1
EXHIBIT 10.01
LONG TERM GAS AGREEMENT
This Agreement is made this 12th day of April 2001 between Midland Cogeneration
Venture Limited Partnership ("MCV" or "Buyer") and Engage Energy America LLC
("Seller") for the purpose of entering into a long-term gas supply arrangement
on the terms and conditions that follow. In this Agreement, Seller and Buyer may
also be referred to individually as "Party" or collectively as "Parties."
1. Definitions. The following terms when used in this Agreement shall have
the following meanings:
1.1. "Agreement" shall mean this Agreement and all Exhibits hereto.
1.2. "Btu" shall mean one (1) British Thermal Unit, the amount of
heat required to raise the temperature of one (1) pound of
water one (1) degree Fahrenheit at sixty (60) degrees
Fahrenheit. BTU is measured on a dry basis.
1.3. "Business Day" shall mean any Day other than a Day on which
banks in the U.S.A. are allowed by law to be closed.
1.4. "Contract Year" shall mean any calendar year during the term
of this Agreement.
1.5. "Cubic Foot of Gas" shall mean the volume of Gas contained in
one (1) cubic foot of space at a pressure of fourteen and
seventy-three hundredths (14.73) dry Psia, at a temperature of
sixty degrees (60 (degrees)) Fahrenheit.
1.6. "Day" shall mean a period of twenty-four (24) consecutive
hours (23 hours when changing from Standard to Daylight time
and 25 hours when changing back to Standard time) beginning
and ending at 9:00 a.m. Central clock time.
1.7. "Disputed Amount" shall have the meaning set forth in Section
5.1.2.
1.8. "Gas" shall mean any mixture of hydrocarbon and noncombustible
gases in a gaseous form consisting primarily of methane and
includes natural Gas produced from gas xxxxx (gas well gas),
Gas which immediately prior to being produced from a reservoir
is in solution with crude oil or dispersed in an intimate
association with crude oil or in contact with crude oil across
a gas-oil contact (casinghead gas), or residue gas resulting
from the processing of either or both casinghead gas and gas
well gas.
1.9. "Material Adverse Change" shall mean: (i) with respect to
Guarantor, having consolidated net worth of less than
$800,000,000 ($US) as presented in its financial statements
and having a Standard & Poor's rating lower than BBB-; (ii)
with respect to MCV having less than $60 million Cash Reserves
as reported in the Liquidity Section of Midland Cogeneration
Venture's annual 10K report and quarterly 10Q report; and
(iii) with respect to Midland Funding Corp. 1 having a
Standard & Poor's rating lower than BBB-. Cash Reserves equal
the total Cash Reserves as reported less the funds restricted
for rental payments (presently $137,000,000) and funds
restricted for management nonqualified plans (presently
$1,800,000).
1.10. "Mcf" shall mean one thousand (1,000) cubic feet of Gas.
1.11. "MMBtu" shall mean a quantity of Gas equal to one million
(1,000,000) Btu, which is equivalent to one (1) dekatherm.
1.12. "Month" shall mean the period beginning at 9 a.m. Central
clock time on the first Day of any calendar month and ending
at 9 a.m. Central clock time on the first Day of the next
succeeding calendar month.
1.13. "Point of Delivery" shall mean the point where Seller delivers
Gas to Buyer as set forth in Exhibit A of this Agreement.
1.14. "Prime Rate" shall mean the fluctuating per annum lending rate
of interest from time to time published by CITIBANK, N.A., or
its successor, for its best commercial customers.
1.15. "Psia" shall mean pounds per square inch absolute.
1.16. "Transporter" shall mean any pipeline transporting Gas subject
to this Agreement as referenced in Exhibit A.
1.17. "Undisputed Amount" shall have the meaning set forth in
Section 5.1.2.
Page 1
2
2. Quantity. Seller agrees to deliver and sell and MCV agrees to receive
and purchase 3,500 MMBtu/Day, on a firm basis, in accordance with the
terms and conditions of this Agreement.
3. Price.
3.1. The price to be paid by Buyer to Seller for all quantities of
Gas delivered hereunder inclusive of all taxes and other
adjustments or costs not provided for herein shall be $5.43
per MMBtu for all Gas delivered to the Point of Delivery.
3.2. Seller shall be responsible for all taxes prior to the Point
of Delivery. MCV shall be responsible for all taxes at and
after the Point of Delivery.
4. Term. Deliveries of Gas shall commence on May 1, 2001 and continue
through March 31, 2003.
5. Billing, Payments and Audit.
5.1. Billing and payment procedures are as follows:
5.1.1. After the delivery of Gas has commenced hereunder,
Seller shall, on or about the fifteenth (15) Day of
each month, render to Buyer a statement showing the
estimated (or actual if available) quantity of Gas
delivered at each Point of Delivery during the prior
month and the amounts due Seller hereunder. Seller
shall also render to Buyer, if necessary, a separate
statement showing the adjustment, if any, required to
conform the prior month's estimated and actual
deliveries and prices. Payment of the amount due
based on such statements shall be made by Buyer to
Seller by wire transfer with immediately available
funds the later of (a) ten (10) Days following
receipt of such statement or (b) the twenty-fifth
(25th) Day of the month. If the due date falls on a
Day that is not a Business Day, then payment shall be
made on the next Business Day. If Buyer bills Seller,
the same procedure shall be followed as set forth in
this Section 5.1.1.
5.1.2. In the event that either Party shall in good faith
dispute any portion of the amount shown in the other
Party's statement (hereinafter called the "Disputed
Amount"), the disputing Party shall (a) notify the
other Party in writing as to the Disputed Amount, and
(b) pay the remaining undisputed portion of the other
Party's statement when due (hereinafter, the
"Undisputed Amount").
5.1.3. If it is determined that the failure to pay any
Disputed Amount of any statement was not justifiable,
interest on such Disputed Amount shall accrue at a
rate per annum equal to the Prime Rate plus one
percent (1.0%) from the time payment would have been
due until the time payment is made, but in no event
shall the interest on such unpaid portion exceed the
applicable lawful nonusurious rate of interest.
Payment of any previously unpaid Disputed Amount
shall be credited first to all interest accrued and
then to principle.
5.2. Each Party hereto shall have the right, upon reasonable
written notice, during normal business hours and at its own
expense to examine and to obtain copies of the relevant
portion of the books and records of the other Party to the
extent necessary to verify the accuracy of any statement,
charge, computation, or demand made under or pursuant to this
Agreement. Such examination shall be conducted no more than
once in a twelve-month period. Any error or discrepancy in
statements furnished pursuant to this Agreement shall be
promptly reported to Seller or Buyer, as applicable, and
proper adjustment thereof shall be made within thirty (30)
Days after final determination of the correct volumes or
amounts involved; provided, however, that if no such errors or
discrepancies are reported to Seller or Buyer, as applicable,
within two (2) years from the end of the calendar year in
which such errors or discrepancies occurred, the same shall be
conclusively deemed to be correct.
