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LONG TERM GAS AGREEMENT EXHIBIT 10.40
This Agreement is made this tenth day of October 2000, between Midland
Cogeneration Venture Limited Partnership ("MCV" or "Buyer") and El Paso Merchant
Energy Gas, L.P. ("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 degrees) 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, a reduction of Guarantor's unsecured, long-term,
senior indebtedness not supported by third party credit
enhancement by Standard & Poor's Corporation or its successor
("S&P") to below "BBB minus", or by ▇▇▇▇▇'▇ Investor Service,
Inc. or its successor ("Moody's") to below "Baa3", and (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. 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 $0).
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. "Point of Delivery" shall mean the point where Seller delivers
Gas to Buyer as set forth in this Agreement as referred to in
Exhibit A.
1.14. "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.
1.15. "Psia" shall mean pounds per square inch absolute.
1.16. "Transporter" shall mean any pipeline transporting gas subject
to this Agreement.
1.17. "Undisputed Amount" shall have the meaning set forth in
Section 5.1.2.
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2. Quantity. Seller agrees to deliver and sell and MCV agrees to receive
and purchase the following volumes at the specific Point of Deliveries
in accordance with the terms and conditions of this Agreement:
10,000 MMBtu /Day, on a firm basis, at Point of Delivery A
16,000 MMBtu/Day, on a firm basis, at Point of Delivery B
10,000 MMBtu/Day, on a firm basis, at Point of Delivery C
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:
$3.78 per MMBtu for all Gas delivered to the Point of
Delivery A
$3.825 per MMBtu for all Gas delivered to the Point of
Delivery B
$4.10 per MMBtu for all Gas delivered to the Point
of Delivery C
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, including but not limited to all sales
and use taxes.
4. Term. Deliveries of Gas at Point of Deliveries A, B, and C shall be as
follows unless an early termination is effected in accordance with the
terms of this Agreement
Point of Delivery A: shall commence November 1, 2006 and continue
through October 31, 2012
Point of Delivery B: shall commence January 1, 2007 and continue
through December 31, 2012
Point of Delivery C: shall commence November 1, 2006 and continue
through October 31, 2012
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 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 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
twentieth (20th) 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
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.
5.2. 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
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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.
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 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 (i) Seller providing, for the term
of this Agreement, a parental guaranty to Buyer in the form
attached hereto as Exhibit "B"; and (ii) Buyer providing, prior
to Deliveries of Gas, an acceptable letter of credit for 90 days
of gas deliveries to Seller provided that if Buyer's senior
long-term debt is investment grade, no such letter of credit
shall be required.
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
Day, if the Termination Payment (as such term is defined in
Section 13.5) should exceed $5,000,000 with respect to Buyer and
$12,000,000 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 five Business Days of the date of the request. If such
additional Performance Assurance is not received by the
requesting Party
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within five Business 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, 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 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 all Transactions then
outstanding) 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 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 Moody's
(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 Moody's; (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 any Transaction.
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, (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, (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,
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in which case Seller's cancellation is null and void, and this
Agreement shall remain in full force and effect.
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 (a)
such assignment shall not relieve Buyer of its obligations under
this Agreement absent Seller's written consent and (b) Dow
assumes all obligations of Buyer and meets any credit
requirements of Seller prior to the effective date of such
assignment.
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. 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, directed to the
address of the Parties as provided in Sections 16.1 and 16.2 below or
at such other address as either Party may from time to time specify in
writing to the other Party. Notices, requests, demands, or statements
made by person, telephone, Telecopy, Telex, or wire shall be deemed
given when received; provided however, that if such notices are
received after 5:00 p.m. (recipient's local time), such notice shall
not be effective until the next Business Day.
16.1. TO SELLER:
Invoices: El Paso Merchant Energy Gas, L.P.
Attn: Accounting Department
▇▇ ▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Other Notices: El Paso Merchant Energy Gas, L.P.
