRODUCT PRICE Section 4.1 Contract Price. The Contract Price paid to Seller for the Product shall consist of: (a) the Energy Payment calculated in accordance with this Article IV; and (b) the Monthly Capacity Payment calculated in accordance with this Article IV. These.charges shall be paid monthly, in arrears, for each month .of the Service Term. The Parties acknowledge and agree that the Resource Adequacy Benefits and any Requested Ancillary Services shall be provided at no additional charge to Buyer. Section 4.1.1 For purposes of Buyer's applicable indentures, the payments made by Buyer to Seller under this Agreement shall, during the term of the applicable indenture agreements and any modifications, renewals, amendments or extensions thereof, constitute operation and maintenance expenses of Buyer, as such term is defined in Buyer's applicable indenture agreements, and Buyer shall be obligated during the terms of the applicable indenture agreements to include in the budget for each fiscal year the costs under this Agreement as operation and maintenance expenses of Buyer, as such term is defined in the applicable indenture agreements. 16 LA\1845906.2 Section 4.2 Energy Payment. The Energy Payment for any period shall mean, for each 'MWh of Contract Energy delivered to the Energy Delivery Point during such period, the Fixed Energy Price for such period plus the Heat Rate Payment/Bonus for such period, where: Section 4.2.1 The "Fixed Energy Price" shall mean $4.37/MWh, which shall be escalated annually starting on January 1, 2009 pursuant to Section4.4. Section 4.2.2 The "Heat Rate PavmentBonus" for any period means an amount calculated as follows: Heat Rate Payment/Bonus = the Excess Differential for such period multiplied by the FC for such period. (a) "Differential" means for any period the amount, if any, by which either (i) the HR Ratio for such period exceeds 1.00 or (ii) 1.00 exceeds the HR Ratio for such period. (b) "Delivered Fuel Quantity" means for any period the actual quantity of fuel (in MMBTu) delivered to Seller by Buyer at the Fuel Delivery Point during such period. (c) "Excess Differential' means the amount, if any, by which the Differential exceeds .01 in the event of a Heat Rate Payment or .02 in the event of a Heat Rate Bonus. (d) "FC" means for any period a fuel charge equal to: (i) The total cost of fuel, calculated by multiplying the Delivered Fuel Quantity by the average cost of fuel during such period as measured at the Commodity Reference Point; plus (i i) The cost of fuel transportation per MMBtu pursuant to the Vernon Gas Transportation Tariff (or any applicable replacement) multiplied by the Delivered Fuel Quantity during such period. FC shall exclude the cost of fuel necessary for any testing requested by either Party pursuant to Article VII. (e) "HR" means for any period the assumed Base Load heat rate (HHV) of the Generating Units, as set forth in Appendix C; provided, that Appendix C shall be read by the Parties to take into account whether major maintenance actually occurs at the Equivalent Operating Hours projected in Appendix C. If major maintenance occurs at a time other than as projected in Appendix C, the Parties shall reasonably approximate the effects of such timing on the value of HR; and, provided, further that after 120,000 Equivalent Operating Hours Appendix C shall be updated to reflect any additional major maintenance to be performed in a manner reasonably agreed upon by the Parties. (f) "HR Ratio' means for any period an amount equal to the Measured HR for such period divided by the HR for such period. 17 LA\1845906.2 "Measured HR" means for any period the Base Load heat rate (HHV) determined pursuant. to the most recent Adjusted Contract Capacity Test; provided, however, that if one Party gives the other a notice calling for an Adjusted Contract Capacity Test, then Measured HR from and. after the date of such notice shall be the Base Load heat rate (HHV) as determined pursuant to the next following Adjusted Contract Capacity Test. Until such Adjusted Contract Capacity Test is completed, the Measured HR for such period shall equal the prior Measured HR for purposes of calculating the Heat Rate Payment/Bonus; provided, however, that after such Adjusted Contract Capacity Test is completed, any payments made for such period based upon the prior Measured HR for such period shall be adjusted to reflect the Measured HR from such Adjusted Contract Capacity Test. Section 4.3 Capacity Payment. The Monthly Capacity Payment shall mean, for the Contract Capacity: Section 4.3.1 $5.00/kW-month from the Service Commencement Date until the end of the Service Term, escalated annually pursuant to Section 4.4; plus Section 4.3.2 $4.00/kW-month from July 1, 2010 until the end of the Service Term, escalated annually pursuant to Section 4.4; plus Section 4.3.3 $5.00/kW-month from July 1, 2011 until the end of the Service Term, escalated annually pursuant to Section 4.4; plus Section 4.3.4 $10.00/kW-month from July 1, 2016 until the end of the Service Term, escalated annually pursuant to Section 4.4; lLus Section 4.3.5 From the Service Commencement Date until June 30, 2008, $11,250,000 for 134,000 kW for such period, paid per kW -month in equal monthly installments commencing with the first calendar month after the Service Commencement Date, I�us Section 4.3.6 $5.60/kW-month from July 1, 2008 until June 30, 2009; plus Section 4.3.7 $7.46/kW-month from July 1, 2009 until June 30, 2010; plus Section 4.3.8 $4.35/kW-month from July 1, 2010 until June 30, 2011. Section 4.4 Escalation. The Fixed Energy Price and the Monthly' Capacity Payment shall be escalated annually by the Escalation Percentage. Section 4.5 Costs and Charges. Seller shall be responsible for any costs or charges imposed on or associated with the Contract Energy (including any Substitute Energy) or Adjusted Contract Capacity, or delivery thereof, including transmission and congestion costs, up to the applicable Delivery Point. Buyer shall be responsible for any costs or charges imposed on or associated with the Contract Energy (including any Substitute Energy) or Adjusted Contract Capacity, or the receipt thereof, including transmission and congestion costs, at and from the applicable Delivery Point. - LA\ 1845906.2 18 C, ARTICLE V REMEDIES FOR FAILURE TO DELIVER OR RECEIVE Section 5.1 Failure to Deliver Contract Energy. If during any calendar month Seller fails to deliver the Contract Energy (or to the extent Seller's Availability Notices are less than the Available Capacity) after taking into account Scheduled Outages and any other failure to deliver Contract Energy otherwise excused under the terms of this Agreement or by Buyer's failure to perform, then Seller shall pay Buyer, on the date payment would otherwise be due in respect of the month in which the failure occurred, an amount equal to the positive difference, if any, obtained by subtracting the Energy Payment from the Average Energy Replacement Price, multiplied by the MWh of Contract Energy not delivered in such month; provided, however, that during any period that Seller delivers Ancillary Services to Buyer at Buyer's request that reduce the Facility's ability to provide the full amount of Contract Energy, Seller shall be excused from delivering that portion of the Contract Energy that Seller was not able to deliver as a result of its delivery of such Ancillary Services. Notwithstanding the foregoing, Seller shall not be required to make such payment to Buyer if Seller has provided Buyer in such calendar month at least 97% of the Energy associated with the Adjusted Contract Capacity as long as the Threshold Capacity is at least 97% of the Adjusted Contract Capacity for such month. The invoice for such amount shall include a written statement explaining in reasonable detail the calculation of such amount. Section 5.2 Failure to Receive Contract Energy. If Buyer fails to accept all or part of the Contract Energy, and such failure is not excused under the terms of this Agreement or by Seller's failure to perform, then Buyer shall pay Seller, on the date payment would otherwise be due in respect of the month in which the failure occurred, within five (5) Business Days of invoice receipt, an amount equal to the Energy Payment, multiplied by the MWh of Contract Energy not accepted in such month. Section 5.3 Failure to Deliver Adjusted Contract Capacity. If the average Available Capacity in Seller's Availability Notices (as adjusted to Available Capacity at Reference Conditions) in a given month (the "Threshold Capacity") falls below 97% of the Adjusted Contract Capacity, the following provisions shall apply: Section 5.3.1 If Seller's Threshold Capacity for the month prior to such month was not below 97% of the Adjusted Contract Capacity, then Seller shall be subject to a 1% reduction in its Monthly Capacity Payment for such month for each percent (or fraction thereof) below the 97% threshold; Section 5.3.2 If Seller's Threshold Capacity for the month prior to such month was below 97% of the Adjusted Contract Capacity, then Seller shall be subject to a 1.5% reduction in its Monthly Capacity Payment for such month for each percent (or fraction thereof) below the 97% threshold; and Section 5.3.3 If Seller's Threshold Capacity for the . two consecutive months prior to such month was below 97% of the Adjusted Contract Capacity, then, beginning with the following month, Seller's obligation to deliver Adjusted Contract Capacity and the Contract Capacity for which Seller is paid, each shall be reduced on a pro rata basis for each unavailable MW (or fraction thereof) below the 97% threshold. 