EXHIBIT 10.3.15
***PORTIONS OF THIS EXHIBIT MARKED BY BRACKETS ("[***]") OR OTHERWISE INDICATED
HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED
PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.***
TOLLING AGREEMENT
BETWEEN
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
AND
DYNEGY POWER MARKETING, INC.
JULY 1, 2001
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TABLE OF CONTENTS
PAGE
----
ARTICLE I - DEFINITIONS.....................................................1
1.01 Format...........................................................1
1.02 Definitions......................................................2
ARTICLE II - TERM...........................................................11
2.01 Term.............................................................11
ARTICLE III - PRODUCTS......................................................11
3.01 Tolling Services.................................................11
3.02 Ancillary Services...............................................12
3.03 Exclusive Nature of Agreement....................................12
ARTICLE IV - PAYMENTS.......................................................13
4.01 Fixed Tolling Services Payment...................................13
4.02 Fixed Ancillary Services Payment.................................13
4.03 Contract Administration Charge...................................13
4.04 Variable Tolling Services Payment................................13
4.05 Variable O&M Payment.............................................13
4.06 Escalation.......................................................14
4.07 Replacement Energy...............................................14
4.08 Avoided Costs....................................................15
ARTICLE V - FACILITY OPERATIONS AND SCHEDULING..............................15
5.01 Start-ups........................................................15
5.02 Scheduling and Operating Procedures and Authorized
Representatives..................................................17
5.03 Shutdown.........................................................17
5.04 Technical Inspection.............................................18
5.05 Reserved Capability..............................................18
5.06 Installed Capacity Testing.......................................21
5.07 Good Electrical Practices........................................21
5.08 Operating Committee..............................................21
5.08 Operating Committee..............................................21
5.07 Good Electrical Practices........................................22
ARTICLE VI - GUARANTEED HEAT RATE...........................................22
6.01 Guaranteed Heat Rate.............................................22
6.02 Heat Rate........................................................22
6.03 Payment..........................................................23
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6.04 Exclusive Nature Of Compensation.................................23
ARTICLE VII - GUARANTEED EQUIVALENT AVAILABILITY............................23
7.01 Calculation of Guaranteed Tolling Capability.....................23
7.02 Exclusive Nature Of Compensation.................................26
ARTICLE VIII - GAS SUPPLY...................................................26
8.01 Purchaser's Gas Delivery Obligations.............................26
8.02 Gas Cost Responsibility..........................................26
8.03 Transportation Obligations.......................................27
8.04 Additional Transportation Obligations............................28
8.05 Pipeline Imbalance Charges.......................................28
8.06 Scheduling Responsibility........................................28
8.07 Effect Of Delivery; Indemnity....................................29
8.08 Transporter's Specifications.....................................29
8.09 Gas Supply Obligations...........................................29
ARTICLE IX - OUTAGES........................................................29
9.01 Scheduled Outages................................................29
9.02 Forced Outages...................................................30
ARTICLE X - NYISO AND REGULATORY REQUIREMENTS...............................31
10.01 Nyiso Bidding....................................................31
10.02 Purchaser Requirements...........................................33
10.03 Niagara Mohawk Power Purchase Agreement..........................34
10.04 Amendment........................................................34
10.03 Niagara Mohawk Power Purchase Agreement..........................35
ARTICLE XI - METERING.......................................................35
11.01 Power............................................................35
11.02 Gas..............................................................35
11.03 Industry Standards...............................................36
11.04 Access...........................................................36
11.05 Calibration......................................................37
11.06 Records..........................................................37
11.07 Upgraded Metering................................................37
ARTICLE XII - BILLING AND PAYMENT...........................................37
12.01 Billing..........................................................37
12.02 Payment..........................................................38
12.03 Audit............................................................38
12.04 Nyiso Reimbursement..............................................38
12.05 Offset...........................................................39
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ARTICLE XIII - ELECTRIC TRANSMISSION ARRANGEMENTS...........................39
13.01 Electric Transmission Arrangements...............................39
ARTICLE XIV - COSTS.........................................................39
14.01 Cost Responsibility..............................................39
ARTICLE XV - ADDITIONAL AGREEMENTS..........................................40
15.01 Insurance........................................................40
ARTICLE XVI - REPRESENTATIONS...............................................42
16.01 Independence's Representations...................................42
16.02 Purchaser's Representations......................................43
ARTICLE XVII - CONDITIONS...................................................44
17.01 Conditions Precedent.............................................44
ARTICLE XVIII - DEFAULT AND REMEDIES........................................44
18.01 Events of Default................................................44
18.02 Notice Of Default; Cure..........................................45
18.03 Remedies.........................................................46
ARTICLE XIX - LIMITATION OF LIABILITY.......................................46
19.01 Limitation of Liability..........................................46
19.02 Duty to Mitigate.................................................47
ARTICLE XX - INDEMNIFICATION................................................47
20.01 Independence's Indemnification...................................47
20.02 Purchaser's Indemnification......................................48
20.03 Indemnification Procedures.......................................48
20.04 Survival.........................................................48
ARTICLE XXI - ASSIGNMENT AND SUCCESSION.....................................49
21.01 Assignment.......................................................49
ARTICLE XXII - FORCE MAJEURE................................................49
22.01 Force Majeure....................................................49
ARTICLE XXIII - TAXES.......................................................51
23.01 Taxes - Power....................................................51
23.02 Taxes - Gas......................................................51
23.03 Cooperation......................................................52
ARTICLE XXVI - MISCELLANEOUS................................................52
24.01 Governing Law....................................................52
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24.02 Submission To Jurisdiction.......................................52
24.03 Headings.........................................................53
24.04 Waiver...........................................................53
24.05 Severability.....................................................53
24.06 Entire Agreement.................................................53
24.07 Notices..........................................................54
24.08 Confidentiality..................................................55
24.09 Counterparts.....................................................57
24.10 No Offset........................................................57
24.11 Other Activities.................................................57
EXHIBIT 3.01(A).............................................................59
EXHIBIT 3.01(B).............................................................59
EXHIBIT 5.01................................................................60
EXHIBIT 5.02(A).............................................................61
EXHIBIT 5.02(B).............................................................72
EXHIBIT 5.03................................................................78
EXHIBIT 6.01................................................................79
EXHIBIT 17.01(A)............................................................81
EXHIBIT 17.01(B)............................................................88
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TOLLING AGREEMENT
TOLLING AGREEMENT ("Agreement") dated as of July 1, 2001 between
Sithe/Independence Power Partners, L.P. (a Delaware limited partnership)
("Independence"), and Dynegy Power Marketing, Inc., a Texas corporation
("Purchaser"); (each of Independence and Purchaser referred to herein
individually, as a "Party," and collectively, as the "Parties"),
WITNESSETH:
WHEREAS, Independence owns a natural gas fired electric generating plant
of approximately 1,032 MW net capacity located in the Town of Scriba, New York
(the "Facility");
WHEREAS, pursuant to an Amended and Restated Energy Purchase Agreement
dated as of September 1, 2000 (as amended, the "ConEd Agreement"), Independence
has agreed to provide 740 MW of Installed Capacity (as defined in Section 1.02)
under the NYISO Services Tariff (as defined in Section 1.02) (but not the
associated energy which may be generated with such capacity) to Consolidated
Edison Company of New York, Inc. ("ConEd");
WHEREAS, pursuant to an Interconnection Agreement dated as of March 9,
1992 (as amended, the "Niagara Mohawk Interconnection Agreement"), Independence
and the Niagara Mohawk Power Corporation ("Niagara Mohawk") have agreed upon the
terms for the interconnection of the Facility with the Niagara Mohawk electric
transmission system; and
WHEREAS, Purchaser desires to utilize the Facility for the processing of
natural gas into electric energy and to purchase Ancillary Services;
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, Independence and Purchaser, intending to be legally bound,
agree as follows:
ARTICLE I - DEFINITIONS
1.01 FORMAT
(a) References to Articles and Sections herein are cross-references
to Articles and Sections, respectively, in this Agreement, unless otherwise
stated.
(b) All Schedules that are attached to this Agreement are
incorporated by reference as if fully set forth herein.
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(c) All references to quantities of Gas are references on an HHV
basis unless otherwise stated.
1.02 DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, when used
with initial capitalization, whether singular or plural, the following terms
shall have the meanings set forth below. All references in this Agreement to any
governmental or non-governmental entity, including, without limitation, NYISO
and FERC, shall include any and all successors to such entities. Unless the
context otherwise requires, any reference herein to any contract, agreement or
tariff and any schedule, attachment or exhibit thereto shall mean such contract,
agreement, tariff, schedule, attachment or exhibit as amended, supplemented and
modified and in effect from time to time.
(1) "Affiliate" means, with respect to any entity, any other entity that,
directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such entity. For this
purpose, "control" means the direct or indirect ownership of fifty percent
(50%) or more of the outstanding capital stock or other equity interests
having ordinary voting power.
(2) "Ancillary Services" means Voltage Support Service, 10-Minute Spinning
Reserve Service and 30-Minute Spinning Reserve Service, all as defined in
the NYISO Open Access Transmission Tariff and the NYISO Services Tariff,
each as in effect as of the date hereof.
(3) "As Available Energy" has the meaning set forth in Section 5.05(d).
(4) "As Available Period" has the meaning set forth in Section 5.05(d).
(5) "Authorized Representatives" has the meaning set forth in Section 5.02.
(6) "Available Tolling Capability" has the meaning set forth in Exhibit
5.02(A).
(7) "Available Tolling Capability Notice" has the meaning set forth in Exhibit
5.02(A).
(8) "Avoided Variable O&M Services Payment" has the meaning set forth in
Section 4.08.
(9) "Avoided Variable Tolling Services Payment" has the meaning set forth in
Section 4.08.
(10) "Btu" means British thermal unit, which is the quantity of thermal energy
necessary to increase the temperature of one pound of pure water by one
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degree Fahrenheit from 59 degrees Fahrenheit to 60 degrees Fahrenheit at a
constant pressure of 14.73 pounds per square inch absolute.
(11) "Business Day" means any Day on which Federal Reserve member banks in New
York, New York are open for business.
(12) "Capacity" means the capability to generate electrical power, measured in
MW.
(13) "Capacity Resource" has the meaning set forth in the NYISO Services
Tariff.
(14) "Cold Start" means each Start-up of a combustion turbine/generator set
after its breaker has been open for at least 48 hours.
(15) "Contract Term" has the meaning set forth in Section 2.01.
(16) "Contract Tolling Capability" means the amount set forth in Exhibit
3.01(A).
(17) "Contract Tolling Capability Average" means the sum of the amounts set
forth opposite the twelve months in Exhibit 3.01(A), divided by 12.
(18) "Contract Year" means each twelve Month (or shorter) period during the
Contract Term beginning on the Effective Date or, for subsequent years,
the first Day of January, and ending the following December 31, or, for
the final Contract Year, ending on November 14, 2014.
(19) "Day" has the meaning set forth in the NYISO Requirements.
(20) "Day-Ahead Market" or "DAM" has the meaning set forth in Section 10.01.
(21) "Eastern Prevailing Time" means local time in New York, New York.
(22) "Effective Date" has the meaning set forth in Section 2.01.
(23) "Electric Delivery Point" means the point of interconnection of the
Facility and the Niagara Mohawk transmission system within the
Independence switchyard owned by Niagara Mohawk and located adjacent to
the Facility at the motor-operated switches commonly referred to as Switch
Number 273 and Switch Number 283.
(24) "Electric Metering Equipment" means electric meters and associated
equipment, including, without limitation, metering transformers and meters
for measuring kWh, amperes and voltage, utilized in determining the amount
of Net Electric Energy delivered or provided by Independence at the
Electric Delivery Point. The Electric Metering Equipment shall include the
Niagara Mohawk meters and Independence's back-up meters utilized to
measure
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deliveries of Energy to Alcan Aluminum Corporation ("Alcan"), use of
Energy at the Facility and deliveries of Energy to the NYISO system.
(25) "Empire" means Empire State Pipeline.
(26) "Empire Gas Transportation Contract" means the Empire Firm Transportation
Agreement dated October 4, 1993 between Empire, Empire State Pipeline
Company ("ESPC"), St. Clair Pipeline Company, Inc. ("SCPC") and
Independence as it incorporates the terms of the Supplemental Agreement
dated February 28, 1992 among Independence, Empire, SCPC and ESPC.
(27) "Energy" means electricity (measured in kWh or MWh, as the case may be).
(28) "Energy Management Agreement" means the Energy Management Agreement dated
as of July 1, 2001 by and among the Parties and Dynegy Marketing and
Trade.
(29) "Event of Default" has the meaning set forth in Section 18.01.
(30) "FERC" means the Federal Energy Regulatory Commission.
(31) "Fixed Tolling Services Charge" means $[***]/kW-month for the period July
1, 2001 through June 30, 2002, escalating each July 1 thereafter at a rate
of [***]% per annum.
(32) "Fixed Tolling Services Payment" has the meaning set forth in Section
4.01.
(33) "Force Majeure" has the meaning set forth in Article XXII.
(34) "Forced Outage" has the meaning set forth in Section 9.02.
(35) "Gas" means natural gas, including gas-well gas, casinghead gas and/or
residue gas resulting from processing both casinghead gas and gas-well
gas, and shall include liquefied natural gas and synthetic gas in a
vaporized state, in each case meeting or exceeding the minimum quality
specifications under the Empire Gas Transportation Contract (and related
Empire Gas tariffs) and the Niagara Mohawk Transportation Contract (and
related Niagara Mohawk Gas tariffs).
(36) "Gas Delivery Point" means (a) with respect to Gas delivered pursuant to
Section 8.01(a), the Gas Facility Point, and (b) with respect to Gas
delivered pursuant to Section 8.01(b), (i) during periods when
Independence has all required regulatory authorizations under this
Agreement and the Gas Supply Agreement from (A) United States Governmental
Authorities to import and (B) their Canadian counterparts to export, Gas
from Canada to the United
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States, the Canadian side of the point of interconnection between the
system of TransCanada Pipelines Limited and the Empire system located near
Chippawa, New York, and (ii) during periods when Independence does not
have all such regulatory authorizations from United States Governmental
Authorities and their Canadian counterparts, the Gas Facility Point.
(37) "Gas Facility Point" means the outlet flange of the Gas Metering Equipment
at the interconnection between the Facility and Line 63 of Niagara Mohawk.
(38) "Gas Index Price" for each day means the midpoint of the common range for
[***] as reported in the "Daily Gas Survey" for that Day in Gas Daily
(published by Financial Times Energy) (with respect to weekdays for the
flow date, and with respect to weekend days and holidays for the flow date
immediately following such weekend day or holiday). If such information is
no longer published, the Parties shall mutually agree on an appropriate
replacement index. If, at any time, the Parties mutually agree that the
specified index no longer provides a reasonable proxy, the Parties shall
mutually agree on an appropriate replacement index.
(39) "Gas Metering Equipment" means Gas meters and associated equipment
specified in the Empire Gas Transportation Contract (and related Empire
Gas tariffs) and in the Niagara Mohawk Gas Transportation Contract (and
related Niagara Mohawk Gas tariffs), utilized in determining the amount of
Gas consumed by the Facility.
(40) "Gas Supply Agreement" means the Gas Supply Agreement dated as of July 1,
2001 between Independence and Dynegy Marketing and Trade.
(41) "GDP-IPD" means the Gross Domestic Product Implicit Price Deflator
published in the National Income and Product Account by the U.S.
Department of Commerce.
(42) "Good Electrical Practices" means those practices, methods and acts
engaged in or approved by a significant portion of the independent
electric power generation industry during the relevant time period, or any
of the practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time a decision is made, could
have been expected to accomplish a desired result at reasonable cost
consistent with good business practices, reliability, safety and
expedition. Good Electrical Practices are not intended to be limited to
the optimum practices, methods or acts to the exclusion of others, but
rather to those practices, methods and acts generally accepted or approved
by a significant portion of the power industry in the relevant region,
during the relevant time period, as described in the immediately preceding
sentence.
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(43) "Governmental Authority" shall mean any federal, state, local or municipal
governmental body; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, policy, regulatory or
taxing authority, jurisdiction or power; any court or governmental
tribunal; or any applicable independent system operator, regional
transmission organization, regional power pool, reliability council or
other regional entity performing similar functions.
(44) "Guaranteed Heat Rate" has the meaning set forth in Section 6.01.
(45) "Guaranteed Heat Rate Gas Differential" has the meaning set forth in
Section 6.02.
(46) "Heat Rate" means the thermal quantity of Gas needed to generate one
kilowatt hour of Energy delivered to the Electric Delivery Point,
including Gas used to generate Energy consumed by the station electrical
load, expressed in Btu per kWh on a HHV basis.
(47) "Higher Heating Value" or "HHV" means the total heat content, expressed in
Btu per cubic foot (Btu/ft3), produced by the complete combustion of 1
cubic foot of natural gas at a temperature of 60 degrees Fahrenheit with
the natural gas free of water vapor and at a pressure of 14.73 pounds per
square inch absolute with the products of combustion to be cooled to the
initial temperature of the natural gas and the water formed by the
combustion reaction condensed to the liquid state.
(48) "Hot Start" means each Start-up of a combustion turbine/generator set
after its breaker has been open for no more than 8 hours.
(49) "Hour-Ahead Market" or "HAM" has the meaning set forth in Section 10.01.
(50) "Installed Capacity" has the meaning set forth in Section 10.01.
(51) "Interest Rate" means, for each Day, a rate per annum equal to the prime
rate reported in The Wall Street Journal's "Money Rates" column (or any
similar column published in The Wall Street Journal in replacement
thereof) for the immediately preceding Business Day plus 2%. In the event
The Wall Street Journal ceases to report the prime rate, the prime rate
for purposes of this Agreement shall be the prevailing prime rate (or base
rate) charged by major banks in the United States of America.
(52) "kW" means kilowatt.
(53) "kWh" means kilowatt-hour.
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(54) "Law" means any law, rule, regulation, order, writ, judgment, decree or
other legal or regulatory determination by a Governmental Authority.
(55) "Load Serving Entity" has the meaning set forth in Section 10.01.
(56) "Market Price" means, for each hour during a particular period, the
hourly day-ahead price (in dollars per MWh and as published by the
NYISO on the last day of the Month that includes the applicable period
on the NYISO's official web site currently located at:
xxxx://xxx.xxxxx.xxx/xxxxx/xxxxx.xxxx, or any successor thereto, under
the headings "Day Ahead Market LBMP Generator; SITHE_INDEPEND") for
electricity during the applicable hour; provided that, in the event
that such hourly day-ahead prices are no longer published by the NYISO,
the Parties shall agree upon an appropriate replacement price.
(57) "Minimum Generation Dispatch" has the meaning set forth in Exhibit
5.02(A).
(58) "Minimum Output Capability" has the meaning set forth in Exhibit 5.02(B).
(59) "Minimum Output Requirement" has the meaning set forth in Exhibit 5.02(A).
(60) "MMBtu" means one million Btu.
(61) "Month" means calendar month.
(62) "Monthly Gas Index Price" means the average, for each Month, of the Gas
Index Price for each day of such Month that Gas is delivered by
Purchaser for Tolling Services or Ancillary Services. At such time that
the Gas Metering Equipment is able to record the daily quantities of
Gas delivered to the Gas Facility Point, the Monthly Gas Index Price
shall be calculated, for each Month, as a weighted average of the Gas
Index Price for each day that Gas is delivered by Purchaser for Tolling
Services or Ancillary Services, weighted by Gas delivered to the Gas
Facility Point in such day for such services.
(63) "MW" means megawatt.
(64) "MWh" means megawatt-hour (one MWh equals 1,000 kWh).
(65) "NERC" means the North American Electric Reliability Council or the North
American Electric Reliability Organization.
(66) "Net Electric Energy" means, for any period, the total Energy output of
the Facility during such period minus the sum of (a) Energy consumed at
the
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Facility during such period plus (b) Energy associated with the use of the
Reserved Capability during such period.
(67) "New York Control Area" has the meaning set forth in Section 10.01.
(68) "Niagara Mohawk Gas Transportation Contract" means the Niagara Mohawk Firm
Transportation Agreement dated March 11, 1992 between Niagara Mohawk and
Independence.
(69) "Niagara Mohawk Power Purchase Agreement" means the Power Purchase
Agreement dated July 24, 1992 between Niagara Mohawk and Independence.
(70) "NYISO" means the New York Independent System Operator, Inc.
(71) "NYISO Bid" means a bid, Schedule or request to operate submitted to
the NYISO related to the generation of Energy or Ancillary Services
from the Facility.
(72) "NYISO Directed Operation" means, for any period, the operation of all
or a portion of the Facility at the direction of the NYISO during such
period, including the operation of the Facility in response to an NYISO
Bid accepted by the NYISO or the operation of the Facility at the
direction of a Transmission Provider pursuant to NYISO Requirements.
(73) "NYISO Open Access Transmission Tariff" means the ISO Open Access
Transmission Tariff filed with FERC by the NYISO.
(74) "NYISO Operating Agreement" means the amended and restated Operating
Agreement of the NYISO filed with FERC by the NYISO.
(75) "NYISO Requirements" means the then applicable and valid obligations,
rules and regulations as defined and set forth in the NYISO Operating
Agreement, the NYISO Services Tariff, the NYISO Open Access
Transmission Tariff and/or similar agreements, policies and guidelines.
(76) "NYISO Services Tariff" means the NYISO Market Administration and Control
Area Services Tariff filed with FERC by the NYISO.
(77) "Operating Committee" has the meaning set forth in Section 5.08.
(78) "Outage" means a Scheduled Outage, a Forced Outage or an event or
circumstance constituting Force Majeure that prevents operation of all
or part of the Facility.
(79) "Person" means any individual, corporation, partnership, trust, estate,
limited liability company, governmental agency or authority or other
entity.
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(80) "Protective Apparatus" means such equipment and apparatus, including, but
not limited to, protective relays, circuit breakers and the like,
necessary or appropriate to isolate the Facility from the electrical
system to which it is connected consistent with Good Electrical Practices
and any requirements of any Transmission Provider.
(81) "Regular Business Hours" means 9:00 a.m. through 5:00 p.m. Eastern
Prevailing Time on Business Days.
(82) "Replacement Energy" means, for any period, the quantity of Energy sourced
by Independence or its designee from any source other than the Facility,
delivered under this Agreement to the Electric Delivery Point during such
period, or if a Substitute Delivery Point is accepted by Purchaser, to the
agreed upon Substitute Delivery Point.
(83) "Replacement Capacity" has the meaning set forth in Section 10.01(c).
(84) "Reserved Capability" means the sum of (a) the Reserved Tolling Capability
plus (b) the Reserved Independence Capability.
(85) "Reserved Independence Capability" means, for any period, 44 MW plus the
excess (if any) of (a) the actual capability of the Facility to provide
Tolling Services (less 44 MW of such capability) minus (b) the sum of (i)
the Contract Tolling Capability plus (ii) the Reserved Tolling Capability.
(86) "Reserved Tolling Capability" means the amount set forth in Exhibit
3.01(B).
(87) "Reserved Tolling Capability Start-up" means, with respect to each
combustion turbine/generator set, the action of bringing such combustion
turbine/generator set from a non-operating mode to the level of output in
combined cycle mode resulting in output associated with the Reserved
Tolling Capability when Independence is operating the Reserved Tolling
Capability for purposes of effectuating a physical hedge against its
financial obligations associated with the Market Price.
(88) "Residual Installed Capacity Agreement" means any agreement entered into
by Independence from time to time for the sale of Installed Capacity from
the Facility (other than the ConEd Agreement).
(89) "Schedule" or "Scheduling" or "Scheduled" means communicating and
confirming that a particular amount of Gas or Energy and/or Ancillary
Services is to be delivered or received and providing all information as
may be necessary to cause such delivery or receipt to occur.
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(90) "Scheduled Outage" means any outage or unavailability, for a designated
period, of all or a portion of the Contract Tolling Capability, of which
Purchaser is notified in advance pursuant to Section 9.01.
(91) "Scheduling and Operating Procedures" has the meaning set forth in Section
5.02.
(92) "Shutdown" means, with respect to each combustion turbine/generator set,
the reduction in output to zero necessary as a result of NYISO Directed
Operation following the provision of Tolling Services or Ancillary
Services.
(93) "Shutdown Gas" has the meaning set forth in Section 5.03.
(94) "Start-up Limit" means, for a designated one year or 365 Day period, [***]
Start-ups minus the number of Reserved Tolling Capability Start-ups during
such period.
