EXHIBIT 10.03
MASTER POWER PURCHASE AND SALE
AGREEMENT
This Master Power Purchase and Sale
Agreement (this “Master Agreement” and together with
all Transaction Agreements, collectively, the
“Agreement”) is entered into effective as of this 7th
day of July, 2004 (the “Effective Date”) by and between
Southwestern Public Service Company (“Company”), and El
Paso Electric Company (“Counterparty”). Each of the
Company and Counterparty may also be referred to individually as a
“Party” or collectively as the “Parties.”
Unless otherwise defined in this Master Agreement, capitalized
terms shall have the meanings set forth in Appendix “1”
attached to this Master Agreement.
SECTION 1.
SCOPE OF AGREEMENT
1.1. Scope of Agreement . (a) This Master
Agreement is entered into in accordance with the Company’s
Rate Schedule for Market-Based Power Sales (“Rate
Schedule”), and the terms of that Rate Schedule, and the
service agreement between the Parties entered thereunder
(“Service Agreement”), apply to this Master Agreement
and any Transaction Agreements as though set forth herein and
therein. From time to time, the Parties may, but shall not be
obligated to, enter into Transactions for the sale and purchase of
Power hereunder. Certain terms of specific Transactions will be set
forth in appropriate Transaction Agreements entered into in
accordance with this Master Agreement. However, the Parties are
relying upon the fact that all Transaction Agreements, together
with this Master Agreement, shall constitute a single integrated
agreement, and that the Parties would not otherwise enter into any
agreement to undertake a specific Transaction. In the event of any
conflict between or among the documents comprising this Agreement;
the following order of precedence shall apply: (i) written
Transaction Agreement (including Confirmations), (ii) Master
Agreement, and (iii) oral Transaction Agreement. All purchases and
sales between the Parties from and after the Effective Date shall
be deemed to be under the Rate Schedule, the Service Agreement, and
this Master Agreement unless expressly agreed to otherwise. The
Parties acknowledge that this Master Agreement and any Transaction
Agreement governed by it shall be subject to the filing,
disclosure, or notification requirements, if any, of the
FERC.
(b) Each Party conducts its
operations in a manner intended to comply with FERC Order No. 2004,
Standards of Conduct for Transmission Providers, requiring the
separation of its transmission and merchant functions. Moreover,
each Party’s transmission function offers transmission
service on its system in a manner intended to comply with FERC
policies and requirements relating to the provision of open-access
transmission service. Accordingly, each Party acknowledges that the
other Party’s responsibilities and obligations under the
Master Agreement and any Transaction are those of that
Party’s merchant function, not of its transmission function,
and that neither this Master Agreement nor any Transaction
Agreement imposes any responsibilities or obligations on that
Party’s transmission function. To the extent either Party
obligates itself to arrange transmission on its system in
connection with a Transaction, it is understood that such Party
will do so in a manner consistent with the open-access
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transmission tariff that is applicable to its
system, and it will only communicate with its transmission function
in a manner consistent with FERC Order No. 2004 (as it may be
modified or superseded by subsequent FERC orders).
1.2. Transaction Procedures .
During the term of this Agreement, the Parties may notify each
other that Power is sought or available for purchase or sale. Each
Transaction shall be effectuated and evidenced by the Authorized
Representatives of the Parties at the time the Transaction is
agreed to and shall be set forth as follows: (i) by a written
Transaction Agreement executed by the Parties or (ii) in a
telephone conversation between the Parties whereby an offer and
acceptance shall constitute an oral Transaction Agreement of the
Parties (which agreement may be subsequently set out in a
Confirmation, as described below) provided each Party may stipulate
by prior notice to the other Party that all Transactions or
particular types of Transactions ( e.g. , having a certain
duration or above a certain price) shall be effectuated and formed
only by means of procedure (i) above. Long-term Transactions (
i.e., having a duration of greater that a year) must be
evidenced by a written Transaction Agreement. The specific terms to
be established by the Parties for each Transaction in a Transaction
Agreement shall include the Buyer and Seller, the nature of the
Power to be provided ( i.e., capacity, energy, or both), the
Period of Delivery, the Contract Price, the Delivery Point, the
Contract Quantity, whether the Transaction is Firm or Non-Firm,
Scheduling, and such other terms as the Parties shall agree upon.