19 LA\1845906.2 Section 5.3.4, Pursuant to Section 7.2, Seller may request an Adjusted Contract Capacity Test at any time following the reductions set forth in Section 5.3.3, and Seller's obligation to deliver Adjusted Contract Capacity, and the Contract Capacity for which Seller is paid, each may be increased on a pro rata basis to the extent that such an Adjusted Contract Capacity Test demonstrates that Seller can achieve such increased levels; provided, however, that, subject to the provisions in Section 3.3 regarding the "Prod Mod," Adjusted Contract Capacity shall not be increased above the degradation schedule set forth in Appendix B, and Contract Capacity shall not be increased above 134 MW. ARTICLE VI FORCE MAJEURE Section 6.1 Force Majeure. To the extent either Party is prevented by Force Majeure from carrying out, in whole or part, its obligations under this Agreement (except failure to pay any sums due under this Agreement) with respect to a Product, and such Party (the "Claiming Party") gives notice and details of the Force Majeure to the other Party as soon as practicable, then, unless the terms of the Product specify otherwise, the Claiming Party shall be excused from the performance of its obligations under this Agreement with respect to such Product (other than the obligation to make payments then due or becoming due with respect to performance prior to the Force Majeure). The Claiming Party shall remedy the Force Majeure with all reasonable dispatch. The non -Claiming Party shall not be required to perform its obligations to the Claiming Party corresponding to the obligations of the Claiming Party excused by Force Majeure. If and when the Facility is restored, it shall undergo an Adjusted Contract Capacity Test and the Parties shall be subject to Section 7.3. For the avoidance of doubt, in the event of a Force Majeure that prevents Seller from performing its obligations under this Agreement with respect to the Product, Buyer shall not be obligated to make any payments to Seller with respect to such Product. Section 6.2 Termination. If and to the extent that the Claiming Party is unable to overcome a Force Majeure and resume performance of its obligations under this Agreement within six (6) months after such performance is interrupted, the non -Claiming Party may terminate this Agreement without any further obligation (other than the obligation to make payment in respect of performance rendered prior to such termination and any other obligation that survives in accordance with Section 20.8). ARTICLE VII TESTING Section 7.1 Testing. The Parties may, at their own expense, including all fuel costs, and at times and for durations reasonably agreed to by Buyer, conduct testing of the Facility, including the Adjusted Contract Capacity Tests discussed below, subject to Section 7.2. Seller shall provide Buyer with reasonable notice no later than three (3)'Business Days before any such testing, and Buyer shall be entitled to witness any such testing. 9N LA\ 1845906.2 Section 7.2 Adjusted Contract Cap'aci Test. On an annual basis during the Service Term, Seller shall schedule and complete a test of the Facility's Capacity in order to determine whether the Facility is operating at Reference Conditions in accordance with PTC 46 and the schedule set forth on Appendix B and to determine the Measured HR ("Adjusted Contract Capacity Test"). Such annual Adjusted Contract Capacity Test shall be conducted at Seller's expense. In addition to the annual Adjusted Contract Capacity Test, each Party, at its expense, shall have the right to request one (1) additional Adjusted Contract Capacity Test per year at a time to be reasonably agreed upon by the Parties. Each Party shall be entitled, at their own expense, to hire an independent engineer mutually agreed upon by the Parties to witness and oversee any Adjusted Contract Capacity Test to confirm the accuracy of the results. For purposes of this Section 7.2, it shall not be unreasonable for Buyer to withhold its consent to any testing from June 1 through October 31 in any given year, unless otherwise required by a Governmental Authority. Section 7.3 Effect of Adjusted Contract Capacity Test. As the result of an Adjusted Contract Capacity Test, the Adjusted Contract Capacity then in effect shall be adjusted to reflect the demonstrated Capacity of the Facility, and the Contract Capacity for which Seller is paid shall be adjusted on a pro rata basis; provided, however, that, subject to the provisions in Section 3.3 regarding the "Prod Mod," Adjusted Contract Capacity shall not be increased above the degradation schedule set forth in Appendix B, and Contract Capacity shall not be increased above 134 MW. ARTICLE VIII OPERATIONS AND MAINTENANCE Section 8.1 Seller's Operation Obligations. Section 8.1.1 Seller shall operate the Facility in accordance with Applicable Law, Required Permits and Good Utility Practice. Section 8.1.2 Seller shall maintain a daily operations log for the Facility which shall include information on power production, fuel consumption and efficiency, availability, maintenance performed, outages, changes in operating status, inspections and any other significant events related to the maintenance and operation of the Facility. In addition, Seller shall maintain all records applicable to the Facility, including the electrical characteristics of the generators and settings or adjustments of the generator control equipment and protective devices. Information maintained pursuant to this Section 8.1.2 shall be provided to Buyer within fifteen (15) Calendar Days of Buyer's request for such information. Section 8.1.3 Seller shall comply with all reporting requirements and permit on - site audits, investigations, tests and inspections permitted or required under any Applicable Law. Section 8.1.4_ Seller shall comply with all Applicable Standards and shall be responsible for all costs and charges relating to the implementation of, or penalties for the failure to comply with, the same. 21 LA11845906.2 Section 8.1.5 During the Service Term, Seller shall employ only appropriately - qualified (determined in Seller's reasonable opinion consistent with applicable industry standards) personnel for the purposes of operating and maintaining the Facility. Section 8.2 Seller's Maintenance and Repair Obligations. Section 8.2.1 Seller shall inspect, maintain and repair the Facility, and any portion thereof, in accordance with Applicable Law, the Required Permits and Good Utility Practice. Section 8.2.2 Seller shall promptly make all necessary repairs to each Generating Unit, and any portion thereof, and take all commercially reasonable actions necessary in order to provide the Contract Energy, Adjusted Contract Capacity, Ancillary Services and Resource Adequacy Benefits to Buyer in accordance with the terms of this Agreement. Section 8.3 Records. In addition to the daily operating logs required pursuant to Section 8.2.1, Seller shall keep and maintain accurate and complete records for the Generating Units and the Facility during the Service Term and for a period of two (2) years thereafter in a manner consistent with Good Utility Practice, Applicable Law, and standards and guidelines adopted from time to time by Governmental Authorities, NERC or the CAISO, including information documenting or relating to the operation and maintenance of the Generating Units and the Facility and all associated equipment and each Generating Unit's' Adjusted Contract Capacity Tests. Information maintained pursuant to this Section 8.3 shall be provided to Buyer within fifteen (15) Calendar Days of Buyer's request for such information. ARTICLE IX TOLLING AND FUEL Section 9.1 Tolliniz. Seller's obligation to deliver Products dispatched by Buyer shall be contingent upon Buyer delivering and paying for fuel sufficient to provide such Products to Seller, including providing and paying for start-up fuel, and fuel required for the annual test contemplated by Section 7.2; provided, however, that Seller shall' reimburse Buyer for Buyer's actual cost of fuel used in connection with failed start-ups. During any period in which the average Available Capacity in a given month is less than the Adjusted Contract Capacity due to derating or shutdown necessitated by low fuel pressure in Buyer's fuel distribution system or Buyer fails to deliver fuel, there shall be no reduction in Seller's Monthly Capacity Payment or any other charge to Seller, nor shall Seller be subject to Section 5.1 with respect to any Energy that cannot be delivered as a result of such derating or shutdown. At the request of Buyer, Seller shall provide Buyer with written evidence of the operational procedures to be followed by Seller in accordance with Good Utility Practice to avoid any damage to the Facility or reduction of the average Available Capacity in the event of low fuel pressure or Buyer's failure to provide fuel. Section 9.2 Title and Risk of Loss. As between the Parties, Buyer will be deemed to have exclusive control and possession of the fuel delivered under this Agreement and be responsible for any damage or injury caused thereby before the fuel is delivered to the Fuel Delivery Point. At and after delivery of the fuel to the Fuel Delivery Point, as between the 22 LAN] 845906.2 Parties, Seller will be deemed to have exclusive control and possession of the fuel and be responsible for any damage or injury caused thereby. Each Party shall indemnify, defend and hold harmless the other Party from and against any claims arising from or out of any event, circumstance, act or incident first occurring or existing during the period when control and title to the natural fuel is vested in such Party in accordance with the foregoing. Section 9.3 Seller's