Exhibit 10.23
EXECUTION COPY
PUBLIC RELEASE VERSION
POWER PURCHASE AGREEMENT
BETWEEN
KISSIMMEE UTILITY AUTHORITY
AND
SOUTHERN COMPANY - FLORIDA LLC
Dated as of March 19, 2001
TABLE OF CONTENTS
Section Page
SECTION 1 DEFINITIONS AND EXPLANATION OF TERMS 2
SECTION 2 TERM OF AGREEMENT 13
SECTION 3 CONDITIONS PRECEDENT 14
SECTION 4 SALE AND PURCHASE 14
SECTION 5 SCHEDULE FOR DELIVERY OF CAPACITY AND ENERGY 28
SECTION 6 REQUESTS FOR ENERGY; OPERATION AND MAINTENANCE 30
SECTION 7 INTERCONNECTION AND TRANSMISSION 32
SECTION 8 RISK OF LOSS; METERING 33
SECTION 9 METHOD OF PAYMENT 34
ARTICLE 10 CHANGE IN LAW; MODIFICATION OF AGREEMENT 35
SECTION 11 FORCE MAJEURE 36
SECTION 12 EVENTS OF DEFAULT; TERMINATION 37
SECTION 13 WAIVER 41
SECTION 14 REPRESENTATIONS AND WARRANTIES 41
SECTION 15 PERFORMANCE ASSURANCE 44
SECTION 16 LIABILITY OF PARTIES 46
SECTION 17 ASSIGNMENT 50
SECTION 18 DISPUTE RESOLUTION 51
SECTION 19 AMENDMENT 52
SECTION 20 NOTICES 52
SECTION 21 APPLICABLE LAW 53
SECTION 22 SEVERABILITY 53
SECTION 23 ENTIRE AGREEMENT 54
SECTION 24 NO THIRD PARTY BENEFICIARIES 54
SECTION 25 COUNTERPARTS 54
SECTION 26 INFORMATION AND CONFIDENTIALITY 54
SECTION 27 PUBLIC STATEMENTS 55
SECTION 28 INSURANCE 56
SECTION 29 TAXES 56
APPENDIX A TECHNICAL LIMITS
APPENDIX B REQUESTS FOR ENERGY
APPENDIX C CAPACITY TESTING PROCEDURE
APPENDIX D EXAMPLE CALCULATIONS
APPENDIX E AFFILIATE GUARANTEE
POWER PURCHASE AGREEMENT
This Power Purchase Agreement (this "Agreement") is made and
entered into as of the 19th day of March, 2001, by and between Kissimmee Utility
Authority, a statutory legal authority existing under the laws of the State of
Florida ("Purchaser"), and Southern Company - Florida LLC, a limited liability
company organized and existing under the laws of the State of Delaware
("Seller"). Purchaser and Seller are hereinafter each referred to individually
as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, in addition and supplemental to their other powers,
OUC, KUA and FMPA (the "Public Agencies"), pursuant to the Florida Interlocal
Cooperation Act of 1969, Chapter 163, Part I, Florida Statutes, (the "Interlocal
Act") are authorized and empowered to cooperate with each other on a basis of
mutual advantage and thereby to provide services and facilities in a manner and
pursuant to forms of government organizations that will best accord with
geographic, economic, electrical generation requirements and other factors; and
WHEREAS, the Ownership Agreement was entered into by the
Public Agencies as an interlocal agreement, to invoke all of the powers of the
Interlocal Act, for the purpose of providing a structure for the Public
Agencies, in participation with Seller, a foreign public utility, to operate,
maintain, repair, improve, extend, or otherwise participate jointly in a nominal
six hundred thirty-three (633) megawatt combined cycle electric generating
facility (the "Facility"), which is proposed, and which is to be constructed,
owned, and located within the State of Florida by Seller and the Public
Agencies; and
WHEREAS, Seller intends to sell to Purchaser, and Purchaser
intends to purchase from Seller, a portion of Seller's share of the Capacity and
Energy generated by the Facility in accordance with the terms and conditions of
this Agreement and in full compliance with the Interlocal Act; and
WHEREAS, Seller and Purchaser acknowledge that this Agreement
is one of three substantially similar contracts through which Seller will sell
and the three Purchasers will individually purchase their respective designated
shares of Seller's share of the Capacity and Energy generated by the Facility;
and
WHEREAS, this Agreement and the two substantially similar contracts are
entered into to invoke all of the powers of the Interlocal Act for the purpose
of obligating Customers, pursuant to such Interlocal Act, to purchase Seller's
share of the Capacity of and Energy generated by the Facility in accordance with
the terms and conditions of this Agreement.
NOW, THEREFORE, for the purpose of exercising all of the powers
enumerated in the Interlocal Act and the Florida Joint Power Act, Part II of
Chapter 361, Florida Statutes, (the "Joint Power Act") (collectively, the
"Acts"), Purchaser, hereby designates this Agreement as an interlocal agreement
within the meaning and intent of the Interlocal Act, and invokes all powers
contained therein with full powers to perform all of the provisions herein
authorized to be performed by the Parties; and
FURTHER, NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the Parties, intending to be legally bound hereby agree as
follows:
SECTION 1
DEFINITIONS AND EXPLANATION OF TERMS
1.1 Definitions. When used in this Agreement, the following
capitalized terms shall have the meanings set forth below:
1.1.1 "Actual Availability" has the meaning given such term in Section 4.3.3 or
4.3.4, as applicable.
1.1.2 "Actual Capability" means the amount of Capacity the Facility is capable
of producing in any given hour.
1.1.3 "AGC" means automatic generation control, which is the capability to
make automatic adjustments to load change by generation through the use of a
digital computer. This control is based on such factors as frequency, cost and
tie line flows.
1.1.4 "Agreement" means this Power Purchase Agreement, including all
appendices attached hereto and all amendments hereto that may be made from time
to time.
1.1.5 "Alternate Resources" has the meaning given such term in Section 4.4.
1.1.6 "Ancillary Services" means ancillary services customarily provided by
an electric generating facility, including voltage/VAR control, load following,
regulation and frequency response, spinning reserve and non-spinning reserve.
1.1.7 "Annual Capacity Charge" means (i) [redacted].
1.1.8 "Annual Purchaser's Capacity Nomination" of the Purchaser means,
during the first five Contract Years, six and one half percent (6.5%) of the
Demonstrated Capability, and thereafter, six and one half percent (6.5%) of the
Demonstrated Capability reduced by those amounts, if any, that Purchaser elects
to subtract from the Capacity available to Purchaser pursuant to the process
provided in Section 4.1.4 for the Customers jointly to make such elections.
1.1.9 "Availability Guarantee" has the meaning given such term in Section
4.3.1.
1.1.10 "Availability Incentive Payment" has the meaning given such term in
Section 4.3.2.
1.1.11 "Bankruptcy" means, with respect to a Party, (i) an adjudication of
bankruptcy or insolvency, or the entry of an order for relief, under any
Bankruptcy Law with respect to such Party; (ii) the making by such Party of an
assignment for the benefit of its creditors; (iii) the filing by such Party of a
petition in bankruptcy or for relief under any Bankruptcy Law; (iv) the filing
by such Party of an answer or pleading admitting or failing to contest the
material allegations of any such petition; (v) the filing against such Party of
any petition in bankruptcy or for relief under any Bankruptcy Law (unless such
petition is dismissed within ninety (90) days from the date of filing thereof);
(vi) the appointment of a trustee, conservator or receiver for such Party or for
all or substantially all of its assets (unless such appointment is vacated or
stayed within ninety (90) days of such appointment); or (vii) the taking by such
Party of any action for its winding up or liquidation, or the consent by such
Party to any of the actions described in clauses (i) through (vi) being taken
against it.
1.1.12 "Bankruptcy Law" means any applicable bankruptcy or insolvency
statute.
1.1.13 "Bond Legislation" shall mean the Composite Resolution of Kissimmee
Utility Authority, comprised of the Original Resolution No. 5-83, adopted
January 20, 1983, as amended by (a) Resolution No. R91-9, adopted December 4,
1991; (b) Resolution No. R91-10, adopted on December 4, 1991; (c) Resolution No.
93-14, adopted December 15, 1993; and (d) Resolution No. 99-12, adopted
September 22, 1999.
1.1.14 "BOP Capital Cost Range" has the meaning ascribed to the term in
Section 6.7.1 of the Ownership Agreement.
1.1.15 "Business Day" means any day other than Saturday or Sunday on which
commercial banks are authorized to open for business in Orlando, Florida.
1.1.16 "Capacity" means electric capacity.
1.1.17 "Capacity Emergency" means, with respect to any hour, that any one
or more of Purchaser's resources is unavailable due to a forced outage and the
summation of such Purchaser's firm Capacity obligations exceeds the summation of
such Purchaser's available resources.
1.1.18 "Capacity Payment" has the meaning given such term in Section 4.1.1.
1.1.19 "Change in Law" has the meaning given such term in Section 10.1.3.
1.1.20 "Collateral Documents" means, collectively, the Ownership Agreement,
the Operating Agreement, the Interconnection Agreement, the Power Purchase
Agreements of the other Customers, the long term lease of the Facility Site by
OUC to and for the benefit of the Participants, the guarantee to be provided by
an affiliate of Seller as contemplated in Section 16.3, and the agreement(s)
pursuant to which Purchaser and/or the other Customers provide station service
and other support services (including but not limited to demineralized water and
cooling water supply) to Seller.
1.1.21 "Commencement Date" has the meaning given such term in Section 5.2.
1.1.22 "Commercial Operation Date" has the meaning ascribed to such term in
Section 1.1.13 of the Ownership Agreement.
1.1.23 "Confidential Information" has the meaning given such term in
Section 26.
1.1.24 "Contract Year" means (i) the period commencing on the Commencement
Date or, if Seller elects the option under Section 4.5(ii)(a), the later of the
Commencement Date or Scheduled Commencement Date, and ending on the last day of
the month in which the first anniversary date of the Commencement Date falls,
and (ii) each twelve (12)-month period thereafter, except that for the twelve
(12)-month period during which the expiration or termination date of this
Agreement occurs, Contract Year shall mean the period commencing on the first
day of such twelve (12)-month period and ending on such expiration or
termination date.
1.1.25 "Customers" means collectively all of OUC, Kissimmee Utility
Authority and Florida Municipal Power Agency (All Requirements Power Supply
Project), or their permitted assigns.
1.1.26 "Delivered Energy" means, in respect of a period of time, the amount
of Energy from the Facility or from Alternate Resources delivered by Seller to
Purchaser at the Delivery Point for sale to Purchaser pursuant to this
Agreement.
1.1.27 "Delivery Point" means (a) with respect to Energy delivered from the
Facility, the high side of generator step-up transformer, as further described
in the Interconnection Agreement, and (b) with respect to Energy delivered from
Alternate Resources, any unconstrained point on the Grid.
1.1.28 "Demonstrated Capability" means the net Capacity of the Facility,
determined by a periodic Capacity test, adjusted to seventy degrees Fahrenheit
(70(degree)F) and forty-five percent (45%) relative humidity.
1.1.29 "Dispute" has the meaning given such term in Section 18.
1.1.30 "Eastern Prevailing Time" or "EPT" means the time prevailing in the
Eastern time zone of the United States of America.
1.1.31 "Effective Date" has the meaning given such term in Section 3.1.
1.1.32 "Eligible Collateral" has the meaning given such term in Section
15.1.1.
1.1.33 "Energy" means electric energy (expressed in megawatt-hours).
1.1.34 "Energy Payment" has the meaning given such term in Section 4.2.
1.1.35 "Equipment Breakdown" means a mechanical breakdown of equipment at
the Facility that is not the result of a Force Majeure that is an act of God or
public enemy; landslide; sinkhole; lightning; earthquake; fire (unless caused by
Seller's willful misconduct or failure to follow Prudent Utility Practice);
storm; ice; snow; hurricane; tornado; wind; flood; riot; civil disturbance;
insurrection; war; sabotage; terrorism; failure of contractors or suppliers
(including, in the case of Seller, OUC and other Customers providing services to
Seller) to provide fuel, equipment, material or services, provided that such
failure would qualify as a Force Majeure under Section 1.1.44 if such failure
were directly experienced by the applicable Party.
1.1.36 "Equity Capacity" with respect to each Participant means that
Participant's percentage share of the Capacity of the Facility corresponding to
such Participant's ownership interest in the Facility.
1.1.37 "Event of Default" means any of the events listed in Sections 12.1
and 12.2.
1.1.38 "Facility" means the gas fired combined cycle electric generating
unit to be located on the Facility Site and owned by the Participants, and its
associated interconnection facilities, as defined in the Ownership Agreement by
the terms "Facility" and "Interconnection Facilities."
1.1.39 "Facility Site" means the parcel of land in Orlando, Florida on
which the Facility is to be located, as further described in Appendix A. 1.1.40
"FDEP" means the Florida Department of Environmental Protection or any successor
Governmental Body exercising the same or equivalent jurisdiction.
1.1.41 "FERC" means the Federal Energy Regulatory Commission or any
successor Governmental Body exercising the same or equivalent jurisdiction.
1.1.42 "Firm Transmission Service" means (a) electric transmission service
designated firm under the open access transmission tariff of a transmission
provider having an open access transmission tariff or (b) if purchased from a
transmission provider that does not have an open access transmission tariff,
electric transmission service sold by such transmission provider as firm
transmission service and generally considered, pursuant to Prudent Utility
Practice and FRCC requirements, to be substantially equivalent to the firm
transmission service referenced in item (a) of this definition.
1.1.43 "Fixed Amount" has the meaning ascribed to such term in Section
6.7.1 of the Ownership Agreement.
1.1.44 "Force Majeure" as to a Party means each of the following events as
affects the Facility: act of God or public enemy; landslide; sinkhole;
lightning; earthquake; fire (unless caused by the applicable Party's willful
misconduct or failure to follow Prudent Utility Practice); storm; ice; snow;
hurricane; tornado; wind; flood; riot; civil disturbance; insurrection; war;
sabotage; terrorism; shutdown of the Facility by a court order or Governmental
Body not resulting from any action or inaction by the applicable Party; strike,
lockout or labor difficulty affecting the SEC Site generally (excluding in the
case of Seller any strike, lockout or labor difficulty that is limited only to
employees of either Seller or its affiliates, and excluding in the case of
Purchaser any strike, lockout or labor difficulty limited only to the employees
of Purchaser); failure of contractors or suppliers (including, in the case of
Seller, OUC and other Customers providing services to Seller) to provide fuel,
equipment, material or services, provided that such failure would qualify as a
Force Majeure under this provision if such failure were directly experienced by
the applicable Party; or any other occurrence, nonoccurrence or set of
circumstances, whether or not foreseeable, that is beyond the reasonable control
of the applicable Party and is not caused or exacerbated by the applicable
Party's failure to follow Prudent Utility Practices.
1.1.45 "FRCC" means the Florida Reliability Coordinating Council or any
successor organization.
1.1.46 "Fuel Supply Agent" has the meaning given such term in the Operating
Agreement.
1.1.47 "Further Extension" has the meaning given such term in Section 2.3.
1.1.48 "Gas Delivery Point" shall have the meaning assigned to it in the
Operating Agreement.
1.1.49 "Governmental Body" shall mean, except as provided in the following
sentence, (i) any local, state, regional or federal administrative, legal,
judicial, or executive agency, court, commission, department or other entity
having jurisdiction or binding authority over any element of the Project or the
performance of the Parties under this Agreement or the Collateral Documents, but
excluding any agency, commission, department or other such entity acting in its
capacity as lender, guarantor or mortgagee and (ii) NERC, FRCC and any RTO.
Except as expressly provided otherwise in this Agreement, the definition
"Governmental Body" shall be deemed to not include OUC, KUA and FMPA for the
purposes of this Agreement.
1.1.50 "Grid" means (i) OUC's electric transmission system, or (ii) if
ownership or control of and jurisdiction over OUC's electric transmission system
is succeeded to by an RTO or other entity, the portion of the electric
transmission system of that RTO or other successor entity that most closely
resembles the OUC electric transmission system as it existed on the effective
date of this Agreement.
1.1.51 "Guaranteed Output" means in any given hour the amount of Capacity
(in MWh per hour) determined by adjusting the Demonstrated Capability to the
prevailing ambient conditions in such hour and adjusting for degradation.
[redacted]
1.1.52 "Indemnified Parties" has the meaning given such term in Section
16.1.1.
1.1.53 "Indemnifying Party" has the meaning given such term in Section 16.1.1.
1.1.54 "Interconnection Agreement" means that certain Interconnection
Agreement expected to be entered into among the Participants in 2001, the entry
into of which is a condition precedent to the effectiveness of this Agreement.
1.1.55 "Interconnection Meters" has the meaning given such term in Section
8.2.
1.1.56 "Lender" has the meaning given such term in Section 12.3.
1.1.57 "Law" shall mean all constitutions, charters, laws, codes,
ordinances, orders, judgments, decrees, injunctions, licenses, rules, permits,
approvals, regulations and requirements of every Governmental Authority
(including OUC) having jurisdiction over the matter in question, whether
federal, state or local, which may be applicable to any Party, as required by
the context in which used, or to the Facility or OUC Interconnection Facilities,
or to the use, manner of use, occupancy, possession, planning, licensing,
design, procurement, construction, acquisition, testing, startup, operation,
maintenance, management, control, addition, renewal modification, replacement or
disposal of the Facility and the OUC Interconnection Facilities or any portion
or portions thereof.
1.1.58 "Market Price" shall mean the price established by Seller, or
negotiated and agreed upon by the Parties, as the case may be, upon Seller's
election pursuant to Section 2.3 with respect to any Further Extension, which
shall become the Annual Capacity Charge for Capacity to be delivered by Seller
during such Further Extension consistent with all other terms and conditions of
this Agreement.
1.1.59 "Meters" means the Interconnection Meters and/or Customers'
check-meters, as applicable.
1.1.60 "Minor Maintenance" shall mean maintenance events lasting not
greater than 72 hours per occurrence, which have been scheduled and for which
Purchaser and the other Customers have given consent in accordance with Section
6.4.
1.1.61 "MMBtu" means one million British thermal units, where one British
thermal unit is the amount of heat required to raise the temperature of one (1)
pound of water one (1) degree Fahrenheit from sixty (60) degrees Fahrenheit.
1.1.62 "MW" means megawatt.
1.1.63 "MWh" means megawatt-hour.
1.1.64 "NERC" means the North American Electric Reliability Council or
successor organization.
1.1.65 "Non-Performing Party" has the meaning given such term in Section
11.1.
1.1.66 "Notice of Intent to Terminate" has the meaning given such term in
Section 12.3.
1.1.67 "Off-Peak Period" means all the days of any given Contract Year other
than the Peak Period days.
1.1.68 "Operating Agreement" means that certain Operating Agreement
expected to be entered into among the Participants in 2001, the entry into of
which is a condition precedent to the effectiveness of this Agreement.
1.1.69 "Operating Period" means the period from the beginning of the first
Contract Year until the end of the last Contract Year.
1.1.70 "OUC" means Orlando Utilities Commission.
1.1.71 "OUC Interconnection Facilities" means the modifications to the
▇▇▇▇▇▇▇ Substation reasonably required for the receipt and delivery of Energy
from the Facility onto the Grid consistent with Prudent Utility Practice.
1.1.72 "Ownership Agreement" means that certain ▇▇▇▇▇▇▇ Energy Center
Combined Cycle Unit A Construction and Ownership Participation Agreement entered
into among the Participants as of March 19, 2001.
1.1.73 "Participant" or "Participants" mean individually or collectively
Orlando Utilities Commission, Kissimmee Utility Authority, Florida Municipal
Power Agency (All Requirements Power Supply Project) and Seller.
1.1.74 "Parties" has the meaning given such term in the first paragraph of
this Agreement.
