EXHIBIT (10)(j)
PALISADES NUCLEAR POWER PLANT
POWER PURCHASE AGREEMENT
BETWEEN
ENTERGY NUCLEAR PALISADES, LLC
AND
CONSUMERS ENERGY COMPANY
DATED AS OF JULY 11, 2006
POWER PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS.................................................... 1
1.1. Defined Terms................................................... 1
1.2. Rules of Interpretation......................................... 8
ARTICLE II: PURCHASE OF CAPACITY, ENERGY, AND ANCILLARY SERVICES.......... 10
2.1. Capacity Sale and Purchase...................................... 10
2.2. Energy Sale and Purchase........................................ 10
2.3. Ancillary Services.............................................. 10
2.4. Replacement Energy and Replacement Capacity..................... 11
2.5. Delivery Point.................................................. 13
2.6. Entitlement Due to Uprate....................................... 14
2.7. Capacity Accreditation.......................................... 14
2.8. Reactive Power.................................................. 15
2.9. Station Power Service........................................... 15
ARTICLE III: PAYMENTS..................................................... 15
3.1. Purchase Payments............................................... 15
3.2. Peak Adjustment Payment......................................... 16
ARTICLE IV: MAINTENANCE AND OPERATION..................................... 16
4.1. Scheduled Maintenance........................................... 16
4.2. Derate Notices.................................................. 18
4.3. Other Operations Obligations.................................... 18
ARTICLE V: METERING, BILLING AND PAYMENT.................................. 19
5.1. Metering........................................................ 19
5.2. Billing and Payment............................................. 21
5.3. Scheduling...................................................... 22
ARTICLE VI: FORCE MAJEURE................................................. 23
6.1. Conditions of Excuse from Performance........................... 23
6.2. No Termination; Extension of Term............................... 23
6.3. Adjustment Payments............................................. 24
ARTICLE VII: EVENTS OF DEFAULT; REMEDIES.................................. 24
7.1. List of Default Events.......................................... 24
7.2. Seller's Security............................................... 25
7.3. Buyer's Security................................................ 26
7.4. No Consequential Damages........................................ 27
ARTICLE VIII: REPRESENTATIONS AND WARRANTIES.............................. 27
8.1. Representations and Warranties of Buyer......................... 27
8.2. Representations and Warranties of Seller........................ 28
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ARTICLE IX: INDEMNITY AND LIMITATION OF LIABILITY......................... 29
9.1. Title and Risk of Loss.......................................... 29
9.2. Indemnification................................................. 29
9.3. No Partnership.................................................. 30
9.4. Responsibility for Employees.................................... 30
ARTICLE X: TERM........................................................... 30
10.1. Term............................................................ 30
10.2. Termination..................................................... 30
10.3. Effect of Termination........................................... 31
ARTICLE XI: RECORDS....................................................... 31
11.1. Inspection of Records........................................... 31
ARTICLE XII: ADMINISTRATIVE COMMITTEE..................................... 31
12.1. Purpose......................................................... 31
12.2. Membership...................................................... 32
12.3. Meetings........................................................ 32
12.4. Functions....................................................... 32
12.5. Expenses........................................................ 32
ARTICLE XIII: NOTICES..................................................... 32
13.1. Notices in Writing.............................................. 32
13.2. Date of Notification............................................ 33
13.3. Oral Notice in Emergency........................................ 33
ARTICLE XIV: CONFIDENTIALITY.............................................. 33
14.1. Non-Disclosure to Third Parties................................. 33
14.2. Disclosure Permitted............................................ 34
14.3. Survival of Confidentiality..................................... 34
ARTICLE XV: INSURANCE..................................................... 34
15.1. Coverage and Amounts of Seller and Buyer........................ 34
15.2. Coverage for Full Term.......................................... 35
ARTICLE XVI: ASSIGNMENT................................................... 35
16.1. Binding Effect.................................................. 35
16.2. General......................................................... 36
16.3. Assignment to an Affiliate...................................... 36
16.4. Assignment to Lenders........................................... 36
ARTICLE XVII: MISCELLANEOUS............................................... 36
17.1. Dispute Resolution.............................................. 36
17.2. Recording Telephone Conversations............................... 37
17.3. Compliance with Laws............................................ 37
17.4. Taxes and Other Charges......................................... 38
17.5. Future Attributes............................................... 38
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17.6. Financial Transmission Rights................................... 38
17.7. Governing Law; Venue............................................ 39
17.8. Entire Agreement; Amendment..................................... 39
17.9. No Implied Waiver............................................... 39
17.10. Severability.................................................... 40
17.11. No Exclusivity/Dedication of Assets............................. 40
17.12. Expenses........................................................ 40
17.13. Counterparts.................................................... 40
17.14. Survival........................................................ 40
17.15. Third-Party Beneficiary......................................... 41
17.16. Mobile-Sierra................................................... 41
17.17. Forward Contract................................................ 41
Exhibits
Exhibit A Capacity and Energy Charges
Exhibit B Buyer's Capacity Amount
Exhibit C Capacity and Energy Charge Shaping Factors
Exhibit D Diagram of Billing Meters
Exhibit E Form of Seller's Guaranty
Exhibit F Form of Buyer's Guaranty
Exhibit G Peak Adjustment Payment
Exhibit H Scheduling Procedures
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POWER PURCHASE AGREEMENT
This POWER PURCHASE AGREEMENT is made and entered into as of July 11, 2006,
by and between ENTERGY NUCLEAR PALISADES, LLC, a Delaware limited liability
company ("Seller"), and CONSUMERS ENERGY COMPANY, a Michigan corporation
("Buyer") (hereinafter the parties hereto are sometimes referred to collectively
as the "Parties," or individually as a "Party").
WITNESSETH:
WHEREAS, Buyer is a public utility which operates a system for generation
and distribution of electric power in the State of Michigan; and
WHEREAS, Buyer intends to transfer to Seller all of its rights, title, and
interests in and to the Palisades Nuclear Power Plant, an approximately 798 MW
(net) nuclear-powered electric generating facility and related assets located in
South Haven, Michigan, NRC Operating License No. DPR-20 (the "Facility"); and
WHEREAS, in order to continue serving its wholesale and retail customers
following transfer of Buyer's interests in the Facility to Seller, Buyer desires
to purchase, and Seller desires to sell, Capacity, Energy, and all associated
Ancillary Services, on a unit contingent basis, on the terms, and subject to the
conditions, set forth below.
NOW THEREFORE, in consideration of the mutual agreements contained herein,
the Parties agree as follows:
ARTICLE I: DEFINITIONS
1.1. DEFINED TERMS
As used in this Agreement, the following terms shall have the following
meanings:
1. "ACCREDITED CAPACITY" shall mean Capacity or Replacement Capacity that (a)
meets the resource adequacy requirements in Module E of the MISO Tariff, as
amended or superseded ("Module E"), and (b) is measured in accordance with
the "Criteria and Method For the Uniform Rating of Generating Equipment"
set forth in ECAR 4; provided, however, that if either requirement in (a)
or (b) is inapplicable, or if both are inapplicable, then Accredited
Capacity shall mean Capacity or Replacement Capacity that meets the
applicable requirements for Capacity (the "Effective Capacity
Requirements") of any Governing Authority having jurisdiction over Buyer,
including any Capacity from the Facility that may be deemed available under
the Effective Capacity Requirements even if the Facility is not operating.
2. "ADMINISTRATIVE COMMITTEE" shall have the meaning set forth in Article XII.
3. "AFFILIATE" shall mean, with respect to any Person, any other Person (other
than an individual) that, directly or indirectly, through one or more
intermediaries, controls, or is
controlled by, or is under common control with, such Person. 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.
4. "AGREEMENT" shall mean this Power Purchase Agreement entered into by Seller
and Buyer, including all Exhibits and any and all subsequent modifications
or amendments hereto made in accordance herewith.
5. "ALTERNATE DELIVERY POINT" shall have the meaning set forth in Section
2.5(b).
6. "ANCILLARY SERVICES" shall mean those services during the Term that are
necessary to support the transmission of electric capacity and energy, and
support the generation or transmission of Energy from the Facility while
maintaining reliable operation of the transmission system, associated with
or otherwise corresponding to the Capacity of the Facility and/or output of
Energy at such time, which Ancillary Services shall include but not be
limited to Reactive Power, regulation, and frequency response service.
7. "ASSET SALE AGREEMENT" shall mean that certain Asset Sale Agreement between
Buyer and Seller, dated as of the date hereof.
8. "AUTHORIZATION" shall mean any license, permit, approval, consent, filing,
waiver, exemption, variance, clearance, entitlement, allowance, franchise,
or other authorization, whether corporate, governmental or otherwise.
9. "BILLING CYCLE" shall mean each calendar month during the Term and any
partial calendar month at the beginning or end of the Term.
10. "BILLING METERS" means the bi-directional metering devices designated on
Exhibit D as meters numbered one through four.
11. "BUSINESS DAY" shall mean any day other than Saturday, Sunday, or any NERC
holiday.
12. "BUYER" shall have the meaning set forth in the preamble hereto.
13. "BUYER'S CAPACITY AMOUNT" shall mean, for any given time, the applicable
amount calculated in accordance with Exhibit B. The amount specified in the
column entitled "Buyer's Capacity Amount" in Exhibit B shall equal the
product of (a) the Capacity rating of the Facility, which shall be set
forth in the column entitled "Capacity of the Facility" in Exhibit B, and
determined in accordance with the applicable requirements for Capacity of
ECAR 4 (or with the Effective Capacity Requirements, if applicable), and
(b) the Buyer's Entitlement, which shall be set forth in the column
entitled "Buyer's Entitlement" in Exhibit B, and determined in accordance
with Section 2.6. The Capacity of the Facility, and the associated amounts
in the column in Exhibit B entitled "Capacity of the Facility," shall be
revised during the Term, upon written notice from Seller to Buyer providing
the results of any net capability testing conducted of the Facility,
whether or not conducted as part of an Uprate, in accordance with ECAR 4
(or with the Effective Capacity Requirements, if applicable).
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14. "BUYER'S GUARANTOR" shall have the meaning set forth in Section 7.3.
15. "BUYER'S GUARANTY" shall have the meaning set forth in Section 7.3.
16. "BUYER'S ENTITLEMENT" shall mean the percentage of Capacity, Net Energy
Output and Ancillary Services allocated to Buyer pursuant to this
Agreement, which as of the Effective Date is 100%, as may subsequently be
reduced pursuant to Section 2.6.
17. "CALENDAR YEAR" shall mean a twelve-month period beginning January 1 and
ending December 31.
18. "CAPACITY" shall mean, on or as of any date of determination, a power
generation unit's capability to generate a specific amount of electrical
energy at a given point in time.
19. "CAPACITY PAYMENT" shall have the meaning set forth in Section 3.1(a).
20. "CLAIMS" shall mean all third party claims or actions, threatened or filed
and, whether groundless, false, fraudulent or otherwise, that directly or
indirectly relate to the subject matter of an indemnity, and the resulting
losses, damages, expenses, reasonable attorneys' fees and court costs.
21. "CPNODE" shall have the meaning ascribed to such term by MISO in the
applicable MISO Tariff or related documents, as such relevant meaning or
relevant term may be modified from time to time.
22. "DEFAULT INTEREST RATE" shall mean, with respect to all obligations to pay
sums due under this Agreement, other than cash collateral held as security,
the Interest Rate plus 200 basis points.
23. "DELIVERED ENERGY" shall mean, for any period of time, the sum of Buyer's
Entitlement of Net Energy Output plus Replacement Energy.
24. "DELIVERY POINT" shall have the meaning set forth in Section 2.5.
25. "DERATE" shall mean an event or condition which causes the Buyer's
Entitlement of Net Energy Output to be less than ninety-five percent (95%)
of the associated Buyer's Capacity Amount.
26. "DERATE NOTICE" shall have the meaning set forth in Section 4.2.
27. "DNR" shall mean a Designated Network Resource as defined under applicable
MISO Tariffs and related documents, as amended or superseded. The term DNR
shall apply to both the Facility and to the resource selected by Seller,
and accepted by MISO, to provide Replacement Capacity for Buyer, in
accordance with the terms and conditions of this Agreement.
28. "DOWNGRADE EVENT" shall mean, with respect to the Seller's Guarantor or the
Buyer's Guarantor, any period of time when such party's unsecured, senior
long-term debt
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obligations (not supported by third-party credit enhancements) are rated
below Baa3 by Moody's Investment Services, Inc. (or its successor), and
rated below BBB- by Standard & Poor's Rating Group (or its successor).
29. "ECAR 4" shall mean ECAR Document No. 4, "Criteria and Method for the
Uniform Rating of Generating Equipment," which is an Organizational
Standard of ReliabilityFirst Corporation, the successor organization to the
East Central Area Coordination Agreement organization, as such document may
be amended, superseded or adopted in whole or in part by ReliabilityFirst
Corporation.
30. "EFFECTIVE DATE" shall mean the Closing Date, as defined in the Asset Sale
Agreement.
31. "ENERGY" shall mean electric energy expressed in MWh.
32. "ENERGY PAYMENT" shall have the meaning set forth in Section 3.1(b).
33. "EST" shall mean Eastern Standard Time.
34. "FACILITY" shall have the meaning set forth in the second recital of this
Agreement.
35. "FERC" shall mean the Federal Energy Regulatory Commission or any successor
thereto.
36. "FINANCIAL BILATERAL TRANSACTION" shall have the meaning ascribed to such
term by MISO in the applicable MISO Tariff or related documents, as such
relevant meaning or relevant term may be modified from time to time.
37. "FORCE MAJEURE" shall mean an event or circumstance which prevents one
Party from performing some or all of its obligations hereunder that (a) is
not within the control of the Party relying thereon, and (b) could not have
been prevented or avoided by such Party through the exercise of reasonable
diligence. Subject to the foregoing, Force Majeure may include, without
limitation, an act of God, war, insurrection, riot, terrorism or shutdowns
or reductions in Facility output or capabilities required, caused by, or
related to, directives, orders or requirements of any Governing Authority;
provided, however, that the following acts, events or causes shall in no
event constitute an event of Force Majeure: (i) any lack of profitability
to a Party or any losses incurred by a Party or any other financial
consideration of a Party; (ii) unavailability of funds or financing; (iii)
an event caused by conditions of national or local economics or markets;
and (iv) any failure of equipment which is not itself directly caused by an
event which would otherwise independently constitute a Force Majeure.
38. "GENERATION OFFER" shall have the meaning ascribed to such term by MISO in
the applicable MISO Tariff or related documents, as such relevant meaning
or relevant term may be modified from time to time.
39. "GOOD UTILITY PRACTICES" shall mean any applicable practices, methods, and
acts engaged in or approved by a significant portion of (a) as to Seller,
the nuclear power electric generating industry, or (b) as to Buyer, the
electric utility industry, during the relevant
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time period, or the practices, methods, and acts which, in the exercise of
reasonable judgment by a prudent nuclear operator (or prudent utility
operator, if applicable to Buyer) in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety, expedition, and the requirements of any Governing
Authority having jurisdiction. Without limitation of the foregoing, "Good
Utility Practices" shall include the applicable operating policies,
standards, criteria, and/or guidelines of NERC, MISO, METC, NRC, RFC and
any other Governing Authority. "Good Utility Practices" is not intended to
be limited to the optimum practice, method, or act to the exclusion of all
others, but rather to the acceptable practices, methods, or acts generally
accepted in (a) as to Seller, the nuclear power electric generating
industry, or (b) as to Buyer, the electric utility industry.
40. "GOVERNING AUTHORITY" shall mean the federal government of the United
States, and any state, county or local government, and any regulatory
department, body, political subdivision, commission, bureau,
administration, agency, instrumentality, ministry, court, judicial or
administrative body, taxing authority, or other authority of any of the
foregoing (including, without limitation, any corporation or other entity
owned or controlled by any of the foregoing), MISO, METC, NERC, RFC, NRC,
and any other regional reliability council, the Transmission Provider and
any other regional transmission organization, in each case having
jurisdiction over either or both of the Parties, the Facility, or the
Transmission Provider's transmission system, whether acting under express
or delegated authority.
41. "INTERCONNECTION AGREEMENT" shall mean, with respect to the Facility, the
interconnection agreement by and among Seller, MISO and METC, and any other
agreement by and among Seller, MISO and METC, governing the interconnection
of the Facility to the MISO or METC system and transmission of Energy from
the Facility into the MISO or METC system, as amended or superseded.
42. "INTERCONNECTION POINT" shall mean, with respect to the Facility, the
Point(s) of Interconnection described in the Interconnection Agreement,
unless the Parties specifically agree otherwise in writing.
43. "INTEREST RATE" shall mean, the one-month LIBOR rate as published in The
Wall Street Journal for the then current month, or in a comparable
publication.
44. "LAW" shall mean any law, statute, rule, regulation, or ordinance issued or
promulgated by a Governing Authority.
