Exhibit 10.1
*** indicates material has been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission. A complete copy of
this agreement has been filed with the Securities and Exchange Commission.
MASTER POWER PURCHASE AND SALES AGREEMENT
MASTER POWER PURCHASE AND SALES AGREEMENT
TABLE OF CONTENTS
COVER SHEET.......................................................................................................1
GENERAL TERMS AND CONDITIONS.....................................................................................25
ARTICLE ONE: GENERAL DEFINITIONS.................................................................................25
ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS....................................................................30
2.1 Transactions...................................................................................30
2.2 Governing Terms................................................................................30
2.3 Confirmation...................................................................................30
2.4 Additional Confirmation Terms..................................................................31
2.5 Recording......................................................................................31
ARTICLE THREE: OBLIGATIONS AND DELIVERIES........................................................................31
3.1 Seller's and Buyer's Obligations...............................................................31
3.2 Transmission and Scheduling....................................................................32
3.3 Force Majeure..................................................................................32
ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE............................................................32
4.1 Seller Failure.................................................................................32
4.2 Buyer Failure..................................................................................32
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES........................................................................33
5.1 Events of Default..............................................................................33
5.2 Declaration of an Early Termination Date and Calculation of Settlement
Amounts........................................................................................34
5.3 Net Out of Settlement Amounts..................................................................34
5.4 Notice of Payment of Termination Payment.......................................................35
5.5 Disputes With Respect to Termination Payment...................................................35
5.6 Closeout Setoffs...............................................................................35
5.7 Suspension of Performance......................................................................36
ARTICLE SIX: PAYMENT AND NETTING.................................................................................36
6.1 Billing Period.................................................................................36
6.2 Timeliness of Payment..........................................................................36
6.3 Disputes and Adjustments of Invoices...........................................................36
6.4 Netting of Payments............................................................................37
6.5 Payment Obligation Absent Netting..............................................................37
6.6 Security.......................................................................................37
6.7 Paying for Options.............................................................................37
6.8 Transaction Netting............................................................................37
i
ARTICLE SEVEN: LIMITATIONS.......................................................................................38
7.1 Limitation of Remedies, Liability and Damage...................................................38
ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS................................................................39
8.1 Party A Credit Protection......................................................................39
8.2 Party B Credit Protection......................................................................40
8.3 Grant of Security Interest/Remedies............................................................42
ARTICLE NINE: GOVERNMENTAL CHARGES...............................................................................43
9.1 Cooperation....................................................................................43
9.2 Governmental Charge............................................................................43
ARTICLE TEN: MISCELLANEOUS.......................................................................................43
10.1 Term of Master Agreement.......................................................................43
10.2 Representations and Warranties.................................................................43
10.3 Title and Risk of Loss.........................................................................45
10.4 Indemnity......................................................................................45
10.5 Assignment.....................................................................................45
10.6 Governing Law..................................................................................46
10.7 Notices........................................................................................46
10.8 General........................................................................................46
10.9 Audit..........................................................................................47
10.10 Forward Contract...............................................................................47
10.11 Confidentiality................................................................................47
CONFIRMATION LETTER..............................................................................................48
ii
***
MASTER POWER PURCHASE AND SALE AGREEMENT
COVER SHEET ***
This Master Power Purchase and Sale Agreement ("Master Agreement") is made as of
the following date: JULY 21, 2004 ("Effective Date"). This Master Agreement,
together with the exhibits, schedules and any written supplements hereto, the
Party A Tariff, if any, the Party B Tariff, if any, any designated collateral,
credit support or margin agreement or similar arrangement between the Parties
and all Transactions (including any confirmations accepted in accordance with
Section 2.3 hereto) shall be referred to as this "Agreement." The Parties to
this Agreement are the following:
Party A: X. XXXX & COMPANY Party B: TEXAS XXXXX, XX
All Notices: X. XXXX & COMPANY All Notices: TEXAS XXXXX, XX
Street: 00 Xxxxx Xxxxxx Xxxxxx: 0000 Xxxxxxxxx Xxxxxx, 00xx Floor
X.X. Xxx 0000, 00xx Xxxxx
Xxxx/Xxxxx: Xxx Xxxx, X.X. Zip: 00000 Xxxx/Xxxxx: Xxxxxxx, XX Zip: 77002 (77252-2846)
Attn: Commodity Operations Attn: Contract Administration--20th Floor
Phone: (000) 000-0000 Phone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Duns: 00-000-0000 Duns: 00-000-0000
Federal Tax ID Number: 000000000 Federal Tax ID Number: 00-0000000
INVOICES: X. XXXX & COMPANY INVOICES:
Attn: Contract Execution Dept. Attn: Energy Accounting--10th Floor
Phone: (000) 000-0000 Phone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
SCHEDULING: X. XXXX & COMPANY SCHEDULING:
Attn: Power Scheduling Attn: Energy Trading--10th Floor
Phone: (000) 000-0000 Phone: (000) 000-0000 or (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
PAYMENTS: X. XXXX & COMPANY PAYMENTS:
Attn: Contract Execution Dept. Attn: Energy Accounting
Phone: (000) 000-0000 Phone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
WIRE TRANSFER: X. XXXX & COMPANY WIRE TRANSFER:
BNK: CITIBANK, NA BNK: Chase Bank of Texas, Houston, TX
000 Xxxx Xxxxxx XXX: 113 000 609
New York, N.Y. ACCT: 0000-000-0000
A/C X. XXXX & CO.
NEW YORK
ABA: 000000000
ACCT: 09292521
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***
CREDIT AND COLLECTIONS: X. XXXX & COMPANY CREDIT AND COLLECTIONS:
Attn: Credit Risk Management - Power Attn: Credit Department
Phone: (000) 000-0000 Phone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
With additional Notices of an Event of Default or With additional Notices of an Event of Default or
Potential Event of Default to: Potential Event of Default to:
Attn: Credit Department Attn: President
Phone: (000) 000-0000 Texas Xxxxx XX, LLC
Facsimile: Phone: (000) 000-0000
Facsimile: (000) 000-0000
and to:
and to:
X. Xxxx & Company
One New York Plaza Xxxxx X. Xxxxx
Xxx Xxxx, XX 00000 c/o CenterPoint Energy, Inc.
Attn: Xxxxxx X. Xxxxxx, Esq. Vice President and Deputy General Counsel
Phone: (000) 000-0000 X.X. Xxx 00000
Facsimile: (000) 000-0000 Xxxxxxx, XX 00000-0000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
and to:
GC Power Acquisition LLC
c/o W. Xxxxxxxx Xxxxxx, Esq.
00 Xxxx xx xxx Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
and to:
Xxxxxxx X. Xxxxxxxx, Esq.
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
The Parties hereby agree that the General Terms and Conditions are incorporated
herein, and to the following provisions as provided for in the General Terms and
Conditions:
Party A Tariff: None
Party B Tariff: None Dated: Docket Number:
--------------------------------------------------------------------------------
ARTICLE TWO
Transaction Terms and Conditions [ ] Optional provision in Section 2.4.
If not checked, inapplicable.
--------------------------------------------------------------------------------
ARTICLE FOUR
Remedies for Failure [ ] Accelerated Payment of Damages.
to Deliver or Receive If not checked, inapplicable.
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***
------------------------------------------------------------------------------------------------------------------------------------
ARTICLE FIVE [ ] Cross Default for Party A:
Events of Default; Remedies [ ] Party A: Applicable Cross Default Amount:
[ ] Other Entity: Cross Default Amount:
[ ] Cross Default for Party B:
[ ] Party B: Cross Default Amount:
[ ] Other Entity: Cross Default Amount:
5.6 Closeout Setoff
[ ] Option A (Applicable if no other selection is made.)
[ ] Option B -- Affiliates shall have the meaning set forth in the
Agreement unless otherwise specified as follows:
[ ] Option C (No Setoff)
------------------------------------------------------------------------------------------------------------------------------------
ARTICLE EIGHT 8.1 Party A Credit Protection:
Credit and Collateral Requirements (a) Financial Information:
[ ] Option A
[ ] Option B Specify:
[ ] Option C Specify:
(b) Credit Assurances:
[ ] Not Applicable
[ ] Applicable
(c) Collateral Threshold:
[ ] Not Applicable
[ ] Applicable
Party B Collateral Threshold:
(d) Downgrade Event:
[ ] Not Applicable
[ ] Applicable
(e) Guarantor for Party B:
Guarantee Amount: N/A
-3-
***
8.2 Party B Credit Protection
(a) Financial Information:
[ ] Option A
[ ] Option B Specify:
|_| Option C Specify:
(b) Credit Assurances:
[ ] Not Applicable
[ ] Applicable
(c) Collateral Threshold:
[ ] Not Applicable
[ ] Applicable
(d) Downgrade Event:
[ ] Not Applicable
[ ] Applicable
(e) Guarantor for Party A:
Guarantee Amount:
------------------------------------------------------------------------------------------------------------------------------------
ARTICLE TEN
Confidentiality [ ] Confidentiality Applicable If not checked, inapplicable.
Schedule M [_] Party A is a Governmental Entity or Public Power System
[_] Party B is a Governmental Entity or Public Power System
[_] Add Section 3.6. If not checked, inapplicable
[_] Add Section 8.6. If not checked, inapplicable
Other Changes: Applicable Specify, if any:
PART 1. GENERAL TERMS AND CONDITIONS
(1) ARTICLE ONE shall be amended as follows:
(i) The following definitions shall be revised or inserted in
alphabetical order:
"Acquiring Person" has the meaning specified in Section 10.5.
"Affiliated Transferee" means a wholly-owned direct or
indirect subsidiary of Party B that receives by way of sale,
transfer, lease conveyance or other disposition (A) all or
substantially all of the assets of Party B, (B) a substantial portion
of the coal or natural gas power generating assets of Party B, or (C)
a Delivery Point Facility.
"Change in Control" means, with respect to Party B, the
occurrence of any of the following: (i) the adoption of a plan
relating to the liquidation or dissolution of Party B or the general
partner of Party B; (ii) Texas Genco Holdings, Inc. ceasing to own,
directly or
-4-
indirectly, all of the general partner interests and limited partner
interests of Party B, (iii) any person other than a direct or
indirect wholly-owned subsidiary of Texas Genco Holdings, Inc.
becoming a general partner of Party B, (iv) CenterPoint Energy, Inc.
ceasing to own, directly or indirectly, at least 67% of the voting
equity of Texas Genco Holdings, Inc., (v) the sale, transfer, lease,
conveyance or other disposition to any person (other than an
Affiliated Transferee) of (A) all or substantially all of the assets
of Party B, (B) a substantial portion of Party B's coal and natural
gas power generating assets, taken as a whole, or (C) a Delivery
Point Facility; or (vi) Party B ceasing to own, directly or
indirectly, all of the voting equity of any Affiliated Transferee,
provided that, for avoidance of doubt, the Xxxxx XX Division will not
be deemed a Change in Control, but the Non-STP Acquisition (as
defined in the Transaction Agreement) will be deemed a Change in
Control.
"Delivery Point Facility" means any facility at which a
Delivery Point under any Transaction is located.
"ERCOT" means the Electric Reliability Council of Texas, Inc.
"ERCOT Protocols" means the document adopted, published and
amended from time to time by ERCOT, and approved by the PUC, to
govern electric transmission in ERCOT, including any attachments,
exhibits or publications referenced in the document, that contains
the scheduling, operating, planning, reliability, and settlement
policies, rules, guidelines, procedures, standards, and criteria of
ERCOT.
"Fixed LOC" has the meaning ascribed thereto in Section
8.1(c)(III).
"Xxxxx XX Division" has the meaning ascribed thereto in the
Transaction Agreement.
"Hedge Agreement" means any agreement (including each
confirmation entered into under a master agreement) providing for
options, swaps, floors, caps, collars, forward sales or forward
purchases involving Energy, generation capacity or natural gas,
prices for such commodities or price indices for such commodities or
other derivative agreement or similar agreement in any case relating
the purchase or sale of Energy, generation capacity or natural gas.
"Increase Date" has the meaning specified in the ***.
***
***
***
"Party" means each of Party A and Party B and "Parties" means
Party A and Party B collectively.
"Person" or "person" means any individual, partnership, firm,
corporation, association, joint venture, limited liability company,
joint-stock company, trust or other entity or organization.
***
***
***
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"Release Date" has the meaning ascribed thereto in the ***
"PUCT" means the Public Utility Commission of Texas.
***
"Specified Transaction" means any transaction (other than a
Transaction) now existing or hereafter entered into between one Party
to this Agreement and the other Party to this Agreement that is a
spot, forward, option or swap transaction in or with respect to one
or more currencies, commodities, securities, rates, indices or other
measures of financial or economic risk or any other similar
transaction (or any combination thereof).
"Transaction Agreement" means that certain Transaction
Agreement of even date herewith by and among CenterPoint Energy,
Inc., Utility Holding, LLC, Step One Merger Sub, Inc., Texas Genco
Holdings, Inc., Houston Power Company LLC and HPC Merger Sub, Inc.
"Transition Date" means the date that is two hundred and
seventy (270) days following the Effective Date, or, if earlier, the
Increase Date.
"Trigger Date" means the first date following the Release Date
that there is no outstanding Second Lien Indebtedness other than of
Party A hereunder.
(ii) Section 1.11 is amended by adding the following to the
end thereof: "and in entering into new arrangements which
replace a Terminated Transaction."
(iii) Section 1.50 is amended to delete the reference to section
"2.4" and replacing it with "2.5".
(iv) Section 1.51 is amended by (a) adding the phrase "for
delivery" immediately before the phrase "at the Delivery
Point" in the second line thereof and (b) deleting the phrase
"at Buyer's option" from the fifth line thereof and replacing
it with the following: "absent a purchase".
(v) Section 1.53 is amended by (a) deleting the phrase "at the
Delivery Point" from the second line thereof and (b) deleting
the phrase "at Seller's option" from the fifth line thereof
and replacing it with the following: "absent a sale."
(2) ARTICLE TWO shall be amended as follows:
(i) In Section 2.3, insert "or any other means of electronic
messaging for which a written record can be retrieved" after
"facsimile" in the first sentence.
(3) ARTICLE FIVE shall be amended as follows:
(i) In Section 5.1(e), add ", the *** or the ***" before "hereof".
(ii) Section 5.1(g) is amended as follows: in clause (i), delete
", or becoming capable at such time of being declared,".
(iii) Section 5.1 shall be amended to add a new Section 5.1(i) and
Section 5.1(j) as follows:
"(i) with respect to Party B only, (A) Party's B
failure to perform any covenant under Paragraph 5
or Paragraph 8(b) of the *** or Paragraph 5 of the
*** and Party B has not cured such failure within
thirty (30) calendar days after receiving notice
from Party A and such failure
-6-
either (x) has a Material Adverse Effect (as
defined in the *** or (y) violates a ***, (B)
prior to the Release Date, the acceleration of any
*** under the *** (as defined in the ***) or any
other of Party B's *** or more (excluding *** held
by Party A), or (C) after the Release Date, the
acceleration of any of the *** of Party B held by
any Other *** Holder (as defined in the ***) or,
after the Trigger Date, of any other *** of Party
B of *** or more. For purposes hereof,
"acceleration" means the occurrence and
continuation of a default, event of default or
other similar condition or event relating to such
***, as applicable, which results in such ***
becoming immediately due and payable, or the
failure to pay any such *** at maturity.
(j) either Party (i) defaults under a Specified
Transaction and, after giving effect to any
applicable notice requirement or grace period,
such default results in a liquidation of, an
acceleration of obligations under, or an early
termination of, that Specified Transaction, (ii)
defaults, after giving effect to any applicable
notice requirement or grace period, in making any
payment or delivery due on the last payment date
or delivery date of a Specified Transaction; or
(iii) disaffirms, disclaims or repudiates any
Specified Transaction."
(iv) Section 5.2 is amended to delete the following phrase from the
last two lines thereof: "under applicable law on the Early
Termination Date, as soon thereafter as is reasonably
practicable)" and to add the following to the end of Section
5.2:
"under applicable law on the Early Termination Date,
then each such Transaction (individually, an "Excluded
Transaction" and collectively, the "Excluded
Transactions") shall be terminated as soon thereafter as
reasonably practicable, and upon termination shall be
deemed to be a Terminated Transaction and the
Termination Payment payable in connection with all such
Transactions shall be calculated in accordance with
Section 5.3 below). The Non-Defaulting Party (or its
agent) may determine its Gains and Losses by reference
to information either available to it internally or
supplied by one or more third parties including, without
limitation, quotations (either firm or indicative) of
relevant rates, prices, yields, yield curves,
volatilities, spreads or other relevant market data in
the relevant markets. Third parties supplying such
information may include, without limitation, dealers in
the relevant markets, end-users of the relevant product,
information vendors and other sources of market
information."
(v) In Section 5.3(a), insert the word "liquid" immediately after
the phrase "any cash or other form of" in the third line
thereof.
(vi) In Section 5.3(b), insert "plus, at the option of the
Non-Defaulting Party, any cash or other form of liquid
security then available to the Defaulting Party or its agent
pursuant to Article Eight," after the phrase "Non-Defaulting
Party," in the sixth line thereof.
(vii) The following is added to the end of Section 5.4:
Notwithstanding any provision to the contrary contained
in this Agreement, the Non-Defaulting Party shall not be
required to pay to the Defaulting Party any amount under
Article 5 until the Non-Defaulting Party receives
confirmation satisfactory to it in its reasonable
discretion (which may include an opinion of its counsel)
that all other obligations of any kind whatsoever of the
Defaulting Party to make any payments to the
Non-Defaulting Party under this Agreement or otherwise
have been fully and finally performed.
-7-
(viii) Option A of Section 5.6 shall be deleted in its entirety and
replaced with the following provision:
"Option A: After calculation of a Termination Payment
in accordance with Section 5.3, if the Defaulting
Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option
and in its discretion, to (i) set off against such
Termination Payment any amounts payable (whether or
not then due) by the Defaulting Party to the
Non-Defaulting Party under any other agreements,
instruments or undertakings between the Defaulting
Party and the Non-Defaulting Party and/or (ii) to the
extent the Transactions are not yet liquidated in
accordance with Section 5.2, withhold payment of the
Termination Payment to the Defaulting Party. The
remedy provided for in this Section shall be without
prejudice and in addition to any right of setoff,
combination of accounts, lien or other right to which
any Party is at any time otherwise entitled (whether
by operation of law, contract or otherwise).
If any obligation is unascertained, the
Non-Defaulting Party may in good faith estimate that
obligation and set-off in respect of the estimate,
subject to the Non-Defaulting Party accounting to the
other when the obligation is ascertained."
(ix) Section 5.7 is amended as follows:
(a) after "(i)" insert the following words: "to withhold
any payment due to the Defaulting Party under this
Agreement and/or"; and
(b) insert the words "withholding or" after "any such".
(x) The following shall be added as a new Section 5.8:
"Section 5.8 Certain Regulatory Matters.
(a) In the event Buyer is regulated by a
federal, state or local regulatory body, and such
body shall disallow all or any portion of any costs
incurred or yet to be incurred by Buyer under any
provision of this Agreement or in respect of any
Transaction, such action shall not operate to excuse
Buyer from performance of any obligation hereunder
nor shall such action give rise to any right of Buyer
to any refund or retroactive adjustment of the price
of any Transaction.
(b) If, after giving effect to any
applicable provision or remedy specified in, or
pursuant to, this Agreement, due to an event or
circumstance (other than any action taken or omission
by a Party) occurring after a Transaction is entered
into, it becomes unlawful under any applicable law
for a Party (an "Affected Party") to perform any
material obligation to make a payment or delivery in
respect of such Transaction (an "Affected
Transaction"), to receive a payment or take delivery
in respect of such Transaction or to comply with any
other material provision of this Agreement relating
to such Transaction (in each case, other than as a
result of a breach by such Party of Section 5.8(c)),
then either Party may, by notice to the other Party,
terminate and liquidate all Affected Transactions in
the manner contemplated by Section 5.2, which notice
shall specify the basis for declaring such Early
Termination Date and identify which Transactions are
Affected Transactions. If the Affected Transactions
constitute all Transactions then in effect under this
Agreement, both Parties shall calculate their
respective Gains, Losses or Costs in respect of
Terminated Transactions as provided in Sections 5.2,
5.3 and 5.4, and endeavor in good faith to agree upon
the Termination Payment payable by either Party. If
-8-
the Affected Transactions constitute some but less
than all of the Transactions then in effect under
this Agreement, only the Party that is not the
Affected Party shall calculate its Gains, Losses and
Costs in respect of all Affected Transactions and
notify the Affected Party of the Termination Payment,
as provided in Section 5.2, 5.3 and 5.4. Only the
Affected Transactions shall be terminated on the
Early Termination Date under the circumstances
described in preceding sentence and all other
Transactions shall remain unaffected as if no Early
Termination Date had been declared.
(c) Each Party agrees that it will use all
reasonable efforts to maintain in full force and
effect all consents, approvals, permits or other
authorizations of any governmental or other authority
(including ERCOT) that are required to be obtained by
it with respect to this Agreement and will use all
reasonable efforts to obtain any that may become
necessary in the future."
(4) ARTICLE SEVEN shall be amended as follows:
(i) Section 7.1 is amended by: (a) deleting "EXCEPT AS SET FORTH
HEREIN" from the first sentence thereof, (b) deleting "UNLESS
EXPRESSLY HEREIN PROVIDED" from the fifth sentence thereof and
substituting in lieu thereof, "NOTWITHSTANDING ANYTHING IN
THIS AGREEMENT TO THE CONTRARY" and (c) adding "SET FORTH IN
THIS AGREEMENT" after the phrase "INDEMNITY PROVISION" in the
fifth sentence thereof.
(5) ***
(6) The following Sections will be added as a new Section 9.3, 9.4 and
9.5, respectively:
"9.3 ***
9.4 ***
9.5 ***
(7) ARTICLE TEN shall be amended as follows:
(i) Section 10.2(viii) is amended by adding at the end thereof:
"; and acknowledges that the other Party is not acting as a
fiduciary for or advisor to it in respect of any Transaction."
(ii) Section 10.5 is amended as follows:
-9-
(a) in the second and third lines thereof, delete the words
"may be withheld in the exercise of its sole discretion"
and replace them with the following: "will not be
arbitrarily withheld or delayed";
(b) in the fourth line thereof, delete "(and without
relieving itself from liability hereunder)";
(c) in Clause (iii) delete "whose creditworthiness is
equal or higher than that" and insert "or pursuant to
any consolidation or amalgamation with, or merger with
or into another entity or the reorganization,
incorporation, reincorporation or reconstitution into or
as another entity" after "such Party";
(d) insert the following at the end of Section 10.5:
"No transfer or assignment by either Party
shall affect the non-transferring Party's
rights and obligations or the transferring
Party's obligations hereunder, including the
obligation to provide and maintain
Performance Assurance (including any liens)
or a guaranty required to be provided under
this Agreement. Notwithstanding the
foregoing, Party B shall have the right to
assign, with full novation and release, this
Agreement without Party A's consent to any
of (i) an Affiliate (provided such Affiliate
assumes all of Party B's obligations under
the Indenture), or (ii) an Acquiring Person
or any other Person that receives
substantially all of Party B's coal and gas
generation assets (with such novation and
release becoming effective upon the
transferee providing all Party B Performance
Assurance required to be provided pursuant
to Section 8.1(c)). The right afforded by
clause (ii) of the foregoing sentence may be
exercised only once during the term of this
Agreement. Party A will execute all
documentation reasonably requested by Party
B, such Acquiring Person or such other
transferee that receives substantially all
of Party B's coal and gas generation assets
in accordance herewith to reflect such
novation and release. An `Acquiring Person'
is any Person (or any Affiliate thereof)
that is owned, directly or indirectly, by
one or more of Blackstone Capital Partners
IV, L.P., Xxxxxxx & Xxxxxxxx Capital
Partners IV, L.P., KKR Millennium Fund,
L.P., and TPG Partners IV, L.P."
(iii) In Section 10.6:
(a) designate the existing text of the Section as Clause
(a) and delete the words "AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER" and replace them with ", EACH
TRANSACTION ENTERED INTO HEREUNDER, AND ALL MATTERS
ARISING IN CONNECTION WITH THIS AGREEMENT", and
(b) insert the following new Clauses (b) and (c):
"(b) With respect to any suit, action or
proceedings relating to this Agreement
("Proceedings"), each Party
irrevocably:
(i) submits to the non-exclusive
jurisdiction of the courts of the
State of New York and the United
States District Court located in
the Borough of Manhattan in New
York City; and
-10-
(ii) waives any objection which it
may have at any time to the
laying of venue of any
Proceedings brought in any such
court, waives any claim that such
Proceedings have been brought in
an inconvenient forum and further
waives the right to object, with
respect to such Proceedings, that
such court does not have any
jurisdiction over such party.
Nothing in this Agreement precludes
either Party from bringing Proceedings
in any other jurisdiction in order to
enforce any judgment obtained in any
Proceedings referred to in the
preceding sentence, nor will the
bringing of such enforcement
Proceedings in any one or more
jurisdictions preclude the bringing of
enforcement Proceedings in any other
jurisdiction.
(c) Each Party hereby irrevocably waives
any and all right to trial by jury in
any Proceeding.";
(iv) The third and fourth sentences of Section 10.7 are replaced
with the following:
"Notices shall be effective upon receipt by the Party
to which it was addressed, which in the case of a
facsimile shall be deemed to occur by the close of
business on the Business Day on which the same is
transmitted (or if not transmitted on a Business Day,
then the next Business Day) or such earlier time as
is confirmed by the receiving Party."
(v) Section 10.11 shall be deleted in its entirety and replaced
with the following:
"10.11 Confidentiality. If the Parties have
elected on the Cover Sheet to make this Section 10.11
applicable to this Agreement, neither Party shall
disclose the terms or conditions of a Transaction
under this Agreement, during the term of such
Transaction, to a third party (other than the Party's
and the Party's Affiliates' employees, rating
agencies, lenders, potential investors or buyers,
counsel, accountants or advisors who have agreed to
keep such terms confidential) except (i) in order to
comply with any applicable law (including the rules
and regulations of the Securities and Exchange
Commission), regulation, or any exchange, control
area or independent system operator rule or in
connection with any court, regulatory or
self-regulatory proceeding or request, (ii) to the
extent such information is delivered to such third
party for the sole purpose of calculating a published
index or other published price source, (iii) to an
Acquiring Person, such Acquiring Person's Affiliates,
and their respective employees, lenders, counsel,
accountants or advisors who have agreed, in each
case, to keep such terms confidential, and (iv) as
may be required to be disclosed to the PUC or in any
proceedings of such commission or of any other
governmental or regulatory agency having jurisdiction
over any Party or such Party's Affiliates. Each Party
shall notify the other Party of any proceeding of
which it is aware which may result in disclosure of
the terms of any transaction (other than as permitted
hereunder) and use reasonable efforts to prevent or
limit the disclosure, provided, however, that such
reasonable efforts do not cause a Party to be in
violation of any law, regulation, subpoena, order or
request. The Parties shall be entitled to all
remedies available at law or in equity to enforce, or
seek relief in connection with, this confidentiality
obligation."
(vi) The following Sections will be added as a new Section 10.12,
10.13, 10.14, 10.15, 10.16 and 10.17 respectively:
-11-
"10.12 Scope of Agreement. Notwithstanding
anything contained in this Agreement to the contrary,
any transaction for the purchase and sale of electric
capacity, energy or other products related thereto
which has been or will be entered into between Party
A and Party B shall constitute a "Transaction" which
is subject to, governed by, and construed in
accordance with the terms of this Agreement.
10.13 Binding Rates and Terms.
(a) Each Party irrevocably waives its
rights, including its rights under Sections 205-206
of the Federal Power Act, unilaterally to seek or
support a change in the rate(s), charges,
classifications, terms or conditions of this
Agreement or any other agreements entered into in
connection with this Agreement or any Transaction
thereunder, including any credit, security, margin,
guaranty or similar agreement (collectively with this
Agreement, the "Covered Agreements"). By this
provision, each Party expressly waives its right to
seek or support: (i) an order from FERC finding that
the market-based rate(s), charges, classifications,
terms or conditions agreed to by the Parties in the
Covered Agreements are unjust and unreasonable; or
(ii) any refund with respect thereto. Each Party
agrees not to make or support such a filing or
request, and that these covenants and waivers shall
be binding notwithstanding any regulatory or market
changes that may occur hereafter.
(b) Absent the agreement of all parties to
the proposed change, the standard of review for
changes to any section of any Covered Agreement
proposed by a Party (to the extent that any waiver in
Section 10.13(a) above is unenforceable or
ineffective as to such Party), a non-Party or FERC
acting sua sponte, shall be the "public interest"
standard of review set forth in United Gas Pipe Line
Co. v. Mobile Gas Service Corp., 000 X.X. 000 (1956)
and Federal Power Commission v. Sierra Pacific Power
Co., 350 U.S. 348 (1956) (the "Mobile-Sierra"
doctrine).
(c) The Parties agree that, if and to the
extent that FERC adopts a final Mobile-Sierra policy
statement in Docket No. PL02-7-000 ("Policy
Statement") or issues a final rule ("Final Rule")
that requires that, in order to exclude application
of the just and reasonable standard under the
Mobile-Sierra doctrine, the Parties must agree to
language which varies from that set forth in Section
10.13(a) or (b) above, then, without further action
of either Party (unless the Parties mutually agree
otherwise), such Section(s) shall be deemed amended
to incorporate the specific language in the Policy
Statement or the Final Rule (as applicable) that
requires the public interest standard of review.
(d) The foregoing is not intended to subject
this Agreement or either Party to the jurisdiction of
FERC.
10.14 ***
-12-
10.15 ERCOT Protocols. The Parties shall
comply with the ERCOT Protocols and shall reasonably
cooperate with each other in their efforts to comply
with the ERCOT Protocols; provided, however, this
Section 10.15 is not intended to impose liability on
either Party for the failure to do so.
10.16 Modifications to Indenture. If at any
time prior to the Release Date, Party B seeks to
modify the terms of the Indenture pursuant to Section
1302 of the Indenture, Party B shall use commercially
reasonable efforts to obtain the necessary consents
to modify the Indenture to provide that any
bondholder may elect, in its sole discretion, not to
have the benefit of or any interest in or enforcement
rights with respect to collateral which consists of a
nuclear facility."
10.17 Xxxxx XX Division. (a) Upon the
transfer of the Agreement by operation of law
pursuant to the Xxxxx XX Division to Genco II LP (as
defined in the Transaction Agreement), the successor
to substantially all of the coal and gas assets of
Party B ("Successor"), under the Transaction
Agreement, (a) the Successor shall, subject to
clauses (b) and (c) below, be fully novated into
Party B's rights and obligations under this Agreement
and (b) Texas Xxxxx, XX shall be automatically and
fully released herefrom (to the extent it would
otherwise be bound) upon consummation of such
transaction. The Parties also agree that the Xxxxx XX
Division shall not constitute an Event of Default
hereunder.
(b) On the effectiveness of any novation
under this Section 10.17 or Section 10.5 (the
"Novation Date") and with respect to the agreement to
be novated (as in effect prior to the Novation Date,
the "Old Agreement"), Party A and Party B (as the
party transferring the agreement by novation,
"Transferor Party B"), are each released and
discharged from further obligations to each other
with respect to the Old Agreement and their
respective rights against each other thereunder are
cancelled.
(c) From and after the Novation Date and
with respect to the novated agreement (as in effect
from and after the Novation Date, the "New
Agreement"), Party A and Party B (as the party
receiving the agreement by novation, "Transferee
Party B"), shall each undertake liabilities and
obligations towards the other and acquire rights
against the other identical in their terms to the Old
Agreement (and, for the avoidance of doubt, as if
Transferee Party B were Transferor Party B and with
Party A remaining as Party A).
-13-
(8) ADDITIONAL PROVISIONS. The following provisions shall be added to
Schedule P: Products and Related Definitions:
(i) Other Products and Service Levels. If the Parties agree to a
service level defined by a different agreement (i.e., the WSPP
agreement, the ERCOT agreement, etc.) for a particular
Transaction, then, unless the Parties expressly state and
agree that all the terms and conditions of such other
agreement will apply, such reference to a service
level/product defined by such other agreement means that the
service level for that Transaction is subject to the
applicable regional reliability requirements and guidelines as
well as the excuses for performance, Force Majeure,
Uncontrollable Forces, or other such excuses applicable to
performance under such other agreement, to the extent
inconsistent with the terms of this Agreement, but all other
terms and conditions of this Agreement remain applicable
including, without limitation, Section 2.2.
(ii) Index Transactions. The terms and provisions of this Section
shall be applicable only to transactions which stipulate
prices that must be determined by reference to a published
index or other publicly available price reference:
(a) Market Disruption. If a Market Disruption Event has
occurred and is continuing during the Determination
Period, the Floating Price for the affected Trading Day
shall be determined pursuant to the index specified in
the Transaction for the first Trading Day thereafter on
which no Market Disruption Event exists; provided,
however, if the Floating Price is not so determined
within three (3) Business Days after the first Trading
Day on which the Market Disruption Event occurred or
existed, then the Parties shall negotiate in good faith
to agree on a Floating Price (or a method for
determining a Floating Price), and if the Parties have
not so agreed on or before the twelfth (12th) Business
Day following the first Trading Day on which the Market
Disruption Event occurred or existed, then the Floating
Price shall be determined with each party obtaining in
good faith a quote from a leading dealer in the relevant
market and averaging the two quotes.
"Determination Period" means each calendar month during
the term of the relevant Transaction, provided that if
the term of the Transaction is less than one calendar
month the Determination Period shall be the term of the
Transaction.
"Floating Price" means the price specified in the
Transaction as being based upon a specified index or
other publicly available price reference ("index").
"Market Disruption Event" means, with respect to an
index, any of the following events: (a) the failure of
the index to announce or publish information necessary
for determining the Floating Price; (b) the failure of
trading to commence or the permanent discontinuation or
material suspension of trading in the relevant options
contract or commodity on the exchange or market acting
as the index; (c) the temporary (for a period in excess
of three (3) business days) or permanent discontinuance
or unavailability of the index; (d) the temporary (for a
period in excess of three (3) business days) or
permanent closing of any exchange acting as the index;
or (e) a material change in the formula for or the
method of determining the Floating Price.
"Trading Day" means a day in respect of which the
relevant price source published the relevant price.
(b) Corrections to Published Prices. For purposes of
determining the relevant prices for any day, if the
price published or announced on a given day and used or
to be used to determine a relevant price is subsequently
corrected and the correction is
-14-
published or announced by the person responsible for
that publication or announcement, either Party may
notify the other Party of (i) that correction and (ii)
the amount (if any) that is payable as a result of that
correction. If a Party gives notice that an amount is so
payable, the Party that originally either received or
retained such amount will, not later than three (3)
Business Days after the effectiveness of that notice,
pay, subject to any applicable conditions precedent, to
the other Party that amount, together with interest at
the Interest Rate for the period from and including the
day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or
payment resulting from that correction.
(c) Calculation of Floating Price. For the purposes of
the calculation of a Floating Price, all numbers shall
be rounded to three (3) decimal places. If the four the
(4th) decimal number is five (5) or greater, then the
third (3rd) decimal number shall be increased by one
(1), and if the four the (4th) decimal number is less
than five (5), then the third (3rd) decimal number shall
remain unchanged.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first above written.
X. XXXX & COMPANY TEXAS XXXXX, XX
By: TEXAS XXXXX XX, LLC, its general
partner
By: /s/ Xxxxx X'Xxxxx By: /s/ Xxxxx X. Tees
------------------------------ ---------------------------------
Name: Xxxxx X'Xxxxx Name: Xxxxx X. Tees
Title: Managing Director Title: President
Date: July 21, 2004 Date: July 21, 2004
-16-
Schedule A-1 to Master Power Purchase
and Sale Agreement Cover Sheet
PUC-MANDATED BASELOAD CAPACITY AUCTIONS*
ESTIMATED VOLUMES (M/W) TO BE OFFERED IN PUC BASELOAD CAPACITY AUCTIONS
SEP-04 OCT-04 NOV-04 DEC-04 JAN-05 FEB-05 MAR-05 APR-05 MAY-05
7/12/2004 AUCTION
Houston Zone -- Parish 125 125 100 125 - - - - -
North Zone -- Limestone 75 75 75 75 - - - - -
South Zone -- STP 50 50 50 50 - - - - -
-----------------------------------------------------------------------------------
TOTAL 250 250 225 250 - - - - -
9/10/2004 AUCTION
Houston Zone -- Parish - - - - 200 275 275 275 275
North Zone -- Limestone - - - - 175 175 175 100 175
South Zone -- STP - - - - 125 125 75 125 125
-----------------------------------------------------------------------------------
TOTAL - - - - 500 575 525 500 575
11/10/2004 AUCTION
Houston Zone -- Parish - - - - 100 125 125 125 -
North Zone -- Limestone - - - - 75 75 75 50 -
South Zone -- STP - - - - 50 50 25 50 -
-----------------------------------------------------------------------------------
TOTAL - - - - 225 250 225 225 -
ESTIMATED VOLUMES (M/W) TO BE OFFERED IN PUC BASELOAD CAPACITY AUCTIONS
JUN-05 JUL-05 AUG-05 SEP-05 OCT-05 NOV-05 DEC-05
7/12/2004 AUCTION
Houston Zone -- Parish - - - - - - -
North Zone -- Limestone - - - - - - -
South Zone -- STP - - - - - - -
--------------------------------------------------------------
TOTAL - - - - - - -
9/10/2004 AUCTION
Houston Zone -- Parish 275 275 275 275 275 200 275
North Zone -- Limestone 175 175 175 175 175 175 000
Xxxxx Xxxx -- XXX 125 125 125 125 75 125 125
--------------------------------------------------------------
TOTAL 575 575 575 575 525 500 575
11/10/2004 AUCTION
Houston Xxxx -- Xxxxxx - - - - - - -
Xxxxx Xxxx -- Limestone - - - - - - -
South Zone -- STP - - - - - - -
--------------------------------------------------------------
TOTAL - - - - - - -
* Actual dates and volumes shall be substantially similar to those set forth
above, subject to PUC requirements and facility availability, but not to exceed
the minimum amount under PUC requirements.
-20-
Schedule A-2 to Master Power Purchase
and Sale Agreement Cover Sheet
PUC-MANDATED GAS CAPACITY AUCTIONS*
ESTIMATED VOLUMES (M/W) TO BE OFFERED IN PUC BASELOAD CAPACITY AUCTIONS
SEP-04 OCT-04 NOV-04 DEC-04 JAN-05 FEB-05 MAR-05 APR-05 MAY-05
7/12/2004 AUCTION
Intermediate 125 125 125 125 - - - - -
Cyclic 200 200 200 200 - - - - -
Peaking 50 50 50 50 - - - - -
-----------------------------------------------------------------------------------
TOTAL 375 375 375 375 - - - - -
9/10/2004 AUCTION
Intermediate - - - - 300 300 300 300 300
Cyclic - - - - 450 450 450 450 450
Peaking - - - - 125 125 125 125 125
-----------------------------------------------------------------------------------
TOTAL - - - - 875 875 875 875 875
11/10/2004 AUCTION
Intermediate - - - - 125 125 125 125 -
Cyclic - - - - 200 200 200 200 -
Peaking - - - - 50 50 50 50 -
-----------------------------------------------------------------------------------
TOTAL - - - - 375 375 375 375 -
JUN-05 JUL-05 AUG-05 SEP-05 OCT-05 NOV-05 DEC-05
7/12/2004 AUCTION
Intermediate - - - - - - -
Cyclic - - - - - - -
Peaking - - - - - - -
--------------------------------------------------------------
TOTAL - - - - - - -
9/10/2004 AUCTION
Intermediate 300 300 300 300 300 300 300
Cyclic 450 450 450 450 450 450 450
Peaking 125 125 125 125 125 125 125
--------------------------------------------------------------
TOTAL 875 875 875 875 875 875 875
11/10/2004 AUCTION
Intermediate - - - - - - -
Cyclic - - - - - - -
Peaking - - - - - - -
--------------------------------------------------------------
TOTAL - - - - - - -
* Actual dates and volumes shall be substantially similar to those set forth
above, subject to PUC requirements and facility availability, but not to exceed
the minimum amount under PUC requirements.
-21-
Schedule A-3 to Master Power Purchase
and Sale Agreement Cover Sheet
VOLUMES (MW) TO BE OFFERED IN BASELOAD CAPACITY AUCTIONS
AUCTION TO OCCUR NOT BEFORE AUGUST 1, 2004
PRODUCT SEP-04
Baseload Firm: ERCOT Houston Zone 25
Baseload Firm: XXXXX Xxxxx Xxxx 00
Xxxxxxxx Xxx-Xxxx 550
Baseload South: 5 MW Blocks 10
AUCTION TO OCCUR NOT BEFORE AUGUST 9, 2004
PRODUCT OCT-04 NOV-04 DEC-04
Baseload Firm: ERCOT Houston Zone 25 25 250
Baseload Firm: XXXXX Xxxxx Xxxx 00 00 000
Cyclic Gas Capacity 75 - -
Baseload Non-Firm 350 325 375
Baseload South: 5 MW Blocks 10 10 10
-22-
Schedule B to Master Power Purchase
and Sale Agreement Cover Sheet
FORM OF LETTER OF CREDIT
WE HEREBY ESTABLISH OUR IRREVOCABLE STAND-BY LETTER OF CREDIT NO.
--------------
IN FAVOR OF:
[BENEFICIARY]
[ADDRESS]
[ADDRESS]
Attn : [ ]
---------------
Telex : [ ]
---------------
BY ORDER AND FOR THE ACCOUNT OF:
(insert full style and address)
FOR AN AMOUNT OF:
US DOLLARS
-------------------------
(UNITED STATES DOLLARS )
----------------------------------
AVAILABLE FOR PAYMENT AT SIGHT UPON PRESENTATION AT OUR COUNTERS IN (insert city
and country where documents are to be presented) OF THE FOLLOWING DOCUMENT:
STATEMENT SIGNED BY A PURPORTEDLY AUTHORIZED REPRESENTATIVE OF [BENEFICIARY]
CERTIFYING THAT (insert your company name) HAS NOT PERFORMED IN ACCORDANCE WITH
THE TERMS OF THE MASTER POWER PURCHASE & SALE AGREEMENT, DATED AS OF JULY ,
---
2004, BETWEEN [BENEFICIARY] AND (insert your company name), AND THE AMOUNT BEING
DRAWN OF USD DOES NOT EXCEED THAT AMOUNT WHICH [BENEFICIARY] IS
-------------
ENTITLED TO DRAW PURSUANT TO THE TERMS AND CONDITIONS OF SUCH AGREEMENT.
SPECIAL CONDITIONS:
1. PARTIAL AND MULTIPLE DRAWINGS ARE PERMITTED.
2. ALL CHARGES RELATED TO THIS LETTER OF CREDIT ARE FOR THE ACCOUNT PARTY'S
ACCOUNT.
3. DOCUMENTS MUST BE PRESENTED NOT LATER THAN (insert expiry date) OR IN THE
EVENT OF FORCE MAJEURE INTERRUPTING OUR BUSINESS, WITHIN THIRTY (30) DAYS AFTER
RESUMPTION OF OUR BUSINESS, WHICHEVER IS LATER.
-23-
UPON RECEIPT OF DOCUMENTS ISSUED IN COMPLIANCE WITH THE TERMS OF THIS CREDIT, WE
HEREBY IRREVOCABLY UNDERTAKE TO COVER YOU AS PER YOUR INSTRUCTIONS WITH VALUE
ONE BANK WORKING DAY.
THIS STANDBY CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS 1993 REVISION), I.C.C. PUBLICATION 500.
-24-
GENERAL TERMS AND CONDITIONS
ARTICLE ONE: GENERAL DEFINITIONS
1.1 "Affiliate" means, with respect to any person, any other person
(other than an individual) that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such person. For this purpose, "control" means the direct or indirect ownership
of fifty percent (50%) or more of the outstanding capital stock or other equity
interests having ordinary voting power.
1.2 "Agreement" has the meaning set forth in the Cover Sheet.
1.3 "Bankrupt" means with respect to any entity, such entity (i) files
a petition or otherwise commences, authorizes or acquiesces in the commencement
of a proceeding or cause of action under any bankruptcy, insolvency,
reorganization or similar law, or has any such petition filed or commenced
against it, (ii) makes an assignment or any general arrangement for the benefit
of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced),
(iv) has a liquidator, administrator, receiver, trustee, conservator or similar
official appointed with respect to it or any substantial portion of its property
or assets, or (v) is generally unable to pay its debts as they fall due.
1.4 "Business Day" means any day except a Saturday, Sunday, or a
Federal Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close
at 5:00 p.m. local time for the relevant Party's principal place of business.
The relevant Party, in each instance unless otherwise specified, shall be the
Party from whom the notice, payment or delivery is being sent and by whom the
notice or payment or delivery is to be received.
1.5 "Buyer" means the Party to a Transaction that is obligated to
purchase and receive, or cause to be received, the Product, as specified in the
Transaction.
1.6 "Call Option" means an Option entitling, but not obligating, the
Option Buyer to purchase and receive the Product from the Option Seller at a
price equal to the Strike Price for the Delivery Period for which the Option may
be exercised, all as specified in the Transaction. Upon proper exercise of the
Option by the Option Buyer, the Option Seller will be obligated to sell and
deliver the Product for the Delivery Period for which the Option has been
exercised.
1.7 "Claiming Party" has the meaning set forth in Section 3.3.
1.8 "Claims" means all third party claims or actions, threatened or
filed and, whether groundless, false, fraudulent or otherwise, that directly or
indirectly relate to the subject matter of an indemnity, and the resulting
losses, damages, expenses, attorneys' fees and court costs, whether incurred by
settlement or otherwise, and whether such claims or actions are threatened or
filed prior to or after the termination of this Agreement.
1.9 "Confirmation" has the meaning set forth in Section 2.3.
1.10 "Contract Price" means the price in $U.S. (unless otherwise
provided for) to be paid by Buyer to Seller for the purchase of the Product, as
specified in the Transaction.
-25-
1.11 "Costs" means, with respect to the Non-Defaulting Party, brokerage
fees, commissions and other similar third party transaction costs and expenses
reasonably incurred by such Party either in terminating any arrangement pursuant
to which it has hedged its obligations or entering into new arrangements which
replace a Terminated Transaction; and all reasonable attorneys' fees and
expenses incurred by the Non-Defaulting Party in connection with the termination
of a Transaction.
1.12 "Credit Rating" means, with respect to any entity, the rating then
assigned to such entity's unsecured, senior long term debt obligations (not
supported by third party credit enhancements) or if such entity does not have a
rating for its senior unsecured long term debt, then the rating then assigned to
such entity as an issues rating by S&P, Moody's or any other rating agency
agreed by the Parties as set forth in the Cover Sheet.
1.13 "Cross Default Amount" means the cross default amount, if any, set
forth in the Cover Sheet for a Party.
1.14 "Defaulting Party" has the meaning set forth in Section 5.1.
1.15 "Delivery Period" means the period of delivery for a Transaction,
as specified in the Transaction.
1.16 "Delivery Point" means the point at which the Product will be
delivered and received, as specified in the Transaction.
1.17 "Downgrade Event" has the meaning set forth on the Cover Sheet.
1.18 "Early Termination Date" has the meaning set forth in Section 5.2.
1.19 "Effective Date" has the meaning set forth on the Cover Sheet.
1.20 "Equitable Defenses" means any bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and with
regard to equitable remedies, the discretion of the court before which
proceedings to obtain same may be pending.
1.21 "Event of Default" has the meaning set forth in Section 5.1.
1.22 "FERC" means the Federal Energy Regulatory Commission or any
successor government agency.
1.23 "Force Majeure" means an event or circumstance which prevents one
Party from performing its obligations under one or more Transactions, which
event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the
negligence of, the Claiming Party, and which, by the exercise of due diligence,
the Claiming Party is unable to overcome or avoid or cause to be avoided. Force
Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's
inability economically to use or resell the Product purchased hereunder; (iii)
the loss or failure of Seller's supply; or (IV) Seller's ability to sell the
Product at a price greater than the Contract Price. Neither Party may raise a
claim of Force Majeure based in whole or in part on curtailment by a
Transmission
-26-
Provider unless (i) such Party has contracted for firm transmission with a
Transmission Provider for the Product to be delivered to or received at the
Delivery Point and (ii) such curtailment is due to "force majeure" or
"uncontrollable force" or a similar term as defined under the Transmission
Provider's tariff, provided, however, that existence of the foregoing factors
shall not be sufficient to conclusively or presumptively prove the existence of
a Force Majeure absent a showing of other facts and circumstances which in the
aggregate with such factors establish that a Force Majeure as defined in the
first sentence hereof has occurred. The applicability of Force Majeure to the
Transaction is governed by the terms of the Products and Related Definitions
contained in Schedule P.
1.24 "Gains" means, with respect to any Party, an amount equal to the
present value of the economic benefit to it, if any (exclusive of Costs),
resulting from the termination of a Terminated Transaction, determined in a
commercially reasonable manner.
1.25 "Guarantor" means, with respect to a Party, the guarantor, if any,
specified for such Party on the Cover Sheet.
1.26 "Interest Rate" means, for any date, the lesser of (a) the per
annum rate of interest equal to the prime lending rate as may from time to time
be published in The Wall Street Journal under "Money Rates" on such day (or if
not published on such day on the most recent preceding day on which published),
plus two percent (2%) and (b) the maximum rate permitted by applicable law.
1.27 "Letter(s) of Credit" means one or more irrevocable, transferable
standby letters of credit issued by a U.S. commercial bank or a foreign bank
with a U.S. branch with such bank having a credit rating of at least AA from S&P
or A3 from Moody's, in a form acceptable to the Party in whose favor the letter
of credit is issued. Costs of a Letter of Credit shall be borne by the applicant
for such Letter of Credit.
1.28 "Losses" means, with respect to any Party, an amount equal to the
present value of the economic loss to it, if any (exclusive of Costs), resulting
from termination of a Terminated Transaction, determined in a commercially
reasonable manner.
1.29 "Master Agreement" has the meaning set forth on the Cover Sheet.
1.30 "Moody's" means Xxxxx'x Investor Services, Inc. or its successor.
1.31 "NERC Business Day" means any day except a Saturday, Sunday or a
holiday as defined by the North American Electric Reliability Council or any
successor organization thereto. A NERC Business Day shall open at 8:00 a.m. and
close at 5:00 p.m. local time for the relevant Party's principal place of
business. The relevant Party, in each instance unless otherwise specified, shall
be the Party from whom the notice, payment or delivery is being sent and by whom
the notice or payment or delivery is to be received.
1.32 "Non-Defaulting Party" has the meaning set forth in Section 5.2.
1.33 "Offsetting Transactions" mean any two or more outstanding
Transactions, having the same or overlapping Delivery Period(s), Delivery Point
and payment date, where
-27-
under one or more of such Transactions, one Party is the Seller, and under the
other such Transaction(s), the same Party is the Buyer.
1.34 "Option" means the right but not the obligation to purchase or
sell a Product as specified in a Transaction.
1.35 "Option Buyer" means the Party specified in a Transaction as the
purchaser of an option, as defined in Schedule P.
1.36 "Option Seller" means the Party specified in a Transaction as the
seller of an option , as defined in Schedule P.
1.37 "Party A Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party A.
1.38 "Party B Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party B.
1.39 "Party A Independent Amount" means the amount , if any, set forth
in the Cover Sheet for Party A.
1.40 "Party B Independent Amount" means the amount, if any, set forth
in the Cover Sheet for Party B.
1.41 "Party A Rounding Amount" means the amount, if any, set forth in
the Cover Sheet for Party A.
1.42 "Party B Rounding Amount" means the amount, if any, set forth in
the Cover Sheet for Party B.
1.43 "Party A Tariff" means the tariff, if any, specified in the Cover
Sheet for Party A.
1.44 "Party B Tariff' means the tariff, if any, specified in the Cover
Sheet for Party B.
1.45 "Performance Assurance" means collateral in the form of either
cash, Letter(s) of Credit, or other security acceptable to the Requesting Party.
1.46 "Potential Event of Default" means an event which, with notice or
passage of time or both, would constitute an Event of Default.
1.47 "Product" means electric capacity, energy or other product(s)
related thereto as specified in a Transaction by reference to a Product listed
in Schedule P hereto or as otherwise specified by the Parties in the
Transaction.
1.48 "Put Option" means an Option entitling, but not obligating, the
Option Buyer to sell and deliver the Product to the Option Seller at a price
equal to the Strike Price for the Delivery Period for which the option may be
exercised, all as specified in a Transaction. Upon
-28-
proper exercise of the Option by the Option Buyer, the Option Seller will be
obligated to purchase and receive the Product.
1.49 "Quantity" means that quantity of the Product that Seller agrees
to make available or sell and deliver, or cause to be delivered, to Buyer, and
that Buyer agrees to purchase and receive, or cause to be received, from Seller
as specified in the Transaction.
1.50 "Recording" has the meaning set forth in Section 2.4.
1.51 "Replacement Price" means the price at which Buyer, acting in a
commercially reasonable manner, purchases at the Delivery Point a replacement
for any Product specified in a Transaction but not delivered by Seller, plus (i)
costs reasonably incurred by Buyer in purchasing such substitute Product and
(ii) additional transmission charges, if any, reasonably incurred by Buyer to
the Delivery Point, or at Buyer's option, the market price at the Delivery Point
for such Product not delivered as determined by Buyer in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Buyer be required to
utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition,
Buyer shall be considered to have purchased replacement Product to the extent
Buyer shall have entered into one or more arrangements in a commercially
reasonable manner whereby Buyer repurchases its obligation to sell and deliver
the Product to another party at the Delivery Point.
1.52 "S&P" means the Standard & Poor's Rating Group (a division of
McGraw Hill, Inc.) or its successor.
1.53 "Sales Price" means the price at which Seller, acting in a
commercially reasonable manner, resells at the Delivery Point any Product not
received by Buyer, deducting from such proceeds any (1) costs reasonably
incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the
third party purchasers, or at Seller's option, the market price at the Delivery
Point for such Product not received as determined by Seller in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Seller be required to
utilize or change its utilization of its owned or controlled assets, including
contractual assets, or market positions to minimize Buyer's liability. For
purposes of this definition, Seller shall be considered to have resold such
Product to the extent Seller shall have entered into one or more arrangements in
a commercially reasonable manner whereby Seller repurchases its obligation to
purchase and receive the Product from another party at the Delivery Point.
1.54 "Schedule" or "Scheduling" means the actions of Seller, Buyer
and/or their designated representatives, including each Party's Transmission
Providers, if applicable, of notifying, requesting and confirming to each other
the quantity and type of Product to be delivered on any given day or days during
the Delivery Period at a specified Delivery Point.
1.55 "Seller" means the Party to a Transaction that is obligated to
sell and deliver, or cause to be delivered, the Product, as specified in the
Transaction.
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1.56 "Settlement Amount" means, with respect to a Transaction and the
Non-Defaulting Party, the Losses or Gains, and Costs, expressed in U.S. Dollars,
which such party incurs as a result of the liquidation of a Terminated
Transaction pursuant to Section 5.2.
1.57 "Strike Price" means the price to be paid for the purchase of the
Product pursuant to an Option.
1.58 "Terminated Transaction" has the meaning set forth in Section 5.2.
1.59 "Termination Payment" has the meaning set forth in Section 5.3.
1.60 "Transaction" means a particular transaction agreed to by the
Parties relating to the sale and purchase of a Product pursuant to this Master
Agreement.
1.61 "Transmission Provider" means any entity or entities transmitting
or transporting the Product on behalf of Seller or Buyer to or from the Delivery
Point in a particular Transaction.
ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS
2.1 Transactions. A Transaction shall be entered into upon agreement of
the Parties orally or, if expressly required by either Party with respect to a
particular Transaction, in writing, including an electronic means of
communication. Each Party agrees not to contest, or assert any defense to, the
validity or enforceability of the Transaction entered into in accordance with
this Master Agreement (i) based on any law requiring agreements to be in writing
or to be signed by the parties, or (ii) based on any lack of authority of the
Party or any lack of authority of any employee of the Party to enter into a
Transaction.
2.2 Governing Terms. Unless otherwise specifically agreed, each
Transaction between the Parties shall be governed by this Master Agreement. This
Master Agreement (including all exhibits, schedules and any written supplements
hereto), the Party A Tariff, if any, and the Party B Tariff, if any, any
designated collateral, credit support or margin agreement or similar arrangement
between the Parties and all Transactions (including any Confirmations accepted
in accordance with Section 2.3) shall form a single integrated agreement between
the Parties. Any inconsistency between any terms of this Master Agreement and
any terms of the Transaction shall be resolved in favor of the terms of such
Transaction.
2.3 Confirmation. Seller may confirm a Transaction by forwarding to
Buyer by facsimile within three (3) Business Days after the Transaction is
entered into a confirmation ("Confirmation') substantially in the form of
Exhibit A. If Buyer objects to any term(s) of such Confirmation, Buyer shall
notify Seller in writing of such objections within two (2) Business Days of
Buyer's receipt thereof, failing which Buyer shall be deemed to have accepted
the terms as sent. If Seller fails to send a Confirmation within three (3)
Business Days after the Transaction is entered into, a Confirmation
substantially in the form of Exhibit A, may be forwarded by Buyer to Seller. If
Seller objects to any term(s) of such Confirmation, Seller shall notify Buyer of
such objections within two (2) Business Days of Seller's receipt thereof,
failing which Seller shall be deemed to have accepted the terms as sent. If
Seller and Buyer each send a Confirmation and neither Party objects to the other
Party's Confirmation within two (2) Business Days of receipt, Seller's
Confirmation shall be deemed to be accepted and shall be the
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controlling Confirmation, unless (i) Seller's Confirmation was sent more than
three (3) Business Days after the Transaction was entered into and (ii) Buyer's
Confirmation was sent prior to Seller's Confirmation, in which case Buyer's
Confirmation shall be deemed to be accepted and shall be the controlling
Confirmation. Failure by either Party to send or either Party to return an
executed Confirmation or any objection by either Party shall not invalidate the
Transaction agreed to by the Parties.
2.4 Additional Confirmation Terms. If the Parties have elected on the
Cover Sheet to make this Section 2.4 applicable to this Master Agreement, when a
Confirmation contains provisions, other than those provisions relating to the
commercial terms of the Transaction (e.g., price or special transmission
conditions), which modify or supplement the general terms and conditions of this
Master Agreement (e.g., arbitration provisions or additional representations and
warranties), such provisions shall not be deemed to be accepted pursuant to
Section 2.3 unless agreed to either orally or in writing by the Parties;
provided that the foregoing shall not invalidate any Transaction agreed to by
the Parties.
2.5 Recording. Unless a Party expressly objects to a Recording (defined
below) at the beginning of a telephone conversation, each Party consents to the
creation of a tape or electronic recording ("Recording") of all telephone
conversations between the Parties to this Master Agreement, and that any such
Recordings will be retained in confidence, secured from improper access, and may
be submitted in evidence in any proceeding or action relating to this Agreement.
Each Party waives any further notice of such monitoring or recording, and agrees
to notify its officers and employees of such monitoring or recording and to
obtain any necessary consent of such officers and employees. The Recording, and
the terms and conditions described therein, if admissible, shall be the
controlling evidence for the Parties' agreement with respect to a particular
Transaction in the event a Confirmation is not fully executed (or deemed
accepted) by both Parties. Upon full execution (or deemed acceptance) of a
Confirmation, such Confirmation shall control in the event of any conflict with
the terms of a Recording, or in the event of any conflict with the terms of this
Master Agreement.
ARTICLE THREE: OBLIGATIONS AND DELIVERIES
3. 1 Seller's and Buyer's Obligations. With respect to each
Transaction, Seller shall sell and deliver, or cause to be delivered, and Buyer
shall purchase and receive, or cause to be received, the Quantity of the Product
at the Delivery Point, and Buyer shall pay Seller the Contract Price; provided,
however, with respect to Options, the obligations set forth in the preceding
sentence shall only anise if the Option Buyer exercises its Option in accordance
with its terms. Seller shall be responsible for any costs or charges imposed on
or associated with the Product or its delivery of the Product up to the Delivery
Point. Buyer shall be responsible for any costs or charges imposed on or
associated with the Product or its receipt at and from the Delivery Point.
3.2 Transmission and Scheduling. Seller shall arrange and be
responsible for transmission service to the Delivery Point and shall Schedule or
arrange for Scheduling services with its Transmission Providers, as specified by
the Parties in the Transaction, or in the absence thereof, in accordance with
the practice of the Transmission Providers, to deliver the Product to the
Delivery Point. Buyer shall arrange and be responsible for transmission service
at and from
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the Delivery Point and shall Schedule or arrange for Scheduling services with
its Transmission Providers to receive the Product at the Delivery Point.
3.3 Force Majeure. To the extent either Party is prevented by Force
Majeure from carrying out, in whole or part, its obligations under the
Transaction and such Party (the "Claiming Party") gives notice and details of
the Force Majeure to the other Party as soon as practicable, then, unless the
terms of the Product specify otherwise, the Claiming Party shall be excused from
the performance of its obligations with respect to such Transaction (other than
the obligation to make payments then due or becoming due with respect to
performance prior to the Force Majeure). The Claiming Party shall remedy the
Force Majeure with all reasonable dispatch. The non Claiming Party shall not be
required to perform or resume performance of its obligations to the Claiming
Party corresponding to the obligations of the Claiming Party excused by Force
Majeure.
ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE
4.1 Seller Failure. If Seller falls to schedule and/or deliver all or
part of the Product pursuant to a Transaction, and such failure is not excused
under the terms of the Product or by Buyer's failure to perform, then Seller
shall pay Buyer, on the date payment would otherwise be due in respect of the
month in which the failure occurred or, if "Accelerated Payment of Damages" is
specified on the Cover Sheet, within five (5) Business Days of invoice receipt,
an amount for such deficiency equal to the positive difference, if any, obtained
by subtracting the Contract Price from the Replacement Price. The invoice for
such amount shall include a written statement explaining in reasonable detail
the calculation of such amount.
4.2 Buyer Failure. If Buyer fails to schedule and/or receive all or
part of the Product pursuant to a Transaction and such failure is not excused
under the terms of the Product or by Seller's failure to perform, then Buyer
shall pay Seller, on the date payment would otherwise be due in respect of the
month in which the failure occurred or, if "Accelerated Payment of Damages" is
specified on the Cover Sheet, within five (5) Business Days of invoice receipt,
an amount for such deficiency equal to the positive difference, if any, obtained
by subtracting the Sales Price from the Contract Price. The invoice for such
amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES
5.1 Events of Default. An "Event of Default" shall mean, with respect
to a Party (a "Defaulting Party"), the occurrence of any of the following:
(a) the failure to make, when due, any payment required
pursuant to this Agreement if such failure is not
remedied within three (3) Business Days after written
notice;
(b) any representation or warranty made by such Party
herein is false or misleading in any material respect
when made or when deemed made or repeated;
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(c) the failure to perform any material covenant or
obligation set forth in this Agreement (except to the
extent constituting a separate Event of Default, and
except for such Party's obligations to deliver or
receive the Product, the exclusive remedy for which
is provided in Article Four) if such failure is not
remedied within three (3) Business Days after written
notice;
(d) such Party becomes Bankrupt;
(e) the failure of such Party to satisfy the
creditworthiness/collateral requirements agreed to
pursuant to Article Eight hereof;
(f) such Party consolidates or amalgamates with, or
merges with or into, or transfers all or
substantially all of its assets to, another entity
and, at the time of such consolidation, amalgamation,
merger or transfer, the resulting, surviving or
transferee entity fails to assume all the obligations
of such Party under this Agreement to which it or its
predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to
the other Party;
(g) if the applicable cross default section in the Cover
Sheet is indicated for such Party, the occurrence and
continuation of (i) a default, event of default or
other similar condition or event in respect of such
Party or any other party specified in the Cover Sheet
for such Party under one or more agreements or
instruments, individually or collectively, relating
to indebtedness for borrowed money in an aggregate
amount of not less than the applicable Cross Default
Amount (as specified in the Cover Sheet), which
results in such indebtedness becoming, or becoming
capable at such time of being declared, immediately
due and payable or (ii) a default by such Party or
any other party specified in the Cover Sheet for such
Party in making on the due date therefor one or more
payments, individually or collectively, in an
aggregate amount of not less than the applicable
Cross Default Amount (as specified in the Cover
Sheet);
(h) with respect to such Party's Guarantor if any:
(i) if any representation or warranty made by a
Guarantor in connection with this Agreement
is false or misleading in any material
respect when made or when deemed made or
repeated;
(ii) the failure of a Guarantor to make any
payment required or to perform any other
material covenant or obligation in any
guaranty made in connection with this
Agreement and such failure shall not be
remedied within three (3) Business Days
after written notice;
(iii) a Guarantor becomes Bankrupt;
(iv) the failure of a Guarantor's guaranty to be
in full force and effect for purposes of
this Agreement (other than in accordance
with its
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terms) prior to the satisfaction of all
obligations of such Party under each
Transaction to which such guaranty shall
relate without the written consent of the
other Party; or
(v) a Guarantor shall repudiate, disaffirm,
disclaim, or reject, in whole or in part, or
challenge the validity of any guaranty.
5.2 Declaration of an Early Termination Date and Calculation of
Settlement Amounts. If an Event of Default with respect to a Defaulting Party
shall have occurred and be continuing, the other Party (the "Non-Defaulting
Party") shall have the right (i) to designate a day, no earlier than the day
such notice is effective and no later than 20 days after such notice is
effective, as an early termination date ("Early Termination Date") to accelerate
all amounts owing between the Parties and to liquidate and terminate all, but
not less than all, Transactions (each referred to as a "Terminated Transaction")
between the Parties, (ii) withhold any payments due to the Defaulting Party
under this Agreement and (iii) suspend performance. The Non-Defaulting Party
shall calculate, in a commercially reasonable manner, a Settlement Amount for
each such Terminated Transaction as of the Early Termination Date (or, to the
extent that in the reasonable opinion of the Non-Defaulting Party certain of
such Terminated Transactions are commercially impracticable to liquidate and
terminate or may not be liquidated and terminated under applicable law on the
Early Termination Date, as soon thereafter as is reasonably practicable).
5.3 Net Out of Settlement Amounts. The Non-Defaulting Party shall
aggregate all Settlement Amounts into a single amount by: netting out (a) all
Settlement Amounts that are due to the Defaulting Party, plus, at the option of
the Non-Defaulting Party, any cash or other form of security then available to
the Non-Defaulting Party pursuant to Article Eight, plus any or all other
amounts due to the Defaulting Party under this Agreement against (b) all
Settlement Amounts that are due to the Non-Defaulting Party, plus any or all
other amounts due to the Non-Defaulting Party under this Agreement, so that all
such amounts shall be netted out to a single liquidated amount (the "Termination
Payment) payable by one Party to the other. The Termination Payment shall be due
to or due from the Non-Defaulting Party as appropriate.
5.4 Notice of Payment of Termination Payment. As soon as practicable
after a liquidation, notice shall be given by the Non-Defaulting Party to the
Defaulting Party of the amount of the Termination Payment and whether the
Termination Payment is due to or due from the Non-Defaulting Party. The notice
shall include a written statement explaining in reasonable detail the
calculation of such amount. The Termination Payment shall be made by the Party
that owes it within two (2) Business Days after such notice is effective.
5.5 Disputes With Respect to Termination Payment. If the Defaulting
Party disputes the Non-Defaulting Party's calculation of the Termination
Payment, in whole or in part, the Defaulting Party shall, within two (2)
Business Days of receipt of Non-Defaulting Party's calculation of the
Termination Payment, provide to the Non-Defaulting Party a detailed written
explanation of the basis for such dispute; provided, however, that if the
Termination Payment is due from the Defaulting Party, the Defaulting Party shall
first transfer Performance Assurance to the Non-Defaulting Party in an amount
equal to the Termination Payment.
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5.6 Closeout Setoffs.
Option A: After calculation of a Termination Payment in accordance with
Section 5.3, if the Defaulting Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(1) set off against such Termination Payment any amounts due and owing by the
Defaulting Party to the Non-Defaulting Party under any other agreements,
instruments or undertakings between the Defaulting Party and the Non-Defaulting
Party and/or (ii) to the extent the Transactions are not yet liquidated in
accordance with Section 5.2, withhold payment of the Termination Payment to the
Defaulting Party. The remedy provided for in this Section shall be without
prejudice and in addition to any right of setoff, combination of accounts, lien
or other night to which any Party is at any time otherwise entitled (whether by
operation of law, contract or otherwise).
Option B: After calculation of a Termination Payment in accordance with
Section 5.3, if the Defaulting Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(1) set off against such Termination Payment any amounts due and owing by the
Defaulting Party or any of its Affiliates to the Non-Defaulting Party or any of
its Affiliates under any other agreements, instruments or undertakings between
the Defaulting Party or any of its Affiliates and the Non-Defaulting Party or
any of its Affiliates and/or (ii) to the extent the Transactions are not yet
liquidated in accordance with Section 5.2, withhold payment of the Termination
Payment to the Defaulting Party. The remedy provided for in this Section shall
be without prejudice and in addition to any right of setoff, combination of
accounts, lien or other right to which any Party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).
Option C: Neither Option A nor B shall apply.
5.7 Suspension of Performance. Notwithstanding any other provision of
this Master Agreement, if (a) an Event of Default or (b) a Potential Event of
Default shall have occurred and be continuing, the Non-Defaulting Party, upon
written notice to the Defaulting Party, shall have the right (1) to suspend
performance under any or all Transactions; provided, however, in no event shall
any such suspension continue for longer than ten (10) NERC Business Days with
respect to any single Transaction unless an early Termination Date shall have
been declared and notice thereof pursuant to Section 5.2 given, and (10 to the
extent an Event of Default shall have occurred and be continuing to exercise any
remedy available at law or in equity.
ARTICLE SIX: PAYMENT AND NETTING
6.1 Billing Period. Unless otherwise specifically agreed upon by the
Parties in a Transaction, the calendar month shall be the standard period for
all payments under this Agreement (other than Termination Payments and, if
"Accelerated Payment of Damages" is specified by the Parties in the Cover Sheet,
payments pursuant to Section 4.1 or 4.2 and Option premium payments pursuant to
Section 6.7). As soon as practicable after the end of each month, each Party
will render to the other Party an invoice for the payment obligations, if any,
incurred hereunder during the preceding month.
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6.2 Timeliness of Payment. Unless otherwise agreed by the Parties in a
Transaction, all invoices under this Master Agreement shall be due and payable
in accordance with each Party's invoice instructions on or before the later of
the twentieth (20th) day of each month, or tenth (10th) day after receipt of the
invoice or, if such day is not a Business Day, then on the next Business Day.
Each Party will make payments by electronic funds transfer, or by other mutually
agreeable method(s), to the account designated by the other Party. Any amounts
not paid by the due date will be deemed delinquent and will accrue interest at
the Interest Rate, such interest to be calculated from and including the due
date to but excluding the date the delinquent amount is paid in full.
6.3 Disputes and Adjustments of Invoices. A Party may, in good faith,
dispute the correctness of any invoice or any adjustment to an invoice, rendered
under this Agreement or adjust any invoice for any arithmetic or computational
error within twelve (12) months of the date the invoice, or adjustment to an
invoice, was rendered. In the event an invoice or portion thereof, or any other
claim or adjustment arising hereunder, is disputed, payment of the undisputed
portion of the invoice shall be required to be made when due, with notice of the
objection given to the other Party. Any invoice dispute or invoice adjustment
shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is
resolved. Upon resolution of the dispute, any required payment shall be made
within two (2) Business Days of such resolution along with interest accrued at
the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the
Party receiving such overpayment from subsequent payments, with interest accrued
at the Interest Rate from and including the date of such overpayment to but
excluding the date repaid or deducted by the Party receiving such overpayment.
Any dispute with respect to an invoice is waived unless the other Party is
notified in accordance with this Section 6.3 within twelve (12) months after the
invoice is rendered or any specific adjustment to the invoice is made. If an
invoice is not rendered within twelve (12) months after the close of the month
during which performance of a Transaction occurred, the night to payment for
such performance is waived.
6.4 Netting of Payments. The Parties hereby agree that they shall
discharge mutual debts and payment obligations due and owing to each other on
the same date pursuant to all Transactions through netting, `in which case all
amounts owed by each Party to the other Party for the purchase and sale of
Products during the monthly billing period under this Master Agreement,
including any related damages calculated pursuant to Article Four (unless one of
the Parties elects to accelerate payment of such amounts as permitted by Article
Four), interest, and payments or credits, shall be netted so that only the
excess amount remaining due shall be paid by the Party who owes it.
6.5 Payment Obligation Absent Netting. If no mutual debts or payment
obligations exist and only one Party owes a debt or obligation to the other
during the monthly billing period, including, but not limited to, any related
damage amounts calculated pursuant to Article Four interest, and payments or
credits, that Party shall pay such sum in full when due.
6.6 Security. Unless the Party benefiting from Performance Assurance or
a guaranty notifies the other Party in writing, and except in connection with a
liquidation and termination in accordance with Article Five, all amounts netted
pursuant to this Article Six shall not take into
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account or include any Performance Assurance or guaranty which may be in effect
to secure a Party's performance under this Agreement.
6.7 Paying for Options. The premium amount for the purchase of an
Option shall be paid within two (2) Business Days of receipt of an invoice from
the Option Seller. Upon exercise of an Option, payment for the Product
underlying such Option shall be due in accordance with Section 6.1.
6.8 Transaction Netting. If the Parties enter into one or more
Transactions, which in conjunction with one or more other outstanding
Transactions, constitute Offsetting Transactions, then all such Offsetting
Transactions may by agreement of the Parties, be netted into a single
Transaction under which:
(a) the Party obligated to deliver the greater amount of
Energy will deliver the difference between the total
amount it is obligated to deliver and the total
amount to be delivered to it under the Offsetting
Transactions, and
(b) the Party owing the greater aggregate payment will
pay the net difference owed between the Parties.
Each single Transaction resulting under this Section shall be deemed part of the
single, indivisible contractual arrangement between the parties, and once such
resulting Transaction occurs, outstanding obligations under the Offsetting
Transactions which are satisfied by such offset shall terminate.
ARTICLE SEVEN: LIMITATIONS
7.1 Limitation of Remedies, Liability and Damage. EXCEPT AS SET FORTH
HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT
SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN
EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE
OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT
LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER ` OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER
ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES
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AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE,
JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO
BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE
DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY
IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS.
ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS
8.1 Party A Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8. 1 (a) is specified on the Cover Sheet, Section 8.1(a) Option C shall apply
exclusively. If none of Sections 8.1(b), 8.1(c) or 8.1(d) are specified on the
Cover Sheet, Section 8. 1 (b) shall apply exclusively.
(a) Financial Information. Option A: If requested by Party A,
Party B shall deliver (1) within 120 days following the end of each fiscal year,
a copy of Party B's annual report containing audited consolidated financial
statements for such fiscal year and (ii) within 60 days after the end of each of
its first three fiscal quarters of each fiscal year, a copy of Party B's
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as Party B diligently pursues the
preparation, certification and delivery of the statements.
Option B: If requested by Party A, Party B shall deliver (i) within 120
days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.
Option C: Party A may request from Party B the information specified in
the Cover Sheet.
(b) Credit Assurances. If Party A has reasonable grounds to
believe that Party B's creditworthiness or performance under this Agreement has
become unsatisfactory, Party A will provide Party B with written notice
requesting Performance Assurance in an amount determined by Party A in a
commercially reasonable manner. Upon receipt of such notice Party
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B shall have three (3) Business Days to remedy the situation by providing such
Performance Assurance to Party A. In the event that Party B fails to provide
such Performance Assurance, or a guaranty or other credit assurance acceptable
to Party A within three (3) Business Days of receipt of notice, then an Event of
Default under Article Five will be deemed to have occurred and Party A will be
entitled to the remedies set forth in Article Five of this Master Agreement.
(c) Collateral Threshold. If at any time and from time to time
during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party A
plus Party B's Independent Amount, if any, exceeds the Party B Collateral
Threshold, then Party A, on any Business Day, may request that Party B provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party B's Independent Amount, if any, exceeds the Party B
Collateral Threshold (rounding upwards for any fractional amount to the next
Party B Rounding Amount) ("Party B Performance Assurance"), less any Party B
Performance Assurance already posted with Party A. Such Party B Performance
Assurance shall be delivered to Party A within three (3) Business Days of the
date of such request. On any Business Day (but no more frequently than weekly
with respect to Letters of Credit and daily with respect to cash), Party B, at
its sole cost, may request that such Party B Performance Assurance be reduced
correspondingly to the amount of such excess Termination Payment plus Party B's
Independent Amount, if any, (rounding upwards for any fractional amount to the
next Party B Rounding Amount). In the event that Party B fails to provide Party
B Performance Assurance pursuant to the terms of this Article Eight within three
(3) Business Days. then an Event of Default under Article Five shall be deemed
to have occurred and Party A will be entitled to the remedies set forth in
Article Five of this Master Agreement.
For purposes of this Section 8.1(c), the calculation of the Termination
Payment shall be calculated pursuant to Section 5.3 by Party A as if all
outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party B to Party A, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.
(d) Downgrade Event. If at any time there shall occur a
Downgrade Event in respect of Party B, then Party A may require Party B to
provide Performance Assurance in an amount determined by Party A in a
commercially reasonable manner. In the event Party B shall fall to provide such
Performance Assurance or a guaranty or other credit assurance acceptable to
Party A within three (3) Business Days of receipt of notice, then an Event of
Default shall be deemed to have occurred and Party A will be entitled to the
remedies set forth `in Article Five of this Master Agreement.
(e) If specified on the Cover Sheet, Party B shall deliver to
Party A, prior to or concurrently with the execution and delivery of this Master
Agreement a guarantee in an amount not less than the Guarantee Amount specified
on the Cover Sheet and in a form reasonably acceptable to Party A.
8.2 Party B Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8.2(a) is specified on the Cover Sheet,
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Section 8.2(a) Option C shall apply exclusively. If none of Sections 8.2(b),
8.2(c) or 8.2(d) are specified on the Cover Sheet, Section 8.2(b) shall apply
exclusively.
(a) Financial Information. Option A: If requested by Party B,
Party A shall deliver (i) within 120 days following the end of each fiscal year,
a copy of Party A's annual report containing audited consolidated financial
statements for such fiscal year and (ii) within 60 days after the end of each of
its first three fiscal quarters of each fiscal year, a copy of such Party's
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as such Party diligently pursues the
preparation, certification and delivery of the statements.
Option B: If requested by Party B, Party A shall deliver (1) within 120
days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.
Option C: Party B may request from Party A the information specified in
the Cover Sheet.
(b) Credit Assurances. If Party B has reasonable grounds to
believe that Party A's creditworthiness or performance under this Agreement has
become unsatisfactory, Party B will provide Party A with written notice
requesting Performance Assurance in an amount determined by Party B in a
commercially reasonable manner. Upon receipt of such notice Party A shall have
three (3) Business Days to remedy the situation by providing such Performance
Assurance to Party B. In the event that Party A fails to provide such
Performance Assurance, or a guaranty or other credit assurance acceptable to
Party B within three (3) Business Days of receipt of notice, then an Event of
Default under Article Five will be deemed to have occurred and Party B will be
entitled to the remedies set forth in Article Five of this Master Agreement.
(c) Collateral Threshold. If at any time and from time to time
during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party B
plus Party A's Independent Amount, if any, exceeds the Party A Collateral
Threshold, then Party B, on any Business Day, may request that Party A provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party A's Independent Amount, if any, exceeds the Party A
Collateral Threshold (rounding upwards for any fractional amount to the next
Party A Rounding Amount) ("Party A Performance Assurance"), less any Party A
Performance Assurance already posted
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with Party B. Such Party A Performance Assurance shall be delivered to Party B
within three (3) Business Days of the date of such request. On any Business Day
(but no more frequently than weekly with respect to Letters of Credit and daily
with respect to cash), Party A, at its sole cost, may request that such Party A
Performance Assurance be reduced correspondingly to the amount of such excess
Termination Payment plus Party A's Independent Amount, if any, (rounding upwards
for any fractional amount to the next Party A Rounding Amount). In the event
that Party A fails to provide Party A Performance Assurance pursuant to the
terms of this Article Eight within three (3) Business Days, then an Event of
Default under Article Five shall be deemed to have occur red and Party B will be
entitled to the remedies set forth in Article Five of this Master Agreement.
For purposes of this Section 8.2(c), the calculation of the Termination
Payment shall be calculated pursuant to Section 5.3 by Party B as if all
outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party A to Party B, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.
(d) Downgrade Event. If at any time there shall occur a
Downgrade Event in respect of Party A, then Party B may require Party A to
provide Performance Assurance in an amount determined by Party B in a
commercially reasonable manner. In the event Party A shall fail to provide such
Performance Assurance or a guaranty or other credit assurance acceptable to
Party B within three (3) Business Days of receipt of notice, then an Event of
Default shall be deemed to have occurred and Party B will be entitled to the
remedies set forth in Article Five of this Master Agreement.
(e) If specified on the Cover Sheet, Party A shall deliver to
Party B, prior to or concurrently with the execution and delivery of this Master
Agreement a guarantee in an amount not less than the Guarantee Amount specified
on the Cover Sheet and in a form reasonably acceptable to Party B.
8.3 Grant of Security Interest/Remedies. To secure its obligations
under this Agreement and to the extent either or both Parties deliver
Performance Assurance hereunder, each Party (a "Pledgor") hereby grants to the
other Party (the "Secured Party") a present and continuing security interest in,
and lien on (and right of setoff against), and assignment of, all cash
collateral and cash equivalent collateral and any and all proceeds resulting
therefrom or the liquidation thereof, whether now or hereafter held by, on
behalf of, or for the benefit of, such Secured Party, and each Party agrees to
take such action as the other Party reasonably requires in order to perfect the
Secured Party's first priority security interest in, and lien on (and right of
setoff against), such collateral and any and all proceeds resulting therefrom or
from the liquidation thereof Upon or any time after the occurrence or deemed
occurrence and during the continuation of an Event of Default or an Early
Termination Date, the Non-Defaulting Party may do any one or more of the
following: (1) exercise any of the rights and remedies of a Secured Party with
respect to all Performance Assurance, including any such rights and remedies
under law then in effect; (ii) exercise its rights of setoff against any and all
property of the Defaulting Party in the possession of the Non-Defaulting Party
or its agent; (iii) draw on any outstanding Letter of Credit issued for its
benefit; and (iv) liquidate all Performance Assurance then held by or for the
benefit of the Secured Party free from any claim or right of any nature
whatsoever of
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the Defaulting Party, including any equity or right of purchase or redemption by
the Defaulting Party. The Secured Party shall apply the proceeds of the
collateral realized upon the exercise of any such rights or remedies to reduce
the Pledgor's obligations under the Agreement (the Pledgor remaining liable for
any amounts owing to the Secured Party after such application), subject to the
Secured Party's obligation to return any surplus proceeds remaining after such
obligations are satisfied in full.
ARTICLE NINE: GOVERNMENTAL CHARGES
9.1 Cooperation. Each Party shall use reasonable efforts to implement
the provisions of and to administer this Master Agreement in accordance with the
intent of the parties to minimize all taxes, so long as neither Party is
materially adversely affected by such efforts.
9.2 Governmental Charge. Seller shall pay or cause to be paid all taxes
imposed by any government authority ("Governmental Charges") on or with respect
to the Product or a Transaction arising prior to the Delivery Point. Buyer shall
pay or cause to be paid all Governmental Charges on or with respect to the
Product or a Transaction at and from the Delivery Point (other than ad valorem,
franchise or income taxes which are related to the sale of the Product and are,
therefore, the responsibility of the Seller). In the event Seller is required by
law or regulation to remit or pay Governmental Charges which are Buyer's
responsibility hereunder, Buyer shall promptly reimburse Seller for such
Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may
deduct the amount of any such Governmental Charges from the sums due to Seller
under Article 6 of this Agreement. Nothing shall obligate or cause a Party to
pay or be liable to pay any Governmental Charges for which it is exempt under
the law.
ARTICLE TEN: MISCELLANEOUS
10.1 Term of Master Agreement. The term of this Master Agreement shall
commence on the Effective Date and shall remain in effect until terminated by
either Party upon (thirty) 30 days' prior written notice; provided, however,
that such termination shall not affect or excuse the performance of either Party
under any provision of this Master Agreement that by its terms survives any such
termination and, provided further, that this Master Agreement and any other
documents executed and delivered hereunder shall remain in effect with respect
to the Transaction(s) entered into prior to the effective date of such
termination until both Parties have fulfilled all of their obligations with
respect to such Transaction(s), or such Transaction(s) that have been terminated
under Section 5.2 of this Agreement.
10.2 Representations and Warranties. On the Effective Date and the date
of entering into each Transaction, each Party represents and warrants to the
other Party that:
(i) it is duly organized, validly existing and
in good standing under the laws of the
jurisdiction of its formation;
(ii) it has all regulatory authorizations
necessary for it to legally perform its
obligations under this Master Agreement and
each Transaction (including any Confirmation
accepted in accordance with Section 2.3);
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(iii) the execution, delivery and performance of
this Master Agreement and each Transaction
(including any Confirmation accepted in
accordance with Section 2.3) are within its
powers, have been duly authorized by all
necessary action and do not violate any of
the terms and conditions in its governing
documents, any contracts to which it is a
party or any law, rule, regulation, order or
the like applicable to it;
(iv) this Master Agreement, each Transaction
(including any Confirmation accepted in
accordance with Section 2.3), and each other
document executed and delivered in
accordance with this Master Agreement
constitutes its legally valid and binding
obligation enforceable against it in
accordance with its terms; subject to any
Equitable Defenses.
(v) it is not Bankrupt and there are no
proceedings pending or being contemplated by
it or, to its knowledge, threatened against
it which would result in it being or
becoming Bankrupt;
(vi) there is not pending or, to its knowledge,
threatened against it or any of its
Affiliates any legal proceedings that could
materially adversely affect its ability to
perform its obligations under this Master
Agreement and each Transaction (including
any Confirmation accepted in accordance with
Section 2.3);
(vii) no Event of Default or Potential Event of
Default with respect to it has occurred and
is continuing and no such event or
circumstance would occur as a result of its
entering into or performing its obligations
under this Master Agreement and each
Transaction (including any Confirmation
accepted in accordance with Section 2.3);
(viii) it is acting for its own account, has made
its own independent decision to enter into
this Master Agreement and each Transaction
(including any Confirmation accepted in
accordance with Section 2.3) and as to
whether this Master Agreement and each such
Transaction (including any Confirmation
accepted in accordance with Section 2.3) is
appropriate or proper for it based upon its
own judgment, is not relying upon the advice
or recommendations of the other Party in so
doing, and is capable of assessing the
merits of and understanding, and understands
and accepts, the terms, conditions and risks
of this Master Agreement and each
Transaction (including any Confirmation
accepted in accordance with Section 2.3);
(ix) it is a "forward contract merchant" within
the meaning of the United States Bankruptcy
Code;
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(x) it has entered into this Master Agreement
and each Transaction (including any
Confirmation accepted in accordance with
Section 2.3) in connection with the conduct
of its business and it has the capacity or
ability to make or take delivery of all
Products referred to in the Transaction to
which it is a Party;
(xi) with respect to each Transaction (including
any Confirmation accepted in accordance with
Section 2.3) involving the purchase or sale
of a Product or an Option, it is a producer,
processor, commercial user or merchant
handling the Product, and it is entering
into such Transaction for purposes related
to its business as such; and
(xii) the material economic terms of each
Transaction are subject to individual
negotiation by the Parties.
10.3 Title and Risk of Loss. Title to and risk of loss related to the
Product shall transfer from Seller to Buyer at the Delivery Point. Seller
warrants that it will deliver to Buyer the Quantity of the Product free and
clear of all liens, security interests, claims and encumbrances or any interest
therein or thereto by any person arising prior to the Delivery Point.
10.4 Indemnity. Each Party shall indemnify, defend and hold harmless
the other Party from and against any Claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period when
control and title to Product is vested in such Party as provided in Section
10.3. Each Party shall indemnify, defend and hold harmless the other Party
against any Governmental Charges for which such Party is responsible under
Article Nine.
10.5 Assignment. Neither Party shall assign this Agreement or its
rights hereunder without the prior written consent of the other Party, which
consent may be withheld in the exercise of its sole discretion; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is equal to or higher than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets whose creditworthiness is equal to or higher
than that of such Party; provided, however, that in each such case, any such
assignee shall agree in writing to be bound by the terms and conditions hereof
and so long as the transferring Party delivers such tax and enforceability
assurance as the non-transferring Party may reasonably request.
10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL
WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT.
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10.7 Notices. All notices, requests, statements or payments shall be
made as specified in the Cover Sheet. Notices (other than scheduling requests)
shall, unless otherwise specified herein, be in writing and may be delivered by
hand delivery, United States mail, overnight courier service or facsimile.
Notice by facsimile or hand delivery shall be effective at the close of business
on the day actually received, if received during business hours on a Business
Day, and otherwise shall be effective at the close of business on tile next
Business Day. Notice by overnight United States mail or courier shall be
effective on the next Business Day after it was sent. A Party may change its
addresses by providing notice of same in accordance herewith.
10.8 General. This Master Agreement (including the exhibits, schedules
and any written supplements hereto), the Party A Tariff, if any, the Party B
Tariff, if any, any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any
Confirmation accepted in accordance with Section 2.3) constitute the entire
agreement between the Parties relating to the subject matter. Notwithstanding
the foregoing, any collateral, credit support or margin agreement or similar
arrangement between the Parties shall, upon designation by the Parties, be
deemed part of this Agreement and shall be incorporated herein by reference.
This Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party or the
other as a result of the preparation, substitution, submission or other event of
negotiation, drafting or execution hereof. Except to the extent herein provided
for, no amendment or modification to this Master Agreement shall be enforceable
unless reduced to writing and executed by both Parties. Each Party agrees if it
seeks to amend any applicable wholesale power sales tariff during the term of
this Agreement, such amendment will not in any way affect outstanding
Transactions under this Agreement without the prior written consent of the other
Party. Each Party further agrees that it will not assert, or defend itself, on
the basis that any applicable tariff is inconsistent with this Agreement. This
Agreement shall not impart any rights enforceable by any third party (other than
a permitted successor or assignee bound to this Agreement). Waiver by a Party of
any default by the other Party shall not be construed as a waiver of any other
default. Any provision declared or rendered unlawful by any applicable court of
law or regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as "Regulatory Event")
will not otherwise affect the remaining lawful obligations that anise under this
Agreement; and provided, further, that if a Regulatory Event occurs, the Parties
shall use their best efforts to reform this Agreement in order to give effect to
the original intention of the Parties. The term "including" when used in this
Agreement shall be by way of example only and shall not be considered in any way
to be in limitation. The headings used herein are for convenience and reference
purposes only. All indemnity and audit rights shall survive the termination of
this Agreement for twelve (12) months. This Agreement shall be binding on each
Party's successors and permitted assigns.
10.9 Audit. Each Party 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 Master Agreement. If requested, a Party shall
provide to the other Party statements evidencing the Quantity delivered at the
Delivery Point. If any such examination reveals any inaccuracy in any statement,
the necessary adjustments in such statement and the payments thereof will be
made promptly and shall bear interest calculated at the Interest Rate from the
date the overpayment or underpayment was made until paid, provided, however,
that no adjustment for any statement or payment will be
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made unless objection to the accuracy thereof was made prior to the lapse of
twelve (12) months from the rendition thereof, and thereafter any objection
shall be deemed waived.
10.10 Forward Contract. The Parties acknowledge and agree that all
Transactions constitute "forward contracts" within the meaning of the United
States Bankruptcy Code.
10.11 Confidentiality. If the Parties have elected on the Cover Sheet
to make this Section 10.11 applicable to this Master Agreement, neither Party
shall disclose the terms or conditions of a Transaction under this Master
Agreement to a third party (other than the Party's employees, lenders, counsel,
accountants or advisors who have a need to know such information and have agreed
to keep such terms confidential) except in order to comply with any applicable
law, regulation, or any exchange, control area or `independent system operator
rule or in connection with any court or regulatory proceeding; provided,
however, each Party shall, to the extent practicable, use reasonable efforts to
prevent or limit the disclosure. The Parties shall be entitled to all remedies
available at law or in equity to enforce, or seek relief in connection with,
this confidentiality obligation.
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CONFIRMATION LETTER
From: X. Xxxx & Company
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
To: Texas Xxxxx, XX
0000 Xxxxxxxxx Xxxxxx, 00xx Floor
X.X. Xxx 0000, 00xx Xxxxx
Xxxxxxx, XX 00000 (77252-2846)
Attention: Xxxxx X. Tees
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the following transaction (the "Transaction") entered
into on the Trade Date specified below between X. Xxxx & Company ("Buyer") and
Texas Xxxxx, XX ("Seller").
This confirmation letter is being provided pursuant to and in accordance with
the Master Power Purchase and Sale Agreement dated as of July21, 2004 (the
"Master Agreement") between Buyer and Seller and constitutes part of and is
subject to the terms and provisions of such Master Agreement. Terms used but not
defined herein shall have the meanings ascribed to them in the Master Agreement.
The commercial terms of this Transaction are as follows:
Trade Date: July 21, 2004
Contract Reference: To be advised by Buyer
Buyer: X. Xxxx & Company
Seller: Texas Xxxxx, XX
Scheduling: Buyer must Schedule the Product at
the contracted quantity with ERCOT by
11:00 Central prevailing time each
day.
Product: Firm (LD) Energy
Delivery Period: From hour ending 0100 on
January 1, 2005 to hour ending 2400
on December 31, 2008, including North
American Electricity Reliability
Council ("NERC") holidays
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Monthly Quantities: See Schedule 1 to this Confirmation.
Contract Prices: See Schedule 1 to this Confirmation.
Delivery Points: Subject to the section entitled
"Alternate Delivery Points" below,
(i) while ERCOT operates on a zonal
congestion basis, the "Primary
Delivery Point" for each ERCOT zone
specified in Schedule 1 shall be any
delivery point in such ERCOT zone,
and (ii) if and when ERCOT switches
to a nodal congestion methodology,
the "Primary Delivery Point" for each
of the Parish facility, the South
Texas Project facility and the
Limestone facility, as specified in
Schedule 1, shall be the node that
consists of the 345 kV
interconnection at the busbar for
such facility.
Alternate Delivery Points: Seller may specify an alternate
delivery point (an "Alternate
Delivery Point") in accordance with
the following for any Product
delivered under this Transaction:
(1) If and when ERCOT switches to a
nodal congestion methodology, upon
notice by Seller to Buyer delivered
no later than 08:30 Central
prevailing time of the Day prior to
the Day on which a Product is to be
delivered, Seller may specify any
other delivery point in the ERCOT
zone (or equivalent designation) in
which the Primary Delivery Point for
such Product is located as the
Delivery Point for such Product. In
the event Seller elects an Alternate
Delivery Point pursuant to this
clause (1), (a) Seller shall pay
Buyer the amount by which the market
price at the Primary Delivery Point
exceeded the market price at the
Alternate Delivery Point, and (b)
Buyer shall pay to Seller the amount
by which the market price at the
Alternate Delivery Point exceeded the
market price at the Primary Delivery
Point, in each case with respect to
the Product delivered at such
Alternate Delivery Point.
(2) In the event of an Unplanned
(Forced) Outage or an Unplanned
(Forced) Derating at either the
Limestone facility or the South Texas
Project facility (each, an "Affected
Facility"), Seller may, upon notice
by Seller to Buyer delivered no later
than 08:30 Central prevailing time of
the Day prior to the Day on which a
Product is to be delivered, elect a
Parish Zone Delivery Point as the
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delivery point for the Product that
would otherwise have been delivered
at the Primary Delivery Point
associated with such Affected
Facility. Seller shall not reduce
Buyer's receipts at the Primary
Delivery Point at either Affected
Facility more than pro rata with
other parties buying power at such
facilities for which Seller has the
right to designate an alternate
delivery point.
For purposes of the foregoing, (i) a
"Parish Zone Delivery Point" is any
delivery point in the ERCOT zone (or
equivalent designation) in which the
Primary Delivery Point for the Parish
facility is located and (ii)
"Unplanned (Forced) Outage" and
"Unplanned (Forced) Derating" each
have the meanings specified in the
NERC Generating Unit Availability
Data System (GADS) event reporting
guidelines.
The provisions related to Alternate
Delivery Points shall not affect
Seller's obligation to deliver Firm
(LD) Energy.
Force Majeure Revise the third sentence of Section
1.23 of the Master Agreement to read
as follows:
Neither Party may raise a
claim of Force Majeure based
in whole or in part on
curtailment by a
Transmission Provider unless
(i) such Party has either
(A) contracted for firm
transmission with a
Transmission Provider for
the Product to be delivered
to or received at the
Delivery Point or (B)
scheduled such Product into
(in the case of Seller) or
out of (in the case of
Buyer) a Delivery Point and
(ii) such curtailment is due
to "force majeure" or
"uncontrollable force" or a
similar term as defined
under the ERCOT Protocols.
For the avoidance of doubt,
Seller is not a Transmission
Provider for purposes of
this provision.
Buyer Operations Contacts: Xxxxxx Xxxxxx - Operations Manager:
(000) 000-0000
Xxxxx Xxxxxx - Scheduling Manager
(000) 000-0000
[SIGNATURE PAGE FOLLOWS]
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Please confirm that the terms stated herein accurately reflect the agreement
reached between Texas Xxxxx, XX and X. Xxxx & Company by executing where
indicated below.
Signed on behalf of X. Xxxx & Company
By: /s/ Xxxxx X'Xxxxx
-----------------------------------------
Xxxxx X'Xxxxx
Managing Director
X. Xxxx & Company
Signed on behalf of Texas Xxxxx, XX
By Texas Xxxxx XX, LLC, its general partner
By: /s/ Xxxxx X. Tees
-----------------------------------
Name: Xxxxx X. Tees
Title: President
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Schedule 1 to Confirmation Letter
CONTRACT PRICES, MONTHLY VOLUMES AND DELIVERY POINTS
***
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***
Pursuant to the Confidential Treatment Request filed with the Securities and
Exchange Commission, we have omitted 14 pages from this exhibit from this point
forward.
A-1