The Seller may confirm a telephonic Transaction by forwarding to
the Buyer a Confirmation, which shall be executed by the Buyer
(with any objections noted thereon) and returned to the Seller
within two (2) Business Days of Buyer’s receipt of it or else
be deemed correct as sent, absent manifest error. Failure by the
Seller to send a Confirmation shall not invalidate any Transaction
agreed to by the Parties. The Parties agree not to contest or
assert any defense to the validity or enforceability of telephonic
Transactions entered into in accordance with this Master Agreement
under Laws relating to whether certain agreements are to be in
writing or signed by the Party to be bound, or the authority of any
employee of the Party to enter into a Transaction. Each Party
consents to the recording of its representatives’ telephone
conversations without any further notice. All recordings may be
introduced into evidence and used to prove oral agreements between
the Parties permitted by this Section 1.2.
1.3. Term of Agreement . The
Parties intend that the term of this Master Agreement shall
commence on the Effective Date and continue until terminated by
either Party upon thirty (30) days prior written notice; provided,
however, that this Master Agreement shall remain in effect with
respect to any Transaction(s) entered into prior to the effective
date of the termination until both Parties have fulfilled all their
obligations with respect to such Transaction(s).
1.4. Regulatory Approval .
The Parties acknowledge that under current FERC policy, neither
Company nor Counterparty are required to file this Master Agreement
with the FERC for its approval. In the event that FERC changes its
policy, either Party may file this Master Agreement with the FERC,
and the other Party shall not oppose such filing.
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SECTION 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 and is qualified to conduct its business in each
jurisdiction in which a Transaction will be performed by it, (ii)
it has all regulatory authorizations necessary for it to legally
perform its obligations under this Master Agreement and each
Transaction, (iii) the execution, delivery and performance of this
Master Agreement and each Transaction are within its powers, have
been duly authorized by all necessary action and do not violate any
of the terms and conditions in its governing documents, any
contracts to which it is a party, or any Law applicable to it, (iv)
this Master Agreement and each Transaction when entered into in
accordance with this Master Agreement constitutes its legally valid
and binding obligation enforceable against it in accordance with
its terms, subject to any Equitable Defenses, (v) there are no
Bankruptcy Proceedings pending or being contemplated by it or, to
its knowledge, threatened against it (vi) there are no Legal
Proceedings that materially adversely affect its ability to perform
its obligations under this Master Agreement and each Transaction,
and (vii) it has knowledge and experience in financial matters and
the electric industry that enable it to evaluate the merits and
risks of entering into this Master Agreement and each
Transaction.
SECTION 3.
OBLIGATIONS AND
DELIVERIES
3.1. Seller’s and
Buyer’s Obligations . Subject to the terms of this Master
Agreement and any applicable Transaction Agreement, Seller, with
respect to each Transaction, shall sell and deliver, or cause to be
delivered, and Buyer shall purchase and receive, or cause to be
received, at the Delivery Point the Contract Quantity, and Buyer
shall pay Seller the Contract Price. Seller shall be responsible
for any costs or charges imposed on or associated with the delivery
of the Contract Quantity up to the Delivery Point. Buyer shall be
responsible for any costs or charges Imposed on or associated with
the Contract Quantity at and from the Delivery Point.
3.2. Transmission and
Scheduling . Seller shall arrange and be responsible for any
necessary transmission service to the Delivery Point and shall
Schedule or arrange for Scheduling services with its Transmission
Providers to deliver the Power to the Delivery Point. Buyer shall
arrange and be responsible for transmission service at and from the
Delivery Point and shall Schedule or arrange for Scheduling
services with its Transmission Providers to receive the Power at
the Delivery Point. Each Party shall designate Authorized
Representatives to effect the Scheduling of the Contract Quantity
of Power.
3.3. Title. Risk of Loss and
Indemnity . Seller warrants that it will deliver to Buyer the
Contract Quantity free and clear of all liens, claims, and
encumbrances arising prior to the Delivery Point. Title to and risk
of loss related to the Contract Quantity shall transfer from Seller
to Buyer at the Delivery Point.
