EXHIBIT 10.79
SETTLEMENT AGREEMENT
This Settlement Agreement is made and entered into as of November 11,
2002, by and among the Governor of the State of California, acting on behalf of
the agencies, departments, subdivisions, boards, and commissions of the
executive branch of the State of California, including without limitation the
California Department of Water Resources; the California Electricity Oversight
Board; the California Public Utilities Commission; the People of the State of
California, by and through the Attorney General; the City and County of San
Francisco and the City of Oakland; the County of Santa ▇▇▇▇▇; the County of
Contra Costa; Valley Center Municipal Water District; Padre Dam Municipal Water
District; ▇▇▇▇▇▇ Municipal Water District; Helix Water District; Vista
Irrigation District; Yuima Municipal Water District; Fallbrook Public Utility
District and ▇▇▇▇▇▇▇ Water District; The Metropolitan Transit Development Board;
San Diego Trolley, Inc.; San Diego Transit Corporation; Sweetwater Authority;
California Lieutenant Governor ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; California Assemblywoman ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇; classes consisting of all persons or entities in California who
indirectly purchased Electric Power for purposes other than resale or
distribution since January 1, 1998, represented by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and Oscar's Photo Lab; the Attorneys General of
Washington and Oregon as chief law enforcement officers of their respective
states; The ▇▇▇▇▇▇▇▇ Companies, Inc.; and ▇▇▇▇▇▇▇▇ Energy Marketing & Trading
Company.
1. DEFINITIONS.
The following terms with initial capital letters, which are in addition
to other terms with initial capital letters defined in the body of this
Settlement Agreement or by the context in which they appear in this Settlement
Agreement, have the following meanings when used in this Settlement Agreement:
1.1 "AB1X" means Assembly ▇▇▇▇ 1 of the 2001-02 First
Extraordinary Session, which amended the California Water Code by adding
Division 27, authorizing the CDWR to, among other things, enter into contracts
with energy suppliers.
1.2 "AES" means any one or more of AES Corporation; AES Southland
L.L.C., a Delaware limited liability company, AES Alamitos, L.L.C., a limited
liability company organized and existing under the laws of the State of
Delaware, AES Huntington Beach, L.L.C., a limited liability company organized
and existing under the laws of the State of Delaware, and AES Redondo Beach,
L.L.C., a limited liability company organized and existing under the laws of the
State of Delaware.
1.3 "AES Contract" means that certain Capacity Sale and Tolling
Agreement (together with all ancillary agreements) dated May 1, 1998, as amended
May 15, 1998, by and among AES and ▇▇▇▇▇▇▇▇.
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1.4 "AG" means the Attorney General of California; the People of
the State of California, by and through the Attorney General ▇▇▇▇ ▇▇▇▇▇▇▇.
1.5 "All Releasing Parties" means the California State Releasing
Parties, the California Cities, Counties and Political Subdivisions, California
Water Districts, ▇▇▇▇▇▇▇▇▇▇, the Northwest AGs, the Private Parties, Unnamed
California Cities, Counties and Political Subdivisions, ▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇
Companies.
1.6 This paragraph has been intentionally left blank.
1.7 "▇▇▇▇ of Sale" means, collectively, the ▇▇▇▇ of Sale,
Assignment and Assumption Agreement(s) providing for transfer and assignment of
the Property to the AG or his designee(s) required to be delivered by Paragraph
3.2(b) of this Settlement Agreement.
1.8 "Business Day" means any day other than a Saturday, Sunday, or
legal holiday in the State of California in which state government is not
generally open for business to the public.
1.9 "▇▇▇▇▇▇▇▇▇▇" means Lieutenant Governor ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and
California Assemblywoman ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
1.10 "CAISO" means the California Independent System Operator
Corporation.
1.11 "California Cities and Counties" means the County of Santa
▇▇▇▇▇, the County of Contra Costa, the City of Oakland and the City and County
of San Francisco.
1.12 "California Executive" means the Governor of the State of
California, acting on behalf of the agencies, departments, subdivisions, boards,
and commissions of the executive branch of the State of California, including,
without limitation, CDWR. California Executive shall not include the CPUC or any
other body created by the California Constitution.
1.13 "California State Releasing Parties" means California
Executive, the CDWR, the CPUC, the CEOB, and the AG.
1.14 "California Water Districts" means Valley Center Municipal
Water District, Padre Dam Municipal Water District, ▇▇▇▇▇▇ Municipal Water
District, Helix Water District, Vista Irrigation District, Yuima Municipal Water
District, Fallbrook Public Utility District, ▇▇▇▇▇▇▇ Water District, and
Sweetwater Authority.
1.15 "Cal PX" means the California Power Exchange.
1.16 "Cash Consideration" means $150,000,000, payable to the AG or
its designee(s) as follows: (a) $42,000,000 payable on or before the Closing
Date; (b) $30,000,000 payable on January 1, 2004; (c) $15,000,000 payable on
January 1, 2005; (d) $15,000,000 payable on January 1, 2007; (e) $15,000,000
payable on January 1, 2008; (f) $15,000,000 payable on January 1, 2009; and (g)
$15,000,000 payable on January 1, 2010, subject, however, to the provisions of
Paragraphs 4.8(a), 4.8(b), and 4.8(c) hereof. The payments described in clauses
(b), (c) and (d) shall be referred to collectively as the "Tranche A Payments,"
and the payments described in clauses (e), (f) and (g) shall be referred to
collectively as the "Tranche B Payments."
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1.17 "CDWR" means the State of California Department of Water
Resources, including without limitation, the California Energy Resources
Scheduling Division.
1.18 "Class" means a class or classes consisting of persons or
entities in California who indirectly purchased Electric Power for purposes
other than resale or distribution since January 1, 1998.
1.19 "CEOB" means the California Electricity Oversight Board.
1.20 "Civil Actions" mean ▇▇▇▇▇▇ ▇. Reliant Energy, Inc., et al.,
Case No. GIC 758487 (San Diego Super. Ct.), ▇▇▇▇▇▇▇▇▇ v. Dynegy Power Marketing,
Inc., et al, Case No. GIC 758565 (San Diego Super. Ct.) and Pier 23 Restaurant
and Oscar's Photo Lab v. PG&E Energy Trading, et al., Case No. 308120 (San
Francisco Super. Ct.).
1.21 "Civil Plaintiffs' Counsel" means the counsel of record for
plaintiffs in the Civil Actions.
1.22 "Closing Date" has the meaning given to it in Paragraph 3.1 of
this Settlement Agreement.
1.23 "Court" shall have the meaning given to it in Paragraph 3.3 of
this Settlement Agreement.
1.24 "CPUC" means the California Public Utilities Commission.
1.25 "Credit Document(s)" means, any of the following documents
delivered pursuant to this Settlement Agreement:
a. Letter(s) of Credit,
b. Cash held by the AG (or a third party for the benefit of the
AG pursuant to the terms of a Deposit Account Control Agreement
satisfactory in form and substance to the AG or such other agreement as
may be necessary to perfect the AG's interests therein) as security for
all or part of the Cash Consideration,
c. Credit Default Swap(s) designating the AG (or such other party
as may be designated in writing by the AG) as the fixed rate payor
meeting the criteria set forth in Schedule 1.25 and Paragraph 4.8(e) of
this Settlement Agreement and otherwise satisfactory in form and
substance to the AG, or
d. Documents evidencing such other security for all or part of
the Cash Consideration as the AG may agree in writing to accept.
1.26 "Electric Power" means electric energy and related products,
including capacity and ancillary services such as regulation, spinning reserve,
non-spinning reserve and replacement reserve.
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1.27 "Event of Default" has the meaning given to it in Paragraph
4.8(a) of this Settlement Agreement.
1.28 "Fee and Expense Fund" shall have the meaning given to it in
Paragraph 4.18 of this Settlement Agreement.
1.29 "FERC" means the Federal Energy Regulatory Commission.
1.30 "Gas" means any natural gas or natural gas-related product or
service.
1.31 "Gas Contract" means the NAESB Base Contract to be executed
and delivered by ▇▇▇▇▇▇▇▇ to CDWR pursuant to the terms of Paragraph 3.2(c) of
this Settlement Agreement.
1.32 "GE Agreement" means that certain Agreement dated October 18,
2001, by and between GE Packaged Power, Inc., as seller, and State Street Bank
and Trust Company of Connecticut, National Association, not in its individual
capacity but solely as Owner Trustee under that certain trust established under
the laws of the State of Connecticut pursuant to a Trust Agreement dated
December 5, 2000, between State Street Bank and Trust Company of Connecticut,
National Association, and Newcourt Capital U.S.A., Inc., as buyer, relating to
the Property.
1.33 "Just and Reasonable" has the meaning ascribed to it in
Sections 205 and 206 of the Federal Power Act, 16 U.S.C. Sections 824d and 824e
and/or Sections 4 and 5 of the Natural Gas Act 15 U.S.C. Sections 717c and 717d.
1.34 "Letter of Credit" means a standby letter of credit
satisfactory to the AG that (a) permits the AG to draw on the Letter of Credit
for the full amount stated therein upon any Event of Default, (b) is issued by
Bank of America, or another financial institution acceptable to the AG in the
AG's reasonable discretion, and (c) permits the AG to draw on the Letter of
Credit for the full amount stated therein (but only to the extent of outstanding
obligations secured thereby) if a substitute Letter of Credit issued by Bank of
America, or another financial institution acceptable to the AG in the AG's
reasonable discretion, (which shall equal the Cash Consideration obligation
outstanding that is secured by such Letter of Credit), in substantially the same
form as the Letter of Credit delivered to the AG on the Closing Date, or other
Security Documents fully securing the outstanding obligation secured by the
Letter of Credit being replaced, is not issued in favor of the AG on or before
sixty (60) days prior to the expiration date stated in the Letter of Credit.
1.35 "Litigation Claims" has the meaning given to it in Paragraph
2.19 of this Settlement Agreement.
1.36 "Northwest AGs" means the Attorneys General of Washington and
Oregon as chief law enforcement officers of their respective states.
1.37 "Notice Order" has the meaning given to it in Paragraph 3.3 of
this Agreement.
1.38 "Original Contracts" means that certain Master Power Purchase
and Sale Agreement (together with any exhibits, schedules, confirmation letters
and any written
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supplements thereto) dated as of February 16, 2001, between ▇▇▇▇▇▇▇▇ and CDWR,
and the Amended and Restated Confirmation Letter dated February 21, 2001
(together with any exhibits, schedules, confirmation letters and any written
supplements thereto).
1.39 "Owner Trustee" means State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity but solely as
Owner Trustee under that certain trust established under the laws of the State
of Connecticut pursuant to a Trust Agreement dated December 5, 2000, between
State Street Bank and Trust Company of Connecticut, National Association, and
Newcourt Capital U.S.A., Inc.
1.40 "Paragraph" means a numbered paragraph of this Settlement
Agreement, unless otherwise noted, and all references to a Paragraph shall
include all subparts or subparagraphs of that Paragraph.
1.41 "Parties" means the persons and entities listed in the first
Paragraph of this Settlement Agreement, collectively, and their successors and
assigns. Each of the Parties may be individually referred to herein as a
"Party."
1.42 "Phase I Execution Date" has the meaning given to it in
Paragraph 3.1 of this Settlement Agreement.
1.43 "Phase II Parties" has the meaning given to it in Paragraph
3.1 of this Settlement Agreement.
1.44 "Private Parties" means the named plaintiffs individually and
in their respective representative capacities in each of the Civil Actions, the
Class, the Metropolitan Transit Development Board, San Diego Trolley, Inc., the
▇▇▇▇▇▇▇▇▇▇ Civil Action, the Water District Action, and San Diego Transit
Corporation.
1.45 "Property" means the six (6) LM 6000 Gas Turbine Generator
Sets described in the GE Agreement and all rights of the Owner Trustee under the
GE Agreement relating thereto.
1.46 "Rate Agreement" has the meaning given to it in Paragraph 2.8
of this Settlement Agreement.
1.47 "Released Claims" means any and all of the claims set forth
and described in Paragraphs 4.1, 4.2, 4.3, 4.4, and 4.5.
1.48 "Renegotiated Contracts" means, collectively, the following
agreements to be executed and delivered by ▇▇▇▇▇▇▇▇ and CDWR pursuant to the
terms of Paragraph 3.2(a) of this Settlement Agreement, together with any
exhibits, schedules, confirmation letters and any written supplements thereto:
(a) Product A, B, C Master Agreement (including the Product A, B, C
Confirmation); and (b) Product D Master Agreement (including the Product D
Confirmation).
1.49 "Settlement Agreement" means this document.
1.50 "Tranche A Payments" mean the payments described in Paragraphs
1.16 (b), (c) and (d) of this Settlement Agreement.
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1.51 "Tranche B Payments" means the payments described in
Paragraphs 1.16 (e), (f) and (g) of this Settlement Agreement.
1.52 "Unnamed California Cities, Counties and Political
Subdivisions" means each of the cities, counties and political subdivisions and
districts of the State of California not otherwise identified as parties to this
Settlement Agreement to the fullest extent of the authority of the Attorney
General of the State of California to release such claims herein.
1.53 "Water District Action" shall have the meaning described in
Paragraph 2.4.
1.54 "Wholesale Electricity Antitrust Cases I & II" means the
▇▇▇▇▇▇ Class Action (described herein in Paragraph 2.2), ▇▇▇▇▇▇▇▇▇ Class Action
(described herein in Paragraph 2.3), Water District Action (described in
Paragraph 2.4), Cities and Counties' Action (described herein in Paragraph 2.5),
Pier 23 Class Action (described herein in Paragraph 2.6), and ▇▇▇▇▇▇▇▇▇▇
Complaint (described herein in Paragraph 2.9) that were coordinated under the
caption Wholesale Electricity Antitrust Cases I & II, Judicial Council
Coordination Proceeding Nos. 4202-00005 and 4202-00006.
1.55 "▇▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇▇ Energy Marketing & Trading Company,
a Delaware corporation, formerly known as ▇▇▇▇▇▇▇▇ Energy Services Company,
which is an indirectly wholly-owned subsidiary of the ▇▇▇▇▇▇▇▇ Companies and the
signatory on the Original Contract and Renegotiated Contracts.
1.56 "▇▇▇▇▇▇▇▇ Companies" means The ▇▇▇▇▇▇▇▇ Companies, Inc., a
Delaware corporation which is the parent of ▇▇▇▇▇▇▇▇ (exclusive of any
subsidiary or affiliates as to the releases provided herein). As to the releases
with respect to Gas herein, such releases extend only to conduct by ▇▇▇▇▇▇▇▇
imputed to the ▇▇▇▇▇▇▇▇ Companies.
1.57 "▇▇▇▇▇▇▇▇ Companies Guaranty" means a guaranty from ▇▇▇▇▇▇▇▇
Companies in the form attached hereto as Schedule 1.57.
2. RECITALS.
2.1 On August 2, 2000, San Diego Gas & Electric Company filed a
Section ▇▇▇ ▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇ ▇▇. ▇▇▇▇-▇▇-▇▇▇, et al.) at the FERC, which
complaint was consolidated with complaints filed by other persons or entities,
including the CEOB (Docket No. EL00-104-000), alleging, among other things, that
the energy markets in California operated by the Cal PX and CAISO resulted in
prices paid for electric energy and energy-related products that were not Just
and Reasonable (the "Refund Proceeding"). The Refund Proceeding could result in
an obligation on the part of ▇▇▇▇▇▇▇▇ to issue refunds for a portion of sums
received for the sale of Electric Power in California.
2.2 On November 27, 2000, Class Representative ▇▇▇▇▇▇ ▇▇▇▇▇▇ filed
a class action complaint against ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies in the
California State Court in San Diego County (▇▇▇▇▇▇ ▇. Reliant Energy, Inc., et
al., Case No. GIC 758487), alleging that ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies had
engaged in unfair competition and committed antitrust violations in the
California wholesale Electric Power markets (the "▇▇▇▇▇▇ Civil
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Action"). The ▇▇▇▇▇▇ Civil Action seeks (a) monetary damages, (b) injunctive
relief, and (c) for ▇▇▇▇▇▇▇▇ to pay restitution and disgorgement of to the Class
and the general public. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any
of the Litigation Claims including the claims asserted in these proceedings.
2.3 On November 29, 2000, Class Representative ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
filed a class action complaint against ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies in
the California State Court in San Diego County (▇▇▇▇▇▇▇▇▇ v. Dynegy Power
Marketing, Inc., et al, Case No. GIC 758565), alleging that ▇▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇▇ Companies had engaged in unfair competition and committed antitrust
violations in the California wholesale Electric Power markets (the "▇▇▇▇▇▇▇▇▇
Civil Action"). The ▇▇▇▇▇▇▇▇▇ Civil Action seeks (a) monetary damages, (b)
injunctive relief, and (c) for ▇▇▇▇▇▇▇▇ to pay restitution and disgorgement of
profits to the Class and the general public. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies
deny liability for any of the Litigation Claims including the claims asserted in
these proceedings.
2.4 On January 16, 2001, Sweetwater Authority, Valley Center
Municipal Water District and Padre Dam Municipal Water District filed a
complaint against ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies in the California State
Court in San Diego County (Sweetwater Authority, et al. v. Dynegy, Inc. et al.,
Case No. GIC 760743), alleging that ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies had
engaged in unfair competition and committed antitrust violations in the
California wholesale Electric Power markets (the "Water District Action").
▇▇▇▇▇▇ Municipal Water District; Helix Water District; Vista Irrigation
District; Yuima Municipal Water District; Fallbrook Public Utility District;
▇▇▇▇▇▇▇ Water District; Metropolitan Transit Development Board; San Diego
Trolley, Inc; San Diego Transit Corporation later joined as plaintiffs in the
Water District Complaint. The Water District Action seeks (a) monetary damages,
(b) injunctive relief, and (c) for ▇▇▇▇▇▇▇▇ to pay restitution and disgorgement
of profits. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any of the
Litigation Claims including the claims asserted in these proceedings.
2.5 On January 18, 2001, the City and County of San Francisco
filed a complaint against ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies on behalf of the
People of the State of California, in the California State Court in San
Francisco County (People v. Dynegy Power Marketing, Inc., et al., Case No.
318189), alleging that ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies had engaged in unfair
competition and committed antitrust violations in the California wholesale
Electric Power markets (the "Cities' and Counties' Action"). The City of
Oakland, Santa ▇▇▇▇▇ County, and Contra Costa County later joined as plaintiffs
in the Cities' and Counties' Action. The Cities' and Counties' Action seeks (a)
monetary damages, (b) injunctive relief, (c) for ▇▇▇▇▇▇▇▇ to pay restitution and
disgorgement of profits, and (d) civil penalties. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
Companies deny liability for any of the Litigation Claims including the claims
asserted in these proceedings.
2.6 On January 24, 2001, Class Representative Pier 23 Restaurant
filed a class action complaint against ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies in
the California State Court in San Francisco County (Pier 23 Restaurant and
Oscar's Photo Lab v. PG&E Energy Trading, et al., Case No. 308120), alleging
that ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies had engaged in unfair competition in
the California wholesale Electric Power markets (the "Pier 23 Civil Action").
Oscar's Photo Lab and ▇▇▇▇ ▇. ▇▇▇▇▇ later joined as plaintiffs in the Pier 23
Civil Action, and
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Pier 23 Restaurant later withdrew from the litigation. The Pier 23 Civil Action
seeks (a) monetary damages, (b) injunctive relief, and (c) for ▇▇▇▇▇▇▇▇ to pay
restitution and disgorgement of profits to the Class and the general public.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any of the Litigation Claims
including the claims asserted in these proceedings.
2.7 On February 16 and 21, 2001, the CDWR and ▇▇▇▇▇▇▇▇ entered
into the Original Contracts.
2.8 On February 21, 2002, pursuant to AB1X, the CDWR and the CPUC
executed a duly authorized Rate Agreement (the "Rate Agreement") providing for
the recovery by CDWR of its revenue requirements. The Rate Agreement, among
other things, facilitates CDWR's payment of suppliers of Electric Power such as
▇▇▇▇▇▇▇▇. The CPUC issued D.▇▇-▇▇-▇▇▇ on February 21, 2002, finding the Rate
Agreement to be in the public interest and adopted it.
2.9 On May 2, 2001, Lieutenant Governor ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and
California Assemblywoman ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ filed a complaint against ▇▇▇▇▇▇▇▇ and
the ▇▇▇▇▇▇▇▇ Companies and certain of their officers and directors in the
California State Court in Los Angeles County (▇▇▇▇▇▇▇▇▇▇ v. Dynegy, Inc., et
al., Case No. BC 249705), alleging that ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies had
engaged in unfair competition and committed antitrust violations in the
California wholesale Electric Power markets (the "▇▇▇▇▇▇▇▇▇▇ Civil Action"). The
▇▇▇▇▇▇▇▇▇▇ Civil Action seeks (a) monetary damages, (b) injunctive relief, and
(c) for ▇▇▇▇▇▇▇▇ to pay restitution and disgorgement of profits. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ Companies deny liability for any of the Litigation Claims including the
claims asserted in these proceedings.
2.10 On February 25, 2002, and on February 26, 2002, the CPUC and
the CEOB, respectively, filed separate complaints in Docket Nos. EL02-60-000 and
EL02-62-000 under Section 206 of the Federal Power Act at the FERC alleging,
among other things, that the terms and the rates under the Original Contracts
are not Just and Reasonable or consistent with the public interest (the "CPUC
Complaint" and the "CEOB Complaint," respectively). As to ▇▇▇▇▇▇▇▇, the CPUC and
CEOB Complaints seek rescission or, in the alternative, reformation of the
Original Contracts. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any of
the Litigation Claims including the claims asserted in these proceedings.
2.11 On March 8, 2002, after the ▇▇▇▇▇▇ Civil Action, the ▇▇▇▇▇▇▇▇▇
Civil Action, the Cities' and Counties' Action, the Water District Action, the
Pier 23 Civil Action and the ▇▇▇▇▇▇▇▇▇▇ Action had been coordinated before a
single trial judge in Wholesale Electricity Antitrust Cases I & II, the
plaintiffs in these actions filed a single Master Complaint.
2.12 On March 11, 2002, the People of the State of California, by
and through Attorney General ▇▇▇▇ ▇▇▇▇▇▇▇, filed a complaint against ▇▇▇▇▇▇▇▇
and the ▇▇▇▇▇▇▇▇ Companies in the California State Court in ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇-▇▇▇▇▇▇, alleging that ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies
had engaged from 1998 to the present in unfair competition in the California
ancillary services Electric Power markets (the "AG Unfair Competition
Complaint"). The AG unfair Competition Complaint seeks (a) injunctive relief
against ▇▇▇▇▇▇▇▇, (b) restitution, (c) disgorgement of profits, and (d) civil
penalties. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any of the
Litigation Claims including the claims asserted in these proceedings.
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2.13 On March 20, 2002, the People of the State of California, by
and through Attorney General ▇▇▇▇ ▇▇▇▇▇▇▇, filed a complaint at FERC in Docket
No. EL02-71-000 under Sections 205 and 206 of the Federal Power Act alleging,
among other things, that public utility sellers which had made sales to CDWR,
Cal PX, and the CAISO were in violation of certain reporting and filing
requirements (the "AG 206 Complaint"). The AG 206 Complaint, if successful,
could result in refund obligations on the part of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ Companies deny liability for any of the Litigation Claims including the
claims asserted in these proceedings.
2.14 Beginning in late 2000 and continuing through 2002, the People
of the State of California, by and through Attorney General ▇▇▇▇ ▇▇▇▇▇▇▇, served
various sets of subpoenas and interrogatories (the "AG subpoenas") on ▇▇▇▇▇▇▇▇
pursuant to its investigation In the Matter of the Investigation of Possible
Unlawful, Unfair or Anti-Competitive Behavior Affecting Electricity Prices in
California (as further described in Section 2.15, the "AG Investigation").
2.15 The AG Investigation includes an inquiry into facts relating
to ▇▇▇▇▇▇▇▇' and ▇▇▇▇▇▇▇▇ Companies' participation in the California Gas and
Electric Power markets from 1998 to the present. The AG Investigation includes
the following: any alleged conspiracy between ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies and
other market participants in the Electric Power or Gas markets; the AES
Contract; the acquisition and holding of the generation facilities which are the
subject of the AES Contract; the exercise of market power and restraint of trade
issues relating to the AES Contract and the relationship between AES and
▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies; the exercise of market power by ▇▇▇▇▇▇▇▇ in
the Electric Power or Gas markets; the alleged misconduct concerning outages of
AES generation facilities including without limitation outages in April and May
2000; the alleged physical or economic withholding of Electric Power or Gas; the
alleged manipulation of supply or prices of Electric Power or Gas; improper or
unlawful trading activities relating to Electric Power or Gas; and alleged
"cornering" of the Gas market. To date, the AG subpoenas and Investigation have
resulted in production by ▇▇▇▇▇▇▇▇ of hundreds of thousands of documents. If the
case were not closed the continuing administrative burden and cost to ▇▇▇▇▇▇▇▇
would be much greater. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny wrongdoing in
connection with any of the matters under investigation by the AG.
2.16 On April 9, 2002, the People of the State of California, by
and through Attorney General ▇▇▇▇ ▇▇▇▇▇▇▇, filed a complaint against ▇▇▇▇▇▇▇▇ in
the California State Court in ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇-▇▇-▇▇▇▇▇▇,
alleging that ▇▇▇▇▇▇▇▇ engaged in unjust and illegal overcharges and price
gouging during the California energy crisis ("the AG Profiteering Complaint.").
If successful, the AG Profiteering Complaint could result in civil penalties
against ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any of the
Litigation Claims including the claims asserted in these proceedings.
2.17 On April 11, 2002, as part of the AG Investigation, the People
of the State of California, by and through Attorney General ▇▇▇▇ ▇▇▇▇▇▇▇,
provided ▇▇▇▇▇▇▇▇ with a draft complaint it intended to file in the United
States District Court for the Northern District of California against ▇▇▇▇▇▇▇▇,
the ▇▇▇▇▇▇▇▇ Companies, and AES for allegedly illegal acquisitions and/or
holdings and/or control of assets or rights related to such assets, under
section 7 of the ▇▇▇▇▇▇▇ Act, 15 U.S.C. ss. 18, and California Business and
Professions Code section 17200, seeking an injunction and other equitable and
ancillary relief, divestiture, damages and restitution
9
("▇▇▇▇▇▇▇ Act Complaint"). The ▇▇▇▇▇▇▇ Act Complaint alleged wrongful conduct,
including without limitation withholding capacity, decreasing competition and/or
raising prices, relating to the acquisition and continued holding of the
generation facilities governed by the AES Contract from 1998 to the present (the
"▇▇ ▇▇▇▇▇▇▇ Act Investigation"). ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability
for any of the Litigation Claims including the claims asserted in the ▇▇▇▇▇▇▇
Act Complaint.
2.18 Beginning in late 2000 and continuing through 2002, the
Attorneys General of Washington and Oregon have conducted an investigation into
facts relating to ▇▇▇▇▇▇▇▇' and ▇▇▇▇▇▇▇▇ Companies' participation in the Oregon
and Washington electricity and gas markets from 1998 to the present (the
"Northwest AGs Investigations"). The Northwest AGs worked cooperatively with the
AG in sharing documents and information related to ▇▇▇▇▇▇▇▇ and other companies.
The Northwest AGs have asserted that ▇▇▇▇▇▇▇▇ may be subject to civil liability,
including civil penalties and/or restitution, as a result of potential illegal
activity. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies deny liability for any of the
Litigation Claims including the claims asserted in the Northwest AG's
Investigations.
2.19 The Refund Proceeding, CPUC Complaint, CEOB Complaint, AG
Unfair Competition Complaint, AG 206 Complaint, AG subpoenas, AG Investigation,
AG Profiteering Complaint, Cities' and Counties' Action, Water District Action,
▇▇▇▇▇▇▇▇▇▇ Action, Northwest AGs Investigations, Civil Actions, ▇▇▇▇▇▇▇ Act
Complaint, and ▇▇ ▇▇▇▇▇▇▇ Act Investigation (collectively, the "Litigation
Claims") have resulted in significant legal and other expenses and present risks
and uncertainties for all Parties, including, without limitation, the risk of
one or more unfavorable judgments in the Litigations Claims.
2.20 Recognizing the mutual benefits of buying peace by reaching a
settlement related to the Electric Power and Gas Markets, representatives of
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, and the California State Releasing Parties
initiated discussions in the winter of 2001-02 to determine whether a resolution
was achievable. Subsequently, the parties to the Litigation Claims joined in the
settlement discussions.
2.21 After extensive negotiations, the Parties reached the terms of
this Settlement Agreement, which provides that in exchange for the releases
described in this Settlement Agreement, ▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇ Companies will,
among other things, enter into the Renegotiated Contracts and Gas Contract, pay
the Cash Consideration, transfer six combustion turbines to the AG or his
designee(s), and cooperate with the AG, the Northwest AGs and the Private
Parties, California Cities and Counties, and California Water Districts as
provided herein.
2.22 The Parties desire to resolve certain matters and to avoid any
future claims relating to them, including issues relating to the effectiveness,
enforceability, validity or justness and reasonableness of the Renegotiated
Contracts and the Gas Contract, by way of compromise rather than by litigation.
The Parties have agreed to resolve such matters and to ensure the ongoing
effectiveness and validity of the Renegotiated Contracts and the Gas Contract on
the terms and conditions set forth in this Settlement Agreement.
10
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed between and
among the Parties as follows:
3. CLOSING.
3.1 Execution of the transactions contemplated by this Settlement
Agreement by CDWR, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, the AG, the CPUC and the CEOB
("Phase I Execution")shall take place at such place on such date and in such
manner (e.g., in person, by facsimile or by overnight mail) as such parties (the
"Phase I Parties") may mutually agree (the "Phase I Execution Date"), but in no
event shall the Phase I Execution Date be more than four (4) days following
satisfaction of the conditions precedent set forth below in Paragraph 3.6(a)
unless otherwise agreed to in writing by the Phase I Parties. Following the
Phase I Execution, the consummation of the transactions contemplated by this
Settlement Agreement shall be deemed to have occurred on December 31, 2002 (the
"Closing Date") provided the conditions set forth in Paragraph 3.6(b) have been
satisfied or waived. This Settlement Agreement shall also be executed by the
California Cities and Counties, the California Water Districts, the Northwest
AGs, and the Private Parties (collectively, the "Phase II Parties") on or before
the Closing Date; provided however, that any of the California Cities, Counties
and Political Subdivisions may execute this Settlement Agreement after the
Closing Date and such Party shall thereafter be bound by the terms and
conditions herein as of the date of said execution. Notwithstanding any other
provision contained in this Settlement Agreement, the failure of any Party,
other than a Phase I Party, to execute this Settlement Agreement on or before
the Closing Date shall not invalidate this Settlement Agreement or nullify any
provision hereof except that, as between such Party and any other Party hereto,
this Settlement Agreement and any provision hereof shall be invalid and of no
force or effect; provided, however, that if any of the Private Parties fail to
execute the Agreement and the Class is not certified and the settlement is not
finally approved, then the Agreement shall terminate as to the Private Parties
at ▇▇▇▇▇▇▇▇ exclusive option.
3.2 Phase I Execution Date, Closing:
a. The following actions shall take place on or prior to the
Phase I Execution Date:
(i) Renegotiated Contracts. CDWR and ▇▇▇▇▇▇▇▇ shall
execute and deliver an original copy of the Renegotiated Contracts, the
form of which shall be the same or substantially similar to the
documents attached hereto and made a part hereof as Schedule 3.2(a)(i),
to each other and to the CPUC, CEOB, and the AG.
(ii) ▇▇▇▇▇▇▇▇ Companies Guaranty. The ▇▇▇▇▇▇▇▇ Companies
shall execute and deliver to the AG the ▇▇▇▇▇▇▇▇ Companies Guaranty.
(iii) Gas Contract. CDWR and ▇▇▇▇▇▇▇▇ shall execute and
deliver an original copy of the Gas Contract, the form of which shall
be the same or substantially similar to the document attached hereto
and made a part hereof as Schedule 3.2(a)(iii), to each other and to
the CPUC, CEOB, and the AG.
11
b. Subject to the satisfaction of the Closing conditions
precedent described below, the following actions shall take place on or by the
Closing Date:
(i) Credit Documents. ▇▇▇▇▇▇▇▇ shall deliver Credit
Document(s) in support of the Tranche A payments. Such Credit Documents
shall include a Letter of Credit in an amount of not less than
$45,000,000 with an expiration date not earlier than July, 2003,
provided Credit Documents delivered before the Closing date shall not
be effective until the Closing date.
(ii) ▇▇▇▇ of Sale. Owner Trustee shall execute and deliver
one or more Bills of Sale, the form of which shall be the same or
substantially similar to the document attached hereto and made a part
hereof as Schedule 3.2(b), to transfer and assign the Property to the
AG or its designee(s). Any transfer or assignment of Property pursuant
to the preceding sentence shall not be effective until the Closing
Date.
(iii) ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies shall (i) make the
first payment as described in Paragraph 1.16(a) and shall pay such
remaining amounts of the Tranche A Payments as have not been subject to
credit support pursuant to Section 3.2(b)(i).
(iv) Consents. ▇▇▇▇▇▇▇▇ shall deliver a written document,
satisfactory in form and substance to the AG, executed by GE Packaged
Power, Inc. affirming that the warranties on the Property will not
expire until 24 months following the dates specified in Schedule
3.2(b)(iv).
3.3 Private Parties' Provisions:
a. No later than five (5) business days after the Closing Date,
Civil Plaintiffs' Counsel shall submit this Settlement Agreement together with
its schedules to the court in which the Wholesale Electricity Antitrust Cases I
& II are pending on the date of submission (the "Court") and shall apply for
entry of an order (the "Notice Order"), to be agreed to by ▇▇▇▇▇▇▇▇ and Civil
Plaintiffs' Counsel. The Notice Order will request, inter alia:
(i) Certification of the Class for settlement purposes
only;
(ii) Preliminary approval of the settlement set forth in
the Settlement Agreement; and
(iii) Approval of the dissemination of a settlement notice
or notices, in a form to be agreed to by ▇▇▇▇▇▇▇▇ and Civil Plaintiffs'
Counsel, which shall set forth the general terms of the settlement set
forth in the Settlement Agreement and the date of the Settlement
Hearing as defined below. ▇▇▇▇▇▇▇▇ and Civil Plaintiffs' Counsel shall
propose to the Court that notice be provided by such methods as are
agreed to between ▇▇▇▇▇▇▇▇ and Civil Plaintiffs' Counsel.
b. The Private Parties and ▇▇▇▇▇▇▇▇ shall be responsible for
paying the costs of notice to the Class as follows:
12
(i) Civil Plaintiffs' Counsel shall pay the costs of
notice in the form ordered by the Court not to exceed $250,000. As set
forth below, the Private Parties (through their counsel) shall be
entitled to draw upon the Fee and Expense Fund to pay for the costs of
this notice.
(ii) If the costs of notice in the form ordered by the
Court do not exceed $250,000, then ▇▇▇▇▇▇▇▇ shall have no
responsibility for payment of any notice costs. If the costs of notice
exceed $250,000, then ▇▇▇▇▇▇▇▇ shall pay the remaining costs of notice,
not to exceed an additional $250,000.
(iii) If the estimated cost of notice in the form ordered
by the Court exceeds $500,000 (the $250,000 to be paid by Civil
Plaintiffs' Counsel pursuant to paragraph 3.3(b)(i) and the $250,000 to
be paid by ▇▇▇▇▇▇▇▇ pursuant to paragraph 3.3(b)(ii)), then ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies and Civil Plaintiffs' Counsel shall attempt to reach
agreement on further allocation of any additional costs of notice;
provided, however, ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies and the Private
Parties shall have, in their sole and absolute discretion, the option
to pay the additional costs of notice above $500,000 or to terminate
this Settlement Agreement as to the Private Parties.
c. Civil Plaintiffs' Counsel shall request that after notice is
given, the Court hold a hearing (the "Settlement Hearing") in which it shall
approve the settlement of the Civil Actions as set forth herein as fair,
adequate and reasonable to the Class, and enter a final judgment of dismissal
with prejudice pursuant to the settlement as to ▇▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇▇
Companies, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
d. If prior to the Settlement Hearing, any Persons who otherwise
would be Members of the Class have timely requested exclusion ("Requests for
Exclusion") from the Class in accordance with the provisions of the Notice Order
and the notice given pursuant thereto, and such Persons in the aggregate
represent claims in an amount greater than an amount to be set forth in a
supplemental agreement between ▇▇▇▇▇▇▇▇ and Civil Plaintiffs' Counsel, ▇▇▇▇▇▇▇▇
or ▇▇▇▇▇▇▇▇ Companies shall have, in its sole and absolute discretion, the
option to terminate this Settlement Agreement as to the Private Parties. Copies
of all Requests for Exclusion received, together with copies of all written
revocations of Requests for Exclusion received shall be delivered to ▇▇▇▇▇▇▇▇'
and ▇▇▇▇▇▇▇▇ Companies' counsel within seven (7) business days before the
Settlement Hearing.
e. Solely for the purposes of the settlement of the Civil
Actions, the Parties agree to the certification of the Class as defined above in
Paragraph 1.18 for settlement purposes; and Civil Plaintiffs' Counsel and
▇▇▇▇▇▇▇▇ agree to jointly request the Court to enter an order, which, among
other things, certifies the Class, as set forth in paragraph 3.3(a)(i). In the
event this Settlement Agreement and the settlement proposed herein is not
finally approved, or is terminated, canceled, or fails to become effective for
any reason, this class certification, solely for the purpose of the settlement
of the Civil Actions, shall be null and void and the Private Parties, the
California Cities and Counties, the Water Districts, ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇
Companies will revert to their respective positions immediately prior to the
Closing Date. Under no circumstances may this Agreement be used as an admission
or evidence concerning the appropriateness of class certification should this
Settlement Agreement be terminated in whole or
13
part. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies reserve the right to oppose class
certification should the Settlement Agreement be terminated in whole or part.
f. The releases in Paragraph 4.5, and in Paragraph 4.9 as they
relate to the Private Parties shall become effective upon, and any obligations
to return any payments from the Fee and Expense Fund as set forth in Paragraph
4.18 shall terminate upon:
(i) A final determination by the Court pursuant to
California Code of Civil Procedure section 877.6 that this Settlement
Agreement was made in good faith and final conclusion of any petition
for mandate;
(ii) Certification of the Class for settlement purposes
and final judgment after final court approval of the settlement,
including any appeal;
The first day on which all of these events shall have occurred shall be called
the "Class Settlement Effective Date." Notwithstanding this provision, prior to
the Class Settlement Effective Date, the Civil Plaintiffs' Counsel shall be
entitled to draw upon the Fee and Expense Fund to pay for the costs of Class
Notice.