(95) "Start-up" means, with respect to each combustion turbine/generator set,
the action of bringing such combustion turbine/generator set from a
non-operating mode to the level of output in combined cycle mode resulting
in the provision of Tolling Services or Ancillary Services.
(96) "Start-up Gas" has the meaning set forth in Section 5.01.
(97) "Substitute Delivery Point" means any point other than the Electric
Delivery Point at which Independence or its designee may deliver Energy to
Purchaser provided that such point shall be subject to the mutual
agreement of the Parties.
(98) "Taxes" means any and all ad valorem, property, occupation, severance,
generation, first use, conversion, Btu or Energy, transmission, utility,
gross receipts, privilege, sales, use, consumption, excise, lease,
transaction and other taxes, governmental charges, surcharges, licenses,
fees, permits and assessments or increases therein, and any interest or
penalties on such taxes, charges, licenses, fees, permits and assessments,
other than taxes based on net income or net worth.
(99) "Tolling Services" means the process whereby Purchaser delivers Gas to the
Facility at the Gas Facility Point, the Gas is converted into Energy at
the Facility and the converted Gas is redelivered to Purchaser as Energy
at the Electric Delivery Point.
(100) "Transmission Providers" means the entity or entities transmitting Energy
or Ancillary Services on behalf of Purchaser from the Electric Delivery
Point.
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(101) "Transporter" means any Person that transports Gas provided under this
Agreement upstream of the Gas Facility Point.
(102) "Variable O&M Services Payment" has the meaning set forth in Section 4.05.
(103) "Variable Tolling Services Charge" means $[***] per MWh, as adjusted
pursuant to Section 4.06.
(104) "Variable Tolling Services Payment" has the meaning set forth in Section
4.04.
(105) "Warm Start" means each Start-up of a combustion turbine/generator set
after its breaker has been open for more than 8 but for less than 48
hours.
(106) "Week" means calendar week.
ARTICLE II - TERM
2.01 TERM
This Agreement shall commence on the later of (a) the date on which all
conditions specified in Article XVII are satisfied or waived or (b) July 1, 2001
("Effective Date") and shall remain in effect through November 14, 2014
("Contract Term"); provided, however, that Independence may terminate this
Agreement in its sole discretion at any time prior to 12:01 A.M. on July 1, 2001
by providing notice of termination to Purchaser. This Agreement shall terminate
automatically at the end of the Contract Term and neither Independence nor
Purchaser shall have any further liability or obligation to the other hereunder,
except for obligations or duties that accrued prior to such termination and for
obligations that expressly survive termination of this Agreement.
ARTICLE III - PRODUCTS
3.01 TOLLING SERVICES
Subject to and in accordance with the terms and conditions of this
Agreement, during the Contract Term, Independence shall perform for Purchaser,
and Purchaser shall purchase and pay for, Tolling Services. Purchaser shall be
entitled to Tolling Services associated with the Contract Tolling Capability.
From time to time, if and to the extent the Facility would otherwise be subject
to NYISO Directed Operations, Independence shall have the right, subject to the
restrictions below, to deliver (or to cause a third party to deliver)
Replacement Energy in amounts up to the amounts of Energy subject to NYISO
Directed Operations for
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each hour, so long as such Replacement Energy otherwise satisfies the
requirements of this Agreement. Notwithstanding the foregoing, Independence may
only elect to provide Replacement Energy during periods where the Facility would
otherwise be subject to NYISO Directed Operations, Purchaser has requested the
delivery of Energy under this Agreement and the Facility is during such period
experiencing an Outage.
3.02 ANCILLARY SERVICES
Subject to and in accordance with the terms and conditions of this
Agreement, during the Contract Term, Purchaser shall be entitled to all
Ancillary Services from the Facility; provided, however, that Independence shall
have no obligation to deliver, and Purchaser shall have no right to receive,
Ancillary Services to the extent that the provision of such services could have
an adverse effect on Independence's ability to use, operate or maintain all or
any portion of the Reserved Capability.
3.03 EXCLUSIVE NATURE OF AGREEMENT; PRIORITY
The relationship between Purchaser and Independence with respect to the
Tolling Services and the Ancillary Services as described in Sections 3.01 and
3.02 during the Contract Term is exclusive. As long as Purchaser is not in
default of this Agreement, unless and except to the extent required by Law or
NYISO Requirements, Independence shall provide Purchaser exclusive access to the
Tolling Services with respect to the Contract Tolling Capability and Ancillary
Services in accordance with Section 3.02, and Independence shall not offer, sell
or make available any Ancillary Services provided under Section 3.02 or perform
Tolling Services with respect to the Contract Tolling Capability during the
Contract Term for any person other than Purchaser; provided, however, that
Independence may offer, sell, make available or otherwise market the Facility,
its Energy and Ancillary Services and Tolling Services for sale after the end of
the Contract Term. Purchaser acknowledges that, subject to Section 10.01(c),
Independence has sold or may from time to time sell the Installed Capacity of
the Facility to third parties and that Purchaser is not entitled to claim any of
the Installed Capacity from the Facility under this Agreement. Notwithstanding
any other provision of this Agreement, but subject to the requirements of
Article VII, Purchaser and Independence acknowledge and agree that at any time
when the actual capability of the Facility is less than the sum of (a) the
Contract Tolling Capability plus (b) the Reserved Tolling Capability plus (c) 44
MW, Independence shall have the first priority to use the actual capability of
the Facility in an amount up to the sum of (a) 44 MW plus (b) the Reserved
Tolling Capability, and Purchaser shall have the second priority to use the
lesser of (A) the excess (if any) of the actual capability of the Facility minus
the sum of (a) 44 MW plus (b) the Reserved Tolling Capability, and (B) the
Contract Tolling Capability.
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ARTICLE IV - PAYMENTS
4.01 FIXED TOLLING SERVICES PAYMENT
Each Month during the Contract Term, Purchaser shall pay Independence, in
arrears, a monthly Fixed Tolling Services Payment equal to the product of the
Fixed Tolling Services Charge multiplied by the Contract Tolling Capability
Average, expressed in kW.
4.02 FIXED ANCILLARY SERVICES PAYMENT
Purchaser shall be entitled to receive and request Ancillary Services as
provided in this Agreement; however, Purchaser shall not be obligated to pay any
separate consideration for the Ancillary Services provided under this Agreement.
4.03 CONTRACT ADMINISTRATION CHARGE
Each Month during the Contract Term, Purchaser shall pay Independence a
Contract Administration Charge of $[***].
4.04 VARIABLE TOLLING SERVICES PAYMENT
Each Month during the Contract Term, Purchaser shall pay Independence a
monthly Variable Tolling Services Payment equal to the product of the Variable
Tolling Services Charge multiplied by the MWh of Energy (including Replacement
Energy) delivered to Purchaser under this Agreement during such Month.
4.05 VARIABLE O&M SERVICES PAYMENT
Each Month during the Contract Term, Purchaser shall pay Independence a
monthly Variable O&M Services Payment equal to the sum of each of the three
payments described below:
(a) The product of $[***] per fired hour per combustion
turbine multiplied by the aggregate number of combustion turbine
fired hours of the Facility associated with the provision of Tolling
Services or Ancillary Services during the Month; plus
(b) The product of $[***] per fired hour per steam turbine
multiplied by the aggregate number of steam turbine fired hours of
the Facility associated with the provision of Tolling Services or
Ancillary Services during the Month; plus
(c) The greater of:
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(i) The product of $[***] per fired hour per combustion
turbine multiplied by the total number of combustion turbine
fired hours of the Facility associated with the provision of
Tolling Services or Ancillary Services during the Month; or
(ii) The product of $[***] per Start-up multiplied by
the total number of Start-ups during the Month.
At the end of each Contract Year, Independence will reimburse Purchaser an
amount equal to the aggregate amounts paid under paragraphs (c)(i) and (c)(ii)
of this Section 4.05 minus the greater of (y) the total number of combustion
turbine fired hours of the Facility associated with the provision of Tolling
Services or Ancillary Services during the Contract Year multiplied by $[***], or
(z) the total number of combustion turbine Start-ups during the Contract Year
multiplied by $[***].
4.06 ESCALATION
Each year, on January 1, the rates for payments specified in Sections 4.04
and 4.05 will be multiplied by a fraction, the numerator of which is equal to
the GDP-IPD for the third calendar quarter of the immediately preceding year,
and the denominator of which is equal to the GDP-IPD for the third calendar
quarter of 2000.
4.07 REPLACEMENT ENERGY
(a) At any time that Independence or its designee delivers
Replacement Energy to Purchaser, all payments specified in this Article IV shall
be determined as if such Energy were provided from Tolling Services. In
particular, Independence shall determine the combustion turbine fired hours, the
steam turbine fired hours and the Start-ups that would have been necessary to
provide such Energy from Tolling Services, and such avoided combustion turbine
fired hours, steam turbine fired hours and Start-ups shall be utilized to
calculate the Variable O&M Services Payment pursuant to Section 4.05; provided,
however, that such avoided Start-ups shall not count as Start-ups for purposes
of Section 5.01.
(b) For each Day that Independence or its designee delivers
Replacement Energy to Purchaser, Purchaser shall pay to Independence an amount
equal to (i) the product of the quantity of Gas Purchaser would have supplied to
the Facility but for the delivery of Replacement Energy (in MMBtu) multiplied by
the Gas Index Price, plus (ii) the amount of the reduction in variable Gas
transportation costs under the Niagara Mohawk Gas Transportation Contract and
the Empire Gas Transportation Contract and under firm transportation capacity on
the system of TransCanada Pipelines Limited between Kirkwall and Chippawa and
firm transportation capacity on the system of Union Gas Limited between Xxxx and
Kirkwall resulting from the delivery of Replacement Energy, plus (iii) the
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product of the quantity of Gas that would have been required for losses on the
Empire and Niagara Mohawk systems but for the delivery of Replacement Energy
multiplied by the Gas Index Price.
4.08 AVOIDED COSTS
At any time that Independence desires to operate all or any portion of the
Reserved Tolling Capability in order to effectuate a physical hedge against
Independence's obligations associated with the Market Price and is unable to do
so as a result of the exercise by Purchaser of any right under this Agreement,
Independence shall pay Purchaser (a) an Avoided Variable O&M Services Payment
calculated utilizing the methodology set forth in Section 4.05, and (b) an
Avoided Variable Tolling Services Payment calculated utilizing the methodology
set forth in Section 4.04, in each case based on the output and operations of
the Reserved Tolling Capability that would have occurred but for the election of
Purchaser not to cause such Reserved Tolling Capability to run. In particular,
Independence shall determine the combustion turbine fired hours, the steam
turbine fired hours and the Start-ups that would have been necessary to operate
the desired portion of the Reserved Tolling Capability in order to effectuate a
physical hedge against Independence's obligations associated with the Market
Price, and such avoided combustion turbine fired hours, steam turbine fired
hours and Start-ups shall be utilized to calculate the Avoided Variable O&M
Services Payment and the Avoided Variable Tolling Services Payment.
ARTICLE V - FACILITY OPERATIONS AND SCHEDULING
5.01 START-UPS
In accordance with the Scheduling and Operating Procedures specified in
Exhibits 5.02(A) and 5.02(B), in each calendar year Purchaser is not entitled to
receive Tolling Services associated with more than the Start-up Limit of each of
the four combustion turbine/generator sets. For the first Contract Year (July 1,
2001 through December 31, 2001), Purchaser is not entitled to receive Tolling
Services associated with more than the Start-up Limit of each of the four
combustion turbine/generator sets during the 365-Day period from July 1, 2001
through June 30, 2002. For the last Contract Year (January 1, 2014 through
November 14, 2014), Purchaser is not entitled to receive Tolling Services
associated with more than the Start-up Limit of each of the four combustion
turbine/generator sets during the 365-Day period from November 15, 2013 through
November 14, 2014. Each Start-up (whether a Hot Start, a Warm Start or a Cold
Start) shall be counted as one Start-up. Each Start-up that results in the
provision of Tolling Services or Ancillary Services counts toward the limit on
the number of Start-ups, provided that a circumstance that would otherwise
constitute a Start-up following an Outage (where such Start-up was necessary to
resume operations that were curtailed as a
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result of the Outage) shall not be counted as a Start-up toward the foregoing
limit. If, following an Outage, the time of a scheduled Shutdown passes before
the next Start-up, such Start-up shall be counted as a Start-up. Except as
specified in Section 5.05, the action of bringing a combustion turbine/generator
set from a non-operating mode to the level of output in combined cycle mode
necessary when Independence is using the Minimum Output Requirement of the
Facility and not providing any Tolling Services or Ancillary Services shall not
count as a Start-up. Purchaser will provide Independence with all of the Gas
necessary for each Start-up and to the extent necessary for the Start-up of one
or more combustion turbine/generator sets when a ramp up necessary as a result
of NYISO Directed Operation requires Independence to operate an additional
combustion turbine/generator set, in an amount determined in accordance with
Exhibit 5.01 ("Start-up Gas"). If the actual quantity of Gas required for a
Start-up is greater than the Start-up Gas specified in Exhibit 5.01,
Independence shall either supply Gas to make up such difference or shall be
deemed to have purchased an amount of Gas equal to such difference from
Purchaser at a rate equal to the sum of the Gas Index Price plus variable Gas
transportation costs (per MMBtu) under the Niagara Mohawk Gas Transportation
Contract and the Empire Gas Transportation Contract (including the variable Gas
transportation charges, fuel, shrinkage and loss requirements associated with
use of the firm transportation capacity under the Empire Gas Transportation
Agreement and the Niagara Mohawk Gas Transportation Agreement) and variable Gas
transportation costs (per MMBtu) under firm transportation capacity on the
system of TransCanada Pipelines Limited between Kirkwall and Chippawa and firm
transportation capacity on the system of Union Gas Limited between Xxxx and
Kirkwall (including the variable Gas transportation charges, fuel, shrinkage and
loss requirements associated with use of such firm transportation capacity) and
applicable Taxes (if any) in accordance with Section 23.02. If a Start-up is
completed utilizing less Gas than the Start-up Gas specified in Exhibit 5.01,
Purchaser shall pay Independence for such difference at a rate equal to the sum
of the Gas Index Price plus variable Gas transportation costs (per MMBtu) under
the Niagara Mohawk Gas Transportation Contract and the Empire Gas Transportation
Contract (including the variable Gas transportation charges, fuel, shrinkage and
loss requirements associated with use of the firm transportation capacity under
the Empire Gas Transportation Agreement and the Niagara Mohawk Gas
Transportation Agreement) and variable Gas transportation costs (per MMBtu)
under firm transportation capacity on the system of TransCanada Pipelines
Limited between Kirkwall and Chippawa and firm transportation capacity on the
system of Union Gas Limited between Xxxx and Kirkwall (including the variable
Gas transportation charges, fuel, shrinkage and loss requirements associated
with use of such firm transportation capacity) and applicable Taxes (if any) in
accordance with Section 23.02. Except as specified in Section 5.05, Purchaser
will be entitled to the Net Electric Energy produced during each such Start-up.
The Start-up fuel requirements and associated Energy during Start-up are set
forth in Exhibit 5.01.
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5.02 SCHEDULING AND OPERATING PROCEDURES AND AUTHORIZED REPRESENTATIVES
Each of Independence and Purchaser agree that Tolling Services will be
made available only in accordance with the Scheduling and Operating Procedures
specified in Exhibits 5.02(A) and 5.02(B) and in accordance with the Energy
Management Agreement. Each Party shall designate in writing to the other Party
the persons authorized to make or provide notices on behalf of such Party in
connection with nominations, schedules or instructions for the delivery or
acceptance of Gas, Energy or Ancillary Services or make other notices on behalf
of such Party and specify the scope of their individual authority and
responsibilities ("Authorized Representatives"). Each Party may change its
Authorized Representatives from time to time with a notice in accordance with
this Agreement. Each Party consents to the recording of all telephone
conversations between its Authorized Representatives and the Authorized
Representatives of the other Party with respect to implementation of this
Agreement.
5.03 SHUTDOWN
Purchaser will provide Independence with all of the Gas necessary for each
Shutdown, in an amount determined in accordance with Exhibit 5.03 ("Shutdown
Gas"). If the actual quantity of Gas required for a Shutdown is greater than the
Shutdown Gas specified in Exhibit 5.03, Independence shall either supply Gas to
make up such difference or shall be deemed to have purchased an amount of Gas
equal to such difference from Purchaser at a rate equal to the sum of the Gas
Index Price plus variable Gas transportation costs (per MMBtu) under the Niagara
Mohawk Gas Transportation Contract and the Empire Gas Transportation Contract
(including the variable Gas transportation charges, fuel, shrinkage and loss
requirements associated with use of the firm transportation capacity under the
Empire Gas Transportation Agreement and the Niagara Mohawk Gas Transportation
Agreement) and variable Gas transportation costs (per MMBtu) under firm
transportation capacity on the system of TransCanada Pipelines Limited between
Kirkwall and Chippawa and firm transportation capacity on the system of Union
Gas Limited between Xxxx and Kirkwall (including the variable Gas transportation
charges, fuel, shrinkage and loss requirements associated with use of such firm
transportation capacity) and applicable Taxes (if any) in accordance with
Section 23.02. If a Shutdown is completed utilizing less Gas than the Shutdown
Gas specified in Exhibit 5.03, Purchaser shall pay Independence for each MMBtu
of such difference at a rate equal to the sum of the Gas Index Price plus
variable Gas transportation costs (per MMBtu) under the Niagara Mohawk Gas
Transportation Contract and the Empire Gas Transportation Contract (including
the variable Gas transportation charges, fuel, shrinkage and loss requirements
associated with use of the firm transportation capacity under the Empire Gas
Transportation Agreement and the Niagara Mohawk Gas Transportation Agreement)
and variable Gas transportation costs (per MMBtu) under firm transportation
capacity on the system
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of TransCanada Pipelines Limited between Kirkwall and Chippawa and firm
transportation capacity on the system of Union Gas Limited between Xxxx and
Kirkwall (including the variable Gas transportation charges, fuel, shrinkage and
loss requirements associated with use of such firm transportation capacity) and
applicable Taxes (if any) in accordance with Section 23.02. Except as specified
in Section 5.05, Purchaser will be entitled to the Net Electric Energy produced
during each such Shutdown. The Shutdown fuel requirements and associated Energy
during Shutdown are set forth in Exhibit 5.03.
5.04 TECHNICAL INSPECTION
Independence agrees to maintain and to make available to Purchaser
records, including those under the control of Independence or any third party
owner of the Facility and any relevant records otherwise within Independence's
control or ability to obtain, necessary to verify Contract Tolling Capability,
Target Tolling Capability, Force Majeure and any other rights and obligations
hereunder, including, but not limited to data, engineering specifications, test
results or any other information used in connection with any computation,
calculation or formulae set forth in this Agreement. Further, Independence
agrees that Purchaser representatives, upon three Days' prior written notice,
may visit the Facility during Regular Business Hours.
5.05 RESERVED CAPABILITY
(a) Subject to the terms and provisions of the Energy Management
Agreement, this Section 5.05 and Exhibits 5.02(A) and 5.02(B), Independence
shall have the right to operate the Facility utilizing all or any portion of the
electrical output associated with the Reserved Capability. At such times,
Independence shall be responsible for all costs associated with operation of the
Facility utilizing all or any portion of the electrical output associated with
the Reserved Capability, and Independence shall be entitled to all revenues
associated with the sale of Energy from the Facility utilizing all or any
portion of the electrical output associated with the Reserved Capability
(including the sale of all Energy produced during Start-up and Shutdown). In the
event that, absent Independence's operation of the Facility utilizing all or any
portion of the electrical output associated with the Reserved Capability, NYISO
Directed Operations to provide Tolling Services to Purchaser would require a
Start-up, such Start-up shall be counted as a Start-up pursuant to Sections 4.05
and 5.01.
(b) Notwithstanding Section 5.05(a) or any other provision of this
Agreement, but subject to the requirements of Exhibit 5.02(B), the Parties
acknowledge that there may be some periods during the term of this Agreement
where Independence desires to deliver all or a portion of the Reserved Tolling
Capability to the NYISO for purposes of effectuating a physical hedge against
its financial obligations associated with the Market Price. If during such
periods, there
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exist contractual limitations on Independence's ability to deliver such portion
of the Reserved Tolling Capability either arising under the provisions of this
Agreement or the provisions of the Energy Management Agreement, such that
Independence is prevented from delivering such portion of the Reserved Tolling
Capability, then Purchaser shall pay to Independence an amount equal to the
difference between (i) the sum of the products of, for each hour during such
period (A) the Market Price multiplied by (B) such portion of the Reserved
Tolling Capability minus (ii) the revenues actually received by Independence
from the NYISO for sales of Energy associated with such portion of the Reserved
Tolling Capability; and provided further that if Independence notifies Purchaser
of its desire to operate the Facility at the Minimum Output Requirement,
Purchaser must cause the Minimum Output Requirement to operate. The foregoing
provisions are an acknowledgement of the obligations of Purchaser, as Energy
Manager, under the Energy Management Agreement to cause the dispatch of the
Reserved Tolling Capability in a manner consistent with the desires of
Independence, and if such obligations are not fulfilled, the foregoing
establishes a remedy under this Agreement for such circumstance. Purchaser shall
make such payments at the same time any other payments are due under this
Agreement.
(c) The Parties acknowledge and agree that any and all references in
this Agreement, the Gas Supply Agreement, the Energy Management Agreement and
any other agreement between Independence and Purchaser (and any of Purchaser's
Affiliates) to Independence's effectuating a physical hedge against its
financial obligations associated with the Market Price (i) refer exclusively to
the operation of all or a portion of the Reserved Tolling Capability and (ii)
shall not be construed as implying that Independence shall have any obligation
to obtain Energy from any other source or to take any other action to effectuate
a physical hedge against its financial obligations associated with the Market
Price.
(d) From time to time during the term of this Agreement,
Independence may have available certain quantities of As Available Energy
(defined below) that Independence is willing to make available to Purchaser.
Independence shall make As Available Energy available to Purchaser during the
"As Available Periods." The "As Available Periods" shall mean those hours during
which (i) Independence is not utilizing any of the Reserved Tolling Capability
for purposes of effectuating a physical hedge against its financial obligations
associated with the Market Price and (ii) Independence has nevertheless elected
to operate a portion of the Reserved Capability at the Minimum Output
Requirement. "As Available Energy" means an amount of Energy available from the
Facility by virtue of Independence's election to operate a portion of the
Reserved Capability at the Minimum Output Requirement, but represents a quantity
equal to the difference between the hourly amount available from one combustion
turbine/generator set in combined cycle mode at maximum output and the amount
attributable to the Minimum Output Requirement. Aside from the determination
that condition (i) of the preceding sentence has been satisfied, Independence
shall advise Purchaser in
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accordance with the procedures specified in Exhibit 5.02(A) of the number of
hours that the Facility will operate at the Minimum Output Requirement and
accordingly, the duration of the As Available Period. The As Available Period
must continue for the duration of the period specified in the notice delivered
by Independence in accordance with Exhibit 5.02(A). Subject to the Scheduling
and Operating Procedures specified in Exhibits 5.02(A) and 5.02(B) (and, in
particular, the limitation on changes in output specified as Item 6(e) to
Exhibit 5.02(B), Part I), following the establishment of the As Available
Period, Purchaser may, no later than ten (10) minutes prior to the top of each
hour during the As Available Period, provide Independence with telephonic notice
of Purchaser's desire to receive As Available Energy for the next following hour
of the As Available Period. Subject to the Scheduling and Operating Procedures
specified in Exhibits 5.02(A) and 5.02(B) (and, in particular, the limitation on
changes in output specified as Item 6(e) to Exhibit 5.02(B), Part I), Purchaser
may select all, any individual, or any combination of hours contained in an As
Available Period as the hours in which Purchaser will require the delivery of As
Available Energy. Purchaser may designate the hours in which Purchaser will
require the delivery of As Available Energy in a single communication to
Independence or in a series of individual hourly communications; provided that
in any event, Purchaser may change its election for any hour as long as the
change is communicated to Independence no later than ten (10) minutes prior to
the upcoming hour for which the change will apply.
