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EXHIBIT 10.3.19
***PORTIONS OF THIS EXHIBIT MARKED BY BRACKETS ("[***]") OR OTHERWISE INDICATED
HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED
PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***
ENERGY MANAGEMENT AGREEMENT
AMONG
SITHE/INDEPENDENCE POWER PARTNERS, L.P.,
DYNEGY MARKETING AND TRADE
AND
DYNEGY POWER MARKETING, INC.
JULY 1, 2001
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ENERGY MANAGEMENT AGREEMENT
ENERGY MANAGEMENT AGREEMENT dated as of July 1, 2001 by and among Dynegy
Marketing and Trade (a Colorado general partnership, "DMT"), Dynegy Power
Marketing, Inc. (a Texas corporation, "DPM"), and Sithe/Independence Power
Partners, L.P. (a Delaware limited partnership, "Independence"),
WITNESSETH
WHEREAS, Independence owns a natural gas fired electric generating plant
of approximately 1,032 MW net capacity located in the Town of Scriba, New York
(the "Facility");
WHEREAS, DPM and Independence have entered into a certain Tolling
Agreement dated as of July 1, 2001 (the "Tolling Agreement"), pursuant to which
DPM has the right to receive Tolling Services and Ancillary Services (both as
defined in the Tolling Agreement) with respect to a portion of the Facility;
WHEREAS, Independence has retained the right to sell the output of the
remainder of the Facility;
WHEREAS, Independence and Dynegy Canada Marketing and Trade ("Dynegy
Canada") have entered into a certain Gas Supply Agreement dated as of July 1,
2001 (the "Gas Agreement") pursuant to which Dynegy Canada supplies Independence
all of its requirements for Gas, excluding Gas for which DPM is responsible
under the Tolling Agreement;
WHEREAS, DPM has certain wholesale energy management and marketing
expertise in the scheduling and management of electric generation services and
products;
WHEREAS, DMT has certain wholesale energy management expertise in the
supply and delivery of natural gas; and
WHEREAS, Independence wishes to take advantage of the combined wholesale
energy management expertise of DPM and DMT for the Facility in accordance with
the terms hereof, and DPM and DMT are willing to provide such energy management
services;
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NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, DMT, DPM and Independence, intending to be legally bound,
agree as follows:
ARTICLE 1 - DEFINITIONS
1.01 FORMAT
(a) References to Articles and Sections herein are
cross-references to Articles and Sections, respectively, in this
Agreement, unless otherwise stated.
(b) All Schedules that are attached to this Agreement are
incorporated by reference as if fully set forth herein.
(c) All references to quantities of Gas are references on an
HHV basis unless otherwise stated.
1.02 DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, when used
with initial capitalization, whether singular or plural, the following terms
shall have the meanings set forth below. All references in this Agreement to any
governmental or non-governmental entity, including, without limitation, NYISO
and FERC, shall include any and all successors to such entities. Unless the
context otherwise requires, any reference herein to any contract, agreement or
tariff and any schedule, attachment or exhibit thereto shall mean such contract,
agreement, tariff, schedule, attachment or exhibit as amended, supplemented and
modified and in effect from time to time.
(1) "Affiliate" means, with respect to any entity, any other entity that,
directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such entity. For this
purpose, "control" means the direct or indirect ownership of fifty percent
(50%) or more of the outstanding capital stock or other equity interests
having ordinary voting power.
(2) "Business Day" means any Day on which Federal Reserve member banks in New
York, New York are open for business.
(3) "Claim" means any demand, claim, cause of action, lawsuit, or proceeding
of any kind or character, including investigation or audit by a
Governmental Authority.
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(4) "Contract Term" has the meaning set forth in Section 2.01.
(5) "Day" has the meaning set forth in the NYISO Requirements.
(6) "Effective Date" has the meaning set forth in Section 2.01.
(7) "Empire" means Empire State Pipeline.
(8) "Empire Gas Transportation Contract" means the Empire Firm Transportation
Agreement dated October 4, 1993 between Empire, Empire State Pipeline
Company ("ESPC"), St. Clair Pipeline Company, Inc. ("SCPC") and
Independence as it incorporates the terms of the Supplemental Agreement
dated February 28, 1992 among Independence, Empire, SCPC and ESPC.
(9) "Energy Management Fee" means an amount equal to $[***] per month.
(10) "Energy Manager(s)" means, in the singular, either of DPM or DMT, and in
the plural both DPM and DMT.
(11) "FERC" means the Federal Energy Regulatory Commission.
(12) "Gas" means natural gas, including gas-well gas, casinghead gas and/or
residue gas resulting from processing both casinghead gas and gas-well
gas, and shall include liquefied natural gas and synthetic gas in a
vaporized state, in each case meeting or exceeding the minimum quality
specifications under the Empire Gas Transportation Contract (and related
Empire Gas tariffs) and the Niagara Mohawk Transportation Contract (and
related Niagara Mohawk Gas tariffs).
(13) "Gas Facility Point" means the outlet flange of the Gas Metering Equipment
at the interconnection between the Facility and Line 63 of Niagara Mohawk.
(14) "Good Electrical Practices" means those practices, methods and acts
engaged in or approved by a significant portion of the independent
electric power generation industry during the relevant time period, or any
of the practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time a decision is made, could
have been expected to accomplish a desired result at reasonable cost
consistent with good business practices, reliability, safety and
expedition. Good Electrical Practices are not intended to be
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limited to the optimum practices, methods or acts to the exclusion of
others, but rather to those practices, methods and acts generally accepted
or approved by a significant portion of the power industry in the relevant
region, during the relevant time period, as described in the immediately
preceding sentence.
(15) "Governmental Authority" shall mean any federal, state, local or municipal
governmental body; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, policy, regulatory or
taxing authority, jurisdiction or power; any court or governmental
tribunal; or any applicable independent system operator, regional
transmission organization, regional power pool, reliability council or
other regional entity performing similar functions.
(16) "Interest Rate" means, for each Day, a rate per annum equal to the prime
rate reported in The Wall Street Journal's "Money Rates" column (or any
similar column published in The Wall Street Journal in replacement
thereof) for the immediately preceding Business Day plus 2%. If the Wall
Street Journal ceases to report the prime rate, the prime rate for
purposes of this Agreement shall be the prevailing prime rate (or base
rate) charged by major banks in the United States.
(17) "Law" means any law, rule, regulation, order, writ, judgment, decree or
other legal or regulatory determination by a Governmental Authority.
(18) "Loss" means any loss, award, judgment, liability, damage, charge, fine,
penalty, interest cost, or expense of any kind or nature (including
attorneys' fees and other expenses associated with litigation and
preparation for litigation, such as court costs and expert and
consultants' fees and expenses).
(19) "Month" means calendar month.
(20) "Niagara Mohawk" means Niagara Mohawk Power Corporation.
(21) "Niagara Mohawk Gas Transportation Contract" means the Niagara Mohawk Firm
Transportation Agreement dated March 11, 1992 between Niagara Mohawk and
Independence.
(22) "NYISO" means the New York Independent System Operator, Inc.
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(23) "NYISO Bid" means a bid, Schedule or request to operate submitted to the
NYISO related to the generation of energy or ancillary services from the
Facility.
(24) "NYISO Directed Operation" means, for any period, the operation of all or
a portion of the Facility at the direction of the NYISO during such
period, including the operation of the Facility in response to an NYISO
Bid accepted by the NYISO or the operation of the Facility at the
direction of a Transmission Provider (as defined in the Tolling Agreement)
pursuant to NYISO Requirements.
(25) "NYISO Open Access Transmission Tariff" means the NYISO Open Access
Transmission Tariff filed with FERC by the NYISO.
(26) "NYISO Operating Agreement" means the amended and restated Operating
Agreement of the NYISO filed with FERC by the NYISO.
(27) "NYISO Requirements" means the then applicable and valid obligations,
rules and regulations as defined and set forth in the NYISO Operating
Agreement, the NYISO Services Tariff, the NYISO Open Access Transmission
Tariff and/or similar agreements, policies and guidelines.
(28) "NYISO Services Tariff" means the NYISO Market Administration and Control
Area Services Tariff filed with FERC by the NYISO.
(29) "Operating Committee" has the meaning set forth in Section 7.02.
(30) "Operator" means the person named by Independence from time to time, as
the operator of the Facility, as the same may be re-appointed by
Independence from time to time.
(31) "Party" or "Parties" means in the singular, any one of Independence, DPM
or DMT, and in the plural, means Independence, DPM and DMT; provided,
however, that with respect to Articles 5, 12 and 13, Independence shall be
considered one Party, and the Energy Managers collectively shall be
considered the other Party.
(32) "Person" means any individual, corporation, partnership, trust, estate,
limited liability company, governmental agency or authority or other
entity.
(33) "Purchase Agreement" shall have the meaning set forth in Section 9.02.
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(34) "Reserved Capability" shall have the meaning set forth in the Tolling
Agreement.
(35) "Reserved Tolling Capability" shall have the meaning set forth in the
Tolling Agreement.
(36) "Schedule" or "Scheduling" or "Scheduled" means communicating and
confirming that a particular amount of Gas or Energy and/or Ancillary
Services is to be delivered or received and providing all information as
may be necessary to cause such delivery or receipt to occur.
(37) "Transporter" means any Person that transports Gas provided under the Gas
Agreement or under the Tolling Agreement upstream of the Gas Facility
Point.
(38) "Transportation Agreement" shall have the meaning set forth in Section
9.02.
ARTICLE 2 - EFFECTIVE DATE AND TERM
2.01 TERM
This Agreement shall commence on the later of (a) the date on which all
conditions specified in Article 16 are satisfied or waived or (b) July 1, 2001
("Effective Date") and shall remain in effect through November 14, 2014
("Contract Term"); provided, however, that Independence may terminate this
Agreement in its sole discretion at any time prior to 12:01 A.M. on July 1, 2001
by providing notice of termination to the Energy Managers. This Agreement shall
terminate automatically at the end of the Contract Term and neither Independence
nor the Energy Managers shall have any further liability or obligation to the
other hereunder, except for obligations or duties that accrued prior to such
termination and for obligations that expressly survive termination of this
Agreement.
ARTICLE 3 - GAS MANAGEMENT SERVICES
3.01 APPOINTMENT OF GAS MANAGER
Independence hereby appoints and authorizes DMT to act as its exclusive
agent for the purposes set forth in this Article 3, and DMT hereby agrees to
such appointment and authorization.
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3.02 SPECIFIC RESPONSIBILITIES
Specifically, DMT shall, in accordance with this Agreement and the Gas
Agreement:
(a) monitor the daily Gas requirements of the Facility based on the
anticipated dispatch of the Facility, including the forecasts provided in
accordance with Section 5.02 and Exhibits 5.02(A) and 5.02(B) of the Tolling
Agreement;
(b) Schedule nominations with Transporters in accordance with Dynegy
Canada's obligations under the Gas Agreement and in accordance with DPM's
obligations under the Tolling Agreement;
(c) coordinate with Independence, DPM, Dynegy Canada and Operator to
ensure that the Gas supply for the Facility is sufficient to meet the
anticipated dispatch of the Facility;
(d) immediately notify Independence, Operator and DPM of any Gas
supply or Gas transportation event which could reasonably be expected to have a
material impact on Independence or the availability of the Facility; and
(e) maintain records of all relevant information necessary or
appropriate to administer its obligations under this Agreement, under the Gas
Agreement, under related agreements and under any transactions contemplated
thereby.
