Operations Board of Directors
March 13, 2024
10:30 A.M.
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
REMOTE LOCATION VIA TELECONFERENCE
Any interested parties or community members may attend, and participate in, the meeting at the following addresses where Board members may also join the meeting from:
County of Santa Cruz
701 Ocean Street, Third Floor Training Room
Santa Cruz, CA 95060
City of San Luis Obispo
City Hall
990 Palm Street, Council Chambers
San Luis Obispo, CA 93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
County of Santa Barbara
County Administration Building
105 East Anapamu Street, Suite 406
Santa Barbra, CA 93101
Public may participate through ZOOM. For ZOOM participation please join by computer audio at:
https://us02web.zoom.us/j/83507087702
Or join by phone:
+1 669 900 6833 or +1 669 219 2599
Enter this Webinar ID Number: 835 0708 7702 when prompted. Please note there is no Participant Code, you will press # again after the recording prompts you.
You will be placed in the meeting as an attendee. To make a public comment:
If joined by computer, please press the button to raise your hand If joined by phone, please push *9 on your keypad
If you have anything that you wish to be distributed to the Board, please provide 15 copies to a member of 3CE staff or the Board Clerk, who will distribute the information to the Board members and staff.
The public may comment on the consent agenda and matters not listed on the agenda but within the Board's jurisdiction at the opening of the meeting. The Board may not take action at this meeting on any item not listed on the agenda other than to refer the matter to staff or set it for a future meeting. The public may comment on a specific item listed on this agenda when the Board considers that item.
Speakers are limited to 3 minutes each.
In addition, members of the public may request and receive copies without undue delay of any documents that are distributed to the Board, unless there is a specific exemption under the Public Records Act that prevents the disclosure of the record. (Cal. Gov’t Code Section 54957.5) In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board in advance of a meeting and that relate to an agenda item will be made available at 3CE’s offices located at 70 Garden Court, Suite 300, Monterey, CA 93940 during normal business hours and are also available on the 3CE website located at: https://3cenergy.org/meetings-agendas/ DISCLOSURE OF CAMPAIGN CONTRIBUTIONS: Pursuant to Government Code section 84308, members of the Board are disqualified and not able to participate in any agenda item involving contracts (other than competitively bid, labor, or personal employment contracts), franchises, discretionary land use permits and other entitlements if the Board member received more than $250 in campaign contributions from the applicant or contractor, an agent of the applicant or contractor, or any financially interested participant who actively supports or opposes the decision on the agenda item since January 1, 2023.
Members of the Board who have received, and applicants, contractors or their agents who have made, campaign contributions totaling more than $250 to a Board member during the proceeding or for 12 months after a final decision is rendered in that proceeding, are required to disclose that fact for the official record of the subject proceeding. Disclosures must include the amount of the campaign contribution and identify the recipient Board member and may be made either in writing to the Clerk of the Board prior to the subject hearing or by verbal disclosure at the time of the hearing.
AGENDA
Welcome & Roll Call
Pledge of Allegiance
Corrections or Additions
The Clerk will announce agenda corrections or proposed additions of emergency, urgency, or continued items, which will be acted on by the Board as provided in Section 54954.2 of the California Government Code.
Public Comment on Items on the Consent Calendar and Items Not listed on the Agenda The public may address the Board on the Consent Calendar and any matter within the jurisdiction of the Board but not on the agenda.
Pages
CONSENT CALENDAR
1. Approve Minutes from the January 10, 2024 meeting of the Operations Board 1
2. Approve and authorize the CEO to execute the Edison Electric Institute Master Power Purchase Agreement and Sale Agreement with J.Aron & Company LLC
4 3. Approve and authorize the CEO to execute the Edison Electric Institute Master Power Purchase and Sale Agreement with Citigroup Energy Inc.
77 4. Confirm February 20, 2024 agreement between 3CE and Stem US Operations Inc. for battery optimization services for an initial 3-year term with optional successive one (1) year terms 163
5. Receive Policy Board Accepted 3CE FY 2022-23 Audited Financial Statements 202
6. Receive Regulatory Update 241
7. Receive Update on FY 2023-24 Energy Programs 251
8. Receive the Quarterly Investment Report 261
9. Receive a Financial Report for the period October 1, 2023 through December 31, 2023 264
REGULAR AGENDA
10. CAC Report 279
11. CEO Report 281
a. Staffing Report
b. 3CE Rate Setting
c. California Climate Credit
d. Expansion of System Reliability Pilots- AgFIT
e. California Community Power Owned Asset Evaluation
f. Property Acquisition
12. Presentation on the challenges and impacts of the 2025 Compliance Year implementation of the 24-Hour Slice of Day Resource Adequacy Paradigm
13. Approve and authorize the CEO to: (1) execute a Scheduling Coordination Agreement between 3CE and Tenaska Power Services Co., to provide scheduling services for operational 3CE clean and renewable projects, and any necessary ancillary agreements and 289
documents, for an initial 33-month term through December 2026; and (2) extend the term for successive one (1) year terms
14. Approve and authorize the CEO to execute an Energy Storage Agreement with San Gabriel Project I LLC, as well as any necessary ancillary documents, for a 125MW storage facility in an amount not to exceed $295,000,000 with a delivery term of 15 years 334
Board member reports and comments
Adjournment
Operations Board of Directors
January 10, 2024
10:30am
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
County of Santa Cruz
701 Ocean Street, Third Floor Training Room
Santa Cruz, CA 95060
City of San Luis Obispo
City Hall
990 Palm Street, Council Chambers
San Luis Obispo, CA 93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
County of Santa Barbara
County Administration
Building
105 East Anapamu Street,
Fourth Floor
Santa Barbra, CA 93101
MINUTES
The meeting was called to order at 10:31 AM with 11 members attending in 5 locations and a quorum established.
Directors Present:
3CE Headquarters: Chiulos(arrived at 10:35am), Espinosa, Guertin, Hunter (arrived at 10:43am) Perrault, Pia, Reynolds(arrived at 10:33am)
County of Santa Cruz: Huffaker(arrived at 10:33am), Palacios, Vice Chair Goldstein City of San Luis Obispo: Campbell, Chair Johnson
City of Santa Maria: Posada, Wolfe
County of Santa Barbara: Miyasato, Ramirez (arrived at 10:55am) Directors Absent: Lewis, Mendez, Robeson
The Chair opened the public comment period for the consent calendar and items not listed on the agenda.
No public comments received.
The Chair closed public comment period.
CONSENT CALENDAR
MOTION: Moved by Director Miyasato, seconded by Director Pia to approve the Consent Agenda.
ACTION: The Motion Carried with a roll call vote: 13*/0/6/1* AYES: Campbell, Espinosa, Guertin, Huffaker, Miyasato, Palacios, Perrault, Pia, Posada, Reynolds, Wolfe (items 2-5)*, Vice Chair Goldstein, Chair Johnson
NOES: None
ABSENT: Chiulos, Hunter, Lewis, Mendez, Ramirez, Robeson ABSTAIN: Wolfe (item 1)*
1. Approved Minutes from the November 8, 2023 meeting of the Operations Board of Directors
2. Adopted Resolution No. OB-2024-01 Supporting People’s Self-Help Housing Corporation’s Paseo Paloma Project
3. Received Update on FY 2023-24 Energy Programs
4. Received Regulatory Update
5. Received the Treasure's Report for the period October 1, 2023 through October 31, 2023
REGULAR AGENDA
6. Community Advisory Council Report
The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
ACTION: Discussion Item; no action required
7. CEO Report
a. Staffing Update
b. Start Date for the City of Atascadero and County of San Luis Obispo c. Front of the Meter Energy Storage Update
d. 3CE Review of Behind-the-Meter Energy Storage Focused Demand Response Proposals e. NET Billing Tariff (NBT) Update
The Chair opened the public comment period.
The following individual(s) address the Board.
Smigelski
The Chair closed public comment period.
ACTION: Discussion Item; no action required
8. Authorized CEO to execute Hybrid - Battery Energy Storage System Power Purchase Agreement with MRP Pacifica Marketing II, LLC for the Panoche Hybrid Project, in a form substantially similar to the attached, as well as any necessary ancillary documents, with a power delivery term of 15 years starting with an expected Commercial Operation Date of January 1, 2026, in an amount not to exceed $168,000,000 The Chair opened the public comment period.
There were no public comments.
The Chair closed public comment period.
MOTION: Moved by Director Palacios , seconded by Vice Chair Goldstein to approve.
ACTION: The Motion Carried with a roll call vote: 16/0/3 AYES: Campbell, Chiulos, Espinosa, Guertin, Huffaker, Hunter, Miyasato, Palacios, Perrault, Pia, Posada, Ramirez, Reynolds, Wolfe, Vice Chair Goldstein, Chair Johnson
NOES: None
ABSENT: Lewis, Mendez, Robeson
9. Authorized CEO to execute Hybrid - Battery Energy Storage System Power Purchase Agreement with MRP Pacifica Marketing II, LLC for the Midway Hybrid Project, in a form substantially similar to the attached, as well as any necessary ancillary documents, with a power delivery term of 15 years starting with an expected Commercial Operation Date of January 1, 2026, in an amount not to exceed $368,000,000 The Chair opened the public comment period.
There were no public comments.
The Chair closed public comment period.
MOTION: Moved by Director Palacios , seconded by Vice Chair Goldstein to approve.
ACTION: The Motion Carried with a roll call vote: 16/0/3 AYES: Campbell, Chiulos, Espinosa, Guertin, Huffaker, Hunter, Miyasato, Palacios, Perrault, Pia, Posada, Ramirez, Reynolds, Wolfe, Vice Chair Goldstein, Chair Johnson
NOES: None
ABSENT: Lewis, Mendez, Robeson
Board member reports and comments
Adjourned at 11:37AM
Staff Report Item 2
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dennis Dyc-O’Neal, Chief Operating Officer SUBJECT: Approve and authorize the CEO to execute the Edison Electric Institute Master Power Purchase and Sale Agreement with J.Aron & Company LLC
DATE: March 13, 2024
RECOMMENDATION:
Staff recommends the Board approve and authorize the CEO to execute the Edison Electric Institute Master Power Purchase and Sale Agreement, and all associated documents, with J.Aron & Company LLC (“J.Aron”).
BACKGROUND:
An Edison Electric Institute Master Power Purchase and Sale Agreement (“EEI Master Agreement”) provides a general framework for the efficient transacting of energy and resource adequacy (RA) products. The J.Aron EEI Master Agreement has no specific transaction associated with it at this time.
Individual confirmation agreements (“Confirms”) may be entered, from time to time, in accordance with the delegations of authority specified in the Energy Risk Management Policy. Such Confirms specify the product, quantity, and price of any future transactions. The individual Confirms are governed by the EEI Master Agreement.
DISCUSSION/ANALYSIS:
Maintaining a set of active counterparties is essential to achieving competitive pricing. Previously, 3CE has executed seventeen (17) EEI Master Agreements, with certain negotiated modifications. In order to increase market liquidity and decrease counterparty credit risk it is important to add active counterparties to 3CE’s approved supplier list. J.Aron is an active market participant that can provide energy and capacity products.
FISCAL IMPACT:
None. Individual confirmations would be subject to negotiation and execution pursuant to the terms of the approved Energy Risk Management Policy.
CONCLUSION:
Staff recommends the Operations Board approve and authorize the CEO to execute the EEI Master Agreements, and all associated documents, with J.Aron. There are no specific transactions associated with this authorization request.
ATTACHMENT(S):
1. J.Aron EEI Master Agreement and Collateral Annex
Execution Version
Version 2.1 (modified 4/25/00)
©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ALL RIGHTS RESERVED UNDER U.S. AND FOREIGN LAW, TREATIES AND CONVENTIONS AUTOMATIC LICENSE – PERMISSION OF THE COPYRIGHT OWNERS IS GRANTED FOR REPRODUCTION BY DOWNLOADING FROM A COMPUTER AND PRINTING ELECTRONIC COPIES OF THE WORK. NO AUTHORIZED COPY MAY BE SOLD. THE INDUSTRY IS ENCOURAGED TO USE THIS MASTER POWER PURCHASE AND SALE AGREEMENT IN ITS TRANSACTIONS.
ATTRIBUTION TO THE COPYRIGHT OWNERS IS REQUESTED.
Master Power
Purchase & Sale
Agreement
Execution Version
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Version 2.1 (modified 4/25/00)
©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
MASTER POWER PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
COVER SHEET ............................................................................................................................... 1 GENERAL TERMS AND CONDITIONS ................................................................................................. 21 ARTICLE ONE: GENERAL DEFINITIONS ................................................................................. 21 ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS ................................................ 26
2.1 Transactions ...................................................................................................................... 26
2.2 Governing Terms .............................................................................................................. 26
2.3 Confirmation ..................................................................................................................... 26
2.4 Additional Confirmation Terms ........................................................................................ 27
2.5 Recording .......................................................................................................................... 27 ARTICLE THREE: OBLIGATIONS AND DELIVERIES ................................................................. 27
3.1 Seller’s and Buyer’s Obligations ...................................................................................... 27
3.2 Transmission and Scheduling ........................................................................................... 27
3.3 Force Majeure ................................................................................................................... 28 ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE .................................... 28
4.1 Seller Failure ..................................................................................................................... 28
4.2 Buyer Failure .................................................................................................................... 28 ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES ............................................................... 28
5.1 Events of Default .............................................................................................................. 28
5.2 Declaration of an Early Termination Date and Calculation of Settlement Amounts ............................................................................................................................ 30
5.3 Net Out of Settlement Amounts ........................................................................................ 30
5.4 Notice of Payment of Termination Payment..................................................................... 30
5.5 Disputes With Respect to Termination Payment .............................................................. 30
5.6 Closeout Setoffs ................................................................................................................ 31
5.7 Suspension of Performance............................................................................................... 31 ARTICLE SIX: PAYMENT AND NETTING .............................................................................. 31
6.1 Billing Period .................................................................................................................... 31
6.2 Timeliness of Payment ...................................................................................................... 32
6.3 Disputes and Adjustments of Invoices .............................................................................. 32
6.4 Netting of Payments .......................................................................................................... 32
6.5 Payment Obligation Absent Netting ................................................................................. 32
6.6 Security ............................................................................................................................. 32
6.7 Payment for Options ......................................................................................................... 33
6.8 Transaction Netting ........................................................................................................... 33 ARTICLE SEVEN: LIMITATIONS .................................................................................................... 33
7.1 Limitation of Remedies, Liability and Damages .............................................................. 33 ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS .......................................... 34
8.1 Party A Credit Protection .................................................................................................. 34
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
8.2 Party B Credit Protection.................................................................................................. 35
8.3 Grant of Security Interest/Remedies................................................................................. 37 ARTICLE NINE: GOVERNMENTAL CHARGES......................................................................... 38
9.1 Cooperation....................................................................................................................... 38
9.2 Governmental Charges ..................................................................................................... 38 ARTICLE TEN: MISCELLANEOUS ............................................................................................ 38
10.1 Term of Master Agreement............................................................................................... 38
10.2 Representations and Warranties........................................................................................ 38
10.3 Title and Risk of Loss....................................................................................................... 40
10.4 Indemnity.......................................................................................................................... 40
10.5 Assignment ....................................................................................................................... 40
10.6 Governing Law ................................................................................................................. 40
10.7 Notices.............................................................................................................................. 40
10.8 General.............................................................................................................................. 40
10.9 Audit ................................................................................................................................. 41
10.10 Forward Contract .............................................................................................................. 41
10.11 Confidentiality .................................................................................................................. 41 SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS................................ 43 SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS.............................................................. 47 EXHIBIT A: CONFIRMATION LETTER............................................................................................... 54
Execution Version
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
MASTER POWER PURCHASE AND SALE AGREEMENT
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date:
_______________, 2024 (“Effective Date”). The 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 shall be referred to as the “Agreement.” The Parties to this Master Agreement are the following:
Name: J. Aron & Company LLC (“Party A”) Name: Central Coast Community Energy, a California joint powers authority (“3CE” or “Party
B”)
All Notices: All Notices:
Address:
200 West Street
New York, NY 10282-2198
Address: 70 Garden Court, Suite 300
Monterey, CA 93940
Attn: Commodity Operations
Phone: (212) 357-0326
Facsimile: (212) 493-9846
Email: [email protected]
Duns: 00-698-0312
Federal Tax ID Number: 133092284
Attn: Dennis Dyc-O’Neal, COO
Phone: (831) 641-7240
Email: [email protected]
Duns: 080977851
Federal Tax ID Number: 82-2386705
Invoices:
Attn: Contract Execution Department
Phone: (212) 357-6450
Invoices:
Attn: Accounts Payable-Power Services
Phone: (831) 641-7218
Email: [email protected]
Scheduling:
Attn: Power Scheduling
Phone: (212) 357-7274
Scheduling:
Attn: The Energy Authority
Phone: (425) 460-1110
Email: [email protected]
Tel: (Real Time Desk): (425) 460-1118
-or-Attn: Day-Ahead Scheduling
Phone: (425) 460-1118
Email: [email protected]
Confirmations:
Attn: Tara Walling, Power Resources Markets
Manager
Phone: (831) 641-7203
Email: [email protected]
Payments:
Attn: Contract Execution Department
Phone: (212) 357-6450
Payments:
Attn: ___________
Phone: ___________
Email: [email protected]
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association Wire Transfer:
BNK: CITIBANK, NA
ABA: 021000089
ACCT: 09292521
Wire Transfer:
Bank: River City Bank
ABA: 121133416
Account: 9981454362
Credit and Collections:
Attn: Credit & Risk Management and Advisory
Phone: (212) 902-2468
Credit and Collections:
Attn: Dewayne Woods, CFO
Phone: (831) 641-7210
Email: [email protected]
With additional Notices of an Event of Default or
Potential Event of Default to:
Central Coast Community Energy
Attn: Charles McKee, General Counsel
Phone: (831) 595-7743
Email: [email protected]
With a copy to:
Hall Energy Law PC
Attn: Stephen Hall
Phone: (503) 313-0755
Email: [email protected]
Execution Version
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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: Rate Schedule FERC No.1 Dated: December 31, 2001 Docket Number: ER02-237-000 Party B Tariff: N/A
Article Two
Transaction Terms and Conditions Optional provision in Section 2.4. If not checked, inapplicable.
Article Four
Remedies for Failure
to Deliver or Receive
Accelerated Payment of Damages. If not checked, inapplicable.
Article Five Cross Default for Party A:
Events of Default; Remedies Party A: Cross Default Amount $______ Other Entity: The
Goldman Sachs Group Inc.
Cross Default Amount $50,000,000
Cross Default for Party B:
Party B: Cross Default Amount $50,000,000
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:
(1) The annual report containing audited consolidated
financial statements for such fiscal year of Party B as soon as practicable after demand, but in no event later than 180 days after the end of each annual period and such request will be deemed to have been filled if such financial
statements are available at: https://3cenergy.org, and
(2) quarterly unaudited financial statements for Party B as soon as practicable upon demand, but in no event later than 90 days after the applicable quarter. In all cases the
statements shall be for the most recent accounting period
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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. The first quarterly unaudited statement will be provided within 90 days after the fiscal quarter during which Party A begins deliveries under a Transaction. Party B’s fiscal year ends June 30.
