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LONG TERM GAS AGREEMENT EXHIBIT 10.41
This Agreement is made this tenth day of October 2000, between Midland
Cogeneration Venture Limited Partnership ("MCV" or "Buyer") and CMS Marketing,
Services and Trading Company ("Seller") for the purpose of entering into a long
term gas supply arrangement on the terms and conditions that follow. In this
Agreement, Seller and Buyer may also be referred to individually as "Party" or
collectively as "Parties."
1. Definitions. The following terms when used in this Agreement shall have
the following meanings:
1.1. "Agreement" shall mean this Agreement and all Exhibits hereto.
1.2. "Btu" shall mean one (1) British Thermal Unit, the amount of
heat required to raise the temperature of one (1) pound of
water one (1) degree Fahrenheit at sixty (60) degrees
Fahrenheit. BTU is measured on a dry basis.
1.3. "Business Day" shall mean any Day other than a Day on which
banks in the U.S.A. are allowed by law to be closed.
1.4. "Contract Year" shall mean any calendar year during the term
of this Agreement.
1.5. "Cubic Foot of Gas" shall mean the volume of Gas contained in
one (1) cubic foot of space at a pressure of fourteen and
seventy-three hundredths (14.73) dry Psia, at a temperature of
sixty degrees (60 degree) Fahrenheit.
1.6. "Day" shall mean a period of twenty-four (24) consecutive
hours (23 hours when changing from Standard to Daylight time
and 25 hours when changing back to Standard time) beginning
and ending at 9:00 a.m. Central clock time.
1.7. "Disputed Amount" shall have the meaning set forth in Section
5.1.2.
1.8. "Gas" shall mean any mixture of hydrocarbon and noncombustible
gases in a gaseous form consisting primarily of methane and
includes natural Gas produced from gas xxxxx (gas well gas),
Gas which immediately prior to being produced from a reservoir
is in solution with crude oil or dispersed in an intimate
association with crude oil or in contact with crude oil across
a gas-oil contact (casinghead gas), or residue gas resulting
from the processing of either or both casinghead gas and gas
well gas.
1.9. "Material Adverse Change" shall mean: (i) with respect to
Guarantor, having consolidated net worth of less than $3
billion as presented in its financial statements, and (ii)
with respect to MCV having less than $60 million Cash Reserves
as reported in the Liquidity Section of Midland Cogeneration
Venture's annual 10K report and quarterly 10Q report. Cash
Reserves equal the total Cash Reserves as reported less the
funds restricted for rental payments (presently $137,000,000)
and funds restricted for management nonqualified plans
(presently $0). 1.10. "Mcf" shall mean one thousand (1,000)
cubic feet of Gas.
1.11. "MMBtu" shall mean a quantity of Gas equal to one million
(1,000,000) Btu, which is equivalent to one (1) dekatherm.
1.12. "Month" shall mean the period beginning at 9 a.m. Central
clock time on the first Day of any calendar month and ending
at 9 a.m. Central clock time on the first Day of the next
succeeding calendar month.
1.13. "NYMEX" shall mean the New York Mercantile Exchange Xxxxx Hub
natural gas Futures contract traded on the New York Mercantile
Exchange.
1.14. "Point of Delivery" shall mean the point where Seller delivers
Gas to Buyer as set forth in this Agreement.
1.15. "Prime Rate" shall mean the fluctuating per annum lending rate
of interest from time to time published by CITIBANK, N.A., or
its successor, for its best commercial customers.
1.16. "Psia" shall mean pounds per square inch absolute.
1.17. "Transporter" shall mean ANR Pipeline as described in Exhibit
A.
1.18. "Undisputed Amount" shall have the meaning set forth in
Section 5.1.2.
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2. Quantity. Seller agrees to deliver and sell and MCV agrees to receive
and purchase the following volumes at the specific Point of Deliveries
in accordance with the terms and conditions of this Agreement:
10,000 MMBtu, on a firm basis, at Point of Delivery A 5,000
MMBtu, on a firm basis, at Point of Delivery B
3. Price.
3.1. The price to be paid by Buyer to Seller for all quantities of
Gas delivered hereunder inclusive of all taxes and other
adjustments or costs not provided for herein shall equal the
averages of the closes of the last three trading days of each
month Gas is delivered during the term of this Agreement of
the NYMEX natural gas contract minus $0.09 per MMBtu for all
Gas delivered to the Point of Delivery A and minus $0.04 per
MMBtu for all Gas delivered to the Point of Delivery B.
3.2. Seller shall be responsible for all taxes prior to the Point
of Delivery. MCV shall be responsible for all taxes at and
after the Point of Delivery.
4. Term. Deliveries of Gas at Point of Deliveries A and B shall be as
follows unless an early termination ---- is effected in accordance with
the terms of this Agreement: Point of Delivery A: shall commence
November 1, 2006 and continue through October 31, 2012 Point of
Delivery B: shall commence January 1, 2007 and continue through
December 31, 2012
5. Billing, Payments and Audit.
5.1. Billing and payment procedures are as follows:
5.1.1. After the delivery of Gas has commenced hereunder,
Seller shall, on or about the tenth Day of each month,
render to Buyer a statement showing the estimated (or
actual if available) quantity of Gas delivered at each
Point of Delivery during the prior month and the
amounts due Seller hereunder. Seller shall also render
to Buyer, if necessary, a separate statement showing
the adjustment, if any, required to conform the prior
month's estimated and actual deliveries and prices.
Payment of the amount due based on such statements
shall be made by Buyer to Seller by wire transfer with
immediately available funds the later of (a) ten (10)
Days following receipt of such statement or (b) the
twentieth (20th) Day of the month. If the due date
falls on a Day that is not a Business Day, then
payment shall be made on the next Business Day. If
Buyer bills Seller, the same procedure shall be
followed as set forth in this Section 5.1.1.
5.1.2. In the event that either Party shall in good faith
dispute any portion of the amount shown in the other
Party's statement (hereinafter called the "Disputed
Amount"), the disputing Party shall (a) notify the
other Party in writing as to the Disputed Amount, and
(b) pay the remaining undisputed portion of the other
Party's statement when due (hereinafter, the
"Undisputed Amount").
5.1.3. If it is determined that the failure to pay any
Undisputed Amount of any statement was not
justifiable, interest on such Undisputed Amount shall
accrue at a rate per annum equal to the Prime Rate
plus one percent (1.0%) from the time payment would
have been due until the time payment is made, but in
no event shall the interest on such unpaid portion
exceed the applicable lawful nonusurious rate of
interest. Payment of any previously unpaid Undisputed
Amount shall be credited first to all interest accrued
and then to principle.