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Notwithstanding any limitation or exclusion
prescribed by Section 5.1 or any other provision of this Agreement,
each Party shall indemnify and hold harmless the other Party, its
directors, officers, employees, agents, and contractors for,
against, and from any and all Claims for personal injury (including
mental anguish), death, or damage to the property of any third
party(s) arising from or out of any event circumstance, act, or
incident first occurring or existing during the period when title
to the Power is vested in the indemnitor; provided, however, the
obligations prescribed by this sentence shall not apply to the
extent such Claims are determined to be attributable to the
negligence, gross negligence, willful misconduct or strict
liability in tort of the indemnitee, its directors, officers,
employees, agents and/or contractors, if any (it being the intent
of the Parties that the indemnitee shall be entitled to comparative
indemnification for such Claims).
3.4. Force Majeure . If
either Party is rendered unable by Force Majeure to carry out in
whole or part, its obligations with respect to a Transaction and
such Party gives notice and full details of the event to the other
Party as soon as practicable after the occurrence of the event then
the obligations of the Party affected by the event (other than the
obligation to make payments then due or becoming due with respect
to performance prior to the event) shall be suspended for such
period as is necessary for the Party claiming Force Majeure, using
all reasonable dispatch, to remedy either the event of Force
Majeure or the effects thereof so as to be able to resume
performance; provided, however, that this provision shall not
require Seller to deliver, or Buyer to receive, Power at points
other than the Delivery Point.
3.5. Failure to Deliver/Receive
in Firm Transactions . (a) Unless excused by Force Majeure in
accordance with Section 3.4 or Buyer’s failure to perform any
material obligation under this Agreement if Seller fails to deliver
all or part of the Contract Quantity pursuant to a Firm Transaction
that Buyer has Scheduled, Seller shall pay Buyer, on the date
payment would otherwise be due to Seller, an amount for each MWh of
such deficiency equal to the positive difference, if any, obtained
by subtracting the Contract Price from the Replacement Price.
“Replacement Price” means the price at which Buyer,
acting in a commercially reasonable manner, purchases substitute
Power not delivered by Seller (plus any (i) Costs (as the term
“Cost” is defined in Section 4.2) reasonably incurred
by Buyer in purchasing the substitute Power, and (ii) additional
transmission charges incurred by Buyer to the Delivery Point) or,
absent a purchase, the market price for such quantity at such
Delivery Point as determined by Buyer in a commercially reasonable
manner. For purposes of determining Buyer’s Replacement Price
and its duty to mitigate damages under Section 5.2, Buyer shall not
be required to use or change its use of its owned or controlled
assets or market positions to minimize Seller’s
liability.
(b) Unless excused by Force Majeure
in accordance with Section 3.4 or Seller’s failure to perform
any material obligation under this Agreement if Buyer fails to
receive (i) the minimum requirement of the Contract Quantity, if
any, as required to be received pursuant to a Firm Transaction or
(ii) amounts of Power that the Parties agreed to Schedule pursuant
to a Firm Transaction, Buyer shall pay Seller, on the date payment
would otherwise be due, an amount for each MWh of such deficiency
equal to the positive difference, if any, obtained by subtracting
the Sales Price from the Contract Price. “Sales Price”
means the price at which Seller, acting in a commercially
reasonable manner, resells the Power not received by Buyer (plus
any (i) Costs reasonably incurred by Seller in selling such minimum
requirement,
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and (ii) additional transmission charges
incurred by Seller) or, absent a resale, the market price for such
quantity at the Delivery Point as determined by Seller in a
commercially reasonable manner. For purposes of determining
Seller’s Sales Price and its duty to mitigate damages under
Section 5.2, Seller shall not be required to use or change its use
of its owned or controlled assets or market positions to minimize
Buyer’s liability.
(c) Notwithstanding the requirements
and obligations specified in this Section 3.5, the Parties in a
written Transaction Agreement may agree to alternative arrangements
that would apply in the event of a Seller’s failure to
deliver or a Buyer’s failure to accept the Contract Quantity
or any portion thereof.
3.6. Failure to Deliver/Receive
Non-Firm Transactions . A Party may be excused from delivering
or receiving the Contract Quantity, in whole or in part, in a
Non-Firm Transaction for any reason without liability.
3.7 Exclusive Remedy . Except
as may be provided in a Transaction Agreement, the applicable
remedy prescribed by Section 3.5 shall be the sole and exclusive
remedy for a Party’s failure to deliver or receive the
Contract Quantity referenced therein.
SECTION 4.
DEFAULTS AND
REMEDIES
4.1. Events of Default . An
“Event of Default” shall mean with respect to a Party
(“Defaulting Party”): (i) the failure to make, when
due, any payment required pursuant to this Agreement if such
failure is not remedied within five (5) Business Days after written
notice of such failure is received by the Defaulting Party from the
other Party (“Non-Defaulting Party”) and provided the
payment is not the subject of a good faith dispute as described in
Section 6, (ii) any representation or warranty made by the
Defaulting Party pursuant to Section 2 shall prove to be false or
misleading in any material respect when made, (iii) the failure to
perform any material covenant set forth in this Agreement (other
than the events that are otherwise specifically covered in this
Section 4.1 as a separate Event of Default or its obligations to
deliver or receive Power the exclusive remedy for which is provided
in Section 3) or any Transaction Agreement, and such failure is not
excused by Force Majeure in accordance with Section 3.4 or cured
within five (5) Business Days after written notice thereof is
received by the Defaulting Party, (iv) the Defaulting Party shall
be subject to a Bankruptcy Proceeding, or (v) Adequate Assurance of
Performance is not provided in accordance with Section
4.4.
4.2. Remedies upon an Event of
Default . (a) If an Event of Default occurs at any time during
the term of this Agreement, the Non-Defaulting Party may, for so
long as the Event of Default is continuing, (i) establish a date
(which date shall be between 2 and 20 Business Days after the
Non-Defaulting Party delivers notice) (“Early Termination
Date”) on which (x) if the Event of Default arises under
clauses (i) or (iii) of Section 4.1, the Transaction(s) underlying
or giving rise to such Event of Default shall terminate (each a
Terminated Transaction”) or (y) if the Event of Default
arises under clauses (ii) (unless relating to the failure to obtain
regulatory approval for any Transactions (Section 2(ii)), in which
case only those specific Transactions may be terminated), (iv), or
(v) of Section 4.1, all Transactions shall terminate, and (ii)
withhold
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any payments due in respect of the Terminated
Transaction(s). If an Early Termination Date has been designated,
the Non-Defaulting Party shall in good faith calculate its Gains,
Losses, and Costs resulting from the termination of the Terminated
Transaction(s). The Gains and Losses shall be determined by
comparing the value of the remaining term, Contract Quantities and
Contract Prices under each Terminated Transaction had it not been
terminated to the equivalent quantities and relevant market prices
for the remaining term either quoted by a bona fide third-party
offer or which are reasonably expected to be available in the
market under a replacement contract for each Terminated
Transaction. To ascertain the market prices of a replacement
contract, the Non-Defaulting Party may consider, among other
valuations, any or all of the settlement prices of NYMEX Power
futures contracts, quotations from leading dealers in energy swap
contracts, and other bona fide third-party offers, all adjusted for
the length of the remaining term and differences in transmission.
It is expressly agreed that a Non-Defaulting Party shall not be
required to enter into replacement transactions in order to
determine the amount due under Section 4.2. The Non-Defaulting
Party shall aggregate such Gains and Losses, and all associated
Costs with respect to all Terminated Transaction(s) into a single
net amount and if the Non-Defaulting Party’s (i) aggregate
Losses and Costs exceed (ii) its aggregate Gains, the Defaulting
Party shall, . within five (5) Business Days of receipt of written
demand, pay the; difference between the aggregate sums referenced
in clauses (i) and (ii) of this sentence (the “Termination
Payment”) to the Non-Defaulting Party, which Termination
Payment shall bear interest at the Interest Rate from the Early
Termination Date until paid. If the Non-Defaulting Party’s
(i) aggregate Gains equal or exceed (ii) the sum of its aggregate
Losses and Costs, the Termination Payment shall be zero, and the
Defaulting Party shall have no interest in or right or entitlement
to, and shall not claim that it should be owed, the difference, if
any, between the aggregate sums referenced in clauses (i) and (ii)
of this sentence.
