UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF LOUISIANA
IN RE:
CASE NO. 94-11474
CAJUN ELECTRIC POWER
COOPERATIVE, INC., Chapter 11
DEBTOR. USDC NO. 94-CV-2763-B2
AMENDED AND RESTATED JOINT PLAN OF REORGANIZATION FOR
CAJUN ELECTRIC POWER COOPERATIVE, INC.
SUBMITTED JOINTLY BY THE COMMITTEE OF CERTAIN MEMBERS AND
SOUTHWESTERN ELECTRIC POWER COMPANY DATED MARCH 18, 1998
The Committee of Certain Members of Cajun Electric Power Cooperative
Inc. ("Committee of Certain Members") and Southwestern Electric Power Company
("SWEPCO")(collectively the "Proponents") hereby propose the following plan of
reorganization ("Plan") which provides for the liquidation of Cajun Electric
Power Cooperative, Inc., the debtor herein ("Debtor" or "Cajun"):
SUMMARY OF THE PLAN
The Proponents have joined together to present to the creditors of
Cajun and the Court a Plan that will resolve Cajun's bankruptcy through the
sale of Cajun's non-nuclear assets to a SWEPCO affiliate, and the voluntary
initiation of new power supply arrangements by and between a SWEPCO affiliate
and Cajun's former members. The Plan has the goal of offering competitive
wholesale rates to the Cajun member cooperatives ("Members"), while maximizing
value to the Cajun estate.
The Plan provides for the acquisition of Cajun's non-nuclear assets by
a subsidiary or affiliate of SWEPCO. The consideration paid under the Plan will
be $940.5 million (subject to adjustments as provided in the Asset Purchase
Agreement and this Plan). The Plan in addition, includes a settlement of a
variety of pending litigation involving the lien claims of the Rural Utilities
Service("RUS"). This Plan is the only plan which relies exclusively on the
execution of consensual agreements with the Members for the purchase of
wholesale power. In addition, the Plan incorporates the River Bend Settlement
negotiated among the Proponents and Entergy Gulf States, Inc. ("GSU"). The Plan
is the only plan that has the potential to harmonize the distinct perspectives
of the Members, the LPSC and the RUS. In short, the Proponents' Plan is the only
feasible plan that can be confirmed without years of litigation.
The distinguishing attribute of the Plan is that it produces
competitive wholesale rates to cooperatives serving over one million Louisiana
residents and maximizes the value of the Cajun estate. The cooperatives cannot
and will not remain viable at non-competitive rates, as evidenced by the
bankruptcy of Washington St. Tammany Electric Cooperative, Inc., the insolvency
and acquisition of Bossier Rural Electric Membership Corporation, the sale of
Teche Electric Cooperative, Inc. to Central Louisiana Electric Company, Inc.,
and the financial difficulties currently experienced by other cooperatives.
The Plan includes consensually negotiated average wholesale rates at a
competitive level, which would immediately provide significant rate relief to
Louisiana ratepayers while also maximizing the value of the estate. Any plan
that unilaterally proposes higher, non-competitive and non-consensual rates in
an effort to extract excessive value from Louisiana ratepayers would not provide
a permanent solution to the substantial rate disparity between cooperatives on
the one hand, and investor-owned and municipal utilities on the other hand.
The Plan provides for an enterprise (hereinafter "SWECO") to be formed
by SWEPCO as a wholly owned subsidiary or affiliate to acquire Cajun's
non-nuclear assets more specifically defined in the Asset Purchase Agreement
(hereinafter the "Acquired Assets"). Under the Plan, SWECO will purchase the
Acquired Assets for a price of $940.5 million (subject to adjustments as set
forth in the Asset Purchase Agreement and this Plan payable in cash (the
"Purchase Price") pursuant to the terms and conditions proposed in an Asset
Purchase Agreement.
SWEPCO/Members Page 2
First Amended Joint Plan of Reorganization
The Asset Purchase Agreement that will be executed by SWECO shall be
substantially in the form of the Asset Purchase Agreement which is attached as
EXHIBIT 1 to the Plan. On the Effective Date of the Plan, the Members and SWECO
shall voluntarily enter into new Power Supply Agreements substantially in the
form of EXHIBIT 2 attached to the Plan, whereby pursuant to the terms and
conditions of the Power Supply Agreements, SWECO shall be obligated to supply
the Members, and the Members electing to enter into the Power Supply Agreements
shall be obligated to purchase all of their power requirements from SWECO. To
the extent that there are any conflicts between the terms of the Plan and the
Asset Purchase Agreement, the provisions of the Asset Purchase Agreement shall
control. Unless specifically provided otherwise in the Plan, the Plan generally
contemplates that any assets remaining in Cajun after the consummation of the
Asset Purchase Agreement and the River Bend Settlement will be (i) liquidated by
the Trustee with the proceeds of such liquidation distributed in accordance with
the Plan; or (ii) conveyed by the Trustee to the holder of the lien on such
assets. The Purchase Price, liquid assets and any proceeds of other assets
liquidated by the Trustee shall be distributed in accordance with the terms of
this Plan.
On August 26, 1996, Judge Frank J. Polozola signed an Order and
Judgment Approving Settlement by and among Cajun Electric Power Cooperative,
Inc., Entergy Gulf States, Inc., Entergy Corporation, and the Rural Utilities
Service of the Department of Agriculture (the "Order"). A true and correct copy
of the Order is attached as EXHIBIT 3 to the Plan. The settlement approved by
the Order (hereinafter the "River Bend Settlement"), among other things: puts an
end to years of expensive litigation among Cajun, GSU, and the RUS; provides for
the transfer of Cajun's River Bend Interest at the discretion of the RUS to a
bidder, the RUS or GSU; provides for the establishment of a Decommissioning
Trust Fund; and settles the claims of GSU that put at issue the Trustee's
ability to transfer Cajun's non-River Bend assets apart from the River Bend
assets and obligations and free and clear of all liens and encumbrances. The
Order provides that the settlement could be consummated independent of any plan
of reorganization. The Order has been affirmed by the United States Court of
Appeals for the Fifth Circuit and GSU has acquired Cajun's River Bend Interest
pursuant to the terms of the River Bend Settlement.
The Committee of Certain Members, SWEPCO and the RUS reached a
settlement of certain issues concerning the validity of the liens and security
interests of the RUS against the estate. The Amended and Restated Settlement
Agreement is attached hereto as EXHIBIT 4 and is incorporated in this Plan as if
fully set forth herein. Certain terms of the Amended and Restated Settlement
Agreement are effective without Court approval. The terms of paragraphs 4 and 7
require approval of the Court, and the Proponents seek approval of those terms
as part of this Plan. This Plan is contingent on approval of the Amended and
Restated Settlement Agreement.
TERMS OF THE PLAN
ARTICLE 1: DEFINITIONS
1.1 "ACQUIRED ASSETS" is defined in the Asset Purchase Agreement.
1.2 "ADMINISTRATIVE EXPENSE CLAIM" means any Claim constituting a cost
or expense of administration of Cajun's Chapter 11 case incurred on or after the
Petition Date of the kind described in Section 503(b) of the Bankruptcy Code,
including, without limitation, any fees or charges assessed against Cajun's
estate under Chapter 123 of title 28, United States Code, fees and expenses of
the Trustee and professionals employed by the Estate, costs and expenses of
preserving the Estate, taxes described in Section 503(b)(1)(B) of the Bankruptcy
Code, certain employee claims arising after the Petition Date, cure amounts for
executory contracts and unexpired leases assumed or assumed and assigned by the
Trustee under the Plan.
1.3 "ALLOWED ADMINISTRATIVE EXPENSE CLAIM" means any Administrative
Expense Claim which, after notice and hearing, is determined by Final Order of
the Court to be an Administrative Expense Claim entitled to payment in
accordance the Bankruptcy Code.
1.4 "ALLOWED CLAIM" means any Claim against the Debtor, (i) the proof
of which was filed on or before the Bar Date; or (ii) that was scheduled by the
Debtor as liquidated in amount and not disputed or contingent; and (iii) in
either case, a Claim to which no objection is timely filed or that is allowed by
a Final Order of the Court.
SWEPCO/Members Page 3
First Amended Joint Plan of Reorganization
1.5 "ALLOWED CONVENIENCE CLAIM" means any Allowed Claim originally
scheduled by the Debtor in the amount of $20,000 or less.
1.6 "ALLOWED SECURED CLAIM" means any Allowed Claim to the extent of
the value of (i) a lien on the assets which are property of the estate, or (ii)
a right of set-off under Code Section 553.
1.7 "ALLOWED UNSECURED CLAIM" means any Allowed Claim to the extent it
is not secured either by a valid, enforceable and unavoidable lien on the
Debtor's assets or a right of set-off under Code Section 553.
1.8 "ASSET PURCHASE AGREEMENT" means the agreement by and between the
Trustee and SWECO providing for the sale of the Acquired Assets to SWECO
substantially in the form as attached hereto as EXHIBIT 1.
1.9 "AVOIDANCE ACTIONS" means all direct or derivative rights, claims
and causes of action which constitute property of the Estate, including but not
limited to claims under Code Sections 506, 510, 542, 543, 544, 545, 546, 547,
548, 549, 550, 551 and 553, and any state laws corresponding thereto.
1.10 "BAR DATE" means October 1, 1995, the date designated by the
Court in its Order dated August 21, 1995 as the last day for filing a proof of
Claim.
1.11 "BIG CAJUN II, UNIT 3 JOPOA" means that Joint Ownership
Participation and Operating Agreement by and between Debtor and GSU, dated as of
November 14, 1980.
1.12 "CAJUN" means Cajun Electric Power Cooperative, Inc., the debtor
in this Chapter 11 Case.
1.13 "CHAPTER 11 CASE" means this Chapter 11 case of Cajun (Case No.
94-11474; USDC No. 94-CV-2763-B2).
1.14 "CLAIM" means a claim as defined in Code Section 101(5) against
Cajun.
1.15 "CLAIMANT" means a person or entity who holds or asserts a Claim.
1.16 "CLASS 6 FUND" means a fund to be established by the Trustee for
distribution to holders of Class 6 Claims under section 6.3 hereof.
1.17 "CLECO" means Central Louisiana Electric Company, Inc., as
successor in interest to Teche Electric Cooperative, Inc.
1.18 "COBANK" means CoBank, N.A., formerly National Bank for
Cooperatives.
1.19 "COBANK CLASS E STOCK" means the Class E stock of CoBank owned by
Cajun.
1.20 "CODE SECTION" means a section of the United States Bankruptcy
Code, 11 U.S.C. '101 et seq., as in effect with respect to the Reorganization
Case.
1.21 "COMMITTEE OF CERTAIN MEMBERS" means the Committee of Certain
Members of Cajun Electric Power Cooperative, Inc., an unofficial committee
currently composed of the following seven Members: Beauregard Electric
Cooperative, Inc., Dixie Electric Membership Corporation, Jefferson Davis
Electric Cooperative, Inc., Northeast Louisiana Power Cooperative, Inc., South
Louisiana Electric Cooperative Association, Valley Electric Membership
Corporation and Washington-St. Tammany Electric Cooperative, Inc.
1.22 "CONFIRMATION DATE" means the date of entry by the Court or other
court of competent jurisdiction of the Confirmation Order.
1.23 "CONFIRMATION ORDER" means the order of the Court confirming this
Plan.
SWEPCO/Members Page 4
First Amended Joint Plan of Reorganization
1.24 "COURT" means the United States District Court for the Middle
District of Louisiana, exercising its original bankruptcy jurisdiction pursuant
to 28 U.S.C. Section 1334, or the United State Bankruptcy Court for the Middle
District of Louisiana to the extent any proceeding was referred to it by said
District Court.
1.25 "DEBTOR" means Cajun Electric Power Cooperative, Inc., the debtor
in this Chapter 11 Case.
1.26 "DECOMMISSIONING TRUST FUND" means a segregated trust fund to be
established to satisfy obligations for Decommissioning Costs (as defined in the
River Bend Settlement).
1.27 "DISBURSEMENT ACCOUNTS" means that certain interest bearing
accounts to be established under the supervision of the Trustee pursuant to
section 6.4 hereof, into which the Purchase Price, Net Proceeds of Excluded
Assets, Net Proceeds of Avoidance Actions and the Class 6 Fund are deposited.
1.28 "DISPUTED CLAIM" means a Claim which is not an Allowed Claim.
1.29 "EFFECTIVE DATE" means a date selected by the Proponents for this
Plan to become effective, for documents to be executed to implement the
provisions of the Plan, and for the Acquired Assets to be transferred to SWECO
pursuant to the terms of the Asset Purchase Agreement which date shall be not
later than 90 days after the Confirmation Order becomes a Final Order and all
required conditions to closing set forth in the Asset Purchase Agreement and all
conditions to effectiveness specified herein are satisfied. As set forth in the
Asset Purchase Agreement, the Effective Date of the Plan shall be the same date
as the "Closing Date" of the Asset Purchase Agreement (as that term is defined
in the Asset Purchase Agreement), on which date the closing of the sale of the
Acquired Assets to SWECO and related transactions shall occur. The Effective
Date of the Plan shall occur on the same date as the Closing Date, but the
Effective Date of the Plan shall occur at the close of business on such date and
immediately after the closing of the sale of assets pursuant to the Plan.
1.30 "ESTATE" means the bankruptcy estate of the Debtor created by
Bankruptcy Code Section 541.
1.31 "EXCESS FUNDS" means (a) the funds contained in a certain
segregated account that are collected by Debtor pursuant to the Order Concerning
Use of Cash Collateral and Adequate Protection approved by the Court on February
13, 1995; (b) the funds contained in a certain segregated account (variously
referred to in Debtor's bankruptcy proceedings as the "Interest Escrow Account,"
the "Ratepayer Trust Fund," the "Debt Service Escrow Account," and the ALPSC
Escrow Account') that are collected pursuant to LPSC Order No. U-17735-F, as
amended by LPSC Order No. U-17735-H; and (c) all interest on the funds described
in (a) and (b) immediately preceding, less any sums necessary to fund the
Decommissioning Trust Fund as provided in the River Bend Settlement.
1.32 "EXCLUDED ASSETS" is defined in the Asset Purchase Agreement.
1.33 "FINAL ORDER" means an order or judgment (a) as to which the time
has expired within which a proceeding for review (whether by way of rehearing,
appeal, certiorari or otherwise) may be commenced, without any such proceeding
having been commenced, or (b) which, if such a review proceeding was timely
commenced, has been affirmed by the highest tribunal in which review was sought
or remains in effect without modification following termination of such
proceeding for review, and the time has expired within which any further
proceeding for review may be commenced.
1.34 "GSU" means Entergy Gulf States, Inc., a Texas corporation
formerly known as Gulf States Utilities Company.
1.35 "HIBERNIA" means Hibernia National Bank, acting as indenture
trustee for the Industrial Revenue Bonds (Cajun Electric Power Cooperative, Inc.
Project), Series 1982.
1.36 "INITIAL DISTRIBUTION DATE" shall mean a date no later than 30
days after the Effective Date when the initial payments on account of Allowed
Claims, as set forth in this Plan, shall be made.
1.37 "LPSC" means the Louisiana Public Service Commission.
SWEPCO/Members Page 5
First Amended Joint Plan of Reorganization
1.38 "AMEMBER INTERESTS" means the Members' interests in Cajun as
evidenced by a Membership Certificate issued by Cajun to each Member pursuant to
Section 2 of Cajun's Bylaws.
1.39 "MEMBERS" means Beauregard Electric Cooperative, Inc., Claiborne
Electric Cooperative, Inc., CLECO, Concordia Electric Cooperative, Inc., Dixie
Electric Membership Corporation, Jefferson Davis Electric Cooperative, Inc.,
Northeast Louisiana Power Cooperative, Inc., Pointe Coupee Electric Membership
Corporation, South Louisiana Electric Cooperative Association, Southwest
Louisiana Electric Membership Corporation, Valley Electric Membership
Corporation and Washington-St. Tammany Electric Cooperative, Inc.
1.40 "NET PROCEEDS" means as to any Excluded Asset or Avoidance Action
the total gross proceeds less all reasonable and necessary costs associated with
the liquidation of such Excluded Asset or prosecution of such Avoidance Action.
1.41 "ORDINARY COURSE ADMINISTRATIVE EXPENSE CLAIMS" shall be limited
to Administrative Expense Claims incurred in the ordinary course of Cajun's
business and shall not include: (i) any post-petition obligations which are past
due or cure payments; (ii) any fees or expenses of the Trustee or "professional
persons" (as that term is used in Section 327 of the Bankruptcy Code) and any
expenses, compensation, or reimbursement requested pursuant to subsections
503(b)(2), (3), (4) or (5) of the Bankruptcy Code; (iii) any Taxes (including
income, sales, use, property or other Taxes) except for sales and use Taxes
incurred other than in the sale of Cajun's assets pursuant to the Asset Purchase
Agreement or the River Bend Settlement; (iv) any claims for breach of contract,
tort, or other actionable conduct; and (v) any post-petition obligations
incurred under executory contracts or unexpired leases which are rejected in
this Plan or prior to the Effective Date of the Plan.
1.42 "PETITION DATE" means December 21, 1994.
1.43 "PROPONENTS" means the Committee of Certain Members and SWEPCO.
1.44 "PRO RATA" means the factor of the amount of the Allowed Claim
multiplied by the fraction of the funds available for distribution to a class
divided by total Allowed Claims in a class plus reserves determined in
accordance with section 6.6 of the Plan for all Disputed Claims in a class.
1.45 "PURCHASE PRICE" is defined in the Asset Purchase Agreement.
1.46 "REPRESENTATIVE" means, with respect to any specified entity, the
officers, directors (or functional equivalent, if any), employees, agents,
attorneys, accountants, financial advisors, other representatives, subsidiaries,
affiliates or any person who controls any of these within the meaning of the
Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as
amended.
1.47 "RIVER BEND" means River Bend Nuclear Station Unit 1, a 936MW
nuclear generating facility located in St. Francisville, Louisiana, which was
co-owned by Cajun and GSU and which is now owned and operated by GSU.
1.48 "RIVER BEND JOA" means the River Bend Joint Operating Agreement
between GSU and Cajun.
1.49 "RIVER BEND SETTLEMENT" means the settlement between Cajun, GSU
and the RUS as currently defined in the Order and Judgment Approving Settlement
by and among Cajun Electric Power Cooperative, Inc., Entergy Gulf States, Inc.,
Entergy Corporation, and the Rural Utilities Service of the Department of
Agriculture, signed by the Honorable Frank J. Polozola on August 26, 1996, in
Civil Action No. 94 2763-B2 in the United States District Court for the Middle
District of Louisiana.
1.50 "RUS" means the United States of America, acting through the Rural
Utilities Service (formerly the Rural Electrification Administration), an agency
within the United States Department of Agriculture.
1.51 "RUS SETTLEMENT" means the settlement terms described in
paragraphs 4 and 7 of the Amended and Restated Settlement Agreement by and among
SWEPCO, the Committee of Certain members and the RUS, attached as Exhibit 4
hereto, and incorporated herein.
SWEPCO/Members Page 6
First Amended Joint Plan of Reorganization
1.52 "SETTLEMENT AMOUNT" means the amount of $20.24 million payable to
the Class 6 Fund pursuant to the RUS Settlement.
1.53 "SUPPLY CONTRACTS" means the long term all-requirements contracts
between the Debtor and each of its Members.
1.54 "SWECO" means Southwestern Wholesale Electric Company, an entity
to be formed as a wholly owned subsidiary or affiliate by SWEPCO to acquire the
Acquired Assets.
1.55 "SWEPCO" means Southwestern Electric Power Company, a
Louisiana-based investor owned utility.
1.56 "TAXES" means all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation and property taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign) and any interest and penalties
imposed with respect to the filing, obligation to file or failure to file any
return for such tax, and shall include any transferee liability in respect to
Taxes.
1.57 "TRUSTEE" means the Chapter 11 trustee appointed herein by the
Court, or any successor Trustee that may be subsequently appointed by the Court.
ARTICLE II: TREATMENT OF UNCLASSIFIED CLAIMS.
2.1 TREATMENT OF ADMINISTRATIVE CLAIMS.
(a) Each holder of an Allowed Administrative Expense Claim shall
receive, on account of such Administrative Expense Claim, cash in the amount of
such Allowed Administrative Expense Claim on the later of the Effective Date or
within ten days after the date the Administrative Expense Claim becomes an
Allowed Administrative Expense Claim, except to the extent any holder agrees to
a different treatment. An Administrative Expense Claim which is subject to the
Administrative Expense Claim Bar Date and the Supplemental Administrative Claim
Bar Date shall be paid only to the extent such claim is timely filed and allowed
as Administrative Expense Claim by the Court by Final Order. Notwithstanding the
foregoing, the Trustee and professionals employed at the expense of the Estate
and entities which may be entitled to reimbursement or the allowance of fees and
expenses from the Estate pursuant to subparagraphs (2) through (6) of Code
Section 503 (b) shall receive cash in the amount awarded to such professionals
and entities at such times and only in accordance with a Final Order entered
pursuant to Code Sections 330, 331 or Code Sections 503 (b) (2) through (6).
(b) (1) On the Effective Date, all real (immovable) property and
personal (movable) property Taxes with respect to the Acquired
Assets for the tax years occurring prior to the Effective
Date, which are Ordinary Course Administrative Expense Claims
and which have not already been paid in the ordinary course of
business, shall be paid in full in cash by the Trustee, except
to the extent that the holder agrees to a different treatment.
All immovable property and movable property Taxes with respect
to the Acquired Assets for the tax year in which the Effective
Date occurs, which are Ordinary Course Administrative Expense
Claims, shall be prorated through the Effective Date based on
the most current assessment information available from the
offices of the assessor and sheriff of the respective parishes
in which the Acquired Assets are located. Cajun's share of
such prorated Taxes shall be paid in cash on the Effective
Date by the Trustee, except to the extent the holder agrees to
a different treatment. All special assessments against the
Acquired Assets for utilities or otherwise, which are Ordinary
Course Administrative Expense Claims, shall be paid in full by
the Trustee in cash prior to or on the Effective Date, except
to the extent a holder agrees to a different treatment.
SWEPCO/Members Page 7
First Amended Joint Plan of Reorganization
(2) All real (immovable) property and personal (movable)
property Taxes with respect to Excluded Assets, which are
Ordinary Course Administrative Expense Claims shall be paid
when due in cash in the ordinary course of business.
(3) All Taxes with respect to Acquired Assets or Excluded
Assets, which are Administrative Expense Claims, but which are
not Ordinary Course Administrative Expense Claims, and all
other Allowed Administrative Expense Claims which are not
Ordinary Course Administrative Expense Claims, and which are
therefore subject to the Administrative Expense Claim Bar Date
will be paid in cash only to the extent such claims are timely
filed and are Allowed as Administrative Expense Claims by the
Court by Final Order. Such Allowed Administrative Expense
Claims will be paid on the later of the Effective Date or ten
(10) days after the date such claims are Allowed by the Court
by Final Order, except to the extent a holder agrees to a
different treatment.
(4) For the tax year in which the Effective Date occurs, any
income Taxes which may be owing for that tax year shall be
deemed to be incurred by the Estate, for purposes of the
application of Code Section 503(b)(1)(B), to the extent that
such Taxes would be owed if the Effective Date was the date on
which the tax year closed for Cajun (the "Effective Date Tax
Year"). For the tax year in which the Petition Date occurred,
any income Tax which may be owing for that tax year shall be
deemed to be incurred by the Estate, for the purpose of Code
Section 503(b)(1)(B), to the extent such Taxes would be owed
if the Petition Date was the date on which the tax year began
for Cajun (the "Petition Date Tax Year"). Any unpaid Allowed
Administrative Expense Claim for income Taxes through and
including the Effective Date Tax Year shall be paid from the
Purchase Price.
(c) Ordinary Course Administrative Expense Claims shall be paid in the
ordinary course of business of Cajun as and when incurred and due. Any such
Ordinary Course Administrative Expense Claims incurred prior to the Effective
Date, and for which consideration has been provided to Cajun prior to the
Effective Date, but which are not yet due in the ordinary course of business on
the Effective Date, shall be paid by Cajun when due.
2.2 ADMINISTRATIVE EXPENSE CLAIM BAR DATES
(a) The Confirmation Order or a separate Court Order shall set a bar
date for the filing of Administrative Expense Claims arising prior to the
Confirmation Date (the "Administrative Expense Claim Bar Date"). Any
Administrative Expense Claims which are subject to the Administrative Expense
Claim Bar Date that are not filed on or prior to such bar date shall be
discharged under the Plan, but shall not be treated as an Administrative Expense
Claim or any other Claim for purposes of distribution under the Plan, whether or
not an objection is initiated.
(b) The Confirmation Order or a separate Court Order shall set a bar
date for the filing of Administrative Expense Claims arising subsequent to the
Confirmation Date, but prior to the Effective Date (the "Supplemental
Administrative Expense Claim Bar Date"). Such Administrative Expense Claims
filed pursuant to the Supplemental Administrative Expense Claim Bar Date may
only include Claims for the period between the Confirmation Date and the
Effective Date, and may not allege any Claims arising out of or from the period
prior to the Confirmation Date. Any Administrative Expense Claims which are
subject to the Supplemental Administrative Expense Claim Bar Date that are not
filed on or prior to such bar date shall be discharged under the Plan, but shall
not be treated as an Administrative Expense Claim or any other Claim for
purposes of distribution under the Plan, whether or not an objection is
initiated.
(c) This subsection and not subsections 2.2(a) and (b) shall apply to
income Taxes described in Code Section 503(b)(1)(B). The Confirmation Order or a
separate Court Order will set a bar date for the filing of Administrative
Expense Claims arising from income Taxes for the period beginning on the
Petition Date and ending on the Effective Date (the "Tax Administrative Expense
Claim Bar Date"). The Tax Administrative Expense Claim Bar Date shall be ninety
(90) days after the Effective Date, provided that such ninety (90) day period
shall not begin to run until Cajun shall file an appropriate tax return or, in
the case of the Petition Date Tax Year or the Effective Date Tax Year, until
Cajun shall provide the equivalent tax return information for such tax years.
The tax return for information for the purpose of determining federal income
Taxes shall be signed under penalty of perjury, shall include all information
that a corporate income tax return would contain, and shall be provided to the
SWEPCO/Members Page 8
First Amended Joint Plan of Reorganization
Internal Revenue Service within a reasonable time after the Effective Date. Any
Administrative Expense Claim arising out of an income Tax claim described in
Code Section 503(b)(1)(B) subject to the Tax Administrative Expense Claim Bar
Date that is not filed on or prior to such bar date shall be discharged under
the Plan, but shall not be treated as an Administrative Expense Claim or any
other Claim for purposes of distribution under the Plan, whether or not an
objection is initiated. Any Administrative Expense Claim timely filed pursuant
to this subsection 2.2(c) on or prior to the Tax Administrative Expense Claim
Bar Date shall be allowed as filed unless an objection to such Administrative
Expense Claim is filed and served not later than 180 days after the filing of
the Administrative Expense Claim, and, after notice and a hearing conducted
pursuant to the Bankruptcy Code and Rules, the Court allows such claim in a
lesser amount.
2.3 TREATMENT OF PRE-PETITION, PRIORITY TAX CLAIMS. The Trustee shall
pay in cash on the Initial Distribution Date the full amount of each Allowed
Unsecured Claim entitled to priority under Code Section 507(a)(8) from the
Disbursement Accounts either, at the option of the Trustee: (a) on the latest of
(i) the Effective Date; (ii) within 60 days after the date on which such Claim
becomes an Allowed Claim; or (iii) such other time as is agreed upon by the
holder of such Claim and the Trustee; or (b) through deferred cash payments over
a period to not exceed six (6) years after the date of assessment of such Claim,
of a value as of the date such Claim becomes an Allowed Claim or such other time
as is agreed upon by the holder of such Claim and the Trustee. If the Trustee
opts to make deferred cash payments, such payments shall be made in equal annual
installments of principal, plus simple interest accruing from the date such
Claim becomes an allowed Claim at 6% per annum on the unpaid portion of the
Allowed Claim or such other rate as the Court may approve. The first such
payment shall be payable at the latest of (a) the Effective Date; (b) within 60
days after the date on which such Claim becomes an Allowed Claim; or (c) such
other time as is agreed upon by the holder of such Claim and the Trustee;
provided, however, that the Trustee shall have the right to prepay any such
Allowed Claim or any remaining balance of such Claim, in full or in part, at any
time on or after the Effective Date without premium or penalty. The foregoing
treatment is consistent with the requirements of Code Section 1129(a)(9)(C). In
no event shall SWECO or SWEPCO be liable for the payment of any Tax claim
allowed under Code Section 507(a)(8) whether such claims are payable in cash or
through deferred cash payments.
ARTICLE III: CLASSIFICATION OF CLAIMS AND INTERESTS.
Claims required to be classified under Code Section 1123(a)(1) and
Member Interests are classified as follows:
3.1 CLASS 1. ALL OTHER PRIORITY CLAIMS. All Allowed Unsecured Claims
entitled to priority under Code Section 507(a) (other than 507(a)(1) and (8))
shall be treated in Class 1. Class 1 is unimpaired.
3.2 CLASS 2. ALLOWED SECURED CLAIM OF RUS. Class 2 consists of the
Allowed Secured Claim of the RUS. Class 2 is impaired.
3.3 CLASS 3. ALLOWED SECURED CLAIM OF COBANK. Class 3 consists of the
Allowed Secured Claim of CoBank. Class 3 is impaired.
3.4 CLASS 4. ALLOWED SECURED CLAIM OF HIBERNIA. Class 4 consists of the
Allowed Secured Claim of Hibernia. Class 4 is impaired.
3.5 CLASS 5. ALLOWED OTHER SECURED CLAIMS. Class 5 consists of all
Allowed Secured Claims not otherwise classified above, if any. Each secured
claim will be treated as a separate class for purposes of voting and treatment
under the Plan. Class 5 is impaired.
3.6.1 CLASS 6(A). ALLOWED CONVENIENCE CLAIMS. The Allowed Convenience
Claims consist of all Claims listed by the Debtor's schedules as being in an
amount of $20,000 or less.
SWEPCO/Members Page 9
First Amended Joint Plan of Reorganization
3.6.2 CLASS 6(B). ALLOWED UNSECURED CLAIMS. Class 6(b) consists of all
Allowed Unsecured Claims, not otherwise classified, including but not limited to
Members' claims,1 deficiency claims and claims arising from the rejection of
executory contracts. Class 6(b) is impaired.
3.7 CLASS 7. MEMBER INTERESTS. Class 7 consists of the interests of the
Members in the Debtor. Class 7 is impaired.
ARTICLE IV: CLASSES IMPAIRED BY THE PLAN.
Claimants in Class 1 are UNIMPAIRED under the Plan and, therefore, are
not being solicited to vote on the Plan pursuant to 11 U.S.C. Section 1126(f).
Claimants and holders of Member Interests in Classes 2, 3, 4, 5, 6, and 7 are
IMPAIRED under the Plan and are being solicited to accept or reject the Plan.
The Proponents, however, specifically reserve the right to contest (1)
the impaired or unimpaired status of a class under the Plan; and (2) whether any
ballots cast by holders of claims or interests in of such class should be
allowed to be counted for purposes of confirmation of the Plan.
ARTICLE V: TREATMENT OF CLASSIFIED CLAIMS.
5.1 CLASS 1. ALL OTHER PRIORITY CLAIMS. All Allowed Priority Claims
entitled to priority treatment under Code Section 507(a) (except Administrative
Expense Claims in Section 2.1) shall be paid in cash on the Initial Distribution
Date.
5.2 CLASS 2. ALLOWED SECURED CLAIM OF THE RUS. The claims of the RUS
include its contingent liability arising out of its guarantees of Cajun's
obligations arising from eight (8) promissory notes payable to First Interstate
Bank of Arizona, N.A., Trustee of Cooperative Utility Trust (Cajun Series)
("FIB"). FIB has filed proofs of claim totaling $982,648.00 constituting
non-priority, general unsecured claims (the "FIB Claims"). The RUS has made
payments to FIB pursuant to its guarantees of the FIB Claims and to the extent
that RUS has made payments pursuant to its guarantees, it is subrogated to the
FIB Claims. To the extent FIB has Claims which are not subrogated to RUS, unless
FIB and RUS agree otherwise, FIB will vote its unsubrogated Claim as a Unsecured
Claim in Class 6 and the amount of the RUS's Unsecured Claim will be reduced by
the amount of the unsubrogated FIB Claims. The Allowed Secured Claim of the RUS
shall be treated as follows:
(a) If the RUS Settlement is approved by separate order of the Court or
as part of the Confirmation Order, then in complete and full
satisfaction of the Allowed Secured Claim of the RUS, on the Initial
Distribution Date, the RUS will receive
(1) the Purchase Price less amounts necessary to pay all
Allowed Administrative Expense Claims, Allowed Ordinary Course
Administrative Expense Claims, Allowed Priority Tax Claims,
Allowed Other Priority Claims, the Allowed Secured Claim of
Hibernia, Allowed Other Secured Claims to the extent secured
by the Acquired Assets; and the Settlement Amount payable to
the Class 6 Fund; and
(2) all Excluded Assets (or the Net Proceeds thereof) not
otherwise subject to liens or interests securing Allowed Other
Secured Claims; and
(3) the RUS and the Committee of Certain Members have asserted
claims to Excess Funds. If a Final Order is entered in favor
of the Members, the funds, or a portion thereof, in accordance
with the terms of the Final Order will be disbursed to Members
or to the Members' constituents subject to the approval of the
LPSC. Alternatively, if a Final Order is entered in favor of
- --------
1 The Trustee or other parties may contend that a portion or all
of the Members' Allowed Unsecured Claims are subordinated to
other Allowed Unsecured Claims. If the subordination is
established by Final Order, some or all of the Members'
Allowed Unsecured Claims will be treated as subordinate to
Allowed Unsecured Claims not otherwise subject to
subordination.
SWEPCO/Members Page 10
First Amended Joint Plan of Reorganization
the RUS, the funds or a portion thereof, in accordance with
the Final Order will be disbursed to the RUS as part of its
Allowed Secured Claim.
5.3 CLASS 3. ALLOWED SECURED CLAIM OF COBANK. CoBank filed a proof of
claim asserting a secured claim in the amount of $25,486,702.50 plus interest,
renewal fees, and expenses. In June 1983, pursuant to a Tax Benefit Transfer
Agreement, Cajun transferred federal income tax ownership of certain property to
the Clorox Company ("Clorox"). In July 1983, Cajun entered into a similar
transaction with Eastman Kodak Company ("Kodak"). These Tax Benefit Transfer
Agreements (the "TBT Agreements") require Cajun to issue and maintain for the
benefit of Clorox and Kodak, respectively, letters of credit in scheduled
amounts which were expected to be sufficient to reimburse Clorox and Kodak for
any losses of tax benefits caused by Cajun.
In connection with each TBT Agreement, Cajun and New Orleans Bank for
Cooperatives ("NOBC"), CoBank's predecessor, executed a Letter of Credit and
Reimbursement Agreement (collectively the "Letter of Credit Agreements") for
Cajun to reimburse CoBank if draws were made under the letter of credit issued
for the benefit of Clorox and Kodak. CoBank and its predecessor have twice
renewed the letter of credit. The amounts now available to be drawn by Clorox
and Kodak are $10,632,750.00 and $11,309,847.50, respectively (the "LC Debt").
The LC Debt is purportedly secured by a Supplemental Mortgage, a
Subordinated Mortgage, Security Agreement and Financing Statements as amended
and supplemented from time to time, an Act of Collateral Pledge dated January
23, 1988 and certain statutory liens. It is believed that this claim of CoBank
is largely contingent and matures only if a disqualifying event occurs under the
TBT Agreements or if the letter of credit is not renewed prior to its
expiration.
In a proof of claim, filed September 27, 1995 with the Court, CoBank
made a Claim for certain loan obligations owed it by Cajun, which Claim is
represented by the outstanding principal balances on four separate promissory
notes made by Cajun to CoBank, which notes were guaranteed by RUS. These notes
(collectively the "Incorporated Indebtedness") were incorporated into the
indebtedness owed RUS by Cajun pursuant to a certain Debt Restructure Agreement,
dated May 31, 1990, between RUS and Cajun. No distribution under the Plan shall
be made to CoBank, on account of the Incorporated Indebtedness, but all such
distributions shall be made to RUS. In addition, RUS shall have the sole right
to vote the Claims represented by the Incorporated Indebtedness as part of its
Class 2(a)(1) Allowed Secured Claim.
Under the Plan, liability for the contingent claims of CoBank shall be
assumed by SWECO on the Effective Date as and to the extent provided in the
Asset Purchase Agreement, and SWECO will execute with CoBank new Letter of
Credit Agreements to further evidence the purchaser's assumption. SWECO will
seek to structure the Asset Purchase Agreement in such a way as to avoid a
disqualifying event occurring under the TBT Agreements. However, in the event
that the sale of Cajun's assets to SWECO pursuant to the acquisition or the
implementation of the acquisition or the action or structure of the purchaser on
the Effective Date causes the indemnity obligation of Cajun to Kodak and/or
Clorox to mature and a subsequent draw on a letter of credit, SWECO will assume
the reimbursement obligation of the Estate to CoBank arising solely as a result
of an act or omission by SWECO (net of the existing cash collateral held by
CoBank). If such indemnity obligation so matures, CoBank shall apply all cash
collateral it then holds against the reimbursement obligation, and SWECO shall
immediately pay the balance of the reimbursement obligation to CoBank, and SWECO
shall be entitled to Cajun's rights to the future retirement payments made by
CoBank to retire the Class E Stock from time to time, together with any CoBank
patronage dividends, etc. until such time as SWECO has been paid in full its
reimbursement obligation with interest. Following payment to SWECO of any
reimbursement obligation, all future retirement payments and patronage dividends
shall be paid by CoBank directly to the RUS.
If it is determined that a triggering event occurred such that Cajun's
indemnity obligation to CoBank matures and constitutes an Administrative Expense
Claim of the Estate, then CoBank shall apply all cash collateral it then holds
against the indemnity obligation, and the Estate shall immediately pay the
balance of the indemnity obligation to CoBank. The Estate shall then be entitled
to Cajun's rights in the future retirement payments made by CoBank to retire the
Class E Stock from time to time, together with future patronage dividends,
proceeds, etc., and SWECO shall not assume Cajun's indemnity obligation.
Subsequent to the Effective Date, if no disqualifying event has
occurred under the tax benefit transfer agreements on or prior to the Effective
Date, the contingent claims of CoBank shall continue to be secured by existing
and future CoBank Class E Stock, proceeds thereof and related collateral
(including patronage dividends, accumulated cash accounts, CoBank Class E Stock,
retirements and the proceeds thereof) ("CoBank Collateral") as more fully
described in the Pledge Agreement to be entered into between CoBank and the
SWEPCO/Members Page 11
First Amended Joint Plan of Reorganization
owners and beneficial owners of such collateral, and CoBank's liens on CoBank
Collateral and its proceeds shall not be discharged or otherwise released or
extinguished by confirmation of the Plan, but shall be retained by CoBank
following the Effective Date. In addition, on the Effective Date, CoBank shall
be entitled to charge the existing cash collateral account it holds for all
unpaid letter of credit fees from the Petition Date through the Effective Date,
and SWECO shall pay all letter of credit fees thereafter. CoBank shall also be
entitled to charge the existing cash collateral account $250,000 for
reimbursement of a portion of its legal fees and expenses incurred since the
inception of the chapter 11 case. On the Effective Date, however, CoBank shall
be deemed to have released any other mortgage or lien on Cajun or reorganized
Cajun's assets securing CoBank's claims, except for the CoBank Collateral.
Accordingly, on and after the Effective Date, CoBank shall have no interest in
any other assets, including, but not limited to, the Acquired Assets and the
sales proceeds thereof.
In addition, on and after the Effective Date of the Plan, to the extent
that the sum of 75% of the face amount of the Class E Stock and the amount of
all funds accumulated in the cash account held by CoBank from time to time
(calculated quarterly) exceeds 110% of the then aggregate amount of the
indemnity obligation assumed by SWECO, the excess shall be paid by CoBank to the
RUS.
If, the RUS, the holder of the CoBank Class E Stock designated
by the Plan is not an "eligible borrower" of CoBank, then CoBank shall issue
replacement Participation Certificates with the only difference from the CoBank
Class E Stock being the right to vote. Nothing contained in the Plan is intended
to extinguish or reduce any rights of CoBank against RUS on any RUS guarantee,
nor any continuing obligations of RUS to make timely payments on such
guarantees, and such claims and obligations as between RUS and CoBank shall
survive confirmation of the Plan.
To the extent any inconsistencies exist between (a) Section 3.11 of the
Asset Purchase Agreement and/or any other provisions of the Asset Purchase
Agreement and (b) this Section 5.3, Section 5.3 of this Plan shall control the
treatment of CoBank's Allowed Secured Claim.
5.4 CLASS 4. ALLOWED SECURED CLAIM OF HIBERNIA. The Allowed Secured
Claim of Hibernia representing the Industrial Development bonds, secured by the
Debtor's current headquarters, building and land, shall, unless Hibernia Bank
agrees otherwise, be paid in full in cash totaling the amount of its Allowed
Secured Claim on the later of (a) the Effective Date or (b) if an objection to
such claim has been filed, within ten days of the date on which an order
allowing such Claim becomes a Final Order. Hibernia shall retain its rights,
liens and security interests until its Allowed Secured Claim is paid in full.
The contingencies contained in previous orders of the Court, upon the occurrence
of which Hibernia would be required to return the funds previously paid to it
are eliminated. Therefore, Hibernia will unconditionally retain the funds that
have been paid to it and its claim will be $900,000 (minus any amounts applied
to principal when Hibernia received the payment pursuant to the June 19, 1997
Order, and any future principal payments received) plus, as allowed, interest,
fees, expenses and premiums and other amounts to Hibernia pursuant to the terms
of the agreements governing these obligations.
5.5 CLASS 5. ALLOWED OTHER SECURED CLAIMS. Each holder of an Allowed
Other Secured Claim shall, at the Trustee's option: (a) be paid, on the Initial
Distribution Date, on account of its Allowed Secured Claim, cash totaling the
amount of such Allowed Secured Claim; (b) be paid, on account of its Allowed
Secured Claim, the Net Proceeds of the sale of any property which is subject to
the lien or interest securing said Allowed Claim, which sales shall be made in
accordance with Code Section 1129(a)(2)(A)(ii); or (c) receive the property
which is subject to the lien or interest securing said Allowed Claim in full
satisfaction of the Allowed Claim of such holder. In the event of option (b)
above, such amount shall be paid on the last to occur of (1) the Effective Date,
(2) within ten (10) days after the date on which an order allowing such Allowed
Other Secured Claim becomes a Final Order, or (3) within ten (10) days after
closing of a sale of the property which is subject to the liens securing said
Allowed Claim. In the event of option (c) above, the property which is subject
to the liens securing said Allowed Other Secured Claim shall be transferred on
the later of (1) the Effective Date, or (2) as soon as practicable after the
date on which an order allowing such Secured Claim becomes a Final Order. Any
such property transferred to holders of Allowed Other Secured Claims under this
paragraph shall be transferred either by abandonment of such property by the
Trustee under Code Section 554 or by transfer of such property "as-is,
where-is," without representation or warranty by Debtor or the Trustee, at the
Trustee's sole option and discretion.
5.6 CLASS 6(A) AND 6(B). ALLOWED UNSECURED CLAIMS AND ALLOWED
CONVENIENCE CLAIMS. In full and complete satisfaction of all Allowed Convenience
Claims and Allowed Unsecured Claims, holders of such Claims will be paid a Pro
SWEPCO/Members Page 12
First Amended Joint Plan of Reorganization
Rata share of the Class 6 Fund. If the RUS Settlement is approved by
Final Order or as part of the Confirmation Order, the RUS shall waive its right
to distribution from the Class 6 Fund on account of its Allowed Unsecured Claim,
and the members of the Committee of Certain Members shall waive their right to
distribution on account of their Allowed Unsecured Claims. If, after payment in
full of Allowed Unsecured Claims and Allowed Convenience Claims under the Plan
(other than the deficiency claim of the RUS), funds remain from the liquidation
of assets and from successful avoidance actions, the RUS, as the sole remaining
holder of an Allowed Unsecured Claim, will receive such remaining funds until
its unsecured claim is paid in full.
5.7 CLASS 7. MEMBER INTERESTS. The interests of the Members in the
Debtor shall be canceled as of the Effective Date.
ARTICLE VI: MEANS FOR IMPLEMENTING PLAN.
6.1 CONSUMMATION OF THE RIVER BEND SETTLEMENT. The River Bend
Settlement shall be consummated pursuant to the Order and Judgment Approving
Settlement by and among Cajun Electric Power Cooperative, Inc., Entergy Gulf
States, Inc., Entergy Corporation and the Rural Utilities Service of the
Department of Agriculture dated August 26, 1996 (the "Order"). The Order
provides that the River Bend Settlement may be consummated independent of any
plan of reorganization.
6.2 SALE OF ACQUIRED ASSETS TO SWECO. On the Effective Date, SWECO
shall purchase the Acquired Assets and the Acquired Assets shall be transferred
to SWECO pursuant to the terms and conditions of the Asset Purchase Agreement, a
copy of which is attached hereto as EXHIBIT 1 and incorporated herein for all
purposes. The Purchase Price shall be deposited in the Disbursement Accounts. On
the Effective Date, unless otherwise specifically provided in this Plan, the
Acquired Assets shall be transferred by the Trustee to SWECO free and clear of
all liens, claims and interests. The Trustee shall be deemed to have entered
into the Asset Purchase Agreement as of the date of the Confirmation Order.
6.3 CLASS 6 FUND. The Class 6 Fund shall be established and deposited
in one of the Disbursement Accounts for purposes of establishing a fund
available for Pro Rata distribution to Class 6. The amount of the Class 6 Fund
shall be the Settlement Amount of $20,240,000 plus all Net Proceeds from
Avoidance Actions.
6.4 DISBURSEMENT ACCOUNTS. On or prior to the Effective Date, the
Trustee shall set up one or more interest bearing accounts to be designated as
the Disbursement Accounts, which account or accounts shall comply with Code
Section 345 except as otherwise ordered by the Court. Except as otherwise
provided in the Plan, the Purchase Price and all Net Proceeds from the sale or
other disposition of Excluded Assets and Avoidance Actions shall be deposited in
the Disbursement Accounts with all valid liens and interests attaching to said
Net Proceeds.
6.5 CLAIMS OBJECTION DEADLINE. Each Claim as to which a proof of claim
has been filed prior to the Bar Date or that is listed as undisputed, liquidated
and non-contingent in the schedules filed by the Debtor shall be allowed without
order of the Court unless an objection thereto is filed and served in accordance
with Bankruptcy Rule 3007 no later than 180 days after the Confirmation Date or
180 days after such Claim is first filed, whichever is later.
6.6 DISPUTED OR UNDETERMINED CLAIMS AND RESERVES THEREFOR.
(1) No payments or distributions shall be made with respect to all
or any portion of a Claim which does not constitute an Allowed
Claim. The Trustee shall reserve funds for the payment of
those Claims which are to receive distributions under the Plan
and which, as of the date of any distribution, do not
constitute an Allowed Claim. Such reserve shall be made by
retaining an amount equal to the distribution such claim would
have received from such distribution based on the lesser of
(i) the amount of the Claim, or (ii) the amount in which the
Claim shall be estimated by the Court pursuant to Code Section
502(c) for the purpose of allowance, which amount shall be the
maximum amount in which such Claim may ultimately become an
Allowed Claim.
(2) In order to pay any Administrative Expense Claim for federal
income Taxes that may be Allowed and payable under this Plan,
the Trustee shall reserve the amount of $20 million until the
allowed Administrative Expense Claim, if any, for the Estate's
federal income Tax(es) is paid in full (the "Income Tax
SWEPCO/Members Page 13
First Amended Joint Plan of Reorganization
Reserve Fund"). Upon the establishment of the Income Tax
Reserve Fund, the Trustee may distribute the remainder of the
Purchase Price, in accordance with the provisions of this Plan
and shall be absolved and released from any personal liability
for the Estate's federal income Taxes; notwithstanding the
foregoing, the Trustee shall be obligated under this Plan to
distribute to the United States of America through the
Internal Revenue Service (the "IRS") any amounts necessary
from the Income Tax Reserve Fund to satisfy any Allowed
Administrative Expense Claim for the Estate's federal income
Taxes. In the event the Allowed Administrative Expense Claim
for the Estate's federal income Taxes exceeds the Income Tax
Reserve Fund, the governmental entities, the RUS and the IRS,
will resolve any issues regarding disgorgement of funds
between themselves, in accordance with the terms of this
paragraph. If the allowed Administrative Expense Claim for the
Estate's federal income Taxes is less than the Income Tax
Reserve Fund, then, after payment of the allowed
Administrative Expense Claim for federal income taxes in full,
the remainder of the Income Tax Reserve Fund shall be
distributed in accordance with the provisions of this Plan. In
the event the Allowed Administrative Expense Claim for the
Estate's federal income Taxes exceeds the Income Tax Reserve
Fund, the RUS shall disgorge part of the funds distributed to
it pursuant to this Plan sufficient to pay any remaining
amounts due to the IRS in order to satisfy the allowed
Administrative Expense Claim for the Estate's federal income
Taxes in full. In the event that this subsection 6.6(2) is
complied with and a $20 million reserve fund is established,
then, in no event shall the IRS be entitled to disgorgement
of, nor shall the Trustee be required to recover by
disgorgement, any funds distributed to creditors other than
the RUS under this Plan in order to satisfy the Allowed
Administrative Expense Claim for the Estate's federal income
Taxes.
6.7 IMPLEMENTATION. Pursuant to Code Section 1142(b) and Bankruptcy
Rule 7070, the Trustee shall execute or deliver any and all documents or
instruments, or to perform any other act necessary to implement or consummate
this Plan. If the Trustee refuses to comply with such direction, the Court may
direct the Trustee's compliance with the Plan, or direct the U.S. Trustee to
appoint a new trustee to implement and consummate this Plan.
ARTICLE VII: EXECUTORY CONTRACTS.
7.1 SUPPLY CONTRACTS. On the Effective Date, SWECO and the Members who
have consensually agreed to do so, shall execute new power supply agreements to
replace and supersede the Supply Contracts with the Debtor substantially in the
form attached hereto as EXHIBIT 2. Any power supply agreements between the
Debtor and those Members who have not agreed to enter into new power supply
agreements as set forth above, shall be neither assumed nor rejected, but shall
remain in effect and subject to any collateral assignments to the RUS, to the
extent of applicable state and federal law:
7.2 RIVER BEND JOA. Cajun shall be deemed to have rejected the River
Bend JOA.
7.3 BIG CAJUN II, UNIT 3 JOPOA. The Big Cajun II, Unit 3 JOPOA will be
assumed by the Trustee and assigned to SWECO on the Effective Date.
7.4 ALL OTHER EXECUTORY CONTRACTS. On the Effective Date, the Trustee
shall be deemed to reject all other executory contracts of the Debtor, except as
may expressly be otherwise set forth in the Asset Purchase Agreement, and for
executory contracts identified on a list of assumed executory contracts which
has been filed by SWEPCO with the Court. The contracts so identified shall be
deemed assumed as of the Effective Date. All payments necessary to cure any
defaults on contracts to be assumed and assigned to SWECO, shall be paid as
Administrative Expense Claims under Section 2.1 on the Initial Distribution
Date.
