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
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 .............................................................................26
2.5 Recording ...............................................................................................................26 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 ........................................................................................................27 ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE ..........................27
4.1 Seller Failure ..........................................................................................................27
4.2 Buyer Failure .........................................................................................................27 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 .................................................................................................................29
5.3 Net Out of Settlement Amounts .............................................................................29
5.4 Notice of Payment of Termination Payment .........................................................29
5.5 Disputes With Respect to Termination Payment ...................................................30
5.6 Closeout Setoffs .....................................................................................................30
5.7 Suspension of Performance....................................................................................30 ARTICLE SIX: PAYMENT AND NETTING ....................................................................30
6.1 Billing Period .........................................................................................................30
6.2 Timeliness of Payment ...........................................................................................31
6.3 Disputes and Adjustments of Invoices ...................................................................31
6.4 Netting of Payments ...............................................................................................31
6.5 Payment Obligation Absent Netting ......................................................................31
6.6 Security ..................................................................................................................31
6.7 Payment for Options ..............................................................................................31
6.8 Transaction Netting ................................................................................................32 ARTICLE SEVEN: LIMITATIONS ..........................................................................................32
7.1 Limitation of Remedies, Liability and Damages ...................................................32 ii
Version 2.1 (modified 4/25/00)
©COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS ................................32
8.1 Party A Credit Protection .......................................................................................32
8.2 Party B Credit Protection .......................................................................................34
8.3 Grant of Security Interest/Remedies ......................................................................35 ARTICLE NINE: GOVERNMENTAL CHARGES...............................................................36
9.1 Cooperation ............................................................................................................36
9.2 Governmental Charges...........................................................................................36 ARTICLE TEN: MISCELLANEOUS ..................................................................................36
10.1 Term of Master Agreement ....................................................................................36
10.2 Representations and Warranties .............................................................................36
10.3 Title and Risk of Loss ............................................................................................38
10.4 Indemnity ...............................................................................................................38
10.5 Assignment ............................................................................................................38
10.6 Governing Law ......................................................................................................38
10.7 Notices ...................................................................................................................38
10.8 General ...................................................................................................................38
10.9 Audit ......................................................................................................................39
10.10 Forward Contract ...................................................................................................39
10.11 Confidentiality .......................................................................................................39 SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS ..................40 SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS .................................................43 EXHIBIT A: CONFIRMATION LETTER ..................................................................................49
1 MASTER POWER PURCHASE AND SALE AGREEMENT
COVER SHEET
This Master Power Purchase and Sale Agreement (“ Master Agreement ”) is made as of the following date: September 11, 2025 (“Effective Date”). This Master Agreement , together with the exhibits, schedules and any written supplements hereto, the P arty A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or margin agr eement or similar arrangement between the Parties a nd all Transactions (including any confirmations accep ted in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” This Master Agreement will be formed in the style of the pre-printed Master Power Purchase and Sale Agreement, Version 2 .1, as published by the Edison Electric Institute, dated April 25, 2000 as modified by the Errata, Ver sion 1.1, published by the Edison Electric Institut e, dated July 18, 2007, and such pre-printed form as s o modified (other than the form cover sheet) will control to the extent of any inconsistencies with t his Master Agreement executed by the Parties. If any of the terms of this cover sheet conflict with such pr e-printed form as so modified, the terms of this co ver sheet will govern. The Parties to this Master Agreement are the following:
Name (“ NRG Business Marketing LLC ” or
“Party A”)
Name (“ City of Palo Alto ” or “Party B”)
All Notices: All Notices:
Street: 804 Carnegie Center Street: 250 Hamilton A ve.
City: Princeton, NJ Zip: 08540 City: Palo Alto, C A Zip: 94301 Attn: Contract Administration
Phone: 609.524.4543
Facsimile: 609.524.4540
Email: [email protected]
Duns: 07-879-0103
Federal Tax ID Number: 80-0909818
Attn: Assistant Director, Utilities Resource
Management Division
Phone: 650-329-2119
Facsimile: 650-617-3140
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
Invoices:
Attn: Accounting – Physical Power
Phone: 609.524.4980
Email:
Invoices:
Attn: Power Settlements, Northern California
Power Agency
Phone: 916-781-4224
Email:
[email protected]
Scheduling:
PJM, ISONE, NYISO:
Attn: Scheduling Desk
Phone: 609.524.5484 or 4554
Facsimile: 609.524.4540
Email:
ERCOT, CAISO and MISO:
Attn: Day Ahead Scheduling
Phone: 713.537.3710 or 3711
Facsimile: 609.524.4540
Email:
[email protected]
Scheduling:
Attn: Pre-Scheduler Desk, Northern
California Power Agency
Phone: 916-781-4240
Email:
[email protected]
2 Payments:
Attn: Accounting – Physical Power
Phone: 609.524.4980
Email:
[email protected]
Payments:
Attn: Accounts Payable, Northern California
Power Agency
Phone: 916-781-4237
Facsimile: 916-781-4226
Wire Transfer:
Bank Name: J.P. Morgan/Chase Manhattan
Bank ABA: 021-000021
Account Name: NRG Business Marketing
LLC
Account Number: 323-271979
Wire Transfer:
BNK: U.S. Bank - Deposit to Northern
California Power Agency, to the benefit of
City of Palo Alto
ABA: 121122676
ACCT: 1-534-0216-2744
Credit and Collections:
Attn: Sr. Director of Credit
Phone: 732-781-0506
Facsimile: 609.524.4779
[email protected]
Credit and Collections:
Attn: Power Settlements, Northern California
Power Agency
Phone: 916-781-4221
Email:
[email protected]
With additional Notices of an Event of Default
or Potential Event of Default to:
Attn: Assistant General Counsel – Commercial
Operations
Phone: 609.524.4500
Facsimile: 609.524.4501
With additional Notices of an Event of
Default or Potential Event of Default to:
Attn: Assistant City Attorney - Utilities
Phone: 650-329-2171
Facsimile: 650-329-2646
Confirmations:
Attn: Confirmation Specialist - Power
Phone: 609.524.4870
Facsimile: 609.524.4779
[email protected]
Confirmations:
Attn: CPAU Electric Front Office
Phone: 650-329-2314
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 Electric Tariff Dated: May 13, 2013 Docket Number ER13-1192-000; as such may be amended, modified, superseded or replaced from time to time.
Party B Tariff:____________________Dated Docket Number ______ 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.
3 Article Five
Cross Default for Party A:
Events of Default; Remedies Party A: Cross Default Amount:
USD 150,000,000
Other Entity: NRG Energy,
Inc.
Cross Default Amount:
USD 150,000,000
Cross Default for Party B:
Party B: Cross Default Amount:
USD 150,000,000
Other Entity: [A single event
or multiple events equal to or
greater than the Cross Default
Amount by any of [ - ]]
Cross Default Amount:
USD [ - ]
5.6 Closeout Setoff
Option A (Applicable if no other selection is ma de.) Option B - Affiliates shall have the meaning set f orth in the Agreement unless otherwise specified as follows:
(See modified provision for Section 5.6 below.)
Option C
Article 8
8.1 Party A Credit Protection:
Credit and Collateral
Requirements
(a) Financial Information:
Option A
Option B Specify: Audited financial statements
for City of Palo Alto and for City of Palo Alto
Enterprise Fund
Option C Specify:
(b) Credit Assurances:
Not Applicable
Applicable
(c) Collateral Threshold:
Not Applicable
Applicable
4 (d) Downgrade Event:
Not Applicable
Applicable
If applicable, complete the following:
It shall be a Downgrade Event for Party B only if (a) Party B’s underlying rating, determined without reference to third party credit enhancement, on its utility revenue bond ("Debt") by S&P or Moody's is respectively below
BBB- or Baa3, (b) (ii) both S&P and Moody's refuse to
rate Party B's Debt, or and (c) Party B’s City Council no longer has the legal authority under the Act, as defined by Schedule M, to adjust electric rates as necessary to
recover Party B’s costs of providing retail electric service to its customers.
Other:
Specify:
(e) Guarantor for Party B: [ - ]
Guarantee Amount: USD [ - ]
8.2 Party B Credit Protection:
(a) Financial Information:
Option A
Option B Specify: NRG Energy, Inc. Audited
financial statements to be provided by Party A as
described in Section 8.2(a) shall be for Party A or
parent entity, if any, providing credit support.
Option C Specify:
(b) Credit Assurances:
Not Applicable
Applicable
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
5 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. For purpose of this
Master Agreement, creditworthiness shall mean a
credit rating for Party A rating established as of the
Effective Date of the Master Agreement of not less
than a BB credit rating established by Standard &
Poor’s and a Ba2 credit rating established by Moody’s
Investors Service, continuing throughout the term of
this agreement.
(c) Collateral Threshold:
Not Applicable
Applicable
(d) Downgrade Event:
Not Applicable
Applicable
If applicable, complete the following:
It shall be a Downgrade Event for Party A if Part y A’s Credit Rating falls below _______ from S&P and
________from Moody’s or if Party A is not rated by
either S&P or Moody’s.
Other:
Specify:
(e) Guarantor for Party A: NRG Energy, Inc.
Guarantee Amount: As set forth in the Guaranty.
Article 10
Confidentiality Confidentiality Applicable If not checked, inappl icable.
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
6 Other Changes:
This Agreement incorporates the Errata published by the Edison Electric Institute Version 1.1 published July 18, 2007.
Article One General Definitions add the following provisions: “1.62 ‘Trading Affil iate’ means, to the extent that it is an Affiliate of Party A, D irect Energy Marketing Limited, or any successor thereto.”
Section 1.4 is amended by deleting the first sentence and repla cing it to read as follows: “Business Day” means any day except a Saturday, Sunday, the F riday immediately following the Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by adding after “the price” in line 1 th e words “, including any and all AB 32 fees” and substituting “U.S. $” for “$U.S.” in line 1 Section 1.27 Letters of Credit (1) delete 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” and (2) replace “transferable” with “non-transferable”, and (3) inserting the phrase “a nd in an amount” in the third line after the word “form” and before the word “acceptable”.
Section 1.45 is deleted and replaced with the following definiti on, ““Performance Assurance” means sufficient security in the form, amount, for a term, and from an issuer, all as reasonably acceptable to the Requesting Party. The following f orms of Performance Assurance may be requested by the Requesting Party: (i) collateral in the form of either cash or Letter(s) of Credit, (ii) revised or earlier payment terms for Product that h as been delivered during the prior Month, (iii) any other security acceptable to the Requesting Par ty, or (iv) information demonstrating that Party B’s retail rates are set at levels sufficiently hig h to recover all costs of providing electric servic e to Party B’s retail electric customers, including the costs incurred by Party B under all Transactions executed under this Agreement.”