3.4 The AG may, at its sole option, waive execution and delivery
of Consents required by Paragraph 3.2(b)(iv) of this Settlement Agreement. Any
such waiver, which must be in writing and signed by the AG, shall not affect the
effectiveness of the releases provided for in this Settlement Agreement in
Paragraphs 4.1 through 4.5 and Paragraph 4.9.
3.5 Any of the agreements described above in Paragraphs 3.2(a),
(b) and (c) which are signed only by parties to this Settlement Agreement may be
signed in any number of counterparts, each of which is equally admissible in
evidence and shall be deemed to be one and the same instrument. No such
agreement shall take effect, however, until each Party to that agreement has
signed a counterpart.
3.6 Conditions Precedent:
a. The following conditions precedent shall be satisfied prior to
the Phase I Execution:
(i) the Phase I Parties shall have obtained all necessary
internal consents and shall have taken all internal actions necessary
to authorize the performance of their obligations herein;
(ii) notwithstanding any other provision contained in this
Settlement Agreement, this Settlement Agreement, the Renegotiated
Contracts, and the Gas Contract shall not become effective until and
unless the CPUC shall have considered and voted to approve and adopt
this Settlement Agreement and communicated the outcome of such vote to
▇▇▇▇▇▇▇▇ and the California State Releasing Parties; and
(iii) each Phase I Party shall have performed any
obligation required to be performed by that Party prior to the Phase I
Execution Date or, if permitted to be
14
performed on the Closing Date, has demonstrated to the reasonable
satisfaction of the other Parties that it is capable of performing such
obligations by the Closing Date.
b. The following conditions precedent shall be satisfied by or
prior to December 31, 2002, or by a date certain as specified below, if any:
(i) Requests by the CEOB and the CPUC advising the FERC
that a resolution between themselves and ▇▇▇▇▇▇▇▇ concerning claims
regarding the Original Contracts has been reached and requesting that
the FERC suspend such proceedings as between the CEOB and CPUC and
▇▇▇▇▇▇▇▇ only relating to such claims pending the Closing at which time
they will seek an order allowing the withdrawal of such claims;
(ii) Issuance by the FERC of an order in the Refund
Proceeding granting ▇▇▇▇▇▇▇▇' motion to dismiss claims for refunds due
to any of the California State Releasing Parties or in relation to any
Electric Power provided to the CDWR that is or may be subject to the
Refund Proceeding from ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies (the "Refund
Order"). Receipt of the Refund Order shall not be a condition precedent
to closing unless ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies, within ten (10)
Business Days from the Phase I Execution, files a Motion to Dismiss in
the Refund Proceeding in which it shall advise FERC that resolution has
been reached between themselves and the State Releasing Parties
concerning such actions and complaints and that each of CDWR, CEOB and
CPUC have agreed to release claims as described in Paragraph 4.3
hereof. The contents of each such filing shall be consistent with the
terms and conditions of this Settlement Agreement. The Parties will
cooperate and assist each other in good faith in the preparation and
filing of such motion;
(iii) If ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies have filed the
Motion to Dismiss described in Paragraph 3.6(b)(ii), the State
Releasing Parties shall file a responsive pleading consistent with the
terms and conditions of this Settlement Agreement within five (5)
Business Days thereafter; and
(iv) ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies shall have (i)
made the payment described in Paragraph 1.16(a), and (ii) delivered to
the AG or its designee(s) the Credit Documents described in Paragraph
3.2(b)(i) (except to the extent additional payments shall have been
made pursuant to Paragraph 3.2(b)(iii).
Absent the express written agreement of ▇▇▇▇▇▇▇▇ and the California
State Releasing Parties extending the time to satisfy or waiving any of the
conditions set forth in this Paragraph 3.6, if each of the conditions have not
been fulfilled on or prior to the dates specified above, then this Settlement
Agreement shall be null and void and of no further effect, with all rights,
duties and obligations of the Parties thereafter restored as if this Settlement
Agreement had never been executed; provided, however that if all of such
conditions other than ▇▇▇▇▇▇▇▇' obligations in Paragraph 3.6(b)(iv) have been
fulfilled, the AG shall be entitled to enforce such obligations of ▇▇▇▇▇▇▇▇, in
which event this Agreement shall not so terminate.
3.7 The releases and other Consideration provided for in this
Settlement Agreement, including without limitation the releases set forth in
Paragraphs 4.1 through 4.5 and Paragraph
15
4.9 (excluding the releases as they relate to the Private Parties) shall become
effective retroactive to the Phase I Execution Date. The releases set forth
herein in Paragraphs 4.5 and 4.9 (with respect to the Private Parties) shall
become effective, retroactive to the Phase I Execution Date, upon the Class
Settlement Effective Date as set forth in Paragraph 3.3(f).
3.8 This Settlement Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date by written notice
delivered by the California State Releasing Parties to ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇
Companies or by ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies to the California State
Releasing Parties, as the case may be, in the following instances (each a
"Termination Event"):
a. by the California State Releasing Parties if there has been a
material misrepresentation, a material breach of warranty, or a material failure
to comply with any covenant or agreement on the part of ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇
Companies with respect to any of their representations, warranties, covenants or
agreements set forth herein, and such misrepresentation, breach, or failure to
comply has not been cured within five (5) Business Days of receipt by ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ Companies from the California State Releasing Parties of written
notice thereof; provided, however, that any failure by ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇
Companies to perform its or their obligations under Paragraph 4.7 hereof shall
constitute a material failure to comply with an agreement and shall not be
subject to such notice and cure period;
b. by ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies if there has been a material
misrepresentation, a material breach of warranty, or a material failure to
comply with any covenant or agreement on the part of the California State
Releasing Parties with respect to their representations, warranties, covenants
or agreements set forth herein, and such misrepresentation, breach, or failure
to comply has not been cured within five (5) Business Days of receipt by the
California State Releasing Parties from ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies of
written notice thereof;
c. by the mutual written consent of the California State
Releasing Parties, ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies;.
d. by the AG, before December 15, 2002 if the AG, in his sole
discretion, determines that there is evidence of illegal conduct by ▇▇▇▇▇▇▇▇ or
the ▇▇▇▇▇▇▇▇ Companies in the Gas or Electric Power markets of which he was not
previously aware or if ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies fail to fully
cooperate in good faith with the AG's due diligence review.
3.9 From time to time after the Closing, the Parties shall
cooperate in consummating the settlement and release of claims and exchange of
consideration provided for herein. This cooperation shall include, without
limitation, the execution of such instruments of conveyance, assignment,
transfer and delivery, release and waiver, the filing of additional complaints
by the Private Parties as necessary to obtain the release set forth in Paragraph
4.5 herein and the provision of submissions, stipulations and other filings with
courts and regulatory agencies, and the provision of such additional documents
or taking of such other action as any Party may reasonably request.
16
4. MUTUAL RELEASES AND WAIVERS.
4.1. Original Contracts and the Renegotiated Contracts:
Each of the California State Releasing Parties for itself hereby
releases, acquits and forever discharges any and all claims of any nature
whatsoever that it ever had, now has, or hereafter can, shall, or may have
against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies based on, or arising out of, in whole or
in part, (a) the Original Contracts, or (b) issues relating to effectiveness,
due authorization, validity, or enforceability of any of the obligations of any
of the California State Releasing Parties under the Renegotiated Contracts or
the Gas Contract or whether such obligations are Just and Reasonable. This
release does not constitute a waiver by the California State Releasing Parties
of the right to pursue remedies under the Renegotiated Contracts or the Gas
Contract for acts and omissions from and after the Phase I Execution Date as
provided therein, including but not limited to (a) claims of breach of an
obligation created by the Renegotiated Contracts, (b) claims of failure to
perform under the Renegotiated Contracts, and (c) disputes over the obligations
created by, or the meaning of any terms used in the Renegotiated Contracts. The
release in this Paragraph 4.1 applies only to matters based on, or arising out
of, in whole or in part, the generation, sale, purchase, ownership, dispatch
and/or transmission of Electric Power, and/or Gas pursuant to the Original
Contracts and the Renegotiated Contracts, and does not include matters of
general applicability including, without limitation, environmental, permitting,
health, safety and taxation.
Each of the California State Releasing Parties waives all rights to
challenge the terms, conditions, rates or validity of the Renegotiated Contracts
or the Gas Contract or whether each such contract is Just and Reasonable for and
with respect to the entire term thereof, including any rights under Sections 205
and 206 of the Federal Power Act to request the FERC to revise the terms and
conditions and the rates or services specified in the Renegotiated Contracts or
the Gas Contract, and hereby further agrees to make no filings at the FERC or
with any other state or federal agency, board, court or tribunal challenging the
rates, terms and conditions of the Renegotiated Contracts or the Gas Contract as
to whether they are Just and Reasonable or in the public interest. It is further
agreed that, in the event of any future challenges to the Renegotiated Contracts
or the Gas Contract for any other reason, the Parties will not dispute the
applicability, as to the Parties, of the public interest standard as that term
has been defined and interpreted under the Federal Power Act or the Natural Gas
Act and the cases of United Gas Pipe Line Co. v. Mobile Gas Corp., ▇▇▇ ▇.▇. ▇▇▇
(1956), and FPC v. Sierra Pacific Power Co., ▇▇▇ ▇.▇. ▇▇▇ (1956), and subsequent
cases.
The Unnamed California Cities, Counties and Political Subdivisions also
release any claims they may have relating to the Original Contracts,
Renegotiated Contracts, or Gas Contract.
4.2. Original Contracts, Renegotiated Contracts and FERC:
The CEOB and CPUC hereby agree to seek suspension and withdrawal with
prejudice, as to ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies only, all actions or
complaints set forth in the CPUC Complaint and the CEOB Complaint pertaining to
the Original Contracts pursuant to the procedures set forth in Paragraph 4.12.
In filing to suspend and withdraw the CPUC Complaint
17
and the CEOB Complaint, the CPUC and the CEOB shall advise FERC that resolution
has been reached between themselves and ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies
concerning such actions and complaints. The contents of each such filing shall
be consistent with the terms and conditions of this Settlement Agreement.
This provision shall not restrict in any way the ability of the CEOB or
the CPUC to continue to participate in the CPUC Complaint or CEOB Complaint as
against the other parties named therein.
4.3. CDWR, CEOB and CPUC: Refund Proceeding:
Each of the CDWR, CEOB, and CPUC hereby releases, acquits and
discharges ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies from any and all claims of any
nature whatsoever that they have ever had, now have, or hereafter may have
against ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies based on the alleged existence or
exercise of market power prior to the Phase I Closing or for charges for
excessive or unlawful charges for Electric Power or Gas including, without
limitation, claims to receive refunds, credits, payments or compensation or
consideration of any kind from ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies related to
claims that were alleged or could have been alleged in the Refund Proceeding.
Nothing in this release shall preclude the CDWR, CEOB, and CPUC from otherwise
continuing their participation in the Refund Proceeding to the ultimate
conclusion of that proceeding, including any actions on appeal as to parties
other than ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies, nor does anything herein release
such claims or entitlement of any other parties, such as the IOUs, to refunds in
the Refund Proceeding.
Each of CDWR, CEOB, and CPUC hereby releases, acquits and discharges
▇▇▇▇▇▇▇▇ from claims, including for refunds, (a) arising from sales, acts or
omissions prior to the Effective Date related to the operation and management of
generation facilities, and the generation, dispatch, purchase, marketing, sale,
or transmission of Electric Power or Gas, and without limitation of the
foregoing (b) any and all federal or state antitrust or unfair competition
claims based on, arising out of or in any way related to the Original Contracts,
the Gas Contract, or Renegotiated Contracts.
The releases set forth in this Paragraph 4.3 shall not restrict the
ability of the CDWR, CEOB, and CPUC to continue to participate in any existing
proceeding, or to bring or participate in any future proceeding that does not
include specific claims against ▇▇▇▇▇▇▇▇ but which could indirectly affect the
▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies, such as but not limited to proceedings
concerning market structure, scheduling rules, generally applicable market
rules, and generally applicable price mitigation, provided, however, this
Settlement Agreement does release all claims by CDWR, CEOB and CPUC for monetary
damages or compensation of any kind based on the participation of ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies in the California Electric Power markets prior to the Phase I
Execution. The releases in this Paragraph 4.3 apply only to matters based on, or
arising out of, in whole or in part, the generation, sale, purchase, ownership,
dispatch and/or transmission of Electric Power, and/or Gas and do not include
matters of general applicability including, without limitation, environmental,
permitting, health, safety and taxation. This Paragraph 4.3 does not affect any
of the Parties' rights and obligations in pending Reliability Must Run
proceedings, or in pending proceedings pertaining to market-based rate
authority;
18
provided however that it is not the intent of the maintenance of such rights and
obligations to prevent or preclude performance by ▇▇▇▇▇▇▇▇ of the Renegotiated
Contracts.
While the CPUC is releasing its claims as described in this paragraph
4.3 for monetary damages or compensation of any kind against ▇▇▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇▇ Companies, this paragraph 4.3 does not restrict the ability of the CPUC
to continue its investigation of generator operation and maintenance, or from
collecting information or investigating any matter for the purposes of making
policy and/or legal arguments for rule changes, market reform, market
mitigation, or related matters, or from making such policy arguments in any
forum, based on information resulting from such investigation.
CDWR, CPUC, and CEOB shall terminate any and all investigations as to
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies as they relate to the pursuit of claims released
in this Paragraph 4.3 and shall not initiate any new investigations against
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies that are related to the pursuit of claims
released in this Paragraph 4.3. This does not limit the CEOB, CDWR or the CPUC
in collecting information or in investigating any matter not related to the
claims released in this Paragraph 4.3. This paragraph 4.3 does not restrict the
ability of the CPUC to continue its investigation of generator operation and
maintenance, or to carry out its responsibilities under SB 39XX. In the event
that: (i) the order referred to in Paragraph 3.6(b)(ii) hereof is overturned,
rescinded, retracted, or is otherwise rendered ineffective by the FERC or any
court of appeals; (ii) ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies is subjected to a
final nonappealable order explicitly directing ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇
Companies to pay refunds due to CDWR either (a) directly to CDWR or (b) to a
third party; (iii) such refunds are awarded for claims in the Refund Proceeding
that are released or waived pursuant to this Paragraph 4.3; and, (iv) ▇▇▇▇▇▇▇▇
or the ▇▇▇▇▇▇▇▇ Companies pays such refunds as ordered; then, if ▇▇▇▇▇▇▇▇ so
elects and in its sole discretion, the release in this Paragraph 4.3, as it
relates to the Refund Proceeding shall be void and of no force or effect. If the
releases herein related to the Refund Proceeding are voided pursuant to the
preceding sentence, the payor (▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies, as
appropriate) shall be entitled to a reduction in the Consideration provided for
such releases in the following manner:
(1) for each refund dollar that ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies pays
as ordered, an equal sum shall be recovered by ▇▇▇▇▇▇▇▇ by way of the additional
net revenues associated with maintaining the same Net Dependable Capacity and
maintaining the same Base Capacity Payment in effect as of December 2007 for so
long as is required to offset refunds that ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies is
required to pay. In no event shall such period extend beyond the Delivery Period
set forth in the Product D Transaction. To the extent such additional revenues
are not sufficient to offset dollar for dollar the refunds paid by ▇▇▇▇▇▇▇▇ as
described herein, the price of Product B as set forth in the Product A, B, C,
Transaction, shall be adjusted upward in each year, beginning January 2006, by
$5.80/MWh for such additional period as is necessary to offset such refunds paid
by ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies but in no event beyond the Delivery Period
associated with Product B as set forth in the Product A, B, C Transaction. All
capitalized terms in this Paragraph have the meanings set forth in the Product D
Transaction and Product A, B, C Transaction, respectively.
19
4.4 Release of the AG, the Northwest AG's and the Unnamed
California Cities, Counties and Political Subdivisions:
a. The AG and each of the Northwest AGs and the and each of the
Unnamed California Cities, Counties and Political Subdivisions hereby release,
acquit and forever discharge any and all claims of any nature whatsoever that
they ever had, now have, or hereafter can, shall, or may have against ▇▇▇▇▇▇▇▇
or ▇▇▇▇▇▇▇▇ Companies, based on, arising out of or in any way related to:
(i) the AG Investigation as defined in Paragraph 2.15,
including each allegation or claim that was or could have been asserted
against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies;
(ii) the Northwest AGs Investigation as defined in
Paragraph 2.18, including each allegation or claim that was or could
have been asserted against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies;
(iii) the AG Profiteering Complaint, including without
limitation each allegation or claim that was or could have been
asserted against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies relating in any way to
the AG Profiteering Complaint;
(iv) the ▇▇ ▇▇▇▇▇▇▇ Act Investigation or ▇▇▇▇▇▇▇ Act
Complaint, including without limitation each allegation or claim that
was or could have been asserted against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies
relating in any way to the ▇▇ ▇▇▇▇▇▇▇ Act Investigation or ▇▇▇▇▇▇▇ Act
Complaint;
(v) the AG Unfair Competition Complaint, including
without limitation each allegation or claim that was or could have been
asserted against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies relating in any way to
the AG Unfair Competition Complaint;
(vi) the AG 206 Complaint, including without limitation
each allegation or claim that was or could have been asserted against
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies relating in any way to the AG 206
Complaint;
(vii) the Refund Proceeding, including without limitation
each allegation or claim that was or could have been asserted against
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies relating in any way to the Refund
Proceeding;
(viii) the CEOB Complaint or CPUC Complaint, including
without limitation each allegation or claim that was or could have been
asserted against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies relating in any way to
the CEOB Complaint or CPUC Complaint;
(ix) the sale, purchase, offer, bidding, marketing,
trading, or withholding of bids or offers, of Electric Power or Gas in
California, Washington or Oregon at any time prior to the Phase I
Execution Date, including any claimed overcharges or refunds;
(x) the acquisition, operation, dispatch, ownership,
control or management of any Electric Power generation facilities or
any interest in or dispatch rights to the output
20
of such facilities including any alleged withholding of supply, exercise of
alleged market power, or alleged failure to provide Electric Power or Gas at any
time prior to the Phase I Execution Date;
(xi) any violations or claimed violations of any rules,
regulations, orders or protocols of any state or federal agency having or
claiming to have regulatory authority over any conduct that is the subject of
any Released Claims including, without limitation, the Federal Power Act and/or
any rules, regulations, tariffs, protocols or orders which occurred prior to the
Phase I Execution Date;
(xii) any claims for refunds, contract reformation or any
other relief, any federal or state antitrust claims or any claims under Business
& Professions Code section 17200 et seq. relating in any way to the Litigation
Claims, the Original Contracts or the Renegotiated Contracts; and
(xiii) subject to the limitations set forth in Paragraph
4.13 hereof, any information provided to the AG prior to the Phase I Execution
to the extent related to the claims released under clauses (i) through (xii) of
this Paragraph 4.4(a), including any such allegation or claim that was or could
have been asserted against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies related in any way to
any information sought by or produced in response to ▇▇▇▇▇▇▇▇ obligations under
Paragraph 4.6 below
b. This release does not affect the right of the AG or the
Northwest AGs to pursue criminal prosecution for any acts or omissions by
▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Companies both before or subsequent to the Phase I
Execution Date. This release applies only to matters that are based on, or
arising out of, in whole or in part, the operation and management of generation
facilities, and the generation, purchase, sale, ownership, dispatch, and/or
transmission of Electric Power, and/or Gas, and does not include matters of
general applicability, including, without limitation, environmental, permitting,
health, safety and taxation. This Paragraph shall not restrict the ability of
the AG or the Northwest AGs to continue to participate in any existing
proceeding, or to bring or participate in any future proceeding, that does not
include specific claims against ▇▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇▇ Companies but could
indirectly affect them, such as but not limited to proceedings concerning market
structure, scheduling rules, generally applicable market rules, and generally
applicable price mitigation, provided, however, this Settlement Agreement does
release all claims for monetary damages or compensation of any kind based on the
participation of ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies in the California Electric Power
and Gas markets prior to the Phase I Execution Date. This release is modified by
Paragraph 4.13 below.
c. The AG further agrees that it (i) will voluntarily withdraw or
dismiss with prejudice (or, if necessary by applicable rule, request withdrawal
or dismissal with prejudice from the court or tribunal) within two (2) Business
Days of the Closing Date all pending claims or actions against ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies, including without limitation the AG Unfair Competition
Complaint, the AG 206 Complaint and the AG Profiteering Complaint and will
terminate all outstanding investigations and all subpoenas to ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies relating to the Released Claims, including without limitation
the AG Investigation, the AG Subpoenas, and the ▇▇ ▇▇▇▇▇▇▇ Act Investigation,
and (ii) will not file any actions or initiate any formal or informal
investigations based on, arising out of or related to any Released Claims
21
or any legal theory based on or related to conduct underlying any of the
Released Claims, including without limitation Business and Professions Code
Section 17200 or federal or state antitrust statutes, against ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies.
d. AES/▇▇▇▇▇▇▇▇ Tolling Agreement. The AES Contract, whereby AES
owns and operates generating units and ▇▇▇▇▇▇▇▇ markets the power, creates a
somewhat unique structure with respect to the California market. The Attorney
General has conducted an investigation into alleged anticompetitive aspects of
the AES Contract and agrees to the following limitations in connection with any
relief or remedies that he may seek from AES in connection with the
investigation.
(i) The Attorney General will not seek monetary remedies from
AES for any portion of alleged anticompetitive conduct attributable
to ▇▇▇▇▇▇▇▇ pursuant to operation or enforcement of the AES
Contract.
(ii) The Attorney General will not seek relief from AES,
monetary or otherwise, that will preclude ▇▇▇▇▇▇▇▇ from performing
its obligations pursuant to the Renegotiated Contracts.
(iii) The CPUC and CEOB will not bring any action against AES for
the purpose of hindering the ability of ▇▇▇▇▇▇▇▇ to perform under
the Renegotiated Contracts.
4.5 Release by California Cities and Counties, California Water
Districts and Private Parties:
The Private Parties, the Class, the California Cities and Counties and
the Water Districts hereby release, acquit and forever discharge any and all
claims of any nature whatsoever that they ever had, now have, or hereafter can,
shall, or may have against ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ based on or arising out of the claims that were
or could have been asserted in any of the Civil Actions, the ▇▇▇▇▇▇▇▇▇▇ Action,
the Water District Action, or the Cities' and Counties' Action, and any other
acts or omissions by or of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ related to their participation in the
California Electric Power markets from January 1, 1998 to the Effective Date,
including, without limitation, the acquisition, operation and management of
facilities for the generation of Electric Power or dispatch rights to such
facilities or the Electric Power generated from such facilities or the
generation, purchase, sale, trading, marketing or transmission of Electric Power
prior to the Closing Date, including but not limited to (a) claims related to
the Original Contracts, Renegotiated Contracts, and Gas Contract, (b) claims
under California Business & Professional Code Section 17200, and (c) any federal
or state antitrust claims, or (d) any taxpayer or other representative claims.
This Paragraph shall not restrict the ability of plaintiffs in the
Wholesale Electricity Antitrust Cases I & II to continue to participate in any
existing proceeding, or to bring or participate in any future proceeding that
does not include specific claims against ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. This settlement shall not
release any claims against any entity (except for ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
22
Companies, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) and
shall in no way restrict the ability of plaintiffs in Wholesale Electricity
Antitrust Cases I & II to continue to participate in any existing proceeding, or
to bring or participate in any future proceeding that does not include specific
claims against ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ but could indirectly affect them, such as but not
limited to proceedings concerning market structure, scheduling rules, generally
applicable market rules, and generally applicable price mitigation; provided,
however, this Settlement Agreement does release all claims for monetary damages
or compensation of any kind as against ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Companies, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ based on their participation in
the California Electric Power markets prior to the Effective Date. To the extent
the Private Parties pursue any claim against AES, such parties shall be subject
to the limitations applicable to the AG as set forth in Paragraphs 4.4(d)(i) and
(ii).
4.6 ▇▇▇▇▇▇▇▇ Cooperation:
▇▇▇▇▇▇▇▇ agrees to cooperate with the AG and the Northwest AGs in their
civil investigation of the Electric Power and Gas markets in California, Oregon
and Washington and to cooperate with the Private Parties, Water Districts and
Cities and Counties in the Wholesale Electricity Antitrust Cases I & II
("Cooperating Parties"), provided that such cooperation shall not obligate
▇▇▇▇▇▇▇▇ to waive any privileges. As part of its ongoing cooperation
obligations, ▇▇▇▇▇▇▇▇ shall make witnesses available for interviews and
depositions by the Cooperating Parties at mutually convenient times and
locations. The Cooperating Parties will seek information in a focused manner,
and will work with ▇▇▇▇▇▇▇▇ to streamline information and requests as
appropriate. The witness interviews, depositions and all documents disclosed
pursuant to this Paragraph 4.6 will be subject to the existing or future
confidentiality agreements and protective orders between ▇▇▇▇▇▇▇▇ and the
Cooperating Parties and the confidentiality provisions of Calif. Govt Code
Section 11180, et seq. As a further part of its ongoing cooperation, ▇▇▇▇▇▇▇▇
will continue to produce documents to the Cooperating Parties as requested. All
documents provided to the Cooperating Parties pursuant to this Settlement
Agreement will also be treated as confidential under Section 11180, et seq.
▇▇▇▇▇▇▇▇ shall not contend that the AG has violated Cal. Govt. Code Section
11180 et seq. by providing documents received from ▇▇▇▇▇▇▇▇ to the Cities and
Counties, the Water Districts and the Private Parties. The documents produced to
the Cooperating Parties by ▇▇▇▇▇▇▇▇ under this Settlement Agreement and pursuant
to the Cooperating Parties' subpoenas can be used by the Cooperating Parties in
litigation against third parties pursuant to a court approved protective order.
The Cooperating Parties shall give reasonable notice to ▇▇▇▇▇▇▇▇ of their intent
to use such documents in litigation which notice shall specify the terms of the
protective order under which they may be used. The Cooperating Parties will
promptly notify ▇▇▇▇▇▇▇▇ in writing when their investigations are closed. This
provision for continuing cooperation by ▇▇▇▇▇▇▇▇ shall extend to the conclusion
of the Cooperating Parties' litigation and active investigation of California
energy markets, and including cooperation through any trials and appeals as
necessary.
23
4.7 Consideration for Releases in Paragraphs 4.1 through 4.5
Inclusive:
a. In consideration for the release of the above-described
claims, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies agree to provide the following
consideration (collectively, the "Consideration"):
i. Cash Consideration;
ii. Renegotiated Contracts;
iii. Gas Contract;
iv. ▇▇▇▇ of Sale;
v. Credit Documents, as more fully described in
Paragraph 3.2(b)(i), subject to Paragraph
3.2(b)(iii);
vi. the cooperation described above in Paragraph 4.6;
vii. the ▇▇▇▇▇▇▇▇ Companies Guaranty;
viii. the release provided for in Paragraph 4.9; and
ix. to take all other action expressly required of
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies under the terms of
this Settlement Agreement.
b. This Settlement Agreement encompasses renegotiated long-term
contract terms as well as consideration for resolution of claims of the various
parties to the settlement. Consideration for those claims includes $147 million
in cash and approximately $90 million in-kind. Additional consideration for
those claims has been captured within the terms of the Renegotiated Contracts,
including approximately $180 million related to the price of natural gas,
capacity, and Electricity
c. The Parties understand and acknowledge that none of the
Consideration represents any civil fines or penalties, and all Consideration
represents payment for alleged overcharges, damages or restitution allegedly
owed to the States of California, Oregon and Washington and their agencies,
departments, cities, counties, political subdivisions and citizens, including
without limitation the California State Releasing Parties, California Water
Districts, California Cities and Counties, Unnamed California Cities, Counties
and Political Subdivisions, the Northwest AGs, and the Private Parties in
connection with the Released Claims herein including, without limitation, claims
related to alleged unlawful or excessive charges for Electric Power or Gas by
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies prior to the Phase I Execution Date.
d. The AG informs ▇▇▇▇▇▇▇▇ that as of the execution of this
Settlement Agreement, it will distribute the Cash Consideration as described in
Schedule 4.7(d) hereto. ▇▇▇▇▇▇▇▇ has no obligation to ensure that the funds are
distributed as represented by the AG, and the failure to distribute the funds in
accordance with this schedule shall not be a basis for challenging the validity
or enforceability of this Settlement Agreement.
24
4.8 Cash Consideration/Rights Upon Default:
a. Upon the occurrence of any one of the following events, the AG
or its designee may, at its option and without notice or demand upon ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies, immediately accelerate the Cash Consideration, making the
entire amount of the outstanding Cash Consideration (as adjusted pursuant to
this Paragraph 4.8(a)) immediately due and payable in full, and thereafter
exercise any of its rights and remedies hereunder, under the Credit Documents,
or under applicable law to recover the Cash Consideration (each an "Event of
Default"):
(i) the failure by ▇▇▇▇▇▇▇▇ to make any payment of the
Cash Consideration within five (5) Business Days of when due, or the
failure by ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies to provide and maintain in
effect Security Documents as set forth in Paragraph 4.8(c), without
notice or right to cure;
(ii) a breach by ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies (but not
any successor or assign excluding any ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies
affiliates) under this Settlement Agreement, the Gas Contract, the
Security Documents, or the Renegotiated Contracts (collectively, the
"Settlement Documents") which is not cured within any applicable grace
period;
(iii) the inaccuracy in any material respect of any
representation or warranty of ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies contained
in the Settlement Documents; or
(iv) the assignment or transfer, whether directly,
indirectly, or by operation of law (including, without limitation, any
transfer by merger), by ▇▇▇▇▇▇▇▇ of any or all of its rights and
obligations under any of the Renegotiated Contracts other than a
collateral assignment in favor of ▇▇▇▇▇▇▇▇' senior secured bank
lender(s) without the AG's prior written consent unless simultaneous
with such transfer, ▇▇▇▇▇▇▇▇ pays to the AG or its designee(s) the
Tranche B Payments.
Notwithstanding the foregoing, (x) in the event of an acceleration of
the Cash Consideration pursuant to this clause (a) above, the Tranche B Payments
shall be reduced to their then net present value utilizing a discount rate equal
to 10% per annum provided that the net present value of Tranche B Payments if
accelerated on the following dates shall be as follows: (A) for payment on or
prior April 1, 2003, $25,700,000; (B) for payment after April 1, 2003 and on or
prior to July 1, 2003, $26,300,000; (C) for payment after July 1, 2003 and on or
prior to October 1, 2003, $27,000,000; and, (D) for payment after October 1,
2003 and on or prior to January 1, 2004, $27,700,000., and (y) an acceleration
pursuant to clause (iv) above shall result only in the acceleration of the
Tranche B Payments and of the payment due pursuant to Paragraph 1.16(iv).
▇. ▇▇▇▇▇▇▇▇ shall be entitled to prepay any of the Cash
Consideration, in whole or in part, at any time or from time to time without
premium or penalty; provided, however, that any prepayment of the Tranche B
Payments shall be reduced to the then current net present value thereof,
calculated using a discount rate of ten percent (10%) per annum. The net present
value of Tranche B Payments if prepaid in full on the following dates shall be
as follows: (i) for
25
prepayment on or prior to April 1, 2003, $25,700,000; (ii) for prepayment after
April 1, 2003 and on or prior to July 1, 2003, $26,300,000; (iii) for prepayment
after July 1, 2003 and on or prior to October 1, 2003, $27,000,000; and (iv) for
prepayment after October 1, 2003 and on or prior to January 1, 2004,
$27,700,000.
▇. ▇▇▇▇▇▇▇▇ shall pay to the AG or its designee, upon demand, any
and all costs (including reasonable attorneys' fees) reasonably incurred by the
AG or its designee in connection with enforcing or collecting the Cash
Consideration not paid when due by ▇▇▇▇▇▇▇▇.
d. Any Cash Consideration not paid by ▇▇▇▇▇▇▇▇ when due shall
bear interest from such due date until paid at a rate equal to the greater of
(i) fifteen percent (15%) per annum, or (ii) the prime rate (as published in the
money rates section of The Wall Street Journal on the default date) plus six
percent (Prime + 6%), compounded monthly.
e. Credit Default Swaps
(i) Any Credit Default Swap provided as a Credit Document
shall meet the criteria set forth in Schedule 1.25 and be otherwise
satisfactory in form and substance to the AG, and be issued by Bank of
America or another single financial institution acceptable to the AG
(an "Eligible CDS party") with Fixed and Floating Rate Payor
Calculation Amounts equal to or greater than 125% of the amount of
Tranche A Payments to be supported.
(ii) ▇▇▇▇▇▇▇▇ shall prepay fees for any Credit Default
Swap provided hereunder for the initial two successive calendar
quarters and thereafter prepay succeeding calendar quarters one full
quarter in advance of that calendar quarter. ▇▇▇▇▇▇▇▇ agrees to pay
each Fixed Payment due under any Credit Default Swap entered into or
obtained pursuant to this Paragraph 4.8 not less than one calendar
quarter before such Fixed Payment becomes due and to deliver or cause
to be delivered to the AG a written receipt from the Floating Rate
Payor under such Credit Default Swap not less than eighty (80) days
before such Fixed Payment becomes due.
(iii) To the extent any payment under any Credit Default
Swap issued pursuant to this clause exceeds the amount owed to the AG
under Tranche A, then such excess amount will be applied by the AG
against ▇▇▇▇▇▇▇▇' obligations to the AG under Tranche ▇.
▇. ▇▇▇▇▇▇▇▇ agrees to put into place any other Credit Document(s)
to replace any Credit Document that is expiring, lapsing or terminating to the
extent any outstanding Tranche A Payments would otherwise be without credit
support, except as provided in clause (e), such replacement Credit Documents to
be executed and delivered to the AG not less than thirty (30) days before the
expiration, lapse or termination date of the Credit Document being replaced.
Notwithstanding any other provision in this Agreement, there shall be no cure
period with respect to any failure to perform by ▇▇▇▇▇▇▇▇ under this Paragraph
4.8.
26
g. The AG shall not be deemed to have waived any of its rights
under this Paragraph or otherwise unless such waiver is in writing and signed by
the AG. The AG's failure to require strict performance of the terms, covenants
and agreements of this Paragraph, the Settlement Documents, or any delay or
omission on the part of the AG in exercising any right, or any acceptance of
partial or adequate payment or performance shall not waive, affect or diminish
such right or ▇▇▇▇▇▇▇▇' or ▇▇▇▇▇▇▇▇ Companies' duty of compliance and
performance therewith. A waiver on any one occasion shall not be construed as a
bar to or waiver of the same or any other right on the same or any future
occasion. All rights and remedies of the AG under this Paragraph 4.8 or any
other of the Settlement Documents shall be cumulative and may be exercised
singularly or concurrently.
4.9 ▇▇▇▇▇▇▇▇ Release:
▇▇▇▇▇▇▇▇ hereby releases, acquits and forever discharges any and all
claims of any nature whatsoever that it ever had, now has, or hereafter can,
shall, or may have against the Parties based on, or arising out of, in whole or
in part, (a) the Original Contracts, or (b) issues relating to effectiveness,
due authorization, validity, or enforceability of any of the obligations of any
of the Parties under the Renegotiated Contracts or whether such obligations are
Just and Reasonable. This release does not constitute a waiver by ▇▇▇▇▇▇▇▇ of
the right to pursue remedies under the Renegotiated Contracts for acts and
omissions from and after the Phase I Execution Date as provided therein,
including but not limited to (a) claims of breach of an obligation created the
Renegotiated Contracts, (b) claims of failure to perform under the Renegotiated
Contracts, and (c) disputes over the obligations created by, or the meaning of
any terms used in the Renegotiated Contracts. This release does not constitute a
waiver of any claims by ▇▇▇▇▇▇▇▇ that actions of the Parties subsequent to the
Phase I Execution Date may constitute an "impairment of contract," as used in
the California and United States Constitution, with respect to the Renegotiated
Contracts.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies hereby release, acquit, and forever discharge
the California State Releasing Parties, California Water Districts, the
California Cities, Counties and Political Subdivisions, the Northwest AGs, and
the Private Parties from any and all claims arising on or before the Phase I
Execution Date related to the claims described in Paragraphs 4.1, 4.2, 4.3, 4.4,
and 4.5.
4.10 The releases set forth above in Paragraphs 4.1, 4.2, 4.3, 4.4,
4.5, and 4.9 shall run to, benefit, and be enforceable by all of the present and
former officers, directors, employees, agents, legal representatives,
successors, and assigns of All Releasing Parties. No other parties that are not
a party to this Settlement Agreement shall be entitled to the benefits of, and
entitled to enforce, the releases provided for in such Paragraphs.
4.11 Notwithstanding anything herein to the contrary, nothing in
Paragraphs 4.1 through 4.10 inclusive shall constitute a limitation to, or
waiver of, any right to enforce any obligation or pursue any remedy provided
under this Settlement Agreement or the Renegotiated Contracts or the Gas
Contract (including the enforcement of the releases provided by the Parties
hereunder).
27
4.12 The CEOB and CPUC hereby agree to withdraw with prejudice, by
means of filing a Notice of Partial Withdrawal, pursuant to 18 C.F.R. Section
385.216(a), as to ▇▇▇▇▇▇▇▇ only, all actions or complaints set forth in the CPUC
Complaint and the CEOB Complaint pertaining to ▇▇▇▇▇▇▇▇ within two (2) Business
Days following the Closing Date following suspension of such proceedings as
provided in Paragraph 3.6(b). In filing to withdraw the AG 206 Complaint, the
CPUC Complaint and the CEOB Complaint as to ▇▇▇▇▇▇▇▇, the AG, the CEOB and the
CPUC shall each advise the FERC that resolution has been reached between it and
▇▇▇▇▇▇▇▇ concerning such actions and complaints. The contents of each such
filing shall be consistent with the terms and conditions of this Settlement
Agreement. In the event the FERC denies the partial withdrawal, this Agreement
shall be null and void and of no further effect, with all rights, duties and
obligations of the Parties thereafter restored as if this Settlement Agreement
had never been executed.
The Parties will cooperate and assist each other in good faith in the
preparation and filing of such partial withdrawal in any and all proceedings
arising out of, or related to, the request for partial withdrawal, including but
not limited to acting in good faith to take all necessary actions to effectuate
FERC acceptance of the withdrawal and associated dismissal of the portions of
the complaints and claims, and effectuation of the releases as contemplated in
this Paragraph.
