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EXHIBIT 10
GAS SALES AGREEMENT
This Agreement is made this 1st day of July, 1999, between Midland Cogeneration
Venture Limited Partnership ("MCV" or "Buyer") and CMS Marketing, Services and
Trading Company ("Seller") for the purpose of entering into a long-term gas
supply arrangement on the terms and conditions which 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:
A) The term "Agreement" means this Agreement and all Exhibits hereto.
B) The term "business day" shall mean any day other than a day on
which banks in Michigan are allowed by law to be closed.
C) The term "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.
D) The term "Contract Year" shall mean any calendar year during the
term of this Agreement.
E) The term "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 degrees) Fahrenheit.
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F) The term "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.
G) The term "Disputed Amount" shall have the meaning set forth in
Section 5A(ii).
H) The term "gas" shall mean any mixture of hydrocarbon and
non-combustible 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.
I) The term "Mcf" shall mean one thousand (1,000) cubic feet of gas.
J) The term "MMBtu" shall mean a quantity of gas equal to one million
(1,000,000) Btu which is equivalent to one (1) dekatherm.
K) The term "month" shall mean the period beginning at 9:00 a.m.
Central clock time on the first day of any calendar month and
ending at 9:00 a.m. Central clock time on the first day of the
next succeeding calendar month.
L) The term "NYMEX" shall mean the New York Mercantile Exchange ▇▇▇▇▇
Hub natural gas futures contract traded on the New York Mercantile
Exchange. Should the NYMEX cease to be traded, Buyer and Seller
shall
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identify and agree on a replacement index. In the event that Buyer
and Seller cannot agree on a replacement index within 30 days,
either Party may request the matter be submitted to an expert for
determination in accordance with Section 17 (G) hereof.
M) The term "Point of Delivery" shall mean the point where Seller
delivers gas to Buyer as set forth in this Agreement.
N) The term "Prime Rate" shall mean the fluctuating per annum lending
rate of interest from time to time published by CITIBANK, NA, or
its successor, for its best commercial customers.
O) The term "psia" shall mean pounds per square inch absolute.
P) The term "psig" shall mean pounds per square inch gauge.
Q) The term "Transporter" shall mean any pipeline transporting gas
subject to this Agreement.
R) The term "Trunkline " shall mean the Trunkline Gas Company.
S) The term "Undisputed Amount" shall have the meaning set forth in
section 5A(ii).
2. Quantity. Seller agrees to deliver and sell, and MCV agrees to receive and
purchase 12,000 MMBtu/day, on a firm basis in accordance with the terms and
conditions of this Agreement.
3. Price.
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A) The price to be paid by Buyer to Seller for all quantities of gas
delivered hereunder in a given month, exclusive of all taxes and
other adjustments or costs herein otherwise expressly provided
for, shall be equal to the average MMBtu price for such month
under a natural gas contract traded on the NYMEX with the average
being determined utilizing the MMBtu price as of the close of the
trading day for the last three days of trading for each such
month, minus $0.085 per MMBtu.
B) 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, 2004 and continue
through February 28, 2007.
5. Billing and Payment.
A) Billing and payment procedures are as follows:
(i) After the delivery of gas has commenced hereunder, Seller
shall, on or about the tenth 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
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statements shall be made by Buyer to Seller by wire transfer
with immediately available funds on or before the later of
(a) ten (10) days following receipt of such statement or (b)
the twentieth (20th) day of the month. If the due date falls
on a day which is not a business day, then payment shall be
made on the next business day. If the Buyer bills Seller the
same procedure shall be followed as set forth in this
subparagraph.
(ii) 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").
(iii) If it is determined that the failure to pay any Undisputed
Amount of any statement was not justifiable, interest on
such Undisputed 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 Undisputed Amount
shall be credited first to all interest accrued and then to
principle.
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B) Each Party hereto shall have the right, upon reasonable written
notice, during normal business hours and at its own expense to
examine 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.
6. Deliveries.
A) Exhibit A hereto sets forth the Point(s) of Delivery (Primary and
Secondary) under this Agreement. Seller shall not use any other
point to deliver gas without Buyer's written consent which Buyer
may grant or withhold at its sole discretion. Secondary Point(s)
of Delivery may be utilized over Primary Point(s) of Delivery,
provided Buyer's Transporter accepts delivery at a Secondary
Point(s) of Delivery.
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B) 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. Title. Title and risk of loss to gas delivered hereunder shall pass from
Seller to Buyer at the Point of Delivery.
8. Delivery Pressure. Seller shall be required to deliver or cause delivery of
the gas at the Point of Delivery hereunder against the varying pressures in
the facilities of Buyer's Transporter(s); provided however, Seller shall
have the right but not the obligation to install compression.
9. Quality of Gas. The gas to be delivered hereunder shall comply with the
quality requirements of the Buyer's Transporter.
10. 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 by the
Buyer's Transporter in accordance with the then current standard terms and
conditions applicable to Buyer's Transporter's gas transportation contracts.
11. Warranty of Title. Seller hereby warrants (i) that it has 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
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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, in addition to any other
remedies Buyer may have hereunder or at law.
12. Credit Worthiness.
12.1 This Agreement is subject to Seller providing Buyer a guaranty
from CMS Enterprises Company, Inc. (CMS Enterprises) in the form
attached hereto as Exhibit "B".
12.2 At any time, and from time to time during the term of this
Agreement, if a Material Adverse Change (as such term is defined
in Section 12.3) has occurred then MCV may demand and Seller
shall provide additional Performance Assurance (as such term is
defined in Section 12.3) equal to $1,500,000 within 30 days of
such demand.
12.3 The term "Material Adverse Change" shall mean CMS Enterprises
having consolidated net worth of less than $5 billion as
presented in its financial statements. Once each quarter during
the term of this Agreement, the Seller will provide to MCV a
financial statement for CMS Enterprises. Once each year, the
Seller will provide to MCV an audited financial statement for
CMS Enterprises. The term "Performance Assurance" means
collateral in the form of either cash, Letters of Credit (as
defined in this section 12.3), or a parental guaranty from CMS
Energy Corporation.
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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). The
term "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 ▇▇▇▇▇'▇.
13. Right to Early Termination.
(A) 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, (ii) Buyer's failure to take, or (iii) a 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.
(B) 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
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Agreement upon twenty (20) days written notice to Buyer if
Buyer, for any reason, other than (I) Force Majeure, (ii)
Seller's failure to deliver, or (iii) a 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. Assignment.
A. This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assignees of the respective Parties
hereto, and the covenants, conditions, rights and obligations of
this Agreement shall run for the full term of this Agreement. No
assignment of this Agreement, in whole or in part, will be made
without the prior written consent of the non-assigning Party,
which consent will not be unreasonably withheld or delayed;
provided, either Party may transfer its interest to any parent
or affiliate by assignment, merger or otherwise without the
prior approval of the other Party. Upon any transfer and
assumption, the transferor shall not be relieved of or
discharged from any obligations hereunder.
B. Seller acknowledges that pursuant to a certain Gas Backup
Agreement and Amendments thereto among Consumers Power Company
(now known as
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Consumers Energy 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.
C. 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.
D. Either Party desiring to make an assignment for which consent
has been given by the other Party may upon request obtain a
written consent within sixty (60) days to such assignment from
the other Party evidencing its consent.
15. Notices. Except as otherwise herein provided, 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 deposited in the government
mail, postage prepaid, as certified mail, directed to the post office
address of the Parties as follows:
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TO SELLER:
For Invoices and Payments: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CMS Marketing, Services and Trading Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No: (▇▇▇)-▇▇▇-▇▇▇▇
Telecopier: (▇▇▇)-▇▇▇-▇▇▇▇
For All Other Notices: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CMS Marketing, Services and Trading Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No: (▇▇▇)-▇▇▇-▇▇▇▇
Telecopier: (▇▇▇)-▇▇▇-▇▇▇▇
TO BUYER:
For Invoices and Payments: Midland Cogeneration Venture
Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Gas Supply Accounting
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
For All Other Notices: Midland Cogeneration Venture
Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: V.P. Energy Supply & Marketing
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either Party may from time to time specify as
its address for such purposes by registered or certified letter addressed to
the other Party. Notices, requests, demands or statements made in person, or
by telephone, telecopier, telex or wire shall be deemed given when received
provided, however, that if such notice is received after 5:00 p.m.
(recipient's local time), it shall not be effective until the next business
day.
Gas nomination notices will be made in accordance with the terms and
conditions applicable to Buyer's Transporter.
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16. 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.
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 13. 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. 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 13.
17. Arbitration.
A) 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(s) to be
arbitrated.
B) The Parties shall each appoint one (1) arbitrator and the two (2)
arbitrators so appointed will select a third arbitrator, all of
such arbitrators
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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, within ten (10) days after the appointment of
the second, to agree on a third arbitrator, the arbitrator or
arbitrators necessary to complete a board of three (3) arbitrators
will be appointed upon application by either Party therefor to the
American Arbitration Association.
C) The jurisdiction of the arbitrators will be limited to the
issue(s) referred to arbitration and the arbitration shall be
conducted pursuant to the guidelines set forth by the American
Arbitration Association; 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.
D) Within fifteen (15) days following selection of the third
arbitrator, each Party shall furnish the arbitrators in writing
its position regarding the issue(s) being arbitrated. The
arbitrators may, if they deem necessary, convene a hearing
regarding the issue(s) 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(s) being arbitrated. No other position may be
selected. Such decision shall be binding on the
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Parties hereto and shall remain in effect until and unless changed
in accordance with the provisions of this Agreement.
E) Enforcement of the award may be entered in any court having
jurisdiction over the Parties.
F) Each Party will pay the expenses of the arbitrator selected by or
for it, and the expense of its respective counsel, witnesses and
employees. All other costs of arbitration will be equally divided
between the Parties.
G) This subsection shall apply only to the issue of selecting a
replacement index for NYMEX. In the event that Buyer and Seller
cannot agree on a replacement index within 30 days, either Party
may request the matter be submitted to an expert for determination
by providing the other Party with written notice of its election.
In such event, the Parties shall attempt to agree upon a single
expert with academic training and industry experience relevant to
determining the matter in dispute. If the Parties are unable to
agree upon a single expert within 30 days after the date of the
notice of election, each Party shall select an expert and the two
selected experts shall together select a third expert to serve on
a panel to determine the disputed matter. The Parties shall each
submit to the expert (or panel of experts, as applicable) all
relevant information concerning the disputed matter within 30 days
after the selection of the last expert. The final decision of the
expert (or panel of experts, as applicable) shall be delivered to
the Parties in writing, shall constitute the final resolution of
all matters so determined, and shall be binding upon the
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Parties. Unless the expert (or panel of experts, as applicable)
directs otherwise, the fees of the expert (or panel of experts, as
applicable) and the cost of conducting the investigation shall be
shared equally by the Parties. Each Party shall bear its own costs
and expenses and those of its counsel. Enforcement of the decision
may be entered in any court having jurisdiction over the Parties.
18. 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, 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 which by the exercise of due diligence such Party is unable
to prevent or to overcome.
19. 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
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as a result of the other Party's failure to deliver or accept the required
quantities, then the failing Party shall reimburse the non-failing Party for
such charges or penalties.
20. Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED ACCORDING TO THE
LAWS OF THE STATE OF MICHIGAN.
21. Miscellaneous.
A) 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.
B) 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.
C) 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.
D) 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 Power Company dated
January 27, 1987 and the Amendments thereto.
E) If any provision of this Agreement is determined to be invalid,
void or unenforceable by any court having jurisdiction, such
determination shall
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not invalidate void or make unenforceable any other provision of
this Agreement.
F) Neither Buyer nor Seller shall disclose to any third Party other
than its partners, parents, affiliates, directors, officers,
employees, consultants, representatives, agents or those third
parties providing financing to it, any information received from
the other Party that is explicitly marked "Confidential" (such
information hereinafter referred to as ("Confidential
Information"); provided however, that nothing shall be deemed
Confidential Information which:
(i) is part of the public domain;
(ii) becomes publicly known otherwise than through an
action or inaction of the receiving Party;
(iii) is independently developed by the receiving Party;
(iv) or 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.
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G) 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.
H) 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.
I) 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
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and all right to ▇▇▇ for, seek or demand any judgement 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.
22. 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 EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED FOR IN THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement is executed in multiple originals
effective as of the day and year first herein above written.
BUYER MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Energy Supply & Marketing
SELLER CMS MARKETING, SERVICES AND
TRADING COMPANY
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President Risk Management
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EXHIBIT A
POINTS OF DELIVERY
PRIMARY
Trunkline Gas Company
Lagloria-Mobil Point 81582
SECONDARY
Available points set forth in Section 2.2 of Trunkline's Rate Schedule FT.
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EXHIBIT B
GUARANTY
Guaranty dated effective as of the 9th day of August, 1999, by CMS
Enterprises Company, Inc., a Michigan corporation (hereinafter referred to as
the "Guarantor"), in favor of Midland Cogeneration Venture Limited Partnership,
a Michigan limited partnership (hereinafter referred to as "Creditor").
WHEREAS, Creditor and CMS Marketing, Services and Trading Company
(hereinafter referred to as "Debtor") have entered into a certain Gas Sales
Agreement dated July 1, 1999 (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. 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 7 below. In the event Debtor defaults in the payment of any of
the Obligations, upon five days written notice to Guarantor at the address
provided below, Guarantor shall make such payment or otherwise cause same
to be paid.
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2. Termination. This Guaranty is continuing and irrevocable and shall remain
in full force and effect until such time as all of the Obligations have
been fully satisfied, performed and discharged.
3. Waivers. 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.
4. 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.
5. Notices. Any notice or other communication required or permitted to be
given to Guarantor under this Guaranty shall be deemed to have been given
when delivered personally or otherwise actually received or on the fourth
(4th) day after being deposited in the United States mail if registered or
certified, postage prepaid, or one (1) day after delivery to a nationally
recognized overnight courier service, fee prepaid, return receipt
requested, if in writing and addressed as follows: as per Section 15 of the
Agreement.
6. 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.
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7. 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 has duly executed this Guaranty effective
as of the date first written above.
▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
BY: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
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EXHIBIT C
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of August 9, 1999, made by CMS
Marketing, Services and Trading, (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 Gas Sales Agreement, dated July 1, 1999, 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 30 days (or such
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longer period, not to exceed 90 days, as may reasonably be required to cure
defaults 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 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
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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 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.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Vice President of Risk Management
------------------------------------
Seen and Agreed to this
9th day of August, 1999.
MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP, as
Lessee
By: MIDLAND COGENERATION
VENTURE
▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Title: V. P. Energy Supply & 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
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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.
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.
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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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