(e) As Available Energy shall for all purposes under this Agreement,
be deemed to be Energy resulting from the provision of Tolling Services. Thus,
Purchaser shall arrange for delivery of Gas required for the provision of As
Available Energy in the manner prescribed by Article VIII. In addition,
Independence and Purchaser acknowledge that the As Available Energy does not
contemplate any related Capacity component and no Capacity is being made
available with respect to the As Available Energy either as Contract Tolling
Capability or otherwise. The Fixed Tolling Services Payment shall be unaffected
by the provision of As Available Energy. The calculation of the Variable Tolling
Services Payment shall include any deliveries of As Available Energy when the
monthly quantities of Energy delivered to Purchaser are multiplied times the
Variable Tolling Services Charge, provided that with respect to the quantity of
As Available Energy only, the monthly Variable Tolling Services Payment shall be
increased by an amount equal to the product of a constant of $[***] per MWh
multiplied by the MWh of As Available Energy delivered to Purchaser during such
Month. The provision of As Available Energy and the applicable hours of the As
Available Period during which As Available Energy is provided shall be
considered circumstances during which Independence is providing Tolling Services
and as a result, the calculations described in Section 4.05 shall apply to the
As Available Energy; provided, however, that the applicable hours of the As
Available Period during which As Available Energy is provided shall not be
considered for purposes
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of the annual comparison pursuant to the last sentence of Section 4.05. No
Start-up shall be incurred during any As Available Period.
(f) The Parties expressly acknowledge and agree that Independence
shall not be responsible to Purchaser for any liabilities or costs resulting
from the occurrence of an Outage that reduces the amount of As Available Energy
during an As Available Period, and that nothing in these Sections 5.05(d), (e)
and (f) shall have any effect on the calculation of the Annual Capability
Adjustment pursuant to Section 7.01.
5.06 INSTALLED CAPACITY TESTING
From time to time, Independence may perform any Installed Capacity
tests required pursuant to the NYISO Requirements. The Parties shall use
commercially reasonable efforts to schedule such tests during periods when the
Facility is otherwise expected to operate in a manner which conforms to the
requirements of any such tests. Independence may, however, elect to conduct such
tests when the Facility is not otherwise expected to operate in such manner and
the Parties shall cause the Facility (through the submission of bids or
otherwise) to operate in such manner. Independence shall be responsible for any
incremental costs and shall be entitled to any incremental revenues associated
with such testing.
5.07 GOOD ELECTRICAL PRACTICES
Subject to Section 10.02, Independence shall at all times operate
the Facility in accordance with Good Electrical Practices.
5.08 OPERATING COMMITTEE
The Parties shall each appoint a member and an alternate to an
Operating Committee, and so notify the other Parties of such appointments in
writing. Such appointments may be changed at any time by similar notice. The
Operating Committee shall meet as necessary to carry out the duties set forth
herein. The Operating Committee shall hold meetings at the request of any Party
at the Facility (unless otherwise agreed upon by the members of the Operating
Committee) and at a time agreed upon by the members of the Operating Committee.
Each member and alternate shall be a responsible person working with his or her
Party's respective day-to-day operations under this Agreement. The duties of the
Operating Committee shall include, but not be limited to, (i) coordinating
operation schedules, (ii) establishing and maintaining operating procedures,
including those pertaining to information transfers between and among the
Parties, consistent with the provisions of this Agreement, and (iii) such other
duties as may be conferred upon it by mutual agreement of the Parties.
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5.09 UNIT OUTAGES
Each time, following completion of a Start-up and prior to
commencement of the next Shutdown, a combustion turbine/generator set operating
in combined cycle mode suffers an Outage, Independence shall pay Purchaser
$[***].
ARTICLE VI - GUARANTEED HEAT RATE
6.01 GUARANTEED HEAT RATE
The Guaranteed Heat Rate for any hour is the Heat Rate indicated in the
table contained in Exhibit 6.01 for the actual output level of the Facility
(including the output level associated with the provision of Tolling Services
plus the output level associated with the use of the Reserved Capability) for
such hour (in MW). The Guaranteed Heat Rate for part loading conditions is as
set forth in Exhibit 6.01.
6.02 HEAT RATE
At the conclusion of each Month, Independence shall calculate the
Guaranteed Heat Rate Gas Differential (GHRGD), where:
GHRGD = (Actual Gas) - (Target Gas);
Actual Gas = the difference for such Month between (a) actual
quantities of Gas supplied pursuant to this Agreement and the Gas
Supply Agreement and used by the Facility (expressed in MMBtu and
measured utilizing the Gas Metering Equipment) minus (b) the
quantities of Gas purchased or deemed purchased by Independence
pursuant to Section 8.01(b) of this Agreement and pursuant to the
Gas Supply Agreement; and
Target Gas = the sum of (a) for each Start-up during the Month, the
Start-up Gas guaranteed in Exhibit 5.01, plus (b) for each Shutdown
during the Month, the Shutdown Gas guaranteed in Exhibit 5.03, plus
(c) the sum for all hours during the Month after the completion of
Start-up and prior to Shutdown of the Facility of the product of (i)
the Guaranteed Heat Rate for such hour (expressed in Btu of Gas
consumed per kWh) multiplied by (ii) the actual Net Electric Energy
produced during such hour.
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6.03 PAYMENT
If the Guaranteed Heat Rate Gas Differential is positive, Independence
shall pay Purchaser the product of the Guaranteed Heat Rate Gas Differential,
increased to reflect Empire, Niagara Mohawk, TransCanada Pipelines Limited
(between Kirkwall and Chippawa) and Union Gas Limited (between Xxxx and
Kirkwall) fuel, shrinkage and loss, multiplied by a rate equal to the sum of the
Monthly Gas Index Price plus variable Gas transportation costs (per MMBtu) under
the Niagara Mohawk Gas Transportation Contract and the Empire Gas Transportation
Contract and variable Gas transportation costs (per MMBtu) under firm
transportation capacity on the system of TransCanada Pipelines Limited between
Kirkwall and Chippawa and firm transportation capacity on the system of Union
Gas Limited between Xxxx and Kirkwall and applicable Taxes (if any) in
accordance with Section 23.02. If the Guaranteed Heat Rate Gas Differential is
negative, Purchaser shall pay Independence the product of the Guaranteed Heat
Rate Gas Differential (expressed as a positive number), increased to reflect
Empire, Niagara Mohawk, TransCanada Pipelines Limited (between Kirkwall and
Chippawa) and Union Gas Limited (between Xxxx and Kirkwall) fuel, shrinkage and
loss, multiplied by a rate equal to the sum of the Monthly Gas Index Price plus
variable Gas transportation costs (per MMBtu) under the Niagara Mohawk Gas
Transportation Contract and the Empire Gas Transportation Contract and variable
Gas transportation costs (per MMBtu) under firm transportation capacity on the
system of TransCanada Pipelines Limited between Kirkwall and Chippawa and firm
transportation capacity on the system of Union Gas Limited between Xxxx and
Kirkwall and applicable Taxes (if any) in accordance with Section 23.02.
6.04 EXCLUSIVE NATURE OF COMPENSATION
The Parties expressly acknowledge and agree that the adjustment provided
in accordance with this Article VI constitutes the exclusive compensation of the
Parties for variations in Heat Rate and that the failure to achieve the
Guaranteed Heat Rate shall not constitute an Event of Default hereunder.
ARTICLE VII - GUARANTEED TOLLING CAPABILITY
7.01 CALCULATION OF GUARANTEED TOLLING CAPABILITY
An additional payment to or from Independence shall be made after the end
of each Contract Year to reflect the Facility's Actual Tolling Capability as
compared to the Target Tolling Capability for each portion of the Contract Year.
Independence may meet the Target Tolling Capability levels either by making the
Facility available for Tolling Services or by supplying Replacement Energy.
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The Target Tolling Capability levels for each portion of the calendar year are
shown in Table 7.1:
TABLE 7.1 TARGET TOLLING CAPABILITY
---------------------------------------------------------------
SEASON
-------------------------------
HOURS SUMMER WINTER SHOULDER
PERIOD PERIOD PERIOD
---------------------------------------------------------------
Peak Hours:
Target Tolling Capability [***]% [***]% [***]%
---------------------------------------------------------------
Off-Peak Hours:
Target Tolling Capability [***]% [***]% [***]%
---------------------------------------------------------------
The Annual Capability Adjustment ("ACA") shall be equal to the sum
of A+B+C+D, where:
Actual Tolling Capability(SP) - Target Tolling Capability(SP)
A=( --------------------------------------------------------- ) x 0.50 x Annual Tolling Payment;
Target Tolling Capability
Actual Tolling Capability(WP) - Target Tolling Capability(WP)
B=( --------------------------------------------------------- ) x 0.25 x Annual Tolling Payment;
Target Tolling Capability(WP)
Actual Tolling Capability(SHP) - Target Tolling Capability(SHP)
C=( ----------------------------------------------------------- ) x 0.15 x Annual Tolling Payment; and
Target Tolling Capability(SHP)
Actual Tolling Capability(WSP) - Target Tolling Capability(WSP)
D=( ----------------------------------------------------------- ) x 0.10 x Annual Tolling Payment;
Target Tolling Capability(WSP)
For purposes of this Section 7.01, the following terms have the following
meanings:
"Actual Tolling Capability," for any period, means the aggregate quantity
of MWh capable of being produced during such period by the Contract Tolling
Capability (plus the Replacement Energy (measured in MWh) supplied during such
period); the "aggregate quantity of MWh capable of being produced during such
period by the Contract Tolling Capability" will be equal to the aggregate
amounts of Available Tolling Capability for each Day of such period (as
identified in the Available Tolling Capability Notices), adjusted to reflect
Outages which occur during the provision of Tolling Services or Ancillary
Services; it being understood that if all or any portion of the Available
Tolling Capability has not been Scheduled pursuant to Exhibit 5.02(A) prior to
11:45 p.m. for the following Day and Independence elects to perform
discretionary maintenance which does not affect the provision of any requested
Tolling Services and/or Ancillary Services and which shall be completed during
such following Day, the portion of the Facility undergoing
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such discretionary maintenance shall not be deemed to be unavailable for
purposes of determining the Actual Tolling Capability, and it being further
understood that the Actual Tolling Capability shall be determined assuming at
all times the availability at the Facility of adequate Gas supplies;
"Annual Tolling Payment" shall mean the sum of the monthly Fixed Tolling
Services Payments for the Contract Year;
"Off-Peak Hours" shall mean all hours other than Peak Hours;
"Peak Hours" shall mean 7:00 a.m. to 11:00 p.m., Monday through Friday,
excluding holidays recognized by the NYISO;
"Shoulder Off-Peak" shall mean the Off-Peak Hours during the Shoulder
Period;
"Shoulder Peak" shall mean the Peak Hours during the Shoulder Period;
"Shoulder Period" shall mean the Months of March, April, October and
November of each year;
"SHP" shall mean the combined Shoulder Peak and Summer Off-Peak;
"Summer Off-Peak" shall mean the Off-Peak Hours during the Summer Period;
"Summer Peak" or "SP" shall mean the Peak Hours during the Summer Period;
"Summer Period" shall mean the Months of May, June, July, August and
September of each year;
"Target Tolling Capability," for any period, means the aggregate quantity
of MWh capable of being produced during such period by the Contract Tolling
Capability of the Facility multiplied by the Target Tolling Capability
percentage shown on the above table for that period;
"Winter Off-Peak" shall mean the Off-Peak Hours during the Winter Period;
"Winter Peak" or "WP" shall mean the Peak Hours during the Winter Period;
"Winter Period" shall mean the Months of December, January and February of
each year; and
"WSP" shall mean the combined Winter Off-Peak and Shoulder Off-Peak.
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Independence shall include the ACA in the first invoice delivered to
Purchaser after each anniversary of the Effective Date. The ACA shall be paid by
Purchaser to Independence if positive, or by Independence to Purchaser if
negative, pursuant to Section 12.02.
7.02 EXCLUSIVE NATURE OF COMPENSATION
The Parties expressly acknowledge and agree that the adjustment provided
in accordance with this Article VII constitutes the exclusive compensation of
the Parties for exceeding or failing to achieve the Target Tolling Capability
during any period and that the failure to achieve the Target Tolling Capability
during any period shall not constitute an Event of Default hereunder.
ARTICLE VIII - GAS SUPPLY
8.01 PURCHASER'S GAS DELIVERY OBLIGATIONS
(a) Subject to the procedures specified in the Energy Management
Agreement and Exhibits 5.02(A) and 5.02(B), Purchaser shall arrange for delivery
to the Gas Facility Point of all quantities of Gas required to generate Energy
or Ancillary Services resulting from the provision of Tolling Services, the
provision of Ancillary Services, Shutdown Gas and Start-up Gas. Purchaser shall
be responsible for all Gas necessary to meet the fuel, shrinkage and loss
requirements of all Transporters upstream of the Gas Facility Point.
(b) Subject to the procedures specified in the Energy Management
Agreement and in Exhibits 5.02(A) and 5.02(B), Purchaser shall arrange for
delivery to the Gas Facility Point of all of Independence's requirements for Gas
at the Facility, excluding Gas delivered pursuant to Section 8.01(a), but
including (i) Gas required for Independence to generate Energy utilizing the
Reserved Capability, (ii) Gas required for Independence to operate auxiliary
boilers, and (iii) Gas Independence is obligated to purchase pursuant to
Sections 5.01, 5.03 and 5.06.
(c) All quantities to be delivered by Purchaser to the Gas Facility
Point shall be based on the conversion of Gas to Energy based upon the
information supplied pursuant to Exhibit 5.02(A).
8.02 GAS COST RESPONSIBILITY
Except as otherwise provided in the Gas Supply Agreement, Purchaser
shall be responsible for all costs associated with the supply and transportation
of Gas other than Gas pursuant to Section 8.01(b). Independence shall purchase
all Gas provided pursuant to Section 8.01(b) from Purchaser at the price per
MMBtu of Gas equal to the Gas Index Price plus the variable Gas transportation
charges, fuel,
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26
applicable Taxes (if any) in accordance with Section 23.02, shrinkage and loss
requirements associated with Purchaser's use of (i) the firm transportation
capacity under the Empire Gas Transportation Agreement and the Niagara Mohawk
Gas Transportation Agreement, and (ii) firm transportation capacity on the
system of TransCanada Pipelines Limited between Kirkwall and Chippawa and firm
transportation capacity on the system of Union Gas Limited between Xxxx and
Kirkwall, for Gas provided pursuant to Section 8.01(b). In addition, Purchaser
shall pay Independence for all Gas supply and transportation costs avoided as a
result of Independence's delivery of Replacement Energy to Purchaser under this
Agreement, as calculated pursuant to Section 4.07(b). The foregoing arrangements
are in addition to those specified for Start-up Gas and Shutdown Gas.
8.03 TRANSPORTATION OBLIGATIONS
To transport Purchaser's Gas to the Gas Facility Point, Independence will
make available to Purchaser firm transportation capacity (a) on the Empire
system pursuant to the Empire Gas Transportation Contract, and (b) on the
Niagara Mohawk system pursuant to the Niagara Mohawk Gas Transportation
Contract. Independence will pay all demand charges and all surcharges (excluding
all variable charges, which include commodity charges, fuel use and shrinkage)
under both firm transportation agreements. Independence will retain all rights
and obligations for the transportation capacity on the Empire and Niagara Mohawk
systems, except that Independence will take all actions reasonably required to
appoint Purchaser as Independence's agent for purposes of nominations and
scheduling under such firm transportation agreements. Except with respect to Gas
delivered pursuant to Section 8.01(b), Purchaser shall pay directly (if
permitted by the applicable Transporter) or reimburse Independence for all
variable charges, including commodity charges, fuel use, shrinkage and imbalance
charges associated with Purchaser's use of such firm transportation capacity.
The Parties shall reasonably cooperate in delivering any documentation necessary
to implement this Section 8.03. During the Contract Term, in addition to other
indemnification obligations of Independence set forth elsewhere in this
Agreement, Independence shall indemnify and hold Purchaser harmless from and
against any and all liabilities, costs, claims, causes of action, judgments,
lawsuits, or damages that may be incurred by Purchaser in connection with the
Empire Gas Transportation Contract and the Niagara Mohawk Gas Transportation
Contract for all periods prior to the Effective Date. During the Contract Term,
in addition to other indemnification obligations of Purchaser set forth
elsewhere in this Agreement, Purchaser shall indemnify and hold Independence
harmless from and against any and all liabilities, costs, claims, causes of
action, judgments, lawsuits, or damages that may be incurred by Independence in
connection with Purchaser's actions as Independence's agent for purposes of
nominations and scheduling under the Empire
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Gas Transportation Contract and the Niagara Mohawk Gas Transportation Contract.
8.04 ADDITIONAL TRANSPORTATION OBLIGATIONS
If and to the extent that NYISO Directed Operations or the provision of
Tolling Services or Ancillary Services under this Agreement requires Purchaser
to provide deliveries of Gas on terms not permitted under the Empire Gas
Transportation Contract or the Niagara Mohawk Gas Transportation Contract (e.g.,
on an intraday basis, on a no-notice basis, or Gas for Ancillary Services on
limited, same-day notice), Purchaser may not utilize the Empire Gas
Transportation Contract or the Niagara Mohawk Gas Transportation Contract for
delivery of such Gas, except in accordance with applicable tariffs or with the
consent of such parties, and Purchaser shall be responsible for any additional
costs associated with such services. Independence agrees to assist Purchaser in
making any adjustments or modifications to the Gas transportation service;
provided, however, that the failure of Empire or Niagara Mohawk to agree to any
such adjustments or modifications shall not constitute an Event of Default.
8.05 PIPELINE IMBALANCE CHARGES
(a) Notwithstanding any other provision contained herein Purchaser
shall be responsible for and pay all pipeline imbalance charges and similar
charges arising out of or relating to Gas provided under this Agreement on all
Gas transportation facilities upstream of the Gas Facility Point.
(b) The Parties shall use commercially reasonable efforts to
minimize all such pipeline imbalance charges.
8.06 SCHEDULING RESPONSIBILITY
Purchaser is responsible for all Scheduling and nomination activities with
the Transporters upstream of the Gas Facility Point.
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8.07 EFFECT OF DELIVERY; INDEMNITY
Title to all Gas delivered pursuant to Section 8.01(b) shall pass to
Independence at the Gas Delivery Point. As between the Parties, Purchaser shall
be deemed to be in exclusive control and possession of the Gas delivered
hereunder until the same shall have been delivered at the Gas Delivery Point, at
and after which delivery Independence shall be deemed to be in exclusive control
and possession thereof. Purchaser and Independence each assumes full
responsibility and liability for and shall indemnify and save harmless the other
Party and its officers, directors, employees, agents, and partners from all
liability and expense on account of any and all damages, claims, or actions,
including injury to and death of Persons, arising from any act or accident
occurring when title to the Gas is vested in the indemnifying Party as herein
provided.
8.08 TRANSPORTER'S SPECIFICATIONS
Gas delivered by Purchaser shall meet or exceed the minimum quality
specifications under the Empire Gas Transportation Contract (and related Empire
Gas tariffs) and the Niagara Mohawk Gas Transportation Contract (and related
Niagara Mohawk Gas tariffs). If any Gas delivered by Purchaser shall fail to
conform to such quality specifications, Independence's sole remedy shall be
refusal to accept the tendered quantities, in which event such Gas shall be
treated as if Purchaser shall have failed to deliver it; all other Gas shall be
treated as meeting such specifications. Gas delivered by Purchaser shall be
delivered at pressures sufficient to cause such Gas to enter Independence's
facilities at the Gas Facility Point, but not below the minimum allowable or
above the maximum allowable operating pressure specified in the Empire Gas
Transportation Contract (and related Empire Gas tariffs) and the Niagara Mohawk
Gas Transportation Contract (and related Niagara Mohawk Gas tariffs).
8.09 GAS SUPPLY OBLIGATIONS
For so long as the Gas Supply Agreement is in full force and effect,
Purchaser's obligations to supply Gas to Independence pursuant to Section
8.01(b) and all related performance and payment obligations in this Article VIII
shall be deemed satisfied by performance by Dynegy Canada Marketing and Trade in
accordance with the Gas Supply Agreement.
ARTICLE IX - OUTAGES
9.01 SCHEDULED OUTAGES
(a) Scheduled Outages will be scheduled and permitted as follows:
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(i) Within ten Days following the Effective Date, on or before
September 15, 2001 and thereafter prior to September 15 of each subsequent
Contract Year, Independence will provide to Purchaser a non-binding forecast
schedule of Scheduled Outages of the Facility for each Month. Such non-binding
forecast schedule will cover the period of time occurring (A) in the case of the
notice delivered within ten days after the Effective Date, from the Effective
Date through December 31, 2001, (B) in the case of the notice delivered on or
before September 15, 2001, from January 1, 2002 through December 31, 2002, and
(C) in the case of each subsequent notice, the following Contract Year. Within
30 Days of receipt of the forecast schedule, Purchaser may provide Independence
with comments on the forecast. Independence will make commercially reasonable
efforts to accommodate Purchaser's comments. No later than thirty Days following
the receipt of Purchaser's comments, Independence will submit to Purchaser its
schedule for Scheduled Outages for the period, which schedule will include the
number of generation turbines to be included in each Scheduled Outage. In no
event, without Purchaser's consent, will such schedule provide for a Scheduled
Outage during the months of June, July, August, September, December, January or
February.
(ii) Either Party may request a change in the schedule for a
Scheduled Outage by delivering a notice to the other Party at least 60 Days
prior to the start of such Scheduled Outage. The Parties will use commercially
reasonable efforts to accommodate such requests, provided that Independence will
in no event be required to accept such request if the implementation of the
requested schedule change could, in Independence's reasonable judgment,
invalidate or impair Independence's equipment warranties or insurance policies
or the success of any claims to be made thereunder, increase the cost to
Independence of performing maintenance or affect the quality of such
maintenance, cause Independence's actions or performance hereunder to deviate
from Good Electrical Practices or prevent Independence from meeting its
obligations under this Agreement.
(b) Notwithstanding any other provision of this Section 9.01,
Independence may schedule or reschedule a Scheduled Outage at any time if
required, in Independence's reasonable judgment, by Good Electrical Practices or
pursuant to NYISO Requirements. Independence shall provide Purchaser with as
much notice of such Scheduled Outages as practicable under the circumstances. If
Independence desires to schedule or reschedule a Scheduled Outage during June,
July, August, September, December, January or February, Independence will, if
practicable, discuss with Purchaser the timing of such a Scheduled Outage and
will consider any reasonable requests by Purchaser to modify the timing for such
a Scheduled Outage.
9.02 FORCED OUTAGES
Any outage or unavailability of all or a portion of the Contract Tolling
Capability, other than due to Force Majeure, breach by Purchaser or a Scheduled
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Outage shall constitute a Forced Outage. The Parties expressly acknowledge and
agree that the existence of a Forced Outage shall not constitute an Event of
Default hereunder. In the event of a Forced Outage, Independence shall use
commercially reasonable efforts to remedy the cause(s) and effect(s) of such
Forced Outage with all reasonable dispatch, including, if necessary, the
reconstruction, repair or replacement of all or a portion of the Facility
utilizing the proceeds of insurance required pursuant to Article XV.
ARTICLE X - NYISO AND REGULATORY REQUIREMENTS
10.01 NYISO BIDDING
(a) Subject to Section 10.01(b) and the applicable Scheduling and
Operating Procedures specified in Exhibits 5.02(A) and 5.02(B) and except as
provided in the following sentence and in Section 10.01(c), Independence or its
agent shall on Purchaser's behalf and in accordance with the directions supplied
by Purchaser, bid all of the Energy associated with the Facility's Installed
Capacity into the NYISO's Day-Ahead Market or sell such Energy to a Load Serving
Entity in the
New York Control Area at prices to be determined by Purchaser.
Independence or its agent shall be entitled to bid all or any portion of the
Energy associated with the Facility's Reserved Capability into the NYISO's
Day-Ahead Market and/or Hour-Ahead Market at a price low enough to ensure that
the NYISO will accept such bid or may make such other instructions as may be
consistent with the procedures and protocols of the NYISO Day-Ahead Market
and/or the NYISO Hour-Ahead Market. Independence or its agent shall be
responsible for all communications with the NYISO pursuant to this Section 10.01
(including the submission of all bids). Each of the terms "Installed Capacity,"
"Day-Ahead Market," "Hour-Ahead Market," "Load Serving Entity," and "New York
Control Area" are as defined in the NYISO Requirements.
(b) The Parties hereby agree to use reasonable efforts to cause the
NYISO to permit Purchaser to submit NYISO Bids directly to the NYISO during the
Contract Term and in accordance with the Energy Management Agreement. At such
time that the NYISO permits Purchaser to submit NYISO Bids directly, Purchaser
shall submit all NYISO Bids in accordance with Section 10.01, Exhibits 5.02(A)
and 5.02(B) and the Energy Management Agreement.