ARTICLE VIII: MISCELLANEOUS PROVISIONS.
8.1 VOTING. All of the classes (except Class 1) are eligible to vote on
the Plan.
SWEPCO/Members Page 14
First Amended Joint Plan of Reorganization
8.2 CRAMDOWN. In the event any class of creditors that is impaired does
not accept the Plan as provided in Code Section 1129(a)(8)(A), the Proponents
request that the Court confirm the Plan pursuant to Code Section 1129(b).
8.3 MODIFICATIONS OF THE PLAN. The Proponents may jointly modify the
Plan in accordance with Code Section 1127.
8.4 U.S. TRUSTEE FEES. All fees payable by the Debtor pursuant to 28
U.S.C. Section 1930 have been paid or shall be paid as of the Effective Date by
the Trustee.
8.5 RELEASE. In consideration for agreements made by each of the
parties set forth herein in connection with the terms and conditions of the
Plan, the Trustee shall, on the Effective Date, release and discharge all direct
or derivative rights, claims and causes of action which constitute property of
the Estate, including but not limited to claims under Code Sections 506, 510,
542, 543, 544, 545, 546, 547, 548, 549, 550, 551 and 553, and any state laws
corresponding thereto, arising prior to the Effective Date, against (i) SWEPCO,
SWECO, Central and South West Corporation, and their respective current and
former Representatives, and, (ii) if the RUS Settlement is approved by Final
Order or as part of the Confirmation Order, the RUS and its respective current
and former Representatives.
8.6 SETOFFS. Subject to the limitations provided in Code Section 553,
all parties retain their rights of setoff or recoupment pursuant to applicable
law. Neither the failure to set off the Estate's claim nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Estate of any such
claim that the Estate may have against the holder, nor shall it constitute a bar
by res judicata and/or collateral estoppel to the assertions of Claims, either
prepetition or postpetition, by the Estate as the case may be.
8.7 SURRENDER OF INSTRUMENTS AND RELEASE OF LIENS. Each claimant who is
to receive distributions under the Plan in satisfaction of a Claim shall not
receive such distributions until such claimant executes a release of any lien(s)
(in recordable form if appropriate) and delivers the same to the Trustee. Any
such claimant that fails to surrender such instrument or satisfactorily explain
its non-availability or to execute such release of liens shall be deemed to have
no further Claim and shall not participate in any distribution under the Plan.
8.8 CONDITIONS TO EFFECTIVENESS. This Plan shall not become effective
and the Effective Date will not occur until the following conditions have been
met or shall have been waived in writing by SWEPCO:
(a) All conditions specified in Article VI: "Conditions to the
Acquisition" in the Asset Purchase Agreement;
(b) Judgment(s) that are Final Order(s) shall have been
entered determining that GSU has no liability to
Burlington Northern and Santa Fe Railway Co.,
American Commercial Marine Service Company, Triton
Coal Company or Western Fuels Association relating to
any obligations, contractual or otherwise, owed or
contracted for by Cajun to or with such entities;
(c) No order or judgment shall have been entered in favor
of any entity determining that GSU has liability to
such entity relating to any obligations, contractual
or otherwise, owed or contracted for by Cajun to or
with such entity; and
(d) Court approval in the confirmation Order or by separate
Order of the RUS Settlement.
8.9 FEES AND EXPENSES. Pursuant to Code Section 1123(a)(4), fees for
services, costs and expenses incurred in connection with Cajun's bankruptcy case
or in connection with the Plan and incident to Cajun's bankruptcy case,
including, but not limited to the reasonable fees, costs and expenses of secured
creditors, parties to unexpired leases or executory contracts to be assumed, and
indenture trustees shall be subject to approval of the Court.
SWEPCO/Members Page 15
First Amended Joint Plan of Reorganization
ARTICLE IX: RESERVATION OF RIGHTS AND PROPERTY.
9.1 CAUSES OF ACTION. Except for claims expressly settled or released
pursuant to this Plan, and claims set forth in the following sentence, the
Trustee shall retain all causes of action it may have under state or federal law
including the United States Bankruptcy Code, and the Trustee in his discretion
shall be authorized to prosecute (or not prosecute) any such actions as fully
and completely as if the same were being prosecuted by a trustee in bankruptcy.
The Trustee shall be provided with a litigation fund to pay fees and expenses in
pursuing such causes of action in the amount of $150,000 from the purchase
price, and such amount shall be reserved as an anticipated administrative
expense. All claims and causes of action of the estate of any nature or kind,
known or unknown, asserted or unasserted which arise from or relate to the
assets purchased by and conveyed to SWECO, shall on the Effective Date be deemed
assigned and conveyed to SWECO.
9.2 VESTING OF PROPERTY IN TRUSTEE AND SWECO. On the Effective Date,
all of the property of the Estate that is not sold to SWECO, if any, or
otherwise liquidated shall be vested in the Trustee, free and clear of all
Claims and interests of creditors except as provided for in the Plan, and the
Trustee at his election shall be entitled to liquidate such assets without
further order of the Court pursuant to Code Section 1141(b) or transfer them to
any lienholder in full satisfaction of the secured claim on such assets. Upon
the completion of the liquidation of the assets or re-vesting in the Trustee, if
any, the Trustee shall cause and implement the dissolution of Cajun under
Louisiana law. All assets conveyed to SWECO (i.e. the Acquired Assets) shall be
conveyed free and clear of all liens, claims, interests and encumbrances,
whether lien claims or otherwise, unless otherwise specifically authorized by
this Plan. The conveyance to SWECO shall further be free and clear of any claims
of successorship liability, and SWECO shall have no successor liability as a
result of its purchase of the Acquired Assets, or as a result of any provisions
of this Plan or of the Asset Purchase Agreement.
ARTICLE X. REQUIRED APPROVALS.
The effectiveness of the Plan and the obligations of the Proponents
hereunder are subject to regulatory approvals by Final Order and all other
conditions as set forth in the Asset Purchase Agreement. The boards of directors
of the Proponents reserve the right to approve all final closing documents.
ARTICLE XI. RETENTION OF JURISDICTION.
After confirmation of the Plan, the Court shall retain jurisdiction for
the following purposes:
(1) For the classification of Claims and for the re-examination of
any Claims that have been allowed for purposes of voting, and
the determination of such objections as may be filed to
Claims. The failure to object to or to examine any Claim for
the purpose of voting shall not be deemed to be a waiver of
the right to object to, or re-examine the Claim in whole or in
part;
(2) For determination of all questions and disputes regarding
title to the assets of the estate, determination of all causes
of action, controversies, disputes, or conflicts, whether or
not subject to action pending as of the date the Confirmation
Order is entered, between the Trustee and any other party,
including but not limited to, any rights of the Trustee to
prosecute Avoidance Actions, and to recover money or assets
pursuant to the provisions of the Bankruptcy Code;
(3) For the correction of any defect, the curing of any omission,
or the reconciliation of any inconsistency in this Plan or the
Confirmation Order as may be necessary to carry out the
purposes and intent of this Plan;
(4) To consider any matters brought before the Court by an
interested party necessary to carry out the terms, conditions
and intent of this Plan;
(5) For the modification of this Plan after confirmation pursuant
to the Bankruptcy Rules and the Bankruptcy Code;
SWEPCO/Members Page 16
First Amended Joint Plan of Reorganization
(6) To enforce and interpret the terms and conditions of this
Plan;
(7) To enter any order, including injunctions, necessary to
enforce the title, rights and powers of the Debtor and to
impose such limitations, restrictions, terms and conditions of
such title, rights, and powers as this Court may deem
necessary;
(8) To determine whether a default has occurred under the Plan or
the Asset Purchase Agreement, and make such orders as the
Court deems necessary to enforce the provisions of the Plan or
the Asset Purchase Agreement; and
(9) To enter an order concluding and terminating this case.
Respectfully submitted on this 18th day of March, 1998.
Respectfully submitted on this 18th day of March, 1998.
COMMITTEE OF CERTAIN MEMBERS OF
CAJUN ELECTRIC
By: Bobby S. Gilliam
Bobby S. Gilliam
Louisiana State Bar No. 6227
Wilkinson, Carmody & Gilliam
400 Travis Street, Suite 1700
Shreveport, La 71101
Telephone: 318/221-4196
Facsimile: 318/221-3705
By: Henry J. Kaim
Henry J. Kaim
Texas State Bar No. 11075400
Edward L. Ripley
Texas State Bar No. 16935950
Patricia Baron Tomasco
Texas State Bar No. 01797600
SHEINFELD, MALEY & KAY, P.C.
3700 First City Tower
1001 Fannin Street, Suite 3700
Houston, Texas 77002-6797
Telephone: (713) 658-8881
Fascimile: (713) 658-9756
ATTORNEYS FOR SOUTHWESTERN
ELECTRIC POWER COMPANY
COMMITTEE OF CERTAIN MEMBERS
OF CAJUN ELECTRIC
By: Melanie Rovner Cohen, Attorney
Melanie Rovner Cohen, Attorney
Melanie Rovner Cohen
Altheimer & Gray
10 South Wacker Drive
Chicago, Illinois 60606
312-715-4000
COMMITTEE OF CERTAIN MEMBERS OF
CAJUN ELECTRIC
By: John M. Sharp
John M. Sharp, Local Counsel
John M. Sharp (Bar No. 19149)
A Professional Law Corporation
14481 Old Hammond Highway,
Suite 2
Baton Rouge, LA 70816
504-273-8510
SWEPCO/Members Page 18
First Amended Joint Plan of Reorganization
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy of the Amended and Restated
Joint Plan of Reorganization has been served, via Federal Express, on this 18th
day of March, 1998, to all parties on the attached distribution list.
Henry J. Kaim
Henry J. Kaim
SHEINFELD, MALEY & KAY, P.C.
3700 First City Tower
1001 Fannin Street, Suite 3800
Houston, Texas 77002-6797
PARTIES RECEIVING SERVICE OF
SWEPCO PLAN/DISCLOSURE STATEMENT
Ralph Mabey, Trustee NRG Energy, Inc./Zeigler Coal Holding
c/o Lon A. Jenkins Company
LeBoeuf Lamb Green & MacRae c/o Brad Axelrod
1000 Kearns Building Jones, Walker, Waechter, Potevent, Carrere
136 South Main Street & Denegre
Salt Lake City, UT 84101 8555 United Plaza, Fifth Floor
Baton Rouge, LA 70809-7000
Ralph Mabey, Trustee Southern Electric International, Inc.
c/o David S. Rubin c/o J. Robert Stoll
Kantrow, Spaht, Weaver & Blitzer Mayer, Brown & Platt
City Plaza - Suite 300 190 South La Salle Street
445 North Boulevard Chicago, IL 60603
Baton Rouge, LA 70821
Ralph Mabey, Trustee Southern Electric International, Inc.
c/o Keith A. Lord c/o Matt J. Farley
Wasserstein Perella & Co., Inc. Deutsch, Kerrigan & Stiles, L.L.P.
31 West 52nd Street, 26th Floor 755 Magazine Street
New York, NY 10019 New Orleans, LA 70130
Cajun Electric Power Enron Capital & Trade Resources Corp.
Cooperative, Inc. c/o Alfredo R. Perez
10719 Airline Highway Bracewell & Patterson LLP
P.O. Box 15540 711 Louisiana Street, Suite 2900
Baton Rouge, LA 70895 Houston, TX 77002
NRG Energy, Inc./Zeigler Coal Enron Capital & Trade Resources Corp.
Holding c/o J. Kenton Parsons
c/o Michael A. Rosenthal Roedel, Parsons, Hill & Kock
Gibson, Dunn & Crutcher 3440 Jefferson Highway, Suite 301
1717 Main Street, Suite 5400 Baton Rouge, LA 70809
Dallas, TX 75201
Southwestern Electric Power Rural Utilities Service
Company c/o Frances M. Toole
c/o Bobby S. Gilliam United States Department of Justice
Wilson, Carmody & Gilliam Civil Division, Commercial Litigation
400 Travis Street Branch
1700 Beck Building P.O. Box 81100
P.O. Box 1707 Washington, DC 20044
Shreveport, LA 71166
Milanie Cohen Louisiana Public Service Commission
Altheimer & Gray c/o Michael R. Fontham
10 South Wacker Drive Stone, Pigman, Walther, Wittman &
Chicago, Illinois 60606 Hutchinson LLP
546 Carondolet Street
New Orleans, LA 70130
Gulf States Utilities Securities and Exchange Commission
c/o Tom F. Phillips, Esq. Document Control
Taylor, Porter, Brooks & Stop 1-4, Room 1004
Phillips, LLP 450 5th Street, N.W.
451 Florida Street, 8th Floor Washington, DC 20549
Baton Rouge, LA 70801
Official Unsecured Creditors' John Lee, Esq.
Committee Securities and Exchange Commission
c/o Gerald M. Amero 500 W. Madison
One Monument Place Chicago, IL 60661
Portland, ME 04104
Official Unsecured Creditors' Office of the United States Trustee
Committee Attn: Janice Taylor
Breazeale, Sachse & Wilson LLP Texaco Center, Suite 2110
One American Plaza 400 Poydras Street
23rd Floor New Orleans, LA 70130
Baton Rouge, LA 70825
Rural Utilities Service James R. Lackie
c/o Frances M. Toole Kean, Miller, Hawthorne, D'Armond,
United States Department of McCowan & Jarman, L.L.P.
Justice One American Place
Civil Division, Commercial 22nd Floor
Litigation Baton Rouge, Louisiana 70825
1100 L Street, N.W., Room 10102
Washington, DC 20005
John David Ziober James B. Supple, Esq.
Shockey & Ziober Biggs, Trowbridge, Supple & Cremaldi
5551 Corporate Boulevard Lawless Building
Suite 3-A 200 Willow Street
Baton Rouge, Louisiana 70808 Franklin, Louisiana 70538-0565
Steve McDonnell John W. Hutchison, Esq.
Central and South West Voorhies & Labbe', A P.L.C
Corporation 700 St. John Street
1616 Woodall Rodgers Freeway Lafayette, Louisiana 70501
Dallas, Texas 75266
Ronald M. Martin Jack L. Smith
Holland & Hart Holland & Hart, LLP
90 S. Cascade, Suite 1000 555 Seventeenth Street, Suite 3200
Colorado Springs, CO 80903 Denver, Colorado 80202
Janet M. Weiss Carl H. Hanchey, Esq.
Gibson, Dunn & Crutcher Jones, Tete, Nolen, Hanchey, Swift &
200 Park Avenue Spears, L.L.P.
47th Floor First Federal Building
New York, NY 10016 1135 Lakeshore Drive, 6th Floor
Lake Charles, Louisiana 70601
Edna Latchem William N. Knight, Esq.
Thibaut, Thibaut, Bacot, 906 North Lake Arthur Avenue
Latchem & Vogt, L.L.P. Jennings, Louisiana 70546
7809 Jefferson Highway,
Building G
Baton Rouge, LA 70809
R. Patrick Vance E. Rudolph McIntyre, Esq.
Jones, Walker McIntyre, McIntyre & McIntyre
207 St. Charles Avenue 810 Pine Street
New Orleans, LA 70130 Winnsboro, Louisiana 71295
Patrick E. Henry, Esq. James M. Funderburk, Esq.
Shaw, Weaver & Henry, L.L.C. Duval, Funderburk, Sundbery & Lovell
522 East Main Street 101 Wilson Avenue
Homer, Louisiana 71040 Houma, Louisiana 70364
V. Russell Purvis, Esq. James J. Davidson, III, Esq.
Smith, Taliaferro, Seibert & Davidson, Meaux, Sonnier, McElligott &
Purvis Swift
407 Mound Street 810 South Buchanan Street
Jonesville, Louisiana 71343 Lafayette, Louisiana 70501
Henry C. Gahagan, Jr., Esq.
Gahagan & Conlay
727 Second Street
Natchitoches, Louisiana 71457
Nicholas F. LaRocca, Jr., Esq.
Nicholas F. LaRocca, Jr., Ltd.
607 Brashear Avenue
Morgan City, Louisiana 70380
Clint Pierson, Esq.
Talley, Anthony, Hughes & Knight
4565 LaSalle Street, Suite 300
Acadian Bank Building
Mandeville, Louisiana 70471
Tom Brice
Southwestern Electric Power Company
416 Travis Street
Shreveport, LA 71101
Judah L. Rose
9300 Lee Highway
Fairfax, Virginia 22031-1207
Mike Smith
Central and South West Corporation
1616 Woodall Rogers Freeway, 7th Floor
Dallas, TX 75202
Mike Rico
Central and South West Corporation
1616 Woodall Rogers Freeway, 7th Floor
Dallas, TX 75202
Stephen J. Baron
Kennedy & Associates
35 Glenlake Parkway, Suite 475
Atlanta, Georgia 30328
770/395-1288
Steve Tick
Sullivan & Tick
7445 East Peakview Avenue
Englewood Colorado 80111
303/740-9775
Mike Yokell
Hagler Bailley
1881 9th Street, Suite 201
Boulder, CO 80302
303/449-5515
Raymond Shapiro
Blank, Rome, Comiskey & McCauley
1200 Four Penn Center Plaza
Philadelphia, PA 19103
215/569-5500
Patrick Johnson, Jr.
Lemle & Kelleher, L.L.P.
Pan-American Life Center, 21st Floor
601 Poydras Street
New Orleans, LA 70130-6097
(504) 584-9417
DRAFT OF MARCH 17, 1998
ASSET PURCHASE AGREEMENT
AMONG
SOUTHWESTERN WHOLESALE ELECTRIC COMPANY
RALPH R. MABEY,
AS CHAPTER 11 TRUSTEE OF CAJUN ELECTRIC POWER
COOPERATIVE, INC.
AND
AS TO SECTION 7.4 OF THE AGREEMENT ONLY,
SOUTHWESTERN ELECTRIC POWER COMPANY
DATED AS OF ___________, 1998
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Defined Terms.................................................1
SECTION 1.2 Interpretation................................................1
SECTION 1.3 Conflict With Plan or Other Transaction Documents.............2
SECTION 1.4 Legal Representation of Parties...............................2
ARTICLE II
THE ACQUISITION
SECTION 2.1 Assets to be Conveyed Free and Clear of Encumbrances..........3
SECTION 2.2 Purchase Price for Acquired Assets............................3
SECTION 2.3 Purchase Price Adjustment for Asset Impairment................3
SECTION 2.4 Other Purchase Price Adjustments. ...........................5
SECTION 2.5 Prorations....................................................5
SECTION 2.6 Liabilities Assumed by SWECO..................................6
SECTION 2.7 Payment of Initial Cash Payment for Acquired Assets...........6
SECTION 2.8 Allocation of Purchase Price..................................6
SECTION 2.9 Further Assurances............................................6
SECTION 2.10 Closing.......................................................7
ARTICLE III
COVENANTS
SECTION 3.1 Access; Due Diligence.........................................7
SECTION 3.2 Conduct of Business...........................................8
SECTION 3.3 Cooperation in Consummation of the Plan and Related Matters..10
SECTION 3.4 Sales Taxes..................................................10
SECTION 3.5 Teche-CLECO Transfer.........................................10
SECTION 3.6 Treatment of Executory Contracts and Unexpired Leases and
Post-Petition Contracts......................................11
SECTION 3.7 Filings, Consents and Approvals..............................12
SECTION 3.8 Employee Matters.............................................13
SECTION 3.9 Notice of Actions and Proceedings............................13
SECTION 3.10 Bankruptcy Filings...........................................13
SECTION 3.11 Safe Harbor Leases...........................................13
SECTION 3.12 Cooperation as to Tax Matters; Proration.....................13
ii
ARTICLE IV
STATEMENTS AS TO THE EXISTENCE OR NON-EXISTENCE
OF CERTAIN FACTS, CONDITIONS OR EVENTS RELATING TO DEBTOR
SECTION 4.1 Organization and Good Standing...............................14
SECTION 4.2 Authorization of Agreement...................................14
SECTION 4.3 No Violation.................................................14
SECTION 4.4 Ownership of Acquired Assets.................................15
SECTION 4.5 Financial Condition..........................................15
SECTION 4.6 Absence of Undisclosed Liabilities...........................16
SECTION 4.7 Real Property................................................16
SECTION 4.8 Tangible Personal Property...................................16
SECTION 4.9 Intellectual Property Rights.................................16
SECTION 4.10 Employee Benefit Plans.......................................17
SECTION 4.11 Litigation...................................................17
SECTION 4.12 Contracts....................................................17
SECTION 4.13 Compliance with Law; Permits.................................18
SECTION 4.14 Labor and Employment Matters.................................18
SECTION 4.15 Environmental Matters........................................18
ARTICLE V
REPRESENTATIONS OF SWECO
SECTION 5.1 Organization. ..............................................20
SECTION 5.2 Authorization of Agreement...................................20
SECTION 5.3 Approvals....................................................21
SECTION 5.4 No Violation.................................................21
SECTION 5.5 Litigation...................................................21
ARTICLE VI
CONDITIONS TO THE ACQUISITION
SECTION 6.1 Conditions to the Obligations of Each Party..................21
SECTION 6.2 Conditions to the Obligation of SWECO to Consummate the
Acquisition..................................................22
SECTION 6.3 Conditions to the Obligation of the Trustee to Consummate
the Acquisition..............................................26
iii
ARTICLE VII
Page
AMENDMENT, TERMINATION, EXPENSE
REIMBURSEMENT,LIQUIDATED DAMAGES
SECTION 7.1 Amendment....................................................27
SECTION 7.2 Termination..................................................27
SECTION 7.3 Effect of Termination........................................28
SECTION 7.4 Trustee's Liquidated Damages for SWECO Breach................28
SECTION 7.5 Reimbursement of SWECO's Expenses............................28
SECTION 7.6 SWECO's Liquidated Damages for Trustee Breach................29
SECTION 7.7 First Priority Expenses......................................29
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Expenses.....................................................30
SECTION 8.2 Entire Agreement, Disclosures in Writing.....................30
SECTION 8.3 Counterparts.................................................30
SECTION 8.4 Headings.....................................................30
SECTION 8.5 Notices......................................................30
SECTION 8.6 Governing Law................................................31
SECTION 8.7 No Third-Party Beneficiaries.................................32
SECTION 8.8 Non-Survival of Certain Statements and Representations.......32
SECTION 8.9 Binding, Effect, Assignment..................................32
SECTION 8.10 Further Assurances...........................................32
SECTION 8.11 Waivers and Amendments: Non-Contractual Remedies.............32
SECTION 8.12 No Personal Liability of Trustee.............................32
SECTION 8.13 Obligations of Trustee Subject to Court Approval.............32
iv
APPENDIX
A Definitions
SCHEDULES
2.4 Coincident Peak Demand
3.6(c) List of Assumed and Assigned Contracts
4.5 Cajun Financial Statements
4.7 List of Real Property
4.8 List of Tangible Personal Property
4.10 List of ERISA Plans
4.11 List of Certain Litigation
4.12 List of Material Contracts
4.13 List of Permits
4.14 Exceptions Regarding Labor and Employment Matters
v
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (including Schedules and Exhibits, this
"Agreement"), dated as of _____________, 1998, is by and among Southwestern
Wholesale Electric Company, a Delaware corporation ("SWECO"), Ralph R. Mabey, as
Chapter 11 Trustee of Cajun Electric Power Cooperative, Inc. (in such capacity,
the "Trustee"), and, solely for purposes of Section 7.4, Southwestern Electric
Power Company, a Delaware corporation ("SWEPCO").
W I T N E S S E T H:
A. Cajun Electric Power Cooperative, Inc. ("Cajun" or the "Debtor") is
the debtor in Chapter 11 case number 94-11474 (the "Case") pending before the
United States Bankruptcy Court for the Middle District of Louisiana;
B. On August 23, 1995, the Trustee was duly appointed as the Chapter 11
trustee of the Debtor in the Case and, on August 30, 1995, the Trustee was duly
qualified to act as the Chapter 11 trustee of the Debtor in the Case; and
C. SWECO, a wholly-owned subsidiary of Central and South West
Corporation, a Delaware corporation ("CSW"), desires to purchase, and the
Trustee desires to cause the Debtor to sell, subject to approval of the Court
(as hereinafter defined), certain assets owned by the Debtor and in connection
therewith SWECO and the Trustee agree to consummate or cause to be consummated
certain other related transactions (such purchase and sale and related
transactions being referred to hereinafter as the "Acquisition") on the terms
and conditions set forth below and otherwise pursuant to the Plan of
Reorganization for the Debtor, dated October 28, 1996, proposed by SWEPCO,
Entergy Gulf States Utilities, Inc. and a committee comprised of certain members
of the Debtor (as it may hereafter be amended or supplemented from time to time,
the "Plan"),
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements. representations and warranties herein contained, and
subject to the conditions hereinafter set forth, the Parties hereto, intending
to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINED TERMS. Terms that are defined in Appendix A shall
have the respective meanings ascribed to them therein when such terms are used
in this Agreement and the other Transaction Documents, unless a clear contrary
intent appears herein or therein.
SECTION 1.2 INTERPRETATION. In this Agreement and the other Transaction
Documents, unless a clear contrary intention appears herein or therein:
(a) the singular includes the plural and vice versa;
(b) reference to any Person includes such Person's successors
and assigns unless such Person is a Party hereto in which case such reference
shall include such Person's successors and assigns only if such successors and
assigns are permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or individually;
(c) reference to any gender includes each other gender;
(d) reference to any agreement (including this Agreement),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms
thereof;
(e) reference to any Law means such Law as amended, modified,
codified or reenacted, in whole or in part, and in effect from time to time, and
shall include any rules and regulations promulgated thereunder by the
Governmental Authority having jurisdiction thereunder to adopt such rules and
regulations;
(f) reference to any Article, Section, Appendix or Schedule,
unless qualified by reference to some other document or instrument, means such
Article or Section of this Agreement or such Appendix or Schedule to this
Agreement, as the case may be, and references in any such Article or Section or
in any definition contained in Appendix A hereto to any clause means such clause
of such Article, Section or definition;
(g) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular Article or Section hereof;
(h) "includes" and "including" are not limiting:
(i) "or" is not exclusive; and
(j) relative to the determination of any period of time, "from"
means "from and including", "to" means "to but excluding" and "through" means
"through and including".
SECTION 1.3 CONFLICT WITH PLAN OR OTHER TRANSACTION DOCUMENTS. If there
is any conflict between this Agreement and the Plan or any other Transaction
Document, this Agreement and the Plan or such other Transaction Document, as the
case may be, shall be interpreted and construed, if possible, so as to avoid or
minimize such conflict. To the extent (and only to such extent) of such
conflict, this Agreement shall prevail and control, except that if there is any
inconsistency between Section 3.11 of this Agreement or any other provision of
this Agreement and Section 5.3 of the Plan, then Section 5.3 of the Plan shall
prevail and control.
2
SECTION 1.4 LEGAL REPRESENTATION OF PARTIES. This Agreement was
negotiated by the Parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any Party shall not apply to any construction
or interpretation hereof.
ARTICLE II
THE ACQUISITION
SECTION 2.1 ASSETS TO BE CONVEYED FREE AND CLEAR OF ENCUMBRANCES. On the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date, the Trustee shall cause the Debtor to convey, transfer, assign, sell and
deliver to SWECO, and SWECO shall acquire, accept and purchase, all of the
Acquired Assets, free and clear of all Encumbrances other than Permitted
Encumbrances; PROVIDED, HOWEVER, that any of the Acquired Assets may, at SWECO's
sole election, be transferred to and acquired by a designee or designees of
SWECO. The Confirmation Order shall provide that the Acquired Assets will be
transferred by the Debtor to SWECO (or, as appropriate, such designee or
designees) on the Closing Date free and clear of all Encumbrances other than
Permitted Encumbrances pursuant to Bankruptcy Code sections 363(f) and 1123 and
that SWECO is purchasing the Acquired Assets in good faith and in exchange for
fair consideration and reasonably equivalent value. The Debtor is not selling,
and SWECO is not purchasing, any of the Excluded Assets pursuant to this
Agreement.
SECTION 2.2 PURCHASE PRICE FOR ACQUIRED ASSETS. Subject to the
adjustments provided in Sections 2.3 and 2.4, the purchase price for the
Acquired Assets (as so adjusted, the "Purchase Price") shall be equal to the sum
of (i) Nine Hundred Thirty-Three Million Five Hundred Thousand Dollars
($933,500,000) payable in cash by SWECO to the Trustee on the Closing Date and
(ii) the lesser of (a) Seven Million Dollars ($7,000,000) and (b) the allowed
amount of unsecured claims (excluding administrative and priority claims)
described and listed in paragraph I.B.2.a. of SWEPCO's Supplemental Disclosure
Statement dated November 12, 1996.
SECTION 2.3 PURCHASE PRICE ADJUSTMENT FOR ASSET IMPAIRMENT
(a) If, during the period from the date hereof through the
Closing, (i) there shall occur any actual or constructive loss, destruction or
damage affecting any of the Acquired Assets or (ii) any of the Core Article IV
Representations shall be untrue and incorrect when made (the occurrence of any
event referred to in the foregoing clauses (i) and (ii) being referred to as an
"Impairment"), then, subject to the other terms and conditions hereof, the
purchase price for the Acquired Assets shall be reduced by the amount (the
"Impaired Asset Adjustment Amount") by which the net economic loss or diminution
in value (on the basis of fair market value) to each Acquired Asset as to which
there has been an Impairment or Impairments (an "Impaired Asset") or the
diminution in the value of the Business resulting or expected to result from the
Impairment, determined after giving effect to any replacements, repairs or
renovations thereof to the extent effected prior to the Closing and any related
insurance proceeds, net of costs of collection, held for transfer to SWECO as
part of the Acquired Assets, exceeds Two Million Five Hundred Thousand Dollars
3
($2,500,000) in the aggregate. SWECO shall notify the Trustee of any Impairment
known to SWECO by a written notice delivered at least ten (10) Business Days
prior to Closing or, if an Impairment occurs thereafter, on or before the
Closing Date (any such notification of a proposed Impaired Asset Adjustment
Amount is referred to as an "Impaired Asset Notice"). The Impaired Asset Notice
shall include SWECO's good faith estimate of the Impaired Asset Adjustment
Amount. The Impaired Asset Adjustment Amount shall be determined by the mutual
agreement of SWECO and the Trustee or, failing such agreement, by the dispute
resolution procedure specified in Section 2.3(b). Notwithstanding the foregoing,
if the Impaired Asset Adjustment Amount shall exceed Twenty Million Dollars
($20,000,000), the Trustee (if the Impairment does not constitute or result from
a breach by the Trustee of the provisions of this Agreement) and SWECO shall
each have the right to terminate this Agreement pursuant to Section 7.2(b). If
the Impaired Asset Adjustment Amount does not exceed Twenty Million Dollars
($20,000,000), neither Party hereto shall have, in the absence of a breach of
this Agreement by the other Party other than any such breach giving rise to an
Impairment, any right to terminate this Agreement. If the Impaired Asset
Adjustment Amount does not exceed $2,500,000, then the purchase price for the
Acquired Assets shall not be reduced.
(b) If the Trustee and SWECO (or their respective
Representatives) are unable to resolve any disagreement with respect to the
Impaired Asset Adjustment Amount within five (5) Business Days following receipt
by the Trustee of the Impaired Asset Notice then:
(i) The matter(s) in dispute shall be immediately
referred to an independent third party, valuation expert qualified to
value the matter(s) in dispute (a "Valuation Expert") (A) selected by
the Trustee and SWECO mutually within five (5) Business Days following
receipt by the Trustee of the Impaired Asset Notice or (B) if the
Trustee and SWECO fail so to select a Valuation Expert within such
period, designated as promptly as practicable thereafter by the Court,
which designation shall be final and binding on the Parties, without
right of appeal or other review.
(ii) The Valuation Expert shall, as promptly as
practicable, determine the Impaired Asset Adjustment Amount, which
valuation shall be final and binding on the Parties, without right of
appeal or other review.
(iii) If the Valuation Expert fails to make such
determination prior to the Closing Date and SWECO's estimate of the
Impaired Asset Adjustment Amount is less than Five Million Dollars
($5,000,000), the Parties shall, subject to the terms and conditions of
this Agreement, consummate the Closing of the Transactions
(notwithstanding such dispute and referral to the Valuation Expert). At
such Closing, SWECO shall deliver to the Trustee a report that sets
forth in reasonable detail its estimate of the Impaired Assets
Adjustment Amount, as determined by it in good faith and the basis
therefor, and shall pay to the Trustee the disputed portion of the
Impaired Asset Adjustment Amount, and the Trustee shall place such
amount in an escrow account established by Order of the Court pending
final determination of the Impaired Asset Adjustment Amount.
4
(iv) If SWECO's estimate of the Impaired Asset
Adjustment Amount is more than Five Million Dollars ($5,000,000) and
neither Party shall have elected to exercise any right it may have to
terminate this Agreement, then the Closing of the Transactions shall be
deferred pending final determination of the Impaired Asset Adjustment
Amount.
(v) Any amount paid into escrow pursuant to clause
(iii) shall, upon final determination of the Impaired Asset Adjustment
Amount, be retained by the Trustee or paid to SWECO as their interests
may appear based on such determination.
SECTION 2.4 OTHER PURCHASE PRICE ADJUSTMENTS.
(a) If the Coincident Peak Demand (as set forth on Schedule
2.4) of the Members that enter into New Power Supply Contracts on or prior to
the Closing Date totals less than 1,538.5 megawatts, then, subject to Section
6.2(d) (v), the purchase price for the Acquired Assets may be reduced, at
SWECO's option, by an amount equal to the product obtained by multiplying (i)
the difference in the number of megawatts between the Coincident Peak Demand (as
set forth on Schedule 2.4) of the Members that have entered into a New Power
Supply Contract and 1,538.5 megawatts, by (ii) an amount, not to exceed,
$325,000 per megawatt, selected by SWECO. If SWECO elects to exercise such
option, it shall deliver a notice to that effect to the Trustee prior to the
Closing Date, which notice shall set forth the amount of the reduction per
megawatt and the total amount of the reduction.
(b) If the Closing Date Yield is below 6.26% or above 7.06%,
then the purchase price for the Acquired Assets shall be subject to the
following adjustments:
(i) if the Closing Date Yield is less than 6.26%,
then such purchase price shall be increased by an amount equal to the
product obtained by multiplying the number of Basis Points by which the
Closing Date Yield is less than 6.26% by $700,000; and
(ii) if the Closing Date Yield is greater than 7.06%,
then such purchase price shall be reduced by an amount equal to the
product obtained by multiplying the number of Basis Points by which the
Closing Date Yield exceeds 7.06% by $700,000.
SECTION 2.5 PRORATIONS.
(a) All of the items, including those listed below, relating to
the Business and the operation of the Acquired Assets that would normally be
prorated between a buyer and a seller in accordance with custom and usage
applicable to contracts for the purchase and sale of commercial assets in the
State of Louisiana shall be prorated as of the Closing Date between the Debtor,
which shall be liable to the extent such items relate to any time period to and
including the Closing Date, and SWECO, which shall be liable to the extent such
items relate to periods subsequent to the Closing Date:
5
(i) personal property, real estate, occupancy and
water taxes, assessments and other charges of Governmental Authorities,
if any, on or with respect to ownership or operation of the Acquired
Assets;
(ii) rents and other lease payments, taxes and other
items payable by the Debtor under any of the Assumed and Assigned
Contracts,
(iii) any permit, license or registration fees with
respect to any Permits that are being assigned or transferred hereunder;
and
(iv) sewer rents and charges for water, telephone,
electricity and other utilities.
(b) If actual taxes, fees and other amounts to be prorated are
not available at the Closing Date, then the proration shall be based upon the
actual taxes, fees and other amounts for the preceding year (or appropriate
period) for which actual taxes, fees and other amounts are available and such
taxes, fees and other amounts shall be reprorated upon the request of either
Party made within 60 days of the date that the actual amounts become available.
The Parties shall furnish each other with such documents and other records as
may be reasonably requested in order to confirm all adjustment and proration
calculations made pursuant to this Section 2.5.
(c) The amount of all salaries, wages, vacation credits and
payroll taxes which under generally accepted accounting principles would be
accrued as a liability on the balance sheet of Debtor as of the close of
business on the Closing Date shall be paid by the Debtor.
SECTION 2.6 LIABILITIES ASSUMED BY SWECO. As further consideration for
consummation of the Transactions, at the Closing, SWECO shall assume and agree
to pay thereafter when due and discharge the Assumed Liabilities. SWECO shall
not assume or be liable for any Liabilities of the Debtor other than the Assumed
Liabilities. Except as to the Assumed Liabilities, SWECO is not a successor to
Cajun, and none of SWEPCO, SWECO, SWECO's Representatives or their Affiliates
shall have any liability, as transferee or otherwise, for claims against Cajun
(whether or not currently known) as a result of SWECO's purchase of the Acquired
Assets or the consummation of the Transactions hereunder, and the Confirmation
Order shall so provide.
SECTION 2.7 PAYMENT OF INITIAL CASH PAYMENT FOR ACQUIRED ASSETS. At the
Closing, SWECO shall pay the Purchase Price to the Trustee by wire transfer to
an account designated by the Trustee by notice given to SWECO not less than five
(5) Business Days prior to the Closing Date.
SECTION 2.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated to the Acquired Assets in accordance with Section 1060 of the Tax
Code. The Parties shall negotiate in good faith the value of each of the
Acquired Assets and the resulting allocation of the Purchase Price among the
Acquired Assets. SWECO and the Trustee each agrees to file (or to cause to be
filed) Internal Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns, in accordance with such agreed allocation and not to take a
position in any Tax Return, tax proceeding or tax audit which is inconsistent
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with such allocation. SWECO and the Trustee each agrees to provide the other
promptly with any other information required to complete Form 8594.
SECTION 2.9 FURTHER ASSURANCES. From time to time after the Closing, the
Trustee or the Debtor shall execute and deliver or shall cause to be executed
and delivered to SWECO or its designee such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of attorney
and other instruments as may be reasonably requested by SWECO in order to vest
in SWECO or its designee all right, title and interest of the Debtor in and to
the Acquired Assets and otherwise in order to carry out the purpose and intent
of this Agreement and the other Transaction Documents.
SECTION 2.10 CLOSING. The closing of the Transactions (the "Closing")
shall, unless another date, time or place is mutually agreed to in writing by
the Parties, take place at the offices of Wilkinson, Carmody & Gilliam, 400
Travis Street, Shreveport, Louisiana at 10:00 a.m., local time, on the Closing
Date.
ARTICLE III
COVENANTS
SECTION 3.1 ACCESS; DUE DILIGENCE
(a) From the date hereof to the Closing Date and subject to the
confidentiality obligations of the Debtor or the Trustee under the Scheduled
Contracts (from which obligations the Trustee shall use all reasonable efforts
to be relieved so that the access contemplated to be given to SWECO and SWECO's
Representatives hereunder may be given by the Trustee and the Trustee's
Representatives to the fullest extent permitted hereunder), the Trustee shall
(i) provide SWECO and SWECO's Representatives with reasonable access to the
Trustee's Representatives and all properties, offices and other facilities of
the Debtor, including all Books and Records, during normal business hours (and,
with the Trustee's consent, which shall not be withheld unreasonably, during
non-business hours) and in a manner not unreasonably disruptive to the operation
of the Business, (ii) use reasonable efforts to provide SWECO and SWECO's
Representatives reasonable access to the Debtor's outside auditors and their
work papers and (iii) furnish promptly to SWECO all financial and operating data
and other information regarding the Business and the Acquired Assets that SWECO
may from time to time reasonably request. Without limiting the generality of the
foregoing, the Trustee shall provide SWECO and its Representatives reasonable
access to the Debtor's Real Property and Leaseholds for such inspection,
examination and other assessment as SWECO deems necessary in order to determine
whether the statements contained in Section 4.13 are true and correct SWECO
agrees to exercise the foregoing rights in conformity with any applicable legal
requirements.
(b) In addition to the access and information rights provided
by Section 3.1(a), SWECO and SWECO's Representatives shall have, at its own risk
and expense, reasonable access to enter the Real Property and Leaseholds during
normal business hours and, with the Trustee's consent (which shall not be
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withheld unreasonably), during non-business hours, to investigate, inspect,
audit, study and test, including the examination of soil, groundwater and all
other physical features in a manner not unreasonably disruptive to the operation
of the Business. The existence of this right shall in no manner obligate SWECO
to perform part or all of any investigation whatsoever.
(c) From and after the Confirmation Date, SWECO may designate
two of its Representatives as Transition Managers to monitor the Debtor's
operations and activities during the period from the Confirmation Date to the
Effective Date. During that period, the Transition Managers and their
Representatives shall be given access to the Debtor's personnel, properties,
offices and other facilities and Books and Records, shall be informed of and
invited to attend management and staff meetings, shall be provided all written,
non-privileged information distributed to the Trustee and his staff or to
management of the Debtor, and shall be provided, without cost, office space in
the Debtor's headquarters facility and reasonably necessary clerical support.
(d) The Trustee acknowledges that, prior to the date hereof,
the opportunity for SWEPCO, SWECO and their Representatives to undertake and
complete the investigations, inquiries and other due diligence customary for
comparable transactions (collectively, the "Due Diligence Investigation") has
been limited. SWECO agrees to initiate and complete its Due Diligence
Investigation as promptly as practicable and the Trustee agrees to provide, or
use all reasonable efforts to cause the Debtor to provide, to SWEPCO, SWECO and
their Representatives information in their possession or control that is
responsive to any Due Diligence Investigation requests made by SWEPCO, SWECO and
their Representatives as promptly as practicable.
SECTION 3.2 CONDUCT OF BUSINESS
(a) From the date hereof to the Closing Date, except as
permitted by the prior written consent of SWECO (i) the Business shall be
conducted only in, and the Debtor shall not take any action in connection with
the conduct of the Business except in, the ordinary course of business and in a
manner consistent with Prudent Utility Practice, (ii) the Trustee shall use, and
shall cause the Debtor to use, reasonable efforts (A) to preserve the Business
substantially intact, (B) to maintain the Acquired Assets in due repair, order
and condition (subject to ordinary wear and tear) in accordance with Prudent
Utility Practice, (C) to comply with all material Laws applicable to the
Business (subject to the Trustee taking or omitting to take any actions, which
action or omission is asserted by a Governmental Authority to be a violation of
any Law and the application of which to the Trustee, the Debtor, the Business or
the Transactions is being or will be contested by the Trustee in good faith in
appropriate proceedings), (D) to keep available the services of employees whose
continuing employment in connection with the Business is necessary to the
conduct of the Business (subject to any steps the Trustee may take in
consultation with SWECO in an effort to minimize employee severance costs);
PROVIDED, HOWEVER, that nothing herein shall be deemed to affect SWECO's right,
in its sole discretion, to determine whether any employee will be employed by
SWECO after the Closing Date, (E) to preserve the present relationships of the
Business with customers, including the Members, and suppliers and other Persons
with which the Business has significant business relations (excluding any such
customers, other than the Members, or suppliers that are not parties to
Contracts with the Debtor that constitute Assumed and Assigned Contracts), and
8
(F) to prepare and file timely all filings necessary or desirable to obtain new
or additional Permits under applicable Law or to renew or extend existing
Permits which are otherwise due to terminate or expire and for transfer or
reissue of such Permits to SWECO or its designee or otherwise to amend or modify
such Permits to reflect the Acquisition pursuant to applicable Law. By way of
amplification and not limitation, except as specifically contemplated by this
Agreement, the Trustee shall not, and shall cause the Debtor not to, between the
date of this Agreement and the Closing Date, directly or indirectly, do, or
propose or agree to do, any of the following without the prior written consent
of SWECO:
(i) sell, assign, pledge, dispose of or encumber any
of the Acquired Assets, except for the sale in the ordinary course of
business of any tangible personal property that has been retired from
operation as a result of the acquisition of a replacement asset of equal
or greater value or utility that will be transferred to SWECO at the
Closing as an Acquired Asset;
(ii) fail to comply with all material requirements of,
and otherwise to maintain Permits required under, applicable Law or fail
to defend or initiate any material proceeding before any Governmental
Authority that is necessary to protect the Acquired Assets or to ensure
the continued, uninterrupted operation of the Business, including the
timely prosecution of any material Permit application or renewal;
(iii) fail (A) to maintain an inventory of coal
consistent with past practices so that the quality and quantity of coal
existing as of the Closing Date shall not be materially less than that
existing on October 30, 1996, (B) to maintain inventory levels of fuel
oil or other inventory, spare parts, material and other supplies of a
quality and quantity required under Prudent Utility Practice in
connection with the conduct of the Business, (C) to make capital
expenditures consistent with Prudent Utility Practice, (D) to maintain
the Acquired Assets in due repair, order and condition in accordance
with Prudent Utility Practice or (E) to maintain insurance for the
Acquired Assets consistent with Prudent Utility Practice;
(iv) fail to comply with or perform all of the
Debtor's obligations under any Assumed and Assigned Contract or Assigned
Post-Petition Contract (except for defaults that are capable of being
cured through the payment on the Closing Date of cure payments under
Bankruptcy Code section 365(b)(1) or defaults of the kind specified in
Bankruptcy Code section 365(e)(1));
(v) terminate, replace, amend or otherwise modify (A)
any Assumed and Assigned Contract or Assigned Post-Petition Contract, or
waive any of the obligations of the parties (other than the Debtor) to
any such Contract or the Debtor's rights under any such Contract or (B)
any other Material Contract (whether a Material Contract before or after
giving effect to such termination, replacement, amendment or other
modification); PROVIDED, HOWEVER, that, at any time prior to the
Confirmation Date, any Contract that is not a Collective Bargaining
Agreement and that at the time in question has not yet been designated
as (1) an Assumed and Assigned Contract, (2) an Assigned Post-Petition
Contract or (3) a Rejected Contract, as the case may be, pursuant to
9
Section 3.6, may be terminated, replaced, amended or otherwise modified
if the Trustee shall have provided written notice to SWECO of the action
proposed to be taken at least ten (10) Business Days prior to the
effectiveness of any such action and SWECO, prior to the expiration of
such period, shall not have designated such Contract as an Assumed and
Assigned Contract or an Assigned Post-Petition Contract, as the case may
be, pursuant to Section 3.6, in the case of (1) and (2);
(vi) enter into any Post-Petition Contract that
relates to the Business, and would be a Material Contract, unless the
Trustee shall have used all reasonable efforts to negotiate a provision
to be included in such Post-Petition Contract that would permit the
assignment thereof to SWECO at the Closing in accordance with
Section 3.6;
(vii) enter into any Post-Petition Contract that
constitutes a Collective Bargaining Agreement or otherwise relates to
labor or employee benefits, other than as permitted pursuant to Section
3.8; or
(viii) depart from the normal and customary trade,
discount and credit policies of the Debtor, except in the ordinary
course of business and consistent with past practice.
(b) If the Trustee intends to take any action (or cause the
Debtor to take any action) or omit to take any action (or permit the Debtor to
omit to take any action) which action or omission, pursuant to Section 3.2(a),
requires the prior written consent of SWECO, then the Trustee shall, as soon as
practicable, inform the Transition Managers of the proposed action or omission
and a proposed reasonable time frame for obtaining the required written consent.
With respect to any such proposed action or omission, the Trustee or his
designated Representatives and the Transition Managers shall use their
reasonable efforts to resolve any disputes regarding the proposed action or
omission so that the necessary written consent to the proposed action can be
provided or withheld by SWECO within the appropriate time frame. If, however,
the Transition Managers inform the Trustee or his designated Representative that
SWECO will not consent to the proposed action or omission, the Trustee and SWECO
will submit the matter to the Court for resolution. The Trustee shall request
the Court not to approve the proposed action or omission unless the Court finds
that, regardless of the benefit that may be conferred on the Cajun Estate
thereby, the Trustee has established that such proposed action or omission would
not have a Material Adverse Effect or a material adverse effect on the
confirmability of the Plan or the benefits of the Plan or the Transactions to
SWECO.
SECTION 3.3 COOPERATION IN CONSUMMATION OF THE PLAN AND RELATED MATTERS.
The Trustee, subject to its fiduciary duties under the Bankruptcy Code, and
SWECO each will fully cooperate with the other in the consummation of the Plan
and in connection with any litigation or proceeding already instituted or which
may be instituted hereafter against or by such Party relating to the Plan or
which may affect the consummation of the Plan or satisfaction of the conditions
precedent to consummation of the Acquisition (other than litigation between the
Parties arising out of the Transactions). The Trustee and SWECO agree to use
their reasonable efforts to (a) obtain the Required Regulatory Approvals as
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promptly as practicable and in any case prior to the Outside Date; and (b) to
consummate the Acquisition within a reasonable time period thereafter and in any
case prior to the Outside Date.
SECTION 3.4 SALES TAXES. To the extent that the sale of the Acquired
Assets is subject under applicable Law to sales, transfer, use, stamp or similar
Taxes that are not exempt under Bankruptcy Code section 1146, such Taxes shall
be paid by SWECO.
SECTION 3.5 TECHE-CLECO TRANSFER. The Trustee and SWECO acknowledge that
CLECO has acquired Teche and that a New Power Supply Contract, to be effective
on the Effective Date, may be entered into directly by CLECO and SWECO.
SECTION 3.6 TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES AND
POST-PETITION CONTRACTS.
(a) It is a condition precedent to SWECO's obligation to
consummate the Acquisition that Members whose Coincident Peak Demand (as set
forth in Schedule 2.4), when added together, equals or exceeds 1,000 megawatts
shall have executed and delivered New Power Supply Contracts in form and
substance satisfactory to SWECO. The Existing Power Supply Contract of each
Member that executes and delivers a New Power Supply Contract shall be
terminated as of the Effective Date. If a Member fails to execute and deliver a
New Power Supply Contract, then the Existing Power Supply Contract of that
Member shall be neither assumed nor rejected; instead, such Existing Power
Supply Contract shall be treated as provided in Section 7.1 of the Plan.
(b) SWECO shall not be obligated under any current or future
collective bargaining agreements entered into or negotiated by Cajun, the Debtor
or the Trustee. However, if and when SWECO hires a majority of Cajun's employees
in units appropriate for collective bargaining, then SWECO will recognize those
unions representing those employees and negotiate in good faith with
representatives of those unions.
(c) Schedule 3.6(c) lists the Contracts that are to be assumed
by the Trustee and assigned to SWECO or its designee on the Closing Date under
the Plan pursuant to Bankruptcy Code sections 365 and 1123 (Contracts that are
so listed are collectively referred to as the "Assumed and Assigned Contracts").
The Trustee shall seek authorization by the Court, either pursuant to the
Confirmation Order or an Order of the Court obtained by separate motion filed by
the Trustee of the assumption and assignment of each of the Assumed and Assigned
Contracts that has not theretofore been assumed by Order of the Court under
Bankruptcy Code section 365.
(d) Each Member entitled to preference shall execute a Contract
with SPA for the sale and purchase of SPA Hydro Peaking Power (as such term is
defined in the New Power Supply Contracts). The amount of SPA Hydro Peaking
Power purchased by each Member shall be allocated by the SPA in accordance with
applicable law. SWEPCO shall act as the Scheduling Agent of the SPA Hydro
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Peaking Power for such Members pursuant to Section 3.2 of the New Power Supply
Contracts.
