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DRAFT

Power Purchase Agreement Template

between

Palau Public Utilities Corporation

and

Company Name

Dated

/ / 2019

Power Purchase Agreement Template DRAFT

1

DRAFT POWER PURCHASE AGREEMENT TEMPLATE

1 POWER PURCHASE AGREEMENT PARTIES 5

1.1 Recitals 5

2 DEFINITIONS AND INTERPRETATION 6

2.1 Definitions 6

2.2 Interpretation 16

3 TERM AND EARLY TERMINATION 16

3.1 Contract Term 16

3.2 Extension of Contract Term 17

3.3 Conditions to Contract 17

4 CONSTRUCTION OF THE PROJECT 17

4.1 Description and Location of the Project 17

4.2 Project Design 18

4.3 Commercial Operation Date 18

4.4 Construction Milestones 20

4.5 PPUC's Rights During Construction 21

4.6 Site Control 21

4.7 Project Development 22

4.8 Progress Reports 23

4.9 Inspection 23

5 ELECTRIC POWER PURCHASE AND SALE 23

5.1 Sale and Purchase of Electric Energy 23

5.2 Purchase Price 23

5.3 Limitation on Purchase 23

5.4 Electrical Specifications 24

5.5 Delivery 24

5.6 Exceptions to Obligation to Deliver and Accept Electric Energy 24

5.7 Curtailment 25

5.8 Minimum Annual Energy Production 26

5.9 Title and Risk of Loss 26

5.10 Exclusivity 27

5.11 Adjustment for Governmental Incentives 27

6 METERING, BILLING AND PAYMENT 27

6.1 Meter Reading 27

6.2 Installation of Meters 27

6.3 Invoicing 28

6.4 Payment of Invoices 29

6.5 Invoice Disputes 29

7 TESTING, COMMISSIONING AND COMMERCIAL OPERATION 30


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7.1 Initial Performance Test 30

7.2 Performance Testing After Extended Outage 30

7.3 Adjustments to Facility Capacity, Project Capacity, and Expected Annual Production 30

7.4 Observation; Reporting 32

8 Interconnection 32

8.1 Interconnection With Electrical System 32

8.2 Interconnection Facilities 32

8.3 Interconnection Study 33

8.4 Operation and Maintenance Obligations 33

8.5 Site Access 34

9 OPERATION AND MAINTENANCE 34

9.1 Forecasting 35

9.2 Capacity and Outage Reporting 35

9.3 Operations Schedule 35

9.4 Permits and Approvals 36

9.5 Operation and Maintenance 36

9.6 Operating Representatives 36

9.7 Project Management Procedures 37

9.8 Environmental Attributes and Other Products 37

10 DECOMMISSIONING 38

11 SELLER’S SECURITY 38

11.1 Construction Security 38

11.2 Performance Security 38

12 PPUC’S SECURITY 38

12.1 Escrow Account 38

12.2 Drawdowns 39

13 RECORDS 39

13.1 Operating Records 39

13.2 Operating Log 39

13.3 Billing and Payment Records 39

13.4 Audit Rights 39

14 INSURANCE 40

14.1 Evidence of Insurance 40

14.2 Term and Modification of Insurance 41

15 UNCONTROLLABLE CIRCUMSTANCES 41

15.1 Effect of Uncontrollable Circumstance 41

15.2 Changes Due to Uncontrollable Circumstance 42

15.3 Termination Due to Uncontrollable Circumstance 42

16 DEFAULT AND TERMINATION 42


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16.1 Seller Default 42

16.2 PPUC Default 44

16.3 Termination for Seller or PPUC Default 45

16.4 Remedies Cumulative 45

17 LIMITATION ON LIABILITY AND INDEMNIFICATION 45

17.1 Exclusion of Consequential Damages, etc 45

17.2 Indemnification by Seller 45

17.3 Indemnification by PPUC 46

17.4 Limitation on Liability 47

18 REPRESENTATIONS AND WARRANTIES 48

18.1 Representations and Warranties of Seller 48

18.2 Representations and Warranties of PPUC 49

19 DISPUTE RESOLUTION 51

19.1 Continued Performance 51

19.2 Negotiations 51

19.3 Arbitration 51

19.4 Commercial Acts: Waiver of Immunity 52

20 TAXES 52

21 MISCELLANEOUS 52

21.1 Assignment 52

21.2 Further Assurances 54

21.3 Relationship of Parties 54

21.4 Notices 54

21.5 Waiver 55

21.6 Survival 55

21.7 Third Party Rights 55

21.8 Counterparts 55

21.9 Severability 56

21.10 Entire Document 56

Appendix A: DESCRIPTION AND DRAWINGS OF THE PROJECT 59

Appendix B: DESCRIPTION AND MAPS OF THE SITES 60

Appendix C: FORM OF INVOICE 61

Appendix D: LETTER OF CREDIT 63

Schedule 1 – PROJECT SPECIFICATIONS 64

Schedule 2 – REQUIREMENTS FOR COMMERCIAL OPERATION DATE 65

Schedule 3 – ELECTRIC ENERGY SPECIFICATIONS 66

Schedule 4 – MILESTONE SCHEDULE 67

Schedule 5 – EXPECTED ANNUAL PRODUCTION 68


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Schedule 6 – PRICE OF ELECTRIC ENERGY 69

Schedule 7 – INSURANCE REQUIREMENTS FOR THE PROJECT 70

Schedule 8 – TESTING REQUIREMENTS 71

Schedule 9 – METERING 72

Schedule 10 – GOVERNMENTAL INCENTIVES 74

Schedule 11 – PERMITS AND APPROVALS 78

Schedule 12 – INTERCONNECTION REQUIREMENTS AND STANDARDS 79


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1 POWER PURCHASE AGREEMENT PARTIES

THIS POWER PURCHASE AGREEMENT(the “Agreement”) is made and entered into as of:

/ / 2019

by and between:

the Palau Public Utilities Corporation (PPUC), a public authority established and existing

under the laws of the Republic of Palau (Palau),

and _____________________________________________ (Seller),

existing under the laws of _____________________________________

Each of PPUC and Seller may be referred to in this Agreement as the Party and collectively

as the Parties.

1.1 Recitals

Seller desires to finance, design, procure, construct, own, operate and maintain [insert

number] solar photovoltaic (PV) Electric Energy generating facilities (as more fully defined

below, the Facilities, and each individually a Facility) with a total nominal AC electric capacity

of [__ kW] at [describe locations] (as further defined below, the "Project");

Seller desires to sell and deliver to PPUC, and PPUC desires to purchase and accept from

Seller, the electric energy and other products produced by the Project; and

Seller has submitted a proposal (the "Proposal") in response to PPUC‟s [insert RFP

document reference] (the "RFP") to provide Electric Energy and other products from the

Project, and PPUC has agreed to purchase such products in accordance with the terms and

conditions of this Agreement.

Therefore in consideration of the mutual promises and covenants of each Party to the other

contained in this Agreement and for other good and valuable consideration, the receipt and

adequacy of which are hereby acknowledged, the Parties agree as follows:


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2 DEFINITIONS AND INTERPRETATION

2.1 Definitions

The following terms shall have the meanings set forth below:

"AC" means alternating electric current.

"Agreement" has the meaning set forth in Clause 1 [Power Purchase Agreement Parties].

"Annual Electric Energy Delivered" has the meaning set forth in Section 5.8.1 [Annual

Electric Energy Delivered].

"Applicable Laws" means any and all Palau national, state, or local statutes, laws, municipal

charter provisions, regulations, ordinances, rules, mandates, judgments, orders, decrees,

Permits and Approvals, codes or license requirements, or other governmental requirements

or restrictions, or any interpretation or administration of any of the foregoing by any

Governmental Authority, that apply to the services or obligations of either Party under this

Agreement, whether now or hereafter in effect.

"Approval Date" means the date on which Palau Energy Administration shall have (a)

granted final and non-appealable orders approving this Agreement and the Interconnection

Agreement, if any, or (b) provided the Parties written confirmation that such approval by the

Palau Energy Administration, of this Agreement and the Interconnection Agreement, if any, is

not required, as contemplated by Section 3.1.1 [Approval by Palau Energy Administration].

"Billing Period" means each calendar month, commencing on the Commercial Operation

Date and ending on the last Day of the Contract Term, prorated for partial months.

"Business Day" means any Day on which banks in Palau are legally permitted to be open for

business.

"Capacity Benefits" means any current or future defined characteristic, certificate, tag, credit,

or ancillary service attribute, whether general in nature or specific as to the location, or any

other attribute of the Project, intended to value the electrical capacity of the Project or any

aspect of the capacity of the Project to produce electric energy or ancillary services, including

any accounting construct so that the Electric Capacity of the Project may be counted toward a

resource adequacy requirement or any other measure under Applicable Laws, to require

PPUC to procure, or to procure at PPUC‟s expense, resource adequacy or other such

products.

"Change in Law" means the enactment, adoption, promulgation, modification, amendment,

repeal or change after the Contract Execution Date, of any Applicable Law that:

(a) applies to Seller, PPUC, a Facility, the Project, a Site, or PPUC‟s Electric System, and

(b) establishes requirements that materially and adversely affect either Party financially or

operationally, or imposes on either Party burdens materially greater than or less than those


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that were in effect with respect to operation of the Project or PPUC‟s Electric System on the

Contract Execution Date.

“Clause” means all the Sections within the numbered chapter.

"Closing Date" means the date when:

(a) Seller and its lenders or other financing parties complete financial closing and Seller has

received the initial draw on its senior debt or lease financing, as applicable, and

(b) Seller has received all financing proceeds and commitments necessary in the aggregate

to pay for Seller's cost of the financing, development, design, construction, completion, and

start-up of the Project and the Interconnection Facilities.

"Codes and Standards" means all industrial or engineering codes, standards, or guidelines,

and insurance requirements, applicable to the design, engineering, construction, completion,

start-up, testing, commissioning, operation, or maintenance of the Project.

"Commercial Operation Date" means the date on which each of the requirements set forth

in Section 7.1 [Initial Performance Test]and on Schedule 2 [Requirements for Commercial

Operation Date] have been satisfied.

"Completion Certificate" has the meaning set forth in Section 4.3.2 [Procedures].

"Construction Security" has the meaning set forth in Section 11.1 [Construction Security].

"Contract Execution Date" means the date of execution of this Agreement.

"Contract Term" has the meaning set forth in Section 3.1 [Contract Term].

"Contract Year" means each twelve (12) month period beginning on the Commercial

Operation Date and ending on each anniversary thereof.

"Creditworthy Entity" means a Person having at the applicable time unsecured, uninsured,

and otherwise unenhanced credit rating on its senior debt from at least two rating agencies of

at least "BBB-," "Baa3" or "BBB-" by Standard & Poor's Ratings Services, Moody's Investors

Service, Inc., and Fitch Inc., respectively.

"Curtailment" has the meaning set forth in Section5.7 [Curtailment].

"Curtailed Product" has the meaning set forth in Section5.7 [Curtailment].

"Day" means a calendar day.

"DC" means direct electric current.


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"Delivery Point" means, with respect to a Facility, the physical point at which Electric Energy

generated by such Facility will be delivered to PPUC in accordance with this Agreement and

the Interconnection Agreement or the Interconnection Standards, as applicable, as such point

may be specified in the Interconnection Agreement or the Interconnection Standards, as

applicable, and as such point may be revised by the Final Interconnection Study, if

applicable.

"Dispute" has the meaning set forth in Section 19.2 [Negotiations].

"Dispute Notice" has the meaning set forth in Section 19.2 [Negotiations].

"Dollars" and "$" mean United States Dollars.

"Electric Capacity" means:

(i) with respect to a Facility, the net AC electric capacity (expressed in kW) capable of being

generated continuously by such Facility, as established by the continuously available AC

output power rating given by the manufacturer of the power-inverter equipment, or

(ii) with respect to the Project, the aggregate of such net AC electric capacity for each Facility.

"Electric Energy" means:

(i) with respect to a Facility, the net electric energy in kWh generated by such Facility and

delivered by Seller to PPUC at such Facility's Delivery Point and measured by the Metering

Devices as provided herein, or

(ii) with respect to the Project, the aggregate net electric energy in kWh generated by all

Facilities comprising the Project and delivered by Seller to PPUC at such Facilities' respective

Delivery Points and measured by the Metering Devices as provided herein.

"Electric System Emergency" means the existence of a physical or operational condition,

including transmission or distribution contingencies, or the occurrence of an event on PPUC‟s

Electric System, that in PPUC‟s sole judgment:

(a) is imminently likely to endanger life or property, or

(b) impairs or imminently will impair:

(i) PPUC‟s ability to discharge its statutory obligations to provide safe, adequate and

proper service to its electric customers, or

(ii) the safety or reliability of PPUC‟s Electric System.

"Environmental Attributes" means any and all environmental, renewable energy, clean

energy, carbon reduction, greenhouse gas reduction, or air quality credits, offsets,

allowances, or other benefits related to the ownership or operation of the Project or the

generation of Electric Energy at the Project, the sale of Electric Energy to PPUC hereunder,

or other transactions contemplated by this Agreement, or the reduction, displacement, or

offset of any emissions resulting from the combustion of fuel at any other location, pursuant to

any foreign, federal, state, territorial, or local legislation or regulation, or voluntary market, and

the aggregate amount of credits, offsets, or other environmental benefits, any successor

marketing or green pricing program, or any other environmental or renewable energy credit


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program derived from the generation, sale, purchase, distribution, or use of renewable energy

from the generation of energy at the Project or any similar program pursuant to any foreign,

federal, state, territorial, or local legislation or regulation, or voluntary market. Environmental

Attributes include renewable or clean energy credits, as well as:

(1) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx),

nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants;

(2) any avoided emissions of carbon dioxide (CO2), methane (CH4) nitrous oxide, hydrofluoro

carbons, perfluoro carbons, sulfur hexafluoride and other greenhouse gases (GHGs) that

have been determined by the United Nations Intergovernmental Panel on Climate Change, or

otherwise by law, to contribute to the actual or potential threat of altering the Earth's climate

by trapping heat in the atmosphere; or

(3) the reporting rights to these avoided emissions.

"Environmental Attributes" shall exclude any tax credits or other tax benefits resulting from

ownership, use, operation or maintenance of the Facility, which shall be governed by the

provisions of Section 5.11 [Adjustment for Governmental Incentives]and Schedule 10

[Governmental Incentives].

"Environmental Law" means any Applicable Law including but not limited to the Palau

Environmental Quality Protection Board (EQPB) regulations relating to:

(a) pollution or protection of natural resources or the environment (including ambient air,

surface or subsurface waters, and surface lands and subsurface strata),

(b) the treatment, disposal, emission, discharge, release, or threatened release into the

environment of Hazardous Substances, or

(c) protection of wildlife or endangered species.

(d) earthmoving

"Expected Annual Production" means, with respect to any Contract Year, the Electric

Energy set forth on Schedule 5 [Expected Annual Production], adjusted from time to time as

provided in Clause 5 [Electric Power Purchase and Sale]or Clause 7 [Testing, Commissioning

and Commercial Operation].

"Extended Milestone Dates" has the meaning set forth in Section 4.4.2 [Extension of

Milestones].

"Expected Capacity" means:

(i) with respect to a Facility, the Electric Capacity set forth with respect to such Facility on

Appendix A [Description and Drawings of the Project], or

(ii) with respect to the Project, an Electric Capacity equal to [___] kW.

"Extended Outage" means:

(i) a complete outage at the Project for more than thirty (30) Days, for any reason, or

(ii) the failure of the Seller to deliver at least [___] kWh from the Project over any

____________ (__) Day period.


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"Facility" means the solar PV systems, inverters, and related equipment, systems,

components, fixtures, and facilities including battery storage systems and grid stabilization

facilities sharing a common point of interconnection with PPUC‟s Electric System, the Site at

which such systems, equipment, fixtures and facilities are located, Seller's Interconnection

Facilities relating thereto, and the other assets, tangible and intangible, that comprise a

Facility, as further described on Appendix A [Description and Drawings of the Project] and

Appendix B [Description and Maps of the Sites].

"Facility Capacity" means, with respect to a Facility, the AC output Electric Capacity of such

Facility, as determined as provided in Clause 7 [Testing, Commissioning and Commercial

Operation].

"Final Interconnection Study" means the Final Interconnection Study conducted pursuant

to the Interconnection Agreement.