Gas Events. Seller shall notify Buyer immediately, upon learning of the occurrence of a Seller's Gas Event. Upon receiving such notification, Buyer shall use commercially reasonable efforts to manage its gas supply and transportation arrangements for the purpose of minimizing daily or monthly pipeline or system pool imbalance charges or penalties resulting from such Seller's Gas Event. Subject to the foregoing, Seller shall pay to Buyer the amount of any imbalance penalties incurred by Buyer, as reasonably determined by Buyer, as a result of any Seller's Gas Events. ARTICLE X SCHEDULING COORDINATOR Section 10.1 Buyer Scheduling Coordinator. Prior to the beginning of the Service Tenn, Seller shall take all actions to execute and deliver to Buyer and the CAISO all documents necessary to authorize or designate Buyer as Seller's Scheduling Coordinator for all Energy and Ancillary Services from the Facility effective as of the Service Commencement Date in accordance with the requirements of the CAISO Tariff. During the Service Term, Seller shall not authorize or designate any other party to act as Seller's Scheduling Coordinator, nor shall Seller perform for its own benefit the duties of Scheduling Coordinator, and Seller shall not revoke Buyer's authorization to act as Scheduling Coordinate unless agreed to in writing by Buyer; provided, however, that Seller may designate an alternate Scheduling Coordinator for the Facility in the event that the CAISO terminates CAISO's Scheduling Coordinator Agreement with Vernon as a result of Vernon's default under such Scheduling Coordinator Agreement. Buyer shall submit schedules and bids to the CAISO in accordance with CAISO Tariff protocols for each Generating Unit, and provide such other services described in this Article X. Section 10.2 Scheduling Coordinator Obligations. Buyer shall submit all required notices and updates regarding each Generating Unit's status to the CAISO, including outage reports, and shall perform all other obligations required of a Scheduling Coordinator; pursuant to the CAISO Tariff. Seller shall cooperate with Buyer to provide all such notices and updates and otherwise perform its obligations as Scheduling Coordinator under the CAISO Tariff. Section 10.3 CAISO Costs and Revenues. Except as set forth in this Agreement, Buyer shall be responsible for CAISO costs (including penalties and other charges) and receive CAISO revenues (including credits and other payments) incurred as a result of providing Scheduling Coordinator services, including costs and revenues associated with CAISO dispatches. Except in the event of a Force Majeure, Seller shall be responsible for all CAISO charges incurred as `a consequence of the Generating Units not being available as scheduled or Seller not notifying Buyer .of outages in a timely manner. Section 10.4 Terminating Buyer's Designation as Scheduling Coordinator. At least thirty (30) Calendar Days prior to the earlier of (i) the expiration of the Service Term, or (ii) an 23 LA\1845906.2 Early Termination Date, regardless of which Party designated it, the Parties will take all actions necessary to terminate the designation of Buyer as Scheduling Coordinator for the Generating Units as of 11:59 p.m. on such date ("SC Replacement Date"). The necessary actions include the following: (a) Seller shall (i) submit to the CAISO; a designation of a new Scheduling Coordinator for the Facility to replace Buyer effective as of the SC Replacement Date and (ii) ; cause its newly -designated Scheduling Coordinator to submit a letter to the CAISO accepting the designation; and (b) Buyer shall submit a letter to, the CAISO resigning as Scheduling Coordinator for the Facility effective as of the SC Replacement Date. Seller bearssole responsibility for locating, selecting and reaching agreement about terms with any replacement Scheduling Coordinator. Section 10.5 CAISO Sanctions. If during the Service Term, the CAISO implements or has implemented any sanction or penalty related to scheduling, metering, outage reporting, or generator operation, and any such sanctions or penalties imposed on the Generating Unit or on Buyer as Scheduling Coordinator are due to,the actions or inactions of Seller, the cost of the sanctions or penalties shall be the Seller's responsibility. ARTICLE XI DISPATCH NOTICES. AND OPERATING LIMITATIONS Section 11.1 Availability Notice. Section 11.1.1 During the Service Term, no later than two (2) Business Days before each schedule date for the Day -Ahead Market in accordance with CAISO scheduling practices, Seller shall provide Buyer with an hourly schedule of the Available Capacity that the Facility is expected to have for each hour of such Calendar Day, which may be updated pursuant to this Agreement and, if the Facility is not fully available, Seller shall state whether it will provide, and in what amount,. Substitute Energy that meets all legal requirements applicable to both Parties from the CAISO market (the "Availabil Notice"). The Availability Notice shall include the Available Capacity for the relevant period and the ambient conditions (i.e., temperature and relative humidity) projected for such Calendar Day by an independent, verifiable third party source mutually agreed upon by the Parties. Seller will notify Buyer immediately if the Available Capacity of the Facility may change after Buyer's receipt of an Availability Notice. To the extent that, in any hour, there is a variation of actual ambient conditions in such hour from the projected ambient conditions, there shall be no reduction in the Monthly Capacity Payment solely as a result of such variation due to ambient conditions. Seller shall accommodate Buyer's reasonable requests for changes in the time of delivery of Availability Notices. Seller shall provide Availability Notices using the form attached hereto as Appendix D by (in order of preference) electronic mail, facsimile transmission or, telephonically to Buyer's personnel designated to receive such communications. Each Party shall provide written notices to the other Party of the contact information for such Party's personnel designated to send and receive such communications, as such designated personnel may change from time to time. In the event that Seller provides Contract Energy through the delivery of Substitute Energy, the Parties shall take all steps necessary to schedule and confirm such sale. 24 LA\ 1845906.2 Section 11.1.2 In determining the availability of the Facility and preparing an Availability Notice, Seller may take into account Applicable Limitations. Seller shall inform Buyer when it becomes aware of any Applicable Limitations as early as commercially reasonable, even if prior to the deadline for an Availability Notice. Seller shall make available to Buyer for inspection any records of Seller pertinent to Facility operations or Applicable Limitations upon reasonable notice during normal business hours. To the extent an Availability Notice is being limited by Permit Limitations, Seller shall indicate the specifics of the Permit Limitations thereon and the reduction of capacity as reflected on such Availability Notice as a result of such Permit Limitations shall be treated as an Unscheduled Outage unless Seller has operated the Facility consistent with Applicable Standards, Applicable Law, Required Permits and SCAQMD RECLAIM program rules and regulations (including reporting obligations), and such reduction is not attributable to any changes after the Effective Date in such Applicable Law or Required Permits. Section.11.2 Dispatch Notice. Buyer shall have the right to direct Seller to dispatch the Facility in the Day Ahead Energy Market by providing Dispatch Notices to Seller electronically (in the forms attached hereto as Appendix E) by 8:00 am PPT for each hour of the time period commencing on the next Calendar Day and extending through and including the next Business Day, subject to the Availability Notice and the Operating Limitations. Subject to Section 10.31 each Dispatch Notice will be effective unless and until Buyer modifies such Dispatch Notice by providing Seller with an updated Dispatch Notice. If an electronic submittal is not possible for reasons beyond Buyer's control, Buyer may provide Dispatch Notices by (in order of preference) electronic mail, facsimile transmission, or telephonically to Seller's personnel designated to receive such communications, as provided by Seller in writing. In addition to any other requirements set forth or referred to in this Agreement, all Dispatch Notices will be made in accordance with the CAISO Tariff. Section 11.3 Dispatch Notice Updates. Buyer shall have the right to update its Dispatch Notice to dispatch the Facility in the Real Time Market no later than three (3) hours and fifteen (15) minutes prior to a given operating hour, consistent with the CAISO Tariff. Section 11.4 Oneratinjz Limitations. If Buyer submits a Dispatch Notice that does not conform with the Operating Limitations or the Availability Notice, then Seller shall notify Buyer of the non -conformity and Buyer will modify its Dispatch Notice to conform to the applicable Operating Limitation and Availability Notice. Until such time as Buyer submits a modified Dispatch Notice, Seller shall deliver the Contract Energy in accordance with the Operating Limitations, and the Availability Notice. Any charges, costs or penalties incurred until such time as Buyer submits a modified Dispatch Notice shall be the responsibility of Buyer. Section 11.5 Writing Requirements. Both Parties hereby consent to the recording by tape or other electronic means of conversations between the Parties' personnel and contractors for the purposes of documenting and confirming Dispatch Notices, which recording the Parties agree will satisfy any "writing" requirement under Applicable Law. Section 11.6 Communications Protocols. The Parties shall coordinate and develop mutually -agreeable communication protocols to facilitate exchange of information between the Parties with respect to Availability Notices, Dispatch Notices and operations. 