(e) Subject to the treatment of the River Bend JOPOA under the
Plan, all executory contracts or unexpired leases, other than the Hydro
Contract, to which the Debtor was a party on the Petition Date or which have
been identified on Schedule 4.12 as a Post-Petition Contract and, in each case,
that have not been designated as Assumed and Assigned Contracts shall be
rejected by the Trustee, effective on the Closing Date, under the Plan pursuant
to Bankruptcy Code sections 365 and 1123. The Trustee shall use all reasonable
efforts to obtain an Order or Orders of the Court on or prior to the Closing
Date making such findings and determinations regarding such executory contracts
and unexpired leases (collectively, the "Rejected Contracts") as SWECO may
reasonably request.
(f) All cure payments which may be required to be made pursuant
to Bankruptcy Code section 365(b)(1) under any Assumed and Assigned Contracts,
and all other amounts that have become due and owing prior to the Closing under
any Assumed and Assigned Contract shall be made by the Debtor on the Closing
Date in accordance with the Plan. SWECO shall not be responsible for any cure
payments required to be made under Bankruptcy Code section 365(b)(1) in
connection with the assumption of an Assumed and Assigned Contract or that
otherwise are due and owing under an Assumed and Assigned Contract prior to the
Closing. If a dispute exists on the Closing Date as to the amount required to be
paid to any party to an Assumed and Assigned Contract under Bankruptcy Code
section 365(b)(1) in order for such Assumed and Assigned Contract to be assumed,
pending a determination by the Court after the Closing Date of the actual amount
owing, an appropriate reserve shall be maintained by the Debtor or the Trustee
to cover any additional amount that the Court ultimately may determine to be due
to such party in connection with such assumption. SWECO shall not assume or be
liable in any respect for any Liability of the Debtor under any Rejected
Contract. Following assignment by the Trustee to SWECO or its designee of an
Assumed and Assigned Contract on the Closing Date, SWECO or such designee shall
be responsible, as assignee of the Debtor, for the performance under such
Assumed and Assigned Contract of all obligations of the Debtor that first arise
after the Closing. SWECO shall have no Liability under any unexpired lease or
executory contract except for Assumed and Assigned Contracts that are designated
by SWECO in accordance with the applicable terms of this Section 3.6 and shall
have no Liability under an Assumed and Assigned Contract other than the
performance of obligations arising after the Closing Date.
(g) On or prior to the Confirmation Date, SWECO shall specify
in writing those Post-Petition Contracts that shall be assigned to SWECO on the
Closing Date (other than Post-Petition contracts entered into prior to the date
of this Agreement which have been identified in Schedule 4.12 as a Post-Petition
Contract) and all such Post-Petition Contracts (other than those as to which the
consent of the other party thereto is required in order for such Post-Petition
Contract to be assigned to SWECO or its designee and such party has withheld
such consent) shall be assigned to SWECO on the Closing Date (collectively, the
"Assigned Post-Petition Contracts"). SWECO shall have no liability for any
amounts that become due from the Debtor under an Assigned Post-Petition Contract
prior to the Closing.
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SECTION 3.7 FILINGS, CONSENTS AND APPROVALS. From and after the
Confirmation Date until the Closing Date, each of the Trustee and SWECO shall
file or cause to be filed any and all petitions, applications, declarations, or
other pleadings as may be necessary or desirable to obtain, and thereafter shall
use all reasonable efforts to obtain, the Required Regulatory Approvals in a
timely manner. During this period, each Party shall consult with the other as to
the appropriate time of filing, shall cooperate with each other as to the
preparation of such notifications and the substance of such filings and shall
use its reasonable efforts to make such filings at the agreed upon time and to
respond promptly to any requests made to it for additional information by any
Governmental Authority. The Trustee, in cooperation with SWECO, shall take all
reasonable actions necessary or desirable to obtain all Governmental Approvals
required to be obtained by the Trustee and to give all notices to, and make all
filings with, any Governmental Authorities and third parties necessary to
authorize, approve or permit the consummation of the Transactions in accordance
with the Plan and the terms of the Transaction Documents. The Trustee, in
cooperation with SWECO, shall take all reasonable actions necessary or desirable
to obtain the consents of third parties to the assignment of the Assumed and
Assigned Contracts required by the provisions thereof.
SECTION 3.8 EMPLOYEE MATTERS
(a) All Employee Benefit Plans shall be terminated on or before
the Closing Date. SWECO shall have no obligation to establish, contribute to or
maintain any Employee Benefit Plan or maintain any particular level of benefits
(it being agreed and acknowledged that no such plan will be transferred to or
assumed by SWECO under section 4204 of ERISA or otherwise), unless expressly
agreed by SWECO under the applicable provisions of (i) any collective bargaining
agreement that SWECO may negotiate with any employee bargaining agent, or (ii)
any employment contract or the terms and conditions of employment that SWECO may
assume or establish. SWECO shall in no event assume or have any liability for
any employee severance costs or employee-related Liabilities of the Debtor or
any other liabilities (including withdrawal liabilities) related, in any way, to
any Employee Benefit Plan.
(b) Subject to the provisions of any collective bargaining
agreement SWECO may negotiate pursuant to Section 3.6(b), SWECO and its
Affiliates shall have no obligation to hire any employees of the Debtor. Subject
to such provisions, SWECO shall have the right to establish the terms and
conditions of employment at any of the facilities, offices or operations
included in the Acquired Assets and to offer employment on such terms and
conditions.
SECTION 3.9. NOTICE OF ACTIONS AND PROCEEDINGS. From and after the date
here of until the Closing Date, the Trustee shall promptly notify SWECO of any
written notice received by the Trustee with respect to Actions commenced or, to
its knowledge, threatened involving or affecting the Debtor or the Business or
which could have a Material Adverse Effect.
SECTION 3.10 BANKRUPTCY FILINGS. From and after the Confirmation Date
until the Closing Date, the Trustee shall deliver to SWECO (a) copies of all
pleadings, motions, notices, statements, schedules, applications, reports and
other papers that the Trustee files in the Case within a reasonable time after
13
filing, but with respect to any such papers that relate, in whole or in part, to
this Agreement, the Plan, the Transactions, or SWECO, SWEPCO or its or their
Representatives, the Trustee shall use all reasonable efforts to provide such
prior notice as may be reasonable under the circumstances before the filing of
such papers and (b) copies of all other pleadings, motions, notices, statements,
schedules, applications, reports and other papers filed in the Case.
SECTION 3.11 SAFE HARBOR LEASES. Reference is made to Section 5.3 of the
Plan regarding certain arrangements relating to certain Tax Benefit Transfer
Agreements, CoBank and related matters. The Trustee shall cooperate, and shall
cause the Debtor to cooperate, in effectuating such arrangements.
SECTION 3.12 COOPERATION AS TO TAX MATTERS; PRORATION.
(a) The Trustee shall cooperate, and shall cause the Debtor to
cooperate, with SWECO, and the Trustee shall keep and shall cause the Debtor to
keep SWECO fully apprised of all meetings, correspondence and other
communications with the IRS (and any state or local taxing authorities) relating
to the liability of the Debtor for Taxes for any period ending before, on or
including the Closing Date.
(b) All real property and personal property Taxes with respect
to the Acquired Assets for the tax years occurring prior to the Closing Date
shall be paid in full by the Trustee prior to or at the Closing. All real
property and personal property Taxes with respect to the Acquired Assets for the
tax year in which the Closing Date occurs shall be prorated through the Closing
Date based on the most current assessment information available from the offices
of the assessor and sheriff of the respective parishes in which the Acquired
Assets are located. All special assessments against the Acquired Assets for
utilities or otherwise shall be paid in full by the Trustee prior to or at the
Closing.
ARTICLE IV
STATEMENTS AS TO THE EXISTENCE OR NON-EXISTENCE OF
CERTAIN FACTS, CONDITIONS OR EVENTS RELATING TO DEBTOR
All of the obligations of SWECO and SWEPCO under this Agreement are
subject to the condition that each of the statements set forth below in this
Article IV shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date.
SECTION 4.1 ORGANIZATION AND GOOD STANDING. The Debtor is a cooperative
association duly organized, validly existing and in good standing under the Laws
of the State of Louisiana, with full power to carry on the Business as it is now
conducted and to own, lease or operate the Acquired Assets and the Excluded
Assets. The Debtor is qualified to do business and is in good standing in each
jurisdiction in which the nature of the Business or the character of the
Debtor's properties makes such qualification necessary.
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SECTION 4.2 AUTHORIZATION OF AGREEMENT. Subject to Section 8.13, the
Trustee has all requisite power and authority to enter into this Agreement and
the Transaction Documents and to consummate the Transactions. Subject to Section
8.13, this Agreement and all other agreements and instruments to be executed by
the Trustee in connection herewith have been (or upon execution will have been)
duly executed and delivered by the Trustee, have been effectively authorized by
all necessary action, and constitute (or upon execution will constitute) legal,
valid and binding obligations of the Trustee enforceable against the Trustee and
the Cajun Estate in accordance with their respective terms.
SECTION 4.3 NO VIOLATION. Assuming the termination or expiration of any
applicable waiting periods imposed by the HSR Act and receipt of all Required
Regulatory Approvals, neither the execution and delivery by the Trustee of this
Agreement or any Transaction Document nor the performance by the Trustee of his
obligations hereunder or thereunder will (a) violate or breach the terms of or
cause a default under (i) any applicable Law or Order, (ii) the Organizational
Documents or (iii) any Assumed and Assigned Contract (except as the terms of any
such Assumed and Assigned Contract have been invalidated or modified pursuant to
applicable bankruptcy law or an order of the Court), (b) result in the creation
or imposition of any Encumbrance on any of the Acquired Assets other than a
Permitted Encumbrance, (c) result in the cancellation, forfeiture, revocation,
suspension or adverse modification of any Permit owned or held by the Debtor and
necessary for the operation of the Business or (d), with the passage of time,
the giving of notice or the taking of any action by a third party, have any of
the effects set forth in clause (a), (b) or (c) of this Section, except in any
such case for any matters described in this Section that could not reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
confirmability of the Plan or the benefits of the Plan or the Transactions to
SWECO.
SECTION 4.4 OWNERSHIP OF ACQUIRED ASSETS. The Debtor has defensible
title to all of the Acquired Assets (other than the Transmission Assets and the
Pipeline Assets, as to which it has such title or interest as is sufficient to
enable the Debtor to conduct the Business as currently conducted without
material interference, and other than any Acquired Assets that (a) are the
subject of leases or (b) are not, individually or in the aggregate, material to
the Debtor) free and clear of Encumbrances other than Permitted Encumbrances.
The Debtor holds under valid lease agreements, each of which is an Assumed and
Assigned Contract, all real and personal properties included in the Acquired
Assets that are subject to leases, and enjoys peaceful and undisturbed
possession of such properties under such leases, other than any properties that,
individually or in the aggregate, are not material to the Debtor or the
Business. The Debtor has not received any written notice of any adverse claim to
the title to any properties included in the Acquired Assets or with respect to
any lease under which any Acquired Assets are held by it, other than any claims
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect on the Business. Upon transfer to SWECO or its
designee on the Closing Date of ownership of the Acquired Assets that are owned
by the Debtor, SWECO or such designee will acquire good and marketable title to
the Acquired Assets (including the Assumed and Assigned Contracts and the
Assigned Post-Petition Contracts but other than the Transmission Assets and the
Pipeline Assets, as to which SWECO will acquire all of the Debtor's right, title
and interest therein), free and clear of all Encumbrances other than Permitted
Encumbrances (subject, in the case of Assigned Post-Petition Contracts, to any
15
required consent of the other parties to such Contracts). The Acquired Assets,
taken as a whole, constitute all the properties, assets and rights relating to
or used or held for use in connection with the business and operations of the
Debtor since (date of last financial statement), other than (i) inventory sold,
cash disposed of, accounts receivables collected, contracts fully performed, and
property or assets replaced by equivalent or superior properties or assets, in
each case in the ordinary course of business, and (ii) the Excluded Assets.
SECTION 4.5 FINANCIAL CONDITION. The Trustee has furnished to SWECO the
financial statements or reports listed in Schedule 4.5 (the "Cajun Financial
Statements"). The Cajun Financial Statements: (a) were prepared from and in
accordance with the books and records of the Debtor; (b) except as may be
indicated in the notes thereto, were prepared in accordance with GAAP (subject,
in the case of unaudited statements or reports, to the absence of any footnote
disclosures and to year-end audit adjustments required by GAAP which consist
solely of normal, recurring adjustments), and (c) fairly present the financial
position, results of operations and cash flows of the Debtor, all in conformity
with GAAP, as of the dates thereof and for the periods covered thereby. Since
the date of the latest balance sheet contained in the Cajun Financial
Statements, except as set forth in Schedule 4.5, the Business has been conducted
only in the ordinary course and there has not been any action taken by the
Debtor which would violate the provisions of Section 3.2 hereof had it been in
effect during such period or any Material Adverse Effect.
SECTION 4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
set forth on the latest balance sheet included in the Cajun Financial Statements
and liabilities incurred in the ordinary course of business since that date
which, in the aggregate, are not material, there are no liabilities or
obligations of any nature, accrued, absolute, contingent or otherwise, whether
due or to become due, which relate to the Business or which would be Assumed
Liabilities. Following the Closing, no claimants shall have any recourse to
SWECO, any Affiliate of SWECO or any Acquired Assets except in respect of the
Assumed Liabilities.
SECTION 4.7 REAL PROPERTY. Schedule 4.7 sets forth a legally adequate
description of each principal parcel of Real Property and a list of all
Contracts with respect to its Leasehold interests. The Debtor has made available
to SWECO (a) all deeds, title insurance policies, surveys, mortgages and other
Contracts granting or relating to the Debtor's ownership of such Real Property
and (b) all Contracts with respect to its Leasehold interests.
Except as set forth in Schedule 4.7:
(i) the Real Property described in Schedule 4.7 constitutes all
of the Real Property necessary for the continued conduct by SWECO on the
Closing Date of the Business as presently conducted;
(ii) the Debtor enjoys peaceful and undisturbed possession of
the improvements located on the Real Property described in Schedule 4.7
and of all real property subject to its Leasehold interests; and
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(iii) all of the buildings, fixtures and other improvements
located on the Real Property described in Schedule 4.7 are in good
operating condition and repair, ordinary wear and tear excepted, and the
operation thereof as presently conducted is not in violation in any
material respect of any applicable building codes, zoning ordinance or
other Law.
SECTION 4.8 TANGIBLE PERSONAL PROPERTY. Schedule 4.8 sets forth a
listing of machinery, equipment, spare parts, furniture, fixtures, supplies and
other tangible personalty which on the date hereof is carried on the Books and
Records of the Debtor with a net book value of One Hundred Thousand Dollars
($100,000) or more. Except for any such property that is sold prior to the
Closing as permitted under Section 3.2 and for Excluded Assets, all such
property will be included in the Acquired Assets transferred to SWECO at the
Closing. Except as otherwise disclosed in Schedule 4.8, all tangible personal
property and fixtures included in the Acquired Assets are (a) structurally sound
with no material defects, (b) in good working order and free from any material
defects or otherwise suitable for the use for which they are intended (ordinary
wear and tear excepted) and (c) adequate and sufficient for the operation of the
Business as presently conducted.
SECTION 4.9 INTELLECTUAL PROPERTY RIGHTS. There are no Intellectual
Property Rights held by the Debtor that are material to the conduct of the
Business as it is presently conducted.
SECTION 4.10 EMPLOYEE BENEFIT PLANS
(a) Except as set forth in Schedule 4.10, there is no Employee
Benefit Plan. Unless expressly identified as such on Schedule 4.10, no Employee
Benefit Plan is an ERISA Multiemployer Plan. In the event of a partial or
complete withdrawal from any ERISA Multiemployer Plan as of the Closing Date,
the Debtor would not be subject to any withdrawal liability under Title IV of
ERISA. The Acquired Assets are not subject to a lien in favor of the Pension
Benefit Guaranty Corporation under Section 4068 of ERISA.
(b) The Debtor has made available to SWECO true and correct
copies of each Employee Benefit Plan set forth in Schedule 4.10 and its summary
plan description (if such description is required under Section 102 of ERISA).
SECTION 4.11 LITIGATION. Except for adversary proceedings and other
matters pending in the Case and appearing on the docket of the clerk of the
Court with respect to the Case or which are described in Schedule 4.11, there
are no claims, disputes or Actions of any nature before or by any Governmental
Authority or arbitral authority pending or, to the knowledge of the Trustee and
the Debtor, threatened, or any unsatisfied judgments, awards or settlements, in
each case against the Debtor or the Trustee, the Business or any of the
directors, officers, or employees of the Debtor in connection with the Business.
SECTION 4.12 CONTRACTS
(a) Schedule 4.12 sets forth a true and correct list of each
Existing Power Supply Contract and each other Contract under which the Debtor
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sells power, including all power marketing Contracts, and a true and correct
list of each other Material Contract, including Collective Bargaining
Agreements, fuel and transportation Contracts and Post-Petition Contracts (all
such Contracts being herein called the "Scheduled Contracts"). The Debtor has
made available to SWECO a true and correct copy of each Scheduled Contract.
(b) Except as set forth in Schedule 4.12:
(i) subject to the Debtor's assumption under
Bankruptcy Code section 365, each Scheduled Contract is a valid and
binding agreement of the Debtor enforceable in accordance with its terms
(except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditor rights
generally and by equitable principles) and the Debtor does not have any
knowledge that any of the Scheduled Contracts is not a valid and binding
agreement of the other parties thereto enforceable in accordance with
its terms (except as aforesaid); and
(ii) the Debtor has fulfilled all material obligations
required pursuant to each Scheduled Contract to have been performed by
the Debtor on its part prior to the date hereof, the Debtor will
fulfill, when due, all of the Debtor's obligations under the Scheduled
Contracts which are to be performed prior to the Closing Date and the
Debtor does not have any knowledge that the other parties to the
Scheduled Contracts have failed to perform their material obligations
under the Scheduled Contracts.
SECTION 4.13 COMPLIANCE WITH LAW; PERMITS. The Business of the Debtor as
presently conducted does not violate any Law in any material respect. The Debtor
is in possession of all Permits from all Governmental Authorities, including all
certificates of public convenience and necessity and rate authorizations
required by the FERC and the LPSC and all Permits required by applicable Law
relating to any of the operations currently being conducted at or on any of the
Real Property described on Schedule 4.6, as are necessary to carry on its
Business as currently conducted, except for any such Permits that (a) are listed
in Schedule 4.13 or (b) the failure to possess which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
To the extent such Permits are transferable, the Trustee shall fully cooperate
in the transfer thereof so as to permit SWECO to continue to have the use and
benefit thereof and the rights granted thereby after the Closing shall have
occurred. To the extent such Permits are not transferable, the Trustee shall
fully cooperate with and assist SWECO in applying for and obtaining such
Permits.
SECTION 4.14 LABOR AND EMPLOYMENT MATTERS. Except as set forth in
Schedule 4.14, there is no (a) unfair labor practice or unlawful employment
practice charge or complaint against the Debtor pending before any federal,
state or local agency, or any basis for any such complaint; (b) pending labor
strike or other material labor dispute; (c) pending labor grievance; (d) pending
petition or question of representation respecting the employees of the Debtor;
(e) pending arbitration proceedings arising out of or under any Collective
Bargaining Agreement to which the Debtor is a party; or (f) any pending or, to
the knowledge of the Trustee or the Debtor, threatened claim against the Debtor
regarding the terms and conditions of employment or discharge or dismissal of
any employee or the failure to hire any individual employee and there is no
basis for any such claim.
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SECTION 4.15 ENVIRONMENTAL MATTERS
(a) (i) Debtor has not engaged in or allowed any
operation or activity upon, or any use or occupancy of, any Real
Property or any Leasehold for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release,
discharge, processing, recycling, refining, dumping or disposal of any
Hazardous Materials on, under, in or about such Real Property or
Leasehold, or transported or arranged for transport of any Hazardous
Materials to, from or across such Real Property or Leasehold, in each
case which constitutes or otherwise causes a material violation of or
for which remediation or other corrective action is or may be required
under any Environmental Law,
(ii) no Hazardous Materials have been used,
manufactured, produced, constructed, deposited, disposed of, stored or
otherwise located on, under, in or about any Real Property or any
Leasehold, in a manner or condition which constitutes or otherwise
causes a material violation of or for which remediation or other
corrective action is or may be required under any Environmental Law;
(iii) no Hazardous Materials have migrated, or due to
their location or condition are threatening to migrate, from any Real
Property or any Leasehold on, under, in or about other properties, and
no Hazardous Materials have migrated, or due to their location or
condition are threatening to migrate, from other properties on, under,
in or about any Real Property or any Leasehold, in a manner or condition
which constitutes or otherwise causes a [material] violation of or for
which investigation, remediation or other corrective action is or may be
required under any Environmental Law;
(iv) no underground improvement, including any
treatment, sump, or storage tank or water, gas or oil well, has been
installed or located on any Real Property or any Leasehold, in a manner
or condition which constitutes or otherwise causes a material violation
of any Environmental Law; and
(v) neither the Debtor or the Trustee nor any
Representative thereof has received any written notice or other written
communication concerning (A) any violation or alleged violation of
Environmental Laws arising out of the conduct of the Business (except
for any such violations which have been corrected to the satisfaction of
the appropriate authority); (B) any alleged liability for environmental
damages, third party injury or property damages (including property
rights or usage) arising from a failure to comply with Environmental
Laws in any material respect and relating to any Real Property or
Leasehold or arising out of the conduct of the Business; or (C) any
alleged liability for the presence or suspected presence, or Release or
suspected Release of Hazardous Materials on any Real Property,
Leasehold, or other property used or held for use in connection with the
Business or any property upon which waste generated through the conduct
of the Business has been disposed or otherwise has become located. No
directive, citation, notice, writ, injunction, decree, order or judgment
relating to the foregoing is outstanding, and the Debtor is not in
default in any material respect with respect to any currently existing
and effective directive, citation, notice, writ, injunction, order or
19
decree arising pursuant to Environmental Laws and relating to the
conduct of the Business or governing the possession or use of any Real
Property or any Leasehold known to or served upon the Debtor by any
court, arbitrator or Governmental Authority. There is no lawsuit, claim,
proceeding, citation, directive, summons or investigation pending or, to
the knowledge of the Debtor and the Trustee, threatened pursuant to
Environmental Laws concerning or against the Debtor relating to the
ownership, use, occupation, maintenance or operation of any Real
Property or any Leasehold by any Person, or relating to any alleged
violation of any applicable Environmental Laws relating to any Real
Property or any Leasehold or arising out of the conduct of the Business
or the suspected presence of any Hazardous Materials on any Real
Property, Leasehold or other property used or held for use in connection
with the Business or any property upon which waste generated through the
conduct of the Business has been disposed or otherwise has become
located.
(b) The Debtor has been and remains in compliance in all
material respects with the terms and conditions of each Permit issued to it in
connection with Environmental Laws by any Governmental Authority with respect to
its activity on any Real Property or Leasehold. The Debtor maintains and has
maintained at all times all Permits required pursuant to Environmental Laws for
the Business or with respect to any Real Property or Leasehold. Immediately
prior to the Closing, each such Permit will be in full force and effect and
shall not be subject to any pending or threatened suspension, termination or
other modification by any Governmental Authority.
(c) The Debtor has timely prepared and made all necessary or
desirable filings, reports, plans, applications, renewals, modifications and
other disclosures and maintains and has maintained at all times all Books and
Records required under any Environmental Law or with respect to any Real
Property or Leasehold.
(d) The Debtor is in compliance in all material respects with
all Environmental Laws in each jurisdiction in which any Real Property or
Leasehold is located or in which it conducts the Business.
(e) There has been no exposure of any Person or property to any
Hazardous Materials in connection with the Business or any Real Property or
Leasehold which exposure could reasonably be expected to give rise to or
otherwise form the basis for a claim for damages or compensation.
(f) The Debtor has made available to SWECO copies of all
claims, complaints, material reports or other material documents in its files
relating to Environmental Laws that relate to the conduct of the Business or any
Real Property or Leasehold.
(g) Nothing in this Section 4.15 relates to River Bend and any
Environmental Liabilities associated therewith.
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ARTICLE V
REPRESENTATIONS OF SWECO
Subject to Sections 7.4 and 8.8, SWECO represents and warrants to the
Trustee as follows:
SECTION 5.1 ORGANIZATION. SWECO is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of Delaware
with all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now conducted.
SECTION 5.2 AUTHORIZATION OF AGREEMENT. SWECO has all requisite
corporate power and authority to execute and deliver this Agreement and each
Transaction Document, to perform its obligations hereunder and thereunder and to
consummate the Transactions contemplated hereby or thereby. The execution and
delivery by SWECO of this Agreement and each Transaction Document and the
performance of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of SWECO. This
Agreement has been duly executed and delivered by SWECO and (assuming due
authorization, execution and delivery hereof by the other party hereto)
constitutes a legal, valid and binding obligation of SWECO, enforceable against
SWECO in accordance with its terms, except as the same may be limited by
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors rights generally and by legal principles of general applicability
governing the application and availability of equitable remedies.
SECTION 5.3 APPROVALS. Except for the Required Regulatory Approvals and
for those Laws and Orders noncompliance with which could not reasonably be
expected to have a material adverse effect on the ability of SWECO to perform
its obligations under this Agreement, no waiting period imposed by and no Permit
or Order of, any Governmental Authority is required under any Law or Order
applicable to SWECO to permit SWECO to execute, deliver or perform this
Agreement or any Transaction Document.
SECTION 5.4 NO VIOLATION. Assuming termination or expiration of any
applicable waiting periods imposed by the HSR Act and receipt of all Required
Regulatory Approvals, neither the execution and delivery by SWECO of this
Agreement or any Transaction Document nor the performance by SWECO of its
obligations hereunder or thereunder will (a) violate or breach the terms of or
cause a default under (i) any Law or Order applicable to SWECO, (ii) the
certificate of incorporation or bylaws of SWECO or (iii) any contract or
agreement to which SWECO is a party or by which it or any of its properties or
assets is bound or (b), with the passage of time, the giving of notice or the
taking of any action by a third party, have any of the effects set forth in
clause (a) of this Section, except in any such case for any matters described in
this Section that could not reasonably be expected to have a material adverse
effect upon the ability of SWECO to perform its obligations under this
Agreement.
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SECTION 5.5 LITIGATION. There are no Actions pending, or, to the
knowledge of SWECO, threatened against SWECO or any of its assets, at law or in
equity, in any court or before or by any Governmental Authority that could
reasonably be expected to have a material adverse effect on the validity or
enforceability of this Agreement or the ability of SWECO to perform its
obligations under this Agreement.
SECTION 5.6 SWEPCO'S AGREEMENT. The agreements contained in Section 7.4
of this Agreement have been duly authorized by SWEPCO and constitute legal,
valid and binding obligations of SWEPCO enforceable against SWEPCO in accordance
with their terms except as enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium, and other laws affecting creditors
rights generally and by general equitable principles.
ARTICLE VI
CONDITIONS TO THE ACQUISITION
SECTION 6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of each Party to this Agreement to effect the transactions contemplated hereby
to occur at the Closing shall be subject to the satisfaction or, to the extent
permitted by Law, waiver by each Party of each of the following conditions:
(a) All requirements of any applicable Law or Order necessary
for the valid consummation of the transactions contemplated herein to occur at
the Closing shall have been fulfilled, and all filings required to be made with
any Governmental Authority under any applicable Law or Order and all Permits and
Orders required to be obtained from any Governmental Authority or court under
any applicable Law or Order, in each case, in order to permit the Trustee or
SWECO to consummate the transactions contemplated hereby to occur at the Closing
shall have been made or obtained (other than any requirement the nonfulfillment
of which and any Permit or Order the nonreceipt of which could not reasonably be
expected to have a Material Adverse Effect on the Trustee, the Debtor or SWECO
and other than the Required Regulatory Approvals referred to in Section 6.2(g)
which are subject to the satisfaction of (or waiver by) SWECO only).
(b) No Order of any nature issued by any court of competent
jurisdiction that (i) prohibits consummation of all or any part of the
Transactions or (ii) materially and adversely affects the validity,
enforceability or binding effect of any Transaction Document shall be in effect.
SECTION 6.2 CONDITIONS TO THE OBLIGATION OF SWECO TO CONSUMMATE THE
ACQUISITION. The obligations of SWECO to effect the transactions contemplated
hereby to occur at the Closing shall be subject to the satisfaction or, to the
extent permitted by Law, waiver by SWECO of each of the following conditions:
(a) STATEMENTS AND COVENANTS OF THE TRUSTEE. Except to the
extent contemplated by Section 2.3, each of the Article IV Statements shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and each of the covenants and agreements of the Trustee
22
to be performed after the date hereof and prior to the Closing or such shorter
period as specifically set forth in a particular covenant or agreement shall
have been duly performed by the prescribed date or for the duration of the
prescribed time period.
(b) PERMITS. All Permits required for the conduct of the
Business as presently conducted or in connection with any Real Property or
Leasehold shall have been transferred or reissued to SWECO or its designee or
otherwise amended or modified to reflect the Acquisition pursuant to applicable
Law.
(c) NO PROCEEDINGS OR ORDERS. There shall not be any action or
proceeding pending or threatened (including any investigation) by any
Governmental Authority to restrain, enjoin or invalidate the transactions
contemplated herein or to compel SWECO or any of its Affiliates to divest any
material assets, which would, in the judgment of the Board of Directors of
SWECO, made in good faith and based upon the advice of counsel, involve expense
or lapse of time or result in a reconfiguration of the business of SWECO or any
of its Affiliates which expense, lapse of time or result would be materially
adverse to the interests of SWECO or any such Affiliate, and there shall be no
Order of any nature in effect issued by any court or Governmental Authority of
competent jurisdiction that would require the divesture of SWECO or any of its
Affiliates of any of the Acquired Assets.
(d) ADDITIONAL CLOSING DOCUMENTS. SWECO shall have received at
the Closing the following documents, each dated the Closing Date (or such
earlier date as SWECO may agree):
(i) bills of sale and assignments, in form and
substance reasonably satisfactory to counsel for SWECO, covering the
items of personal property included in the Acquired Assets to be
transferred or assigned to SWECO at the Closing;
(ii) general warranty deeds, acts of sale in authentic
form or similar forms of conveyance in proper statutory form for
recording duly executed and acknowledged by the Debtor covering the Real
Property to be conveyed to SWECO pursuant to this Agreement;
(iii) such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Acquired Assets or any
part thereof as SWECO may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment and delivery to it of
the Acquired Assets;
(iv) title insurance policies (which shall be at the
expense of SWECO) issued by title insurance companies reasonably
acceptable to SWECO under an ALTA Standard Form B policy insuring good
and marketable title of SWECO in and to the Real Property (other than
that involving the Transmission Assets and the Pipeline), subject only
to Permitted Encumbrances and such other exceptions as are generally
23
contained in such ALTA Standard Form B Policy, for such amounts as may
be reasonably specified by SWECO;
(v) New Power Supply Contracts in form and substance
satisfactory to SWECO executed and delivered by Members having
Coincident Peak Demands (as set forth in Schedule 2.4) which, when added
together, equals or exceeds 1,000 megawatts, each duly executed and
delivered by the applicable Member, together with (A) evidence of such
Member's valid existence, (B) evidence of such Member's due
authorization of the execution, delivery and performance of such
Member's New Power Supply Contract, (C) opinions of counsel to such
Member (who shall be satisfactory to SWECO) with respect to the valid
existence of such Member, the due authorization, execution and delivery
by such Member of such Member's New Power Supply Contract, and that such
Member's New Power Supply Contract constitutes such Member's legal,
valid and binding obligation and is enforceable against such Member in
accordance with its terms and (D) such other matters as SWECO may
reasonably request from such Member;
(vi) any documents required to effect the arrangements
contemplated by Section 5.3 of the Plan, which shall be in form
satisfactory to SWECO and shall have been duly executed and delivered by
CoBank or other appropriate party; and
(vii) such other documents as may be specified herein,
the Transaction Documents or in the Plan or as SWECO may reasonably
request.
(e) NO ADVERSE CHANGES; OTHER CONDITIONS.
(i) Between the Confirmation Date and the Closing Date
there shall not have occurred any damage, destruction or loss of any of
the Acquired Assets, whether or not covered by insurance, which has had
or could reasonably be expected to have a Material Adverse Effect (other
than an Impaired Asset for which the Purchase Price will be adjusted
pursuant to Section 2.3) nor shall there have occurred any other event
or condition or any change from the information available to SWECO on
the date hereof which has had or which could reasonably be expected to
have a Material Adverse Effect.
(ii) No replacement, addition or other modification to
any equipment or process used to conduct the Business which would have a
Material Adverse Effect will be necessary to comply with any additional
or different requirements which, as of the Closing Date, are existing or
proposed under any Permit or Environmental Law but which will not become
effective or otherwise applicable until after the Closing Date.
(iii) Between the Confirmation Date and the Closing
Date, SWECO shall have received information regarding each Member's
condition (financial and other), business, operations and prospects
satisfactory to SWECO and there shall have occurred no adverse change
therein.
24
(iv) On the Closing Date, SWECO shall have determined
that:
(A) the Debtor has coal and other fuel oil
inventory, spare parts, materials and other supplies of a
quality and a quantity to continue to operate the Business in
accordance with Prudent Utility Practice and the quantity and
quality of the coal shall not be materially less than that
existing on the date hereof; and
(B) the Debtor has all the sulfur dioxide
allowances attributable to the Acquired Assets under applicable
Environmental Law.
(f) THE PLAN.
(i) The Bar Date Order, the Disclosure Statement Order
and the Ballot and Solicitation Order, in form and substance reasonably
satisfactory to SWECO, shall have been entered and shall not have been
modified, amended, dissolved, revoked or rescinded in any material
respect detrimental to SWECO.
(ii) The Plan shall not have been amended,
supplemented or modified in any respect other than as permitted by its
terms.
(iii) The Confirmation Order, which shall comply with
Sections 2.1 and 2.4 and shall otherwise be in form and substance
reasonably satisfactory to SWECO, shall have been entered, shall remain
in effect without any modification or amendment thereto and shall have
become a Final Order.
(iv) The Orders referred to in Section 3.6(c) and (e)
shall have been entered and shall not have been modified, amended,
dissolved, revoked or rescinded.
(v) All conditions precedent to the consummation of
the Plan on the Effective Date (other than the satisfaction or waiver of
the conditions to the obligations of SWECO set forth in Section 6.2 or
the Trustee set forth in Section 6.3) shall have been satisfied or
waived as provided therein.
(vi) The Trustee shall have complied in all material
respects with the Bankruptcy Code, the Bankruptcy Rules and all
applicable orders of the Court entered in the Case.
(vii) The Plan shall be substantially consummated on
the Effective Date thereof simultaneously with the Closing hereunder.
(g) REQUIRED REGULATORY APPROVALS; CONSENTS. Each Required
Regulatory Approval shall have been received in form and substance satisfactory
to SWECO on or prior to the Closing Date, shall be in full force and effect and
shall not be subject to rehearing or appeal on the Closing Date. To the extent
required pursuant to the provisions of an Assigned and Assumed Contract or by
25
applicable law, the Trustee shall have obtained consents to the assignment of
the Assumed and Assigned Contracts to SWECO (or shall have entered into other
arrangements satisfactory to SWECO) and such consents shall not contain any
conditions, requirements, or limitations (other than those contained in the
underlying contract) determined by SWECO to be unacceptable.
(h) OPINION OF COUNSEL. SWECO shall have received from the
Trustee an opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to the
Trustee, that the Confirmation Order has been entered and that no notice of
appeal has been timely filed, or the Confirmation Order otherwise constitutes a
Final Order, as of the Closing Date.
(i) SIMULTANEOUS CLOSING. The Excluded Transmission Assets
shall have been transferred to GSU pursuant to the terms of the Plan and,
subject to the terms and conditions set forth in this Agreement, the closing of
the other Transactions contemplated to be consummated at the Closing shall have
occurred simultaneously.
(j) EXERCISE OF RIGHTS UNDER LIENS. None of the Acquired Assets
shall have been sold, assigned, transferred or delivered to any Person through
the enforcement of any Lien.
(k) NO EMPLOYEE-RELATED LIABILITIES. SWECO shall not be
responsible for any employee related Liabilities of Cajun incurred on or prior
to the Closing Date, including those relating to Employee Benefit Plans,
post-retirement benefits, severance, accrued vacation or sick leave, COBRA
coverage, failure to hire Liability, withdrawal Liability (complete or partial)
under any retirement program and liabilities occasioned by the dismissal or
layoff of any employees or under equal employment or civil rights Laws,
including those Laws regarding discrimination based on sex, race, national
origin, religion, age, veteran's status or disability. The Debtor shall have
complied with all its obligations, if any, under the WARN Act.
(l) FUEL, TRANSMISSION AND TRANSPORTATION ARRANGEMENTS. SWECO
shall have entered into such transmission, interconnection and interchange
arrangements satisfactory to SWECO as may be reasonably necessary for the
transmission of power generated by SWECO or purchased by SWECO for sale in a
manner no less favorable to SWECO than the current arrangements of the Debtors.
(m) NO OTHER LIABILITIES. SWECO shall not be liable for any
other claims or Liabilities of Cajun, other than the Assumed Liabilities, that
have arisen prior to the Closing Date, including any and all claims or
Liabilities with respect to River Bend.
SECTION 6.3 CONDITIONS TO THE OBLIGATION OF THE TRUSTEE TO CONSUMMATE
THE ACQUISITION. The obligation of the Trustee to consummate the Acquisition and
the other Transactions to be consummated at the Closing as contemplated by this
Agreement shall be subject to the satisfaction or waiver in writing by the
Trustee on or prior to the Closing Date of each of the following conditions:
26
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of SWECO contained in this Agreement shall be true and correct in
all material respects as of the date hereof, and as of the Closing Date, with
the same effect as though such representations and warranties had been made on
and as of such dates (except representations and warranties that are made as of
a specific date need be true and correct only as of such date), and each of the
covenants and agreements of SWECO to be performed after the date hereof and
prior to the Closing Date shall have been duly performed by the prescribed date
or for the duration of the prescribed time period, in all material respects.
(b) ENTRY OF ORDERS; CONSUMMATION OF THE PLAN. The Bar Date
Order, the Disclosure Statement Order and the Ballot and Solicitation Order, in
form and substance reasonably satisfactory to the Trustee, shall have been
entered and shall not have been modified, amended, dissolved, revoked or
rescinded in any material respect detrimental to the Cajun Estate and the
Confirmation Order, in form and substance reasonably satisfactory to the
Trustee, shall have been entered, shall remain in effect without any
modification or amendment thereto and shall have become a Final Order.
(c) CERTAIN CLOSING DELIVERIES.
(i) OTHER AGREEMENTS. The relevant parties shall have
entered into all agreements necessary to consummate the Plan, in form
and substance reasonably satisfactory to the Trustee.
(ii) OTHER DOCUMENTS. The Trustee shall have received
from SWECO any other documents required to be delivered by SWECO to the
Trustee pursuant to the provisions of this Agreement, the Transaction
Documents or the Plan in form and substance reasonably satisfactory to
the Trustee.
ARTICLE VII
AMENDMENT, TERMINATION, EXPENSE REIMBURSEMENT,
LIQUIDATED DAMAGES
SECTION 7.1 AMENDMENT. Subject to any Bankruptcy Court approval
requirement that may be applicable, this Agreement may be amended by the written
agreement (and only by the written agreement) of the Trustee and SWECO at any
time prior to the Closing Date.
SECTION 7.2 TERMINATION. This Agreement may be terminated prior to the
Closing as follows (the actual date on which this Agreement is terminated being
referred to herein as the "Termination Date").
(a) at any time on or prior to the Closing Date, by mutual
written consent of the Trustee and SWECO;
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(b) at any time after final determination of the Impaired Asset
Adjustment Amount, by either the Trustee (if the Impairment does not constitute
or result from a breach of the Trustee of its obligations under this Agreement)
or SWECO if such amount exceeds Twenty Million Dollars ($20,000,000);
(c) at the election of the Trustee, if any one or more of the
conditions to the obligations of the Trustee to close as set forth in Section
6.1 or 6.3 has not been fulfilled by July 1, 1999 (the "Outside Date");
(d) at the election of SWECO, if any one or more of the
conditions to the obligations of SWECO to close as set forth in Section 6.1 or
6.2 has not been fulfilled by the Outside Date;
(e) at the election of SWECO, if any of the following shall
occur;
(i) approval by the Court of an Alternative Plan;
(ii) confirmation of a plan of reorganization that
does not accomplish the Acquisition;
(iii) entry of an order of the Court authorizing the
sale of all or a substantial part of the assets of Cajun (in one or more
related transactions and pursuant to any form of transaction) to a
Person other than SWECO or another designated affiliate of SWEPCO (other
than the Excluded Transmission Assets pursuant to the GSU Settlement);
(iv) dismissal or conversion to Chapter 7 of the Case;
or
(v) the Court shall not have signed the Confirmation
Order by July 1, 1998; and
(f) by either SWECO or the Trustee if the Closing has not
occurred on or before the Outside Date, time being of the essence.
(g) by either SWECO or the Trustee if any Governmental
Authority of competent jurisdiction shall have issued an Order or taken any
other action restraining, enjoining or otherwise prohibiting the Transaction
(which the party seeking to terminate this Agreement shall have used all
reasonable efforts to have lifted or reversed) and such Order shall have become
final and nonappealable.
SECTION 7.3 EFFECT OF TERMINATION. If this Agreement is terminated and
the Transactions are not consummated, this Agreement shall become void and of no
further force and effect, except that any such termination shall be without
prejudice to the rights and obligations of the parties hereto under Sections
7.4, 7.5 and 7.6.
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SECTION 7.4 TRUSTEE'S LIQUIDATED DAMAGES FOR SWECO BREACH. If this
Agreement is terminated solely as a result of a breach by SWECO of its
obligations under this Agreement, then the Trustee shall be entitled to payment
of the SWECO Termination Fee. SWEPCO agrees to pay the SWECO Termination Fee to
the Trustee if SWECO does not promptly pay the SWECO Termination Fee if and when
the SWECO Termination Fee is payable under this Section 7.4. Payment of the
SWECO Termination Fee shall (a) be full consideration for the Trustee's efforts
and expenses in connection with this Agreement, the Plan. the other Transaction
Documents and all Transactions contemplated hereby and thereby, and (b)
constitute liquidated and agreed damages in respect of this Agreement and the
Transactions, and SWECO, SWEPCO and their respective Affiliates shall have no
further liability to the Trustee, the Cajun Estate or to any Claimant. The
Trustee agrees that it is impossible to determine accurately the amount of all
of the damages that the Cajun Estate would incur by virtue of a breach by SWECO
of its obligations to proceed with the Transactions, and agrees that the sole
and exclusive remedy for any such breach shall be for the Trustee to receive
payment of the SWECO Termination Fee. Except as provided in this Section 7.4,
the Trustee shall have no right or remedy against SWECO, SWEPCO or their
respective Affiliates at law or in equity by reason of a breach by SWECO of its
obligations under this Agreement. The Trustee agrees and acknowledges that he
has no recourse to the Affiliates, officers, directors, shareholders, employees,
or agents of SWEPCO or SWECO with respect to the obligations of SWEPCO and SWECO
hereunder, and the Trustee agrees not to assert any claim hereunder against any
Person other than SWEPCO or SWECO.
SECTION 7.5 REIMBURSEMENT OF SWECO'S EXPENSES. The Trustee hereby
acknowledges and agrees that SWECO has incurred and is continuing to incur
substantial expenses, including the fees and expenses of legal counsel and
financial advisors in connection with investigating the business and operations
of the Debtor and in preparing this Agreement, the Transaction Documents and
other various documentation, and that the Debtor has derived and will continue
to derive benefit from such expenditures by SWECO. In recognition of such
expenditures and to induce SWECO to continue to incur such expenses in
connection with the Acquisition, subject to Sections 7.6 and 8.12, the Trustee
shall cause the Debtor to pay SWECO up to Seven Million Five Hundred Thousand
Dollars ($7,500,000) in respect of the Reimbursable Expenses if (a) the Plan is
confirmed, and (b) the Acquisition is not consummated for any reason other than
a material default by SWECO of its obligations under this Agreement that results
in the SWECO Termination Fee being payable under Section 7.4 (a "Reimbursable
Termination"). SWECO shall be entitled to the payment of such Reimbursable
Expenses upon demand, subject to reasonable substantiation. Funds from the Cajun
Estate shall not be paid to SWECO or SWEPCO for payments made by SWEPCO to
reimburse the Committee of Certain Members (or the members thereof) with respect
to bankruptcy and litigation expenses.
SECTION 7.6 SWECO'S LIQUIDATED DAMAGES FOR TRUSTEE BREACH
(a) The Trustee agrees that, in the event of a Reimbursable
Termination that results from a breach by the Trustee of its obligations under
this Agreement after entry of the Confirmation Order, then, subject to Section
8.12, the Trustee shall, upon demand, pay, or cause the Debtor to pay, to SWECO
or such other Person as SWECO shall designate, the Trustee Termination Fee.
29
Neither (i) a failure of the Article IV Representations to be true and correct
nor (ii) a failure of any condition specified in Section 6.1 or Section 6.2 to
be satisfied prior to the Outside Date (other than part of Section 6.2 that
relates to the Trustee's performance of his covenants hereunder) shall
constitute such a default for purposes of this Section 7.6. If the Trustee
Termination Fee is paid by the Trustee, then no Reimbursable Expenses shall be
payable.
(b) Payment of the Trustee Termination Fee shall (i) be full
consideration for SWECO's, SWEPCO's and their respective Affiliates' efforts and
expenses in connection with this Agreement, the Plan, the other Transaction
Documents and all Transactions contemplated hereby and thereby, including the
substantial due diligence efforts of SWECO, SWEPCO or their Affiliates and their
Representatives, and (ii) constitute liquidated and agreed damages in respect of
this Agreement and the Transactions, and the Trustee (on behalf of the Cajun
Estate) shall have no further liability to SWECO, SWEPCO or their respective
Affiliates. SWECO agrees that it is impossible to determine accurately the
amount of all of the damages that it would incur by virtue of a breach by the
Trustee of his obligations under this Agreement, and agrees that its sole and
exclusive remedy for any such breach shall be to receive payment of the Trustee
Termination Fee. Except as provided in this Section 7.6 and in Sections 6.2, 7.2
and 8.8, SWECO shall have no right or remedy against the Trustee, at law or in
equity, by reason of a breach by the Trustee of his obligations under this
Agreement.
SECTION 7.7 FIRST PRIORITY EXPENSES. The Reimbursable Expenses and the
Trustee Termination Fee shall constitute first priority administrative expenses
of the Debtor pursuant to section 503(b) of the Bankruptcy Code and shall be
paid upon the entry of any Order of the Court directing payment by the Trustee
of such amounts. From and after the Outside Date, until payment in full of the
Reimbursable Expenses and the Trustee Termination Fee, interest shall accrue on
any unpaid portion of the Reimbursable Expenses or Trustee Termination Fee, as
the case may be, at a rate per annum equal to the prime commercial lending rate
announced from time to time by The Chase Manhattan Bank, N.A.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 EXPENSES. Except as otherwise provided herein, the parties
hereto shall bear their own respective costs and expenses (including all
compensation and expenses of counsel, financial advisors, consultants, actuaries
and independent accountants) incurred in connection with the preparation and
execution of this Agreement and the Transaction Documents and consummation of
the Transactions.
SECTION 8.2 ENTIRE AGREEMENT, DISCLOSURES IN WRITING. Except as
otherwise contemplated herein, this Agreement, together with the Appendices and
Schedules hereto, and the Transaction Documents constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof
30
SECTION 8.3 COUNTERPARTS. This Agreement and any amendments hereto may
be executed in one or more counterparts, each of which will be deemed to be an
original by the party executing such counterpart, but all of which shall be
considered one and the same instrument.
SECTION 8.4 HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
SECTION 8.5 NOTICES. All notices hereunder shall be deemed given if in
writing and delivered or sent by facsimile, courier or by registered or
certified mail (return receipt requested) to the following addresses or
facsimile numbers (or at such other addresses or facsimile numbers as shall be
specified by like notice):
(a) if to the Trustee, to:
The Honorable Ralph R. Mabey
c/o LeBoeuf Lamb, Greene & MacRae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah 84101
Telephone (801) 321-6721
Facsimile (801) 359-3256
With a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
1000 Kearns Building
136 South Main Street
Salt Lake City, Utah 84101
Attention: Lon Jenkins, Esq.
Telephone: (801) 321-6721
Facsimile: (801) 359-8256
and to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
633 Seventeenth Street
Suite 2800
Denver, Colorado 80202
Attention: Thomas J. Moore, Esq.
Telephone: (303) 291-2600
Facsimile: (303) 297-0422
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if to SWECO, to:
Southwestern Wholesale Electric Power Company
428 Travis Street
Shreveport, Louisiana 71101
Attention: Michael D. Smith
Telephone: (318) 673-3395
Facsimile: (318) 673-3681
With a copy to:
Central and Southwest Corporation
1616 Woodall Rogers Freeway
Dallas, Texas 75202
Attention: F. C. Meyer, Esq.
General Counsel
Telephone: (214) 777-1096
Facsimile: (214) 777-1528
Any, notice given by delivery, mail or courier shall be effective when received.
Any notice given by facsimile shall be effective upon oral or machine
confirmation of transmission.
SECTION 8.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the Laws of the State of Louisiana applicable to
agreements made and to be performed entirely within such state (without regard
to conflict of laws provisions of Louisiana law that would result in the
application of the laws of another jurisdiction) and, to the extent applicable,
the Bankruptcy Code.
SECTION 8.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns, and nothing herein
express or implied shall give or be construed to give to any other Person any
legal or equitable rights hereunder.
SECTION 8.8 NON-SURVIVAL OF CERTAIN STATEMENTS AND REPRESENTATIONS. The
statements contained in Article IV and the representations of SWECO set forth in
this Agreement shall not survive the Closing.
SECTION 8.9 BINDING, EFFECT, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns, including any Person appointed for or in connection with any
chapter 11 case involving the Debtor in any subsequent case under the Bankruptcy
Code in which the Debtor may be a debtor. Except as provided in the preceding
sentence and in Section 2.1, this Agreement and the rights and remedies
hereunder are not assignable by the Trustee or SWECO, except that SWECO may
assign its rights and remedies hereunder to any one or more of its Affiliates.
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SECTION 8.10 FURTHER ASSURANCES. The Trustee, on the one hand, and
SWECO, on the other, agree, to the extent necessary (and only to such extent),
on or any time after the Closing Date, to execute and deliver, or to cause to be
executed and delivered, all such instruments, and to take all such actions, as
the other may reasonably request in order to effectuate the intent and purpose
of, and to otherwise carry out the terms of, this Agreement.
SECTION 8.11 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES. This
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms and conditions hereof may be waived, only by a written instrument signed
by the parties or, in the case of a waiver, the party waiving compliance. Except
as otherwise provided herein, no delay on the part of any party in exercising
any right, power or privilege hereunder, nor any single or partial exercise of
any such right, power or privilege hereunder, shall preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege hereunder. The rights and remedies herein provided are cumulative and,
except as otherwise provided herein, are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity.
SECTION 8.12 NO PERSONAL LIABILITY OF TRUSTEE. Notwithstanding anything
herein to the contrary, the Trustee shall have no personal liability for any of
his obligations under this Agreement, including under Section 7.5 and Section
7.6, all of which the Trustee has undertaken for and on behalf of the Cajun
Estate and all liability for which will be the sole responsibility of the Cajun
Estate.