1.1.75 "Peak Period" means for any given Contract Year the periods that
include the days from January 1 through March 15, inclusive, May 15 through
September 15, inclusive, and December 15 through December 31, inclusive.
1.1.76 "Permit" means any permit, license, approval, consent, waiver,
authorization or other requirement in connection with the Project required from
any Governmental Body under applicable Law.
1.1.77 "Person" means any individual, partnership, corporation, limited
liability company, association, business, trust, Governmental Body or other
entity.
1.1.78 "Planned Major Maintenance" means the Gas Turbine (GT) Combustor
Inspection, the GT Hot Gas Path Inspection, and the GT Major Inspection, as
these inspections are defined in the maintenance agreement with the GT vendor.
1.1.79 "Power Purchase Agreements" means this Agreement and those certain
similar power purchase agreements between Seller and the other Customers
respecting the delivery of Capacity and Energy from Seller's ownership share of
the Capacity and Energy of the Facility.
1.1.80 "Prime Rate" means the prime rate of interest as published from time
to time in the Wall Street Journal or such other comparable successor
publication as the Participants may agree upon. The Prime Rate shall be
calculated on the basis of a 365-day year for the actual number of days that a
payment, reimbursement or adjustment, as the case may be, has not been made.
1.1.81 "Project" means the Facility, the Facility Site and all other
appliances, parts, instruments, appurtenances, accessories and other property
that may be incorporated or installed in, or otherwise become part of, any of
the foregoing.
1.1.82 "Prudent Utility Practice" means any of the practices, methods and
acts engaged in, or approved by, a significant portion of the electric utility
industry in the United States (or, if more stringent, any of the practices,
methods and acts engaged in, or approved by, a significant portion of the
electric utility industry in the region covered by the FRCC) operating
facilities of a size and technology similar to the Facility during the relevant
time period or any of the practices, methods and acts, which, in the exercise of
reasonable judgment in light of the facts known, or that reasonably should have
been known, at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with applicable
Laws, reliability, safety and expedition. Prudent Utility Practice is not
intended to be limited to the optimum practice, method or act to the exclusion
of all others, but rather to be acceptable practices, methods and acts generally
accepted in the United States and having due regard for current editions of the
National Electrical Safety Code, the National Electric Code and other applicable
electrical, safety and maintenance codes and standards, manufacturers'
warranties and applicable Laws.
1.1.83 "Request for Energy" or "Schedule" means a request for the delivery
of Energy made by Purchaser and the other Customers in accordance with the
process provided in Section 6 and Appendix B for the Customers jointly to
Schedule Energy, and any adjustments thereto made in accordance with Appendix B.
1.1.84 "RTO" means a regional transmission organization.
1.1.85 "Scheduled Commencement Date" means the date that is twenty-four
(24) months after the receipt of the Site Certification and all other Permits to
be obtained by the Customers that are necessary for Seller to commence
construction, as such date may be extended under the provisions of Section 5.1,
but in no event earlier than October 1, 2003.
1.1.86 "Scheduled Maintenance" means the removal of the Facility or a
component thereof from service (which removal reduces the capability of the
Facility to operate) to perform maintenance, overhaul, inspection, testing or
repair work, as contemplated in Section 6.4.
1.1.87 "SEC Site" means the parcel of land in Orlando, Florida on which the
fossil fired generating stations ▇▇▇▇▇▇▇ ▇▇▇▇ # ▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇ are
located, including the parcel of land on which the Facility is to be located.
1.1.88 "Seller" has the meaning given such term in the first paragraph of
this Agreement.
1.1.89 "Site Certification" means (i) the final approval by the applicable
Governmental Body of the initial need for power determination and site
certification permit applications pursuant to the Florida Electrical Power Plant
Siting Act, and (ii) the receipt of the air construction (Prevention of
Significant Deterioration) permit by OUC issued by FDEP pursuant to the
delegated authority of the United States Environmental Protection Agency under
the Clean Air Act Amendments of 1977.
1.1.90 "Technical Limits" means the limits and constraints relating to the
operation and maintenance of the Facility, as described in Appendix A.
1.1.91 "Termination Payment" means the payment to be paid by a Defaulting
Party to the Non-Defaulting Party under in Section 12.5.1.
1.1.92 "Test Energy" means (i) Energy produced by the Facility during
testing of the Facility prior to the Commencement Date; and (ii) Energy produced
by the Facility during periodic tests of the Facility's Capacity output
capability following the Commencement Date.
1.2 Rules of Construction. In this Agreement, unless the context otherwise
requires, the singular shall include the plural, the masculine shall include the
feminine and neuter, and vice versa. The terms "include," "includes" and
"including" shall be deemed to be followed by the words "without limitation."
The term "month" refers to a calendar month, and any period measured by a
"month" from a reference date refers to the period beginning on such reference
date and ending on the same date of the next succeeding calendar month or, if no
such date exists in the next succeeding calendar month, the last day of such
next succeeding calendar month. References to a Section, Table or Appendix shall
be references to a Section of, Table of or Appendix to this Agreement unless
specifically stated otherwise. A reference to a given agreement or instrument
shall be a reference to that agreement or instrument as modified, amended,
supplemented and restated through the date as of which such reference is made.
The term "or" is not exclusive, the term "shall" is mandatory and the term "may"
is permissive. In the event that any index or publication referenced in this
Agreement ceases to be published, each such reference shall be deemed to be a
reference to a successor or alternate index or publication reasonably agreed by
the Parties. Both Parties acknowledge that each was actively involved in the
negotiation and drafting of this Agreement and that no law or rule of
construction shall be raised or used in which the provisions of this Agreement
shall be construed in favor of or against either Party because one is deemed to
be the author thereof.
1.3 Consents. Whenever the consent or approval of either Party is required under
this Agreement, such consent or approval shall not be unreasonably withheld,
unless this Agreement provides that such consent or approval is to be given by
such Party at its sole or absolute discretion or is otherwise qualified.
SECTION 2
TERM OF AGREEMENT
2.1 Initial Term.
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2.1.1 This Agreement shall become effective as set forth in
Section 3.1, and shall remain in full force and
effect, subject to the early termination provisions
set forth herein, through the later of (i) the last
day of the month in which the tenth (10th)
anniversary of the Scheduled Commencement Date occurs
or (ii) the last day of the month in which the tenth
(10th) anniversary of the Commencement Date occurs
(the "Initial Term").
2.1.2 Notwithstanding the provisions of Section 2.1.1, the
Initial Term shall terminate on (a) November 30, 2013
if Section 2.1.1 yields an end date falling between
December 1, 2013 and April 30, 2014, inclusive, or
(b) November 30, 2014 if Section 2.1.1 yields an end
date that falls on or after May 1, 2014.
2.2 Extension of Initial Term.The Initial Term shall be automatically
extended an additional five (5) years from the end of the Initial Term
("Extended Term"); provided, however, that the Purchaser shall have the option
to elect to terminate this Agreement effective on the last day of the Initial
Term by providing written notice of such election to Seller no later than the
date that is three (3) years prior to the end of the Initial Term.
2.3 Extensions of Extended Term. The Extended Term shall be
automatically extended three (3) successive periods of five (5) years each from
the end of the Extended Term (the "Further Extensions"); provided, however, that
the Purchaser shall have the option to elect to terminate this Agreement
effective on the last day of any of (i) the Extended Term, (ii) the first
Further Extension, or (iii) the second Further Extension, by providing written
notice of such election to Seller no later than the date that is, respectively,
three (3) years prior to the end of the Extended Term, three (3) years prior to
the end of the first Further Extension, or three (3) years prior to the end of
the second Further Extension, as the case may be; provided, further, that with
respect to each Further Extension, Seller shall have the right to establish the
Annual Capacity Charge for such Further Extension based on Seller's then-current
assessment of market conditions by providing Purchaser written notice of the new
proposed Annual Capacity Charge no later than the date that is three and
one-half (3 1/2) years prior to the date that such Further Extension period is
scheduled to begin, subject to Purchaser's right to request that Seller
negotiate in good faith to agree on any other price that Purchaser believes in
good faith reflects current market conditions.
2.4 Survival. Applicable provisions of this Agreement shall continue in
effect after termination to the extent necessary to satisfy the terms and
conditions of this Agreement and, as applicable, to provide for: final ▇▇▇▇▇▇▇▇
and adjustments related to the period prior to termination, repayment of any
money due and owing either Party pursuant to this Agreement, repayment of
principal and interest associated with security funds, and the indemnifications
specified in this Agreement.
SECTION 3
CONDITIONS PRECEDENT
3.1 Condition Precedent to Effectiveness. The Parties agree and
acknowledge that this Agreement shall be effective only upon the date on or
before which both of the following have occurred (such date, the "Effective
Date"): (i) the execution and delivery of the Ownership Agreement and the
Operating Agreement and all other Collateral Documents; and (ii) the
acknowledgment of the Participants' satisfaction of the foregoing condition and
the accuracy of the cross-references to the Collateral Documents contained in
this Agreement.
3.2 Conditions Precedent to Obligations. Notwithstanding any provisions
of this Agreement to the contrary, the obligations of the Parties to this
Agreement shall be subject to the fulfillment of each of the conditions (or the
waiver in writing of such conditions by the respective Party or Parties) set
forth in Article 8 of the Ownership Agreement.
SECTION 4
SALE AND PURCHASE
4.1 Capacity Delivery and Payment. Subject to the terms and conditions
of this Agreement, during the Operating Period, Seller agrees to deliver and
sell to Purchaser and Purchaser agrees to receive and purchase from Seller up to
six and one half percent (6.5%) of the Actual Capability of the Facility in
accordance with the following provisions:
4.1.1 The Capacity payment (the "Capacity Payment" or "CP") in respect
of each month during the Operating Period shall be an amount equal to: the
product of the Annual Purchaser's Capacity Nomination (expressed in
kilowatts) multiplied by the Annual Capacity Charge. For any partial month
during the Operating Period, the Capacity Payment shall equal the amount
determined pursuant to the formula set forth in the preceding sentence
multiplied by a fraction, the numerator of which is the number of days of
such partial month within the Operating Period, and the denominator of
which is the total number of days in such month. If the Annual Purchaser's
Capacity Nomination changes during a month, then the Capacity Payment for
such month shall be equal to the product of the Annual Capacity Charge
multiplied by the sum of the two results obtained: (i) first by multiplying
the old Annual Purchaser's Capacity Nomination by the ratio of the number
of days in the month (including fractional days) prior to the time of the
change over the total number of days in the month; and (ii) second by
multiplying the new Annual Purchaser's Capacity Nomination by the ratio of
the number of days in the month (including fractional days) after the time
of the change over the total number of days in the month. The Capacity
Payment shall be paid by Purchaser to Seller in accordance with Section
9.1. Notwithstanding the above, if during the first three (3) months of the
Operating Period any Governmental Body shall prohibit the Facility from
operating because of Seller's failure to obtain, prior to the Commencement
Date any Permit required by Law for Seller to operate the Facility, then
Purchaser's obligation to make Capacity Payments shall be suspended until
the earlier of: (i) the lifting of such prohibition; or (ii) the date that
is three (3) months after the Commencement Date.
4.1.2 The initial Demonstrated Capability of the Facility shall be
established in accordance with the Capacity testing procedure set forth in
Appendix C. Following the first anniversary of the Commencement Date,
Seller shall perform Capacity tests twice each Contract Year, pursuant to
the testing procedures set forth in Appendix C, during the Summer and
Winter periods as defined by FRCC; provided, however, that Seller shall be
entitled to a fifty-eight (58)-hour period of maintenance that does not
affect calculation of Actual Availability of the Facility (which period
shall be prior to any such Capacity test from 9 p.m. Friday to 7 a.m.
Monday, unless OUC, in its sole discretion, agrees otherwise). In addition,
Seller may retest when a repair or modification of the Facility, or a
corrected or improved operational or maintenance activity, results in an
increase in the Capacity of the Facility (including adjustments made during
initial shakedown), provided that the actual full load output (as adjusted
to seventy degrees Fahrenheit (70(0)F) and forty-five percent (45%)
relative humidity) is at least one hundred and one percent (101%) of the
last Demonstrated Capability test amount. Should any test or retest
conducted pursuant this Section 4.1.2 indicate that the actual full load
output (as adjusted to seventy degrees Fahrenheit (70(0)F) and forty-five
percent (45%) relative humidity) has changed by an amount equal to or
greater than one percent (1%) of the last Demonstrated Capability test
amount, the Demonstrated Capability shall be reset at such actual full load
output for purposes of determining the Capacity Payment as of the time the
test is completed; provided, however, that if the test is performed during
a Force Majeure event and such Force Majeure event resulted in the
reduction of the Demonstrated Capability, the Capacity Payment shall not be
reduced thereby until the end of the forty-five (45) day period described
in the last paragraph of Section 4.1 below.
4.1.3 Seller shall conduct additional tests as required by the FRCC or
as requested by Purchaser pursuant to Purchaser's legal or contractual
obligations with third parties; provided, however, such additional tests
shall be for informational purposes and shall not be used to reset the
Demonstrated Capability or otherwise determine the Capacity Payment under
this Agreement.
4.1.4 Beginning with the sixth (6th) Contract Year and ending with the
tenth (10th) Contract Year, the Customers shall have the irrevocable right
to jointly reduce the total of their combined Annual Purchaser's Capacity
Nominations, for the remainder of the Initial Term and any Extended Term or
Further Extensions, by either twenty-five (25) MW or fifty (50) MW (as
adjusted to seventy degrees Fahrenheit (70(0)F) and forty-five percent
(45%) relative humidity) per year; provided, however, that such combined
total of the Annual Purchaser's Capacity Nominations may not be reduced by
more than 200 MW in the aggregate. Purchaser must give Seller notice of any
such reduction elected by Purchaser not later than three (3) years prior to
the commencement of the Contract Year in which such reduction shall occur;
provided, however, that such notice shall be effective if and only if
either it is made jointly with the other Customers or the other Customers
give Seller a similar notice under their respective Power Purchase
Agreements with all such notices together satisfying the above criteria;
provided, further, that such notices shall specify any changes in the
percentage of the Annual Purchaser's Capacity Nomination to be purchased by
Purchaser under Section 4.1.1 and by the other Customers under the
corresponding provisions of their respective Power Purchase Agreements.
Notwithstanding the foregoing provisions of this Section 4.1, if and to the
extent that a Force Majeure event affects Seller's ability to deliver and sell
to Purchaser the Capacity of the Facility or any portion thereof, Seller shall
be excused from any delay in performing or failure to perform any or all of such
obligations (and in this regard, the Parties shall follow the procedures
contemplated in Section 11.1); provided, however, that notwithstanding such
reduction or elimination of the Actual Capability of the Facility, Purchaser
shall continue to pay Seller the full Capacity Payment attributable to the first
forty-five (45) days following the date of Seller's notification to Purchaser of
any such Force Majeure effect; provided, further, that if the effect of a Force
Majeure event lasts for longer than forty-five (45) days, then Purchaser shall
not be required to make Capacity Payments attributable to any continued period
of Force Majeure declaration after the end of such forty-five (45) day period,
but Purchaser must resume making Capacity Payments when Seller declares the
Force Majeure period over and resumes its obligation for delivery of Energy
under this Agreement; and provided, further, that the Capacity Payment relief
contemplated in the immediately preceding clause shall not apply if the Force
Majeure event affecting Seller resulted from a failure of Purchaser or another
Customer to fulfill its obligations under this Agreement or any of the
Collateral Documents; and provided, further, that a Force Majeure event that
affects Purchaser's ability to receive Energy from the Facility shall not excuse
Purchaser's obligation to make Capacity Payments, except solely to the extent
provided for in Section 5.1.3 if and to the extent such provision is applicable.
4.2 Energy Delivery and Payment. Subject to the terms and conditions of
this Agreement and, in particular, subject to the provisions of Section 6 and
Appendix B, Seller shall sell and deliver, and Purchaser shall purchase and
receive, during the Operating Period, Energy requested by Purchaser in a Request
for Energy, as well as Energy generated by associated ramp up and ramp down of
the Facility and Test Energy; provided, however, that Purchaser shall not be
required to make any payments for Test Energy produced prior to the Commencement
Date. The Customers shall pay for and supply all fuel associated with the
Customers' Request for Energy in accordance with the provisions of Section 3.2
of the Operating Agreement. The Energy payment (the "Energy Payment" or "EP") in
respect of each month shall be the sum of four (4) components: a variable O&M
component for operation on natural gas, a variable O&M component for operation
on fuel oil, a start-up component, and a fuel component for Energy delivered
from Alternate Resources. The components of the Energy Payment shall be
calculated as follows:
4.2.1 Variable O&M Component - Natural Gas. The variable O&M component
for operation on natural gas shall be calculated as follows:
(SIGMA)i=Days in the month (SIGMA)j=Hours in the Day [(DENGij x VOMR)
+ HVOMij]
Where:
DENGij is Delivered Energy in MWh (other than Test Energy prior to the
Commencement Date) from the Facility produced with natural gas during hour
j of day i; provided, however, that if the Facility uses both natural gas
and fuel oil in a given hour, then fifty percent (50%) of the Delivered
Energy in such hour shall be deemed to be produced with natural gas; and
VOMR is the variable O&M rate (in $/MWh), which shall be
[redacted]; and
HVOM is the hourly variable O&M rate (in $ per hour) as
determined from Table A and its accompanying Notes applicable for hour
j of day i during which the Facility is operating on natural gas and
which is applicable only when DENGij is > 0.
Table A
Hourly Variable O&M Charges for Operation on Natural Gas
Annual On-Line Factor Combined Hourly Variable O&M Rate (in $
--------------------- ---------------------------------------
per hour) for all Customers (see Notes
--------------------------------------
below)
------
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
Notes to Table A:
----------------
1) The Hourly Variable O&M Rate in Table A
represents the rate applicable for the Annual
Purchaser's Capacity Nominations of all Customers.
The actual Hourly Variable O&M Rate for Purchaser for
an hour in a particular Contract Year shall equal the
product of the applicable rate from the table for
such Contract Year multiplied by the ratio of
Purchaser's portion of the Request for Energy for
such hour over the total Request for Energy for such
hour.
2) The Hourly Variable O&M Rate for a
Contract Year shall be interpolated between the
values shown in Table A when the Annual On-Line
Factor for the previous Contract Year falls between
the specific percentages shown on Table A. For
example, with respect to an Annual On-Line Factor of
[redacted].
3) The dollar amounts shown in Table A are
expressed in January 1, 2003 dollars and shall be
escalated based upon the U.S. Consumer Price Index on
January 1 of each year.
4) The dollar amounts in Table A represent
the charge for sixty-five percent (65%) of the
Facility's Capacity being sold to Customers under the
Power Purchase Agreements. If Purchaser and the other
Customers elect to reduce their combined Annual
Purchaser's Capacity Nominations pursuant to Section
4.1.4, then the dollar amounts in Table A shall be
proportionately reduced commensurate with such
Capacity reduction.
5) The Annual On-Line Factor shall
be calculated for each Contract Year, as follows:
Annual On-Line Factor = SH/ (PH - OH)
Where:
SH is the number of hours that the
Customers Schedule and Seller delivers
Energy in a Contract Year; and
PH is the number of hours in a Contract
Year; and
OH is the number of hours in a Contract Year
during which (i) the Facility is unavailable
due to a forced outage or due to a
maintenance outage that Seller has scheduled
pursuant to Section 6.4 or, if applicable,
that is a permitted fifty-eight (58) hour
pre-testing maintenance under Section 4.1.2,
and (ii) Seller does not deliver from an
Alternate Resource.