(b) Credit Assurances:
Not Applicable
Applicable
(c) Collateral Threshold:
Not Applicable
Applicable
If applicable, the provisions of Section 8.1 (c) of the Agreement shall be replaced by the provisions of the
Collateral Annex attached hereto.
(d) Downgrade Event:
Not Applicable
Applicable
If applicable, complete the following:
It shall be a Downgrade Event for Party B if Party B’s Credit Rating falls below BBB- from S&P or Baa3 from
Moody’s or if Party B is not rated by either S&P or
Moody’s.
Other - Specify:
(e) Guarantor for Party B: N/A
Guarantee Amount: N/A
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
8.2 Party B Credit Protection:
(a) Financial Information:
Option A
Option B Specify:
Option C Specify: The Goldman Sachs Group, Inc.
Most recent financial statements of GS Group as available, which shall be available via the following link-http://www2.goldmansachs.com/our-firm/investors/financials/current/annual-reports/index.html. (b) Credit Assurances:
Not Applicable
Applicable
(c) Collateral Threshold:
Not Applicable
Applicable
If applicable, the provisions of Section 8.2 (c) of the Agreement shall be replaced by the provisions of the
Collateral Annex attached hereto.
(d) Downgrade Event:
Not Applicable
Applicable
If applicable, complete the following:
It shall be a Downgrade Event for Party A if Party A’s Credit Rating falls below BBB- from S&P or Baa3 from
Moody’s or if Party A is not rated by either S&P or
Moody’s.
Other - Specify: It shall be a Downgrade Event for Party A if Party A’s Guarantor’s Credit Rating falls below
BBB- from S&P or Baa3 from Moody’s or if Party A’s
Guarantor is not rated by either S&P or Moody’s.
(e) Guarantor for Party A: The Goldman Sachs Group, Inc.
Guarantee Amount: Unlimited
Article Ten
Confidentiality Confidentiality Applicable If not checked, inapplicable.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 8.4. If not checked, inapplicable
Other Changes
This Master Power Purchase and Sale Agreement and the associated Collateral Annex incorporate, by reference, the changes published in the EEI Errata, Version 1.1, dated July 18, 2007.
ARTICLE ONE: GENERAL DEFINITIONS.
1. “Affiliate”: Section 1.1 is amended by adding the following sentence at the end of the definition:
“Notwithstanding the foregoing, the Parties hereby agree and acknowledge that with respect to Party B, the public entities designated as members or participants under the Joint Powers Agreement creating Party B shall not constitute or otherwise be deemed an “Affiliate” for the purposes of this Master Agreement or any Confirmation executed in connection therewith.”
2. “Business Day”: Section 1.4 is amended by deleting the first sentence and replacing it to read as follows:
“Business Day” means any day except a Saturday, Sunday, the Friday immediately following the Thanksgiving holiday or a Federal Reserve Holiday.
3. “Credit Rating”: Section 1.12 is amended by deleting the word “issues” and replacing it with the word “issuer”.
4. “Force Majeure”: Section 1.23 is amended by (i) deleting from the second and third lines the phrase “which event or circumstance was not anticipated as of the date the Transaction was agreed to,” and (ii) inserting in the thirteenth line of this Subsection before the phrase “foregoing factors” the word “two.”
5. “Gains”: Section 1.24 is amended by adding before the period at the end thereof the following: “in accordance with Section 5.2” and by adding at the end: “based on the prime rate of interest as published from time to time under The Wall Street Journal for such period.
6. A new Section 1.26A is added as follows:
“1.26A “Joint Powers Agreement” means the Joint Powers Agreement, effective as of February 21, 2017, as amended, providing for the formation of Party B, as such agreement may be further amended or amended and restated.”
7. “Letters of Credit”: Section 1.27 is amended by deleting the phrase “or a foreign bank with a U.S. branch” and replacing it with the phrase “or a U.S. branch of a foreign bank.”
8. “Losses”: Section 1.28 is amended by adding to the end thereof: “based on the prime rate of interest as published from time to time under The Wall Street Journal for such period.”
9. “Potential Event of Default”: Section 1.46 is deleted in its entirety.
10. “Recording”: Section 1.50 is amended by changing “Section 2.4” to “Section 2.5”.
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11. “Replacement Price”: Section 1.51 is amended by adding “for delivery” immediately before “at the Delivery Point” in the second line, and replacing “at Buyer’s option” with “absent a purchase” in the fifth line.
12. “S&P”: Section 1.52 is amended by (i) deleting the words “Rating” and “Group” from the first line and replacing with “Financial Services LLC” and (ii) by replacing the words in the parenthetical with “a subsidiary of McGraw-Hill Companies, Inc.”
13. “Sales Price” Section 1.53 is amended by:
(i) deleting the phrase “at the Delivery Point” from the second line; (ii) deleting the phrase in line 5 “at the Seller’s option” and replacing it with “absent a sale”; and (iii) inserting after the word “liability” in the ninth line the following: “provided, further, if the Seller is unable after using commercially reasonable efforts to resell all or a portion of the Product not received by the Buyer, the Sales Price with respect to such unsold Product shall be deemed equal to zero (0).”
14. “Settlement Amount”: Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before the period at the end thereof the following: “, as determined in accordance with Section
5.2.”
15. “Transaction”: Section 1.60 is amended by inserting the words “in writing” immediately following the words “agreed to.”
ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS.
1. Section 2.1 is deleted in its entirety and replaced with the following:
“A Transaction, or an amendment, modification or supplement thereto, shall be entered into only upon a writing signed by both Parties. 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 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. Section 2.3 is deleted in its entirety and replaced with the following:
“2.3 Confirmation. A Transaction shall be entered into only by a written confirmation in a form mutually agreeable to both Parties and signed by both Parties (“Confirmation”). Notwithstanding anything to the contrary in this Master Agreement, the Master Agreement and any and all Confirmations may not be amended or modified except by an instrument in writing signed by both of the Parties.”
3. Section 2.4 is amended by deleting the words “either orally or” in the sixth and seventh lines and adding “a” before the word “writing”.
4. Section 2.5 is deleted in its entirety and replaced with the following:
“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 and secured from improper access, and to the retention, monitoring or transfer to or from Affiliates and/or regulatory bodies (as applicable) of such recordings (in any jurisdiction), for the purposes of compliance with applicable law or regulation, quality assurance or
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association record-keeping, provided however that it shall be the responsibility of each party to satisfy any notice and/or consent requirements (as applicable) imposed by applicable law or regulation with respect to the recording that it conducts; provided, however, that both Parties acknowledge and agree that any such Recording may not be submitted as 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.”
ARTICLE THREE: OBLIGATIONS AND DELIVERIES.
1. Section 3.2 is amended by adding the following text to the end of the Section: “Product deliveries shall be scheduled in accordance with the then-current applicable tariffs, protocols, operating procedures and scheduling practices for the relevant region.”
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES.
1. Section 5.1(g) is deleted in its entirety and replaced with the following:
“if the applicable cross default section in the Cover Sheet is indicated for such Party, the occurrence and continuation of 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 immediately due and payable; provided, however, that it shall not constitute an Event of Default under this Section 5.1(g) if (i) such event, condition or failure is a failure to pay caused by an error or omission of an administrative or operational nature, (ii) funds were available to such Party to enable it to make the relevant payment when due, and (iii) such event, condition or failure is remedied on or before the third Business Day after receipt of written notice of its occurrence;”
2. In Section 5.1(h)(v), add “made in connection with this Agreement” after “any guaranty”.
3. Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semicolon, and adding the conjunction “or”, that read as follows:
“(i) Party A’s authorization to make sales at market-based rates in CAISO is revoked or suspended by the Federal Energy Regulatory Commission unless FERC accepts for filing a tariff or rate schedule that authorizes Party A to make wholesale sales under this Agreement and has an effective date that is no more than 180 days after the revocation or suspension of Party’s A authorization to make sales at market-based rates. (j) A Party, its Guarantor or any Specified Entity (as defined below) of such Party:
(i) defaults under a Specified Transaction (as defined below) and, after giving effect to any applicable notice requirement or grace period, which 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. ‘Specified Transaction’ means any transaction (other than a Transaction) now existing or hereafter entered into between one Party to this Agreement (or any Guarantor or any applicable Specified Entity
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association of such Party) and the other Party to this Agreement (or any Guarantor or any applicable Specified Entity of such Party) 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). ‘Specified Entity’ shall mean with respect to Party A: Goldman Sachs & Co. LLC, Goldman Sachs Bank USA, Goldman Sachs International, Goldman Sachs Japan Co., Ltd., Goldman Sachs International Bank, Goldman Sachs (Asia) Finance, Goldman Sachs Financial Markets, L.P., Goldman Sachs Paris Inc. et Cie, Goldman Sachs Mitsui Marine Derivative Products, L.P., Goldman Sachs AG and J. Aron & Company (Singapore) Pte.
‘Specified Entity’ shall mean with respect to Party B: N/A.”
4. Section 5.2 is amended by:
(i) deleting the following phrase from the last line: “as soon thereafter as is reasonably practicable”; and (ii) adding the following to the end of that provision: “then each such Transaction 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 Gains and Losses for each Terminated Transaction shall be determined by the Non-Defaulting Party calculating the amount that would be incurred or realized to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of that Terminated Transaction. In making such calculation, the Non-Defaulting Party may reference information 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 dealers, brokers and information vendors, including, without limitation, Intercontinental Exchange, Inc. If the Non-Defaulting Party’s calculation of a Settlement Amount for a Terminated Transaction results in an amount that would be due to the Defaulting Party (i.e., the Defaulting Party was in-the-money), then the Settlement Amount shall be deemed to be zero dollars ($0.00); provided, however, that if the Non-Defaulting Party has declared an Early Termination Date under either (i) Section 5.1(d) or (ii) Section 5.1(h)(iii) (either such event, a “Defaulting Party Credit Event”) the Settlement Amount shall not be deemed to be zero dollars ($0.00) and shall be equal to the amount originally calculated by the Non-Defaulting Party. If a Termination Payment would be due from the Non-Defaulting Party due to a Defaulting Party Credit Event, the Non-Defaulting Party may elect to pay the Termination Payment over the delivery term of the Terminated Transaction(s) by providing written notice to the Defaulting Party. The Non-Defaulting Party shall provide the Defaulting Party with a written explanation of the method for payment of the Termination Payment and the method shall ensure that the Defaulting Party receives a payment each month through the end of the term of each Terminated Transaction in a manner reasonably designed to replicate as closely as possible the payment streams under each Terminated Transaction.”
5. Section 5.3 is amended by adding the phrase “plus, at the option of the Non-Defaulting Party, any cash or other form of liquid security then in the possession of the Defaulting Party or its agent pursuant to Article 8,” after the first use of the phrase “due to the Non-Defaulting Party” in the sixth line.
ARTICLE SEVEN: LIMITATIONS.
1. Section 7.1 is amended by:
(i) adding “SET FORTH IN THIS AGREEMENT” after “INDEMNITY PROVISION” and before “OR OTHERWISE,” in the fifth sentence; and
(ii) adding at the end of the last sentence the words “AND ARE NOT PENALTIES.”
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ARTICLE TEN: MISCELLANEOUS.
1. In Section 10.2, delete the phrase “(including any Confirmation accepted in accordance with Section 2.3)” from Sections 10.2(ii), (iii), (iv), (vi), (vii), (viii), (x) and (xi).
2. Section 10.2(ix) is deleted in its entirety and replaced with the following:
“such Party intends that it is a “forward contract merchant” within the meaning of the Title 11 of the United States Code, as amended (the “Bankruptcy Code”), all payments made or to be made by one Party to the other Party pursuant to this Agreement constitute a “settlement payment” within the meaning of the Bankruptcy Code, all transfers of Performance Assurance by one Party to the other Party under this Agreement constitute a “margin payment” within the meaning of the Bankruptcy Code, each Party shall have the “contractual right” to terminate, liquidate, accelerate, or offset the transaction as a “master netting agreement participant” within the meaning of the Bankruptcy Code, electricity delivered hereunder constitutes a “good” under Section 503(b)(9) of the Bankruptcy Code, and the Parties are entities entitled to the rights under, and protections afforded by, Sections 362, 546, 553, 556, 560, 561 and 562 of the Bankruptcy Code.”
3. After Section 10.2(xii) add the following:
“(xiii) each Transaction that is not executed or traded on a trading facility, as defined in the Commodity Exchange Act, is subject to individual negotiation by the Parties; (xiv) it intends that all payments made or to be made by one Party to the other Party pursuant to this Agreement constitute “settlement payments”;
(xv) it intends that all transfers of Performance Assurance by one Party to the other Party under this Agreement constitute “margin payments”;
(xvi) it intends that each Party’s rights under Section 5.2, Declaration of an Early Termination Date and Calculation of Settlement Amounts, and Section 5.3, Net Out of Settlement Amounts constitute a “contractual right to liquidate” Transactions;
(xvii) it is an “eligible commercial entity” within the meaning of Section 1a (17) of the Commodity Exchange Act, as amended (the “Commodity Exchange Act”); and (xviii) it is an “Eligible Contract Participant” as defined in Section 1a(18) of the Commodity Exchange Act, as amended, 7 U.S.C. § 1a(18).”
4. Section 10.6 is amended by deleting the sentence “EACH PARTY WAIVES ITS RESPECTIVE RIGHT
TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.”
and adding the following after the last line: “(a) EACH PARTY HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HEREBY (i) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND
THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. (b) EACH PARTY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN SAN FRANCISCO, CALIFORNIA, FOR ANY ACTION OR
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PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION, AND EXPRESSLY
WAIVES ANY OBJECTION IT MAY HAVE TO SUCH JURISDICTION OR THE CONVENIENCE OF SUCH FORUM.
The Parties intend for the waiver in clause (a) above to be enforced to the fullest extent permitted under applicable law as in effect from time to time. To the extent that the waiver in clause (a) above is not enforceable at the time that any action or proceeding is filed in a court of the State of California by or against any Party in connection with any of the transactions contemplated by this Agreement, then (i) the court shall, and is hereby directed to, make a general reference pursuant to California Code of Civil Procedure Section 638 to a referee (who shall be a single active or retired judge) to hear and determine all of the issues in such action or proceeding (whether of fact or of law) and to report a statement of decision, provided that at the option of any Party, any such issues pertaining to a “provisional remedy” as defined in California Code of Civil Procedure Section 1281.8 shall be heard and determined by the court, and (ii) the Parties shall share equally all fees and expenses of any referee appointed in such action or proceeding.”
5. Section 10.6 is amended by changing “NEW YORK” to “CALIFORNIA”.
6. Section 10.7 is amended by deleting the third sentence thereof and replacing it in its entirety with the following sentences:
“Notice shall be effective upon receipt on a Business Day by the addressee. Any notices, demands, or requests under this Agreement received on a day that is not a Business Day (or after 5:00 p.m. local time on a Business Day) will be deemed delivered at the opening of business at such location on the next Business Day.”
7. Section 10.8 is amended by:
Adding the following to the end thereof: “This Master Agreement may be signed in any number of counterparts with the same effect as if the signatures to the counterparts were upon a single instrument.
Delivery of an executed signature page of this Master Agreement and any Confirmation by electronic mail transmission shall be effective as delivery of a manually executed signature page.”
8. Section 10.9 is amended by inserting the words “copies of” after the word “examine” in line 2.
9. Section 10.10 is amended by adding the following after the last sentence of Section 10.10:
“Each Party further agrees that, for purposes of this Agreement, the other Party is not a “utility” as such term is used in 11 U.S.C. Section 366, and each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. Section 366 in any bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further waives the right to assert that the other Party is a provider of last resort.”
10. Section 10.11 is deleted in its entirety and replaced with the following:
“Confidentiality. Neither Party shall disclose the terms or conditions of a Transaction under this Agreement for a period of the longer of (a) the maturity or, if terminated or settled early, the date of such termination or early settlement of such Transaction and (b) two years after a Transaction is entered into, to a third party (other than to a “Representative”, which means, as to any person, such person's Affiliates and its and their employees, officers, directors, lenders, counsel, accountants, investment committee, sponsor, and agents of the Party who are under a general duty to maintain information related to the recipient Party confidential or have otherwise agreed to keep such terms or conditions confidential) except (i) in order to comply with any applicable law, order, regulation or exchange rule; (ii) in connection with any court, regulatory or self-regulatory request, inquiry, proceeding or pursuant to routine supervisory oversight; (iii) to the extent necessary for the enforcement of this Agreement; (iv) to the extent necessary
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association to implement any Transaction, including without limitation, to any swap execution facilities, clearing houses, middleware platforms and similar service providers in connection with the execution, clearing and processing of any Transactions; (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index; or (vi) to the extent required by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules, regulations, interpretations and orders published or issued thereunder or otherwise to comply with regulatory required trade reporting obligations, including, without limitation, reporting of transactions and similar information, and disclosure of trade information including the Party’s identity (by name, identifier or otherwise) to a “swap data repository” as defined in Section 1a(48) of the U.S. Commodity Exchange Act and the rules, regulations, interpretations and orders published or issued by the Commodity Futures Trading Commission thereunder. Each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure of the terms or conditions of any Transaction (other than as permitted hereunder).
Additionally, nothing contained herein is intended to limit disclosure of information that is in or becomes available to the public other than as a result of an unauthorized disclosure in violation of the terms of this provision. The Parties shall be entitled to all remedies at law or in equity to enforce, or seek relief in connection with, this confidentiality provision except that neither Party shall be liable (in contract, tort, equity or otherwise) for any special, incidental or consequential damages of any nature howsoever arising in respect of any breach of this confidentiality provision. Notwithstanding the above, each Party (and each employee, representative, or other agent of a Party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure.
Party A and Party B acknowledge and agree that the Master Agreement and any Transactions entered into in connection therewith are subject to the requirements of the California Public Records Act (Government Code Section 7920 et seq.). In order to designate information as confidential, the disclosing party must clearly stamp and identify the specific portion of the material designated with the word “Confidential.” Upon request or demand of any third person or entity not a Party hereto to Party B pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), Party B will as soon as practical notify Party A in writing via email that such request has been made and will not disclose the Requested Confidential Information until Party A has been afforded an adequate opportunity to seek protection of the Requested Confidential Information from disclosure. Party A will be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release of the Requested Confidential Information to the third party by Party B. If Party A takes no such action within sixty (60) days after receiving the foregoing notice from Party B, Party B shall, at its discretion, be permitted to comply with the third party’s request to the extent required by the California Public Records Act and is not required to defend against it. If Party A does take or attempt to take such action, Party B shall provide timely and reasonable cooperation to Party A, if requested by Party A.”