3.03 CERTAIN GAS NOMINATIONS
In circumstances where DMT has made the Gas supply nomination for the
Facility and the nomination is less than the Gas transportation capacity under
contract for the Facility's requirements, DMT shall use commercially reasonable
efforts to mitigate the costs and charges which would otherwise be incurred by
Independence as a result of the under-utilization of the transportation
capacity, provided, however, nothing in this Agreement shall require DMT to pay
or be liable for any such costs or charges unless such obligation is set forth
in the Gas Agreement. Under no circumstances, absent DMT's gross negligence or
willful misconduct shall DMT have any liability or suffer any consequences
associated with Gas imbalance or any such similar or related charges imposed by
any transportation provider or Governmental Authority under any fuel supply
agreement other than the Gas Agreement; it being understood that Independence
shall be solely and exclusively liable for any such charges and liabilities
(except as otherwise specified in the Gas Agreement or in the Tolling
Agreement).
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3.04 STANDARDS OF CARE
DMT agrees to use commercially reasonable efforts to provide to
Independence all Gas management services described in this Agreement necessary
for the dispatch of energy from the Facility as provided in this Agreement and
DMT agrees to perform such services with reasonable care and diligence, and in
accordance with industry standards and all Laws. Notwithstanding the foregoing,
nothing in this Article shall establish a standard of performance relative to
the Gas Agreement or the Tolling Agreement, it being understood and agreed that
Dynegy Canada's and DPM's Gas supply obligations with respect to the Facility
are set forth exclusively, in the case of Dynegy Canada, in the Gas Agreement
and, in the case of DPM, the Tolling Agreement and that the obligations with
respect to the delivery of Gas to the Facility other than in connection with
deliveries under the Gas Agreement and the Tolling Agreement are set forth
exclusively in the other fuel supply agreements entered into by Independence.
3.05 DELIVERIES UNDER THE GAS AGREEMENT
All payments for Gas delivered under the Gas Agreement shall be made in
accordance with the terms of the Gas Agreement.
ARTICLE 4 - ELECTRICITY MANAGEMENT SERVICES
4.01 APPOINTMENT OF ELECTRICITY MANAGER
Independence hereby appoints and authorizes DPM to act as its exclusive
agent for the purposes set forth in this Article 4, and DPM hereby agrees to
such appointment and authorization.
4.02 SPECIFIC RESPONSIBILITIES
Specifically, DPM shall:
(a) on behalf of DPM and Independence and to the extent permitted by
the NYISO Requirements, enter any nominations and enter all bids of energy under
the Tolling Agreement on behalf of Independence into the NYISO's Day-Ahead
Market (as defined in the Tolling Agreement) or otherwise in accordance with the
arrangements for bidding of energy into the NYISO markets as may be set forth in
the Tolling Agreement;
(b) on behalf of DPM and Independence and to the extent permitted by
the NYISO Requirements, enter any Schedule of energy in
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accordance with the directions of Independence that may arise in connection with
the Reserved Capability;
(c) on behalf of DPM and Independence and to the extent permitted by
the NYISO Requirements, conform to the standards of entering bids of energy to
the various NYISO markets in accordance with the NYISO Requirements and
otherwise where applicable, in accordance with the Tolling Agreement;
(d) on behalf of DPM and Independence and to the extent permitted by
the NYISO Requirements, maintain accounts with, and administer payments and
reconciliations of amounts due from the NYISO with respect to Tolling Services
provided under the Tolling Agreement and with respect to revenues attributable
to the use of the Reserved Capability;
(e) maintain records of all relevant information necessary or
appropriate to administer its obligations under this Agreement, under the
Tolling Agreement, under related agreements and under any transactions
contemplated thereby;
(f) verify daily and hourly bids of energy with the NYISO in
comparison to the operation of the Facility; and
(g) on behalf of DPM and Independence and to the extent permitted by
the NYISO Requirements, be the primary point of contact with the NYISO with
respect to all matters related to bidding and Scheduling as contemplated by
Sections 5.02 and 10.01 and Exhibits 5.02(A) and 5.02(B) of the Tolling
Agreement.
4.03 COMMUNICATIONS WITH NYISO
Subject to Article X of the Tolling Agreement and to the extent permitted
by the NYISO Requirements, it is the intent of the Parties that DPM shall be the
primary contact with the NYISO with respect to all of the functions listed in
Section 4.02(a), (b), (c) and (f) and any other matters reasonably related
thereto. If the NYISO contacts Independence directly with respect to any of the
functions listed in Section 4.02, Independence shall promptly notify DPM. It is
the intent of the Parties that Independence shall continue to be the primary
contact with the NYISO with respect to reliability considerations and emergency
operations. If the NYISO contacts DPM directly with respect to reliability
considerations and emergency operations, DPM shall promptly notify Independence.
The Parties agree to work together to develop operating procedures with respect
to communications between the Parties and the NYISO related to all other
matters. To the extent practicable, Independence shall provide copies to DPM of
any
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correspondence or written communications with the NYISO related to the operation
of the Facility.
4.04 SCHEDULING AND DISPATCH
(a) Subject to Article X of the Tolling Agreement and to the extent
permitted by the NYISO Requirements, it is the intention of Independence and DPM
to allow DPM to have maximum flexibility with respect to preparing and
submitting bids of energy to the NYISO markets under the Tolling Agreement. As
such, all bidding and scheduling of energy shall be done in accordance with
Article X and Exhibits 5.02(A) and 5.02(B) of the Tolling Agreement.
(b) From time to time, Independence will notify DPM of its
contractual responsibilities related to the operation of the Facility and,
consistent with the procedures specified herein and in Section 5.02 and Exhibits
5.02(A) and 5.02(B) to the Tolling Agreement, DPM will prepare and submit bids
to the NYISO in a manner designed to cause operation of the Facility to conform
to such contractual responsibilities.
4.05 STANDARD OF CARE
DPM agrees to use commercially reasonable efforts to provide to
Independence all of the electricity management services described in this
Agreement and DPM agrees to perform such services with reasonable care and
diligence and in accordance with the Tolling Agreement, the instructions from
Independence related to the Reserved Capability, Good Electrical Practices and
all Laws.
ARTICLE 5 - DEFAULT AND REMEDIES
5.01 EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an Event of Default under this Agreement:
(a) A material breach of any material term or condition of this
Agreement, including, but not limited, to (i) any material breach of a
representation, warranty or covenant made in this Agreement, and (ii) failure of
a Party to make a required payment to another Party of amounts due hereunder.
(b) A failure of Guarantor to provide Performance Assurance as
defined in the Guaranty Agreement dated as of the date hereof by Guarantor (as
amended, supplemented or modified and in effect from time to
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time, the "Guaranty Agreement") or a guaranty or other credit assurance
acceptable to Independence, within the time required pursuant to Section 6 of
the Guaranty Agreement.
(c) A receiver or liquidator or trustee of a Party or of any of its
property shall be appointed by a court of competent jurisdiction, and such
receiver, liquidator or trustee shall not have been discharged within one
hundred twenty (120) Days, or by decree of such a court, a Party shall be
adjudicated bankrupt or insolvent or any substantial part of its property shall
have been sequestered, and such decree shall have continued undischarged and
unstayed for a period of one hundred twenty (120) Days after the entry thereof;
or a petition to declare bankruptcy or to reorganize a Party pursuant to any of
the provisions of the Federal Bankruptcy Code, as now in effect or as it may
hereafter be amended, or pursuant to any other similar state statute as now or
hereafter in effect, shall be filed against a Party and shall not be dismissed
within one hundred twenty (120) Days after such filing.
(d) A Party shall file a voluntary petition in bankruptcy under any
provision of any federal or state bankruptcy law or shall consent to the filing
of any bankruptcy or reorganization petition against it under any similar law;
or, without limiting the generality of the foregoing, a Party shall file a
petition or answer or consent seeking relief or assisting in seeking relief in a
bankruptcy under any provision of any federal or state bankruptcy law or shall
consent to the filing of any bankruptcy or reorganization petition against it
under any similar law, or, without limiting the generality of the foregoing, a
Party shall file a petition or answer or consent seeking relief or assisting in
seeking relief in a proceeding under any of the provisions of the Federal
Bankruptcy Code, as now in effect or as it may hereafter be amended, or pursuant
to any other similar state statute as now or hereafter in effect, or an answer
admitting the material allegations of a petition filed against it in such a
proceeding; or a Party shall make an assignment for the benefit of its
creditors; or a Party shall admit in writing its inability to pay its debts
generally as they become due; or a Party shall consent to the appointment of a
receiver, trustee or liquidator of it or of all or part of its property.
(e) The occurrence and continuation of a default, event of default
or other similar condition or event in respect of such Party under (i) the Gas
Supply Agreement; or (ii) the Tolling Agreement, or (iii) the ISDA Master
Agreement (Multicurrency - Cross Border) dated as of July 1, 2001, the Schedule
dated as of July 1, 2001 to the ISDA Master Agreement (Multicurrency - Cross
Border) or the Electricity Swap Confirmation dated as of July 1, 2001, all
between Independence and DPM.
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5.02 NOTICE OF DEFAULT; CURE
Upon the occurrence of any such Event of Default other than those
described in Section 5.01(b), (c) and (d), the Party not in default shall give
written notice of the Event of Default to the defaulting Party. Such notice of
default shall set forth, in reasonable detail, the nature of the default and,
where known and applicable, the steps necessary to cure such default. Following
receipt of such notice, the defaulting Party shall have:
(a) ten (10) Days in the case of the failure of the defaulting
Party to make a required payment to the other Party of amounts
due hereunder; or
(b) thirty (30) Days in the case of any other Event of Default
described in Sections 5.01(a) and 5.01(e):
to cure such default or, in the case of an Event of Default under Section
5.02(b), to commence in good faith and continue to diligently pursue all such
steps as shall be reasonably necessary and appropriate to cure such default in
the event such default cannot reasonably be completely cured within such thirty
(30) Day period.
5.03 REMEDIES
Notwithstanding the foregoing, after the occurrence of any such Event of
Default and the expiration of all applicable cure periods with respect thereto
without such default being cured, the non-defaulting Party shall be entitled (i)
to suspend performance under this Agreement or to terminate this Agreement, (ii)
to commence an action to require the defaulting Party to remedy such default and
specifically perform its duties and obligations hereunder in accordance with the
terms and conditions hereof and (iii) to exercise such other rights and remedies
as it may have at equity or at law, but subject to any limitation on damages
otherwise provided for under this Agreement.
ARTICLE 6 - BILLING AND PAYMENT
6.01 BILLING
As soon as practicable after the end of each Month, Independence shall
deliver to the Energy Managers an invoice setting forth all charges and any
other amount payable to Independence pursuant to this Agreement, and any amounts
payable to the Energy Managers pursuant to the terms of this Agreement (other
than the Energy Management Fee).
