EXHIBIT 10.6
EXECUTION COPY
WECC FIXED PRICE GAS SALE AND POWER PURCHASE
AGREEMENT
AMONG
CALPINE ENERGY SERVICES, L.P., CALPINE GENERATING
COMPANY, LLC, DELTA ENERGY CENTER, LLC AND LOS
MEDANOS ENERGY CENTER, LLC
DATED AS OF
MARCH 23, 2004
WECC FIXED PRICE GAS SALE AND POWER PURCHASE AGREEMENT
This WECC Fixed Price Gas Sale and Power Purchase Agreement (as amended,
modified and supplemented from time to time and together with the exhibits,
schedules and any written supplements hereto, which are hereby incorporated
herein and made a part hereof, the "Agreement"), is entered into as of March 23,
2004 (the "Effective Date"), by and among Calpine Generating Company,LLC, a
Delaware limited liability company ("CGC"), Delta Energy Center, LLC, a Delaware
limited liability company ("Delta"), Los Medanos Energy Center, LLC, a Delaware
limited liability company ("LMEC") (each of Delta and LMEC is a "Facility Owner"
or the "Company") and Calpine Energy Services, L.P., a Delaware limited
partnership ("CES")
ARTICLE ONE: GENERAL DEFINITIONS
1.1 "Actual Availability" means, for any Facility for any period, (i) the
Actual Energy Production for such Facility during such period divided by (ii)
the Scheduled Energy Production for such Facility during such period.
1.2 "Actual Energy Production" means, for any Facility for any Period, the
total number of MWhs associated with the Applicable Capacity produced by such
Facility (as measured at the Power Delivery Point) during On Peak Hours during
such period, excluding Scheduled Outage Periods.
1.3 "Affiliate" means, with respect to any Person, any other Person (other
than an individual) that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such person. For this purpose, "control" means the direct or indirect ownership
of more than fifty percent (50%) of the outstanding capital stock or other
equity interests having ordinary voting power.
1.4 "Applicable Capacity" means, as to any Facility, the applicable
capacity as set forth for such Facility on the applicable Facility Schedule
under the caption "Applicable Capacity" during the periods specified in such
Facility Schedule.
1.5 "Availability Factor" means ninety-eight percent (98%) for each Day
that is not a Planned Outage Day and the applicable Planned Outage Percentage
shown on the respective Facility Schedules for each Day that is a Planned Outage
Day.
1.6 "Bankrupt" means with respect to any entity, such entity (i) files a
petition or otherwise commences, authorizes or acquiesces in the commencement of
a proceeding or cause of action under any bankruptcy, insolvency, reorganization
or similar law, or has any such petition filed or commenced against it, (ii)
makes an assignment or any general arrangement for the benefit of creditors,
(iii) otherwise becomes subject to an involuntary petition seeking to declare
such entity bankrupt or insolvent or seeking liquidation or reorganization of
such entity, if such petition is not timely controverted and dismissed within 60
days after filing, (iv) has a liquidator, administrator, receiver, trustee,
conservator or similar official appointed with respect to it or any substantial
portion of its property or assets, or (v) is generally unable to pay its debts
as they fell due. "Bankruptcy" means, with respect to any entity, the condition
or state of being Bankrupt.
1.7 "Baseload Power Products" means all Power Products other than Peaking
Power Products generated by a Facility.
1.8 "British thermal unit" or "Btu" shall mean the International BTU,
which is also called the Btu(IT).
1.9 "Business Day" means any day except a Saturday, Sunday, or a Federal
Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00
p.m. local time for the relevant Facility. The relevant Party, in each instance
unless otherwise specified, shall be the Party from whom the notice, payment or
delivery is being sent and by whom the notice or payment or delivery is to be
received.
1.10 "Buyer" means (i) with respect to Gas supplied hereunder, the Company
and (ii) with respect to Power Products supplied hereunder, CES.
1.11 "Capacity" means with respect to a Facility, its Applicable Capacity.
1.12 "Claiming Party" has the meaning set forth in Section 3.4.
1.13 "Claims" means all third party claims or actions, threatened or filed
and, whether groundless, false, fraudulent or otherwise, and the resulting
losses, damages, expenses, attorneys' fees and court costs, whether incurred by
settlement or otherwise, and whether such claims or actions are threatened or
filed prior to or after the termination of this Agreement.
1.14 "Commercial Operation" means, with respect to a Facility, that such
Facility is able to operate and produce electric energy for commercial sale
consistently with Prudent Engineering and Operating Practices and applicable
laws.
1.15 "Consent Parties" means (i) with respect to CGC, CES, (ii) with
respect to a Facility Owner, CGC and CES, and (iii) with respect to CES, CGC and
the Facility Owner of the affected Facility.
1.16 "Contract Price" has the meaning set forth in Article Four.
1.17 "Contracted Power Products" has the meaning set forth in Section 2.1.
1.18 "Costs" means, with respect to the Non-Defaulting Party, brokerage
fees, commissions and other similar third party transaction costs and expenses
reasonably incurred by such Party either in terminating any arrangement pursuant
to which it has hedged its obligations or entering into new arrangements which
replace this Agreement if terminated with respect to one or more Facilities; and
all reasonable attorneys' fees and expenses incurred by the Non-Defaulting
Party in connection with the termination of this Agreement as to one or more
Facilities.
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1.19 "Daily Scheduled Energy Production" means, for any Facility and any
period, the total energy production Scheduled by CES in accordance with this
Agreement, not to exceed the Applicable Capacity of such Facility, for each On
Peak Hour of an On Peak Day, including, if applicable, Days during such period
when the Facility was deemed Scheduled pursuant to Section 4.3 notwithstanding
the existence of a Force Majeure, but excluding Scheduled Outage Periods.
1.20 "Day" means, with respect to each Facility, the twenty-four (24) hour
period beginning with the hour ending 0700 local time on one calendar day and
ending with the hour ending 0600 local time on the next calendar day.
1.21 "Defaulting Party" has the meaning set forth in Section 5.1.
1.22 "Delivery Point" means Gas Delivery Point for Gas and Power Delivery
Point for the Power Product.
1.23 "Early Termination Date" has the meaning set forth in Section 5.2.
1.24 "Effective Date" has the meaning set forth in the preamble to this
Agreement
1.25 "Equitable Defenses" means all bankruptcy, insolvency, reorganization
and other laws affecting creditors' rights generally, equitable defenses
generally, and with regard to equitable remedies, the discretion of the court
before which proceedings to obtain same may be pending.
1.26 "Event of Default" has the meaning set forth in Section 5.1
1.27 "Facility" means each of the electric generating facilities described
on Exhibit A attached hereto. References herein to a particular
Facility by name (e.g. the Delta Facility) shall mean the Facility so identified
on Exhibit A, as the same may be amended or deemed amended from time
to time to reflect the addition or sale or transfer of Facilities.
1.28 "Facility Owner" has the meaning defined in the preamble to this
Agreement.
1.29 "Facility Schedule" means each of Schedules 1 and 2 attached hereto,
which schedules set forth certain indices, plant specific data and other
information relating to each of the Facilities.
1.30 "Facility Transportation Charge Adjustment" means, with respect to a
Facility, the "Facility Transportation Charge Adjustment" indicated for such
Facility on the applicable Facility Schedule.