(c) (i) On 45 Days' notice, Purchaser may request, at any time and
at its own expense, to supply Installed Capacity on behalf of Independence to
ConEd under the ConEd Agreement or to any purchaser under a Residual Installed
Capacity Agreement (to the extent such Residual Installed Capacity Agreement
permits Independence to supply Installed Capacity from sources other than the
Facility) ("Replacement Capacity"). Independence shall consent to Purchaser's
supply of such Replacement Capacity only if Independence determines, in its sole
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discretion, that (1) such Replacement Capacity satisfies all requirements under
the ConEd Agreement and any Residual Installed Capacity Agreements, (2) such
Replacement Capacity meets the NYISO Requirements for Installed Capacity, and
(3) the provision of such Replacement Capacity is permitted under the NYISO
Requirements and will not result in any penalty, deficiency charge or price
adjustment under the NYISO Services Tariff, the ConEd Agreement or any Residual
Installed Capacity Agreement.
(ii) For any period during which Purchaser is supplying
Replacement Capacity to ConEd or to any other purchaser under a Residual
Installed Capacity Agreement on Independence's behalf and with Independence's
consent pursuant to Section 10.01(c)(i), Purchaser shall be entitled to the
Installed Capacity from the Facility up to the level of the Replacement Capacity
supplied and the requirements of Section 10.01(a) shall not apply with respect
to such Installed Capacity.
(iii) If at any time, the provision of Replacement Capacity to
ConEd or to any other purchaser under a Residual Installed Capacity Agreement
fails to satisfy any of the three conditions listed in Section 10.01(c)(i) or if
Independence reasonably believes that the provision of Replacement Capacity to
ConEd or to any other purchaser under a Residual Installed Capacity Agreement
shall fail to satisfy any of the three conditions listed in Section 10.01(c)(i),
Independence shall be entitled to immediately take the Installed Capacity from
the Facility back from Purchaser and the requirements of Section 10.01(a) shall
once again apply with respect to such Installed Capacity. During the Contract
Term, in addition to other indemnification obligations of Purchaser set forth
elsewhere in this Agreement, Purchaser shall indemnify and hold Independence
harmless from and against any and all liabilities, costs, claims, causes of
action, judgments, lawsuits, or damages (including any penalties, deficiency
charges or price adjustments under the ConEd Agreement) that may be incurred by
Independence in connection with the failure of Replacement Capacity to satisfy
any of the three conditions listed in Section 10.01(c)(i).
(iv) For any period during which Purchaser is supplying
Replacement Capacity to ConEd or to any other purchaser under a Residual
Installed Capacity Agreement on Independence's behalf and with Independence's
consent pursuant to Section 10.01(c)(i), the Parties expressly acknowledge and
agree that Independence shall be entitled to receive directly all amounts
payable under the ConEd Agreement or such Residual Installed Capacity Agreement
and Purchaser hereby waives any right, title or interest to any such amounts
payable.
(v) Independence agrees to incorporate provisions in all
negotiated Residual Installed Capacity Agreements entered into during the
Contract Term to permit Independence or its designated agent to supply Installed
Capacity from sources other than the Facility. If Independence elects to sell
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Installed Capacity from the Facility through an auction process, Independence
shall notify Purchaser of its intent at least 15 Days prior to the deadline for
participation in such auction; it being understood that the first sentence of
this Section 10.01(c)(v) shall not apply to any sales of Installed Capacity
through an auction process.
10.02 PURCHASER REQUIREMENTS
Purchaser shall not issue any notices, instructions or schedules
inconsistent with this Agreement, any applicable operating policies, criteria
and/or guidelines of NERC, NYISO, any other regional or subregional operational
and reliability requirements or any other applicable Laws, or that would result
in NYISO Directed Operations that are inconsistent with Good Electrical
Practices. If Purchaser issues a notice, instruction or schedule in
contravention of the preceding sentence, Independence shall have no obligation
to comply with such notice, instruction or schedule. Any NYISO Directed
Operation that requires Independence to Start-up or Shutdown or otherwise
affects the operation of the Facility shall be treated under this Agreement as
if such direction had been issued by Purchaser, and Purchaser shall supply Gas
as required for Independence to comply with such NYISO order, and Purchaser
shall be entitled to all revenues from sales resulting from such NYISO order and
Independence shall be entitled to payment in accordance with Article IV (except
as specified in Sections 5.05 and 8.02). Independence shall comply with NYISO
Directed Operations that are not consistent with Good Electrical Practices only
during NYISO system emergencies. In the event that a Party receives notice of a
change or proposed change to the NYISO Requirements that would require a Party
to take or refrain from taking an action that would be inconsistent with such
Party's rights and/or obligations hereunder, the Party receiving notice will
promptly notify the other Party to the extent practicable that such NYISO
Requirement conflicts with the rights and/or obligations of a Party under this
Agreement and the Parties agree to promptly meet and negotiate in good faith an
agreement as to how compliance shall be established and maintained, attempting
in all events to restore or maintain for each Party as nearly as possible, its
respective rights, obligations and benefits under this Agreement provided that
such compliance shall not result in significant economic impact to the Parties.
The failure of the Parties to reach any such agreement shall not result in
termination of this Agreement or relieve any Party of its obligations to make
payments in accordance with this Agreement. Subject to any such agreement,
Independence and Purchaser shall each comply with all NYISO Requirements and
shall deviate (except for the payment of money for which there shall be no
deviation) from the provisions of this Agreement to the minimum extent necessary
in order to comply with such NYISO Requirements. During the Contract Term, in
addition to other indemnification obligations of Purchaser set forth elsewhere
in this Agreement, Purchaser shall indemnify and hold Independence harmless from
and against any and all liabilities, costs, claims, causes of action, judgments,
lawsuits, or damages that may be incurred by Independence as a result of
Purchaser's failure to meet its obligations under this Section 10.02.
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10.03 NIAGARA MOHAWK POWER PURCHASE AGREEMENT
Subject to the requirements and limitations of the Niagara Mohawk Power
Purchase Agreement and the Scheduling and Operating Procedures set forth in
Exhibits 5.02(A) and 5.02(B) and for so long as Independence remains a
Qualifying Facility (as defined in the Federal Power Act) and the Niagara Mohawk
Power Purchase Agreement remains in effect, Independence may submit (or, once
Purchaser takes over responsibility for submission of bids, request that
Purchaser submit) a transaction bid under the Niagara Mohawk Power Purchase
Agreement for a portion of the Energy output of the Facility associated with the
Reserved Capability. Notwithstanding any provision of this Agreement,
Independence shall have the right to suspend, modify, amend or terminate the
Niagara Mohawk Power Purchase Agreement in its sole discretion without any
liability whatsoever.
10.04 AMENDMENT; REGULATORY ACTION
(a) This Agreement shall not be amended unless such amendment is in
writing and executed by the Parties. It is the intent of this Section 10.04
that, to the maximum extent permitted by law, the rates, terms and conditions in
this Agreement shall not be subject to change, regardless of whether such change
is sought under Section 205 or 206 of the Federal Power Act or any other
applicable law or regulation (a) by the FERC acting SUA SPONTE on behalf of a
Party or third party, (b) by a Party, (c) by a third party, or (d) in any other
manner; and that this Agreement may be amended, modified or supplemented only by
written agreement of both Parties as provided above. Either Party shall, as and
if requested by the other Party, support this Agreement in filings and with
testimony in any administrative or judicial proceeding relating to or in
connection with this Agreement.
(b) Except as provided in this Section 10.04, nothing in this
Agreement shall limit the ability of the Parties to participate in regulatory
proceedings. To the extent permitted by law, if a Party desires to participate
in a generic rulemaking or similar regulatory proceeding, the Parties may
participate in their own right or may cause Affiliates to participate in such
proceedings in lieu of direct participation by the Parties; provided that if a
Party determines, in its reasonable judgment, that its rights cannot be
adequately protected except through direct participation by such Party, the
Party may participate in such regulatory proceedings.
(c) Purchaser shall be responsible for obtaining and maintaining, on
behalf of Independence, all required regulatory authorizations for Independence
under this Agreement and the Gas Supply Agreement from (i) United States
Governmental Authorities to import and (ii) their Canadian counterparts to
export Gas from Canada to the United States.
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10.05 CLASSIFICATION
If at any time during the term of this Agreement, the Facility ceases to
qualify as a "qualifying facility" under the Public Utility Regulatory Policies
Act, then subject to NYISO Requirements, Purchaser shall instruct Independence
to designate the Facility as a non-utility generator with the NYISO and to make
such other appropriate arrangements as may be necessary to coordinate pricing
references to the Facility. Upon such instruction, and at the request of
Purchaser, Independence shall make such arrangements with the NYISO as may be
necessary to carry out such re-designation. The Parties expressly acknowledge
and agree that Independence shall have no obligation under this Agreement or
otherwise to maintain its status as a "qualifying facility."
ARTICLE XI - METERING
11.01 POWER
(a) To the maximum extent possible given the capabilities of the
Electric Metering Equipment, Net Electric Energy delivered by Independence shall
be metered at the Electric Delivery Point on a continuous real-time basis. The
Electric Metering Equipment shall be used to determine conclusively, subject to
Section 11.05, the amount of Net Electric Energy delivered by Independence at
the Electric Delivery Point.
(b) Subject to the requirements and limitations of the Niagara
Mohawk Interconnection Agreement, Independence shall be responsible for
performing, or causing to be performed, and shall bear all costs and expenses of
the installation, maintenance, testing and initial calibration of the Electric
Metering Equipment and the maintenance and testing of the electrical facilities
and Protective Apparatus, including any transmission equipment and related
facilities, necessary to interconnect the Facility at the Electric Delivery
Point to the relevant electrical system. All Electric Metering Equipment must
conform to the requirements of Niagara Mohawk.
(c) Subject to the requirements and limitations of the Niagara
Mohawk Interconnection Agreement and NYISO Requirements, Independence will work
with Purchaser to permit Purchaser, at Purchaser's expense, either to install
electronic access to the existing real-time electric meters, or to install
Purchaser's own real-time meters.
11.02 GAS
(a) To the maximum extent possible given the capabilities of the Gas
Metering Equipment, Gas delivered by Purchaser to Independence shall be measured
at the Gas Facility Point on a continuous real-time basis. Subject to
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Section 11.05, the delivering pipeline revenue meter shall be used to determine
the quantity of Gas delivered at the Gas Facility Point.
(b) Subject to the requirements and limitations of the Niagara
Mohawk Gas Transportation Contract and the Empire Gas Transportation Contract
(and related Gas tariffs), Independence shall be responsible for performing, or
causing to be performed, and shall bear all costs and expenses of the
installation, maintenance, repair, testing and initial calibration of the Gas
Metering Equipment (to the extent not otherwise installed, maintained, tested
and calibrated by the delivery pipeline or supplier of Gas to the Facility).
(c) Subject to the requirements and limitations of the Niagara
Mohawk Gas Transportation Contract and the Empire Gas Transportation Contract
(including related Gas tariffs), Independence will work with Purchaser to permit
Purchaser, at Purchaser's expense, either to install electronic access to the
existing real-time gas meters, or to install Purchaser's own real-time meters.
11.03 INDUSTRY STANDARDS
Subject to the requirements and limitations of the Niagara Mohawk
Interconnection Agreement and the Niagara Mohawk Gas Transportation Contract and
the Empire Gas Transportation Contract (including related Gas tariffs), all
Electric Metering Equipment and Gas Metering Equipment, whether owned by
Independence or by a third party, shall be operated, maintained and tested by
and/or on behalf of Independence in accordance with Good Electrical Practices,
in the case of the Electric Metering Equipment, and in accordance with AGA and
ANSI standards in the case of the Gas Metering Equipment.
11.04 ACCESS
Subject to the requirements and limitations of the Niagara Mohawk
Interconnection Agreement and the Niagara Mohawk Gas Transportation Contract and
the Empire Gas Transportation Contract (including related Gas tariffs), each
Party shall have the right to receive reasonable advance notice with respect to,
and to be present at the time of, any installing, cleaning, changing, repairing,
inspecting, testing, calibrating or adjusting of Electric Metering Equipment and
Gas Metering Equipment irrespective of whether such Electric Metering Equipment
or Gas Metering Equipment is owned or operated by Independence or by a third
party. Upon reasonable advance notice, Independence shall make available to
Purchaser all data, records and charts relating to the Electric Metering
Equipment and Gas Metering Equipment, together with measurements and
calculations therefrom, for inspection and verification.
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11.05 CALIBRATION
Subject to the requirements and limitations of the Niagara Mohawk
Interconnection Agreement and the Niagara Mohawk Gas Transportation Contract and
the Empire Gas Transportation Contract (including related Gas tariffs),
Independence at its sole cost and expense shall inspect and calibrate, or cause
to be inspected, all Electric Metering Equipment and Gas Metering Equipment
periodically, but not less frequently than as required by Niagara Mohawk and
Empire. Subject to the requirements and limitations of the Niagara Mohawk
Interconnection Agreement and the Niagara Mohawk Gas Transportation Contract and
the Empire Gas Transportation Contract (including related Gas tariffs),
correction shall be made when any test shows a measurement error of more than
(i) in the case of Gas Metering Equipment, two percent (2%) or such lower
percentage as may be established by applicable tariff of the delivering
pipeline, or (ii) in the case of Electric Metering Equipment, as specified by
the NYISO Requirements.
11.06 RECORDS
The Parties shall maintain accurate and detailed records relating to the
Facility's hourly deliveries of Net Electric Energy and Gas consumption for
three years or for such longer period as may be required by FERC, the NYISO,
Empire or Niagara Mohawk. All records shall be available for inspection by
either Party upon reasonable notice during Regular Business Hours.
11.07 UPGRADED METERING
Notwithstanding any other provision of this Article XI, the Parties
acknowledge that the Gas Metering Equipment may not provide the degree of
precision that the Parties desire regarding the measurement and monitoring of
the Gas input of the Facility, and the Parties agree to work together to develop
plans for upgraded and additional meters. Such plans shall be developed by
mutual agreement of the Parties, and shall be subject to the requirements of the
Niagara Mohawk Gas Transportation Contract and the Empire Gas Transportation
Contract. Independence agrees to bear the reasonable costs of such upgraded
metering.
ARTICLE XII - BILLING AND PAYMENT
12.01 BILLING
As soon as practicable after the end of each Month, Independence shall
deliver to Purchaser an invoice detailing the Energy and Ancillary Services
delivered to Purchaser and setting forth all charges and any other amount
payable to Independence pursuant to this Agreement, and any amounts payable to
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Purchaser pursuant to the terms of this Agreement. Monthly payments under this
Agreement for any partial Month during the Contract Term will be prorated.
12.02 PAYMENT
Each Party shall render payment to the other Party by wire transfer
payment, or other acceptable method agreed to by the Parties, of the amount due
as set forth in the invoice, by the later of (i) the twenty fifth (25th) Day of
the Month, and (ii) ten Days after the other Party's receipt of the invoice. The
address, account information and/or wire transfer information shall be as
provided pursuant to Section 24.07. Failure to make such payment when due shall
result in a late charge on the unpaid balance that shall accrue on each calendar
day from the due date to the date paid at the Interest Rate. If either Party in
good faith disputes any part of any invoice, it shall make payment of the
undisputed amount invoiced and shall provide to the other Party on or before the
payment due date a written explanation of the basis for the dispute. If any
amount disputed is determined to be due, the disputing Party shall pay such
disputed amount within two Days of such determination, along with interest
accrued daily at the Interest Rate from the date that, but for the dispute,
payment was due until the date paid.
12.03 AUDIT
Each Party has the right with reasonable prior notice, at its sole
expense, to examine the records of the other Party during Regular Business Hours
to the extent reasonably necessary to verify the accuracy of any invoice, or
calculations provided with or supporting such invoice, rendered pursuant to this
Agreement. If any such examination reveals any inaccuracy in any invoice, or
calculations provided with or supporting such invoice, the necessary adjustments
in such invoice, or calculations provided with or supporting such invoice, and
the payments made pursuant to such inaccurate invoice, or calculations provided
with or supporting such invoice, shall be adjusted in the next invoice;
provided, however, that the party asserting the need for such adjustment brought
it to the attention of the other Party within twelve Months after the event
causing the need for adjustment. This Section 12.03 shall survive any
termination of this Agreement for a period of one year from the date on which
the last invoice is rendered to such Party pursuant to this Agreement.
12.04 NYISO REIMBURSEMENT
If and to the extent the NYISO pays Independence directly for Energy or
Ancillary Services to which Purchaser is entitled in accordance with Article
III, Independence shall forward such payments to Purchaser within five Days of
receipt. If the NYISO subsequently adjusts any such payment, Independence shall
forward such adjustment to Purchaser within five days of receipt (in the case of
an additional payment from the NYISO), and Independence shall include the amount
of such adjustment in the next billing statement to Purchaser (in the case of an
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adjustment reducing a prior payment). If Purchaser believes that a payment
calculated by the NYISO is incorrect and requests that Independence dispute such
calculation, Independence shall dispute any such payment amounts pursuant to the
applicable NYISO procedures, subject to the direction of Purchaser and with
counsel that may be engaged by Purchaser. Purchaser shall be responsible for all
costs reasonably incurred by Independence with respect to such disputes.
12.05 OFFSET
The Parties hereby agree that they shall discharge mutual debts and
payment obligations due and owing to each other under this Agreement through
netting, in which case all amounts owed by each Party to the other Party under
this Agreement during the monthly billing period, including, interest, and
payments or credits, shall be netted so that only the excess amount remaining
due shall be paid by the Party who owes it.
ARTICLE XIII - ELECTRIC TRANSMISSION ARRANGEMENTS
13.01 ELECTRIC TRANSMISSION ARRANGEMENTS
Purchaser shall arrange and be responsible for transmission service at and
after the Electric Delivery Point, shall schedule or arrange for scheduling
services with its Transmission Providers to accept Energy at and from the
Electric Delivery Point and shall be responsible for all costs or charges
imposed on or associated with the transmission service at and after the Electric
Delivery Point, including control area services, and other ancillary services
required by the Transmission Providers' tariff or otherwise to be provided to
the transmission customer.
ARTICLE XIV - COST RESPONSIBILITY
14.01 COST RESPONSIBILITY
Purchaser shall be responsible for and shall reimburse Independence for
all costs imposed upon Independence by any Governmental Authority or by the
NYISO (other than any such costs that are currently imposed on Independence by
such entities) and that Independence would not have incurred but for performance
by Independence of its obligations to Purchaser under this Agreement. The
Parties expressly acknowledge and agree that Purchaser shall be responsible for,
and shall reimburse Independence for, all costs arising out of or relating to
the performance of any of the Parties' obligations under this Agreement
including, without limitation, the provision of Tolling Services or Ancillary
Services, the operation of all or any portion of the Reserved Capability and the
dispatch or decision not to cause the dispatch of the Facility by the NYISO that
are associated with scheduling,
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regulation, energy imbalances or similar occurrences, including, but not limited
to, any charges assessed against Independence or Purchaser by the NYISO, either
directly or indirectly, for Energy Imbalance Service (pursuant to and as defined
in Schedule 4 to the NYISO Open Access Transmission Tariff) or for charges
associated with Real-Time Market Settlement (pursuant to and as defined in
Section 4.18 to the NYISO Services Tariff), provided further however, that
Purchaser shall not be responsible for any of the foregoing costs to the extent
that they arise out of the breach by Independence of a material obligation of
Independence set forth in this Agreement.
ARTICLE XV - ADDITIONAL AGREEMENTS
15.01 INSURANCE
(a) Independence will at all times carry and maintain or cause to be
carried and maintained at its expense such insurance as is customarily
maintained by owners and operators of generating facilities and in all events
will carry and maintain at least the minimum insurance coverage set forth in
this section placed with brokers, insurers, and reinsurers of recognized
responsibility.
(i) ALL RISK PROPERTY INSURANCE.
Throughout the Contract Term, Independence will maintain all risk property
insurance covering the Facility against physical loss or damage, including,
comprehensive boiler and machinery coverage (including electrical malfunction
and mechanical breakdown). Deductibles will not exceed US $1,000,000.00 for a
combustion turbine, $750,000.00 for a steam turbine, generator, or heat recovery
steam generator, and $250,000.00 for all other losses. As an extension of All
Risk Coverage Independence will maintain Business Interruption insurance in an
amount equal to six (6) Months projected non-operating cash flow requirements.
Such extension may be subject to deductibles not to exceed 60 Days.
(ii) COMMERCIAL GENERAL LIABILITY.
Independence will maintain third party liability insurance written on an
occurrence basis (claims made if covered by Aegis) with a limit not less than US
$1,000,000.00. Deductibles will not exceed $50,000.00 per occurrence.
(iii) WORKERS' COMPENSATION/EMPLOYER'S LIABILITY.
Independence will maintain Workers' Compensation Insurance and Employer's
Liability Insurance which comply with Applicable Laws statutory to New York.
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(iv) BUSINESS AUTOMOBILE LIABILITY.
Independence will maintain Business Automobile Liability Insurance with a
limit of not less than US $1,000,000.00, including coverage for owned, not-owned
and hired automobiles for both bodily injury (including death) and property
damage, uninsured/underinsured motorist protection endorsements.
(v) EXCESS/UMBRELLA LIABILITY.
Independence will maintain Excess/Umbrella Liability insurance written on
an occurrence basis (claims made if covered by Aegis) and providing coverage
limits in excess of the primary limits. The limit of such excess/umbrella
coverage will not be less than US $10,000,000.00 on a follow form basis.
Independence will annually cause each insurer or authorized agent to
provide Purchaser with two original copies of insurance certificates reasonably
acceptable to Purchaser evidencing the effectiveness of the insurance coverages
required to be maintained.
(b) All such insurance policies maintained by Independence will:
(i) name Purchaser as an additional insured (except in the
case of worker's compensation insurance);
(ii) provide that Purchaser will receive from each insurer 30
Days' prior written notice of non-renewal, cancellation of, or
significant modification to, any of such policies (except that
such notice period will be 10 Days in case of non-payment of
premiums); and
(iii) provide a waiver of any rights of subrogation against
Purchaser, its Affiliates and their officers, directors,
agents, subcontractors, and employees.
The insurance certificates will indicate that the insurance policies have
been endorsed as described above.
(c) All policies maintained by Independence will be written by one
or more nationally reputable insurance companies approved to do business in New
York and be rated B+VII or higher by A.M. Best Company or Lloyds Companies or
other insurers reasonably acceptable to Purchaser.
(d) All policies maintained by Independence will be written on an
occurrence basis unless procured from AEGIS on a claims made basis. Policies
will contain an endorsement that Independence's policy will be primary as
respects
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construction and operations of the Facility regardless of like coverages, if
any, carried by Purchaser.
(e) Purchaser may request Independence to require that any insurance
obtained and maintained by a third party operator of the Facility name Purchaser
as an additional insured, with any cost for such coverage payable by Purchaser.
(f) Independence will notify Purchaser of the insurance company (and
any replacement thereof) from which Independence obtains its Commercial or
Comprehensive General Liability insurance and, if Purchaser desires to obtain
Commercial or Comprehensive General Liability insurance from the same insurance
company (or any replacement thereof), Independence will comply with Purchaser's
reasonable requests for information concerning such coverages which assist
Purchaser in obtaining insurance from the same such insurance company.
(g) In the event that (i) the third party liability insurance
required above or (ii) the Excess/Umbrella Liability insurance required, is on a
"claims made" basis and not on an occurrence basis, such insurance will provide
for a retroactive date and continuing "tail" coverage not later than the
Effective Date and such insurance will be maintained by Independence, with a
retroactive date not later than the retroactive date required above, for a
minimum of three years after the Contract Term.
(h) In the event that Independence reasonably determines that any
such policy of insurance is no longer available at commercially reasonable
rates, Independence shall not be obligated to continue to carry such insurance,
and shall obtain substitute insurance which is as nearly identical as possible
to the policy of insurance which it is intended to replace.
(i) Purchaser shall at all times effect, maintain and keep in force,
or cause to be effected, maintained and kept in force, comprehensive general
liability insurance, public liability coverage and property insurance for
injuries to persons and property, automobile liability insurance and xxxxxxx'x
compensation insurance, all in commercially reasonable amounts and terms. In the
event that Purchaser reasonably determines that any such policy of insurance is
no longer available at commercially reasonable rates, Purchser shall not be
obligated to continue to carry such insurance, and shall obtain substitute
insurance which is as nearly identical as possible to the policy of insurance
which it is intended to replace.
ARTICLE XVI - REPRESENTATIONS
16.01 INDEPENDENCE'S REPRESENTATIONS
Independence hereby represents and warrants as follows:
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(a) It is a limited partnership duly organized and validly existing
and in good standing under the laws of Delaware and is duly qualified to do
business and in good standing in the State of New York.
(b) It has all requisite power and authority to carry on the
business to be conducted by it and to enter into this Agreement and the
transactions contemplated hereby, and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to this Agreement.
(c) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on its part and do not require any
other actions or proceedings or any partnership approval or consent of any
trustee or holder of any indebtedness of Independence.
(d) This Agreement has been duly executed and delivered on behalf of
Independence by the appropriate officers of the general partner of Independence
and constitutes the legal, valid and binding obligation of Independence,
enforceable against Independence in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium and other similar laws applicable
to creditors' rights generally and except as the enforceability thereof may be
limited by general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
16.02 PURCHASER'S REPRESENTATIONS
Purchaser hereby represents and warrants as follows:
(a) It is a corporation duly organized and validly existing and in
good standing under the laws of Texas and is duly qualified to do business and
in good standing in the State of New York.
(b) It has all requisite power and authority to carry on the
business to be conducted by it and to enter into this Agreement and the
transactions contemplated hereby, and perform and carry out all covenants and
obligations on its part to be performed under and pursuant to this Agreement.
(c) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on its part and do not require any
other actions or proceedings or any shareholder approval or consent of any
trustee or holder of any indebtedness of Purchaser.
(d) This Agreement has been duly executed and delivered on behalf of
Purchaser by the appropriate officers of Purchaser and constitutes the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium and other
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similar laws applicable to creditors' rights generally and except as the
enforceability thereof may be limited by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(e) Purchaser warrants that it will, at the time of delivery, have
good title to all Gas delivered by it to Independence hereunder, free and clear
of all liens, encumbrances and claims whatsoever.
ARTICLE XVII - CONDITIONS
17.01 CONDITIONS PRECEDENT
The obligations of Independence to consummate the transactions
contemplated by this Agreement shall be subject to fulfillment of the following
conditions, unless waived in writing by Independence:
(a) Purchaser shall have delivered a duly executed Acknowledgement
and Consent in the form of Exhibit 17.01(A) or such other form as Independence
may approve;
(b) Dynegy Holdings Inc. ("Guarantor") shall have delivered a duly
executed Guaranty Agreement in the form of Exhibit 17.01(B) or such other form
as Independence may approve; and
(c) Guarantor shall have delivered a duly executed Acknowledgement
and Consent in the form of Exhibit 2 to Exhibit 17.01(B) or such other form as
Independence may approve.
ARTICLE XVIII - DEFAULT AND REMEDIES
18.01 EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an Event of Default under this Agreement:
(a) A material breach of any material term or condition of this
Agreement, including, but not limited, to (i) any material breach of a
representation, warranty or covenant made in this Agreement, and (ii) failure of
either Party to make a required payment to the other Party of amounts due
hereunder.
(b) A failure of Guarantor to provide Performance Assurance as
defined in the Guaranty Agreement dated as of the date hereof by Guarantor (as
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amended, supplemented or modified and in effect from time to time, the "Guaranty
Agreement") or a guaranty or other credit assurance acceptable to Independence,
within the time required pursuant to Section 6 of the Guaranty Agreement.
(c) A receiver or liquidator or trustee of either Party or of any of
its property shall be appointed by a court of competent jurisdiction, and such
receiver, liquidator or trustee shall not have been discharged within one
hundred twenty (120) Days, or by decree of such a court, a Party shall be
adjudicated bankrupt or insolvent or any substantial part of its property shall
have been sequestered, and such decree shall have continued undischarged and
unstayed for a period of one hundred twenty (120) Days after the entry thereof;
or a petition to declare bankruptcy or to reorganize a Party pursuant to any of
the provisions of the Federal Bankruptcy Code, as now in effect or as it may
hereafter be amended, or pursuant to any other similar state statute as now or
hereafter in effect, shall be filed against a Party and shall not be dismissed
within one hundred twenty (120) Days after such filing.
(d) A Party shall file a voluntary petition in bankruptcy under any
provision of any federal or state bankruptcy law or shall consent to the filing
of any bankruptcy or reorganization petition against it under any similar law;
or, without limiting the generality of the foregoing, a Party shall file a
petition or answer or consent seeking relief or assisting in seeking relief in a
bankruptcy under any provision of any federal or state bankruptcy law or shall
consent to the filing of any bankruptcy or reorganization petition against it
under any similar law, or, without limiting the generality of the foregoing, a
Party shall file a petition or answer or consent seeking relief or assisting in
seeking relief in a proceeding under any of the provisions of the Federal
Bankruptcy Code, as now in effect or as it may hereafter be amended, or pursuant
to any other similar state statute as now or hereafter in effect, or an answer
admitting the material allegations of a petition filed against it in such a
proceeding; or a Party shall make an assignment for the benefit of its
creditors; or a Party shall admit in writing its inability to pay its debts
generally as they become due; or a Party shall consent to the appointment of a
receiver, trustee or liquidator of it or of all or part of its property.
(e) The occurrence and continuation of a default, event of default
or other similar condition or event in respect of such Party (or an Affiliate of
such Party) under (i) the Gas Supply Agreement; or (ii) the Energy Management
Agreement.
18.02 NOTICE OF DEFAULT; CURE
Upon the occurrence of any such Event of Default other than those
described in Section 18.01(b), (c) and (d), the Party not in default shall give
written notice of the Event of Default to the defaulting Party. Such notice of
default shall set forth, in reasonable detail, the nature of the default and,
where known and applicable, the
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steps necessary to cure such default. Following receipt of such notice, the
defaulting Party shall have:
(a) ten (10) Days in the case of the failure of the defaulting Party to
make a required payment to the other Party of amounts due hereunder;
or
(b) thirty (30) Days in the case of any other Event of Default described
in Sections 18.01(a) and 18.01(e):
to cure such default or, in the case of an Event of Default under Section
18.02(b), to commence in good faith and continue to diligently pursue all such
steps as shall be reasonably necessary and appropriate to cure such default in
the event such default cannot reasonably be completely cured within such thirty
(30) Day period.
18.03 REMEDIES
Notwithstanding the foregoing, after the occurrence of any such Event of
Default and the expiration of all applicable cure periods with respect thereto
without such default being cured, the non-defaulting Party shall be entitled (i)
to suspend performance under this Agreement or to terminate this Agreement, (ii)
to commence an action to require the defaulting Party to remedy such default and
specifically perform its duties and obligations hereunder in accordance with the
terms and conditions hereof and (iii) to exercise such other rights and remedies
as it may have at equity or at law, but subject to any limitation on damages
otherwise provided for under this Agreement.
ARTICLE XIX - LIMITATION OF LIABILITY
19.01 LIMITATION OF LIABILITY
(a) Subject to Section 19.01(b), neither Party, nor their respective
officers, directors, partners, agents, employees or Affiliates, shall be liable
to the other Party or its Affiliates, officers, directors, trustees, partners,
agents, employees, successors or assigns, for claims for incidental, special,
indirect, consequential or punitive damages of any nature connected with or
resulting from performance or breach of this Agreement, including, without
limitation, claims in the nature of lost revenues, income or profits (other than
payments specifically provided for and properly due under this Agreement) or
losses, damages or liabilities under any financing, lending or construction
contracts, agreements or other arrangements, irrespective of whether such claims
are based upon warranty, negligence, strict liability, contract, operation of
law or otherwise. Under no circumstances shall Independence be liable to
Purchaser for damages associated with the costs to Purchaser to obtain
replacement Energy, Capacity or Ancillary Services to meet Purchaser's
contractual obligations to third parties. The Parties
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acknowledge and agree that the services to be provided hereunder are contingent
on the availability of the Facility.
(b) Notwithstanding the limitation of liability under Section
19.01(a), if Purchaser (i) fails for any reason (including as a result of Force
Majeure) to deliver Gas to the Gas Facility Point or (ii) fails for any reason
(including as a result of Force Majeure) to cause the Reserved Tolling
Capability to be dispatched by the NYISO in accordance with Section 5.05(b), in
each case, during all or any portion of a period in which Independence desires
to operate any portion of the Reserved Tolling Capability for purposes of
effectuating a physical hedge against its financial obligations associated with
the Market Price (during which such portion of the Reserved Tolling Capability
is otherwise available), Purchaser shall pay to Independence the Market Price
for all quantities of Energy that would have been delivered to the Electric
Delivery Point but for the Purchaser's failure (i) to deliver Gas for such
period or (ii) to cause the Reserved Tolling Capability to be dispatched by the
NYISO in accordance with Section 5.05(b). The Parties acknowledge that damages
for such failure to deliver Gas or to cause the Reserved Tolling Capability to
operate are difficult or impossible to determine or otherwise obtaining an
adequate remedy is inconvenient and the damages calculated under this Section
19.01(b) constitute a reasonable approximation of the harm or loss.
19.02 DUTY TO MITIGATE
Notwithstanding any other provision of this Agreement, each Party has a
duty to mitigate damages and covenants that it will use commercially reasonable
efforts to minimize any damages it may incur as a result of the other Party's
performance or non-performance.
ARTICLE XX - INDEMNIFICATION
20.01 INDEPENDENCE'S INDEMNIFICATION
Independence shall indemnify, defend and hold harmless Purchaser and its
Affiliates and their officers, trustees, directors, employees and agents from
and against any and all claims, demands, suits, losses, damages, liabilities,
costs and expenses (including reasonable attorney's fees and costs of
investigation) for damage to the tangible property of third parties and injury
to or death of persons (other than Purchaser's employees and Independence's
employees) to the extent caused by, arising out of or relating to the gross
negligence or willful misconduct of Independence in connection with or resulting
from Independence's performance or breach of this Agreement.
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20.02 PURCHASER'S INDEMNIFICATION
Purchaser shall indemnify, defend and hold harmless Independence and its
Affiliates and their officers, directors, trustees, employees and agents from
and against any and all claims, demands, suits, losses, damages, liabilities,
costs and expenses (including reasonable attorney's fees and costs of
investigation) for damage to tangible property of third parties and injury to or
death of persons (other than Independence's employees or Purchaser's employees)
to the extent caused by, arising out of or related to the gross negligence or
willful misconduct of Purchaser in connection with or resulting from Purchaser's
performance or breach of this Agreement.
20.03 INDEMNIFICATION PROCEDURES
(a) A Party which becomes entitled to indemnification under this
Agreement (the "Indemnified Party") shall give written notice to the other Party
(the "Indemnifying Party") of the occurrence of the events which give rise to
such right of indemnification within 30 Days of the Indemnified Party becoming
aware of the occurrence thereof. Such notice shall describe the claim, the basis
thereof and shall indicate an estimate of the amount of the claim. To the extent
that the Indemnifying Party is prejudiced by any failure of the Indemnified
Party to provide such notice, such notice shall be a condition precedent to the
liability of the Indemnifying Party under this Article XX.
(b) At the Indemnified Party's request, the Indemnifying Party
shall, at its cost and expense, defend (with counsel reasonably acceptable to
the Indemnified Party) any suit asserting a claim against the Indemnified Party
with respect to which the Indemnified Party is entitled to indemnification
hereunder, and shall pay all costs and expenses incurred by the Indemnified
Party to enforce its right to indemnification. The Indemnified Party may, at its
own expense, retain separate counsel and participate in the defense of any such
suit. Neither Party may settle or compromise a claim or suit without the consent
of the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
20.04 SURVIVAL
The indemnification obligations of each party under this Article XX shall
not be limited in any way by any limitation on insurance, by the amount or types
of damages, or by any compensation or benefits payable by the parties under
Worker's Compensation Acts, disability benefit acts or other employee acts or
otherwise. The provisions of this Article XX shall survive termination,
cancellation, suspension, completion or expiration of this Agreement.
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ARTICLE XXI - ASSIGNMENT AND SUCCESSION
21.01 ASSIGNMENT
(a) This Agreement and all of the provisions hereof shall be binding
upon, and inure to the benefit of, the Parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, except to an
Affiliate or successor, by either Party hereto, whether by operation of law or
otherwise, without the prior written consent of the other Party, which consent
may not be unreasonably withheld or delayed. No assignment of all or any portion
of the rights, interests or obligations permitted pursuant to the immediately
preceding sentence shall relieve or discharge the assignor from any of its
obligations under this Agreement without the prior written consent of the
non-assigning Party, which consent shall not be unreasonably withheld or
delayed. Any assignment of this Agreement in violation of the foregoing shall
be, at the option of the non-assigning Party, void.
(b) Notwithstanding the foregoing provisions of Section 21.01(a),
(i) Purchaser may assign all or any portion of its rights and obligations
hereunder to any of its Affiliates, (ii) Independence may assign all or any
portion of its rights and obligations hereunder to any of its Affiliates
(including, without limitation, Sithe Power Marketing, L.P., a Delaware limited
partnership), and (iii) Independence may assign, transfer, pledge or otherwise
dispose of its rights and interests hereunder to a trustee or lending
institution for the purposes of financing or refinancing any of its assets,
including upon or pursuant to the exercise of remedies with respect to such
financing or refinancing, or by way of assignments, transfers, pledges or other
dispositions in lieu thereof, provided, however, that no such assignment of all
or any portion of the rights, interests or obligations of a party pursuant to
this Section 21.01(b) shall relieve or discharge the assignor from any of its
obligations under this Agreement unless the non-assigning Party consents to such
release or discharge in accordance with Section 21.01(a). With respect to clause
(iii) of this Section 21.01(b), Purchaser agrees to execute and deliver such
documents as may be reasonably necessary to accomplish any such assignment,
transfer, pledge or other disposition of rights hereunder, so long as
Purchaser's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.
ARTICLE XXII - FORCE MAJEURE
22.01 FORCE MAJEURE
(a) The term "Force Majeure" shall mean causes beyond the reasonable
control of, and without the fault or negligence of the Party claiming Force
Majeure, including, but not limited to, acts of God; strikes and other labor
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disturbances; earthquakes; storms; fires; lightning; epidemics; wars; riots or
civil disturbances; sabotage or condemnation or other similar acts.
Notwithstanding the foregoing, under no circumstances shall Force Majeure
include any of the following: (i) any reduction, curtailment or interruption of
generation or operation of the Facility, whether in whole or in part, which
reduction, curtailment or interruption is caused by or arises from the
negligence or willful misconduct of the affected Party or any third party vendor
or supplier to the Facility of materials, equipment, supplies or services; (ii)
changes in market conditions that affect the cost of or demand for Energy,
Ancillary Services or Gas; (iii) any NYISO or other grid constraint affecting
the transmission of energy by Purchaser from the Electric Delivery Point; (iv)
derating of the Facility, unless such derating is due to a Force Majeure event;
(v) change in Law; (vi) failure of a Party to obtain and maintain any
governmental approval, (vii) any failure or Outage of the Facility the cause of
which cannot be determined through reasonable diligence; (viii) any failure or
outage of the Facility that is due to a latent or patent defect or inadequacy in
the generation equipment comprising the Facility; (ix) any failure or outage of
the Facility that is due to the improper or negligent maintenance, installation,
delivery, or design of the Facility; (x) the unavailability of equipment, goods,
or services that could have been avoided by the observance of Good Electrical
Practices or (ix) causes or events affecting the performance of third-party
suppliers of goods or services to the Facility or to Independence except to the
extent caused by an event that otherwise is an event of Force Majeure as
specified in this Section 22.01(a).
(b) If either Party because of Force Majeure is rendered wholly or
partly unable to perform its obligations under this Agreement, except for a
Party's obligation to make payments under this Agreement (which shall not be
excused), that Party shall be excused from whatever performance is affected by
the Force Majeure to the extent so affected, provided that the Party whose
performance under this Agreement is affected by an event of Force Majeure (i)
gives the other Party notice of the occurrence of such Force Majeure event as
soon as possible, and (ii) uses all commercially reasonable efforts to remedy
the cause(s) and effect(s) of such Force Majeure event with all reasonable
dispatch. If an event of Force Majeure results in an Outage of the Facility,
Independence shall use commercially reasonable efforts to remedy the cause(s)
and effect(s) of such Force Majeure event with all reasonable dispatch,
including, if necessary, the reconstruction, repair or replacement of all or a
portion of the Facility utilizing the proceeds of insurance required pursuant to
Article XV. The affected Party shall not be obligated to undertake unreasonable
or uneconomic costs or burdens, including the settlement of strikes or labor
disturbances on terms other than are acceptable to such Party in its sole
discretion, in order to overcome the effects of the Force Majeure and reinstate
full performance of its Agreement obligation.
*** CONFIDENTIAL TREATMENT REQUESTED ***
50
ARTICLE XXIII - TAXES
23.01 TAXES - POWER
(a) Purchaser is liable for and shall pay, cause to be paid,
reimburse Independence if Independence has paid, or pay to Independence if
Independence is required by Law to pay to a taxing or other Governmental
Authority, or to any other entity, all Taxes arising out of or related to
Independence's performance in providing Tolling Services or Ancillary Services
under this Agreement including (i) any Taxes imposed or collected by a taxing
authority with jurisdiction over Purchaser, and (ii) any Taxes imposed on the
delivery or sale of Energy or Ancillary Services to Purchaser, or Purchaser's
possession, transportation, consumption, use, sale or other disposition of the
Energy or Ancillary Services; provided, however, that Purchaser shall not be
responsible for the payment of any Taxes levied on or with respect to
Independence's personal or real property.
(b) Each Party will provide the other Party upon written request a
certificate of exemption or other reasonably satisfactory evidence of exemption
if any exemption from or reduction of any Tax is applicable. Each Party will
exercise commercially reasonable efforts to obtain and to cooperate in obtaining
any exemption from or reduction of any Tax.
23.02 TAXES - GAS
(a) Purchaser is liable for and shall pay, or cause to be paid, or
reimburse Independence if Independence has paid, all Taxes applicable to Gas
provided by Purchaser pursuant to Section 8.01(a) this Agreement including (i)
any Taxes imposed or collected by a taxing authority with jurisdiction over
Independence, and (ii) any Taxes imposed on the delivery or sale of Gas to
Independence, on Independence's possession, transportation, consumption use,
sale or other disposition of the Gas.
(b) The price specified in Section 8.02 for Gas delivered pursuant
to Section 8.01(b) includes full reimbursement to Purchaser for all Taxes
applicable to the Gas sold hereunder upstream of the Gas Facility Point,
including all Taxes applicable to the Gas sold hereunder prior to the Gas
Facility Point or applicable as a result of the transfer of title to the Gas
sold hereunder, but excluding all Taxes applicable to the Gas sold hereunder
downstream of the Gas Facility Point and except in each case to the extent that
the Tax is assessed due to any subsequent sale by Independence of such Gas. All
Taxes incurred in or attributable to the production, sale, and delivery,
handling, or transportation of the Gas sold and delivered pursuant to Section
8.01(b) of this Agreement (or otherwise caused by or attributable to such Gas)
prior to the Gas Facility Point (including all Taxes applicable to the Gas sold
hereunder prior to the Gas Facility Point or applicable as
*** CONFIDENTIAL TREATMENT REQUESTED ***
51
a result of the transfer of title to the Gas sold hereunder) shall be the
responsibility of Purchaser and Purchaser shall indemnify, defend, and hold
Independence and its officers, directors, employees, agents, and partners
harmless from and against all such Taxes. Any liability for the New York State
Tax on Natural Gas Importers under ss.189 of the New York Tax Law, or any
similar taxes enacted in place of the Sec. 189 Taxes (together, the "Sec. 189
Taxes"), which are assessed as a result of the location of any Gas Delivery
Point outside of New York State shall be the responsibility of Purchaser and
Purchaser shall indemnify, defend, and hold Independence and its officers,
directors, employees, agents, and partners harmless from and against all such
Taxes. Except as provided in the Gas Supply Agreement and with respect to Sec.
189 Taxes, all Taxes incurred in or attributable to the purchase and transfer,
handling, or transportation of the Gas purchased and received pursuant to
Section 8.01(b) of this Agreement (or otherwise caused by or attributable to
such Gas) after the Gas Facility Point shall be the responsibility of
Independence, and Independence shall indemnify, defend, and hold Purchaser and
its officers, directors, employees, agents, and shareholders harmless from and
against all such Taxes. Except as provided in the Gas Supply Agreement, all
sales, transfer, and use Taxes (if any) applicable to the sale or transfer of
Gas pursuant to Section 8.01(b) of this Agreement at the Gas Facility Point
shall be borne 50% each by Independence and Purchaser. Each of Purchaser and
Independence shall apply for, and shall cooperate with the other in applying
for, such exemption and other certificates as the other reasonably may request
to eliminate the necessity of paying, collecting, or withholding any such Taxes.
23.03 COOPERATION
The Parties agree to use commercially reasonable efforts to mitigate the
Parties' exposure to Taxes which could be imposed on either Party as a result of
this Agreement.
ARTICLE XXIV - MISCELLANEOUS
24.01 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
law of the State of New York as to all matters (without giving effect to
conflict of law principles). Each of Purchaser and Independence hereby
irrevocably waives, to the fullest extent permitted by law, any and all right to
trial by jury in any legal proceedings arising out of or relating to this
Agreement.
24.02 SUBMISSION TO JURISDICTION
Each of the Parties hereby irrevocably and unconditionally:
*** CONFIDENTIAL TREATMENT REQUESTED ***
52
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States for the
Southern District of New York and appellate courts from any thereof;
(b) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the other Party at
its address set forth in Section 24.07, or at such other address of which the
other Party shall have been notified pursuant thereto; and
(c) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by Law.
24.03 HEADINGS
The descriptive headings of the Articles and Sections of this Agreement
are inserted for convenience only and are not intended to affect the meaning,
interpretation or construction of this Agreement.
24.04 WAIVER
Except as otherwise provided in this Agreement, any failure of a Party to
comply with any obligation, covenant, agreement or condition herein may be
waived by the Party entitled to the benefits thereof only by a written
instrument signed by the Party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first Party to comply with such obligation, covenant, agreement or
condition.
24.05 SEVERABILITY
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
24.06 ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between the Parties,
and supersedes any and all previous understandings, oral or written, with
respect to the subject matter hereof.
*** CONFIDENTIAL TREATMENT REQUESTED ***
53
24.07 NOTICES
Any notice, request, demand, statement or payment provided for in this
Agreement shall be in writing and shall be made as specified below; provided,
however, that notices of interruption may be provided verbally, effective
immediately and confirmed in writing and, provided further, that any Scheduling
shall be done pursuant to the Scheduling and Operating Procedures. Invoices may
be sent by facsimile. A notice sent by facsimile transmission will be recognized
and shall be deemed received on the Business Day on which such notice was
transmitted if received before close of business (and if received after close of
business, on the next Business Day) and a notice by overnight mail or courier
shall be deemed to have been received two Business Days after it was sent or
such earlier time as is confirmed by the receiving Party unless it confirms a
prior verbal communication, in which case any such notice shall be deemed
received on the Day sent.
To Purchaser:
NOTICES & CORRESPONDENCE: PAYMENTS & INVOICES:
Dynegy Power Marketing, Inc. Bank One, NA-Chicago
P.O. Box 4777 For the Account of:
Xxxxxxx, Xxxxx 00000-0000 Dynegy Power Marketing, Inc.
Account #/CHIPS UID: 552-7651
Street Address: (courier delivery) Fed. ABA #: 000000000
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
To Independence:
NOTICES & CORRESPONDENCE: PAYMENTS BY WIRE TRANSFER:
Sithe/Independence Power Partners, L.P. All payments made by Purchaser
X.X. Xxx 0000 to Independence shall be made
00 Xxxxxxxxxxxx Xxx directly to the account entitled
Xxxxxx, Xxx Xxxx 00000 "Project Revenue Fund"
Attention: General Manager maintained by Independence with
Facsimile: (000) 000-0000 The Bank of New York, Account
No. 229289, 000 Xxxxxxx Xxxxxx,
Xxxxx 00X, Xxx Xxxx, Xxx Xxxx,
00000, or to such
***CONFIDENTIAL TREATMENT REQUESTED***
54
with a copy to: other person or account as shall
be specified from time to time
Sithe/Independence Power Partners, L.P by Independence to Purchaser in
c/o Sithe Energies, Inc. writing. Any payments being
000 Xxxxxxx Xxxxxx wired to the above-referenced
28th Floor account should be directed to
Xxx Xxxx, Xxx Xxxx 00000 ABA 000000000; The Bank of New
Attention: General Counsel York; Corporate Trust/GLA
Facsimile: (000) 000-0000 111-565; for further credit to
TAS Account 229289; REF: Sithe
Independence PWR Project Revenue
Fund.
From time to time either Party may change the foregoing addresses and payment
information by sending written notice of such change in accordance with this
Section.