Section 1.46 is amended by adding before the period at the end thereof the following: “; provided that the failure to comply with any requirement of this Master Agreement or a Transaction, including the requirements of Article 8, before the expiration of the time period expressly specified for such compliance in this Master Agreement or the Transaction, if any, shall not be considered a Potential Event of Default unless and until the app licable time period has expired without compliance.”
Section 1.51 Replacement Price (1) add the phrase “for delivery” immediately befo re the phrase “at the Delivery Point” in the second line and (2) delete the phrase “at Buyer's option” from the fifth line and replace with the phrase “absent a purchase ”, and (3) inserting in the seventh line after the words, “any penalties” and before “, ratcheted dema nd”, the following: “(other than penalties imposed on Buyer under the CAISO Tariff, the NCPA M etered Subsystem Agreement, or an open access transmission tariff as a result of the non-delivery)”.
Section 1.52 S&P delete in its entirety and replace with the followi ng: “1.52 “S&P” means S&P Global Ratings or its successor.”
Section 1.53 Sales Price (1) delete the phrase “at the Delivery Point” from the second line, and (2) delete the phrase “at Seller’s option” from the fif th line and replace with the phrase “=assuming a sale could not have been made in a commercially rea sonable manner” Section 2.1 shall be amended by deleting the second sentence thereof. For purpo ses of Section 2.3, Party B requires that all Transactions be confirmed in writing. Accordingly, the provision is amended by striking the word “may” from the first line thereof and replacing it with the word “shall.”
7 Section 2.3 Confirmation (1) add after “deemed to have accepted the terms as sent” in each place it appears the words “, absent manifest error,” and (2 ) delete the phrase “two (2) Business Days of Buyer’s receipt thereof” and replace with the phras e “seven (7) Business Days of Buyer’s receipt thereof”, and (3) all references to Seller shall be instead to Party A.
Section 2.4 Additional Confirmation Terms , delete the words “either orally or” in the sevent h line.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwith standing anything to the contrary in this Master Agreement, including in this Article Two, no Transaction between the Parties shall become binding unless and until a Confirmation for such Tr ansaction is signed by both Parties, and this Master Agreement and any and all Transactions may n ot be orally amended or modified, including by Recording pursuant to Section 2.5.”
Section 3.2 Transmission and Scheduling add the following text to the end of the Section:
“Product deliveries shall be scheduled in accordanc e with the then-current applicable tariffs, protocols, operating procedures and scheduling practices for the relevant region.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. In addition to the remedies provided pursuant to Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part of the Product pursuant to a Transaction for a period of three (3) or more consecutive days, and such failure is not excused under the terms of the Product, by Force Majeure, by the other Party’s failure to perform or by agreement of the Parties, then upon one (1) Business Day’s pr ior written notice, and for so long as the non- performing Party fails to perform, the performing P arty shall have the right to suspend its performance under such Transaction; provided however, suspension of performance will not include the payment for any Products already delivered. In the event the performing Party suspends performance pursuant to this Section 4.3, it shall not be obligated to resume performance until it has received notice from the non-performing Party at le ast one (1) Business Day prior to the date upon which the non-performing Party intends to resume it s performance; provided that, if the performing Party has entered into a replacement contract with a term of 31 days or less, the performing Party may resume performance at the end of the term of su ch replacement contract. Remedies available under this provision to the performing Party are in addition to, not in replacement of, other remedies specified in this Agreement.” Section 5.1 Events of Default, subsection (g), (1) add “, excluding any such indebtedness owing by such Party or any ot her party specified in the Cover Sheet for such Party to any of their Affiliates” after “borrowed m oney” in the sixth line, (2) delete the phrase “, o r becoming capable at such time of being declared,” b eginning in the eighth line of the Section, and (3) add the phrase “under such agreements or instru ments” immediately following the phrase “due date therefor” in the eleventh line.
Section 5.1 Events of Default, subjection (h)(v) , add “made in connection with this Agreement” after “any guaranty”.
Section 5.1 Events of Default add the following as a new Section 5.1(i) through (m):
“(i) a Party, its Guarantor or any Specified Ent ity (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 t ermination of, that Specified
8 Transaction,
(ii) defaults, after giving effect to any applicable not ice requirement or grace period, in making any payment or delivery due on the last paym ent date or delivery date of a Specified Transaction; or
(iii) disaffirms, disclaims or repudiates any Specified Transaction. (j) a representation or warranty with respect to the Defaulting Party's financial statement or position that is false or materially misleading; or
(m) revocation by the Federal Energy Regulat ory Commission of Party A’s authorization to make sales and market-based rates.”
‘Specified Transaction’ means any transaction (othe r than a Transaction) now existing or hereafter entered into between one Party to this Agreement (or any Guarantor or any applicable Specified Entity of such Party) and the other Party to this Agreement (or any Guarantor or any applicable Specified Entity of such Party) that is a transaction for the purchase, sale, exchange or transfer of any commodity or any other commodity transaction or 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). For this purpose, “commodity” means any tangible or intangible commodity of any type or description (including, wi thout limitation, electric power, capacity, natural gas, natural gas liquids, coal, petroleum ( and the products or by-products thereof), renewable energy obligations, emission allowances, ambient temperature indexes, and indexes of other weather characteristics.
‘Specified Entity’ shall mean with respect to Party A: Trading Affiliate. ‘Specified Entity’ shall mean with respect to Party B: Affiliate;”
Section 5.2 Declaration of an Early Termination Date and Calcul ation of Settlement Amounts delete the following phrase from the last two lines : “under applicable law on the Early Termination Date, as soon thereafter as is reasonably practicable” and replace it with the following:
“under applicable law on the Early Termination Date , 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 Non- Defaulting Party (or its agent) may determine its Gains and Losses by reference to information either available to it internally or supplied by on e or more third parties including, without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets. Third parties supplying such information may include, without lim itation, dealers in the relevant markets, end-users of the relevant product, information vend ors and other sources of market information.”
Add the following to the end of this Section-
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs, if any, resulting from the termination of this Agreement, the Settlement Amount shall be zero, notwithstanding any provision of this Agreement to the contrary. Any Party who is in default at the time of the Early Termination Date, or whose default is the cause of the Early Termination Date,
9 shall not be entitled to receive any Termination Payment of Settlement Amount For purposes of clarity, the Defaulting Party is entitled for any payment due for any amounts delivered prior to the Early Termination Date.”
Section 5.3 Net Out of Settlement Amounts . Section 5.3 is amended by adding the phrase “plus, at the option of the Non-Defaulting Party, any cash or Letter of Credit(s) then in the possession of the Defaulting Party or its agent pursuant to Article Eight,” after the first use of the phrase “due to the Non-Defaulting Party” in the sixth line.
Section 5.6 Closeout Setoffs, Option B delete in its entirety and replace with the following:
“Option B: Subject to Section 5.2, any Termination Payment payable to the Defaulting Party will, at the option of the Non-Defaulting Party (“X ”) (and without prior notice to the Defaulting Party), be set-off against any other amo unts (“Other Amounts”) payable by or due to the other Party (“Y”) to or from X or any Affili ate of X (whether or not arising under this Agreement, matured or contingent and irrespective o f the currency, place of payment or place of booking of the obligation). To the extent that any Other Amounts are so set off, those Other Amounts will be discharged promptly and in all respects. X will give notice to Y of any set-off effected under this Section 5.6. For purposes of t his Section 5.6 the Affiliates of Party A will be limited to the Trading Affiliates. The remedy p rovided for in this Section 5.6 will be without prejudice and in addition to any right or s etoff, combination of accounts, lien, or other right to which any Party is at any time otherwise e ntitled (whether by operation of law, contract, or otherwise).”
Section 5.7 Suspension of Performance delete all of the text starting with the proviso in subclause (i) and replace it with the following:
“provided, however, and without waiving any Event o f Default or any rights or remedies in this Agreement (other than the suspension rights in this Section 5.7 solely in respect of such Event of Default), in no event shall any such suspe nsion related to an Event of Default continue for longer than ten (10) NERC Business Day s with respect to any single Transaction unless an early Termination Date shall have been declared and notice thereof pursuant to Section 5.2 given (during which time am ounts under Section 4.1 or 4.2, as applicable, may continue to accrue with respect to the Defaulting Party as if it breached its obligation), and (ii) to the extent an Event of Def ault shall have occurred and be continuing, to exercise any remedy available at law or in equit y. Notwithstanding the proviso in subclause (i), (x) the Non-Defaulting Party retains all of its other rights and remedies arising with respect to such Event of Default or Potential Event of Default, including (without limitation) the right to declare an Early Terminati on Date, and (y) such proviso will not affect the right of the Non-Defaulting Party in res pect of any new or subsequent Event of Default or Potential Event of Default.”
Section 8.1(a) Financial Information, Option A (1) replace “120” with “90”, and (2) add after the phrase “quarterly report containing unaudited conso lidated financial statements for such fiscal quarter” the text, “, provided however, for the pur poses of this (i) and (ii), if such financial statements are publicly available electronically, t hen Party B shall be deemed to have met this requirement”.
Section 8.1(b) Credit Assurances (1) add in the fourth line after the words “in a c ommercially reasonable manner” the text, “which amount shall no t exceed 100% of the Termination Payment that would be due Party A as if Party B was the Defaulting Party and an Early Termination Date had been designated”, and (2) add in the seventh line a fter the words “acceptable to Party A” the text,
10 “acting reasonably”.
Section 8.1(d) Downgrade Event (1) add in the third line after the words “in a com mercially reasonable manner” the text, “which amount shall no t exceed 100% of the Termination Payment that would be due Party A as if Party B was the Defaulting Party and an Early Termination Date had been designated” and (2) add after the phrase “or other credit assurance acceptable to Party A within three (3) Business Days of receipt of notice” the f ollowing text, “and/or fails to maintain such Performance Assurance or guaranty or other credit assurance for so long as the Downgrade Event is continuing.”
Section 8.2(a) Financial Information, Option B (1) replace “120” with “90”, and (2) add after the phrase “quarterly report containing unaudited conso lidated financial statements for such fiscal quarter for the party(s) specified on the Cover Sheet” the text, “, provided however, for the purposes of this (i) and (ii), if such financial statements are publicly available electronically, then Party A shall be deemed to have met this requirement”.
Section 8.2(b) Credit Assurances (1) add in the fourth line after the words “in a c ommercially reasonable manner” the text, “which amount shall no t exceed 100% of the Termination Payment that would be due Party B as if Party A was the Defaulting Party and an Early Termination Date had been designated” and (2) add in the seventh line af ter the words “acceptable to Party B” the text, “acting reasonably”.
Section 8.2(d) Downgrade Event (1) add in the third line after the words “in a com mercially reasonable manner” the text, “which amount shall no t exceed 100% of the Termination Payment that would be due Party B as if Party A was the Defaulting Party and an Early Termination Date had been designated” and (2) add after the phrase “or other credit assurance acceptable to Party B within three (3) Business Days of receipt of notice” the t ext, “and/or fails to maintain such Performance Assurance or guaranty or other credit assurance for so long as the Downgrade Event is continuing.” Section 10.2 Representations and Warranties, subsection (viii) (1) delete “and” before the phrase “is capable of assessing the merits of” and (2) add at the end the words “, and the other Party is not acting as a fiduciary or an advisor to it in respect of a Transaction”.
Section 10.2 Representations and Warranties, subsec tion (ix) amend to read in its entirety as follows:
“(ix) (a) it is a “forward contract merchant” within the meaning of the United States Bankruptcy Code, (b) it is a “master netting agreement partici pant” for purposes of the United States Bankruptcy Code, and (c) it is an “eligible contrac t participant” as such term is defined in the Commodity Exchange Act, as amended 7 U.S.C. § 1 (a)(18).” Section 10.2 Representations and Warranties, subsec tion (xi) delete in its entirety and replace with the following:
“(ix) with respect to each Transaction proposed or entered into that constitutes a “commodity option transaction” as such term is used in Part 32 of Title 17 of the U.S. Code of Federal Regulations,
(A) it is a producer, processor, or commercial user of, or a merchant handling the commodity that is the subject of such Transaction, of the products or byproducts thereof; (B) it is entering into the Transaction solely for purposes related to its business as such; and (C) it intends to physically settle such Transactio n such that if the option associated with such Transaction is exercised, the option would result i n the sale of an “exempt commodity” (as such term is defined in Section 1a(20) of the U.S. Commo dity Exchange Act, as amended), for
11 immediate or deferred delivery;”
Section 10.4 Indemnity (1) add in the last sentence after “hold harmless the other Party” the text “from any liability” and (2) add after the last sen tence the text, “Neither Party shall be liable with respect to any Claim to the extent that such Claim resulted from the negligence, willful misconduct or bad faith of the indemnified Party.”.
Section 10.5 Assignment
(1) Delete from the first sentence the text “may be withheld in the exercise of its sole discretion” and replace it with “shall not be unreasonably delayed or withheld”; (2) In clause (ii) thereof replace the words “affi liate” and “affiliate's” with, respectively, “Affiliate” and “Affiliate's”, and insert before “, or” the wor ds “taking in account any credit support document”;
(3) Replace subsection (ii) - (iii) with the following text:
“(ii) transfer or assign this Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal to or higher than that of such Party or the Guarantor as of the Effective Date and the date of entering into each Transaction under this Agreement, if any, for such Party, or (y) the obligations of such Affiliate are guaran teed by such Party or its Guarantor, if any, in accordance with a guaranty agreement in form and su bstance satisfactory to the other Party, and (iii) transfer or assign this Agreement to any pers on or entity succeeding to all or substantially all of the assets of such Party whose creditworthin ess is equal to or higher than that of such Party or its Guarantor, if any, as of the Effective Date and the effective date of any such transfer or assignment.”
(4) An additional sentence shall be added as the last s entences of Section 10.5 stating “Any purported transfer or assignment in contravention of this Section shall be void.” Section 10.6 Governing Law is amended as follows :
“THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PA RTIES HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PE RFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA , WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. EACH PA RTY WAIVES ITS
RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY DISPUTE ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT. The Parties hereby consent to conduct all dispute resolution, judicial actions or proceedings arising directly, indirectly or otherwise in conjunction with, out of , related to, or arising from this Agreement in Santa Clara County, California.”
Section 10.7 Notices (1) add the phrase “or the exercise of an option” immediately after the phrase “(other than scheduling requests” and (2) delete th e third and fourth sentences and replace them with the following:
“Unless otherwise specified herein, notice by facsi mile shall be considered received upon the sending Party’s receipt of its facsimile machines’ confirmation of successful transmission, notice by hand delivery shall be considered receive d at the close of business on the day actually received, if received during business hours on a Bu siness Day, and notice by overnight United States mail or courier shall be considered received on the next Business Day after it was sent.” Section 10.8 General change the words “parties” and “party” to “Parties” and “Party” in the third sentence and delete the second to last sentence and replace it with “The indemnity provisions of this Agreement shall survive the termination of this Agreement for the period of the applicable statute of limitations and the audit provisions of this Agreem ent shall survive the termination of this
12 Agreement for a period of twelve (12) months.”
Section 10.10 Forward Contract delete in its entirety and replace with the following:
“10.10 Bankruptcy Provisions . The Parties acknowledge and agree that (a) this Agr eement and all Transactions constitute a “forward contract” wi thin the meaning of the United States Bankruptcy Code (the “Code”); (b) this Agreement co nstitutes a “master netting agreement” within the meaning of the Code; (c) all payments ma de or to be made on its behalf pursuant to this Agreement, including the application by a Part y of Performance Assurance to any amounts due and owing to such Party, constitute “settlement payments” within the meaning of the Code; (d) all transfers of Performance Assurance by it or on its behalf under this Agreement constitute “margin payments” within the meaning of the Code; ( e) its rights under Article Five, “Events of Default; Remedies”, of this Agreement constitute a “contractual right to liquidate, terminate or accelerate” or “contractual right to liquidate, ter minate, accelerate, or offset under a master netting agreement and across contracts” the Transactions within the meaning of the Code; (f) (i) the other Party is not a “utility” as such term is used in Section 366 of the Code, and (ii) it waives and agrees not to assert (x) the applicability of the provisions of Section 366 of the Code in any bankruptcy proceeding wherein it is a debtor and (y) that the other Party is a provider of last resort in any such proceeding.”
Section 10.11 Confidentiality is amended to (1) add the phrase “or the completed Cover Sheet to this Master Agreement” immediately before the phras e “to a third party”, (2) add the following phrase after the word “lenders”: “and their counse l and advisors”, (3) add immediately after the phrase “other than the Party's” the text “or the Pa rty's Affiliates'“, and (4) add the following text to the end of the paragraph: “The Parties hereby ackno wledge that the disclosure of price data only without counterparty name does not contravene this Section 10.11 so long as the data is disclosed to an index publisher that publishes the data in aggregated form and does not identify the Parties.
The Parties acknowledge and agree that the Transact ion may be subject to the requirements of the California Public Records Act (Government Code Sect ion 7920.000 et seq .). Each Party (a “Receiving Party”) acknowledges that the other Part y (a “Disclosing Party”) may submit information to the Receiving Party that the Disclos ing Party considers confidential, proprietary, or trade secret information pursuant to the Uniform Tr ade Secrets Act (Cal. Civ. Code section 3426 et seq .), or otherwise protected from disclosure pursuant to an exemption to the California Public Records Act (Government Code Sections 7929 and 7922 ). In order to designate information as confidential, the Disclosing Party must clearly sta mp and identify the specific portion of the material designated with the word “Confidential”. T he Parties agree not to over-designate material as confidential. Over-designation would include sta mping whole agreements, entire pages or series of pages as confidential that clearly contain infor mation that is not confidential. Upon request or demand of any third person or entity not a party to this Transaction (“Requestor”) for production, inspection and/or copying of information designated by a Party as confidential information (such designated information, the “Confidential Informati on”), the Receiving Party shall notify the Disclosing Party as soon as practical that such request has been made. The Disclosing Party shall be solely responsible for taking whatever legal steps are necessary to protect information deemed by it to be Confidential Information and to prevent relea se of information to the Requestor by the Receiving Party. If the Disclosing Party takes no s uch action within ten (10) business days after receiving the foregoing notice from the Receiving P arty, the Receiving Party shall be permitted to comply with the Requestor’s demand and is not required to defend against it.
If required by any law, statute, ordinance, a court , Governmental Authority or agency having jurisdiction over a Party, including the California Public Records Act, that Party may release
13 Confidential Information, or a portion thereof, as required by the Applicable Law, statute, ordinance, decision, order or regulation. A Party may disclose Confidential Information to accountants in connection with audits. In the even t a Party is required to release Confidential Information, such Party shall notify the other Part y of the required disclosure, such that the other Party may attempt (if such Party so chooses), at it s sole cost, to cause the recipient of the Confidential Information to treat such information in a confidential manner, and to prevent such information from being disclosed or otherwise becom ing part of the public domain. Parties acknowledge that Purchaser may be obligated to provide Confidential Information to the CPUC and CEC for regulatory compliance purposes.
Except as provided in this Confidentiality section and the California Public Records Act neither Party shall publish, disclose, or otherwise divulge Confidential Information to any person at any time during or after the term of this Agreement, wi thout the other Party’s prior express written consent. Each Party shall permit knowledge of and access to Confidential Information only to those of its affiliates and to their respective attorneys , accountants, representatives, agents and employee s who have a need to know such Confidential Information related to this Agreement.”
Article Ten, Miscellaneous add the following new Sections 10.12 to 10.18:
“10.12 FERC Standard of Review; Mobile Sierra Waiver .
(a) Absent the agreement of all Parties to the proposed change, the standard of review for changes to any rate, charge, classification, term o r condition of this Agreement proposed by a Party (to the extent that any waiver in subsection (b) below is unenforceable or ineffective as to such Party), by FERC acting sua sponte or by non-parties will 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) an d Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) and clarifie d by Morgan Stanley Capital Group, Inc. v.
Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008), and further clarified by NRG Power Marketing LLC v. Maine Pub. Util. Comm’n, 558 U.S. 165 (2010) (commonly known as the “Mobile-Sierra doctrine).
(b) In addition, and notwithstanding the foregoing subs ection (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 complain t, 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 ex press intent of the Parties that, to the fullest extent permitted by applicable law, neither Party s hall 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 applicab le law precludes the Parties from waiving their rights to seek changes from FERC to their mar ket-based power sales contracts (including entering into covenants not to do so) then this sub section (b) shall not apply, provided that, consistent with the foregoing subsection (a), neith er 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).”
14 10.13. Imaged Documents. Any document generated by the Parties with respect to this Agreement, including this Agreement, may be imaged and stored electronically (“Imaged Documents”). Imaged Documents may be introduced as evidence in any proceeding as if such were original business records and neither Party sh all contest the admissibility of Imaged Documents as evidence in any proceeding on the basi s that such were not originated or maintained in documentary form. However, nothing he rein shall be construed as a waiver of any other objection to the admissibility of such evidence.
10.14 Prior Agreements. Party A and Party B confir m that there are no prior master power purchase and sale agreements between the Parties with respect to the subject matter hereof. .
10.15 Counterparts. This Master Agreement and any C onfirmation may be executed in counterparts, each of which will be considered an o riginal, but all of which together will constitute the same instrument. Without limiting the foregoing, a facsimile copy of this Master Agreement or a Confirmation or copy of this Master Agreement or a Confirmation sent via electronic mail in a portable document format (“PDF”) will be considered an original.
10.16. Compliance with Law. Each Party will comply in all material respects with all applicable laws, regulations, and orders to which i t may be subject if failure so to comply would materially impair its ability to perform its obligations under this Master Agreement or any Confirmation.
10.17 “Nondiscrimination. As set forth in Palo Alto Municipal Code section 2.30.510, Party A agrees that in the performance of this Agreement, i t shall not discriminate in the employment of any person because of the race, skin color, gend er, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, preg nancy, genetic information or condition, housing status, marital status, familial status, we ight or height of such person. Party A acknowledges that it has read and understands the p rovisions of Chapter 2.30 of the Palo Alto Municipal Code relating to Nondiscrimination Requir ements and the penalties for violation thereof, and agrees to meet all requirements of Cha pter 2.30 pertaining to nondiscrimination in employment, including completing the form furnished by Party B and set forth in Exhibit D, as applicable.
10.18 Index Transactions. If the Contract Price fo r a Transaction is determined by reference to a Price Source, then:
(a) .Market Disruption Event. If a Market Disruption E vent 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 F loating Price, then the Parties will endeavor, in good faith and using commercially reasonable effort s, to agree on a substitute Floating Price, taking into consideration, without limitation, guid ance, protocols or other recommendations or conventions issued or employed by trade organizatio ns 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 compa rable Delivery Points that may permit the Parties to derive the Floating Price based on historical differentials.
15 iii) If the Price Source retrospectively issues a F loating 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 Floati ng 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 su bstitute Floating Price agreed upon by the Parties will remain the Floating Price without adju stment unless the Parties expressly agree otherwise.
iv) If the Parties cannot agree on a substitute Flo ating Price and the Price Source does not retrospectively publish or announce a Floating Pric e, in each case, on or before the fifth Business Day following the first Trading Day on whi ch the Market Disruption Event first occurred or existed, then the Floating Price for ea ch 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 quotat ions with the highest and lowest values, subject to the following qualifications:
1. If exactly three quotations are obtained, the Fl oating Price for each such Disrupted Day will be the quotation that remains after disreg arding the quotations having the highest and lowest values.
2. If fewer than three quotations are obtained, the Floating Price for each such Disrupted Day will be the average of the quotations obtained.
3. 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.
v) Unless otherwise agreed, if at any time the Par ties agree on a substitute Floating Price for any Disrupted Day, then such substitute Floating Pr ice shall be the Floating Price for such Disrupted Day, notwithstanding the subsequent publi cation or announcement of a Delayed Floating Price by the relevant Price Source or any quotations obtained from Specified Dealers.
"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 as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified i n a Transaction that is based upon a Price Source.
"Market Disruption Event" means, with respect to an y 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 particu lar day or the permanent discontinuation or material suspension of trading in the relevant opti ons contract or com modity on the Exchange,
16 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 Excha nge or RTO specified for determining a Floating Price; or
(e) a material change in the formula for or the met hod 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, a publication or such other origin of reference, including an Exchange or RTO, containing or reporting or making generally available to market participants (including by elec tronic means) a price, or prices or information from which a price is determined, as specified in the relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
"Trading Day" means a day in respect of which the r elevant Price Source ordinarily would announce, publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floa ting Price published, announced or made available on a given day and used or to be used to determine a relevant price is subsequently corrected by the relevant Price Source (i) within 3 0 days of the original publication, announcement or availability, or (ii) in the case o f RTO Transactions only, within such longer time period as is consistent with the RTO’s procedu res and guidelines, then either Party may notify the other Party of that correction and the a mount (if any) that is payable as a result of that correction. If, not later than sixty (60) day s 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 th an three (3) Business Days after such notice is effective, pay, subject to any applicable condit ions 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. Notwithstanding the foregoing, corrections shall not be made to any Floating Prices agreed upon by the Parties or determined based on quotations from Specified Dealers pursuant to paragraph (a) above unless the Parties expressly agree otherwise.
(c) Rounding. When calculating a Floating Price, a ll numbers shall be rounded to four (4) decimal places. If the fifth (5th) decimal number i s five (5) or greater, then the fourth (4th) decimal number shall be increased by one (1), and i f the fifth (5th) decimal number is less than five (5), then the fourth (4th) decimal number shall remain unchanged.
Schedule M is amended as follows:
Part A is amended by including the following definition fo r the term “Act”: “Act” means the Constitution of the State of California, the Califo rnia statute(s), charter and municipal ordinances under which Party B was created, organized and authorized to enter into this Master Agreement and each Transaction thereunder.
Schedule M, Clause E delete the model text for new Section 3.6 and add the following:
“Section 3.6 Governmental Entity or Public Power System Security . (a) With
17 respect to each Transaction, Party B shall (1) eith er (i) have created and set aside a Special Fund or (ii) upon execution of this Maste r Agreement and prior to the commencement of each subsequent fiscal year of Gove rnmental Entity or Public Power System during any Delivery Period, have obtai ned all necessary budgetary approvals and certifications for payment of all of its obligations under this Master Agreement for such fiscal year; and (2) upon the re asonable request of Party A, provide to Party A evidence reasonably satisfactory to Party A, that Party B has complied with the preceding clause (1). Party B s hall have allocated to the Special Fund or its general funds a revenue base th at is adequate to cover Party B’s payment obligations hereunder throughout the entire Delivery Period. For the avoidance of doubt, any breach of this Section 3.6( a) by Party B shall be deemed to be material and to have arisen during a fiscal p eriod of Party B for which budgetary approval or certification of its obligations under this Master Agreement is in effect.
(b) If any Transaction is determined to be a “swap” (as defined in Section 1a(47) of the U.S. Commodity Exchange Act, as amended, 7 U SC Section 1, et seq. and any Commodity Futures Trading Commission rules, reg ulations, orders, supplementary information, guidance, questions and answers, staff letters and interpretations published or issued thereunder, in each applicable case as amended), Party B shall be deemed to have represent ed to Party A immediately prior to the Parties entry into such Transaction that (1) Party B is a “utility special entity” at such time and (2) that such Transaction is a “utility operations-related swap” (as each such term is defined in the CFTC’s r ule Exclusion of Utility Operations-Related Swaps With Utility Special Entit ies From De Minimis Threshold for Swaps With Special Entities, 79 Fed. Reg. 57,767 (Sept. 26, 2014)).”
Part G does not apply.
Schedule P
The following shall be added at the end of Schedule P:
“If the Parties agree to use a service level/produc t defined by reference to a different agreement, tariff, set of rules or protocols (herein, “agreeme nt”) (e.g., the PJM Operating Agreement, the ERCOT Protocols, WSPP Agreement) for a particular T ransaction, then, unless the Parties expressly state and agree that all the terms and co nditions of such other agreement will apply, the Transaction shall be subject to all the terms of th is Agreement except (1) all service level/product definitions, (2) the regional reliability requireme nts and guidelines, and (3) the specific definition s for excuses for performance, Force Majeure and Unco ntrollable Forces shall have the meaning ascribed to them in such other agreement in effect on the date the Transaction was entered into; provided, however , that with respect to Transactions subject to the WSPP Agreement, the methodology for calculating the payments for failur e to deliver or receive, under Section 4 hereof, shall be in accordance with Section 21.3 of the WSP P Agreement; provided, further that the “Accelerated Payment of Damages” addressed in Secti on 4 hereof shall continue to apply to such payments if such election is made on the Cover Sheet.”
The following definitions are hereby added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission approved tariff of CAISO,
18 including all CAISO protocols, as the same may be amended from time to time.
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any similar description means with respect to a Transaction, a Product that is or will be scheduled as firm energy consistent with the most recent rules adopted by the WECC.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Po ol Agreement as amended from time to time.
“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 e qual to the hourly quantity without Ancillary Services (as defined in the 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 California Independent System Operator (“CAISO”) (as amended f rom time to time, the “Tariff”) for which the only excuse for failure to deliver or receive i s an “Uncontrollable Force” (as defined in the Tariff).
“Hourly Transactions”. The sale of energy on an ho urly basis shall be deemed a “Non-Firm” product.
“WSPP Agreement” means the WSPP Agreement as amended from time to time.
19 IN WITNESS WHEREOF, the Parties have caused this Ma ster Agreement to be duly executed in one or more counterparts (each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same agreement) as of the da te first above written. The Parties expressly acknowledge the validity of facsimile counterparts of the executed Master Agreement, if any, which may be transmitted in advance of, or in lieu of, executed original documents.
Party A: Party B: City of Palo Alto
NRG Business Marketing LLC Approval as to Form:
By: ……………………………..
By: …………………………….. Name: …………………………….. Name: Amy Bartell Title: …………………………….. Title: Assistant City Attorney Date: ____ , 2025 Date: _________ _, 2025
Party B: City of Palo Alto
By: ……………………………..
Name: Ed Shikada
Title: City Manager
Date: _______________, 2025
Party B: City of Palo Alto
Approval by Administrative Services Department:
By:
……………………………
.. Name: Lauren Lai
Title: Administrative Services Director
Date: ______ ___, 2025
Party B: City of Palo Alto
Approval by Utilities
Department:
By:
……………………………
.. Name: Alan Kurotori
Title: Utilities Director
Date: ______ _ ___ , 2025
20 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.
21 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 i ntermediaries, 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 capi tal 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 e ntity (i) files a petition or otherwise commences, authorizes or acquiesces in the commence ment of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar l aw, or has any such petition filed or commenced against it, (ii) makes an assignment or any general arrangement for the benefit of creditors, (iii) ot herwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with resp ect to it or any substantial portion of its propert y 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, Sun day, 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 Par ty’s principal place of business. The relevant Party, i n each instance unless otherwise specified, shall b e 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 ob ligated 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 ob ligating, the Option Buyer to purchase and receive the Product from the Option Se ller at a price equal to the Strike Price for the Delivery Period for which the Option may be exercis ed, all as specified in the Transaction. Upon prop er exercise of the Option by the Option Buyer, the Opt ion Seller will be obligated to sell and deliver th e 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, t hreatened or filed and, whether groundless, false, fraudulent or otherwise, that di rectly or indirectly relate to the subject matter o f an indemnity, and the resulting losses, damages, expen ses, attorneys’ fees and court costs, whether incur red by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or aft er 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 o therwise provided for) to be paid by Buyer to Seller for the purchase of the Product, as specified in the Transaction.
22 1.11 “Costs” means, with respect to the Non-Defaulting P arty, 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 ha s 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 obligatio ns (not supported by third party credit enhancement s) or if such entity does not have a rating for its se nior 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 amou nt, 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 Produ ct 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, insolven cy, reorganization and other laws affecting creditors’ rights generally, and with reg ard to equitable remedies, the discretion of the co urt 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 whic h prevents one Party from performing its obligations under one or more Transa ctions, which event or circumstance was not anticipated as of the date the Transaction was agre ed to, which is not within the reasonable control o f, 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 ca use to be avoided. Force Majeure shall not be base d on (i) the loss of Buyer’s markets; (ii) Buyer’s in ability 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 P arty may raise a claim of Force Majeure based in wh ole or in part on curtailment by a Transmission Provide r unless (i) such Party has contracted for firm transmission with a Transmission Provider for the P roduct to be delivered to or received at the Delive ry Point and (ii) such curtailment is due to “force ma jeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; p rovided, however, that existence of the foregoing
23 factors shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeur e absent a showing of other facts and circumstances w hich in the aggregate with such factors establish t hat a Force Majeure as defined in the first sentence he reof has occurred. The applicability of Force Maje ure 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 th e letter of credit is issued. Costs of a Letter of C redit shall be borne by the applicant for such Lett er of Credit.
1.28 “Losses” means, with respect to any Party, an amoun t equal to the present value of the economic loss to it, if any (exclusive of Costs), r esulting from termination of a Terminated Transacti on, 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 princi pal place of business. The relevant Party, in each ins tance 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 outs tanding Transactions, having the same or overlapping Delivery Period(s), Delivery Po int and payment date, where under one or more of such Transactions, one Party is the Seller, and und er 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.
24 1.35 “Option Buyer” means the Party specified in a Trans action as the purchaser of an option, as defined in Schedule P.
1.36 “Option Seller” means the Party specified in a Tran saction 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 for m 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 i n Schedule P hereto or as otherwise specified by th e Parties in the Transaction.
1.48 “Put Option” means an Option entitling, but not obl igating, 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 exercise of the Opt ion 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, an d that Buyer agrees to purchase and receive, or cau se to be received, from Seller as specified in the Transaction.
1.50 “Recording” has the meaning set forth in Section 2.4.
25 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) c osts reasonably incurred by Buyer in purchasing suc h substitute Product and (ii) additional transmission charges, if any, reasonably incurred by Buyer to t he 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 si milar charges, nor shall Buyer be required to utili ze or change its utilization of its owned or controlled a ssets or market positions to minimize Seller’s liab ility.
For the purposes of this definition, Buyer shall be considered to have purchased replacement Product t o the extent Buyer shall have entered into one or mor e arrangements in a commercially reasonable manner whereby Buyer repurchases its obligation to sell an d deliver the Product to another party at the Deliv ery Point.
1.52 “S&P” means the Standard & Poor’s Rating Group (a d ivision of McGraw-Hill, Inc.) or its successor.
1.53 “Sales Price” means the price at which Seller, acti ng in a commercially reasonable manner, resells at the Delivery Point any Product n ot received by Buyer, deducting from such proceeds any (i) costs reasonably incurred by Seller in rese lling such Product and (ii) additional transmission charges, if any, reasonably incurred by Seller in d elivering such Product to the third party purchaser s, or at Seller’s option, the market price at the Deliver y Point for such Product not received as determined by Seller in a commercially reasonable manner; provide d, however, in no event shall such price include an y penalties, ratcheted demand or similar charges, nor shall Seller be required to utilize or change its utilization of its owned or controlled assets, incl uding contractual assets, or market positions to mi nimize 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 mo re arrangements in a commercially reasonable manner whereby Seller repurchases its obligation to purcha se and receive the Product from another party at th e Delivery Point.
1.54 “Schedule” or “Scheduling” means the actions of Sel ler, Buyer and/or their designated representatives, including each Party’s Transmission Providers, if applicable, of notifying, requestin g 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 o bligated to sell and deliver, or cause to be delivered, the Product, as specified in the Transaction.
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. D ollars, 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 p urchase 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.
26 1.61 “Transmission Provider” means any entity or entitie s 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 agre es not to contest, or assert any defense to, the validity or enforceability of the Transaction enter ed into in accordance with this Master Agreement (i ) based on any law requiring agreements to be in writ ing or to be signed by the parties, or (ii) based o n any lack of authority of the Party or any lack of autho rity of any employee of the Party to enter into a Transaction.
2.2 Governing Terms. Unless otherwise specifically agr eed, each Transaction between the Parties shall be governed by this Master Agreement. This Master Agreement (including all exhibits, schedules and any written supplements hereto), , th e Party A Tariff, if any, and the Party B Tariff, i f any, any designated collateral, credit support or margin agreement or similar arrangement between the Parti es and all Transactions (including any Confirmations a ccepted in accordance with Section 2.3) shall form a single integrated agreement between the Parties. A ny 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 Transactio n is entered into a confirmation (“Confirmation”) substantially in the form of Exhibit A. If Buyer o bjects to any term(s) of such Confirmation, Buyer s hall 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 te rms as sent. If Seller fails to send a Confirmatio n within three (3) Business Days after the Transactio n is entered into, a Confirmation substantially in the form of Exhibit A, may be forwarded by Buyer to Sel ler. If Seller objects to any term(s) of such Confirmation, Seller shall notify Buyer of such obj ections within two (2) Business Days of Seller’s receipt thereof, failing which Seller shall be deem ed to have accepted the terms as sent. If Seller a nd Buyer each send a Confirmation and neither Party ob jects to the other Party’s Confirmation within two (2) Business Days of receipt, Seller’s Confirmation shall be deemed to be accepted and shall be the controlling Confirmation, unless (i) Seller’s Confi rmation was sent more than three (3) Business Days after the Transaction was entered into and (ii) Buy er’s Confirmation was sent prior to Seller’s Confirmation, in which case Buyer’s Confirmation sh all 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 o f the Transaction (e.g., price or special transmiss ion conditions), which modify or supplement the general terms and conditions of this Master Agreement (e.g., arbitration provisions or additional representation s and warranties), such provisions shall not be dee med to be accepted pursuant to Section 2.3 unless agree d to either orally or in writing by the Parties; pr ovided that the foregoing shall not invalidate any Transaction agreed to by the Parties.
2.5 Recording. Unless a Party expressly objects to a R ecording (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 confid ence, secured from improper access, and may be submitted in evidence in any proceeding or action r elating to this Agreement. Each Party waives any
27 further notice of such monitoring or recording, and agrees to notify its officers and employees of suc h 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 partic ular Transaction in the event a Confirmation is not fully executed (or deemed accepted) by both Parties. Upo n full execution (or deemed acceptance) of a Confirmation, such Confirmation shall control in th e event of any conflict with the terms of a Recordi ng, 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 wit h its terms. Seller shall be responsible for any c osts or charges imposed on or associated with the Produc t 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 Transmiss ion Providers, as specified by the Parties in the Trans action, or in the absence thereof, in accordance wi th the practice of the Transmission Providers, to deliver the Product to the Delivery Point. Buyer shall arr ange and be responsible for transmission service at and from the Delivery Point and shall Schedule or arran ge for Scheduling services with its Transmission Providers to receive the Product at the Delivery Point.
3.3 Force Majeure. To the extent either Party is preve nted by Force Majeure from carrying out, in whole or part, its obligations under the Tr ansaction and such Party (the “Claiming Party”) giv es notice and details of the Force Majeure to the othe r Party as soon as practicable, then, unless the te rms of the Product specify otherwise, the Claiming Party s hall 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. Th e non-Claiming Party shall not be required to perfo rm or resume performance of its obligations to the Cla iming 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 u nder 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 P ayment of Damages” is specified on the Cover Sheet, within five (5) Business Days of invoice receipt, a n amount for such deficiency equal to the positive difference, if any, obtained by subtracting the Con tract Price from the Replacement Price. The invoic e for such amount shall include a written statement e xplaining in reasonable detail the calculation of s uch amount.
4.2 Buyer Failure. If Buyer fails to schedule and/or r eceive all or part of the Product pursuant to a Transaction and such failure is not e xcused 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 “Acc elerated Payment of Damages” is specified on the
28 Cover Sheet, within five (5) Business Days of invoi ce receipt, an amount for such deficiency equal to the positive difference, if any, obtained by subtractin g the Sales Price from the Contract Price. The inv oice for such amount shall include a written statement e xplaining in reasonable detail the calculation of s uch amount.
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES
5.1 Events of Default. An “Event of Default” shall mea n, 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 h erein is false or misleading in any material respect when made or when deemed made or repeated; (c) the failure to perform any material covenant or obl igation set forth in this Agreement (except to the extent constituting a sepa rate Event of Default, and except for such Party’s obligations to deliver or r eceive the Product, the exclusive remedy for which is provided in Article F our) 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 creditwort hiness/collateral requirements agreed to pursuant to Article Eight hereof;
(f) such Party consolidates or amalgamates with, or mer ges 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, th e resulting, surviving or transferee entity fails to assume all the obligatio ns of such Party under this Agreement to which it or its predecessor was a part y by operation of law or pursuant to an agreement reasonably satisfactory to the other Party; (g) if the applicable cross default section in the Cove r Sheet is indicated for such Party, the occurrence and continuation of (i) a def ault, 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 ag reements or instruments, individually or collectively, relating to indebtedn ess for borrowed money in an aggregate amount of not less than the applicable Cr oss Default Amount (as specified in the Cover Sheet), which results in suc h indebtedness becoming, or becoming capable at such time of being declared, im mediately 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:
29 (i) if any representation or warranty made by a Guarant or in connection with this Agreement is false or misleading in any m aterial respect when made or when deemed made or repeated;
(ii) the failure of a Guarantor to make any payment requ ired or to perform any other material covenant or obligation in any gu aranty made in connection with this Agreement and such failure sha ll not be remedied within three (3) Business Days after written notice;
(iii) a Guarantor becomes Bankrupt;
(iv) the failure of a Guarantor’s guaranty to be in full force and effect for purposes of this Agreement (other than in accordanc e with its terms) prior to the satisfaction of all obligations of suc h Party under each Transaction to which such guaranty shall relate wit hout the written consent of the other Party; or
(v) a Guarantor shall repudiate, disaffirm, disclaim, o r reject, in whole or in part, or challenge the validity of any guaranty.
5.2 Declaration of an Early Termination Date and Calcul ation of Settlement Amounts. If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other P arty (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 n otice 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 Parti es, (ii) withhold any payments due to the Defaulting Pa rty under this Agreement and (iii) suspend performance. The Non-Defaulting Party shall calcul ate, in a commercially reasonable manner, a Settlement Amount for each such Terminated Transact ion 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 ter minate or may not be liquidated and terminated unde r 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: nettin g out (a) all Settlement Amounts that are due to th e Defaulting Party, plus, at the option of the Non-De faulting Party, any cash or other form of security then available to the Non-Defaulting Party pursuant to A rticle Eight, plus any or all other amounts due to the Defaulting Party under this Agreement against (b) a ll 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 sing le 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 t o the Defaulting Party of the amount of the Termination Payment and whether the Termination Pay ment is due to or due from the Non-Defaulting Party. The notice shall include a written statemen t explaining in reasonable detail the calculation o f such amount. The Termination Payment shall be made by t he Party that owes it within two (2) Business Days after such notice is effective.
30 5.5 Disputes With Respect to Termination Payment. If t he Defaulting Party disputes the Non-Defaulting Party’s calculation of the Terminati on Payment, in whole or in part, the Defaulting Par ty shall, within two (2) Business Days of receipt of N on-Defaulting Party’s calculation of the Terminatio n 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 N on-Defaulting Party in an amount equal to the Termination Payment.
5.6 Closeout Setoffs.
Option A: After calculation of a Termination Payme nt in accordance with Section 5.3, if the Defaulting Party would be owed the Termination Paym ent, the Non-Defaulting Party shall be entitled, at its option and in its discretion, to (i) set off ag ainst 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 N on-Defaulting Party and/or (ii) to the extent the Transactions are not yet liquidated in accordance w ith Section 5.2, withhold payment of the Terminatio n Payment to the Defaulting Party. The remedy provid ed for in this Section shall be without prejudice a nd 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 Payme nt in accordance with Section 5.3, if the Defaulting Party would be owed the Termination Paym ent, the Non-Defaulting Party shall be entitled, at its option and in its discretion, to (i) set off ag ainst such Termination Payment any amounts due and owing by the Defaulting Party or any of its Affilia tes to the Non-Defaulting Party or any of its Affil iates under any other agreements, instruments or undertak ings between the Defaulting Party or any of its Affiliates and the Non-Defaulting Party or any of i ts Affiliates and/or (ii) to the extent the Transac tions 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 t his Section shall be without prejudice and in addit ion to any right of setoff, combination of accounts, li en 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 oth er provision of this Master Agreement, if (a) an Event of Default or (b) a Pote ntial Event of Default shall have occurred and be continuing, the Non-Defaulting Party, upon written notice to the Defaulting Party, shall have the righ t (i) to suspend performance under any or all Transaction s; provided, however, in no event shall any such suspension continue for longer than ten (10) NERC B usiness Days with respect to any single Transaction unless an early Termination Date shall have been de clared and notice thereof pursuant to Section 5.2 given, and (ii) to the extent an Event of Default s hall have occurred and be continuing to exercise an y 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.
31 6.2 Timeliness of Payment. Unless otherwise agreed by the Parties in a Transaction, all invoices under this Master Agreement shall be due a nd payable in accordance with each Party’s invoice instructions on or before the later of the twentiet h (20th) day of each month, or tenth (10th) day aft er receipt of the invoice or, if such day is not a Bus iness Day, then on the next Business Day. Each Par ty 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 pai d by the due date will be deemed delinquent and wil l accrue interest at the Interest Rate, such interest to be calculated from and including the due date t o 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 an y invoice for any arithmetic or computational error w ithin twelve (12) months of the date the invoice, o r adjustment to an invoice, was rendered. In the eve nt an invoice or portion thereof, or any other clai m 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 ob jection given to the other Party. Any invoice disp ute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Pa yment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the di spute, any required payment shall be made within two (2) B usiness Days of such resolution along with interest accrued at the Interest Rate from and including the due date to but excluding the date paid. Inadvert ent overpayments shall be returned upon request or dedu cted by the Party receiving such overpayment from subsequent payments, with interest accrued at the I nterest Rate from and including the date of such overpayment to but excluding the date repaid or ded ucted by the Party receiving such overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in accordance with thi s Section 6.3 within twelve (12) months after the inv oice is rendered or any specific adjustment to the invoice is made. If an invoice is not rendered wit hin 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 Par ty to the other Party for the purchase and sale of Products during the monthly billing period under th is 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 paymen ts or credits, shall be netted so that only the exc ess amount remaining due shall be paid by the Party who owes it.
6.5 Payment Obligation Absent Netting. If no mutual de bts or payment obligations exist and only one Party owes a debt or obligation to the oth er during the monthly billing period, including, but not limited to, any related damage amounts calculated p ursuant 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 Perform ance Assurance or a guaranty notifies the other Party in writing, and except in connectio n with a liquidation and termination in accordance with Article Five, all amounts netted pursuant to this A rticle Six shall not take into account or include a ny Performance Assurance or guaranty which may be in e ffect to secure a Party’s performance under this Agreement.
6.7 Payment for Options. The premium amount for the pu rchase of an Option shall be paid within two (2) Business Days of receipt of an invoi ce 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.
32 6.8 Transaction Netting. If the Parties enter into one or more Transactions, which in conjunction with one or more other outstanding Tran sactions, constitute Offsetting Transactions, then all such Offsetting Transactions may by agreement of th e Parties, be netted into a single Transaction unde r which:
(a) the Party obligated to deliver the greater amount o f 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 Sectio n shall be deemed part of the single, indivisible contractual arrangement between the parties, and on ce 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. EXC EPT AS SET FORTH HEREIN,
THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DIS CLAIMED. THE PARTIES
CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF D AMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREO F. 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 EXPR ESSLY PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT
ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHA LL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEIT HER PARTY SHALL BE
LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXE MPLARY OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTIO N DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE
INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN I MPOSED ON REMEDIES AND
THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHE THER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY
DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATE D, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOS SIBLE TO DETERMINE,
OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONV ENIENT 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 a nd 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 Secti ons 8.1(b), 8.1(c) or 8.1(d) are specified on the C over Sheet, Section 8.1(b) shall apply exclusively.
33 (a) Financial Information. Option A: If requested by Party A, Party B shall deliver (i) within 120 days following the end of each fisca l year, a copy of Party B’s annual report containin g audited consolidated financial statements for such fiscal year and (ii) within 60 days after the end o f each of its first three fiscal quarters of each fiscal y ear, a copy of Party B’s quarterly report containin g unaudited consolidated financial statements for such fiscal quarter. In all cases the statements shall be for the most recent accounting period and prepared in a ccordance 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 s hall 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 d eliver (i) within 120 days following the end of each fiscal year, a copy of the annual report conta ining 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 eac h of its first three fiscal quarters of each fiscal year, a copy of quarterly report containing unaudited conso lidated financial statements for such fiscal quarter for th e party(s) specified on the Cover Sheet. In all ca ses 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 prepa ration or certification, such delay shall not be an Event of Default so long as the relevant entity diligentl y pursues the preparation, certification and delive ry 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 groun ds to believe that Party B’s creditworthiness or performance under this Agreemen t 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 Performan ce Assurance to Party A. In the event that Party B fails to provide such Performance Assurance, or a g uaranty or other credit assurance acceptable to Par ty A within three (3) Business Days of receipt of noti ce, then an Event of Default under Article Five wil l be deemed to have occurred and Party A will be entitle d to the remedies set forth in Article Five of this Master Agreement.
(c) Collateral Threshold. If at any time and from time to time during the term of this Agreement (and notwithstanding whether an Event of Default has occurred), the Termination Payment that would be owed to Party A plus Party B’s Indepe ndent Amount, if any, exceeds the Party B Collateral Threshold, then Party A, on any Business Day, may r equest that Party B provide Performance Assurance in an amount equal to the amount by which the Termi nation 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 Perform ance 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 suc h 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 Ass urance 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 Amou nt). In the event that Party B fails to provide Pa rty B Performance Assurance pursuant to the terms of th is Article Eight within three (3) Business Days, th en an Event of Default under Article Five shall be dee med to have occurred and Party A will be entitled t o the remedies set forth in Article Five of this Master Agreement.
34 For purposes of this Section 8.1(c), the calculatio n 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 pro vide 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 o f Default shall be deemed to have occurred and Part y 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 deli ver to Party A, prior to or concurrently with the execution and delivery of thi s Master Agreement a guarantee in an amount not les s 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 a nd collateral requirements shall be as specified on the Cover Sheet. If no option in Sect ion 8.2(a) is specified on the Cover Sheet, Section
8.2(a) Option C shall apply exclusively. If none o f Sections 8.2(b), 8.2(c) or 8.2(d) are specified o n 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 fisca l year, a copy of Party A’s annual report containin g audited consolidated financial statements for such fiscal year and (ii) within 60 days after the end o f each of its first three fiscal quarters of each fiscal y ear, a copy of such Party’s quarterly report contai ning unaudited consolidated financial statements for such fiscal quarter. In all cases the statements shall be for the most recent accounting period and prepared in a ccordance 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 s hall not be an Event of Default so long as such Par ty diligently pursues the preparation, certification and delivery of the statements.
Option B: If requested by Party B, Party A shall d eliver (i) within 120 days following the end of each fiscal year, a copy of the annual report conta ining 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 eac h of its first three fiscal quarters of each fiscal year, a copy of quarterly report containing unaudited conso lidated financial statements for such fiscal quarter for th e party(s) specified on the Cover Sheet. In all ca ses 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 prepa ration or certification, such delay shall not be an Event of Default so long as the relevant entity diligentl y pursues the preparation, certification and delive ry 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 groun ds to believe that Party A’s creditworthiness or performance under this Agreemen t 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 Performan ce 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
35 deemed to have occurred and Party B will be entitle d 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 r equest that Party A provide Performance Assurance in an amount equal to the amount by which the Termi nation 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 Perform ance 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 suc h 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 Ass urance 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 Pa rty A Performance Assurance pursuant to the terms of th is Article Eight within three (3) Business Days, th en an Event of Default under Article Five shall be dee med to have occurred and Party B will be entitled t o the remedies set forth in Article Five of this Master Agreement.
For purposes of this Section 8.2(c), the calculatio n 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 o f Default shall be deemed to have occurred and Part y 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 deli ver to Party B, prior to or concurrently with the execution and delivery of thi s Master Agreement a guarantee in an amount not les s 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 Perfor mance Assurance hereunder, each Party (a “Pledgor”) hereby grants to the other Party (the “Secured Part y”) a present and continuing security interest in, and lien on (and right of setoff against), and assignme nt of, all cash collateral and cash equivalent coll ateral 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 P arty, 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 intere st in, and lien on (and right of setoff against), such col lateral and any and all proceeds resulting therefro m or from the liquidation thereof. Upon or any time aft er the occurrence or deemed occurrence and during t he continuation of an Event of Default or an Early Ter mination 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 res pect to all Performance Assurance, including any such ri ghts and remedies under law then in effect; (ii) exercise its rights of setoff against any and all p roperty of the Defaulting Party in the possession o f 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
36 claim or right of any nature whatsoever of the Defa ulting Party, including any equity or right of purc hase 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 re medies to reduce the Pledgor’s obligations under th e Agreement (the Pledgor remaining liable for any amo unts owing to the Secured Party after such application), subject to the Secured Party’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full.
ARTICLE NINE: GOVERNMENTAL CHARGES
9.1 Cooperation. Each Party shall use reasonable effor ts 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 ca use 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 P roduct and are, therefore, the responsibility of th e Seller). In the event Seller is required by law or regulation to remit or pay Governmental Charges wh ich are Buyer’s responsibility hereunder, Buyer shall p romptly 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 Agre ement. 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 ter minated by either Party upon (thirty) 30 days’ prio r written notice; provided, however, that such termin ation 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 a nd any other documents executed and delivered hereunder shall remain in effect with respect to th e Transaction(s) entered into prior to the effectiv e date of such termination until both Parties have fulfill ed 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 Tr ansaction (including any Confirmation accepted in accordance with Section 2.3);
(iii) the execution, delivery and performance of this Mas ter Agreement and each Transaction (including any Confirmation accepted in accordance with Section
2.3) are within its powers, have been duly authoriz ed by all necessary action and do not violate any of the terms and conditions in i ts governing documents, any
37 contracts to which it is a party or any law, rule, regulation, order or the like applicable to it;
(iv) this Master Agreement, each Transaction (including any Confirmation accepted in accordance with Section 2.3), and each other document executed and delivered in accordance with this Master Agreement constitute s its legally valid and binding obligation enforceable against it in accord ance 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 whic h would result in it being or becoming Bankrupt;
(vi) there is not pending or, to its knowledge, threaten ed against it or any of its Affiliates any legal proceedings that could materia lly adversely affect its ability to perform its obligations under this Master Agreem ent and each Transaction (including any Confirmation accepted in accordance with Section 2.3); (vii) no Event of Default or Potential Event of Default w ith 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 (in cluding 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 prop er for it based upon its own judgment, is not relying upon the advice or recomme ndations 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 Confi rmation accepted in accordance with Section 2.3);
(ix) it is a “forward contract merchant” within the mean ing 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 Con firmation accepted in accordance with Section 2.3) involving the purchase or sale of a Product or an Option, it is a producer, processor, commercial use r or merchant handling the Product, and it is entering into such Transaction f or purposes related to its business as such; and
(xii) the material economic terms of each Transaction are subject to individual negotiation by the Parties.
38 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 warr ants that it will deliver to Buyer the Quantity of the Product free and clear of all liens, security inter ests, claims and encumbrances or any interest there in 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 e vent, circumstance, act or incident first occurring or existing during the period when control and title t o Product is vested in such Party as provided in Se ction
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 con sent may be withheld in the exercise of its sole discretion; provided, however, either Party may, wi thout the consent of the other Party (and without relieving itself from liability hereunder), (i) tra nsfer, sell, pledge, encumber or assign this Agreem ent or the accounts, revenues or proceeds hereof in connec tion with any financing or other financial arrangements, (ii) transfer or assign this Agreemen t 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 Agree ment to any person or entity succeeding to all or substanti ally all of the assets whose creditworthiness is eq ual 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 delive rs such tax and enforceability assurance as the non-transferring Party may reasonably request.
10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND D UTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUE D, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PAR TY WAIVES ITS RESPECTIVE
RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGAT ION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.
10.7 Notices. All notices, requests, statements or paym ents shall be made as specified in the Cover Sheet. Notices (other than scheduling reques ts) 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 effec tive at the close of business on the day actually received, if received during business hours on a Bu siness 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 b e effective on the next Business Day after it was sen t. A Party may change its addresses by providing notice of same in accordance herewith.
10.8 General. This Master Agreement (including the exhi bits, schedules and any written supplements hereto), the Party A Tariff, if any, th e 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 Sectio n 2.3) constitute the entire agreement between the Parties relating to the subject matter. Notwithsta nding 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 incorpor ated herein by reference. This Agreement shall be considered for all purposes as prepared through the joint efforts of the parties and shall not be cons trued against one party or the other as a result of the p reparation, 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 enfo rceable 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
39 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 wil l not assert, or defend itself, on the basis that any app licable tariff is inconsistent with this Agreement. This Agreement shall not impart any rights enforceable b y any third party (other than a permitted successor or assignee bound to this Agreement). Waiver by a Par ty of any default by the other Party shall not be construed as a waiver of any other default. Any pr ovision declared or rendered unlawful by any applicable court of law or regulatory agency or dee med unlawful because of a statutory change (individually or collectively, such events referred to as “Regulatory Event”) will not otherwise affec t the remaining lawful obligations that arise under this Agreement; and provided, further, that if a Regulat ory 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 “inclu ding” when used in this Agreement shall be by way o f 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 indem nity and audit rights shall survive the termination of this Agreement for twelve (12) months. This Agreem ent shall be binding on each Party’s successors and permitted assigns.
10.9 Audit. Each Party has the right, at its sole expen se and during normal working hours, to examine the records of the other Party to the exten t reasonably necessary to verify the accuracy of an y statement, charge or computation made pursuant to t his 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 be ar interest calculated at the Interest Rate from th e date the overpayment or underpayment was made until paid; provided, however, that no adjustment for any statement or payment will be made unless object ion to the accuracy thereof was made prior to the lapse of twelve (12) months from the rendition ther eof, and thereafter any objection shall be deemed waived.
10.10 Forward Contract. The Parties acknowledge and agre e 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 Transac tion 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 suc h information and have agreed to keep such terms confidential) except in order to comply with any ap plicable law, regulation, or any exchange, control area or independent system operator rule or in connectio n with any court or regulatory proceeding; provided , however, each Party shall, to the extent practicabl e, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled to all r emedies available at law or in equity to enforce, o r seek relief in connection with, this confidentiality obligation.
40 SCHEDULE M
(THIS SCHEDULE IS INCLUDED IF THE APPROPRIATE BOX O N THE COVER SHEET IS
MARKED INDICATING A PARTY IS A GOVERNMENTAL ENTITY OR PUBLIC POWER
SYSTEM)
A. The Parties agree to add the following definitio ns 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 Gover nmental Entity or Public Power System set aside and or pledged to sat isfy 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 P ublic Power System, Force Majeure does not include any action taken by the Go vernmental Entity or Public Power System in its governmental capacity.
C. The Parties agree to add the following represent ations and warranties to Section 10.2:
Further and with respect to a Party that is a Gover nmental Entity or Public Power System, such Governmental Entity or Pu blic Power System represents and warrants to the other Party continui ng throughout the term of this Master Agreement, with respect to this Master Agree ment and each Transaction, as follows: (i) all acts necessary to the valid exe cution, delivery and performance of this Master Agreement, including without limitat ion, competitive bidding, public notice, election, referendum, prior appropri ation or other required procedures has or will be taken and performed as re quired under the Act and the Public Power System’s ordinances, bylaws or other r egulations, (ii) all persons making up the governing body of Governmental Entity or Public Power System are the duly elected or appointed incumbents in the ir positions and hold such positions in good standing in accordance with the A ct and other applicable law, (iii) entry into and performance of this Master Agr eement by Governmental Entity or Public Power System are for a proper publ ic purpose within the meaning of the Act and all other relevant constitut ional, organic or other governing documents and applicable law, (iv) the te rm of this Master Agreement does not extend beyond any applicable limitation im posed by the Act or other
1 Cite the state enabling and other relevant statut es applicable to Governmental Entity or Public Power System.
41 relevant constitutional, organic or other governing documents and applicable law, (v) the Public Power System’s obligations to make p ayments hereunder are unsubordinated obligations and such payments are (a) operating and maintenance costs (or similar designation) which enjoy first pr iority 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 o ther 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 document s and applicable law and are available without limitation or deduction to satisf y all Governmental Entity or Public Power System’ obligations hereunder and unde r 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 Govern mental Entity or Public Power System will not adversely affect the exclusio n from gross income for federal income tax purposes of interest on any obligation of Governmental Entity or Public Power System otherwise entitled to such e xclusion, and (vii) obligations to make payments hereunder do not const itute any kind of indebtedness of Governmental Entity or Public Power System or create any kind of lien on, or security interest in, any property o r revenues of Governmental Entity or Public Power System which, in either case , is proscribed by any provision of the Act or any other relevant constitu tional, organic or other governing documents and applicable law, any order o r 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 counse l for Governmental Entity or Public Power System, in form and substance reasonab ly satisfactory to the Other Party, regarding the validity, binding effect and e nforceability of this Master Agreement against Governmental Entity or Public Pow er System in respect of the Act and all other relevant constitutional organ ic or other governing documents and applicable law.
Section 3.5 No Immunity Claim. Governmental Enti ty or Public Power System warrants and covenants that with respect to its contractual obligations hereunder and performance thereof, it will not clai m 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 injuncti on, order for specific performance or recovery of property, (d) attachment of assets, or (e) execution or enforcement of any judgment.
42 E. If the appropriate box is checked on the Cover S heet, 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 Sy stem Security.
With respect to each Transaction, Governmental Enti ty or Public Power System shall either (i) have created and set aside a Speci al 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 appro vals 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 Syste m for which budgetary approval or certification of its obligations under this Master Agreement is in effect and, notwithstanding anything to the contrar y in Article Four, an Early Termination Date shall automatically and without fu rther notice occur hereunder as of such date wherein Governmental Entity or Publ ic Power System shall be treated as the Defaulting Party. Governmental Enti ty 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 obl igations hereunder throughout the entire Delivery Period.
F. If the appropriate box is checked on the Cover S heet, the Parties agree to add the following section to Article Eight:
Section 8.4 Governmental Security. As security fo r payment and performance of Public Power System’s obligations he reunder, Public Power System hereby pledges, sets over, assigns and grant s to the other Party a security interest in all of Public Power System’s right, tit le and interest in and to [specify collateral].
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 LA WS OF THE STATE OF _____________ 2 SHALL APPLY.
2 Insert relevant state for Governmental Entity or Public Power System.
43 SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS
“Ancillary Services” means any of the services iden tified 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 op erating reserve-supplemental, as may be specified i n the Transaction.
“Capacity” has the meaning specified in the Transaction. “Energy” means three-phase, 60-cycle alternating cu rrent electric energy, expressed in megawatt hours.
“Firm (LD)” means, with respect to a Transaction, t hat either Party shall be relieved of its obligations to sell and deliver or purchase and rec eive 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 ent itled to receive from the Party which failed to deliver/receive an amount determined pursuant to Article Four. “Firm Transmission Contingent - Contract Path” mean s, with respect to a Transaction, that the performance of either Seller or Buyer (as specified in the Transaction) shall be excused, and no damag es shall be payable including any amounts determined p ursuant to Article Four, if the transmission for su ch Transaction is interrupted or curtailed and (i) suc h Party has provided for firm transmission with the transmission provider(s) for the Product in the cas e 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 th e duration of the interruption or curtailment notwith standing the provisions of the definition of “Force Majeure” in Section 1.23 to the contrary.
“Firm Transmission Contingent - Delivery Point” mea ns, with respect to a Transaction, that the performance of either Seller or Buyer (as specified in the Transaction) shall be excused, and no damag es shall be payable including any amounts determined p ursuant 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) suc h 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 P oint 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 simi lar term as defined under the applicable transmissi on provider’s tariff. This transmission contingency e xcuses performance for the duration of the interrup tion or curtailment, notwithstanding the provisions of t he definition of “Force Majeure” in Section 1.23 to the contrary. Interruptions or curtailments of transmi ssion other than the transmission either immediatel y 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 purch ase and receive the Product, the Party to which performance is owed shall be entitled to receive fr om the Party which failed to perform an amount determined pursuant to Article Four. Force Majeure shall not excuse performance of a Firm (No Force Majeure) Transaction.
“Into ______________ (the “Receiving Transmission P rovider”), 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”) eithe r (a) on the Receiving Transmission Provider’s
44 transmission system border or (b) within the contro l area of the Receiving Transmission Provider if th e Product is from a source of generation in that cont rol area, which Interface, in either case, the Rece iving 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 Bus iness Day before the next delivery day or as otherwise agreed to by Buyer and Seller, Seller sha ll 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 sh all 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 Transmissio n.” In determining availability to Buyer of next- day firm transmission (“Firm Transmission”) from th e Designated Interface, a “Timely Request for Transmission” shall mean a properly completed reque st 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 accep ting requests for Firm Transmission at the time of Seller’s Notification, then such request by Buyer s hall be made within 30 minutes of the time when the Receiving Transmission Provider first opens thereaf ter for purposes of accepting requests for Firm Transmission.
Pursuant to the terms hereof, delivery of the Produ ct may under certain circumstances be redesignated to occur at an Interface other than th e Designated Interface (any such alternate designat ed interface, an “ADI”) either (a) on the Receiving Tr ansmission Provider’s transmission system border or (b) within the control area of the Receiving Transm ission Provider if the Product is from a source of generation in that control area, which ADI, in eith er case, the Receiving Transmission Provider identi fies 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 Availa bility 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 th e Receiving Transmission Provider and Buyer purchases such Firm Transmission, then Se ller shall deliver and Buyer shall receive the Product at the Designated Interface.
i. If the Firm Transmission purchased by Buyer with in 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
45 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 th e 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.
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 bec ause of unavailability of Firm Transmission from the Designated Interface, then Bu yer shall notify Seller within 15 minutes after receipt of the Receiving Transmission Provider’s notice of rejection (“Buyer’s Rejection Notice”). If Buyer timely noti fies Seller of such unavailability of Firm Transmission from the Designated Interface, th en 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 p rovisions 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 Bu yer’s purchase of non-firm transmission from the Designated Interface or an AD I 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-fi rm transmission is interrupted or curtailed or if Seller is unable to deliver the Pro duct for any reason, Seller shall have the
46 right to schedule and deliver the Product to anothe r ADI in order to satisfy its delivery obligations, in which case Seller shall be responsi ble for any additional transmission purchases and/or associated congestion charges incu rred by Buyer in connection with Seller’s inability to deliver the Product as origin ally 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 Tran smission 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 inte rruption 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 sati sfied 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 Bu yer, or Buyer Fails to Timely Send Buyer’s Rejection Notice. If Buyer fails to m ake 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 tra nsmission from the Designated Interface. In such circumstances, if Seller’s deli very is interrupted as a result of transmission relied upon by Buyer from the Designat ed Interface, then Seller shall be deemed to have satisfied its delivery obligations t o Buyer, Buyer shall be deemed to have failed to receive the Product and Buyer shall be li able to Seller for amounts determined pursuant to Article Four.
4. Transmission.
A. Seller’s Responsibilities. Seller shall be respon sible 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 uti lize Firm Transmission for its delivery obligations hereunder, and Seller shall bear the ri sk of utilizing non-firm transmission.
If Seller’s scheduled delivery to Buyer is interrup ted as a result of Buyer’s attempted transmission of the Product beyond the Receiving Tr ansmission Provider’s system border, then Seller will be deemed to have satisfie d 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 responsi ble for transmission required to receive and transmit the Product at and from the De signated 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 transmiss ion therefrom. If Seller is attempting to complete the designation of an ADI as a result o f Seller’s rights and obligations
47 hereunder, Buyer shall co-operate reasonably with S eller in order to effect such alternate designation.
5. Force Majeure. An “Into” Product shall be subje ct to the “Force Majeure” provisions in Section 1.23.
6. Multiple Parties in Delivery Chain Involving a D esignated Interface. Seller and Buyer recognize that there may be multiple parties involv ed in the delivery and receipt of the Product at th e 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 wh ich Other Sellers shall be causing the Product to b e 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 Ot her Buyers shall be using the Product to serve its energy needs (“Sink Buyer”). Seller and Buyer furt her recognize that in certain Transactions neither Seller nor Buyer may originate the decision as to e ither (a) the original identification of the Design ated 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 Availabl e 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 sh all 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 n otify the Other Buyer with whom Buyer has a contractual relationship of the Designa ted 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.
C. Seller and Buyer each agree that any other communi cations or actions required to be given or made in connection with this “Into Prod uct” (including without limitation, information relating to an ADI) shall be made or ta ken 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 Transa ctions time is of the essence and it may be desirable to provide necessary information t o Other Sellers and Other Buyers in order to complete the scheduling and delivery of th e Product. Accordingly, Seller and Buyer agree that each has the right, but not the ob ligation, 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 electr ic utility or an entity by the requirements of retail customers located within a franchised ser vice territory that the electric utility or entity has statutory obligation to serve.
“Non-Firm” means, with respect to a Transaction, th at delivery or receipt of the Product may be interrupted for any reason or for no reason, without liability on the part of either Party.
48 “System Firm” means that the Product will be suppli ed from the owned or controlled generation or pre-existing purchased power assets of the syste m specified in the Transaction (the “System”) with non-firm transmission to and from the Delivery Poin t, unless a different Transmission Contingency is specified in a Transaction. Seller’s failure to de liver shall be excused: (i) by an event or circums tance 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 resul t 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 o n, 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 th e 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) s hall be excused, and no damages shall be payable including any amounts determined pursuant to Articl e Four, if the transmission for such Transaction is unavailable or interrupted or curtailed for any rea son, at any time, anywhere from the Seller’s propos ed generating source to the Buyer’s proposed ultimate sink, regardless of whether transmission, if any, t hat such Party is attempting to secure and/or has purch ased 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 performanc e for the entire Transaction. If the transmission (whether firm or non-firm) that Seller or Buyer has secured from source to sink is interrupted or curt ailed for any reason, this contingency excuses performanc e for the duration of the interruption or curtailme nt notwithstanding the provisions of the definition of “Force Majeure” in Article 1.23 to the contrary. “Unit Firm” means, with respect to a Transaction, t hat the Product subject to the Transaction is intended to be supplied from a generation asset or assets specified in the Transaction. Seller’s fail ure to deliver under a “Unit Firm” Transaction shall be ex cused: (i) if the specified generation asset(s) ar e unavailable as a result of a Forced Outage (as defi ned in the NERC Generating Unit Availability Data System (GADS) Forced Outage reporting guidelines) o r (ii) by an event or circumstance that affects the specified generation asset(s) so as to prevent Sell er 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 neglige nce of, the Seller or (iii) by Buyer’s failure to p erform.
In any of such events, Seller shall not be liable t o Buyer for any damages, including any amounts determined pursuant to Article Four.
49 EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT
CONFIRMATION LETTER
This confirmation letter shall confirm the Transact ion 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 tran smission contingency) [] FT-Contract Path Contingency [] Seller [] Buyer
[] FT-Delivery Point Contingency [] Seller [] Buye r
[] Transmission Contingent [] Seller [] Buyer
[] Other transmission contingency
(Specify: )
Contract Quantity:
Delivery Point:
Contract Price:
Energy Price:
Other Charges:
50 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 ______________ (t he “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: