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AGREEMENT AND AMENDMENTS TO AGREEMENTS
BY AND AMONG
CITY OF HENDERSON, KENTUCKY,
CITY OF HENDERSON UTILITY COMMISSION,
BIG RIVERS ELECTRIC CORPORATION,
WKE STATION TWO INC.,
LG&E ENERGY MARKETING INC.,
AND
WESTERN KENTUCKY ENERGY CORP.
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July 15, 1998
TABLE OF CONTENTS
Section Page
@@1. Definitions, Whole Agreement and Payments...............................3
1.1 Definitions..........................................................3
1.2 Schedules and Exhibits...............................................3
1.3 Method of Payment....................................................3
1.4 Late and Partial Payments............................................4
2. Phase I Effective Date and Phase II Effective Date........................4
2.1 Phase I Effective Date...............................................4
2.2 Phase II Assignment Preceding Phase I Subcontract....................4
2.3 Successive Phase I and Phase II Effective Dates......................4
2.4 Effective Date; Term.................................................5
3. Closing; Deliveries at Closing............................................5
3.1 The Closing and the Phase I and Phase II Effective Dates.............5
3.2 Actions Simultaneous.................................................6
3.3 Big Rivers' Deliveries...............................................6
3.4 Henderson's Deliveries..............................................8
3.5 LG&E Companies' Deliveries..........................................10
4. Covenants of the Parties Pending Effective Date..........................11
4.1 Access Pending Effective Date.......................................11
4.2 Negative Covenants..................................................12
4.3 Affirmative Covenants...............................................14
4.4 Purchase Option on Default..........................................16
5. Representations and Warranties of Henderson..............................17
5.1 Organization and Powers of Henderson................................17
5.2 No Violation........................................................17
5.3 Effect of Agreement; Consents.......................................18
5.4 Output..............................................................18
5.5 Station Two Contracts...............................................19
5.6 Bond Ordinance......................................................19
5.7 Condition of Station Two Assets.....................................19
5.8 Water Supply........................................................19
5.9 Permits.............................................................20
5.10 Litigation and Insurance Claims....................................20
5.11 Compliance with Laws...............................................20
5.12 Environmental Matters..............................................21
5.13 No Condemnation, Expropriation or Restrictions.....................22
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Section Page
5.14 Miscellaneous Payments.............................................22
5.15 Completeness of Statements.........................................22
6. Representations and Warranties of Big Rivers.............................23
6.1 Organization and Powers of Big Rivers...............................23
6.2 No Violation........................................................23
6.3 Effect of Agreement; Consents.......................................24
6.4 Completeness of Statements..........................................24
7. Representations and Warranties of the LG&E Companies.....................24
7.1 Organization and Powers.............................................24
7.2 No Violation........................................................24
7.3 Effect of Agreement.................................................25
7.4 Completeness of Statements..........................................25
8. Phase I Subcontract......................................................26
8.1 Term of Engagement..................................................26
8.2 Duties of Station Two Subsidiary....................................26
8.3 Standards of Performance............................................29
8.4 Station Two Subsidiary Negative Covenants...........................30
8.5 Reporting Obligations...............................................31
8.6 Communication of Certain Events.....................................32
8.7 Maintenance of Books and Records....................................32
8.8 Statements and Reports..............................................33
8.9 Confidentiality of Books and Records................................34
8.10 Fees and Expenses; Assignment of Rights............................34
8.11 Invoicing Procedure; Reid Station Operating Account(s).............39
8.12 Station Two Surplus Capacity.......................................40
8.13 Phase I Off-Sets...................................................48
8.14 Additional Covenants of Big Rivers.................................50
8.15 Budget Process; Operating Committee................................51
8.16 Adjustment for Henderson Incremental Environmental O&M. ...........54
8.17 Station Two Improvements -- Forecasts, Budgeting and Payments......56
8.18 Reimbursement for Debt Service.....................................64
8.19 Big Rivers' Performance Responsibility.............................65
9. Phase II Assignments.....................................................65
9.1 Assignment..........................................................65
9.2 Assumption of Assumed Station Two Liabilities.......................66
9.3 Term of Assignment..................................................67
9.4 Excluded Station Two Contracts or Liabilities.......................67
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Section Page
9.5 Terms of General Applicability......................................71
9.6 Consents to Assignment..............................................74
9.7 Sale of Station Two Surplus Capacity................................75
9.8 Budget Process for Phase II Assignment..............................82
9.9 Adjustment for Henderson Incremental Environmental O&M..............85
9.10 Station Two Improvements -- Forecasts, Budgeting and Payments......86
9.11 [Intentionally Omitted].............................................93
9.12 Phase I Adjustments................................................94
9.13 Survival of Phase I Subcontract Provisions and Claims..............96
9.14 No Release; Big River's Responsibility.............................97
9.15 Standards of Performance...........................................97
9.16 Communication of Certain Events....................................98
9.17 Additional Payments to Big Rivers..................................98
10. Additional Agreements of the Parties....................................99
10.1 Interim Period Reconciliations.....................................99
10.2 Transfer of Title to Station Two Surplus Capacity.................103
10.3 Sharing of Station Two O&M or R&R Account Balances................104
10.4 [Intentionally Omitted]...........................................115
10.5 Two County Restriction............................................115
10.6 Two Counties' Demand..............................................115
10.7 Suspension of Performance.........................................117
10.8 Insurance.........................................................122
10.9 Cooperation in Fuel Procurement...................................125
10.10 Maintenance Power................................................125
10.11 Access to Premises; Rights-of-Way................................126
10.12 Covenants to Exercise Rights and Remedies........................127
10.13 Notice of Delivery Obligations...................................128
10.14 Access to Records................................................129
10.15 Indemnification; Waivers and Limitations of Liability............129
10.16 Reversion to Big Rivers..........................................139
10.17 Rights of First Offer; Waivers...................................140
10.18 Compliance with Bond Ordinance...................................143
10.19 Additional Covenants of Henderson................................143
10.20 Acknowledgments and Affirmations by Big Rivers...................146
10.21 SEPA Power.......................................................147
10.22 Green Station FGD System Facility................................148
10.23 Transmission and Transformation Facilities.......................149
10.24 Governmental Consents............................................149
10.25 Third Party Consents.............................................150
10.26 Reasonable Best Efforts..........................................150
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Section Page
10.27 Further Assurances...............................................150
10.28 Access to Spare Transformer......................................151
10.29 General and Administrative Expenses..............................152
10.30 Systems and Operating Reserves...................................153
10.31 Rights and Remedies Not Waived...................................153
10.32 Survival Of Representations and Warranties.......................154
10.33 Station Two Inventories..........................................154
10.34 Assignment of Certain Station Two Intangible Assets..............155
10.35 Station Two Personal Property....................................158
10.36 LG&E Parties' Residual Value Payment.............................160
10.37 Survival of Monthly Margin Payments..............................160
11. Additional Agreements Respecting Station Two Power. ...................160
11.1 Pre-Closing Economic Development Opportunities. ..................160
11.2 Economic Development Opportunities During The Term................165
11.3 Treatment of Economic Development Agreements Following the Term...176
11.4 Section 3.4 of Power Sales Contract...............................180
11.5 Use of Excess Energy and Capacity.................................180
12. Condemnation; Damage or Destruction of Station Two Assets..............183
12.1 Condemnation......................................................183
12.2 Damage or Destruction.............................................183
13. Termination; Default; Remedies.........................................185
13.1 Termination Prior to Effective Date...............................185
13.2 Pre-Effective Date Remedies; Conditions Precedent.................185
13.3 Default During the Phase I Subcontract Term.......................186
13.4 Default During the Phase II Assignment Term.......................188
13.5 Notice of Defaults; Cure Rights...................................191
13.6 Remedies During Phase I Subcontract Term..........................196
13.7 Remedies During Phase II Assignment Term..........................201
13.8 Additional Covenants Concerning the Parties' Rights and Remedies..207
13.9 Termination Date True Up..........................................222
13.10 Survival of Terms and Conditions.................................223
14. Abatement and Other Rights.............................................224
14.1 Abatement and Other Rights For Condemnation.......................224
14.2 Abatement and Other Rights for Damage or Destruction..............226
14.3 Abatement and Other Rights Upon Termination.......................228
14.4 Abatement Rights Cumulative.......................................230
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TABLE OF CONTENTS
Section Page
15. Transfers and Assignments..............................................230
15.1 Permitted Assignments.............................................230
15.2 Assignment and Assumption of Related Agreements...................232
15.3 Noncomplying Assignment...........................................233
15.4 Regulatory Approvals..............................................233
15.5 Liens.............................................................233
16. Uncontrollable Forces..................................................234
16.1 Suspension of Performance for Uncontrollable Forces...............234
16.2 Uncontrollable Forces.............................................234
17. Taxes..................................................................234
17.1 Sales and Use Taxes...............................................235
17.2 Property Taxes....................................................235
17.3 Unidentified Asset-Related Taxes..................................236
17.4 Change of Tax Law.................................................237
17.5 Other Taxes.......................................................237
17.6 Kentucky Tax Rulings..............................................237
17.7 Appeal of Tax Assessment..........................................238
18. Miscellaneous.........................................................238
18.1 Miscellaneous Disclaimers.........................................238
18.2 No General Obligations of the City................................239
18.3 Notices...........................................................239
18.4 Waiver............................................................241
18.5 Amendment and Modification........................................241
18.6 Governing Law.....................................................241
18.7 Successors and Assigns............................................241
18.8 Counterparts......................................................242
18.9 Severability......................................................242
18.10 Headings.........................................................242
18.11 Entire Agreement.................................................242
18.12 Construction.....................................................242
18.13 Production of Operative Documents................................243
18.14 Zero Capacity Allocations........................................243
18.15 Continuation of Agreement........................................243
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TABLE OF CONTENTS
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TABLE OF CONTENTS
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EXHIBITS
Description Exhibit
Station Two Contracts........................................................A
Definitions .................................................................B
G & A Allocation Agreement...................................................C
Amended Systems Reserve Agreement............................................D
SCHEDULES
Description Schedule
Conditions Precedent to Phase I Effective Date ............................2.1
Conditions Precedent to Phase II Effective Date in the Event Phase
II Precedes Commencement of Phase I........................................2.2
Conditions Precedent to Phase II Effective Date in the Event Phase
II follows Phase I.........................................................2.3
Henderson's No Violation...................................................5.2
Condition of Station Two Assets............................................5.7
Permits....................................................................5.9
Litigation and Insurance Claims...........................................5.10
Big Rivers' No Violation...................................................6.2
Effect of Agreement; Consents..............................................6.3
LG&E Companies' No Violation...............................................7.2
Payments for Station Two Improvements..................................8.17(d)
GLOSSARY OF DEFINED TERMS
Defined Term Section
Actual Henderson Environmental O&M.....................................8.17(c)
Additional Payment.....................................................8.10(b)
Agreement.........................................................Introduction
Assigned Station Two Contracts..........................................9.1(d)
Assumed Station Two Liabilities............................................9.2
Big Rivers........................................................Introduction
Big Rivers' Henderson Incremental Environmental O&M Share..............8.16(a)
Big Rivers' Replacement O&M Fund.......................................10.3(f)
Big Rivers' Replacement R&R Fund.......................................10.3(g)
Bond Ordinance.......................................................Recital A
City..............................................................Introduction
Closing....................................................................3.1
Damage Multipliers.....................................................14.2(b)
Debt Service and R&R Capacity Payment...................................9.7(b)
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Defaulting Party.......................................................13.5(a)
Economic Development Agreement.........................................11.2(g)
Economic Development Opportunity.......................................11.2(a)
Effective Date.............................................................2.4
Environmental Condition...................................................5.12
Environmental Violations..................................................5.12
Excess Henderson Capacity..............................................11.5(b)
Excess Henderson Energy................................................11.5(a)
Existing SEPA Contract...................................................10.21
Fair Market Value Ratio...................................................14.1
Final Year of Agreement................................................8.10(c)
14 1/2 Cent Payments...................................................8.10(b)
Fuel and Reid Station Operating Accounts...............................8.11(b)
Fuel and Reid Station Operating Expenses...............................8.10(a)
Fundamental Rights.....................................................10.7(c)
G & A Allocation Agreement...............................................10.29
Green River............................................................8.12(e)
Henderson.........................................................Introduction
Henderson Environmental-Related Capital Cost...........................8.17(e)
Henderson Non-Incremental Capital Cost.................................8.17(e)
Henderson Replacement O&M Fund.........................................10.3(f)
Henderson Union........................................................8.12(e)
LEM/Henderson Union Agreement..........................................8.12(e)
HMPL..............................................................Introduction
HUC...............................................................Introduction
Joint Facilities Agreement...........................................Recital B
Knowledge.................................................................5.12
Letter Ruling..........................................................8.12(e)
LG&E Companies....................................................Introduction
LG&E Company......................................................Introduction
LG&E Rights............................................................13.8(a)
LEM...............................................................Introduction
LEM Capacity Charge Share .............................................8.12(b)
LEM Margin..........................................................13.8(a)(1)
Matching Offer.........................................................11.2(f)
Maximum Funding Limit...............................................10.3(g)(2)
Mean Proposal..........................................................11.2(d)
1993 Amendment.......................................................9.4(b)(4)
1998 Amendments......................................................Recital B
New Reserves Agreement...................................................10.30
Non-Defaulting Party...................................................13.5(a)
Notice.................................................................11.2(b)
Notice of Default......................................................13.5(b)
O&M Closing Balance....................................................10.3(a)
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Offer..................................................................11.2(a)
Offer Price............................................................11.2(a)
Operating Pass Through Costs...........................................8.10(a)
Participation Agreement..............................................Recital D
Parties...........................................................Introduction
Party.............................................................Introduction
Phase I Adjustments.......................................................9.12
Phase I Effective Date.....................................................3.1
Phase I Subcontract..........................................................8
Phase I Subcontract Term...................................................8.1
Phase II Assignment..........................................................9
Phase II Assignment Term...................................................9.3
Phase II Effective Date....................................................2.3
Plan.................................................................Recital D
Pre-Closing Development Agreement......................................11.1(a)
Qualified Power Marketer...............................................11.2(c)
R&R Closing Balance....................................................10.3(a)
Refinancing Costs.........................................................10.6
Reid Station............................................................8.2(b)
Releasing Party ......................................................10.15(g)
Released Party........................................................10.15(g)
Replacement O&M Fund...................................................10.3(f)
RFP Process............................................................11.2(b)
Right of First Offer.......................................................9.6
Section 28................................................................11.2
SEPA.....................................................................10.21
SEPA Power...............................................................10.21
SEPA Schedule............................................................10.21
Station Two..........................................................Recital A
Station Two Allowances.................................................8.10(c)
Station Two Assets......................................................4.1(a)
Station Two Assets Insurance...........................................10.8(b)
Station Two Bonds....................................................Recital A
Station Two Contracts................................................Recital B
Station Two Improvements...............................................8.17(a)
Station Two Improvements Account.......................................8.17(d)
Station Two Improvement Sharing Ratio..................................8.17(e)
Station Two O&M Account.................................................3.3(d)
Station Two Operating Agreement......................................Recital B
Station Two Power Sales Agreement....................................Recital B
Station Two PP Price Reduction...........................................10.35
Station Two R&R Account.................................................3.3(d)
Station Two Rated Capacity.............................................8.17(b)
Station Two Subsidiary............................................Introduction
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Station Two Subsidiary's Performance Obligations......................10.15(a)
Station Two Surplus Capacity.........................................Recital B
Station Two Unit Output................................................8.12(b)
Surplus Power..........................................................11.2(a)
Surplus Power Notice...................................................11.2(b)
Systems Improvement Project.............................................4.2(d)
Term.......................................................................2.4
Termination Multipliers................................................14.3(b)
Terms of General Applicability.............................................9.5
Transitional Year......................................................9.12(d)
Uncontrollable Force......................................................16.2
WKEC..............................................................Introduction
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AGREEMENT AND AMENDMENTS TO AGREEMENTS
THIS AGREEMENT AND AMENDMENTS TO AGREEMENTS ("Agreement") is entered into
and effective as of July 15, 1998, by and among (i) THE CITY OF HENDERSON,
KENTUCKY (the "City"), a municipal corporation and city of the third class
organized under the laws of Kentucky, THE CITY OF HENDERSON UTILITY Commission
("HUC"), a public body politic and corporation organized under Kentucky Revised
Statutes ss. 96.530 and related statutes, doing business as HENDERSON MUNICIPAL
POWER & LIGHT ("HMPL") (the City and HUC being sometimes hereinafter
collectively referred to as "Henderson"), (ii) BIG RIVERS ELECTRIC CORPORATION
("Big Rivers"), a Kentucky rural electric cooperative corporation, and (iii) WKE
STATION TWO INC., formerly known as LG&E Station Two Inc. ("Station Two
Subsidiary"), a Kentucky corporation, LG&E ENERGY MARKETING INC., ("LEM"), an
Oklahoma corporation, and WESTERN KENTUCKY ENERGY CORP., a Kentucky corporation
("WKEC") and the successor by merger to Western Kentucky Leasing Corp.
(hereinafter, Station Two Subsidiary, LEM and WKEC are referred to collectively
as the "LG&E Companies" and individually as an "LG&E Company," and together with
Henderson and Big Rivers are referred to collectively as the "Parties" or
individually as a "Party").
RECITALS:
A. The City owns an electric generating station, consisting of two
175-megawatt coal-fired, steam-electric generators with related facilities
located on a site near the Green River in Henderson County, Kentucky ("Station
Two"), having as of the date of this Agreement a net rated Capacity of 312 MW.
The City financed the costs of acquisition, construction and start-up of Station
Two through the issuance of the Electric Light & Power Revenue Bonds, Station
Two Series, due March 1, 2003, in an initial aggregate principal amount of
$82,500,000 and with an aggregate outstanding principal balance as of March 2,
1998 of $25,035,000 (such bonds, together with any bonds issued to refund such
bonds, are hereinafter referred to as the "Station Two Bonds"), which were
authorized, sold and issued by the City pursuant to the
Electric Light & Power Revenue Bond Ordinance adopted by the City on August 27,
1970, together with supplemental ordinances and amendments thereto as of the
date hereof (such ordinance, together with any ordinance (in form and substance
reasonably satisfactory to each of the Parties) authorizing any refunding bonds,
are hereinafter referred to as the "Bond Ordinance").
B. Big Rivers currently operates Station Two, purchases all Capacity and
associated Energy of Station Two surplus to the immediate needs of the City and
its inhabitants, determined in accordance with the Station Two Power Sales
Agreement described below ("Station Two Surplus Capacity"), and otherwise has
arranged with Henderson for the joint utilization by Big Rivers and Henderson of
certain auxiliary facilities and operating personnel. The respective rights and
obligations of Big Rivers and Henderson with respect to Station Two are set
forth in that certain Power Plant Construction and Operation Agreement dated
August 1, 1970, as amended (the "Station Two Operating Agreement"), that certain
Power Sales Contract dated August 1, 1970, as amended (the "Station Two Power
Sales Agreement"), that certain Joint Facilities Agreement dated August 1, 1970,
as amended (the "Joint Facilities Agreement"), and other agreements, all of
which (together with all amendments thereto, including, without limitation, the
Amendments to Contracts dated May 1, 1993 (the "1993 Amendments") and the
Amendments to Contracts dated July 15, 1998 (the "1998 Amendments"), are
identified on Exhibit A attached hereto (all such agreements, as amended, being
referred to hereinafter collectively as the "Station Two Contracts").
C. On September 25, 1996, Big Rivers filed for relief under Chapter 11 of
the Bankruptcy Code.
D. The LG&E Companies and Big Rivers entered into a New Participation
Agreement dated April 6, 1998 (the "Participation Agreement") which contemplates
(among other transactions) the lease, use and operation of all Facilities and
related assets owned by Big Rivers, the purchase, sale and transmission of the
Energy and capacity produced by such Facilities, and the transactions
contemplated in this Agreement. The proposed transactions
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among Big Rivers and the LG&E Companies are substantially described in Big
Rivers' Plan of Reorganization.
E. As contemplated in the Plan of Reorganization and the Participation
Agreement, Big Rivers and the LG&E Companies desire to enter into this Agreement
which provides, among other terms, for the performance by Station Two Subsidiary
of certain obligations of Big Rivers under certain of the Station Two Contracts
and for the purchase and sale by Station Two Subsidiary or LEM of the Station
Two Surplus Capacity.
AGREEMENT:
NOW, THEREFORE, the Parties hereby agree as follows:
1. DEFINITIONS, WHOLE AGREEMENT AND PAYMENTS.
1.1 Definitions. All capitalized terms used in this Agreement but not
otherwise defined in this Agreement shall have the meanings set forth in Exhibit
B attached hereto or, if not defined therein, shall have the meanings set forth
in the Station Two Operating Agreement or the Station Two Power Sales Agreement.
A Glossary of terms defined in this Agreement is included with this Agreement
for ease of reference only.
1.2 Schedules and Exhibits. The schedules and exhibits to this Agreement
constitute an integral part of this Agreement, and all references to this
Agreement shall include all such schedules and exhibits.
1.3 Method of Payment. All payments required to be made by a Party to any
other Party under the terms of, or as contemplated in, this Agreement, unless
otherwise provided in this Agreement or the Station Two Contracts, shall be made
in immediately available United States funds no later than 2:00 p.m. eastern
time on the due date therefor. A Party desiring to receive any such payment by
wire transfer shall provide written notice to the paying Party not
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less than five (5) Business Days prior to the due date indicating the wire
instructions and applicable account information. A written notice shall be
applicable to all future payments unless revoked or modified by that notice or
any subsequent written notice.
1.4 Late and Partial Payments. All amounts payable between any LG&E
Company and Big Rivers under this Agreement, if not paid when due, shall bear
interest from the due date until paid at the Default Rate. No receipt by any
such Party to whom a payment is due of an amount less than the full amount due
will be deemed to be other than payment on account, nor will any endorsement or
statement on any check or any accompanying letter effect or evidence an accord
or satisfaction. The receiving Party may accept such check or payment without
prejudice to its right to recover the balance or pursue any right hereunder.
2. PHASE I EFFECTIVE DATE AND PHASE II EFFECTIVE DATE.
2.1 Phase I Effective Date. The "Phase I Subcontract" (defined in Section
8 of this Agreement, entitled "Phase I Subcontract") shall commence and become
effective on the "Phase I Effective Date" (as defined in Section 3.1 of this
Agreement).
2.2 Phase II Assignment Preceding Phase I Subcontract. In the event that
the conditions set forth in Schedule 2.2 for each Party have been fulfilled or
waived by each such Party on a date prior to the Phase I Effective Date, the
Phase I Subcontract shall never become effective and the Closing referred to in
Section 3.1 of this Agreement shall consummate the "Phase II Assignment" (as
defined in Section 9 of this Agreement, entitled "Phase II Assignments") rather
than the Phase I Subcontract.
2.3 Successive Phase I and Phase II Effective Dates. At any time
subsequent to the occurrence of the Phase I Effective Date, upon the
satisfaction or waiver by each Party of all conditions set forth in Schedule 2.3
for such Party, (a) the Phase II Assignment shall thereafter commence and become
effective as set forth below, and (b) the Phase I Subcontract and the provisions
of this Agreement relating thereto, shall, upon the commencement of the Phase II
Assignment, immediately terminate and be of no further force or effect (subject
to survival of
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specific provisions set forth in Section 8 of this Agreement, entitled "Phase I
Subcontract," or elsewhere in this Agreement which by their terms shall survive
the termination of the Phase I Subcontract). The date on which the Phase II
Assignment takes effect, whether pursuant to Section 2.2 of this Agreement or
Section 2.3 of this Agreement, shall hereinafter be referred to as the "Phase II
Effective Date." At such time as any Party shall in good faith believe that each
of the conditions precedent set forth in Schedule 2.3 for all Parties have been
satisfied or waived by the relevant Party(s), the Party having that belief may,
in its discretion, notify all (but not less than all) of the other Parties of
its belief, and each such other Party agrees to notify the first Party of
whether it agrees with or in good faith disputes the first Party's belief within
ten (10) Business Days after delivery of the initial notice. In the event a
Party fails to respond within that ten-day period, it shall be deemed to have
agreed with the initial Party's belief. The Phase II Effective Date shall
commence two (2) Business Days following the expiration of the ten-day notice
period described above or, if the initial Party's belief shall have been
disputed by one or more other Parties as contemplated above, two (2) Business
Days after a determination that such conditions precedent have been so satisfied
or waived is made (i) by the mutual agreement of the disputing Parties, or (ii)
pursuant to a final, non-appealable decision rendered by a court of competent
jurisdiction or other tribunal acceptable to the Parties. The successful
Party(s) in any legal proceeding commenced to obtain a decision of the type
described in (ii), above, shall be entitled to recover from the unsuccessful
Party(s) its reasonable attorneys fees and court costs incurred in connection
with that legal proceeding.
2.4 Effective Date; Term. For purposes of this Agreement, the "Effective
Date" shall mean the earlier of the Phase I Effective Date or the Phase II
Effective Date. The term of this Agreement ("Term") shall commence on the
Execution Date and shall, unless sooner terminated as contemplated in Section 13
of this Agreement, continue until the later of expiration of (a) the Phase I
Subcontract Term (as defined in Section 8.1 of this Agreement), other than such
an expiration occurring upon the Phase II Effective Date, or (b) the Phase II
Assignment Term (as defined in Section 9.3 of this Agreement).
3. CLOSING; DELIVERIES AT CLOSING.
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3.1 The Closing and the Phase I and Phase II Effective Dates. The
consummation of the transactions contemplated in this Agreement and commencement
of the Phase I Subcontract Term or the Phase II Assignment Term, (whichever is
earlier) (the "Closing"), shall take place at the offices of Sullivan, Mountjoy,
Stainback & Miller, P.S.C., Owensboro, Kentucky (or at such other location as
the Parties may agree) at 10:00 a.m., local time, on the date that is 10
Business Days following the earlier to occur of (i) the date on which all
conditions set forth in Schedule 2.1 of this Agreement for each Party have been
fulfilled or waived in writing by such Party in its sole discretion (other than
the conditions set forth in items 1.1, 1.9, 2.1, and 2.7 of Schedule 2.1, which
the Parties intend shall be fulfilled immediately prior to or contemporaneously
with the Closing, unless so waived), (the "Phase I Effective Date"), or (ii) the
date on which all conditions set forth in Schedule 2.2 of this Agreement for
each Party have been fulfilled or waived in writing by such Party in its sole
discretion (other than the conditions set forth in items 1.1, 1.9, 2.1, and 2.7
of Schedule 2.1, which are incorporated by reference in items 1.1 and 2.1 of
Schedule 2.2, which the Parties intend shall be fulfilled immediately prior to
or contemporaneously with the Closing, unless so waived). Notwithstanding
anything contained in this Section 3.1 to the contrary, in no event shall the
Effective Date under this Agreement commence prior to the "Effective Date" under
the Participation Agreement.
3.2 Actions Simultaneous. Notwithstanding the order of the deliveries by
the Parties set forth below, all deliveries shall be deemed to have occurred
simultaneously and shall not be deemed to have been completed until each of the
steps or conditions set forth or identified in this Section 3, entitled
"Closing; Deliveries at Closing," has been completed or has been waived by the
Party who is required or permitted to waive the same.
3.3 Big Rivers' Deliveries. At the Closing Big Rivers shall deliver to the
LG&E Companies and/or Henderson, as appropriate, all of the following (duly
executed where appropriate):
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(a) A Certificate of the Secretary or an Assistant Secretary of Big
Rivers, dated the Effective Date, in form and substance reasonably satisfactory
to the LG&E Companies and Henderson, certifying as to the due adoption of the
resolutions of the Board of Directors of Big Rivers authorizing the execution,
delivery and performance by Big Rivers of this Agreement and the transactions
contemplated in this Agreement.
(b) The opinions of each of Sullivan, Mountjoy, Stainback & Miller,
P.S.C. and Long Aldridge & Norman LLP referenced in items 1.11 and 3.7 of
Schedule 2.1.
(c) A Certificate of an authorized officer of Big Rivers certifying
that (i) the representations and warranties set forth in Section 6 of this
Agreement, entitled "Representations and Warranties of Big Rivers," are true and
correct in all material respects on the Effective Date as though made on the
Effective Date, and (ii) the conditions precedent to Big Rivers' obligations set
forth in Section 2 of Schedule 2.1 or Schedule 2.2, as the case may be, have
been satisfied or waived by Big Rivers, provided that the foregoing shall not
relieve any other Party from its responsibility or liability for any
misrepresentation or breach of warranty by such other Party made in this
Agreement.
(d) A Certificate of the chief financial officer of Big Rivers
certifying as to those items affecting or relating to the Station Two Account in
the Operation and Maintenance Fund (the "Station Two O&M Account") and the
Station Two Account in the Renewals and Replacements Fund (the "Station Two R&R
Account") and as to Big Rivers' rights in respect of such accounts in accordance
with Section 10.3(a) of this Agreement.
(e) Such short-form instruments or other instruments, in recordable
form reasonably acceptable to the LG&E Companies and Big Rivers, solely
evidencing the rights and interests of the LG&E Companies in and to Big Rivers'
properties, rights-of-way and easements granted in Section 10.11 of this
Agreement.
(f) The New Reserves Agreement contemplated in Section 10.30 of this
Agreement.
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(g) The G & A Allocation Agreement contemplated in Section 10.29 of
this Agreement.
(h) Such consents of third parties, instruments of assignment and
assumption or other agreements, instruments and documents as may be necessary to
effect the provisions of Section 11.1 of this Agreement with respect to the
Pre-Closing Development Agreements.
(i) Such bills of sale and other appropriate documents of transfer,
conveyance and assignment (in form reasonably satisfactory to Big Rivers and the
LG&E Companies) as shall be necessary or appropriate for the assignment by Big
Rivers to Station Two Subsidiary of the Station Two Inventory, the Station Two
Personal Property and the Station Two Allowances as contemplated in Sections
10.33, 10.35 and 8.10(c) of this Agreement.
(j) An assignment and assumption agreement, in substantially the
same form as the Agreement attached as Schedule 9.2 of the Participation
Agreement, providing for the assignment from Big Rivers to Station Two
Subsidiary of certain of Big Rivers' rights, title and interest under, in and to
the Station Two Intangible Assets (other than the Station Two Allowances), as
contemplated in Section 10.34 of this Agreement.
(k) Such other agreements, instruments and documents as shall be
reasonably necessary for the consummation of the transactions contemplated in
this Agreement, consistent with Section 10.27 of this Agreement.
3.4 Henderson's Deliveries. At the Closing, Henderson shall deliver to Big
Rivers and the LG&E Companies, as appropriate, all of the following (duly
executed where appropriate):
(a) A Certificate of the City Clerk of the City, dated the Effective
Date, in form and substance reasonably satisfactory to Big Rivers and the LG&E
Companies, certifying as to due adoption of the resolution or ordinance of the
City Commission authorizing and approving the
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execution, delivery and performance by Henderson of this Agreement and the
transactions contemplated in this Agreement.
(b) A Certificate of the Secretary of HUC, dated the Effective Date,
in form and substance reasonably satisfactory to Big Rivers and the LG&E
Companies, certifying as to the due adoption of the resolutions of HUC
authorizing the execution, delivery and performance by HUC of this Agreement and
the transactions contemplated in this Agreement.
(c) A Certificate of the General Manager of HMPL stating that (i)
the representations and warranties set forth in Section 5 of this Agreement,
entitled "Representations and Warranties of Henderson," are true and correct in
all material respects on the Effective Date, as though made on the Effective
Date, and (ii) the conditions precedent to Henderson's obligations set forth in
Section 3 of Schedule 2.1 or Schedule 2.2, as the case may be, have been
satisfied or waived by Henderson, provided, that the foregoing shall not relieve
any other Party from its responsibility or liability for any misrepresentation
or breach of warranty by such other Party made in this Agreement.
(d) A Certificate of the General Manager of HMPL certifying as to
those items affecting or relating to the Station Two O&M Account and the Station
Two R&R Account and as to Henderson's rights in respect of such accounts in
accordance with Section 10.3(a) of this Agreement.
(e) The opinions of O'Melveny & Meyers LLP and The Law Firm of
Sheffer Hoffman referenced in items 1.11 and 2.9 of Schedule 2.1.
(f) Such short-form instruments or other instruments, in recordable
form reasonably acceptable to the LG&E Companies, solely evidencing the rights
and interests of the LG&E Companies in and to Henderson's properties,
rights-of-way and easements as contemplated in Section 10.11 of this Agreement.
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(g) The New Reserves Agreement contemplated in Section 10.30 of this
Agreement.
(h) The G & A Allocation Agreement contemplated in Section 10.29 of
this Agreement.
(i) Such other agreements, instruments and documents as shall be
reasonably necessary for the consummation of the transactions contemplated in
this Agreement, consistent with Section 10.27 of this Agreement.
3.5 LG&E Companies' Deliveries. At the Closing, each of the LG&E Companies
shall deliver to Big Rivers and Henderson, as appropriate, all of the following
(duly executed where appropriate):
(a) A Certificate of the Secretary or an Assistant Secretary of each
LG&E Company, each dated the Effective Date, in form and substance reasonably
satisfactory to Big Rivers and Henderson, certifying as to the due adoption of
the resolutions of each such LG&E Company's Board of Directors authorizing the
execution, delivery and performance by such LG&E Company of this Agreement and
the transactions contemplated in this Agreement.
(b) A Certificate of an authorized officer of each LG&E Company
certifying that (i) the representations and warranties of that LG&E Company set
forth in Section 7 of this Agreement, entitled "Representations and Warranties
of the LG&E Companies," are true and correct in all material respects on the
Effective Date, as though made on the Effective Date, and (ii) the conditions
precedent to that LG&E Company's obligations set forth in Section 1 of Schedule
2.1 or Schedule 2.2, as the case may be, have been satisfied or waived by that
LG&E Company, provided that the foregoing shall not relieve any other Party from
its responsibility or liability for any misrepresentation or breach of warranty
by such other Party made in this Agreement.
(c) The opinions of Greenebaum Doll & McDonald PLLC and Dewey
Ballantine LLP referenced in items 2.9 and 3.7 of Schedule 2.1.
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(d) A Certificate of an authorized officer of Station Two Subsidiary
certifying that, as of the effective date of the Station Two Agreement, Station
Two Subsidiary is an "affiliate" of a utility subject to regulation by the KPSC
in compliance with KRS ss. 96.520, but only if such compliance is required as of
the Effective Date.
(e) The New Reserves Agreement contemplated in Section 10.30 of this
Agreement.
(f) The G & A Allocation Agreement contemplated in Section 10.29 of
this Agreement.
(g) Such instruments of assignment and assumption or other
agreements, instruments and documents as may be necessary for LEM to execute and
deliver to effect the provisions of Section 11.1 of this Agreement with respect
to the Pre-Closing Development Agreements.
(h) Certificates of Insurance, and copies of the policies of
Insurance, required by Section 10.8(e) of this Agreement.
(i) An assignment and assumption agreement, in substantially the
same form as the Agreement attached as Schedule 9.2 of the Participation
Agreement, providing for the assumption by Station Two Subsidiary of certain of
Big Rivers' performance obligations under the Station Two Intangible Assets
(other than the Station Two Allowances), as contemplated in Section 10.34 of
this Agreement.
(j) Such other agreements, instruments and documents as shall be
reasonably necessary for the consummation of the transactions contemplated in
this Agreement, consistent with Section 10.27 of this Agreement.
4. COVENANTS OF THE PARTIES PENDING EFFECTIVE DATE.
4.1 Access Pending Effective Date.
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(a) Prior to the Effective Date, Big Rivers and Henderson shall, at
the request of any of the LG&E Companies, afford or cause to be afforded to the
employees, agents, attorneys, accountants and other authorized representatives
of the LG&E Companies reasonable access during normal business hours to all
assets, facilities and properties, tangible and intangible, real and personal,
fixed and contingent, comprising Station Two and the Joint Use Facilities, and
to all employees, agents, representatives, books, records, data, contracts and
documents relating to those assets, facilities and properties (hereinafter,
collectively, the "Station Two Assets"), including, without limitation,
affording or causing such access for the purpose of conducting investigations
and examinations, preparing surveys, making appraisals and ascertaining the
condition thereof, and shall permit such persons, at the LG&E Companies'
expense, to make copies of such books, records, data, contracts and documents.
(b) The LG&E Companies shall treat, and shall cause all of their
respective employees, agents, attorneys, accountants and other authorized
representatives to treat, all information obtained pursuant to this Section 4.1
that otherwise is not in the public domain as confidential.
(c) No investigation by any of the LG&E Companies or any of their
respective employees, agents, attorneys, accountants or other authorized
representatives pursuant to this Section 4.1 shall affect any representation,
warranty, or closing condition of any Party hereto.
4.2 Negative Covenants. Except as otherwise permitted by this Agreement or
with the prior written consent of Station Two Subsidiary, for itself and as
agent for the other LG&E Companies (which consent shall not be unreasonably
withheld), each of Big Rivers and Henderson agree with the LG&E Companies, but
not with each other, as follows for all periods prior to the Closing:
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(a) No Liens. Neither Big Rivers nor Henderson shall, directly or
indirectly, create, incur, assume or suffer to exist any Lien on or with respect
to any of the Station Two Assets, except for Permitted Liens and Liens created
by the Bond Ordinance.
(b) No Disposal. Except as may otherwise be required to comply with
the Bond Ordinance, neither Big Rivers nor Henderson shall dispose of, or agree
to dispose of, any of the Station Two Assets or any rights under the Station Two
Contracts outside the ordinary course of business, nor shall either of them
assign, or agree to assign, any rights that it may have under any of the Station
Two Contracts (or any portion of any of those contracts).
(c) No New Contracts.
(1) Big Rivers shall not enter into any Power sales contract
that commits Energy or Capacity from Station Two, or any
maintenance, fuel supply or transportation contracts relating to the
operation or maintenance of Station Two or the other Station Two
Assets or in furtherance of its obligations under the Station Two
Contracts, in any such case, involving the payment or receipt by Big
Rivers of an amount in excess of $500,000 annually or having an
expiration or termination date after May 31, 1998. Notwithstanding
the foregoing or Section 7.2.3 of the Participation Agreement, Big
Rivers shall be entitled to enter into Pre-Closing Development
Agreements with Henderson as contemplated in the 1998 Amendments for
Economic Development Opportunities provided that such agreements do
not specifically commit Power from and after the Closing from any of
the Generating Plants.
(2) Henderson shall not permit Big Rivers to enter into any of
the commitments described in (1) above on behalf of Henderson, but
only to the extent that Henderson has the right to do so, and
Henderson shall not itself, without the written consent of Station
Two Subsidiary (unless Henderson reasonably determines that the
failure to enter into such a contract would impair Henderson's
duties and obligations to the Trustee or the holders of the Station
Two Bonds), enter into (A) any contracts relating to the operations
or maintenance of Station Two or the other Station Two Assets, or
(B) any Power sales
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contract that commits Capacity (excluding, however, any Station Two
Economic Development Power committed to Henderson in accordance with
Section 28 of the 1998 Amendments and as contemplated in Section
11.1 of this Agreement), other than such contracts as are permitted
under the terms of the Station Two Contracts following a breach or
default thereunder by Big Rivers as contemplated in Section 15.2 of
the Station Two Power Sales Agreement, and then only to the extent
that such breach or default has not been cured by Big Rivers or an
LG&E Company in accordance with the terms of the Station Two
Contracts and this Agreement, subject, however, to LEM's option to
purchase Energy and Capacity as contemplated in Section 4.4 of this
Agreement.
(d) Station Two Contracts; Station Two Bonds. Henderson shall not
breach or default under, nor shall Henderson suffer to exist any breach or
default under, the Bond Ordinance or any of the Station Two Bonds or the Station
Two Contracts. Big Rivers shall not terminate or materially modify or amend, or
suffer to exist any termination or material modification or amendment of, any of
the Station Two Contracts or the Station Two Bonds to the extent the same is
within its reasonable control. Big Rivers, without the written approval of the
LG&E Companies, shall not authorize Henderson to issue, and Henderson agrees
that without the written consent of Big Rivers and Station Two Subsidiary it
shall not issue, additional bonds or other indebtedness under the Bond
Ordinance, whether or not to finance any major renewals or replacements of
Station Two, any major additions or improvements thereto, or any expansion
thereof (each a "Systems Improvement Project"), unless (x) such Systems
Improvement Project is such that no duty, obligation or liability shall be
imposed thereby, or in connection therewith, upon Big Rivers or any of the LG&E
Companies under this Agreement or any of the Station Two Contracts (including
without limitation, in the form of increased Capacity charges under the Station
Two Power Sales Agreement), and (y) such Systems Improvement Project would not
otherwise adversely affect the rights of any of the LG&E Companies under the
Phase I Subcontract or the Phase II Assignment, or under any other transactions
contemplated by this Agreement or the Station Two Contracts.
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(e) No Commitment. Neither Big Rivers nor Henderson shall agree or
commit to do any of the foregoing matters which they are otherwise prohibited
from doing under the terms of this Section 4.2.
(f) Monthly Operations and Demand. Big Rivers agrees with the LG&E
Companies that it has not operated, and shall not at any time during each of the
12 calendar months immediately preceding the Effective Date operate, Station Two
in such a manner that, when measured on a monthly basis, would violate the
Letter Ruling.
4.3 Affirmative Covenants. Except as otherwise permitted by this Agreement
or with the prior written consent of Station Two Subsidiary, for itself and as
agent for the other LG&E Companies (which consent shall not be unreasonably
withheld), each of Big Rivers and Henderson agrees with the LG&E Companies, but
not with each other, that it shall at all times prior to the Closing:
(a) Ordinary Course. Unless different standards or specifications
are otherwise required by any regulatory authority having jurisdiction thereof
and such standards or specifications make it impracticable or illegal to comply
with the following, operate Station Two as presently operated and only in the
ordinary course and consistent with the Station Two Operating Agreement and
Prudent Utility Practices unless such performance by those Parties in accordance
with Prudent Utility Practice would result in a breach or default by those
Parties under the Station Two Contracts or the Bond Ordinance, in which event
the covenant regarding Prudent Utility Practices shall not apply.
(b) Adverse Changes. Advise Station Two Subsidiary in writing
(except to the extent disclosed in this Agreement or in any disclosure schedule
hereto) of any litigation or administrative proceeding (other than in the
Bankruptcy Court) that challenges or otherwise materially affects, or that, to
the best of its knowledge in the case of Henderson, reasonably could be expected
to materially affect the transactions contemplated in this Agreement or the
respective rights and entitlements of the Parties under the Station Two
Contracts as
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contemplated in this Agreement from and after the Closing, and of any material
adverse change in the Station Two Assets, their respective interests therein or
the condition thereof.
(c) Maintain Assets. Unless different standards or specifications
are otherwise required by any regulatory authority having jurisdiction thereof,
and such standards or specifications make it impracticable or illegal to comply
with the following, use its reasonable best efforts to maintain all tangible
assets included in the Station Two Assets in good operating condition,
reasonable wear and tear excepted, consistent with the Station Two Contracts and
Prudent Utility Practice unless such performance by those Parties in accordance
with Prudent Utility Practice would result in a breach or default by those
Parties under the Station Two Contracts or the Bond Ordinance, in which event
the covenant regarding Prudent Utility Practices shall not apply.
(d) Insurance. Maintain at all times prior to the Closing policies
of insurance relating to the Station Two Assets and operation of Station Two as
required by, and in material compliance with, the Station Two Contracts and the
Bond Ordinance and which in any event provide no less coverage than is in effect
on the date hereof.
(e) Comply with Laws. Operate and maintain Station Two and the other
Station Two Assets in substantial compliance with all applicable Laws.
(f) Station Two Contracts. Unless different standards or
specifications are otherwise required by any regulatory authority having
jurisdiction thereof, and such standards or specifications make it impracticable
or illegal to comply with the following, perform all of their respective duties
and obligations under all Station Two Contracts in all material respects,
consistent with the terms and provisions thereof, and not waive or release the
other Party thereto (or any other parties thereto) from any material obligation
that they may have to perform under any Station Two Contracts in all material
respects consistent with the terms and provisions thereof.
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4.4 Purchase Option on Default. If at any time prior to the Effective Date
Henderson shall have the right under Section 15.2 of the Station Two Power Sales
Agreement to sell Station Two Surplus Capacity otherwise allocated to Big Rivers
thereunder on account of a breach or default under such agreement by Big Rivers
that is not timely cured by Big Rivers or by any LG&E Company (to the extent it
elects to do so in accordance with the terms of this Agreement), and Henderson
determines to exercise such right, Henderson shall first offer (in a binding
written offer delivered to LEM) to sell such Power to LEM, and LEM shall have
the right (but not the obligation) to purchase such Power at the price and in
accordance with the terms set forth in the Station Two Power Sales Agreement
that are applicable to purchases by Big Rivers. LEM may accept or reject
Henderson's offer to sell such Power to LEM within 15 days after the date of its
receipt of that offer. If LEM shall reject Henderson's offer, or fails to
deliver its acceptance within the foregoing 15-day period, Henderson shall be
entitled to sell the Power which LEM did not accept to one or more third parties
on such terms as Henderson shall deem appropriate. The foregoing rights of LEM
shall also apply during the Phase I Subcontract Term with respect to any breach
or default by Big Rivers under the Station Two Power Sales Agreement, unless
that breach or default was the result of a breach or default by any LG&E Company
under this Agreement or any other Operative Document.
5. REPRESENTATIONS AND WARRANTIES OF HENDERSON. Henderson hereby represents and
warrants to Big Rivers (solely with respect to Sections 5.1, 5.2, 5.3 and 5.15
(but only as expressly set forth in Section 5.15) of this Agreement) and to the
LG&E Companies (with respect to all Sections of this Section 5) as follows:
5.1 Organization and Powers of Henderson. The City is a municipal
corporation and city of the third class duly organized and existing under the
laws of the Commonwealth of Kentucky. HUC is a public body politic and
corporation duly organized and existing under Kentucky Revised Statutes ss.
96.530 and related statutes. The execution, delivery and performance of this
Agreement by Henderson has been duly authorized by all necessary action,
governmental, corporate or otherwise, including approval by ordinance or other
official action of the City Board of Commissioners and Mayor of the City.
Henderson has all
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requisite power and authority to own Station Two and the other Station Two
Assets (excluding, however, the Joint Use Facilities owned by Big Rivers which
Henderson has the power, right and authority to use in its operation of Station
Two) and to carry on its business as now being conducted at Station Two and,
subject to satisfaction or waiver of all conditions relevant to Henderson that
are set forth in Schedules 2.1, 2.2 or 2.3 hereof, as applicable, as proposed to
be conducted pursuant to the terms of this Agreement.
5.2 No Violation. Except as set forth in Schedule 5.2, Henderson's
execution and delivery of this Agreement and consummation of the transactions
contemplated hereunder (a) will not violate any existing statute, law, rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, (b) will not under any existing statute or law or any existing rule,
regulation, order, writ, injunction or decree of any court or governmental
authority require any authorization, consent, approval, exemption or other
action by or notice to any court, administrative or governmental agency,
instrumentality, commission, authority, board or body, except to the extent such
authorization, consent, approval, exemption, notice or other action is required
solely as a result of actions taken by Big Rivers or any LG&E Company after the
Effective Date, and, (c) subject to obtaining the consents referred to in
Schedule 5.2, will not violate or conflict with, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
by, or result in the creation of any Lien upon the Station Two Assets under, any
terms or provisions of the Station Two Bonds or the Bond Ordinance, the Station
Two Contracts, or any other material contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which the City
or HUC is a party or by which Station Two or the other Station Two Assets may be
bound or affected. No consents or approvals of this Agreement or the
transactions contemplated in this Agreement are required from the holders of any
Station Two Bonds or from any trustee or other fiduciary appointed under or in
connection with the Bond Ordinance. In connection with the representations made
in this Section 5.2, insofar as they relate to KRS ss. 96.520, Henderson is
relying upon the representations of the LG&E Companies and the determination of
the KPSC as to compliance with KRS ss. 96.520.
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5.3 Effect of Agreement; Consents. This Agreement and the Station Two
Contracts have been duly and validly authorized, executed and delivered by
Henderson, and constitute valid and legally binding agreements enforceable
against Henderson in accordance with their respective terms, except as the
foregoing may be limited by (a) general principles of equity or (b) bankruptcy,
insolvency, reorganization, arrangement, moratorium or other laws or equitable
principles relating to or affecting creditor's rights generally.
5.4 Output. Except for sales of the type contemplated by Section 4.2(c)(2)
of this Agreement and for the HMP&L Contract, there are no contracts or other
arrangements in place by which any of the Station Two Surplus Capacity has been
sold, dedicated or committed by Henderson to any use, purpose or Person. The
Capacity and associated Energy generated by Station Two is free and clear of all
Liens, except for any Permitted Liens or any Liens created by the Bond
Ordinance, which Liens (including Permitted Liens) in such Capacity and Energy
are automatically released upon the sale and delivery of the same pursuant to
the Station Two Power Sales Agreement, upon payment therefor.
5.5 Station Two Contracts. Exhibit A contains a list of all agreements
relating to, or affecting, Station Two or the other Station Two Assets to which
Henderson is a party. Henderson has not received notice from any third party
(including Big Rivers) to the effect that any such agreements are not in full
force and effect. Neither Henderson nor, to the best of Henderson's knowledge,
Big Rivers is in material default under any such agreements, and no event has
occurred which, with notice or the passage of time, or both, would constitute a
material default under any such agreements. Henderson holds its interest in each
such agreement free and clear of any Liens, except for any Liens created by the
Bond Ordinance.
5.6 Bond Ordinance. Henderson has not defaulted, and is not now in
default, under the terms and provisions of the Station Two Bonds or the Bond
Ordinance, and no event has occurred which, with notice or the passage of time,
or both, would constitute a default thereunder.
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5.7 Condition of Station Two Assets. Except as set forth on Schedule 5.7,
to the best knowledge of Henderson each of the tangible assets included in the
Station Two Assets owned by Henderson is in all material respects well
maintained and in good condition and state of repair consistent with Prudent
Utility Practice and the Station Two Contracts, subject only to ordinary wear
and tear and to the performance of regularly scheduled maintenance that is yet
to be performed in the ordinary course of the operation of Station Two
consistent with Prudent Utility Practice and the Station Two Contracts.
5.8 Water Supply. Henderson currently has rights in or to a water supply
and Permits for waste water disposal sufficient for the operation of Station Two
at a Capacity of 312 net MW, and, as of the date hereof, no permit, license or
other governmental or private action or permission is required to utilize such
water supply (provided the ordinary charges for consumption or disposition
thereof are paid). Henderson has no knowledge of any pending or threatened
impediment to the continuation of such water supply and waste water disposal as
set forth above for the duration of the Phase I Subcontract Term and, as
applicable, the Phase II Assignment Term, other than renewals of Permits
required in the ordinary course of business. Henderson has no knowledge of any
breach, impediment or other reason why such renewals may not be granted to
Henderson.
5.9 Permits. To the best knowledge of Henderson, Schedule 5.9 contains a
listing of all material Permits currently required for the ownership or
operation of Station Two at a Capacity of 312 net MW (including, without
limitation, for the performance by Station Two Subsidiary of its obligations set
forth in this Agreement) and specifically identifies those material Permits that
expire prior to the end of the Phase I Subcontract Term and Phase II Assignment
Term. Each such Permit is in full force and effect. Henderson is in material
compliance with the terms of each such Permit and Henderson holds its interest
in each such Permit free and clear of any Liens, other than any Liens created by
the Bond Ordinance.
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5.10 Litigation and Insurance Claims. Schedule 5.10 contains a description
of (i) all pending or, to the best of Henderson's knowledge, threatened suits,
actions, arbitrations, claims, administrative proceedings or other proceedings,
or, to the best of Henderson's knowledge, governmental investigations relating
in any way to the ownership or operation of Station Two or the other Station Two
Assets owned by Henderson, or to the Station Two Bonds, and (ii) any claim,
demand or notice tendered to an insurer by Henderson with respect to any matter
related in any way to the ownership or operation of Station Two or the other
Station Two Assets.
5.11 Compliance with Laws. To Henderson's knowledge, the use and operation
of Station Two and the other Station Two Assets owned by Henderson are in
material compliance with all applicable laws, rules, orders, regulations or
restrictions, except any existing or previous noncompliance (whether or not
cured) that does not and will not materially interfere with the use or operation
of Station Two or the other Station Two Assets owned by Henderson or the use or
sale of Power generated therefrom, nor result in the imposition of any material
civil or criminal fines or penalties or other material liability on Henderson or
any of the LG&E Companies. Henderson has received no notice of material
violation or notice of material noncompliance which has not been cured.
5.12 Environmental Matters. To the knowledge of Henderson, other than the
matters set forth in the Baseline Environmental Audit Report or Schedule 5.1.19
attached to the Participation Agreement, there is no pending administrative or
judicial investigation, proceeding or action or any outstanding claim, demand,
order, administrative or legal proceeding or settlement, consent decree or order
under, or relating to any Environmental Law and further relating to or involving
Station Two or any other Station Two Assets, nor is there now, nor has there
been, any pattern of violations that would lead to any of the foregoing
(collectively, "Environmental Violations"). To the knowledge of Henderson, (i)
no Hazardous Substance or other waste (including without limitation garbage and
refuse) has been disposed of, spilled, leaked or otherwise released at, on,
under or from Station Two or the other Station Two Assets, any real property on
which Station Two or any other Station Two
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Assets is situated, or any land subject to any rights-of-way or easements used
in or committed to the operation of Station Two or the other Station Two Assets,
and (ii) there are no underground storage tanks at Station Two or on the real
property on which Station Two or any other Station Two Assets is situated or the
land subject to the rights-of-way used in or committed to the operation of
Station Two (collectively "Environmental Conditions"). For purposes of this
Section 5.12 only, the LG&E Companies acknowledge and agree that "knowledge"
shall mean the actual knowledge of the commissioners of HUC, the general manager
of HMPL or the project manager for Station Two on behalf of HUC, without any
such representatives of HUC or HMPL undertaking an independent audit or other
investigation (other than a review of written notices or correspondence in
Henderson's records) of Environmental Violations or Environmental Conditions
relating to or affecting Station Two or the other Station Two Assets. The LG&E
Companies further acknowledge and agree that Henderson shall have no obligation
to disclose to the LG&E Companies under this Section 5.12 any Environmental
Violations or Environmental Conditions that are set forth and identified in
Schedule 5.1.19 of Big Rivers' disclosure schedules attached to the
Participation Agreement, as the same shall be in existence on the Effective
Date, or in the Baseline Environmental Audit Report as such report shall be in
existence on the Effective Date and may thereafter be supplemented by quarterly
groundwater data in accordance with the terms of the Participation Agreement. In
the event the Parties at any time share any information relating to
environmental matters regarding Station Two or any other Station Two Asset, they
each agree to hold all such information in the strictest confidence and secrecy
to the fullest extent permitted by applicable law, absent the prior consent of
the other Parties, which approval will not be unreasonably withheld, conditioned
or delayed.
5.13 No Condemnation, Expropriation or Restrictions. Neither the whole nor
any portion of Station Two or the other Station Two Assets is subject to any
governmental decree or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor to Henderson's knowledge, has any such condemnation,
expropriation, taking or material new assessment been proposed. Henderson has
received no notice that any zoning, land use or other governmental proceeding
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specific to Station Two or the other Station Two Assets is pending, nor to the
best of Henderson's knowledge is any such proceeding proposed, which would
materially adversely affect Station Two or any of the other Station Two Assets,
or the use and operation thereof in accordance with the terms of this Agreement
and the Station Two Contracts.
5.14 Miscellaneous Payments. Effective as of October 31, 2003, no further
payments shall be due and owing to Henderson pursuant to Section 6.6 of the
Station Two Power Sales Agreement.
5.15 Completeness of Statements. Henderson has disclosed to the LG&E
Companies and Big Rivers (limited to those representations and warranties made
to Big Rivers herein) in writing all material facts known to it relating to the
representations and warranties made by it to each such Party in this Agreement.
No representation, warranty or covenant of Henderson made to the LG&E Companies
and, as applicable, to Big Rivers in this Agreement contains any untrue
statement of a material fact, any misstatement of a material fact or omits to
state a material fact necessary to make the statements herein not misleading to
such Party.
6. REPRESENTATIONS AND WARRANTIES OF BIG RIVERS. Big Rivers hereby represents
and warrants to the LG&E Companies and Henderson as follows:
6.1 Organization and Powers of Big Rivers. Big Rivers is a rural electric
cooperative corporation, duly organized and existing under the laws of the
Commonwealth of Kentucky. Big Rivers has all requisite cooperative power and
authority to own, operate, and lease its properties, and to carry on its
business as now being conducted and, subject to satisfaction or waiver of all
conditions relevant to Big Rivers that are set forth in Schedules 2.1, 2.2 and
2.3 hereof, as proposed to be conducted pursuant to the terms of this Agreement.
The execution, delivery and performance of this Agreement by Big Rivers has been
duly authorized by all necessary action, and no further cooperative or Member
authorization is necessary.
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6.2 No Violation. Except as set forth in Schedule 6.2, Big Rivers'
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby, including performance in all material respects of all of
its obligations hereunder, (a) will not violate any existing statute or law or
any existing rule, regulation, order, writ, injunction or decree of any court or
governmental authority, (b) will not under any existing statute or law or any
existing rule, regulation, order, writ, injunction or decree of any court or
governmental authority, require any authorization, consent, approval, exemption
or other action by or notice to any court or any administrative or governmental
agency, instrumentality, commission, authority, board or body, except to the
extent such authorization, consent, approval, exemption, notice or other action
is required solely as a result of actions taken by Henderson or any of the LG&E
Companies after the Effective Date, and, (c) subject to obtaining the consents
referred to in Schedule 6.2, will not violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien upon any of the
Station Two Assets (other than a Permitted Lien) under, any terms or provisions
of the Articles of Incorporation or By-laws of Big Rivers, the Station Two
Contracts or any material contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Big Rivers is a party
or, to its knowledge, by which Station Two or any of the other Station Two
Assets may be bound or affected.
6.3 Effect of Agreement; Consents. This Agreement and the Station Two
Contracts have been duly and validly authorized, executed and delivered by Big
Rivers and constitute valid and legally binding obligations of Big Rivers
enforceable against Big Rivers in accordance with their respective terms, except
as the foregoing may be limited by (a) general principles of equity or (b)
bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws
or equitable principles relating to or affecting creditors' rights generally.
6.4 Completeness of Statements. Big Rivers has disclosed to the LG&E
Companies and Henderson in writing all material facts known to it relating to
the representations and warranties made by it in this Agreement. No
representation, warranty or covenant of Big
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Rivers in this Agreement contains any untrue statement of a material fact, any
misstatement of a material fact or omits to state a material fact necessary to
make the statements herein not misleading.
7. REPRESENTATIONS AND WARRANTIES OF THE LG&E COMPANIES. Each of The LG&E
Companies, for itself only, hereby represents and warrants to Henderson and Big
Rivers as follows:
7.1 Organization and Powers. Such LG&E Company is duly organized, existing
and in good standing under the laws of the state of its organization. Such LG&E
Company has all requisite corporate power and authority to own, operate, and
lease its properties, and to carry on its business as now being conducted and,
subject to satisfaction or waiver of all conditions relevant to that LG&E
Company set forth in Schedules 2.1, 2.2 and 2.3 hereof, as proposed to be
conducted pursuant to the terms of this Agreement. Station Two Subsidiary and
LEM are each an "affiliate" of a utility subject to regulation by the KPSC in
compliance with KRS ss. 96.520.
7.2 No Violation. Except as set forth in Schedule 7.2, the execution and
delivery of this Agreement by such LG&E Company, and the consummation by such
LG&E Company, of the transactions contemplated hereunder, including performance
in all material respects of all of its obligations hereunder, (a) will not
violate any existing statute or law or any existing rule, regulation, order,
writ, injunction or decree of any court or governmental authority, (b) will not
under any existing statute or law or any existing rule, regulation, order, writ,
injunction or decree of any court or any administrative or governmental
authority, require any authorization, consent, approval, exemption or other
action by or notice to any court or any administrative or governmental agency,
instrumentality, commission, authority, board or body, except to the extent such
authorization, consent, approval, exemption, notice or other action is required
solely as a result of actions taken by Big Rivers or Henderson after the
Effective Date, and, (c) subject to obtaining the consents referred to in
Schedule 7.2, will not violate or conflict with, or constitute a default (or an
event which, with notice or lapse of time, or both, would
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constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien upon any of the
assets of such LG&E Company under any terms or provisions of the respective
Articles of Incorporation, By-laws or other constituent documents of such LG&E
Company, or of any material contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which such LG&E Company is
a party or by which the assets or properties of such LG&E Company may be bound
or affected.
7.3 Effect of Agreement. This Agreement has been duly and validly
authorized, executed and delivered by such LG&E Company and constitutes a valid
and legally binding obligation of such LG&E Company enforceable against such
LG&E Company in accordance with its terms, except as the foregoing may be
limited by (a) general principles of equity or (b) bankruptcy, insolvency,
reorganization, arrangement, moratorium, or other laws or equitable principles
relating to or affecting creditors' rights generally.
7.4 Completeness of Statements. Each of the LG&E Companies has disclosed
to Henderson and Big Rivers in writing all material facts known by it relating
to the representations and warranties made by it in this Agreement. No
representation, warranty or covenant of any such LG&E Company in this Agreement
contains any untrue statement of a material fact, any misstatement of a material
fact or omits to state a material fact necessary to make the statements herein
not misleading.
8. PHASE I SUBCONTRACT. During the Phase I Subcontract Term, Big Rivers hereby
engages Station Two Subsidiary, and Station Two Subsidiary accepts such
engagement, to perform as Big Rivers' subcontractor those obligations of Big
Rivers under certain of the Station Two Contracts as are specifically identified
in Section 8.2 of this Agreement, upon and subject to the terms and conditions
of this Agreement (the "Phase I Subcontract"). Henderson consents to and
approves of such limited engagement for all purposes. Henderson further
acknowledges and agrees that it shall have no implied rights or rights as a
third party beneficiary or otherwise, unless otherwise expressly granted to
Henderson in this Agreement,
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to pursue any of the LG&E Companies for failure of performance of any of the
duties or obligations due Big Rivers under this Section 8. The terms and
provisions of this Section 8 shall only apply during the Phase I Subcontract
Term, unless otherwise expressly provided below or elsewhere in this Agreement.
8.1 Term of Engagement. The term (the "Phase I Subcontract Term") of the
engagement of Station Two Subsidiary as the subcontractor of Big Rivers shall
commence on the Phase I Effective Date and shall end on the earlier of (a) the
Phase II Effective Date, (b) the December 31st that is closest to the
twenty-fifth anniversary of the Phase I Effective Date, or (c) the date of any
termination of this Agreement pursuant to Section 13 of this Agreement, entitled
"Termination; Default; Remedies."
8.2 Duties of Station Two Subsidiary. Station Two Subsidiary hereby agrees
with Big Rivers that, during the Phase I Subcontract Term, Station Two
Subsidiary, as Big Rivers' subcontractor, shall:
(a) Pay or perform, as applicable, for Big Rivers all of the
obligations of Big Rivers under the following sections of the Station Two
Operating Agreement which arise or accrue on or after the Phase I Effective Date
and during the Phase I Subcontract Term: (i) Section 13 (Operation, Maintenance
and Control), but excluding Section 13.8(c) (obligation to provide fuel),
Section 13.8(d) (concerning allocation of transmission system costs), and
Section 13.10 (but solely those provisions in Section 13.10 that require that
access be given to transmission and transformation facilities or any other
facilities, lands or properties in which Station Two Subsidiary, WKEC or any of
its Affiliates has no interest as an operator or lessee, or to facilities (or
portions thereof) control over which by the LG&E Companies has been denied by
reason of a breach or default by Big Rivers or Henderson under this Agreement or
any other Operative Document); (ii) Section 14 (Budgeting), provided that the
Operating Budget prepared by Station Two Subsidiary for Big Rivers' submission
to Henderson shall also comply with the procedures set forth in Section 8.15 of
this Agreement and Section 6 of the Facilities Operating Agreement; (iii)
Section 15 (Accounting and Auditing); (iv) Section 16
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(Billing and Payments); (v) Section 18 (Insurance), subject to those
modifications set forth in Section 10.8 of this Agreement; and (vi) Section 20
(Inspections, Rights of Access), except that Station Two Subsidiary shall have
no obligation to grant access or rights of inspection to any facilities or any
portions thereof in which Station Two Subsidiary, WKEC or any other LG&E Company
has no interest as an operator or lessee, and except that Station Two
Subsidiary's responsibilities and obligations to Big Rivers with respect to
Section 20.2 of the Station Two Operating Agreement shall be limited to the
safety of Station Two Subsidiary's representatives and employees, and to hold
harmless and indemnify Big Rivers from any loss or damage incurred by Big Rivers
by reason of injury to Station Two Subsidiary's representatives and employees
during such representatives' and employees' access to the premises of Big Rivers
or Henderson, unless such injury is due to the negligence or the willful
misconduct of Big Rivers or Henderson or their respective agents, employees or
representatives, or to the breach of this Agreement, any of the Station Two
Contracts or any of the other Operative Documents by Big Rivers or Henderson, as
the case may be (which act or omission is not itself the direct result of an act
or omission of any of the LG&E Companies).
(b) Pay or perform, as applicable, for Big Rivers all of the
obligations of Big Rivers under the following sections of the Joint Facilities
Agreement which arise or accrue on or after the Phase I Effective Date and
during the Phase I Subcontract Term: (i) Section 6 (Operation and Maintenance),
except for the operation and maintenance of facilities located between the
step-up transformer and the Station Two disconnect switches on the high-voltage
side of the unit step-up transformers, which shall be governed solely by
reference to Section 5.1 of the Transmission Services and Interconnection
Agreement and the agreement referenced therein, and except that the obligation
to renew or replace the Joint Use Facilities and any obligation respecting
Henderson Incremental Environmental O&M shall be governed by the terms of
Sections 8.16 and 8.17 of this Agreement; and (ii) Section 7 (Access), except
that Station Two Subsidiary shall have no obligation to grant access to
facilities or any portions thereof in which the Station Two Subsidiary, WKEC or
any other LG&E Company has no interest as an operator or lessee, or to
facilities (or portions thereof) control over which by the LG&E
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Companies has been denied by reason of a breach or default by Big Rivers or
Henderson under this Agreement or any other Operative Document.
Except for those obligations set forth above or as otherwise provided in this
Section 8, entitled "Phase I Subcontract," during the Phase I Subcontract Term,
Station Two Subsidiary shall not in any manner have any obligation,
responsibility, liability or duty to perform or discharge for Big Rivers any
other liabilities or obligations of Big Rivers under the Station Two Contracts,
and Big Rivers hereby covenants to the LG&E Companies that Big Rivers shall
retain, pay and perform all other obligations of Big Rivers under the Station
Two Contracts. Notwithstanding anything contained in this Section 8, entitled
"Phase I Subcontract," or any provision of the Station Two Contracts that
purports to obligate an LG&E Company for the payment of costs and expenses
relating to the Reid steam generating plant of Big Rivers (the "Reid Station")
or any of the Joint Use Facilities that may be owned by Big Rivers, the LG&E
Companies and Big Rivers hereby agree that their respective rights and
obligations as to each other for such costs and expenses shall nonetheless be
governed by the provisions of the Cost Sharing Agreement, the Power Purchase
Agreement, the Facilities Operating Agreement, the Lease or the Participation
Agreement, as applicable. Henderson and Big Rivers each hereby represents to the
LG&E Companies that, for purposes of this Agreement and the Station Two
Contracts, the Reid combustion turbine generating plant of Big Rivers is not a
Joint Use Facility and is not the "Reid Station" nor the "Reid Generating
Station," nor does it comprise a portion thereof, for purposes of one or more of
the Station Two Contracts, and that Henderson has no right or interest (legal,
contractual or otherwise) in or to the Reid combustion turbine generating plant
of Big Rivers, including, without limitation, any Right of First Offer (as such
term is defined in Section 9.6 of this Agreement).
8.3 Standards of Performance.
(a) Unless different standards or specifications are otherwise
required by any regulatory authority having jurisdiction thereof and such
standards or specifications make it impossible or illegal to comply with the
following, Station Two Subsidiary shall perform its
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duties under Section 8 of this Agreement, entitled "Phase I Subcontract," as Big
Rivers' subcontractor in accordance with standards and specifications equal to
the more stringent of (a) those set forth in the National Electric Safety Code
of the United States Bureau of Standards, (b) Prudent Utility Practice, and (c)
any other standards or specifications as may be expressly required of Big Rivers
under the relevant provisions of the Station Two Contracts which Station Two
Subsidiary has expressly agreed to perform for Big Rivers hereunder, unless such
performance by Station Two Subsidiary in accordance with Prudent Utility
Practice would result in a breach or default by Big Rivers under the Station Two
Contracts or by Henderson under the Bond Ordinance, in which event the
provisions of subclause (b) above shall not apply. Station Two Subsidiary will,
at all times, faithfully obey and substantially comply with existing and future
laws, rules and regulations of federal, state and local governmental bodies
lawfully affecting the operations and activities of Station Two and, in its
performance of its obligations under Section 8, entitled "Phase I Subcontract,"
Station Two Subsidiary will operate and maintain Station Two and the other
Station Two Assets in substantial compliance with any standards imposed by any
insurance policies required to be maintained by Big Rivers under the Station Two
Contracts or otherwise hereunder. Station Two Subsidiary's performance of its
duties under this Section 8 shall at all times be subject to Big Rivers' right
of control, review and approval as set forth in this Agreement, and shall be
conducted in a manner that would not cause Big Rivers to be in material default
under the provisions of the Station Two Contracts. At all times during which the
Station Two Bonds shall remain outstanding, Station Two subsidiary shall perform
its duties in a manner that is consistent with the provisions of the Bond
Ordinance and that would not cause Big Rivers to be in material default under
any provisions of the Station Two Contracts as it relates to the Bond Ordinance.
Station Two Subsidiary shall have no authority to act on behalf of or bind Big
Rivers in any way except as expressly set forth in this Agreement. The standards
of performance set forth in this Section 8.3 are made solely for the benefit of
Big Rivers and shall not be enforceable by Henderson against any of the LG&E
Companies.
(b) In the performance of the services under this Section 8,
entitled "Phase I Sub-Contract," Station Two Subsidiary shall be an independent
contractor and shall act as agent of
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Big Rivers solely in those instances expressly provided for in this Section 8,
entitled "Phase I Subcontract." Except as expressly provided in this Section 8,
neither Station Two Subsidiary nor any of its employees, subcontractors or
agents shall be deemed to be a servant, employee or agent of Big Rivers or its
Affiliates to any extent or for any purpose, nor shall anything herein be deemed
to create an association, joint venture, partnership, trust or similar legal
arrangement, or to impose a trust or partnership covenant, obligation or
liability on or with regard to the Parties to this Agreement. During the Phase I
Subcontract Term, Station Two Subsidiary shall have no power of decision or
authority regarding the conduct or management of the business or affairs of Big
Rivers, and shall have no power to bind or commit Big Rivers in any manner
whatsoever, except as otherwise expressly provided in this Section 8 or pursuant
to a written authorization or consent from Big Rivers. Station Two Subsidiary
shall at all times during the Phase I Subcontract Term follow the directives of
Big Rivers regarding the scope of the services and the results to be achieved by
Station Two Subsidiary, but shall be permitted, subject to the terms and
conditions of this Agreement and the Annual Budget, to employ any reasonable
means and methods which it deems necessary and appropriate to achieve such
results.
8.4 Station Two Subsidiary Negative Covenants. Unless Station Two
Subsidiary shall have obtained the prior written consent of Big Rivers, Station
Two Subsidiary hereby covenants to Big Rivers that it will not do, or, to the
extent the same is within its reasonable control, permit to occur, any of the
following:
(a) make any expenditure of, or otherwise use, any funds of Big
Rivers (including the making of any loans or advances to any Person), except as
permitted in the Annual Budget or to the extent otherwise expressly permitted in
this Agreement;
(b) commit Big Rivers to be or become directly or contingently
responsible or liable for any liability or other obligations to any other
Person, by contract, agreement, assumption, undertaking, guarantee, endorsement
or otherwise; or
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(c) settle, compromise, file or prosecute any claims, suits or
litigation for or on behalf of Big Rivers.
8.5 Reporting Obligations. Station Two Subsidiary shall report to and
consult with Big Rivers about the operation of Station Two on a continuing
basis, as reasonably requested by Big Rivers, and shall provide Big Rivers with
a monthly written operating report which shall include but not be limited to the
following matters with respect to Station Two:
(a) net Power production;
(b) fuel consumption and costs;
(c) lime, limestone and scrubber reagent consumption and costs;
(d) summary of outages and costs;
(e) major maintenance activities, including costs;
(f) safety statistics;
(g) environmental compliance;
(h) ash and waste water disposal;
(i) solid waste and landfill (Pozotec) production, including costs;
(j) staffing levels; and
(k) heat rate and other operational efficiencies.
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8.6 Communication of Certain Events. Station Two Subsidiary shall
communicate to Big Rivers, both orally and in writing as soon as possible after
the event, regarding (i) all significant operating and management events
relating to or affecting Station Two or the other Station Two Assets, including,
but not limited to, all forced and scheduled outages, partial or full load
restrictions due to equipment unavailability, deaths or injuries, governmental
inquiries or investigations, claims under any insurance policies, Operating
Emergencies and any other events or causes which may, in Station Two
Subsidiary's reasonable judgment, jeopardize personnel or property or result in
the unavailability of major equipment used in the operation of Station Two, and
(ii) all events and circumstances which are required to be reported to the KPSC
or any other governmental or regulatory authority or any insurance carrier, in
each case regarding the Station Two Assets or the operation thereof.
8.7 Maintenance of Books and Records. Station Two Subsidiary hereby
covenants to Big Rivers that it shall keep, or cause to be kept, up-to-date
books and records of financial transactions and other arrangements that carry
out the terms of this Agreement, which books and records shall be sufficiently
detailed to allow Big Rivers to fulfill its obligations under the Station Two
Contracts to Henderson or as it may otherwise be obligated under applicable Law.
Station Two Subsidiary hereby covenants to Big Rivers that it shall retain, or
cause to be retained, those books and records during the Phase I Subcontract
Term (unless the destruction or disposal thereof is otherwise approved by Big
Rivers or the Operating Committee, or Station Two Subsidiary delivers the books
and records it desires to destroy or dispose of to Big Rivers) and, upon prior
written request from Big Rivers to Station Two Subsidiary and at Big Rivers'
cost and expense, shall make those books and records available during normal
business hours for inspection and audit by Big Rivers. Big Rivers shall have no
duty to the LG&E Companies to make any such inspection or inquiry and shall not
waive any rights hereunder or incur any liability or obligation by reason of not
making such inspection or inquiry. All accounts maintained by Station Two
Subsidiary pursuant to this Section 8.7 shall be kept consistent with the
Accounting Practices and, where a different standard is required by the Station
Two Contracts, also in accordance with the Station Two Contracts.
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8.8 Statements and Reports. Station Two Subsidiary hereby covenants to Big
Rivers that it shall prepare and file, on Big Rivers' behalf, all required
reports, notices or filings with respect to the operation of the Station Two
Assets with governmental or other regulatory authorities (other than the RUS) to
the extent Station Two Subsidiary possesses the information to be included in
such reports, notices or filings. Big Rivers agrees to provide Station Two
Subsidiary, upon its request, with any and all information to be included in
such reports, notices or filings which Big Rivers possesses and which is not
otherwise available to Station Two Subsidiary, and agrees to reasonably
cooperate with Station Two Subsidiary in its preparation and filing of such
reports, notices and filings, including, without limitation, providing Station
Two Subsidiary with reasonable advance notice of deadlines for the filing of any
reports, notices and filings which are required by reason of Big Rivers' status
as a rural electric cooperative, and the authorities with which such reports,
notices and filings must be filed. Station Two Subsidiary shall furnish to Big
Rivers monthly statements of the costs incurred and expenditures made with
respect to Station Two pursuant to the Annual Budget approved and adopted for
Station Two. Station Two Subsidiary also covenants to Big Rivers that it shall
furnish to Big Rivers copies of all material reports, notices or filings made by
Station Two Subsidiary to any governmental or other regulatory authority with
respect to Station Two. Station Two Subsidiary shall also furnish to Big Rivers
such other reports in connection with the operation of the Station Two Assets as
may from time to time be reasonably requested by Big Rivers (but exclusive of
any information relating to the sale by LEM or any of its Affiliates of Station
Two Surplus Capacity to Persons other than Big Rivers); provided, that Big
Rivers shall bear one-half (1/2) of all costs and expenses incurred by Station
Two Subsidiary and its Affiliates in generating any such requested reports which
are not otherwise prepared and maintained by Station Two Subsidiary to comply
with this Section 8 or in the ordinary course of its business.
8.9 Confidentiality of Books and Records. The LG&E Companies and Big
Rivers shall each treat as confidential all books, records and other information
developed or acquired by that Party in connection with the Station Two Contracts
or the Station Two Assets and no such Party shall reveal or otherwise disclose
such confidential information to third parties (other
-34-
than Henderson as required by the Station Two Contracts or under this Agreement)
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld, conditioned or delayed. These restrictions shall not
apply to the disclosure of confidential information: (a) to any Affiliate of the
disclosing Party; (b) to each Party and its employees, attorneys, agents and
auditors; (c) to any public or private financing agency or institution which has
either lent money or committed to lend money to any Party hereto or is
considering such action; (d) to any third party to which a Party contemplates a
permitted transfer or assignment pursuant to Section 15.1 of this Agreement
(provided, however, that in any such case only such confidential information as
such third party shall have a legitimate business need to know shall be
disclosed); provided, in the case of any disclosure pursuant to (a), (b), (c) or
(d), that the Person receiving the disclosure first agrees to keep the
information confidential; (e) that otherwise comes into the public domain unless
as a result of a breach by such Party of its obligations under this Section 8.9;
or (f) that is required by applicable Laws, in the opinion of either Party's
legal counsel, to be disclosed to the RUS, KPSC or any other federal, state or
local government or appropriate regulatory agencies and departments of such
agencies, or that is required by applicable Laws, in the opinion of either
Party's legal counsel, to be publicly announced. Big Rivers and the LG&E
Companies each shall be responsible to the other Party(s) for any disclosures of
confidential information by its employees, attorneys, agents and auditors in
violation of this Section 8.9, which shall themselves constitute a breach hereof
by the responsible Party.
8.10 Fees and Expenses; Assignment of Rights. Big Rivers shall, during the
Phase I Subcontract Term, make the following payments to Station Two Subsidiary
(or an Affiliate designated by it), and assign the following rights and
interests to Station Two Subsidiary (or an Affiliate designated by it), which,
together with Big Rivers' other covenants to Station Two Subsidiary and its
Affiliates set forth in this Agreement, shall be the exclusive compensation for
the services provided by, and the exclusive reimbursement for the expenses
incurred by, Station Two Subsidiary during the Phase I Subcontract Term, except
as otherwise expressly provided elsewhere in this Agreement. Station Two
Subsidiary shall provide Big Rivers invoices hereunder in accordance with
Section 8.11(a) of this Agreement.
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(a) Notwithstanding Station Two Subsidiary's covenant to pay certain
costs of operation and maintenance allocated to the Reid Station under Sections
13.8(a) and 13.8(b) of the Station Two Operating Agreement (including costs for
operating and maintaining the Joint Use Facilities allocated in accordance with
such sections to the Reid Station, but specifically excluding any such costs
which, as between Big Rivers and the LG&E Companies or WKEC, are Incremental
Environmental O&M subject to the terms of Article 5 of the Cost Sharing
Agreement or are expenditures for a Capital Asset subject to the terms of
Article 7 of the Cost Sharing Agreement and, in each such case, subject to the
payment and reimbursement obligations set forth in the Cost Sharing Agreement),
and notwithstanding Station Two Subsidiary's covenant, as Big Rivers' agent, to
procure and pay for all of Big Rivers' fuel and reagents relating to Station Two
under Section 8.14(c) of this Agreement (collectively, the "Fuel and Reid
Station Operating Expenses"), Big Rivers shall pay or reimburse Station Two
Subsidiary for all of the Fuel and Reid Station Operating Expenses incurred by
Station Two Subsidiary in the performance of its obligations hereunder in
accordance with the terms of Section 8.11 of this Agreement, but only to the
extent not otherwise paid by Big Rivers to WKEC under the Facilities Operating
Agreement or the Cost Sharing Agreement. The LG&E Companies hereby acknowledge
that the Fuel and Reid Station Operating Expenses shall constitute "Operating
Pass Through Costs" payable by LEM to Big Rivers during the Phase I Subcontract
Term pursuant to Section 3.3(b) of the Power Purchase Agreement and, as such,
the payment thereof shall be made consistent with the provisions of Section 6.5
of the Power Purchase Agreement.
(b) During the Phase I Subcontract Term, Big Rivers hereby assigns,
grants and conveys to Station Two Subsidiary all of Big Rivers' rights to
receive payments due it from Henderson pursuant to (1) Section 13.6 of the
Station Two Operating Agreement, including, without limitation, all payments
attributable to general and administrative expenses of the Parties incurred in
connection with Station Two, and any late payment interest and sums due Big
Rivers pursuant to the annual reconciliation provided for in Section 16.6 of the
Station Two Operating Agreement, and (2) Section 3.3 of the Joint Facilities
Agreement.
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Notwithstanding anything in this Section 8.10(b) to the contrary, Station Two
Subsidiary shall promptly pay to Big Rivers a portion of any amounts that
Station Two Subsidiary receives from Henderson pursuant to this Section 8.10(b)
that corresponds to the portion of Henderson's obligation under Section 13.6 of
the Station Two Operating Agreement to pay to Big Rivers the additional 14
1/2(cent) per month, per kilowatt of total Capacity of Station Two (the "14 1/2
Cent Payments") (which obligation the Parties acknowledge will expire no later
than October 31, 2003). The portion of the 14 1/2 Cent Payments owing to Big
Rivers (the "Additional Payment") shall equal the percentage by which
Henderson's reserved Capacity from Station Two as of the relevant payment date
bears to the total rated Capacity of Station Two as of that date. Big Rivers
acknowledges and agrees that such Additional Payment shall at all times be
subject to Henderson's right of off-set set forth in Section 16.4 of the Station
Two Operating Agreement and its right of off-set set forth in Section 8.13 of
this Agreement.
(c) (1) Big Rivers hereby agrees that Station Two Subsidiary (or its
designated Affiliate) shall be entitled to the full use, enjoyment and benefit,
free of additional charge, of Big Rivers' rights in all SO2 allowances allocated
to Station Two (the "Station Two Allowances"), except as provided in subsection
(2) of this Section 8.10(c), and except (i) those allowances used by Station Two
to comply with emission standards applicable for the period beginning on January
1 immediately preceding the Effective Date and ending on the Effective Date,
(ii) Big Rivers' rights in the 154,384 Station Two Allowances previously
transferred by Big Rivers and Henderson in accordance with the Station Two
Contracts, (iii) Big Rivers' rights in any additional Station Two Allowances
that may be sold prior to the Effective Date with the LG&E Companies' prior
written consent, and (iv) Big Rivers' rights in any Station Two Allowances
having a vintage year prior to January 1 of the calendar year in which the
Effective Date occurs (which rights of Big Rivers in the Station Two Allowances
referred to in this Subclause (iv) represent part of the Inventory to be sold by
Big Rivers to WKEC on the Effective Date). The LG&E Companies and Big Rivers
further agree that, for purposes of the above described covenants of Big Rivers,
Station Two Allowances which Station Two Subsidiary (or its designated
Affiliate) shall be
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entitled to use shall also include Big Rivers' rights in (x) all bonuses,
extensions or transfer allowances allocated by the Environmental Protection
Agency to Station Two for a particular calendar year (or portion thereof) during
the Phase I Subcontract Term or the Phase II Assignment Term, and (y) all
bonuses, extensions or transfer allowances allocated by the Environmental
Protection Agency to Station Two, but not so allocated for a particular calendar
year (or portion thereof) during the Phase I Subcontract Term or the Phase II
Assignment Term, which shall be deemed to be allocated ratably to the period
commencing on the Effective Date and ending December 31, 1999, subject, however,
to Henderson's rights (if any) in and to such additional allowances and the
agreed upon allocation of any such additional allowances (or the proceeds
therefrom) set forth in the Station Two Contracts. Subject to subsection (2) of
this Section 8.10(c), upon the date of expiration or termination of this
Agreement, and provided Big Rivers has rights in those Station Two Allowances
which must be returned to it on such date of expiration or termination, Station
Two Subsidiary hereby acknowledges and agrees that it shall immediately return
to Big Rivers (free of all Liens), Station Two Subsidiary's (and its
Affiliate's, as applicable) rights in all of the Station Two Allowances
allocated by the Environmental Protection Agency for all years beginning on or
after such date of expiration or termination and Station Two Subsidiary's rights
in a pro rata portion of the Station Two Allowances allocated by the
Environmental Protection Agency for the remainder of the year in which such date
of expiration or termination occurs. Station Two Subsidiary further acknowledges
and agrees that, to the extent Station Two Subsidiary (or its Affiliate, as
applicable), together with Henderson, previously disposed of any Station Two
Allowances, and provided Big Rivers has rights in those Station Two Allowances
which must be returned to it on such date of expiration or termination, Station
Two Subsidiary shall have the obligation on such date of expiration or
termination to replace, at its sole expense, Station Two Allowances which are
equivalent to Big Rivers' rights in those Station Two Allowances so disposed of
by it (or its Affiliate, as applicable), together with Henderson, and to
transfer such replacement Station Two Allowances to Big Rivers (free of all
Liens). Notwithstanding anything in this Agreement to the contrary, the LG&E
Companies agree with Henderson that the LG&E Companies shall not be entitled to
use,
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nor shall the LG&E Companies have any right, title or interest in, any Station
Two Allowances which have been allocated to Henderson's share of Station Two
Capacity. As of the Effective Date, Big Rivers shall assign, grant and convey to
Station Two Subsidiary (or its designated Affiliate) all rights and interests of
Big Rivers under the Station Two Contracts (a) to utilize the Station Two
Allowances during the Phase I Subcontract Term and (b) to receive proceeds from
the sale of the Station Two Allowances, from whatever source.
(2) If the date of expiration or termination of this Agreement
occurs prior to the December 31st that is closest to the
twenty-fifth anniversary of the Effective Date, this Section
8.10(c)(2) shall apply and the year of termination shall be called
the "Final Year of Agreement;" provided that Big Rivers has rights
in those Station Two Allowances which must be returned to it on such
date of expiration or termination. In the event SO2 emissions from
Station Two during the portion of the Final Year of Agreement prior
to the date of such expiration or termination exceed the pro rata
amount of the Station Two Allowances allocated by the Environmental
Protection Agency to Station Two for the entire Final Year of
Agreement, Station Two Subsidiary shall transfer to Big Rivers SO2
allowances equal to the amount by which SO2 emissions from Station
Two exceed the pro rata amount of the SO2 Allowances for the Final
Year of Agreement allocable to Station Two, multiplied by the then
current percentage that reflects the proportion of the rights in
such Station Two Allowances allocable to Henderson and Big Rivers
and/or Station Two Subsidiary under Section 4.7 of the Station Two
Operating Agreement. In the event SO2 emissions from Station Two
during the portion of the Final Year of Agreement prior to the date
of termination are less than the pro rata amount of the Station Two
Allowances allocated by the Environmental Protection Agency for the
entire Final Year of Agreement, Big Rivers shall transfer to Station
Two Subsidiary (or its designated Affiliate) SO2 Allowances equal to
the amount by which SO2 emissions from Station Two are less than the
pro rata amount of the SO2 Allowances for the Final Year of
Agreement allocable to Station Two, multiplied by the then current
percentage that reflects the proportion of such
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Station Two Allowances allocable to Henderson and Big Rivers and/or
Station Two Subsidiary under Section 4.7 of the Station Two
Operating Agreement.
(d) Henderson hereby recognizes the assignments in Sections 8.10(b)
and 8.10(c) of this Agreement and agrees to make all such payments and to remit
all such amounts contemplated therein, in accordance with Sections 4.7, 13.6 and
16 of the Station Two Operating Agreement, directly to Station Two Subsidiary
during the Phase I Subcontract Term. All such payments and remissions, when made
by Henderson to Station Two Subsidiary in accordance with the terms hereof,
shall be deemed to discharge Henderson's obligations to Big Rivers for such
amounts.
8.11 Invoicing Procedure; Reid Station Operating Account(s).
(a) Big Rivers shall pay or reimburse Station Two Subsidiary or its
designated Affiliate (in lieu of paying WKEC for such expenses as required by
Section 9.2 of the Facilities Operating Agreement) for all Fuel and Reid Station
Operating Expenses on the Monthly Payment Date immediately following receipt of
an invoice from Station Two Subsidiary. The invoicing of Fuel and Reid Station
Operating Expenses shall be done by Station Two Subsidiary (or by WKEC or any
other designated Affiliate of Station Two Subsidiary, on its behalf) in the same
manner and in accordance with the time schedule set forth in Section 9.2 of the
Facilities Operating Agreement.
(b) Station Two Subsidiary (or WKEC or any other designated
Affiliate of Station Two Subsidiary, on its behalf) shall have the authority to
establish on behalf of Big Rivers one or more operating bank accounts, with a
mutually acceptable financial institution (the "Fuel and Reid Station Operating
Account(s)"). Station Two Subsidiary (or WKEC or any other designated Affiliate
of Station Two Subsidiary, on its behalf) will be given signatory authority to
make disbursements for all Fuel and Reid Station Operating Expenses by drawing
checks against these accounts in accordance with the terms of this Section 8.
Payment of Fuel and Reid Station Operating Expenses encompassing wages and
salaries of operating and
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maintenance personnel may be made from the Fuel and Reid Station Operating
Account(s), from any of them, or from any other Operating Account(s) established
under the Facilities Operating Agreement, as Station Two Subsidiary or its
designated Affiliate deems appropriate, as and to the extent required by Station
Two Subsidiary (or WKEC or any other designated Affiliate of Station Two
Subsidiary). On each Monthly Payment Date, Big Rivers shall make provisions for
adequate funds to be deposited into the Fuel and Reid Station Operating
Account(s) to fund disbursements required to be made by Station Two Subsidiary
(or WKEC or any other designated Affiliate of Station Two Subsidiary, on its
behalf), including the payment of all Fuel and Reid Station Operating Expenses.
8.12 Station Two Surplus Capacity. Big Rivers and the LG&E Companies
hereby affirm and agree that, during the Phase I Subcontract Term, Station Two
Surplus Capacity shall be purchased and sold in accordance with the terms of the
Power Purchase Agreement and any additional or different terms as may be set
forth below:
(a) All Station Two Surplus Capacity allocated to Big Rivers under
the Station Two Power Sales Agreement shall be purchased by Big Rivers in
accordance with the Station Two Power Sales Agreement, including, without
limitation, in accordance with the requirement therein that Big Rivers pay to
Henderson or the Trustee all Capacity charges for the Station Two Surplus
Capacity under Section 6.1 of the Station Two Power Sales Agreement. In
addition, Big Rivers shall purchase from Henderson (1) solely at the request of
LEM, all surplus Capacity resulting from good faith over-estimates of the needs
of the City and its inhabitants at such times as such surplus Capacity is
offered to Big Rivers, pursuant to Section 3.4 of the Station Two Power Sales
Agreement, (2) solely at the request of LEM, all or designated portions of any
Excess Henderson Energy (as defined in Section 11.5 of this Agreement) that may
then be available, and (3) all Energy associated with Excess Henderson Capacity
(as defined in Section 11.5 of this Agreement) that may be available, which
purchases by Big Rivers described in (2) and (3), above, shall be made pursuant
to Section 11.5 of this Agreement.
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(b) Big Rivers and the LG&E Companies hereby acknowledge that all
Station Two Surplus Capacity allocated to Big Rivers, any Excess Henderson
Energy and/or Energy associated with Excess Henderson Capacity purchased by Big
Rivers as contemplated in (a), above, and all surplus Capacity and associated
Energy acquired by Big Rivers pursuant to Section 3.4 of the Station Two Power
Sales Agreement as contemplated in (a), above, shall constitute Unit Output from
Station Two and shall be sold by Big Rivers to LEM pursuant to Section 3.2 of
the Power Purchase Agreement (regardless of whether the Participation Agreement
Phase I or Participation Agreement Phase II shall then be in effect). As
consideration for such Unit Output from Station Two ("Station Two Unit Output")
purchased from Big Rivers pursuant to the Power Purchase Agreement as
contemplated herein, LEM shall pay for such Unit Output pursuant to Section 3.3
of the Power Purchase Agreement. For purposes of Section 3.3(b) of the Power
Purchase Agreement, Operating Pass-Through Costs (as defined in Exhibit X to the
Participation Agreement) payable for Station Two Unit Output shall be deemed to
include only the sum of (i) the Capacity charges (excluding, however, from such
Capacity charges specified in this item (i) any expenditures or costs that
constitute a payment for a Station Two Improvement that are subject to the
payment provisions set forth in Sections 8.17 and 10.3(e) of this Agreement)
allocated to and paid by Big Rivers under Sections 6.1 and 6.2 of the Station
Two Power Sales Agreement solely as they relate to Sections 6.3(b), 6.3(c)(i)
(relating solely to payments into the Station Two O&M Account), 6.3(e) (but
subject to the provisions of the agreement described in Section 10.29 of this
Agreement), 6.3(f) and 6.3(g) of the Station Two Power Sales Agreement
(collectively, the "LEM Capacity Charge Share"), plus (ii) any taxes lawfully
imposed upon Henderson and paid by Big Rivers in the prior month pursuant to
Section 6.5 of the Station Two Power Sales Agreement, plus (iii) any amounts
paid by Big Rivers to Henderson in the prior month pursuant to Section 6.6 of
the Station Two Power Sales Agreement, plus (iv) any amounts paid by Big Rivers
to Henderson pursuant to Section 11.2 of this Agreement during the current month
for Excess Henderson Energy or Energy associated with Excess Henderson Capacity
purchased by Big Rivers and resold as Station Two Unit Power to LEM during the
prior month. The amount payable by LEM under Section 3.3 of the Power Purchase
Agreement,
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and determined by reference to this Section 8.12(b), shall be paid monthly no
later than the Monthly Payment Date (as established by Big Rivers and LEM under
the Power Purchase Agreement) and, with respect to the Capacity charges
described above, shall be based upon the sum due for the current monthly billing
period under the Annual Budget established for Station Two. Payments to Big
Rivers under this Section 8.12 (other than those to be made directly to
Henderson or the trustee as contemplated in (d) below) shall be made to the bank
and for the credit of the account that is designated by Big Rivers under Section
6.5 of the Power Purchase Agreement. In the event that the annual reconciliation
of Capacity charges under Section 9.4 of the Station Two Power Sales Agreement
determines that the actual Capacity charges with respect to the Station Two
Surplus Capacity under Sections 6.3(b), 6.3(c)(i) (relating solely to payments
into the Station Two O&M Account), 6.3(e) (but subject to the provisions of the
agreement described in Section 10.29 of this Agreement), 6.3(f) and 6.3(g) of
the Station Two Power Sales Agreement are less than the LEM Capacity Charge
Share, such excess shall be credited against and shall reduce LEM's next monthly
payment(s) due Big Rivers hereunder or if no such monthly payments are
thereafter due to Big Rivers from LEM, shall be paid by Big Rivers to LEM within
15 days after the date of the reconciliation. In the event that such annual
reconciliation determines that the actual Capacity charges with respect to
Station Two Surplus Capacity under Sections 6.3(b), 6.3(c)(i) (relating solely
to payments into the Station Two O&M Account), 6.3(e) (but subject to the
provisions of the agreement described in Section 10.29 of this Agreement),
6.3(f) and 6.3(g) of the Station Two Power Sales Agreement are greater than the
LEM Capacity Charge Share, LEM shall pay to Big Rivers the additional amount
which Big Rivers is due for such Capacity charges on the next Monthly Payment
Date or, if no further payments are due to Big Rivers, within 15 days after the
date of the reconciliation.
(c) If the Power Purchase Agreement (or Section 3 thereof) shall at
any time expire or be terminated, or otherwise be rendered of no further force
or effect, for any reason prior to the expiration or termination of the Phase I
Subcontract Term, then Big Rivers agrees to sell and deliver all Station Two
Unit Output to LEM throughout the remainder of the Phase I Subcontract Term
pursuant to this Section 8.12 and otherwise upon the same terms and
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conditions as were set forth in Sections 3.2 and 3.3 of the Power Purchase
Agreement (and such other provisions of the Power Purchase Agreement as shall be
reasonably necessary to give effect and meaning to Sections 3.2 and 3.3), which
terms and conditions shall then and thereafter be deemed to be incorporated by
reference in this Section 8.12 to the extent such provisions relate to Station
Two for all purposes; provided, that LEM shall not thereafter be required to pay
for that Station Two Unit Output any Initial Fixed Payment or Annual Fixed
Payments that are contemplated in Section 3.3(a) of the Power Purchase Agreement
(other than as expressly contemplated in Section 10.7(d) of this Agreement), it
being expressly understood that the consideration to Big Rivers contemplated in
Section 3.3(b) of the Power Purchase Agreement (modified as contemplated in (b),
above) shall alone be payable by LEM for such Station Two Unit Output.
(d) Big Rivers hereby assigns, grants and conveys to Henderson all
of Big Rivers' rights under Section 8.12(b) of this Agreement to receive from
LEM that portion of such Operating Pass-Through Costs which represents (1) the
portion of the Capacity charges relating to operating and maintenance expenses
of Station Two under Section 6.3(b) of the Station Two Power Sales Agreement and
(2) any Excess Henderson Energy and Capacity Charges payable by Big Rivers to
Henderson. LEM hereby recognizes such assignment and agrees, during the Phase I
Subcontract Term, to make all such payments (less any applicable off-sets under
Section 8.13 of this Agreement) directly to the Trustee until the Station Two
Bonds are canceled, retired or expire and thereafter to Henderson. The Parties
acknowledge and agree that the payment obligations of LEM assigned hereunder to
the Trustee (on behalf of Henderson) or Henderson, as the case may be, may be
off-set by Henderson pursuant to Section 8.13 of this Agreement against the
amount of operating and maintenance expenses for Station Two due from Henderson
to Big Rivers and assigned to Station Two Subsidiary under Section 8.10(b) of
this Agreement, which off-set shall be deemed to discharge Henderson's
obligations to Big Rivers and Station Two Subsidiary under such Section and
Section 13.6 of the Station Two Operating Agreement, and Big Rivers' and Station
Two Subsidiary's payment obligations contemplated in this Section 8.12, in each
case to the extent of the amounts so off-set. In addition, the Parties
acknowledge and agree that the payment obligations of LEM
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assigned hereunder to the Trustee (on behalf of Henderson) or Henderson, as the
case may be, to the extent paid by LEM to the Trustee or Henderson or otherwise
off-set by Henderson against Henderson's obligation to pay to Station Two
Subsidiary (as assigned to Station Two Subsidiary under Section 8.10(b) of this
Agreement) operating and maintenance expenses for Station Two, shall be deemed
for purposes of Section 6.1 of the Station Two Power Sales Agreement and Section
8.12(b) of this Agreement to be a payment by Big Rivers in discharge of its
obligations thereunder.
(e) In lieu of any rights that Big Rivers may have pursuant to
Section 6.4(b) of the Power Purchase Agreement or elsewhere to pay amounts to
LEM in lieu of actually purchasing Power under such agreement, during such
period of time as the Letter Ruling of the IRS dated January 26, 1971 (the
"Letter Ruling") shall remain in effect and continue to limit the distribution
of Energy from Station Two to customers within Henderson and Daviess Counties,
Kentucky, Big Rivers hereby covenants to the LG&E Companies and Henderson that
Big Rivers shall actually repurchase and accept delivery from LEM, and LEM
hereby covenants to Henderson and Big Rivers that it shall deliver to Big
Rivers, all Station Two Unit Output, less such amounts (if any) of Station Two
Power (x) as LEM sells to Henderson or otherwise delivers to Big Rivers pursuant
to or in connection with one or more Pre-Closing Development Agreements or
Economic Development Agreements as contemplated in Sections 11.1 and 11.2 of
this Agreement, or (y) as LEM sells to Henderson Union Electric Cooperative
Corporation ("Henderson Union") for the benefit of Alcan pursuant to the
Agreement for Electric Service dated July 15, 1998, between Henderson Union and
LEM (the "LEM/Henderson Union Agreement"), at the price provided for in Section
8.12(h) of this Agreement. Big Rivers agrees to resell all such Station Two Unit
Output solely to all or any of Henderson Union, Green River Electric Corporation
("Green River") or Henderson, including, without limitation, pursuant to the
HMP&L Contract, for retail distribution solely within Henderson and Daviess
Counties, Kentucky. All such Power repurchased by Big Rivers (other than Power
resold by Big Rivers pursuant to the HMP&L Contract or Power purchased from LEM
in connection with a Pre-Closing Development Agreement or an Economic
Development Agreement) shall be credited toward any minimum obligation of Big
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Rivers to purchase Power, and any maximum obligation of LEM to sell Power, under
Section 4.1 of the Power Purchase Agreement. Big Rivers agrees that, until the
Station Two Bonds have been fully retired, its sales of Power to Henderson
Union, Green River and Henderson (including, without limitation Big Rivers'
sales pursuant to the HMP&L Contract) shall be fulfilled by Big Rivers under its
wholesale Power agreements with Henderson Union, Green River or Henderson (or
any additional or successor agreements) by first using Station Two Unit Output
that is purchased from LEM. For purposes of determining whether Big Rivers has
fulfilled its obligation under this Section 8.12(e), the amount of Station Two
Unit Output which Big Rivers is obligated to use in accordance with the prior
sentence shall be equal to the hourly output of Station Two allocated to Big
Rivers under Sections 3.3 and 4.1 of the Station Two Power Sales Agreement, less
the hourly sales (if any) of Station Two Unit Output by LEM to Henderson under
the terms of one or more Pre-Closing Development Agreements as contemplated in
Sections 11.1 and 11.2 of this Agreement and the hourly sales (if any) of
Station Two Unit Output by LEM to Henderson Union under the LEM/Henderson Union
Agreement. Henderson shall have the right to enforce the provisions of this
Section 8.12(e) against LEM, Station Two Subsidiary and Big Rivers. In the event
the Power Purchase Agreement (or the portions thereof requiring Big Rivers to
purchase Power from LEM thereunder) shall at any time expire or be terminated,
or otherwise be rendered of no further force or effect, for any reason prior to
the expiration or termination of this Agreement and LEM continues to have the
right or obligation to receive Station Two Unit Output, then Big Rivers agrees
to actually purchase and accept delivery from LEM of, and LEM agrees to deliver
to Big Rivers, all Station Two Unit Output (other than Unit Output sold by LEM
(x) to Henderson or otherwise delivered to Big Rivers pursuant to or in
connection with one or more Pre-Closing Development Agreements or Economic
Development Agreements or (y) to Henderson Union under the LEM/Henderson Union
Agreement) throughout the period commencing on that expiration or termination
date and expiring upon the redemption or retirement of the Station Two Bonds,
pursuant to this Section 8.12(e) and otherwise upon the same terms and
conditions as were set forth in the Power Purchase Agreement, which terms shall
then be deemed to be incorporated by reference in this Section 8.12 to the
extent they relate to Station Two Unit Output for all purposes.
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(f) Notwithstanding any provision of this Agreement or any other
Operative Document to the contrary, including, without limitation, the
immediately preceding Section 8.12(e) of this Agreement, Big Rivers shall not at
any time during the Phase I Subcontract Term be obligated to actually repurchase
and accept from LEM (in lieu of making the payments contemplated in Section
6.4(b) of the Power Purchase Agreement) any Station Two Unit Output to the
extent (but only to the extent) that Big Rivers does not then have the right to
resell that Power to Henderson (whether pursuant to the HMP&L Contract, one or
more Pre-Closing Development Agreements or Economic Development Agreements, or
otherwise), Henderson Union and Green River (or any of them) to meet the needs
of their respective customers located in Henderson County or Daviess County in
Kentucky, or there is no demand for such Unit Output from the respective
customers of Henderson, Henderson Union and Green River located in Henderson or
Daviess County, Kentucky, unless in either such situation the reason that Big
Rivers can not resell such Unit Output to Henderson, Henderson Union and/or
Green River for distribution in those Counties is due to (1) a breach or default
by Big Rivers of its wholesale Power agreements with Henderson, Henderson Union
or Green River (that was not itself the direct result of a breach or default by
any LG&E Company or Affiliate of an LG&E Company under any of the Operative
Documents or the negligence or willful misconduct of any LG&E Company or
Affiliate of an LG&E Company), whether or not such agreements are terminated by
Henderson or those Members as a result thereof, or (2) any other actions or
omissions on the part of Big Rivers or its employees, agents or representatives
that constitutes a breach or default by Big Rivers under any other agreement to
which it is a party (including, without limitation, any Operative Document),
that violates applicable Laws, or that constitutes negligence or willful
misconduct by Big Rivers or its employees, agents or representatives. Big Rivers
shall not, by reason of the foregoing provisions, be released from its
obligations under Section 6.4(b) of the Power Purchase Agreement to pay LEM
amounts in lieu of purchasing and accepting delivery of Station Two Unit Output
as contemplated above, if such provisions of the Power Purchase Agreement are
applicable. Notwithstanding the foregoing, and regardless of whether Big Rivers
shall have an
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obligation to also pay amounts to LEM pursuant to Section 6.4(b) of the Power
Purchase Agreement (and not in lieu of those payment obligations), in the event
Big Rivers shall not be released from its obligation to actually purchase and
accept delivery of Station Two Unit Output by reason of the circumstances (or
any of them) described in subclauses (1) and (2), above, Big Rivers shall be
entitled, in its discretion, and in lieu of actually purchasing, accepting
delivery of and paying the entire price for such Unit Output, to pay to LEM an
amount for each megawatt-hour of Energy that it was obligated to accept from LEM
equal to (A) 16% multiplied by (B) the applicable rate per megawatt-hour of Base
Power under Section 6.3 of the Power Purchase Agreement; provided, that the
foregoing right of Big Rivers to make payments in lieu of accepting delivery of
Station Two Unit Output shall apply only when there is insufficient customer
load in the two counties as described above, and then only to the extent that
Station Two Subsidiary shall have been given reasonable advance notice from Big
Rivers of the impending load constraints in Henderson and/or Daviess Counties so
that Station Two Subsidiary shall have had a reasonable opportunity to reduce
the output of Station Two accordingly. Big Rivers shall in no event be released
from any breach or default by Big Rivers under this Agreement arising by reason
of the actions, events or circumstances described in Subclauses (1) or (2),
above. The rights and obligations of LEM and Big Rivers, respectively, set forth
in this Section 8.12(f), including, without limitation, Big Rivers' release from
its obligation to repurchase and accept from LEM any Station Two Unit Output
pursuant to Section 8.12(e) of this Agreement, shall be subject to Section 10.5
of this Agreement and such Party's fulfillment of its obligations (provided such
obligations shall then be effective under such section) under Section 10.6 of
this Agreement to cooperate in the refinancing of the Station Two Bonds and to
pay its respective percentage of the costs associated with such refinancing.
(g) Nothing contained in this Agreement or in the Power Purchase
Agreement shall be deemed to prevent LEM from selling to any Person any Energy
associated with the Station Two Unit Output without also selling to that Person
the associated Capacity, subject, however, to the provisions of Sections 8.12(e)
and 10.5 of this Agreement.
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(h) Consistent with Section 8.12(e) of this Agreement, all Station
Two Unit Output sold to Big Rivers by LEM as contemplated in Section 8.12(e) of
this Agreement shall be sold either (i) at the Base Power Price established
pursuant to Section 6.4 of the Power Purchase Agreement; or (ii) to the extent
such Unit Output is resold to Henderson pursuant to the HMP&L Contract, at the
price provided for in Section 6.2(c) of the Power Purchase Agreement.
8.13 Phase I Off-Sets.
(a) The Parties hereby agree that LEM shall have the right to
off-set the amounts payable by Henderson to Station Two Subsidiary (as assignee
of Big Rivers pursuant to Section 8.10(b) of this Agreement) pursuant to Section
13.6 of the Station Two Operating Agreement, against the payments LEM owes
Henderson (payable to the Trustee during the term of the Station Two Bonds), as
the assignee of Big Rivers under Section 8.12(d) of this Agreement, and that
Henderson (and the Trustee) shall have the right to off-set the amounts payable
by LEM to Henderson pursuant to Section 8.12(d) of this Agreement against the
payments Henderson owes Station Two Subsidiary (as the assignee of Big Rivers)
pursuant to Section 13.6 of the Station Two Operating Agreement. Any such
off-set shall be deemed to discharge the relevant obligation against which the
off-set is made, to the extent of the amounts so off-set. Notwithstanding
anything set forth in Section 13.5(h) of this Agreement or elsewhere in this
Agreement to the contrary, during the Phase I Subcontract Term, Big Rivers shall
not, pursuant to Section 9.3 of the Station Two Power Sales Agreement or
pursuant to any other provision of any Station Two Contract or this Agreement,
off-set any amounts payable by Big Rivers to Henderson or to an LG&E Company,
against accounts receivable or other sums due from Henderson or any LG&E Company
to Big Rivers under the terms of the Station Two Power Sales Agreement, the
Station Two Contracts or this Agreement, or otherwise, the effect of which would
impair any payment due by Big Rivers or by Henderson to Station Two Subsidiary
or any other LG&E Company pursuant to Section 8.10(a) or 8.10(b) of this
Agreement, or any provisions of the Station Two Contracts.
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(b) Should Henderson at any time off-set any accounts payable or
other sums due from Henderson to any LG&E Company against any accounts
receivable or other sums due from Big Rivers to Henderson, the effect of which
is that the right of any LG&E Company to receive payment from Henderson is
impaired thereby, including, without limitation, an impairment of the right of
Station Two Subsidiary (as assigned by Big Rivers to Station Two Subsidiary
pursuant to Section 8.10(b) of this Agreement) to receive the payment due it
from Henderson under Section 13.6 of the Station Two Operating Agreement, such
off-set by Henderson shall automatically create a payment obligation by Big
Rivers to the relevant LG&E Company for the amount so off-set by Henderson,
which obligation by Big Rivers must be discharged within five (5) Business Days
after written notice of the off-set by Henderson is delivered by that LG&E
Company to Big Rivers. Failure by Big Rivers to timely pay such amount shall
constitute a payment default by Big Rivers to that LG&E Company which, if not
cured by Big Rivers as set forth in Section 13.5 of this Agreement, may (in
addition to all other remedies provided in this Agreement or at law or in
equity) be off-set by that or any other LG&E Company, or by WKEC, against any
sums then or thereafter due and owing Big Rivers under this Agreement
(including, without limitation, the Capacity charges due Big Rivers and assigned
to Henderson (or the Trustee) pursuant to Section 8.12(d) of this Agreement) or
under any of the other Operative Documents. Notwithstanding the foregoing, no
payment default by Big Rivers of the type described in this Subsection (b) shall
give rise to a right of any LG&E Company to terminate this Agreement in the
event (i) there remain sums then or thereafter due and owing to Big Rivers by
any LG&E Company which are sufficient to cover such Henderson off-set and
against which that LG&E Company shall be entitled to exercise an off-set right,
or (ii) Big Rivers notifies that LG&E Company that it is disputing its
obligation to pay to Henderson the account(s) receivable or other sum(s) which
were the basis for Henderson's off-set, until (with respect to (ii) above) such
time thereafter as it is determined in a final, non-appealable decision of a
court, arbitration panel or other tribunal having jurisdiction thereof, that Big
Rivers did, in fact, owe such sums to Henderson, in which event that LG&E
Company shall be entitled to so terminate this Agreement at any time following
the fifth Business Day after that determination (unless Big Rivers shall pay to
that LG&E Company all amounts so off-set by Henderson that have not been
previously recovered
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by that LG&E Company through off-sets against amounts due and owing to Big
Rivers as contemplated above). In the event it shall be finally determined that
Big Rivers did not owe such amounts to Henderson, that LG&E Company agrees to
promptly pay to Big Rivers all amounts previously off-set against payments
otherwise owing by that LG&E Company to Big Rivers; provided, that such LG&E
Company may pursue whatever rights and remedies that it may have against
Henderson for its initial off-set.
8.14 Additional Covenants of Big Rivers. During the Phase I Subcontract
Term Big Rivers hereby covenants to the LG&E Companies as follows:
(a) Big Rivers shall not do or permit anything within its reasonable
control to be done which would constitute a material default by Big Rivers under
any of the Station Two Contracts or omit to perform any of its material
obligations under the terms of any of the Station Two Contracts.
(b) Big Rivers shall not amend, modify or waive any provision of any
of the Station Two Contracts, or exercise any right that it may have to
terminate any of those contracts, without the prior written consent of Station
Two Subsidiary (which consent shall not be unreasonably withheld).
(c) Big Rivers shall continue to have the primary obligation to
Henderson to purchase all fuel and reagents as required by the terms of the
Station Two Contracts, including, without limitation, replacement of fuel
reserves as required of Big Rivers under Section 7.2 of the Station Two
Operating Agreement and full replacement, at its own cost, of all fuels consumed
from the Station Two fuel reserves for the production of Energy acquired by Big
Rivers during each month as required by Section 6.7 of the Station Two Power
Sales Agreement. Station Two Subsidiary shall have the exclusive right to
administer, as agent for Big Rivers, and shall administer, or cause to be
administered, all of Big Rivers' fuel and reagent supply agreements (including
those supply agreements existing at the Effective Date and all supply agreements
executed thereafter), and shall procure, or cause to be procured, and initially
pay for all fuel
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and reagents (which fuel and reagents are to be procured pursuant to such fuel
and reagents supply agreements), in accordance with Big Rivers' obligations
under the Station Two Contracts. The costs of such fuel and reagents shall
constitute Fuel and Reid Station Operating Expenses which are reimbursable or
payable by Big Rivers as contemplated in Section 8.10(a) of this Agreement, and
are covered by the Operating Pass - Through Costs payable by LEM.
8.15 Budget Process; Operating Committee. The Parties acknowledge that
Station Two Subsidiary will perform for Big Rivers its obligations under Section
14 of the Station Two Operating Agreement (preparation of the Operating Budget)
as an independent sub-contractor of Big Rivers, as follows:
(a) Station Two Subsidiary shall prepare the Operating Budget for
the Contract Year as contemplated in the first sentence of Section 14.1 of the
Station Two Operating Agreement. Station Two Subsidiary will separately identify
therein each item that represents anticipated expenditures associated with (1) a
Station Two Improvement (as defined in Section 8.17(a) of this Agreement),
including specification therein whether expenses related to that Station Two
Improvement are Henderson Incremental Capital Costs or Henderson Non-Incremental
Capital Costs, and (2) a Henderson Incremental Environmental O&M cost. As
between Big Rivers and Station Two Subsidiary, special arrangements described in
Sections 8.16 and 8.17 of this Agreement shall apply to all Henderson
Incremental Environmental O&M and Station Two Improvements, respectively. Those
distinctions among items in the Operating Budget shall have no meaning, however,
as between (x) Henderson and (y) Big Rivers and Station Two Subsidiary.
(b) Prior to submittal to Henderson of the Operating Budget for
Station Two as contemplated in the last sentence of Section 14.1 of the Station
Two Operating Agreement, and in any event on or before November 1 of each Year
subsequent to the Effective Date, Station Two Subsidiary shall submit in writing
to each member of the Operating Committee (which Committee is described in
Section 8.15(c) of this Agreement) a proposed Operating Budget for
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Station Two for the next Year. Within 30 days after receipt of Station Two
Subsidiary's proposed Operating Budget for Station Two, Big Rivers may propose
modifications to the proposed Operating Budget. The Operating Committee shall
meet in December and January of each year to review and discuss the Operating
Budget proposed by Station Two Subsidiary and to review and approve any
modifications thereof proposed by Station Two Subsidiary or Big Rivers. The
Operating Committee, by agreement of its members representing Big Rivers and
Station Two Subsidiary, may determine to adopt an amendment to the proposed
budget, in which case the proposed budget will thereafter be as so amended.
Absent agreement of the members of both Parties to modify the budget, the
Operating Committee must approve the Operating Budget as proposed by Station Two
Subsidiary if such budget is consistent with Prudent Utility Practice; provided,
that the responsibility of Big Rivers and the LG&E Companies with respect to the
costs incurred for items identified in the Operating Budget shall be determined
as provided elsewhere in this Agreement. In the event of a dispute between Big
Rivers and Station Two Subsidiary as to whether such budget (including those
amendments adopted by agreement) is consistent with Prudent Utility Practice,
those Parties will submit the dispute to arbitration consistent with Section 15
of the Participation Agreement; provided, however, if the expenditure disputed
by Station Two Subsidiary and Big Rivers is ultimately determined to be a
required expenditure under the Station Two Operating Agreement, Big Rivers and
Station Two Subsidiary shall not have the right to further arbitrate such
expenditure and the expenditure shall be included in the Operating Budget for
Station Two and paid or shared by Big Rivers and the LG&E Companies in
accordance with the terms and provisions set forth in Section 8 of this
Agreement, entitled "Phase I Subcontract." The Operating Budget, as approved in
accordance with this Section 8.15(b), shall be the only budget submitted by
either the LG&E Companies or Big Rivers to Henderson for its review as required
by Section 14 of the Station Two Operating Agreement; provided, however, that
Station Two Subsidiary (on behalf of Big Rivers) shall be entitled to submit to
Henderson an Operating Budget that may be the subject of a dispute between Big
Rivers and Station Two Subsidiary to the extent required for compliance with the
Station Two Operating Agreement, it being understood by Big Rivers and Station
Two Subsidiary that their respective obligations under this Agreement for items
set forth in that Operating Budget shall thereafter be
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determined through the dispute resolution procedures described above or as
otherwise agreed to by Big Rivers and Station Two Subsidiary. Henderson shall
have the final authority to modify and approve the budget or approve it without
modifications, subject however to whatever approval rights are available to Big
Rivers under the Station Two Operating Agreement.
(c) Each of Station Two Subsidiary and Big Rivers hereby establishes
an Operating Committee consisting of not more than two representatives appointed
by each such Party. Each such Party shall promptly designate its representatives
on the Operating Committee by notice given to the other such Party. Each such
Party may appoint one or more alternates to act in the absence of a regular
member or members, and may replace its representatives and alternates at any
time, in its sole discretion, by notice to the other Party. The chair of the
Operating Committee shall be a representative of Station Two Subsidiary. The
chair shall be responsible for calling meetings and establishing agendas in
consultation with the other committee members.
(d) The Operating Committee shall meet at least twice annually
including in December and January (for review and approval of the Operating
Budget) or more often by mutual agreement of Big Rivers and Station Two
Subsidiary. Meetings shall be held at Henderson, Kentucky or any other mutually
agreed place. Big Rivers and Station Two Subsidiary agree to cooperate and to
provide the Operating Committee with such information as is reasonably necessary
for the Operating Committee to perform its responsibilities. The Operating
Committee shall continue to be constituted, shall continue to act, and shall
continue to be governed by Sections 8.15(c) through 8.15(g), inclusive, of this
Agreement throughout any Phase II Assignment Term pursuant to Section 9 of this
Agreement, entitled "Phase II Assignments."
(e) Station Two Subsidiary shall give not less than ten (10) days'
notice to Big Rivers of regular Operating Committee meetings. Each meeting
notice shall include an agenda prepared by Station Two Subsidiary. Notice may be
waived by written consent of both Big
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Rivers and Station Two Subsidiary. A quorum for any meeting shall exist if each
of Big Rivers and Station Two Subsidiary is represented by at least one of its
two members. Station Two Subsidiary shall maintain minutes of Operating
Committee meetings and telephone conference calls. One of Station Two
Subsidiary's representatives shall prepare and distribute the minutes to Big
Rivers' representatives within 45 days after each meeting or telephone
conference call of the Operating Committee. The minutes, when signed by the
respective representatives of Big Rivers and Station Two Subsidiary, shall be
the official record of the decisions made by the Operating Committee and shall
bind Station Two Subsidiary and Big Rivers. Each of Station Two Subsidiary and
Big Rivers shall bear for its own account all expenses incurred by such Party's
representatives on the Operating Committee in connection with their duties on
the Operating Committee. Where such approval authority exists, the Operating
Committee may condition its approval of any Operating Budget hereunder (or
modification thereof) upon receipt of such studies and other information as they
may reasonably deem appropriate.
(f) In lieu of meetings, the Operating Committee may hold telephone
conference calls with Station Two Subsidiary and Big Rivers simultaneously and
in which each such Party shall be represented by at least one of its two
representatives on the Operating Committee. The Operating Committee, in lieu of
deciding any matter at a meeting or by telephone conference, may act by
instrument in writing signed by each such Party's representatives on the
Operating Committee.
(g) The Operating Committee may not modify any of the terms,
covenants or conditions of this Agreement or any Station Two Contract.
8.16 Adjustment for Henderson Incremental Environmental O&M. . If any of
the Capacity charges payable by Big Rivers under Section 6.3 of the Station Two
Power Sales Agreement represent payments attributable to Henderson Incremental
Environmental O&M incurred following the Closing, such Capacity charge costs
shall thereafter be shared by LEM and Big Rivers in accordance with this Section
8.16. If any of the operating and maintenance
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expenses allocated to the Reid Station under Section 13.8 of the Station Two
Operating Agreement constitute Incremental Environmental O&M, such costs shall
be allocated between and paid by Big Rivers and WKEC in accordance with the
payment and reimbursement procedures set forth in Article 5 of the Cost Sharing
Agreement.
(a) Notwithstanding the payments and reimbursements for Henderson
Incremental Environmental O&M made between Big Rivers, Station Two Subsidiary,
LEM and Henderson as contemplated in the Station Two Contracts or elsewhere in
this Agreement, Big Rivers shall pay a share of all Henderson Incremental
Environmental O&M incurred by Station Two Subsidiary each year during the Phase
I Subcontract Term, as and when incurred by LEM, Station Two Subsidiary or any
of their Affiliates, as follows (in each case "Big Rivers' Henderson Incremental
Environmental O&M Share"): (i) Big Rivers' share of Henderson Incremental
Environmental O&M incurred during the period from the Effective Date until
December 31, 2010, inclusive, is 20%; (ii) Big Rivers' share of Henderson
Incremental Environmental O&M incurred during the period from January 1, 2011 to
December 31, 2011, inclusive, is 40.26%; and (iii) Big Rivers' share of
Henderson Incremental Environmental O&M incurred during the period from January
1, 2012 until the Termination Date, inclusive, is 33.9%. Big Rivers' payment
shall be made by reducing each monthly payment required to be made by LEM for
the Station Two Unit Output pursuant to Section 3.3(a)(ii) of the Power Purchase
Agreement (which monthly payment is further contemplated in Section 8.12(b) of
this Agreement) by an amount equal to Big Rivers' Henderson Incremental
Environmental O&M Share based on the Henderson Incremental Environmental O&M
estimated by Station Two Subsidiary to be incurred in such month by Station Two
Subsidiary consistent with the Operating Budget. LEM shall pay the remaining
share of the Henderson Incremental Environmental O&M monthly through its
Operating Pass-Through Cost payments to Big Rivers as contemplated in Section
8.12(b) of this Agreement.
(b) Within 120 days after the end of each Year, LEM shall compute
the actual Henderson Incremental Environmental O&M for the Year ("Actual
Henderson Environmental O&M"). LEM shall compare the Actual Henderson
Environmental O&M with the aggregate
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payments made by Big Rivers (through reductions in the monthly payment due
pursuant to Section 3.3 of the Power Purchase Agreement) pursuant to this
Section 8.16 during such Year. If Big Rivers' Henderson Incremental
Environmental O&M Share of the Actual Henderson Environmental O&M is more than
the sum of such payments made by Big Rivers during the year, Big Rivers shall
promptly pay such difference to LEM. If Big Rivers' Henderson Incremental
Environmental O&M Share of the Actual Henderson Environmental O&M is less than
such payments made by Big Rivers, LEM shall promptly pay such difference to Big
Rivers.
(c) Except as expressly provided in this Section 8.16 or Section
9.9, elsewhere in this Agreement or in any other Operative Document to the
contrary, Big Rivers shall have no obligation or liability to Station Two
Subsidiary (or its Affiliates) for any operating or maintenance costs relating
to the Station Two Assets.
8.17 Station Two Improvements -- Forecasts, Budgeting and Payments.
(a) For purposes of this Agreement (including without limitation,
Section 9 of this Agreement, entitled "Phase II Assignments") as between Big
Rivers and Station Two Subsidiary, "Station Two Improvements" shall mean any
betterments, renewals, replacements or additions to the Station Two Assets used
in the operation of Station Two and/or the Reid Station (but only if not
otherwise accounted for under the Cost Sharing Agreement or the Lease, as
applicable), (i) that are made pursuant to the Operating Budget, or an approved
modification thereof, or a deviation therefrom as permitted by Section 8.17(f)
or Section 9.10(d), as applicable, or that result from an Operating Emergency as
contemplated in those Sections, or that are required to be made under the
Station Two Contracts in the absence of an approved Operating Budget, and (ii)
that should ordinarily be capitalized in accordance with the RUS Uniform System
of Accounts Bulletin 1767 B, as such Bulletin may be amended, modified, or
replaced from time to time (but subject to the Capitalization Guidelines).
Notwithstanding anything contained in this Section 8.17 or any provision of the
Station Two Contracts that purports to obligate an LG&E Company for the payment
of costs and expenses relating to the Reid Station (including, without
limitation, any such costs or expenses that
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would otherwise be includable in the "Operating Pass-Through Costs" payable by
LEM to Big Rivers for Station Two Unit Output), the LG&E Companies and Big
Rivers hereby agree that any operating and maintenance expense allocated to the
Reid Station under Section 13.8 of the Station Two Operating Agreement, and
which otherwise constitutes an expense for a "Capital Asset" under the Cost
Sharing Agreement, shall be allocated between and paid by Big Rivers and WKEC in
accordance with the payment and reimbursement procedures set forth in Article 7
of the Cost Sharing Agreement.
(b) Station Two Improvements made during the Phase I Subcontract
Term, including, without limitation, Station Two Improvements funded by draws
against amounts deposited by Big Rivers or Station Two Subsidiary into the
Station Two R&R Account, shall be paid for or reimbursed in accordance with this
Section 8.17, to the extent such expense is not the responsibility of Henderson.
Notwithstanding anything to the contrary in this Agreement or in any other
Operative Document, Big Rivers shall have no obligation to (1) authorize the
acquisition or construction of or pay for any Station Two Improvements unless
such Station Two Improvements are necessary, consistent with Prudent Utility
Practice, to maintain the Capacity of Station Two that is physically available
and can be legally utilized at 312 net MW (the "Station Two Rated Capacity"), or
to comply with any requirement of applicable Laws or administrative or judicial
interpretation of an applicable Law (including, without limitation, to comply
with any requirement of Environmental Law or any regulatory authority
(including, without limitation, any change in position of the KNREPC regarding
compliance with applicable opacity limitations based upon concurrent measurement
of particulate matter emissions affecting the Green Facility and which also
affects a Joint Use Facility), and including for the avoidance of doubt, and
without regard for the actual time of enactment or implementation of the same,
without limitation, the Proposed SIP Call and any Laws that may be enacted or
implemented pursuant thereto or in connection therewith) in which case Big
Rivers shall be obligated to so authorize the acquisition or construction of and
pay for (based on the proportion of Capacity allocation then existing between
Big Rivers and Henderson and otherwise in accordance with this Section 8.17)
such Station Two Improvements, (2) make any
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expenditure for Station Two Improvements which would not be capitalized pursuant
to the Accounting Practices (as interpreted, modified or supplemented by the
Capitalization Guidelines), (3) make any expenditure in connection with any
personal property or other asset which does not constitute a Station Two
Improvement (other than such expenditures as may be required by Big Rivers as a
result of any breach or default by Big Rivers under this Agreement or any of the
other Operative Documents, or pursuant to any indemnification or hold harmless
covenant of Big Rivers under this Agreement or any other Operative Documents
(unless such expenditures for such personal property or other asset is part of
Henderson Incremental Environmental O&M, in which event the provision of Section
8.16 of this Agreement shall govern, or unless such an expenditure involves a
repurchase of the End of Term Personal Property (defined in Section 10.35) by
Big Rivers in accordance with Section 10.35 of this Agreement), or (4) make any
expenditure for a Station Two Improvement the principal purpose of which is to
increase the Capacity of Station Two above the Station Two Rated Capacity or to
improve the efficiency of Station Two. Notwithstanding the limitations set forth
in subclauses (1), (3) and (4) of the immediately preceding sentence, if
requested by Station Two Subsidiary, Big Rivers shall authorize and approve, and
shall pay for (based on the proportion of Capacity then allocated to Big Rivers
from Station Two) all renewals, replacements and additions pursuant to Section
13.8(a)(3) of the Station Two Operating Agreement, Sections 6.3(c)(ii) and
6.3(d) of the Station Two Power Sales Agreement and Section 6 of the Joint
Facilities Agreement, to the extent such renewals, replacements and additions
are Station Two Improvements that comply with Subclause (2) above and are
required to be made to Station Two to comply with Big River's obligations under
any Station Two Contracts or the Bond Ordinance; provided, however, should a
dispute exist between the LG&E Companies and Big Rivers with respect to whether
the Station Two Contracts or the Bond Ordinance required any such expenditure,
the dispute shall be resolved, as between the LG&E Companies and Big Rivers,
pursuant to the dispute resolution procedures set forth in Article 15 of the
Participation Agreement (as contemplated in Section 13.5(e) of this Agreement).
All Station Two Improvements and all other renewals, replacements and additions
contemplated by this Section 8.17(b) shall in all events be further subject to
the approval rights, if any, of Henderson under the Station Two Contracts.
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(c) At least ten (10) days before the commencement of each quarterly
period referenced below, Station Two Subsidiary shall submit to Big Rivers a
forecast of cash requirements for each Station Two Improvement set forth in the
Annual Budget or any modification of that budget approved by the Operating
Committee under Section 8.15(b) of this Agreement (including specification of
requirements for Henderson Incremental Capital Costs and Henderson
Non-Incremental Capital Costs), together with a summary of all amounts that have
been required under the terms of the Station Two Contracts and/or the Bond
Ordinance to be deposited by Station Two Subsidiary into the Station Two R&R
Account (to the extent such information has been made available at that time by
Henderson), and that have been drawn out of that account to fund any one or more
Station Two Improvements. This forecast shall set forth cash requirements with
respect to such Station Two Improvements (i) for each quarterly period
commencing on the first day of June, September, December and March in which
costs for such Station Two Improvements shall become due and (ii) for each month
of the first two quarterly periods immediately following the issuance of the
forecast. Station Two Subsidiary shall revise and furnish the forecast to Big
Rivers no less often than every three months thereafter until completion of the
Station Two Improvement. Notwithstanding anything contained in this Section
8.17(c), Article 5 of the Cost Sharing Agreement or Section 2.3 of the Lease, or
elsewhere in this Agreement or any other Operative Document to the contrary,
none of Station Two Subsidiary or WKEC (in the case of the Lease), or WKEC (in
the case of the Cost Sharing Agreement) or LEM shall be obligated to pay for
their proportionate share, if any, of the costs and expenses associated with any
Station Two Improvement to a Joint Use Facility or a Henderson Incremental
Environmental O&M required in order for the Green Facility to comply with
applicable opacity limitations imposed under Laws unless the provisions of
Section 7.1 of the Cost Sharing Agreement or Section 2.3 of the Lease shall
require Station Two Subsidiary or WKEC to share in such costs and expenses, and
then solely to the extent so required by such provisions. Big Rivers and the
LG&E Companies (for themselves and on behalf of WKEC) each hereby acknowledge
that those Parties intend to include the costs for Station Two Improvements to
the Joint Use Facilities and Henderson Incremental Environmental O&M costs, to
the extent required to
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bring the Green Facility into compliance with applicable opacity limitations,
within the agreed upon procedure for allocation and sharing of such costs and
expenses as set forth in Section 7.1 of the Cost Sharing Agreement and Section
8.1 of the Lease.
(d) Station Two Subsidiary shall maintain an interest-bearing
account (the "Station Two Improvements Account") into which Big Rivers and
Station Two Subsidiary shall pay amounts as provided in this Section 8.17 and
from which Station Two Subsidiary shall be permitted to withdraw funds to pay
for Station Two Improvements at such time when Big Rivers or Station Two
Subsidiary, as applicable, shall have an obligation to pay for the same under
the Station Two Operating Agreement. On the first day of each month during the
Phase I Subcontract Term Station Two Subsidiary and Big Rivers shall each
deposit sufficient funds into the Station Two Improvements Account based on
their respective Station Two Improvement Sharing Ratios (defined in Section
8.17(e) below) but limited in the case of Big Rivers to the remaining Big Rivers
Contribution (as defined in Section 20.6 of the Participation Agreement) for
that Year with respect to Henderson Non-Incremental Capital Costs that are not
for Henderson Major Capital Repairs (as defined in the Participation Agreement)
(i) to cover all cash requirements forecast under Section 8.17(c) for that month
for all Station Two Improvements (less any excess between funds deposited and
interest accrued thereon and funds actually required for all Station Two
Improvements during the previous month) and (ii) to cover any shortfall between
funds deposited and funds actually required for all Station Two Improvements
during the previous month. With respect to funds deposited in the prior month,
which are remaining in the present month, and shortfalls in funds deposited in
the prior month relative to expenses for that month, Big Rivers' and Station Two
Subsidiary's obligation in the present month shall be adjusted proportionately
based on that Party's deposit during the prior month and that Party's relative
share of responsibility in that prior month for the Station Two Improvement for
which funds were withdrawn or not used. An illustration of the operation of this
Section is set forth in Schedule 8.17(d). Upon the expiration or earlier
termination of this Agreement (other than a Phase II Termination), all funds
remaining in the Station Two Improvements Account shall be immediately
distributed to Station Two Subsidiary and Big Rivers in accordance with the same
methodology as used in the prior sentence.
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(e) Station Two Improvement Sharing Ratios. Subject to the
provisions of Section 8.17(b), Station Two Subsidiary and Big Rivers shall
directly contribute to the payment of each Station Two Improvement in accordance
with its respective "Station Two Improvement Sharing Ratio," which will be as
follows:
(1) Each capital expenditure made by Big Rivers and/or Station
Two Subsidiary for a Station Two Improvement in accordance with
Section 8.17(d) of this Agreement and to comply with a new Law or
any revision to an existing Law, including but not limited to a new
or revised Environmental Law (including for the avoidance of doubt,
and without regard for the actual time for the enactment or
implementation of the same, without limitation, the Proposed SIP
Call and any Laws that may be enacted or implemented pursuant
thereto or in connection therewith), or to comply with any change in
applicable judicial or administrative interpretation of a Law,
occurring after the Effective Date shall be deemed a "Henderson
Incremental Capital Cost." Big Rivers' share of each Henderson
Incremental Capital Cost determined as of the date payment for such
Station Two Improvement is required to be made to the Station Two
Improvements Account pursuant to the forecast prepared by Station
Two Subsidiary pursuant to Section 8.17(c), shall be as follows: (i)
from the Effective Date until December 30, 2010, inclusive, 20%;
(ii) from January 1, 2011 to December 31, 2011, inclusive, 40.26%;
(iii) from January 1, 2012 until the Termination Date, inclusive,
33.9%. Station Two Subsidiary's share of each Henderson Incremental
Capital Cost shall be as follows: (i) from the Effective Date until
December 31, 2010, inclusive, 80%; (ii) from January 1, 2011 to
December 31, 2011, inclusive, 59.74%; and (iii) from January 1, 2012
until the Termination Date, inclusive, 66.1%.
(2) Each capital expenditure made by Big Rivers and/or Station
Two Subsidiary for a Station Two Improvement in accordance with
Section 8.17(d) of this Agreement, but which does not constitute a
Henderson Incremental Capital Cost, shall be deemed a "Henderson
Non-Incremental Capital Cost." Big Rivers' share of each Henderson
Non-
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Incremental Capital Cost, determined as of the date payment for such
Station Two Improvement is required to be made to the Station Two
Improvements Account pursuant to the forecast prepared by Station
Two Subsidiary pursuant to Section 8.17(c), shall be as follows: (i)
from the Effective Date until December 31, 2010, inclusive, 49%;
(ii) from January 1, 2011 to December 31, 2011, inclusive, 40.26%;
and (iii) from January 1, 2012 until the Termination Date,
inclusive, 33.9%. Station Two Subsidiary's share of each Henderson
Non-Incremental Capital Cost shall be as follows: (i) from the
Effective Date until December 31, 2010, inclusive, 51%; (ii) from
January 1, 2011 to December 31, 2011, inclusive, 59.74%; and (iii)
from January 1, 2012 until the Termination Date, inclusive, 66.1%.
(f) Station Two Subsidiary and Big Rivers agree with each other as
follows: Station Two Subsidiary shall immediately notify the Operating Committee
of any anticipated departure of 10% or more from the budget for Station Two
Improvements or for operating and maintenance expenses included in any approved
Operating Budget. Station Two Subsidiary shall use reasonable efforts to (a)
operate within 90 percent to 110 percent of the total approved budget for
Station Two Improvements included in an Operating Budget, and (b) to spend at
least 90 percent of the total approved budget for operating and maintenance
expenses included in an Operating Budget (not including the fuel or reagent
budget). Subject to the provisions set forth below, any increase of 10 percent
or more proposed by Station Two Subsidiary to either the Station Two
Improvements budget or the operating and maintenance expense budget set forth in
an approved Operating Budget shall be subject to review and approval by the
Operating Committee; provided, that such review and approval shall not apply to
the operating and maintenance expense budgets that are included in an Operating
Budget that is a part of the Initial Period Budgets, it being understood that
increases of 10 percent or more proposed by Station Two Subsidiary to those
budgets shall be permissible without that review and approval if the relevant
expenditures are consistent with Prudent Utility Practice, in which case the
additional costs that are allocable to Big Rivers under the Station Two
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Contracts shall, as between Big Rivers and Station Two Subsidiary, be borne by
Station Two Subsidiary unless they constitute Henderson Incremental
Environmental O&M required to be borne by both Station Two Subsidiary and Big
Rivers in the manner provided for in Section 8.16. If Station Two Subsidiary
exceeds the total budget for Henderson Non-Incremental Capital Costs (exclusive
of such costs as are for Henderson Major Capital Repairs) that are included in
an approved budget for Station Two Improvements in an Operating Budget, the
additional cost of those Henderson Non-Incremental Capital Costs that are
allocable to Big Rivers under the Station Two Contracts shall, as between Big
Rivers and Station Two Subsidiary, be borne by Station Two Subsidiary unless the
parties agree otherwise, or unless remaining portions of the Big Rivers
Contribution for that Year that were not included in the approved Operating
Budget are available as contemplated in Section 20.6.2 of the Participation
Agreement (in which event such amounts will be applied as contemplated in that
Section). Subject to the next succeeding sentence, if Station Two Subsidiary
exceeds 110 percent of the total approved budget for Henderson Incremental
Capital Costs, or for Henderson Non-Incremental Capital Costs for Major Capital
Repairs, in either case that are included in an approved Operating Budget, the
additional costs of those Station Two Improvements that are allocable to Big
Rivers under the Station Two Contracts shall, as between Big Rivers and Station
Two Subsidiary, be borne by
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Station Two Subsidiary unless the Parties otherwise agree, or unless the dispute
resolution procedure under Article 15 of the Participation Agreement (and
contemplated in Section 13.5(e) of this Agreement) determines that at the time
Station Two Subsidiary proposed the applicable portions of the Operating Budget
(or modification thereof) relating to those expenditures Station Two Subsidiary
acted consistent with Prudent Utility Practice, in which case the additional
costs shall be borne by Station Two Subsidiary and Big Rivers in accordance with
Sections 8.17(d) and 8.17(e) of this Agreement. Notwithstanding the provisions
of the immediately preceding sentence, if Station Two Subsidiary exceeds 110
percent of the total of any approved budget for Henderson Incremental Capital
Costs, or for Henderson Non-Incremental Capital Costs for Major Capital Repairs,
that are included in an Operating Budget that is a part of the Initial Period
Budgets, the additional cost of those Station Two Improvements that are
allocable to Big Rivers under the Station Two Contracts shall, as between Big
Rivers and Station Two Subsidiary, be borne by Station Two Subsidiary unless the
Parties otherwise agree, the dispute resolution procedure set forth in Article
15 of the Participation Agreement determines that the purchase and installation
of those Station Two Improvements, and the costs thereof, are consistent with
Prudent Utility Practice, regardless of whether the relevant Initial Period
Budget, or Station Two Subsidiary's actions in connection with the same, were
consistent with Prudent Utility Practice at the time that the budget was
prepared, in which case the additional costs that are allocable to Big Rivers
under the Station Two Contracts shall, as between Big Rivers and Station Two
Subsidiary, be borne by Station Two Subsidiary and Big Rivers in accordance with
Sections 8.17(d) and 8.17(e) of this Agreement. If Station Two Subsidiary fails
or refuses to use reasonable efforts to spend at least 90 percent of the total
budget for Station Two Improvements or for operating and maintenance expenses
included in an approved Operating Budget (excluding that portion relating to
Henderson Incremental Environment O&M), and pursuant to the dispute resolution
procedure under Article 15 of the Participation Agreement it is determined that
such failure or refusal was inconsistent with Prudent Utility Practice, Station
Two Subsidiary shall make the omitted expenditures as required pursuant to the
applicable dispute resolution procedure. Notwithstanding anything contained in
this Section 8.17(f) to the contrary, Station Two Subsidiary shall in no event
be required to expend the monies included in an approved Operating Budget where
to do so would cause Station Two Subsidiary to be in breach or default under any
Station Two Contract. Additional capital expenditures incurred by Station Two
Subsidiary in response to an Operating Emergency (as defined in the
Participation Agreement) which are not already included in an approved Operating
Budget, and which are allocated to Big Rivers under the Station Two Contracts
shall, as between Big Rivers and Station Two Subsidiary, be paid for by Station
Two Subsidiary unless (a) the same represents a Henderson Incremental Capital
Cost or expenditures for a Henderson Major Capital Repair (as defined in the
Participation Agreement), in which case such expenditures shall be paid by
Station Two Subsidiary and Big Rivers in accordance with Sections 8.17(d) and
8.17(e), or (b) there are remaining amounts in the Big Rivers Contribution for
that Year that were not included in the budget for Henderson Non-Incremental
Capital Costs in the approved Operating Budget, as contemplated in Section
20.6.2 of the Participation Agreement, in which case that remaining amount will
be allocated to any Henderson Non-Incremental
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Capital Costs in that Year resulting from that Operating Emergency as
contemplated in Section 20.6.2.
8.18 Reimbursement for Debt Service. At the Closing of the Phase I
Subcontract and thereafter on the first day of each month during the Phase I
Subcontract Term, commencing with the first day of the month following the
Closing, Station Two Subsidiary or its designated Affiliate shall pay to Big
Rivers a monthly payment, determined as set forth below, for that portion of the
Debt Service (as defined in the Bond Ordinance) allocable to and payable by Big
Rivers pursuant to Section 6.3(a) of the Station Two Power Sales Agreement
during that current month; provided, that Station Two Subsidiary's payment
obligation with respect to any Debt Service paid or payable by Big Rivers during
the month in which the Closing occurs shall be proportionally reduced by a
fraction, the numerator of which is the total number of days in that month which
preceded the Closing and the denominator of which is the total number of days in
that month; and provided further, that Station Two Subsidiary shall have no
payment obligation to Big Rivers hereunder with respect to Debt Service paid by
Big Rivers during any month that precedes the month in which the Closing occurs.
The monthly payment by Station Two Subsidiary (or its designated Affiliate)
relative to each such Debt Service payment by Big Rivers shall be an amount
equal to one-half of the portion of the Debt Service allocable to and payable by
Big Rivers pursuant to Section 6.3(a) of the Station Two Power Sales Agreement
during that current month.
8.19 Big Rivers' Performance Responsibility. Notwithstanding anything in
Section 8 of this Agreement, entitled "Phase I Subcontract," to the contrary,
throughout the Phase I Subcontract Term, Big Rivers shall continue to be
primarily responsible to Henderson for the full performance of all obligations
and covenants made under the Station Two Contracts in accordance with the
respective terms thereof, and for any and all claims, liabilities, expenses,
actions, damages, losses or other sums that are claimed by or otherwise due to
Henderson arising out of or resulting from any breach or default by Big Rivers
in its performance of covenants and obligations under the Station Two Contracts.
The LG&E Companies, with respect to their respective performance obligations
under this Section 8, have agreed to
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indemnify and save harmless Big Rivers in the manner set forth in Section
10.15(a) of this Agreement.
9. PHASE II ASSIGNMENTS. During the Phase II Assignment Term (as defined in
Section 9.3), Big Rivers shall assign to Station Two Subsidiary certain of its
rights and responsibilities under the Station Two Contracts (the "Phase II
Assignment"), in lieu of the subcontracting arrangements described in Section 8
of this Agreement, entitled "Phase I Subcontract," upon and subject to the terms
and conditions of this Agreement (including this Section 9).
9.1 Assignment. Effective as of the Phase II Effective Date, and without
any additional consideration from Station Two Subsidiary or any of the other
LG&E Companies, Big Rivers hereby grants, sells, bargains, conveys, transfers
and assigns to Station Two Subsidiary, its successors and permitted assigns,
except as otherwise provided in this Section 9.1 and Sections 9.4 and 9.5 of
this Agreement, all of Big Rivers' rights, title and interests under, in and to
the following agreements and undertakings (or portions thereof), as those
agreements or undertakings have been amended through the date of this Agreement
or any amendments to those agreements or undertakings effected pursuant to this
Agreement, including, without limitation, the 1993 Amendments and the 1998
Amendments, which rights, title and interests shall remain with Station Two
Subsidiary, its successors and permitted assigns, throughout the Phase II
Assignment Term:
(a) the Station Two Power Sales Agreement;
(b) the Station Two Operating Agreement; and
(c) the Joint Facilities Agreement (the agreements or portions
thereof described in (a) through (c), above, but subject to any modifications of
portions of such agreements in this Section 9.1 or Sections 9.4 or 9.5, being
hereinafter collectively referred to as the "Assigned Station Two Contracts").
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The foregoing assignments by Big Rivers to Station Two Subsidiary shall be
irrevocable throughout the Phase II Assignment Term absent an earlier
termination of this Agreement in accordance with its terms. The Parties
acknowledge that Big Rivers shall retain substantial rights and obligations
under the "Terms of General Applicability" (defined in Section 9.5 of this
Agreement), and that such Terms of General Applicability will continue to inure
to the benefit of, and will continue to be binding upon and enforceable against,
Big Rivers as the context of such provisions shall require (or as further
described in Section 9.5 of this Agreement). The Terms of General Applicability
shall also inure to the benefit of, and shall be binding upon and be enforceable
against, Station Two Subsidiary as the context of such provisions shall require
(or as further described in Section 9.5 of this Agreement). Notwithstanding any
provision of Section 9 of this Agreement, entitled "Phase II Assignments," to
the contrary, the provisions of Section 11 of this Agreement, entitled
"Additional Agreements Respecting Station Two Power," shall govern the rights
and obligations of the Parties with respect to the matters provided for in
Section 28 of the Station Two Power Sales Agreement.
9.2 Assumption of Assumed Station Two Liabilities. Station Two Subsidiary
hereby agrees as of the Phase II Effective Date to accept the grant, sale,
bargain, conveyance, transfer and assignment by Big Rivers to Station Two
Subsidiary, its successors and permitted assigns, of Big Rivers' rights, title
and interests under, in and to the Assigned Station Two Contracts during the
Phase II Assignment Term, as contemplated in Section 9.1 of this Agreement, and
hereby agrees as of the Phase II Effective Date to assume, perform and
discharge, except as otherwise provided in Sections 9.4 and 9.5 of this
Agreement, such obligations of Big Rivers' under the Assigned Station Two
Contracts which arise or accrue on or after the Phase II Effective Date and
during the Phase II Assignment Term (the "Assumed Station Two Liabilities").
Notwithstanding anything contained in this Section 9, entitled "Phase II
Assignments," or any provision of the Station Two Contracts that purports to
obligate an LG&E Company for the payment of costs and expenses relating to the
Reid Station or any of the Joint Use Facilities that may be owned by Big Rivers,
the LG&E Companies and Big Rivers hereby agree that their respective rights and
obligations as to each other for such costs
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and expenses shall nonetheless be governed solely by the provisions of the Cost
Sharing Agreement, the Facilities Operating Agreement, the Power Purchase
Agreement, the Lease or the Participation Agreement, as applicable.
9.3 Term of Assignment. The term (the "Phase II Assignment Term") of the
assignment by Big Rivers to Station Two Subsidiary, its successors and permitted
assigns, of certain rights and obligations under the Assigned Station Two
Contracts, as contemplated in Section 9.1 of this Agreement, shall commence on
the Phase II Effective Date and shall end on the earlier of (a) December 31st
that is closest to the twenty-fifth anniversary of the Effective Date or (b) the
date of any termination of this Agreement pursuant to Section 13 of this
Agreement, entitled "Termination; Default; Remedies."
9.4 Excluded Station Two Contracts or Liabilities. Notwithstanding Section
9.2 of this Agreement, Station Two Subsidiary shall not as of the Phase II
Effective Date assume, and shall not in any manner become responsible or liable
for, and Big Rivers shall retain, pay and perform, any debts, obligations or
liabilities of Big Rivers, whether known or unknown, fixed, contingent or
otherwise arising under the following contracts or portions thereof:
(a) all Station Two Contracts (or portions thereof) except for the
Assigned Station Two Contracts, including, without limitation: the 1980 Funds
Agreement (as defined on Exhibit A attached hereto); the Agreement for
Transmission and Transformation Capacity dated April 11, 1975; the Switchyard
Agreement dated June 1, 1978; the Spare Transformer Agreement dated July 11,
1972 (subject, however, to those further rights granted by Big Rivers and
Henderson to Station Two Subsidiary and WKEC for Station Two Subsidiary's or
WKEC's use of the Spare Transformer set forth in Section 10.28 of this
Agreement); the letter agreement dated December 22, 1982; the letter from Big
Rivers to Henderson dated April 3, 1989; the letter agreement dated July 30,
1984 (regarding the Henderson - SEPA Contract); the Systems Reserves Agreement
dated January 1, 1974, (it being understood by the Parties that the rights and
responsibilities of the LG&E Companies with respect to operating reserves and
system reserves during the Term shall be set forth solely in the New Reserves
Agreement
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identified in Section 10.30 of this Agreement); the Amended Interconnection
Agreement dated October 13, 1981; the Agreement dated August 31, 1981; and the
First Amendment to Amended Interconnection Agreement dated January 10, 1989;
(b) the obligations and liabilities of Big Rivers set forth in or
arising under the specific provisions of the Assigned Station Two Contracts as
described below:
(1) The Station Two Power Sales Agreement - Section 10.3;
Section 15.2(4); Section 23.2; Section 25 (Assignment), it being
hereby agreed by Big Rivers and Henderson that Station Two
Subsidiary shall have the right to assign its rights and obligations
under the Station Two Power Sales Agreement pursuant to Section 15.1
of this Agreement; and Sections 3.8, 19.2 and 19.3, it being
understood by the Parties that the respective rights and obligations
of Henderson and Big Rivers under those Sections are being retained
by those Parties, but are being suspended, modified or supplemented
by the provisions of Sections 11.5, 10.3(g) and 10.3(f),
respectively, of this Agreement during the Phase I Subcontract Term
and the Phase II Assignment Term.
(2) The Station Two Operating Agreement - Sections 4.8, 4.9,
4.10 and 4.11 (relating to the installation costs of the Station Two
FGD System and the billing and payment procedures relating thereto),
the full costs of which shall remain with and will be paid and
discharged by Henderson and Big Rivers in accordance with the
provisions set forth in such sections; Section 5 (Transmission and
Transformation Facilities); Section 6 (Joint Use Facilities);
Section 7 (Fuel Supply), except that the provisions of Section 7.2
shall be assumed by Station Two Subsidiary; Section 11 (Construction
Assistance); Section 12 (Start-up Assistance); Section 13.8(d)
(relating to operation, maintenance and repair of transmission and
transformation facilities); Section 13.10, but solely to the extent
such provision contemplates access to transmission and
transformation facilities or other lands, properties and/or
facilities in which Station Two Subsidiary or any of its Affiliates
has no interest as an operator or lessee; Section 20.2, but solely
with respect to any responsibility or indemnity or hold harmless
obligation of Big Rivers arising under Section 20.2 to the
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extent (A) relating to events or circumstances occurring or existing
prior to the Effective Date, or (B) relating to liability or expense
resulting from or by reason of the negligence or willful misconduct
of Big Rivers or its authorized agents, employees or
representatives, or resulting from or by reason of Big Rivers breach
or default of this Agreement, any of the Station Two Contracts or
any of the Operative Documents, without regard for when such
liability or expense shall arise; Section 22.1, but solely with
respect to any indemnification and hold harmless obligations of Big
Rivers arising under Section 22.1 to the extent (A) relating to
events or circumstances occurring or existing prior to the Effective
Date, or (B) relating to liability or expense resulting from the
negligence or any malfeasance or nonfeasance of Big Rivers, its
agents, servants, employees and representatives, or from the breach
of this Agreement, any of the Station Two Contracts or any of the
other Operative Documents, without regard for when such liability or
expenses shall arise; Section 34 (Sale or Other Disposition of
Plant); and Section 37 (Assignment), it being agreed that Station
Two Subsidiary shall have the right to assign its rights and
obligations under the Station Two Operating Agreement pursuant to
Section 15.1 of this Agreement.
(3) The Joint Facilities Agreement - Section 3.1, to the
extent that such provision requires Big Rivers to allocate to the
continuing joint use of the Parties (which shall be inclusive of the
LG&E Companies and Henderson) in the operation of Station Two and
the Reid Station certain auxiliary facilities (including
modifications thereto), provided, that any auxiliary facilities in
which WKEC or any of its Affiliates holds a leasehold interest, and
only for so long as the term of such interest, shall continue to be
allocated for the joint use of the Parties and will continue to be
subject to the modifications contemplated by Section 3.1 of the
Joint Facilities Agreement; Section 3.3, to the extent such
provision requires Big Rivers to allocate the Green Station FGD
System Facilities (including modifications thereto) for the
continuing joint use of the Parties (which shall be inclusive of the
LG&E Companies and Henderson) in the operation of Station Two and
the Reid Station, provided, that (i) to the extent of WKEC's or any
of its Affiliate's leasehold interest in the Green Station FGD
System Facilities, and only for so long as the term of such
interest, WKEC or
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its Affiliate (as applicable) shall continue to allocate such
Facilities for the joint use of the Parties in their operation of
Station Two, the Reid Station and the Green Generating Facility, and
(ii) Station Two Subsidiary shall be entitled throughout the Phase
II Assignment Term to receive the payment from Henderson of the
carrying costs of the Green Station FGD System Facilities set forth
in Section 3.3 of the Joint Facilities Agreement (as such section
has been modified by Big Rivers and Henderson by the 1998
Amendments); Section 4 (Title To Joint Use Facilities), provided,
that Big Rivers and Henderson acknowledge that WKEC or its Affiliate
shall have a leasehold interest in Big Rivers' Joint Use Facilities
during the Phase II Assignment Term, and LEM commits that any Joint
Use Facilities in which any of its Affiliates holds a leasehold
interest, and only for so long as the term of such interest, shall
continue to be allocated for the joint use of Henderson and Station
Two Subsidiary; Section 15 (Assignment), it being hereby agreed by
Henderson and Big Rivers that Station Two Subsidiary shall have the
right to assign its rights and obligations under the Joint
Facilities Agreement pursuant to Section 15.1 of this Agreement; and
any other provisions in the Joint Facilities Agreement to the extent
the joint facilities covered thereby relate to transmission and
facilities related to transmission, but only with respect to such
transmission and related facilities, including, without limitation,
Big Rivers' continuing obligation to maintain and operate, at its
cost, any such transmission and related facilities in accordance
with the operating standards set forth in the Joint Facilities
Agreement.
(4) Section 8 of the 1993 Amendments relating to
decommissioning costs of Station Two to be borne by Big Rivers and
Henderson, with Big Rivers' obligation thereunder to remain
unchanged;
(c) All obligations and liabilities of Big Rivers under the Terms of
General Applicability, as further described in Sections 9.5 of this Agreement
(provided, the LG&E Companies acknowledge that they (or certain of them) have
undertaken obligations and liabilities to Henderson under the Terms of General
Applicability as described in Section 9.5 of this Agreement); and
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(d) Any debts, obligations or liabilities of Big Rivers to Henderson
(including any liability for reclamation or corrective actions) that now exist,
or may hereafter arise, for any Environmental Violations or Environmental
Conditions existing as of, or prior to, the Effective Date. Nothing in this
subsection (d) shall affect or limit the respective rights and obligations of
Big Rivers and the LG&E Companies under Section 10.15(j) of this Agreement.
9.5 Terms of General Applicability. The terms and provisions of the
Assigned Station Two Contracts set forth below (hereinafter, "Terms of General
Applicability") shall continue to create rights and obligations of Big Rivers,
enforceable against or for the benefit of Henderson, notwithstanding the
assignments of certain provisions of the Assigned Station Two Contracts effected
by this Agreement, and, by virtue of such assignments and the assumption of the
Assumed Station Two Liabilities, shall also create rights and obligations of
Station Two Subsidiary, its successors and permitted assigns, enforceable
against or for the benefit of Henderson. The Terms of General Applicability
shall inure to the benefit of all Parties and shall be binding upon and
enforceable against such Parties, as the context shall require. Notwithstanding
anything herein to the contrary, the Terms of General Applicability shall at all
times during the Phase II Assignment Term inure to the benefit of Henderson, and
shall be enforceable by Henderson against Big Rivers and Station Two Subsidiary,
respectively, as the context shall require. Big Rivers and Station Two
Subsidiary shall have no obligation or liability to the other Party for any
breach or default by it of the terms and provisions of any of the Terms of
General Applicability, except where the other Party exercises such other Party's
right in accordance with this Agreement to cure Big Rivers' or Station Two
Subsidiary's (as the case may be) breach or default thereof and for which said
other Party seeks indemnification, a right of contribution or other remedy to
which it is entitled as a consequence of the cure effected by such other Party,
it being understood by Big Rivers and Station Two Subsidiary that the covenants
in the Terms of General Applicability are made by each of them solely for
Henderson's benefit and not for the benefit of the other Party. In addition,
neither Big Rivers nor Station Two Subsidiary shall have any obligation or
liability to Henderson by reason of any breach or default by the other Party
under the Terms of General Applicability. Henderson further agrees that during
the Phase II Assignment Term it
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shall perform all obligations it is required to perform under the Terms of
General Applicability for the benefit of Big Rivers and Station Two Subsidiary.
(a) The following Sections of the Station Two Power Sales Agreement,
subject to the exceptions and modifications set forth below, shall constitute
Terms of General Applicability in the Station Two Power Sales Agreement Section
11 (Annual Audit); Section 13 (Uncontrollable Forces - Continuing Obligation for
Payments); Section 14 (Arbitration); Section 15 (Default), except that (i)
neither Big Rivers nor Station Two Subsidiary (nor any other LG&E Company), nor
their respective successors or permitted assigns, shall be responsible for the
default of the other Party in their performance of any one or more of the
provisions of the Station Two Power Sales Agreement, (ii) clause (b) of Section
15.2 of the Station Two Power Sales Agreement shall not apply during the Phase
II Assignment Term, and (iii) the default provisions of Section 15 of the
Station Two Power Sales Agreement shall be in addition to, and not in limitation
of, the provisions regarding default set forth in Section 13 of this Agreement;
Section 16 (Waiver); Section 17 (Notices), except that the Parties shall provide
all notices, consents, payments and other communications to Station Two
Subsidiary and the other LG&E Companies pursuant to Section 18.3 of this
Agreement; Section 21 (Henderson-Daviess and City Electric Systems), provided,
however, that each Party's obligations with respect to compliance with the
Ruling Request during the Phase II Assignment Term are as further described in
Sections 9.7, 10.2, 10.5, 10.6, and 10.18 of this Agreement; Section 22 (Term
and Termination); Section 23 (Amendments), provided, that in the event Station
Two Subsidiary desires to amend, modify or alter the Station Two Power Sales
Agreement (with the consent of Henderson), and has obtained the prior consent of
Big Rivers as contemplated elsewhere in this Agreement, then upon the request of
Station Two Subsidiary, Big Rivers shall promptly request the approval of such
amendment, modification or alteration from the Administrator of the RUS as
contemplated in Section 23.2 of the Station Two Power Sales Agreement (assuming
that approval shall still be required), and Big Rivers agrees to use its
reasonable best efforts (at the expense of Station Two Subsidiary) to obtain
that approval at the earliest practicable time; and Section 24 (Severability),
except that this
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provision shall not be enforced or interpreted by any Party in such a way as to
materially frustrate the essential objectives of any of the Parties as expressed
in this Agreement.
(b) The following Sections of the Station Two Operating Agreement,
subject to the exceptions and modifications set forth below, shall constitute
Terms of General Applicability in the Station Two Operating Agreement Section 20
(Inspections, Right of Access), except that each Party shall be responsible for
providing access to its premises for the purposes specified in Section 20.1, and
each Party shall be responsible under Section 20.2 for the safety of its own
employees and representatives while on another Party's premises and to indemnify
such other Party for loss or damage resulting from injuries to those
representatives or employees while on such other Party's premises, unless such
loss or damage is due to the negligence or willful misconduct of such other
Party; Section 21 (Relationship of the Parties); Section 23 (Uncontrollable
Forces); Section 24 (Arbitration), except that any arbitrable matter between Big
Rivers and any LG&E Company shall be arbitrated instead pursuant to the terms
set forth in the Participation Agreement; Section 25 (Default), except that
neither Big Rivers nor Station Two Subsidiary (nor any other LG&E Company), nor
their respective successors or permitted assigns, shall be responsible for the
default of the other Party in their performance of any one or more provisions of
the Station Two Operating Agreement, and the default provisions of Section 25
shall be in addition to and not in limitation of, the provisions regarding
default set forth in Section 13 of this Agreement, entitled "Termination;
Default; Remedies;" Section 26 (Waiver); Section 27 (Notices), except that the
Parties shall provide all notices, payments and other communications to Station
Two Subsidiary and the other LG&E Companies pursuant to Section 18.3 of this
Agreement; Section 30 (Compliance with Governmental Regulations), with each
Party to be solely responsible for its faithful observance and compliance with
such laws, rules and regulations; Section 33 (Term and Termination; Section 35
(Amendments), provided, that in the event Station Two Subsidiary desires to
amend, modify or alter the Station Two Operating Agreement (with the consent of
Henderson), and has obtained the prior consent of Big Rivers as contemplated
elsewhere in this Agreement, then upon the request of Station Two Subsidiary,
Big Rivers shall promptly request the approval of such amendment, modification
or alteration from the Administrator of
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the RUS as contemplated in Section 35.2 of the Station Two Operating Agreement
(assuming that approval shall still be required), and Big Rivers agrees to use
its reasonable best efforts (at the expense of Station Two Subsidiary) to obtain
that approval at the earliest practicable time; and Section 36 (Severability),
except that this provision shall not be enforced or interpreted by any Party in
such a way as to materially frustrate the essential objectives of the LG&E
Companies as expressed in this Agreement.
(c) The following Sections of the Joint Facilities Agreement,
subject to the exceptions and the modifications set forth below, shall
constitute Terms of General Applicability in the Joint Facilities Agreement -
Section 3.2, whereby Henderson allocates for the continuing joint use of the
Parties, and their respective successors and permitted assigns, in the operation
of Station Two and the Reid Station certain designated auxiliary facilities
(including, without limitation, those facilities identified on Exhibit 1, Pages
1 and 2, Part B to the 1993 Amendments and Exhibit 1, page 3, Parts A and B, to
the 1993 Amendments); Section 7 (Access); Section 8 (Term); Section 10
(Uncontrollable Forces); Section 13 (Amendments), provided, that in the event
Station Two Subsidiary desires to amend, modify or alter the Joint Facilities
Agreement (with the consent of Henderson), and has obtained the prior consent of
Big Rivers as contemplated elsewhere in this Agreement, then, upon the request
of Station Two Subsidiary, Big Rivers shall promptly request the approval of
such amendment, modification or alteration from the Administrator of the RUS as
contemplated in Section 13.2 of the Joint Facilities Agreement (assuming that
approval shall still be required), and Big Rivers agrees to use its reasonable
best efforts (at the expense of Station Two Subsidiary) to obtain that approval
at the earliest practicable time.
9.6 Consents to Assignment. Henderson hereby consents for all purposes to
the assignment by Big Rivers to Station Two Subsidiary of the Assigned Station
Two Contracts, and the assumption by Station Two Subsidiary of the Assumed
Station Two Liabilities thereunder, upon the terms and conditions of this
Agreement. Henderson hereby waives any right of first offer or first purchase
(the "Right of First Offer") that it may have under Section 34 of the Station
Two Operating Agreement or under any other provision of the Station Two
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Contracts, or otherwise, with respect to the Assets of Big Rivers or the Station
Two Assets by reason of such assignment and assumption.
9.7 Sale of Station Two Surplus Capacity. The Parties hereby affirm and
agree that, during the Phase II Assignment Term, Station Two Surplus Capacity
shall be purchased and sold in accordance with the terms of the Station Two
Power Sales Agreement and as otherwise provided in this Section 9.7:
(a) All Station Two Surplus Capacity allocated to Station Two
Subsidiary (as Big Rivers' assignee) under the Station Two Power Sales Agreement
shall be purchased by Station Two Subsidiary, or its successors or permitted
assigns, in accordance with that agreement, including, without limitation, in
accordance with the requirement therein that Station Two Subsidiary pay to
Henderson or the Trustee all Capacity charges for the Station Two Surplus
Capacity under Section 6.1 of the Station Two Power Sales Agreement. In
addition, Station Two Subsidiary (or its successors or permitted assigns) may,
but shall not be obligated to, purchase from Henderson (1) all surplus Capacity
resulting from good faith overestimates of the needs of the City and its
inhabitants at such times as such surplus Capacity is offered to Station Two
Subsidiary, pursuant to Section 3.4 of the Station Two Power Sales Agreement,
and (2) all or a designated portion of any Excess Henderson Energy, as
contemplated in Section 11.5 of this Agreement. However, Station Two Subsidiary
(or its successors or permitted assigns) shall be obligated to purchase from
Henderson all Energy associated with Excess Henderson Capacity in accordance
with Section 11.5 of this Agreement.
(b) Notwithstanding the obligation of Station Two Subsidiary to
Henderson to pay such Capacity charges under Section 9.7(a) of this Agreement,
Big Rivers shall promptly pay to Station Two Subsidiary (or its successors or
permitted assigns) on each Monthly Payment Date during the Phase II Assignment
Term an amount (the "Debt Service and R&R Capacity Payment") equal to the sum of
(i) one-half of the portion of Debt Service allocable to and payable by Station
Two Subsidiary (as the assignee of Big Rivers) pursuant to Section 6.3(a)
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of the Station Two Power Sales Agreement during such month plus (ii) the
Capacity charges that are due to Henderson or the Trustee during such month
under the Station Two Power Sales Agreement, and that are attributable to: (A)
required payments into the Station Two R&R Account pursuant to Section
6.3(c)(ii) of the Station Two Power Sales Agreement; and (B) required payments
for the costs for Station Two Improvements under Section 6.3(d) of the Station
Two Power Sales Agreement or that may otherwise be a required payment for a
Station Two Improvement under Section 6.1 of the Station Two Power Sales
Agreement (subject, however, to the payment obligations relating to Station Two
Improvements set forth in Section 9.10 of this Agreement) or under Section 9.10
of this Agreement. Station Two Subsidiary shall invoice Big Rivers prior to the
fifth day of each month for the Debt Service and R&R Capacity Payment (exclusive
of any payment under (iii) above relating to a Station Two Improvement, which
shall not be invoiced hereunder and shall be paid by Big Rivers in accordance
with the terms of Section 9.10(c) of this Agreement) due for such month. Big
Rivers' payment for these Debt Service R&R Capacity Payments shall be made to a
bank account designated from time to time by Station Two Subsidiary for receipt
of these Debt Service and R&R Capacity Payments and may be immediately drawn
from such account by Station Two Subsidiary for payment of such obligation or to
reimburse Station Two Subsidiary if it has already paid such obligation. Big
Rivers and Station Two Subsidiary agree to implement and employ an adjustment
procedure for the payments owing by Big Rivers to Station Two Subsidiary as
contemplated above (including for this specific purpose all of such Debt
Services and R&R Capacity Payments) comparable to that provided for in Section
8.12(b) of this Agreement, based upon the annual reconciliation of the Capacity
charges under Section 9.4 of the Station Two Power Sales Agreement, and
reconciliation payments (if any) by Big Rivers to Station Two Subsidiary, or by
Station Two Subsidiary to Big Rivers, shall be made within the time required by
Section 8.12(b) for reconciliation payments between Big Rivers and LEM.
Notwithstanding anything herein to the contrary, in the event that the Phase II
Effective Date shall occur prior to the Phase I Effective Date, the respective
obligations of Big Rivers and Station Two Subsidiary for the portion of the Debt
Service due under Section 6.3(a) of the Station Two Power Sales Agreement to
Henderson or the Trustee during the month in which the Closing occurs shall be
determined as follows: (x) if such Debt Service
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payment is paid by Big Rivers to Henderson or the Trustee prior to the Closing,
then Station Two Subsidiary shall pay to Big Rivers at Closing an amount equal
to the product of (1) one-half of such Debt Service payment multiplied by (2) a
fraction, the numerator of which is the number of days that Station Two
Subsidiary will operate Station Two in that month (inclusive of the Closing
Date) and the denominator of which is the total number of days in that month;
and (y) if such Debt Service payment is due to Henderson or the Trustee after
the Closing, then Big Rivers shall pay to Station Two Subsidiary (at the Closing
or on the Monthly Payment Date, whichever is later) an amount equal to the
difference between (1) the Debt Service payment due to Henderson or the Trustee
in such month and (2) the product determined by application of the formula set
forth above in (x) of this sentence. Station Two Subsidiary shall in no event
have a payment obligation to Henderson, the Trustee or Big Rivers hereunder with
respect to Debt Service paid by Big Rivers during any month that precedes the
month in which the Closing occurs.
(c) All Station Two Surplus Capacity allocated to Station Two
Subsidiary, all surplus Capacity resulting from good faith over-estimates of the
needs of the City and its inhabitants offered to and purchased by Station Two
Subsidiary pursuant to Section 3.4 of the Station Two Power Sales Agreement, and
all Excess Henderson Energy and/or any Energy associated with Excess Henderson
Capacity purchased by Station Two Subsidiary from Henderson may be sold by
Station Two Subsidiary to LEM, subject, however, to the obligation of LEM to
sell such Power to Big Rivers as provided below. Consistent with Section 8.12(b)
of this Agreement, all such Capacity and Energy shall constitute Station Two
Unit Output during the Phase II Assignment Term. In lieu of any rights that Big
Rivers may have pursuant to Section 6.4(b) of the Power Purchase Agreement or
elsewhere to pay amounts to LEM in lieu of actually purchasing and accepting
delivery of Power thereunder, during the period of time that the Letter Ruling
shall remain in effect and continue to limit the distribution of Energy from
Station Two to customers within Henderson and Daviess Counties, Kentucky, Big
Rivers hereby covenants with the LG&E Companies and Henderson that Big Rivers
shall actually purchase and accept delivery from Station Two Subsidiary and/or
LEM, and Station Two
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Subsidiary and/or LEM hereby covenants to Henderson and Big Rivers that it shall
sell and deliver to Big Rivers, all Station Two Unit Output, less such amounts
(if any) of Station Two Power (x) as LEM and/or Station Two Subsidiary sells to
Henderson or otherwise delivers to Big Rivers pursuant to or in connection with
one or more Pre-Closing Development Agreements or Economic Development
Agreements as contemplated in Sections 11.1 and 11.2 of this Agreement, or (y)
as LEM sells to Henderson Union under the LEM/Henderson Union Agreement, at the
price provided for in (d), below. Big Rivers agrees to resell all such Station
Two Unit Output purchased by Big Rivers solely to all or any of Henderson Union,
Green River or Henderson, including, without limitation, pursuant to the HMP&L
Contract, for retail distribution solely within Henderson and Daviess Counties,
Kentucky. All such Station Two Unit Output purchased by Big Rivers (other than
Power resold by Big Rivers to Henderson pursuant to the HMP&L Contract or Power
purchased from LEM in connection with a Pre-Closing Development Agreement or an
Economic Development Agreement) shall be credited toward any minimum obligation
of Big Rivers to purchase Power, and any maximum obligation of LEM to sell
Power, under Section 4.1 of the Power Purchase Agreement. Big Rivers agrees
that, until the Station Two Bonds have been fully retired, its sales of Power to
Henderson Union, Green River and Henderson (including, without limitation, Big
Rivers' sales pursuant to the HMP&L Contract) shall be fulfilled by Big Rivers
under its wholesale Power agreements with Henderson Union, Green River or
Henderson (or any successor agreements) by first using Station Two Unit Output
that is purchased from LEM and/or Station Two Subsidiary. For purposes of
determining whether Big Rivers has fulfilled its obligation under this Section
9.7(c), the amount of Station Two Unit Output which Big Rivers is obligated to
use in accordance with the prior sentence shall be equal to the hourly output of
Station Two allocated to Big Rivers or Station Two Subsidiary under Sections 3.3
and 4.1 of the Station Two Power Sales Agreement, less the hourly sales (if any)
of Station Two Unit Output by LEM to Henderson under the terms of one or more
Pre-Closing Development Agreements or Economic Development Agreements as
contemplated in Sections 11.1 and 11.2 of this Agreement and the hourly sales
(if any) of Station Two Unit Output by LEM to Henderson Union under the
LEM/Henderson Union Agreement. Henderson shall have the right to enforce the
provisions of this Section 9.7(c) against LEM, Station Two
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Subsidiary and Big Rivers. In the event the Power Purchase Agreement (or the
portions thereof requiring Big Rivers to purchase Power from LEM thereunder)
shall at any time expire or be terminated, or otherwise be rendered of no
further force or effect, for any reason prior to the expiration or termination
of this Agreement and LEM continues to have the right or obligation to receive
Station Two Unit Output, then Big Rivers agrees to actually purchase and accept
delivery from LEM and/or Station Two Subsidiary of, and LEM and/or Station Two
Subsidiary agrees to deliver to Big Rivers, all Station Two Unit Output (other
than Unit Output sold by LEM (x) to Henderson or otherwise delivered to Big
Rivers pursuant to or in connection with one or more Pre-Closing Development
Agreements or Economic Development Agreements or (y) to Henderson Union under
the LEM/Henderson Union Agreement) throughout the period commencing on that
expiration or termination date and expiring upon the redemption or retirement of
the Station Two Bonds, pursuant to this Section 9.7(c) and otherwise upon the
same terms and conditions as were set forth in the Power Purchase Agreement,
which Terms shall then be deemed to be incorporated by reference in this Section
9.7 to the extent they relate to Station Two Unit Output for all purposes.
(d) Consistent with Section 9.7(c) of this Agreement, all Station
Two Unit Output sold to Big Rivers by Station Two Subsidiary or LEM as
contemplated in Section 9.7(c) of this Agreement (other than Station Two Unit
Output sold in connection with one or more Pre-Closing Development Agreements or
Economic Development Agreements as contemplated in Sections 11.1 and 11.2 of
this Agreement) shall be sold either (1) at the Base Power Price established
pursuant to Section 6.4 of the Power Purchase Agreement, or, (2) in the case of
Station Two Surplus Capacity that is resold by Big Rivers to Henderson pursuant
to the HMP&L Contract, at the price provided for in Section 6.2(c) of the Power
Purchase Agreement.
(e) Notwithstanding any provision of this Agreement or any other
Operative Document to the contrary, including, without limitation, Section
9.7(c) of this Agreement, Big Rivers shall not at any time during the Phase II
Assignment Term be obligated to actually purchase
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and accept from LEM (in lieu of making the payments contemplated in Section
6.4(b) of the Power Purchase Agreement) any Station Two Unit Output to the
extent (but only to the extent) that Big Rivers does not then have the right to
resell that Power to Henderson (whether pursuant to the HMP&L Contract, one or
more Pre-Closing Development Agreements or Economic Development Agreements, or
otherwise), Henderson Union and Green River (or any of them) to meet the needs
of their respective customers located in Henderson County or Daviess County in
Kentucky, or there is no demand for such Station Two Unit Output from the
respective customers of Henderson, Henderson Union and Green River located in
Henderson or Daviess County, Kentucky, unless in any such situation the reason
that Big Rivers cannot resell such Station Two Unit Output to Henderson,
Henderson Union and/or Green River for distribution in those counties is due to
(1) a breach or default by Big Rivers of its wholesale Power agreement(s) with
Henderson, Henderson Union or Green River (that was not itself the direct result
of a breach or default by any LG&E Company or Affiliate of an LG&E Company under
any of the Operative Documents or the negligence or willful misconduct of any
LG&E Company or Affiliate of an LG&E Company), whether or not such agreements
are terminated by those Members as a result thereof, or (2) any other actions or
omissions on the part of Big Rivers or its employees, agents or representatives
that constitutes a breach or default by Big Rivers under any other agreement to
which it is a party (including without limitation, any Operative Document), that
violates applicable Laws, or that constitutes negligence or willful misconduct
by Big Rivers or its employees, agents or representatives. Big Rivers shall not,
by reason of the foregoing provisions, be released from its obligations under
Section 6.4(b) of the Power Purchase Agreement to pay LEM amounts in lieu of
purchasing and accepting delivery of the Station Two Unit Output as contemplated
above, if such provisions of the Power Purchase Agreement are applicable.
Notwithstanding the foregoing, and regardless of whether Big Rivers shall have
an obligation to also pay amounts to LEM pursuant to Section 6.4(b) of the Power
Purchase Agreement (and not in lieu of those payment obligations), in the event
Big Rivers shall not be released from its obligation to actually purchase and
accept delivery of Station Two Unit Output by reason of the circumstances (or
any of them) described in Subclauses (1) and (2), above, Big Rivers shall be
entitled, in its discretion, and in lieu of actually purchasing, accepting
delivery of and paying
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the entire price for that Unit Output (for which there is no demand for the
reasons described in Subclauses (1) and (2), above), to pay to LEM or Station
Two Subsidiary an amount for each megawatt-hour of Energy that it was obligated
to accept from LEM equal to (A) 16% multiplied by (B) the applicable Base Power
rate per megawatt-hour under Section 6.3 of the Power Purchase Agreement;
provided, that the foregoing right of Big Rivers to make payments in lieu of
accepting delivery of Station Two Unit Output shall apply only when there is
insufficient customer load in the two counties as described above, and then only
to the extent that Station Two Subsidiary shall have been given reasonable
advance notice from Big Rivers of the impending load constraints in Henderson
and/or Daviess Counties so that Station Two Subsidiary shall have had a
reasonable opportunity to reduce the outputs of Station Two accordingly. Big
Rivers shall in no event be released from any breach or default by Big Rivers
under this Agreement arising by reason of the actions, events or circumstances
described in Subclauses (1) or (2), above. The rights and obligations of LEM,
Station Two Subsidiary and Big Rivers, respectively, set forth in this Section
9.7(e), including, without limitation, Big Rivers' release from its obligation
to repurchase and accept from LEM any Station Two Unit Output pursuant to
Section 9.7(c) of this Agreement, shall be subject to Section 10.5 of this
Agreement and such Party's fulfillment of its obligations (provided such
obligations shall then be effective under such Section) under Section 10.6 of
this Agreement to cooperate in the refinancing of the Station Two Bonds and to
pay its percentage of the costs associated with such refinancing.
(f) Nothing contained in this Agreement or in the Power Purchase
Agreement shall be deemed to prevent LEM from selling to any Person any Energy
associated with the Station Two Unit Output without also selling to that Person
the associated Capacity, subject, however, to the provisions of Sections 9.7(c)
and 10.5 of this Agreement.
(g) Big Rivers, Henderson and Station Two Subsidiary each agree that
those costs contemplated in Section 6.3(f) and Section 6.3(g) of the Station Two
Power Sales Agreement as being payable by Big Rivers during the Phase I
Subcontract Term and by Station Two Subsidiary during the Phase II Assignment
Term shall not include costs and expenses
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associated with any damages arising out of any breach by Henderson, Big Rivers
or Station Two Subsidiary, respectively, of its obligations under this Agreement
or any Station Two Contract, or arising out of any negligence or willful
misconduct by Henderson, Big Rivers or Station Two Subsidiary, respectively, or
its agents or employees, all of which costs and expenses will be the sole
responsibility of such Party.
(h) Notwithstanding any provision of this Agreement or the Station
Two Contracts to the contrary, the Parties hereby agree that Station Two
Subsidiary (or its successors or permitted assigns) shall have the right to
off-set the amounts payable by Henderson to Station Two Subsidiary (or its
successors or permitted assigns) pursuant to Section 13.6 of the Station Two
Operating Agreement against the payments Station Two Subsidiary (or its
successors or permitted assigns) owes Henderson (payable to the Trustee during
the term of the Station Two Bonds) pursuant to Sections 6.1 and 6.2 of the
Station Two Power Sales Agreement, and that Henderson shall have the right to
off-set the amounts payable by Station Two Subsidiary (or its successors or
permitted assigns) to Henderson pursuant to Sections 6.1 and 6.2 of the Station
Two Power Sales Agreement against the payments that Henderson owes to Station
Two Subsidiary (or its successors or permitted assigns) pursuant to Section 13.6
of the Station Two Operating Agreement. Any such off-set shall be deemed to
discharge the relevant obligation against which the off-set is made, to the
extent of the amounts so off-set.
9.8 Budget Process for Phase II Assignment. The Parties acknowledge that
Station Two Subsidiary, as the assignee of Big Rivers, will perform the
obligations set forth in Section 14 of the Station Two Operating Agreement
(preparation of the Operating Budget) theretofore performed by Big Rivers, as
follows:
(a) Station Two Subsidiary shall prepare the Operating Budget for
the Contract Year as contemplated in the first sentence of Section 14.1 of the
Station Two Operating Agreement. Station Two Subsidiary will separately identify
therein each item that represents anticipated expenditures associated with (1) a
Station Two Improvement, including specification therein whether expenses
related to that Station Two Improvement are Henderson Incremental Capital Costs
or Henderson Non-Incremental Capital Costs, and (2) a Henderson Incremental
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Environmental O&M cost. As between Big Rivers and Station Two Subsidiary,
special arrangements described in Sections 9.9 and 9.10 below shall apply to all
Henderson Incremental Environmental O&M costs and Station Two Improvements.
Those distinctions among items in the Operating Budget shall have no meaning,
however, as between (x) Henderson and (y) Big Rivers and Station Two Subsidiary.
(b) Prior to submittal to Henderson of the Operating Budget for
Station Two as contemplated in the last sentence of Section 14.1 of the Station
Two Operating Agreement, and in any event on or before November 1 of each Year
subsequent to the Phase II Effective Date, Station Two Subsidiary shall submit
in writing to each member of the Operating Committee (the composition and
operating procedures of which are set forth in Section 8.15 of this Agreement) a
proposed Operating Budget for Station Two for the next Year. With respect to
operating and maintenance costs, within 30 days after receipt of Station Two
Subsidiary's proposed Operating Budget for Station Two, Big Rivers may propose
to the Operating Committee modifications to the operating and maintenance cost
components of the Operating Budget proposed by Station Two Subsidiary. The
Operating Committee shall meet in December and January of each Year to review
and discuss the Operating Budget proposed by Station Two Subsidiary and review
and approve any modifications thereof proposed by Station Two Subsidiary or Big
Rivers. The Operating Committee, by agreement of its members representing Big
Rivers and Station Two Subsidiary, may determine to adopt an amendment to the
operations and maintenance cost components of the proposed budget, in which case
the proposed budget will thereafter be as so amended. Absent agreement of the
members of both of those Parties to modify the budget proposed by Station Two
Subsidiary, as recommended by Big Rivers, Station Two Subsidiary will determine
what portion of Big Rivers' proposed modifications to the operations and
maintenance components of the Operating Budget it will adopt, if any, and its
decision shall be final as between the Big Rivers and Station Two Subsidiary.
With respect to any component of the Operating Budget which constitutes a
Station Two Improvement or Henderson Incremental Environmental O&M costs, within
60 days after its receipt of the proposed Operating Budget for Station Two from
Station Two Subsidiary, Big Rivers may also propose to the Operating Committee
modifications to such
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components of the Operating Budget as proposed by Station Two Subsidiary. The
Operating Committee, by agreement of its members representing Big Rivers and
Station Two Subsidiary, may determine to adopt an amendment to the components of
the Operating Budget relating to Station Two Improvements and Henderson
Incremental Environmental O&M, in which event the proposed budget will
thereafter be so amended. Absent agreement of the members of both Parties to
modify the budget proposed by Station Two Subsidiary relating to a Station Two
Improvement or a Henderson Incremental Environmental O&M cost, as proposed by
Big Rivers, the Operating Committee must approve those components of the
Operating Budget as proposed by Station Two Subsidiary if such budget is
consistent with Prudent Utility Practice; provided, that the responsibility of
Big Rivers and the LG&E Companies with respect to the costs incurred for items
identified in the Operating Budget shall be determined as provided elsewhere in
this Agreement. In the event of a dispute as to whether such budget (including
those amendments adopted by agreement) is consistent with Prudent Utility
Practice, those Parties will submit the dispute to arbitration consistent with
Section 15 of the Participation Agreement; provided, however, if the expenditure
disputed by Station Two Subsidiary and Big Rivers is ultimately determined to be
a required expenditure under the Station Two Operating Agreement, Big Rivers and
Station Two Subsidiary shall not have the right to further arbitrate such
expenditure and the expenditure shall be included in the Operating Budget for
Station Two and paid or shared by Big Rivers and the LG&E Companies in
accordance with the terms and provisions set forth in Section 9 of this
Agreement, entitled "Phase II Assignment." The Operating Budget, as approved in
accordance with this Section 9.8, shall be the only budget submitted by either
the LG&E Companies or Big Rivers to Henderson for its review as required by
Section 14 of the Station Two Operating Agreement; provided, however, that
Station Two Subsidiary shall be entitled to submit to Henderson an Operating
Budget that may be the subject of a dispute between Big Rivers and Station Two
Subsidiary to the extent required for compliance with the Station Two Operating
Agreement, it being understood by Big Rivers and Station Two Subsidiary that
their respective obligations for items set forth in that Operating Budget shall
thereafter be determined through the dispute resolution procedures described
above or as otherwise agreed by Big Rivers and Station Two Subsidiary. Henderson
shall have the final authority to modify and approve the budget or approve it
without
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modifications, subject however to whatever approval rights are available to
Station Two Subsidiary under the Station Two Operating Agreement.
(c) Notwithstanding anything in this Section 9.8 to the contrary,
the Operating Committee may not modify any of the terms, covenants or conditions
of this Agreement or any Station Two Contract.
9.9 Adjustment for Henderson Incremental Environmental O&M.
Notwithstanding the assignment to Station Two Subsidiary (or its successors or
permitted assigns) of the obligation to pay Capacity costs under Section 6.3 of
the Station Two Power Sales Agreement arising or accruing during the Phase II
Assignment Term, in the event any of those Capacity costs represent payments
attributable to Henderson Incremental Environmental O&M, such costs shall
continue to be initially paid by Station Two Subsidiary in accordance with that
agreement, but shall thereafter be shared by Station Two Subsidiary and Big
Rivers in accordance with this Section 9.9. If any of the operating and
maintenance expenses allocated to the Reid Station under Section 13.8 of the
Station Two Operating Agreement constitute Incremental Environmental O&M, such
costs shall be subject to the payment and reimbursement procedures set forth in
Section 2.3.3 of the Lease.
(a) Big Rivers shall pay to Station Two Subsidiary, Big Rivers'
Henderson Incremental Environmental O&M Share (as then applicable) of all
Henderson Incremental Environmental O&M incurred by Station Two Subsidiary
during the Phase II Assignment Term, as follows: (i) Big Rivers' payment shall
be paid to Station Two Subsidiary on each Monthly Payment Date in an amount
equal to Big Rivers' Henderson Incremental Environmental O&M Share, multiplied
by the Henderson Incremental Environmental O&M estimated by Station Two
Subsidiary to be incurred in such month by Station Two Subsidiary consistent
with the Operating Budget. Within 120 days after the end of each Year, Station
Two Subsidiary shall compute the Actual Henderson Environmental O&M for the
Year. Station Two Subsidiary shall compare the Actual Henderson Environmental
O&M with the aggregate payments made by Big Rivers pursuant to this Section
9.9(a) during such Year. If
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Big Rivers' Henderson Incremental Environmental O&M Share of the Actual
Henderson Environmental O&M is more than such payments made by Big Rivers (or on
its behalf), Big Rivers shall promptly pay such difference to Station Two
Subsidiary. If Big Rivers' Henderson Incremental Environmental O&M Share of the
Actual Henderson Environmental O&M is less than such payments made by Big
Rivers, Station Two Subsidiary shall promptly pay such difference to Big Rivers.
9.10 Station Two Improvements -- Forecasts, Budgeting and Payments.
(a) During the Phase II Assignment Term, "Station Two Improvement"
shall not include any operating and maintenance expenses allocated to the Reid
Station under Section 13.8 of the Station Two Operating Agreement that
constitute a "Capital Asset" under the Lease, it being understood that such
expenses shall instead be allocated between and paid by Big Rivers and WKEC or
its Affiliate in accordance with the payment and reimbursement procedures set
forth in Article 8 of the Lease. Station Two Improvements made during the Phase
II Assignment Term, including, without limitation, Station Two Improvements
funded by draws against amounts deposited by Big Rivers or Station Two
Subsidiary into the Station Two R&R Account, shall be paid for or reimbursed in
accordance with this Section 9.10. Notwithstanding anything to the contrary in
this Agreement or in any other Operative Document, Big Rivers shall have no
obligation to (1) authorize the acquisition or construction of or to pay for any
Station Two Improvements unless such Station Two Improvements are necessary,
consistent with Prudent Utility Practice, to maintain the Capacity of Station
Two that is physically available and can be legally utilized at the Station Two
Rated Capacity, or to comply with any requirement of applicable Laws or
administrative or judicial interpretation of an applicable Law (including,
without limitation, Environmental Law) or any regulatory authority (including,
without limitation, any change in position of the KNREPC regarding compliance
with applicable opacity limitations based upon concurrent measurement of
particulate matter emissions affecting the Green Facility and which also affects
a Joint Use Facility and including for the avoidance of doubt, and without
regard for the actual time of enactment or implementation of the same, without
limitation, the Proposed SIP Call and any
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Laws that may be enacted or implemented pursuant thereto or in connection
therewith), in which case Big Rivers shall be obligated to so authorize the
acquisition or construction of and pay for (based on the proportion of Capacity
allocation then existing between Station Two Subsidiary and Henderson and
otherwise in accordance with this Section 9.10) such Station Two Improvements,
(2) make any expenditure for Station Two Improvements which would not be
capitalized pursuant to the Accounting Practices (as interpreted, modified or
supplemented by the Capitalization Guidelines), (3) make any expenditure in
connection with Station Two Personal Property or other asset which does not
constitute a Station Two Improvement (other than such expenditures by Big Rivers
as may be required as a result of any breach or default by Big Rivers under this
Agreement or any of the other Operative Documents, or pursuant to any
indemnification or hold harmless covenant of Big Rivers under this Agreement or
any of the other Operative Documents) (unless such expenditure for such Station
Two Personal Property is part of Henderson Incremental Environmental O&M, in
which event the provisions of Section 9.9 of this Agreement shall govern, or
unless a purchase involves a repurchase of the End of Term Personal Property by
Big Rivers in accordance with Section 10.35 of this Agreement), or (4) make any
expenditure for a Station Two Improvement the principal purpose of which is to
increase the Capacity of Station Two above the Station Two Rated Capacity or to
improve the efficiency of Station Two. Notwithstanding the limitations set forth
in subclauses (1), (3) and (4) of the preceding sentence, if requested by
Station Two Subsidiary, Big Rivers shall authorize and approve, and shall pay
for, or shall promptly reimburse Station Two Subsidiary for (based on the
proportion of Capacity then allocated between Henderson and Station Two
Subsidiary) all renewals, replacements and additions pursuant to Section
13.8(a)(3) of the Station Two Operating Agreement, Sections 6.3(c)(ii) and
6.3(d) of the Station Two Power Sales Agreement and Section 6 of the Joint
Facilities Agreement, to the extent such renewals, replacements and additions
are Station Two Improvements that comply with subclause (2), above, and are
required to be made to Station Two to comply with any obligation of Big Rivers
or any LG&E Company under any Station Two Contracts or the Bond Ordinance;
provided, however, should a dispute exist between the LG&E Companies and Big
Rivers with respect to whether the Station Two Contracts or the Bond Ordinance
required any such expenditure, the dispute shall be resolved, as between the
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LG&E Companies and Big Rivers, pursuant to the dispute resolution procedures set
forth in Article 15 of the Participation Agreement (as contemplated in Section
13.5(e) of this Agreement). All Station Two Improvements and all renewals,
replacements and additions contemplated by this Section 9.10 shall in all events
be further subject to approval rights, if any, of Henderson under the Station
Two Contracts.