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6.02 PAYMENT
On or before the tenth Day of each Month, Independence shall pay to DMT,
on behalf of the Energy Managers, the Energy Management Fee. Each Party shall
render payment to the other Party by wire transfer payment, or other acceptable
method agreed to by the Parties, of the amount due as set forth in any invoice
under Section 6.01, by the later of (i) the twenty fifth (25th) Day of the
Month, and (ii) ten Days after the other Party's receipt of the invoice. The
address, account information and/or wire transfer information shall be as
provided pursuant to Section 24.07. Failure to make such payment when due shall
result in a late charge on the unpaid balance that shall accrue on each calendar
day from the due date to the date paid at the Interest Rate. If either Party in
good faith disputes any part of any invoice, it shall make payment of the
undisputed amount invoiced and shall provide to the other Party on or before the
payment due date a written explanation of the basis for the dispute. If any
amount disputed is determined to be due, the disputing Party shall pay such
disputed amount within two Days of such determination, along with interest
accrued daily at the Interest Rate from the date that, but for the dispute,
payment was due until the date paid.
6.03 AUDIT
Each Party has the right with reasonable prior notice, at its sole
expense, to examine the records of the other Party during Regular Business Hours
to the extent reasonably necessary to verify the accuracy of any invoice, or
calculations provided with or supporting such invoice, rendered pursuant to this
Agreement. Each Party shall retain the records necessary to verify the accuracy
of any invoice for 18 Months following the date of such invoice. If any such
examination reveals any inaccuracy in any invoice, or calculations provided with
or supporting such invoice, the necessary adjustments in such invoice, or
calculations provided with or supporting such invoice, and the payments made
pursuant to such inaccurate invoice, or calculations provided with or supporting
such invoice, shall be adjusted in the next invoice; provided, however, that the
Party asserting the need for such adjustment brought it to the attention of the
other Party within twelve Months after the event causing the need for
adjustment. This Section 6.03 shall survive any termination of this Agreement
for a period of one year from the date on which the last invoice is rendered to
such Party pursuant to this Agreement.
6.04 OFFSET
The Parties hereby agree that they shall discharge mutual debts and
payment obligations due and owing to each other under this Agreement
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through netting, in which case all amounts owed by each Party to the other Party
under this Agreement during the monthly billing period, including, interest, and
payments or credits, shall be netted so that only the excess amount remaining
due shall be paid by the Party who owes it.
ARTICLE 7 - MANAGEMENT REPORTS AND OPERATING COMMITTEE
7.01 MANAGEMENT REPORTS
The Energy Managers shall provide Independence with periodic management
reports detailing all activities undertaken under this Agreement. The Energy
Managers and Independence shall conduct quarterly meetings (or more frequent
meetings if more frequent meetings are requested by Independence) to jointly
review and evaluate the performance under this Agreement and determine future
strategies and operational decisions concerning all aspects of the Agreement.
The meetings may be held telephonically or by other agreed upon means.
7.02 OPERATING COMMITTEE
The Parties shall each appoint a member and an alternate to an Operating
Committee, and so notify the other Parties of such appointments in writing. Such
appointments may be changed at any time by similar notice. The Operating
Committee shall meet as necessary to carry out the duties set forth herein. The
Operating Committee shall hold meetings at the request of any Party at the
Facility (unless otherwise agreed upon by the members of the Operating
Committee) and at a time agreed upon by the members of the Operating Committee.
Each member and alternate shall be a responsible person working with his or her
Party's respective day-to-day operations under this Agreement. The duties of the
Operating Committee shall include, but not be limited to, (i) coordinating
operation schedules, (ii) establishing and maintaining operating procedures,
including those pertaining to information transfers between and among the
Parties, consistent with the provisions of this Agreement, and (iii) such other
duties as may be conferred upon it by mutual agreement of the Parties.
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES
8.01 ENERGY MANAGERS REPRESENTATIONS
The Energy Managers hereby represents and warrants as follows:
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(a) DMT is a general partnership duly organized and validly existing
and in good standing under the laws of Colorado and is duly qualified to do
business and in good standing in the State of New York.
(b) DPM is a corporation duly organized and validly existing and in
good standing under the laws of Texas and is duly qualified to do business and
in good standing in the State of New York.
(c) DMT has all requisite power and authority to carry on the
business to be conducted by it and to enter into this Agreement and the
transactions contemplated hereby, and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to this Agreement.
(d) DPM has all requisite power and authority to carry on the
business to be conducted by it and to enter into this Agreement and the
transactions contemplated hereby, and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to this Agreement.
(e) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of DMT and do not
require any other actions or proceedings or any partner approval or consent of
any trustee or holder of any indebtedness of DMT.
(f) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of DPM and do not
require any other actions or proceedings or any shareholder approval or consent
of any trustee or holder of any indebtedness of DPM.
(g) This Agreement has been duly executed and delivered on behalf of
DMT by the appropriate officers of DMT and constitutes the legal, valid and
binding obligation of DMT, enforceable against DMT in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium and other similar laws
applicable to creditors' rights generally and except as the enforceability
thereof may be limited by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(h) This Agreement has been duly executed and delivered on behalf of
DPM by the appropriate officers of DPM and constitutes the legal, valid and
binding obligation of DPM, enforceable against DPM in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium and other similar laws
applicable to creditors' rights generally and except as the enforceability
thereof may be limited by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
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(i) The execution, delivery, and performance of its obligations
under this Agreement do not: (i) violate any provision of any Law having
applicability to any Energy Manager or any provision of the organizational
documents of either Energy Manager, the violation of which could reasonably be
expected to have a material adverse effect on the ability of an Energy Manager
to perform its obligations under this Agreement; (ii) result in a breach of or
constitute a default under any provision of the organizational documents of
either Energy Manager, (iii) result in a breach of or constitute a default under
any agreement relating to the management or affairs of either Energy Manager or
any indenture or loan or credit agreement or any other agreement, lease, or
instrument to which any Energy Manager is a party or by which any Energy Manager
or its properties or assets may be bound, the breach or default of which could
reasonably be expected to have a material adverse affect on the ability of such
Energy Manager to perform its obligations under this Agreement, or (iv) result
in, or require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest, or other charge or encumbrance of any nature
(other than as may be contemplated by this Agreement) upon or with respect to
any of the assets or properties of any Energy Manager, the creation or
imposition of which could reasonably be expected to have a material adverse
affect on the ability of such Energy Manager to perform its obligations under
this Agreement.
(j) There is no pending or, to the best of each of the Energy
Manager's knowledge, threatened Claim affecting an Energy Manager before any
court or other Governmental Authority, or arbitrator that could reasonably be
expected to materially and adversely affect the financial condition or
operations of either Energy Manager or the ability of either Energy Manager to
perform its obligations hereunder (except with respect to consents, licenses,
permits, and other approvals of Governmental Authorities that are required to be
obtained by either Energy Manager to enable it to perform its obligations under
this Agreement), or that purport to affect the legality, validity, or
enforceability of this Agreement.
8.02 INDEPENDENCE REPRESENTATIONS
Independence hereby represents and warrants as follows:
(a) It is a limited partnership duly organized and validly existing
and in good standing under the laws of Delaware and is duly qualified to do
business and in good standing in the State of New York.
(b) It has all requisite power and authority to carry on the
business to be conducted by it and to enter into this Agreement and the
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transactions contemplated hereby, and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to this Agreement.
(c) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on its part and do not require any
other actions or proceedings or any partnership approval or consent of any
trustee or holder of any indebtedness of Independence.
(d) This Agreement has been duly executed and delivered on behalf of
Independence by the appropriate officers of the general partner of Independence
and constitutes the legal, valid and binding obligation of Independence,
enforceable against Independence in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and other similar laws applicable
to creditors' rights generally and except as the enforceability thereof may be
limited by general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
(e) The execution, delivery, and performance of its obligations
under this Agreement do not: (i) violate any provision of any Law having
applicability to Independence or any provision of the organizational documents
of Independence, the violation of which could reasonably be expected to have a
material adverse effect on the ability of Independence to perform its
obligations under this Agreement; (ii) result in a breach of or constitute a
default under any provision of the organizational documents of Independence,
(iii) result in a breach of or constitute a default under any agreement relating
to the management or affairs of Independence or any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which Independence is
a party or by which Independence or its properties or assets may be bound, the
breach or default of which could reasonably be expected to have a material
adverse affect on the ability of Independence to perform its obligations under
this Agreement, or (iv) result in, or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance of any nature (other than as may be contemplated by this Agreement)
upon or with respect to any of the assets or properties of Independence, the
creation or imposition of which could reasonably be expected to have a material
adverse affect on the ability of Independence to perform its obligations under
this Agreement.
(f) There is no pending or, to the best of Independence's knowledge,
threatened Claim affecting Independence before any court or other Governmental
Authority, or arbitrator that could reasonably be expected to materially and
adversely affect the financial condition or operations of Independence or the
ability of Independence to perform its obligations hereunder (except with
respect to consents, licenses, permits, and
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other approvals of Governmental Authorities that are required to be obtained by
Independence to enable it to perform its obligations under this Agreement), or
that purport to affect the legality, validity, or enforceability of this
Agreement.
8.03 NO IMPLIED WARRANTIES
THE REPRESENTATIONS AND WARRANTIES OF INDEPENDENCE AND THE ENERGY MANAGERS
ARE SET FORTH FULLY AND COMPLETELY IN THIS AGREEMENT. THE PARTIES HEREBY
EXPRESSLY DISCLAIM AND NEGATE ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND
HEREUNDER, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHER, WRITTEN OR ORAL,
INCLUDING ANY REPRESENTATION OR WARRANTY WITH RESPECT TO CONFORMITY OR MODELS OR
SAMPLES, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE.
8.04 RELIANCE
Notwithstanding any due diligence, analysis, investigation, review, study,
or audit, each Party shall be entitled to rely on the representations,
warranties, obligations, covenants, and agreements set forth herein.
ARTICLE 9 - AGENCY
9.01 AGENCY AUTHORITY
Persons dealing with either of the Energy Managers are entitled to rely
qconclusively on the power and authority of the Energy Managers as set forth in
this Agreement.
9.02 GAS AGENCY
(a) Independence hereby appoints and authorizes DMT to act as its
exclusive agent for the purposes set forth in Section 9.02(b) and DMT hereby
agrees to such appointment and authorization.
(b) Commencing on the Effective Date, DMT shall have the authority to: (i)
administer and manage Independence's Transportation Agreements, any Gas storage
agreements entered into by Independence, and the Purchase Agreements, as the
same may be executed or amended from time to time; (ii) make and change on
behalf of Independence all nominations for daily deliveries of Gas to and from
the receipt and delivery points specified in the Transportation Agreements,
Purchase Agreements, or if
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applicable, any Gas storage agreements; (iii) make assignments on behalf of
Independence under the Transportation Agreements entered into by Independence
and (iv) take such other action on behalf of Independence as Independence and
DMT may agree upon from time to time. For purposes of this Section 9.02,
"Purchase Agreements" are those Gas purchase agreements Independence has entered
into or will enter into, and "Transportation Agreements" are those firm Gas
transportation agreements Independence has entered into or will enter into, in
each case under which Gas may be purchased and delivered to the Facility.
(c) There is no requirement under this Agreement that every aspect of the
day-to-day operation of the agency relationship between Independence and DMT, or
that any transaction between Independence and DMT under this Agreement, be
reduced to a written agreement and incorporated into this Agreement.
(d) By this Agreement, DMT is hereby authorized and directed by
Independence (i) to provide any applicable Transporters under the Transportation
Agreements with accurate and timely information as necessary for DMT to make and
change daily deliveries to applicable receipt points at which deliveries are to
be made, and (ii) to receive from the Transporters under the Transportation
Agreements and immediately forward to Independence any notice of curtailment,
operational flow orders, or other emergencies which would otherwise be sent by a
Transporter under the Transportation Agreements to Independence. If Independence
receives any such notices or operational flow orders, Independence shall
promptly forward such information to DMT.
ARTICLE 10 - DELIVERY OF FUEL
10.01 FAILURE TO ARRANGE FOR DELIVERY OF GAS
In circumstances where DMT has met the obligations imposed on DMT under
this Agreement, has arranged for deliveries of Gas to the Gas Facility Point and
there is a failure of Dynegy Canada to deliver Gas under the Gas Agreement, or a
failure of a third-party supplier to deliver Gas to the Gas Facility Point, DMT
and Independence hereby agree that the exclusive remedies for any failure in the
delivery of Gas shall be governed exclusively by the Gas Agreement, the other
Gas supply agreements and/or the Tolling Agreement.
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ARTICLE 11 - ELECTRIC ENERGY
11.01 FAILURE TO SUPPLY OR RECEIVE ELECTRIC ENERGY
In circumstances where DPM has met the obligations imposed on DPM under
this Agreement, DPM and Independence hereby agree that the exclusive remedies
for the failure of any delivery of energy shall be governed exclusively by the
Tolling Agreement.
ARTICLE 12 - INDEMNIFICATION
12.01 INDEPENDENCE'S INDEMNIFICATION
Independence shall indemnify, defend and hold harmless the Energy Managers
and their Affiliates and their officers, trustees, directors, employees and
agents from and against any and all claims, demands, suits, losses, damages,
liabilities, costs and expenses (including reasonable attorney's fees and costs
of investigation) for damage to the tangible property of third parties and
injury to or death of persons (other than the Energy Manager's employees and
Independence's employees) to the extent caused by, arising out of or relating to
the gross negligence or willful misconduct of Independence in connection with or
resulting from Independence's performance or breach of this Agreement.
12.02 ENERGY MANAGERS' INDEMNIFICATION
The Energy Managers shall jointly indemnify, defend and hold harmless
Independence and its Affiliates and their officers, directors, trustees,
employees and agents from and against any and all claims, demands, suits,
losses, damages, liabilities, costs and expenses (including reasonable
attorney's fees and costs of investigation) for damage to tangible property of
third parties and injury to or death of persons (other than Independence's
employees or the Energy Managers' employees) to the extent caused by, arising
out of or related to the gross negligence or willful misconduct of the Energy
Managers in connection with or resulting from the Energy Managers' performance
or breach of this Agreement.
12.03 INDEMNIFICATION PROCEDURES
(a) A Party which becomes entitled to indemnification under this
Agreement (the "Indemnified Party") shall give written notice to the other Party
(the "Indemnifying Party") of the occurrence of the events which give rise to
such right of indemnification within 30 Days of the Indemnified Party becoming
aware of the occurrence thereof. Such notice shall describe the claim, the basis
thereof and shall indicate an estimate of the amount of
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the claim. To the extent that the Indemnifying Party is prejudiced by any
failure of the Indemnified Party to provide such notice, such notice shall be a
condition precedent to the liability of the Indemnifying Party under this
Article 12.
(b) At the Indemnified Party's request, the Indemnifying Party
shall, at its cost and expense, defend (with counsel reasonably acceptable to
the Indemnified Party) any suit asserting a claim against the Indemnified Party
with respect to which the Indemnified Party is entitled to indemnification
hereunder, and shall pay all costs and expenses incurred by the Indemnified
Party to enforce its right to indemnification. The Indemnified Party may, at its
own expense, retain separate counsel and participate in the defense of any such
suit. Neither Party may settle or compromise a claim or suit without the consent
of the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
12.04 SURVIVAL
The indemnification obligations of each party under this Article 12 shall
not be limited in any way by any limitation on insurance, by the amount or types
of damages, or by any compensation or benefits payable by the parties under
Worker's Compensation Acts, disability benefit acts or other employee acts or
otherwise. The provisions of this Article 12 shall survive termination,
cancellation, suspension, completion or expiration of this Agreement.
ARTICLE 13 - LIMITATION OF LIABILITY
13.01 LIMITATION OF LIABILITY
None of the Parties, nor their respective officers, directors, partners,
agents, employees or Affiliates, shall be liable to the other Parties or their
Affiliates, officers, directors, trustees, partners, agents, employees,
successors or assigns, for claims for incidental, special, indirect,
consequential or punitive damages of any nature connected with or resulting from
performance or breach of this Agreement, including, without limitation, claims
in the nature of lost revenues, income or profits (other than payments
specifically provided for and properly due under this Agreement) or losses,
damages or liabilities under any financing, lending or construction contracts,
agreements or other arrangements, irrespective of whether such claims are based
upon warranty, negligence, strict liability, contract, operation of law or
otherwise.
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13.02 DUTY TO MITIGATE
Notwithstanding any other provision of this Agreement, each Party has a
duty to mitigate damages and covenants that it will use commercially reasonable
efforts to minimize any damages it may incur as a result of the other Party's
performance or non-performance.
ARTICLE 14 - FORCE MAJEURE
14.01 FORCE MAJEURE
(a) The term "Force Majeure" shall mean causes beyond the reasonable
control of, and without the fault or negligence of the Party claiming Force
Majeure, including, but not limited to, acts of God; strikes and other labor
disturbances; earthquakes; storms; fires; lightning; epidemics; wars; riots or
civil disturbances; sabotage or condemnation or other similar acts.
(b) If a Party because of Force Majeure is rendered wholly or partly
unable to perform its obligations under this Agreement, except for a Party's
obligation to make payments under this Agreement (which shall not be excused),
that Party shall be excused from whatever performance is affected by the Force
Majeure to the extent so affected, provided that the Party whose performance
under this Agreement is affected by an event of Force Majeure (i) gives the
other Party notice of the occurrence of such Force Majeure event as soon as
possible, and (ii) uses all commercially reasonable efforts to remedy the
cause(s) and effect(s) of such Force Majeure event with all reasonable dispatch.
The affected Party shall not be obligated to undertake unreasonable or
uneconomic costs or burdens, including the settlement of strikes or labor
disturbances on terms other than are acceptable to such Party in its sole
discretion, in order to overcome the effects of the Force Majeure and reinstate
full performance of its Agreement obligation.
ARTICLE 15 - ASSIGNMENT
15.01 ASSIGNMENTS
(a) This Agreement and all of the provisions hereof shall be binding upon,
and inure to the benefit of, the Parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, except to an Affiliate or
successor, by any Party hereto, whether by operation of law or otherwise,
without the prior written consent of the other Parties, which consent may not be
unreasonably withheld or delayed. No assignment of all or any portion of the
rights, interests or obligations permitted pursuant to the
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immediately preceding sentence shall relieve or discharge the assignor from any
of its obligations under this Agreement without the prior written consent of the
non-assigning Parties, which consent shall not be unreasonably withheld or
delayed. Any assignment of this Agreement in violation of the foregoing shall
be, at the option of the non-assigning Parties, void.
(b) Notwithstanding the foregoing provisions of Section 15.01(a), (i) each
Energy Manager may assign all or any portion of its rights and obligations
hereunder to any of its Affiliates, (ii) Independence may assign all or any
portion of its rights and obligations hereunder to any of its Affiliates
(including, without limitation, Sithe Power Marketing, L.P., a Delaware limited
partnership), and (iii) Independence may assign, transfer, pledge or otherwise
dispose of its rights and interests hereunder to a trustee or lending
institution for the purposes of financing or refinancing any of its assets,
including upon or pursuant to the exercise of remedies with respect to such
financing or refinancing, or by way of assignments, transfers, pledges or other
dispositions in lieu thereof, provided, however, that no such assignment of all
or any portion of the rights, interests or obligations of a party pursuant to
this Section 15.01(b) shall relieve or discharge the assignor from any of its
obligations under this Agreement unless the non-assigning Parties consent to
such release or discharge in accordance with Section 15.01(a). With respect to
clause (iii) of this Section 15.01(b), the Energy Managers agree to execute and
deliver such documents as may be reasonably necessary to accomplish any such
assignment, transfer, pledge or other disposition of rights hereunder, so long
as the Energy Managers' rights under this Agreement are not thereby altered,
amended, diminished or otherwise impaired.
15.02 AFFILIATION
Notwithstanding any right to assignment pursuant to Section 15.01, DPM,
Dynegy Canada and DMT shall remain Affiliates throughout the Contract Term.
ARTICLE 16 - CONDITIONS
16.01 CONDITIONS PRECEDENT
The obligations of Independence to consummate the transactions
contemplated by this Agreement shall be subject to fulfillment of the following
conditions, unless waived in writing by Independence:
(a) DPM and DMT shall have delivered a duly executed Acknowledgement and
Consent in the form of Exhibit A or such other form as Independence may approve;
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(b) Dynegy Holdings Inc. ("Guarantor") shall have delivered a duly
executed Guaranty Agreement in the form of Exhibit B or such other form as
Independence may approve; and
(c) Guarantor shall have delivered a duly executed Acknowledgement and
Consent in the form of Exhibit 2 to Exhibit B or such other form as Independence
may approve.
ARTICLE 17 - MISCELLANEOUS
17.01 NO AMENDMENT OF UNDERLYING AGREEMENTS
Nothing in this Agreement shall in any way amend or alter any provisions
of the Gas Agreement, the Tolling Agreement, agreements relating to sales of the
output of the Reserved Capability, or any third-party Gas supply agreements, or
any of the duties or obligations of the Parties thereunder.
17.02 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
law of the State of New York as to all matters (without giving effect to
conflict of law principles). Each of the Parties hereby irrevocably waives, to
the fullest extent permitted by law, any and all right to trial by jury in any
legal proceedings arising out of or relating to this Agreement.
17.03 SUBMISSION TO JURISDICTION
Each of the Parties hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States for the Southern District
of New York and appellate courts from any thereof;
(b) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the other Party at its
address set forth in Section 17.08, or at such other address of which the other
Party shall have been notified pursuant thereto; and
(c) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by Law.
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17.04 HEADINGS
The descriptive headings of the Articles and Sections of this Agreement
are inserted for convenience only and are not intended to affect the meaning,
interpretation or construction of this Agreement.