SECTION 8.13 OBLIGATIONS OF TRUSTEE SUBJECT TO COURT APPROVAL. SWECO and
SWEPCO agree and acknowledge that the Trustee's obligations hereunder are
subject to the approval of the Court in the Case, as and to the extent required
by the applicable provisions of the Bankruptcy Code.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto by their respective duly appointed representatives thereunder
duly authorized as of the date first above written.
SOUTHWESTERN WHOLESALE
ELECTRIC COMPANY
By:
Name:
Title:
Ralph R. Mabey, as Chapter 11 Trustee for
Cajun Electric Power Cooperative, Inc.,
subject to Section 8.12
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As to Section 7.4 only:
SOUTHWESTERN ELECTRIC POWER
COMPANY
By:
Name:
Title:
34
APPENDIX A
DEFINITIONS
"ACQUIRED ASSETS" shall mean any and all assets owned by the Debtor or
in which the Debtor has rights or privileges, of every type and description,
real, personal and mixed, tangible, choate or inchoate, known or unknown, fixed
or unfixed, accrued, absolute, contingent or otherwise, wheresoever located, and
whether or not specifically referred to in this Agreement, excluding only the
Excluded Assets, but including the following:
(i) Big Cajun I;
(ii) Big Cajun II, Units I and 2;
(iii) the Debtor's 58% undivided ownership interest in Big
Cajun II, Unit 3;
(iv) the Debtor's 86% undivided interest in Big Cajun II common
facilities;
(v) the Energy Control Center;
(vi) the 37,500 sq. ft. headquarters building in Baton Rouge,
Louisiana situated on approximately 5.5 acres of land, together with all
servitudes, easements, rights of way and other real property rights
related thereto;
(vii) approximately 4,200 acres of agricultural land near
Coushatta, Louisiana, together with all servitudes, easements, rights of
way and other real property rights related thereto;
(viii) the 540 MW General Electric turbine generator;
(ix) the Pipeline System, together with all servitudes,
easements, rights of way and other real property rights related thereto;
(x) all railcars owned by the Debtor or in which the debtor has
an interest, including 836 steel rotary dump railcars;
(xi) all annual Phase II sulfur dioxide allowances attributable
to the other Acquired Assets under applicable Environmental Laws;
(xii) all of the Assumed and Assigned Contracts and the
Assigned Post-Petition Contracts, including all of the Leaseholds,
transmission/interconnection contracts, and the other power sales
contracts that SWECO designates as Assumed and Assigned Contracts or
Assigned Post-Petition Contracts pursuant to Section 3.6;
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(xiii) all other office furniture, furnishings, machinery,
equipment, supplies and computer hardware and software owned by the
Debtor or in which the Debtor has an interest that are not Excluded
Assets;
(xiv) all coal, fuel oil and other inventories, material, spare
parts and other supplies owned by the Debtor or in which the Debtor has
an interest that are not Excluded Assets;
(xv) the Big Cajun II Solid Waste Closure Fund;
(xvi) all motor vehicles owned by the Debtor or in which the
Debtor has an interest that are not Excluded Assets;
(xvii) all of the Designated Transmission Assets and all other
substations, through buses, and microwave stations owned by the Debtor
or in which the Debtor has an interest, and all servitudes, easements,
rights of way and other real property rights related thereto, other than
any Excluded Transmission Assets;
(xviii) all Real Property not otherwise specifically referred
to in the foregoing clauses (i) through (xvii);
(xix) the proceeds of any insurance or condemnation award
resulting from any casualty to or condemnation of an Acquired Asset
occurring prior to the Closing Date which are not applied to the payment
of the cost of restoration of such Acquired Asset; and
(xx) all other assets and properties, except Excluded Assets,
listed in Schedule 4.7 and 4.8.
"ACQUISITION" shall have the meaning set forth in the recitals to this
Agreement.
"ACTION" shall mean any civil, criminal, or administrative action, suit,
arbitration, charge, petition, complaint, inquiry, litigation, proceeding or
investigation by or before any Governmental Authority or Arbitral Authority,
including any class actions or investigations.
"AFFILIATE" shall mean, with respect to any Person, any other Person
controlling, controlled by; or under common control with such Person. For
purposes of this definition, "CONTROL" shall mean the power to direct, or cause
the direction of, the management or policies of any Person, whether through
ownership of securities, by contract or otherwise.
"AGREEMENT" shall mean this Agreement and the Appendices and Schedules
hereto.
"ARTICLE IV STATEMENTS" shall mean the statements set forth in Article IV.
"ASSIGNED POST-PETITION CONTRACTS" shall have the meaning set forth in
Section 3.6(g).
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"ASSUMED AND ASSIGNED CONTRACTS" shall have the meaning set forth in
Section 3.6(c).
"ASSUMED LIABILITIES" shall mean (i) the obligations of the Debtor under
any Assumed and Assigned Contracts or Assigned Post-Petition Contracts that
first arise on or after the Closing Date (excluding any amounts that are
required to be paid in order to assume any of such Contracts pursuant to
Bankruptcy Code sections 365 and 1123 or that otherwise are due and owing under
any such Contracts prior to the Closing) and (ii) any obligations of the Debtor
that are assumed by SWECO under Section 3.11.
"BALLOT AND SOLICITATION ORDER" shall mean the order to be entered by the
Court, approving the procedures for the solicitation of acceptances and
rejections of the Plan and the form of ballots related thereto.
"BANKRUPTCY CODE" shall mean title 11 of the United States Code, " 101, et
M., as amended and in effect on the Petition Date.
"BANKRUPTCY RULES" shall mean the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under section 2075, title 28,
United States Code. and any local rules of the Court.
"BAR DATE ORDER" shall mean an order of the Court establishing a bar date
for the filing of certain administrative expense claims under Bankruptcy Code
section 503(b) against the Debtor.
"BASIS POINT" shall mean one one-hundredth of one percent (1/100 of 1%).
"BIG CAJUN I" shall mean Big Cajun I, Units 1 and 2, which are natural
gas-fired electric generating facilities located in New Roads, Louisiana, owned
100% by Cajun, both of which were recertified to a capacity of net 110MW in
1995, and all related switchyards, machinery, equipment, tools, spare parts,
supplies, fuel oil in storage, other items in inventory, docking facilities,
Transferable Permits and other personal and Real Property, including all
servitudes, easements. rights of way and other real property rights related
thereto.
"BIG CAJUN II" shall mean Big Cajun II, Units I and 2 and Big Cajun II,
Unit 3.
"BIG CAJUN II JOPOA" shall mean the Joint Ownership Participation and
Operating Agreement dated November 14, 1980 between the Debtor and GSU related
to Big Cajun II, Unit 3.
"BIG CAJUN II SOLID WASTE CLOSURE FUND" shall mean the funds held in
account No. 98-0005-01-1 maintained at Hibernia National Bank in Baton Rouge,
Louisiana.
"BIG CAJUN II, UNITS I AND 2" shall mean Big Cajun II, Units 1 and 2, which
are coal-fired electric (generating facilities located in New Roads, Louisiana,
owned 100% by Cajun, each of which is rated at a capacity of net 575MW and all
related machinery, equipment, switchyards, coal inventory. fuel oil in storage,
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other items in inventory, docking facilities, tools, spare parts, supplies,
Transferable Permits and other personal and Real Property, including all
servitudes, easements. rights of way and other real property fights related
thereto.
"BIG CAJUN II, UNIT 3" shall mean Big Cajun II, Unit 3, a coal-fired
electric generating facility, located in New Roads, Louisiana, in which the
Debtor owns a 58% undivided interest and GSU owns a 42% undivided interest and
which is operated by the Debtor and rated at a capacity of net 40%TW (with the
Debtor's share being 313MW), and all related machinery, equipment, standards,
coal inventory, fuel oil in storage, other items in inventory, docking
facilities, tools, spare parts., supplies, Transferable Permits and other
personal and Real Property, including all servitudes. easements, rights of way
and other real property rights related thereto.
"BOOKS AND RECORDS" shall mean all books and records (or true and complete
copies thereof) of this Debtor, including all computerized books and records,
including all such books and records relating to the purchase or sale of power,
materials, supplies and services or dealings with customers and all records and
other documentation relating to Environmental Laws and Environmental
Liabilities.
"BUSINESS" shall mean the business and operations of Cajun currently
conducted by the Trustee with the Acquired Assets.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any day
which is a legal holiday under the Laws of the State of Texas, Louisiana or New
York or is a day on which banking institutions located in any such state are
authorized or required by Law or other government action to close.
"CAJUN" shall have the meaning set forth in the recitals to this Agreement.
"CAJUN ESTATE" A shall mean the bankruptcy estate of the Debtor created
under Bankruptcy Code section 541(a) upon commencement of the Case.
"CAJUN FINANCIAL STATEMENTS" shall have the meaning set forth in Section
4.5.
"CAJUN RIVER BEND INTEREST" shall mean the undivided 30% interest of the
Debtor in River Bend
"CASE" shall have the meaning set forth in the recitals to this Agreement.
"CLAIMANTS" shall mean the holders of claims against, or equity interests
in, the Debtor.
"CLECO" shall mean Central Louisiana Electric Company, Inc., a Louisiana
corporation.
"CLOSING" shall have the meaning set forth in Section 2.8.
"CLOSING DATE" shall mean the Effective Date.
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"CLOSING DATE YIELD" means the yield to maturity implied by (i) the yields
reported in Bloomberg Business News, as of the close of business on the Business
Day immediately preceding the Closing Date, for actively traded U.S. Treasury
securities having a constant maturity of ten (10) years, or (ii) if such yields
are not reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for the
latest day for which such yields have been so reported as of the Business Day
immediately preceding the Closing Date, in U.S. Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for actively traded
U.S. Treasury securities having a constant maturity of ten (10) years.
"COBANK" shall mean CoBank ACB, formerly the National Bank for
Cooperatives.
"COBANK CLASS E STOCK" shall mean the Class E stock of CoBank owned by the
Debtor.
"COBANK LETTERS OF CREDIT" shall mean the letter of credit issued by CoBank
for the account of the Debtor and for the benefit of The Clorox Company dated
June 30, 1983, as renewed or replaced from time to time, and the letter of
credit issued by CoBank for the account of the Debtor and for the benefit of
Eastman Kodak Company dated July 7, 1983, as renewed or replaced from time to
time.
"COBANK PATRONAGE DIVIDENDS" shall mean the patronage dividends payable by
CoBank to the Debtor and held by CoBank immediately prior to the Closing.
"COBANK REIMBURSEMENT AGREEMENT" shall mean the separate Letter of Credit
Reimbursement Agreements dated June 30, 1983 and July 7, 1983, respectively, as
amended, executed and delivered by the Debtor in favor of CoBank and any other
similar agreement that governs the CoBank Letters of Credit then outstanding.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985.
"COINCIDENT PEAK DEMAND" shall mean, with respect to each Member, the
amount set forth opposite such Member's name in Schedule 2.4.
"COLLECTIVE BARGAINING AGREEMENTS" shall mean all collective bargaining
agreements to which the Debtor is a party, including: (i) the Collective
Bargaining Agreement dated April 1, 1995 between the Debtor and the United
Steelworkers of America, (ii) the Collective Bargaining Agreement dated April 1,
1995 between the Debtor and the International Brotherhood of Electrical Workers,
and (iii) the Collective Bargaining Agreement dated December 1, 1994 between the
Debtor and the International Brotherhood of Electrical Workers.
"CONFIRMATION DATE" shall mean the date on which the Confirmation Order is
entered on the docket for the Case by the clerk of the Court.
"CONFIRMATION HEARING" shall mean the hearing on confirmation of the Plan.
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"CONFIRMATION ORDER" shall mean the order to be entered by the Court,
confirming the Plan in accordance with section 1129 of the Bankruptcy Code.
"CONTRACTS" shall mean all contracts, agreements, indentures, notes, bonds,
loans, instruments. leases, sub-leases, deeds of trust, conditional sales
contracts, mortgages, franchises, licenses. commitments or other binding
agreements, understandings and other arrangements, express or implied.
"CORE ARTICLE IV STATEMENTS" means the Article IV Statements set forth in
Sections 4.4, 4.5 (as to the last two sentences thereof), 4.7 (as to the last
sentence thereof), 4.8, 4.12, and 4.15.
"COURT" shall mean the United States District Court for the Middle District
of Louisiana having jurisdiction over the Case and, to the extent of any
references under section 157, title 28, United States Code, the unit of such
District Court constituted under section 15 1, title 28, United States Code.
"CREDITORS" shall mean any Person that holds a claim against the Debtor (i)
that arose at the time of or before the commencement of the Case or (ii) of a
kind specified in section 502(g), 502(h) or 502(i) of the Bankruptcy Code.
"DEBTOR" shall have the meaning set forth in the recitals to this
Agreement.
"DESIGNATED TRANSMISSION ASSETS" shall mean the Transmission Assets
consisting of those interconnecting transmission facilities that are necessary
to effect the sale by SWECO of capacity and associated energy at wholesale,
excluding any Excluded Transmission Assets.
"DIRECTORS AND OFFICERS TRUST FUND" shall mean the directors and officers
trust fund maintained at City National Bank and relating to the Debtor's
retained Liability under its directors and officers liability insurance policy.
"DISCLOSURE STATEMENT" shall mean the Disclosure Statement, including all
exhibits and schedules thereto, relating to the Plan filed by SWEPCO with the
Court pursuant to section 1125 of the Bankruptcy Code.
"DISCLOSURE STATEMENT ORDER" shall mean the order to be entered by the
Court, approving the Disclosure Statement pursuant to section 1125 of the
Bankruptcy Code and establishing the procedure and method of providing notice of
the hearing on confirmation of the Plan.
"DOLLARS" and "$" shall mean lawful currency of the United States of
America.
"DUE DILIGENCE INVESTIGATION" shall have the meaning set forth in Section
3.1(c).
"EFFECTIVE DATE" shall mean the Effective Date of the Plan, which shall be
the earlier of (i) a Business Day after the Confirmation Date selected by SWECO
and the Trustee; or (ii) ten (10) Business Days after the date on which the
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conditions precedent to the effectiveness of the Plan have been fulfilled or
waived by the Trustee and SWECO as set forth in the Plan.
"EMPLOYEE BENEFIT PLAN" shall mean each ERISA Plan and each other pension,
profit sharing, retirement, bonus, deferred compensation, stock option, stock
purchase, fringe benefit, severance pay or insurance plan for officers or
employees (as well as any other policy or practice that provides health,
welfare, or post-retirement benefits to officers or employees), which currently
is established, maintained, contributed to or legally obligated to be
contributed to (i) by the Debtor or (ii) any current or former ERISA Affiliate.
"ENCUMBRANCE" shall mean any Lien, claim, option, leasehold interest, right
of way, option, restriction or other right of any third party of any kind or any
nature whatsoever.
"ENERGY CONTROL CENTER" shall mean the operations control center located in
New Roads, Louisiana, and all related personal and Real Property, including all
servitudes, easements, rights of way and other real property rights related
thereto.
"ENVIRONMENT" shall mean any indoor or outdoor ambient air, surface water,
ground water, drinking water, building surface, material surface, land surface
or subsurface strata or natural resources.
"ENVIRONMENTAL LAWS" shall mean any United States federal, state or local
Law relating or applicable to pollution or protection of the Environment,
including any of the foregoing relating or applicable to emissions, discharges,
spills, Releases or threatened Releases of any Hazardous Materials into the
Environment, the investigation, removal, remediation or other cleanup or
corrective action for Hazardous Materials, interference with the use of property
caused by or resulting from Hazardous Materials or human or natural resource
exposure to any Hazardous Materials, or otherwise relating to the manufacture,
generation, processing, distribution, use, treatment. storage, disposal,
recycling, transport or handling of any Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U S C,
Section 960 1, et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901, et seq.), the Clean Air Act (42 U.S.C. Section 7401, et seq.), the
Federal Water Pollution Control Act (13 U S C Section 12-1, et seq.), the Safe
Drinking Water Act (42 U.S.C. Section 300, et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C.Section 180 1, et seq.), and all regulations issued
under such statutes, and all analogous and similar state statutes and
regulations issued thereunder, and all obligations, duties, and requirements
arising from or related to Hazardous Materials under common law (including
nuisance and trespass).
"ENVIRONMENTAL LIABILITIES" shall mean any known or reasonably expected
liability or obligation under any Environmental Law, including liability for
investigatory costs, oversight costs, remediation and cleanup costs,
governmental or private response costs and cost recovery actions, natural
resource damages, property damages, personal injuries, expenditures for process
or operational changes necessary to remedy violations of any Environmental Law,
A-7
consequential economic damages, administrative, civil or criminal penalties or
forfeitures, and attorneys' fees or other costs of defending an Action asserting
liability under any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" shall mean any corporation or trade or business
(including a sole proprietorship, partnership, trust, estate or corporation)
that is a member of any group of organizations described in section 414(b), (c),
(m) or (o) of the Tax Code and the regulations issued thereunder of which the
Debtor is a member.
"ERISA MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
section 3(37) or 4001(a)(1)) of ERISA.
"EWG" shall mean an "exempt wholesale generator" under Section 32 of the
Public Utility Holding Company Act of 1935.
"EXCLUDED ASSETS" shall mean (i) the Cajun River Bend Interest and all
assets related thereto; (ii) cash and cash equivalents of the Debtor on the
Closing Date, whether such cash or cash equivalents are held by the Debtor or by
a third party, including (A) the cash collateral account established for the
benefit of the RUS pursuant to the cash collateral stipulations entered into
between the RUS and the Debtor or the Trustee, as applicable, on and after the
Petition Date; (B) the River Bend decommissioning fund maintained at Hibernia;
(C) the River Bend low level waste fund maintained by GSU; and (D) the Board
Escrow Fund maintained at Hibernia, but excluding the Big Cajun II Solid Waste
Closure Fund; (iii) all of the Debtor's accounts receivable existing immediately
prior to the Closing (iv) the insurance claims of the Debtor relating to
loss, destruction or other damage to any of the Acquired Assets prior to the
Closing Date that results in an adjustment to the Purchase Price pursuant to
Section 2.3(a); (v) the Rejected Contracts; (vi) the Excluded Transmission
Assets; (vii) any and all directors and officers liability insurance policies
and rights with respect thereto, including the Directors and Officers Trust
Fund; (viii) the Debtor's membership in the U.S. Southwestern Power Pool; (ix)
the capital term certificates issued by the Natural Rural Utilities Cooperative
Finance Corporation to the Debtor, and all related dividends or credits; (x)
the Debtor's investment in Western Fuels Association, Inc. as and to the extent
it exists on the Closing Date; and (xi) the CoBank Class E Stock and the CoBank
Partronage Dividends, subject to the pledge thereon to secure the SHL Indemnity
Obligations assumed by SWECO pursuant to Section 5.3 of the Plan.
"EXCLUDED TRANSMISSION ASSETS" shall mean the 500KV Transmission Assets,
together with the related through bus facilities located in certain substations
and the revenue metering facilities affixed to the high-voltage side of the
through bus facilities situated in certain substations.
"EXISTING POWER SUPPLY CONTRACTS" shall mean those long-term wholesale
power contracts between the Debtor and the Members, nine of which expire in the
year 2026 and three of which expire in the year 2021.
A-8
"FERC" A shall mean the Federal Energy Regulatory Commission.
"FINAL ORDER" shall mean (i) an order of the Court as to which the time to
appeal, petition for certiorari or move for reargument or rehearing has expired
and as to which no appeal, petition for certiorari or other proceedings for
reargument or rehearing shall then be pending, or (ii) if an appeal, writ of
certiorari, reargument or rehearing thereof has been filed or sought, such order
of the Court shall have been affirmed by the highest court to which such order
was appealed, or certiorari shall have been denied or reargument or rehearing
shall have been denied or resulted in no modification of such order, and the
time to take any further appeal, petition for certiorari or move for reargument
or rehearing shall have expired, PROVIDED, HOWEVER, that the possibility that a
motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any
analogous Bankruptcy Rule, may be filed with respect to such order shall not
cause such order not to be a Final Order.
"500KV TRANSMISSION ASSETS" shall mean the 29 miles of 500 KV transmission
near Big Cajun II known as 500KV line number 745 and line number 746.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in effect in the
United States, consistently applied.
"GOVERNMENTAL APPROVALS" shall mean the consents, approvals, authorizations
and other requirements prescribed by any Law, including the Required Regulatory
Approvals, which must be obtained or satisfied by Cajun, the Trustee or SWECO
and which are necessary for the execution and performance by the Trustee or
SWECO of this Agreement and the Transaction Documents or for the consummation of
any of the Transactions in accordance with the terms of the Transaction
Documents.
"GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign federal, state
or local court, department, legislative body, commission, council, board or
other administrative or governmental Person.
"GSU" shall mean Entergy Gulf States Utilities, Inc., a Texas corporation
formerly known as Gulf States Utilities, Inc.
"GSU SETTLEMENT" shall mean the proposed settlement between the Cajun
Estate and GSU settling all mutual claims relating to River Bend and all other
disputes and claims between the Cajun Estate and GSU.
"HAZARDOUS MATERIALS" shall mean any substance: (i) that is defined as
"hazardous waste," "hazardous substance," "hazardous material," "extremely
hazardous substance," "toxic substance," "pollutant", "contaminant" or "solid
waste" under any Environmental Law; (ii) that is toxic, explosive, corrosive,
flammable, infectious, reactive, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated by any Governmental Authority; (iii) that
is or contains oil, petroleum products, natural gas or liquefied natural gas; or
A-9
(iv) that contains PCBS, asbestos, radon gas or urea formaldehyde foam
insulation.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"HYDRO CONTRACT" shall mean the contract between the Debtor and the
Southwestern Power Administrator, designated No. DE-PM75-945WO0244, pursuant to
which the Debtor is purchasing hydroelectric capacity and associated energy.
"IMPAIRED ASSETS" shall have the meaning set forth in Section 2.3(a).
"IMPAIRED ASSET NOTICE" shall have the meaning set forth in Section 2.3(a).
"IMPAIRED ASSETS ADJUSTMENT AMOUNT" shall have the meaning set forth in
Section 2.3(a).
"IMPAIRMENT" shall have the meaning set forth in Section 2.3(a).
"INTELLECTUAL PROPERTY RIGHTS" shall mean, collectively, any and all
patents, trademarks, service marks, copyrights, trade names, know how, technical
information and data, trade secrets and other proprietary information or
intellectual property rights.
"IRS" shall mean the Internal Revenue Service.
"LAW" shall mean any statute, law (including common law), rule, regulation,
ordinance, order, decree, ruling, permit, authorization, action, restriction,
requirement or policy of any Governmental Authority (each as may be in effect
from time to time).
"LEASEHOLD" means a lease of Real Property that is included in the Acquired
Assets, including any space use agreement, license or other right to use or
occupy.
"LIABILITY" shall mean any debt, liability or obligation, whether accrued,
contingent, disputed, undisputed, secured, unsecured, liquidated, unliquidated,
matured or unmatured, including (i) those arising under (a) any Law or Order,
(b) any Employee Benefit Plan or (c) any Contract; (ii) all Environmental
Liabilities; (iii) liabilities for Taxes and interest, penalties or other
charges payable with respect to any such Liability and (iv) all tort
liabilities.
"LIEN" shall mean a charge against or interest in property to secure
payment of a debt or performance of a liability, whether granted voluntarily or
involuntarily, including any security interest, pledge, mortgage or charge.
"LPSC" shall mean the Louisiana Public Service Commission.
"MATERIAL ADVERSE EFFECT" shall mean any condition, change or event that,
individually or in the aggregate, could reasonably be expected to materially and
A-10
adversely affect the Acquired Assets, the Retained Assets or the business,
operations, financial condition or prospects of SWECO or Cajun.
"MATERIAL CONTRACTS" shall mean any Contract (i) the term of which could
reasonably be expected to extend beyond the Closing, (ii) involves aggregate
future consideration of One Hundred Thousand Dollars ($100,000) or more or (iii)
is otherwise material to the Business.
"MEMBERS" shall mean the following 12 distribution cooperatives who are
members of Cajun BeaureLyard Electric Cooperative, Inc., Claiborne Electric
Cooperative, Inc., Concordia Electric Cooperative, Inc., Dixie Electric
Membership Corp., Jefferson Davis Electric Cooperative, Inc., Northeast
Louisiana Power Cooperative, Inc., Pointe Coupee Electric Membership
Cooperative, South Louisiana Electric Cooperative Association, Southwest
Louisiana Electric Membership Corp., Teche, Valley Electric Membership Corp.,
and Washington St. Tammany Electric Cooperative, Inc.
"NEW POWER SUPPLY CONTRACT" shall mean a long-term wholesale power purchase
agreement, in form and substance acceptable to SWECO and to take effect on the
Closing Date, between SWECO and a Member pursuant to which SWECO will provide,
subject to certain limitations, the applicable Member with a supply of power
sufficient to fulfill certain of such Member's respective capacity and energy
requirements.
"NON-CORE ARTICLE IV STATEMENTS" shall mean those Article IV Statements
that are not Core Article IV Representations.
"138KV TRANSMISSION ASSETS" shall mean the assets associated with the 24
miles of 138KV transmission in the Lake Charles, Louisiana area, including all
related through buses, substations and other transmission assets owned by the
Debtor, regardless of voltage level or classification, other than the 500 KV
Transmission Assets.
"ORDER" shall mean any order, writ, judgment, injunction, decree,
determination or award of a Governmental Authority.
"ORGANIZATIONAL DOCUMENTS" shall mean the articles of incorporation,
by-laws and other organizational documents of the Debtor.
"OUTSIDE DATE" shall have the meaning set forth in Section 7.2(c).
"PARTY" shall mean Cajun, the Trustee, SWECO or SWEPCO and any
Representative of such Party, as the context may require or allow.
"PCB" shall mean polychlorinated biphenyl.
"PERMITS" shall mean all permits, licenses, certificates, franchises and
other authorizations, consents and approvals of any Governmental Authority.
A-11
"PERMITTED ENCUMBRANCES" shall mean Permitted Liens and such zoning
restrictions, covenants, easements, rights of way, licenses, profits,
restrictions or other Encumbrances (other than Liens) on Real Property or minor
irregularities in the title thereto as do not impair the use thereof in the
operation of the Business as it is presently conducted by the Debtor and is
presently contemplated by the Debtor to be conducted in the future or the value
thereof to the Debtor in the conduct of the Business as it is presently
conducted by the Debtor.
"PERMITTED LIENS" shall mean the Lien on the CoBank Collateral referred to
in Section 5.3 of the Plan, the Lien of Hibernia National Bank on the
headquarters building and related land in Baton Rouge, Louisiana and the other
rights, liens and security interest of Hibernia National Bank referred to in
Section 5.4 of the Plan, and any Liability owing by Cajun to SWEPCO or any
affiliate thereof.
"PERSON" shall mean any natural person, corporation, partnership, firm,
joint venture, association, joint-stock, trust, unincorporated organization,
governmental or regulatory body or other entity.
"PETITION DATE" shall mean December 21, 1994, the date on which the Debtor
commenced the Case in the Court.
"PETROLEUM PRODUCTS" shall mean petroleum, gasoline, oil, fuel oil, diesel
fuel and petroleum solvents or derivatives.
"PIPELINE ASSETS" shall mean the 17.5 mile gas pipeline system, together
with all servitudes, easements, rights of way and other real property rights
related thereto.
"PLAN" shall have the meaning set forth in the recitals to this Agreement.
"POST-PETITION CONTRACTS" shall mean any Contracts entered into by Cajun or
the Trustee on or after the Petition Date.
"PRUDENT UTILITY PRACTICE" or "PUP" shall mean, at any time, any of the
practices, methods and acts engaged in or approved by a significant portion of
the electric utility industry prior to such time, having due regard for, among
other things, manufacturers' recommendations and warranties, requirements, of
Governmental Authorities and the requirements of this Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"REAL PROPERTY" shall mean real property and interests in real property,
including buildings, structures and improvements (including construction in
progress) located thereon, fixtures contained therein and appurtenances thereto,
together with all servitudes, easements, rights of way and other real property
rights related thereto, owned by the Debtor or in which the Debtor has an
interest other than any real property or interests in real property relating to
River Bend.
A-12
"REIMBURSABLE EXPENSES" shall mean all reasonable expenses or obligations
of SWECO, SWEPCO, or any of their Affiliates or advisors (including the fees and
expenses of legal, accounting and financial advisors to such Persons, and all
engineers, rate consultants and other professionals retained by any of such
Persons) incurred on or after July 1, 1996 in connection with the investigation
of the business of Cajun, negotiations with Cajun and its creditors, Members and
other constituencies in the Case, this Agreement, the Plan, the Disclosure
Statement, and financing commitments, and related fees and expenses, and the
preparation of documentation relating to the financing of the Acquisition and
the other documents contemplated hereby and thereby, and all other acts taken in
furtherance of obtaining confirmation and substantial consummation of the Plan
and the Acquisition. Reimbursable Expenses shall not include any payments made
by SWEPCO to reimburse the Committee of Certain Members (or the members of such
Committee) for bankruptcy and litigation expenses.
"REIMBURSABLE TERMINATION" shall have the meaning set forth in Section 7.5.
"REJECTED CONTRACTS" shall have the meaning set forth in Section 3.6(e).
"RELEASE" shall mean any spilling, leaking, leaching, pumping, pouring,
emitting, emptying, placing, discharging, injecting, escaping, dumping or
disposing of a substance into the Environment, whether intentional or
unintentional.
"REPRESENTATIVES" shall mean, with respect to any Party, the directors (or
functional equivalent. if any), officers, employees, representatives or agents
of such Party or its Affiliates and its accountants, legal counsel, financial
advisors and technical advisors, as the context may require or allow.
"REQUIRED REGULATORY APPROVALS" shall mean the following required consents,
approvals or other authorizations of the indicated or otherwise applicable
Governmental Authorities, which shall be issued in a final order, no longer
subject to rehearing or appeal, and in a form and substance satisfactory to
SWECO:
(i) at SWECO's election, either (a) of the SEC for SWEPCO or an
Affiliate of SWEPCO to acquire stock of SWECO and for SWECO to acquire
the Acquired Assets (unless the SEC concurs that an exemption is
available under Section 9(b) of PUHCA), and for SWECO to issue
securities to SWEPCO and SWECO's lenders, or (b) a determination by FERC
that SWECO is an EWG (both before and after giving effect to the
Acquisition);
(ii) if SWECO is determined to be an EWG, of the SEC of the
issuance of securities by SWEPCO or Central and South West Corporation
or an Affiliate thereof to finance the Acquisition and, if such
financing involves a guarantee by SWEPCO or Central and South West
Corporation or an Affiliate thereof of securities issued by SWECO, the
approval of the SEC of such guarantee; PROVIDED, HOWEVER, that SWECO and
its Affiliates may rely on existing SEC authority to finance the
acquisition depending upon circumstances existing at the time of
consummation;
A-13
(iii) under the HSR Act for SWECO to acquire the Acquired
Assets;
(iv) of FERC of the rates, terms and conditions under which
SWECO will provide capacity and energy to the Members and other
purchasers under the New Power Supply Contracts, one or more Assumed and
Assigned Contracts, and new power sale or purchase contracts or similar
agreements, including, at SWECO's election, either (a) a finding that
the cost of the Acquired Assets reflected in the rates in the New Power
Supply Contracts is prudent, and the rates therein are just and
reasonable, or (b) that SWECO is authorized to enter into the New Power
Supply Contracts as market-based, negotiated rate contracts;
(v) of FERC or the LPSC, or both, as applicable, for SWECO's
financing of the Acquisition;
(vi) of FERC of the tariff for the provision of transmission
services by SWECO;
(vii) of FERC for the acquisition by SWECO of any Acquired
Assets over which FERC would have jurisdiction under the Federal Power
Act;
(viii) of the LPSC for the Members' obligations under and in
connection with the New Power Supply Contracts, including the charges
for demand, variable overhead and maintenance and fuel thereunder and
other charges, fees and other amounts payable thereunder, the recovery
from the Members' ratepayers of such obligations, and of the New Power
Supply Contracts and finding that (1) the terms and conditions thereof
are prudent, (2) the cost of the Acquired Assets reflected in the New
Power Supply Contracts is prudent, and (3) the rates thereunder are just
and reasonable;
(ix) if SWECO is an EWG, of the LPSC for the Acquired Assets to
be "eligible facilities" within the meaning of section 32(c) of the
PUHCA;
(x) of the assignment of the Hydro Contract to the Members that
execute and deliver New Power Supply Contracts;
(xi) of the Commissioner, Office of Conservation of the
Louisiana Department of Natural Resources, of the acquisition and
operation by SWECO of the Pipeline System; and
(xii) any and all other consents, approvals and other
authorizations of any Governmental Authority required under any
applicable law in connection with the execution and delivery of the
Transaction Documents, the consummation of the Transactions and the
operation of the Business by SWECO and GSU after the Closing Date.
A-14
"RIVER BEND" shall mean River Bend Nuclear Station Unit 1, a net 936MW
nuclear electric generating facility located in St. Francisville, Louisiana,
owned 30% by the Debtor and 70% by GSU and operated by an affiliate of GSU.
"RIVER BEND JOPOA" shall mean the Joint Ownership Participation and
Operating Agreement between the Debtor and GSU relating to River Bend and dated
August 20, 1979, as amended.
"RUS" shall mean the Rural Utilities Services, an agency of the United
States Government.
"SCHEDULED CONTRACTS" shall have the meaning set forth in Section 4.11.
"SEC" shall mean the Securities and Exchange Commission.
"SHL INDEMNITY OBLIGATION" shall mean the indemnity obligations relating to
the CoBank Letters of Credit and the CoBank Reimbursement Agreement assumed by
SWECO as set forth in Section 3.11.
"SPA" shall mean the Southwestern Power Administration.
"SWECO TERMINATION FEE" shall mean Twenty Million Dollars ($20,000,000).
"TAX CODE" shall mean the Internal Revenue Code of 1986.
"TAXES" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, and property taxes, customs duties, fees,
assessments and charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) and any interest and penalties imposed with
respect to the filing, obligation to file or failure to file any Tax Return, and
shall include any transferee liability in respect of Taxes.
"TAX RETURN" shall mean all returns, declarations, reports, claims for
refund, estimates, information returns, statements or other similar documents
relating to Taxes, including any schedule attached thereto, and including any
amendment thereof.
"TECHE" shall mean Teche Electric Cooperative, Inc.
"TERMINATION DATE" shall have the meaning set forth in Section 7.2.
"TRANSACTION DOCUMENTS" shall mean the contracts, agreements, documents and
instruments contemplated to be entered into by the terms of this Agreement and
the Plan.
A-15
"TRANSACTIONS" shall mean the Acquisition and related transactions
contemplated by this Agreement and the Transaction Documents.
"TRANSFERABLE PERMITS" shall mean Permits that are transferable to SWECO in
accordance with their terms or as to which any consent required to transfer such
Permits to SWECO at the Closing shall have been obtained.
"TRANSITION MANAGERS" shall mean the two individuals appointed by SWECO
pursuant to Section 3.1(b).
"TRANSMISSION ASSETS" shall mean the 500KV Transmission Assets and the
138KV Transmission Assets.
"TRUSTEE" shall have the meaning set forth in the preamble of this
Agreement.
"TRUSTEE-MODIFIED CONTRACTS" shall have the meaning set forth in Section
3.2(a)(v).
"TRUSTEE TERMINATION FEE" shall mean Twenty Million Dollars ($20,000,000).
"TRUSTEE'S REPRESENTATIVES" shall mean the Representatives of the Trustee.
"VALUATION EXPERT" shall have the meaning set forth in Section 2.3(b).
A-16
SCHEDULE 2.2
COINCIDENT PEAK DEMAND
MEMBER KILOWATTS
Beauregard Electric Cooperative 139,043
Claiborne Electric Cooperative 72,647
Concordia Electric Cooperative 27,837
Dixie Electric Membership Corp 332,843
Jefferson Davis Electric Corp 38,553
Northeast Louisiana Power Coop 43,751
Pointe Coupee Electric Membership Corp 35,319
South Louisiana Electric Coop 79,252
Southwest LA Electric Membership Corp 422,802
Teche Electric Cooperative 42,621
Valley Electric Membership Corp 109,391
Washington-St. Tammany Electric Coop 194,505
-----------
Total 1,538,564
2.2-1
SCHEDULES 4.5-4.14
[TO BE PROVIDED BY TRUSTEE]
SCHEDULE 3.6(C)
EXECUTORY CONTRACTS TO BE
ASSUMED AND ASSIGNED TO SWECO
1. AES Power, Inc. Interchange Agreement
2. Alabama Electric Cooperative Interchange Agreement
3. Arkansas Electric Cooperative Interchange Agreement
4. Associated Electric Cooperative Interchange Agreement
5. Central Louisiana Electric Company Interconnection Agreement
6. Citizen's Power & Light Corp. Interchange Agreement
7. Duke Power Company Economy Energy Interchange Agreement
8. Duke Power Company Short Term Power Agreement
9. East Kentucky Power Cooperative Interchange Agreement
10. ENRON Power Marketing Interchange Agreement
11. Florida Municipal Power Agency Interchange Agreement
12. Florida Power Corporation Economy Energy Agreement
13. Florida Power & Light Company Economic Energy Agreement
14. Gulf States Utilities Company (Entergy) Interconnection Agreement
15. Jacksonville Electric Authority Interchange and Economic Energy Agreement
16. City of Lafayette Interchange Agreement
17. LG&E Power Marketing, Inc. Interchange Agreement
18. InterCoast Power Marketing Co. Interchange Agreement
19. Louisiana Power & Light Company (Entergy) Interchange Agreement
20. Preamble to Louisiana Power & Light (Entergy) Settlement Agreement
21. Mississippi Power & Light Company (Entergy) Interconnection Agreement
22. Municipal Energy Agency of Mississippi (MEAM) Interchange Agreement
23. Mississippi Energy Agency of Mississippi (MEAM) Power Sale Agreement
24. NorAm Energy Services Interchange Agreement
25. Oglethorpe Power Corp. Interchange Agreement
26. Orlando Utilities Commission Interchange Agreement
27. Rainbow Energy Marketing Corp. Interchange Agreement
28. Santee Cooper Interchange Agreement
29. South Carolina Public Service Authority Interchange Agreement
30. Seminole Electric Interchange Agreement
31. City Utilities of Springfield Interchange Agreement
32. City of Tallahassee Interchange Agreement
33. Sonat Power Marketing, Inc. Interchange Agreement
34. South Mississippi Electric Power Association (SMEPA) Interchange and Power
Sales Agreement
35. Southern Company Services, Inc. Interchange Agreement
36. Southern Illinois Power Cooperative Interchange Agreement
37. Hydro Contract
38. Southwestern Electric Power Company Interchange Agreement
39. Tennessee Valley Authority Interchange Agreement
40. Western Farmers Electric Cooperative Interchange Agreement
41. Western Systems Power Pool, Pool Agreement
2
42. Western Power Services, Inc. Interchange Agreement
43. Vitol Gas and Electric, L.L.C. Interchange Agreement
44. Acadian Gas Pipeline Co. Interruptible Agreement
45. Bridgeline Gas Distribution Co. Interruptible Agreement
46. Bridgeline Gas Distribution Co. Pipeline Maintenance Agreement
47. Excel Resources Interruptible Agreement
48. The Clorox Company Tax Benefit Transfer Agreement
49. Eastman Kodak Company Tax Benefit Transfer Agreement
50. All Miscellaneous Tower Agreements
51. All Cajun Land Leases with Cajun as Lessor
52. The Land Lease between Cajun and M.A. Patout and Son Ltd. for the Patout
Substation in Iberia Parish, La.
53. The Land Lease between Cajun and the State of Louisiana for coal dock on the
Mississippi River at Big Cajun II
54. The Equipment Storage Agreement with General Electric for storage of Big
Cajun III steam turbine and generator components
55. All Executory Insurance Policies or Contracts of Cajun
56. Any additional contracts as may be identified by SWECO after the date of
this Agreement and noticed to the Trustee as contracts to be assumed
57. Joint Ownership Participation and Operating Agreement by and between Cajun
Electric Power Cooperative Inc. and Gulf States Utilities Inc. (now known as
Entergy Gulf States Inc.) dated as of November 14, 1980.
3
POWER SUPPLY AND SERVICE AGREEMENT
BETWEEN
SOUTHWESTERN WHOLESALE ELECTRIC COMPANY
AND
______________ ELECTRIC MEMBERSHIP COOPERATIVE
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS 4
1.1 Additional Investment 4
1.2 Agreement 4
1.3 Ancillary Services 4
1.4 Benchmark Year 4
1.5 Billing Month 5
1.6 CLECO Contract 5
1.7 Common Facilities 5
1.8 Contract Year 5
1.9 Depreciated Book Value 6
1.10 Economic Power 6
1.11 Effective Date 6
1.12 Excess Requirements 6
1.13 Extraordinary Load 7
1.14 FERC 7
1.15 Good Utility Practice 7
1.16 Group 8
1.17 Group Load 9
1.18 Initial Facilities 9
1.19 LPSC 9
1.20 Maximum Point of Delivery Demand 9
1.21 MEAM Contract 10
1.22 Member Base Supply 10
1.23 MEMBER Hydro and MEMBER Hydro Energy 13
1.24 MEMBER Load 13
1.25 MEMBER Share 14
1.26 Other Resources 14
1.27 Parties 14
1.28 Party 14
1.29 Point of Delivery 15
1.30 Power Sales Contract 15
1.31 Project Capacity 15
1.32 Project Capacity Energy 16
1.33 Qualifying Facility 16
1.34 Separately Metered Load 16
1.35 SMEPA Contract 17
1.36 Specific Facilities 17
i
PAGE
1.37 Supplemental Supply 17
1.38 Third-Party Supplier 18
1.39 Transmission Service Agreement(s) 18
1.40 Transmission Supplier 18
ARTICLE II TERMS AND CONDITIONS OF POWER SUPPLY SERVICE 19
2.1 General Obligations 19
2.2 MEMBER Base Supply 20
2.3 Supplemental Supply 21
2.4 Power Supplied from Qualifying Facilities and Other Resources 26
2.5 Maintenance of Member Base Supply Requirement 27
ARTICLE III SCHEDULING SERVICES 28
3.1 Control Area and Ancillary Services 28
3.2 SWECO Transmission and Ancillary Services 29
3.3 Scheduling Services for MEMBER Hydro 30
3.4 Scheduling Services for Other Resources 32
ARTICLE IV BILLING CREDITS FOR MEMBER HYDRO AND OTHER RESOURCES 32
4.1 MEMBER Hydro 32
4.2 Capacity and Energy Credits for MEMBER Hydro and Other Resources 33
ARTICLE V TRANSMISSION SERVICE 34
5.1 Transmission Service 34
5.2 Transmission and Distribution Service Costs 35
ARTICLE VI MEMBER FACILITIES CHARGES 36
6.1 Responsibility for and Permitted Uses of Specific Facilities 36
6.2 Additional Investments for Common Facilities 37
6.3 Responsibilities for Common Facilities 37
6.4 Additional Investments for Common Facilities 37
6.5 Facilities 37
6.6 Abondonment of Specific Facilities 39
6.7 Option to Purchase Specific Facilities 39
ii
PAGE
ARTICLE VII POINTS OF DELIVERY 40
7.1 Delivery Points 40
7.2 Changes in Points of Delivery 40
7.3 New Points of Delivery 41
7.4 Notice of Point of Delivery Abandonment 42
7.5 SWECO or Transmission Supplier Facilities 42
ARTICLE VIII OPERATING RESPONSIBILITIES 44
8.1 Operating Responsibilities of MEMBER and SWECO 44
8.2 Power Factor 45
8.3 Emergency Load Relief 45
8.4 Coordination of Temporary Transfer of Load 46
8.5 Extended Outage 47
8.6 Qualifying Facility 50
ARTICLE IX METERING 53
9.1 Meter Reading 53
9.2 Billing Meters and Associated Instrument Transformers 53
9.3 Meter Tests 54
9.4 Meter Accuracy 55
9.5 Meter Adjustments 55
ARTICLE X BILLINGS AND PAYMENTS 56
10.1 Compensation 56
10.2 Fuel and Economic Power Costs 58
10.3 Audits of Cost Records 58
10.4 Economic Development and Incentive Rates 58
10.5 Payment by MEMBER to SWECO 60
ARTICLE XI ADDITIONAL PROVISIONS 61
11.1 Planning 61
11.2 Technical Committee 62
11.3 Responsibility for Electricity 63
11.4 Continuity of Service 63
11.5 Right of Access 65
11.6 Hold Harmless Provisions 65
11.7 Right of First Refusal in Case of Proposed Sale, Merger or
Consolidation 66
11.8 Acquisition of Facilities to Serve Retail Customers Formerly
Served by Other Suppliers 68
iii
PAGE
11.9 Extraordinary Load 69
11.10 Competitive Territory Credits 70
11.11 SWECO Covenants 73
11.12 MEMBER Covenants 74
ARTICLE XII DEFAULT 75
12.1 Default Defined 75
12.2 Notice of Default 75
12.3 Remedies for Default 75
ARTICLE XIII GENERAL PROVISIONS 76
13.1 Governing Law 76
13.2 Notice 76
13.3 Successors and Assigns 77
(a) Permitted Assignments by SWECO 77
(b) Permitted Assignments by MEMBERS 78
(c) Other Assignment 79
(d) Effect of Assignments 80
13.4 Rules of Construction 80
13.5 Effective Date of Agreement 81
13.6 Term 81
13.7 Counterparts 82
13.8 Amendments 82
13.9 Further Assurances 82
13.10 Schedules 83
13.11 Severability of Contract Provisions 83
13.12 Severability of MEMBER Contracts 83
13.13 Computation of Time 84
13.14 Limitation 84
13.15 Waivers 84
13.16 Regulation 84
13.17 Reasonableness of Rates - Pre-Established Rate Contract 85
13.18 Rounding 85
13.19 Survivorship of Obligations 86
13.20 Force Majeure 86
13.21 Authority of MEMBER 89
13.22 Warranties 89
iv
PAGE
SCHEDULE A RATES AND CHARGES FOR MEMBER BASE SUPPLY
SERVICE 91
SCHEDULE A-1 ECONOMIC DEVELOPMENT RIDER 111
SCHEDULE A-2 ECONOMIC DEVELOPMENT CREDITS RIDER 117
SCHEDULE A-3 RATES AND CHARGES FOR EXISTING INCENTIVE LOAD
CUSTOMERS 119
SCHEDULE B RATES AND CHARGES FOR SUPPLEMENTAL SERVICE 135
SCHEDULE C SOUTHWESTERN ELECTRIC WHOLESALE COMPANY MEMBER
HYDRO ALLOCATION 143
SCHEDULE D SPECIFIC FACILITIES AT POINTS OF DELIVERY 144
SCHEDULE E DATA TO BE SUPPLIED WITH MONTHLY BILLING
TO ENABLE VERIFICATION 154
v
POWER SUPPLY AND SERVICE AGREEMENT
BETWEEN
SOUTHWESTERN WHOLESALE ELECTRIC COMPANY
AND
______________ ELECTRIC MEMBERSHIP COOPERATIVE
THIS AGREEMENT, is made and entered into this _______ day of
___________, 1997, by and between Southwestern Wholesale Electric Company, a
Delaware corporation engaged in the business of generating and transmitting
electricity in, among other places, certain parts of the state of Louisiana, and
having its principal office and place of business at 428 Travis Street,
Shreveport, Louisiana (hereinafter referred to as SWECO), and _____________
Electric Cooperative, Inc., an electric membership cooperative existing under
the laws of the State of Louisiana and having its principal office and place of
business in ______________________, Louisiana (hereinafter referred to as
MEMBER).
WITNESSETH:
WHEREAS, MEMBER, together with eleven other electric membership
cooperative corporations doing business in the State of Louisiana, was formerly
a member of Cajun Electric Power Cooperative, Inc. (Cajun), a generation and
transmission cooperative formed to provide an economical supply of electric
capacity and energy for the benefit of its members;
WHEREAS, on December 21, 1994, Cajun filed a voluntary petition for
reorganization in the United States Bankruptcy Court;
WHEREAS, pursuant to a plan of reorganization submitted by SWECO and
certain former members of Cajun and confirmed in such bankruptcy proceeding,
SWECO has acquired certain electric generating plants and related facilities
formerly owned by Cajun for the purpose, among others, of supplying electric
capacity and energy to MEMBER and such former Cajun members;
WHEREAS, SWECO has financed the acquisition of such facilities in whole
or in part through loans, and may in the future obtain additional loans,
evidenced by debt securities that are or may be secured by the revenues SWECO
shall be entitled to collect from MEMBER under this Agreement;
WHEREAS, MEMBER must purchase electric power and energy
in order to serve its retail customers;
WHEREAS, in order to secure a portion of such power and energy, MEMBER
has entered into a Power Sales Contract with the United States of America acting
through the Secretary, Department of Energy, as represented by the Administrator
of the Southwestern Power Administration (SPA), which, among other things,
2
entitles MEMBER to purchase, for the benefit and use of its retail customers,
hydroelectric capacity and associated energy (SPA Hydro Peaking Power) in
accordance with such Power Sales Contract and, at MEMBER's option, also to
purchase SPA Supplemental Peaking Energy as such energy is available from time
to time as determined by SPA; WHEREAS, MEMBER has determined that the power and
energy that SWECO is willing to sell to MEMBER pursuant to the terms and
conditions set forth in this Agreement represent an economical and reliable
power supply resource suitable for use in serving MEMBER's retail customer loads
and that the interests of MEMBER's retail customers will be well served by
MEMBER's purchasing such power and energy; and
WHEREAS, SWECO and MEMBER desire to enter into this Power Supply and
Service Agreement under which SWECO shall sell to MEMBER and MEMBER shall
purchase from SWECO power and energy in accordance with and subject to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Parties hereto mutually
contract and agree as follows:
3
ARTICLE I
DEFINITIONS
The following terms used herein shall have the respective meanings set
forth below:
1.1 ADDITIONAL INVESTMENT.
Additional Investment means the total installed cost of transmission,
distribution, and communication facilities owned by SWECO that are
necessary to provide service to MEMBER Load or Group Load and that are
installed after the Effective Date.
1.2 AGREEMENT.
Agreement means this Power Supply and Service Agreement.
1.3 ANCILLARY SERVICES.
Ancillary Services shall have the meaning given that term by the FERC
in its Order No. 888 issued April 24, 1996 in FERC Docket Nos.
RM95-8-000 and RM94-7-000, as modified by FERC's Order No. 888-A issued
March 4, 1997, and FERC's Order No. 888-B issued November 25, 1997, in
such proceeding.
1.4 BENCHMARK YEAR.
Benchmark Year means the Contract Year in which the Group Load plus
the contract demand of CLECO first equals or exceeds the sum of 1,270 mW
4
and an amount (in mW) equal to the sum of Member Hydro capacity for all
Group Members.
1.5 BILLING MONTH.
Billing Month shall be a calendar month.
1.6 CLECO.
CLECO means Central Louisiana Electric Company.
