attachment 2_decommissioning fund and escrow agreement for the pinnacle wind project

8/7/2019 Attachment 2_Decommissioning Fund and Escrow Agreement for the Pinnacle Wind Project

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DECOMMISSIONING FUND AND ESCROW AGREEMENT

THIS DECOMMISSIONING FUND AND ESCROW AGREEMENT, is made and

entered into as of the 25'(. day o f ~ , 201 I, by and between Pinnacle Wind Force,LLC, a Delaware limited -liability company, its successors and assigns ( " p i n n a c l ~ " ) , and the

County Commission of Mineral County, West Virginia, a political subdivision of the State of

West Virginia. and its successors (the "Commission") (Pinnacle and the Commission being

sometimes herein referred to individually as a "Party" and collectively as the "PLirtics"). as the

same may be amended or modified 11-0111 time to time (the "Agreement").

WITNESSETH:

THAT WHEREAS. pursuant to that certain Order of the Public Service Commission of

West Virginia (the "PSC") issued on January 1I. 2010. in Case No. 09-0360-E-CS (the "PSC

Order"). Pinnacle is committed to establish and fund a decommissioning fund C'Fund") to ensure

that money will be available to the Commission for the "Decommissioning" (hereinafter defined)

of the wind turbines. including all lowers, blades. nacelles and transformers, and related wind

power facilities, then dedicated for the sole use of Pinnacle and not others (collectively the

"Wind Power Facilities"). to be constructed by Pinnacle at Pinnacle's wind farm development

near the Town of Keyser in Mineral County. West Virginia (the "Pinnacle Wind Fann at

NewPage") in the event of the occurrence of a Decommissioning Fund Event; and

WHEREAS, in furtherance of Pinnacle's obligations to establish the Fund. Pinnacle will

arrange, when required to do so under this Agreement. for the posting of Security in the amount

of the Net Decommissioning Costs established by the Consultant made payable to the Fund. and

WHEREAS. the Parties desire to enter into this Agreement to set forth their respectiverights and responsibilities with regard to the Decommissioning of the Wind Power Facilities and

the establishment of the Fund, including the periodic review and adjustment, i f necessary, of the

aggregate amount of the Security for the benefit of the Fund. and the procedures to he followed

by the Commission in making claims against the Fund for Decommissioning costs and expenses;

NO W THEREFORE. in consideration of the foregoing and of the mutual covenantshereinafter set forth. the Parties hereto agree as follows:

1. Term. This Agreement shall commence as of the date first written above and shall

continue until terminated as hereinafter provided. hut in no event shall exceed the maximumterm permitted by law.

2. Scope of D c c o m m j s s i o n i n ~ of Wind Power Factlities; Consultation with LandOwners.

For purposes of this Agreement, "Decommissioning" the Wind Power Facilities shall

m e ~ n . ~ i s m a l ~ t l i l l g and removal (tor otTsite reuse, recycling or disposal) of all Wind Power

Facilities, including the removal of wind turbine foundations to a depth of approximately three



feet below surface grade and the regrading and reseeding of disturbed areas in accordance with

standard practices in the wind industry, but not including any activities with respect to Leased

Facilities undertaken without the consent of the landowner to such property or without any

required access rights from such landowner. Prior to commencing the Decommissioning of the

Wind Power Facilities pursuant to this Agreement, the Commission shall consult with the owneror owners of the property or properties on which the Wind Power Facilities are located regarding

the scope of Decommissioning and to secure any required rights of entry or temporary easements

tor such Decommissioning activities.

3. Decommissioning Fund.

(a) Establishment of Decommissioning Fund. On or before the commencement of

the pouring of the first turbine foundation ("Construction Commencement") of the Pinnacle

Wind Farm at Newf'age, Pinnacle shall establish the Fund, and shall select an escrow agent from

among those listed on Schedule A hereto (or another escrow agent with a favorable reputation in

the business industry in West Virginia to whom the Commission does not reasonably object

within thirty (30) days after receiving notice of the appointment) (the "Agent") to administersuch Fund. Pinnacle shall enter into an escrow agreement with the Agent containing

commercially standard terms and conditions. including provisions for the removal and

resignation of the Agent. If at any time the Agent shall be resign or be removed pursuant to the

escrow agreement, then Pinnacle shall select a successor agent from among those listed on

Schedule A hereto or another escrow agent with a favorable reputation in the business industry in

West Virginia to whom the Commission does not reasonably object within thirty (30) days after

receiving notice of the appointment. or i f no such successor agent is appointed within thirty (30)

days. then either party may petition the courts located in Mineral County, WV to appoint a

successor agent. In each case, the successor agent shall, upon its appointment. be the "Agent"

lor purposes of this Agreement

(b) Initial Balance. Prior to commencing construction ofthe Wind Power Facilities,

GL Garrad Hassan ("IJ!itial Consultant") shall analyze and prepare a report, based on reasonable

assumptions consistent with industry standards, setting forth an amount deemed sufficient to

cover the estimated current net costs of Decommissioning the Wind Power Facilities, which shall

he calculated as the excess of (a) one hundred and five percent (I 05%) of the estimated cost of

Decommissioning the Wind Power Facilities, minus (b) the estimated salvage value of the Wind

Power Facilities ("Net Decommissioning Cost"). Net Decommissioning Cost will be established

in all periodic updates in a manner consistent with the initial report. The components of the Net

Decommissioning Cost will be determined as of a reasonable decommissioning date detennincd

by the Consultant, and will be stated in current year dollars as of the Periodic Report Date.

