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Wind Option and Wind Energy Lease Agreement  

Author:  | Contracts, New York

This WIND OPTION AND WIND ENERGY LEASE AGREEMENT (this “Agreement”) is made, dated and effective as of the Effective Date (defined below), by and between Landowner (as defined below) and Atlantic Wind, LLC, an Oregon Limited Liability Company (“Lessee”).

2.2 Wind Facilities Layout Plan. Prior to the commencement of construction of the Wind Power Facilities described in Section 3.2.3, Lessee shall provide to Landowner a plan indicating the proposed location of the Wind Power Facilities, which Wind Power Facilities shall be on Permitted Areas (“Wind Power Facilities Layout Plan”). Lessee shall consult with Landowner and obtain Landowner’s consent, which consent shall not be unreasonably withheld, conditioned or delayed, on Lessee’s Wind Power Facilities Layout Plan prior to construction of any Wind Power Facilities described in Section 3.2.3, showing Landowner the proposed location of wind turbine generators (each, a “Wind Turbine”), roads, electric power lines, substations, interconnection and switching facilities and buildings, before making Lessee’s final decisions as to location of Wind Power Facilities on the Property. The Wind Power Facilities Layout Plan chosen by Lessee shall become Exhibit B to this Agreement. Lessee may, from time to time upon written notice to Landowner and with Landowner’s consent, which consent shall not be unreasonably withheld, conditioned or delayed, make changes to the location of Wind Power Facilities from the location(s) shown on the then current Wind Power Facilities Layout Plan, and the Wind Power Facilities Layout Plan shall be deemed to be modified to reflect such changes. Notwithstanding the preceding sentence, with regard to any change required by Lessee in the location of roads on the Property (from the location(s) shown on the then current Wind Power Facilities Layout Plan), Lessee will obtain prior written consent of Landowner, which said consent shall not be unreasonably withheld, conditioned or delayed.

2.3 Remaining Property. After the completion of the Project (as hereinafter defined), Lessee shall deliver to Landowner legal descriptions, together with As-Built Drawings (as hereinafter defined, generally depicting the location of the Wind Power Facilities as provided in Section 5.2,) of those portions of the . Property designated as the Operating Area (as such Operating Area may be modified as permitted pursuant to this Agreement). The “Operating Area” shall consist of (a) leasehold areas for the Wind Power Facility consisting of approximately a 500 foot diameter circle [4.5 acres] around each Wind Power Facility (collectively, the “Retained Leasehold Areas”), and (b) easement corridors for the access rights described in Section 3.4 and for the Easements described in Section 3.5 (collectively, the “Retained Easement Corridors”). At such time, Lessee, in Lessee’s sole discretion, by written notice to Landowner (which notice may include such legal descriptions and drawing(s)), may terminate the lease as to any portion of the Property that is not part of the Retained Leasehold Area that Lessee wishes to release to Landowner (collectively, the “Remaining Property”). In such event, Lessee shall promptly thereafter execute and record a release of all of its right, title and interest in and to such Remaining Property; provided, however, that (and the release shall so provide): (i) the Remaining Property shall in any event remain, for the entire Term, subject to and burdened by (A) the easements,if any, on, over, across, along and above the Retained Easement Corridors, (B) the Easements created by Section 3.5 over all of the Property, and (C) the rights granted to Lessee pursuant to Sections 3.4, 3.5, 4, 12.2, 12.6, 12.8, 12.10, 16.2, 16.7, 16.10, 16.15, and 16.16; (ii) Landowner shall be free to use and develop the Remaining Property subject in all events to Section 11.1, and (iii) in the event that in connection with a repowering of a Project or any portion thereof Lessee reasonably determines that a Retained Easement Corridor needs to be relocated or amended, and subject to the consent of Landowner, which consent shall not be unreasonably withheld, conditioned or delayed, then (A) Landowner shall, promptly upon request therefor, execute and deliver to Lessee an instrument (prepared by Lessee), that implements and grants the applicable rights for such relocation or amendment, and (B) Lessee shall, promptly upon request therefor, execute and deliver to Landowner a release of any part of the previous Retained Easement Corridor that Lessee reasonably determines is no longer needed.

2.4 Commencement of Leasehold Interest. Notwithstanding any provision of this Agreement to the contrary, until the commencement of the Extended Term (as hereinafter defined) occurs as provided in Section 5.1, the interest of Lessee granted pursuant to Section 2.1 shall constitute an easement and right of way with respect to the use of the Property for the purposes permitted during the Option Term pursuant to Section 3 and no leasehold interest or leasehold tenancy shall be created hereunder in the Property until the commencement of the Extended Term.

3.2 Permitted Uses of Property by Lessee.

3.2.1 Option Term During the Option Term, the rights granted to Lessee in this Agreement permit Lessee, without limitation, to do the following:

(a) Extract soil samples, perform geotechnical tests, perform environmental studies, survey the Property or any portion thereof, take photographs of the Property or any portion thereof, and conduct such other tests, studies, inspections and analysis on the Property as Lessee deems necessary, useful or appropriate;

(b) Subject to Landowner’s consent, which consent shall not be unreasonably withheld, conditioned or delayed, construct, erect, install, reinstall, replace, relocate and remove from time to time, 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, and SODAR units, to determine the feasibility of wind energy conversion on the Property, on adjacent property, or elsewhere; and

(c) Install or utilize any other improvements, including roads, facilities, machinery and equipment, on the Property that Lessee reasonably determines are necessary, useful or appropriate to accomplish any of the foregoing, and conduct site clearing activities. Any such roads to be installed by Lessee will be sited on a portion of the Property as determined by Lessee with the prior written consent of Landowner, which consent shall not be unreasonably withheld, conditioned or delayed. Compensation for crop or timber damage will be pursuant to section 11.7.

3.2.2 Extended Term. During the Extended Term and any Renewal Term(s), if applicable, the rights granted to Lessee in this Agreement permit Lessee, to construct, erect, use, install, reinstall, replace, relocate, maintain and remove from time to time any of the following on the Property, on adjacent property or elsewhere:

(a) 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, laydown areas, crane pads, and related facilities and equipment;

(b) electrical wires and cables required for the gathering and transmission of electrical energy and/or for communication purposes for the purposes defined in this Agreement, 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 energy storage facilities; and

(c) any other improvements, including roads, facilities, machinery and equipment, on the Property that Lessee reasonably determines are necessary, useful or appropriate to accomplish any of the foregoing. Any such roads to be installed by Lessee will be sited on a portion of the Property as determined by Lessee with the prior written consent of Landowner, which consent shall not be unreasonably withheld, conditioned or delayed.

3.3 Permitted Uses. For the avoidance of doubt, the rights granted to Lessee in this Agreement permit Lessee during the Option Term, any Extended Term and any Renewal Term, without limitation, to undertake any other activities that Lessee determines are necessary, helpful, appropriate or convenient in connection with, incidental to or to accomplish any of the foregoing purposes or for the benefit of one or more Projects, including conducting surveys and environmental, biological, cultural and other tests and studies and conducting site tours to educate and demonstrate the ecological and other benefits of electrical generation from wind power. Without limiting the generality of the foregoing, the Parties recognize that (a) power generation technologies are improving at a rapid rate and that Lessee may (but shall not be required to) from time to time replace or repower Wind Power Facilities on the Property with newer model (and potentially larger) Wind Power Facilities, and (b) the activities contemplated by this Agreement may be accomplished by Lessee or one or more third parties authorized by Lessee.

3.4 Ingress and Egress. This Agreement includes the right of reasonable vehicular and pedestrian access, and ingress of and egress from the Wind Power Facilities (whether located on the Property, on adjacent property or elsewhere), during the Term 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 in accordance with Section 3.2.1(c) and/or Section 3.2.2(c).

3.5 Easements.

3.5.1 In addition, Landowner hereby grants to Lessee the following easements (together, the “Operations Easements”) for the term of this Agreement: (a) an exclusive easement to use, convert, maintain and capture the free and unobstructed flow of wind currents and wind resources over and across the Property; (b) an exclusive easement over the Property for audio, visual, view, light, flicker, noise, vibration, air turbulence, wake, electromagnetic, electrical and radio frequency interference, and any other effects attributable to any Project or the operations of any Project; and (c) an exclusive easement to permit the rotors of Wind Power Facilities located on adjacent properties to overhang the Property.

3.5.2 To the extent that Landowner holds any access, utility, transmission or other easements, rights of way or licenses over lands in the general vicinity of the Property (the “Landowner Easements”), and Lessee determines that such Landowner Easements could be used for the benefit of a Project, then the same are hereby included in this Agreement, and Lessee shall be entitled to make full use thereof. Upon the request of Lessee from time to time, Landowner shall grant to Lessee (or a party designated by Lessee), in recordable form and containing such terms and provisions as may reasonably be requested by Lessee, for no additional consideration) one or more subeasements of the Landowner Easements (each, a “Landowner Subeasement”). The term of each Landowner Subeasement shall run concurrently with the Term (or for a shorter period of time as is provided in the applicable Landowner Easement, or as may be requested by Lessee), and shall terminate upon the expiration or termination of this Agreement.

3.5.3 Upon Lessee’s request from time to time, Landowner shall grant to Lessee (or a party designated by Lessee), in recordable form and containing such terms and provisions as may reasonably be requested by Lessee, for no additional consideration, the following stand-alone easements (each, a “Separate Easement”): (a) one or more nonexclusive easements for access rights on, over and across the Property, including for vehicular and pedestrian ingress, egress and access to and from one or more Projects; and (b) one or more easements for Wind Power Facilities on, under, over and across the Property, for the benefit of one or more Projects, in each such case as, where and to whom designated by Lessee. The term of each Separate Easement shall run concurrently with the Term (or for a shorter period of time as may be requested by Lessee), and shall terminate upon the expiration or termination of this Agreement.

3.5.4 With respect to each Operations Easement, Landowner Subeasement and Separate Easement (each, an “Easement”): (a) to the extent permitted by applicable federal, State and local laws, statutes, ordinances, orders, rules and regulations (each, a “Law”), such Easement shall be appurtenant to the applicable leasehold estate or easement; (b) such Easement shall run with the Property (and such other lands, as applicable) and inure to the benefit of and be binding upon Landowner and the holder of the Easement and their respective successors and assigns and all persons claiming under them; (c) no act or failure to act on the part of Lessee or the holder of the Easement shall be deemed to constitute an abandonment, surrender or termination thereof, except upon recordation by such holder of a quitclaim deed specifically conveying the Easement back to Landowner; (d) nonuse of the Easement shall not prevent the future use of the entire scope thereof if the same is needed; and (e) no use of or improvement to the Property or any lands benefited by the Easement, and no assignment or sublease hereof or thereof, shall, separately or in the aggregate, constitute an overburdening of the Easement.

11.1 Landowner Activities. Landowner expressly reserves the right to use the Property for purposes of (a) farming, including the growing of crops, pasturing of livestock, and construction of farm-related buildings and related facilities; (b) cutting and removal of timber; (c) the mining and/or removal of sand, stone and/or any and all minerals, overburden materials, oil and/or gas, in, upon and/or underlying the Property, and (d) hunting and recreational vehicle use, and for any and/or all other lawful purposes, but only to the extent that (i) such use by Landowner does not, currently or in the future, interfere with Lessee’s operations hereunder or enjoyment of the rights hereby granted to Lessee; (ii) any such use does not include wind energy development or the installation or use of any facilities related to wind energy development or generation (which rights and uses are exclusively granted to Lessee in this Agreement), and (iii) any leases and easements entered into by Landowner with respect to the Property after the Effective Date shall expressly provide that they are subject and subordinate in all respects to this Agreement and to the rights of Lessee and any Lender or Assignee hereunder. Notwithstanding the foregoing and subject to Landowner’s rights under this Agreement, if there is any conflict or disagreement between Landowner and Lessee regarding their respective rights to develop and utilize the Permitted Areas or Easements, then Lessee’s use (for the purposes permitted in this Agreement) shall have first priority. Lessee shall make reasonable efforts not to disturb Landowner’s activities on the Permitted Areas or Easements to the extent such activities are consistent with Lessee’s rights under this Agreement. Lessee shall post (and shall have the right to gate) the access roads Lessee constructs going to the Wind Power Facilities as being private roads only for use by authorized personnel in connection with the Wind Power Facilities. Landowner may use or cross such roads only to the extent that Landowner does not interfere with Lessee’s rights under this Agreement.

11.4 Requirement of Governmental Agencies. Lessee, at its expense, shall comply in all material respects with valid laws, ordinances, statutes, orders and regulations of any governmental agency applicable to the Wind Power Facilities. In its sole discretion and through appropriate legal proceedings brought in the name of Lessee or in the names of both Lessee and Landowner where appropriate or required, Lessee shall have the right to contest the validity or applicability to the Property or Wind Power Facilities of any law, ordinance, statute, order, regulation, property assessment or the like now or hereafter made or issued by any federal, state, county, local or other governmental agency or entity. Landowner shall cooperate in every reasonable way in such contest, provided Lessee’ reimburses Landowner for its reasonable and actual out-of-pocket expense directly incurred in connection with such cooperation, to the extent Lessee has approved such expense in advance. Any such contest or proceeding, including any maintained in the name of Landowner, shall be controlled and directed by Lessee, but Lessee shall protect and indemnify Landowner from Lessee’s failure to observe or comply during the contest with the contested law, ordinance, statute, order, regulation or property assessment.

11.7 Crop/Timber Damage.

11.7.1 Lessee shall pay Landowner one-time compensation of $350 per acre (prorated for fractional portions) for any and all portions of the Property that are taken out of commercial crop production from the Property during the construction of the Wind Power Facilities and any and all crops damaged as a direct result of Lessee’s construction of Wind Power 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 Wind Power Facilities on the Property materially interferes with Landowner’s ability to farm such portions of the Property during the growing season 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 Wind Power Facilities on the Property. After construction is complete, Lessee shall not be responsible to pay Landowner any losses of income, rent, business opportunities, profits or other losses arising out of Landowner’s inability to grow crops or otherwise use the Property as a result of the existence or operations of the Wind Power Facilities on the Property, and no further payment will be made to Landowner for crop damage.

11.7.2 Lessee shall cause the cutting of trees on the Property as may be necessary for the exercise of the rights granted to Lessee pursuant to this Agreement. At least thirty (30) days prior to any cutting of trees by Lessee, Lessee will inform Landowner of the trees that are required to be cut in order to give Landowner the opportunity to capture the timber value of the trees. In the event Lessee fails to give Landowner such thirty days advance notice regarding the trees to be cut by Lessee, Lessee will reimburse Landowner for the timber value of the destroyed trees, which value will be determined by Lessee and Landowner based upon the prevailing market value for commercial timber at the time of such cutting.

11.7.3 Landowner understands that, as the Project alignment may transect the boundaries of properties owned by third parties, the removal of trees from the Property may be necessary for the benefit of the performance of Wind Turbines located on adjacent property, Landowner agrees that, subject to the requirement for written notice contained in this Section 11.7, trees may be removed from the Property as required for the efficient operation of Wind Turbines located on the Property or on adjacent properties.

12.2 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 rights granted to Lessee under this Agreement with respect to: (i) the development, siting, permitting, construction, installation, maintenance, operation, replacement, relocation or removal of Wind Power Facilities, whether located on the Permitted Area or elsewhere; (ii) the flow of wind, wind speed or wind direction over the Property; (iii) access over the Property to Wind Power Facilities, whether located on the Permitted Area 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.

12.7 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 other person or entity subject to the terms of this Agreement.

12.8 Waiver of Nuisance. Landowner has been informed by Lessee and understands that the presence and operations of the improvements on the Permitted Area and on adjacent property will potentially result in some nuisance to Landowner, such as: (i) higher noise levels than currently occur at the Permitted Area and the surrounding area; (ii) visual impact; (iii) “flickering” reflections and/or shadowing from the Wind Turbine rotors. Landowner hereby accepts such nuisance and waives any right that Landowner may have to object to such nuisance (and Landowner releases Lessee from any claims Landowner may have with respect to any such nuisance). Lessee will exercise reasonable efforts to keep such nuisances, if any, to a minimum.

16.2 Confidentiality. Landowner shall maintain in the strictest confidence, for the benefit of Lessee and any Assignee, 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 Wind Power Facilities, and the like, whether disclosed by Lessee or any Assignee, 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 or any Assignee. Notwithstanding the foregoing, Landowner may disclose such information to (a) Landowner’s lenders, attorneys, accountants and other personal financial advisors solely for use in connection with their representation of Landowner regarding this Agreement or in connection with the proposed sale or refinance of the Property; (b) any prospective purchaser of the Property who has made a written offer to purchase or otherwise acquire the Property that Landowner desires to accept; or (c) pursuant to lawful process, subpoena or court order requiring such disclosure, provided that Landowner (1), at a reasonable time prior to such disclosure, notifies Lessee of such anticipated disclosure, and (2) in making such disclosure advises the party receiving the information of the confidentiality of the information and obtains the written agreement of said party not to disclose the information, which agreement shall run to the benefit of and be enforceable by Lessee. Landowner shall get Lessee’s written consent before issuing a press release or having any contact with or responding to the news media with any operational, sensitive or confidential information with respect to this Agreement, the wind power project to be constructed on the Permitted Area by Lessee, or any other existing wind power project owned or operated by Lessee. The provisions of this Section 16.2 shall survive the termination or expiration of this Agreement.

16.14 Third-Party Access. Both parties shall have the power and authority to control and prevent access by third parties to the Property or Permitted Areas, as applicable, if such third parties have not been authorized by either Landowner or Lessee. Either party may invite third parties upon the Property or Permitted Areas, as applicable, without permission from the other so long as no material inconvenience is caused to the other party. Lessee shall invite third parties only for purposes relevant to this Agreement.

16.15 Overhangs and Adjacent Property. Landowner understands that, as the boundary between the Permitted Area and adjacent property might extend at or near to the topographic crest of the geologic feature upon which the Permitted Area is located or for other reasons may be located near the boundary of the Property, and that optimal siting of Wind Turbines requires their placement at or near to such topographic crest or boundary such that the blades of a turbine located on the Permitted Area might overhang such adjacent property; similarly, the blades of a turbine located on an adjacent property might overhang the Permitted Area. Landowner hereby agrees to such overhang, if any, with respect to the Permitted Area by blades of Wind Turbine(s) located on adjacent property. Landowner further agrees, should zoning regulations be proposed that might prevent such overhangs or institute property-line set-back requirements more restrictive in nature than those indicated on the Wind Power Facilities Layout Plan, to cooperate with Lessee in obtaining exemption from such regulations for any Wind Turbines associated with the Project and sited according to the Wind Power Facilities Layout Plan.

16.16 Safety Zone. If permitted by applicable law, Lessee reserves the right to designate the Permitted Area as a Safety Zone, as may be described under the statutes of the State.

Download original document: “Wind Option and Wind Energy Lease Agreement

This article is the work of the author(s) indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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