This WIND ENERGY LEASE AND WIND EASEMENT AGREEMENT (this “Agreement”) is made, dated and effective as of the Effective Date (defined below), by and between Landowner (defined below) and PREVAILING WINDS, LLC, a South Dakota limited liability company (“Lessee”).
1. Basic Provisions. The following terms used in this Agreement have the meanings set forth below:
1.5 “Development Period Payments” – An annual payment equal to One and 25/100 Dollars ($1.25) per one (1) acre of the Property leased by Lessee under this Agreement; provided, however, that if the Property consists of less than 160 acres, the annual Development Period Payment shall be $200.00.
1.6 “Operating Fees” – An annual payment of Four Thousand Dollars ($4,000.00) for each megawatt of installed capacity of wind turbine installed on the Property by Lessee, based on such wind turbine’s name-plate rating (as determined by the wind turbine manufacturer). The Operating Fees shall increase one and one-half percent (1 1/2%) per year in accordance with Section 5.4 below.
1.7 “Installation Fee” – Five Thousand Dollars ($5,000.00) for each wind turbine installed on the Property by Lessee in any particular phase of construction.
1.8 “Extended Term” – The thirty-year period commencing upon the date described in Section 4 of this Agreement.
1.9 Annual Alternative Rent” – An annual payment during the Extended Term equal to Five Dollars ($5.00) per acre of the Property leased by Lessee under this Agreement.
1.10 “Alternative Use Fee” – An annual payment during the Extended Term equal to Twenty Dollars ($20.00) per acre for the Impacted Area of the Property, (i) with a minimum payment equal to Five hundred dollars ($500.00) for an Access Road Easement, and (ii) with a minimum payment equal to Three hundred dollars ($300.00) for a Transmission Easement.
1.11 “Met Tower Development Fee” – An annual payment during the Development Period equal to One Thousand Dollars ($1,000.00) per year for each meteorological tower installed on the Property by Lessee during the Development Period.
1.12 “Met Tower Operating Fee” – An annual payment of Five Thousand Dollars ($5,000.00) for each meteorological tower installed on the Property by Lessee during the Extended Term. The Operating Fees shall increase one and one- half percent (11/2%) per year in accordance with Section 5.2 below.
2. Lease and Confirmation. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Landowner, Landowner hereby leases the Property to Lessee.
3. Purpose of Lease; Permitted Uses.
3.1 Purpose of Lease. The lease created by this Agreement is solely and exclusively for wind energy purposes, and throughout the term of this Agreement, Lessee shall have the sole and exclusive rights to use the Property for wind energy purposes and to convert all of the wind resources of the Property. Lessee shall have no right to use the Property for agricultural, conservation or recreational purposes. For purposes of this Agreement, “wind energy purposes” means: wind resource evaluation; wind energy development; converting wind energy into electrical energy; collecting and transmitting the electrical energy converted from wind energy; and any and all other activities related to the foregoing.
3.2 Permitted Uses of Property by Lessee. The rights granted to Lessee in this Agreement permit Lessee, without limitation, to do the following:
3.2.1 Extract soil samples, perform geotechnical tests, and conduct other tests, studies, inspections and analysis on the Property as Lessee deems necessary, useful or appropriate.
3.2.2 Construct, erect, install, reinstall, replace, relocate and remove from time to time, the following “Windpower Facilities” on the Property, on adjacent property or elsewhere:
(a) meteorological and wind measuring equipment, including but not limited to anemometer towers and all necessary and proper appliances and fixtures for use in connection with said towers, to determine the feasibility of wind energy conversion on the Property, on adjacent property or elsewhere;
(b) wind turbines, steel towers, foundations and concrete pads, support structure, footings, anchors, fences and other fixtures and facilities, maintenance, security, office and/or guest facilities, staging areas for the assembly of equipment, power generation facilities to be operated in conjunction with large wind turbine installations, control buildings, lay down areas, crane pads, and related facilities and equipment;
(c) electrical wires and cables required for the gathering and transmission of electrical energy and/or for communication purposes, which may be placed overhead on appurtenant support structures or underground and one or more substations or interconnection or switching facilities from which Lessee may interconnect to a utility transmission system or the transmission system of another purchaser of electrical energy, together with the appropriate rights of way on, along, in and under the Property; and
(d) any other improvements, including roads, facilities, machinery and equipment that Lessee reasonably determines are necessary, useful or appropriate to accomplish any of the foregoing.
3.2.3 Use, maintain and operate Windpower Facilities on the Property, on adjacent property or elsewhere.
3.3 Ingress and Egress. This Agreement includes the right of ingress of and egress from the Windpower Facilities (whether located on the Property, on adjacent property or elsewhere) over and across the Property by means of any existing roads and lanes thereon, and by such other route or routes as Lessee may construct on the Property from time to time. …
3.5 Grant of Wind Easement. Any obstruction to the free flow of the wind by Landowner or persons other than Lessee or a Tenant or Assignee (as defined in Section 10.1 below) or persons claiming through or under Lessee or a Tenant or Assignee is prohibited throughout the entire area of the Property, which shall consist horizontally three hundred and sixty degrees (360°) from any point where any Windpower Facilities are or may be located at any time or from time to time (each such location referred to as a “Site”) and for a distance from each Site to the boundaries of the Property, together vertically through all space located above the surface of the Property, that is, one hundred eighty degrees (180°) or such greater number or numbers of degrees as may be necessary to extend from each point on and along a line drawn along the surface from each point along the exterior boundary of the Property through each Site to each point and on and along such line to the opposite exterior boundary of the Property. Trees, structures and improvements located on the Property as of the Effective Date of this Agreement shall be allowed to remain and Lessee may not require their removal. Landowner may not place or plant any trees, structures or improvements exceeding 60 feet in height or likely to exceed 60 feet in height on the Property after the date of this Lease which may, in Lessee’s sole judgment, impede or interfere with the flow of wind to any Site or Windpower Facilities, unless Landowner has received approval from Lessee for any such trees, structure or improvement. So long as Landowner is not otherwise in default under this Lease, Lessee agrees not to unreasonably withhold its approval for those structures or improvements Landowner proposes to place or construct on that portion of the Property not occupied by Windpower Facilities. The provisions of this Section 3.5 shall survive the termination of this Agreement for the full term hereof. …