4.13 All Releasing Parties expressly waives the benefits of any
statutory provision or common law rule that provides, in sum or substance, that
a release does not extend to claims which the party does not know or suspect to
exist in its favor at the time of executing the release, which if known by it,
would have materially affected its settlement with the other party. In
particular, but without limitation, All Releasing Parties expressly waive the
provisions of California Civil Code Section 1542, which statute reads:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
All Releasing Parties acknowledges that they may hereafter discover
facts other than or different from those that they know or believe to be true
with respect to the claims released pursuant to the provisions of this
Settlement Agreement, but All Releasing Parties hereby expressly waive and
fully, finally and forever settle and release any known or unknown, suspected or
unsuspected, asserted or unasserted, contingent or non-contingent claim with
respect to the Released Claims, and without regard to the subsequent discovery
or existence of such different or additional facts, except, with respect to the
AG and Northwest AG's and the CPUC only, this California Civil Code Section 1542
waiver does not apply to any criminal claims or unknown claims of willful fraud.
4.14 This Settlement Agreement may be pleaded as a full and
complete defense to any claim that may be instituted, prosecuted or attempted in
breach of this Settlement Agreement. The Parties further agree that their
respective duties and obligations hereunder may be specifically enforced through
an action seeking equitable relief or a petition for writ of mandamus by the
Party or Parties for whose benefit such duty or obligation is to be performed,
but no breach of any duty or obligation by any Party hereunder shall entitle any
other Party to rescind or terminate this Settlement Agreement, except as
provided in Paragraph 3.8 hereof. In
28
any such action, and in any action to enforce the provisions of the Settlement
Agreement, the prevailing party shall recover its reasonable attorneys' fees and
costs.
4.15 ▇▇▇▇▇▇▇▇ agrees that it is subject to, and will comply in all
material respects with, applicable rate filing requirements under the Federal
Power Act and regulations thereunder, as those requirements may be interpreted,
reviewed and revised by the FERC or a federal court from time to time. The AG
will not file any actions based on any legal theory, including without
limitation Business and Professions Code Section 17200, against ▇▇▇▇▇▇▇▇ with
respect to such filing requirements or any filings made, or any failure or
omission to make filings, under the Federal Power Act so long as such parties
comply with the requirements of this Paragraph 4.15.
4.16 The Parties expressly understand that both direct and indirect
breaches of the provisions of this Settlement Agreement are proscribed.
Therefore, the Parties covenant that each will not institute or prosecute,
against the other, any action or other proceeding based in whole or in part upon
any claims released by this Settlement Agreement; provided, however, the Parties
expressly acknowledge that the CPUC Complaint, CEOB Complaint, Refund
Proceeding, and AG 206 Complaint are continuing with respect to entities other
than ▇▇▇▇▇▇▇▇ and this release is not intended to impair in any way the Parties'
participation in those pending actions.
4.17 Except for the provisions of Paragraph 4.18, the California
State Releasing Parties stipulate that part of the cash portion of this
settlement constitutes full payment of any claim for attorneys' fees and costs,
and the Parties hereby waive and release any and all claims for attorneys' fees
or costs, statutory or otherwise, related in any way to disputes pre-dating this
Settlement Agreement or related to the Parties' entry into this Settlement
Agreement.
4.18 ▇▇▇▇▇▇▇▇ agrees to pay the amount of $15 million (the "Fee and
Expense Fund") by wire transfer into an escrow account (the "Escrow Account")
with a qualified third party financial institution (the "Escrow Agent")
acceptable to ▇▇▇▇▇▇▇▇ and Civil Plaintiffs' Counsel. These funds shall be wired
to the Escrow Account no later than January 2, 2003, provided however, that if
the Phase I parties extend the date for satisfaction of any conditions precedent
set forth in Paragraph 3.6 beyond January 2, 2003, the date for funding the
Escrow Account shall be the earlier of the date of satisfaction of the Paragraph
3.6 conditions or April 1, 2003, provided however that this date may be extended
by mutual agreement of ▇▇▇▇▇▇▇▇ and Civil Plaintiffs' Counsel. This amount will
be held in escrow, and will be returned to ▇▇▇▇▇▇▇▇, with all interest earned,
less approved costs of notice paid from the Fee and Expense Fund, should this
settlement not be completed or approved by the Court.
a. If this settlement is approved, then the funds provided by
▇▇▇▇▇▇▇▇ shall remain in escrow, with all interest added to the fund, to be
disbursed upon application to the Court by a majority of Civil Plaintiffs'
Counsel as follows:
(i) Upon satisfaction of the conditions of Paragraphs
3.3(f)(i) and 3.3(f)(ii), excluding any appeals, any or all of the
funds may be expended for litigation expenses of the Private Parties,
Water Districts, the California Cities and Counties and/or any other
counsel that represents or purports to represent the Class, including
but not limited to expert fees, as approved from time to time by the
Court. Any counsel receiving funds from the Fee and Expense Fund agrees
to be bound by the provisions of the Settlement
29
Agreement including without limitation Paragraph 3.3 as it applies to
Civil Plaintiffs' Counsel;
(ii) Any or all of the funds may be expended for
attorneys' fees of the Private Parties, Water Districts, the California
Cities and Counties and/or any other counsel that represents or
purports to represent the Class. Any counsel receiving funds from the
Fee and Expense Fund agrees to be bound by the provisions of the
Settlement Agreement including without limitation the provisions of the
Paragraph 3.3 as it applies to Civil Plaintiffs' Counsel, as approved
from time to time by the trial court;
(iii) Counsel for the Private Parties, the Water Districts,
the California Cities and Counties and/or any other counsel that
represents or purports to represent the Class, may make multiple
requests, at their sole discretion, for expenses and/or attorneys' fees
as the litigation progresses;
(iv) Should the litigation be completed without exhausting
the funds for the purposes described above, then all remaining funds
shall be paid, upon Court order, to the Class or the Private Parties,
or to a charity approved by the Court; and
(v) Except as provided in Paragraphs 4.18(e), (f) and
(g), in no event shall any of these funds be returned to ▇▇▇▇▇▇▇▇ or
paid to the State of California, the AG, or any agency or officer of
the State of California.
b. Except as provided in this paragraph 4.18 above, if payment
under this paragraph is not made by January 2, 2003, this Settlement Agreement
with respect to the Plaintiffs and the Class in Wholesale Electricity Antitrust
Cases I & II may, at the option of Civil Plaintiffs' Counsel be terminated. If
the Settlement Agreement is not terminated, any amount due under this paragraph
shall bear interest from such due date until paid at a rate equal to the greater
of (i) fifteen percent (15%) per annum, or (ii) the prime rate (as published in
the money rates section of The Wall Street Journal on the default date) plus six
percent (Prime + 6%), compounded monthly.
c. Other than the deposit of the Fee and Expense Payment into the
Escrow Account, ▇▇▇▇▇▇▇▇ shall have no further obligation to any person or
entity including, without limitation, the Private Parties, Water Districts, the
California Cities and Counties, Civil Plaintiffs' Counsel, any other counsel
that represents or purports to represent the Class, or any of them with respect
to any claim for incentive awards, attorneys' fees, costs or disbursements
incurred or claimed to have been incurred in connection with the Civil Actions.
▇. ▇▇▇▇▇▇▇▇ shall have no responsibility for, and no liability
whatsoever with respect to the allocation among Civil Plaintiffs' Counsel, or
any other person who may assert some claim thereto, of any part of the Fee and
Expense Fund, and ▇▇▇▇▇▇▇▇ takes no position with respect to such matters.
e. All (i) taxes (including any estimated taxes, interest or
penalties) arising with respect to the income earned by the Fee and Expense Fund
("Taxes"); and (ii) expenses and costs
30
incurred in connection with the operation and implementation of this Paragraph
(including, without limitation, expenses of tax attorneys and/or accounting and
mailing distribution costs and expenses relating to filing (or failing to file)
any necessary filings) ("Tax Expenses"), shall be paid out of the Fee and
Expense Fund; in all events ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies shall have no
liability or responsibility for the Taxes, the Tax Expenses, or the filing of
any tax returns or other documents with the Internal Revenue Service or any
other state or local taxing authority. The Fee and Expense Fund, by and through
Civil Plaintiffs' Counsel, shall hold ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies harmless
for Taxes and Tax Expenses (including, without limitation, Taxes payable by
reason of any such indemnification). Further, Taxes and Tax Expenses shall be
treated as, and considered to be, a cost of administration of the settlement and
shall be timely paid by the Escrow Agent out of the Fee and Expense Fund without
prior order from the Court, and the Escrow Agent shall be obligated
(notwithstanding anything herein to the contrary) to withhold from distribution
to Civil Plaintiffs' Counsel any funds necessary to pay such amounts. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ Companies are not responsible and shall have no liability therefor,
or for any reporting requirements that may relate thereto. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
Companies and the Plaintiffs in the Civil Actions hereto agree to cooperate with
the Escrow Agent, each other, and their tax attorneys and accountants to the
extent reasonably necessary to carry out the provisions of this Paragraph 4.18.
f. In the event the Phase I Execution Date or the Closing does
not occur for any reason, or the Settlement Agreement is terminated pursuant to
its terms, or the Class Settlement provided for in this Paragraph is not
approved, or is terminated, canceled, or fails to become effective for any
reason, the Fee and Expense Fund (including accrued interest), less any amounts
expended to provide notice to the Class pursuant to Paragraph 3.3(b), shall be
refunded to ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies as provided in Paragraph 4.18(g)
below.
g. The attorneys' fees and expenses including the fees of experts
and consultants as awarded by the Court (the "Fee and Expense Award"), shall be
paid from the Fee and Expense Fund, as ordered, immediately after the Court
executes an order awarding such fees and expenses. Civil Plaintiffs' Counsel
shall thereafter allocate the Fee and Expense Award in a manner in which they in
good faith believe reflects the contributions of each such counsel to the
litigation and settlement. In the event that the Settlement Agreement or Class
Settlement does not occur for any reason, or the Judgment or the order making
the Fee and Expense Award is reversed or modified on appeal, and in the event
that the Fee and Expense Award has been paid to any extent, then Civil
Plaintiffs' Counsel shall within ten (10) business days from the event which
precludes the Effective Date from occurring or such reversal or modification,
refund to the Fee and Expense Fund the fees, expenses and interest previously
paid to them from the Fee and Expense Fund, including accrued interest on any
such amount at the average rate earned on the Fee and Expense Fund from the time
of withdrawal until the date of refund. Each such Civil Plaintiffs' Counsel's
law firm, as a condition of receiving such fees and expenses, on behalf of
itself and each partner and/or shareholder of it, agrees that the law firm and
its partners and/or shareholders are subject to the jurisdiction of the Court
for the purpose of enforcing this Paragraph 4.18 of this Settlement Agreement.
Without limitation, each such law firm and its partners and/or shareholders
agree that the Court may, upon application of ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies on
notice to each such law firm and its partners and/or shareholders, summarily
issue orders, including but not limited to, judgments and attachment orders, and
may make appropriate
31
findings of or sanctions for contempt, against each such law firm and its
partners and/or shareholders, or any of them, should such law firm fail timely
to repay fees and expenses pursuant to this Paragraph 4.18 of this Settlement
Agreement.
h. Except as provided in Paragraphs 4.18(f), and (g), ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ Companies shall not have any responsibility for interest in, or
liability whatsoever with respect to the administration, investment or
distribution of the Fee and Expense Fund, the plan of allocation, the
determination or administration of Taxes, or any losses incurred in connection
therewith. No Person shall have any claim of any kind against ▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ Companies, or its counsel, or its primary or excess directors' and
officers' liability insurer and reinsurers with respect to the matters set forth
in this paragraph.
4.19 Each of the Parties acknowledges and agrees that the various
releases in this Settlement Agreement were individually negotiated with the
various releasing parties under such releases and that such releases should be
interpreted individually in the context of this Settlement Agreement without
regard to other releases herein.
5. REPRESENTATIONS, WARRANTIES, AND OTHER AGREEMENTS.
5.1 Each of the Parties hereto as to itself represents and
warrants to each other Party as of the date hereof, and as of the Closing Date,
as follows:
a. it has the full power and authority to enter into this
Settlement Agreement and to perform all transactions, duties and obligations
herein set forth;
b. it has taken all necessary actions duly and validly to
authorize the execution and delivery of this Settlement Agreement and the other
documents and agreements provided for herein to be executed and delivered by it
(including without limitation the Renegotiated Contracts and the Gas Contract)
in accordance with applicable law;
c. they have duly and validly executed and delivered this
Settlement Agreement and, on the Closing Date, will have duly and validly
executed and delivered, the other documents and agreements provided for herein
to be executed and delivered by it (including without limitation the
Renegotiated Contracts and the Gas Contract);
d. this Settlement Agreement constitutes, and other documents and
agreements provided for herein to be executed and delivered by it will
constitute on and after Closing, its legal, valid and binding obligations,
enforceable against it in accordance with this Settlement Agreement's terms and
the respective terms of the other documents and agreements provided for herein
to be executed and delivered by it (including without limitation the
Renegotiated Contracts and the Gas Contract);
e. it has not sold, assigned, transferred, or encumbered, or
otherwise disposed of, in whole or in part, voluntarily or involuntarily, any
claim of any nature whatsoever released pursuant to this Settlement Agreement;
and
32
f. except as set forth in Schedule 5.1(f) attached to this
Settlement Agreement, no discharge or consent of any party is required for (i)
the execution, delivery or performance of this Settlement Agreement, (ii) the
consummation of the transactions contemplated hereby (including without
limitation the Renegotiated Contracts and the Gas Contract), or (iii) the
transfer of any of the Property to the AG or his designee(s).
5.2 In order to induce the California State Releasing Parties,
California Cities and Counties, California Water Districts, the Northwest AGs,
and the Private Parties to enter into this Settlement Agreement and provide the
releases and other consideration set forth herein, and as further consideration
therefor, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Companies acknowledge and agree as follows:
a. Reasonably Equivalent Value (▇▇▇▇▇▇▇▇). ▇▇▇▇▇▇▇▇ has made an
independent determination of (i) the fair market value of the Property to be
conveyed pursuant to the ▇▇▇▇ of Sale, (ii) the fair market value of William's
interests in the Original Contracts, (iii) the fair market value of ▇▇▇▇▇▇▇▇'
claims released in this Settlement Agreement, and (iv) the fair market value of
all other consideration provided by ▇▇▇▇▇▇▇▇ pursuant to this Settlement
Agreement to any party hereto (collectively, the "▇▇▇▇▇▇▇▇ Consideration"), and
has determined that, in the aggregate, the fair market value of the ▇▇▇▇▇▇▇▇
Consideration is reasonably equivalent to the aggregate of (A) the fair market
value of ▇▇▇▇▇▇▇▇' interests in the Renegotiated Contracts and the Gas Contract,
(B) the fair market value of the claims of the Parties released in this
Settlement Agreement, and (C) the fair market value of all other consideration
received by ▇▇▇▇▇▇▇▇ pursuant to this Settlement Agreement from any Party
hereto.
b. Reasonably Equivalent Value (▇▇▇▇▇▇▇▇ Companies). ▇▇▇▇▇▇▇▇
Companies has made an independent determination of (i) the fair market value of
▇▇▇▇▇▇▇▇ Companies' claims released in this Settlement Agreement, and (ii) the
fair market value of all other consideration provided by ▇▇▇▇▇▇▇▇ Companies
pursuant to this Settlement Agreement to any party hereto (collectively, the
"▇▇▇▇▇▇▇▇ Companies Consideration"), and has determined that, in the aggregate,
the fair market value of the ▇▇▇▇▇▇▇▇ Companies Consideration is reasonably
equivalent to the aggregate of (A) the fair market value of the claims of the
Parties released in this Settlement Agreement, and (B) the fair market value of
all other consideration received by ▇▇▇▇▇▇▇▇ Companies pursuant to this
Settlement Agreement from any party hereto.
c. Solvency (▇▇▇▇▇▇▇▇). ▇▇▇▇▇▇▇▇ acknowledges and agrees that
before and after giving effect to the transactions contemplated by this
Settlement Agreement (i) ▇▇▇▇▇▇▇▇' financial condition is and will be such that
the fair value of its property (exclusive of property transferred, concealed or
removed with intent to hinder, delay or defraud any creditor) exceeds the sum of
▇▇▇▇▇▇▇▇' debts, (ii) ▇▇▇▇▇▇▇▇ has not incurred and will not have incurred, and
does not intend to incur, debts beyond its ability to pay as they become due,
and (iii) ▇▇▇▇▇▇▇▇ has and will have sufficient capital to conduct its business
affairs.
d. Solvency (▇▇▇▇▇▇▇▇ Companies). ▇▇▇▇▇▇▇▇ acknowledges and
agrees that before and after giving effect to the transactions contemplated by
this Settlement Agreement (i) ▇▇▇▇▇▇▇▇' financial condition is and will be such
that that the fair value of its property (exclusive of property transferred,
concealed or removed with intent to hinder, delay or defraud any creditor)
exceeds the sum of ▇▇▇▇▇▇▇▇ Companies' debts, (ii) ▇▇▇▇▇▇▇▇ Companies has not
33
incurred and will not have incurred, and does not intend to incur, debts beyond
its ability to pay as they become due, and (iii) ▇▇▇▇▇▇▇▇ Companies has and will
have sufficient capital to conduct its business affairs.
e. Reinstatement of Claims. If under any debtor relief
proceedings all or any part of any conveyance of property or any payment of cash
by ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies to any Party to this Settlement Agreement is
subsequently invalidated, declared to be fraudulent or preferential, or set
aside, then, to the extent such Party is required to return such property or pay
the value thereof or refund any payment, ▇▇▇▇▇▇▇▇' and ▇▇▇▇▇▇▇▇ Companies'
liabilities to such Party shall be deemed reinstated to the extent necessary to
provide such Party with a distribution on its claim in such debtor relief
proceeding equal to the value assigned herein to the returned property or the
full amount of the avoided payment or refund and the release given by such party
to ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇' Companies in this Settlement Agreement shall be to
such extent of no further force or effect.
f. Prior Obligations; Taxes. No Party shall be liable for or
obligated to pay any amounts or obligations with respect to the Property arising
prior to the date hereof. ▇▇▇▇▇▇▇▇ shall pay when due all fees, taxes and
governmental charges (including without limitation interest and penalties) of
any nature which may now or hereafter be imposed or levied by any federal, state
or local authority upon any Party, the Property (including, without limitation,
the purchase, ownership, transportation, delivery, installation, leasing,
possession, use, operation, storage, and return of such Property) arising as a
result of ▇▇▇▇▇▇▇▇' ownership of the Property.
5.3 All Releasing Parties represents and warrants, as to itself,
that it is not aware of any other pending or existing lawsuits, claims, or
formal or informal investigations by or on behalf of itself against ▇▇▇▇▇▇▇▇
related to the Original Contracts other than as released in this Settlement
Agreement.
5.4. Each of the CDWR, CEOB, and CPUC represents and warrants, as
to its own agency, that it is not aware of any pending or existing lawsuits,
claims, or formal or informal investigations or inquiries by or on behalf of the
itself against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies, other than as set forth above,
related to the pursuit of claims released in Paragraph 4.3 other than as
released in this Settlement Agreement.
5.5 Each of the AG and the Northwest AGs represents and warrants
that he or she is not aware of any pending or existing lawsuits, claims, or
formal or informal investigations or inquiries by or on behalf of him or her
against ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies related in any way to the subject matter
of this Settlement Agreement other than the claims he or she is releasing in
Paragraph 4.4 of this Settlement Agreement.
5.6 Each Party warrants the following: (1) it is represented by
competent counsel with respect to this Settlement Agreement and all matters
covered by it; (2) it has been fully advised by said counsel with respect to its
rights and obligations and with respect to the execution of this Settlement
Agreement; and (3) it authorizes and directs its respective attorneys to have
such papers executed and to take such other action as is necessary and
appropriate to effectuate the terms of this Settlement Agreement.
34
5.7 Each Party warrants that no promise, inducement or agreement
not expressed herein has been made in connection with this Settlement Agreement.
To the extent that it was deemed necessary and desirable by a Party, each such
Party warrants that it has received appropriate, adequate, and competent
technical and economic advice. Each Party warrants that it has not relied on any
other Party for advice or guidance concerning the technical or economic
implications or consequences of the Renegotiated Contracts or this Settlement
Agreement. This Settlement Agreement constitutes the entire agreement between
the Parties and supersedes and replaces all prior negotiations or proposed
agreements, written or oral, with respect to the subject matter thereof.
5.8 The representations, warranties and agreements of the Parties
set forth in Paragraphs 5.1 through 5.7 of this Settlement Agreement shall
survive the Closing indefinitely.
6. GENERAL PROVISIONS.
6.1 In entering and making this Settlement Agreement, the Parties
assume the risk of any mistake of fact or law. If the Parties, or any of them,
should later discover that any fact they relied upon in entering this Settlement
Agreement is not true, or that their understanding of the facts or law was
incorrect, then the Parties shall not be entitled to seek rescission of this
Settlement Agreement by reason thereof. This Settlement Agreement is intended to
be final and binding upon the Parties regardless of any mistake of fact or law.
6.2 This Settlement Agreement shall be binding upon and for the
benefit of any of the Parties and their successors and assigns. Nothing in this
Settlement Agreement shall be construed or interpreted to impart any rights or
obligations to any third party (other than a permitted successor or assignee
bound to this Settlement Agreement).
6.3 Neither the provision of consideration in the form of the
mutual covenants contained herein, nor the performance of any such covenants
contained herein, nor anything contained or incorporated herein shall be deemed,
nor shall the negotiations, execution and performance of this Settlement
Agreement constitute, any admission or concession of liability or wrongdoing on
the part of any Party. Any such liability or wrongdoing is expressly denied.
6.4 This Settlement Agreement may not be altered, amended,
modified or otherwise changed in any respect whatsoever except by a writing duly
executed by an authorized representative of each of the Parties.
6.5 The language of this Settlement Agreement shall be construed
as a whole, according to its fair meaning and intendment, and not strictly for
or against any Party, regardless of who drafted or was principally responsible
for drafting the Settlement Agreement or any specific terms or conditions
hereof. This Settlement Agreement shall be deemed to have been drafted by all
Parties, and no Party shall urge otherwise.
6.6 The headings in this Settlement Agreement are for convenience
only. They in no way limit, alter or affect the meaning of this Settlement
Agreement.
35
6.7 This Settlement Agreement shall be construed and enforced
pursuant to the laws of the State of California, excluding any choice of laws
provisions or conflict of laws principles which would require reference to the
laws of any other jurisdiction.
6.8 Should any provision of this Settlement Agreement be held
illegal, such illegality shall not invalidate the whole of this Settlement
Agreement; instead, the Parties shall use their best efforts to reform the
Settlement Agreement in order to give effect to the original intention of the
Parties in all material respects.
6.9 This Settlement Agreement may be executed in multiple original
and/or facsimile counterparts, each of which is equally admissible in evidence
and shall be deemed to be one and the same instrument. This Settlement Agreement
shall not take effect until each Party has signed a counterpart.
6.10 The failure of any Party hereto to enforce any condition or
provision in this Settlement Agreement at any time shall not be construed as a
waiver of that condition or provision unless such waiver is in writing and
signed by the waiving Party, nor shall it forfeit any rights to future
enforcement thereof.
6.11 The schedules attached to this Settlement Agreement are hereby
made a part of this Settlement Agreement.
6.12 Time shall be of the essence for purposes of construing and
enforcing this Agreement.
6.13 If the Closing does not occur, the Parties shall be restored
to their respective positions as of the Phase I Execution Date.
6.14 The Parties (a) acknowledge that it is their intent to
consummate this Settlement Agreement; and (b) agree to cooperate to the extent
necessary to effectuate and implement all terms and conditions of this
Settlement Agreement and to exercise their best efforts to accomplish the
foregoing terms and conditions of this Settlement Agreement.
6.15 The Parties agree that the terms of the settlement reflect a
good-faith settlement of all Parties hereto, reached voluntarily after
consultation with experienced legal counsel. Neither this Settlement Agreement
nor the settlement contained herein, nor any act performed or document executed
pursuant to or in furtherance of this Settlement Agreement or the settlement:
(i) is or may be deemed to be or may be used as an admission of, or evidence of,
the validity of any Released Claim, or of any wrongdoing or liability of
▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Companies; (ii) is or may be deemed to be or may be used as
an admission of, or evidence of, any fault or omission of ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇
Companies in any civil, criminal or administrative proceeding in any court,
administrative agency or other tribunal; or (iii) shall be offered in evidence
or alleged in any pleading by any party hereto, ▇▇▇▇▇▇▇▇' or ▇▇▇▇▇▇▇▇ Companies'
counsel or Civil Plaintiffs' Counsel. Released Persons may file this Settlement
Agreement and/or Judgment from this Litigation in any other action that may be
brought against them in order to support a defense or counterclaim based on
principles of res judicata, collateral estoppel, release, good-faith settlement,
judgment bar or reduction or any theory of claim preclusion or issue preclusion
or similar defense or counterclaim. The Parties, their respective counsel or any
other Member of
36
the Class may file this Settlement Agreement in any proceeding brought to
enforce any of its terms or provisions. The Parties and their counsel, and each
of them, agree, to the extent permitted by law, that all agreements made and
orders entered during the course of the Litigation relating to the
confidentiality of information shall survive this Settlement Agreement.
6.16 This Settlement Agreement and the attached Schedules
constitute the entire agreement among the Parties, and no representations,
warranties or inducements have been made to any Party concerning this Settlement
Agreement or its Exhibits other than the representations, warranties and
covenants contained and memorialized in such documents. Except as otherwise
provided herein, each Party shall bear its own costs.
6.17 Each Party, or any person or entity executing this Settlement
Agreement or any of its Exhibits on behalf of any of the Parties, warrants
that it is expressly authorized to take all appropriate action required or
permitted to be taken by the Parties pursuant to this Settlement Agreement
to effectuate its terms and also are expressly authorized to enter into any
modifications or amendments to this Settlement Agreement on behalf of the
Class which they deem appropriate.
6.18 Each counsel or other Person executing this Settlement
Agreement or any of its Exhibits on behalf of any Party hereto hereby
warrants that such Person has the full authority to do so.
6.19 The Court shall retain jurisdiction with respect to
implementation and enforcement of the terms of this Settlement Agreement,
and all Parties hereto submit to the jurisdiction of the Court for purposes
of implementing and enforcing the settlement embodied in this Settlement
Agreement.
6.20 This Settlement Agreement and the Exhibits hereto shall be
considered to have been negotiated, executed and delivered, and to be
wholly performed, in the State of California, and the rights and
obligations of the parties to this Settlement Agreement shall be construed
and enforced in accordance with the laws of the State of California without
giving effect to that State's choice of law principles.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK/
SIGNATURES FOLLOW ON NEXT PAGE]
37
IN WITNESS WHEREOF, the Parties have executed and delivered this
Settlement Agreement and made it effective as of the date set forth at the
beginning of this Settlement Agreement.
THE GOVERNOR OF THE STATE OF CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary of Legal Affairs
Attorney for the Governor of the State of California
THE CALIFORNIA DEPARTMENT OF WATER RESOURCES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Deputy Director
THE CALIFORNIA ELECTRICITY OVERSIGHT BOARD
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Counsel
THE CALIFORNIA PUBLIC UTILITIES COMMISSION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Counsel
ATTORNEY GENERAL OF THE STATE OF CALIFORNIA
By: /s/ ▇▇▇ ▇▇▇▇
--------------------------------------------------
▇▇▇ Alex
Supervising Deputy Attorney General
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: ATTORNEY GENERAL OF OREGON
ATTORNEY GENERAL OF THE STATE OF WASHINGTON
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: ASSISTANT ATTORNEY GENERAL
CITY AND COUNTY OF SAN FRANCISCO
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: San Francisco City Attorney
CITY OF OAKLAND
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Deputy City Attorney
COUNTY OF SANTA ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairperson
COUNTY OF CONTRA COSTA
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: County Counsel
VALLEY CENTER MUNICIPAL WATER DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
PADRE DAM MUNICIPAL WATER DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
▇▇▇▇▇▇ MUNICIPAL WATER DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
HELIX WATER DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
2
VISTA IRRIGATION DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Counsel
YUIMA MUNICIPAL WATER DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
FALLBROOK PUBLIC UTILITY DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
▇▇▇▇▇▇▇ WATER DISTRICT
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
METROPOLITAN TRANSIT DEVELOPMENT BOARD
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
3
SAN DIEGO TROLLEY, INC.
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
SAN DIEGO TRANSIT CORPORATION
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
SWEETWATER AUTHORITY
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Special Counsel
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------------
California Lieutenant Governor ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------------
California Assemblywoman ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in her capacity as a
Representative of the Class
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in her capacity as a
Representative of the Class
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, in her capacity as a
Representative of the Class
4
OSCAR'S PHOTO LAB, IN ITS CAPACITY AS A
REPRESENTATIVE OF THE CLASS
By: /s/ ▇▇▇▇▇▇ Demirjian__
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Owner
▇▇▇▇▇▇▇▇ ENERGY MARKETING & TRADING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and CEO
THE ▇▇▇▇▇▇▇▇ COMPANIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman, President and CEO
5
AMENDED AND RESTATED MASTER POWER PURCHASE
AND SALE AGREEMENT
COVER SHEET
PRODUCTS A, B, AND C
This Amended and Restated Master Power Purchase and Sale Agreement (Version 2.1;
modified 4/25/00) ("Products A, B, C Master Agreement") is made as of the
following date: November 11, 2002 ("Effective Date"). The Products A, B, C
Master Agreement, together with the exhibits, schedules and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any
designated collateral, credit support or margin agreement or similar arrangement
between the Parties and all Transactions (including the Products A, B, C
Transaction (defined below) and any confirmations accepted in accordance with
Section 2.3 hereto) shall be referred to as the "Agreement." The Parties to this
Products A, B, C Master Agreement are the following:
Name: ▇▇▇▇▇▇▇▇ ENERGY MARKETING & Name: STATE OF CALIFORNIA DEPARTMENT
TRADING COMPANY ("▇▇▇▇▇▇▇▇" or OF WATER RESOURCES separate and apart
"Party A" or "Seller") from its powers and responsibilities
with respect to the State Water
Resources Development System ("California
Department of Water Resources" or
"Department" or"Party B" or "Buyer")
All Notices: All Notices: California Department of
Water Resources/CERS
Street: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇: Tulsa, OK Zip: 74172 City: Sacramento, California Zip: 95821
Attn: Contract Administration Attn: Executive Manager Power Systems
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Duns: ▇▇-▇▇▇-▇▇▇▇ Duns:
Federal Tax ID Number: ▇▇-▇▇▇-▇▇▇▇ Federal Tax ID Number: ▇▇-▇▇▇▇▇▇▇
INVOICES: INVOICES: DWR/CERS SETTLEMENTS UNIT
Attn: Power Accounting Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULING: SCHEDULING:
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: Chief Water and Power Dispatcher
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
PAYMENTS: PAYMENTS:
Attn: Power Accounting Attn: Cash Receipts Section
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
1
WIRE TRANSFER: WIRE TRANSFER:
BNK: Bank One, N.A. BNK: Bank of America (Sacramento main
ABA: ▇▇▇▇▇▇▇▇▇ branch)
ACCT: 55-27554 for: Department of Water Resources
ABA: Routing # ▇▇▇▇▇▇▇▇▇
ACCT: # 14365-80598
CREDIT AND COLLECTIONS: CREDIT AND COLLECTIONS:
Attn: ▇▇▇ ▇▇▇▇▇▇ Attn: Deputy Controller
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With additional Notices of an With additional Notices of an Event of
Event of Default to: Default or Potential Event of Default
Attn: Contract Administration to:
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Attn: Deputy Controller
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Parties hereby agree that the General Terms and Conditions are incorporated
herein, and to the following provisions as provided for in the General Terms and
Conditions:
Party A Tariff Tariff n/a Dated______________ Docket Number______________
Party B Tariff Tariff n/a Dated______________ Docket Number______________
ARTICLE TWO
------------------------------------------------------------------------------------------------------------------------------------
Transaction Terms and Conditions [x] Optional provision in Section 2.4. If not checked, inapplicable.
------------------------------------------------------------------------------------------------------------------------------------
ARTICLE FOUR
Remedies for Failure [ ] Accelerated Payment of Damages. If not checked, inapplicable.
to Deliver or Receive
------------------------------------------------------------------------------------------------------------------------------------
ARTICLE FIVE
[ ] Cross Default for Party A:
Events of Default; Remedies [ ] Party A:_____________________ Cross Default Amount $______________
[ ] Other Entity:________________ Cross Default Amount $______________
[ ] Cross Default for Party B:
[ ] Party B:_____________________ Cross Default Amount $______________
[ ] Other Entity:________________ Cross Default Amount $______________
5.6 Closeout Setoff
[ ] Option A (Applicable if no
other selection is made.)
[ ] Option B - Affiliates shall
have the meaning set forth
in the Agreement unless
otherwise specified as
follows:________________
____________________________
[X] Option C (No Setoff)
------------------------------------------------------------------------------------------------------------------------------------
ARTICLE 8 8.1 Party A Credit Protection:
Credit and Collateral Requirements (a) Financial Information:
2
[ ] Option A
[ ] Option B Specify:_____________________
[x] Option C Specify: (1) Annual audit, annual budget and
all financial information sent to any seller under a power
purchase agreement; Party B shall use reasonable commercial
efforts to periodically prepare and make available to all sellers
under power sales agreements, but not more frequently than
quarterly, financial information reasonably intended to apprise
all such sellers of the financial conditions of the Fund.) (2)
Under any Buyer Replacement Agreement (defined below), or
if Party B is an entity other than the California Department of
Water Resources, financial statements, audited if available, no
less frequently than quarterly. Notwithstanding anything in
this Agreement to the contrary, any non-public financial
statements provided pursuant to this Section shall be kept
confidential.
(b) Credit Assurances:
[x] Not Applicable
[ ] Applicable
(c) Collateral Threshold:
[x] Not Applicable
[ ]
If applicable, complete the following:
Party B Collateral Threshold: ; provided, however, that Party B's Collateral
Threshold shall be zero if an Event of Default or Potential Event of Default
with respect to Party B has occurred and is continuing.
Party B Independent Amount: [$________________]
Party B Rounding Amount: [$__________________]
(d) Downgrade Event:
[x] Not Applicable
[ ] Applicable
If applicable, complete the following:
[ ] It shall be a Downgrade Event for Party B if Party B's Credit
Rating falls below [__________] from S&P or ________ from Moody's
or if Party B is not rated by either S&P or Moody's
[ ] Other:
Specify:___________________________________________________________
(e) Guarantor for Party B:_________________________________________________
Guarantee Amount:__________________________________________________
8.2 Party B Credit Protection:
(a) Financial Information:
3
[ ] Option A
[ ] Option B Specify:______________
[x] Option C Specify: Party A to provide annual 10k
filings of its parent and financial statements of Party A,
audited if available, together with an officer's certificate
relating to same, no less frequently than quarterly.
Notwithstanding anything in this Agreement to the contrary,
non-public financial statements provided pursuant to this
Section shall be kept confidential.
(b) Credit Assurances:
[x] Not Applicable
[ ] Applicable
(c) Collateral Threshold:
[x] Not Applicable
[ ]
If applicable, complete the following:
Party A Collateral Threshold: $ ; provided, however, that Party A's
Collateral Threshold shall be zero if an Event of Default or Potential
Event of Default with respect to Party A has occurred and is continuing.
Party A Independent Amount: $________________
Party A Rounding Amount: $___________________
(d) Downgrade Event
[x] Not Applicable
[ ] Applicable
If applicable, complete the following:
[ ] It shall be a Downgrade Event for Party A if Party A's Credit
Rating falls below __________ from S&P or __________ from
Moody's or if Party A is not rated by either S&P or Moody's
[ ] Other:
(e) Guarantor for Party A:____________________________________________
______________________________________________________________
-------------------------------------------------------------------------------
ARTICLE 10
Confidentiality [ ] Confidentiality Applicable If not checked, inapplicable.
-------------------------------------------------------------------------------
SCHEDULE M
[ ] Party A is a Governmental Entity or Public Power System
[x] Party B is a Governmental Entity or Public Power System
[ ] Add Section 3.6. If not checked, inapplicable
[ ] Add Section 8.4. If not checked, inapplicable
4
OTHER CHANGES Specify, if any:____________________________________________
(a) DEFINITIONS.
(1) Section 1.11 is amended by adding the following sentence at the end of the
current definition: "The Non-defaulting Party shall use commercially reasonable
efforts to mitigate or eliminate these Costs."
(2) Section 1.51, "Replacement Price" is amended on the fifth line by deleting
the phrase "at Buyer's option" and inserting the following phrase: "absent a
purchase."
(3) Section 1.53, "Sales Price" is amended on the fifth line of by deleting the
phrase "at Seller's option" and inserting the following phrase: "absent a sale."
(4) Sections 1.6, 1.24, 1.28, 1.33, 1.34, 1.35, 1.36, 1.43, 1.44, 1.46, 1.48 and
1.56 are amended by deleting the text in each of such sections and substituting
therefor "[Intentionally omitted.]"
(5) Section 1.59 is amended by changing "Section 5.3" to "Section 5.2."
(6) Sections 1.62 through 1.73 are added to Article One as follows:
1.62 "Bonds" means the bonds offered by the Department of Water
Resources pursuant to AB 1X, codified at California Water Code
Section 80100 et seq (the "Act") with recourse only to the Trust
Estate, and shall include any financing pursuant to Executive
Order D-42-01 and a Credit and Security Agreement, dated as of
June 26, 2001, by and among the Department of Water Resources,
various lenders and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
agent on behalf of such lenders.
1.63 "Buyer Replacement Agreement" means any agreement identical to
this Agreement (including the Products A, B, C Transaction)
between Party A and a Qualified Electrical Corporation, excluding
provisions relating to Party B's status as a governmental agency
or to the original start date(s) of this Agreement, and together
with such changes as Party A and such Qualified Electrical
Corporation may agree.
1.64 "Fund" means the Department of Water Resources Electric Power
Fund established by Section 80200 of the Water Code.
1.65 "Market Quotation Average Price" means the average of the good
faith quotations solicited from not less than three (3) Reference
Market-makers; provided, however, that the Party soliciting such
quotations shall use commercially reasonable efforts to obtain
good faith quotations from at least five (5) Reference
Market-makers and, if at least five (5) such quotations are
obtained, the Market Quotation Average Price shall be determined
disregarding the highest and lowest quotations.
1.66 "Market Value" has the meaning set forth in Section
5.3.
1.67 "Per Unit Market Price" means the applicable price per MWh
determined in accordance with Section 5.3.
1.68 "Products A, B, C Transaction" means the Transaction described in
the attached Confirmation dated November 11, 2002.