1.6 CLECO CONTRACT.
CLECO Contract means that certain Power Supply Agreement dated
________ between CLECO and SWECO.
1.7 COMMON FACILITIES.
Common Facilities means certain communication, transmission and
distribution facilities owned by SWECO and listed on Schedule E to this
Agreement, as such Schedule E may be from time to time supplemented or
revised, that are not specifically necessary to provide service to
distinct MEMBER Load but are reasonably required to provide service
hereunder to Group Load for the term of this Agreement. SWECO shall, in
its sole discretion, determine if any such asset owned by SWECO is a
Common Facility.
1.8 CONTRACT YEAR.
Contract Year means the 12-month period beginning on January 1 and
extending through December 31 of any calendar year, except that the
5
first Contract Year shall begin on the Effective Date and end on
December 31, 1999.
1.9 DEPRECIATED BOOK VALUE.
Depreciated Book Value means the original book cost of electric plant
net of accumulated depreciation determined using FERC depreciation
rates.
1.10 ECONOMIC POWER
Economic Power means the costs incurred in the Billing Month for
capacity or energy purchased over a period of twelve months or less
where the total cost of the purchase is less than SWECO's total avoided
variable cost.
1.11 EFFECTIVE DATE.
The Effective Date shall be the date assigned by the FERC when
accepting this Agreement for filing for the effectiveness of this
Agreement as a FERC rate schedule.
1.12 EXCESS REQUIREMENTS.
Excess Requirements means the capacity and energy required by MEMBER
to serve MEMBER Load in excess of the capacity and energy provided by
SWECO to MEMBER as MEMBER Base Supply and provided from MEMBER Hydro.
6
1.13 EXTRAORDINARY LOAD.
Extraordinary Load means the load of any single retail customer not
previously served by MEMBER that is equal to or exceeds five mW that is
to be served by MEMBER pursuant to Section 11.9 of this Agreement.
Extraordinary Load shall not be counted as MEMBER Load.
1.14 FERC.
FERC means the Federal Energy Regulatory Commission or any successor
regulatory agency having jurisdiction over this Agreement.
1.15 GOOD UTILITY PRACTICE.
Good Utility Practice means any of the practices, methods or acts
engaged in or approved by significant portion of the electric utility
industry during the relevant time period, or any of the practices,
methods and acts that in the exercise of reasonable judgment in light of
the facts known at the time a decision was made, could have been
expected to accomplish the desired result at reasonable cost consistent
with reliability, safety, expedition and the requirements of
governmental agencies having jurisdiction. Good 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 a spectrum of acceptable
7
practices, methods or acts. Good Utility Practice shall include, but not
be limited to, conformance with the applicable reliability criteria,
standards and operating guides of the Southwest Power Pool ("SPP") and
the North American Electric Reliability Council, or successor
organizations that may exist in the future and of which SWECO is then a
member in effect at the time a decision is made or an action is taken or
not taken.
1.16 GROUP
Group means all of the following:
Beauregard Electric Cooperative, Inc.
Claiborne Electric Cooperative, Inc.
Dixie Electric Membership Corporation
Jefferson Davis Electric Cooperative, Inc.
Northeast Louisiana Power Cooperative, Inc.
South Louisiana Electric Cooperative Association
Valley Electric Membership Corporation
Washington-St. Tammany Electric Corp. Inc.
8
1.17 GROUP LOAD.
Group Load means the maximum coincidental 60-minute integrated peak
demand incurred by the Group in any Contract Year during the term of
this Agreement to serve their retail loads at all Points of Delivery
other than Extraordinary Load or any Separately Metered Load.
1.18 INITIAL FACILITIES.
Initial Facilities means the Specific Facilities and Common Facilities
owned by SWECO as of the Effective Date.
1.19 LPSC.
LPSC means the Louisiana Public Service Commission.
1.20 MAXIMUM POINT OF DELIVERY DEMAND.
Maximum Point of Delivery Demand shall be the maximum non-coincident
60-minute demand, measured in kW, experienced at any Point of Delivery
during a Billing Month.
9
1.21 MEAM CONTRACT.
MEAM Contract means that certain Power Sales Contract dated _________
between the Municipal Energy Agency of Mississippi and Cajun Electric
Power Cooperative, Inc. that is to be assumed by SWECO under the Plan of
Reorganization submitted to the Bankruptcy Court by SWECO and certain
members of the Group.
1.22 MEMBER BASE SUPPLY
MEMBER Base Supply shall consist of a monthly capacity component and
an annual energy component. The respective obligations of MEMBER and
SWECO to purchase and to provide MEMBER Base Supply are stated in
Section 2.2 of this Agreement.
In each Contract Year through and including the Benchmark Year, the
monthly capacity component for any calendar month, measured in
kilowatts, shall be equal to the sum of the MEMBER's Maximum Point of
Delivery Demands at the MEMBER's Points of Delivery for such month less
the sum of the following amounts:
1. capacity associated with MEMBER Hydro for the Contract
Year to serve load at such Point of Delivery;
10
2. Extraordinary Load served from MEMBER'S Points of Delivery during
the Billing Month; and
3. any Separately Metered Load.
Beginning in the Contract Year following the Benchmark Year, the
monthly capacity component of MEMBER Base Supply for any Billing Month,
measured in kilowatts, shall be the lesser of (a) the highest monthly
capacity component of MEMBER Base Supply established for the MEMBER's
Points of Delivery in the aggregate during the Benchmark Year or (b) the
sum of MEMBER's Maximum Point of Delivery Demands at the MEMBER'S Points
of Delivery for such month less the following amounts:
1. capacity associated with MEMBER Hydro for the Contract Year;
2. Extraordinary Load served from MEMBER Points of Delivery during the
Billing Month; and
3. any Separately Metered Load.
For the Benchmark Year and Contract Years prior to the Benchmark Year,
the energy component of the MEMBER Base Supply in any Contract Year,
measured in kilowatt-hours, shall be the energy required each hour to
supply the Member Load at the MEMBER Points of Delivery not supplied
from MEMBER Hydro (adjusted for losses in delivery). For any Contract
11
Year following the Benchmark Year, the energy component of the MEMBER
Base Supply, measured in kilowatt-hours, shall be the energy required
each hour to supply the Member Load at the MEMBER'S Points of Delivery
not supplied from MEMBER Hydro (adjusted for losses in delivery) up to
an amount equal to the MEMBER Share of Project Capacity Energy in such
hour. In no event shall SWECO be obligated in any Contract Year
following the Benchmark Year to supply more than 7,350,000,000
kilowatt-hours of Project Capacity Energy to the Group for the purpose
of furnishing the energy component of MEMBER Base Supply under this
Agreement or similar agreements between SWECO and other Group members.
However, in addition to MEMBER's MEMBER Share of Project Capacity
Energy, SWECO shall make available to MEMBER in any hour kilowatt-hours
of Project Capacity Energy that is not used by other Group members
during such hour as long as the annual limit on SWECO's obligation to
supply Project Capacity Energy to all Group members is not exceeded.
SWECO shall notify MEMBER within a reasonable time after Project
Capacity Energy furnished to the Group by SWECO to meet its obligation
to furnish MEMBER Base Supply under this Agreement and such agreements
with other Group members exceeds 6,500,000,000 kilowatt-hours in any
12
consecutive twelve-month period. MEMBER agrees that it will thereafter
join SWECO and other Group members taking MEMBER Base Supply from SWECO
promptly to negotiate in good faith alternative limits on SWECO's
obligation to furnish the energy component of MEMBER Base Supply so that
SWECO's obligation to furnish such energy component to all Group members
does not exceed 7,350,000,000 kilowatt-hours in any Contract Year and
that Project Capacity Energy is fairly distributed among the Group
members. In the event that in any hour more than one Group member
requires Project Capacity Energy in excess of such Group member's MEMBER
Share the available Project Capacity Energy not used by other Group
members shall be allocated among the Group members requiring such excess
energy in proportion to their respective MEMBER Shares.
1.23 MEMBER HYDRO AND MEMBER HYDRO ENERGY
MEMBER Hydro means in any Contract Year the amount of capacity (in mW)
available for the account of Member under the Power Sales Contract as
shown on Schedule C. MEMBER Hydro Energy means in any Billing Month the
amount of energy (in kWh) available from Member Hydro in such Billing
Month.
1.24 MEMBER LOAD.
13
MEMBER Load means the aggregate amount of capacity and energy required
by the MEMBER to serve its retail customers in any hour during the term
of this Agreement at all MEMBER Points of Delivery other than
Extraordinary Load or Separately Metered Load.
1.25 MEMBER SHARE.
MEMBER Share is the ratio of the sum of MEMBER Load (in mW) served at
the MEMBER's Points of Delivery in the hour in which the Group Load was
established in the immediately preceding Contract Year (or in the
Benchmark Year if specified) to the total Group Load served at all
Points of Delivery.
1.26 OTHER RESOURCES.
Other Resources means power supply resources acquired by MEMBER during
the term of this Agreement to meet Excess Requirements as further
described in Section 2.4 (not including capacity and energy purchased
from a Qualifying Facility in accordance with a statutory obligation to
make such purchase and subject to compliance with the provisions of
Section 8.6 of this Agreement).
1.27 PARTIES.
Parties mean SWECO and MEMBER collectively.
1.28 PARTY.
14
Party means either SWECO or MEMBER individually.
1.29 POINT OF DELIVERY.
Point of Delivery means any point listed on Schedule D hereto, as such
exhibit may be amended from time to time, at which any member of the
Group receives capacity and energy pursuant to this Agreement or other
power supply and service agreements with SWECO entered into in
connection with the resolution of the Cajun reorganization proceedings.
1.30 POWER SALES CONTRACT.
Power Sales Contract means the MEMBER's contract with SPA providing
for the purchase by MEMBER from the SPA of firm hydroelectric capacity
(SPA Hydro Peaking Power) and associated energy and, at MEMBER'S option,
also to purchase SPA Supplemental Peaking Energy, at times when SPA
determines that such energy is available.
1.31 PROJECT CAPACITY.
The Project Capacity means that portion of the aggregate rated
generating capability (in mW) of Big Cajun I (Unit 1 and Unit 2) and Big
Cajun II (Unit 1, Unit 2, and 58% of Unit 3) and any firm resource
acquired by SWECO after the Effective Date that shall be adequate in the
aggregate to enable SWECO to serve a portion of Group Load that does not
15
exceed the sum of the capacity components of MEMBER Base Supply for all
members of the Group in Contract Years following the Benchmark Year.
1.32 PROJECT CAPACITY ENERGY.
Project Capacity Energy means for any period the energy output of the
Project Capacity during such period (adjusted for losses in delivery)
plus energy purchased by SWECO in such period (adjusted for losses in
delivery) to replace energy output from Project Capacity to serve MEMBER
Base Supply under this Agreement and similar agreements between SWECO
and the other Group members.
1.33 QUALIFYING FACILITY
Qualifying Facility means a facility certified to be a Qualifying
Facility under subpart (B) of Part 292 of the FERC's Regulations under
Section 201 of the Public Utility Regulatory Policies Act of 1978
(PURPA) and as further defined and discussed in Section 8.6.
1.34 SEPARATELY METERED LOAD
Separately Metered Load means any retail load served by MEMBER that
SWECO and MEMBER have agreed shall not be billed under Schedule A or
Schedule B to this Agreement, including without limitation retail load
MEMBER serves with Other Resources pursuant to Section 11.8 of this
16
Agreement, or with capacity and energy supplied by SWECO and billed by
SWECO to MEMBER under Schedule A-3 to this Agreement.
1.35 SMEPA CONTRACT
SMEPA Contract means that certain Power Sales Contract dated ________
between the South Mississippi Electric Power Association and Cajun
Electric Power Cooperative, Inc. that is to be assumed by SWECO under
the Plan of Reorganization submitted to the Bankruptcy Court by SWECO
and certain members of the Group.
1.36 SPECIFIC FACILITIES
Specific Facilities means the transmission and distribution facilities
and any telecommunications facilities that are necessary to provide
service under this Agreement to a distinct Point of Delivery that are
owned by SWECO and located between a point of interconnection with a
Transmission Supplier and a Point of Delivery to MEMBER.
1.37 SUPPLEMENTAL SUPPLY
Supplemental Supply means capacity and energy provided to MEMBER by
SWECO under this Agreement to serve MEMBER's Excess Requirements.
17
1.38 THIRD-PARTY SUPPLIER
Third-Party Supplier means any supplier of power or energy to MEMBER
other than SWECO.
1.39 TRANSMISSION SERVICE AGREEMENT(S)
Transmission Service Agreement(s) means any or all of the agreements
between SWECO and any Transmission Supplier relating to transmission
service and Ancillary Services needed by SWECO to perform its
obligations to MEMBER under this Agreement.
1.40 TRANSMISSION SUPPLIER
Transmission Supplier means SWECO or any one or more of Entergy
(specifically including the systems of Louisiana Power & Light (LP&L)
and Gulf States Utilities (GSU)), Central Louisiana Electric Company
(CLECO), Southwestern Electric Power Company (SWEPCO), or any other
owner or operator of a transmission facility that SWECO needs to perform
its obligations to MEMBER under this Agreement, their successors in
interest and assigns.
18
ARTICLE II
TERMS AND CONDITIONS OF POWER SUPPLY SERVICE
2.1 GENERAL OBLIGATIONS
The MEMBER's obligation and agreement to purchase MEMBER Base Supply
and any Supplemental Supply MEMBER elects to take from SWECO is intended
to give full effect to SWECO's rights hereunder to serve the MEMBER Load
and future normal load growth in MEMBER's service territory. MEMBER
agrees that SWECO's rights to serve MEMBER Load are the essential
consideration and inducement for SWECO to acquire the Project Capacity.
MEMBER shall exercise continuing good faith efforts to retain its
existing customers and to obtain new customers, thereby increasing
MEMBER Load, and to maintain MEMBER Load at a level at least equal to
the MEMBER Base Supply obligation.
The Parties recognize that they must obtain approvals of certain
regulatory agencies in order to perform this Agreement. Without limiting
the foregoing, the MEMBER must obtain the approval of the LPSC to enter
into and perform MEMBER's obligations under this Agreement and SWECO
must obtain all regulatory approvals from the LPSC and the FERC needed
for SWECO lawfully to perform its obligations under the Agreement. Each
19
Party agrees to cooperate with the other Party so as to secure the
necessary approvals.
SWECO shall operate and maintain the Project Capacity and
transmission, distribution and general electric plant that SWECO owns or
controls to fulfill SWECO's contract obligations to the members of the
GROUP and SWECO's obligations under the CLECO Contract, the MEAM
Contract and the SMEPA Contract in a least-cost manner in accordance
with Good Utility Practice. SWECO shall use the Project Capacity to
furnish to members of the Group the energy associated with their
respective entitlements to Member Base Supply and to furnish the energy
that SWECO is obligated to furnish under the CLECO Contract, the MEAM
Contract and the SMEPA Contract. SWECO shall make no distinction between
Group members, CLECO, MEAM or SMEPA in calculating the cost of
furnishing such energy except in the case the SMEPA Contract, which
provides that energy shall be furnished from a specific generating unit.
2.2 MEMBER BASE SUPPLY
SWECO agrees to sell to MEMBER, and MEMBER agrees to purchase from
SWECO, the MEMBER Base Supply. SWECO shall supply the MEMBER Base Supply
at rates and charges determined in accordance with Schedule A and, if
20
and to the extent applicable, Schedules A-1, A-2 and A-3 to this
Agreement, and any other provision of this Agreement relating to rates
and charges for service. SWECO shall use the generating capability
acquired from the Cajun estate to provide the MEMBER Base Supply, and to
fulfill SWECO's obligations under the CLECO Contract, the MEAM Contract
and the SMEPA Contract, before using such generating capability to make
sales to other purchasers.
2.3 SUPPLEMENTAL SUPPLY
SWECO agrees to make available to MEMBER Supplemental Supply
beginning as of the first day of the first Contract Year if MEMBER
elects to take Supplemental Supply (which election must be made in
writing delivered to SWECO no later than the earlier of (1) the date
that is six months prior to the first day of the first Contract Year in
which MEMBER expects to have Excess Requirements or (2) July 1, 1999).
Subject to MEMBER's option to limit its obligation to take Supplemental
Supply described below, Supplemental Supply shall consist of capacity
and energy in excess of MEMBER Base Supply, MEMBER Hydro, and any
capacity and energy provided by a Qualifying Facility in accordance with
Section 8.6 that in the aggregate shall be adequate to meet MEMBER's
full requirements for electricity needed to serve MEMBER Load. If MEMBER
21
exercises its right to contract for Supplemental Supply from SWECO,
SWECO shall supply such capacity and energy at rates and charges
determined in accordance with Schedule B to this Agreement and subject
to all other applicable terms and conditions set forth in this
Agreement.
In the event that MEMBER has elected to take Supplemental Supply in
accordance with this Section 2.3 and SWECO thereafter gives MEMBER
notice of its intention to construct or purchase additional capacity in
order to provide Supplemental Supply and that SWECO expects the cost of
such additional capacity will exceed $400/kW, MEMBER shall have the
option to limit its obligation to take Supplemental Supply service from
SWECO to such capacity and associated energy furnished as Supplemental
Supply in the Contract Year immediately preceding the Contract Year in
which such option, if exercised, becomes effective. Any such notice to
MEMBER shall state (1) the estimated cost to construct or purchase
additional capacity, (2) the amount of capacity that SWECO is planning
to add to its power supply resources, (3) the revised rates SWECO would
propose to charge MEMBER for Supplemental Supply, and (4) the date
("rate change effective date") on which SWECO would propose to place the
22
revised rates in effect. The rate change effective date shall be the
first day of the Contract Year in which the new capacity is expected to
be needed to furnish Supplemental Supply. Such notice to MEMBER shall be
given in writing at least twelve months prior to the rate change
effective date stated in the notice. MEMBER shall notify SWECO no later
than six months after receipt of SWECO's notice whether MEMBER will
elect to limit its Supplemental Supply obligation or to pay the revised
rates for Supplemental Supply.
In the event MEMBER elects to limit the amount of Supplemental Supply
MEMBER will purchase from SWECO, MEMBER and SWECO shall execute and
deliver an amendment to this Agreement that, INTER ALIA, shall provide
that (1) the limit on MEMBER's obligation to take Supplemental Supply
from SWECO shall be effective as of the rate change effective date
stated in the notice given by SWECO to MEMBER, (2) that SWECO's
obligation to provide Supplemental Supply to MEMBER shall not exceed the
average of the four highest monthly values for MEMBER's Supplemental
Total Billing Demands (as determined by applying Step 1 of Section 1.3
of Schedule B of this Agreement) in the Contract Year immediately
preceding the Contract Year in which the limit on MEMBER's obligation to
23
purchase Supplemental Supply becomes effective (Fixed Amount), (3) that
SWECO shall provide and MEMBER shall purchase its capacity requirements
in excess of Member Base Supply as Supplemental Supply an amount up to
but not exceeding the Fixed Amount from SWECO in each Billing Month
throughout the remaining term of this Agreement, and (4) that the demand
charges that shall apply to such capacity purchases shall continue to be
the Schedule B demand charges in effect as of the time of the MEMBER's
election to limit its obligation to take Supplemental Supply from SWECO
and (5) SWECO shall provide and MEMBER may purchase energy associated
with the Fixed Amount of Supplemental Supply an amount based on a load
factor to be mutually agreed upon by the Parties between 30 and 60
percent (%). If MEMBER elects to limit its Supplemental Supply
obligation, it may purchase Other Resources to meet its needs for
capacity and energy after it has used all of its Member Base Supply and
the Fixed Amount up to the agreed upon load factor.
If MEMBER elects not to limit its Supplemental Supply obligation,
SWECO shall be obligated to continue to provide Supplemental Supply to
MEMBER as originally contemplated at the time of the MEMBER's initial
24
election to take Supplemental Supply except that the rates set forth in
Schedule B to this Agreement shall be revised in the manner indicated in
SWECO's notice to MEMBER or as MEMBER and SWECO may otherwise agree.
Nothing provided for in this Section 2.3 shall affect in any way the
obligation of the MEMBER to purchase MEMBER Base Supply or the
obligation of SWECO to provide MEMBER's Base Supply through Contract
Year 25.
In the event that MEMBER enters into an amendment to this Agreement in
accordance with the third paragraph of this Section 2.3 to limit SWECO's
obligations to furnish Supplemental Supply, SWECO will nevertheless
furnish MEMBER with all notices contemplated by the second paragraph of
this Section 2.3, and MEMBER shall have the right to respond to any such
notice no later than six months after receipt thereof by requesting that
SWECO suspend the amended limit on SWECO's obligation to furnish
Supplemental Supply and agree to furnish additional amounts of
Supplemental Supply to MEMBER. SWECO shall no later than eight months
after the date the notice was sent respond to any such request by
agreeing either to (1) furnish all or part of such additional amounts of
Supplemental Supply under this Agreement if such additional amounts can
25
be made available from the additional power supply resources referenced
in the notice without adversely affecting the other members of the Group
or (2) negotiate with MEMBER a new power supply agreement under which
the additional capacity and energy sought by MEMBER can be made
available. In the event that SWECO determines that additional
Supplemental Supply can be furnished to MEMBER without adversely
affecting any other Group member, then all Supplemental Supply furnished
to MEMBER shall be priced at the increased rate referenced in the
notice.
2.4 POWER SUPPLIED FROM QUALIFYING FACILITIES AND OTHER RESOURCES
Subject to the provisions of Section 8.6 of this Agreement, MEMBER may
purchase capacity and energy from a Qualifying Facility to comply with
any obligation of MEMBER under federal law to make such purchase.
Subject to the provisions of this Section 2.4, MEMBER may otherwise
purchase capacity and energy from any Third-Party Supplier as needed to
meet its Excess Requirements if the MEMBER has elected not to purchase
Supplemental Supply from SWECO, either initially or by exercising its
option to limit MEMBER's Supplemental Supply obligations pursuant to
Section 2.3.
26
Any capacity the MEMBER purchases from a Qualifying Facility or other
Third-Party Supplier to meet its Excess Requirements must be backed-up
by reserve capacity sufficient to meet the reserve criteria established
by the Southwest Power Pool, or its successor in function. The MEMBER
shall coordinate with SWECO, as control area operator, the planning and
scheduling in accordance with Good Utility Practice of deliveries of
power and energy from such Other Resources to the MEMBER's Points of
Delivery.
Unless MEMBER has elected to take Supplemental Supply, SWECO shall
have no obligation to supply the MEMBER's Excess Requirements.
2.5 MAINTENANCE OF MEMBER BASE SUPPLY REQUIREMENT
MEMBER recognizes and agrees that MEMBER's obligation to purchase its
MEMBER Base Supply from SWECO was a material and substantial inducement
for SWECO to enter into this Agreement and to acquire the Project
Capacity. Except as permitted by Section 2.4, the MEMBER covenants and
agrees that it will not directly or indirectly acquire, own, operate or
lease any interest in any generating facility, finance, operate or
maintain disbursed diesel generation, fuel cells or any other generating
27
facility or technology, or acquire any right to any portion of the
output of a generating facility or contract to purchase any electric
power for the purpose of supplying MEMBER Load or Group Load that SWECO
has the right or obligation to serve under this Agreement, or under
similar agreements with other Group members. Nothing in this Section 2.5
shall be construed to prevent MEMBER from owning or operating for
reliability purposes any electric generating equipment used by MEMBER in
emergency conditions to supply energy needed at its offices, to operate
MEMBER's communications equipment or to back up battery supply used to
operate other MEMBER facilities. Nothing in this Section 2.5 shall be
construed to prevent any retail customer of MEMBER from owning or
operating for reliability purposes any electric generating equipment and
using such generation as back-up supply during times when MEMBER cannot
supply such retail customer's electricity requirements.
ARTICLE III
SCHEDULING SERVICES
3.1 CONTROL AREA AND ANCILLARY SERVICES
MEMBER Load at all of the Points of Delivery listed in Schedule D
shall be electronically transferred into the SWECO load control area on
28
the Effective Date. Unless the Parties otherwise agree, MEMBER Load
shall be operated in the SWECO control area throughout the term of this
Agreement. SWECO will provide to MEMBER or acquire on MEMBER's behalf
from other Transmission Suppliers, all necessary control area and
Ancillary Services needed to serve the MEMBER Load in accordance with
Good Utility Practice. SWECO shall purchase from other Transmission
Suppliers only those control area and Ancillary Services that SWECO
cannot provide from SWECO controlled generating capacity used to furnish
the MEMBER Base Supply and Supplemental Supply purchased by MEMBER under
this Agreement. As between SWECO and MEMBER, SWECO shall bear and pay
for any penalties or other charges imposed by a Transmission Supplier as
a result of SWECO's scheduling and dispatch of capacity and energy
furnished by SWECO to MEMBER as MEMBER Base Supply or Supplemental
Supply under this Agreement.
3.2 SWECO TRANSMISSION AND ANCILLARY SERVICES
SWECO shall bear the cost of the following operations and services:
29
(a) the operation of SWECO's control area, including the costs of
SWECO's energy management system and other control equipment and
related labor costs; and (b) the following Ancillary Services provided
by SWECO from SWECO controlled generating capacity used to furnish the
MEMBER Base Supply and Supplemental Supply purchased by MEMBER under
this Agreement:
(1) Regulation and Frequency Response Service;
(2) Energy Imbalance Service;
(3) Operating Reserve--Spinning Reserve Service; and
(4) Operating Reserve--Supplemental Reserve Service.
Notwithstanding the foregoing MEMBER shall purchase from SWECO and pay
SWECO for Ancillary Services provided by SWECO in respect of MEMBER's
use of Other Resources and the output of Qualifying Facilities pursuant
to Section 8.6 of this Agreement in accordance with SWECO's applicable
FERC rate schedule.
3.3 SCHEDULING SERVICES FOR MEMBER HYDRO
MEMBER hereby designates SWECO as its duly authorized agent through
which all transactions with SPA under the Power Sales Contract between
MEMBER and SPA shall be conducted. SWECO shall be, and hereby is,
30
authorized and directed to accept and receive from SPA, for the account
of MEMBER, SPA Hydro Peaking Power and SPA Supplemental Peaking Energy;
to prepare and to submit, and to receive and accept, all accounting
statements and a copy of all bills; and to act for and on behalf of
MEMBER as to all matters pertaining to scheduling, receipt and delivery
of the SPA Hydro Peaking Power and SPA Supplemental Peaking Energy with
the same force and effect as if MEMBER were acting through its duly
authorized officials. To the maximum extent practicable in keeping with
Good Utility Practice SWECO shall utilize for MEMBER's benefit all SPA
Supplemental Peaking Energy available to MEMBER.
The scheduling provisions of this Section 3.3 are subject to the terms
and conditions of Member's Power Sales Contract with SPA and to SPA's
recognition and acceptance of the designation and appointment of SWECO
as MEMBER's agent under the MEMBER's Power Sales Contract with SPA for
the purposes described above and to SPA's agreement to furnish SWECO a
copy of each energy accounting statement, notice and bill furnished by
SPA to MEMBER pursuant to the provisions of such Power Sales Contract.
31
3.4 SCHEDULING SERVICES FOR OTHER RESOURCES
The delivery of power and energy obtained by MEMBER
from Other Resources shall be scheduled and dispatched by SWECO as
necessary to assure system reliability pursuant to SWECO's Open Access
Transmission Tariff filed with the FERC. SWECO may schedule and use such
capacity and energy to meet SWECO's system requirements, including
service to MEMBER Load, in an efficient manner and in accordance with
Good Utility Practice. In scheduling Member's Other Resources SWECO
shall make no adverse distinction between such sources of power and
sources used by SWECO to supply Member. SWECO shall not be obligated to
schedule any resource in a manner that would impair the reliability of
the SWECO control area or be inconsistent with the MEMBER's obligation
under Section 2.5.
ARTICLE IV
BILLING CREDITS FOR MEMBER HYDRO AND OTHER RESOURCES
4.1 MEMBER HYDRO
A portion of the capacity and energy requirements of MEMBER shall be
supplied from MEMBER Hydro. MEMBER hereby agrees that it will not
terminate its Power Sales Contract with SPA without first providing
32
reasonable notice to and consulting with SWECO with respect to such
termination.
MEMBER hereby agrees that it will give SWECO reasonable prior notice
regarding any changes in its contract arrangements with SPA regarding
MEMBER Hydro, and that the MEMBER Hydro shall be limited to the rights
to hydroelectric capacity and associated energy shown on Schedule C, as
it may be revised from time to time. The Parties agree that SWECO shall
have no obligation under this Agreement to replace MEMBER Hydro listed
on Schedule C independent of SWECO's obligation to provide the MEMBER
Base Supply and any obligation of SWECO to provide Supplemental Supply
pursuant to Section 2.3 of this Agreement.
4.2 CAPACITY AND ENERGY CREDITS FOR MEMBER HYDRO AND OTHER RESOURCES.
MEMBER shall receive credits on each monthly bill determined in
accordance with Schedules A and B in respect of capacity and energy
supplied from MEMBER Hydro as shown on Schedule C, as it may be revised
from time to time, to which MEMBER shall be entitled and from permitted
Other Resources scheduled by MEMBER to serve MEMBER Load.
33
ARTICLE V
TRANSMISSION SERVICE
5.1 TRANSMISSION SERVICE
SWECO shall make arrangements for, and as the designated agent for all
Members of the Group, shall enter into all agreements with Transmission
Suppliers necessary to obtain from the Transmission Suppliers, the
transmission and Ancillary Services needed by SWECO to fulfill its
obligations to MEMBER under this Agreement. Unless SWECO and MEMBER
otherwise agree, SWECO shall arrange for firm point-to-point or network
integration transmission service.
MEMBER will coordinate with SWECO as needed to assure compliance with
the terms and conditions of any Transmission Service Agreement. SWECO
shall use its best efforts diligently to obtain all necessary
Transmission Service Agreements with any Transmission Supplier and all
required regulatory approvals relating thereto. MEMBER agrees to support
such efforts.
In its dealings with Transmission Suppliers, SWECO shall vigorously
advocate the interests of MEMBER, and shall coordinate with the
Technical Committee to be established pursuant to Section 11.2 of this
Agreement as to matters involving Transmission or Ancillary Service
34
expenses that will be borne by MEMBER or quality of service. SWECO shall
invite a MEMBER representative of the Technical Committee to accompany
SWECO at any meeting with a Transmission Supplier involving any such
matter.
5.2 TRANSMISSION AND DISTRIBUTION SERVICE COSTS
To the extent practicable SWECO shall separate the
transmission and Ancillary Services costs that SWECO pays to the
Transmission Suppliers in any month to serve the Group Load among costs
related to such services taken to serve Group Load at delivery voltages
of less than 69 Kv, costs related to such services taken to serve Group
Load at a delivery voltage of 69 Kv, and costs related to such services
taken to serve Group Load at delivery voltages higher than 69 Kv. Such
costs shall be grouped by voltage level and then allocated and charged
to MEMBER based on the ratio of the Maximum Point of Delivery Demand
determined separately for each MEMBER Point of Delivery during the
Billing Month to which such costs relate to the sum of the Maximum Point
of Delivery Demands at all Points of Delivery served during such Billing
Month in the same delivery voltage group.
35
ARTICLE VI
MEMBER FACILITIES CHARGES
6.1 RESPONSIBILITY FOR AND PERMITTED USES OF SPECIFIC FACILITIES.
SWECO shall be responsible for installing, owning, operating, and
maintaining the Specific Facilities for MEMBER that are listed on
Schedule D to this Agreement. Upon reasonable request, SWECO shall allow
MEMBER to use such Specific Facilities in connection with MEMBER's
protective relaying schemes. Any permitted use of such facilities shall
be in accordance with Good Utility Practice and shall be subject to
SWECO's prior written approval of MEMBER's equipment installation.
Nothing in this Article VI shall be construed to prohibit MEMBER from
installing, owning, operating and maintaining transmission or
telecommunications facilities that are necessary to MEMBER's receipt of
service hereunder at a Point of Delivery.
6.2 ADDITIONAL INVESTMENTS FOR SPECIFIC FACILITIES
The Parties will amend Schedule D from time to time to list any
Additional Investments for Specific Facilities installed to serve MEMBER
Load. The Parties shall amend Schedule D within 30 days after the end of
37
each Contract Year to list Additional Investments for Specific
Facilities totaling less than $100,000 made during such Contract Year.
The Parties shall amend Schedule D within 30 days after the in-service
date of Specific Facilities after Additional Investments for Specific
Facilities made during any Contract Year exceed $100,000.
6.3 RESPONSIBILITIES FOR COMMON FACILITIES
SWECO shall be responsible for installing, owning, operating, and
maintaining the Common Facilities listed on Schedule D of this
Agreement.
6.4 ADDITIONAL INVESTMENTS FOR COMMON FACILITIES
The Parties will amend Schedule D from time to time to
list any Additional Investments for Common Facilities. The Parties shall
amend Schedule D within 30 days after the end of each calendar year to
list Additional Investments for Common Facilities totaling less than
$100,000 made during any Contract Year. The Parties shall amend Schedule
D within 30 days after the in-service date of such Common Facilities
after Additional Investments for Common Facilities made during any
Contract Year exceed $100,000.
6.5 FACILITIES
MEMBER shall pay SWECO a monthly facilities charge for Specific
Facilities and Common Facilities in accordance with Article X and
37
Schedule A. Such monthly facilities charge shall be the sum of (a) 1/12
of the annual charge to MEMBER for Initial Facilities plus (b) the
product of 1.75% times the Additional Investments for Specific
Facilities, as listed on Schedule D of this Agreement (as it is revised
from time to time pursuant to Sections 6.2 and 6.4 of this Agreement)
plus (c) the product of 1.75% times the MEMBER Share times the
Additional Investments for Common Facilities, as listed on Schedule D of
this Agreement (as so revised); provided however that MEMBER may elect
to maintain the Specific Facilities and any such Additional Investments.
If MEMBER so elects, then the carrying charge rate set forth in Schedule
D shall be 1.25% and not 1.75%. (Any such agreement that MEMBER shall
maintain such facilities shall be memorialized in writing and shall
contain reasonable terms relating to MEMBER's maintenance duties and
obligations.) The annual charge to MEMBER in any Contract Year for
Initial Facilities shall be as shown on Schedule D. In the event that
such Specific Facilities are deemed to serve more than one Group member,
the investment associated with such Specific Facilities shall be
allocated among such Group members.
38
6.6 ABANDONMENT OF SPECIFIC FACILITIES
In the event MEMBER abandons or transfers load from a Point of
Delivery owned by a Transmission Supplier, MEMBER shall pay SWECO an
amount sufficient to pay any and all abandonment charges due under the
relevant Transmission Service Agreements. In the event MEMBER abandons a
Point of Delivery or other Specific Facilities owned by SWECO, MEMBER
shall purchase said facilities from SWECO at Depreciated Book Value.
MEMBER shall remove or otherwise disconnect said abandoned facilities
from the applicable SWECO or Transmission Supplier system.
6.7 OPTION TO PURCHASE SPECIFIC FACILITIES
MEMBER shall have the option to purchase from SWECO
within 180 days following the termination of this Agreement in
accordance with its terms any Specific Facilities being used by SWECO at
the termination date to serve MEMBER Load. The MEMBER shall pay SWECO
for such Specific Facilities the depreciated book value of SWECO's
Additional Investment in such Specific Facilities. The initial specific
facilities will have a depreciated book value of zero at the termination
date.
39
ARTICLE VII
POINTS OF DELIVERY
7.1 DELIVERY POINTS
SWECO shall furnish the electric capacity and deliver the energy
purchased by the MEMBER from SWECO under this Agreement to the MEMBER at
the Point(s) of Delivery. Title and risk of loss of such energy shall
pass from SWECO to the MEMBER at such Points of Delivery.
7.2 CHANGES IN POINTS OF DELIVERY.
Whenever MEMBER seeks the establishment of a new Point of Delivery, or
to change the capacity of, or the voltage at, an existing Point of
Delivery, or to abandon a Point of Delivery on the Transmission System
of SWECO or a Transmission Supplier, MEMBER shall notify SWECO, in
writing, of the change desired, as far in advance as is practical, but
at least 30 days in advance of the time at which SWECO must give notice
of the change to any Transmission Supplier under the terms of any
relevant Transmission Service Agreement. Such notice shall provide the
information needed by SWECO to request a change in Points of Delivery
under the terms of any relevant Transmission Service Agreement.
40
Subject to the conditions set forth in Section 7.5 below, SWECO shall
use its best efforts to effect a requested change in an existing Point
of Delivery or to furnish a new Point of Delivery at an available
standard distribution or transmission voltage. In no event shall SWECO
be obligated to seek a change in an existing Point of Delivery or to
establish a new Point of Delivery that would violate Good Utility
Practice.
In the event that a Transmission Supplier does not agree to establish
a requested new Point of Delivery or to make a requested change to an
existing Point of Delivery, SWECO shall request that the Transmission
Supplier file with the FERC an unexecuted service agreement or
unexecuted service agreement amendment setting forth the terms on which
the Transmission Supplier is willing to provide the requested service to
MEMBER Load. SWECO and MEMBER shall cooperate in seeking FERC review of
any Transmission Supplier's refusal to provide requested service.
7.3 NEW POINTS OF DELIVERY
If MEMBER desires to establish a new Point of Delivery on the
transmission system of SWECO or a Transmission Supplier, MEMBER shall so
notify SWECO. Such notice shall be given in accordance with the
requirements of Section 7.2 of this Agreement. MEMBER and SWECO shall
41
enter into a written delivery point agreement for each new Point of
Delivery containing, among other things, the location of the new Point
of Delivery, capacity required, and a description of the facilities to
be installed. Such delivery point agreement shall be subject to approval
by SWECO or the appropriate Transmission Supplier and obtaining any
required regulatory approval. SWECO shall not unreasonably withhold any
such approval.
7.4 NOTICE OF POINT OF DELIVERY ABANDONMENT
Whenever MEMBER desires to abandon a Point of
Delivery, MEMBER shall notify SWECO of such abandonment, in writing, as
far in advance of the proposed abandonment date as is practical, but not
less than the notice required for abandonment, if any, as specified in
the relevant Transmission Service Agreements. Any Point of Delivery
abandonment shall be subject to the abandonment charges provided for in
Sections 6.7 and 6.8 of this Agreement.
7.5 SWECO OR TRANSMISSION SUPPLIER FACILITIES
If a change requested by MEMBER pursuant to Section 7.2 or Section 7.3
is mutually agreeable to SWECO and the relevant Transmission Supplier,
SWECO shall furnish MEMBER a written construction schedule within 30
days after said construction schedule is received by SWECO from the
42
Transmission Supplier. To the extent such change in service or
additional service would require investment by a Transmission Supplier
in additional transmission or distribution facilities, SWECO shall not
be obligated to provide service to the new or changed Point of Delivery
until the relevant Transmission Service Agreement has been amended and
such amendment becomes effective and any required construction is
completed. In the event SWECO, the Transmission Supplier or other agency
for coordinating the use of transmission facilities determines that a
request for a new or changed Point of Delivery is not feasible, SWECO
shall consult with MEMBER for the purpose of suggesting a feasible
alternative to the request made by MEMBER and a representative of MEMBER
shall be invited by SWECO to participate in any meeting with such
Transmission Supplier or other agency. From time to time, SWECO or
another Transmission Supplier may convert its line operating voltages to
higher voltages. MEMBER shall be required to accept any such change to a
higher voltage at any Point of Delivery in accordance with the terms and
conditions, if any, of the applicable Transmission Service Agreements.
SWECO shall give notice to MEMBER of such changes at least 24 months in
43
advance of any such change in SWECO facilities initiated by SWECO or
within 15 days after receipt of any such notice from Transmission
Supplier, as the case may be. In negotiating the Transmission Service
Agreements, SWECO shall endeavor to obligate the Transmission Supplier
to give SWECO at least 24 months' prior written notice of the
Transmission Supplier's intention to convert its transmission line
operating voltages to higher voltages.
ARTICLE VIII
OPERATING RESPONSIBILITIES
8.1 OPERATING RESPONSIBILITIES OF MEMBER AND SWECO
MEMBER and SWECO each shall exercise reasonable diligence to use and
provide any service furnished under this Agreement to secure the
efficiency of their respective apparatus and systems in keeping with
Good Utility Practice in the area, shall coordinate their respective
systems' relaying and fusing and with those of the Transmission
Suppliers so as to preclude unnecessary interruptions, shall maintain
their respective lines at all times in a safe operating condition in
accordance with Good Utility Practice, shall operate their respective
facilities in a manner designed not to interfere with the service to
44
customers of the other Party, and shall coordinate maintenance
activities which may adversely affect the operation of their respective
facilities.
8.2 POWER FACTOR
The amounts that SWECO bills MEMBER for service under this Agreement
shall be adjusted to reflect adjustments, charges, fees or penalties
relating to power factor charged SWECO by a Transmission Supplier
relating to service provided hereunder. Such billing adjustments shall
be made by individual Points of Delivery. SWECO agrees to provide MEMBER
information concerning charges, fees or penalties that are imposed by a
Transmission Supplier and will attempt to notify MEMBER when MEMBER is
approaching a potential penalty power factor level. SWECO will also
notify MEMBER if and when SWECO becomes aware that MEMBER is operating
its facilities in a manner that violates power factor requirements
imposed under any applicable Transmission Service Agreement. However,
SWECO shall have no obligation to provide reactive power to remedy a
MEMBER's failure to maintain the power factor levels required by a
Transmission Supplier.
8.3 EMERGENCY LOAD RELIEF
45
SWECO shall develop a load relief plan to comply with contingent
situations that may arise in the region. MEMBER shall participate in
SWECO's load relief plan, pro rata, on a non-discriminatory basis.
8.4 COORDINATION OF TEMPORARY TRANSFER OF LOAD
To the extent permitted under any applicable Transmission Service
Agreement, MEMBER may temporarily transfer load from one Delivery Point
to another as necessary to facilitate the safe, reliable and economic
provision of service to its retail customers while system maintenance
activities are being conducted or to respond to system emergencies. Such
transfers shall not exceed the physical capacity or constraints of the
SWECO facilities or of any Transmission Supplier's system. MEMBER shall
notify SWECO's system dispatcher of any proposed transfer as far in
advance as is practical and shall coordinate any such transfer with
SWECO's system dispatcher to assure compliance with Good Utility
Practice. Such notice shall state, among other things, the duration of
the expected transfer, the Points of Delivery involved in the proposed
load transfer and the amount of said load to be transferred. After the
load has been transferred back to the original Point of Delivery, the
MEMBER shall provide SWECO with written verification of the exact
46
duration of the transfer. Any additional costs of transmission incurred
due to the temporary transfer shall be borne by the MEMBER. Monthly
billing will be adjusted as necessary to avoid duplicative billing for
demand charges.
8.5 EXTENDED OUTAGE
During any outage of all or any part of the Project Capacity (whether
or not the cause of such outage is a force majeure event), the Member
shall pay the charges described in Schedule A for MEMBER Base Supply
provided under this Agreement. In the event that any of the Project
Capacity is out of service for more than 60 consecutive days for any
reason (whether or not the result of force majeure), the demand charges
payable by MEMBER for MEMBER Base Supply in accordance with Schedule A
shall be reduced by the difference (net of any abatement from the Rate
Fund described in Schedule A) between the cost of replacement power (in
mills per kWh) purchased to cover the outage after the sixtieth
consecutive day of outage and charged MEMBER in accordance with Schedule
A and the sum of energy and fuel costs (in mills per kWh) charged MEMBER
for energy provided from operating Project Capacity and Economic Power
(as defined in Schedule A) in the Billing Month times the amount of such
47
replacement energy delivered to serve MEMBER Load in the Billing Month;
provided, however, that the demand charges payable by MEMBER for the
Billing Month shall not be less than an amount sufficient when added to
demand charges payable by other Group members for such Billing Month to
pay SWECO's debt service requirements relating to Project Capacity and
other assets acquired by SWECO from the Cajun estate for such Billing
Month. Such reductions in demand charges will be determined utilizing a
twenty-five (25) year debt amortization schedule and in a manner that
results in all Group members paying the same reduced demand rate. For
purposes of this Section 8.5, the amount of replacement energy deemed to
be delivered to MEMBER Load in any Billing Month shall be equal to a
fraction of the replacement energy delivered to serve Group Load in the
Billing Month that has as its numerator total energy deliveries to the
MEMBER's Points of Delivery and as its denominator total energy
deliveries to all Group Points of Delivery. Because the effect of Rate
Fund reductions on MEMBER billings will not be calculated and applied
until after the close of any Contract Year, monthly billing adjustments
made to take account of Extended Outages shall be tentatively determined
48
without reference to Rate Fund applications and shall be recalculated at
the time Rate Fund allocations for the Contract Year are determined.
In the event of an outage of Project Capacity that persists beyond 60
consecutive days, SWECO shall have the option to reduce its obligation
to serve MEMBER Load by an amount not to exceed the MEMBER Share of the
outaged capacity divided by .85. To exercise such option SWECO must
notify MEMBER in writing no later than 59 days following the first day
of any outage of Project Capacity of the amount by which SWECO has
elected to reduce its obligation to serve MEMBER Load. The indicated
reduction in SWECO's obligation shall take effect on the earlier of (x)
the date on which SWECO calls debt securities equal to its Depreciated
Book Value in the outaged Project Capacity that is the basis of the
reduction in SWECO's obligation or (y) a date that is 18 months after
the date on which such outage began, and the amount of capacity by which
SWECO's obligation to serve MEMBER Base Supply is reduced shall become
part of MEMBER's Excess Requirements. MEMBER may not use Other Resources
to serve that part of MEMBER Load that is equal to the reduction in
SWECO's MEMBER Base Supply obligation until the reduction in SWECO's
MEMBER Base Supply obligation to such MEMBER takes effect. Beginning
with the effective date of such reduction in SWECO's MEMBER Base Supply
49
Obligation, the calculation of the demand ratchet under Schedule A,
Section 1.3, Step 3 (2) shall exclude the amount of kilowatts, if any,
that exceed the reduced MEMBER Base Supply Obligation. If SWECO elects
to reduce its obligation to serve MEMBER load, SWECO shall provide a
credit on MEMBER billing determined by the product of the energy rate
under Schedule A and the amount of replacement energy delivered to serve
MEMBER load in the Billing Month.
8.6 QUALIFYING FACILITY
MEMBER shall notify SWECO of the proposed connection to any part of
MEMBER's transmission or distribution facilities of any Qualifying
Facility (as determined under Subpart B of Part 292 of the FERC's
regulations under Section 201 of the Public Utility Regulatory Policies
Act of 1978 (PURPA)). The Qualifying Facility must agree to operate
under the criteria for non-utility generation established by the
Southwest Power Pool or its successor in function.
MEMBER shall give SWECO as much notice as possible, but not less than
90 days' notice, of its intention to connect its system to a Qualifying
50
Facility and shall give SWECO reasonable notice prior to the initial
energizing or start-up testing of the Qualifying Facility so as to allow
SWECO to have a representative present at such test. In addition, MEMBER
shall secure approval from SWECO and the appropriate Transmission
Supplier of any interconnection facilities so that adequate safety and
metering provisions can be made prior to such interconnection.
MEMBER shall supply, at no cost to SWECO, the metering equipment
required to determine the amount of capacity and energy supplied to
MEMBER by the Qualifying Facility. The metering equipment must be
compatible with the existing translation equipment of SWECO or the
Transmission Supplier as appropriate. SWECO or the Transmission Supplier
shall approve the compatibility of the metering equipment before the
equipment is installed. MEMBER shall make its metering data available to
SWECO.
SWECO's approval of such facilities shall not be construed as
confirming or endorsing the design, or as a warranty of safety,
durability or reliability, of any facility or equipment. It will be
MEMBER's sole responsibility to meet or comply with all permits, license
51
agreements, fees, rules, regulations, ordinances, inspection, or other
requirements that may be imposed.
If, during the billing month, MEMBER purchases power from a Qualifying
Facility, SWECO will credit MEMBER's charges for the current billing
month in an amount equal to the capacity- and energy-related
compensation SWECO would have been required to pay such Qualifying
Facility for such power, in accordance with the rules of the LPSC, had
such Qualifying Facility elected to require SWECO to purchase its
output. In turn, SWECO will bill MEMBER in such month at the otherwise
applicable rates under this Agreement for the sum of capacity and energy
delivered from any such Qualifying Facility and from SWECO's system in
accordance with Article X and Schedules A and B.
In the alternative, if MEMBER and the Qualifying Facility so agree,
SWECO will execute a contract with the Qualifying Facility for the
purchase of capacity and energy at SWECO's avoided cost, in accordance
with the rules of the LPSC. All other provisions of this Section 8.6
shall apply to the transaction (including particularly those related to
billing) without regard to whether SWECO or MEMBER executes the contract
for purchase of the energy generated by the Qualifying Facility. Any
52
capacity and energy purchased by SWECO directly from a Qualifying
Facility shall not be considered Project Capacity.
ARTICLE IX
METERING
9.1 METER READING
The Parties shall cause meters to be read monthly at times agreed
upon. Metering records shall be available at all reasonable times to
authorized representatives and employees of the Parties.
9.2 BILLING METERS AND ASSOCIATED INSTRUMENT TRANSFORMERS
SWECO shall be responsible for the purchase,
installation, ownership, operation and maintenance of the billing meters
and associated instrument transformers at all the existing and new
Points of Delivery to MEMBER. SWECO's records of data collected from
such meters shall be available at all reasonable times to the duly
authorized representatives of MEMBER. If necessary to accommodate a
specific installation at a location other than the physical Points of
Delivery, losses may be added to the actual meter readings to create the
equivalent readings that would have been obtained if the meters were
installed at the physical Points of Delivery.
53
SWECO's investments in billing meters and associated instrument
transformers after the Effective Date of the Agreement shall be listed
as Additional Investments on Schedule D to this Agreement. Upon
reasonable request, SWECO shall make available for MEMBER's use SWECO's
instrument transformers located at MEMBER's Points of Delivery for
purposes of installing check meters or for load research purposes.
MEMBER's use of such instrument transformers shall be subject to SWECO's
prior approval of MEMBER's equipment installation, which approval shall
not be unreasonably withheld
9.3 METER TESTS
SWECO shall test and calibrate meters used in connection with service
provided hereunder by reference to accurate standards at intervals of
approximately every twenty-four (24) months or at other intervals
mutually agreed to by the Parties. If SWECO finds a meter is not
registering accurately, SWECO shall restore the meter to an accurate
condition or substitute in its place an accurate meter. SWECO shall bear
the expense of all such routine tests.
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9.4 METER ACCURACY
SWECO and MEMBER shall have the right to request that a special test
of metering equipment be made at any time. If any test made at MEMBER's
request discloses that the metering equipment tested is registering
within plus or minus one percent accuracy, MEMBER shall bear the expense
thereof. The expense of all other such tests shall be borne by SWECO.
9.5 METER ADJUSTMENTS
The results of all meter tests and calibrations shall be open to
examination by MEMBER. Any meter tested and found to be within plus or
minus one percent accuracy shall be considered to be accurate. In the
event that SWECO determines that, as the result of a test of any meter,
a meter is not accurate within the limits of plus or minus one percent
accuracy, SWECO shall estimate the amount of electrical usage upon which
MEMBER's bill should have been rendered. Such estimate shall be based on
all known pertinent facts (which will be developed jointly by SWECO and
MEMBER) and shall be made for service provided from the date of the last
previous test of the metering equipment found to be in error, but in no
event shall such estimate be made for electrical use prior to the twelve
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(12) Billing Months immediately preceding the date on which the
inaccuracy was discovered. To adjust for the difference between metered
electrical usage upon which billing amounts were determined and
estimated electrical usage upon which MEMBER should have been billed,
SWECO will make appropriate adjustments (upward or downward) during the
next Billing Month to correct for such metering errors. Such adjustment
shall be the difference between the amount billed and the estimated
amount which should have been billed to account for such past metering
errors. If the meter in error has not been in service for twelve (12)
full preceding Billing Months, or if the meter inaccuracy can be
determined to have begun less than twelve (12) months prior to the date
on which the inaccuracy was discovered, then the estimated amount to be
refunded or credited by SWECO or paid by MEMBER shall reflect these
factors.