5.2. Each Party hereto shall have the right, upon reasonable written
notice, during normal business hours and at its own expense to
examine the books and records of the other Party to the extent
necessary to verify the accuracy of any statement, charge,
computation, or demand made under or pursuant to this
Agreement. Such examination shall be conducted no more than
once in a twelve-month period. Any error or discrepancy in
statements furnished pursuant to this Agreement shall be
promptly reported to Seller or Buyer, as applicable, and proper
adjustment thereof shall be made within thirty (30) Days after
final determination of the
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correct volumes or amounts involved; provided, however, that
if no such errors or discrepancies are reported to Seller or
Buyer, as applicable, within two (2) years from the end of the
calendar year in which such errors or discrepancies occurred,
the same shall be conclusively deemed to be correct.
6. Deliveries.
6.1. Exhibit A hereto sets forth the Point of Delivery under this
Agreement. Seller shall not use any other point to deliver Gas
without Buyer's written consent, which Buyer may grant or
withhold in its sole discretion.
6.2. To the extent that the procedures for the delivery of Gas set
forth herein conflict with the rules and tariffs of any
Transporter, the Transporter's rules and tariffs will control
and the Parties shall cooperate fully with each other in
complying with such rules and tariffs.
7. Third Party Gas. Buyer understands and agrees the Gas delivered
hereunder may be supplied either from Seller's Gas or from Gas
purchased by Seller from third parties; provided however, if such Gas
is purchased from third parties, Seller shall be solely responsible for
the payment of the purchase price of Gas to such third parties.
8. Title. Title and risk of loss to Gas delivered hereunder shall pass
from Seller to Buyer at the Point of Delivery.
9. Delivery Pressure. Seller shall be required to deliver or cause
delivery of the Gas to the Point of Delivery and for delivering such
Gas at a pressure sufficient to effect such delivery. Notwithstanding
anything to the contrary herein, Seller shall have the right but not
the obligation to install compression to effect deliveries of Gas
hereunder.
10. Quality of Gas. The Gas to be delivered by Seller hereunder at the
Point of Delivery shall comply with the quality requirements of the
receiving Transporter.
11. Measurement and Tests of Gas. The quantity and quality of Gas delivered
to the Buyer's account at the Point of Delivery shall be determined in
accordance with the established standard terms and conditions
applicable to the Transporter's gas transportation contracts.
12. Warranty of Title. Seller hereby warrants (i) title to all Gas sold
hereunder or the right to sell such Gas, (ii) that it has the right to
sell same to Buyer, and (iii) that all such Gas shall be free from any
and all liens and adverse claims of any nature whatsoever. Seller
agrees to indemnify and hold Buyer harmless, including but not limited
to, all costs, damages, and expenses (including Buyer's reasonable
attorney fees) incurred by Buyer in defending against any liens or
adverse claims of any nature whatsoever, including but not limited to,
third parties from whom Seller purchased Gas as permitted in Section 7,
in addition to any other remedies Buyer may have hereunder or at law.
13. Credit Worthiness.
13.1. This Agreement is subject to Seller providing a parental
guaranty to Buyer in the form attached hereto as Exhibit "B."
13.2. At any time, and from time to time during the term of this
Agreement (and notwithstanding whether an Event of Default has
occurred as defined in Section 21) but not more than once in
any seven (7) Day period, if the Termination Payment (as such
term is defined in Section 13.5) should exceed $1,000,000 (the
"Security Threshold"), then either Party may request the other
Party to provide additional Performance Assurance in an amount
equal to the amount by which the Termination Payment exceeds
the Security Threshold (rounding upwards for any fractional
amount to the next $100,000). The Performance Assurance shall
be delivered within thirty (30) calendar days of the date of
the request. If such additional Performance Assurance is not
received by the requesting Party within thirty (30) calendar
days, then the requesting Party, in addition to any other
remedy available, may immediately suspend performance with
respect to the quantities associated with the amount in excess
of the
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Security Threshold, plus any Performance Assurance already in
place, and cover such lost supply or market, as the case may
be. Incremental gas costs (as referenced in Section 17 with
respect to either Buyer or Seller, as applicable) incurred by
the covering Party shall be recoverable from the other Party.
Such suspension will be implemented on a pro rata basis to a
level at which assurances have been provided. In addition, a
failure to provide Performance Assurance as requested shall
constitute an Event of Default under Section 21.
13.3. Either Party, at its sole expense, may request the other Party
to reduce its Performance Assurance then in place if the
Termination Payment (with respect to all Transactions then
outstanding) reverts back to an amount less than or equal to
the sum of the Performance Assurance and the Security
Threshold then in place (rounding upwards for any fractional
amount to the next $100,000). Such request for reduction shall
be no more frequently than weekly, with respect to Letters of
Credit and guaranties, and daily, with respect to cash. The
consent to such request(s) shall not be unreasonably withheld.
13.4. Either Party may at any time make a calculation of the
Termination Payment and submit same to the other Party for
review. If within thirty (30) Days of the submission of the
value of the Termination Payment from one Party to the other,
agreement has not been reached by the Parties as to the amount
of the Termination Payment, the determination of the amount of
the Termination Payment shall be submitted to arbitration as
provided for in Section 18 of this Agreement. Notwithstanding
the submission of the determination of the amount of the
Termination Payment to arbitration, all requirements in
Section 13 of this Agreement shall remain in effect.
13.5. With respect to this Section 13: (a) "Performance Assurance"
means collateral in the form of either cash or Letters of
Credit. The requesting Party may also accept a parental
guaranty or other collateral deemed sufficient by the
requesting Party. If the collateral is in the form of cash,
then such cash shall be placed in a segregated,
interest-bearing escrow account on deposit with a major U.S.
commercial bank having a credit rating of at least "A-" from
Standard and Poor's or "A3" from Xxxxx'x (interest to accrue
to the Party posting the collateral); (b) "Letter of Credit"
means one or more irrevocable, transferable standby letters of
credit from a major U.S. commercial bank or foreign bank with
a U.S. office having a credit rating of at least "A-" from
Standard & Poor's or "A3" from Xxxxx'x; (c) "Termination
Payment" means the amount by which the requesting Party shall
aggregate Gains, Losses, and Costs (as those terms are defined
in Section 21.2.5 with respect to this Agreement) into a
single net amount. The Termination Payment shall include all
amounts owed but not yet paid by one Party to the other Party,
whether or not such amounts are then due, for performance
already performed pursuant to any Transaction.
14. Right to Terminate Agreement.
14.1. In addition to any other remedy of Buyer under law or provided
under this Agreement, Buyer shall have the right at its
election to terminate this Agreement upon twenty (20) Days
written notice to Seller if Seller for any reason other than:
(i) Force Majeure, (ii) Buyer's failure to take, or (iii)
failure by Buyer to pay any Undisputed Amounts, fails, over a
period of at least sixty (60) Days, to deliver an average of
ninety percent (90%) of the agreed quantity, and provided
further, that such failure occurred not more than one hundred
forty (140) Days immediately preceding the giving of such
notice of termination. Seller shall have twenty (20) Days
after receipt of such cancellation notice to cure any failure,
in which case Buyer's cancellation is null and void, and this
Agreement shall remain in full force and effect.