Attn: Contract Services
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Wire Transfer: BANK: Mellon Bank, Pittsburgh PA
ACCT: 020-9517
ABA: ▇▇▇-▇▇▇-▇▇▇
16.2. TO BUYER:
Invoices: Midland Cogeneration Venture Limited
Partnership
Attn: Gas Accounting
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Other Notices: Midland Cogeneration Venture Limited
Partnership
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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
16.3. 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
binding 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 (a) qualified by education, knowledge,
and experience to resolve the dispute or controversy and (b)
neutral and disinterested parties. 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.
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
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. In no event shall the arbitrators be authorized to
award punitive, consequential or incidental damages.
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.
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.
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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. Notwithstanding anything to the contrary contained herein,
Buyer's loss of QF Status shall not constitute an event of Force
Majeure. In the event that Buyer cannot perform its obligations to take
gas under this contract due to a loss of QF status, the cover damages
set forth in Section 17 above shall apply. If Buyer's loss of QF status
continues for three month(s), Seller may terminate this Agreement
without liability.
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, 17, and 19) 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 becomes subject to a bankruptcy proceeding,
generally fails to pay its debts when due or makes an
assignment for the benefit of creditors; 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
(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 five
(5) 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.
21.2. 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
for so long as the Event of Default is continuing to (i)
establish a date (which date shall be between
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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 (ii) withhold any payments due, or (iii)
suspend deliveries or receipts, as the case may be, of
Gas in the period prior to such Early Termination Date;
provided however, upon the occurrence of any Event of
Default listed in Section 21, 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 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
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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
(a) any punitive or consequential damages or (b) 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, advisors, 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 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; provided that the Party
requesting protection shall pay the costs of these
efforts.
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
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10
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.
25. Nominations and Recording.
25.1 Each Party consents to the recording of its employees' telephone
conversations without any further notice.
25.2 Either Party shall notify the other Party of its nomination(s),
from time to time, with prior notice of at least twenty-four
(24) hours and/or within the transporter's pipeline's deadline
date for making changes in nominations. Buyer shall be
responsible for compliance with the effective nominations given
within the transporter's pipeline's deadline date for changes.
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 El Paso Merchant Energy Gas, L.P.
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------- ----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President Energy Supply and Marketing Title: Vice President
Page 10
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EXHIBIT A
POINT OF DELIVERY
Point of Delivery A: ANR Southwest Head Station
Point of Delivery B: ANR Southeast Head Station
Point of Delivery C: Consumers Energy Company Citygate
Page 11
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EXHIBIT B
GUARANTY
Guaranty dated effective as of the tenth day of October 2000, by El Paso Energy
Corporation, a Delaware 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 El Paso Merchant Energy Gas, L.P. (hereinafter
referred to as "Debtor") have entered into a certain Long Term Gas Agreement
dated October 10, 2000 (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") up to
an aggregate limit of $12 million U.S. dollars; 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, 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) Termination. This Guaranty is continuing and irrevocable and shall
remain in full force and effect until the earlier of (a) the
termination of the Contract, (b) December 31, 2012, (c) the date on
which all obligations under the Contract have been fulfilled, or (d)
the date on which Guarantor successfully transfers its obligations
hereunder to a permitted transferee according to Section 4 below.
Termination of this Guaranty shall not eliminate Guarantor's liability
for any transactions entered into under the Contract prior to such
termination; however, termination of this Guaranty shall relieve
Guarantor of any obligation or liability occurring after such
termination.
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, which shall not be unreasonably withheld. 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. Creditor shall give notice to Guarantor if it elects to extend
primary term of the Contract. 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
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personally or otherwise actually received or on the tenth (10th) 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:
El Paso Energy Corporation
Attn: Treasury
▇▇▇▇ ▇▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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.
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.
El Paso Energy Corporation
--------------------------
▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
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EXHIBIT C
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of October 10, 2000, made by EL PASO
MERCHANT ENERGY GAS, L.P., a Delaware limited partnership, (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 October 10, 2000, 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 and obligations 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, provided MCV is not in default under the Contract.
