Resolution No. 9510 (7);:
LA\ 1776718.10
EXECUTION VERSION
INTERCONNECTION AND TRANSMISSION SERVICES AGREEMENT
BETWEEN
THE CITY OF VERNON
AND
BICENT (CALIFORNIA) MALBURG LLC
TABLE OF CONTENTS
ARTICLE1. DEFINITIONS:.........................................................................................................:..........2
ARTICLE 2. EFFECTIVE DATE, TERM AND TERMINATION..................................................... 6
2.1 Effective Date..................................................................................................................... 6
2.2 Term of Agreement.............................................................................................................6
2.3 Termination Procedures..................................................................................................... 6
2.3.1 Written Notice........................................................................................................ 6
2.3.2 Default................................................................................................................... 6
2.4 Termination Costs................................................................................................................6
2.5 Disconnection.................................................................................................................. 7
2.6 Survival...............................................................................................................................7
ARTICLE 3. SCOPE OF SERVICE......................................................................................................... 7
3.1
Interconnection Service...................................................................................................... 7
3.2
Commencement of Interconnection Service.......................................................................
7
3.3
Performance Standards....................................................................................................... 7
3.4
Transmission Service..........................................................................................................7
3.4.1 Rate for Service..................................................................................................... 8
3.4.2 Modification of Service.........................................................................................
8
3.4.3 Daily Schedules..................................................................................................... 8
3.4.4 Output., ..................................................................................................................
8
3.5
Station Power......................................................................................................................
8
3.6
MGS Owner Provided Services..........................................................................................
8
ARTICLE 4. TESTING AND INSPECTION..........................................................................................9
4.1
Testing and Modifications ..................................................................................................
9
4.2
Right to Observe Testing.................................................................................................... 9
4.3
Right to Inspect...................................................................................................................
9
ARTICLE5. METERING......................................................................................................................... 9
5.1
General............................................................................................................._..................9
5.2
Check Meters...................................................................................................................... 9
5.3
Vernon Retail Metering ................................................... .....
..............................................
9
5.4
Products............................................................................................................................
10
5.5
Adjustments......................................................................................................................
10
ARTICLE 6.
COMMUNICATIONS......................................................................................................10
6.1
MGS Owner Obligations..................................................................................................
10
6.2
Remote Terminal Unit......................................................................................................
10
6.3
No Annexation..................................................................................................................
10
ARTICLE 7. OPERATIONS................................................................................................................... 11
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7.1
General..............................................................................................................................11
7.2
Vernon Obligations............................................................................................................
11
7.3
MGS Owner Obligations...................................................................................................
11
7.4
Reactive Power.................................................................................................................
I l
7.4.1 Power Factor Criteria...........................................................................................
11
7.4.2 Voltage Schedules................................................................................................11
7.5
Outages and Interruptions.................................................................................................12
7.5.1 Outages................................................................................................................
12
7.5.2 Interruption of Service.........................................................................................
12
7.5.3 Under -Frequency and Over Frequency Conditions .............................................
13
7.5.4 System Protection and Other Control Requirements ...........................................
13
7.5.5 Requirements for Protection................................................................................
14
7.5.6 Power Quality ......................................................................................................
14
7.6
Switching and Tagging Rules...........................................................................................14
7.7
Purpose of Interconnection Facilities................................................................................
15
7.8
Disturbance Analysis Data Exchange...............................................................................15
ARTICLE 8.
MAINTENANCE...............................................................................................................15
8.1 Vernon Obligations ................................................ ........................ 15
...................................
8.2 MGS Owner Obligations.................................................................................................. 15
8.3 Coordination..................................................................................................................... 15
8.4 Secondary Systems...........................................................................................................15
8.5 Operating and Maintenance Expenses.............................................................................. 15
ARTICLE 9. PERFORMANCE OBLIGATION................................................................................... Is
9.1 MGS Owner's Interconnection Facilities.........................................................................15
9.2 Vernon's Interconnection Facilities.................................................................................. 15
ARTICLE10. INVOICE..........................................................................................................................Is
10.1 General..............................................................................................................................15
10.2 Losses...............................................................................................................................16
10.3 Payment............................................................................................................................ 16
10..3.1 Nonpayment.........................................................................................................16
10.4 Disputes............................................................................................................................ 16
ARTICLE11. EMERGENCIES.............................................................................................................16
11.1
Obligations........................................................................................................................
16
11.2
Notice................................................................................................................................16
11.3
Immediate Action.............................................................................................................
17
11.4
Vernon Authority ..............................................................................................................
17
11.4.1 General 17
11.4.2 Reduction and Disconnection..............................................................................
17
11.5
MGS Owner Authority ....................................................................................................17
11.6
Limited Liability................_.......................................................................:......................
18
ARTICLE 12. REGULATORY REQUIREMENTS AND GOVERNING LAW...............................18
LA\1776718.10
12.1
Regulatory Requirements...................:............................................................................. 18
12.2
Governing Law.................................................................................................................
18
ARTICLE 13. NOTICES.........................................................................................................................18
13.1
General............................................::.....................................:..........................................18
13.2
Billings and Payments......................................................................................................
18
13.3
Alternative Forms of Notice.............................................................................................
18
13.4
Operations and Maintenance Notice.................................................................................
18
ARTICLE 14. FORCE MAJEURE.........................................................................................................19
14.1
Force Majeure...................................................................................................................
19
ARTICLE 15. DEFAULT........................................................................................................................19
15.1
Default..............................................................................................................................
19
15.1.1 General 19
15.1.2 Right to Terminate...............................................................................................19
ARTICLE 16. INDEMNITY, CONSEQUENTIAL DAMAGES AND INSURANCE .......................19
16.1
Indemnity ..........................................................................................................................
19
16.1.1 Indemnified Party .................................................................. .......
. ..................... .
20
16.1.2 Indemnifying Party..............................................................................................
20
16.1.3 Indemnity Procedures..........................................................................................20
16.2
Consequential Damages......................................................................................:.............
20
16.3
Insurance................................................................:..........................................................
21
ARTICLE17. ASSIGNMENT................................................................................................................
21
17.1 Assignment ........................... .......... 21
..................................................................................
i
ARTICLE 18. SEVERABILITY.............................................................................................................21
18.1 Severability.................................................................................................... 21
...................
ARTICLE 19. CONFIDENTIALITY.....................................................................................................
21
19.1 Confidentiality.............................................................: ....................21
.................................
19.1.1 Term................................................................................................................22
19.1.2 Scope............................................:........................................................ ...........22
19.1.3 Release of Confidential Information........:.................:.........................................
22
19.1.4 Rights................................................................................................................22
19.1.5 No Warranties......................................................................................................22
19.1.6 Standard of Care..................................:.......:.......................................................22
19.1.7 Order of Disclosure..............................................................................................
23
19.1.8 Termination of Agreement................................................................................... 23
19.1.9 Remedies..............................................................................................................23
19.1.10 Disclosure to Governmental Authority, its Staff, or a State .................................
23
LA\ 1776718.10
ARTICLE 20. ENVIRONMENTAL RELEASES ..........................................
......... 24
ARTICLE 21. INFORMATION REQUIREMENTS............................................................................ 24
21.1 Information Acquisition.................................................................................................... 24
21.2 Information Submission by Vernon.................................................................................. 24
21.3 Information Supplementation........................................................................................... 24
ARTICLE 22. INFORMATION ACCESS AND AUDIT RIGHTS.....................................................25
22.1 Information Access........................................................................................................... 25
22.2 Reporting of Non -Force Majeure Events..........................................................................25
22.3 Audit Rights ........................
22.4 Audit Rights Periods......................................................................................................... 25
22.5 Audit Results..................................................................................................................... 25
ARTICLE 23. SUBCONTRACTORS..................................................................................................... 25
23.1 General..............................................................................................................................25
23.2 Responsibility of Principal................................................................................................ 26
23.3 No Limitation by Insurance..............................................................................................26
ARTICLE24. DISPUTES........................................................................................................................26
24.1 Submission........................................................................................................................26
24.2 External Arbitration Procedures....................................................................................... 26
24.3 Arbitration Decisions........................................................................................................26
24.4 Costs................................................................................................................................. 27
ARTICLE 25. REPRESENTATIONS, WARRANTIES AND COVENANTS...................................27
25.1 General..............................................................................................................................27
25.1.1 Good Standing..................................................................................................... 27
25.1.2 Authority ..............................................................................................................27
25.1.3 No Conflict.......................................................................................................... 27
25.1.4 Consent and Approval......................................................................................... 27
ARTICLE 26. MISCELLANEOUS........................................................................................................ 27
26.1
Binding Effect...................................................................................................................
27
26.2
Conflicts............................................................................................................................27
26.3
Rules of Interpretation......................................................................................................
27
26.4
Entire Agreement..............................................................................................................28
26.5
No Third Party Beneficiaries............................................................................................
28
26.6
Waiver...............................................................................................................................28
26.7
Headings...........................................................................................................................
28
26.8
Multiple Counterparts.......................................................................................................28
26.9
Amendment.......................................................................................................................28
26.10
Modification by the Parties..............................................................................................
29
26.11
No Partnership..................................................................................................................
29
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4
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I
Appendices................................................................................................................................................. 30
Part A Interconnection Facilities
Part B Addresses for Delivery of Notices and Billings
LA\1776718.10
INTERCONNECTION AND TRANSMISSION SERVICES AGREEMENT
BETWEEN
CITY OF VERNON
AND
BEOWULF (VERNON) POWER LLC
THIS INTERCONNECTION AND TRANSMISSION SERVICES AGREEMENT (this
"ITSA") is made and entered into this 10th day of April, 2008 (the "Effective Date"), by and between
Bicent (California) Malburg LLC, a Delaware limited liability corporation ("MGS Owner'), and the City
of Vernon, a municipal corporation and chartered city duly organized and existing under and by virtue of
the Constitution and the laws of the State of California ("Vernon"). MGS Owner and Vernon each may
be referred to as a "Party" or collectively as the "Parties."
RECITALS
A. Pursuant to that certain Amended and Restated Purchase and Sale Agreement dated
December 13, 2007, as amended by that certain First Amendment to Amended and
Restated Purchase and Sale Agreement dated February 8, 2008 ("PSA"), MGS Owner
intends to acquire, own and operate the 134 MW (nominal) gas fired 2 x 1 combined
cycle generating facility located in Vernon, California known as the Malburg Generating
Station (the "Generating Facility").
B. Vernon and MGS Owner are parties to that certain Lease and Grant of Easements dated
as of the date hereof, as may be amended or extended from time to time ("Lease"), for
certain real property associated with the Generating Facility.
C. Vernon and MGS Owner are parties to a Power Purchase and Tolling Agreement dated as
of the date hereof, as it may be amended from time to time (the "PPTA"), and upon
consummation of Vernon's sale, and MGS Owner's acquisition, of the Generating
Facility, MGS Owner will provide for the sale and delivery of certain products to Vernon
from the Generating Facility.
D. After the PPTA Termination Date, MGS Owner may desire to sell Products to a third
party through the ISO Grid.
E. Vernon operates the Distribution System and has contractual rights to deliver energy to
the ISO Grid at the Receiving Point.
MGS Owner and Vernon have agreed to enter into this ITSA .for the purpose of
interconnecting the Generating Facility with the Distribution System and to set forth the
terms and conditions pursuant to which Vernon will provide firm transmission service to
MGS Owner for the transmission of Products from the Generating Facility to the
Receiving Point after the PPTA Termination Date.
NOW THEREFORE, in consideration of the mutual obligations and undertakings set forth
herein, the parties to this ITSA covenant and agree as follows:
LA\1776718.10
ARTICLE 1. DEFINITIONS
When used in this ITSA with initial capitalization, the following terms shall have the meanings
specified in this Article 1. When used in this ITSA, terms with initial capitalization that are not defined in
this Article 1 shall have the meanings specified in the Article in which they are used.
Affiliate shall mean, with respect to a Person, any other Person that (a) directly.or indirectly
controls the specified Person; or (b) is controlled by or is under direct or indirect common control with the
specified Person. For the purposes of this definition, "control," when used with respect to any specified
Person, means the power to direct the management or policies of the specified Person, directly or
indirectly, whether through the ownership of voting securities, partnership or limited liability company
interests, by contract or otherwise.
Ancillary Services shall have the meaning set forth in the ISO Tariff.
Applicable Laws and Regulations shall mean all duly promulgated and applicable federal, state
and local laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders, pen -nits and other duly authorized and applicable actions of any Governmental
Authority.
Applicable Reliability Council shall mean the Western Electricity Coordinating Council or its
successor.
Applicable Reliability Standards shall mean the requirements and guidelines of NERC, the
Applicable Reliability Council, and the ISO.
Breach shall mean the failure of a Party to perform or observe any material term or condition of
this ITSA.
Breaching Party shall mean a Party that is in Breach of this ITSA.
Business Day shall mean any Calendar Day except a Saturday, Sunday, or legal holiday in the
State of California. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. PPT.
Calendar Day shall mean the period of twenty-four (24) consecutive hours, beginning at 12:00
midnight PPT.
Capacity shall mean the maximum dependable operating capability of a generating resource to
produce or generate Energy or Ancillary Services.
Confidential Information shall mean any confidential, proprietary or trade secret information of
a plan, specification, pattern, procedure, design, device, list, concept, policy or compilation relating to the
present or planned business of a Party, which is designated as confidential by the Party supplying the
information, whether conveyed orally, electronically, in writing, through inspection, or otherwise, subject
to Article 19.1.2.
Default shall mean the failure of a Breaching Party to cure its Breach in accordance with Article
15 of this ITSA.
Distribution System shall mean those non -ISO -controlled transmission and distribution facilities
owned, controlled, and operated by Vernon.
LA\ 1776718.10 2
Emergency Condition shall mean a condition or situation: (1) that, in the judgment of the Party
making the claim, is imminently likely to endanger life or property; (2) that, in the case of Vernon, is
imminently likely (as determined in a non-discriminatory manner) to cause a material adverse effect on
the securityof, or damage to, the Distribution System, Vernon's Interconnection Facilities, or the electric
systems of others to which Vernon's electric system is directly connected; or (3) that, in the case of MGS
Owner, is imminently likely (as determined in a non-discriminatory manner) to cause a material adverse
effect on the security of, or damage to, the Generating Facility or MGS Owner's Interconnection
Facilities. System restoration and black start shall be considered Emergency Conditions; provided, that
MGS Owner is not obligated by this ITSA to possess black start capability.
Energy shall mean three-phase, 60 cycle alternating current electric energy.
Environmental Law shall mean any Governmental Rules relating to or imposing liability or
standards of conduct with respect to the protection of human health, safety or the environment (including
ambient air, soil, surface water, ground water, wetlands, land or subsurface strata), including
Governmental Rules relating to (a) emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment, (b) manufacture, generation, processing, distribution, use, treatment,
storage, disposal, transport `or handling of Hazardous Substances, and (b) human exposure to Hazardous
Substances or conditions, including CERCLA, the Hazardous Materials Transportation Act (49 U.S.C.
§§ 5101 et seq,), the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.),
the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Oil Pollution Act (33 U.S.C. §§ 2701 et
seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Emergency Planning and
Community Right -to -Know Act (42 U.S.C. §§ 11001 et seq.), the Endangered Species Act (16 U.S.C:
§§ 1531 et seq.), the Porter -Cologne Water Quality Control Act (Cal. Water Code §§ 13000 et seq.), the
Safe Drinking. Water and Toxic Enforcement Act of.1986 (Cal. Health & Safety Code §§ 25249.5 et seq.),
the Hazardous Substance Account Act (Cal Health & Safety Code §§ 25300 et seq.), the Hazardous
Waste Control Act (Cal. Health & Safety Code §§ 25100 et seq_), the California Clean Air Act (Cal.
Health & Safety Code §§ 39000 et seq.), the California Endangered Species Act (Cal. Fish & Game Code
§§ 2050 et seq.), the Warren-Alquist Act (Cal. Public Resources Code §§ 25410 et seq.) and the
California Native Plant Protection Act (Cal. Fish & Game Code §§ 1900 et seq.).
Federal Power Act shall mean the. Federal Power Act, as amended, 16 U.S.C. §§ 791 a et seq
FERC shall mean the Federal Energy Regulatory Commission or its successor.
Force Majeure shall mean any act of God, labor disturbance, act of the public enemy, war,
insurrection, riot, fire, storm or flood, explosion, breakage or accident to machinery or equipment, any
order, regulation or restriction imposed by governmental, military or lawfully established civilian
authorities, or any other cause beyond a Parry's control. A Force Majeure event does not include acts of
negligence or intentional wrongdoing by the Party claiming Force Majeure.
Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved
by a significant portion of the electric utility industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at
the time the decision was made, could have been expected to accomplish the desired result at a reasonable
cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is
not intended to be any one of a number of the optimum practices, methods, or acts to the exclusion of all
others, but rather to be acceptable practices, methods, or acts generally accepted in the region.
LA\1776718.10
Governmental Authority shall mean any federal, state, local or other governmental, regulatory
or administrative agency, court, commission, department, board, or other governmental subdivision,
legislature, rulemaking board, tribunal, or other governmental authority having jurisdiction over the
Parties, their respective facilities, or the respective services they provide, and exercising or entitled to
exercise any administrative, executive, police, or taxing authority or power.
Governmental_ Rules shall mean all applicable laws (including the common law), statutes,
treaties, rules, regulations, ordinances, codes,, judgments, enactments, decrees, injunctions, writs and
orders, decisions, directives, and agreements, authorizations or other restrictions of or enacted by any
Governmental Authority, or any binding interpretation or administration of any of the foregoing.
Hazardous Substances shall mean collectively, (a) any chemical, material or substance that is
listed or regulated under applicable. Governmental Rules as a "hazardous" or "toxic" substance or waste,
or as a "contaminant" or "pollutant" or words of similar import, (b) any petroleum or petroleum products,
flammable materials, explosives, radioactive materials, asbestos, urea formaldehyde foam insulation, and
transformers or other equipment that contain polychlorinated biphenyls and (c) any other chemical or
other material or substance, exposure to which is prohibited, limited or regulated by any Governmental
Rules, including but not limited to Environmental Laws.
f'- Interconnection Facilities shall mean Vernon's Interconnection Facilities and MGS Owner's
Interconnection Facilities. Collectively, Interconnection Facilities include all facilities and equipment
between the Generating Facility and the Point of Interconnection, including any modification, additions or
upgrades that are necessary to physically and electrically interconnect the Generating Facility to the
Distribution System.
Interconnection Service shall mean the service provided by Vernon associated with
interconnecting MGS Owner's Generating Facility to the Distribution System and enabling it to receive
electric energy and capacity from the Generating Facility at the Point of Interconnection, pursuant to the
terms of this ITSA.
ISO shall mean the California Independent System Operator Corporation, a state -chartered, not -
for -profit corporation that controls certain transmission facilities of all Participating Transmission Owners
(as defined in the ISO Tariff) and dispatches certain generating units and loads.
ISO Grid shall mean the system of transmission lines and associated facilities of the parties of
the, parties to the Transmission Control Agreement that have been placed under the ISO's Operational
Control.
ISO Tariff shall mean the California Independent System Operator Corporation Operating
Agreement and Tariff, as filed with FERC, and as amended or supplemented from time to time, or any
successor tariff.
Laguna Bell shall mean the 230/66/16 kV substation owned by Southern. California Edison
Company located at the intersection of Gage and Garfield Avenues in the City of Commerce, California.
Laguna Bell Agreement shall mean that certain Laguna Bell — Vernon Interconnection Service
Agreement, dated as September 16, 1997, by and between Southern California Edison Company and the
City of Vernon, as may be amended or supplemented at any time.
Lease Effective Date shall mean the Effective Date, as such term is defined in the Lease.
4
LA\1776718.10
Lease Termination Date shall mean the Termination Date, as such term is defined in the Lease.
Loss shall mean any and all damages, losses, and claims, including claims and actions relating to
injury to or death of any person or damage to property, demand; suits, recoveries, costs and expenses,
court costs, attorney fees, and all other obligations by or to third parties.
Metering Equipment shall mean all metering equipment installed or to be installed for
measuring the output of the Generating Facility pursuant ;to -this ITSA at the metering' points, including
but not limited to instrument transformers, MWh-meters, data acquisition equipment, transducers, remote'
terminal unit, communications equipment, phone lines, and fiber optics.
MGS Owner'sInterconnection Facilities shall mean all facilities and equipment, as identified
in Appendix A of the ITSA, that are located between the Generating Facility and the Point of Change of
Ownership, including any modification, addition, or upgrades to such facilities and equipment necessary
to physically and electrically interconnect the Generating Facility to the Distribution System. MGS
Owner's Interconnection Facilities are sole use facilities.
NERC shall mean the North American Electric Reliability Council or its successor organization.
NGP shall mean any limited partnership, limited liability company or other Person for which
NGP Energy Capital Management or any other fund management company that is a successor.to, an
Affiliate of, or under common control with NGP Energy Capital Management acts as investment
manager.
NGP Energy Capital Management shall mean NGP Energy Capital Management, L.L.C., a
Texas limited liability company.
Operational Control shall mean the rights of the ISO under the Transmission Control
Agreement and the ISO Tariff to direct how the parties to the Transmission Control Agreement operate
their transmission lines and facilities and other electric plant affecting the reliability of those lines and
facilities for the purpose of affording comparable non-discriminatory transmission access and meeting
applicable reliability criteria.
Party or Parties shall mean Vernon and/or MGS Owner.
Person shall mean an individual, partnership, joint venture, corporation, limited liability
company, trust, association or unincorporated organization, or any Governmental Authority.
Point of Change of Ownership shall mean the point between the high side of the transformer
and Vernon's air -breaker, as set forth in Part A to this ITSA, where' MGS Owner's Interconnection
Facilities connect to Vernon's Interconnection Facilities.
Point of Interconnection shall mean the point, as set forth in Part A to this ITSA, where the
Interconnection Facilities connect to the Distribution System.
PPTA Termination Date shall mean the date on which the PPTA expires or terminates.
PPT shall mean Pacific Standard Time or Pacific Daylight Time, whichever is in effect on the
relevant date.
Product(s) shall mean Energy and/or Ancillary Services.
LA\1776718.10 5
Reasonable Efforts shall mean, with respect to an action required to be attempted or taken by a
Party under this ITSA, efforts that are timely and consistent with Good Utility Practice and are otherwise
substantially equivalent to those a Party would use to protect its own interests.
Receiving Point shall mean the 220 kV bus at Southern California Edison Company's Laguna
Bell substation.
Station Power shall have the meaning set forth in the ISO Tariff.
System Protection Facilities shall mean the equipment, including necessary protection signal
communications equipment, that protects (1) the Distribution System and ISO Grid from faults or other
electrical disturbances occurring at the Generating Facility and.(2) the Generating Facility from faults or
other electrical system disturbances occurring on the ISO Grid and the Distribution System or on other
delivery systems or other generating systems to which the Distribution System is directly connected.
Transmission Control Agreement shall mean ISO FERC Electric Tariff No. 7.
Vernon's Interconnection Facilities shall mean all facilities and equipment owned, controlled or
operated by Vernon from the Point of Change of Ownership to the Point of Interconnection as identified
in Part A to this ITSA, including any modifications, additions or upgrades to such facilities and
equipment. Vernon's Interconnection Facilities are sole use facilities.
ARTICLE 2. EFFECTIVE DATE, TERM AND TERMINATION
2.1 Effective Date. This ITSA shall become effective upon the Lease Effective Date.
2.2 Term of Agreement. Subject to the provisions of Article 2.3, this ITSA shall remain in effect
during the term of the Lease, and shall terminate without any further notice upon the Lease
Termination Date, or otherwise by mutual agreement of the Parties.
2.3 Termination Procedures.
2.3.1 Written Notice. This ITSA may be terminated by MGS Owner after giving Vernon
ninety (90) Calendar Days advance written notice, or after the Generating Facility
permanently ceases generating electricity, by Vernon after giving MGS Owner ninety
(90) Calendar Days advance written notice.
2.3.2 Default. A Party may terminate this ITSA in accordance with Article 15.
2.4 Termination Costs. If this ITSA terminates pursuant to Article 2.3 above, MGS Owner shall
pay all costs incurred or irrevocably committed to be incurred in association with MGS Owner's
interconnection and other expenses as of the date of the other Parties' receipt of the notice of
termination, subject to the limitations set forth in this Article 2.4. Nothing in this Article 2.4 shall
limit the Parties' rights under Article 15.
2.4.1 Notwithstanding the foregoing, in the event of termination by a Party, all Parties shall use
commercially Reasonable Efforts to mitigate the costs, damages and charges arising as a
consequence of termination.
LA\1776718.10
L
6
2.4.2 Vernon may, at its option, retain any portion of materials,equipment, or facilities that
MGS Owner chooses not to accept delivery of, in which case Vernon shall be responsible
for all costs associated with procuring such materials; equipment, or facilities.
2.4.3 MGS Owner shall be responsible for all costs associated with the removal, relocation or
other disposition or retirement of materials, equipment, or facilities.
2.5 Disconnection. Upon termination of this ITSA, the Parties will take all appropriate steps to
disconnect the Generating Facility from the Distribution System. All costs required to effectuate
such disconnection shall be bome by the terminating Party, unless such termination resulted from
the non -terminating Party's Default of this ITSA or such 'non -terminating Party otherwise is
responsible for these costs under this ITSA. -
2.6 Survival. This ITSA shall continue in effect after termination to the extent necessary to provide
for final billings and payments and for costs incurred hereunder, including billings and payments
pursuant to this ITSA; to permit the determination and enforcement of liability and
indemnification obligations arising from acts or events that occurred while this ITSA was in
effect; and to permit each Party to have access to the lands of the other Parties pursuant to this
ITSA or other applicable agreements, to disconnect, remove or salvage its own facilities and
equipment.
ARTICLE 3. SCOPE OF SERVICE
3.1 Interconnection Service. Vernon shall provide at the Point of Interconnection, Interconnection
Service to enable MGS Owner to connect the Generating Facility to the Distribution System and
be eligible to deliver the Generating Facility's output using the available capacity of the
Distribution System' thereto.
Interconnection Service does not necessarily provide MGS Owner with the capability to
physically deliver the output of its Generating Facility to any particular load on the Distribution
System or the ISO Grid without incurring congestion costs. In the event of transmission
constraints on the Distribution System or the ISO Grid, MGS Owner's Generating Facility shall
be subject to the applicable congestion management procedures with respect to the Distribution
System or in the ISO Tariff in the same manner as all other resources. The MGS Owner shall be
solely responsible for completing' all of the necessary arrangements required under the ISO Tariff
to be eligible to schedule the output of its resource.
3.2 Commencement of Interconnection Service. Interconnection Service under this Agreement
shall commence on the Effective Date, and shall continue throughout the term of this Agreement.
3.3 Performance Standards. ' Each Party shall perform all of its obligations under this ITSA in
accordance with Applicable Laws and Regulations, Applicable Reliability Standards, and Good
Utility Practice, and to the extent a Party is required or prevented or limited in taking any action
by such regulations and standards, such Party shall not be deemed to be in Breach of this ITSA
for its compliance therewith.
3.4 Transmission Service. After the PPTA Termination Date, Vernon shall, in accordance with
Good Utility Practice, any ISO agreements and the Laguna. Bell Agreement, provide firm
wholesale transmission services for Products as adjusted for losses, in accordance with Article
10.2, from the Generating Facility to the Receiving Point subject to the provisions of this ITSA at
7
LAU 776718.10
the rate specified in Article 3.4.1 (the "Rate"). Products shall be delivered to the Receiving Point
at voltages to be agreed to by Vernon and MGS Owner.
3.4.1 Rate for Service. Vernon shall set the Rate to equal a reasonable approximation of
Vernon's costs to transmit Products on behalf of MGS Owner to the Receiving Point.
Vernon's first invoice to MGS Owner shall contain a statement setting forth in reasonable
detail the basis for Vernon's calculation of .the Rate. From time to time, Vernon shall
have the right, in its reasonable discretion, to revise the Rate. The first invoice sent to
MGS Owner reflecting the revised Rate shall contain a statement setting forth in
reasonable detail the basis for Vernon's calculation of the Rate. In the event that MGS
Owner disputes Vernon's calculation of the Rate, MGS Owner shall resolve such dispute
using the procedures set forth in Article 24.
3.4.2 Modification of Service. Vernon's obligation to provide MGS Owner with transmission
services after the PPTA Termination Date as described in Article 3.4 is subordinate to
and subject to Vernon's obligations to serve its own retail customers, its obligations to its
firm wholesale and transmission customers under agreements entered into prior to the
date of this ITSA, its obligations under any ISO agreements and its obligations under all
Applicable Laws and Regulation and Applicable Reliability Standards, all as may be
amended from time to time. Vernon shall have the right, in its sole discretion, to modify
the level of service under agreements entered into prior to the date of this ITSA, provided
that Vernon's ability to provide MGS Owner with the level of transmission services
described in this ITSA is not reduced in any way. In addition, Vernon shall have the
right in its sole discretion to take such actions, including curtailment of services to MGS
Owner under this ITSA prior to the implementation of voltage reduction, or any other
actions necessary to maintain reliable electric service in accordance with Vernon's
operating policies and Good Utility Practice. In the event of such curtailment Vernon
shall not beheld liable for any losses or damages that MGS Owner may incur as a result;
provided such curtailment shall continue only for so long as it is reasonably necessary
under Vernon's operating policies and Good Utility Practice.
3.4.3 Daily Schedules. The daily schedules of Products to be transmitted under this ITSA will
be supplied by MGS Owner to Vernon scheduling personnel no later than 08:00 PPT for
each hour of the time period commencing on the next Calendar Day and extending
through and including the next Business Day ("Output Schedule").
3.4.4 Output. MGS Owner shall make commercially reasonable efforts to match the Output
Schedule provided to Vernon. If for any hour there is a difference between the actual
output of the Generating Facility and the Output Schedule, MGS Owner will be
responsible for making the appropriate adjustments in like hours within the next
succeeding five (5) Calendar Days to balance the. output to compensate for any
deficiencies or excesses which occurred in previous hours. If for any hour the actual
output of the Generating Facility deviates from the scheduled output by greater than plus
or minus two percent (2%), Vernon reserves the right to unilaterally adjust MGS Owner's
schedule to accommodate such deviation.
3.5 Station Power. Prior to and including the PPTA Termination Date, Vernon shall provide Station
Power to MGS Owner's Generating Facility at no additional cost.
3.6 MGS Owner. Provided Services. The services provided by MGS Owner under this ITSA are set
forth in Article 7.4.
LA\1776718.10
8
H
ARTICLE 4. TESTING AND INSPECTION
4.1 Testing and Modifications. Each Party shall at its own expense perform routine inspection and
testing of its facilities and equipment in accordance with Good Utility Practice as may be
necessary to 'ensure the continued interconnection of the Generating Facility with the Distribution
System in a safe and reliable manner. Each Party shall have the right, upon advance written
notice, to require reasonable additional testing of the other Party's facilities, at the requesting
Party's expense, as may be in accordance with Good Utility Practice.
4.2 Right to Observe Testing. Each Party shall notify the other Parties at least fourteen (14) days in
advance of its performance of tests of its Interconnection Facilities or Generating Facility. The
other Parties have the right, at their own expense, to observe such testing.
4.3 Right to Inspect. Each Party shall have the right, but shall have no obligation to: (i) observe
another Party's tests and/or inspection of any of its System Protection Facilities and other
protective equipment, including Power System Stabilizers; (ii) review the settings of another
Party's System Protection Facilitiesand other protective equipment; and (iii) review another
Party's maintenance records relative to the Interconnection Facilities, the System Protection
Facilities and other protective equipment. A Party may exercise these rights from time to time as
it deems necessary upon reasonable notice to the other Party. The exercise or non -exercise by a
Party of any such rights shall not be construed as an endorsement or confirmation of any element
or condition of the Interconnection "Facilities or the System Protection Facilities or other
protective equipment or the operation thereof, or as a warranty as to the fitness, safety,
desirability, or reliability of same. Any information that a Party obtains through the exercise of
any of its rights under this Article 4.3 shall be deemed to be Confidential Information and treated
pursuant to Article 19 of this ITSA.
ARTICLE 5. METERING
5.1 General. Each Party shall comply with the Applicable Reliability Council requirements. MGS
Owner shall comply with the provisions of the ISO Tariff regarding metering, including Section
10 and the Metering Protocol of the ISO Tariff. Unless otherwise agreed by the Parties, Vernon
may install additional Metering Equipment at the Point of Interconnection prior to any operation
of the Generating Facility by MGS Owner and shall own, operate, test and maintain such
Metering Equipment. Power flows to and from the Generating Facility shall be measured at or, at
Vernon's option for its respective Metering Equipment, compensated to, the Point of
Interconnection. MGS Owner's access to meter data shall be provided in accordance with the
ISO Tariff. MGS Owner shall bear all reasonable documented costs associated with the purchase,
installation, operation, testing and maintenance of the Metering Equipment.
5.2 Check Meters. MGS Owner, at its option and expense, may install and operate, on its premises
and on its side of the Point of Interconnection, one or more check meters to check the ISO -polled
meters or Vernon's meters. Such check meters shall be for check purposes only and shall not be
used for the measurement of power flows for purposes of this ITSA, except in the case that no
other means are available on a temporary basis at the option of Vernon. The check meters shall
be subject at all reasonable times to inspection and examination by Vernon or its designees. The
installation, operation and maintenance thereof shall be performed entirely by MGS Owner in
accordance with Good Utility Practice.
5.3 Vernon Retail Metering. Vernon may install retail revenue quality meters and associated
equipment, pursuant to Vernon's applicable retail tariffs.
LAU 776718.10
5.4 Products. The transmission of MGS Owner's Products by Vernon after the PPTA Termination
Date pursuant. to the terms and conditions of this ITSA shall be measured by the Generating
Facility's Metering Equipment and the ISO's metering equipment.
5.5 Adjustments. If a meter fails to register, or if the measurement made by a meter is found to be
inaccurate, then an adjustment shall be made correcting all measurements made by the inaccurate
or defective meter for (a) the actual period during which inaccurate measurements were made, if
that period can be determined to the satisfaction of the parties; or (b):if the actual period cannot
be determined to the mutual satisfaction of the parties, one-half of the period from the date of the
last previous test of the meter. Any revisions to scheduled deliveries to MGS Owner necessitated
by correcting adjustments shall be made as soon as possible but no later than the twenty-fifth
(25th) day of the month following the month in which the failure or inaccuracy is identified.
MGS Owner may elect to install its own Metering Equipment in addition to Vernon's Metering
Equipment. Such metering equipment shall meet the requirements of the ISO. Should any
Metering Equipment installed by Vernon fail to register during the term of this ITSA, the parties
shall use MGS Owner's Metering Equipment, if ,installed, to determine the amount of the
Products delivered to Vernon. On any Calendar 'Day in which, neither Vernon's nor MGS
Owner's Metering Equipment is in service, the Products delivered shall be determined in such
manner as the parties shall agree.
ARTICLE 6. COMMUNICATIONS
6.1 MGS Owner Obligations. MGS Owner shall maintain satisfactory operating communications
with Vernon's dispatcher or representative designated by Vernon. MGS Owner shall provide
standard voice line, dedicated voice line and facsimile communications at its Generating Facility
control room or central dispatch facility through use of either the public telephone system, or a
voice communications system that does not rely on the public telephone system. MGS Owner
shall also provide the dedicated data circuit(s) necessary to provide MGS Owner data to Vernon.
The data circuit(s) shall extend from the Generating Facility to the location(s) specified by
Vernon. Any required maintenance of such communications equipment shall be performed by
MGS Owner. Operational communications shall be activated and maintained under, but not be
limited to, the following events: system paralleling or separation, scheduled and unscheduled
shutdowns, equipment clearances, and hourly and daily, load data.
6.2 Remote Terminal Unit. Prior to the Effective Date of the Generating facility, a Remote
Terminal Unit, or equivalent data collection and transfer equipment acceptable to the Parties,
shall be installed by MGS Owner, or by Vernon at MGS Owner's expense, to gather accumulated
and instantaneous data to be telemetered to the location(s) designated by the ISO and by Vernon
through use of a dedicated point-to-point data circuit(s) as indicated in Article 6.1. The
communication protocol for the data circuits(s) shall be specified by Vernon. Instantaneous bi-
directional real power and reactive power flow and any other required information must be
telemetered directly to the location(s) specified by Vernon.
Each Party will promptly advise the other Parties if it detects or otherwise learns of any metering,
telemetry or communications equipment errors or malfunctions that require the attention and/or
correction by another Party. The. Party owning such equipment shall correct such error or
malfunction as soon as reasonably feasible.
6.3 No Annexation. Any and all equipment placed on the premises of a Party shall be and remain
the property of the Party providing such equipment regardless of the mode and manner of
annexation or attachment to real property, unless otherwise mutually agreed by the Parties.
LA\1776718.10
H
10
ARTICLE 7. OPERATIONS
7.1 General. Each Party shall comply with the Applicable Reliability Council requirements. Each
Party shall provide to the other Party all information that may reasonably be required by the other
Party to comply with Applicable Laws and Regulations and Applicable Reliability Standards.
7.2 Vernon Obligations. Vernon shall cause its Distribution System to be operated and controlled in
a safe and reliable manner and in accordance with this ITSA. Vernon at MGS Owner's expense
shall cause Vernon's Interconnection Facilities to be operated, maintained and controlled in a safe
and reliable manner and in accordance with this ITSA. Vernon may provide operating
instructions to MGS Owner consistent with this ITSA and Vernon's operating protocols and
procedures as they may change from time to time. Vernon will consider changes to its operating
protocols and procedures proposed by MGS Owner.
7.3 MGS Owner Obligations. MGS Owner shall at its own expense operate, maintain and control
the Generating Facility and MGS Owner's Interconnection Facilities in a safe and reliable manner
and in accordance with this ITSA. MGS Owner shall operate the Generating Facility and MGS
Owner's Interconnection Facilities in accordance with all applicable requirements of the ISO and
Applicable Reliability Standards.
7.4 Reactive Power.
7.4.1 " Power Factor Criteria. MGS Owner's Generating Facility shall maintain a composite
power delivery at continuous rated power output at the terminals of the Generating
Facility at apower factor within the range of 0.95 leading to 0.90 lagging.
7.4.2 Voltage Schedules. Vernon shall require MGS Owner to maintain a voltage schedule by
operating the Generating Facility to produce or absorb reactive power within the design
limitations of the Generating Facility set forth in Article 7.4.1 (Power Factor Criteria).
Vernon's voltage schedules shall treat all sources of reactive power in the Distribution
System in an equitable and not unduly discriminatory manner. Vernon shall exercise
Reasonable Effoi-ts to provide MGS Owner with such schedules at least one (1) day in
advance,. and Vernon may make changes to such schedules as necessary to maintain the
reliability of the Distribution System. MGS Owner shall operate the Generating Facility
to maintain the specified output voltage or power factor within the design limitations of
the Generating Facility set forth in Article 7.4.1 (Power Factor Criteria). If MGS Owner
is unable to maintain the specified voltage or power factor, it shall promptly notify
Vernon.
7.4.2.1 Governors and Regulators. Whenever the Generating Facility is operated
in parallel with the Distribution System and the speed governors (if installed
on the Generating Facility pursuant to Good Utility Practice) and voltage
regulators are capable of operation, MGS Owner shall operate the Generating
Facility with its speed governors and voltage regulators in automatic
operation. If the Generating Facility's speed governors and voltage
regulators are not capable of such automatic operation, MGS Owner shall
immediately notify Vernon and ensure that the Generating Facility operates
as specified in Article 7.4.2 through manual operation and that the
Generating Facility's reactive power production or absorption (measured in
MVARs) are within the design capability of the Generating Facility and
steady state stability limits. MGS Owner shall restore the speed governors
11
LAU 776718.10
7.5
and voltage regulators to automatic operation as soon as possible. MGS
Owner shall not cause its Generating Facility to disconnect automatically or
instantaneously from the Distribution System or trip the Generating Facility
for an under or over frequency condition unless the abnormal frequency
condition persists for a time period beyond the limits set forth in ANSI/IEEE
Standard C37.106.
Outages and Interruptions.
7.5.1 Outages.
7.5.2
LA\1776718.10
7.5.1.1 Outage Authority and Coordination. Each Party may in accordance with
Good Utility Practice in coordination with the other Parties remove from
service any of its respective Interconnection Facilities that may impact
another Party's facilities as necessary to perform maintenance or testing or to
install or replace equipment. Absentan Emergency Condition, the Party
scheduling a removal of such facility(ies) from service will use Reasonable
Efforts to schedule such removal on a date and time mutually acceptable to
all Parties. In all circumstances any Party planning to remove such
facility(ies) from service shall use Reasonable Efforts to minimize the effect
on the other Parties of such removal.
7.5.1.2 Outage Schedules. MGS Owner shall submit its planned maintenance
schedules for the Generating Facility to Vernon for a minimum of a rolling
twenty-four month .period. MGS Owner shall update its planned
maintenance schedules as necessary. Vernon may request MGS Owner to
reschedule its maintenance as necessary to maintain the reliability of. the
Distribution System. Vernon shall compensate MGS Owner for any
additional direct costs that MGS Owner incurs as a result of having to
reschedule maintenance. MGS Owner will not be eligible to receive
compensation, if during the twelve (42) months prior to the date of the
scheduled maintenance, MGS Owner had modified its schedule of
maintenance activities. Vernon shall have no obligation to pay MGS Owner
any costs MGS Owner incurs as a result of being directed by the ISO to
reschedule maintenance.
7.5.1.3 Outage Restoration. If an outage on a Party's Interconnection Facilities
adversely affects another Party's operations or facilities, the Party that owns
or controls the facility that is out of service shall use Reasonable Efforts to
promptly restore such facility(ies) to a normal operating condition consistent
with the nature of the outage. The Party that owns or controls the facility
that is outof service shall provide the other Parties, to the extent such
information is known, information on the nature of the Emergency
Condition, :if the outage is caused by an Emergency Condition, an estimated
time of restoration, and any corrective actions required. Initial verbal notice
shall be followed up as soon as practicable with written notice explaining the
nature of the outage, if requested by a Party, which may be provided by e-
mail or facsimile.
Interruption of Service. If required by Good Utility Practice to do so, Vernon may
require MGS Owner to interrupt or reduce deliveries of electricity if such delivery of
electricity could adversely affect Vernon's ability to perform such activities as are
necessary to safely and reliably operate and maintain the Distribution System. The
12
following provisions shall apply to any interruption or reduction permitted under this
Article 7.5.2:
7.5.2.1 ; The interruption or reduction shall continue only for so long as reasonably
necessary under Good Utility Practice;
7.5.2.2 Any such interruption or reduction shall be made on an equitable, non-
discriminatory basis with respect to all generating facilities directly
connected to the Distribution System;
7.5.2.3 When the interruption or reduction must be made under circumstances which
do not allow for advance notice, Vernon shall notify MGS Owner by
telephone as soon as practicable of the reasons for the curtailment,
interruption, or reduction, and, if known, its expected duration. Telephone
notification shall be followed by written notification, if requested by MGS
Owner, as soon as practicable;
7.5.2.4 Except during the existence of an Emergency Condition, Vernon shall notify
MGS Owner in advance regarding the timing of such interruption or
reduction and further notify MGS Owner of the expected duration. Vernon
shall coordinate with MGS Owner using Good Utility Practice to schedule
the interruption or reduction during periods of least impact to MGS Owner
and Vernon;
7.5.2.5 The Parties shall cooperate and coordinate with each other to the extent
necessary in order to restore the Generating Facility, Interconnection
Facilities, and the Distribution System to their normal operating state,
consistent with system conditions and Good Utility Practice.
7.5.3 Under -Frequency and Over Frequency Conditions. MGS Owner shall implement
under -frequency and over -frequency protection set points for the Generating Facility as
required by the Applicable Reliability Council to ensure "ride through" capability.
Generating Facility response to frequency deviations of pre -determined magnitudes, both
under -frequency and over -frequency deviations, shall be studied and coordinated with
Vernon in accordance with Good Utility Practice. The term "ride through" as used herein
shall mean the ability of a Generating Facility to stay connected to and synchronized with
the Distribution System during system disturbances within a range of under -frequency
and over -frequency conditions, in accordance with Good Utility Practice.
7.5.4 System Protection and Other Control Requirements.
7.5.4.1 System Protection Facilities. MGS Owner shall, at its expense, install,
operate and maintain System Protection Facilities as a part of the Generating
Facility or MGS Owner's Interconnection Facilities. Vernon shall install at
MGS Owner's expense any System Protection Facilities that may be required
on Vernon's Interconnection Facilities or the Distribution System as a result
of the interconnection of the Generating Facility and MGS Owner's
Interconnection Facilities.
7.5.4.2 Vernon's and MGS Owner's protection facilities shall be designed and
coordinated with other systems in accordance with Applicable Reliability
Council criteria and Good Utility Practice.
7.5.4.3 Vernon and MGS Owner shall each be responsible for protection of its
facilities consistent with Good Utility Practice.
13
LAV 776718.10
7.5.5
7.5.4.4 Vernon's and MGS Owner's, protective relay design shall incorporate the
necessary test switches to perform the tests required in Article 6. The
required test switches will be placed. such that they allow operation of
lockout relays while preventing breaker failure schemes from operating and
causing unnecessary breaker operations and/or the tripping of MGS Owner's
Generating Facility.
7.5.4.5 Vernon and MGS Owner will test, operate and maintain System Protection
Facilities in accordance with Good Utility Practice.
7.5.4.6 Prior to the in-service date, Vernon and MGS Owner or their agents shall
perform a complete calibration test and functional trip test of the System
Protection Facilities. At intervals suggested by Good Utility Practice, the
standards and procedures of Vernon, and following any apparent malfunction
of the System Protection Facilities, each Party shall perform both calibration
and functional trip tests of its System Protection Facilities. These tests do
not require the tripping of any.in-service generation unit. These tests do,
however, require that all protective relays and lockout contacts be activated.
Requirements for Protection. In compliance with Good Utility Practice, MGS Owner
shall provide, install, own, and maintain relays, circuit breakers and all other devices
necessary to remove any fault contribution of the Generating Facility to any short circuit
occurring on the Distribution System not otherwise isolated by Vernon's equipment, such
that the removal of the fault contribution shall be coordinated with the protective
requirements of the Distribution System. Such protective equipment shall include,
without limitation, a disconnecting device with fault current -interrupting capability
located between the Generating Facility and the Distribution System at a site selected
upon mutual agreement (not to be unreasonably withheld, conditioned or delayed) of the
Parties. MGS Owner shall be responsible for protection of the Generating Facility and
MGS Owner's other equipment from such conditions as negative sequence currents,
over- or under -frequency, sudden load rejection, over- or under -voltage, and generator
loss -of -field. MGS Owner shall be solely responsible to disconnect the Generating
Facility and MGS Owner's other equipment if conditions on the Distribution System
could adversely affect the Generating Facility.
7.5.6 Power Quality. Neither Vernon's nor MGS Owner's facilities shall cause excessive
voltage flicker nor introduce excessive distortion to the sinusoidal voltage or current
waves as defined by ANSI Standard C84.1-1989, in accordance with IEEE Standard 519,
any applicable superseding electric industry standard, or any alternative Applicable
Reliability Council standard. In the event of a conflict between ANSI Standard C84.1-
1989, any applicable superseding electric industry standard, or any alternative Applicable
Reliability Council standard, the alternative Applicable Reliability Council standard shall
control.
7.6 Switching and Tagging Rules. Each Party shall provide the other Parties a copy of its switching
and tagging rules that are applicable to the other Parties' activities. Such switching and tagging
rules shall be developed on a non-discriminatory basis. The Parties shall comply with applicable
switching and tagging rules, as amended from time to time, in obtaining clearances for work or
for switching operations on equipment.
k4
LA\ 1776718.10 14
7.7 Purpose of Interconnection, Facilities. Except as may be required by Applicable Laws and
Regulations, or as otherwise agreed to among the Parties, the Interconnection Facilities shall be
used for the sole purpose of interconnecting the Generating Facility to the Distribution System.
7.8 Disturbance Analysis Data Exchange. The Parties will cooperate with one another in the
analysis of disturbances to either the Generating Facility or the Distribution System by gathering
and providing access to any information relating to any disturbance, including information from
oscillography, protective relay, targets, breaker operations and sequence of events records, and
any disturbance information required by Good Utility Practice.
ARTICLE 8. MAINTENANCE
8.1 Vernon Obligations. Vernon shall maintain the Distribution System and Vernon's
Interconnection Facilities in a safe and reliable manner and in accordance with this ITSA.
8.2 MGS Owner Obligations. MGS Owner shall maintain the Generating Facility and MGS
Owner's Interconnection Facilities in a safe and reliable manner and in accordance with this
ITSA.
8.3 Coordination. The Parties shall confer regularly to coordinate the planning, scheduling and
performance of preventive and corrective maintenance on the Generating Facility and the
Interconnection Facilities.
8.4 Secondary Systems. The Parties shall cooperate in the inspection, maintenance, and testing of
control or power circuits that operate below 600 volts, AC or DC, including, but not limited to,
any hardware, control or protective devices, cables, conductors, electric raceways, secondary
equipment panels, transducers, batteries, chargers, and voltage and current transformers that
directly affect the operation of a Parry's facilities and equipment which may reasonably be
expected to impact the other Parties. Each Party shall provide advance notice to the other Parties
before undertaking any work on such circuits, especially on electrical circuits involving circuit
breaker `trip and close contacts, current transformers, or potential transformers.
8.5 Operating and Maintenance Expenses. MGS Owner shall be responsible for all reasonable
expenses including overheads, associated with: (1) owning, operating, maintaining, repairing, and
replacing MGS Owner's Interconnection Facilities; and (2) operation, maintenance, repair and
replacement of Vernon's Interconnection Facilities.
ARTICLE 9. PERFORMANCE OBLIGATION
9.1 MGS Owner's Interconnection Facilities. MGS Owner shall own and/or' control MGS
Owner's Interconnection Facilities described in Part A at its sole expense.
9.2 Vernon's Interconnection Facilities. Vernon shall own and/or control Vernon's
Interconnection Facilities described in Part A at the sole expense of MGS Owner.
ARTICLE 10. INVOICE
10.1 General. Each Party shall submit to the other Party, on a monthly basis, invoices of amounts due
pursuant to this ITSA for the preceding month. Each invoice shall state the month to which the
invoice applies and fully describe the services and equipment provided. The Parties may
discharge mutual debts and payment obligations due and owing to each other on the same date
15
LAN 1776718.10
through netting, in which case all amounts a Party owes to the other Party under this ITSA,
including interest payments or credits, shall be netted so that only the net amount remaining due
shall be paid by the owing Party.
10.2 Losses. MGS Owner shall compensate Vernon for losses incurred by Vernon in its control area
as a result of Vernon's provision of transmission services hereunder. The determination of such
losses and the procedure for compensation thereof shall be determined by the Engineering
Division of Vernon's Light & Power Department in accordance with Vernon's practices relating
to other similar transactions and in accordance with Good Utility Practice.
10.3 Payment. Invoices shall be rendered to the paying Party at the address specified in Part B. The
Party receiving the invoice shall pay the invoice within thirty (30) Calendar Days of receipt. All
payments shall be made in immediately available funds payable to the other Party, or by wire
transfer to a bank named and account designated by the invoicing Party. Payment of invoices by
any Party will not constitute a waiver of any rights or claims any Party may have under this
ITSA.
10.3.1 Nonpayment. Except as otherwise provided in Article 10.4, if any amount billed MGS
Owner by Vernon remains unpaid for a period of sixty (60) days or more after the date
due under this ITSA, Vernon shall have the right upon no less than thirty (30) days' prior
written notice to MGS Owner to discontinue providing service to MGS Owner for
nonpayment of bills and to refuse to resume provision of service so long as any part of
the amount due, including interest, remains unpaid.
10.4 Disputes. In the event of a billing dispute between the Parties, Vernon shall continue to provide
Interconnection Service under this ITSA as long as MGS Owner: (i) continues to make all
payments not in dispute; and (ii) pays to Vernon or into an independent escrow account the
portion of the invoice in dispute, pending resolution of such dispute. If MGS Owner fails to meet
these two requirements for continuation of service, then Vernon may provide notice to MGS
Owner of a Default pursuant to Article 15. Within thirty (30) Calendar Days after the resolution
of the dispute, the Party that owes money to the other Party shall pay the amount due with interest
calculated in accordance with the methodology set forth in FERC's Regulations at 18 C.F.R. §
35.19a(a)(2)(iii).
ARTICLE 11. EMERGENCIES
11.1 Obligations. Each Party shall comply with the Emergency Condition procedures of the ISO,
NERC, the Applicable Reliability Council, Applicable Laws and Regulations, and any emergency
procedures set forth in this ITSA.
11.2 Notice. Vernon shall notify MGS Owner promptly when it becomes aware of an Emergency
Condition that affects Vernon's Interconnection Facilities or the Distribution System that may
reasonably be expected to affect MGS Owner's operation of the Generating Facility or MGS
Owner's Interconnection Facilities. MGS Owner shall notify Vernon promptly when it becomes
aware of an Emergency Condition that affects the Generating Facility or MGS Owner's
Interconnection Facilities that may reasonably be expected to affect the Distribution System or
Vernon's Interconnection Facilities. To the extent information is known, the notification shall
describe the Emergency Condition, the extent of the damage or deficiency, the expected effect on
the operation of MGS Owner's or Vernon's facilities and operations, its anticipated duration and
the corrective action taken and/or to be taken. The initial notice shall be followed as soon as
LA\1776718.10
16
practicable with written notice, if requested by a Party; which may be provided by electronic mail
or facsimile.
11.3 Immediate Action. Unless, in MGS Owner's reasonable judgment, immediate action is required,
MGS Owner shall obtain the consent of Vernon, such consent to not be unreasonably withheld,
prior to performing any manual switching operations at the Generating Facility or MGS Owner's
Interconnection Facilities in response to an Emergency Condition declared by Vernon or in
response to any other emergency condition.
11.4 Vernon Authority.
11.4.1 General. Vernon may take whatever actions or inactions, including issuance of dispatch
instructions,with regard to Vernon's Interconnection Facilities or Distribution System it
deems necessary during an Emergency Condition' in order to (i) preserve public health
and safety, (ii) preserve the reliability of Vernon's 'Interconnection Facilities or
Distribution System, or MGS Owner's Generating Facility, and (iii) limit or prevent
damage, and (iv) expedite restoration of service.
Vernon shall use Reasonable Efforts to minimize the effect of such actions or inactions
on the Generating Facility or MGS Owner's Interconnection Facilities. Vernon may, on
the basis of technical considerations, require the Generating Facility to mitigate an
Emergency Condition by taking actions necessary and limited in scope to remedy the
Emergency Condition, including, but not limited to, directing MGS Owner to shut -down,
start-up, increase or decrease the real or reactive power output of the Generating Facility;
implementing a reduction or disconnection pursuant to Article 11.5.2; directing MGS
Owner to assist with black start (if available) or restoration efforts; or altering the outage
schedules of the Generating Facility and MGS Owner's Interconnection Facilities. MGS
Owner shall comply with all of Vernon's operating instructions concerning Generating
Facility real power and reactive power output within the manufacturer's design
limitations of the Generating Facility's equipment that is in service and physically
available for operation at the time, in compliance with Applicable Laws and Regulations.
11.4.2 Reduction and Disconnection. Vernon may reduce Interconnection Service or
disconnect the Generating Facility or MGS Owner's Interconnection Facilities when such
reduction or disconnection is necessary under Good Utility Practice due to Emergency
Conditions. These rights are separate and distinct from any right of curtailment of the
ISO pursuant to the ISO Tariff. When Vernon can schedule the reduction or
disconnection in advance, Vernon shall notify MGS Owner of the reasons, timing and
expected duration of the reduction or disconnection. Vernon shall coordinate with MGS
Owner using Good Utility Practice to schedule the reduction or disconnection during
periods of least impact to MGS Owner and Vernon. Any reduction or disconnection shall
continue only for so long as reasonably necessary under Good Utility Practice. The
Parties shall cooperate with each other to restore the Generating Facility, the
Interconnection Facilities, and the Distribution System to their normal operating state as
soon as practicable consistent with Good Utility Practice.
11.5 MGS Owner Authority. Consistent with Good Utility Practice and the ITSA, MGS Owner may
take actions or inactions with regard to the Generating Facility or MGS Owner's Interconnection
Facilities during an Emergency Condition in order to (i) preserve public health and safety, (ii)
preserve the reliability of the Generating Facility or MGS Owner's Interconnection Facilities, (iii)
limit or prevent damage, and (iv) expedite restoration of service. MGS Owner shall use
LA\1776718.10
17
Reasonable Efforts to minimize the effect of such actions or inactions on the Distribution System
and Vernon's Interconnection Facilities. Vernon shall use Reasonable Efforts to assist MGS
Owner in such actions.
11.6 Limited Liability. Except as otherwise provided in Article 11.6. of this ITSA, no Party shall be
liable to any other Party for any action it takes in responding to an Emergency Condition so long
as such action is made in good faith and is consistent with Good Utility Practice.
ARTICLE 12. REGULATORY _REQUIREMENTS AND GOVERNING LAW
12.1 Regulatory Requirements. Each Parry'sobligations under this ITSA shall be subject to its
receipt of any required approval or certificate from one or more Governmental Authorities in the
form and substance satisfactory to the applying Party, or the Party making any required filings
with, or providing notice to, such Governmental Authorities, and the expiration of any time
period associated therewith. Each Party shall in good faith seek and use its Reasonable Efforts to
obtain such other approvals.
12.2 Governing Law.
12.2.1 The validity, interpretation and performance of this ITSA and each of its provisions shall
be governed by the laws of the State of California, without regard to its conflicts of law
principles.
12.2.2 This ITSA is subject to all Applicable Laws and Regulations.
12.2.3 Each Party expressly reserves the right to seek changes in, appeal, or otherwise contest
any laws, orders, rules, or regulations of a Governmental Authority.
ARTICLE 13. NOTICES
13.1General. Unless otherwise provided in this ITSA, any notice, demand or request required or
permitted to be given by a Party to another and any instrument required or permitted to be
tendered or delivered by a Party in writing to another shall be effective when delivered and may
be so given, tendered or delivered, by recognized national courier, or by depositing the same with
the United States Postal Service with postage prepaid, for delivery by certified or registered mail,
addressed to the Party, or personally. delivered to the Party, at the, address set out in Part B,
Addresses for Delivery of Notices and Billings.
A Party must update the information in Part B as information changes. A Party may change the
notice information in this ITSA by giving five (5) Business Days written notice prior to the
effective date of the change. Such changes shall not constitute an amendment to this ITSA.
13.2 Billings and Payments. Billings and payments shall be sent to the addresses set out in Part B
13.3 Alternative Forms of Notice. Any notice or request required or permitted to be given by a Party
to another, and not required by this ITSA to be given in writing may be so given by telephone,
facsimile or e-mail to the telephone numbers and e-mail addresses set out in Part B.
13.4 Operations and Maintenance Notice. Each Party shall notify the other Parties in writing of the
identity of the person(s) that it designates as the point(s) of contact with respect to the
implementation of Articles 7 and 8.
LA\1776718.10
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ARTICLE 14. FORCE MAJEURE
14.1- Force Majeure.
14.1.1 Economic hardship is not considered a Force Majeure event.
14.1.2 No Party shall be considered to be in Default with respect to any obligation hereunder,
(including obligations under Article 3), other than the obligation to pay money when due,
if prevented from fulfilling such obligation by Force Majeure. A Party unable to fulfill
any obligation hereunder (other than an obligation to pay money when due) by reason of
Force Majeure shall give notice and the full particulars of such Force Majeure to the
other Party in writing or by telephone as soon as reasonably possible after the occurrence
of the cause relied upon. Telephone notices given pursuant to this Article shall be
confirmed in writing as soon as reasonably possible and shall specifically state full
particulars of the Force Majeure, the time and date when the Force Majeure occurred and
when the Force Majeure is reasonably expected to cease. The Party affected shall
exercise due diligence to remove such disability with reasonable dispatch, but shall not be
required to accede or agree to any provision not satisfactory to it in order to settle and
terminate a strike or other labor disturbance.
ARTICLE 15. DEFAULT
15.1 Default
15.1.1 General. No Default shall exist where such failure to discharge an obligation (other than
the payment of money) is the result of Force Majeure as defined in this ITSA or the result
of an act or omission of the other Party. Upon a Breach, the affected non -Breaching
Party(ies) shall give written notice of such Breach to the Breaching Party. Except as
provided in Article 15.1.2, the Breaching Party shall have thirty (30) Calendar Days from
receipt of the Default notice within which to cure such Breach; provided however, if such
Breach is not capable of cure within thirty (30) Calendar Days, the Breaching Party shall
commence such cure within thirty (30) Calendarbays after notice and continuously and
diligently complete such cure within ninety (90) Calendar Days from receipt of the
Default notice; and, if cured within such time, the Breach specified in such notice shall
cease to exist.
15.1.2 Right to Terminate. If a Breach is not cured as provided in this Article, or if a Breach is
not capable of being cured within the period provided for herein, the affected non -
Breaching Party(ies) shall have the right to declare a Default and terminate this ITSA by
Written notice at any until cure occurs, and be relieved of any further obligation
hereunder and, whether or not such Party(ies) terminates this ITSA, to recover from the
Breaching Party all amounts due hereunder, plus all other damages and remedies to
which it is entitled at law or in equity. The provisions of this Article will survive
termination of this ITSA.
ARTICLE 16. INDEMNITY, CONSEQUENTIAL DAMAGES AND INSURANCE
16.1 Indemnity. Each Party shall at all times indemnify, defend, and hold the other Parties harmless
from, any and all Losses arising out of or resulting from another Party's action or inactions of its
obligations under this ITSA on behalf of the indemnifying Party, except in cases of gross
negligence or intentional wrongdoing by the Indemnified Party.
19
LAU 776718.10
16.1.1 Indemnified Party. If an Indemnified Party is entitled to indemnification under this
Article 16 as a result of a claim by a third party, and the Indemnifying Party fails, after
notice and reasonable opportunity to proceed under Article 16.1, to assume the defense of
such claim, such Indemnified Party may at the expense of the Indemnifying Party contest,
settle or consent to the entry of any judgment with respect to, or pay in full, such claim.
16.1.2 Indemnifying Party. If an Indemnifying Party is obligated to indemnify and hold any
Indemnified Party harmless under this Article 16, the amount owing to the Indemnified
Party shall be the amount of such Indemnified Party's actual Loss, net of any insurance or
other recovery.
16.1.3 Indemnity Procedures. Promptly after receipt by an Indemnified Party of any claim or
notice of the commencement of any action or administrative or legal proceeding or
investigation as to which the indemnity provided for in Article 16.1 may apply, the
Indemnified Party shall notify. the Indemnifying Party of such fact. Any failure of or
delay in such notification shall not affect,a Party's indemnification obligation unless such
failure or delay is materially prejudicial to the indemnifying Party.
The Indemnifying Party shall have the right to assume the defense thereof with counsel
designated by such Indemnifying Party and reasonably satisfactory to the Indemnified
Party. If the defendants in any such ,action include one or more Indemnified Parties and
the Indemnifying Party and if the Indemnified Party reasonably concludes that there may
be legal defenses available to it and/or other Indemnified Parties which are different from
or additional to those available to the Indemnifying Party,, the Indemnified Party shall
have the right to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on its own behalf. In such instances, the
Indemnifying Party shall only be required to pay the fees and expenses of one additional
attorney to represent an Indemnified Party or Indemnified Parties having such differing or
_additional legal defenses.
The Indemnified Party shall be entitled, at its expense, to participate in any such action,
suit or proceeding, the defense of which has been assumed by the Indemnifying Party.
Notwithstanding the foregoing, the Indemnifying Party (i) shall not be entitled to assume
and control the defense of any such action, suit or proceedings if and to the extent that, in
the opinion of the Indemnified Party and its counsel, such action, suit or proceeding
involves the potential imposition of criminal liability on the Indemnified Party, or there
exists a conflict or adversity of interest between the Indemnified Party and the
Indemnifying Party, in such event the Indemnifying Party shall pay the reasonable
expenses of the Indemnified Party, and (ii) shall not settle or consent to the entry of any
judgment in any action, suitor proceeding without the consent of the Indemnified Party,
which shall not be unreasonably withheld, conditioned or delayed.
16.2 Consequential Damages. In no event shall any Party be liable under any provision of this ITSA
for any losses, damages, costs or expenses for any special, indirect, incidental, consequential, or
punitive damages, including but not limited to loss of profit or revenue, loss of the use of
equipment, cost of capital, cost of temporary equipment or services, whether based in whole or in
part in contract, in tort, including negligence, strict liability, or any other theory of liability;
provided, however, that damages for which a Party may be liable to another Party under another
agreement will not be considered to be special, indirect, incidental, or consequential damages
hereunder.
LA\1776718.10 20
16.3 Insurance. MGS Owner shall procure at its own expense and maintain in full force and effect,
with responsible insurance carriers authorized to do business in the State of California, insurance
policies in at least the minimum amount, and in accordance with the terms and conditions,
specified in the Lease.
16.3.1 The Parties agree to report to each other in writing as soon as practical all accidents or
occurrences resulting in injuries to any person, including death, and any property damage
arising out of this ITSA.
ARTICLE 17. ASSIGNMENT
17.1 Assignment.
17.1.1 This Agreement is binding upon and inures to the benefit of the successors and assigns of
the Parties. However, neither Party shall Assign this Agreement without the prior written
consent of the other Party, which consent shall not be unreasonably withheld, except that
MGS Owner may Assign this Agreement to an Affiliate or to its financing sources for
collateral purposes without the prior written consent of Vernon. Any such Assignment is
conditioned on the assignee's agreement in writing to assume the assigning Party's duties
and obligations under this Agreement. Any Assignment to an Affiliate effected in
accordance with this Section 17.1 shall not relieve the assigning Party of its obligations
and liabilities under this Agreement. For purposes of this Section 17.1, "Assign" or
"Assignment" means any direct or indirect assignment, subcontracting or other transfer of
this Agreement, including, with respect to MGS Owner, any change of control of MGS
Owner; provided, however, that"Assign" or "Assignment" shall not include any
transaction if after giving effect to such transaction NGP and/or Paul B. Prager directly or
indirectly control the Facility
17.1.2 MGS Owner shall have the right to assign this ITSA to a lender as collateral for any debt
financing or refinancing relating to the Facility. Vernon shall execute a consent to
collateral assignment substantially in the form attached as Exhibit F-1 to the PSA
ARTICLE 18. SEVERABILITY
18.1 Severability. If any provision in this ITSA is finally determined to be invalid, void or
unenforceable by any court or other Governmental Authority having jurisdiction, such
determination shall not invalidate, void or make unenforceable any other provision, agreement or
covenant of this ITSA.
ARTICLE 19. CONFIDENTIALITY
19.1 Confidentiality. Confidential Information shall include, without limitation, all information
relating to a Party's technology, research and development, business affairs, and pricing, and any
information supplied by any of the Parties to the other Parties prior to the execution of this ITSA.
Information is Confidential Information only if it is clearly designated or marked in writing as
confidential on the face of the document, or, if the information is conveyed orally or by
inspection, if the Party providing the information orally informs the Parties receiving the
information that the information is confidential.
LA117 76718.10
21
If requested by any Party; the other Parties shall provide in writing, the basis for asserting that the
information referred to in this Article 19 warrants confidential treatment, and the requesting Party
.may disclose such writing to the appropriate Governmental Authority. Each Party shall be
responsible for the costs associated with affording confidential treatment to its information.
19.1.1 Term. During the term of this ITSA, and for a period of three (3) years after the
expiration or termination of this ITSA, except as otherwise provided in this Article 19,
each Party shall hold in confidence and shall not disclose to any person Confidential
Information.
19.1.2 Scope. Confidential Information shall not include information that the receiving Party
can demonstrate: (1) ,is generally available to the ,public other than as a result of a
disclosure by the receiving Party; (2) was in the lawful possession of the receiving Party
on a non -confidential basis before receiving it from the disclosing Party; (3) was supplied
to the receiving Party without restriction by a third party, who, to the knowledge of the
receiving Party after due inquiry, was under no obligation to the disclosing Party to keep
such information confidential; (4) was independently developed by the receiving Party
without reference to Confidential Information of the disclosing Party; (5) is, or becomes,
publicly known, through no wrongful act or omission of the receiving Party or Breach of
this, ITSA; or (6) is required, in accordance with Article 19.1.7 of this ITSA, Order of
Disclosure, to be disclosed by any Governmental Authority or is otherwise required to be
disclosed by law or subpoena, or is necessary in any legal proceeding establishing rights
and obligations under this ITSA. Information designated as Confidential Information
will no longer be deemed confidential if the.Party that designated the information as
confidential notifies the other Parties that it no longer is confidential.
19.1.3 Release of Confidential Information. No Party shall release or disclose Confidential
Information to any other person, except to its employees, consultants, Affiliates,
subcontractors, or to parties who may be or considering providing financing to or equity
participation with MGS Owner, or to potential purchasers or assignees of MGS Owner,
on a need -to -know basis in connection with this ,ITSA, unless such person has first been
advised of the confidentiality provisions of this Article 19 and has agreed to comply with
such provisions. Notwithstanding the foregoing, a Party providing Confidential
Information to any person shall remain primarily responsible for any release of
Confidential Information in contravention of this Article 19.
19.1.4 Rights. Each Party retains all rights, title, and interest in the Confidential Information
that each Party discloses to the other Parties. The disclosure by each Party to the other
Parties of Confidential Information shall not be deemed a waiver by a Party or any other
person or entity of the right to protect the Confidential Information from public
disclosure.
19.1.5 No Warranties. The mere fact that a Party has provided Confidential Information does
not constitute a warranty or representation as to its accuracy or completeness. In
n addition, by supplying Confidential Information, no Party obligates itself to provide any
particular information or Confidential Information to the other Parties nor to enter into
any further agreements or proceed with any other relationship or joint venture.
19.1.6 Standardof Care. Each Party shall use at least the same standard of care to protect
Confidential Information it receives as it uses to protect its own Confidential Information
from unauthorized disclosure, publication or dissemination. Each Party may use
LA\ 1776718.10
13
22
Confidential Information solely to fulfill its obligations to the other Parties under this
ITSA or its regulatory requirements.
19.1.7 Order of Disclosure. If a court or a Government Authority or entity with the right,
power, and apparent authority to do so requests or requires any Party, by subpoena, oral
deposition, interrogatories, requests for production of documents, administrative order, or
otherwise, to disclose Confidential Information, that Party shall provide the other Parties
with prompt notice of such request(s) or requirement(s) so that the other Parties may seek
an appropriate protective order or waive compliance with the terms of this ITSA.
Notwithstanding the absence of a protective order or waiver, the Party may disclose such
Confidential Information which, in the opinion of its counsel, the Party is legally
compelled to disclose. Each Party will use Reasonable Efforts to obtain reliable
assurance that confidential treatment will be accorded any Confidential Information so
furnished:
19.1.8 Termination of Agreement. Upon termination of this ITSA for any reason, each Party
shall, within ten (10) Calendar Days of receipt of a written request from another Party,
use Reasonable Efforts to destroy, erase, or delete (with such destruction, erasure, and
deletion certified in writing to the other Party) or return to the other Party, without
retaining copies thereof, any and all written or electronic Confidential Information
received from the other Party.
19.1.9 Remedies. The Parties agree that monetary damages would be inadequate to compensate
a Party for another Parry's Breach of its obligations under this Article 19. Each Party
accordingly agrees that the other Parties shall be entitled to equitable relief, by way of
injunction or otherwise, if the first Party Breaches or threatens to Breach its obligations
under this Article 19, _which equitable` relief shall be granted without bond or proof of
damages, and the receiving Party shall not plead in defense that there would be an
adequate remedy at law. Such remedy shall not be deemed an exclusive remedy for the
Breach of this Article 19, but shall be in addition to all other remedies available at law or
in equity. The Parties further acknowledge and agree that the covenants contained herein
are necessary for the protection of legitimate business interests and are reasonable in
scope. No Party, however, shall be liable for indirect, incidental, or consequential or
punitive damages of any nature or kind resulting from or arising in connection with this
Article 19.
19.1.10 Disclosure to Governmental Authority, its Staff, or a State. Notwithstanding anything
in this Article 19 to the contrary, during the course of an investigation or otherwise,
requests information from one of the Parties that is otherwise required to be maintained in
confidence pursuant to this ITSA, the Party shall provide the requested information to the
requesting Governmental Authority or its staff, within the time provided for in the request
for information. In providing the information to such Governmental Authority or its
staff, the Party must request that the information be treated as confidential and non-public
by such Governmental Authority and its staff and that the information be withheld from
public disclosure. Parties are prohibited from notifying the other Parties to this ITSA
prior to the release of the Confidential Information to such Governmental Authority or its
staff. The Party shall notify the other Parties to the ITSA when it is notified by such
Governmental Authority or its staff that a request to release Confidential Information has
been received by such Governmental Authority, at which time any of the Parties may
respond before such information would be made public.
LA\1776718.10 23
19.1.11 Subject to the .exception in Article-19.1.10, Confidential Information shall not be
disclosed by the other Parties to any person not employed or retained by the other Parties,
except to the extent disclosure is (i) required by .law; (ii) reasonably deemed by the
disclosing Party to be required to be disclosed in connection with a dispute between or
among the Parties, or the defense of litigation or dispute; (iii) otherwise permitted by
consent of the other Parties, such consent not to be unreasonably withheld; or (iv)
necessary to fulfill its obligations under this ITSA or as a transmission service provider,
including disclosing the Confidential Information town RTO or ISO or to a regional or
national reliability organization. The Party asserting confidentiality shall notify the other
Parties in writing of the information it claims is confidential. Prior to any disclosures of
another Party's Confidential Information under this subparagraph, or if any third party or
Governmental Authority makes any request or demandfor any of the information
described in this subparagraph, the disclosing Party agrees to promptly notify the other
Party in writing and agrees to assert confidentiality and cooperate with the other Party in
seeking to protect the Confidential Information from public disclosure by confidentiality
agreement, protective order or other reasonable measures.
ARTICLE 20. ENVIRONMENTAL RELEASES
20.1 Each Party shall notify the other Parties, first orally and then in writing, of the release of any
Hazardous Substances, or any type of remediation activities related to the Generating Facility or
the Interconnection Facilities, each of.which may reasonably be expected to affect materially the
other Parties. The notifying Party shall: (i) provide the notice as soon as practicable, provided
such Party makes a good faith effort to provide the notice no later than twenty-four hours after
such Party becomes aware of the occurrence; and (ii) promptly furnish to the other Parties copies
of any publicly available reports filed with any Governmental Authorities addressing such events.
ARTICLE 21. INFORMATION REQUIREMENTS
21.1 Information Acquisition. The Parties shall submit specific information regarding the electrical
characteristics of their respective facilities to each other as described below and in accordance
with Applicable Reliability Standards. -
21.2 Information Submission by Vernon. The initial information submission by Vernon shall
include the Distribution System information necessary to allow MGS Owner to select equipment
and meet any system protection and stability requirements, unless otherwise agreed to by the
Parties.
21.3 Information Supplementation. MGS Owner shall provide Vernon any information changes due
to equipment replacement, repair, or adjustment. Vernon shall provide MGS Owner any
information changes due to equipment replacement, repair or adjustment in the directly connected
substation or any adjacent Vernon -owned substation that may affect MGS Owner's
Interconnection Facilities equipment ratings, protection or operating requirements.
LA\1776718.10
24
ARTICLE 22. INFORMATION ACCESS AND AUDIT RIGHTS
22.1 Information Access. Each Party (the "Disclosing Party") shall make available to the other Party
information that is in the possession of the Disclosing Party and is necessary in order for the other
Party to: (i) verify the costs incurred by the Disclosing Party for which the other Party is
responsible under this ITSA; and (ii) carry out its obligations and responsibilities under this
ITSA. The.Parties shall not use such information for purposes other than those set forth in this
Article 22.1 and to enforce their rights under this ITSA.
22.2 Reporting of Non -Force Majeure Events. Each Party (the "Notifying Party") shall notify the
other Parties when the Notifying Party becomes aware of its inability to comply with the
provisions of this ITSA for a reason other than a Force Majeure event. The Parties agree to
cooperate with each other and provide necessary information regarding such inability to comply,
including the date, duration, reason for the inability to comply, and corrective actions taken or
planned to be taken with respect to such inability to comply. Notwithstanding the foregoing,
notification, cooperation or information provided under this Article shall not entitle the Party
receiving such notification to allege a cause for anticipatory breach of this ITSA.
22.3 Audit Rights. Subject to the requirements of confidentiality under Article 19 of this ITSA, the
Parties' audit rights shall include audits of the other Parry's costs, calculation of invoiced
amounts, Vernon's efforts to allocate responsibility for interruption or reduction of generation on
the Distribution System, and each such Party's actions in an Emergency Condition.
22.3.1 The Parties shall each have the right, during normal business hours, and upon prior
reasonable notice to the other Party, to audit at its own expense the other Party's accounts
and records pertaining to either such Party's performance or either such Parry's
satisfaction of obligations owed to the other Party under this ITSA. Any audit authorized
by this Article shall be performed at the offices where such accounts and records are
maintained and shall be limited to those portions of such accounts and records that relate
to each such Party's performance and satisfaction of obligations under this ITSA.. Each
such Party shall keep such accounts and records for a period equivalent to the audit rights
periods'described in Article 22.4.
22.4 Audit Rights Periods. Accounts and recordsrelated to a Party's performance or satisfaction of
all obligations under this ITSA shall be subject to audit as follows: (i) for an audit relating to cost
obligations, the applicable audit rights period shall be twenty-four months after the auditing
Party's receipt of an invoice giving rise to such cost obligations; and (ii) for an audit relating to
all other obligations, the applicable audit rights period shall be twenty-four months after the event
for which the audit is sought.
22.5 Audit Results. If an audit by MGS Owner or Vernon determines that an overpayment or an
underpayment has occurred with respect to the other Party, a notice of such overpayment or
underpayment shall be given to the other Party together with those records from the audit which
support such determination. The Party that is owed payment shall render an invoice to the other
Party and such invoice shall be paid pursuant to Article 10 hereof.
ARTICLE 23. SUBCONTRACTORS
23.1 General. Nothing in this ITSA shall prevent a Party from utilizing the services of any
subcontractor as it deems appropriate to perform its obligations under this ITSA; provided,
however, that each Party shall require its subcontractors to comply with all applicable terms and
25
LA\1776718.10
conditions of this ITSA in providing such services and each Party shall remain primarily liable to
the other Party for the performance of such subcontractor.
23.2 Responsibility of Principal. The creation of any subcontract relationship shall not relieve the
hiring Party of any of its obligations under this ITSA. The hiring Party shall be fully responsible
to the other Party for the acts or omissions of any subcontractor the hiring Tarty hires as if no
subcontract had been made. Any applicable obligation imposed by this ITSA upon the hiring
Party, shall be equally binding upon, and shall be construed as having application to, any
subcontractor of such Party.
23.3 No Limitation by Insurance. The obligations under this Article 23 will not be limited in any
way by any limitation of subcontractor's insurance.
ARTICLE 24. DISPUTES
24.1 Submission. In the event either Party has a dispute, or asserts a claim, that arises out of or in
connection with this ITSA or its performance, such Party shall provide the other Party with
written notice of the .dispute or claim ("Notice of Dispute'). .Such dispute or claim shall be
referred to.a designated senior representative of each Party for resolution on an informal basis as
promptly as practicable after receipt of the Notice of Dispute bythe other Party. In the event the
designated representatives are unable to resolve the claim or dispute through unassisted or
assisted negotiations within thirty (30) Calendar Days of the other Party's receipt of the Notice of
Dispute, such claim or dispute may, upon mutual agreement of the Parties, be submitted to
arbitration and resolved in accordance with the arbitration procedures set forth below. In the
event the Parties do not agree to submit such claim or dispute to arbitration, each Party may
exercise whatever rights and remedies it may have in equity or at law consistent with the terms of
this ITSA.
24.2 External Arbitration Procedures. Either Party may initiate binding arbitration with respect to a
Dispute by making a written demand for binding arbitration before Judicial Arbitration and
Mediation Services, Inc., its successor, or any other mutually agreeable arbitrator. If the Parties
fail to agree upon a single arbitrator within ten (10) Calendar Days of the submission of the
dispute to arbitration, each Party shall choose one arbitrator who shall sit on a three -member
arbitration panel. The two arbitrators so chosen shall within twenty (20) Calendar Days select a
third arbitrator to chair the arbitration panel., In either case, the arbitrators shall be knowledgeable
in electric utility matters, including electric transmission and bulk power issues, and shall not
have any current or past substantial business or financial relationships with any party to the
arbitration (except prior arbitration). The arbitrator(s) shall provide each of the Parties an
opportunity to be heard and, except as otherwise provided herein, shall conduct the arbitration in
accordance .with the Commercial Arbitration Rules of the American Arbitration Association
("Arbitration Rules"); provided, however, in the event of a conflict between the Arbitration Rules
and the terms of this Article 24, the terms of this Article 24 shall prevail.
24.3 Arbitration Decisions. Unless otherwise agreed by the Parties, the arbitrator(s) shall render a
decision within ninety (90) Calendar Days of appointment and shall notify the Parties in writing
of such decision and the reasons therefor. The arbitrators) shall be authorized only to interpret
and apply the provisions of this; ITSA and shall have no power to modify or change any provision
of this Agreement in any manner. The decision of the arbitrator(s) shall be final and binding
upon the Parties, and judgment on the award may be entered in any court having jurisdiction.
The decision of the arbitrator(s) may be appealed solely on the grounds that the conduct of the
LAU 776718.10
26
arbitrator(s), or the decision itself, violated the standards set forth in the Federal Arbitration Act
or the Administrative Dispute Resolution Act.
24.4Costs. Each Party shall be responsible for its own costs incurred during the arbitration process
and for the following costs, if applicable: (1) the cost of the arbitrator chosen by the Party to sit
on the three member panel and one half of the cost of the third arbitrator chosen; or (2) one half
the cost of the single arbitrator jointly chosen by the Parties.
ARTICLE 25. REPRESENTATIONS, WARRANTIES AND COVENANTS
25.1 General. Each Party makes the following representations, warranties and covenants:
25.1.1 Good Standing. Such Party is duly organized, validly existing and in good standing
under the laws of the state in which it is organized, formed, or incorporated, as
applicable; that it is qualified to do business in the state or states in which the Generating
Facility, Interconnection Facilities owned by such Party, as applicable, are located; and
that it has the corporate power and authority to own its properties, to carry on its business
as now being conducted and to enter into this ITSA and carry out the transactions
contemplated hereby and perform and carry out all covenants and obligations on its part
to be performed under and pursuant to this ITSA.
25.1.2 Authority. Such Party has the right, power and authority to enter into this ITSA, to
become a Party hereto and to perform its obligations hereunder. This ITSA is a legal,
valid and binding obligation of such Party, enforceable against such Party in accordance
with its terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether enforceability is
sought in a proceeding in equity or at law).
25.1.3 No 'Conflict. The execution, delivery and performance of this ITSA does not violate or
conflict with the organizational' or formation documents, or bylaws or operating
agreement; of such Party, or any judgment, license, material permit, order, material
agreement or instrument applicable to or binding upon such Party or any of its assets.
25.1.4 Consent and Approval. Such Party has sought or obtained, or, in accordance with this
ITSA will seek or obtain, each consent, approval; authorization, order, or acceptance by
any Governmental Authority in connection with the execution, delivery and performance
of this ITSA, and it will provide to any Governmental Authority notice of any actions
under this ITSA that are required by Applicable Laws and Regulations.
ARTICLE 26. MISCELLANEOUS
26.1 Binding Effect. This ITSA and the rights and obligations hereof, shall be binding upon and shall
inure to the benefit of the successors and assigns of the Parties hereto.
26.2 Conflicts. In the event of a conflict between the body of this ITSA and any attachment;
appendices or exhibits hereto, the terms and provisions of the body of this ITSA shall prevail and
be deemed the final intent of the Parties.
26.3 Rules of Interpretation. This ITSA, unless a clear contrary intention appears, shall be construed
and interpreted as follows: (I) the singular number includes the plural number and vice versa; (2)
27
LA\1776718.10
reference to any person includes such person's successors and assigns but, in the case of a Party,
only if such successors and assigns are permitted by this ITSA, and reference to a person in a
particular capacity excludes such person in any other capacity or individually; (3) reference to
any agreement (including this ITSA), document, instrument or tariff means such agreement,
document, instrument, or tariff as amended or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms hereof; (4) reference to any
Applicable Laws and Regulations means such Applicable Laws and Regulations as amended,
modified, codified, or reenacted, in whole or in part, and in effect from time to time, including, if
applicable, rules and regulations promulgated thereunder; (5) unless expressly stated otherwise,
reference to any Article, Section or Appendix means such Article of this ITSA or such, Appendix
to this ITSA; (6) "hereunder", "hereof', "herein", "hereto" and words of similar import shall be.
deemed references to this ITSA as a whole and not to any particular Article or other provision
hereof or thereof; (7) "including" (and with correlative meaning "include") means including
without limiting the generality of any description preceding such term; and (8) relative to the
determination of any period of time, "from" means "from and including", "to" means "to but
excluding" and "through" means "through and including".
26.4 Entire Agreement. This ITSA, including all Appendices and Schedules attached hereto,
constitutes the entire agreement among the Parties with reference to the subject matter hereof, and
supersedes all prior and contemporaneous understandings or agreements, oral or written, between
or among the Parties with respect to the subject matter of this ITSA. There are no other
agreements, representations, warranties, or covenants which constitute any part of the
consideration for, or any condition to, any Party's compliance with its obligations under this
ITSA.
26.5 No Third Party Beneficiaries. This ITSA is not intended to and does not create rights,
remedies, or benefits of any character whatsoever in favor of any persons, corporations,
associations, or entities other than the Parties, and the obligations herein assumed are solely for
the use and benefit of the Parties, their successors in interest and, where permitted, their assigns.
26.6 Waiver. The failure of a Party to this ITSA to insist, on any occasion, upon strict performance of
any provision of this ITSA will not be considered a waiver of any obligation, right, or duty of, or
imposed upon, such Party. Any waiver at any time by either Party of its rights with respect to this
ITSA shall not be deemed a continuing waiver or a waiver with respect to any other failure to
comply with any other obligation, right, duty of this ITSA. Termination or Default of this ITSA
for any reason by MGS Owner shall not constitute a waiver of MGS Owner's legal rights to
obtain an interconnection from Vernon. Any waiver of this ITSA shall, if requested, be provided
in writing.
26.7 Headings. The descriptive headings of the various Articles of this ITSA have been inserted for
convenience of reference only and are of no significance in the interpretation or construction of
this ITSA.
26.8 Multiple Counterparts. This ITSA may be executed in two or more counterparts, each of which
is deemed an original but all constitute one and the same instrument.
26.9 Amendment. The Parties may by mutual agreement amend this ITSA by a written instrument
duly executed by all of the Parties. Such amendment shall become effective and a part of this
ITSA upon satisfaction of all Applicable Laws and Regulations.
28
LA\1776718.10
26.10 Modification by the Parties. The Parties may by mutual agreement amend the Appendices to
this ITSA by a written instrument duly executed by all of the Parties. Such amendment shall
become effective and a part of this ITSA upon satisfaction of all Applicable Laws and
Regulations.
26.11 No Partnership. This ITSA shall not be interpreted or construed to create an association, joint
venture, agency relationship, or partnership among the Parties or to impose any partnership
obligation or partnership liability upon any Party. No Party shall have any right, power or
authority to enter into any agreement or undertaking for, or act on behalf of, or to act as or be an
agent or representative of, or to otherwise bind, another Party.
26.12 Joint and Several Obligations. Except as otherwise provided in this ITSA, the obligations of
Vernon and MGS'Owner are several, and are neither joint nor joint and several.
LA\ 1776718.10 29
IN WITNESS WHEREOF, the Parties have executed this ITSA in multiple originals,
each of which shall constitute and be an original effective agreement among the Parties.
T ORNIA) MALBURG LLC
Name: Paul Pr(per
Title: President
Date:
CITY OF VERNON
Name: Eric T. Fresch
Title: City Administrator
Date:
[Signature Page to Interconnection and Transmission Services Agreement — Bicent (California) Malburg LLC]
i
IN WITNESS WHEREOF, the Parties have executed this ITSA in multiple originals,
each of which shall constitute and be an original effective agreement among the Parties.
BICENT (CALIFORNIA) MA.LBURG LLC
Name: Paul Prager
Title: President
Date:
CITY OF VERNON
(�Z- �—�
Name: Eric T. Fresch
Title: City Administrator
Date:
[Signature Page to Interconnection and Transmission Services Agreement— Bicent (California) Malburg LLC]
The execution of this Interconnection and Transmission Services Agreement by the City of
Vernon is hereby affirmed and attested to by:
CITY OF VERNON
By:
Name: Manuela Giron
Title: City Clerk
[Attestation to Interconnection and Transmission Services Agreement — Bicent (California) Malburg LLC]
Appendices to ITSA
Part A Interconnection Facilities
PartB Addresses for Delivery of Notices and Billings
LA11776718.10
Part A
to ITSA
Interconnection Facilities
LA\1776718.10
Part B
to ITSA
Addresses for Delivery of Notices and Billings
Notices:
Vernon:
4305 Santa Fe Avenue
Vernon, CA 90058
Facsimile: (323) 826-1438
Attn: Director of Light & Power Department
With a copy to:
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Facsimile: (323) 826- 438
Attn: City Attorney
and
Latham & Watkins LLP
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
Attn: David B. Rogers, Esq:
Fax No: (213) 891-8763
MGS Owner:
Bicent (California) Power LLC
Attn: President
103 North Washington Street
Easton, MD 21601
Facsimile: 410-770-9705
With copies to:
Chadbourne and Parke LLP
Attn: Robert Shapiro
1200 New Hampshire Avenue, NW
Washington, DC 20036
Facsimile: 202-974-6 770
LA\ 1776718.10
Billings and Payments:
Vernon:
4395 Santa Fe Avenue
Vernon, CA 90058
Facsimile: (323) 826-1438
Attn: Financial Director
MGS Owner:
Bicent (California) Power LLC
Attn: President
103 North Washington Street
Easton, MD 21601
Facsimile: 410-770-9705
Alternative Forms of Delivery of Notices (telephone, facsimile or e-mail):
Vernon:
4395 Santa Fe Avenue
Vernon, CA 90058
Facsimile: (323) 826-1438
Attn: Electric Resources Planning & Development Manager
MGS Owner:
Bicent (California) Power LLC
Attn: President
103 North Washington Street
Easton, MD 21601
Facsimile: 410-770-9705
LA\1776718.10
EXECUTION VERSION
BILL OF SALE
This BILL OF SALE (this "Bill of Sale") is made as of April 10, 2008, by the City of
Vernon, a municipal corporation and a chartered city duly organized and existing under and by
virtue of the Constitution and laws of the State of California ("Seller"), for the benefit of Bicent
(California) Malburg LLC, a Delaware limited liability company ("Purchaser").
RECITALS
A. Pursuant to that certain Amended and Restated Purchase and Sale Agreement,
dated as of December 13, 2007, as amended by that certain First Amendment to Amended and
Restated Purchase Agreement, by and between Seller, Purchaser, Bicent (California) Power
LLC, a Delaware limited liability company, and Bicent (California) I400ver LLC, a Delaware
limited liability company (collectively, the "Purchase and Sale Agreement"), Seller has agreed to
sell, assign, convey, transfer and deliver all of its right, title and interest in and to the Assets to
Purchaser, and Purchaser has agreed to purchase, assume and acquire the Assets from Seller.
B. Pursuant to Section 2.6(a)(1) of the Purchase and Sale Agreement, Seller is
entering into this Bill of Sale for purpose of selling, assigning, transferring and conveying the
Assets to the Purchaser.
NOW THEREFORE, in consideration of the premises and covenants contained
herein and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, do hereby covenant and
agree as follows:
1. Defined Terms. Unless the context hereof shall otherwise require,
capitalized terms used in this Bill of Sale, including those in the recitals hereto, and not
otherwise defined Herein, shall have the respective meanings as defined in the Purchase and Sale
Agreement.
2. Sale and Assignment. Effective as of 11:59 p.m., Los Angeles time, on
the date hereof (the "Effective Time"), Seller, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, does hereby grant, sell, assign, convey,
transfer and deliver to Purchaser all of Seller's right, title and interest in and to the Assets,
pursuant to the terms and conditions set forth in the Purchase Agreement.
3. Title. Seller does hereby warrant and covenant that (i) it is the true and
lawful owner of the Assets and has good right to sell the Assets, and that except for Permitted
Encumbrances, title to the Assets is on the date of execution hereof free and clear of all Liens of
any nature and (ii) good, record and marketable title to the Assets is hereby conveyed to
Purchaser free and clear of all Liens of any nature, except for any existing Permitted
Encumbrances.
4. Warranty. Except as otherwise set forth in the Purchase and Sale
Agreement:
1
LAU 842354.4
11
j
(a) it is understood and agreed that Seller sells and transfers and Purchaser
acquires and accepts the Transferred Items on an "as is" and "where is" basis;
(b) Purchaser, by its acceptance of this Bill of Sale, acknowledges and agrees
that, except as expressly set forth in the Purchase and Sale Agreement, Seller has not made and
will not make, nor shall Seller be deemed to have made, any warranty or representation of any
kind, express or implied, with respect to any of the Assets, including any warranty or
representation as to their fitness for any use or purpose, design or condition for any particular use
or purpose, as to the quality of the material or workmanship therein, latent or patent, or as to
value, compliance with legal requirements, insurance requirements, specifications, location, use,
condition, merchantability, quality, description; durability or operation, it being agreed that all
risks incident to all of these matters are to be borne by the Purchaser; and
(c) in the event of any defect or deficiency in any of the Assets of any nature,
whether patent or latent, Seller shall not have any responsibility or liability with respect thereto
or for any incidental, consequential or other damages (including strict liability in tort).
The provisions of this paragraph 4 have been negotiated, and except as otherwise set forth in the
Purchase and Sale Agreement, the foregoing provisions are intended to be a complete exclusion
and negation of any representations or warranties by Seller, express or implied, with respect to
any of the Assets arising pursuant to the Uniform Commercial Code as adopted by the State of
California or any other law or regulation now or hereafter in effect or otherwise.
5. Binding Effect; Assignment. This Bill of Sale and all of the provisions
hereof shall be binding upon Seller and its respective successors and assigns and shall inure to
the benefit of Purchaser and its successors and assigns.
6. Further Action. Seller covenants and agrees that it will, from time to time,
execute and deliver such further instruments of conveyance and transfer as may be reasonably
required to implement and effectuate the sale set forth in the Purchase and Sale Agreement.
T Effectiveness. This Assignment shall become effective as of the Effective
Time.
8. No Third Party Beneficiary. Nothing in this Bill of Sale is intended to
confer upon any other person except Purchaser any rights or remedies hereunder or shall create
any third party beneficiary rights in any person.
9. Governing Law. This Bill of Sale shall be governed by and construed in
accordance with the laws of the State of California (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).
10. Construction. This Bill of Sale is delivered pursuant to and is subject to
the terms of the Purchase and Sale Agreement. The terms of the Purchase Agreement, including
but not limited to Seller's representations, warranties, covenants, agreements and indemnities
2
LAU 842354.4
relating to the Assets, are incorporated herein by this reference. Seller acknowledges and agrees
that the representations, warranties, covenants, agreements and indemnities contained in the
Purchase Agreement shall not be superseded hereby but shall remain in full force and effect to
the full extent provided therein. In the event of any conflict or ambiguity between the terms of
the Purchase and Sale Agreement and the terms of this Bill of Sale, the terms of the Purchase and
Sale Agreement shall control.
I I . Severability. If one or more of the provisions of this Bill of Sale shall be
deemed invalid, illegal or unenforceable in any respect, such provisions shall be deemed to be
severed from this Bill of Sale, and the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired in any way thereby.
12. Counterparts. This Bill of Sale may be executed in any number of
counterparts, all such counterparts together constituting but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
3
LAX] 842354.4
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have executed and delivered this Bill of Sale as of the day and year first above set forth.
CITY OF VERNON
By:�
Name: Eric T. Fresch
Title: City Administrator
ACCEPTED AND AGREED TO
THIS DAY OF , 2008 -
BICENT (CALIFORNIA) MALBURG LLC
By:
Name: Paul Prager
Title: President
(Signature Page to Bill of Sale — Bicent (California) Malburg LLC]
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have executed and delivered this Bill of Sale as of the day and year first above set forth.
CITY OF VERNON
By:
Name: Eric T. Fresch
Title: City Administrator
ACCEPTED AND AGREED TO
THIS 10% DAY OF �ri , 2008
BICENT (CALIF RNIA)MALBURG LLC
By:
Name: Paul P r
Title: President
[Signature Page to Bill of Sale — Bicent (California) Malburg LLC]
The execution of this Bill of Sale by the City of Vernon is hereby affirmed and attested to by:
CITY. OF VERNON
By:
Name Manuela Giron
Title: City Clerk
[Attestation to Bill of Sale— Bicent (California) Malburg LLC]
FIRST AMERICAN TITLE INSURANCE COMPANY
NATIONAL COMMERCIAL SERVICES
LOSANGELES OFFICE
RECORDING REQUESTED BY CITY OF VERNON AND
WHEN RECORDED MAIL TO
AND MAIL TAX STATEMENTS TO:
Bicent (California) Malburg LLC
103 North Washington Street
Easton, MD 21601
Attn: President
NIGS-22285"1 -LA2
(Above Space for Recorder's Use Only)
Recording Fee: Exempt Pursuant to California Government Code Section 27383
GRANT DEED
The Undersigned grantor declares that the documentary transfer tax is shown on the
accompanying statement and is not for public record.
FOR VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, City of Vernon, a municipal corporation and a chartered city duly organized_ and
existing under and by virtue of the Constitution and laws of the State of California (the
"Grantor"), hereby grants to Bicent (California) Malburg LLC, a Delaware limited liability
company (the "Grantee"), all of Grantor's right, title and interest in and to the fixtures and
improvements (the "Prouertx') located on the real property ("Land") described in Exhibit "A"
attached hereto and incorporated herein by this reference, but expressly excluding the Land.
Said grant is made subject to all covenants, conditions, restrictions, easements,
encumbrances, circumstances and other matters of record that currently exist and affect the
Property and/or the Land, and Grantee's reconveyance obligations as set .forth in that certain
Lease and Grant of Easements dated April A, 2008 by and between Grantor, as Landlord, and
Grantee, as Tenant.
1.A%1778118.4
Execution Version
M
IN WITNESS WHEREOF, this Grant Deed shall be effective as of April 8, 2008.
GRANTOR: CITY OF VERNON,
a municipal corporation and a chartered city duly
organized and existing under and by virtue of the
Constitution and laws of the State of California
By:_.. �Q
Name: Eric T. Fresch
Title: City Administrator
[Signature Page to Grant Deed Bicent (California) Malburg LLCI
S-2
STATE OF CALIFORNIA )
ss.
COUNTY OF I a s •A U CIe S )
On 4VIZ,'L- '7 , 2008, before me, JGd,T-A 4. Le/IA' n,-rQ,'y A,b%C- ,
personally appeared 7- Fet:IH
who proved to me on the basis of satisfactory evidence to be the personal whose name() is/arm
subscribed to the within instrument and acknowIedged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/hWtheir signatureM on the instrument the
person(, or the entity upon behalf of which the person(l) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
hlolary Public [SEAL]
JUDftH A. LEHR
Commluton W 1646385
"Ory Public - Ca7RorNa
Los Angeles Canty
�V Cortnt. b�ket Fsb 19, 2D1
[Notary Page to Grant Deed — Bicent (California) Malburg LLC]
l
The execution of this Grant Deer[ by the City of Vemon is hereby affirmed and attested to by:
CITY OF VERNON
By:
Name: Manuela Giron
Title: City Clerk
[Attestation to Grant Deed — Bicent (Galifomia) Malbwg LLC}
LAU7781 [s.a
A PORTION OF LOT 7, TRACT NUMBER 6452 IN THE CITY OF VERNON. COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA. AS PER MAP RECORDED 1N BOOK 94 PAGES 77 AND 78
OF MAPS, RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE MOST.NORTHERLY CORNER OF SAID LOT 7, SAID CORNER ALSO BEING
THE BEGINNING OF A CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 367.83
FEET, A RADIAL LINE PASSING THROUGH SAID CORNER BEAR SOUTH 58'03'33 WEST:
THENCE SOUTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 59'37'38"
AN ARC DISTANCE OF 382.79 FEET; THENCE NORTH 88*25*55" EAST 323.79 FEET ALONG
THE NORTHERLY LINE OF SAID LOT 7 TO A POINT ON THE SOUTHERLY LINE OF 'A PORTION
DEEDED FOR THE WIDENING OF THE LOS ANGELES JUNCTION RAILROAD RIGHT-OF-WAY AS
SHOWN ON LOS ANGELES COUNTY FIELD MAP NUMBER 10287 PAGE A3, RECORDS OF SAID
COUNT, SAID POINT ALSO BEING THE BEGINNING OF A CURVE CONCAVE SOUTHERLY
HAVING A RADIUS OF 906.21 FEET; THENCE EASTERLY ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 445'51" AN ARC DISTANCE OF 75.35 FEET TO THE BEGINNING OF A
COMPOUND CURVE HAVING A RADIUS OF 294.44 FEET; THENCE EASTERLY ALONG SAID
CURVE THROUGH A CENTRAL ANGLE OF 13'28'39" AN ARC DISTANCE OF 69.26 FEET TO A
POINT ON THE EASTERLY LINE OF A PORTION DEEDED FOR THE WIDENING OF SOTO STREET
.AS SHOWN ON SAID LOS ANGELES COUNTY FIELD MAP; THENCE SOUTH 1'37'37" EAST
186.27 FEET ALONG SAID EASTERLY LINE; THENCE SOUTH 88'10'26" WEST 33.20 FEET;
THENCE NORTH 01'49'34" WEST 6.00 FEET; THENCE SOUTH 88*10*26" WEST 6.00 FEET.
THENCE SOUTH 01'49'34" EAST 6.00 FEET; THENCE SOUTH 88'ID'26" WEST 439.07 FEET;
THENCE NORTH 01'27.:'57" WEST 115.24 FEET; THENCE SOUTH 89'1O17" WEST 193.60 FEET;
THENCE NORTH 02'51'27" WEST 42.65 FEET; THENCE NORTH 87*47*00" EAST 11.55 FEET;
THENCE THENCE NORTH 01'54'17" WEST 24.22 FEET; THENCE SOUTH 87'28'16" WEST 10.26
FEET; THENCE NORTH 01'06'15" WEST 13.30 FEET; THENCE SOUTH 88'4B'42" WEST 81.59
FEET; THENCE SOUTH 01'26'34" EAST 79.61 FEET; THENCE SOUTH 89'10'17" WEST 37.82
FEET TO A POINT ON THE WESTERLY LINE OF SAID LOT 7; THENCE NORTH 00,09'03" WEST
267.99 FEET ALONG SAID WESTERLY LINE TO THE POINT OF BEGINNING.
CONTAINING 3.10 ACRES MORE OR LESS.
AS SHOWN ON EXHIBIT "B", ATTACHED HERETO AND BY THIS REFERENCE MADE APART
HEREOF.
DAVID T. ROSELL P.L.S. 6281 EXP. 9/30/08
DAVID T. '
ROSELL.
Ems. 9-30-W
No. 6281 i
DOCUMENTARY TRANSFER TALC DECLARATION
Assessor's Parcel Number: 6308-002-900
In accordance with Section 11932 and 11933 of the California Revenue and Taxation
Code, the Grantor requests that this Documentary Transfer Tax Declaration not be recorded with
the attached Grant Deed, but be affixed to the Grant Deed after recordation and before the Grant
Deed is returned as directed on the Grant Deed.
The attached Grant Deed names The City of Vernon, a municipal corporation and a
chartered city duly organized and existing under and by virtue of the Constitution and laws of the
State of California, as Grantor, and Bicent (California) California Malburg LLC, a Delaware
limited liability company, as Grantee. The property subject to this Grant Deed is located in the
City of Vernon, County of Los Angeles. The total amount of documentary transfer tax due on
the Grant Deed is $ 31 Sr %1$: & D , which represents $ 3[! , 0 K & a , County tax
and $0.00 City tax, computed on the full value of the property conveyed.
1-A11844934.2
FIRST AMERICAN TITLE INSURANCE
COMPANY
.i / 5em.s.
tir;
EXECUTION VERSION
Assignment and Assumption Agreement
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Assi ng ment"),
is made as of April 10, 2008 (the "Effective Date"), by and between the City of Vernon, a
municipal corporation and a chartered city duly organized and existing under and by virtue of the
Constitution and laws of the State of California ("Assignor" ), and Bicent (California) Malburg
LLC, a Delaware limited liability company ("Assignee").
WITNESSETH:
WHEREAS, the .parties have entered into that certain Amended and Restated
Purchase and Sale Agreement, dated as of December 13, 2007, as amended by that certain First
Amendment to Amended and Restated Purchase Agreement, dated as of February 8, 2008, by
and among Assignor, Assignee, Bicent (California) Power LLC, a Delaware limited liability
company, and Bicent (California) Hoover LLC, a Delaware limited liability company
(collectively, the "Purchase and Sale Agreement"),
WHEREAS, pursuant to Section 2.1(g) and Section 2.6(a)(2) of the Purchase and
Sale Agreement, Assignor desires to assign and transfer to Assignee, and Assignee desires to
assume and accept, all of Assignor's rights and duties under the Assigned Agreements and all of
Assignor's obligations under the Assigned Agreements arising or occurring after the Closing
Date.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby
covenant and agree as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Purchase and Sale Agreement.
2. Assignment._ Effective as of 11:00 a.m., Los Angeles time, on the date
hereof (the "Effective Time"), Assignor hereby irrevocably assigns and transfers to Assignee all
of its right, title and interest in, to and under, and all of its duties, liabilities and obligations under
or, pursuant to, the Assigned Agreements, except for any liabilities under the Assigned
Agreements resulting from Assignor's breach or failure to perform its obligations under the
Assigned, Agreements on or prior to the Closing Date, which liabilities are retained by and
remain the responsibility of Assignor (the "Retained Liabilities").
3. Assumption. Assignee shall assume and accept all of Assignor's right,
title and interest in, to and under, and all of Assignor's duties, liabilities and obligations under or
pursuant to, the Assigned Agreements on the Closing Date, except for the Retained Liabilities,
and agrees to perform under and be bound by the terms of the Assigned Agreements. For the
LA\l 842389.4
EXECUTION VERSION
avoidance of doubt, Assignee assumes no Excluded Liabilities, and the parties hereto agree that
all such Excluded Liabilities shall remain the sole responsibility of the Assignor.
4. Non -Interference. Each of Assignor and Assignee agrees that the
assignment and assumption of the assigned rights and responsibilities hereunder is irrevocable
and that neither party shall take any action or make any other assignment or direction which
could prejudice the .other's rights hereunder, and that any such action or assignment shall be
void.
5. Representations and Warranties. Assignor hereby represents and warrants
to Assignee that neither its execution, delivery or performance of this Agreement, nor the
consummation by it of the transactions contemplated hereby will (a) require any consent,
agreement or acknowledgement of any Person that has not been obtained, (b) require any
Governmental Approval that it has not obtained, or (c) violate any Governmental Rules
applicable to Assignor.
6. Effectiveness. This Assignment shall become effective as of the Effective
Time.
7. Further Assurances. Each of the parties will, from time to time and at all
times hereafter, at its own expense, upon every reasonable request to do so by another party "
hereto, promptly make, do, execute and deliver, or cause to be made, done, executed and
delivered, all such further acts, deeds, assurances and things as may be, legally required or
reasonably necessary in order to further implement and carry out the assignments and
assumptions contemplated by this Assignment.
8.1 - Successors and Assigns. The provisions of this Assignment are binding
upon, and will inure to the benefit of, the successors and assigns of Assignor and Assignee,
respectively.
9. Governing Law. The validity, interpretation and effect of this Assignment
shall be governed by and will be construed in accordance with the laws of the State of California
applicable to contracts made and performed in such State and without regard to conflicts of law
doctrines except to the extent that certain matters are preempted by Federal law or are governed
by'the law of the jurisdiction of organization of the respective parties.
10. Severability. If one or more of the provisions of this Assignment shall be
deemed invalid, illegal or unenforceable in any respect, such provisions shallbe deemed to be
severed from this Assignment, and the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired in any way thereby.
11. Construction. This Assignment is delivered pursuant to and is subject to
the terms of the Purchase and Sale Agreement. The terms of the Purchase and Sale Agreement,
including but not limited to Assignor's representations, warranties, covenants, agreements and
indemnities relating to the Assumed Liabilities, are incorporated herein by this reference.
Assignor acknowledges and agrees that the representations, warranties, covenants, agreements
2
LA\1842389.4
EXECUTION VERSION
and indemnities contained in the Purchase and Sale Agreement shall not be superseded hereby
but shall remain in full force and effect to the full extent provided therein. In the event of any
conflict or ambiguity between the terms of the Purchase and Sale Agreement and the terms of
this Assignment, the terms of the Purchase and Sale Agreement shall control.
12. Counterparts. This Assignment may be executed in any number of
counterparts, all such counterparts together constituting but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
i
LA\ 1842389.4
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have executed and delivered this Assignment as of the day and year first above set forth.
CITY OF VERNON
By: `
Name: Eric T. Fresch
Title: City Administrator
BICENT (CALIFORNIA) MALBURG LLC
By:
Name: Paul Prager
Title: President
[Signature Page to Assignment and Assumption Agreement — Bicent (California) Malburg LLC]
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have executed and delivered this Assignment as of the day and year first above set forth.
CITY OF VERNON
By:
Name: Eric T. Fresch
Title: City Administrator
BICENT (CALI A) MALBURG LLC
By: N
Name: Paul Prager
Title: President
[Signature Page to Assignment and Assumption Agreement — Bicent (California) Malburg LLCI
The execution of this Assignment and Assumption Agreement by the City of Vernon is hereby
affirmed and attested to by:
CITY OF VFRNON
By:.
Na. Manuela Giron
Title: City Clerk
[Attestation to Assignment and Assumption Agreement — Bicent (California) Malburg LLC]
_
l
J
_ - _
_. _ /
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
April 10, 2008
To The Parties Listed On Schedule A Hereto
Re Transaction for Certain Power Assets
Ladies and Gentlemen:
Pursuant to Section 2.6(a)(18) of that certain Amended and
Restated Purchase and Sale Agreement dated Dccember 13, 2007, a3
amended by that certain First Amendment to Amended and Restated
Purchase and Sale Agreement dated February 8, 2008 and as
amended by that certain Second Amendment to Amended and Restated
Purchase and Sale Agreement dated April-8, 2008 (collectively
the "PSA") by and among the City of Vernon, California, a
municipal corporation and chartered city duly organized and
existing under and by virtue of the Constitution and laws of the
state of California (the "City"), Bicent (California) Malburg
LLC, a Delaware limited liability company, Bicent '(California)
Hoover LLC, a Delaware limited liability company and Bicent
(California) Power LLC, a Delaware limited liability company, I
hereby advise you as of the date hereof that I am of the
following opinions. Capitalized terms used herein and not
otherwise defined shall have the meaning set forth in the PSA.
A. The City is duly organized and validly existing as a
chartered city under the Constitution and laws of the State
of California and its Charter.
To The Parties Listed on Schedule A Hereto
April 10, 2008
Page 2
B. The members of the Council of the City (the "City Council")
are duly invested in office with full power and authority
under the City's Charter to act on behalf of the City.
C. The City has the full legal right, power and authority to
enter into and perform its obligations under the PSA, the
PPTA, the Assignment and Assumption Agreement, the CFD
(Hoover), the Interconnection and Transmission Services
Agreement, the Lease; the Subordination Agreement, the
Lender Consents, the Seller Subordinate Deed of Trust and
the Memorandum of Lease and Easements (together, the
"Agreements").
D. The Agreements constitute valid and binding obligations of
the City, enforceable against the City in accordance with
their respective terms.Each of the Agreements has been
duly executed and delivered by the City.
E. The City Council has duly and validly adopted Resolution
9510 authorizing the transaction contemplated by the
Agreements at meetings of the City Council that were called
and held pursuant to law and the City's Charter and with
all public notice required and at which a quorum was
present and acting throughout, and Resolution 9510 is now
in full force and effect, and has not been amended.
F. There is no investigation, action, suit or proceeding
pending against, or to the best of my knowledge after
reasonable inquiry, threatened against, or affecting ,the
City or any of its properties before any arbitrator or any
federal, state or local governmental agency or body or any
federal, state or local court (i) in which, there is a
reasonable possibility of an adverse decision which would
materially affect the ability of the City to perform its
obligations under any of the Agreements; or (ii) questions
the legality, validity or enforceability of any of the
Agreements or any of the transactions contemplated thereby.
G. All action necessary for the authorization, execution,
delivery of the Agreements by the City and the performance
of by the City of the obligations to be performed by the
To The Parties Listed on Schedule A Hereto
April 10, 2008
Page 3
City as of the date hereof under the Agreements has been
taken on the part of the City.
This letter is furnished only to you and is solely for your
benefit in connection with the transactions contemplated by the
Agreements. This letter may not be relied upon by you for any
other purpose, or furnished to, assigned to, quoted to or relied
upon by any other person, firm or entity for any purpose,
without my prior written consent, which may be granted or
withheld in my sole discretion.
Respectfu,ly submitted,
J . Ha rison
C#,A
Attorney
JH:jl
Schedule A
Bicent (California) Power LLC;
Bicent (California) Malburg LLC;
Bicent (California) Hoover LLC;
Union Bank of California, N.A., as Administrative Agent, Syndication
Agent, Collateral Agent, Depositary Agent and Securities
Intermediary;
The Lenders under that certain Credit Agreement dated as of April
10, 2008 among Bicent (California) Power LLC, as borrower, Bicent
(California) Malburg LLC and Bicent (California) Hoover LLC, as
subsidiary guarantors;
The several Lenders from time to time parties thereto;
And Union Bank of California, N.A., as sole lead arranger, sole
bookrunner, administrative agent, syndication agent and collateral
agent