"Good Engineering and Operating Practices" means generally accepted and sound

independent power producer industry practices, methods and acts applicable to similarly

situated U.S. facilities, which at a particular time, in the exercise of reasonable judgment in

light of the facts known or that reasonably should be known at the time a decision is made,

would be expected to accomplish the desired result in a manner consistent with Applicable

Laws, reliability, safety, environmental protection, economy and expedition. Good

Engineering and Operating Practices is not intended to be limited to the optimum practices,

methods and acts to the exclusion of all others, but rather to be acceptable practices,

methods, and acts generally accepted in similarly situated facilities. With respect to the

Project, Good Engineering and Operating Practices include, but are not limited to, taking

reasonable steps to ensure that:

a) adequate equipment, materials, resources, and supplies in sufficient reliable volumes

and quality, are available to meet the Project's needs;

b) sufficient qualified and experienced operating, maintenance and supervisory personnel

are available and adequately trained on the systems and other equipment comprising

each Facility to operate, maintain, and supervise each Facility properly, efficiently and

within manufacturer's guidelines and specifications and are capable of responding to

emergency conditions;

c) preventive, routine and non-routine maintenance and repairs are performed on a basis

consistent with manufacturers' guidelines and specifications that ensures reliable and

safe long-term operation, and are performed by knowledgeable, trained, and

experienced personnel utilizing proper equipment, tools, and procedures;

d) appropriate monitoring and testing are done periodically to ensure that equipment and

systems are functioning consistent with manufacturers' guidelines and specifications as

designed and to assure that equipment and systems will function properly under normal

conditions and emergency conditions; and

e) equipment and systems are operated in a manner safe to workers and the environment.

"Governmental Authority" means:


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a) the government of Palau,

b) any federal, state, local, municipal, or other government, or

c) any other governmental, quasi-governmental, regulatory or administrative agency,

commission, or other authority lawfully exercising or entitled to exercise any administrative,

executive, judicial, legislative, regulatory, or taxing authority or power having jurisdiction over

either Party, a Site, a Facility, the Project, or the Interconnection Facilities, whether acting

under actual or assumed authority; provided, that for purposes of this Agreement, PPUC shall

not be deemed to be a Governmental Authority.

"Governmental Incentive" means any grant, credit, rebate, incentive, or abatement that

becomes available due to the enactment, adoption, promulgation, modification, amendment,

or other change in Applicable Law by Governmental Authority of Palau after [_____] [NOTE:

Insert date of Seller's proposal.], including incentives for economic stimulus, encouragement

of renewable or alternative energy, discouragement of oil-based and non-renewable energy

production, or similar purposes; provided, that to the extent that any benefit was available

under Applicable Law on [____] [NOTE: Insert proposal date.], such benefit shall not be

deemed a "Governmental Incentive" for purposes of Section 5.11 [Adjustment for

Governmental Incentives]and Schedule 10 [Governmental Incentives], and the allocation of

such benefit as described in Schedule 10 [Governmental Incentives] shall apply only to the

incremental benefit received or available over and above the continuing existing benefit.

"Guaranteed Commercial Operation Date" has the meaning set forth in Section 4.3.1

[Commercial Operation].

"Hazardous Substance" means:

a) any material, substance, or waste (whether liquid, gaseous or solid) that:

(i) requires removal, remediation, or reporting under any Environmental Law, or is listed,

classified or regulated as a "hazardous waste" or "hazardous substance" (or other similar

term) pursuant to any applicable Environmental Law, or

(ii) is regulated under applicable Environmental Laws as being, toxic, explosive, corrosive,

flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous, and

b) petroleum-derived substances, wastes or breakdown products, friable asbestos, or

polychlorinated biphenyls.

"Initial Performance Test" has the meaning set forth in Section 7.1.2 [Initial Performance

Test].

"Initial Term" has the meaning set forth in Section 3.1 [Contract Term].

"Insurance Date" has the meaning set forth in Section 14.1.1 [Evidence of Insurance].

"

"Interconnection Facilities" means the facilities necessary to connect PPUC‟s Electric

System to each Facility at its Delivery Point, including breakers, bus work, bus relays, visible

disconnect devices, and associated equipment installed for the direct purpose of

interconnecting each such Facility, along with any easements, rights of way, surface use


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agreements and other interests or rights in real estate reasonably necessary for the

construction, operation, and maintenance of such facilities. The Interconnection Facilities

include Seller's Interconnection Facilities and PPUC‟s Interconnection Facilities.

"Interconnection Procedures" means the interconnection procedures set forth in Schedule

12 [Interconnection Requirements and Standards].

"Interconnection Standards" means the interconnection standards set forth in Schedule 12

[Interconnection Requirements and Standards].

"Invoice" has the meaning set forth in Section 6.3.2 [Invoices].

"kW" means kilowatt of electrical power (AC) unless stated otherwise.

"kWh" means kilowatt hour of Electric Energy(AC) unless otherwise stated.

"LIBOR" means the rate appearing on Reuters Page LIBOR01 (or on any successor or

substitute page of such service, or any successor to or substitute for such service, providing

rate quotations comparable to those currently provided on such page of such service, for

purposes of providing quotations of interest rates applicable to Dollar deposits in the London

interbank market), at 11h00 (GMT), on the day that is two (2) Business Days prior to the date

on which interest shall begin to be calculated hereunder, as the rate for the offering of Dollar

deposits with a maturity of three (3) months.

“Lost Production” has the meaning set forth in Section 5.8.4 [Lost Production].

"Maximum Expected Annual Production" means, with respect to any Contract Year, the

Maximum Electric Energy as set forth on Schedule 5 [Expected Annual Production], adjusted

from time to time as provided in Clause 5 [Electric Power Purchase and Sale] or Clause 7

[Testing, Commissioning and Commercial Operation].

"Metering Devices" means all meters, metering equipment, and data processing equipment

used to measure, record, or transmit data relating to electric output of a Facility or the Project,

as applicable, installed by PPUC pursuant to Schedule 9 [Metering].

"Milestone Date" has the meaning set forth in Section 4.4.2 [Extension of Milestones].

"Milestones" has the meaning set forth in Section 4.4.1 [Milestones].

"Milestone Schedule" means the schedule of Milestones set forth on Schedule 4 [Milestone

Schedule].

"Minimum Expected Annual Production" means, with respect to any Contract Year, the

Minimum Electric Energy as set forth on Schedule 5 [Expected Annual Production], adjusted

from time to time as provided in Clause 5 [Electric Power Purchase and Sale] or Clause 7

[Testing, Commissioning and Commercial Operation].


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"Minimum Facility Capacity" means, with respect to a Facility, that the inverters and related

equipment, systems, components, fixtures, and facilities of such Facility have an Electric

Capacity equal to not less than ninety percent (90%) of the Expected Capacity of such

Facility.

"Minimum Project Capacity" means that the Project has an Electric Capacity equal to not

less than ninety percent (90%) of the Expected Capacity of the Project.

"Operating Representatives" has the meaning set forth in Section 9.6.1 [Operating

Representatives].

"Party" or "Parties" has the meaning set forth in Clause 1 [Power Purchase Agreement

Parties].

"Performance Security" has the meaning set forth in Section 11.2 [Performance Security].

"Performance Tests" has the meaning set forth in Section 7.1.2 [Initial Performance Test].

"Permits and Approvals" means any and all permits, approvals, consents, authorizations,

agreements, licenses, or inspection certificates of, by, or with any Governmental Authority or

other Person.

"Person" means any legal or natural person, including any individual, corporation,

partnership, limited liability company, joint stock company, association, joint venture, trust,

Governmental Authority, or other entity.

"PPUC" has the meaning set forth in Clause 1 [Power Purchase Agreement Parties], i.e.

Palau Public Utilities Corporation.

"PPUC Delay" has the meaning set forth in Section 4.4.4 [Limitation on Delay].

"PPUC Fiscal Year" means the fiscal year of PPUC, which as of the Contract Execution

Date is the twelve-month period beginning each October 1 and concluding on September 30,

as such fiscal year may be changed from time to time by PPUC upon reasonable advance

notice to Seller.

"PPUC's Electric System" means PPUC‟s Interconnection Facilities and the electric power

generation, transmission, substation, switching station and distribution facilities owned,

operated and maintained from time to time by PPUC in the Republic of Palau.

"PPUC’s Interconnection Facilities" means "PPUC‟s Interconnection Facilities" under and

as described in the Interconnection Agreement or the Interconnection Standards, as

applicable.


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"Product" means the Electric Energy, Electric Capacity, Capacity Benefits, Environmental

Attributes, and all ancillary products, services, or attributes which are or can be produced by

or associated with the Project.

"Product Price" means the price, in Dollars per kWh, payable by PPUC for each kWh of

Electric Energy (and all other Products) delivered hereunder, as set forth in Schedule 5

[Expected Annual Production].

"Project" means the Facilities, the Sites at which the Facilities are located, Seller's

Interconnection Facilities, and the other assets, tangible and intangible, that comprise the

Facilities, collectively, as further described on Appendix A [Description and Drawings of the

Project] and Appendix B [Description and Maps of the Sites].

"Project Management Procedures" has the meaning set forth in Section 9.7 [Project

Management Procedures].

"Project Capacity" means, with respect to the Project, the Expected Capacity of the Project,

as determined as provided in Clause 7 [Testing, Commissioning and Commercial Operation].

"Proposal" has the meaning set forth in Section 1.1[Recitals].

"Protected Assets" has the meaning set forth in Section Error! Reference source not

found. [Commercial Acts: Waiver of Immunity].

"PV" means photovoltaic.

"Qualified Owner" means a Person that:

a) either:

(i) has a tangible net worth of not less than five million Dollars ($5,000,000), or

(ii) is a Creditworthy Entity,

b) does not have a conflict of interest with PPUC, including a Person that, by itself or through

its affiliates, is

(i) an industrial, commercial, or institutional customer of PPUC with an annual purchase of

water, Electric Energy, or both of one million Dollars ($1,000,000) or more,

(ii) a supplier of PPUC with annual billings of five million Dollars ($5,000,000) or more,

(iii) adverse to PPUC in any litigation, regulatory proceeding, or arbitral proceeding, or

(iv) engaged in the business of providing Electric Energy or water in Palau to Persons

other than PPUC, and

c) has not been convicted of a felony and has no officer or director who has been convicted of

a felony.

“Running Total” has the meaning set forth in Section 6.3.6 [Running Total for Energy

Production].


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"RFP" has the meaning set forth in Section 1.1 [Recitals].

"Scheduled Maintenance Outages" means those scheduled electric maintenance outages

of a Facility, including outages for major overhauls, planned by Seller each Contract Year

pursuant to Clause 9[Operation and Maintenance] that either:

a) require a complete outage of a Facility for a period exceeding seventy two (72) hours, or

b) is expected to reduce the Electric Energy generated by such Facility by more than fifty

percent (50%) for a period in excess of ninety six (96) hours.

"Seller" has the meaning set forth in Clause1 [Power Purchase Agreement Parties].

"Seller's Interconnection Facilities" means "Seller's Interconnection Facilities" under and

as described in the Interconnection Agreement or the Interconnection Standards, as

applicable.

"Site" means, for each Facility, the site on which such Facility is located, as further described

on Appendix B [Description and Maps of the Sites].

"Site Control" has the meaning set forth in Section 4.6 [Site Control].

"Specified Permits and Approvals" means those permits identified as "Specified Permits

and Approvals" in Schedule 11 [Permits and Approvals].

"Test Energy" has the meaning set forth in Section 7.1.3 [Test Energy].

"Transmission Event" has the meaning set forth in Section 5.6 [Exceptions to Obligation to

Deliver and Accept Electric Energy].

"Uncontrollable Circumstance" means any act, event or condition, that is not caused by the

negligence or lack of due diligence of the Party relying thereon as justification for any failure

of performance hereunder, that is beyond the reasonable control of such Party, and that

prevents or delays the performance of the affected Party's obligations under this Agreement,

including:

a) acts of God, hurricane, tornado, lightning, earthquake, fire, explosion, flood, act of public

enemy, war, blockade, insurrection, riot or civil disturbance, or the exercise of the power of

eminent domain, condemnation or other taking by or on behalf of any public, quasi-public or

private Person;

b) a Change in Law;

c) strikes;

d) Seller's inability or failure to obtain any Specified Permits and Approvals after due

application therefore in accordance with the requirements of Applicable Law; and

e) PPUC's inability or failure to obtain any Permits and Approvals in Schedule 11 [Permits

and Approvals]after due application therefore in accordance with the requirements of

Applicable Law; provided, that the following acts or events shall not be considered an

Uncontrollable Circumstance:


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(i) equipment breakdown (or inability to use equipment) caused by its design, construction,

operation, maintenance, or inability to meet the requirements of Applicable Law existing on

the Contract Execution Date or otherwise caused by an event originating at the Facility;

(ii) Seller's inability or failure to obtain any Permits and Approvals (other than Specified

Permits and Approvals) or to renew or maintain any Permits and Approvals;

(iii) any failure of any supplier of either Party to perform its obligations to such Party,

except to the extent caused by an event that otherwise would be an Uncontrollable

Circumstance;

(iv) any event or circumstance arising from the Facility's failure to meet the requirements of

Section4.2 [Project Design];

(v) any strike targeted solely or primarily at the Party claiming the occurrence of the

Uncontrollable Circumstance or any of its contractors or vendors; and

(vi) any event or circumstance that the Facility is to be designed to withstand in

accordance with Section4.2 [Project Design].

2.2 Interpretation

Headings. The headings or titles of the sections hereof shall be solely for convenience of

reference and shall not affect the meaning, construction, interpretation, or effect of this

Agreement.

Pronouns. Whenever the context may require, any pronoun shall include the corresponding

masculine, feminine and neuter forms.

"Includes" Not Exclusive. The words "include," "includes," and "including" shall be deemed to

be followed by the phrase "without limitation."

Computation of Time Periods. Any computation made on the basis of a Billing Period shall

be adjusted on a pro-rata basis to take into account any Billing Period of less than thirty (30)

Days, in the case of the first and last Billing Periods of the Contract Term.

3 TERM AND EARLY TERMINATION

3.1 Contract Term

The term of this Agreement (as extended in accordance with Section 3.2 [Extension of

Contract Term] shall commence on the Contract Execution Date and shall expire on the

twentieth (20th) anniversary of the Commercial Operation Date (the "Initial Term"), unless

sooner terminated in accordance with Section 3.1.1 [Approval by Palau Energy

Administration], Section 4.4.4 [Limitation on Delay], Clause 15 [Uncontrollable

Circumstances] or Clause 16 [Default and Termination]or extended in accordance with

Section 3.2 [Extension of Contract Term].


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3.2 Extension of Contract Term

PPUC may extend the Initial Term for one additional period of five (5) Contract Years by

delivering a notice of such extension to Seller not less than six (6) months prior to the

expiration of the Initial Term, unless sooner terminated in accordance with Clause 15

[Uncontrollable Circumstances] or Clause 16 [Default and Termination].

3.3 Conditions to Contract

3.1.1 Approval by Palau Energy Administration. If by 180 Days after the Contract Execution Date, the Palau Energy Administration shall not have:

(i) granted final and non-appealable orders approving this Agreement and the

Interconnection Agreement, if applicable, or

(ii) provided the Parties written confirmation that such approval by the Palau Energy

Administration, of this Agreement and the Interconnection Agreement is not required,

then each Party shall have the right to terminate this Agreement, by ten (10) Days'

notice to the other Party, given not later than 195 Days after the Contract Execution

Date, without any further financial or other obligation to the other Party as a result of

such termination.

3.1.2 Liability. Neither Party shall have any further financial or other obligation to the other Party with respect to this Agreement as a result of a termination of this Agreement under Section 3.1.1 [Approval by Palau Energy Administration].

4 CONSTRUCTION OF THE PROJECT

4.1 Description and Location of the Project

The Project shall be a [insert total AC Project Electric Capacity] kW solar PV electric

generating facility, comprised of [__] Facilities, located at the respective Sites. Appendix A

[Description and Drawings of the Project] and Appendix B [Description and Maps of the Sites]

provide a more detailed description of the Facilities and the Sites, including identification of

the primary solar PV electric generating systems, energy storage systems, and other

components which make up the Project, a description of Seller's Interconnection Facilities,

and a drawing and a map identifying the location of such Facilities and Sites.


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4.2 Project Design

4.2.1 Design of the Project. Seller shall design, engineer, procure, and construct the

Project in accordance with this Agreement (including the Schedules and Appendices

hereto) and the Interconnection Agreement or the Interconnection Standards, as

applicable, and in accordance with the Codes and Standards, Good Engineering and

Operating Practices, and Applicable Laws, and Seller shall cause the Project to

adhere to such requirements for the Contract Term.