24.08 CONFIDENTIALITY
(a) "Confidential Information" shall be any information or data
exchanged by the Parties relating to the trading and marketing activities of
either Party, the bids and Schedules submitted directly or indirectly to the
NYISO pursuant to this Agreement or daily advisory billing statements and
monthly billing statements received from the NYISO related to the Facility
(including non-public information related thereto communicated to a Party from
the NYISO). Confidential Information shall not include information:
(i) which was developed by the Receiving Party and was
contained in a writing in the Receiving Party's possession before its receipt
from the other Party;
(ii) which at the time of its disclosure to the Receiving
Party is, or thereafter becomes, through no act or failure to act on the part of
the Receiving Party, part of the public domain;
(iii) which has been rightfully furnished to the Receiving
Party by a third party without restriction on disclosure or use and not in
violation of any rights of, or obligations to, the other Party.
The occurrence of any of the above exceptions shall not be construed as an
express or implied grant of any rights under any of the other Party's patents or
other intellectual property rights. For the purposes of this Section 24.08, a
Party that receives Confidential Information from the other Party shall be
referred to as the "Receiving Party."
***CONFIDENTIAL TREATMENT REQUESTED***
55
(b) No Receiving Party shall disclose or use Confidential
Information received from the other Party for any purpose other than in
connection with the performance of its obligations under this Agreement, without
the prior written consent of the other Party. The Receiving Party agrees to
utilize with respect to received Confidential Information the same standards and
procedures which it applies to protection of its own confidential information,
but not less than reasonable care.
(c) Each Party will limit access to received Confidential
Information to those of its owners, affiliates, directors, officers, employees,
attorneys, lenders, contractors, suppliers, agents, and consultants who need to
know about or participate in the performance of its obligations under this
Agreement. Each Party agrees to (i) inform each of its owners, affiliates,
directors, officers, employees, attorneys, lenders, contractors, suppliers,
agents, and consultants who receive Confidential Information of the confidential
nature thereof and of the obligations imposed by this Agreement, and (ii) each
Party shall remain primarily liable to the other for unauthorized use or
disclosure of received Confidential Information by its owners, affiliates,
directors, officers, employees, attorneys, lenders, contractors, suppliers,
agents or consultants receiving such information.
(d) Notwithstanding Section 24.08(c), Independence shall not
disclose Confidential Information to individuals who are actively involved in
material marketing and trading activities in the markets administered by the
NYISO; provided that Independence may designate by notice to Purchaser up to two
individuals for receipt of Confidential Information who have responsibilities
related to the Facility and associated contracts (including this Agreement) and
who are engaged in material marketing and trading activities in the markets
administered by the NYISO; provided further that Independence shall take all
reasonable precautions to ensure that such designated individuals do not utilize
Confidential Information in their marketing and trading activities; and provided
further that information related to transmission congestion contracts or
Installed Capacity contained in daily advisory billing statements and monthly
billing statements received from the NYISO related to the Facility shall not be
considered Confidential Information for purposes of this Section 24.08(d) only.
Such individuals will not be provided access to the results of the NYISO's
Day-Ahead Market bidding process undertaken by Purchaser under this Agreement
and the Energy Management Agreement, unless and until Independence's Facility
operating personnel (who will have daily access to such results) (i) have
identified a problem or material issue regarding such results, (ii) have
attempted to discuss the problem or material issue with Purchaser, and (iii)
following such discussions, have been unable to resolve the problem or material
issue.
(e) Notwithstanding Section 24.08(c), Purchaser shall not disclose
information related to transmission congestion contracts or Installed Capacity
***CONFIDENTIAL TREATMENT REQUESTED***
56
contained in daily advisory billing statements and monthly billing statements
received from the NYISO related to the Facility to individuals who are actively
involved in material marketing and trading activities in the markets
administered by the NYISO.
(f) Each Party may disclose Confidential Information to third
parties or other Governmental Authorities, including NYISO, to the extent such
disclosures are contemplated in and required by the Parties in connection with
the performance of their obligations under this Agreement. Each Party may also
disclose Confidential Information which it is legally required to furnish to
comply with a subpoena or other legal process of a Governmental Authority,
provided that the disclosing Party shall use reasonable efforts to limit such
disclosure and to obtain confidential treatment of such Confidential
Information.
(g) The provisions of this Section 24.08 shall survive expiration,
cancellation, or termination of this Agreement. Each Party agrees to be bound by
the confidentiality obligations herein for a period of five (5) years from
expiration, cancellation or termination.
24.09 COUNTERPARTS
This Agreement may be executed in counterparts, all of which shall
constitute one and the same Agreement and each of which shall be deemed to be an
original.
24.10 NO OFFSET
Except as provided in Section 12.05, the amounts due Purchaser from
Independence and the amounts due Independence from Purchaser shall constitute
separate and independent obligations and may not be offset or net against each
other or offset or net against any other amounts due between the Parties
(whether under this Agreement or otherwise).
24.11 OTHER ACTIVITIES
The Parties acknowledge and agree that either Party or its Affiliates may
engage in competitive activities, including, on the part of Independence and its
Affiliates, the possible expansion of the Facility or construction of a new
generating facility adjacent to the Facility; provided, however, that such
activities shall not interfere with the Party's ability to perform its
obligations under this Agreement.
***CONFIDENTIAL TREATMENT REQUESTED***
57
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the date first above written.
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
BY: SITHE/INDEPENDENCE, INC.,
ITS GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
DYNEGY POWER MARKETING, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
***CONFIDENTIAL TREATMENT REQUESTED***
58
EXHIBIT 3.01(A)
CONTRACT TOLLING CAPABILITY
The Contract Tolling Capability for any Month shall be equal to the amount set
forth in Table 3.01 below:
------------------------- ----------------------------
MONTH CONTRACT TOLLING
CAPABILITY (MW)
------------------------- ----------------------------
January [***]
------------------------- ----------------------------
February [***]
------------------------- ----------------------------
March [***]
------------------------- ----------------------------
April [***]
------------------------- ----------------------------
May [***]
------------------------- ----------------------------
June [***]
------------------------- ----------------------------
July [***]
------------------------- ----------------------------
August [***]
------------------------- ----------------------------
September [***]
------------------------- ----------------------------
October [***]
------------------------- ----------------------------
November [***]
------------------------- ----------------------------
December [***]
------------------------- ----------------------------
EXHIBIT 3.01(B)
RESERVED TOLLING CAPABILITY
The Reserved Tolling Capability for each Month shall be equal to [***] MW.
***CONFIDENTIAL TREATMENT REQUESTED***
59
EXHIBIT 5.01
TABLE 5.01 START-UP DATA
-----------------------------------------------------------------------------------------------------------------
ENERGY PRODUCED***
FUEL CONSUMED** (MWH)
TIME TO FULL LOAD* ---------------- --------------------
(HOURS) (MMBTU) GAS TURBINE STEAM TURBINE
-----------------------------------------------------------------------------------------------------------------
Start-up of one CT in Block when other CT and ST are not operating
-----------------------------------------------------------------------------------------------------------------
Cold [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Warm [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Hot [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Start-up of one CT in Block when other CT and ST are operating
-----------------------------------------------------------------------------------------------------------------
Cold [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Warm [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Hot [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Start-up of an entire Block
-----------------------------------------------------------------------------------------------------------------
Cold [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Warm [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Hot [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Start-up of entire Facility
-----------------------------------------------------------------------------------------------------------------
Cold [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
Hot [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------
* Including supplemental firing
** The Start-up Gas amounts identified in this table are guaranteed by
Independence For purposes of this Agreement, the term "Start-up Gas" refers to
the amounts listed in this table.
*** Energy produced will be reduced by the amount of Energy delivered to Alcan
during Start-up.
As used in this table, "CT" means one combustion turbine/generator set, "ST"
means one steam turbine/generator set and "Block" means 2 CTs and one ST.
***CONFIDENTIAL TREATMENT REQUESTED***
60
EXHIBIT 5.02(A)
I. DAILY OPERATING PROCEDURE
The following table lists the primary interactions and communications as between
Purchaser, Independence and the NYISO for deliveries on a hypothetical Day 3
(for example, if the delivery date, Day 3, were Wednesday, Days 1 and 2 would be
Monday and Tuesday in this example). The Parties shall comply with the
communications deadlines set forth in the table. Note that pursuant to Section
10.01(a), Independence shall initially be responsible for the submission of all
NYISO Bids. Pursuant to Section 10.01(b), at some point during the Contract
Term, Purchaser may take over responsibility to submit the NYISO Bids. The Daily
Operating Procedures set forth in this Exhibit 5.02(A)(I) describe a process
pursuant to which Purchaser submits all NYISO Bids. Until Purchaser takes over
responsibility to submit all NYISO Bids, the Parties will work together to
effectuate the requirements of this Exhibit 5.02(A)(I) with Independence
submitting all NYISO Bids.
Operating activities pursuant to this Exhibit 5.02(A) shall not result in any
operations of the Facility that conflict with the requirements of Exhibit
5.02(B).
The Daily Operating Procedures set forth in this Exhibit 5.02(A) may be modified
from time to time by mutual agreement of the Parties without requiring amendment
to this Agreement; provided such modified procedures are not inconsistent with
this Agreement or the Energy Management Agreement.
-------------------------------------------------------------------------------------------------------------------------------
EASTERN PREVAILING PARTY/ENTITY
STEP TIME TASK RESPONSIBLE
-------------------------------------------------------------------------------------------------------------------------------
1 Day 1, by no later Independence shall notify Purchaser of the following for Independence
than 10:00 operations on Day 3, in the format attached hereto as Section II
("Available Tolling Capability Notice"):
(1) Anticipated hourly output of the Facility available for
Tolling Services under this Agreement ("Available
Tolling Capability");
(2) The Minimum Output Capability;
(3) The Reserved Capability;
(4) The estimated amounts of Start-up
Gas (if applicable), Gas required
to operate the portion of the
Reserved Capability designated by
Independence as its
-------------------------------------------------------------------------------------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
61
------------------------------------------------------------------------------------------------------------------------------------
minimum output requirement ("Minimum Output Requirement"), Gas
required to operate the Facility at the output level associated
with the Reserved Capability, Gas required at the output level
associated with the Available Tolling Capability, Gas require to
operate the Facility at the Minimum Output Capability, and the
total Gas required at full output;
(5) The amount of Installed Capacity sold from the Facility into the
New York Control Area; and
(6) the number of combustion turbine/generator sets available for
dispatch in combined cycle mode.
------------------------------------------------------------------------------------------------------------------------------------
2 Day 1 by no later than Purchaser shall provide Independence with an estimate of the Gas Price Index Purchaser
15:00
------------------------------------------------------------------------------------------------------------------------------------
3 Day 1 between 15:00 and Independence shall notify Purchaser of its desire to operate the Facility at Independence
17:00 the Minimum Output Requirement and of its intent to schedule bilateral sales
to Niagara Mohawk for Day 3 under the Niagara Mohawk Power Purchase Agreement
with respect to all or a portion of the Reserved Capability. Whenever any
portion of the Facility is operating (including whenever any portion of the
Reserved Tolling Capability is operating), Purchaser must cause up to 44 MW
of the Reserved Capability to be dispatched, at Independence's direction,
either in the DAM or pursuant to the Niagara Mohawk Power Purchase Agreement.
From time to time, Independence may notify Purchaser of its desire to operate
all or a portion of the Reserved Tolling Capability during designated hours
to effectuate a physical hedge against its financial obligations associated
with the Market Price.
------------------------------------------------------------------------------------------------------------------------------------
4 Day 2, by no later than Purchaser shall provide Independence with its best estimate by hour of the Purchaser
12:00 actual anticipated
------------------------------------------------------------------------------------------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
62
------------------------------------------------------------------------------------------------------------------------------------
dispatch schedule ("Anticipated Dispatch Schedule") that shall include
Scheduled Energy commitments for Day 3 operations and required notices of
bilateral sales as soon as practicable after the NYISO posts the results of
the Day-Ahead Market bidding process. Subject to the requirements of Section
24.08, Independence shall have the right to access the results of the
NYISO's Day-Ahead Market bidding process directly on the NYISO web site.
------------------------------------------------------------------------------------------------------------------------------------
5 Day 2 between 12:00 and If the Anticipated Dispatch Schedule does not show dispatch of the Facility Independence
13:00 or within one hour at the Minimum Output Requirement or greater during all hours and
of Purchaser completing Independence desires to operate the Facility at the Minimum Output
step two. Requirement during such period, Independence shall notify Purchaser that it
will require Gas to operate the Facility at the Minimum Output Requirement in
the Hour-Ahead Market ("HAM"). Such notification will be defined as
"Minimum Generation Dispatch."
If the Anticipated Dispatch Schedule does not dispatch the Facility,
Independence shall notify Purchaser if it will require Gas to operate the
auxiliary boilers or notify Purchaser that Independence will not require Gas
to operate the Facility.
------------------------------------------------------------------------------------------------------------------------------------
6 Day 2, as early as Independence estimates Gas requirements for Day 3 operations based on the Independence
reasonably practicable, Anticipated Dispatch Schedule. The Gas estimates will include all of the Gas
but no later than 13:00 required for all of the activities described in Section 8.01(b), whether such
or within one hour of Gas is provided pursuant to the
Tolling Agreement or the Gas Supply Agreement.
Purchaser completing
step two.
------------------------------------------------------------------------------------------------------------------------------------
7 Day 2, as early as Purchaser confirms Gas delivery arrangement and notifies Independence. Purchaser
reasonably practicable
but no later than 14:00
PM
------------------------------------------------------------------------------------------------------------------------------------
8 Day 2, and Purchaser throughout the applicable Days may Purchaser
------------------------------------------------------------------------------------------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
63
------------------------------------------------------------------------------------------------------------------------------------
Day 3 inquire of Independence of the operational configuration of the Facility
to enable Purchaser to formulate its HAM bids.
Purchaser submits HAM bids throughout the applicable Days. If Purchaser
instructs Independence to dispatch differently than Purchaser instructed
Independence under Step 4, Purchaser must confirm revised Gas delivery
arrangements and notify Independence.
Case 1- If Purchaser in Step 4 provides Independence with an Anticipated
Dispatch Schedule greater than the Minimum Output Requirement and
Independence in Step 5 notifies Purchaser of its desire to operate the
Facility at the Minimum Output Requirement, Purchaser shall dispatch the
Facility in either the DAM or HAM to ensure that the NYISO Directed Operation
will be at least equal to the Minimum Output Requirement.
Case 2- If the Anticipated Dispatch Schedule provided by Purchaser in Step 4
does not dispatch the Facility at the Minimum Output Requirement and
Independence notifies Purchaser under Step 5 that it will require Gas to
operate at the Minimum Output Requirement in the HAM, Purchaser shall submit
HAM bids to ensure that the NYISO Directed Operation will be at least equal
to the Minimum Output Requirement. If under this Xxxx 0, Xxxxxxxxx
instructs Independence to dispatch the Facility at a level greater than the
Minimum Output Requirement, Purchaser must confirm revised Gas delivery
arrangements and notify Independence.
------------------------------------------------------------------------------------------------------------------------------------
9 Day 2, commencing 23:45 Purchaser shall provide Independence with a revised Anticipated Dispatch Purchaser
and continuing through Schedule for the balance of Day 3 at least ten minutes before the top of the
Day 3 hour to the extent Purchaser, at its sole discretion, believes that dispatch
will be
------------------------------------------------------------------------------------------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
64
------------------------------------------------------------------------------------------------------------------------------------
different from the schedule submitted in Step 4.
------------------------------------------------------------------------------------------------------------------------------------
10 Day 3, commencing 0:00 Independence operates in accordance with NYISO Directed Operation. Independence
AM (Operating Day)
------------------------------------------------------------------------------------------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
65
II. Available Tolling Capability Notice
AVAILABLE TOLLING CAPABILITY NOTICE
INDEPENDENCE STATION
GENERATION DATE:
ISSUED BY:
------------------------------------------------------------------------------------------------------------------------------------
Hour begin- Avail- Minimum Xxxxx- Esti- Esti- Esti- Esti- Esti- Esti- Instal- Number of
ning able Tolling xxx Xxxx- mated mated Gas mated Gas mated Gas mated Gas mated Gas led Capacity combus-
Tolling Capa- bility Start- for Minimum for Xxxxx- for Avail- for full for Minimum sold into tion
Capa- bility (MW) up Gas Output xxx Xxxx- able Tolling output Tolling New York turbine/
bility (MW) (MMBtu) Require bility only Capa- (MMBtu) Capa- Control gener-
(MW) -ment only MMBtu) bility only bility only Area ator sets
MMBtu) (MMBtu) (MMBtu) (MW) avail-
able
------------------------------------------------------------------------------------------------------------------------------------
0:00
------------------------------------------------------------------------------------------------------------------------------------
1:00
------------------------------------------------------------------------------------------------------------------------------------
2:00
------------------------------------------------------------------------------------------------------------------------------------
3:00
------------------------------------------------------------------------------------------------------------------------------------
4:00
------------------------------------------------------------------------------------------------------------------------------------
5:00
------------------------------------------------------------------------------------------------------------------------------------
6:00
------------------------------------------------------------------------------------------------------------------------------------
7:00
------------------------------------------------------------------------------------------------------------------------------------
8:00
------------------------------------------------------------------------------------------------------------------------------------
9:00
------------------------------------------------------------------------------------------------------------------------------------
10:00
------------------------------------------------------------------------------------------------------------------------------------
11:00
------------------------------------------------------------------------------------------------------------------------------------
12:00
------------------------------------------------------------------------------------------------------------------------------------
13:00
------------------------------------------------------------------------------------------------------------------------------------
14:00
------------------------------------------------------------------------------------------------------------------------------------
15:00
------------------------------------------------------------------------------------------------------------------------------------
16:00
------------------------------------------------------------------------------------------------------------------------------------
17:00
------------------------------------------------------------------------------------------------------------------------------------
18:00
------------------------------------------------------------------------------------------------------------------------------------
19:00
------------------------------------------------------------------------------------------------------------------------------------
20:00
------------------------------------------------------------------------------------------------------------------------------------
21:00
------------------------------------------------------------------------------------------------------------------------------------
22:00
------------------------------------------------------------------------------------------------------------------------------------
23:00
------------------------------------------------------------------------------------------------------------------------------------
Comments:
***CONFIDENTIAL TREATMENT REQUESTED***
66
III. Sample NYISO Bid Form
GENERATOR BID
GENERATOR NAME:
--------------------------------------------------------------------------------------------------
Bid Date Number of Hours Market Expiration (DAM Only)
--------------------------------------------------------------------------------------------------
(mm/dd/yyyy hh:mm) (mm/dd/yyyy hh:mm)
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
ENERGY BID
--------------------------------------------------------------------------------------------------
Upper Operating Limit Minimum Generation Minimum Generation Cost
(MW) (MW) ($)
--------------------------------------------------------------------------------------------------
==================================================================================================
Bid-Curve Format Unit Operations
--------------------------------------------------------------------------------------------------
|_| Block Bid (3 Pairs Max) |_| On-Dispatch |_| Zero Start-Up Cost
|_| Energy Cost Curve (6 Pairs Max) |_| Off-Dispatch
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
BID CURVE
--------------------------------------------------------------------------------------------------
MW (Basepoint)
--------------------------------------------------------------------------------------------------
$/MW
--------------------------------------------------------------------------------------------------
[NOTES:
- Not Available to Purchaser:
1. On - Dispatch operation
- Note that the generation parameters for the Independence facility as
on file with the NYISO are set forth in the form attached hereto as
Section V to this Exhibit 5.02(A).]
***CONFIDENTIAL TREATMENT REQUESTED***
67
IV.
GENERATOR COMMITMENT PARAMETERS
GENERATOR:
Last Changed by: Last Changed Date:
------------------------------------------------------------
Minimum Run Time (hrs)
------------------------------------------------------------
Minimum Down Time (hrs)
------------------------------------------------------------
Maximum Stops per Day
------------------------------------------------------------
Start up Notification Time (hrs)
------------------------------------------------------------
STARTUP COST CURVE
--------------------------------------------------------------------------------
Hours Off Line
--------------------------------------------------------------------------------
Startup Cost ($)
--------------------------------------------------------------------------------
STARTUP NOTIFICATION TIME CURVE
--------------------------------------------------------------------------------
Hours to Start
--------------------------------------------------------------------------------
Hours Off Line
--------------------------------------------------------------------------------
[NOTE: This form may be modified with the NYISO on a daily basis.]
***CONFIDENTIAL TREATMENT REQUESTED***
68
V.
NOTE: THIS FORM IS NOT BINDING AND IS SET FORTH HEREIN FOR INFORMATIONAL
PURPOSES ONLY.
GENERATOR PARAMETERS
Generator Name: SITHE_INDEPEND Generator
Type: PURPA GENERATOR NERC Unit ID:
Zone Name: CENTRL Subzone Type: NMPC CENTRAL Active: |X|
Contact Information
Name: Xxxx Xxxxxxxxx Address: Sithe Power Marketing, LP
Primary Phone: 000-000-0000 00 Xxxxxxxxxxxx Xxx
Secondary Phone: Oswego
Fax: 000-000-0000 New York, 13126
E-Mail: xxxxxxxxxx@xxxxx.xxx
Pager:
PTID: 23800
Max Summer Operating Limit: 1102.0
Max Winter Operating Limit: 1102.0
Summer Installed Capacity Contracts: 914.9
Winter Installed Capacity Contracts: 1022.9
Physical Min Gen MW: 160.0
Emergency Response Rate: 11.1 (MW/MIN)
Normal Response Rate: 11.1 (MW/MIN)
Max Regulation Response Rate: 11.1 (MW/MIN)
Penalty Factor: 1.0
Power Factor: 1.0
AVR Qualified: |X|
----------------------------
Unit VAR Capability
Leading
----------------------------
MW MVAR
----------------------------
----------------------------
----------------------------
Unit VAR Capability
Lagging
----------------------------
MW MVAR
----------------------------
----------------------------
QUALIFIED TO BID
***CONFIDENTIAL TREATMENT REQUESTED***
69
DAY AHEAD MARKET
|X| Fixed Energy |X| Dispatch Energy
|X| Regulation Control
|_| 10 Minute Non-Synch |X| 10 Minute Spinning
|X| 30 Minute Non-Synch |X| 30 Minute Spinning
[NOTE THAT INDEPENDENCE IS NOT CAPABLE OF PROVIDING REGULATION CONTROL AND 30
MINUTE NON-SYNCH.]
HOUR AHEAD MARKET
|X| Fixed Energy |X| Dispatch Energy
|X| Regulation Control
|_| 10 Minute Non-Synch |X| 10 Minute Spinning
|X| 30 Minute Non-Synch |X| 30 Minute Spinning
[NOTE THAT INDEPENDENCE IS NOT CAPABLE OF PROVIDING REGULATION CONTROL AND 30
MINUTE NON-SYNCH.]
[NOTES:
o This form may be modified only with the concurrence of the NYISO.
o Independence's ability to provide 10-minute spinning reserve service and
30-minute spinning reserve service is currently contingent upon resolution
with the NYISO of modified procedures for applicable ramp rates.
o At present, Independence is bid into the NYISO as a single PURPA facility.
In addition, the power supplied to Alcan, as measured by a Niagara Mohawk
revenue meter, is subtracted from the net generation of Independence, as
measured by two Niagara Mohawk revenue meters, to determine and measure
the net output of the Facility to the grid (i.e., to the NYISO and Niagara
Mohawk). As a single PURPA facility, in general, the amount of energy that
the Facility actually produces that is above or below the NYISO Directed
Operation level "floats" under the Niagara Mohawk Power Purchase Agreement
between 0 MWs and a maximum of 300 MWs. If the Facility is not selected in
the DAM and it runs in the HAM, under the Niagara Mohawk Power Purchase
Agreement, Niagara Mohawk must purchase up to 300 MWs. As a result, the
Facility's participation in the HAM is currently limited to sales under
the
***CONFIDENTIAL TREATMENT REQUESTED***
70
Niagara Mohawk Power Purchase Agreement of up to 300 MWs. Independence
is working with the NYISO with respect to this issue.
o Independence physically has two revenue meters, one for each power block,
which are summed for net generation. Independence has commenced initial
discussions with the NYISO and Niagara Mohawk on "splitting" into two
separate "generators" in the eyes of the NYISO. Issues that need to be
resolved are changes in software with Niagara Mohawk and NYISO,
modifications to provide proper basepoint signals, how to handle PURPA
"float" with Niagara Mohawk and how to deal with Alcan load. As for
Purchaser, even if two "generators" to the ISO, Independence would still
be considered a single Facility for power output, heat rate, etc. This
"splitting" would provide much greater flexibility in how to bid
Independence with the ISO.
o There are certain constraints or limitations on how the Facility can be
bid into the NYISO market and also meet the Agreement restrictions in
number of starts per day, time between starts and startup times, etc.