45. "LETTER(S) OF CREDIT" means one or more irrevocable, transferable standby
Letters of Credit issued by a U.S. commercial bank or a foreign bank with a
U.S. branch with such bank having a credit rating of at least A- from S&P
or A3 from Moody's, in a form acceptable to the Party in whose favor the
Letter of Credit is issued. Costs of a Letter of Credit shall be borne by
the applicant for such Letter of Credit.
46. "LMP" shall mean the Locational Marginal Price at the relevant CPNode for
the relevant
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hour(s) and day(s), as posted by MISO.
47. "MAINTENANCE SCHEDULE" shall have the meaning set forth in Section 4.1(a).
48. "MERCHANT OPERATIONS CENTER" shall mean that operations center responsible
for monitoring, coordinating and scheduling the outages and dispatch of
generation facilities.
49. "METERING PARTY" shall have the meaning set forth in Section 5.1(a).
50. "METC" shall mean the Michigan Electric Transmission Company, or any
successor entity.
51. "MISO" shall mean the Midwest Independent Transmission System Operator,
Inc., or any successor entity.
52. "MISO TARIFF" shall mean the "Open Access Transmission and Energy Market
Tariff for the Midwest Independent Transmission System Operator, Inc.," as
amended or superseded.
53. "MPSC" shall have the meaning set forth in Section 10.l.
54. "MWH" shall mean megawatt hours.
55. "NERC" shall mean the North American Electric Reliability Council, or any
successor entity.
56. "NET ENERGY OUTPUT" shall mean, for any hour during a Billing Cycle and
with respect to the Facility, (a) if the Facility is operating, total
Energy output of the Facility as measured at the Delivery Point, less
Station Power Service Load, which amounts shall be calculated at the
applicable Billing Meters, and provided that Net Energy Output can in no
event be less than zero, or (b) if the Facility is not operating, zero. In
accordance with the foregoing, if the Facility is operating, Net Energy
Output is equal to the sum of the Billing Meter data for "in" flows less
the sum of the Billing Meter data for "out" flows; where "in" flows are
those flows having a direction designated as being from the Facility to the
transmission system and "out" flows are those flows having a direction
designated as being from the transmission system to the Facility. The
absolute value of the data from each Billing Meter shall be used to
calculate Net Energy Output.
57. "NRC" shall mean the Nuclear Regulatory Commission, or any successor
entity.
58. "OFF-PEAK" shall mean all hours that are not On-Peak hours.
59. "ON-PEAK" shall mean hour ending 0700 EST through hour ending 2200 EST,
Monday through Friday, excluding NERC holidays.
60. "OPERATING DAY" shall have the meaning ascribed to such term by MISO in the
applicable MISO Tariff or related documents, as such relevant meaning or
relevant term may be modified from time to time.
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61. "PARTY" shall have the meaning set forth in the preamble hereto.
62. "PEAK ADJUSTMENT PAYMENT" shall have the meaning set forth in Section 3.2.
63. "PERSON" shall mean any legal or natural person, including any individual,
corporation, partnership, limited liability company, joint stock company,
association, joint venture, trust, Governing Authority or international
body or agency, or other entity.
64. "REACTIVE POWER" shall mean the capability of the Facility when operating
to produce or absorb reactive power.
65. "REGULATORY EVENT" shall have the meaning set forth in Section 17.10.
66. "REPLACEMENT CAPACITY" shall mean, at any time, Accredited Capacity
supplied to Buyer by Seller from any DNR other than the Facility to
fulfill, in whole or in part, Seller's obligation to supply Accredited
Capacity under this Agreement. Replacement Capacity shall not exceed the
Buyer's Capacity Amount. In addition, Replacement Capacity shall (a) not be
committed for sale to any third party, and (b) be available at all times to
serve Buyer's Capacity requirements.
67. "REPLACEMENT ENERGY" shall mean, at any time, Energy supplied to Buyer by
Seller from any generation resource other than the Facility to fulfill, in
part or in whole, Seller's obligation to deliver Energy which, when
combined with Buyer's Entitlement of Net Energy Output, shall not exceed
the Buyer's Capacity Amount applicable to Buyer at such time under this
Agreement.
68. "RFC" shall mean the ReliabilityFirst Corporation, or any successor entity.
69. "SCADA" shall mean supervisory, control and data acquisition technology and
equipment.
70. "SCHEDULED" or "SCHEDULING" means the actions of Seller, Buyer and/or their
designated representatives, of notifying, requesting and confirming to each
other and any third party the quantity and type of Energy to be delivered
on any Operating Day (a) submitted to MISO by Seller as Seller's Generation
Offer from the Facility for a relevant Operating Day during the Term
pursuant to this Agreement, or (b) submitted to MISO by Seller and accepted
by Buyer as a Financial Bilateral Transaction for a relevant Operating Day
during the Term pursuant to this Agreement.
71. "SCHEDULED MAINTENANCE OUTAGE" shall have the meaning set forth in Section
4.1(a).
72. "SELLER" shall have the meaning set forth in the preamble hereto.
73. "SELLER'S GUARANTOR" shall have the meaning set forth in Section 7.2.
74. "SELLER'S GUARANTY" shall have the meaning set forth in Section 7.2.
75. "STATION POWER SERVICE LOAD" shall mean, for the Facility and for any hour
during a
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Billing Cycle, the sum of the following items: (a) the station start-up
transformer load for that hour; (b) the safeguard transformer load for that
hour; and (c) the main transformer load for that hour.
76. "SUMMER MAINTENANCE OUTAGE" shall have the meaning set forth in Section
4.1(b)(i).
77. "TARGET CAPACITY FACTOR" shall mean 0.9500.
78. "TAX" shall mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any Governing Authority, including income, gross
receipts, single business, excise, real or personal property, sales,
transfer, customs, duties, franchise, payroll, withholding, social
security, receipts, license, stamp, occupation, employment, or other taxes,
including any interest, penalties or additions attributable thereto, and
any payments to any state, local, provincial or foreign taxing authorities
in lieu of any such taxes, charges, fees, levies or assessments.
79. "TERM" shall mean the period from and after the Closing as defined in the
Asset Sale Agreement to and including the date and time on which this
Agreement is terminated in accordance with the terms hereof.
80. "TERMINATION DATE" shall have the meaning set forth in Section 10.1.
81. "TRANSMISSION OWNER" shall mean METC.
82. "TRANSMISSION PROVIDER" shall mean the MISO.
83. "UPRATE" shall mean the increase in the maximum power level at which the
Facility may operate (a) under its NRC license as such license may be
amended after the date hereof and/or (b) any increase in the power level at
which the Facility may operate as a result of the replacement or
modification of the Facility's moisture-separator reheaters.
1.2. RULES OF INTERPRETATION
(a) Unless otherwise required by the context in which any term appears:
(i) Capitalized terms used in this Agreement shall have the meanings
specified in this Article.
(ii) The singular shall include the plural, the plural shall include
the singular, and the masculine shall include the feminine and
neuter.
(iii) References to "Articles," "Sections," or "Exhibits" shall be to
articles, sections, or exhibits of this Agreement, and references
to "Paragraphs" or "Clauses" shall be to separate paragraphs or
clauses of the section or subsection in which the reference
occurs.
(iv) The words "herein," "hereof" and "hereunder" shall refer to this
Agreement as a whole and not to any particular section or
subsection of
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this Agreement; and the words "include," "includes" or
"including" shall mean "including, but not limited to."
(v) The term "day" shall mean a calendar day, commencing at 12:00
a.m. (EST). The term "week" shall mean any seven consecutive day
period, and the term "month" shall mean a calendar month;
provided that when a period measured in months commences on a
date other than the first day of a month, the period shall run
from the date on which it starts to the corresponding date in the
next month and, as appropriate, to succeeding months thereafter.
Whenever an event is to be performed or a payment is to be made
by a particular date and the date in question falls on a day
which is not a Business Day, the event shall be performed, or the
payment shall be made, on the next succeeding Business Day;
provided, however, that all calculations shall be made regardless
of whether any given day is a Business Day and whether or not any
given period ends on a Business Day.
(vi) All references to a particular entity shall include such entity's
permitted successors and permitted assigns unless otherwise
specifically provided herein.
(vii) All references herein to any Law or to any contract or other
agreement shall be to such Law, contract or other agreement as
amended, supplemented or modified from time to time unless
otherwise specifically provided herein.
(b) The titles of the articles and sections herein have been inserted as a
matter of convenience of reference only, and shall not control or
affect the meaning or construction of any of the terms or provisions
hereof.
(c) This Agreement was negotiated and prepared by both Parties with advice
of counsel to the extent deemed necessary by each Party; the Parties
have agreed to the wording of this Agreement; and none of the
provisions hereof shall be construed against one Party on the ground
that such Party is the author of this Agreement or any part hereof.
(d) The Exhibits hereto are incorporated in and are intended to be a part
of this Agreement; provided, however, that in the event of a conflict
between the terms of any Exhibit and the terms of the remainder of
this Agreement, the terms of the remainder of this Agreement shall
take precedence.
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ARTICLE II: PURCHASE OF CAPACITY, ENERGY, AND
ANCILLARY SERVICES
2.1. CAPACITY SALE AND PURCHASE
Subject to the terms and conditions of this Agreement, Seller agrees to
sell and supply to Buyer, and Buyer agrees to accept and purchase from
Seller, Buyer's Entitlement of all Accredited Capacity that Seller has
available from the Facility for the duration of the Term. Seller agrees to
sell and supply, and Buyer agrees to accept and purchase from Seller, all
Accredited Capacity associated with Replacement Capacity that Seller
supplies to Buyer pursuant to the terms of this Agreement. Buyer's
obligation to pay for Accredited Capacity sold and supplied by Seller to
Buyer for any period of time shall be based on the aggregate amount of
Delivered Energy for that period of time.
2.2. ENERGY SALE AND PURCHASE
Subject to the terms and conditions of this Agreement, for the duration of
the Term, Seller shall sell and deliver to Buyer at the Delivery Point, and
Buyer shall accept and purchase, Buyer's Entitlement of the Net Energy
Output of the Facility. Buyer also agrees to accept and purchase all
Replacement Energy that Seller delivers to Buyer pursuant to the terms of
this Agreement. The amount of all Energy sold and delivered by Seller and
accepted and purchased by Buyer pursuant to this Section 2.2, for any
period of time, shall be the aggregate amount of Delivered Energy for such
period of time.
2.3. ANCILLARY SERVICES
(a) The sale of Capacity and Energy hereunder from the Facility to Buyer
shall include the Ancillary Services associated with Buyer's
Entitlement of such Capacity and Energy from the Facility. Seller
agrees to provide and/or execute any documents or agreements necessary
to transfer to Buyer any revenue in excess of revenues from the sale
of Energy and Capacity under this Agreement, and any other benefits
and rights, received by Seller in providing such Ancillary Services.
(b) To the extent that Seller's unexcused failure to deliver Ancillary
Services to Buyer results in any increased cost or penalty incurred by
Buyer, Seller shall reimburse Buyer for any such increased cost or
penalty. The amount of such cost or penalty to be reimbursed shall not
exceed an amount equal to the increased costs or penalties actually
incurred by Buyer. In the event that during the Term there exists a
market for the purchase and sale of Ancillary Services, then (i) if
Seller fails to provide an Ancillary Service required to be delivered
hereunder from the Facility, Seller shall use commercially reasonable
efforts to provide Buyer with a replacement for such Ancillary Service
and (ii) if Seller is unsuccessful in satisfying its obligation under
clause (i), Seller shall reimburse Buyer for the market-clearing price
for such undelivered Ancillary Service to the extent such
market-clearing price exceeds those amounts already due from Seller
10
pursuant to this Section 2.3(b).
2.4. REPLACEMENT ENERGY AND REPLACEMENT CAPACITY
Subject to the provisions of this Agreement, Seller may provide Buyer with
Replacement Energy and Replacement Capacity and/or Accredited Capacity from
the Facility as set forth below in this Section 2.4 during a Derate with a
duration of more than one (1) day, including a Derate caused by a Scheduled
Maintenance Outage, a Summer Maintenance Outage, or any other scheduled
outage of the Facility. If Seller supplies Replacement Capacity and/or
Accredited Capacity from the Facility without also simultaneously
delivering Replacement Energy, Seller shall be deemed as not having
supplied Replacement Capacity and as not having delivered Replacement
Energy. If Seller delivers Replacement Energy without also simultaneously
supplying Replacement Capacity and/or Accredited Capacity from the
Facility, Seller shall be deemed as not having supplied Replacement
Capacity and as not having delivered Replacement Energy. Seller may provide
Replacement Energy from a generation resource that differs from the DNR
selected by Seller to supply Replacement Capacity, if any.
(a) Notices to Supply Replacement Capacity and Deliver Replacement Energy
If the event or condition constituting the Derate is an event or
condition other than a Scheduled Maintenance Outage, Summer
Maintenance Outage, or any other scheduled outage of the Facility,
Seller shall notify Buyer's Merchant Operations Center of Seller's
election in accordance with Section 2.4(b) below to provide or not to
provide Replacement Capacity (to the extent not supplying Accredited
Capacity from the Facility) and Replacement Energy no later than the
second Business Day following the day that the Derate commenced.
If the event or condition constituting the Derate is a Scheduled
Maintenance Outage, a Summer Maintenance Outage, or any other
scheduled outage of the Facility, Seller shall notify Buyer's Merchant
Operations Center of Seller's election in accordance with Section
2.4(b) below to provide or not to provide Replacement Capacity (to the
extent not supplying Accredited Capacity from the Facility) and
Replacement Energy no later than two (2) Business Days prior to the
scheduled commencement of such Scheduled Maintenance Outage, Summer
Maintenance Outage, or other scheduled outage of the Facility.
(b) Seller's Replacement Capacity and Replacement Energy Options
Seller shall have the option of electing to provide: (i) Replacement
Capacity (to the extent not supplying Accredited Capacity from the
Facility) and Replacement Energy on a weekly basis, (ii) Replacement
Capacity (to the extent not supplying Accredited Capacity from the
Facility) and Replacement Energy for the expected duration of the
Derate, or (iii) no Replacement Capacity and Replacement Energy for
the expected duration of the Derate; provided, however, that with
respect to a Derate other than a Scheduled Maintenance Outage, a
Summer Maintenance Outage, or another scheduled outage of the
Facility, Replacement Capacity (to the extent not supplying Accredited
Capacity from the Facility) and Replacement
11
Energy, if provided, must be provided for the remaining duration of
the Derate commencing with the date that Buyer's Merchant Operations
Center is notified in accordance with Section 2.4(a) above.
Notwithstanding anything else in this Agreement to the contrary, if a
Derate occurs in the month of July or August and is expected to have a
duration in excess of one (1) week during any part of that two-month
period, then Seller shall not have option (i) above with respect to
Replacement Capacity and Replacement Energy but will have options (ii)
and (iii) above. Notwithstanding the foregoing, Seller's only option
with respect to a Summer Maintenance Outage is to provide Replacement
Capacity (to the extent not supplying Accredited Capacity from the
Facility) and Replacement Energy on a continuous basis for the
duration of such an outage equal to the Buyer's Capacity Amount.
(c) Replacement Energy Scheduling
Any Replacement Energy Scheduled hereunder shall be Scheduled in
accordance with Section 5.3, subject to the following:
(i) Seller shall provide notice to Buyer of the proposed source and
Delivery Point (or Alternate Delivery Point, as the case may be)
of the Replacement Energy by the required time for notices to be
provided to Buyer pursuant to Section 2.4(a) above; and,
(ii) Replacement Energy may only be Scheduled and delivered on a
continuous basis in either (A) a single fixed quantity or (B) a
quantity varied to reflect expected changes in the Buyer's
Entitlement of Net Energy Output of the Facility (e.g., changes
in Facility output or ramp rates or expected resolution of
outages) such that the aggregate of such Replacement Energy and
Buyer's Entitlement of Net Energy Output of the Facility will
result in a single, fixed quantity.
(d) Failure to Schedule/Deliver
If Seller fails to deliver or cause to be delivered all or part of the
Replacement Energy that is Scheduled in accordance with Section 2.4(c)
above, or fails to Schedule Replacement Energy in accordance with
Section 2.4(c) above after providing the requisite notice under
Section 2.4(a), and such failure is not excused under the terms of
this Agreement, then Seller shall pay to Buyer, within ten (10)
Business Days of invoice receipt therefore, an amount equal to the
positive difference, if any, between (i) the cost incurred by Buyer
acting in a commercially reasonable manner to replace the Replacement
Energy not delivered or Scheduled by Seller, including the cost
incurred by Buyer in purchasing Energy to replace, at the Delivery
Point, the Replacement Energy not delivered or Scheduled by Seller in
either a bilateral transaction or the market price at the Delivery
Point, plus additional transmission charges, if any, reasonably
incurred by Buyer for the delivery of the Energy to the Delivery
Point, and (ii) the cost (using the Energy Charge) that Buyer would
have incurred under this Agreement had the
12
Replacement Energy been delivered or Scheduled. Any invoice submitted
by Buyer to Seller pursuant to this Section 2.4(d) shall include a
written statement explaining in reasonable detail the calculation of
the amount due from Seller.
If Buyer fails to Schedule, receive or cause to be received all or
part of the Replacement Energy that is Scheduled by Seller in
accordance with Section 2.4 herein, and such failure is not excused
under the terms of this Agreement, then Buyer shall pay to Seller,
within ten (10) Business Days of invoice receipt therefore, an amount
equal to the negative difference, if any, between (i) the amount
received by Seller acting in a commercially reasonable manner in the
reselling at the Delivery Point any Replacement Energy not received by
Buyer, including the amount received by Seller in reselling any
Replacement Energy, at the Delivery Point, not received by Buyer in
either a bilateral transaction or the market price at the Delivery
Point, less additional transmission charges, if any, and (ii) the
amount (using the Energy Charge) that Seller would have received under
this Agreement had the Replacement Energy been received by Buyer. Any
invoice submitted by Seller to Buyer pursuant to this Section 2.4(d)
shall include a written statement explaining in reasonable detail the
calculation of the amount due from Buyer.
(e) Failure to Supply
Seller shall have the option to supply Replacement Capacity to Buyer
in accordance with this Agreement, provided that the combined amount
of Capacity supplied from the Facility and the Replacement Capacity is
equal to or less than the Buyer's Capacity Amount. If Seller fails to
supply Replacement Capacity (to the extent it is not supplying
Accredited Capacity from the Facility) after providing the requisite
notice under Section 2.4(a), and such failure is not excused under the
terms of this Agreement, then Seller shall pay Buyer, within ten (10)
Business Days of invoice receipt therefore, an amount equal to the
positive difference, if any, between (i) the cost incurred by Buyer
acting in a commercially reasonable manner to replace the Replacement
Capacity not supplied by Seller, including the cost incurred by Buyer
in purchasing Capacity to replace the Replacement Capacity not
supplied by Seller in either a bilateral transaction or the market
price at the Delivery Point, and (ii) the cost (using the Capacity
Charge) that Buyer would have incurred under this Agreement had the
Replacement Capacity been supplied. Any invoice submitted by Buyer to
Seller pursuant to this Section 2.4(e) shall include a written
statement explaining in reasonable detail the calculation of the
amount due from Seller.
(f) When supplying Replacement Energy and Replacement Capacity, Seller
shall not be required to supply Ancillary Services with respect
thereto.
2.5. DELIVERY POINT
(a) If the Facility is the generation source of Energy to be delivered to
Buyer hereunder, then the "Delivery Point" for such Energy is the
CPNode that
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corresponds to the Interconnection Point for the main transformer.
(b) If the Facility is not the generation source of Energy to be delivered
to Buyer hereunder (i.e., if Replacement Energy is being supplied),
then the "Delivery Point" for the Replacement Energy shall be,
pursuant to the Seller's choice, any of: (i) the CPNode that
corresponds to the Interconnection Point for the main transformer,
(ii) any other CPNode located within the METC Sub-Control Area, or
(iii) the CPNode that corresponds to the Buyer's Load Zone as defined
by MISO ((ii) or (iii) being the "Alternate Delivery Point").
(c) In the event that Seller chooses to deliver Replacement Energy to an
Alternate Delivery Point permitted by Section 2.5(b) above, Seller
shall reimburse Buyer for any additional costs (net of any savings)
incurred by Buyer (relative to that which would have been incurred by
Buyer if such delivery had been made to the CPNode that corresponds to
the Interconnection Point) as a result of the delivery of such
Replacement Energy, including, but not limited to, LMP differentials,
transmission costs, imbalance penalties or charges, scheduling
penalties or fees, redispatch costs, cash out charges, congestion
management fees, Ancillary Service costs associated with the
incremental transmission, line losses and similar costs, regulation
and frequency response charges, voltage support charges or any similar
penalties, fees or charges assessed by Transmission Provider for
failure to satisfy the Transmission Provider's balance, nomination
and/or scheduling requirements.
2.6. ENTITLEMENT DUE TO UPRATE
In the event of an Uprate, Seller shall be entitled to sell, and Buyer
shall have no right to, all additional Capacity, Energy and Ancillary
Services attributed to the Uprate. In the event of an Uprate, Seller will
arrange for a net capability test (the "Uprate Capability Test") in
accordance with ECAR 4 (or with the Effective Capacity Requirements, if
applicable) to be conducted, after the Uprate is completed, tested and
operational as determined by Seller, to calculate the actual net increase
in the Capacity of the Facility attributable to the Uprate. Once the Uprate
Capability Test is completed, the Buyer's Entitlement and the associated
percentages in the column in Exhibit B entitled "Buyer's Entitlement" shall
be revised, upon written notice from Seller to Buyer, to equal the
quotient, stated as a percentage, resulting from (a) the Capacity of the
Facility amount from Exhibit B (without taking into account the effect of
the Uprate) corresponding to the month in which the Uprate is completed,
tested and operational as determined by Seller, divided by (b) the Capacity
rating of the Facility resulting from the Uprate Capability Test. Buyer
shall be entitled under this Agreement to the Buyer's Entitlement of all
Capacity made available, or capable of being made available, from the
Facility (except for Capacity from the Facility attributable to an Uprate),
and Seller shall not sell or commit to sell such Capacity to any party
other than Buyer.
2.7. CAPACITY ACCREDITATION
Seller shall, at its cost and expense, (a) on an annual basis (or more
frequently as Seller may be directed by any Governing Authority), perform a
Capacity test of the Facility, in
14
accordance with ECAR 4 and Module E, and (b) take all other actions
reasonably required to cause the Capacity of the Facility and the
Replacement Capacity to be Accredited Capacity, including the satisfaction
of all applicable requirements to establish and maintain the DNR status (as
defined under applicable MISO Tariffs) of the Facility or the source of the
Replacement Capacity for Buyer.
2.8. REACTIVE POWER
(a) Seller agrees that it shall not have any rights to the production or
absorption of the Reactive Power capabilities of the Facility existing
as of the time of closing of the transactions contemplated by the
Asset Sale Agreement (which capabilities are identified in the
Interconnection Agreement), and that Seller shall not operate the
Facility to produce real power at a level or in a manner that
compromises its ability to operate the Facility to produce or absorb
Reactive Power to maintain the output voltage or power factor at the
Interconnection Point as specified in the Interconnection Agreement
or, if the Interconnection Agreement is not applicable, any other
applicable agreement governing Seller's obligation to provide Reactive
Power from the Facility. In addition, Seller shall maintain the
Reactive Power capability of the Facility at the levels set forth in
the Interconnection Agreement as the same may be amended by the
parties thereto. Notwithstanding the foregoing, in no event shall
Seller be required by Buyer to reduce its real power output below the
Buyer's Capacity Amount for the purpose of producing Reactive Power.
(b) Notwithstanding Section 2.8(a), Seller may alter the Facility's
ability to absorb or produce Reactive Power or otherwise change the
amount or nature of Reactive Power if such alteration is approved by
the applicable Governing Authority.
2.9. STATION POWER SERVICE
During any period in which the Facility is operating, Seller shall be
entitled to satisfy the Station Power Service Load using Energy generated
by the Facility. Seller shall be solely responsible for obtaining, at its
cost, Energy to serve the Station Power Service Load, including any
transmission charges (if applicable) associated with such Energy, during
any period of time in which the Facility is not operating, or is not
generating sufficient Energy to meet the Station Power Service Load. In the
event that any fees, penalties, or transmission charges are assessed
against Buyer by any Governing Authority in connection with Seller's
consumption of Energy to serve the Station Power Service Load or any Energy
obtained by Seller to serve the Station Power Service Load, Seller shall
reimburse Buyer for such fees, penalties, or transmission charges or
Energy.
ARTICLE III: PAYMENTS
3.1. PURCHASE PAYMENTS
The amounts to be paid to the Seller by the Buyer for purchases of
Capacity, Energy and Ancillary Services under this Agreement shall be
determined as follows:
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(a) Capacity Payment. With respect to each Billing Cycle, Buyer shall make
a payment to Seller equal to the product of: (i) the applicable
"Capacity Charge" set forth in Exhibit A; (ii) the applicable Capacity
Charge Shaping Factor set forth in Exhibit C; and (iii) the number of
MWhs of Delivered Energy for the Billing Cycle (each, a "Capacity
Payment").
(b) Energy Payment. With respect to each Billing Cycle, Buyer shall make a
payment to Seller equal to the product of: (i) the applicable "Energy
Charge" set forth in Exhibit A; (ii) the applicable Energy Charge
Shaping Factor set forth in Exhibit C; and (iii) the number of MWhs of
Delivered Energy for the Billing Cycle (each, an "Energy Payment").
(c) Ancillary Services. The Capacity Payment and the Energy Payment
include payment for any and all Ancillary Services received by Buyer,
and no additional payment in respect thereof shall be due at any time.
Without limiting the generality of the foregoing, Seller specifically
agrees that it shall not be entitled to any payment for Reactive Power
under this Agreement, notwithstanding its obligation to operate the
Facility in accordance with Section 2.8.
3.2. PEAK ADJUSTMENT PAYMENT
If applicable, Seller shall make a payment to Buyer as determined in
accordance with Exhibit G (each, a "Peak Adjustment Payment").
ARTICLE IV: MAINTENANCE AND OPERATION
4.1. SCHEDULED MAINTENANCE
(a) Scheduling Procedure
Seller shall submit to Buyer a schedule of maintenance of the Facility
(each, a "Maintenance Schedule" and each item thereon a "Scheduled
Maintenance Outage") for each Calendar Year during the Term no later
than twelve (12) months before the beginning of such year (or no later
than three (3) months prior to the deadline for submittal of any such
schedule to the Transmission Provider or any other applicable
Governing Authority, if earlier); except that within thirty (30) days
following the Effective Date, Seller shall submit to Buyer a
Maintenance Schedule for the Calendar Year in which the Effective Date
occurs and for the following Calendar Year. Each Maintenance Schedule
shall meet the requirements set forth in Section 4.1(b) and shall be
deemed confidential information and shall be treated accordingly as
provided in Article XIV of this Agreement; provided, however, that
Buyer shall have the right, consistent with Section 14.2(a), to submit
the Maintenance Schedule to the MPSC. Seller shall also submit to
Buyer any schedule of maintenance provided to the Transmission
Provider, any Governing Authority or other entity.
(b) Limitations on Scheduled Maintenance Outages
16
(i) If Seller plans a Scheduled Maintenance Outage during the period
from June 1st through August 31st (a "Summer Maintenance
Outage"), Seller must comply with the notice and Scheduling
provisions of Section 2.4 and the following terms and conditions:
(A) Seller shall supply Replacement Capacity (if and to the
extent Accredited Capacity from the Facility is not
provided), and Schedule and deliver Replacement Energy, on a
continuous basis to the Delivery Point (or Alternate
Delivery Point) for each hour of such Summer Maintenance
Outage in an amount equal to the Buyer's Capacity Amount;
and
(B) If Seller fails to deliver or cause to be delivered, or
fails to Schedule, all or part of the Replacement Energy
required by subsection (i)(A) above, and such failure is not
excused under the terms of this Agreement, then Seller shall
pay to Buyer, within ten (10) Business Days of invoice
receipt therefore, an amount equal to the positive
difference, if any, between (1) the cost incurred by Buyer
acting in a commercially reasonable manner to replace the
Replacement Energy not delivered or Scheduled by Seller,
including the cost incurred by Buyer in purchasing Energy to
replace, at the Delivery Point, the Replacement Energy not
delivered or Scheduled by Seller in either a bilateral
transaction or the market price at the Delivery Point, plus
additional transmission charges, if any, reasonably incurred
by Buyer for the delivery of the Energy to the Delivery
Point, and (2) the cost (using the Energy Charge) that Buyer
would have incurred under this Agreement had the Replacement
Energy been delivered or Scheduled. Any invoice submitted by
Buyer to Seller pursuant to this subsection (i)(B) shall
include a written statement explaining in reasonable detail
the calculation of the amount due from Seller.
(C) If Buyer fails to Schedule, receive or cause to be received
all or part of the Replacement Energy that is Scheduled by
Seller in accordance with subsection (i)(A) above and such
failure is not excused under the terms of this Agreement,
then Buyer shall pay to Seller, within ten (10) Business
Days of invoice receipt therefore, an amount equal to the
negative difference, if any, between (1) the amount received
by Seller acting in a commercially reasonable manner in the
reselling at the Delivery Point any Replacement Energy not
received by Buyer, including the amount received by Seller
in reselling any Replacement Energy, at the Delivery Point,
not received by Buyer in either a bilateral transaction or
the market price at the Delivery Point, less additional
transmission charges, if any, and (2) the amount (using the
Energy Charge) that Seller would have received under this
Agreement had the Replacement Energy been received by Buyer.
Any invoice submitted by Seller
17
to Buyer pursuant to this subsection (i)(C) shall include a
written statement explaining in reasonable detail the
calculation of the amount due from Buyer.
(D) If Seller fails to supply Replacement Capacity in accordance
with subsection (i)(A) above and such failure is not excused
under the terms of this Agreement, then Seller shall pay
Buyer, within ten (10) Business Days of invoice receipt
therefore, an amount equal to the positive difference, if
any, between (1) the cost incurred by Buyer to replace the
Replacement Capacity not supplied by Seller, including the
cost incurred by Buyer in purchasing Capacity to replace the
Replacement Capacity or the market price paid by Buyer for
Replacement Capacity not supplied by Seller, and (2) the
cost (using the Capacity Charge) that Buyer would have
incurred under this Agreement had the Replacement Capacity
been supplied. Any invoice submitted by Buyer to Seller
pursuant to this subsection (i)(D) shall include a written
statement explaining in reasonable detail the calculation of
the amount due from Seller.
(ii) The conditions set forth in Section 4.1(b)(i) shall not apply to
(x) the Scheduled Maintenance Outage which includes the
Facility's reactor head replacement, (y) the Scheduled
Maintenance Outage, if any, during which the Facility's steam
generator is replaced, or (z) any unexpected maintenance outage
(i.e., a maintenance outage which is scheduled in less than three
months).
4.2. DERATE NOTICES
In the event of any Derate, other than a Scheduled Maintenance Outage, any
Summer Maintenance Outage, or any other scheduled outage of the Facility,
Seller must notify Buyer's Merchant Operations Center telephonically of
such Derate as soon as practicable after Seller becomes aware of the
necessity or occurrence thereof (each, a "Derate Notice"), with written
confirmation within 24 hours. During any ongoing Derate, Seller shall
provide daily or more frequent updates to Buyer's Merchant Operations
Center of the nature and expected duration of such Derate. During the
course of development of a Derate, Seller shall provide frequent updates as
to the magnitude and timing of actual and expected output changes of the
Facility and such other information as may assist Buyer in assessing the
reliability of output from the Facility.
4.3. OTHER OPERATIONS OBLIGATIONS
(a) Permits, Licenses and Approvals; Compliance with Laws
Seller shall, at its expense, acquire and maintain in effect
throughout the Term of this Agreement all permits, licenses, approvals
and other Authorizations of any Governing Authority required for the
lawful operation and maintenance of the Facility.
18
(b) Information Requirements
Seller shall provide Buyer with the following real-time telemetered
data (scanned no less frequently than once every four seconds) for the
duration of the Term: (i) net output (megawatts and megaVARs), (ii)
status (i.e., open or closed) of the applicable breaker, (iii)
operating limits, and (iv) such additional information as may be
required from time to time by the Transmission Provider or any
Governing Authority, or Buyer's control area operator, or by Good
Utility Practices. Seller shall provide Buyer with copies of any
scheduling notices or requests submitted to the Transmission Provider,
concurrently with the submission thereof. In addition, Seller shall
provide Buyer with any other information Buyer may reasonably request
regarding the operation of the Facility. Seller shall advise Buyer and
provide information regarding events, ongoing work or Facility status
which may create a risk of Derates. In no event shall the provisions
of this Section 4.3(b) require Seller to provide Buyer with any
information that Seller believes in good faith, based on established
precedent or reasonable inquiry, violates the rules or regulations on
transfer of information promulgated by any Governing Authority or
Transmission Provider.
(c) SCADA Data
Seller shall provide and make available to Buyer, on a real-time
basis, all data generated by the SCADA system at the Facility,
including, without limitation, all four-second meter data.
(d) Quality of Energy
All Energy delivered hereunder shall be three-phase, 60 Hertz (plus or
minus variations as may be required or allowed by the Transmission
Provider), alternating current, at a voltage acceptable to the
Transmission Provider, or shall otherwise comply with such other
specifications of the Transmission Provider, regional reliability
council or other Governing Authority responsible for the safety and
reliability of the electric grid with authority over the Delivery
Point (or Alternate Delivery Point, if applicable) as may be in effect
at the time of delivery.