4.2.2 Design and Engineering Documentation. Seller shall provide to PPUC, for its

review and comment, as reasonably may be requested by PPUC, such information

related to the design, engineering, and construction contracts for the Facilities

relevant to Seller's performance hereunder, including major engineering drawings, to

the extent such information is reasonably available to Seller.

4.2.3 Changes to Certain Specifications. Seller shall not modify any of the key design

specifications of any Facility detailed in Appendix A [Description and Drawings of the

Project], including any change to a Facility or its design that would change the

Expected Capacity of such Facility or the Minimum Expected Annual Production,

Expected Annual Production or Maximum Expected Annual Production of the Project,

without the prior written consent of PPUC.

4.3 Commercial Operation Date

4.3.1 Commercial Operation. The Facility shall achieve the Commercial Operation Date

effective as of the date on which each of the conditions set forth on Schedule 2

[Requirements for Commercial Operation Date] have been satisfied.

Seller shall cause the Facility to achieve the Commercial Operation Date and to be

fully capable of reliably producing and delivering all Product required in accordance

with this Agreement no later than 12 months after the Approval Date (the "Guaranteed

Commercial Operation Date").

4.3.2 Procedures. When Seller believes that all of the conditions to the Commercial

Operation Date in Schedule 2[Requirements for Commercial Operation Date] have

been satisfied, Seller shall submit to PPUC a certificate of an officer of Seller familiar

with the Project after due inquiry (a "Completion Certificate"), certifying;

i) that each of the requirements set forth in Section7.1 [Initial Performance Test] and on Schedule 2[Requirements for Commercial Operation Date] have been satisfied with respect to each Facility and the Project, as applicable,

ii) the Facility Capacity of each Facility [NOTE: To be provided for each Facility],

iii) the Project Capacity of the Project,

iv) that the Facility Capacity of each Facility comprising the Project is not less than the Minimum Facility Capacity nor greater than the Expected Capacity of such Facility, and

v) that the Project Capacity of the Project is not less than the Minimum Project Capacity nor greater than the Expected Capacity of the Project.


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If, after Seller provides a Completion Certificate, PPUC believes, in good faith, that

the conditions set forth on Schedule 2[Requirements for Commercial Operation

Date] have not been satisfied, PPUC shall, as soon as practicable but in no event

more than ten (10) Business Days after receipt of the Completion Certificate, provide

a written objection to Seller stating with specificity those conditions that PPUC

believes, in good faith, have not been satisfied and the basis for such conclusion.

If PPUC fails to provide a written objection within such ten (10) Business Day period

according to the immediately preceding sentence, the Commercial Operation Date

shall be the date on which such conditions were satisfied, as set forth in the

Completion Certificate.

If PPUC provides a written objection within such ten (10) Business Day period, then

the Parties shall promptly confer for the purpose of resolving any dispute with

respect to any condition set forth on Schedule 2[Requirements for Commercial

Operation Date].

If the Parties reach agreement, the Commercial Operation Date shall be the date

agreed by the Parties.

If the Parties do not reach agreement, either Party may submit the dispute to the

dispute resolution procedures set forth in Section 19 [Dispute Resolution].


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4.4 Construction Milestones

4.4.1 Milestones. In order to achieve the Commercial Operation Date by the Guaranteed

Commercial Operation Date, Seller agrees to meet the construction milestones (the

"Milestones") set forth on the Milestone Schedule attached as Schedule 4 [Milestone

Schedule].

4.4.2 Extension of Milestones. If Seller fails to achieve any Milestone by the

corresponding date set forth on the Milestone Schedule (a "Milestone Date"), including

the Guaranteed Commercial Operation Date, Seller may, at its option, pay PPUCan

extension payment of [$_____] per kW of Expected Capacity of the Project per Day

for each Day of delay in achieving such Milestone.

Upon the achievement of such Milestone and PPUC‟s receipt of such extension

payment, each subsequent Milestone in the Milestone Schedule, including the

Guaranteed Commercial Operation Date, shall be extended day-for-day, up to a

maximum extension of one hundred eighty (180) Days in the aggregate (the

"Extended Milestone Dates").

4.4.3 Return of Extension Payment. If Seller, after paying an extension payment with

respect to any Milestone, is able to achieve the original Commercial Operation Date

on or prior to the original Guaranteed Commercial Operation Date notwithstanding

such missed Milestone (and without taking account of any extension of the

Guaranteed Commercial Operation Date as provided in Section 4.4.2 [Extension of

Milestones] ) then PPUC shall return to Seller any extension payment previously paid

by Seller within thirty (30) Days of Seller's achievement of the original Guaranteed

Commercial Operation Date.

4.4.4 Limitation on Delay. If the Project fails to achieve any Milestone by the

corresponding Milestone Date (or Extended Milestone Date, if applicable) or to

achieve the Commercial Operation Date by the Guaranteed Commercial Operation

Date, unless such failure is caused by:

a) the failure of PPUC to perform its obligations hereunder or under the

Interconnection Agreement, if any, in a timely manner (regardless of whether such

failure to perform is a result of an Uncontrollable Circumstance) ("PPUC Delay"), or

b) a delay caused by an Uncontrollable Circumstance,

then PPUC may, at its option, terminate this Agreement by thirty (30) Days‟ notice to

Seller.

If the Project is unable to achieve any Milestone by the corresponding Milestone Date

(or Extended Milestone Date, as applicable) or to achieve the Commercial Operation

Date by the Guaranteed Commercial Operation Date, because of PPUC Delay or an

Uncontrollable Circumstance, such Milestone Date (or Extended Milestone Date, as

applicable) and the Guaranteed Commercial Operation Date shall be extended:

(i) in the case of an Uncontrollable Circumstance day for day, for each day the

Uncontrollable Circumstance continues to affect the Project or the Seller;

provided, that neither the Milestones nor the Guaranteed Commercial Operation


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Date shall be extended for more than twelve (12) months in the aggregate for

delays due to Uncontrollable Circumstances, and

(ii) in the case of PPUC Delay, for such period of time as reasonably may be

required as a consequence of such failure.

Upon becoming aware of the occurrence of any such delay or failure, Seller shall

promptly notify PPUC of such event, providing reasonable detail with respect to the

alleged delay or failure and its effect on Seller's ability to meet the schedule, and

shall proceed with reasonable diligence to resume performance as promptly as

practicable under the circumstances.

The provisions of this Section4.4.4 [Limitation on Delay]shall not be construed to limit

the termination rights of the Parties with respect to extended Uncontrollable

Circumstances as provided in Section 15.3 [Termination Due to Uncontrollable

Circumstance], nor to limit any right or remedy of a Party with respect to a breach of

this Agreement by the other Party.

4.5 PPUC's Rights During Construction

PPUC shall have the right to monitor the construction, commissioning and testing of the

Facilities, and Seller shall comply with all reasonable requests of PPUC with respect to the

monitoring of these events.

Seller shall cooperate in such physical inspections of the Facilities as may be reasonably

requested by PPUC during and after completion of construction. All persons visiting the

Facilities on behalf of PPUC shall comply with Seller's reasonable safety and health rules and

requirements.

PPUC‟s technical review and inspection of the design documents or any of the Facilities shall

not be construed as endorsing the design thereof or its compliance with this Agreement, nor

as any warranty of safety, durability, or reliability of the Facility.

4.6 Site Control

Seller shall acquire legal title to, or obtain a valid and binding leasehold interest in, or an

easement, right-of-way, license, or other right to use, such Site, for the Contract Term and on

a schedule sufficient to meet its obligations under this Agreement, and in any case prior to

the commencement of construction and not later than the date set forth on the Milestone

Schedule ("Site Control").

Seller shall provide to PPUC, promptly after obtaining such legal title, leasehold interest,

easement, right-of-way or use in such Site, a copy of the relevant documentation with respect

to such acquisition, leasehold, or other interest, and in any event prior to the commencement

of construction.


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4.7 Project Development

4.7.1 Site Report. For each Site at which a Facility with an Expected Capacity of 200 kW or

more will be ground-mounted, Seller shall expeditiously conduct, such environmental

studies and reports as may be required by applicable law and regulations and orders

of the Palau Environmental Quality Protection Board and shall promptly after each

investigation, provide PPUC a copy of the report summarizing such investigation that

includes

a) any data or information generated pursuant to such investigation, and

b) a confirmation from a reputable, qualified environmental engineer selected by Seller with the approval of PPUC (such approval not unreasonably to be withheld, conditioned, or delayed) that the Site has been inspected for environmental contamination and the results of such inspection.

4.7.2 Permits and Approvals. Seller shall, at its expense, acquire and maintain in effect,

and shall comply with, all Permits and Approvals from all Governmental Authorities

with jurisdiction over Seller, the Project, any Facility, or any Site, and shall complete

all environmental impact studies necessary for the ownership, construction, or

completion of the Project, a Facility or a Site, including the disposal of any waste, by-

products, or hazardous materials, if any, and for Seller to perform its obligations under

this Agreement.

PPUC shall not be responsible in any way whatsoever for any Permits and Approvals

or environmental studies or assessments that may be necessary for Seller to perform

its obligations under this Agreement.

4.7.3 Facility Contracts. Seller shall provide to PPUC, not later than the Closing Date,

copies of the following major contracts governing the design and construction of the

Facilities and the ability of Seller to deliver Product in accordance with this Agreement:

i) contracts for the manufacture, delivery and installation of the solar PV systems and inverters;

ii) engineering, procurement and construction, or other general contractor agreements; and

iii) operating agreements, warranty agreements, and long-term service agreements.

Upon PPUC‟s reasonable notice and request, Seller shall provide PPUC with other

construction contracts and major engineering drawings related to the Facilities.

Seller shall provide sufficient information for PPUC to be reasonably assured that

Seller has contracted with financially responsible vendors as part of the Facility

construction process.


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4.7.4 Financing. Within ninety (90) Days after the Approval Date, Seller shall provide

PPUC with reasonable evidence that it has the capability to finance construction of the

Project, which may take the form of lender letters of intent or commitment letters.

Seller shall give reasonable advance notice to PPUC of the expected date of the

Closing Date, and shall notify PPUC promptly after the Closing Date.

4.8 Progress Reports

Seller shall advise PPUC of the achievement of each Milestone and shall notify PPUC in a

once a month of any significant changes to its construction and completion schedules.

4.9 Inspection

Seller shall cooperate in any physical inspections of the Facilities or the Sites by PPUC, as

may be reasonably required by PPUC during the Contract Term.

5 ELECTRIC POWER PURCHASE AND SALE

5.1 Sale and Purchase of Electric Energy

Commencing on the Commercial Operation Date and continuing throughout the Contract

Term, and subject to the terms and conditions of this Agreement, Seller shall sell and deliver

to PPUC, and PPUC shall purchase and accept from Seller:

a) one hundred percent (100%) of the Electric Energy generated by each Facility and

delivered by Seller to the Delivery Points as provided herein, and

b) for no additional consideration other than the payment of the amounts set forth in Section

5.2 [Purchase Price],

all of the Capacity Benefits, Environmental Attributes and other Products in addition to

Electric Energy that are produced by or associated with the Project.

5.2 Purchase Price

For each Billing Period, PPUC shall pay Seller for the Electric Energy and other Products

delivered hereunder during such Billing Period, an amount equal to the product of:

a) the Electric Energy delivered hereunder during such Billing Period, multiplied by

b)the Product Price as set forth in Schedule 6 [Price of Electric Energy].

5.3 Limitation on Purchase

Notwithstanding any other provision of this Agreement, PPUC shall have no obligation to

purchase or accept, any Electric Energy at the Delivery Point for any Facility in excess of the

Maximum Expected Annual Production of such Facility, as set forth in Schedule 5[Expected

Annual Production].


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5.4 Electrical Specifications

Seller warrants that the Electric Energy delivered to PPUC shall meet the connection

requirements, quality standards and technical specifications set forth in the Interconnection

Agreement or the Interconnection Standards, as applicable, and Schedule 3 [Electric Energy

Specifications].

5.5 Delivery

Seller shall deliver all Electric Energy produced at each Facility to PPUC at such Facility's

Delivery Point.

5.6 Exceptions to Obligation to Deliver and Accept Electric Energy

5.6.1 Exceptions. PPUC shall not be obligated to accept or purchase Test Energy or to

accept or purchase Electric Energy from a Facility in accordance with this Clause5

[Electric Power Purchase and Sale], as and to the extent any of the following applies:

a) To the extent that transmission facilities are loaded to their maximum capability

and continued or increased output of Electric Energy from the Facility would

adversely affect the reliability or power quality of PPUC‟s Electric System, or

b) PPUC interrupts acceptance of the Facility's Electric Energy to conduct

maintenance or testing or to install or replace equipment of the interconnection

or adjacent transmission or sub transmission facilities (each such event, a

"Transmission Event"); or

c) To the extent any of the following events applies to a Facility or the Project:

i) PPUC during any Electric System Emergency has reduced

interconnection service or disconnected the Project, any of the Facilities,

or any of Seller's Interconnection Facilities in accordance with Article [_]

of the Interconnection Agreement, or deliveries of Electric Energy would

contribute to such Electric System Emergency, or if the Project or any of

the Facilities must be disconnected, or PPUC requires Seller to interrupt

or reduce deliveries of Electric Energy, pursuant to Section [___] of the

Interconnection Agreement;

ii) the Facility or the Electric Energy produced thereby does not comply with

the requirements set forth in Schedule 3 [Electric Energy Specifications]

of this Agreement, or the provisions of Section [__] of the Interconnection

Agreement;

iii) the Facility is unavailable due to Scheduled Maintenance Outages,

forced outages, or unscheduled maintenance; or

c) without limiting the provisions in Clause 15 [Uncontrollable Circumstances], to

the extent:


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i) performance by Seller is prevented by Uncontrollable Circumstances, to

the extent such Uncontrollable Circumstance reduces the availability or

output of Electric Energy below the Project Capacity; or

ii) performance by PPUC is prevented by Uncontrollable Circumstances, or

Uncontrollable Circumstances prevent PPUC from accepting,

transmitting, or distributing, Electric Energy.

5.6.2 Notice. Where practicable, each Party shall give the other Party reasonable advance notice of any interruption, curtailment, or reduction effected pursuant to thisSection5.6 [Exceptions to Obligations to Deliver and Accept Electric Energy], the circumstances requiring or necessitating the interruption, curtailment or reduction of Seller's delivery or sale, or PPUC‟s acceptance or purchase, of the Facility's Electric Energy and, if able, the reasons therefore, and the extent and duration thereof.

In the event that a Party is unable, for any reason, to give the other Party such advance notice, such Party shall, as soon thereafter as practicable, contact the other Party explaining the circumstances requiring or necessitating the interruption, curtailment, or reductions, and, if able, furnish the reasons therefore and the extent and duration thereof.

PPUC shall resume the acceptance of the Facility's Electric Energy when the cause for the interruption, curtailment, or reduction no longer exists.

5.6.3 Effects. In the event of any interruption, curtailment, or reduction effected pursuant

to this Section5.6 [Exceptions to Obligations to Deliver and Accept Electric Energy],

Seller shall not produce Product or sell Product to any third party to the extent so

interrupted, curtailed, or reduced. Except as provided in Section 5.7 [Curtailment],

PPUC shall have no liability for damages or otherwise to Seller or any third party due

to PPUC‟s failure to accept or purchase the Facility's Electric Energy pursuant to this

Section 5.6 [Exceptions to Obligations to Deliver and Accept Electric Energy].

5.7 Curtailment

To the extent an interruption, curtailment, or reduction pursuant to Section 5.6[Exceptions to

Obligations to Deliver and Accept Electric Energy] results from a Transmission Event (a

"Curtailment"), PPUC shall pay Seller the Product Price for the applicable Billing Period for

the amount of Electric Energy so curtailed (and any other associated Product) ("Curtailed

Product"), calculated based on the actual solar irradiance and meteorological data of each

Facility (if available, including through the meteorological information contemplated by

Section 8.4.2 [Meteorological Data]), manufacturer's production and degradation curves, and

prior production and metering data for comparable periods within the current or prior Contract

Year.


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5.8 Minimum Annual Energy Production

5.8.1 Annual Electric Energy Delivered. The “Annual Electric Energy Delivered” for any

Contract Year will be equal to the sum of the Project‟s net Electric Energy delivered in

that Contract Year in kWh, plus any Curtailments for that Contract Year as

contemplated in Section 5.7 [Curtailment], plus any Lost Production as set forth in

Section 5.8.4 [Lost Production].

5.8.2 Production Target. Seller warrants that the Annual Electric Energy Delivered in any

Contract Year will be equal to or greater than the Minimum Expected Annual

Production for that Contract Year as set forth in Schedule 5 [Expected Annual

Production].