(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 5 business days (or such longer period, not to exceed 30 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. It is understood that, except for the right to
terminate the Contract, the undersigned may exercise any right or remedy
available under the Contract during this cure period, including but not limited
to suspension of deliveries and recourse to financial security or offset.
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(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 and obligations of MCV under
such Contract, and the undersigned will comply in all respects with such
exercise by such Person, provided that the Condition Precedent in Section 2(a)
above is met.
(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
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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, material 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.
El Paso Merchant Energy Gas, L.P.
By: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Title: Vice President
-----------------------------------
Seen and Agreed to this
16 Day of October , 2000.
MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP, as
Lessee
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Page 16
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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.
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
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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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First Amendment to Long Term Gas Agreement
between El Paso Merchant Energy-Gas, L.P.
and Midland Cogeneration Venture Limited Partnership
dated October 10, 2000 ("Agreement")
This Amendment made and entered into effective this first day of December 2000
by and between El Paso Merchant Energy-Gas, L.P. ("Seller") and Midland
Cogeneration Venture Limited Partnership ("MCV" or "Buyer").
WITNESSETH:
WHEREAS, Seller and Buyer have heretofore entered into the Agreement
and now desire to amend certain terms, conditions, and provisions contained
therein as hereafter set forth.
Now, therefore, Seller and Buyer mutually agree as follows:
1. Article 1 of the Agreement shall have the following section 1.18 added:
1.18 "NYMEX" shall mean the New York Mercantile Exchange ▇▇▇▇▇ Hub
natural gas futures contract traded on the New York Mercantile
Exchange.
2. Article 2 of the Agreement shall be deleted in its entirety and shall
be replaced with the following:
2. Quantity. Seller agrees to deliver and sell and MCV agrees to
receive and purchase the following volumes at the specific Point
of Deliveries in accordance with the terms and conditions of
this Agreement:
10,000 MMBtu /Day, on a firm basis, at Point of Delivery A
16,000 MMBtu/Day, on a firm basis, at Point of Delivery B
10,000 MMBtu/Day, on a firm basis, at Point of Delivery C for
the price given in amended Article 3 below and for the
term T1 given in amended Article 4 below.
5,000 MMBtu/Day, on a firm basis, at Point of Delivery C for
the price given in amended Article 3 below and for the
term T2 given in amended Article 4 below.
5,000 MMBtu/Day, on a firm basis, at Point of Delivery C for
the price given in amended Article 3 below and for the
term T3 given in amended Article 4 below.
3. Article 3.1 of the Agreement shall be deleted in its entirety and shall
be replaced with the following:
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:
$3.78 per MMBtu for all Gas delivered to the Point of Delivery A
$3.825 per MMBtu for all Gas delivered to the Point of Delivery
B
$4.10 per MMBtu for all Gas delivered to the Point of Delivery C
for the term T1 listed in amended Article 4 given below.
$0.21 per MMBtu plus the last day of the NYMEX settle for the
prompt month for all Gas delivered to the point of Delivery C
for the terms T2 and T3 given in amended Article 4 below.
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4. Article 4 of the Agreement shall be deleted in its entirety and shall
be replaced with the following:
4. Term. Deliveries of Gas at Point of Deliveries A, B, and C
shall be as follows unless an early termination is effected in
accordance with the terms of this Agreement.
Point of Delivery A: shall commence November 1, 2006 and
continue through October 31, 2012
Point of Delivery B: shall commence January 1, 2007 and continue
through December 31, 2012
Point of Delivery C: shall commence November 1, 2006 and
continue through October 31, 2012, term T1
Point of Delivery C: shall commence November 1, 2005 and
continue through October 31, 2009, term T2
Point of Delivery C: shall commence November 1, 2006 and
continue through October 31, 2009, term T3
5. All other terms and conditions of the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, this Amendment is executed in multiple originals effective
as of the day and year first hereinabove written.
Midland Cogeneration Venture Limited Partnership
El Paso Merchant
Energy-Gas, L.P.
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------------- -------------------
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President Energy Supply and Marketing Title: Vice President
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