6) For the first Contract Year, all monthly
Energy ▇▇▇▇▇▇▇▇ will be made assuming an Annual
On-Line Factor of [redacted]. The rate shall be
determined annually for each Contract Year based on
the Annual On-Line Factor for the previous Contract
Year. At the end of each Contract Year, the Annual
On-Line Factor for such Contract Year shall be
calculated and the Hourly Variable O&M charges for
such Contract Year shall be recalculated using such
Annual On-Line Factor for such Contract Year. A
true-up payment or refund shall be made to adjust the
amounts collected by Seller from Purchaser during
each Contract Year to the amount computed by Seller
using such Annual On-Line Factor for such Contract
Year. Any true-up payments shall be included on an
invoice as soon as reasonably practicable following
the end of the applicable Contract Year.
4.2.2 Variable O&M Component--Fuel Oil. The variable O&M
component for operation on fuel oil when firing the
gas turbines shall be calculated as follows:
(SIGMA)i= Days in the Month (SIGMA)j= Hours in the Day [(DEFOij x
VOMRFO) + HVOMFOij] Where:
DEFOij is Delivered Energy (other than Test
Energy prior to the Commencement Date)
produced with fuel oil during hour j of day
i; provided that if the Facility uses both
natural gas and fuel oil in a given hour,
then fifty percent (50%) of the Delivered
Energy in such hour shall be deemed to be
produced with fuel oil; and
VOMRFO is the variable O&M rate (in $/MWh)
for Energy produced with fuel oil,
[redacted], subject to adjustment up or down
based on the Participants' evaluation of
General Electric's reports on the effect of
burning fuel oil on variable O&M costs (as
mutually agreed by the Participants
following good faith negotiations); and
HVOMFO is the hourly variable O&M rate (in $
per hour) for hour j of day i during which
the Facility is Operated on fuel oil, which
rate shall be [redacted], subject to
adjustment up or down based on the
Participants' evaluation of General
Electric's reports on the effect of burning
fuel oil on variable O&M costs (as mutually
agreed by the Participants following good
faith negotiations), and which is applicable
only when DEFOij is > 0.
4.2.3 Start-up Component. The start-up component shall be
calculated as follows:
GTS x SUR
Where:
GTS is the number of gas turbine starts
required to meet a Request for Energy (other
than for Test Energy prior to the
Commencement Date) where the amount of
Energy delivered from any single gas turbine
increases from zero to an amount greater
than zero; provided, however, that the
calculation of GTS shall not include: (i)
any starts required to resume delivery to
Purchaser due to an interruption caused by a
forced outage, or (ii) any starts initiated
by Seller in order to make third party sales
in any given hour where the Facility would
otherwise not have been started in such hour
to meet a Request for Energy.
SUR is the Start-up Rate (in $ per start)
for each gas turbine as determined from
Table B below and its accompanying Notes:
TABLE B
Start-Up Rates
---------------------------------------------------------------------------
Cumulative Number of Start-ups per Combined Start-up Rate per Start per
-----------------------------------------------------------------------
Gas Turbine per Contract Year Gas Turbine for all Customers (see
----------------------------- ----------------------------------
Notes)
------
[redacted] [redacted]
[redacted] [redacted]
[redacted] [redacted]
---------------------------------------------------------------------------
Notes to Table B:
----------------
1) The SUR in Table B represents the rate
applicable to all Customers for each start-up during
a Contract Year. There shall be no charge for the
[redacted], and the combined rate among all Customers
participating in each subsequent start-up during such
Contract Year shall be as identified in the Table B.
The actual SUR for Purchaser (in $ per start) for any
such start-up shall equal the quotient of the
applicable rate from the Table B divided by the
number of Customers participating in the Request for
Energy that requires the start-up (and in which
Purchaser is one of those Customers); provided,
however, Purchaser will not have to pay for start-ups
in which it does not participate.
2) The SUR is expressed in January 1, 2003
dollars and shall be escalated based upon the U.S.
Consumer Price Index on January 1 of each year.
3) The dollar amounts in Table B represent
the charge for sixty-five percent (65%) of the
Facility's Capacity being sold to Participants under
the Power Purchase Agreements. If the Participants
elect to reduce their combined Annual Purchaser's
Capacity Nominations pursuant to Section 4.1.4, then
the dollar amounts in Table B shall be
proportionately reduced commensurate with such
Capacity reduction.
4.2.4 O&M Rate Adjustment. The rates in Sections 4.2.1,
4.2.2 and 4.2.3 shall be increased or decreased based
on good faith negotiation of the Parties (in
accordance with Section 18) to reflect and include
any actual increase or decrease in Seller's costs of
operating the Facility that is caused by any mutually
agreed-upon modification or design change or any
actual increase or decrease in Purchaser's or another
Customers' charges for providing any services to
Seller.
4.2.5 Energy Payment for Delivery from Alternate Resources.
----------------------------------------------------
4.2.5.1 If Seller elects to deliver Energy from
Alternate Resources pursuant to Section 4.4,
then the variable O&M component and the
start-up component of the Energy Payment
shall be calculated in accordance with
Sections 4.2.1 and 4.2.3, respectively, for
such Alternate Resource Energy as if it were
delivered from the Facility. In addition,
the fuel component for the Energy delivered
from Alternate Resources shall be calculated
as follows:
(SIGMA)i=Days in the month (SIGMA)j=Hours in the Day (MDEij x HRij x FRPij)
Where:
MDEij = Scheduled Energy in MWhs delivered from an Alternate
Resource during hour j of day i;
when the Facility is unavailable, then HRij for an hour =
[redacted];
when the Facility is available, then HRij for an hour =
[redacted]; and
FRPij = the fuel rate proxy for an
hour calculated in dollars per
MMBtus in accordance with the
applicable provisions of either
Section 4.2.5.2 or 4.2.5.3.
4.2.5.2 If the Fuel Supply Agent has not already
scheduled the transportation of gas to the
Facility to meet the Customers' Schedules
for the hour during which Seller elects to
deliver the Scheduled Energy from Alternate
Resources, then following notification from
Seller of its election to deliver the
Scheduled Energy from Alternate Resources,
Seller shall be obligated to obtain the
necessary quantities of gas and necessary
gas transportation capacity to accommodate
any portion of the Schedule that Seller has
elected to satisfy from Alternate Resources.
During periods that Seller elects to deliver
Energy from Alternate Resources, the Fuel
Supply Agent shall make available
transportation capacity, within constraints
of the pipeline tariffs and operational
procedures in effect at the time and at no
additional cost to the Fuel Supply Agent, in
the amount determined by the quantity of
Energy supplied from Alternate Resources and
the applicable heat rate determined by the
rules for defining HR in the formula
provided in Section 4.2.5.1. An example of
the determination of the transportation
capacity is included in Appendix D. If
Seller has delivered Energy from Alternate
Resources under these circumstances, then
the FRP (in $ per MMBtus) shall be equal to
the sum of: (i) [redacted]; and (ii) the
applicable firm gas transportation variable
cost associated with deliveries to the
Facility under such Participant's firm
transportation agreement(s). All risks of
gas supply and transportation interruption
to accommodate deliveries of Energy from
Alternate Resources shall be borne by
Seller.
4.2.5.3 If the Fuel Supply Agent has already
scheduled the transportation of gas to the
Facility to meet the Customers' Schedules by
the ▇▇▇▇ ▇▇▇▇▇▇ notifies Purchaser of
Seller's election to deliver the Scheduled
Energy from Alternate Resources, then at
Seller's election:
(i) Seller shall direct Fuel Supply Agent to use commercially
reasonable efforts to revise its scheduled transportation of gas to
the Facility to provide for the delivery of the gas to Seller at any
alternate delivery point designated by Seller that is available under
the Customers' firm transportation agreement(s). The efforts of the
Fuel Supply Agent shall be subject to the constraints of the pipeline
tariffs and operational procedures in effect at the time, and the Fuel
Supply Agent shall not be required to incur any additional cost as a
result of the revision of the schedule of transportation of gas to the
alternate delivery point. The amount of scheduled transportation of
gas to be delivered to the alternate delivery point shall be
determined by the quantity of Energy supplied from Alternate Resources
and the applicable heat rate determined by the rules for defining HR
in the formula provided in Section 4.2.5.1. An example of the
determination of the transportation capacity is included in Appendix
D. If Seller has delivered Energy from Alternate Resources under these
circumstances, then the FRP (in $ per MMBtu) shall be [redacted]; or
(ii) Seller shall direct Fuel Supply Agent to use commercially
reasonable efforts to remarket to third parties the gas that has been
scheduled for delivery to the Facility on the best terms possible
under the circumstances. The efforts of the Fuel Supply Agent shall be
subject to the constraints of the pipeline tariffs and operational
procedures in effect at the time. The amount of scheduled
transportation of gas to be remarketed to third parties shall be
determined by the quantity of Energy supplied from Alternate Resources
and the applicable heat rate determined by the rules for defining HR
in the formula provided in from paragraph 4.2.5.1. An example of the
determination of the transportation capacity is included in Appendix
D. If Seller has directed the Fuel Supply Agent to remarket the gas
under these circumstances, the FRP (in $ per MMBtu) shall be
[redacted].
4.3 Availability Guarantee.
----------------------
4.3.1 Seller guarantees that the Actual Availability of the
Facility for each of the Peak and Off-Peak Periods of each Contract
Year will equal or exceed [redacted] ("Availability Guarantee");
provided, however, that (i) the first three months of operation
following the Commencement Date shall be excluded from the
Availability Guarantee, (ii) if and to the extent that a Force Majeure
event affects Seller's ability to achieve the Availability Guarantee,
other than in the case of Equipment Breakdown, Seller shall be excused
from the Availability Guarantee (and in this regard the Parties shall
follow the procedures contemplated in Section 11), and (iii) to the
extent that the Facility is fired with fuel oil in excess of
forty-eight (48) hours per combustion turbine unit in any Contract
Year in order to meet Purchaser's Request for Energy, then for every
additional ten (10) hours that the Facility is fired using fuel oil,
the lower end of the Availability Guarantee range, and the [redacted]
in Sections 4.3.5.1 and 4.3.5.2, shall be reduced by [redacted], which
reductions shall remain in effect until the next Planned Major
Maintenance occurs. If either combustion turbine is not fired on oil
during any Contract Year for the same number of hours as the other
combustion turbine, then for purposes of calculating the adjustment to
the Availability Guarantee, each combustion turbine will be deemed to
have been fired on oil during such Contract Year for a number of hours
that is equal to one half of the summation of the number of hours that
each combustion turbine was actually fired on oil during such Contract
Year.
4.3.2 In each Contract Year, or partial Contract Year in
the case of the first Contract Year (where the first
three months are excluded) or the last Contract Year,
Seller shall be entitled to an availability incentive
payment from Purchaser ("Availability Incentive
Payment") equal to [redacted].
4.3.3 The Actual Availability for the Peak Period of each
Contract Year, or partial Contract Year in the case
of the first Contract Year (where the first three
months are excluded) or the last Contract Year, shall
be calculated as follows and then rounded up or down
to the nearest tenth of a percentage point (based on
the method that the rounding is up if the succeeding
decimal is 5 or higher or otherwise the rounding is
down); provided, however, that such Actual
Availability shall not exceed one (1.00):
Actual Availability = (PH-OH -EDH+EMH+ARDH)/PH Where: "PH" (or
"Period Hours") shall equal the hours in the Peak Period of such
calendar year;
"OH" (or "Outage Hours") in the Peak
Period of such Contract Year means all
hours the Facility is unavailable for
operation; provided, however, that OH
shall not include hours in any day during
which the Purchaser has not Scheduled any
Energy from the Facility during the
entirety of such day;
"EDH" (or "Equivalent Derated Hours") in
the Peak Period of such Contract Year
means the summation of EDH for each hour
during the Peak Period; provided, however,
that EDH shall not include hours in any
day during which the Purchaser has not
Scheduled any Energy from the Facility
during the entirety of such day. In each
hour for which the EDH of such hour must
be calculated, EDH for the hour will equal
(Guaranteed Output - Actual
Capability)/Guaranteed Output;
"EMH" (or "Excused Maintenance Hours")
shall equal hours that Seller has
scheduled maintenance on the Facility in
the Peak Period of such calendar year
pursuant to Section 6.4 and, if
applicable, the fifty-eight (58) hours of
pre-testing maintenance allowed prior to a
Capacity test under Section 4.1.2;
provided, however, that in any hour EMH
must be zero if there is no Outage Hour in
such hour; and
"ARDH" (or "Alternate Resource Delivery
Hours") shall equal the number of hours
that Seller delivers Energy to Purchaser
from Alternate Resources in the Peak
Period of such Contract Year to fully or
partially make up for shortfalls caused by
Facility outages or derates. Seller will
not receive any credit for ARDH in any
entire day unless Seller is able to
deliver at least partial Energy in each
hour of such day that Purchaser Schedules
Energy, in which case Seller will receive
ARDH credit for each hour of the day based
on the lowest ratio during any hour of
such day of Delivered Energy to Scheduled
Energy.
4.3.4 The Actual Availability for the Off-Peak Period of each
Contract Year shall be calculated in a fashion similar to Section
4.3.3, substituting "Off-Peak Period" for "Peak Period" where it
appears in Section 4.3.3.
4.3.5 In the event that the Actual Availability during the Peak
Period or Off-Peak Period, or both, of any given Contract Year, or
partial Contract Year in the case of the first Contract Year (where
the first three months are excluded) or the last Contract Year, is
less than the lower end of the Availability Guarantee range, then
Purchaser shall be entitled to receive availability damages
("Availability Damages") from Seller as Purchaser's sole and exclusive
remedy for Seller's failure to delivery Capacity and Energy from the
Facility due to the unavailability of the Facility. 4.3.5.1 The
Availability Damages for the Peak Period shall be calculated as
follows (with any required adjustments as noted in Section 4.3.5.3):
Availability Damages for the Peak Period of any Contract Year =
[redacted]
4.3.5.2 The Availability Damages for the Off-Peak
Period shall be calculated as follows (with
any required adjustments as noted in Section
4.3.5.3):
Availability Damages for the Off-Peak Period of any Contract Year
= [redacted]
4.3.5.3 In both of Sections 4.3.5.1 and 4.3.5.2, the
factors [redacted] shall be adjusted for the
use of fuel oil pursuant to Section
4.3.1(iii), if applicable.
4.3.6 As soon as reasonably practicable after the first
month following the Commencement Date, and each month
thereafter, Seller shall submit to Purchaser a
statement setting forth in reasonable detail the
actual availability of the Facility during the prior
month, including the underlying availability data.
4.3.7 As soon as reasonably practicable following each Contract
Year, Seller shall submit to the Purchaser a statement setting forth
the Actual Availability for the preceding Contract Year together with
a calculation of the net amount of any Availability Incentive Payment
due to Seller or Availability Damages due to the Purchaser for the
preceding Contract Year based on the foregoing calculations, as
applicable, with respect to the Peak Period and Off-Peak Period of
such Contract Year. Within ten (10) Business Days of (a) receipt of
such statement, Purchaser shall pay any Availability Incentive Payment
due to Seller by wire transfer in immediately available funds, or (b)
transmittal of such statement, Seller shall pay any Availability
Damages due to Purchaser by wire transfer in immediately available
funds.
4.4 Alternate Resources. In any hour in which the Facility is
unavailable, Seller may continue to make deliveries of Energy in the full amount
Scheduled by Purchaser from non-Facility sources (including, but not limited to,
generating units on Seller's or its Affiliates' systems and Energy purchases
available to Seller) ("Alternate Resources") to replace the Energy that would
have been provided by the unavailable Facility. In any hour in which the
Facility is available, Seller may choose to make deliveries of Energy in the
full amount Scheduled by Purchaser, or any portion thereof, from Alternate
Resources to replace the Energy that would have been provided by the available
Facility; provided, however, that if the Facility is available, Seller must
maintain the Facility on-line and committed at least at the Facility's minimum
load, and Purchaser may Schedule spinning reserves from the Facility, all in
accordance with Appendix B. Seller must deliver Energy from Alternate Resources
to Purchaser at an unconstrained point on the Grid, and if Seller is making such
delivery at a time when the Facility is unavailable, then Seller will purchase
Firm Transmission Service for such delivery to the extent that such Firm
Transmission Service is available for the Alternate Resource Energy from the
point of its acquisition by Seller to the unconstrained point on the Grid. In
utilizing Alternate Resources, Seller shall comply with the notice requirements
of Section 3 of Appendix B.
4.5 Purchaser's Right to Capacity and Energy. During the Operating
Period, Purchaser shall have the first call to purchase Seller's share of the
Capacity and Energy generated by, and Ancillary Services associated with, the
Facility (other than the reductions in Capacity elected jointly by the Customers
pursuant to Section 4.1.4); provided, however, that (i) subject to Purchaser's
right to Capacity and Energy under this Agreement and the Operating Agreement,
Seller may make sales of any Capacity and Energy generated by, and Ancillary
Services associated with, Seller's Equity Capacity when such Capacity and Energy
is not Scheduled by Purchaser, and (ii) in the event that Seller determines that
the Facility is capable of delivering Energy to the Grid prior to the Scheduled
Commencement Date, Seller shall have the option of either (a) utilizing the
Capacity and Energy generated by, and Ancillary Services associated with, its
percentage ownership share of the Facility prior to the Scheduled Commencement
Date for sales to third parties by delivering written notice of its election of
this option thirty (30) days prior to the anticipated Commercial Operation Date,
in which event Purchaser shall not make Capacity Payments until the later of the
Scheduled Commencement Date or the Commencement Date, or (b) initiating delivery
of Capacity and Energy to Purchaser under this Agreement on the Commencement
Date. If Seller makes sales of either or both Capacity and Energy to third
parties under Section 4.5(ii)(a) at a time when the Scheduled Commencement Date
has passed but the Commencement Date has not yet occurred, then Seller will pay
to Purchaser the portion, if any, of the proceeds of such sales that Seller
actually receives.
SECTION 5
SCHEDULE FOR DELIVERY OF CAPACITY AND ENERGY
5.1 Scheduled Delivery.
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5.1.1 Seller anticipates that, the Facility will achieve the
Commencement Date by the Scheduled Commencement Date and shall be
fully capable of reliably producing the power and Energy to be
provided under this Agreement to Purchaser at the Delivery Point;
provided, however, that if and to the extent that a Force Majeure
event affects Seller's ability to timely comply with the foregoing
guarantee, the Scheduled Commencement Date shall be extended by the
amount of ▇▇▇▇ ▇▇▇▇▇▇ reasonably needs to remedy the effects of the
Force Majeure that prevented Seller's performance (and in this regard,
the Parties shall follow the procedures contemplated in Section 11).
5.1.2 In the event that Seller fails to achieve the Commencement
Date by the date that is two (2) years after the Scheduled
Commencement Date, then either (i) Seller shall have the right to
simultaneously terminate all of the Power Purchase Agreements by
delivering written notice of such election to Purchaser and the other
Customers ("Seller's Termination Notice"), or (ii) Purchaser may
terminate this Agreement, if and only if each of the other Customers
also terminates contemporaneously its respective Power Purchase
Agreement for the same reason, by delivering written notice of such
election to Seller (collectively, together with the other Customers'
similar notices, "Purchasers' Termination Notices"). Within ten (10)
Business Days of the date of Seller's Termination Notice, Seller shall
pay Purchaser liquidated damages [redacted], this Agreement shall
terminate effective as of the date of Seller's Termination Notice, and
Seller shall have no further liability to Purchaser other than the
liquidated damages paid under this Section 5.1.2. Within ten (10)
Business Days of the date of Purchasers' Termination Notice, Seller
shall pay Purchaser liquidated damages [redacted], this Agreement
shall terminate effective as of the date of Purchasers' Termination
Notice, and Seller shall have no further liability to Purchaser other
than the liquidated damages paid under this Section 5.1.2.