1.31 "FERC" means the Federal Energy Regulatory Commission or any
successor government agency having similar jurisdiction..
1.32 "Fixed Payment" has the meaning set forth in Section 4.1.
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1.33 "Force Majeure" means an event or circumstance which prevents one
Party from performing its obligations under this Agreement, which event or
circumstance is not within the reasonable control of, or the result of the
negligence of, willful misconduct of or willful failure to comply with this
Agreement by, the Claiming Party and which, by the exercise of due diligence,
the Claiming Party is unable to overcome or avoid or cause to be avoided,
including without limitation the following: (i) events causing physical loss or
damage to any Facility, including acts of God, unusually severe weather
conditions, civil disturbance, damage or breakdown of necessary facilities,
fire, flood and earthquake, (ii) strikes, lockouts or labor disputes not solely
by or against the Claiming Party, and (iii) changes in laws, rules and
regulations after the date hereof or actions by governmental authorities,
including suspension or revocation of permits and approvals for reasons other
than non-compliance or violation of an applicable law, rule or regulation. Force
Majeure shall not include (i) the loss of Buyer's markets; (ii) Buyer's
inability economically to use or resell the Product purchased hereunder; (iii)
the loss or failure of Gas supply; (iv) Seller's ability to sell the Product at
a price greater than the Contract Price; or (v) complete or partial curtailment
by a Transmission Provider or a Transporter unless the Claiming Party has
contracted for firm transmission or transportation, as applicable.
Notwithstanding anything to the contrary contained in the foregoing, the Company
shall be entitled to claim Force Majeure with respect to a Facility in the event
of (a) CES's failure to Schedule and deliver sufficient Gas to the applicable
Gas Delivery Point to operate such Facility as Scheduled for any reason not the
result of the Company's gross negligence or willful misconduct, and (b) CES's
failure to provide sufficient transmission capacity to export Power Products
Scheduled by CES from the applicable Power Delivery Point for any reason not the
result of the Company's gross negligence or willful misconduct.
1.34 "Gains" means, with respect to any Party, an amount equal to the
present value of the economic benefit to it, if any (exclusive of Costs),
resulting from the termination of this Agreement with respect to one or more
Facilities, determined in a commercially reasonable manner.
1.35 "Gas" means natural gas conforming to the requirements of this
Agreement.
1.36 "Gas Delivery Point" means, for any Facility, the "Gas Delivery
Point" indicated for such Facility on the applicable Facility Schedule.
1.37 "Governmental Charges" has the meaning set forth in Section 8.2.
1.38 "Guarantor" means Calpine Corporation.
1.39 "Guaranty" has the meaning set forth in Section 9.11.
1.40 "Imbalance Charges" shall mean any fees, penalties, costs or charges
(in cash or in kind) assessed by a Transporter for failure
to satisfy the Transporter's balance and/or nomination requirements.
1.41 "Interest Rate" means, for any date, the lesser of (a) the per annum
rate of interest equal to the prime lending rate as may from time to time be
published in The Wall Street Journal under "Money Rates" on such day (or if not
published on such day on the most recent preceding
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day on which published), plus two percent (2%) and (b) the maximum rate
permitted by applicable law.
1.42 "ISO" means, as to any Facility, the independent system operator,
regional transmission organization, control area operator or similar entity
controlling the transmission system used by the Transmission Provider serving
such Facility.
1.43 "Losses" means, with respect to any Party, an amount equal to the
present value of the economic loss to it, if any (exclusive of Costs), resulting
from termination of this Agreement with respect to one or more Facilities,
determined in a commercially reasonable manner.
1.44 "MMBtu" shall mean one million British thermal units, which is
equivalent to one dekatherm.
1.45 "NERC Holiday" means any day that is a holiday as defined by the
North American Electric Reliability Council or any successor organization
thereto.
1.46 "Non-Defaulting Party" has the meaning set forth in Section 5.2
1.47 "Off Peak Days" means Sundays and NERC Holidays.
1.48 "Off Peak Hours" means, for any Facility, (i) the eight (8) hour
period during On Peak Days beginning with the hour ending 2300 and ending with
the hour ending 0600, local time, and (ii) all hours on Off Peak Days.
1.49 "Off Peak Power Products" means all Baseload Power Products generated
by a Facility during Off Peak Hours.
1.50 "On Peak Days" means Monday through Saturday except NERC Holidays.
1.51 "On Peak Hours" means, for any Facility, the sixteen (16) hour period
during each On Peak Day beginning with the hour ending 0700 and ending with the
hour ending 2200, local time.
1.52 "On Peak Power Products" means all Baseload Power Products generated
by a Facility during On Peak Hours.
1.53 "Party" means CGC, each of the Facility Owners, and/or CES, as
specified or as the context requires.
1.54 "Peaking Power Products" means all Power Products generated by a
Facility by supplemental natural gas duct firing into the Facility's heat
recovery steam generator(s), by steam injection or by other power production
augmentation techniques that involve operating a Facility in excess of its
baseload operating mode.
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1.55 "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, government, political subdivision,
governmental agency, bureau, commission or other authority, or other entity.
1.56 "Power Delivery Point" means, for any Facility, the "Power Delivery
Point" indicated for such Facility on the applicable Facility Schedule.
1.57 "Power Product" means electric capacity, energy or other generator
-based product(s) related thereto.
1.58 "Product" means a Power Product or Gas, as specified or as the
context may require.
1.59 "Prudent Engineering and Operating Standards" means those practices,
methods, equipment, specifications and standards of safety and performance, as
the same may change from time to time, as are commonly used by independent
operators of electric generation stations of a type and size similar to those
constituting the applicable Facility as good, safe and prudent engineering and
operating practices in connection with the operation, maintenance, repair and
use of gas turbines, electrical generators and other equipment and facilities
with commensurate standards of safety, performance, dependability, efficiency
and economy. Prudent Engineering and Operating Practices are not intended to be
limited to the optimum practice or method to the exclusion of others, but rather
to be a spectrum of possible but reasonable practices and methods.
1.60 "Quantity" means that quantity of the Product that Seller agrees to
make available or sell and deliver, or cause to be delivered, to Buyer, and that
Buyer agrees to purchase and receive, or cause to be received, from Seller
hereunder.
1.61 "Recording" has the meaning set forth in Section 2.6.
1.62 "Reduced Semiannual Period" has the meaning set forth in Section
4.3(c).
1.63 "Regulatory Event" has the meaning set forth in Section 9.7.
1.64 "Responsible Officer" means, as to any entity, the president chief
executive officer, secretary, treasurer, chief financial officer or any vice
president of such entity, or the designee of such officer.
1.65 "RMR Agreements" means (i) that certain Must-Run Service Agreement
dated February 10, 2003 between Delta Energy Center, LLC and California
Independent System Operator Corporation, and (ii) Must-Run Service Agreement
dated September 27,1999 between Los Medanos Energy Center, LLC (as successor to
Pittsburg District Energy Facility, LLC) and California Independent System
Operator Corporation, in each case as amended from time to time.
1.66 "Schedule" or "Scheduling" means the actions of Seller, Buyer and/or
their designated representatives, including each Party's Transmission Providers
or Transporters, if applicable, of notifying, requesting and confirming to each
other the quantity and type of Product to be delivered on any given day or days
at a specified Delivery Point.
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1.67 "Scheduled Energy Production" means, for any Facility for any period,
the total of the Daily Scheduled Energy Production for each On Peak Day during
such period, excluding Scheduled Outage Periods.
1.68 "Scheduled Outage Period" means, as to any Facility, the period
during which the Company has actually scheduled a maintenance outage for the
Facility, not to exceed a total of thirty (30) Days per calendar year for such
Facility. Scheduled Outage Periods may, but need not, occur during Planned
Outage Months.
1.69 "Secured Obligations" means the "Secured Obligations" as defined in
that certain Security Agreement dated as of March 23, 2004 by and between CGC,
the Facility Owners, as guarantors, and Wilmington Trust Company, as collateral
trustee.
1.70 "Seller" means (i) with respect to Gas supplied hereunder, CES, and
(ii) with respect to Power Products supplied hereunder, the Company.
1.71 "Semiannual Period" means each six month period beginning on January
1 and July 1 during the Term of this Agreement.
1.72 "Term" has the meaning set forth in Section 2.3.
1.73 "Termination Notice" has the meaning set forth in Section 5.2.
1.74 "Termination Payment" means, as of an Early Termination Date, an
amount equal to a Non-Defaulting Party's Losses plus Costs minus Gains, in each
case resulting from the termination of this Agreement with respect to an
applicable Facility or Facilities, but not less than zero.
1.75 "Transmission Provider" means any entity or entities transmitting or
transporting any Power Product on behalf of Seller or Buyer to or from the Power
Delivery Point.
1.76 "Transporter" means any entity or entities transporting Gas on behalf
of Seller or Buyer to or from the Gas Delivery Point.
1.77 "Variable O&M Amount" means, for any Facility, the "Variable O&M
Amount" indicated for such Facility on the applicable Facility Schedule.
ARTICLE TWO: PURCHASE AND SALE OF GAS AND POWER
2.1 Purchase and Sale of Gas and Power. For and in consideration of the
Contract Price and subject to the terms and conditions of this Agreement,
including without limitation Section 2.2, CES agrees to purchase from the
Company, and the Company agrees to sell to CES, all On Peak Power Products
produced from the Applicable Capacity of each Facility, (the "Contracted Power
Products"), and CES agrees to sell to the Company, and the Company agrees to
purchase from CES, all Gas needed by the Facilities to operate and to produce
all such Contracted Power Products. The Contracted Power Products do not include
(i) any On Peak Power Products associated with any capacity of the Facility
other than its Applicable Capacity,
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(ii) any Off Peak Power Products, or (iii) any Peaking Power Products. The
Company and CES acknowledge and agree that, except for the RMR Agreements and as
expressly provided herein, the foregoing purchase and sale arrangements shall be
exclusive and that, as a result, (A) the Company will sell all Contracted Power
Products generated by the Facilities only to CES, and (B) CES will supply all
the Gas the Company needs for all of its Facilities in order to produce the
Contracted Power Products, and the Company will only obtain Gas for its
Facilities needed to produce the Contracted Power Products from CES. Once the
Contracted Power Products are sold to CES, CES shall be entitled to sell,
transfer or otherwise dispose of such Power Products as it elects in its sole
discretion. CES shall also have the right to Schedule deliveries of Contracted
Power Products to and from each Facility in its discretion as provided below.
2.2 Certain Limitations. Notwithstanding anything to the contrary
contained in this Agreement, including the exclusivity described in Section 2.1,
the Facility Owners shall have the right to sell all Power Products and
otherwise perform all of their respective obligations under the RMR Agreements,
and CES's Scheduling of the Facilities shall not be inconsistent with the
Facility Owners' obligations under the RMR Agreements. CES shall supply the
Facility Owners, and the Facility Owners shall purchase from CES, all Gas
required to comply with their respective obligations under the RMR Agreements.
2.3 Term. The "Term" of this Agreement shall be the period
commencing on the Effective Date and ending on December 31,2009, unless sooner
terminated as provided herein.
2.4 Multiple Facilities. This Agreement applies to the delivery of Gas to
and the receipt of Contracted Power Products from each of the Facilities. In
applying this Agreement with respect to any particular Facility, "Company" shall
be understood to mean the applicable Facility Owner with respect to such
Facility, unless the context indicates otherwise (e.g. that all Facility Owners
are intended to be included). While this Agreement refers to all the Facilities,
the terms of this Agreement shall apply individually to each Facility as well as
the Facilities as a whole where so specified or where the context so requires.
In the event the Company sells or otherwise transfers a Facility (it being
understood that a sale in violation of agreements between the Company and the
holders of the Secured Obligations or a foreclosure on one or more of the
Facilities by the holders of the Secured Obligations does not constitute a sale
by the Company for purposes of this Section 2.4), (i) this Agreement shall not
apply to such Facility or Facility Owner from and after the effective date of
such sale and shall be amended to delete the Facility Schedule related to such
Facility and to reduce the Fixed Payment by an amount that is proportional to
the proportion that the Applicable Capacity of such Facility constitutes of the
total Applicable Capacities of the Facilities subject to this Agreement, and
(ii) CGC, the applicable Facility Owner and CES will be released from all future
liabilities, and will no longer have any obligations, hereunder with respect to
such Facility from and after the date of such sale or transfer. In the event of
a foreclosure on one or more of the Facilities by the holders of the Secured
Obligations, this Agreement may be divided into two separate agreements, each
relating to a specific Facility, on the identical terms and conditions as this
Agreement and for the then remaining term hereof, but applied to such Facility
only, and with the Contract Price modified to reflect only those elements
applicable to such Facility.
2.5 Recording. Unless a Party expressly objects to a Recording (defined
below) at the beginning of a telephone conversation, each Party consents to the
creation of a tape or electronic
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recording ("Recording") of all telephone conversations between the Parties to
this Agreement, and that any such Recordings will be retained in confidence,
secured from improper access, and may be submitted in evidence in any proceeding
or action relating to this Agreement. Each Party waives any further notice of
such monitoring or recording, and agrees to notify its officers and employees of
such monitoring or recording and to obtain any necessary consent of such
officers and employees. The Recording, and the terms and conditions described
therein, if admissible, shall be the controlling evidence for the Parties'
agreement with respect to a particular Schedule or other matters related to the
Facilities or the administration or operation of this Agreement in the event of
a disagreement between the Parties.
ARTICLE THREE: OBLIGATIONS AND DELIVERIES
3.1 Delivery of Product; Title. CES shall deliver all Gas required for
each Facility to produce the Contracted Power Products to such Facility's Gas
Delivery Point, and the Company shall deliver the Contracted Power Products
generated by each Facility to such Facility's Power Delivery Point. Except as
expressly provided on a Facility Schedule, CES shall be responsible for all
costs or charges imposed on or associated with the delivery of Gas to the Gas
Delivery Point for each Facility and for the transmission of all Power Products
from the Power Delivery Point for each Facility, notwithstanding whether or not
such transmission or transportation rights or services are held by CES and
whether or not title to the Gas or Power Products may have passed from CES to
the Company or from the Company to CES at a different point, and CES hereby
agrees to reimburse the Company for any such costs or charges to the extent paid
for by the Company except to the extent that a Facility Schedule expressly
provides that such costs and charges are to be paid by the Company. Title to the
Gas supplied hereunder shall pass from CES to the Company at the Gas Delivery
Point for the applicable Facility, and title to all Power Products sold by the
Company to CES hereunder shall pass from the Company to CES at the Power
Delivery Point for the applicable Facility. Subject to the terms and conditions
of this Agreement regarding responsibility for payments and other matters, CES
and the Company shall cooperate and use commercially reasonable efforts to
facilitate the deliver of Gas and Power Products hereunder.
3.2 Transmission and Scheduling. Subject to Section 2.2, CES shall have
complete rights to Schedule deliveries of the Contracted Power Products from
each Facility and to control the operation and dispatch of each Facility, so
long as such operation and dispatch is consistent with (i) Prudent Engineering
and Operating Practices, (ii) all manufacturer's recommendations and warranties
with respect to the Facility in question, (iii) the Schedules for delivery of
Gas to such Facility delivered by CES pursuant to Section 3.3 below, and (iv)
the requirements of the RMR Agreements. Subject to the foregoing, CES shall
deliver all Schedules and operating instructions to the Company with respect to
each Facility a sufficient time in advance of the day ahead or intra-day
scheduling deadlines, as applicable, in the applicable Transmission Provider's
or ISO's tariff, as applicable, to enable the Company to comply with the
requirements of the applicable Transmission Provider's or ISO's tariff. The
Company shall deliver all Contracted Power Products Scheduled by CES with
respect to each Facility to the applicable Power Delivery Point unless prevented
from doing so by Force Majeure.
3.3 Gas Transportation and Scheduling. Subject to Section 2.2, CES shall
Schedule Gas deliveries to each Facility that are consistent with (i) the
Schedules for delivery of
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Contracted Power Products from such Facility and the RMR Agreements, (ii)
Prudent Engineering and Operating Practices, and (iii) all manufacturer's
recommendations and warranties with respect to the Facility in question. The
Parties shall coordinate their nomination activities with respect to Gas, giving
sufficient time to meet the deadlines of the affected Transporter(s). CES shall
deliver nominations to the affected Transporter(s) a sufficient time in advance
of the earliest first of month nomination deadline for monthly nominations and
the intra-month nomination deadline for subsequent nominations, if intra-month
changes are authorized, for the Transporter(s) delivering Gas for each Facility,
and shall give the Company timely prior notice, sufficient to meet the
requirements of all Transporter(s) involved in the transaction, of the
quantities of Gas to be delivered and purchased each Day. Should any Party
become aware that actual deliveries of Gas at one or more Gas Delivery Point(s)
are greater or less than the Scheduled Gas deliveries, then such Party shall
promptly notify the other affected Parties. The affected Parties shall use
commercially reasonable efforts to avoid imposition by any Transporter of
imbalance charges. Unless they result from the failure by the Company to accept
Gas that is properly Scheduled and delivered and such failure is not excused by
Force Majeure, all imbalance charges assessed by any Transporters shall be CES's
responsibility.
3.4 Force Majeure. To the extent any Party is prevented by Force Majeure
from carrying out, in whole or part, its obligations under this Agreement, such
Party (the "Claiming Party") shall give notice and details of the Force Majeure
to the other Parties as soon as practicable. Subject to the Claiming Party's
obligation to remedy the Force Majeure as soon as possible, the Claiming Party
shall be excused from the performance of its obligations (other than the
obligation to make payments then due or becoming due with respect to performance
prior to the Force Majeure), and the non-Claiming Party shall not be required to
perform or resume performance of its obligations to the Claiming Party
corresponding to the obligations of the Claiming Party excused by Force Majeure
until the Force Majeure has been remedied; provided, however, that in the case
of a Force Majeure affecting the Company or CES, CES shall continue to make
payments under Article Four notwithstanding such Force Majeure, subject,
however, in the case of Force Majeure affecting the Company, to adjustment as
provided in Section 4.3. The Claiming Party shall remedy the Force Majeure as
quickly as reasonably possible; provided, however, that the Claiming Party shall
not be obligated, either in connection with remedying a Force Majeure or in
exercising due diligence in overcoming or avoiding it, to provide or pay for
replacement Product except as expressly provided herein or to settle or
compromise any strike, lockout or labor dispute.
3.5 Quality and Measurement. All Gas delivered by CES shall meet the
pressure, quality and heat content requirements of the receiving Transporter at
the Gas Delivery Point. Measurement of Gas quantities hereunder shall be in
accordance with the established procedures of the receiving Transporter at the
Gas Delivery Point. All Contracted Power Products delivered by the Company shall
meet the frequency, voltage and other quality requirements of the receiving
Transmission Provider at the Power Delivery Point. Measurement of Power Product
quantities hereunder shall be in accordance with the established procedures of
the receiving Transmission Provider at the Power Delivery Point.
3.6 Cooperation and Further Assurances. Company and CES shall cooperate
with each other in a commercially reasonable manner in carrying out their
respective obligations
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under this Agreement, including without limitation with respect to Scheduling,
delivery and receipt of Gas and Power Products.
ARTICLE FOUR: CONTRACT PRICE
4.1 Calculation of Contract Price. For each month during the Term, CES
shall pay to the Company the Contract Price. "Contract Price" shall be the
amount in U.S.$ calculated as follows:
"Contract Price" = the Fixed Payment for such month + the sum of the VOM
Adjustments for each Facility for such month + the
Transportation Charge Adjustment.
For purposes of the foregoing calculation of the Contract Price:
"Fixed Payment" = $3,615,346 per month
"VOM Adjustment" = With respect to each Facility, the Variable O&M Amount *
Energy Produced
"Energy Produced" = With respect to each Facility, the total number of MWh
associated with the Applicable Capacity actually
produced by such Facility during On Peak Hours during
the applicable month
Transportation Charge
Adjustment = The sum of the Facility Transportation Charge
Adjustments for the Facilities
4.2 Deemed Availability. CES and the Company acknowledge and agree that,
except as provided in Section 4.3, the Contract Price will be made on the basis
of the designated quantities and formulas set forth in Sections 4.1, the
definitions in Article 1 and the applicable Facility Schedules, regardless of
actual day-to-day performance of each Facility, which may be better or worse
than that assumed herein. CES and the Company agree that, even though results
may vary from month to month, the method of calculating the Contract Price,
together with the adjustments pursuant to Section 4.3, is based on a reasonable
estimate of the actual availability and output of each Facility over time and
that the Contract Price represents a reasonable payment for the Capacity and
Contracted Power Products to be provided hereunder.
4.3 Adjustments to Contract Price.
(a) Within thirty (30) days after the end of each Semiannual Period, the
Company shall deliver to CES a certificate signed by a Responsible Officer of
the Company certifying with respect to each Facility (i) that the Actual
Availability of such Facility during such Semiannual Period was not less than
80% for such Semiannual Period in the aggregate or (ii) if the Actual
Availability of such Facility during such Semiannual Period was less than 80%
for such Semiannual Period, specifying the Actual Availability for such
Semiannual Period as a
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percentage. For purposes of calculating the Actual Availability of a Facility
for a Semiannual Period, (A) both the Actual Energy Production and the Scheduled
Energy Production during Scheduled Outage Periods during such Semiannual Period
shall be deemed to be zero, and (B) to the extent that such Facility is wholly
or partially prevented from operating by a Force Majeure, such Facility shall be
deemed to have been Scheduled at its Applicable Capacity during such periods
(or, in the event a Force Majeure only partially affects such Facility's
availability, deem such affected portion of such Facility's Applicable Capacity
so Scheduled) for all On Peak Hours during such period.
(b) If the Company delivers the certification described in Section
4.3(a)(i) for a Semiannual Period, there shall be no adjustment to the Contract
Price for the next Semiannual Period.
(c) If the Company delivers the certification described in Section
4.3(a)(ii) for a Semiannual Period with respect to any Facility, the Monthly
Amounts for the next Semiannual Period (the "Reduced Semiannual Period") for
such Facility shall be adjusted by multiplying the Fixed Payment otherwise
includable in the calculation of Contract Price under Section 4.1 by a fraction,
the numerator of which is the Actual Availability for such Facility for the
Semiannual Period specified by the Company, expressed as a percentage, in such
certification and the denominator of which is ninety-eight percent (98%).
However, if the Facility achieves an Actual Availability of 90% for 30 or more
consecutive Days during a Reduced Semiannual Period, then, beginning with the
month next following the end of such 30 consecutive day period, the Fixed
Payment with respect to such Facility shall not be reduced as provided in the
previous sentence for the remainder of such Reduced Semiannual Period.
(d) If the certificate delivered pursuant to Section 4.3(a) with respect
to a Reduced Semiannual Period states that the Actual Availability for such
Reduced Semiannual Period was not less than 80%, then there shall be no
adjustment to the Contract Price for the next Semiannual Period following the
Reduced Semiannual Period, and the full Contract Price shall be payable for such
next Semiannual Period. If, however, the Company delivers the certification
described in Section 4.3(a)(ii) for a Reduced Semiannual Period stating that the
Actual Availability for such Reduced Semiannual Period was less than 80%, the
Contract Price for the next Semiannual Period following the Reduced Semiannual
Period shall again be adjusted as provided in Section 4.3(c).
(e) In calculating the Actual Availability for a Semiannual Period, the
Company shall use all reasonably available data and shall calculate the Actual
Availability in accordance with generally established methods and procedures
used in the electric power industry in the United States. Partial outages shall
be prorated accordingly.
(f) If CES disputes the calculation of Actual Availability set forth in
any certificate delivered pursuant to Section 4.3(a), it shall give the Company
written notice of such dispute, including the reasons therefor, within fifteen
(15) Days after receipt of the Company's certificate. If the Parties are unable
to resolve the dispute before the date that a payment affected by the dispute is
payable hereunder, CES shall make payment based on the certificate that was
delivered, but, if upon resolution of such dispute, it is determined that a
lesser amount was properly payable by CES hereunder, CES may offset the
difference between the amounts
12
actually paid and the amounts determined to be properly payable, together with
interest on such difference at the Interest Rate from the date of the
overpayment until the date it is recovered (through repayment or offset),
against amounts otherwise due and payable by CES to the Company hereunder.
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES
5.1 Events of Default. An "Event of Default" shall mean, with respect to a
Party (a "Defaulting Party"), the occurrence of any of the following:
(a) the failure to make, when due, any payment required pursuant
to this Agreement if such failure is not remedied within ten
(10) Days after written notice;
(b) any representation or warranty made by such Party herein is
false or misleading in any material respect when made or when
deemed made or repeated, such inaccuracy has a material
adverse effect on such Party's performance of or ability to
perform its obligations under this Agreement, and such
inaccuracy is not corrected within thirty (30) Days after
written notice, or, if such inaccuracy cannot reasonably be
cured within such thirty (30) Day period, such additional
period, not to exceed ninety (90) Days in the aggregate, as
may reasonably be necessary to cure such inaccuracy, so long
as the Defaulting Party is making diligent efforts to do so;
(c) the failure to perform any material covenant or obligation set
forth in this Agreement (except for such Party's obligations
to deliver or receive the Product, which is covered in
Sections 5.3 and 5.4 below), in each case if such failure has
a material adverse effect on such Party's performance
hereunder, taken as a whole, and is not remedied within thirty
(30) Days after written notice, or, if such failure cannot
reasonably be cured within such thirty (30) Day period, such
additional period, not to exceed ninety (90) Days in the
aggregate, as may reasonably be necessary to cure such
failure, so long as the Defaulting Party is making diligent
efforts to cure such failure;
(d) such Party becomes Bankrupt; provided, however, that a Party's
Bankruptcy shall not constitute an Event of Default hereunder
unless, following such Bankruptcy, the Bankrupt Party breaches
or defaults in the performance of any covenant or obligation
under this Agreement that would, independently of such
Bankruptcy, constitute an Event of Default hereunder;
(e) such Party consolidates or amalgamates with, or merges with or
into, or transfers all or substantially all of its assets to,
another entity and, at the time of such consolidation,
amalgamation, merger or transfer, the resulting, surviving or
transferee entity fails to assume all the obligations
13
of such Party under this Agreement to which it or its
predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other Party;
(f) any of the following occur, any such occurrences being an
Event of Default of CES hereunder:
(i) any representation or warranty made by the Guarantor in
connection with this Agreement is false or misleading in
any material respect when made or when deemed made or
repeated, and such inaccuracy has a material adverse
effect on the Guarantor's performance of or ability to
perform its obligations under the Guaranty and such
inaccuracy is not corrected within thirty (30) Days
after written notice, or, if such inaccuracy cannot
reasonably be cured within such thirty (30) period, such
longer period, not to exceed ninety (90) Days in the
aggregate, as may be reasonably necessary to cure such
inaccuracy;
(ii) the failure of the Guarantor to make any payment
required or to perform any other material covenant or
obligation in the Guaranty and such failure shall not be
remedied within ten (10) Days after written notice with
respect to a failure to make payment and within thirty
(30) Days after written notice in all other cases, or,
if such failure cannot reasonably be cured within such
thirty (30) Day period, such additional period, not to
exceed ninety (90) Days in the aggregate, as may
reasonably be necessary to cure such failure, so long as
the Defaulting Party is making diligent efforts to cure
such failure;
(iii) the Guarantor becomes Bankrupt;
(iv) the failure of the Guaranty to be in full force and
effect for purposes of this Agreement (other than in
accordance with its terms) prior to the satisfaction of
all obligations of CES under this Agreement, and such
failure is not remedied within ten (10) Days after
written notice;
(v) the Guarantor shall repudiate, disaffirm, disclaim, or
reject, in whole or in part, or challenge the validity
of the Guaranty; or
(vi) Guarantor shall default beyond any applicable grace
period in the payment or performance of any obligation
due with respect to any recourse indebtedness of
Guarantor with a principal amount of more than
$200,000,000, which default gives the holder or holders
of such indebtedness the right to accelerate the
maturity thereof.
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(g) The termination of that certain Master Operation and
Maintenance Agreement dated as of March 23, 2004 between
the Company and Calpine Operating Services Company, Inc.
with respect to any Facility (i) as the result of a
default thereunder by the Company or (ii) by the Company
not as the result of a default thereunder by Calpine
Operating Services Company, Inc. at such time as the
applicable Facility Owner is no longer an Affiliate of
the Guarantor, which in either case shall constitute an
Event of Default of the Company hereunder with respect
to such Facility (provided, that CES shall not be
entitled to terminate this Agreement with respect to any
Facility pursuant to Section 5.2 as a result of an Event
of Default under this clause (g) earlier than sixty (60)
Days after such a termination of the Master Operation
and Maintenance Agreement.