1.69 "Qualified Electric Corporation" means an electrical corporation
as defined by the Act, whose long-term unsecured senior debt on
the effective date of any Buyer Replacement Agreement is rated
BBB or better by S&P and Baa2 or better by Moody's and is not on
negative outlook or Credit Watch from either rating agency;
provided that with the exception of San Diego Gas and Electric
Company,
5
Southern California Edison Company and Pacific gas and Electric
Company, no electrical corporation shall be a Qualified
Electrical Corporation without the prior written agreement of
Party A.
1.70 "Qualified Power Seller" means any entity (a) engaged in the
selling of electricity whose long-term unsecured senior debt on
the effective date of any Assignment and Assumption Agreement is
rated BBB or better by Standard & Poor's and Baa2 or better by
Moody's and is not on negative outlook or Credit Watch from
either rating agency, and (b) approved by Party B, such approval
not to be unreasonably withheld.
1.71 "Reference Market-maker" means any marketer, trader or seller of
or dealer in firm energy products whose long-term unsecured
senior debt is rated BBB- or better by Standard & Poor's and Baa3
or better by ▇▇▇▇▇'▇ Investor Services.
1.72 "Replacement Contract" means a contract having a term, quantity,
delivery rate, delivery point and product substantially similar
to the remaining Term, quantity, delivery rate, Delivery Point
and Product to be provided under this Agreement.
1.73 "Trust Estate" means all revenues received by Party B under any
obligation entered into, and rights to receive the same, and
moneys on deposit in the Fund and income or revenue derived from
the investment thereof.
(b) TRANSACTIONS. The Transaction shall be in writing and this Agreement may not
be amended or modified except in writing signed by the Parties' respective duly
authorized representatives. For purposes of this requirement, a Recording
pursuant to Section 2.5 shall not constitute a writing.
(c) GOVERNING TERMS. Section 2.2 is amended by adding the following
sentence at the end of the current section:
"Notwithstanding the foregoing, the Products A, B, C
Transaction shall be treated as a stand-alone Transaction and
accordingly, (a) provisions in the Master Agreement referring to
offsetting or netting multiple Transactions shall not be applicable to
the Products A, B, C Transaction, and (b) an Event of Default or
Potential Event of Default with respect to any Transaction other than
the Products A, B, C Transaction shall not affect the Products A, B, C
Transaction. No provision of any other Confirmation entered into
pursuant to Section 2.4 shall affect the Products A, B, C Transaction."
(d) CONFIRMATION. Section 2.3, Confirmation, the term "Seller" (and
cognates) is deleted and is replaced with "Party A" in each place where it
occurs; and the term "Buyer" (and cognates) is deleted and is replaced with
"Party B" in each place where it occurs. And insert the words "or other
electronic transmission," after the word "facsimile."
(e) RECORDING. Section 2.5, Recording, the phrase "of all telephone
conversations between the Parties to this Master Agreement" is deleted and
replaced with the phrase "of all telephone conversations between the energy
scheduling and/or trading personnel of the Parties to this Products A, B, C
Master Agreement related to scheduling of energy to be delivered pursuant to
this Agreement."
(f) TRANSMISSION AND SCHEDULING. Section 3.2 is amended by renaming it
"Transmission, Scheduling and Imbalance Charges" and inserting the following
sentences at the end thereof:
"In addition to the remedies provided under Article 4, Buyer shall
assume all liability for and reimburse Seller within thirty (30) days
of presentation of an invoice for any Penalties incurred as a result of
Buyer's failure to (i) notify Seller of a failure to Schedule or a
change in a Schedule or (ii) comply with the Transmission Provider's
tariff and scheduling policies. Seller shall assume all liability for
and reimburse Buyer within thirty (30) days of presentation of an
invoice for any Penalties incurred as a result of Seller's failure to
(i) notify Buyer of a failure to Schedule or a change in a Schedule or
(ii) comply with the Transmission Provider's tariff and scheduling
policies. The Parties shall notify each other as soon as
6
possible of any imbalance that is occurring or has occurred and shall
cooperate to eliminate imbalances and minimize Penalties. Penalties
shall be defined as any fees, liabilities, assessments or similar
charges assessed by a Transmission Provider."
(g) EVENTS OF DEFAULT. Section 5.1 is amended as follows.
(1) In Section 5.1(c) the phrase "three (3) Business Days", is deleted
and replaced with "fifteen (15) Business Days".
(2) Add a new subsection (i) as follows:
(i) for Party B, any amendment or repeal of the Water Code
subsequent to the date hereof, that adversely affects the ability
of Party B to perform its obligations under this Agreement or
otherwise adversely affects the rights of Party A hereunder, in
which event Party B shall be the Defaulting Party.
(h) DECLARATION OF AN EARLY TERMINATION DATE AND CALCULATION OF TERMINATION
PAYMENT.
(1) The last sentence of Section 5.2 is replaced in its entirety by the
following: "Upon termination of this Agreement as the result of an Event of
Default, the Non-Defaulting Party shall be entitled to a payment (the
"Termination Payment") which shall be the aggregate of the Market Value and
Costs calculated as of the Early Termination Date in accordance with Section
5.3. As soon as practicable after the Early Termination Date, the Non-Defaulting
Party shall give notice to the Defaulting Party of the amount of the Termination
Payment, if any, due to the Non-Defaulting Party. The notice shall include a
written statement explaining in reasonable detail the calculation of such
amount. Termination Payment to be made no later than one hundred eighty (180)
days after receipt of written notice of an Early Termination Date."
(2) The following shall be added to the end of Section 5.2 (as amended by clause
(1) immediately above): "Notwithstanding the other provisions of this Agreement,
if the Non-Defaulting Party has the right to liquidate or terminate all
obligations arising under the Agreement under the provisions of this Article 5
because the Defaulting Party or its Guarantor either (a) is the subject of a
bankruptcy, insolvency, or similar proceeding, or (b) applies for, seeks,
consents to, or acquiesces in the appointment of a receiver, custodian, trustee,
liquidator, or similar official for all or a substantial portion of its assets,
then this Agreement and the Transaction shall automatically terminate, without
notice, as if the Early Termination Date was the day immediately preceding the
events listed in Section 5.1."
(3) Section 5.3 is replaced in its entirety by the following:
"5.3. Termination Payment Calculations. The Non-Defaulting Party
shall calculate the Termination Payment as follows:
(a) Market Value shall be (i) in the case Party B is the Non-Defaulting
Party, the present value of the positive difference, if any, of (A)
payments under a Replacement Contract based on the Per Unit Market
Price, and (B) payments under this Agreement, or (ii) in the case
Party A is the Non-Defaulting Party, the present value of the
positive difference, if any, of (A) payments under this Agreement,
and (B) payments under a Replacement Contract based on the Per Unit
Market Price, in each case using the Present Value Rate as of the
time of termination (to take account of the period between the time
notice of termination was effective and when such amount would have
otherwise been due pursuant to the relevant transaction). The
"Present Value Rate" shall mean the sum of 0.50% plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services
Screen (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in United States
government securities) at 11:00 a.m. (New York City, New York time)
for the United States government securities having a maturity that
matches the average remaining term of this Agreement. It is
expressly agreed that the Non-Defaulting Party shall not be
required to enter into a Replacement Contract in order to determine
the Termination Payment.
(b) To ascertain the Per Unit Market Price of a Replacement Contract
with a term of less than one year, the Non-Defaulting Party may
consider, among other valuations, quotations from leading dealers
in
7
energy contracts, the settlement prices on established, actively
traded power exchanges, other bona fide third party offers and
other commercially reasonable market information.
(c) To ascertain the Per Unit Market Price of a Replacement Contract
with a term of one year or more, the Non-Defaulting Party shall use
the Market Quotation Average Price; provided, however, that if
there is not an actively traded market for such Replacement
Contract or if the Non-Defaulting Party is unable to obtain
reliable quotations from at least three (3) Reference
Market-makers, the Non-Defaulting Party shall use the methodology
set forth in paragraph (b).
(d) In no event, however, shall a party's Market Value or Costs include
any penalties, ratcheted demand charges or similar charges imposed
by the Non-Defaulting Party.
If the Defaulting Party disagrees with the calculation of the
Termination Payment and the parties cannot otherwise resolve their
differences, the calculation issue shall be submitted to dispute
resolution as provided in Section 10.12 of this Agreement. Pending
resolution of the dispute, the Defaulting Party shall pay the full
amount of the Termination Payment calculated by the Non-Defaulting
Party no later than one hundred eighty (180) days after receipt of
written notice of an Early Termination Date."
(3) Section 5.4 is replaced in its entirety by the following:
Section 5.4 Adequate Assurance. Notwithstanding any other
provision of this Agreement, Party A and Party B acknowledge
and agree that if an order for relief under Chapter 11 of the
United States Bankruptcy Code (11 U.S.C. sec. 101 et seq.), as
the same may be amended from time to time (the "Bankruptcy
Code"), is entered against Party A at any time during the term
of this Agreement, then, if this Agreement has not been
terminated, adequate assurances of future performance will not
be provided to Party B by Party A within the meaning of
section 365(b)(1) of the Bankruptcy Code unless Party A
affirmatively establishes that it has the required financial
or other resources necessary to operate and perform under this
Agreement.
Party A and Party B further acknowledge and agree that if an order for
relief under Chapter 11 of the Bankruptcy Code is at any time entered
against Party A during the term hereof, then Party A must be able to
cure (a) all non-monetary defaults hereunder within ninety (90) days of
the date on which Party A proposes to assume this Agreement; and (b)
all monetary defaults hereunder within one (1) year from the date on
which Party A proposes to assume this Agreement.
(4) Sections 5.5, 6.7 and 6.8 are amended by deleting the text in each
of such sections and substituting therefor "[Intentionally omitted.]"
(i) TIMELINESS OF PAYMENT. Add the following to Section 6.2 before the first
sentence in that section: "Party A shall provide invoice data, disaggregated by
transaction components, in a template formas may be reasonably specified by
Party B."
(j) LIMITATIONS. Article Seven is amended as follows:
(1) Add a new Section 7.2, "The obligations hereunder of Party A shall be
solely those of Party A and Guarantor, if any, and no other person or entity."
(k) GRANT OF SECURITY INTEREST/REMEDIES. In Section 8.3 the phrase "or deemed
occurrence" is deleted from the beginning of the second sentence.
(l) GOVERNMENTAL CHARGES. Add the following to Section 9.2 after the second
sentence in that section: "Party A shall be entitled to pass through to Party B
any liability, loss, cost, damage and expense, including gross-up, arising out
of a tax or other imposition enacted by the California state legislature after
the date of this Agreement that is not
8
of general applicability and is instead directed at the assets or activities
involved in the generation, sale, purchase, ownership and/or transmission of
electric power, natural gas and/or other utility or energy goods and services,
but only insofar as such liability, loss, cost, damage or expense relates to a
Transaction hereunder and reflects an increase in Party A's cost of service in
connection therewith. Party B shall be entitled to the benefit or reduction of
or credit with respect to any such tax or other imposition enacted by the
California state legislature after the date of this Agreement, but only insofar
as such benefit relates to a Transaction hereunder and results in a decrease in
Party A's cost of service for such Transaction."
(m) TERM OF MASTER AGREEMENT. Add the following sentence to Section 10.1: "The
Products A, B, C Transaction shall terminate on the day following the last day
of the Delivery Period, unless terminated sooner pursuant to the express
provisions of this Agreement or as a result of an Event of Default".
(n) REPRESENTATIONS AND WARRANTIES.
(1) the phrase "...and is qualified to conduct its business in each
jurisdiction in which it will perform a Transaction" is added to
the end of Section 10.2(i);
(2) the phrase ", except as would not have a material and adverse
affect on the other Party" is added to the end of Section
10.2(iii);
(3) the phrase "or any of its Affiliates" is deleted from Section
10.2(vi);
(4) the phrase ", and are reasonable in all respects, including rates
and allocation of risk" is added to the end of Section 10.2(xii);
(5) clauses (ix) and (xi) of Section 10.2 are amended by deleting the
text in each of such sections and substituting therefor
"[Intentionally omitted.]", provided, that such clauses shall be
included in any Buyer Replacement Agreement as defined herein.
(o) INDEMNITY. The phrase "To the extent permitted by law" is added at the
beginning of the first two sentences of Section 10.4. Add the following to the
end of Section 10.4: "To the extent Party A and Party B are named as defendants
by a third party in any action arising with respect to delivery of Product and
Party B receives any amount from a third party as indemnification or
reimbursement with respect to such action, Party A and Party B agree to
equitably divide such amount."
(p) ASSIGNMENT. In Section 10.5, the existing paragraph shall be replaced in its
entirety with the following:
"(a) Neither Party shall assign this Agreement or its rights hereunder
without the prior written consent of the other Party, which consent may
be withheld in the exercise of its sole discretion.
(b) Notwithstanding the foregoing, Party A may, without the consent of
Party B, (i) transfer, sell, pledge, encumber or assign this Agreement
or the accounts, revenues or proceeds hereof in connection with any
financing or other financial arrangements, (ii) transfer or assign this
Agreement to an affiliate of Party A which affiliate's creditworthiness
is equal to or higher than that of Party A, or (iii) transfer or assign
this Agreement to any person or entity succeeding to all or
substantially all of the assets whose creditworthiness is equal to or
higher than that of Party A; provided, however, that in each such case,
such assignee shall agree in writing to be bound by the terms and
conditions hereof and, so long as the Party A delivers such tax and
enforceability assurances together with such assurances as to the
sufficiency of creditworthiness of such assignee to perform its
obligations hereunder, as Party B may reasonably request; provided,
further, however, that in the event this Agreement is pledged or
assigned to a bond trustee pursuant to clause (i) as collateral for
bonds issued by Party A, such bond trustee shall not be required to
agree in writing to be bound by the terms and conditions hereof unless
and until the bond trustee or any successor or assign shall foreclose
on such collateral in which case such bond trustee or its successor or
assign shall be bound by each of the provisions hereof, including the
immediately preceding proviso.
(c) Notwithstanding the foregoing, Party B, without the consent of
Party A, may (i) transfer, sell, pledge, encumber or assign this
Agreement or the accounts, revenues or proceeds hereof in connection
with any financing or other financial arrangements, or (ii) transfer
and assign all of its right, title and interest to this
9
Agreement and the Fund to another Governmental Entity created or
designated by law solely to carry out the rights, powers, duties and
obligations of the Department under the Act, provided, however, that in
each such case, such assignee shall agree in writing to be bound by the
terms and conditions hereof and, in each such case, so long as the
transferring Party delivers such tax and enforceability assurances
together with such assurances as to the sufficiency of creditworthiness
of such assignee to perform its obligations hereunder, as the
non-transferring Party may reasonably request; provided, further,
however, that in the event this Agreement is pledged or assigned to a
bond trustee pursuant to clause (i) as collateral for bonds issued by
Party B, such bond trustee shall not be required to agree in writing to
be bound by the terms and conditions hereof unless and until the bond
trustee or any successor or assign shall foreclose on such collateral
in which case such bond trustee or its successor or assign shall be
bound by each of the provisions hereof, including the immediately
preceding proviso."
(q) GOVERNING LAW. In Section 10.6, "New York" shall be replaced with
"California."
(r) GENERAL.
(1) The phrase "Except to the extent herein provided for," shall be
deleted from the fourth sentence of Section 10.8, and the phrase "and this
agreement may not be orally amended or modified, including by Recording pursuant
to Section 2.5" shall be added to the end of such fourth sentence.
(2) In the ninth sentence of Section 10.8, insert "materially affected
or" after the phrase "Any provision," and insert "and materially affected by or"
after the phrase "or regulatory agency."
(s) ADDITIONAL PROVISIONS. New Sections 10.12 through 10.18 are added to Article
10 as follows:
10.12. No Retail Services; No Agency. (a) Nothing contained
in this Agreement shall grant any rights to or obligate Party A to
provide any services hereunder directly to or for retail customers of
any person.
(b) In performing their respective obligations hereunder,
neither Party is acting, or is authorized to act, as agent of the other
Party.
10.13 Dispute Resolution. (a) If a dispute shall arise
between the Parties relating to the interpretation of this Agreement or
to performance by a Party hereunder or under any Transaction, the Party
desiring resolution of the dispute shall notify the other Party in
writing. The notice shall set forth the matter in dispute in reasonable
detail and a proposed solution.
(b) The Parties shall attempt to resolve any dispute within 15
calendar days after delivery of the written notice referred to above.
Any disputes not so resolved shall be referred by each Party to an
officer (or the officer's designee) for resolution. If the Parties fail
to reach an agreement within 15 days after such referral, each Party
shall have the right to pursue any and all remedies provided in this
Agreement and as afforded by applicable law.
(c) The existence of any dispute or controversy under this
Agreement or the pendency of the dispute settlement or resolution
procedures set forth herein shall not in and of itself relieve or
excuse either Party from its ongoing duties and obligations under this
Agreement.
10.14 WAIVER OF JURY TRIAL. THE PARTIES HEREBY EXPRESSLY
WAIVE ALL RIGHTS TO TRIAL BY JURY ON ANY CAUSE OF ACTION, SUIT OR
PROCEEDING DIRECTLY OR INDIRECTLY INVOLVING OR RELATED TO THE TERMS,
COVENANTS OR CONDITIONS OF THIS AGREEMENT OR ANY MATTERS WHATSOEVER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR RELATED TO THIS
AGREEMENT. EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE OTHER PARTY OR ANY CREDIT SUPPORT PROVIDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO
10
ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE
OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND PROVIDE
FOR ANY CREDIT SUPPORT DOCUMENTS, AS APPLICABLE, BY AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. THE PROVISIONS
OF THIS AGREEMENT RELATING TO WAIVER OF JURY TRIAL SHALL SURVIVE THE
TERMINATION OR EXPIRATION OF THIS AGREEMENT.
10.15 No Third Party Beneficiaries.
The provisions of this Agreement are for the benefit of the Parties
hereto, and as to any other person or entity, this Agreement shall not
be construed as a third party beneficiary contract.
10.16 CAISO Imbalance Markets; Scheduling. Party A shall
not intentionally (a) use the CAISO uninstructed imbalance energy
markets to deliver the Contract Quantity to Party B, or (b) for
economic reasons fail to schedule by the time delivery is due the
Contract Quantity to Party B during any CAISO stage alert; provided in
no event shall Party A be precluded from bidding or providing
"regulation down" or similar services recognized by the CAISO.
From time to time (but not more frequently than monthly) upon Party B's
request, Party A shall provide Party B scheduling information
reasonably satisfactory to Party B in sufficient detail to enable Party
B to verify compliance with this Section 10.16.
10.17 Fixed Rate Contract; Mobile-Sierra Clause. The
Parties hereby stipulate and agree that, under the facts and
circumstances known to them at this time, this Agreement was entered
into as a result of arms'-length negotiations between the Parties.
Further, the Parties believe that the rates, terms and conditions of
this Agreement are just and reasonable within the meaning of Sections
205 and 206 of the Federal Power Act, 16 U.S.C. Sections 824d and 824e,
and that the rates, terms and conditions of this Agreement will remain
so over the life of the Agreement. The Parties waive all rights to
challenge the validity of this Agreement or whether it is just and
reasonable for and with respect to the entire term thereof, including
any rights under Sections 205 and 206 of the Federal Power Act to
request the FERC to revise the terms and conditions and the rates or
services specified in this Agreement, and hereby agree to make no
filings at the FERC or with any other state or federal agency, board,
court or tribunal challenging the rates, terms and conditions of this
Agreement as to whether they are just and reasonable or in the public
interest under the Federal Power Act. The Parties hereby further
stipulate and agree that neither Party may bring any action, proceeding
or complaint under Section 205 or 206 of the Federal Power Act, 16
U.S.C. 824d or 824e, seeking to modify, cancel, suspend, or abrogate
the rates, terms and conditions of this Agreement or any Transaction
hereunder, or to prevent this Agreement or any Transaction hereunder
from taking effect. It is further agreed that, in the event any of the
Parties challenges this Agreement for any other reason, they will not
dispute the applicability of the public interest standard as that term
has been defined and interpreted under the Federal Power Act and the
cases of United Gas Pipe Line Co. v. Mobile Gas Corp., ▇▇▇ ▇.▇. ▇▇▇
(1956), and FPC v. Sierra Pacific Power Co., 350 U.S. 348 (1956), and
subsequent cases.
10.18 Novation. Notwithstanding the foregoing limitations
on assignment, at any time after January 1, 2003, the Seller shall,
upon the written request of Department, enter into one or more Buyer
Replacement Agreements as may be agreed to by one or more Qualified
Electric Corporations. This Agreement shall terminate upon effective
date of a Buyer Replacement Agreement. The effectiveness of the Buyer
Replacement Agreement shall constitute a novation that shall relieve
Department of any liability or obligation arising after the date of
termination of the Agreement. Such Buyer Replacement Agreement shall
state that it is a Buyer Replacement Agreement within the meaning of
this Agreement and that it constitutes a novation for which there is
adequate consideration. The effectiveness of such Buyer Replacement
Agreement shall be subject to the condition precedent that the
California Public Utilities Commission shall have conducted a just and
reasonable review under Section 451 of the Public Utilities Code with
respect to such Buyer Replacement Agreement and shall have issued an
order determining that the charges under such Buyer Replacement
Agreement are just and reasonable.
11
(t) SCHEDULE M. Schedule M shall be amended as follows:
(1) In Section A, "Act" will mean Sections 80000, 80002, 80002.5,
80003, 80004, 80010, 80012, 80014, 80016, 80100, 80102, 80104,
80106, 80108, 80110, 80112, 80116, 80120, 80122, 80130, 80132,
80134, 80200, 80250, 80260 and 80270 of the Water Code, as amended.
(2) "Special Fund" will mean the Fund.
(3) In Section A, the defined term "Governmental Entity or Public Power
System" shall be replaced with the term "Governmental Entity" using
the following definition "`Governmental Entity' means the State of
California, any State governmental board, public power authority,
public utility district, joint action agency, or other similar
political subdivision or public entity of the State of California,
the State of California Department of Water Resources, or any
combination thereof"; and all references to (A) "Governmental
Entity or Public Power System" (and cognates) and (B) "Public Power
System" (and cognates) in Schedule M shall be replaced with the new
defined term "Governmental Entity" (using the applicable cognate).
(4) In Section B, the sentence to be added to the end of the definition
of "Force Majeure" in Article One shall be replaced with the
following: "If the Claiming Party is a Governmental Entity, Force
Majeure does not include any act or omission of a Governmental
Entity (or any branch, subdivision, agency, officer or
representative thereof) in its governmental capacity or any other
act or omission of any Governmental Entity (including judicial
action or inaction) and such act or omission shall be deemed to be
an action of Party B.
(5) In Section C add the following representations and warranties:
(i) "Party B represents and warrants that a Rate Agreement By and
Between State of California Department of Water Resources and
State of California Public Utilities Commission adopted by the
California Public Utilities Commission on February 21, 2001 in
Decision ▇▇-▇▇-▇▇▇ (the "rate Agreement") is binding and in
effect."
(ii) Party B represents and warrants each of this Amended and
Restated Master Power Purchase and Sale Agreement and the
Products A, B, C Transaction is a "Priority Long Term Power
Contract" as that term is defined in the Rate Agreement.
(6) In Section D, delete Section 3.5 and replace it with the following:
"Section 3.5 No Immunity Claim. California law authorizes
suits based on contract against the State or its agencies, and Party B
agrees that it will not assert any immunity it may have as a state
agency against such lawsuits filed in California state court."
(7) In Section G, specify that the laws of the State of California will
apply.
(8) Add a new Section H, which shall read as follows:
Section 3.6. Payments Under Agreement an Operating Expense.
Payments under this Agreement shall constitute an operating expense of
the Fund payable prior to all bonds, notes or other indebtedness
secured by a pledge or assignment of the Trust Estate or payments to
the general fund.
(9) Add a new Section I, which shall read as follows:
Section 3.7. Rate Covenant; No Impairment. Party B covenants that it will,
at least annually, and more frequently as required, establish and revise
revenue requirements sufficient, together with any moneys on deposit in the
Fund, to provide for the timely payment of all obligations which it has
incurred, including any payments required to be made by Party B pursuant to
this Agreement. While any obligations of Party B pursuant this Agreement
remain outstanding and not fully performed or discharged, the rights,
powers, duties
12
and existence of Party B and the Public Utilities Commission shall not be
diminished or impaired in any manner that will affect adversely the
interests and rights of Party A under this Agreement.
(10) Add a new Section J, which shall read as follows:
Section 3.8. Sources of Payment; No Debt of State. Party B's
obligation to make payments hereunder shall be limited solely to the
Fund. Any liability of Party B arising in connection with this
Agreement or any claim based thereon or with respect thereto,
including, but not limited to, any Termination Payment arising as the
result of any breach or Potential Event of Default or Event of Default
under this Agreement, and any other payment obligation or liability of
or judgment against Party B hereunder, shall be satisfied solely from
the Special Fund. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING
POWER OF THE STATE OF CALIFORNIA ARE OR MAY BE PLEDGED FOR ANY PAYMENT
UNDER THIS AGREEMENT. Revenues and assets of the State Water Resources
Development System shall not be liable for or available to make any
payments or satisfy any obligation arising under this Agreement.
(11) Add a new Section K, which shall read as follows:
"Section 3.9 No More Favorable Terms. Party B shall not
provide in any power purchase agreement payable from the Trust Estate
for (i) collateral or other security or credit support with respect
thereto, (ii) a pledge or assignment of the Trust Estate for the
payment thereof, or (iii) payment priority with respect thereto
superior to that of Party A, without in each case offering such
arrangements to Party A."
(12) Add a new Section L, which shall read as follows:
"Section 3.10. Application of Government Code and the Public
Contracts Code. Party A has stated that, because of the administrative
burden and delays associated with such requirements, it would not enter
into this Agreement if the provisions of the Government Code and the
Public Contracts Code applicable to state contracts, including, but not
limited to, advertising and competitive bidding requirements and prompt
payment requirements would apply to or be required to be incorporated
in this Agreement. Accordingly, pursuant to Section 80014(b) of the
Water Code, Party B has determined that it would be detrimental to
accomplishing the purposes of Division 27 (commencing with Section
80000) of the Water Code to make such provisions applicable to this
Agreement and that such provisions and requirements are therefore not
applicable to or incorporated in this Agreement."
(13) Add a new Section M, which shall read as follows:
"Section 3.11. Electric Corporations as Agents. Party B shall
establish or cause to be established the terms and conditions for the
segregation of moneys received by electrical corporations pursuant to
Section 80106 pending their transfer to Party B in accordance with
Section 80112 of the Water Code."
(13) Add a new Section N, which shall read as follows:
"Section 3.12. Deposit of Proceeds of Bonds. The proceeds of
any bonds issued by Party B shall be deposited and applied in
accordance with the resolution or indenture providing for the issuance
thereof."
(14) Add a new Section O, which shall read as follows:
"Section 3.13. Transfers of Power Charge Revenues and Bond
Charge Revenues. The indenture providing for the issuance of any bonds
or other indebtedness by Party B will provide for the application of
Power Charge Revenues and Bond Charge Revenues in accordance with the
document entitled "California Department of Water Resources Summary of
Material Terms of Financing Documents (Submitted in connection with
Section 7.10 of a proposed Rate Agreement between California Department
of Water Resources and the California Public Utilities Commission)"
under the captions "III. Flow of Funds - Power Charge Revenues; Bond
Charge Revenues as modified and amended by the Amended and Restated
Addendum to Summary of Material Terms of Financing Documents dated as
of August 8, 2002, as further
13
amended or supplemented, and according to Section 7.10 of the Rate
Agreement as adopted by the California Public Utilities Commission in
Decision No. ▇▇-▇▇-▇▇▇."
(u) CONDITIONS PRECEDENT. The effectiveness of this Agreement (including the
Products A, B, C Transaction) is subject to and conditioned upon:
(1) delivery to Party A of a legal opinion from the General Counsel of
the California Department of Water Resources in the form attached
hereto as Exhibit A; and
(2) delivery to Party A of a legal opinion from the Attorney General of
the State of California in the form attached hereto as Exhibit B.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
THIS PRODUCTS A, B, C MASTER AGREEMENT AMENDS AND SUPERSEDES THAT CERTAIN MASTER
POWER PURCHASE AND SALE AGREEMENT DATED FEBRUARY 16, 2001 (THE "PRIOR
AGREEMENT") BY AND BETWEEN THE PARTIES. AS OF THE EFFECTIVE DATE OF THIS MASTER
AGREEMENT, THE PRIOR AGREEMENT, TOGETHER WITH ANY TRANSACTION THEREUNDER, SHALL
BE OF NO FORCE OR EFFECT.
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly
executed as of the date first above written.
▇▇▇▇▇▇▇▇ ENERGY MARKETING & CALIFORNIA DEPARTMENT OF WATER
TRADING COMPANY RESOURCES separate and apart from its powers
and responsibilities with respect to the
State Water Resources Development System
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
Title:__________________________ Title:__________________________
DISCLAIMER: THIS AMENDED AND RESTATED MASTER POWER PURCHASE AND SALE AGREEMENT
WAS PREPARED BY A COMMITTEE OF REPRESENTATIVES OF EDISON ELECTRIC INSTITUTE
("EEI") AND NATIONAL ENERGY MARKETERS ASSOCIATION ("NEM") MEMBER COMPANIES TO
FACILITATE ORDERLY TRADING IN AND DEVELOPMENT OF WHOLESALE POWER MARKETS.
NEITHER EEI NOR NEM NOR ANY MEMBER COMPANY NOR ANY OF THEIR AGENTS,
REPRESENTATIVES OR ATTORNEYS SHALL BE RESPONSIBLE FOR ITS USE, OR ANY DAMAGES
RESULTING THEREFROM. BY PROVIDING THIS AGREEMENT EEI AND NEM DO NOT OFFER LEGAL
ADVICE AND ALL USERS ARE URGED TO CONSULT THEIR OWN LEGAL COUNSEL TO ENSURE THAT
THEIR COMMERCIAL OBJECTIVES WILL BE ACHIEVED AND THEIR LEGAL INTERESTS ARE
ADEQUATELY PROTECTED.
1
ACKNOWLEDGMENTS
State of Oklahoma )
) SS
County of Tulsa )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, ____________________ of ▇▇▇▇▇▇▇▇ Energy Marketing
& Trading Company, a Delaware corporation, known to me that he executed this
Amended and Restated Master Power Purchase And Sale Agreement Cover Sheet for
the purposes and consideration herein expressed, in the capacity therein set
forth and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
________________________________________
Notary Public
My Commission Expires: ________________
[ S E A L ]
State of California )
) SS
County of _________ )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, _____________________ of the California
Department of Water Resources, a ____________________, known to me that he
executed this Amended and Restated Master Power Purchase And Sale Agreement
Cover Sheet for the purposes and consideration therein expressed, in the
capacity therein set forth and as the act and deed of said ______________.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
________________________________________
Notary Public
My Commission Expires: ________________
[ S E A L]
2
MASTER POWER PURCHASE AND SALE AGREEMENT
AMENDED AND RESTATED CONFIRMATION LETTER
PRODUCTS A, B, C TRANSACTION
This amended and restated confirmation letter shall confirm the
Transaction agreed to on November 11, 2002 between ▇▇▇▇▇▇▇▇ ENERGY MARKETING &
TRADING COMPANY ("Party A") and CALIFORNIA DEPARTMENT OF WATER RESOURCES
separate and apart from its powers and responsibilities with respect to the
State Water Resources Development System ("Party B") regarding the sale/purchase
of the Product under the terms and conditions as follows:
Seller: Party A
Buyer: Party B
Product:
[ ] Into _________________, Seller's Daily Choice
[ ] Firm (LD)
[ ] Firm (No Force Majeure)
[ ] System Firm
(Specify System:_____________________________________________________)
[ ] Unit Firm
(Specify Unit(s):____________________________________________________)
[X] Other
Product A: Firm (LD) 7x24 (hour ending 0100 through the hour
ending 2400, Monday through Sunday).
Product B: Firm (LD) 6x16 (hour ending 0700 through the hour
ending 2200, Monday through Saturday (except for official NERC
holidays)).
Product C: Firm (LD) 6x16 (hour ending 0700 through the hour
ending 2200, Monday through Saturday (except for official NERC
holidays)).
[ ] Transmission Contingency (If not marked, no transmission
contingency)
[ ] FT-Contract Path Contingency [ ] Seller [ ] Buyer
3
[ ] FT-Delivery Point Contingency [ ] Seller [ ] Buyer
[ ] Transmission Contingent [ ] Seller [ ] Buyer
[X] Other transmission contingency
(Specify: Buyer shall be responsible for transmission contingencies at
and after the Delivery Point and Seller shall be responsible for transmission
contingencies prior to the Delivery Point.)
Contract Quantity:
Product A: Start Date - June 30, 2003: 40 MW
July 1, 2003 - Dec. 31, 2007: 200 MW
Product B: Start Date - Jun. 30, 2003: 175 MW
July 1, 2003 - Dec. 31, 2007: 450 MW
Jan. 1, 2008 - Dec. 31, 2010: 275 MW
Product C: July 1, 2003 - Dec. 31, 2010: 50 MW
Delivery Point: Product A, B and C: SP 15
Energy Price: Product A: $62.50 per MWh
Product B: 2003-2005 $87.00 per MWh
2006 $78.07 per MWh
2007 $77.07 per MWh
2008 $76.07 per MWh
2009 $75.07 per MWh
2010 $74.07 per MWh
Product C: $70.00 per MWh
Delivery Period: Product A: Start Date - Dec. 31, 2007
Product B: Start Date - Dec. 31, 2010
Product C: July 1, 2003 - Dec. 31, 2010
Special Conditions:
(1) "Start Date" means January 1, 2003.
4
(2) Material Modification or Elimination of Delivery
Point. In the event that the California Independent
System Operator ("CAISO") or its successor eliminates
or materially modifies the characteristics of the
Delivery Point such that either Seller or Buyer is
adversely affected thereby, Seller shall, upon such
elimination or modification, deliver the Product to a
delivery point reasonably determined by it to
approximate the location and characteristics of the
Delivery Point on the date of the execution of this
Confirmation Letter ("Modified Delivery Point"). If
Seller reasonably determines that no Modified
Delivery Point exists, the parties shall negotiate a
mutually agreeable replacement delivery point
("Replacement Delivery Point") for such delivery.
Once Seller or Buyer determines that the Delivery
Point will be modified or eliminated such that it
will be adversely affected thereby, it will notify
the other party as soon as practicable.
(3) The Product B Energy Price shall be subject to
adjustment as provided in that certain Settlement
Agreement, among the parties hereto in addition to
other parties, dated November 11, 2002.
Scheduling: _________________________________
Option Buyer: N/A
Option Seller: N/A
Type of Option: _____________________________________________________
Strike Price: _____________________________________________________
Premium: _____________________________________________________
Exercise Period: _____________________________________________________
5
This amended and restated confirmation letter is being provided
pursuant to and in accordance with the Amended and Restated Master Power
Purchase and Sale Agreement dated November 11, 2002 (the "Products A, B, C
Master Agreement") between Party A and Party B, and constitutes part of and is
subject to the terms and provisions of such Products A, B, C Master Agreement.
This amended and restated confirmation letter supersedes the amended and
restated confirmation dated February 21, 2001. Terms used but not defined herein
shall have the meanings ascribed to them in the Products A, B, C Master
Agreement.
▇▇▇▇▇▇▇▇ ENERGY MARKETING & CALIFORNIA DEPARTMENT OF
TRADING COMPANY WATER RESOURCES separate and apart
from its powers and responsibilities
with respect to the State Water
Resources Development System
Name: ____________________________ Name: ______________________________
Title: ___________________________ Title:______________________________
Phone No: ________________________ Phone No: __________________________
Fax: ____________________________ Fax: ______________________________
Acknowledgments
State of Oklahoma )
) SS
County of Tulsa )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, ____________________ of ▇▇▇▇▇▇▇▇ Energy Marketing
& Trading Company, a Delaware corporation, known to me that he executed this
Master Power Purchase And Sale Agreement Amended And Restated Confirmation
Letter for the purposes and consideration herein expressed, in the capacity
therein set forth and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
__________________________________
Notary Public
My Commission Expires: ________________
[ S E A L ]
State of California )
) SS
County of _________ )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, _____________________ of the California
Department of Water Resources, a ____________________, known to me that he
executed this Master Power Purchase And Sale Agreement Amended And Restated
Confirmation Letter for the purposes and consideration therein expressed, in the
capacity therein set forth and as the act and deed of said ______________.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
__________________________________
Notary Public
My Commission Expires: ________________
[ S E A L ]
AMENDED AND RESTATED MASTER POWER PURCHASE
AND SALE AGREEMENT
COVER SHEET
PRODUCT D
This Amended and Restated Master Power Purchase and Sale Agreement (Version 2.1;
modified 4/25/00) ("Product D Master Agreement") is made as of the following
date: November 11, 2002 ("Effective Date"). The Product D Master Agreement,
together with the exhibits, schedules and any written supplements hereto, the
Party A Tariff, if any, the Party B Tariff, if any, any designated collateral,
credit support or margin agreement or similar arrangement between the Parties
and all Transactions (including any confirmations accepted in accordance with
Section 2.3 hereto) shall be referred to as the "Agreement." The Parties to this
Product D Master Agreement are the following:
Name: ▇▇▇▇▇▇▇▇ ENERGY MARKETING & Name: STATE OF CALIFORNIA DEPARTMENT OF
TRADING COMPANY ("▇▇▇▇▇▇▇▇" or\ WATER RESOURCES separate and apart from
"Party A") its powers and responsibilities with
respect to the State Water Resources
Development System ("California
Department of Water Resources" or
"Department" or "Party B")
All Notices: All Notices: California Department of
Water Resources/CERS
Street: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇: ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇: Tulsa, OK Zip: 74172 City: Sacramento, California Zip: 95821
Attn: Contract Administration Attn: Executive Manager Power Systems
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Duns: ▇▇-▇▇▇-▇▇▇▇ Duns:
Federal Tax ID Number: ▇▇-▇▇▇-▇▇▇▇ Federal Tax ID Number: ▇▇-▇▇▇▇▇▇▇
INVOICES: INVOICES: DWR/CERS SETTLEMENTS UNIT
Attn: Power Accounting Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULING: SCHEDULING:
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: Chief Water and Power
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Dispatcher Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
PAYMENTS: PAYMENTS:
Attn: Power Accounting Attn: Cash Receipts Section
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
2
WIRE TRANSFER: WIRE TRANSFER:
BNK: Bank One, N.A. BNK: Bank of America (Sacramento
ABA: ▇▇▇▇▇▇▇▇▇ main branch)
ACCT: 55-27554 for: Department of Water Resources
ABA: Routing # ▇▇▇▇▇▇▇▇▇
ACCT: # 14365-80598
CREDIT AND COLLECTIONS: CREDIT AND COLLECTIONS:
Attn: ▇▇▇ ▇▇▇▇▇▇ Attn: Deputy Controller
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With additional Notices of an With additional Notices of an Event of
Event of Default to: Default or Potential Event of Default
Attn: Contrsact Administration to:
Phone: ▇▇▇-▇▇▇-▇▇▇▇ Attn: Deputy Controller
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Parties hereby agree that the General Terms and Conditions are incorporated
herein, and to the following provisions as provided for in the General Terms and
Conditions:
Party A Tariff Tariff n/a Dated _________ Docket Number _________
Party B Tariff Tariff n/a Dated _________ Docket Number _________
ARTICLE TWO
Transaction Terms and Conditions [x] Optional provision in Section 2.4. If not checked, inapplicable.