5.1.3 In the event that Seller's failure to achieve the
Commencement Date by the Scheduled Commencement Date is attributable
to, in whole or in part, the failure of any Customer to meet any of
their respective obligations under this Agreement or their respective
Power Purchase Agreements or the Collateral Documents, then (a) the
Scheduled Commencement Date shall be extended for such period of
Purchaser's or such other Customer's failure, and (b) Purchaser shall
make Capacity Payments [redacted] beginning as of the initial
Scheduled Commencement Date (without any extension); provided,
however, that Purchaser shall not be required to make any Capacity
Payments under this Section 5.1.3 to the extent the delay in achieving
the Scheduled Commencement Date is attributable to the concurrent
failure of Purchaser or such other Customers and Seller (where such
concurrent failures are not co-extensive, such relief from Capacity
Payments shall apply only during the period of time that Seller's
failure to meet its obligations contributed to the delay); provided,
further, that in the event Purchaser's failure to meet its obligation
was the result solely of a Force Majeure event that prevented
Purchaser's timely completion of such obligation, then Purchaser will
be excused from having to make Capacity Payments as contemplated in
Section 5.1.3(b) for the first forty-five (45) days after the
Scheduled Commencement Date (without benefit of any extension thereof
allowed under this Agreement), but if the Commencement Date does not
occur within such forty-five (45) day period, then Purchaser shall
recommence making Capacity Payments starting at the beginning of the
forty-sixth (46th) day after the Scheduled Commencement Date and
thereafter continue making Capacity Payments as contemplated in
Section 5.1.3(b).
5.2 Conditions to Commencement. Seller will notify Purchaser of the
date when the Facility has achieved the following criteria (the "Commencement
Date"), which notice will be accompanied by reasonable documentation evidencing
satisfaction or occurrence of each of the following; provided, however, that
Seller shall not be precluded from making third-party sales, in accordance with
Section 4.5, of its percentage ownership share of Capacity and Energy from the
Facility notwithstanding whether any or all of the following criteria have been
met in whole or in part:
5.2.1 successful completion of required testing of the
Facility has occurred for purposes of financing,
project operation, air permitting, Purchaser's
planning and reporting, and manufacturers'
warranties, including establishment of the initial
Demonstrated Capability of the Facility as
contemplated in Section 4.1.2;
5.2.2 the Facility has completed four (4) successful
start-ups without experiencing any abnormal operating
conditions and has generated continuously for a
period of not less than sixteen (16) hours while
synchronized to the Grid at a net Capacity output of
at least ninety percent (90%) of the Demonstrated
Capability (adjusted for ambient conditions) without
experiencing any abnormal operating conditions;
5.2.3 the Facility is in compliance with the
Interconnection Agreement, either is capable of
operation in the AGC mode or is capable of responding
to manual load change instructions, has achieved
initial synchronization with the Grid, and has
demonstrated the reliability of its communications
systems and communications with the Florida Municipal
Power Pool Energy Control Center located in the OUC
Pershing Operations Building (or the replacement for
such control center if the Customers decide to have
their generation control performed at a different
location); and
5.2.4 certificates of insurance coverages and/or insurance
policies required of Seller have been obtained and
submitted to Purchaser as required by Section 28.
5.3 Test Energy. Seller shall coordinate the production and delivery of
Test Energy with Purchaser. Purchaser shall cooperate with Seller to facilitate
Seller's testing of the Facility, provide the fuel necessary to conduct testing,
and shall accept Test Energy delivered to Purchaser in accordance with the
provisions of Section 4.2.
SECTION 6
REQUESTS FOR ENERGY; OPERATION AND MAINTENANCE
6.1 Communicating Requests for Energy. Purchaser shall have the right
to request deliveries of Energy by providing a Request for Energy to Seller in
accordance with this Section 6 and Appendix B; provided, however, that Purchaser
and the other Customers shall coordinate their Scheduling requirements by
jointly submitting a single Request for Energy that covers all of their
respective requirements on any given day.
6.1.1 The Customer's joint Requests for Energy may request the
full output of the Facility, reduced by those amounts, if any, that
Customers jointly elect to subtract from the Capacity available to
Customers pursuant to the process provided in Section 4.1.4 of this
Agreement and the other Power Purchase Agreements. If the Customer's
joint Request for Energy is for less than the full output of the
facility, then the request shall be deemed to be a Request for Energy
first from Purchaser's Equity Capacity and, if such Equity Capacity is
not sufficient, then from Purchaser's purchased Energy under this
Agreement.
6.1.2 The Parties hereby consent to the recording of all
conversations on the telephone lines used for communicating Requests
for Energy and related notices and instructions in accordance with
customary industry practice. The contents of such recordings shall be
definitive.
6.2 Limitations on Requests for Energy. Notwithstanding anything to the
contrary in this Agreement, any Request for Energy, operation in the AGC mode or
operation in response to a Capacity Emergency that would require the Facility to
operate in a manner inconsistent with the Technical Limits, Prudent Utility
Practice or applicable Law and Permit requirements shall be deemed not to comply
with the requirements and limitations set forth in this Section 6. If and when a
Customers' Request for Energy does not comply with the requirements and
limitations of this Section 6 by reason of the previous sentence, Seller will
notify Customers of such noncompliance promptly after Seller realizes that the
Request for Energy is noncompliant and will modify Customer's Request for Energy
to make it consistent with the Technical Limits, Prudent Utility Practice and
all applicable Laws and Permits to the extent it is reasonably possible to do so
consistent with such standards.
6.3 Operation of the Facility. Seller shall operate and maintain the
Facility in accordance with this Agreement, Prudent Utility Practice, the
Technical Limits and all applicable Laws and Permit requirements. Any emission
allowances required for operation of the Facility as contemplated in this
Agreement shall be provided in accordance with the applicable provisions of the
Operating Agreement.
6.4 Scheduled Maintenance. Seller agrees to schedule Planned Major
Maintenance during the Off-Peak Period, or to obtain Purchaser's consent to
schedule such maintenance during the Peak Period. Seller will submit to
Purchaser an annual maintenance projection and will make reasonable efforts to
coordinate the scheduling of such Planned Major Maintenance with Purchaser,
including estimated start dates and return to service dates. Seller must seek
the consent of OUC, acting for itself and on behalf of the other Customers
(which Purchaser hereby authorizes) in scheduling of any Minor Maintenance;
provided, however, that Purchaser guarantees Seller will be afforded a minimum
of four (4) such Minor Maintenance events distributed approximately evenly over
the Off-Peak Period, with a maximum of six (6) such Minor Maintenance events
during any year; provided, further, that requests for Minor Maintenance events
during the period from May 15 through September 15 may be granted or withheld in
OUC's sole discretion.
6.5 Transmission Operator. Coordination with an RTO regarding security
and reliability of the Grid as it relates to the Facility, or any other entity,
having control over the security and reliability of the Grid shall be the
responsibility of Seller as the operator of the Facility. Coordination with an
RTO, or other entity, having balancing authority or scheduling authority over
the Facility should be handled by Purchaser for any schedules to Purchaser from
the Facility and by Seller for any other schedules from the Facility. Any
orders, directives or operating requirements that Seller is required to follow
by Law imposed on Seller by an RTO, or any other entity, having control over the
security and reliability of the Grid shall take precedence over this Agreement.
To the extent the requirements of such order, directive or operating requirement
necessarily prevent Seller from fulfilling its obligations under this Agreement,
Seller shall be relieved of its obligations hereunder. To the extent the
requirements of such order, directive or operating requirement conflict with
Seller's fulfillment of its obligations hereunder, the rights and obligations of
the Parties hereunder shall be adjusted as necessary to comply with such orders,
directives or operating requirements.
SECTION 7
INTERCONNECTION AND TRANSMISSION
7.1 Interconnection Facilities. The Parties shall execute an
Interconnection Agreement pursuant to applicable interconnection
policies and procedures of OUC. The Interconnection Agreement shall
contain terms and conditions governing the interconnection and
parallel operation of the Facility with the Grid.
7.2 Delay in Interconnection. Purchaser shall cause OUC to complete the
OUC Interconnection Facilities and ensure that the Grid is capable of providing
and receiving Energy by the date that is eight (8) months prior to the
anticipated Commercial Operation Date, but in no event earlier than January 15,
2003. By the date that Seller has completed the collector bus and the 230 kv
line to the OUC Interconnection Facilities, but no earlier than the date that is
eleven (11) months prior to the anticipated Commercial Operation Date, OUC shall
provide service to the Facility for the purposes of engineering and testing the
collector bus and other systems by either providing 230 kv service at the 230 kv
Interconnection Point or by providing service to the 4160 kv SWGR bus. If for
any reason, other than the fault of Seller, OUC fails to complete the OUC
Interconnection Facilities and/or if the Grid is not capable of providing and
receiving Energy (as determined by OUC and as supported by reasonable
documentation) in accordance with the preceding sentence and, as a result, OUC
cannot accommodate Seller's start-up and testing of the Facility (such a delay,
an "IF/Grid Delay"), then the Scheduled Commencement Date shall be extended by
that period of time equal to the IF/Grid Delay; provided, however, that
Purchaser shall make the Capacity Payments as provided in Section 5.1.3(b);
provided, further, that if Seller would not have been capable of delivering
Energy from the Facility to the OUC Interconnection Facilities, even in the
absence of an IF/Grid Delay, on the original anticipated Commercial Operating
Date ("Seller's Delay"), then extension of the Scheduled Commencement Date and
the date on which Purchaser is obligated to make Capacity Payments shall be
adjusted by the period of time of Seller's Delay.
7.3 Transmission.
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7.3.1 Purchaser shall be responsible for all costs
associated with and for making all necessary
transmission arrangements for Delivered Energy,
including tagging and any required Ancillary
Services, with the transmission service provider for
delivery from and beyond the Delivery Point.
7.3.2 Seller shall bear all costs and losses and shall be
responsible for making all arrangements for
transmission service, including tagging and any
required ancillary services, with respect to delivery
of Capacity and Energy from an Alternate Resource to
an unconstrained point on the Grid.
SECTION 8
RISK OF LOSS; METERING
8.1 Risk of Loss. Delivered Energy sold pursuant to this Agreement
shall be made available to Purchaser at the Delivery Point. Risk of loss with
respect to all such Energy shall pass to Purchaser when such Delivered Energy is
made available to Purchaser at the Delivery Point. Risk of loss with respect to
the natural gas supply utilized to deliver Energy pursuant to this Agreement
shall pass to Seller when such natural gas supply is made available to Seller at
the Gas Delivery Point. For purposes of this Agreement, and except to the extent
expressly limited in this Agreement, Purchaser shall bear all risk of all
occurrences of any nature (including Force Majeure or any other event beyond the
reasonable control of either Party) affecting any interconnection facilities,
substations, transmission lines and other facilities on Purchaser's side of the
applicable Delivery Point and the Gas Delivery Point.
8.2 Place of Measurement. All Energy from the Facility shall be
measured by the Facility's meters (such meters collectively, the
"Interconnection Meters"), and the Energy delivered from the Facility shall be
the Interconnection Meters' readings of the quantities of Energy, reduced by an
amount equal to the applicable Energy quantity necessary to compensate for the
loss, if any, between the Interconnection Meters and the Delivery Point.
8.3 Testing and Calibration of Interconnection Meters. Seller shall
inspect and calibrate the Interconnection Meters at least once a year. Seller
shall give Purchaser reasonable advance notice of any inspection, testing or
calibration of the Interconnection Meters. Purchaser shall have the right to
have a representative present at such inspection, testing or calibration of the
Interconnection Meters. Purchaser shall have the right to require, at
Purchaser's expense except as set forth in Section 8.4, a test of any of the
Interconnection Meters not more often than once every twelve (12) months. If any
Interconnection Meter is found to be inaccurate by one half of a percent (0.5%)
or less, then any previous recordings of such Interconnection Meter shall be
deemed accurate, but Seller shall use its reasonable efforts to adjust such
Interconnection Meter immediately and accurately. In the event that any
Interconnection Meter is found to be inaccurate by more than one half of a
percent (0.5%), Energy delivered at the corresponding Delivery Point shall be
measured by reference to Customers' check-meters, if installed and registering
accurately, or the meter readings at the Delivery Point for the period of
inaccuracy shall be adjusted as far as can be reasonably ascertained by Seller
from the best available data from both Parties. If the period of the inaccuracy
cannot be ascertained reasonably, any such adjustment shall be for a period
equal to one half of the time elapsed since the preceding test. Customers' check
meters, if installed, shall be subject to Seller's right to require, at Seller's
expense except as set forth in Section 8.4, a test of any of the check-meters
not more often than once every twelve (12) months. If any of Customers' check
meters is found to be inaccurate by one half of a percent (0.5%) or less, then
any previous recordings of such check meter shall be deemed accurate, but
Customers shall use their reasonable efforts to adjust such check meter
immediately and accurately.
8.4 Delivered Energy Adjustments. In the event that, due to correction
for inaccurate Interconnection Meters with an inaccuracy in excess of one half
of a percent (0.5%) (determined in accordance with Section 8.3), the amount of
Delivered Energy is increased or decreased, the revised quantity of Delivered
Energy shall be used for purposes of calculating the Energy Payment pursuant to
Section 4.2. If any Energy Payment has already been calculated using the
previous quantity of Delivered Energy, the Energy Payment shall be recalculated
using the revised quantity of Delivered Energy. If the recalculation (i)
increases the Energy Payment, Purchaser shall pay to Seller the amount of such
increase, or (ii) decreases the Energy Payment, Seller shall refund to Purchaser
the amount of such decrease. In any such case, the required payment shall be
included on the next invoice to be issued and shall be paid at the time payment
of such invoice is required pursuant to Section 9. Any payment required under
this Section 8.4 shall bear interest in accordance with Section 9.3 from the
original due date (or from the date paid in the case of a refund) until the date
paid (or until the date refunded in the case of a refund). In the case of
inaccurate Meters with an inaccuracy in excess of one half of a percent (0.5%),
the Party which owns such Meters shall promptly cause such Meters to be
corrected and, where such inaccuracy was determined pursuant to a test required
by the other Party, the Party which owns such Meters shall bear the expense of
any such test.
SECTION 9
METHOD OF PAYMENT
9.1 Invoicing and Payment. As soon as reasonably practicable after the
first day of each month commencing with the second month or portion thereof
during which Test Energy is delivered to Purchaser and continuing for each month
until the first month after the end of the Operating Period, Seller shall submit
to Purchaser an invoice as described in Section 9.2. If such invoice indicates a
net amount payable to Seller, Purchaser shall pay such invoice within ten (10)
Business Days of Purchaser's receipt of the invoice. Such payment shall be made
in U.S. dollars by wire transfer of immediately available funds prior to 3:00
p.m. Eastern Prevailing Time, on the date of payment in accordance with the
invoice instructions. Payments made after 3:00 p.m. Eastern Prevailing Time or
on a day that is not a Business Day shall be deemed to be made on the next
subsequent Business Day. If such invoice indicates a net amount payable to
Purchaser, Seller shall pay such amount within ten (10) Business Days of
Purchaser's receipt of the invoice.
9.2 Monthly Invoices. Each monthly invoice shall show the amount and
calculation of the following, as applicable: (i) the Capacity Payment and Energy
Payment payable by Purchaser to Seller for the preceding month net of any
amounts to be credited by Seller to Purchaser for such month; (ii) following
each Contract Year, the net amount payable by Purchaser or Seller pursuant to
Section 4.3 respecting the Availability Incentive Payment and Availability
Damages, as the case may be; and (iii) payments, refunds, credits and
reductions, if any, payable by either Party pursuant to Sections 9.3 or 9.4.
9.3 Late Payments. Any amount due from either Party hereunder not paid
in full on or before the date such payment is due will incur a delayed payment
charge on the unpaid amount from the original due date until the date paid at an
annual rate equal to the then current Prime Rate plus six (6) percentage points
(or such lesser annual rate as is the maximum rate permitted by applicable Law).
9.4 Billing Disputes. In the event of any dispute as to all or any
portion of any monthly invoice, Purchaser shall give notice of the dispute to
Seller but shall pay the full amount of the invoiced charges when due (or if
applicable, Seller shall give notice to Purchaser of Seller's dispute regarding
any information provided by Purchaser that was a factor in any calculation
supporting invoiced amounts). Such notice shall state the amount in dispute and
set forth a full statement of the grounds on which such dispute is based.
Purchaser and Seller shall give all due and prompt consideration to any such
dispute. Upon final determination (whether by agreement, dispute resolution
pursuant to Section 18 hereof, or otherwise) of the dispute, any amounts due to
Purchaser or Seller, together with interest from the date due until the date
paid at the rate specified in Section 9.3, shall be paid no later than thirty
(30) days following such final determination. Purchaser and Seller shall have
until the end of one hundred eighty (180) days after its receipt of any invoice,
statement or information supporting invoice calculations to question or contest
the correctness of any charge or credit on such invoice or statement.
9.5 Audit Rights. Until the end of one hundred eighty (180) days after
Purchaser's receipt of any invoice, Seller and Purchaser will make available to
the other upon written request, and the Purchaser or Seller may audit, such
books and records of the other (or other information to which Purchaser or
Seller has access) as are reasonably necessary for Purchaser or Seller to
calculate and determine the amounts shown on such invoice and thereby to verify
the accuracy and appropriateness of the amounts billed or credited to Purchaser
or Seller hereunder; provided, however, that Purchaser shall coordinate its
rights under this section with the other Customers in order to conduct joint,
rather than individual, audits pursuant to this provision. The Parties shall
maintain their respective books and records in accordance with generally
accepted accounting principles applicable from time to time.
ARTICLE 10
CHANGE IN LAW; MODIFICATION OF AGREEMENT
10.1 Change in Law.
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10.1.1 The Parties acknowledge that a Change in Law may increase
or decrease Seller's costs in providing service under this Agreement.
In the event of such a Change in Law, Seller may give notice to
Purchaser that Seller's costs of providing service under this
Agreement have changed (which notice will include reasonably detailed
information about such cost changes) and, in the event such notice is
given, this Agreement shall be modified to reflect such changes in
costs, subject to Section 18, provided, however, that in the event
Seller provides notice of such an increase, then Purchaser may provide
documentation to Seller of other Changes in Law that have decreased
the cost of providing service under this Agreement and Seller shall
set-off any such decrease in cost against the increase in cost
identified in the Seller's notice.
10.1.2 Purchaser shall pay the adjusted amount calculated
pursuant to Section 10.1.1 for the period commencing with the notice
of changed cost through the date of termination of this Agreement. The
Parties shall make such payments as are appropriate to adjust all
prior ▇▇▇▇▇▇▇▇ or payments to reflect the adjustments described
herein.
10.1.3 A "Change in Law" shall mean a change in Law which
constitutes a new environmental or tax Law or a new interpretation of
such Law (not including a change in tax Laws that assess taxes only on
Seller's net income) or a change in the provisions contained in the
Site Certification permits and which generally affects the cost of, or
restricts, operation of the Facility.
10.2 Modification of Agreement. In the event the FERC modifies this
Agreement, the Parties agree to make all changes necessary to preserve as nearly
as possible the bargain contained in this Agreement, including but not limited
to, the total amounts of Capacity and Energy delivered to Purchaser and the
total amount of revenues to be received by Seller hereunder; provided, however,
that Seller shall have the right to terminate this Agreement without further
obligation to Purchaser in the event that modifications to this Agreement by
FERC cause a material adverse effect on the economic value of this Agreement to
Seller; provided, further, that Purchaser shall have the right to terminate this
Agreement without further obligation to Seller in the event that modifications
to this Agreement by FERC cause a material adverse effect on the economic value
of this Agreement to Purchaser; and provided, further, that in the event Seller
elects to terminate this Agreement pursuant to this Section 10.2, then Purchaser
and Seller agree to expeditiously proceed with a sale at net book value of
Seller's entire ownership interest in the Facility to Purchaser and the other
Customers in accordance with the provisions of the Ownership Agreement. Seller
agrees to use good faith efforts, consistent with Prudent Utility Practice, to
resist any changes to this Agreement proposed by the FERC or any other
Governmental Body or their respective staffs, and Purchaser agrees not to seek,
request, promote or support any changes to this Agreement before the FERC or any
other Governmental Body.