Page 2
3
6. Deliveries.
6.1. Exhibit A hereto sets forth the Point of Delivery under this
Agreement. Seller shall not use any other point to deliver Gas
without Buyer's written consent, which Buyer may grant or
withhold in its sole discretion.
6.2. To the extent that the procedures for the delivery of Gas set
forth herein conflict with the rules and tariffs of any
Transporter, the Transporter's rules and tariffs will control
and the Parties shall cooperate fully with each other in
complying with such rules and tariffs.
7. Third Party Gas. Buyer understands and agrees the Gas delivered
hereunder may be supplied either from Seller's Gas or from Gas
purchased by Seller from third parties; provided however, if such Gas
is purchased from third parties, Seller shall be solely responsible for
the payment of the purchase price of Gas to such third parties.
8. Title. Title and risk of loss to Gas delivered hereunder shall pass
from Seller to Buyer at the Point of Delivery.
9. Delivery Pressure. Seller shall be required to deliver or cause
delivery of the Gas to the Point of Delivery and for delivering such
Gas at a pressure sufficient to effect such delivery. Notwithstanding
anything to the contrary herein, Seller shall have the right but not
the obligation to install compression to effect deliveries of Gas
hereunder.
10. Quality of Gas. The Gas to be delivered by Seller hereunder at the
Point of Delivery shall comply with the quality, heat, and pressure
requirements of the receiving Transporter.
11. Measurement and Tests of Gas. The quantity and quality of Gas delivered
to the Buyer's account at the Point of Delivery shall be determined in
accordance with the established standard terms and conditions
applicable to the Transporter's gas transportation contracts.
12. Warranty of Title. Seller hereby warrants (i) title to all Gas sold
hereunder or the right to sell such Gas, (ii) that it has the right to
sell same to Buyer, and (iii) that all such Gas shall be free from any
and all liens and adverse claims of any nature whatsoever. Seller
agrees to indemnify and hold Buyer harmless, including but not limited
to, all costs, damages, and expenses (including Buyer's reasonable
attorney fees) incurred by Buyer in defending against any liens or
adverse claims of any nature whatsoever, including but not limited to,
third parties from whom Seller purchased Gas as permitted in Section 7,
in addition to any other remedies Buyer may have hereunder or at law.
13. Credit Worthiness.
13.1. This Agreement is subject to Seller providing, for the term of
this Agreement, a parental guaranty to Buyer in the form
attached hereto as Exhibit "B." SUCH GUARANTY SHALL BE
EFFECTIVE AS OF THE DATE OF THIS AGREEMENT. If the Seller's
guarantor is merged, acquired or otherwise controlled by
another entity and no longer has a long-term credit rating of
at least BBB-, Seller will cause a substitute guaranty in the
same form without change to any material obligation and in the
same amount to be issued by an affiliated entity with a
minimum credit rating of BBB-.
13.2. At any time, and from time to time during the term of this
Agreement (and notwithstanding whether an Event of Default has
occurred as defined in Section 21) but not more than once in
any seven (7) Day period, if the Termination Payment (as such
term is defined in Section 13.5) should exceed $5 million with
respect to Buyer and $5 million with respect to Seller (the
"Security Threshold"), then either Party may request the other
Party to provide additional Performance Assurance in an amount
equal to the amount by which the Termination Payment exceeds
the Security Threshold (rounding upwards for any fractional
amount to the next $100,000). The Performance Assurance shall
be delivered within fourteen (14) calendar days of the date of
the request. If such additional Performance Assurance is not
received by the requesting Party within fourteen (14) calendar
days, then the requesting Party, in addition to any other
remedy available, may immediately suspend performance with
respect to the quantities associated with the amount in excess
of the Security Threshold, plus any
Page 3
4
Performance Assurance already in place, and cover such lost
supply or market, as the case may be. Incremental gas costs
(as referenced in Section 17 with respect to either Buyer or
Seller, as applicable) incurred by the covering Party shall be
recoverable from the other Party. Such suspension will be
implemented on a pro rata basis to a level at which assurances
have been provided. In addition, a failure to provide
Performance Assurance as requested shall constitute an Event
of Default under Section 21.
13.3. Either Party, at its sole expense, may request the other Party
to reduce its Performance Assurance then in place if the
Termination Payment (with respect to this Agreement) reverts
back to an amount less than or equal to the sum of the
Performance Assurance and the Security Threshold then in place
(rounding upwards for any fractional amount to the next
$100,000). Such request for reduction shall be no more
frequently than weekly, with respect to Letters of Credit and
guaranties, and daily, with respect to cash. The consent to
such request(s) shall not be unreasonably withheld.
13.4. Either Party may at any time make a calculation of the
Termination Payment and submit same to the other Party for
review. If within thirty (30) Days of the submission of the
value of the Termination Payment from one Party to the other,
agreement has not been reached by the Parties as to the amount
of the Termination Payment, the determination of the amount of
the Termination Payment shall be submitted to arbitration as
provided for in Section 18 of this Agreement. Notwithstanding
the submission of the determination of the amount of the
Termination Payment to arbitration, all requirements in
Section 13 of this Agreement shall remain in effect.
13.5. With respect to this Section 13: (a) "Performance Assurance"
means collateral in the form of either cash or Letters of
Credit. The requesting Party may also accept a parental
guaranty or other collateral deemed sufficient by the
requesting Party. If the collateral is in the form of cash,
then such cash shall be placed in a segregated,
interest-bearing escrow account on deposit with a major U.S.
commercial bank having a credit rating of at least "A-" from
Standard and Poor's or "A3" from Xxxxx'x (interest to accrue
to the Party posting the collateral); (b) "Letter of Credit"
means one or more irrevocable, transferable standby letters of
credit from a major U.S. commercial bank or foreign bank with
a U.S. office having a credit rating of at least "A-" from
Standard & Poor's or "A3" from Xxxxx'x; (c) "Termination
Payment" means the amount by which the requesting Party shall
aggregate Gains, Losses, and Costs (as those terms are defined
in Section 21.2.5 with respect to this Agreement) into a
single net amount. The Termination Payment shall include all
amounts owed but not yet paid by one Party to the other Party,
whether or not such amounts are then due, for performance
already performed pursuant to this Agreement.
14. Right to Terminate Agreement.
14.1. In addition to any other remedy of Buyer under law or provided
under this Agreement, Buyer shall have the right at its
election to terminate this Agreement upon twenty (20) Days
written notice to Seller if Seller for any reason other than:
(i) Force Majeure with a duration of less than sixty (60)
days, (ii) Buyer's failure to take, or (iii) failure by Buyer
to pay any Undisputed Amounts, fails, over a period of at
least sixty (60) Days, to deliver an average of ninety percent
(90%) of the agreed quantity, and provided further, that such
failure occurred not more than one hundred forty (140) Days
immediately preceding the giving of such notice of
termination. Seller shall have twenty (20) Days after receipt
of such cancellation notice to cure any failure, in which case
Buyer's cancellation is null and void, and this Agreement
shall remain in full force and effect.