17.05 WAIVER
Except as otherwise provided in this Agreement, any failure of a Party to
comply with any obligation, covenant, agreement or condition herein may be
waived by the Party entitled to the benefits thereof only by a written
instrument signed by the Party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first Party to comply with such obligation, covenant, agreement or
condition.
17.06 SEVERABILITY
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17.07 ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between the Parties,
and supersedes any and all previous understandings, oral or written, with
respect to the subject matter hereof.
17.08 NOTICES
Any notice, request, demand, statement or payment provided for in this
Agreement shall be in writing and shall be made as specified below; provided,
however, that notices of interruption may be provided verbally, effective
immediately and confirmed in writing and, provided further, that any Scheduling
shall be done pursuant to the Scheduling and Operating Procedures. Invoices may
be sent by facsimile. A notice sent by facsimile transmission will be recognized
and shall be deemed received on the Business Day on which such notice was
transmitted if received before close of business (and if received after close of
business, on the next Business Day) and a notice by overnight mail or courier
shall be deemed to have been received two Business Days after it was sent or
such earlier time as is confirmed by the
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receiving Party unless it confirms a prior verbal communication, in which case
any such notice shall be deemed received on the Day sent.
To the Energy Managers:
<Table>
<Caption>
NOTICES & CORRESPONDENCE: PAYMENTS & INVOICES:
c/o Dynegy Marketing & Trade All payments made by Independence to
1000 Louisiana Street, Suite 5800 the Energy Managers shall be made
Houston, Texas 77002 directly to:
Attention: Contract Administration First National Bank of Chicago -
Phone: 713-507-3713 Chicago, Illinois
Fax: 713-507-3780 Account Title: Dynegy Marketing and
Trade
Account No.: 55-53911
To Independence: ABA Reference No.: 071000013
<Caption>
NOTICES & CORRESPONDENCE: PAYMENTS BY WIRE TRANSFER:
Sithe/Independence Power Partners, L.P. All payments made by the Energy
P.O. Box 1046 Manager to Independence shall be
76 Independence Way made directly to the account
Oswego, New York 13126 entitled "Project Revenue Fund"
Attention: General Manager maintained by Independence with
Facsimile: (315) 342-8425 The Bank of New York, Account
No. 229289, 101 Barclay Street,
with a copy to: Floor 21W, New York, New York,
10286, or to such other person
Sithe/Independence Power Partners, L.P. or account as shall be specified
c/o Sithe Energies, Inc. from time to time by
335 Madison Avenue Independence to the Energy
28th Floor Manager in writing. Any payments
New York, New York 10017 being wired to the
Attention: General Counsel above-referenced account should
Facsimile: (212) 351-0800 be directed to ABA 021000018;
The Bank of New York; Corporate
Trust/GLA 111-565; for further
credit to TAS Account 229289;
REF: Sithe Independence PWR
Project Revenue Fund.
</Table>
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From time to time a Party may change the foregoing addresses and payment
information by sending written notice of such change in accordance with this
Section.
17.09 CONFIDENTIALITY
(a) "Confidential Information" shall be any information or data
exchanged by the Parties relating to the trading and marketing activities of
either Party, the bids and Schedules submitted directly or indirectly to the
NYISO pursuant to this Agreement or daily advisory billing statements and
monthly billing statements received from the NYISO related to the Facility
(including non-public information related thereto communicated to a Party from
the NYISO). Confidential Information shall not include information:
(i) which was developed by the Receiving Party and was
contained in a writing in the Receiving Party's possession before its receipt
from the other Party;
(ii) which at the time of its disclosure to the Receiving
Party is, or thereafter becomes, through no act or failure to act on the part of
the Receiving Party, part of the public domain;
(iii) which has been rightfully furnished to the Receiving
Party by a third party without restriction on disclosure or use and not in
violation of any rights of, or obligations to, the other Party.
The occurrence of any of the above exceptions shall not be construed as an
express or implied grant of any rights under any of the other Party's patents or
other intellectual property rights. For the purposes of this Section 17.09, a
Party that receives Confidential Information from the other Party shall be
referred to as the "Receiving Party."
(b) No Receiving Party shall disclose or use Confidential
Information received from the other Party for any purpose other than in
connection with the performance of its obligations under this Agreement, without
the prior written consent of the other Party. The Receiving Party agrees to
utilize with respect to received Confidential Information the same standards and
procedures which it applies to protection of its own confidential information,
but not less than reasonable care.
(c) Each Party will limit access to received Confidential
Information to those of its owners, affiliates, directors, officers, employees,
attorneys, lenders, contractors, suppliers, agents, and consultants who need to
know about or participate in the performance of its obligations under this
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Agreement. Each Party agrees to (i) inform each of its owners, affiliates,
directors, officers, employees, attorneys, lenders, contractors, suppliers,
agents, and consultants who receive Confidential Information of the confidential
nature thereof and of the obligations imposed by this Agreement, and (ii) each
Party shall remain primarily liable to the other for unauthorized use or
disclosure of received Confidential Information by its owners, affiliates,
directors, officers, employees, attorneys, lenders, contractors, suppliers,
agents or consultants receiving such information.
(d) Notwithstanding Section 17.09(c), Independence shall not
disclose Confidential Information to individuals who are actively involved in
material marketing and trading activities in the markets administered by the
NYISO; provided that Independence may designate by notice to the Energy Managers
up to two individuals for receipt of Confidential Information who have
responsibilities related to the Facility and associated contracts (including
this Agreement) and who are engaged in material marketing and trading activities
in the markets administered by the NYISO; provided further that Independence
shall take all reasonable precautions to ensure that such designated individuals
do not utilize Confidential Information in their marketing and trading
activities; and provided further that information related to transmission
congestion contracts or installed capacity contained in daily advisory billing
statements and monthly billing statements receieved from the NYISO related to
the Facility shall not be considered Confidential Information for purposes of
this Section 17.09(d) only. Such individuals will not be provided access to the
results of the NYISO's Day-Ahead Market bidding process undertaken by DPM under
this Agreement and the Tolling Agreement, unless and until Independence's
Facility operating personnel (who will have daily access to such results) (i)
have identified a problem or material issue regarding such results, (ii) have
attempted to discuss the problem or material issue with DPM, and (iii) following
such discussions, have been unable to resolve the problem or material issue.
(e) Notwithstanding Section 17.09(c), the Energy Managers shall not
disclose information related to transmission congestion contracts or installed
capacity contained in daily advisory billing statements and monthly billing
statements received from the NYISO related to the Facility to individuals who
are actively involved in material marketing and trading activities in the
markets administered by the NYISO.
(f) Each Party may disclose Confidential Information to third
parties or other Governmental Authorities, including NYISO, to the extent such
disclosures are contemplated in and required by the Parties in connection with
the performance of their obligations under this Agreement. Each Party may also
disclose Confidential Information which it is legally
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required to furnish to comply with a subpoena or other legal process of a
Governmental Authority, provided that the disclosing Party shall use reasonable
efforts to limit such disclosure and to obtain confidential treatment of such
Confidential Information.
(g) The provisions of this Section 17.09 shall survive expiration,
cancellation, or termination of this Agreement. Each Party agrees to be bound by
the confidentiality obligations herein for a period of five (5) years from
expiration, cancellation or termination.
17.10 COUNTERPARTS
This Agreement may be executed in counterparts, all of which shall
constitute one and the same Agreement and each of which shall be deemed to be an
original.
17.11 NO OFFSET
Except as provided in Section 6.04, the amounts due Energy Managers from
Independence and the amounts due Independence from the Energy Managers shall
constitute separate and independent obligations and may not be offset or net
against each other or offset or net against any other amounts due between the
Parties (whether under this Agreement or otherwise).
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement to be
executed as of the date first set forth above.
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By: /s/ Sandra J. Manilla
---------------------------------
Name: Sandra J. Manilla
Title: Vice President and
Treasurer
DYNEGY POWER MARKETING, INC.
By: /s/ Miles Allen
---------------------------------
Name: Miles Allen
Title: Vice President
DYNEGY MARKETING AND TRADE
By: /s/ Miles Allen
---------------------------------
Name: Miles Allen
Title: Senior Vice President
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EXHIBIT A
ACKNOWLEDGMENT AND CONSENT
Acknowledgment and Consent (this "CONSENT") dated as of July 1, 2001 among
Dynegy Power Marketing, Inc., a Texas corporation and Dynegy Marketing and
Trade, a Colorado general partnership (together with their successors and
assigns, the "ENERGY MANAGERS") and Sithe/Independence Power Partners, L.P., a
Delaware limited partnership (together with its successors and assigns, the
"PARTNERSHIP"), to and for the benefit of Manufacturers and Traders Trust
Company, a New York banking corporation, in its capacity as collateral agent
(together with successors and assigns in that capacity, the "COLLATERAL AGENT").
SECTION 1. CONSENT TO ASSIGNMENTS, ETC.
The Energy Managers hereby (a) acknowledge that they have been advised of
that certain Security Agreement and Assignment of Contracts dated as of January
1, 1993 (as amended, supplemented or modified and in effect from time to time,
the "SECURITY AGREEMENT") between the Collateral Agent and the Partnership, (b)
consent, subject to the provisions of this Consent, to the collateral assignment
by the Partnership of the ENERGY MANAGEMENT AGREEMENT dated as of July 1, 2001
among the Energy Managers and the Partnership (as amended, supplemented or
modified and in effect from time to time, the "ASSIGNED CONTRACT") as collateral
for the Partnership's obligations to the Secured Parties (as defined in the
Security Agreement), and any subsequent assignments by the Collateral Agent, on
behalf of the Secured Parties, (c) acknowledge the right of the Collateral
Agent, following an Event of Default (as defined in the Security Agreement) by
the Partnership, to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Assigned Contract as the
Partnership could have taken absent the Event of Default, and (d) acknowledge
and agree that the Collateral Agent succeeding to the rights and obligations of
the Partnership under the Assigned Contract shall not, in and of itself,
constitute or cause a default by the Partnership under the Assigned Contract.
SECTION 2. PAYMENT OF ASSIGNED SUMS
All payments (if any) to be made by the Energy Managers to the Partnership
under the Assigned Contract shall be made by wire transfer to the account
specified in Section 17.08 of the Assigned Contract.
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SECTION 3. REPRESENTATIONS OF ENERGY MANAGERS
(a) The Energy Managers represent and warrant that as of the date hereof:
(i) AUTHORIZATION. The execution, delivery and performance by the
Energy Managers of this Consent has been duly authorized by all necessary action
on the part of the Energy Managers and does not require any approval or consent
of any shareholder or partner of the Energy Managers or any holder (or any
trustee for any holder) of any indebtedness or other obligation of the Energy
Managers, except as has been heretofore obtained.
(ii) EXECUTION; DELIVERY; BINDING AGREEMENT. This Consent has been
duly executed and delivered on behalf of the Energy Managers by the appropriate
officers and representatives of the Energy Managers and constitutes the legal,
valid and binding obligation of the Energy Managers, enforceable against the
Energy Managers in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and other similar laws applicable to creditors' rights
generally and except as the enforceability thereof may be limited by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(iii) NO DEFAULT OR AMENDMENT. As of the date hereof, neither the
Energy Managers nor, to the knowledge of the Energy Managers, the Partnership is
in default under the Assigned Contract. The Energy Managers have no existing
claims, counterclaims, offsets or defenses against the Partnership in respect of
the Assigned Contract except for routine claims for payment under the Assigned
Contract.