ARTICLE FOUR
Remedies for Failure [ ] Accelerated Payment of Damages. If not checked, inapplicable.
to Deliver or Receive
ARTICLE FIVE [ ] Cross Default for Party A:
------------
Events of Default; Remedies [ ] Party A:_____________________ Cross Default Amount $_____________
[ ] Other Entity:________________ Cross Default Amount $_____________
[ ] Cross Default for Party B:
[ ] Party B:_____________________ Cross Default Amount $_____________
[ ] Other Entity:________________ Cross Default Amount $_____________
5.6 Closeout Setoff
[ ] Option A (Applicable if no other
selection is made.)
[ ] Option B - Affiliates shall have the
meaning set forth in the Agreement
unless otherwise specified as follows:
______________________________________
[x] Option C (No Setoff)
ARTICLE 8 8.1 Party A Credit Protection:
Credit and Collateral (a) Financial Information:
Requirements
3
[ ] Option A
[ ] Option B Specify:____________
[x] Option C Specify: (1) Annual
audit, annual budget and all
financial information sent to any
seller under a power purchase
agreement; Party B shall use
reasonable commercial efforts to
periodically prepare and make
available to all sellers under
power sales agreements, but not
more frequently than quarterly,
financial information reasonably
intended to apprise all such
sellers of the financial conditions
of the Fund.) (2) Under any
Replacement Agreement (defined
below), or if Party B is an entity
other than the California
Department of Water Resources,
financial statements, audited if
available, no less frequently than
quarterly. Notwithstanding anything
in this Agreement to the contrary,
any non-public financial statements
provided pursuant to this section
shall be kept confidential.
(b) Credit Assurances:
[x] Not Applicable
[ ] Applicable
(c) Collateral Threshold:
[x] Not Applicable
[ ]
If applicable, complete the following:
Party B Collateral Threshold:; provided,
however, that Party B's Collateral Threshold
shall be zero if an Event of Default or
Potential Event of Default with respect to
Party B has occurred and is continuing.
Party B Independent Amount: [$_____]
Party B Rounding Amount: [$________]
(d) Downgrade Event:
[x] Not Applicable
[ ] Applicable
If applicable, complete the following:
[ ] It shall be a Downgrade Event for
Party B if Party B's Credit Rating
falls below [__________] from S&P or
_______ from Moody's or if Party B is
not rated by either S&P or Moody's
[ ] Other:
Specify:_____________________________
(e) Guarantor for Party B:___________________
Guarantee Amount:____________________
8.2 Party B Credit Protection:
(a) Financial Information:
4
[ ] Option A
[ ] Option B Specify:___________
[x] Option C Specify: Party A to
provide annual 10k filings of its
parent and financial statements of
Party A, audited if available,
together with an officer's
certificate relating to same, no
less frequently than quarterly.
Notwithstanding anything in this
Agreement to the contrary,
non-public financial statements
provided pursuant to this Section
shall be kept confidential.
(b) Credit Assurances:
[x] Not Applicable
[ ] Applicable
(c) Collateral Threshold:
[x] Not Applicable
[ ]
If applicable, complete the following:
Party A Collateral Threshold:; provided,
however, that Party A's Collateral Threshold
shall be zero if an Event of Default or
Potential Event of Default with respect to
Party A has occurred and is continuing.
Party A Independent Amount: $_________
Party A Rounding Amount: $____________
(d) Downgrade Event
[x] Not Applicable
[ ] Applicable
If applicable, complete the following:
[ ] It shall be a Downgrade Event for
Party A if Party A's Credit Rating
falls below __________ from S&P or
__________ from Moody's or if Party A
is not rated by either S&P or Moody's
[ ] Other:
(e) Guarantor for Party A:___________________
_____________________________________
ARTICLE 10
Confidentiality [ ] Confidentiality Applicable If not checked, inapplicable.
SCHEDULE M
[ ] Party A is a Governmental Entity or Public Power System
[x] Party B is a Governmental Entity or Public Power System
[ ] Add Section 3.6. If not checked, inapplicable
[ ] Add Section 8.4. If not checked, inapplicable
5
OTHER CHANGES Specify, if any:___________________________
(a) DEFINITIONS.
(1) Section 1.11 is amended by adding the following sentence at the end of
the current definition: "The Non-defaulting Party shall use
commercially reasonable efforts to mitigate or eliminate these Costs."
(2) Section 1.23 is replaced in its entirety by the following:
1.23 "Force Majeure" means any cause beyond the control of the Party
affected, including but not restricted to failure of or threat of failure
of facilities, flood, drought, earthquake, storm, lightning, fire,
epidemic, war, riot, civil disturbance or disobedience, labor dispute,
labor or material shortage, sabotage, restraint by court order or public
authority and action or nonaction by or failure to obtain the necessary
authorizations or approvals from any governmental agency or authority which
by exercise of due diligence such Party could not reasonably have been
expected to avoid, and which, by the exercise of due diligence, it has been
unable to overcome.
(3) Section 1.51, "Replacement Price" is amended on the fifth line by deleting
the phrase "at Buyer's option" and inserting the following phrase: "absent a
purchase."
(4) Section 1.53, "Sales Price" is amended on the fifth line of by deleting the
phrase "at Seller's option" and inserting the following phrase: "absent a sale."
(5) Sections 1.6, 1.24, 1.28, 1.33, 1.34, 1.35, 1.36, 1.43, 1.44, 1.46, 1.48 and
1.56 are amended by deleting the text in each of such sections and substituting
therefor "[Intentionally omitted.]"
(6) Section 1.59 is amended by changing "Section 5.3" to "Section 5.2."
(7) Sections 1.62 through 1.76 are added to Article One as follows:
1.62 "AES Agreement" means that certain Capacity Sale and Tolling
Agreement dated May 1, 1998, as amended May 15, 1998, by and
among the AES Subsidiaries and ▇▇▇▇▇▇▇▇ Energy Marketing &
Trading Company (f/k/a ▇▇▇▇▇▇▇▇ Energy Services Company) and
their respective successors and assigns and any amendments or
modifications thereto.
1.63 "AES Agreement Default" means the occurrence of an Event of
Default described in Section 18.1 of the AES Agreement that
materially and adversely affects Party B's rights under the
Product D Transaction or, if a cure period is provided for in
Section 18.2(a) of the AES Agreement, the occurrence of such an
Event of Default and the failure of a Defaulting Party (as
defined in the AES Agreement) to cure such default within the
applicable cure period.
1.64 "AES Subsidiaries" means any one or more of AES Alamitos, L.L.C.,
a limited liability company organized and existing under the laws
of the State of Delaware, AES Huntington Beach, L.L.C., a limited
liability company organized and existing under the laws of the
State of Delaware, and AES Redondo Beach, L.L.C., a limited
liability company organized and existing under the laws of the
State of Delaware.
6
1.65 "Bonds" means the bonds offered by the Department of Water
Resources pursuant to AB 1X, codified at California Water Code
Section 80100 et seq (the "Act") with recourse only to the Trust
Estate, and shall include any financing pursuant to Executive
Order D-42-01 and a Credit and Security Agreement, dated as of
June 26, 2001, by and among the Department of Water Resources,
various lenders and ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
agent on behalf of such lenders.
1.66 "Fund" means the Department of Water Resources Electric Power
Fund established by Section 80200 of the Water Code.
1.67 "Market Quotation Average Price" means the average of the good
faith quotations solicited from not less than three (3) Reference
Market-makers; provided, however, that the Party soliciting such
quotations shall use commercially reasonable efforts to obtain
good faith quotations from at least five (5) Reference
Market-makers and, if at least five (5) such quotations are
obtained, the Market Quotation Average Price shall be determined
disregarding the highest and lowest quotations.
1.68 "Market Value" has the meaning set forth in Section 5.3.
1.69 "Per Unit Market Price" means the applicable price per kW-month
determined in accordance with Section 5.3.
1.70 "Product D Transaction" means the Transaction described in the
attached Confirmation dated November 11, 2002.
1.71 "Qualified Electric Corporation" means an electrical corporation
as defined by the Act, whose long-term unsecured senior debt on
the effective date of any Replacement Agreement is rated BBB or
better by S&P and Baa2 or better by Moody's and is not on
negative outlook or Credit Watch from either rating agency;
provided that with the exception of San Diego Gas and Electric
Company, Southern California Edison Company and Pacific gas and
Electric Company, no electrical corporation shall be a Qualified
Electrical Corporation without the prior written agreement of
Party A.
1.72 "Qualified Power Seller" means any entity (a) engaged in the
selling of electricity whose long-term unsecured senior debt on
the effective date of any Assignment and Assumption Agreement is
rated BBB or better by Standard & Poor's and Baa2 or better by
Moody's and is not on negative outlook or Credit Watch from
either rating agency, and (b) approved by Party B, such approval
not to be unreasonably withheld.
1.73 "Reference Market-maker" means any marketer, trader or seller of
or dealer in firm energy products whose long-term unsecured
senior debt is rated BBB- or better by Standard & Poor's and Baa3
or better by ▇▇▇▇▇'▇ Investor Services.
1.74 "Replacement Agreement" means any agreement identical to this
Agreement and the Product D Transaction between Party A and a
Qualified Electrical Corporation, excluding provisions relating
to Party B's status as a governmental agency or to the original
start date(s) of the Agreement (including the Product D
Transaction), and together with such changes as Party A and such
Qualified Electrical Corporation may agree.
1.75 "Replacement Contract" means a contract having a term, quantity,
delivery rate, delivery point and product substantially similar
to the remaining Term, quantity, delivery rate, Delivery Point
and Product to be provided under this Agreement.
1.76 "Trust Estate" means all revenues received by Party B under any
obligation entered into, and rights to receive the same, and
moneys on deposit in the Fund and income or revenue derived from
the investment thereof.
7
(b) TRANSACTIONS. The Transaction shall be in writing and this
Agreement may not be amended or modified except in writing signed by the
Parties' respective duly authorized representatives. For purposes of this
requirement, a Recording pursuant to Section 2.5 shall not constitute a writing.
(c) GOVERNING TERMS. Section 2.2 is amended by adding the following
sentence at the end of the current section:
"Notwithstanding the foregoing, the Product D Transaction
shall be treated as a stand-alone Transaction and accordingly, (a) provisions in
the Product D Master Agreement referring to offsetting or netting multiple
Transactions shall not be applicable to the Product D Transaction, and (b) an
Event of Default or Potential Event of Default with respect to any Transaction
other than the Product D Transaction shall not affect the Product D Transaction.
No provision of any other Confirmation entered into pursuant to Section 2.4
shall affect the Product D Transaction."
(d) CONFIRMATION. Section 2.3, Confirmation, the term "Seller" (and
cognates) is deleted and is replaced with "Party A" in each place where it
occurs; and the term "Buyer" (and cognates) is deleted and is replaced with
"Party B" in each place where it occurs. And insert the words "or other
electronic transmission," after the word "facsimile."
(e) RECORDING. Section 2.5, Recording, the phrase "of all telephone
conversations between the Parties to this Product D Master Agreement" is deleted
and replaced with the phrase "of all telephone conversations between the energy
scheduling and/or trading personnel of the Parties to this Product D Master
Agreement related to scheduling of energy to be delivered pursuant to this
Agreement."
(f) TRANSMISSION AND SCHEDULING. Section 3.2 is amended by renaming it
"Transmission, Scheduling and Imbalance Charges" and inserting the following
sentences at the end thereof:
"In addition to the remedies provided under Article 4, Buyer shall
assume all liability for and reimburse Seller within thirty (30) days
of presentation of an invoice for any Penalties incurred as a result of
Buyer's failure to (i) notify Seller of a failure to Schedule or a
change in a Schedule or (ii) comply with the Transmission Provider's
tariff and scheduling policies. Seller shall assume all liability for
and reimburse Buyer within thirty (30) days of presentation of an
invoice for any Penalties incurred as a result of Seller's failure to
(i) notify Buyer of a failure to Schedule or a change in a Schedule or
(ii) comply with the Transmission Provider's tariff and scheduling
policies. The Parties shall notify each other as soon as possible of
any imbalance that is occurring or has occurred and shall cooperate to
eliminate imbalances and minimize Penalties. Penalties shall be defined
as any fees, liabilities, assessments or similar charges assessed by a
Transmission Provider."
(g) FORCE MAJEURE. Section 3.3 is replaced in its entirety as follows:
Force Majeure. (a) No Party shall be considered to be in default in
performance of any of its obligations under this Agreement, except to
make payment as specified herein, to the extent such failure in
performance shall be due to a Force Majeure. No Party shall, however,
be relieved of liability for failure of performance to the extent such
failure shall be due to causes arising out of its own negligence or due
to removable or remediable causes which it fails to remove or remedy
within a reasonable time period. Any Party rendered unable to fulfill
any of its obligations under the Agreement by reason of a Force Majeure
shall give prompt notice of such fact to the other Party and shall
exercise due diligence to remove such inability within a reasonable
time period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, except as may expressly be provided herein, the term Force
Majeure shall not include or excuse the loss by Party A or its
Affiliates of FERC-approved marketer status (if any), unless such loss
is itself caused by a Force Majeure.
8
(c) Notwithstanding anything to the contrary in this Agreement, failure
to achieve the Guaranteed Availability of any Unit or to deliver the
Dependable Capacity, Net Electric Energy or Ancillary Services, as the
case may be, from a Designated Unit shall not be excused due to a Force
Majeure.
(d) Notwithstanding anything contained in this Article Three to the
contrary, neither Party shall be required to settle any strike,
walkout, lockout or other labor dispute on terms which, in the sole
judgment of the Party involved in the dispute, are contrary to its
interest, it being understood and agreed that the settlement of
strikes, walkouts, lockouts or other labor disputes shall be entirely
within the discretion of the Party having such dispute.
(h) EVENTS OF DEFAULT. Section 5.1 is replaced in its entirety by the following:
"(c) the failure to perform any material covenant or obligation set
forth in this Agreement (except to the extent constituting a separate
Event of Default and other than the failure of a Designated Unit to
Dispatch in accordance with Article VIII of the AES Agreement or the
failure to achieve Guaranteed Availability pursuant to Section 4.2 of
the AES Agreement, if the Non-Defaulting Party is able to recover fully
all amounts due it pursuant to Section 8(a) or (b) as a result of
either such failure through the exercise of its right of or reduction
of capacity payments provided for in Section 8(a) and its right of set
off provided for in Section 8(b), in which case, notwithstanding any
provision of this Article V, such right of capacity payment reduction
and set-off shall be the Non-Defaulting Party's exclusive remedy;
provided, however, nothing herein shall affect Party B's rights under
Section 5.8 hereof) if such failure is not remedied within thirty (30)
Business Days after written notice;"
(2) Add a new subsection (i) as follows:
(i) for Party B, any amendment or repeal of the Water Code
subsequent to the date hereof, that adversely affects the ability
of Party B to perform its obligations under this Agreement or
otherwise adversely affects the rights of Party A hereunder, in
which event Party B shall be the Defaulting Party.
(4) Add a new subsection (j) as follows:
(j) With respect to Party A, the occurrence of an AES Agreement
Default. Party A shall give Party B written notice of any AES
Agreement Default one Business Day following the occurrence
thereof.
(I) DECLARATION OF AN EARLY TERMINATION DATE AND CALCULATION OF TERMINATION
PAYMENT.
(1) The last sentence of Section 5.2 is replaced in its entirety by the
following: "Upon termination of this Agreement as the result of an
Event of Default, the Non-Defaulting Party shall be entitled to a
payment (the "Termination Payment") which shall be the aggregate of the
Market Value and Costs calculated as of the Early Termination Date in
accordance with Section 5.3. As soon as practicable after the Early
Termination Date, the Non-Defaulting Party shall give notice to the
Defaulting Party of the amount of the Termination Payment, if any, due
to the Non-Defaulting Party. The notice shall include a written
statement explaining in reasonable detail the calculation of such
amount. Termination Payment to be made no later than one hundred eighty
(180) days after receipt of written notice of an Early Termination
Date."
(2) The following shall be added to the end of Section 5.2 (as amended
by clause (1) immediately above): "Notwithstanding the other provisions
of this Agreement, if the Non-Defaulting Party has the right to
liquidate or terminate all obligations arising under the Agreement
under the provisions of this Article 5 because the Defaulting Party or
its Guarantor either (a) is the subject of a bankruptcy, insolvency, or
similar proceeding, or (b) applies for, seeks, consents to, or
acquiesces in the appointment of a receiver, custodian, trustee,
liquidator, or similar official for all or a substantial portion of its
assets, then this Agreement and the Transaction shall automatically
terminate, without notice, as if the Early Termination Date was the day
immediately preceding the events listed in Section 5.1."
(3) Section 5.3 is replaced in its entirety by the following:
9
"5.3. Termination Payment Calculations. The Non-Defaulting Party shall
calculate the Termination Payment as follows:
(e) Market Value shall be (i) in the case Party B is the
Non-Defaulting Party, the present value of the positive
difference, if any, of (A) payments under a Replacement Contract
based on the Per Unit Market Price, and (B) payments under this
Agreement, or (ii) in the case Party A is the Non-Defaulting
Party, the present value of the positive difference, if any, of
(A) payments under this Agreement, and (B) payments under a
Replacement Contract based on the Per Unit Market Price, in each
case using the Present Value Rate as of the time of termination
(to take account of the period between the time notice of
termination was effective and when such amount would have
otherwise been due pursuant to the relevant transaction). The
"Present Value Rate" shall mean the sum of 0.50% plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services
Screen (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in United States
government securities) at 11:00 a.m. (New York City, New York
time) for the United States government securities having a
maturity that matches the average remaining term of this
Agreement. It is expressly agreed that the Non-Defaulting Party
shall not be required to enter into a Replacement Contract in
order to determine the Termination Payment.
(f) To ascertain the Per Unit Market Price of a Replacement Contract
with a term of less than one year, the Non-Defaulting Party may
consider, among other valuations, quotations from leading dealers
in energy contracts, the settlement prices on established,
actively traded power exchanges, other bona fide third party
offers and other commercially reasonable market information.
(g) To ascertain the Per Unit Market Price of a Replacement Contract
with a term of one year or more, the Non-Defaulting Party shall
use the Market Quotation Average Price; provided, however, that if
there is not an actively traded market for such Replacement
Contract or if the Non-Defaulting Party is unable to obtain
reliable quotations from at least three (3) Reference
Market-makers, the Non-Defaulting Party shall use the methodology
set forth in paragraph (b).
(h) In no event, however, shall a party's Market Value or Costs
include any penalties, ratcheted demand charges or similar charges
imposed by the Non-Defaulting Party.
If the Defaulting Party disagrees with the calculation of the
Termination Payment and the parties cannot otherwise resolve their
differences, the calculation issue shall be submitted to dispute
resolution as provided in Section 10.12 of this Agreement. Pending
resolution of the dispute, the Defaulting Party shall pay the full
amount of the Termination Payment calculated by the Non-Defaulting
Party no later than one hundred eighty (180) days after receipt of
written notice of an Early Termination Date."
(5) Section 5.4 is replaced in its entirety by the following:
(l) Notwithstanding any other provision of this Agreement,
Party A and Party B acknowledge and agree that if an order for relief
under Chapter 11 of the United States Bankruptcy Code (11 U.S.C. sec.
101 et seq.), as the same may be amended from time to time (the
"Bankruptcy Code"), is entered against Party A at any time during the
term of this Agreement, then, if this Agreement has not been
terminated, adequate assurances of future performance will not be
provided to Party B by Party A within the meaning of section 365(b)(1)
of the Bankruptcy Code unless Party A affirmatively establishes the
following:
i. Party A demonstrates that it has the financial resources
necessary to maintain the AES Agreement; and
ii. Party A demonstrates that it has the required financial or
other resources necessary to operate and perform under this
Agreement.
Party A and Party B further acknowledge and agree that if an order for
relief under Chapter 11 of the Bankruptcy Code is at any time entered
against Party A during the term hereof, then Party A must be able to
cure (a) all non-monetary defaults hereunder within one hundred eighty
(180) days of the date on which
10
Party A proposes to assume this Agreement; and (b) all monetary
defaults hereunder within one (1) year of the date on which Party A
proposes to assume this Agreement.
(5) Sections 5.5, 6.7 and 6.8 are amended by deleting the text in each of such
sections and substituting therefor "[Intentionally omitted.]"
(6) Add a new Section 5.8 as follows:
"Notwithstanding anything to the contrary herein, any Force
Majeure which interrupts Party A's performance of its obligations under
this Agreement, with respect to a Designated Unit, for a continuous period
of more than twelve (12) months shall be considered an event upon which
Buyer may terminate this Agreement with respect to such Designated Unit. In
the event of early termination under this Section 5.8, neither Party shall
be liable to the other for the payment of damages related to such early
termination.
(j) TIMELINESS OF PAYMENT. Add the following to Section 6.2 before the first
sentence in that section: "Party A shall provide invoice data, disaggregated by
transaction components, in a template formas may be reasonably specified by
Party B."
(k) LIMITATIONS. Article Seven is amended as follows:
(1) Add a new Section 7.2, "The obligations hereunder of Party A shall be
solely those of Party A and Guarantor, if any, and of no other person or
entity."
(l) GRANT OF SECURITY INTEREST/REMEDIES. In Section 8.3 the phrase "or deemed
occurrence" is deleted from the beginning of the second sentence.
(m) GOVERNMENTAL CHARGES. Add the following to Section 9.2 after the second
sentence in that section: "Party A shall be entitled to pass through to Party B
any liability, loss, cost, damage and expense, including gross-up, arising out
of a tax or other imposition enacted by the California state legislature after
the date of this Agreement that is not of general applicability and is instead
directed at the assets or activities involved in the generation, sale, purchase,
ownership and/or transmission of electric power, natural gas and/or other
utility or energy goods and services, but only insofar as such liability, loss,
cost, damage or expense relates to a Transaction hereunder and reflects an
increase in Party A's cost of service in connection therewith. Party B shall be
entitled to the benefit or reduction of or credit with respect to any such tax
or other imposition enacted by the California state legislature after the date
of this Agreement, but only insofar as such benefit relates to a Transaction
hereunder and results in a decrease in Party A's cost of service for such
Transaction.
Should the United States or any agency thereof, including FERC, impose
a tax or other imposition that is not of general applicability and is instead
directed at the generation, sale, purchase, ownership and/or transmission of
electric power, Gas and/or other utility or energy goods and services
("Regulatory Change") that adversely affects Party A's costs of providing
Capacity or Energy (or any other product or service hereunder) and the aggregate
adverse effect on Party A's cost (taking into account all such Regulatory
Changes and all Designated Units) is in the aggregate at least $2.5 million in
any calendar year, then: (a) Party A shall provide notice to Party B of such
occurrence together with a proposal to adjust the payments hereunder, and work
papers that demonstrate that such adjustment is reasonably calculated to collect
no more than the amount of such increased costs and shall request, by such
notice, that Party B respond to such proposed adjustment within thirty (30)
days; and (b) if after a period of seventy-five (75) days after delivery by
Party A of the aforesaid notice, Party B and Party A have not reached agreement
as to an adjustment to the amounts payable by Party B that is satisfactory to
Party A, in its commercially reasonable discretion, Party A shall have the
option to terminate the agreement upon ten (10) Business Days notice and neither
Party shall have any further liability to the other, including with respect to a
Termination Payment, other than such obligations as survive the termination of
the Agreement with respect to obligations incurred prior to termination."
11
(n) TERM OF PRODUCT D MASTER AGREEMENT. Add the following sentence to Section
10.1: "The Product D Transaction shall terminate on the day following the last
day of the Delivery Period, unless terminated sooner pursuant to the express
provisions of this Agreement or as a result of an Event of Default".
(O) REPRESENTATIONS AND WARRANTIES.
(1) the phrase "...and is qualified to conduct its business in each
jurisdiction in which it will perform a Transaction" is added to
the end of Section 10.2(i);
(2) the phrase ", except as would not have a material and adverse
affect on the other Party" is added to the end of Section
10.2(iii);
(3) the phrase "or any of its Affiliates" is deleted from Section
10.2(vi);
(4) the phrase ", and are reasonable in all respects, including rates
and allocation of risk" is added to the end of Section 10.2(xii);
(5) clauses (ix) and (xi) of Section 10.2 are amended by deleting the
text in each of such sections and substituting therefor
"[Intentionally omitted.]", provided, that such clauses shall be
included in any Replacement Agreement as defined herein.
(6) Add a new Section 10.2.1 as follows:
10.2.1 On the Effective Date and the date of entering into each
Transaction, Party A represents and warrants to Party B that it
has obtained from the AES Subsidiaries all consents necessary for
the performance of its obligations under this Agreement.
(p) INDEMNITY. The phrase "To the extent permitted by law" is added at the
beginning of the first two sentences of Section 10.4. Add the following to the
end of Section 10.4: "To the extent Party A and Party B are named as defendants
by a third party in any action arising with respect to delivery of Product and
Party B receives any amount from a third party as indemnification or
reimbursement with respect to such action, Party A and Party B agree to
equitably divide such amount."
(q) ASSIGNMENT. In Section 10.5, the existing paragraph shall be replaced in its
entirety with the following:
"(a) Neither Party shall assign this Agreement or its rights hereunder
without the prior written consent of the other Party, which consent may
be withheld in the exercise of its sole discretion.
(b) Notwithstanding the foregoing, Party A may, without the consent of
Party B, (i) transfer, sell, pledge, encumber or assign this Agreement
or the accounts, revenues or proceeds hereof in connection with any
financing or other financial arrangements, (ii) transfer or assign this
Agreement to an affiliate of Party A which affiliate's creditworthiness
is equal to or higher than that of Party A, or (iii) transfer or assign
this Agreement to any person or entity succeeding to all or
substantially all of the assets whose creditworthiness is equal to or
higher than that of Party A; provided, however, that in each such case,
such assignee shall agree in writing to be bound by the terms and
conditions hereof and, so long as Party A delivers such tax and
enforceability assurances together with such assurances as to the
sufficiency of creditworthiness of such assignee to perform its
obligations hereunder, as Party B may reasonably request; provided,
further, however, that in the event this Agreement is pledged or
assigned to a bond trustee pursuant to clause (i) as collateral for
bonds issued by Party A, such bond trustee shall not be required to
agree in writing to be bound by the terms and conditions hereof unless
and until the bond trustee or any successor or assign shall foreclose
on such collateral in which case such bond trustee or its successor or
assign shall be bound by each of the provisions hereof, including the
immediately preceding proviso.
(c) Notwithstanding the foregoing, Party B, without the consent of
Party A, may (i) transfer, sell, pledge, encumber or assign this
Agreement or the accounts, revenues or proceeds hereof in connection
with any financing or other financial arrangements, or (ii) transfer
and assign all of its right, title and interest to this Agreement and
the Fund to another Governmental Entity created or designated by law
solely to carry out the rights, powers, duties and obligations of the
Department under the Act, provided, however, that in each such case,
such assignee shall agree in writing to be bound by the terms and
conditions hereof and, in each
12
such case, so long as the transferring Party delivers such tax and
enforceability assurances together with such assurances as to the
sufficiency of creditworthiness of such assignee to perform its
obligations hereunder, as the non-transferring Party may reasonably
request; provided, further, however, that in the event this Agreement
is pledged or assigned to a bond trustee pursuant to clause (i) as
collateral for bonds issued by Party B, such bond trustee shall not be
required to agree in writing to be bound by the terms and conditions
hereof unless and until the bond trustee or any successor or assign
shall foreclose on such collateral in which case such bond trustee or
its successor or assign shall be bound by each of the provisions
hereof, including the immediately preceding proviso."
(r) GOVERNING LAW. In Section 10.6, "New York" shall be replaced with
"California."
(s) GENERAL.
(1) The phrase "Except to the extent herein provided for," shall be
deleted from the fourth sentence of Section 10.8, and the phrase "and this
agreement may not be orally amended or modified, including by Recording pursuant
to Section 2.5" shall be added to the end of such fourth sentence.
(2) In the ninth sentence of Section 10.8, insert "materially affected
or" after the phrase "Any provision," and insert "and materially affected by or"
after the phrase "or regulatory agency."
(t) ADDITIONAL PROVISIONS. New Sections 10.12 through 10.18 are added to Article
10 as follows:
10.12. No Retail Services; No Agency. (a) Nothing contained in
this Agreement shall grant any rights to or obligate Party A to provide
any services hereunder directly to or for retail customers of any
person.
(b) In performing their respective obligations hereunder,
neither Party is acting, or is authorized to act, as agent of the other
Party.
10.13 No Interference; No Adverse Actions.
Party B agrees to assist Party A in good faith to resolve acts or
omissions (other than as otherwise required to be done by a public
agency pursuant to the legal exercise of such public agency's mandate)
which Party A believes would have a significant effect on (a) Party A's
right or ability to (x) sell and deliver, or cause to be delivered,
Product to Party B or (y) otherwise satisfy its obligations under this
Agreement or (b) Party B's right or ability to (x) purchase and
receive, or cause to be received Product from Party A or (y) otherwise
satisfy its obligations under this Agreement.
10.14 Dispute Resolution. (a) If a dispute shall arise between
the Parties relating to the interpretation of this Agreement or to
performance by a Party hereunder or under any Transaction, the Party
desiring resolution of the dispute shall notify the other Party in
writing. The notice shall set forth the matter in dispute in reasonable
detail and a proposed solution.
(b) The Parties shall attempt to resolve any dispute within 15
calendar days after delivery of the written notice referred to above.
Any disputes not so resolved shall be referred by each Party to an
officer (or the officer's designee) for resolution. If the Parties fail
to reach an agreement within 15 days after such referral, each Party
shall have the right to pursue any and all remedies provided in this
Agreement and as afforded by applicable law.
(c) The existence of any dispute or controversy under this
Agreement or the pendency of the dispute settlement or resolution
procedures set forth herein shall not in and of itself relieve or
excuse either Party from its ongoing duties and obligations under this
Agreement.
10.15 WAIVER OF JURY TRIAL. THE PARTIES HEREBY EXPRESSLY WAIVE
ALL RIGHTS TO TRIAL BY JURY ON ANY CAUSE OF ACTION, SUIT OR PROCEEDING
DIRECTLY OR INDIRECTLY INVOLVING OR RELATED TO THE TERMS, COVENANTS OR
CONDITIONS
13
OF THIS AGREEMENT OR ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY
WAY CONNECTED WITH OR RELATED TO THIS AGREEMENT. EACH PARTY (I)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY
OR ANY CREDIT SUPPORT PROVIDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A SUIT, ACTION OR
PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND PROVIDE FOR ANY CREDIT SUPPORT DOCUMENTS, AS APPLICABLE,
BY AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION. THE PROVISIONS OF THIS AGREEMENT RELATING TO WAIVER OF JURY
TRIAL SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT.
10.16 No Third Party Beneficiaries. The provisions of this
Agreement are for the benefit of the Parties hereto, and as to any
other person or entity, this Agreement shall not be construed as a
third party beneficiary contract.
10.17.Fixed Rate Contract; Mobile-Sierra Clause. The Parties
hereby stipulate and agree that, under the facts and circumstances
known to them at this time, this Agreement was entered into as a result
of arms'-length negotiations between the Parties. Further, the Parties
believe that the rates, terms and conditions of this Agreement are just
and reasonable within the meaning of Sections 205 and 206 of the
Federal Power Act, 16 U.S.C. Sections 824d and 824e, and that the
rates, terms and conditions of this Agreement will remain so over the
life of the Agreement. The Parties waive all rights to challenge the
validity of this Agreement or whether it is just and reasonable for and
with respect to the entire term thereof, including any rights under
Sections 205 and 206 of the Federal Power Act to request the FERC to
revise the terms and conditions and the rates or services specified in
this Agreement, and hereby agree to make no filings at the FERC or with
any other state or federal agency, board, court or tribunal challenging
the rates, terms and conditions of this Agreement as to whether they
are just and reasonable or in the public interest under the Federal
Power Act. The Parties hereby further stipulate and agree that neither
Party may bring any action, proceeding or complaint under Section 205
or 206 of the Federal Power Act, 16 U.S.C. 824d or 824e, seeking to
modify, cancel, suspend, or abrogate the rates, terms and conditions of
this Agreement or any Transaction hereunder, or to prevent this
Agreement or any Transaction hereunder from taking effect. It is
further agreed that, in the event any of the Parties challenges this
Agreement for any other reason, they will not dispute the applicability
of the public interest standard as that term has been defined and
interpreted under the Federal Power Act and the cases of United Gas
Pipe Line Co. v. Mobile Gas Corp., ▇▇▇ ▇.▇. ▇▇▇ (1956), and FPC v.
Sierra Pacific Power Co., 350 U.S. 348 (1956), and subsequent cases.
10.18 Novation. Notwithstanding the foregoing limitations on
assignment, at any time after January 1, 2003, the Seller shall, upon
the written request of Department, enter into one or more Replacement
Agreements as may be agreed to by one or more Qualified Electric
Corporations. This Agreement shall terminate upon effective date of a
Replacement Agreement. The effectiveness of the Replacement Agreement
shall constitute a novation that shall relieve Department of any
liability or obligation arising after the date of termination of the
Agreement. Such Replacement Agreement shall state that it is a
Replacement Agreement within the meaning of the Agreement and that it
constitutes a novation for which there is adequate consideration. The
effectiveness of such Replacement Agreement shall be subject to the
condition precedent that the California Public Utilities Commission
shall have conducted a just and reasonable review under Section 451 of
the Public Utilities Code with respect to such Replacement Agreement
and shall have issued an order determining that the charges under such
Replacement Agreement are just and reasonable.
(u) SCHEDULE M. Schedule M shall be amended as follows:
(1) In Section A, "Act" will mean Sections 80000, 80002, 80002.5,
80003, 80004, 80010, 80012, 80014, 80016, 80100, 80102, 80104, 80106,
80108, 80110, 80112, 80116, 80120, 80122, 80130, 80132, 80134, 80200,
80250, 80260 and 80270 of the Water Code, as amended.
(2) "Special Fund" will mean the Fund.
14
(3) In Section A, the defined term "Governmental Entity or Public
Power System" shall be replaced with the term "Governmental Entity"
using the following definition "`Governmental Entity' means the State
of California, any State governmental board, public power authority,
public utility district, joint action agency, or other similar
political subdivision or public entity of the State of California, the
State of California Department of Water Resources, or any combination
thereof"; and all references to (A) "Governmental Entity or Public
Power System" (and cognates) and (B) "Public Power System" (and
cognates) in Schedule M shall be replaced with the new defined term
"Governmental Entity" (using the applicable cognate).
(4) In Section B, the sentence to be added to the end of the
definition of "Force Majeure" in Article One shall be replaced with the
following: "If the Claiming Party is a Governmental Entity, Force
Majeure does not include any act or omission of a Governmental Entity
(or any branch, subdivision, agency, officer or representative thereof)
in its governmental capacity or any other act or omission of any
Governmental Entity (including judicial action or inaction) and such
act or omission shall be deemed to be an action of Party B.
(5) In Section C add the following representations and warranties:
(i) "Party B represents and warrants that a Rate Agreement By and
Between State of California Department of Water Resources and
State of California Public Utilities Commission adopted by the
California Public Utilities Commission on February 21, 2001 in
Decision ▇▇-▇▇-▇▇▇ (the "rate Agreement") is binding and in
effect."
(ii) Party B represents and warrants that, unless determined
otherwise by a court or body of appropriate jurisdiction, each
of this Amended and Restated Master Power Purchase and Sale
Agreement and the Product D Transaction is a "Priority
Long-Term Power Contract" as that term is defined in the Rate
Agreement.
(6) In Section D, delete Section 3.5 and replace it with the
following:
"Section 3.5 No Immunity Claim. California law authorizes
suits based on contract against the State or its agencies, and Party B
agrees that it will not assert any immunity it may have as a state
agency against such lawsuits filed in California state court."
(7) In Section G, specify that the laws of the State of California
will apply.
(8) Add a new Section H, which shall read as follows:
Section 3.6. Payments Under Agreement an Operating Expense. To
the extent that this Transaction shall constitute a "Priority Long Term
Power Contract" as that term is defined in the Rate Agreement between
Party B and State of California Public Utilities Commission ("CPUC")
adopted by the CPUC on February 21, 2001 in Decision ▇▇-▇▇-▇▇▇,
payments under this Agreement shall constitute an operating expense of
the Fund payable prior to all bonds, notes or other indebtedness
secured by a pledge or assignment of the Trust Estate or payments to
the general fund."
(9) Add a new Section I, which shall read as follows:
Section 3.7. Rate Covenant; No Impairment. Party B covenants that it will,
at least annually, and more frequently as required, establish and revise
revenue requirements sufficient, together with any moneys on deposit in the
Fund, to provide for the timely payment of all obligations which it has
incurred, including any payments required to be made by Party B pursuant to
this Agreement. While any obligations of Party B pursuant this Agreement
remain outstanding and not fully performed or discharged, the rights,
powers, duties and existence of Party B and the Public Utilities Commission
shall not be diminished or impaired in any manner that will affect
adversely the interests and rights of Party A under this Agreement.
(10) Add a new Section J, which shall read as follows:
15
Section 3.8. Sources of Payment; No Debt of State. Party B's
obligation to make payments hereunder shall be limited solely to the
Fund. Any liability of Party B arising in connection with this
Agreement or any claim based thereon or with respect thereto,
including, but not limited to, any Termination Payment arising as the
result of any breach or Potential Event of Default or Event of Default
under this Agreement, and any other payment obligation or liability of
or judgment against Party B hereunder, shall be satisfied solely from
the Special Fund. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING
POWER OF THE STATE OF CALIFORNIA ARE OR MAY BE PLEDGED FOR ANY PAYMENT
UNDER THIS AGREEMENT. Revenues and assets of the State Water Resources
Development System shall not be liable for or available to make any
payments or satisfy any obligation arising under this Agreement.
(11) Section 3.9. No More Favorable Terms. Party B shall not
provide in any power purchase agreement payable from the Trust Estate
for (i) collateral or other security or credit support with respect
thereto, (ii) a pledge or assignment of the Trust Estate for the
payment thereof, or (iii) payment priority with respect thereto
superior to that of Party A, without in each case offering such
arrangements to Party A; provided, however, that Party B shall not be
deemed to be in violation of this Section 3.9, and Party B shall not be
required to offer Party A payment priority equal to that of the
Priority Long Term Power Contracts, to the extent that this Transaction
shall not constitute a "Priority Long Term Power Contract" as that term
is defined in the Rate Agreement.