14.2. In addition to the other remedies of Seller under law or
provided under this Agreement, Seller shall have the right at
its election to terminate this Agreement upon twenty (20) Days
written notice to Buyer if Buyer for any reason other than:
(i) Force Majeure with a duration of less than sixty (60)
days, (ii) Seller's failure to deliver, or (iii) failure by
Seller to pay any Undisputed Amounts, fails, over a period of
at least sixty (60) Days, to take a volume of Gas not less
than an average of ninety percent (90%) of the agreed
quantity, and provided further, that such failure occurred not
more than one hundred forty (140) Days immediately preceding
the giving of such notice of termination. Buyer shall have
twenty (20) Days after receipt of such
Page 4
5
cancellation notice to cure any failure, in which case
Seller's cancellation is null and void, and this Agreement
shall remain in full force and effect.
14.3. Notwithstanding Section 21.1.3, in the event of an on-going
Force Majeure continuing sixty (60) days or longer, in
addition to any other remedy under law or provided under this
Agreement, then such event of Force Majeure may be treated as
an Event of Default, and the Party who did not claim such
Force Majeure shall have the additional rights of a
Non-Defaulting Party as enumerated under Section 21.2.
15. Assignment.
15.1. The terms, covenants and conditions hereof shall be binding on
the Parties hereto and on their successors and permitted
assignees.
15.2. Either Party may assign its interest under this Agreement with
the consent of the other Party, which consent shall not be
unreasonably withheld, to an affiliate or any company that
shall succeed, by merger or consolidation, to substantially
all of its assets. In the event of any such assignment, such
successor shall be entitled to the rights and shall be subject
to the obligations of its predecessor. Seller acknowledges
that pursuant to a certain Gas Backup Agreement among
Consumers Energy Company (formerly Consumers Power Company),
The Dow Chemical Company ("Dow"), and Midland Cogeneration
Venture Limited Partnership dated January 27, 1987, Buyer may
be required to make an assignment to Dow of certain rights
under this Agreement. Seller specifically agrees to accept
such assignments, if any, made by Buyer to Dow in accordance
with the aforementioned Gas Backup Agreement; provided,
however, that such assignment shall not relieve Buyer of its
obligations under this Agreement absent Seller's written
consent.
15.3. Except as provided above, neither Party shall assign this
Agreement without the prior consent of the other Party, which
consent shall not be unreasonably withheld. Nothing herein
contained shall prevent or restrict either Party from
pledging, granting a security interest in, or assigning as
collateral all or any portion of such Party's interest to
secure any debt or obligation of such Party under any
mortgage, deed of trust, security agreement, or similar
instrument.
15.4. Either Party desiring to make an assignment for which it has
the right pursuant to the foregoing may upon request obtain a
written consent within sixty (60) Days to such assignment from
the other Party evidencing its consent.
16. Notices. All Notices required hereunder may be sent by facsimile or
mutually acceptable electronic means, a nationally recognized overnight
courier service, first class mail, or hand delivered to the addressee
as provided below or at such other address as either Party may from
time to time specify in writing to the other Party. Any notice,
request, demand, or statement given in writing or required to be given
in writing by the terms of this Agreement shall be deemed given when
received on a Business Day by the addressee. In the absence of proof of
the actual receipt date, the following presumptions will apply. Notices
sent by facsimile shall be deemed to have been received upon the
sending party's receipt of its facsimile machine confirmation of
successful transmission, if the day on which such facsimile is received
is not a Business Day or is after five p.m., recipient's time, on a
Business Day, then such facsimile shall be deemed to have been received
on the next following Business Day. Notice by overnight mail or courier
shall be deemed to have been received on the next Business Day after it
was sent or such earlier time as is confirmed by the receiving party.
Notice via first class mail shall be considered delivered two Business
Days after mailing.
TO SELLER:
Invoices: Engage Energy America LLC
Attn: Vice President Structured Gas, Midwest
0000 Xxxx Xxxxxx Xxxxx 0000; Xxxxxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Other Notices: Engage Energy America LLC
Attn: Vice President Structured Gas, Midwest
0000 Xxxx Xxxxxx Xxxxx 0000; Xxxxxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Page 5
6
Wire Transfer: BANK: BankOne N.A., Chicago, IL
ACCT: 10-51051
ABA: 000000000
TO BUYER:
Invoices: Midland Cogeneration Venture Limited Partnership
Attn: Gas Accounting
000 Xxxxxxxx Xxxxx; Xxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Other Notices: Midland Cogeneration Venture Limited Partnership
Attn: Contract Administration
100 Progress Place; Xxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Wire Transfer: BANK: U.S. Bank Trust, N.A., Minneapolis, MN
ACCT: 180121167365
ABA: 000000000
DETAILS: MI Clearing 47300196 - FBO MCV 76608640
Gas nomination notices will be in accordance with the terms and
conditions applicable to Transporter.
17. Remedies. In the event Seller fails to deliver the daily quantities for
reasons not otherwise excused by Force Majeure, Seller shall
be responsible for any incremental gas costs incurred by MCV in
replacing such Gas. MCV agrees to use commercially reasonable efforts
to purchase replacement Gas at the lowest available price. Seller's
obligation to pay MCV for incremental replacement Gas costs (and any
transportation penalties or transportation demand charges resulting
from unused transportation) shall be MCV's sole and exclusive remedy
for Seller's failure to deliver except as provided in Section 14. In
the event that MCV fails to take Gas for reasons not otherwise excused
by Force Majeure, MCV shall pay Seller for any incremental decrease in
the resale price of such Gas. Seller agrees to use commercially
reasonable efforts to resell such deficiency Gas at the highest
achievable price. MCV's obligation to pay Seller for such decrease (and
any transportation penalties or transportation demand charges resulting
from unused transportation) shall be Seller's sole and exclusive remedy
for MCV's failure to take Gas except as provided in Section 14.
18. Arbitration.
18.1. If the Parties are unable to resolve a disagreement arising
under this Agreement, such disagreement shall be settled by
arbitration. Either Party may then commence arbitration by
serving written notice thereof on the other Party designating
the issue to be arbitrated.
18.2. The Parties shall each appoint one (1) arbitrator and the two
(2) arbitrators so appointed will select a third arbitrator,
all of such arbitrators to be qualified by education,
knowledge, and experience to resolve the dispute or
controversy. If either Party fails to appoint an arbitrator
within ten (10) Days after a request for such appointment is
made by the other Party in writing, or if the two (2)
appointed fail to agree on a third arbitrator within ten (10)
Days after the appointment of the second, the arbitrator or
arbitrators necessary to complete a board of three (3)
arbitrators will be appointed upon application by either Party
therefore to the American Arbitration Association ("AAA").