(b) At least ten (10) days before the commencement of each quarterly
period referenced below, Station Two Subsidiary shall submit to Big Rivers a
forecast of cash requirements for each Station Two Improvement set forth in the
Annual Budget or any modification of that budget approved by the Operating
Committee under Section 9.8 of this Agreement (including specification of
requirements for Henderson Incremental Capital Costs and Henderson
Non-Incremental Capital Costs), together with a summary of all amounts that have
been required under the terms of the Station Two Contracts and/or the Bond
Ordinance to be deposited by Station Two Subsidiary into the Station Two R&R
Account (to the extent such information has been made available at that time by
Henderson), and that have been drawn out of that account to fund any one or more
Station Two Improvements. This forecast shall set forth cash requirements with
respect to such Station Two Improvements (including all sums in the Annual
Budget to be paid under Section 13.8(a)(3) of the Station Two Operating
Agreement or as a component of Capacity charges under Section 6.3 of the Station
Two Power Sales Agreement, as applicable) (i) for each quarterly period
commencing on the first day of June, September, December and March in which
costs for such Station Two Improvements shall become due and (ii) for each month
of the first two quarterly periods immediately following the issuance of the
forecast. Station Two Subsidiary shall revise the forecast and furnish the
revised forecast to Big Rivers no less often than every three months thereafter
until completion of the Station Two Improvement. Notwithstanding anything
contained in this Section 9.10(b), Article 5 of the Cost Sharing Agreement or
Section 2.3 of the Lease, or elsewhere in this Agreement or any other Operative
Document to the contrary, none of LG&E Companies or WKEC shall be obligated to
pay for their proportionate share, if any, of the costs and expenses associated
with any Station Two Improvement to a Joint Use Facility or a
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Henderson Incremental Environmental O&M required in order for the Green Facility
to comply with applicable opacity limitations imposed under Laws unless the
provisions of Section 7.1 of the Cost Sharing Agreement or Section 2.3 of the
Lease shall require any such LG&E Company or WKEC to share in such costs and
expenses, and then solely to the extent so required by such provisions. Big
Rivers and the LG&E Companies each hereby acknowledge that those Parties intend
to include the costs for Station Two Improvements to the Joint Use Facilities
and Henderson Incremental Environmental O&M costs, to the extent required to
bring the Green Facility into compliance with applicable opacity limitations,
within the agreed upon procedure for allocation and sharing of such costs and
expenses as set forth in Section 7.1 of the Cost Sharing Agreement and Section
2.3 of the Lease.
(c) Big Rivers and Station Two Subsidiary shall pay into the Station
Two Improvements Account amounts as provided in this Section 9.10(c). Station
Two Subsidiary shall be permitted to withdraw such funds (x) for its own account
at such times when Big Rivers shall have an obligation to pay or reimburse
Station Two Subsidiary for the costs of Station Two Improvements, whether paid
or payable by Station Two Subsidiary directly to third parties or as a component
of the Capacity charges Station Two Subsidiary owes Henderson (or the Trustee)
pursuant to Section 9.7(a) of this Agreement (including without limitation, in
order to reimburse Station Two Subsidiary for amounts that were deposited by it
in the Station Two R&R Account that were subsequently drawn upon by Henderson or
the Trustee to fund one or more Station Two Improvements), or (y) to pay for a
Station Two Improvement at such time when Big Rivers or Station Two Subsidiary,
as applicable, shall otherwise have an obligation to pay for Station Two
Improvements under this Agreement or any of the Station Two Contracts. On the
first day of each month during the Phase II Assignment Term Station Two
Subsidiary and Big Rivers shall each directly deposit sufficient funds into the
Station Two Improvements Account based on their respective Station Two
Improvement Sharing Ratios (defined in Section 8.17(e)), as then applicable, but
limited in the case of Big Rivers to the remaining Big Rivers Contribution (as
defined in Section 20.6 of the Participation Agreement) for that Year with
respect to Henderson Non-Incremental Capital Costs that are not for Henderson
Major Capital Repairs (as defined in the Participation
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Agreement) (i) to cover all cash requirements forecast under or otherwise
specified in Section 9.10(b) of this Agreement for that month for all Station
Two Improvements (less any excess between funds deposited and interest accrued
thereon and funds actually required for all Station Two Improvements during the
previous month) and (ii) to cover any shortfall between funds deposited and
funds actually required for all Station Two Improvements during the previous
month. With respect to funds deposited in the prior month, which are remaining
in the present month, and shortfalls in funds deposited in the prior month
relative to expenses for that month, Big Rivers' and Station Two Subsidiary's
respective obligations in the present month shall be adjusted proportionally
based on that Party's deposit during the prior month and that Party's relative
share of responsibility in that prior month for the Station Two Improvements for
which funds were withdrawn or not used. An illustration of the operation of this
Section (and Section 8.17(d) of this Agreement) is set forth in Schedule 8.17(d)
attached to this Agreement. Upon the expiration or earlier termination of this
Agreement, all funds remaining in the Station Two Improvements Account shall be
immediately distributed to Station Two Subsidiary and Big Rivers in accordance
with the same methodology as is used in the prior sentence; provided, Station
Two Subsidiary may first withdraw and retain all such funds from the Station Two
Improvements Account (including interest accrued thereon) and apply such funds
(and interest), (i) to reimburse Station Two Subsidiary for all amounts
deposited by it into the Station Two R&R Account (and not otherwise paid by Big
Rivers to Station Two Subsidiary as required by Section 9.7(b) of this
Agreement) which were drawn upon by Henderson or the Trustee to fund any one or
more Station Two Improvements, and (ii) to fund any other Station Two
Improvements for which Station Two Subsidiary has a continuing obligation to
fund (whether directly or as a component of the Capacity charges under Section
6.3(d) of the Station Two Power Sales Agreement). To the extent amounts
remaining in the Station Two Improvements Account are insufficient to satisfy
the foregoing obligations to Station Two Subsidiary, Big Rivers shall pay and
satisfy those obligations within five (5) days after the expiration or
termination of this Agreement (unless this Agreement expressly provides
elsewhere for a later payment date).
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(d) Station Two Subsidiary and Big Rivers agree with each other as
follows: Station Two Subsidiary shall immediately notify the Operating Committee
of any anticipated departure of 10% or more from the budget for Station Two
Improvements or for operating and maintenance expenses included in any approved
Operating Budget. Station Two Subsidiary shall use reasonable efforts to (a)
operate within 90 percent to 110 percent of the total approved budget for
Station Two Improvements included in an Operating Budget, and (b) to spend at
least 90 percent of the total approved budget for operating and maintenance
expenses included in an Operating Budget (not including the fuel or reagent
budget). Subject to the provisions set forth below, any increase of 10 percent
or more proposed by Station Two Subsidiary to either the Station Two
Improvements budget or the operating and maintenance expense budget set forth in
an approved Operating Budget shall be subject to review and approval by the
Operating Committee; provided, that such review and approval shall not apply to
the operating and maintenance expense budgets that are included in an Operating
Budget that is a part of the Initial Period Budgets, it being understood that
increases of 10 percent or more proposed by Station Two Subsidiary to those
budgets shall be permissible without that review and approval if the relevant
expenditures are consistent with Prudent Utility Practice, in which case the
additional costs shall, as between Big Rivers and Station Two Subsidiary, be
borne by Station Two Subsidiary unless they constitute Henderson Incremental
Environmental O&M required to be borne by both Station Two Subsidiary and Big
Rivers in the manner provided for in Section 9.9. If Station Two Subsidiary
exceeds the total budget for Henderson Non-Incremental Capital Costs (exclusive
of such costs as are for Henderson Major Capital Repairs (as defined in the
Participation Agreement) that are included in an approved budget for Station Two
Improvements in an Operating Budget, the additional cost of those Henderson
Non-Incremental Capital Costs that are allocable to Station Two Subsidiary under
the Station Two Contracts shall, as between Big Rivers and Station Two
Subsidiary, be borne by Station Two Subsidiary unless the parties agree
otherwise, or unless remaining portions of the Big Rivers Contribution for that
Year that were not included in the approved Operating Budget are available as
contemplated in Section 20.6.2 of the Participation Agreement (in which event
such amounts will be applied as contemplated in that Section). Subject to the
next succeeding
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sentence, if Station Two Subsidiary exceeds 110 percent of the total approved
budget for Henderson Incremental Capital Costs, or for Henderson Non-Incremental
Capital Costs for Henderson Major Capital Repairs, in either case that are
included in an approved Operating Budget, the additional costs of those Station
Two Improvements that are allocable to Station Two Subsidiary under the Station
Two Contracts shall, as between Big Rivers and Station Two Subsidiary, be borne
by Station Two Subsidiary unless the Parties otherwise agree, or unless the
dispute resolution procedure under Article 15 of the Participation Agreement
(and contemplated in Section 13.5(e) of this Agreement) determines that at the
time Station Two Subsidiary proposed the applicable portions of the Operating
Budget (or modification thereof) relating to those expenditures Station Two
Subsidiary acted consistent with Prudent Utility Practice, in which case the
additional costs shall be borne by Station Two Subsidiary and Big Rivers in
accordance with Section 9.10(c) of this Agreement. Notwithstanding the
provisions of the immediately preceding sentence, if Station Two Subsidiary
exceeds 110 percent of the total of any approved budget for Henderson
Incremental Capital Costs, or for Henderson Non-Incremental Capital Costs for
Henderson Major Capital Repairs, that are included in an Operating Budget that
is a part of the Initial Period Budgets, the additional cost of those Station
Two Improvements that are allocable to Big Rivers under the Station Two
Contracts shall, as between Big Rivers and Station Two Subsidiary, be borne by
Station Two Subsidiary unless the Parties otherwise agree, or unless the dispute
resolution procedure set forth in Article 15 of the Participation Agreement
determines that the purchase and installation of those Station Two Improvements,
and the costs thereof, are consistent with Prudent Utility Practice, regardless
of whether the relevant Initial Period Budget, or Station Two Subsidiary's
actions in connection with the same, were consistent with Prudent Utility
Practice at the time that the budget was prepared, in which case the additional
costs that are allocable to Station Two Subsidiary under the Station Two
Contracts shall, as between Big Rivers and Station Two Subsidiary, be borne by
Station Two Subsidiary and Big Rivers in accordance with Section 9.10(c) of this
Agreement. If Station Two Subsidiary fails or refuses to use reasonable efforts
to spend at least 90 percent of the total budget for Station Two Improvements or
for operating and maintenance expenses included in an approved Operating Budget
(excluding that portion relating to Henderson Incremental Environment O&M), and
pursuant to the dispute resolution
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procedure under Article 15 of the Participation Agreement it is determined that
such failure or refusal was inconsistent with Prudent Utility Practice, Station
Two Subsidiary shall make the omitted expenditures as required pursuant to the
applicable dispute resolution procedure. Notwithstanding anything contained in
this Section 9.10(d) to the contrary, Station Two Subsidiary shall in no event
be required to expend the monies included in an approved Operating Budget where
to do so would cause Station Two Subsidiary to be in breach or default under any
Station Two Contract. Additional capital expenditures incurred by Station Two
Subsidiary in response to an Operating Emergency (as defined in the
Participation Agreement) which are not already included in an approved Operating
Budget, and which are allocated to Station Two Subsidiary under the Station Two
Contracts shall, as between Big Rivers and Station Two Subsidiary, be paid for
by Station Two Subsidiary unless (a) the same represents a Henderson Incremental
Capital Cost or expenditures for a Henderson Major Capital Repair, in which case
such expenditures shall be paid by Station Two Subsidiary and Big Rivers in
accordance with Section 9.10(c), or (b) there are remaining amounts in the Big
Rivers Contribution for that Year that were not included in the budget for
Henderson Non-Incremental Capital Costs in the approved Operating Budget, as
contemplated in Section 20.6.2 of the Participation Agreement, in which case
that remaining amount will be allocated to any Henderson Non-Incremental Capital
Costs in that Year resulting from that Operating Emergency as contemplated in
Section 20.6.2.
(e) Station Two Subsidiary and Big Rivers agree with each other as
follows: In the absence of an approved Operating Budget, Station Two Subsidiary
shall operate and maintain Station Two in accordance with Prudent Utility
Practice, unless otherwise required or permitted under this Agreement. In the
absence of an approved Operating Budget or an approved acquisition of a Station
Two Improvement, Station Two Subsidiary may (but shall not be obligated to, as a
condition of mediation or arbitration of the disputed budget or Station Two
Improvement) install or cause to be installed a disputed Station Two
Improvement; provided, however, that as between Station Two Subsidiary and Big
Rivers, Station Two Subsidiary shall bear the full cost of such Station Two
Improvement for its own account unless those Parties otherwise agree, or unless
the dispute resolution procedure set forth in Article 15
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of the Participation Agreement (and as contemplated in Section 13.5(e) of this
Agreement) determines that Station Two Subsidiary is entitled to reimbursement
from Big Rivers because Big Rivers was obligated to pay for the Station Two
Improvement pursuant to this Section 9.10, or unless Station Two Subsidiary
shall have been required to fund that Station Two Improvement under the terms of
the Station Two Contracts, in which case the costs of that Station Two
Improvement shall be borne by Big Rivers and Station Two Subsidiary in
accordance with this Section 9.10. If the Operating Committee fails to approve
an Operating Budget for the following Year on or before May 15 of the prior
Year, Big Rivers and Station Two Subsidiary will promptly proceed with the
dispute resolution procedures described above to resolve that issue.
9.11 [Intentionally Omitted].
9.12 Phase I Adjustments. The LG&E Companies and Big Rivers hereby agree
with each other that notwithstanding the termination of the Phase I Subcontract
Term, any of the following commitments or adjustments to the extent made during
the Phase I Subcontract Term and existing as of the Phase II Effective Date
shall survive the termination of the Phase I Subcontract Term and be carried
forward throughout the Phase II Assignment Term (the "Phase I Adjustments"):
(a) A continuation of any adjustments previously made to the
payments owing by LEM to Big Rivers pursuant to Section 3.3 of the Power
Purchase Agreement, as such adjustments shall be required pursuant to any
provision of this Agreement, resulting from the application of the Station Two
PP Price Reduction (defined in Section 10.35 of this Agreement), reductions or
abatements relating to condemnation or damage or destruction of the Station Two
Assets, or any reductions or abatements relating to a termination of this
Agreement, all of which shall continue as an adjustment to the Annual Fixed
Payments thereafter due under the Power Purchase Agreement or the Rental
Payments thereafter due under the Lease.
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(b) Any payments due as refunds of the Initial Fixed Payment, as may
be required under any provision of this Agreement, shall continue without
adjustment as to amount or timing of payment.
(c) A continuation of the calculation of Actual Henderson
Incremental Environmental O&M and Henderson Incremental Environmental O&M for
the entire Year which includes the transition from the Phase I Subcontract Term
to the Phase II Assignment Term (the "Transitional Year"). Big Rivers and
Station Two Subsidiary shall reconcile Actual Henderson Incremental
Environmental O&M incurred during the Transitional Year with Henderson
Incremental Environmental O&M incurred during the Transitional Year within 120
days after the end of the Transitional Year.
(d) A continuation, without adjustment, of balances and other
accounting with respect to the Station Two Improvements Account and a
continuation of the allocation of Station Two Improvements funded in accordance
with Sections 8.17 of this Agreement.
(e) A continuation of the effectiveness of the portion of any
approved capital expenditures for Station Two Improvements and operating and
maintenance expenditures pursuant to the Annual Budget as it relates to Station
Two and the other Station Two Assets in effect during any such Transitional
Year.
(f) A continuation of the relative percentages of Shared Costs
between Big Rivers and any of the LG&E Companies (as the case may be).
The Parties acknowledge that all payments or other sums due under the Station
Two Operating Agreement and the Station Two Power Sales Agreement to any other
Party shall continue to be paid without interruption (except that the primary
obligor for such sums may, as applicable, change from Big Rivers to Station Two
Subsidiary) and based upon the budget for such Transitional Year approved by
Henderson and Big Rivers (with the advice and consent of
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Station Two Subsidiary). The annual reconciliations required under Section 16.6
of the Station Two Operating Agreement and Section 9.4 of the Station Two Power
Sales Agreement in the Transitional Year to the Phase II Assignment shall be
inclusive of all payments made by the Parties throughout such Year without
regard to the termination of the Phase I Subcontract, and any sums due by
Henderson shall be paid to Station Two Subsidiary and thereafter, as among
Station Two Subsidiary, LEM and Big Rivers, shall be allocated among such
Parties (subject to any applicable off-sets) based on whether the amount
disbursed by Henderson relates to a Station Two Improvement funded by Big Rivers
(which shall be allocated to Big Rivers and credited to any reimbursement
payment due it by Station Two Subsidiary) or another expenditure (which shall be
allocated to Station Two Subsidiary or LEM, as appropriate). On or prior to the
Monthly Payment Date in the month in which the transition from the Phase I
Subcontract to the Phase II Assignment occurs, and in addition to the payment
owing by Big Rivers to Station Two Subsidiary under Section 9.7(b) of this
Agreement for that month, Big Rivers shall pay to Station Two Subsidiary an
amount equal to any payment previously made by Station Two Subsidiary or its
designated Affiliate to Big Rivers during that month pursuant to Section 8.18 of
this Agreement, relating to Station Two Subsidiary's share of Debt Service
payment due Henderson or the Trustee under Section 6.3(a) of the Station Two
Power Sales Agreement during that month; provided, that no such payment by Big
Rivers shall be payable to Station Two Subsidiary to the extent that Big Rivers
has already paid that amount to Henderson or the Trustee in satisfaction of the
Debt Service payment due and owing to Henderson or the Trustee for that month.
9.13 Survival of Phase I Subcontract Provisions and Claims.
Notwithstanding anything in this Agreement to the contrary, including, without
limitation, Section 8 of this Agreement, entitled "Phase I Subcontract," and
Section 13 of this Agreement, entitled "Termination; Default; Remedies," the
following terms and provisions set forth in Section 8, entitled "Phase I
Subcontract," shall survive the termination of the Phase I Subcontract Term by
virtue of the Phase II Effective Date and shall continue in full force and
effect from and after such termination throughout the Phase II Assignment Term:
(a) the terms relating to Station Two Allowances set forth in Section 8.10(c) of
this Agreement; (b) the agreed upon allocation of
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general and administrative costs as set forth in the G & A Allocation Agreement
provided for in Section 10.29 of this Agreement; (c) the terms of Section
8.13(b) of this Agreement, to the extent that any payment default which may
exist thereunder has not been fully paid or otherwise discharged as of the Phase
II Effective Date; (d) the terms for composition of the Operating Committee and
agreed upon operating procedures set forth in Section 8.15 of this Agreement;
and (e) all definitions of terms contained in a provision within Section 8,
entitled "Phase I Subcontract," to the extent such defined terms have
application in any other Section of this Agreement. In addition, all
indemnification claims and all other claims or causes of action that any of the
Parties may have for breach or default of this Agreement or the Station Two
Contracts, and all claims for payment or other sums due and owing a Party under
this Agreement or the Station Two Contracts, arising or accruing during the
Phase I Subcontract Term or otherwise relating to the Phase I Subcontract shall
survive the expiration or termination of the Phase I Subcontract Term.
9.14 No Release; Big River's Responsibility. Notwithstanding anything in
this Section 9 to the contrary, Big Rivers shall not throughout the Phase II
Assignment Term, by virtue of the assignments contemplated hereby, be released
from any of its covenants or agreements set forth in the Assigned Station Two
Contracts, or from any damages, actions, liabilities or obligations that may
result from or arise out of the performance or failure of performance of the
obligations thereunder from and after the Phase II Effective Date. The LG&E
Companies, with respect to their respective performance of the Assumed Station
Two Liabilities, have agreed to give Big Rivers the indemnity set forth in
Section 10.15(a) of this Agreement.
9.15 Standards of Performance. Unless different standards or
specifications are otherwise required by any regulatory authority having
jurisdiction thereof and such standards or specifications make it impracticable
or illegal to comply with the following, Station Two Subsidiary (or its
successors or permitted assigns) shall perform its duties under Section 9 of
this Agreement, entitled "Phase II Assignment," in accordance with standards and
specifications equal to the more stringent of (a) those set forth in the
National Electric Safety Code of the United States Bureau of Standards, (b)
Prudent Utility Practice, and (c) any other
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standards or specifications as may be expressly required of Station Two
Subsidiary (as the assignee of Big Rivers) under the relevant provisions of the
Assigned Station Two Contracts which Station Two Subsidiary has expressly agreed
to perform hereunder, unless such performance by Station Two Subsidiary in
accordance with Prudent Utility Practice would result in a breach or default by
Station Two Subsidiary under the Assigned Station Two Contracts or by Henderson
under the Bond Ordinance, in which event the provisions of subclause (b) above
shall not apply. Station Two Subsidiary will, at all times, faithfully obey and
substantially comply with existing and future laws, rules and regulations of
federal, state and local governmental bodies lawfully affecting the operations
and activities of Station Two and, in its performance of its obligations under
Section 9, entitled "Phase II Assignment," Station Two Subsidiary will operate
and maintain Station Two and the other Station Two Assets in substantial
compliance with any standards imposed by any insurance policies required to be
maintained by Station Two Subsidiary under the Assigned Station Two Contracts or
otherwise hereunder. Station Two Subsidiary's performance of its duties under
this Section 9 shall at all times be conducted in a manner that is at all times
consistent with the provisions of the Bond Ordinance and that would not cause
Station Two Subsidiary or Big Rivers to be in material default under any terms
of the Station Two Contracts as it relates to the Bond Ordinance or otherwise
(but only until redemption or retirement of the Station Two Bonds). The
standards of performance set forth in this Section 9.15 are made solely for the
benefit of Big Rivers and shall not be enforceable by Henderson against any of
the LG&E Companies.
9.16 Communication of Certain Events. Station Two Subsidiary shall
communicate to Big Rivers, both orally and in writing as soon as possible after
the event, regarding (i) all significant operating and management events
relating to or affecting Station Two or the other Station Two Assets, including,
but not limited to, all forced and scheduled outages, partial or full load
restrictions due to equipment unavailability, deaths or injuries, governmental
inquiries or investigations, claims under any insurance policies, Operating
Emergencies and any other events or causes which may, in Station Two
Subsidiary's reasonable judgment, jeopardize personnel or property or result in
the unavailability of major equipment used in the
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operation of Station Two, and (ii) all events and circumstances which are
required by Laws to be reported to the KPSC or any other governmental or
regulatory authority or any insurance carrier, in each case regarding the
Station Two Assets or the operation thereof.
9.17 Additional Payments to Big Rivers. Notwithstanding anything in
Section 9, entitled "Phase II Assignment," to the contrary, Station Two
Subsidiary shall pay to Big Rivers the Additional Payments promptly following
Station Two Subsidiary's receipt of the corresponding 14 1/2 Cent Payments from
Henderson, the same as contemplated in Section 8.10(b) of this Agreement. In the
event that Henderson shall off-set against the 14 1/2 Cent Payment due and owing
Station Two Subsidiary an amount payable by Station Two Subsidiary or any of its
Affiliates to Henderson, and as a consequence thereof the corresponding
Additional Payment payable to Big Rivers pursuant to this Section 9.17 is
reduced by such off-set, Station Two Subsidiary shall pay to Big Rivers the
amount by which that Additional Payment was so reduced by Henderson's exercise
of such off-set, which payment shall be made promptly following Station Two
Subsidiary's receipt of sufficient information relating to such off-set to
determine the amount of the corresponding reduction in such Additional Payment.
10. ADDITIONAL AGREEMENTS OF THE PARTIES.
10.1 Interim Period Reconciliations.
(a) In any Year which includes either the Effective Date or the date
of termination or expiration of the Term, Big Rivers, on the one hand, and
Station Two Subsidiary and LEM, on the other hand, hereby agree that, on or
before 30 days after the Effective Date or the date of termination or expiration
of the Term, as the case may be (or as soon thereafter as is reasonably
possible, in the event the relevant data is not available within 30 days), there
shall be a reconciliation between Big Rivers and the LG&E Companies of the
following charges and costs actually paid or accrued while Station Two was being
operated by Big Rivers prior to the Effective Date or by Station Two Subsidiary
during the Term, as compared with the estimates
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of such charges and costs paid or accrued (based on the Annual Budget with
Henderson) during the period of operation of Station Two by Big Rivers or
Station Two Subsidiary, respectively: (1) all charges and costs for operation
and maintenance of Station Two under the Station Two Operating Agreement, as
actually paid or accrued by Big Rivers or Station Two Subsidiary, respectively,
during the period of their respective operations of Station Two, as compared
with payments made or accrued by Henderson to Big Rivers or Station Two
Subsidiary, respectively, under Section 13.6 of the Station Two Operating
Agreement based upon estimates included in the Annual Budget; and (2) all
amounts paid or accrued to Henderson or the Trustee (pursuant to Section 6.1 of
the Station Two Power Sales Agreement) of estimated Capacity costs and charges
(based on the Annual Budget with Henderson) by Big Rivers or Station Two
Subsidiary or LEM during the period of Big Rivers' and Station Two Subsidiary's
respective operations of Station Two, as compared with the actual aggregate
Capacity costs and charges that should have been paid or accrued (based on
actual charges and costs so paid or accrued in the operation of Station Two) by
Big Rivers or by LEM or Station Two Subsidiary during the period of their
respective operation of Station Two.
(b) For purposes of reconciling operating and maintenance costs and
Capacity charges between Big Rivers, on the one hand, and LEM and Station Two
Subsidiary, on the other hand, before the Effective Date, the provisions of this
Section 10.1(b) shall govern. If (1) the sum of the operating and maintenance
costs actually paid or accrued by Big Rivers during the Partial Year prior to
the Effective Date plus the estimated Capacity costs and charges paid or accrued
by Big Rivers during the Partial Year prior to the Effective Date exceeds (2)
the sum of the estimated operating and maintenance costs paid or accrued by
Henderson as a reimbursement to Big Rivers during the Partial Year prior to the
Effective Date plus the Capacity costs and charges that should have been paid or
accrued (based on actual charges and costs paid or accrued in the operation of
Station Two) by Big Rivers during the Partial Year prior to the Effective Date,
then LEM and/or Station Two Subsidiary shall pay to Big Rivers the excess amount
on the next Monthly Payment Date. If, however, the sum described in (2), above,
exceeds the sum described in (1), above, then LEM and/or Station Two Subsidiary
shall have the right to off-set the amount of such deficiency against any
payments due and owing by LEM and/or Station Two Subsidiary to Big Rivers on the
next Monthly Payment
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Date or, if no sums shall then be due and owing, Big Rivers shall promptly pay
the amount of the deficiency to LEM and/or Station Two Subsidiary on the next
Monthly Payment Date. As between Big Rivers, on the one hand, and Station Two
Subsidiary and LEM, on the other hand, such Parties acknowledge and agree that
Station Two Subsidiary and LEM shall either be entitled to receive the benefit
of any sums payable by Henderson, or shall be obligated to pay Henderson any
sums owed to Henderson, as a result of the annual reconciliations required by
Section 9.4 of the Station Two Power Sales Agreement and Section 16.6 of the
Station Two Operating Agreement for the Year which includes the Effective Date.
Amounts which have accrued or become payable during the Partial Year but which
have not been paid to the relevant Party as of the Effective Date shall continue
to be payable to that Party following the Effective Date by the Party having the
obligation to make such payment prior to the Effective Date.
(c) For purposes of reconciling operating and maintenance costs and
Capacity charges between Big Rivers, on the one hand, and LEM and Station Two
Subsidiary, on the other hand, incurred during the Partial Year prior to the
date of expiration or termination of this Agreement, the provisions of this
Section 10.1(c) shall govern. If during the Partial Year ending on the
termination or expiration date: (1) the sum of the operating and maintenance
costs actually paid or accrued by Station Two Subsidiary in such Partial Year
plus the estimated Capacity costs and charges (A) during the Phase I Subcontract
Term, reimbursed in or reimbursable for such Partial Year to Big Rivers by LEM
and/or Station Two Subsidiary (including all dollar-for-dollar reimbursements of
Big Rivers for certain Capacity charges associated with Station Two operating
and maintenance expenses (including payments for Henderson Incremental
Environmental O&M), Station Two Subsidiary's (or its successors' or permitted
assigns') share of all Station Two Improvements funded during that Partial Year,
and all reimbursements of Big Rivers for Station Two Subsidiary's (or its
successors' or permitted assigns') corresponding share of Capacity charges
incurred during such Partial Year associated with Debt Service), and/or (B)
during the Phase II Assignment Term, paid in or payable for such Partial Year
directly to Henderson or the Trustee by Station Two Subsidiary
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(or its successors or permitted assigns) (reduced, however, by the amounts that
Big Rivers reimburses or must reimburse Station Two Subsidiary for Capacity
charges in such Partial Year associated with Big Rivers' share of Debt Service,
Big Rivers' share of Henderson Incremental Environmental O&M or Big Rivers'
share of all Station Two Improvements funded during that Partial Year) exceeds
(2) the sum of the estimated operating and maintenance costs paid or accrued by
Henderson as a reimbursement to Station Two Subsidiary during such Partial Year
plus the Capacity costs and charges that (based on actual charges and costs paid
or accrued in the operation of Station Two during such Partial Year, and not
based on estimates) should have been either (A) during the Phase I Subcontract
Term, reimbursed in or reimbursable for such Partial Year to Big Rivers by LEM
and/or Station Two Subsidiary (including all dollar-for-dollar reimbursements of
Big Rivers for certain Capacity charges associated with Station Two operating
and maintenance expenses (including payments for Henderson Incremental
Environmental O&M), Station Two Subsidiary's (or its successors' or permitted
assigns') share of all Station Two Improvements funded during that Partial Year,
and all reimbursements of Big Rivers for Station Two Subsidiary's (or its
successors' or permitted assigns') corresponding share of Capacity charges
incurred during such Partial Year associated with Debt Service), and/or (B)
during the Phase II Assignment Term, paid in or payable for the Partial Year
directly to Henderson or the Trustee by Station Two Subsidiary (or its
successors or permitted assigns) (reduced, however, by the amounts that Big
Rivers reimburses or must reimburse Station Two Subsidiary for Capacity charges
incurred during such Partial Year associated with Big Rivers' share of Debt
Service, Big Rivers' share of Henderson Incremental Environmental O&M or Big
Rivers' share of Station Two Improvements funded during that Partial Year); then
Big Rivers shall pay to LEM and/or Station Two Subsidiary such excess amount
within 45 days after the termination or expiration date (or, if the
determination of those amounts cannot reasonably be made within the initial
30-
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day period as contemplated in Section 10.1(a), then within 15 days after that
determination can be reasonably made). If, however, the sum described in (2),
above, exceeds the sum described in (1), above, then Station Two Subsidiary (or
its designated Affiliate) shall pay to Big Rivers the amount of such deficiency
within 45 days after the termination or expiration date (or, if the
determination of those amounts cannot reasonably be made within the initial
30-day period as contemplated in Section 10.1(a), then within 15 days after that
determination can be reasonably made). As between Big Rivers, on the one hand,
and Station Two Subsidiary and LEM, on the other hand, such Parties acknowledge
and agree that neither Station Two Subsidiary nor LEM, nor any other LG&E
Company, shall have any right or interest in the proceeds due from Henderson, or
any duty or obligation to Big Rivers or Henderson for proceeds due to Henderson,
in the annual reconciliation required by Section 9.4 of the Station Two Power
Sales Agreement and Section 16.6 of the Station Two Operating Agreement for the
Year which includes the date of expiration or termination of the Term. Amounts
which have accrued or become payable during the Partial Year prior to the
expiration or termination of the Term, but which have not been paid to the
relevant Party as of the date of that expiration or termination, shall continue
to be payable to that Party thereafter by the Party having the obligation to
make such payment prior to the date of expiration or termination of the Term.
(d) Notwithstanding anything herein to the contrary, the agreements
set forth above are solely between Big Rivers, Station Two Subsidiary and LEM,
and shall not impose upon Henderson any duty or obligation to Big Rivers,
Station Two Subsidiary or LEM relating to such interim period reconciliations or
the annual reconciliations required by the Station Two Operating Agreement and
the Station Two Power Sales Agreement which are in addition to or different than
the duties and obligations required of Henderson under such Station Two
Contracts; provided, however, that Henderson hereby agrees to reasonably
cooperate and assist Big Rivers, Station Two Subsidiary and LEM in determining
the actual and estimated charges and costs paid, payable or accrued by the
Parties for the respective Partial Years of operation of Station Two by Big
Rivers and Station Two Subsidiary, respectively.
10.2 Transfer of Title to Station Two Surplus Capacity. Consistent with
and subject to the provisions of Sections 8.12(e), 8.12(f), 9.7(c), and 9.7(e)
of this Agreement, during the Phase I Subcontract Term and the Phase II
Assignment Term, but only during such period as the Letter Ruling shall continue
to limit the distribution of Energy from Station Two solely to customers within
Henderson and Daviess Counties, all Energy associated with the Station Two
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Unit Output sold by Station Two Subsidiary, LEM or their respective Affiliates
from Station Two shall be delivered to Big Rivers or Henderson, or to Henderson
Union, under the LEM/Henderson Union Agreement for resale to Alcan, as
applicable, and title thereto transferred by Station Two Subsidiary, LEM or
their Affiliate, as applicable, at the point of interconnection between Station
Two and Big River's Transmission System without exception. Big Rivers and
Henderson hereby agree to accept title to such Energy (exclusive of Energy sold
under the LEM/Henderson Union Agreement), as applicable, and delivery of such
Energy, as applicable, from Station Two Subsidiary, LEM or their Affiliate, as
applicable, at such point of interconnection during such period as the
restriction of the Letter Ruling shall remain in effect. Big Rivers and
Henderson each hereby acknowledge and agree that the delivery by Station Two
Subsidiary, LEM or their Affiliate of title to the Power from Station Two at
such point of interconnection shall not constitute a violation of the delivery
requirements in the Letter Ruling or any other requirements or restrictions
relating to delivery of the Power from Station Two set forth in the Station Two
Contracts or the Bond Ordinance, and thereafter no LG&E Company shall have any
further responsibility for compliance with the distribution requirements of the
Letter Ruling, the Station Two Contracts and the Bond Ordinance with respect to
that Power. Following the retirement or the redemption in full of the Station
Two Bonds, Station Two Subsidiary, LEM or their Affiliate may, but shall not be
obligated to, deliver all Power from Station Two sold by it to Big Rivers or to
Henderson Union at that same point of interconnection.
10.3 Sharing of Station Two O&M or R&R Account Balances.
(a) At the Closing, the chief financial officer of Big Rivers and
the General Manager of Henderson shall execute and deliver a certificate to the
LG&E Companies certifying and agreeing to the following: (1) the balances of
funds contained in the Station Two O&M Account and the Station Two R&R Account
as of the Effective Date; (2) the total amount of contributions and payments of
Big Rivers and Henderson, respectively, into the Station Two O&M Account and the
Station Two R&R Account with respect to that portion (if any) of the combined
balance in such accounts that exceeds $1,250,000; and (3) Big Rivers' and
Henderson's respective shares, as of the Effective Date, of the excess (if any)
of the balance of
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such funds (with any investments included in such accounts to be valued in
accordance with the Bond Ordinance) in the Station Two O&M Account and the
Station Two R&R Account, respectively, over $1,250,000 (taking into
consideration, for purposes of such calculation, any accrued and unpaid expenses
on the Effective Date, and any outstanding, uncleared checks or unconfirmed wire
transfers as of the Effective Date). Big Rivers' share of each such excess
account balance (if any) is referred to hereinafter as the "O&M Closing Balance"
as such excess may exist in the Station Two O&M Account and the "R&R Closing
Balance" as such excess may exist in the Station Two R&R Account.
(b) Notwithstanding anything to the contrary in Section 1(b) of the
Agreement dated April 8, 1980, between Big Rivers and Henderson, and provided
that this Agreement shall be in force and effect on the date of the disbursement
of the then remaining balances of monies contained in the Station Two O&M
Account and the Station Two R&R Account in accordance with Section 1 of said
Agreement, to the extent that the combined balance of such accounts are then in
excess of $1,250,000, Henderson shall, on that disbursement date, disburse to
Station Two Subsidiary a proportionate share of such excess account balances,
which is determined based upon the percentage of the excess balances that were
contributed by Big Rivers and Station Two Subsidiary (and all other LG&E
Companies), as compared with the percentage of those excess balances that were
contributed by Henderson. Station Two Subsidiary, in turn, shall have the
obligation to make disbursements (less appropriate off-sets as may be applicable
thereto and permissible under Section 10.3(c), below) to Big Rivers of that
portion of such excess balances in the Station Two O&M Account and the Station
Two R&R Accounts determined in Section 10.3(c) of this Agreement. Upon making
the disbursement to Station Two Subsidiary from excess account balances as
provided above, neither Henderson nor any LG&E Company shall have any further
responsibility or liability to Big Rivers for any payments from excess account
balances under the Agreement dated April 8, 1980 or under this Agreement.
(c) Within five (5) Business Days after Station Two Subsidiary
receives a disbursement of the excess account balances from Henderson, as
provided in (b) above, Station Two
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Subsidiary shall allocate and pay to Big Rivers the following sums: (i) an
amount equal to the O&M Closing Balance; (ii) an amount equal to the sum of the
R&R Closing Balance plus any additional sums over the R&R Closing Balance as may
have been disbursed by Henderson to Station Two Subsidiary as excess fund
balances in the Station Two R&R Account, but then only to the extent those
excess fund balances represent amounts that were contributed by Big Rivers to
that account since the Effective Date; and (iii) an amount equal to all interest
that has accrued on the O&M Closing Balance and the R&R Closing Balance, that
has not otherwise been applied toward the Debt Service, and that has been
disbursed by Henderson to Station Two Subsidiary; provided, that Station Two
Subsidiary shall have the right to off-set against the payment it is required to
make (if any) to Big Rivers under (i), (ii) and (iii), above, (x) any amounts
that may then be due and payable to Station Two Subsidiary pursuant to Section
10.3(e) of this Agreement, and (y) any then existing deficiency in any payment
obligations of Big Rivers under this Agreement and the Station Two Contracts
relating to the Capacity payments and reimbursement payments described above.
Any remaining balances from the Station Two O&M Account and the Station Two R&R
Account that are disbursed by Henderson to Station Two Subsidiary to be retained
by Station Two Subsidiary. In addition, Station Two Subsidiary shall have no
obligation to pay to Big Rivers any deficiency in the amounts disbursed to
Station Two Subsidiary by Henderson relating to the Station Two R&R Account
below the R&R Closing Balance to the extent such deficiency is caused by a
withdrawal by Henderson or the Trustee of funds from such account that were used
to fund a Station Two Improvement (except to the extent that an LG&E Company
otherwise has a current obligation under this Agreement to pay to Big Rivers (or
into the Station Two Improvements Account as required under Section 8.17(d) or
Section 9.10(c) of this Agreement) its share of the capital costs for such
Station Two Improvement funded by the amounts so withdrawn from that account at
the time of that withdrawal). To the extent those additional sums from the
Station Two R&R Account are less than the aggregate contributions made by Big
Rivers and Station Two Subsidiary, those additional sums shall be prorated
between Big Rivers and Station Two Subsidiary based on the portion of
unreimbursed payments made into that account after the Effective Date by Big
Rivers and Station Two Subsidiary, respectively, since the Effective Date.
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(d) Notwithstanding that Big Rivers shall at all times during the
Term have the obligation to pay the Trustee (during the Phase I Subcontract
Term) or to pay or reimburse Station Two Subsidiary (during the Phase II
Assignment Term) for the portion of the Capacity charges attributable to
required payments into the Station Two R&R Account pursuant to Sections 8.12(a)
and 9.7(b) of this Agreement, respectively, should any funds be withdrawn from
the Station Two R&R Account by Henderson to fund an operating and maintenance
expense for Station Two during the Phase I Subcontract Term or the Phase II
Assignment Term (which is not otherwise a capital expense characterized by Big
Rivers and the LG&E Companies in this Agreement as a Station Two Improvement),
within five (5) Business Days after notice is given by Big Rivers or Henderson,
of the withdrawal of those funds from that account specifying the type and
character of such expenditure made, Station Two Subsidiary (or its designated
Affiliate) shall pay to the Trustee (for further credit to the Station Two R&R
Account) the amount so withdrawn for the operating and maintenance expenditure
from that account and shall not require Big Rivers to reimburse it for such
payment. Any such payments by Station Two Subsidiary (or its designated
Affiliate) shall, during the Phase I Subcontract Term, be on behalf of Big
Rivers, and shall, during the Phase II Assignment Term, be on behalf of Station
Two Subsidiary. In the event, following the distribution of funds described in
(c), above, the Station Two R&R Account contemplated in the Bond Ordinance is
eliminated and replaced, with the Parties' approval, by another similar account
to fund renewals, replacements and additions at Station Two, the payments
contemplated in this Section 10.3(d) as being payable by Station Two Subsidiary
to the Trustee shall be paid instead into that replacement account. In the event
such a replacement account is not so established by the Parties following the
disbursement of excess funds from the Station Two R&R Account, then,
notwithstanding anything contained elsewhere in this Section 10.3 to the
contrary, Station Two Subsidiary shall have no obligation to repay to Henderson
or the Trustee the amount previously withdrawn from the Station Two R&R Account
for such operating and maintenance expenses, but shall pay such amounts to Big
Rivers to the extent that the withdrawal occurred prior to Henderson's
disbursements contemplated in (b), above, and then only to the extent such
withdrawal had the effect of reducing the amounts from the Station
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Two R&R Account that would otherwise have been payable by Station Two Subsidiary
to Big Rivers as contemplated in (c), above.
(e) Henderson is only entitled to use funds in the Station Two O&M
Account for the payment of "Operating Expenses" as defined in the Bond
Ordinance, subject, however, to the pledge in favor of bondholders thereunder.
Notwithstanding that Station Two Subsidiary shall at all times during the Term
have the obligation to pay or reimburse Big Rivers (during the Phase I
Subcontract Term) or to pay the Trustee (during the Phase II Assignment Term)
for the portion of the Capacity charges attributable to required payments into
the Station Two O&M Account to restore minimum fund balances in that account
pursuant to Sections 8.12(b) and 9.7(a) of this Agreement, respectively, should
any funds be withdrawn from the Station Two O&M Account by Henderson to fund a
Station Two Improvement, within five (5) Business Days after notice is given by
Station Two Subsidiary or Henderson of the withdrawal of those funds from that
account specifying the type and character of such expenditure made, Station Two
Subsidiary shall be permitted to withdraw from the Station Two Improvements
Account sufficient funds to restore to the Station Two O&M Account the amount so
withdrawn for the Station Two Improvement from that account, with Big Rivers and
Station Two Subsidiary each bearing responsibility for the amounts so withdrawn
from the Station Two Improvements Account based on their respective Station Two
Improvement Sharing Ratios or if there is not sufficient funds in the Station
Two Improvements Account to restore in full the amounts so withdrawn from the
Station Two O&M Account for the Station Two Improvement, then Big Rivers shall
(1) during the Phase I Subcontract Term pay to the Trustee (for further credit
to the Station Two O&M Account) an amount equal to the product of its then
applicable Station Two Improvement Sharing Ratio multiplied by the amount so
withdrawn for the Station Two Improvement from that account (which LEM shall not
be required to reimburse Big Rivers for such payment) and (2) during the Phase
II Assignment Term pay to Station Two Subsidiary (for its account) an amount
equal to the product of its then applicable Station Two Improvement Sharing
Ratio multiplied by the amount withdrawn for the Station Two Improvement from
that account. The LG&E Companies and Big Rivers intend that the foregoing
provisions of this Section 10.3(e), and Big Rivers' payment obligations to the
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Trustee and to Station Two Subsidiary hereunder, shall be subject to the
agreements between the LG&E Companies and Big Rivers in this Agreement relating
to Station Two Improvements, including, without limitation, those agreements
relating to the funding and payment for Station Two Improvements.
(f) (1) The Parties acknowledge that, pursuant to Section 19.3 of
the Station Two Power Sales Agreement (as amended by the 1998 Amendments), Big
Rivers and Henderson have agreed to separately establish and fund, on or before
the date of Henderson's disbursement of funds as described in (b), above, a new
Big Rivers Station Two O&M Fund (the "Big Rivers Replacement O&M Fund") and a
new Henderson Station Two O&M Fund (the "Henderson Replacement O&M Fund") (such
funds being collectively referred to herein as the "Replacement O&M Funds"),
which funds are intended to be used to support the operation and maintenance of
Station Two throughout the remaining term of the Station Two Power Sales
Agreement, subject to the provisions of that agreement. Big Rivers and Henderson
have further agreed to maintain a minimum balance in their respective
Replacement O&M Funds, and to replenish that fund up to its required minimum
balance with monthly payments thereto (but subject to certain maximum monthly
payment limits). In the event the Closing has occurred and this Agreement
remains in effect, Station Two Subsidiary hereby agrees to fully fund the Big
Rivers Replacement O&M Fund in the amount required from Big Rivers under Section
19.3 of the Station Two Power Sales Agreement (and in lieu of Big Rivers'
funding obligation under that section), promptly following the disbursement of
funds to Station Two Subsidiary described in (b), above. If for whatever reason
Big Rivers shall have funded the Big Rivers Replacement O&M Fund, in whole or in
part, prior to Station Two Subsidiary's funding thereof as required by the
preceding sentence, then promptly following the payment by Station Two
Subsidiary of funds into the Big Rivers Replacement O&M Fund, in accordance with
the preceding sentence, Henderson shall pay to Big Rivers from the Big Rivers
Replacement O&M Fund an amount equal to the lesser of the amount of Station Two
Subsidiary's payment or the amount so funded by Big Rivers into the Big Rivers
Replacement O&M Fund. Furthermore, Station Two Subsidiary agrees to replenish
that fund up to that minimum balance (i.e., that amount required from Big Rivers
under the 1998 Amendments) in
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the event amounts therein are withdrawn by Station Two Subsidiary or Henderson
to fund operating and maintenance expenses required during the Term as
contemplated below (but subject to the monthly funding limits provided for in
the Station Two Power Sales Agreement). Once fully funded, neither Big Rivers
nor Station Two Subsidiary shall have any obligation to fund the Big Rivers
Replacement O&M Fund to a level above the amount provided for in the 1998
Amendments. In the event the initial funding of the Big Rivers Replacement O&M
Fund by Station Two Subsidiary is required during the Phase I Subcontract Term,
Station Two Subsidiary shall deposit those amounts directly into that account on
behalf of Big Rivers, with the assistance of Henderson. In the event that
amounts are withdrawn by Henderson from the Big Rivers Replacement O&M Fund
during the Phase I Subcontract Term to fund one or more Station Two
Improvements, but those amounts have not been withdrawn by Station Two
Subsidiary from the Station Two Improvements Account or Big Rivers' share
thereof has not been repaid by Big Rivers to the Trustee prior to the
disbursement of funds by Henderson as contemplated in (e), above, then Big
Rivers shall pay its share of the amounts so withdrawn for that Station Two
Improvement based on its Station Two Improvement Sharing Ratio) directly to
Station Two Subsidiary (for its account), and Station Two Subsidiary shall have
no obligation to pay such funds into the Big Rivers Replacement O&M Fund to the
extent that Station Two Subsidiary has already fully funded that account as
contemplated above.
(2) During the Term, the Big Rivers Replacement O&M Fund shall be
maintained by Henderson as an interest bearing depository account at a
commercial bank in Henderson, Kentucky that is reasonably acceptable to Station
Two Subsidiary. All interest accruing on that account shall be the sole property
of Station Two Subsidiary, and shall be held by Henderson for the sole benefit
of Station Two Subsidiary and shall not be disbursed except as provided in (4),
below. The Parties agree that any funds deposited by Station Two Subsidiary into
the Big Rivers Replacement O&M Fund (exclusive of interest accruing thereon,
which may not be utilized by Henderson) may be used by Henderson and Station Two
Subsidiary only to fund costs and expenses required for the operation and
maintenance of Station Two during the Term, and which would have been required
or permitted to be paid or incurred as "Operating Expenses" under the Bond
Ordinance, but then, in the case of
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withdrawals from that fund by Henderson, only to the extent that (y) Station Two
Subsidiary has failed or refused to directly fund those operating and
maintenance expenses (as Big Rivers' subcontractor during the Phase I
Subcontract Term or for its own account during the Phase II Assignment Term) in
the ordinary course, or thereafter promptly following a written request to do so
by Henderson, and (z) Henderson has made a corresponding withdrawal from the
Henderson Replacement O&M Fund to fund a portion of that same cost or expense in
proportion to the then effective allocation of Station Two Capacity between
Henderson and Big Rivers (during the Phase I Subcontract Term) or Station Two
Subsidiary (during the Phase II Assignment Term), in accordance with Section 3
of the Station Two Power Sales Agreement. No such funds which are so deposited
by Station Two Subsidiary shall be used to fund Station Two Improvements,
Station Two Debt Service obligations or any other costs or expenses, or to
prepay expenditures required for the operation or maintenance of Station Two
following the Term, except that Henderson shall have the right of off-set
against such funds to the extent that Station Two Subsidiary has not satisfied
any payment obligation which became due and owing to Henderson during the Phase
I Subcontract Term or the Phase II Assignment Term. In addition, no funds of
Henderson or Big Rivers, whether or not relating to Station Two, shall be
deposited or commingled with the amounts deposited by Station Two Subsidiary
into the Big Rivers Replacement O&M Fund, or the interest accruing thereon.
(3) During the Phase I Subcontract Term, only Henderson shall have
signatory authority to deposit funds into, and withdraw funds from, the Big
Rivers Replacement O&M Fund. During the Phase II Assignment Term, only Henderson
and Station Two Subsidiary shall have such signatory authority.
(4) On May 31 of each Year during the Term, Henderson shall withdraw
and pay to Station Two Subsidiary all interest accrued on amounts deposited in
the Big Rivers Replacement O&M Fund during the prior Year. Upon any expiration
or earlier termination of this Agreement, Station Two Subsidiary shall be
entitled to an immediate disbursement of all amounts that were previously funded
by Station Two Subsidiary into the Big Rivers Replacement O&M Fund and that
remain in that account as of the expiration or termination of
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this Agreement, together with (A) all accrued but unpaid interest thereon, and
(B) an additional payment from Henderson in the amount of the portion (if any)
of the Big Rivers Replacement O&M Fund that was previously withdrawn by
Henderson for use in violation of the restrictions set forth above. Promptly,
following the disbursement to Station Two Subsidiary described above, Big Rivers
shall separately fund the Big Rivers Replacement O&M Fund to the same extent as
would have initially been required of it under Section 19.3 of the Station Two
Power Sales Agreement. Nothing contained in this Section 10.3(f) shall affect or
limit any rights that Station Two Subsidiary or any of its Affiliates may have
to reimbursement from Big Rivers (during the Phase I Subcontract Term) or
Henderson (during the Phase II Assignment Term) for operating and maintenance
expenses as contemplated elsewhere in this Agreement.
(g) (1) The Parties acknowledge that, pursuant to Section 19.2 of
the Station Two Power Sales Agreement (as amended by the 1998 Amendments), Big
Rivers and Henderson have agreed to separately establish and fund, on or before
the date of Henderson's disbursement of funds as described in (b), above, and
thereafter as contemplated in that agreement, a new Big Rivers Station Two
Renewals and Replacements Fund (the "Big Rivers Replacement R&R Fund") and a new
Henderson Station Two Renewals and Replacements Fund. Those funds are intended
to be used to support expenditures for renewals and replacements for Station Two
throughout the remaining term of the Station Two Power Sales Agreement, subject
to the provisions of that agreement. Notwithstanding anything contained in this
Agreement or any Station Two Contract to the contrary, the Parties agree that,
throughout the Phase I Subcontract Term and the Phase II Assignment Term, the
provisions of Section 19.2 of the Station Two Power Sales Agreement shall be
suspended and shall have no applicability to the Parties, and the provisions of
this Section 10.3(g) shall govern the Parties' respective rights and obligations
in lieu of Section 19.2.
(2) In the event the Closing occurs and this Agreement remains in
effect, and in the event the disbursement of funds to Station Two Subsidiary
contemplated in (b), above, shall have occurred, then LEM (during the Phase I
Subcontract Term) or Station Two
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Subsidiary (during the Phase II Assignment Term) hereby agrees to thereafter
remit and pay to Henderson by wire transfer, within two (2) Business Days
following that LG&E Company's receipt of a written request therefor from
Henderson, immediately available funds in an amount not to exceed $600,000 in
the aggregate from LEM and Station Two Subsidiary collectively (the "Maximum
Funding Limit"), for use by Henderson solely to fund one or more major renewals
or replacements with respect to Station Two that are then permitted to be made
under the Station Two Contracts in order to keep Station Two in good operating
condition at its rated capacity then in effect (including without limitation,
any such major renewals or replacements required to correct any unusual loss or
damage with respect to Station Two). Henderson's use of the funds contemplated
above shall be further limited to those situations where a sufficient budget was
not previously established in the then-current Annual Budget for Station Two,
but then only to the extent that the expenditure for such renewal or replacement
is required on an expedited basis and in advance of the time by which the
Parties could otherwise meet to separately budget for the expenditure.
Henderson's written request for funds contemplated above shall be effective only
if delivered to LEM or Station Two Subsidiary (as applicable) during the Phase I
Subcontract Term or the Phase II Assignment Term, and then only if it includes a
description of the major renewal(s) or replacement(s) for which the funds are
requested, the reason for their expenditure, the amount of funds so requested,
Henderson's good faith estimate of the actual cost of the relevant renewal(s) or
replacement(s), and the bank account of Henderson to which the funds are to be
wire transferred (with appropriate wiring instructions). LEM and Station Two
Subsidiary shall not be responsible for delays incurred in any wire-transfer of
funds to Henderson, so long as their bank has initiated that wire transfer
within the two (2)-Business Day period described above.
(3) Henderson shall be entitled, from time-to-time, in its
discretion, to submit multiple requests for funds from LEM or Station Two
Subsidiary pursuant to this Section 10.3(g); provided, however, that the
following additional conditions or limitations shall apply to the funding
obligations of LEM and Station Two Subsidiary hereunder for all purposes: (i)
the maximum amount of funds that LEM and Station Two Subsidiary, collectively,
shall be
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obligated to remit and pay to Henderson throughout the Term under this Section
10.3(g) for all renewals and replacements, collectively, shall not exceed the
Maximum Funding Limit, (ii) Henderson may not request funds hereunder in
increments of less than $10,000, (iii) LEM or Station Two Subsidiary (as
applicable) shall not be required to remit or pay funds to Henderson hereunder
in excess of that portion of the cost of the relevant renewal(s) or
replacement(s) corresponding with the Capacity from Station Two then reserved
for use by Big Rivers or Station Two Subsidiary (as contemplated in the Station
Two Power Sales Agreement and/or this Agreement), (iv) Henderson shall not
request funds in excess of its good faith estimate of the cost of such
renewal(s) or replacement(s), and hereby agrees to promptly repay to LEM or
Station Two Subsidiary (as applicable) any amounts funded by them in excess of
the actual cost thereof (which obligation of Henderson shall be deemed to
survive any expiration or termination of this Agreement), and (v) Henderson must
also contemporaneously fund, out of its own resources, that portion of the cost
of such renewal(s) and replacement(s) corresponding with Henderson's reserved
Capacity from Station Two at that time.
(4) Upon any expiration or termination of this Agreement, Henderson
agrees to immediately cease all expenditures of funds previously remitted and
paid by LEM or Station Two Subsidiary to Henderson as contemplated in this
Section 10.3(g), and agrees to promptly remit and pay to LEM or Station Two
Subsidiary, as applicable, all such funds then remaining in the possession or
control of Henderson, subject, however, to any rights of off-set Henderson may
have against any LG&E Company under this Agreement or the Assigned Station Two
Contracts. Big Rivers agrees that, within two (2) Business Days following that
expiration or termination, Big Rivers shall fund the Big Rivers Replacement R&R
Fund, to the same extent as would have initially been required of it under
Section 19.2 of the Station Two Power Sales Agreement upon Henderson's release
of the funds as provided for in Section 10.3(b) of this Agreement, and Henderson
shall thereafter be entitled to withdraw amounts from that fund as contemplated
in the Station Two Power Sales Agreement. Henderson further agrees to promptly
reimburse LEM or Station Two Subsidiary (as applicable) for any amounts paid by
them under this Section 10.3(g) to the extent Henderson receives insurance
proceeds
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by reason of the casualty, damage, event or other circumstance giving rise to
the relevant renewal(s) or replacement(s).
(5) Except as provided above with respect to Section 19.2 of the
Station Two Power Sales Agreement, and as expressly contemplated in this Section
10.3(g), nothing contained in this Section 10.3(g) is intended by the Parties to
modify their respective rights and obligations under this Agreement or any
Station Two Contract with respect to renewals or replacements relating to
Station Two or the funding of the same. Consistent with the foregoing, the
limitations on LEM's and Station Two Subsidiary's respective obligations to
provide funds to Henderson pursuant to this Section 10.3(g) shall not affect,
limit or eliminate the obligation of any LG&E Company to Henderson or Big Rivers
to ultimately share responsibility for the cost of such renewals or replacements
to the extent otherwise required under the terms of this Agreement or the
Assigned Station Two Contracts, nor shall they affect, limit or eliminate the
obligation of Henderson or Big Rivers (as applicable) under this Agreement or
any Station Two Contract to reimburse the LG&E Companies, or any of them, for
such costs, or to otherwise share responsibility for the same; provided, the
Parties each agree that any payment of funds by LEM or Station Two Subsidiary to
Henderson pursuant to this Section 10.3(g), upon the request of Henderson as
contemplated above, shall, to the extent of that payment, be deemed to satisfy
any obligations of the LG&E Companies and Big Rivers to Henderson to thereafter
fund that portion of the relevant renewals or replacements, whether under this
Agreement or any Station Two Contracts, including without limitation, any
obligation to pay that portion of any Capacity charges to Henderson or the
Trustee attributable to the costs and expenses of such renewal(s) or
replacement(s).
(6) In the event LEM and Station Two Subsidiary, or either of them,
shall be required at any time to provide funds to Henderson pursuant to this
Section 10.3(g), that LG&E Company shall provide Big Rivers with written notice
thereof, and Big Rivers agrees to reimburse that LG&E Company for its share
(based on its Station Two Improvement Sharing Ratio) of such amounts within five
(5) Business Days after its receipt of that written notice.
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10.4 [Intentionally Omitted].
10.5 Two County Restriction. In addition to any covenants or obligations
of Big Rivers under the Station Two Contracts, Big Rivers hereby further
covenants and agrees with the LG&E Companies and Henderson that, during the
Phase I Subcontract Term and the Phase II Assignment Term, Big Rivers will
comply with the requirements of the Letter Ruling and Section 21.1 of the
Station Two Power Sales Agreement with respect to all Station Two Power received
by it from any LG&E Company or transmitted by it over its transmission system.
The preceding covenant by Big Rivers shall continue until such time as
compliance with the terms of the Letter Ruling are no longer required under
applicable Laws to maintain and preserve the exemption from federal income
taxation of the interest on the Station Two Bonds. Notwithstanding anything in
this Agreement to the contrary, LEM and Station Two Subsidiary hereby
acknowledge and agree that, during the period that the Letter Ruling shall
remain in effect and shall continue to limit the distribution of Energy from
Station Two to customers within Henderson and Daviess Counties, (a) LEM and
Station Two Subsidiary shall sell Energy associated with the Station Two Surplus
Capacity (directly or indirectly) only to either Big Rivers, as contemplated in
this Agreement and in accordance with the Power Purchase Agreement, to
Henderson, or to Henderson Union pursuant to the terms of LEM/Henderson Union
Agreement for resale to Alcan, in each such case solely for distribution within
such two county area, and (b) the total amount of Energy produced from Station
Two during the month divided by the number of hours in the applicable month
shall not exceed the KWh Energy consumption by those retail customers served by
Henderson, Henderson Union or Green River located within Henderson and Daviess
Counties divided by the number of hours in the applicable month.
10.6 Two Counties' Demand. During the Phase I Subcontract Term and the
Phase II Assignment Term, the LG&E Companies or Big Rivers shall have the right,
in their discretion, upon written notice to Henderson and the other Party, to
request that the Station Two Bonds be refinanced in such a manner as will
eliminate the two county limitation of the
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Letter Ruling on the distribution and sale of Energy from Station Two, in the
event the LG&E Companies or Big Rivers, as the case may be, shall at any time
reasonably determine that the demand for Energy of the customers located in
Henderson and Daviess Counties to whom an LG&E Company or Big Rivers (directly
or through the Members) shall have a legal and contractual right to distribute
such Energy, is or is likely to become less than the amount of Station Two Unit
Output that is then or shall thereafter become available, for whatever reason,
including, without limitation, for the reason set forth in Section 8.12(f) and
9.7(e) of this Agreement. The Parties hereby agree that, immediately following
receipt of such a request from the LG&E Companies or Big Rivers, as the case may
be, Henderson, Big Rivers and the LG&E Companies shall take immediate steps,
using their respective commercially reasonable efforts, to cause Henderson to
refinance the Station Two Bonds at the earliest possible time with taxable bonds
or other forms of indebtedness of Henderson that will eliminate the limitation
of the Letter Ruling on distribution and sale of the Energy from Station Two
outside the two counties, and that otherwise contains terms that are customary
and commercially available at the time of such request for the type of financing
sought by the Parties. The Parties shall reasonably cooperate with each other
and take all action within their reasonable control as may be reasonably
necessary to complete the refinancing. The Parties hereby agree to share all of
the costs, fees and expenses associated with such refinancing, including the
incremental increase (if any) in interest costs (determined on a net present
value basis using a discount rate of eight percent (8%)) associated with
refinancing the Station Two Bonds with other taxable or tax-exempt indebtedness
(collectively, the "Refinancing Costs"), in proportion to the percentage of
Capacity allocated to Henderson, on the one hand, and to Big Rivers or Station
Two Subsidiary, on the other hand, for the month immediately preceding the month
in which the refinancing occurs, and with the further agreement between Big
Rivers and the LG&E Companies that the costs, fees and expenses of such
refinancing allocated to Big Rivers and Station Two Subsidiary shall be borne
equally by Big Rivers and Station Two Subsidiary. Notwithstanding the foregoing,
in the event that, during the period commencing on the date of the refinancing
of the Station Two Bonds and expiring on the earlier of March 1, 2002 or the
date which is three (3) years following the date of that refinancing, Henderson
has not recouped its proportionate share of the Refinancing Costs from profits
realized from sales of
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capacity or energy from its Station One generating station and/or from profits
realized from sales of its reserved Capacity or associated Energy from Station
Two (to the extent such sales are otherwise permitted under the Station Two
Contracts), in either case directly or indirectly to customers located outside
of Henderson and Daviess Counties, Kentucky, then the LG&E Companies shall be
obligated to pay to Henderson an amount in immediately available funds equal to
that portion of the Refinancing Costs not so recouped by Henderson. The
foregoing payment (if one shall become due) shall be paid by the LG&E Companies
within 10 days after the written request of Henderson is delivered following the
expiration of the period described above. Henderson agrees to use commercially
reasonable efforts to sell all such capacity and energy to the extent required
to recoup its Refinancing Costs as contemplated above, and shall maintain
appropriate records of all such transactions so that the Parties shall be able
to verify the profits realized therefrom by Henderson. If Big Rivers was the
Party which requested such refinancing, Big Rivers shall, within 15 days after
the written request of any of he LG&E Companies, reimburse the LG&E Companies
the amounts, if any, paid by the LG&E Companies to Henderson under this Section
10.6 to cover the portion of the Refinancing Costs not recouped by Henderson in
the manner described above.
10.7 Suspension of Performance.
(a) Prior to any LG&E Company's exercise of any rights that it may
have to terminate this Agreement (which rights shall not be affected or limited
by the provisions of this Section 10.7), and subject to any rights of off-set or
similar rights that may be available under this Agreement, the Station Two
Contracts or applicable Laws, the obligations of that LG&E Company under Section
8 of this Agreement, entitled "Phase I Subcontract," and, during the Phase II
Assignment Term, under any of the Assigned Station Two Contracts shall not be
disturbed, excused or suspended by reason of any breach or default by Big Rivers
or Henderson under this Agreement or any Station Two Contract, or by reason of
any breach or default by Big Rivers of any of the other Operative Documents
(including the termination of any of the Operative Documents), unless and only
to the extent that Big Rivers also has (and can exercise) the concomitant right
to disturb, excuse or suspend its performance under the
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corresponding portion(s) of such Station Two Contract by reason of a breach or
default by Henderson hereunder or thereunder (which rights Big Rivers
acknowledges it has an obligation to diligently pursue pursuant to Section
13.8(c) of this Agreement).
(b) Notwithstanding the limitations on the suspension of performance
by the LG&E Companies set forth in (a), above, and in addition to the
termination rights provided for in Section 13 of this Agreement, entitled
"Termination; Default; Remedies," the Parties hereby agree that: (i) the LG&E
Companies shall have the right to terminate this Agreement if at any time during
the Term (x) the Participation Agreement, the Power Purchase Agreement, the
Transmission Services and Interconnection Agreement, the Cost Sharing Agreement
and the Facilities Operating Agreement are terminated in accordance with their
respective terms by any of the LG&E Companies, or by WKEC, by reason of any
breach of default by Big Rivers under all or any of those agreements, or (y) the
Participation Agreement, the Power Purchase Agreement, the Transmission Services
and Interconnection Agreement and the Lease are terminated in accordance with
their respective terms by any of the LG&E Companies, or by WKEC, by reason of
any breach or default by Big Rivers under all or any of those agreements
(provided, that, the LG&E Companies' rights to terminate this Agreement by
reason of any of the circumstances described in (x) or (y), above, shall be
further conditioned upon the LG&E Companies then or thereafter having been
directly or indirectly denied access to, or the full use and enjoyment of, any
of the Fundamental Rights (as defined in Section 10.7(c) of this Agreement) for
any of the reasons described in Section 10.7(c) of this Agreement or as
permitted under Subclause (iv) of this Section 10.7(b)); (ii) Big Rivers shall
have the right to terminate this Agreement if at any time during the Term (x)
the Participation Agreement, the Power Purchase Agreement, the Transmission
Services and Interconnection Agreement, the Cost Sharing Agreement and the
Facilities Operating Agreement are terminated in accordance with their
respective terms by Big Rivers by reason of any breach or default by any of the
LG&E Companies or WKEC under all or any of those agreements, or (y) the
Participation Agreement, the Power Purchase Agreement, the Transmission Services
and Interconnection Agreement and the Lease are terminated in accordance with
their respective terms by Big
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Rivers by reason of any breach or default by any of the LG&E Companies or WKEC
under all or any of those agreements; (iii) the LG&E Companies and Big Rivers
shall at all times have the right to pursue each of their other respective
rights (if any) under this Agreement and the Station Two Contracts to terminate
this Agreement and/or any of the Station Two Contracts by reason of a breach or
default hereunder or thereunder by Henderson (subject, however, to any consent
rights in this Agreement as may exist as between the LG&E Companies and Big
Rivers prior to their taking any action to terminate any of the Station Two
Contracts); and (iv) following the retirement or redemption in full of the
Station Two Bonds, in the event that a breach or default by Henderson of this
Agreement or any of the Station Two Contracts, or any negligent or willful
misconduct of Henderson or any of its employees, agents or representatives,
shall have the effect, directly or indirectly, of denying the LG&E Companies and
Big Rivers access to, or the full use and enjoyment of, any of the Fundamental
Rights, then until such time as Henderson shall fully restore that Fundamental
Right the LG&E Companies and Big Rivers, in addition to all other rights and
remedies available to such Parties under this Agreement or the Station Two
Contracts, or in law or at equity, shall be excuse (without any obligations or
liability to Henderson or any other Party for breach or default of this
Agreement or the Station Two Contracts) from all obligations to Henderson under
the Station Two Power Sales Agreement to pay any Capacity charge payments and
reimbursement payments with respect to the Station Two Unit Output that is no
longer available, and under the Station Two Operating Agreement. In the event
the LG&E Companies are denied access to, or the full use and enjoyment of, any
of the Fundamental Rights by reason of a breach or default, or the negligence or
willful misconduct, of Henderson or its employees, agents or representatives, as
contemplated above, whether or not Big Rivers is also denied such access, use or
enjoyment, then the LG&E Companies shall be entitled to pursue and exercise any
and all rights and remedies that they may have against Henderson by reason
thereof, including without limitation, specific performance by Henderson of its
obligations under this Agreement and the Station Two Contracts, and under those
circumstances Big Rivers agrees to reasonably cooperate with the LG&E Companies
in their efforts to restore all of their Fundamental Rights at the earliest
practicable time. To the extent that the LG&E Companies and Big Rivers shall be
excused from their Capacity charge
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payment obligations to Henderson as contemplated above, then (A) in the case of
the LG&E Companies, they shall also be released from any obligation under this
Agreement to pay to Big Rivers, or reimburse Big Rivers for, any amounts
representing portions of those Capacity charge payments, and (B) in the case of
Big Rivers, it shall also be released from any obligation under this Agreement
to pay to the LG&E Companies, or reimburse them for, any amounts representing
portions of those Capacity charge payments.
(c) For purposes of this Section 10.7, the following rights, entitlements
and benefits from or relating to Station Two shall each constitute a
"Fundamental Right": (1) the access to and right throughout the Term to operate
and maintain Station Two and the other Station Two Assets (including, without
limitation, access to all of the Joint Use Facilities) as contemplated in this
Agreement and the Station Two Contracts; (2) the access to and right throughout
the Term to the full use and enjoyment of the Station Two Unit Output
(including, without limitation, the right of LEM and/or Station Two Subsidiary
to purchase, accept delivery of and resell such Unit Output to Big Rivers,
Henderson or Henderson Union (as contemplated in Sections 8.12(e) and 9.7(c)),
or to other Persons following the redemption or retirement in full of the
Station Two Bonds) in the manner, to the extent and at the costs contemplated in
this Agreement, the Station Two Power Sales Agreement and the LEM/Henderson
Union Agreement or, in the case of the rights of Big Rivers, under the Station
Two Power Sales Agreement alone; and (3) the access to and right throughout the
Term to reserve Big Rivers' available transmission capacity at tariffed or
market rates in quantities sufficient for (y) delivery of all Station Two Unit
Output to Henderson and to the Members of Big Rivers for distribution by them
solely within Henderson and Daviess Counties until such time as the Station Two
Bonds have been fully redeemed or retired, and (z) delivery of all Station Two
Unit Output to one or more interconnection points between the transmission
systems of Big Rivers and each interconnected utility's transmission system
after the Station Two Bonds have been fully redeemed or retired, in accordance
with Big Rivers' open access transmission tariff or any successor tariff of Big
Rivers or any other tariff that replaces Big Rivers' open access transmission
tariff or successor tariff that has been approved by FERC and that relates to
the Big Rivers' transmission system.
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(d) In the event (1) the Operative Documents (excluding this Agreement,
the Settlement Promissory Note, the Settlement Mortgage and the Subordinate
Mortgage and Security Agreement) shall terminate at any time during the Term of
this Agreement and (2) LEM and/or Station Two Subsidiary shall thereafter
continue to operate Station Two and to receive the Station Two Unit Output
pursuant to this Agreement, then Big Rivers shall, throughout the remainder of
the Term, continue to be entitled to receive on each Monthly Payment Date a
portion (determined on the basis of the formula set forth below in this Section
10.7(d)) of the monthly installments of the Annual Fixed Payment or Rental
Payment that it would have received under the Power Purchase Agreement or the
Lease had such agreements not been terminated (but excluding any adjustments to
the Annual Fixed Payments or Rental Payment that otherwise would be contemplated
because the Contract Limits have been eliminated due to the termination of the
Power Purchase Agreement), and a portion (determined on the basis of the formula
set forth below in this Section 10.7(d)) of the refund payment otherwise due to
WKEC or its Affiliate under Section 21.8 of the Participation Agreement shall
not be due and owing to WKEC or such Affiliate, but only for so long as (i) Big
Rivers continues to fulfill its obligation to purchase the Station Two Unit
Output from LEM and/or Station Two Subsidiary upon the terms and conditions
specified in Section 8.12(e) of this Agreement, or to make the payments to LEM
and/or Station Two Subsidiary in lieu of those purchases as permitted under
Section 8.12(f), (ii) Big Rivers continues to fulfill and discharge all payment
and other obligations to LEM under the Settlement Promissory Note, and (iii) the
LG&E Companies continue to receive all of the Fundamental Rights in all material
respects or, should any of the Fundamental Rights be denied the LG&E Companies,
the denial of such right is not by reason of a breach or default of this
Agreement or any Station Two Contract by Big Rivers or by reason of the
negligence or willful misconduct of Big Rivers or its employees, agents or
representatives. The portion of each monthly installment of any Annual Fixed
Payment or Rental Payment, if any, that shall be due Big Rivers under this
Section 10.7(d) shall be an amount equal to (1) the monthly installment of
Annual Fixed Payment or Rental Payment that would have been due Big Rivers at
that time under either the
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Power Purchase Agreement or the Lease had it continued in force and effect
(subject to all adjustments in such installment payments as shall then be
applicable under the terms of the Power Purchase Agreement and the Lease, but
excluding any adjustments to the Annual Fixed Payments or Rental Payment that
otherwise would be contemplated because the Contract Limits have been eliminated
due to the termination of the Power Purchase Agreement), multiplied by (2) the
ratio by which: (A)(i) the total number of megawatts of Station Two Surplus
Capacity allocated to Big Rivers and/or Station Two Subsidiary (or its
successors or permitted assigns) under the Station Two Power Sales Agreement on
the date on which the last of the Operative Documents (other than this
Agreement) terminates minus (ii) 50% multiplied by the difference (if any)
between (x) the average number of megawatts of Power anticipated to be reserved
for each hour by Henderson from Station Two between the relevant Monthly Payment
Date and the fourth (4th) anniversary thereof (as reflected in the current five
(5) year forecast of Henderson's needs required to be made under the Station Two
Power Sales Agreement, but adjusted to include any Economic Development Power
reserved by Henderson for its customers as contemplated in the 1998 Amendments
and Sections 11.1, 11.2 and 11.3 of this Agreement) and (y) the average number
of megawatts of Power from Station Two that were reserved by Henderson for each
hour during the four (4) year period immediately preceding the relevant Monthly
Payment Date, including, without limitation, any Economic Development Power
reserved by Henderson during the preceding four (4) year period; bears to (B)
1708 Megawatts. The portion of the refund of the Initial Fixed Payment or the
Initial Rental Payment that will not be due to WKEC or its Affiliate, if any,
shall be an amount equal to the amount of such refund payment that is due by Big
Rivers to WKEC or such Affiliate under Section 21.8 of the Participation
Agreement multiplied by the ratio described in (2) of the immediately preceding
sentence of this Section 10.7(d).
10.8 Insurance.
(a) Station Two Subsidiary shall have in place on the Effective Date, and
shall thereafter maintain in effect at all times during the Term, in accordance
with standards prevailing in the electric power industry (including the
independent power industry) for assets
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of similar size and nature to Station Two, insurance coverage for Station Two
with responsible insurers, for the benefit of Station Two Subsidiary, Henderson
and Big Rivers as their respective interests may appear, to protect and insure
against: third party liability for bodily injury and property damage, all risks
of physical damage to property or equipment, including transportation and
installation perils, catastrophic losses due to either third party liability or
damage to first party property, workers compensation insurance and such other
insurance as Station Two Subsidiary deems necessary, with reasonable limits and
subject to appropriate exclusions and deductibles/retentions. Such insurance
shall at all times be subject to prior approval by Henderson, which approval
shall not be unreasonably withheld, conditioned or delayed by Henderson. In no
event, however, shall the coverage maintained in effect by Station Two
Subsidiary at any time be less than the insurance coverages of the types and in
the minimum amounts set forth in Section 18.1 of the Station Two Operating
Agreement or as required in the Bond Ordinance or the Debt Restructuring
Documents, whichever is greater; provided, that Henderson shall in no event bear
any responsibility for payment of the increase in insurance premiums caused by
the requirements of the Debt Restructuring Documents. Station Two Subsidiary
may, at its option, continue and maintain in effect, the insurance policies and
coverage on Station Two in effect on the Effective Date and to have itself named
as an additional insured party, and Henderson and Big Rivers agree to reasonably
cooperate with Station Two Subsidiary to accomplish the same, upon its request.
Henderson agrees to promptly notify Station Two Subsidiary at such time as the
provisions of the Bond Ordinance require insurance coverages that are different
than those required by the Station Two Operating Agreement.
(b) At all times during the Term, when the Station Two Bonds shall remain
outstanding, all insurance proceeds from policies obtained pursuant hereto or
pursuant to any other provision of the Station Two Contracts ("Station Two
Assets Insurance") shall be paid and applied by Henderson, Big Rivers, the LG&E
Companies and/or the insurance company or companies providing such insurance in
accordance with the provisions of the Bond Ordinance and Section 12.2 of this
Agreement.
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(c) Henderson shall be named as the first named insured and each of Big
Rivers and Station Two Subsidiary shall be named as additional named insureds on
all policies of Station Two Assets Insurance (except for any crime policy and
any workers' compensation and employers' liability policy), and such policies
that do not carry a "separation of insureds" provision shall carry
cross-liability endorsements.
(d) Station Two Subsidiary shall notify Henderson and Big Rivers of the
assertion of any claim relating to the Station Two Assets immediately upon
assertion of the same, or of the occurrence of an event likely to result in the
assertion of such a claim. Station Two Subsidiary shall report annually to
Henderson, Big Rivers and the Operating Committee all claims asserted in the
amount of $100,000 or more, and shall provide Henderson, Big Rivers and the
Operating Committee with all notices provided to insurers with respect to any
such claim.
(e) Station Two Subsidiary shall furnish the Parties with Certificates of
Insurance evidencing the existence of the Station Two Assets Insurance and shall
furnish Henderson a copy of all policies of insurance providing coverage for
Station Two. Upon the request of Big Rivers or Henderson, Station Two Subsidiary
shall make available for inspection and copying a certified copy of each of the
policy forms of Station Two Assets Insurance, together with a line sheet
therefor (and any subsequent amendments) naming the insurers and underwriters
and the extent of their participation.
(f) Each of the Station Two Assets Insurance policies shall be endorsed so
as to provide that the Parties shall be given the same advance notice of
cancellation or material change as that required to be given to Station Two
Subsidiary.
(g) Nothing in this Agreement or the Station Two Contracts shall prohibit
Station Two Subsidiary from combining the coverage required by this Agreement
with coverage outside the scope of that required by this Agreement as long as
such combining of coverage in no way adversely affects the coverage required
hereunder.
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(h) Station Two Subsidiary shall assist any insurer in the investigation,
adjustment and settlement of any loss or claim covered by Station Two Assets
Insurance. Station Two Subsidiary and Henderson shall jointly present and
prosecute claims against insurers providing Station Two Assets Insurance in
respect of any loss of or damage to the Station Two Assets or liability of any
Party to third parties covered by such insurance.
10.9 Cooperation in Fuel Procurement. During the Phase I Subcontract Term
and the Phase II Assignment Term, Station Two Subsidiary or its Affiliates may
advise and assist Henderson, as and when requested by Henderson, in its
procurement of fuel and reagents for Station Two. Subject to applicable laws of
the Commonwealth of Kentucky, during the Phase I Subcontract Term and Phase II
Assignment Term, Henderson shall provide Station Two Subsidiary reasonable
advance notice each time that it intends to purchase fuel or reagents for
Station Two and shall offer Station Two Subsidiary or its designated Affiliates
a reasonable opportunity to participate in any procedures required of Henderson
by the Laws of the Commonwealth of Kentucky relating to its fuel and reagent
procurement for Station Two. Big Rivers acknowledges and agrees that Station Two
Subsidiary or its Affiliate may advise and assist Henderson in Henderson's
purchase of fuel and reagents for Station Two, and hereby agrees that it will
take no action that would in any manner interfere with such arrangement between
Henderson and Station Two Subsidiary (or any of its Affiliates); provided, Big
Rivers shall have no responsibility, liability or obligation, of any nature
whatsoever, relating to Station Two Subsidiary's advice and assistance to
Henderson hereunder. Station Two Subsidiary has agreed to indemnify Big Rivers,
upon the terms set forth in Section 10.15(b), for certain costs, liabilities and
obligations that it may incur during the Phase I Subcontract Term under certain
fuel supply agreements.
10.10 Maintenance Power. During the Phase I Subcontract Term and the Phase
II Assignment Term, Henderson agrees that, in the event both of the generating
units at Station Two are out of service by reason of a scheduled or unscheduled
outage, Henderson shall provide to Station Two all Power required for its
operation, maintenance and repair during that scheduled or unscheduled outage.
Henderson shall be paid by Station Two Subsidiary all
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of Henderson's actual costs to provide such Power to Station Two, and such
expenditures by Station Two Subsidiary shall be deemed to be reasonable and
necessary operations and maintenance expenses of Station Two for all purposes
under this Agreement and the Station Two Contracts.
10.11 Access to Premises; Rights-of-Way.
(a) Big Rivers and Henderson shall provide rights of access, ingress and
egress, to the LG&E Companies and their respective agents, attorneys,
representatives, Affiliates and employees to all plants, facilities, land and
properties for the purpose of enabling the LG&E Companies, and their agents,
attorneys, representatives, Affiliates and employees, to perform or fulfill
their respective obligations under this Agreement and the Assigned Station Two
Contracts (or pursuant to a new agreement entered into by the LG&E Companies and
Henderson in accordance with Section 13.8(f) of this Agreement), provided such
access does not unreasonably interfere with Big Rivers' ability to fulfill its
responsibilities and exercise its rights under this Agreement or to otherwise
conduct its operations, including, without limitation, its operation of the
facilities. Big Rivers (to the extent such right is not provided to the LG&E
Companies in any Operative Document or in the event such right is provided to
the LG&E Companies in an Operative Document but that Operative Document shall at
any time be terminated, rescinded or revoked prior to termination or expiration
of this Agreement) and Henderson each hereby further grants, or shall hereafter
grant, to the LG&E Companies such non-exclusive rights-of-way and easements over
its real property or the non-exclusive right to use any easement or
rights-of-way from others in which either Big Rivers or Henderson may possess an
interest, as may be reasonably necessary to enable the LG&E Companies and their
respective agents, attorneys, representatives, Affiliates and employees to
perform or fulfill their respective obligations to Big Rivers or Henderson under
this Agreement or the Assigned Station Two Contracts (or pursuant to a new
agreement entered into by the LG&E Companies and Henderson in accordance with
Section 13.8(f) of this Agreement), including, without limitation, all such
rights-of-way and easements that Big Rivers and Henderson shall have granted to
the other prior to the Effective Date or may
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hereafter grant to the other, in relation to Station Two or the other Station
Two Assets, provided such access does not unreasonably interfere with Big
Rivers' ability to fulfill its responsibilities and exercise its rights under
this Agreement or to otherwise conduct its operations, including, without
limitation, its operation of its transmission facilities. Neither Big Rivers nor
Henderson shall take any action to disturb the right or authority of the other
Party or any of the LG&E Companies at any time during the Phase I Subcontract
Term or the Phase II Assignment Term to any such rights, rights-of-way or
easements, or to the use thereof. At the request of the LG&E Companies, the
Parties shall execute and file with appropriate governmental offices such
short-form instruments or other agreements, instruments and documents, in form
reasonably satisfactory to the LG&E Companies, evidencing the LG&E Companies'
rights and interests in the properties granted in this Section 10.11. At such
time as Station Two Subsidiary or its Affiliates, successors or permitted
assigns under Section 15 of this Agreement shall no longer have the right to
operate and maintain Station Two, the LG&E Companies shall execute and file with
appropriate governmental offices such instruments and other agreements and
documents in form reasonably satisfactory to Henderson and Big Rivers,
respectively, releasing the LG&E Companies' rights and interest in those
properties granted in this Section 10.11.
(b) Big Rivers shall at all times have access to, and the right of ingress
and egress from, Station Two solely for the purposes of (1) providing the
services required of it under this Agreement and the other Operative Documents
or, (2) upon reasonable prior written notice to Station Two Subsidiary,
examining and observing the operation of the Station Two Assets, provided such
access does not unreasonably interfere with Station Two Subsidiary's ability to
fulfill its responsibilities and exercise its rights under this Agreement and
the Assigned Station Two Contracts. Any entry by Big Rivers or its employees,
agents or representatives on the premises of Station Two, and each examination
or inspection conducted by Big Rivers or its employees, agents or
representatives, shall be done at the expense and risk of Big Rivers, and shall
be conducted during normal business hours upon reasonable prior notice to
Station Two Subsidiary.
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10.12 Covenants to Exercise Rights and Remedies.
(a) At any time during the Phase I Subcontract Term, Big Rivers shall
exercise such rights in respect of the Station Two Contracts as are reasonably
requested from time to time by Station Two Subsidiary, LEM or WKEC to the extent
the exercise of such rights is reasonably necessary for any LG&E Company to
receive the full benefit, use and enjoyment of the LG&E Companies' respective
rights under the Phase I Subcontract. At any time during the Phase II Assignment
Term, Big Rivers shall exercise all such rights and shall consent to the taking
of such actions in respect of the Station Two Contracts as are reasonably
requested from time to time by any LG&E Company and as are reasonably necessary
to preserve the LG&E Company's rights and interests under this Agreement and the
Station Two Contracts. Such rights and consents that may be requested of Big
Rivers at any time during the Term shall include, to the extent such rights
reside in Big Rivers, without limitation, (a) exercising the right to request a
test to determine the total Capacity of Station Two pursuant to Section 3.6 of
the Station Two Power Sales Agreement, and (b) fully enforcing all rights and
legal remedies Big Rivers has under the Station Two Contracts (as further
provided in Section 13.8 of this Agreement), whether or not on account of a
breach or default thereunder by Henderson, and refraining from waiving
compliance by Henderson with any of its obligations under the Station Two
Contracts or this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, none of
the LG&E Companies or Big Rivers shall waive any rights, or fail to enforce any
remedy, that it may have against Henderson, the waiver or failure of which would
materially adversely affect the other Party's rights and interests under this
Agreement or the Station Two Contracts; provided, however, in fulfilling the
foregoing covenants, Big Rivers shall have no obligation to terminate this
Agreement or any Station Two Contract or exercise any option it may have to
purchase any property or assets related to Station Two, and the LG&E Companies
shall have no obligation to terminate this Agreement.
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10.13 Notice of Delivery Obligations. Big Rivers and the LG&E Companies
hereby agree that each shall provide the other Party with all notices, reports,
documents or other written communications that it directs to or receives from
Henderson pursuant to or relating to the Station Two Assets, the Station Two
Contracts or the Bond Ordinance.
10.14 Access to Records. From and after the Effective Date, and at all
times during the Term, each of the Parties shall, at the reasonable request of
another Party, afford or cause to be afforded to the agents, attorneys,
accountants and other authorized representatives of such other Party reasonable
access during normal business hours to all employees, representatives,
properties, books, records (excluding employee records), data, contracts and
documents, to which such requesting Party reasonably needs access to perform its
obligations under, or to exercise its rights and obtain the full benefits under,
this Agreement and the Station Two Contracts, and shall permit such
representatives, at the requesting Party's expense, to use and, if necessary,
make copies of such books, records, data, contracts and documents.
Notwithstanding anything herein to the contrary, each of the Parties shall
maintain dominion and control over their respective books, records, data,
contracts and documents at all times during the Term.
10.15 Indemnification; Waivers and Limitations of Liability.
(a) Station Two Subsidiary shall be fully responsible to Big Rivers during
the Phase I Subcontract Term for the performance, on behalf of Big Rivers, of
those provisions of the Station Two Operating Agreement and the Joint Facilities
Agreement that Station Two Subsidiary has expressly agreed to perform under
Section 8 of this Agreement, entitled "Phase I Subcontract," and during the
Phase II Assignment Term for the Assumed Station Two Liabilities that it has
expressly agreed to perform and discharge under Section 9 of this Agreement,
entitled "Phase II Assignment" (collectively, the "Station Two Subsidiary's
Performance Obligations"), in each case to the extent and in the manner required
by those Station Two Contracts and this Agreement. From and after the Execution
Date, Station Two Subsidiary hereby agrees to indemnify and save harmless Big
Rivers and Henderson from all
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claims, losses, liabilities, damages, costs (including court costs) and expenses
(including reasonable attorneys' and accountants fees) suffered or incurred by,
or made against, each such Party, or their respective agents, representatives
and employees, arising out of, resulting from or related to the following:
(1) Any inaccurate representation or warranty made by the LG&E
Companies to that Party in this Agreement.
(2) Any breach or default by an LG&E Company in the performance or
discharge of any of the covenants or agreements made to that Party in this
Agreement; provided, however, that with respect to the LG&E Companies'
performance obligations under Section 8.2 of this Agreement, such
performance shall be irrespective of any materiality standard set forth in
Section 8.3 of this Agreement.
(3) All liability and expense incurred by that Party on account of
any and all damages, claims or actions, including injury to or death of
Persons or damage to property, arising from any act, omission or accident
in connection with Station Two (including in the case of Henderson only,
without limitation, damages, liability and expense arising out of
Environmental Violations or Environmental Conditions), in each case, to
the extent caused by the negligence or any willful misconduct of Station
Two Subsidiary, or its agents, representatives and/or employees.
(4) For the benefit of Big Rivers only throughout the entire Term,
any breach or noncompliance by any LG&E Company with the Bond Ordinance in
performing or not performing its obligations under this Agreement and/or
the Station Two Contracts during the Term (it being understood that in the
event such breach or non-compliance by the LG&E Companies causes Henderson
to be in breach of the Bond Ordinance, the indemnity provided by the LG&E
Companies pursuant to this paragraph shall include the reasonable costs of
refinancing the Station Two Bonds incurred by Station Two Subsidiary
(including without limitation, incremental interest costs) if such
refinancing is deemed appropriate by
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Henderson and Big Rivers as a consequence of such breach or non-compliance
by an LG&E Company).
Nothing in this Section 10.15(a) shall impose on Station Two Subsidiary any
obligation for any such liability or expense incurred by that Party that arises
out of or otherwise is the result of the negligence or the willful misconduct of
Big Rivers or Henderson, or any of their respective agents, representatives or
employees (which negligence or willful misconduct is not the direct result of an
act or omission of any LG&E Company or its agents, representatives or
employees), or the breach or default of any of the terms or provisions of this
Agreement or the Station Two Contracts or any other Operative Document, which
Big Rivers or Henderson, respectively, is required to perform from and after the
Effective Date (in any such event which breach or default is not the direct
result of a breach or default by any LG&E Company under such agreements or any
LG&E Company's acts or omissions) or was required to perform prior to the
Effective Date. Notwithstanding anything contained in this Section 10.15(a) or
elsewhere in this Agreement to the contrary, and except to the extent
contemplated in Section 10.15(j) of this Agreement, no LG&E Company shall have
liability to Big Rivers under this Agreement for environmental matters
(including, without limitation, Environmental Violations and Environmental
Conditions), or any damages, liabilities, claims, injuries, costs, or expenses
arising out of, or relating to, such environmental matters, at or relating to
Station Two or any other Station Two Assets, or associated with its operation of
Station Two or any other Station Two Assets, and its sole obligation (if any) to
Big Rivers relating thereto shall be as set forth in Article 14 of the
Participation Agreement and Section 10.15(j) of this Agreement.
(b) During the Phase I Subcontract Term, Station Two Subsidiary shall
indemnify, defend and hold harmless Big Rivers and its directors, officers and
employees for any liability, loss, damage, claim, and cost (including reasonable
attorneys' fees) arising or accruing after the Effective Date in connection with
each and every fuel supply contract held by Big Rivers as of the Execution Date
for use in connection with Station Two, and all other fuel supply contracts
entered into by Big Rivers after the Execution Date with Station Two
Subsidiary's
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prior written consent, in each case including liabilities, losses, damages,
claims, and costs (including reasonable attorneys' fees) arising from any act or
omission of Big Rivers following the Effective Date, provided that, if such
liability, loss, damage, claim or cost (including reasonable attorneys' fees)
arises from any act or omission of Big Rivers that constitutes a breach or
default by Big Rivers under any such fuel supply contract, or negligence or
willful misconduct by Big Rivers or its employees, agents or representatives,
(which breach, default, negligence or willful misconduct by Big Rivers under any
such fuel supply contract is not related to or caused by any act or omission of
Station Two Subsidiary or any other LG&E Company), then Station Two Subsidiary
shall have no obligation to Big Rivers under this provision unless Station Two
Subsidiary or any other LG&E Company requested or concurred in writing to such
act or omission by Big Rivers (in which case Station Two Subsidiary's
obligations under this Section shall not be excused).
(c) From and after the Execution Date, Henderson, in addition to and not
in substitution for any indemnities given in any provision of the Station Two
Contracts, hereby agrees to indemnify and save harmless the LG&E Companies and
Big Rivers, and each of their respective agents, representatives, servants and
employees, from any and all claims, losses, liabilities, damages, costs
(including court costs) and expenses (including reasonable attorneys' and
accountants' fees) suffered or incurred by, or made against, such LG&E Companies
(or any of them) or Big Rivers, or their respective agents, representatives and
employees, arising out of, resulting from or related to the following:
(1) Any inaccurate representation or warranty made by Henderson to
that Party in this Agreement;
(2) Any breach or default by Henderson in the performance or
discharge of any of the covenants or agreements made to that Party in this
Agreement.
(3) For the benefit of each of the LG&E Companies throughout the
entire Term, all liability and expense incurred or suffered by that LG&E
Company on account of any
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and all damages, claims or actions, including injury to or death of
Persons or damage to property, arising from any act, omission or accident
in connection with Station Two (including, without limitation, damages,
liability and expense arising out of Environmental Violations or
Environmental Conditions), in each case to the extent caused by the
negligence or any willful misconduct of Henderson, its agents,
representatives and/or employees.
Nothing in this Section 10.15(c) shall impose on Henderson any obligation for
any such liability or expense incurred by any of the LG&E Companies or Big
Rivers that arises out of or otherwise is the result of the negligence or
willful misconduct of any of the LG&E Companies or Big Rivers, respectively, or
their respective agents, representatives and/or employees (which negligence or
willful misconduct is not the direct result of an act or omission of Henderson
or its agents, representatives or employees), or the breach or default of any of
the terms or provisions of this Agreement or the Station Two Contracts which any
of the LG&E Companies or Big Rivers, respectively, is required to perform from
and after the Effective Date (which breach or default is not the direct result
of a breach or default by Henderson under such agreements or Henderson's or its
agent's, representative's or employee's acts or omissions).
(d) From and after the Execution Date, Big Rivers, in addition to and not
in substitution for any indemnities given in any provision of the Station Two
Contracts, hereby agrees to indemnify and save harmless each of the LG&E
Companies and Henderson, and the respective agents, representatives and
employees of Station Two Subsidiary and Henderson, from any and all claims,
losses, liabilities, damages, costs (including court costs) and expenses
(including reasonable attorneys' and accountants' fees) suffered or incurred by
or made against any LG&E Companies or Henderson, or their respective agents,
representatives and employees, arising out of, resulting from or related to the
following:
(1) Any inaccurate representation or warranty made by Big Rivers to
that Party in this Agreement.
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(2) Any breach or default by Big Rivers in the performance or
discharge of any of the covenants or agreements made to that Party in this
Agreement.
(3) For the benefit of the LG&E Companies only throughout the entire
Term, all liability and expense incurred or suffered by that LG&E Company
on account of any and all damages, claims or actions, including injury to
or death of Persons or damage to property, arising from any act, omission
or accident in connection with Station Two to the extent caused by the
negligence or any willful misconduct of Big Rivers or its agents,
representatives and/or employees.
(4) For the benefit of each of the LG&E Companies only throughout
the entire Term, any breach or noncompliance by Big Rivers with the Bond
Ordinance in performing or not performing its obligations under this
Agreement and/or the Station Two Contracts during the Term (it being
understood that in the event such breach or non-compliance by Big Rivers
causes Henderson to be in breach of the Bond Ordinance, the indemnity
provided by Big Rivers pursuant to this paragraph shall include the
reasonable costs of refinancing the Station Two Bonds incurred by Station
Two Subsidiary (including without limitation, incremental interest costs)
if such refinancing is deemed appropriate by Henderson and Station Two
Subsidiary as a consequence of such breach or non-compliance of Big
Rivers).
Nothing in this Section 10.15(d) shall impose on Big Rivers any obligation for
any such liability or expense incurred by any of the LG&E Companies or Henderson
that arises out of or otherwise is the result of the negligence or willful
misconduct of any of the LG&E Companies or Henderson, respectively, or any of
their respective agents, representatives and/or employees (which negligence or
willful misconduct is not the direct result of an act or omission of Big Rivers
or its agents, representatives or employees), or the breach or default of any of
the terms or provisions of this Agreement or the Station Two Contracts which an
LG&E Company or Henderson, respectively, is required to perform from and after
the
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Effective Date (which breach or default is not the direct result of a breach or
default by Big Rivers under such agreements or acts or omissions of Big Rivers
or its agents, representatives or employees). Notwithstanding anything contained
in this Section 10.15(d) or elsewhere in this Agreement to the contrary, and
except to the extent contemplated in Section 10.15(j) of this Agreement, Big
Rivers shall have no liability to any LG&E Company under this Agreement for
environmental matters (including, without limitation, Environmental Violations
and Environmental Conditions), or any damages, liabilities, claims, injuries,
costs, or expenses arising out of, or relating to, such environmental matters,
at or relating to Station Two or any other Station Two Assets, or associated
with its operation of Station Two or any other Station Two Assets, and its sole
obligation (if any) to the LG&E Companies relating thereto shall be as set forth
in Article 14 of the Participation Agreement and Section 10.15(j) of this
Agreement.
(e) Station Two Subsidiary shall not be liable or in any way responsible
for, and Henderson and Big Rivers each hereby waives all claims or actions
against Station Two Subsidiary and its Affiliates, agents, representatives and
employees for, any breach or default by Big Rivers of this Agreement or any of
the Station Two Contracts, as the same are now or may hereafter be in effect
(unless such breach or default is the result of an act or omission by any LG&E
Company).
(f) None of the LG&E Companies, unless otherwise specifically provided in
this Agreement or in the Assumed Station Two Liabilities, shall be liable at any
time for any act, omission or legal obligation (i) of any other Party to this
Agreement; (ii) of the agents, representatives and/or employees of any other
Parties, or (iii) of any persons, corporations or other entities not a Party to
this Agreement. The provisions of this Section 10.15(f) are intended to provide
the LG&E Companies, throughout the Term, with the same rights and entitlements
as those that are provided to Henderson and Big Rivers in Section 21.2 of the
Station Two Operating Agreement.
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(g) Neither Big Rivers nor any of the LG&E Companies (the "Released
Party"), nor any of the Released Party's respective Affiliates, successors and
assigns, nor any of the Released Party's officers, consultants or agents, will
be liable or in any way responsible to the other Party(s) (the "Releasing
Party"), and the Releasing Party waives all claims that it may have against each
Released Party and each Released Party's Affiliates, agents, representatives or
employees, for any liability, loss, damage, claim or cost (including attorneys'
fees) suffered by the Releasing Party in connection with the performance of the
Released Party's (or any of its Affiliates') obligations under this Agreement or
the Station Two Contracts (including in the case of an LG&E Company any such
liability, loss, damage, claim or cost suffered by it in connection with the use
and/or operation of the Station Two Assets by that LG&E Company and its
Affiliates, agents, representatives or employees), except to the extent such
liability, loss, damage, claim or cost shall have been caused by the negligence
or willful act or omission of the Released Party, its Affiliates, successors and
assigns (unless the Released Party shall be released from such obligations
caused by its successors and assigns under Section 15.2 of this Agreement), or
their respective agents, representatives or employees, or by the breach or
default by the Released Party under this Agreement, any of the Station Two
Contracts or any of the other Operative Documents (which act or omission of any
such Released Party or its Affiliates, or their respective agents,
representatives or employees, is itself not the direct result of an act or
omission of any Releasing Party or any of its Affiliates, or their respective
agents representatives or employees), and except for losses, injuries and
damages specifically assumed by the Released Party or covered by any
indemnification or hold harmless covenant of the Released Party in this
Agreement, any of the Station Two Contracts or any of the Operative Documents.
This Section 10.15(g) is solely between Big Rivers and the LG&E Companies and is
not intended to modify or in any way limit the respective rights and obligations
specified in this Agreement or the Station Two Contracts, or otherwise, between
Henderson and Big Rivers or Henderson and any of the LG&E Companies.
(h) Station Two Subsidiary does not assume and shall not in any manner be
responsible or liable for, and Big Rivers and Henderson each hereby agrees, for
itself only, to indemnify and hold Station Two Subsidiary harmless from and
against, any and all loss, cost,
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expense (including reasonable attorneys' fees), claims and causes of action,
debts, obligations, liabilities or responsibilities, whether known or unknown,
fixed, contingent or otherwise, and not otherwise specifically assumed or
undertaken hereunder by Station Two Subsidiary (1) that arose or accrued under
the Station Two Contracts prior to the Effective Date, or (2) that arose out of
or relating to any failure by Big Rivers or Henderson, as applicable, to perform
any covenants or conditions under the Station Two Contracts which were required
to be performed or fulfilled by it prior to the Effective Date, or (3) that are
asserted by third parties (including, all claims asserted by Henderson or, in
the case of Henderson, all claims asserted by Big Rivers) related to the
ownership, use, operation and/or maintenance by Big Rivers or Henderson, as
applicable, of Station Two or the Station Two Assets, as the case may be, prior
to the Effective Date, including, in the case of Henderson only, and without
limitation, any Environmental Violation or Environmental Condition existing as
of the Effective Date. Notwithstanding anything contained in this Section
10.15(h) or elsewhere in this Agreement to the contrary, and except to the
extent contemplated in Section 10.15(j) of this Agreement, Big Rivers shall have
no obligation or liability to the LG&E Companies by reason of this Agreement or
the provisions hereof for any environmental matters (including without
limitation, Environmental Violation or Environmental Condition) at or relating
to Station Two, and Big Rivers' sole obligation or liability (if any) to the
LG&E Companies for such Environmental Violations and/or Environmental Conditions
shall be as set forth in the Participation Agreement and Section 10.15(j) of
this Agreement. The Parties further acknowledge that notwithstanding anything
contained in this Agreement to the contrary, Big Rivers shall have no obligation
or liability to Henderson, and Henderson shall have no obligation or liability
to Big Rivers, by reason of this Agreement or the provisions hereof for any
Environmental Violation or Environmental Condition at or relating to Station
Two, and that Big Rivers' sole obligation and liability to Henderson (if any),
and Henderson's sole obligation and liability to Big Rivers (if any) for such
Environmental Violations or Environmental Conditions shall be as set forth in
the Station Two Contracts.
(i) Station Two Subsidiary hereby agrees that, in connection with any
reversion and assignment to Big Rivers of all rights and obligations under the
Assigned Station Two
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Contracts which is to occur upon the expiration or termination of this Agreement
as provided for and in accordance with Section 10.16 of this Agreement, Big
Rivers shall not assume and shall not in any manner be responsible or liable
for, and Station Two Subsidiary hereby agrees to indemnify and hold Big Rivers
harmless from and against, any and all loss, costs, expense (including
reasonable attorneys' fees), claims, causes of action, debts, obligations,
liabilities and responsibilities, whether known or unknown, fixed, contingent or
otherwise, (1) arising out of or relating to any failure by Station Two
Subsidiary during the Term to perform any of the Station Two Subsidiary's
Performance Obligations, or (2) which are asserted against Big Rivers by any
third party (including Henderson) related to the use, operation and/or
maintenance by Station Two Subsidiary of Station Two or the other Station Two
Assets during the Term; provided, that Station Two Subsidiary shall have no
obligation or liability to Big Rivers under this Section 10.15(i) for any such
losses, costs, expenses, claims, causes of action, debts, obligations,
liabilities or responsibilities that arise out of or otherwise are the result of
the negligence or the willful misconduct of Big Rivers or Henderson, or any of
their respective agents, representatives and/or employees (which negligent or
willful act or omission is not the direct result of an act or omission of any
LG&E Company), or the breach or default of this Agreement or any of the terms or
provisions of the Station Two Contracts or any other Operative Document which
Big Rivers or Henderson is required to perform at any time prior to the date of
such reversion or assignment to Big Rivers (which breach or default is not the
direct result of a breach or default by any LG&E Company under such agreements).
Notwithstanding the foregoing, Big Rivers further acknowledges that neither
Station Two Subsidiary nor any other LG&E Company shall have any obligation or
liability to Big Rivers by reason of this Agreement or the provisions hereof for
any Environmental Violations or Environmental Conditions relating to Station Two
or any other Station Two Assets, or to the real property on which Station Two or
the other Station Two Assets are situated, and that the LG&E Companies' sole
obligation or liability (if any) for such Environmental Conditions shall be as
set forth in the Participation Agreement and Section 10.15(j) of this Agreement.
(j) Big Rivers and each of the LG&E Companies acknowledge and agree with
each other, but not with Henderson, that the provisions of Article 14 of the
Participation Agreement
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shall apply with equal effect to Station Two, and the other Station Two Assets,
and the real property on which Station Two and the other Station Two Assets are
situated, and to all Environmental Violations and Environmental Conditions at,
affecting or relating to Station Two, the other Station Two Assets and the real
property on which Station Two and the other Station Two Assets are situated, the
same as such provisions may apply to the Facilities and the real property on
which the Facilities are situated, and that the Baseline Environmental Audit
Report, the End of Term Baseline Audit and the scope of the related
environmental audits shall each be caused to encompass all such assets,
facilities and real property. On or prior to the Effective Date, Big Rivers, the
LG&E Companies and WKEC intend to amend the Participation Agreement to reflect
the Parties' acknowledgments and agreements described above; provided, that in
the event such amendments are not so made, the provisions of this Section
10.15(j) shall continue to govern the respective rights and responsibilities of
Big Rivers and the LG&E Companies with respect to Hazardous Substances or other
Environmental Violations or Environmental Conditions or circumstances at,
affecting or relating to Station Two or the other Station Two Assets, or the
real property upon which those assets and facilities are situated, and the
provisions of Article 14 of the Participation Agreement, as between Big Rivers
and the LG&E Companies, shall be deemed to be incorporated by reference herein
and shall be made a part of this Agreement for all purposes relating to Station
Two and the other Station Two Assets and the real property upon which such
Assets are situated, and the use and operation of the same. No expiration or
termination of the Participation Agreement prior to the expiration or
termination of this Agreement shall affect the respective rights and obligations
of the LG&E Companies and Big Rivers under this Section 10.15(j) or Article 14
of the Participation Agreement with respect to the Station Two Assets and the
real property on which such assets are situated, and the use and operation of
the same.
10.16 Reversion to Big Rivers. At the expiration or termination of this
Agreement, other than a termination due to a breach or default by Big Rivers,
the rights and obligations under the Station Two Contracts assigned to and
assumed by Station Two Subsidiary pursuant to Section 9 of this Agreement,
entitled "Phase II Assignment," shall automatically revert and be
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assigned to Big Rivers without any action on the part of any of the Parties
hereto, no LG&E Company shall retain any interest in the Assigned Station Two
Contracts following that reversion (except as provided below), and Big Rivers
shall thereafter assume and agree to pay and perform all obligations and
liabilities of Big Rivers under the terms of the Station Two Contracts that
arise or accrue from and after the expiration or termination date of this
Agreement; provided that no such reversion shall occur to the extent any of the
Station Two Contracts shall have been terminated prior to the expiration or
termination of this Agreement; and provided further, that no such reversion
shall result in any waiver or relinquishment by any LG&E Company of any claims
or causes of action that it may have arising out of any breach or default by
Henderson under the Assigned Station Two Contracts arising or accruing prior to
the date of expiration or termination of the Assigned Station Two Contracts. The
Parties agree that the LG&E Companies shall be released from any and all debts,
obligations and liabilities that arise or accrue under the Station Two Contracts
from and after the date that the Station Two Contracts revert to Big Rivers,
except for those debts, obligations or liabilities that are covered by any
indemnity given by the LG&E Companies to Big Rivers or Henderson under this
Agreement or any other Operative Document.
10.17 Rights of First Offer; Waivers.
(a) Henderson hereby waives and releases all of its Rights of First Offer
under the Station Two Contracts in connection with the proposed operating and
lease transactions contemplated between Big Rivers, the LG&E Companies and WKEC
in the Participation Agreement. Henderson further agrees not to object to the
proposed transactions among the LG&E Companies and Big Rivers contemplated in
the other Operative Documents, and agrees to support the transactions
contemplated in this Agreement. Henderson hereby waives and releases any and all
rights to object to or otherwise withhold its approval thereof in any manner
whatsoever, whether before the Bankruptcy Court, the KPSC or FERC or before any
other regulatory agency having the right to assert jurisdiction over such
Parties or the transactions so contemplated by such Parties.
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(b) The LG&E Companies agree that each mortgage and security interest held
by the LG&E Companies, or any of them, in the Reid Station and the Joint Use
Facilities shall be subject to Henderson's Rights of First Offer relating to
such plant and facilities set forth in the Station Two Contracts; provided,
however, that the LG&E Companies' agreement set forth in this Section 10.17(b)
shall be conditioned upon Henderson's agreement that, and Henderson hereby
agrees that, upon Henderson's purchase of any such plant or facility pursuant to
its exercise of such Right of First Offer, (i) Henderson shall assume in writing
all the duties and obligations of Big Rivers under the Participation Agreement
and all of the agreements and instruments executed in furtherance of the
transactions contemplated therein with respect to the assets and interests so
purchased by Henderson, to the extent those duties and obligations arise or
accrue following Henderson's purchase of the same, (ii) Henderson shall continue
to honor and fulfill all of its obligations and liabilities to such Parties and
their successors and permitted assigns under the Station Two Contracts and this
Agreement, and (iii) Henderson will assume and agree to perform and discharge
all of the duties, liabilities and obligations of Big Rivers under the Station
Two Contracts and this Agreement arising or accruing following that purchase, in
each such event relating to those plants and facilities so purchased by
Henderson. Henderson's assumption of Big Rivers' obligations pursuant to the
preceding sentence shall not release Big Rivers from responsibility for the
future performance of such obligations or liabilities for the benefit of the
LG&E Companies arising under the Station Two Contracts, this Agreement, the
Participation Agreement or such other agreements and instruments, regardless of
whether such obligations or liabilities first arise or accrue before or after
such assumption. The LG&E Companies agree to recognize an assignment of Big
River's rights, title and interest in and to those plants and facilities
purchased by Henderson in accordance with its Rights of First Offer, and the
assignment of Big Rivers' rights and interest in and to the Participation
Agreement, all agreements and instruments executed pursuant thereto, this
Agreement and the Station Two Contracts to the extent they relate to those
plants and facilities; provided, that the LG&E Companies' agreement is
conditioned upon all the terms and conditions of this Section 10.17(b) being
fully satisfied and performed by Henderson and Henderson having effected such
assignments lawfully and in accordance with its contractual obligations to Big
Rivers.
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(c) The Parties hereby agree that, in the event Henderson shall at any
time purchase the Reid Station pursuant to, and in accordance with, its Rights
of First Offer, and Henderson shall otherwise fulfill the terms and conditions
of this Section 10.17(c), Henderson shall be entitled from and after the date of
its purchase of the Reid Station to be paid by LEM a portion of the Annual Fixed
Payments otherwise payable by LEM to Big Rivers pursuant to Section 3.3(a) of
the Power Purchase Agreement (but only if the Phase I Agreements shall then be
in effect), and to be paid by WKEC or its Affiliate a portion of the monthly
installments of the Rental Payment otherwise payable by WKEC or such Affiliate
to Big Rivers pursuant to Section 2.3.2 of the Lease (but only if the Phase II
Agreements shall then be in effect), in each case in the amount determined by
multiplying 1.5 mils times the total number of kilowatt-hours of Energy
generated by the Reid Station during the calendar month immediately preceding
that monthly installment; provided, however, that in no event shall the amounts
payable by LEM, WKEC and such Affiliate, collectively, to Henderson under the
foregoing provisions exceed $700,000 in any Year (prorated for Partial Years).
Prior to each relevant Monthly Payment Date, Big Rivers shall provide to
Henderson and either LEM (during the Participation Agreement Phase I) or WKEC
and its relevant Affiliate (during the Participation Agreement Phase II), notice
of the portion of the monthly installment of the Annual Fixed Payment payable by
LEM, or the portion of the monthly installment of Rental Payment payable by WKEC
and such Affiliate, as the case may be, to Henderson on that Monthly Payment
Date pursuant to this Section 10.17(c). Any such payments by LEM, WKEC or such
Affiliate to Henderson of the amount set forth in Big Rivers' notice, as
contemplated above, shall be deemed to satisfy and discharge any obligation that
they may have to pay those amounts to Big Rivers pursuant to the Power Purchase
Agreement or the Lease (as applicable). Henderson and Big Rivers agree that in
the event LEM, WKEC or its Affiliate shall make a payment to Henderson under
this Section 10.17(c) in error, either due to an overpayment or underpayment to
Henderson, but shall have otherwise paid Henderson the amount set forth in Big
Rivers' notice as due Henderson on that Monthly Payment Date, LEM, WKEC or such
Affiliate, as the case may be, shall have no obligation to Big Rivers or
Henderson by reason of
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that error, and Big Rivers and Henderson shall reconcile the error through
appropriate payments made between them.
(d) Big Rivers hereby agrees that, upon its exercise of any purchase
option or right of first refusal with respect to Station Two or any Station Two
Assets, Big Rivers shall assume and agree to perform and discharge all the
duties and obligations of Henderson to the LG&E Companies under this Agreement
and the Station Two Contracts with respect to such assets, plant and facilities
so purchased by Big Rivers, to the extent arising or accruing following the date
that purchase is consummated. Big Rivers' assumption of Henderson's obligations
pursuant to the preceding sentence shall not release Henderson from
responsibility for the future performance of such obligations or liabilities for
the benefit of the LG&E Companies arising under the Station Two Contracts or
this Agreement, regardless of whether such liabilities first arise or accrue
before or after such assumption. Notwithstanding anything in this Agreement to
the contrary, each of the LG&E Companies acknowledges that it has no right to
force Big Rivers to exercise any such purchase option or right of first refusal
that Big Rivers may have from Henderson. If Big Rivers shall at any time
exercise any such purchase option or right of first refusal, such exercise, in
and of itself, shall not release the LG&E Companies from their respective
obligations under this Agreement or the Assigned Station Two Contracts.
10.18 Compliance with Bond Ordinance. This Agreement and all Station Two
Contracts shall be subject to the terms and provisions of the Bond Ordinance, as
the same may exist from time to time. Each of the Parties agrees that, in the
performance of its obligations under this Agreement or the Station Two
Contracts, it shall comply with the terms and provisions of the Bond Ordinance
and shall take all action, and shall not fail to take action, within its
reasonable control as may be necessary or required to comply with the Bond
Ordinance. Each of the Parties agrees that neither this Agreement nor any of the
Station Two Contracts will be amended, modified or otherwise altered in a manner
that will conflict with or violate the terms and provisions of the Bond
Ordinance as the same may, from time to time, exist.
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10.19 Additional Covenants of Henderson.
(a) Henderson hereby agrees to promptly provide to Station Two Subsidiary:
(1) after Henderson's delivery or receipt thereof, all copies of written
correspondence and notices of (A) the occurrence of an "Event of Default" under
the Bond Ordinance, (B) the occurrence of any other event or circumstance that,
with notice or the passage of time, may constitute a default or breach of the
Bond Ordinance, and (C) potential violations or conflicts with the terms and
provisions of the Bond Ordinance that may exist as a result of the performance
of this Agreement or the Station Two Contracts by any of the Parties hereto; (2)
all notices, reports, documents or other written communications that Henderson
directs to Big Rivers pursuant to or relating to the Station Two Assets or the
Station Two Contracts; and (3) all subsequent written correspondence or notices
that may be delivered or received by Henderson relating to any of the foregoing.
During the Phase I Subcontract Term, the reports provided by Henderson to
Station Two Subsidiary shall be inclusive of, without limiting those other
reports otherwise to be provided pursuant hereto, the annual audit report for
Station Two described in Section 11.1 of the Station Two Power Sales Agreement.
(b) Without in any manner limiting the rights that will be assigned to
Station Two Subsidiary throughout the Phase II Assignment Term, Henderson hereby
agrees with Station Two Subsidiary that it shall not:
(1) Without the prior written consent of Station Two Subsidiary,
during the Phase I Subcontract Term or the Phase II Assignment Term,
authorize or issue any additional bonds or other indebtedness under the
Bond Ordinance or any other ordinance the debt service on which would
constitute Capacity costs under the Station Two Power Sales Agreement,
subject, however, to Section 10.18 of this Agreement.
(2) During the Phase I Subcontract Term, add any additional
generating units to Station Two unless Station Two Subsidiary shall have
agreed with Henderson as to the terms and conditions applicable thereto
(including without limitation, the respective rights
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of those Parties with respect to the operation and maintenance thereof and
the use of the Power generated therefrom).
(3) Without the prior written consent of Station Two Subsidiary, at
any time during the Term sell, transfer, convey or assign any rights or
interests in or to Station Two, the Station Two Assets, or the Station Two
Contracts unless the transferee takes such assets and facilities subject
to all the rights, obligations, terms and conditions of this Agreement and
the Station Two Contracts applicable to Henderson; provided, nothing in
this Section 10.19(b)(3) shall restrict Henderson from selling Excess
Station Two Capacity and Excess Station Two Energy pursuant to Section
11.5 of this Agreement, in accordance with the terms thereof. As a
condition of any such sale, transfer, conveyance and assignment, such
transferee shall assume all duties, obligations and liabilities of
Henderson under this Agreement and the Station Two Contracts, by execution
and delivery to the LG&E Companies of a written instrument in form and
substance reasonably satisfactory to the LG&E Companies.
(c) During the Phase I Subcontract Term, and not in limitation of similar
rights the LG&E Companies shall have in the Phase II Assignment Term by virtue
of the Assigned Station Two Contracts, Henderson hereby confirms and agrees for
the benefit of the LG&E Companies that:
(1) Henderson shall give Station Two Subsidiary advance notice of,
and Station Two Subsidiary may have representatives present for, tests and
inspections of the printing demand meters and all other meters relating to
Station Two or the operation thereof, and shall at all times during such
period be promptly advised by Henderson of the results of such tests.
(2) Subject to approval of the regulatory bodies having jurisdiction
thereof, at all times maintain rates for services rendered by its electric
system which will be sufficient to adequately meet the costs of proper
operation and maintenance thereof, to provide for the
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depreciation thereof through renewals and replacements, or otherwise, and
to provide for the full and prompt payment of all obligations of Henderson
on all of its outstanding Electric Revenue Bonds, including, without
limitation, its Station Two Bonds.
(3) Station Two Subsidiary and its agents, authorized
representatives or employees shall have the right at all reasonable times
during the Phase I Subcontract Term to examine the books, accounts and
records of Henderson in order to determine the accuracy of the Capacity
charges and other charges to be paid by LEM and/or Station Two Subsidiary
to Big Rivers during the Phase I Subcontract.
(4) Except to the extent such obligation or duty is imposed on Big
Rivers under the Station Two Contracts, Henderson shall use its reasonable
best efforts to maintain all necessary Permits for the maintenance,
improvement and operation of Station Two, and shall use its reasonable
best efforts to obtain all renewals and extensions of such Permits for the
term of the Station Two Contracts.
(d) In addition to all other rights and entitlements granted by Henderson
in this Agreement or in the Station Two Contracts, and not in limitation
thereof, Henderson hereby irrevocably commits to Station Two Subsidiary for the
continuing use by Station Two Subsidiary and its Affiliates, successors and
assigns in the operation and maintenance of Station Two and/or the Reid Station
throughout the continuance of the term of all Station Two Contracts, or for such
longer period as Station Two Subsidiary (or its Affiliates, successors or
assigns) shall continue to operate or maintain Station Two or the Reid Station,
all of Henderson's Joint Use Facilities that it has committed to the joint use
of such generating facilities on the Effective Date, or as may thereafter be
committed by Henderson for use in the operation or maintenance of such
facilities. Henderson's commitment hereunder shall in any event continue for so
long as Station Two Subsidiary or its Affiliates, successors or assigns shall
continue to operate or maintain a generating station (as a subcontractor or
operator) served by any such Joint Use Facilities, and shall survive and not be
terminated by reason of a
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termination of this Agreement, any Station Two Contract or any other agreement
between or among the Parties.
10.20 Acknowledgments and Affirmations by Big Rivers. Big Rivers hereby
agrees that, throughout the Phase I Subcontract Term and the Phase II Assignment
Term, and in addition to all other rights and entitlements granted by Big Rivers
in this Agreement or any Station Two Contract, and not by way of limitation
thereof, Big Rivers hereby commits to Station Two Subsidiary (or its successors
or permitted assigns) for the continuing use by Station Two Subsidiary in the
operation and maintenance of Station Two and in the transmission of Power by
Station Two Subsidiary from such facilities throughout the continuance of the
term of all Station Two Contracts, and for such longer period as Station Two
Subsidiary (or its Affiliates, successors or assigns) shall continue to operate
or maintain Station Two or the Reid Station, all of Big Rivers' transmission
facilities and all Joint Use Facilities (including the Green Station FGD System
Facility) that it has committed (and in accordance with the terms of that
commitment) to the joint use of such generating facilities on the Effective Date
under the Station Two Contracts, or as may thereafter be committed by Big Rivers
for use in the operation or maintenance of such facilities. Big Rivers'
commitment under this Section 10.20 shall in any event continue for so long as
any LG&E Company, or their respective Affiliates, successors or permitted
assigns, shall continue to operate or maintain Station Two or the Reid Station,
and shall survive and not be terminated by reason of any expiration or
termination of this Agreement, any Station Two Contracts, or any other agreement
between or among the Parties; provided, however, such commitment shall terminate
upon the termination of this Agreement and (a) the Power Purchase Agreement, the
Transmission Services and Interconnection Agreement, the Cost Sharing Agreement,
the Facilities Operating Agreement and the Participation Agreement, or (b) the
Power Purchase Agreement, the Transmission Services and Interconnection
Agreement, the Lease and the Participation Agreement, as the case may be, by Big
Rivers in accordance with the terms of this Agreement and those agreements due
to a default by any LG&E Company or its Affiliate.
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10.21 SEPA Power. As soon as practicable following the Execution Date, Big
Rivers and the LG&E Companies shall cooperate with one another in good faith in
an attempt to structure and submit to Henderson at the earliest practicable time
a proposal for the purchase by Big Rivers and scheduling by LEM and/or Station
Two Subsidiary of peaking Power and associated Energy ("SEPA Power") from the
Southeastern Power Administration ("SEPA") that may be made available to
Henderson at any time during the Term pursuant to any new contract that may be
entered into following the Execution Date by Henderson with SEPA in place of the
existing contract between Henderson and SEPA dated July 1, 1984, but that may be
in excess of Henderson's needs for that SEPA Power. Until that new contract and
associated arrangements among the Parties have been entered into, Big Rivers
shall schedule through LEM (as further provided below) and purchase from
Henderson all SEPA Power that may be made available by Henderson to Big Rivers
in connection with the contract with SEPA dated July 1, 1984 (the "Existing SEPA
Contract"). In the event Big Rivers shall purchase SEPA Power, whether from
Henderson or SEPA in connection with the Existing SEPA Contract or any
replacement contract therefor, or from SEPA pursuant to any existing contracts
between Big Rivers and SEPA, at any time when the Letter Ruling shall remain in
effect and shall continue to limit the distribution of Energy from Station Two
to customers within Henderson and Daviess Counties, all such SEPA Power shall be
taken by Big Rivers for resale, and shall be resold or otherwise utilized by Big
Rivers, solely outside of Henderson and Daviess Counties unless the customer
load for those two counties in the hour(s) in which such SEPA Power is to be
delivered is in excess of the Station Two Unit Output generated for that hour,
in which event, for that hour, Big Rivers may take and resell in that two-county
area an amount of SEPA Power that is no greater than necessary to meet such
excess load in those two counties. At least 30 days prior to the expected
Effective Date and each October 1 thereafter during the period of time that Big
Rivers shall continue to have the legal and contractual right to take SEPA Power
from Henderson in excess of the needs of Henderson, Big Rivers shall submit to
LEM a schedule showing the amount of SEPA Power Big Rivers desires to have
delivered to it under its agreement with Henderson during each month ("SEPA
Schedule") of the following Partial Year or Year, and which Henderson has
notified Big Rivers will be made available to it during those months. In
addition, Big Rivers shall notify
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LEM at the earliest possible time after Big Rivers receives that notice from
Henderson, of the amount of SEPA Power that will be made available by Henderson
to Big Rivers, the time(s) at which and duration(s) for which it shall be
available, and point(s) of interconnection at which it will be made available to
Big Rivers. Henderson agrees to notify LEM that Henderson will make SEPA Power
available to Big Rivers as contemplated above, including the data regarding that
Power described above, as soon as is reasonably possible following Henderson's
notice of the same to Big Rivers, and Henderson agrees to keep LEM reasonably
apprised of any changes in those plans or such data. LEM shall act as Big
Rivers' agent for the scheduling of all SEPA Power that may be made available to
it by Henderson (whether in connection with the Existing SEPA Contract or
otherwise), and shall have the right to determine (consistent with the
provisions of the Existing SEPA Contract or any replacement therefor) the timing
of deliveries of such Power during each month; provided, however, for purposes
of the administration of this Agreement, such deliveries shall be deemed,
after-the-fact, to have occurred consistent with the SEPA Schedule and, to the
maximum extent allowable under the Existing SEPA Contract or any replacement
therefor, during hours of the Members' demand on Big Rivers' system.
10.22 Green Station FGD System Facility. Big Rivers and Henderson
acknowledge that the portion of the Green Station FGD System Facilities owned by
Big Rivers and described in Section 3.3 of the Joint Facilities Agreement is
subject to contractual rights, a license and a leasehold interest in favor of
WKEC or one of its Affiliates pursuant to the Operative Documents. The Parties
acknowledge that the portion of the Green Station FGD System Facilities owned by
Big Rivers is further subject to the terms of the Joint Facilities Agreement and
the Cross-Grants of Rights of Access and of Easements dated July 20, 1993
between Big Rivers and Henderson. In consideration of such rights and interests
of WKEC or its Affiliate, Big Rivers and Henderson hereby agree that at all
times during the Phase I Subcontract Term and the Phase II Assignment Term all
of the payments due by Henderson for a prorated share of the carrying costs of
the Green Station FGD System Facilities pursuant to Section 3.3 of the Joint
Facilities Agreement shall be paid by Henderson to Station Two Subsidiary, WKEC
or their designated Affiliate, rather than to Big Rivers, subject, however, to
Henderson's right of
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off-set set forth in Section 16.4 of the Station Two Operating Agreement. Such
carrying costs shall continue to be included as a cost under Section 6.3(g) of
the Station Two Power Sales Contract (payable by Big Rivers in the Phase I
Subcontract Term and by Station Two Subsidiary (or its successors or permitted
assigns) in the Phase II Assignment Term), subject, however, to LEM's right of
off-set in Section 8.13 of this Agreement during the Phase I Subcontract Term
and Station Two Subsidiary's (or its successors' or permitted assigns') right of
off-set in Section 9.3 of the Station Two Power Sales Agreement or Section
9.7(h) of this Agreement. Nothing in this Section 10.22 is intended to in any
way limit any Party's right of off-set which is set forth in any other provision
of this Agreement or any of the Station Two Contracts.
10.23 Transmission and Transformation Facilities. Throughout the Term, Big
Rivers and Henderson shall each provide, maintain and operate, to the extent
required of such Party by Section 5 of the Station Two Operating Agreement and
in accordance with Prudent Utility Practice, the 161 KV step-up transformers,
the 69 KV transmission line and related transformation facilities connecting
Station Two to Henderson's Existing System, surplus capacity on Big Rivers 69 KV
transmission lines and other lines and transmission facilities as necessary for
the delivery of Power from the point of Station Two to Big Rivers and to
Henderson's Existing System, and all other transmission and transformation
facilities used in or in connection with Station Two or necessary for the
delivery of Power from Station Two to Big Rivers' transmission system.
10.24 Governmental Consents. Promptly following the execution of this
Agreement, the Parties will proceed to prepare and file with the appropriate
governmental authorities any requests for approval or waiver that are required
(or that the Parties otherwise agree to seek) from governmental authorities in
connection with the transactions contemplated hereby, and that have not been
filed prior to the Execution Date, and the Parties shall diligently and
expeditiously prosecute and cooperate fully in the prosecution of such requests
for approval or waiver and all proceedings necessary to secure such approvals
and waivers. Compliance by the Parties with this Section 10.24 shall not affect
or limit the provisions of Section 3.1 of this
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Agreement which require, as a condition precedent to the Closing, that each of
the conditions set forth on Schedule 2.1 or Schedule 2.2 be satisfied or waived,
including such conditions as relate to the receipt of governmental approvals.
10.25 Third Party Consents. Promptly following the execution of this
Agreement, the Parties will use their reasonable best efforts to procure all
consents that are required from third parties in connection with the
transactions contemplated hereby, and the Parties shall diligently and
expeditiously seek such consents and cooperate fully in the procurement of such
consents.
10.26 Reasonable Best Efforts. Each Party agrees to use its reasonable
best efforts to effect the transactions contemplated by this Agreement and to
fulfill the conditions to the obligations of the Parties set forth in Schedule
2.1, 2.2 or, as applicable, 2.3 to this Agreement at the earliest practicable
time.
10.27 Further Assurances. Each of the Parties shall take, from time to
time, for no additional consideration, such actions and execute such additional
instruments as may be reasonably necessary or convenient to implement and carry
out the intent and purposes of this Agreement, including, without limitation,
such instruments of conveyance and assignment as shall be necessary or
appropriate in order to effect the assignment of the Assigned Station Two
Contracts and the assumption of the Assumed Station Two Liabilities as
contemplated by this Agreement. Station Two Subsidiary presently intends to
explore the possible repeal of KRS ss.96.520 insofar as it requires that sales
of wholesale Power by Henderson within the Commonwealth of Kentucky, or that the
operation and maintenance of the Station Two, be restricted to utilities
regulated by the KPSC or having customers located solely outside the
Commonwealth of Kentucky. To the extent that Station Two Subsidiary determines
to seek such repeal, each of the Parties hereto, at Station Two Subsidiary's
request, shall reasonably cooperate with and assist Station Two Subsidiary to
effect such repeal; provided that Station Two Subsidiary hereby agrees to pay
for all reasonable out-of-pocket costs and expenses
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incurred by Big Rivers in providing such cooperation and assistance to Station
Two Subsidiary.
10.28 Access to Spare Transformer. Throughout the Phase I Subcontract Term
and the Phase II Assignment Term, Henderson and Big Rivers agree that the spare
161 KV step-up Power transformer subject to the Spare Transformer Agreement
between Henderson and Big Rivers shall be available for use at Station Two, the
Coleman Facility of Big Rivers and such other facilities of Henderson or Big
Rivers as are permitted under the Spare Transformer Agreement. If Henderson or
Station Two Subsidiary shall determine that the spare transformer is needed at
Station Two, and the transformer is not then subject to a prior use at the
Coleman Facility or any other facility of Henderson or Big Rivers, as permitted
under the Spare Transformer Agreement, then Big Rivers and Henderson shall make
the spare transformer available for use at Station Two. Similarly, if Big Rivers
or WKEC, as the case may be, shall determine that the spare transformer is
needed at the Coleman Facility or any other facility of Big Rivers, as permitted
under the Spare Transformer Agreement, and the transformer is not then subject
to a prior use at Station Two, then Big Rivers and Henderson shall make the
spare transformer available for use at the Coleman Facility or such other Big
Rivers' facility. The availability and usage of the spare transformer shall at
all times be subject to the terms of the Spare Transformer Agreement. In
addition to making the spare transformer available for use at Station Two, the
Coleman Facility or any other facility of Big Rivers, as permitted under the
Spare Transformer Agreement, Big Rivers shall ready the spare transformer for
operation, install, operate and maintain the spare transformer and, with respect
to its use at Station Two only, shall charge Station Two Subsidiary only its
direct costs (without mark-up) incurred in providing such services and shall be
entitled to no other compensation from any of the LG&E Companies, WKEC or
Henderson for such services. The Parties shall account for the costs paid to Big
Rivers associated with the use of the spare transformer at Station Two as an
operating and maintenance expense of Station Two. Big Rivers and Henderson shall
fully enforce their respective rights under the Spare Transformer Agreement to
obtain and use the spare transformer whenever reasonably requested to do so by
Station Two Subsidiary or WKEC. Station Two Subsidiary and the other LG&E
Companies
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agree to indemnify and save harmless Big Rivers from all claims, losses,
liabilities, damages, costs (including court costs), and expenses (including
reasonable attorneys' fees and accountants fees) suffered or incurred by, or
made against, Big Rivers or its respective agents, representatives and
employees, arising out of, resulting from or related to Station Two Subsidiary's
use of the Spare Transformer, but exclusive of any such claims, losses,
liabilities, damages, costs or expenses that (y) are a direct result of a breach
or default by Big Rivers or Henderson under the Spare Transformer Agreement, any
Station Two Contract, this Agreement or any other Operative Document, the
negligence or willful misconduct of Big Rivers or Henderson, or any of their
respective agents, representatives or employees, or (z) are a direct result of
any latent defects in the Spare Transformer or in any of Big Rivers' or
Henderson's assets or properties; provided, that the LG&E Companies shall at no
time have any obligation or liability to Big Rivers or Henderson for any costs
of remediation or any other costs, expenses or liabilities arising under
Environmental Laws or in connection with compliance with such Environmental
Laws, at or associated with the Spare Transformer to the extent arising out of
events or circumstances occurring or existing at any time prior to the Effective
Date. Notwithstanding the foregoing, none of the LG&E Companies shall have any
obligation to indemnify and save harmless Big Rivers or any of its agents,
representatives or employees by reason of any damages to the Spare Transformer
resulting from, arising out of or relating to any defects (whether or not
latent), or any costs or expenses to repair or replace the same not arising out
of the negligence or willful misconduct of those LG&E Companies or their
employees, agents or representatives.
10.29 General and Administrative Expenses. On or prior to the Effective
Date, the Parties shall execute and deliver an agreement substantially in the
form of Exhibit C attached hereto providing for an appropriate and reasonable
allocation to Station Two of the Parties' anticipated general and administrative
expenses associated with their respective performance obligations relating to
Station Two under this Agreement and the Station Two Contracts following the
Effective Date (the "G & A Allocation Agreement"). On the Effective Date, the
agreements between Big Rivers and Henderson specifically relating to general and
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administrative expenses, as set forth in the Agreement dated February 15, 1991,
shall terminate and be of no further force or effect.
10.30 Systems and Operating Reserves. On or prior to the Effective Date,
Big Rivers, Henderson and LEM shall enter into an agreement in substantially the
form attached hereto as Exhibit D (the "New Reserves Agreement").
10.31 Rights and Remedies Not Waived.
(a) Notwithstanding anything in this Agreement to the contrary, (1)
Henderson shall continue to be responsible to Big Rivers for the full
performance of all of its covenants and obligations under the Station Two
Contracts, and shall not, by virtue of the assignment of Big Rivers' rights,
title and interests in and to the Assigned Station Two Contracts to Station Two
Subsidiary (or its successors or permitted assigns) or the assumption of the
Assumed Station Two Liabilities by Station Two Subsidiary (or its successors or
permitted assigns) during the Phase II Assignment Term as provided in this
Agreement, or by virtue of any other term or provision of this Agreement, be
released from any of its covenants and obligations under the Station Two
Contracts, and (2) Big Rivers shall not be deemed to have waived or to have
otherwise limited or restricted the availability to it of any of its rights or
remedies against Henderson under the Station Two Contracts.
(b) Notwithstanding anything in this Agreement to the contrary, (1) Big
Rivers shall continue to be responsible to Henderson for the full performance of
all of its covenants and obligations under the Station Two Contracts, and shall
not, by virtue of the assignment of its rights, title and interests in and to
the Assigned Station Two Contracts to Station Two Subsidiary (or its successors
or permitted assigns) or the assumption of the Assumed Station Two Liabilities
by Station Two Subsidiary (or its successors or permitted assigns) during the
Phase II Assignment Term as provided in this Agreement, or by virtue of any
other term or provision of this Agreement, be released from any of its covenants
and obligations under the Station Two Contracts (except to the extent that any
such covenant or obligation shall have been performed, paid or otherwise
discharged or satisfied under the terms and provisions of
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the Station Two Contracts by Big Rivers or any LG&E Company), and (2) Henderson
shall not be deemed to have waived or to have otherwise limited or restricted
the availability to it of any of its rights or remedies against Big Rivers under
the Station Two Contracts.
10.32 Survival Of Representations and Warranties. All of the
representations and warranties set forth in this Agreement shall survive the
date of this Agreement and the Effective Date, and shall continue to be binding
on the Party or Parties making such representations and warranties.
10.33 Station Two Inventories. On the Effective Date, Big Rivers shall
sell and assign to Station Two Subsidiary, free and clear of all Liens, all of
Big Rivers' (but not Henderson's) rights, title and interest under, in and to
the Station Two Inventory in Big Rivers' possession or control. Pursuant to the
procedures set forth on Schedule 9.1 attached to the Participation Agreement,
Big Rivers and Station Two Subsidiary shall jointly conduct an inventory survey
and agree upon the fair market value of the Station Two Inventory sold to
Station Two Subsidiary pursuant to this Section 10.33 prior to the Effective
Date. Station Two Subsidiary (or its designated Affiliate) shall pay Big Rivers
for the fair market value as so determined on the Effective Date or, if Station
Two Subsidiary and Big Rivers are unable to agree on such fair market value and
either party submits the issue of fair market value to the arbitration procedure
described in Section 13.5(e) of this Agreement, then within five (5) days after
final determination pursuant to that procedure. On the date of termination or
expiration of this Agreement, Station Two Subsidiary shall immediately sell and
assign to Big Rivers, free and clear of all Liens, all of Station Two
Subsidiary's rights, title and interest under, in and to the fuel and scrubber
reagent inventory, spare parts and materials and supplies inventory then owned
by Station Two Subsidiary or its Affiliates and held exclusively for use by
Station Two Subsidiary (or its Affiliates) at that time in connection with its
operation of Station Two and the other Station Two Assets, and in Station Two
Subsidiary's (or its Affiliates') possession or control (the "End of Term
Inventory"). Within 30 days after such sale, Station Two Subsidiary and Big
Rivers shall utilize the procedures set forth above and on Schedule 9.1 of the
Participation Agreement to determine the fair market value of the End of Term
Inventory
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sold to Big Rivers, and Big Rivers shall pay Station Two Subsidiary (or its
designated Affiliate) the fair market value of such inventory. In connection
with any such sale of the End of Term Inventory to Big Rivers upon the
termination or expiration or this Agreement, should any portion of such
inventory have been paid for by Big Rivers as Henderson Incremental
Environmental O&M (determined on a first in, first out basis) prior to the date
of expiration or termination of this Agreement, either pursuant to Section 8.16
or Section 9.9 of this Agreement, Big Rivers shall receive a credit against the
fair market value of the End of Term Inventory in an amount equal to that
portion for which it paid the applicable Henderson Incremental Environmental
O&M. If Station Two Subsidiary and Big Rivers are unable to agree upon the fair
market value of Station Two Inventory or the End of Term Inventory, the issue
shall be submitted to the arbitration procedure described in Section 13.5(e) of
this Agreement. Schedule 9.1 of the Participation Agreement is incorporated by
reference in this Agreement at the first place where such reference appears in
this Agreement and shall survive any termination or expiration of the
Participation Agreement prior to the date of termination or expiration of the
terms and provisions of this Section 10.33.
10.34 Assignment of Certain Station Two Intangible Assets.
(a) On the Effective Date, and pursuant to an assignment and assumption
agreement in substantially the same form as that agreement attached as Schedule
9.2 to the Participation Agreement, Big Rivers shall assign or transfer to
Station Two Subsidiary all of Big Rivers' (but not Henderson's) right, title and
interest in and to, and all of its obligations (if any) under, the Station Two
Intangible Assets (except (i) the Station Two Allowances, which are subject to
Section 8.10(c) of this Agreement, and (ii) if the Effective Date is the Phase I
Effective Date, the Permits), free and clear of all Liens, and Station Two
Subsidiary shall assume and agree to perform and discharge Big Rivers'
performance obligations, if any, under those Station Two Intangible Assets which
first arise or accrue on or after the Effective Date. Station Two Subsidiary
shall maintain and replace the Station Two Intangible Assets (if any such assets
shall exist) as shall be necessary, in its reasonable discretion, to operate the
Station Two Assets in a manner consistent with Prudent Utility Practice and the
Station Two
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Contracts. Station Two Subsidiary shall inform the Operating Committee of any
material change in the status of any material Station Two Intangible Asset, of
any pending applications for new Permits, and of the receipt of new material
intangible assets that are required of it, as operator of the Station Two
Assets, to comply with the performance standards set forth in Sections 8.3 and
9.15 of this Agreement, as the case may be. On the date of termination or
expiration of this Agreement, Station Two Subsidiary shall (subject to the
receipt of all third-party consents and approvals required therefor, if any)
assign to Big Rivers, free and clear of all Liens, its rights, title and
interest under, in and to the remaining Station Two Intangible Assets (exclusive
of rights in the Station Two Allowances, which are addressed in Section 8.10(c)
of this Agreement) and any additions, modifications or replacements of the
Station Two Intangible Assets (exclusive of the rights in the Station Two
Allowances) previously approved by Big Rivers in writing, and Big Rivers shall
assume all of Station Two Subsidiary's obligations thereunder arising after such
date of termination or expiration of this Agreement. Station Two Subsidiary
shall utilize its best efforts to obtain the third-party consents and approvals
referred to in the parenthetical in the prior sentence and agrees, to the extent
such consents or approvals are not obtained, to utilize its best efforts to
provide Big Rivers with its benefits and rights in, to and under such Station
Two Intangible Assets at no expense to Big Rivers.
(b) Notwithstanding the assignment provisions set forth in (a), above, Big
Rivers and the LG&E Companies agree that during the Phase I Subcontract Term,
(i) all Permits in which Big Rivers may have an interest (including, without
limitation, those held in its name as operator of Station Two) and which relate
in any manner to its operation of Station Two or any other Station Two Asset,
will not be assigned by Big Rivers to Station Two Subsidiary, and (ii) all
Permits which may be required or necessary in connection with the operation of
Station Two or any Station Two Asset shall be obtained by Big Rivers in its name
as operator of Station Two. Big Rivers shall take any and all action to maintain
and preserve in full force and effect, and shall timely renew, all of those
Permits as may be required or necessary for the operation of Station Two and the
other Station Two Assets in a manner consistent with Prudent
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Utility Practice and as may otherwise be required for Big Rivers and Station Two
Subsidiary to fulfill their respective obligations under this Agreement and the
Station Two Contracts. Notwithstanding the foregoing provisions of this Section
10.34(b), at all times during the Phase I Subcontract Term and thereafter during
the Term until such Permits are assigned to Station Two Subsidiary (or its
designated Affiliate), Station Two Subsidiary, solely to the extent permitted by
applicable Laws and the Station Two Contracts, shall administer, maintain,
preserve, renew and, where necessary, procure the Permits described above on
behalf of Big Rivers, as the agent of Big Rivers. Big Rivers and Henderson
acknowledge and agree that, where Station Two Subsidiary shall be precluded by
applicable Laws or the Station Two Contracts from doing so, Station Two
Subsidiary shall have no obligation, as the agent of Big Rivers or in any other
capacity, to administer, maintain, preserve, renew, procure or take any other
action of the type described above in respect of any such Permits, and in such
event Big Rivers shall be responsible for that action which must be taken in
respect of such Permits. On the Phase II Effective Date, or as soon as
reasonably practicable thereafter, Big Rivers and Station Two Subsidiary shall
execute and deliver an assignment and assumption agreement with respect to all
Permits held by Big Rivers with respect to its operation of Station Two or any
Station Two Asset to the extent such Permit may be assigned to Station Two
Subsidiary or its designated Affiliate) under applicable Laws. To the extent
that any such Permit is not so assignable by Big Rivers, Big Rivers agrees to
make such Permit otherwise available at no additional cost, to the greatest
extent possible, to Station Two Subsidiary in connection with the performance of
its obligations under this Agreement and the Station Two Contracts. Station Two
Subsidiary agrees, to the extent permitted by Law, to take during the Phase II
Assignment Term any and all actions necessary to administer, maintain or renew
such non-transferable Permits, consistent with those requirements and standards
set forth above for Big Rivers; provided, however, to the extent Station Two
Subsidiary is precluded from doing so under applicable Law or the Station Two
Contracts, Big Rivers, shall continue to maintain, preserve, renew and otherwise
take actions with respect to the non-transferable Permits consistent with its
obligations set forth above relating to the Permits during the Phase I
Subcontract. At all times during the Phase I Subcontract Term and thereafter
until the Permits are assigned to Station Two Subsidiary (or its designated
Affiliate), Big Rivers (x)
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shall cooperate with and assist Station Two Subsidiary in its actions taken in
respect of the Permits, to the extent reasonably requested by Station Two
Subsidiary or Henderson, and (y) shall obtain the consent of Station Two
Subsidiary and, where requested by Station Two Subsidiary or Henderson, shall
exercise all rights and remedies it may have in respect of such Permits, to the
extent the exercise of such rights or remedies is reasonably necessary for any
LG&E Company or Henderson to receive the full benefit, use and enjoyment of the
Station Two Assets and their respective rights under this Agreement and the
Station Two Contracts.
(c) Notwithstanding the assignment provision set forth in (a), above, Big
Rivers and the LG&E Companies agree that during the Phase I Subcontract Term,
all fuel or reagent supply agreements that Big Rivers may have with respect to
its operations at Station Two will not be assigned by Big Rivers to Station Two
Subsidiary and any additional fuel or reagent agreements required during the
Phase I Subcontract Term shall be entered into by Big Rivers in its own name
(subject to Station Two Subsidiary's rights as Big Rivers' exclusive agent for
administering Big Rivers' fuel and reagent supply agreements as is further set
forth in Section 8.14(c) of this Agreement). On the Phase II Effective Date, Big
Rivers and Station Two Subsidiary agree to execute an assignment and assumption
agreement with respect to the fuel or reagent supply agreements to which Big
Rivers may be a party and that relate to Big Rivers' obligations as the operator
of Station Two; provided, that Station Two Subsidiary shall have no obligation
to assume any fuel or reagent supply agreement entered into by Big Rivers during
the Phase I Subcontract Term to the extent Big Rivers did not receive Station
Two Subsidiary's consent to that agreement prior to executing that agreement. On
the date of termination or expiration of this Agreement, Big Rivers shall not be
obligated to assume any fuel supply agreements entered into by Station Two
Subsidiary during the Phase II Assignment Term to the extent Station Two
Subsidiary did not receive Big Rivers' written approval prior to executing such
fuel supply agreement.
(d) Nothing in this Section 10.34 shall in any way limit any additional or
different commitment of Big Rivers or any LG&E Company (or WKEC) relating to
Station Two Intangible Assets (including, without limitation, commitments
related to fuel and reagent
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supply in connection with operation of Station Two) as may be set forth in any
of the Operative Documents, including, without limitation, Section 9.2 of the
Participation Agreement.
10.35 Station Two Personal Property. On the Effective Date, Big Rivers
shall sell to Station Two Subsidiary (or its designated Affiliate) and Station
Two Subsidiary (or its designated Affiliate) shall purchase from Big Rivers,
free and clear of all Liens, all of Big Rivers' (but not Henderson's) rights,
title and interest under, in and to the Station Two Personal Property (if any)
in Big Rivers' possession, including, without limitation, any such Station Two
Personal Property which may be identified on Schedule 5.1.11 attached to the
Participation Agreement. Station Two Subsidiary shall pay Big Rivers an amount
equal to the net book value of the Station Two Personal Property as so
determined on the Effective Date (the "Station Two PP Price"). Upon such
payment, (a) in the event that the Effective Date is the Phase I Effective Date,
the Initial Fixed Payment referenced in Section 3.3(a) of the Power Purchase
Agreement shall be reduced by an amount equal to twenty percent (20%) of the
Station Two PP Price and the remaining monthly fixed installments payable
pursuant to such Section 3.3 shall each be reduced by an amount equal to 0.78%
of the Station Two PP Price, (b) in the event that the Effective Date is the
Phase II Effective Date, the Initial Rental Payment referenced in Section 2.3.1
of the Lease shall be reduced by an amount equal to twenty percent (20%) of the
Station Two PP Price and the remaining monthly installments of Rental Payment
payable pursuant to Section 2.3.2 of the Lease shall each be reduced by an
amount equal to 0.78% of the Station Two PP Price and (c) in the event that the
Phase II Effective Date follows the Phase I Effective Date, all remaining
monthly rental installments payable on and after the Phase II Effective Date
pursuant to Section 2.3.2 of the Lease shall each be reduced by an amount equal
to 0.78% of the Station Two PP Price (any such reduction set forth in (a), (b)
and (c), above, is sometimes referred to in this Agreement as the "Station Two
PP Price Reduction"). On the date of termination or expiration of this
Agreement, Station Two Subsidiary shall immediately sell to Big Rivers, free and
clear of all Liens, all of Station Two Subsidiary's rights, title and interest
under, in and to all tangible personal
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property (other than fuel and scrubber reagent, inventory, spare parts and
materials, and supplies) then owned by Station Two Subsidiary (or its
Affiliates) and used or held at that time exclusively for use in connection with
its use and operation of the Station Two Assets (the "End of Term Personal
Property"), and Big Rivers shall pay Station Two Subsidiary (or its designated
Affiliate) the net book value of such End of Term Personal Property as so
determined on the date of such termination or expiration of this Agreement. If
as of the date of any such termination or expiration of this Agreement, any
portion of the End of Term Personal Property has been paid for by Big Rivers as
Henderson Incremental Environmental O&M (determined on a first in, first out
basis), either pursuant to Section 8.16 or Section 9.9 of this Agreement, Big
Rivers shall receive a credit against the net book value of such End of Term
Personal Property in an amount equal to that portion for which it paid the
applicable Henderson Incremental Environmental O&M.
10.36 LG&E Parties' Residual Value Payment. In the event the Participation
Agreement terminates or expires prior to the date that this Agreement terminates
or expires, the terms and provisions of Section 22 of the Participation
Agreement relating to the LG&E Parties' Residual Value Payment on the Station
Two Assets shall survive the expiration or termination of the Participation
Agreement and shall be incorporated by this reference in this Agreement.
10.37 Survival of Monthly Margin Payments. LEM and WKEC hereby agree with
Big Rivers that the Monthly Margin Payments owing by LEM or WKEC (as
applicable), or their respective successors or permitted assigns, pursuant to
Section 3.3(a)(iv)(A) of the Power Purchase Agreement or Section 2.3.2(c)(i) of
the Lease shall survive the termination of the Power Purchase Agreement or the
Lease, as the case may be, and shall continue to be binding on LEM and WKEC
pursuant to this Agreement in accordance with their respective terms.
11. ADDITIONAL AGREEMENTS RESPECTING STATION TWO POWER. .
11.1 Pre-Closing Economic Development Opportunities. .
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(a) Notwithstanding anything contained in this Agreement or the 1998
Amendments to the contrary, neither the Closing, the Phase II Assignment nor the
consummation of any other transactions contemplated in this Agreement shall
constitute an undertaking by any LG&E Company of Big Rivers' obligation, under
one or more Power sales or similar agreements entered into prior to the
Effective Date, to sell and deliver Power to Henderson to meet all or any
portion of the Economic Development Load (as defined in the 1998 Amendments) of
one or more customers of Henderson (each a "Pre-Closing Development Agreement"),
unless such Power sales are to be made during the Term at the applicable
Economic Development Rate(s) set forth on Exhibit 1 to the 1998 Amendments, and
Henderson has agreed with LEM to pay all transmission fees that Big Rivers (or
its successor) is required or permitted to charge in order to deliver such Power
to Henderson over Big Rivers' transmission system, and then only to the extent
that LEM approved in writing the other material terms and conditions of those
Pre-Closing Development Agreements prior to their execution by Big Rivers and
Henderson. Prior to execution and delivery of any Pre-Closing Economic
Development Agreement, and as a condition precedent to the obligation of the
LG&E Companies to assume and undertake any obligation of Big Rivers set forth in
the Pre-Closing Economic Development Agreement, Big Rivers shall deliver a copy
of the Pre-Closing Economic Development Agreement to LEM for its determination
whether the material terms and conditions set forth in the Pre-Closing Economic
Development Agreement are acceptable to LEM. LEM shall notify Big Rivers and
Henderson of its approval or disapproval of the proposed terms of the
Pre-Closing Economic Development Agreement within 15 days after its receipt of
the Pre-Closing Economic Development Agreement. At the Closing, Big Rivers shall
assign and transfer to LEM, without further consideration (but subject to the
provisions of Subsection (d) below), all of Big Rivers' rights, title and
interests in and to all Pre-Closing Development Agreements pre-approved by LEM
as contemplated above. Upon any such assignment or transfer of any Pre-Closing
Economic Development Agreement to LEM, LEM shall be deemed to have assumed and
undertaken all of Big Rivers' obligations thereunder which arise or accrue
following that assignment or transfer; provided, in the event Big Rivers shall
have modified or amended in any material respect a Pre-Closing Development
Agreement without the consent of LEM, then
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in lieu of any obligation of LEM to assume that agreement, as otherwise provided
for in this Section 11.1(a), LEM shall have the option to have that agreement
assigned to and assumed by it (which option shall be exercised by LEM in
accordance with the procedures set forth below). If LEM shall decline or
otherwise fail to pre-approve a Pre-Closing Development Agreement within the
15-day period provided above, then LEM shall be deemed to have fully and forever
waived its right to elect to take an assignment of that Pre-Closing Development
Agreement at the Closing and Big Rivers shall retain, perform and discharge that
Pre-Closing Development Agreement. If Big Rivers shall fail to present to LEM
one or more Pre-Closing Economic Development Agreements as required by this
Section 11.1, then LEM shall be entitled, in its discretion (and not in
limitation of any claim or remedies that LEM may elect to pursue for failure of
Big Rivers to conform to that criteria), to elect to cause Big Rivers to assign
and transfer to LEM without further consideration all of Big Rivers' rights,
title and interest under, in and to each of those Pre-Closing Economic
Development Agreements upon written notice delivered to Big Rivers prior to or
within 30 days following the Effective Date. If LEM shall fail to make such an
election, Big Rivers shall remain solely responsible for the performance of the
relevant Pre-Closing Economic Development Agreement(s). If LEM makes such an
election, Big Rivers shall assign and transfer the relevant agreement to LEM
within two (2) Business Days following its receipt of LEM's election notice (but
subject to the provisions of subsection (d) below).
(b) Upon an assignment and transfer as described in (a) above, LEM agrees
to assume and undertake to perform and discharge all of Big Rivers' Power
delivery obligations under the relevant Pre-Closing Development Agreements which
arise or accrue following the assignment or transfer LEM shall not assume or be
responsible for, and Big Rivers shall retain, pay and perform, any transmission
service obligations or any other obligations or liabilities under those
Pre-Closing Development Agreements. Big Rivers shall retain all rights (if any)
to charge and receive payment for the transmission service obligations it
discharges only to the extent that such right is contemplated in Section 28 of
the Station Two Power Sales Agreement. Big Rivers and LEM shall enter into an
Assignment and Assumption Agreement in substantially the form attached as
Schedule 9.2 to the Participation Agreement, evidencing
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the assignment to and assumption by LEM of the relevant Pre-Closing Development
Agreement(s), if any.
(c) In the event Henderson shall have pre-paid Big Rivers for any of the
Power to be delivered by LEM to Henderson during the Term under any Pre-Closing
Development Agreement which LEM has assumed, Big Rivers agrees to pay to LEM all
such pre-paid amounts as they relate to Power deliveries to be made after the
assignment and assumption at the same time as its rights, title and interest
thereunder are assigned and transferred to LEM.
(d) The Parties acknowledge that the assignment and transfer of any
Pre-Closing Development Agreements by Big Rivers to LEM as contemplated above
may require the prior approval of the FERC or other federal, state or local
governmental authorities, which may take extended periods of time and
considerable expense to obtain. In light of this, the Parties agree that,
notwithstanding the provisions of Subsection (a) and (b), above, no such
assignment or transfer shall be deemed to have occurred in the event LEM shall
reasonably determine, and shall notify Big Rivers and Henderson in writing, that
any such approval by FERC or another governmental authority shall be required
for the same but shall not have been obtained. In such event, and in lieu of the
assignment and transfer of the relevant Pre-Closing Development Agreement as
contemplated in subsection (a), above, LEM shall be deemed by that notice to
have elected to (and shall then be obligated to) sell and deliver to Big Rivers,
and Big Rivers shall then be obligated to purchase from LEM, seventy-five
percent (75%) of all Power required by Big Rivers to meet its obligations to
Henderson under the relevant Pre-Closing Development Agreement(s), for a
purchase price payable by Big Rivers to LEM therefor equal to the total revenues
actually received by Big Rivers from Henderson for the corresponding Power that
it delivered to Henderson in connection with that agreement (but exclusive of
revenues attributable to transmission charges or reimbursements payable by
Henderson).
(e) In the event LEM elects to sell Power to Big Rivers to service a
Pre-Closing Development Agreement, in lieu of taking assignment of that
agreement, as contemplated in subsection (d), above, LEM agrees to sell and
deliver that Power to Big Rivers at one or more
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interconnection points on Big Rivers' transmission system, or at one or more
Points of Delivery (as defined in the Power Purchase Agreement), in either case
at the same time(s) that Big Rivers is required to deliver the corresponding
Power to Henderson under that agreement, and Big Rivers agrees to use its
commercially reasonable efforts to enforce all of its rights thereunder and to
continue the same in full force and effect for the remaining term thereof. LEM
agrees to reimburse Big Rivers for seventy-five percent (75%) of its reasonable
out-of-pocket costs and expenses incurred in connection with such enforcement,
promptly after being invoiced by Big Rivers for the same. LEM shall be entitled
at any time, and without further consideration, to elect to take assignment and
transfer of any Pre-Closing Development Agreement for which an initial election
was made to sell Power to Big Rivers in lieu of taking such assignment and
transfer, upon written notice delivered to Big Rivers. Upon such election, LEM
shall be responsible for obtaining all FERC and other governmental approvals
required for such assignment and transfer (at LEM's expense), and Big Rivers and
Henderson agree to reasonably cooperate with LEM in obtaining all such
approvals. Henderson hereby consents for all purposes to the assignments and
transfers described in this Section 11.1.
(f) In the event LEM shall at any time take an assignment and transfer of
a Pre-Closing Development Agreement from Big Rivers as contemplated in this
Section 11.1, Big Rivers agrees to sell and deliver to LEM, and LEM agrees to
purchase from Big Rivers, not less than twenty-five percent (25%) of the total
amount of Power required by LEM to service that Pre-Closing Development
Agreement with Henderson, for a purchase price payable by LEM to Big Rivers
therefor equal to the total revenues actually received by LEM from Henderson for
the corresponding Power that is delivered by LEM to Henderson under that
agreement (but exclusive of revenues attributable to transmission charges or
reimbursements that are payable by Henderson). Such Power shall be so delivered
by Big Rivers to LEM at one or more interconnection points on Big Rivers'
transmission system at the same time that the corresponding Power must be
delivered by LEM to Henderson. Big Rivers agrees to reimburse LEM for
twenty-five percent (25%) of its reasonable out-of-pocket costs and expenses
incurred in connection with LEM's enforcement of its rights under such
agreements, promptly after being invoiced by LEM for the same. Big Rivers agrees
that all such Power
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sales and deliveries shall be satisfied using Power other than the Unit Output
or Station Two Unit Output required to be sold by Big Rivers to LEM pursuant to
Section 3 of the Power Purchase Agreement; provided, that Big Rivers may provide
such Power from the Base Power sold to Big Rivers by LEM under Section 4 of the
Power Purchase Agreement.
(g) Except as otherwise provided in the relevant Pre-Closing Development
Agreement, Henderson shall be responsible for coordinating and paying for any
transmission services over the Big Rivers transmission system required for the
delivery of Power to Henderson or its customers (subject to any rights of
Henderson under the Station Two Contracts to use that system without such
payments). Where LEM is selling that Power directly to Henderson, Big Rivers
agrees to invoice Henderson separately for such transmission charges (if any).
Big Rivers and LEM agree with each other that they shall be solely responsible
for the costs and risks which each has undertaken in the relevant Pre-Closing
Development Agreement associated with their procuring and delivering the Power
for which they are responsible as described in this Section 11.1, including
without limitation any responsibility undertaken regarding the transmission and
related costs required in order to transmit that Power to Big Rivers'
transmission system. Big Rivers and LEM each agree to pay to the other Party,
the purchase price amounts for which they are responsible under this Section
11.1 within 15 days after receipt of the corresponding revenues from Henderson.
11.2 Economic Development Opportunities During The Term. Notwithstanding
anything contained in the 1998 Amendments or elsewhere in this Agreement to the
contrary, the Parties agree that during the Phase I Subcontract Term and the
Phase II Assignment Term the rights and obligations of Big Rivers under Section
28 of the Station Two Power Sales Agreement (as amended by the 1998 Amendments),
pertaining to "Economic Development Opportunities" of Henderson ("Section 28")
(other than its rights and obligations relating to Pre-Closing Development
Agreements, which shall continue to be governed by Section 28 and by Sections
11.1 and 11.3 of this Agreement) shall be deemed to be suspended, and Section
28, as modified and supplemented by this Section 11.2 and Section 11.3, below,
shall be deemed to represent separate and distinct rights and obligations of LEM
and Henderson to each other that
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shall continue in force and effect until such time as this Agreement expires or
is terminated in accordance with its terms. Notwithstanding the foregoing, the
Parties agree that Henderson shall continue to enjoy all of the rights and
benefits arising under Section 28, as well as under any other provisions of the
Station Two Power Sales Agreement to which Section 28 may relate; provided, that
Henderson hereby agrees that such rights and benefits shall be subject to the
provisions of Sections 11.1, 11.2 and 11.3 of this Agreement throughout the
Term. The covenants and agreements made by LEM and Big Rivers to each other in
this Section 11.2 and Section 11.3, below, shall be deemed to be independent of
the provisions of Section 28. Consistent with the foregoing, and for the purpose
of implementing the agreements contemplated in this Section 11.2, references to
Big Rivers in Sections 28.1 and 28.2 of the Station Two Power Sales Agreement
shall be deemed to be references to LEM throughout the Phase I Subcontract Term
and the Phase II Assignment Term. The Parties acknowledge that (a) the
availability of Station Two Economic Development Power to Henderson as
contemplated in this Section 11.2 shall take into consideration any Economic
Development Power utilized by Henderson in connection with any Pre-Closing
Development Agreements that may remain in effect at that time, and (b) except to
the extent otherwise provided for herein, Station Two Economic Development Power
shall be treated under this Section 11.2 in the same manner and with the same
effect as provided in Section 28.
(a) In the event Henderson shall elect to use available Station Two
Economic Development Power with respect to a particular "Economic Development
Opportunity" pursuant to Section 28 at any time during the Phase I Subcontract
Term or the Phase II Assignment Term (other than uses of that Power in
connection with Pre-Closing Development Agreements between Henderson, on the one
hand, and Big Rivers or LEM, on the other hand), Henderson shall be required, as
a condition to its right to utilize that Power: (i) to enter into an agreement
with LEM for the purchase by Henderson and the delivery by LEM of all capacity
and Energy requirements of such Economic Development Opportunity to the extent
not supplied by
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Henderson with its reserved capacity or with Station Two Economic Development
Power, which shall in no event be less than one-half of all capacity and Energy
required to meet the needs of that Economic Development Opportunity not supplied
by Henderson from its reserved Capacity in compliance with the Station Two
Contracts ("Surplus Power"), at a price and upon terms and conditions which
those Parties determine are based on the then-prevailing market for such Surplus
Power, or (ii) to make a binding written offer to LEM to purchase from LEM all
of that Surplus Power, at the price determined in accordance with the process
provided below (the "Offer Price") and on the other terms and conditions which
are determined in accordance with the process described below (the "Offer"). In
the event of such a negotiated agreement or an acceptance by LEM of an Offer,
Henderson shall be obligated to purchase and LEM shall be obligated to deliver
such Surplus Power in accordance with the terms of such negotiated agreement or
the agreement created by that Offer and acceptance.
(b) Any Offer made by Henderson to LEM, to be effective for purposes of
this Section 11.2, must be preceded by a notice by Henderson to LEM of
Henderson's desire to so utilize all or a portion of the remaining Station Two
Economic Development Power (a "Notice"), and by a completed bidding process as
contemplated below, and must otherwise comply with the provisions of this
Section 11.2, in each case absent the written agreement of LEM to the contrary.
Any Notice shall, upon its delivery to LEM, be deemed to be the commencement of
the bidding process provided for below in order to determine the relevant Offer
Price for the relevant Surplus Power (the "RFP Process"). The Notice must
identify the particular Economic Development Opportunity for which the Surplus
Power is being sought and the amount of Surplus Power and Station Two Economic
Development Power, respectively, that would be required for the same, and must
include a description in reasonable detail of the load characteristics and other
terms that would be relevant to the Surplus Power purchases to be made by
Henderson (which shall in no event materially deviate from the load
characteristics and other terms (exclusive of pricing terms) and conditions upon
which Henderson is to supply the capacity and Energy requirements of that
Economic Development Opportunity), including without limitation, the quantity or
quantities of Surplus Power to be delivered, the date for the Commencement of
service, the period or periods during which deliveries would be required, the
duration of the proposed agreement, the relevant delivery points to which the
Surplus Power must be delivered at the Power supplier's expense, the relevant
load factor(s), whether
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sales would be firm or interruptible, and all other material terms and
conditions upon which the Surplus Power sales would be made to Henderson.
(c) Promptly following its delivery of the Notice to LEM, Henderson shall
initiate the RFP Process by delivering a written request for proposal to not
less than six (6) power suppliers (other than LEM) which are then authorized by
applicable Laws to sell Power on a wholesale basis at market-based rates in the
Commonwealth of Kentucky (each a "Qualified Power Marketer"), soliciting from
those Qualified Power Marketers one (but not more than one) firm offer to sell
to Henderson all (but not less than all) of the Surplus Power required to meet
the needs of that Economic Development Opportunity. All such requests for
proposals shall be delivered by Henderson to the Qualified Power Marketers on
the same Business Day, shall specify the date by which proposals must be
received by Henderson, shall include the same terms and conditions for Surplus
Power sales as were set forth in the Notice delivered by Henderson to LEM, and
shall not include any different or additional terms or conditions. Any proposal
that may be received by Henderson in response to its requests for proposals, in
order to be valid for purposes of this Section 11.2, (i) must be in writing,
(ii) must contain a single price per megawatt-hour at which the relevant
Qualified Power Marketer is willing to sell the Surplus Power to Henderson
during each period specified in the request for proposals (with annual
adjustments, if any, to that price based on a nationally recognized industry
index which references price levels) but without any separate demand or capacity
charge absent the written agreement of LEM and Henderson to the contrary, (iii)
must represent a binding offer by that Qualified Power Marketer to sell and
deliver to Henderson all Surplus Power included in the request for proposals on
the terms and subject to the conditions set forth therein without material
condition or reservation (and must expressly recite that it is such a binding
offer), and (iv) must be irrevocable and not subject to modification by that
Qualified Power Marketer until at least 4:00 P.M. Henderson, Kentucky time on
the first Business Day following the date on which Henderson shall deliver the
Offer to LEM as contemplated in Subsection (e), below. Any offer or proposal
from a Qualified Power Marketer that does not meet each of the criteria set
forth in (i), (ii), (iii) and (iv), above, shall be disqualified from
consideration, but Henderson shall be free to obtain a replacement offer which
meets those criteria from that or
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any other Qualified Power Marketer. In order to facilitate the receipt of at
least three offers from Qualified Power Marketers that meet the foregoing
criteria, Henderson shall be permitted, following its delivery of the relevant
Notice to LEM, to provide to prospective power suppliers in advance and on an
informal basis the relevant information to be included in its formal request for
proposals, and to discuss with those prospective power suppliers the load
characteristics and other terms and conditions upon which Surplus Power sales
would be required.
(d) Henderson shall promptly deliver to LEM (i) a complete copy of all
requests for proposals that are delivered to prospective power suppliers, and
(ii) copies of all proposals that are received by Henderson from Qualified Power
Marketers in response to those requests, and Henderson shall notify LEM promptly
following the specified date by which proposals shall be received by Henderson
that Henderson has received at least three (3) qualifying proposals that will
remain effective through the period described in Section (c)(iv), above, and
that otherwise meet the criteria described in (c), above (including the
identities of those Qualified Power Marketers). Henderson shall rank such
qualifying offers from highest to lowest, based on the megawatt-hour prices
specified therein for the Surplus Power. In the event that a proposal shall
specify different prices for separate periods of time as permitted by the
request for proposals, the megawatt-hour price for such proposal shall be
determined by calculating the weighted average of the megawatt-hour prices so
specified, weighted based on the quantity of Energy to be purchased in each
period. For purposes of calculating the megawatt-hour prices of an offer which
specifies annual adjustments thereto based on an index as provided for in
Subsection (c) above, the amount of each such adjustment during the term of the
proposed agreement shall be assumed to be the same as the latest annual rate of
adjustment for such index as of the time of the price determination. Any demand
or capacity charges that are agreed to by LEM and Henderson as contemplated in
Subsection (c) above, shall be calculated for purposes of determining the
ranking of the proposals in the manner provided in such agreement. Based on the
ranking of the proposals as aforesaid: (i) if five or more qualifying proposals
are received by Henderson, then of the five qualifying proposals specifying the
lowest prices the highest and lowest of those proposals shall be eliminated, the
proposal which
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is the mean of the remaining three proposals shall constitute the "Mean
Proposal"; and (ii) if less than five but at least three qualifying proposals
are received by Henderson, then of the three qualifying proposals specifying the
lowest prices, the highest and lowest proposals shall be eliminated and the
remaining proposal shall be the Mean Proposal. The megawatt-hour price or prices
specified in the Mean Proposal (together with the adjustments thereto, if any,
specified in such proposal as are permitted by the request for proposals, shall
constitute the "Offer Price." In the event Henderson does not receive at least
three such qualifying proposals, then absent the written agreement of LEM and
Henderson to the contrary, that entire RFP Process shall be deemed to be
disqualified, and Henderson may elect (but shall be required as a condition to
its right of access to and use of the relevant Station Two Economic Development
Power) to once again deliver a Notice to LEM, commence and complete a new RFP
Process with those or other Qualified Power Marketers, and make a corresponding
Offer to LEM.
(e) Following a determination of the relevant Mean Proposal and Offer
Price as contemplated in (d), above, Henderson may, as a condition to its right
of access to and use of the relevant Station Two Economic Development Power, but
shall not be obligated to, deliver an Offer to LEM based solely on that Offer
Price and the other terms and conditions for Surplus Power sales and deliveries
as were set forth in the Mean Proposal; provided, however, that any such Offer
by Henderson, as an additional condition to its effectiveness hereunder, must be
delivered by Henderson to LEM within two (2) Business Days following Henderson's
determination of the relevant Mean Proposal. Any proposed Offer by Henderson to
LEM which does not follow a determination of the relevant Mean Proposal and
Offer Price as contemplated above, or which does not otherwise comply with the
provisions of this Section 11.2, shall be disqualified, and Henderson may
request (but shall be required as a condition to its right of access to and use
of the relevant Station Two Economic Development Power) to commence a new RFP
Process to once again determine the relevant Mean Proposal and Offer Price, and
to make a corresponding new Offer to LEM (absent the written agreement of LEM
and Henderson to the contrary)
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(f) LEM shall have a period of five (5) Business Days following receipt of
Henderson's Offer to accept the terms of such Offer and agree to supply the
Surplus Power at the Offer Price and on the other terms and conditions included
in the Offer. If LEM rejects or fails to accept such Offer within that
five-Business Day period, Henderson may pursue its rights provided for in
Section 28.2 of the Station Two Power Sales Agreement to seek alternative
sources for such Surplus Power, by either (i) accepting one of the original
qualifying proposals from any of the Qualified Power Marketers described in
Subsection (d), above, whose proposal was ranked lower than or constituted the
Mean Proposal, or (ii) accepting a new proposal from any such Qualified Power
Marketer or other third-party supplier based on the same material terms and
conditions as were included in the Offer, and that meets the criteria set forth
in Subclauses (i), (ii) and (iii) of Subsection (c), above; provided, that any
such new proposal, based on the method of calculation set forth in Subsection
(d), above, shall be ranked equal to or lower than the Mean Proposal on which
the Offer was based. If Henderson shall fail to so accept one of the original
qualifying proposals or a new proposal meeting the criteria described above,
then as a condition to Henderson's right to utilize the relevant Station Two
Economic Development Power, Henderson shall, prior to entering into an agreement
to buy the Surplus Power (or any of it) from a third-party Power supplier, offer
to LEM the right, in LEM's discretion, to match the price and other material
terms and conditions offered by or to that third-party supplier (a "Matching
Offer"), thereby agreeing to supply the Surplus Power to Henderson on those
terms and conditions in lieu of that supplier. Such a Matching Offer by
Henderson to LEM shall be accompanied by a copy of the proposed agreement with,
or binding written offer from or to, that third-party supplier. If the Matching
Offer is accepted by LEM, Henderson shall be obligated to purchase and LEM shall
be obligated to sell the relevant Surplus Power at the price and upon the other
material terms and conditions set forth or deemed to be included in the Matching
Offer. If LEM rejects the Matching Offer or fails to accept it within five (5)
Business Days after its receipt thereof and of a copy of the relevant third
party agreement or offer, Henderson shall be free to enter into that agreement
with the third-party supplier; provided, however, that if Henderson shall fail
to enter into that agreement for the purchase of the relevant Surplus Power
within thirty (30) days after the expiration of that five-Business Day period,
no such agreement shall be
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entered into without again first offering LEM the right to match the price and
material terms and conditions thereof as contemplated in this Subsection (f).
Big Rivers shall have no rights with respect to any Offer or Matching Offer that
is not accepted by LEM, absent the agreement of Henderson to the contrary.
Following any acceptance by LEM of an Offer or Matching Offer made by Henderson
as contemplated in this Section 11.2, and subject to the provisions of
Subsection (h), below, LEM shall be given at least ten (10) Business Days prior
written notice by Henderson of the date on which initial Surplus Power
deliveries by LEM must commence under their relevant agreement, and of the date
on which Henderson shall begin taking the relevant Station Two Economic
Development Power from Station Two for sale to that Economic Development
Opportunity (which shall not pre-date the date of such initial Surplus Power
deliveries).
(g) Any acceptance by LEM of an Offer or Matching Offer made by Henderson
must be in writing, and shall be deemed to obligate Henderson to purchase and
accept delivery of, and LEM to sell and deliver, Surplus Power on the relevant
terms and conditions for that Offer or Matching Offer described above. Any such
agreements that may be created between LEM and Henderson are hereinafter
referred to individually as an "Economic Development Agreement" and collectively
as the "Economic Development Agreements." Following any acceptance by LEM of an
Offer or Matching Offer made by Henderson in accordance with the terms hereof,
those Parties and their counsel may restate, without limitation, the Economic
Development Agreement created thereby in a separate written instrument executed
by LEM and Henderson.
(h) Notwithstanding anything contained in Section 28 or Section 11.2 of
this Agreement to the contrary, and notwithstanding LEM's acceptance of any
Offer or Matching Offer made by Henderson as contemplated herein, LEM shall be
entitled, in its discretion and upon written notice to Henderson, to terminate
any agreement created by that acceptance without further obligation to
Henderson, and to terminate Henderson's right pursuant to Section 28 and this
Section 11.2 to use the Station Two Economic Development Power relating to that
Offer or Matching Offer, in the event Power purchases by the relevant Economic
Development Op-
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portunity from Henderson under their agreement, and the corresponding Surplus
Power purchases by Henderson from LEM under their Economic Development
Agreement, have not commenced in accordance with their respective terms by the
date for commencement of service (the "Start Date") as set forth in the Offer or
Matching Offer, unless the relevant Economic Development Agreement between
Henderson and LEM expressly provides for Henderson's payment in the event that
service has not commenced by the Start Date of demand or capacity charges to LEM
commencing with the Start Date and continuing until service shall be commenced
in which event the foregoing termination rights of LEM shall not be exercisable
by LEM unless such purchases of Surplus Power by Henderson have not commenced in
accordance with the terms of those agreements within 36 months following the
date of LEM's acceptance of the Offer or the Matching Offer (or such shorter
period as is provided for in the relevant Economic Development Agreement). In
the event that the demand and/or use of Power by any Economic Development
Opportunity shall be reduced due to any unexpected inability to utilize such
Power or refusal to purchase such Power, or such Economic Development
Opportunity shall otherwise no longer be a customer of Henderson, upon
notification by Henderson to LEM of such an event, (i) in the case of such
reduction in Power requirement, the amount of the Power reduction shall be
applied to reduce the relevant Economic Development Power allocated and
available to Henderson under this Section 11.2 and Section 28, and the Surplus
Power purchased by Henderson and sold by LEM under the relevant Economic
Development Agreement, pro-rata based on the respective amounts of Power
thereof, and (ii) in the case of Henderson's loss of such Economic Development
Opportunity as a customer, the allocation to Henderson of the relevant Economic
Development Power shall end and the relevant Economic Development Agreement
shall be deemed terminated by the Parties. No Economic Development Power to
which Henderson becomes entitled pursuant to this Section 11.2 or Section 28
shall be used other than for the relevant Economic Development Opportunity,
except for the use of Excess Henderson Energy associated with the Capacity of
such Economic Development Power as provided in Section 3.8 of the 1998
Amendments and Section 11.5 of this Agreement. The foregoing termination rights
shall be in addition to and not in lieu of, any other termination rights that
LEM or Henderson may have under or with respect to the relevant Economic
Development Agreement,
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all of which, together with all other rights and remedies, shall be cumulative
to the fullest extent permitted by applicable Laws.
(i) The provisions of Section 28.3 of the Station Two Power Sales
Agreement shall continue to govern the Parties' respective rights and
obligations throughout the Phase I Subcontract Term and Phase II Assignment
Term, except that references therein to Big Rivers shall be deemed to be to LEM,
and the reference therein to the specified prices contained in Exhibit 1 shall
be deemed to be a reference to the relevant Offer Price or the price identified
in the relevant Matching Offer (as applicable). The Parties agree that the
provisions of Section 28.4 of the Station Two Power Sales Agreement shall have
no applicability during the Phase I Subcontract Term or the Phase II Assignment
Term.
(j) Within five (5) Business Days after any acceptance by LEM of an Offer
or Matching Offer made by Henderson with respect to an Economic Development
Opportunity as contemplated above, LEM shall notify Big Rivers of the resulting
Economic Development Agreement, shall provide Big Rivers with a copy of
Henderson's Offer or Matching Offer (as applicable), and shall offer in writing
to Big Rivers the right to sell and deliver to LEM twenty-five percent (25%) of
all Power required by LEM to service that Economic Development Agreement with
Henderson, for a purchase price payable by LEM to Big Rivers for such Power
equal to the total revenues actually received by LEM for the corresponding
amount of Surplus Power delivered to Henderson under that Economic Development
Agreement (inclusive of all corresponding Energy and demand or capacity charges,
if any, but exclusive of revenues attributable to transmission charges or
reimbursements (if any) payable by Henderson to LEM under that agreement). The
Power sales and deliveries contemplated by any such offer from LEM to Big Rivers
would be on the same material terms and conditions as are provided for in the
corresponding Economic Development Agreement between LEM and Henderson, and
deliveries by Big Rivers would be required to be made to LEM at one or more
interconnection points on Big Rivers' transmission system. Big Rivers shall have
five (5) Business Days following its receipt of that offer by LEM to accept the
same
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by written notice to LEM. Such acceptance by Big Rivers shall obligate it to
sell all such Power to LEM for the duration of LEM's corresponding Economic
Development Agreement with Henderson and on the other terms and conditions
described above. LEM shall be entitled, without obligation to Big Rivers, to
sell and deliver all Surplus Power required under that Economic Development
Agreement, solely for LEM's account, until such time as Big Rivers shall have
notified LEM of its acceptance of the foregoing offer from LEM, and, thereafter,
(i) until such time as Big Rivers has commenced deliveries of the relevant Power
as contemplated herein, or (ii) to the extent that Big Rivers shall at any time
fail to deliver the corresponding quantities of Power to LEM. LEM shall have no
obligation to enter into any Economic Development Agreement with Henderson, and
shall be entitled to terminate any such agreement as contemplated in Subsection
(h) above without the consent or approval of Big Rivers. Any failure by Big
Rivers to accept LEM's offer within that five (5) day period as to all Power
covered thereby, any failure by Big Rivers, following its timely acceptance of
that offer, to commence deliveries of the relevant Power to LEM within 24 hours
after such acceptance (or such later time at which LEM's corresponding Power
deliveries to Henderson are required to commence), or any failure by Big Rivers
to thereafter fulfill in all material respects all Power delivery and other
obligations of Big Rivers to LEM under their agreement, shall immediately
entitle LEM to revoke or terminate its offer or that agreement (as applicable)
by written notice to Big Rivers and without further obligation to Big Rivers,
and shall, following such revocation or termination, be deemed to release and
discharge LEM from any further obligation to Big Rivers, whether under this
Section 11.2(j) or otherwise, to purchase or offer to purchase from Big Rivers
any Power required by LEM for that or any future Economic Development Agreement
with Henderson; provided, that such revocation or termination by LEM shall not
be deemed to affect Big Rivers' rights and obligations under any other similar
power sales agreements with LEM in existence as of that revocation or
termination and relating to another existing Economic Development Agreement. Big
Rivers agrees that all Power sales and deliveries by it to LEM in connection
with one or more Economic Development Agreements shall be satisfied using Power
other than the Unit Output or Station Two Unit Output required to be sold by Big
Rivers to LEM pursuant to Section 3 of the Power Purchase Agreement; provided,
that Big Rivers may provide such Power from the
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Base Power sold to Big Rivers by LEM under Section 4 of the Power Purchase
Agreement. LEM agrees to pay to Big Rivers the purchase price amounts for which
it is responsible under this Section 11.2(j) within 15 days after LEM's receipt
of the corresponding revenues from Henderson.
(k) Throughout the term of any agreement created between Big Rivers and
LEM as contemplated in (j), above, Big Rivers agrees to reimburse LEM for 25% of
all out-of-pocket costs and expenses incurred by LEM in enforcing its
corresponding Economic Development Agreement with Henderson, promptly after
being invoiced by LEM for the same, and LEM agrees to use its commercially
reasonable efforts to so enforce that agreement against Henderson. Except as
otherwise provided in the relevant Economic Development Agreement, Henderson
shall be responsible for coordinating and paying for any transmission services
over the Big Rivers transmission system required for the delivery of Surplus
Power to Henderson or its customers (subject to any rights of Henderson under
the Station Two Contracts to use that system without such payments). Big Rivers
agrees to invoice Henderson separately for those transmission charges (if any).
Big Rivers and LEM agree with each other that they shall be solely responsible
for the costs and risks which each may undertake in the relevant Economic
Development Agreement associated with their procuring and delivering the Power
for which they are or may become responsible as described in this Section 11.2,
including without limitation, any responsibility undertaken regarding the
transmission and related costs required in order to transmit that Power to Big
Rivers' transmission system. The agreements between Big Rivers and LEM described
in this Subsection (k) and Subsection (j) above, and the performance and
non-performance thereof, shall have no effect on LEM's or Henderson's rights and
obligations under any Economic Development Agreements between them.
(l) In the event that, with respect to any Economic Development
Opportunity, Henderson shall for any reason elect not to, or shall fail to,
submit to LEM an Offer for Surplus Power that complies with the provisions of
this Section 11.2 or to otherwise negotiate and enter into an agreement with LEM
to supply that Surplus Power (in either case thereby foregoing its right to use
Station Two Economic Development Power for sale to the relevant
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Economic Development Opportunity), but Henderson shall instead pursue the
purchase of all or any portion of the Power needs of that Economic Development
Opportunity from one or more other power suppliers, and in the event Henderson
shall thereafter desire to enter into one or more agreements with a third-party
power supplier to purchase Power for resale to that Economic Development
Opportunity, then, prior to so entering into that agreement Henderson shall
provide a copy thereof (or the relevant offer(s) from or to that supplier) to
LEM, and shall offer in writing to LEM the right, in LEM's discretion, to match
the price and the other material terms and conditions offered by or to that
third-party supplier. If LEM rejects that offer or fails to accept it within
five (5) Business Days after its receipt thereof, Henderson shall be entitled to
enter into an agreement with that third-party supplier for the price and upon
the same material terms and conditions as were offered to LEM. In the event LEM
accepts any offer made by Henderson as contemplated in this Subsection (l), LEM
shall be obligated to sell and deliver, and Henderson shall be obligated to
purchase, all such Power at the price and upon the other material terms and
conditions described above. In the event LEM accepts an Offer under this Section
11.2(l), it shall have no obligation or liability whatsoever to Big Rivers with
respect to the resulting agreement between LEM and Henderson.
11.3 Treatment of Economic Development Agreements Following the Term.
(a) Upon the expiration or earlier termination of this Agreement for any
reason: (i) LEM shall assign and transfer to Big Rivers all of LEM's rights,
title and interest under, in and to any Pre-Closing Development Agreements that
were previously assigned and transferred to LEM in accordance with Section 11.1
and that continue in effect as of that expiration or termination date (other
than LEM's rights to payment thereunder for Power deliveries made prior to the
assignment or transfer to Big Rivers, and other than damage claims of LEM
arising thereunder prior to that assignment or transfer); (ii) any agreements
between LEM and Big Rivers providing for LEM's sale of Power to Big Rivers for
resale to Henderson under any Pre-Closing Development Agreement (as contemplated
in Section 11.1) shall be terminated (other than LEM's rights to payment
thereunder for Power deliveries already made to Big Rivers, and other than
damage claims of LEM or Big Rivers arising
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thereunder prior to that termination); (iii) any agreements between LEM and Big
Rivers providing for Big Rivers' sale of Power to LEM for resale to Henderson
under any Pre-Closing Development Agreement (as contemplated in Section 11.1)
shall be deemed to be terminated (other than Big River's rights to payment
thereunder for Power deliveries already made to LEM, and other than damage
claims of Big Rivers of LEM arising thereunder prior to that termination); and
(iv) LEM shall be deemed to be fully released and discharged by Big Rivers and
Henderson from further obligation or liability in connection with the agreements
described in (i), (ii) and (iii), above, except as contemplated above, and
except for breaches or defaults under those agreements on the part of LEM
occurring prior to the assignment, transfer or termination, as applicable, of
such agreements (which breaches or defaults on the part of LEM, and all
liabilities arising therefrom, shall remain an obligation of LEM after such
assignment, transfer or termination). Upon any assignment or transfer by LEM to
Big Rivers of any Pre-Closing Development Agreements as contemplated above, Big
Rivers shall be deemed to have assumed and undertaken all of LEM's obligations
thereunder which arise or accrue following that assignment or transfer;
provided, that in the event LEM shall have modified or amended in any material
respect a Pre-Closing Development Agreement without the consent of Big Rivers,
then in lieu of any obligation of Big Rivers to assume that agreement, as
otherwise provided for in this Section 11.3(a), Big Rivers shall have the option
to assume the agreement (which option shall be exercised by Big Rivers in
accordance with the procedures set forth in Section 11.3(b) relating to all
other Economic Development Agreements).
(b) In addition, upon the expiration or earlier termination of this
Agreement for any reason, LEM shall be deemed to have offered to Big Rivers the
right to cause LEM to assign and transfer to Big Rivers all (but not less than
all) of LEM's remaining rights, title and interest (if any) under, in and to any
Economic Development Agreements which are then in effect and to which LEM is
then a party (other than LEM's rights and entitlements thereunder for payments
owing by Henderson as of the assignment or transfer, and other than LEM's damage
claims arising thereunder prior to the assignment or transfer). Big Rivers shall
have a period of 30 days following the expiration or termination of this
Agreement to accept that offer
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from LEM by designating in writing to LEM, in reasonable detail, the specific
Economic Development Agreement(s) that will be assigned and transferred by LEM
to Big Rivers. If Big Rivers fails to so designate a particular Economic
Development Agreement within that 30-day period, its rights under this Section
11.3 with respect to that agreement shall be deemed to have been fully and
forever waived, its rights under Section 11.2 (or under any related agreement
with LEM contemplated in Section 11.2) to sell Power to LEM for resale to
Henderson under that Economic Development Agreement shall, at the election of
LEM made at any time thereafter upon notice to Big Rivers, be terminated without
further obligation on the part of LEM, and LEM shall thereafter supply all such
Power to Henderson from any source satisfactory to LEM during the remainder of
that Economic Development Agreement.
(c) The Parties acknowledge and agree that the assignment or transfer of
the Pre-Closing Development Agreements and Economic Development Agreements
contemplated by or made pursuant to Sections 11.3(a) and 11.3(b), above, may
require notice to or the prior approval of the FERC or other federal, state or
local governmental agencies. LEM shall be solely responsible for submitting all
notices or obtaining all approvals of the FERC or any other governmental
authority required for the assignment or transfer of such Power sales
agreements. LEM will pay the first $25,000, and Big Rivers will pay the
remaining balance due, of all reasonable fees and expenses incurred by LEM in
filing the notices and seeking the required approvals contemplated in this
Section 11.3(c), including, without limitation, consultant and legal fees,
administrative fees and filing fees. After the Term, and promptly following Big
Rivers' request therefor, LEM shall proceed in good faith and use its reasonable
best efforts to file such notices and to obtain such approvals as may be
required to transfer and assign such Power sales agreements to Big Rivers. In
light of the regulatory notices and approvals which may be required, the Parties
further agree that, notwithstanding the provisions of Subsection (a) and (b),
above, no such assignment or transfer shall be deemed to have occurred in the
event Big Rivers shall reasonably determine, and shall notify LEM and Henderson
in writing, that any such approval by the FERC or any other governmental
authority shall be required for the same but shall not have been obtained. In
any event, no
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such assignment or transfer shall occur until all necessary notices and
approvals to such assignments and transfers, and the terms thereof, are so
obtained from the FERC and all other governmental authorities, and the
provisions of the Pre-Closing Development Agreements and the Economic
Development Agreements shall remain unchanged except for such assignment or
transfer. If Big Rivers provides a notice to LEM and Henderson to the effect
contemplated in the preceding sentence, Big Rivers shall be deemed by that
notice to have elected to (and shall then be obligated to) sell and deliver to
LEM during the period specified below, and LEM shall have an obligation to
purchase and accept delivery from Big Rivers during the period specified below
(provided Big Rivers shall not then or at any time during that period be in
breach or default of any obligation that may be due and owing to any LG&E
Company), all Power required by LEM to meet its obligation to Henderson under
the relevant Pre-Closing Development Agreement(s) and Economic Development
Agreement(s), for a purchase price payable by LEM to Big Rivers therefor equal
to the total revenues actually received by LEM from Henderson for the
corresponding Power that it delivered to Henderson in connection with that
agreement(s) (but exclusive of revenues attributable to transmission charges or
reimbursements payable by Henderson). The period during which the purchase and
sale obligations specified in the preceding sentence shall be effective shall
commence on the date of Big Rivers' notice to LEM and Henderson and shall expire
on the earlier of (x) the date of receipt of all required regulatory and
governmental approvals to the proposed assignment or transfers of the relevant
Pre-Closing Development Agreement(s) and Economic Development Agreement(s) or
(y) the date of expiration or termination of the relevant Pre-Closing
Development Agreement(s) and Economic Development Agreement(s). Big Rivers and
Henderson agree to reasonably cooperate with LEM's efforts to submit such
notices and obtain such approvals, and Big Rivers agrees to seek such approvals
expeditiously. Upon any assignment or transfer by LEM to Big Rivers of the
Pre-Closing Development Agreement(s) and Economic Development Agreement(s) as
contemplated herein, LEM shall be deemed to be released and discharged from any
further obligation or liability to Henderson or Big Rivers thereunder or under
this Section 11.3(c), or with respect thereto or hereto, except for any breaches
or defaults by LEM under that agreement or under this Section 11.3(c) occurring
prior to that assignment or transfer.
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11.4 Section 3.4 of Power Sales Contract. By way of clarification only and
not in limitation of the Parties' respective rights and obligations thereunder,
the Parties acknowledge and agree that the annual adjustment to Henderson's five
year capacity reservation forecasts in amounts not exceeding five (5) megawatts
per Contract Year provided for in Section 3.3 of the Station Two Power Sales
Agreement, as applied as contemplated in the concluding sentence of Section 3.4
of the Station Two Power Sales Agreement (as amended by the 1998 Amendments), is
limited to five (5) megawatts per Contract Year for all commercial or industrial
customers of Henderson collectively, not five (5) megawatts per Contract Year
for each such customer.
11.5 Use of Excess Energy and Capacity. The Parties hereby agree that,
during the Phase I Subcontract Term and the Phase II Assignment Term, the
provisions of this Section 11.5 shall apply and govern their respective rights
and obligations with respect to Excess Henderson Energy and Energy associated
with Excess Henderson Capacity (each as defined below), in lieu of the
provisions of Section 3.8 of the Station Two Power Sales Agreement (as amended
by the 1998 Amendments). Consistent with the foregoing, the Parties agree that
the provisions of Section 3.8 of the Station Two Power Sales Agreement shall be
suspended throughout the Phase I Subcontract Term and the Phase II Assignment
Term. Notwithstanding the foregoing, the provisions of Sections 8.12 and 9.7 of
the Agreement, as they relate to Excess Henderson Energy and Energy associated
with Excess Henderson Capacity, shall also govern the Parties' respective rights
and obligations to the extent contemplated therein.
(a) In the event that at any time and from time to time Henderson does not
schedule or take the full amount of Energy associated with its reserved Capacity
from Station Two (determined in accordance with Station Two Power Sales
Agreement), (1) Big Rivers shall, during the Phase I Subcontract Term, upon the
prior request of LEM, and (2) Station Two Subsidiary may, during the Phase II
Assignment Term, in its discretion, take and utilize all such Energy (or any
portion thereof designated by Station Two Subsidiary) not so scheduled or taken
by Henderson (the "Excess Henderson Energy"), as provided herein. Henderson
agrees
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to permit Big Rivers or Station Two Subsidiary (as applicable) to take and
utilize all or any portion of such Excess Henderson Energy as contemplated
above.
(b) If at any time Station Two Capacity is generated in excess of the
Total Capacity of Station Two determined in accordance with Section 3.6 of the
Station Two Power Sales Agreement ("Excess Henderson Capacity"), (1) Big Rivers
shall during the Phase I Subcontract Term, and (2) Station Two Subsidiary shall,
during the Phase II Assignment Term, take and utilize all Energy associated with
such Excess Henderson Capacity as provided herein (unless otherwise agreed to by
Station Two Subsidiary and Henderson). Henderson agrees to permit Big Rivers or
Station Two Subsidiary (as applicable) to take and utilize all such Energy as
contemplated above.
(c) Promptly following the end of each calendar month during the Phase I
Subcontract Term and the Phase II Assignment Term, Station Two Subsidiary shall
notify Henderson and Big Rivers of the amount of Excess Henderson Energy and
Energy associated with the Excess Henderson Capacity, if any, taken by Big
Rivers or Station Two Subsidiary, as the case may be, during the previous month.
Big Rivers or Station Two Subsidiary (whichever Party so took the Excess
Henderson Energy and/or Energy associated with Excess Henderson Capacity) shall
pay to Henderson, prior to the 25th day of the then current month, for the
amount of Excess Henderson Energy and Energy associated with the Excess
Henderson Capacity so taken by it during that prior month, a purchase price per
megawatt hour equal to $1.50. In addition, Big Rivers or Station Two Subsidiary,
as the case may be, shall (i) provide, at its own cost, the full replacement of
all fuels and reagents consumed from the Station Two fuel and reagent reserves
for the production of the Excess Henderson Energy and Energy associated with the
Excess Henderson Capacity so taken by it, and (ii) pay the portion of the sludge
disposal costs attributable to that Excess Henderson Energy and Energy
associated with Excess Henderson Capacity, as calculated in accordance with
Section 3.4 of the Joint Facilities Agreement. Notwithstanding the foregoing,
Station Two Subsidiary agrees to promptly reimburse Big Rivers for its
out-of-pocket costs and expenses incurred in connection with such fuels,
reagents and sludge disposal to the extent not paid by LEM as an Operating Pass
Through Cost
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pursuant to Section 8.12 of this Agreement, and Station Two Subsidiary shall
administer all such fuel and reagent procurement on behalf of Big Rivers
pursuant to Section 8.14 (c) of this Agreement.
(d) Henderson and Big Rivers agree that Station Two Subsidiary shall be
allowed, but shall not be required, to operate Station Two to obtain Capacity
above the Total Capacity of Station Two determined in accordance with Section
3.6 of the Station Two Power Sales Agreement; provided, however, that Station
Two Subsidiary's operation of Station Two shall at all times be subject to its
operating covenants to Big Rivers and Henderson, respectively, set forth
elsewhere in this Agreement or the Assigned Station Two Contracts, as
applicable. Henderson further agrees that it shall not at any time be permitted
to sell or commit to any Person (other than to Big Rivers or Station Two
Subsidiary as contemplated in this Section 11.5) any Excess Henderson Energy
without having first offered Big Rivers or Station Two Subsidiary the
opportunity to purchase such Excess Henderson Energy as contemplated herein. Big
Rivers or Station Two Subsidiary (as applicable) shall have a reasonable period
of time after submission of Henderson's scheduled Energy requirements to decide
whether to purchase any Excess Henderson Energy not scheduled by Henderson. Big
Rivers or Station Two Subsidiary (as applicable) agrees to notify Henderson
thereafter if it does not intend to purchase such Energy, and agrees to give
Henderson a response within a reasonable time so that Henderson may take efforts
to resell that Energy to third-parties. Henderson agrees to compensate Big
Rivers according to Big Rivers' Open Access Transmission Tariff to the extent
Henderson utilizes any transmission on Big Rivers' transmission system in
marketing Excess Henderson Energy. In the event Big Rivers or Station Two
Subsidiary (as applicable) decline to purchase any Excess Henderson Energy as
contemplated above, then LEM agrees, upon the written request of Henderson
delivered within a reasonable period of time prior to the production of such
Excess Henderson Energy (but in no event prior to the redemption or retirement
in full of the Station Two Bonds), to reasonably assist Henderson it its efforts
to market that Excess Henderson Energy to third-parties for Henderson's own
account.
12. CONDEMNATION; DAMAGE OR DESTRUCTION OF STATION TWO ASSETS.
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12.1 Condemnation. If all or substantially all of the Station Two Assets
are condemned or become the subject of any taking through powers of eminent
domain, this Agreement shall terminate when possession of the Station Two Assets
is taken by the condemning or taking authority. Upon such termination, the
Parties hereto shall have no further liability or obligation under this
Agreement (other than liabilities accrued under this Agreement before the date
of such condemnation or taking). If less than substantially all of the Station
Two Assets are condemned or taken, then this Agreement shall not terminate.
12.2 Damage or Destruction. If at any time during the Phase I Subcontract
Term or the Phase II Assignment Term the Station Two Assets are damaged or
destroyed and such damage or destruction was caused by a casualty covered by an
insurance policy required by Section 18 of the Station Two Operating Agreement
or Section 10.8 of this Agreement, the proceeds of such insurance shall, to the
extent made available to the Parties (including the Trustee under the Station
Two Bonds) and to the extent consistent with Prudent Utility Practice, be used
to restore the Station Two Assets as soon as reasonably possible to
substantially the same general condition, character or use as existed before the
damage, and this Agreement shall remain in effect. To the extent not covered by
the proceeds of insurance, the capital costs of such restoration of the Station
Two Assets shall be allocated to and paid by the Parties as required by Section
6.3(d) of the Station Two Power Sales Agreement and Section 13(a) of the Station
Two Operating Agreement and, as between Big Rivers and Station Two Subsidiary to
the extent consistent with either Section 8.17(b) or 9.10(a) of this Agreement,
shall be deemed payments for Station Two Improvements pursuant to an approved
modification of the Operating Budget and shall be paid and reimbursed, as the
case may be, in accordance with the provisions of Sections 8.17(d) and 8.17(e)
or Section 9.10(c) of this Agreement, as then applicable, provided, that the
Station Two Improvement Sharing Ratios applied to such restoration shall be
those appropriate based on whether it is a Henderson Incremental Capital Cost or
a Henderson Non-Incremental Capital Cost. Each of the Parties shall pay the
restoration costs as provided above unless the damage or destruction to the
Station Two Assets resulted (a) from the negligence or willful misconduct of
Station Two Subsidiary or its
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Affiliates, or their respective employees, agents or representatives, in which
event Station Two Subsidiary shall bear such additional costs alone, (b) from
the negligence or willful misconduct of Big Rivers, or its employees, agents or
representatives, in which event Big Rivers shall bear such additional costs
alone, or (c) from the negligence or willful misconduct of Henderson, or its
employees, agents or representatives, in which event Henderson, if the Station
Two Bonds shall have been retired or redeemed prior to the restoration, or shall
at any time during the restoration process be retired or redeemed, shall bear
such additional costs alone from and after the date of any such retirement or
redemption; provided, however, that with respect to any negligence or willful
misconduct of Henderson or its employees, agents or representatives, and
notwithstanding anything herein to the contrary, Big Rivers and the LG&E
Companies shall retain and have the right, in their sole discretion, to pursue
any and all rights, causes of action and remedies that any of them may have
against Henderson relating to such negligence or willful misconduct, whether at
law or in equity and whether pursuant to this Agreement or any of the Station
Two Contracts, including, without limitation, any claims under Section 22 of the
Station Two Operating Agreement and Section 10.15 of this Agreement; and
provided, further, that with respect to any negligence or willful misconduct of
either Big Rivers or any LG&E Company, respectively, or of their respective
employees, agents or representatives, and notwithstanding anything herein to the
contrary, Henderson shall retain and have the right, in its sole discretion, to
pursue any and all rights, causes of action and remedies that it may have
against Big Rivers or any of the LG&E Companies, respectively, relating to such
negligence or willful misconduct, whether at law or in equity and whether
pursuant to this Agreement or any of the Station Two Contracts, including,
without limitation, any claims under Section 22 of the Station Two Operating
Agreement (which shall not be applicable to the LG&E Companies during the Phase
I Subcontract Term) and Section 10.15 of this Agreement.
13. TERMINATION; DEFAULT; REMEDIES.
13.1 Termination Prior to Effective Date. This Agreement may be terminated
prior to the Effective Date, upon notice delivered by the terminating Party(s)
to the other Parties, under the following circumstances:
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(a) by the LG&E Companies if (1) one or more of the Station Two Power
Sales Agreement, Station Two Operating Agreement or the Joint Facilities
Agreement are terminated, or (2) any other Station Two Contract is terminated by
Henderson or Big Rivers and the termination of such other Station Two Contract
would have a material adverse effect on the rights of the LG&E Companies under
this Agreement taken as a whole; provided, however, Henderson and Big Rivers
agree to promptly provide the LG&E Companies with notice of any default, breach
or other event that, with notice or the lapse of time, or both, may result in
the termination of any Station Two Contract prior to the Effective Date and, if
the proposed termination results from a breach or default of the terms and
provisions thereof by Big Rivers, Henderson and Big Rivers shall afford to the
LG&E Companies the cure rights and rights of off-set as are further set forth in
Section 13.5(f) of this Agreement.
(b) by the LG&E Companies or Big Rivers if the Participation Agreement
shall be terminated for any of the reasons set forth in Section 17.1.1 of the
Participation Agreement; or
(c) by the LG&E Companies, Big Rivers or Henderson if the Effective Date
shall not have occurred on or prior to December 31, 1998, other than by reason
of a breach or default under this Agreement on the part of the Party seeking to
effect such Termination.
13.2 Pre-Effective Date Remedies; Conditions Precedent. In the event of a
termination of this Agreement pursuant to Section 13.1, each of the Parties
shall be released from all liabilities and obligations arising under this
Agreement which do not survive such termination under Section 13.10 of this
Agreement, other than obligations or liabilities arising from their breach or
default under this Agreement. In addition, Big Rivers and the LG&E Companies
each acknowledge and agree that, in the event this Agreement is executed and
delivered by the Parties prior to the Participation Agreement Effective Date,
but is subsequently terminated by any Party(s) pursuant to Section 13.1 of this
Agreement or otherwise for any reason on or prior to that Participation
Agreement Effective Date, then the conditions precedent described in (a) Item 4
of Section I and Item 5 of Section II, respectively, of Schedule 3.1 of the
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Participation Agreement, (b) Item 5 of Section I and Item 3 of Section II,
respectively, of Schedule 3.2 of the Participation Agreement, and (c) Item 4 of
Section I and Item 2 of Section II, respectively, of Schedule 3.3 of the
Participation Agreement (as applicable), shall be deemed not to have been
fulfilled, and none of the LG&E Companies or Big Rivers shall be obligated to
consummate the transactions contemplated in the Participation Agreement and the
Phase I Agreements or the Phase II Agreements (as applicable) until an agreement
with respect to Station Two of the type contemplated in the above-described
items, which is mutually satisfactory to Big Rivers and the LG&E Companies, is
thereafter executed and delivered by them with Henderson, or until the relevant
conditions precedent to such transactions have been waived by Big Rivers and the
LG&E Companies in the manner contemplated in the Participation Agreement, and
then only to the extent all other conditions precedent to such transactions set
forth in that agreement have been appropriately fulfilled or waived.
13.3 Default During the Phase I Subcontract Term. During the Phase I
Subcontract Term, the terms and provisions of the respective Station Two
Contracts shall continue to govern the default and termination rights of Big
Rivers and Henderson for a breach or default under the terms of the Station Two
Contracts. A default under this Section 13.3 shall not, in and of itself, create
an additional basis for a breach or default by that Party under any of the
Station Two Contracts. Consistent with the preceding two sentences, the
occurrence of any of the following events at any time during the Phase I
Subcontract Term shall constitute a default by a Party under this Agreement:
(a) Failure by that Party to pay when due any and all amounts payable to
any other Party in accordance with the terms of Section 8 of this Agreement,
entitled "Phase I Subcontract," or any other provision of this Agreement.
(b) Any rejection in bankruptcy of this Agreement or any Station Two
Contract by that Party, or any other rescission or termination of this Agreement
or any Station Two Contract (in whole or in material part) by that Party in
breach or default of this Agreement or such contract.
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(c) Failure of that Party to perform any material covenant or obligation
that it may have under this Agreement (other than a payment obligation of the
type described in (a) of this Section 13.3, above, or a breach of the type
described in (d) of this Section 13.3, below; provided, that neither Big Rivers,
on the one hand, nor any LG&E Company, on the other, shall at any time during
the Phase I Subcontract Term be deemed to be in default under this Section
13.3(c) by reason of any act or omission on the part of the other which
constitutes a default by that other Party under this Section 13.3(c).
(d) Any attempt by that Party to transfer an interest in this Agreement in
breach of Section 15 of this Agreement.
(e) Except with respect to the Chapter 11 Case, any filing by that Party
of a Petition in Bankruptcy or insolvency, or for reorganization or arrangement
under any bankruptcy or insolvency laws, or voluntarily taking advantage of any
such laws by answer or otherwise or the commencement of any involuntary
proceedings under any such laws if such proceedings are not withdrawn or
dismissed within 60 days after their institution (with default occurring as of
the 61st day after such institution).
(f) Assignment by that Party for the benefit of creditors of any of its
rights or interests under this Agreement or any Station Two Contracts or, in the
case of Henderson, any of its rights or interests in the Station Two Assets.
(g) Allowance by that Party of the appointment of a receiver or trustee of
all or a material portion of its property if such receiver or trustee is not
discharged within 60 days after appointment (with default occurring as of the
61st day after such appointment).
(h) Any breach by that Party of a representation or warranty made by that
Party in this Agreement, provided that such breach has had a material adverse
effect on the non-defaulting Parties or their respective rights under this
Agreement and the Station Two Contracts taken as
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a whole; provided, however, the Parties acknowledge and agree that any breach of
any representation or warranty made by a Party as of the Effective Date in this
Agreement shall give rise to the right of the other Party to damages or
availability of other remedies provided for hereunder arising from such breach
only if the claim for damages or other relief is made within one year following
the Effective Date.
(i) For the benefit of Big Rivers and the LG&E Companies only, any
failure, inability or refusal of that Party, or its Affiliates, to cure a
default or breach by such Party or such Party's Affiliate under the Power
Purchase Agreement, the Cost Sharing Agreement, the Transmission Service and
Interconnection Agreement, the Facilities Operating Agreement or the
Participation Agreement that gives rise to a termination of such agreement, or
any termination by that Party or its Affiliates of any of the foregoing
agreements in breach or default under such agreement (including without
limitation, through a rejection in Bankruptcy).
(j) For the benefit of the LG&E Companies only, any failure by Big Rivers
to pay to LEM, when due, an amount owed pursuant to the Settlement Promissory
Note.
13.4 Default During the Phase II Assignment Term. During the Phase II
Assignment Term, the terms and provisions of the respective Station Two
Contracts shall govern the default and termination rights of Big Rivers, Station
Two Subsidiary and Henderson for a breach or default of their respective
obligations under the Station Two Contracts. A default under this Section 13.4
shall not, in and of itself, create an additional basis for a breach or default
by that Party under any of the Station Two Contracts. Consistent with the
preceding two sentences, the occurrence of any of the following events at any
time during the Phase II Assignment Term shall constitute a default by a Party
under this Agreement:
(a) Failure by that Party to pay when due any and all amounts payable to
any other Party in accordance with the terms of Section 9 of this Agreement,
entitled "Phase II Assignment," or any other provision of this Agreement.
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(b) Any rejection in bankruptcy of this Agreement or any Station Two
Contract by that Party, or any other rescission or termination of this Agreement
or any Station Two Contract (in whole or in material part) by that Party in
breach or default of this Agreement or such contract.
(c) Failure of that Party to perform any material covenant or obligation
that it may have under this Agreement (other than a payment obligation of the
type described in (a) of this Section 13.4, above, or a breach of the type
described in (d) of this Section 13.4, below); provided, that neither Big
Rivers, on the one hand, nor any LG&E Company, on the other, shall at any time
during the Phase II Assignment Term be deemed to be in default under this
Section 13.4(c) by reason of any act or omission on the part of the other which
constitutes a default by that other Party under this Section 13.4(c).
(d) Any attempt by a Party to transfer an interest in this Agreement in
breach of Section 15 of this Agreement.
(e) Except with respect to the Chapter 11 Case, any filing by that Party
of a Petition in Bankruptcy or insolvency, or for reorganization or arrangement
under any bankruptcy or insolvency laws, or voluntarily taking advantage of any
such laws by answer or otherwise or the commencement of any involuntary
proceedings under any such laws if such proceedings are not withdrawn or
dismissed within 60 days after such institution (with default occurring as of
the 61st day after such institution).
(f) Assignment by that Party for the benefit of creditors of any of its
respective rights or interests under this Agreement or any Station Two Contracts
or, in the case of Henderson, any of its rights or interests in the Station Two
Assets.
(g) Allowance by that Party of the appointment of a receiver or trustee of
all or a material portion of its property if such receiver or trustee is not
discharged within 60 days after appointment (with default occurring as of the
61st day after such appointment).
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(h) Any breach by that Party of a representation or warranty made by that
Party in this Agreement, provided that such breach has had a material adverse
effect on the non-defaulting Parties or their respective rights under this
Agreement and the Station Two Contracts taken as a whole; provided, however, the
Parties acknowledge and agree that any breach of any representation or warranty
made by a Party as of the Effective Date in this Agreement shall give rise to
the right of the other Party to damages or availability of other remedies
provided for hereunder arising from such breach only if the claim for damages or
other relief is made within one year following the Effective Date.
(i) For the benefit of Big Rivers and the LG&E Companies only, failure,
inability or refusal of that Party, or its Affiliates, to cure a default or
breach by such Party or such Party's Affiliate under the Lease, the Transmission
Service and Interconnection Agreement, the Power Purchase Agreement or the
Participation Agreement that gives rise to a termination of such agreement, or
any termination by that Party or by its Affiliates of any of the foregoing
agreements in breach or default under such agreement (including without
limitation, through a rejection in Bankruptcy).
(j) For the benefit of the LG&E Companies only, any failure by Big Rivers
to pay to LEM, when due, an amount owed pursuant to the Settlement Promissory
Note.
13.5 Notice of Defaults; Cure Rights.
(a) The Party in default under any provision of this Agreement shall be
referred to as the "Defaulting Party" and each other Party shall be referred to
as a "Non-Defaulting Party."
(b) Each Non-Defaulting Party shall have the right to give the Defaulting
Party a notice of default ("Notice of Default"), which shall describe the
default in reasonable detail and shall state the date by which the default must
be cured, which shall be at least 30 days after receipt of the notice, except as
to a default under Section 13.3(a) or Section 13.4(a) of
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this Agreement which shall be cured within three days after receipt of the
notice, except as to a default under Section 13.3(d) or 13.4(d) of this
Agreement which shall be cured within two days after receipt of the notice (and
which shall remain subject to the provisions of Section 15 of this Agreement),
and except as to a default under Sections 13.3(b), 13.3(e), 13.3(f), 13.3(g),
13.3(h), 13.3(i), 13.3(j), 13.4(b), 13.4(e), 13.4(f), 13.4(g), 13.4(h), 13.4(i)
or 13.4(j) of this Agreement, as to which the Defaulting Party shall have no
right or opportunity to cure.
(c) If within the three day period with respect to a default under Section
13.3(a) or Section 13.4(a) the Defaulting Party cures the default, if within the
two-day period with respect to defaults under Section 13.3(d) or 13.4(d) of this
Agreement, or if within the 30 day period with respect to defaults under Section
13.3(c) or 13.4(c) (which are not also a default under Sections 13.3(b),
13.3(d), 13.3(e), 13.3(f), 13.3(g), 13.3(h), 13.3(i) or 13.3(j), or under
Sections 13.4(b), 13.4(d), 13.4(e), 13.4(f), 13.4(g),13.4(h), 13.4(i) or 13.4(j)
of this Agreement), the Defaulting Party cures the default or if the default is
one that cannot in good faith be cured within such period and the Defaulting
Party (x) certifies to each Non-Defaulting Party that it agrees to cure such
default, (y) certifies a reasonable date by which the cure will be effected, and
(z) begins to correct the default within the 30 day period and continues
corrective efforts with diligence until a cure is effected, the Notice of
Default shall be inoperative and the rights under either Section 13.6 or 13.7 of
this Agreement, as applicable, of each Non-Defaulting Party shall not be
triggered. Subject to the Defaulting Party's right to contest under Section
13.5(d) of this Agreement, if the Defaulting Party does not cure or begin (and
diligently continue) to cure the default as provided above or effect the cure
within the period allotted above or such extension thereof as to which the
Parties in good faith agree, each Non-Defaulting Party which has incurred actual
damages of any kind by reason of the default or by reason of the actions or
omissions giving rise to that default, shall have (x) in the Phase I Subcontract
Term, the rights specified in Section 13.6 of this Agreement and (y) in the
Phase II Assignment Term, the rights specified in Section 13.7 of this
Agreement. A Non-Defaulting Party's right to damages or other relief resulting
from a default by a Defaulting Party hereunder shall begin to accrue as of the
first day of the default without regard to the
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availability of the cure opportunities hereunder, and without regard to whether
the default is cured.
(d) If the Defaulting Party disputes the existence or the nature of a
default asserted in a Notice of Default, then the Defaulting Party shall pay the
disputed payment or perform the disputed obligation, but may do so under
protest. The protest shall be in writing, shall accompany the disputed payment
or precede the performance of the disputed obligation, and shall specify the
reasons upon which the protest is based. The Defaulting Party shall deliver
copies of the protest to each Non-Defaulting Party. If it is later determined
pursuant to the dispute resolution, mediation or arbitration procedure required
by Section 13.5(e) of this Agreement that a protesting Defaulting Party is
entitled to a refund of all or any portion of a disputed payment or payments or
is entitled to the reasonable equivalent in money of non-monetary performance of
a disputed obligation theretofore made, then, upon such determination, the
Non-Defaulting Party(s) for whom such obligation was performed, or to whom such
payments were made, shall pay such amount to the Defaulting Party, together with
interest thereon at a rate equal to the Prime Rate from the date of payment or
from the date of completion of performance of a disputed obligation to the date
of reimbursement.
(e) Disputes relating to this Agreement or Station Two, or the other
Station Two Assets, that are solely between Big Rivers and any of the LG&E
Companies shall be resolved in accordance with the procedure set forth in
Article 15 of the Participation Agreement. All other disputes relating to this
Agreement or Station Two, or the other Station Two Assets, in which Henderson is
one of the Parties in dispute shall be resolved in accordance with the dispute
resolution procedures contained in the relevant Station Two Contract(s) or, in
the absence of such procedures, by any other legal means that may be available.
In the event the Participation Agreement shall expire or terminate for any
reason prior to the expiration or termination of this Agreement, then the
provisions of Article 15 of the Participation Agreement shall be deemed to
survive such expiration or termination for purposes of this Agreement and shall
be incorporated by reference in this Section 13.5(e).
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(f) Big Rivers and Henderson each agree to provide Station Two Subsidiary
with a copy of any Notice of Default or similar notice given by such Party under
this Agreement or any Station Two Contract at the same time as such notice is
given to Henderson or Big Rivers, respectively, under this Agreement or such
contract and, provided such default is not the result of a violation by Station
Two Subsidiary of its duties and obligations under this Agreement, each of Big
Rivers and Henderson shall permit Station Two Subsidiary (which shall have no
obligation to do so) to cure, or assist the Defaulting Party in curing, such
default (including any payment default for which there may otherwise be no cure
opportunity afforded to Big Rivers) by making payment to the Non-Defaulting
Party or by fulfilling any other obligation of the Defaulting Party under the
Station Two Contracts or this Agreement before any termination of any Station
Two Contract or this Agreement by that Non-Defaulting Party (assuming that
Non-Defaulting Party then has the right, pursuant to this Agreement or the
relevant Station Two Contract, to terminate the same). Any cure by Station Two
Subsidiary of a default by Big Rivers or Henderson shall be done according to
the terms of the Station Two Contracts or this Agreement, as applicable, except
that Station Two Subsidiary shall be afforded a reasonable period of time, in
addition to the cure period afforded Big Rivers or Henderson (as applicable), to
effect such cure; provided, in the event that Big Rivers shall have no right or
opportunity to cure a payment default by Big Rivers under the terms of any of
the Station Two Contracts or this Agreement, then the period of time afforded to
the LG&E Companies hereunder to cure that payment default shall be no less than
60 days. Nothing in this Section 13.5(f) shall deny any right to Big Rivers or
Henderson, or otherwise limit Big Rivers or Henderson from exercising any right,
that it may have under this Agreement or the Station Two Contract, as
applicable, to a notice of default, to any opportunity to cure the default, or
to protest the default. If Station Two Subsidiary elects to cure or attempt to
cure a perceived default of Big Rivers or Henderson, as applicable, and if it is
later determined pursuant to the dispute resolution, mediation or arbitration
procedure described in Section 13.5(e) of this Agreement, or by mutual agreement
of the Parties, that Big Rivers or Henderson, as the case may be, was not then
in default, all sums, costs and expenses paid or incurred by, and any other
obligations undertaken by, Station Two Subsidiary in curing the purported
default shall be solely for Station Two Subsidiary's account (but Station Two
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Subsidiary's actions in reliance upon the notice of default shall not prejudice
its right to pursue any other claims or actions that it may have against the
Party that delivered the Notice of Default (or the similar notice) or any other
third party to recover any sums, costs and expenses that Station Two Subsidiary
may have paid or incurred, or to rescind or otherwise terminate any obligations
it may have undertaken, in reliance upon such notice). If it is ultimately
determined pursuant to the dispute resolution, mediation or arbitration
procedure, (or by agreement of the Parties) that Big Rivers or Henderson, as the
case may be, was in default under the relevant Station Two Contract, then so
long as such default is not the result of a default by Station Two Subsidiary
under this Agreement, Station Two Subsidiary shall be entitled to reimbursement
from the Defaulting Party for all sums, costs and expenses incurred by it in
effecting or attempting to effect such cure, or, in lieu of such reimbursement,
may off-set the same against any sums then or thereafter due by Station Two
Subsidiary to the Defaulting Party under this Agreement or any Station Two
Contract (but, in the case of amounts so due to Henderson, only after the
Station Two Bonds have been retired or redeemed) and, in the event the
Defaulting Party is Big Rivers, may during the Phase II Assignment Term off-set
against any sums due to Big Rivers from any of Station Two Subsidiary's
Affiliates under any of the other Operative Documents.
(g) During the Phase II Assignment Term, Henderson and Station Two
Subsidiary agree each to provide Big Rivers with a copy of any Notice of Default
or similar notice given by that Party under any Station Two Contract or this
Agreement at the same time as such notice is given to Station Two Subsidiary or
Henderson, respectively, under this Agreement or such contract and, provided
such default is not the result of a violation by Big Rivers of its duties and
obligations under this Agreement, each of Henderson and Station Two Subsidiary
shall permit Big Rivers (which shall have no obligation to do so) to cure, or to
assist the Defaulting Party in curing, such default by making payment to the
Non-Defaulting Party or by fulfilling any other obligation of the Defaulting
Party under the Station Two Contracts or this Agreement before any termination
of any Station Two Contract or this Agreement by that Non-Defaulting Party
(assuming that Non-Defaulting Party then has the right, pursuant to this
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Agreement or the relevant Station Two Contract, to so terminate the same). Any
cure by Big Rivers of a default by Station Two Subsidiary or Henderson shall be
done according to the terms of the Station Two Contracts or this Agreement, as
applicable, except that Big Rivers shall be afforded a reasonable period of
time, in addition to the cure period afforded Station Two Subsidiary or
Henderson (as applicable), to effect such cure. Nothing in this Section 13.5(g)
shall deny any rights to Station Two Subsidiary or Henderson, or otherwise limit
Station Two Subsidiary or Henderson from exercising any right, that it may have
under this Agreement or the Station Two Contract, as applicable, to a notice of
default, to any opportunity to cure the default, or to protest the default. If
Big Rivers elects to cure or attempt to cure the perceived default of Station
Two Subsidiary or Henderson, and if it is later determined pursuant to the
dispute resolution, mediation or arbitration procedure required by Section
13.5(e) of this Agreement, or by mutual agreement of the Parties, that Station
Two Subsidiary or Henderson, as the case may be, was not then in default, all
sums, costs and expenses paid or incurred by, and any obligations undertaken by,
Big Rivers in curing the purported default shall be solely for Big Rivers'
account (but Big Rivers' actions in reliance upon the Notice of Default (or the
similar notice) shall not prejudice its right to pursue any other claims that it
may have against the Party that delivered the Notice of Default (or the similar
notice) or any other third party to recover any sums, costs and expenses that
Big Rivers may have paid or incurred, or to rescind or otherwise terminate any
obligations it may have undertaken, in reliance upon such notice). If it is
ultimately determined pursuant to the dispute resolution, mediation or
arbitration procedure (or by agreement of the Parties) that Station Two
Subsidiary or Henderson was in default under the relevant Station Two Contract,
then so long as such default is not the result of a default by Big Rivers under
this Agreement, Big Rivers shall be entitled to reimbursement from the
Defaulting Party for all sums, costs and expenses incurred by it in effecting or
attempting to effect such cure, or, in lieu of such reimbursement, may off-set
the same against any sums then or thereafter due by Big Rivers to the Defaulting
Party under this Agreement (but in the case of amounts so due to Henderson, only
after the Station Two Bonds have been retired or redeemed) and, in the event the
Defaulting Party is Station Two Subsidiary, may during the Phase II Assignment
Term off-set
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against any sums due by Big Rivers to Station Two Subsidiary or any of its
Affiliates under any of the other Operative Documents.
(h) Notwithstanding anything contained in Section 13, entitled
"Termination; Defaults; Remedies," or elsewhere in this Agreement, the Station
Two Contracts or the other Operative Documents to the contrary, and in addition
to any other rights of off-set set forth herein or therein, each Party shall
have the right to off-set any payments or other sums due and owing by another
Party to it under this Agreement, including, without limitation, any payments
owing at any time by Big Rivers to any of the LG&E Companies as contemplated in
Section 13.8(a) of this Agreement, and any damages or other sums awarded to or
otherwise due and owing by another Party to the off-setting Party pursuant to
any dispute resolution proceeding, mediation or arbitration procedure of the
type described in Section 13.5(e) of this Agreement, against any payments or
other sums that the off-setting Party may owe to such other Party (i) under this
Agreement (including, without limitation, damages or other sums awarded such
other Party under that or any other dispute resolution procedure between those
Parties), (ii) under any of the Station Two Contracts (but, in the case of
amounts so due to Henderson, only after the Station Two Bonds have been retired
or redeemed), and (iii) during the Phase II Assignment Term, as between Big
Rivers and the LG&E Companies or their Affiliates, under any of the other
Operative Documents.
13.6 Remedies During Phase I Subcontract Term. If the Defaulting Party's
default under this Agreement during the Phase I Subcontract Term is one for
which there is no right or opportunity to cure, or if the Defaulting Party fails
or refuses to cure a default under this Agreement for which a cure opportunity
is available within the time described above, each Non-Defaulting Party which
has incurred actual damages by reason of the default or by reason of the
Defaulting Party's actions or omissions giving rise to the default (including,
in the case of the LG&E Companies, any reasonable replacement Power costs which
they may suffer or incur (which costs shall be deemed to be direct damages for
all purposes under this Agreement), in addition to any other damages) shall
have, in addition to any rights that Party may have at law, in equity or
otherwise (including without limitation, rights to indemnification
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pursuant to Section 10.15), the following remedies, all of which shall be
cumulative, but subject to the limitations provided below:
(a) If any Party (together with that Party's Affiliates, collectively "X")
shall fail to make any payment or shall fail to perform any obligation under
this Agreement or the Settlement Promissory Note, the other Parties individually
or collectively (together with such Parties' Affiliates, collectively referred
to as "Y") will have the right (but not the obligation) without prior notice to
X to perform such obligation and to off-set the costs of such performance
incurred by Y or the amount of any such past due payment owing to Y against any
obligation of Y owing to X (whether or not matured) under this Agreement or the
Station Two Contracts, or to otherwise assert against X its right to
reimbursement for the costs of such performance; provided, that Big Rivers and
Station Two Subsidiary, and their respective Affiliates, shall have the further
right to, during the Phase II Assignment Term, off-set the costs of such
performance or the amount of any such past due payment against any obligation
owing to the other Party (or such Affiliates) under any of the other Operative
Documents.
(b) If the damages incurred by a Non-Defaulting Party (or such Affiliates)
have had a material adverse effect on that Non-Defaulting Party's respective
rights under this Agreement and the Station Two Contracts, taken as a whole, or
on that Non-Defaulting Party's business, financial condition or results of
operations, then that Non-Defaulting Party may terminate this Agreement upon 30
days' advance notice to the Defaulting Party and any other Non-Defaulting
Parties of its intent to do so; provided, however, if Henderson is the
Defaulting Party, Big Rivers and the LG&E Companies hereby covenant for the
benefit of the other, but not for the benefit of Henderson, that neither Big
Rivers nor the LG&E Companies, nor any of them, shall exercise the right of that
Party to terminate this Agreement until such time as the Station Two Bonds are
retired or redeemed in full.
(c) If Big Rivers is the Defaulting Party, and if Henderson or the LG&E
Companies terminate this Agreement pursuant to Section 13.6(b) of this Agreement
(but subject to Station Two Subsidiary's rights and Henderson's fulfillment of
its obligations under Section 13.5(f) of
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this Agreement), then (1) Henderson, from and after the date the Station Two
Bonds are redeemed or retired, in full, shall be entitled to terminate all (but
not less than all) of the Station Two Contracts upon 30 days' advance notice to
Big Rivers and Station Two Subsidiary (which notice may be included in
Henderson's notice to Big Rivers of termination of this Agreement, if
applicable); and (2) the LG&E Companies shall be entitled to terminate all of
the other Operative Documents (excluding, at the sole option of the LG&E
Companies, any duty to also terminate one or more of the Settlement Promissory
Note, the Settlement Mortgage, the Subordinate Mortgage and Security Agreement
or the Non-Disturbance Agreement in the event the LG&E Companies shall determine
to terminate other Operative Documents) upon 30 days' advance notice to Big
Rivers (which notice may be included in any notice to Big Rivers of termination
of this Agreement by the LG&E Companies, if applicable), or the LG&E Companies
may elect in accordance with Section 14.3 of this Agreement, in lieu of
terminating the other Operative Documents, to pursue their rights to an
abatement against the Annual Fixed Payments or Rental Payment, as applicable, to
a reimbursement of the Initial Fixed Payment or the Initial Rental Payment, as
applicable, and to a reduction in the then applicable maximum Contract Limits
(provided, however, that any right of the LG&E Companies to cross-terminate to
the other Operative Documents or to abate payments, seek reimbursement of
payments and adjust the Contract Limits, as contemplated above, shall be further
subject to Big Rivers' rights under Section 13.8(a)(1) or 13.8(a)(2) of this
Agreement, as applicable). Any termination of the Station Two Contracts by
Henderson or any of the other Operative Documents by the LG&E Companies shall be
effective as of the date of termination of this Agreement. Henderson shall have
no right to terminate this Agreement for a default by Station Two Subsidiary of
its obligations to Big Rivers under the terms of the Phase I Subcontract, but
shall instead rely upon the rights and remedies (other than any termination,
rescission or other similar right) that it may have at law or in equity and
otherwise pursuant to this Agreement.
(d) If Henderson is the Defaulting Party, and provided Big Rivers or the
LG&E Companies have terminated this Agreement pursuant to Section 13.6(b) of
this Agreement (and in compliance with Sections 13.5(f), 13.6(b) and 13.8(b) of
this Agreement), then Big Rivers,
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from and after the date the Station Two Bonds are redeemed or retired, in full,
shall also be entitled to terminate all (but not less than all) of the Station
Two Contracts upon 30 days' advance notice to Henderson and Station Two
Subsidiary (which notice may be included by Big Rivers in its termination notice
to Henderson contemplated in Section 13.6(b) of this Agreement).
(e) If Big Rivers is the Defaulting Party under Section 13.3(b) or Section
13.3(j) of this Agreement, and as a result of that default this Agreement is
terminated, or if Big Rivers defaults under its covenant set forth in Section
13.8(b) not to terminate any of the Station Two Power Sales Agreement, the
Station Two Operating Agreement or the Joint Facilities Agreement, or to waive
its rights thereunder, without the prior consent of the LG&E Companies, then the
provisions of Section 13.8(a)(1) and 13.8(a)(2) of this Agreement shall not
apply, and each of the LG&E Companies may terminate the Operative Documents
(excluding, at the sole option of the LG&E Companies, any duty to also terminate
one or more of the Settlement Promissory Note, the Settlement Mortgage, the
Subordinate Mortgage and Security Agreement or the Non-Disturbance Agreement in
the event the LG&E Companies shall determine to terminate the other Operative
Documents) upon notice to Big Rivers, or may pursue their rights, in accordance
with Section 14.3 of this Agreement, to abate the Annual Fixed Payment or Rental
Payment (as applicable), to a reimbursement of the Initial Fixed Payment or
Initial Rental Payment (as applicable) and to reduce the maximum Contract
Limits. If Henderson is the Defaulting Party under Section 13.3(b) of this
Agreement by reason of its rejection in bankruptcy, rescission or termination of
any Station Two Contract, in whole or in part, then Big Rivers agrees that it
shall not be entitled to terminate this Agreement by reason of that default
without the prior consent of Station Two Subsidiary (provided, that in the event
the LG&E Companies elect to terminate this Agreement by reason of that default,
Big Rivers shall have the cross-termination rights set forth in Section 13.6(d)
of this Agreement).
(f) If Station Two Subsidiary is the Defaulting Party under Section
13.3(b) of this Agreement, and as a result of that default this Agreement is
terminated, or if any LG&E
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Company defaults under its obligation set forth in Section 13.8(b) of this
Agreement not to terminate any of the Station Two Power Sales Agreement, the
Station Two Operating Agreement or the Joint Facilities Agreement, or to waive
its rights thereunder, without the prior consent of Big Rivers, then the
provisions of Section 13.8(a)(4) of this Agreement shall not apply.
(g) Notwithstanding anything contained elsewhere in this Agreement to the
contrary, (i) Big Rivers may terminate this Agreement at any time that the
Guarantee (Big Rivers), as in effect on the Effective Date, provides Big Rivers
with the right to terminate the Operative Documents (other than the Settlement
Promissory Note, the Settlement Mortgage, the Subordinate Mortgage and Security
Agreement and the Non-Disturbance Agreement, which Big Rivers shall not have a
right to terminate) upon notice delivered to the LG&E Companies and Henderson,
but only to the extent that Big Rivers also terminates all of the other
Operative Documents (other than the Settlement Promissory Note, the Settlement
Mortgage, the Subordinate Mortgage and Security Agreement and the
Non-Disturbance Agreement, which Big Rivers shall not have a right to terminate)
pursuant to the Guarantee Agreement, and (ii) Henderson may terminate this
Agreement at any time that the Guaranty, as in effect on the Effective Date,
provides Henderson with the right to terminate this Agreement, upon notice
delivered to Big Rivers and the LG&E Companies.
(h) Notwithstanding anything contained elsewhere in this Agreement to the
contrary, the LG&E Companies shall be entitled to terminate this Agreement upon
notice to the other Parties in the event Henderson exercises any rights that it
may have to terminate the Station Two Power Sales Agreement, the Station Two
Operating Agreement or the Joint Facilities Agreement by reason of a breach or
default thereunder by Big Rivers (other than a breach or default by Big Rivers
directly resulting from a breach or default of this Agreement by, or the
negligence or willful misconduct of, an LG&E Company). Upon any such termination
of this Agreement by the LG&E Companies, and subject to the provisions of
Sections 13.8(a)(1) or
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13.8(a)(2) (as applicable), the LG&E Companies may also terminate all of the
Operative Documents (excluding, at the sole option of the LG&E Companies, any
duty to also terminate one or more of the Settlement Promissory Note, the
Settlement Mortgage, the Subordinate Mortgage and Security Agreement or the
Non-Disturbance Agreement in the event the LG&E Companies shall determine to
terminate other Operative Documents) upon 30 days' advance notice to Big Rivers
(which notice may be included in the notice of termination of this Agreement by
the LG&E Companies), or the LG&E Companies may elect in accordance with Section
14.3 of this Agreement to pursue their rights to an abatement against the Annual
Fixed Payments or Rental Payment , as applicable, to seek reimbursement of the
Initial Fixed Payment or Initial Rental Payment, as applicable, and to reduce
the then applicable maximum Contract Limits, in lieu of terminating the
Operative Documents, in addition to all other rights and remedies.
(i) The provisions of this Section 13.6 shall be in addition to, and not
in lieu of, any other termination rights of the Parties expressly set forth
elsewhere in this Agreement.
(j) The LG&E Companies shall not have the right, by reason of a
termination of this Agreement or any of the Station Two Contracts (other than a
termination of this Agreement or any of the Station Two Contracts by Big Rivers
in breach or default of this Agreement) based upon a breach or default by
Henderson or any LG&E Company hereunder or thereunder, to an abatement against
the Annual Fixed Payments or Rental Payment , as applicable, to a reimbursement
of the Initial Fixed Payment or Initial Rental Payment, as applicable, to a
reduction in the maximum Contract Limits pursuant to Section 14.3 of this
Agreement, or to terminate any of the other Operative Documents, unless
permitted under Section 13.8(a)(3) or 13.8(a)(4) of this Agreement,
respectively, as applicable.
13.7 Remedies During Phase II Assignment Term. If the Defaulting Party's
default under this Agreement during the Phase II Assignment Term is one for
which there is no right
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or opportunity to cure, or if the Defaulting Party fails or refuses to cure a
default under this Agreement for which a cure opportunity is available within
the time described above, each Non-Defaulting Party which has incurred actual
damages by reason of the default or by reason of the Defaulting Party's actions
or omissions giving rise to the default (including any reasonable replacement
Power costs which they may suffer or incur, in addition to any other damages)
shall have, in addition to any rights that Party may have at law, in equity or
otherwise (including without limitation, rights to indemnification pursuant to
Section 10.15), the following remedies, all of which shall be cumulative, but
subject to the limitations provided below:
(a) If any Party (together with that Party's Affiliates, collectively "X")
shall fail to make any payment or shall fail to perform any obligation under
this Agreement or the Settlement Promissory Note, the other Parties individually
or collectively (together with such Parties' Affiliates collectively referred to
as "Y") will have the right (but not the obligation) without prior notice to X
to perform such obligation and to off-set the costs of such performance by Y or
the amount of any such past due payment owing to Y against any obligation of Y
owing to X (whether or not matured) under this Agreement or the Station Two
Contracts, or to otherwise assert against X its right to reimbursement for the
costs of such performance; provided, that Big Rivers and Station Two Subsidiary,
and their respective Affiliates, shall have the further right to off-set the
costs of such performance or the amount of any such past due payment against any
obligation owing to the other Party (or such Affiliates) under any of the other
Operative Documents.
(b) If the damages incurred by a Non-Defaulting Party have had a material
adverse effect on that Non-Defaulting Party's respective rights under this
Agreement and the Station Two Contracts, taken as a whole, or on its business,
financial condition or results of operations, then that Non-Defaulting Party may
terminate this Agreement upon 30 days' advance notice to the Defaulting Party
and any other Non-Defaulting Parties of its intent to do
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so; provided, however, if Henderson is the Defaulting Party, Big Rivers and the
LG&E Companies hereby covenant for the benefit of the other, but not for the
benefit of Henderson, that neither Big Rivers nor the LG&E Companies, nor any of
them, shall exercise the right of such Party to terminate this Agreement (other
than a termination right either of them may have under Section 10.7 of this
Agreement for a reason other than Henderson's breach or default) until such time
as the Station Two Bonds are retired or redeemed in full; and provided further,
that except for the LG&E Companies' right to terminate this Agreement under
Section 10.7, Section 13.7(c) or Section 13.7(g) of this Agreement, or Big
Rivers' right to terminate this Agreement under Section 10.7, Section 13.7(f) or
Section 13.7(g) of this Agreement, Big Rivers and the LG&E Companies hereby
covenant for the benefit of the other, but not for the benefit of Henderson,
that neither Station Two Subsidiary and its Affiliates (as to a Big Rivers' or
Henderson's default) nor Big Rivers (as to any LG&E Company's or Henderson's
default) may terminate this Agreement during the Phase II Assignment Term
without the prior consent of the other of those two Parties, and each shall rely
solely upon such Party's rights and remedies (other than any termination,
rescission or other similar right) that they may have at law or in equity or
otherwise pursuant to this Agreement.
(c) If Big Rivers is the Defaulting Party under Section 13.4(b) or Section
13.4(j) of this Agreement, and as a result of that default this Agreement or any
Station Two Contract is terminated, or in the event Big Rivers defaults under
its covenant set forth in Section 13.8(b) not to terminate any of the Station
Two Power Sales Agreement, the Station Two Operating Agreement or the Joint
Facilities Agreement, or to waive any rights thereunder, without the prior
consent of the LG&E Companies, then the provisions of Sections 13.8(a)(1) and
13.8(a)(2) of this Agreement shall not apply, and each of the LG&E Companies may
terminate the Operative Documents (excluding, at the sole option of the LG&E
Companies, any duty to also terminate one or more of the Settlement Promissory
Note, the Settlement Mortgage, the Subordinate Mortgage and Security Agreement
or the Non-Disturbance Agreement in the event the LG&E Companies shall determine
to terminate other Operative Documents) without
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further notice to Big Rivers, or may pursue their rights in accordance with
Section 14.3 of this Agreement, to abate the Annual Fixed Payments or Rental
Payment , as applicable, to seek reimbursement of the Initial Fixed Payment or
Initial Rental Payment, as applicable, and to adjust the maximum Contract
Limits. If Henderson is the Defaulting Party under Section 13.4(b) of this
Agreement by reason of Henderson's rejection in bankruptcy or rescission or
termination (in breach) of the Station Two Power Sales Agreement, the Station
Two Operating Agreement or the Joint Facilities Agreement, in whole or in part,
then the LG&E Companies (but not Big Rivers) shall be entitled to terminate this
Agreement upon notice to the other Parties, it being understood that Big Rivers'
rights with respect to any such action by Henderson shall be to pursue its
damages resulting therefrom (including any losses or damages which may affect
Big Rivers' reversionary interests in the Assigned Station Two Contracts
following the expiration or termination of this Agreement), and to pursue
injunctive relief and specific performance with respect to Henderson's default
(unless the LG&E Companies so elect to terminate this Agreement, in which event
Big Rivers shall have the cross-termination rights set forth in Section 13.7(h)
of this Agreement).
(d) If Station Two Subsidiary is the Defaulting Party under Section
13.4(b) of this Agreement, and as a result of that default this Agreement is
terminated, or if an LG&E Company defaults under its obligation set forth in
Section 13.8(b) of this Agreement not to terminate any of the Station Two Power
Sales Agreement, the Station Two Operating Agreement or the Joint Facilities
Agreement, or to waive its rights thereunder, without the prior consent of Big
Rivers, then the provisions of Section 13.8(a)(4) of this Agreement shall not
apply.
(e) If Big Rivers is the Defaulting Party, and if Henderson or any of the
LG&E Companies terminate this Agreement pursuant to Section 13.7(b) of this
Agreement (but subject to the limitations on such termination provided for in
Section 13.7(b), and to the provisions of Section 13.5(f)), then (1) Henderson,
from and after the date the Station Two
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Bonds are redeemed or retired, in full, shall be entitled to terminate all (but
not less than all) of the Station Two Contracts upon 30 days' advance notice to
Big Rivers and Station Two Subsidiary (which notice may be included in
Henderson's notice to Big Rivers of termination of this Agreement), and (2) the
LG&E Companies shall be entitled to terminate all of the other Operative
Documents (excluding, at the sole option of the LG&E Companies, any duty to also
terminate one or more of the Settlement Promissory Note, the Settlement
Mortgage, the Subordinate Mortgage and Security Agreement or the Non-Disturbance
Agreement in the event the LG&E Companies shall determine to terminate other
Operative Documents) upon 30 days advance notice to Big Rivers (which notice may
be included in any notice to Big Rivers of termination of this Agreement), or
the LG&E Companies may elect in accordance with Section 14.3 of this Agreement,
in lieu of terminating the other Operative Documents, to pursue their rights to
an abatement against the Annual Fixed Payments or Rental Payment , as
applicable, to a reimbursement of the Initial Fixed Payment or the Initial
Rental Payment, as applicable, and to a reduction in the then applicable maximum
Contract Limits (provided, however, that any right of the LG&E Companies to
cross-terminate to the other Operative Documents or to abate payments, pursue
reimbursement of payments and adjust the Contract Limits, as contemplated above,
shall be further subject to Big Rivers' rights under Section 13.8(a)(1) or
13.8(a)(2) of this Agreement, as applicable). Any termination of the Station Two
Contracts by Henderson or any of the other Operative Documents by the LG&E
Companies shall be effective as of the date of termination of this Agreement.
Henderson shall have no right to terminate this Agreement for a default by
Station Two Subsidiary of its obligations to Big Rivers under the terms of the
Phase II Assignment, but shall instead rely solely upon the rights and remedies
(other than any termination, rescission or other similar right) that it may have
at law or in equity or otherwise pursuant to this Agreement.
(f) Notwithstanding anything contained elsewhere in this Agreement to the
contrary, (1) Big Rivers may terminate this Agreement at any time that the
Guarantee (Big Rivers), as in effect on the Effective Date, provides Big Rivers
with the right to terminate the Operative
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Documents (other than the Settlement Promissory Note, the Settlement Mortgage,
the Subordinate Mortgage and Security Agreement and Non-Disturbance Agreement,
which Big Rivers shall not have a right to terminate), upon notice delivered to
the LG&E Companies and Henderson, but only to the extent that Big Rivers also
terminates all of the other Operative Documents (other than the Settlement
Promissory Note, the Settlement Mortgage, the Subordinate Mortgage and Security
Agreement and the Non-Disturbance Agreement, which Big Rivers shall not have a
right to terminate) pursuant to the Guarantee Agreement, and (2) Henderson may
terminate this Agreement at any time that the Guaranty, as in effect on the
Effective Date, provides Henderson with the right to terminate this Agreement,
upon notice delivered to Big Rivers and the LG&E Companies.
(g) Notwithstanding anything contained elsewhere in this Agreement to the
contrary, either Big Rivers, on the one hand, or the LG&E Companies, on the
other hand, shall be entitled to terminate this Agreement upon notice to the
other Parties in the event Henderson exercises any rights that it may have to
terminate the Station Two Power Sales Agreement, the Station Two Operating
Agreement or the Joint Facilities Agreement by reason of a breach or default
thereunder by the LG&E Companies (in the case of termination by Big Rivers, but
other than a breach or default by any LG&E Company directly resulting from a
breach or default of this Agreement by, or the negligence or willful misconduct
of, Big Rivers) or by Big Rivers (in the case of termination by the LG&E
Companies, but other than a breach or default by Big Rivers directly resulting
from a breach or default of this Agreement by, or the negligence or willful
misconduct of, an LG&E Company). Upon any such termination of this Agreement by
the LG&E Companies, and subject to the provisions of Sections 13.8(a)(1) or
13.8(a)(2), as applicable, the LG&E Companies may also terminate all of the
other Operative Documents (excluding, at the sole option of the LG&E Companies,
any duty to also terminate one or more of the Settlement Promissory Note, the
Settlement Mortgage or the Subordinate Mortgage and Security Agreement, and the
Non-Disturbance Agreement in the event the LG&E Companies shall determine to
terminate other Operative Documents) upon 30 days'
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advance notice to Big Rivers (which notice may be included in the notice of
termination of this Agreement by the LG&E Companies), or the LG&E Companies may
elect in accordance with Section 14.3 of this Agreement, in lieu of terminating
the other Operative Documents and in addition to all other rights and remedies,
to pursue their rights to an abatement against the Annual Fixed Payments or
Rental Payment , as applicable, to a reimbursement of the Initial Fixed Payment
or the Initial Rental Payment, as applicable, and to reduce the then applicable
maximum Contract Limits.
(h) If Henderson is the Defaulting Party, and provided Big Rivers or the
LG&E Companies have terminated this Agreement pursuant to Section 13.7(b) by
reason of that default (with the prior consent of the other Non-Defaulting Party
as contemplated in Section 13.7(b) of this Agreement), then Big Rivers, from and
after the date the Station Two Bonds are redeemed or retired, in full, shall
also be entitled to terminate all (but not less than all) of the Station Two
Contracts upon 30 days' advance notice to Henderson and Station Two Subsidiary
(which notice may be included by Big Rivers in its termination notice to
Henderson contemplated in Section 13.7(b) of this Agreement).
(i) The provisions of this Section 13.7 shall be in addition to, and not
in lieu of, any other termination rights of the Parties expressly set forth
elsewhere in this Agreement.
(j) The LG&E Companies shall not have the right, by reason of a
termination of this Agreement or any of the Station Two Contracts (other than a
termination of this Agreement or any of the Station Two Contracts by Big Rivers
in breach or default of this Agreement) based upon a breach or default by
Henderson or any LG&E Company hereunder or thereunder, to an abatement against
the Annual Fixed Payments or Rental Payment , as applicable, to a reimbursement
of the Initial Fixed Payment or the Initial Rental Payment, as applicable, to a
reduction in the maximum Contract Limits pursuant to Section 14.3 of this
Agreement, or to
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terminate any of the other Operative Documents, unless permitted under Section
13.8(a)(3) or 13.8(a)(4) of this Agreement, respectively, as applicable.
13.8 Additional Covenants Concerning the Parties' Rights and Remedies.
(a) The terms and conditions of this Section 13.8(a) shall provide to Big
Rivers the right, solely in those limited circumstances specifically described
below, to suspend the enforcement by the LG&E Companies and their Affiliates of
their rights provided in this Agreement (i) to terminate any of the other
Operative Documents, (ii) to abate the Annual Fixed Payments and Rental Payment
payable to Big Rivers under the Power Purchase Agreement and Lease,
respectively, and to seek reimbursement from Big Rivers of a portion of the
Initial Fixed Payment or Initial Rental Payment, in each case pursuant to
Section 14.3 of this Agreement, and (iii) to reduce the Contract Limits set
forth in the Power Purchase Agreement pursuant to Section 14.3 of this Agreement
(other than the cross-termination rights, abatement and reimbursement rights and
Contract Limit reductions permitted under Section 13.6(e) and 13.7(c) of this
Agreement, which rights shall in no event be suspended by any actions taken by
Big Rivers under this Section 13.8(a)) (collectively, the "LG&E Rights"). If,
however, Big Rivers shall fail at any time to satisfy each of the relevant terms
and conditions set forth below in this Section 13.8(a), then in addition to all
other rights and remedies available to the LG&E Companies at law or in equity,
or pursuant to this Agreement, the Station Two Contracts or the other Operative
Documents, the LG&E Companies shall be entitled to exercise their respective
rights to terminate other Operative Documents or, in their discretion, to abate
the payments, seek reimbursement for the prior payments and reduce the Contract
Limits, each as provided in Section 13.6 or 13.7 of this Agreement, Section 14
of this Agreement or elsewhere in this Section 13.8, as applicable.
(1) In the event a default under this Agreement by Big Rivers
results in a termination of this Agreement by Henderson or any of the LG&E
Companies in accordance with
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its terms (other than a termination pursuant to Section 13.6(e) or Section
13.7(c) of this Agreement), and in the event the Station Two Power Sales
Agreement and the Station Two Operating Agreement remain in full force and
effect and Henderson's material obligations thereunder have not been
waived by Big Rivers, excused by reason of a default thereunder by Big
Rivers, or otherwise relinquished pursuant to any amendments to those
agreements effected following the termination of this Agreement, then Big
Rivers must fulfill each of the conditions set forth below in order to
avoid the exercise by the LG&E Companies of the LG&E Rights, or any of
them: (A) Big Rivers must have satisfied its indemnification and hold
harmless covenants to the LG&E Companies set forth in this Agreement, and
must use its reasonable best efforts, consistent with the Station Two
Contracts and Prudent Utility Practice to minimize the generating costs at
Station Two; (B) Big Rivers must pay to LEM for all Power thereafter
allocated to Big Rivers under the terms of the Station Two Power Sales
Agreement for a particular month (without regard to any waiver of its
rights or entitlements thereunder or any amendments thereto following the
date hereof that may reduce Big Rivers' right or entitlement to such
Power, and without regard to the amount of Power actually generated or
taken by Big Rivers), an amount equal to the difference between (i) the
Base Power rate set forth in Section 6.3 of the Power Purchase Agreement
that would have been applicable had this Agreement remained in effect and
(ii) the actual generating costs to produce the Power from Station Two
(i.e., the Capacity charge payable to Henderson or the Trustee for such
Power plus the cost of all fuels and reagents consumed in the generation
of such Power) (the "LEM Margin"), which amount must be paid by Big Rivers
to LEM on or prior to the 25th day of the month following the month for
which determined; (C) Big Rivers must agree that the maximum annual and
hourly Contract Limits set forth in Section 4.3 of the Power Purchase
Agreement shall be reduced by the amount of Power from Station Two (in
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megawatt hours) allocated to Big Rivers during the relevant hour and Year
as contemplated in subclause (B), above, but that the minimum Contract
Limits set forth in Section 4.3 of the Power Purchase Agreement shall be
reduced only by the product of (x) the total amount of Power from Station
Two (in megawatt hours) so allocated to Big Rivers during the relevant
hour or Year, times (y) a fraction, the numerator of which is the then
applicable minimum Contract Limit under Section 4.3 of the Power Purchase
Agreement and the denominator of which is the then applicable maximum
hourly or annual (as applicable) Contract Limit under Section 4.3 of the
Power Purchase Agreement, and (D) Big Rivers must continue to meet the
Power purchase requirements under those minimum Contract Limits, or to
fulfill its payment obligations under Section 6.4(b) of the Power Purchase
Agreement for any deficiencies in those Power purchases.
(2) In the event that a default under this Agreement by Big Rivers
results in a termination of this Agreement by Henderson or any of the LG&E
Companies in accordance with its terms (other than a termination pursuant
to Section 13.6(e) or Section 13.7(c) of this Agreement), and at any time
thereafter either the Station Two Power Sales Agreement or the Station Two
Operating Agreement (or both of them) are no longer in force or effect, or
any of Henderson's material obligations thereunder have been waived by Big
Rivers, excused by reason of a default thereunder by Big Rivers, or
otherwise relinquished pursuant to any amendments to those agreements
effected following the termination of this Agreement, then the LG&E
Companies shall thereafter have the right, pursuant to Section 14.3 of
this Agreement, to an abatement against the Annual Fixed Payments or
Rental Payment (as applicable) due by them to Big Rivers, to a
reimbursement of the Initial Fixed Payment or Initial Rental Payment, and
to a reduction in the Contact Limits to the extent provided for in Section
14.3 of this Agreement, unless and until such time as:
(A) (y) Big Rivers has restored all of its rights and
entitlements under the Station Two Power Sales Agreement and
the Station Two Operating Agreement to reasonably comparable
levels as existed prior to the time they were terminated or
rendered of no
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further force or effect, or otherwise prior to the waiver,
excuse or amendment(s) described above, or Big Rivers has
entered into new contractual arrangements with Henderson
affording Big Rivers rights and entitlements reasonably
comparable to those that existed under the Station Two Power
Sales Agreement and the Station Two Operating Agreement prior
to the events described above, and (z) following the
restoration of rights and entitlements or establishment of new
arrangements (as applicable) described above, Big Rivers has
commenced to perform each of the obligations of Big Rivers
described in Subclauses (A) through (D), inclusive, of Section
13.8(a)(1) of this Agreement, in which event the LG&E Rights
shall be suspended for so long thereafter as Big Rivers
continues to perform those obligations, but the maximum and
minimum Contract Limits shall remain reduced to the extent
provided for in Section 14.3 of this Agreement notwithstanding
that the abatement rights of the LG&E Companies have been so
suspended; or
(B) (x) the LG&E Companies and Henderson, in their
discretion, have entered into new contractual arrangements
affording the LG&E Companies with rights and entitlements
reasonably comparable to those which the LG&E Companies would
have had under this Agreement, the Station Two Power Sales
Agreement, the Station Two Operating Agreement and the Joint
Facilities Agreement had this Agreement and those contracts
not been terminated, including without limitation, the right
to operate and maintain the Station Two Assets and to purchase
the Station Two Unit Output on terms reasonably comparable to
those set forth in this Agreement and those contracts, and (y)
to the extent that Big Rivers
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then has continuing rights with respect to the Station Two
Assets, the Joint Use Facilities and/or the Station Two Unit
Output, whether pursuant to any of the Station Two Contracts
or otherwise, Big Rivers has entered into an agreement in form
reasonably acceptable to the LG&E Companies that waives such
of those rights, or grants to the LG&E Companies such
additional rights, as are necessary to afford the LG&E
Companies with the rights and entitlements described in (x),
above, and Big Rivers continues to perform its obligations
under that agreement, and (z) Big Rivers agrees to purchase
from the relevant LG&E Companies all Station Two Unit Output
to the extent and for the period contemplated in Section
8.12(e) or Section 9.7(c) of this Agreement (whichever was
effective immediately prior to the termination of this
Agreement), which provision shall survive the termination of
this Agreement for the purposes hereof, and agrees to promptly
reimburse the LG&E Companies for any additional capacity
charge expenses for Station Two Unit Output (or their
equivalent), including, without limitation, components thereof
attributable to Debt Service payments, Station Two
Improvements and Henderson Incremental Environmental O&M, that
are or may thereafter become payable to Henderson or the
Trustee under the new contractual arrangements described in
this Section 13.8(a)(2)(B), by reason of the inability of the
LG&E Companies to otherwise collect those expenses from Big
Rivers under Section 8 or Section 9 (as applicable) of this
Agreement, and Big Rivers continues to perform those
obligations and make those reimbursement payments upon being
invoiced for the same. In the event the provisions of this
Section 13.8(a)(2)(B) are and remain fulfilled by Big Rivers,
the abatement and reimbursement rights of
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the LG&E Companies contemplated in Section 14.3 of this
Agreement shall be suspended and the maximum and minimum
hourly and annual Contract Limits shall be reinstated to their
levels in effect immediately prior to the termination of this
Agreement described in this Section 13.8(a)(2); or
(C) Big Rivers has commenced to perform and discharge
each of the following obligations for the benefit of the LG&E
Companies, in which event the LG&E Rights shall be suspended
for so long thereafter as Big Rivers continues to perform
those obligations, but the maximum and minimum Contract Limits
shall be and remain reduced in the manner provided for below:
(w) Big Rivers must satisfy all of its indemnification and
hold harmless covenants to the LG&E Companies set forth in this
Agreement;
(x) Big Rivers must pay to LEM on or before the 25th day of
each month during the remaining term of the Power Purchase Agreement
an amount determined by reference to the following formula:
X = (Y x 16%) x Z
Where:
X = The monthly payment owing by Big Rivers to LEM for the
relevant month.
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Y = The Base Power rate applicable under Section 6.3 of the
Power Purchase Agreement during the month in which such
monthly payment by Big Rivers is due.
Z = The total number of megawatt-hours of Station Two Surplus
Capacity to which Big Rivers and/or Station Two Subsidiary
were entitled under the terms of the Station Two Power Sales
Agreement throughout the calendar month immediately preceding
the date on which the Station Two Power Sales Agreement or
Station Two Operating Agreement (as applicable) was
terminated, determined without regard to any waiver by Big
Rivers or Station Two Subsidiary of its rights or entitlements
under the Station Two Power Sales Agreement, or any amendments
thereto following the Execution Date not approved in writing
by Station Two Subsidiary, in either case that reduced Big
Rivers' and/or Station Two Subsidiary's rights or entitlements
to such Station Two Surplus Capacity during that prior month,
and without regard to the amount of Power actually generated
or taken by Big Rivers and/or Station Two Subsidiary during
that prior month;
(y) Big Rivers must agree that the Contract Limits set forth
in Section 4.3 of the Power Purchase Agreement shall thereafter be
reduced as follows: (1) the Maximum Hourly Power Purchase Amount
shall be and remain reduced by the total number of megawatt-hours of
Station Two Surplus Capacity to which Big Rivers was entitled under
the terms of the Station Two Power Sales Agreement for the period
from 12:00 noon to 1:00 p.m. on the last day of the month
immediately preceding the date on which the Station Two Power Sales
Agreement or Station Two Operating Agreement (as applicable) was
terminated;
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(2) the Maximum Annual Power Purchase Amount shall be and remain
reduced by the product of total number of megawatt-hours determined
as described in (1), above, multiplied by 8,760; (3) the Minimum
Hourly Power Purchase Amount shall be and remain reduced by the
product of the total number of megawatt-hours determined as
described in (1), above, multiplied by a fraction, the numerator of
which is the Minimum Hourly Power Purchase Amount in effect on the
last day of the month described in (1), above, and the denominator
of which is the Maximum Hourly Power Purchase Amount in effect on
that same day; and (4) the Minimum Annual Power Purchase Amount
shall be and remain reduced by the product of the total number of
megawatt-hours determined as described in (3), above, multiplied by
8,760; and
(z) Big Rivers must continue to meet the Power purchase
requirements under those minimum Contract Limits, or to fulfill its
payment obligations under Section 6.4(b) of the Power Purchase
Agreement for any deficiencies in those Power purchases.
Notwithstanding anything contained in this Section 13.8(a)(2) to the
contrary, in the event each of the requirements of either Section
13.8(a)(2)(A), Section 13.8(a)(2)(B) or 13.8(a)(2)(C) have not been
fulfilled on or prior to the first anniversary of the termination of this
Agreement, or following their initial fulfillment they shall at any time
cease to be fulfilled by reason of any failure by Big Rivers to perform
the obligations or meet the conditions thereunder, then the LG&E Companies
shall be entitled, in their discretion and in lieu of continuing their
abatement of the Annual Fixed Payments or Rental Payment , as applicable,
their pursuit of reimbursement of the Initial Fixed Payment or Initial
Rental Payment, as applicable, and their reduction in the maximum hourly
and annual Contract Limits, to terminate all of the other Operative
Documents (excluding, at the sole option of the LG&E Companies, any duty
to also terminate one or more of the Settlement Promissory Note, the
Settlement Mortgage, the Subordinate Mortgage and Security
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Agreement or the Non-Disturbance Agreement in the event the LG&E Companies
shall determine to terminate other Operative Documents) upon 30 days'
prior notice delivered to Big Rivers at any time thereafter that such
requirements are not being fulfilled.
(3) In the event Big Rivers or the LG&E Companies shall terminate
this Agreement in accordance with its terms by reason of a default
hereunder by Henderson, and either (A) Big Rivers shall not exercise its
rights, pursuant to Section 13.6(d) or 13.7(h) of this Agreement, to also
terminate all of the Station Two Contracts, or (B) Big Rivers shall
exercise its termination rights under Section 13.6(d) or 13.7(h) of this
Agreement, but shall at any time during the Participation Agreement Phase
I or the Participation Agreement Phase II enter into new contractual
arrangements with Henderson affording Big Rivers rights and remedies that
are reasonably comparable to any of the rights or remedies maintained by
Big Rivers under the Station Two Power Sales Agreement or the Station Two
Operating Agreement prior to their termination, then Big Rivers must
thereafter fulfill each of the obligations set forth in Subclauses (A)
through (D), inclusive, of Section 13.8(a)(1) of this Agreement in order
to avoid the exercise by the LG&E Companies of the LG&E Rights, or any of
them. The failure of Big Rivers to do so shall give the LG&E Companies the
right to exercise the LG&E Rights.
(4) In the event that a default under this Agreement by any LG&E
Company results in a termination of this Agreement by Big Rivers or
Henderson in accordance with its terms, none of the LG&E Companies shall
have any right as a result of that termination to also exercise any of the
LG&E Rights; provided, however, that if following that termination of this
Agreement Big Rivers continues to have access to and the right to purchase
and utilize any of the Station Two Unit Output, or subsequently obtains
such access and rights, in either case on reasonably comparable terms, but
Big Rivers fails to promptly pay to LEM the LEM Margins associated with
that Unit Output (determined as described in Section 13.8(a)(2)(B)), or
fails to acknowledge a reduction in the maximum
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and minimum Contract Limits to the extent contemplated in Section
13.8(a)(1)(C), or fails at any time to meet those minimum Contract Limits
or to fulfill its payment obligations under Section 6.4(b) of the Power
Purchase Agreement for any deficiencies in those Power purchases, then the
LG&E Companies shall thereafter during such time as the requirements are
not being fulfilled have the right, consistent with the procedures
described in Section 14.3 of this Agreement, to abate the Annual Fixed
Payments or Rental Payment (as applicable) due to Big Rivers, to seek
reimbursement of the Initial Fixed Payment or Initial Rental Payment, and
to reduce the maximum Contract Limits or, in their discretion, to
terminate all of the other Operative Documents (excluding, at the sole
option of the LG&E Companies, any duty to also terminate one or more of
the Settlement Promissory Note, the Settlement Mortgage, the Subordinate
Mortgage and Security Agreement or the Non-Disturbance Agreement in the
event the LG&E Companies shall determine to terminate other Operative
Documents) upon 30 days' prior notice to Big Rivers, but only at such time
as the LG&E Companies shall have fulfilled their respective
indemnification and hold harmless obligations to Big Rivers set forth in
this Agreement.
(b) In addition to the limitations on termination provided for elsewhere
in this Section 13, neither Big Rivers nor any LG&E Company may at any time
during the Term take any action, or exercise any rights that they may have, to
terminate any of the Station Two Contracts, or to waive any rights thereunder
that may adversely affect the economic interests of the other Party, without the
prior consent of the other Party. Big Rivers also agrees that it shall not,
throughout the Term, have the right upon a default under this Agreement by
Henderson or the LG&E Companies, in and of itself, or upon any termination of
this Agreement for any reason, to terminate any of the other Operative
Documents, nor shall any such breach or default constitute a default under any
other Operative Document. The covenants of Big Rivers and the LG&E Companies set
forth in this Section 13.8(b) are made solely for the benefit of each other and
are not made for the benefit of Henderson.
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(c) In addition to the covenants made by Big Rivers to the LG&E Companies
in Sections 10.12, 10.7(b) and 10.34(b) of this Agreement, during the Phase I
Subcontract Term Big Rivers shall, upon the request of any of the LG&E
Companies, diligently pursue and fully enforce all rights and remedies under
this Agreement, the Station Two Contracts, and at law or in equity, that it has,
or may then have, against Henderson upon any breach or default by Henderson of a
Station Two Contract that adversely affects Station Two Subsidiary or its
Affiliate(s), or their respective rights and interests to enjoy the full use and
benefit of the Station Two Assets and the Station Two Surplus Capacity as
contemplated in the Phase I Subcontract; provided, Big Rivers shall have no
obligation to pursue a termination of the Station Two Contracts, and agrees not
to pursue any termination of the Station Two Contracts, unless Big Rivers and
the LG&E Companies agree that such termination is the appropriate remedy or
action to be taken under the given circumstances. Station Two Subsidiary shall
reimburse Big Rivers for the reasonable out-of-pocket costs and expenses
incurred by Big Rivers in complying with its obligations under Sections 10.12,
10.7(b) (but with respect to Section 10.7(b) of this Agreement only to the
extent of Big Rivers' commitment thereunder to reasonably cooperate with the
LG&E Companies) and 10.34(b) of this Agreement (except to the extent that Big
Rivers has expressly agreed elsewhere in this Agreement to be responsible for
such costs and expenses) and in pursuing and enforcing its rights and remedies
under the Station Two Contracts to the extent, but only to the extent, the
relevant breach or default by Henderson does not or would not adversely affect
Big Rivers' rights and interests under the Station Two Contracts or, following
the assignment to Station Two Subsidiary of the Assigned Station Two Contracts,
Big Rivers' reversionary interest in the Station Two Contracts. If the relevant
breach or default by Henderson adversely affects Big Rivers' rights and
interests under the Station Two Contracts or its reversionary interest in the
Station Two Contracts, Station Two Subsidiary shall reimburse Big Rivers for an
equitable percentage of the reasonable out-of-pocket costs and expenses incurred
by Big Rivers relative to the rights and interests of each of the Parties that
are adversely affected by the breach or default by Henderson. Each of Big Rivers
and Station Two Subsidiary (and its Affiliate(s)) shall
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cooperate with one another in Big Rivers' assertion of any rights and remedies
against Henderson with the purpose, where possible and not adverse to the
economic interests of any such Parties, of minimizing or reducing the potential
adverse effect that the assertion of such right or remedy may have on the other
Party or such other Party's rights and interests under this Agreement and the
Station Two Contracts. Any sums or damages recovered by Big Rivers from
Henderson for a breach or default of the Station Two Contracts shall be
equitably allocated among Station Two Subsidiary and its Affiliates and Big
Rivers as their respective interests may appear.
(d) During the Phase II Assignment Term, Big Rivers hereby agrees that
Station Two Subsidiary shall have the right to control all remedies that Big
Rivers may have against Henderson for breach or default by Henderson of any
Station Two Contract. Station Two Subsidiary agrees that, except as provided
below, during the Phase II Assignment Term it shall, upon the request of Big
Rivers, diligently pursue and fully enforce all rights and remedies under the
Station Two Contracts, and at law or in equity, that it has or may have against
Henderson upon any breach or default by Henderson of the Station Two Contract,
to the extent required to protect the economic or reversionary interests of Big
Rivers in the Station Two Contracts or to minimize or reduce the potential
adverse effect that such breach or default may have on Big Rivers' rights and
interests under this Agreement and the Station Two Contracts; provided, Station
Two Subsidiary shall have no obligation to pursue a termination of the Station
Two Contracts, and agrees not to pursue a termination of the Station Two
Contracts, unless Big Rivers and the LG&E Companies agree that such termination
is the appropriate remedy or action to be taken under the given circumstances.
Big Rivers shall reimburse Station Two Subsidiary for the reasonable
out-of-pocket costs and expenses incurred by Station Two Subsidiary in pursuing
and enforcing rights and remedies under the Station Two Contracts to the extent,
but only to the extent, the relevant breach or default by Henderson does not or
would not adversely affect any LG&E Company's rights, interests, use and
benefits under this Agreement or any of the Assigned Station Two Contracts or
any LG&E
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Company's use and benefit of the Station Two Assets and the Station Two Surplus
Capacity. If the relevant breach or default by Henderson would so adversely
affect any LG&E Company's rights, interests, uses and benefits, then Big Rivers
shall reimburse Station Two Subsidiary for an equitable percentage of the
reasonable out-of-pocket costs and expenses incurred by Station Two Subsidiary
relative to the rights and interests of each of the Parties that are adversely
affected by the breach or default by Henderson. Each of Big Rivers and Station
Two Subsidiary shall cooperate with one another in Station Two Subsidiary's
assertion of any rights and remedies against Henderson with the purpose, where
possible and not adverse to the economic interests of any such Parties, of
minimizing or reducing the potential adverse effect that the assertion of such
right or remedy may have on the other Party or such other Party's rights and
interests under this Agreement and the Assigned Station Two Contracts. Any sums
or damages recovered by Station Two Subsidiary from Henderson for a breach or
default of the Station Two Contracts shall be equitably allocated among Station
Two Subsidiary and its Affiliates and Big Rivers as their respective interests
may appear.
(e) Nothing contained in this Section 13 shall be deemed to affect, limit
or eliminate any rights that Big Rivers, on the one hand, or any of the LG&E
Companies, on the other hand, may have to terminate any of the Operative
Documents other than this Agreement in accordance with their respective terms,
or any other rights or remedies that they may have under those other Operative
Documents.
(f) If any of the Station Two Power Sales Agreement, the Station Two
Operating Agreement or the Joint Facilities Agreement shall at any time during
the Phase I Subcontract Term or the Phase II Assignment Term be terminated by
Big Rivers or by Henderson for any reason other than a breach or default by any
of the LG&E Companies under this Agreement or, during the Phase II Assignment
Term, under any Assigned Station Two Contract, then the LG&E Companies and
Henderson each agree between themselves (but not with Big Rivers)
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that each shall negotiate with the other Party(s), to effect a new agreement
among themselves (including a guaranty of LEC in substantially the same form and
substance as the Guaranty). The new agreement among the LG&E Companies and
Henderson shall be by means of a structure substantially the same as the Phase
II Assignment structure contemplated in this Agreement and the Station Two
Contracts or by some other mutually agreed upon structure that preserves or
enhances the relative economic benefits contemplated by the LG&E Companies and
Henderson, and that otherwise does not impose additional material risks or
obligations upon any of the LG&E Companies or Henderson than the risks and
obligations undertaken or assumed by such Parties in this Agreement and the
Station Two Contracts (unless any such Party, in its discretion, agrees to
accept lesser economic benefits or greater risks or obligations than undertaken
or assumed by such Party in this Agreement and the Station Two Contracts). All
negotiations undertaken or required pursuant to this Section 13.8(f) shall be
conducted in good faith and each Party participating in such negotiations shall
use their reasonable best efforts to effect the new agreement. Notwithstanding
anything herein to the contrary: (i) in connection with the foregoing
negotiations, neither Henderson nor the LG&E Companies shall have an obligation
to agree to perform for the other certain services or to furnish or commit to
Station Two certain assets and properties that were unique to Big Rivers in such
Station Two Contracts, including, without limitation, providing or furnishing
transmission related services, transmission facilities and lines, the Joint Use
Facilities owned by Big Rivers (except to enforce rights they may have with
respect thereto or to provide any interests that such Party may have in such
Joint Use Facilities), and common employees and supplies in the operation of
Station Two and the Reid Station; provided, however, if Henderson shall then
have the right, on account of such termination or any other event or
circumstance, to purchase the Joint Use Facilities owned by Big Rivers and/or
the Reid Station, or the right to use transmission facilities or services in
connection with the delivery of Station Two Power, then Henderson and the LG&E
Companies agree with each other to negotiate in good faith terms of financing
and other commercially reasonable terms associated with that purchase or use of
transmission facilities or services with a view toward securing for
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both Henderson and the LG&E Companies the continued enjoyment, use and benefit
of those Joint Use Facilities, the Reid Station and transmission facilities or
services upon terms no less favorable to either Henderson or the LG&E Companies
than those that are contemplated by the Parties in this Agreement or the Station
Two Contracts; and (ii) in the event the termination of the Station Two Power
Sales Agreement, the Station Two Operating Agreement or the Joint Facilities
Agreement (as applicable) shall result from a material breach or default of
Henderson, the provisions of this Section 13.8(f) shall be applicable only at
the option of Station Two Subsidiary, in its sole discretion. The LG&E Companies
and Henderson further agree to negotiate in good faith such other commercially
reasonable terms and provisions as either such Party may reasonably request to
enable such Party to enter into and perform their respective obligations under
the new agreements and to continue to obtain and enjoy the benefits of the
Capacity and Energy from Station Two as contemplated in this Agreement for the
Phase II Assignment Term. Big Rivers, without waiving or releasing any other
rights under this Agreement, the other Operative Documents, the Station Two
Contracts, or at law or in equity, hereby consents to the LG&E Companies and
Henderson negotiating and entering into a new agreement as provided for in this
Section 13.8(f), and hereby waives any claims or rights that it may have to
operate and maintain Station Two or to purchase or acquire the Station Two
Assets (including Henderson's interest in any Joint Use Facilities) or any
Station Two Surplus Capacity by virtue of such negotiations or new agreement
between Henderson and any one or more of the LG&E Companies (or their
Affiliates), in the event that the Station Two Power Sales Agreement, the
Station Two Operating Agreement or the Joint Facilities Agreement are (1)
terminated by Henderson for a breach or default by Big Rivers of those Station
Two Contracts or this Agreement (other than a breach or default resulting from
the act or omission of any LG&E Company in breach of this Agreement) or (2)
terminated by Big Rivers during the Term for any reason other than a termination
of this Agreement for a default of this Agreement by the LG&E Companies. Big
Rivers shall not be deemed by virtue of the consents and waivers set forth above
to have consented to the foregoing or waived any rights or interests that it may
have to operate Station Two or to purchase any of the Station Two
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Assets or Station Two Surplus Capacity, to the extent such rights or interests
were not set forth in the Station Two Contracts that were terminated, nor shall
any such consent or waiver exist for any termination by Henderson or the LG&E
Companies that is in breach or default of this Agreement or any of those Station
Two Contracts.
(g) Unless otherwise expressly provided in this Agreement, a Party shall
not be liable to any of the other Parties for any special, incidental or
consequential damages arising in connection with this Agreement, or any breach
or default hereunder and, from and after the retirement or redemption of the
Station Two Bonds, for any special, incidental or consequential damages arising
in connection with the Station Two Contracts or any breach or default thereof.
In the event that the negligence or willful misconduct of any LG&E Company or a
breach or default by any LG&E Company of this Agreement shall directly result in
Henderson obtaining a judgment or other award of special, incidental or
consequential damages from Big Rivers, then the LG&E Companies hereby agree
that, notwithstanding any limitations in this Section 13.8(g) between those
Parties for those types of damages, as between the LG&E Companies and Big Rivers
such damages (if awarded) shall be deemed to be direct damages for which Big
Rivers may pursue against the LG&E Companies its right to indemnification or any
other legal or equitable right it may have against the LG&E Companies as a
result of such breach or default.
(h) The LG&E Companies agree that they shall not at any time during the
Phase I Subcontract Term or the Phase II Assignment Term authorize or approve
any amendments or modifications of any Station Two Contracts, or any suspensions
of performance under any Station Two Contracts, in either case without the prior
consent of Big Rivers, which consent shall not be unreasonably withheld,
conditioned or delayed.
(i) Should any breach or default by Big Rivers under this Agreement, any
of the Station Two Contracts or any of the other Operative Documents, or should
the negligence or
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willful misconduct of Big Rivers or any of its employees, agents or
representatives, have the effect, directly or indirectly, of denying the LG&E
Companies access to, or the full use and enjoyment of, any of the "Fundamental
Rights" (as defined in Section 10.7) in any material respects, then the damages
that shall be recoverable by the LG&E Companies from Big Rivers shall include,
without limitation, (1) any costs that the LG&E Companies may suffer or incur in
purchasing Power in place of the Station Two Unit Output that was thereby
rendered unavailable for purchase, use, transmission or sale by the LG&E
Companies; (2) any transmission charges incurred to transmit that replacement
Power that would not have otherwise been incurred had it been available from
Station Two; (3) any costs and expenses incurred by the LG&E Companies
(including without limitation, Capacity charges) associated with the Station Two
Unit Output that can be generated but cannot be utilized by the LG&E Companies
by reason of the denial of one or more of the Fundamental Rights; and (4) any
increased Capacity Charges that may be payable by any LG&E Company for Station
Two Surplus Capacity that may still be available for use notwithstanding the
denial in any material respect of the Fundamental Right described in Section
10.7(c), but only to the extent those increased charges resulted from that
denial.
13.9 Termination Date True Up. On the date this Agreement expires or is
terminated for any reason, Big Rivers and the LG&E Companies (and without in any
manner impairing Big Rivers' refund obligations, if any, under Section 21.8 of
the Participation Agreement) agree that all amounts due and owing under this
Agreement to the other Party, or any outstanding credits, in each case, shall be
so paid within five (5) days after the date of termination or expiration after
netting all such amounts and credits owed by each of those Parties to the
other(s) or their Affiliates under this Agreement or the Operative Documents.
The Parties agree that all credits shall be converted to a cash amount for
purposes of this provision.
13.10 Survival of Terms and Conditions. The provisions of this Agreement,
other than those which specifically address the period of time prior to the
Closing, shall survive the
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Closing. Upon the expiration or earlier termination of this Agreement, each of
the Parties shall be released from all liabilities and obligations arising under
the terms and provisions of this Agreement, except for liabilities and
obligations arising under terms and provisions of this Agreement which expressly
provide for the survival thereof following such expiration or earlier
termination, and except for the following terms and provisions which shall
survive any such expiration or earlier termination of this Agreement, all of
which shall continue to be binding on the relevant Party(s): (a) the covenants
of confidentiality set forth in Sections 4.1(b) and Section 8.9 of this
Agreement; (b) the agreement of Station Two Subsidiary set forth in Section
10.8(h) of this Agreement to assist any insurer in investigating, adjusting and
settling any loss or claim covered by Station Two Assets Insurance, but only to
the extent such loss or claim arises or accrues during the Phase I Subcontract
Term or the Phase II Assignment Term; (c) all of the terms and provisions of
Section 10.16, relating to the reversion of the Station Two Contracts and the
Parties' respective rights and obligations in connection therewith, as may be
applicable on the date of termination; (d) each of the commitments set forth in
this Agreement of Henderson and Big Rivers, respectively, regarding access to
and the right to utilize the Joint Use Facilities (including, without
limitation, the Green Station FGD System Facility) and, in the case of Big
Rivers only, its commitments to provide transmission access and certain
transmission and transformation facilities, including, without limitation, those
commitments of Henderson and Big Rivers set forth in Sections 10.19(d) and 10.20
of this Agreement, respectively; (e) those provisions of Sections 11.1, 11.2 and
11.3 of this Agreement (relating to Economic Development Power) which
specifically contemplate their survival for the benefit of one or more of the
Parties following the expiration or termination of this Agreement; (f) all
rights of first purchase of LEM provided for in Section 4.4 of this Agreement to
purchase Station Two Surplus Capacity from Henderson following Henderson's
election, pursuant to Section 15.2 of the Station Two Power Sales Agreement, not
to sell such Power to Big Rivers; (g) the terms and provisions of Section 13.9
of this Agreement, until each of the Parties' respective obligations thereunder
are performed and discharged in full; (h) any rights to terminate the other
Operative Documents,
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any rights to an abatement of the Annual Fixed Payments or the Rental Payment
due to Big Rivers under either the Power Purchase Agreement or the Lease, any
rights to reimbursements of portions of the Initial Fixed Payment or the Initial
Rental Payment, as applicable, and any rights to adjustments of the Contract
Limits, in each case as provided for in Sections 13.6, 13.7, 13.8 or 14 of this
Agreement, and any rights of Big Rivers set forth in Section 13.8(a) of this
Agreement to suspend the enforcement of the foregoing rights by the LG&E
Companies and their Affiliates; (i) all terms and provisions of this Agreement
which create or provide for obligations between the Parties for sums due and
owing any other Party, or credits due any other Party, under this Agreement as
of its expiration or termination (which payment obligations shall survive until
finally paid in full or off-set by such Parties against sums that may otherwise
be owed by any such Party under this Agreement or any Operative Document); (j)
the agreement between Henderson and the LG&E Companies to negotiate a new
agreement relating to Station Two and the Station Two Surplus Capacity pursuant
to the terms of Section 13.8(f) of this Agreement; (k) any indemnification
claims or actions for breach or default to the extent that the events or actions
that gave rise to liability occurred prior to the expiration or termination of
this Agreement and the Station Two Contracts, including without limitation,
claims relating to breaches or defaults occurring prior to the Effective Date;
and (l) the terms and provisions of Section 18.15 of this Agreement.
14. ABATEMENT AND OTHER RIGHTS.
14.1 Abatement and Other Rights For Condemnation. In the event of a
condemnation or taking by governmental authority of all or substantially all of
the Station Two Assets, or of both or either of the Station Two generating
units, Big Rivers agrees that the Annual Fixed Payments payable by LEM for each
month during the condemnation or taking (prorated for partial months) pursuant
to Section 3.3(a) of the Power Purchase Agreement or the Rental Payment payable
by WKEC (or its Affiliates) for each month during the condemnation or taking
(prorated for partial months) pursuant to Section 2.3.2 of the Lease, whichever
is then
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applicable, shall be reduced proportionately from and after possession is taken
based upon the ratio of (a) the fair market value at the time of the
condemnation or taking of the specific Station Two Assets condemned or taken to
(b) the sum of (y) the fair market value at the time of the condemnation or
taking of all the Station Two Assets and (z) the fair market value at the time
of the condemnation or taking of the Generating Assets of Big Rivers which are
not also Station Two Assets hereunder, each determined on the basis that said
condemnation or taking had not occurred (the "Fair Market Value Ratio"). In
addition, if the initial condemnation or taking of the Station Two Assets occurs
prior to the second anniversary of the Effective Date, Big Rivers shall refund
to LEM, as agent for the LG&E Companies and their Affiliates, an amount equal to
(a) the amount of the Initial Fixed Payment or the Initial Rental Payment, as
the case may be, paid to Big Rivers under the Power Purchase Agreement or the
Lease on the Effective Date, multiplied by (b) the ratio of (1) the number of
days between the date of the initial condemnation or the taking and the second
anniversary of the Effective Date over (2) 730, multiplied by (c) the Fair
Market Value Ratio. Such refund amount shall be payable by Big Rivers, free of
interest, in twenty-four equal monthly installments commencing on the one-month
anniversary of the date of the condemnation or the taking. The LG&E Companies
and Big Rivers agree that the fair market value of the Station Two Assets taken
shall be determined equitably by taking into consideration, among other relevant
factors, the amount of surplus Capacity that is not available from Station Two
by virtue of the condemnation or the taking, the amount of the Station Two
Surplus Capacity that was available to Station Two Subsidiary and/or LEM,
directly or through Big Rivers, immediately prior to the condemnation or the
taking of the Station Two Assets, and a reasonable estimate of the future
allocation of Station Two Surplus Capacity that would have been made available
to Station Two Subsidiary and/or LEM from Station Two based on historical
allocations of Capacity from Station Two reserved by Henderson and the
reasonably foreseeable and determinable future needs for such Capacity by
Henderson (for its governmental and proprietary facilities and its retail sales
to inhabitants of the City, present and future). The Contract Limits provided
for in Section 4.3 of the Power
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Purchase Agreement shall not be affected or modified by reason of any
condemnation or taking, in whole or in part, of the Station Two Assets.
14.2 Abatement and Other Rights for Damage or Destruction.
(a) There shall be no refund of the Initial Fixed Payment or the Initial
Fixed Rental Payment , no abatement in the Annual Fixed Payments by LEM under
Section 3.3 of the Power Purchase Agreement, the Rental Payment payable by WKEC
(or its Affiliates) under Section 2.3.2 of the Lease or the Debt Service
reimbursement payments of Station Two Subsidiary (or its successors or permitted
assigns) to Big Rivers under Sections 8.18 and 9.11 of this Agreement, and no
adjustments made to the Contract Limits set forth in Section 4.3 of the Power
Purchase Agreement, if the Station Two Assets are damaged or destroyed during
the Term for any reason (including, without limitation, an Uncontrollable Force
or the negligence or willful misconduct of any of the LG&E Companies or
Henderson, or any of their respective employees, agents or representatives)
other than the negligence or willful misconduct of Big Rivers or any of its
employees, agents or representatives, but then only to the extent provided for
in this Section 14.2.
(b) If the Station Two Assets are damaged or destroyed during the Term and
the damage or destruction was caused by the negligence or willful misconduct of
Big Rivers, or any of its employees, agents or representatives, then the Annual
Fixed Payments by LEM under Section 3.3 of the Power Purchase Agreement and the
Rental Payment payable under Section 2.3.2 of the Lease shall be abated, and the
Debt Service reimbursement payments to Big Rivers pursuant to Section 8.18 of
this Agreement shall on each Monthly Payment Date be abated, until such time as
the Station Two Assets are restored in the manner provided in Section 12.2 of
this Agreement, in each case in an amount equal to (1) the monthly installment
of Annual Fixed Payment, Rental Payment and/or Debt Service reimbursement
payment that is
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due Big Rivers at that time under either the Power Purchase Agreement, the Lease
or this Agreement (subject to all adjustments in such installment payments as
shall then be applicable under the terms of the Power Purchase Agreement, the
Lease or this Agreement), multiplied by (2) the ratio by which (A) the average
number of megawatts of Station Two Surplus Capacity that were allocated to Big
Rivers (prior to the Effective Date or during the Phase I Subcontract Term, as
applicable) and Station Two Subsidiary (during the Phase II Assignment Term)
under the Station Two Power Sales Agreement for each hour during the four (4)
year period immediately preceding the date of the damage or destruction, but
with an equitable reduction in that number to reflect the increase (if any) in
(y) the average number of megawatts of Power anticipated to be reserved for each
hour by Henderson from Station Two between the relevant Monthly Payment Date and
the fourth (4th) anniversary thereof (as reflected in the then current forecast
of Henderson's needs required to be made under the Station Two Power Sales
Agreement, but adjusted to include any Economic Development Power reserved by
Henderson for its customers as contemplated in the 1998 Amendments and Sections
11.1, 11.2 and 11.3 of this Agreement) over (z) the average number of megawatts
of Power from Station Two that were reserved by Henderson for each hour during
the four (4) year period immediately preceding the relevant Monthly Payment
Date, bears to (B) 1708 Megawatts, multiplied by (3) the percentage of Station
Two Power which can no longer be generated by Station Two by reason of the
damage or destruction (the multipliers in (2) and (3), above, being hereinafter
collectively referred to as the "Damage Multipliers"). In addition, the Debt
Service payments by Big Rivers to Station Two Subsidiary pursuant to Section
9.7(b ) shall on each Monthly Payment Date be increased, until such time as the
Station Two Assets are restored in the manner provided in Section 12.2 of this
Agreement, by an amount equal to such Debt Service payment by Big Rivers
multiplied by the Damage Multipliers. In addition, if the damage or destruction
to the Station Two Assets occurs prior to the second anniversary of the
Effective Date, which damage or destruction was caused by the negligence or
willful misconduct of Big Rivers or any of its employees, agents or
representatives, Big Rivers agrees to refund to LEM, as agent for the LG&E
Companies and their Affiliates, an amount equal to (i) the amount of the Initial
Annual Fixed Payment or the Initial Rental Payment, as the case may be, paid to
Big Rivers under the Power Purchase
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Agreement or the Lease on the Effective Date, multiplied by (ii) the ratio of
(A) the number of days between such damage or destruction date and the earlier
of the date the Station Two Assets are restored in the manner provided in
Section 12.2 of this Agreement or second anniversary of the Effective Date over
(B) 730, multiplied by (iii) the Damage Multipliers in the order described
above. Such refund amount shall be payable by Big Rivers, free of interest, in
twenty-four equal monthly installments commencing on the one-month anniversary
of the damage or destruction date. No adjustments shall be made to the Contract
Limits set forth in Section 4.3 of the Power Purchase Agreement as a consequence
of such damage or destruction.
14.3 Abatement and Other Rights Upon Termination.
(a) At the time(s), and under the circumstances permitted by Section 13.6,
13.7 and 13.8 of this Agreement (but subject to Big Rivers' rights provided for
in Section 13.8(a) of this Agreement), and at such time prior to a termination
of this Agreement as Henderson shall terminate the Station Two Power Sales
Agreement, the Station Two Operating Agreement or the Joint Facilities Agreement
by reason of a breach or default thereunder by Big Rivers, the relevant LG&E
Companies and their relevant Affiliates shall be entitled (1) to an immediate
abatement against, and the right to reduce, any Annual Fixed Payments thereafter
owing by LEM to Big Rivers under Section 3.3 of the Power Purchase Agreement,
and any Rental Payment thereafter owing by WKEC or its Affiliates to Big Rivers
under Section 2.3 of the Lease, (2) where applicable (as described below), to a
reimbursement by Big Rivers to LEM, WKEC and its Affiliates of a portion of the
Initial Fixed Payment or the Initial Rental Payment (as applicable), and (3) to
an immediate reduction in the maximum and minimum Contract Limits, in each case
to the extent provided in this Section 14.3. Any such abatement, reimbursement
and Contract Limit reduction rights, once effective, shall remain in effect at
all times during the remainder of the Term (or, if this Agreement shall have
been terminated for the remainder of the Participation Agreement Phase I or the
Participation Agreement Phase II, as applicable), but subject to Big Rivers'
rights provided for in Section 13.8(a) of this Agreement.
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(b) In the event that an abatement against the Annual Fixed Payments or
the Rental Payment , as applicable, is required or permitted under this Section
14.3, then on each Monthly Payment Date such abatement shall be in an amount
equal to (1) the monthly installment of Annual Fixed Payment, or Rental Payment
that is due to Big Rivers at that time under either the Power Purchase
Agreement, the Lease or this Agreement (subject to all adjustments in such
installment payments as shall then be applicable under the terms of the Power
Purchase Agreement, the Lease and this Agreement), multiplied by (2) the ratio
by which (A) the average number of megawatts of Station Two Surplus Capacity
that was allocated to Big Rivers (prior to the Effective Date or during the
Phase I Subcontract Term, as applicable) and Station Two Subsidiary (during the
Phase II Assignment Term) under the Station Two Power Sales Agreement for each
hour during the four (4) year period immediately preceding the date on which the
LG&E Companies' respective abatement rights first accrue under Sections 13.6,
13.7 or 13.8 of this Agreement, but with an equitable reduction in that number
to reflect the increase (if any) in (y) the average number of megawatts of Power
anticipated to be reserved for each hour by Henderson from Station Two between
the relevant Monthly Payment Date and the fourth (4th) anniversary thereof (as
reflected in the then current forecast of Henderson's needs required to be made
under the Station Two Power Sales Agreement, but adjusted to include any
Economic Development Power reserved by Henderson for its customers as
contemplated in the 1998 Amendments and Sections 11.1, 11.2 and 11.3 of this
Agreement) over (z) the average number of megawatts of Power from Station Two
that were reserved by Henderson for each hour during the four (4) year period
immediately preceding the relevant Monthly Payment Date, bears to (B) 1708
Megawatts, (the multipliers identified in (1) and (2), above, being hereinafter
collectively referred to as the "Termination Multipliers").
(c) In the event that the relevant termination of this Agreement or a
Station Two Contract giving rise to abatement rights hereunder occurred prior to
the second anniversary of the Effective Date, then in addition to the abatement
rights described above, Big Rivers agrees to refund to LEM, as agent for the
LG&E Companies and their Affiliates, an amount equal to
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(i) the amount of the Initial Fixed Payment or the Initial Rental Payment, as
the case may be, paid to Big Rivers under the Power Purchase Agreement or the
Lease on the Effective Date, multiplied by (ii) the ratio of (A) the number of
days between such termination date and the second anniversary of the Effective
Date over (B) 730, multiplied by (iii) the Termination Multipliers in the order
described above. Such refund amount shall be payable by Big Rivers, free of
interest, in twenty-four equal monthly installments commencing on the one-month
anniversary of the termination date.
(d) At such time as any of the LG&E Companies shall be entitled to an
abatement against its payment obligations as contemplated in Section 14.3(a),
above, and for so long as that abatement right shall continue, then the Contract
Limits provided for in Section 4.3 of the Power Purchase Agreement shall be and
remain reduced as follows: (1) the maximum Contract Limits set forth in Section
4.3 of the Power Purchase Agreement shall be reduced by the amount of Power from
Station Two allocated to Big Rivers during the relevant hour or Year under the
terms of the Station Two Power Sales Agreement (without regard to any waiver of
its rights or entitlements thereunder or any amendments thereto following the
date hereof that may reduce Big Rivers' right or entitlement to such Power, and
without regard to the amount of Power actually generated or taken by Big
Rivers), or if the Station Two Power Sales Agreement has been terminated as
contemplated in Section 14.3(a), then the amount of Power that would have been
allocated to Big Rivers had that agreement remained in effect; and (2) the
minimum Contract Limits set forth in Section 4.3 of the Power Purchase Agreement
shall be reduced only by the product of (x) the total amount of Power from
Station Two (in megawatt hours) so allocated to Big Rivers during the relevant
hour or Year, times (y) a fraction, the numerator of which is the then
applicable minimum Contract Limit under Section 4.3 of the Power Purchase
Agreement and the denominator of which is the then applicable maximum hourly or
annual (as applicable) Contract Limit under Section 4.3 of the Power Purchase
Agreement.
14.4 Abatement Rights Cumulative. The rights of the LG&E Companies
specified in this Section 14, entitled "Abatement," shall be in addition to, and
not be exclusive of, any other rights or remedies that the LG&E Companies may
have in this Agreement, the Station Two
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Contracts or the Operative Documents, or at law or in equity, as a consequence
of any breach or default under, or termination of, this Agreement, any of the
Station Two Contracts or any of the other Operative Documents.
15. TRANSFERS AND ASSIGNMENTS.
15.1 Permitted Assignments. No Party shall assign any of its rights or
obligations under this Agreement or any of the Station Two Contracts without the
prior consent of the other Parties, except that with respect to an assignment of
the type described in (a) or (c) below, only the consent of Henderson shall be
required (which consent shall not be unreasonably withheld, conditioned or
delayed by Henderson) and, with respect to an assignment of the type described
in (b) or (d) below, no prior consent shall be required with respect to such an
assignment:
(a) to any Person into which or with which the Party making the assignment
is merged or consolidated or to which the Party transfers substantially all of
its assets including this Agreement and/or the Station Two Contracts.
(b) with respect to Station Two Subsidiary, LEM or WKEC, to any Affiliate
of those Parties.
(c) with respect to Station Two Subsidiary, LEM or WKEC, to any third
party which is authorized by all appropriate regulatory authorities and under
applicable law to fulfill such Party's obligations under this Agreement or that
Station Two Contract (as applicable) to which such Party is a party and which
provides assurances of payment and performance of equal or greater value to that
provided in this Agreement or such Station Two Contract, as reasonably
determined by Henderson and Big Rivers.
(d) in the case of either Big Rivers or Henderson, unless to do so would
violate the terms of the Station Two Contracts as in effect on the date hereof,
and in the case of the LG&E Companies, to any (a) creditor holding a Permitted
Lien as security for the underlying obligation, (b) other mortgagee or other
secured party as security for indebtedness incurred for
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borrowed money by such Party for any renewal, replacement, improvement or
addition to Station Two, or (c) other entity as security for indebtedness for
borrowed money loaned to Big Rivers or any LG&E Company; provided, that each
such secured party of Big Rivers or any LG&E Company referenced herein executes
a Non-Disturbance Agreement in substantially the form of Exhibit H attached to
the Participation Agreement (or, in the case of an assignment by an LG&E
Company, in a form reasonably acceptable to Big Rivers and Henderson), and each
such secured party may transfer or assign the interest given as security
pursuant to, or in lieu of, a foreclosure of the Lien (or the exercise of power
of sale) held by such secured party, provided that the transferee or assignee
assumes all of the duties and obligations of the pledging Party under this
Agreement and the Station Two Contracts, including, without limitation, the
obligation to enter into a nondisturbance agreement, and all other agreements
that relate to the interest being transferred or assigned. No such assignment by
any Party pursuant to this Section 15.1(d) shall be deemed to release that Party
from any of its obligations hereunder.
Notwithstanding anything in this Section 15.1 to the contrary, Henderson may
withhold its consent (without regard to whether the withholding thereof is
otherwise unreasonable) to any assignment by an LG&E Company of the type
described in (a) or (c), above, if (y) such assignment is to any Person that is
not an Affiliate of LEC and (z) the request for Henderson's consent to such
assignment is not accompanied by an opinion of counsel to LEC, in substantially
the form of the legal opinion to be delivered by Kentucky counsel at the Closing
pursuant to Item 29 of Schedule 2.1 to this Agreement, as to the enforceability
of the Guaranty as it relates to such non-affiliated Person's performance of its
obligations to Henderson under this Agreement from and after the date of such
assignment. In addition, all of the assignments described in this Section 15.1
shall in any event be subject to compliance with all applicable Laws. Subject to
the foregoing restrictions in this Section, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and assigns.
15.2 Assignment and Assumption of Related Agreements. No transfer or
assignment of any interest in the Station Two Assets or in this Agreement or the
Station Two Contracts, or
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any part thereof, pursuant to Sections 15.1(a), 15.1(b) or 15.1(c) of this
Agreement may be made unless, simultaneously, the transferring Party's rights
under this Agreement and all Station Two Contracts and all other agreements that
relate to such interest are similarly transferred or assigned to the same Person
or Persons (or one or more Affiliates of such Person or Persons), and such
Person or Persons (or one or more Affiliates of such Person or Persons) assumes
in writing all the duties and obligations of the Party making such transfer or
assignment under such agreements that relate to the interest being transferred
or assigned and that accrue or arise after the date of assignment. Unless the
provisions of Sections 15.1(a), 15.1(b) or 15.1(c) of this Agreement and the
immediately preceding sentence are satisfied, no such assignment or transfer
shall release the transferring or assigning Party from any of its obligations
pursuant to this Agreement or the Station Two Contracts or such other
agreements; provided, in no event shall Big Rivers be released by virtue of any
such assignment. Nothing in this Section 15.2, as it relates to Big Rivers and
Henderson, shall modify or amend any such additional or different rights or
obligations that either such Party has or owes the other Party under the terms
of the Station Two Contracts on the date hereof, including, without limitation,
the rights of first refusal of each such Party under the Station Two Contracts.
15.3 Noncomplying Assignment. Any attempted or purported assignment or
transfer made other than in accordance with this Section 15, entitled "Transfers
and Assignments," whether voluntarily, involuntarily or by operation of law,
including, without limitation, by merger or consolidation shall be void and of
no effect.
15.4 Regulatory Approvals. Assignments or transfers under this Agreement
or any Station Two Contract may be subject to the jurisdiction of state or
federal regulatory agencies. Such assignments or transfers shall not be
effective until all required approvals and all other required action by such
agencies having jurisdiction shall have been obtained.
15.5 Liens. No Party shall directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to the Station Two Assets, except
Permitted Liens or the Liens created by the Bond Ordinance. Station Two
Subsidiary agrees to pay before delinquency all costs for work, services or
materials furnished or used during the Term in connection with the
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Station Two Assets, the non-payment of which could result in any Lien against
the Station Two Assets. Henderson will keep title to the Assets free and clear
of any and all Liens other than Permitted Liens and Liens in existence under the
Bond Ordinance on the date hereof. Each Party hereto will immediately notify the
other Parties of the filing of any other Lien which such Party creates, incurs,
assumes or suffers to exist upon the Station Two Assets and any pending claims
or proceedings related to any such Lien, and will indemnify and hold the other
Parties harmless from and against all loss, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by such other Parties as a
result of the imposition of such Lien (regardless of whether or not Station Two
Subsidiary knew of the existence of such Lien). In case any such other Lien
attaches, the Party which creates, incurs, assumes or suffers to exist a Lien
upon the Station Two Assets agrees to cause it to be immediately released and
removed of record (failing which any of the other Parties may do so at such
defaulting Party's sole expense). Notwithstanding anything herein to the
contrary, the Party who creates, incurs, assumes or suffers to exist any such
other Lien shall have the right to contest in good faith such Lien even if such
contest prolongs or permits the existence of such Lien.
16. UNCONTROLLABLE FORCES.
16.1 Suspension of Performance for Uncontrollable Forces. Except as may be
further limited in Section 16.2 of this Agreement, none of the Parties shall be
considered in default or breach with respect to any obligation under this
Agreement if prevented from fulfilling such obligation by reason of an
"Uncontrollable Force" (as defined in Exhibit B attached hereto). If LEM or
Station Two Subsidiary is unable to fulfill any obligation by reason of an
Uncontrollable Force, it shall exercise due diligence to remove such disability
as soon as reasonably possible; provided, that no Party shall be relieved of any
payment obligation that it may have to any other Party (or to the Trustee) under
this Agreement or any Station Two Contract by reason of an Uncontrollable Force.
16.2 Uncontrollable Forces. -- Station Two Contracts. Station Two
Subsidiary shall not be considered in default or breach with respect to any
obligation under Section 8 of this
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Agreement entitled "Phase I Subcontract" and Section 9 of this Agreement
entitled "Phase II Assignment," if prevented from fulfilling such obligation by
reason of an "Uncontrollable Force" (as hereinafter defined), but only to the
extent that such obligation arises under the terms of the Station Two Contracts
or the corresponding provisions of Section 8, and provided, that no Party shall
be relieved of any payment obligation that it may have to any other Party (or to
the Trustee) under this Agreement or any Station Two Contract by reason of an
Uncontrollable Force. If Station Two Subsidiary is unable to fulfill any such
obligation by reason of an Uncontrollable Force, it shall exercise due diligence
to remove such disability as soon as reasonably possible. For purposes of this
Section 16.2, with respect to each specific obligation, the term "Uncontrollable
Force" shall have the same meaning as set forth in the Station Two Contract
under which the obligation arises, and no performance under Section 8 of this
Agreement and Section 9 of this Agreement shall be excused by reason of an
Uncontrollable Force unless performance of such obligation is also excused under
the terms of such Station Two Contract.
17. TAXES. The provisions of this Section 17 shall apply only as to the
respective rights and obligations of the LG&E Companies and Big Rivers with
respect to each other, and not as to their respective rights and obligations
with respect to Henderson, and then only to the extent that such rights and
obligations have not been addressed in Section 11 of the Participation
Agreement.
17.1 Sales and Use Taxes. Notwithstanding anything in this Agreement or
any other Operative Document to the contrary, (a) Big Rivers shall pay (or
reimburse the LG&E Companies for) any and all sales and use Taxes imposed on (1)
its transfer of Station Two Inventory and Station Two Personal Property to
Station Two Subsidiary pursuant to Sections 10.33 and 10.35 of this Agreement,
(2) its lease of any Station Two Assets to WKEC or its Affiliates pursuant to
the Lease or any characterization of this transaction, or any portion thereof,
as a lease by Big Rivers to any LG&E Company of Station Two Assets, and (3) if
the Phase I Subcontract Term become effective, its sale of Station Two Unit
Output to LEM pursuant to the Power Purchase Agreement, to the extent of the
lesser of (i) the sales Tax imposed on Big Rivers with respect to the
consideration described in Section 3.3(a) of the
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Power Purchase Agreement, and (ii) the sales Tax that would have been imposed on
Big Rivers if the Phase II Assignment Term (rather than the Phase I Subcontract
Term) were effective as of the Effective Date, and (b) an LG&E Company shall pay
(or reimburse Big Rivers for) any and all sales and use Taxes imposed on (1)
Station Two Subsidiary's transfer of the End of Term Inventory and the End of
Term Personal Property to Big Rivers on date of expiration or termination of
this Agreement, and (2), if the Phase I Subcontract Term becomes effective, Big
Rivers' sale of Station Two Unit Output to LEM pursuant to the Power Purchase
Agreement and this Agreement, to the extent that the amount of such sales Tax
exceeds the amount of the Tax described in clause (a)(3) of this sentence. The
allocation of responsibility for sales and use Taxes pursuant to this Section
17.1 also shall apply to any Taxes enacted after the date hereof in replacement
of any such sales or use Tax.
17.2 Property Taxes. Big Rivers shall pay when finally due and owing all
property Taxes assessed, levied, or exacted on the Station Two Assets (but
specifically excluding for purposes of this Section 17.2 all Station Two
Inventory and Station Two Personal Property from the Station Two Assets) that
are the obligation of Big Rivers or Station Two Subsidiary under applicable Law
or pursuant to any of the Station Two Contracts, including, without limitation,
any property taxes that may be treated as an operating and maintenance expense
of Station Two and payable in whole or in part, as a component of the Capacity
charges due the trustee or Henderson, as the case may be, under Section 6.1 and
6.3 of the Station Two Power Sales Agreement. Where Station Two Subsidiary or
any other LG&E Company is required to pay such Taxes directly to the relevant
taxing authority, Henderson or the trustee, Big Rivers agrees to promptly
reimburse that LG&E Company for the same, but subject to the following sentence.
Station Two Subsidiary shall, following the Effective Date, reimburse Big Rivers
for thirty (30) percent of all such property Taxes described in the immediately
preceding sentence that are actually paid by Big Rivers and allocable to the
period beginning on the Effective Date and ending on the date of termination or
expiration of this Agreement; provided, however, that the thirty (30) percent
sharing ratio shall be changed to 43.64% for the year 2011 and to 52.54% as of
January 1, 2012 and remain at 52.54% throughout the remainder of the Term. In
the event that Big Rivers elects to reduce the Contract Limits pursuant to
Section 4.3(e) of the Power Purchase Agreement, the property Taxes sharing ratio
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shall be adjusted by multiplying Big Rivers' then applicable percentage share of
property taxes by the sum of one (1) plus the CCAP in effect on the date of
assessment of such taxes. Any adjustments to the property Tax sharing ratio made
pursuant to the preceding sentence shall be effective for taxable periods (or
portions thereof) beginning on the effective date for the Reduction in Contract
Limits set forth in Section 4.3(e) of the Power Purchase Agreement. For purposes
of this Section 17.2, property Taxes imposed on the Station Two Assets for a
taxable period shall be allocated to each day in such period on a pro rata
basis. Station Two Subsidiary shall reimburse Big Rivers for Station Two
Subsidiary's portion of such property Taxes within thirty (30) days of receiving
notice from Big Rivers showing the nature and amount of such property Taxes,
proof of Big Rivers' payment of such property Taxes, and the computation of
Station Two Subsidiary's share of such property Taxes. The allocation of
property Taxes pursuant to this Section 17.2 also shall apply to any Taxes
enacted and effective on or after the date hereof in replacement of such
property Tax.
17.3 Unidentified Asset-Related Taxes. Following the Effective Date, the
LG&E Companies shall pay when due all Taxes that are imposed upon Big Rivers
and/or Station Two Subsidiary in connection with the operation or maintenance of
the Station Two Assets that are presently the obligation of Big Rivers or
Station Two Subsidiary under applicable Law or pursuant to any of the Station
Two Contracts and that are not otherwise described in Section 17.1 or 17.2 of
this Agreement; provided, however, that this Section 17.3 shall not apply to (i)
any income or franchise Tax (except to the extent that LEC assumes an income or
franchise Tax pursuant to the Tax Indemnification Agreement) or (ii) any utility
gross receipts license Tax.
17.4 Change of Tax Law. Except as provided in Sections 17.1 and 17.2
concerning replacement Taxes, Big Rivers shall pay any Tax imposed on Big Rivers
that is attributable to a change in law or regulation (or any interpretation
thereof) after the Effective Date to the extent that the amount of such Tax does
not exceed the amount of the Tax that would have been imposed on Big Rivers if
the Phase II Assignment Term (rather than the Phase I Subcontract Term) had been
in effect as of the Effective Date. The LG&E Companies shall pay any Tax imposed
on Big Rivers following the Effective Date that is attributable to a
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change in law or regulation (or any interpretation thereof) after the Effective
Date to the extent that such Tax exceeds the amount of the Tax that would have
been imposed on Big Rivers if the Phase II Assignment Term (rather than the
Phase I Subcontract Term) had been in effect as of the Effective Date. Nothing
in this Section 17.4 shall relieve Big Rivers of its obligations under Section 8
of the Power Purchase Agreement or Big Rivers or any LG&E Company of their
respective obligations under Section 8.17 or Section 9.10 of this Agreement.
17.5 Other Taxes. Any Tax imposed on an LG&E Company or Big Rivers during
the Term of this Agreement and that is not specifically allocated between those
Parties (either by direct payment or reimbursement) pursuant to the Station Two
Contracts, Sections 17.1, 17.2, 17.3, or 17.4 of this Agreement, Article 11 of
the Participation Agreement, Section 8 of the Power Purchase Agreement, or the
Tax Indemnification Agreement, shall be borne by the Party that is primarily
obligated under governing Laws, to pay such Tax.
17.6 Kentucky Tax Rulings. At the request of Big Rivers or the LG&E
Companies, each of Big Rivers and the LG&E Companies shall request jointly and
in writing, that the KRC determine, or issue a certificate or other statement to
each of those Parties to the effect, that an exemption and/or a reduced rate of
property Tax are allowable with respect to all or any portion of the Station Two
Assets owned, leased and/or used by Big Rivers or Station Two Subsidiary in the
operation and maintenance of Station Two or the Reid Station for any taxable
period; provided, however, that, if the KRC determines that an exemption or
reduced rate of Tax is not allowable for a taxable period with respect to all or
any portion of the Station Two Assets, then the Parties shall also request that
the KRC determine the amount of such exemption or rate and advise Big Rivers and
the LG&E Companies of the nature and computation of the amount of Tax in
controversy. Big Rivers and the LG&E Companies shall have the right to
participate in the preparation and filing of any and all written and oral
submissions to the KRC for purposes of obtaining the determination, certificate,
and/or statement described in this Section 17.6, and each of those Parties shall
have the right to join in all negotiations and communications with the KRC for
such purpose. Each of Big Rivers and the LG&E Companies shall cooperate fully
and shall execute all applicable documents and
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necessary waivers of confidentiality of Tax and other information that is or may
be reasonably related to the subject matter of the determinations, statements,
and certificates described in this Section 17.6.
17.7 Appeal of Tax Assessment. Except as otherwise provided in the Tax
Indemnification Agreement, each Party shall have the right to appeal and contest
the assessment of any Tax that is or may be imposed upon such Party by operation
of law or that is allocated to such Party (either by direct payment or
reimbursement) pursuant to this Section 17, entitled "Taxes," Section 8 of the
Power Purchase Agreement or any other provision of this Agreement or any Station
Two Contract.
18. MISCELLANEOUS.
18.1 Miscellaneous Disclaimers. The respective covenants of the Parties
set forth in this Agreement are several and not joint and, except as expressly
provided otherwise, (a) the covenants of Big Rivers or Henderson made solely to
the LG&E Companies are for the benefit of only the LG&E Companies, (b) Big
Rivers and Henderson shall have no obligation or liability under this Agreement
to each other for a breach of any covenant made by either of them solely to any
LG&E Company set forth in this Agreement, and (c) except as expressly provided
in Sections 15 and 13.11 of this Agreement, this Agreement may not be assigned
to, or relied upon by, anyone other than the Parties hereto and WKEC.
18.2 No General Obligations of the City. Nothing herein contained shall
constitute general obligations of the City within Kentucky Constitutional
restrictions on such obligations. The obligations herein imposed on the City
shall be borne entirely from revenues or other legally available funds or
resources of Henderson's electric light and power system.
18.3 Notices. All notices, consents, waivers, demands, requests, payments
and other communications required or permitted to be made or given under this
Agreement by a Party to one or more other Parties, or under any other Operative
Document, must be in writing, and shall be addressed respectively as follows:
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For the City and HUC, addressed to:
City of Henderson, Kentucky
City Building
P.O. Box 716
Henderson, Kentucky 42420
Phone No.: (502) 831-1200
Kendel D. Bryan
Henderson Municipal Power & Light
P.O. Box 8
100 Fifth Street
Henderson, Kentucky 42420
Facsimile No.: (502) 826-9650
With a copy to:
Robert E. Ferdon, Esq.
O'Melveny & Myers LLP
Attorney at Law
Citicorp Center
153 East 53rd Street
54th Floor
New York, New York 10022-4611
Phone No.: (212) 326-2000
Facsimile: (212) 326-2061
Charles B. West, Esq.
The Law Firm Of Sheffer Hoffman
300 First Street
Henderson, Kentucky 42420
For Big Rivers, addressed to:
Michael Core
David Spainhoward
Big Rivers Electric Corporation
201 Third Street
Post Office Box 24
Henderson, Kentucky 42420
Phone No. (502) 827-2561
Facsimile: (502) 827-2558
With a copy to:
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James M. Miller, Esq.
Sullivan, Mountjoy, Stainback & Miller, P.S.C.
100 St. Ann Building
Post Office Box 727
Owensboro, Kentucky 42302-0727
Phone No. (502) 926-4000
Facsimile: (502) 683-6694
For Station Two Subsidiary, LEM, WKEC, LEC, or their Affiliates,
addressed to the Chief Operating Officer of such entity:
c/o LG&E Energy Corp.
220 West Main Street
Louisville, KY 40202
Phone: (502) 627-3665
Facsimile: (502) 627-2585
With a copy to:
John R. McCall, Esq.
Executive Vice President, General Counsel
and Secretary
LG&E Energy Corp.
220 West Main Street
Louisville, KY 40202
Phone: (502) 627-3665
Facsimile: (502) 627-2585
Daniel E. Fisher, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202-3197
Phone No. (502) 587-3620
Facsimile: (502) 587-3695
Each Party may change such address by notice given to the other Parties in the
manner set forth above. All such notices shall be effective, and all such other
consents, waivers, demands, requests, payments and other communications shall be
deemed to have been
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delivered (i) if sent by messenger or courier service, when delivered, (ii) if
sent by U.S. Mail, three days after posting, assuming it is then or thereafter
actually delivered to the relevant address in the ordinary course, and (iii) if
sent by facsimile, when sent (provided that, if sent by facsimile, a duplicate
copy thereof is promptly sent by U.S. Mail which is actually delivered to the
relevant address in the ordinary course); provided that if a provisions hereof
specifies that a period shall be measured by a fixed number of days after
receipt of a notice, notice shall be effective when received, irrespective of
the means of delivery.
18.4 Waiver. The failure of a Party to insist on the strict performance of
any provision of this Agreement or to exercise any right, power or remedy upon a
breach of any provision of this Agreement shall not constitute a waiver of any
provision of this Agreement or limit the Party's right thereafter to enforce any
provision or exercise any right.
18.5 Amendment and Modification. No amendment or modification of this
Agreement shall be valid unless made in writing and duly executed by the
Parties.
18.6 Governing Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the Commonwealth of Kentucky.
18.7 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Parties and their respective successors and permitted assigns.
18.8 Counterparts. This Agreement may be executed in counterparts, each of
which taken together shall constitute a single Agreement.
18.9 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall to any extent be held in any
proceeding to be invalid, illegal or unenforceable, the remainder of this
Agreement, or the application of such provision to such Persons or circumstances
other than those to which it was held to be invalid, illegal or
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unenforceable, shall not be effected thereby, and shall be valid, legal and
enforceable to the fullest extent permitted by law, but only if and to the
extent such enforcement would not materially and adversely frustrate the
Parties' objectives as expressed herein. Notwithstanding the foregoing, the
Parties hereto shall endeavor in good faith and negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
18.10 Headings. The headings in this Agreement are included for purposes
of convenience only and should not be considered a part of this Agreement in
construing or interpreting any provision hereof.
18.11 Entire Agreement. This Agreement, including all attached Exhibits
and Schedules, together with the Station Two Contracts contain the entire and
final understanding of the Parties and supersedes all prior agreements and
understandings between the parties related to the subject matter of those
agreements.
18.12 Construction. This Agreement was the product of negotiations between
the Parties and, therefore, the rule of contract construction that an agreement
shall be construed against the drafter shall not be applied to this Agreement.
18.13 Production of Operative Documents. At or prior to the Closing, the
LG&E Companies and Big Rivers shall deliver to Henderson an executed copy of all
of the Operative Documents.
18.14 Zero Capacity Allocations. Notwithstanding anything contained
elsewhere in this Agreement or any Station Two Contract to the contrary, the
consummation of the transactions contemplated in this Agreement (including
without limitation, the Phase II Assignment) shall not, in and of themselves, be
deemed to cause Big Rivers' allocation of Capacity from Station
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Two to be reduced to zero, it being expressly understood by the Parties that,
throughout the Term, such Capacity from Station Two shall at no time be deemed
to be so reduced to zero for purposes of the Station Two Contracts unless and
until the allocation of Station Two Capacity to Big Rivers under the Station Two
Contracts and to Station Two Subsidiary under the Assigned Station Two Contracts
shall have each been reduced to zero.
18.15 Continuation of Agreement.
(a) Big Rivers recognizes and acknowledges that the RUS, the Members and
the LG&E Companies have in good faith entered into the transactions to which
this Agreement and the other Operative Documents relate, and have agreed to
consummate those transactions, in specific reliance upon the fact that the
transactions contemplated in the Operative Documents shall continue for the
stated Term (i.e., approximately 25 years). Big Rivers has informed the RUS, the
Members and the LG&E Companies that Big Rivers has in good faith entered into
this Agreement in reliance upon and with the specific intent of continuing this
transaction through the stated term (i.e., approximately 25 years). In order to
enable Big Rivers to comply with certain requirements of the KPSC related to
approval of its proposed rates, and to provide additional assurances of its good
faith and commitment, and without in any way intending to reduce or otherwise
avoid abiding by this Agreement throughout its stated Term (i.e., approximately
25 years), and without any implication by any of the Parties that Big Rivers is
or would be entitled to attempt to reduce or otherwise avoid the terms of this
Agreement, Big Rivers additionally commits and undertakes that for the period
prior to January 1, 2012, in the event of any filing by Big Rivers of a petition
or similar filing for bankruptcy or reorganization or arrangement under any
federal or state bankruptcy or insolvency or similar Law, or the commencement of
involuntary proceedings against Big Rivers under any such Law, neither Big
Rivers nor its successors or assigns, if any, shall file, direct the filing of,
join in, consent to, or otherwise support any other party to any such
proceedings in a motion, complaint, pleading, statement, testimony or otherwise
make any attempt to terminate, reject or modify this Agreement (other than in
accordance with its terms) under Section 365 of the United States Bankruptcy
Code, 11 U.S.C. ss. 101, et seq., as it
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subsequently may be amended, modified or supplemented or any other similar,
applicable federal or state bankruptcy or insolvency laws (the "Insolvency
Assurance"). Thereafter, Big Rivers shall continue the Insolvency Assurance
unless and until the RUS, in the exercise of its discretion, were to consent to
any of the foregoing. In all events and throughout the Term, each of the RUS,
the Members and the LG&E Companies shall be entitled to rely upon the specific
provisions of this Agreement, including but not limited to the stated Term
(i.e., approximately 25 years), and shall be entitled to take whatever actions
may prove to be necessary or appropriate to maintain the benefit of their
bargain in the event that Big Rivers ever attempts to cause the rejection or
termination of this Agreement (other than in accordance with its terms) in a
subsequent bankruptcy or reorganization proceeding or otherwise.
(b) The LG&E Companies recognize and acknowledge that the RUS, the Members
and Big Rivers have in good faith entered into the transactions to which this
Agreement and the other Operative Documents relate, and have agreed to
consummate those transactions, in specific reliance upon the fact that the
transactions contemplated in the Operative Documents shall continue for the
stated Term (i.e., approximately 25 years). The LG&E Companies have informed the
RUS, the Members and Big Rivers that the LG&E Companies have in good faith
entered into this Agreement in reliance upon and with the specific intent of
continuing this transaction through the stated term (i.e., approximately 25
years). In order to facilitate the approval of the proposed rates of Big Rivers
and to provide additional assurances of their good faith and commitment, and
without in any way intending to reduce or otherwise avoid abiding by this
Agreement throughout its stated Term (i.e., approximately 25 years), and without
any implication by any of the Parties that any of the LG&E Companies is or would
be entitled to attempt to reduce or otherwise avoid the terms of this Agreement,
the LG&E Companies additionally commit and undertake that for the period prior
to January 1, 2012, in the event of any filing by any of the LG&E Companies of a
petition or similar filing for bankruptcy or reorganization or arrangement under
any federal or state bankruptcy or insolvency or similar Law, or the
commencement of involuntary proceedings against any of the LG&E Companies under
any such Law, none of the LG&E Companies or their respective successors or
assigns, if any, shall file, direct the filing of, join in, consent to, or
otherwise support any other party
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to any such proceedings in a motion, complaint, pleading, statement, testimony
or otherwise make any attempt to terminate, reject or modify this Agreement
(other than in accordance with its terms) under Section 365 of the United States
Bankruptcy Code, 11 U.S.C. ss. 101, et seq., as it subsequently may be amended,
modified or supplemented or any other similar, applicable federal or state
bankruptcy or insolvency laws (the "Insolvency Assurance"). Thereafter, the LG&E
Companies shall continue the Insolvency Assurance unless and until the RUS, in
the exercise of its discretion, were to consent to any of the foregoing. In all
events and throughout the Term, each of the RUS, the Members and Big Rivers
shall be entitled to rely upon the specific provisions of this Agreement,
including but not limited to the stated Term (i.e., approximately 25 years), and
shall be entitled to take whatever actions may prove to be necessary or
appropriate to maintain the benefit of their bargain in the event that any of
the LG&E Companies ever attempts to cause the rejection or termination of this
Agreement (other than in accordance with its terms) in a subsequent bankruptcy
or reorganization proceeding or otherwise.
(c) Nothing in this Section 18.15 shall modify, reduce or diminish: (i)
the rights of the RUS under the New RUS Loan Documents (as defined in that
certain New RUS Loan Agreement between Big Rivers and the RUS to be executed and
delivered on the Effective Date; (ii) the rights of the Mortgagees under the New
RUS Mortgage (as defined in said New RUS Loan Agreement); including without
limitation, any right to withhold consent with respect to any sale or
disposition of Big Rivers' property except on terms acceptable to the RUS and/or
such mortgages; but subject in the case of (i) or (ii) above, in all cases to
the Non-Disturbance Agreement.
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the
date first written above.
CITY OF HENDERSON, KENTUCKY
By: /s/ Glenn L. Johnson
----------------------------------
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Title: Mayor
-------------------------------
("City")
CITY OF HENDERSON UTILITY
COMMISSION
By: /s/ B.E. Higginson
----------------------------------
Title: Chairman
-------------------------------
("HUC")
BIG RIVERS ELECTRIC CORPORATION
By: /s/ Michael H. Core
----------------------------------
Title: President and CEO
-------------------------------
("Big Rivers")
WKE STATION TWO INC.
By: /s/ George Basinger
----------------------------------
Title: President
-------------------------------
("Station Two Subsidiary")
LG&E ENERGY MARKETING INC.
By: /s/ John R. McCall
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Title: Vice President and Secretary
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("LEM")
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WESTERN KENTUCKY ENERGY CORP.
By: /s/ George Basinger
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Title: President
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("WKEC")
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