8.7 Crop Damage.
(a) During initial construction, Lessee shall pay Landowner crop damage on a per acre basis (prorated for fractional portions), for any and all portions of the Property that are taken out of commercial crop production during the construction of the Windpower Facilities and any and all crops that are removed or damaged as a direct result of Lessee’s construction of Windpower Facilities on the Property. Portions of the Property shall be deemed to have been taken out of commercial crop production only to the extent Lessee’s construction of Windpower Facilities on the Property materially interferes with Landowner’s ability to farm such portions of the Property in which such construction occurs, assuming that Landowner was actually farming such portions of the Property immediately prior to Lessee’s commencing construction of the Windpower Facilities on the Property. Such crop damage shall be paid one time per growing season in which such construction and crop damage occur.
Crop damage will equal “Amount of damaged acres” multiplied by “Average yield in the County of Property” multiplied by “Price” multiplied by 1.50.
“Amount of damaged acres” shall be based on Landowner’s reasonable estimate as reasonably reviewed and agreed by Lessee’s representative.
“Average yield in the County of Property” shall be based on the average yield for the latest 3 years of corn in the County as published by the National Agricultural Statistical Service through the website (www.nass.usda.gov), or if unavailable, another publicly available information source for average yields in the County.
“Price”, regardless of the actual type of crop, shall be based on the corn future price for December delivery during the year that crop damages occur, and will be the closing price of that year’s December futures quoted on the 15th of the month in which the damages occur as posted by the Chicago Board of Trade, or if unavailable another publicly available information source.
(b) After initial construction is complete, Lessee shall be responsible to pay · for Landowner any losses of income, rent, business opportunities, profits or other losses arising out of the damage by the Lessee of any crops growing on the Property as a result of the existence or operations of the Windpower Facilities to the extent, but only to the extent that such damage occurs outside the boundaries of the access roads and Windpower Facilities installed on the Property pursuant to this Agreement or otherwise outside the graveled area surrounding the base of any Windpower Facilities installed on the Property. It is the intention of the parties that compensation under Sections 5.4 and 5.5 includes a payment for crop damage incidental to such existence and operation. Such crop damage, if any, occurring after initial construction is complete, will equal “Amount of damaged acres” multiplied by “Average yield in the County of Property” multiplied by “Price” multiplied by 1.50. …
9.2 No Interference. Landowner’s activities and any grant of rights Landowner makes to any person or entity, whether located on the Property or elsewhere, shall not, currently or in the future, impede or interfere with: (i) the siting, permitting, construction, installation, maintenance, operation, replacement, or removal of Windpower Facilities, whether located on the Property or elsewhere; (ii) the flow of wind, wind speed or wind direction over the Property; (iii) access over the Property to Windpower Facilities, whether located on the Property or elsewhere; or (iv) the undertaking of any other activities of Lessee permitted under this Agreement. In no event during the term of this Agreement shall Landowner construct, build or locate or allow others to construct, build or locate any wind energy conversion system, wind turbine or similar project on the Property. Notwithstanding the foregoing or Section 3.5, Landowner shall have the right to replace or repair any structures or improvements located on the Property as of the Effective Date, so long as such structures or improvements do not exceed the height of the existing structure, and are replaced or repaired in substantially the same location as the structures or improvements in existence on the Property as of the Effective Date. Further, Landowner shall have the right to construct not more than one (1) Small Turbine (as defined below) on the Property for Landowner’s personal use, so long as such Small Turbine is sited within two hundred fifty (250) feet of Landowner’s existing building site. A “Small Turbine” shall be defined as a wind turbine for residential or farm use by Landowner, with a nameplate capacity of 40 kW or less and a hub height o f sixteen (16) meters or less. …
9.7 Quiet Enjoyment. Landowner covenants and warrants that Lessee shall peacefully hold and enjoy all of the rights granted by this Agreement for its entire term without hindrance or interruption by Landowner or any person lawfully or equitably claiming by, through, under or superior to Landowner subject to the terms of this Agreement. …
13.2 Confidentiality. Landowner shall maintain in the strictest confidence, for the benefit of Lessee, any Assignee or Tenant, all information pertaining to the financial terms of or payments under this Agreement, Lessee’s site or product design, methods of operation, methods of construction, power production or availability of the Windpower Facilities, and the like, whether disclosed by Lessee, any Assignee or Tenant, or discovered by Landowner, unless such information either (i) is in the public domain by reason of prior publication through no act or omission of Landowner or its employees or agents; or (ii) was already known to Landowner at the time of disclosure and which Landowner is free to use or disclose without breach of any obligation to any person or entity. Landowner shall not use such information for its own benefit, publish or otherwise disclose it to others, or permit its use by others for their benefit or to the detriment of Lessee, any Assignee or Tenant. … The provisions of this Section 13.2 shall survive the termination or expiration of this Agreement. …
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