18.3. The jurisdiction of the arbitrators will be limited to the
single issue referred to arbitration and the arbitration shall
be conducted pursuant to the guidelines set forth by the AAA;
provided however, that should there be any conflict between
such guidelines and the procedures set forth in this
Agreement, the terms of this Agreement shall control.
18.4. Within fifteen (15) Days following selection of the third
arbitrator, each Party shall furnish the arbitrators in
writing its position regarding the issue being arbitrated. The
arbitrators may, if they deem necessary, convene a hearing
regarding the issue being arbitrated. Within thirty (30) Days
following the later of the appointment of the third arbitrator
or of the hearing, if one is held, the arbitrators shall
notify the Parties in writing as to which of the two (2)
positions submitted is most consistent with the meaning of
this Agreement with respect to the issue being arbitrated. No
other position may be selected. Such decision shall be binding
on the
Page 6
7
Parties hereto and shall remain in effect until and unless
changed in accordance with the provisions of this Agreement.
18.5. Enforcement of the award may be entered in any court having
jurisdiction over the Parties.
18.6. Each Party will pay the expenses of the arbitrator selected by
or for it, and its counsel, witnesses, and employees. All
other costs of arbitration will be equally divided between the
Parties.
19. Force Majeure. The term "Force Majeure" as employed herein for all
purposes relating hereto, shall mean acts of God, strikes, lockouts, or
other industrial disturbances, acts of public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes,
hurricanes, explosions, fires, arrests and restraints of governments
and people, civil disturbance, freeze-up of Seller's xxxxx or xxxxx
from which Seller is furnishing Gas hereunder, or other temporary
inability of Seller's xxxxx or xxxxx from which Seller is furnishing
Gas hereunder to produce, mechanical breakdowns or repairs of MCV's
plant or pipeline facilities or those of any Transporter used to
transport Gas hereunder, inability of any Party hereto to obtain
necessary materials, supplies, or permits due to existing or future
rules, regulations, orders, laws, or proclamations of governmental
authorities (federal, state, or local), including both civil and
military, and any other causes whether of the kind herein enumerated or
otherwise not within the control of the Party claiming suspension and
that by the exercise of due diligence such Party is unable to prevent
or overcome. Neither party shall be entitled to the benefit of the
provisions of Force Majeure to the extent performance is affected by
any or all of the following circumstances: (i) the curtailment of
interruptible or secondary firm transportation unless primary, in-path,
firm transportation is also curtailed; (ii) the party claiming excuse
failed to remedy the condition and to resume the performance of such
covenants or obligations with reasonable dispatch; or (iii) economic
hardship, to include, without limitation, Seller's ability to sell Gas
at a higher or more advantageous price than the Contract Price, Buyer's
ability to purchase Gas at a lower or more advantageous price than the
Contract Price, or a regulatory agency disallowing, in whole or in
part, the pass through of costs resulting from this Agreement; (iv) the
loss of Buyer's market(s) or Buyer's inability to use or resell Gas
purchased hereunder
20. Transportation. Both Parties shall cooperate in an effort to eliminate
imbalances on either Party's transporting pipeline(s). The Parties
further agree that if any imbalance penalties or charges (including
cash out charges) are imposed on a Party as a result of the other
Party's failure to deliver or accept the required quantities then the
failing Party shall reimburse the nonfailing Party for such charges or
penalties.
21. Defaults and Remedies.
21.1. Event of Default. A Party shall be deemed in default under
this Agreement upon the occurrence of any one
or more of the following events ("Events of Default"):
21.1.1. The unexcused failure by a Party (the "Defaulting
Party") to make, when due, any payment required
pursuant to this Agreement if such failure is not
remedied within three (3) Business Days after written
notice of such failure is given to the Defaulting
Party by the other Party (the "Non-Defaulting Party")
and provided the payment is not a Disputed Amount as
described in Section 5.1.2;
21.1.2. Any representation or warranty made by a Party herein
shall at any time during the term of this Agreement
prove to be false or misleading in any material
respect;
21.1.3. The failure by a Party to perform, in any material
respect, any material covenant or provision set forth
in this Agreement (other than (i) the events that are
otherwise specifically covered in this Section 21.1
as a separate Event of Default and (ii) the events
that are covered in Sections 14 and 17) and such
failure is not cured within five (5) Business Days
(or such longer period of time if reasonably
necessary to cure the failure and the Defaulting
Party is making continuous and diligent efforts to
cure) after written notice thereof to the Defaulting
Party unless such failure is excused by Force
Majeure;
21.1.4. A Party (i) makes an assignment or any general
arrangement for the benefit of creditors; (ii) files
a petition or otherwise commences, authorizes, or
acquiesces in the
Page 7
8
commencement of a proceeding or cause under any
bankruptcy or similar law for the protection of
creditors or have such petition filed or proceeding
commenced against it; or (iii) has a receiver,
provisional liquidator, conservator, custodian,
trustee or other similar official appointed with
respect to it or substantially all of its assets; or
21.1.5. The failure of a Party, upon the occurrence of a
Material Adverse Change, to provide, for so long as
the Material Adverse Change is occurring, adequate
assurance as reasonably determined by the
Non-Defaulting Party but not to exceed the
Termination Amount (in the form of cash or a Letter
of Credit to be provided at the election of the
Defaulting Party or a guaranty deemed acceptable by
the Non-Defaulting Party, which such acceptance of
such guaranty may not be unreasonably withheld) of
its ability to perform all of its outstanding
obligations to the Non-Defaulting Party under this
Agreement within a period not to exceed three (3)
Business Days of the Defaulting Party's receipt, in
accordance with the notice provisions of Section 16,
of a demand therefore by the Non-Defaulting Party.
21.1.6. If a party to this Agreement becomes subject to
Bankruptcy Code proceedings, it is understood and
agreed that the other Party shall be entitled to
exercise its contractual right to liquidate as a
forward contract merchant under Section 556 of the
U.S. Bankruptcy Code.
21.2. Remedies Upon an Event of Default.
21.2.1. If an Event of Default occurs with respect to a
Defaulting Party at any time during the term of this
Agreement, the Non-Defaulting Party shall have the
right at its sole discretion for so long as the Event
of Default is continuing to (i) establish a date
(which date shall be between 5 and 10 Business Days
after the Non-Defaulting Party delivers written
notice to the Defaulting Party of its intent to
exercise the remedy described herein) ("Early
Termination Date") on which this Agreement shall
terminate, and (ii) withhold any payments due;
provided however, upon the occurrence of any Event of
Default listed in Section 21.1, as it may apply to
any Party, this Agreement in respect thereof shall
automatically terminate, without notice, and without
any other action by either Party as if an Early
Termination Date had been declared immediately prior
to such event.