ARTICLE X
BILLINGS AND PAYMENTS
10.1 COMPENSATION
The rates, charges, and fees used to determine the amounts that MEMBER
shall pay to SWECO each month during the term of this Agreement for
service hereunder shall be determined in accordance with the rate
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schedules attached hereto, including without limitation Schedules A,
A-1, A-2, A-3, and B to this Agreement, and any other provision of this
Agreement relating to rates and charges for service. SWECO may make
adjustments to any bill for a period of up to one year after the date of
the original bill in order to reflect differences in charges resulting
from SWECO's receipt of more accurate data. SWECO may make additional
adjustments to bills to the extent such additional adjustments are
required to reflect the final resolution of any claim, action, or
proceeding that affects data contained in an original bill and that is
formally initiated by or noticed to SWECO prior to the end of the period
provided for in Section 10.3 for auditing SWECO's fuel costs. SWECO
shall provide notice of any such claim, action, or proceeding promptly
upon learning of same. SWECO shall furnish bills that separately state
the charges by individual Point of Delivery. SWECO shall also provide to
a designated representative of the MEMBER the information listed on
Schedule F with each monthly bill in order that such representative may
verify that the bill has been properly computed.
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10.2 FUEL AND ECONOMIC POWER COSTS
Fuel and Economic Power costs incurred by SWECO to serve MEMBER Load
shall be calculated monthly in accordance with the Fuel Cost Provisions
of Schedules A and B to this Agreement.
10.3 AUDITS OF COST RECORDS
Within three years following any calendar year for which service was
provided pursuant to this Tariff, and subject to any confidentiality
agreement between SWECO and any supplier of goods or services, MEMBER,
acting through the designated representative referred to in Section
10.1, shall have the right to audit SWECO's records of fuel and Economic
Power costs, MEMBER Hydro costs, and charges paid to Transmission
Suppliers at the offices where such records are maintained during normal
business hours; provided that appropriate notice shall have been given
prior to any audit and provided that the audit shall be limited to those
portions of such records that relate to service under this Agreement for
such calendar year. The costs of any such audit shall be borne by the
MEMBER.
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10.4 ECONOMIC DEVELOPMENT AND INCENTIVE RATES
SWECO shall sell to MEMBER power and energy needed to
serve qualifying economic development and incentive
loads as follows:
(a) For the economic development and incentive loads in respect of
which MEMBER has made a formal written commitment of reduced rates
(based on Cajun incentive tariffs) as of the Effective Date and that are
listed on Schedule F to this Agreement, SWECO shall provide electric
service to MEMBER at the rates set forth in either Schedule A or
Schedule A-3. On or before the Effective Date, MEMBER shall determine
which rate option is best and elect for each retail load being served at
the Effective Date with power and energy purchased from Cajun at LPSC
approved incentive rates on file with the LPSC on March 31, 1997 (which
are the Cajun Riders JCIC, LPI, VLP and EEDS and the Cotton Gins Rider
that are described in Schedule A-3) whether to be billed under Schedule
A or Schedule A-3 to this Agreement. Any loads greater than 10 mW in
respect of which MEMBER has made a formal written offer of reduced rates
(based on Cajun rate VLP) shall be deemed to be Separately Metered Load
that SWECO shall supply to MEMBER in accordance with the rates and terms
59
set forth in Schedule A-3 that are applicable to VLP customers and shall
not be counted as MEMBER Load.
If MEMBER elects Schedule A-3 for certain incentive loads, such
Schedule A-3 rates shall be applicable only during the remaining term of
the original incentive load contracts as referenced in Schedule A-3 and
thereafter such incentive loads shall be billed in accordance with
Schedule A.
(b) For economic development and incentive loads that are first served
by MEMBER after the Effective Date of this Agreement, SWECO shall
provide electric service to MEMBER at the applicable rates, terms and
conditions set forth in Schedules A-1 and A-2 to this Agreement.
10.5 PAYMENT BY MEMBER TO SWECO
MEMBER shall make payment to SWECO for electric service billed under
this Agreement in a manner that will assure that collected funds are
available to SWECO within twenty (20) days from the date said bills are
mailed. No dispute in regard to billing shall delay payment. Payment
shall be made to SWECO by check or by electronic transfer of funds to
the bank and account as indicated on the bill. All payments for service
not electronically transferred hereunder shall be mailed to SWECO's
address.
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Unpaid amounts shall be subject to a late payment charge equal to one
percent (1%) per month; provided, however, that such late payment charge
shall not exceed the maximum charge which may be collected under the
applicable provisions of Louisiana law. If MEMBER makes collected funds
available to SWECO sooner than 15 days after the date a bill is mailed,
MEMBER's account shall be credited with the product of .0001369863 and
the amount paid early for each day sooner than 15 days after the date a
bill is mailed that such amount is available to SWECO in collected
funds.
The payment of that portion of any bill that MEMBER may be
contesting shall not be construed as waiving MEMBER's right to recover
the contested portion.
ARTICLE XI
ADDITIONAL PROVISIONS
11.1 PLANNING
In order to keep SWECO advised of MEMBER's future requirements so that
SWECO may make provision for such requirements in its long-range system
plans, MEMBER shall cooperate with SWECO in its system planning and
shall provide SWECO prior to the earlier of (1) the time specified in
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the appropriate Transmission Service Agreements, or (2) June 1 of each
Contract Year, a forecast of MEMBER's anticipated load requirements in,
or proposed to be placed in, SWECO's load control area for each of the
next ten Contract Years or the remaining Contract Years if fewer than
ten. MEMBER shall also advise SWECO of its maximum load requirements at
each existing Point of Delivery, and its anticipated need for additional
Point(s) of Delivery for each such Contract Year.
11.2 TECHNICAL COMMITTEE
As soon after the Effective Date as possible, SWECO and the members of
the Group shall establish a Technical Committee consisting of
representatives of SWECO and of each member of the Group. The Technical
Committee shall meet as often as reasonably required to keep the Group
informed of SWECO's planning decisions and operating procedures. SWECO
shall entertain suggestions and advice from the Technical Committee in
respect of SWECO's obligations under this Agreement; however, such
suggestions and advice from the Technical Committee shall not be binding
upon SWECO, but shall be advisory only.
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11.3 RESPONSIBILITY FOR ELECTRICITY
MEMBER assumes all responsibility for electricity on its side of each
Point of Delivery and SWECO assumes all responsibility for electricity
present on electric facilities owned by SWECO. It is also understood and
agreed that neither SWECO nor MEMBER assumes any responsibility with
respect to the construction, installation, insulation, maintenance or
operation of the systems of the other or any part thereof and neither
SWECO nor MEMBER shall, in any event, be liable for damage or injury to
any person or property whatsoever arising, accruing or resulting from,
in any manner, the receipt, transmission, control, use, application or
distribution by the other Party of said electricity. Both SWECO and
MEMBER shall use reasonable diligence in maintaining their respective
lines and equipment in proper and serviceable condition, and shall take
reasonable steps and precautions for maintaining the services agreed to
be performed and received under this Agreement.
11.4 CONTINUITY OF SERVICE
SWECO shall endeavor at all times to provide in an uninterrupted
fashion the service contemplated by this Agreement in keeping with Good
Utility Practice. In no event, however, shall SWECO be liable to MEMBER
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for losses or damages arising from failure, interruption or suspension
of service resulting from SWECO's operations conducted in accordance
with Good Utility Practice, or any interruption or suspension of
transmission or ancillary service by any Transmission Supplier or any
other failure of any Transmission Supplier to provide service unless
such interruption, suspension or failure of transmission or ancillary
service is a result of SWECO's failure to discharge one or more of its
obligations under this Agreement. SWECO reserves the right to suspend
service pursuant to Good Utility Practice without any liability on its
part at such times and for such periods and in such manner as it may
deem advisable including, without limitation, suspensions for the
purpose of making necessary adjustments to, changes in, or repairs on,
its lines, substations and facilities, and suspensions in cases where,
in its opinion, the continuance of service to MEMBER would endanger
persons or property. SWECO shall use its best efforts to provide MEMBER
with reasonable notice in the event of a suspension of service. Monthly
billing will be adjusted as necessary to avoid duplicative billing
related to load shifts made by MEMBER to respond to any such suspension
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of service. Any additional costs of transmission incurred due to load
shifts made at the request of SWECO shall be borne by SWECO.
11.5 RIGHT OF ACCESS
Each Party shall give all necessary permission to the other Party to
enable the agents of the other Party to carry out this Agreement, and
shall give the other Party the right to enter its premises by the other
Party's fully authorized agents and employees at all reasonable times
for the purposes of reading or checking meters; for inspecting, testing,
repairing, renewing or exchanging any or all of the other Party's
equipment; or for performing any other work incident to rendering the
services covered by this Agreement. Except as otherwise agreed by the
Parties or in emergencies, whenever the agent of one Party enters the
premises of the other Party, such agent shall be accompanied by
personnel of the Party owning such premises. It is agreed, however, that
neither Party hereto assumes the duty of inspecting the equipment,
lines, or other facilities of the other.
11.6 HOLD HARMLESS PROVISIONS
Each Party shall indemnify and hold harmless the other Party from and
against any and all legal and other expenses, claims, costs, losses,
65
suits or judgments for damages to any person or destruction of any
property arising in any manner directly or indirectly by reason of the
sole negligence or willful misconduct of such Party's authorized
representatives.
TO THE FULLEST EXTENT PERMITTED BY LAW, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER PARTY, FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE,
EXEMPLARY, MULTIPLE, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LIABILITY BASED UPON OR DAMAGES FOR LOSS OF PROFITS) WITH
RESPECT TO ANY CLAIM ARISING OUT OF THIS AGREEMENT WHETHER BASED ON
CONTRACT, TORT (INCLUDING THE NEGLIGENCE OR THE SOLE NEGLIGENCE OF A
PARTY) OR OTHERWISE.
For purposes of this Section 11.6 the term Party shall mean SWECO or
MEMBER and their respective officers, directors, employees and
independent contractors.
11.7 RIGHT OF FIRST REFUSAL IN CASE OF PROPOSED SALE, MERGER OR
CONSOLIDATION.
In the event MEMBER receives an offer to sell, merge, consolidate or
otherwise transfer all or substantially all of the assets of MEMBER,
MEMBER shall first offer to sell such assets to SWECO, or any of its
affiliates, on the same terms and conditions as are received from any
66
other party unless the offering party is a member of the Group that is a
rural electric cooperative that is purchasing from SWECO the capacity
and energy required to meet such party's MEMBER Load under a Power
Supply and Service Agreement with SWECO having terms similar to the
terms of this Agreement and such party's offer includes an obligation to
assume MEMBER's obligation to SWECO under this Agreement. After SWECO
receives written notification of said offer and of MEMBER's agreement or
desire to sell, SWECO shall have 120 days to notify MEMBER of SWECO's
agreement to purchase MEMBER's assets on the same terms and conditions,
or on more favorable terms and conditions than those that were submitted
by the offering party. During the 120-day notification period, MEMBER
shall not enter into any memorandum of understanding, contract or other
agreement with the third party without specifically noting therein that
said agreement is subject to this right of first refusal. In the event
SWECO or any of its affiliates notify MEMBER during the 120-day period
that it desires to purchase MEMBER's assets, the Parties will proceed,
with due diligence, to complete the transaction; provided, however, that
SWECO's right to purchase MEMBER's assets shall be subject to
obligations relating to disposition of MEMBER's assets that MEMBER may
67
have under its by-laws in effect on January 1, 1997 that continue in
effect as of the date on which the MEMBER first receives an offer from
the third party to sell, merge, consolidate or otherwise transfer the
MEMBER's assets. In the event SWECO does not respond within 120 days or
notifies MEMBER during such period of its election not to submit an
offer, MEMBER shall be free to sell, merge, consolidate or otherwise
transfer its assets to the third party.
MEMBER specifically agrees to abide by the terms of this provision and
acknowledges that in the event of noncompliance with any terms of this
provision, any contract, agreement or transfer of assets to a third
party shall be null and void, without force and effect and subject to
any and all remedies pursuant to applicable law.
11.8 ACQUISITION OF FACILITIES TO SERVE RETAIL CUSTOMERS FORMERLY SERVED BY
OTHER SUPPLIERS.
In the sole event that the MEMBER determines to purchase or otherwise
acquire facilities for the provision of electrical service to a customer
or customers not served by MEMBER on the Effective Date and if it is
necessary in order to consummate the transaction for the MEMBER to
assume an existing power purchase agreement from the seller of the
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acquired facilities or execute a new power purchase agreement with such
seller, MEMBER shall have the right to purchase power under the MEMBER's
agreement with the seller solely to serve the electric load of customers
being served in the new service territory. Any electric load so served
shall not be counted as MEMBER Load while so served, and if served
through a Point of Delivery shall be separately metered at MEMBER's sole
expense.
After the expiration of the primary term of any such agreement, MEMBER
shall purchase from SWECO the power and energy needed to serve the new
customer or customers if MEMBER would otherwise have been obligated to
purchase such power and energy from SWECO under this Agreement and, in
such event, MEMBER hereby renounces any right to extend the primary term
of any agreement assumed or entered into by MEMBER in accordance with
this Section 11.8.
11.9 EXTRAORDINARY LOAD
SWECO and MEMBER shall cooperate to facilitate the attraction of
Extraordinary Load to SWECO's control area. MEMBER shall keep SWECO
informed regarding any proposals to potential Extraordinary Load
customers. In the event any such potential Extraordinary Load customer
rejects such proposal and MEMBER demonstrates to SWECO's reasonable
69
satisfaction that, unless such potential Extraordinary Load customer is
offered a lower price for electricity than MEMBER can offer based on its
costs incurred under this Agreement, or under other power supply
arrangements that SWECO is willing to offer to MEMBER, SWECO shall have
no obligation to serve such Extraordinary Load, which shall not become
part of MEMBER Load, and MEMBER shall have the right to purchase from a
Third-Party Supplier the capacity and energy needed to serve such
Extraordinary Load. Such right to purchase from a Third-Party Supplier
shall be subject to SWECO's right of first refusal to furnish the
capacity and energy MEMBER requires in order to serve such Extraordinary
Load. If served through a Point of Delivery, such Extraordinary Load
shall be separately metered at MEMBER's sole expense.
11.10 COMPETITIVE TERRITORY CREDITS
The MEMBER shall use all reasonable efforts to oppose any activities
by any municipality or any other entity that threatens to reduce MEMBER
Load or cause SWECO to sustain loss or impair SWECO's ability to recover
the costs it has incurred to provide service under this Agreement.
Nothing in this Section 11.10 shall, however, require MEMBER to take any
action that is in conflict with MEMBER's obligations under any agreement
70
between MEMBER and a political subdivision of the State of Louisiana
that is in force and effect as of November 1, 1997, so long as such
Agreement remains in effect. The MEMBER acknowledges and recognizes that
SWECO has made a substantial investment and incurred substantial costs
to enable it to serve MEMBER load.
In the event that a political subdivision, as defined by the Louisiana
Constitution in effect on the Effective Date, that serves electric
utility customers in a geographic area that is contiguous to the
geographic area in which MEMBER provides electric utility service, poses
a significant competitive threat to MEMBER because such political
subdivision either (a) has offered to provide electric utility service
at lower cost (after considering the value of services or subsidies that
such political subdivision has offered to MEMBER's electric utility
customers) or (b) has taken or initiated official action, or Member and
SWECO in good faith believe such action is likely, to annex any part of
the geographic area in which MEMBER serves retail customers or to
condemn any member facilities:
(1) SWECO shall establish a separate fund
("Territory and Cooperative Defense Fund") to be
available to Member to assist Member and other
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members of the Group to defend against
condemnation, hostile takeover, and annexation
efforts. On the first day of Contract Year one,
SWECO shall deposit $900,000 in the "Territory
and Cooperative Defense Fund" to be available to
qualifying Members during Contract Year one (1)
through five (5). Beginning on the first day of
Contract Year Six, such fund shall be reduced to
an amount equal to the lesser of $500,000 or the
actual balance in the fund at the end Contract
Year 5. Such fund shall continue to be
available until the earlier of the exhaustion of
the fund or the end of Contract Year 25. Any
amount remaining in the fund at the end of
Contract Year 25 shall revert to SWECO.
(2) Beginning in Year 6, and for each Contract Year
through the end of Contract Year 25, SWECO shall
establish a separate fund of up to $500,000 per
year ("Contingent Fund"). The Contingent Fund
shall be available to all qualifying Members of
the Group in order to assist such Members in
defending against the condemnation and
annexation efforts described in this section,
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but shall not be available to defend hostile
takeover activities of Third Parties.
For each of the Territory and Cooperative Defense Fund and the
Contingent Fund, a qualifying Member is entitled to utilize up to the
full amount of each fund for the purposes specified, unless more than
one qualifying Member is entitled to participate in such fund, in which
case Member shall be entitled to its pro rata share of such fund, which
pro rata share shall be determined by the ratio of the MEMBER's Member
Share to sum of the Member Shares of the qualifying Members.
11.11 SWECO COVENANTS
In addition to its other obligations under this Agreement, SWECO
specifically warrants and covenants to MEMBER that it will (a) maintain
its status as a validly existing corporate entity in good standing with
full power and authority to carry out its business as contemplated by
this Agreement; and (b) pay all principal and interest SWECO accrues,
and comply with all other covenants and obligations, under any financing
documents executed by SWECO to finance its acquisition of the Project
Capacity.
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11.12 MEMBER COVENANTS
In addition to its other obligations under this Agreement, MEMBER
specifically warrants and covenants to SWECO that MEMBER will: (a)
maintain its status as a validly existing corporate or other legal
entity in good standing with full power and authority to carry on its
business as it is now conducted; (b) pay all principal and interest it
accrues, and comply with all other covenants and obligations, under any
financing documents executed by MEMBER; (c) establish and maintain, to
the extent permitted by all regulatory bodies having jurisdiction
thereof, rates and collect charges for retail service based thereon
sufficient to pay all indebtedness and all expenses of MEMBER, including
but not limited to all payments due and owed to SWECO pursuant to this
Agreement; and (d) oppose and not allow any substantial part of its
electric distribution system to be sold, transferred or leased, or any
of its customers to be served by others except as is specifically
authorized by this Agreement or required by law.
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ARTICLE XII
DEFAULT
12.1 DEFAULT DEFINED
As used in this ARTICLE XII, "default" shall mean the failure of
MEMBER or SWECO to make any payment, perform any obligation in the time
and/or manner required by this Agreement or otherwise breach any
covenant or warranty contained herein, except where such failure to
discharge obligations (other than the payment of money) is the result of
Force Majeure (as defined in Section 13.20 of this Agreement).
12.2 NOTICE OF DEFAULT
Upon failure of a Party hereto to make a payment or to perform an
obligation required hereunder, the other Party shall give written notice
of such default to the Party in default. The Party in default shall have
twenty (20) days within which to cure such default and, if cured within
such time, the default specified in such notice shall cease to exist.
12.3 REMEDIES FOR DEFAULT
If a default is not cured as provided in Section 12.2, the Party not
in default may resort to all remedies available at law or in equity,
including the initiation of a proceeding at the FERC to terminate
75
service. If it is necessary for SWECO to institute legal proceedings or
retain an attorney in attempting to collect a delinquent bill, MEMBER
will also pay and be responsible for all interest provided for in
Section 10.3 and all expenses and costs of collection, including
reasonable attorneys' fees, incurred by SWECO.
ARTICLE XIII
GENERAL PROVISIONS
13.1 GOVERNING LAW
The validity, interpretation and performance of this Agreement and
each of its provisions shall be governed by the laws of the State of
Louisiana, except as to matters that are governed by federal law.
13.2 NOTICE
Any notice, request, demand, or statement, which may be given to or
made upon a Party hereto by the other Party hereto under any of the
provisions of this Agreement, shall be in writing unless it is
specifically provided otherwise herein, and shall be treated as duly
delivered when the same is either (1) personally delivered to the
President of SWECO or the General Manager of MEMBER, or (2) deposited in
76
the United States mail, by certified mail, postage prepaid, or (3)
delivered by facsimile transmission, and properly addressed to the party
to be served, as follows:
If the notice is to SWECO:
President
Southwestern Wholesale Electric Company
P. O. Box 21106
Shreveport, Louisiana 71156
FAX (318) 221-____
If the notice is to MEMBER:
General Manager
"CO-OP"
"Address"
___________, Louisiana
FAX ( ) ___-____
The names, titles, addresses and fax telephone numbers of either party
in this section may be changed by written notification to the other
party.
13.3 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of SWECO
and MEMBER and their respective successors and assigns.
(a) PERMITTED ASSIGNMENTS BY SWECO
The MEMBER acknowledges that SWECO's lenders will advance funds in
reliance on this Agreement and similar agreements between SWECO and
other Group members and that such agreements will secure SWECO's
77
obligations to repay its lenders. The Parties specifically agree that
SWECO, without further consent or approval, may assign, transfer,
mortgage and/or pledge or otherwise use this Agreement in order to
secure financing and/or refinancing of SWECO, or any of its successors
and assigns, and further to allow enforcement, by assignees, receivers
or trustees and/or creditors to this Agreement. In this regard, it is
further acknowledged and agreed that SWECO, or any of its successors
and/or assigns, is hereby authorized and permitted, without further
approval, to sell, transfer, merge or consolidate all or substantially
all of its assets with any other party or entity and to assign this
Agreement in the event of such sale, transfer, merger or consolidation.
(b) PERMITTED ASSIGNMENTS BY MEMBERS
MEMBER, without the approval of SWECO, may assign, transfer, mortgage
or pledge this Agreement to create a security interest for the benefit
of the United States of America, acting through the administrator of the
Rural Utilities Services (the "Administrator"). Thereafter, the
Administrator, without the approval of SWECO, may (1) cause this
Agreement to be sold, assigned, transferred or otherwise disposed of to
78
a third party pursuant to the terms governing such security interest, or
(2) if the Administrator first acquires this Agreement pursuant to 7
U.S.C. ' 907, sell, assign, transfer or otherwise dispose of this
Agreement to a third party; provided, however, that in either case (a)
MEMBER is in default of its obligations to the Administrator that are
secured by such security interest and the Administrator has given SWECO
notice of such default; and (b) the Administrator has given SWECO thirty
(30) days prior notice of its intention to sell, assign, transfer or
otherwise dispose of this Agreement indicating the identity of the
third-party assignee or purchaser. In addition, MEMBER, without the
approval of SWECO, may assign, transfer, mortgage or pledge this
Agreement to create a security interest for the benefit of any lender
other than the Administrator.
(c) OTHER ASSIGNMENT
Except as otherwise provided in this Section 13.3, neither Party shall
assign its interest in or delegate its duties under this Agreement in
whole or in part without the prior written consent of the other Party.
Such consent shall not be unreasonably withheld.
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(d) EFFECT OF ASSIGNMENTS
No assignment, sale, transfer, merger or consolidation shall in any
way relieve or discharge any Party of its obligations under this
Agreement or impose additional obligations or burdens on the other Party
unless specifically so agreed in writing by the other Party.
13.4 RULES OF CONSTRUCTION
(a) The descriptive headings of the various articles and sections of
this Agreement have been inserted for convenience of reference only and
shall in no way modify, expand, or restrict any of the terms and
provisions hereof.
(b) Wherever the term "including" is used in this Agreement and the
Schedules attached hereto, such term shall not be construed as limiting
the generality of any statement, clause, phrase or term.
(c) The terms defined in this Agreement and the Schedules attached
hereto shall include the plural as well as the singular and the singular
as well as the plural.
(d) The language used in this Agreement is the product of both
Parties' efforts, and each Party hereby irrevocably waives the benefit
80
of any rule of contract construction that disfavors the drafter of a
contract or the drafter of specific words in a contract.
13.5 EFFECTIVE DATE OF AGREEMENT
This Agreement and all obligations hereunder are expressly conditioned
upon (i) acceptance for filing by the FERC by a final, nonappealable
order, without change, modification, or refund conditions; (ii) receipt
of a final, nonappealable order of the LPSC approving MEMBER's execution
of this Agreement as prudent; and (iii) upon the granting of all other
necessary regulatory approvals and authorizations required by law. SWECO
shall file this Agreement with the FERC and request that the Agreement
become effective as of the Effective Date. This Agreement shall become
effective on the date specified by the FERC in such order accepting this
Agreement for filing.
13.6 TERM
Unless terminated sooner in accordance with Article XII of this
agreement, the provisions of this Agreement shall continue in effect
from the first day of the month in which the Effective Date occurs
through and including December 31 of the twenty-fifth Contract Year.
SWECO and MEMBER shall negotiate in good faith to execute a separate
agreement three years prior to the such termination date, to establish
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the ownership, operation, and maintenance of the Common Facilities
listed in Schedule E to this Agreement that will be in-service at the
projected termination date.
13.7 COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.8 AMENDMENTS
This Agreement may be amended only by a written Agreement executed by
both Parties. The Agreements by and between SWECO and each of the Group
members are separate contracts, and any amendment to a contract shall
only be binding and enforceable upon SWECO and the Group member that are
parties thereto and said amendment shall not require the amendment of
other agreements between SWECO and other Group members.
13.9 FURTHER ASSURANCES
Each Party will execute such further documents and instruments and
take such further actions as may be reasonably requested by the other
Party in order to carry out and perform this Agreement in accordance
with its terms.
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13.10 SCHEDULES
Schedules referred to herein and attached hereto are made a part
hereof for all purposes.
13.11 SEVERABILITY OF CONTRACT PROVISIONS
In the event any material term, covenant or condition of this
Agreement, or any amendment hereto shall be held invalid, illegal or
unenforceable as to any Party by any court or regulatory authority
having jurisdiction, all remaining provisions of this Agreement not
affected by such judgment or order shall continue in full force and
effect. The Parties shall conduct good faith negotiations and use best
efforts in reaching a mutually acceptable written Agreement to replace
deleted provision(s) that will most nearly accomplish the purpose and
intent of the said deleted provision(s).
13.12 SEVERABILITY OF MEMBER CONTRACTS
If a power supply and service agreement between SWECO and any other
member of the Group is held invalid, illegal or unenforceable by any
court or regulatory authority having jurisdiction or in the event that
any MEMBER contract is rejected, canceled or terminated for any reason
whatsoever, this Agreement shall nevertheless remain in full force and
effect.
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13.13 COMPUTATION OF TIME
In computing any period of time, prescribed or allowed by this
Agreement (other than the beginning and ending dates of a billing
month), the day of the act, event, or default from which the designated
period of time begins to run shall not be included. The last day of the
period so computed shall be included unless it is a Saturday, Sunday, or
legal holiday, in which event the period shall run until the end of the
next business day which is neither a Saturday, Sunday, nor legal
holiday.
13.14 LIMITATION
This Agreement is not intended to and shall not create rights of any
character whatsoever in favor of any person, corporation, association,
or entity other than the Parties to this Agreement, and the obligations
herein assumed are solely for the use and benefit of the Parties to this
Agreement, their successors in interest, or assigns.
13.15 WAIVERS
A waiver by a Party of a default by the other Party shall not be
deemed a waiver of any other or subsequent default.
13.16 REGULATION
This Agreement is subject to approval by the regulatory authorities
having jurisdiction. This Agreement is also subject to applicable
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federal, state, and local laws, ordinances, rules, and regulations.
Nothing herein contained shall be construed as a waiver of any right to
question or contest any such law, ordinance, rule, regulation or
asserted regulatory jurisdiction.
13.17 REASONABLENESS OF RATES - PRE-ESTABLISHED RATE CONTRACT
This Agreement reflects negotiated, "market based"
rates and a pricing regime established by the Parties that takes into
account the MEMBER's present and projected needs for electric capacity
and energy, the costs of the power supply resources that SWECO shall
acquire as contemplated by this Agreement and the power supply
alternatives available to MEMBER. The parties agree that the rates and
other pricing modalities established hereunder are just and reasonable
and take into account specific benefits expected to be achieved by the
Parties by this Agreement and not otherwise available to the Parties.
13.18 ROUNDING
Whenever the provisions of this Agreement require the use of kilowatts
or kilowatt-hours, the actual kilowatt or kilowatt-hour figure involved
shall be adjusted by rounding upward to the next full kilowatt or
kilowatt-hour if the actual figure is 0.5 kilowatt or kilowatt-hour, or
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higher, or downward to the last full kilowatt or kilowatt-hour if the
actual figure is less than 0.5 kilowatt or kilowatt-hour.
13.19 SURVIVORSHIP OF OBLIGATIONS
The termination or cancellation of this Agreement shall not discharge
any Party from any obligation it owes to the other Party under this
Agreement by reason of any transaction, loss, cost, damage, expense or
liability which shall occur or arise prior to such termination. It is
the intention of the Parties that any such obligation owed (whether the
same shall be known or unknown as of the termination or cancellation of
this Agreement) shall survive the termination or cancellation of this
Agreement. The Parties also intend that the indemnification and
limitation of liability provisions contained in ARTICLE XI hereof shall
remain operative and in full force and effect, regardless of any
termination or cancellation of this Agreement, except with respect to
actions or events occurring or arising after such termination or
cancellation is effective.
13.20 FORCE MAJEURE
Except as specifically otherwise provided in this Agreement, neither
Party shall be liable to the other Party for failure to perform its
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obligations under this Agreement (other than an obligation to pay money)
when such failure is attributable solely to Force Majeure. Force Majeure
shall mean any cause beyond the reasonable control of either Party,
including, without limitation, failure, or imminent threat of failure,
of facilities or equipment, flood, freeze, earthquake, storm, fire,
lightning, other acts of God, epidemic, war, acts of a public enemy,
riot, civil disturbance or disobedience, strike, lockout, work
stoppages, other industrial disturbance or dispute, labor or material
shortage, sabotage, restraint by court order or other public authority,
and action or non-action by, or failure or inability to obtain the
necessary authorizations or approvals from, any governmental agency or
authority, which by the exercise of due diligence such Party could not
reasonably have been expected to avoid and by exercise of due diligence
it could not overcome. Nothing contained herein shall be construed so as
to require the Parties to settle any strike, lockout, work stoppage or
any industrial disturbance or dispute in which it may be involved, or to
seek review of or take an appeal from any administrative or judicial
action.
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Neither the sale by SWECO to the MEMBER of electric capacity and
associated energy under this Agreement, nor any other provision of this
Agreement, shall constitute either (i) a sale, lease, transfer,
dedication or conveyance of an ownership interest in or to any asset of
SWECO or (ii) an entitlement to the electric capacity or associated
energy from any specific SWECO asset. SWECO shall have the sole
authority, which it may exercise in its discretion, to manage, control
and operate all SWECO resources, subject to SWECO's obligations to
provide electric capacity and associated energy to the MEMBER pursuant
to this Agreement.
In the event of an interruption of service, SWECO and the MEMBER shall
use all due diligence to restore their respective systems to enable the
delivery and receipt of electric capacity and energy. In the event of a
power shortage, or an adverse condition or disturbance, SWECO may,
without incurring liability, take such emergency action as, in the
judgment of SWECO, may be necessary; provided that SWECO in determining
the action to be taken shall make no adverse distinction against MEMBER
Load. Such emergency action may include, but shall not be limited to,
reduction or interruption of the supply of electricity to some Points of
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Delivery in order to compensate for an emergency condition on the system
of SWECO, or on any other directly or indirectly interconnected system.
13.21 AUTHORITY OF MEMBER
MEMBER represents and warrants that by resolutions duly adopted at a
properly called and noticed meeting of MEMBER's Board of Directors at
which a quorum was present and otherwise, MEMBER has taken all necessary
corporate action required by MEMBER's Articles of Incorporation and
Bylaws to be taken to authorize MEMBER's execution, delivery and
performance of this Agreement and that this Agreement constitutes a
valid and legally binding obligation of MEMBER. MEMBER will provide
SWECO with copies of such resolutions.
13.22 WARRANTIES
THE PARTIES HAVE EXECUTED THIS AGREEMENT IN RELIANCE SOLELY ON THE
EXPRESS WARRANTIES AND COVENANTS CONTAINED HEREIN. THE PARTIES EXPRESSLY
DISCLAIM AND NEGATE ANY AND ALL OTHER REPRESENTATIONS OR WARRANTIES,
EXPRESSED OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY OF (1)
MERCHANTABILITY, (2) CONFORMITY TO MODELS OR SAMPLES, AND (3) FITNESS
FOR A PARTICULAR PURPOSE.
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IN WITNESS WHEREOF, SWECO and MEMBER have caused this Agreement to be
executed in multiple copies in their names by their respective duly authorized
officials as of the date and year first above written.
SOUTHWESTERN WHOLESALE ELECTRIC
COMPANY
By: _____________________________
ATTEST:
- ---------------------------
MEMBER COOPERATIVE ASSOCIATION
By: _____________________________
General Manager
ATTEST:
- ------------------------
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SCHEDULE A
RATES AND CHARGES FOR MEMBER BASE SUPPLY SERVICE
1.1 For MEMBER Base Supply SWECO shall bill MEMBER each month a Demand
Charge, an Energy Charge, and a Fuel Cost Charge and all other charges
and credits contemplated by this Agreement to be applicable to MEMBER
Base Supply Service, including without limitation the Rate Fund Credits,
Wheeling Charges and Facilities Charges described in this Schedule A.
1.2 The Demand Charge for MEMBER Base Supply at a Point of Delivery shall be
equal to the Demand Rate shown below times the Kilowatts of Billing
Demand associated with MEMBER Base Supply, subject to adjustment in
accordance with Section 8.5 for extended outages.
1.3 To determine the Kilowatts of Billing Demand that are associated with
MEMBER Base Supply furnished by SWECO to a Point of Delivery during a
Billing Month, SWECO shall perform the following calculations:
Step 1: SWECO shall separately determine (for each hour of the
Billing Month being analyzed) MEMBER's total demand for
power at each MEMBER Point of Delivery by reference to
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actual metered values, including without limitation metered
amounts of the kilowatts of capacity supplied by any
Qualifying Facility to serve Member Load located behind a
Point of Delivery (Total Demand).
Step 2: SWECO shall subtract from Total Demand (for each hour of
the Billing Month being analyzed) the sum of (a) the
kilowatts of MEMBER Hydro (after adjustment for losses in
delivery) available for delivery to the Point of Delivery
during the Billing Month plus (b) the kilowatts of any
Extraordinary Load (after adjustment for losses in delivery)
served during the hour being analyzed plus (c) the kilowatts
of any Separately Metered Load of MEMBER occurring during
such hour plus (d) the kilowatts associated with capacity
scheduled for delivery from Other Resources (after
adjustment for losses in delivery) and allocated to the
MEMBER's Points of Delivery in proportion to the ratio of
the Maximum Point of Delivery Demand in the Billing Month at
the Point of Delivery to the sum of the Maximum Point of
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Delivery Demands for all MEMBER's Points of Delivery
(Adjusted Total Demand). The MEMBER Hydro available for
delivery to the Point of Delivery shall be equal to the
amount of MEMBER Hydro available in the current Contract
Year times the ratio of (x) the highest Maximum Point of
Delivery Demand established for the Point of Delivery in the
immediately preceding Contract Year and (y) the sum of the
highest Maximum Point of Delivery Demands established for
all MEMBER'S Points of Delivery in such Contract Year.
Step 3: The Kilowatts of Demand associated with MEMBER Base
Supply furnished to the Point of Delivery during the current
Billing Month shall be the higher of the following measures:
(1) the highest hourly Adjusted Total Demand at the Point of
Delivery determined in Step 2 for any hour in the Billing
Month; or (2) 70% of the highest hourly Adjusted Total
Demand at the Point of Delivery established during any hour
of the immediately preceding months of June, July, August or
September.
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Step 4: If the Billing Month for which a bill is being prepared
occurs in the Benchmark Year or any Contract Year prior to
the Benchmark Year, the total Kilowatts of Billing Demand
associated with MEMBER Base Supply for the current Billing
Month shall be the sum of the Kilowatts of Demand determined
in accordance with Steps 1-3 for all MEMBER Points of
Delivery. If the Billing Month for which a bill is being
prepared occurs in any Contract Year after the Benchmark
Year, the Demand Charge for MEMBER Base Supply shall be
equal to the product of the Demand Rate shown below and the
lesser of (a) the sum of the Kilowatts of Demand determined
for the current Billing Month in accordance with Steps 1-3
for all MEMBER Points of Delivery or (b) the highest
Kilowatts of Demand established for all MEMBER Points of
Delivery determined in accordance with Steps 1-4 in any
Billing Month of the Benchmark Year plus any load billed to
MEMBER under Schedule A-3 of this Agreement in such Billing
Month.
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Step 5: If clause (b) of Step 4 is used to determine Demand Charges
for MEMBER Base Supply for the Billing Month and if
requested by MEMBER, SWECO will allocate the aggregate
Demand Charges to MEMBER so determined among MEMBER's Points
of Delivery in the proportion that Adjusted Total Demand at
a Point of Delivery bears to the sum of the Adjusted Total
Demands at all MEMBER's Points of Delivery.
1.4 DEMAND RATE
A.SCHEDULE OF DEMAND RATES
The Demand Rate shall be $5.99 per kilowatt from the Effective
Date through December 31, 1999.
The Demand Rate shall be $6.24 per kilowatt from January 1, 2000
through December 31, 2000.
The Demand Rate shall be $6.51 per kilowatt from January 1, 2001
through December 31, 2001.
The Demand Rate shall be $6.73 per kilowatt from January 1, 2002
through December 31, 2002.
The Demand Rate shall be $6.93 per kilowatt from January 1, 2003
through December 31, 2003.
The Demand Rate shall be $7.31 per kilowatt from January 1, 2004
through December 31, 2004.
The Demand Rate shall be $7.51 per kilowatt from January 1, 2005
through December 31, 2005.
The Demand Rate shall be $7.71 per kilowatt from January 1, 2006
through December 31, 2006.
The Demand Rate shall be $7.92 per kilowatt from January 1, 2007
through December 31, 2007.
The Demand Rate shall be $8.12 per kilowatt from January 1, 2008
through December 31, 2008.
The Demand Rate shall be $8.55 per kilowatt from January 1, 2009
through December 31, 2009.
The Demand Rate shall be $8.75 per kilowatt from January 1, 2010
through December 31, 2010.
The Demand Rate shall be $8.94 per kilowatt from January 1, 2011
through December 31, 2011.
The Demand Rate shall be $8.74 per kilowatt from January 1, 2012
through December 31, 2012.
The Demand Rate shall be $8.66 per kilowatt from January 1, 2013
through December 31, 2013.
The Demand Rate shall be $8.82 per kilowatt from January 1, 2014
through December 31, 2014.
The Demand Rate shall be $8.72 per kilowatt from January 1, 2015
through December 31, 2015.
The Demand Rate shall be $8.59 per kilowatt from January 1, 2016
through December 31, 2016.
The Demand Rate shall be $8.46 per kilowatt from January 1, 2017
through December 31, 2017.
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The Demand Rate shall be $8.31 per kilowatt from January 1, 2018
through December 31, 2018.
The Demand Rate shall be $8.13 per kilowatt from January 1, 2019
through December 31, 2019.
The Demand Rate shall be $7.94 per kilowatt from January 1, 2020
through December 31, 2020.
The Demand Rate shall be $7.73 per kilowatt from January 1, 2021
through December 31, 2021.
The Demand Rate shall be $7.50 per kilowatt from January 1, 2022
through December 31, 2022.
The Demand Rate shall be $7.26 per kilowatt from January 1, 2023
until termination of the Agreement.
B. ADJUSTMENT TO DEMAND RATES.
The foregoing Demand Rates shall be subject to increase to account for
the cost of plant additions required to comply with new or changed legal
requirements first imposed after the Effective Date, including but not
limited to plant additions required to comply with:
a. environmental legislation or regulation enacted
or promulgated after the Effective Date, as
provided in Section 1.8 of this Schedule A, or
b. or occupational safety and health laws or
regulations enacted or promulgated after the
Effective Date,
but not for any penalties, fines costs or expenses imposed on SWECO as a
result of SWECO's noncompliance, breach or violation of any
environmental or occupational safety and health law or regulation or
other laws, rules, regulations or ordinances.
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C. COSTS COVERED BY STATED BASE RATES.
Except as provided otherwise in Section 1.3 of this Schedule A, the
Parties intend that the following costs shall be deemed to be recovered
by the Demand Rate (DR) and the Energy Rate (ER):
a. plant site coal handling operations and maintenance expenses;
b. reserve capacity (whether owned or purchased from third parties)
required to be provided by SWECO under this Agreement;
c. the initial planned heat rate upgrades to the plants acquired
from the Cajun estate;
d. any and all ad valorem taxes assessed on the capital improvements
referenced in Section 1.6(b)(iii)(C) that were identified prior
to MEMBER's execution of this Agreement, except such taxes on
rail cars included in such capital improvements.
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1.5 The Energy Charge shall be equal to the Energy Rate times the sum of the
kilowatt-hours metered at the MEMBER Points of Delivery that are
associated with the energy component of MEMBER Base Supply for the
Billing Month. The Energy Rate shall be $0.0033 per kilowatt-hour for
Contract Years 1 through 5 and shall be $0.003 per kilowatt-hour for
Contract Years 6 through 25. To determine the kilowatt-hours that are
associated with the Energy component of MEMBER Base Supply for the
Billing Month, SWECO shall perform the following calculations:
Step 1: SWECO shall separately determine for each MEMBER
Point of Delivery the total kilowatt-hours metered at such
Point of Delivery during the Billing Month plus the kilowatt
hours of energy delivered to serve Member Load from a
Qualifying Facility located behind such POD and subtract
from such total kilowatt-hours the kilowatt-hours associated
with (a) Extraordinary Load, (b) separately metered load
that is billed under Schedule A-3 of this Agreement and (c)
any Separately Metered Load of MEMBER. The net amount is
referred to below as Total Energy.
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Step 2: SWECO shall sum the kilowatt-hours of energy scheduled to
all MEMBER Points of Delivery during the Billing Month from
MEMBER Hydro Energy and from permitted Other Resources.
Step 3: SWECO shall adjust the amount determined in Step 2 to
take account of losses in delivery to the MEMBER's Points of
Delivery and shall allocate the adjusted amount to each
MEMBER Point of Delivery in the proportion the
kilowatt-hours metered at such Point of Delivery bears to
the sum of the kilowatt-hours metered at all MEMBER Points
of Delivery for the Billing Month.
Step 4: For each MEMBER Point of Delivery, SWECO shall subtract
the amount determined in Step 3 from the Total Energy
determined for such Point of Delivery in Step 1.
Step 5: If the Billing Month occurs in the Benchmark Year or a
Contract Year that precedes the Benchmark Year, the
kilowatt-hours associated with the energy component of
MEMBER Base Supply for the Billing Month shall be the amount
(in kilowatt-hours) determined in Step 4. If the Billing
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Month occurs in a Contract Year after the Benchmark Year,
the kilowatt-hours associated with the energy component of
MEMBER Base Supply for the Billing Month shall be an amount
(in kilowatt-hours) equal to the lesser of (x) the amount
determined in Step 4 or (y) the Point of Delivery allocation
which is equal to: 1) the MEMBER Share of Project Capacity
Energy for all hours of the Billing Month; 2) plus any
Project Capacity Energy in excess of its MEMBER Share
provided to MEMBER in accordance with Section 1.21 of this
Agreement; and 3) for purposes of clause (y) above Project
Capacity Energy shall be allocated to the Point of Delivery
in the manner described in Step 3.
COMPETITIVE TERRITORY CREDITS
In any Billing Month in which Member qualifies for use of the funds
specified in Section 11.10 of this Agreement, the Member may elect to
receive a credit on its next monthly bill equal to the amount determined
in accordance with Section 11.10.
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1.6 The monthly Fuel Cost Charge (FCC) shall be equal to the Fuel Cost Rate
(FCR) times the monthly sum of the kilowatt-hours determined in Step 5
described in Section 1.5 of this Schedule A. The FCR shall be an amount
computed monthly in accordance with the following formula:
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FCR = F.C.-N.M.C.+E.P.+ R.P.C.-S.E.
KWH
Definitions:
F.C. = the total costs incurred in the Billing Month for
fuel consumed in Project Capacity generating plants
N.M.C.= the average fuel costs incurred in the Billing
Month associated with the use by SWECO of Project
Capacity generating plants to generate energy for
sale to purchasers that are not Group members after
deducting the fuel costs associated with sales
under the SMEPA Contract
E.P. = the costs incurred in the Billing Month for power
or energy purchased over a period of twelve months
or less where the total cost of the purchase is
less than SWECO's total avoided variable cost, and
where SWECO has available Project Capacity adequate
to generate the amount of energy that is purchased
R.P.C.= the cost of replacement power permitted by Section
8.5 of this Agreement to be passed through to
MEMBER
S.E. = the fuel costs incurred by SWECO in the Billing
Month to generate energy using the Project Capacity
generating plants to furnish Supplemental Supply or
to supply energy to serve loads billed pursuant to
Schedule A-3 to this Agreement or similar
agreements with other Group members
KWH = the sum for the Billing Month of the
kilowatt-hours determined in Step 5 described in
Section 1.5 of this Schedule A and in Schedule A to
all other agreements between SWECO and other Group
members for all Group Points of Delivery less the
kilowatt-hours of energy supplied in such Billing
Month to the Points of Delivery from Qualifying
Facilities
For purposes of the foregoing formula, the Parties agree that fuel costs
include (a) all costs that are properly chargeable to Account 501 of the
FERC's Uniform System of Accounts for Public Utilities and a reasonable
return on and return over ten years of, and all operating and
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maintenance expenses associated with, any capital investment made by
SWECO in fuel-related facilities that in advance of SWECO's commitment
of capital all members of the Group have agreed can be expected to
provide a net benefit to the Group and (b) any such capital related
costs associated with investments in fuel-related facilities identified
prior to the date of execution of this Agreement that by executing this
Agreement MEMBER agrees should be made.
Notwithstanding the foregoing sentence, however, the Parties further
agree that: (1) during any period in which the fuel-related facilities
identified prior to the date of execution of this Agreement are not used
to the benefit of the Group, and as a result MEMBER would experience
increased coal costs, the cost of such facilities will not be included
in fuel costs, but SWECO shall have the sole right of redress against
any third party arising from such circumstances; and (2) fuel costs
shall not include costs of compliance with laws and regulations in
effect on January 1, 1998 that limit emissions of sulfur dioxide.
The FCC for any Billing Month shall be estimated by applying the most
current previous Billing Month's actual FCR available. Any difference
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between the estimated FCC and the actual FCC shall be billed or credited
to the MEMBER on the first bill rendered after the actual FCR for such
Billing Month has been determined. The FCR shall be calculated to the
nearest $0.00001 and when applied the result will be rounded to the
nearest cent.
1.7 On the date of execution of this Agreement, MEMBER shall, in relation to
MEMBER Base Supply service, elect either to: (1) pay the FCC determined
in accordance with the FCR formula described in paragraph 1.6 above
beginning on the Effective Date; (2) to pay an adjusted FCC determined
in accordance with the FCR formula described in paragraph 1.6 above but
assuming that all coal-fired Project Capacity has a heat rate of 10,600
when determining the fuel costs associated with coal burned in such
coal-fired Project Capacity; or (3) to pay the fuel costs determined by
using the following fixed fuel factors for such service beginning on the
Effective Date and ending on December 31, 2008, unless in Contract Year
5 MEMBER elects to pay the FCC determined in accordance with clause (1)
or clause (2) for Contract Years 6 through 10.
CONTRACT YEAR FIXED FUEL FACTOR
1998-99 $ 0.01677
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2000 0.01638
2001 0.01582
2002 0.01539
2003 0.01505
2004 0.01424
2005 0.01387
2006 0.01352
2007 0.01316
2008 0.01282
Such election shall be made effective beginning on the Effective Date.
On or before the first day of June in Contract Years 5, 10, 15 and 20,
SWECO shall inform MEMBER of the fixed fuel factors that would apply to
billings for MEMBER Base Supply service provided in the five-year
periods beginning on the first day of Contract Years 6, 11, 16 and 21,
respectively. On or before the first day of September in Contract Years
5, 10, 15, and 20, MEMBER shall advise SWECO of MEMBER's election to pay
for fuel costs for the subsequent five-year period based on either: (a)
fixed fuel factors; or (b) a monthly FCR determined in accordance with
paragraph 1.6 above with reference to actual heat rates; or (c) a
monthly FCR determined in accordance with paragraph 1.6 above based on
an assumed heat rate for coal-fired Project Capacity of 10,600. In the
event MEMBER makes an initial election pursuant to this Section 1.7 to
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pay the fixed fuel factors listed above, MEMBER may not elect to pay for
fuel using the fixed fuel factors offered in Contract Year 5 for
application in the five Contract Years beginning with Contract Year 6.
1.8 OTHER CHARGES.
MEMBER and SWECO agree that the demand rates set forth in this Schedule
A reflect all ad valorem taxes that apply to the Project Capacity as of
January 1, 1998. MEMBER and SWECO further agree that none of the rates
described in this Schedule A makes provision for the potential effects
of new or additional sales, excise, or other applicable taxes (excluding
income taxes), fees and charges incurred in accordance with federal,
state or local law other than increases in ad valorem taxes associated
with assets purchased by SWECO from the Cajun estate resulting from the
change in ownership. For purposes of this Agreement, "new or additional
sales, excise or other applicable taxes and fees and charges" shall be
construed to mean any such taxes, fees and charges enacted after the
date hereof or that are increased after the date hereof for any reason
other than the nature or identity of the new owner of the Cajun assets.
Any expense incurred by SWECO as the result of the imposition of any
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such new or additional taxes shall be appropriately allocated to and
paid by MEMBER and other members of the Group.
1.9 ENVIRONMENTAL LEGISLATION.
Except as provided under Section 1.4 of this Schedule A, MEMBER and
SWECO agree that the rates contained in this Agreement make no provision
for the potential effects of new environmental control legislation or
the additional costs of providing electric service to MEMBER resulting
from any such legislation. Any such costs resulting from such
legislation shall be appropriately allocated to and paid by MEMBER.
1.10 RATE FUND CREDITS.
SWECO will establish an interest bearing Rate Fund to be used beginning
in Contract Year Six to ameliorate unanticipated fuel costs. SWECO shall
establish the Rate Fund by depositing $12,240,000 in an interest bearing
account on or before the last business day of Contract Year Six. No
later than the end of the first quarter of each of Contract Years Seven
through Twenty-five and the end of the first quarter of the calendar
year following Contract Year Twenty-five, SWECO will determine whether
the average cost of MEMBER Base Supply to the Group members that elected
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to pay the FCC determined in accordance with the FCR formula set forth
in Section 1.6 of this Schedule A exceeded 40 mills per kWh for the
immediately preceding Contract Year (taking into account the effect on
such average costs of Group Hydro deliveries to all such Group members).