(12) Add a new Section L, which shall read as follows:
"Section 3.10. Application of Government Code and the Public
Contracts Code. Party A has stated that, because of the administrative
burden and delays associated with such requirements, it would not enter
into this Agreement if the provisions of the Government Code and the
Public Contracts Code applicable to state contracts, including, but not
limited to, advertising and competitive bidding requirements and prompt
payment requirements would apply to or be required to be incorporated
in this Agreement. Accordingly, pursuant to Section 80014(b) of the
Water Code, Party B has determined that it would be detrimental to
accomplishing the purposes of Division 27 (commencing with Section
80000) of the Water Code to make such provisions applicable to this
Agreement and that such provisions and requirements are therefore not
applicable to or incorporated in this Agreement."
(13) Add a new Section M, which shall read as follows:
"Section 3.11. Deposit of Proceeds of Bonds. The proceeds of
any bonds issued by Party B shall be deposited and applied in
accordance with the resolution or indenture providing for the issuance
thereof."
(14) Add a new Section N, which shall read as follows:
"Section 3.12. Transfers of Power Charge Revenues and Bond
Charge Revenues. The indenture providing for the issuance of any bonds
or other indebtedness by Party B will provide for the application of
Power Charge Revenues and Bond Charge Revenues in accordance with the
document entitled "California Department of Water Resources Summary of
Material Terms of Financing Documents (Submitted in connection with
Section 7.10 of a proposed Rate Agreement between California Department
of Water Resources and the California Public Utilities Commission)"
under the captions "III. Flow of Funds - Power Charge Revenues; Bond
Charge Revenues as modified and amended by the Amended and Restated
Addendum to Summary of Material Terms of Financing Documents dated as
of August 8, 2002, as further amended or supplemented, and according to
Section 7.10 of the Rate Agreement as adopted by the California Public
Utilities Commission in Decision No. ▇▇-▇▇-▇▇▇"
(w) CONDITIONS PRECEDENT. The effectiveness of this Agreement (including the
Product D Transaction) is subject to and conditioned upon:
(1) delivery to Party A of a legal opinion from the General Counsel of
the California Department of Water Resources in the form attached
hereto as Exhibit A; and
16
(2) delivery to Party A of a legal opinion from the Attorney General of
the State of California in the form attached hereto as Exhibit B.
(3) unless waived by Party A, receipt by Party A of consents and
agreements from the AES Subsidiaries as Party A deems necessary or
beneficial in its sole discretion, such consents and agreements to
be received on or prior to December 31, 2002; and
(4) unless waived by Party A, receipt by Party A of required consents
and agreements from the California Independent System Operator
Corporation, such consents and agreements to be received on or
prior to December 31, 2002.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
17
Unless otherwise determined by a court or other body of appropriate
jurisdiction, this Product D Master Agreement amends and supercedes that certain
Master Power Purchase and Sale Agreement dated February 16, 2001 (the "Prior
Agreement") by and between the Parties. As of the effective date of this Product
D Master Agreement, the Prior Agreement, together with any transaction
thereunder, shall be of no force or effect.
IN WITNESS WHEREOF, the Parties have caused this Product D Master Agreement to
be duly executed as of the date first above written.
▇▇▇▇▇▇▇▇ ENERGY MARKETING & CALIFORNIA DEPARTMENT OF WATER
TRADING COMPANY RESOURCES separate and apart from its powers
and responsibilities with respect to the
State Water Resources Development System
By:____________________________ By: _____________________________
Name:__________________________ Name:____________________________
Title:_________________________ Title:___________________________
DISCLAIMER: THIS MASTER POWER PURCHASE AND SALE AGREEMENT WAS PREPARED BY A
COMMITTEE OF REPRESENTATIVES OF EDISON ELECTRIC INSTITUTE ("EEI") AND NATIONAL
ENERGY MARKETERS ASSOCIATION ("NEM") MEMBER COMPANIES TO FACILITATE ORDERLY
TRADING IN AND DEVELOPMENT OF WHOLESALE POWER MARKETS. NEITHER EEI NOR NEM NOR
ANY MEMBER COMPANY NOR ANY OF THEIR AGENTS, REPRESENTATIVES OR ATTORNEYS SHALL
BE RESPONSIBLE FOR ITS USE, OR ANY DAMAGES RESULTING THEREFROM. BY PROVIDING
THIS AGREEMENT EEI AND NEM DO NOT OFFER LEGAL ADVICE AND ALL USERS ARE URGED TO
CONSULT THEIR OWN LEGAL COUNSEL TO ENSURE THAT THEIR COMMERCIAL OBJECTIVES WILL
BE ACHIEVED AND THEIR LEGAL INTERESTS ARE ADEQUATELY PROTECTED.
ACKNOWLEDGMENTS
State of Oklahoma )
)SS
County of Tulsa )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, ____________________ of ▇▇▇▇▇▇▇▇ Energy Marketing
& Trading Company, a Delaware corporation, known to me that he executed this
Master Power Purchase And Sale Agreement Cover Sheet for the purposes and
consideration herein expressed, in the capacity therein set forth and as the act
and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
______________________________
Notary Public
My Commission Expires:_____________
[ S E A L ]
State of California )
)SS
County of _________ )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, _____________________ of the California
Department of Water Resources, a ____________________, known to me that he
executed this Master Power Purchase And Sale Agreement Cover Sheet for the
purposes and consideration therein expressed, in the capacity therein set forth
and as the act and deed of said ______________.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
______________________________
Notary Public
My Commission Expires:_____________
[ S E A L ]
MASTER POWER PURCHASE AND SALE AGREEMENT
CONFIRMATION LETTER
PRODUCT D TRANSACTION
This confirmation letter shall confirm the Product D Transaction agreed to on
November 11, 2002 between ▇▇▇▇▇▇▇▇ ENERGY MARKETING & TRADING COMPANY ("Party
A") and CALIFORNIA DEPARTMENT OF WATER RESOURCES separate and apart from its
powers and responsibilities with respect to the State Water Resources
Development System ("Party B") regarding the sale/purchase of the Product under
the terms and conditions as follows:
Seller: Party A
Buyer: Party B
Product:
[ ] Into _________________, Seller's Daily Choice
[ ] Firm (LD)
[ ] Firm (No Force Majeure)
[ ] System Firm
(Specify System:_______________________________________________________________)
[ ] Unit Firm
(Specify Unit(s):______________________________________________________________)
[X] Other
All capacity and energy from the Designated Units as provided in the
AES Agreement and Schedule 1 hereto, subject to Force Majeure as
provided in the Product D Master Agreement (defined below). All
capitalized terms not otherwise defined herein shall have the meanings
set forth in Schedule 1.
[ ] Transmission Contingency (If not marked, no transmission contingency)
[ ] FT-Contract Path Contingency [ ] Seller [ ] Buyer
[ ] FT-Delivery Point Contingency [ ] Seller [ ] Buyer
[ ] Transmission Contingent [ ] Seller [ ] Buyer
[x] Other transmission contingency
(Specify: Buyer shall be responsible for transmission contingencies at and
after the Delivery Point and Seller shall be responsible for transmission
contingencies prior to the Delivery Point.)
Contract Quantity:
Page 1
All Dependable Capacity of the Designated Units and associated energy
during the periods as provided in Schedule 1 as follows, subject to
adjustment pursuant to the Settlement Agreement:
Start Date through June 30, 2003 from HB 1 and HB 2
July 1, 2003 through December 31, 2007 from AL 5, AL 6 and HB 1
January 1, 2008 through Dec. 31, 2010 from AL 1, AL 5, HB 1 and RB6
Delivery Point: As specified as in the AES Agreement.
Contract Price: As provided in Schedule 1, subject to adjustment pursuant to
the Settlement Agreement.
Energy Price: As provided in Schedule 1.
Other Charges: As provided in Schedule 1.
Delivery Period: Start Date through Dec. 31, 2010
Special Conditions: See Schedule 1 hereto.
Option Buyer: N/A
Option Seller: N/A
Type of Option: _______________________________________________________
Strike Price: _________________________________________________________
Premium: ______________________________________________________________
Exercise Period: ______________________________________________________
This Product D confirmation letter is being provided pursuant to and in
accordance with the Amended and Restated Master Power Purchase and Sale
Agreement, dated November 11, 2002 (the "Product D Master Agreement") between
Party A and Party B, and constitutes part of and is subject to the terms and
provisions of such Product D Master Agreement.
This Product D confirmation letter, together with the Product D Master
Agreement and the Amended and Restated Master Power Purchase and Sale Agreement
and related amended and restated Product A, B, and C confirmation letter (both
of even date herewith), collectively supersedes the Amended and Restated Master
Power Purchase and Sale Agreement dated February 16, 2001, and related amended
and restated confirmation dated February 21, 2001. Terms used but not defined
herein shall have the meanings ascribed to them in the Product D Master
Agreement or in Schedule 1 hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Page 2
▇▇▇▇▇▇▇▇ ENERGY MARKETING & CALIFORNIA DEPARTMENT OF WATER
TRADING COMPANY RESOURCES separate and apart from its
powers and responsibilities with
respect to the State Water Resources
Development System
Name: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: Signature Illegible
Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President Title: Deputy Director
& CEO
Phone No: 918/▇▇▇-▇▇▇▇ Phone No: ▇▇▇ ▇▇▇ ▇▇▇▇
Fax: 918/▇▇▇-▇▇▇▇ Fax: ▇▇▇ ▇▇▇ ▇▇▇▇
Page 3
Schedule 1
Section 1. Definitions. All capitalized terms in this Schedule 1 not
otherwise defined herein shall have the meanings set forth in the Capacity and
Tolling Agreement (the "AES Agreement"), dated as of May 1, 1998, among AES
Alamitos, L.L.C., AES Huntington Beach, L.L.C., AES Redondo Beach L.L.C. and
Party A, (f/k/a ▇▇▇▇▇▇▇▇ Energy Services Company), as amended by Amendment No.
1, dated May 1, 1998, and Amendment No. 2, dated March 5, 2002, a copy of which
is attached hereto as Appendix A and any other amendments.
"AL 1" means Alamitos Unit No. 1.
"AL 5" means Alamitos Unit No. 5.
"AL 6" means Alamitos Unit No. 6.
"AL 7" means Alamitos Unit No. 7.
"ADC" means
with respect to AL 1, the Dependable Capacity in excess of 175
MW;
with respect to AL 5, the Dependable Capacity in excess of 480
MW;
with respect to AL 6, the Dependable Capacity in excess of 480
MW;
with respect to HB 1, the Dependable Capacity in excess of 215
MW;
with respect to HB 2, the Dependable Capacity in excess of 215
MW;
with respect to RB 6, the Dependable Capacity in excess of 175
MW;
"Additional Capacity Payment" means for the period from the Start Date
to Dec. 31, 2010, with respect to a given month, the sum of the Fixed Payments
for the Designated Unit(s) for such month attributable to the ADC.
"Adjustment Factor" means, when used with respect to any particular
"nth" Contract Year, shall be determined as follows:
AF = 1 + [(CPI(n-1) - CPI(n-2)) / CPI(n-2)]
Where,
CPI(n-1) = The average of the 12 monthly CPI values
occurring in the Contract Year preceding the
Contract Year with respect to which a
calculation is to be made hereunder.
CPI(n-2) = The average of the 12 monthly CPI values
for the Contract Year two years preceding
the Contract Year for which a determination
is to be made.
Page 4
"Base Capacity Payment" means:
For the period from the Start Date to December 31, 2007, a
monthly capacity payment, payable in arrears, of
$11.67/kW-month times the total Base Dependable Capacity of
the Designated Units.
For the period from January 1, 2008- Dec. 31, 2010, a monthly
capacity payment, payable in arrears, of $9.75/kW-month times
the total Base Dependable Capacity of the Designated Units.
"Base Dependable Capacity" shall mean the Dependable Capacity as
defined in the AES Agreement with respect to each Designated Unit, minus such
Unit's ADC.
"Capacity Payment" means the Base Capacity Payment and the Additional
Capacity Payment.
"Contract Year" means any period of June 1 to May 31 during the
Delivery Period.
"CPI" means the Consumer Price Index as defined in the AES Agreement.
"Default Fuel Supply Plan" means the Gas supply plan attached hereto as
Appendix B.
"Designated Unit(s)" means any of AL 1, AL 5, AL 6, HB 1, HB 2, and RB
6, but only to the extent such Units are obligated to provide Contract Quantity
hereunder, subject to change as provided in Section 8(f).
"Extended-Term Obligations" means obligations provided by either Party
that extend beyond the then current Fuel Supply Period.
"Event of Default" means, with respect to this Transaction, any Event
of Default as set forth in Section 5.1 of the Product D Master Agreement;
provided, however, that Event of Default shall not include any determination by
any court or regulatory authority that this Transaction is not a Priority Long
Term Power Contract.
"Fuel Payment" means (a) a fuel management fee of one cent (1cent)
per decatherm of Hourly Fuel Consumption for all hours during such month, plus
(b) in the event Party A is responsible for supplying Gas to the Designated
Units, the amount payable by Party B to Party A pursuant to a Fuel Supply Plan
pursuant to Section 6, or, in the absence of a Fuel Supply Plan, the amount
payable to Party A pursuant to the Default Fuel Supply Plan.
"Fuel Supply Period" means the twelve-month period commencing on the
termination of the Initial Fuel Supply Period and the anniversary thereof.
"HB 1" means Huntington Beach No. 1.
"HB 2" means ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇.
"HB 5" means Huntington Beach No. 5.
Page 5
"Hourly Fuel Consumption" means with respect to a Designated Unit the
hourly fuel consumption as metered at such Designated Unit adjusted back on a
pro rata basis to the total quantity metered at the revenue meter of Southern
California Gas Company or its successor ("RMT"), calculated as follows:
Hourly Fuel Consumption = RMT * (DM/FMT)
Where:
"DM" means with respect to a Designated Unit the
hourly fuel consumption as metered at such Designated Unit;
and
"FMT" means the sum of the hourly fuel consumption
quantities at each Unit at a Facility connected to the same
revenue meter as the Designated Unit.
"Initial Fuel Supply Period" means the period commencing on the Start
Date and continuing until June 30, 2003.
"Initial Fuel Supply Plan" means the Gas supply plan attached hereto as
Appendix C.
"MRA" means Must Run Agreement between Party A or Party B and CAISO for
a generating unit on an individual unit basis.
"RB 6" means Redondo Beach No. 6.
"Scheduling Coordinator Fee" means $16,667 per month payable in arrears
as adjusted annually by the Adjustment Factor each June commencing June, 2004.
"Settlement Agreement" means the Settlement Agreement, dated as of
November 11, 2002, among the parties thereto, including the parties hereto.
"Start Date" means January 1, 2003.
Section 2. Intent of the Parties. Party A and Party B acknowledge and
agree that (i) this Transaction has resulted from and is a part of the
renegotiation of the Master Power Purchase and Sale Agreement, dated as of
February 16, 2001, between Party A and Party B and the related Amended and
Restated Confirmation Letter dated February 21, 2001 referred to in the Rate
Agreement ("Rate Agreement") between Party B and State of California Public
Utilities Commission ("CPUC") adopted by the CPUC on February 21, 2001 in
Decision ▇▇-▇▇-▇▇▇ (such Amended and Restated Master Power Purchase and Sale
Agreement and related amended and restated confirmation being referred to as the
"Existing Transaction"), and (ii) because of certain benefits to be derived by
Party A, constituting part of the consideration for the renegotiation of the
Existing Transaction, Party A and Party B have determined to set forth the
agreements resulting from the renegotiation of the Existing Transaction as two
separate Transactions, including this Transaction. It is further the intent of
Party A and Party B that both resulting Transactions, including this
Transaction, each constitute a "Priority Long Term Power Contract" as that term
is defined in the Rate Agreement.
Page 6
Section 3. Scheduling and Dispatch. (a) Subject only to the limitations
set forth herein and in the AES Agreement, Party B shall have (i) all of Party
A's rights to Dispatch the Designated Units, utilize the Net Electric Energy and
Ancillary Services associated with the Dependable Capacity of the Designated
Units and market the Dependable Capacity of the Designated Units, the associated
Net Electric Energy and the associated Ancillary Services as set forth in
Section 8.2 of the AES Agreement and Party A shall Dispatch the Designated Units
as directed by Party B except to the extent a Designated Unit is dispatched by
the CAISO or any successor entity, and (ii) subject to the provisions of
subsection 3(d), any and all related and ancillary rights of Party A under the
AES Agreement that in any way bear on, affect or relate to the Dispatch and
scheduling of the Designated Units or otherwise affect the value thereof to
Party B.
(b) Party A shall Dispatch the Designated Units as directed by Party B,
subject to the limitations set forth in the AES Agreement and except as
otherwise required in applicable laws or regulations, or any requirements of the
CAISO or any successor entity.
(c) Party B will not Dispatch or cause Party A to Dispatch the
Designated Units in violation of the limitations set forth in the AES Agreement
or of any applicable laws, regulations or any requirements of the CAISO or any
successor entity.
(d) (i) Party A shall not change June, July, August, September, and
October as Designated Months for any Facility which includes a Designated Unit
without the written approval of Party B. Party A shall consult with Party B
before selecting the remaining two Designated Months for any Facility which
includes a Designated Unit as permitted by the AES Agreement (which as of the
Start Date is a single selected month: May).
(ii) Party A shall consult with Party B before agreeing to any
alternative index or method for determining the Hourly Gas Price with respect to
a Designated Unit pursuant to Section 1.54 of the AES Agreement.
(iii) Except as specifically provided for in Section 3(d)(i) or (ii),
if at any time the exercise of any rights by Party B pursuant to Section
3(a)(ii) interferes with or adversely affects Party A's rights with respect to
any Units which are not Designated Units, Party A shall notify Party B thereof
in writing. If the Parties are unable to establish mutually agreeable procedures
for the exercise of such rights, the Parties shall submit the question of the
reasonable and equitable apportionment of Party B's ancillary rights pursuant to
Section 3(a)(ii) and Party A rights with respect to any Units which are not
Designated Units to binding arbitration pursuant to Section 15.
Section 4. Notices, Information and Other Documentation. (a) Party A
shall provide to Party B any all notices, information and other documentation
and material provided to Party A by the AES Subsidiaries under the AES
Agreement, pertaining to the Designated Units, including, but not limited to,
any (i) Availability Notices for the Designated Units received by Party A
pursuant to Sections 8.1 or 8.2(a) of the AES Agreement, (ii) each weekly Unit
status Notice for each Designated Unit, (iii) any monthly reports of outage
hours (Maintenance Outage Notice, Force Outage Notice), Start-ups, commodities
consumed, actual Net Electric Energy delivered and actual MVARs, (iv) all
availability and status notices, including Unit Status Change Notice for each
Designated Unit, (v) any notice of inability to meet scheduled dispatch of a
Designated Unit, (vi) any certificate of compliance delivered pursuant to
Section 9.7 of the AES Agreement, (vii) any certificates of insurance pursuant
to Section 16.3 of the AES
Page 7
Agreement, (viii) any forecasts of Planned Outages or Planned Outage Schedules
for the Designated Units and updates thereof, any notice of Maintenance Outages
and Maintenance Deratings, (ix) notice of any other event which could result in
the inability of a Designated Unit to return to schedule service, (x) notice of
any Forced Outages or Forced Deratings or any change thereto, (xi) any outage
request, (xii) response rates received pursuant to Section 9.4 of the AES
Agreement, (xiii) all other notices, requests and information delivered pursuant
to Schedule 8.2 of the AES Agreement, and (xiv) any Notice of an Event of
Default pursuant to Section 18.2(a) of the AES Agreement.
(b) To the extent any notices, information and other documentation and
material are not provided, but may be requested by Party A under the AES
Agreement with respect to the Designated Units, Party A shall, upon the request
of Party B, request any such notices, information and other documentation and
material under the AES Agreement and deliver any such notices, information and
other documentation and material received under the AES Agreement to Party B,
including, but not limited to, all Planned Outage and operation and maintenance
records pertaining to the Designated Units pursuant to the AES Agreement.
(c) Party B shall be responsible for all incremental out of pocket
costs and expenses incurred by Party A with respect to requests made by Party B
pursuant to subsections 4(a) and (b) above, including but not limited to, costs
of additional meters, communications software and equipment, and other equipment
required to provide gas and electric meter data. Party B shall not be
responsible for any of Party A's personnel or general overhead costs allocable
to complying with subsections 4(a) and 4(b) above.
(d) The time period for the delivery of notices, information or other
material hereunder shall be established by the Operating Committee established
pursuant to Section 14 hereof. To the extent that a specific time or time period
is not expressly specified by the Operating Committee with respect to any
particular notice, action, consent or right hereunder, Party A shall provide to
Party B all notices, or afford Party B the opportunity to take actions, give
consents, or otherwise exercise the rights of Party A contracted to Party B
hereunder as soon as reasonably possible.
Section 5. Exercise of Rights and Performance of Obligations. (a) In
order to accomplish the purpose of Section 3 hereof, Party A shall not exercise
any of the rights referred to in Section 3 hereof, including in cases where
Party B does not Dispatch any Designated Unit, without the approval of Party B
(which shall be in writing except with respect to subsection 5(a)(v), which may
be an oral approval), including, but not limited to, the rights to (i) agree to
any amendment of Schedule 8.2 of the AES Agreement with respect to or affecting
the Designated Units in accordance with Section 8.2(a) thereof, or (ii) give
consent pursuant to Section 8.2(d) of the AES Agreement with respect to or
affecting the Designated Units, (iii) agree to the operation of any Designated
Unit using any fuel other than Gas pursuant to Section 8.9 of the AES Agreement,
(iv) designate an alternate or additional Delivery Point with respect to any
Designated Unit pursuant to Section 8.10 of the AES Agreement, (v) approve or
change any dispatch request with respect to the Designated Units, (vi) consent
to the reduction of Dependable Capacity of the Designated Units pursuant to
Section 4.5 of the AES Agreement, (vii) approve the schedule of Planned Outages
for the Designated Units, any proposed 15-month Planned Outage Schedule, any
request for 24-hour approval and confirmation of a Planned Outage, or any
preferred outage dates, with respect to the Designated Units, (viii) waive any
right or remedy with respect to an Event of Default by any AES Subsidiary with
respect to a Designated Unit other that Party A's right to terminate the AES
Agreement which Party A may waive at any time without the
Page 8
approval of Party B, (ix) use of the maximum ramp rate in bidding spinning
reserve as provided in Section 9.4(b) of the AES Agreement with respect to the
Designated Units, (x) change or modify any performance standards such as heat
rate guarantees and availability guarantees of the Designated Units, and (xi)
exercise any other or similar right to approve, consent, agree, direct or cause
an AES Subsidiary to act with respect to the Designated Units.
(b) In order to accomplish the purpose of Section 3 hereof, Party B may
direct or cause Party A to exercise such rights, take such actions or otherwise
perform under the AES Agreement with respect to the Designated Units, including
but not limited to, the rights to direct Party A to (i) provide written consent
pursuant to Section 8.2(d) of the AES Agreement, (ii) agree to the operation of
any Designated Unit using any fuel other than Gas pursuant to Section 8.9 of the
AES Agreement (provided, however, Party A shall not be required to incur any
additional expense as a result), (iii) designate an alternate or additional
Delivery Point with respect to any Designated Unit pursuant to Section 8.10 of
the AES Agreement (provided, however, Party A shall not be required to incur any
additional expense as a result), (iv) provide the AES Subsidiaries with any
anticipated daily Unit forecast for each Designated Unit received from Party B,
(v) approve or change any dispatch request with respect to the Designated Units,
(vi) approve the schedule of Planned Outages for the Designated Units, any
proposed 15-month Planned Outage Schedule for the Designated Units, any request
for 24-hour approval and confirmation of a Planned Outage for the Designated
Units, or any preferred outage dates for the Designated Units, (vii) direct
Party A to make use of the maximum ramp rate in bidding spinning reserve as
provided in Section 9.4(b) of the AES Agreement with respect to the Designated
Units, (viii) direct Party A regarding operation of Designated Units with
automatic generating control equipment in service pursuant to the last sentence
of Section 9.3 of the AES Agreement, and (ix) take any other or similar actions
under the AES Agreement to approve, consent, agree, direct or cause an AES
Subsidiary to act with respect to the Designated Units. Notwithstanding the
foregoing provisions or any other provision herein, in no event shall Party B
have the right to direct Party A to amend the AES Agreement.
(c) In addition to obligations specified elsewhere herein, Party B
shall with respect to the Designated Units: (i) provide to Party A a three-year
unit forecast (or such shorter forecast if the remaining time in the Deliver
Period is less than three (3) years) for run hours, megawatt hours, and starts,
and (ii) to the extent applicable to Party B, comply with all CAISO and other
regulatory requirements related to dispatch and bidding, including without
limitation any "must offer requirements".
(d) Party B shall treat as confidential any information provided by
Party A to Party B hereunder with respect to the Designated Units to the extent
that such information would be treated as confidential pursuant to Section 23.5
of the AES Agreement. If any person requests the disclosure of any such
confidential information, Party B shall provide notice thereof to Party A as
soon as reasonably possible after receipt by Party B of such request and if
Party B is not California Department of Water Resources, Party B shall defend
against any such request. If Party B is California Department of Water
Resources, upon Party A's request, California Department of Water Resources
shall use its reasonable efforts to assist Party A in defending against any such
request, provided Party A shall reimburse Party B for its reasonable out of
pocket expenses for such assistance.
Section 6. Gas. As further set forth in this Section 6, either Party A
or Party B shall provide all Gas with respect to the Dispatch of any of the
Designated Units as required by and in accordance with Article VI and Section
8.4 of the AES Agreement; provided, in no event shall
Page 9
Party A be deemed obligated to install additional Gas meters. Party A shall act
as fuel manager hereunder for the Delivery Period.
(a) Initial Fuel Supply Period. During the Initial Fuel Supply Period,
Party A will supply Gas to the Designated Units pursuant to the Initial Fuel
Supply Plan. The Initial Fuel Supply Plan will provide information such that
Party B can evaluate the expected cost of Gas needed to generate energy provided
under this Schedule 1. Party A shall act in accordance with the Initial Fuel
Supply Plan.
(b) Subsequent Fuel Supply Periods. At least ninety (90) Days prior to
the commencement of each succeeding Fuel Supply Period, Party A shall provide
for Party B's approval a proposed Fuel Supply Plan for the next succeeding Fuel
Supply Period.
(c) Parties' Failure to Execute Fuel Supply Plan.
(i) In the event the Parties do not agree to a Fuel Supply Plan by
sixty (60) Days prior to the next succeeding Fuel Supply Period, Party B may
elect, at Party B's sole option, to provide, or cause to be provided, for the
next succeeding Fuel Supply Period, as appropriate, Gas necessary to supply the
Designated Units hereunder from Party B's own Gas purchases. Party B's election
to provide, or cause to be provided, Gas to the Designated Units under this
Section 6(c)(i) shall be expressed in writing to Party A no later than thirty
(30) Days prior to the commencement of the next succeeding Fuel Supply Period.
(ii) If the Parties do not agree on a Fuel Supply Plan and Party B does
not timely elect to provide Gas to the Designated Units from Party B's own Gas
purchases pursuant to Section 6(c)(i), Party A will provide, pursuant to the
Default Fuel Supply Plan, Gas necessary to supply the Designated Units hereunder
during the next succeeding Fuel Supply Period, or until the Parties have agreed
to and executed a Fuel Supply Plan for such Fuel Supply Period. However, in the
event that the Parties are involved in good faith negotiations with respect to a
Fuel Supply Plan for a Fuel Supply Period, then Party B may elect to, and upon
making such election Party B shall, provide Gas necessary to supply the
Designated Units hereunder until (x) the Parties have agreed to and executed a
Fuel Supply Plan for such Fuel Supply Period, (y) the Parties have discontinued
negotiations with respect to the Fuel Supply Plan for such Fuel Supply Period,
or (z) Party B has elected pursuant to Section 6(c)(i) to provide Gas to the
Designated Units from Party B's own Gas purchases.
(iii) In the event the Parties have not agreed to and executed a Fuel
Supply Plan, Party B has not elected to provide Gas to the Designated Units from
Party B's own Gas purchases for the entire Fuel Supply Period pursuant to
Section 6(c)(i), Party B has not elected to supply Gas from its own Gas
purchases during continuing negotiations with respect to a Fuel Supply Plan
pursuant to Section 6(c)(ii), and Party A is unable, using commercially
reasonable efforts, at any time during the Fuel Supply Period, to provide Gas
necessary to supply the Designated Units hereunder, then Party B will provide
Gas necessary to supply the Designated Units hereunder. In the event Party A is
unable to provide Gas necessary to supply the Designated Units hereunder, and
Party B is unable to provide Gas necessary to supply the Designated Units
hereunder, such inability to provide Gas shall constitute a Force Majeure.
(d) Party B Delivery of Gas Notwithstanding Agreed Fuel Supply Plan. If
Party A is unable to provide Gas to the Designated Units during any Fuel Supply
Period for which the Parties have executed a Fuel Supply Plan, Party B may
provide Gas to the Designated Units.
Page 10
(e) Extended-Term Obligations. The Parties acknowledge that any Fuel
Supply Plan may include Extended-Term Obligations. Extended-Term Obligations may
include, but are not limited to, long-term commitments for pipeline capacity,
storage rights, or financial risk products pertaining to the commodity price
(such as fixed prices, costless collars, basis purchases, caps, or other price
management mechanisms). Any Extended-Term Obligation that the Parties
specifically approve in a separate binding agreement shall be deemed effective
and approved for the duration of the period to which it applies, regardless of
whether such period extends beyond the term of any Fuel Supply Plan.
(f) Fuel Cost Responsibility. Party B shall be solely responsible,
without reimbursement from Party A, for any costs or charges imposed on or
associated with Gas it provides the Designated Units pursuant to Sections 6(c)
or 6(d). In no event shall Party B pay more than one cent per decatherm for fuel
manager's services. Party A shall cause AES to maintain all gas meters in good
working order and in compliance with the requirements of the AES Agreement;
provided, to the extent Party A is responsible for metering costs under the AES
Agreement, Party B shall pay Party A for all such metering costs associated with
the Designated Units and a pro rata share of costs associated with shared meters
at the Facilities.
(g) Fuel Imbalances. The Parties shall use commercially reasonable
efforts to avoid imposition of any Imbalance Charges. If Party A or Party B
receives an invoice from a Transporter that includes Imbalance Charges, the
Parties shall determine the validity as well as the cause of such Imbalance
Charges. If the Imbalance Charges were incurred as a result of Party A's actions
or inactions (which shall include, but not be limited to, Party A's failure to
accept scheduled quantities of Gas), then Party A shall pay for such Imbalance
Charges, or reimburse Party B for such Imbalance Charges paid by the Party B to
the Transporter. If the Imbalance Charges were incurred as a result of Party B's
actions or inactions (which shall include, but shall not be limited to, Party
B's failure to deliver scheduled quantities of Gas), then Party B shall pay for
such Imbalance Charges, or reimburse Party A for such Imbalance Charges paid by
the Party A to the Transporter. Any imbalance penalties require documentation of
penalty assessment by a non-related third party applicable to the imbalance
determination. Party B may direct Party A to use Party B's gas storage to
minimize imbalances. Party B shall have the right to direct the fuel manager to
use Party B's gas buying pool (including storage) to minimize imbalance charges
to Party B. It is the Parties' intent that services provided by the fuel manager
shall include balancing provisions within each month that offer no less benefit
than the then-effective applicable local natural gas distribution utility tariff
would provide for the same period for the Designated Units. Party A shall allow
Party B to nominate through the fuel manager all Gas volumes required for Energy
Dispatched by Party B and fuel manager shall be available to Party B to
coordinate Party B's Gas activity for all four gas nomination cycles each Day.
If a transporter curtailment is in existence during any period during which
Party B is supplying Gas to the Designated Units, the available gas volumes
under the transporter curtailment shall be apportioned between Party B and Party
A in proportion to Party B's Energy Dispatched for that period and Party A's
scheduled dispatch for that period.
(h) Curtailments. To the extent there is a curtailment of gas
deliveries on the applicable transporters, the available gas volumes under the
transporter curtailment shall be apportioned between Party B and Party A in
proportion to the Party's respective dispatch schedules for the curtailment
period.
Page 11
(i) Authorization and Effectiveness of Fuel Plan as to Party B;
Conflicts. Party B's acceptance of a Fuel Plan shall be evidenced by written
acceptance thereof an authorized representative of Party B and upon acceptance
thereof by such authorized representative Party B shall be bound by the terms of
such Fuel Plan; provided, however, that such authorized representative of Party
B shall not have any authority to agree to any terms and provisions of a Fuel
Plan that conflict with the provisions of this Section 6 and in the event any
Fuel Plan contains terms and provisions that conflict with this Section 6, such
terms and provisions shall be void and the provisions of this Section 6 shall
govern such Fuel Plan.
Section 7. Payments. (a) Each month of the Delivery Period of this
Transaction, Party B shall, subject to the provisions of subsection (c) of this
Section 7, pay to Party A, the following:
(i) the Capacity Payment, as adjusted pursuant to Section 8
and Section 12.
(ii) any Variable Payment applicable to the Designated Units
payable in such month pursuant to Section 5.2 of the AES Agreement;
(iii) any Startup Payment applicable to the Designated Units
payable in such month pursuant to Section 5.4 of the AES Agreement;
(iv) the Fuel Payment;
(v) any Additional Ancillary Services Payment applicable to
the Designated Units payable in such month pursuant to Section 5.3 of the AES
Agreement;
(vi) any amount payable in such month pursuant to Article VI
of the AES Agreement, associated with the Designated Unit(s); and
(vii) the Scheduling Coordinator Fee.
(b) amounts payable pursuant to subsection (a) of this Section
7 shall be in addition to amounts payable by Party B to Party A pursuant to the
Product D Master Agreement.
(c) Amounts payable in such month by Party B to Party A
pursuant to subsection (a) of this Section 7 in each month shall be reduced by
the following amounts:
(i) any amount paid or payable in such month by the AES
Subsidiaries to Party A pursuant to Article VI of the AES Agreement,
associated with the Designated Unit(s).
(ii) where Party A is serving as scheduling coordinator, an
amount equal to [A + B] - C
Where,
A = Amounts paid or payable in such month to Party A
by the CAISO for such month as a result of Party A acting as
scheduling coordinator for the Designated Unit(s) in
accordance with tariffs established by CAISO.
B = Amounts not otherwise already reflected in "A"
above, paid or payable in such month to CAISO or withheld by
CAISO from payments due Party
Page 12
A or Party B due to the negligence or willful misconduct of
Party A or the breach by Party A of its scheduling coordinator
agreement with respect to the Designated Unit(s).
C = Amounts paid or payable in such month by Party A
as a result of Party A acting as scheduling coordinator for
the Designated Unit(s) in accordance with tariffs established
by CAISO.
(iii) where a MRA entered into pursuant to Section 8(f) with
respect to the Designated Unit(s) is in effect, an amount equal to [A +
B + C] - [D+ E + F]
Where:
A = Amounts paid or payable in such month to Party A
by the CAISO under the terms of any MRA with respect to the
Designated Unit(s).
B = Amounts not otherwise already reflected in "A"
above, paid or payable in such month by Party A to the CAISO
with respect to the Designated Unit(s) under the terms of an
MRA to the extent such amounts paid or payable in such month
are due to the negligence or willful misconduct of Party A or
the breach by Party A of such MRA.
C = Amounts not otherwise already reflected in "A"
above, paid or payable in such month by the CAISO for Gas
under such MRA with respect to such Designated Unit(s) to the
extent that such Gas has been has paid for by Party B or
provided from storage by Party B or Party B is otherwise
economically obligated with respect thereto.
D = Amounts paid or payable in such month by Party A
to the CAISO with respect to the Designated Unit(s) under the
terms of such MRA.
E = Amounts not otherwise already reflected in "D"
above, paid or payable in such month to the AES Subsidiaries
for capital improvements to such Designated Unit(s) to the
extent such improvements were made with the approval of CAISO
and added to the cost recovery formulae.
F = Amounts not otherwise already reflected in "D"
above, paid or payable in such month by the CAISO for Gas
under such MRA with respect to such Designated Unit(s) to the
extent that such Gas has been has paid for by Party A or
provided from storage by Party A or Party A is otherwise
economically obligated with respect thereto.
(d) If in any month the amounts payable by Party B in a month is less
than an amount of aggregate of reductions permitted to Party B under this
Transaction, any portion of such reductions not made in such month shall be made
in the following month(s); provided, however, that any reductions permitted to
Party B which are not made in full by the month following the final month of the
Delivery Period shall be settled in such month by a payment in the amount of the
reduction not made from Party A to Party B.
Section 8. Reliability Provisions. (a) Non-Dispatch. Any amounts
received (through payment or netting) from the AES Subsidiaries pursuant to
Section 8.6 of the AES Agreement as
Page 13
the result of the Non-Dispatch of any Designated Unit shall be automatically
netted against amounts payable by Party B to Party A pursuant to Section 7(a).
Such pass through shall be in lieu of any liability of Party A to Party B
pursuant to Article Four of the Product D Master Agreement with respect to
delivery of energy hereunder by Party A. Party A shall not, without the approval
of Party B, which shall not be unreasonable withheld, waive its right to receive
any amounts from the AES Subsidiaries pursuant to Section 8.6 of the AES
Agreement. To the extent required by the provisions of Section 8.6 of the AES
Agreement to receive payment thereunder, Party B may, but shall not be obligated
to, make such purchases and Party A shall not be required to make any purchases
pursuant to said section with respect to any Dispatch Notice provided by Party
B. Any amounts that Party A shall be obligated to pass through to Party B shall
be net of (i) any amounts payable by Party A to CAISO which are the direct
result of the failure of Party B to make any purchase required by Section 8.6 of
the AES Agreement and which are not otherwise paid by the AES Subsidiaries,
provided, however, in no event shall Party B be required to make a payment to
Party A pursuant to this Section 8(a) and (ii), to the extent that Party A and
the AES Subsidiaries apply the provisions of Section 8.6 of the AES Agreement to
require actual purchases to be made in order for the AES Subsidiaries to be
obligated to make a payment to Party A thereunder, any portion of a purchase
price of a purchase made by Party B in excess of the price of a purchase made in
a commercially reasonable manner.
(b) Capacity Payment Adjustments. (i) The Capacity Payment payable by
Party B shall be adjusted pursuant to the provisions of Section 4.3 of the AES
Agreement, except that Section 1.79 of the AES Agreement shall be replaced by
the following with respect to the Designated Units:
"Non-Availability Discount" means, as of the end of each month, if a
Unit's Year-to-Date Availability shall be less than its Guaranteed Availability,
the amount computed in accordance with the following formula:
(GA-YTDA)/GA x ((FP/12) x ADC + BCP x BDC) x M x Shortfall Factor
where: "GA" is Guaranteed Availability; "YTDA" is Year-to-Date
Availability (except for periods prior to June 1, 2003, it shall be measured
from the Start Date); "FP" is the Fixed Payment for such Unit ($/kWyr.); "BCP"
is the relevant dollar per kW-month rate for the Base Capacity Payment; "M" is
the number of months elapsed in the then-current Contract Year (except for
periods prior to June 1, 2003, it shall be measured from the Start Date); "ADC"
is the additional capacity made available as defined in Section 1; "BDC" is Base
Dependable Capacity; and the Shortfall Factor applicable to the amount of
Availability Shortfall is determined from Schedule 4.3 of the AES Agreement. The
term "Availability Shortfall" refers to (i) GA minus YTDA, divided by (ii) GA.
For this formula, a negative numeric value (i.e., when YTDA is greater than GA)
shall be treated as zero.
(ii) In the event of an Availability Shortfall under the AES Agreement
with respect to a Designated Unit of less than 50 percent (50%) resulting in
amounts payable by the AES Subsidiaries to Party A with respect to the
Designated Units, Party A shall be obligated only to pass through to Party B
(through payment or netting) any such amounts received (through payment or
netting) from the AES Subsidiaries as the result of the application of Section
4.3 of the AES Agreement to the Designated Units, and in no event shall Party A
be liable to Party B for an amount in excess of ten percent (10%) of the Fixed
Payment for such Designated Unit.
Page 14
(iii) Party A shall not otherwise be obligated to make payments or
adjustments to Party B as the result of the operation of this subsection 8(b)
related to such Capacity Payment. Adjustment of the Capacity Payment pursuant to
this subsection 8(b) shall be in lieu of any liability of Party A to Party B
pursuant to Article Four of the Product D Master Agreement with respect to Party
A's providing capacity and ancillary services hereunder. Party A shall not,
without the approval of Party B, which shall not be unreasonable withheld, waive
its right to receive any amounts from the AES Subsidiaries pursuant to Section
4.3 of the AES Agreement.
(c) Availability Bonus.
(i) The Capacity Payment payable by Party B shall be increased by an
amount (the "Availability Bonus") calculated as follows: if the Availability of
any Designated Unit during Peak Times of any Designated Month (each, in respect
of the relevant Designated Unit, the "Peak Time Unit Availability") is greater
than 86%, then, subject to Section 8(c)(ii), the Availability Bonus for such
Designated Unit in respect of such Designated Month shall equal:
For AL 1 $4,039 multiplied by (Peak Time Unit Availability
minus 86%),
For AL 5 $11,077 multiplied by (Peak Time Unit Availability
minus 86%),
For AL 6 $11,077 multiplied by (Peak Time Unit Availability
minus 86%),
For HB 1 $5,000 multiplied by (Peak Time Unit Availability
minus 86%),
For HB 2 $5,000 multiplied by (Peak Time Unit Availability
minus 86%), and
For RB 6 $4,008 multiplied by (Peak Time Unit Availability
minus 86%).
If the Peak Time Unit Availability is less than 86%for a Designated
Unit, then the Availability Bonus for such Designated Unit for such Designated
Month shall be zero.
(ii) From the Start Date through calendar year 2004, Availability Bonus
amounts calculated pursuant to Section 8(c)(i) shall be reduced by 50%.
(d) Contract Quantity Adjustments. In the event of (i) the exercise by
AES Subsidiaries of the buyout rights with respect to a Designated Unit pursuant
to Section 18.3 of the AES Agreement, or (ii) termination of all or a portion of
the AES Agreement with respect to a Designated Unit(s) pursuant to Article XVIII
of the AES Agreement, or (iii) termination of this Agreement with respect to a
Designated Unit pursuant to Section 5.8 of the Product D Master Agreement or
Section 12(a) of this Transaction, such Designated Units shall be deleted from
the Contract Quantity and Party B's obligations hereunder with respect to such
Contract Quantity correspondingly reduced. Party B shall not be entitled to
receive any payment payable by the AES Subsidiaries to Party A pursuant to
Section 18.3 of the AES Agreement.
(e) CAISO Stage Emergencies. For any hour in which a CAISO stage
emergency alert has been issued or remains in effect, if, after the close of the
CAISO hour-ahead scheduling window for such hour, Party A has uncommitted energy
and/or capacity available from its Facilities other than the Designated Units,
unless otherwise required by the CAISO or the FERC, Party A shall bid such
uncommitted energy and capacity from all such Facilities into the CAISO
imbalance energy market or shall otherwise make such capacity or energy
available to CAISO
Page 15
pursuant to any applicable CAISO tariff provisions, provided, the foregoing
shall not be construed to prohibit Party A from also bidding Ancillary Services
into the CAISO market. From time to time (but not more frequently than monthly)
at Party B's request, for the purposes of determining compliance with this
subsection 8(e), Party A shall provide Party B information reasonably
satisfactory to Party B in sufficient detail to enable Party B to verify that
undelivered energy and/or capacity from such Facilities was previously sold,
scheduled, and/or bid into the CAISO imbalance energy market or has otherwise
been made available to CAISO pursuant to any applicable CAISO tariff provisions.
(f) Reliability Must-Run Agreements. (i) Notwithstanding any provision
herein, Party B's rights and obligations shall at all times be subject to any
MRA applicable to any Designated Unit.
(ii) (A) For any calendar year after 2003, to the extent that any
Designated Unit may be subject to any MRA (a "MRA Designated Unit"), Party A
may, subject to the limitations set forth in this subsection (f), designate
alternate Unit(s) with Dependable Capacity approximately equal to the Base
Dependable Capacity for such calendar year, at least sixth (60) days prior to
the date established for entering into the MRA for such MRA Designated Unit. If
Party A in fact designates such alternate Unit(s) and the Designated Unit in
question in fact become subject to a MRA for such calendar year, the alternate
Unit(s) designated by Party A pursuant to this subsection (f)(ii) shall be the
Designated Unit for all purposes of this Transaction for such calendar year and
the MRA Designated Unit shall not be treated as a Designated Unit for the
purposes of this Transaction for such calendar year. For the purposes of this
Transaction, the Dependable Capacity as set forth in Schedule 4.1 to the AES
Agreement for any alternate Unit(s) designated pursuant to this subsection
(f)(ii) shall be the Base Dependable Capacity and ADC shall be the Dependable
Capacity in excess thereof.
(B) Any alternate Unit designated pursuant to this subsection (f)(ii)
must be an entire alternate Unit.
(C) Any alternate Unit designated pursuant to this subsection (f)(ii)
shall not be subject to a Force Majeure claim at the time designated or any
other Unit specific encumbrance to which the MRA Designated Unit is not subject
that would prevent Party B from realizing the benefits of this Transaction.
(D) Any designation of a alternate Unit(s) pursuant to this subsection
(f)(ii) shall be subject to Party B's reasonable approval; provided, however,
that Party A shall not designate AL 7 or HB 5. It is the intention of the
Parties that any alternate Unit designated shall be of at least equal
performance as the MRA Designated Unit.
(iii) In the event alternate Unit(s) are not designated by Party A with
respect to a MRA Designated Unit pursuant to subsection (f)(ii) for any reason,
Party A may, but shall not be obligated to enter into a MRA with respect to such
MRA Designated Unit. Party A shall notify Party B of its intention to enter into
such MRA with respect to a MRA Designated Unit at least thirty (30) days prior
to the date established for entering into such MRA for such MRA Designated Unit.
The terms and provisions of any such MRA shall be subject to Party B's
reasonable approval. Party B acknowledges and agrees that even if a Designated
Unit at a Facility is not under an MRA, Party A may have a alternate Unit which
is not a Designated Unit under MRA at that Facility.
Page 16
(iv) In the event that Party A does not either designate alternate
Unit(s) with respect to a MRA Designated Unit pursuant to subsection (f)(ii) or
elect to enter into a MRA with respect to a MRA Designated Unit pursuant to
subsection (f)(iii) for any reason, Party B may directly enter into any MRA with
respect to a Designated Unit. Party B shall not propose any Discretionary
Capital Expenditures to the CAISO pursuant to the MRA unless (1) the Party A
shall be reasonably compensated for such Discretionary Capital Expenditures, and
(2) in Party A's reasonable judgment, the implementation of such Discretionary
Capital Expenditure shall not have a material adverse effect on Party A. Party B
shall comply with the terms and provisions of any MRA.
Section 9. Inspection Rights. Upon request of Party B, Party A will
exercise all inspection rights under the AES Agreement on behalf of Party B and
with such personnel as Party B may reasonably designate.
Section 10. Scheduling Coordinator. Party A shall serve as scheduling
coordinator for the Designated Units. Party B shall be required to pay the
Scheduling Coordinator Fee only so long as Party A is the scheduling
coordinator. Party B may become scheduling coordinator for the Designated Units
upon not less than sixty (60) days prior written notice to Party A, at no
additional cost to Party B; provided that Party B shall negotiate reasonable
provisions to protect Party A while Party B serves as scheduling coordinator. In
the event Party A and Party B cannot agree on such provisions within thirty (30)
days of the notice referred to above, the Party A and Party B shall resolve any
disagreement by binding arbitration pursuant to Section 15. It is the intent of
the Parties that Party B acting in the capacity of scheduling coordinator
hereunder not be able to cause Party A to be in default under the AES Agreement
with respect to the Designated Units.
Section 11. Amendment, Assignment of the AES Agreement. Party A shall
provide a copy of any proposed amendment or waiver of the provisions of the AES
Agreement to Party B and (except with respect to waivers under Section 8(a) or
8(b)) not fewer than thirty (30) days prior to the effective date of such
amendment or waiver. Except as provided in Section 8(a) or 8(b), Party A shall
not agree to any amendment of, or waiver of any of Party A's rights pursuant to,
the AES Agreement with respect to the Designated Units or any Unit that may
become a Designated Unit during the Delivery Period without the written approval
of Party B, which shall not be unreasonably withheld. Party B shall provide
written approval or specify the reason for the withholding thereof as soon as
reasonably possible after receipt of notice of any proposed amendment or waiver.
Party A shall not assign the AES Agreement without simultaneously assigning this
Agreement to the same party in accordance with the provisions of Section 10.5 of
the Product D Master Agreement.
Section 12. Additional Termination Right; Event of Default.
(a) Termination for Availability Shortfall. If, after June 1, 2003, the
average Availability of all Designated Units shall be below 70% for any two
consecutive six month periods of May through October, (i) the relevant dollar
per kW-month rate for the Capacity Payment for Designated Unit with the lowest
availability shall be divided by two for the one (1) year period immediately
following such shortfall, and (ii) Party B shall be entitled to terminate this
Product D Transaction with respect to such Designated Unit if the average
Availability of such Designated Unit is below its Guaranteed Availability during
such one (1) year period following such shortfall. In the event of early
termination under this Section 12, the MW allocable to such
Page 17
Designated Unit shall be deleted from the Contract Quantity for Product D and
neither Party shall be liable to the other for the payment of damages related to
such early termination.
(b) Additional Event of Default. Except as provided in Section 3(a),
Party A shall not for economic reasons intentionally and without reasonable
belief that such action was excused or otherwise permitted:
(i) dispatch any of the Designated Units for sale or delivery
of energy to any Person other than Party B, including in cases
where Party B does not Dispatch a Designated Unit; or
(ii) enter into sale or commitment of capacity of a Designated
Unit during the Delivery Period to any Person other than Party
B.
Upon the first or second violation of this subsection 12(b),
other than during a CAISO stage emergency alert, Party A shall
terminate any transaction resulting in such violation and
shall pay to Party B as liquidated damages and not as a
penalty 5 times the amount payable to Party A under any such
transaction.
A third violation of this subsection 12(b) or any violation
during a CAISO stage emergency alert, shall constitute an
Event of Default and Party B shall be entitled to damages set
forth in Article V of the Product D Master Agreement.
Section 13. Confidential Information. The Parties agree, as soon as is
practicable, but no later than twelve (12) months after the effective date of
this Agreement, to take such action as is necessary to ensure the protection of
confidential business information from one another and shall establish
protective barriers and procedures to ensure that sensitive non-public
operational and bidding information is shielded from the Parties respective
marketing and trading personnel.
Section 14. Operations Committee. (a) Party A and Party B shall each
designate a person to address implementation of this Transaction. The Operations
Committee may adopt such procedures it considers necessary or appropriate for
its operations. The Operations Committee shall meet from time to time as it
deems necessary.
(b) Issues the Operations Committee will address include:
COMMUNICATION PROTOCOLS
- Contact lists
- Job responsibilities
- Fax numbers
- Emergency communications
- Dispatch Notices
DATA EXCHANGE
- Gas
- Power
- Real-time (instantaneous) data
- Telemetry issues
Page 18
SCHEDULING AND DISPATCH PROCEDURES
- Format
- Notifications (schedule changes, unit status)
(c) The responsibilities and authority of the Operations Committee
shall be limited to the development of operating procedures and shall not
include altering any terms of this Agreement. Failure of the Operations
Committee to reach agreement shall in no event excuse either Party A or Party B
of its obligations hereunder.
Section 15. Arbitration. The Parties agree to resolve the specific
matters set forth in Section 3(d)(iii) or Section 10 by binding arbitration.
Arbitration shall be conducted in accordance with the Complex Commercial
Arbitration Rules of the American Arbitration Association. The validity,
construction, and interpretation of this agreement to arbitrate, and all
procedural aspects of the arbitration conducted pursuant hereto shall be decided
by the arbitrators. In deciding the substance of the Parties' claims, the
arbitrators shall refer to California law. It is agreed that the arbitrators
shall be limited solely to resolving the matters specifically set for in either
Section 3(d)(iii) or Section 10. The arbitrators shall have no authority to take
any other action or provide any remedy, including, but limited to, the award of
damages, under either Section 3(d)(iii) or Section 10 or to consider any matter
or dispute hereunder not specifically referred to in said Section 3(d)(iii) or
Section 10. The arbitration proceeding shall be conducted in Los Angeles,
California. Within twenty (20) days of the notice of initiation of the
arbitration procedure, the respondent shall file a response in writing. Within
thirty (30) days after the response, each party shall select one arbitrator.
Within twenty (20) days thereafter, the two (2) arbitrators shall select a third
arbitrator. All three arbitrators are required to be neutral and impartial and
shall take an oath at the first session of the arbitration affirming same. None
of the three arbitrators shall have business, professional or social
relationships with any of the parties. However, upon full disclosure of such
relationships, all parties may agree that the arbitrator may serve as an
arbitrator. The arbitration shall proceed within sixty (60) days after the
appointment of the last of the three arbitrators. The arbitrators shall render
their decision (by majority rule) within twenty (20) days after the conclusion
of the arbitration. California law shall apply to the subject matter of the
arbitration.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Page 19
BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS
This Base Contract is entered into as of the following date: November
11, 2002. The parties to this Base Contract are the following:
STATE OF CALIFORNIA DEPARTMENT OF WATER RESOURCES and ▇▇▇▇▇▇▇▇ ENERGY MARKETING & TRADING COMPANY__________________
separate and apart from its powers and responsibilities _____________________________________________________________
with respect to the State Water Resources
Development System
Duns Number: ▇▇-▇▇▇-▇▇▇▇ Duns Number: ▇▇-▇▇▇-▇▇▇▇
Contract Number: ____________________________________________ Contract Number: ___________________________________________
U.S. Federal Tax ID Number: ▇▇-▇▇▇▇▇▇▇ U.S. Federal Tax ID Number: ▇▇-▇▇▇▇▇▇▇
Notices:
California Department of water Resources/CERS
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy Marketing & Trading Company
Attn: Executive Manager Power Systems________________________ ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇ ▇-▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: Contract Management
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
* and *
▇▇▇▇▇▇▇▇ Energy Marketing & Trading Company
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇-▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Assistant General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmations:
▇▇▇▇▇▇▇▇ Energy Marketing & Trading Company
______________________________________________________________
Attn: _______________________________________________________ Attn: Natural Gas Confirmations Analyst
Phone: _____________ Fax: _____________________ Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Invoices and Payments:
DWR/CERS SETTLEMENTS UNIT
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Energy Marketing & Trading Company
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: EMT Gas & Power Operations Accounting
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer or ACH Numbers (if applicable):
BANK: Bank of America (Sacramento main branch) BANK: ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
ABA: Routing # ▇▇▇▇▇▇▇▇▇ ABA: ▇▇▇-▇▇▇▇-▇▇
ACCT: # 14365-80598 ACCT: as invoiced
Other Details: for Dept. of Water Resources Other Details:_______________________________________________
This Base Contract incorporates by reference for all purposes the General Terms
and Conditions for Sale and Purchase of Natural Gas published by the North
American Energy Standards Board. The parties hereby agree to the following
provisions offered in said General Terms and Conditions. In the event the
parties fail to check a box, the specified default provision shall apply. Select
only one box from each section:
SECTION 1.2 [ ] Oral (default) SECTION 7.2 x 25th Day of Month following Month of
Transaction x Written Payment Date delivery.
Procedure [ ] _ Day of Month following Month of delivery
------------------------------------------------------------------------------------------------------------------------------------
SECTION 2.5 x 2 Business Days after receipt (default) SECTION 7.2 x Wire transfer (default)
Confirm [ ] 5 Business Days after receipt Method of [ ] Automated Clearinghouse Credit (ACH)
Deadline Payment [ ] Check
------------------------------------------------------------------------------------------------------------------------------------
SECTION 2.6 [ ] Seller (default) SECTION 7.7 x Netting applies (default)
Confirming [ ] Buyer Netting [ ] Netting does not apply
Party x Both
------------------------------------------------------------------------------------------------------------------------------------
SECTION 3.2 x Cover Standard (default) SECTION 10.3.1 x Early Termination Damages Apply (default)
Performance Spot Price Standard Early [ ] Early Termination Damages Do Not Apply
Obligation Termination
Damages
------------------------------------------------------------------------------------------------------------------------------------
SECTION 10.3.2 [ ] Other Agreement Setoffs Apply (default)
NOTE: THE FOLLOWING SPOT PRICE PUBLICATION APPLIES TO BOTH OF Other Agreement x Other Agreement Setoffs Do Not Apply
THE IMMEDIATELY PRECEDING. Setoffs
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Page 20
SECTION 2.26 x Gas Daily Midpoint (default) SECTION 14.5
Spot Price [ ] ____________________________ Choice Of Law California
Publication
------------------------------------------------------------------------------------------------------------------------------------
SECTION 6 x Buyer Pays At and After Delivery Point SECTION 14.10 [ ] Confidentiality applies (default)
Taxes (default) Confidentiality x Confidentiality does not apply
[ ] Seller Pays Before and At Delivery Point
------------------------------------------------------------------------------------------------------------------------------------
x SPECIAL PROVISIONS Number of sheets attached: 7
[ ] ADDENDUM(S):___________________________________________________________________________________________
IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in
duplicate.
____________________________________ _______________________________________
Party Name Party Name
By ________________________________ By _______________________________
Name: Name:
Title: Title:
GENERAL TERMS AND CONDITIONS
BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS
Section 1. PURPOSE AND PROCEDURES
1.1 These General Terms and Conditions are intended to facilitate purchase
and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to
the party receiving Gas and "Seller" refers to the party delivering Gas. The
entire agreement between the parties shall be the Contract as defined in Section
2.7.
THE PARTIES HAVE SELECTED EITHER THE "ORAL TRANSACTION PROCEDURE" OR THE
"WRITTEN TRANSACTION PROCEDURE" AS INDICATED ON THE BASE CONTRACT.
ORAL TRANSACTION PROCEDURE:
1.2 The parties will use the following Transaction Confirmation procedure.
Any Gas purchase and sale transaction may be effectuated in an EDI transmission
or telephone conversation with the offer and acceptance constituting the
agreement of the parties. The parties shall be legally bound from the time they
so agree to transaction terms and may each rely thereon. Any such transaction
shall be considered a "writing" and to have been "signed". Notwithstanding the
foregoing sentence, the parties agree that Confirming Party shall, and the other
party may, confirm a telephonic transaction by sending the other party a
Transaction Confirmation by facsimile, EDI or mutually agreeable electronic
means within three Business Days of a transaction covered by this Section 1.2
(Oral Transaction Procedure) provided that the failure to send a Transaction
Confirmation shall not invalidate the oral agreement of the parties. Confirming
Party adopts its confirming letterhead, or the like, as its signature on any
Transaction Confirmation as the identification and authentication of Confirming
Party. If the Transaction Confirmation contains any provisions other than those
relating to the commercial terms of the transaction (i.e., price, quantity,
performance obligation, delivery point, period of delivery and/or transportation
conditions), which modify or supplement the Base Contract or General Terms and
Conditions of this Contract (e.g., arbitration or additional representations and
warranties), such provisions shall not be deemed to be accepted pursuant to
Section 1.3 but must be expressly agreed to by both parties; provided that the
foregoing shall not invalidate any transaction agreed to by the parties.
WRITTEN TRANSACTION PROCEDURE:
1.2. The parties will use the following Transaction Confirmation procedure.
Should the parties come to an agreement regarding a Gas purchase and sale
transaction for a particular Delivery Period, the Confirming Party shall, and
the other party may, record that agreement on a Transaction Confirmation and
communicate such Transaction Confirmation by facsimile, EDI or mutually
agreeable electronic means, to the other party by the close of the Business Day
following the date of agreement. The parties acknowledge that their agreement
will not be binding until the exchange of nonconflicting Transaction
Confirmations or the passage of the Confirm Deadline without objection from the
receiving party, as provided in Section 1.3.
1.3 If a sending party's Transaction Confirmation is materially different
from the receiving party's understanding of the agreement referred to in Section
1.2, such receiving party shall notify the sending party via facsimile, EDI or
mutually agreeable electronic means by the Confirm Deadline, unless such
receiving party has previously sent a Transaction Confirmation to the sending
party. The failure of the receiving party to so notify the sending party in
writing by the Confirm Deadline constitutes the receiving party's agreement to
the terms of the transaction described in the sending party's Transaction
Confirmation. If there are any material differences between timely sent
Transaction Confirmations governing the same transaction, then neither
Transaction Confirmation shall be binding until or unless such differences are
resolved including the use of any evidence that clearly resolves the differences
in the Transaction Confirmations. In the event of a conflict among the terms of
(i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral
agreement of the parties which may be evidenced by a recorded conversation,
where the parties have selected the Oral Transaction Procedure of the Base
Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions,
the terms of the documents shall govern in the priority listed in this sentence.
1.4 The parties agree that each party may electronically record all
telephone conversations with respect to this Contract between their respective
employees, without any special or further notice to the other party. Each party
shall obtain any necessary consent of its agents and employees to such
recording. Where the parties have selected the Oral Transaction Procedure in
Section 1.2 of the Base Contract, the parties agree not to contest the validity
or enforceability of telephonic recordings entered into in accordance with the
requirements of this Base Contract. However, nothing herein shall be construed
as a waiver of any objection to the admissibility of such evidence.
Section 2. DEFINITIONS
The terms set forth below shall have the meaning ascribed to them
below. Other terms are also defined elsewhere in the Contract and shall have the
meanings ascribed to them herein.
2.1 "Alternative Damages" shall mean such damages, expressed in dollars or
dollars per MMBtu, as the parties shall agree upon in the Transaction
Confirmation, in the event either Seller or Buyer fails to perform a Firm
obligation to deliver Gas in the case of Seller or to receive Gas in the case of
Buyer.
Page 1 of 10
2.2 "Base Contract" shall mean a contract executed by the parties that
incorporates these General Terms and Conditions by reference; that specifies the
agreed selections of provisions contained herein; and that sets forth other
information required herein and any Special Provisions and addendum(s) as
identified on page one.
2.3 "British thermal unit" or "Btu" shall mean the International BTU, which
is also called the Btu (IT).
2.4 "Business Day" shall mean any day except Saturday, Sunday or Federal
Reserve Bank holidays.
2.5 "Confirm Deadline" shall mean 5:00 p.m. in the receiving party's time
zone on the second Business Day following the Day a Transaction Confirmation is
received or, if applicable, on the Business Day agreed to by the parties in the
Base Contract; provided, if the Transaction Confirmation is time stamped after
5:00 p.m. in the receiving party's time zone, it shall be deemed received at the
opening of the next Business Day.
2.6 "Confirming Party" shall mean the party designated in the Base Contract
to prepare and forward Transaction Confirmations to the other party.
2.7 "Contract" shall mean the legally-binding relationship established by
(i) the Base Contract, (ii) any and all binding Transaction Confirmations and
(iii) where the parties have selected the Oral Transaction Procedure in Section
1.2 of the Base Contract, any and all transactions that the parties have entered
into through an EDI transmission or by telephone, but that have not been
confirmed in a binding Transaction Confirmation.
2.8 "Contract Price" shall mean the amount expressed in U.S. Dollars per
MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the
parties in a transaction.
2.9 "Contract Quantity" shall mean the quantity of Gas to be delivered and
taken as agreed to by the parties in a transaction.
2.10 "Cover Standard", as referred to in Section 3.2, shall mean that if
there is an unexcused failure to take or deliver any quantity of Gas pursuant to
this Contract, then the performing party shall use commercially reasonable
efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate
fuel if elected by Buyer and replacement Gas is not available), or (ii) if
Seller is the performing party, sell Gas, in either case, at a price reasonable
for the delivery or production area, as applicable, consistent with: the amount
of notice provided by the nonperforming party; the immediacy of the Buyer's Gas
consumption needs or Seller's Gas sales requirements, as applicable; the
quantities involved; and the anticipated length of failure by the nonperforming
party.
2.11 "Credit Support Obligation(s)" shall mean any obligation(s) to provide
or establish credit support for, or on behalf of, a party to this Contract such
as an irrevocable standby letter of credit, a margin agreement, a prepayment, a
security interest in an asset, a performance bond, guaranty, or other good and
sufficient security of a continuing nature.
2.12 "Day" shall mean a period of 24 consecutive hours, coextensive with a
"day" as defined by the Receiving Transporter in a particular transaction.
2.13 "Delivery Period" shall be the period during which deliveries are to be
made as agreed to by the parties in a transaction.
2.14 "Delivery Point(s)" shall mean such point(s) as are agreed to by the
parties in a transaction.
2.15 "EDI" shall mean an electronic data interchange pursuant to an
agreement entered into by the parties, specifically relating to the
communication of Transaction Confirmations under this Contract.
2.16 "EFP" shall mean the purchase, sale or exchange of natural Gas as the
"physical" side of an exchange for physical transaction involving gas futures
contracts. EFP shall incorporate the meaning and remedies of "Firm", provided
that a party's excuse for nonperformance of its obligations to deliver or
receive Gas will be governed by the rules of the relevant futures exchange
regulated under the Commodity Exchange Act.
2.17 "Firm" shall mean that either party may interrupt its performance
without liability only to the extent that such performance is prevented for
reasons of Force Majeure; provided, however, that during Force Majeure
interruptions, the party invoking Force Majeure may be responsible for any
Imbalance Charges as set forth in Section 4.3 related to its interruption after
the nomination is made to the Transporter and until the change in deliveries
and/or receipts is confirmed by the Transporter.
2.18 "Gas" shall mean any mixture of hydrocarbons and noncombustible gases
in a gaseous state consisting primarily of methane.
2.19 "Imbalance Charges" shall mean any fees, penalties, costs or charges
(in cash or in kind) assessed by a Transporter for failure to satisfy the
Transporter's balance and/or nomination requirements.
2.20 "Interruptible" shall mean that either party may interrupt its
performance at any time for any reason, whether or not caused by an event of
Force Majeure, with no liability, except such interrupting party may be
responsible for any Imbalance Charges as set forth in Section 4.3 related to its
interruption after the nomination is made to the Transporter and until the
change in deliveries and/or receipts is confirmed by Transporter.
2.21 "MMBtu" shall mean one million British thermal units, which is
equivalent to one dekatherm.
2.22 "Month" shall mean the period beginning on the first Day of the
calendar month and ending immediately prior to the commencement of the first Day
of the next calendar month.
2.23 "Payment Date" shall mean a date, as indicated on the Base Contract, on
or before which payment is due Seller for Gas received by Buyer in the previous
Month.
2.24 "Receiving Transporter" shall mean the Transporter receiving Gas at a
Delivery Point, or absent such receiving Transporter, the Transporter delivering
Gas at a Delivery Point.
2.25 "Scheduled Gas" shall mean the quantity of Gas confirmed by
Transporter(s) for movement, transportation or management.
Page 2 of 10
2.26 "Spot Price " as referred to in Section 3.2 shall mean the price listed
in the publication indicated on the Base Contract, under the listing applicable
to the geographic location closest in proximity to the Delivery Point(s) for the
relevant Day; provided, if there is no single price published for such location
for such Day, but there is published a range of prices, then the Spot Price
shall be the average of such high and low prices. If no price or range of prices
is published for such Day, then the Spot Price shall be the average of the
following: (i) the price (determined as stated above) for the first Day for
which a price or range of prices is published that next precedes the relevant
Day; and (ii) the price (determined as stated above) for the first Day for which
a price or range of prices is published that next follows the relevant Day.
2.27 "Transaction Confirmation" shall mean a document, similar to the form
of Exhibit A, setting forth the terms of a transaction formed pursuant to
Section 1 for a particular Delivery Period.
2.28 "Termination Option" shall mean the option of either party to terminate
a transaction in the event that the other party fails to perform a Firm
obligation to deliver Gas in the case of Seller or to receive Gas in the case of
Buyer for a designated number of days during a period as specified on the
applicable Transaction Confirmation.
2.29 "Transporter(s)" shall mean all Gas gathering or pipeline companies, or
local distribution companies, acting in the capacity of a transporter,
transporting Gas for Seller or Buyer upstream or downstream, respectively, of
the Delivery Point pursuant to a particular transaction.
Section 3. PERFORMANCE OBLIGATION
3.1 Seller agrees to sell and deliver, and Buyer agrees to receive and
purchase, the Contract Quantity for a particular transaction in accordance with
the terms of the Contract. Sales and purchases will be on a Firm or
Interruptible basis, as agreed to by the parties in a transaction.
THE PARTIES HAVE SELECTED EITHER THE "COVER STANDARD" OR THE "SPOT PRICE
STANDARD" AS INDICATED ON THE BASE CONTRACT.
COVER STANDARD:
3.2 The sole and exclusive remedy of the parties in the event of a breach
of a Firm obligation to deliver or receive Gas shall be recovery of the
following: (i) in the event of a breach by Seller on any Day(s), payment by
Seller to Buyer in an amount equal to the positive difference, if any, between
the purchase price paid by Buyer utilizing the Cover Standard and the Contract
Price, adjusted for commercially reasonable differences in transportation costs
to or from the Delivery Point(s), multiplied by the difference between the
Contract Quantity and the quantity actually delivered by Seller for such Day(s);
or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to
Seller in the amount equal to the positive difference, if any, between the
Contract Price and the price received by Seller utilizing the Cover Standard for
the resale of such Gas, adjusted for commercially reasonable differences in
transportation costs to or from the Delivery Point(s), multiplied by the
difference between the Contract Quantity and the quantity actually taken by
Buyer for such Day(s); or (iii) in the event that Buyer has used commercially
reasonable efforts to replace the Gas or Seller has used commercially reasonable
efforts to sell the Gas to a third party, and no such replacement or sale is
available, then the sole and exclusive remedy of the performing party shall be
any unfavorable difference between the Contract Price and the Spot Price,
adjusted for such transportation to the applicable Delivery Point, multiplied by
the difference between the Contract Quantity and the quantity actually delivered
by Seller and received by Buyer for such Day(s). Imbalance Charges shall not be
recovered under this Section 3.2, but Seller and/or Buyer shall be responsible
for Imbalance Charges, if any, as provided in Section 4.3. The amount of such
unfavorable difference shall be payable five Business Days after presentation of
the performing party's invoice, which shall set forth the basis upon which such
amount was calculated.
SPOT PRICE STANDARD:
3.2. The sole and exclusive remedy of the parties in the event of a breach
of a Firm obligation to deliver or receive Gas shall be recovery of the
following: (i) in the event of a breach by Seller on any Day(s), payment by
Seller to Buyer in an amount equal to the difference between the Contract
Quantity and the actual quantity delivered by Seller and received by Buyer for
such Day(s), multiplied by the positive difference, if any, obtained by
subtracting the Contract Price from the Spot Price; or (ii) in the event of a
breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to
the difference between the Contract Quantity and the actual quantity delivered
by Seller and received by Buyer for such Day(s), multiplied by the positive
difference, if any, obtained by subtracting the applicable Spot Price from the
Contract Price. Imbalance Charges shall not be recovered under this Section 3.2,
but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as
provided in Section 4.3. The amount of such unfavorable difference shall be
payable five Business Days after presentation of the performing party's invoice,
which shall set forth the basis upon which such amount was calculated.
3.3 Notwithstanding Section 3.2, the parties may agree to Alternative
Damages in a Transaction Confirmation executed in writing by both parties.
3.4 In addition to Sections 3.2 and 3.3, the parties may provide for a
Termination Option in a Transaction Confirmation executed in writing by both
parties. The Transaction Confirmation containing the Termination Option will
designate the length of nonperformance triggering the Termination Option and the
procedures for exercise thereof, how damages for nonperformance will be
compensated, and how liquidation costs will be calculated.
Section 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES
4.1 Seller shall have the sole responsibility for transporting the Gas to
the Delivery Point(s). Buyer shall have the sole responsibility for transporting
the Gas from the Delivery Point(s).
Page 3 of 10
4.2 The parties shall coordinate their nomination activities, giving
sufficient time to meet the deadlines of the affected Transporter(s). Each party
shall give the other party timely prior Notice, sufficient to meet the
requirements of all Transporter(s) involved in the transaction, of the
quantities of Gas to be delivered and purchased each Day. Should either party
become aware that actual deliveries at the Delivery Point(s) are greater or
lesser than the Scheduled Gas, such party shall promptly notify the other party.
4.3 The parties shall use commercially reasonable efforts to avoid
imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from
a Transporter that includes Imbalance Charges, the parties shall determine the
validity as well as the cause of such Imbalance Charges. If the Imbalance
Charges were incurred as a result of Buyer's receipt of quantities of Gas
greater than or less than the Scheduled Gas, then Buyer shall pay for such
Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller.
If the Imbalance Charges were incurred as a result of Seller's delivery of
quantities of Gas greater than or less than the Scheduled Gas, then Seller shall
pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges
paid by Buyer.
Section 5. QUALITY AND MEASUREMENT
All Gas delivered by Seller shall meet the pressure, quality and heat
content requirements of the Receiving Transporter. The unit of quantity
measurement for purposes of this Contract shall be one MMBtu dry. Measurement of
Gas quantities hereunder shall be in accordance with the established procedures
of the Receiving Transporter.
Section 6. TAXES
THE PARTIES HAVE SELECTED EITHER "BUYER PAYS AT AND AFTER DELIVERY POINT" OR
"SELLER PAYS BEFORE AND AT DELIVERY POINT" AS INDICATED ON THE BASE CONTRACT.
BUYER PAYS AT AND AFTER DELIVERY POINT:
Seller shall pay or cause to be paid all taxes, fees, levies, penalties,
licenses or charges imposed by any government authority ("Taxes") on or with
respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to
be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all
Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes
that are the other party's responsibility hereunder, the party responsible for
such Taxes shall promptly reimburse the other party for such Taxes. Any party
entitled to an exemption from any such Taxes or charges shall furnish the other
party any necessary documentation thereof.
SELLER PAYS BEFORE AND AT DELIVERY POINT:
Seller shall pay or cause to be paid all taxes, fees, levies, penalties,
licenses or charges imposed by any government authority ("Taxes") on or with
respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery
Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to
the Gas after the Delivery Point(s). If a party is required to remit or pay
Taxes that are the other party's responsibility hereunder, the party responsible
for such Taxes shall promptly reimburse the other party for such Taxes. Any
party entitled to an exemption from any such Taxes or charges shall furnish the
other party any necessary documentation thereof.
Section 7. BILLING, PAYMENT, AND AUDIT
7.1 Seller shall invoice Buyer for Gas delivered and received in the
preceding Month and for any other applicable charges, providing supporting
documentation acceptable in industry practice to support the amount charged. If
the actual quantity delivered is not known by the billing date, billing will be
prepared based on the quantity of Scheduled Gas. The invoiced quantity will then
be adjusted to the actual quantity on the following Month's billing or as soon
thereafter as actual delivery information is available.
7.2 Buyer shall remit the amount due under Section 7.1 in the manner
specified in the Base Contract, in immediately available funds, on or before the
later of the Payment Date or 10 Days after receipt of the invoice by Buyer;
provided that if the Payment Date is not a Business Day, payment is due on the
next Business Day following that date. In the event any payments are due Buyer
hereunder, payment to Buyer shall be made in accordance with this Section 7.2.
7.3 In the event payments become due pursuant to Sections 3.2 or 3.3, the
performing party may submit an invoice to the nonperforming party for an
accelerated payment setting forth the basis upon which the invoiced amount was
calculated. Payment from the nonperforming party will be due five Business Days
after receipt of invoice.
7.4 If the invoiced party, in good faith, disputes the amount of any such
invoice or any part thereof, such invoiced party will pay such amount as it
concedes to be correct; provided, however, if the invoiced party disputes the
amount due, it must provide supporting documentation acceptable in industry
practice to support the amount paid or disputed. In the event the parties are
unable to resolve such dispute, either party may pursue any remedy available at
law or in equity to enforce its rights pursuant to this Section.
7.5 If the invoiced party fails to remit the full amount payable when due,
interest on the unpaid portion shall accrue from the date due until the date of
payment at a rate equal to the lower of (i) the then-effective prime rate of
interest published under "Money Rates" by The Wall Street Journal, plus two
percent per annum; or (ii) the maximum applicable lawful interest rate.
7.6 A party shall have the right, at its own expense, upon reasonable
Notice and at reasonable times, to examine and audit and to obtain copies of the
relevant portion of the books, records, and telephone recordings of the other
party only to the extent reasonably necessary to verify
Page 4 pf 10
the accuracy of any statement, charge, payment, or computation made under the
Contract. This right to examine, audit, and to obtain copies shall not be
available with respect to proprietary information not directly relevant to
transactions under this Contract. All invoices and ▇▇▇▇▇▇▇▇ shall be
conclusively presumed final and accurate and all associated claims for under- or
overpayments shall be deemed waived unless such invoices or ▇▇▇▇▇▇▇▇ are
objected to in writing, with adequate explanation and/or documentation, within
two years after the Month of Gas delivery. All retroactive adjustments under
Section 7 shall be paid in full by the party owing payment within 30 Days of
Notice and substantiation of such inaccuracy.