21.2.2. If an Early Termination Date has been designated, the
Non-Defaulting Party shall in good faith calculate
its Gains, Losses, and Costs resulting from the
termination of this Agreement. The Gains, Losses, and
Costs shall be determined by comparing the value of
the remaining term, contract quantities, and contract
prices under this Agreement, had it not been
terminated, to the equivalent quantities and relevant
market prices for the remaining term either quoted by
a bona fide third-party offer or that are reasonably
expected to be available in the market under a
replacement contract for the balance of this
Agreement. To ascertain the market prices of a
replacement contract, the Non-Defaulting Party may
consider, among other valuations, settlement prices
of NYMEX natural gas futures contracts, quotations
from leading dealers in natural gas swap contracts,
and other bona fide third party offers, all adjusted
for the length of the remaining term and differences
in transportation. It is expressly agreed that a
Party shall not be required to enter into replacement
transactions in order to determine the Termination
Amount (as hereinafter defined.)
21.2.3. The Non-Defaulting Party shall aggregate such Gains,
Losses, and Costs with respect to the balance of this
Agreement into a single net amount ("Termination
Amount"). The Non-Defaulting Party shall provide the
Defaulting Party with a notice and statement
containing a clear identification and calculation of
the Termination Amount owed by or due to the
Defaulting Party and shall be accompanied by
sufficient information to enable the Defaulting Party
to determine the basis upon which the calculation was
made and the accuracy thereof. If the Non-Defaulting
Party's aggregate Losses and Costs exceed its
aggregate Gains, the Defaulting Party shall, within
five (5) Business Days of receipt of such statement,
pay the Termination Amount to the Non-Defaulting
Party, which amount shall bear interest at the
interest rate as set forth in Section 5.1.3 above,
from the Early Termination Date until paid. If
Page 8
9
the Non-Defaulting Party's aggregate Gains exceed its
aggregate Losses and Costs, if any, resulting from
the termination of this Agreement, the Non-Defaulting
Party shall pay such excess to the Defaulting Party
on or before the latter of: (i) twenty (20) Days
after the end of the month ending on or after the
Early Termination Date, and (ii) five (5) Business
Days after receipt by the Defaulting Party of the
Non-Defaulting Party's notice of the Termination
Amount, which amount shall bear interest at the
interest rate as set forth in Section 5.1.3 above,
from the Early Termination Date until paid.
21.2.4. If the Defaulting Party disputes the Non-Defaulting
Party's right to terminate this Agreement or
disagrees with its calculation of the Termination
Amount, in whole or in part, the Defaulting Party
shall, within three (3) Business Days of receipt of
the Non-Defaulting Party's calculation of the
Termination Amount, provide to the Non-Defaulting
Party a detailed written explanation of the basis for
such dispute or disagreement and, if the Termination
Amount is due from the Defaulting Party, shall
promptly pay to the Non-Defaulting Party such portion
thereof as is conceded to be correct. Upon receipt of
the Defaulting Party's explanation, the Parties shall
seek to resolve the issues in accordance with
mutually agreeable dispute resolution procedures.
21.2.5. As used herein in this Section 21.2, with respect to
each Party: (i) "Costs" shall mean reasonable
brokerage fees, commissions, and other similar
transaction costs and expenses reasonably incurred by
a Party either in terminating or entering into new
arrangements which replace this Agreement, and
reasonable attorney's fees, if any, reasonably
incurred in connection with enforcing its rights
under this Agreement; (ii) "Gains" shall mean an
amount equal to the present value (calculated using
the interest rate as set forth in Section 5.1.3 above
as the prevailing discount rate) of the economic
benefit (exclusive of Costs), if any, to a Party
resulting from the termination of its obligations
with respect to this Agreement, determined in a
commercially reasonable manner; and (iii) "Losses"
shall mean an amount equal to the present value
(calculated using the interest rate as set forth in
Section 5.1.3 above as the prevailing discount rate)
of the economic loss (exclusive of Costs), if any, to
a Party from the termination of its obligations, with
respect to this Agreement, determined in a
commercially reasonable manner. In no event, however,
shall a Party's Costs, Gains, or Losses include any
costs or expenses incurred by a Party in terminating
or reestablishing any arrangement pursuant to which
it has hedged its obligations under this Agreement.
22. Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED ACCORDING TO
THE LAWS OF THE STATE OF MICHIGAN.
23. Miscellaneous.
23.1. No waiver by either Seller or Buyer of any default by the
other under this Agreement shall operate as a waiver of any
future default, whether of like or different character or
nature.
23.2. The descriptive headings of particular provisions of this
Agreement are for the purpose of facilitating administration
and shall not be construed as having any substantive effect on
the terms of this Agreement.
23.3. The Parties agree to proceed with due diligence and make good
faith effort to obtain such governmental authorizations as may
be necessary to enable performance of this Agreement.
23.4. This Agreement is subject to the January 27, 1987, Gas Supply
Option between Buyer and Dow and to Dow's rights under a
certain Gas Backup Agreement with Buyer and Consumers Energy
Company (formerly Consumers Power Company) dated January 27,
1987.
23.5. If any provision of this Agreement is determined to be
invalid, void, or unenforceable by any court having
jurisdiction, such determination shall not invalidate, void,
or make unenforceable any other provision of this Agreement.
23.6. Neither Buyer nor Seller shall disclose to any third Party
(other than its partners, parents, affiliates, directors,
officers, employees, consultants, representatives, agents,
prospective purchasers, or those third parties providing
financing to it provided such persons have agreed
Page 9
10
to keep such terms confidential) any information received from
the other Party that is explicitly marked "Confidential" (such
information hereinafter referred to as "Confidential
Information"); provided however, that nothing shall be deemed
Confidential Information that:
23.6.1. is part of the public domain;
23.6.2. becomes publicly known otherwise than through an
action or inaction of the receiving Party;
23.6.3. is independently developed by the receiving Party; or
23.6.4. is required to be disclosed pursuant to any law,
rule, or regulation, or pursuant to any order of a
governmental instrumentality, provided that the Party
receiving the order shall, if feasible, notify the
other Party of any such requirement at least ten (10)
Days before compliance is required, and if so
requested by the other Party, shall use reasonable
efforts to oppose the required disclosure, as
appropriate under the circumstances, or to otherwise
make such disclosure pursuant to a protective order
or other similar arrangement for confidentiality.
23.7. This Agreement may be amended only by a written instrument
executed by the Parties hereto. This Agreement, the Guaranty
(Exhibit B attached hereto), and the Consent and Agreement
(Exhibit C attached hereto) contain the entire understanding
of the Parties with respect to the matter contained in said
documents. There are no promises, covenants, or undertakings
other than those expressly set forth in said documents.
23.8. Buyer represents and warrants that it has full and complete
authority to enter into and to perform this Agreement. Seller
represents and warrants that it has full and complete
authority to enter into and to perform this Agreement. Each
person who executes this Agreement on behalf of Buyer
represents and warrants that he or she has full and complete
authority to do so, and that Buyer will be bound thereby. Each
person who executes this Agreement on behalf of Seller
represents and warrants that he or she has full and complete
authority to do so, and that Seller will be bound thereby.