The Rate Fund, including accumulated interest, will be used (to the
extent of remaining funds) to return to each Group member that elected
to pay the FCC determined in accordance with the FCR formula set forth
in Section 1.6 of this Schedule A an amount per kWh of MEMBER Base
Supply energy delivered by SWECO in the preceding Contract Year equal to
the amount charged all such Group members for MEMBER Base Supply service
that exceeded 40 mills/kWh on average (taking into account the effect on
such average costs of Group Hydro deliveries to such Group members). The
Rate Fund will be so applied to billings for Contract Year Six through
Twenty-five or until depleted if the Rate Fund is depleted before the
end of Contract Year Twenty-five. Any such credit to which MEMBER is
entitled in respect of Contract Years Seven through Twenty-five shall be
applied in equal dollar amounts to bills for the Billing Months of May
through August in the year in which such credit is determined. Any
credit relating to service during the last Contract Year shall be paid
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to MEMBER no later than April 30 of the following calendar year. Any
amounts remaining in the Rate Fund after application, if any, of the
Rate Fund to reduce amounts billed in Contract Year Twenty-five shall be
returned to SWECO for its sole use and benefit.
1.11 WHEELING CHARGE.
Each monthly bill to MEMBER shall reflect adjustments, charges, fees or
penalties relating to transmission and Ancillary Services charged SWECO
by a Transmission Supplier in connection with service to the MEMBER
Points of Delivery in accordance with Sections 5.2 and 8.2 of this
Agreement. Such Transmission Supplier costs shall be allocated to
individual MEMBER Points of Delivery in accordance with Section 5.2.
SWECO agrees to provide MEMBER information concerning any such charges,
fees or penalties imposed by a Transmission Supplier. Charges for
services provided to MEMBER under SWECO's Open Access Transmission
Tariff shall be billed to MEMBER separately.
1.12 FACILITIES CHARGE.
In addition to the other charges contemplated by this Schedule A MEMBER
shall also pay to SWECO each month a Facilities Charge determined in
accordance with Article VI of this Agreement.
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1.13 CREDIT FOR LOAD SERVED BY QUALIFYING FACILITY
SWECO shall provide any credits due MEMBER during the Billing Month for
capacity and energy provided to MEMBER by a qualifying Facility that
contracts directly with MEMBER in accordance with Section 8.6 of this
Agreement. Such credit shall be equal to the capacity and energy related
compensation SWECO would have been required by pay such Qualifying
Facility for such capacity and energy, in accordance with the rules of
the LPSC, had such Qualifying Facility elected to require SWECO to
purchase its output.
1.14 ECONOMIC DEVELOPMENT RIDER CREDITS
SWECO shall credit MEMBER's bill each month for any credits available in
accordance with Schedule A-1 or A-2 of this Agreement.
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SCHEDULE A-1
ECONOMIC DEVELOPMENT RIDER
AVAILABILITY
This Rider is available to MEMBER in connection with the sale by SWECO
to MEMBER of wholesale electricity pursuant to this Agreement to the extent used
by MEMBER to serve any retail customer (Customer) that meets the requirements of
this Rider. Otherwise, all provisions of this Agreement will apply to the
provision of power and energy to MEMBER needed to serve such Customer except as
modified herein. SWECO shall accept new applications for this Rider as long as
service to the new or additional load to which a new application relates would
not cause Group Load to exceed Project Capacity. SWECO reserves the right to
accept a new application for this Rider that would result in Group Load
exceeding Project Capacity if SWECO determines that so doing would be mutually
beneficial to SWECO and MEMBER.
To qualify for use of the Rider the Customer must meet all of the
following requirements:
1) The load of the Customer that qualifies for use of this Rider
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must be a new load of a new Customer of at least 300 kW or an
additional load of an existing Customer of at least 300 kW.
2) Businesses and industries eligible for service under this
Rider must fall within one of the following categories;
* Industries manufacturing a product for sale or resale;
* Regional warehousing and distributing facilities;
* Scientific and industrial research and development facilities;
* Corporate relocations to MEMBER's service area in which the
Corporation takes electric service in its own name;
* Petroleum and chemical refineries, pipeline pumping and pipeline
compressor loads;
* Process and storage industries;
* Agricultural-related industries;
* Mining industries;
* Any other category of industry which SWECO and MEMBER agree
should be eligible for electric service under this Rider; and
* Governmental agencies (including correctional institutions).
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3) Service under this Rider is available only if MEMBER has a
contract for electric service with a new Customer for a new load
that has an initial term of at least five years or a contract
for electric service with an existing customer (whose qualifying
load is an additional load) that has a remaining term of at
least five years and that in either case such contract requires
at least thirty (30) days advance notice to cancel after such
contract term has expired.
4) Prior to service being rendered under this Rider, MEMBER must
furnish SWECO a copy of MEMBER's contract with Customer and a
written statement from Customer confirming that this Rider was
an important contributing factor in Customer's decision to open
a new facility or expand an existing facility.
5) This Rider is not available to additional load from Customers
that have begun construction or installation of equipment prior
to the effective date of this Rider.
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6) Resumption of service to load that has been inactive 12 months
or more that meets the requirements of this Rider is eligible.
DEFINITION OF BASE PERIOD
The Base Period shall be the 12 months immediately preceding the month
that service is requested under this Rider, or as mutually agreed upon by the
SWECO and MEMBER.
DETERMINATION OF MONTHLY BASE DEMAND THRESHOLD
The Monthly Base Demand Threshold for an existing Customer that adds
load that is eligible for credit under this Rider shall be the kilowatts of
Metered Demand for the month of the Base Period that corresponds to the Billing
Month; provided, however, that the kilowatts of Billing Demand for any month of
the Base Period may be adjusted as mutually agreed upon by SWECO and MEMBER to
reflect the Customer's normalized load profile. The Monthly Base Demand
Threshold for a new Customer's new load shall be zero.
DETERMINATION OF ECONOMIC DEVELOPMENT DEMAND CREDIT
The credit for Economic Development Demand subject to the provisions of
this Rider shall be applied in each Billing Month in which the Customer's
metered demand above the Monthly Base Demand Threshold exceeds 300 kW. In any
month in which MEMBER qualifies for such credit, the credit shall be applied to
all demand above the Monthly Base Demand Threshold. The credit shall be applied
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to the coincident demand impact of the MEMBER's Customer's additional or new
load on MEMBER's Point of Delivery and such demand impact shall be subject to
verification by SWECO personnel.
ECONOMIC DEVELOPMENT DEMAND CHARGE CREDIT FACTORS DEMAND CREDIT
Year 1-First 12 monthly billing periods 50%
Year 2-Next 12 monthly billing periods 40%
Year 3-Next 12 monthly billing periods 30%
Year 4-Next 12 monthly billing periods 20%
Year 5-Next 12 monthly billing periods 10%
SPECIAL TERMS AND CONDITIONS
Customer load will be disqualified from this Rider if the Kilowatts of
Billing Demand for 12 consecutive months is below the corresponding Monthly Base
Demand Threshold.
MEMBER shall be responsible for the costs of providing the necessary
metering and related telecommunications equipment and will send to SWECO by
facsimile or other electronic transfer hourly load data required for billing
purposes no later than the third business day following the end of the Billing
Month to which such data relate.
SWECO and MEMBER will develop standard coincidence factors and load
profiles in lieu of real-time load data for given load categories to apply to
loads ranging from 300 kW to 1000 kW. For loads served under this Schedule A-1
that exceed 1000 kW, MEMBER shall furnish real-time metering at the retail
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customer's premises and related telecommunications equipment that will be
adequate to assure to SWECO its reliable real-time access to metered measurement
of the Customer's hourly use of electricity.
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SCHEDULE A-2
ECONOMIC DEVELOPMENT CREDITS RIDER
AVAILABILITY
This rider is available to MEMBER in connection with sales by SWECO to
Member of wholesale electricity pursuant to this Agreement when such electricity
is used by MEMBER to serve any retail customer under purchase incentive
arrangements by which MEMBER offers to the retail customer qualifying credits to
encourage economic development.
QUALIFICATIONS
Subject to the conditions set forth below, SWECO will match any energy
credits given by MEMBER for new loads or additions to existing loads of at least
100 kW and that increase employment by at least 26 permanent full-time jobs or
the equivalent number of full-time and part-time jobs.. SWECO will make such
credits available to MEMBER if it has contracted with an all-requirements
customer to add a new or expanded load of at least 100 kW, and the customer's
new or additional load is 100 kW or more in at least 8 months out of 12, and the
customer maintains increased employment of at least 26 full-time permanent jobs.
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The energy credit shall be provided only for the months in which the customer's
new or expanded load is equal to or greater than 100 kW.
APPLICATION AND TERM OF ENERGY CREDIT
For qualifying loads, SWECO will match energy credits given by MEMBER up
to $0.00126/kWh. For new loads, the energy credit will be applied to the total
amount of energy supplied. For qualifying existing customers, the energy credit
will be applied to energy sales in excess of the energy sales in the
corresponding month of the base year, where the base year is defined to be the
twelve calendar months immediately preceding application for service under this
Rider. The matching energy credit will be applied to all qualifying loads for a
period of up to 5 years for up to 10,000,000 kWh annually per customer.
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SCHEDULE A-3
RATES AND CHARGES FOR EXISTING INCENTIVE LOAD CUSTOMERS
A. Experimental Economic Development Service (EEDS) - Existing
1.1 EEDS Rate - Subject to the election of Member, SWECO shall
charge the EEDS rates set forth in this section to MEMBER for
MEMBER'S customers which qualified under Cajun's EEDS rate as of
the Effective Date of this Agreement and which do not receive
any other special rates.
1.2 Existing EEDS Customers
The Members of the Group with existing EEDS customers are listed
below:
Member EEDS Customer Beginning Termination
Cooperative Customer Number Date Date
- -------------------------------------------------------------
Beauregard Union BEC00000 7/97 6/04
Resources
Beauregard Southern BEC00000 3/96 2/04
Wood
Claiborne ConAgra CLA00000 5/92 4/00
Claiborne Wilamette CLA00000 4/96 3/04
Claiborne Wilamette 8DC00000 10/98 9/06
Jeff Davis Shell 0DC00000 12/90 11/98
Jeff Davis Nottie JDC00000 3/98 ?/05
Jeff Davis Global JDC00000 4/98 3/05
Northeast Midvalley NEL00000 8/90 7/98
SLECA La. SLE00000 5/92 2/00
Interstate
Gas
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SLECA Global Plus SLE00000 1/92 12/98
SLECA Weatherford SLE00000 2/93 1/00
SLEMCO Liberty Rice SLM00000 5/95 4/02
1.3 Demand Charge - The demand rate for service to EEDS customers will depend on
the number of years the EEDS customer has been receiving service under this
Schedule A-3 or the previous Cajun EEDS rate as shown above.
Demand Rate for
YEAR OF EXISTING EEDS CUSTOMER CONTRACT
(Dollars Per KW Month)
--------------- ---------------------------------- -------------
Year 8 and
Years Year 5 Year 6 Year 7 Thereafter
--------------- ---------------------------------- -------------
Above 69 kV $4.00 $5.00 $6.00 $7.00 Demand
Charge as
Specified
in Schedule A
At 69 kV $4.25 $5.25 $6.25 $7.25
Below 69 kV $4.50 $5.50 $6.50 $7.50
The EEDS demand rate will be applied at each Point of Delivery which services
one or more EEDS customers as follows: In the months of June, July, August, and
September, for each EEDS customer the applicable EEDS demand rate will be
applied to the higher of (1) 1,000 kW or (2) the EEDS customer's contribution to
the Maximum Point of Delivery Demand during the hours of 1:00 p.m. to 9:00 p.m.
Central Time in such Billing Month.
In all other months, for each EEDS customer the applicable EEDS demand rate
will be applied to 80% of the average of the kW's for which the EEDS customer
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was billed during each of the most recent June, July, August, and September.
1.4 Energy Charge - The energy charge per kWh for existing EEDS
customer contracts will be as shown below.
Existing EEDS Contract Year 1 Year78 and Thereafter
-------------------------------------------------------------
$.006 Energy Charge Specified in
Schedule A
1.5 Fuel Charge - The fuel charge per kWh for existing EEDS customer contracts
shall be as shown below.
Existing EEDS Contract Year 1-7 Year 8 and Thereafter
-------------------------------------------------------------
$.016 Fuel Cost as Determined Under
Schedule A
1.6 Other Charges - During the existing term of the contract for the EEDS
customer, no other charges will be included in calculating the delivered cost to
the EEDS customer. All other charges specified in Schedule A of this Agreement
will apply for year 8 and afterwards.
1.7 Other Provisions - SWECO shall not be obligated to provide special rates to
the EEDS customers served under this Schedule A-3 upon the termination, at the
end of the seventh year, of the existing EEDS customer contract.
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B. Large Power Incentive Service (LPI) - Existing
1.1 LPI Rate - Subject to the election of MEMBER, SWECO shall
charge the LPI rates set forth in this section to MEMBER for
MEMBER'S customers which qualified under Cajun's LPI rate as of
the Effective Date of this Agreement and which do not receive
any other special rates.
1.2 LPI Existing Customers
The Members of the Group with existing LPI customers are shown
below.
MEMBER COOPERATIVE LPI CUSTOMER CUSTOMER NUMBER
--------------------------------------------------------------
Claiborne Lamamco Drilling LCLA000005
SLECA McDermotte W LSLE000001
SLECA McDermotte E LSLE000008
1.3 Application - The LPI rate applies only to wholesale power and energy that
will be resold to individual "all-requirements" customers which has contracted
with MEMBER at the Effective Date of this Agreement for a load equal to or
greater than 5,000 kW and whose actual load is 5,000 kW or more in at least
eight (8) months out of twelve (12). The LPI rate will be implemented only in
those months in which the LPI customer load is equal to or greater than 5,000
kW.
1.4 Demand Charge - The monthly demand rate for LPI customers will be equal
to the demand rate as shown below.
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$7.80 per kilowatt (kW) of billing demand for power delivered above 69 kV.
$8.25 per kilowatt (kW) of billing demand for power delivered at 69 kV.
$8.95 per kilowatt (kW) of billing demand for power delivered below 69 kV.
The billing demand at each Point of Delivery shall be the following:
1. During the billing months of June, July, August, and
September, the kilowatts consumed during Maximum Point of
Delivery Demand during the hours of 1:00 p.m. and 9:00
p.m. Central Time; and
2. For all other months, eighty percent (80%) of the average of the most
recent June, July, August, and September billing demands.
1.5 Energy Charge - The energy charge will be $.006 per kilowatt-hour (kWh).
1.6 Fuel Charge - The fuel charge will be $.016 per kilowatt-hour (kWh).
1.7 Other Charges - While this section is available for LPI customers, no other
charges will be included in calculating the delivered cost to the customer. All
other charges specified in Schedule A of this Agreement will be assessed after
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the expiration date provided for in Section 1.8 below.
1.8 Other Provisions - SWECO shall provide special rates to the LPI customers
served under this Schedule A-3 through 12/31/1999 and thereafter on a year to
year basis at SWECO's discretion. SWECO shall provide not less than one year
written notice of termination of LPI service to MEMBER.
C. Jobs Creation Incentive Credit (JCIC) - Existing
1.1 JCIC Rate - Subject to the election of MEMBER, SWECO shall charge
the JCIC rates set forth in this section to MEMBER for MEMBER'S customers which
qualified under Cajun's JCIC rate as of the Effective Date of this Agreement and
which do not receive any other special rates.
1.2 Availability - The JCIC rate is available to the Members of the Group which
had customers enrolled under the Cajun JCIC rider as of the Effective Date of
the Agreement. SWECO will provide a credit as noted in the table below for the
amount of energy supplied to each respective JCIC customer contracting with
MEMBER. The JCIC credit is subject to MEMBER offering energy credits equal to
the JCIC credit to the JCIC customer.
The Members of the Group, their JCIC customers and the amount of the JCIC credit
are listed below.
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Member Customer Start Termination Credit Amt
Cooperative Customer Number Date Date (4/kWh)
- -------------------------------------------------------------------------------
Claiborne McDonalds JCLA000002 9/93 8/99 .00126
Claiborne Temple Island JCLA000003 8/95 7/01 .00126
Claiborne ConAgra JCLA000001 3/92 2/98 .00126
Claiborne McDonalds #2 JCLA000004 11/96 10/99 .00126
Dixie Winn Dixie JCIX000002 11/93 10/99 .00426
Dixie KMART JCIX000003 4/95 3/01 .00426
Dixie Cal-Maine JCIX000001 8/92 7/98 .00126
SLECA Rainbow JSLE000017 1/95 12/00 .00126
SLECA Oil & Gas JSLE000024 3/94 2/00 .00126
SLECA La Com Mtn JSLE000011 1/92 12/97 .00063
SLECA Ryans JSLE000013 5/92 4/98 .00126
SLECA Walmart JSLE000023 11/94 10/00 .00126
SLECA Surgery Center JSLE000031 5/96 4/92 .00126
SLECA Copelands JSLE000032 6/96 5/02 .00426
SLECA Chet Morrison JSLE000016 10/93 9/99 .00426
SLECA Tomahawk JSLE000026 9/96 8/02 .00126
SLECA Service Marine JSLE000030 6/96 5/02 .00426
Teche AM Oil Divers JTEC000006 10/95 9/01 .00126
Teche Chart Coastal JTEC000007 10/95 9/01 .00426
Teche Southern Magic JTEC000004 9/91 8/97 .00063
Valley Campti JVEM000004 1/92 12/97 .00063
Valley Trus Joint JVEM000005 1/93 12/98 .00126
Valley Timberland 6/92 5/98 .00126
1.3 Demand Charge - The monthly demand rate for JCIC customers will be equal to
the demand rate as shown below.
$7.80 per kilowatt (kW) of billing demand for power delivered above 69 kV.
$8.25 per kilowatt (kW) of billing demand for power delivered at 69 kV.
$8.95 per kilowatt (kW) of billing demand for power delivered below 69 kV.
The billing demand at each Point of Delivery shall be the following:
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1. During the billing months of June, July, August, and
September, the kilowatts consumed during Maximum Point of
Delivery Demand during the hours of 1:00 p.m. and 9:00
p.m. Central Time; and
2.For all other months, eighty percent (80%) of the average of the most
recent June, July, August, and September billing demands.
1.4 Energy Charge - The JCIC credit will be applied to the following energy
charges. For each delivery point, the energy charge before applying the JCIC
credit shall be the sum of energy charges billed under Blocks 1 and 2 as
described below.
Block 1: For an amount of energy delivered which is less than
or equal to the product of the delivery point actual
monthly peak demand and the factor 300 kWh/kW, the rate
shall be:
$.00998 per kWh delivered above 69 kV.
$.01058 per kWh delivered at 69 kV.
$.01183 per kWh delivered below 69 kV.
Block 2: For all energy delivered above the quantity specified in
Block 1, above, the rate shall be $.00936 per kWh delivered.
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1.5 Fuel Charge - The fuel charge will be $.016 per kilowatt-hour (kWh).
1.6 Other Charges - During the existing term of the contract for the JCIC
customer, no other charges will be included in calculating the delivered cost to
the JCIC customer. All other charges specified in Schedule A of this Agreement
will be assessed after the initial contract period.
1.7 Other Provisions - SWECO shall not be obligated to provide special rates to
the JCIC customers served under this Schedule A-3 upon the termination of the
existing JCIC customer contract.
D. Very Large Power Incentive (VLP) - Existing
1.1 VLP Rate - Subject to the election of MEMBER, SWECO shall charge the VLP
rates set forth in this section to MEMBER or MEMBER'S customers which qualified
under Cajun's VLP rate as of the Effective Date of this Agreement and which do
not receive any other special rates.
1.2 Availability - The VLP Rate only applies to wholesale power that will be
resold by the MEMBER to customers whose load is at least 10,000 kW and no more
than 100,000 kW. Additionally, service under this section is available only to
customer whose load factors are at least 50%. For a customer to receive
interruptible service under this section, SWECO must have supervisory control
over the customer's delivery point. If a customer contracts for interruptible
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power, a minimum interruptible load of 7,000 kW shall be required. THE ONLY
QUALIFIED CUSTOMER AS OF THE EFFECTIVE DATE OF THIS AGREEMENT IS MG INDUSTRIES,
WHICH IS A BEAUREGARD CUSTOMER.
1.3 Customer Charge - $500 per month
1.4 Demand Charge - The monthly demand charges are as follows:
Firm Service: $7.15 per kW of billing demand.
Interruptible Subject to 60 minutes notice: $5.50 per kW of
interruptible billing demand.
Interruptible Subject to 5 minutes notice: $2.50 per kW of interruptible
billing demand.
FIRM SERVICE
The firm billing demand shall be the actual kilowatts (kW) consumed by the
retail customer during the sixty (60) minutes of maximum use during the month
less the 5-minute and 60-minute interruptible billings demands, but shall be:
1. no less than 80% of the customer's contracted firm demand;
2. no less than 80% of the maximum firm billing demand in the preceding 11
months; and
3. no less than 10,000 kW minus the 5-minute and 60-minute interruptible billing
demands.
INTERRUPTIBLE
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For retail customers that contract for firm demand, the 5-minute and 60-minute
interruptible billing demands shall be equal to the respective 5-minute and
60-minute contract demands specified in the contract for service. For retail
customers that do not contract for firm demand all demand shall be subject to
interruption. In this case, the interruptible billing demand shall be determined
as follows: If the retail customer contracts only for 5-minute interruptible
demand or only for 60-minute interruptible demand, then the interruptible
billing demand shall be the highest of the actual kilowatts consumed by the
retail customer during the sixty (60) minutes of maximum use during the current
month or the previous eleven (11) months, but in no case shall be less than the
contract amount.
If the retail customer contracts for both 5-minute interruptible demand and
60-minute interruptible demand, the 60-minute interruptible demand shall be
equal to the contract 60-minute interruptible demand. The 5-minute interruptible
demand shall be the highest of the actual kilowatts consumed by the retail
customer during the sixty (60) minutes of maximum use during the current month
or the previous eleven (11) months less the 60-minute interruptible demand, but
in no case shall be less than the contract 5-minute interruptible demand.
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INTERRUPTION
Interruptions shall be requested by SWECO as it deems necessary for any
justifiable reason, including, but not limited to, maintaining service to firm
loads, maintaining service integrity in the area, or other situations when
reduction in load on the MEMBER system is required. In order to ensure
interruptibility of interruptible loads, SWECO will have supervisory control
over the breakers serving the customer's interruptible loads.
Loads with five-minute interruption notice will be notified of the need to
reduce the load by SWECO dispatchers. If the load is not reduced to the required
level within the time required, which can be as short as five minutes, SWECO
will interrupt the entire load. For loads with 60-minute notification, SWECO
dispatchers shall notify the retail customer and the MEMBER when possible, at
least one hour prior to the time at which the load reduction must take place.
SWECO shall also give notification of the firm demand which the customer can use
and the approximate length of the interruption. If the customer does not reduce
its load to the required demand level in the time required, the customer's
entire load will be interrupted.
Notwithstanding the above, at the time interruptible customer is notified of the
need to interrupt, the customer may request that service be continued through
SWECO's purchase of power on the market. If SWECO is able to provide such power,
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the full cost of obtaining such power, including opportunity costs, shall be
substituted for the fuel cost in the charge for that block of power. SWECO shall
make all reasonable efforts to comply with such request; however, the final
determination as to whether it is able to comply with such request will be at
SWECO's sole discretion. Upon return to normal system conditions, as determined
by SWECO dispatchers, customers previously notified of the interruption will be
notified of permissible restoration of full service. Interruptions initiated by
SWECO will be limited to a maximum of 50 hours per week and 600 hours per year.
Notwithstanding any of the above, in the event of a system emergency beyond the
control of SWECO and the MEMBER, service may be interrupted with less than the
required notice and for periods longer than those maximum listed above. SWECO
will make all efforts necessary to return service to normal as quickly as
possible.
1.5 Delivery Voltage Adjustment - An additional $.70 per kW per month
of billing demand (firm and interruptible) for delivery voltage below 69 kV.
1.6 Energy Charge - The energy charge will be $.006 per kWh.
1.7 Fuel Charge - The fuel charge will be $.016 per kilowatt-hour (kWh).
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1.8 Other Charges - During the existing term of the contract for the VLP
customer, no other charges will be included in calculating the delivered cost to
the VLP customer. All other charges specified in Schedule A of this Agreement
will be assessed after the initial contract period.
1.9 Other Provisions - SWECO shall not be obligated to provide special rates to
the VLP customers served under this Schedule A-3 upon the termination of the
existing VLP customer contract.
E. Cotton Gins - Existing
1.1 Cotton Gin Ratchet - Subject to the election of MEMBER, SWECO shall utilize
the ratchet provisions set forth in this section for MEMBER'S customers which
qualified under Cajun's Cotton Gin Rider as of the Effective Date of this
Agreement and which do not receive any other special rates.
1.2 Availability - This rider is available to all MEMBERS with cotton gins on
their systems, who properly executed the Implementation Agreement and
Application(s) while under the Cajun rider.
1.3 Qualifications - The operating season for the cotton gin will start after
August 31 in any Contract Year and will end no later than December 31 of such
Contract Year.
1.4 Determination of Billing Demand - All kW and kWh used by the cotton gin will
be billed according to the rates set forth in Schedule A. However, the kilowatts
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used by the cotton gin in September will not be utilized in the calculation of
the ratchet under Schedule A. The metered demand of the cotton gin at the time
of the Maximum Point of Delivery Demand for September shall be subtracted from
the September Maximum Point of Delivery Demand, with the result used as the
value for the Billing Month of September in the Schedule A calculation of the
ratchet. 1.5 Other Provisions - SWECO shall apply the ratchet provisions of this
section to MEMBERS with cotton gins served under this Schedule A-3 through
12/31/1999 and thereafter on a year to year basis at SWECO's discretion. SWECO
shall provide not less than one year written notice of termination of cotton gin
service to MEMBER.
F. Off-Peak Rider - Existing
1.1 Off-Peak Billing - Subject to the election of MEMBER, SWECO
shall make available the off-peak billing provisions of this section to
MEMBER for MEMBER'S off-peak customers existing as of the Effective Date of
this Agreement and which do not receive any other special rates.
1.2 Qualifications - Each qualifying off-peak load will be measured using
time-of-use metering and MEMBER shall be responsible for all costs of
owning, operating and maintaining necessary metering.
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1.3 Existing Off-Peak Customers - The list of customers is to be provided and
such list could result in some modification of Section F of this Schedule
A-3.
1.4 Demand Charge - The demand rate for service to off-peak customers under
this section shall be as follows: $7.80 per kilowatt (kW) of billing demand
for power delivered above 69 kV.
$8.25 per kilowatt (kW) of billing demand for power delivered at 69 kV.
$8.95 per kilowatt (kW) of billing demand for power delivered below 69 kV.
During any Billing Month, the demand rate will be applied to the Maximum
Point of Delivery Demand established between the hours of 1:00 p.m. to
9:00 p.m. Central Time. The demand charge will not be applied to kilowatts
of usage between the hours of 9:00 p.m. to 1:00 p.m. Central Time.
1.5 Other Charges - The off-peak customers will be charged for fuel, energy
charges and other applicable charges provided for under Schedule A of this
Agreement.
1.6 Other Provisions - SWECO shall not be obligated to provide special rates to
off-peak customers served under this Schedule A-3 after the initial term of
any existing agreements between the MEMBER and the off-peak customers.
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SCHEDULE B
RATES AND CHARGES FOR SUPPLEMENTAL SERVICE
1.1 For Supplemental Supply SWECO provides to MEMBER under this Agreement SWECO
shall bill MEMBER in any Billing Month a Demand Charge, an Energy Charge,
and a Supplemental Supply Fuel Cost Charge.
1.2 The Demand Charge for Supplemental Supply shall be equal to the Demand Rate
shown below times the Kilowatts of Demand associated with Supplemental
Supply.
1.3 To determine the Kilowatts of Demand associated with Supplemental Supply
provided to MEMBER during a Billing Month, SWECO shall perform the
following calculations:
Step 1: SWECO shall refer to the calculations performed under Schedule A to
this Agreement for the Billing Month and subtract from the amount
determined in accordance with clause (a) of Step 4 of Section 1.3
of such Schedule A the amount determined pursuant to clause (b) of
such Step 4.
Step 2: The Kilowatts of Billing Demand associated with Supplemental Supply
furnished by SWECO to MEMBER during the current Billing Month shall
be the higher of the following measures: (1) the Kilowatts of
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Demand determined in Step 1 of this Section 1.3 for the Billing
Month; or (2) 70% of the highest Kilowatts of Demand for
Supplemental Supply determined in accordance with such Step 1 for
any of the immediately preceding months of June, July, August or
September.
Step 3: If requested by MEMBER, the Demand Charges for Supplemental Supply
shall be allocated to each of MEMBER's Points of Delivery in the
same proportion that Demand Charges for MEMBER Base Supply are
allocated to each Point of Delivery pursuant to Step 5 described in
Section 1.3 of Schedule A to this Agreement.
1.4 DEMAND RATE
The Demand Rate shall be $5.99 per kilowatt from the Effective Date
through December 31, 1999.
The Demand Rate shall be $6.24 per kilowatt from January 1, 2000 through
December 31, 2000.
The Demand Rate shall be $6.51 per kilowatt from January 1, 2001 through
December 31, 2001.
The Demand Rate shall be $6.73 per kilowatt from January 1, 2002
through December 31, 2002.
The Demand Rate shall be $6.93 per kilowatt from January 1, 2003 through
December 31, 2003.
The Demand Rate shall be $7.31 per kilowatt from January 1, 2004 through
December 31, 2004.
The Demand Rate shall be $7.51 per kilowatt from January 1, 2005
through December 31, 2005.
The Demand Rate shall be $7.71 per kilowatt from January 1, 2006 through
December 31, 2006.
The Demand Rate shall be $7.92 per kilowatt from January 1, 2007 through
December 31, 2007.
The Demand Rate shall be $8.12 per kilowatt from January 1, 2008
through December 31, 2008.
The Demand Rate shall be $8.55 per kilowatt from January 1, 2009 through
December 31, 2009.
The Demand Rate shall be $8.75 per kilowatt from January 1, 2010 through
December 31, 2010.
The Demand Rate shall be $8.94 per kilowatt from January 1, 2011
through December 31, 2011.
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The Demand Rate shall be $8.74 per kilowatt from January 1, 2012
through December 31, 2012.
The Demand Rate shall be $8.66 per kilowatt from January 1, 2013 through
December 31, 2013.
The Demand Rate shall be $8.82 per kilowatt from January 1, 2014 through
December 31, 2014.
The Demand Rate shall be $8.72 per kilowatt from January 1, 2015 through
December 31, 2015.
The Demand Rate shall be $8.59 per kilowatt from January 1, 2016 through
December 31, 2016.
The Demand Rate shall be $8.46 per kilowatt from January 1, 2017 through
December 31, 2017.
The Demand Rate shall be $8.31 per kilowatt from January 1, 2018 through
December 31, 2018.
The Demand Rate shall be $8.13 per kilowatt from January 1, 2019 through
December 31, 2019.
The Demand Rate shall be $7.94 per kilowatt from January 1, 2020 through
December 31, 2020.
The Demand Rate shall be $7.73 per kilowatt from January 1, 2021 through
December 31, 2021.
The Demand Rate shall be $7.50 per kilowatt from January 1, 2022 through
December 31, 2022.
The Demand Rate shall be $7.26 per kilowatt from January 1, 2023 until
termination of the Agreement.
The foregoing demand rates shall be subject to increase to account for the
cost of: 1) the foregoing demand rates shall be subject to increase to
account for the cost of plant additions required to comply with new or
changed legal requirements first imposed after the Effective Date,
including but not limited to plant additions required to comply with: a)
environmental legislation or regulation enacted or promulgated after the
Effective Date, as provided in Section 1.8 of this Schedule A, or b)
occupational safety and health laws or regulations enacted or promulgated
after the Effective Date, but not for any penalties, fines, costs or
expenses imposed on SWECO as a result of SWECO's noncompliance, breach or
violation of any environmental or occupational safety and health law or
regulation or other laws, rules, regulations or ordinances; 2) additional
capacity constructed or purchased by SWECO to provide Supplemental Supply
137
to serve Group Load that exceeds $400 per kW of installed or purchased
capacity (such cost to include the cost of transmission to the boundary of
a Transmission Supplier). The demand rate adjustments made to reflect the
cost of such additional capacity shall be made as set forth in the notice
given MEMBER pursuant to Section 2.3 of this Agreement.
1.5 The monthly Energy Charge shall be equal to the Energy Rate times the sum
of the Supplemental Supply kilowatt-hours provided to MEMBER during the
Billing Month determined separately for each MEMBER Point of Delivery. The
Supplemental Supply kilowatt-hours for a Point of Delivery shall be the
difference between the amount determined for such Point of Delivery by
applying Step 4 under Section 1.5 of Schedule A and the amount determined
for such Point of Delivery by applying Step 5 of Section 1.5 of Schedule A.
The Energy Rate shall be $0.003 per kilowatt-hour.
1.6 The monthly Supplemental Supply Fuel Cost Charge (SSFCC) shall be equal to
the Supplemental Supply Fuel Cost Rate (SSFCR) times the sum for the
Billing Month of the kilowatt-hours of Supplemental Supply determined in
accordance with Section 1.5 of this Schedule B. The SSFCR shall be an
amount computed monthly in accordance with the following formula to reflect
138
the fuel and purchased power cost incurred by SWECO in the Billing Month to
provide Supplemental Supply to Group Load:
SSFCR = F.C. + P.P.C. + E.P. - N.M.C.
KWH
Definitions:
F.C. = the costs incurred in the Billing Month for fuel consumed
in generating plants that are used to provide Supplemental
Supply to Group members
P.P.C. = the costs incurred in the Billing Month for purchased
power (excluding identifiable capacity charges) required
to provide Supplemental Service to Group Load that is not
Economic Power (E.P.)
E.P. = the costs incurred in the Billing Month for power and
energy purchased over a period of twelve months or less
where the total cost of the purchase is less than SWECO's
total avoided variable cost, and where SWECO has available
generating capability adequate to generate the amount of
energy that is purchased
N.M.C. = the fuel costs incurred in the Billing Month associated
with energy sales made to Non-Members from generating
units that are also used to provide Supplemental Supply
to Group members or to supply loads billed under Schedule
A-3 to this Agreement or similar agreements with other
Group members
KWH = the sum for the Billing Month of the kilowatt-hours
determined in paragraph 1.5 of this Schedule B and in all
other agreements between SWECO and other Group members for
all Group Points of Delivery less the kilowatt-hours of
energy supplied in such Billing Month to the Points of
Delivery from Qualifying Facilities.
For purposes of the foregoing formula, fuel costs shall include all costs
that are properly chargeable to Account 501 of the FERC's Uniform System of
Accounts for Public Utilities and a reasonable return on and return over
ten years of, and all operating and maintenance expenses associated with,
139
any capital investment made by SWECO in fuel-related facilities that in
advance of SWECO's commitment of capital all members of the Group that
receive Supplemental Supply have agreed can be expected to provide a net
benefit to such Group members and any cost of operating or maintaining such
capital investment. The current billing month's SSFCC shall be estimated by
applying the most current previous month's actual SSFCR available. Any
difference between the estimated SSFCC and the actual SSFCC shall be billed
or credited to the MEMBER on the first bill rendered after the actual SSFCR
for such preceding Billing Month has been determined. The SSFCR shall be
calculated to the nearest $0.00001 and when applied the result will be
rounded to the nearest cent.
1.6 OTHER CHARGES.
MEMBER and SWECO agree that the demand rates set forth in this Schedule B
reflect all ad valorem taxes that apply to the Project Capacity as of
January 1, 1998. MEMBER and SWECO further agree that none of the rates
described in this Schedule B makes provision for the potential effects of
new or additional sales, excise, and other applicable taxes (excluding
income taxes), fees and charges incurred in accordance with federal, state
or local law other than increases in ad valorem taxes associated with
140
assets purchased by SWECO from the Cajun estate resulting from the change
in ownership. Any expense incurred by SWECO as the result of the imposition
of any such new or additional taxes shall be appropriately allocated to and
paid by MEMBER and other members of the Group.
1.7 ENVIRONMENTAL LEGISLATION.
Except as provided under Section 1.4 of this Schedule B, MEMBER and SWECO
agree that the rates for Supplemental Supply contained in this Agreement
make no provision for the potential effects of new environmental control
legislation or the additional costs of providing electric service to MEMBER
resulting from any such legislation. Any such costs resulting from such
legislation shall be appropriately allocated to and paid by MEMBER.
1.8 WHEELING CHARGE.
Each monthly bill to MEMBER shall reflect adjustments, charges, fees or
penalties relating to transmission and Ancillary Services charged SWECO by
a Transmission Supplier in connection with service to the MEMBER Points of
Delivery in accordance with Sections 5.2 and 8.2 of this Agreement. Such
Transmission Supplier costs shall be allocated to individual MEMBER Points
of Delivery in accordance with Section 5.2. SWECO agrees to provide MEMBER
141
information concerning any such charges, fees or penalties imposed by a
Transmission Supplier. Charges for services provided to MEMBER under
SWECO's Open Access Transmission Tariff shall be billed to MEMBER
separately.
142
SCHEDULE C
SOUTHWESTERN ELECTRIC WHOLESALE COMPANY
MEMBER HYDRO ALLOCATION
Member Load Member Member
HYDRO DEMAND ALLOCATION 1996 kW* Share** Hydro
Beauregard Electric Cooperative, Inc. 1,391,749 0.0907 8,290
Claiborne Electric Cooperative, Inc. 915,356 0.0596 5,447
Concordia Electric Cooperative, Inc. 344,869 0.0225 2,057
Dixie Electric Membership Corporation 3,185,301 0.2075 18,966
Jefferson Davis Electric Cooperative, Inc. 421,085 0.0274 2,504
Northeast Louisiana Power Cooperative, Inc. 541,846 0.0353 3,226
Pointe Coupee Electric Membership Corporation 430,729 0.0281 2,568
South Louisiana Electric Cooperative Association 942,164 0.0614 5,612
Southwest Louisiana Electric Membership
Corporation 3,810,506 0.2483 22,695
Teche Electric Cooperative, Inc. 434,706 0.0283 2,587
Valley Electric Membership Corporation 1,199,480 0.0781 7,138
Washington - St. Tammany Electric
Cooperative, Inc. 1,731,466 0.1128 10,310
--------------------------
ALL COOPERATIVES 15,349,257 1.0000 91,400
===========================
Group Load 15,349,257
Group Hydro 91,400
* January - December 1996 Actual Data
** At the time of the hydro allocation.
143
WORK IN PROCESS 718197
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
BEAUREGARD ELECTRIC COOPERATIVE, INC.
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Sugartown 1014 34.5 $ - $ - $ - $ -
Moss Bluff 1022 69 1,523,565 319,949 - -
Merryvilie 1034 34.5 - - - -
Oakdale 1044 13.2 - - - -
Sulpher 1052 69 127,015 26,673 - -
DeRidder West 1054 13.2 4,533 952 - -
Serpent 1062 69 68,200 14,322 - -
Oberlin 1074 13.2 - - - -
Anacoco 1084 13.2 - - - -
Elizabeth 1094 34.5 - - - -
Sugartown East 1114 34.5 - - - -
DeRidder 69 Bulk 1124 69 1,415,935 297,346 - -
New Llano 1134 69 - - - -
Dequincy 69 1144 69 17,884 3,756 - -
MGI EEDS* 4,271 897 - -
Shell Pipeline EEDS* 7,711 1,619 - -
---------------------------------------------------
Total $ 3,169,114 $ 665,514 $ - $ -
===================================================
*Specific facilities behind a point of delivery.
144
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
CLAIBORNE ELECTRIC COOPERATIVE, INC.
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- -------------------------------------------------------------------------------------------------
Farmervilie 3023 34.5 $ - $ - $ - $ -
Shongaloo 3043 13.8 - - - -
Dubberly 3053 13.8 - - - -
Bernice 3063 34.5 - - - -
Grambling 3073 13.8 - - - -
Point 3083 34.5 - - - -
Cross Roads 3093 34.5 - - - -
Pine Hill 3113 34.5 - - - -
Marion Bulk 3123 115 224,887 47,226 - -
Mount Union 3133 34.5 - - - -
Minden Bulk 3143 69 900,931 189,196 - -
Ruston East 3153 115 485,747 102,007 - -
Trussell's Crossing 3173 115 - - - -
Williamette Industries EEDS* 5,424 1,139 - -
Conagra EEDS* 6,950 1,460 - -
Mandeville EEDS* 19,268 4,046 - -
----------------------------------------------
Total $ 1,643,207 $ 345,074 $ - $ -
===============================================
*Specific facilities behind a point of delivery.
145
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
DIXIE ELECTRIC MEMBERSHIP CORPORATION
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Zachary 5012 69 $ - $ - $ - $ -
Clinton 5022 69 5,976 1,255 - -
French Settlement 5023 230 388,374 81,559 - -
Elm Park 5032 69 4,999 1,050 - -
Flannery Road 5042 69 7,927 1,665 - -
Terrell Road 5052 69 398,964 83,782 - -
Coly 69 5062 69 11,432 2,401 - -
Vignes 5072 69 - - - -
Darlington* - - - -
Dyer* 3,484 732 - -
Greenwell* 3,484 732 - -
Indian Mound* 3,484 732 - -
Wallcrossing* 3,484 732 - -
Fancy Point* 15,230 3,198 - -
---------------------------------------------------
Total $ 846,838 $ 177,838 $ - $ -
====================================================
* These appear to be points which are no longer served but have investment.
146
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
JEFFERSON DAVIS ELECTRIC COOPERATIVE, INC.
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Compton 6032 69 $ 5,684 $ 1,194 $ - $ -
Holly 6052 69 5,684 1,194 - -
Klondike 6072 69 5,671 1,191 - -
Robbie 6082 69 7,895 1,658 - -
Chalkley 6092 69 2,472,509 519,227 - -
Potter 6102 69 109,225 22,937 - -
Derouen 6112 69 81,545 17,124 - -
Tupper 6122 69 78,428 16,470 - -
Creole* 1,154,131 242,368 - -
Andruscove* 1,114 234 - -
Transmission Line Connecting - - - -
Chalkley and Creole 580,226 121,847 - -
---------------------------------------------------
Total $ 4,502,112 $ 945,444 $ - $ -
===================================================
* These appear to be points which are no longer served but have investment.
147
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
NORTHEAST LOUISIANA POWER COOPERATIVE, INC.
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Delhi 7013 13.2 $ 11,214 $ 2,361 $ - $ -
Oak Grove 7033 13.2 - - - -
Lone Cedar 7043 13.2 - - - -
Darnell 7053 13.2 - - - -
Crowville 7073 13.2 - - - -
Como 7083 34.5 - - - -
Chickasaw 7093 115 151,973 31,914 - -
Gilbert 7103 115 380,899 79,989 - -
Log Cabin 7113 115 542,894 114,008 - -
Archibald 7123 34.5 398 84 - -
Midvall EEDS* $ 7,936 1,667 - -
---------------------------------------------------
Total $ 1,095,341 $ 230,023 $ - $ -
===================================================
specific facilities behind a point of delivery.
148
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
SOUTH LOUISIANA ELECTRIC COOPERATIVE ASSOCIATION
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Bayou Ramos Bulk 9014 138 $ 189,194 $ 39,731 $ - $ -
Gheens 9033 13.2 89,569 18,809 - -
Greenwood 9073 115 374,254 78,593 - -
Ashland 9093 115 523,578 109,951 - -
Landry 9103 115 1,301,700 273,357 - -
Bayou L'Ourse 9113 115 448,805 94,249 - -
Gemoeo EEDS* 1,111 233 - -
Lig EEDS* 4,590 964 - -
---------------------------------------------------
Total $ 2,932,801 $ 615,887 $ - $ -
===================================================
*Specific facilities behind a point of delivery.
149
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
VALLEY ELECTRIC MEMBERSHIP CORPORATION
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Campti 12013 34.5 $ - $ - $ - $ -
Colfax 12014 13.2 50,461 10,597 - -
Robson Road 12015 69 17,239 3,620 - -
Mansfield 12024 34.5 - - - -
Gahagan 12034 34.5 - - - -
Carroll 12044 34.5 - - - -
Grand Ecore 12073 34.5 - - - -
Creston 12074 34.5 - - - -
Verda 12083 13.2 - - - -
Derry 12084 34.5 - - - -
Cane River Bulk 12093 115 316,605 66,487 - -
Provencal 12103 115 135,660 28,489 - -
Powhatan 12104 34.5 - - - -
Kurthwood 12124 34.5 - - - -
Red Oak 12154 34.5 - - - -
East Leesville Bulk 12174 69 1,780,282 373,859
Many Bulk 12204 69 1,587,854 333,449 - -
--------------------------------------------------
Total $ 3,888,101 $ 816,501 $ - $ -
===================================================
150
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
WASHINGTON - ST. TAMMANY ELECTRIC COOPERATIVE, INC.
Assigned Annual Initial Annual Additional
Delivery Initial Facilities Additional Facilities
NAME/LOCATION POINT NUMBER VOLTAGE INVESTMENT CHARGE INVESTMENT CHARGE
- ----------------------------------------------------------------------------------------------
Blond 13014 34.5 $ 5,976 $ 1,255 $ - $ -
Pine Cliff 13023 69 1,142,838 239,996 - -
Mandeville 13136 34.5 78,758 16,539 - -
Talisheek 13043 69 1,418,892 297,967 - -
French Branch 13083 69 1,821,078 382,426 - -
----------------------------------------------------
Total $ 4,467,542 $ 938,183 $ - $ -
=====================================================
151
WORK IN PROCESS 7/8/97
SCHEDULE D
SPECIFIC FACILITIES AT POINTS OF DELIVERY
SPECIFIC PER ABOVE $ 31,488,531
SPECIFIC ERROR (66,650)
SPECIFIC PER TOM $ 31,421,881
SPECIFIC $ 6,612,591
COMMON 345,450
CWIP 552,766
--------------
TOTAL $ 7,510,829
==============
INITIAL AMOUNT
SPECIFIC ERROR
TOTAL FACILITIES
CALCULATED CHARGE
TOTAL x 1.75% x 12
INITIAL CHARGE
FACTOR
152
WORK IN PROCESS 7/8/97
SCHEDULE D
COMMON FACILITIES
Member Annual Initial Addition Annual Additional
Member Load Member Assigned Facilities Common Common Facilities
1996 kW* Share** Common Charge Investment Charge
Beauregard Electric Cooperative, Inc. 1,391,749 0.0907 $ 149,202 $ 31,332 $ - $ -
Claiborne Electric Cooperative, Inc. 915,356 0.0596 98,042 20,589 - -
Concordia Electric Cooperative, Inc. 344,869 0.0225 37,013 7,773 - -
Dixie Electric Membership Corporation 3,185,301 0.2075 341,338 71,681 - -
Jefferson Davis Electric Cooperative, Inc. 241,085 0.0274 45,073 9,465 - -
Northeast Louisiana Power Cooperative, Inc. 541,846 0.0353 58,069 12,194 - -
Pointe Coupee Electric Membership Corporation 430,729 0.0281 46,225 9,707 - -
South Louisiana Electric Cooperative Association 942,164 0.0614 101,003 21,211 - -
Southwest Louisiana Electric Membership Corporation 3,810,506 0.2483 408,454 85,775 - -
Teche Electric Cooperative, Inc. 434,706 0.0283 46,554 9,776 - -
Valley Electric Membership Corporation 1,199,480 0.0781 128,475 26,980 - -
Washington - St. Tammany Electric Cooperative, Inc. 1,731,466 0.1128 185,556 38,967 - -
-----------------------------------------------------------------------
ALL COOPERATIVES 15,349,257 1.0000 $1,645,004 $ 345,450 $ - $ -
========================================================================
* January - December 1996 Actual Data
** At the time of the facilities allocation
CONSTRUCTION WORK IN PROCESS FACILITIES
Member Annual Initial Addition Annual Additional
Assigned Facilities CWIP CWIP Facilities
CWIP** Charge Investment Charge
Beauregard Electric Cooperative, Inc. $ 47,552 $ 9,986 $ - $ -
Claiborne Electric Cooperative, Inc. 1,035,305 217,414 - -
Concordia Electric Cooperative, Inc. - - - -
Dixie Electric Membership Corporation 1,304,479 273,941 - -
Jefferson Davis Electric Cooperative, Inc.
Northeast Louisiana Power Cooperative, Inc. 38,354 8,054 - -
Pointe Coupee Electric Membership Corporation 181,369 38,087 - -
South Louisiana Electric Cooperative Association 25,269 5,306 - -
Southwest Louisiana Electric Membership Corporation - - - -
Teche Electric Cooperative, Inc. - - - -
Valley Electric Membership Corporation - - - -
Washington - St. Tammany Electric Cooperative, Inc. -
-------------------------------------------------------
ALL COOPERATIVES $ 2,632,328 $552,788 $ - $ -
=======================================================
*** Specific by Cooperative
153
SCHEDULE E
DATA TO BE SUPPLIED WITH MONTHLY BILLING
TO ENABLE VERIFICATION
1.Point to Point Demand Allocation.
2.Point to Point Energy Allocation
3.Transmission Charge Summary-Grouped by Delivery Voltage
4.Facility Charge Summary-Initial and Additional Specific and Common
5.Separately Metered Load Summary-Customers Billed Under Schedule A-4
6.Monthly Fuel and Purchased Energy Cost Calculations
7.Summary Incentive Load Credits-Credits from Schedules A-1 and A-2
8.Detailed Billing for Each Point of Delivery
154
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF LOUISIANA
IN RE: CIVIL ACITON
NO. 94-2763-B2
CAJUN ELECTRIC POWER
COOPERATIVE, INC. BANKRUPTCY CASE
NO. 94-11474
Debtor.
Chapter 11
Federal Tax Id. No.: 72-0655799
ORDER AND JUDGEMENT APPROVING SETTLEMENT BY AND AMONG
CAJUN ELECTRIC POWER COOPERATIVE, INC., ENTERGY
GULF STATES, INC., ENTERGY CORPORATION, AND THE
RURAL UTILITIES SERVICE OF THE DEPARTMENT OF AGRICULTURE
This matter coming to be heard on the Motion (the "Motion") of Ralph R.