SECTION 11
FORCE MAJEURE
11.1 Force Majeure Notice and Obligations. With respect to those
obligations of the Parties set forth in this Agreement that expressly excuse
performance in the event of a Force Majeure, the existence of Force Majeure that
causes a Party (the "Non-Performing Party") to delay performance or fail to
perform such obligations shall excuse the Non-Performing Party's delay in
performing, or failure to perform, such obligations, subject to any express
limitations on such excuse provided or referenced in the Section invoking the
excuse. In the event of Force Majeure that causes the Non-Performing Party to
delay performance or fail to perform its obligations under this Agreement and
that excuses such delay or failure:
11.1.1 the Non-Performing Party shall give the other Party
written notice and full details as soon as
practicable after learning of the Force Majeure;
11.1.2 the Non-Performing Party shall use reasonable
dispatch to remedy its inability to perform (except
that this provision shall not impose a requirement on
either Party to deliver or receive Energy at a
delivery point other than a Delivery Point), and, if
Seller is the Non-Performing Party, Seller shall use
reasonable efforts to provide Energy from the
Facility at a Delivery Point; and
11.1.3 when the Non-Performing Party is able to resume
performance of its obligations under this Agreement,
that Party shall give the other Party written notice
to that effect.
SECTION 12
EVENTS OF DEFAULT; TERMINATION
12.1 Events of Default of Seller. Except when excused due to a Force
Majeure event pursuant to the provisions of Section 11 hereof, an Event of
Default shall be deemed to have occurred with respect to Seller upon the
occurrence and during the continuance of any of the following events:
12.1.1 The Bankruptcy of Seller;
12.1.2 Seller fails to pay any invoiced amount or undisputed
non-invoiced amount when due under this Agreement within five (5)
Business Days after receiving notice of such failure;
12.1.3 Seller fails to perform or observe any of its material
obligations or covenants hereunder or otherwise is in material breach
of this Agreement (other than obligations addressed in Section 12.1.2)
and such failure or breach continues unremedied for a period of thirty
(30) days following notice from Purchaser demanding cure of such
failure or breach (or within such longer period of time as is
reasonably necessary to accomplish such cure, if it cannot be
reasonably accomplished within such 30-day period and Seller
diligently commences such cure in such period and continues such cure
to completion); or
12.1.4 Any representation or warranty made by Seller herein, in
the Ownership Agreement or in any document or certificate furnished by
Seller hereunder shall have been false when made and such false
representation or warranty has a material and adverse effect on
Purchaser and, if capable of being cured, such false representation or
warranty is not cured within thirty (30) days after notice thereof
from Purchaser.
12.2 Events of Default of Purchaser. An Event of Default shall be
deemed to have occurred with respect to Purchaser upon the occurrence and during
the continuance of any of the following events:
12.2.1 The Bankruptcy of Purchaser;
12.2.2 Purchaser fails: (i) to pay any invoiced amount or any
undisputed non-invoiced amount when due under this Agreement within
ten (10) Business Days after receiving notice of such failure; or (ii)
to make any payment of principal or interest under the Bond
Legislation or any other bond resolution, indenture or similar secured
instrument of the Purchaser when due (at maturity, upon redemption or
otherwise), which failure is not cured within ten (10) Business Days;
12.2.3 Purchaser fails to perform or observe any of its material
obligations or covenants hereunder or otherwise is in material breach
of this Agreement (other than payment obligations, which are addressed
in Section 12.2.2) and such failure or breach continues unremedied for
a period of thirty (30) days following notice from Seller demanding
cure of such failure or breach (or within such longer period of time
as is reasonably necessary to accomplish such cure, if it cannot
reasonably be accomplished within such 30-day period and Purchaser
diligently commences such cure in such period and continues such cure
to completion);
12.2.4 Any representation or warranty made by Purchaser herein,
in the Ownership Agreement or in any document or certificate furnished
by Purchaser shall have been false when made and such false
representation or warranty has a material and adverse effect on Seller
and, if capable of being cured, such false representation or warranty
is not cured within thirty (30) days after notice thereof from Seller;
or
12.2.5 Purchaser fails to comply with any of the requirements of
Section 15 within thirty (30) days of receipt of Seller's written
notice of such failure.
12.3 Remedies; Notice of Intent to Terminate. Subject to the provisions
of this Agreement providing for limitations on damages and for exclusive
remedies under certain circumstances, upon the occurrence and during the
continuation of any Event of Default, the Party not in default (the
"Non-Defaulting Party") shall have the right to pursue all remedies available at
law or in equity, suspend its performance under this Agreement to the extent of
the Event of Default and/or to deliver a notice of intent to terminate ("Notice
of Intent to Terminate") this Agreement to the Party in default ("Defaulting
Party"). Any Notice of Intent to Terminate shall specify the Event of Default
giving rise to such Notice of Intent to Terminate. Following the giving of a
Notice of Intent to Terminate, the Parties shall negotiate pursuant to the
provisions of Section 18 hereof, following which, unless the Parties shall have
otherwise mutually agreed on a remedy or the Defaulting Party or any lender or
financing party ("Lender") to the Defaulting Party or its affiliate, or agent on
behalf of a Lender, shall have cured such default or is diligently pursuing a
remedy to cure the Event of Default, the Non-Defaulting Party having given the
Notice of Intent to Terminate may terminate this Agreement by giving written
notice thereof to the Defaulting Party, whereupon this Agreement shall
immediately terminate; provided, however, that upon a default under Section
12.2.2, the Non-Defaulting Party may serve a notice of termination of this
Agreement without having first to deliver a Notice of Intent to Terminate and to
negotiate under Section 18, whereupon this Agreement shall terminate immediately
upon delivery of such notice of termination, unless such default shall have been
cured prior to the delivery of such notice of termination. Except as provided in
Sections 2.2, 2.3, 5.1.2, 10.2, 12.4, and 12.5 or in this Section 12.3, or in
Section 4.3. of the Ownership Agreement, neither Party shall have any right to
terminate this Agreement.
12.4 Notice to Lenders. Any and all notices given by Purchaser to
Seller under this Section 12 shall also be given at the same time by Purchaser
to any Lender for which Seller provides written notice to Purchaser of the need
to provide such notice and the address to which such notice must be sent. No
termination of this Agreement by Purchaser will be effective until and unless
Purchaser shall have given Seller's Lenders notice of Seller's Event of Default
and an opportunity to cure such Event of Default, which notice and cure period
shall be as set forth in any consent executed by Purchaser with Seller's Lenders
but in any event such notice and cure period shall be at least concurrent with
that provided to Seller under this Agreement.
12.5 Termination Payment.
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12.5.1 Except in the case of an Event of Default under Section
12.2.2 under the circumstances that are described in Section 12.5.2
below or an Event of Default under Section 12.1.3 under the
circumstances that are described in Section 12.5.3 below, in the event
that a Non-Defaulting Party terminates this Agreement pursuant to
Section 12.3 and provided an Event of Default shall not have occurred
and be continuing as to such Non-Defaulting Party, the Defaulting
Party shall pay the Non-Defaulting Party the Termination Payment, as
defined below, within thirty (30) days of the effective date of the
termination. Except as so otherwise provided in Section 12.5.2 or
12.5.3, the Termination Payment (if applicable) shall be the
Defaulting Party's sole liability arising out of a termination of this
Agreement pursuant to Section 12.3, and neither Party shall have any
other liability or obligation to the other Party arising out of a
termination of this Agreement pursuant to Section 12.3. The Defaulting
Party's Termination Payment (if applicable) to the Non-Defaulting
Party resulting from an Event of Default under this Agreement shall be
calculated as follows:
Termination Payment = TPR * APCN
Where:
TPR = a termination payment rate in dollar
per kilowatt, which is equal to: (i)
[redacted] is given between the date of this
Agreement's execution and the end of the
twelfth (12th) month after the date Purchaser
gives notice under Section 2.2 or 2.3 that it
has elected to terminate this Agreement; (ii)
[redacted] if the Notice of Intent to
Terminate is given between the end of such
twelfth (12th) month and the end of the
twenty-fourth (24th) month after the date
Purchaser gives such notice; or (iii)
[redacted] if the Notice of Intent to
Terminate is given between the end of such
twenty-fourth (24th) month and the expected
termination of this Agreement twelve (12)
months later; and
APCN = the Annual Purchaser's Capacity
Nomination, in kilowatts, that is in effect
on the date of the Notice of Intent to
Terminate.
Delivery of a Notice to Terminate or calculation or
payment of the Termination Payment shall not relieve
the Defaulting Party of its obligation to pay all
other amounts that became or have become due and
payable by the Defaulting Party hereunder prior to
the effective date of termination.
12.5.2 In the case of an Event of Default under Section 12.2.2 by
Purchaser at a time when Purchaser is able to pay its debts generally
as they come due, Seller shall be entitled to recover its actual
damages, which the Parties recognize may be greater than, or less
than, the Termination Payment. In determining actual damages, any
amounts actually recovered from Seller's reasonable efforts to
mitigate such damages shall be taken into account.
12.5.3 In the case of an Event of Default by Seller under Section
12.1.3 that results from a failure by Seller to deliver Energy from
the Facility to Purchaser as required by this Agreement at a time when
(i) the Facility was capable of delivering such Energy to Seller as
required by this Agreement consistent with Prudent Utility Practice,
the Technical Limits and applicable Law and Permit requirements, and
(ii) Seller sold such Energy to a third party, then Purchaser shall be
entitled to recover the actual damages of Purchaser, which the Parties
recognize may be greater than, or less than, the Termination Payment.
In determining actual damages, the actual results of Purchaser's
reasonable efforts to mitigate such damages shall be taken into
account.
12.5.4 In receiving a Termination Payment or recovering actual
damages, the Non-Defaulting Party shall also be entitled to recover
its reasonable attorney fees in enforcing this provision.
SECTION 13
WAIVER
Failure by either Party to exercise any of its rights under this
Agreement shall not constitute a waiver of such rights. Neither Party shall be
deemed to have waived any right resulting from any failure to perform by the
other Party unless it has made such waiver specifically in writing, and no such
waiver shall operate as a waiver of any future failure to perform whether of a
like or different character. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
SECTION 14
REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties of Seller. Seller hereby
represents and warrants to Purchaser as follows:
14.1.1 Organization and Existence. Seller is a limited liability
company duly organized, validly existing and in good standing under
the laws of the State of Delaware, is qualified to transact business
in Florida, and has sufficient power and authority to execute and
deliver this Agreement and the Collateral Documents and to perform its
obligations hereunder and thereunder. Seller has full power and
authority to carry on its business as it is now being conducted and as
it is contemplated hereunder and under the Collateral Documents to be
conducted in the future.
14.1.2 Due Authorization. The execution, delivery and performance
of this Agreement and the Collateral Documents by Seller has been duly
and effectively authorized by all requisite action on the part of
Seller. This Agreement and the Collateral Documents constitute the
legal, valid and binding obligations of Seller, enforceable against
Seller in accordance with their terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors generally and by general principles
of equity.
14.1.3 Litigation. There is no action, suit, claim, proceeding or
investigation pending or, to Seller's knowledge, threatened against
Seller or The Southern Company by or before any Governmental Body
having jurisdiction over Seller or The Southern Company which, if
adversely determined, would have a material adverse effect upon
Seller's ability to enter into and perform its obligations and
consummate the transactions contemplated by this Agreement and the
Collateral Documents or the material rights of Purchaser under this
Agreement or the Collateral Documents. Neither Seller nor The Southern
Company is subject to any material outstanding judgment, order, writ,
injunction or decree of any Governmental Body having jurisdiction over
Seller or The Southern Company which would materially and adversely
affect its ability to enter into and perform its obligations under
this Agreement and the Collateral Documents or the material rights of
Purchaser under this Agreement or the Collateral Documents.
14.1.4 No Violation or Conflict. The execution, delivery and
performance by Seller of this Agreement and the Collateral Documents
do not violate or conflict with Seller's operating agreement, any
existing Law applicable to Seller, or any note, bond, indenture,
agreement or instrument to which Seller is a party or by which it is
bound.
14.1.5 Approvals. Other than the approvals by the Governmental
Bodies described in Attachment A of the Ownership Agreement, there are
no approvals or consents, the absence of which would materially impair
Seller's ability to consummate the transactions described in, or to
perform its obligations under, this Agreement and the Collateral
Documents.
14.2 Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as follows:
14.2.1 Organization and Existence. Purchaser is a statutory
utility authority duly organized, validly existing and in good
standing under the laws of the State of Florida and has sufficient
statutory power and authority to execute and deliver this Agreement
and the Collateral Documents and to perform its obligations hereunder
and thereunder. Purchaser has full statutory power and authority to
carry on its business as it is now being conducted and as it is
contemplated hereunder and under the Collateral Documents to be
conducted in the future.
14.2.2 Due Authorization. The execution, delivery and performance
of this Agreement and the Collateral Documents by Purchaser has been
duly and effectively authorized by all requisite action on the part of
Purchaser's governing board. This Agreement and the Collateral
Documents constitute the legal, valid and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights of
creditors generally and by general principles of equity.
14.2.3 Litigation. There is no action, suit, claim, proceeding or
investigation pending or, to Purchaser's knowledge, threatened against
Purchaser by or before any Governmental Body having jurisdiction over
Purchaser which, if adversely determined, would have a material
adverse effect upon Purchaser's ability to enter into and perform its
obligations and consummate the transactions contemplated by this
Agreement and the Collateral Documents or the material rights of
Seller under this Agreement or the Collateral Documents. Purchaser is
not subject to any material outstanding judgment, order, writ,
injunction or decree of any Governmental Body having jurisdiction over
Purchaser which would materially and adversely affect its ability to
enter into and perform its obligations under this Agreement and the
Collateral Documents or the material rights of Seller under this
Agreement or the Collateral Documents.
14.2.4 No Violation or Conflict. The execution, delivery and
performance by Purchaser of this Agreement and the Collateral
Documents do not violate or conflict with Purchaser's charter or
bylaws, any existing Law applicable to Purchaser, or any note, bond,
resolution, indenture, agreement or instrument to which Purchaser is a
party or by which it is bound.
14.2.5 Approvals. Other than the approvals by the Governmental
Bodies described in Attachment A of the Ownership Agreement, there are
no approvals or consents, the absence of which would materially impair
Purchaser's ability to consummate the transactions described in, or to
perform its obligations under, this Agreement and the Collateral
Documents.
14.2.6 No Immunity. With respect to its contractual obligations
hereunder and performance thereof, Purchaser is not entitled to claim
immunity on the grounds of sovereignty or similar grounds with respect
to itself or its revenues or assets from: (a) suit; (b) jurisdiction
of any Florida court; or (c) relief by way of injunction, order for
specific performance or attachment of property that is subject to
execution or levy under Florida Law (including the Eligible
Collateral).
14.3 Warranties Regarding Energy, Capacity and Ancillary Services.
Seller warrants that the Energy, Capacity and Ancillary Services provided under
this Agreement (i) shall have been delivered in accordance with applicable Law,
and (ii) meets the requirements set forth in this Agreement. THE FOREGOING IS IN
LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, IN FACT OR
BY LAW WITH RESPECT TO THE ENERGY, CAPACITY AND ANCILLARY SERVICES PROVIDED
HEREUNDER. SELLER HEREBY DISCLAIMS ANY AND ALL OTHER WARRANTIES WHATSOEVER.
SECTION 15
PERFORMANCE ASSURANCE
15.1 In the event that Purchaser experiences a Material Adverse Change,
as defined below, as security for Purchaser's payment obligations under this
Agreement, Purchaser shall deliver to Seller within ten (10) Business Days of
Seller's written request therefor, Eligible Collateral in an amount equal to the
lesser of: (i) [redacted] of Capacity Payments, or (ii) [redacted] of the total
of Capacity Payments for the remainder of the Operating Period.
15.1.1 As used in this Section 15.1: (i) a "Material Adverse
Change" shall occur (A) when Purchaser's credit rating on its senior
securities falls below the lower of (x) BBB- (Standard & Poors) or
Baa3 (Moody's) and (y) the lowest credit rating of Southern
Guarantor's senior securities under either Moody's or Standard &
Poors, (B) upon an Event of Default by Purchaser under Section 12.2.2,
(C) upon a failure by Purchaser to make any required deposit into any
sinking fund under the Bond Legislation or any other bond resolution,
indenture or similar secured instrument entered into in connection
with the issuance of additional debt (each a "Debt Instrument"), or
(D) upon a failure by Purchaser to maintain in any debt service
account under the Bond Legislation or any Debt Instrument at least
fifty percent (50%) of the amount required to be maintained in such
account requirement; and (ii) "Eligible Collateral" means cash
deposited into an operating reserve account from "Revenues", as that
term is defined in the Bond Legislation, or an unconditional letter of
credit from an "A" rated bank, as determined by Standard & Poors or
Moody's, in a form reasonably acceptable to Seller; provided, however,
that for purposes of Sections 15.1.1(i)(C) and 15.1.1(i)(D), Eligible
Collateral shall constitute an unconditional letter of credit from an
"A" rated bank, as determined by Standard & Poors or Moody's, in a
form reasonably acceptable to Seller. Costs of a letter of credit
shall be borne by Purchaser.
15.1.2 If at any time during the term of this Agreement neither
Standard & Poors nor ▇▇▇▇▇'▇ is in the business of providing credit
ratings or willing to rate Purchaser, then Purchaser and Seller will
negotiate in good faith to choose and implement an alternative
mechanism for determining if and when a "Material Adverse Change" has
occurred.
15.2 In the event that legislation is enacted in the State of
Florida which contains provisions that will cause an Event of Default
by Purchaser at any time during the term of this Agreement, Seller
will have the right, from and after the date of enactment of such
legislation, to provide Purchaser with written notice requesting
Eligible Collateral, as defined above, in an amount equal to the
lesser of: (i) [redacted] of Capacity Payments, or (ii) [redacted] of
the total of Capacity Payments for the remainder of the Operating
Period. Upon receipt of such notice, in addition to Purchaser's other
payment obligations under this Agreement, Purchaser shall within
thirty (30) days provide such Eligible Collateral.
15.3. To the extent Purchaser delivers Eligible Collateral in the
form of cash to be held in an operating reserve account pursuant to
Sections 15.5 or 15.6, Purchaser hereby grants to Seller a present and
continuing security interest in, and lien on (and right of setoff
against), and assignment of, such Eligible Collateral, and any and all
proceeds resulting therefrom or from the liquidation thereof, and
Purchaser agrees to take such action as Seller reasonably requires in
order to perfect Seller's first-priority security interest in, and
lien on (and right of setoff against), such Eligible Collateral and
any and all proceeds resulting therefrom or from the liquidation
thereof. This Agreement is intended to, and does, constitute a
security agreement between Seller and Purchaser with regard to any
cash which may constitute Eligible Collateral.
15.4. Upon or any time after the occurrence and during the continuation
of an Event of Default of Purchaser, Seller may (i) exercise any of the rights
and remedies of a secured party with respect to the Eligible Collateral,
including any such rights and remedies under Law then in effect, such as but not
limited to the Uniform Commercial Code, and (ii) liquidate and/or draw on any
outstanding Eligible Collateral issued for its benefit (free from any claim or
right of any nature whatsoever of Purchaser including any equity or right of
purchase or redemption by Purchaser) with respect to Purchaser's obligations
under this Agreement. In the event that Seller liquidates or draws on any of the
Eligible Collateral, Purchaser shall within ten (10) Business Days of notice
from Seller of such liquidation or draw, deliver additional cash or increase the
amount of the letter of credit, as the case may be, in order to replenish the
amount of the Eligible Collateral to the extent of the liquidation or draw.