(e) Compliance with Interconnection Agreement
To the extent the Interconnection Agreement requires delivery to Buyer
of information and data substantially similar to that referred to in
Sections 4.3(b) and (c), the information and data required by the
Interconnection Agreement shall be delivered to Buyer in lieu of that
required under Sections 4.3(b) and (c).
ARTICLE V: METERING, BILLING AND PAYMENT
5.1. METERING
(a) The Billing Meters shall at all times during the Term meet the
requirements set by
19
the Transmission Provider and all applicable Governing Authorities.
Seller shall arrange with Transmission Owner for Transmission Owner to
own, operate, test, maintain, and replace the Billing Meters at the
main transformer (Meters #2 and #3 on Exhibit D). Transmission Owner
shall be the metering party ("Metering Party") as to such Billing
Meters. As between Seller and Buyer following the Effective Date,
Seller shall bear all reasonable, documented costs associated with the
operation, testing, maintenance, or replacement of the Billing Meters
at the main transformer. Seller shall use reasonable efforts to cause
the Transmission Owner to provide metering quantities, in analog
and/or digital form, to Buyer upon Buyer's request.
(b) Buyer shall own, operate, test, maintain, and replace the Billing
Meters at the start-up transformer and the safeguard transformer
(Meters #1 and #4 on Exhibit D) in accordance with Good Utility
Practices. Buyer shall be the Metering Party as to such Billing
Meters. Following the Effective Date, Seller shall bear all
reasonable, documented costs associated with the operation, testing,
maintenance, or replacement of the Billing Meters at the start-up
transformer or the standby transformer. Buyer shall provide metering
quantities, in analog and/or digital form, to Seller upon Seller's
request.
(c) The Transmission Owner's and Buyer's Billing Meters, which are shown
on Exhibit D, shall be used for measurements under this Agreement and
shall be sufficient to permit an accurate determination of the
quantity and time of delivery of Energy delivered to Buyer. Buyer
shall calibrate, and Seller shall use reasonable efforts following the
Effective Date to cause the Transmission Owner to calibrate, their
respective Billing Meters at least annually, and otherwise in
accordance with applicable Governing Authority standards. Seller or
Seller's representative shall have the right to be present during any
calibration of the Billing Meters owned by Buyer, and Buyer shall
provide reasonable notice to Seller of any such calibration. Seller
agrees, and shall use reasonable efforts to cause the Transmission
Owner to agree in writing, that upon reasonable notice, Transmission
Owner (and Seller) shall provide Buyer access to the Billing Meters
owned by Buyer and Transmission Owner during normal business hours for
the purpose of reading, inspecting, calibrating, and testing such
equipment, or witnessing the reading, inspecting, calibrating, and
testing of such equipment by another party.
(d) Check Meters. Seller, at its option and expense, may install and
operate on its premises and on its side of the Interconnection Points,
one or more check meters to check the Billing Meters owned by Buyer.
Seller is responsible for any separate arrangements to install check
meters with respect to the Billing Meters owned by Transmission Owner.
All such check meters shall be for check purposes only and shall not
be used for the measurement of Energy flows for purposes of this
Agreement, except as provided in Section 5.1(e) below. The check
meters shall be subject at all reasonable times to inspection and
examination by Transmission Provider, Buyer or their designees. The
installation, operation and maintenance thereof shall be performed
entirely by
20
Seller in accordance with Good Utility Practice.
(e) Testing of Metering Equipment. Seller and Buyer agree, and Seller
shall use reasonable efforts to cause the Transmission Owner to agree
in writing to the following: the Metering Party shall inspect and test
its Billing Meters upon installation and at least once every two (2)
years thereafter. If requested to do so by a Party, the Metering Party
shall, at the requesting Party's expense, inspect and test Billing
Meters more frequently than once every two (2) years. The Metering
Party shall give reasonable notice to the other Party of the time when
any inspection or test shall take place, and the other Party may have
representatives present at the test or inspection. In addition, Seller
shall have the right to inspect Buyer's Billing Meters from time to
time at its discretion. If at any time a Billing Meter is found to be
inaccurate or defective, it shall be adjusted, repaired or replaced at
Seller's expense, in order to provide accurate metering, unless the
inaccuracy or defect is due to the Metering Party's failure to
maintain, then the Metering Party shall pay. If a Billing Meter fails
to register, or if the measurement made by a Billing Meter during a
test varies by more than one-half of one percent (0.5%) from the
measurement made by the standard meter used in the test, the Metering
Party shall adjust the measurements by correcting all measurements for
the period during which the Billing Meter was in error by using
Seller's check meters, if installed and if, when tested, varied less
than the Billing Meter. If no such check meters are installed, the
Parties shall use the best available data for the period in question.
If no other data are available, or if the period cannot be reasonably
ascertained, the adjustment shall be for the period immediately
preceding the test of the Billing Meter equal to one-half the time
from the date of the previous test of the Billing Meter.
(f) Seller and Buyer agree, and Seller shall use reasonable efforts to
cause the Transmission Owner to agree in writing, to the following: at
Seller's expense, the metered data shall be telemetered by the
Metering Party to one or more locations, designated by Transmission
Owner and one or more locations designated by Buyer.
5.2. BILLING AND PAYMENT
(a) Seller shall send a billing statement to Buyer on or before the tenth
(10th) day after the end of each Billing Cycle. If any net amount is
due to Seller pursuant to any such billing statement, Buyer shall pay
such amount to Seller by the later of (i) ten (10) Business Days after
receipt of such billing statement, or (ii) the 20th day of the month
in which the billing statement was received. If any net amount is due
to Buyer pursuant to any such billing statement, Seller shall pay such
amount to Buyer by the later of (i) ten (10) Business Days after
receipt of such billing statement, or (ii) the 20th day of the month
in which the billing statement was received. The billing statement
shall show the kilowatt-hours of Delivered Energy for such Billing
Cycle; the amounts due Seller for that Billing Cycle in respect of (i)
the Capacity Payment and the Energy Payment, and (ii) any other
amounts due to Seller hereunder; the amounts due Buyer for that
Billing Cycle in
21
respect of (iii) the Peak Adjustment Payment, and (iv) any other
amounts due to Buyer hereunder; and the data reasonably pertinent to
the calculation of the payments due to Seller or Buyer. If meter
readings cannot be made during such Billing Cycle (or any portion
thereof), the Buyer shall estimate deliveries to it for such period,
tender payment accordingly, and make an adjustment for actual
purchases in the next Billing Cycle's statement. For purposes of
billing for Replacement Capacity and Replacement Energy, the Capacity
of the resources providing Replacement Capacity and Replacement Energy
shall be determined in accordance with Module E of the MISO Tariff,
such determination to be submitted by Seller and Buyer and the
Schedule(s) submitted in accordance with Section 2.4 to determine the
amount of Replacement Capacity and Replacement Energy supplied and
delivered to Buyer. Any amounts not paid by the due date shall be
deemed delinquent and shall accrue interest at the Default Interest
Rate, such interest to be calculated from and including the due date
to but excluding the date the delinquent amount is paid in full.
(b) In the event of a dispute as to the amount of any bill, the disputing
Party shall notify the other Party of the amount in dispute and Buyer
or Seller, as applicable, shall pay to the other Party the undisputed
portion of the bill on or prior to the due date therefor, as
identified in Section 5.2(a). Buyer or Seller, as applicable, shall
pay, with an interest charge computed at the Default Interest Rate,
from and including the date payment was due to but excluding the date
payment is made, any portion of the disputed amount ultimately found
to be proper. In the event of a refund, Buyer or Seller, as
applicable, shall pay, with an interest charge computed at the Default
Interest Rate, from and including the date the disputed payment was
made to but excluding the date the refund payment is made, any refund
amount ultimately found to be due to the other Party.
(c) Neither the Buyer nor Seller shall have the right to challenge any
billing statement rendered or received hereunder after a period of two
(2) years from the date such statement was rendered. In the event that
any such billing statement depends in whole or in part upon estimated
data, this two (2) year limitation period shall be deemed to begin on
the first day of the Billing Cycle in which such estimated data is
adjusted to actual.
5.3. SCHEDULING
Seller shall submit its Generation Offers and Financial Bilateral
Transactions in accordance with applicable MISO rules and procedures, as
the same may be amended or superseded, and consistent with offering the
Facility in the MISO day-ahead market for dispatch as a must-run generation
unit. The current version of such rules and procedures are attached hereto
as Exhibit H.
22
ARTICLE VI: FORCE MAJEURE
6.1. CONDITIONS OF EXCUSE FROM PERFORMANCE
If and to the extent resulting from a Force Majeure a Party hereto is
rendered unable to perform any of its obligations under this Agreement
(other than obligations of such Party to pay money when such money is due),
that Party shall be excused, except as specifically provided elsewhere in
this Agreement, from whatever performance is prevented by the Force Majeure
to the extent so prevented, provided that:
(a) The Party claiming excuse gives the other Party prompt written notice
describing how the event qualifies as a Force Majeure;
(b) The permitted suspension of performance is of no greater scope and of
no longer duration than is required by the Force Majeure; provided,
however, that performance under this Agreement shall only be excused
for longer than one (1) year by reason of any particular Force Majeure
if Seller first complies with subsection (e) below;
(c) No obligations of a Party hereto under this Agreement which arose and
accrued before the Force Majeure are excused as a result of the Force
Majeure;
(d) A Party's performance may be excused due to Force Majeure only for so
long as such Party claiming Force Majeure is exercising commercially
reasonable efforts consistent with Good Utility Practices to eliminate
or ameliorate the Force Majeure condition; and
(e) Seller shall, within sixty (60) days of the occurrence of a Force
Majeure affecting Seller's performance under this Agreement that
Seller reasonably anticipates will last more than twelve (12) months
after the commencement thereof, deliver to Buyer a detailed plan for
the remedy of the Force Majeure condition, which plan shall include:
(i) a detailed specification of Seller's proposal (including a
timetable) to remedy the Force Majeure condition and restore the
Facility to maximum attainable operating status, and (ii) Seller's
decision as to whether it will commence supplying and delivering
Replacement Capacity and Replacement Energy after the sixth (6th)
month of the Force Majeure if the Force Majeure condition has not been
remedied; provided, however, that, if Seller decides to provide
Replacement Capacity and Replacement Energy after the sixth (6th)
month of the Force Majeure, Seller must provide both Replacement
Capacity and Replacement Energy on a continuous basis until the event
that previously constituted the Force Majeure has been remedied.
6.2. NO TERMINATION; EXTENSION OF TERM
In no event shall a condition of Force Majeure be grounds for termination
of this Agreement, or extend the Term of this Agreement.
23
6.3. ADJUSTMENT PAYMENTS
No Peak Adjustment Payment shall be calculated or accrue in favor of Buyer
while performance of the Seller is excused pursuant to Section 6.1.
ARTICLE VII: EVENTS OF DEFAULT; REMEDIES
7.1. LIST OF DEFAULT EVENTS
Except as otherwise provided in this Agreement and subject to the
limitations contained in this Section 7.1, Section 7.2 and Section 7.3, a
Party shall be entitled to pursue any remedies available to it under
generally applicable Laws or under this Agreement upon the occurrence of
any of the following events (except as to the event described in Section
7.1(f), for which only Seller shall be entitled to pursue any remedies
available to it under generally applicable Laws or under this Agreement):
(a) The failure of the other Party to make any undisputed payment due
hereunder and such failure shall continue for ten (10) Business Days
after written notice demanding such payment is received;
(b) In the event the other Party shall cease doing business as a going
concern, shall generally not pay its debts as they become due or admit
in writing its inability to pay its debts as they become due, shall
file a voluntary petition in bankruptcy or shall be adjudicated as
bankrupt or insolvent, or shall file any petition or answer seeking
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any
future federal bankruptcy code or any other present or future
applicable Law, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver, custodian or liquidator of said
Party or of all or any substantial part of its properties, or shall
make an assignment for the benefit of creditors, or said Party shall
take any corporate action to authorize or that is in contemplation of
the actions set forth above in this Section 7.1(b);
(c) In the event that within thirty (30) days after the commencement of
any proceeding against either Party seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under the present or any future federal bankruptcy code
or any other statute or Law, such proceeding shall not have been
dismissed, or if, within thirty (30) days after the appointment
without the consent or acquiescence of said Party of any trustee,
receiver, custodian or liquidator of said Party or of all or any
substantial part of its properties, such appointment shall not have
been vacated or stayed on appeal or otherwise, or if, within thirty
(30) days after the expiration of any such stay, such appointment
shall not have been vacated;
(d) Any of the other Party's representations and warranties contained in
Article VIII hereof was false or misleading in any material respect
when made, unless the fact, circumstance or condition that is the
subject of such representation or warranty is
24
made true within thirty (30) days after the defaulting Party has
received notice thereof from the non-defaulting Party;
(e) A default in performance by a Party of any agreement, undertaking,
covenant or other obligation contained in Section 7.2 and Section 7.3,
and such default shall continue for ten (10) Business Days after
written notice demanding such performance is received;
(f) The failure of either Party to provide the other Party's employees,
agents, and other representatives reasonable access to test or examine
the other Party's Billing Meters after receiving notice to do so by
the applicable Party as required under this Agreement;
(g) A material default in performance or observance of any other
agreement, undertaking, covenant or other material obligation
contained in this Agreement by a Party unless, within thirty (30) days
after written notice from the non-defaulting Party specifying the
nature of such material default, the defaulting Party cures such
default or, if such cure cannot reasonably be completed within thirty
(30) days and if the defaulting Party within such thirty (30) day
period commences, and thereafter proceeds with all due diligence, to
cure such default, said period shall be extended for such further
period as shall be necessary for the defaulting Party to cure such
default with all due diligence, provided that the extended cure period
shall not exceed ninety (90) days from the date of the original
notice; or
(h) Seller or Buyer shall permanently or persistently fail to perform
under the terms of this Agreement, such persistent failure continues
for a period of thirty (30) days following notice to Seller or Buyer
(as appropriate) of such persistent failure and such failure is not
due to Force Majeure.
If an event of default under Sections 7.1(a), (b), (c) or (e) occurs, the other
Party (the "Non-Defaulting Party") shall have (in addition to any remedies
available to under generally applicable Laws or under this Agreement) the right
(i) to terminate this Agreement and/or (ii) to suspend performance hereunder
including without limitation the delivery of Energy; provided, however, that
with respect to the circumstances described in Sections 7.1(a) and 7.1(e),
Seller's right to suspend performance hereunder, including without limitation
the delivery of Energy (but not the right to terminate this Agreement) shall
become effective upon the expiration of five (5) Business Days after (iii)
written notice demanding payment is received under Section 7.1.(a), or (iv)
written notice demanding performance is received under Section 7.1(e), as
applicable.
7.2. SELLER'S SECURITY
(a) Seller shall provide on the Effective Date, and maintain thereafter
throughout the remainder of the Term, security for compliance with its
payment obligations under this Agreement, which shall consist of (1) a
cash deposit in the amount of $30,000,000, which deposit shall earn
interest at the Interest Rate, (2) a corporate guaranty (the "Seller's
Guaranty") in the form attached hereto as Exhibit E, from Entergy
Corporation, or its Affiliate or successor ("Seller's Guarantor")
whose
25
unsecured, senior long-term debt obligations (not supported by
third-party credit enhancements) are rated Baa3 or better by Moody's
Investment Services, Inc. (or its successor), or BBB- or better by
Standard & Poor's Rating Group (or its successor) in the amount of
$30,000,000, or (3) a Letter or Letters of Credit in the amount of
$30,000,000.
(b) A default specified in Section 7.1(a) may not be cured by drawing, or
permitting a draw on, the cash deposit, Seller's Guaranty or Letter of
Credit, unless the cash deposit, Seller's Guaranty or Letter of Credit
is immediately replenished up to the required amount of the cash
deposit, Seller's Guaranty or Letter of Credit under Section 7.2(a).
(c) If at any time there shall occur a Downgrade Event with respect to
Seller's Guarantor or if the rating of the Letter of Credit issuing
bank falls below the minimum acceptable level as set forth in the
definition of Letter of Credit, then Buyer may require Seller to
replace the Seller's Guaranty or Letter of Credit with a Letter of
Credit acceptable to the beneficiary in the amount of $30,000,000, and
shall be subject to all terms and conditions of this Agreement
applicable to a Letter of Credit. In the event Seller shall fail to
provide such security within ten (10) Business Days of receipt of
written notice, then a breach of this Agreement shall be deemed to
have occurred; provided, however, that Seller's obligation to provide
a Letter of Credit due to a Downgrade Event with respect to Seller's
Guarantor shall be suspended if the unsecured, senior long-term debt
obligations (not supported by third-party credit enhancements) of the
Seller's Guarantor are restored to a rating of Baa3 or better by
Moody's Investment Services, Inc. (or its successor), or BBB- or
better by Standard & Poor's Rating Group (or its successor).