25 LA118459062 Section 11.7 Operating Records. Seller shall, for five (5) years or such longer period as and to the extent required by any Applicable Law, keep and maintain accurate and detailed records relating to the Facility's hourly Available Capacity and the scheduling and delivery of Energy and Ancillary Services. Information maintained pursuant to this Section 11.7 shall be provided to Buyer within fifteen (15) Calendar Days of Buyer's request for such information. ARTICLE' XII METERING Section 12.1 Ownership, Operation and Maintenance of Meters. Seller shall own, and at its sole expense, operate and maintain the Meter during the Service Term. Seller shall exercise reasonable care in the operation and maintenance of the Meter so as to assure to the .maximum extent reasonablypractical an accurate determination of such quantities. Section 12.2 Meter Reading. Seller shall read the Meter at the end of each calendar month, and shall record the Net Facility Output and the Delivered Fuel Quantity. The Meter shall be used as the basis for calculating the Energy Payment for Net Facility Output and Delivered Fuel Quantity for the Heat Rate Payment/Bonus under this Agreement. The records from each Meter shall be made available to Buyer on a monthly basis by the tenth (10th) Calendar Day of the next month so that Buyer may reconcile its monthly invoice with the Meter reading. Section 12.3 Alternatives in Event of Non -Operability. In the event the Meter is out of service or registers inaccurately, the measurement of the Meter shall be determined by the following alternatives, in the following order: (a) any alternative or back-up meter that Seller may have installed, if registering accurately; (b) a mathematical calculation if upon a calibration test of such Meter a percentage errot is ascertainable; or (c) estimates of deliveries of Net Facility Output or fuel by reference to quantities measured during periods of similar conditions when such Meter was registering accurately. Section 12.4 Calibration. Seller shall provide calibration testing of the Meter, by an independent third party consultant retained by the Seller, at least annually to ensure the accuracy of such Meter. Buyer may request that Seller perform more frequent testing; any such testing in excess of the minimum once -per -year tests shall be at Buyer's expense. Buyer shall be entitled to witness all such calibration tests. Section 12.4.1 If upon testing, any Meter is found to be accurate or in error by not more than plus or minus one quarter of one percent (.25%) for electricity meters and three -tenths of one percent (0.3%) for gas meters, then previous recordings of such Meter shall be considered accurate in computing deliveries of Net Facility Output or Delivered Fuel Quantity, as applicable, hereunder, but such Meter shall be promptly adjusted to record correctly. Section 12.4.2 If, upon testing, any Meter shall be found to be inaccurate by an amount exceeding plus or minus one quarter of one percent (.25%) for electricity meters and three -tenths of one percent (0.3%) for gas meters, then such Meter shall be promptly adjusted to record properly and any previous recordings by such Meter shall be corrected to zero error as set 26 LA\1845906.2 forth. If no reliable information exists as to the period over which such Meter registered inaccurately, it shall be assumed for correction purposes hereunder that such inaccuracy began at a point in time midway between the testing date and the last previous date on which such Meter was tested and found to be accurate. Section 12.4.3 If upon testing, any Meter is found to be in error by more than plus or minus one quarter of one percent (.25%) for electricity meters and three -tenths of one percent (0.3%) for gas meters, then the payments for Net Facility Output or Heat Rate Payment/Bonus, as applicable, made since the previous test of such Meter shall be adjusted to reflect the corrected measurements determined and the next invoice sent to Buyer shall be corrected to reflect such adjustment. Section 12.5 Shared Access and Meter Data. The Parties shall each have shared access to Meter data and all other Facility data available through the distributed controls system, the continuous emissions monitoring system or other such systems, including, with respect to fuel, data regarding fuel nominations, confirmation, allocations and usage, and with respect to Product, data regarding Net Facility Output, gross output to the Energy Delivery Point and Energy used to serve internal Facility load. Seller shall take all actions and execute all documents reasonably necessary to grant Buyer access to such information, such as confirmations and meter readings. The cost of any improvements necessary to facilitate such access shall be borne by Buyer. Additionally, prior to the fifth day of each month; Seller shall provide to Buyer copies.of the Net Facility Output and Delivered Fuel Quantity for the previous month. ARTICLE XIII OUTAGES Section 13.1 Scheduled Outages. Not later than April 1 and October 1 of each Contract Year during the Service Term, Seller shall submit to Buyer Seller's schedule of proposed Scheduled Outages ("Outage Schedule") for the following twenty-four (24)-month period, in a form reasonably agreed to by Buyer. Within twenty (20) Business Days after its receipt of the Outage Schedule, Buyer shall notify Seller in writing of any reasonable request for changes to the Outage Schedule, and Seller shall, consistent with Good Utility Practice, accommodate Buyer's requests regarding the timing of any Scheduled Outage. Seller shall cooperate with Buyer to arrange and coordinate all Outage Schedules with the CAISO. Seller shall communicate to Buyer all changes to a Scheduled Outage and estimated time of return of each Generating Unit as soon as practicable after the condition causing the change becomes known to Seller. Scheduled Outages that will equal more than 168 hours in any calendar month must be agreed to and coordinated in advance between the Parties. In no event shall Scheduled Outages exceed 336 hours during any Contract Year; provided, however, that the Facility may schedule a major overhaul every 20,000 Equivalent Operating Hours, during which Contract Year Scheduled Outages shall not exceed 672 hours. Section 13.2 Affect of Scheduled Outages on DelivererObligations. Seller shall be excused from the obligation to sell and deliver, or cause to be delivered, Contract Energy, Adjusted Contract Capacity and/or Ancillary Services for time periods in which the Facility is subject to a Scheduled Outage. 27 LA\1845906.2 Section 13.3 No Scheduled Outages During Summer Months. Except as otherwise explicitly permitted herein, no outages shall be scheduled or planned from each June 1 through October 31 during the Service Term. In the event that Seller has a previously Scheduled Outage that becomes coincident with a CAISO-declared system emergency, Seller shall make all reasonable efforts to reschedule such Scheduled Outage. Section 13.4 Notice of Unscheduled Outages. Seller shall notify Buyer by telephoning Buyer's operations center no later than ten (10) minutes following the occurrence of an Unscheduled Outage, or if Seller has knowledge that an Unscheduled Outage will occur, within twenty (20) minutes of determining that such Unscheduled Outage will occur. Seller shall communicate to Buyer the estimated time of return of each Generating Unit as soon as practicable after Seller has knowledge thereof. Any sanctions, charges or penalties imposed on Buyer as Seller's Scheduling Coordinator due to Seller's failure to timely provide Buyer with a report of a Scheduled Outage or Unscheduled Outage, shall be the responsibility of Seller. Section 13.5 Inspection. In the event of an Unscheduled Outage, Buyer shall have the option to inspect any Generating Unit and all records relating thereto on any Business Day and at a reasonable time, and Seller shall reasonably cooperate with Buyer during any such inspection. Buyer shall comply with Seller's safety and security rules and instructions during any inspection, and shall not interfere with work on or operation of the Generating Unit. Section 13.6 Reports of.Outages. Seller shall promptly prepare and provide to Buyer all reports of Scheduled Outages and Unscheduled Outages that Buyer may reasonably require, including for the purpose of enabling Buyer to comply with CAISO requirements or any Applicable Law. ARTICLE XIV EVENTS OF DEFAULT; REMEDIES Section 14.1 Events of Default. An "Event of Default" shall mean, with respect to a Party (a "Defaulting Party"), the occurrence of any of the following: Section 14.1.1The failure by such Party to make, when due, any payment required pursuant to this Agreement if such failure is not remedied within ten (10) Business Days after written notice from the other Party ("Failure to Pay"); Section 14.1.2 Any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated; Section 14.1.3 The unexcused failure to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default, and except for such Party's obligations to deliver or receive the Product, the exclusive remedy for which is provided in Article V and Section 14.2.1 and its implementing provisions) if such failure is not remedied within fifteen (15) Business Days after written