15.5. If the trigger of a Material Adverse Change was occurrence of the
circumstances in Sections 15.1.1(i)(A) or the circumstances described in Section
15.2 occur, then: (i) if the Eligible Collateral is in the form of cash, Seller
will hold the Eligible Collateral in an interest-bearing operating reserve
account, established by Seller, and the agent for which shall act pursuant to
Seller's instructions and will return the balance of such account, including
interest, at such time as the circumstances described in Sections 15.1.1(i)(A)
and 15.2 no longer apply (provided that Purchaser shall be entitled to receive
any funds in such operating reserve account at any time and to the extent that
such funds exceed [redacted] of the total of Capacity Payments for the remainder
of the Operating Period); or (ii) if the Eligible Collateral is in the form of a
letter of credit, such letter of credit shall expire at such time as the
circumstances described in Sections 15.1.1 and 15.2 no longer apply and Seller
shall return such letter of credit to Purchaser (provided that Purchaser shall
be entitled to reduce the amount available under the letter of credit at any
time and to the extent that such amount exceeds [redacted] of the total of
Capacity Payments for the remainder of the Operating Period).
15.6 If the trigger of a Material Adverse Change was occurrence of the
circumstances described in Section 15.1.1(i)(B), then (i) if the Eligible
Collateral is in the form of cash, Seller will hold the Eligible Collateral in
an interest-bearing operating reserve account, established by Seller, and the
agent for which shall act pursuant to Seller's instructions and will return the
balance of such account, including interest, at such time as Purchaser shall
have (A) cured the Event of Default under Section 12.2.2 that triggered the
Material Adverse Change and (B) thereafter avoided both any further Events of
Default under Section 12.2.2 and a Material Adverse Change as described in
Section 15.1.1(i)(A) or 15.2 for a period of sixty (60) continuous days
(provided that Purchaser shall be entitled to receive any funds in such
operating reserve account at any time and to the extent that such funds exceed
[redacted] of the total of Capacity Payments for the remainder of the Operating
Period); or (ii) if the Eligible Collateral is in the form of a letter of
credit, such letter of credit shall expire (and Seller shall return such letter
of credit) at such time as Purchaser shall have (C) cured the Events of Default
under Section 12.2.2 that triggered the Material Adverse Change and (D)
thereafter avoided both any further Events of Default under Section 12.2.2 and a
Material Adverse Change as described in Section 15.1.1(i)(A) or 15.2 for a
period of sixty (60) continuous days (provided that Purchaser shall be entitled
to reduce the amount available under the letter of credit at any time and to the
extent that such amount exceeds [redacted] of the total of Capacity Payments for
the remainder of the Operating Period).
15.7 In the event that the Purchaser exercises its right to elect an
Extended Term or any Further Extension of this Agreement pursuant to Sections
2.2 and 2.3, and on any day of such Extended Term or Further Extensions the
circumstances of either Sections 15.1.1 or 15.2 apply, then, Purchaser shall
deliver to Seller within ten (10) Business Days of the date of such occurrence,
Eligible Collateral, as defined above, in an amount equal to [redacted] of
Capacity Payments, and the provisions of Sections 15.3, 15.4, 15.5 and 15.6
shall apply to such Eligible Collateral.
SECTION 16
LIABILITY OF PARTIES
16.1 INDEMNITIES.
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16.1.1 TO THE EXTENT PERMITTED BY LAW, EACH PARTY (THE
"INDEMNIFYING PARTY") SHALL FULLY INDEMNIFY AND DEFEND THE OTHER PARTY
AND EACH OF THE OTHER PARTY'S SUBSIDIARIES AND AFFILIATES, AND THE
PARTNERS, MEMBERS, PARTICIPANTS, PRINCIPALS, REPRESENTATIVES,
SHAREHOLDERS, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES, SUCCESSORS AND
ASSIGNS OF EACH OF THEM (THE "INDEMNIFIED PARTIES") FROM AND AGAINST
ANY AND ALL LOSSES, COSTS, DAMAGES, INJURIES, LIABILITIES, CLAIMS,
DEMANDS, PENALTIES AND INTEREST, INCLUDING REASONABLE ATTORNEYS' FEES,
RESULTING FROM THIRD PARTY CLAIMS DIRECTLY OR INDIRECTLY RELATED TO
THIS AGREEMENT, TO THE EXTENT CAUSED OR CONTRIBUTED TO BY THE FAULT,
INTENTIONAL ACT, NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNIFYING
PARTY OR ITS SUBSIDIARIES, AFFILIATES, CONTRACTORS OR SUBCONTRACTORS
OR ANY OF THE OFFICERS, PARTNERS, MEMBERS, PARTICIPANTS, SHAREHOLDERS,
PRINCIPALS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, SUCCESSORS
OR ASSIGNS OF ANY OF THEM OR BY BREACH BY THE INDEMNIFYING PARTY OF
THIS AGREEMENT; PROVIDED, HOWEVER, THAT ANY LIABILITY TO THIRD PARTIES
INCURRED BY SELLER IN PERFORMANCE OF ITS AGENCY FUNCTIONS PURSUANT TO
THE OWNERSHIP AGREEMENT OR THE OPERATING AGREEMENT SHALL BE
APPORTIONED IN ACCORDANCE WITH ARTICLE 9 OF THE OWNERSHIP AGREEMENT OR
ARTICLE 7 OF THE OPERATING AGREEMENT.
16.1.2 IF ANY INDEMNIFIED PARTY INTENDS TO SEEK INDEMNIFICATION
UNDER THIS SECTION 16.1 FROM AN INDEMNIFYING PARTY WITH RESPECT TO ANY
ACTION OR CLAIM, THE INDEMNIFIED PARTY SHALL GIVE THE INDEMNIFYING
PARTY WRITTEN NOTICE OF SUCH CLAIM OR ACTION PROMPTLY FOLLOWING THE
RECEIPT OF ACTUAL KNOWLEDGE OR INFORMATION BY THE INDEMNIFIED PARTY OF
A POSSIBLE CLAIM OR OF THE COMMENCEMENT OF A CLAIM OR ACTION, WHICH
WRITTEN NOTICE SHALL IN NO EVENT BE DELIVERED LATER THAN THE FIRST TO
OCCUR OF (A) FIFTEEN (15) DAYS PRIOR TO THE LAST DAY FOR RESPONDING TO
SUCH CLAIM OR ACTION OR (B) THE EXPIRATION OF THE FIRST HALF OF THE
PERIOD ALLOWED FOR RESPONDING TO SUCH CLAIM OR ACTION. THE
INDEMNIFYING PARTY SHALL HAVE NO LIABILITY UNDER THIS SECTION FOR ANY
CLAIM OR ACTION FOR WHICH SUCH NOTICE IS NOT PROVIDED TO THE EXTENT
THAT THE FAILURE TO GIVE SUCH WRITTEN NOTICE MATERIALLY PREJUDICES THE
INDEMNIFYING PARTY. UPON ACKNOWLEDGMENT OF ITS OBLIGATIONS UNDER THIS
SECTION 16.1, THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO ASSUME
THE DEFENSE OF ANY CLAIM OR ACTION, AT ITS SOLE COST AND EXPENSE, WITH
COUNSEL DESIGNATED BY THE INDEMNIFYING PARTY AND REASONABLY
SATISFACTORY TO THE INDEMNIFIED PARTY; PROVIDED, HOWEVER, THAT IF THE
DEFENDANTS IN ANY SUCH ACTION INCLUDE BOTH THE INDEMNIFIED PARTY AND
THE INDEMNIFYING PARTY, AND THE INDEMNIFIED PARTY SHALL HAVE
REASONABLY CONCLUDED THAT THERE MAY BE LEGAL DEFENSES AVAILABLE TO IT
WHICH ARE DIFFERENT FROM OR ADDITIONAL TO THOSE AVAILABLE TO THE
INDEMNIFYING PARTY, THE INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO
SELECT SEPARATE COUNSEL, AT THE INDEMNIFYING PARTY'S EXPENSE, TO
ASSERT SUCH LEGAL DEFENSES AND TO OTHERWISE PARTICIPATE IN THE DEFENSE
OF SUCH ACTION ON BEHALF OF SUCH INDEMNIFIED PARTY.
16.1.3 EXCEPT TO THE EXTENT EXPRESSLY PROVIDED HEREIN, NO
INDEMNIFIED PARTY SHALL SETTLE ANY CLAIM OR ACTION WITH RESPECT TO
WHICH IT HAS SOUGHT OR INTENDS TO SEEK INDEMNIFICATION PURSUANT TO
THIS AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFYING
PARTY. SHOULD ANY INDEMNIFIED PARTY BE ENTITLED TO INDEMNIFICATION
UNDER THIS SECTION 16.1 AS A RESULT OF A CLAIM OR ACTION BY A THIRD
PARTY, AND SHOULD THE INDEMNIFYING PARTY FAIL TO ASSUME THE DEFENSE OF
SUCH CLAIM OR ACTION, THE INDEMNIFIED PARTY MAY, AT THE EXPENSE OF THE
INDEMNIFYING PARTY, CONTEST (OR, WITH OR WITHOUT THE PRIOR CONSENT OF
THE INDEMNIFYING PARTY, SETTLE) SUCH CLAIM OR ACTION. EXCEPT TO THE
EXTENT EXPRESSLY PROVIDED HEREIN, NO INDEMNIFYING PARTY SHALL SETTLE
ANY CLAIM OR ACTION WITH RESPECT TO WHICH IT MAY BE LIABLE TO PROVIDE
INDEMNIFICATION PURSUANT TO THIS AGREEMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF THE INDEMNIFIED PARTY; PROVIDED, HOWEVER, THAT IF THE
INDEMNIFYING PARTY HAS REACHED A BONA FIDE SETTLEMENT AGREEMENT WITH
THE PLAINTIFF(S) IN ANY SUCH ACTION AND THE INDEMNIFIED PARTY DOES NOT
CONSENT TO SUCH SETTLEMENT AGREEMENT, THEN THE AMOUNT SPECIFIED IN THE
SETTLEMENT AGREEMENT, PLUS THE INDEMNIFIED PARTY'S REASONABLE ATTORNEY
FEES INCURRED PRIOR TO THE DATE OF SUCH SETTLEMENT AGREEMENT, SHALL
ACT AS AN ABSOLUTE MAXIMUM LIMIT ON THE INDEMNIFICATION OBLIGATION OF
THE INDEMNIFYING PARTY WITH RESPECT TO THE CLAIM, OR PORTION THEREOF,
THAT IS THE SUBJECT OF SUCH SETTLEMENT AGREEMENT TO THE EXTENT SUCH
SETTLEMENT AGREEMENT FULLY RELEASES THE INDEMNIFIED PARTY AND DOES NOT
REQUIRE ANY PAYMENT FROM, OR IMPOSE ANY RESTRICTION ON, THE
INDEMNIFIED PARTY.
16.2 LIMITATION ON DAMAGES. NEITHER PARTY NOR ITS SUBSIDIARIES OR
AFFILIATES NOR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, PARTICIPANTS,
PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS, DIRECTORS, SUCCESSORS OR ASSIGNS OF
ANY OF THEM SHALL IN ANY EVENT BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES
OR AFFILIATES OR THE OFFICERS, AGENTS, EMPLOYEES, REPRESENTATIVES, PARTICIPANTS,
PARTNERS, MEMBERS, SHAREHOLDERS, PRINCIPALS OR DIRECTORS OF ANY OF THEM FOR
CLAIMS FOR INCIDENTAL, PUNITIVE, CONSEQUENTIAL, EXEMPLARY OR INDIRECT DAMAGES OF
ANY NATURE, ARISING AT ANY TIME, FROM ANY CAUSE WHATSOEVER, WHETHER ARISING IN
TORT, CONTRACT, WARRANTY, STRICT LIABILITY, BY OPERATION OF LAW OR OTHERWISE,
CONNECTED WITH OR RESULTING FROM PERFORMANCE OR NON-PERFORMANCE UNDER THIS
AGREEMENT; PROVIDED, HOWEVER, THAT THIS SECTION 16.2 IS NOT INTENDED, NOR SHALL
IT BE CONSTRUED, TO LIMIT OR ELIMINATE A PARTY'S OBLIGATION TO PAY LIQUIDATED
DAMAGES OR TERMINATION PAYMENTS OR MAKE ANY OTHER PAYMENTS EXPRESSLY
CONTEMPLATED HEREIN, OR IN ANY COLLATERAL DOCUMENT, EVEN IF IT MAY BE POSSIBLE
TO CHARACTERIZE SUCH LIQUIDATED DAMAGES OR TERMINATION PAYMENTS OR OTHER
PAYMENTS AS INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR INDIRECT DAMAGES.
16.3 Seller Affiliate Guarantee. Seller shall at all times following
the Effective Date of this Agreement cause an Affiliate of Seller to maintain in
place a payment guarantee in the form attached to this Agreement as Appendix E.
For purposes of the previous sentence, an "Affiliate" of Seller shall be any
entity controlling, under common control with or controlled by Seller, which has
a credit rating on its senior securities at or above BBB- (Standard & Poors) and
Baa3 (Moody's). If at any time during the term of this Agreement neither
Standard & Poors nor ▇▇▇▇▇'▇ is in the business of providing credit ratings or
willing to rate Seller's affiliates, then Purchaser and Seller will negotiate in
good faith to choose and implement an alternative mechanism for determining if
and when an entity controlling, under common control with or controlled by
Seller has sufficient credit-worthiness to qualify as an "Affiliate."
16.4 No Penalty. The Parties agree that it would be extremely difficult
to precisely determine the amount of actual damages that would be suffered by
Purchaser due to Seller's failure to meet the Availability Guarantee or achieve
the schedule provided under Section 5.1.1, that the Availability Damages set
forth in Section 4.3 and the liquidated damages set forth in Section 5.1.2 are
fair and reasonable determinations of the amount of actual damages which would
be suffered by Purchaser or Seller, as the case may be, by reason of such
failure, and that the Availability Damages and other liquidated damages do not
constitute a penalty. Similarly, the Parties agree that it would be extremely
difficult to precisely determine the amount of actual damages that would be
suffered by either Party in case of an Event of Default and a termination of
this Agreement by the Non-defaulting Party, that the Termination Payment set
forth in Section 12.5.1 is a fair and reasonable determination of the amount of
actual damages which would be suffered by the Non-defaulting Party in such
event, and that the Termination Payment does not constitute a penalty.
SECTION 17
ASSIGNMENT
17.1 Agreement Binding. This Agreement shall be binding upon,
and shall inure to the benefit of, the Parties and their successors and
permitted assigns.
17.2 Permitted Assignment. This Agreement shall not be assignable by
Seller without the prior written consent of Purchaser, except that this
Agreement (a) may be assigned by Seller without the requirement for such consent
(but with notice to Purchaser) (i) to any Lender from time to time providing
financing to Seller or its affiliate with respect to all or any portion of the
Project or (iii) to any Lender or its designee in connection with a foreclosure
or other exercise of remedies, and (b) unless otherwise waived by Purchaser,
shall be assigned in whole or in part by Seller without the requirement for such
consent (but with notice to Purchaser) in the event of a sale by Seller of all
or a portion of Seller's interest in the Facility, with the purchaser of
Seller's interest in the Facility assuming Seller's obligations under this
Agreement in the same percentage as the portion of Seller's interest being
transferred bears to Seller's entire interest in the Facility. This Agreement
shall not be assignable by Purchaser without the prior written consent of
Seller, provided, however, that Purchaser may assign this Agreement to another
Customer without the requirement for such consent (but with notice to Seller) so
long as such Customer has not experienced a Material Adverse Change under its
PPA. Any such transferee, assignee or purchaser (other than a Lender through
collateral assignment in connection with a lease or other financing transaction
permitted under Section 6.2.8 of the Ownership Agreement) shall confirm its
willingness to accept all of the assigning Party's obligations under this
Agreement by writing reasonably acceptable to the non-assigning Party. Any such
assignee, transferee or purchaser (other than a Lender through collateral
assignment in connection with a lease or other financing transaction permitted
under Section 6.2.8 of the Ownership Agreement) must be sufficiently
creditworthy and otherwise capable of performing all of the assigning Party's
obligations under this Agreement. No assignment or transfer of this Agreement by
a Party shall be permitted during any period in which an Event of Default of
such Party shall have occurred and be continuing and not cured, unless the other
Party shall agree. No assignment of this Agreement shall relieve the assigning
Party of any of its obligations under this Agreement, except that the assignor
shall be released from its obligations under this Agreement at such time as all
future obligations of the assignor hereunder shall have been assumed by the
assignee in a written agreement delivered to the other Party. Any assignment
that does not comply with the provisions of this Section 17 shall be null and
void.
SECTION 18
DISPUTE RESOLUTION
18.1 Good-Faith Negotiations. The Parties shall first negotiate in good
faith to attempt to resolve any dispute, controversy or claim arising out of,
under, or relating to this Agreement (a "Dispute"), unless otherwise mutually
agreed to by the Parties. In the event that the Parties are unsuccessful in
resolving a Dispute through such negotiations, either Party may proceed
immediately to litigation concerning the Dispute.
18.1.1 The process of "good-faith negotiations" requires that
each Party set out in writing to the other its reason(s) for adopting
a specific conclusion or for selecting a particular course of action,
together with the sequence of subordinate facts leading to the
conclusion or course of action. The Parties shall attempt to agree on
a mutually agreeable resolution of the Dispute. A Party shall not be
required as part of these negotiations to provide any information
which is confidential or proprietary in nature unless it is satisfied
in its discretion that the other Party will maintain the
confidentiality of and will not misuse such information or any
information subject to attorney-client or other privilege under
applicable Law regarding discovery and production of documents.
18.1.2 The negotiation process shall include at least two (2)
meetings to discuss any Dispute. Unless otherwise mutually agreed, the
first meeting shall take place within ten days after either Party has
received notice from the other of the desire to commence formal
negotiations concerning the Dispute. Unless otherwise mutually agreed,
the second meeting shall take place no more than ten days later. In
the event a Party refuses to attend a negotiation meeting, either
Party may proceed immediately to litigation concerning the Dispute.
18.2 Confidentiality and Non-Admissibility of Statements Made in, and
Evidence Specifically Prepared for, Good Faith Negotiations. Each Party hereby
agrees that all statements made in the course of good faith negotiations, as
contemplated in Section 18.1, shall be confidential and shall not be disclosed
to or shared with any third parties (other than any person whose presence is
necessary to facilitate the negotiation process). Each Party agrees and
acknowledges that no statements made in or evidence specifically prepared for
good faith negotiations under Section 18.1 shall be admissible for any purpose
in any subsequent litigation.
SECTION 19
AMENDMENT
This Agreement cannot be amended, modified or supplemented except by
written agreement making specific reference hereto executed by both Parties.
SECTION 20
NOTICES
Other than telephonic notices required or permitted under Section 6.1
or Appendix B, any notice required or permitted to be given hereunder shall be
in writing and shall be: (i) personally delivered; (ii) transmitted by postage
prepaid registered mail; (iii) transmitted by a recognized overnight courier
service; or (iv) transmitted by facsimile to the receiving Party as follows, as
elected by the Party giving such notice:
20.1 In the case of Purchaser:
------------------------
Orlando Utilities Commission
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice-President of Power Resources
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
--------------
Kissimmee Utility Authority
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager Bulk System Planning
Telephone: 407-933-7777 ext. 1235
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
20.2 In the case of Seller:
---------------------
Southern Company Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Director of Contract Administration
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
--------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Bank of America Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
All notices and other communications shall be deemed to have been duly given on
(i) the date of receipt if delivered personally, (ii) five (5) days after the
date of posting if transmitted by mail, (iii) the Business Day following
delivery to the courier if transmitted by overnight delivery service, or (iv)
the date of transmission with confirmation if transmitted by facsimile,
whichever shall first occur. Any Party may change its address for purposes
hereof by notice to the other Party.