SECTION 4. RIGHTS OF SECURED PARTIES
The Energy Managers agree that, subject to the provisions of this Consent,
the Secured Parties shall have the following rights with respect to the Assigned
Contract:
(a) Notwithstanding anything to the contrary contained in the
Assigned Contract, the Assigned Contract shall not be terminated or cancelled by
action of the Energy Managers and shall not be deemed abandoned or surrendered
without prior notice in writing to the Collateral Agent specifying the
Partnership's default (hereinafter called a "NOTICE"). Any such Notice shall
contain a copy of the notice of default sent to the Partnership and shall be
delivered to the Collateral Agent when the Energy Managers deliver a notice of
default to the Partnership under the Assigned
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Contract. The Collateral Agent shall have the right (but not the obligation) to
cure the defaults listed in any Notice within the same period of time provided
in the Assigned Contract for the Partnership to cure such default; PROVIDED,
HOWEVER, if the nature of any non-monetary default on the part of the
Partnership under the Assigned Contract is such that it cannot be cured by the
Collateral Agent without the Collateral Agent having taken possession of the
Project (as defined in the Security Agreement), then the Collateral Agent's time
for commencing such cure shall be extended for such reasonable period of time as
is necessary for the Collateral Agent to lawfully obtain possession of the
Project; PROVIDED, FURTHER, that the Collateral Agent shall at all times be
seeking by all reasonable and lawful means to obtain such possession. Once the
defaults listed in any Notice are timely cured by the Collateral Agent, there
shall no longer be deemed to be any default under the Assigned Contract in
respect of such defaults so cured. The curing of any defaults under the Assigned
Contract shall not in and of itself be construed as an assumption by the
Collateral Agent or any of the Secured Parties of any of the obligations,
covenants or agreements of the Partnership under the Assigned Contract.
(b) If a notice of election is delivered to the Energy Managers as
provided in Section 5 below, the Energy Managers will accept performance of the
Partnership's obligations (as specified in such notice of election) under the
Assigned Contracts by the Collateral Agent, or its nominee(s) acting for the
Secured Parties, as the case may be, in lieu of the Partnership's performance of
such obligations.
(c) Upon any transfer of the Partnership's rights under the Assigned
Contract pursuant to the exercise of the Collateral Agent's rights under this
Consent, the Collateral Agent or any third party to which such rights are
transferred by the Collateral Agent (hereinafter, a "THIRD PARTY TRANSFEREE")
shall, upon the Energy Managers' reasonable satisfaction with the Collateral
Agent's or such Third Party Transferee's financial condition and subject to all
applicable laws, rules and regulations, succeed to all of the Partnership's
right, title and interest under and in connection with the Assigned Contract and
shall be obligated to perform all of the terms and conditions of the Assigned
Contract, except that the Collateral Agent or any Third Party Transferee shall
not be required to perform or cause to be performed any of the Partnership's
obligations under the Assigned Contract (except for the Partnership's obligation
for the payment of all amounts due and payable to the Energy Managers under the
terms of the Assigned Contract including any interest applicable thereon) that
remain unperformed at the time that the Collateral Agent or such Third Party
Transferee is transferred such Assigned Contract other than continuing
non-monetary defaults under the Assigned Contract which are capable of
performance by the Collateral Agent or the Third Party Transferee or be liable
for any prior
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act or omission of the Partnership, and upon the transfer by the Collateral
Agent of its rights and interests and the rights and interests of the
Partnership under the Assigned Contracts to a Third Party Transferee, the
Collateral Agent and the Partnership shall be relieved of all obligations under
the Assigned Contract arising after such transfer.
(d) In the event that (i) the Assigned Contract is rejected by a
trustee or any person exercising the powers of a trustee in any bankruptcy or
insolvency proceeding applicable to the Partnership or (ii) the Assigned
Contract is terminated as a result of any bankruptcy or insolvency proceeding
applicable to the Partnership, the Energy Managers shall, subject to all
applicable laws, rules and regulations, execute and deliver to the Collateral
Agent and its designees, successors and assigns a new contract; PROVIDED that
the Energy Managers shall be required to execute a new contract with the
Collateral Agent only if the Collateral Agent or its designees, successors or
assigns shall within ten (10) business days of entering into such new contract,
cure all defaults for failure to pay all amounts due and payable to the Energy
Managers under the Assigned Contract, including any interest applicable thereon.
The new contract shall, subject to all applicable laws, rules and regulations,
contain the same covenants, agreements, terms, provisions and limitations as the
Assigned Contract (except for any requirements with respect to past performance
which have been fulfilled by the Partnership or the Collateral Agent or its
designees, successors and assigns hereunder).
SECTION 5. LIABILITY OF SECURED PARTIES
The Collateral Agent, on behalf of the Secured Parties, and its successors
and assigns, shall have no right or power to enforce the Assigned Contract, and
assumes no duty or obligation thereunder unless and until the Collateral Agent
shall have notified the Energy Managers that it has elected to exercise its
rights and remedies under the Security Agreement and to substitute itself in the
position of the Partnership under the Assigned Contracts and has agreed in a
written instrument executed by the Collateral Agent to be bound by all terms and
conditions of the Assigned Contract applicable to the Partnership.
SECTION 6. FURTHER ASSURANCES
The Energy Managers hereby agree to execute and deliver all such
instruments and take all such actions as may be reasonably necessary to
effectuate fully the purposes of this Consent, provided, however, that such
further assurances shall not expand the liability, or obligations arising under
this Consent or dilute any rights or remedies otherwise accruing to Energy
Managers under this Consent.
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SECTION 7. NOTICES
All notices and other communications hereunder shall be in writing, shall
refer on their face to the Assigned Contract (although failure to so refer shall
not render any such notice or communication ineffective), shall be sent by first
class mail, facsimile, by hand or overnight courier service and shall be
directed:
(a) if to the Energy Managers, in accordance with the Assigned
Contract;
(b) if to the Collateral Agent, addressed to:
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
Attention: Corporate Trust Department
(c) if to the Partnership, in accordance with the Assigned Contract;
and
(d) to such other address as any party may designate by notice to
the other party hereto given pursuant hereto.
SECTION 8. MISCELLANEOUS
(a) GOVERNING LAW. This Consent shall be governed by and construed in
accordance with the law of the State of New York as to all matters (without
giving effect to conflict of law principles). Each of the Energy Managers and
the Partnership hereby irrevocably waives, to the fullest extent permitted by
law, any and all right to trial by jury in any legal proceedings arising out of
or relating to this Consent.
(b) SUBMISSION TO JURISDICTION. Each of the Parties hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States for the
Southern District of New York and appellate courts from any thereof;
(ii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified
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mail (or any substantially similar form of mail), postage prepaid, to the other
Party at its address set forth in Section 7, or at such other address of which
the other Party shall have been notified pursuant thereto; and
(iii) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law.
(c) HEADINGS. The descriptive headings of the Articles and Sections of
this Consent are inserted for convenience only and are not intended to affect
the meaning, interpretation or construction of this Consent.
(d) WAIVER. Except as otherwise provided in this Consent, any failure of a
party to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first party to comply with such obligation, covenant, agreement or
condition.
(e) SEVERABILITY. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) SUCCESSORS AND ASSIGNS. This Consent shall be binding upon and inure
to the benefit of the Energy Managers, the Collateral Agent, the Partnership and
their respective permitted successors and assigns.
(g) COUNTERPARTS. This Consent may be executed in counterparts, all of
which shall constitute one and the same Consent and each of which shall be
deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as
of the day and year first above written.
DYNEGY POWER MARKETING, INC.
By:
----------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
DYNEGY MARKETING AND TRADE
By:
----------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
----------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
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EXHIBIT B
GUARANTY AGREEMENT
Base Guaranty Agreement (this "Guaranty") dated as of July 1, 2001 is made
and entered into by Dynegy Holdings Inc., a Delaware corporation ("Guarantor"),
to and for the benefit of Sithe/Independence Power Partners, L.P., a Delaware
limited partnership ("Independence"), and its successors and permitted assigns.
WITNESSETH:
WHEREAS, Independence, Dynegy Power Marketing, Inc., a Texas corporation
("DPM") and Dynegy Marketing and Trade, a Colorado general partnership ("DMT")
(DPM and DMT referred to collectively, together with their respective successors
and permitted assigns, as "Energy Managers"), have entered into an ENERGY
MANAGEMENT AGREEMENT dated as of July 1, 2001 (as amended, supplemented or
modified from time to time, the "Energy Management Agreement"), a copy of which
is attached hereto as Exhibit 1;
WHEREAS, the Energy Managers are indirect, wholly owned subsidiaries of
Guarantor, and Guarantor will derive substantial benefit from the performance by
Independence of its obligations under the Energy Management Agreement;
WHEREAS, it is a condition precedent to Independence's obligations under
the Energy Management Agreement that this Guaranty be duly executed and
delivered to Independence; and
WHEREAS, Guarantor is willing to enter into this Guaranty.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Guarantor hereby
covenants and agrees as follows:
1. GUARANTY. Subject to the terms hereof, Guarantor hereby irrevocably,
absolutely, and unconditionally guarantees to Independence and its
successors and permitted assigns the due, punctual and full performance
and payment of each and every obligation of the Energy Managers under the
Energy Management Agreement (each such obligation hereinafter referred to,
individually, as a "Guaranteed Obligation" and, collectively, as the
"GUARANTEED OBLIGATIONS") and
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agrees that, if for any reason whatsoever the Energy Managers shall fail
or be unable duly, punctually and fully to perform or pay any such
Guaranteed Obligation, Guarantor shall forthwith, upon demand as provided
in Section 4 hereof, perform or pay such Guaranteed Obligation, or cause
such Guaranteed Obligation to be performed or paid, without regard to any
exercise or nonexercise by Independence, its successors or permitted
assigns of any right, power or privilege under or in respect of the Energy
Management Agreement or the Guaranteed Obligations. In connection with the
foregoing, Independence acknowledges that performance of the obligations
of the Energy Managers under the Energy Management Agreement, to the
extent that such performance is for an obligation other than the payment
of money, shall be accomplished by Guarantor causing such performance to
occur through a third party or otherwise by the payment of money. This
Guaranty shall be direct, immediate and primary and shall be a guaranty of
performance and payment and not of collection, and is not conditioned or
contingent upon any attempt to collect from the Energy Managers or upon
any other event, contingency or circumstance whatsoever, except as
expressly provided otherwise herein.