notice; Section 14.1.4 Such Party becomes Bankrupt (`Bankruptcy Event"); or 28 LA\1845906.2 Section 14.1.5 Such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other Party. Section 14.2 Seller Events of Default. An Event of Default shall also mean, with respect to Seller (as the "Defaulting Party" ), the occurrence of any of the following: Section 14.2.1 Unless otherwise excused by the terms of this Agreement, the failure of the Generating Units to maintain a Capacity rating of at least 75% of the Contract Capacity on average for a period of twenty-four (24)consecutive months for any reason; provided, however, that the Seller shall continue to be subject to the .provisions governing the failure to delivery Adjusted Contract Capacity in Section 5.3; Section 14.2.2 The failure to provide and maintain credit support pursuant to the terms of this Agreement; or Section 14.2.3 Seller sells Products, or enters into a contract to sell Products, to any entity other than Buyer. Section 14.2.4 Seller assigns -this Agreement in violation of Section 20.4. Section 14.3 Declaration of an Early Termination Date. Section 14.3.1 If a Failure to Pay or a Bankruptcy Event with respect to a Defaulting Party shall have occurred and is continuing, the other Party (the "Non -Defaulting Party") shall have the right to designate an early termination date ("Early. Termination Date"), upon twenty (20) Calendar Days written notice to the Defaulting Party. Section 14.3.2 If an Event of Default with respect to a Defaulting Party other than a Failure to Pay or a Bankruptcy Event shall have occurred and be continuing, the Non - Defaulting Party shall have the right to declare an Early Termination Date, upon 120 Calendar Days prior notice to the Defaulting Party; provided, however, that such prior notice period shall be extended by an additional sixty (60) Calendar Days if and to the extent that the Defaulting Party (or, in the case of Seller, a Lender acting on behalf of Seller) is diligently attempting to cure such Event of Default. If an Event of Default is cured prior to the Early Termination Date, then such Early Termination Date shall expire, and no associated Termination Payment shall be owed. Section 14.4 Termination Pa ment. As of the Early Termination Date, the Agreement shall terminate and the Non -Defaulting' Party shall calculate the amounts owing between the Parties as of the Early Termination Date (the "Termination Payment"). The Termination Payment shall equal the Non -Defaulting Party's Losses (plus its Costs) (as defined below), with respect to the Product and shall be owed and paid to the Non -Defaulting Party; provided, however, that the Non -Defaulting Parry's Losses shall be calculated, in relevant part, based upon a Market Quotation. 29 LA\1845906.2 Section 14.5 Notice of Payment of Termination Payment. As soon as practicable after the Early Termination Date, notice shall be given by the Non -Defaulting Party to the Defaulting Party of the amount of the Termination Payment. The notice shall include a written statement explaining in reasonable detail the calculation of such amount. The Termination Payment shall be made by the Defaulting Party within ten (10) Business Days after such notice is effective. Section 14.6 Disputes With Respect to Termination Pam. If the Defaulting Party disputes the Non -Defaulting Party's calculation of the Termination Payment, in whole or in part, the Defaulting Party shall, within ten (10) Business Days of receipt of Non -Defaulting Party's calculation of the Termination Payment, provide to the Non -Defaulting Party a detailed written explanation of the basis for such dispute; provided, however, that the undisputed portion of the Termination Payment shall be paid in accordance with Section 14.5. Section 14.7 Suspension of Performance and Other Remedies. Notwithstanding any other provision of this Agreement, if an Event of Default shall have occurred and be continuing, the Non -Defaulting Party, upon written notice to the Defaulting Party, shall have the right (i) to suspend performance under this Agreement (including but not limited to any withholding any payments due to the Defaulting Party under this Agreement); provided, however, in no event shall any such suspension continue for longer than ten (10) Business Days unless an Early Termination Date has been declared and notice thereof pursuant to Section 14.3.1 given; and (ii) to the extent an Event of Default shall have occurred and be continuing, to exercise any remedy available at law or in equity. ARTICLE XV PAYMENT AND BILLING Section 15.1 BillingPeriod. eriod. The calendar month shall be the standard period for all payments under this Agreement (other than a Termination Payment). As soon as practicable after the end of each month, each Party will render to the other Party an invoice for the payment obligations, if any, incurred hereunder during the preceding month. Section 15.2. Timeliness of Payment. All invoices under this Agreement shall be due and payable in accordance with each Party's invoice instructions on or before the later of the twentieth (20th) Calendar Day of each month, or tenth (10th) Calendar Day after receipt of the invoice or, if such Calendar Day is not a. Business Day, then on the next Business Day. Each Party will make payments by electronic funds transfer, or by other mutually agreeable method(s), to the account designated by the other Party. Any amounts not paid by the due date will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be calculated from and including the due date to but excluding the date the delinquent amount is paid in full. Section 15.3 Disputes and Adjustments of Invoices. A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due, with LA\1845906.2 30 L notice of the objection given to the other Party. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within two (2)` Business Days of such resolution along with interest accrued at the Interest Rate from and including the due date to but excluding the date paid. Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such overpayment from subsequent payments, with interest accrued at the Interest Rate from and including the date of such overpayment to but excluding the date repaid or deducted by the Party receiving such overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in accordance with this Section 15.3-within twelve (12) months after the invoice is rendered or any specific adjustment to the invoice is made. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived. Section 15.4 Netting of Payments. The Parties hereby agree that they shall discharge debts and payment obligations due and owing to each other under this Agreement on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement, interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it. Section 15.5 Payment Obligations Absent Netting. If no mutual debts or payment obligations exist and only one Party owes a debt or obligation to the other during the monthly billing period, including interest and payments or credits, that Party shall pay such sum in full when due. ARTICLE XVI LIMITATIONS Section 16.1 Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN, THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITYARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER` REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION 31 LA\ 1845906"2 DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES: ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. ARTICLE XVII CREDIT SUPPORT Section 17.1 Financial Information. If requested by a Party, the other Party shall deliver: (a) within 180 Calendar Days following the end of each fiscal year, a copy of its (and, if applicable, its Guarantor's) annual report. containing audited consolidated financial statements for such fiscal year; and (b) within 120 Calendar Days after the end of each of its first three fiscal quarters (or half -year, if applicable) of each fiscal year, a copy of its (and, if applicable, its Guarantor's) quarterly (or half -yearly, if applicable) report containing unaudited consolidated financial statements for such fiscal quarter (or half -year, if applicable). In all cases the statements shall be for the most recent accounting period and prepared in accordance with generally accepted accounting principles; provided; however, that should any such statements not be available on a timely basis due to a delay in preparation or certification, such delay shall not be an Event of Default so long as the producing Party diligently pursues the preparation, certification and delivery of the statements. Section 17.2 Subordinated Security Interest and Mortgage. Section 17.2.1 Grant of Subordinated Security Interest. Prior to the Service Commencement Date, to secure Seller's performance of its obligations under this Agreement, Seller and Buyer, as the case may be, shall each execute, deliver, file and record, as appropriate, separate agreements, documents, or instruments under which Seller will grant to Buyer, in a form reasonably acceptable to Buyer, fully perfected security interests and/or mortgage liens in the Facility and in any and all real and personal property rights, contractual rights, or other rights that Seller requires in order to own and operate the Facility (collectively, the "Subordinated Security Interest'). The lien of the Subordinated Security Interest shall be subordinate only to the senior lien of the Lenders and upon request of Seller, Buyer will execute a subordination agreement in favor of Lender(s) on terms consistent with this Section 17.2.1, which subordination agreement may, if so requested, be in a form appropriate for recording or filing; provided, however, that