5.8.3 Under Production Penalty. To the extent that Seller does not meet its obligations

under Section 5.8.2 [Production Target] Seller shall pay PPUC for the amount of

Electric Energy not delivered for that Contract Year, calculated by subtracting the

Annual Electric Energy Production from the Minimum Expected Annual Production,

and multiplying this difference by the difference between the Product Price for that

Contract Year as set forth in Schedule 6 [Price of Electric Energy], and the cost of

diesel generation for that Contract Year as reasonably calculated from PPUC‟s

financial statements covering the same time period. In the case that the cost of diesel

generation for that Contract Year is less than the Product Price of that Contract Year,

no payment is required.

5.8.4 Lost Production. To the extent an interruption, or reduction pursuant to

Section 5.6[Exceptions to Obligations to Deliver and Accept Electric Energy]results

from Uncontrollable Circumstances as contemplated in Section 15.3[Termination Due

to Uncontrollable Circumstance] or from an Electric System Emergency as

contemplated in Section 8.5.3 [Electric System Emergencies] (the “Lost Production”)

Seller may, for the sole purpose of meeting their annual Electric Energy production

obligation under Section 5.8.2 [Production Target]and with written approval from

PPUC, add the net Lost Production for that Contract Year to the Annual Electric

Energy Delivered in that Contract Year.

Lost Production shall be calculated using the same method used to establish

Curtailments as set forth in Section 5.7 [Curtailment].

Without limiting the provisions of Clause 5 [Electric Power Purchase and Sale] or

Clause 6 [Metering, Billing and Payment] seller shall not invoice or be paid by PPUC

for such Lost Production.

5.9 Title and Risk of Loss

As between the Parties, Seller shall be deemed to be in control of the Electric Energy

generated by the Facility up to and until delivery and receipt at its Delivery Point and PPUC

shall be deemed to be in control of the Electric Energy from and after delivery and receipt at

such Delivery Point. Title and risk of loss of the Products shall transfer from Seller to PPUC at

each respective Delivery Point.


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5.10 Exclusivity

Seller shall not deliver or sell to any Person other than PPUC any electric capacity, electric

energy, ancillary services, or other products or services, including any Product, generated or

produced at or associated with the Facility.

5.11 Adjustment for Governmental Incentives

The allocation between Seller and PPUC of any Governmental Incentives shall be as set forth

in Schedule 10 [Governmental Incentives].

6 METERING, BILLING AND PAYMENT

6.1 Meter Reading

Each Billing Period, the Metering Devices shall be read and the quantity of Electric Energy

delivered by Seller to PPUC at each Delivery Point shall be recorded for billing purposes by

PPUC, unless such quantity is determined by electronic means as contemplated by Schedule

9 [Metering].

6.2 Installation of Meters

The Metering Devices shall be obtained and installed, calibrated and tested, at Seller's

expense, by PPUC, as part of PPUC‟s Interconnection Facilities, as provided in Schedule 9

[Metering] and the Interconnection Agreement, if any.

PPUC shall complete the initial installation, calibration, and testing of such Metering Devices

on a schedule mutually agreed to by the Parties; provided, that if Seller shall have given

PPUC at least one hundred twenty (120) Days notice of the initial synchronization of a Facility

to PPUC's Electric System, such activities shall be completed by PPUC at least thirty (30)

Days prior to such synchronization.

The Metering Devices shall be readily capable of automatic metering by powerline carrier or

radio technology.


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6.3 Invoicing

6.3.1 Information. Promptly following the end of each Billing Period, each Party shall

provide to the other Party such information available to such Party as reasonably may

be required to enable Seller to prepare an invoice respecting the Products delivered

by Seller hereunder, including hourly records of Electric Energy actually delivered by

the Project and any outages or deratings of the Project.

If agreed by the Parties, such information may be provided by electronic means,

through telemetering of data available from the Metering Devices or remote terminal

units, or as may be provided by such other methods as agreed in the Project

Management Procedures.

6.3.2 Invoices. Promptly following the end of each Billing Period, Seller shall prepare and

deliver to PPUC an invoice (the "Invoice") for the Products delivered by Seller to each

Delivery Point during such Billing Period in accordance with this Agreement.

All Invoices shall be accompanied by such supporting documentation as PPUC

reasonably may request.

6.3.3 Itemization. Each Invoice shall be itemized substantially in the manner set forth in

Appendix C [Form of Invoice], or in such other form and format as PPUC reasonably

may request, and shall state:

a) the amount of Electric Energy delivered to each Delivery Point by Seller during each hour of such Billing Period, as contemplated by Section 5.2 [Purchase Price];

b) the amount of Curtailed Product for such Billing Period, as contemplated by Section 5.7 [Curtailment];

c) an adjustment for Governmental Incentives, if any, not previously paid as contemplated by Section5.11 [Adjustment for Governmental Incentives]and Schedule 10 [Governmental Incentives];

d) an adjustment for PPUC‟s costs and expenses for meter calibration, as provided in Section6.2 [Installation of Meters]; and

e) an adjustment for PPUC‟s cost of operating and maintaining PPUC‟s Interconnection Facilities as provided in the Interconnection Agreement and as invoiced by PPUC, as provided in Section8.4 [Operation and Maintenance Obligations];

f) any other charges or adjustments expressly set forth in this Agreement.

6.3.4 Test Energy. Test Energy delivered by Seller to a Delivery Point in accordance with

the terms of this Agreement (notably Section 7.1.3 [Test Energy]), in each calendar

month or portion thereof prior to and including the Commercial Operation Date, shall

be invoiced by Seller and paid by PPUC in accordance with the procedures set forth

in this Clause 6 [Metering, Billing and Payment] (other than Section6.3.3

[Itemization]).


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6.3.5 Noting Lost Production. Following successful negotiation and written agreement

from PPUC as to the extent of any Lost Production in accordance with Section 5.8.4

[Lost Production], Seller shall note the dates and quantity of such Lost Production as

a separate item on the invoice for a given Billing Period and without including any

charge for Lost Production.

6.3.6 Running Total for Energy Production. For the purposes of monitoring Seller‟s

progress throughout a Contract Year with regards to achieving their Minimum

Expected Annual Production as set forth in Section 5.8 [Minimum Annual Energy

Production], Seller shall include as part of their invoice for each Billing Period a

„running total‟ starting from the beginning of that Contract Year and including the

Billing Period in question, with details of the following kWh values explicitly itemized

a) the net Electric Energy delivered up until the end of the billing period in question for that Contract Year,

b) the net Curtailments up until the end of the billing period in question for that Contract Year,

c) the net Lost Production up until the end of the billing period in question for that Contract Year,

d) the sum of these items (a) to (c) (the “Running Total”), and a comparison of the Running Total value with

e) the target for that Contract Year in the form of the Minimum Expected Annual Production, as set forth in Schedule 5 [Expected Annual Production].

6.4 Payment of Invoices

Unless otherwise specified herein, payments due under this Agreement shall be due and

payable in Dollars net 45 from receipt of the invoice.

Unless otherwise agreed by Seller and PPUC in writing, all such payments to Seller shall be

made to the depositary account designated by Seller, by notice to PPUC, and at Seller's

request shall be made by wire transfer to such account.

6.5 Invoice Disputes

In the event of a bona fide dispute about the correctness of an Invoice, PPUC shall:

a) notify Seller in writing of the nature of the dispute, clearly setting forth in such written

notice the date of the subject Invoice and the dollar amount of the portion thereof which

is being disputed, and

b) pay the undisputed amount in accordance with Section 6.3 [Invoicing]pending the

resolution of the dispute.

Additional amounts owed by PPUC or refunds due to PPUC upon resolution of the billing

dispute shall accrue interest at an annual rate equal to LIBOR plus two percent (2%).


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7 TESTING, COMMISSIONING AND COMMERCIAL OPERATION

7.1 Initial Performance Test

7.1.1 Test Schedule. Seller shall submit its start-up and test schedule for the Project for

PPUC's review at least sixty (60) Days prior to start up and testing to establish the

Commercial Operation Date as contemplated by Section4.3[Commercial Operation

Date] and Schedule 2[Requirements for Commercial Operation Date].

7.1.2 Initial Performance Test. The initial performance tests for each Facility to be

conducted to establish the Commercial Operation Date (the "Initial Performance

Tests") shall be comprised of:

a) the tests that are conditions to commencement of commercial operations of the Project under the Permits and Approvals, the Interconnection Agreement, if any, any engineering, procurements and construction contracts for the Project, any operating agreements for the Project, Seller's financing documents for the Project, and any manufacturers' warranties, and

b) for each Facility with an Expected Capacity of 200 kW or more, the tests set forth on Schedule 8 [Testing Requirements] (the "Performance Tests").

7.1.3 Test Energy. Seller shall coordinate with PPUC the production and delivery of Electric

Energy during the construction, start-up, testing, and commissioning of each Facility

after initial synchronization of such Facility with PPUC‟s Electric System and prior to

the Commercial Operation Date ("Test Energy").

PPUC shall cooperate with Seller to facilitate Seller's testing of each Facility and shall

accept delivery of all Test Energy at its Delivery Point and purchase such Test Energy

at a price equal to fifty percent (50%) of the Product Price.

7.2 Performance Testing After Extended Outage

PPUC by notice to Seller may require new Performance Tests of the Project by notice to

Seller within thirty (30) Days after any Extended Outage of a Facility or the Project.

7.3 Adjustments to Facility Capacity, Project Capacity, and Expected Annual

Production

7.3.1 Initial Determination of Facility Capacity. The Facility Capacity of each Facility after

the Initial Performance Test shall be the continuously available AC Electric Capacity of

the inverters and related equipment, systems, components, fixtures, and facilities of

such Facility that pass such Performance Tests of such Facility conducted

immediately prior to the Commercial Operation Date and otherwise meet the

requirements for Commercial Operation set forth on Schedule 2[Requirements for

Commercial Operation Date].


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7.3.2 Initial Determination of Project Capacity. The Project Capacity of the Project after

the Initial Performance Test shall be the aggregate Electric Capacity of all Facilities

that pass the initial Performance Test and otherwise meet the requirements for

Commercial Operation set forth on Schedule 2[Requirements for Commercial

Operation Date].

7.3.3 Determination of Facility Capacity and Project Capacity After an Extended

Outage. The Facility Capacity of each Facility after a Performance Test conducted

after Commercial Operation, as contemplated by Section7.2 [Performance Testing

After Extended Outage], shall be the continuously available AC Electric Capacity of

the inverters and related equipment, systems, components, fixtures, and facilities of

such Facility that pass such Performance Tests of such Facility.

The Project Capacity of the Project after such a Performance Test shall be the

aggregate Electric Capacity of all Facilities that pass such Performance Test.

7.3.4 Adjustments to Expected Annual Production. If after any Performance Test the

Project Capacity is less than the Expected Capacity of the Project, but greater than

the Minimum Project Capacity, then the Expected Annual Production, Minimum

Expected Annual Production and Maximum Expected Annual Production for each

Contract Year of the remaining Contract Term may with the consent of PPUC in its

sole discretion, be adjusted, and in proportion to the ratio of the Project Capacity to

the Expected Capacity of the Project.

7.3.5 Limitation on Capacity; Modifications to Facilities or Project. Without the consent

of PPUC that is rendered in its sole discretion,

a) the Facility Capacity of any Facility established as of the Commercial

Operation Date or in any subsequent Performance Test shall not be less than

the Minimum Facility Capacity of such Facility,

b) the Project Capacity established as of the Commercial Operation Date or in

any subsequent Performance Test shall not be less than the Minimum Project

Capacity,

c) Seller shall not modify any Facility in a manner that would result in any

modification to the technical requirements or terms and conditions agreed

upon in the Interconnection Agreement

d) Seller shall not modify any Facility in a manner that would increase the Facility

Capacity of such Facility, or the Project Capacity of the Project, as applicable,

to an amount that is greater than one hundred twenty-five percent (125%) of

the Facility Capacity or Project Capacity, as applicable, established as of the

Commercial Operation Date.


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7.4 Observation; Reporting

7.4.1 Observation. PPUC and its representatives shall have the right to have

representatives present for such start-up and testing. Seller shall notify PPUC not less

than three (3) Business Days, and not more than fourteen (14) Days, prior to

commencing such start-up and testing.

7.4.2 Reporting. Promptly (and not later than five (5) Business Days) after completion of

any Performance Tests, Seller shall provide to PPUC a certificate setting out and

confirming the Performance Test results and attaching such back-up information as

reasonably may be required to evaluate and verify such results.

7.4.3 Effective Test. The latest Performance Tests shall be deemed to be the effective test

at any time, whether or not successful, and the Facility Capacity or Project Capacity

demonstrated by such latest test shall be deemed to be the Facility Capacity or

Project Capacity, as applicable.

8 Interconnection

8.1 Interconnection With Electrical System

Each Facility shall interconnect with PPUC‟s Electrical System at or near the applicable point

on PPUC‟s Electric System indicated on Appendix B [Description and Maps of the Sites], or

such other location as may be determined in accordance with the Interconnection

Procedures.

Each Facility's interconnection with, and delivery of Electric Energy into, PPUC‟s Electric System shall be accomplished in accordance with the Interconnection Requirements and Standards set forth in or referenced by Schedule 12 to this Agreement.

8.2 Interconnection Facilities

Seller shall be responsible for the development, design, permitting, engineering,

procurement, construction, installation, completion, and testing of the various portions of the

Interconnection Facilities, as set forth in the Interconnection Agreement or the

Interconnection Requirements and Standards, as applicable.

Seller shall use commercially reasonable efforts to complete such work within the time frame

determined in the Interconnection Requirements and Standards, as applicable.

Seller will be solely responsible for the costs of development, design, permitting, engineering,

procurement, construction, installation, completion and testing of the Interconnection

Facilities, consistent with the Final Interconnection Study, if applicable, and as provided in the

Interconnection Requirements and Standards.

Upon the completion of the Interconnection Facilities, but no later than the Commercial

Operation Date, Seller shall transfer to PPUC full ownership and control, including any

required Permits and Approvals, of PPUC‟s Interconnection Facilities.


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8.3 Interconnection Study

If required by the Interconnection Procedures, on or before sixty (60) Days after the Contract

Execution Date, Seller shall provide to PPUC data required in Schedule [_] to the

Interconnection Agreement, in form and substance reasonably satisfactory to PPUC.

PPUC shall perform the Final Interconnection Study as provided in the Interconnection

Agreement within one hundred and twenty (120) Days of Seller's provision of such

information.

The Final Interconnection Study shall, at a minimum:

a) determine the final location and configuration of each Delivery Point and the

Interconnection Facilities,

b) determine the time required to complete the Interconnection Facilities, and

c) designate the PPUC operations center that will coordinate the operations of the Project.

8.4 Operation and Maintenance Obligations

8.4.1 Operation and Maintenance. Seller shall be responsible for the maintenance and

operation of Seller's Interconnection Facilities in accordance with the Interconnection

Agreement or the Interconnection Standards, as applicable.

PPUC, at Seller's expense, shall be responsible for the maintenance and operation of

PPUC‟s Interconnection Facilities as and to the extent provided in the Interconnection

Agreement or the Interconnection Standards, as applicable.

PPUC shall invoice Seller each Billing Period for its costs incurred in performing such

obligations, each such invoice to include a reconciliation and adjustment for actual

costs incurred, if any, in the Billing Period prior to such invoice.

8.4.2 Meteorological Data. For each Facility that has an Expected Capacity greater than

200 kW, Seller shall install and maintain at such Facility's Site a meteorological station

to monitor and report solar irradiance and meteorological data for such Facility.

Seller shall also provide a two (2) year pre-paid remote communication package for

each such meteorological station (to be renewed biannually) and shall provide PPUC

with real-time electronic access to the meteorological data collected at such Facility.

PPUC shall be responsible for maintaining and paying the costs associated with the

meteorological station for each Facility that has an Expected Capacity greater than

200 kW.

Either Party may install and maintain such equipment at its own cost for any other

Facility.


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8.4.3 Electric System Emergencies. PPUC shall notify Seller promptly by telephone, or as

may be agreed in the Project Management Procedures, when it becomes aware of an

Electric System Emergency that affects PPUC‟s Interconnection Facilities or PPUC‟s

Electric System that may reasonably be expected to affect Seller's operation of a

Facility or Seller's Interconnection Facilities.

Seller shall notify PPUC promptly by telephone, or as may be agreed in the Project

Management Procedures, when it becomes aware of an Electric System Emergency

that affects a Facility or Seller's Interconnection Facilities that may reasonably be

expected to affect PPUC‟s Electric System or PPUC's Interconnection Facilities.