Details will have to be developed between Independence and Purchaser;
however, as examples:
o assuming availability of the entire Facility (i.e. all gas and steam
turbines available), Independence could bid a minimum generation of
nominal 500 MWs with defined startup cost for 4 GTs and run with various
combinations thereafter.
o assuming the availability of the entire Facility, if Independence or
Purchaser wanted to specify minimum generation and startup cost, etc. with
a single GT, then Independence does not believe it is possible to use the
cost curve format for bidding up to 1000 MWs.
o assuming availability of the entire Facility, if one bid using the block
method of 250, 500 and 1000 blocks, then the minimum generation of 250
reflect that 2 GTs must be operating and the startup costs should reflect
the startup of 2 GTs. Then the cost of starting 1 GT for the 500 MW block
would have to be incorporated in this block and likewise for the 1000 MW
block. Once we see the actual dispatch scenario, since we can operate up
to nominal 500 MWs with 2 GTs or operate down to 500 MWs with 4 GTs, the
determination of how to actually operate can be determined.]
***CONFIDENTIAL TREATMENT REQUESTED***
71
EXHIBIT 5.02(B)
I. Forecasts and Operating Limitations
1. On or before 5:00 p.m. Eastern Prevailing Time on the tenth Day of each
Month, Purchaser shall provide Independence with a forecast of the
estimated Energy and Ancillary Services expected to be bid from the
Facility for each Day of the following Month, in the form set forth in
Section II to this Exhibit 5.02(B).
2. On or before 5:00 p.m. Eastern Prevailing Time on each Thursday, Purchaser
shall provide Independence with a forecast of the estimated Energy and
Ancillary Services to be Scheduled from the Facility for each Day of the
following Week in the form set forth in Section II to this Exhibit
5.02(B).
3. On or before 5:00 p.m. Eastern Prevailing Time on the fifteenth Day of
each Month, Independence shall provide Purchaser with a forecast of the
estimated Available Tolling Capability of the Facility for each Day of the
following Month and the estimated Gas requirements associated with the
output of the forecast Available Tolling Capability and associated with
the output of the Reserved Capability, in the form set forth in Section
III to this Exhibit 5.02(B).
4. On or before 5:00 p.m. Eastern Prevailing Time each Friday, Independence
shall provide Purchaser with a forecast of the estimated Available Tolling
Capability of the Facility for each Day of the following Week and the
estimated Gas requirements associated with the output of the forecast
Available Tolling Capability and associated with the output of the
Reserved Capability, in the form set forth in Section III to this Exhibit
5.02(B).
5. From time-to-time, Independence and/or Purchaser may update the
information provided under items 1-4 above to reflect any material
changes.
6. In addition to any other limitations or restrictions in accordance with
the NYISO Requirements, Purchaser may not include in its Bid Submission,
and Independence shall have no obligation to submit a bid to the NYISO
that would result in:
a) more than one Start-up for each combustion turbine/generator set per
Day.
b) a combustion turbine/generator set, once started, running for less
than six consecutive hours before a Shutdown.
***CONFIDENTIAL TREATMENT REQUESTED***
72
c) operation of any combustion turbine/generator set at a level below
55 percent of the actual capability of such combustion
turbine/generator set plus its associated steam turbine/generator
set ("Minimum Output Capability").
d) commencement of Start-up procedures of a combustion
turbine/generator set less than 4 hours after completion of a
Shutdown of such combustion and steam turbine/generator set.
e) A change in the level of output of any combustion turbine/generator
set and its associated steam turbine/generator set at a rate (up or
down) greater than 5 MW per minute.
7. It is expressly acknowledged and agreed that the limitations set forth in
item 6 above apply to all bids submitted in the DAM and in the HAM
pursuant to Exhibit 5.02(A).
8. It is expressly acknowledged that Independence's ability to provide
10-minute spinning reserve service and 30-minute spinning reserve service
is currently contingent upon resolution with the NYISO of modified
procedures for applicable ramp rates.
9. As soon as reasonably practicable, each Party will notify the other Party
of any material incidents affecting performance under this Agreement,
including all Outages and interruptions or curtailments of Gas supplies or
electric transmission service.
10. For each hour that Independence elects to supply Replacement Energy,
Independence shall provide advance notice to Purchaser of at least 2
hours, in the form set forth in Section IV to this Exhibit 5.02.
11. Upon receipt of a notice that Independence elects to supply Replacement
Energy, Purchaser shall confirm receipt of the notice by sending a fax or
e-mail to Independence. If Purchaser consents to the Substitute Delivery
Point designated by Independence in the Notice, it shall so indicate in
its confirming notice. If Purchaser does not consent to such Substitute
Delivery Point, it shall promptly notify Independence so that the Parties
may resolve the matter.
12. All communications pursuant to this Exhibit 5.02 shall be by electronic
means whenever possible.
13. Each Party shall provide a copy to the other Party simultaneously with all
notices to the NYISO related to the operation of the Facility. Upon
receipt of
***CONFIDENTIAL TREATMENT REQUESTED***
73
a notice from the NYISO regarding the operation of the Facility, each
Party shall promptly provide a copy of such notice to the other Party.
***CONFIDENTIAL TREATMENT REQUESTED***
74
II.
FORECAST SCHEDULE FOR TOLLING SERVICES
INDEPENDENCE STATION
GENERATION DATE:
ISSUED BY:
-----------------------------------------------------------------
Hour Estimated Energy Estimated Ancillary
beginning (MWh) Services
-----------------------------------------------------------------
0:00
-----------------------------------------------------------------
1:00
-----------------------------------------------------------------
2:00
-----------------------------------------------------------------
3:00
-----------------------------------------------------------------
4:00
-----------------------------------------------------------------
5:00
-----------------------------------------------------------------
6:00
-----------------------------------------------------------------
7:00
-----------------------------------------------------------------
8:00
-----------------------------------------------------------------
9:00
-----------------------------------------------------------------
10:00
-----------------------------------------------------------------
11:00
-----------------------------------------------------------------
12:00
-----------------------------------------------------------------
13:00
-----------------------------------------------------------------
14:00
-----------------------------------------------------------------
15:00
-----------------------------------------------------------------
16:00
-----------------------------------------------------------------
17:00
-----------------------------------------------------------------
18:00
-----------------------------------------------------------------
19:00
-----------------------------------------------------------------
20:00
-----------------------------------------------------------------
21:00
-----------------------------------------------------------------
22:00
-----------------------------------------------------------------
23:00
-----------------------------------------------------------------
Comments:
***CONFIDENTIAL TREATMENT REQUESTED***
75
III.
FORECAST SCHEDULE FOR TOLLING SERVICES
INDEPENDENCE STATION
GENERATION DATE:
ISSUED BY:
--------------------------------------------------------
Hour Estimated Available Estimated Gas
beginning Tolling Capability at Full Output
(MWh) (MMBtu)
--------------------------------------------------------
0:00
--------------------------------------------------------
1:00
--------------------------------------------------------
2:00
--------------------------------------------------------
3:00
--------------------------------------------------------
4:00
--------------------------------------------------------
5:00
--------------------------------------------------------
6:00
--------------------------------------------------------
7:00
--------------------------------------------------------
8:00
--------------------------------------------------------
9:00
--------------------------------------------------------
10:00
--------------------------------------------------------
11:00
--------------------------------------------------------
12:00
--------------------------------------------------------
13:00
--------------------------------------------------------
14:00
--------------------------------------------------------
15:00
--------------------------------------------------------
16:00
--------------------------------------------------------
17:00
--------------------------------------------------------
18:00
--------------------------------------------------------
19:00
--------------------------------------------------------
20:00
--------------------------------------------------------
21:00
--------------------------------------------------------
22:00
--------------------------------------------------------
23:00
--------------------------------------------------------
Comments:
***CONFIDENTIAL TREATMENT REQUESTED***
76
IV.
REPLACEMENT ENERGY NOTICE
INDEPENDENCE STATION
GENERATION DATE:
ISSUED BY:
--------------------------------------------------------------------
Hour Replacement Energy Substitute Delivery Point
beginning (MWh)
--------------------------------------------------------------------
0:00
--------------------------------------------------------------------
1:00
--------------------------------------------------------------------
2:00
--------------------------------------------------------------------
3:00
--------------------------------------------------------------------
4:00
--------------------------------------------------------------------
5:00
--------------------------------------------------------------------
6:00
--------------------------------------------------------------------
7:00
--------------------------------------------------------------------
8:00
--------------------------------------------------------------------
9:00
--------------------------------------------------------------------
10:00
--------------------------------------------------------------------
11:00
--------------------------------------------------------------------
12:00
--------------------------------------------------------------------
13:00
--------------------------------------------------------------------
14:00
--------------------------------------------------------------------
15:00
--------------------------------------------------------------------
16:00
--------------------------------------------------------------------
17:00
--------------------------------------------------------------------
18:00
--------------------------------------------------------------------
19:00
--------------------------------------------------------------------
20:00
--------------------------------------------------------------------
21:00
--------------------------------------------------------------------
22:00
--------------------------------------------------------------------
23:00
--------------------------------------------------------------------
Comments:
***CONFIDENTIAL TREATMENT REQUESTED***
77
EXHIBIT 5.03
SHUTDOWN
For a Scheduled Shutdown, Independence requires 30 minutes to complete the
Shutdown. Shutdown Gas is equal to 600 MMBtu per combustion turbine. The Energy
output during Shutdown varies depending on the load level prior to Shutdown, but
with a baseload facility running at 1000 MW, a 30 minute shutdown would produce
approximately 250 MWh of Energy. For purposes of this Agreement, the term
"Shutdown Gas" refers to the amounts described in this Exhibit.
***CONFIDENTIAL TREATMENT REQUESTED***
78
EXHIBIT 6.01
GUARANTEED HEAT RATE
The Guaranteed Heat Rate, measured in Btu/kWh (HHV) for the Tolling Services
provided to Purchaser is equal to the levels set forth in Table 6.01 below.
The Guaranteed Heat Rate for load factors between 100% and 80% assumes four
combustion turbine/generator sets operating combined cycle mode. The Guaranteed
Heat Rate for load factors between 75% and 55% assumes three combustion
turbine/generator sets operating in combined cycle mode. The Guaranteed Heat
Rate for load factors between 50% and 30% assumes two combustion
turbine/generator sets operating in combined cycle mode. The Guaranteed Heat
Rate for load factors between 25% and 15% assumes one combustion
turbine/generator set operating in combined cycle mode.
For clarification, if Purchaser desires operations at a load factor between 100%
and 15% but not in accordance with the number of combustion turbine/generator
sets as stated above (but still within the operating parameters of the plant),
the Guaranteed Heat Rate shall be as set forth in Table 6.01 below for the load
factor equal to the desired plant load factor divided by the number of
combustion turbine/generator sets Purchaser desires to operate. For example, if
Purchaser desires operating at a plant load factor of 60% but with four
combustion turbine/generator sets, the Guaranteed Heat Rate shall be that set
forth for such month at a 15% load factor.
TABLE 6.01 - Guaranteed Heat Rate - Load Factor
based on Full Plant Output
------------------------------------------------------------------------------------------------------------------------------------
100.0% load 95.0% load 90.0% load 85.0% load 80.0% load
Month MW Btu/kWh MW Btu/kWh MW Btu/kWh MW Btu/kWh MW Btu/kWh (HHV)
----- -- (HHV) -- (HHV) -- (HHV) -- (HHV) -- ------------
------- ------- ------- ------
January [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
February [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
March [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
April [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
May [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
June [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
July [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
August [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
September [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
October [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
November [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
December [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
75.0% load 70.0% load 65.0% load 60.0% load 55.0% load
Month MW Btu/kWh MW Btu/kWh MW Btu/kWh MW Btu/kWh MW Btu/kWh (HHV)
----- -- (HHV) -- (HHV) -- (HHV) -- (HHV) -- ------------
------- ------- ------- ------
January [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
February [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
March [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
April [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
May [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
June [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
July [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
August [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
September [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
October [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
November [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
December [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
79
-----------------------------------------------------------------------------------------------------------------------------------
50.0% load 45.0% load 40.0% load 35.0% load 30.0% load
Month MW Btu/kWh MW Btu/kWh MW Btu/kWh MW Btu/kWh MW Btu/kWh (HHV)
----- -- (HHV) -- (HHV) -- (HHV) -- (HHV) -- ------------
------- ------- ------- ------
January [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
February [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
March [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
April [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
May [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
June [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
July [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
August [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
September [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
October [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
November [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
December [***] [***] [***] [***] [***] [***] [***] [***] [***] [***]
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
25.0% load 20.0% load 15.0% load
Month MW Btu/kWh MW Btu/kWh MW Btu/kWh
----- -- (HHV) -- (HHV) -- (HHV)
------- ------- -------
January [***] [***] [***] [***] [***] [***]
February [***] [***] [***] [***] [***] [***]
March [***] [***] [***] [***] [***] [***]
April [***] [***] [***] [***] [***] [***]
May [***] [***] [***] [***] [***] [***]
June [***] [***] [***] [***] [***] [***]
July [***] [***] [***] [***] [***] [***]
August [***] [***] [***] [***] [***] [***]
September [***] [***] [***] [***] [***] [***]
October [***] [***] [***] [***] [***] [***]
November [***] [***] [***] [***] [***] [***]
December [***] [***] [***] [***] [***] [***]
--------------------------------------------------------------------------------
Note: For any Facility output in a given month at a point not shown on Table
6.01, the Guaranteed Heat Rate shall be calculated using linear interpolation
based on the closest point above and the closest point below such output level
for such month.
***CONFIDENTIAL TREATMENT REQUESTED***
80
EXHIBIT 17.01(A)
ACKNOWLEDGMENT AND CONSENT
Acknowledgment and Consent (this "CONSENT") dated as of July 1, 2001
between Dynegy Power Marketing, Inc., a Texas corporation (together with its
successors and assigns, the "COMPANY") and Sithe/Independence Power Partners,
L.P., a Delaware limited partnership (together with its successors and assigns,
the "PARTNERSHIP"), to and for the benefit of Manufacturers and Traders Trust
Company, a New York banking corporation, in its capacity as collateral agent
(together with successors and assigns in that capacity, the "COLLATERAL AGENT").
SECTION 1. CONSENT TO ASSIGNMENTS, ETC.
The Company hereby (a) acknowledges that it has been advised of that
certain Security Agreement and Assignment of Contracts dated as of January 1,
1993 (as amended, supplemented or modified and in effect from time to time, the
"SECURITY AGREEMENT") between the Collateral Agent and the Partnership, (b)
consents, subject to the provisions of this Consent, to the collateral
assignment by the Partnership of the
TOLLING AGREEMENT dated as of July 1, 2001
between the Company and the Partnership (as amended, supplemented or modified
and in effect from time to time, the "ASSIGNED CONTRACT") as collateral for the
Partnership's obligations to the Secured Parties (as defined in the Security
Agreement), and any subsequent assignments by the Collateral Agent, on behalf of
the Secured Parties, (c) acknowledges the right of the Collateral Agent,
following an Event of Default (as defined in the Security Agreement) by the
Partnership, to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Assigned Contract as the
Partnership could have taken absent the Event of Default, and (d) acknowledges
and agrees that the Collateral Agent succeeding to the rights and obligations of
the Partnership under the Assigned Contract shall not, in and of itself,
constitute or cause a default by the Partnership under the Assigned Contract.
SECTION 2. PAYMENT OF ASSIGNED SUMS
All payments (if any) to be made by the Company to the Partnership under
the Assigned Contract shall be made by wire transfer to the account specified in
Section 24.07 of the Assigned Contract.
SECTION 3. REPRESENTATIONS OF COMPANY
(a) The Company represents and warrants that as of the date hereof:
(i) AUTHORIZATION. The execution, delivery and performance by the
Company of this Consent has been duly authorized by all necessary action on the
part of the Company and does not require any approval or consent of any
***CONFIDENTIAL TREATMENT REQUESTED***
- 81 -
[shareholder] of the Company or any holder (or any trustee for any holder) of
any indebtedness or other obligation of the Company, except as has been
heretofore obtained.
(ii) EXECUTION; DELIVERY; BINDING AGREEMENT. This Consent has been
duly executed and delivered on behalf of the Company by the appropriate
[officers] [representatives] of the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium and
other similar laws applicable to creditors' rights generally and except as the
enforceability thereof may be limited by general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(iii) NO DEFAULT OR AMENDMENT. As of the date hereof, neither the
Company nor, to the knowledge of the Company, the Partnership is in default
under the Assigned Contract. The Company has no existing claims, counterclaims,
offsets or defenses against the Partnership in respect of the Assigned Contract
except for routine claims for payment under the Assigned Contract.
SECTION 4. RIGHTS OF SECURED PARTIES
The Company agrees that, subject to the provisions of this Consent, the
Secured Parties shall have the following rights with respect to the Assigned
Contract:
(a) Notwithstanding anything to the contrary contained in the
Assigned Contract, the Assigned Contract shall not be terminated or cancelled by
action of the Company and shall not be deemed abandoned or surrendered without
prior notice in writing to the Collateral Agent specifying the Partnership's
default (hereinafter called a "NOTICE"). Any such Notice shall contain a copy of
the notice of default sent to the Partnership and shall be delivered to the
Collateral Agent when the Company delivers a notice of default to the
Partnership under the Assigned Contract. The Collateral Agent shall have the
right (but not the obligation) to cure the defaults listed in any Notice within
the same period of time provided in the Assigned Contract for the Partnership to
cure such default; PROVIDED, HOWEVER, if the nature of any non-monetary default
on the part of the Partnership under the Assigned Contract is such that it
cannot be cured by the Collateral Agent without the Collateral Agent having
taken possession of the Project (as defined in the Security Agreement), then the
Collateral Agent's time for commencing such cure shall be extended for such
reasonable period of time as is necessary for the Collateral Agent to lawfully
obtain possession of the Project; PROVIDED, FURTHER, that the Collateral Agent
shall at all times be seeking by all reasonable and lawful means to obtain such
possession. Once the defaults listed in any Notice are timely cured by the
Collateral Agent, there shall no longer be deemed to be any default
***CONFIDENTIAL TREATMENT REQUESTED***
- 82 -
under the Assigned Contract in respect of such defaults so cured. The curing of
any defaults under the Assigned Contract shall not in and of itself be construed
as an assumption by the Collateral Agent or any of the Secured Parties of any of
the obligations, covenants or agreements of the Partnership under the Assigned
Contract.
(b) If a notice of election is delivered to the Company as provided
in Section 5 below, the Company will accept performance of the Partnership's
obligations (as specified in such notice of election) under the Assigned
Contracts by the Collateral Agent, or its nominee(s) acting for the Secured
Parties, as the case may be, in lieu of the Partnership's performance of such
obligations.
(c) Upon any transfer of the Partnership's rights under the Assigned
Contract pursuant to the exercise of the Collateral Agent's rights under this
Consent, the Collateral Agent or any third party to which such rights are
transferred by the Collateral Agent (hereinafter, a "THIRD PARTY TRANSFEREE")
shall, upon the Company's reasonable satisfaction with the Collateral Agent's or
such Third Party Transferee's financial condition and subject to all applicable
laws, rules and regulations, succeed to all of the Partnership's right, title
and interest under and in connection with the Assigned Contract and shall be
obligated to perform all of the terms and conditions of the Assigned Contract,
except that the Collateral Agent or any Third Party Transferee shall not be
required to perform or cause to be performed any of the Partnership's
obligations under the Assigned Contract (except for the Partnership's obligation
for the payment of all amounts due and payable to the Company under the terms of
the Assigned Contract including any interest applicable thereon) that remain
unperformed at the time that the Collateral Agent or such Third Party Transferee
is transferred such Assigned Contract other than continuing non-monetary
defaults under the Assigned Contract which are capable of performance by the
Collateral Agent or the Third Party Transferee or be liable for any prior act or
omission of the Partnership, and upon the transfer by the Collateral Agent of
its rights and interests and the rights and interests of the Partnership under
the Assigned Contracts to a Third Party Transferee, the Collateral Agent and the
Partnership shall be relieved of all obligations under the Assigned Contract
arising after such transfer.
(d) In the event that (i) the Assigned Contract is rejected by a
trustee or any person exercising the powers of a trustee in any bankruptcy or
insolvency proceeding applicable to the Partnership or (ii) the Assigned
Contract is terminated as a result of any bankruptcy or insolvency proceeding
applicable to the Partnership, the Company shall, subject to all applicable
laws, rules and regulations, execute and deliver to the Collateral Agent and its
designees, successors and assigns a new contract; PROVIDED that the Company
shall be required to execute a new contract with the Collateral Agent only if
the Collateral Agent or its designees, successors or assigns shall within ten
(10) business days of entering
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into such new contract, cure all defaults for failure to pay all amounts due and
payable to the Company under the Assigned Contract, including any interest
applicable thereon. The new contract shall, subject to all applicable laws,
rules and regulations, contain the same covenants, agreements, terms, provisions
and limitations as the Assigned Contract (except for any requirements with
respect to past performance which have been fulfilled by the Partnership or the
Collateral Agent or its designees, successors and assigns hereunder).
SECTION 5. LIABILITY OF SECURED PARTIES
The Collateral Agent, on behalf of the Secured Parties, and its successors
and assigns, shall have no right or power to enforce the Assigned Contract, and
assumes no duty or obligation thereunder unless and until the Collateral Agent
shall have notified the Company that it has elected to exercise its rights and
remedies under the Security Agreement and to substitute itself in the position
of the Partnership under the Assigned Contracts and has agreed in a written
instrument executed by the Collateral Agent to be bound by all terms and
conditions of the Assigned Contract applicable to the Partnership.
SECTION 6. FURTHER ASSURANCES
The Company hereby agrees to execute and deliver all such instruments and
take all such actions as may be reasonably necessary to effectuate fully the
purposes of this Consent, provided, however, that such further assurances shall
not expand the liability, or obligations arising under this Consent or dilute
any rights or remedies otherwise accruing to Company under this Consent.
SECTION 7. NOTICES
All notices and other communications hereunder shall be in writing, shall
refer on their face to the Assigned Contract (although failure to so refer shall
not render any such notice or communication ineffective), shall be sent by first
class mail, facsimile, by hand or overnight courier service and shall be
directed:
(a) if to the Company, in accordance with the Assigned Contract;
(b) if to the Collateral Agent, addressed to:
Manufacturers and Traders Trust Company
Xxx X&X Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
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(c) if to the Partnership, in accordance with the Assigned Contract;
and
(d) to such other address as any party may designate by notice to
the other party hereto given pursuant hereto.
SECTION 8. MISCELLANEOUS
(a) GOVERNING LAW. This Consent shall be governed by and construed in
accordance with the law of the State of New York as to all matters (without
giving effect to conflict of law principles). Each of the Company and the
Partnership hereby irrevocably waives, to the fullest extent permitted by law,
any and all right to trial by jury in any legal proceedings arising out of or
relating to this Consent.
(b) SUBMISSION TO JURISDICTION. Each of the Parties hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States for the
Southern District of New York and appellate courts from any thereof;
(ii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the other
Party at its address set forth in Section 7, or at such other address of which
the other Party shall have been notified pursuant thereto; and
(iii) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law.
(c) HEADINGS. The descriptive headings of the Articles and Sections of
this Consent are inserted for convenience only and are not intended to affect
the meaning, interpretation or construction of this Consent.
(d) WAIVER. Except as otherwise provided in this Consent, any failure of a
party to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver shall not
operate as a waiver of, or estoppel with respect to, any subsequent failure of
the first party to comply with such obligation, covenant, agreement or
condition.
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(e) SEVERABILITY. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) SUCCESSORS AND ASSIGNS. This Consent shall be binding upon and inure
to the benefit of the Company, the Collateral Agent, the Partnership and their
respective permitted successors and assigns.
(g) COUNTERPARTS. This Consent may be executed in counterparts, all of
which shall constitute one and the same Consent and each of which shall be
deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as of the day
and year first above written.
DYNEGY POWER MARKETING, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
---------------------------------
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
----------------------------------
Name:
----------------------------------
Title:
---------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
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EXHIBIT 17.01(B)
EXHIBIT B
GUARANTY AGREEMENT
Base Guaranty Agreement (this "Guaranty") dated as of July 1, 2001 is made
and entered into by Dynegy Holdings Inc., a Delaware corporation ("Guarantor"),
to and for the benefit of Sithe/Independence Power Partners, L.P., a Delaware
limited partnership ("Independence"), and its successors and permitted assigns.
WITNESSETH:
WHEREAS, Independence and Dynegy Power Marketing, Inc., a Texas
corporation (together with successors and permitted assigns, "Purchaser"), have
entered into a
TOLLING AGREEMENT dated as of July 1, 2001 (as amended,
supplemented or modified from time to time, the "
Tolling Agreement"), a copy of
which is attached hereto as Exhibit 1;
WHEREAS, Purchaser is an indirect, wholly owned subsidiary of Guarantor,
and Guarantor will derive substantial benefit from the performance by
Independence of its obligations under the
Tolling Agreement;
WHEREAS, it is a condition precedent to Independence's obligations under
the
Tolling Agreement that this Guaranty be duly executed and delivered to
Independence; and
WHEREAS, Guarantor is willing to enter into this Guaranty.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Guarantor hereby
covenants and agrees as follows:
1. GUARANTY. Subject to the terms hereof, Guarantor hereby irrevocably,
absolutely, and unconditionally guarantees to Independence and its successors
and permitted assigns the due, punctual and full performance and payment of each
and every obligation of Purchaser under the
Tolling Agreement (each such
obligation hereinafter referred to, individually, as a "Guaranteed Obligation"
and, collectively, as the "GUARANTEED OBLIGATIONS") and agrees that, if for any
reason whatsoever Purchaser shall fail or be unable duly, punctually and fully
to perform or pay any such Guaranteed Obligation, Guarantor shall forthwith,
upon demand as provided
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in Section 4 hereof, perform or pay such Guaranteed Obligation, or cause such
Guaranteed Obligation to be performed or paid, without regard to any exercise or
nonexercise by Independence, its successors or permitted assigns of any right,
power or privilege under or in respect of the Tolling Agreement or the
Guaranteed Obligations. In connection with the foregoing, Independence
acknowledges that performance of the obligations of Purchaser under the Tolling
Agreement, to the extent that such performance is for an obligation other than
the payment of money, shall be accomplished by Guarantor causing such
performance to occur through a third party or otherwise by the payment of money.
This Guaranty shall be direct, immediate and primary and shall be a guaranty of
performance and payment and not of collection, and is not conditioned or
contingent upon any attempt to collect from Purchaser or upon any other event,
contingency or circumstance whatsoever, except as expressly provided otherwise
herein.
2. OBLIGATIONS UNCONDITIONAL. Guarantor covenants to and agrees with
Independence and its successors and permitted assigns that, to the fullest
extent permitted by law, its obligations under this Guaranty are irrevocable,
absolute and unconditional, shall remain in full force and effect, and shall not
be impaired or affected by, or be subject to, any reduction, termination or
other impairment by set-off, deduction, counterclaim, recoupment, interruption
or otherwise, and Guarantor shall have no right to terminate this Guaranty or to
be released, relieved or discharged, in whole or in part, from its performance
or payment obligations referred to in this Guaranty for any reason whatsoever
(other than the performance and payment in full of the Guaranteed Obligations),
including (a) any amendment, supplement or modification to, waiver of, consent
to or departure from, or failure to exercise any right, remedy, power or
privilege under or in respect of, the Tolling Agreement, the Guaranteed
Obligations or any other agreement or instrument relating thereto, (b) any
insolvency, bankruptcy, reorganization, dissolution or liquidation of, or any
similar occurrence with respect to, or cessation of existence of, or change of
ownership of Purchaser, or any rejection of any of the Guaranteed Obligations in
connection with any Proceeding (as defined in Section 3 below) or any
disallowance of all or any portion of any claim by Independence, its successors
or permitted assigns in connection with any Proceeding, (c) any lack of
genuineness, legality, validity, regularity, enforceability or value of the
Tolling Agreement, any of the Guaranteed Obligations, or any other agreement or
instrument relating thereto, (d) the failure to create, preserve, validate,
perfect or protect any security interest granted to, or in favor of, any person,
(e) any substitution, modification, exchange, release, settlement or compromise
of any security or collateral for or guaranty of any of the Guaranteed
Obligations or failure to apply such security or collateral or failure to
enforce such guaranty or (f) any other event or circumstance whatsoever that
might otherwise constitute a legal or equitable discharge of a surety or
guarantor (other than the payment in full of the Guaranteed Obligations, and
defenses available to Purchaser
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under the Tolling Agreement), it being the intent of Guarantor that its
obligations under this Guaranty shall be irrevocable, unconditional and absolute
under any and all circumstances, except as expressly provided herein. This
Guaranty and the obligations of Guarantor hereunder shall continue to be
effective or be automatically reinstated, as the case may be, if at any time any
payment by or on behalf of Purchaser is rescinded or must otherwise be restored
by Independence, its successors or permitted assigns for any reason, including,
but not limited to, as a result of any Proceeding with respect to Purchaser or
any other person, as though such payment had not been made.
3. INTEREST. The Guaranteed Obligations shall include, without limitation,
interest accruing as part of the Guaranteed Obligations by the terms thereof
following the commencement by or against Purchaser of any case or proceeding
under any law relating to bankruptcy, insolvency, reorganization, winding-up,
liquidation, dissolution or composition or adjustment of debt (hereinafter, a
"PROCEEDING").
4. DEMAND. If Purchaser shall fail or be unable duly, punctually and fully
to perform or pay any Guaranteed Obligation, Independence, its successors or
permitted assigns may at any time prior to the full performance or payment of
such Guaranteed Obligation deliver notice of such failure or inability of
Purchaser to perform or pay to Guarantor in writing, which notice shall
reasonably specify the nature of such failure or inability to perform or pay, as
the case may be and, in the case of a failure or inability to pay, the amount
thereof (each such written notice hereinafter a "DEMAND"). Guarantor shall, upon
receipt of a Demand, forthwith perform or pay such Guaranteed Obligation, or
cause such Guaranteed Obligation to be performed or paid in full. Promptly on
request, Guarantor shall reimburse Independence, its successors and permitted
assigns for all costs and expenses (including reasonable attorneys' fees)
incurred in enforcing Independence's, its successors' or permitted assigns'
rights under this Guaranty, but only to the extent that Independence is
successful in enforcing Independence's rights under this Guaranty.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Independence and its successors and permitted assigns that as of the date
hereof:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, it has the
corporate power and authority to execute, deliver and carry out the
terms and provisions of this Guaranty;
(b) no authorization, approval, consent or order of, or
registration or filing with, any court or other governmental body
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having jurisdiction over Guarantor is required on the part of
Guarantor for the execution and delivery of this Guaranty;
(c) this Guaranty has been duly executed and delivered by
Guarantor and constitutes a valid and legally binding agreement of
Guarantor enforceable against Guarantor in accordance with its
terms, subject, however, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally and except as the enforceability thereof may be
limited by general principles of equity (regardless of whether
considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of this Guaranty
have been duly authorized by all necessary corporate action and do
not require any other actions or proceedings or any stockholder
approval or consent of any trustee or holder of any indebtedness of
Guarantor;
(e) the execution, delivery and performance of this Guaranty
and compliance by Guarantor with the terms hereof (i) will not
violate any governmental approval or law applicable to it or any of
its property, (ii) will not violate any provision of its certificate
of incorporation, bylaws or other governing documents, and (iii)
will not violate or constitute a default under any agreement or
instrument to which it is a party or by which it or any of its
property may be bound, or result in the creation or imposition of
any lien upon any of its property, which violation, default or lien
would have a material adverse effect on its ability to perform its
obligations under this Guaranty;
(f) except as disclosed in Guarantor's latest Form 10-K and
any Form 10-Qs or Form 8-Ks subsequently filed with the Securities
and Exchange Commission, there are no actions, suits, investigations
or proceedings against Guarantor by or before any court, arbitrator,
administrative or regulatory agency, or other governmental authority
pending, or to its knowledge, threatened against or affecting it,
its properties, or its assets that, if adversely determined, would
reasonably be expected to have a material and adverse effect on its
ability to perform its obligations under this Guaranty; and
(g) it directly or indirectly owns all of the issued and
outstanding shares of each class of capital stock of Purchaser.
6. DOWNGRADE EVENT. If at any time any two of the credit ratings then
assigned to Guarantor's unsecured, senior long-term debt obligations falls below
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"Investment Grade" from the Standard & Poor's Rating Group (a division of
XxXxxx-Xxxx, Inc.) or its successor ("S&P"),"Investment Grade" from Xxxxx'x
Investor Services, Inc. or its successor ("XXXXX'X") or "Investment Grade" from
Fitch IBCA, Inc. or its successor ("FITCH") (or if Guarantor is not rated by any
of S&P, Xxxxx'x or Fitch), then Independence may require Guarantor to provide
collateral in the form of either a substitute guaranty on terms and conditions
substantially similar to this Guaranty (from a substitute guarantor whose
unsecured, senior long-term debt obligations are rated at least "Investment
Grade" from two of S&P, Xxxxx'x and Fitch) or other security reasonably
acceptable to Independence and Purchaser ("Performance Assurance") in an amount
determined by Independence in a commercially reasonable manner. The failure of
Guarantor to provide such Performance Assurance or a guaranty or other credit
assurance acceptable to Independence within twenty (20) business days of receipt
of notice shall constitute an Event of Default under the Tolling Agreement and
Independence will be entitled to the remedies set forth in the Tolling
Agreement.
7. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived, supplemented or terminated except in a
writing signed by Guarantor and Independence or Independence's successors and
permitted assigns.
8. WAIVERS. To the fullest extent permitted by law, and except for the
Demand required pursuant to Section 4 hereof, Guarantor hereby waives (a) all
set-offs, counterclaims, presentments, demands for performance, notices of
nonperformance, protests, notice of any of the matters referred to in Section 2,
notices of protests, notices of dishonor, notice of any waivers or indulgences
or extensions, and notices of every kind that may be required to be given by any
statute or rule of law and notice of acceptance of this Guaranty, (b) diligence,
presentment, and demand of payment, filing of claims with a court in connection
with any Proceeding, protest or notice with respect to the Guaranteed
Obligations and all demands whatsoever; and (c) any requirement that any action
or proceeding be brought against Purchaser or any other person, or any
requirement that any person exhaust any right, power or remedy or proceed
against any other person, prior to any action against Guarantor under the terms
hereof. No delay on the part of Independence, its successors or permitted
assigns in the exercise of, or failure to exercise, any right or remedy shall
operate as a waiver thereof, a waiver of any other rights or remedies, or a
release of Guarantor from any obligations hereunder, and no single or partial
exercise by Independence, its successors or permitted assigns of any right or
remedy shall preclude any further exercise thereof or the exercise of any other
right or remedy.
9. WAIVER OF SUBROGATION. Guarantor hereby agrees that it will not
exercise, and hereby irrevocably, absolutely and unconditionally waives, any
rights of subrogation, contribution, reimbursement, indemnification or other
rights of
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payment or recovery for any payments made by it hereunder until all
Guaranteed Obligations have been fully paid and performed.
10. NOTICE. Any Demand, notice, request, instruction, correspondence or
other document to be given hereunder (herein collectively called "Notice") shall
be in writing and delivered personally or mailed by certified mail, postage
prepaid and return receipt requested, or by telecopy, as follows:
To Independence:
Sithe/Independence Power Partners, L.P.
X.X. Xxx 0000
00 Xxxxxxxxxxxx Xxx
Xxxxxx, Xxx Xxxx 00000
Attention: General Manager
Telecopy: (000) 000-0000
with a copy to:
Sithe Energies, Inc.
28th Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
To Guarantor:
Dynegy Holdings Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Assistant Treasurer
Telecopy: (000) 000-0000
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telefax shall be effective upon actual receipt if
received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telefax shall be confirmed
promptly after transmission in writing by certified mail or personal delivery.
Any party may change any address to which Notice is to be given to it by giving
notice as provided above of such change of address.
***CONFIDENTIAL TREATMENT REQUESTED***
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11. ASSIGNMENT. Guarantor shall have no right, power or authority to
delegate, assign or transfer all or any of its rights or obligations hereunder.
Independence may assign all or any of its rights hereunder to any assignee of
its rights under the Tolling Agreement as permitted thereby; provided, further,
that Independence may pledge or assign its interest hereunder to the lenders of
financial parties referred to in Section 21.01 of the Tolling Agreement
("Financial Parties") in connection with any assignment of the Tolling Agreement
to the Financial Parties as contemplated by Section 21.01 of the Tolling
Agreement. In connection with any such assignment to any Financial Party,
Guarantor agrees to execute and deliver the agreement attached hereto as Exhibit
2.
12. MISCELLANEOUS. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING CONFLICT-OF-LAWS
RULES. EACH OF GUARANTOR AND INDEPENDENCE HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER
AGREEMENTS REFERRED TO HEREIN OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. Each of the Parties hereby irrevocably and unconditionally: (i) submits
for itself in any legal action or proceeding relating to this Guaranty, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States for the Southern District of New York and appellate
courts from any thereof; (ii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
the other Party at its address set forth in Section 10, or at such other address
of which the other Party shall have been notified pursuant thereto; and (iii)
agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law. This Guaranty is a continuing guaranty,
shall apply to all Guaranteed Obligations whenever arising, shall be binding
upon Guarantor and its successors and shall inure to the benefit of and be
enforceable by Independence and its successors and permitted assigns. This
Guaranty embodies the entire agreement of Guarantor and Independence and
supersedes all prior agreements and understandings relating to the subject
matter hereof. The headings in this Guaranty are for the purposes of reference
only, and shall not affect the meaning hereof. If any provision of this Guaranty
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Guaranty, and this Guaranty shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein, but
only to the extent of its invalidity, illegality or unenforceability. This
Guaranty may be executed in any number of counterparts,
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each of which shall be an original, but all of which together shall constitute
one instrument.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed and
delivered by its duly authorized officer as of the day and year first above
written.
DYNEGY HOLDINGS INC.
By:
-----------------------------
Title:
--------------------------
ACCEPTED:
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
--------------------------------------
Title:
-----------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
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EXHIBIT 2
ACKNOWLEDGMENT AND CONSENT
Acknowledgment and Consent (this "CONSENT") dated as of July 1, 2001
between Dynegy Holdings Inc. a Texas corporation (together with its successors
and assigns, the "COMPANY") and Sithe/Independence Power Partners, L.P., a
Delaware limited partnership (together with its successors and assigns, the
"PARTNERSHIP"), to and for the benefit of Manufacturers and Traders Trust
Company, a New York banking corporation, in its capacity as collateral agent
(together with successors and assigns in that capacity, the "COLLATERAL AGENT").
SECTION 1. CONSENT TO ASSIGNMENTS, ETC.
The Company hereby (a) acknowledges that it has been advised of that
certain Security Agreement and Assignment of Contracts dated as of January 1,
1993 (as amended, supplemented or modified and in effect from time to time, the
"SECURITY AGREEMENT") between the Collateral Agent and the Partnership, (b)
consents, subject to the provisions of this Consent, to the collateral
assignment by the Partnership of the Guaranty Agreement dated as of July 1, 2001
between the Company and the Partnership (as amended, supplemented or modified
and in effect from time to time, the "ASSIGNED CONTRACT") as collateral for the
Partnership's obligations to the Secured Parties (as defined in the Security
Agreement), and any subsequent assignments by the Collateral Agent, on behalf of
the Secured Parties, (c) acknowledges the right of the Collateral Agent,
following an Event of Default (as defined in the Security Agreement) by the
Partnership, to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Assigned Contract as the
Partnership could have taken absent the Event of Default, and (d) acknowledges
and agrees that the Collateral Agent succeeding to the rights and obligations of
the Partnership under the Assigned Contract shall not, in and of itself,
constitute or cause a default by the Partnership under the Assigned Contract.
SECTION 2. PAYMENT OF ASSIGNED SUMS
All payments (if any) to be made by the Company to the Partnership under
the Assigned Contract shall be made by wire transfer to the account specified in
Section 24.07 of the Assigned Contract.
SECTION 3. REPRESENTATIONS OF COMPANY
(a) The Company represents and warrants that as of the date hereof:
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(i) AUTHORIZATION. The execution, delivery and performance by
the Company of this Consent has been duly authorized by all necessary action on
the part of the Company and does not require any approval or consent of any
shareholder of the Company or any holder (or any trustee for any holder) of any
indebtedness or other obligation of the Company, except as has been heretofore
obtained.
(ii) EXECUTION; DELIVERY; BINDING AGREEMENT. This Consent has
been duly executed and delivered on behalf of the Company by the appropriate
officers of the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium and other similar laws
applicable to creditors' rights generally and except as the enforceability
thereof may be limited by general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(iii) NO DEFAULT OR AMENDMENT. As of the date hereof, neither
the Company nor, to the knowledge of the Company, the Partnership is in default
under the Assigned Contract. The Company has no existing claims, counterclaims,
offsets or defenses against the Partnership in respect of the Assigned Contract
except for routine claims for payment under the Assigned Contract.
SECTION 4. RIGHTS OF SECURED PARTIES
The Company agrees that, subject to the provisions of this Consent, the
Secured Parties shall have the following rights with respect to the Assigned
Contract:
(a) Notwithstanding anything to the contrary contained in the
Assigned Contract, the Assigned Contract shall not be terminated or cancelled by
action of the Company and shall not be deemed abandoned or surrendered without
prior notice in writing to the Collateral Agent specifying the Partnership's
default (hereinafter called a "NOTICE"). Any such Notice shall contain a copy of
the notice of default sent to the Partnership and shall be delivered to the
Collateral Agent when the Company delivers a notice of default to the
Partnership under the Assigned Contract. The Collateral Agent shall have the
right (but not the obligation) to cure the defaults listed in any Notice within
the same period of time provided in the Assigned Contract for the Partnership to
cure such default; PROVIDED, HOWEVER, if the nature of any non-monetary default
on the part of the Partnership under the Assigned Contract is such that it
cannot be cured by the Collateral Agent without the Collateral Agent having
taken possession of the Project (as defined in the Security Agreement), then the
Collateral Agent's time for commencing such cure shall be extended for such
reasonable period of time as is necessary for the Collateral Agent to lawfully
obtain possession of the Project; PROVIDED, FURTHER, that
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the Collateral Agent shall at all times be seeking by all reasonable and lawful
means to obtain such possession. Once the defaults listed in any Notice are
timely cured by the Collateral Agent, there shall no longer be deemed to be any
default under the Assigned Contract in respect of such defaults so cured. The
curing of any defaults under the Assigned Contract shall not in and of itself be
construed as an assumption by the Collateral Agent or any of the Secured Parties
of any of the obligations, covenants or agreements of the Partnership under the
Assigned Contract.
(b) If a notice of election is delivered to the Company as provided
in Section 5 below, the Company will accept performance of the Partnership's
obligations (as specified in such notice of election) under the Assigned
Contracts by the Collateral Agent, or its nominee(s) acting for the Secured
Parties, as the case may be, in lieu of the Partnership's performance of such
obligations.
(c) Upon any transfer of the Partnership's rights under the Assigned
Contract pursuant to the exercise of the Collateral Agent's rights under this
Consent, the Collateral Agent or any third party to which such rights are
transferred by the Collateral Agent (hereinafter, a "THIRD PARTY TRANSFEREE")
shall, upon the Company's reasonable satisfaction with the Collateral Agent's or
such Third Party Transferee's financial condition and subject to all applicable
laws, rules and regulations, succeed to all of the Partnership's right, title
and interest under and in connection with the Assigned Contract and shall be
obligated to perform all of the terms and conditions of the Assigned Contract,
except that the Collateral Agent or any Third Party Transferee shall not be
required to perform or cause to be performed any of the Partnership's
obligations under the Assigned Contract (except for the Partnership's obligation
for the payment of all amounts due and payable to the Company under the terms of
the Assigned Contract including any interest applicable thereon) that remain
unperformed at the time that the Collateral Agent or such Third Party Transferee
is transferred such Assigned Contract other than continuing non-monetary
defaults under the Assigned Contract which are capable of performance by the
Collateral Agent or the Third Party Transferee or be liable for any prior act or
omission of the Partnership, and upon the transfer by the Collateral Agent of
its rights and interests and the rights and interests of the Partnership under
the Assigned Contracts to a Third Party Transferee, the Collateral Agent and the
Partnership shall be relieved of all obligations under the Assigned Contract
arising after such transfer.
(d) In the event that (i) the Assigned Contract is rejected by a
trustee or any person exercising the powers of a trustee in any bankruptcy or
insolvency proceeding applicable to the Partnership or (ii) the Assigned
Contract is terminated as a result of any bankruptcy or insolvency proceeding
applicable to the Partnership, the Company shall, subject to all applicable
laws, rules and regulations, execute and deliver to the Collateral Agent and its
designees,
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successors and assigns a new contract; PROVIDED that the Company shall be
required to execute a new contract with the Collateral Agent only if the
Collateral Agent or its designees, successors or assigns shall within ten (10)
business days of entering into such new contract, cure all defaults for failure
to pay all amounts due and payable to the Company under the Assigned Contract,
including any interest applicable thereon. The new contract shall, subject to
all applicable laws, rules and regulations, contain the same covenants,
agreements, terms, provisions and limitations as the Assigned Contract (except
for any requirements with respect to past performance which have been fulfilled
by the Partnership or the Collateral Agent or its designees, successors and
assigns hereunder).
SECTION 5. LIABILITY OF SECURED PARTIES
The Collateral Agent, on behalf of the Secured Parties, and its successors
and assigns, shall have no right or power to enforce the Assigned Contract, and
assumes no duty or obligation thereunder unless and until the Collateral Agent
shall have notified the Company that it has elected to exercise its rights and
remedies under the Security Agreement and to substitute itself in the position
of the Partnership under the Assigned Contracts and has agreed in a written
instrument executed by the Collateral Agent to be bound by all terms and
conditions of the Assigned Contract applicable to the Partnership.
SECTION 6. FURTHER ASSURANCES
The Company hereby agrees to execute and deliver all such instruments and
take all such actions as may be reasonably necessary to effectuate fully the
purposes of this Consent, provided, however, that such further assurances shall
not expand the liability, or obligations arising under this Consent or dilute
any rights or remedies otherwise accruing to Company under this Consent.
SECTION 7. NOTICES
All notices and other communications hereunder shall be in writing, shall
refer on their face to the Assigned Contract (although failure to so refer shall
not render any such notice or communication ineffective), shall be sent by first
class mail, facsimile, by hand or overnight courier service and shall be
directed:
(a) if to the Company, in accordance with the Assigned Contract;
(b) if to the Collateral Agent, addressed to:
Manufacturers and Traders Trust Company
One M&T Plaza
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Xxxxxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
(c) if to the Partnership, in accordance with the Assigned
Contract; and
(d) to such other address as any party may designate by notice to
the other party hereto given pursuant hereto.
SECTION 8. MISCELLANEOUS
(a) GOVERNING LAW. This Consent shall be governed by and construed in
accordance with the law of the State of New York as to all matters (without
giving effect to conflict of law principles). Each of the Company and the
Partnership hereby irrevocably waives, to the fullest extent permitted by law,
any and all right to trial by jury in any legal proceedings arising out of or
relating to this Consent.
(b) SUBMISSION TO JURISDICTION. Each of the Parties hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States for the
Southern District of New York and appellate courts from any thereof;
(ii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the other
Party at its address set forth in Section 7, or at such other address of which
the other Party shall have been notified pursuant thereto; and
(iii) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law.
(c) HEADINGS. The descriptive headings of the Articles and Sections of
this Consent are inserted for convenience only and are not intended to affect
the meaning, interpretation or construction of this Consent.
(d) WAIVER. Except as otherwise provided in this Consent, any failure of a
party to comply with any obligation, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver shall not
operate as a
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waiver of, or estoppel with respect to, any subsequent failure of the first
party to comply with such obligation, covenant, agreement or condition.
(e) SEVERABILITY. Any provision of this Consent which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(f) SUCCESSORS AND ASSIGNS. This Consent shall be binding upon and inure
to the benefit of the Company, the Collateral Agent, the Partnership and their
respective permitted successors and assigns.
(g) COUNTERPARTS. This Consent may be executed in counterparts, all of
which shall constitute one and the same Consent and each of which shall be
deemed to be an original.
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IN WITNESS WHEREOF, the parties hereto have executed this Consent as
of the day and year first above written.
DYNEGY HOLDINGS INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SITHE/INDEPENDENCE POWER PARTNERS, L.P.
By: SITHE/INDEPENDENCE, INC.,
its General Partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
***CONFIDENTIAL TREATMENT REQUESTED***
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