nothing contained therein shall limit Buyer's rights and remedies in respect of Buyer's right to receive the payment of money or other performance in accordance with this Agreement and Buyer may exercise its rights and remedies in accordance with the terms hereof (other than through the exercise of any remedy relating to any Subordinated LA\ 1845906.2 32 c., Security Interest). The Subordinated Security Interest shall not include the pledge or assignment of any ownership interest in Seller. Section 17.2.2 Other Actions By Seller. All costs of executing, delivering, filing, and recording the Security Documents shall be at Buyer's expense. The Security Documents in respect of the Subordinated Security Interest shall contain financial and operating covenants intended to preserve and maintain the value of the Subordinated Security Interest substantially similar to those in favor of Lender. In addition, Seller authorizes Buyer to file such Uniform Commercial Code financing statements and to take such further action and execute such further instruments as shall reasonably be required by Buyer to confirm and continue the validity, priority, and perfection of the Subordinated Security Interest. The granting of the Subordinated Security Interest shall not be to the exclusion of, nor be construed to limit the amount of any further claims, causes of action or other rights accruing to Buyer by reason of any Event of Default by Seller or Early Termination Date. The Subordinated Security Interest shall be discharged and released, and Buyer shall take any steps reasonably required by Seller to effect and record such discharge and release, upon the expiration of the Term and satisfaction by Seller of all of its obligations hereunder. Seller shall reimburse Buyer for its reasonable costs associated with the discharge and release of the Subordinated Security Interest. Section 17.2.3 Transfer of Required Permits. The Security Documents with respect to the Subordinated Security Interest shall provide that, subject to the prior senior lien of Lenders; if Buyer acts to obtain title to the Facility pursuant to the exercise of remedies thereunder, Seller shall take all steps necessary, to legally. transfer all authority to dispatch the operations of each Generating Unit as required by its Required Permits to Buyer as necessary for Buyer to operate the Facility, and shall diligently prosecute and cooperate in such transfers. Section 17.3 Debt Covenant. Seller shall not create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable for, contingently or otherwise, any Seller's Debt in excess of (i) as of the Effective Date, $273,600,000; (ii) for the period commencing with the fifth anniversary through the tenth anniversary of the Service Commencement Date $290,700,000; (iii) for the final five (5) years of the Service Term, excluding the Option Term, $307,800,000, and (iv) for the Option Term, $324,900,000. ARTICLE XVIII GOVERNMENTAL CHARGES Section 18.1 Cooperation. Each Party shall use reasonable efforts to implement the provisions of and to administer this Agreement in accordance with the intent of the Parties to minimize all taxes, so long as neither Party is materially adversely affected by such efforts. Section 18.2 Governmental Charges. Seller shall pay or cause to be paid all taxes imposed by any Governmental Authority ("Governmental Charges") on or with respect to the Product arising prior to the Delivery Point. Buyer shall pay or cause to be paid all Governmental Charges on or with respect to the Product at and from the Delivery Point (other than franchise or income taxes which are related to the sale of the Product and are, therefore, the responsibility of the Seller, but including any sales and use taxes, if any, which are the responsibility of Buyer). 33 LA\ 1845906.2 In the, event Seller is required by Applicable Law to remit or pay Governmental Charges which are Buyer's responsibility hereunder, Buyer shall promptly reimburse Seller for such Governmental Charges. If Buyer is required by Applicable Law to remit or pay Governmental Charges which are Seller's responsibility hereunder, Buyer may deduct the amount of any such Governmental Charges from the sums due to Seller under Article XV of' this Agreement. Nothing shall obligate or cause a Party to pay or be liable to pay any Governmental Charges for which it is exempt under Applicable Law. Section 18.3 Greenhouse Gas Charges. Notwithstanding anything to the contrary in Section 18.2, Buyer shall reimburse Seller for newly -imposed taxes, charges or fees (which shall include the costs of any carbon, Greenhouse Gas or similar emissions credits) for Greenhouse Gas attributable to Energy supplied to Buyer from the Generating Units, within forty-five (45) Calendar Days of Buyer's receipt from Seller of documentation establishing to Buyer's reasonable satisfaction: (i) that Seller is actually liable for the tax, charge or fee for Greenhouse Gas attributed to the operation of the Generating Units during the Service Term; (ii) that the tax, charge, or fee was not effective or scheduled to become effective as of the Effective Date; (iii) the specific amount of the tax, charge, or fee; (iv) that the tax, charge or fee was imposed upon Seller by an authorized Governmental Authority in which the Generating Units are located, or which otherwise has jurisdiction over Seller or the Generating Units; (v) that Seller has paid such tax, charge or fee; (iv) the full amount of the tax, charge or fee for which Seller seeks reimbursement from Buyer under this Section 18.3, and (vi) that Seller took all reasonable steps to mitigate the cost or amount of such tax, charge or fee, provided, however, that such reasonable steps shall not be deemed to require Seller to make capital improvements to the Generating Unit. ARTICLE XIX DISPUTE RESOLUTION Section 19.1 Dispute Resolution. ,Any and all disputes, claims or controversies arising out of, relating to, concerning or pertaining to the terms of this Agreement, or to either Party's performance or failure of performance under this Agreement ("Dispute"), which Dispute the Parties have been unable to resolve by informal methods after undertaking a good faith effort to do so, shall first be submitted to an informal dispute resolution under the procedure described in Section 19.2 below; if the matter is not resolved through such procedures, it shall be referred for final and binding arbitration under the procedures described in Section 19.3. Section 19.2 Informal Resolution. Any unresolved Disputes shall initially be referred to Buyer's City Administrator, or designee, and President of Seller for resolution. Such executives or their respective designees shall meet at least once, and shall negotiate in a commercially reasonable manner for a period of fifteen (15) Business Days in an effort to resolve the Dispute. Neither Party shall seek to commence any litigation or arbitration proceeding without first satisfying this Section 19.2, and any failure of a Party to do so shall constitute a sufficient basis for termination without prejudice to any proceeding so attempted. Section 19.3 Arbitration. Either Party may initiate binding arbitration with respect to the Dispute by making a written demand for binding arbitration before an arbitrator that is a former judge or attorney with experience resolving major commercial disputes within the electric LA\ 184 5906.2 34 9 industry with JAMS, its successor, or any other mutually agreeable arbitrator (the "Arbitrator") at any time following the unsuccessful conclusion of the informal resolution provided for in Section 19.2. The Parties will cooperate with one another in promptly selecting the Arbitrator and in scheduling the arbitration to commence no later than 180 Calendar Days from the date of the initial written demand for binding arbitration. If, notwithstanding their good faith efforts, the Parties are unable to agree upon a mutually acceptable Arbitrator, the Arbitrator shall be appointed as provided for in California Code of Civil Procedure Section 1281.6. Upon a Party's written demand for binding arbitration, such Dispute, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by binding arbitration before the Arbitrator, in accordance with the laws of the State of California, without regards to principles of conflicts of laws. Except as provided for herein, the arbitration shall be conducted by the Arbitrator in accordance with the rules and procedures for arbitration of complex business disputes for the organization with which the Arbitrator is associated; absent the existence of such rules and procedures, the arbitration shall be conducted in accordance with the California Arbitration Act, California Code of Civil Procedure Section 1280 et seq. However, notwithstanding the rules and procedures that would otherwise apply to the arbitration, and unless the Parties agree to a different arrangement, the place of the arbitration shall be in Los Angeles County, California, each side in the arbitration shall be entitled to take up to three depositions, and all direct testimony in the arbitration shall be submitted in the form of affidavits or declarations under penalty of perjury. Each Party shall cooperate in making available for cross-examination at the arbitration hearing its witnesses whose direct testimony has been so submitted. Judgment on the award may be entered in any court having jurisdiction. The Arbitrator shall, in any award, allocate all of the costs of the binding arbitration (other than each Party's individual attorneys' fees and costs related to the Party's participation in the arbitration, which fees and costs shall be borne by such Party), including the fees of the Arbitrator, against the Party who did not prevail. Until such award is made, however, the Parties shall share equally in paying the costs of the arbitration. Section.19.4 Waiver of Jury Trial. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING UNDER THIS AGREEMENT. ARTICLE XX MISCELLANEOUS Section 20.1 Representations and Warranties. Each Party represents and warrants to the other Party that: Section 20.1.1 It is duly organized,' validly existing and in good standing under the laws of the jurisdiction of its formation; Section 20.1.2 As of the Service Commencement Date, it has all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; Section 20.1.3 The execution, delivery and performance of this Agreement are within its powers, have been duly authorized by all necessary action and do not violate any of the 35 LA\1845906.2 terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it; Section 20.1.4 This Agreement, and each other document executed and delivered in accordance with this Agreement, constitutes its legally valid and binding obligation enforceable against it in accordance with its terms, subject to any Equitable, Defenses; Section 20.1.5 It is not Bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being. or becoming Bankrupt; Section 20.1.6 There is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement; Section 20.1.7 No Event of Default with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement; Section 20.1.8 It is acting for its own account, has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment, is not relying upon the advice or recommendations of the other Party in so doing, and is capable of assessing the merits of and understanding, and understands and accepts, the terms, conditions and risks of this Agreement; Section 20.1.9 It is a "forward contract merchant" within the meaning of the United States Bankruptcy Code; and Section 20.1.10 It has entered into this Agreement in connection with the conduct of its business and it has the capacity or ability to make or take delivery of the Product. Section 20.2 Title and Risk of Loss. Title to and risk of loss for Contract Energy shall pass from Seller to Buyer at the Energy Delivery Point, and title to and risk of loss for Adjusted Contract Capacity shall pass from Seller to Buyer at the Capacity Delivery Point. Section 20.3 Indemnity. Each Party shall indemnify, defend and hold harmless the other Party from and against any Claims arising from or out of any event, circumstance, act or incident first occurring or existing during the period when control and title to Product is vested in such Party as provided in Section 20.2. Each Party shall indemnify, defend and hold harmless the other Party against any Governmental Charges for which such Party is responsible under Article XVIII. Section 20.4 Assignment. Section 20.4.1 This Agreement is binding upon and inures to the benefit of the successors and assigns of the Parties. However, neither Party shall Assign this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld, except that Seller may Assign this Agreement to an Affiliate or to its financing sources 36 LA\ 1845906.2 Le- for collateral purposes without the prior written consent of Buyer. Any such Assignment is conditioned on the assignee's agreement in writing to assume the assigning Parry's duties and obligations under this Agreement. Any Assignment to an Affiliate effected in accordance with this Section 20.4.1 shall not relieve the assigning Party of its obligations and liabilities under this Agreement. For purposes of this Section 20.4.1, "Assign" or "Assignment' means any direct or indirect assignment, subcontracting or other transfer of this Agreement, including, with respect to Seller, any change of control of Seller; provided, however, that "Assign" or "Assignment" shall not include any transaction if after giving effect to such transaction NGP and/or Paul B. Prager directly or indirectly control the Facility. Section 20.4.2 Seller shall have the right to assign this Agreement to a Lender as collateral for any debt financing or refinancing relating to the Facility. Buyer shall execute a consent to collateral assignment substantially in the form attached as Exhibit F to the PSA. Section 20.5 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS RESPECTIVE RIGHT TO, ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT. Section 20.6 Notices. Notices (other than scheduling requests) shall, unless otherwise specified herein, be in writing and may be delivered by hand delivery, United States mail, overnight courier service or facsimile. Notice by facsimile or hand delivery shall be effective at the close of business on the Calendar Day actually received, if received during business hours on a Business Day, and otherwise shall be effective at the close of business on the next Business Day. Notice by overnight United States mail or courier shall be effective on the next Business Day after it was sent. A Party may change its notice information by providing notice of same in accordance herewith. If to Buyer: City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 Attn: Director of Light & Power Department With a copy to: City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Facsimile: (323) 826-1438 Attn: City Attorney and 37 LA\1845906.2 Latham & Watkins LLP 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071-2007 Attn: David B. Rogers, Esq. Facsimile: (213) 891-8763 If to Purchaser: Beowulf (Vernon) Power, LLC Attn: President 103 North Washington Street Easton, MD 21601 Facsimile: 410-770-9705 With copies to: Chadbourne & Parke LLP Attn: Robert Shapiro 1200 New Hampshire Ave., N.W. Washington, DC 20036 Facsimile: (202) 974-5602 Section 20.7 Entire Agreement. This Agreement (including the appendices and any written supplements hereto), any designated credit support or similar arrangement between the Parties constitute the entire agreement; between the Parties relating to the subject matter of this Agreement. Section 20.8 Obligations Surviving Termination. Except as may be provided or limited by this Agreement, the obligations which by their nature are intended to survive termination of this Agreement, including representations, warranties, covenants and rights and obligations with respect to audits, indemnification, payment and settlement and confidentiality, shall so survive. Section 20.9 Amendment. This Agreement shall be considered for all purposes as prepared through the joint efforts of the parties and shall not be construed against one party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution hereof. Except to the extent herein provided for, no amendment or modification to this Agreement shall be enforceable unless reduced to writing and executed by both Parties. Each Party agrees if it seeks to amend any applicable wholesale power sales tariff during the term of this Agreement, such amendment will not in any way affect this Agreement without the prior written consent of the other Party. Each Party further agrees that it will not assert, or defend itself, on the basis that any applicable tariff is inconsistent with this Agreement. Section 20.10 No Waiver. No waiver of any of the terms and conditions of this Agreement shall be effective unless in writing and signed by the Party against whom such waiver is sought to be enforced. Any waiver of the terms hereof shall be effective only in the specific 38 LA\1845906.2 in and for the specific purpose given. The failure of a Party to insist, in any instance, on the strict performance of any of the terms and conditions hereof shall not be construed as a waiver of such Party's right in the future to insist on such strict performance. Section 20.11 Regulatory Review. Section 20.11.1 Any provision declared or rendered unlawful by any applicable court of law or regulatory agency or deemed unlawful because of a statutory change (individually or collectively, such events referred to as "Regulatory Event") will not otherwise affect the remaining lawful obligations that arise under this Agreement; provided, however, that if a Regulatory Event occurs, the Parties shall use their best efforts to reform this Agreement in order to give effect to the original intention of the Parties. Section 20.11.2 To the fullest extent permitted by Applicable Law, each Party, for itself and its successors and assigns, hereby knowingly, voluntarily, expressly, completely and irrevocably waives any rights it has or may have, now or in the future, whether under Sections 205 or 206 of the Federal Power Act or otherwise, notwithstanding any subsequent changes in Applicable Law or market conditions that may occur, to seek or support by any means, directly or indirectly (through complaint, claim, suit, investigation or otherwise), and each Party hereby covenants and agrees that it will not seek unilaterally from the FERC or any other authority an order or relief of any kind amending or changing any provision of this Agreement (including any transaction hereunder) specifying the rate, charge, classification, or other term or condition agreed to by the Parties, or granting any refunds with respect to a change or proposed change: (i) under any standard of review, including the "just and reasonable" standard; or (ii) based upon a contention that: (x) the wholesale market in which this Agreement was made was not competitive or appropriately functional; (y) either Party had the ability to compel the other Party to agree to or otherwise accept a rate, term or condition that did not reflect the then -current market rate, term or condition for this Agreement; and/or (z) that it was not just and reasonable (collectively, "Waived Claims"). Section 20.11.3 Notwithstanding the foregoing, in the event that a standard of review is undertaken by the FERC or any other authority in respect of any unilateral request for a change to any rate, charge, classification, term or condition of this Agreement or any part thereof or any individual purchase and sale transaction hereunder, whether proposed by a Party, a non- party or the FERC acting sua sponte, the Parties stipulate and agree that the applicable standard of review shall be the strictest standard of review permissible to preserve the intent of the Parties pursuant to this Section 20.11 to uphold the sanctity ;of this Agreement and each of its terms to the maximum extent possible under Applicable Law. Section 20.12 Insurance. Seller shall procure at its own expense and maintain in full force and effect, with responsible insurance carriers authorized to do business in the State of California, insurance policies in at least the minimum amounts, and in accordance with the terms and conditions, specified in the Lease. Section 20.13 Headings and Captions. The headings and captions used herein are for convenience and reference, purposes only. This Agreement shall be binding on each Party's successors and permitted assigns. 