11. The following Mobile-Sierra clause is added as a new Section 10.12:
“Standard of Review/Modifications.
(a) Absent the prior mutual written agreement of all parties to the contrary, the standard of review for any proposed changes to the rates, terms and/or conditions of service of this Agreement or any Transaction entered into thereunder, whether proposed by a Party (to the extent that any waiver in subsection (b) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the Mobile-Sierra “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008) and further refined in NRG
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association Power Marketing v. Maine Public Utilities Commission, 558 U.S. 165 (2010) (the “Mobile-Sierra” doctrine).
(b) In addition, and notwithstanding the foregoing subsection (a), to the fullest extent permitted by applicable law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under §§ 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable law or market conditions that may occur. In the event it were to be determined that applicable law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this subsection (b) shall not apply, provided that, consistent with the foregoing subsection (a), neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in the foregoing section (a).”
12. The following is added as a new Section 10.13:
“Physical Transactions. The Parties understand and agree that the Transactions under this Agreement are physical transactions for deferred delivery, and that the Parties contemplate making or taking physical delivery of electric energy or capacity attributes. Party B is a commercial entity engaged in the business of delivering electric energy to its retail load and routinely makes or takes delivery of electric energy in order to provide service to its retail electric customers.”
13. The following is added as a new Section 10.14:
“Imaged Agreement. Any original executed Agreement, Confirmation or other related document may be imaged and stored electronically (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidenced on paper, the Confirmation, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings, will be admissible as between the Parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the Confirmation or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence.”
14. The following is added as a new Section 10.15:
“Generally Accepted Accounting Principles. Any reference to “generally accepted accounting principles” shall mean, with respect to an entity and its financial statements, generally accepted accounting principles, consistently applied, adopted or used in the jurisdiction of the entity whose financial statements are being considered for the purposes of this Agreement.”
15. The following is added as a new Section 10.16:
“No Recourse Against Constituent Members of Party B. Party B is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) and is a public entity separate from its constituent members. Party B will solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement.
Party A will have no rights and will not make any claims, take any actions or assert any remedies against
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association any of Party B’s constituent members, or the officers, directors, advisors, contractors, consultants or employees of Party B or Party B’s constituent members, in connection with this Agreement.”
16. The following is added as a new Section 10.17:
“Index Transactions. If the Contract Price for a Transaction is determined by reference to a third-party information source, then the following provisions shall be applicable to such Transaction. (a) Market Disruption. If a Market Disruption Event occurs on any one or more days during a Determination Period (each day, a “Disrupted Day”), then:
(i) The fallback Floating Price, if any, specified by the Parties in the relevant Confirmation shall be the Floating Price for each Disrupted Day.
(ii) If the Parties have not specified a fallback Floating Price, then the Parties will endeavor, in good faith and using commercially reasonable efforts, to agree on a substitute Floating Price, taking into consideration, without limitation, guidance, protocols or other recommendations or conventions issued or employed by trade organizations or industry groups in response to the Market Disruption Event and other prices published by the Price Source or alternative price sources with respect to the Delivery Point or comparable Delivery Points that may permit the Parties to derive the Floating Price based on historical differentials. (iii) If the Price Source retrospectively issues a Floating Price in respect of a Disrupted Day (a “Delayed Floating Price”) before the parties agree on a substitute Floating Price for such day, then the Delayed Floating Price shall be the Floating Price for such Disrupted Day. If a Delayed Price is issued by the Price Source in respect of a Disrupted Day after the Parties agree on a substitute Floating Price for such day, the substitute Floating Price agreed upon by the Parties will remain the Floating Price without adjustment unless the Parties expressly agree otherwise. (iv) If the Parties cannot agree on a substitute Floating Price and the Price Source does not retrospectively publish or announce a Floating Price, in each case, on or before the fifth Business Day following the first Trading Day on which the Market Disruption Event first occurred or existed, then the Floating Price for each Disrupted Day shall be determined by taking the arithmetic mean of quotations requested from four leading dealers in the relevant market that are unaffiliated with either Party and mutually agreed upon by the Parties (“Specified Dealers”), without regard to the quotations with the highest and lowest values, subject to the following qualifications:
(A) If exactly three quotations are obtained, the Floating Price for each such Disrupted Day will be the quotation that remains after disregarding the quotations having the highest and lowest values.
(B) If fewer than three quotations are obtained, the Floating Price for each such Disrupted Day will be the average of the quotations obtained.
(C) If the Parties cannot agree upon four Specified Dealers, then each of the Parties will, acting in good faith and in a commercially reasonable manner, select up to two Specified Dealers separately, and those selected dealers shall be the Specified Dealers. (D) Unless otherwise agreed, if at any time the Parties agree on a substitute Floating Price for any Disrupted Day, then such substitute Floating Price shall be the Floating Price for such Disrupted Day, notwithstanding the subsequent publication or announcement of a Delayed Floating Price by the relevant Price Source or any quotations obtained from Specified Dealers.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association “Determination Period” means each calendar month a part or all of which is within the Delivery Period of a Transaction.
“Exchange” means, in respect of a Transaction, the exchange or principal trading market specified in the relevant Transaction.
“Floating Price” means a Contract Price specified in a Transaction that is based upon a Price Source.
“Market Disruption Event” means, with respect to any Price Source, any of the following events: (a) the failure of the Price Source to announce, publish or make available the specified Floating Price or information necessary for determining the Floating Price for a particular day; (b) the failure of trading to commence on a particular day or the permanent discontinuation or material suspension of trading in the relevant options contract or commodity on the Exchange, RTO or in the market specified for determining a Floating Price; (c) the temporary or permanent discontinuance or unavailability of the Price Source; (d) the temporary or permanent closing of any Exchange or RTO specified for determining a Floating Price; or (e) a material change in the formula for or the method of determining the Floating Price by the Price Source or a material change in the composition of the Product.
“Price Source” means, in respect of a Transaction, the publication (or such other origin of reference, including an Exchange) containing (or reporting) the specified price (or prices from which the specified price is calculated) specified in the relevant Transaction. “RTO” means any regional transmission operator or independent system operator. “RTO Transaction” means a Transaction in which the Price Source is an RTO. “Trading Day” means a day in respect of which the relevant Price Source ordinarily would announce, publish or make available the Floating 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 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 four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th) decimal number is less than five (5), then the fourth (4th) decimal number shall remain unchanged.”
17. The following shall be added as a new Section 10.18:
“10.18 U.S. Resolution Stay Provisions
(1) Recognition of the U.S. Special Resolution Regimes
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (a) In the event that Party A becomes subject to a proceeding under (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder or (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder (a “U.S.
Special Resolution Regime”) the transfer from Party A of this Agreement, and any interest and obligation in or under, and any property securing, this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any interest and obligation in or under, and any property securing, this Agreement were governed by the laws of the United States or a state of the United States. (b) In the event that Party A or an Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, any Default Rights (as defined in 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable (“Default Right”)) under this Agreement that may be exercised against Party A are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
(2) Limitation on Exercise of Certain Default Rights Related to an Affiliate’s Entry Into Insolvency Proceedings
Notwithstanding anything to the contrary in this Agreement, the Parties expressly acknowledge and agree that:
(a) Party B shall not be permitted to exercise any Default Right with respect to this Agreement or any Affiliate Credit Enhancement that is related, directly or indirectly, to an Affiliate of the Party A becoming subject to receivership, insolvency, liquidation, resolution, or similar proceeding (an “Insolvency Proceeding”), except to the extent that the exercise of such Default Right would be permitted under the provisions of 12 C.F.R. 252.84, 12 C.F.R. 47.5 or 12 C.F.R. 382.4, as applicable; and
(b) Nothing in this Agreement shall prohibit the transfer of any Affiliate Credit Enhancement, any interest or obligation in or under such Affiliate Credit Enhancement, or any property securing such Affiliate Credit Enhancement, to a transferee upon or following an Affiliate of Party A becoming subject to an Insolvency Proceeding, unless the transfer would result in the Party B being the beneficiary of such Affiliate Credit Enhancement in violation of any law applicable to the Party B.
(3) U.S. Protocol
If Party B adheres to the ISDA 2018 U.S. Resolution Stay Protocol, as published by the International Swaps and Derivatives Association, Inc. as of July 31, 2018 (the “ISDA U.S. Protocol”), after the date of this Agreement, the terms of the ISDA U.S. Protocol will supersede and replace the terms of this Part 5 (k).
For purposes of this Section 10.18:
“Affiliate” is defined in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k). “Credit Enhancement” means any credit enhancement or credit support arrangement in support of the obligations of Party A under or with respect to this Agreement, including any guarantee, collateral arrangement (including any pledge, charge, mortgage or other security interest in collateral or title transfer arrangement), trust or similar arrangement, letter of credit, transfer of margin or any similar arrangement.”
18. The following shall be added as a new Section 10.19:
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association “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.”
19. The following is added as a new Section 10.20:
“Commodity Reference Price. If a Commodity Reference Price (as defined below) that would normally be determinable is not available on any Commodity Business Day (as defined below), then the Commodity Reference Price shall be the Commodity Reference Price published on the next Commodity Business Day, provided that if the Commodity Reference Price is not available for three (3) consecutive Commodity Business Days in that Calculation Period (as defined below), then the Commodity Reference Price shall be calculated on the basis of the fallback price, if any, specified in the applicable Confirmation (the “Fallback Price”). If no such Fallback Price is specified, the parties shall promptly endeavor to agree on an alternative source for determination of such Commodity Reference Price for that day. If such agreement is not reached by the parties within three (3) Business Days, Party A shall determine such Commodity Reference Prices by taking the average of the price quotations for the relevant commodity and the relevant Commodity Business Days obtained from at least two and no more than four internationally recognized dealers in such commodity, two of which are selected by each party. “Commodity Business Day” means, in respect of a Transaction in which any or the entire pricing component is based on a pricing index or pricing source (a “Commodity Reference Price”), a day in respect of which the Commodity Reference Price is scheduled to be published. “Calculation Period” means, in respect of a Transaction, the period or periods specified as such in the Confirmation of the Transaction.”
SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEM.
Schedule M is hereby deleted in its entirety and replaced with the following:
1. The Parties agree to add the following definition to Article One:
“Act” means the Joint Exercise of Powers Act of California (Government Code Section 6500 et seq.).
2. The following sentence shall be added to the end of the definition of “Force Majeure” in Article One:
“If the Claiming Party is a Governmental Entity or Public Power System, Force Majeure does not include any action taken by the Governmental Entity or Public Power System in its governmental capacity.”
3. The Parties agree to add the following sections to Article Three:
“Section 3.4 Party B ’s Deliveries. Upon request by Party A, Party B shall provide Party A (a) certified copies of all ordinances, resolutions, public notices and other documents evidencing the necessary authorizations with respect to the execution, delivery and performance by Party B of this Master Agreement and (b) the incumbency and signatures of the signatories of Party B executing this Master Agreement and any Confirmations executed in connection herewith, and setting forth the name and signatures of employees of Party B with authority to act on behalf of Party B.
Section 3.5 No Immunity Claim. Party B warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to the Secured Account from (a) suit, (b) jurisdiction of court (provided that such court is located within a venue permitted under the Agreement), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment; provided, however, that nothing in this Agreement shall waive the
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association obligations and/or rights set forth in the California Government Claims Act (Government Code Section 810 et seq.).”
4. The Parties agree to add the following representations and warranties to Section 10.2:
“Further and with respect to a Party that is a Governmental Entity or Public Power System, such Governmental Entity or Public Power System represents and warrants to the other Party continuing throughout the term of this Master Agreement, with respect to this Master Agreement and each Transaction, as follows: (i) all acts necessary to the valid execution, delivery and performance of this Master Agreement, including without limitation, competitive bidding, public notice, election, referendum, prior appropriation or other required procedures has or will be taken and performed as required under the Act and the Public Power System’s ordinances, bylaws or other regulations, (ii) all persons making up the governing body of Governmental Entity or Public Power System are the duly elected or appointed incumbents in their positions and hold such positions in good standing in accordance with the Act and other applicable law, (iii) entry into and performance of this Master Agreement by Governmental Entity or Public Power System are for a proper public purpose within the meaning of the Act and all other relevant constitutional, organic or other governing documents and applicable law, (iv) the term of this Master Agreement does not extend beyond any applicable limitation imposed by the Act or other relevant constitutional, organic or other governing documents and applicable law, (v) the Public Power System’s obligations to make payments hereunder are unsubordinated obligations and such payments are (a) operating and maintenance costs (or similar designation) which enjoy first priority of payment at all times under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law or (b) otherwise not subject to any prior claim under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law and are available without limitation or deduction to satisfy all Governmental Entity or Public Power System’ obligations hereunder and under each Transaction or (c) are to be made solely from a Special Fund, (vi) entry into and performance of this Master Agreement and each Transaction by the Governmental Entity or Public Power System will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any obligation of Governmental Entity or Public Power System otherwise entitled to such exclusion, and (vii) obligations to make payments hereunder do not constitute any kind of indebtedness of Governmental Entity or Public Power System or create any kind of lien on, or security interest in, any property or revenues of Governmental Entity or Public Power System which, in either case, is proscribed by any provision of the Act or any other relevant constitutional, organic or other governing documents and applicable law, any order or judgment of any court or other agency of government applicable to it or its assets, or any contractual restriction binding on or affecting it or any of its assets.”
5. The Parties agree to add the following sentence at the end of Section 10.6 - Governing Law:
“IN RESPECT OF THE APPLICABILITY OF THE ACT AS HEREIN PROVIDED, THE LAWS OF THE STATE OF CALIFORNIA SHALL APPLY.”
SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS.
1. The Parties agree to add the following definitions to Schedule P:
““CAISO Energy” means with respect to a Transaction, a Product under which the Seller shall sell and the Buyer shall purchase a quantity of energy equal to the hourly quantity without Ancillary Services (as defined in the California Independent System Operator (“CAISO”) Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator transaction pursuant to the applicable tariff and protocol provisions of the CAISO tariff, as amended from time to time for which the only excuse for failure to deliver or receive is an “Uncontrollable Force” as defined in the CAISO Tariff.”
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ““West Firm” or “WSPPC-Firm” means with respect to a Transaction, a Product defined by the WSPP Agreement as amended, in Service Schedule C as Firm Capacity/Energy Sale or Exchange Service.” ““WSPP Agreement” means the WSPP as amended from time to time.”
2. The Parties agree to add the following new Section 7 to Schedule P:
“Other Products and Service Levels: If the Parties agree to a service level defined by a different agreement (e.g., the WSPP Agreement, the California Independent System Operator tariff, 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 shall be defined by such other agreement, including, if applicable, the regional reliability requirements and guidelines as well as the excuses for performance, Force Majeure, Uncontrollable Forces, or other such excuses applicable to such other agreement, to the extent inconsistent with the terms of this Agreement, but all other terms and conditions of this Agreement shall remain applicable including, without limitation, Section 2.2.”
3. The Parties may from time to time by notice to each other mutually agree to adopt product definitions, delivery point language and definitions, and conversion conventions, that are posted by the Edison Electric Institute to its website as optional language for the Master Power Purchase and Sale Agreement. [Signatures appear on the following page.]
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the Effective Date.
J. ARON & COMPANY LLC, a New York
limited liability company
CENTRAL COAST COMMUNITY ENERGY,
a California joint powers authority
By:
Name:
Title:
By:
Name:
Title:
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”) member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be achieved and their legal interests are adequately protected.
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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.
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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 Provider
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 A- 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 Moody’s 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 under one or
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 proper
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 (i) 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
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association Confirmation shall be deemed to be accepted and shall be the 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 arise 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 the
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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 fails 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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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (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;
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (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 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 (i) 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 right 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 (i) 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 (i) 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 (ii) 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 right to payment for such performance is waived.
6.4 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date 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 account or include any Performance Assurance or guaranty which may be in effect to secure a Party’s performance under this Agreement.
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6.7 Payment 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 Damages. EXCEPT AS SET FORTH HEREIN,
THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE
PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR
BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF
DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL
BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF
DAMAGES IS EXPRESSLY PROVIDED HEREIN 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 REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED.
UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES,
LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS
THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON
REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE
OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY,
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE
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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.l(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 (i) 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 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.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (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 fail 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, 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
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 (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 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 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
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association occurred 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: (i) 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 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.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 Charges. 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); (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;
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (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;
(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
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (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.
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 the next Business Day. Notice by overnight United States mail or courier shall be effective on the next Business Day after it was sent. A Party may change its addresses by providing 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
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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 arise 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 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
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS (THIS SCHEDULE IS INCLUDED IF THE APPROPRIATE BOX ON THE COVER
SHEET IS MARKED INDICATING A PARTY IS A GOVERNMENTAL ENTITY OR
PUBLIC POWER SYSTEM)
A. The Parties agree to add the following definitions in Article One. “Act” means ______________________________.1
“Governmental Entity or Public Power System” means a
municipality, county, governmental board, public power authority, public utility district, joint action agency, or other similar political subdivision or public entity of the United States, one or more States or territories or any combination thereof.
“Special Fund” means a fund or account of the Governmental Entity or Public Power System set aside and or pledged to satisfy the Public Power System’s obligations hereunder out of which amounts shall be paid to satisfy all of the Public Power System’s obligations under this Master Agreement for the entire Delivery Period.
B. The following sentence shall be added to the end of the definition of “Force Majeure” in Article One.
If the Claiming Party is a Governmental Entity or Public Power System, Force Majeure does not include any action taken by the Governmental Entity or Public Power System in its governmental capacity.
C. The Parties agree to add the following representations and warranties to Section 10.2:
Further and with respect to a Party that is a Governmental Entity or Public Power System, such Governmental Entity or Public Power System represents and warrants to the other Party continuing throughout the term of this Master Agreement, with respect to this Master Agreement and each Transaction, as follows: (i) all acts necessary to the valid execution, delivery and performance of this Master Agreement, including without limitation, competitive bidding, public notice, election, referendum, prior appropriation or other required procedures has or will be taken and performed as required under the Act and the Public Power System’s ordinances, bylaws or other regulations, (ii) all persons making up the governing body of Governmental Entity or Public Power System are the duly elected or appointed incumbents in their positions and hold such 1 Cite the state enabling and other relevant statutes applicable to Governmental Entity or Public Power System.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association positions in good standing in accordance with the Act and other applicable law, (iii) entry into and performance of this Master Agreement by Governmental Entity or Public Power System are for a proper public purpose within the meaning of the Act and all other relevant constitutional, organic or other governing documents and applicable law, (iv) the term of this Master Agreement does not extend beyond any applicable limitation imposed by the Act or other relevant constitutional, organic or other governing documents and applicable law, (v) the Public Power System’s obligations to make payments hereunder are unsubordinated obligations and such payments are (a) operating and maintenance costs (or similar designation) which enjoy first priority of payment at all times under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law or (b) otherwise not subject to any prior claim under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law and are available without limitation or deduction to satisfy all Governmental Entity or Public Power System’ obligations hereunder and under each Transaction or (c) are to be made solely from a Special Fund, (vi) entry into and performance of this Master Agreement and each Transaction by the Governmental Entity or Public Power System will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any obligation of Governmental Entity or Public Power System otherwise entitled to such exclusion, and (vii) obligations to make payments hereunder do not constitute any kind of indebtedness of Governmental Entity or Public Power System or create any kind of lien on, or security interest in, any property or revenues of Governmental Entity or Public Power System which, in either case, is proscribed by any provision of the Act or any other relevant constitutional, organic or other governing documents and applicable law, any order or judgment of any court or other agency of government applicable to it or its assets, or any contractual restriction binding on or affecting it or any of its assets.
D. The Parties agree to add the following sections to Article Three:
Section 3.4 Public Power System’s Deliveries. On the Effective Date and as a condition to the obligations of the other Party under this Agreement, Governmental Entity or Public Power System shall provide the other Party hereto (i) certified copies of all ordinances, resolutions, public notices and other documents evidencing the necessary authorizations with respect to the execution, delivery and performance by Governmental Entity or Public Power System of this Master Agreement and (ii) an opinion of counsel for Governmental Entity or Public Power System, in form and substance reasonably satisfactory to the Other Party, regarding the validity, binding effect and enforceability of this Master Agreement against Governmental Entity or Public Power System in respect of the Act and all
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association other relevant constitutional organic or other governing documents and applicable law.
Section 3.5 No Immunity Claim. Governmental Entity or Public Power System warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (a) suit, (b) jurisdiction of court (including a court located outside the jurisdiction of its organization), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment.
E. If the appropriate box is checked on the Cover Sheet, as an alternative to selecting one of the options under Section 8.3, the Parties agree to add the following section to Article Three:
Section 3.6 Governmental Entity or Public Power System Security.
With respect to each Transaction, Governmental Entity or Public Power System shall either (i) have created and set aside a Special Fund or (ii) upon execution of this Master Agreement and prior to the commencement of each subsequent fiscal year of Governmental Entity or Public Power System during any Delivery Period, have obtained all necessary budgetary approvals and certifications for payment of all of its obligations under this Master Agreement for such fiscal year; any breach of this provision shall be deemed to have arisen during a fiscal period of Governmental Entity or Public Power System for which budgetary approval or certification of its obligations under this Master Agreement is in effect and, notwithstanding anything to the contrary in Article Four, an Early Termination Date shall automatically and without further notice occur hereunder as of such date wherein Governmental Entity or Public Power System shall be treated as the Defaulting Party. Governmental Entity or Public Power System shall have allocated to the Special Fund or its general funds a revenue base that is adequate to cover Public Power System’s payment obligations hereunder throughout the entire Delivery Period.
F. If the appropriate box is checked on the Cover Sheet, the Parties agree to add the following section to Article Eight:
Section 8.4 Governmental Security. As security for payment and performance of Public Power System’s obligations hereunder, Public Power System hereby pledges, sets over, assigns and grants to the other Party a security interest in all of Public Power System’s right, title and interest in and to [specify collateral].
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association G. The Parties agree to add the following sentence at the end of Section 10.6 - Governing Law:
NOTWITHSTANDING THE FOREGOING, IN RESPECT OF THE
APPLICABILITY OF THE ACT AS HEREIN PROVIDED, THE LAWS
OF THE STATE OF _____________2 SHALL APPLY.
2 Insert relevant state for Governmental Entity or Public Power System.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS
“Ancillary Services” means any of the services identified by a Transmission Provider in its transmission tariff as “ancillary services” including, but not limited to, regulation and frequency response, energy imbalance, operating reserve-spinning and operating reserve-supplemental, as may be specified in the Transaction.
“Capacity” has the meaning specified in the Transaction. “Energy” means three-phase, 60-cycle alternating current electric energy, expressed in megawatt hours.
“Firm (LD)” means, with respect to a Transaction, that either Party shall be relieved of its obligations to sell and deliver or purchase and receive without liability only to the extent that, and for the period during which, such performance is prevented by Force Majeure. In the absence of Force Majeure, the Party to which performance is owed shall be entitled to receive from the Party which failed to deliver/receive an amount determined pursuant to Article Four. “Firm Transmission Contingent - Contract Path” means, with respect to a Transaction, that the performance of either Seller or Buyer (as specified in the Transaction) shall be excused, and no damages shall be payable including any amounts determined pursuant to Article Four, if the transmission for such Transaction is interrupted or curtailed and (i) such Party has provided for firm transmission with the transmission provider(s) for the Product in the case of the Seller from the generation source to the Delivery Point or in the case of the Buyer from the Delivery Point to the ultimate sink, and (ii) such interruption or curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the applicable transmission provider’s tariff. This contingency shall excuse performance for the duration of the interruption or curtailment notwithstanding the provisions of the definition of “Force Majeure” in Section 1.23 to the contrary.
“Firm Transmission Contingent - Delivery Point” means, with respect to a Transaction, that the performance of either Seller or Buyer (as specified in the Transaction) shall be excused, and no damages shall be payable including any amounts determined pursuant to Article Four, if the transmission to the Delivery Point (in the case of Seller) or from the Delivery Point (in the case of Buyer) for such Transaction is interrupted or curtailed and (i) such Party has provided for firm transmission with the transmission provider(s) for the Product, in the case of the Seller, to be delivered to the Delivery Point or, in the case of Buyer, to be received at the Delivery Point and (ii) such interruption or curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the applicable transmission provider’s tariff. This transmission contingency excuses performance for the duration of the interruption or curtailment, notwithstanding the provisions of the definition of “Force Majeure” in Section 1.23 to the contrary. Interruptions or curtailments of transmission other than the transmission either immediately to or from the Delivery Point shall not excuse performance.
“Firm (No Force Majeure)” means, with respect to a Transaction, that if either Party fails to perform its obligation to sell and deliver or purchase and receive the Product, the Party to which performance is owed shall be entitled to receive from the Party which failed to perform an amount
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association determined pursuant to Article Four. Force Majeure shall not excuse performance of a Firm (No Force Majeure) Transaction.
“Into ______________ (the “Receiving Transmission Provider”), Seller’s Daily Choice” means that, in accordance with the provisions set forth below, (1) the Product shall be scheduled and delivered to an interconnection or interface (“Interface”) either (a) on the Receiving Transmission Provider’s transmission system border or (b) within the control area of the Receiving Transmission Provider if the Product is from a source of generation in that control area, which Interface, in either case, the Receiving Transmission Provider identifies as available for delivery of the Product in or into its control area; and (2) Seller has the right on a daily prescheduled basis to designate the Interface where the Product shall be delivered. An “Into” Product shall be subject to the following provisions:
1. Prescheduling and Notification. Subject to the provisions of Section 6, not later than the prescheduling deadline of 11:00 a.m. CPT on the Business Day before the next delivery day or as otherwise agreed to by Buyer and Seller, Seller shall notify Buyer (“Seller’s Notification”) of Seller’s immediate upstream counterparty and the Interface (the “Designated Interface”) where Seller shall deliver the Product for the next delivery day, and Buyer shall notify Seller of Buyer’s immediate downstream counterparty.
2. Availability of “Firm Transmission” to Buyer at Designated Interface; “Timely Request for Transmission,” “ADI” and “Available Transmission.” In determining availability to Buyer of next-day firm transmission (“Firm Transmission”) from the Designated Interface, a “Timely Request for Transmission” shall mean a properly completed request for Firm Transmission made by Buyer in accordance with the controlling tariff procedures, which request shall be submitted to the Receiving Transmission Provider no later than 30 minutes after delivery of Seller’s Notification, provided, however, if the Receiving Transmission Provider is not accepting requests for Firm Transmission at the time of Seller’s Notification, then such request by Buyer shall be made within 30 minutes of the time when the Receiving Transmission Provider first opens thereafter for purposes of accepting requests for Firm Transmission.
Pursuant to the terms hereof, delivery of the Product may under certain circumstances be redesignated to occur at an Interface other than the Designated Interface (any such alternate designated interface, an “ADI”) either (a) on the Receiving Transmission Provider’s transmission system border or (b) within the control area of the Receiving Transmission Provider if the Product is from a source of generation in that control area, which ADI, in either case, the Receiving Transmission Provider identifies as available for delivery of the Product in or into its control area using either firm or non-firm transmission, as available on a day-ahead or hourly basis (individually or collectively referred to as “Available Transmission”) within the Receiving Transmission Provider’s transmission system.
3. Rights of Buyer and Seller Depending Upon Availability of/Timely Request for Firm Transmission.
A. Timely Request for Firm Transmission made by Buyer, Accepted by the Receiving Transmission Provider and Purchased by Buyer. If a Timely Request for Firm Transmission is made by Buyer and is accepted by the Receiving Transmission Provider
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association and Buyer purchases such Firm Transmission, then Seller shall deliver and Buyer shall receive the Product at the Designated Interface.
i. If the Firm Transmission purchased by Buyer within the Receiving Transmission Provider’s transmission system from the Designated Interface ceases to be available to Buyer for any reason, or if Seller is unable to deliver the Product at the Designated Interface for any reason except Buyer’s non-performance, then at Seller’s choice from among the following, Seller shall: (a) to the extent Firm Transmission is available to Buyer from an ADI on a day-ahead basis, require Buyer to purchase such Firm Transmission from such ADI, and schedule and deliver the affected portion of the Product to such ADI on the basis of Buyer’s purchase of Firm Transmission, or (b) require Buyer to purchase non-firm transmission, and schedule and deliver the affected portion of the Product on the basis of Buyer’s purchase of non-firm transmission from the Designated Interface or an ADI designated by Seller, or (c) to the extent firm transmission is available on an hourly basis, require Buyer to purchase firm transmission, and schedule and deliver the affected portion of the Product on the basis of Buyer’s purchase of such hourly firm transmission from the Designated Interface or an ADI designated by Seller.
ii. If the Available Transmission utilized by Buyer as required by Seller pursuant to Section 3A(i) ceases to be available to Buyer for any reason, then Seller shall again have those alternatives stated in Section 3A(i) in order to satisfy its obligations.
iii. Seller’s obligation to schedule and deliver the Product at an ADI is subject to Buyer’s obligation referenced in Section 4B to cooperate reasonably therewith. If Buyer and Seller cannot complete the scheduling and/or delivery at an ADI, then Buyer shall be deemed to have satisfied its receipt obligations to Seller and Seller shall be deemed to have failed its delivery obligations to Buyer, and Seller shall be liable to Buyer for amounts determined pursuant to Article Four. iv. In each instance in which Buyer and Seller must make alternative scheduling arrangements for delivery at the Designated Interface or an ADI pursuant to Sections 3A(i) or (ii), and Firm Transmission had been purchased by both Seller and Buyer into and within the Receiving Transmission Provider’s transmission system as to the scheduled delivery which could not be completed as a result of the interruption or curtailment of such Firm Transmission, Buyer and Seller shall bear their respective transmission expenses and/or associated congestion charges incurred in connection with efforts to complete delivery by such alternative scheduling and delivery arrangements. In any instance except as set forth in the immediately preceding sentence, Buyer and Seller must make alternative scheduling arrangements for delivery at the Designated Interface or an ADI under Sections 3A(i) or (ii), Seller shall be responsible for any additional transmission purchases and/or associated congestion charges incurred by Buyer in connection with such alternative scheduling arrangements.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association B. Timely Request for Firm Transmission Made by Buyer but Rejected by the Receiving Transmission Provider. If Buyer’s Timely Request for Firm Transmission is rejected by the Receiving Transmission Provider because of unavailability of Firm Transmission from the Designated Interface, then Buyer shall notify Seller within 15 minutes after receipt of the Receiving Transmission Provider’s notice of rejection (“Buyer’s Rejection Notice”). If Buyer timely notifies Seller of such unavailability of Firm Transmission from the Designated Interface, then Seller shall be obligated either (1) to the extent Firm Transmission is available to Buyer from an ADI on a day-ahead basis, to require Buyer to purchase (at Buyer’s own expense) such Firm Transmission from such ADI and schedule and deliver the Product to such ADI on the basis of Buyer’s purchase of Firm Transmission, and thereafter the provisions in Section 3A shall apply, or (2) to require Buyer to purchase (at Buyer’s own expense) non-firm transmission, and schedule and deliver the Product on the basis of Buyer’s purchase of non-firm transmission from the Designated Interface or an ADI designated by the Seller, in which case Seller shall bear the risk of interruption or curtailment of the non-firm transmission; provided, however, that if the non-firm transmission is interrupted or curtailed or if Seller is unable to deliver the Product for any reason, Seller shall have the right to schedule and deliver the Product to another ADI in order to satisfy its delivery obligations, in which case Seller shall be responsible for any additional transmission purchases and/or associated congestion charges incurred by Buyer in connection with Seller’s inability to deliver the Product as originally prescheduled. If Buyer fails to timely notify Seller of the unavailability of Firm Transmission, then Buyer shall bear the risk of interruption or curtailment of transmission from the Designated Interface, and the provisions of Section 3D shall apply.
C. Timely Request for Firm Transmission Made by Buyer, Accepted by the Receiving Transmission Provider and not Purchased by Buyer. If Buyer’s Timely Request for Firm Transmission is accepted by the Receiving Transmission Provider but Buyer elects to purchase non-firm transmission rather than Firm Transmission to take delivery of the Product, then Buyer shall bear the risk of interruption or curtailment of transmission from the Designated Interface. In such circumstances, if Seller’s delivery is interrupted as a result of transmission relied upon by Buyer from the Designated Interface, then Seller shall be deemed to have satisfied its delivery obligations to Buyer, Buyer shall be deemed to have failed to receive the Product and Buyer shall be liable to Seller for amounts determined pursuant to Article Four.
D. No Timely Request for Firm Transmission Made by Buyer, or Buyer Fails to Timely Send Buyer’s Rejection Notice. If Buyer fails to make a Timely Request for Firm Transmission or Buyer fails to timely deliver Buyer’s Rejection Notice, then Buyer shall bear the risk of interruption or curtailment of transmission from the Designated Interface. In such circumstances, if Seller’s delivery is interrupted as a result of transmission relied upon by Buyer from the Designated Interface, then Seller shall be deemed to have satisfied its delivery obligations to Buyer, Buyer shall be deemed to have failed to receive the Product and Buyer shall be liable to Seller for amounts determined pursuant to Article Four.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
4. Transmission.
A. Seller’s Responsibilities. Seller shall be responsible for transmission required to deliver the Product to the Designated Interface or ADI, as the case may be. It is expressly agreed that Seller is not required to utilize Firm Transmission for its delivery obligations hereunder, and Seller shall bear the risk of utilizing non-firm transmission. If Seller’s scheduled delivery to Buyer is interrupted as a result of Buyer’s attempted transmission of the Product beyond the Receiving Transmission Provider’s system border, then Seller will be deemed to have satisfied its delivery obligations to Buyer, Buyer shall be deemed to have failed to receive the Product and Buyer shall be liable to Seller for damages pursuant to Article Four.
B. Buyer’s Responsibilities. Buyer shall be responsible for transmission required to receive and transmit the Product at and from the Designated Interface or ADI, as the case may be, and except as specifically provided in Section 3A and 3B, shall be responsible for any costs associated with transmission therefrom. If Seller is attempting to complete the designation of an ADI as a result of Seller’s rights and obligations hereunder, Buyer shall co-operate reasonably with Seller in order to effect such alternate designation.
5. Force Majeure. An “Into” Product shall be subject to the “Force Majeure” provisions in Section 1.23.
6. Multiple Parties in Delivery Chain Involving a Designated Interface. Seller and Buyer recognize that there may be multiple parties involved in the delivery and receipt of the Product at the Designated Interface or ADI to the extent that (1) Seller may be purchasing the Product from a succession of other sellers (“Other Sellers”), the first of which Other Sellers shall be causing the Product to be generated from a source (“Source Seller”) and/or (2) Buyer may be selling the Product to a succession of other buyers (“Other Buyers”), the last of which Other Buyers shall be using the Product to serve its energy needs (“Sink Buyer”). Seller and Buyer further recognize that in certain Transactions neither Seller nor Buyer may originate the decision as to either (a) the original identification of the Designated Interface or ADI (which designation may be made by the Source Seller) or (b) the Timely Request for Firm Transmission or the purchase of other Available Transmission (which request may be made by the Sink Buyer). Accordingly, Seller and Buyer agree as follows:
A. If Seller is not the Source Seller, then Seller shall notify Buyer of the Designated Interface promptly after Seller is notified thereof by the Other Seller with whom Seller has a contractual relationship, but in no event may such designation of the Designated Interface be later than the prescheduling deadline pertaining to the Transaction between Buyer and Seller pursuant to Section 1.
B. If Buyer is not the Sink Buyer, then Buyer shall notify the Other Buyer with whom Buyer has a contractual relationship of the Designated Interface promptly after Seller notifies Buyer thereof, with the intent being that the party bearing actual responsibility to secure transmission shall have up to 30 minutes after receipt of the Designated Interface to submit its Timely Request for Firm Transmission.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association C. Seller and Buyer each agree that any other communications or actions required to be given or made in connection with this “Into Product” (including without limitation, information relating to an ADI) shall be made or taken promptly after receipt of the relevant information from the Other Sellers and Other Buyers, as the case may be.
D. Seller and Buyer each agree that in certain Transactions time is of the essence and it may be desirable to provide necessary information to Other Sellers and Other Buyers in order to complete the scheduling and delivery of the Product. Accordingly, Seller and Buyer agree that each has the right, but not the obligation, to provide information at its own risk to Other Sellers and Other Buyers, as the case may be, in order to effect the prescheduling, scheduling and delivery of the Product.
“Native Load” means the demand imposed on an electric utility or an entity by the requirements of retail customers located within a franchised service territory that the electric utility or entity has statutory obligation to serve.
“Non-Firm” means, with respect to a Transaction, that delivery or receipt of the Product may be interrupted for any reason or for no reason, without liability on the part of either Party. “System Firm” means that the Product will be supplied from the owned or controlled generation or pre-existing purchased power assets of the system specified in the Transaction (the “System”) with non-firm transmission to and from the Delivery Point, unless a different Transmission Contingency is specified in a Transaction. Seller’s failure to deliver shall be excused: (i) by an event or circumstance which prevents Seller from performing its obligations, 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 Seller; (ii) by Buyer’s failure to perform; (iii) to the extent necessary to preserve the integrity of, or prevent or limit any instability on, the System; (iv) to the extent the System or the control area or reliability council within which the System operates declares an emergency condition, as determined in the system’s, or the control area’s, or reliability council’s reasonable judgment; or (v) by the interruption or curtailment of transmission to the Delivery Point or by the occurrence of any Transmission Contingency specified in a Transaction as excusing Seller’s performance. Buyer’s failure to receive shall be excused (i) by Force Majeure; (ii) by Seller’s failure to perform, or (iii) by the interruption or curtailment of transmission from the Delivery Point or by the occurrence of any Transmission Contingency specified in a Transaction as excusing Buyer’s performance. In any of such events, neither party shall be liable to the other for any damages, including any amounts determined pursuant to Article Four.
“Transmission Contingent” means, with respect to a Transaction, that the performance of either Seller or Buyer (as specified in the Transaction) shall be excused, and no damages shall be payable including any amounts determined pursuant to Article Four, if the transmission for such Transaction is unavailable or interrupted or curtailed for any reason, at any time, anywhere from the Seller’s proposed generating source to the Buyer’s proposed ultimate sink, regardless of whether transmission, if any, that such Party is attempting to secure and/or has purchased for the Product is firm or non-firm. If the transmission (whether firm or non-firm) that Seller or Buyer is attempting to secure is from source to sink is unavailable, this contingency excuses performance for the entire Transaction. If the transmission (whether firm or non-firm) that Seller or Buyer has
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association secured from source to sink is interrupted or curtailed for any reason, this contingency excuses performance for the duration of the interruption or curtailment notwithstanding the provisions of the definition of “Force Majeure” in Article 1.23 to the contrary. “Unit Firm” means, with respect to a Transaction, that the Product subject to the Transaction is intended to be supplied from a generation asset or assets specified in the Transaction. Seller’s failure to deliver under a “Unit Firm” Transaction shall be excused: (i) if the specified generation asset(s) are unavailable as a result of a Forced Outage (as defined in the NERC Generating Unit Availability Data System (GADS) Forced Outage reporting guidelines) or (ii) by an event or circumstance that affects the specified generation asset(s) so as to prevent Seller from performing its obligations, which event or circumstance was not anticipated as of the date the Transaction was agreed to, and which is not within the reasonable control of, or the result of the negligence of, the Seller or (iii) by Buyer’s failure to perform. In any of such events, Seller shall not be liable to Buyer for any damages, including any amounts determined pursuant to Article Four.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT
CONFIRMATION LETTER
This confirmation letter shall confirm the Transaction agreed to on ___________, ___ between __________________________ (“Party A”) and _____________________ (“Party B”) regarding the sale/purchase of the Product under the terms and conditions as follows:
Seller:
Buyer:
Product:
[] Into _________________, Seller’s Daily Choice
[] Firm (LD)
[] Firm (No Force Majeure)
[] System Firm
(Specify System: )
[] Unit Firm
(Specify Unit(s): )
[] Other
[] Transmission Contingency (If not marked, no transmission contingency) [] FT-Contract Path Contingency [] Seller [] Buyer
[] FT-Delivery Point Contingency [] Seller [] Buyer
[] Transmission Contingent [] Seller [] Buyer
[] Other transmission contingency
(Specify: )
Contract Quantity:
Delivery Point:
Contract Price:
Energy Price:
Other Charges:
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association Confirmation Letter
Delivery Period:
Special Conditions:
Scheduling:
Option Buyer:
Option Seller:
Type of Option:
Strike Price:
Premium:
Exercise Period:
This confirmation letter is being provided pursuant to and in accordance with the Master Power Purchase and Sale Agreement dated ______________ (the “Master Agreement”) between Party A and Party B, 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.
[Party A] [Party B]
Name: Name:
Title: Title:
Phone No: Phone No:
Fax: Fax:
Execution Version
1 PARAGRAPH 10
to the
COLLATERAL ANNEX
to the
EEI MASTER POWER PURCHASE AND SALE AGREEMENT
CREDIT ELECTIONS COVER SHEET
Between
J. Aron & Company LLC (“Party A”)
and
Central Coast Community Energy (“Party B”)
Paragraph 10. Elections and Variables
I. Collateral Threshold.
A. Party A Collateral Threshold.
$______________ (the “Threshold Amount”); provided, however, that the Collateral Threshold for Party A shall be zero upon the occurrence and during the continuance of an Event of Default or a Potential Event of Default with respect to Party A; and provided further that, in the event that, and on the date that, Party A cures the Potential Event of Default on or prior to the date that Party A is required to post Performance Assurance to Party B pursuant to a demand made by Party B pursuant to the provisions of the Collateral Annex on or after the occurrence of such Potential Event of Default, (i) the Collateral Threshold for Party A shall automatically increase from zero to the Threshold Amount and (ii) Party A shall be relieved of its obligation to post Performance Assurance pursuant to such demand.
(a) The amount (the “Threshold Amount”) set forth below under the heading “Party A Collateral Threshold” opposite the Credit Rating for [Party A][Party A’s Guarantor] on the relevant date of determination, or (b) zero if on the relevant date of determination [Party A][its Guarantor] does not have a Credit Rating from the rating agency specified below or an Event of Default or a Potential Event of Default with respect to Party A has occurred and is continuing; provided, however, in the event that, and on the date that, Party A cures the Potential Event of Default on or prior to the date that Party A is required to post Performance Assurance to Party B pursuant to a demand made by Party B pursuant to the provisions of the Collateral Annex on or after the occurrence of such Potential Event of Default, (i) the Collateral Threshold for Party A shall automatically increase from zero to the Threshold Amount and (ii) Party A shall be relieved of its obligation to post Performance Assurance pursuant to such demand.
2 Party A
Collateral Threshold Credit Rating
$__________ _______ (or above)
$__________ _______
$__________ _______
$__________ _______
$__________ Below _______
“Threshold Amount” means (a) the lesser of (i) the amount of the Guaranty Agreement provided to Party B by Party A’s Guarantor and (ii) the amount (the “Threshold Amount”) set forth below under the heading “Party A Collateral Threshold” opposite the Credit Rating for Party A’s Guarantor on the relevant date of determination, and if Party A’s Guarantor’s Credit Ratings shall not be equivalent, the lower Credit Rating shall govern or (b) zero if on the relevant date of determination Party A’s Guarantor does not have a Credit Rating from the rating agency specified below or an Event of Default with respect to Party A or Party A’s Guarantor has occurred and is continuing:
Party A
Collateral Threshold S&P Credit Rating Moody’s Credit Rating $ 35,000,000 AA- (or above Aa3 (or above)
$ 30,000,000 A+ A1
$ 25,000,000 A A2
$ 20,000,000 A- A3
$ 15,000,000 BBB+ Baa1
$ 10,000,000 BBB Baa2
$ 5,000,000 BBB- Baa3
$ 0 (zero) Below BBB- Below Baa3
The amount of the Guaranty Agreement dated _____ from _____, as amended from time to time but in no event shall Party A’s Collateral Threshold be greater than $______.
Other:
B. Party B Collateral Threshold.
$______________ (the “Threshold Amount”); provided, however, that the Collateral Threshold for Party B shall be zero upon the occurrence and during the continuance of an Event of Default or a Potential Event of Default with respect to Party B; and provided further that, in the event that, and on the date that, Party B cures the Potential Event of Default on or prior to the date that Party B is required to post Performance Assurance to Party A pursuant to a demand made by Party A pursuant to the provisions of the Collateral Annex on or after the occurrence of such Potential Event of Default, (i) the Collateral Threshold for Party B shall automatically increase from zero to the Threshold Amount and (ii) Party B shall be relieved of its obligation to post Performance Assurance pursuant to such demand.
3 (a) The amount (the “Threshold Amount”) set forth below under the heading “Party B Collateral Threshold” opposite the Credit Rating for [Party B][Party B’s Guarantor] on the relevant date of determination, or (b) zero if on the relevant date of determination [Party B][its Guarantor] does not have a Credit Rating from the rating agency specified below or an Event of Default or a Potential Event of Default with respect to Party B has occurred and is continuing; provided, however, in the event that, and on the date that, Party B cures the Potential Event of Default on or prior to the date that Party B is required to post Performance Assurance to Party A pursuant to a demand made by Party A pursuant to the provisions of the Collateral Annex on or after the occurrence of such Potential Event of Default, (i) the Collateral Threshold for Party B shall automatically increase from zero to the Threshold Amount and (ii) Party B shall be relieved of its obligation to post Performance Assurance pursuant to such demand:
Party B
Collateral Threshold Credit Rating
$__________ _______ (or above)
$__________ _______
$__________ _______
$__________ _______
$__________ Below _______
(a) The amount (the “Threshold Amount”) set forth below under the heading “Party B Collateral Threshold” opposite the applicable Credit Rating for Party B on the relevant date of determination, and if Party B has two Credit Ratings and Party B’s Credit Ratings are not equivalent, the lower Credit Rating shall govern, or (b) zero if on the relevant date of determination Party B does not have a Credit Rating from either rating agency specified below or an Event of Default with respect to Party B has occurred and is continuing.
Party B
Collateral Threshold S&P Credit Rating Moody’s Credit Rating $ 35,000,000 AA- (or above Aa3 (or above)
$ 30,000,000 A+ A1
$ 25,000,000 A A2
$ 20,000,000 A- A3
$ 15,000,000 BBB+ Baa1
$ 10,000,000 BBB Baa2
$ 5,000,000 BBB- Baa3
$ 0 (zero) Below BBB- Below Baa3
The amount of the Guaranty Agreement dated _____ from _____, as amended from time to time but in no event shall Party B’s Collateral Threshold be greater than $______.
Other – see attached threshold terms
4 II. Eligible Collateral and Valuation Percentage.
The following items will qualify as “Eligible Collateral” for the Party specified:
Party A Party B Valuation Percentage
(A) Cash [X] [X] 100%
(B) Letters of
Credit
[X] [X] 100% unless either (i) a Letter of Credit
Default shall have occurred and be
continuing with respect to such Letter of
Credit, or (ii) twenty (20) or fewer
Business Days remain prior to the
expiration of such Letter of Credit, in
which cases the Valuation Percentage shall
be zero (0).
(C) Other [ ] [ ] ________%
III. Independent Amount.
A. Party A Independent Amount.
Party A shall have a Fixed Independent Amount of $0 (zero). If the Fixed Independent Amount option is selected for Party A, then Party A (which shall be a Pledging Party with respect to the Fixed IA Performance Assurance) will be required to Transfer or cause to be Transferred to Party B (which shall be a Secured Party with respect to the Fixed IA Performance Assurance) Performance Assurance with a Collateral Value equal to the amount of such Independent Amount (the “Fixed IA Performance Assurance”). The Fixed IA Performance Assurance shall not be reduced for so long as there are any outstanding obligations between the Parties as a result of the Agreement, and shall not be taken into account when calculating Party A’s Collateral Requirement pursuant to the Collateral Annex. Except as expressly set forth above, the Fixed IA Performance Assurance shall be held and maintained in accordance with, and otherwise be subject to, Paragraphs 2, 5(b), 5(c), 6, 7 and 9 of the Collateral Annex. Party A shall have a Full Floating Independent Amount of $______________. If the Full Floating Independent Amount option is selected for Party A, then for purposes of calculating Party A’s Collateral Requirement pursuant to Paragraph 3 of the Collateral Annex, such Full Floating Independent Amount for Party A shall be added by Party B to its Exposure Amount for purposes of determining Net Exposure pursuant to Paragraph 3(a) of the Collateral Annex. Party A shall have a Partial Floating Independent Amount of $______________.
If the Partial Floating Independent Amount option is selected for Party A, then Party A will be required to Transfer or cause to be Transferred to Party B Performance Assurance with a Collateral Value equal to the amount of such Independent Amount (the “Partial Floating IA Performance Assurance”) if at any time Party A otherwise has a Collateral Requirement (not taking into consideration the Partial Floating Independent Amount) pursuant to Paragraph 3 of the Collateral Annex. The Partial Floating IA Performance Assurance shall not be reduced so
5 long as Party A has a Collateral Requirement (not taking into consideration the Partial Floating Independent Amount). The Partial Floating Independent Amount shall not be taken into account when calculating a Party’s Collateral Requirements pursuant to the Collateral Annex. Except as expressly set forth above, the Partial Floating Independent Amount shall be held and maintained in accordance with, and otherwise be subject to, the Collateral Annex.
Not Applicable.
B. Party B Independent Amount.
Party B shall have a Fixed Independent Amount of $0 (zero). If the Fixed Independent Amount Option is selected for Party B, then Party B (which shall be a Pledging Party with respect to the Fixed IA Performance Assurance) will be required to Transfer or cause to be Transferred to Party A (which shall be a Secured Party with respect to the Fixed IA Performance Assurance) Performance Assurance with a Collateral Value equal to the amount of such Independent Amount (the “Fixed IA Performance Assurance”). The Fixed IA Performance Assurance shall not be reduced for so long as there are any outstanding obligations between the Parties as a result of the Agreement, and shall not be taken into account when calculating Party B’s Collateral Requirement pursuant to the Collateral Annex. Except as expressly set forth above, the Fixed IA Performance Assurance shall be held and maintained in accordance with, and otherwise be subject to, Paragraphs 2, 5(b), 5(c), 6, 7 and 9 of the Collateral Annex. Party B shall have a Full Floating Independent Amount of $______________. If the Full Floating Independent Amount Option is selected for Party B then for purposes of calculating Party B’s Collateral Requirement pursuant to Paragraph 3 of the Collateral Annex, such Full Floating Independent Amount for Party B shall be added by Party A to its Exposure Amount for purposes of determining Net Exposure pursuant to Paragraph 3(a) of the Collateral Annex. Party B shall have a Partial Floating Independent Amount of $______________.
If the Partial Floating Independent Amount option is selected for Party B, then Party B will be required to Transfer or cause to be Transferred to Party A Performance Assurance with a Collateral Value equal to the amount of such Independent Amount (the “Partial Floating IA Performance Assurance”) if at any time Party B otherwise has a Collateral Requirement (not taking into consideration the Partial Floating Independent Amount) pursuant to Paragraph 3 of the Collateral Annex. The Partial Floating IA Performance Assurance shall not be reduced for so long as Party B has a Collateral Requirement (not taking into consideration the Partial Floating Independent Amount). The Partial Floating Independent Amount shall not be taken into account when calculating a Party’s Collateral Requirements pursuant to the Collateral Annex. Except as expressly set forth above, the Partial Floating Independent Amount shall be held and maintained in accordance with, and otherwise be subject to, the Collateral Annex.
Not Applicable.
6 IV. Minimum Transfer Amount.
A. Party A Minimum Transfer Amount: $ 100,000
B. Party B Minimum Transfer Amount: $ 100,000
V. Rounding Amount.
A. Party A Rounding Amount: $ 10,000
B. Party B Rounding Amount: $ 10,000
VI. Administration of Cash Collateral.
A. Party A Eligibility to Hold Cash.
Party A shall not be entitled to hold Performance Assurance in the form of Cash.
Performance Assurance in the form of Cash shall be held in a Qualified Institution in accordance with the provisions of Paragraph 6(a)(ii)(B) of the Collateral Annex.
Party A shall pay to Party B in accordance with the terms of the Collateral Annex the amount of interest it receives from the Qualified Institution on any Performance Assurance in the form of Cash posted by Party B.
Party A shall be entitled to hold Performance Assurance in the form of Cash provided that the following conditions are satisfied: (1) it is not subject to an Event of Default or Potential Event of Default; and (2) Cash shall be held only in any jurisdiction within the United States. To the extent Party A is entitled to hold Cash, the Interest Rate payable to Party B on Cash shall be as selected below:
Party A Interest Rate.
Federal Funds Effective Rate - the rate for that day opposite the caption “Federal Funds (Effective)” as set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System.
Other - ____________
B. Party B Eligibility to Hold Cash.
Party B shall not be entitled to hold Performance Assurance in the form of Cash.
Performance Assurance in the form of Cash shall be held in a Qualified Institution in accordance with the provisions of Paragraph 6(a)(ii)(B) of the Collateral Annex.
Party B shall pay to Party A in accordance with the terms of the Collateral Annex the amount of interest it receives from the Qualified Institution on any Performance Assurance in the form of Cash posted by Party A.
Party B shall be entitled to hold Performance Assurance in the form of Cash provided that the following conditions are satisfied: (1) it is not subject to an Event
7 of Default or Potential Event of Default; and (2) Cash shall be held only in any jurisdiction within the United States. To the extent Party B is entitled to hold Cash, the Interest Rate payable to Party A on Cash shall be as selected below:
Party B Interest Rate.
Federal Funds Effective Rate - the rate for that day opposite the caption “Federal Funds (Effective)” as set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System.
Other - ____________
VII. Notification Time.
Other - 10:00 a.m. Pacific Prevailing Time on a Local Business Day VIII. General.
Amendments to Introductory Paragraph:
(i) Delete “Paragraph 10 Elections” in the first introductory paragraph and replace it with “Paragraph 10 Cover Sheet”.
(ii) The first paragraph of the introduction shall be amended to read as follows:
“This Collateral Annex, together with the Paragraph 10 Cover Sheet, (the “Collateral Annex”) supplements, forms a part of, and is subject to the EEI Master Power Purchase and Sale Agreement dated as of __________ between J. Aron & Company LLC (“Party A”) and Central Coast Community Energy, a California joint powers authority (“Party B”), including the Cover Sheet and any other annexes thereto (as amended and supplemented from time to time, the “Agreement”). Capitalized terms used in this Collateral Annex but not defined herein shall have the meanings given to such terms in the Agreement.” Amendments to Definitions:
(i) The definition of “Credit Rating” is deleted from the Collateral Annex and all references shall have the meaning set forth in Section 1.12 of the Master Agreement as modified in the Cover Sheet.
(ii) “Credit Rating Event” shall be amended by replacing “6(a)(iii)” with “6(a)(ii)”. (iii) “Downgraded Party” shall be amended by replacing “6(a)(i)” with “6(a)(ii)”. (iv) “Letter of Credit” shall be deleted from both the Master Agreement, as amended by the Schedule thereto, and the Collateral Annex and replaced with the following:
““Letter(s) of Credit” shall mean an irrevocable, standby letter of credit, issued or confirmed by a major U.S. commercial bank or a U.S. branch office of a foreign bank with a Credit Rating of at least “A” by S&P and “A2” by Moody’s and net capital in excess of one billion dollars ($1,000,000,000) that is substantially in the form attached hereto as
8 Schedule 1 to this Paragraph 10 to the Collateral Annex or in such other form as may be reasonably acceptable to the beneficiary thereof, in each case, with such changes to the terms in that form as the issuing or confirming bank may require and as may be reasonably acceptable to the beneficiary thereof.”
(v) “Letter of Credit Default” is deleted in its entirety and replaced with the following:
““Letter of Credit Default” shall mean with respect to an outstanding Letter of Credit, the occurrence of any of the following events: (i) the issuer of such Letter of Credit shall fail to maintain a Credit Rating of at least “A” by S&P or “A2” by Moody’s; (ii) the issuer of the Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit; (iii) the issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit; or (iv) such Letter of Credit shall expire or terminate, or shall fail and cease to be in full force and effect at any time during the term of this Agreement, or fail to be renewed. Notwithstanding the foregoing, references to the “issuer” in this definition shall mean, for each Letter of Credit that was confirmed by a Qualified Institution, the confirming entity.” (vi) “Local Business Day” shall be amended by replacing the word “day” with “Business Day”. (vii) “Notification Time” shall be amended by replacing “11:00, New York time” with “10:00 a.m. Pacific Prevailing Time on a Local Business Day.”
(viii) “Performance Assurance” shall be amended by replacing “6(a)(iv)” with “6(a)(iii)”. (ix) “Qualified Institution” shall be amended by deleting “capital and surplus”, and replacing it with “capital surplus”.
(x) “Secured Party” shall be amended by replacing “3(b)” with “3(a)”.
Amendment to Paragraph 4:
(i) The second to last sentence of Paragraph 4, “Delivery of Performance Assurance”, shall be amended to read as follows:
“Unless otherwise agreed in writing by the Parties, (i) Performance Assurance demanded of a Pledging Party on or before the Notification Time on a Local Business Day shall be provided by not later than the close of business on the same Local Business Day; and (ii) Performance Assurance demanded of a Pledging Party after the Notification time on a Local Business Day shall be provided by not later than the close of business on the next Local Business Day.”
Amendments to Paragraph 5:
(i) Paragraph 5(a) shall be amended by inserting “so long as the amount of the requested reduction is equal to or greater than the Minimum Transfer Amount” after “the Pledging Party for the benefit of the Secured Party” in the third line thereof. (ii) Paragraph 5(a) shall be further amended by deleting “before the Notification Time on a Business Day” and replacing it with “before the Notification Time on a Local Business Day”.
9 Amendments to Paragraph 6:
(i) Paragraph 6(a)(ii)(A) shall be amended by inserting “(other than subparagraph (B) below)” after “the provisions of this Paragraph 6(a)(ii)” in the first line thereof. (ii) Paragraph 6(a)(ii)(B) shall be amended by deleting “to perfect the security interest of the Non-Downgraded Party” and replacing it with “to perfect the security interest of the Downgraded Party”.
Amendments to Paragraph 7:
(i) Paragraph 7(b) shall be amended by deleting it in its entirety and inserting the words “Intentionally Omitted.”
(ii) Paragraph 7(c) shall be amended by adding “The” immediately before “Secured Party” in the first line.
Amendments to Paragraph 10:
(i) Schedule 1 to the Collateral Annex is deleted in its entirety and replaced with the form of Letter of Credit attached as Schedule 1 to this Paragraph 10 to the Collateral Annex.
With respect to the Collateral Threshold, Independent Amount, Minimum Transfer Amount and Rounding Amount, if no selection is made in this Cover Sheet with respect to a Party, then the applicable amount in each case for such Party shall be zero (0). In addition, with respect to the “Administration of Cash Collateral” section of this Paragraph 10, if no selection is made with respect to a Party, then such Party shall not be entitled to hold Performance Assurance in the form of Cash and such Cash, if any, shall be held in a Qualified Institution pursuant to Paragraph 6(a)(ii)(B) of the Collateral Annex.
10 IN WITNESS WHEREOF, the Parties have caused this Paragraph 10 to the Collateral Annex to be duly executed as of the Effective Date of the EEl Master Power Purchase and Sale Agreement between the Parties.
J. ARON & COMPANY LLC, a New York
limited liability company
CENTRAL COAST COMMUNITY
ENERGY, a California joint powers
authority
By: By:
Name: Name:
Title: Title:
Schedule 1 - 1
SCHEDULE 1
FORM OF LETTER OF CREDIT
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date: ____________________
Bank Ref.: ________________
Amount: US$[XXXXXXXX]
Expiration Date: ___________
Beneficiary:
Central Coast Community Energy
Attn: Dennis Dyc-O’Neal, Director of Power Supply Resources 70 Garden Court, Suite 300
Monterey, CA 93940
Ladies and Gentlemen:
By the order of __________ (“Applicant”), we, [insert bank name and address] (“Issuer”) hereby issue our Irrevocable Standby Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) in favor of Central Coast Community Energy, a California joint powers authority (“Beneficiary”), for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100), pursuant to that certain EEI Master Power Purchase and Sale Agreement, together with the Cover Sheet, the Collateral Annex and Paragraph 10 to the Collateral Annex dated as of [insert date] and as amended from time to time between Applicant and Beneficiary (the “Master Agreement”). This Letter of Credit shall become effective immediately and shall expire on [insert date] which is one [insert time period] after the issue date of this Letter of Credit, or any expiration date extended in accordance with the terms hereof (the “Expiration Date”).
Funds under this Letter of Credit are available to Beneficiary by presentation on or before the Expiration Date of a dated statement purportedly signed by your duly authorized representative, in the form attached hereto as Exhibit A, referencing our Letter of Credit No. [XXXXXXX] (“Drawing Certificate”) along with a copy of this Letter of Credit and all amendments hereto.
The Drawing Certificate may be presented by (a) U.S. mail, (b) overnight courier or (c) as a PDF attachment to an email to [bank email address]. Transmittal by email shall be deemed delivered when received.
The original of this Letter of Credit (and all amendments, if any) is not required to be presented in connection with any presentment of a Drawing Certificate by Beneficiary hereunder in order to receive payment.
We hereby agree with the Beneficiary that all documents presented under and in compliance with the terms of this Letter of Credit, that such drafts will be duly honored upon presentation to the Issuer on or before
Schedule 1 - 2
the Expiration Date.
All payments made under this Letter of Credit shall be made with Issuer’s own immediately available funds by means of wire transfer in immediately available United States dollars to Beneficiary’s account as indicated by Beneficiary in its Drawing Certificate.
Partial draws are permitted under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance.
It is a condition of this Letter of Credit that the Expiration Date shall be deemed automatically extended without an amendment for a one year period beginning on the present Expiration Date hereof and upon each anniversary for such date, unless at least one hundred twenty (120) days prior to any such Expiration Date we have sent to you written notice by overnight courier service that we elect not to extend this Letter of Credit, in which case it will expire on the date specified in such notice. No presentation made under this Letter of Credit after such Expiration Date will be honored.
This Letter of Credit is issued subject to the rules of the ‘International Standby Practices 1998’, International Chamber of Commerce Publication No. 590 (“ISP98”) and, as to matters not addressed by ISP98, shall be governed and construed in accordance with the laws of state of California.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements (other than as set forth in the immediately prior paragraph), this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [insert bank address information], referring specifically to Issuer’s Letter of Credit No. [XXXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [XXX-XXX-XXXX] and have this Letter of Credit available. [Bank Name]
___________________________
[Insert officer name]
[Insert officer title]
Schedule 1 - 3
Exhibit A
(DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD)
Drawing Certificate
[Insert Bank Name and Address]
The undersigned, a duly authorized representative of Central Coast Community Energy, a California joint powers authority, as beneficiary (the “Beneficiary”) of the Irrevocable Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) issued by [insert bank name] (the “Bank”) by order of __________ (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain EEI Master Power Purchase and Sale Agreement, together with the Cover Sheet, the Collateral Annex and Paragraph 10 to the Collateral Annex dated as of [insert date] and as amended from time to time (the “Master Agreement”).
2. “An Event of Default (as defined in the Master Agreement) has occurred and is continuing with respect to Applicant under the Master Agreement and no Event of Default has occurred and is continuing with respect to the beneficiary of this Letter of Credit. Wherefore, the undersigned does hereby demand payment of the entire undrawn amount of the Letter of Credit”; OR
“An Early Termination Date (as defined in the Master Agreement) has occurred and is continuing with respect to Applicant under the Master Agreement and no Event of Default has occurred and is continuing with respect to the beneficiary of this Letter of Credit. Wherefore, the undersigned does hereby demand payment of the entire undrawn amount of the Letter of Credit”.
3. The undersigned is a duly authorized representative of Central Coast Community Energy and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to Central Coast Community Energy by wire transfer in immediately available funds to the following account:
[specify account information]
Central Coast Community Energy
_____________________________________
[name and title of authorized representative]
Date___________________________
Staff Report Item 3
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dennis Dyc-O’Neal, Chief Operating Officer SUBJECT: Approve and authorize the CEO to execute the Edison Electric Institute Master Power Purchase and Sale Agreement with Citigroup Energy Inc.
DATE: March 13, 2024
RECOMMENDATION:
This memorandum recommends the Operations Board approve and authorize the CEO to execute the Edison Electric Institute Master Power Purchase and Sale Agreement with Citigroup Energy Inc. (“CEI”).
BACKGROUND:
An Edison Electric Institute Master Power Purchase and Sale Agreement (“EEI Master Agreement”) provides a general framework for the efficient transacting of energy and resource adequacy (RA) products. The CEI EEI Master Agreement has no specific transaction associated with it at this time.
Individual confirmation agreements (“Confirms”) may, from time to time, be entered into pursuant to the delegations of authority specified in the Energy Risk Management Policy. Such Confirms specify the product, quantity, and price of any future transactions. The individual confirms are governed by the EEI Master Agreement.
DISCUSSION/ANALYSIS:
Maintaining a set of active counterparties is essential to achieving competitive pricing. Previously, 3CE has executed seventeen (17) EEI Master Agreements, with certain negotiated modifications. To increase market liquidity and decrease counterparty credit risk it is important to add active counterparties to 3CE’s approved supplier list. CEI is an active market participant that can provide energy and capacity products.
FISCAL IMPACT:
None. Individual confirmations would be subject to negotiation and execution pursuant to the terms of the approved Energy Risk Management Policy.
CONCLUSION:
Staff recommends the Operations Board approve and authorize the CEO to execute the EEI Master Agreements, and all associated documents, with CEI. There are no specific transactions associated with this authorization request.
ATTACHMENT(S):
1. CEI EEI Master Agreement and Collateral Annex
Version 2.1 (modified 4/25/00)
©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ALL RIGHTS RESERVED UNDER U.S. AND FOREIGN LAW, TREATIES AND CONVENTIONS AUTOMATIC LICENSE – PERMISSION OF THE COPYRIGHT OWNERS IS GRANTED FOR REPRODUCTION BY DOWNLOADING FROM A COMPUTER AND PRINTING ELECTRONIC COPIES OF THE WORK. NO AUTHORIZED COPY MAY BE SOLD. THE INDUSTRY IS ENCOURAGED TO USE THIS MASTER POWER PURCHASE AND SALE AGREEMENT IN ITS TRANSACTIONS.
ATTRIBUTION TO THE COPYRIGHT OWNERS IS REQUESTED.
Master Power
Purchase & Sale
Agreement
i
Version 2.1 (modified 4/25/00)
©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
MASTER POWER PURCHASE AND SALES AGREEMENT
TABLE OF CONTENTS
COVER SHEET...............................................................................................................................1 GENERAL TERMS AND CONDITIONS ...................................................................................22 ARTICLE ONE: GENERAL DEFINITIONS.........................................................................6 ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS......................................27
2.1 Transactions...........................................................................................................27
2.2 Governing Terms...................................................................................................27
2.3 Confirmation..........................................................................................................27
2.4 Additional Confirmation Terms.............................................................................28
2.5 Recording...............................................................................................................28 ARTICLE THREE: OBLIGATIONS AND DELIVERIES.......................................................28
3.1 Seller’s and Buyer’s Obligations...........................................................................28
3.2 Transmission and Scheduling ................................................................................28
3.3 Force Majeure ........................................................................................................29 ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE ..........................29
4.1 Seller Failure..........................................................................................................29
4.2 Buyer Failure .........................................................................................................29 ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES.....................................................29
5.1 Events of Default ...................................................................................................29
5.2 Declaration of an Early Termination Date and Calculation of Settlement Amounts.................................................................................................................31
5.3 Net Out of Settlement Amounts.............................................................................31
5.4 Notice of Payment of Termination Payment .........................................................31
5.5 Disputes With Respect to Termination Payment...................................................31
5.6 Closeout Setoffs.....................................................................................................32
5.7 Suspension of Performance....................................................................................31 ARTICLE SIX: PAYMENT AND NETTING ....................................................................32
6.1 Billing Period.........................................................................................................32
6.2 Timeliness of Payment...........................................................................................33
6.3 Disputes and Adjustments of Invoices...................................................................33
6.4 Netting of Payments...............................................................................................33
6.5 Payment Obligation Absent Netting ......................................................................33
6.6 Security ..................................................................................................................34
6.7 Payment for Options..............................................................................................34
6.8 Transaction Netting................................................................................................34
ii
Version 2.1 (modified 4/25/00)
©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ARTICLE SEVEN: LIMITATIONS..........................................................................................34
7.1 Limitation of Remedies, Liability and Damages...................................................34 ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS ................................35
8.1 Party A Credit Protection.......................................................................................35
8.2 Party B Credit Protection.......................................................................................37
8.3 Grant of Security Interest/Remedies......................................................................38 ARTICLE NINE: GOVERNMENTAL CHARGES...............................................................39
9.1 Cooperation............................................................................................................39
9.2 Governmental Charges...........................................................................................39 ARTICLE TEN: MISCELLANEOUS ..................................................................................39
10.1 Term of Master Agreement....................................................................................39
10.2 Representations and Warranties.............................................................................39
10.3 Title and Risk of Loss............................................................................................41
10.4 Indemnity ...............................................................................................................41
10.5 Assignment ............................................................................................................41
10.6 Governing Law ......................................................................................................41
10.7 Notices ...................................................................................................................42
10.8 General...................................................................................................................42
10.9 Audit ......................................................................................................................42
10.10 Forward Contract ...................................................................................................43
10.11 Confidentiality .......................................................................................................43 SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS ..................44 SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS.................................................48 EXHIBIT A: CONFIRMATION LETTER..................................................................................55
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association
MASTER POWER PURCHASE AND SALE AGREEMENT
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date:
February 28, 2024 (“Effective Date”). The 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 shall be referred to as the “Agreement.” The Parties to this Master Agreement are the following:
Name: Citigroup Energy Inc. (“CEI” or “Party
A”)
Name: Central Coast Community Energy, a California
joint powers authority (“3CE” or “Party B”)
All Notices: All Notices:
Address: 2700 Post Oak Blvd., Suite 400
Houston, TX 77056
Address: 70 Garden Court, Suite 300
Monterey, CA 93940
Attn: Legal Department
Facsimile: (713) 552-1192
Email: [email protected]
Duns: 14-518-4631
Federal Tax ID Number: 27-0069674
Attn: Dennis Dyc-O’Neal, COO
Phone: (831) 641-7240
Email: [email protected]
Duns: 080977851
Federal Tax ID Number: 82-2386705
Invoices and Payments:
Attn: Commodity Operations Group
Phone: (713) 752-5407
Facsimile: (646)- 291-3381
Email: [email protected]
Invoices:
Attn: Accounts Payable-Power Services
Phone: (831) 641-7218
Email: [email protected]
Scheduling:
Business Hours: 713-752-5230
After Hours: 713-752-5410
Facsimile: 713-752-5208
Scheduling:
Attn: The Energy Authority
Phone: (425) 460-1110
Email: [email protected]
Option Exercise Line: 713-752-5200
Confirmations:
Attn: Commodity Operations Group
Phone: (713) 752-5407
Email: [email protected]
Confirmations:
Attn: Tara Walling, Manager of Energy Trading
Phone: (831) 641-7203
Email: [email protected]
Payments:
Attn: ___________
Phone: ___________
Email: [email protected]
Wire Transfer:
BNK: Citibank NA NY
ABA: 021-000-089
ACCT: 3056-9329
SWIFT: CITIUS33
Wire Transfer:
Bank: River City Bank
ABA: 121133416
Account: 9981454362
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association Credit and Collections:
Attn: Credit Manager - Commodities
Phone: (713) 693-6622
Email:
Credit and Collections:
Attn: ___________
Phone: ___________
Email: [email protected]
With additional Notices of an Event of Default
or Potential Event of Default to:
Attn: Legal Department
Street: 388 Greenwich Street, 17th Floor
New York, NY 10013
Phone:
Facsimile: 212-816-5550
With a copy to:
Attn:
Phone:
Email:
With additional Notices of an Event of Default or
Potential Event of Default to:
Central Coast Community Energy
Attn: Brian Kimball, General Counsel
Phone: (831) 257-4000
Email: [email protected]
With a copy to:
Hall Energy Law PC
Attn: Stephen Hall
Phone: (503) 313-0755
Email: [email protected]
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: FERC Dated: 11/30/17 Docket Number: ER18-343-000 Party B Tariff: N/A
Article Two
Transaction Terms and Conditions Optional provision in Section 2.4. If not checked, inapplicable.
Article Four
Remedies for Failure
to Deliver or Receive
Accelerated Payment of Damages. If not checked, inapplicable.
Article Five
Events of Default; Remedies Cross Default for Party A:
Party A: Cross Default Amount: 2% of the
stockholders’ equity of Party A
Other Entity: Cross Default Amount $
Cross Default for Party B:
Party B: Cross Default Amount: $50,000,000
Other Entity: Cross Default Amount $
5.6 Closeout Setoff:
Option A (Applicable if no other selection is made.)
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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:
(b) Credit Assurances:
Not Applicable
Applicable
(c) Collateral Threshold:
Not Applicable
Applicable
If applicable, the provisions of Section 8.1(c) of the
Agreement shall be replaced by the provisions of the
Collateral Annex attached hereto.
(d) Downgrade Event:
Not Applicable
Applicable
If applicable, complete the following:
It shall be a Downgrade Event for Party B if Party B’s Credit Rating falls below BBB- from S&P or Baa3
from Moody’s or if Party B is not rated by either S&P
or Moody’s.
Other - Specify:
(e) Guarantor for Party B: N/A
8.2 Party B Credit Protection:
(a) Financial Information:
Option A
Option B Specify:
Option C Specify:
(b) Credit Assurances:
Not Applicable
Applicable
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (c) Collateral Threshold:
Not Applicable
Applicable
If applicable, the provisions of Section 8.2(c) of the
Agreement shall be replaced by the provisions of the
Collateral Annex attached hereto.
(d) Downgrade Event:
Not Applicable
Applicable
If applicable, complete the following:
It shall be a Downgrade Event for Party A if Party A’s Credit Rating falls below BBB- from S&P or Baa3
from Moody’s or if Party A is not rated by either S&P
or Moody’s.
Other - Specify: It shall be a Downgrade Event for
Party A if Party A’s Guarantor’s Credit Rating falls
below BBB- from S&P or Baa3 from Moody’s or if
Party A’s Guarantor is not rated by either S&P or
Moody’s.
(e) Guarantor for Party A: Not applicable.
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 8.4. If not checked, inapplicable
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association Other Changes
This Master Power Purchase and Sale Agreement and the associated Collateral Annex incorporate, by reference, the changes published in the EEI Errata, Version 1.1, dated July 18, 2007.
ARTICLE ONE: GENERAL DEFINITIONS.
1. “Affiliate”: Section 1.1 is amended by adding the following sentence at the end of the definition:
1.1 “Notwithstanding the foregoing, the Parties hereby agree and acknowledge that with respect to Party B, the public entities designated as members or participants under the Joint Powers Agreement creating Party B shall not constitute or otherwise be deemed an “Affiliate” for the purposes of this Master Agreement or any Confirmation executed in connection therewith.”
2. “Business Day”: Section 1.4 is amended by deleting the first sentence and replacing it to read as follows: “Business Day” means any day except a Saturday, Sunday or a Federal Reserve holiday.
3. “Cross-Default Amount”: Section 1.13 (“Cross-Default Amount”) is amended by inserting the following at the end thereof: “For purposes of determining the Cross Default Amount applicable to a Party, stockholders’ equity shall be determined by reference to such Party’s Guarantor’s, if any, most recent consolidated (e.g. quarterly) balance sheet and shall include legal capital, paid-in capital, retained earnings and cumulative translation adjustments. Such balance sheet shall be prepared in accordance with accounting principles that are generally accepted in the U.S.”.
4. “Force Majeure”: Section 1.23 is amended by (i) adding the following phrase after the word “obligations” in the second line thereof: “at the Delivery Point (to the extent there is a Delivery Point for the applicable Product)” and (ii) inserting in the thirteenth line thereof before the phrase “foregoing factors” the word “two.”
5. “Gains”: Section 1.24 is amended by adding before the period at the end thereof the following: “in accordance with Section 5.2”.
6. “Joint Powers Agreement”: A new Section 1.26A is added as follows:
“1.26A “Joint Powers Agreement” means the Joint Powers Agreement, effective as of February 21, 2017, as amended, providing for the formation of Party B, as such agreement may be further amended or amended and restated.”
7. “Letters of Credit”: Section 1.27 is amended (i) by inserting the phrase “and has a combined capital surplus of at least $10,000,000,000” after the word “Moody’s” and (ii) by inserting the phrase “and in an amount” in the third line after the word “form” and before the word “acceptable”.
8. “Losses”: Section 1.28 is amended by adding before the period at the end thereof the following: “in accordance with Section 5.2”.
9. “Replacement Price”: Section 1.51 is amended by adding “for delivery” immediately before “at the Delivery Point” in the second line, and replacing “at Buyer’s option” with “absent a purchase (Buyer shall have no obligation to enter into actual replacement transactions)” in the fifth line.
10. “S&P”: Section 1.52 is amended by deleting “the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.)” and replacing it with the following: “S&P Global Ratings, a division of S&P Global, Inc., or its successor.”
11. “Sales Price” Section 1.53 is amended by:
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (i) deleting the phrase “at the Delivery Point” from the second line; and (ii)deleting the phrase in line 5 “at the Seller’s option” and replacing it with “absent a sale”.
12. “Settlement Amount”: Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before the period at the end thereof the following: “, as determined in accordance with Section
5.2.”
13. Article One is further amended by inserting at the end thereof the following new Section 1.62:
“1.64 “Unpaid Amounts” means the amounts owed by one Party to the other Party under this Agreement that have not been paid as of the Early Termination Date whether or not such amounts are then due, including, without duplication, (i) invoiced amounts, (ii) uninvoiced amounts, including without limitation amounts payable in respect of physical deliveries or settlements that occurred prior to the Early Termination Date, (iii) damages payable under Article 4 of this Agreement without duplication of any amount, included in Settlement Amount.”
ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS.
1. Section 2.3 is deleted in its entirety and replaced with the following:
“2.3 Confirmation. Party A may confirm a Transaction by forwarding to Party B by facsimile within three (3) Business Days after the Transaction is entered into a confirmation (“Confirmation”) substantially in the form of Exhibit A. If Party B objects to any term(s) of such Confirmation, Party B shall notify Party A in writing of such objections within two (2) Business Days of Buyer’s receipt thereof, failing which Party B shall be deemed to have accepted the terms as sent. Failure by Party A to send to Party B or Party B to return to Party A an executed Confirmation shall not invalidate the Transaction as agreed to by the Parties. A Transaction shall be entered into only by a written confirmation in a form mutually agreeable to both Parties and signed by both Parties (“Confirmation”).
Notwithstanding anything to the contrary in this Master Agreement, the Master Agreement and any and all Confirmations may not be amended or modified except by an instrument in writing signed by both of the Parties.”
2. Section 2.5 (“Recording”) is deleted in its entirety and replaced with the following:
“2.5 Recording. Each Party hereto consents to the recording of its telephone conversations relating to this Agreement or any potential Transaction.” ARTICLE THREE: OBLIGATIONS AND DELIVERIES.
1. Section 3.2 is amended by adding the following text to the end of the Section: “Product deliveries shall be scheduled in accordance with the then-current applicable tariffs, protocols, operating procedures and scheduling practices for the relevant region.”
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES.
1. Section 5.1(a) is amended by changing “three (3) Business Days” to “one (1) Business Day”.
2. Section 5.1(c) is amended by changing “three (3) Business Days” to “five (5) Business Days”.
3. Section 5.1(e) is amended is amended in its entirety to read as follows:
“(e) such Party shall:
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (1) fail (or fail to cause its Qualified Institution) to make when due, any Transfer of Eligible Collateral, Performance Assurance or Interest Amount, as applicable, required to be made by it and that failure continues for one (1) Local Business Day after notice of that failure is given to such Party;
(2) fail to comply with any restriction or prohibition specified in the Collateral Annex with respect to any of the rights specified Paragraph 6(a)(ii) and that failure continues for five (5) Local Business Days after notice of that failure is given to such Party; (3) fail to comply with or perform any agreement or obligation set forth in the Collateral Annex, other than those specified in subclauses (1) or (2) above, and the failure continues for thirty days after notice of that failure is given to such Party; (4) fail (or its Guarantor shall fail) to comply with or perform any agreement or obligation to be complied with or performed by it (or its Guarantor) in accordance with Article 8, other than as specified in subclauses (1), (2) or (3) above.”
4. Section 5.1(g) is amended to add the following the following at the end thereof:
“; provided, however, that it shall not constitute an Event of Default under this Section 5.1(g) if (i) such event, condition or failure is a failure to pay caused by an error or omission of an administrative or operational nature, (ii) funds were available to such Party to enable it to make the relevant payment when due, and (iii) such event, condition or failure is remedied on or before the third Business Day after receipt of written notice of its occurrence;”
5. Section 5.1 is amended by (i) deleting in 5.1(h) the phrase “and such failure shall not be remedied within three (3) Business Days after written notice” in the third and fourth lines of Section 5.1(h)(ii), (ii) deleting the “.” at the end of Section 5.1(h)(v) and replacing it with “;” and (iii) adding the following new subsections:
“(i) such Party or such Party’s Guarantor (A) consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and such action does not constitute an event described in Section 5.1(f), or any person or entity acquires directly or indirectly the beneficial ownership of equity securities having the power to elect a majority of the board of directors or other managing body of such Party or such Party’s Guarantor or any other ownership interest enabling it to exercise control over such Party; or (B) effects any substantial change in its capital structure by means of the issuance, incurrence or guarantee of debt or the issuance of preferred stock or other securities convertible into, or exchangeable for, debt or preferred stock, or (C) enters into any agreement providing for any of the forgoing; and (x) the creditworthiness of the resulting, surviving, transferee, reorganized, burdened or recapitalized entity is materially weaker than that of such Party or such Party’s Guarantor, as the case may be, immediately prior to such action (and, in such event, such Party or its successor or transferee, as appropriate, will be the Defaulting Party), (y) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Guarantor under this Agreement or any Guaranty to which it or its predecessor was a party, or (z) the benefits of any Guaranty, Collateral Annex or other credit support fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement; or
(j) such Party, any Guarantor of such Party or any Specified Entity of such Party:
(l) defaults (other than by failing to make a delivery) under a Specified Transaction or any credit support arrangement relating to 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;
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment due on the last payment or exchange date of, or any payment on early termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one (1) Business Day);
(3) defaults in making any delivery due under (including any delivery due on the last delivery or exchange date of) a Specified Transaction or any credit support arrangement relating to that 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, all transactions outstanding under the documentation applicable to such Specified Transaction; or (4) disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, a Specified Transaction or any credit support arrangement relating to that Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that Party, any Guarantor of such Party, or applicable Specified Entity of such Party (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf).”
6. Section 5.2 is deleted in its entirety and replaced with the following:
Section 5.2 (“Declaration of an Early Termination Date and Calculation of Settlement Amounts”) is amended as follows: (i) reversing the placement of “(i)” and “to” in the first sentence, and (ii) by inserting the following at the end thereof: “The Gains and Losses for each Terminated Transaction shall be determined by calculating the amount that would be incurred or realized to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of that Terminated Transaction.
The Non-Defaulting Party 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 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.”
7. Section 5.7 is amended by deleting in line 4 the words “any or” and add the words “or payments (including payment or performance obligations under the Collateral Annex, if applicable” after “suspend performance”;.
ARTICLE SEVEN: LIMITATIONS.
1. Section 7.1 is amended by:
(i) adding “SET FORTH IN THIS AGREEMENT” after “INDEMNITY PROVISION” and before “OR OTHERWISE,”;
(ii) adding in the nineteenth line the words “PROVIDED, HOWEVER, NOTHING IN THIS SECTION
SHALL AFFECT THE ENFORCEABILITY OF THE PROVISIONS OF THIS AGREEMENT
EXPRESSLY PROVIDING FOR SPECIAL DAMAGES, INCLUDING BUT NOT LIMITED TO REMEDIES FOR FAILURE TO DELIVER/RECEIVE IN SECTIONS 4.1 AND 4.2, AND CALCULATION AND PAYMENT OF THE TERMINATION PAYMENT IN SECTIONS 5.2 AND
5.3.” immediately after the words “ANY INDEMNITY PROVISION SET FORTH IN THIS AGREEMENT OR OTHERWISE”; and
(iii) adding at the end of the last sentence the words “AND ARE NOT PENALTIES.”
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS.
1. Section 8.2(a) (“Party B Credit Protection. - Financial Information”) – Option B is amended as follows:
(i) by inserting the following at the end of the first sentence: “if such financial statements are not available on “EDGAR” or its Guarantor's home page on the World Wide Web at www.citigroup.com (which may be in the notes to the financial statements for Citigroup Inc.) for Party A”; and
(ii) by inserting the following at the end thereof: “Notwithstanding the foregoing, the financial report and financial statements to be delivered hereunder shall be “deemed” to be delivered on the date the same shall be posted on the Securities and Exchange Commission website (www.sec.gov).”
2. A new Section 8.4 is added as follows:
“8.4 UCC. Each Party agrees that notwithstanding any provisions of law relating to adequate assurance of future performance, including without limitation Article 2-609 of the UCC, the parties shall only be entitled to request adequate assurance as specifically provided in this Agreement, including the Collateral Annex hereto. For purposes of the foregoing, UCC means the Uniform Commercial Code as adopted by the jurisdiction governing the parties and the Transactions. Section references are to the Model Uniform Commercial Code and are intended to correspond to the same substantive provisions contained in the specific codes adopted in the controlling jurisdictions, to the extent that section references differ.”
ARTICLE NINE: GOVERNMENTAL CHARGES.
The following new section is inserted at the end of Article Nine:
“Section 9.3 Agreement to Deliver Tax Exemption Documents. Within ten (10) Business Days of the receipt of a written request by one Party from the other Party, such Party shall provide to the other Party such certificates, documents or other evidence sufficient to confirm the exemption from liability for any Governmental Charges by such Party for each jurisdiction in which the purchase, sale and/or delivery of any Product takes place or is to take place under this Master Agreement, such that the other Party will bear no obligation in relation to the purchase, sale and/or delivery of any Product for charging, collecting and/or remitting to any local, municipal, state or federal authority or agency any Governmental Charges for which such Party hereunder is otherwise exempt.”
ARTICLE TEN: MISCELLANEOUS.
1. Section 10.2(viii) is deleted in its entirety and replaced with the following:
“(viii) it (A) is acting for its own account, (B) 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, (C) is not relying upon the advice or recommendations of the other Party in so doing, (D) is capable of assessing the merits of 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), (E) understands that information and explanations of the terms and conditions of each such Transaction shall not be considered investment or trading advice or a recommendation to enter into that Transaction, (F) understands that no communication (written or oral) received from the other Party shall be deemed to be an assurance or guarantee as to the
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association expected results of that Transaction, and (G) understands that the other Party is not acting as a fiduciary for or an advisor to it in respect to that Transaction;”
2. Sections 10.2(ix), (x) and (xi) are deleted in their entirety and replaced with the following:
“(ix) it is a “forward contract merchant” within the meaning of the Bankruptcy Code; (xv) it is an “Eligible Contract Participant” within the meaning of Section 1(a)(18) of the Commodity Exchange Act, as amended;
(x) it is eligible to file as a debtor under Chapter 7 and/or Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”); and
(xi) the assets that are used, directly or indirectly, in connection with the execution, delivery and performance of this Master Agreement and the Transactions entered into pursuant hereto are legally and beneficially owned by such Party and are not held by it, directly or indirectly, for the benefit of or under any form of any employee benefit or other plan, trust plan, pension plan, individual retirement accounts or other type of similar plans.”
3. A new Section 10(xiii) is added, as follows:
“(xiii) Party B represents and warrants that it has the capacity and authority to enter into Transactions under this Master Agreement.”
4. Section 10.4 is amended by adding the following to the end of the first sentence:
“, except where an express remedy or measure of damages is otherwise provided for such violation or breach, in which case the foregoing obligations shall not apply.”
5. Section 10.5 is deleted in its entirety and replaced with the following:
“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 the accounts, revenues or proceeds hereof in connection with any financing or other financial arrangements or (ii) 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.”
6. Section 10.6 is amended by deleting the sentence “EACH PARTY WAIVES ITS RESPECTIVE
RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.”
and adding the following after the last line: “(a) EACH PARTY HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HEREBY (i) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association CERTIFICATIONS IN THIS SECTION. (b) EACH PARTY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN SAN FRANCISCO,
CALIFORNIA, FOR ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY TRANSACTION, AND EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE TO SUCH JURISDICTION OR THE CONVENIENCE OF SUCH FORUM.
7. Section 10.6 is amended by changing “NEW YORK” to “CALIFORNIA”.
8. Section 10.8 is amended by:
(i) replacing the phrase “(including any Confirmation accepted in accordance with Section 2.3)” with the phrase “(including any Confirmation entered into hereunder)”; (ii) adding at the end of the second to last sentence: “and the rights of either Party pursuant to (i) Section 7.1, (ii) Section 10.11, (iii) Waiver of Jury Trial and general reference provisions, if applicable, (iv) the obligation of either Party to make payments hereunder, (v) Section 10.4, (vi) Section 10.6 and (vii) Section 10.16 shall also survive the termination of the Agreement or any Transaction.”; and (iii) adding the following to the end thereof: “This Master Agreement and any Confirmation hereunder may be signed in any number of counterparts with the same effect as if the signatures to the counterparts were upon a single instrument. Delivery of an executed signature page of this Master Agreement and any Confirmation by electronic mail transmission (including PDF) shall be the same as delivery of a manually executed signature page. The Parties may rely on electronic or scanned signatures as originals under this Master Agreement and any Confirmation.”
9. Section 10.9 is amended as follows:
(i) Section 10.9 (“Audit”) is amended by inserting the phrase “copies of” in the second line between the phrase “to examine” and the phrase “the records”.
(ii) In the third sentence, the words “If any such examination reveals any inaccuracy in any statement,” are replaced by: “If the Parties determine that any statement, charge or computation contained any inaccuracy,”; and
(iii) Add the following text at the end: “The Parties agree that such examination and audit refer only to the examination and audit of copies of the relevant books, records and telephone recordings provided by a Party and do not grant either Party the right to an on-premises examination and audit.”
10. Section 10.10 is amended by adding the following after the last sentence:
“Each Party further agrees that, for purposes of this Agreement, the other Party is not a “utility” as such term is used in 11 U.S.C. Section 366, and each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. Section 366 in any bankruptcy proceeding wherein such Party is a debtor.”
11. Section 10.11 is deleted in its entirety and replaced with the following:
“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 or the completed Cover Sheet to this Master Agreement to a third party (other than the Party’s and/or its Affiliates’ 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 or request by a bank examiner or other regulatory authority applicable to such Party or any of its Affiliates; provided, however, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation. The Parties agree and acknowledge that nothing in this Section 10.11 prohibits a Party from disclosing any one or more of the commercial terms of a Transaction (other than the name of the other Party unless otherwise agreed to in writing by the Parties) to any industry price source for the purpose of aggregating and reporting such information in the form of a published energy price index.
Party A and Party B acknowledge and agree that the Master Agreement and any Transactions entered into in connection therewith are subject to the requirements of the California Public Records Act (Government Code Section 7920 et seq.).
Upon request or demand of any third person or entity not a Party hereto to Party B pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), Party B will as soon as practical notify Party A in writing via email that such request has been made. In no event, will Party B provide Party A less than 30 days’ notice before it produces Confidential Information to any third person or entity. If Party A takes no such action after receiving the foregoing notice from Party B, Party B shall, at its discretion, be permitted to comply with the third party’s request or demand and is not required to defend against it. If Party A does take or attempt to take such action, Party B shall provide timely and reasonable cooperation to Party A, if requested by Party A.
12. The following Mobile-Sierra clause is added as a new Section 10.12:
“Standard of Review/Modifications.
(a) Absent the agreement of all Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term or condition of this Agreement, whether proposed by a Party (to the extent that any waiver in subsection (b) below is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall solely be the “public interest” application of the “just and reasonable” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarified by Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008) and further refined in NRG Power Marketing v. Maine Public Utilities Commission, 558 U.S. 165 (2010) (the “Mobile-Sierra” doctrine).
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (b) In addition, and notwithstanding the foregoing subsection (a), to the fullest extent permitted by applicable law, each Party, for itself and its successors and assigns, hereby expressly and irrevocably waives any rights it can or may have, now or in the future, whether under §§ 205 and/or 206 of the Federal Power Act or otherwise, to seek to obtain from FERC by any means, directly or indirectly (through complaint, investigation or otherwise), and each hereby covenants and agrees not at any time to seek to so obtain, an order from FERC changing any section of this Agreement specifying the rate, charge, classification, or other term or condition agreed to by the Parties, it being the express intent of the Parties that, to the fullest extent permitted by applicable law, neither Party shall unilaterally seek to obtain from FERC any relief changing the rate, charge, classification, or other term or condition of this Agreement, notwithstanding any subsequent changes in applicable law or market conditions that may occur. In the event it were to be determined that applicable law precludes the Parties from waiving their rights to seek changes from FERC to their market-based power sales contracts (including entering into covenants not to do so) then this subsection (b) shall not apply, provided that, consistent with the foregoing subsection (a), neither Party shall seek any such changes except solely under the “public interest” application of the “just and reasonable” standard of review and otherwise as set forth in the foregoing section (a).”
13. The following is added as a new Section 10.13:
“Physical Transactions. The Parties understand and agree that the Transactions under this Agreement are physical transactions for deferred delivery, and that the Parties contemplate making or taking physical delivery of electric energy or capacity attributes. Party B is a commercial entity engaged in the business of delivering electric energy to its retail load and routinely makes or takes delivery of electric energy in order to provide service to its retail electric customers.”
14. The following is added as a new Section 10.14:
“Imaged Agreement. Any original executed Agreement, Confirmation or other related document may be photocopied and stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Confirmation, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings, will be admissible as between the Parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the Confirmation or the Imaged Agreement (or photocopies of the Confirmation or the Imaged Agreement) on the basis that such were not originated or maintained in documentary form under the hearsay rule, the best evidence rule or other rule of evidence.”
15. The following is added as a new Section 10.15:
“Generally Accepted Accounting Principles. Any reference to “generally accepted accounting principles” shall mean, with respect to an entity and its financial statements, generally accepted accounting principles, consistently applied, adopted or used in the jurisdiction of the entity whose financial statements are being considered for the purposes of this Agreement.”
16. The following is added as a new Section 10.16:
“No Recourse Against Constituent Members of Party B. Party B is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) and is a public entity separate from its constituent members. Party B will solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement.
Party A will have no rights and will not make any claims, take any actions or assert any remedies against any of Party B’s constituent members, or the officers, directors, advisors, contractors, consultants or employees of Party B or Party B’s constituent members, in connection with this Agreement.”
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17. The following is added as a new Section 10.17:
“10.17 Index Transactions. If the Contract Price for a Transaction is determined by reference to a third-party information source, then the following provisions shall be applicable to such Transaction:
(a) Market Disruption If a Market Disruption Event occurs during the Determination Period, the Floating Price for the affected Trading Day(s) shall be determined pursuant to (i) the alternative Floating Price specified in the Transaction, and if no such alternative price is specified, (ii) the Floating Price specified for 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 (iii) 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 (iv) in good faith by Party A by taking the average of two or more dealer quotes. “Determination Period” means each calendar month a part or all of which is within the Delivery Period of a Transaction.
“Exchange” means, in respect of a Transaction, the exchange or principal trading market specified in the relevant Transaction.
“Floating Price” means a Contract Price specified in a Transaction that is based upon a Price Source.
“Market Disruption Event” means, with respect to any Price Source, any of the following events (the existence of which shall be determined in good faith by Party A): (a) The failure of the Price Source 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 in the market specified for determining a Floating Price; (c) the temporary or permanent discontinuance or unavailability of the Price Source; (d) the temporary or permanent closing of any Exchange specified for determining a Floating Price; or (e) a material change in the formula for or the method of determining the Floating Price.
“Price Source” means, in respect of a Transaction, the publication (or such other origin of reference, including an Exchange) containing (or reporting) the specified price (or prices from which the specified price is calculated) specified in the relevant Transaction. “RTO” means any regional transmission operator or independent system operator. “RTO Transaction” means a Transaction in which the Price Source is an RTO. “Trading Day” means a day in respect of which the relevant Price Source published or should have published the Floating Price.
(b) Revisions to Published Prices. For purposes of determining the Floating Price for any day, if the price published or announced on a given day or used or to be used to determine the Floating Price is subsequently corrected and the correction is published or announced by the person responsible for that publication or announcement within the later of (1) thirty (30) days of the original publication, announcement or availability or (2) in the case of RTO Transactions only, within such longer time period as is consistent with the RTO’s procedures and guidelines, then
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 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, not later than thirty (30) days after publication or announcement of that correction, 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 the fourth (4th) decimal place. If the fifth (5th) decimal number is five (5) or greater, then the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th) decimal number is less than five (5), then the fourth (4th) decimal number shall remain unchanged.”
18. The following is added as a new Section 10.18:
“Each Party acknowledges and agrees that it is the intent of the Parties that (i) all payments made or to be made by one Party to the other Party pursuant to this Agreement constitute a “settlement payment” within the meaning of the Bankruptcy Code, (ii) all transfers of Performance Assurance by one Party to the other Party under this Agreement constitute a “margin payment” within the meaning of the Bankruptcy Code, (iii) each Party shall have the “contractual right” to terminate, liquidate, accelerate, or offset the transaction as a “master netting agreement participant” within the meaning of the Bankruptcy Code, (iv) electricity delivered hereunder constitutes a “good” under Section 503(b)(9) of the Bankruptcy Code, (v) the Parties are entities entitled to the rights under, and protections afforded by, Sections 362, 546, 553, 556, 560, 561 and 562 of the Bankruptcy Code, and (vi) each Transaction that is not executed or traded on a trading facility, as defined in the Commodity Exchange Act, is subject to individual negotiation by the Parties.”
19. The following is added as a new Section 10.19:
“Execution Deliverables. Upon execution of this Master Agreement, each Party shall provide the other Party evidence reasonably satisfactory to the other party of the (i) authority of such party and its Guarantor, if any, to enter into this Master Agreement, any Performance Assurance and any Transactions (if requested by the other party, as soon as practicable after execution of any Confirmation of any Transaction) and (ii) the authority and genuine signature of the individual signing this Master Agreement and the Collateral Annex on behalf of such party to execute the same. With respect to Party B, such authority may include (a) certified copies of all ordinances, resolutions, public notices and other documents evidencing the necessary authorizations with respect to the execution, delivery and performance by Party B of this Master Agreement and any Performance Assurance, and (b) the incumbency and signatures of the signatories of Party B executing this Master Agreement and any Confirmations executed in connection herewith, and setting forth the name and signatures of employees of Party B with authority to act on behalf of Party B.
20. Section 10.16 U.S. QFC Contractual Stay Requirements. (1) Recognition of U.S. Regimes. In the event CEI becomes subject to a proceeding under a U.S.
Special Resolution Regime, the transfer of any Relevant Agreement and any interest and obligation in or under, and any property securing, such Relevant Agreement (“Relevant Interests”) from CEI will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Relevant Agreement and Relevant Interests were governed by the laws of the United States or a state of the United States. In the event CEI or any Citi Affiliate becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights with respect to any Relevant Agreement against CEI
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Relevant Agreement were governed by the laws of the United States or a state of the United States. The requirements of this Section (1) apply notwithstanding Sections (2), (3) and (4) below.
(2) Limitation on Exercise of Certain Default Rights. Notwithstanding anything to the contrary in any Relevant Agreement or any other agreement, the parties expressly agree that:
(a) Subject to Sections (3) and (4), Counterparty shall not be permitted to exercise any Default Right with respect to any Relevant Agreement or any Citi Affiliate Credit Enhancement that is related, directly or indirectly, to a Citi Affiliate becoming subject to an Insolvency Proceeding; and (b) Nothing in any Relevant Agreement shall prohibit the transfer of any Citi Affiliate Credit Enhancement, any interest or obligation in or under such Citi Affiliate Credit Enhancement, or any property securing such Citi Affiliate Credit Enhancement to a Transferee upon or following a Citi Affiliate becoming subject to an Insolvency Proceeding, unless the transfer would result in Counterparty being the beneficiary of such Citi Affiliate Credit Enhancement in violation of any law applicable to Counterparty.
(3) General Creditor Protections. Nothing in Section (2) shall restrict the exercise by Counterparty of any Default Right against CEI with respect to a Relevant Agreement that arises as a result of (a) CEI becoming subject to an Insolvency Proceeding; (b) CEI not satisfying a payment or delivery obligation pursuant to such Relevant Agreement or another contract between CEI and Counterparty that gives rise to a Default Right under such Relevant Agreement; or (c) the failure of a Citi Affiliate Support Provider, or any Transferee thereof, to satisfy a payment or delivery obligation pursuant to any Citi Affiliate Credit Enhancement that supports this Agreement or any QFC hereunder. (4) Additional Creditor Protections. To the extent this Agreement or any QFC hereunder is supported by a Citi Affiliate Credit Enhancement, nothing in Section (2) shall restrict the exercise by Counterparty after the QFC Stay Period of a Default Right that is related, directly or indirectly, to a Citi Affiliate Support Provider becoming subject to an Insolvency Proceeding if:
(a) the Citi Affiliate Support Provider that remains obligated under such Citi Affiliate Credit Enhancement becomes subject to an Insolvency Proceeding, other than a Chapter 11 Proceeding; (b) subject to 12 C.F.R. 252.84(h), 12 C.F.R. 382.4(h) and 12 C.F.R. 47.5(h), the Transferee, if any, becomes subject to an Insolvency Proceeding;
(c) the Citi Affiliate Support Provider does not remain, and a Transferee does not become, obligated to the same, or substantially similar, extent as the Citi Affiliate Support Provider was obligated immediately prior to entering such Insolvency Proceeding with respect to: (i) such Citi Affiliate Credit Enhancement; (ii) all other Citi Affiliate Credit Enhancements provided by the Citi Affiliate Support Provider in support of other Direct QFCs between CEI and Counterparty; and (iii) all Citi Affiliate Credit Enhancements provided by the Citi Affiliate Support Provider in support of Direct QFCs between CEI and Counterparty Affiliates; or
(d) in the case that the Citi Affiliate Credit Enhancement is transferred to a Transferee: (i) all of the ownership interests of CEI directly or indirectly held by the Citi Affiliate Support Provider are not transferred to the Transferee; or (ii) reasonable assurance has not been provided that all or substantially all of the assets of the Citi Affiliate Support Provider (or net proceeds therefrom), excluding any assets reserved for the payment of costs and expenses of administration in the Insolvency Proceeding, will be transferred or sold to the Transferee in a timely manner.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association (5) Burden of Proof. After a Citi Affiliate has become subject to an Insolvency Proceeding, if Counterparty seeks to exercise any Default Right with respect to any Relevant Agreement, Counterparty shall have the burden of proof, by clear and convincing evidence, that the exercise of such Default Right is permitted thereunder.
(6) Effective Date. The provisions of this Section 10.16 will come into effect on the later of the date of this Agreement and the Applicable Compliance Date.
(7) Definitions. For the purposes of Section 10.16, the following definitions apply:
“Applicable Compliance Date” means: (a) July 1, 2019, if Counterparty is a “financial counterparty” other than a “small financial institution” (as such terms are defined under, and interpreted in accordance with, the QFC Stay Rules); or (b) otherwise, January 1, 2020. “Chapter 11 Proceeding” means a proceeding under Chapter 11 of the United States Bankruptcy Code. “Citi Affiliate” means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of CEI.
“Citi Affiliate Credit Enhancement” means any Credit Enhancement provided by a Citi Affiliate to CEI. “Citi Affiliate Support Provider” means a Citi Affiliate that is an obligor on any Citi Affiliate Credit Enhancement, provided that it is not a Transferee.
“Counterparty Affiliate” means a “consolidated affiliate” (as such term is defined in, and interpreted in accordance with, the QFC Stay Rules) of Counterparty.
“Credit Enhancement” means, with respect to any Relevant Agreement, any credit enhancement or other credit support arrangement in support of the obligations of CEI or Counterparty thereunder or with respect thereto, including any guarantee, pledge, charge, mortgage or other security interest in collateral or title transfer collateral arrangement, trust or similar arrangement, letter of credit, transfer of margin, reimbursement obligation or any similar arrangement.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, the QFC Stay Rules, including without limitation any right of a party to liquidate, terminate, cancel, rescind, or accelerate an agreement or transactions thereunder; set off or net amounts owed; exercise remedies in respect of collateral or other credit support or related property; demand payment or delivery; suspend, delay, or defer payment or performance; alter the amount of, demand the return of or modify any right to reuse collateral or margin provided; otherwise modify the obligations of a party; or any similar rights.
“Direct QFC” means a QFC that is not a Credit Enhancement. For the avoidance of doubt, for a QFC that is a master agreement that includes a Citi Affiliate Credit Enhancement as a supplement to the master agreement, the Direct QFC does not include such Citi Affiliate Credit Enhancement. “Insolvency Proceeding” means a receivership, insolvency, liquidation, resolution, or similar proceeding.
“QFC” has the meaning assigned to the term “qualified financial contract” as defined in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). “QFC Stay Period” means, in the event of an Insolvency Proceeding, the period of time beginning on the commencement of the proceeding and ending at the later of 5:00 p.m. (Eastern Time) on the first day
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association on which commercial banks in the jurisdiction of the proceeding are open for general business (including dealings in foreign exchange and foreign currency deposits) following the date of the commencement of the proceeding and 48 hours after the commencement of such proceeding. “QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81–8; 12 C.F.R. 382.1-7; and 12 C.F.R. 47.1-8. All references herein to the QFC Stay Rules shall be construed, with respect to CEI or a Citi Affiliate Support Provider, to the particular QFC Stay Rule(s) applicable to it. “Relevant Agreement” means this Agreement and all QFCs entered into under or pursuant to this Agreement together with all related Credit Enhancements between CEI and Counterparty. “Transferee” means, in respect of a Citi Affiliate Credit Enhancement, a person to whom such Credit Enhancement is transferred upon the Citi Affiliate Support Provider entering an Insolvency Proceeding or thereafter as part of the resolution, restructuring, or reorganization involving the Citi Affiliate Support Provider.
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.” SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS.
Schedule M is hereby deleted in its entirety and replaced with the following:
1. The Parties agree to add the following definitions to Article One:
“Act” means the Joint Exercise of Powers Act of California (Government Code Section 6500 et seq.). “Governmental Entity or Public Power System” means a municipality, county, governmental board, public power authority, public utility district, joint action agency, or other similar political subdivision or public entity of the United States, one or more States or territories or any combination thereof.
2. The following sentence shall be added to the end of the definition of “Force Majeure” in Article One:
“If the Claiming Party is a Governmental Entity or Public Power System, Force Majeure does not include any action taken by the Governmental Entity or Public Power System in its governmental capacity.”
3. The Parties agree to add the following sections to Article Three:
Section 3.5 No Immunity Claim. Party B warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to this Master Agreement or any credit support provided with respect to this Master Agreement or the Collateral Annex from (a) suit, (b) jurisdiction of court (including a court located outside of the jurisdiction of its organization), (c) relief by way of injunction, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment; provided, however, that nothing in this Agreement shall waive the obligations and/or rights set forth in the California Government Claims Act (Government Code Section 810 et seq.).”
4. The Parties agree to add the following representations and warranties to Section 10.2:
“Further and with respect to a Party that is a Governmental Entity or Public Power System, such Governmental Entity or Public Power System represents and warrants to the other Party continuing
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association throughout the term of this Master Agreement, with respect to this Master Agreement and each Transaction, as follows: (i) all acts necessary to the valid execution, delivery and performance of this Master Agreement, including without limitation, competitive bidding, public notice, election, referendum, prior appropriation or other required procedures has or will be taken and performed as required under the Act and the Public Power System’s ordinances, bylaws or other regulations, (ii) all persons making up the governing body of Governmental Entity or Public Power System are the duly elected or appointed incumbents in their positions and hold such positions in good standing in accordance with the Act and other applicable law, (iii) entry into and performance of this Master Agreement by Governmental Entity or Public Power System are for a proper public purpose within the meaning of the Act and all other relevant constitutional, organic or other governing documents and applicable law, (iv) the term of this Master Agreement does not extend beyond any applicable limitation imposed by the Act or other relevant constitutional, organic or other governing documents and applicable law, (v) the Public Power System’s obligations to make payments hereunder are unsubordinated obligations and such payments are (a) operating and maintenance costs (or similar designation) which enjoy first priority of payment at all times under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law or (b) otherwise not subject to any prior claim under any and all bond ordinances or indentures to which it is a party, the Act and all other relevant constitutional, organic or other governing documents and applicable law and are available without limitation or deduction to satisfy all Governmental Entity or Public Power System obligations hereunder and under each Transaction or (c) to be made solely from a Special Fund, (vi) entry into and performance of this Master Agreement and each Transaction by the Governmental Entity or Public Power System will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any obligation of Governmental Entity or Public Power System otherwise entitled to such exclusion, and (vii) obligations to make payments hereunder do not constitute any kind of indebtedness of Governmental Entity or Public Power System or create any kind of lien on, or security interest in, any property or revenues of Governmental Entity or Public Power System which, in either case, is proscribed by any provision of the Act or any other relevant constitutional, organic or other governing documents and applicable law, any order or judgment of any court or other agency of government applicable to it or its assets, or any contractual restriction binding on or affecting it or any of its assets.”
5. Section 8.4 in Paragraph F of Schedule M shall be amended in its entirety to read as follows:
“Section 8.4 Governmental Security. As security for payment and performance of Public Power System’s obligations hereunder, Public Power System hereby pledges, sets over, assigns and grants to the other Party a security interest in all of Public Power System’s right, title and interest in and to [specify collateral].”
6. The Parties agree to add the following sentence at the end of Section 10.6 - Governing Law:
“IN RESPECT OF THE APPLICABILITY OF THE ACT AS HEREIN PROVIDED, THE LAWS OF THE STATE OF CALIFORNIA SHALL APPLY.”
7. Paragraph G of Schedule M shall be modified to insert “[insert state where counterparty is located]” in the blank space therein.
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©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS.
1. The Parties agree to add the following definitions to Schedule P:
“CAISO Energy” means with respect to a Transaction, a Product under which the Seller shall sell and the Buyer shall purchase a quantity of energy equal to the hourly quantity without Ancillary Services (as defined in the California Independent System Operator (“CAISO”) Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator transaction pursuant to the applicable tariff and protocol provisions of the CAISO tariff, as amended from time to time for which the only excuse for failure to deliver or receive is an “Uncontrollable Force” as defined in the CAISO Tariff. “West Firm” or “WSPPC-Firm” means with respect to a Transaction, a Product defined by the WSPP Agreement as amended, in Service Schedule C as Firm Capacity/Energy Sale or Exchange Service. “WSPP Agreement” means the WSPP as amended from time to time.
2. The Parties agree to add the following new Section 7 to Schedule P:
“Other Products and Service Levels: The Parties may agree to use a product/service level defined by a different agreement (e.g., the WSPP Agreement, the California Independent System Operator tariff, etc.) for a particular Transaction. Unless the Parties expressly state and agree that all the terms and conditions of such other agreement will apply to any such Transaction, the Transaction shall be subject to all the terms of this Agreement, except that (1) all service level/product definitions; (2) the regional reliability requirements and guidelines; and (3) Force Majeure/Uncontrollable Force definitions shall have the meaning ascribed to them in the different agreement in effect on the date the Transaction was entered into. Provided, however, with respect to Transactions subject to the WSPP Agreement, the methodology for calculating the payments for failure to deliver or receive, under Sections 4.1 and 4.2 hereto, shall be in accordance with Section 21.3 of the WSPP Agreement; provided further, that the “Accelerated Payment of Damages” addressed in Sections 4.1 and 4.2 hereto shall continue to apply to such payments if such election is made on the Cover Sheet.”
3. The Parties may from time to time by notice to each other mutually agree to adopt product definitions, delivery point language and definitions, and conversion conventions, that are posted by the Edison Electric Institute to its website as optional language for the Master Power Purchase and Sale Agreement. [Signatures appear on the following page.]