14.2. In addition to the other remedies of Seller under law or
provided under this Agreement, Seller shall have the right at
its election to terminate this Agreement upon twenty (20) Days
written notice to Buyer if Buyer for any reason other than:
(i) Force Majeure, (ii) Seller's failure to deliver, or (iii)
failure by Seller to pay any Undisputed Amounts, fails, over a
period of at least sixty (60) Days, to take a volume of Gas
not less than an average of ninety percent (90%) of the agreed
quantity, and provided further, that such failure occurred not
more than one hundred forty (140) Days immediately preceding
the giving of such notice of termination. Buyer shall have
twenty (20) Days after receipt of such cancellation notice to
cure any failure,
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in which case Seller's cancellation is null and void, and this
Agreement shall remain in full force and effect.
15. Assignment.
15.1. The terms, covenants and conditions hereof shall be binding on
the Parties hereto and on their successors and permitted
assignees.
15.2. Either Party may assign its interest under this Agreement with
the consent of the other Party, which consent shall not be
unreasonably withheld, to an affiliate or any company that
shall succeed, by merger or consolidation, to substantially
all of its assets. In the event of any such assignment, such
successor shall be entitled to the rights and shall be subject
to the obligations of its predecessor. Seller acknowledges
that pursuant to a certain Gas Backup Agreement among
Consumers Energy Company (formerly Consumers Power Company),
The Dow Chemical Company ("Dow"), and Midland Cogeneration
Venture Limited Partnership dated January 27, 1987, Buyer may
be required to make an assignment to Dow of certain rights
under this Agreement. Seller specifically agrees to accept
such assignments, if any, made by Buyer to Dow in accordance
with the aforementioned Gas Backup Agreement; provided,
however, that such assignment shall not relieve Buyer of its
obligations under this Agreement absent Seller's written
consent.
15.3. Except as provided above, neither Party shall assign this
Agreement without the prior consent of the other Party, which
consent shall not be unreasonably withheld. Nothing herein
contained shall prevent or restrict either Party from
pledging, granting a security interest in, or assigning as
collateral all or any portion of such Party's interest to
secure any debt or obligation of such Party under any
mortgage, deed of trust, security agreement, or similar
instrument.
15.4. Either Party desiring to make an assignment for which it has
the right pursuant to the foregoing may upon request obtain a
written consent within sixty (60) Days to such assignment from
the other Party evidencing its consent.
16. Notices. Except as otherwise herein provided, any notice, request,
demand, or statement given in writing or required to be given in
writing by the terms of this Agreement shall be deemed given when
deposited in the government mail, postage prepaid, directed to the
address of the Parties as provided in Sections 16.1 and 16.2 below or
at such other address as either Party may from time to time specify in
writing to the other Party. Notices, requests, demands, or statements
made by person, telephone, Telecopy, Telex, or wire shall be deemed
given when received; provided however, that if such notices are
received after 5:00 p.m. (recipient's local time), such notice shall
not be effective until the next Business Day.
16.1. TO SELLER:
Invoices: CMS Marketing, Services and Trading Company
Attn: Accounting Department
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000; Xxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Other Notices: CMS Marketing, Services and Trading Company
Attn: Contract Administration
0000 Xxxx Xxxxxx, Xxxxx 0000; Xxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Wire Transfer: BANK: Citibank, N.A., Detroit, MI
ACCT: 4072-7394
ABA: 000000000
16.2. TO BUYER:
Invoices: Midland Cogeneration Venture Limited Partnership
Attn: Gas Accounting
000 Xxxxxxxx Xxxxx; Xxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
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Other Notices: Midland Cogeneration Venture Limited Partnership
Attn: Contract Administration
100 Progress Place; Xxxxxxx XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Wire Transfer: BANK: U.S. Bank Trust, N.A., Minneapolis, MN
ACCT: 180121167365
ABA: 000000000
DETAILS: MI Clearing 47300196 - FBO MCV 76608640
16.3. Gas nomination notices will be in accordance with the terms
and conditions applicable to Transporter.
17. Remedies. In the event Seller fails to deliver the daily quantities for
reasons not otherwise excused by Force Majeure, Seller shall be
responsible for any incremental gas costs incurred by MCV in replacing
such Gas. MCV agrees to use commercially reasonable efforts to purchase
replacement Gas at the lowest available price. Seller's obligation to
pay MCV for incremental replacement Gas costs (and any transportation
penalties or transportation demand charges resulting from unused
transportation) shall be MCV's sole and exclusive remedy for Seller's
failure to deliver except as provided in Section 14. In the event that
MCV fails to take Gas for reasons not otherwise excused by Force
Majeure, MCV shall pay Seller for any incremental decrease in the
resale price of such Gas. Seller agrees to use commercially reasonable
efforts to resell such deficiency Gas at the highest achievable price.
MCV's obligation to pay Seller for such decrease (and any
transportation penalties or transportation demand charges resulting
from unused transportation) shall be Seller's sole and exclusive remedy
for MCV's failure to take Gas except as provided in Section 14.
18. Arbitration.
18.1. If the Parties are unable to resolve a disagreement arising
under this Agreement, such disagreement shall be settled by
arbitration. Either Party may then commence arbitration by
serving written notice thereof on the other Party designating
the issue to be arbitrated.
18.2. The Parties shall each appoint one (1) arbitrator and the two
(2) arbitrators so appointed will select a third arbitrator,
all of such arbitrators to be qualified by education,
knowledge, and experience to resolve the dispute or
controversy. If either Party fails to appoint an arbitrator
within ten (10) Days after a request for such appointment is
made by the other Party in writing, or if the two (2)
appointed fail to agree on a third arbitrator within ten (10)
Days after the appointment of the second, the arbitrator or
arbitrators necessary to complete a board of three (3)
arbitrators will be appointed upon application by either Party
therefore to the American Arbitration Association.
18.3. The jurisdiction of the arbitrators will be limited to the
single issue referred to arbitration and the arbitration shall
be conducted pursuant to the guidelines set forth by the
American Arbitration Association; provided however, that
should there be any conflict between such guidelines and the
procedures set forth in this Agreement, the terms of this
Agreement shall control.
