Exhibit 10.11
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is entered into as of
September 13, 2001 between PG&E Energy Trading-Power, L.P. ("PGET"), a
Delaware limited partnership, having an office at 0000 Xxx Xxxxxxxxxx Xxxx,
Xxxxxxxx, XX 00000, and Buzzard Power Corporation ("Buzzard"), a Delaware
corporation having an office at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000,
collectively referred to herein as the "Parties".
WHEREAS, Buzzard expects to own, as lessee of the Scrubgrass generating
facility, certain NOx emission allowances and wishes to engage PGET to perform
certain marketing services relating to such allowances pursuant to the terms and
conditions set forth in this Agreement; and
WHEREAS, PGET wishes to perform such services;
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties, intending to be bound hereby, agree
as follows:
SECTION 1. SERVICES.
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Pursuant to separate transaction agreements between the Parties,
substantially in the form of Exhibit A attached hereto (subject to Section 2
below), to be executed on or before December 1, 2001 (the "Buzzard/PGET Sale
Documents"), Buzzard shall sell, and PGET shall purchase, the quantity of NOx
emission allowances identified on Exhibit B attached hereto (the "Identified
Allowances"). Pursuant to the terms hereof, PGET shall use commercially
reasonable efforts to resell the Identified Allowances, on or before November
15, 2001, to a third party at the highest available price (the "Third Party Sale
Price"); provided, however, that Buzzard may direct PGET, from time to time, to
sell any or all of the Identified Allowances on terms acceptable to Buzzard.
Each Party expressly acknowledges and agrees that PGET shall not act as or be an
agent for Buzzard.
SECTION 2. COMPENSATION.
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(a) In consideration of PGET's services in reselling the Identified
Allowances, the price payable by ET for each Identified Allowance to Buzzard, as
set forth in the Buzzard /PGET Sale Documents, shall be equal to:
Third Party Sale Price - $35 - ( 25% x Profit);
Where: Profit = Average Third Party Sale Price for the
5-year stream indicated in Exhibit B - Benchmark
Price; provided however, that if Profit equals a
negative value, Profit shall be deemed to equal zero;
and Benchmark Price = $5,000, if Exhibit B reflects a
3-year stream; or
$4,000, if Exhibit B reflects a
5-year stream
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NO CONSEQUENTIAL DAMAGES.
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Neither Party shall be liable to the other Party for any consequential or
indirect losses or damages that may be incurred in connection with the services
provided hereunder, including, without limitation, loss of use, lost profits or
revenues, cost of capital, or loss of goodwill.
GOVERNING LAW.
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THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
EXECUTION IN COUNTERPARTS.
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This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
BUZZARD:
BUZZARD POWER CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED TO:
SCRUBGRASS GENERATING COMPANY,
L.P.
By: /s/ X. Xxxxxxxx Xxxxx
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Name: X. Xxxxxxxx Xxxxx
Title: President
SELLER:
PG&E ENERGY TRADING - POWER, L.P.
BY PG&E ENERGY TRADING HOLDINGS
CORPORATION, ITS SOLE GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President & CEO
Exhibit A
October 29, 2001
Scrubgrass Generating Company, L.P.
XX0, Xxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
RE: NOx Transaction
This letter shall confirm the agreement reached between PG&E Energy
Trading - Power, L.P. ("PGET") and Buzzard Power Corporation ("Counterparty")
regarding the transaction set forth below.
Introduction: The Clean Air Act contains a program for control of
NOx emissions, under which parties may buy and sell
NOx Emission Allowances which are valid for NOx
emissions emitted from May 1 - September 30 of each
year 1999-2002 (the "Ozone Season"). The NOx
Emission Allowance program is administered by EPA,
pursuant to regulations issued by that agency under
the Clean Air Act. Buyer and Seller expect this
program to be continued for the Ozone Seasons of
years 2003-2007. Seller is interested in selling
certain NOx Emission Allowances for vintage years
2003, 2004, 2005, 2006, and 2007, and Buyer is
interested in purchasing those same Allowances.
Commodity: NOx Emission Allowances
Trade Date: October 22, 2001
Seller: Counterparty
Buyer: PGET
Vintage Year(s): 2003, 2004, 2005, 2006, 2007
Contract Quantity: 150 Allowances for 2003, 140 Allowances per year for
2004 through 2007, (710 total)
Price(s): $3,420 per NOx Emission Allowance for Vintage 2003,
$3,420 per NOx Emission Allowance for Vintage 2004,
$3,420 per NOx Emission Allowance for Vintage 2005
$3,420 per NOx Emission Allowance for Vintage 2006
$3,420 per NOx Emission Allowance for Vintage 2007
Condition Precedent: Buyer and Seller recognize the NOx Allowances are
originating from the Commonwealth of Pennsylvania
Department of Environmental Protection ("DEP"), and
as such, if Pennsylvania DEP and EPA have not funded
Seller's EPA NOx account by _____ of each Vintage
Year, neither Seller nor Buyer shall have any
obligation hereunder for that respective Vintage
Year's Allowances. However, all obligations to
deliver subsequent Vintage Year's Allowances shall
continue consistent with the terms set forth herein.
Delivery/Documentation: Within 10 business days of the EPA's funding of
Seller's EPA NOx Allowance Tracking System ("NATS")
account of each Vintage Years' Allowances, Seller
will deliver a partially executed Allowance Transfer
Form or its legal equivalent ("ATF") to Buyer,
authorizing the transfer of the Contract Quantity
from Seller's account into the appropriate to
Buyer's account.
PGET's EPA NATS account information:
NOx:
AAR: Xxxxx X. Xxxxxxxxx, 1073
ALT: Xxxx Xxxxxx, 1813
NATS Acct. # 999900000014
Counterparty's EPA NATS account information:
NOx:
AAR:______________________, #_______
NATS Acct. #
Within three business days of receiving the ATF or
its legal equivalent, Buyer will execute the form
and cause it to be placed on file with the EPA in
accordance with all applicable regulations.
Buyer may, with Seller's prior written approval,
modify any documentation provided by Seller prior to
its submission to the EPA. Buyer will promptly
furnish to Seller or its designated representative
copies of any documentation which Buyer submits to
the EPA to effectuate this transfer. Excluded from
this requirement is documentation concerning Buyer's
confidential matters.
Upon notification by the EPA that the transfer
contemplated by this transaction letter will not be
recorded, the parties shall promptly confer, and
then they shall cooperate in taking all reasonable
actions necessary to cure any defects in the
proposed transfer, so that the transfer can be
recorded.
Payment: For each Vintage Years' Allowances, payment shall be
made by Buyer in immediately available funds (U.S.
Dollars) by wire transfer to Seller's account
specified below (or in such other form as reasonably
requested by Seller) within three Business Days of
written or electronic notification by the EPA that
the Vintage Years' Allowances have been transferred
from Seller to Buyer.
Additional Terms and This transaction is subject to the Additional Terms
Conditions: and Conditions set forth below.
Definitions: "Allowance" means a NOx Emission Allowance, as
defined by the Clean Air Act and regulated by the
EPA.
"Clean Air Act" means Title IV of the Clean Air Act
Amendments of 1990 (effective November 15, 1990) as
well as any amendments thereto and regulations
promulgated thereunder, all of which are the basis
for the federal air pollution control program for
NOx emissions.
"Confidential Information" means all oral and
written information exchanged between Seller and
Buyer with respect to the pricing of Allowances
hereunder. The following exceptions, however, do not
constitute Confidential Information for the purposes
of this transaction: (a) information that is or
becomes generally available to the public other than
as a result of a disclosure by either party in
violation of this transaction letter; (b)
information that was already known by either party
on a non-confidential basis prior to this
transaction letter; and (c) information that becomes
available to either party on a non-confidential
basis from a source other than the other party if
such source was not subject to any prohibition
against disclosing the information to such party.
"EPA" means the United States Environmental
Protection Agency or any successor agency with
similar jurisdiction.
ADDITIONAL TERMS AND CONDITIONS
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Netting. If Buyer and Seller are each required to pay an amount to the other on
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the same day, then such amounts with respect to each party may be aggregated and
the parties may discharge their obligations to pay through netting, in which
case the party, if any, owing the greater aggregate amount shall pay to the
other party the difference between the amounts owed.
Security. If a party (the "Beneficiary Party") reasonably determines that the
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other party's creditworthiness, financial responsibility or performance
viability is unsatisfactory, the Beneficiary Party may require Performance
Assurance. "Performance Assurance" means, at the option of the Beneficiary
Party: (i) the posting of a letter of credit; (ii) a cash prepayment; or (iii)
the posting of other acceptable collateral or security by the party with
impaired credit. The Performance Assurance shall be delivered within two (2)
business days of the date of such request.
Events of Default. An "Event of Default" shall mean with respect to a party
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("Defaulting Party"): (i) any representation or warranty made by the Defaulting
Party herein shall at any time prove to be false or misleading in any material
respect; (ii) the failure by the Defaulting Party to perform any covenant set
forth herein; (iii) the Defaulting Party shall make an assignment or any general
arrangement for the benefit of its creditors, files a petition or otherwise
commences, authorizes or acquiesces in the commencement of a proceeding or cause
under any bankruptcy or similar law for the protection of creditors, or has such
a petition filed against it and such proceeding remains undismissed for 30 days,
otherwise becomes bankrupt or insolvent (however evidenced), or becomes unable
to pay its debts as they fall due (each of the foregoing shall be referred to as
a "Bankruptcy Proceeding"); (iv) the occurrence of a material adverse change
with respect to the Defaulting Party; provided, such material adverse change
shall not be considered an Event of Default if the Defaulting Party establishes
and maintains for so long as the material adverse change is continuing,
Performance Assurance for the benefit of the other party (the "Non-Defaulting
Party") in a form and amount reasonably acceptable to the Non-Defaulting Party;
(vi) the failure by the Defaulting Party to establish, maintain, extend or
increase Performance Assurance when required pursuant to this transaction; (vii)
in the event a party has posted a guarantee, the failure by the guarantor of the
Defaulting Party to perform any covenant set forth in the guarantee it delivered
in respect of any such transaction, any representation or warranty made by such
guarantor shall prove to have been false or misleading in any material respect
when made or when deemed to be repeated, or the guaranty shall expire or be
terminated or shall in any way cease to guaranty the obligations of the
Defaulting Party hereunder; or (viii) the guarantor of the Defaulting Party
shall be subject to a Bankruptcy Proceeding.
Remedies upon an Event of Default.
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(a) In the event of a default by Buyer, this transaction can be terminated
immediately by Seller upon written notice to Buyer. Upon such termination, Buyer
will be obligated to pay Seller damages equal to the positive difference, if
any, between (a) the aggregate price set forth in this transaction and (b) the
aggregate market price of these Allowances as of the date of
termination, to be determined based upon the average of two quotes from
brokerage firms or third-party intermediaries reasonably selected by Seller, net
of reasonably expected transaction costs. If Buyer has already made a partial
payment to Seller, the amount owed under this provision will be decreased by
that amount already paid. Except with respect to breaches of Buyer's obligations
under Confidentiality, no other damages will be available to Seller.
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(b) In the event of a default by Seller, this transaction can be terminated
immediately by Buyer upon written notice to Seller. Upon such termination,
Seller will be obligated to pay Buyer an amount equal to the cost to Buyer
(including its transaction costs) of purchasing Allowances equivalent to those
that were to be delivered under this transaction but which Seller failed to
deliver, less the cost that Buyer would have had to pay Seller for the same
number of Allowances. Except with respect to breaches of Seller's obligations
under Confidentiality, no other damages will be available to Buyer.
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Audit. Each party has the right, at its sole expense, to examine the records of
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the other party during normal business hours to the extent reasonably necessary
to verify the accuracy of any statement rendered to such party. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments made pursuant to such inaccurate statement
shall be adjusted; provided, however, that such adjustments shall be made prior
to the lapse of one calendar year following the date on which the inaccurate
statement was delivered.
Late Payments. All overdue payments shall bear interest from (and including) the
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due date to (but excluding) the date of payment at a rate equal to two percent
(2%) over 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";
provided, the interest rate shall never exceed the maximum lawful rate permitted
by applicable law.
Limitation of Remedies, Liability and Damages. THE PARTIES CONFIRM THAT THE
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EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED HEREIN 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 HEREIN
PROVIDED, 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, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, 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, OTHERWISE OBTAINING AN
ADEQUATE REMEDY IS INCONVENIENT AND THE LIQUIDATED DAMAGES CONSTITUTE A
REASONABLE APPROXIMATION OF THE HARM OR LOSS.
Taxes. Each party shall pay any taxes or other fees that are associated with its
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respective purchase or sale of the Allowances as described herein.
Assignment. Neither party shall assign this transaction or its rights hereunder
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without the prior written consent of the other party. Upon any assignment made
in compliance with this section, this transaction shall inure to and be binding
upon the successors and assigns of the assigning party. Notwithstanding the
foregoing, either party may, without the need for consent from the other party
(and without relieving itself from liability hereunder), (a) transfer, pledge or
assign this transaction as security for any financing with financial
institutions; (b) transfer or assign this transaction to an affiliate of such
party provided that such assignee has substantially equivalent financial
capability to the assignor; or (c) transfer or assign this transaction to any
person or entity succeeding to all or substantially all of the assets of such
assignor; provided, however, in each case, that any such assignee shall agree to
be bound by the terms and conditions thereof.
Notices. Any notice, request, demand, statement or payment provided for herein
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to either Seller or Buyer shall be confirmed in writing and shall be made as
specified below. A notice sent by facsimile transmission shall be deemed
received by the close of the business day on which such notice was transmitted
or such earlier time as confirmed by the receiving party and notice by overnight
mail or courier shall be deemed to have been received two (2) business days
after it was sent or such earlier time as is confirmed by the receiving party
unless it confirms a prior verbal communication, in which case any such notice
shall be deemed received on the day sent.
Notices & Correspondence: Payments & Invoices:
PG&E Energy Trading-Power, L.P. PG&E Energy Trading-Power, L.P.
0000 Xxx Xxxxxxxxxx Xxxx 0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxxx, Xxxxxxxx 00000
Attn: Emissions Trader Attn: Director, Power Accounting
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000 or 000-0000
Scrubgrass Generating Company L.P. Scrubgrass Generating Company X.X.
Xxxxxxx Power Corporation Buzzard Power Corporation
0000 Xxxxxx Xxxx 0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Attn: General Manager Attn: Accounting
Telephone: (000) 000-0000 x00 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
with a copy to:
Assistant General Counsel Assistant General Counsel
Scrubgrass Generating Company, L.P. PG&E Energy Trading-Power, L.P.
0000 Xxx Xxxxxxxxxx Xxxx, 00xx Floor 0000 Xxx Xxxxxxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
Payments by Wire Transfer:
Boston Safe Deposit and Trust Company
Account Title: PG&E Energy Trading-Power, L.P.
Account Number: 145513
ABA Number: 011 001 234
Bankers Trust Company, NY
Corporate Trust Agency Group
Account Title: Venango (Scrubgrass) Operating A/C
Account Number: 00000000
ABA Number: 000000000
From time to xxxx Xxxxxx and/or Buyer may change the foregoing addresses by
sending notice of such change in accordance with this section.
Representations and Warranties. Seller hereby represents and warrants to Buyer
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as follows:
(a) Seller has and, at all times during the term of this
transaction will have, all necessary power and authority to execute, deliver and
perform its obligations hereunder.
(b) The execution, delivery and performance of this
transaction by Seller have been duly authorized by all necessary action and do
not violate any of the terms or conditions of Seller's governing documents, or
any contract to which it is a party, or any law, rule, regulation, order,
judgment or other legal or regulatory determination applicable to Seller.
(c) There is no pending or threatened litigation, arbitration
or administrative proceeding that materially adversely affects Seller's ability
to perform this transaction.
(d) Seller is, or will be prior to any transfer to Buyer, the
owner, free and clear of any liens, encumbrances, charges, agreements or claims,
of the Allowances herein being transferred.
Seller makes NO representations or warranties as to the following:
(a) There is no warranty or representation that Buyer's use
for compliance or transferability or merchantability of these Allowances will
not be challenged by a government agency, private party, or other interested
third party. Except as expressly set forth in this transaction letter, Seller
expressly negates any other representations or warranties, whether written or
oral, and whether express or implied.
Buyer hereby represents and warrants to Seller as follows:
(a) Buyer has, and at all times during the term of this
transaction will have, all necessary power and authority to execute, deliver and
perform its obligations hereunder.
(b) The execution, delivery and performance of this
transaction by Buyer have been duly authorized by all necessary action and do
not violate any of the terms or conditions of Buyer's governing documents, or
any contract to which it is a party, or any law, rule, regulation, order,
judgment or other legal or regulatory determination applicable to Buyer.
(c) There is no pending or threatened litigation, arbitration
or administrative proceeding that materially adversely affects Buyer's ability
to perform this transaction.
Entire Agreement. This transaction letter is the final and entire agreement
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between the parties. No modification or amendment of this transaction letter
shall be effective or binding unless set forth in writing signed by both
parties.
No Waiver. Waiver of any breach of this transaction shall not be construed as a
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waiver of any other breach.
Governing Law. INCLUDING ANY COUNTERCLAIMS AND CROSS CLAIMS ASSERTED IN SUCH
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ACTION, THIS TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF _____, INCLUDING THE UNIFORM COMMERCIAL CODE, WITHOUT
REGARD TO THE LAWS OF SUCH STATE REQUIRING THE APPLICATION OF THE LAWS OF
ANOTHER STATE. It is agreed that this transaction is enforceable as a "qualified
financial contract" within the meaning of New York General Obligations Law
Section 5-701(b).
Confidentiality. Except as provided in this Section, neither party shall
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publish, disclose, or otherwise divulge Confidential Information to any person,
at any time during or after the term of this transaction, without the other
party's prior express written consent. Each party shall permit knowledge of and
access to the Confidential Information only to those of its corporate
affiliates, attorneys, accountants, representatives, agents and employees who
have a need to know related to this transaction.
If required by any law, statute, ordinance, decision, order or
regulation passed, adopted, issued or promulgated by a court, governmental
agency or authority having jurisdiction over a party, that party may release
Confidential Information, or a portion thereof, to the court, governmental
agency or authority, as required by the applicable law, statute, ordinance,
decision, order or regulation, and a party may disclose Confidential Information
to accountants in connection with audits, provided that such party has notified
the other party of the required disclosure, such that the other party may
attempt (if such party so chooses) to cause that court, governmental agency,
authority or accountant to treat such information in a confidential manner and
to prevent such information from being disclosed or otherwise becoming part of
the public domain.
This Section survives for a period of one (1) year following the
expiration or termination of this transaction.
Please confirm that the terms stated herein accurately reflect the agreement
reached between PGET and Counterparty by returning an executed copy of this
transaction letter via facsimile to PGET at (000) 000-0000. Your response should
reflect the appropriate party in your organization who has the authority to
enter into the transaction.
PG&E ENERGY TRADING - POWER, L.P.
By: PG&E Energy Trading Holdings
Corporation - its sole general partner
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Senior Vice President
ACCEPTED AND AGREED:
SCRUBGRASS GENERATING COMPANY, L.P.
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President
Exhibit B
Identification of NOx Emission Allowances
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Originating State Vintage Year Quantity
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Pennsylvania 2003 150 tons
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Pennsylvania 2004 140 tons
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Pennsylvania 2005 140 tons
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Pennsylvania 2006 140 tons
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Pennsylvania 2007 140 tons
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