Mabey, Chapter 11 Trustee (the "Trustee") pursuant to Rule 9019 of the Federal
Rules of Bankruptcy Procedure to approve a settlement between Cajun Electric
Power Cooperative, Inc. ("Cajun"or the "Debtor") and Entergy Gulf States, Inc.
formerly known as Gulf States Utilities Company ("GSU"), in accordance with the
terms set forth in the Settlement Term Sheet, dated May 2, 1996, executed by the
Trustee, GSU, and Entergy Corporation ( "Entergy" ) and recommended for
adoption by the Rural Utilities Service of the United States Department of
Agriculture (the "RUS") ("Settlement Term Sheet," a copy of which is attached
hereto as Exhibit A), the Motion, and this order (the "Settlement");
Upon consideration of the Motion, due and proper notice having been
provided thereof to parties entitled thereto, and on the basis of the record of
this case, including the evidence presented at the hearing on the Motion to
approve the Settlement, the litigation involving the parties described in the
Motion and attachments thereto (and the Court having taken judicial notice of
litigation pending before it), and the Court's oral Finding of Fact and
Conclusions of law on the record on August 26, 1996, which are incorporated
herein by reference and a transcript of which shall be filed by the Trustee as
soon as practicable, and pursuant to SUBSECTION 11 USC 105(a) and 363(b) and
Federal Rule of Bankruptcy Procedure Rule 9019(a);
The Court having considered all objections not withdrawn (the
"Objections") to approve the Settlement and to this Order and Judgement
(hereinafter, the "Order") ;
The Court is of the opinion that the Motion is meritorious; accordingly,
IT IS ORDERED, ADJUDGED AND DECREED THAT:
1. The relief requested in the Motion is granted.
2. The Settlement is approved.
3. All Objections are denied with prejudice.
4. The Settlement as approved includes, but is not, limited to:
a. A global settlement of all disputes between GSU and Cajun
which will result in a reciprocal dismissal with prejudice of all-claims and
counterclaims and a general release of any liability of any kind rising out of
the transactions or occurrences upon which the presently litigated matters are
based;
b. A global settlement of all disputes between GSU and RUS which
will result in a dismissal with prejudice of all pending litigated matters in
which the RUS has intervened and a judgment in favor of RUS on GSU's
subordination complaint against the RUS;
c. A settlement of certain disputes between RUS and Cajun
including all matters related to the River Bend nuclear power facility ("River
Bend") including a release and waiver of all claims and causes of action,
whether known or uknown, by Cajun against RUS for equitable subordination, all
claims and causes of action by Cajun against RUS for "lender liability,"
alleging waiver of deficiency judgment rights under Louisiana 13:4108.1.
5. The Settlement as approved does not resolve claims between RUS and
Cajun not involving River Bend unless dealt with in the Settlement.
6. The terms and provisions of the Settlement which are intended to apply
prior to the closing of the Settlement (the"Consummation Date") shall be
binding, effective, and enforceable against each of the Trustee, GSU, Entergy
and the RUS as of the date hereof. The terms and provisions of the Settlement
which are intended to apply on and after the Consummation Date shall be binding,
effective and enforceable against each of the Trustee, GSU, Entergy and RUS as
of the Consummation Date.
7. The Trustee is authorized to set aside in a decommissioning trust fund
or other appropriate vehicle the sum of $125,000,000 in 1995 dollars. When the
Trustee acts pursuant to this authorization, he shall transfer the funds in
Cajun's existing decommissioning trust fund and will use funds on hand to make
up the difference. The funds on hand used to make up the difference, which may
be funds subject to the Order Concerning Use of Cash Collateral to Substitute
Cajun's "1996 Budget" for all references in said Order to Cajun's "1995 Budget"
(Docket No. 1536), will be transferred free and clear of any lien, claim or
other interest asserted by any party. Moreover, the transfer of these funds
shall not result in a transfer of any party's lien on, claim against, or other
interest in these funds to other assets of Cajun or its estate, and shall not
create rights or claims in any party against any other party or against the
assets of Cajun or its estate. The transfer of these funds is a necessary and
proper expense of Cajun's estate, and no party shall thereafter assert any
rights, except as granted herein, relating to these funds including any claims
that the funds were cash collateral, were not property of the estate, were
subject to refund or repayment, were subject to actual or constructive trust, or
were subject to an equitable lien. This prohibition on the assertion of rights
is not a ruling on, and shall not preclude the assertion of, claims that other
funds not transferred into the decommissioning trust fund or other appropriate
vehicle are cash collateral, are not property of the estate, are subject to
refund or repayment, are subject to actual or
constructive trust, or are subject to an equitable lien, except insofar as such
claims relate to or rely on the transfer of the funds into the decommissioning
trust fund or other appropriate vehicle. The funding of the trust fund, together
with the transfer of the Cajun River Bend Interest (the "Cajun River Bend
Interest" as that term is defined in the Term Sheet) will absolve Cajun, its
member cooperatives, and any successor to assets, other than the Cajun River
Bend Interest, now owned by Cajun (but not others who may succeed to the
ownership of the Cajun River Bend Interest) of all responsibility for River Bend
Decommissioning Costs (as that term is defined in the Term Sheet).
8. The Trustee is authorized without the necessity of any further order
or approval of this Court, to transfer all assets as provided in the Settlement,
including but not limited to the Cajun River Bend Interest, Cajun's interest in
River Bend fuel and spare parts (under the option provided for in the Term
Sheet), Tranmission lines 745 and 746 (provided, as required by the Term Sheet,
that Entergy's Network Service Tariff and its Transmission Service Tariff,
under which Cajun receives service, makes the continued ownership of the
Transmission Line or Lines by Cajun or the transferee of its generating assets
unnecessary for Cajun or its transferee's provision of current or future
services by reason of the benefits provided under the new tariffs), and any
other assets required by the Settlement, free and clear of any lien or other
interest asserted by any party.
9. RUS is authorized to receive from GSU and Cajun Cajun's share of all
cash payments resulting from the litigation presently being conducted against
General Electric in connection with claims alleging River Bend design defects.
Cajun's share of all payments in kind and other non-cash consideration received
or promised as a result of the litigation shall be paid to the owner of the
Cajun River Bend Interest at the time such payments in kind or other non-cash
consideration become due. All of such transfers and payments shall be free and
clear of any lien or other interest asserted by any party.
10. The Trustee is authorized and directed, without the necessity of any
further order or approval of this Court, to take any and all actions necessary
or appropriate to implement, effectuate, and consummate the Settlement and any
transactions contemplated thereby or by this Order, including, without
limitation, the issuance, execution and delivery of any document, certificate,
agreement or instrument, the filing of any pleading, and the transfer or other
disposition of any assets. No action or approval of the Board of Directors of
Cajun shall be required with respect to the implementation and consummation of
the Settlement.
11. Without limiting the generality of the foregoing, between the date
hereof and until and including the Consummation Date:
a. the Trustee, and GSU, Entergy, and RUS, as necessary, shall
undertake any and all such actions as are necessary or
appropriate to cause the Consummation Date to occur no later
than June 1, 1997;
b. the Trustee shall cause Cajun to cease prosecution of all of
its objections to any and all relief sought by GSU or Entergy,
or any of their affiliates, in any regulatory or
administrative proceeding in which approval of the merger of
Entergy and GSU is sought, including any related appellate
proceedings to the extent that Cajun's objection to such relief
is intended to be settled or resolved on or prior to the
Consummation Date in accordance with the terms of the
Settlement;
c. the Trustee, with the intervention of GSU, if required, shall
cause to be stayed all civil actions and regulatory and
administrative proceedings, other than proceedings which are
the subject of paragraph 9(b) of this Order, which are pending
between Cajun, on the one hand, and GSU or Entergy, on the
other hand, including any related appellate proceedings, and
which are intended to be settled or resolved on the
Consummation Date in accordance with the terms of the
Settlement;
d. the Trustee, and RUS, GSU, and Entergy, as necessary or
appropriate, shall undertake such actions as are necessary or
appropriate to cause the disposition of the Cajun River Bend
Interest on the Consummation Date in the manner provided in
Section 1 of the Settlement Term Sheet, and will cooperate to
effect, at the option of RUS, the disposition of the Cajun
River Bend Interest before the Consummation Date subject to
consent of the parties and further court order as provided in
paragraph 13 below;
e. the Trustee and GSU, jointly or singly, shall undertake to
obtain all regulatory approvals reasonably considered to be
required to implement, consumate, and effectuate the Settlement
(the "Regulatory Approvals"); and
f. the Trustee, GSU, Entergy, and RUS shall undertake all such
other necessary or appropriate actions as are intended to occur
prior to the Consummation Date in accordance with the terms and
provisions of the Settlement Term Sheet.
12. As soon as practicable after the conditions precedent to the closing
of the Settlement, as contained in the Settlement Term Sheet, shall have been
satisified or waived by the affected party or parties, the Trustee, GSU, Entergy
and the RUS shall cause the closing of the Settlement to occur.
13. The preliminary injunction in the Service Water Litigation will be
continued in full force and effect until the Consummation Date, as set forth in
Section 3 (b) of the Settlement Term Sheet.
14. If the Consummation Date has not occurred by the close of business on
June 1, 1997, the Trustee, GSU, Entergy and the RUS may by agreement continue to
undertake to implement, effectuate and consummate the Settlement. However, in
the absence of an agreement, any of the parties may move the Court to order the
extension of the Consummation Date upon hearing and finding that the Settlement
will likely be effectuated within a reasonable time upon the terms set forth in
the Settlement Term Sheet and that such extension is in the best interest of the
estate.
15. The Settlement may not be modified by any Plan of Reorganization in
this bankruptcy case except as may be agreed to by the Trustee, GSU and the RUS.
The terms of the Settlement shall be binding upon any successors to the parties
thereto, including, without limitation, any purchaser of Cajun or Cajun's
assets.
16. RUS is now authorized to seek a purchaser for the Cajun River Bend
Interest (as defined in the Motion and the Settlement Term Sheet). In the event
that a purchase offer that is acceptable to RUS is received prior to the closing
of the Settlement or to the receipt by the parties of all regulatory approvals
required by the Settlement, the Trustee, with the consent of RUS and GSU, may
submit a motion for early approval of the sale of the Cajun River Bend Interest
on terms that protect the interests of the parties to the Settlement under the
Settlement Term Sheet.
17. Each of the actions taken, documents executed, and payments and
transfers of assets made pursuant to provisions of the Settlement and Order
shall be valid, binding and enforceable and not preferential,fraudulent or an
otherwise avoidable transfer under the Bankruptcy Code or under applicable law
of the United States or any state, province or other jurisdiction, and will, to
the fullest extent permitted by the Bankruptcy Code, vest in the transferee good
title to such property, free and clear of all liens, claims, and encumbrances,
except as otherwise provided in the Settlement, and shall not be subject to
modification in any Plan of Reorganization in this bankruptcy case, except as
agreed by the parties receiving the benefit under this Settlement.
18. The record of the hearing to approve the Settlement is closed.
19. This Order shall be effective according to its terms upon the entry
thereof.
20. This is a final order and immediately subject to appeal.
Baton Rouge, Louisiana, this 26TH day of AUGUST , 1996.
FRANK J. POLOZOLA
UNITED STATES DISTRICT JUDGE
David S.Rubin
Ralph R Mabry
Tom Phillips
Brian Jackson
Office of the U.S. Trustee
EXHIBIT A
SETTLEMENT TERM SHEET
WHEREAS Cajun Electric Power Cooperative, Inc.(Cajun)operating through
its Chapter 11 Trustee Ralph R. Mabey (Trustee), Rural Utilities Service of the
United States Department of Agriculture (RUS) and Gulf States Utilities (GSU)
desire to resolve longstanding disputes and disagreements respecting various
issues including operation and ownership of Cajun's undivided thirty per cent
interest in the River Bend nuclear facility (the Cajun River Bend Interest), the
Trustee and GSU desire to establish mutually favorable business relationships
and Trustee, RUS and GSU desire to arrange for the transfer of certain specified
assets, the Trustee, RUS and GSU agree to the terms and Provisions set forth
herein (the"Settlement"), recognizing that various of the components of these
terms and provisions may reqire approvals of regulatory agencies to complete and
may require more formal documentation to be executed at a closing of the
Settlement in order to give full effect to the intentions of the parties set
forth herein:
1. Disposition of River Bend
(a) On or before the closing of the Settlement, Cajun will set aside in a
decommissioning trust fund or other appropriate vehicle the sum of
$125,000,000 in 1995 dollars. This fund will be made up of Cajun's new
contribution, and the amount in Cajun's existing decommissioning trust
fund (the "Trust Fund"). The establishment of the Trust Fund, together
with the transfer of the Cajun River Bend Interest as provided herein
will absolve Cajun and any successor to assets, other than the Cajun
River Bend Interest, now owned by Cajun (but not others who may succeed
to the ownership of the Cajun River Bend Interest) of all
responsibility for River Bend Decommissioning Costs as defined below.
"Decommissioning" means al1 actions taken to render the River Bend
nuclear power plant permanently inactive, inoperable and free of
radioactive materials. The term decommissioning is intended to be
comprehensive and include, without limitation, the entombment,
decontamination, dismantlement, removal and disposal of structures,
systems and components of the River Bend nuclear power plant in order
to permanently cease the nuclear generation of electric energy,
including all actions necessary to bring the plant site to "greenfield"
status and any other item included in a study accepted and approved by
regulatory authorities of competent jurisdiction as a basis for the
termination of operations under the license to own or operate River
Bend. The term also includes preparation for decommissioning, such as
engineering and other planning activities, and all associated
activities to be performed after the actual dismantlement occurs, such
as physical security and radiation monitoring. The term also includes
activities associated with spent fuel storage, disposal, transfer,
transportation and removal of low leve waste storage as well as Cajun's
future obligations with respect to decontamination and decommissioning
of DOE's uranium enrichment facilities. Also included is the
preparation of studies and supporting documentation required by
regulatory authorities.
The foregoing specification is not intended to form a basis for
excluding any action or cost-legitimately part of decommissioning and
returning the site to "greenfield" status because of the failure to
separately identify or to fall witin a category specifically
identified.
"Decommissioning Costs" means the funds expended to perform
Decomissioning. The term includes expenditures whether they are
treated as capital items or expense items for regulatory, financial,
or tax accounting purposes.
(b) The Trust Fund may be used only for the prudent expenditure of
Decommissioning Costs for the Cajun River Bend Interest. If, upon the
completion of Decommissioning of the River Bend plant, the Trust Fund,
and such additional amounts as have been added to it as a result of
the investment and management of funds included therein, is not
exhausted by the prudent expenditure of Decommisioning Costs for the
Cajun River Bend Interest, the remainder will be remitted to RUS.
(c) Upon the transfer of the Cajun River Bend Interest, Cajun shall
deliver title thereto free and clear of all liens and encumbrances
except those agreed to by the purchaser. In the event the Cajun River
Bend Interest is transferred to RUS, its liens and encumbrances on the
Cajun River Bend Interest shall be merged with the title which it
obtains. In the event the Cajun River Bend Interest is transferred to
any other person, RUS will release all of its liens and encumbrances
on the Cajun River Bend Interest. The foregoing releases by RUS shall
not be construed as a waiver or release of the portion of RUS's claim
against Cajun which remain unsatisfied by the transfers of title for
which provision is made herein. Notwithstanding RUS's release of
liens on the Cajun River Bend Interest or the merger of title if the
Cajun River Bend Interest is transferred to RUS, the amount of RUS's
claims against Cajun shall be reduced only to the extent of RUS's
receipt of proceeds from the sale of the Cajun River Bend Interest.
If the Cajun River Bend Interest is transferred to GSU under paragraph
l(f) below, the amount of RUS's claims against Cajun shall not be
reduced on account of the transfer of the Cajun River Bend Interest.
The parties hereto agree that any disposition of the Cajun River Bend
Interest under the Settlement shall be considered commercially
reasonable.
(d) In the sole discretion of RUS, the Cajun River Bend Interest will be
transferred under one of the two options or subparagraph (f) set
forth below.
In connection with such transfers, Cajun will satisfy the obligation
to fund the Trust Fund required by paragraph l(a) and GSU will make
available to all prospective purchasers records, personnel and
facilities such that prospective purchasers can conduct an appropriate
due diligence evaluation before making their bid. GSU may subject the
examination of personnel, records and facilities to reasonable
confidentiality and business requirements. RUS shall have substantial
flexibility in exercising its discretion to arrange for the transfer
of the Cajun River Bend Interest. In furtherance of that end, RUS's
flexibility shall include, but shall not be limited to, negotiating
with and selecting a prospective purchaser, being permitted to
establish a reserve price which must be met before consummating a sale
at auction, not being required to accept the highest bid received at
an auction and taking title to the Cajun River Bend Interest itself
for subsequent reconveyance.
Option 1
The Cajun River Bend Interest and Cajun's interest in River Bend fuel
and spare parts will be sold, with net proceeds remitted to RUS. The
purchaser will become obligated to fully comply with the Cajun NRC
license requirements, all other applicable laws and regulations and
the provisions of the River Bend JOPOA, as amended in the respects
described in Exhibit No. 1, commencing with the date of the transfer
of the Cajun River Bend Interest. The Big Cajun No. 2, Coal Unit #3
JOPOA will also be similarly amended, as may be required. All of
Cajun's interest and obligations under the River Bend JOPOA, the NRC
license and any recorded documents of transfer between GSU and Cajun
relating to River Bend will be canceled and terminated as to Cajun
and, subject to the provisions in this paragraph, will be assumed by
the purchaser. As used herein, the obligations under the River Bend
JOPOA for which a successor shall be obligated shall be limited to
obligations for operations commencing with the c1osing of the
Settlement and for fuel and spare parts purchased only after the
closing of the Settlement and shall not include unfulfilled or unpaid
obligations which Cajun incurred while it was still the owner. GSU
may elect to become a bidder if RUS elects to conduct an auction under
this option.
Option 2
The Cajun River Bend Interest and Cajun's interest in River Bend fuel
and spare parts will be transferred to RUS which will become obligated
to fully comply with the Cajun NRC license requirements, all other
applicable laws and regulations and the provisions of the River Bend
JOPOA, as amended in the respects described in Exhibit No. 1,
commencing with the date of its succession to the Cajun River Bend
Interest. The Big Cajun No. 2, Coal Unit #3 JOPOA will also be
similarly amended, as may be required. All of Cajun's interest and
obligations under the River Bend JOPOA, the NRC license and any
recorded domments of transfer between GSU and Cajun relating to River
Bend will be canceled and terminated as to Cajun and will be assumed
by RUS. As used herein, the obligations under the River Bend JOPOA
for which RUS shall be obligated shall be limited to obligations for
operations commencing with the closing of the Settlement and for fuel
and spare parts purchased only after the closing of the Settlement and
shall not include unfulfilled or unpaid obligations which Cajun
incurred while it was still the owner.
(e) RUS will receive from GSU and Cajun Cajun's share of all cash payments
resulting from the litigation presently being conducted against
General Electric in connection with claims alleging River Bend design
defects. Cajun's share of all payments in kind and other non-cash
consideration received or promised as a result of the litigation will
be payable to the owner of the Cajun river Bend Interest at the time
such payments in kind or other non-cash consideration become due.
The same allocation shall be made between RUS and a transferee of the
Cajun River Bend Interest of refunds or other benefit related to the
payment by Cajun to the U.S. Government to fund the decontaminating
and decommissioning of DOE's uranium enrichment facilities.
(f) In the event that no offer is accepted by RUS under Option 1 above and
in the further event that RUS elects not to become the transferee of
the Cajun River Bend Interest, together with Cajun's interest in River
Bend fuel and spare parts, will be transferred to GSU with no payment
by GSU to Cajun's estate or to RUS.
2. Transmission and Certain Other Issues
(a) Pursuant to existing FERC decisions, the claim due GSU for past
transmission services under the CTOC credits and QTF Dockets amounts
to $55,000,000 (the "Liquidated Transmission Debt"). The Liquidated
Transmission Debt consists of S32,000,000 due under the QTF Docket and
$23,000,000 due under the CTOC Credits Docket. GSU waives its right to
collect the Liquidated Transmission Debt from Cajun.
(b) Cajun or Cajun's transferee or transferees of its generation assets
will receive transmission services under Entergy's Network Service
Tariff Entergy's Transmission Service Tariff as of the later of (i)
twelve months from the date of the Settlement or (ii) the date of the
closing of the Settlement. Neither GSU nor Entergy will oppose the
entitlement of Cajun or such transferee to service thereunder or its
effectiveness at such date.
(c) All previous transmission agreements existing between Cajun and
Entergy, GSU, LP&L or MP&L will terminated upon the commencement of
services described in paragraph 2(b) hereinabove. Cajun will use its
best efforts to obtain agreement from its distribution co-ops to be
bound by the terms and provisions of Entergy's Network Service Tariff,
during the time they receive service over facilities to which such
tariff is applicable.
(d) Cajun or its transferee under a plan of reorganization will retain
ownership of its BC1 and BC2 Switchyards and its Through Bus
facilities. Cajun will transfer to GSU its ownership of each of
Transmission lines 745 and 746 (provided that Entergy's Network
Service tariff and its Transmission Service tarff, under which Cajun
receives service under subparagraph 2(b) above, make the continued
ownership of the Transmission line or lines by Cajun or by the
transferee of its generating assets unnecessary for Cajun or its
transferee's provision of current or future services by reason of the
benefits provided under the new tariffs), as of the later of (i)
twelve months from the date of the Settlement or (ii) the date of the
closing of the Settlement. Unleae Transmission lines 745 and 746 are
not transferred to GSU as set forth herein, Cajun will pay RUS an
amount equal to the amount by which NRG Energy, Inc. and Zeigler Coal
Holding Company reduce the amount of their bid for the purchase of
Cajun's assets as a result of the transfer of Transmission lines 745
and 746 pursuant to the Settlement and RUS will release its liens on
Transmission lines 745 and 746 upon such payment by Cajun.
3. Settlement of all Claims and Disputes
(a) Any and all claims of any nature or kind, whether or not now pending in
Court, whether known or unknown, whether founded in law, equity or
otherwise, whether or not already asserted for any and all acts or
omissions between Cajun and GSU or Entergy, and between RUS and GSU or
Entergy, will be dismissed with prejudice and released and satisfied in
full, including, but not limited to, all claims for the River Bend
litigation, the fraud and breach of contract case, the antitrust case,
the nullity case and the service water litigation, and any claims of
equitable subordination of RUS's rights, all pending cases before any
regulatory agency or on appeal from any regulatory agency (such as the
transmission cases before FERC, the merger appeals before FERC, the SEC
and NRC and any and all other matters pending before any regulatory
agency) and any and all other claims or disputes between the parties of
any nature whatsoever, whether or not in litigation. (The foregoing
does not include resolution of claims of RUS against Cajun that are not
specifically identified as resolved in this paragraph.) Judgment will
be rendered in favor of RUS in GSU's adversary proceeding asserting
claims of equitable subordination of RUS's rights. Any and all claims
Cajun may have against RUS for equitable subordination, whether known
or unknown, will be released. Cajun will use its best efforts to
obtain a waiver of all claims held by its members against GSU or
Entergy under the nullity case, and against RUS.
(b) The preliminary injunction issued by the U.S. District Court in the
service water litigation between GSU and Cajun shall continue in full
force and effect until the closing of the Settlement and upon such
date, all funds paid and to be paid into the Registry of the Court
pursuant to said injunction shall be paid over to GSU, together with
all interest earned thereon.
4. Approvals
The Settlement is subject to the approval of (1) all regulatory agencies
having jurisdiction over the subject matter; (2) the bankruptcy court; (3)
the Entergy Board of Directors; (4) the United States of America on behalf
of RUS.
The parties intend to give effect to an to close the Settlement irrespective
of the confirmation or lack of Confirmation of a plan of reorganization of
Cajun. The parties will use their best efforts promptly to obtain all
required approvals and to close the Settlement. The structure of the
Settlement may be modified based upon tax or regulatory advice received by a
party provided the modification does not adversely affect another party.
The Settlement shall close no later than June 1, 1997, unless the parties
otherwise agree.
This Settlement is dated as of May 1, 1996.
Seen and Agreed this 9th day of May, 1996
Ralph R. Mabey
Cajun Electric Power Cooperative, Inc.
through its Chapter ll Trustee,
Ralph R. Mabey
Seen and Agreed this 26th day of April, 1996
Michael G. Thompson
Entergy Corporation and Gulf States Utilities
by Michael G. Thompson
Senior Vice President & General Counsel
Recommended for Adoption by Rural Utilities Senice this 2nd day of May, 1996.
Larry A. Belluzzo
Program Advisor
EXHIBIT NO. 1
RIVER BEND JOPOA - AMENDMENT CONSIDERATIONS
New owner(s) of River Bend may wish to amend the JOPOA as follows:
a. Section 1.6 ADMINISTRATIVE GENERAL CHARGES
Section 1.6 should be revised to specifically spell out defintion and
method of calculating GSU's A&G "add ons."
b. Section 4.2 GSU ACCEPTS APPOINTMENT OF AGENT
Needs a mutual agreeable definition of "Good Utility Practice."
c. Section 6.5 "DAMAGE OR DESTRUCTION"
Needs better definition as to a minority owner's right NOT to take part in
any major capital addition whether it is part of a replacement of damaged
equipment or expansion of capacity.
d. Section 8.5.1. METHOD OF BILLING AND PAYMENT
The current section has been mofidied by mutual agreement as follows:
1. The right to include a contingency amount to the estimated bill has
been dropped.
2. The current estimated monthly bill with a two month true up. Both
sides have agreed to use prime rate for interest either charged or
credited. These changes should be carried to a new owner.
c. ARTICLE 10 - DEFAULT: DEFAULTING
Party should have input in advance as to where the power is being sold and
the price for the power being sold. Also the power should be able to be
sold for a 6 to 9 month period. Current sale period is 90 days which can
limit value received.
A non-defaulting party which pays a defaulting party's costs should have
protection.
f. BUDGET REVIEW AND INPUT - The Current JOPOA
Does not contain any language on budget formulation or forecasts. We
suggest a new section calling for the owners to jointly review the budget
formation process and forecast process. This would prevent
misunderstanding over the plant's needs.
Provide minority owner with adequate and reasonable safeguards against
excessive expenditures.
Parties should have access to additional information on fuel and
transportation costs.
March _ 1998
PRIVILEGED SETTLEMENT NEGOTIATIONS
Mr. Larry A. Belluzzo VIA FAX
Rural Utilities Service - USDA
14th and Independence S. W.
Room 4031- S
Washington, D.C. 20250
Re: Cajun Electric Power Cooperative, Inc. ("Cajun")
Dear Mr. Belluzzo:
When executed by the Rural Utilities Service ("RUS") in the space provided
below, this letter shall evidence the agreement between Southwestern Electric
Power Company ("SWEPCO") and the RUS with respect to the treatment of the claim
of the RUS under the Plan of Reorganization filed by SWEPCO and the Committee of
Certain Members of Cajun Electric Power Cooperative, Inc. ("Cajun") as modified
(the "Joint Plan").
Negotiations between SWEPCO and the RUS have now progressed to a stage
where the RUS has reached an agreement with SWEPCO on the terms on which the RUS
will withdraw iti objection to the Joint Plan, vote for the Joint Plan, and the
RUS and SWEPCO will take certain other affirmative actions regarding the Joint
Plan all as more particularly set forth herein.
Now therefore, for and in consideration of the mutual benefits received by
the RUS and SWEPCO, the RUS and SWEPCO agree as follows:
1. SWEPCO shall increase the "Purchase Price" under its Asset Purchase
Agreement to Nine Hundred Thirty-three Million Five Hundred Thousand and No/100
($933,500,000) cash, subject to adjustments as provided in Section 2.3 and 2.4
of the Asset Purchase Agreement. There will be no reduction in purchase price
if SWEPCO fails to sign the three cooperatives that have not yet agreed to sign
power supply agreements with SWEPCO.
2. SWEPCO shall amend the Asset Purchase Agreement to pay to Cajun, as
additional purchase price, an amount not to exceed $7 million, equal to the
allowed amount of usecured claims (not administrative or priority claims)
described and listed in paragraph I.B.2.a of SWEPCO'S Supplemental Disclosure
Statement, dated November 12, 1996. These funds will be the first funds paid by
the estate to the RUS on its secured claim. On the Effective Date, the estate
will place these funds in a separate account for distribution to the RUS, solely
Mr. Larry A. Belluzzo
Page 2
March _, 1998
for the use of the RUS as set forth herein. On the Effective Date, the RUS will,
outside the Joint Plan, use the additional purchase price funds to pay, on or
before the fourteenth day after confirmation of the Joint Plan, the allowed,
unsecured claims (not administrative or priority claims) described in paragraph
I.B.2.a of SWEPCO'S Supplemental Disclosure Statement. Upon such payment the
claims, and any obligations of SWEPCO to purchase them, shall be satisfied and
extinguished without further distribution from the estate.
3. SWEPCO shall amend the definition of "Excluded Assets" and SUBSECTION 3.11
of its Asset Purchase Agreement such that Cobank Class E Stock and patronage
dividends will be Excluded Assets and will be treated on a similar basis as the
Enron and Trustee Asset Purchase Agreements.
4. SWEPCO shall eliminate any condition in its Asset Purchase Agreement to
SWEPCO'S closing due to the failure of SWEPCO to obtain acceptable fuel
transportation contracts.
5. SWEPCO'S performance of its obligations hereunder and under the Asset
Purchase Agreement will be subject to all the existing rights and satisfaction
of all other conditions precedent in the Joint Plan and the Asset Purchase
Agreement as well as the following:
(a) All nine (9) of the Louisiana electric distribution cooperatives that
constitute the members of Cajun (including CLECO, the successor to Teche)
that have signed term agreements, continue to agree to enter into new
twenty-five year contracts with SWEPCO or a SWEPCO affiliate on terms and
conditions mutually acceptable to SWEPCO and such members;
6. The Joint Plan shall be conditioned on approval of the Amended and Restated
Settlement Agreement. However, in the event that the Trustee's Plan of
Reorganization, which is presently conditioned on a similar settlement agreement
by the RUS with the Trustee, is amended such that the Trustee's Plan is not
conditioned on approval of the Trustee's settlement agreement with the RUS, then
the Joint Plan maybe similarly amended to eliminate the condition of approval of
the Amended and Restated Settlement Agreement.
7. SWEPCO agrees, either through the Amended and Restated Settlement Agreement
filed by SWEPCO and the RUS or by amendments to the Joint plan, to provide for
the treatment of the RUS's claim as secured by all the assets upon which the RUS
claims a lien. The RUS and SWEPCO shall modify the Amended and Restated
Settlement Agreement to allow a fund of $20.24 million from the purchase price,
plus any recoveries from avoidance actions, to be available to unsecured
creditors other than the RUS; and any surplus to be returned to the RUS on its
Mr, Larry A. Belluzzo
Page 3
March _, 1998
unsecured claim. The Trustee shall be limited to the amount of $150,000 from the
Purchase Price, for fees and expenses incurred in pursuing avoidance actions.
8. The RUS shall use its best efforts to obtain Bankruptcy Court approval (and
appellate approvals) of the Amended and Restated Settlement Agreement, including
but not limited to providing necessary witnesses and documents, and assisting in
the prosecution of the case seeking approval of the Amended and Restated
Settlement Agreement.
9. The Amended and Restated Settlement Agreement will include a provision that
will allow the parties by mutual agreement thereto to further amend the
agreement in the event a modification is necessary to cure any impediments to
approval of the settlement or confirmation of the Joint Plan announced or ruled
upon by the Bankruptcy Court.
10. The RUS will use its best efforts to encourage the Trustee to support the
Amended and Restated Settlement Agreement.
11. The RUS shall use its best efforts to contact the general manager of those
three cooperatives who have not yet agreed to sign power supply agreements with
SWEPCO, and encourage them to negotiate power supply agreements with SWEPCO.
12. Since the RUS is consenting to the entry by the Members to power supply
agreements with SWEPCO under the Joint Plan on the Effective Date of the Joint
Plan, SWEPCO shall withdraw its opposition to the relief sought by the RUS in
Adversary 1066 pertaining to the requirement of RUS consent. However, nothing
herein precludes or waives the right of SWEPCO to assert any and all defenses in
Adversary 1066 to causes of action pertaining to the requirement of Cajun's (or
the Trustee's) consent to the entry into power supply agreements by the Members.
13. On or before March 23, 1998, the RUS will file a Motion with the Bankruptcy
Court seeking to change its vote on the Joint Plan from a rejection to an
acceptance of the Joint Plan, and on approval will so change their vote.
14. On or before March 23, 1998, the RUS will withdraw all of its objections to
the Joint Plan, and will modify its appeal presently before Federal District
Judge Polozola to dismiss any relief seeking to disqualify the Joint Plan. The
RUS will not object to or vote against the Joint Plan in the future solely
because of any increase in purchase price or other consideration paid by any
other plan.
Mr. Larry A. Belluzzo
Page 4
March _, 1998
15. On or before March 23, 1998, or as soon thereafter as possible, the RUS
will announce to the Bankruptcy Court that it supports the Joint Plan, will vote
to accept the Joint Plan, and will withdraw all objections to the Joint Plan.
16. The RUS will not take any action that directly or indirectly hinders,
impedes or delays confirmation of the Joint Plan. The RUS may however vote for
other plans of reorganization, and state a preference for other plans of
reorganization.
17. The RUS will not express a preference for any other plan, unless such plan
provides more than $10 million in net value to the RUS according to RUS
calculations (as opposed to gross purchase price), than does the Joint Plan.
18. One business day after the RUS files its Motion to Change its Vote, and its
withdrawal of objections to the Joint Plan, SWEPCO will withdraw any opposition
to the relief sought by the Trustee and the RUS in adversary 1073 pertaining to
the interest escrow fund.
19. Upon execution of this letter agreement by both parties hereto, the terms
and conditions hereof shall constitute the binding obligations of each and may
not be amended or modified except in writing executed by each. Both parties
agree to proceed with their respective obligations hereunder in good faith and
in reliance upon the agreed to terms and conditions hereof.
This offer shall expire unless accepted in writing and delivered to SWEPCO
on or before noon central time on March 17, 1998.
Very truly yours,
Southwestern Electric Power Company
By:
Name:
Title:
AGREED:
Rural Utilities Service
Mr. Law A. Belluzzo
Page 5
March _, 1998
By:
Larry A. Belluzzo
AMENDED AND RESTATED SETTLEMENT AGREEMENT
Southwestern Electric Power Company ("SWEPCO"), the Committee of Certain
Members of Cajun Electric ("Committee") Claiborne Electric Cooperative Inc.
("Claiborne") and the Rural Utilities Service of the United States Department of
Agriculture ("RUS") have previously entered an Amended Settlement Agreement
dated October 31, 1997. This agreement amends, supersedes and restates such
settlement agreement.
WHEREAS, SWEPCO and the Committee assert that the Cajun bankruptcy
estate holds a number of potential lien avoidance actions against RUS whereby
RUS's lien would be avoided on certain assets of Cajun and would otherwise
reduce the amount of the RUS allowed secured claim; and
WHEREAS, RUS denies that any of its liens on Cajun's assets could be
avoided by Cajun's estate; and
WHEREAS, RUS asserts claims against Cajun totaling in excess of $4.1
billion and asserts unsecured deficiency claims likely totaling in excess of $3
billion; and
WHEREAS, RUS's unsecured deficiency claims against Cajun represent most
of Cajun's unsecured debt such that any avoidance of liens by the Cajun estate
for the benefit of unsecured creditors will in large part be for the benefit of
RUS as a general unsecured creditor; and
WHEREAS, the Trustee and RUS have entered into a settlement agreement
that deals with the settlement of the estate's avoidance actions against the
RUS's liens; and
WHEREAS, SWEPCO, Claiborne and the Committee have indicated an
intention to object to such settlement agreement; and
WHEREAS, SWEPCO has filed a plan along with the Committee whereby SWEPCO
proposes to purchase the assets of the Cajun estate for up to $940.5 million;
and
WHEREAS, the RUS has filed an objection to the Joint Plan alleging,
among other things, that SWEPCO may not use alleged cash collateral under the
Joint Plan without the RUS's consent; and
WHEREAS, the RUS, SWEPCO, Claiborne and the Committee desire to avoid
litigation over potential lien avoidance actions and cash collateral disputes
and the cost thereof; and
WHEREAS, in consideration of the mutual promises, conditions and
covenants contained herein, the RUS, SWEPCO, Claiborne and the Committee desire
to settle the disputes among them pertaining to the perfection of the liens of
the RUS and the ability of SWEPCO to use cash collateral under the Joint Plan;
NOW, THEREFORE, the RUS, SWEPCO, Claiborne and the Committee agree to
the terms and provisions set forth below:
1. DEFINITIONS. As used in this Agreement, the following defined
terms shall have the following meanings:
"Agreement" means this Settlement Agreement.
"Approval Order" means the Order of the Court approving each of paragraphs
4 and 7 of this Agreement.
"Cajun" means Cajun Electric Power Cooperative, Inc.
"Court" means the United States Bankruptcy Court for the Middle District of
Louisiana or the United States District Court for the Middle District of
Louisiana, as appropriate.
"Joint Plan" shall mean the Joint Plan of Reorganization filed by SWEPCO,
the Committee and by Entergy Gulf States, Inc. as amended, modified or
supplemented.
"RUS" means the Rural Utilities Service of the United States Department of
Agriculture.
"Settlement Amount" means $20.24 million to be provided for the benefit of
unsecured creditors from the purchase price under the Joint Plan, plus any funds
constituting recoveries from avoidance actions by the estate.
"Trustee" means Ralph R. Mabey or his successor as Chapter 11 Trustee of
Cajun Electric Power Cooperative, Inc.
2. RUS SETTLEMENT WITH THE TRUSTEE. SWEPCO, Claiborne and the Committee
agree not to file objections to the Motion by Ralph R. Mabey, Chapter 11 Trustee
Seeking Order Approving Settlement between the Trustee and the Rural Utilities
Service pursuant to Federal Rule of Bankruptcy Procedure 9019 filed on November
26, 1996.
3. PERFECTION OF RUS' LIENS. SWEPCO, Claiborne and the Committee agree
not to file, and to withdraw if already filed, any objections to the perfection
of the liens asserted by the RUS.
4. ALLOWED SECURED CLAIM. The RUS shall be deemed under the Joint Plan,
without taking further steps, to have as against Cajun and its estate, a fully
perfected security interest in all Cajun assets and proceeds thereof as to which
it is a party to a security agreement, mortgage or pledge (subject only to any
other prior interest held by a third-party not involving a claim of Cajun or its
estate).
5. RATE ESCROW FUND. The Rate Escrow Fund (held by Cajun and currently
in the amount of approximately $42 million and growing) shall be deemed property
of the estate, subject to any final non-appealable orders of any court of
competent jurisdiction.
6. RUS CONSENT TO USE OF CASH COLLATERAL. The RUS consents to the use of
cash collateral under the Joint Plan for payment of administrative and priority
expenses through the Effective Date of the Joint Plan, or any other plan
proposed by the Committee or SWEPCO which provides equivalent value to the RUS.
7. TRANSFER OF FUNDS FOR THE BENEFIT OF UNSECURED CREDITORS. The RUS
consents to the transfer on the Effective Date of the Joint Plan, from the
proceeds of the sale of assets securing RUS's claims, $20.24 million to
unsecured creditors in Classes 6 (a) and (b) under the Joint Plan. The RUS
agrees that, as to the Settlement Amount, RUS shall not be entitled to receive
any distributions on account of any of its claims whether secured, unsecured, or
administrative in nature. If, after payment in full of allowed unsecured claims
under the Joint Plan (other than the deficiency claim of the RUS), funds remain
from the liquidation of assets and from successful avoidance actions, the RUS,
as the sole remaining holder of a general unsecured claim, will receive such
remaining funds.
8. WITHDRAWAL OF OBJECTIONS TO JOINT PLAN. The RUS shall withdraw all
objections to the Joint Plan, including those based on the use of cash or cash
collateral to pay administrative or priority expenses without RUS consent.
9. CONDITIONS.
(a) Paragraphs 4 and 7 become effective only after the occurrence
of the following conditions: (i) the Approval Order being entered by the Court,
(ii) confirmation of the Joint Plan by the Court and (iii) the Joint Plan
becoming effective.
(b) All paragraphs other than 4 and 7 of this Agreement shall
become effective upon execution, and shall remain effective irrespective of
whether the Court approves paragraphs 4 and 7.
10. REPRESENTATION AND WARRANTY OF SWEPCO, CLAIBORNE AND THE COMMITTEE.
SWEPCO, Claiborne and the Committee represent and warrant as of the date this
Agreement is executed that they have all the requisite power and authority to
execute and deliver this Agreement and the other documents necessary to
consummate this Agreement and to perform their obligations hereunder and
thereunder.
11. REPRESENTATION AND WARRANTY OF RUS. RUS represents and warrants as
of the date this Agreement is executed that it has all requisite power and
authority to execute and deliver this Agreement and any other documents
necessary to consummate this Agreement and perform its obligations hereunder and
thereunder.
12. TERMINATION.
(a) The obligations of the parties under paragraphs 4 and 7 shall
terminate and be of no further force and effect, and the parties shall be
released therefrom, if any of the conditions set forth in paragraph 9 are not
met.
13. MISCELLANEOUS.
a. Notices. All notices, requests and other communications to
parties hereunder shall be in writing and delivered by certified mail, return
receipt requested, by Federal Express or by facsimile and shall be given to such
parties at the following respective addresses: If to RUS: With a copy to:
Larry A. Belluzzo Brendan Collins
Program Advisor Civil Division
Financial Services Staff Department of Justice
Rural Utilities Service-USDA P.O. Box 875, Ben Franklin Station
14th and Independence, S.W. 550 11th Street, N.W.
Room 4031-S Washington, D.C. 20044-0875
Washington, D.C. 20250
If to the SWEPCO: With copies to:
Tom Brice Henry Kaim
Central and South West Corporation Sheinfeld, Maley & Kay, P.C.
SWEPCO 3700 First City Tower
416 Travis Street 1001 Fannin, Suite 3700
Shreveport, LA 71101 Houston, Texas 77002
If to the Committee: With copies to:
Henry Locklar Melanie Cohen
Dixie Electric Cooperative Altheimer & Gray
P.O. Box 15659 10 S. Wacker Drive, Suite 4000
Baton Rouge, LA 70895 Chicago, IL 60606-7482
and
John M. Sharp
14481 Old Hammond Highway, Suite 2
Baton Rouge, LA 70816
If to Claiborne: With Copies to:
Jerry Williams Patrick Henry
P.O. Box 719 P.O. Box 239
Homer, LA 71040 Homer, LA 71040
14. BENEFIT OF AGREEMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, including without limitations any successors or assigns under the Joint
Plan.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
agreed to by the parties hereto relating to the subject matter hereof, and may
not be amended, altered or modified, except by a writing executed by a duly
authorized representative of each of the parties hereto. This Agreement shall in
no event be construed or deemed to be evidence of any admission on the part of
any party of any liability or wrongdoing.
16. HEADINGS. The headings herein are inserted for convenience of
reference only and shall not affect the construction or interpretation thereof.
17. COUNTERPARTS AND MULTIPLE ORIGINALS. This Agreement may be executed
in any number of counterparts, and/or originals, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were on
the same instrument.
18. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with Louisiana law except to the extent federal law is applicable, in
which case, this Agreement shall be governed and construed in accordance with
federal law.
19. COURT JURISDICTION. The Court shall have jurisdiction to resolve all
disputes concerning the interpretation and enforcement of this Agreement and any
other documents executed in conjunction with this Agreement and to enforce this
Agreement.
Signed and Agreed this 18th day of March, 1998.
LARRY A BELLUZZO
- ----------------------------------------------
Rural Utilities Service of the United States
Department of Agriculture
by Larry A. Belluzzo, Program Advisor
MICHAEL D. SMITH
- ----------------------------------------------
Southwestern Electric Power Company
JOHN M. SHARP
- ----------------------------------------------
Committee of Certain Members of Cajun Electric
PATRICK HENRY
- ----------------------------------------------
Claiborne Electric Cooperative Inc.
March 18, 1998
PRIVILEGED SETTLEMENT NEGOTIATIONS
Mr. Larry A. Belluzzo VIA FAX
Rural Utilities Service - USDA
14th and Independence S.W.
Room 4031 - S
Washington, D.C. 20250
Re: Cajun Electric Power Cooperative, Inc. ("Cajun")
Dear Mr. Belluzzo:
When executed by the Rural Utilities Service ("RUS") in the space provided
below, this letter shall evidence the agreement between Southwestern Electric
Power Company ("SWEPCO") and the RUS with respect to the treatment of the claim
of the RUS under the Plan of Reorganization filed by SWEPCO and the Committee of
Certain Members of Cajun Electric Power Cooperative, Inc. ("Cajun") as modified
(the "Joint Plan").
Negotiations between SWEPCO and the RUS have now progressed to a stage
where the RUS has reached an agreement with SWEPCO on the terms on which the RUS
will withdraw its objection to the Joint Plan, vote for the Joint Plan, and the
RUS and SWEPCO will take certain other affirmative actions regarding the Joint
Plan all as more particularly set forth herein.
Now therefore, for and in consideration of the mutual benefits received by
the RUS and SWEPCO, the RUS and SWEPCO agree as follows:
1. SWEPCO shall increase the "Purchase Price" under its Asset Purchase
Agreement to Nine Hundred Thirty-three Million Five Hundred Thousand and No/100
($933,500,000) cash, subject to adjustments as provided in Section 2.3 and 2.4
of the Asset Purchase Agreement. There will be no reduction in purchase price
if SWEPCO fails to sign the three cooperatives that have not yet agreed to sign
power supply agreements with SWEPCO.
2. SWEPCO shall amend the Asset Purchase Agreement to pay to Cajun, as
additional purchase price, an amount not to exceed $7 million, equal to the
allowed amount of unsecured claims (not administrative or priority claims)
described and listed in paragraph I.B.2.a of SWEPCO's Supplemental Disclosure
Statement, dated November 12, 1996. These funds will be the first funds paid by
th estate to the RUS on its secured claim. On the Effective Date, the estate
will place these funds in a separate account for distribution to the RUS, solely
for the use of the RUS as set forth herein. On the Effective Date, the RUS
will, outside the Joint Plan, use the additional purchase price funds to pay, on
or before the fourteenth day after confirmation of the Joint Plan, the allowed,
unsecured claims (not administrative or priority claims) described in paragraph
I.B.2.a of SWEPCO's Supplemental Disclosure Statement. Upon such payment the
claims, and any obligations of SWEPCO to purchase them, shall be satisfied and
extinguished without further distribution from the estate.
3. SWEPCO shall amend the definition of "Excluded Assets" and Section 3.11 of
its Asset Purchase Agreement such that Cobank Class E Stock and patronage
dividends will be Excluded Assets and will be treated on a similar basis as the
Enron and Trustee Asset Purchase Agreements.
4. SWEPCO shall eliminate any condition in its Asset Purchase Agreement to
SWEPCO's closing due to the failure of SWEPCO to obtain acceptable fuel
transportation contracts.
5. SWEPCO's performance of its obligations hereunder and under the Asset
Purchase Agreement will be subject to all the existing rights and satisfaction
of all other conditions precedent in the Joint Plan and the Asset Purchase
Agreement as well as the following:
(a) All nine (9) of the Louisiana electric distribution cooperatives that
constitute the members of Cajun (including CLECO, the successor to Teche)
that have signed term agreements, continue to agree to enter into new
twenty-five year contracts with SWEPCO or a SWEPCO affiliate on terms and
conditions mutually acceptable to SWEPCO and such members;
6. The Joint Plan shall be conditioned on approval of the Amended and Restated
Settlement Agreement. However, in the event that the Trustee's Plan of
Reorganization, which is presently conditioned on a similar settlement agreement
by the RUS with the Trustee, is amended such that the Trustee's Plan is not
conditioned on approval of the Trustee's settlement agreement with the RUS, then
the Joint Plan may be similarly amended to eliminate the condition of approval
of the Amended and Restated Settlement Agreement.
7. SWEPCO agrees, either through the Amended and Restated Settlement Agreement
filed by SWEPCO and the RUS or by amendments to the Joint plan, to provide for
the treatment of the RUS's claim as secured by all the assets upon which the RUS
claims a lien. The RUS and SWEPCO shall modify the Amended and Restated
Settlement Agreement to allow a fund of $20.24 million from the purchase price,
plus any recoveries from avoidance actions, to be available to unsecured
creditors other than the RUS; and any surplus to be returned to the RUS on its
unsecured claim. The Trustee shall be limited to the amount of $150,000 from
the Purchase Price, for fees and expenses incurred in pursuing avoidance
actions.
8. The RUS shall use its best efforts to obtain Bankruptcy Court approval (and
appellate approvals) of the Amended and Restated Settlement Agreement, including
but not limited to providing necessary witnesses and documents, and assisting in
the prosecution of the case seeking approval of the Amended and Restated
Settlement Agreement.
9. The Amended and Restated Settlement Agreement will include a provision that
will allow the parties by mutual agreement thereto to further amend the
agreement in the event a modification is necessary to cure any impediments to
approval of the settlement or confirmation of the Joint Plan announced or ruled
upon by the Bankruptcy Court.
10. The RUS will use its best efforts to encourage the Trustee to support the
Amended and Restated Settlement Agreement.
11. The RUS shall use its best efforts to contact the general manager of those
three cooperatives who have not yet agreed to sign power supply agreements with
SWEPCO, and encourage them to negotiate power supply agreements with SWEPCO.
12. Since the RUS is consenting to the entry by the Members to power supply
agreements with SWEPCO under the Joint Plan, on the Effectice Date of the Joint
Plan, SWEPCO shall withdraw its opposition to the relief sought by the RUS in
Adversary 1066 pertaining to the requirement of RUS consent. However, nothing
herein precludes or waives the right of SWEPCO to assert any and all defenses in
Adversary 1066 to causes of action pertaining to the requirements of Cajun's (or
the Trustee's) consent to the entry into power supply agreements by the Members.
13. On or before March 25, 1998, if the Board of Directors approvals discussed
in paragraph 18 have been obtained, the RUS will file a Motion with the
Bankruptcy Court seeking to change its vote on the Joint Plan from a rejection
to an acceptance of the Joint Plan, and on approval will so change their vote.
14. On or before March 25, 1998, if the Board of Director approvals discussed
in paragraph 18 have been obtained, the RUS will withdraw all of its objections
to the Joint Plan, and will modify its appeal presently before Federal District
Judge Polozola, to dismiss any relief seeking to disqualify the Joint Plan. The
RUS will not object to or vote against the Joint Plan in the future solely
because of any increase in purchase price or other consideration paid by any
other plan.
15. On or before March 25, 1998, or as soon thereafter as possible, if the
Board of Director approvals discussed in paragraph 18 have been obtained, the
RUS will announce to the Bankruptcy Court that it supports the Joint Plan, will
vote to accept the Joint Plan, and will withdraw all objections to the Joint
Plan.
16. The RUS, if the Board of Director approvals discussed in paragraph 18 have
been obtained, will not take any action that directly or indirectly hinders,
impedes or delays confirmation of the Joint Plan. The RUS may however vote for
other plans of reorganization, and state a preference for other plans of
reorganization.
17. The RUS will not express a preference for any other plan, unless such plan
provides more than $10 million in net value to the RUS according to RUS
calculations (as opposed to gross purchase price), than does the Joint Plan.
18. On or before March 25, SWEPCO and the Members Committee, and Claiborne will
withdraw any opposition to the relief sought by the Trustee and the RUS in
adversary 1073 pertaining to the interest escrow fund. Such withdrawal shall be
subject to approval of the Board of Directors of each of the members of the
Committee of Certain Members and Claiborne, where required, and such withdrawal
shall not require SWEPCO, any member of the Members Committee nor Claiborne to
violate any Order of the Bankruptcy Court, the Louisiana Public Service
Commission or any other Court of competent jurisdiction which is unstayed
pertaining to the interest escrow funds. Furthermore such withdrawal shall not
waive rights of the ultimate consumer rate payers to the interest escrow funds,
if any.
19. Upon execution of this letter agreement by both parties hereto, the terms
and conditions hereof shall constitute the binding obligations of each and may
not be amended or modified except in writing executed by each. Both parties
agree to proceed with their respective obligations hereunder in good faith and
in reliance upon the agreed to terms and conditions hereof.
This offer shall expire unless accepted in writing and delivered to SWEPCO
on or before noon central time on March 18, 1998.
Very truly your,
Southwestern Electric Power Company