18.4. Within fifteen (15) Days following selection of the third
arbitrator, each Party shall furnish the arbitrators in
writing its position regarding the issue being arbitrated. The
arbitrators may, if they deem necessary, convene a hearing
regarding the issue being arbitrated. Within thirty (30) Days
following the later of the appointment of the third arbitrator
or of the hearing, if one is held, the arbitrators shall
notify the Parties in writing as to which of the two (2)
positions submitted is most consistent with the meaning of
this Agreement with respect to the issue being arbitrated. No
other position may be selected. Such decision shall be binding
on the Parties hereto and shall remain in effect until and
unless changed in accordance with the provisions of this
Agreement.
18.5. Enforcement of the award may be entered in any court having
jurisdiction over the Parties.
18.6. Each Party will pay the expenses of the arbitrator selected by
or for it, and its counsel, witnesses, and employees. All
other costs of arbitration will be equally divided between the
Parties.
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19. Force Majeure. The term "Force Majeure" as employed herein for all
purposes relating hereto, shall mean acts of God, strikes, lockouts, or
other industrial disturbances, acts of public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes,
hurricanes, explosions, fires, arrests and restraints of governments
and people, civil disturbance, freeze-up of Seller's xxxxx or xxxxx
from which Seller is furnishing Gas hereunder, or other temporary
inability of Seller's xxxxx or xxxxx from which Seller is furnishing
Gas hereunder to produce, mechanical breakdowns or repairs of MCV's
plant or pipeline facilities or those of any Transporter used to
transport Gas hereunder, any curtailment in firm transportation,
inability of any Party hereto to obtain necessary materials, supplies,
or permits due to existing or future rules, regulations, orders, laws,
or proclamations of governmental authorities (federal, state, or
local), including both civil and military, and any other causes whether
of the kind herein enumerated or otherwise not within the control of
the Party claiming suspension and that by the exercise of due diligence
such Party is unable to prevent or overcome.
20. Transportation. Both Parties shall cooperate in an effort to eliminate
imbalances on either Party's transporting pipeline(s). The Parties
further agree that if any imbalance penalties or charges (including
cash out charges) are imposed on a Party as a result of the other
Party's failure to deliver or accept the required quantities then the
failing Party shall reimburse the nonfailing Party for such charges or
penalties.
21. Defaults and Remedies.
21.1. Event of Default. A Party shall be deemed in default under
this Agreement upon the occurrence of any one or more of the
following events ("Events of Default"):
21.1.1. The unexcused failure by a Party (the "Defaulting
Party") to make, when due, any payment required
pursuant to this Agreement if such failure is not
remedied within three (3) Business Days after
written notice of such failure is given to the
Defaulting Party by the other Party (the
"Non-Defaulting Party") and provided the payment is
not a Disputed Amount as described in Section 5.1.2;
21.1.2. Any representation or warranty made by a Party
herein shall at any time during the term of this
Agreement prove to be false or misleading in any
material respect;
21.1.3. The failure by a Party to perform, in any material
respect, any material covenant or provision set
forth in this Agreement (other than (i) the events
that are otherwise specifically covered in this
Section 21.1 as a separate Event of Default and (ii)
the events that are covered in Sections 14 and 17)
and such failure is not cured within five (5)
Business Days (or such longer period of time if
reasonably necessary to cure the failure and the
Defaulting Party is making continuous and diligent
efforts to cure) after written notice thereof to the
Defaulting Party unless such failure is excused by
Force Majeure;
21.1.4. A Party becomes subject to a bankruptcy proceeding;
or
21.1.5. The failure of a Party, upon the occurrence of a
Material Adverse Change, to provide, for so long as
the Material Adverse Change is occurring, adequate
assurance (in the form of cash or a Letter of Credit
to be provided at the election of the Defaulting
Party or a guaranty deemed acceptable by the
Non-Defaulting Party, which such acceptance of such
guaranty may not be unreasonably withheld) of its
ability to perform all of its outstanding
obligations to the Non-Defaulting Party under this
Agreement within a period not to exceed three (3)
Business Days of the Defaulting Party's receipt, in
accordance with the notice provisions of Section 16,
of a demand therefore by the Non-Defaulting Party.
21.2. Remedies Upon an Event of Default.
21.2.1. If an Event of Default occurs with respect to a
Defaulting Party at any time during the term of this
Agreement, the Non-Defaulting Party shall have the
right for so long as the Event of Default is
continuing to (i) establish a date (which date shall
be between 5 and 10 Business Days after the
Non-Defaulting Party delivers written notice to the
Defaulting Party of its intent to exercise the
remedy described herein) ("Early
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Termination Date") on which this Agreement shall terminate,
and (ii) withhold any payments due; provided however, upon the
occurrence of any Event of Default listed in Section 21.1, as
it may apply to any Party, this Agreement in respect thereof
shall automatically terminate, without notice, and without any
other action by either Party as if an Early Termination Date
had been declared immediately prior to such event.
21.2.2. If an Early Termination Date has been designated, the
Non-Defaulting Party shall in good faith calculate its Gains,
Losses, and Costs resulting from the termination of this
Agreement. The Gains, Losses, and Costs shall be determined by
comparing the value of the remaining term, contract
quantities, and contract prices under this Agreement, had it
not been terminated, to the equivalent quantities and relevant
market prices for the remaining term either quoted by a bona
fide third-party offer or that are reasonably expected to be
available in the market under a replacement contract for the
balance of this Agreement. To ascertain the market prices of a
replacement contract, the Non-Defaulting Party may consider,
among other valuations, settlement prices of NYMEX natural gas
futures contracts, quotations from leading dealers in natural
gas swap contracts, and other bona fide third party offers,
all adjusted for the length of the remaining term and
differences in transportation. It is expressly agreed that a
Party shall not be required to enter into replacement
transactions in order to determine the Termination Amount (as
hereinafter defined).
21.2.3. The Non-Defaulting Party shall aggregate such Gains, Losses,
and Costs with respect to the balance of this Agreement into a
single net amount ("Termination Amount"). The Non-Defaulting
Party shall provide the Defaulting Party with a notice and
statement containing a clear identification and calculation of
the Termination Amount owed by or due to the Defaulting Party
and shall be accompanied by sufficient information to enable
the Defaulting Party to determine the basis upon which the
calculation was made and the accuracy thereof. If the
Non-Defaulting Party's aggregate Losses and Costs exceed its
aggregate Gains, the Defaulting Party shall, within five (5)
Business Days of receipt of such statement, pay the
Termination Amount to the Non-Defaulting Party, which amount
shall bear interest at the interest rate as set forth in
Section 5.1.3 above, from the Early Termination Date until
paid. If the Non-Defaulting Party's aggregate Gains exceed its
aggregate Losses and Costs, if any, resulting from the
termination of this Agreement, the Non-Defaulting Party shall
pay such excess to the Defaulting Party on or before the
latter of: (i) twenty (20) Days after the end of the month
ending on or after the Early Termination Date, and (ii) five
(5) Business Days after receipt by the Defaulting Party of the
Non-Defaulting Party's notice of the Termination Amount, which
amount shall bear interest at the interest rate as set forth
in Section 5.1.3 above, from the Early Termination Date until
paid.
21.2.4. If the Defaulting Party disputes the Non-Defaulting Party's
right to terminate this Agreement or disagrees with its
calculation of the Termination Amount, in whole or in part,
the Defaulting Party shall, within three (3) Business Days of
receipt of the Non-Defaulting Party's calculation of the
Termination Amount, provide to the Non-Defaulting Party a
detailed written explanation of the basis for such dispute or
disagreement and, if the Termination Amount is due from the
Defaulting Party, shall promptly pay to the Non-Defaulting
Party such portion thereof as is conceded to be correct. Upon
receipt of the Defaulting Party's explanation, the Parties
shall seek to resolve the issues in accordance with mutually
agreeable dispute resolution procedures.
21.2.5. As used herein in this Section 21.2, with respect to each
Party: (i) "Costs" shall mean reasonable brokerage fees,
commissions, and other similar transaction costs and expenses
reasonably incurred by a Party either in terminating or
entering into new arrangements which replace this Agreement,
and reasonable attorney's fees, if any, reasonably incurred in
connection with enforcing its rights under this Agreement;
(ii) "Gains" shall mean an amount equal to the present value
(calculated using the interest rate as set forth in Section
5.1.3 above as the prevailing discount rate) of the economic
benefit (exclusive of Costs), if any, to a Party resulting
from the termination
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of its obligations with respect to this Agreement, determined
in a commercially reasonable manner; and (iii) "Losses" shall
mean an amount equal to the present value (calculated using
the interest rate as set forth in Section 5.1.3 above as the
prevailing discount rate) of the economic loss (exclusive of
Costs), if any, to a Party from the termination of its
obligations, with respect to this Agreement, determined in a
commercially reasonable manner. In no event, however, shall a
Party's Costs, Gains, or Losses include any costs or expenses
incurred by a Party in terminating or reestablishing any
arrangement pursuant to which it has hedged its obligations
under this Agreement.
21.2.6. With respect to either Party, if a Party's activities
hereunder become subject to regulation of any kind whatsoever
under any law to a greater or different extent than that
existing on the date the Agreement is entered into and such
regulation either (a) renders this Agreement illegal or
unenforceable or (b) materially adversely affects the business
of a party with respect to its financial position
(collectively "Material Regulatory Change"), the Party
affected by the Material Regulatory Change will give the other
Party notice within thirty (30) days of the Material
Regulatory Change. The Parties agree to meet and negotiate in
good faith a change to the Agreement to reflect the Material
Regulatory Change and its impact upon the Agreement. If the
Parties cannot mutually agree within thirty (30) days of the
notice of the Material Regulatory Change, the Party affected
by the Material Regulatory Changer under clause 21.2.6(b) may
declare an Early Termination Date under Sections 21.2.1
through 21.2.5. For purposes of declaring an Early Termination
Date, the Party declaring the Material Regulatory Change shall
be substituted for the Defaulting Party under Sections 21.2.1
through 21.2.5.
22. Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED ACCORDING TO
THE LAWS OF THE STATE OF MICHIGAN.
23. Miscellaneous.
23.1. No waiver by either Seller or Buyer of any default by the
other under this Agreement shall operate as a waiver of any
future default, whether of like or different character or
nature.
23.2. The descriptive headings of particular provisions of this
Agreement are for the purpose of facilitating administration
and shall not be construed as having any substantive effect on
the terms of this Agreement.
23.3. The Parties agree to proceed with due diligence and make good
faith effort to obtain such governmental authorizations as may
be necessary to enable performance of this Agreement.
23.4. This Agreement is subject to the January 27, 1987, Gas Supply
Option between Buyer and Dow and to Dow's rights under a
certain Gas Backup Agreement with Buyer and Consumers Energy
Company (formerly Consumers Power Company) dated January 27,
1987.
23.5. If any provision of this Agreement is determined to be
invalid, void, or unenforceable by any court having
jurisdiction, such determination shall not invalidate, void,
or make unenforceable any other provision of this Agreement.
23.6. Neither Buyer nor Seller shall disclose to any third Party
other than its partners, parents, affiliates, directors,
officers, employees, consultants, representatives, agents, or
those third parties providing financing to it any information
received from the other Party that is explicitly marked
"Confidential" (such information hereinafter referred to as
"Confidential Information"); provided however, that nothing
shall be deemed Confidential Information that:
23.6.1. is part of the public domain;
23.6.2. becomes publicly known otherwise than through an
action or inaction of the receiving Party;
23.6.3. is independently developed by the receiving Party; or
23.6.4. is required to be disclosed pursuant to any law, rule,
or regulation, or pursuant to any order of a
governmental instrumentality, provided that the Party
receiving the order
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shall, if feasible, notify the other Party of any such
requirement at least ten (10) Days before compliance
is required, and if so requested by the other Party,
shall use reasonable efforts to oppose the required
disclosure, as appropriate under the circumstances, or
to otherwise make such disclosure pursuant to a
protective order or other similar arrangement for
confidentiality.
23.7. This Agreement may be amended only by a written instrument
executed by the Parties hereto. This Agreement, the Guaranty
(Exhibit B attached hereto), and the Consent and Agreement
(Exhibit C attached hereto) contain the entire understanding
of the Parties with respect to the matter contained in said
documents. There are no promises, covenants, or undertakings
other than those expressly set forth in said documents.
23.8. Buyer represents and warrants that it has full and complete
authority to enter into and to perform this Agreement. Seller
represents and warrants that it has full and complete
authority to enter into and to perform this Agreement. Each
person who executes this Agreement on behalf of Buyer
represents and warrants that he or she has full and complete
authority to do so, and that Buyer will be bound thereby. Each
person who executes this Agreement on behalf of Seller
represents and warrants that he or she has full and complete
authority to do so, and that Seller will be bound thereby.
23.9. Notwithstanding anything to the contrary contained in this
Agreement, the liabilities and obligations of MCV arising out
of, or in connection with, this Agreement or any other
agreements entered into pursuant hereto shall not be enforced
by any action or proceeding wherein damages or any money
judgment or specific performance of any covenant in any such
document and whether based upon contract, warranty,
negligence, indemnity, strict liability, or otherwise, shall
be sought against the assets of the partners of MCV. By
entering into this Agreement, Seller waives any and all right
to xxx for, seek, or demand any judgment against such partners
and their affiliates, other than MCV by reason of the
performance by MCV of its obligations under this Agreement or
any other agreements entered into pursuant hereto, except to
the extent such partners are legally required to be named in
any action to be brought against MCV.
24. Limitations: NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY
FOR ANY CONSEQUENTIAL, INCIDENTAL, OR PUNITIVE DAMAGES ARISING OUT OF,
OR RELATED TO, A BREACH OF THIS AGREEMENT.
25. IN WITNESS WHEREOF, this Agreement is executed in multiple originals
effective as of the day and year first herein above written.
Midland Cogeneration Venture Limited Partnership CMS Marketing, Services and
Trading Company
XxXxx X. Xxxxx Xxxxxx X. Xxxxxx
-------------- ----------------
Name: XxXxx X. Xxxxx Name: Xxxxxx X. Xxxxxx
Title: Vice President Energy Supply and Marketing Title: President & COO
CMS Energy MST
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EXHIBIT A
POINT OF DELIVERY
Point of Delivery A: ANR Southwest Head Station
Point of Delivery B: ANR Southeast Head Station
Page 11
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EXHIBIT B
GUARANTY
GUARANTY, dated October 10, 2000, made by CMS Enterprises Company, a
Michigan corporation, whose address is Fairlane Plaza South, Suite 1100, 000
Xxxx Xxxxxx Xxxxx, Xxxxxxxx, XX 00000, ("Guarantor") in favor of Midland
Cogeneration Venture Limited Partnership, a Michigan limited partnership, whose
address is 100 Progress Place; Xxxxxxx, XX 00000 ("Counterparty").
WHEREAS, CMS Marketing, Services and Trading Company, a Michigan
corporation, whose address is Fairlane Plaza South, Suite 1100, 000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxx, XX 00000, ("CMS MST") desires to enter into power and/or gas
purchase agreements and/or commodities swap agreements with Counterparty (the
"Agreements");
WHEREAS, as a condition precedent to Counterparty entering into the
Agreements, Counterparty is requiring a guarantee from CMS MST's parent company;
WHEREAS, Guarantor is the parent company of CMS MST and Guarantor is
willing to guarantee CMS MST's obligations under the Agreements as set forth
below;
NOW, THEREFORE, in consideration of the premises and in order to induce
Counterparty to enter into the Agreements, the Guarantor hereby agrees as
follows:
1. Guaranty. The Guarantor hereby guarantees the punctual payment
when due of all obligations of CMS MST now or hereafter existing under the
Agreements and agrees to pay any and all reasonable expenses (including
reasonable fees and expenses of counsel) incurred by Counterparty in enforcing
any rights under this Guaranty. Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts owed by CMS MST
to Counterparty under the Agreements but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving CMS MST.
2. Guaranty Limited. The Guarantor guarantees that the
obligations of the Guarantor under this Guaranty are independent of the
obligations of CMS MST under the Agreements, and a separate action or actions
may be brought against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against CMS MST or whether CMS MST is joined in
any such action or actions. The liability of the Guarantor under this Guaranty
shall be limited as follows:
(i) Notwithstanding anything to the contrary herein,
Guarantor's obligation to Counterparty is limited to $1,000,000 plus
the expenses set forth in paragraph 1 above.
(ii) This Guaranty is continuing and irrevocable and shall
continue in full force and effect until all obligations under the
Agreement have been discharged.
3. Waiver. The Guarantor expressly waives notice of acceptance of
this Guaranty, demand and notice of non-payment, and hereby consents to any
extension of time of payment of the obligations under the Agreements.
4. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor and CMS MST are corporations duly
organized, validly existing and in good standing under the laws of the
State of Michigan and are duly qualified to do business in, and are in
good standing in, all other jurisdictions where the nature of their
business or the nature of property owned or used by them make such
qualification necessary.
(b) The execution and delivery by the Guarantor of this
Guaranty, and the performance by the Guarantor of its obligations
hereunder (i) are within the Guarantor's corporate powers, (ii) have
been duly authorized by all necessary corporate action and (iii) do not
and will not (A) require any consent or approval of the stockholders of
the Guarantor, (B) violate any provision
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of the charter or by-laws of the Guarantor or of law, (C) violate any
legal restriction binding on or affecting the Guarantor, or (D) result
in a breach of, or constitute a default under, any indenture or loan or
credit agreement or any other agreement, lease or instrument to which
the Guarantor is a party or by which it or its properties may be bound
or affected.
(c) This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms; subject to the qualification, however, that
the enforcement of the rights and remedies herein is subject to
bankruptcy and other similar laws of general application affecting
rights and remedies of creditors and the application of general
principles of equity (regardless of whether considered in a proceeding
in equity or at law).
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the
Guarantor of this Guaranty.
(e) There are no pending or threatened actions, suits or
proceedings against or, to the knowledge of Guarantor, affecting the
Guarantor or CMS MST before any court, governmental agency or
arbitrator, that would, if adversely determined reasonably be expected
to materially adversely affect the financial condition, properties,
business or operations of the Guarantor or of CMS MST or affect the
legality, validity or enforceability of this Guaranty.
5. Amendments. No amendment or waiver of any provision of this
Guaranty, and no consent to any departure by the Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by both
the Guarantor and Counterparty.
6. Assignment. Neither the Guarantor nor the Counterparty may assign
its rights, interests or obligations hereunder to any other person or entity
(except by operation of law) without the prior written consent of the Guarantor
or the Counterparty, as the case may be.
7. Governing Law. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of Michigan without regard to its
principles of conflicts of laws. The Guarantor (i) irrevocably submits to the
jurisdiction of any Michigan State court or Federal court sitting in Michigan in
any action arising out of this Guaranty, (ii) agrees that all claims in such
action may be decided in such court, (iii) waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum and (iv) consents to the
service of process by mail. A final judgment in any such action shall be
conclusive and may be enforced in other jurisdictions. Nothing herein shall
affect the right of any party to serve legal process in any manner permitted by
law or affect its right to bring any action in any other court.
8. Notices. Any notice required or permitted to be given hereunder
shall be in writing and mailed, postage prepaid, by certified or registered U.S.
mail, return receipt requested to the address as set forth in the first
paragraph hereof. Notices shall be deemed to have been given when mailed, as
evidenced by receipt for said mailing.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed by its duly authorized officer as of the day first above written.
CMS Enterprises Company
By Xxxxxx X. Xxxxxx
----------------
Its President & COO
---------------
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EXHIBIT C
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT, dated as of October 10, 2000, made by CMS
Marketing, Services and Trading Company, a Michigan corporation, (the
"undersigned") to the parties whose names appear on Schedule A attached hereto
(the "Transaction Parties"), provides as follows:
1. Midland Cogeneration Venture Limited Partnership ("MCV"), and
the undersigned entered into the Long Term Gas Agreement dated October 10, 2000,
as the same may be amended, modified or supplemented from time to time in
accordance with the provisions thereof and of this Consent and Agreement (the
"Contract"). MCV was the owner of an approximately 1370 MW gas-fired
cogeneration facility in Midland, Michigan (the "Facility"). Pursuant to several
separate Participation Agreements, each dated as of June 1, 1990, MCV sold and
leased-back several separate Undivided Interests in the Facility under several
separate Leases each having a basic term of 25 years. The general structure of
the sale and lease-back transactions is described in more detail in Schedule B
attached hereto.
2. The undersigned hereby acknowledges notice of the sale and
lease-back transactions described in Schedule B and receipt of a photocopy of
each Participation Agreement (including Appendix A thereto but excluding other
Appendices, Exhibits and Schedules referenced therein unless specifically
requested). Photocopies of the related Transaction Documents will be made
available by MCV to the undersigned at its request for inspection. The
undersigned further acknowledges and consents to the assignments of and Liens on
the Contract pursuant to the Transaction Documents related to each sale and
lease-back transaction, and hereby agrees with each of the Transaction Parties
(provided, however, that each of the Indenture Trustees will have the rights set
forth herein only until the undersigned receives written notice from such
Indenture Trustee that the related Undivided Interest in the Facility is no
longer subject to the Lien of the Indenture to which such Indenture Trustee is a
party and the Secured Notes issued pursuant to such Indenture have been paid in
full) that:
(a) Each Owner Trustee and each related Indenture Trustee
shall be entitled, after a Lease Event of Default or an Indenture Event of
Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, to exercise any and all rights of MCV under the Contract in
accordance with the terms of the related Lease, the related Lessee Security
Agreement, the related Indentures and this Consent and Agreement, and the
undersigned will comply in all respects with such exercise by any of such
Persons.
(b) The undersigned will give each owner Trustee and Indenture
Trustee prompt written notice of any default of which it has knowledge under the
Contract which, if not cured, would give the undersigned the right to suspend
its performance under, or to terminate, the Contract. Each Owner Trustee and
Indenture Trustee (and their respective designee(s)) shall have the right,
within 30 days (or such longer period, not to exceed 90 days, as may reasonably
be required to cure defaults other than defaults in respect to the nonpayment of
money by MCV) of receipt by each such Person of such written notice, to cure
such default.
(c) In the event any Owner Trustee or Indenture Trustee
succeeds to MCV's rights or interests under the Contract after a Lease Event of
Default or an Indenture Event of Default under the Lease or the Indenture, as
the case may be, to which such Person is a party,
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whether by foreclosure or otherwise, such Person shall have the right to
exercise all rights of MCV under such Contract, and the undersigned will comply
in all respects with such exercise by such Person.
(d) The exercise of remedies under any Lease or foreclosure of
any Indenture, whether by judicial proceedings or under power of sale contained
in such Indenture or otherwise or any conveyance from MCV or any Owner Trustee
to either related Indenture Trustee in lieu thereof, following a Lease Event of
Default or Indenture Event of Default under the Lease or the Indenture, as the
case may be, to which such Person is a party, shall not require the further
consent of the undersigned.
3. It is understood and agreed that the Contract and this Consent
and Agreement are subject to all tariffs and all Applicable Laws relating to
such services. Except as required, in the undersigned's reasonable opinion or by
any Applicable Law, the undersigned will not, without the prior written consent
of each Owner Trustee and Indenture Trustee (unless MCV delivers to the
undersigned a certificate stating that such consent is not required by the terms
of the related Transaction Documents), cancel, amend, modify or terminate or
accept any cancellation, amendment, modification or termination thereof, except
if such cancellation or termination is in accordance with the express terms of
the Contract, but subject to the rights of each Owner Trustee and Indenture
Trustee to cure any defaults and to keep the Contract in full force and effect
as provided in Section 2(b) above.
4. In the event that any Owner Trustee or Indenture Trustee (or
their respective designee(s)) assumes the Contract or otherwise elects to
perform the duties of MCV under the Contract, such Person shall not have any
personal liability to the undersigned for the performance of MCV's obligations
under the Contract, it being understood that the sole recourse of the
undersigned seeking enforcement of such obligations shall be to such Person's
interest in the Facility and the related rights and Revenues therefrom.
5. If the Contract is rejected by a trustee or
debtor-in-possession in any bankruptcy, insolvency or similar proceeding
involving any Persons other than the undersigned, or is terminated for any other
reason (except as a result of a default which was not appropriately cured as
provided herein and in the Contract), and if, (i) within 30 days thereafter, MCV
(in the case of a bankruptcy, insolvency or similar proceeding involving any
Owner Trustee or Owner Participant), any Owner Trustee, Indenture Trustee or
their respective successors or assigns so request and (ii) all payment defaults
under the Contract have been cured, the undersigned will execute and deliver to
the Person or Persons making such request in proportion to their respective
interests in the Contract a new Contract for the services remaining to be
performed under the original Contract and containing the same terms and
conditions as the original Contract (except for any requirements which have been
fulfilled prior to such termination). Such new Contract also shall be subject to
the terms of this Consent and Agreement.
6. The undersigned acknowledges that after the end of the
respective Lease Terms and during the respective Residual Terms, each Owner
Trustee, as the assignee of an Undivided Interest in the Contract pursuant to
the related Facility Agreements Assignment, shall have all of the rights and
shall be liable for all of the obligations (to the extent of its respective
Undivided Interest Percentage) on a non-recourse basis of MCV under the
Contract. The undersigned further acknowledges that MCV shall be the initial
Operator of the Facility under the Operating Agreement and further agree that
the Owner Trustees may appoint any Person to serve as a successor Operator
thereunder so long as such Person satisfies the requirements set forth in the
Operating Agreement.
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7. No termination, amendment or waiver of any provision of this
Consent and Agreement or consent to any departure by the undersigned from any
provision of this Consent and Agreement shall be effective unless the same shall
be in writing and signed by the Owner Trustees, the Indenture Trustees and MCV
and then such waiver or consent shall be effective only in a specified instance
for the specific purpose for which it was given.
8. This Consent and Agreement shall be governed by, and construed
in accordance with, the laws of the State of Michigan, and shall be binding on
the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned by its officers thereunto duly
authorized, have duly executed this Agreement as of the day and year first above
written.
CMS Marketing, Services and Trading Company
By: Xxxxxx X. Xxxxxx
----------------
Title: President & COO
---------------
Seen and Agreed to this
18th day of October 2000.