To the extent such information is known, the notification shall describe the Electric

System Emergency, the extent of the damage or deficiency, the expected effect on

the operation of Seller's or PPUC's facilities and operations, its anticipated duration

and the corrective action taken or to be taken.

The initial notice shall be followed as soon as practicable with written notice. For

avoidance of doubt, the provisions of thisSection8.4.3[Electric System Emergencies]

shall not limit the obligations of the Parties with respect to Electric System

Emergencies set forth in the Interconnection Agreement or the Interconnection

Standards, as applicable.

8.5 Site Access

In order to help ensure the continuous, safe, reliable and compatible operation of each

Facility with PPUC‟s Electric System, Seller hereby grants PPUC for the period of

interconnection, the reasonable right of ingress and egress, consistent with safe operation of

each Facility, over property leased or otherwise controlled or used by Seller for the Project, to

the extent PPUC deems such ingress and egress reasonably necessary in order to examine,

test, calibrate, coordinate, operate, maintain, or repair any interconnection equipment

involved in the parallel operation of the Facilities and PPUC‟s Electric System, including the

Metering Devices and any PPUC meteorological equipment.

Seller, in its lease or other real estate documents evidencing its rights in each Site, shall

secure for PPUC such rights of ingress and egress, and will cause the landlord or other

Person with an interest in such property to enter into an estoppels agreement or other

agreement satisfactory to PPUC confirming such access.

Except in the event of actual or pending Electric System Emergency, or as otherwise

provided in the Interconnection Agreement or the Interconnection Standards, as applicable,

PPUC shall give reasonable prior notice to Seller prior to such ingress or egress.

9 OPERATION AND MAINTENANCE


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9.1 Forecasting

9.1.1 For each Facility with an Expected Capacity of 200 kW or more, Seller shall, not more

than fifteen (15) days prior to the end of each quarter of the PPUC Fiscal Year,

provide PPUC with an anticipated monthly forecast of the Electric Energy to be

produced during each month of the immediately following quarter.

9.1.2 The forecasts provided pursuant to Section 9.1.1 [Forecasting] shall be made by

Seller in good faith based on information available to it at such time, and as long as

Seller acts in good faith such forecasts shall not be binding on Seller nor shall Seller

be liable for any inaccuracies in such forecasts.

9.2 Capacity and Outage Reporting

Seller shall notify PPUC as soon as practical but in no event later than twenty-four (24) hours

after the Electric Capacity of the Project falls below sixty percent (60%) of the Project

Capacity.

Seller shall notify PPUC promptly (and in any event not less than three Business Days) after:

a) any emergency or unplanned outage or significant partial outage at any Facility, or

b) the occurrence of any event that reasonably could be expected to reduce the Electric

Capacity, or production of Electric Energy of any Facility or the Project by forty percent

(40%) or more during any Billing Period.

9.3 Operations Schedule

9.3.1 Expected Operation and Maintenance Schedule. At least ninety (90) Days prior to

the then-anticipated Commercial Operation Date, and at least ninety (90) Days prior to

the end of each PPUC Fiscal Year thereafter during the Contract Term, Seller shall

provide to PPUC, in writing, its planned Scheduled Maintenance Outages for the

immediately succeeding PPUC Fiscal Year, the expected operation schedule of the

Project for such immediately succeeding PPUC Fiscal Year, and a good faith, non-

binding, estimate of the amount of Electric Energy to be generated by the Project and

delivered to PPUC in each Billing Period of such immediately succeeding PPUC

Fiscal Year.

Seller shall exercise all reasonable efforts to coordinate Scheduled Maintenance

Outages with PPUC to avoid overlap with PPUC‟s planned outages of its generating

units.

9.3.2 Scheduling. Seller may reschedule a Scheduled Maintenance Outage only upon

PPUC‟s prior written approval, which approval shall not be unreasonably withheld,

conditioned, or delayed.

Seller shall not schedule any Scheduled Maintenance Outages, except for Scheduled

Maintenance Outages actually taken in accordance with the approved schedule in

Section 8.3 [Interconnection Facilities], without the prior written approval of PPUC.


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9.4 Permits and Approvals

Seller shall, at its expense, acquire and maintain in effect, and shall comply with, all Permits

and Approvals from all Governmental Authorities with jurisdiction over Seller, the Project, or

any Site, or necessary for the ownership, operation, maintenance, removal, or remediation of

the Project or any Site, including the disposal of any waste, byproduct(s) or hazardous

materials, if any, and for Seller to perform its obligations under this Agreement.

PPUC shall not be responsible in any way whatsoever for any Permits and Approvals,

environmental studies or assessments that may be necessary for Seller to perform its

obligations under this Agreement.

9.5 Operation and Maintenance

Seller shall operate and maintain each Facility in accordance with Good Engineering and

Operating Practice, the Codes and Standards, and Applicable Laws, including applicable

Environmental Laws.

Seller shall, in good faith, exert all commercially reasonable efforts to operate energy storage

systems in such a way as to minimize curtailed energy due to fully-charged energy storage

systems. Energy storage systems shall be sufficiently depleted, without endangering grid

stability and supply reliability, before expected periods of low-energy consumption and high-

solar PV energy generation.

9.6 Operating Representatives

9.6.1 Not later than ten (10) Days after the Contract Execution Date, each Party shall

appoint a member and an alternate member as operating representatives and provide

written notice of such appointments to the other Party ("Operating Representatives").

Such appointments may be changed at any time by similar written notice.

The respective Operating Representatives shall meet as necessary at a mutually

agreeable time and place upon prior written notice.

Each Operating Representative and alternate shall be a responsible person working

with the day-to-day operations of, in the case of PPUC, PPUC‟s Electric System and,

in the case of Seller, the Facility.

9.6.2 The duties of the Operating Representatives shall include those specifically identified

elsewhere in this Agreement, and such other duties as may be delegated to them by

mutual agreement of the Parties; provided, that such Operating Representatives shall

not have the authority to amend this Agreement.

9.6.3 Each Party shall cooperate in providing to the Operating Representatives all

information required in the performance of their duties.


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If the Operating Representatives are unable to agree on any matter that may be

delegated to them in accordance with this Agreement, such matter shall be referred

by the Operating Representatives to their principals for decision.

All decisions made by the Operating Representatives or principals shall be evidenced

in writing.

9.7 Project Management Procedures

The Parties may, from time to time, agree on standing procedures, consistent with this

Agreement, respecting such matters as coordination, scheduling, or rescheduling of planned

outages of their respective facilities; metering; reporting; and such other matters as may be

contemplated by this Agreement or the Parties otherwise may agree therein (the "Project

Management Procedures").

In the event of any conflict between the provisions of this Agreement and the Project

Management Procedures, this Agreement shall control.

9.8 Environmental Attributes and Other Products

9.8.1 Environmental Attributes and Renewable Energy Benefits. The Parties

acknowledge that current Applicable Law, as well as future Change in Law, may

create value in the ownership, use or allocation of Environmental Attributes.

To the extent applicable, PPUC shall own or be entitled to claim, and Seller for no

additional consideration hereby conveys, or upon the award, registration, certification,

or other allocation of such Environmental Attributes shall convey, to PPUC all

Environmental Attributes resulting from Seller's generation at or delivery of Electric

Energy or Electric Capacity from the Project during the Contract Term.

PPUC shall be entitled to claim any benefit or credit from the generation of Electric

Energy by the Project under any renewable energy, clean energy, or other similar

requirements that may be imposed on PPUC by Applicable Laws or otherwise.

9.8.2 Other Products. PPUC shall be entitled to claim any Capacity Benefits, ancillary

products, and other Products resulting from the generation of Electric Energy at the

Project under any requirements that may be imposed on PPUC by Applicable Laws or

otherwise.

9.8.3 Qualification for Benefits. Seller shall use commercially reasonable efforts to cause

the Facilities to qualify for any Environmental Attributes, Capacity Benefits, or other

Products or to meet any clean energy standards, renewable portfolio standards,

installed capacity resource adequacy, or other similar benefits, standards or

requirements, and, if requested by PPUC, shall take all further measures reasonably

necessary to allow PPUC to qualify for, claim, register, certify, or be allocated such

benefits or credits.


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10 DECOMMISSIONING

Upon the expiration of the Contract Term or the earlier termination of this Agreement as

provided herein, Seller shall promptly:

(1) decommission and remove each Facility, and recycle, reuse, or dispose of the solar

PV panels, energy storage systems, and other components in accordance with

international industry standards, and

(2) restore or remediate each Site to a condition deemed acceptable by PPUC in its

reasonably exercised discretion.

11 SELLER’S SECURITY

11.1 Construction Security

On the Contract Execution Date, Seller shall provide, for each Project with an Expected

Capacity of 200 kW or more, a letter of credit from a bank reasonably acceptable to PPUC in

the form of Appendix D [Letter of Credit] in the amount of $[__] per kW of Expected Capacity

to secure Seller's obligations to meet the Milestones and to perform its other obligations

hereunder, which letter of credit shall remain in full force and effect until the Commercial

Operation Date (the "Construction Security").

11.2 Performance Security

On or prior to the Commercial Operation Date, as security for the performance of its

obligations under this Agreement, Seller shall provide, for each Project with an Expected

Capacity of 200 kW or more, a replenish able letter of credit from a bank reasonably

acceptable to PPUC in the form of Appendix D [Letter of Credit] in the amount of $[__] per kW

of Project Capacity (the "Performance Security").

Seller shall cause such a letter of credit to remain in effect until the expiration of the Contract

Term and the completion of Seller's obligations under Section 3.4 [Removal and

Remediation].

12 PPUC’S SECURITY

12.1 Escrow Account

PPUC shall establish an escrow account with an international financial institution agreeable by both Parties as security for PPUC‟s performance of its payment obligations under Section 6.4 [Payment Invoices] above. PPUC shall maintain a minimum escrow account balance equal to the product of:

a. six (6) months average Electric Energy generation, and b. the Purchase Price as set forth in Schedule 6 [Price of Electric Energy].


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12.2 Drawdowns

Drawdowns on the escrow account will be drawn upon only if PPUC doesn‟t pay within 45 days of receiving the IPP‟s monthly invoice for payment of undisputed amounts. PPUC shall, within forty-five (45) days of any such drawdown of the escrow account, replenish the escrow account to the minimum escrow account balance.

13 RECORDS

13.1 Operating Records

Seller and PPUC shall each keep complete and accurate records and all other data required

by each of them for the purposes of proper administration of this Agreement, including such

records as may be required under Applicable Law or by Governmental Authorities.

PPUC reserves the right to audit any records necessary to evaluate and verify Seller's

compliance with this Agreement and PPUC‟s business ethics policies as may be provided

from time to time by PPUC to Seller.

13.2 Operating Log

Seller shall maintain an accurate and up-to-date operating log, in electronic format, at the

Facility, with records of real production for each hour; changes in operating status; scheduled

maintenance and forced outages; and any unusual conditions found during inspections.

Seller shall maintain accurate and up-to-date logs of delivered energy, including Test Energy,

and other records needed in order to comply with this Agreement.

Upon PPUC request, Seller shall make available to PPUC such operating log for review.

13.3 Billing and Payment Records

To facilitate payment and audit, Seller and PPUC shall keep all books and records necessary

for billing and payments in accordance with this Agreement.

A copy of all records of Seller pertaining to the operation of the Facility shall be maintained in

the Republic of Palau at the location specified in Appendix A [Description and Drawings of the

Project].

Seller shall advise PPUC in writing of any change to the location at which such copy is kept

within sixty (60) Days of such change.

13.4 Audit Rights

Seller shall have the right, upon reasonable notice and during normal business hours, to audit

relevant information provided by PPUC for Seller's preparation of any Invoice(s).


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During the Contract Term and for five (5) years thereafter, PPUC shall have the right, upon

reasonable notice and during normal business hours, to audit relevant electric generation and

other information relevant to the performance of Seller's obligations hereunder and the

calculation of any amounts payable by PPUC hereunder and all the information required to be

maintained hereunder.

The Parties shall provide each other with copies of records in computer – readable format as

well as hard copies. In the event that PPUC's audit uncovers overcharges in excess of one

percent (1%) of any Invoice, Seller shall reimburse PPUC for the costs incurred in connection

with such audit.

14 INSURANCE

14.1 Evidence of Insurance

14.1.1 Seller shall, on or before that date (the "Insurance Date") that is:

a) with respect to the Commercial General Liability insurance, not later than the date

five (5) Business Days after acquiring title to, or a leasehold interest in, each Site,

and

b) with respect to each other policy, not later than the earlier of

(A) the date ten (10) Business Days prior to commencement of work on such Site, or

(B) the date set forth on Schedule 7 [Insurance Requirements for the Project], and

on or before June 1 of each year following such earlier date, provide PPUC with two

copies of evidence of insurance as provided in Schedule 7 [Insurance Requirements

for the Project] documenting that insurance coverages for the Project are in

compliance with the specifications for insurance coverage set forth in Schedule 7

[Insurance Requirements for the Project].

Such evidence of insurance shall be in compliance with the requirements set forth in

Schedule 7 [Insurance Requirements for the Project].


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14.1.2 Seller's liability under this Agreement is not limited to the amount of insurance

coverage required herein.

14.1.3 PPUC shall have the right, at times deemed appropriate to PPUC during the Contract

Term, to request Seller to modify the insurance minimum limits specified in Schedule

7 [Insurance Requirements for the Project] in order to maintain reasonable coverage

amounts consistent with then-current industry standards and to the extent such limits

are commercially available at commercially reasonable rates.

Seller shall make all commercially reasonable efforts to comply with any such request.

14.1.4 For any insurance required under Schedule 7 [Insurance Requirements for the

Project], Seller shall be responsible for all deductibles, retentions, coinsurance, and

the difference between any sub limits and the limits set out in Schedule 7 [Insurance

Requirements for the Project].

14.2 Term and Modification of Insurance

All insurance required under this Agreement shall cover occurrences arising on and after the

applicable Insurance Date and continuing during the Contract Term; provided, that the

Commercial General Liability insurance required under Schedule 7 [Insurance Requirements

for the Project] shall cover occurrences during the Contract Term and for a period of two (2)

years after the expiration of the Contract Term.

In the event that any insurance as required herein is commercially available only on a

"claims-made" basis, such insurance shall provide for a retroactive date not later than the

applicable Insurance Date and such insurance shall be maintained by Seller, with a

retroactive date not later than the retroactive date required above, for a minimum of five (5)

years after the Contract Term.

15 UNCONTROLLABLE CIRCUMSTANCES

15.1 Effect of Uncontrollable Circumstance

Neither Party shall be liable to the other Party for failure to perform any obligation hereunder,

when such failure is the result of the occurrence of an Uncontrollable Circumstance after the

Contract Execution Date; provided, that neither Party shall be excused from any obligation to

pay amounts due under this Agreement by reason of an Uncontrollable Circumstance.

Upon becoming aware of the occurrence of an Uncontrollable Circumstance, or that any such

event is reasonably expected to occur, the affected Party shall promptly notify the other Party

of such event, or such pending event, as the case may be. The suspension of performance

shall be of no greater scope and of no longer duration than is reasonably required as a result

of the Uncontrollable Circumstance.

The non-performing Party shall proceed with reasonable diligence to remedy its inability to

perform and shall provide weekly progress reports to the other Party describing actions taken

to end the Uncontrollable Circumstance; provided, that the non-performing Party shall not be


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required to settle any strikes on terms that are adverse to such Party and not commercially

reasonable.

When the non-performing Party is able to resume performance of its obligations under this

Agreement that Party shall give the other Party written notice to that effect, except as

otherwise expressly provided for in this Agreement, the existence of an Uncontrollable

Circumstance shall not relieve the Parties of their obligations under this Agreement (including

payment obligations) to the extent that performance of such obligations is not precluded by

such Uncontrollable Circumstance.

15.2 Changes Due to Uncontrollable Circumstance

As soon as practicable following the initial notice of the Uncontrollable Circumstance by either

Party pursuant to Section15.1 [Effect of Uncontrollable Circumstance], the notifying Party

shall provide the other Party with a written preliminary evaluation of the extent of the adverse

effect on the performance of such other Party's obligations caused by the Uncontrollable

Circumstance or on the operation and maintenance of the Facility.

Upon completion of the notifying Party's final analysis of such adverse impact, including

completion of engineering estimates, if necessary, and of any necessary modifications or

repairs to the Facility or other remedial action, the notifying Party shall provide the other Party

with a final written report of the overall impact on the Facility.

15.3 Termination Due to Uncontrollable Circumstance

In the event that Seller's delay or failure of performance caused by Uncontrollable

Circumstances continues for an uninterrupted period of twelve (12) months, PPUC may

terminate this Agreement upon written notice to Seller.