7.3. BUYER'S SECURITY
(a) Buyer shall provide on the Effective Date, and maintain thereafter
throughout the remainder of the Term, security for compliance with its
payment obligations under this Agreement, which shall consist of (1) a
cash deposit in the amount of $30,000,000, which deposit shall earn
interest at the Interest Rate, (2) a corporate guaranty (the "Buyer's
Guaranty") in the form attached hereto as Exhibit F, from CMS Energy
Corporation, or its Affiliate or successor ("Buyer's Guarantor") whose
unsecured, senior long-term debt obligations (not supported by
third-party credit enhancements) are rated Baa3 or better by Moody's
Investment Services, Inc. (or its successor), or BBB- or better by
Standard & Poor's Rating Group (or its successor) in the amount of
$30,000,000, or (3) a Letter or Letters of Credit in the amount of
$30,000,000.
(b) A default specified in Section 7.1(a) may not be cured by drawing, or
permitting a draw on, the cash deposit, Buyer's Guaranty or Letter of
Credit, unless the cash deposit, Buyer's Guaranty or Letter of Credit
is immediately replenished up to the required amount of the cash
deposit, Buyer's Guaranty or Letter of Credit under Section 7.3(a).
26
(c) If at any time there shall occur a Downgrade Event with respect to
Buyer's Guarantor or if the rating of the Letter of Credit issuing
bank falls below the minimum acceptable level as set forth in the
definition of Letter of Credit, then Seller may require Buyer to
replace the Buyer's Guaranty or Letter of Credit with a Letter of
Credit acceptable to the beneficiary in the amount of $30,000,000, and
shall be subject to all terms and conditions of this Agreement
applicable to a Letter of Credit. In the event Buyer shall fail to
provide such security within ten (10) Business Days of receipt of
written notice, then a breach of this Agreement shall be deemed to
have occurred; provided, however, that Buyer's obligation to provide a
Letter of Credit due to a Downgrade Event with respect to Buyer's
Guarantor shall be suspended if the unsecured, senior long-term debt
obligations (not supported by third-party credit enhancements) of the
Buyer's Guarantor are restored to a rating of Baa3 or better by
Moody's Investment Services, Inc. (or its successor), or BBB- or
better by Standard & Poor's Rating Group (or its successor).
7.4. NO CONSEQUENTIAL DAMAGES
In actions arising under Section 7.1 of this Agreement, and in all other
claims arising under this Agreement by either Party against the other
Party, neither Seller nor the Buyer shall be liable to the other for
indirect, special, incidental, or consequential damages, except as to the
indemnification obligations of the Parties under Article IX for the
indirect, special, or consequential damages of third parties.
ARTICLE VIII: REPRESENTATIONS AND WARRANTIES
8.1. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Seller, each of
which is true and correct as of the Effective Date:
(a) Buyer is a corporation duly organized and in active status under the
Laws of the State of Michigan.
(b) Buyer has all corporate power and authority to enter into and perform
this Agreement and to carry out the transactions contemplated herein.
(c) Buyer's execution, delivery and performance of this Agreement have
been duly authorized by, and are in accordance with, its articles of
incorporation and by-laws; this Agreement has been duly executed and
delivered for it by the signatory so authorized; and this Agreement
constitutes its legal, valid, and binding obligation, enforceable
against it in accordance with the terms hereof.
(d) Buyer's execution, delivery and performance of this Agreement (i) will
not result in a breach or violation of, or constitute a default under,
any Authorization, or any contract, lease or other agreement or
instrument to which it is a party, or by which it or its properties
may be bound or affected; and (ii) does not require any
27
Authorization, or the consent, authorization or notification of any
other Person, or any other action by or with respect to any other
Person (except for Authorizations and consents or authorizations of
other Persons already obtained, notifications already delivered, or
other actions already taken).
(e) No suit, action or arbitration, or legal, administrative or other
proceeding is pending or has been threatened against Buyer that would
affect the validity or enforceability of this Agreement or the ability
of Buyer to perform its obligations hereunder in any material respect,
or that would, if adversely determined, have a material adverse effect
on the business or financial condition of Buyer. There are no
bankruptcy, insolvency, reorganization, receivership or other
arrangement proceedings pending against or being contemplated by
Buyer, or, to Buyer's knowledge, threatened against it.
(f) Buyer is not in breach of, in default under, or in violation of, any
applicable Law, or the provisions of any Authorization, or in breach
of, in default under, or in violation of, any provision of any
promissory note, indenture or any evidence of indebtedness or security
therefor, lease, contract, or other agreement by which it is bound,
except for any such breaches, defaults or violations which,
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business or financial condition
of Buyer or its ability to perform its obligations hereunder.
8.2. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer, each of
which is true as of the Effective Date:
(a) Seller is a limited liability company duly organized and in good
standing under the Laws of the State of Delaware and qualified to do
business in the State of Michigan.
(b) Seller has all limited liability company power and authority to enter
into and perform this Agreement and to carry out the transactions
contemplated herein.
(c) Seller's execution, delivery and performance of this Agreement have
been duly authorized by, and are in accordance with, its certificate
of formation and operating agreement; this Agreement has been duly
executed and delivered for it by the signatory so authorized; and this
Agreement constitutes Seller's legal, valid and binding obligation,
enforceable against it in accordance with the terms hereof.
(d) Seller's execution, delivery and performance of this Agreement (i)
will not result in a breach or violation of, or constitute a default
under, any Authorization, or any contract, lease or other agreement or
instrument to which it is a party, or by which it or its properties
may be bound or affected; and (ii) does not require any Authorization,
or the consent, authorization or notification of any other Person, or
any other action by or with respect to any other Person (except for
Authorizations and consents or authorizations of other Persons already
obtained, notifications
28
already delivered, or other actions already taken).
(e) No suit, action or arbitration, or legal, administrative or other
proceeding is pending or has been threatened against Seller that would
affect the validity or enforceability of this Agreement or the ability
of Seller to perform its obligations hereunder in any material
respect, or that would, if adversely determined, have a material
adverse effect on the business or financial condition of Seller. There
are no bankruptcy, insolvency, reorganization, receivership or other
arrangement proceedings pending against or being contemplated by
Seller, or, to Seller's knowledge, threatened against it.
(f) Seller is not in breach of, in default under, or in violation of, any
applicable Law, or the provisions of any Authorization, or in breach
of, in default under, or in violation of, any provision of any
promissory note, indenture or any evidence of indebtedness or security
therefor, lease, contract, or other agreement by which it is bound,
except for any such breaches, defaults or violations which,
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business or financial condition
of Seller or its ability to perform its obligations hereunder.
ARTICLE IX: INDEMNITY AND LIMITATION OF LIABILITY
9.1. TITLE AND RISK OF LOSS
Title to and risk of loss related to the Capacity, Energy or Ancillary
Services shall transfer from Seller to Buyer at the Delivery Point (or
Alternate Delivery Point, if applicable). Seller warrants that it will
deliver to Buyer the Capacity, Energy and Ancillary Services free and clear
of all liens, security interests, claims and encumbrances or any interest
therein or thereto by any Person arising prior to the Delivery Point (or
Alternate Delivery Point, if applicable).
9.2. INDEMNIFICATION
(a) Each Party shall indemnify, defend and hold harmless the other Party
from and against any Claims related to, or arising under, this
Agreement and arising from or out of any event, circumstance, act or
incident first occurring or existing during the period when control
and title to Energy, Capacity and Ancillary Services is vested in such
Party as provided in Section 9.1. Each Party shall indemnify, defend
and hold harmless the other Party against any charges imposed by
Governing Authority for which such Party is responsible.
(b) Notwithstanding any language to the contrary in this Agreement,
neither Party shall have liability to the other Party with respect to
provision of advice, consultation, proposals or recommendations by the
first Party's personnel or representatives to the second Party whether
occasioned by comments or requests of or by the second Party or by the
negligent acts or omissions of employees or representatives of the
first Party or otherwise, and the second Party shall
29
indemnify the first Party and hold harmless the first Party from and
against losses, damages, costs or liabilities arising therefrom.
(c) Each Party shall promptly notify the other Party of the assertion of
any Claim against which such other Party may be required to provide
indemnity hereunder and shall give such other Party an opportunity to
defend such Claim. These indemnification provisions are for the
protection of the Parties hereto only and shall not establish, of
themselves, any liability to third parties.
9.3. NO PARTNERSHIP
The Parties do not by this Agreement effect a joint undertaking and do not
intend to create any joint or several obligations to third parties. Neither
this Agreement nor any transaction hereunder, shall be construed to create
a new entity, such as a partnership or a joint venture, or constitute an
agency or employment relationship. Neither Party shall be under the control
of or be deemed to control the other Party, and no Party shall have the
right or power to bind any other Party.
9.4. RESPONSIBILITY FOR EMPLOYEES
The Parties agree that, as between themselves, each Party shall be
responsible for the acts and omissions of, and any claims by and
compensation to, its employees and agents, irrespective of any limitation
on the amount or type of damages, compensation or benefits payable by or
for such Party under workers' or workmen's compensation acts, disability
benefit acts or other employee benefit acts; provided, however, that the
foregoing is not intended to create third-party beneficiary rights in any
Person not a Party to this Agreement. Each Party shall indemnify the other
Party from and against all liabilities, Claims, damages, suits, fines or
judgments, including reasonable attorneys' fees and defense fees,
disbursements and expenses, for injury or death to third persons and damage
to or destruction of property of third persons, to the extent caused by
such Party's employees or agents.
ARTICLE X: TERM
10.1. TERM
Subject to the terms and conditions of this Agreement, including the final
approval of the Michigan Public Service Commission ("MPSC"), this Agreement
shall commence on the Effective Date and, unless terminated earlier as
expressly provided herein, shall continue in effect until 11:59:59 p.m.
(EST) on the Fifteenth (15th) anniversary of the Effective Date (the
"Termination Date").
10.2. TERMINATION
If the NRC does not grant the application for renewal of Operating License
No. DPR-20 for the Facility for an additional twenty years as set forth in
NRC Docket No. 50-255, the Termination Date shall be March 24, 2011 and
neither Party shall have any further
30
obligations hereunder except for those obligations which survive such
termination.
Promptly following Seller's determination that operation of the Facility
has become materially and economically adverse such that continued
operation of the Facility is no longer feasible, prudent and/or
sustainable, Seller shall provide twelve (12) months' written notice to
Buyer (or longer notice if commercially feasible under the circumstances)
that Seller will permanently retire the Facility at the expiration of that
notice period (unless twelve (12) months' notice is not commercially
feasible under the circumstances, in which case Seller shall provide such
notice as is commercially feasible under the circumstances). This Agreement
will terminate at the time specified in such notice which will become the
Termination Date, and neither Party shall have any further obligations
hereunder except for those obligations which survive such termination.
10.3. EFFECT OF TERMINATION
Termination of this Agreement shall not terminate the rights or duties of
either Party hereunder with respect to any obligations due to be performed
on or before the effective date of termination. Without limitation of the
foregoing, Article IX, Article XI and Article XIV shall survive the
termination of this Agreement.
ARTICLE XI: RECORDS
11.1. INSPECTION OF RECORDS
Buyer and Seller shall maintain, to the extent applicable, for a period of
not less than seven (7) years from the date of preparation thereof complete
and accurate records of: (a) all measurements by Billing Meters of
Delivered Energy pursuant to this Agreement, (b) real and reactive power
production for each hour, changes in operating status, scheduled outages
and any unusual conditions found during inspections, and (c) all other data
and information necessary to calculate payments as provided in this
Agreement, including invoices, receipts, charts, printouts, and other
materials and documents. Subject to limitations imposed by applicable Law,
Seller or Buyer, or their respective representatives shall be permitted to
inspect such records upon request during normal business hours and copies
of such records shall be provided, if requested, at the requesting Party's
expense, within thirty (30) days of such request.
ARTICLE XII: ADMINISTRATIVE COMMITTEE
12.1. PURPOSE
From time to time various administrative and technical matters may arise in
connection with the terms and conditions of this Agreement which will
require the cooperation and consultation of the Parties and the exchange of
information. As a means of providing for such cooperation, consultation and
exchange, an Administrative Committee is hereby established with the
functions described in Section 12.4. However, the Administrative Committee
shall not (a) have the authority to amend this Agreement, or (b) diminish
in
31
any manner the authority or responsibility of either Party as set forth in
the various sections of this Agreement.
12.2. MEMBERSHIP
The Administrative Committee shall have two (2) members. Within sixty (60)
days after execution of this Agreement, each Party shall designate its
representative on the Administrative Committee and shall promptly give
written notice thereof to the other Party. Thereafter, each Party shall
promptly give written notice to the other Party of any change in the
designation of its representative on the Administrative Committee. All
actions taken by the Administrative Committee must be approved by both
members.
12.3. MEETINGS
Meetings as are reasonably required may be called by either member with as
much advance notice as is practicable. Meetings may be attended by other
representatives of the Parties.
12.4. FUNCTIONS
The Administrative Committee shall have the following functions:
1. Provide liaison between the Parties at the management level and exchange
information with respect to significant matters arising under this
Agreement.
2. Appoint ad hoc committees, the members of which need not be members of the
Administrative Committee, as necessary to perform detailed work and conduct
studies regarding matters requiring investigation.
3. Review, discuss and attempt to resolve disputes arising under this
Agreement; provided, nothing herein shall limit the provisions of Section
17.1.
4. Provide liaison between the Parties concerning the status of and operation
of the Facility.
12.5. EXPENSES
Each Party shall be responsible for the salary and out-of-pocket expenses
of its representative and its other attendees. All other expenses incurred
in connection with the performance by the Administrative Committee of its
functions shall be allocated and paid as determined by the Administrative
Committee.
ARTICLE XIII: NOTICES
13.1. NOTICES IN WRITING
All notices or other communications which are required or permitted under
this Agreement shall be effective if they are in writing and delivered
personally or by certified mail (postage prepaid and return receipt
requested), reputable overnight delivery service,
32
or telecopy or other confirmable form of electronic delivery, to the
following address (except as to notices which are required by this
Agreement to be delivered to a Party's Administrative Committee
representative or to Buyer's Merchant Operations Center, which shall be
delivered to such Party's Administrative Committee representative or the
Buyer's Merchant Operations Center, as the case may be):
(a) if to Seller: c/o Entergy Northeast
440 Hamilton Avenue
White Plains, NY 10601
With a copy to: c/o ENTERGY
100 First Stamford Place
Stamford, CT 06902
(b) if to the Buyer: Consumers Energy Company
1945 W. Parnall Road
Jackson, MI 49201
Attention: William E. Garrity
(c) or to such other person or address as the addressee may have
specified in a notice duly given to the sender as provided
herein.
13.2. DATE OF NOTIFICATION
All notices or communications duly delivered or mailed and postmarked to a
Party hereto as provided in Section 13.1 shall be effective as of the date
of receipt.
13.3. ORAL NOTICE IN EMERGENCY
Notwithstanding the provisions of Section 13.1, any notice required
hereunder with respect to an occurrence or event requiring immediate
attention may be made orally, by telephone or otherwise, provided such
notice shall be confirmed in writing promptly thereafter. Each Party shall
make any such oral notice directly to the Administrative Committee
representative of the other Party.
ARTICLE XIV: CONFIDENTIALITY
14.1. NON-DISCLOSURE TO THIRD PARTIES
Except in any proceeding to approve or enforce this Agreement, Seller and
Buyer will not disclose to any third person (including any of Seller's
personnel engaged in electricity market related activity, but excluding
each Party's employees, lenders, counsel, accountants or advisors who have
a need to know such information and have agreed to keep such items
confidential) without the prior written consent of the other Party which
shall not be unreasonably withheld: (a) the terms or conditions of this
Agreement or any other agreement between the Parties required hereby or
referred to herein; or (b) any confidential or proprietary information or
data, whether oral or written, received from the
33
other Party.
14.2. DISCLOSURE PERMITTED
Notwithstanding Section 14.1, Seller or Buyer may disclose: (a) such
information as may be required by any applicable Law, regulation, or
governmental order, including a requirement, regulation or order of the
MPSC; (b) such information as may reasonably be required by any operator of
the Facility, or by independent accountants, attorneys, credit rating
agency representatives, other professional consultants, or prospective
lenders or investors, subject to reasonable procedures and other safeguards
to protect the confidentiality of the information disclosed; (c) any
information which is or becomes publicly known, other than by breach of
this Agreement by the receiving Party; (d) information which becomes
available to the receiving Party hereunder without restriction from a third
party; (e) information which is at any time developed by the receiving
Party independently of any disclosures hereunder; or (f) such information
regarding the terms of this Agreement as such Party deems necessary to
enable it to comply with the Securities Exchange Act of 1934, as amended,
or the rules, regulations and forms of the Securities and Exchange
Commission issued thereunder, the rules of the New York Stock Exchange, or
the rules, regulations or orders of the FERC. In addition, the Buyer or
Seller may use the confidential information in connection with their
respective dealings with Governing Authorities of competent jurisdiction.