7.7 Unless the parties have elected on the Base Contract not to make this
Section 7.7 applicable to this Contract, the parties shall net all undisputed
amounts due and owing, and/or past due, arising under the Contract such that the
party owing the greater amount shall make a single payment of the net amount to
the other party in accordance with Section 7; provided that no payment required
to be made pursuant to the terms of any Credit Support Obligation or pursuant to
Section 7.3 shall be subject to netting under this Section. If the parties have
executed a separate netting agreement, the terms and conditions therein shall
prevail to the extent inconsistent herewith.
Section 8. TITLE, WARRANTY, AND INDEMNITY
8.1 Unless otherwise specifically agreed, title to the Gas shall pass from
Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for
and assume any liability with respect to the Gas prior to its delivery to Buyer
at the specified Delivery Point(s). Buyer shall have responsibility for and any
liability with respect to said Gas after its delivery to Buyer at the Delivery
Point(s).
8.2 Seller warrants that it will have the right to convey and will transfer
good and merchantable title to all Gas sold hereunder and delivered by it to
Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED
IN THIS SECTION 8.2 AND IN SECTION 14.8, ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE, ARE DISCLAIMED.
8.3 Seller agrees to indemnify Buyer and save it harmless from all losses,
liabilities or claims including reasonable attorneys' fees and costs of court
("Claims"), from any and all persons, arising from or out of claims of title,
personal injury or property damage from said Gas or other charges thereon which
attach before title passes to Buyer. Buyer agrees to indemnify Seller and save
it harmless from all Claims, from any and all persons, arising from or out of
claims regarding payment, personal injury or property damage from said Gas or
other charges thereon which attach after title passes to Buyer.
8.4 Notwithstanding the other provisions of this Section 8, as between
Seller and Buyer, Seller will be liable for all Claims to the extent that such
arise from the failure of Gas delivered by Seller to meet the quality
requirements of Section 5.
Section 9. NOTICES
9.1 All Transaction Confirmations, invoices, payments and other
communications made pursuant to the Base Contract ("Notices") shall be made to
the addresses specified in writing by the respective parties from time to time.
9.2 All Notices required hereunder may be sent by facsimile or mutually
acceptable electronic means, a nationally recognized overnight courier service,
first class mail or hand delivered.
9.3 Notice shall be given when received on a Business Day by the addressee.
In the absence of proof of the actual receipt date, the following presumptions
will apply. Notices sent by facsimile shall be deemed to have been received upon
the sending party's receipt of its facsimile machine's confirmation of
successful transmission. If the day on which such facsimile is received is not a
Business Day or is after five p.m. on a Business Day, then such facsimile shall
be deemed to have been received on the next following Business Day. Notice by
overnight mail or courier shall be deemed to have been received on the next
Business Day after it was sent or such earlier time as is confirmed by the
receiving party. Notice via first class mail shall be considered delivered five
Business Days after mailing.
Section 10. FINANCIAL RESPONSIBILITY
10.1 If either party ("X") has reasonable grounds for insecurity regarding
the performance of any obligation under this Contract (whether or not then due)
by the other party ("Y") (including, without limitation, the occurrence of a
material change in the creditworthiness of Y), X may demand Adequate Assurance
of Performance. "Adequate Assurance of Performance" shall mean sufficient
security in the form, amount and for the term reasonably acceptable to X,
including, but not limited to, a standby irrevocable letter of credit, a
prepayment, a security interest in an asset or a performance bond or guaranty
(including the issuer of any such security).
10.2 In the event (each an "Event of Default") either party (the "Defaulting
Party") or its guarantor shall: (i) make an assignment or any general
arrangement for the benefit of creditors; (ii) file a petition or otherwise
commence, authorize, or acquiesce in the commencement of a proceeding or case
under any bankruptcy or similar law for the protection of creditors or have such
petition filed or proceeding commenced against it; (iii) otherwise become
bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as
they fall due; (v) have a receiver, provisional liquidator, conservator,
custodian, trustee or other similar official appointed with respect to it or
substantially all of its assets; (vi) fail to perform any obligation to the
other party with respect to any Credit Support Obligations relating to the
Contract; (vii) fail to give Adequate Assurance of Performance under Section
10.1 within 48 hours but at least one Business Day of a written request by the
other party; or (viii) not have paid any amount due the other party hereunder on
or before the second Business Day following written Notice that such payment is
due; then the other party (the "Non-Defaulting Party") shall have the right, at
its sole election, to immediately withhold and/or suspend deliveries or payments
upon Notice and/or to terminate and liquidate
Page 5 of 10
the transactions under the Contract, in the manner provided in Section 10.3, in
addition to any and all other remedies available hereunder.
10.3 If an Event of Default has occurred and is continuing, the
Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to
designate a Day, no earlier than the Day such Notice is given and no later than
20 Days after such Notice is given, as an early termination date (the "Early
Termination Date") for the liquidation and termination pursuant to Section
10.3.1 of all transactions under the Contract, each a "Terminated Transaction".
On the Early Termination Date, all transactions will terminate, other than those
transactions, if any, that may not be liquidated and terminated under applicable
law or that are, in the reasonable opinion of the Non-Defaulting Party,
commercially impracticable to liquidate and terminate ("Excluded Transactions"),
which Excluded Transactions must be liquidated and terminated as soon thereafter
as is reasonably practicable, and upon termination shall be a Terminated
Transaction and be valued consistent with Section 10.3.1 below. With respect to
each Excluded Transaction, its actual termination date shall be the Early
Termination Date for purposes of Section 10.3.1.
THE PARTIES HAVE SELECTED EITHER "EARLY TERMINATION DAMAGES APPLY" OR "EARLY
TERMINATION DAMAGES DO NOT APPLY" AS INDICATED ON THE BASE CONTRACT.
EARLY TERMINATION DAMAGES APPLY:
10.3.1 As of the Early Termination Date, the Non-Defaulting Party shall
determine, in good faith and in a commercially reasonable manner, (i) the amount
owed (whether or not then due) by each party with respect to all Gas delivered
and received between the parties under Terminated Transactions and Excluded
Transactions on and before the Early Termination Date and all other applicable
charges relating to such deliveries and receipts (including without limitation
any amounts owed under Section 3.2), for which payment has not yet been made by
the party that owes such payment under this Contract and (ii) the Market Value,
as defined below, of each Terminated Transaction. The Non-Defaulting Party shall
(x) liquidate and accelerate each Terminated Transaction at its Market Value, so
that each amount equal to the difference between such Market Value and the
Contract Value, as defined below, of such Terminated Transaction(s) shall be due
to the Buyer under the Terminated Transaction(s) if such Market Value exceeds
the Contract Value and to the Seller if the opposite is the case; and (y) where
appropriate, discount each amount then due under clause (x) above to present
value in a commercially reasonable manner as of the Early Termination Date (to
take account of the period between the date of liquidation and the date on which
such amount would have otherwise been due pursuant to the relevant Terminated
Transactions).
For purposes of this Section 10.3.1, "Contract Value" means the amount of Gas
remaining to be delivered or purchased under a transaction multiplied by the
Contract Price, and "Market Value" means the amount of Gas remaining to be
delivered or purchased under a transaction multiplied by the market price for a
similar transaction at the Delivery Point determined by the Non-Defaulting Party
in a commercially reasonable manner. To ascertain the Market Value, the
Non-Defaulting Party may consider, among other valuations, any or all of the
settlement prices of NYMEX Gas futures contracts, quotations from leading
dealers in energy swap contracts or physical gas trading markets, similar sales
or purchases and any other bona fide third-party offers, all adjusted for the
length of the term and differences in transportation costs. A party shall not be
required to enter into a replacement transaction(s) in order to determine the
Market Value. Any extension(s) of the term of a transaction to which parties are
not bound as of the Early Termination Date (including but not limited to
"evergreen provisions") shall not be considered in determining Contract Values
and Market Values. For the avoidance of doubt, any option pursuant to which one
party has the right to extend the term of a transaction shall be considered in
determining Contract Values and Market Values. The rate of interest used in
calculating net present value shall be determined by the Non-Defaulting Party in
a commercially reasonable manner.
EARLY TERMINATION DAMAGES DO NOT APPLY:
10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall
determine, in good faith and in a commercially reasonable manner, the amount
owed (whether or not then due) by each party with respect to all Gas delivered
and received between the parties under Terminated Transactions and Excluded
Transactions on and before the Early Termination Date and all other applicable
charges relating to such deliveries and receipts (including without limitation
any amounts owed under Section 3.2), for which payment has not yet been made by
the party that owes such payment under this Contract.
THE PARTIES HAVE SELECTED EITHER "OTHER AGREEMENT SETOFFS APPLY" OR "OTHER
AGREEMENT SETOFFS DO NOT APPLY" AS INDICATED ON THE BASE CONTRACT.
OTHER AGREEMENT SETOFFS APPLY:
10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any
and all amounts owing between the parties under Section 10.3.1, so that all such
amounts are netted or aggregated to a single liquidated amount payable by one
party to the other (the "Net Settlement Amount"). At its sole option and without
prior Notice to the Defaulting Party, the Non-Defaulting Party may setoff (i)
any Net Settlement Amount owed to the Non-Defaulting Party against any margin or
other collateral held by it in connection with any Credit Support Obligation
relating to the Contract; or (ii) any Net Settlement Amount payable to the
Defaulting Party against any amount(s) payable by the Defaulting Party to the
Non-Defaulting Party under any other agreement or arrangement between the
parties.
OTHER AGREEMENT SETOFFS DO NOT APPLY:
10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any
and all amounts owing between the parties under Section 10.3.1, so that all such
amounts are netted or aggregated to a single liquidated amount payable by one
party to the other (the "Net Settlement Amount"). At its sole option and without
prior Notice to the Defaulting Party, the Non-Defaulting Party may setoff any
Net Settlement Amount owed to the Non-Defaulting Party against any margin or
other collateral held by it in connection with any Credit Support Obligation
relating to the Contract.
10.3.3 If any obligation that is to be included in any netting, aggregation or
setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may
in good faith estimate that obligation and net, aggregate or setoff, as
applicable, in respect of the estimate,
Page 6 of 10
subject to the Non-Defaulting Party accounting to the Defaulting Party when the
obligation is ascertained. Any amount not then due which is included in any
netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to
net present value in a commercially reasonable manner determined by the
Non-Defaulting Party.
10.4 As soon as practicable after a liquidation, Notice shall be given by
the Non-Defaulting Party to the Defaulting Party of the Net Settlement
Amount, and whether the Net Settlement Amount is due to or due from the
Non-Defaulting Party. The Notice shall include a written statement
explaining in reasonable detail the calculation of such amount,
provided that failure to give such Notice shall not affect the validity
or enforceability of the liquidation or give rise to any claim by the
Defaulting Party against the Non-Defaulting Party. The Net Settlement
Amount shall be paid by the close of business on the second Business
Day following such Notice, which date shall not be earlier than the
Early Termination Date. Interest on any unpaid portion of the Net
Settlement Amount shall accrue from the date due until the date of
payment at a rate equal to the lower of (i) the then-effective prime
rate of interest published under "Money Rates" by The Wall Street
Journal, plus two percent per annum; or (ii) the maximum applicable
lawful interest rate.
10.5 The parties agree that the transactions hereunder constitute a "forward
contract" within the meaning of the United States Bankruptcy Code and
that Buyer and Seller are each "forward contract merchants" within the
meaning of the United States Bankruptcy Code.
10.6 The Non-Defaulting Party's remedies under this Section 10 are the sole
and exclusive remedies of the Non-Defaulting Party with respect to the
occurrence of any Early Termination Date. Each party reserves to itself
all other rights, setoffs, counterclaims and other defenses that it is
or may be entitled to arising from the Contract.
10.7 With respect to this Section 10, if the parties have executed a
separate netting agreement with close-out netting provisions, the terms
and conditions therein shall prevail to the extent inconsistent
herewith.
Section 11. FORCE MAJEURE
11.1 Except with regard to a party's obligation to make payment(s) due under
Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party
shall be liable to the other for failure to perform a Firm obligation, to the
extent such failure was caused by Force Majeure. The term "Force Majeure" as
employed herein means any cause not reasonably within the control of the party
claiming suspension, as further defined in Section 11.2.
11.2 Force Majeure shall include, but not be limited to, the following: (i)
physical events such as acts of God, landslides, lightning, earthquakes, fires,
storms or storm warnings, such as hurricanes, which result in evacuation of the
affected area, floods, washouts, explosions, breakage or accident or necessity
of repairs to machinery or equipment or lines of pipe; (ii) weather related
events affecting an entire geographic region, such as low temperatures which
cause freezing or failure of ▇▇▇▇▇ or lines of pipe; (iii) interruption and/or
curtailment of Firm transportation and/or storage by Transporters; (iv) acts of
others such as strikes, lockouts or other industrial disturbances, riots,
sabotage, insurrections or wars; and (v) governmental actions such as necessity
for compliance with any court order, law, statute, ordinance, regulation, or
policy having the effect of law promulgated by a governmental authority having
jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the
adverse impacts of a Force Majeure and to resolve the event or occurrence once
it has occurred in order to resume performance.
11.3 Neither party shall be entitled to the benefit of the provisions of
Force Majeure to the extent performance is affected by any or all of the
following circumstances: (i) the curtailment of interruptible or secondary Firm
transportation unless primary, in-path, Firm transportation is also curtailed;
(ii) the party claiming excuse failed to remedy the condition and to resume the
performance of such covenants or obligations with reasonable dispatch; or (iii)
economic hardship, to include, without limitation, Seller's ability to sell Gas
at a higher or more advantageous price than the Contract Price, Buyer's ability
to purchase Gas at a lower or more advantageous price than the Contract Price,
or a regulatory agency disallowing, in whole or in part, the pass through of
costs resulting from this Agreement; (iv) the loss of Buyer's market(s) or
Buyer's inability to use or resell Gas purchased hereunder, except, in either
case, as provided in Section 11.2; or (v) the loss or failure of Seller's gas
supply or depletion of reserves, except, in either case, as provided in Section
11.2. The party claiming Force Majeure shall not be excused from its
responsibility for Imbalance Charges.
11.4 Notwithstanding anything to the contrary herein, the parties agree that
the settlement of strikes, lockouts or other industrial disturbances shall be
within the sole discretion of the party experiencing such disturbance.
11.5 The party whose performance is prevented by Force Majeure must provide
Notice to the other party. Initial Notice may be given orally; however, written
Notice with reasonably full particulars of the event or occurrence is required
as soon as reasonably possible. Upon providing written Notice of Force Majeure
to the other party, the affected party will be relieved of its obligation, from
the onset of the Force Majeure event, to make or accept delivery of Gas, as
applicable, to the extent and for the duration of Force Majeure, and neither
party shall be deemed to have failed in such obligations to the other during
such occurrence or event.
11.6 Notwithstanding Sections 11.2 and 11.3, the parties may agree to
alternative Force Majeure provisions in a Transaction Confirmation executed in
writing by both parties.
Section 12. TERM
This Contract may be terminated on 30 Day's written Notice, but shall remain in
effect until the expiration of the latest Delivery Period of any transaction(s).
The rights of either party pursuant to Section 7.6 and Section 10, the
obligations to make payment hereunder, and the obligation of either party to
indemnify the other, pursuant hereto shall survive the termination of the Base
Contract or any transaction.
Page 7 of 10
Section 13. LIMITATIONS
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY. A PARTY'S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN
SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A
TRANSACTION, A PARTY'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY.
SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER
REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN
PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE,
EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION
DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR
OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED
ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES
RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE
BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES
REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE
DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN
ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE
A REASONABLE APPROXIMATION OF THE HARM OR LOSS.
Section 14. MISCELLANEOUS
14.1 This Contract shall be binding upon and inure to the benefit of the
successors, assigns, personal representatives, and heirs of the respective
parties hereto, and the covenants, conditions, rights and obligations of this
Contract shall run for the full term of this Contract. No assignment of this
Contract, in whole or in part, will be made without the prior written consent of
the non-assigning party (and shall not relieve the assigning party from
liability hereunder), which consent will not be unreasonably withheld or
delayed; provided, either party may (i) transfer, sell, pledge, encumber, or
assign this Contract or the accounts, revenues, or proceeds hereof in connection
with any financing or other financial arrangements, or (ii) transfer its
interest to any parent or affiliate by assignment, merger or otherwise without
the prior approval of the other party. Upon any such assignment, transfer and
assumption, the transferor shall remain principally liable for and shall not be
relieved of or discharged from any obligations hereunder.
14.2 If any provision in this Contract 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, agreement or
covenant of this Contract.
14.3 No waiver of any breach of this Contract shall be held to be a waiver
of any other or subsequent breach. 14.4 This Contract sets forth all
understandings between the parties respecting each transaction subject hereto,
and any prior contracts, understandings and representations, whether oral or
written, relating to such transactions are merged into and superseded by this
Contract and any effective transaction(s). This Contract may be amended only by
a writing executed by both parties.
14.5 The interpretation and performance of this Contract shall be governed
by the laws of the jurisdiction as indicated on the Base Contract, excluding,
however, any conflict of laws rule which would apply the law of another
jurisdiction.
14.6 This Contract and all provisions herein will be subject to all
applicable and valid statutes, rules, orders and regulations of any governmental
authority having jurisdiction over the parties, their facilities, or Gas supply,
this Contract or transaction or any provisions thereof.
14.7 There is no third party beneficiary to this Contract.
14.8 Each party to this Contract represents and warrants that it has full
and complete authority to enter into and perform this Contract. Each person who
executes this Contract on behalf of either party represents and warrants that it
has full and complete authority to do so and that such party will be bound
thereby.
14.9 The headings and subheadings contained in this Contract are used solely
for convenience and do not constitute a part of this Contract between the
parties and shall not be used to construe or interpret the provisions of this
Contract.
14.10 Unless the parties have elected on the Base Contract not to make this
Section 14.10 applicable to this Contract, neither party shall disclose directly
or indirectly without the prior written consent of the other party the terms of
any transaction to a third party (other than the employees, lenders, royalty
owners, counsel, accountants and other agents of the party, or prospective
purchasers of all or substantially all of a party's assets or of any rights
under this Contract, provided such persons shall have agreed to keep such terms
confidential) except (i) in order to comply with any applicable law, order,
regulation, or exchange rule, (ii) to the extent necessary for the enforcement
of this Contract , (iii) to the extent necessary to implement any transaction,
or (iv) to the extent such information is delivered to such third party for the
sole purpose of calculating a published index. Each party shall notify the other
party of any proceeding of which it is aware which may result in disclosure of
the terms of any transaction (other than as permitted hereunder) and use
reasonable efforts to prevent or limit the disclosure. The existence of this
Contract is not subject to this confidentiality obligation. Subject to Section
13, the parties shall be entitled to all remedies available at law or in equity
to enforce, or seek relief in connection with this confidentiality obligation.
The terms of any transaction hereunder shall be kept confidential by the parties
hereto for one year from the expiration of the transaction.
In the event that disclosure is required by a governmental body or
applicable law, the party subject to such requirement may disclose the material
terms of this Contract to the extent so required, but shall promptly notify the
other party, prior to disclosure, and shall cooperate (consistent with the
disclosing party's legal obligations) with the other party's efforts to obtain
protective orders or similar restraints with respect to such disclosure at the
expense of the other party.
Page 8 of 10
14.11 The parties may agree to dispute resolution procedures in Special
Provisions attached to the Base Contract or in a Transaction Confirmation
executed in writing by both parties.
DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid
misunderstandings and make more definite the terms of contracts of purchase and
sale of natural gas. Further, NAESB does not mandate the use of this Contract by
any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CONTRACT
ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES,
CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT
TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES
OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR
SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON
TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE),
WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR
BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO
CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS
CONTRACT.
Page 9 of 10
EXHIBIT A
TRANSACTION CONFIRMATION
FOR IMMEDIATE DELIVERY
Letterhead/Logo Date:__________________________, __________
Transaction Confirmation #: _______________
This Transaction Confirmation is subject to the Base Contract between Seller and
Buyer dated ______________________. The terms of this Transaction Confirmation
are binding unless disputed in writing within 2 Business Days of receipt unless
otherwise specified in the Base Contract.
SELLER: BUYER:
_______________________________________________ _______________________________________________
_______________________________________________ _______________________________________________
_______________________________________________ _______________________________________________
Attn: _________________________________________ Attn: _________________________________________
Phone: ________________________________________ Phone: ________________________________________
Fax: __________________________________________ Fax: __________________________________________
Base Contract No. _____________________________ Base Contract No. _____________________________
Transporter: __________________________________ Transporter: __________________________________
Transporter Contract Number: __________________ Transporter Contract Number: __________________
Contract Price: $____________/MMBtu or ________________________________________
Delivery Period: Begin: ____________________ End:__________________
PERFORMANCE OBLIGATION AND CONTRACT QUANTITY: (Select One)
FIRM (FIXED QUANTITY): FIRM (VARIABLE QUANTITY): INTERRUPTIBLE:
______________MMBtus/day ______________MMBtus/day Minimum Up to _____________MMBtus/day
[ ] EFP ______________MMBtus/day Maximum
subject to Section 4.2. at election of
[ ] Buyer or [ ] Seller
DELIVERY POINT(S): ________________________
(If a pooling point is used, list a specific geographic and pipeline location):
SPECIAL CONDITIONS:
Seller: _________________________ Buyer: _________________________
By: _____________________________ By: ____________________________
Title: __________________________ Title: _________________________
Date: ___________________________ Date: __________________________
Page 10 of 10
TRANSACTION CONFIRMATION
FOR IMMEDIATE DELIVERY
DWR(CERS) Date: November 11, 2002
Transaction Confirmation #: ___________
This Transaction Confirmation is subject to the Base Contract between Seller and
Buyer dated ___November 11, 2002_____. The terms of this Transaction
Confirmation are binding unless disputed in writing within 2 Business Days of
receipt unless otherwise specified in the Base Contract.
SELLER: BUYER:
▇▇▇▇▇▇▇▇ ENERGY MARKETING &
TRADING COMPANY. CALIFORNIA DEPARTMENT OF WATER
RESOURCES, P. O. Box 219001
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Contract Administration Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Base Contract No._______________________________
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Transporter: ___________________________________
Transporter Contract Number:_____________________
Base Contract No. _________________________
Transporter: ______________________________
Transporter Contract Number:_______________
Contract Price: As indicated in Special Conditions below.
Delivery Period: Begin: January 1, 2004 End: December 31, 2010
PERFORMANCE OBLIGATION AND CONTRACT QUANTITY:
FIRM
November through April: 1,200,000 MMBtu/month. Ratable daily takes; must take
entire quantity, but allocable on a monthly basis for delivery to either or both
of Southern California Border or point(s) on Kern River Pipeline pursuant to
Special Conditions below.
May through October: 1,800,000 MMBtu/month. Ratable daily takes; must take
entire quantity, but allocable on a monthly basis for delivery to either or both
of Southern California Border or point(s) on Kern River Pipeline pursuant to
Special Conditions below.
DELIVERY POINT(S): Southern California Border delivery points into Southern
California Gas Pipeline (50 - 100% of Contract Quantity) and Kern River Pipeline
delivery points (0 - 50% of Contract Quantity), as described in Special
Conditions. (If a pooling point is used, list a specific geographic and pipeline
location):
SPECIAL CONDITIONS:
1. Contract Price for each year ($/MMBtu) as follows:
2004 3.98 2008 4.21
2005 3.85 2009 4.32
2006 3.96 2010 4.39
2007 4.09
3. Monthly Allocation. Not later than the earlier of monthly nominations
deadline and 3 business days prior to the beginning of each month during the
Term, Buyer shall provide Seller notice of Buyer's requested allocation of
volumes of natural gas for delivery during such month to (i) the Southern
California Border and (ii) delivery point(s) Kern River Pipeline; provided,
Buyer shall not request allocation of more than 50% of the Contract Quantity to
Kern River Pipeline. With respect to the volumes requested to be delivered on
Kern River Pipeline, Buyer's notice shall also state Buyer's requested delivery
points on Kern River Pipeline where, subject to available operational capacity
and subject to Buyer's responsibility for any incremental cost
incurred by Seller, Buyer requests that Seller deliver such volumes during such
month.
Gas nominated into Southern California Gas Company will be designated as the
"Southern California Border" nomination.
4. Daily Delivery Point Option on Kern River Pipeline. Subject to available
operational capacity and subject to Buyer's responsibility for any incremental
cost incurred by Seller, to the extent Buyer shall have allocated all or a
portion of the volumes purchased hereunder for delivery on Kern River Pipeline,
Buyer will be allowed to change the volumes to other Kern River Pipeline
delivery points on a day ahead basis as long as operational capacity at those
points is available for that day. Buyer shall provide notice of such changes to
Buyer's monthly nomination notice (previously provided to Seller pursuant to
Special Provision #3, above) to Seller by not later than the earlier of
day-ahead nominations deadline and 8:30 AM Central Standard Time the business
day prior to the day of gas flow.
5. Limited Ability to Deliver ▇▇▇▇ to SoCalBorder Intramonth. Changes of
nominations from Kern River Pipeline to Southern California Border or Southern
California Border to Kern River Pipeline during the month will not be allowed
except where the original nominations on Kern River Pipeline can be delivered
off ▇▇▇▇ to a Southern California delivery point, including, but not limited to,
▇▇▇▇▇▇▇ Ridge and ▇▇▇▇▇▇ Junction.
6. Limitations. Buyer's right to allocate between pipelines and delivery points
as described in Special Conditions 3, 4, and 5 above shall also be subject to
all of the terms and conditions of the applicable pipeline tariff(s).
Seller: ▇▇▇▇▇▇▇▇ ENERGY MARKETING & Buyer: CALIFORNIA DEPARTMENT OF WATER
TRADING COMPANY. RESOURCES
By: ________________________________ By: ___________________________________
Title: _____________________________ Title: ________________________________
Date: November 11, 2002 Date: November 11, 2002
---------------------------- -------------------------
SPECIAL PROVISIONS
to the BASE CONTRACT FOR
SALE AND PURCHASE OF NATURAL GAS
(NAESB Standard 6.3.1, Dated April 19, 2002)
between
CALIFORNIA DEPARTMENT OF WATER RESOURCES
P. O. Box 219001
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("DWR")
and
▇▇▇▇▇▇▇▇ ENERGY MARKETING & TRADING COMPANY
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇▇▇ ")
Dated: November 11, 2002
The parties agree to amend the General Terms and Conditions of the Base Contract
as follows:
1. The penultimate sentence of Section 1.2 WRITTEN TRANSACTION PROCEDURE
shall be amended as follows:
"EDI" shall be deleted.
2. Section 2.15 shall be deleted.
3. The following shall be added immediately following Section 2.29:
2.30. "Buyer" shall mean the purchaser of Gas in a Transaction
formed pursuant to this Base Contract.
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2.31. "Buyer Replacement Agreement" means any agreement identical to
this Base Contract (including any Transactions hereunder)
between ▇▇▇▇▇▇▇▇ and a Qualified Electrical Corporation,
excluding provisions relating to DWR's status as a
governmental agency or to the original start date(s) of this
Base Contract, and together with such changes as Sellers and
such Qualified Electrical Corporation may agree.
2.32. "Fund" shall mean Department of Water Resources Electric Power
Fund established by Section 80200 of the Water Code of the
State of California (the "Water Code").
2.33. "Qualified Electric Corporation" means an electrical
corporation as defined by AB 1X, codified at California Water
Code Section 80100 et seq (the "Act"), whose long-term
unsecured senior debt on the effective date of any Buyer
Replacement Agreement is rated BBB or better by S&P and Baa2
or better by ▇▇▇▇▇'▇ and is not on negative outlook or Credit
Watch from either rating agency; provided that with the
exception of San Diego Gas and Electric Company, Southern
California Edison Company and Pacific gas and Electric
Company, no electrical corporation shall be a Qualified
Electrical Corporation without the prior written agreement of
▇▇▇▇▇▇▇▇.
2.34. "Seller" shall mean the seller of Gas in a Transaction formed
pursuant to this Base Contract.
2.35 "Transaction" shall mean a purchase and sale transaction
formed pursuant to Section 1 for a particular delivery period.
2.36 "Trust Estate" means all revenues received by Buyer under any
obligation entered into, and rights to receive the same, and
moneys on deposit in the Fund and income or revenue derived
from the investment thereof.
4. The following sentence shall be added immediately following the last
sentence of Section 8.3:
However, DWR's obligation to indemnify ▇▇▇▇▇▇▇▇ pursuant to the
provisions of this Section 8.3 shall apply only to the extent expressly
permitted by law.
5. Section 10.3.1 shall be deleted and replaced in its entirety with the
following:
10.3.1 (a) Upon termination of this Base Contract and the Transactions
hereunder as the result of an Event of Default, the Non-Defaulting Party
shall be entitled to a payment (the "Termination Payment") which shall be
calculated as of the Early Termination Date in accordance with (b) below.
As soon as practicable after the Early Termination Date, the Non-Defaulting
Party shall give notice to the Defaulting Party of the amount of the
Termination Payment, if any, due to the Non-Defaulting Party. The notice
shall include a written statement explaining in reasonable detail the
calculation of such amount. Termination
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Payment is to be made no later than thirty (30) days after receipt of
written notice of an Early Termination Date, except in the event that DWR
is the Defaulting Party, in which case the Termination Payment is to be one
hundred eighty (180) days after receipt of written notice of an Early
Termination Date. Interest on any unpaid portion of the Net Settlement
Amount shall accrue from the date due until the date of payment at a rate
equal to the lower of (i) the then effective prime rate of interest
published under "Money Rates" by the Wall Street Journal, plus two percent
per annum; or (ii) the maximum applicable lawful interest rate.
Notwithstanding Section 7.4 hereof, if the Defaulting Party disagrees with
the calculation of the Termination Payment and the parties cannot otherwise
resolve their differences, pending resolution of the dispute, the
Defaulting Party shall pay the full amount of the Termination Payment
calculated by the Non-Defaulting Party in accordance with the timetable as
provided above.
(b) The Non-Defaulting Party shall calculate the Termination Payment as
follows:
The Termination Payment, if any, shall be (i) in the case Buyer is the
Non-Defaulting Party, the present value of the positive difference, if any,
of (A) Market Value, and (B) Contract Value, or (ii) in the case Seller is
the Non-Defaulting Party, the present value of the positive difference, if
any, of (A) Contract Value, and (B) Market Value, in each case using the
Present Value Rate as of the time of termination (to take account of the
period between the time notice of termination was effective and when such
amount would have otherwise been due pursuant to the relevant transaction).
The "Present Value Rate" shall mean the sum of 0.50% plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally recognized trading screen
reporting on-line intraday trading in United States government securities)
at 11:00 a.m. (New York City, New York time) for the United States
government securities having a maturity that matches the average remaining
term of this Agreement.
For purposes of this Section 10.3.1, "Contract Value" means the amount of
Gas remaining to be delivered or purchased under a transaction multiplied
by the Contract Price, and "Market Value" means the amount of Gas remaining
to be delivered or purchased under a Transaction multiplied by the market
price for a similar transaction at the Delivery Point determined by the
Non-Defaulting Party in a commercially reasonable manner. To ascertain
Market Value, the Non-Defaulting Party may consider, among other
valuations, any or all of the settlement prices of NYMEX Gas futures
contracts, quotations from leading dealers in energy swap contracts or
physical gas trading markets, similar sales or purchases and any bona fide
third party offers, all adjusted for the length of the term and the
difference in transportation costs. A party shall not be required to enter
into a replacement transaction (s) in order to determine "Market Value".
Any extensions(s) of the term of a transaction to which parties are not
bound as of the Early Termination Date (including but not limited to
"evergreen provisions") shall not be considered in determining Contract
Values and Market Values.
(c) Notwithstanding the other provisions of this Base Contract, if the
Non-Defaulting Party has the right to liquidate or terminate all
obligations arising under the Transaction under the provisions of this
Section 10 because of the circumstances listed in items (i) through (v) of
Section 10.2, then this Base Contract and the Transactions hereunder shall
automatically
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terminate, without notice, as if the Early Termination Date was the day
immediately preceding the events listed in Section 10.2.
6. Section 10.4 shall be deleted.
7. For so long as DWR is a party to the Base Contract, Section 10.5 shall
be deleted, provided, however that Section 10.5 shall be included in
any Buyer Replacement Agreement as defined in Section 2.31.
8. The following shall be added immediately following Section 10.7:
10.8. DWR's obligation to make payments hereunder shall be limited
solely to the Fund. Any liability of DWR arising in connection with
this Base Contract or any claim based thereon or with respect thereto,
including, but not limited to, any payment pursuant to Section 3.2
hereof arising as the result of any breach or event of default under
this Base Contract, and any other payment obligation or liability of or
judgment against DWR hereunder, shall be satisfied solely from the
Fund. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE
STATE OF CALIFORNIA ARE OR MAY BE PLEDGED FOR ANY PAYMENT UNDER THIS
BASE CONTRACT. Revenues and assets of the State Water Resources
Development System shall not be liable for or available to make any
payments or satisfy any obligation arising under this Base Contract.
9. The following shall be added immediately following Section 10.8:
10.9. In accordance with Section 80134 of the Water Code, DWR covenants
that it will, at least annually, and more frequently as required,
establish and revise revenue requirements sufficient, together with any
moneys on deposit in the Fund, to provide for the timely payment of all
obligations which it has incurred, including any payments required to
be made by DWR pursuant to this Base Contract. As provided in Section
80200 of the Water Code, while any obligations of DWR pursuant to this
Base Contract remain outstanding and not fully performed or discharged,
the rights, powers, duties and existence of DWR and the California
Public Utilities Commission shall not be diminished or impaired in any
manner that will affect adversely the interests and rights of the
Seller under this Base Contract.
10. The following shall be added immediately following Section 14.11:
14.12. Seller has stated that, because of the administrative burden and
delays associated with such requirements, it would not enter into this
Base Contract if the provisions of the Government Code of California
and the Public Contracts Code of California applicable to state
contracts, including, but not limited to, advertising and competitive
bidding requirements and prompt payment requirements would apply to or
be required to be incorporated in this Base Contract. Accordingly,
pursuant to Section 80014(b) of the Water Code, DWR has determined that
it would be detrimental to accomplishing the purposes of Division 27
(commencing with Section 80000) of the Water Code to make
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such provisions applicable to this Base Contract and that such
provisions and requirements are therefore not applicable to or
incorporated in this Base Contract.
11. The following shall be added immediately following Section 14.12:
14.13. It is understood by the parties that, with respect to the DWR,
only the following persons or such other persons as designated in
writing by DWR shall be authorized to enter into any transaction, other
than the 2002A Transaction, contemplated hereunder on behalf of DWR:
(1) ▇▇▇▇▇▇ ▇▇▇▇▇▇; (2) ▇▇▇▇▇▇ Grow; and (3) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
12. The following shall be added immediately following Section 14.13:
14.14. It is understood by the parties that the California Department
of Water Resources means the California Department of Water Resources,
acting solely under the authority and powers created by AB1-X, codified
as Sections 80000 through 80270 of the Water Code of California, AS
AMENDED, and not under its powers and responsibilities with respect to
the State Water Resources Development System.
13. The following shall be added immediately following Section 14.14:
14.15. Notwithstanding the foregoing limitations on assignment, at any
time after January 1, 2003, the Seller shall, upon the written request
of DWR, enter into one or more Buyer Replacement Agreements as may be
agreed to by one or more Qualified Electric Corporations. This Base
Contract and any Transactions hereunder shall terminate upon execution
of a Buyer Replacement Agreement. The execution of the Buyer
Replacement Agreement shall constitute a novation that shall relieve
DWR of any liability or obligation arising after the date of
termination of this Base Contract and Transactions hereunder. Such
Replacement Agreement shall state that it is a Replacement Agreement
within the meaning of the Agreement. The effectiveness of such Buyer
Replacement Agreement shall be subject to the condition precedent that
the California Public Utilities Commission shall have conducted a just
and reasonable review under Section 451 of the Public Utilities Code
with respect to such Buyer Replacement Agreement and shall have issued
an order determining that the charges under such Buyer Replacement
Agreement are just and reasonable.
15. The following shall be added immediately following Section 14.15:
14.16. California law authorizes suits based on contract against the
State or its agencies, and Buyer agrees that it will not assert any
immunity it may have as a state agency against such lawsuits filed in
California state court.
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16. The following shall be added immediately following Section 14.16:
14.17. Payments by Buyer under this Base Contract shall constitute an
operating expense of the Fund payable prior to all bonds, notes or other
indebtedness secured by a pledge or assignment of the Trust Estate or
payments to the general fund.
17. The following shall be added immediately following Section 14.17:
14.18. Buyer covenants that it will, at least annually, and more frequently
as required, establish and revise revenue requirements sufficient, together
with any moneys on deposit in the Fund, to provide for the timely payment
of all obligations which it has incurred, including any payments required
to be made by Buyer pursuant to this Base Contract. While any obligations
of Buyer pursuant this Base Contract remain outstanding and not fully
performed or discharged, the rights, powers, duties and existence of Buyer
and the California Public Utilities Commission shall not be diminished or
impaired in any manner that will affect adversely the interests and rights
of Seller under this Base Contract.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have caused this Special Provisions to
The Base Contract for Sale and Purchase of Natural Gas to be duly executed as of
the date first above written.
▇▇▇▇▇▇▇▇ ENERGY MARKETING & CALIFORNIA DEPARTMENT OF WATER
TRADING COMPANY RESOURCES separate and apart from its
Powers and responsibilities with
respect to the State Water Resources
Development System
By:_____________________________ By:______________________________
Name:___________________________ Name:____________________________
Title:__________________________ Title:___________________________
7
ACKNOWLEDGMENTS
State of Oklahoma )
) SS
County of Tulsa)
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, ____________________ of ▇▇▇▇▇▇▇▇ Energy Marketing
& Trading Company, a Delaware corporation, known to me that he executed this
Special Provisions to The Base Contract for Sale and Purchase of Natural Gas for
the purposes and consideration herein expressed, in the capacity therein set
forth and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
________________________________________
Notary Public
My Commission Expires: ________________
Commission Number: ______________
[ S E A L ]
State of California )
) SS
County of _________ )
BEFORE ME, the undersigned authority, a notary public, on this day personally
appeared ____________________, _____________________ of the California
Department of Water Resources, a ____________________, known to me that he
executed this Special Provisions to The Base Contract for Sale and Purchase of
Natural Gas for the purposes and consideration therein expressed, in the
capacity therein set forth and as the act and deed of said ______________.
GIVEN UNDER MY HAND AND SEAL of office, this the _____ day of November, 2002.
________________________________________
Notary Public
My Commission Expires: ________________
Commission Number: ______________
[ S E A L ]
8