SECTION 21
APPLICABLE LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Florida, exclusive of any conflict of laws provisions
thereof that would apply the laws of another jurisdiction. The Parties hereby
submit to the jurisdiction of, and agree that venue for actions hereunder shall
be, the U.S. District Court for the Middle District of Florida, if the U.S.
District Court has jurisdiction, or, if the U.S. District Court does not have
jurisdiction, the Circuit Court of the State of Florida sitting in Orange
County, Florida, and the Parties hereby waive any objection to venue in such
courts and any objection to any action or proceeding on the basis of forum non
conveniens.
SECTION 22
SEVERABILITY
The invalidity or unenforceability of any provision or portion of this
Agreement will not affect the validity of the remainder of this Agreement. If
any provision of this Agreement is determined to be invalid or unenforceable,
the Parties will negotiate in good faith to agree upon substitute provisions to
carry out the purpose and intent of the invalid or unenforceable provision. If
the economic or legal substance of the transactions contemplated hereby is
affected in any manner adverse to any Party as a result thereof, the Parties
shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the Parties.
SECTION 23
ENTIRE AGREEMENT
This Agreement and the Collateral Documents contain the complete
agreement of the Parties hereto with respect to the matters contained herein and
supersede all other agreements, understandings and negotiations, whether written
or oral, with respect to the matters contained herein.
SECTION 24
NO THIRD PARTY BENEFICIARIES
This Agreement is intended to be solely for the benefit of Purchaser
and Seller and their respective successors and permitted assigns and is not
intended to and shall not confer any rights or benefits on any Person not a
signatory hereto.
SECTION 25
COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original but all of which, when taken together, shall
constitute only one legal instrument.
SECTION 26
INFORMATION AND CONFIDENTIALITY
Where a Party makes any calculation of costs or damages under this
Agreement, such Party shall provide, upon the reasonable request of the other
Party, documentation supporting such calculation. Neither Party shall disclose
or otherwise make available to any other party any information of a technical,
commercial or business nature regarding the Project or this Agreement that has
been marked or identified as confidential or proprietary ("Confidential
Information") without the prior written consent of the other Party, except that
(a) Seller or its affiliate may provide Confidential Information to its or any
such affiliate's prospective Lenders, underwriters, investors, affiliates,
advisors, employees, officers and directors to the extent reasonably required in
connection with the administration of this Agreement, the issuance of debt or
equity or other financing activities of Seller or its affiliate, or the
performance of any duties relating to this Agreement; (b) Purchaser may provide
Confidential Information to its advisors, employees, officers, directors and
Lenders to the extent reasonably required in connection with the administration
of this Agreement or the performance of any such Person's duties relating to
this Agreement; (c) any Party may disclose any such Confidential Information in
any litigation or proceeding to enforce or recover damages under this Agreement;
(d) any Party (or its affiliate) may disclose any such Confidential Information
as may be required by any applicable Law, regulation or governmental order; and
(e) any Party (or its affiliate) may disclose such Confidential Information to
any person or entity succeeding to all or substantially all the assets of such
Party (or its affiliate) or all or a substantial portion of its interest in the
Facility; provided, that in the case of (e), any such successor shall agree to
be bound by the provisions of this Section 26. Confidential Information shall
not include information that: (i) the receiving Party can demonstrate was known
to it prior to its disclosure by the other Party; (ii) is, or later becomes,
public knowledge without breach of this Agreement by the receiving Party; (iii)
was received by the receiving Party from a third party without obligation of
confidentiality; or (iv) is developed by the receiving Party independently from
Confidential Information received from the other Party, as evidenced by
appropriate documentation. In the event that disclosure is required by a valid
order of a court or Governmental Body, the Party subject to such requirement may
disclose Confidential Information to the extent so required, but shall promptly
notify the other Party and shall cooperate with the other Party's efforts to
obtain protective orders or similar restraints with respect to such disclosure.
The provisions of this Section 26 shall continue in effect until three years
after the end of the Operating Period.
The Parties understand that under the Florida Public Records Law
(Section 119.10, Florida Statutes), any Party or all of them may be subject to
statutory fines and penalties, including but not limited to a requesting Party's
costs and attorney's fees for failure to make public records available for
public inspection upon request (Chapter 119, Florida Statutes). In addition,
each Party may be subject to its own costs and expenses of litigation. With this
understanding in mind, the Parties agree that in the event Purchaser in an
attempt to comply with this Agreement, refuses to honor a public records request
under Chapter 119, Florida Statutes, for examination or inspection of a
confidential document of Seller or any affiliate of Seller and is forced to
defend its actions in a court of competent jurisdiction, Seller shall indemnify,
defend, and hold Purchaser harmless from and against any fines, penalties,
costs, attorney's fees and expenses, including, but not by way of limitation,
attorney's fees, expert fees, court costs and other costs arising from or
related to defending any lawsuit bought pursuant to Chapter 119, Florida
Statutes; provided, however, Seller's consent with such refusal shall be
obtained before Seller can be liable under this Section 26. In addition, the
Parties shall cooperate to provide witnesses to support the Parties'
declarations and certification that the Confidential Information is a valid
trade secret under the above cited Florida law and meets all definitional
requirements therein or is exempt from disclosure under other applicable Florida
law.
SECTION 27
PUBLIC STATEMENTS
Seller and Purchaser shall consult with each other and neither of them
shall issue a press release or make a statement intended for release to the
general public with respect to the transactions contemplated hereby without the
consent of the other Party, which consent shall not be unreasonably withheld,
unless the Party desiring to make such statement or press release is advised by
legal counsel that a statement or press release is required by applicable Law
(including information provided pursuant to a request for public information
under the Florida Public Records Law, Section 119.10, Florida Statutes);
provided, however, that in this event the Party making the public statement or
press release shall notify the other Party in advance of such statement or press
release and allow the other Party reasonable time to comment on such statement
or press release. Notwithstanding the immediately preceding sentence, the
Parties acknowledge that certain meetings of the Orlando Utilities Commission
and the City of Orlando are open to the public, and nothing in this Agreement
shall be deemed to require that the proceedings of such meetings not be made
public or to restrict the reporting by the media of such proceedings.
SECTION 28
INSURANCE
Seller and Purchaser, and all contractors and subcontractors performing
any services in connection with the operation or maintenance of the Facility,
shall obtain and maintain in force comprehensive general liability insurance,
and property insurance for injury to persons and property, automobile liability
insurance and ▇▇▇▇▇▇▇'▇ compensation insurance, all in amounts and under terms
as required by the Operating Agreement.
SECTION 29
TAXES
Purchaser shall reimburse Seller for, or pay to Seller, all sales, use,
personal property and other taxes of every kind paid or collected by Seller, if
any, that are not currently levied and are hereafter levied on the purchase,
sale or use of fuel consumed by the Facility to provide Energy or Ancillary
Services in accordance with this Agreement or the purchase, sale or use of
Capacity, Energy or Ancillary Services under this Agreement, but excluding any
taxes levied on Seller's net income. Purchaser shall pay directly for all such
sales, use, personal property and other taxes which it is legally obligated and
empowered to pay. In the event Seller, on behalf of Purchaser, pays any taxes
that are the responsibility of Purchaser to reimburse or pay, under the first
two sentences of this Section 29, the amount so paid by Seller shall be added to
a monthly invoice submitted by Seller to Purchaser under Section 9, and
Purchaser shall pay such amount in accordance with Section 9. Upon the
reasonable request of Purchaser, Seller agrees to (i) provide documents related
to taxes or assessments to be reimbursed or paid by Purchaser under this
Agreement and (ii) cooperate with Purchaser at Purchaser's expense should
Purchaser seek to obtain from the entity to which taxes were paid a refund of
any taxes paid by Seller and/or reimbursed or paid by Purchaser.
A-4
APPENDIX A
TECHNICAL LIMITS
Unit Operating Modes
1. Definition of Operating Modes.
-----------------------------
The Facility will have several different operating modes.
o Mode 1: Normal Operation--both gas turbines (CTs) operating with
no supplemental firing of the Heat Recovery Steam Generator (HRSG)
and no gas turbine power augmentation.
o Mode 2: Supplemental Firing Operation--both gas turbines operating
at full load with supplemental firing of the HRSG.
o Mode 3: Power Augmentation Operation--both gas turbines operating
at full load with supplemental firing of the HRSG's (Mode 2
Supplemental Firing Operation) to produce both steam for full
steam turbine-generator output with the maximum allowed continuous
throttle flow at the maximum allowed continuous throttle pressure
and steam for full gas turbine power augmentation (steam
injection.)
o Mode 4: Part-load Operation--one or both gas turbines operating at less than
full load.
2. Natural Gas Requirements.
------------------------
The Facility will require "pipeline quality gas" meeting the
requirements of GE fuel specification "GEI 41040E - Process
Specification Fuel Gases for Combustion in Heavy Duty Gas Turbines".
Natural gas is to be delivered to the Facility by pipeline and the
pipeline and gas must meet the following equipment characteristics and
requirements:
o Nominal Maximum N.G. Flow (HHV) per Block (2x1) [redacted]
o Nominal N.G. Higher Heating Value [redacted]
o Minimum Fuel Supply Temperature (after PRV) [redacted]
o Fuel Pressure at Gas Control Valve** [redacted]
[redacted]
* Based on Winter Peaking (19(degree)F) Power during Full
Pressure Operation.
** Reference GE Pub. GEI 41040E.
3. Fuel Oil Requirements.
---------------------
The Facility will require fuel oil that is in compliance with ASTM
Standard Specification D-2880 (as revised) and "GE Gas Turbine Liquid
Fuel Specifications" (document number GEI 41047H). This No. 2 GT Grade
Gas Turbine Fuel Oil must be in compliance with the specifications and
procedures for No. 2 Fuel Oil as defined in ASTM D396.
Note that environmental permitting may create conditions for sulfur,
fuel bound nitrogen and other specifications which could affect or add
minimum specifications, such as, but not limited to, those identified
in the following table:
ASTM TEST
SPECIFICATIONS METHOD
------
Sulfur, % Wt., Max. 0.05 D - 1266
Fuel Bound Nitrogen 0.050% Max.
4. Dispatch and Operational Requirements.
-------------------------------------
o The Facility will be capable of operating with fuel oil. The Facility may
fire oil in the gas turbines only and not in the HRSG duct burners. During
these periods, the Facility shall operate in Mode 1 (Normal Operation)
only.
o The Facility will require shutdown for a minimum of one hour prior to
switching from natural gas to oil firing. The fuel oil forwarding system
will not be operated during normal gas firing, but operation of the fuel
forwarding system will be initiated upon proper notice of a requirement for
fuel switching. The Facility will be capable of switching from oil to
natural gas without shutdown; however, the Facility may be required to
decrease to a minimum load and stabilize prior to ramping to full load.
o The Facility will be capable of being controlled via Automatic Generation
Control (AGC) in Mode 1 (Normal Operation). The AGC load range and ramp
rate will be set by the Facility's operator based on the actual capability
of the CTs as determined through testing. With the duct burners firing
(Mode 2 - Supplemental Firing Operation), the load range and ramp rate will
be set and manually controlled by the Facility's operator based on the
capabilities of the duct burners. No load following capability is available
in Mode 3 (Power Augmentation Operation).
o The Facility will be allowed to operate in Mode 3 (Power Augmentation
Operation) only at ambient temperatures of [redacted].
o The Facility will require [redacted] of de-mineralized water for Mode 1
(Normal Operation).
o The expected maximum allowable rate of load increase for the Facility will
be [redacted]. Actual maximum load increase rate will be determined by
actual testing and in light of final permit restrictions and emissions
tests.
o The Facility will be expected to be capable of operating minimum load with
one CT [redacted]. Actual minimum load will be determined in light of final
NOx emissions and permit restrictions and testing.
o Required startup times for the Facility shall be as follows:
Mode 1 (Normal Operation): refer to Attachment 1 - Time to
Dispatch Curve. Note: Actual Curve to be
determined by testing.
Mode 2 (Supplemental Firing Operation): [redacted] Mode 1 (Normal
Operation).
Mode 3 (Power Augmentation Operation): [redacted] Mode 1 (Normal
Operation) or [redacted] Mode 2
(Supplemental Firing Operation).
o The Facility will be allowed to operate in Mode 3 (Power Augmentation
Operation) a [redacted] /year based on the LTSA contract with GE.
o The Facility will not be allowed to operate in a traditional CT only mode
(no simple cycle operation, i.e., no bypass stack). However, the CTs will
be capable of operating independently of the steam turbine utilizing the
steam bypass systems for a limited time. Most major plant equipment (such
as HRSG BFP's, condenser, cooling tower and circulating water pumps) will
be required during operation in this mode. The HRSG duct burners will not
be available in this mode. The maximum generation capability of the
Facility operating in this mode will be [redacted].
o The Facility's CT evaporative coolers should not be operated at ambient
temperatures less than [redacted] to prevent freezing at the CT compressor
inlet.
[redacted]
B-5
APPENDIX B
REQUESTS FOR ENERGY
1.1 Schedules for Requested Quantities of Energy. Purchaser and each
other Customer shall provide Seller with a single Request for Energy in order to
schedule requested quantities of each category of unit output as follows:
1.1.1 Day Ahead Daily Schedule. Customers shall communicate
the day ahead Request for Energy for each day to
Seller at or before [redacted] of the immediately
preceding day before delivery is to be made, or such
other earlier time that may be required by an RTO.
1.1.1.1 When AGC mode is available, during each hour
the unit is scheduled to be in AGC mode, the
Request for Energy shall specify the maximum
amount of Energy desired for each of the
twenty-four (24) hours. During each hour the
unit is in AGC mode, the Customers shall not
be permitted to reduce the Request for
Energy to an amount less than [redacted] of
the maximum Energy scheduled during that
hour in the Request for Energy from the
Customers' aggregate Equity Capacity and the
Customers' aggregate capacity available
under the Power Purchase Agreements
(Customers' "PPA Capacity"). If in any hour,
should the Customers reduce the Request for
Energy amount by more than [redacted], the
Customers shall pay Seller [redacted] for
the difference between the amount of the
Delivered Energy and [redacted] below the
Request for Energy amount.
1.1.1.2 During each hour the Facility is not
scheduled to be in AGC mode or the AGC mode
is unavailable, the Request for Energy shall
specify the amount of Energy from the
Customers' aggregate PPA Capacity and
aggregate Equity Capacity for each of the
twenty-four (24) hours. Requests for Energy
shall be submitted in [redacted] increments
in a total amount that falls between the
Facility's minimum capability and its
maximum capability as described in the
Technical Limits.
1.2. Hourly Changes to the Daily Schedule. The Customers
jointly shall be entitled to make changes to a
Request for Energy by communicating such changes to
Seller no later than [redacted] prior to the
beginning of the hour in which such changes are to
become effective. The Customers shall be responsible
for any costs associated with OASIS notifications and
NERC tagging requirements.
1.3. Capacity Emergency. During any periods in which the
Customers experience a Capacity Emergency, the
Customers shall be entitled to increase the Request
for Energy on shorter notice than that provided in
paragraph 1.2 above by an amount not to exceed the
Customers' unavailable resources that were the cause
of the Capacity Emergency and Seller shall endeavor
to comply with the request consistent with the
Technical Limits, Prudent Utility Practice,
applicable Law and Permit requirements.
1.4. Minimum Start-up Time. If the Customers have
scheduled a zero amount of Capacity in
any hour and the Facility is not on-line,
the Customers shall provide notice
consistent with the Technical Limits prior to
scheduling any Request for Energy.
1.5. Load Following Service. The Customers shall have the
ability to control the output of the Facility using
the AGC mode, if available, only to the extent that
the Facility has the ability to operate in the AGC
mode consistent with the Technical Limits, Prudent
Utility Practice, and applicable Law and Permit
requirements.
1.6 Electronic Scheduling. The Customers shall use
electronic scheduling for Requests for Energy under
this Agreement, if and to the extent that Seller's
electronic scheduling capability is operational. To
the extent it is not, the Parties will use other
mutually agreed-upon communication procedures (such
as fax).
2.1 Shortfall Conditions; Oversupply Conditions.
-------------------------------------------
2.1.1 If the Facility is in load following service and OUC,
acting for itself and on behalf of the other Customers, determines
that the actual output of the Facility is not within [redacted] of the
Request for Energy, OUC shall communicate to Seller the amount of
error. Seller shall endeavor to adjust the actual output of the
Facility to be equal to the Request for Energy within [redacted] of
receipt of the notification. If the actual output of the Facility does
not equal the Request for Energy within [redacted] of the
notification, the Customers shall be entitled to reimbursement of
their costs from Seller as follows:
2.1.1.1 If the actual output of the Facility is greater than
the Request for Energy (an "Oversupply Condition"), the
decremental cost associated with over-generation shall be
documented by the Customers until the actual output of the
Facility equals the Request for Energy. OUC, acting for itself
and on behalf of the other Customers, shall coordinate with
Seller during the period that the actual output of the Facility
exceeds the Request for Energy. The Customers shall advise Seller
of the total decremental costs associated with each instance of
an Oversupply Condition. Seller shall compensate OUC, on its own
behalf and as agent for KUA and FMPA, for any such Oversupply
Condition.
2.1.1.2 If the actual output of the unit is less than the
Request for Energy (an "Undersupply Condition"), the provisions
of Section 4.3 will apply if applicable.
2.1.2 If the Facility is not in load following service and
OUC, acting for itself and on behalf of the other Customers,
determines that the actual output of the unit is not within
[redacted] of the schedule included in the Request for Energy
(plus any other scheduled output pursuant to Seller's right to
schedule Energy pursuant to Section 4.5 of this Agreement), then
OUC shall communicate to Seller the amount of the error. Seller
shall endeavor to adjust the actual output of the Facility to be
equal to the Request for Energy (plus any other scheduled output
pursuant to Seller's right to schedule Energy) within [redacted]
of receipt of the notification. If the actual output of the
Facility does not equal the schedule included in the Request for
Energy (plus any other scheduled output pursuant to Seller's
right to schedule Energy) within [redacted] of the notification,
the Customers shall be entitled to reimbursement of their costs
from Seller as follows:
2.1.2.1 If an Oversupply Condition exists, the
decremental cost associated with
over-generation shall be documented by the
Customers until the actual output of the
unit equals the Request for Energy (plus any
other scheduled output pursuant to Seller's
right to schedule Energy). The Customers
shall advise Seller of the total decremental
costs associated with each instance of an
Oversupply Condition.
2.1.2.2 If an Undersupply Condition exists, the
provisions of Section 4.3 will apply if
applicable.
3.1 Notification Requirements for Delivery of Energy from
Alternate Resources.
3.1.1 When the Facility is available and running at minimum
load and spinning reserves are available, Seller will notify OUC
if Seller has scheduled delivery of Energy from Alternate
Resources to meet all or a portion of Customers' Schedule at
least [redacted] (or the amount of time in which an RTO has
determined that the Physical Transmission Rights ("PTRs") may be
recalled) prior to the scheduled commencement of delivery of such
Energy. For purposes of paragraph 3.1, the phrase "has scheduled
delivery" means that Seller has scheduled and arranged the OASIS,
tagging, and any transmission rights required by an RTO. If an
RTO is established in Florida, and under such condition the RTO
determines that Physical Transmission Rights (PTRs) may be
recalled if not utilized, then Seller will notify OUC if Seller
has so scheduled delivery of Energy from Alternate Resources at
least [redacted] (or the amount of time in which an RTO has
determined that the PTRs may be recalled) and [redacted] prior to
the scheduled commencement of delivery of such Energy. At the
▇▇▇▇ ▇▇▇▇▇▇ notifies OUC that Seller has so scheduled delivery of
Energy from Alternate Resources, Seller will identify the source
and quantity of such Energy and the path of its transmission to
OUC.