23.9. Notwithstanding anything to the contrary contained in this
Agreement, the liabilities and obligations of MCV arising out
of, or in connection with, this Agreement or any other
agreements entered into pursuant hereto shall not be enforced
by any action or proceeding wherein damages or any money
judgment or specific performance of any covenant in any such
document and whether based upon contract, warranty,
negligence, indemnity, strict liability, or otherwise, shall
be sought against the assets of the partners of MCV. By
entering into this Agreement, Seller waives any and all right
to xxx for, seek, or demand any judgment against such partners
and their affiliates, other than MCV by reason of the
performance by MCV of its obligations under this Agreement or
any other agreements entered into pursuant hereto, except to
the extent such partners are legally required to be named in
any action to be brought against MCV.
24. Limitations: NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY
FOR ANY CONSEQUENTIAL, INCIDENTAL, OR PUNITIVE DAMAGES ARISING OUT OF,
OR RELATED TO, A BREACH OF THIS AGREEMENT.
IN WITNESS WHEREOF, this Agreement is executed in multiple originals effective
as of the day and year first herein above written.
Midland Cogeneration Venture Limited Partnership Engage Energy America LLC
XxXxx X. Xxxxx Xxxx Xxxxxx
--------------------------------------- -----------
Name: XxXxx X. Xxxxx Name: Xxxx Xxxxxx
Title: Vice President Energy Supply and Marketing Title: Senior Vice President
Page 10
11
EXHIBIT A
POINT OF DELIVERY
Delivery point on the pipeline of Great Lakes Gas
Transmission Limited Partnership commonly known as Midland
Page 11
12
EXHIBIT B
GUARANTY
Guaranty dated effective as of the 12th day of April 2001, by Westcoast Energy
Inc., a Canadian Federal corporation (hereinafter referred to as the
"Guarantor"), in favour of Midland Cogeneration Venture Limited Partnership, a
Michigan limited partnership (hereinafter referred to as "Creditor").
WHEREAS, Creditor and Engage Energy Canada, L.P. and/or Engage Energy
America LLC (hereinafter referred to as "Debtor") have entered into a certain
Long Term Gas Agreement dated April 12, 2001, as may be amended from time to
time (hereinafter referred to as the "Contract"); and
WHEREAS, as a condition precedent to Creditor's entering into the
Contract, Guarantor has agreed to provide this Guaranty as provided herein;
NOW THEREFORE, for and in consideration of the premises, Guarantor
hereby agrees as follows:
1) Guaranty. With respect to the period from May 1, 2001 to March 31, 2003
during which Obligations (as defined below) are to be performed (the
"Guarantee Period"), Guarantor unconditionally guarantees to Creditor
the payment of amounts due and payable by Debtor pursuant to the
Contract (such obligations being hereinafter referred to as the
"Obligations"); provided however, that as to Obligations which
Guarantor is called upon to honor, Guarantor is and shall be entitled
to assert any and all claims, counterclaims, defenses, offsets, and
other rights which Debtor could assert against Creditor with respect to
the Obligations, except as provided in paragraph 8 below. In the event
Debtor defaults in the payment of any of the Obligations, after thirty
days written notice to Guarantor at the address provided below,
Guarantor shall make such payment or otherwise cause same to be paid.
Guarantor's Obligations are subject to its receiving from Creditor
copies of any and all notices of defaults and events of default given
by Creditor to Debtor pursuant to the Contract in the same manner and
at the same time as such notices are given by Creditor to Debtor,
except to Guarantor's address for notice set forth in this Guaranty.
2) Guaranty Maximum Amount. The Obligations so guaranteed will be for a
dollar amount up to, but in no event in excess of, ten million United
States Dollars (US $10,000,000) (the "Guarantee Maximum Amount"). The
Guarantor has the unconditional right to satisfy all performance
obligations by means of payment of a dollar amount necessary to satisfy
in full the Obligations in question.
3) Termination. This Guaranty is continuing and irrevocable at all times
during the Guarantee Period, unless terminated earlier in accordance
with the terms and conditions of the Contract; provided that,
notwithstanding such termination, the Guarantor shall remain liable for
and this Guaranty shall remain in full force and effect until all
Obligations with respect to transactions entered into prior to the
effective date of such termination, have been fully satisfied.
4) Waiver. Except as is otherwise provided in this Guaranty, Guarantor
waives notice of acceptance of the guaranty contained herein,
presentment, demand, notice of dishonor, protest and notice of protest,
and prosecution of litigation in connection with the Obligations.
5) Assignment. Neither Guarantor nor Creditor may assign its respective
rights or obligations under this Guaranty without the other's written
consent. Subject to the foregoing, this Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives.
6) Notices. Any notice or other communication required or permitted to be
given to Guarantor or Creditor under this Guaranty shall be deemed to
have been given when delivered personally or otherwise actually
received if registered or certified, postage prepaid, or one (1) day
after delivery
Page 12
13
to a nationally recognized overnight courier service, fee prepaid,
return receipt requested, if in writing and addressed as follows:
Guarantor: Westcoast Energy Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Attention: Assistant Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
Creditor: Midland Cogeneration Venture Limited Partnership
000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx
00000
Attention: Vice-President, Energy, Supply and Marketing
Telephone: (000) 000-0000
Fax: (000) 000-0000
7) Applicable Law. This Guaranty shall in all respects be governed by,
enforced under and construed in accordance with the laws of the State
of Michigan.
8) Effect of Certain Events. Guarantor agrees that Guarantor's liability
hereunder will not be released, reduced, impaired, or affected by the
occurrence of any one or more of the following events:
a) The insolvency, bankruptcy, reorganization or disability of
Debtor;
b) The renewal, consolidation, extension, modification, or
amendment from time to time of the Contract;
c) The failure, delay, waiver or refusal by Creditor to
exercise any right or remedy held by Creditor with respect
to the Contract;
d) The sale, encumbrance, transfer or other modification of
the ownership of Debtor or the change in the financial
condition or management of Debtor.
IN WITNESS WHEREOF, Guarantor and Creditor have duly executed this
Guaranty effective as of the date first written above.
WESTCOAST ENERGY INC.