In the event that PPUC‟S delay or failure of performance caused by Uncontrollable

Circumstances continues uninterrupted for a period of twelve (12) months, Seller may

terminate this Agreement upon written notice to PPUC.

If the Agreement is terminated pursuant to this Section15.3 [Termination Due to

Uncontrollable Circumstance], neither Party shall have any further obligations hereunder

except as to costs and balances incurred prior to the effective date of such termination and

provisions expressly surviving termination pursuant to Section21.6 [Survival].

16 DEFAULT AND TERMINATION

16.1 Seller Default

PPUC may declare Seller in default under this Agreement if any of the following shall occur:


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16.1.1 The Project Capacity at any time is less than the Minimum Project Capacity, and

Seller fails to cure such deficiency, as demonstrated by a Performance Test, within

thirty (30) days.

16.1.2 In any two consecutive Contract Years the Project fails to meet its Minimum Expected

Annual Production target as set forth in Section5.8.2 [Production Target].

16.1.3 Seller fails to pay undisputed amounts due to PPUC under this Agreement within thirty

(30) Days following notice from PPUC.

16.1.4 Seller fails to maintain solvency, including:

a) inability, failure, or refusal to pay debts as they mature; entry into an

arrangement with or for the benefit of its creditors; consent to or acquiescence

in the appointment of a receiver, trustee, or liquidator for a substantial part of

Seller's property;

b) bankruptcy, winding up, reorganization, insolvency, arrangement, or similar

proceeding instituted by or against Seller under the laws of any jurisdiction,

which proceeding is not dismissed within ninety (90) Days;

c) any action or answer in a bankruptcy, winding up, reorganization, insolvency,

arrangement, or similar proceeding in which Seller approves of, consents to, or

acquiesces in, any such proceeding; or

d) the levy of any distress, execution, or attachment upon Seller's property which

shall substantially interfere with Seller's performance hereunder; provided, that

this form of insolvency shall not be deemed to have occurred if the insolvency

is caused primarily by PPUC‟s failure to make any payment due pursuant to

this Agreement within forty-five (45) Days of when it becomes due and

payable.

16.1.5 Seller fails to achieve the Commercial Operation Date on or prior to the Guaranteed

Commercial Operation Date for any reason other than any PPUC Delay or delay due

to an Uncontrollable Circumstance or as in accordance with Section 4.4 [Construction

Milestones].

16.1.6 Seller fails to maintain adequate insurance in accordance with Section14 [Insurance]

and Schedule 7 [Insurance Requirements for the Project] for a period of five (5)

Business Days after Seller receives notice from PPUC of such failure.

16.1.7 Seller abandons the construction or operation of any Facility.

16.1.8 Seller fails to perform any material obligation under this Agreement (other than the

defaults addressed in Section 16.1.1 [Seller Default] through Section 16.1.6[Seller

Default] above) that remains uncured for thirty (30) Days after Seller receives notice

from PPUC of such failure, with such notice describing in reasonable detail the nature

of the failure; provided, that if such failure to perform is not reasonably capable of

being cured within such thirty (30) Day cure period but is reasonably capable of being

cured, Seller shall have such additional time, not to exceed sixty (60) Days, as is

reasonably necessary to cure such non-performance, so long as Seller promptly

commences and diligently pursues such cure.


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16.2 PPUC Default

Seller may declare PPUC in default under this Agreement if any of the following shall occur:

16.2.1 PPUC fails to pay undisputed amounts due to Seller under this Agreement within

forty-five(45) Days following notice from Seller.

16.2.2 PPUC fails to maintain solvency, including:

a) inability, failure, or refusal to pay debts as they mature; entry into an

arrangement with or for the benefit of its creditors; consent to or acquiescence

in the appointment of a receiver, trustee, or liquidator for a substantial part of

PPUC‟s property;

b) bankruptcy, winding up, reorganization, insolvency, arrangement, or similar

proceeding instituted by or against PPUC under the laws of any jurisdiction,

which proceeding is not dismissed within ninety (90) Days;

c) any action or answer in a bankruptcy, winding up, reorganization, insolvency,

arrangement, or similar proceeding in which PPUC approves of, consents to,

or acquiesces in, any such proceeding; or

d) the levy of any distress, execution, or attachment upon PPUC‟s property which

shall substantially interfere with PPUC‟s performance hereunder.

16.2.3 PPUC fails to perform any material obligation under this Agreement (other than the

defaults addressed in Section 16.2.1[PPUC Default] and Section 16.2.2 [PPUC

Default] above) that remains uncured for forty-five (45) Days after PPUC receives

notice from Seller of such failure, with such notice describing in reasonable detail the

nature of the failure; provided, that if such failure to perform is not reasonably capable

of being cured within such forty-five (45) Day cure period but is reasonably capable of

being cured, PPUC shall have such additional time, not to exceed sixty (60) Days, as

is reasonably necessary to cure such non-performance, so long as PPUC promptly

commences and diligently pursues such cure.


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16.3 Termination for Seller or PPUC Default

If Seller or PPUC shall default under and pursuant to either Section 16.1 [Seller Default] or

Section 16.2 [PPUC Default] of this Agreement, the non-defaulting Party may, at its option,

exercise one or more of the following remedies:

a) upon thirty (30) Days' prior written notice, terminate this Agreement; and

b) pursue and have recourse to any other right or remedy to which it may be entitled by

law, at equity, or under this Agreement, including, but not limited to, specific

performance, injunction, and the right to recover all damages, losses, costs and

expenses (including reasonable attorney fees) incurred as a result of such default.

16.4 Remedies Cumulative

Except as provided in Section17.4 [Limitation on Liability], each right or remedy of the Parties

under this Agreement shall be cumulative of and shall be in addition to every other right or

remedy provided herein, and the exercise, or the beginning of the exercise, by a Party of any

one or more of the rights or remedies provided for herein shall not preclude the simultaneous

or later exercise by such Party of any or all other rights or remedies provided for herein.

17 LIMITATION ON LIABILITY AND INDEMNIFICATION

17.1 Exclusion of Consequential Damages, etc

17.1.1 No Consequential Damages. Without limiting any express remedy specifically

provided in this Agreement, in no event, whether because of a breach of any provision

contained in this Agreement or any other cause, whether based upon contract,

negligence (including tort or strict liability), warranty, or otherwise, shall either Party be

liable for or obligated in any manner to pay incidental, special, punitive, consequential,

exemplary, or indirect damages of any nature whatsoever incurred by the other Party.

17.1.2 Exclusion of Implied Warranties. PPUC acknowledges and agrees that it has

entered into this agreement and is contracting to receive Electric Energy,

Environmental Attributes and other products based solely upon the express

representations and warranties in this Agreement, and no implied warranties from

Seller or any other person shall be deemed to apply to the same.

The Parties negate any representation or warranty with respect to such electric

energy, Environmental Attributes and other products not expressly set forth in this

Agreement, including any representation or warranty with respect to merchantability or

fitness for any particular purpose.

17.2 Indemnification by Seller

Seller agrees to indemnify and save harmless PPUC and its officials, employees, agents, and

contractors from any loss, claim, liability, penalty, fine, forfeiture, demand, cause of action,


46

suit, and costs and expenses incidental thereto (including cost of defense, settlement and

reasonable attorneys' fees) to the extent caused by or resulting from

(1) any negligent or willful act or omission of Seller, its directors, officers, employees, agents

or contractors or

(2) the breach by Seller of any covenants, representations, or warranties of Seller contained

in this Agreement;

provided, that Seller shall not indemnify PPUC or any of its officials, employees, agents, or

contractors from any loss, liability, penalty, fine, forfeiture, demand, cause of action, suit, and

costs and expenses incidental thereto (including cost of defense, settlement and reasonable

attorneys' fees) to the extent caused by or arising out of any negligent or willful act or

omission of, or the breach of this Agreement by, PPUC or any of its officials, employees,

agents or contractors.

17.3 Indemnification by PPUC

PPUC agrees to indemnify and save harmless Seller, its directors, officers, employees,

agents, and contractors from any loss, claim, liability, penalty, fine, forfeiture, demand, cause

of action, suit, and costs and expenses incidental thereto (including cost of defense,

settlement and reasonable attorneys' fees) to the extent caused by or resulting from

(1) any negligent or willful act or omission of PPUC or its officials, employees, agents, or

contractors, or

(2) the breach by PPUC of any of the covenants, representations, or warranties of PPUC

contained in this Agreement;

provided, that PPUC shall not indemnify Seller, its directors, officers, employees, agents or

contractors, from any loss, liability, penalty, fine, forfeiture, demand, cause of action, suit, and

cost and expense incidental thereto (including cost of defense, settlement and reasonable

attorneys' fees) to the extent caused by or arising out of any negligent or willful act or

omission of or breach of this Agreement by Seller, or any of its directors, officers, employees,

agents, or contractors.


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17.4 Limitation on Liability

17.4.1 PPUC's Liability. PPUC's liability to Seller under this Agreement with respect to any

Contract Year, whether based on contract, warranty or tort, including intentional acts,

errors or omissions, negligence, indemnity, strict liability, or otherwise, or any other

claim or cause of action (excluding any claim or cause of action respecting any

obligations under Clause4 [Construction of the Project]) when aggregated with

PPUC's liability to Seller under the Interconnection Agreement shall not in the

aggregate exceed one thousand Dollars ($1,000) per kW of Project Capacity during

such Contract Year.

17.4.2 Seller's Liability. Seller's liability to PPUC under this Agreement with respect to any

Contract Year, whether based on contract, warranty or tort, including intentional acts,

errors or omissions, negligence, indemnity, strict liability, or otherwise, or any other

claim or cause of action (excluding any claim or cause of action respecting any

obligations under Clause4 [Construction of the Project]) when aggregated with Seller's

liability to PPUC under the Interconnection Agreement shall not in the aggregate

exceed one thousand Dollars ($1,000) per kW of Project Capacity during such

Contract Year.


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18 REPRESENTATIONS AND WARRANTIES

18.1 Representations and Warranties of Seller

Seller represents and warrants as of the date hereof as follows:

18.1.1 Seller is a [corporation] duly organized and validly existing under the laws of [the

Republic of Palau], is duly qualified to conduct business in the Republic of Palau, and

has full legal right, power and authority to enter into and perform its obligations under

this Agreement.

18.1.2 Seller has duly authorized the execution and delivery of this Agreement. This

Agreement has been duly executed and delivered by Seller and constitutes the legal,

valid and binding obligation of Seller in accordance with its terms except insofar as

such enforcement may be affected by bankruptcy, insolvency, moratorium, and other

laws affecting creditors rights generally.

18.1.3 Neither the execution nor the delivery by Seller of this Agreement nor the performance

by Seller of its obligations hereunder:

(i) upon the approval of this Agreement by the [Palau Energy Administration], as

contemplated by Section3.1.1 [Approval by Palau Energy Administration], will

conflict with, violate, or result in a breach of any Applicable Law applicable to

Seller; or

(ii) (ii) conflicts with, violates or results in a breach of any term or condition of any

judgment, decree, franchise, agreement (including the certificate of

[incorporation] of Seller) or instrument to which Seller is a party or by which

Seller or any of its properties or assets are bound, or constitutes a default

under any such judgment, decree, agreement or installment.

18.1.4 There is no action, suit, or other proceeding as of the date hereof at law or in equity,

before or by any Governmental Authority, pending or, to its knowledge, threatened

against Seller, which is likely to result in an unfavorable decision, ruling, or finding

which would materially and adversely affect the validity or enforceability of this

Agreement or any agreement or instrument entered into by Seller in connection with

the transaction contemplated hereby, or which would materially and adversely affect

the performance by Seller of its obligations hereunder or under any such other

agreement or instrument.

18.1.5 Schedule 11 [Permits and Approvals] lists all material Permits and Approvals required

under Applicable Law for Seller to execute, deliver, and perform its obligations under

this Agreement. Except for those Permits and Approvals listed in Schedule 11

[Permits and Approvals] that Seller anticipates will be obtained by Seller in due course

prior to the Commercial Operation Date, all Permits and Approvals required under

Applicable Law to authorize Seller's execution, delivery and performance of this

Agreement have been duly obtained and are in full force and effect.


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18.2 Representations and Warranties of PPUC

PPUC represents and warrants as of the date hereof as follows:


50

18.2.1 PPUC is a public corporation duly established and validly existing under the

constitution and laws of the Republic of Palau, is duly qualified to conduct business in

the Republic of Palau, and upon the approval of this Agreement by the [Palau Energy

Administration], as contemplated by Section 3.1.1 [Approval by Palau Energy

Administration], will have full legal right, power and authority to enter into and perform

its obligations under this Agreement.

18.2.2 PPUC has duly authorized the execution and delivery of this Agreement. This

Agreement has been duly executed and delivered by PPUC and upon the approval of

this Agreement by the [Palau Energy Administration], as contemplated bySection3.1.1

[Approval by Palau Energy Administration], will constitute a legal, valid and binding

obligation of PPUC, enforceable against PPUC in accordance with its terms except

insofar as such enforcement may be affected by bankruptcy, insolvency, moratorium,

and other laws affecting creditors‟ rights generally.

18.2.3 Neither the execution nor the delivery by PPUC of this Agreement nor the

performance by PPUC of its obligations hereunder:

(i) upon the approval of this Agreement by the [Palau Energy Administration], as

contemplated by Section3.1.1 [Approval by Palau Energy Administration], will

conflict with, violate, or result in a breach of any Applicable Law applicable to

PPUC; or

(ii) (ii) conflicts with, violates, or results in a breach of any term or condition of any

judgment, decree, franchise, agreement or instrument to which PPUC is a

party or by which PPUC or any of its properties or assets are bound, or

constitutes a default under any such judgment, decree, agreement or

instrument.

18.2.4 There is no action, suit, or other proceeding as of the date hereof at law or in equity,

before or by any Governmental Authority, pending or, to its knowledge, threatened

against PPUC, which is likely to result in an unfavorable decision, ruling, or finding

which would materially and adversely affect the validity or enforceability of this

Agreement or any agreement or instrument entered into by PPUC in connection with

the transaction contemplated hereby, or which would materially and adversely affect

the performance by PPUC of its obligations hereunder or under such an agreement or

instrument.

18.2.5 Schedule 11 [Permits and Approvals] lists all material Permits and Approvals required

under Applicable Law for PPUC to execute, deliver, and perform its obligations under

this Agreement. Except for those Permits and Approvals listed in Schedule 11

[Permits and Approvals] that PPUC anticipates will be obtained by PPUC in due

course prior to the Commercial Operation Date, including approval of this Agreement

and the Interconnection Agreement, if any, by the [Palau Energy Administration], all

Permits and Approvals required under Applicable Law to authorize PPUC‟s execution,

delivery and performance of this Agreement have been duly obtained and are in full

force and effect.


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19 DISPUTE RESOLUTION

19.1 Continued Performance

Each Party shall continue to perform its obligations under this Agreement pending resolution

of any dispute pursuant to this Clause 19 [Dispute Resolution]. Neither Party shall be required

to make any disputed payment(s) to the other Party so long as such dispute has been

referred to the process for resolution pursuant to this Clause19 [Dispute Resolution];

provided, that to the extent any amounts owed to either Party by the other Party are not

disputed and can be segregated from amounts with respect to which there is a dispute, such

undisputed amounts shall, in good faith, be identified by the Parties and paid as required by

this Agreement.

To the extent that any disputed amount was withheld from a Party, and such Party is

ultimately found to be entitled to all or any portion of such disputed amount pursuant to this

Clause 19 [Dispute Resolution], then such Party shall be entitled to the payment of interest on

any withheld amount, at an annual rate equal to LIBOR plus two percent (2%), from the

original due date for payment of such amount until the payment of such disputed amount.

19.2 Negotiations

If any dispute, controversy or claim arises under or relates to this Agreement or the breach,

termination or validity thereof, other than a dispute respecting Governmental Incentives under

Section 5.11 [Adjustment for Governmental Incentives] or Schedule 10 [Governmental

Incentives] (the "Dispute"), which such dispute shall be resolved pursuant to such provisions,

such Dispute shall be referred by each Party to its designated senior officer for resolution

upon five (5) Days written notice from either Party (the "Dispute Notice").

The Parties agree to attempt to resolve all Disputes promptly and equitably and to provide

each other with reasonable access during regular business hours to any and all non-

privileged records, information and data pertaining to any such Dispute.

If the designated officers of the Parties are unable to reach agreement within thirty (30) Days

of the Dispute Notice, each Party shall have the right to submit the matter to arbitration as

provided by Section 19.3 [Arbitration] below.