Within thirty (30) days of receiving the Initial Consultant's written report on the then current Net

Decommissioning Cost. Pinnacle shall provide a copy of the Initial Consultant's report to theCommission. I Pinnacle will within sixty (60) days of provid ing the Initial Consul tant's report to

the Commission. furnish to the Agent to be held for the benefit of the Fund (i) an irrevocable

letter of credit issued by a U.S. commercial bank (or a foreign bank with a U.S. branch) having

total assets of at least $10 billion and a credit rating equal to or better than "A-" by S&P and an

Receipt. on January 25. 2011. of a copy of the January J9. 20 II , initial report of the Initial Consultant regardingDecommissioning is hereby acknowledged by the Commission.

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I



equivalent credit rating by Moody's or Fitch. (i i] a performance bond underwritten by a surety

licensed and authorized to do business in the State of West Virginia (to which additional parties

may he listed as dual beneficiaries), (iii) cash or cash equivalents placed in escrow with excess

amounts payable to Pinnacle. or (iv) another security instrument reasonably satisfactory to the

Commission (any of (i). (ii). (iii) or (iv), the "Sccurity"). Th e Security shall he in an amountequal to the Net Decommissioning Cost; provided. however, that i f the Net Decommissioning

Cost is zero or less than zero (salvage value exceeds 105% of the current Decommissioning

costs). Pinnacle shall not be required to post Security.

(c) Periodic Review and Adjustment. No later than thirty (30) days after the fifth

(5Ih

) anniversary of the date of this Agreement and each subsequent fifth (5th

) anniversary of the

date ofthis Agreement (each a "Periodic Renort Date") Pinnacle shall deliver to the Commission

an updated report, prepared by the Initial Consultant or another consultant with a favorable

reputation in the wind industry. to whom the Commission docs not reasonably object within

thirty (30) days after receiving notice of the appointment (the "ronsultant"), who Pinnacle has

retained to review the then current Net Decommissioning Cost and such report shall be deemed

approved by the Commission upon the earlier to occur of receipt of written approval from the

Commission or the passage of sixty (60) days after delivery of such report, unless the

Commission objects to the report. in writing, prior to such approval. I t following any such

approved periodic review. the amount of the Security is no longer equal to the amount required

pursuant to Section 3(h) hereof. then Pinnacle will. within sixty (60) days of the Commission's

approval of the report. amend the amount of the existing Security or obtain replacement Security

in the amount and meeting the requirements set forth in subsection (b), above, and such security

shall be the Security hereunder.

(d) Duty to Maintain Fund. Pinnacle agrees to maintain Security. payable to the Fund.

in an amount at least equal to the Net Decommissioning Cost as the same may be adjusted from

time to time as herein provided. as reduced by the amount of any draws made on the Security asa result of Commission Claims. Pinnacle may from lime to time change the form of Security by

delivering substitute Security to the Agent. If the provider of the Security shall at any time issue

a notice or cancellation or non-renewal of the Security. Pinnacle shall promptly obtain and

maintain another substitute Security in an amount not less than the most recently determined Net

Decommissioning Cost. which Security shall be subject to and governed by the terms of this

Agreement in the same manner and to the same extent as the previously provided Security, If at

any time the Fund is entitled to draw upon or receive payment pursuant to the Security pursuant

to the terms thereof tor any reason other than the occurrence of a Decommissioning Fund Event.

the proceeds of such draw or other payment shall he deposited in thc Fund and disbursed to the

Commission or to Pinnacle only pursuant to the tcnns of this Agreement.

(c) Commission's Right to Review. The Commission shall have the right, at itsexpense. to conduct an independent review of any Consultant's report. including to select and

contract with its own expert(s) tor the review of such Consultant's report. and Pinnacle agrees to

reasonably cooperate, and cause the Consultant to reasonably cooperate. in the Commission's

and the Commission's expert's review of the report.

4. Decommissioning of Wind Power Facilities

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(a) Leased Properties. Pinnacle has entered into one or more lease agreements with

owners of property on which turbines that arc part of the Wind Power Facilities will be located.

(the " L . ~ a s c d Properties"). Pinnacle is obligated under existing lease agreements for the Leased

Properties to decommission the turbines. and certain additional Wind Power Facilities. locatedon sueh properties within a stated period or periods following the expiration, surrender or

termination of the respective leases or upon the occurrence of certain other specified events (each

a "LcaseDecOImnissioning Ev.enf·). The lessors under one or more of such leases have reserved

the right to decommission the portion or the Wind Power Facilities located on their respective

properties if Pinnacle (ails to do so within the allotted time following a Lease Decommissioning

Event. In addit ion. one or more current or future lenders to Pinnacle may reserve the right under

eertain circumstances to perform Pinnacle's obligations under one or more of such leases.

including the obligation to decommission the Wind Power Facilities. The Parties hereto

acknowledge and expressly agree that the decommissioning of any Leased Facilities pursuant to

and consistent with the requirements of such lease shall meet the requirements of

Decommissioning hereunder and that the Commission shall bc entitled to draw upon the Fund to

pay for the Decommissioning of any of the Wind Power Facilities that arc situated on property

leased hy Pinnacle only if Pinnacle and all other persons or entities then possessing a right or

obligation to decommission such facilities shall tail or refuse to exercise such right or fulfill sueh

obligation when the same arises and within the time allotted or permitted under the terms ofany

applicable lease or other document. including applicable eure periods and such reasonable

extensions of time as may be agreed to by the parties to sueh leases or documents. Pinnacle

agrees that. unless caused by Force Majeure (hereinafter defined) or except as otherwise

provided herein. if all of the Wind Power Facilities that are located on a leased parcel of land

( " L e a s ~ _ F a c i l i t i c ~ ( ) shall cease to generate electric power for a period of 24 or more consecutive

months and diligent efforts are not being made to remedy such generation interruption, upon

written notice by the Commission to Pinnacle ( " L e a ~ ~ _ F a c i l i l i _ ~ s A b a l ) d o n m e n t J ~ J o t i c e " ) . the

Lease Facilities located on such leased property shall be presumed to be at the end of their usefullife and to have been abandoned. Within thirty (30) days of receipt of a Lease Facilities

Abandonment Notice. Pinnacle may give written notice to the Commission ("Lease Facilities

Compliance Notice") that: (i ) Pinnacle will resume generating electric power from the Lease

Facilities within thirty (30) days of receipt of the Lease Facilities Abandonment Notice; (ii)

Pinnacle will not resume generating electric power from the Lease Facilities within such thirty

(30) day period. but is diligently pursuing all repair and maintenance activities necessary to

resume generation of electric power as soon as reasonably practicable; or (iii) such interruption is

the result of compliance with a governmental or utility order. If Pinnacle provides the

Commission with a Lease Facilities Compliance Notice pursuant to clauses (ii) or (iii) of the

preceding sentence. the Lease Facilities Compliance Notice shall set forth an estimated date for

resumption of service and supporting documentation regarding the cause of the generation

interruption; provided that Pinnacle may extend the estimated dale of resumption of generation

by providing subsequent supporting documentation of the continuing impediment to generation

and Pinnacle's efforts to overcome such impediment. If Pinnacle provides a Lease Facilities

Compliance Notice and H..esumes generating electric power during the period set forth in the

Lease Facilities Compliance Notice. including any pcnnitted extensions. then Pinnacle shall have

no obligation to Decommission the Lease Facilities by reason of the Lease Facilities

Abandonment Notice. A "Decommissioning Fund Event" shall occur if either (x) Pinnacle fails

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to timely issue a Lease Facilities Compliance Notice and fails to Decommission the Lease

Facilities within one (I) year of the receipt of a Lease Facilities Abandonment Notice, (y)

Pinnacle timely provides a Lease Facilities Compliance Notice pursuant to clause (i) of this

Section 4(a), but does not resume electric generation within thirty (30) days of receipt of a Lease

Facilities Abandonment Notice and does not Decommission the Lease Facilities within onc (1)year of receipt of a Lease Facilities Abandonment Notice, or (z) Pinnacle timely provides a

Lease Facilities Compliance Notice pursuant to clauses (ii) or (iii) of this Section 4(a). but does

not either resume elect ric generat ion or Decommission the Lease Facilit ies within one (I ) year 0 f

receipt of a Lease Facilities Abandonment Notice. Not less than thi rty (30) days after delivery

by the Commission to Pinnacle ofa second written notice notifying Pinnacle of the occurrence of

the Decommissioning Fund Event ("Notice of Claim"), the Commission may seck to

Decommission the Lease Facilities and may submit a claim or claims to the Agent for the

payment or reimbursement from the Fund of the cost of Decommissioning the Lease Facilities.

(b) Owned Property. Pinnacle plans to exercise an exclusive option to purchase a

tract of land on which eleven (II) of the proposed turbines will be located from Allegany

Holding Company (the "Allegany Tract"). Pinnacle agrees that, unless caused by Force Majeure

(hereinafter defined) or except as otherwise provided herein. if all of the Wind Power Facilities

that are located on the Allegany Tract (the "Pinnacle Facilities") shall cease to generate electric

power for a period of 24 consecutive months and diligent efforts arc not being made to remedy

such generation interruption. upon written notice by the Commission to Pinnacle ("Pinnacle

Facilities Abandonment Notice"), the Pinnacle Facilities shall be presumed to be at the end of

their useful life and to have been abandoned. Within thirty (30) days of receipt of a Pinnacle

Facilit ies Abandonment Notice. Pinnacle may give written notice to the Commission ("Pinnacle

Facilities Compliance Notice") that: (i) Pinnacle will resume generating electric power from the

Pinnacle Facilities within thirty (30) days of receipt of the Pinnacle Facilities Abandonment

Notice: (ii) Pinnacle will not resume generating electric power from the Pinnacle Facilities

within such thirty (30) day period. but is diligently pursuing all repair and maintenance activitiesnecessary to resume generation of electric power as soon as reasonably practicable; or (iii) such

interruption is the result nfcompliance with a governmental or utility order. If Pinnacle provides

the Commission with a Pinnacle Facilities Compliance Notice pursuant to clauses (ii) or (iii) of

the preceding sentence. the Pinnacle Facilities Compliance Notice shall set forth an estimated

date lor resumption of service and supporting documentation regarding the cause of the

generation interruption: provided that Pinnacle may extend the estimated date of resumption of

generation by providing subsequent supporting documentation of the continuing impediment to

generation and Pinnacle's efforts to overcome such impediment. If Pinnacle provides a Pinnacle

Facilities Compliance Notice and resumes generating electric power during the period set forth

in the Pinnacle Facilities Compliance Notice, including any permitted extensions. Pinnacle shall

have no obligation to Decommission the Pinnacle Facilities by reason of the Pinnacle Facilities

Abandonment Notice. A "Decommissioning Fund Event" shall occur if either (x) Pinnacle fails

to timely issue a Pinnacle Facilities Compliance Notice and tails to Decommission the Pinnacle

Facilities within one (I ) year of the receipt of a Pinnacle Facilities Abandonment Notice. (y)

Pinnacle timely provides a Pinnacle Facilities Compliance Notice pursuant to clause (i) of this

Section 4(b), but does not resume electric generation within thirty (30) days of receipt of a

Pinnacle Facilities Abandonment Notice and does not Decommission the Pinnacle Facilities

within one (I) year of receipt of a Pinnacle Facilities Abandonment Notice. or (z) Pinnacle

s



timely provides a Pinnacle Facilities Compliance Notice pursuant to clauses (ii) or (iii) of this

Section 4(h), but does not either resume electric generation or Decommission the Pinnacle

Facilities within one (I ) year of receipt of a Pinnacle Facilities Abandonment Notice. Not less

than thirty (30) days after delivery by the Commission to Pinnacle of a Notice of Claim, the

Commission may seek to Decommission the Pinnacle Facilities and may submit a claim orclaims to the Agent for the payment or reimbursement from the Fund of the cost of

Decommissioning the Pinnacle Facilitics.

(c) Access Rights.

(i) To the extent that it may lawfully do so and provided that the Commission is

not in breach of this Agreement, Pinnacle hereby authorizes and grants to the Commission, its

employees and agents, permission to enter upon the Leased Properties, as an invitee or assignee

of Pinnacle and subject to Pinnacle's rights and obligations under the affected real property

leases, tor the purpose of preparing for and carrying out the Decommissioning of such facilities

upon the occurrence ofa Decommissioning Fund Event. To the extent that, as ofthe date hereof:

Pinnacle does not possess the authority to grant the Commission access to and over the parcels

on which the Leased Facilities are located, Pinnacle agrees that it will secure access rights for the

Commission to carry out the Decommissioning in a commercially reasonable manner with

respect to the Leased Properties, which rights shall be subject to reasonable restrictions and

enforceable by the Commission as a third party beneficiary. Prior to entering upon any of the

parcels on which the Leased Facilities are located, the Commission shall confer with the owner

or owners of such tracts and confirm its authority to enter onto such properties and the scope of

Decommissioning for such Leased Facilities.

(ii) With respect to the Allegany Tract. provided that the Commission is not in

breach of this Agreement, Pinnacle hereby authorizes and grants to the Commission, its

employees and agents, an easement to enter upon the Allegany Tract for the purpose of preparingfor and carrying out the Decommissioning of the Wind Power Facilities located thereon upon the

occurrence ora Decommissioning Fund Event.

5. Fund Claims and Disbursements.

(a) On and after the tenth (1nIh) Business Day (as hereinafter defined) following

service of a Notice of Claim on Pinnacle. subject to Section 5(b) below, the Commission may

submit a claim to the Agent for the payment or reimbursement from the Fund of the

Commission's actual cost of Decommissioning the Wind Power Facilities (whether Lease

Facilities or Pinnacle Facilities. or both), as reduced by the actual salvage value of the Wind

Power Facilities to be Decommissioned received by the Commission at the time such claim is

made (the "Commission (Iaim"). The Commission or the Agent shall then, on behalf of the

Fund. request a draw upon, or other payment under, the Security, pursuant to the claim

requirements thereof (including, without limitation, certification that a Decommissioning Fund

Event has occurred, that all required notices hereunder have been properly issued and timely

served on Pinnacle and that ten days have lapsed from the Notice of Claim). The Agent shall

have no obligation to disburse any amount from the Fund unless, until, and to the extent funds

are available in the Fund. As used in this Agreement, "Business Da..)'." shall mean any day other

6



than a Saturday, Sunday or any other day on which U.S. banks arc authorized or required by law

or executive order to remain closed.

(b) During the ten (10) Business Day Notice of Claim period. Pinnacle may provide

written notice to the Commission and the Agent of its intent to oppose the Commission Claim(the "Pinnacle Qp...P...Qsition N { ) t i ~ ~ " ) . The Commission shall not submit the Commission Claim to

the Agent if the Commiss ion has received the Pinnacle Opposition Not ice within such ten (10)

Business Day period. If any dispute arising t1"<)111 a Pinnacle Opposition Notice regarding the

Commission's right to submit a Commission Claim to the Agent. the amount of such claim.

and/or the Commission's right to receive a disbursement of funds from the Fund results in

litigation before a COUl1 or tribunal of competent jurisdiction. then (a) ifPinnac1e is the prevailing

party. each party shall pay its own costs and expenses in connection with such dispute and (b) if

the Commission is the prevailing party, then the Commission will be entitled to payment ofall of

its costs and expenses in connection with such dispute (including reasonable attorney fees) by

Pinnacle.

(c) All funds obtained by the Commission under this Agreement shall be used by the

Commission solely tor the Decommissioning of the Wind Power Facilities and for no other

purposes. including decommissioning activities not required for Decommissioning. Any funds

disbursed to the Commission under this Agreement that remain after the occurrence of" a

Termination Event shall be promptly returned to Pinnacle, its successors or assigns. without any

requirement that Pinnacle make a demand tor the return of such unused funds and any Security

then remaining for the benefit of the Fund will be cancelled and released or terminated.

6. Termination. Except as otherwise noted below. this Agreement will terminate.

any Security then remaining lor the benefit of the Fund will be cancelled and released or

terminated, and any funds in the Fund will be promptly returned to Pinnacle upon the earliest to

occur of the following: (i) the Wind Power Facilities located on the Allegany Tract and LeasedProperty have been Decommissioned hy Pinnacle. the Commission, or any other person or party:(ii) a Decommissioning Fund Event has occurred and the Commission has notified Pinnacle. in

writing. that it docs not intend to Decommission the Wind Power Facilities; or (iii) twenty-four

(24) months. as extended tor Force Majeure, have elapsed from the occurrence or a

Decommissioning Fund Event. the Commission is not actively engaged in Decommissioning.

Pinnacle has sent a written notice to the Commission requesting confirmation of whether the

Commission intends to Decommission the Wind Power Facilities, and the Commission has failed

to respond in writing within sixty (60) days of such request, or has responded in writing that it

does not intend to Decommission the Wind Power Facilities (each such event being a

"Termination Event"). Notwiths tanding the foregoing, if the Commission shall have

Decommissioned all of the Wind Power Facilities and there remain any unpaid Commission

Claims. then this Agreement will survive solely with respect to the resolution of such unpaid

Commission Claims and shall terminate upon such resolution. The sum of the amount of the

Security remaining and the balance (if any) of the Fund at such time need only be in the amount

of such outstanding Commission Claims. As soon as such dispute (if any) is resolved. whether

by mutual agreement of the Panics or by a final and unappealable order ofthe PSC or other court

of competent jurisdiction. the Agent will disburse such amount or amounts to (i) the Pal1Y or

Panics determined by the PSC or court to be entitled thereto. or (ii) Pinnacle. i f no determination

7



is made by the PSC or the court, as the case may be. The Agent shall disburse such amounts as

promptly as practicable, and any remaining Security shall be cancelled and released or

terminated. Notwithstanding the foregoing, no new Commission Claims will be accepted by the

Agent after the occurrence ofany Termination Event.

7. Notices. All communications hereunder shall be in writing and shall be deemed to he

duly given and received:

(a) upon delivery. i f delivered personally. or upon confirmed transmittal. if by

facsimile;

(b) on the next Business Day if sent by overnight courier; or

(e) lour (4 ) Business Days alter mailing if mailed by prepaid registered mail. return

receipt requested, to the appropriate notice address set forth below or at such other

address as the Agent or any party hereto may have furnished to the other parties in

writing by registered mail. return receipt requested.

I I to Pinnacle: Pinnacle Wind Force, LLC

Attention: General Counsel

645 E. Pittsburgh St. II 356

Greensburg PA 1560I

Fax: 304.257.0777

Tel: 304.257.0777

If to the Commission: Mineral County Commission

Attn: Commission President

150 Armstrong St

Keyser, WV 26726-3500

Fax: 304-778-0768Tel: 304-788-5921

Ifto the Agent: To such address for Agent as may be set forth in Schedule A or to

such other address as the Agent may have furnished to the parties

in writing.

8. Assignment. Pinnacle may assign its rights and obligations under this Agreement (as

collateral security or otherwise) (a) for financing purposes or (b) to a person or entity acquiring

all or substantially all of the assets relat ing to the Pinnacle Wind Farm at New Page who agrees

to be bound by all terms and conditions of this Agreement, in either case without the consent of

the Commission. and the Commission shall execute such consents to assignment and other

documents as Pinnacle or its assigneets) may request from time to time. it being intended that

any such consents to assignment and other documents may be relied upon by any assignees or

prospective assignees. or any prospective and/or subsequent purchaser or transferee of all or a

part of Pinnacle's interest in the Wind Power Facilities.

9. State Decommissioning. If at any time (a) the State of West Virginia or the Federal

Government enacts laws or regulations regarding the decommissioning of the Wind Power

8



Facilities and (b) the termination of this Agreement will not result in a violation of the PSC

Order. then the Commission's right to Decommission the Wind Power Facilities shall terminate

upon Pinnacle's written notice thereof to thc Commission. and such termination shall be a

"Termination Event" hereunder.

10. Future Obligations. The parties hereto acknowledge and agree that (a) appropriation of

funds by the Commission is a governmental function that the Commission cannot contractually

commit itself in advance 10 perform: (b) the Commission's obligations under this Agreement

shall not constitute a general obligation of the Commission; and (c) the Commission's obligations

under this Agreement shall not constitute either a pledge of the full faith and credit or the taxing

power ofthe Commission.

11. Miscellaneous. The provisions of this Agreement may be waived. altered. amended or

supplemented. in whole or in part. only by a writing signed by the Parties. This Agreement shall

be governed by and construed under the laws of the State of West Virginia. Each Party

irrevocably waives any objection on the grounds of venue. forum non-conveniens or any similar

grounds and irrevocably consents to service or process by mail or in any other manner permittedby applicable law and consents to the jurisdiction of the courts located in Mineral County in the

State of West Virginia. The Parties further hereby waive any right to a trial by jury with respect

to ~ U 1 y lawsuit or judicial proceeding arising or relating to this Agreement. No party to this

Agreement is liable 10 any other party to the extent that the performance of its obligations under

the terms of this Agreement is interfered with. delayed. restricted or prevented. in whole or in

part. because 0 r tire. earthquake. flood. tornado or other natural disasters or acts of God. war.

terrorism. strikes or other labor disputes. electrical outages. equipment or transmission failure.

any law. order. proclamation, regulation. ordinance. action. demand or requirement of any

government agency or other causes reasonably beyond its control {"Force Maieurc"). or because

of the suspension of operations of all or a portion of the Wind Power Facilities tor routine

maintenance. overhaul. upgrade. or reconditioning. This Agreement may be executed in one or

more counterparts. each of which shall be deemed an original. but all of which together shall

constitute one and the same instrument. All signatures of the parties to this Agreement may be

transmitted by facsimile. and such facsimile will. tor all purposes. he deemed to he the original

signature of such party whose signature it reproduces. and will he binding upon sueh party. If

any provision of this Agreement is determined to be prohibited or unenforceable by reason of

any applicable law or a jurisdiction. then such provision shall. as to such jurisdiction. be

ineffective to the extent of such prohibition or unenforceability without invalidating the

remaining provisions thereof and any such prohibition or uncnforceability in such jurisdiction

shall not invalidate or render unenforceable such provisions in any other jurisdiction.

9



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the

date set forth above.

THE COUNTY COMMISSION OFMINERALrCOUNTY. WEST VIRGINIA

..-,/ 'l By: _===_.. _ ---::::--.. . _

Narnc., ~ _ C 7 L j tr-lJi.L<1-: .L fv( L t . ~ ; Tit : Commission President

10



Schedule A

Approved Agents

First United Bank & Trust

29 West Southern Drive

Keyser, v"rv 26726

Grant County Bank

PO Box 849

Keyser, WV 26726

BB&T

PO Box 789

Keyser, WV 26726

M&T Bank

67 North Main Street

Keyser, WV 26726



Exhibit A-I

Form of Letter of Credit

DATI:: ,2 0

BENEFICIARY: [Name of Escrow Agent]

ADDRESS:

APPLICANT: [Name of Applicant]

ADDRESS:

WE, . ("LETTER OF CREDIT ISSUER"). ISSUE THIS IRREVOCABLE

STANDBY 'l:ETTER--'C)F CREDIT NUMBER L 5 L S ~ _ , , _ , _ ~ , __ , ("LETTER OF

CREDII") IN FAVOR OF______ _ , ("BENEFICIARY"' ) FOR THE

ACCOUNT OF ("APPLICANT"). FOR AN AMOUNT OF US

$ ( UNITED STATES DOLLARS). WE tiNDERSTAND

THIS'tETTl::'1i O ( C R E D I TI S ISSUED RELATIVE TO THE DECOMMISSIONING

SECURITY OBLIGATIONS OF PINNACLE WIND FORCE. LLC UNDER THE

DECOMMISSIONING FUND AN D ESCROW AGREEMENT DATED . 2010....- - - ~ - ~ _ ..

(THE "AGREEMENT") AVAILABLE BY PAYMENT AT SIGHT WilEN ACCOMPANIED

BY ONE OR MORE OF THE FOLLOWING STATEMENTS DATED AND PURPORTEDLY

SIGNED BY AN AUTHORIZED REPRESENTATIVE OF BENEFICIAR"{ (SIGNED AS

SUCH):

I. A DECOMMISSIONING FUND EVENT. AS SUCH TERM IS DEFINED IN THE

DECOMMISSIONING FUND AND ESCROW AGREEMENT, HAS OCCURRED, A

NOTlCE OF CLAIM HAS BEEN PROPERLY ISSUED AND TIMELY SERVED AND

ALL OTHER REQUIRED NOTICES UNDER THE DECOMMISSIONING FUND

AND ESCROW AGREEMENT HAVE BEEN PROPERLY ISSUED AND TIMEL"s'

SERVED. TEN BUSINESS DAYS HAVE LAPSED FROM THE DATE OF SERVICE

OF THE NOTICE OF CLAIM. AN D BENEFICIARY HAS NO T RECEIVED A



PINNACLE OPPOSITION NOTICE. THE COUNTY COMMISSIOf\ OF PINNACLE

COUNTY. WEST VIRGINIA HAS INCURRED OR WILL INCUR ACTUAL COSTS

OF DECOMMISSIONING OF s THEREFORE. THE

BENEFICIARY DEMANDS PAYMENT OF UNDER

LETTER OF CREDIT NO. L5LS_ .... ..._ .._

OR

.., "THIS LETTER OF CREDIT WILL EXPIRE IN LESS THAN THIRTY (30) DAYS.

APPLICANT IS REQUIRED UNDER THE DECOMMISSIONING FUND AND

ESCROW AGREEMENT DATED . __ .2010 TO MAINTAIN A COMPARABLE

LETTER OF CREDIT ArlER THIS LETTER OF CREDIT HAS EXPIRED. AND

BENEFICIARY HAS NOT RECEIVED AN EXTENSION OF SAID LETTER OF

CREDIT OR OTHER REPLACEMENT COLLATERAL FROM APPLICANT.

WHEREFORE, THE UNDERSIGNED BENEFICIARY DOES HEREBY DEMAND

PAYMENT OFS

THIS LETTER OF CREDIT EXPIRES ON . 20_ ("EXPIRATION DATE") AT[BANK NAME]. IBANK ADDRESS].

SPECIAL CONDITIPNS:

PARTIAL AND MULTIPLE DRAWINGS ARE PERMITTED, AND THE AMOUNT

OF THIS LETTER OF CREDIT WILL BE REDUCED BY THE AMOUNT OF EACHDRAWING HONORED BY US.

ALL ISSUING BANK CHARGES ARE FOR THE ACCOUNT OF THE APPLICANT.



[OPTIONAL PROVISION: IT IS A CONDITION OF THIS LETTER OF CREDIT

THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED. WITHOUT

AMENDMENT. FOR ADDITIONAL PERIOD(S) OF FROM THE EXPIRY

DATE HEREOF. OR ANY FUTURE EXPIRATION DATE UNLESS AT LEAST __( ) DAYS PRIOR TO ANY EXPIRATION DATE WE NOTIFY YOU B) '

CERTIFi-ED MAIL (RETURN RECEIPT REQUESTED) OR BY ANY OTHER

RECEIPTED MEANS THAT WE ELECT NOT TO RENEW OR EXTEND THE

EXPIRY DATE OF THIS LETTER OF CREDIT FOR ANY SUCH ADDITIONAL

PERIOD.]

TI-IIS LETTER OF CIU:DIT MAY NOT BE AMENDED. CHANGED OR MODIFIED

WITHOUT THE EXPRESS WRITTEN CONSENT OF THE BENEFICIARY AND

THE ISSUER: PROVIDED. HOWEVER. THE AMOUNT AVAILABLE FOR

DRAWING UNDER TI-IIS LETTER OF CREDIT MAY BE REDUCED

AUTOMATICALLY. WITHOUT AMENDMENT. FROM TIME TO TIME UPON

OUR RECEIPT OF REDUCTION CERTIFICATE STATING THE AMOUNT OF

REDUCTION AND i\ V i \ 1 I ~ A B L E AMOUNT AFTER SUCH REDUCTION.

EXECUTED AND PURPORTEDLY SIGNED BY BOTH APPLICANT AND

BENEFICIARY.

IF A COMPLYING PRESENTATION IS MADE PRIOR TO 12:00 P.M. (P.S.T.) 01\ A

BUSINESS DAY THEN ISSUER SHALL. PRIOR TO CLOSE OF BUSINESS ON THE

FOLLOWING BUSINESS DAY. MAKE PAYMENT IN IMMEDIATELY

AVAILABLE FUNDS. IF A COMPLYING PRESENTATION IS MADE AT OR AFTER

11:00 P.M. (PST.) ON A BUSINESS DAY. THEN ISSUER SHALL PRIOR TO CLOSE

OF BUSINESS ON THE __

. FOLLOWING BUSINESS DAY. MAKE PAYMENT INIMMEDIATE1.Y AVAILABLE FUNDS. BUSINESS DAY AS STATED IN THIS

LETTER OF CREDIT MEANS ANY DAY OTHER THAN A SATURDAY. SUNDAY.

OR BANK HOLIDAY IN THE STATE OF NEW YORK OR STATE OF CALIFORNIA.

WE HEREBY ENGAGE WITH YOU THAT DOCUMENTS PRESENTED UNDER

AND IN CONFORMITY WITH THE TERMS AND CONDITIONS OF THIS LETTER

OF CREDIT WILL BE DUI.Y HONORED ON PRESENTATION IF PRESENTED ON

OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT AT

JPMORGAN CHASE BANK. N.A.. ClO JPMORGAN TREASURY SERVICES.

GLOBAL TRADE SERVICES REGIONAL PROCESSING CENTER. STANDBY

LETTERS OF CREDIT DEPARTMENT. :133 SOUTH GRAND AVENUE. SUITE

3600. LOS ANGELES. CA 90071.

THIS LETTER OF CREDIT IS GOVERNED BY. AND CONSTRUED IN

ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. AND.

EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN. IS SUBJECT TO THE



INTERNATIONAL STANDBY PRACTICES 1998. INTERNATIONAL CHAMBER

OF COMMERCE PUBLICATION 590 ("'SP").

PLEASE ADDRESS ALL CORRESPONDENCE REGARDING THIS LETTER OFCREDIT TO (BANK NAME] [BANK ADDRESS], INCLUDING THE LETTER OF

CREDIT NUMBER MENTIONED ABOVE.

~ - - -THE LETTER OF CREDIT ISSUER

AUTHORIZED SIGNATURE



Exhibit A-2

Form of Performance Bond

BOlld

Maximum Amount for decommissioning activities guaranteed by this bond:

[ __ ___1 Dollars rs )f.Nt·'

. . . Co, a" dt--:'-e---r--""',,cd pursuant to Section 3 or tire DecommissionlngDeco",nll,\',WOllu'g ,\' • " ,., 'J

Agreement]

Date ofBond: L ]·20L--.1

Bond Number: [ 1

Beneficiary: LAddress:

Surety: L__Address:

Pinnacle Wind Force. LL('

Address:

KNOW ALL MEN BY THESE PRESENTS. that we. Surety named above. arc held

and firmly hound unto Obligee and Beneficiary, each named above, in Net Decommissioning

Cost, not to exceed the maximum amount of this bond (this "Bond") stated above (the

"Maximum Amount"). tor the payment of which Net Decommissioning Cost. O [ performance of

the Decommissioning of the Wind Power Facilities up to such value. we bind ourselves. our

heirs. executors. administrators. personal representatives. successors. and assigns. joint ly and

severally. firmly by these presents. subject to the terms and conditions below. Where Surety is

composed of entities acting as co-sureties. we. the co-sureties. bind ourselves. our successors and

assigns, in the amount of such Net Decommissioning Cost, not to exceed the Maximum Amount.

joint ly and severally as well as severally only for the purpose of allowing a joint action or actions

against any or all of us. and fo r all other purposes each co-surety hinds itself: jointly and

severally with Beneficiary. fo r the payment of the Net Decommissioning Cost not to exceed the

Maximum Amount. or performance of the Decommissioning of the Wind Power Facilities up to

such value.



WHEREAS. Obligee is a limited liability company of the State 01' Delaware and

authorized to do business in the State ofWest Virginia.

WHEREAS. Surety is a l___ __J of the State of

l_ ] and authorized to do business in the State ofWest Virginia

WHEREAS. this Bond is issued in connection with the Decommissioning Fund and

Escrow Agreement ("Decommissioning Agreement"). dated as of [___ _ ]. 20 Ill. by and

between Obligee and the County Commission 01'Mineral County. West Virginia ("the County").

in connection with that certain order of the Public Service Commission of West Virginia. issued

on January I I. 2010. in Case No. 09-0360-E-CS (the "PSC Order"). whereby Obligee is

committed to establish and lund a decommissioning fund held by the Beneficiary, as Escrow

Agent. in respect of Obligee's wind turbines. and associated wind power facilities. to be

constructed at Obligee's wind farm development project in Mineral County. West Virginia.

NOW TIIEREFORF:. Beneficiary. Surety and Ohligee agree as follows:

I, IfObligee Decommissions the Wind Power Facilities. then Surety and Obligee shall have

no obligation under this Bond.

') If no breach or default by County exists under the Decommissioning Agreement. then

Surety's obligation under this Bond shall arise after:

2.1 County first provides advance written notice to Obligee. pursuant to the terms of

the Decommissioning Agreement. and advance written notice to Surety that

Beneficiary is considering declaring a Decommissioning Fund Event. Surely

may. within live (5) business days after receipt of County's notice. request a

conference among Beneficiary, County, Obligee and Surety. II' Surety timelyrequests such a conference. Beneficiary and County shall attend. Unless

Beneficiary agrees otherwise, any conference requested under this Section 3.1

shall be held within ten (10) business days of Surety's receipt of County's notice.

If Beneficiary. County. Ohligee and Surety agree. Obligee shall be allowed a

reasonable time to Decommission the Wind Power Facilities, but such an

agreement shall not waive County's right. if any. subsequently to declare a

Decommissioning Fund Event:

2.1 Beneficiary notifies Surety of the declaration of a Decommissioning Fund Event

and the passage of ten (10) Business Days following filing of a Notice of Claim

without receipt by Beneficiary of a Pinnacle Opposition Notice:

2.3 County signs (a) a written release. to be held in escrow by the Agent. pursuant to

which County releases Obligee and Surety for amounts expended by County

necessary to complete Decommissioning of the Wind Power Facilities in excess

of Maximum Amount and (b) a waiver of claims as against Obligee and Surety

relating to Decommissioning ofthc Wind Power Facilities.



2.4 County shall have completed Decommissioning of the Wind Power Facilities and

submitted to Surety documentation of actual, direct costs expended in such

Decommissioning.

3. When the conditions of Section 2 have been met, Surety shall promptly and at Surety's

expense take one of the following actions, in its sale discretion, and provide written

notice to Beneficiary of the actions elected:

3.1 Arrange lor Obligee, with the consent of Beneficiary, to perform and complete the

Decommissioning of the Wind Power Facilities:

3.2 Undertake to perform and complete the Decommissioning of the Wind Power

Facilities itself: through its agents or independent contractors:

3.3 Atier investigation, determine the amount for which it may bc liable to

Benef iciary and, as soon as pract icable after the amount is determined, makepayment to Beneficiary by deposit of the actual amount specified under Section

3.6 into the Fund established pursuant to Section 3(a) of the Decommissioning

Agreement: or

3.4 Deny liabi lity in whole or in part and notify Beneficiary, citing the reasons for

denial.

4. If Surety docs not proceed as provided in Section 4 with reasonable promptness. Surety

shall be deemed to be in default on this Bond seven days after receipt of an additional

written notice from Beneficiary to Surety demanding that Surety perform its obligations

under this Bond. and Beneficiary shall be entitled to enforce any remedy available toBeneficiary. If Surety proceeds as provided in Sections 3.3 or 3.4, and Beneficiary

refuses the payment or Surety has denied liability, in whole or in part, without further

notice Beneficiary shall he entitled to enforce any remedy available to Beneficiary.

5. If Surety elects to act under Section 3.1 or 3.2, then the liability of Surety shall be

discharged by payment. succession of payments, or other expenditure made in

Decommissioning ofthe Wind Power Facilities hereunder, amounting in the aggregate to

the Net Decommissioning Cost, which in no event shall exceed the Maximum Amount.

even if Decommissioning is incomplete at such time. whereupon County shall be

obligated to complete the Decommissioning of the Wind Power Facilities. without

recourse to Surety or Obligee.

6. Surety's expenditures under Sections 5 and 3.1 or 3.2 include additional legal. design

professional and delay costs relating to Decommissioning of the Wind Power Facilities.

7. The Maximum Amount shall automatically adjust to the amount determined in

connection with the periodic review and adjustment of the Net Decommissioning Cost, as



se t forth in Section 3{b) of the Decommissioning Agreement, which new amount shall be

the new "Maximum Amount." Obligee and Beneficiary shall append the Consultant's

written report or determination of the Net Decommissioning Cost obtained pursuant to

such section to this Bond no later than thirty (30) days after such report is received by

Obligee.

8. The Surety may cancel the bond by sending notice of cancellation by certified mail to

Beneficiary and Obligee. The Obligee may terminate this Bond by sending written notice

to Beneficiary and to Surely :'0 days prior to the proposed date oftermination.

9. The Surety shall not be liable to Beneficiary, County or others for obligations ofObligee

that arc unrelated to the Decommissioning Agreement. No right of action shall accrue on

this Bond to any person or entity other than Beneficiary or its heirs, executors,

administrators, successors and assigns.

10. Any proceeding. legal or equitable, under this Bond may he instituted in any court of

competent jurisdiction in the location in which the Decommissioning work or part or

such work is located and shall be instituted within one year utter a declaration of a

Decommissioning Fund Event of which Beneficiary provides notice to Surety pursuant to

Section 3. I I' the provisions of this Section arc void or prohibited by law. the minimum

period of limitation available to sureties as a defense in the jurisdiction of the suit shall be

applicable.

11. All communications hereunder shall be in writing and shall be deemed to be duly given

and received: (a) upon tiel ivery, if delivered personally. or upon confirmed transmirtal, if

by facsimile: (h) on the next Business Day i f sent by overnight courier: or (c) four (4)

Business Days after mailing if mailed by prepaid registered mail, return receipt requested.

to the appropriate notice address set forth below or at such other address as the Agent or

any party hereto may have furnished to the other parties in writing by registered mail,

return receipt requested.

I f to Surety: __ __ ]Attention: [ __ J

L_ _ ]l.. - ]Fax: Tel: L

If to Obligee: [_ "_ _ .1Attention: [ _ ____ __

1__[_" JFax: [ ~ " " _ ] Tel: [ ]

- - - ~ ~ .- ---



------

If to the Beneficiary: [ Attention: __J

..---]

[- ]Fax: __ Tel: [ ]

12. This Bond has been furnished to comply with the PSC Order . Any provision in this Bond

conflicting with any legal requirement thereunder shall be deemed deleted hcrcfrom and

provisions conforming to such Icgal requirement shall be deemed incorporated herein.

Whcn so furnished, the intent is that this Bond shall be construed as a statutory bond and

not as a common law bond.

13. This Bond shall be governed by and construed in accordance with the laws ofthe State of

West Virginia and any reference herein to Beneficiary or Surety in the singular shall

include all entities in the plural who or which are signatories under the Beneficiary or the

Surety heading below.

14. Capitalized terms used, hut not defined, in this Bond shall have the meanings ascribed in

the Decommissioning Agreement.



IN WITNESS WHEREOF. Beneficiary and Surety have set their hands and seals to this

Bond.

Beneficiary

Attest:

By:

Name:

Title:

as to

Secretary [Title]

AFFIX

CORPORATE

SEAL

SuretyAttest:

By:

Name:

Title:

as to

Secretary [Title1

AFFIX

CORPORATESEAL

Bonding Agent's name:

Agent's Address:

Approved as to legal form and sufficiency this __ day o f _ 20[ 1

21

attachment 2_decommissioning fund and escrow agreement for the pinnacle wind project

Documents