In connection with any such use, the Buyer or Seller, as applicable, agrees
to request confidential treatment of the information.
14.3. SURVIVAL OF CONFIDENTIALITY
The provisions of this Article XIV shall survive the Termination Date (or
any earlier termination of this Agreement) for a period of five (5) years.
ARTICLE XV: INSURANCE
15.1. COVERAGE AND AMOUNTS OF SELLER AND BUYER. During the Term, Seller and
Buyer shall procure, pay premiums for and maintain in full force and effect
the insurance coverages described below.
(a) Worker's Compensation Insurance as required by the Laws of the State
of Michigan, and employer's liability insurance with limits
established by state or federal Law, if applicable. This policy is to
be endorsed to include a Waiver of Subrogation in favor of the Buyer
or Seller, as the case may be.
(b) Commercial General Liability Insurance, including coverage for: (i)
premises/operations, (ii) independent contractor, (iii) products and
completed operations, (iv) broad form contractual liability, (v) broad
form property damage, (vi) explosion, collapse and underground damage
exclusion deletion, and (vii) personal injury, all with limits of not
less than $25,000,000 each occurrence and in the aggregate. Such
coverage can be made up of a combination of primary (or
34
in lieu thereof, self-insurance of no more than $10,000,000) and
excess coverage policies.
(c) Comprehensive Vehicle Liability Insurance, covering all vehicles and
automobiles whether owned, leased, or rented when used by such Party
in connection with performance of this Agreement and including
coverage for bodily injury and property damage in an amount not less
than $1,000,000 per accident.
(d) Notwithstanding the foregoing, Seller or Buyer may self-insure to meet
the minimum insurance requirements of Sections 15.1(a) through 15.1(c)
to the extent it maintains a self-insurance program; provided that
Seller's or Buyer's, as the case may be (or the Seller's Guarantor or
Buyer's Guarantor, as the case may be) senior secured debt meets the
rating specified in Section 7.2(a)(2) or 7.3(a)(2) and that its
self-insurance program meets minimum insurance requirements under
Sections 15.1(a) through 15.1(c). For any period of time that Seller
or Buyer, as the case may be (or Seller's Guarantor or Buyer's
Guarantor, as the case may be) senior secured debt is unrated, the
Party shall comply with the insurance requirements applicable to it
under Sections 15.1(a) through 15.1(c). In the event that a Party is
permitted to self-insure pursuant to this Section 15.1(d), it shall
notify the other Party that it meets the minimum insurance requirement
in a manner consistent with that specified in this Article XV.
(e) On the Effective Date, and thereafter from time to time at the request
of a Party, the other Party shall provide certificates of insurance
from insurance companies having a Best rating of A minus or better
confirming that the insurance coverages required herein are
maintained. Such certificates shall provide that the other Party be
given thirty (30) days' prior written notice by the insurer, or its
authorized representative, of any cancellation and ten (10) days'
prior written notice due to cancellation for non-payment of premiums
in any required coverage provided by such insurer as evidenced by the
certificates. In addition, each Party agrees to provide notice to the
other Party of any material change in the insurance coverages or
policies required hereby.
15.2. COVERAGE FOR FULL TERM
All required coverages shall remain in full force and effect during the Term.
Buyer's and Seller's liability under this Agreement shall not be limited to or
by the insurance coverage required in this Article XV.
ARTICLE XVI: ASSIGNMENT
16.1. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
Parties and their respective successors and permitted assignees.
35
16.2. GENERAL
Except as provided in this Article XVI, neither Party shall assign or
otherwise convey any of its right, title, or interest under this Agreement
without the prior written consent of the other Party hereto (which consent
shall not be unreasonably withheld or delayed). Seller shall not be
permitted to assign this Agreement to any Person unless such Person also
acquires all or substantially all of Seller's interest in the Facility. Any
assignment or delegation made without required consent shall be null and
void.
16.3. ASSIGNMENT TO AN AFFILIATE
Notwithstanding Section 16.2, each Party shall have the right to assign all
or a portion of its rights or obligations under this Agreement to an
Affiliate without the consent of the other Party, and such Affiliate to
which this Agreement has been assigned shall have the right to further
assign the Agreement back to assigning Party without the consent of the
other Party; provided, however that (a) the assigning Party shall provide
written notice of such assignment to the other Party and the assuming
Affiliate agrees in writing to assume all obligations under this Agreement,
(b) the assignee can document its financial strength is no worse than that
of the assignor, or the assignee will provide credit support from an entity
with financial strength no worse than that of the assignor, and (c) any
security requirements then in effect pursuant to Article VII remain
effective following the assignment, or are replaced with equivalent
security to the reasonable satisfaction of the non-assigning Party. In the
event of an assignment to an Affiliate pursuant to this section, the
Parties agree that the assignor is not released from any and all further
obligations under this Agreement.
16.4. ASSIGNMENT TO LENDERS
Seller shall have the right to assign all or a portion of its rights or
obligations under this Agreement to any lender providing financing for
Seller's acquisition of the Facility as collateral security for obligations
under the financing documents entered into with such lenders provided that:
(a) Seller first provides Buyer with written notice of not less than sixty
(60) days of such collateral assignment; and (b) Buyer consents to the form
of collateral assignment and related documentation.
ARTICLE XVII: MISCELLANEOUS
17.1. DISPUTE RESOLUTION
If a dispute arises between the Parties relating to this Agreement except
with respect to the matters set forth in Sections 7.1(a), (b), (c) or (e),
the following procedure shall be followed except that either Party may seek
injunctive relief from a court where appropriate in order to maintain the
status quo while this procedure is being followed.
(a) The Parties shall promptly hold a meeting, attended by persons with
decision-making authority regarding the dispute, to attempt in good
faith to negotiate a
36
resolution of the dispute; provided, however, that no such meeting
shall be deemed to vitiate or reduce the obligations or liabilities of
the Parties hereunder or be deemed a waiver of a Party hereof of any
remedies to which such Party would otherwise be entitled hereunder.
(b) If, within thirty (30) days following such meeting, the Parties have
not succeeded in negotiating a resolution of the dispute, they agree
to submit the dispute to binding arbitration in accordance with the
Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes, by a neutral arbitrator to be mutually selected by
the Parties. The cost of the arbitrator shall be borne by the Parties,
and the Parties shall equally bear the costs of such arbitration. If
the Parties are unable to agree upon an arbitrator within thirty (30)
days, the Parties may then petition the Circuit Court of Jackson
County, Michigan to appoint the arbitrator.
(c) In the event the Circuit Court appoints an arbitrator, arbitration
shall take place in a mutually acceptable location in the State of
Michigan. Otherwise the location for arbitration shall be mutually
agreed to by the Parties. In either case the substantive and
procedural law of the State of Michigan shall apply to the
proceedings. Equitable remedies shall be available in any arbitration.
Punitive damages shall not be awarded. The written decision of the
arbitrator shall be binding on the Parties and the Parties hereby
agree to execute all necessary documents, including releases and
subrogation agreements as necessary in order to conclude the matter
upon the arbitrator rendering a final award. This Section is subject
to the Federal Arbitration Act, 9 USCA Section 1 et seq. and judgment
upon the award, if any, may be entered by any court having
jurisdiction thereof.
17.2. RECORDING TELEPHONE CONVERSATIONS
Each Party agrees that the other Party or its representatives may record
any or all telephone conversations between representatives of the two
Parties pursuant to or relating to this Agreement and will advise the other
Party that the conversation is being recorded. Seller is hereby advised
that telephone conversations with Buyer's personnel relating to Articles
II, IV and V are routinely recorded. Each Party further agrees that such
recorded telephone conversations shall not be deemed inadmissible in any
arbitration proceeding or court of law by virtue of the recorded nature of
the conversations or any authority or lack of authority to make such
recording. Each Party hereby waives any objection to the introduction of
such recorded telephone conversations as evidence in any arbitration
proceeding or court of law to the extent such objections are based on the
recorded nature of such conversations or the authority or lack of authority
to make such recording.
17.3. COMPLIANCE WITH LAWS
Each Party shall at all times conform to all applicable Laws. Each Party
shall give all required notices, shall procure and maintain all necessary
Authorizations, governmental permits, licenses and inspections necessary
for its performance of this Agreement, and shall pay all charges and fees
in connection therewith.
37
17.4. TAXES AND OTHER CHARGES
(a) Seller's Taxes.
Seller is liable for and shall pay, or cause to be paid, or reimburse
Buyer if Buyer has paid, all Taxes applicable to any transaction
arising out of this Agreement prior to the Delivery Point on the sale
of Energy, Capacity or Ancillary Services to Buyer. Seller shall
indemnify, defend and hold harmless Buyer from any Claims for such
Taxes applicable prior to the Delivery Point.
(b) Buyer's Taxes.
Buyer is liable for and shall pay, or cause to be paid, or reimburse
Seller if Seller has paid, all Taxes applicable to any transaction
arising out of this Agreement at or after the Delivery Point on the
purchase by Buyer of Energy, Capacity or Ancillary Services. Buyer
shall indemnify, defend and hold harmless Seller from any Claims for
such Taxes applicable at or after the Delivery Point.
(c) Certificate of Tax Exemption.
Either Party, upon written request of the other, shall provide a
certificate of exemption or other reasonably satisfactory evidence of
exemption if either Party is exempt from Taxes.
17.5. FUTURE ATTRIBUTES
In the event that, at any time during the Term, a change in Law occurs that
causes capability of the Facility as in existence on the date hereof to
become a tradable attribute (e.g., emission credit, renewable energy
credit, environmental credit, "Green" credit, etc.) or otherwise to have a
market value, Buyer shall be entitled to one hundred percent (100%) of such
tradable attribute and the benefits of such attribute until the tenth
(10th) anniversary of the Effective Date and thereafter fifty percent (50%)
until the Termination Date (with the other fifty percent (50%) belonging to
Seller), and the Parties shall in good faith negotiate to reflect such
allocation to Buyer at no additional cost to Buyer. Seller agrees to
execute a separate agreement to transfer to Buyer any revenue, or any other
benefit received by Seller for Buyer's tradable attributes and to execute
all documents and agreements and take all steps necessary to permit Buyer
to market Buyer's tradable attributes. Seller shall be entitled to all
attributes and benefits arising from an Uprate.
17.6. FINANCIAL TRANSMISSION RIGHTS
Buyer shall be entitled to all financial transmission rights or other
rights and benefits with the Transmission Provider associated with the
Capacity, Energy and Ancillary Services being purchased hereunder. Seller
shall cooperate in good faith with Buyer to ensure that such financial
transmission rights and other rights and benefits are assigned and
transferred to Buyer at no additional cost to Buyer.
38
17.7. GOVERNING LAW; VENUE
This Agreement shall be governed by and construed in accordance with the
law of the State of Michigan (without giving effect to conflict of law
principles) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies. THE PARTIES
HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO
THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE IN THE UNITED STATES DISTRICT
COURT FOR THE WESTERN DISTRICT OF MICHIGAN. THE FOREGOING COURT SHALL HAVE
EXCLUSIVE JURISDICTION FOR SUCH PURPOSES, AND THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURT AND
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY
MANNER RECOGNIZED BY SUCH COURT. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
17.8. ENTIRE AGREEMENT; AMENDMENT
This Agreement constitutes the entire agreement between the Parties
pertaining to the subject matter of this Agreement, and supersedes and
terminates any letters of intent and all prior and contemporaneous
agreements, understandings, negotiations and discussions with the Parties,
whether oral or written, regarding said subject matter, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter of this Agreement, except as
specifically set forth in this Agreement. NEITHER PARTY TO THIS AGREEMENT
MAKES ANY REPRESENTATION, WARRANTY OR INDEMNITY, EXPRESS OR IMPLIED, TO THE
OTHER PARTY TO THIS AGREEMENT EXCEPT FOR THE REPRESENTATIONS, WARRANTIES
AND INDEMNITIES EXPRESSLY SET FORTH IN THIS AGREEMENT. No amendment,
supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the Party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or
not similar, nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
17.9. NO IMPLIED WAIVER
The failure or delay of any Party hereto to enforce at any time any of the
provisions of this Agreement, or to require at any time performance of the
other Party hereto of any of the provisions hereof, shall neither be
construed to be a waiver of such provisions nor affect the validity of this
Agreement or any part hereof or the right of such Party thereafter to
enforce each and every such provision.
39
17.10. SEVERABILITY
Any provision of this Agreement declared or rendered unlawful by any
Governing Authority or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as a "Regulatory
Event") will not otherwise affect the remaining lawful obligations that
arise under this Agreement; provided, however, that if a Regulatory Event
occurs, the Parties shall use their best efforts to reform this Agreement
in order to give effect to the original intention of the Parties.
Additionally, in the event any Governing Authority imposes on Seller, the
Facility or any Energy, Capacity or Ancillary Services delivered to Buyer
by Seller pursuant to this Agreement any Tax or other payment obligation
related to the ownership or operation of the Facility and not otherwise
generally imposed on electric generation facilities under the jurisdiction
of such Governing Authority, or energy, capacity or ancillary services
produced thereby, then in such case the Energy Payment applicable to a
Billing Cycle shall be increased to reflect fifty percent (50%) of such Tax
or other payment obligation to the extent paid by Seller in such Billing
Cycle. The Energy Payment applicable to a Billing Cycle shall be increased
to reflect one-twelfth of 50% of any incremental real property Taxes paid
with respect to any spent nuclear fuel storage facility located in
Charlevoix County, Michigan owned by Seller, to the extent such Taxes with
respect to such facility exceed $50,000 in the year of the Effective Date,
or in subsequent years, $50,000 plus 4% per year.
17.11. NO EXCLUSIVITY/DEDICATION OF ASSETS
This Agreement is not intended to be an exclusive arrangement between Buyer
and Seller. No undertaking by a Party hereto to the other Party hereto
under any provision of this Agreement shall constitute the dedication of
that Party's assets or any portion thereof to the other Party or to the
public.
17.12. EXPENSES
Each Party shall pay the fees and expenses of its respective counsel,
accountants, brokers, consultants, investment bankers and other experts
incident to the negotiation and preparation of this Agreement.
17.13. COUNTERPARTS
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17.14. SURVIVAL
The applicable provisions of this Agreement shall continue in effect after
the termination of this Agreement, to the extent necessary to provide for
final billing and adjustment, and to make other appropriate settlements
hereunder. Those provisions hereof that by their express terms are intended
to survive this Agreement shall so survive for the periods indicated.
40
17.15. THIRD-PARTY BENEFICIARY
Nothing expressed or referenced in this Agreement shall be construed to
give any Person other than the Parties hereto any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and the provisions and conditions hereof are
for the sole and exclusive benefit of the Parties hereto, and their
permitted successors and permitted assigns.
17.16. MOBILE-SIERRA
It is the intent of the Parties that the rates and all other terms and
conditions of the services provided hereunder shall not be subject to
change under Sections 205 or 206 of the Federal Power Act of 1935, as
amended, 16 U.S.C. Section 791 et seq. (or any successor legislation),
without the consent of both Parties. Each of the Parties hereto agrees not
to unilaterally file with the FERC a change in the rates, terms or
conditions of this Agreement. Moreover, absent agreement of all Parties to
a proposed change, the standard of review for changes to any rate, term or
condition of this Agreement proposed by a non-Party or the FERC or any
other Governing Authority acting sua sponte shall be the "public interest"
standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas
Services Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra
Pacific Power Co., 350 U.S. 348 (1956). To the extent that the FERC adopts
specific language that parties must incorporate into agreements in order to
bind FERC, third parties and themselves to a public interest standard of
review, the Parties hereby incorporate such language herein by reference.
17.17. FORWARD CONTRACT
The Parties acknowledge and agree that this Agreement, the transactions
contemplated hereby, and any security instrument that may be provided by
either Party under Article VII shall each, and together, constitute one and
the same "forward contract" within the meaning of the United Stated
Bankruptcy Code (the "Code"), and Seller, Seller's Guarantor, Buyer, and
the Buyer's Guarantor shall each constitute a "forward contract merchant"
under the Code.
41
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed on its behalf by its duly authorized officer as of the
date first set forth above.
ENTERGY NUCLEAR PALISADES, LLC
By: /s/ Gary J. Taylor
------------------------------------
Gary J. Taylor
President
CONSUMERS ENERGY COMPANY
By: /s/ Robert A. Fenech
------------------------------------
Robert A. Fenech
Senior Vice President
Nuclear, Fossil & Hydro Operations
42
EXHIBIT A
CAPACITY AND ENERGY CHARGES(1)
CAPACITY ENERGY CHARGE (IN TOTAL
YEAR CHARGE (IN $/MWH) $/MWH) (IN $/MWH)
- ---- ----------------- ----------------- ----------
2007 [to be inserted] [to be inserted] $43.50
2008 [to be inserted] [to be inserted] $44.00
2009 [to be inserted] [to be inserted] $44.50
2010 [to be inserted] [to be inserted] $45.75
2011 [to be inserted] [to be inserted] $47.00
2012 [to be inserted] [to be inserted] $48.25
2013 [to be inserted] [to be inserted] $49.00
2014 [to be inserted] [to be inserted] $50.00
2015 [to be inserted] [to be inserted] $51.00
2016 [to be inserted] [to be inserted] $52.50
2017 [to be inserted] [to be inserted] $54.00
2018 [to be inserted] [to be inserted] $55.50
2019 [to be inserted] [to be inserted] $57.00
2020 [to be inserted] [to be inserted] $58.50
2021 [to be inserted] [to be inserted] $60.00
2022 [to be inserted] [to be inserted] $61.50
2023 [to be inserted] [to be inserted] $63.00
For each month during the Term, the Capacity Charge and the Energy Charge set
forth above shall be adjusted by multiplying the amount of such charge by the
applicable Shaping Factor for such month as set forth on Exhibit C hereto.
- ----------
(1) Within three weeks of the execution of this Agreement, Buyer shall provide
a notice to Seller that shall allocate the Total value for each year in the
above table as between the Capacity Charge and the Energy Charge, and this
Exhibit A shall be modified accordingly.
EXHIBIT B
BUYER'S CAPACITY AMOUNT
For any given month during the Term, the Buyer's Capacity Amount shall be as set
forth in the table below:
COLUMN A COLUMN B COLUMN C COLUMN D
MONTH CAPACITY OF THE FACILITY BUYER'S ENTITLEMENT BUYER'S CAPACITY AMOUNT
- -------- ------------------------ ------------------- -----------------------
January 813 MW 100% 813 MW
February 811 MW 100% 811 MW
March 809 MW 100% 809 MW
April 801 MW 100% 801 MW
May 794 MW 100% 794 MW
June 786 MW 100% 786 MW
July 781 MW 100% 781 MW
August 778 MW 100% 778 MW
September 783 MW 100% 783 MW
October 800 MW 100% 800 MW
November 809 MW 100% 809 MW
December 810 MW 100% 810 MW
Column A - Depicts the month of the year.
Column B - Will be updated over the Term of this Agreement to reflect the
Capacity of the Facility, as determined in accordance with ECAR 4 (or with the
Effective Capacity Requirements, if applicable).
Column C - Indicates the Buyer's Entitlement of the output of the Facility. This
value will be updated only after an Uprate (as defined in 1.1 (83)). The Buyer's
Entitlement shall be determined in accordance with Section 2.6 as follows (both
values shall be determined or measured for the same month):
Capacity of the Facility before the Uprate Capability Test
-------------------------------------------------------------------------
Capacity of the Facility resulting from the Uprate Capability Test
Column D - Shall be the product of Column B and Column C, as those values may be
revised over the Term of this Agreement.
EXHIBIT C
CAPACITY AND ENERGY CHARGE SHAPING FACTORS
MONTH ON-PEAK HOURS OFF-PEAK HOURS
- ----- ------------- --------------
January 1.350 0.8275
February 1.200 0.6750
March 1.140 0.6750
April 1.140 0.6750
May 1.200 0.6750
June 1.400 0.8250
July 1.500 0.9500
August 1.500 0.9500
September 1.400 0.8275
October 1.140 0.6750
November 1.140 0.6750
December 1.200 0.6750
EXHIBIT D
Diagram of Billing Meters
(DIAGRAM)
Meters #1 and #4 are owned by Consumers Energy (Load Serving Entity)
Meters #2 and #3 are owned by METC
[Actual Diagram drawn]
EXHIBIT E
FORM OF SELLER'S GUARANTY
This Guaranty is made and given as of the day of 200_, by ______________, a
corporation ("Guarantor"), in favor of Consumers Energy Company, a Michigan
corporation ("Consumers").
WHEREAS, ENTERGY NUCLEAR PALISADES, LLC ("Seller") an Affiliate of
Guarantor, has entered into a Power Purchase Agreement dated as of _________,
2006 (the "Power Purchase Agreement"), pursuant to which Consumers has agreed to
purchase and Seller has agreed to sell, Capacity, Energy and Ancillary Services
in accordance with the Power Purchase Agreement, and the parties have undertaken
certain duties, responsibilities and obligations as set forth in the Power
Purchase Agreement; and
WHEREAS, Guarantor has agreed to guarantee the payment obligations of
Seller under the Power Purchase Agreement; and
WHEREAS, it is a condition to the obligations of Consumers under the Power
Purchase Agreement that the Guarantor execute and deliver this Guaranty or that
Seller otherwise provide security; and
WHEREAS, the Guarantor will benefit from the transactions contemplated by
the Power Purchase Agreement.
NOW, THEREFORE, the Guarantor agrees as follows:
Section 1. Definitions. Capitalized terms used herein shall have the
meanings assigned to them herein or, if not defined herein, then such terms
shall have the meanings assigned to them in the Power Purchase Agreement.
Section 2. Guaranty. As an inducement to Consumers, for and in
consideration of Consumers entering into the Power Purchase Agreement, Guarantor
hereby absolutely, unconditionally, and irrevocably guarantees to Consumers and
its successors, endorsees and assigns, as primary obligor and not merely as a
surety, the full and prompt payment, when due, of all sums payable by Seller
under the Power Purchase Agreement (the "Guaranteed Obligations"). The
Guaranteed Obligations shall include all reasonable costs and expenses
(including reasonable attorneys' fees), if any, incurred in enforcing Consumers'
rights under this Guaranty, but only to the extent that Consumers is successful
in enforcing its rights under this Guaranty. This is a guaranty of payment and
not of performance or collection. Notwithstanding any other provision of this
Guaranty, the maximum recovery from the Guarantor which may be collected
pursuant to the
provisions of this Guaranty shall in no event exceed in the aggregate an amount
equal to thirty million ($30,000,000) dollars plus the expenses set forth in
this Section 2.
Section 3. Guaranty Absolute. Subject to the last sentence of Section 2,
the liability of Guarantor under this Guaranty shall be absolute, unconditional
and irrevocable, and nothing whatever except actual full payment to Consumers of
the Guaranteed Obligations (and all other debts, obligations and liabilities of
Guarantor under this Guaranty) shall operate to discharge Guarantor's liability
hereunder. Without limiting the generality of the foregoing, Guarantor's
liability hereunder shall be unaffected by:
(a) The occurrence or continuance of any event of bankruptcy,
reorganization or insolvency with respect to Seller or any disallowance of all
or any portion of any claim by Consumers, its successors or permitted assigns in
connection with any such proceeding or in the event that all or any part of any
payment is recovered from Consumers as a preference payment or fraudulent
transfer under the Federal Bankruptcy Code or any applicable law, or the
dissolution, liquidation or winding up of Guarantor or Seller;
(b) Any amendment, supplement, reformation or other modification of the
Power Purchase Agreement;
(c) The exercise, non-exercise or delay in exercising, by Consumers or any
other Person, of any of their rights under this Guaranty or the Power Purchase
Agreement;
(d) Any change in time, manner or place of payment of, or in any other
terms of, all or any of the Guaranteed Obligations or any other amendment or
waiver of, or any consent to depart from, the Power Purchase Agreement or any
other agreement, document or instrument relating thereto;
(e) Any permitted assignment or other transfer of rights under this
Guaranty by Consumers, or any permitted assignment or other transfer of the
Power Purchase Agreement, including any assignment as security for financing
purposes;
(f) Any merger or consolidation into or with any other entity, or other
change in the corporate existence or cessation of existence of, Seller or
Guarantor;
(g) Any change in ownership or control of Guarantor or Seller;
(h) Any sale, transfer or other disposition by Guarantor of any direct or
indirect interest it may have in Seller;
(i) The inaccuracy of any of the representations and warranties of Seller
under the Power Purchase Agreement;
(j) The absence of any notice to, or knowledge by, Guarantor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses;
(k) The failure to create, preserve, validate, perfect or protect any
security interest granted to, or in favor of, any Person;
(l) 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;
(m) The existence of any claim, set-off, or other rights which Guarantor or
any Affiliate thereof may have at any time against Consumers or any Affiliate
thereof;
(n) The genuineness, validity, regularity, or enforceability of this
Guaranty, the Power Purchase Agreement or any other agreement, document or
instrument related to the transactions contemplated hereby or thereby; and
(o) Any other circumstances which might otherwise constitute a defense to,
or discharge of, Guarantor or Seller in respect of the Guaranteed Obligations or
a legal or equitable discharge of Seller in respect thereof, including, a
discharge as a result of any bankruptcy or similar law.
Section 4. Waiver. In addition to waiving any defenses to which clauses (a)
through (o) of Section 3 may refer:
(a) Guarantor hereby irrevocably, unconditionally and expressly waives, and
agrees that it shall not at any time insist upon, plead or in any manner
whatsoever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshaling of assets or redemption laws, or exemption, whether
now or at any time hereafter in force, which may delay, prevent or otherwise
affect the performance by Guarantor of its obligations under, or the enforcement
by Consumers of, this Guaranty;
(b) Guarantor hereby irrevocably, unconditionally and expressly waives all
notices, diligence, presentment and demand of every kind (whether for nonpayment
or protest or of acceptance, maturity, extension of time, change in nature or
form of the Guaranteed Obligations, acceptance of security, release of security,
composition or agreement arrived at as to the amount of, or the terms of, the
Guaranteed Obligations, notice of adverse change in Seller's financial
condition, or any other fact which might materially increase the risk to
Guarantor hereunder) with respect to the Guaranteed Obligations which are not
specifically required to be given by Consumers to Guarantor in the Power
Purchase Agreement, and any other demands whatsoever which are not specifically
required to be given by Consumers to Guarantor in the Power Purchase Agreement,
and waives the benefit of all provisions of law which are in conflict with the
terms of this Guaranty; provided, however, Consumers agrees that all payment
demands under this Guaranty shall be in writing and shall specify in what manner
and what amount Seller has failed to pay and an explanation of why such payment
is due, with a
specific statement that Consumers is calling upon Guarantor to pay under this
Guaranty. The payment demand shall also include the bank account and wire
transfer information to which the funds should be wire transferred;
(c) The Guarantor hereby irrevocably, unconditionally and expressly waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Guaranteed Obligations and the delivery, acceptance, performance,
default or enforcement of this Guaranty and any requirement that Consumers
protect, secure or perfect any security interest or exhaust any right or first
proceed against Seller or any other person or entity or any other security; and
(d) Until payment and satisfaction in full of all Guaranteed Obligations,
Guarantor irrevocably, unconditionally and expressly waives (i) any right it may
have to bring in a case or proceeding against Seller by reason of Guarantor's
performance under this Guaranty or with respect to any other obligation of
Seller to Guarantor, under any state or federal bankruptcy, insolvency,
reorganization, moratorium or similar laws for the relief of debtors or
otherwise; (ii) any subrogation to the rights of Consumers against Seller and
any other claim against Seller which arises as a result of payments made by
Guarantor pursuant to this Guaranty, until the Guaranteed Obligations have been
paid in full and such payments are not subject to any right of recovery; and
(iii) any setoffs or counterclaims against Consumers which would otherwise
impair Consumers' rights against Guarantor hereunder. If any amount shall be
paid to the Guarantor on account of such subrogation rights at any time when all
the Guaranteed Obligations shall not have been paid in full, such amount shall
be held in trust for the benefit of Consumers and shall forthwith be paid to
Consumers to be applied to the Guaranteed Obligations.
Section 5. Representations and Warranties. Guarantor hereby represents and
warrants as follows:
(a) Guarantor is a corporation duly organized and validly existing under
the laws of [__________].
(b) Guarantor has full corporate power, authority and legal right to
execute and deliver this Guaranty and to perform its obligations hereunder.
(c) This Guaranty has been duly authorized, executed and delivered by
Guarantor.
(d) This Guaranty constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with its terms.
(e) The execution and delivery by Guarantor of this Guaranty and the
performance by Guarantor of its obligations hereunder will not (i) conflict with
or result in any breach of any provisions of Guarantor's certificate of
incorporation or bylaws (or other similar governing documents); (ii) conflict
with or result in any breach of any provision of any law applicable to Guarantor
or the transactions contemplated hereby; (iii) result in a breach of or
constitute a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, agreement or other instrument or
obligation to which Guarantor is a party or by which it or its assets or
property are bound; or (iv) require any consent, approval, permit or
authorization of, or filing with or notification to, any governmental or
regulatory authority.
(f) No action, suit or proceeding at law or in equity or by or before any
governmental authority or arbitral tribunal is now pending or, to the best
knowledge of Guarantor, threatened against Guarantor that would reasonably be
expected to have a material adverse effect on Guarantor's ability to pay and
perform its obligations under this Guaranty.
(g) Guarantor's obligations under this Guaranty are not subject to any
offsets or claims of any kind against Consumers, Seller or any of their
Affiliates.
(h) It is not and shall not be necessary for Consumers to inquire into the
powers of Seller or the officers, directors, partners, trustees or agents acting
or purporting to act on Seller's behalf pursuant to the Power Purchase
Agreement, and any Guaranteed Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder to the extent
made or created in accordance with the terms of the Power Purchase Agreement.
Section 6. Continuing Guaranty. This Guaranty is a continuing guaranty and
shall remain in full force and effect until the earlier of (i) all Guaranteed
Obligations have been paid in full or Seller's obligations to make payment to
Consumers have been terminated pursuant to the terms of the Power Purchase
Agreement and (ii) the replacement of this Guaranty with a cash deposit or
Letter of Credit pursuant to Section 7.2 of the Power Purchase Agreement. This
Guaranty shall continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the Guaranteed
Obligations by Guarantor is rescinded and returned by Consumers to Guarantor
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Seller or Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, Seller,
Guarantor or any substantial part of their respective properties, or otherwise,
all as though such payments had not been made. Guarantor agrees, upon the
written request of Consumers, to execute and deliver to Consumers any additional
instruments or documents necessary or advisable from time to time, in the
reasonable and good faith opinion of Consumers, to cause this Guaranty to be,
become or remain valid and effective in accordance with its terms
Section 7. Amendments; Waivers; Etc. Neither this instrument nor any terms
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by Consumers and Guarantor. Upon such termination
of this Guaranty, this Guaranty shall continue in effect thereafter with respect
to all Guaranteed Obligations which arise or are committed for prior to such
termination (including all subsequent extensions and renewals thereof, including
extensions and renewals at increased rates, and all subsequently accruing
interest and other charges thereon) until all
such Guaranteed Obligations and all obligations of Guarantor hereunder shall be
paid in full and such payments are not subject to any right of recovery. No
delay or failure by Consumers to exercise any remedy against Seller or Guarantor
shall be construed as a waiver of that right or remedy. No failure on the part
of Consumers to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by any applicable law.
Section 8. Severability. In the event that the provisions of this Guaranty
are claimed or held to be inconsistent with any other instrument evidencing or
securing the Guaranteed Obligations, the terms of this Guaranty shall remain
fully valid and effective. If any one or more of the provisions of this Guaranty
should be determined to be illegal or unenforceable, all other provisions shall
remain effective.
Section 9. Assignment.
(a) Assignability. Guarantor shall not have the right to assign any of
Guarantor's rights or obligations or delegate any of its duties under this
Guaranty without the prior written consent of Consumers. Guarantor shall remain
liable under this Guaranty, notwithstanding assumption of this Guaranty by a
successor or assign, unless and until released in writing from its obligations
hereunder by Consumers. Consumers may, at any time and from time to time,
assign, in whole or in part, its rights hereunder to any Person to whom
Consumers has the right to assign its rights or obligations under and pursuant
to the terms of the Power Purchase Agreement, whereupon such assignee shall
succeed to all rights of Consumers hereunder.
(b) Successors and Assigns. Subject to Section 9(a) hereof, all of the
terms of this instrument shall be binding upon and inure to the benefit of the
parties hereof and their respective permitted successors and assigns.
Section 10. Address for All Notices. All notices and other communications
provided for hereunder shall be given and effective in accordance with the
notice requirements of the Power Purchase Agreement and if to Guarantor, at the
following address:
Attn: [Guarantor]
Atten: Chief Financial Officer
Telecopy:
with a copy to: [Guarantor]
Attn: General Counsel
Telecopy:
Section 11. Governing Law. This Guaranty shall be governed by and construed
in accordance with the law of the State of Michigan (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. THE PARTIES
HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE
SUBJECT MATTER OF THIS GUARANTY SHALL BE IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF MICHIGAN. THE FOREGOING COURT SHALL HAVE EXCLUSIVE
JURISDICTION FOR SUCH PURPOSES, AND THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF SUCH COURT AND IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. SERVICE
OF PROCESS MAY BE MADE IN ANY MANNER RECOGNIZED BY SUCH COURT. EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12. Entire Agreement. This writing is the complete and exclusive
statement of the terms of this Guaranty and supersedes all prior oral or written
representations, understandings, and agreements between Consumers and Guarantor
with respect to the subject matter hereof. Guarantor agrees that there are no
conditions to the full effectiveness of this Guaranty.
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, Guarantor has duly caused this Guaranty to be executed
and delivered as of the date first written above.
[GUARANTOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT F
FORM OF BUYER'S GUARANTY
This Guaranty is made and given as of the day of 200_, by [to be inserted],
in favor of ENTERGY NUCLEAR PALISADES, LLC ("Seller").
WHEREAS, Consumers Energy Company ("Consumers") an Affiliate of Guarantor,
has entered into a Power Purchase Agreement dated as of _________, 2006 (the
"Power Purchase Agreement"), pursuant to which Consumers has agreed to purchase
and Seller has agreed to sell, Capacity, Energy and Ancillary Services in
accordance with the Power Purchase Agreement, and the parties have undertaken
certain duties, responsibilities and obligations as set forth in the Power
Purchase Agreement; and
WHEREAS, Guarantor has agreed to guarantee the payment obligations of
Consumers under the Power Purchase Agreement; and
WHEREAS, it is a condition to the obligations of Seller under the Power
Purchase Agreement that the Guarantor execute and deliver this Guaranty or that
Consumers otherwise provide security; and
WHEREAS, the Guarantor will benefit from the transactions contemplated by
the Power Purchase Agreement.
NOW, THEREFORE, the Guarantor agrees as follows:
Section 1. Definitions. Capitalized terms used herein shall have the
meanings assigned to them herein or, if not defined herein, then such terms
shall have the meanings assigned to them in the Power Purchase Agreement.
Section 2. Guaranty. As an inducement to Seller, for and in consideration
of Seller entering into the Power Purchase Agreement, Guarantor hereby
absolutely, unconditionally, and irrevocably guarantees to Seller and its
successors, endorsees and assigns, as primary obligor and not merely as a
surety, the full and prompt payment, when due, of all sums payable by Consumers
under the Power Purchase Agreement (the "Guaranteed Obligations"). The
Guaranteed Obligations shall include all reasonable costs and expenses
(including reasonable attorneys' fees), if any, incurred in enforcing the
Seller's rights under this Guaranty, but only to the extent that Seller is
successful in enforcing its rights under this Guaranty. This is a guaranty of
payment and not of performance or collection. Notwithstanding any other
provision of this Guaranty, the maximum recovery from the Guarantor which may be
collected pursuant to the provisions of this Guaranty shall in no event exceed
in the aggregate an amount equal to thirty million ($30,000,000) dollars plus
the expenses set forth in this Section 2.
Section 3. Guaranty Absolute. Subject to the last sentence of Section 2,
the liability of Guarantor under this Guaranty shall be absolute, unconditional
and irrevocable, and nothing whatever except actual full payment to Seller of
the Guaranteed Obligations (and all other debts, obligations and liabilities of
Guarantor under this Guaranty) shall operate to discharge Guarantor's liability
hereunder. Without limiting the generality of the foregoing, Guarantor's
liability hereunder shall be unaffected by:
(a) The occurrence or continuance of any event of bankruptcy,
reorganization or insolvency with respect to Consumers, or any disallowance of
all or any portion of any claim by Seller, its successors or permitted assigns
in connection with any such proceeding or in the event that all or any part of
any payment is recovered from Seller as a preference payment or fraudulent
transfer under the Federal Bankruptcy Code or any applicable law, or the
dissolution, liquidation or winding up of Guarantor or Consumers;
(b) Any amendment, supplement, reformation or other modification of the
Power Purchase Agreement;
(c) The exercise, non-exercise or delay in exercising, by Seller or any
other Person, of any of their rights under this Guaranty or the Power Purchase
Agreement;
(d) Any change in time, manner or place of payment of, or in any other
terms of, all or any of the Guaranteed Obligations or any other amendment or
waiver of, or any consent to depart from, the Power Purchase Agreement or any
other agreement, document or instrument relating thereto;
(e) Any permitted assignment or other transfer of rights under this
Guaranty by Seller, or any permitted assignment or other transfer of the Power
Purchase Agreement, including any assignment as security for financing purposes;
(f) Any merger or consolidation into or with any other entity, or other
change in the corporate existence or cessation of existence of, Consumers or
Guarantor;
(g) Any change in ownership or control of Guarantor or Consumers;
(h) Any sale, transfer or other disposition by Guarantor of any direct or
indirect interest it may have in Consumers;
(i) The inaccuracy of any of the representations and warranties of
Consumers under the Power Purchase Agreement;
(j) The absence of any notice to, or knowledge by, Guarantor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses;
(k) The failure to create, preserve, validate, perfect or protect any
security interest granted to, or in favor of, any Person;
(l) 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;
(m) The existence of any claim, set-off, or other rights which Guarantor or
any Affiliate thereof may have at any time against Seller or any Affiliate
thereof;
(n) The genuineness, validity, regularity, or enforceability of this
Guaranty, the Power Purchase Agreement or any other agreement, document or
instrument related to the transactions contemplated hereby or thereby; and
(o) Any other circumstances which might otherwise constitute a defense to,
or discharge of, Guarantor or Consumers in respect of the Guaranteed Obligations
or a legal or equitable discharge of Consumers in respect thereof, including, a
discharge as a result of any bankruptcy or similar law.
Section 4. Waiver. In addition to waiving any defenses to which clauses (a)
through (o) of Section 3 may refer:
(a) Guarantor hereby irrevocably, unconditionally and expressly waives, and
agrees that it shall not at any time insist upon, plead or in any manner
whatsoever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshaling of assets or redemption laws, or exemption, whether
now or at any time hereafter in force, which may delay, prevent or otherwise
affect the performance by Guarantor of its obligations under, or the enforcement
by Seller of, this Guaranty;
(b) Guarantor hereby irrevocably, unconditionally and expressly waives all
notices, diligence, presentment and demand of every kind (whether for nonpayment
or protest or of acceptance, maturity, extension of time, change in nature or
form of the Guaranteed Obligations, acceptance of security, release of security,
composition or agreement arrived at as to the amount of, or the terms of, the
Guaranteed Obligations, notice of adverse change in Consumers' financial
condition, or any other fact which might materially increase the risk to
Guarantor hereunder) with respect to the Guaranteed Obligations which are not
specifically required to be given by Seller to Guarantor in the Power Purchase
Agreement, and any other demands whatsoever which are not specifically required
to be given by Seller to Guarantor in the Power Purchase Agreement, and waives
the benefit of all provisions of law which are in conflict with the terms of
this Guaranty; provided, however, Seller agrees that all payment demands under
this Guaranty shall be in writing and shall specify in what manner and what
amount Consumers has failed to pay and an explanation of why such payment is
due, with a specific statement that Seller is calling upon Guarantor to pay
under this Guaranty. The payment demand shall also include the bank account and
wire transfer information to which the funds should be wire transferred;
(c) The Guarantor hereby irrevocably, unconditionally and expressly waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of
the Guaranteed Obligations and the delivery, acceptance, performance, default or
enforcement of this Guaranty and any requirement that Seller protect, secure or
perfect any security interest or exhaust any right or first proceed against
Consumers or any other person or entity or any other security; and
(d) Until payment and satisfaction in full of all Guaranteed Obligations,
Guarantor irrevocably, unconditionally and expressly waives (i) any right it may
have to bring in a case or proceeding against Consumers by reason of Guarantor's
performance under this Guaranty or with respect to any other obligation of
Consumers to Guarantor, under any state or federal bankruptcy, insolvency,
reorganization, moratorium or similar laws for the relief of debtors or
otherwise; (ii) any subrogation to the rights of Seller against Buyer and any
other claim against Consumers which arises as a result of payments made by
Guarantor pursuant to this Guaranty, until the Guaranteed Obligations have been
paid in full and such payments are not subject to any right of recovery; and
(iii) any setoffs or counterclaims against Seller which would otherwise impair
Seller's rights against Guarantor hereunder. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of Seller and shall forthwith be paid to Seller to
be applied to the Guaranteed Obligations.
Section 5. Representations and Warranties. Guarantor hereby represents and
warrants as follows:
(a) Guarantor is a corporation duly organized and validly existing under
the laws of [__________].
(b) Guarantor has full corporate power, authority and legal right to
execute and deliver this Guaranty and to perform its obligations hereunder.
(c) This Guaranty has been duly authorized, executed and delivered by
Guarantor.
(d) This Guaranty constitutes the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with its terms.
(e) The execution and delivery by Guarantor of this Guaranty and the
performance by Guarantor of its obligations hereunder will not (i) conflict with
or result in any breach of any provisions of Guarantor's certificate of
incorporation or bylaws (or other similar governing documents); (ii) conflict
with or result in any breach of any provision of any law applicable to Guarantor
or the transactions contemplated hereby; (iii) result in a breach of or
constitute a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, agreement or other instrument or obligation to
which Guarantor is a party or by which it or its assets or property are bound;
or (iv) require any consent, approval, permit or authorization of, or filing
with or notification to, any governmental or regulatory authority.
(f) No action, suit or proceeding at law or in equity or by or before any
governmental authority or arbitral tribunal is now pending or, to the best
knowledge of Guarantor, threatened against Guarantor that would reasonably be
expected to have a material adverse effect on Guarantor's ability to pay and
perform its obligations under this Guaranty.
(g) Guarantor's obligations under this Guaranty are not subject to any
offsets or claims of any kind against Consumers, Seller or any of their
Affiliates.
(h) It is not and shall not be necessary for Seller to inquire into the
powers of Consumers or the officers, directors, partners, trustees or agents
acting or purporting to act on Consumers' behalf pursuant to the Power Purchase
Agreement and any Guaranteed Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder to the extent
made or created in accordance with the terms of the Power Purchase Agreement.
Section 6. Continuing Guaranty. This Guaranty is a continuing guaranty and
shall remain in full force and effect until the earlier of (i) all Guaranteed
Obligations have been paid in full or Consumers' obligations to make payment to
Seller have been terminated pursuant to the terms of the Power Purchase
Agreement and (ii) the replacement of this Guaranty with a cash deposit or
Letter of Credit pursuant to Section 7.3 of the Power Purchase Agreement. This
Guaranty shall continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the Guaranteed
Obligations by Guarantor is rescinded and returned by Seller to Guarantor upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Consumers or Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, Consumers,
Guarantor or any substantial part of their respective properties, or otherwise,
all as though such payments had not been made. Guarantor agrees, upon the
written request of Seller, to execute and deliver to Seller any additional
instruments or documents necessary or advisable from time to time, in the
reasonable and good faith opinion of Seller, to cause this Guaranty to be,
become or remain valid and effective in accordance with its terms.
Section 7. Amendments; Waivers; Etc. Neither this instrument nor any terms
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by Seller and Guarantor. Upon such termination of
this Guaranty, this Guaranty shall continue in effect thereafter with respect to
all Guaranteed Obligations which arise or are committed for prior to such
termination (including all subsequent extensions and renewals thereof, including
extensions and renewals at increased rates, and all subsequently accruing
interest and other charges thereon) until all such Guaranteed Obligations and
all obligations of Guarantor hereunder shall be paid in full and such payments
are not subject to any right of recovery. No delay or failure by Seller to
exercise any remedy against Consumers or Guarantor shall be construed as a
waiver of that right or remedy. No failure on the part of Seller to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by any applicable law.
Section 8. Severability. In the event that the provisions of this Guaranty
are claimed or held to be inconsistent with any other instrument evidencing or
securing the Guaranteed Obligations, the terms of this Guaranty shall remain
fully valid and effective. If any one or more of the provisions of this Guaranty
should be determined to be illegal or unenforceable, all other provisions shall
remain effective.
Section 9. Assignment.
(a) Assignability. Guarantor shall not have the right to assign any of
Guarantor's rights or obligations or delegate any of its duties under this
Guaranty without the prior written consent of Seller. Guarantor shall remain
liable under this Guaranty, notwithstanding assumption of this Guaranty by a
successor or assign, unless and until released in writing from its obligations
hereunder by Seller. Seller may, at any time and from time to time, assign, in
whole or in part, its rights hereunder to any Person to whom Seller has the
right to assign its rights or obligations under and pursuant to the terms of the
Power Purchase Agreement, whereupon such assignee shall succeed to all rights of
Seller hereunder.
(b) Successors and Assigns. Subject to Section 9(a) hereof, all of the
terms of this instrument shall be binding upon and inure to the benefit of the
parties hereof and their respective permitted successors and assigns.
Section 10. Address for All Notices. All notices and other communications
provided for hereunder shall be given and effective in accordance with the
notice requirements of the Power Purchase Agreement and if to Guarantor, at the
following address:
Attn:
-------------------------------------
Telecopy:
---------------------------------
with a copy to:
---------------------------
Telecopy:
---------------------------------
Section 11. Governing Law. This Guaranty shall be governed by and construed
in accordance with the law of the State of Michigan (without giving effect to
conflict of law principles) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. THE PARTIES
HERETO AGREE THAT VENUE IN ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE
SUBJECT MATTER OF THIS GUARANTY SHALL BE IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF MICHIGAN. THE FOREGOING
COURT SHALL HAVE EXCLUSIVE JURISDICTION FOR SUCH PURPOSES, AND THE PARTIES
HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURT AND
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY
SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN ANY MANNER
RECOGNIZED BY SUCH COURT. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 12. Entire Agreement. This writing is the complete and exclusive
statement of the terms of this Guaranty and supersedes all prior oral or written
representations, understandings, and agreements between Seller and Guarantor
with respect to the subject matter hereof. Guarantor agrees that there are no
conditions to the full effectiveness of this Guaranty.
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, Guarantor has duly caused this Guaranty to be executed
and delivered as of the date first written above.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT G
PEAK ADJUSTMENT PAYMENT
During the months of July and August for each Calendar Year of the Term (the
"Peak Period"), Seller must achieve a specified capacity factor for the Facility
as set forth in this Exhibit G. If Seller fails to achieve such a capacity
factor for the specified period, Seller shall be responsible for a payment to
Buyer (the "Peak Adjustment Payment") calculated in accordance with the
following formula:
(TEM - DEM) x $20/MWh
where
TEM = Targeted Energy for the month, which shall be the product of: (i) the
applicable Buyer's Capacity Amount for the month; (ii) the number of hours in
the month; and (iii) the Target Capacity Factor.
DEM = Delivered Energy for the month.
If the resulting product of the above formula is positive, then such positive
amount shall equal the Peak Adjustment Payment for the month in question and
Seller shall pay that Peak Adjustment Payment in accordance with this Exhibit G.
If the resulting product is zero or negative, then Seller shall owe no Peak
Adjustment Payment to Buyer for the month. For purposes of calculating the TEM
and DEM, the determination of the applicable number of hours in a month and the
Delivered Energy for a month shall exclude (a) hours within an Summer
Maintenance Outage that occurs in that month and Energy delivered during those
outage hours, and (b) hours for which a damages amount has been paid by, or is
due from, Seller pursuant to Section 2.4(d) or Section 4.1(b).
If it is determined that Seller owes Buyer a Peak Adjustment Payment for a
particular month, Buyer shall have the right to either (a) demand payment of
that Peak Adjustment Payment in writing, in which case Seller shall make such
payment to Buyer within five (5) Business Days after the written demand for
payment is received, or (b) reduce the payments otherwise due to Seller under
this Agreement for the Billing Cycle that includes the month in question by the
amount of the Peak Adjustment Payment.
EXHIBIT H
SCHEDULING PROCEDURES
(a) Scheduling of Generation Offers. Seller shall submit its Generation Offer
for the Facility into the MISO day-ahead market for dispatch as a must-run
generation unit with a dispatch minimum for each hour of the Operating Day equal
to no less than Seller's reasonable estimate of the Buyer's Entitlement of Net
Energy Output, provided, however, that during any Derate in which the entire
Facility is not available for the generation of Energy, Seller shall have no
obligation to schedule Generation Offers under Section 5.3 and this Exhibit H.
(b) Scheduling of Financial Bilateral Transactions. Seller shall Schedule each
Financial Bilateral Transaction relating to the delivery to Buyer of Energy
generated at the Facility or the Replacement Energy and Buyer shall accept each
such Financial Bilateral Transaction Schedule no later than the deadline
established by MISO for such acceptance, with each utilizing the appropriate
MISO electronic scheduling system and protocols in accordance with the following
Scheduling parameters:
(i) Seller shall submit a Financial Bilateral Transaction Schedule or
Schedules for settlement in the day-ahead market for the actual quantity of
Delivered Energy for the relevant Operating Day; and
(ii) Buyer shall confirm such Financial Bilateral Transaction Schedule
submitted by Seller in accordance with paragraph (i) above, provided that
if Buyer disputes any component of any such Financial Bilateral Transaction
Schedule submitted by Seller, Buyer shall immediately notify Seller and
Buyer and Seller shall cooperate to resolve any discrepancies in a timely
manner;
provided, however, that during a Scheduled Maintenance Outage, Seller may
Schedule Financial Bilateral Transactions under Section 5.3 and this Exhibit H
with respect to the Replacement Energy or the Parties may mutually agree to an
alternative settlement procedure.