-----------------------------------------------------
Name:
Title:
MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP
-----------------------------------------------------
Name: XxXxx X. Xxxxx
Title: Vice President Energy Supply and Marketing
Page 13
14
EXHIBIT C
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of April 12, 2001, made by Engage
Energy America LLC, a Delaware limited liability company, (the "undersigned") to
the parties whose names appear on Schedule A attached hereto (the "Transaction
Parties"), provides as follows:
1. Midland Cogeneration Venture Limited Partnership ("MCV"), and the
undersigned entered into the Long Term Gas Agreement dated April 12, 2001, as
the same may be amended, modified or supplemented from time to time in
accordance with the provisions thereof and of this Consent and Agreement (the
"Contract"). MCV was the owner of an approximately 1370 MW gas-fired
cogeneration facility in Midland, Michigan (the "Facility"). Pursuant to several
separate Participation Agreements, each dated as of June 1, 1990, MCV sold and
leased-back several separate Undivided Interests in the Facility under several
separate Leases each having a basic term of 25 years. The general structure of
the sale and lease-back transactions is described in more detail in Schedule B
attached hereto.
2. The undersigned hereby acknowledges notice of the sale and
lease-back transactions described in Schedule B and receipt of a photocopy of
each Participation Agreement (including Appendix A thereto but excluding other
Appendices, Exhibits and Schedules referenced therein unless specifically
requested). Photocopies of the related Transaction Documents will be made
available by MCV to the undersigned at its request for inspection. The
undersigned further acknowledges and consents to the assignments of and Liens on
the Contract pursuant to the Transaction Documents related to each sale and
lease-back transaction, and hereby agrees with each of the Transaction Parties
(provided, however, that each of the Indenture Trustees will have the rights set
forth herein only until the undersigned receives written notice from such
Indenture Trustee that the related Undivided Interest in the Facility is no
longer subject to the Lien of the Indenture to which such Indenture Trustee is a
party and the Secured Notes issued pursuant to such Indenture have been paid in
full) that:
(a) Each Owner Trustee and each related Indenture Trustee
shall be entitled, after a Lease Event of Default or an Indenture Event of
Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, to exercise any and all rights of MCV under the Contract in
accordance with the terms of the related Lease, the related Lessee Security
Agreement, the related Indentures and this Consent and Agreement, and the
undersigned will comply in all respects with such exercise by any of such
Persons.
(b) The undersigned will give each owner Trustee and Indenture
Trustee prompt written notice of any default of which it has knowledge under the
Contract which, if not cured, would give the undersigned the right to suspend
its performance under, or to terminate, the Contract. Each Owner Trustee and
Indenture Trustee (and their respective designee(s)) shall have the right,
within 10 days (or such longer period, to the extent a longer period is provided
to cure such default under the terms of the Long Term Gas Agreement dated April
12, 2001, other than defaults in respect to the nonpayment of money by MCV) of
receipt by each such Person of such written notice, to cure such default.
(c) In the event any Owner Trustee or Indenture Trustee
succeeds to MCV's rights or interests under the Contract after a Lease Event of
Default or an Indenture Event of
Page 14
15
Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, whether by foreclosure or otherwise, such Person shall have
the right to exercise all rights of MCV under such Contract, and the undersigned
will comply in all respects with such exercise by such Person.
(d) The exercise of remedies under any Lease or foreclosure of
any Indenture, whether by judicial proceedings or under power of sale contained
in such Indenture or otherwise or any conveyance from MCV or any Owner Trustee
to either related Indenture Trustee in lieu thereof, following a Lease Event of
Default or Indenture Event of Default under the Lease or the Indenture, as the
case may be, to which such Person is a party, shall not require the further
consent of the undersigned.
3. It is understood and agreed that the Contract and this Consent and
Agreement are subject to all tariffs and all Applicable Laws relating to such
services. Except as required, in the undersigned's reasonable opinion or by any
Applicable Law, the undersigned will not, without the prior written consent of
each Owner Trustee and Indenture Trustee (unless MCV delivers to the undersigned
a certificate stating that such consent is not required by the terms of the
related Transaction Documents), cancel, amend, modify or terminate or accept any
cancellation, amendment, modification or termination thereof, except if such
cancellation or termination is in accordance with the express terms of the
Contract, but subject to the rights of each Owner Trustee and Indenture Trustee
to cure any defaults and to keep the Contract in full force and effect as
provided in Section 2(b) above.
4. In the event that any Owner Trustee or Indenture Trustee (or their
respective designee(s)) assumes the Contract or otherwise elects to perform the
duties of MCV under the Contract, such Person shall not have any personal
liability to the undersigned for the performance of MCV's obligations under the
Contract, it being understood that the sole recourse of the undersigned seeking
enforcement of such obligations shall be to such Person's interest in the
Facility and the related rights and Revenues therefrom.
5. If the Contract is rejected by a trustee or debtor-in-possession in
any bankruptcy, insolvency or similar proceeding involving any Persons other
than the undersigned, or is terminated for any other reason (except as a result
of a default which was not appropriately cured as provided herein and in the
Contract), and if, (i) within 30 days thereafter, MCV (in the case of a
bankruptcy, insolvency or similar proceeding involving any Owner Trustee or
Owner Participant), any Owner Trustee, Indenture Trustee or their respective
successors or assigns so request and (ii) all payment defaults under the
Contract have been cured, the undersigned will execute and deliver to the Person
or Persons making such request in proportion to their respective interests in
the Contract a new Contract for the services remaining to be performed under the
original Contract and containing the same terms and conditions as the original
Contract (except for any requirements which have been fulfilled prior to such
termination). Such new Contract also shall be subject to the terms of this
Consent and Agreement.
6. The undersigned acknowledges that after the end of the respective
Lease Terms and during the respective Residual Terms, each Owner Trustee, as the
assignee of an Undivided Interest in the Contract pursuant to the related
Facility Agreements Assignment, shall have all of the rights and shall be liable
for all of the obligations (to the extent of its respective Undivided Interest
Percentage) on a non-recourse basis of MCV under the Contract. The undersigned
further acknowledges that MCV shall be the initial Operator of the Facility
under the Operating Agreement and further agree that the Owner Trustees may
appoint any Person to
Page 15
16
serve as a successor Operator thereunder so long as such Person satisfies the
requirements set forth in the Operating Agreement.
7. No termination, amendment or waiver of any provision of this Consent
and Agreement or consent to any departure by the undersigned from any provision
of this Consent and Agreement shall be effective unless the same shall be in
writing and signed by the Owner Trustees, the Indenture Trustees and MCV and
then such waiver or consent shall be effective only in a specified instance for
the specific purpose for which it was given.
8. This Consent and Agreement shall be governed by, and construed in
accordance with, the laws of the State of Michigan, and shall be binding on the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned by its officers thereunto duly
authorized, have duly executed this Agreement as of the day and year first above
written.
Engage Energy America LLC
By: Xxxx Xxxxxx
-----------
Title: Senior Vice President
---------------------
Seen and Agreed to this 12th day of April 2001.
MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP, as
Lessee
By: XxXxx Xxxxx
-----------
Title: Vice President Energy Supply and Marketing
Page 16
17
SCHEDULE A
MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP,
as Lessee,
FIRST MIDLAND LIMITED PARTNERSHIP,
DCC PROJECT FINANCE ONE, INC.,
EDISON CAPITAL (formerly, Mission Funding Epsilon),
XXXX ATLANTIC CREDIT CORPORATION (formerly, NYNEX Credit Company),
RESOURCES CAPITAL MANAGEMENT CORPORATION,
as the several Owner Participants,
STATE STREET BANK AND TRUST COMPANY
(formerly, Fleet National Bank, Shawmut Bank Connecticut, National Association,
and The Connecticut National Bank),
not in its individual capacity but solely as Owner Trustee
under several separate Trust Agreements,
UNITED STATES TRUST COMPANY OF NEW YORK,
not in its individual capacity but solely as Senior Indenture Trustee
under several separate Senior Trust Indenture, Leasehold Mortgage
and Security Agreements for the benefit of the Senior Secured Notes,
FIRST UNION NATIONAL BANK
(formerly, Meridian Trust Company),
not in its individual capacity but solely as Subordinated Indenture Trustee
under several separate Subordinated Trust Indenture,
Leasehold Mortgage and Security Agreements
for the benefit of the Subordinated Secured Notes, and
MIDLAND FUNDING CORPORATION I AND
MIDLAND FUNDING CORPORATION II,
as purchasers of the Secured Notes.
Page 17
18
SCHEDULE B
A. As described below, the Owner Participants named in
Schedule A acquired separate Undivided Interests in the Facility and leased such
Undivided Interests back to MCV through separate Owner Trustees acting on behalf
of separate Owner Trusts. The beneficial interest in each Owner Trust is held by
Owner Participant.
B. For purposes of this Schedule B and the Consent and
Agreement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in Appendix A to the several separate
Amended and Restated Participation Agreements (the "Participation Agreements"),
each dated as of June 1, 1990, to which MCV, an Owner Participant, the related
Owner Trustee, the related Indenture Trustees, the Funding Corporations, MDC and
the Institutional Senior Bond Purchasers named therein are parties. The rules of
usage set forth in such Appendices also shall apply hereto; provided, that when
the terms defined in Appendix A to a particular Participation Agreement as
relating only to the transaction contemplated therein are used in the plural
herein, such terms are intended to apply to the terms applicable to the
transactions contemplated by all Participation Agreements collectively. In
addition, the word "related", when used with respect to any Person, interest,
instrument, agreement or document, shall denote a Person which is a party to, or
an interest, instrument, agreement or document which is a part of, the
transaction contemplated in a particular Participation Agreement and the
Transaction Documents referred to in such Participation Agreement.
C. Pursuant to a related Participation Agreement, MCV sold and
transferred to each Owner Trustee, and each Owner Trustee acquired, subject to
Dow's Prior Rights and Consumers' Prior Rights, an Undivided Interest in the
Facility equal to the respective Undivided Interest Percentage of such Owner
Trustee (with the Undivided Interests in the Initial Assets having been sold and
transferred on the First Closing Date and the Undivided Interests in the Second
Closing Assets being sold and transferred on the Second Closing Date). Each
Owner Trustee leased its Undivided Interest in the Facility back to the Lessee
pursuant to a related Lease, under which MCV has the use, possession and control
of the Undivided Interest in the Facility for the related Lease Term (with the
Undivided Interests in the Initial Assets having been leased on the First
Closing Date and the Undivided Interests in the Second Closing Assets being so
leased on the Second Closing Date).
D. On the Second Closing Date, (i) MCV assigned to each Owner
Trustee a separate Undivided Interest in the Facility Agreements and the
Cogeneration Agreements pursuant to a related Facility Agreements Assignment and
a related Cogeneration Agreements Assignment, respectively, (ii) each Owner
Trustee assumed the obligations of MCV under the PPA and the SEPA, to the extent
of its respective Undivided Interest Percentage, pursuant to a related
Cogeneration Agreements Assignment, (iii) pursuant to the related Lease, each
Owner Trustee subassigned its Undivided Interests in the Cogeneration Agreements
and Facility Agreements back to MCV for the respective Lease Term, subject to
the Lien of the related Indentures, and MCV, as lessee, accepted such
subassignment, and (iv) MCV granted to each Owner Trustee a Lien on, without
limitation, MCV's right, title and interest in the related Undivided Interests
in the Cogeneration Agreements and the Facility Agreements (and the Revenues
therefrom) as collateral security for the related Secured Obligations pursuant
to a related Lessee Security Agreement.
Page 18
19
E. Each Owner Trustee, as provided in the related
Participation Agreement, financed a portion of the Purchase Price for its
Undivided Interest in the Facility with the proceeds of Senior Secured Notes
issued by it to Midland Funding Corporation I pursuant to a related Senior Trust
Indenture and related Subordinated Secured Notes issued by it to Midland Funding
Corporation II pursuant to a related Subordinated Trust Indenture, and Midland
Funding Corporation I and Midland Funding Corporation II purchased such Secured
Notes.
F. Each Owner Trustee granted to the related Indenture
Trustees Liens on, among other things, the Owner Trustee's Undivided Interests
in the Facility, the Cogeneration Agreements and the Facility Agreements, the
Site Interest and its interest in certain of the related Transaction Documents
as collateral security for the Owner Trustee's obligations under the related
Secured Notes.
G. On the Second Closing Date, the Funding Corporations issued
Bonds pursuant to a Senior Collateral Trust Indenture and a Subordinated
Collateral Trust Indenture, respectively, for the purpose of participating in
the payment of the Purchase Price for each Undivided Interest in the Facility
and acquiring the funds necessary to purchase the Senior Secured Notes and the
Subordinated Secured Notes pursuant to a related Participation Agreement. The
Funding Corporations secured their obligations under the Bonds by a pledge to
the related Collateral Trust Trustees of the related Secured Notes (and the
collateral security therefor) held by the Funding Corporations.
H. MCV, each Owner Trustee and Indenture Trustee and the
Working Capital Lender, on the Second Closing Date, entered into an
Intercreditor Agreement with the Collateral Agent providing for the deposit with
and disbursement of all Revenues from the Undivided Interests in the Project by
the Collateral Agent.
I. MCV and each Owner Trustee also entered into an Operating
Agreement appointing MCV as the initial operator of the Project during the
respective Residual Terms, commencing on the Operation Commencement Date (as
such term is defined in the Operating Agreement).
J. On the Second Closing Date, in order to obtain necessary
working capital for the operation of the Facility, MCV obtained the Working
Capital Line from the Working Capital Lender and granted to the Working Capital
Lender first priority Liens on MCV's right, title and interest (as subassignee
of the separate Undivided Interests in the Cogeneration Agreements and the
Facility Agreements during the respective Lease Terms) in and to (i) all Earned
Receivables, (ii) its Natural Gas Inventory and (iii) the Gas Brokering
Contract.
K. Each Owner Trustee has agreed to reassign its Undivided
Interest in the Project (including the Undivided Interest in the Facility
Agreements) and the Site Interest back to MCV at the expiration of the related
Support Term.
Page 19