39 LM 1845906.2 Section 20.14 No Third Party Beneficiaries. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound by this Agreement). Section 20.15 Audit. Each Party has the right, at its sole expense and during normal working hours, to examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to this Agreement. If any such examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and the payment thereof will be made promptly and shall bear interest calculated at.the Interest Rate from the date the overpayment or underpayment wasmadeuntil paid; provided, however, that no adjustment for any statement or payment will be made unless objection to the accuracy thereof was made prior to the lapse of twelve (12) months from the rendition thereof, and thereafter any, objection shall be deemed waived. Section 20.16 Forward Contract. The Parties acknowledge and agree that this Agreement constitutes a "forward contract" within the meaning of the United States Bankruptcy Code. Section 20.17 Construction of Agreement. Ambiguities or uncertainties in the wording of this Agreement shall not be construed for or against any Party either on account of such Party having drafted or provided any language in this Agreement or otherwise, and shall be construed in accordance with the fair meaning of this Agreement. Section 20.18 Counterparts. This Agreement may be executed and delivered by the Parties in any number of counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 20.19 Confidentiality. Neither Party shall disclose the terms or conditions of this Agreement to a third party (other than the Parry's employees, lenders, counsel, accountants or advisors who have a need to know such information and have agreed to keep such terms confidential) except in order to comply with any Applicable Law (including the California Public Records Act and any law of similar effect), or any exchange, control area or independent system operator rule or in connection with any court or regulatory proceeding; provided, however, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation. Section 20.20 No Immunity Claim. Buyer warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (a) suit, (b) jurisdiction or court (including a court located outside the jurisdiction of its organization), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment. Section 20.21 Cooperation Regarding Possible Future Alternative Power Source. If Buyer determines to obtain an alternative source of power for its electric system, Seller agrees (a) to enter into a consent agreement (with substantially similar rights to those contained in the 40 LAU 845906.2 forms of the Lender Consents attached to the PSA as Exhibits F-1 and F-2) for the benefit of transaction participants who are not in direct privity with Seller and (b) to accept reasonable requests by Buyer for modifications to the Related Agreements (as defined ,in the PSA) that (i) do not adversely affect Seller's economics in any way not fully compensated or otherwise in any material respect adverse to Seller and (ii) are reasonably necessary to acquire an alternative source of power for the Buyer's electric system. Notwithstanding anything to the contrary in this Agreement but subject to this Section 20.21, Seller further agrees that if Buyer determines to obtain an alternative source of power for its electric system, Buyer may novate its obligations under this Agreement to a counterparty (x) that either has or is irrevocably and unconditionally guaranteed by an entity (i) that has a credit rating from S&P of not lower than AA- and from Moody's of not lower than Aa3, and is not on a negative creditwatch by S&P or negative ratings watch by Moody's to be downgraded below such rating; and (ii) if such counterparty or its guarantor has (or has a banking affiliate with) a "Bank Financial Strength" rating from Moody's, then such rating shall not be less than B+, and such counterparty or its guarantor shall not be on a negative ratings watch by Moody's to be downgraded below such rating; and (iii) if such counterparty or its guarantor has an "Insurance Financial Strength" rating from Moody's, then such rating shall not be less than Aa2, or (y) that is acceptable to Seller's lenders that has (or whose guarantor has) a credit rating from S&P of not lower than A and from Moody's of not lower than A2 or (z) that is, or is guaranteed by, Goldman Sachs or Lehman Brothers. Buyer warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (a) suit, (b) jurisdiction or court (including a court located outside the jurisdiction of its organization), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment. Notwithstanding the foregoing, Buyer may not novate its obligations under this Agreement if such novation would cause the notes issued or other funded indebtedness incurred by Seller or any of its Affiliates to finance or refinance the acquisition of the. Facility to be rated less than Investment Grade with a stable outlook by Fitch Ratings by reaffirmation or otherwise. [Signature page follows] 41 LAU 845906.2 IN WITNESS WHEREOF, the duly authorized representatives of the Parties each have executed this Agreement, effective as of the date first above written. BICE O ALBURG LLC, as Se er By: Name: Paul Prager Title: President THE CITY OF VERNON, as Buyer By: Name: Eric T. Fresco Title: City Administrator [Signature Page to Power Purchase Tolling Agreement— Bicent (California) Malburg LLC] IN WITNESS WHEREOF, the duly authorized representatives of the Parties each have executed this Agreement, effective as of the date first above written. BICENT (CALIFORNIA) MALBURG LLC, as Seller By: Name: Paul Prager Title: President THE CITY OF VERNON, as Buyer By: Name: Eric T�,,,h Title: City Administrator [Signature Page to Power Purchase Tolling Agreement— Bicent (Califomia) Malburg LLC] The execution of this Power Purchase Tolling Agreement by the City of Vernon is hereby affirmed and attested to by: CITY OF VERNON By: /�'� ►^ Name: Manuela Giron Title: City Clerk [Attestation to Power Purchase Tolling Agreement — Bicenl (California) Malburg LLCI APPENDIX A OPERATING LIMITS Start-ups: Maximum: Each CT is limited to one start per Calendar Day Start-up Notification Lead Time: 12 minutes for CT purge Startup Time: Cold Startup from: 2 hours to emissions compliance Hot Startup: 1 hour to emissions compliance Ramp Rate: 3 MW/min for CT Operations Heat Input: 520.62 mmBtu/hr HHV per each unit (CT and duct burner) Heat Input: 73.4 mmBtu/hr LHV per each duct burner MGS is limited to 330 mmscf per,month per unit Minimum Dispatch Level: Minimum Dispatch Level: 95 MW LA\ 1845906.2 Appendix B Output Degradation Schedule EVAP EVAP on DF on DF on off Power Power Output Output EOH MW's MW's 0 134.00 120.00 5000 13.2,66 118.80 10000 131.99 118.20 15000 131.05 117.36 20000 130.65 117.00 20001 134.70 118.70 30000 134.03 118.11 40000 133.36 117.52 40001 134.69 118.69 50000 133.34 117.50 60000 132.01 116.33 ' 60001 133.33 117.49 70000 132.13 116.44 80000 130.94 115.39 80001 132.64 116.89 90000 131.32 115.72 100000 130.40 114.91 100001 130.92 115.37 110000 129,74 114.33 120000 129.35 113.99 LA\ 1782698.2 Fall 2007 Post Outage Performance Test Results Appendix C Heat Rate Degradation Schedule EVAP EVAP on DF on no on Heat DF Heat Rate Rate HHV HHV EOH BTU/kW BTU/kW 0 7689 7343 5000 7743 7394 10000 7797 7446 15000 7827 7475 20000 7843 7490 Fall 2007 Post Outage Performance 20001 7762 7436 Test Results 30000 7801 7473 40000 7840 7511 40001 7761 7435 50000 7816 7487 60000 7878 7547 60001 7799 7472 70000 7838 7509 80000 7917 7584 80001 7838 7509 90000 7900' 7569 100000 7956 7622 100001 7916 7583 110000 7971 7637 120000 7995 7659 APPENDIX D FORM OF AVAILABILITY .NOTICE Operating Day: Station: Issued By: Unit: Issued At: Unit 100% Available No Restrictions: Hour Ending Available Capacity Temperature / RH Minimum Output Substitute Energy Comments - (MW) (MN) (non AGC) YES/NO 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 I o:00 11:00 12:00 - 13:00 - - 14:00 15-00 16:00 1700 I8:00 19:00 2000 21:00 22.00 23:00 000 Comments: LA\ 1845906.2 APPENDIX E FORM OF DISPATCH NOTICE Operating Day: Station: Issued By: Unit: Issued At: Hour Ending Scheduled Energy AGC Scheduled Regulation Up Regulation Down Spinning Reserve Non -Spinning - Reserves Comments (MW) YES/NO (MW) (MW) (MW) (MW) 1.00 200 3:00 400 5:00 - 6:00 7:00 800 - 9:00 10:00 1 1:00 12:06 13:00 14:00 15:00 1600 17:00 I8:00 - 19:00 20-00 21:00 2200 - 2300 - 000 - Comments: LA\l845906.2