5.2 Declaration of an Early Termination Date and Calculation of Settlement
Amounts. If an Event of Default with respect to a Defaulting Party has occurred
and is continuing, the other Party (the "Non-Defaulting Party") shall have the
right upon written notice (the "Termination Notice") to the Non-Defaulting Party
(i) to designate a day, no earlier than the day the Termination Notice is
effective and no later than 30 Days after the Termination Notice is effective,
as an early termination date ("Early Termination Date") to terminate this
Agreement with respect to the Facility or Facilities affected by such Event of
Default only; provided, however, that if such Event of Default is cured before
the Early Termination Date, such Termination Notice shall cease to be effective,
(ii) withhold any payments due to the Defaulting Party under this Agreement with
respect to such Facility or Facilities, (iii) suspend performance with respect
to such Facility or Facilities, and (iv) seek specific enforcement of this
Agreement, the Parties hereby agreeing that the covenants and obligations in
this Agreement may be specifically enforced regardless of whether or not there
is an adequate remedy available at law. If a Non-Defaulting Party is permitted
to and elects to terminate this Agreement with respect to a Facility or
Facilities on account of an Event of Default, it shall calculate, in a
commercially reasonable manner, a Termination Payment as of the Early
Termination Date. The Gams and Losses resulting from termination of this
Agreement with respect to such Facility or Facilities shall be determined by
calculating the amount that would be incurred or realized to replace or to
provide the economic equivalent of the remaining payments or deliveries in
respect of the purchase and sale of Gas and Power Products contemplated by this
Agreement. The Non-Defaulting Party (or its agent) may determine its Gains and
Losses by reference to information either available to it internally or supplied
by one or more third parties including, without limitation, quotations (either
firm or indicative) of relevant rates, prices, yields, yield curves,
volatilities, spreads or other relevant market data in the relevant markets.
Third parties supplying such information may include, without limitation,
dealers in the relevant markets, end-users of the relevant product, information
vendors and other sources of market information.
5.3 CES Failure. If CES fails to Schedule and/or deliver all or part of
the Gas required to be delivered hereunder or fails to accept and receive any
Power Products to be delivered hereunder, and such failure is not excused by the
Company's failure to perform, then CES shall nonetheless continue to pay the
Company the Contract Price as provided in Article Four; provided, that if CES
fails to deliver sufficient Gas to enable a Facility Owner to satisfy its
obligations under the RMR Agreements, and such failure is not excused by Force
Majeure or such Facility Owner's failure to perform, then CES shall be liable
for any costs related to
15
replacement Gas required by such Facility Owner to enable it to satisfy its
obligations under the RMR Agreements in excess of the amount such Gas would have
cost such Facility Owner under this Agreement. If CES willfully fails to
Schedule and/or deliver all or part of the Gas required to be delivered
hereunder with respect to a Facility or willfully fails to accept and receive
any Contrqacted Power Products to be delivered hereunder with respect to a
Facility, such failure continues for more than ten (10) Days after written
notice, and such failure is not excused by Force Majeure or the Company's
failure to perform, then the Company shall have the right to deliver a
Termination Notice and to terminate this Agreement with respect to such Facility
only pursuant to Section 5.2.
5.4 Company Failure. If the Company willfully fails to accept and receive
all or part of the Gas Scheduled to be delivered hereunder with respect to a
Facility or willfully fails to deliver any Contracted Power Products to be
delivered hereunder with respect to a Facility, such failure continues for more
than ten (10) Days after written notice, and such failure is not excused by
Force Majeure or by CES's failure to perform, then CES shall have the right, at
its election, (a) to suspend its obligations hereunder, including its
obligations to make payments, to schedule and supply Gas, and to schedule and
accept Contracted Power Products, until such willful failures to accept and
receive Gas and/or to deliver Contracted Power Products cease, and/or (b) to
deliver a Termination Notice and to terminate this Agreement with respect to
such Facility only pursuant to Section 5.2. Otherwise, if the Company's failure
to accept and receive all or part of the Gas Scheduled hereunder with respect to
a Facility or to deliver any Contracted Power Products hereunder with respect to
a Facility is not willful, CES's sole remedy for such failure shall be the
adjustment of the Contract Price provided in Section 4.3.
5.5 Notice of Payment of Termination Payment. As soon as practicable after
a termination hereunder, notice shall be given by the Non-Defaulting Party to
the Defaulting Party of the amount of the Termination Payment if any, owed to
the Non-Defaulting Party. The notice shall include a written statement
explaining in reasonable detail the calculation of such amount. The Termination
Payment shall be made by the Defaulting Party within fifteen (15) Business Days
after such notice is received by the Defaulting Party.
5.6 Disputes With Respect to Termination Payment. If the Defaulting Party
disputes the Non-Defaulting Party's calculation of the Termination Payment, in
whole or in part, the Defaulting Party shall, within ten (10) Business Days
after receipt of Non-Defaulting Party's calculation of the Termination Payment,
provide to the Non-Defaulting Party a detailed written explanation of the basis
for such dispute. The Defaulting Party and the Non-Defaulting Party shall use
all commercially reasonable efforts to resolve such dispute by negotiation and
compromise. If they are unable to do so within twenty (20) Business Days after
the Defaulting Party's delivery of such detailed written explanation, both
Parties shall have the right to exercise any or all of their legal rights and
remedies with respect to such dispute.
5.7 Termination for Convenience. The Company may, at its sole option,
terminate this Agreement with respect to one or more Facilities or in its
entirety at any time during the Term at the Company's convenience upon sixty
(60) Days prior written notice to CES. Upon receipt of such notice, CES shall
calculate a Termination Payment hereunder as if the Company were the Defaulting
Party. Upon such termination, the Company shall pay CES the Termination Payment
so calculated, and, this Agreement shall cease to apply to such Facility or
Facilities, and
16
the Contract Price and other provisions hereof shall be adjusted accordingly to
delete amounts, rights or obligations related to such Facility or Facilities.
ARTICLE SIX: BILLING AND PAYMENT
6.1 Billing Period. All payments under this Agreement (other than
Termination Payments and other damage payments payable pursuant to Article 5,
which shall be paid as provided therein) will be paid on a monthly basis. Within
ten (10) Days after the end of each month, CES will calculate the amount of the
monthly payment due for such month and will send a notice of such amount,
together with supporting information and calculations, to the Company.
6.2 Timeliness of Payment. All invoices for monthly payments under this
Agreement shall be due and payable to or by each Facility Owner in accordance
with the Facility Owner's or CES's invoice instructions, as applicable, on or
before the later of the twenty-fifth (25th) day of each month, or the fifteenth
(15th) day after receipt of the invoice or, if such day is not a Business Day,
then on the next Business Day. Payment shall be made by electronic funds
transfer, or by other mutually agreeable method(s), to the account designated by
a Party in its invoice. Any amounts not paid by the due date will be deemed
delinquent and will accrue interest at the Interest Rate, such interest to be
calculated from and including the due date to but excluding the date the
delinquent amount is paid in full.
6.3 Disputes and Adjustments of Invoices. A Party may, in good faith,
dispute the correctness of any invoice or any adjustment to an invoice, rendered
under this Agreement or adjust any invoice for any arithmetic or computational
error within twelve (12) months of the date the invoice, or adjustment to an
invoice, was rendered. In the event an invoice or portion thereof, or any other
claim or adjustment arising hereunder, is disputed, payment of the undisputed
portion of the invoice shall be required to be made when due, with notice of the
objection given to the other Party. Any invoice dispute or invoice adjustment
shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is
resolved. Upon resolution of the dispute, any required payment shall be made
within five (5) Business Days of such resolution along with interest accrued at
the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the
Party receiving such overpayment from subsequent payments, with interest accrued
at the Interest Rate from and including the date of such overpayment to but
excluding the date repaid or deducted by the Party receiving such overpayment.
Any dispute with respect to an invoice is waived unless the other Party is
notified in accordance with this Section 6.3 within twelve (12) months after the
invoice is rendered or any specific adjustment to the invoice is made. If an
invoice is not rendered within twelve (12) months after the close of the month
during which performance has occurred, the right to payment for such performance
is waived.
6.4 Netting of Payments. The Parties hereby agree that they shall
discharge mutual debts and payment obligations due and owing to each other on
the same date under this Agreement through netting, in which case all amounts
owed by each Party to the other Party for the purchase and sale of Products
during the monthly billing period under this Agreement,
17
including any related damages calculated pursuant to Article Five, 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.
6.5 Payment Obligation Absent Netting. If no mutual debts or payment
obligations exist and only one Party owes a debt or obligation to the other
during the monthly billing period, including, but not limited to, any related
damage amounts calculated pursuant to Article Five, interest, and payments or
credits, that Party shall pay such sum in full when due.
ARTICLE SEVEN: LIMITATIONS
7.1 Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH
HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT
SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN
EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE
OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT
LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL
DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY
AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS
EXPRESSLY HEREIN PROVIDED, NO PARTY SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER
BUSINESS INTERRUPTION DAMAGES, WHETHER BY STATUTE, IN TORT OR CONTRACT, UNDER
ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR
PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED,
THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE
DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM
OR LOSS.
ARTICLE EIGHT: GOVERNMENTAL CHARGES
8.1 Cooperation. Each Party shall use reasonable efforts to implement the
provisions of and to administer this Agreement in accordance with the intent of
the parties to minimize all taxes, so long as neither Party is materially
adversely affected by such efforts.
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8.2 Governmental Charges. The payments to be made by CES to the Company
hereunder are net of all taxes due or payable with respect to such payments.
Accordingly, CES shall pay or cause to be paid all taxes imposed by any
government authority ("Governmental Charges") on or with respect to Gas
delivered hereunder arising prior to or at the applicable Delivery Point and on
or with respect to any Power Product delivered hereunder arising at or after the
applicable Delivery Point, including any sales or use taxes imposed in
connection with the sale or transfer of any Gas or Power Product. The Company
shall pay or cause to be paid all Governmental Charges on or with respect to Gas
delivered hereunder imposed after the applicable Delivery Point and with respect
to Power Products delivered hereunder imposed prior to the applicable Delivery
Point. Franchise or income taxes imposed on the net income of a Party shall be
the responsibility of that Party. In the event either Party is required by law
or regulation to remit or pay Governmental Charges which are the other Party's
responsibility hereunder, the second Party shall promptly reimburse the first
Party for such Governmental Charges. Nothing herein shall obligate or cause a
Party to pay or be liable to pay any Governmental Charges for which it is exempt
under the law.
ARTICLE NINE: MISCELLANEOUS
9.1 Representations and Warranties. On the Effective Date, each Party
represents and warrants to each other Party that:
(i) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation;
(ii) it has all regulatory authorizations necessary for it to
legally perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement are
within its powers, have been duly authorized by all necessary
action and do not violate any of the terms and conditions in
its governing documents, any material contracts to which it is
a party or any law, rule, regulation, order or judgment
applicable to it;
(iv) this Agreement and each other document executed and delivered
in accordance with this Agreement constitutes its legally
valid and binding obligation enforceable against it in
accordance with its terms subject to any Equitable Defenses.
(v) it is not Bankrupt and there are no proceedings pending or
being contemplated by it or, to its knowledge, threatened
against it which would result in it being or becoming
Bankrupt;
(vi) there is not pending or, to its knowledge, threatened against
it or any of its Affiliates any legal proceedings that could
reasonably be expected to materially and adversely affect its
ability to perform its obligations under this Agreement;
19
(vii) no Event of Default with respect to it has occurred and is
continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations
under this Agreement;
(viii) it is acting for its own account, has made its own
independent decision to enter into this Agreement and as to
whether this Agreement is appropriate or proper for it based
upon its own judgment, is not relying upon the advice or
recommendations of the other Party in so doing, and is capable
of assessing the merits of and understanding, and understands
and accepts, the terms, conditions and risks of this
Agreement; and
(ix) it has entered into this Agreement in connection with the
conduct of its business and it has the capacity or ability to
make or take delivery of all Products referred to herein.
9.2 Title. Seller warrants that it will deliver to Buyer the Quantity of
each Product to be delivered hereunder free and clear of all liens, security
interests, claims and encumbrances or any interest therein or thereto by any
person arising prior to the applicable Delivery Point.
9.3 Indemnity. Each Party shall indemnity, defend and hold harmless the
other Parties from and against any Claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period when
control and title to Product is vested in such Party as provided in Section 3.1.
Each Party shall indemnify, defend and hold harmless the other Parties against
any Governmental Charges for which such Party is responsible under Article Nine.
9.4 Assignment. No Party shall assign its rights and interests under this
Agreement without the prior written consent of the other Consent Parties, which
consent may be withheld in the exercise of its sole discretion; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign its rights and interests under this Agreement and in and to the
accounts, revenues or proceeds hereof in connection with any financing or other
financial arrangements, or (ii) transfer or assign its rights and interests
under this Agreement to an Affiliate of such Party if, (A) in the case of CGC,
the assignee succeeds to the ownership of all of the Facility Owners, (B) in the
case of a Facility Owner, the assignee succeeds to the ownership of the
applicable Facility, or (C) in the case of CES, the obligations of the assignee
continue to be guaranteed by the same Guarantor.
9.5 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. EACH PARTY WAIVES ITS
RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING UNDER
OR IN CONNECTION WITH THIS AGREEMENT.
9.6 Notices. All notices, requests, statements or payments shall be made
as follows:
20
CES: Calpine Energy Services, L.P.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Contract Administration
Fax: (000)000-0000
Phone: (000)000-0000
CGC: Calpine Generating Company, LLC
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Fax: (000)000-0000
Phone: (000)000-0000
Facility Owner: To the Plant Manager for the applicable Facility at the
address set forth on Exhibit A attached hereto.
Notices (other than scheduling requests) shall, unless otherwise specified
herein, be in writing and may be delivered by hand delivery, United States mail,
overnight courier service or facsimile. Notice by facsimile or hand delivery
shall be effective at the close of business on the day actually received, if
received during business hours on a Business Day, and otherwise shall be
effective at the close of business on the next Business Day. Notice by overnight
United States mail or courier shall be effective on the next Business Day after
it was sent. A Party may change its addresses by providing like notice as
specified above.
9.7 General. This Agreement (including the exhibits, schedules and any
written supplements hereto), constitute the entire agreement between the Parties
relating to the subject matter. This Agreement shall be considered for all
purposes as prepared through the joint efforts of the Parties and shall not be
construed against a Party as a result of the preparation, substitution,
submission or other event of negotiation, drafting or execution hereof. Except
to the extent herein provided for, no amendment or modification to this
Agreement shall be enforceable unless reduced to writing and executed by all
affected Parties. Each Party agrees if it seeks to amend any applicable
wholesale power sales tariff during the term of this Agreement, such amendment
will not in any way affect this Agreement without the prior written consent of
the other affected Parties. Each Party further agrees that it will not assert,
or defend itself, on the basis that any applicable tariff is inconsistent with
this Agreement. This Agreement shall not impart any rights enforceable by any
third party (other than a permitted successor or assignee bound to this
Agreement). Waiver by a Party of any default by another Party shall not be
construed as a waiver of any other default. Any provision declared or rendered
unlawful by any applicable court of law or regulatory agency or deemed unlawful
because of a statutory change (individually or collectively, such events
referred to as "Regulatory Event") will not otherwise affect the remaining
lawful obligations that arise under this Agreement. If a Regulatory Event
occurs, the Parties shall use their best efforts to reform this Agreement in
order to give effect to the original intention of the Parties. The term
"including" when used in this Agreement shall be by way of example only and
shall not be considered in any way to be in limitation. The headings
21
used herein are for convenience and reference purposes only. All indemnity and
audit rights shall survive the termination of this Agreement for twelve (12)
months. This Agreement shall be binding on each Party's successors and permitted
assigns.
9.8 Audit. Each Party has the right, at its sole expense and during normal
working hours, to examine the records of another Party to the extent reasonably
necessary to verify the accuracy of any statement, charge or computation made
pursuant to this Agreement. If requested, a Party shall provide to the other
Parties statements evidencing the Quantity delivered at an applicable Delivery
Point. If any such examination reveals any inaccuracy in any statement, the
necessary adjustments in such statement and the payments thereof will be made
promptly and shall bear interest calculated at the Interest Rate from the date
the overpayment or underpayment was made until paid; provided, however, that no
adjustment for any statement or payment will be made unless objection to the
accuracy thereof was made prior to the lapse of twelve (12) months from the
rendition thereof, and thereafter any objection shall be deemed waived.
9.9 Forward Contract. The Parties acknowledge and agree that this
Agreement constitutes a "forward contract" within the meaning of the United
States Bankruptcy Code.
9.10 Confidentiality. The Parties agree that they will not disclose their
communications with any Transporter or Transmission Provider to a third party
(other than the Party's employees, lenders, counsel, accountants or advisors who
have a need to know such information and have agreed to keep such terms
confidential) except in order to comply with any applicable law, regulation, or
any exchange, control area or independent system operator rule or in connection
with any court or regulatory proceeding; provided, however, each Party shall, to
the extent practicable, use reasonable efforts to prevent or limit the
disclosure. The Parties shall be entitled to all remedies available at law or in
equity to enforce, or seek relief in connection with, this confidentiality
obligation.
9.11 Guaranty. CES shall deliver to the Company, prior to or concurrently
with the execution and delivery of this Agreement, a guaranty (the "Guaranty")
in a form reasonably acceptable to the Company whereby Guarantor guarantees, in
favor of the Company, the performance by CES of its obligations under this
Agreement.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
CALPINE ENERGY SERVICES, L.P. CALPINE GENERATING COMPANY, LLC
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxx Xxxx
------------------------- ------------------------
Name: XXXXXX XXXXXXX Name: XXXXX XXXX
Title: Authorized Signatory Title: Vice President
DELTA ENERGY CENTER, LLC LOS MEDANOS ENERGY CENTER, LLC
By: /s/ Xxxxx Xxxx By: /s/ Xxxxx Xxxx
------------------------ ------------------------
Name: XXXXX XXXX Name: XXXXX XXXX
Title: Vice President Title: Vice President
23
EXHIBIT A
DESCRIPTION OF THE FACILITIES
DELTA ENERGY CENTER FACILITY
Address: 0000 Xxxxxxx 00 Xxxx
Xxxxxxx, Xxxxxxx 00000
(000)000-0000
The Delta facility is a nominal 799 MW natural gas-fired combined cycle
generating facility with an estimated peak capacity of 882 MW. The facility
consists of three Siemens combustion turbines and three Deltak heat recovery
steam generators which supply steam to a single Toshiba steam turbine.
LOS MEDANOS ENERGY CENTER FACILITY
Address: 000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
(000)000-0000
The Los Medanos facility is a nominal 497 MW natural gas-fired combined
cycle generating facility with an estimated peak capacity of 566 MW. The
facility consists of two General Electric combustion turbines and two Nooter
Xxxxxxx heat recovery steam generators which supply steam to a single General
Electric steam turbine. The facility supplies power and steam to USS-POSCO
Industries and may supply power to Dow Chemical Company.
A-1
SCHEDULE 1
DELTA ENERGY CENTER FACILITY
0000 XXXXX XXXX
XXXXXXXXX, XX 00000
LOCATION: California
NERC REGION: WECC
APPLICABLE CAPACITY: 250 MW
VARIABLE O&M AMOUNT:
Effective Date through December 2004: $0.26
January 2005 through December 2005: 0.27
January 2006 through December 2006: 0.28
January 2007 through December 2007: 0.28
January 2008 through December 2008: 0.30
January 2009 through December 2009: 0.31
January 2010 through December 2010: 0.31
January 2011 through December 2011: 0.32
January 2012 through December 2012: 0.33
January 2013 through December 2013: 0.34
GAS DELIVERY POINT: CPN Pipeline Meter No. 32600
PG&E City Gate interconnection at Delta Energy Facility
POWER DELIVERY POINT: 230kV Pittsburgh Power Plant Switchyard
FACILITY TRANSPORTATION
CHARGE ADJUSTMENT: To the extent the Facility Owner pays local distribution
charges to PG&E, the amount of such local distribution
charges (currently $0.31/MMBtu)
X-0
XXXXXXXX 0
XXX XXXXXXX ENERGY CENTER FACILITY
000 XXXX XXXXX XXXXXX
XXXXXXXXX, XX 00000
LOCATION: California
NERC REGION: WECC
APPLICABLE CAPACITY: 250 MW
VARIABLE O&M AMOUNT:
Commencement through December 2004: $0.50
January 2005 through December 2005: 0.52
January 2006 through December 2006: 0.53
January 2007 through December 2007: 0.54
January 2008 through December 2008: 0.52
January 2009 through December 2009: 0.53
January 2010 through December 2010: 0.55
January 2011 through December 2011: 0.56
January 2012 through December 2012: 0.57
January 2013 through December 2013: 0.59
GAS DELIVERY POINT: CPN Pipeline Meter No. 32500
PG&E City Gate interconnection at LMEC Facility
POWER DELIVERY POINT: 115kV LMEC Switchyard
FACILITY TRANSPORTATION
CHARGE ADJUSTMENT: To the extent the Facility Owner pays local distribution
charges to PG&E, the amount of such local distribution
charges (currently $0.31/MMBtu)
S-2