2. OBLIGATIONS UNCONDITIONAL. Guarantor covenants to and agrees with
Independence and its successors and permitted assigns that, to the fullest
extent permitted by law, its obligations under this Guaranty are
irrevocable, absolute and unconditional, shall remain in full force and
effect, and shall not be impaired or affected by, or be subject to, any
reduction, termination or other impairment by set-off, deduction,
counterclaim, recoupment, interruption or otherwise, and Guarantor shall
have no right to terminate this Guaranty or to be released, relieved or
discharged, in whole or in part, from its performance or payment
obligations referred to in this Guaranty for any reason whatsoever (other
than the performance and payment in full of the Guaranteed Obligations),
including (a) any amendment, supplement or modification to, waiver of,
consent to or departure from, or failure to exercise any right, remedy,
power or privilege under or in respect of, the Energy Management
Agreement, the Guaranteed Obligations or any other agreement or instrument
relating thereto, (b) any insolvency, bankruptcy, reorganization,
dissolution or liquidation of, or any similar occurrence with respect to,
or cessation of existence of, or change of ownership of the Energy
Managers, or any rejection of any of the Guaranteed Obligations in
connection with any Proceeding (as defined in Section 3 below) or any
disallowance of all or any portion of any claim by Independence, its
successors or permitted assigns in connection with any Proceeding, (c) any
lack of genuineness, legality,
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validity, regularity, enforceability or value of the Energy Management
Agreement, any of the Guaranteed Obligations, or any other agreement or
instrument relating thereto, (d) the failure to create, preserve,
validate, perfect or protect any security interest granted to, or in favor
of, any person, (e) any substitution, modification, exchange, release,
settlement or compromise of any security or collateral for or guaranty of
any of the Guaranteed Obligations or failure to apply such security or
collateral or failure to enforce such guaranty or (f) any other event or
circumstance whatsoever that might otherwise constitute a legal or
equitable discharge of a surety or guarantor (other than the payment in
full of the Guaranteed Obligations and any defenses available to the
Energy Managers under the Energy Management Agreement), it being the
intent of Guarantor that its obligations under this Guaranty shall be
irrevocable, unconditional and absolute under any and all circumstances,
except as expressly provided herein. This Guaranty and the obligations of
Guarantor hereunder shall continue to be effective or be automatically
reinstated, as the case may be, if at any time any payment by or on behalf
of the Energy Managers is rescinded or must otherwise be restored by
Independence, its successors or permitted assigns for any reason,
including, but not limited to, as a result of any Proceeding with respect
to the Energy Managers or any other person, as though such payment had not
been made.
3. INTEREST. The Guaranteed Obligations shall include, without limitation,
interest accruing as part of the Guaranteed Obligations by the terms
thereof following the commencement by or against the Energy Managers of
any case or proceeding under any law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation, dissolution or composition or
adjustment of debt (hereinafter, a "PROCEEDING").
4. DEMAND. If the Energy Managers shall fail or be unable duly, punctually
and fully to perform or pay any Guaranteed Obligation, Independence, its
successors or permitted assigns may at any time prior to the full
performance or payment of such Guaranteed Obligation deliver notice of
such failure or inability of the Energy Managers to perform or pay to
Guarantor in writing, which notice shall reasonably specify the nature of
such failure or inability to perform or pay, as the case may be and, in
the case of a failure or inability to pay, the amount thereof (each such
written notice hereinafter a "DEMAND"). Guarantor shall, upon receipt of a
Demand, forthwith perform or pay such Guaranteed Obligation, or cause such
Guaranteed Obligation to be performed or paid in full. Promptly on
request, Guarantor shall
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reimburse Independence, its successors and permitted assigns for all costs
and expenses (including reasonable attorneys' fees) incurred in enforcing
Independence's, its successors' or permitted assigns' rights under this
Guaranty, but only to the extent that Independence is successful in
enforcing Independence's rights under this Guaranty.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Independence and its successors and permitted assigns that as of the date
hereof:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, it has the
corporate power and authority to execute, deliver and carry out the
terms and provisions of this Guaranty;
(b) no authorization, approval, consent or order of, or registration or
filing with, any court or other governmental body having
jurisdiction over Guarantor is required on the part of Guarantor for
the execution and delivery of this Guaranty;
(c) this Guaranty has been duly executed and delivered by Guarantor and
constitutes a valid and legally binding agreement of Guarantor
enforceable against Guarantor in accordance with its terms, subject,
however, to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
except as the enforceability thereof may be limited by general
principles of equity (regardless of whether considered in a
proceeding in equity or at law);
(d) the execution, delivery and performance of this Guaranty have been
duly authorized by all necessary corporate action and do not require
any other actions or proceedings or any stockholder approval or
consent of any trustee or holder of any indebtedness of Guarantor;
(e) the execution, delivery and performance of this Guaranty and
compliance by Guarantor with the terms hereof (i) will not violate
any governmental approval or law applicable to it or any of its
property, (ii) will not violate any provision of its certificate of
incorporation, bylaws or other governing documents, and (iii) will
not violate or constitute a default under any agreement or
instrument to which it is a party or by which it or any of its
property may be bound, or result in the creation or imposition of
any lien upon any of its property, which violation, default or lien
would have a material adverse effect on its ability to perform its
obligations under this Guaranty;
(f) except as disclosed in Guarantor's latest Form 10-K and any Form
10-Qs or Form 8-Ks subsequently filed with the Securities
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and Exchange Commission, there are no actions, suits, investigations
or proceedings against Guarantor by or before any court, arbitrator,
administrative or regulatory agency, or other governmental authority
pending, or to its knowledge, threatened against or affecting it,
its properties, or its assets that, if adversely determined, would
reasonably be expected to have a material and adverse effect on its
ability to perform its obligations under this Guaranty; and
(g) it directly or indirectly owns all of the issued and outstanding
shares of each class of capital stock of the Energy Managers.
6. DOWNGRADE EVENT. If at any time any two of the credit ratings then
assigned to Guarantor's unsecured, senior long-term debt obligations falls
below "Investment Grade" from the Standard & Poor's Rating Group (a
division of McGraw-Hill, Inc.) or its successor ("S&P"),"Investment Grade"
from Moody's Investor Services, Inc. or its successor ("MOODY'S") or
"Investment Grade" from Fitch IBCA, Inc. or its successor ("FITCH") (or if
Guarantor is not rated by any of S&P, Moody's or Fitch), then Independence
may require Guarantor to provide collateral in the form of either a
substitute guaranty on terms and conditions substantially similar to this
Guaranty (from a substitute guarantor whose unsecured, senior long-term
debt obligations are rated at least "Investment Grade" from two of S&P,
Moody's and Fitch) or other security reasonably acceptable to Independence
and the Energy Managers ("Performance Assurance") in an amount determined
by Independence in a commercially reasonable manner. The failure of
Guarantor to provide such Performance Assurance or a guaranty or other
credit assurance acceptable to Independence within twenty (20) business
days of receipt of notice shall constitute an Event of Default under the
Energy Management Agreement and Independence will be entitled to the
remedies set forth in the Energy Management Agreement.
7. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived, supplemented or terminated except in a
writing signed by Guarantor and Independence or Independence's successors
and permitted assigns.
8. WAIVERS. To the fullest extent permitted by law, and except for the Demand
required pursuant to Section 4 hereof, Guarantor hereby waives (a) all
set-offs, counterclaims, presentments, demands for performance, notices of
nonperformance, protests, notice of any of the matters referred to in
Section 2, notices of protests, notices of dishonor, notice of any waivers
or indulgences or extensions, and notices of every
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kind that may be required to be given by any statute or rule of law and
notice of acceptance of this Guaranty, (b) diligence, presentment, and
demand of payment, filing of claims with a court in connection with any
Proceeding, protest or notice with respect to the Guaranteed Obligations
and all demands whatsoever; and (c) any requirement that any action or
proceeding be brought against the Energy Managers or any other person, or
any requirement that any person exhaust any right, power or remedy or
proceed against any other person, prior to any action against Guarantor
under the terms hereof. No delay on the part of Independence, its
successors or permitted assigns in the exercise of, or failure to
exercise, any right or remedy shall operate as a waiver thereof, a waiver
of any other rights or remedies, or a release of Guarantor from any
obligations hereunder, and no single or partial exercise by Independence,
its successors or permitted assigns of any right or remedy shall preclude
any further exercise thereof or the exercise of any other right or remedy.
9. WAIVER OF SUBROGATION. Guarantor hereby agrees that it will not exercise,
and hereby irrevocably, absolutely and unconditionally waives, any rights
of subrogation, contribution, reimbursement, indemnification or other
rights of payment or recovery for any payments made by it hereunder until
all Guaranteed Obligations have been fully paid and performed.
10. NOTICE. Any Demand, notice, request, instruction, correspondence or other
document to be given hereunder (herein collectively called "Notice") shall
be in writing and delivered personally or mailed by certified mail,
postage prepaid and return receipt requested, or by telecopy, as follows:
To Independence:
Sithe/Independence Power Partners, L.P.
P.O. Box 1046
76 Independence Way
Oswego, New York 13126
Attention: General Manager
Telecopy: (315) 342-8425
with a copy to:
Sithe Energies, Inc.
28th Floor
335 Madison Avenue
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New York, New York 10017
Attention: General Counsel
Telecopy: (212) 351-0800
To Guarantor:
Dynegy Holdings Inc.
1000 Louisiana Street, Suite 5800
Houston, Texas 77002
Attention: Assistant Treasurer
Telecopy: (713) 507-6786
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telefax shall be effective upon actual receipt if
received during the recipient's normal business hours, or at the beginning
of the recipient's next business day after receipt if not received during
the recipient's normal business hours. All Notices by telefax shall be
confirmed promptly after transmission in writing by certified mail or
personal delivery. Any party may change any address to which Notice is to
be given to it by giving notice as provided above of such change of
address.
11. ASSIGNMENT. Guarantor shall have no right, power or authority to delegate,
assign or transfer all or any of its rights or obligations hereunder.
Independence may assign all or any of its rights hereunder to any assignee
of its rights under the Energy Management Agreement as permitted thereby;
provided, further, that Independence may pledge or assign its interest
hereunder to the lenders of financial parties referred to in Section 15.01
of the Energy Management Agreement ("Financial Parties") in connection
with any assignment of the Energy Management Agreement to the Financial
Parties as contemplated by Section 15.01 of the Energy Management
Agreement. In connection with any such assignment to any Financial Party,
Guarantor agrees to execute and deliver the agreement attached hereto as
Exhibit 2.
12. MISCELLANEOUS. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING
CONFLICT-OF-LAWS RULES. EACH OF GUARANTOR AND INDEPENDENCE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OF THE OTHER AGREEMENTS REFERRED TO HEREIN OR ANY
OF THE TRANSACTIONS CONTEMPLATED
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HEREBY OR THEREBY. Each of the Parties hereby irrevocably and
unconditionally: (i) submits for itself in any legal action or proceeding
relating to this Guaranty, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of
the Courts of the State of New York, the courts of the United States for
the Southern District of New York and appellate courts from any thereof;
(ii) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the other
Party at its address set forth in Section 10, or at such other address of
which the other Party shall have been notified pursuant thereto; and (iii)
agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law. This Guaranty is a
continuing guaranty, shall apply to all Guaranteed Obligations whenever
arising, shall be binding upon Guarantor and its successors and shall
inure to the benefit of and be enforceable by Independence and its
successors and permitted assigns. This Guaranty embodies the entire
agreement of Guarantor and Independence and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
headings in this Guaranty are for the purposes of reference only, and
shall not affect the meaning hereof. If any provision of this Guaranty
shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Guaranty, and this Guaranty shall be construed
as if such invalid, illegal or unenforceable provision had never been
contained herein, but only to the extent of its invalidity, illegality or
unenforceability. This Guaranty may be executed in any number of
counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and
delivered by its duly authorized officer as of the day and year first above
written.