3.1.2 When the Facility is unavailable and is not scheduled
to return to service in time for Seller to serve the Customers'
Schedule, Seller will notify OUC within [redacted] after Seller's
receipt of Customers' Schedule if Seller has scheduled delivery
of Energy from Alternate Resources to meet all or a portion of
such Customers' Schedule. At the ▇▇▇▇ ▇▇▇▇▇▇ notifies OUC that
Seller has so scheduled delivery of Energy from Alternate
Resources, Seller will identify the source and quantity of such
Energy and the path of its transmission to OUC.
3.1.3 When the Facility becomes unavailable while Seller is
serving Customers' Schedule, Seller will notify OUC within
[redacted] after the Facility is deemed unavailable if Seller has
scheduled delivery of Energy from Alternate Resources to meet all
or a portion of the remainder of Customers' Schedule. If Seller
notifies OUC that Seller has so scheduled delivery of Energy from
Alternate Resources, then Seller will schedule delivery of such
Energy to begin no later than the top of the next full hour
following the hour that Seller notified OUC of Seller's election.
(Example: The Facility becomes unavailable at [redacted] Seller
gives notice no later than [redacted] if Seller will arrange to
deliver Energy from Alternate Resources. Delivery from Alternate
Resources should begin no later than [redacted]) At the ▇▇▇▇
▇▇▇▇▇▇ notifies OUC that Seller has so scheduled delivery of
Energy from Alternate Resources, Seller will identify the source
and quantity of such Energy and the path of its transmission to
OUC.
3.1.4 When the Facility is expected to return from an
outage, but does not, Seller will notify OUC within [redacted] of
Seller's realization that the Facility will not be available as
expected to meet the start of a Customer's Schedule. If the start
of such Customer's Schedule is to begin within [redacted] or less
from the time of such notice, Seller will notify OUC at the same
time if Seller has scheduled delivery of Energy from Alternate
Resources to meet all or a portion of such Customer's Schedule.
Otherwise Seller will notify OUC if Seller has scheduled delivery
of Energy from Alternate Resources to meet all or a portion of
such Customer's Schedule at least [redacted] prior to the start
of such Schedule and preferably at least [redacted] prior. If
Seller notifies OUC that Seller has scheduled delivery of Energy
from Alternate Resources, then Seller will schedule delivery of
such Energy to begin no later than the top of the next full hour
following the hour that Seller notified OUC of Seller's election
(but not earlier than the original start of such Customers'
Schedule). If an RTO develops in Florida, and under such
condition the RTO determines that PTRs may be recalled if not
utilized, then Seller will notify OUC if Seller has scheduled
delivery of Energy from Alternate Resources at least [redacted]
(or the amount of time in which an RTO has determined that the
PTRs may be recalled) and [redacted] prior to the scheduled
commencement of delivery of such Energy. At the ▇▇▇▇ ▇▇▇▇▇▇
notifies OUC that Seller has so scheduled delivery of Energy from
Alternate Resources, Seller will identify the source and quantity
of such Energy and the path of its transmission to OUC.
C-1
APPENDIX C
CAPACITY TESTING PROCEDURE
The capability of the Facility will be required to be demonstrated prior
to the Commencement Date. The demonstration of the capability of the Facility
following the Commencement Date shall be scheduled in accordance with the
provisions of Section 4.1.2. As provided in Section 4.1.3, Participants may also
request additional tests of the Facility which shall not be used as the basis
for determining the Demonstrated Capability of the Facility. Purchaser shall
have the right to monitor (either on-Site or otherwise) all performance tests.
All Capacity testing will be adjusted to the Rated Conditions using
correction curves supplied by Seller. "Rated Conditions" means seventy (70)
degrees Fahrenheit ((degree)F) and forty five percent (45%) relative humidity.
The demonstrated net output of the Facility will be as measured by the Meters.
On the date of the Capacity test, Seller shall bring the Facility to
maximum full load capability within the Technical Limits of the Facility for the
ambient conditions for that day. The test shall be scheduled between the weekday
hours of 11:00 a.m. and 7:00 p.m. (prevailing Eastern Time) and will be
conducted over an eight consecutive hour period (or a lesser period if mutually
agreed upon). Seller must notify Customers when the Facility is at maximum full
load capability, at which time the Capacity test shall begin. The Demonstrated
Capability will be the average net hourly output over the test period corrected
to Rated Conditions.
exhibit 10.23.doc
D-1
APPENDIX D
Example Calculations of Quantities of Gas Transportation and/or
Commodity Required for Delivery from Alternate Resources
Listed below are examples of the determination of the amount of gas
transportation and/or commodity that the Fuel Supply Agent shall provide to
Seller pursuant to Section 4.2.5.2 or 4.2.5.3 when Seller elects to deliver
Energy from Alternate Resources.
Example 1
The facility is unavailable. The Customers have Scheduled 400 MWh of
Energy in an hour. Seller notifies OUC that Seller will supply the 400
MWh of Energy for the subject hour from Alternate Resources.
In Example 1, the Fuel Supply Agent will provide [redacted]
Example 2
The facility is unavailable. The Customers have Scheduled 610 MWh of
Energy in an hour. Seller notifies OUC that Seller will supply 550 MWh
of Energy for the subject hour from Alternate Resources.
In Example 2, the Fuel Supply Agent will provide [redacted]
Example 3
The facility is available. The Customers have Scheduled 450 MWh of
Energy in an hour. Seller notifies OUC that Seller will deliver 100 MWh
of Energy for the subject hour from Alternate Resources and 350 MWh
from the Facility.
In Example 3, the Fuel Supply Agent will provide [redacted]
Example 4
The facility is available. The Customers have Scheduled 600 MWh of
Energy in an hour. Seller notifies OUC that Seller will deliver 200 MWh
of Energy for the subject hour from Alternate Resources and 400 MWh
from the Facility.
In Example 4, the Fuel Supply Agent will provide [redacted]
exhibit 10.23.doc
E-9
APPENDIX E
FORM OF PAYMENT GUARANTY
This Guaranty Agreement (the "Guaranty") is made by The Southern
Company ("Guarantor"), a Delaware corporation, in favor of Kissimmee Utility
Authority ("KUA"), a public body corporate organized and existing under the laws
of the State of Florida.
WHEREAS, Southern Company - Florida LLC ("Principal Obligor"), a
Delaware limited liability company, and KUA entered into that certain Power
Purchase Agreement, dated as of March 19, 2001 (the "PPA");
WHEREAS, Guarantor has agreed to provide assurance for the payment of
Principal Obligor's obligations in connection with the PPA as provided in this
Guaranty; and
WHEREAS, the execution and delivery of this Guaranty by Guarantor is
pursuant to the terms of the PPA in order to satisfy the requirement that
Principal Obligor cause an Affiliate to maintain in place a guaranty of
Principal Obligor's obligations under the PPA.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, Guarantor hereby agrees as follows:
1. Guaranty. Guarantor hereby irrevocably, unconditionally and absolutely
guarantees the punctual payment when due of Principal Obligor's payment
obligations arising under the PPA, as amended or modified from time to time,
together with any interest thereon, including, without limitation, any interest
amounts accruing under the PPA during the pendency of insolvency, bankruptcy,
reorganization or other similar proceedings affecting Principal Obligor or its
assets; provided, however, that the maximum liability of Guarantor under this
Guaranty with respect to Principal Obligor's obligations under the PPA shall be
limited to the amount that is equal to the then-current Termination Payment (as
defined in the PPA), which shall not exceed in any event One Million Nine
Hundred Forty-Six Thousand One Hundred Dollars ($1,946,100) (collectively, the
"Guaranteed Obligations"); provided, further, that the cap on Guarantor's
liability under this Guaranty established in the immediately preceding clause
creates an absolute cap on Guarantor's liability to KUA in relation to the PPA
and, if and when Guarantor's liability under this Guaranty has reached such cap,
then from and after such time, Guarantor shall have no further liability under
this Guaranty whatsoever to KUA and this Guaranty shall thereupon terminate;
provided, further, that costs incurred by Guarantor under Section 4 hereof shall
not be counted for purposes of determining whether Guarantor has reached such
cap, unless and to the extent that Guarantor's costs under such Section 4,
together with costs incurred by Guarantor under the corresponding provisions of
Guarantor's other three Payment Guarantees of contemporaneous date to one or
more of OUC, FMPA and KUA, exceed Three Million Dollars ($3,000,000) in the
aggregate.
2. Guaranty Absolute. The liability of Guarantor under this Guaranty shall
be irrevocable, absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of or defect or deficiency
in the PPA or any other documents executed in connection with the PPA;
(b) any assignment, transfer, modification, extension or waiver of any
of the terms of the PPA;
(c) any change in the time, manner, terms of payment of or in any
other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any agreement or
instrument executed in connection therewith;
(d) any sale, exchange, release or non-perfection of any property
standing as security for the liabilities hereby guaranteed or any
liabilities incurred directly or indirectly hereunder or any set off
against any of said liabilities, or any release or amendment or waiver of
or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(e) applicable statutes of limitation, failure, omission, delay,
waiver or refusal by KUA to exercise, in whole or in part, any right or
remedy held by KUA with respect to the PPA or any transaction under the
PPA; or
(f) any change in the existence, structure or ownership of Guarantor
or Principal Obligor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting Principal Obligor or its assets.
The obligations of the Guarantor hereunder are several from the
Principal Obligor or any other person, and are primary obligations concerning
which the Guarantor is the principal obligor. There are no conditions precedent
to the enforcement of this Guaranty, except as expressly contained herein.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations are
annulled, set aside, invalidated, declared to be fraudulent or preferential,
rescinded or must otherwise be returned, refunded or repaid by KUA upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Principal
Obligor or any other guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
Principal Obligor or any other guarantor or any substantial part of its property
or otherwise, all as though such payment or payments had not been made.
3. Waiver. This is a guaranty of payment and not of collection.
Guarantor hereby waives:
(a) notice of acceptance of this Guaranty, of the creation or
existence of any of the Guaranteed Obligations and of any action by KUA in
reliance hereon or in connection herewith;
(b) except as expressly set forth herein, presentment, demand for
payment, notice of dishonor or nonpayment, protest and notice of protest
with respect to the Guaranteed Obligations; and
(c) any requirement that suit be brought against Principal Obligor or
any other person as a condition to Guarantor's liability for the Guaranteed
Obligations under this Guaranty or as a condition to the enforcement of
this Guaranty against Guarantor.
Notwithstanding anything to the contrary set forth herein, Guarantor
shall have the same defenses available to it as Principal Obligor may
have with respect to any payment obligations arising under the PPA.
4. Expenses. Guarantor agrees to pay on demand any and all costs,
including reasonable legal fees, and other expenses incurred by KUA in
enforcing Guarantor's payment obligations under this Guaranty; provided
that the Guarantor shall not be liable for any expenses of KUA if no
payment under this Guaranty is due.
5. Subrogation. Guarantor shall be subrogated to all rights of KUA
against Principal Obligor in respect of any amounts paid by Guarantor
pursuant to the Guaranty, provided that Guarantor waives any rights it may
acquire by way of subrogation under this Guaranty, by any payment made
hereunder or otherwise, until all of the Guaranteed Obligations shall have
been irrevocably paid to KUA in full. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all the
Guaranteed Obligations shall not have been paid in full, such amount shall
be held in trust for the benefit of KUA and shall forthwith be paid to KUA
to be applied to the Guaranteed Obligations. If (a) the Guarantor shall
perform and shall make payment to KUA of all or any part of the Guaranteed
Obligations and (b) all the Guaranteed Obligations shall have been paid in
full, KUA shall, at the Guarantor's request, execute and deliver to the
Guarantor appropriate documents necessary to evidence the transfer by
subrogation to the Guarantor of any interest in the Guaranteed Obligations
resulting from such payment by Guarantor.
6. Notices. All demands, notices and other communications provided for
hereunder shall, unless otherwise specifically provided herein, (a) be in
writing addressed to the party receiving the notice at the address set
forth below or at such other address as may be designated by written
notice, from time to time, to the other party, and (b) be effective upon
delivery, when mailed by U.S. mail, registered or certified, return receipt
requested, postage prepaid, or personally delivered. Notices shall be sent
to the following addresses:
If to KUA:
Kissimmee Utility Authority
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Director of Power Supply
Tel: 407-933-7777 ext. 1235
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Kissimmee Utility Authority
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Manager Bulk System Planning
Telephone: 407-933-7777 ext. 1235
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Guarantor:
The Southern Company
c/o Southern Company Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President and Treasurer
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Bank of America Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Principal Obligor:
Southern Company - Florida LLC
c/o Southern Company Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President and Treasurer
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Bank of America Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
7. Demand and Payment. Any demand by KUA for payment hereunder shall be in
writing, signed by a duly authorized officer of KUA and delivered to
the Guarantor pursuant to Section 6 hereof, and shall (a) reference
this Guaranty, (b) specifically identify the Principal Obligor, the
Guaranteed Obligations to be paid and the amount of such Guaranteed
Obligations and (c) set forth payment instructions. There are no other
requirements of notice, presentment or demand. Guarantor shall pay, or
cause to be paid, such Guaranteed Obligations within three (3) business
days of receipt of such demand.
8. No Waiver; Remedies. Except as to applicable statutes of limitation, no
failure on the part of KUA to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
9. Replacement of Guarantor and Termination.
(a) Guarantor may assign and delegate its rights and
obligations under this Guarantee, in whole or in part, as follows: (i)
without the consent of KUA, to Southern Power Company, a Delaware
corporation and parent company of Principal Obligor, or other Affiliate
of Principal Obligor, if Southern Power Company or such other Affiliate
has achieved the following three characteristics: (1) a credit rating
on its senior securities at or above BBB- (Standard & Poors) and Baa3
(Moody's), (2) Net Equity (as hereinafter defined) of at least Two
Hundred Fifty Million Dollars ($250,000,000), as reflected on its most
recent audited balance sheet, and (3) Gross Equity (as hereinafter
defined) of at least Five Hundred Million Dollars ($500,000,000),
provided, however, that the date on which Guarantor causes such a
replacement of this Guaranty under this Section 9(a)(i) may not be
earlier than the Commercial Operation Date (as defined in the Ownership
Agreement); or (ii) with the consent of KUA, which consent may not be
unreasonably withheld, to an assignee which has a credit rating on its
senior securities at or above BBB- (Standard & Poors) and Baa3
(Moody's) and which meets other reasonable financial criteria similar
to those identified in Section 9(a)(i), provided, however, that if
Guarantor requests KUA's consent to such an assignment and delegation
in connection with a permitted transfer or assignment of the PPA, then
KUA may not withhold such consent if the assignee meets the financial
criteria in Section 9(a)(ii). An assignment and delegation of
Guarantor's rights and obligations under this Section 9 shall become
effective when the replacement guarantor executes and delivers to KUA a
replacement guaranty on terms and conditions substantially similar to
this Guaranty.
(b) For purposes of this Guaranty, the following terms shall
have the following meanings:
"Net Equity" shall mean the aggregate of the capital stock and other
equity accounts (including retained earnings and paid-in capital) of
Southern Power Company or other Affiliate of Principal Obligor, as the
case may be.
"Gross Equity" shall mean Net Equity plus Guaranteed Debt plus loans to
Southern Power Company from its parent corporation.
"Guaranteed Debt" shall mean any obligations of Southern Power Company
or other Affiliate of Principal Obligor, as the case may be, for or in
respect of (a) moneys borrowed or raised (whether or not for cash) by
whatever means (including acceptances, deposits, discounting, letters
of credit, factoring (other than on a non-recourse basis), finance
leases, and any other form of financing which is recognized in Southern
Power Company's or other Affiliate of Principal Obligor's, as the case
may be, financial statements as being in the nature of a borrowing
(excluding for the avoidance of doubt, share capital, share premium
account and any capital prepayment reserve), which has been guaranteed
by Guarantor, and (b) the deferred purchase price of assets or services
(other than goods and services obtained on normal commercial terms in
the ordinary course of business or operations), which has been
guaranteed by Guarantor.
"Affiliate" of an Entity shall mean any other entity controlled by,
controlling or under common control with such entity, where control of
an entity means the ability to direct the policies of such entity
through election of a majority of such entity's board of directors or
other governing body or by contract or otherwise.
(c) This Guaranty shall terminate, and upon the effective date of
such termination Guarantor shall have no further liability hereunder,
on the earliest to occur of: (i) the satisfaction of all of the
Guaranteed Obligations, (ii) the termination or expiration of the PPA,
(iii) the date on which the liability cap is reached, as provided in
Section 1 hereof, or (iv) the date on which an assignment and
delegation by Guarantor of its rights and obligations hereunder
becomes effective under Section 9(a) hereof.
10. Assignment by KUA; Successors and Assigns. KUA may, upon notice to
Guarantor, assign its rights hereunder only to a subsequent owner of all of
KUA's interest in the Facility and the Interconnection Facilities (as
defined in the PPA) without the consent of Guarantor. Subject to the
foregoing, this Guaranty shall be binding upon and inure to the benefit of
the parties hereto and their respective successors, permitted assigns, and
legal representatives.
11. Amendments, Etc. No amendment of this Guaranty shall be effective
unless in writing and signed by Guarantor and KUA. No waiver of any
provisions of this Guaranty or consent to any departure by Guarantor
therefrom shall in any event be effective unless such waiver shall be in
writing and signed by KUA. Any such waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
12. Captions. The captions in this Guaranty have been inserted for
convenience only and shall be given no substantive meaning or significance
whatsoever in construing the terms and provisions of this Guaranty.
13. Representations and Warranties.
The Guarantor represents and warrants as follows:
(a) The Guarantor is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation and has full corporate power to execute, deliver
and perform this Guaranty.
(b) The execution, delivery and performance of this Guaranty have
been and remain duly authorized by all necessary corporate
action and do not contravene the Guarantor's constitutional
documents or any contractual restriction binding on the
Guarantor or its assets.
(c) This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor enforceable against Guarantor in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting KUA's rights
and to general equity principles.
(d) The financial statements of Guarantor for the year ended
December 31, 2000 (the "Financial Statements"), heretofore
delivered to KUA or filed with the United States Securities
Exchange Commission by Guarantor present fairly the financial
condition and results of operations of Guarantor and its
consolidated subsidiaries as of the dates and for the period
specified therein in conformity with generally accepted
accounting principles, and, except as otherwise expressly
stated therein, consistently applied.
14. Limitation by Law. All rights, remedies and powers provided in this
Guaranty may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this Guaranty
are intended to be subject to all applicable mandatory provisions of law that
may be controlling and to be limited to the extent necessary so that they will
not render this Guaranty invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
15. Governing Law; Submission to Jurisdiction. This Guaranty shall be
governed by, and construed in accordance with, the laws of the State of Georgia,
exclusive of any conflict of laws provisions thereof that would apply the laws
of another jurisdiction. The parties hereby submit to the jurisdiction of, and
agree that venue for actions hereunder shall be, the U.S. District Court for the
Northern District of Georgia, if the U.S. District Court has jurisdiction, or,
if the U.S. District Court does not have jurisdiction, the Superior Court of the
State of Georgia sitting in ▇▇▇▇▇▇ County, Georgia and the parties hereby waive
any objection to venue in such courts and any objection to any action or
proceeding on the basis of forum non conveniens.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer effective as of this ___
day of __________, 2001.
"Guarantor"
THE SOUTHERN COMPANY
By:
-----------------
Name:
---------------
Title:
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