19.3 Arbitration

Any Dispute not resolved in accordance with Section 19.2 [Negotiations] above, may, at the

request of either Party, be finally settled under the Rules of Arbitration of the International

Chamber of Commerce by one or more arbitrators appointed in accordance with the said

Rules. The seat of any such arbitration shall be Singapore. The language to be used in the

arbitral proceedings shall be English. This Agreement shall be governed by the substantive

law of the Republic of Palau.


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19.4 Commercial Acts: Waiver of Immunity

PPUC unconditionally and irrevocably agrees that the execution, delivery and performance by it of this Agreement and the other project documents to which it is a party constitute private and commercial acts. In furtherance of the foregoing, PPUC hereby irrevocably and unconditionally agrees that to the extent permitted by Applicable Law, if any

(i) should any proceedings be brought to enforce any arbitral award against PPUC or

its assets (other than the PPUC‟s Electric System and equipment, its electric

distribution assets, and assets protected by diplomatic and consular privileges

legislation analogous to the 1976 Sovereign Immunities Act of the United States

(the "Protected Assets")) in any court of competent jurisdiction in connection with

this Agreement or any of the transactions contemplated by this Agreement, no

claim of immunity from such proceedings shall be claimed by or on behalf of

PPUC on behalf of itself or any of its assets (other than Protected Assets);

(ii) it waives any right of immunity which it or any of its assets (other than Protected

Assets) now has or may in the future have in any jurisdiction in connection with

any such proceedings; and

(iii) consents generally in respect of the enforcement of any arbitral award against it in

any such proceedings in any jurisdiction, to the giving of any relief or the issuance

of any process in connection with such proceedings, including, without limitation,

the making, enforcement or execution against or in respect of any of its assets

(other than Protected Assets).

20 TAXES

Seller shall be solely responsible for any and all present or future taxes relating to the

construction, ownership or leasing, operation or maintenance of each Facility, or any

components or appurtenances thereof, and all ad valorem taxe, if any, relating to each Site or

Facility, and Seller shall be obligated to pay all national and/or state taxes imposed on or with

respect to the generation or sale of Electric Energy under this Agreement.

Except as provided in Schedule 10 [Governmental Incentives], PPUC shall not be obligated

to pay or reimburse Seller for any such tax, or for any income taxes assessed on Seller, or for

gross receipts taxes or import or excise taxes associated with Seller's generation or sale of

Electric Energy hereunder.

21 MISCELLANEOUS

21.1 Assignment

21.1.1 Assignment. Seller shall not assign or otherwise transfer this Agreement, except

(i) for the collateral assignment to any lenders in connection with the provision of

any financing for the Facility, or

(ii) upon PPUC's prior written consent, such consent not to be withheld

unreasonably;


53

provided, that the Parties agree that it shall not be unreasonable for PPUC to withhold

consent to any assignment or other transfer if such assignment or other transfer is to

any Person that is not

(x) a Qualified Owner,

(y) experienced in the ownership or operation of facilities for the generation of

Electric Energy from solar PV systems, directly or through its affiliates, unless

the Facility is managed by, and is operated by, a qualified Person with such

experience or by Seller or one of its subsidiaries after the subject assignment,

and such Person is reasonably acceptable to PPUC, or

(z) the owner or lessee of the Facility and Seller's Interconnection Facilities.

PPUC may assign or otherwise transfer this Agreement to any agency, authority or

other Person having similar responsibilities, authority, independence and financial

creditworthiness as of the Contract Execution Date.

21.1.2 Sale of the Facility. Any sale or other transfer of all or substantially all of the Facility

shall be deemed an assignment subject to PPUC‟s consent rights under

Section21.1.1[Assignment].

21.1.3 Change of Control. Any direct or indirect change of control of Seller (whether

voluntary or by operation of law) shall be deemed an assignment subject to PPUC's

consent rights under Section21.1.1 [Assignment]; provided, that the Parties agree that

it shall not be unreasonable for PPUC to withhold consent of any such change of

control if the transferee of the direct or indirect interest in Seller, successor, or other

Person benefiting from the change of control is not experienced in the ownership or

operation of facilities for the generation of Electric Energy from PV systems, directly or

through its affiliates, unless the Facility is managed by, and is operated by, a Person

with such experience, and such Person is reasonably acceptable to PPUC.

For purposes of this Agreement, "change of control" shall include any transfer,

assignment, acquisition, or other transaction by which

(i) any Person that is not a Qualified Owner becomes the legal or beneficial

owner of a direct or indirect interest in Seller, or

(ii) (ii) any Person (or such Person and its affiliates) becomes the legal or

beneficial owner of more than fifty percent (50%) of the direct or indirect equity

interests of Seller, in each case whether in a single transaction or in a series of

transactions.

21.1.4 Procedure. Seller shall include with any notice requesting PPUC's approval of any

assignment or deemed assignment a statement of the facts and circumstances of

such proposed assignment or deemed assignment, in reasonable detail and with

reasonable supporting documentation, and shall provide such other information with

respect thereto as PPUC reasonably may request.

PPUC shall reply to any request for such consent in a reasonable period of time.


54

If PPUC does not consent to such assignment or deemed assignment, or notify Seller

that it does not so consent, within thirty (30) Days of the provision of such request and

information, Seller may notify PPUC requesting such response within ten (10)

Business Days.

If PPUC does not consent to such assignment or deemed assignment, or notify Seller

that it does not so consent, by the date ten (10) Business Days after such second

notice, PPUC shall be deemed to have consented to such assignment or deemed

assignment on the terms so disclosed to PPUC.

21.2 Further Assurances

Each Party agrees to, and shall use all reasonable efforts to, provide such information,

execute and deliver any instruments and documents and take such action as may be

necessary or reasonably requested or required by the other Party which are not inconsistent

with the provisions of this Agreement and which do not involve the assumption of obligations

other than those provided for in this Agreement in order to give full force and effect to this

Agreement and to carry out its intent.

21.3 Relationship of Parties

Except as otherwise explicitly provided herein, neither Party to this Agreement shall have any

responsibility whatsoever with respect to services provided or contractual obligations

assumed by the other Party and nothing in this Agreement shall be deemed to constitute

either Party a partner, agent or legal representative of the other Party or to create any

fiduciary relationship between or among the Parties.

21.4 Notices

Any notices required to be given hereunder shall be deemed delivered when deposited in the

United States mail, certified and return receipt requested, or when deposited with an

internationally recognized express courier service that provides a receipt of delivery, or when

delivered by personal delivery, addressed to the following persons or such other persons as

the Parties may designate in writing:

If to PPUC:

NAME

PO Box 1372

Koror Republic of Palau 96940

with a copy to:

NAME

PO Box 1372

Koror Republic of Palau 96940

If to Seller:

NAME


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Address

Address2

with a copy to:

NAME

Address

Address2

21.5 Waiver

No waiver of any provision of this Agreement shall be effective against a Party except as

expressly set forth in a writing signed by such Party.

The waiver by either Party of a default or a breach by the other Party of any provision of this

Agreement shall not operate or be construed to operate as a waiver of any subsequent

default or breach.

The making or the acceptance of a payment by either Party with knowledge of the existence

of a default or breach shall not operate or be construed to operate as a waiver of any

subsequent default or breach.

21.6 Survival

Notwithstanding anything provided herein to the contrary, Section 3.4 [Removal and

Remediation], Section 14.2 [Term and Modification of Insurance]and Clause 13 [Records],

Clause 17 [Limitation on Liability and Indemnification], Clause 19 [Dispute Resolution],

Clause 20 [Taxes], and Clause 21 [Miscellaneous] (and, to the extent referenced in such

provisions, the Appendices and Schedules hereto) shall survive the termination of this

Agreement.

21.7 Third Party Rights

Nothing herein is intended to or should be construed to create any rights of any kind

whatsoever in third persons not parties to this Agreement.

21.8 Counterparts

This Agreement and any amendment hereto may be executed and delivered in one or more

counterparts and by different Parties in separate counterparts.

All of such counterparts shall constitute one and the same agreement and shall become

effective (unless otherwise therein provided) when one or more counterparts have been

signed by each Party and delivered to the other Party.

Delivery of this Agreement by facsimile transmission or electronic email shall be as effective

as delivery of a manually executed counterpart.


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21.9 Severability

In the event that any provision of this Agreement shall, for any reason, be determined to be

invalid, illegal, or unenforceable in any respect, the Parties shall negotiate in good faith and

agree to such amendments, modifications, or supplements to this Agreement, or such other

appropriate actions, as shall, to the maximum extent practicable in light of such

determination, implement and give effect to the intentions of the Parties as reflected herein,

and the other provisions of this Agreement shall, as so amended, modified, supplemented, or

otherwise affected by such action, remain in full force and effect.

21.10 Entire Document

This Agreement, the Interconnection Agreement, if any, and each Appendix and Schedule

hereto and thereto, shall constitute the entire agreement between the Parties with respect to

the development, financing, design, construction, and operation of the Facility and the other

transactions contemplated hereby, and all prior agreements, negotiations, representations,

and understandings with respect thereto, including the RFP and the Proposal, are expressly

superseded.

No amendment, modification, or change to this Agreement or its Appendices or Schedules

shall be effective unless the same shall be in writing, duly executed, authorized and approved

by the Parties. In the event of any conflict between the terms and conditions of this

Agreement and that of any Appendix, Schedule or other document referenced herein, this

Agreement shall govern and control.


57

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and

delivered by their duly authorized representatives as of the date first set forth above.

[SELLER]

By:

__________________________________

Name:

Title:

Date:

Witness:

____________________________________

Name:

PALAU PUBLIC UTILITIES CORPORATION

By:

__________________________________

Name:

Title:

APPROVED AS TO LEGAL FORM AND CONTENT

By:

__________________________________

Name:


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COUNSEL TO THE PALAU PUBLIC UTILITIES CORPORATION


59

Appendix A: DESCRIPTION AND DRAWINGS OF THE PROJECT

[To be provided by Seller. Description of each Facility should include, among other things,

nameplate capacity of the Facility, major equipment and components of the Facility and

interconnection, and interconnection location.]

i) Description of each Facility

ii) Interconnection of each Facility

iii) Site Layout and Wiring Diagrams

iv) Location of Records


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Appendix B: DESCRIPTION AND MAPS OF THE SITES

[To be provided by Seller]


61

Appendix C: FORM OF INVOICE

To be used as a guide for the invoice to be sent from Seller to PPUC for each Billing Period]

PPUC Monthly Energy Invoice

Power Purchase Agreement with [_____]

Facility: Invoice Number:_______

Billing Period: _________

Invoice Data: __________

Item Total

1. Electric Energy (Section 5.2 [Purchase Price])

= Electric Energy Delivered by Facility (kWh)

x Product Price ($__/kWh) $__________

2. Test Energy (if applicable) (Section 7.1.3 [Test Energy]) +

= Test Energy Delivered by Facility (kWh)

x 50% of Product Price ($__/kWh) $__________

3. Curtailed Product (Section 5.7 [Curtailment]) +

= Curtailed Product applicable to Facility (kWh)

x Product Price ($__/kWh) $__________

4. PPUC‟s costs and expenses for meter calibration

(Section 6.2 [Installation of Meters], Schedule 9

[Metering])

-

$__________

5. Governmental Incentives Attributable to Project (if

applicable) (Section 5.11 [Adjustment for Governmental

Incentives], Schedule 10 [Governmental Incentives])

-

$__________

6. Cost of Operating and Maintaining PPUC‟s

Interconnection Facilities (Section 8.4 [Operation and

Maintenance Obligations])

-

$__________

7. Other charges and adjustments expressly set forth in the

Agreement (if any) (describe, and identify applicable

Section of Agreement)

+/-

$__________

Total Amount due to Seller $__________

Annual Electric Energy Summary for [Facility] [Contract Year]

Net Electric Energy Delivered by [Facility] to [Date] for [Contract Year] _____ kWh

Net Curtailments for [Facility]to [Date] for [Contract Year] + _____ kWh


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Net Lost Production for [Facility] to [Date] for [Contract Year] + _____ kWh

Running Total for [Facility] for [Contract Year] = _____ kWh

Facility Target for [Contract Year] (Schedule 5[Expected Annual Production]) _____ kWh


63

Appendix D: LETTER OF CREDIT

[ref. 11–To be provided by Seller]


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Schedule 1 – PROJECT SPECIFICATIONS

Each Facility shall at all times:

a) accommodate PPUC's Metering Devices, generator telemetering equipment, and

communications equipment;

b) as deemed feasible or required by the Final Interconnection Study, use Seller-owned

dedicated fiber-optic communication circuits from Seller's Interconnection Facilities to

PPUC's communication circuits at each Delivery Point, and a redundant

telecommunications system as may be set forth in the Final Interconnection Study, for

the purpose of telemetering, supervisory control/data acquisition, and voice

communications, which communication circuits Seller shall install in accordance with

PPUC's specifications (which shall be compatible with PPUC's communication circuits);

c) comply with the Republic of Palau building code, if any;

d) meet all applicable Codes and Standards for facilities located in seismic zone 4; and

e) either not be located in a flood zone, or incorporate appropriate flood mitigation

measures


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Schedule 2 – REQUIREMENTS FOR COMMERCIAL OPERATION DATE

The Project shall achieve Commercial Operation Date when Seller has certified to PPUC, and

PPUC has accepted, that the following conditions have been satisfied:

a) The Project has been completed in all material respects (excepting punch list items that

do not materially and adversely affect the ability of the Project to operate as intended

hereunder) in accordance with the Permits and Approvals, Interconnection Agreement,

if any, any operating agreements for the Project, any engineering, procurements and

construction contracts for the Project, the financing documents, and the manufacturers'

specifications;

b) Seller has paid to PPUC any extension payment under Section4.4.2 [Extension of

Milestones], as applicable;

c) For Projects with an Expected Capacity of 200 kW or more, Phase I and Phase II

Environmental Investigations of each Site have been completed as required by Section

4.7.1 [Site Report], as applicable;

d) Seller has provided copies of all major Project contracts to PPUC as required by

Section4.7.3 [Facility Contracts];

e) For Projects with an Expected Capacity of 200 kW or more, Seller shall have provided

to PPUC the Performance Security required by Section 11.2 [Performance Security];

f) Certificates of insurance evidencing the coverage required by Clause 14 [Insurance]

have been obtained and submitted to PPUC;

g) All Permits and Approvals required to construct or operate the Project in compliance

with Applicable Laws and this Agreement have been obtained and are in full force and

effect;

h) Seller has successfully completed all Performance Tests for each Facility, and the

Facility Capacity of each Facility is not less than the Minimum Facility Capacity, and the

Project Capacity is not less than the Minimum Project Capacity;

i) The Project has achieved initial synchronization with PPUC's Electric System, and has

demonstrated the reliability of its communications systems and communications with

PPUC's system scheduling coordinator;

j) The Interconnection Facilities have been constructed, completed, energized and the

interconnection of the Facilities to PPUC's Electric System has been accomplished in

accordance with the Interconnection Agreement or the Interconnection Standards, as

applicable;

k) Seller is in compliance with its obligations under this Agreement and the

Interconnection Agreement, if any; and

l) Each Facility has commenced delivering Electric Energy to PPUC at its Delivery Point

as contemplated by this Agreement and the Interconnection Agreement, if any.


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Schedule 3 – ELECTRIC ENERGY SPECIFICATIONS

The Electric Energy supplied at each Delivery Point shall have the following

characteristics:

a) The operating frequency of the Seller‟s equipment shall meet the requirements of

the Interconnection Agreement or the Interconnection Standards, as applicable, and

shall allow low frequency ride through for any deviation from a 60 hertz base down

to 58 hertz in accordance with PPUC‟s “Guidelines, Standards and Regulations for

Renewable Energy Generation Systems Connecting to the Palau Central Grid”

document;

b) Seller shall operate each Facility within the voltage range specified in the

Interconnection Agreement or the Interconnection Standards, as applicable, and

allow low voltage ride through down to Z kV. Note: Low voltage ride through

standards to be addressed through the interconnection process; and

c) The Electric Energy shall also have the characteristics set forth in the Final

Interconnection Study, the Interconnection Agreement, or the Interconnection

Standards, as applicable.