DYNEGY HOLDINGS INC.
By:
------------------------
Title:
---------------------
ACCEPTED:
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
---------------------------------
Title:
------------------------------
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EXHIBIT 2
ACKNOWLEDGMENT AND CONSENT
Acknowledgment and Consent (this "CONSENT") dated as of July 1, 2001
between Dynegy Holdings Inc. a Texas corporation (together with its successors
and assigns, the "COMPANY") and Sithe/Independence Power Partners, L.P., a
Delaware limited partnership (together with its successors and assigns, the
"PARTNERSHIP"), to and for the benefit of Manufacturers and Traders Trust
Company, a New York banking corporation, in its capacity as collateral agent
(together with successors and assigns in that capacity, the "COLLATERAL AGENT").
SECTION 1. CONSENT TO ASSIGNMENTS, ETC.
The Company hereby (a) acknowledges that it has been advised of that
certain Security Agreement and Assignment of Contracts dated as of January 1,
1993 (as amended, supplemented or modified and in effect from time to time, the
"SECURITY AGREEMENT") between the Collateral Agent and the Partnership, (b)
consents, subject to the provisions of this Consent, to the collateral
assignment by the Partnership of the Guaranty Agreement dated as of July 1, 2001
between the Company and the Partnership (as amended, supplemented or modified
and in effect from time to time, the "ASSIGNED CONTRACT") as collateral for the
Partnership's obligations to the Secured Parties (as defined in the Security
Agreement), and any subsequent assignments by the Collateral Agent, on behalf of
the Secured Parties, (c) acknowledges the right of the Collateral Agent,
following an Event of Default (as defined in the Security Agreement) by the
Partnership, to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Assigned Contract as the
Partnership could have taken absent the Event of Default, and (d) acknowledges
and agrees that the Collateral Agent succeeding to the rights and obligations of
the Partnership under the Assigned Contract shall not, in and of itself,
constitute or cause a default by the Partnership under the Assigned Contract.
SECTION 2. PAYMENT OF ASSIGNED SUMS
All payments (if any) to be made by the Company to the Partnership under
the Assigned Contract shall be made by wire transfer to the account specified in
Section 24.07 of the Assigned Contract.
SECTION 3. REPRESENTATIONS OF COMPANY
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(a) The Company represents and warrants that as of the date hereof:
(i) AUTHORIZATION. The execution, delivery and performance by
the Company of this Consent has been duly authorized by all necessary action on
the part of the Company and does not require any approval or consent of any
shareholder of the Company or any holder (or any trustee for any holder) of any
indebtedness or other obligation of the Company, except as has been heretofore
obtained.
(ii) EXECUTION; DELIVERY; BINDING AGREEMENT. This Consent has
been duly executed and delivered on behalf of the Company by the appropriate
officers of the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium and other similar laws
applicable to creditors' rights generally and except as the enforceability
thereof may be limited by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(iii) NO DEFAULT OR AMENDMENT. As of the date hereof, neither
the Company nor, to the knowledge of the Company, the Partnership is in default
under the Assigned Contract. The Company has no existing claims, counterclaims,
offsets or defenses against the Partnership in respect of the Assigned Contract
except for routine claims for payment under the Assigned Contract.
SECTION 4. RIGHTS OF SECURED PARTIES
The Company agrees that, subject to the provisions of this Consent, the
Secured Parties shall have the following rights with respect to the Assigned
Contract:
(a) Notwithstanding anything to the contrary contained in the
Assigned Contract, the Assigned Contract shall not be terminated or
cancelled by action of the Company and shall not be deemed abandoned or
surrendered without prior notice in writing to the Collateral Agent
specifying the Partnership's default (hereinafter called a "NOTICE"). Any
such Notice shall contain a copy of the notice of default sent to the
Partnership and shall be delivered to the Collateral Agent when the
Company delivers a notice of default to the Partnership under the Assigned
Contract. The Collateral Agent shall have the right (but not the
obligation) to cure the defaults listed in any Notice within the same
period of time provided in the Assigned Contract for the Partnership to
cure such default; PROVIDED, HOWEVER, if
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the nature of any non-monetary default on the part of the Partnership
under the Assigned Contract is such that it cannot be cured by the
Collateral Agent without the Collateral Agent having taken possession of
the Project (as defined in the Security Agreement), then the Collateral
Agent's time for commencing such cure shall be extended for such
reasonable period of time as is necessary for the Collateral Agent to
lawfully obtain possession of the Project; PROVIDED, FURTHER, that the
Collateral Agent shall at all times be seeking by all reasonable and
lawful means to obtain such possession. Once the defaults listed in any
Notice are timely cured by the Collateral Agent, there shall no longer be
deemed to be any default under the Assigned Contract in respect of such
defaults so cured. The curing of any defaults under the Assigned Contract
shall not in and of itself be construed as an assumption by the Collateral
Agent or any of the Secured Parties of any of the obligations, covenants
or agreements of the Partnership under the Assigned Contract.
(b) If a notice of election is delivered to the Company as
provided in Section 5 below, the Company will accept performance of the
Partnership's obligations (as specified in such notice of election) under
the Assigned Contracts by the Collateral Agent, or its nominee(s) acting
for the Secured Parties, as the case may be, in lieu of the Partnership's
performance of such obligations.
(c) Upon any transfer of the Partnership's rights under the
Assigned Contract pursuant to the exercise of the Collateral Agent's
rights under this Consent, the Collateral Agent or any third party to
which such rights are transferred by the Collateral Agent (hereinafter, a
"THIRD PARTY TRANSFEREE") shall, upon the Company's reasonable
satisfaction with the Collateral Agent's or such Third Party Transferee's
financial condition and subject to all applicable laws, rules and
regulations, succeed to all of the Partnership's right, title and interest
under and in connection with the Assigned Contract and shall be obligated
to perform all of the terms and conditions of the Assigned Contract,
except that the Collateral Agent or any Third Party Transferee shall not
be required to perform or cause to be performed any of the Partnership's
obligations under the Assigned Contract (except for the Partnership's
obligation for the payment of all amounts due and payable to the Company
under the terms of the Assigned Contract including any interest applicable
thereon) that remain unperformed at the time that the Collateral Agent or
such Third Party Transferee is transferred such Assigned Contract other
than continuing non-monetary defaults under the Assigned Contract which
are capable of performance by the Collateral Agent or the Third Party
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Transferee or be liable for any prior act or omission of the Partnership,
and upon the transfer by the Collateral Agent of its rights and interests
and the rights and interests of the Partnership under the Assigned
Contracts to a Third Party Transferee, the Collateral Agent and the
Partnership shall be relieved of all obligations under the Assigned
Contract arising after such transfer.
(d) In the event that (i) the Assigned Contract is rejected by
a trustee or any person exercising the powers of a trustee in any
bankruptcy or insolvency proceeding applicable to the Partnership or (ii)
the Assigned Contract is terminated as a result of any bankruptcy or
insolvency proceeding applicable to the Partnership, the Company shall,
subject to all applicable laws, rules and regulations, execute and deliver
to the Collateral Agent and its designees, successors and assigns a new
contract; PROVIDED that the Company shall be required to execute a new
contract with the Collateral Agent only if the Collateral Agent or its
designees, successors or assigns shall within ten (10) business days of
entering into such new contract, cure all defaults for failure to pay all
amounts due and payable to the Company under the Assigned Contract,
including any interest applicable thereon. The new contract shall, subject
to all applicable laws, rules and regulations, contain the same covenants,
agreements, terms, provisions and limitations as the Assigned Contract
(except for any requirements with respect to past performance which have
been fulfilled by the Partnership or the Collateral Agent or its
designees, successors and assigns hereunder).
SECTION 5. LIABILITY OF SECURED PARTIES
The Collateral Agent, on behalf of the Secured Parties, and its successors
and assigns, shall have no right or power to enforce the Assigned Contract, and
assumes no duty or obligation thereunder unless and until the Collateral Agent
shall have notified the Company that it has elected to exercise its rights and
remedies under the Security Agreement and to substitute itself in the position
of the Partnership under the Assigned Contracts and has agreed in a written
instrument executed by the Collateral Agent to be bound by all terms and
conditions of the Assigned Contract applicable to the Partnership.
SECTION 6. FURTHER ASSURANCES
The Company hereby agrees to execute and deliver all such instruments and
take all such actions as may be reasonably necessary to effectuate fully the
purposes of this Consent, provided, however, that such
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further assurances shall not expand the liability, or obligations arising under
this Consent or dilute any rights or remedies otherwise accruing to Company
under this Consent.
SECTION 7. NOTICES
All notices and other communications hereunder shall be in writing, shall
refer on their face to the Assigned Contract (although failure to so refer shall
not render any such notice or communication ineffective), shall be sent by first
class mail, facsimile, by hand or overnight courier service and shall be
directed:
(a) if to the Company, in accordance with the Assigned Contract;
(b) if to the Collateral Agent, addressed to:
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203
Attention: Corporate Trust Department
(c) if to the Partnership, in accordance with the Assigned Contract;
and
(d) to such other address as any party may designate by notice to
the other party hereto given pursuant hereto.
SECTION 8. MISCELLANEOUS
(a) GOVERNING LAW. This Consent shall be governed by and construed in
accordance with the law of the State of New York as to all matters (without
giving effect to conflict of law principles). Each of the Company and the
Partnership hereby irrevocably waives, to the fullest extent permitted by law,
any and all right to trial by jury in any legal proceedings arising out of or
relating to this Consent.
(b) SUBMISSION TO JURISDICTION. Each of the Parties hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States for the
Southern District of New York and appellate courts from any thereof;
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(ii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the other Party at
its address set forth in Section 7, or at such other address of which the other
Party shall have been notified pursuant thereto; and
(iii) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law.
(c) HEADINGS. The descriptive headings of the Articles and Sections of
this Consent are inserted for convenience only and are not intended to affect
the meaning, interpretation or construction of this Consent.
(d) WAIVER. Except as otherwise provided in this Consent, any failure of a
party to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first party to comply with such obligation, covenant, agreement or
condition.
(d) SEVERABILITY. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) SUCCESSORS AND ASSIGNS. This Consent shall be binding upon and inure
to the benefit of the Company, the Collateral Agent, the Partnership and their
respective permitted successors and assigns.
(g) COUNTERPARTS. This Consent may be executed in counterparts, all of
which shall constitute one and the same Consent and each of which shall be
deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as
of the day and year first above written.
DYNEGY HOLDINGS INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SITHE/INDEPENDENCE POWER
PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
*** CONFIDENTIAL TREATMENT REQUESTED ***
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