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Exhibit 10.27    
  

 
 

MASTER PURCHASE, SALE AND SERVICES AGREEMENT    
  

        This MASTER PURCHASE, SALE AND SERVICES AGREEMENT (together with the Schedules attached hereto from time to time, the "Agreement") is entered into this
23rd day of March, 2001 between MIDWEST GENERATION, LLC ("MW Gen"), a Delaware limited liability company, and EDISON MISSION MARKETING & TRADING, INC. ("EMMT"), a
California corporation. Each of MW Gen and EMMT may be referred to herein as a "Party" and together shall be referred to as the "Parties". 

        WHEREAS,
MW Gen is engaged in the business of owning or leasing and operating the following power generation facilities (collectively, the "Facilities"): (a) six
coal-fired generating plants consisting of 5,646 MW, which include Powerton, Joliet, Will County, Waukegan, Crawford, and Fisk; (b) the Collins gas and oil-fired
generating station consisting of 2,698 MW (the "Collins Station"); and (c) a group of on-site generating peakers consisting of 740 winter MW (467 summer MW) and off-site
generating peakers consisting of 657 winter MW (467 summer MW). 

        WHEREAS,
EMMT is engaged, among other things, in the business of marketing, trading, buying and selling Energy, capacity, fossil fuels, emissions allowances and other energy-related
physical and financial commodities and products, and derivatives thereof. 

        WHEREAS,
the Parties may enter into physical or financial transactions related to the purchase and sale of Energy, fossil fuels, emissions allowances and other energy-related products,
and physical and financial derivatives thereof related to the Facilities (the "Products"), and MW Gen desires, under certain circumstances, to use EMMT's services to facilitate transactions with third
parties related to the purchase and sale of such Products (all transactions described in this paragraph are, collectively, the "Transactions"). 

        WHEREAS,
the Parties intend that all Transactions shall be based on Back-to-Back Transactions between EMMT and unrelated third parties (except for Transactions in
which EMMT acts as MW
Gen's disclosed agent with third parties ("Disclosed Agent Transactions")), and that no Transactions hereunder shall result from or relate to EMMT's proprietary trading portfolio. 

        WHEREAS,
the Parties entered into an Energy Sales Agreement dated as of August 1, 2000 and Services Agreement (Natural Gas) dated as of December 15, 1999, which shall be
superseded in their entirety by this Agreement as of the date hereof; provided that such contracts shall survive in respect of transactions between the Parties that were entered into prior to the
execution and delivery of this Agreement until all Parties have fulfilled all of their obligations with respect to such Transaction(s). 

        NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and
agree as follows: 

ARTICLE I

SCOPE OF AGREEMENT  

        1.1.    Scope of Agreement.    Each Transaction shall be effectuated and evidenced in accordance with this Agreement
and the Schedules hereto, which Schedules shall constitute a part of this Agreement. The Parties are relying upon the fact that all Transactions, together with this Agreement and the Schedules hereto,
shall constitute a single integrated agreement. This Agreement, including the Schedules hereto, shall govern all Transactions between the Parties for the term of this Agreement unless, in the case of
any Transaction, the Parties shall expressly state otherwise. The Parties' rights and obligations with respect to any Product will be further described in the Schedule for such Product, as such
Schedules may be entered into between the Parties from time to time. Schedules may be added, deleted or amended from time to time as agreed by the Parties in writing. In the case of Energy sales from
MW Gen to EMMT, such sales shall be for a duration of no more than one year, unless agreed 

 

to by the Parties in writing. In case of any conflict between this Agreement and any Schedule, the Schedule shall govern. 

        1.2.    Transaction Procedures.    

        (a)  The
transaction price ("Transaction Price"), quantity ("Transaction Quantity") and delivery point ("Delivery Point") of each Product purchased or sold by EMMT and MW Gen
under this Agreement shall be the price established in a Back-to-Back Transaction between EMMT and an unrelated third party (unless such purchase or sale is a Disclosed Agent
Transaction). 

        (b)  Each
Transaction hereunder shall be designated by EMMT as a "hedge transaction" in EMMT's Energy Trading System or other applicable software at or before the execution
of its corresponding Back-to-Back Transaction (except for Disclosed Agent Transactions, which shall be designated at the time of such Transaction), and shall be subsequently
evidenced by a written notice (a "Transaction Notice") from EMMT that includes reasonable detail of such Transaction, including the Transaction Price, Transaction Quantity, and Delivery Point. Such
notice may be provided (i) in a monthly accounting journal entry; or (ii) in such other form as agreed by the Parties in writing. Any additional information to be provided for
Transactions for each Product shall be specified in the Schedule that applies to such Product. 

        (c)  The
Transactions will be entered into by EMMT and MW Gen according to the guidelines established and amended from time to time (the "Risk Management Guidelines") by the
EMMT Risk Management Committee, which is comprised of senior officers and representatives of both EMMT and MW Gen. EMMT shall be required to use commercially reasonable care in developing and
executing Transactions so as to comply with the Risk Management Guidelines. EMMT shall advise MW Gen on marketing, fuel procurement and other business strategies from time to time. 

        1.3.    Term.    

        (a)  This
Agreement shall commence on the date hereof (the "Effective Date") and shall remain in effect until terminated by either Party upon thirty (30) days prior
written notice, or as the Parties mutually agree in writing; provided, however, that this Agreement shall remain in effect with respect to any Transaction(s) entered into prior to the effective date
of the termination until both Parties have fulfilled their obligations with respect to such Transaction(s). 

        (b)  In
the event either Party shall (i) make an assignment or any general arrangement for the benefit of creditors, (ii) default in the payment of any
obligation to the other Party, (iii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or cause under any bankruptcy or similar law for
the protection of creditors or have such petition filed or proceeding commenced against it, (iv) otherwise become bankrupt or insolvent (however evidenced), or (v) be unable to pay its
debts as they fall due (collectively, "Bankruptcy Proceedings"), then the other Party shall have the right to either withhold and/or suspend deliveries or payment, or terminate this Agreement without
prior notice, in addition to any and all other remedies available hereunder. Either Party may immediately suspend deliveries to the other Party in the event such other Party has not paid any amount
due to the suspending Party hereunder on or before the fifth Business Day following the date such payment is due. 

ARTICLE II

OBLIGATIONS OF THE PARTIES; TITLE  

        2.1.    Title: Risk of Loss.    As between the Parties, the seller of such Product ("Seller") shall be deemed to be in
exclusive control (and responsible for any damages or injury caused thereby) of any Product prior to the Delivery Point of the Product and the purchaser of such Product ("Buyer") shall be deemed to be
in exclusive control (and responsible for any damages or injury caused thereby) of the 

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Product at and from the Delivery Point of the Product, except for Disclosed Agent Transactions (in which case MW Gen shall have such control and responsibility with respect to such Product as the
contract entered into by MW Gen or EMMT on MW Gen's behalf may specify). Each Party warrants that it will deliver Products sold by it hereunder to the
other Party, free and clear of all liens, claims, and encumbrances arising prior to the Delivery Point. Title to and risk of loss related to the Product shall transfer from the Seller to the Buyer at
the Delivery Point. 

        2.2    Indemnity.    MW Gen and EMMT shall indemnify, defend and hold harmless each other from any Claims (as defined
herein) arising from any act or incident occurring when title to the Product is vested in the indemnifying Party; provided that, MW Gen shall not be obligated to indemnify, defend and hold harmless
EMMT from any claims arising from any negligent act or omission of EMMT when title to a Product is vested in MW Gen but is under the control of EMMT in Disclosed Agent Transactions. 

        2.3    Rights of EMMT Subject to Certain Other Agreements.    Notwithstanding any other provision of this Agreement to
the contrary the rights of EMMT under this Agreement, if applicable, are subject to the rights of Com Ed under the Power Purchase Agreements; (ii) the obligations of MW Gen under the Power
Purchase Agreement; and (iii) the terms and provisions of the MW Gen Financing Agreements. 

ARTICLE III

PRICING AND PAYMENT  

        3.1.    Billing and Payment.    Unless otherwise agreed in the specific Product Schedules, EMMT shall send a
settlement statement or otherwise make available a record to MW Gen by the 25th day of each month in respect of purchases and sales of each Product during the preceding month; such statement shall
itemize in reasonable detail the amounts owed, if any, by each Party to the other, including the net amount due by either Party. The Party owing a net payment shall render payment by wire transfer in
immediately available funds by the 30th day of each month to such account as may be specified by the
payee from time to time. MW Gen shall use its best efforts to coordinate payments with EMMT as needed to meet EMMT's payment obligations to third parties. If such day is not a Business Day, then
payment shall be due on the next following Business Day. 

        3.2.    Off Set.    All outstanding Transactions under this Agreement and the obligations to make payment in
connection therewith or under any other agreement between the Parties may be offset against each other, netted, set-off or recouped therefrom. 

        3.3    Audit.    Each Party (and its representative(s)) has the right, at its sole expense and during normal working
hours, to examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any statement, charge or computation made pursuant to this Agreement. If requested, a
Party shall provide to the other Party statements evidencing the quantities of Products delivered hereunder. If any such examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be promptly made and shall bear interest calculated at the Interest Rate from the date the overpayment or underpayment was made until paid;  provided, however, that no adjustment for any statement or payment will be made unless objection to the accuracy thereof was made prior to the lapse of
one (1) year from the rendition thereof; and provided further that this Section 3.3 will
survive any termination of the Agreement for a period of one (1) year from the date of such termination for the purpose of such statement and payment objections. 

ARTICLE IV

EVENTS OF DEFAULT  

        4.1.    Events of Default.    If either Party shall fail to observe or perform any material term, covenant or
condition of this Agreement (except for bankruptcy proceedings which are governed by 

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Section 1.3(b) hereof) and such failure shall remain uncured for a period of ten (10) days after receipt of written notice thereof by the other Party (each such failure shall constitute
an "Event of Default"), then, upon the occurrence of any such Event of Default, the non-defaulting Party may, in addition to the other rights and remedies provided for in this Agreement,
immediately terminate this Agreement by giving the defaulting Party written notice of such termination, and upon the giving of such notice, all rights of the defaulting Party and all obligations of
the non-defaulting Party under this Agreement shall cease, except to the extent otherwise provided in Section 4.2 or Section 5.1. The defaulting Party shall pay upon demand
all costs, expenses, losses, expenditures and damages (including, without limitation, reasonable attorneys' fees) incurred by or on behalf of the non-defaulting Party in connection with
any Event of Default, together with interest thereon at the Interest Rate from the date of the Event of Default. 

        4.2.    Survival.    The termination of this Agreement pursuant to Section 4.1 shall in no event relieve either
Party of its liability and obligations hereunder that accrued prior to such termination, all of which shall survive any such termination. 

        4.3.    Remedies Cumulative Waivers.    

        (a)  If
an Event of Default shall have occurred and be continuing, the non-defaulting Party shall have, in addition to the rights and remedies provided for in
Section 4, all rights and remedies available at law, in equity or otherwise. 

        (b)  No
failure to exercise and no delay in exercising, on the part of the non- defaulting Party, any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Agreement, including with particularity Section 4.1, are cumulative and not exclusive
of any rights, remedies, powers, and privileges provided by law. 

        4.4.    Right to Cure.    The non-defaulting Party, without waiving or releasing any obligation or Event
of Default, may (but shall be under no obligation to) remedy any Event of Default for the account of and at the sole cost and expense of the defaulting Party. All reasonable
out-of-pocket costs and expenses so incurred (including, without limitation, reasonable attorneys' fees), together with interest thereon at the Interest Rate from the date on
which such sums or expenses are paid by the non-defaulting Party, shall be paid by the defaulting Party to the non-defaulting Party on demand. 

ARTICLE V

INDEMNITY  

        5
..1.    Indemnification.    Each Party shall indemnify, hold harmless and defend the other Party, its officers,
directors, employees, assignees, affiliates (other than the indemnifying Party), successors and assigns (each an "Indemnified Person") from and against any and all claims (including without limitation
third party claims for personal injury or real or personal property damage), losses, damages, demands, liabilities, fines, penalties, charges, administrative and judicial proceedings (including
informal proceedings) and orders, judgments, remedial action, requirements, enforcement actions of any kind, and all reasonable and documented costs and expenses incurred in connection therewith
(including but not limited to reasonable and documented attorneys' and/or paralegals' fees and expenses) (collectively, "Claims"), arising in whole or in part, out of default in the performance of, or
the negligent performance of, any obligations of such Party under this Agreement; provided, however, such Party shall not be required to indemnify any
Indemnified Person under this Section 5.1 for any Claim to the extent resulting from the misconduct or gross negligence of such Indemnified Person. It is expressly
understood and agreed that the indemnity provided for herein shall survive the expiration or termination of and shall be separate and independent from any remedy under this Agreement. 

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        5.2.    Duty to Mitigate.    Each Party agrees that it has a duty to mitigate damages and covenants that it will use
commercially reasonable efforts to minimize any damages it may incur as a result of the other Party's performance of non-performance of this Agreement. 

ARTICLE VI

DEFINITIONS  

        "AAA" shall have the meaning set forth in Section 7.3. 

        "Ancillary
Services" means regulation, spinning reserve, voltage support and black start services supporting transmission of Energy from generation resources to loads while maintaining
reliable operation of the transmission grid. 

        "Back-to-Back
Transactions" shall mean transactions with unrelated third parties that are not Disclosed Agent Transactions pursuant to which a Product is either
(a) purchased by EMMT (for resale to MW Gen), or (b) sold by EMMT (with the intent to acquire the Product sold from MW Gen), and any other transactions with unrelated third parties which
are designated pursuant to Section 1.2 as "hedge transactions". 

        "Bankruptcy
Proceedings" shall have the meaning set forth in Section 1.3. 

        "Business
Day" shall be any day on which Federal Reserve banks are open for regular commercial business in New York, New York. 

        "Buyer"
shall have the meaning set forth in Section 2.1. 

        "Capacity"
means the right, but not the obligation, to schedule and take Merchantable Energy. 

        "Claims"
shall have the meaning set forth in Section 5.1. 

        "Collins
Participation Agreements" means: (a) that certain Participation Agreement, dated as of December 15, 1999 among Collins Holdings EME, LLC ("Collins Holdings"),
Wilmington Trust Company, as the Owner Trustee, Collins Trust I, as the Owner Lessor, Collins Generation I, LLC, as Owner Participant, Holdings, Midwest, Funding LLC, Bayerische Landesbank
International S.A. (the "Midwest LC Issuer"), Bayerische Landesbank Girozentrale ("RCE LC Issuer") and the Holder Representative (as such term is defined therein); (b) the Participation
Agreement, dated as of December 15, 1999 among Collins Holdings, Wilmington Trust Company, as the Owner Trustee, Collins Trust II, as the Owner Lessor, Collins Generation II, LLC, as Owner
Participant, Holdings, Midwest, Funding LLC, the Midwest LC Issuer, the RCE LC Issuer and the Holder Representative (as such term is defined therein); (c) the Participation Agreement, dated as
of December 15, 1999 among Collins Holdings, Wilmington Trust Company, as the Owner Trustee, Collins Trust III, as the Owner Lessor, Collins Generation III, LLC, as Owner Participant, Holdings,
Midwest, Funding LLC, the Midwest LC Issuer, the RCE LC Issuer and the Holder Representative (as such term is defined therein); and (d) the Participation Agreement, dated as of
December 15, 1999 among Collins Holdings, Wilmington Trust Company, as the Owner Trustee, Collins Trust IV, as the Owner Lessor, Collins Generation IV, LLC, as Owner Participant, Holdings,
Midwest, Funding LLC, the Midwest LC Issuer, the RCE LC Issuer and the Holder Representative (as such term is defined therein); 

        "Com
Ed" shall mean the Commonwealth Edison Company. 

        "Credit
Agreements" means (a) that certain Credit Agreement dated as of December 15, 1999, among Edison Mission Energy, certain commercial lending institutions named
therein, and The Chase Manhattan Bank as administrative agent for the lenders, (b) that certain Credit Agreement dated as of December 15, 1999, among Edison Mission Midwest Holdings Co.,
certain commercial lending institutions, and The Chase Manhattan Bank as administrative agent for the lenders, and (c) other documents executed pursuant to such Credit Agreements. 

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        "Delivery
Point" shall have the meaning set forth in Section 1.2. 

        "Disclosed
Agent Transaction" shall have the meaning set forth in the fourth recital of this Agreement. 

        "Dispute"
shall have the meaning set forth in Section 7.3. 

        "Effective
Date" shall have the meaning set forth in Section 1.3. 

        "Energy"
means Merchantable Energy, Capacity, and/or Ancillary Services. 

        "Event
of Default" shall have the meaning set forth in Section 4.1. 

        "Facilities"
shall have the meaning set forth in the preamble to this Agreement. 

        "Indemnified
Person" shall have the meaning set forth in Section 5. 

        "Interest
Rate" means, for any date, the lesser of (i) two percent over the per annum rate of interest equal to the prime lending rate as may from time to time be published in the
Wall Street Journal under "Money Rates" and (ii) the maximum lawful interest rate permitted by applicable law. 

        "Joliet
Participation Agreements" means (a) that certain Participation Agreement, dated as of August 17, 2000 among Midwest, Joliet Trust I, Wilmington Trust Company, as
the Owner Trustee, Joliet Generation I, LLC, Edison Mission Energy ("EME"), United States Trust Company of New York as Lease Indenture Trustee and United States Trust Company of New York as Pass
Through Trustees and (b) that certain Participation Agreement, dated as of August 17, 2000 among Midwest, Joliet Trust II, Wilmington Trust Company, as the Owner Trustee, Joliet
Generation II, LLC, EME, United States Trust Company of New York as Lease Indenture Trustee and United States Trust Company of New York as Pass Through Trustees. 

        "Leases"
means (a) that certain Facility Sublease Agreement dated as of December 15, 1999, by and among Collins Holdings EME, LLC, as Facility Sublessor, MW Gen, as
Facility Sublessee, and Collins Trust I, as Owner Lessor, (b) that certain Facility Site Lease Agreement dated as of December 15, 1999, between MW Gen, as Ground Lessor, and Collins
Trust I, as Ground Lessee, (c) that certain Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings EME, LLC, as Ground
Sub-Sublessor, and MW Gen, as Ground Sub-Sublessee, (d) that certain Facility Sublease Agreement dated as of December 15,1999, by and among Collins Holdings EME,
LLC, as Facility Sublessor, MW Gen, as Facility Sublessee, and Collins Trust II, as Owner Lessor, (e) that certain Facility Site Lease Agreement dated as of December 15, 1999, between MW
Gen, as Ground Lessor, and Collins Trust II, as Ground Lessee, (f) that certain Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings
EME, LLC, as Ground Sub-Sublessor, and MW Gen, as Ground Sub-Sublessee, (g) that certain Facility Sublease Agreement dated as of December 15,1999, by and among
Collins Holdings EME, LLC, as Facility Sublessor, MW Gen, as Facility Sublessee, and Collins Trust III, as Owner Lessor, (h) that certain Facility Site Lease Agreement dated as of
December 15, 1999, between MW Gen, as Ground Lessor, and Collins Trust III, as Ground Lessee, (i) that certain Facility Site Sub-Sublease Agreement dated as of
December 15, 1999, between Collins Holdings EME, LLC, as Ground Sub-Sublessor, and Seller, as Ground Sub-Sublessee,(j) that certain
Facility Sublease Agreement dated as of December 15, 1999, by and among Collins Holdings EME, LLC, as Facility Sublessor, MW Gen, Facility Sublessee, and Collins Trust IV, as Owner Lessor;
(k) that certain Facility Site Lease Agreement dated as of December 15,1999, between MW Gen, as Ground Lessor, and Collins Trust IV, as Ground Lessee, and (l) that certain
Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings EME, LLC, as Ground Sub-Sublessor, and MW Gen, as Ground
Sub-Sublessee; (m) that certain Facility Lease Agreement (T1), dated as of August 17, 2000, between Powerton Trust I, as Owner Lessor, and MW Gen, as Facility Lessee;
(n) that certain Facility Lease Agreement (T2), dated as of August 17, 2000, between Powerton Trust II, as Owner Lessor, and MW Gen, as Facility Lessee; 

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(o) that certain Facility Lease Agreement (T1), dated as of August 17, 2000, between Joliet Trust I, as Owner Lessor, and MW Gen, as Facility Lessee; (p) that certain Facility
Lease Agreement (T2), dated as of August 17, 2000, between Joliet Trust II, as Owner Lessor, and MW Gen, as Facility Lessee; (q) that certain Facility Site Lease and Easement Agreement
(T1), dated as of August 17, 2000, between MW Gen, as Ground Lessor, and Powerton Trust I, as Ground Lessee; (r) that certain Facility Site Lease and Easement Agreement (T2), dated as of
August 17, 2000, between MW Gen, as Ground Lessor, and Powerton Trust II, as Ground Lessee; (s) that certain Facility Site Lease and Easement Agreement (T1), dated as of
August 17, 2000, between MW Gen, as Ground Lessor, and Joliet Trust I, as Ground Lessee; (t) that certain Facility Site Lease and Easement Agreement (T2), dated as of August 17,
2000, between MW Gen, as Ground Lessor, and Joliet Trust II, as Ground Lessee; (u) that certain Facility Site Sublease Agreement (T1), dated as of August 17, 2000, between Powerton Trust
I, as Ground Sublessor, and MW Gen, as Ground Sublessee; (v) that certain Facility Site Sublease Agreement (T2), dated as of August 17, 2000, between Powerton Trust II, as Ground
Sublessor, and MW Gen, as Ground Sublessee; (w) that certain Facility Site Sublease Agreement (T1), dated as of August 17, 2000, between Joliet Trust I, as Ground Sublessor, and MW Gen,
as Ground Sublessee; and (x) that certain Facility Site Sublease Agreement (T2), dated as of August 17, 2000, between Joliet Trust II, as Ground Sublessor, and MW Gen, as Ground
Sublessee. 

        "Merchantable
Energy" means electric energy of the character commonly known as three-phase, sixty-hertz electric energy that is delivered at the nominal voltage of the delivery point. 

        "MW
Gen Financing Documents" means the Credit Agreements and the Participation Agreements and other documents executed in connection with the Credit Agreements and the Participation
Agreements. 

        "Participation
Agreements" means, collectively, the Collins Participation Agreements, Powerton Participation Agreements and Joliet Participation Agreements. 

        "Power
Purchase Agreements" means (a) that certain Power Purchase Agreement dated as of December 15,1999, between Commonwealth Edison Company and MW Gen with respect to the
Crawford, Fisk, Waukegan, Will County, Joliet and Powerton Generating Stations, (b) that certain Power Purchase Agreement dated as of December 15,1999, between Commonwealth Edison
Company and MW Gen with respect to the Collins Generating Station, and (c) that certain Power Purchase Agreement dated as of December 15,1999, between Commonwealth Edison Company and
Seller with
respect to the Crawford, Fisk, Waukegan, Calumet, Joliet, Bloom, Electric Junction, Sabrooke and Lombard Peaking Units. 

        "Powerton
Participation Agreements" means (a) that certain Participation Agreement, dated as of August 17, 2000 among Midwest, Powerton Trust I, Wilmington Trust Company,
as the Owner Trustee, Powerton Generation I, LLC, Edison Mission Energy ("EME"), United States Trust Company of New York as Lease Indenture Trustee and United States Trust Company of New York as Pass
Through Trustees and (b) that certain Participation Agreement, dated as of August 17, 2000 among Midwest, Powerton Trust II, Wilmington Trust Company, as the Owner Trustee, Powerton
Generation II, LLC, EME, United States Trust Company of New York as Lease Indenture Trustee and United States Trust Company of New York as Pass Through Trustees. 

        "Product(s)"
shall have the meaning set forth in the Third Recital to this Agreement. 

        "Risk
Management Guidelines" shall have the meaning set forth in Section 1.2. 

        "Seller"
shall have the meaning set forth in Section 2.1. 

        "Transaction"
shall have the meaning set forth in the Third Recital to this Agreement. 

        "Transaction
Notice" shall have the meaning set forth in Section 1.2. 

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        "Transaction
Price" shall have the meaning set forth in Section 1.2. 

        "Transaction
Quantity" shall have the meaning set forth in Section 1.2. 

ARTICLE VII

MISCELLANEOUS  

        7.1    Notices.    All notices, requests, statements, payments, and other communications required or permitted by the
terms hereof to be given to any person shall be made as specified in Annex I. Notices required to be in writing shall be delivered by letter, facsimile, or other documentary form. Notice by facsimile
or hand delivery shall be deemed to have been received by the close of the Business Day on which it was transmitted or hand delivered (unless transmitted or hand delivered after close of business in
which case it shall be deemed received at the close of the next Business Day). Notice by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent.
A Party may change its addresses by providing written notice of same in accordance herewith. 

        7.2.    Successors and Assigns.    Neither Party shall assign this Agreement or its rights hereunder without the prior
written consent of the other Party, which consent shall not be unreasonably withheld or delayed. This Agreement shall be binding upon and inure to the benefit of MW Gen, EMMT and their permitted
successors and assigns. 

        7.3.    Binding Arbitration.    The Parties shall attempt to resolve any dispute, controversy, difference, or claim
arising between them concerning the interpretation, performance, or enforcement of this Agreement (a "Dispute") through direct discussion. If, in the sole opinion and discretion of either Party, such
discussion is unsuccessful, such Party shall submit the Dispute to binding arbitration, and the binding arbitration shall be held in Los Angeles, California. Unless otherwise agreed by the Parties,
the Dispute shall be submitted to the American Arbitration Association ("AAA") for binding arbitration pursuant to the commercial arbitration rules of the AAA. 

        7.4.    Governing Law.    THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 

        7.5.    Amendments    The Parties may from time to time enter into written amendments, supplements or modifications
hereto. 

        7.6.    Counterparts.    This Agreement may be executed in any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same instrument. 

        7.7.    Severability.    Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

        7.8.    Headings and Table of Contents.    The headings and table of contents contained in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the meaning hereof. 

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        IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above
written. 

MlDWEST
GENERATION, LLC,

a Delaware limited liability company 

By:
/s/ John Finneran 

Name:
John Finneran 

Title:
Vice President 

EDISON
MISSION MARKETING & TRADING, INC.,

a California corporation 

By:
/s/ Paul Jacob 

Name:
Paul Jacob 

Title:
Vice President 

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ANNEX I    
  

NOTICES  

MW GEN:  

NOTICES & CORRESPONDENCE

Midwest Generation LLC

One Financial Place

440 South LaSalle Street Suite 3500

Chicago, IL 60605

Attn: Georgia R. Nelson

Facsimile No.: (312) 581-6111 

BILLING STATEMENTS

Midwest Generation LLC

18101 Von Karman Ave., Suite 1700

Irvine, CA 92612-1046

Attn: Ken Ziegler

Facsimile No.: (949) 225-2753 

PAYMENTS

Bank

ABA Routing #

Acct. No. 

EMMT:  

NOTICES & CORRESPONDENCE

Edison Mission Marketing & Trading, Inc.

160 Federal Street

Boston, MA 02110-1776

(617) 912-6003 (Facsimile)

Attention: General Counsel 

PAYMENTS:

Edison Mission Marketing & Trading, Inc.

160 Federal Street

Boston, MA 02110-1776

(617) 912-5702 (Facsimile)

Attention: Trade Accounting

Bank: Fleet Bank

ABA Routing #011-500-010

Acct No.: 056-225-6897

Account of: Edison Mission Marketing & Trading, Inc. Operating Account 

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SCHEDULE A TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT
  (ENERGY PURCHASE AND SALE SCHEDULE)    
  

        This SCHEDULE A TO MASTER PURCHASE, SALE, AND SERVICES AGREEMENT (ENERGY PURCHASE AND SALE) ("Energy Schedule") is entered into this 23rd day of March, 2001
between MIDWEST GENERATION, LLC ("MW Gen"), a Delaware limited liability company, and EDISON MISSION MARKETING & TRADING, INC. ("EMMT"), a California
corporation. Each of MW Gen and EMMT may be referred to herein as a "Party" and together shall be referred to as the "Parties". 

        WHEREAS,
the Parties entered into a Master Purchase, Sale and Services Agreement of even date herewith (the "Agreement"), which provided that Schedules might be added thereto from time
to time setting forth the terms and conditions upon which the Parties would buy and sell Products from one another and facilitate each other's entering into Transactions with third parties; 

        WHEREAS,
the Parties desire to add this Energy Schedule to the Agreement to provide for the purchase and sale of Energy from MW Gen to EMMT and for the facilitation of the Com Ed
Transactions (as hereafter defined); 

        WHEREAS,
all capitalized terms used in this Energy Schedule that are defined in the Agreement shall have the respective meanings herein given to such terms in the Agreement; 

        NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and
agree as follows: 

ARTICLE 1

SCOPE OF AGREEMENT  

        1.1.    Scope of Agreement.    

        (a)  Pursuant
to and subject to the terms and conditions set forth herein, the Parties agree that EMMT will, as MW Gen's agent, arrange for the sale by MW Gen and delivery to
Commonwealth Edison Company ("Com Ed") of all Energy required to be sold to Com Ed under the Power Purchase Agreements (the "Com Ed Transactions"). For the purposes of this Energy Schedule, all Com Ed
Transactions are considered Disclosed Agent Transactions. 

        (b)  In
addition to facilitating the Com Ed Transactions, EMMT shall purchase from MW Gen, for resale to unrelated third party purchasers, all of the remaining output of the
Facilities. EMMT and MW Gen may also enter into other transactions for the purchase and sale of Energy from time to time.Energy sales from MW Gen to EMMT shall be for a duration of no more than one
year, except for the Transactions in which EMMT acts as MW Gen's agent, including, but not limited to, Com Ed Transactions (as defined herein), or unless agreed to by the Parties in writing. 

        (c)  EMMT
may also enter into financial hedge transactions related to the Energy output of the Facilities from time to time. 

        (d)  All
Transactions described in subsections (a) through (c) above (collectively, "Energy Transactions") shall be entered into by EMMT and MW Gen according to
the guidelines established and amended from time to time (the "Risk Management Guidelines") by the EMMT Risk Management Committee, which is comprised of senior officers and representatives of both
EMMT and MW Gen. EMMT shall be required to use commercially reasonable care in developing and executing Energy Transactions so as to comply with the Risk Management Guidelines. EMMT shall advise MW
Gen on marketing and other business strategies from time to time. 

A-1

 

        (e)  The
terms and conditions of the Agreement shall apply to Energy Transactions entered into pursuant to this Energy Schedule, provided that, in case of any conflict
between the Agreement and this Energy Schedule, this Energy Schedule shall govern. Energy Transactions in which MW Gen sells Energy to EMMT other than Com Ed Transactions in which EMMT acts as MW
Gen's agent shall be for a duration of no more than one year, unless agreed to by the Parties in writing. 

        1.2.    Transaction Procedures and Information.    

        (a)  MW
Gen shall promptly deliver all material information related to the condition and output of the Facilities or as otherwise reasonably requested by EMMT from time to
time and promptly deliver to EMMT security coordinator, reliability region, independent system operator, regional transmission organizations, governmental authorities (collectively, "Reliability
Organizations"), and other third party notices or communications. MW Gen shall also designate EMMT to Reliability Organizations as having any and all authority necessary to effectuate the Transactions
provided for in this Energy Schedule. 

        (b)  The
transaction price ("Transaction Price"), quantity ("Transaction Quantity") and delivery point ("Delivery Point") of Energy purchased or sold by EMMT and MW Gen under
this Agreement, and the terms and conditions of any financial transaction entered into under this Agreement, shall be established in a Back-to-Back Transaction between EMMT and
an unrelated third party (except for Disclosed Agent Transactions). Each Energy Transaction hereunder shall be designated by EMMT as a "hedge transaction" in EMMT's Energy Trading System or other
applicable software at or before the execution of its corresponding Back-to-Back Transaction (except for Disclosed Agent Transactions, which shall be designated at the time of
such Transaction), and shall be subsequently evidenced by a written notice (a "Transaction Notice") from EMMT that includes reasonable detail of such Transaction, including the Transaction Price,
Transaction Quantity, and Delivery Point. Such notice may be provided (i) in a monthly accounting journal entry; or (ii) in such other form as agreed by the Parties in writing. 

        1.3.    Term.    

        (a)  This
Energy Schedule shall commence on the date hereof (the "Schedule Effective Date") and shall remain in effect until terminated by either Party upon thirty
(30) days prior written notice, or as the Parties mutually agree in writing; provided, however, that this Energy Schedule shall remain in effect with respect to any Transaction(s) entered into
prior to the effective date of the termination until both Parties have fulfilled their obligations with respect to such Transaction(s). 

        (b)  This
Energy Schedule shall terminate automatically upon a default by MW Gen under the Leases or any Credit Agreement, provided that the Parties shall fulfill all of
their obligations with respect to Transactions entered into prior to such termination. 

ARTICLE II

OBLIGATIONS OF THE PARTIES; TITLE  

        2.1.    Delivery Point.    The Delivery Point shall be the bus bar at the Facility generating the energy for delivery
unless the Parties agree otherwise. With respect to each Transaction (except for Disclosed Agent Transactions), the selling Party ("Seller") shall sell and deliver, or cause to be delivered, and the
buying Party ("Buyer") shall purchase and receive, or cause to be received, the Transaction Quantity at the Delivery Point. 

        2.2.    Dispatch Procedures.    The Parties shall develop procedures for coordinating the dispatch of Energy at the
Delivery Points pursuant to this Energy Schedule. 

A-2

 

        2.3.    Title: Risk of Loss: and Indemnity.    For the purposes of Section 2.1 of the Agreement, EMMT shall act
solely as MW Gen's agent with respect to all Com Ed Transactions. 

        2.4.    Force Majeure.    If Seller or Buyer is rendered unable by Force Majeure to carry out, in whole or in part,
its obligations under a Transaction and Seller or Buyer, as the case may be, gives notice and full details of the event to Buyer as soon as practicable after the occurrence of the event, then during
the pendency of such Force Majeure but for no longer period, the obligations of Seller or Buyer as the case may be (other than the obligations to make payments then due or becoming due with respect to
performance prior to the event) shall be suspended to the extent required. The Party claiming Force Majeure shall remedy the Force Majeure with all reasonable dispatch. 

        2.5.    Failure to Deliver.    

        (a)  In
Disclosed Agent Transactions, MW Gen shall reimburse EMMT for any charges, penalties or damages EMMT incurs as a result of MW Gen's failure to deliver or receive the
Transaction Quantity to such third parties. 

        (b)  In
Transactions other than Disclosed Agent Transactions, unless excused by Force Majeure or Buyer's failure to receive Energy, if Seller fails to deliver all or part of
the Transaction Quantity, Seller shall pay Buyer for each part of the Transaction Quantity not delivered an amount equal to either (i) the sum of (x) two cents ($0.02) for each megawatt
hour of Energy purchased by the Buyer to replace Energy the Seller has failed to deliver and (y) the price at which Buyer, acting in a commercially reasonable manner, purchases substitute
Energy not delivered by Seller (plus any additional transmission charges, if any, incurred by Buyer to the Delivery Point) or (ii) absent a purchase, the market price for such quantity at such
Delivery Point as determined by Buyer in a commercially reasonable manner. 

        (c)  Payments
pursuant to this Section 2.5 shall be due and payable by Seller according to the payment terms in Section 3.1 of the Agreement. 

ARTICLE III

PRICING AND PAYMENT  

        3.1    Price and Reimbursement.    

        (a)  For
sales by MW Gen to EMMT, EMMT shall pay MW Gen the Transaction Price for the Transaction Quantity less the Reimbursements (as defined herein). For sales by EMMT to
MW Gen, MW Gen shall pay EMMT the Transaction Price for the Transaction Quantity plus the Reimbursements. 

        (b)  With
respect to any Transaction Quantity, the term "Reimbursements" shall mean (i) $0.02/MWh ($0.02/MW-day for Capacity) for each megawatt hour (or
MW-day in the case of Capacity) of the Transaction Quantity; (ii) FERC fees accrued on such Transaction Quantity; (iii) broker fees incurred with regard to such Transaction
Quantity; (iv) any power pool, independent system operator, regional transmission operator, or security coordinator charges incurred as a result of the relevant Transaction;
(v) transmission charges incurred with regard to such Transaction Quantity; and (vi) any other out-of-pocket expenses incurred by EMMT in effectuating the
relevant Transaction. Option premia paid to third parties and directly related to the Transactions shall be charged to MW Gen as Reimbursements. Option premia received from third parties and directly
related to the Transactions shall be paid to MW Gen or credited against amounts owing from MW Gen to EMMT. 

        (c)  MW
Gen shall pay for any generation, dispatch, and/or settlement management software and consultant services costs reasonably allocable to the relevant Transactions,
provided that, such software and consultant services have been approved by MW Gen. 

A-3

 

        (d)  The
unrealized results of all financial Transactions entered into pursuant to this Agreement shall not be included in the monthly settlement between MW Gen and EMMT. 

ARTICLE IV

DEFINITIONS  

        In addition to the defined terms set forth in the Agreement, the following terms shall have the following meanings for purposes of this Energy Schedule: 

        "Buyer"
shall have the meaning set forth in Section 2.1. 

        "Com
Ed Transaction(s)" shall have the meaning set forth in Section 1.1. 

        "Credit
Agreements" means (a) that certain Credit Agreement dated as of December 15, 1999, among Edison Mission Energy, certain commercial lending institutions named
therein, and The Chase Manhattan Bank as administrative agent for the lenders, (b) that certain Credit Agreement dated as of December 15, 1999, among Edison Mission Midwest Holdings Co.,
certain commercial lending institutions, and The Chase Manhattan Bank as administrative agent for the lenders, and (c) other documents executed pursuant to such Credit Agreements. 

        "Delivery
Point" shall have the meaning set forth in Section 1.2. 

        "Disclosed
Agent Transactions" shall have the meaning set forth in the Agreement. 

        "Force
Majeure" shall have the meaning set forth in Section 2.5. 

        "Leases"
means (a) that certain Facility Sublease Agreement dated as of December 15, 1999, by and among Collins Holdings EME, LLC, as Facility Sublessor, MW Gen, as
Facility Sublessee, and Collins Trust I, as Owner Lessor, (b) that certain Facility Site Lease Agreement dated as of December 15, 1999, between MW Gen, as Ground Lessor, and Collins
Trust I, as Ground Lessee, (c) that certain Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings EME, LLC, as Ground
Sub-Sublessor, and MW Gen, as Ground Sub-Sublessee, (d) that certain Facility Sublease Agreement dated as of December 15,1999, by and among Collins Holdings EME,
LLC, as Facility Sublessor, MW Gen, as Facility Sublessee, and Collins Trust II, as Owner Lessor, (e) that certain Facility Site Lease Agreement dated as of December 15, 1999, between MW
Gen, as Ground Lessor, and Collins Trust II, as Ground Lessee, (f) that certain Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings
EME, LLC, as Ground Sub-Sublessor, and MW Gen, as Ground Sub-Sublessee, (g) that certain Facility Sublease Agreement dated as of December 15,1999, by and among
Collins Holdings EME, LLC, as Facility Sublessor, MW Gen, as Facility Sublessee, and Collins Trust III, as Owner Lessor, (h) that certain Facility Site Lease Agreement dated as of
December 15, 1999, between MW Gen, as Ground Lessor, and Collins Trust III, as Ground Lessee,
(i) that certain Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings EME, LLC, as Ground Sub-Sublessor, and Seller, as
Ground Sub-Sublessee,(j) that certain Facility Sublease Agreement dated as of December 15, 1999, by and among Collins Holdings EME, LLC, as Facility Sublessor, MW Gen, Facility
Sublessee, and Collins Trust IV, as Owner Lessor; (k) that certain Facility Site Lease Agreement dated as of December 15,1999, between MW Gen, as Ground Lessor, and Collins Trust IV, as
Ground Lessee, and (l) that certain Facility Site Sub-Sublease Agreement dated as of December 15, 1999, between Collins Holdings EME, LLC, as Ground
Sub-Sublessor, and MW Gen, as Ground Sub-Sublessee, (m) that certain Facility Lease Agreement (T1), dated as of August 17, 2000, between Powerton Trust I, as
Owner Lessor, and MW Gen, as Facility Lessee; (n) that certain Facility Lease Agreement (T2), dated as of August 17, 2000, between Powerton Trust II, as Owner Lessor, and MW Gen, as
Facility Lessee; (o) that certain Facility Lease Agreement (T1), dated as of August 17, 2000, between Joliet Trust I, as Owner Lessor, and MW Gen, as Facility Lessee; (p) that
certain Facility Lease Agreement (T2), dated as 

A-4

 

of August 17, 2000, between Joliet Trust II, as Owner Lessor, and MW Gen, as Facility Lessee; (q) that certain Facility Site Lease and Easement Agreement (T1), dated as of
August 17, 2000, between MW Gen, as Ground Lessor, and Powerton Trust I, as Ground Lessee; (r) that certain Facility Site Lease and Easement Agreement (T2), dated as of August 17,
2000, between MW Gen, as Ground Lessor, and Powerton Trust II, as Ground Lessee; (s) that certain Facility Site Lease and Easement Agreement (T1), dated as of August 17, 2000, between MW
Gen, as Ground Lessor, and Joliet Trust I, as Ground Lessee; (t) that certain Facility Site Lease and Easement Agreement (T2), dated as of August 17, 2000, between MW Gen, as Ground
Lessor, and Joliet Trust II, as Ground Lessee; (u) that certain Facility Site Sublease Agreement (T1), dated as of August 17, 2000, between Powerton Trust I, as Ground Sublessor, and MW
Gen, as Ground Sublessee; (v) that certain Facility Site Sublease Agreement (T2), dated as of August 17, 2000, between Powerton Trust II, as Ground Sublessor, and MW Gen, as Ground
Sublessee; (w) that certain Facility Site Sublease Agreement (T1), dated as of August 17, 2000, between Joliet Trust I, as Ground Sublessor, and MW Gen, as Ground Sublessee; and
(x) that certain Facility Site Sublease Agreement (T2), dated as of August 17, 2000, between Joliet Trust II, as Ground Sublessor, and MW Gen, as Ground Sublessee."Reliability
Organizations" shall have the meaning set forth in Section 1.2. 

        "Reimbursements"
shall have the meaning set forth in Section 3.1. 

        "Seller"
shall have the meaning set forth in Section 2.1. 

        IN
WITNESS WHEREOF, the Parties hereto have caused this Energy Schedule to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above
written. 

MlDWEST
GENERATION, LLC,

a Delaware limited liability company 

By:
/s/ John Finneran 

Name:
John Finneran 

Title:
Vice President 

EDISON
MISSION MARKETING & TRADING, INC.,

a California corporation 

By:
/s/ Paul Jacob 

Name:
Paul Jacob 

Title:
President 

A-5

  

 
 

SCHEDULE B TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT
  (NATURAL GAS PURCHASE, SALE AND SERVICES SCHEDULE)    
  

        This SCHEDULE B TO MASTER PURCHASE, SALE, AND SERVICES AGREEMENT (NATURAL GAS PURCHASE, SALE AND SERVICES SCHEDULE) ("Gas Schedule") is entered into this 23rd day
of March, 2001 between MIDWEST GENERATION, LLC ("MW Gen"), a Delaware limited liability company, and EDISON MISSION MARKETING & TRADING, INC. ("EMMT"), a California corporation. Each of
MW Gen and EMMT may be referred to herein as a "Party" and together referred to as the "Parties"). 

        WHEREAS,
the Parties entered into a Master Purchase, Sale and Services Agreement of even date herewith (the "Agreement"), which provided that Schedules might be added thereto from time
to time setting forth the terms and conditions upon which the Parties would buy and sell Products from one another and facilitate each other's entering into Transactions with third parties; 

        WHEREAS,
the Parties desire to add this Gas Services Schedule to the Agreement to provide for the facilitation of the purchase and sale of physical and financial Gas by MW Gen and EMMT
and EMMT's arrangement for the transportation and storage of natural gas for such purchases and sales for MW Gen; 

        WHEREAS,
the Parties entered into a Services Agreement (Natural Gas) dated as of December 15, 1999, which is terminated and superseded by this Gas Services Schedule; 

        WHEREAS,
the Parties entered into a Base Contract for Short-Term Sale and Purchase of Natural Gas dated on or about January 7, 2000 (the "GISB"), which supplements the
terms of this Gas Schedule and remains unaffected by this Gas Services Schedule, and is attached hereto and fully incorporated by reference herein. 

        WHEREAS,
all capitalized terms used in this Gas Schedule that are defined in the Agreement shall have the respective meanings herein given to such terms in the Agreement; 

        NOW
THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and
agree as follows: 

ARTICLE I

SCOPE OF AGREEMENT  

        1.1    Scope of Agreement.    This Gas Schedule shall govern the Parties' rights and obligations with respect to the
Parties' purchase and sale of Gas between each other and third parties and the arrangement for transportation and storage of such Gas. Unless otherwise agreed, EMMT shall purchase and sell Gas and
arrange for Transportation and storage of Gas solely as agent for MW Gen. The GISB shall govern the purchase and sale of Gas between the Parties in physical Transactions in which each Party is a
principal, except as provided herein. The terms and conditions of the Agreement shall apply to Transactions entered into pursuant to this Gas Schedule, provided that, in case of any conflict between
the Agreement and this Gas Schedule, this Gas Schedule shall govern. In case of any conflict between the GISB and this Gas Schedule, this Gas Schedule shall govern. 

        1.2    Transaction Procedures and Information.    MW Gen shall promptly deliver to EMMT all material information
related to its supply and requirements for natural gas and other information related to the Facilities, including, but not limited to, estimated hourly output of the Facilities for Gas usage
projections, which shall be delivered at least two (2) Business Days prior to such usage, historical data, and any information related to the heat rate(s) of the Facilities. Any data received
by MW Gen from Com Ed related to Gas usage or otherwise related to the Facilities shall be promptly delivered to EMMT, and MW Gen shall notify EMMT from time to time of MW Gen's Gas requirements as
they 

B-1

 

become known to MW Gen. Such notification (each, a "Requirements Notice") shall be effectuated and evidenced (i) by a written notice executed by MW Gen, or (ii) in such other form as
agreed by the Parties in writing. The information to be provided in a Requirements Notice shall include the type and amount of Gas required, the desired delivery date and the desired delivery point of
such Gas. 

        1.3    Services.    

        (a)  Subject
to the terms, conditions, restrictions and limitations set forth herein, the Parties agree that EMMT will perform all services reasonably necessary for the
performance and satisfaction of all of EMMT's obligations hereunder, including, without limitation: 

          (i)  Developing
Gas procurement strategy in conjunction with MW Gen to support the Risk Management Guidelines; 

        (ii)  Identifying
sources of Gas for the Facilities and proposing strategies for the purchasing (either from third party sellers or from EMMT itself), Transportation and
storage of Gas for the Facilities, including but not limited to the term of different supply contracts; 

        (iii)  Negotiating
for approval and execution by MW Gen (or EMMT as agent for MW Gen in Disclosed Agent Transactions) and administering all contracts or arrangements
necessary for MW Gen to purchase Gas; 

        (iv)  Negotiating
for approval and execution by MW Gen and administering all of MW Gen's contracts or arrangements necessary for the Transportation of Gas to the Facilities; 

        (v)  Developing
procedures for the receipt of the Gas delivered to the Facilities; 

        (vi)  Reviewing
and recommending approval (for final approval and execution by MW Gen) for payment by MW Gen to providers of goods and services in connection with MW Gen's
contracts or arrangements administered by EMMT pursuant to clauses (i) through (iv) above; 

      (vii)  Maintaining
records with respect to the identification, purchase, scheduling, Transportation, delivery and storage of Gas pursuant hereto; 

      (viii)  Performing
any other acts necessary to support the identification, purchase, scheduling, Transportation, delivery and storage of Gas in accordance with this Schedule; 

        (ix)  Providing
MW Gen on a monthly basis fuel cost projections to be incorporated into MW Gen's Operating Budget for the current calendar year and the subsequent two years
as well as EMMT's projected costs for managing the Gas supply in accordance with the terms of this Schedule; 

        (x)  Identifying
purchasers of excess Gas (which may be either third party purchases or EMMT itself) and developing strategies for the sale of excess Gas (if any); 

        (xi)  Negotiating
for approval and execution by MW Gen and administering, as appropriate, contracts or arrangements for MW Gen to sell excess Gas; 

      (xii)  Reviewing
and recommending approval (for final approval and execution by MW Gen) for payment and issuance of invoices by MW Gen to purchasers of excess Gas in
connection with MW Gen's contracts or arrangements administered by EMMT pursuant to clause (xi) above; 

      (xiii)  Maintaining
records with respect to the sale of excess Gas pursuant hereto; and 

      (xiv)  Performing
any other acts necessary to support the sale of excess Gas in accordance with this Schedule. 

B-2

 

        (b)  Subject
to the terms and conditions of this Schedule, EMMT shall recommend to MW Gen and the Parties shall jointly develop the means, methods and procedures
(i) with respect to the purchase, Transportation, delivery and storage of Gas pursuant hereto and (ii) as appropriate, with respect to the sale and disposal of excess Gas pursuant
hereto. 

        (c)  EMMT
hereby covenants and agrees that in the performance of its obligations hereunder (i) it shall negotiate to obtain the requisite Gas at commercially
reasonable prices and on commercially reasonable terms; (ii) it shall negotiate to sell or otherwise dispose of any excess Gas at commercially reasonable prices and on commercially reasonable
terms and conditions; and (iii) the services provided by EMMT to MW Gen shall be performed: (A) in accordance with Prudent Industry Practice and in compliance with all applicable laws
and regulations, and (B) in accordance with the Risk Management Guidelines and any other applicable requirements of this Schedule. 

ARTICLE II

OBLIGATIONS OF THE PARTIES  

        2.1    Failure to Deliver or Receive Transaction Quantity.    

        (a)  In
Disclosed Agent Transactions, MW Gen shall reimburse EMMT for any charges, penalties or damages EMMT incurs as a result of MW Gen's failure to deliver to or receive
from such third parties the Transaction Quantity. 

        (b)  In
Transactions other than Disclosed Agent Transactions, unless excused by Force Majeure or Buyer's failure to receive Gas, if Seller fails to deliver all or part of the
Transaction Quantity,, Seller shall pay Buyer, for each part of the Transaction Quantity not delivered, an amount determined pursuant to the terms of the GISB plus two cents ($0.02) for each MMBTU
replaced by Buyer. 

        (c)  Payments
pursuant to this Section 2.1 shall be due and payable by Seller according to the payment terms in Section 3.1 of the Agreement. 

ARTICLE III

PRICING AND PAYMENT  

        3.1    Price and Reimbursement.    

        (a)  For
sales by MW Gen to EMMT, EMMT shall pay MW Gen the Transaction Price for the Transaction Quantity less the Reimbursements (as defined herein). For sales by EMMT to
MW Gen, MW Gen shall pay EMMT the Transaction Price for the Transaction Quantity plus the Reimbursements. In the case of Disclosed Agent Transactions, MW Gen shall pay EMMT an agency fee equal to the
Reimbursements for such Transaction Quantity. 

        (b)  With
respect to any Transaction Quantity, the term "Reimbursements" shall mean (i) $0.02 for each MMBtu of the Transaction Quantity; (iii) broker fees
incurred with regard to such Transaction Quantity; (iv) any local, state or federal governmental or other regulatory charges and/or taxes incurred with respect to such Transaction Quantity; and
(v) any other direct out-of-pocket expenses incurred by EMMT in effectuating the relevant Transaction. Option premia paid to third parties and directly related to the
Transactions shall be charged to MW Gen as Reimbursements. Option premia received from third parties and directly related to the Transactions shall be paid to MW Gen or credited against amounts owing
from MW Gen to EMMT. 

B-3

 

        (c)  MW
Gen shall pay for any software and consultant services costs reasonably allocable to the relevant Transactions, provided that such software and consultant services
are approved by MW Gen. 

        (d)  The
unrealized results of all financial Transactions entered into pursuant to this Agreement shall not be included in the monthly settlement between MW Gen and EMMT. 

ARTICLE IV

DEFINITIONS  

        "Gas" shall mean any mixture of hydrocarbons and non-combustible gases in a gaseous state consisting primarily of methane. 

        "GISB"
shall have the meaning set forth in the Fourth Recital to this Agreement. 

        "Reimbursements"
shall have the meaning set forth in Section 3.1(b). 

        "Transportation"
shall mean movement of Gas via pipeline from origins to the Facilities. 

B-4

 

        IN
WITNESS WHEREOF, the Parties hereto have caused this Gas Schedule to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above
written. 

MlDWEST
GENERATION, LLC,

a Delaware limited liability company 

By:
/s/ John Finneran 

Name:
John Finneran 

Title:
Vice President 

EDISON
MISSION MARKETING & TRADING, INC.,

a California corporation 

By:
/s/ Paul Jacob 

Name:
Paul Jacob 

Title:
President 

B-5

  

 
 

SCHEDULE C TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT
  (FUEL OIL PURCHASE AND SALE SCHEDULE)    
  

        This SCHEDULE C TO MASTER PURCHASE, SALE, AND SERVICES AGREEMENT (FUEL OIL PURCHASE AND SALE SCHEDULE) ("Fuel Oil Schedule") is entered into this 23rd day of
March, 2001 between MIDWEST GENERATION LLC ("MW Gen"), a Delaware limited liability company, and EDISON MISSION MARKETING & TRADING, INC. ("EMMT"), a California
corporation. Each of MW Gen and EMMT may be referred to herein as a "Party" and together shall be referred to as the "Parties". 

        WHEREAS,
the Parties entered into a Master Purchase, Sale and Services Agreement of even date herewith (the "Agreement"), which provided that Schedules might be added thereto from time
to time setting forth the terms and conditions upon which the Parties would buy and sell Products from one another and facilitate each other's entering into Transactions with third parties; 

        WHEREAS,
the Parties desire to add this Fuel Oil Schedule to the Agreement so that EMMT may hedge the market risk for the supply of Fuel Oil to MW Gen's Facilities ("Fuel Oil
Transactions"); 

        WHEREAS,
all capitalized terms used in this Fuel Oil Schedule that are defined in the Agreement shall have the respective meanings herein given to such terms in the Agreement; 

        NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and
agree as follows: 

 
 

ARTICLE 1
  SCOPE OF AGREEMENT    
  

        1.1.    Scope of Agreement.    The terms and conditions of the Agreement shall apply to Transactions entered into
pursuant to this Fuel Oil Schedule, provided that, in case of any conflict between the Agreement and this Fuel Oil Schedule, this Fuel Oil Schedule shall govern. 

        1.2.    Transaction Procedures and Information.    MW Gen shall notify EMMT from time to time of MW Gen's fuel oil
requirements and MW Gen's fuel oil contracts and commitments as they become known to MW Gen. Such notification (each, a "Requirements Notice") shall be effectuated and evidenced (i) by a
written notice executed by MW Gen, or (ii) in such other form as agreed by the Parties in writing. The information to be provided in a Requirements Notice shall include the type and amount of
Fuel Oil required or contracted for, the Delivery Point, the Transaction Price in the case of Fuel Oil contracts and commitments, and the desired delivery date of such Fuel Oil. 

        1.3.    Term.    This Fuel Oil Schedule shall commence on the date hereof (the "Schedule Effective Date") and shall
remain in effect until terminated by either Party upon thirty (30) days prior written notice, or as the Parties mutually agree in writing; provided, however, that this Fuel Oil Schedule shall
remain in effect with respect to any Transaction(s) entered into prior to the effective date of the termination until both Parties have fulfilled their obligations with respect to such Transaction(s). 

ARTICLE II

OBLIGATIONS OF THE PARTIES; TITLE  

        2.1    Responsibilities of EMMT.    EMMT hereby covenants and agrees that in the performance of its obligations
hereunder it shall use commercially reasonable care in developing and executing Transactions hereunder so as to comply with the Risk Management Guidelines. 

        2.2.    Third Party Non-Performance.    If EMMT does not receive payment from the third party buyer or
third party seller by two (2) Business Days prior to the payment date in the Agreement, 

C-1

 

EMMT shall make such payment to MW Gen two (2) Business Days after receipt of payment from such third party buyer or seller (as the case may be). 

ARTICLE III

PRICING AND PAYMENT  

        3.1    Price and Reimbursement.    

        (a)  For
sales by MW Gen to EMMT, EMMT shall pay MW Gen the Transaction Price for the Transaction Quantity less the Reimbursements (as defined herein). For sales by EMMT to
MW Gen, MW Gen shall pay EMMT the Transaction Price for the Transaction Quantity plus the Reimbursements. 

        (b)  With
respect to any Transaction Quantity, the term "Reimbursements" shall mean (i) $0.05 per barrel of the Transaction Quantity (ii) broker fees incurred
with regard to such Transaction Quantity; (iii) any local, state or federal governmental or other regulatory charges and/or taxes incurred with respect to such Transaction Quantity;
(iv) any other direct out-of-pocket expenses incurred by EMMT in effectuating the relevant Transaction. Option premia paid to third parties and directly related to the
Transactions shall be charged to MW Gen as Reimbursements. Option premia received from third parties and directly related to the Transactions shall be paid to MW Gen or credited against amounts owing
from MW Gen to EMMT. 

        (c)  The
unrealized results of all financial Transactions entered into pursuant to this Agreement shall not be included in the monthly settlement between MW Gen and EMMT. 

ARTICLE IV

DEFINITIONS  

        In addition to the defined terms set forth in the Agreement, the following terms shall have the following meanings for purposes of this Fuel Oil Schedule: 

        "Buyer"
shall have the meaning set forth in Section 2.1. "Fuel Oil" shall mean any types of heating, fuel or crude oil, or derivatives thereof, including, but not limited to,
No. 2 Heating Oil and No. 6 Fuel Oil. 

        "Reimbursements"
shall have the meaning set forth in Section 3.1. 

        "Schedule
Effective Date" shall have the meaning set forth in Section 1.3. 

        "Seller"
shall have the meaning set forth in Section 2.1. 

C-2

 

        IN
WITNESS WHEREOF, the Parties hereto have caused this Fuel Oil Schedule to be duly executed and delivered by their proper and duly authorized officers as of the day and year first
above written. 

MIDWEST
GENERATION, LLC,

a Delaware limited liability company 

By:
/s/ John Finneran 

Name:
John Finneran 

Title:
Vice President 

EDISON
MISSION MARKETING & TRADING, INC.,

a California corporation 

By:
/s/ Paul Jacob 

Name:
Paul Jacob 

Title:
President 

C-3

  

 
 

SCHEDULE D TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT
  (EMISSION ALLOWANCE PURCHASE AND SALE SCHEDULE)    
  

        This SCHEDULE D TO MASTER PURCHASE, SALE, AND SERVICES AGREEMENT (EMISSION ALLOWANCE PURCHASE AND SALE SCHEDULE) ("Emission Allowance Schedule") is entered into
this 23rd day of March, 2001 between MIDWEST GENERATION, LLC ("MW Gen"), a Delaware limited liability company, and EDISON MISSION MARKETING & TRADING, INC. ("EMMT"), a California
corporation. Each of MW Gen and EMMT may be referred to herein as a "Party" and together referred to as the "Parties"). 

        WHEREAS,
the Parties entered into a Master Purchase, Sale and Services Agreement of even date herewith (the "Agreement"), which provided that Schedules might be added thereto from time
to time setting forth the terms and conditions upon which the Parties would buy and sell Products from one another and facilitate each other's entering into Transactions with third parties; 

        WHEREAS,
the Parties desire to add this Emission Allowance Schedule to the Agreement to provide for the purchase and sale of physical and financial Emission Allowances from MW Gen to
EMMT; 

        WHEREAS,
all capitalized terms used in this Emission Allowance Schedule that are defined in the Agreement shall have the respective meanings herein given to such terms in the Agreement; 

        NOW
THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and
agree as follows: 

ARTICLE I

SCOPE OF AGREEMENT  

        1.1    Scope of Agreement.    

        (a)  This
Emission Allowance Schedule shall govern the Parties' rights and obligations with respect to the Parties' purchase and sale of emission allowances, including but
not limited to, Allowances for nitrogen oxide ("NOx") and sulfur dioxide ("SO2") (collectively, the "Emission Allowances"). The terms and conditions of the Agreement shall apply to Transactions
entered into pursuant to this Emission Allowance Schedule, provided that, in case of any conflict between the Agreement and this Emission Allowance Schedule, this Emission Allowance Schedule shall
govern. 

        (b)  EMMT
may also enter into financial hedge transactions related to the emissions from the Facilities from time to time. 

        (c)  All
Transactions described in subsections (a) and (b) above (collectively, "Emission Allowance Transactions") shall be entered into by EMMT and MW Gen
according to the guidelines established and amended from time to time (the "Risk Management Guidelines") by the EMMT Risk Management Committee, which is comprised of senior officers and
representatives of both EMMT and MW Gen. EMMT shall be required to use commercially reasonable care in developing and executing Emission Allowance Transactions so as to comply with the Risk Management
Guidelines. EMMT shall advise MW Gen on marketing and other business strategies from time to time. 

        1.2    Transaction Procedures and Information.    

        (a)  MW
Gen shall promptly deliver all material information related to its Emission Allowances and Emission Allowance requirements to EMMT. MW Gen shall further notify EMMT
of any regulatory or third party actions that could reasonably affect such Emission Allowances or Emission Allowance requirements. 

D-1

 

        (b)  The
transaction price ("Transaction Price"), quantity ("Transaction Quantity"), the date on which the seller of the Emission Allowance must submit the Allowance Transfer
Form to the EPA ("Delivery Date"), type of Emission Allowance, Vintage Year, of Emission Allowances purchased or sold by EMMT and MW Gen under this Agreement, and the terms and conditions of any
financial transaction entered into under this Agreement, shall be established in a Back-to-Back Transaction between EMMT and an unrelated third party (except for Disclosed
Agent Transactions). Each Emission Allowance Transaction hereunder shall be designated by EMMT as a "hedge transaction" in EMMT's Energy Trading System or other applicable software at or before the
execution of its corresponding Back-to-Back Transaction (except for Disclosed Agent Transactions, which shall be designated at the time of such Transaction), and shall be
subsequently evidenced by a written notice (a "Transaction Notice") from
EMMT that includes reasonable detail of such Transaction, including the Transaction Price, Transaction Quantity, and Delivery Date. Such notice may be provided (i) in a monthly accounting
journal entry; or (ii) in such other form as agreed by the Parties in writing. 

ARTICLE II

OBLIGATIONS OF THE PARTIES  

        2.1    Transfer Procedures.    The Parties shall develop procedures for coordinating the transfer of Emission
Allowances pursuant to this Emission Allowance Schedule. 

        2.2    Failure to Deliver.    

        (a)  In
Disclosed Agent Transactions, MW Gen shall reimburse EMMT for any charges, penalties or damages EMMT incurs as a result of MW Gen's failure to deliver the Transaction
Quantity to, or receive the Transaction Quantity from, such third parties. 

        (b)  In
Transactions other than Disclosed Agent Transactions, unless excused by the Buyer's failure to receive Emission Allowances, if Seller fails to deliver all of part of
the Transaction Quantity,, Seller shall pay Buyer for each part of the Transaction Quantity not delivered by an amount equal to either (i) the price at which Buyer, acting in a commercially
reasonable manner, purchases substitute Emission Allowances not delivered by Seller or (ii) absent a purchase, the market price for such quantity as determined by Buyer in a commercially
reasonable manner, 

        (c)  Payments
pursuant to Section 2.2 shall be due and payable by Seller according to the payment terms in Section 3.1 of the Agreement. 

ARTICLE III

PRICING AND PAYMENT  

        3.1    Price and Reimbursement.    

        (a)  For
sales by MW Gen to EMMT, EMMT shall pay MW Gen the Transaction Price for the Transaction Quantity less the Reimbursements (as defined herein). For sales by EMMT to
MW Gen, MW Gen shall pay EMMT the Transaction Price for the Transaction Quantity plus the Reimbursements. In the case of Disclosed Agent Transactions, MW Gen shall pay EMMT an agency fee equal to the
Reimbursements for such Transaction Quantity. 

        (b)  With
respect to any Transaction Quantity, the term "Reimbursements" shall mean (i) $0.25 for each SO2 Emission Allowance in the Transaction Quantity;
(ii) $25.00 for each NOx Emission Allowance in the Transaction Quantity; (iii) broker fees incurred with regard to such Transaction Quantity; (iv) any governmental or regulatory
charges incurred with respect to such Transaction Quantity; and (v) any other out-of-pocket expenses incurred by EMMT in effectuating the relevant Transaction. Option
premia paid to third parties and directly related to the Transactions shall be charged to MW Gen as Reimbursements. Option premia received from third 

D-2

 

parties and directly related to the Transactions shall be paid to MW Gen or credited against amounts owing from MW Gen to EMMT. 

        (c)  MW
Gen shall pay for any software and consultant services costs reasonably allocable to the relevant Transactions, provided that such software and consultant services
have been approved by MW Gen. 

        (d)  The
unrealized results of all financial transactions entered into pursuant to this Agreement shall not be included in the monthly settlement between MW Gen and EMMT. 

ARTICLE IV

DEFINITIONS  

        "Allowance" shall mean the authorization from any state that is a signatory to or subject to the Ozone Transport Commission Memorandum of Understanding dated
September 27, 1994 to emit one ton of NOx (May through September) or the authorization by the Administrator of the Environmental Protection Agency or any successor agency with similar
jurisdiction ("EPA") to emit one ton of SO2 under Title IV of The Clean Air Act Amendments of 1990, as the same may be amended) or supplemented, or any successor statutes which are the basis for The
Federal Air Pollution Control Program for Sulfur Dioxide Emissions, in the Vintage Year of issue or in subsequent control periods (subject to restrictions on banked allowances). 

        "Delivery
Date" shall have the meaning set forth in Section 1.2. 

        "Emission
Allowances" shall have the meaning set forth in Section 1.1. 

        "EPA"
shall mean the United States Environmental Protection Agency or its successor. 

        "NOx"
shall have the meaning set forth in Section 1.1. 

        "Reimbursements"
shall have the meaning set forth in Section 3.1(b). 

        "SO2"
shall have the meaning set forth in Section 1.1. 

        "Vintage
Year" shall mean the first calendar year during which the Allowances may be utilized. 

D-3

 

        IN
WITNESS WHEREOF, the Parties hereto have caused this Emission Allowance Schedule to be duly executed and delivered by their proper and duly authorized officers as of the day and year
first above written. 

MlDWEST
GENERATION, LLC,

a Delaware limited liability company 

By:
/s/ John Finneran 

Name:
John Finneran 

Title:
Vice President 

EDISON
MISSION MARKETING & TRADING, INC.,

a California corporation 

By:
/s/ Paul Jacob 

Name:
Paul Jacob 

Title:
President 

D-4

QuickLinks

Exhibit 10.27

MASTER PURCHASE, SALE AND SERVICES AGREEMENT

ANNEX I

SCHEDULE A TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT (ENERGY PURCHASE AND SALE SCHEDULE)

SCHEDULE B TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT (NATURAL GAS PURCHASE, SALE AND SERVICES SCHEDULE)

SCHEDULE C TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT (FUEL OIL PURCHASE AND SALE SCHEDULE)

ARTICLE 1 SCOPE OF AGREEMENT

SCHEDULE D TO MASTER PURCHASE, SALE AND SERVICES AGREEMENT (EMISSION ALLOWANCE PURCHASE AND SALE SCHEDULE)QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.8    
  

 
 

CHANGE IN CONTROL AGREEMENT    
  

        THIS CHANGE IN CONTROL AGREEMENT (the "Agreement") is entered into as of January 9, 2002,
by Mid-State Bank & Trust, a banking company organized under the laws of California ("Company"), located in Arroyo Grande, California, and Harry H. Sackrider  ("Executive" or "you"). 

        WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and the shareholders of Mid-State Bancshares; 

        WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may
arise and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the
Company and the shareholders of Mid-State Bancshares; 

        WHEREAS, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company's management to their assigned duties without distraction in circumstances arising from the possibility of a change in
control of the Company. In particular, the Board believes it important, should the Company, Mid-State Bancshares or the shareholders of Mid-State Bancshares receive a proposal
for transfer of control of the Company, that Executive be able to assess and advise the Board and/or the Board of Directors of Mid-State Bancshares whether such proposal would be in the
best interests of the Company and Mid-State Bancshares' shareholders and to take such other action regarding such proposal as such Boards might determine to be appropriate, without being
influenced by the uncertainties of your own situation; and 

        WHEREAS, the Board of Directors of the Company has approved this Agreement; 

        NOW, THEREFORE, in consideration of the premises and mutual promises of the parties, the Company and Executive agree as follows: 

        1.    Right to Terminate.    The Company or you may terminate your employment at any time,
subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof. 

        2.    Term of Agreement.    This Agreement shall commence on the date hereof and shall
continue in effect until December 31, 2002; provided, however, that commencing on January 1,
2003, and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such
January 1st date, the Company or you shall have given notice that this Agreement shall not be extended; and provided, further, that this Agreement shall continue in effect for a period of  Thirty-Six (36) months beyond the term provided herein if a Change in Control of the Company, as defined in Section 3 hereof,
shall have occurred during such term. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company terminate your employment prior to a
Change in Control of the Company. 

        3.    Change in Control.    "Change in Control" means a change, after January 1, 2002,
in control of the Company of a nature that would be required to be the subject of prior approval by (A) the Federal Reserve Board pursuant to the Bank Holding Company Act of 1956, as amended,
(B) the Federal Deposit Insurance Corporation under the Change In Bank Control Act, (C) the appropriate federal bank regulatory agency under the Bank Merger Act or (D) the
California Department of Financial Institutions pursuant to provisions of the California Financial Code; provided, that without limitation, and without consideration of regulatory exemptions from
prior approval, such a Change in Control will be deemed to have occurred if and when any of the following occur: (i) there is a transfer, voluntarily or by hostile takeover or proxy contest,
operation of law or otherwise, of control of the Company, (ii) individuals, who were members of the Board of Directors of the Company immediately prior to a meeting of the shareholders of the
Company which meeting involved a contest for the election of 

 

directors, do not constitute a majority of the Board of Directors of the Company following such election or meeting, (iii) an acquisition, directly or indirectly, of more than 25% of the
outstanding shares of any class of voting securities of the Company by any Person, (iv) a merger (in which the Company is not the surviving entity), consolidation or sale of all, or
substantially all, of the assets of the Company, or (v) there is a change, during any period of two consecutive years, of a majority of the Board of Directors of the Company as constituted as
of the beginning of such period, unless the election of each director who is not a director at the beginning of such period was approved by a vote of at least two-thirds of the directors
then in office who were directors at the beginning of such period. If any of the approvals referred to in (A)-(D), above, shall relate to a Change in Control of Bancshares or any of the events or
circumstances described in (i)-(v), above, shall occur to or be applicable to
Bancshares, then such Change in Control shall be deemed for all purposes of this Agreement to also be a "Change in Control" of the Company. For purposes of this Agreement, the term "Person" shall mean
and include any individual, corporation, partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934, other than the Company,
Mid-State Bancshares, a wholly owned subsidiary of the Company or any employee benefit plan(s) sponsored by the Company, Mid-State Bancshares or a subsidiary of the Company. 

        4.    Termination Following Change in Control.    If any of the events described in
Section 3 hereof constituting a Change in Control of the Company shall have occurred, you shall be entitled to the benefits provided in Section 5 hereof upon the termination of your
employment with the Company within Thirty-Six (36) months after such event, unless such termination is (a) because of your
death or Retirement, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined). 

        (i)    Disability.    Termination by the Company of your employment based on "Disability"
shall mean termination because of your absence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to
physical or mental illness (as confirmed by a physician acceptable to you), unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such
absence you shall have returned to the full time performance of your duties. 

        (ii)    Retirement.    Termination by you of your employment based on "Retirement" shall mean
the voluntary termination of active employment with the Company or a subsidiary on or about 65 years of age or at such later age as such employee desires to discontinue his active employment
with the Company or a subsidiary. 

        (iii)    Cause.    Termination by the Company of your employment for "Cause" shall mean
termination upon (a) the willful and continued failure by you to perform substantially your duties with the Company (other than any such failure resulting from your incapacity due to physical
or mental illness) after a demand for substantial performance is delivered to you by the Chairman of the Board or the Vice Chairman of the Board or the President of the Company which specifically
identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in
bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best
interests of the Company. It is also expressly understood that your attention to matters not directly related to the business of the Company shall not provide a basis for termination for Cause so long
as the Board has approved your engagement in such activities. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been 

2

 

delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three quarters of the entire membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of
the conduct set forth above in (a) or (b) of this paragraph (iii) and specifying the particulars thereof in detail. 

        (iv)    Good Reason.    Termination by you of your employment for "Good Reason" shall mean
termination based on: 

        (A)  an
adverse change in your status or position(s) as an executive officer of the Company as in effect immediately prior to the Change in Control, including, without
limitation, any adverse change in your status or position as a result of a material diminution in your duties or responsibilities (other than, if applicable, any such change directly attributable to
the fact that the Company is no longer publicly owned) or the assignment to you of any duties or responsibilities which, in your reasonable judgment, are inconsistent with such status or position(s),
or any removal of you from or any failure to reappoint or reelect you to such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a
result of your death or by you other than for Good Reason); 

        (B)  a
reduction by the Company in your base salary as in effect immediately prior to the Change in Control; 

        (C)  the
failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the Change in Control of the Company (or
Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the Change
in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any of such Plans on at least as favorable a basis to you as
is the case on the date of the Change in Control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit under any Plan enjoyed by
you at the time of the Change in Control; 

        (D)  the
failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with the Company's normal
vacation policy as in effect immediately prior to the Change in Control; 

        (E)  the
Company's requiring you to be based at an office that is greater than 25 miles from where your office is located immediately prior to the Change in Control except
for required travel on the Company's business to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company prior to the Change in Control; 

        (F)  the
failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 6 hereof; or 

        (G)  any
purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v)
below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective. 

For
purposes of this Agreement, "Plan" shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit
sharing, medical, disability, accident, life insurance plan or a relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees. 

3

 

        (v)    Notice of Termination.    Any purported termination by the Company or by you following
a Change in Control shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon. 

        (vi)    Date of Termination.    "Date of Termination" following a Change in Control shall mean
(a) if your employment is to be terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such thirty (30) day period), (b) if your employment is to be terminated by the Company for Cause or by you pursuant to Sections
4(iv) (F) and 6 hereof or for any other Good Reason, the date specified in the Notice of Termination, or (c) if your employment is to be terminated by the Company for any reason
other than Cause, the date specified in the Notice of Termination, which in no event shall be a date earlier than ninety (90) days after the date on which a Notice of Termination is given,
unless an earlier date has been expressly agreed to by you in writing either in advance of, or after, receiving such Notice of Termination. In the case of termination by the Company of your employment
for Cause, if you have not previously expressly agreed in writing to the termination, then within thirty (30) days after receipt by you of the Notice of Termination with respect thereto, you
may notify the Company that a dispute exists concerning the termination, in which event the Date of Termination shall be the date set either by mutual written agreement of the parties or by the
arbitrators in a proceeding as provided in Section 13 hereof. During the pendency of any such dispute, the Company will continue to pay you your full compensation in effect just prior to the
time the Notice of Termination is given and until the dispute is resolved in accordance with Section 13. 

        5.    Compensation Upon Termination or During Disability; Other Agreements.    

        (i)    During
any period following a Change in Control of the Company that you fail to perform your duties as a result of incapacity due to physical or mental illness, you
shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans,
until your employment is terminated pursuant to and in accordance with paragraphs 4(i) and 4(vi) hereof. Thereafter, your benefits shall be determined in accordance with the Plans then
in effect. 

        (ii)  If
your employment shall be terminated for Cause following a Change in Control of the Company, the Company shall pay you your salary through the Date of Termination
plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plan have been earned or become payable, but which have not yet been paid to you.
Thereupon the Company shall have no further obligations to you under this Agreement. 

        (iii)  Subject
to Section 8 hereof, if, within Thirty-Six (36) months after a Change in Control of
the Company, as defined in Section 3 above, shall have occurred, your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability or Retirement or
(b) by you for Good Reason, then the Company shall pay to you, no later than the fifth day following the Date of Termination, without regard to any contrary provisions of any Plan, the
following: 

        (A)  your
salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the
cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you (including amounts which previously had been deferred at
your request); and 

        (B)  as
severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, an amount in cash equal to Three
(3) times your annual salary and bonus, 

4

 

such salary to be at the rate of salary in effect immediately prior to the Date of Termination (or, if greater, immediately prior to the Change in Control of the Company) and such bonus to be equal
to the total bonus paid to you during the twelve-month period immediately preceding the Date of Termination (or, if greater, during the twelve-month period immediately preceding the Change in Control
of the Company). 

        (iv)  If,
within Thirty-Six (36) months after a Change in Control of the Company, as defined in
Section 3 above, shall have occurred, your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability or Retirement or (b) by you for Good
Reason, then the Company shall maintain in full force and effect, for the continued benefit of you and your dependents for a period terminating on the earliest of (a) three years after the Date
of Termination, (b) the commencement date of equivalent benefits from a new employer or (c) your normal retirement date under the terms of any retirement plan, all insured and
self-insured employee welfare benefit Plans in which you were entitled to participate immediately prior to the Date of Termination, provided that your continued participation is possible
under the general terms and provisions of such Plans (and any applicable funding media)
and you continue to pay an amount equal to your regular contribution under such plans for such participation. If, at the end of three years after the Termination Date, you have not reached your normal
retirement date and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall arrange, at its sole cost and expense, to enable you to
convert your and your dependents' coverage under such Plans to individual policies or programs upon the same terms as employees of the Company may apply for such conversions. In the event that your
participation in any such Plan is barred, the Company, at its sole cost and expense, shall arrange to have issued for the benefit of you and your dependents individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those which you otherwise would have been entitled to receive under such Plans pursuant to this paragraph (iv) or, if such
insurance is not available at a reasonable cost to the Company, the Company shall otherwise provide you and your dependents with equivalent benefits (on an after-tax basis). You shall not
be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such Plans. 

        (v)  Except
as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject
to recovery by the Company by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. 

        6.    Successors; Binding Agreement.    

        (i)    The
Company will seek, by written request at least five (5) business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such
Person by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such Person to furnish such assent by the later
of (A) three (3) business days prior to the time such Person becomes a Successor or (B) two (2) business days after such Person receives a written request to so assent
shall constitute Good Reason for termination by you of your employment if a Change in Control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person
that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company's business directly, by merger or consolidation, or indirectly, by purchase of
Mid-State Bancshares voting securities or otherwise. 

        (ii)  This
Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to 

5

 

live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to
your estate. 

        (iii)  For
purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Company ceases to exist. 

        7.    Fees and Expenses; Mitigation.    

        (i)    The
Company shall pay all reasonable legal fees and related expenses incurred by you in connection with the Agreement following a Change in Control of the Company,
including, without limitation, (a) all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or incurred by you in seeking advice with respect
to the matters set forth in Section 8 hereof or (b) your seeking to obtain or enforce any right or benefit provided by this Agreement; provided, however, you shall be required to repay
any such amounts to the Company to the extent that a court issues a final and non-appealable order setting forth the determination that the position taken by you was frivolous or advanced
by you in bad faith. 

        (ii)  You
shall not be required to mitigate the amount of any payment the Company becomes obligated to make to you in connection with this Agreement, by seeking other
employment or otherwise. 

        8.    Taxes.    

        (i)    All
payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income and employment taxes. 

        (ii)  In
the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code, as amended (the "Code")), to the Executive or
for his benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment with the Company or a Change
in Control (including the accelerated exercise of any stock options)(any such payment or benefit being a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount equal to the total Excise Tax imposed on the
Executive as a result of such Payments (including the Excise Tax reimbursement due pursuant to this sentence and the Excise Taxes on any federal and state tax reimbursements due pursuant to the next
subsection). 

        (iii)  If
Company is obligated to pay the Executive pursuant to the preceding paragraph, Company also shall pay the Executive an amount equal to the "total presumed federal
and state taxes" that could be imposed on the Executive with respect to the Excise Tax reimbursements due to the Executive pursuant to the preceding paragraph and the federal and state tax
reimbursements due to the Executive pursuant
to this sentence. For purposes of the preceding sentence, the "total presumed federal and state taxes" that could be imposed on the Executive shall be conclusively calculated using a combined tax rate
equal to the sum of (a) the highest individual income tax rate in effect under (i) Federal tax law and (ii) the tax laws of the state in which the Executive resides on the date
that the payment under this Section 8 is computed and (b) the hospital insurance portion of FICA. 

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        (iv)  No
adjustments will be made in this combined rate for the deduction of state taxes on the federal return, the loss of itemized deductions or exemptions, or for any
other purpose for paying the actual taxes. 

        (v)  An
initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be
made at the Company's expense by Arthur Andersen LLP or by any successor accounting firm appointed by the Company prior to any Change in Control (the "Accounting Firm"). The Accounting Firm shall
provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within five days after a Date of Termination or at
such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise
Tax will be imposed with respect to any such Payment or Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination
(the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this Section 8 shall be paid by the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. The existence of the Dispute shall not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the Determination. Upon
the final resolution of a Dispute, the Company shall promptly pay to the Executive any additional amount required by such resolution. If there is no Dispute, the Determination shall be binding, final
and conclusive upon the Company and the Executive subject to the application of Section 8(vi) below. 

        (vi)  Notwithstanding
anything contained in this Agreement to the contrary, in the event that according to the Determination, an Excise Tax will be imposed on any Payment or
Payments, the Company shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or
Payments. 

        9.    Survival.    The respective obligations of, and benefits afforded to, the Company and
you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of this Agreement shall survive termination of this Agreement. 

        10.    Notice.    For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed
by United States registered mail, return receipt requested, postage prepaid and addressed, in the case of the Company, to the address set forth on the first page of this Agreement or, in the case of
the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the
Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt. 

        11.    Miscellaneous.    No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in a writing signed by you and approved by the Board of Directors of the Company. No waiver by either party hereto at any time of any breach
by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. This 

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Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof (except for other benefits payable under other compensation plans maintained by the Company) and
supersedes all prior agreements and understanding of the parties in connection therewith, including any prior change in control agreement. 

        12.    Validity.    The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 

        13.    Arbitration.    Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in San Luis Obispo County, California, by three (3) arbitrators in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with
any arbitration proceeding pursuant to this Section 13. 

        14.    Employee's Commitment.    You agree that subsequent to your period of employment with
the Company, you will not at any time communicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any subsidiary or
other confidential information concerning their business, affairs, products, suppliers or customers which, if disclosed, would have a material adverse effect upon the business or operations of the
Company and its subsidiaries, taken as a whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the aforesaid matters (a) are
disclosed in circumstances where you are
legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission. 

        15.    Counterparts.    This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same instrument. 

        If
this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our
agreement on this subject. 

	 	 	Sincerely,
	

 	
 	

 	

 
	 	 	MID-STATE BANK & TRUST
	

 	
 	

 	

 
	 	 	By:	 
	 	 	 	
 James G. Stathos

Executive Vice President
	 	 	 	 
	Agreed to and Accepted this        day
of                      , 2002.	 	 	 
	

 	
 	

 	

 
	

 Harry H. Sackrider	
 	

 	

 
	

 Address	
 	

 	

 
	

 City/State/Zip	
 	

 	

 

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QuickLinks

Exhibit 10.8

CHANGE IN CONTROL AGREEMENT

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