MIDLAND COGENERATION VENTURE
LIMITED PARTNERSHIP, as
Lessee
By: XxXxx X. Xxxxx
--------------
Title: Vice President Energy Supply and Marketing
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SCHEDULE A
MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP,
as Lessee,
FIRST MIDLAND LIMITED PARTNERSHIP,
DCC PROJECT FINANCE ONE, INC.,
EDISON CAPITAL (formerly, Mission Funding Epsilon),
XXXX ATLANTIC CREDIT CORPORATION (formerly, NYNEX Credit Company),
RESOURCES CAPITAL MANAGEMENT CORPORATION,
as the several Owner Participants,
STATE STREET BANK AND TRUST COMPANY
(formerly, Fleet National Bank, Shawmut Bank Connecticut, National Association,
and The Connecticut National Bank),
not in its individual capacity but solely as Owner Trustee
under several separate Trust Agreements,
UNITED STATES TRUST COMPANY OF NEW YORK,
not in its individual capacity but solely as Senior Indenture Trustee
under several separate Senior Trust Indenture, Leasehold Mortgage
and Security Agreements for the benefit of the Senior Secured Notes,
FIRST UNION NATIONAL BANK
(formerly, Meridian Trust Company),
not in its individual capacity but solely as Subordinated Indenture Trustee
under several separate Subordinated Trust Indenture,
Leasehold Mortgage and Security Agreements
for the benefit of the Subordinated Secured Notes, and
MIDLAND FUNDING CORPORATION I AND
MIDLAND FUNDING CORPORATION II,
as purchasers of the Secured Notes.
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SCHEDULE B
A. As described below, the Owner Participants named in Schedule A
acquired separate Undivided Interests in the Facility and leased such Undivided
Interests back to MCV through separate Owner Trustees acting on behalf of
separate Owner Trusts. The beneficial interest in each Owner Trust is held by
Owner Participant.
B. For purposes of this Schedule B and the Consent and Agreement,
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in Appendix A to the several separate Amended
and Restated Participation Agreements (the "Participation Agreements"), each
dated as of June 1, 1990, to which MCV, an Owner Participant, the related Owner
Trustee, the related Indenture Trustees, the Funding Corporations, MDC and the
Institutional Senior Bond Purchasers named therein are parties. The rules of
usage set forth in such Appendices also shall apply hereto; provided, that when
the terms defined in Appendix A to a particular Participation Agreement as
relating only to the transaction contemplated therein are used in the plural
herein, such terms are intended to apply to the terms applicable to the
transactions contemplated by all Participation Agreements collectively. In
addition, the word "related", when used with respect to any Person, interest,
instrument, agreement or document, shall denote a Person which is a party to, or
an interest, instrument, agreement or document which is a part of, the
transaction contemplated in a particular Participation Agreement and the
Transaction Documents referred to in such Participation Agreement.
C. Pursuant to a related Participation Agreement, MCV sold and
transferred to each Owner Trustee, and each Owner Trustee acquired, subject to
Dow's Prior Rights and Consumers' Prior Rights, an Undivided Interest in the
Facility equal to the respective Undivided Interest Percentage of such Owner
Trustee (with the Undivided Interests in the Initial Assets having been sold and
transferred on the First Closing Date and the Undivided Interests in the Second
Closing Assets being sold and transferred on the Second Closing Date). Each
Owner Trustee leased its Undivided Interest in the Facility back to the Lessee
pursuant to a related Lease, under which MCV has the use, possession and control
of the Undivided Interest in the Facility for the related Lease Term (with the
Undivided Interests in the Initial Assets having been leased on the First
Closing Date and the Undivided Interests in the Second Closing Assets being so
leased on the Second Closing Date).
D. On the Second Closing Date, (i) MCV assigned to each Owner
Trustee a separate Undivided Interest in the Facility Agreements and the
Cogeneration Agreements pursuant to a related Facility Agreements Assignment and
a related Cogeneration Agreements Assignment, respectively, (ii) each Owner
Trustee assumed the obligations of MCV under the PPA and the SEPA, to the extent
of its respective Undivided Interest Percentage, pursuant to a related
Cogeneration Agreements Assignment, (iii) pursuant to the related Lease, each
Owner Trustee subassigned its Undivided Interests in the Cogeneration Agreements
and Facility Agreements back to MCV for the respective Lease Term, subject to
the Lien of the related Indentures, and MCV, as lessee, accepted such
subassignment, and (iv) MCV granted to each Owner Trustee a Lien on, without
limitation, MCV's right, title and interest in the related Undivided Interests
in the Cogeneration Agreements and the Facility Agreements (and the Revenues
therefrom) as collateral security for the related Secured Obligations pursuant
to a related Lessee Security Agreement.
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E. Each Owner Trustee, as provided in the related Participation
Agreement, financed a portion of the Purchase Price for its Undivided Interest
in the Facility with the proceeds of Senior Secured Notes issued by it to
Midland Funding Corporation I pursuant to a related Senior Trust Indenture and
related Subordinated Secured Notes issued by it to Midland Funding Corporation
II pursuant to a related Subordinated Trust Indenture, and Midland Funding
Corporation I and Midland Funding Corporation II purchased such Secured Notes.
F. Each Owner Trustee granted to the related Indenture Trustees
Liens on, among other things, the Owner Trustee's Undivided Interests in the
Facility, the Cogeneration Agreements and the Facility Agreements, the Site
Interest and its interest in certain of the related Transaction Documents as
collateral security for the Owner Trustee's obligations under the related
Secured Notes.
G. On the Second Closing Date, the Funding Corporations issued
Bonds pursuant to a Senior Collateral Trust Indenture and a Subordinated
Collateral Trust Indenture, respectively, for the purpose of participating in
the payment of the Purchase Price for each Undivided Interest in the Facility
and acquiring the funds necessary to purchase the Senior Secured Notes and the
Subordinated Secured Notes pursuant to a related Participation Agreement. The
Funding Corporations secured their obligations under the Bonds by a pledge to
the related Collateral Trust Trustees of the related Secured Notes (and the
collateral security therefor) held by the Funding Corporations.
H. MCV, each Owner Trustee and Indenture Trustee and the Working
Capital Lender, on the Second Closing Date, entered into an Intercreditor
Agreement with the Collateral Agent providing for the deposit with and
disbursement of all Revenues from the Undivided Interests in the Project by the
Collateral Agent.
I. MCV and each Owner Trustee also entered into an Operating
Agreement appointing MCV as the initial operator of the Project during the
respective Residual Terms, commencing on the Operation Commencement Date (as
such term is defined in the Operating Agreement).
J. On the Second Closing Date, in order to obtain necessary
working capital for the operation of the Facility, MCV obtained the Working
Capital Line from the Working Capital Lender and granted to the Working Capital
Lender first priority Liens on MCV's right, title and interest (as subassignee
of the separate Undivided Interests in the Cogeneration Agreements and the
Facility Agreements during the respective Lease Terms) in and to (i) all Earned
Receivables, (ii) its Natural Gas Inventory and (iii) the Gas Brokering
Contract.
K. Each Owner Trustee has agreed to reassign its Undivided
Interest in the Project (including the Undivided Interest in the Facility
Agreements) and the Site Interest back to MCV at the expiration of the related
Support Term.
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