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Schedule 4 – MILESTONE SCHEDULE

Milestone Deadline

1. Submit complete applications for all Permits

and Approvals required for construction of

each Facility

30 Days after the Contract

Execution Date

2. Achieve Site Control for each Site 30 Days after the Contract

Execution Date

3. Obtain all Permits and Approvals (in final,

unappealable form) necessary or desirable

under Applicable Laws to enable it to construct

and own the Project

3 months after the

Approval Date

4. Achieve Closing Date and issue full notice to

proceed to the Project construction contractor

to commence construction of each facility at its

respective Site

3 months after the

Approval Date

5. Deliver of fifty percent (50%) of the solar PV

panels for each Facility at the Site for each

such Facility

[TBD]

6. Guaranteed Commercial Operation Date 12 months after the

Approval Date


68

Schedule 5 – EXPECTED ANNUAL PRODUCTION

The Expected Capacity of the Project is [___].

Expected Annual Production commencing on the Commercial Operation Date with respect to

the Project is forecast as follows:*

* The table reflects an annual assumed degradation of Electric Energy production from the

Project amounting to [_] % per annum. Depending on the size of the Project, this Schedule

may require that information on Expected Annual Production be provided for each Facility.

Contract

Year

Minimum

Expected

Annual

Production

(kWh)

Expected

Annual

Production

(kWh)

Maximum

Expected

Annual

Production

(kWh)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20


69

Schedule 6 – PRICE OF ELECTRIC ENERGY

The rate for the purchase of electric energy is $____ / kWh and this rate is fixed for the 20-

year term of this Agreement.


70

Schedule 7 – INSURANCE REQUIREMENTS FOR THE PROJECT

Liability Insurance

Workers Compensation Insurance

Property Insurance Requirements

[TBD]


71

Schedule 8 – TESTING REQUIREMENTS

[TBD]


72

Schedule 9 – METERING

[PPUC to confirm]

1. PPUC shall install solid state Metering Devices and inspect and test all Metering Devices

upon installation and at least annually thereafter as part of PPUC's Interconnection Facilities.

PPUC shall provide Seller with reasonable advance notice of, and permit Seller's

representatives to witness and verify, such inspections and tests; provided, that Seller shall

not unreasonably interfere with or disrupt PPUC's activities and shall comply with all of

PPUC's safety standards. Upon Seller's reasonable request, and at Seller's expense, PPUC

shall perform additional inspections or tests of any Metering Device and shall permit a

qualified representative of Seller to inspect or witness the testing of any such device;

provided, that Seller shall not unreasonably interfere with or disrupt PPUC's activities and

shall comply with all of PPUC's safety standards. If upon such repeat inspection or testing a

Metering Device is found to register inaccurately by more than the allowable limits

established in this Agreement, the expense of the requested additional inspection or testing

shall be borne by PPUC. If requested by Seller in writing, PPUC shall provide copies of any

inspection or testing reports to Seller.

2. Seller may elect to install and maintain, at its own expense, solid state backup metering

devices ("Seller's Back-Up Metering") in addition to those installed and maintained by PPUC,

which installation and maintenance shall be performed in a manner acceptable to PPUC.

Seller, at its own expense, shall inspect and test Seller's Back-Up Metering upon installation

and at least annually thereafter. Seller shall provide PPUC with reasonable advance notice

of, and permit a representative of PPUC to witness and verify, such inspections and tests;

provided, that PPUC shall not unreasonably interfere with or disrupt Seller's activities and

shall comply with all of Seller's safety standards. Upon PPUC's reasonable request and at

PPUC's expense, Seller shall perform additional inspections or tests of Seller's Back-Up

Metering and shall permit a qualified representative of PPUC to inspect or witness the testing

of Seller's Back-Up Metering; provided, that PPUC shall not unreasonably interfere with or

disrupt the activities of Seller and shall comply with all of Seller's safety standards. If upon

such inspection or testing, Seller's Back-Up Metering is found to register inaccurately by more

than the allowable limits established in this Agreement, the expense of the requested

additional inspection or testing shall be borne by Seller. If requested by PPUC in writing,

Seller shall provide copies of any inspection or testing reports to PPUC.

3. If any Metering Devices, or Seller's Back-Up Metering, are found to be defective or

inaccurate, they shall be adjusted, repaired, replaced, and/or recalibrated as near as

practicable to a condition of zero error by the Party owning such defective or inaccurate

device and at that Party's expense.

4. If a Metering Device, or Seller's Back-Up Metering, fails to register, or if the measurement

made by a Metering Device, or Seller's Back-Up Metering, is found upon testing to be

inaccurate by more than the lesser of the industry standard or one percent (1.0%), an

adjustment shall be made correcting all measurements by the inaccurate or defective


73

Metering Device, or Seller's Back-Up Metering, for both the amount of the inaccuracy and the

period of the inaccuracy, in the following manner:

(i) In the event that any Metering Device is found to be defective or inaccurate, the Parties

shall use Seller's Back-Up Metering, if installed, to determine the amount of such inaccuracy,

provided, that Seller's Back-Up Metering has been tested and maintained in accordance with

the provisions of this Agreement. If Seller's Back-Up Metering is installed on the low side of

Seller's step-up transformer, the Seller's Back-Up Metering data shall be adjusted for losses

(which losses shall be determined in accordance with the manufacturer's guidelines). In the

event that Seller did not install back-up metering, or Seller's Back-Up Metering is also found

to be inaccurate by more than the lesser of the industry standard or one percent (1.0%), the

Parties shall estimate the amount of the necessary adjustment on the basis of deliveries of

net power and energy from the Project during periods of similar operating conditions when

the Metering Device was registering accurately. The adjustment shall be made for the period

during which inaccurate measurements were made.

(ii) In the event that the Parties cannot agree on the actual period during which the inaccurate

measurements were made, the period during which the measurements are to be adjusted

shall be the shorter of (i) the last one-half of the period from the last previous test of the

Metering Device to the test that found the Metering Device to be defective or inaccurate, or

(ii) the one hundred eighty (180) Days immediately preceding the test that found the Metering

Device to be defective or inaccurate.

(iii) To the extent that the adjustment period covers a period of deliveries for which payment

has already been made by PPUC, PPUC shall use the corrected measurements as

determined in accordance with this Schedule 9 [Metering] to recomputed the amount due for

the period of the inaccuracy and shall subtract the previous payments by PPUC for such

period from such recomputed amount. If the difference is a positive number, the difference

shall be paid by PPUC to Seller; if the difference is a negative number, that difference shall

be paid by Seller to PPUC, or at PPUC's discretion, may take the form of an offset to

payments due Seller by PPUC. Payment of such difference by the owing Party shall be made

not later than thirty (30) Days after the owing Party receives notice of the amount due, unless

PPUC elects payment via an offset.

(iv) At the request of either Party, PPUC, at Seller's expense, may install (or PPUC may

require Seller to install) telecommunications equipment to record or transmit metering data, or

real-time production data on a continuous basis, directly to PPUC, through a SCADA system

or by other means, in a manner consistent with Good Engineering and Operating Practices.

(v) At Seller's expense, the metered data shall be telemeter to one or more locations

designated by PPUC; provided, that unless otherwise agreed by the Parties in the Project

Management Procedures, for invoicing purposes, actual reading of the meter located at each

Delivery Point shall be taken by PPUC once a month in accordance with Section 6.1 [Meter

Reading].


74

Schedule 10 – GOVERNMENTAL INCENTIVES

Suggest removing this schedule

1. Benefit of Incentives

In the event that any Governmental Incentive is or becomes available to Seller, an amount

equal to ninety percent (90%) of the net present value benefit of such Governmental

Incentive, determined after taking into account the costs listed in Section 2 hereto, without

duplication, shall accrue to the benefit of PPUC (such amounts, the "PPUC Share"), and the

remaining ten percent (10%) of such benefit shall accrue to the benefit of Seller (the "Seller

Share"), in the manner described in the Schedule 10 [Governmental Incentives] Procedures.

a) reasonable transaction costs, including reasonable attorneys' and accountants' fees

incurred by Seller or the direct and indirect beneficial owners of interests in Seller to

obtain and utilize the Governmental Incentive

b) the net present value cost of any incremental taxes or other costs incurred or that are

reasonably expected to be incurred by Seller, or the direct and indirect beneficial

owners of interests in Seller, as a result of such Governmental Incentive or the actions

taken to obtain and utilize the Governmental Incentive, taking into account the

adjustments or payments to be made pursuant to this Schedule 10 [Governmental

Incentives],

For purposes of these calculations and the calculation of the adjustments described in the

Procedures hereto, (x) net present values shall be computed using a discount rate of twelve

percent (12%) per annum (the "Discount Rate") and (y) no cost shall be taken into account

under Section 2hereto unless such cost shall have been incurred as a result of a transaction

or steps undertaken (i) pursuant to a written request from PPUC, or (ii) with prior written

consent from PPUC (it being understood and agreed that Seller shall not be obligated to

enter into any transaction or take other steps to obtain a Governmental Incentive other than

at PPUC's request or following its consent).

2. Procedures.

a) Seller shall promptly give PPUC notice of the availability, receipt, and amount of any

Governmental Incentive and shall provide PPUC with its calculation of the estimated net

present value benefit of the Governmental Incentive and such other supporting

documentation as reasonably necessary or desirable to determine such net present

value benefit. In the event of a failure by Seller to provide such notice and calculation

(and supporting documentation) promptly, and in any event by the date thirty (30) Days

after notice from PPUC, PPUC may provide to Seller such notice and calculation, and in

such event Seller shall cooperate with PPUC to provide such supporting documentation

as reasonably necessary or desirable to determine such net present value benefit.

b) Seller shall use commercially reasonable efforts, as PPUC shall request in writing (upon

the provision of notice and supporting documentation as provided in Section 3 hereto)

to obtain and utilize, to the maximum extent practicable, consistent with Applicable

Laws, for the benefit of the Parties, any such material Governmental Incentive that may

be available.


75

c) If Seller qualifies for any Governmental Incentive, it shall pay (or cause to be paid as

described in Section 6 hereto) to PPUC an amount equal to the PPUC Share

attributable to such Governmental Incentive within ten (10) Business Days following

receipt by Seller of the after-tax cash proceeds attributable to the Governmental

Incentive.

d) In the event that Seller is expected to receive a portion of the proceeds of a

Governmental Incentive from time to time (or is expected to recognize a reduction in

current cash taxes as a result of a Governmental Incentive from time to time) then,

within ten (10) Business Days following each receipt of such proceeds (or recognition of

such reduction), Seller shall pay (or cause to be paid as described in Section (e) hereto)

to PPUC an amount equal to ninety percent (90%) of the amount, if any, by which (A)

the amount received (or recognized, as described above) exceeds (B) the sum of the

previously unreimbursed costs and taxes described in Section (a)(i) or Section (a)(ii)

hereto incurred prior to the receipt of such proceeds (plus interest computed at the

Discount Rate on the amount of such unreimbursed costs and expenses from time to

time outstanding), provided, however, that in the year in which the last dollar of the

Governmental Incentive has been received (or recognized, as described above) by

Seller, clause (B) of this sentence shall be modified to include the net present value of

all future costs described in Section (a)(ii) hereto. If, under the proviso of the previous

sentence, such amount is a negative number, PPUC shall pay Seller, within forty-five

(45) Business Days, the absolute value of such amount, and upon such payment,

neither Party shall have a future obligation under this Schedule 10 [Governmental

Incentives] with respect to that Governmental Incentive.

e) In the event Seller or any direct or indirect owner of a beneficial interest in Seller is

obligated to repay or recapture all or any portion of any Governmental Incentive, other

than by reason of a voluntary disposition of any direct or indirect beneficial interest in

Seller or the Project or the failure of Seller to perform its obligations hereunder (the

amount of any such obligation, a "Repayment Obligation”), Seller shall promptly give

PPUC notice of such Repayment Obligation and of the amount thereof. Within forty-five

(45) business days of receipt of such notice, PPUC shall pay Seller ninety percent

(90%) of the Repayment Obligation.

3. Review and Audit

In the event that Seller and PPUC disagree as to the applicability, amount, or calculation of

the net present value benefit of a Governmental Incentive, including the amount of any costs

described in Section (a)(i) or Section (a)(ii) hereto or any Repayment Obligation, the Parties

shall attempt in good faith to resolve such dispute. If such dispute is not resolved within sixty

(60) Days following the receipt of a notice of such dispute, Seller and PPUC shall retain a

nationally recognized independent accounting firm designated by PPUC and reasonably

acceptable to Seller to resolve the dispute within sixty (60) Days following the engagement of

such accounting firm. Subject to a confidentiality agreement reasonably satisfactory to Seller,

Seller hereby agrees to provide such accountants with all information and materials as shall

be reasonably necessary or desirable in connection therewith (including information derived

from tax returns and certified as being correct by an officer of Seller, as applicable); provided,

that Seller shall not be required to provide the accountants with any of their tax returns, tax

books or records. The fees and costs of the accountants in verifying an adjustment pursuant


76

to this Schedule 10 [Governmental Incentives] shall be borne by PPUC, unless such

verification discloses an adjustment in PPUC's favor of five percent (5.0%) or more of the

amount originally calculated by Seller, in which case, such fees and costs shall be borne by

Seller. Any information provided to such accountants by Seller shall be and remain the

exclusive property of Seller and shall be deemed to be (and the accountants will confirm in

writing that it will treat such information as) the private, proprietary and confidential property

of Seller. The computations of the accounting firm shall be final, binding and conclusive upon

PPUC and Seller, absent manifest error.

4. General

Any amounts paid to PPUC by Seller under this Agreement with respect to a Governmental

Incentive shall at no time exceed ninety percent (90%) of the positive after-tax cash flow

Seller shall have realized as of such time as a result of such Governmental Incentive, after

taking into account amounts described in Section (a)(i) or Section (a)(ii) hereto in the manner

set forth in Section (b), above, and if at any time Seller is required to recapture or repay any

amount of a Governmental Incentive for which a payment has previously been paid to PPUC,

PPUC shall pay such amounts to Seller in accordance with this Agreement as and to the

extent described in Section (b)(v) hereto.

5. Control Agreement Restriction on Liens

At the request of PPUC, if Seller is expected to receive any Governmental Incentive that

consists of a cash payment or otherwise can be paid directly by a Governmental Authority,

Seller shall (to the extent consistent with Applicable Laws) direct the applicable Governmental

Authority to pay directly to PPUC, the PPUC Share of such Governmental Incentive; provided

that if such PPUC Share cannot be paid directly to PPUC by such Governmental Authority, or

cannot be paid separately to PPUC apart from the Seller Share, then Seller shall establish a

separate collateral account into which Seller shall (to the extent consistent with Applicable

Law) direct the applicable Governmental Authority to pay (or shall cause its direct or indirect

owners to direct to be paid) the whole of such Governmental Incentives, with Seller's Share

and the costs and expenses described in Section (a)(i) or Section (a)(ii) hereto to be released

promptly to Seller.

In addition, at the request of PPUC, Seller shall enter into a control agreement with respect to

any collateral account established as described above, or shall establish such other security

arrangement with respect to such Governmental Incentives or any proceeds thereof, as may

be reasonably requested by PPUC (the "Control Agreement") in order to secure to PPUC the

benefit of the PPUC Share.

Seller shall, and shall cause each direct or indirect owner of a beneficial interest in Seller to

use commercially reasonable efforts to avoid any lien, encumbrance, levy or charge on,

pledge of, security interest in, or conditional sale or other title retention agreement ("Lien")

with respect to the PPUC Share of any Governmental Incentive, or any proceeds thereof,

except for the Control Agreement, if any, or (to the extent expressly agreed by PPUC in the

Control Agreement or any consent to assignment or direct assignment with the lenders

providing any senior debt for the Project and their successors and assigns (the "Senior

Lenders")) any documents evidencing, securing or otherwise relating to any senior debt at the

Project (the "Senior Financing Documents "). Unless expressly agreed to by PPUC, Seller

shall not create, incur, assume or suffer to exist any Lien with respect to the PPUC Share of


77

any Governmental Incentive for the benefit of the Senior Lenders, under the Senior Financing

Documents, or for the benefit of any other lender.


78

Schedule 11 – PERMITS AND APPROVALS

Seller Permits

Permits and Approvals Generally

Specified Permits and Approvals

EQBP Permit

Historical Permit

State Government Building Permit

PPUC Permits and Approvals

Permits and Approvals Generally


79

Schedule 12 – INTERCONNECTION REQUIREMENTS AND STANDARDS

All Interconnection Facilities shall adhere to PPUC‟s “Guidelines, Standards and Regulations for Renewable Energy Generation Systems Connecting to the Palau Central Grid”document wherever applicable, as well as PPUC‟s “Electrical Service Regulations” document dated March 30, 1995 wherever applicable. All Interconnection Facilities shall tie into PPUC‟s Electric System via the 34.5 kV transmission line. Interconnection Facilities shall be in accordance with the basic single-line diagram below: