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EXHIBIT 10.01
LONG TERM GAS AGREEMENT
This Agreement is made this 22nd day of March 2001, between Midland Cogeneration
Venture Limited Partnership ("MCV" or "Buyer") and Engage Energy America LLC
("Seller") for the purpose of entering into a long-term gas supply arrangement
on the terms and conditions that follow. In this Agreement, Seller and Buyer may
also be referred to individually as "Party" or collectively as "Parties."
1. Definitions. The following terms when used in this Agreement shall have the
following meanings:
1.1. "Agreement" shall mean this Agreement and all Exhibits hereto.
1.2. "Btu" shall mean one (1) British Thermal Unit, the amount of heat
required to raise the temperature of one (1) pound of water one (1)
degree Fahrenheit at sixty (60) degrees Fahrenheit. BTU is measured
on a dry basis.
1.3. "Business Day" shall mean any Day other than a Day on which banks in
the U.S.A. are allowed by law to be closed.
1.4. "Contract Year" shall mean any calendar year during the term of this
Agreement.
1.5. "Cubic Foot of Gas" shall mean the volume of Gas contained in one
(1) cubic foot of space at a pressure of fourteen and seventy-three
hundredths (14.73) dry Psia, at a temperature of sixty degrees
(60(K176)) Fahrenheit.
1.6. "Day" shall mean a period of twenty-four (24) consecutive hours (23
hours when changing from Standard to Daylight time and 25 hours when
changing back to Standard time) beginning and ending at 9:00 a.m.
Central clock time.
1.7. "Disputed Amount" shall have the meaning set forth in Section 5.1.2.
1.8. "Gas" shall mean any mixture of hydrocarbon and noncombustible gases
in a gaseous form consisting primarily of methane and includes
natural Gas produced from gas ▇▇▇▇▇ (gas well gas), Gas which
immediately prior to being produced from a reservoir is in solution
with crude oil or dispersed in an intimate association with crude
oil or in contact with crude oil across a gas-oil contact
(casinghead gas), or residue gas resulting from the processing of
either or both casinghead gas and gas well gas.
1.9. "Material Adverse Change" shall mean: (i) with respect to Guarantor,
having consolidated net worth of less than $800,000,000 ($US) as
presented in its financial statements and having a Standard & Poor's
rating lower than BBB-; (ii) with respect to MCV having less than
$60 million Cash Reserves as reported in the Liquidity Section of
Midland Cogeneration Venture's annual 10K report and quarterly 10Q
report; and (iii) with respect to Midland Funding Corp. 1 having a
Standard & Poor's rating lower than BBB-. Cash Reserves equal the
total Cash Reserves as reported less the funds restricted for rental
payments (presently $137,000,000) and funds restricted for
management nonqualified plans (presently $1,800,000).
1.10. "Mcf" shall mean one thousand (1,000) cubic feet of Gas.
1.11. "MMBtu" shall mean a quantity of Gas equal to one million
(1,000,000) Btu, which is equivalent to one (1) dekatherm.
1.12. "Month" shall mean the period beginning at 9 a.m. Central clock time
on the first Day of any calendar month and ending at 9 a.m. Central
clock time on the first Day of the next succeeding calendar month.
1.13. "NYMEX last day settlement" shall mean the last day settlement price
on the New York Mercantile Exchange for natural gas for delivery at
the ▇▇▇▇▇ Hub in the month of delivery on which futures contracts
for gas in such month were traded.
1.14. "Point of Delivery" shall mean the point where Seller delivers Gas
to Buyer as set forth in Exhibit A of this Agreement.
1.15. "Prime Rate" shall mean the fluctuating per annum lending rate of
interest from time to time published by CITIBANK, N.A., or its
successor, for its best commercial customers.
1.16. "Psia" shall mean pounds per square inch absolute.
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1.17. "Transporter" shall mean any pipeline transporting Gas subject to
this Agreement as referenced in Exhibit A.
1.18. "Undisputed Amount" shall have the meaning set forth in Section
5.1.2.
2. Quantity. Seller agrees to deliver and sell and MCV agrees to receive and
purchase 10,000 MMBtu/Day, on a firm basis, in accordance with the terms
and conditions of this Agreement.
3. Price.
3.1. The price to be paid by Buyer to Seller for all quantities of Gas
delivered hereunder inclusive of all taxes and other adjustments or
costs not provided for herein shall be NYMEX last day settlement
plus $0.205 per MMBtu for all Gas delivered to the Point of
Delivery.
3.2. Seller shall be responsible for all taxes prior to the Point of
Delivery. MCV shall be responsible for all taxes at and after the
Point of Delivery.
4. Term. Deliveries of Gas shall commence on November 1, 2002, and continue
through October 31, 2010.
5. Billing, Payments and Audit.
5.1. Billing and payment procedures are as follows:
5.1.1. After the delivery of Gas has commenced hereunder, Seller
shall, on or about the fifteenth (15) Day of each month,
render to Buyer a statement showing the estimated (or
actual if available) quantity of Gas delivered at each
Point of Delivery during the prior month and the amounts
due Seller hereunder. Seller shall also render to Buyer, if
necessary, a separate statement showing the adjustment, if
any, required to conform the prior month's estimated and
actual deliveries and prices. Payment of the amount due
based on such statements shall be made by Buyer to Seller
by wire transfer with immediately available funds the later
of (a) ten (10) Days following receipt of such statement or
(b) the twenty-fifth (25th) Day of the month. If the due
date falls on a Day that is not a Business Day, then
payment shall be made on the next Business Day. If Buyer
bills Seller, the same procedure shall be followed as set
forth in this Section 5.1.1.
5.1.2. In the event that either Party shall in good faith dispute
any portion of the amount shown in the other Party's
statement (hereinafter called the "Disputed Amount"), the
disputing Party shall (a) notify the other Party in writing
as to the Disputed Amount, and (b) pay the remaining
undisputed portion of the other Party's statement when due
(hereinafter, the "Undisputed Amount").
5.1.3. If it is determined that the failure to pay any Disputed
Amount of any statement was not justifiable, interest on
such Disputed Amount shall accrue at a rate per annum equal
to the Prime Rate plus one percent (1.0%) from the time
payment would have been due until the time payment is made,
but in no event shall the interest on such unpaid portion
exceed the applicable lawful nonusurious rate of interest.
Payment of any previously unpaid Disputed Amount shall be
credited first to all interest accrued and then to
principle.
5.2. Each Party hereto shall have the right, upon reasonable written
notice, during normal business hours and at its own expense to
examine and to obtain copies of the relevant portion of the books
and records of the other Party to the extent necessary to verify
the accuracy of any statement, charge, computation, or demand made
under or pursuant to this Agreement. Such examination shall be
conducted no more than once in a twelve-month period. Any error or
discrepancy in statements furnished pursuant to this Agreement
shall be promptly reported to Seller or Buyer, as applicable, and
proper adjustment thereof shall be made within thirty (30) Days
after final determination of the correct volumes or amounts
involved; provided, however, that if no such errors or
discrepancies are reported to Seller or Buyer, as applicable,
within two (2) years from the end of the calendar year in which
such errors or discrepancies occurred, the same shall be
conclusively deemed to be correct.
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6. Deliveries.
6.1. Exhibit A hereto sets forth the Point of Delivery under this
Agreement. Seller shall not use any other point to deliver Gas
without Buyer's written consent, which Buyer may grant or withhold
in its sole discretion.
6.2. To the extent that the procedures for the delivery of Gas set forth
herein conflict with the rules and tariffs of any Transporter, the
Transporter's rules and tariffs will control and the Parties shall
cooperate fully with each other in complying with such rules and
tariffs.
7. Third Party Gas. Buyer understands and agrees the Gas delivered hereunder
may be supplied either from Seller's Gas or from Gas purchased by Seller
from third parties; provided however, if such Gas is purchased from third
parties, Seller shall be solely responsible for the payment of the
purchase price of Gas to such third parties.
8. Title. Title and risk of loss to Gas delivered hereunder shall pass from
Seller to Buyer at the Point of Delivery.
9. Delivery Pressure. Seller shall be required to deliver or cause delivery
of the Gas to the Point of Delivery and for delivering such Gas at a
pressure sufficient to effect such delivery. Notwithstanding anything to
the contrary herein, Seller shall have the right but not the obligation to
install compression to effect deliveries of Gas hereunder.
10. Quality of Gas. The Gas to be delivered by Seller hereunder at the Point
of Delivery shall comply with the quality, heat, and pressure requirements
of the receiving Transporter.
11. Measurement and Tests of Gas. The quantity and quality of Gas delivered to
the Buyer's account at the Point of Delivery shall be determined in
accordance with the established standard terms and conditions applicable
to the Transporter's gas transportation contracts.
12. Warranty of Title. Seller hereby warrants (i) title to all Gas sold
hereunder or the right to sell such Gas, (ii) that it has the right to
sell same to Buyer, and (iii) that all such Gas shall be free from any and
all liens and adverse claims of any nature whatsoever. Seller agrees to
indemnify and hold Buyer harmless, including but not limited to, all
costs, damages, and expenses (including Buyer's reasonable attorney fees)
incurred by Buyer in defending against any liens or adverse claims of any
nature whatsoever, including but not limited to, third parties from whom
Seller purchased Gas as permitted in Section 7, in addition to any other
remedies Buyer may have hereunder or at law.
13. Credit Worthiness.
13.1. This Agreement is subject to Seller providing, for the term of this
Agreement, a parental guaranty to Buyer in the form attached hereto
as Exhibit "B." Such guaranty shall be effective as of the date of
this Agreement.
13.2. At any time, and from time to time during the term of this Agreement
(and notwithstanding whether an Event of Default has occurred as
defined in Section 21) but not more than once in any seven (7) Day
period, if the Termination Payment (as such term is defined in
Section 13.5) should exceed $10 million with respect to Buyer and
$10 million with respect to Seller (the "Security Threshold"), then
either Party may request the other Party to provide additional
Performance Assurance in an amount equal to the amount by which the
Termination Payment exceeds the Security Threshold (rounding upwards
for any fractional amount to the next $100,000). The Performance
Assurance shall be delivered within fourteen (14) calendar days of
the date of the request. If such additional Performance Assurance is
not received by the requesting Party within fourteen (14) calendar
days, then the requesting Party, in addition to any other remedy
available, may immediately suspend performance with respect to the
quantities associated with the amount in excess of the Security
Threshold, plus any Performance Assurance already in place, and
cover such lost supply or market, as the case may be. Incremental
gas costs (as referenced in Section 17 with respect to either Buyer
or Seller, as applicable) incurred by the covering Party shall be
recoverable from the other Party. Such suspension will be
implemented on a pro rata basis to a level at which assurances have
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been provided. In addition, a failure to provide Performance
Assurance as requested shall constitute an Event of Default under
Section 21.
13.3. Either Party, at its sole expense, may request the other Party to
reduce its Performance Assurance then in place if the Termination
Payment (with respect to this Agreement) reverts back to an amount
less than or equal to the sum of the Performance Assurance and the
Security Threshold then in place (rounding upwards for any
fractional amount to the next $100,000). Such request for reduction
shall be no more frequently than weekly, with respect to Letters of
Credit and guaranties, and daily, with respect to cash. The consent
to such request(s) shall not be unreasonably withheld.
13.4. Either Party may at any time make a calculation of the Termination
Payment and submit same to the other Party for review. If within
thirty (30) Days of the submission of the value of the Termination
Payment from one Party to the other, agreement has not been reached
by the Parties as to the amount of the Termination Payment, the
determination of the amount of the Termination Payment shall be
submitted to arbitration as provided for in Section 18 of this
Agreement. Notwithstanding the submission of the determination of
the amount of the Termination Payment to arbitration, all
requirements in Section 13 of this Agreement shall remain in effect.
13.5. With respect to this Section 13: (a) "Performance Assurance" means
collateral in the form of either cash or Letters of Credit. The
requesting Party may also accept a parental guaranty or other
collateral deemed sufficient by the requesting Party. If the
collateral is in the form of cash, then such cash shall be placed in
a segregated, interest-bearing escrow account on deposit with a
major U.S. commercial bank having a credit rating of at least "A-"
from Standard and Poor's or "A3" from ▇▇▇▇▇'▇ (interest to accrue to
the Party posting the collateral); (b) "Letter of Credit" means one
or more irrevocable, transferable standby letters of credit from a
major U.S. commercial bank or foreign bank with a U.S. office having
a credit rating of at least "A-" from Standard & Poor's or "A3" from
▇▇▇▇▇'▇; (c) "Termination Payment" means the amount by which the
requesting Party shall aggregate Gains, Losses, and Costs (as those
terms are defined in Section 21.2.5 with respect to this Agreement)
into a single net amount. The Termination Payment shall include all
amounts owed but not yet paid by one Party to the other Party,
whether or not such amounts are then due, for performance already
performed pursuant to this Agreement.
14. Right to Terminate Agreement.
14.1. In addition to any other remedy of Buyer under law or provided under
this Agreement, Buyer shall have the right at its election to
terminate this Agreement upon twenty (20) Days written notice to
Seller if Seller for any reason other than: (i) Force Majeure with a
duration of less than six (6) months, (ii) Buyer's failure to take,
or (iii) failure by Buyer to pay any Undisputed Amounts, fails, over
a period of at least sixty (60) Days, to deliver an average of
ninety percent (90%) of the agreed quantity, and provided further,
that such failure occurred not more than one hundred forty (140)
Days immediately preceding the giving of such notice of termination.
Seller shall have twenty (20) Days after receipt of such
cancellation notice to cure any failure, in which case Buyer's
cancellation is null and void, and this Agreement shall remain in
full force and effect.
14.2. In addition to the other remedies of Seller under law or provided
under this Agreement, Seller shall have the right at its election to
terminate this Agreement upon twenty (20) Days written notice to
Buyer if Buyer for any reason other than: (i) Force Majeure with a
duration of less than six (6) months, (ii) Seller's failure to
deliver, or (iii) failure by Seller to pay any Undisputed Amounts,
fails, over a period of at least sixty (60) Days, to take a volume
of Gas not less than an average of ninety percent (90%) of the
agreed quantity, and provided further, that such failure occurred
not more than one hundred forty (140) Days immediately preceding the
giving of such notice of termination. Buyer shall have twenty (20)
Days after receipt of such cancellation notice to cure any failure,
in which case Seller's cancellation is null and void, and this
Agreement shall remain in full force and effect.
14.3. Notwithstanding Section 21.1.3, in the event of an on-going Force
Majeure continuing six (6) months or longer, in addition to any
other remedy under law or provided under this
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Agreement, then such event of Force Majeure may be treated as an
Event of Default, and the Party who did not claim such Force Majeure
shall have the additional rights of a Non-Defaulting Party as
enumerated under Section 21.2.
15. Assignment.
15.1. The terms, covenants and conditions hereof shall be binding on the
Parties hereto and on their successors and permitted assignees.
15.2. Either Party may assign its interest under this Agreement with the
consent of the other Party, which consent shall not be unreasonably
withheld, to an affiliate or any company that shall succeed, by
merger or consolidation, to substantially all of its assets. In the
event of any such assignment, such successor shall be entitled to
the rights and shall be subject to the obligations of its
predecessor. Seller acknowledges that pursuant to a certain Gas
Backup Agreement among Consumers Energy Company (formerly Consumers
Power Company), The Dow Chemical Company ("Dow"), and Midland
Cogeneration Venture Limited Partnership dated January 27, 1987,
Buyer may be required to make an assignment to Dow of certain rights
under this Agreement. Seller specifically agrees to accept such
assignments, if any, made by Buyer to Dow in accordance with the
aforementioned Gas Backup Agreement; provided, however, that such
assignment shall not relieve Buyer of its obligations under this
Agreement absent Seller's written consent.
15.3. Except as provided above, neither Party shall assign this Agreement
without the prior consent of the other Party, which consent shall
not be unreasonably withheld. Nothing herein contained shall prevent
or restrict either Party from pledging, granting a security interest
in, or assigning as collateral all or any portion of such Party's
interest to secure any debt or obligation of such Party under any
mortgage, deed of trust, security agreement, or similar instrument.
15.4. Either Party desiring to make an assignment for which it has the
right pursuant to the foregoing may upon request obtain a written
consent within sixty (60) Days to such assignment from the other
Party evidencing its consent.
16. Notices. All Notices required hereunder may be sent by facsimile or
mutually acceptable electronic means, a nationally recognized overnight
courier service, first class mail, or hand delivered to the addressee as
provided below or at such other address as either Party may from time to
time specify in writing to the other Party. Any notice, request, demand,
or statement given in writing or required to be given in writing by the
terms of this Agreement shall be deemed given when received on a Business
Day by the addressee. In the absence of proof of the actual receipt date,
the following presumptions will apply. Notices sent by facsimile shall be
deemed to have been received upon the sending party's receipt of its
facsimile machine confirmation of successful transmission, if the day on
which such facsimile is received is not a Business Day or is after five
p.m., recipient's time, on a Business Day, then such facsimile shall be
deemed to have been received on the next following Business Day. Notice by
overnight mail or courier shall be deemed to have been received on the
next Business Day after it was sent or such earlier time as is confirmed
by the receiving party. Notice via first class mail shall be considered
delivered two Business Days after mailing.
TO SELLER:
Invoices: Engage Energy America LLC
Attn: Vice President Structured Gas, Midwest
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Other Notices: Engage Energy America LLC
Attn: Vice President Structured Gas, Midwest
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Wire Transfer: BANK: BankOne N.A., Chicago, IL
ACCT: 10-51051
ABA: ▇▇▇▇▇▇▇▇▇
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TO BUYER:
Invoices: Midland Cogeneration Venture Limited Partnership
Attn: Gas Accounting
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Other Notices: Midland Cogeneration Venture Limited Partnership
Attn: Contract Administration
100 Progress Place; ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Wire Transfer: BANK: U.S. Bank Trust, N.A., Minneapolis, MN
ACCT: 180121167365
ABA: ▇▇▇▇▇▇▇▇▇
DETAILS: MI Clearing 47300196 - FBO MCV 76608640
Gas nomination notices will be in accordance with the terms and conditions
applicable to Transporter.
17. Remedies. In the event Seller fails to deliver the daily quantities for
reasons not otherwise excused by Force Majeure, Seller shall be
responsible for any incremental gas costs incurred by MCV in replacing
such Gas. MCV agrees to use commercially reasonable efforts to purchase
replacement Gas at the lowest available price. Seller's obligation to pay
MCV for incremental replacement Gas costs (and any transportation
penalties or transportation demand charges resulting from unused
transportation) shall be MCV's sole and exclusive remedy for Seller's
failure to deliver except as provided in Section 14. In the event that MCV
fails to take Gas for reasons not otherwise excused by Force Majeure, MCV
shall pay Seller for any incremental decrease in the resale price of such
Gas. Seller agrees to use commercially reasonable efforts to resell such
deficiency Gas at the highest achievable price. MCV's obligation to pay
Seller for such decrease (and any transportation penalties or
transportation demand charges resulting from unused transportation) shall
be Seller's sole and exclusive remedy for MCV's failure to take Gas except
as provided in Section 14.
18. Arbitration.
18.1. If the Parties are unable to resolve a disagreement arising under
this Agreement, such disagreement shall be settled by arbitration.
Either Party may then commence arbitration by serving written notice
thereof on the other Party designating the issue to be arbitrated.
18.2. The Parties shall each appoint one (1) arbitrator and the two (2)
arbitrators so appointed will select a third arbitrator, all of such
arbitrators to be qualified by education, knowledge, and experience
to resolve the dispute or controversy. If either Party fails to
appoint an arbitrator within ten (10) Days after a request for such
appointment is made by the other Party in writing, or if the two (2)
appointed fail to agree on a third arbitrator within ten (10) Days
after the appointment of the second, the arbitrator or arbitrators
necessary to complete a board of three (3) arbitrators will be
appointed upon application by either Party therefore to the American
Arbitration Association ("AAA").
18.3. The jurisdiction of the arbitrators will be limited to the single
issue referred to arbitration and the arbitration shall be conducted
pursuant to the guidelines set forth by the AAA; provided however,
that should there be any conflict between such guidelines and the
procedures set forth in this Agreement, the terms of this Agreement
shall control.
18.4. Within fifteen (15) Days following selection of the third
arbitrator, each Party shall furnish the arbitrators in writing its
position regarding the issue being arbitrated. The arbitrators may,
if they deem necessary, convene a hearing regarding the issue being
arbitrated. Within thirty (30) Days following the later of the
appointment of the third arbitrator or of the hearing, if one is
held, the arbitrators shall notify the Parties in writing as to
which of the two (2) positions submitted is most consistent with the
meaning of this Agreement with respect to the issue being
arbitrated. No other position may be selected. Such decision shall
be binding on the Parties hereto and shall remain in effect until
and unless changed in accordance with the provisions of this
Agreement.
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18.5. Enforcement of the award may be entered in any court having
jurisdiction over the Parties.
18.6. Each Party will pay the expenses of the arbitrator selected by or
for it, and its counsel, witnesses, and employees. All other costs
of arbitration will be equally divided between the Parties.
19. Force Majeure. The term "Force Majeure" as employed herein for all
purposes relating hereto, shall mean acts of God, strikes, lockouts, or
other industrial disturbances, acts of public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes,
hurricanes, explosions, fires, arrests and restraints of governments and
people, civil disturbance, freeze-up of Seller's ▇▇▇▇▇ or ▇▇▇▇▇ from which
Seller is furnishing Gas hereunder, or other temporary inability of
Seller's ▇▇▇▇▇ or ▇▇▇▇▇ from which Seller is furnishing Gas hereunder to
produce, mechanical breakdowns or repairs of MCV's plant or pipeline
facilities or those of any Transporter used to transport Gas hereunder,
inability of any Party hereto to obtain necessary materials, supplies, or
permits due to existing or future rules, regulations, orders, laws, or
proclamations of governmental authorities (federal, state, or local),
including both civil and military, and any other causes whether of the
kind herein enumerated or otherwise not within the control of the Party
claiming suspension and that by the exercise of due diligence such Party
is unable to prevent or overcome. Neither party shall be entitled to the
benefit of the provisions of Force Majeure to the extent performance is
affected by any or all of the following circumstances: (i) the curtailment
of interruptible or secondary firm transportation unless primary, in-path,
firm transportation is also curtailed; (ii) the party claiming excuse
failed to remedy the condition and to resume the performance of such
covenants or obligations with reasonable dispatch; or (iii) economic
hardship, to include, without limitation, Seller's ability to sell Gas at
a higher or more advantageous price than the Contract Price, Buyer's
ability to purchase Gas at a lower or more advantageous price than the
Contract Price, or a regulatory agency disallowing, in whole or in part,
the pass through of costs resulting from this Agreement; (iv) the loss of
Buyer's market(s) or Buyer's inability to use or resell Gas purchased
hereunder
20. Transportation. Both Parties shall cooperate in an effort to eliminate
imbalances on either Party's transporting pipeline(s). The Parties further
agree that if any imbalance penalties or charges (including cash out
charges) are imposed on a Party as a result of the other Party's failure
to deliver or accept the required quantities then the failing Party shall
reimburse the nonfailing Party for such charges or penalties.
21. Defaults and Remedies.
21.1. Event of Default. A Party shall be deemed in default under this
Agreement upon the occurrence of any one or more of the following
events ("Events of Default"):
21.1.1. The unexcused failure by a Party (the "Defaulting Party")
to make, when due, any payment required pursuant to this
Agreement if such failure is not remedied within three (3)
Business Days after written notice of such failure is given
to the Defaulting Party by the other Party (the
"Non-Defaulting Party") and provided the payment is not a
Disputed Amount as described in Section 5.1.2;
21.1.2. Any representation or warranty made by a Party herein shall
at any time during the term of this Agreement prove to be
false or misleading in any material respect;
21.1.3. The failure by a Party to perform, in any material respect,
any material covenant or provision set forth in this
Agreement (other than (i) the events that are otherwise
specifically covered in this Section 21.1 as a separate
Event of Default and (ii) the events that are covered in
Sections 14 and 17) and such failure is not cured within
five (5) Business Days (or such longer period of time if
reasonably necessary to cure the failure and the Defaulting
Party is making continuous and diligent efforts to cure)
after written notice thereof to the Defaulting Party unless
such failure is excused by Force Majeure;
21.1.4. A Party (i) makes an assignment or any general arrangement
for the benefit of creditors; (ii) files a petition or
otherwise commences, authorizes, or acquiesces in the
commencement of a proceeding or cause under any bankruptcy
or similar law for the protection of creditors or have such
petition filed or proceeding commenced against it;
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or (iii) has a receiver, provisional liquidator, conservator,
custodian, trustee or other similar official appointed with
respect to it or substantially all of its assets; or
21.1.5. The failure of a Party, upon the occurrence of a Material Adverse
Change, to provide, for so long as the Material Adverse Change is
occurring, adequate assurance as reasonably determined by the
Non-Defaulting Party but not to exceed the Termination Amount (in
the form of cash or a Letter of Credit to be provided at the
election of the Defaulting Party or a guaranty deemed acceptable
by the Non-Defaulting Party, which such acceptance of such
guaranty may not be unreasonably withheld) of its ability to
perform all of its outstanding obligations to the Non-Defaulting
Party under this Agreement within a period not to exceed three
(3) Business Days of the Defaulting Party's receipt, in
accordance with the notice provisions of Section 16, of a demand
therefore by the Non-Defaulting Party.
21.1.6. If a party to this Agreement becomes subject to Bankruptcy Code
proceedings, it is understood and agreed that the other Party
shall be entitled to exercise its contractual right to liquidate
as a forward contract merchant under Section 556 of the U.S.
Bankruptcy Code.
21.2. Remedies Upon an Event of Default.
21.2.1. If an Event of Default occurs with respect to a Defaulting Party
at any time during the term of this Agreement, the Non-Defaulting
Party shall have the right at its sole discretion for so long as
the Event of Default is continuing to (i) establish a date (which
date shall be between 5 and 10 Business Days after the
Non-Defaulting Party delivers written notice to the Defaulting
Party of its intent to exercise the remedy described herein)
("Early Termination Date") on which this Agreement shall
terminate, and (ii) withhold any payments due; provided however,
upon the occurrence of any Event of Default listed in Section
21.1, as it may apply to any Party, this Agreement in respect
thereof shall automatically terminate, without notice, and
without any other action by either Party as if an Early
Termination Date had been declared immediately prior to such
event.
21.2.2. If an Early Termination Date has been designated, the
Non-Defaulting Party shall in good faith calculate its Gains,
Losses, and Costs resulting from the termination of this
Agreement. The Gains, Losses, and Costs shall be determined by
comparing the value of the remaining term, contract quantities,
and contract prices under this Agreement, had it not been
terminated, to the equivalent quantities and relevant market
prices for the remaining term either quoted by a bona fide
third-party offer or that are reasonably expected to be available
in the market under a replacement contract for the balance of
this Agreement. To ascertain the market prices of a replacement
contract, the Non-Defaulting Party may consider, among other
valuations, settlement prices of NYMEX natural gas futures
contracts, quotations from leading dealers in natural gas swap
contracts, and other bona fide third party offers, all adjusted
for the length of the remaining term and differences in
transportation. It is expressly agreed that a Party shall not be
required to enter into replacement transactions in order to
determine the Termination Amount (as hereinafter defined.)
21.2.3. The Non-Defaulting Party shall aggregate such Gains, Losses, and
Costs with respect to the balance of this Agreement into a single
net amount ("Termination Amount"). The Non-Defaulting Party shall
provide the Defaulting Party with a notice and statement
containing a clear identification and calculation of the
Termination Amount owed by or due to the Defaulting Party and
shall be accompanied by sufficient information to enable the
Defaulting Party to determine the basis upon which the
calculation was made and the accuracy thereof. If the
Non-Defaulting Party's aggregate Losses and Costs exceed its
aggregate Gains, the Defaulting Party shall, within five (5)
Business Days of receipt of such statement, pay the Termination
Amount to the Non-Defaulting Party, which amount shall bear
interest at the interest rate as set forth in Section 5.1.3
above, from the Early Termination Date until paid. If the
Non-Defaulting Party's aggregate Gains exceed its aggregate
Losses and Costs, if any, resulting from the termination of this
Agreement, the Non-Defaulting Party shall
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pay such excess to the Defaulting Party on or before the latter
of: (i) twenty (20) Days after the end of the month ending on or
after the Early Termination Date, and (ii) five (5) Business Days
after receipt by the Defaulting Party of the Non-Defaulting
Party's notice of the Termination Amount, which amount shall bear
interest at the interest rate as set forth in Section 5.1.3
above, from the Early Termination Date until paid.
21.2.4. If the Defaulting Party disputes the Non-Defaulting Party's right
to terminate this Agreement or disagrees with its calculation of
the Termination Amount, in whole or in part, the Defaulting Party
shall, within three (3) Business Days of receipt of the
Non-Defaulting Party's calculation of the Termination Amount,
provide to the Non-Defaulting Party a detailed written
explanation of the basis for such dispute or disagreement and, if
the Termination Amount is due from the Defaulting Party, shall
promptly pay to the Non-Defaulting Party such portion thereof as
is conceded to be correct. Upon receipt of the Defaulting Party's
explanation, the Parties shall seek to resolve the issues in
accordance with mutually agreeable dispute resolution procedures.
21.2.5. As used herein in this Section 21.2, with respect to each Party:
(i) "Costs" shall mean reasonable brokerage fees, commissions,
and other similar transaction costs and expenses reasonably
incurred by a Party either in terminating or entering into new
arrangements which replace this Agreement, and reasonable
attorney's fees, if any, reasonably incurred in connection with
enforcing its rights under this Agreement; (ii) "Gains" shall
mean an amount equal to the present value (calculated using the
interest rate as set forth in Section 5.1.3 above as the
prevailing discount rate) of the economic benefit (exclusive of
Costs), if any, to a Party resulting from the termination of its
obligations with respect to this Agreement, determined in a
commercially reasonable manner; and (iii) "Losses" shall mean an
amount equal to the present value (calculated using the interest
rate as set forth in Section 5.1.3 above as the prevailing
discount rate) of the economic loss (exclusive of Costs), if any,
to a Party from the termination of its obligations, with respect
to this Agreement, determined in a commercially reasonable
manner. In no event, however, shall a Party's Costs, Gains, or
Losses include any costs or expenses incurred by a Party in
terminating or reestablishing any arrangement pursuant to which
it has hedged its obligations under this Agreement.
22. Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED ACCORDING TO THE
LAWS OF THE STATE OF MICHIGAN.
23. Miscellaneous.
23.1. No waiver by either Seller or Buyer of any default by the other
under this Agreement shall operate as a waiver of any future
default, whether of like or different character or nature.
23.2. The descriptive headings of particular provisions of this Agreement
are for the purpose of facilitating administration and shall not be
construed as having any substantive effect on the terms of this
Agreement.
23.3. The Parties agree to proceed with due diligence and make good faith
effort to obtain such governmental authorizations as may be
necessary to enable performance of this Agreement.
23.4. This Agreement is subject to the January 27, 1987, Gas Supply Option
between Buyer and Dow and to Dow's rights under a certain Gas Backup
Agreement with Buyer and Consumers Energy Company (formerly
Consumers Power Company) dated January 27, 1987.
23.5. If any provision of this Agreement is determined to be invalid,
void, or unenforceable by any court having jurisdiction, such
determination shall not invalidate, void, or make unenforceable any
other provision of this Agreement.
23.6. Neither Buyer nor Seller shall disclose to any third Party (other
than its partners, parents, affiliates, directors, officers,
employees, consultants, representatives, agents, prospective
purchasers, or those third parties providing financing to it
provided such persons have agreed to keep such terms confidential)
any information received from the other Party that is explicitly
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marked "Confidential" (such information hereinafter referred to as
"Confidential Information"); provided however, that nothing shall be
deemed Confidential Information that:
23.6.1. is part of the public domain;
23.6.2. becomes publicly known otherwise than through an action or
inaction of the receiving Party;
23.6.3. is independently developed by the receiving Party; or
23.6.4. is required to be disclosed pursuant to any law, rule, or
regulation, or pursuant to any order of a governmental
instrumentality, provided that the Party receiving the
order shall, if feasible, notify the other Party of any
such requirement at least ten (10) Days before compliance
is required, and if so requested by the other Party, shall
use reasonable efforts to oppose the required disclosure,
as appropriate under the circumstances, or to otherwise
make such disclosure pursuant to a protective order or
other similar arrangement for confidentiality.
23.7. This Agreement may be amended only by a written instrument executed
by the Parties hereto. This Agreement, the Guaranty (Exhibit B
attached hereto), and the Consent and Agreement (Exhibit C attached
hereto) contain the entire understanding of the Parties with respect
to the matter contained in said documents. There are no promises,
covenants, or undertakings other than those expressly set forth in
said documents.
23.8. Buyer represents and warrants that it has full and complete
authority to enter into and to perform this Agreement. Seller
represents and warrants that it has full and complete authority to
enter into and to perform this Agreement. Each person who executes
this Agreement on behalf of Buyer represents and warrants that he or
she has full and complete authority to do so, and that Buyer will be
bound thereby. Each person who executes this Agreement on behalf of
Seller represents and warrants that he or she has full and complete
authority to do so, and that Seller will be bound thereby.
23.9. Notwithstanding anything to the contrary contained in this
Agreement, the liabilities and obligations of MCV arising out of, or
in connection with, this Agreement or any other agreements entered
into pursuant hereto shall not be enforced by any action or
proceeding wherein damages or any money judgment or specific
performance of any covenant in any such document and whether based
upon contract, warranty, negligence, indemnity, strict liability, or
otherwise, shall be sought against the assets of the partners of
MCV. By entering into this Agreement, Seller waives any and all
right to ▇▇▇ for, seek, or demand any judgment against such partners
and their affiliates, other than MCV by reason of the performance by
MCV of its obligations under this Agreement or any other agreements
entered into pursuant hereto, except to the extent such partners are
legally required to be named in any action to be brought against
MCV.
24. Limitations: NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR
ANY CONSEQUENTIAL, INCIDENTAL, OR PUNITIVE DAMAGES ARISING OUT OF, OR
RELATED TO, A BREACH OF THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement is executed in multiple originals effective
as of the day and year first herein above written.
Midland Cogeneration Venture Limited Partnership Engage Energy America LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------- --------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President Energy Supply and Marketing Title: Vice Chairman
Page 10
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EXHIBIT A
POINT OF DELIVERY
Delivery point on the pipeline of Great Lakes Gas Transmission
Limited Partnership commonly known as Midland
Page 11
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EXHIBIT B
GUARANTY
Guaranty dated effective as of the 22nd day of March 2001, by Westcoast Energy
Inc., a Canadian Federal corporation (hereinafter referred to as the
"Guarantor"), in favour of Midland Cogeneration Venture Limited Partnership, a
Michigan limited partnership (hereinafter referred to as "Creditor").
WHEREAS, Creditor and Engage Energy Canada, L.P. and/or Engage Energy
America LLC (hereinafter referred to as "Debtor") have entered into a certain
Long Term Gas Agreement dated March 22, 2001, as may be amended from time to
time (hereinafter referred to as the "Contract"); and
WHEREAS, as a condition precedent to Creditor's entering into the
Contract, Guarantor has agreed to provide this Guaranty as provided herein;
NOW THEREFORE, for and in consideration of the premises, Guarantor
hereby agrees as follows:
1) Guaranty. With respect to the period from November 1, 2002 to October
31, 2010 during which Obligations (as defined below) are to be
performed (the "Guarantee Period"), Guarantor unconditionally
guarantees to Creditor the payment of amounts due and payable by Debtor
pursuant to the Contract (such obligations being hereinafter referred
to as the "Obligations"); provided however, that as to Obligations
which Guarantor is called upon to honor, Guarantor is and shall be
entitled to assert any and all claims, counterclaims, defenses,
offsets, and other rights which Debtor could assert against Creditor
with respect to the Obligations, except as provided in paragraph 8
below. In the event Debtor defaults in the payment of any of the
Obligations, after thirty days written notice to Guarantor at the
address provided below, Guarantor shall make such payment or otherwise
cause same to be paid. Guarantor's Obligations are subject to its
receiving from Creditor copies of any and all notices of defaults and
events of default given by Creditor to Debtor pursuant to the Contract
in the same manner and at the same time as such notices are given by
Creditor to Debtor, except to Guarantor's address for notice set forth
in this Guaranty.
2) Guaranty Maximum Amount. The Obligations so guaranteed will be for a
dollar amount up to, but in no event in excess of, ten million United
States Dollars (US $10,000,000) (the "Guarantee Maximum Amount"). The
Guarantor has the unconditional right to satisfy all performance
obligations by means of payment of a dollar amount necessary to satisfy
in full the Obligations in question.
3) Termination. This Guaranty is continuing and irrevocable at all times
during the Guarantee Period, unless terminated earlier in accordance
with the terms and conditions of the Contract; provided that,
notwithstanding such termination, the Guarantor shall remain liable for
and this Guaranty shall remain in full force and effect until all
Obligations with respect to transactions entered into prior to the
effective date of such termination, have been fully satisfied.
4) Waiver. Except as is otherwise provided in this Guaranty, Guarantor
waives notice of acceptance of the guaranty contained herein,
presentment, demand, notice of dishonor, protest and notice of protest,
and prosecution of litigation in connection with the Obligations.
5) Assignment. Neither Guarantor nor Creditor may assign its respective
rights or obligations under this Guaranty without the other's written
consent. Subject to the foregoing, this Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives.
6) Notices. Any notice or other communication required or permitted to be
given to Guarantor or Creditor under this Guaranty shall be deemed to
have been given when delivered personally or otherwise actually
received if registered or certified, postage prepaid, or one (1) day
after delivery
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to a nationally recognized overnight courier service, fee prepaid,
return receipt requested, if in writing and addressed as follows:
Guarantor: Westcoast Energy Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇
Attention: Assistant Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Creditor: Midland Cogeneration Venture Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: Vice-President, Energy, Supply and Marketing
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
7) Applicable Law. This Guaranty shall in all respects be governed by,
enforced under and construed in accordance with the laws of the State of
Michigan.
8) Effect of Certain Events. Guarantor agrees that Guarantor's liability
hereunder will not be released, reduced, impaired, or affected by the
occurrence of any one or more of the following events:
a) The insolvency, bankruptcy, reorganization or disability of
Debtor;
b) The renewal, consolidation, extension, modification, or
amendment from time to time of the Contract;
c) The failure, delay, waiver or refusal by Creditor to exercise
any right or remedy held by Creditor with respect to the
Contract;
d) The sale, encumbrance, transfer or other modification of the
ownership of Debtor or the change in the financial condition
or management of Debtor.
IN WITNESS WHEREOF, Guarantor and Creditor have duly executed this
Guaranty effective as of the date first written above.
WESTCOAST ENERGY INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior VP, Law & Corporate Secretary
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP
▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Energy Supply and Marketing
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EXHIBIT C
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of March 22, 2001, made by Engage
Energy America LLC, a Delaware limited liability company, (the "undersigned") to
the parties whose names appear on Schedule A attached hereto (the "Transaction
Parties"), provides as follows:
1. Midland Cogeneration Venture Limited Partnership ("MCV"), and the
undersigned entered into the Long Term Gas Agreement dated March 22, 2001, as
the same may be amended, modified or supplemented from time to time in
accordance with the provisions thereof and of this Consent and Agreement (the
"Contract"). MCV was the owner of an approximately 1370 MW gas-fired
cogeneration facility in Midland, Michigan (the "Facility"). Pursuant to several
separate Participation Agreements, each dated as of June 1, 1990, MCV sold and
leased-back several separate Undivided Interests in the Facility under several
separate Leases each having a basic term of 25 years. The general structure of
the sale and lease-back transactions is described in more detail in Schedule B
attached hereto.
2. The undersigned hereby acknowledges notice of the sale and
lease-back transactions described in Schedule B and receipt of a photocopy of
each Participation Agreement (including Appendix A thereto but excluding other
Appendices, Exhibits and Schedules referenced therein unless specifically
requested). Photocopies of the related Transaction Documents will be made
available by MCV to the undersigned at its request for inspection. The
undersigned further acknowledges and consents to the assignments of and Liens on
the Contract pursuant to the Transaction Documents related to each sale and
lease-back transaction, and hereby agrees with each of the Transaction Parties
(provided, however, that each of the Indenture Trustees will have the rights set
forth herein only until the undersigned receives written notice from such
Indenture Trustee that the related Undivided Interest in the Facility is no
longer subject to the Lien of the Indenture to which such Indenture Trustee is a
party and the Secured Notes issued pursuant to such Indenture have been paid in
full) that:
(a) Each Owner Trustee and each related Indenture Trustee
shall be entitled, after a Lease Event of Default or an Indenture Event of
Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, to exercise any and all rights of MCV under the Contract in
accordance with the terms of the related Lease, the related Lessee Security
Agreement, the related Indentures and this Consent and Agreement, and the
undersigned will comply in all respects with such exercise by any of such
Persons.
(b) The undersigned will give each owner Trustee and Indenture
Trustee prompt written notice of any default of which it has knowledge under the
Contract which, if not cured, would give the undersigned the right to suspend
its performance under, or to terminate, the Contract. Each Owner Trustee and
Indenture Trustee (and their respective designee(s)) shall have the right,
within 10 days (or such longer period, to the extent a longer period is provided
to cure such default under the terms of the Long Term Gas Agreement dated March
22, 2001, other than defaults in respect to the nonpayment of money by MCV) of
receipt by each such Person of such written notice, to cure such default.
(c) In the event any Owner Trustee or Indenture Trustee
succeeds to MCV's rights or interests under the Contract after a Lease Event of
Default or an Indenture Event of
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Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, whether by foreclosure or otherwise, such Person shall have
the right to exercise all rights of MCV under such Contract, and the undersigned
will comply in all respects with such exercise by such Person.
(d) The exercise of remedies under any Lease or foreclosure of
any Indenture, whether by judicial proceedings or under power of sale contained
in such Indenture or otherwise or any conveyance from MCV or any Owner Trustee
to either related Indenture Trustee in lieu thereof, following a Lease Event of
Default or Indenture Event of Default under the Lease or the Indenture, as the
case may be, to which such Person is a party, shall not require the further
consent of the undersigned.
3. It is understood and agreed that the Contract and this Consent and
Agreement are subject to all tariffs and all Applicable Laws relating to such
services. Except as required, in the undersigned's reasonable opinion or by any
Applicable Law, the undersigned will not, without the prior written consent of
each Owner Trustee and Indenture Trustee (unless MCV delivers to the undersigned
a certificate stating that such consent is not required by the terms of the
related Transaction Documents), cancel, amend, modify or terminate or accept any
cancellation, amendment, modification or termination thereof, except if such
cancellation or termination is in accordance with the express terms of the
Contract, but subject to the rights of each Owner Trustee and Indenture Trustee
to cure any defaults and to keep the Contract in full force and effect as
provided in Section 2(b) above.
4. In the event that any Owner Trustee or Indenture Trustee (or their
respective designee(s)) assumes the Contract or otherwise elects to perform the
duties of MCV under the Contract, such Person shall not have any personal
liability to the undersigned for the performance of MCV's obligations under the
Contract, it being understood that the sole recourse of the undersigned seeking
enforcement of such obligations shall be to such Person's interest in the
Facility and the related rights and Revenues therefrom.
5. If the Contract is rejected by a trustee or debtor-in-possession in
any bankruptcy, insolvency or similar proceeding involving any Persons other
than the undersigned, or is terminated for any other reason (except as a result
of a default which was not appropriately cured as provided herein and in the
Contract), and if, (i) within 30 days thereafter, MCV (in the case of a
bankruptcy, insolvency or similar proceeding involving any Owner Trustee or
Owner Participant), any Owner Trustee, Indenture Trustee or their respective
successors or assigns so request and (ii) all payment defaults under the
Contract have been cured, the undersigned will execute and deliver to the Person
or Persons making such request in proportion to their respective interests in
the Contract a new Contract for the services remaining to be performed under the
original Contract and containing the same terms and conditions as the original
Contract (except for any requirements which have been fulfilled prior to such
termination). Such new Contract also shall be subject to the terms of this
Consent and Agreement.
6. The undersigned acknowledges that after the end of the respective
Lease Terms and during the respective Residual Terms, each Owner Trustee, as the
assignee of an Undivided Interest in the Contract pursuant to the related
Facility Agreements Assignment, shall have all of the rights and shall be liable
for all of the obligations (to the extent of its respective Undivided Interest
Percentage) on a non-recourse basis of MCV under the Contract. The undersigned
further acknowledges that MCV shall be the initial Operator of the Facility
under the Operating Agreement and further agree that the Owner Trustees may
appoint any Person to
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serve as a successor Operator thereunder so long as such
Person satisfies the requirements set forth in the Operating Agreement.
7. No termination, amendment or waiver of any provision of this Consent
and Agreement or consent to any departure by the undersigned from any provision
of this Consent and Agreement shall be effective unless the same shall be in
writing and signed by the Owner Trustees, the Indenture Trustees and MCV and
then such waiver or consent shall be effective only in a specified instance for
the specific purpose for which it was given.
8. This Consent and Agreement shall be governed by, and construed in
accordance with, the laws of the State of Michigan, and shall be binding on the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned by its officers thereunto duly
authorized, have duly executed this Agreement as of the day and year first above
written.
Engage Energy America LLC
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: Vice Chairman
---------------------------------
Seen and Agreed to this
22nd Day of March 2001.
MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP, as
Lessee
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Title: Vice President Energy Supply and Marketing
-------------------------------------------
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SCHEDULE A
MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP,
as Lessee,
FIRST MIDLAND LIMITED PARTNERSHIP,
DCC PROJECT FINANCE ONE, INC.,
EDISON CAPITAL (formerly, Mission Funding Epsilon),
▇▇▇▇ ATLANTIC CREDIT CORPORATION (formerly, NYNEX Credit Company),
RESOURCES CAPITAL MANAGEMENT CORPORATION,
as the several Owner Participants,
STATE STREET BANK AND TRUST COMPANY
(formerly, Fleet National Bank, Shawmut Bank Connecticut, National Association,
and The Connecticut National Bank),
not in its individual capacity but solely as Owner Trustee
under several separate Trust Agreements,
UNITED STATES TRUST COMPANY OF NEW YORK,
not in its individual capacity but solely as Senior Indenture Trustee
under several separate Senior Trust Indenture, Leasehold Mortgage
and Security Agreements for the benefit of the Senior Secured Notes,
FIRST UNION NATIONAL BANK
(formerly, Meridian Trust Company),
not in its individual capacity but solely as Subordinated Indenture Trustee
under several separate Subordinated Trust Indenture,
Leasehold Mortgage and Security Agreements
for the benefit of the Subordinated Secured Notes, and
MIDLAND FUNDING CORPORATION I AND
MIDLAND FUNDING CORPORATION II,
as purchasers of the Secured Notes.
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SCHEDULE B
A. As described below, the Owner Participants named in
Schedule A acquired separate Undivided Interests in the Facility and leased such
Undivided Interests back to MCV through separate Owner Trustees acting on behalf
of separate Owner Trusts. The beneficial interest in each Owner Trust is held by
Owner Participant.
B. For purposes of this Schedule B and the Consent and
Agreement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in Appendix A to the several separate
Amended and Restated Participation Agreements (the "Participation Agreements"),
each dated as of June 1, 1990, to which MCV, an Owner Participant, the related
Owner Trustee, the related Indenture Trustees, the Funding Corporations, MDC and
the Institutional Senior Bond Purchasers named therein are parties. The rules of
usage set forth in such Appendices also shall apply hereto; provided, that when
the terms defined in Appendix A to a particular Participation Agreement as
relating only to the transaction contemplated therein are used in the plural
herein, such terms are intended to apply to the terms applicable to the
transactions contemplated by all Participation Agreements collectively. In
addition, the word "related", when used with respect to any Person, interest,
instrument, agreement or document, shall denote a Person which is a party to, or
an interest, instrument, agreement or document which is a part of, the
transaction contemplated in a particular Participation Agreement and the
Transaction Documents referred to in such Participation Agreement.
C. Pursuant to a related Participation Agreement, MCV sold and
transferred to each Owner Trustee, and each Owner Trustee acquired, subject to
Dow's Prior Rights and Consumers' Prior Rights, an Undivided Interest in the
Facility equal to the respective Undivided Interest Percentage of such Owner
Trustee (with the Undivided Interests in the Initial Assets having been sold and
transferred on the First Closing Date and the Undivided Interests in the Second
Closing Assets being sold and transferred on the Second Closing Date). Each
Owner Trustee leased its Undivided Interest in the Facility back to the Lessee
pursuant to a related Lease, under which MCV has the use, possession and control
of the Undivided Interest in the Facility for the related Lease Term (with the
Undivided Interests in the Initial Assets having been leased on the First
Closing Date and the Undivided Interests in the Second Closing Assets being so
leased on the Second Closing Date).
D. On the Second Closing Date, (i) MCV assigned to each Owner
Trustee a separate Undivided Interest in the Facility Agreements and the
Cogeneration Agreements pursuant to a related Facility Agreements Assignment and
a related Cogeneration Agreements Assignment, respectively, (ii) each Owner
Trustee assumed the obligations of MCV under the PPA and the SEPA, to the extent
of its respective Undivided Interest Percentage, pursuant to a related
Cogeneration Agreements Assignment, (iii) pursuant to the related Lease, each
Owner Trustee subassigned its Undivided Interests in the Cogeneration Agreements
and Facility Agreements back to MCV for the respective Lease Term, subject to
the Lien of the related Indentures, and MCV, as lessee, accepted such
subassignment, and (iv) MCV granted to each Owner Trustee a Lien on, without
limitation, MCV's right, title and interest in the related Undivided Interests
in the Cogeneration Agreements and the Facility Agreements (and the Revenues
therefrom) as collateral security for the related Secured Obligations pursuant
to a related Lessee Security Agreement.
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E. Each Owner Trustee, as provided in the related
Participation Agreement, financed a portion of the Purchase Price for its
Undivided Interest in the Facility with the proceeds of Senior Secured Notes
issued by it to Midland Funding Corporation I pursuant to a related Senior Trust
Indenture and related Subordinated Secured Notes issued by it to Midland Funding
Corporation II pursuant to a related Subordinated Trust Indenture, and Midland
Funding Corporation I and Midland Funding Corporation II purchased such Secured
Notes.
F. Each Owner Trustee granted to the related Indenture
Trustees Liens on, among other things, the Owner Trustee's Undivided Interests
in the Facility, the Cogeneration Agreements and the Facility Agreements, the
Site Interest and its interest in certain of the related Transaction Documents
as collateral security for the Owner Trustee's obligations under the related
Secured Notes.
G. On the Second Closing Date, the Funding Corporations issued
Bonds pursuant to a Senior Collateral Trust Indenture and a Subordinated
Collateral Trust Indenture, respectively, for the purpose of participating in
the payment of the Purchase Price for each Undivided Interest in the Facility
and acquiring the funds necessary to purchase the Senior Secured Notes and the
Subordinated Secured Notes pursuant to a related Participation Agreement. The
Funding Corporations secured their obligations under the Bonds by a pledge to
the related Collateral Trust Trustees of the related Secured Notes (and the
collateral security therefor) held by the Funding Corporations.
H. MCV, each Owner Trustee and Indenture Trustee and the
Working Capital Lender, on the Second Closing Date, entered into an
Intercreditor Agreement with the Collateral Agent providing for the deposit with
and disbursement of all Revenues from the Undivided Interests in the Project by
the Collateral Agent.
I. MCV and each Owner Trustee also entered into an Operating
Agreement appointing MCV as the initial operator of the Project during the
respective Residual Terms, commencing on the Operation Commencement Date (as
such term is defined in the Operating Agreement).
J. On the Second Closing Date, in order to obtain necessary
working capital for the operation of the Facility, MCV obtained the Working
Capital Line from the Working Capital Lender and granted to the Working Capital
Lender first priority Liens on MCV's right, title and interest (as subassignee
of the separate Undivided Interests in the Cogeneration Agreements and the
Facility Agreements during the respective Lease Terms) in and to (i) all Earned
Receivables, (ii) its Natural Gas Inventory and (iii) the Gas Brokering
Contract.
K. Each Owner Trustee has agreed to reassign its Undivided
Interest in the Project (including the Undivided Interest in the Facility
Agreements) and the Site Interest back to MCV at the expiration of the related
Support Term.
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