(b) As used in this Agreement with
respect to each Party: (i) “Costs” shall mean, with
respect to a Party, brokerage fees, commissions, and other similar
transaction costs and expenses reasonably incurred by such Party
either in terminating any arrangement pursuant to which it has
hedged its obligations or entering into new arrangements which
replace a Terminated Transaction, and attorneys’ fees, if
any, incurred in connection with enforcing its rights under this
Agreement; (ii) “Gains” shall mean, with respect to a
Party, an amount equal to the present value of the economic benefit
(exclusive of Costs), if any, to it resulting from the termination
of its obligations with respect to a Terminated Transaction,
determined in a commercially reasonable manner, and (iii)
“Losses” shall mean, with respect to a Party, an amount
equal to the present value of the economic loss (exclusive of
Costs), if any, to it resulting from the termination of its
obligations with respect to a Terminated Transaction, determined in
a commercially reasonable manner. At the time for payment of any
amount due under this Section 4.2, each Party shall pay to the
other Party all additional amounts payable
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by its pursuant to this Agreement ( e.g.,
amounts owed for services provided prior to termination), but all
such amounts shall be netted and aggregated with any Termination
Payment payable hereunder.
(c) Notwithstanding any other
provision of this Agreement if Buyer or Seller fails to pay to the
other Party any amounts when due and such failure is not cured
within five (5) Business Days following the delinquent
Party’s receipt of written notice describing such nonpayment
in reasonable detail, the Non-Defaulting Party may, regardless of
whether it elects to exercise its remedies under Section 4.2(a),
(i) suspend performance of any or all of its obligations related to
any Transactions until . such amounts plus interest at the Interest
Rate have been paid and/or (ii) exercise any remedy available at
Law to enforce payment of such amount plus interest at the Interest
Rate; provided, however, If the non-paying Party, in good faith,
shall dispute the amount of any such billing or part thereof and
shall pay such amounts as it concedes to be correct, no suspension
shall be permitted.
4.3. Other Events . Unless
the Parties agree otherwise in a Transaction Agreement, in the
event Buyer or Seller is regulated by a federal, state, or local
regulatory body, and such body shall either (i) disallow all or any
portion of any. costs incurred or yet to be incurred by Buyer
through a purchase, or (ii) through its setting of rates attribute
costs to a sale made by Seller under any provision of this
Agreement, such action shall not operate to excuse Buyer or Seller
from performance of any obligation nor shall such action give rise
to any right of Buyer or Seller to any refund or retroactive
adjustment of the Contract Price provided in any Transaction.
Notwithstanding the foregoing, if a Party’s activities
hereunder become subject to regulation of any kind whatsoever under
any Law to a greater or different extent than that existing on the
Effective Date and such regulation renders this Agreement illegal
or unenforceable in its entirety, the Parties shall, through their
duly authorized representatives, convene to discuss and assess in
good faith appropriate, modifications to or restructuring of this
Agreement so that it is no longer rendered illegal or
unenforceable; provided, however, if despite such good faith
efforts the Agreement cannot be so modified or restructured, either
Party shall have the right to declare an Early Termination Date
effective as of the date this Agreement becomes illegal or
unenforceable and no Termination Payment shall be owing to either
Party.
4.4. Credit Assurances . (a)
If either party (“X”) has reasonable grounds for
insecurity regarding the performance of any obligation under this
Contract (whether or not then due) by the other party
(“Y”) (including, without limitation, the occurrence of
a material change in the creditworthiness of Y), X may demand
Adequate Assurance of Performance in an amount determined by X in a
commercially reasonable manner. In the event that Y fails to
provide Adequate Assurance of Performance reasonably acceptable to
X within three (3) Business Days following Y’s receipt of
such demand, an Event of Default under Section 4.1 will be deemed
to have occurred and X will be entitled to the remedies set forth
in Section 4.2 of this Master Agreement.
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Confidential treatment has
been requested for the redacted portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of
this exhibit has been filed separately with the Securities Exchange
Commission.
(b) Absent a change in a
Party’s (Y’s) financial circumstances that would
justify a request by the other Party (X) for Adequate Assurance of
Performance in accordance with Section 4.4, X may only request
Adequate Assurance of Performance to the extent that Y’s
obligations under this Agreement (after netting of all obligations
pursuant to Section 6.2) exceed the applicable credit limit. The
credit limit for each Party, which is based upon each
Parties’ creditworthiness as of the Effective Date, is as
follows: (i) for Counterparty, $ *****, and (ii) for Company, $
*****. Either Party may request Adequate Assurance of Performance
to secure payment projected to be owed in excess of the applicable
credit limit amount irrespective of whether a change in financial
circumstances has occurred.
(c) Upon the occurrence of a
material change in the creditworthiness of a Party
(“X”). the Parties shall convene within a reasonable
time (but in no event more than fifteen (15) days following a
Party’s receipt of written request) to establish a revised
credit limit for X based upon Y’s standard criteria for
creditworthiness which, in turn, shall be based upon commercially
reasonable criteria; provided, however, that in the event that the
Parties are unable to agree to a revised credit line, each Party
reserves its respective rights ( i.e., (i) Y to either
retain or modify X’s credit limits based on its standard
criteria, and (ii) X to dispute the credit limit that Y retains or
establishes).
SECTION 5.
LIMITATIONS; DUTY TO
MITIGATE
5.1. Limitation of Remedies.
Liability and Damages . THE PARTIES CONFIRM THAT THE EXPRESS
REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY
THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR
WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS
SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT
LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS
EXPRESSLY HEREIN PROVIDED, THE OBLIGOR’S LIABILITY SHALL BE
LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES
SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR
DAMAGES AT LAW OR IN EQUITY ARE WAIVED. EXCEPT FOR CLAIMS FOR
INDEMNIFICATION UNDER SECTION 3.3, EACH TO WHICH THE PROVISIONS OF
THIS SECTION 5.1 SHALL NOT APPLY, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES,
LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN
TORT OR CONTRACT, OR OTHERWISE. IT IS THE INTENT OF THE PARTIES
THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED
THERETO,
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INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE
LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT
OR IMPOSSIBLE TO DETERMINE, OTHERWISE OBTAINING AN ADEQUATE REMEDY
IS INCONVENIENT, AND THE LIQUIDATED DAMAGES CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS.
5.2. Duty to Mitigate . Each
Party agrees that it has a duty to mitigate damages and covenants
that it will use commercially reasonable efforts to minimize any
damages it may incur as a result of the other Party’s
performance or non-performance of this Agreement.
5.3. Disclaimer of Warranties
. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER EXPRESSLY
NEGATES ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO CONFORMITY TO MODELS OR
SAMPLES MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR
PURPOSE.
SECTION 6.
BILLING; PAYMENT
6.1. Billing and Payment .
Seller shall render to Buyer (by regular mail, facsimile or other
acceptable means pursuant to Section 8.3) for each calendar month
during which purchases/sales are made, a statement setting forth
the total quantity of Power that was Scheduled or that Buyer was
obligated to purchase and any other charges due Seller, including
Demand Charges or payments or credits between the Parties pursuant
to Section 3.5, under this Agreement during the preceding month and
the total net amounts due to Seller from Buyer therefor. Billing
and payment will be based on Scheduled hourly quantities (with such
amount adjusted as appropriate for curtailments that are allowable
under a Transaction Agreement). On or before ten (10) days after
receipt of Seller’s statement or if such day is not a
Business Day, the immediately following Business Day, Buyer shall
render, by wire transfer or as otherwise agreed between the
Parties, the amount set forth on such statement to the payment
address provided in Exhibit “A” appended to this Master
Agreement. Overdue payments shall accrue interest from, and
including, such tenth (10th) day (or following Business Day, as
applicable) to, but excluding, the date of payment at the Interest
Rate. If Buyer, in good faith, disputes a statement, Buyer shall
provide a written explanation of the basis for the dispute and pay
the portion of such statement conceded to be correct no later than
such tenth (10th) day (or following Business Day, as applicable).
If any amount disputed by Buyer is determined to be due to Seller,
it shall be paid within ten (10) days of such determination, along
with interest accrued at the Interest Rate from the date such
payment was originally due to the date paid.
6.2. Mandatory Netting/Setoff
. On or before the tenth (10th) calendar day of each month the
Parties shall communicate by telephone to determine whether the
netting and setoff provisions of this Section 6.2 are applicable to
the payments to be made with respect to such month. Any amounts
(other than amounts disputed in-good-faith) owed by the Parties
under this Agreement shall be aggregated and the Parties shall
discharge their obligations to
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pay through netting, in which case the Party, if
any, owing the greater aggregate amount shall pay to the other
Party the difference between the amounts owed. Each Party reserves
to itself all rights, setoffs, counterclaims, and other remedies
and defenses consistent with Section 4 (to the extent not expressly
herein waived or denied) which such Party has or may be entitled to
arising from or out of this Agreement. All outstanding Transactions
and the obligations to make payment in connection therewith or
under this Agreement (including any damages that may be determined
and owed in accordance with Section 3.5 and any Termination Payment
determined and owed in accordance with Section 4.2) may be offset
against each other, set off, or recouped therefrom. A Party’s
failure to net, offset, setoff, or recoup such obligations shall
not alter, waive, or otherwise affect such Party’s right to
payment under this Agreement.
6.3. Audit . Each Party (and
its representative (s)) has the right, at its sole expense and
during normal working hours, to examine the records of the other
Party to the extent reasonably necessary to verify the accuracy of
any statement, charge, or computation made pursuant to this
Agreement. If requested, a Party shall provide to the other Party
statements evidencing the quantities of Power delivered at the
Delivery Point. If any such examination reveals any inaccuracy in
any statement, the necessary adjustments with such statement and
the payments thereof will be promptly made and shall bear interest
calculated at the Interest Rate from the date the overpayment or
underpayment was made until paid; provided, however, that no
adjustment for any statement or payment will be made unless
objection to the accuracy thereof was made prior to the lapse of
four (4) years from the rendition thereof.
SECTION 7.
TAXES
7.1. Taxes . Seller shall pay
or cause to be paid all taxes imposed by any governmental authority
(“Taxes”) on or with respect to a Transaction arising
prior to the Delivery Point Buyer shall pay or cause to be paid all
Taxes on or with respect to a Transaction at and from the Delivery
Point (other than ad valorem, franchise, or income Taxes that are
related to the sale of Power and are, therefore, the responsibility
of the Seller). In the event Seller is required by Law to remit or
pay Taxes that are Buyer’s responsibility hereunder, Buyer
shall promptly reimburse Seller for such Taxes. If Buyer is
required by Law to remit or pay Taxes that are Seller’s
responsibility hereunder, Buyer may deduct the amount of any such
Taxes from the sums due to Seller under Section 6 of this
Agreement. Nothing shall obligate or cause a Party to pay or be
liable to pay any Taxes for which it is exempt under
Law.
7.2. Cooperation . Each Party
shall use reasonable efforts to implement the provisions of and to
administer this Master Agreement in accordance with the intent of
the parties to minimize all Taxes, so long as neither Party is
adversely affected by such efforts.
SECTION 8.
MISCELLANEOUS
8.1. Assignment . Neither
Party shall assign this Agreement or its rights hereunder without
the prior written consent of the other Party; provided,
however,
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either Party may, without the consent of the
other Party (and without relieving itself from liability
hereunder), (i) transfer, sell, pledge,-encumber or assign its
rights under this Agreement or the accounts; revenues or proceeds
hereof in connection with any financing or other financial
arrangements, (ii) transfer or assign this Agreement to an
Affiliate of such Party provided that the creditworthiness of such
Affiliate is equal to or greater than that of the transferring
entity, or (iii) transfer or assign this Agreement to any person or
entity succeeding to all or substantially all of the assets of such
Party, provided, however, that in each such case, any such assignee
shall agree to in writing be bound by the terms and conditions
hereof. Additionally, in the event a Party undertakes a
reorganization to comply with any Law (including, without
limitation, Section 39.051 of the Texas Utility Code), the Parties
agree that such Party may transfer or assign this Agreement
(including any Transaction Agreements entered into pursuant to this
Master Agreement) to an Affiliate, and be released of its
obligations thereunder, provided that the Affiliate’s
ultimate parent company provides a guarantee of the
Affiliate’s payment obligations at terms and conditions that
are reasonably acceptable to the receiving Party.
8.2. Financial Information .
If requested by Counterparty, the Company shall deliver within 120
days following the end of each fiscal year, a copy of its audited
consolidated financial statements for such fiscal year certified by
independent certified public accountants. If requested by the
Company, Counterparty shall deliver within 120 days following the
end of each fiscal year, a copy of its audited consolidated
financial statements for such fiscal year certified by independent
certified public accountants. In all cases the statements shall be
for the most recent accounting period and prepared in accordance
with GAAP or such other principles then in effect; provided, should
any such statements not be available within such 120 day period due
to a delay in preparation or certification, such delay shall not be
considered a default so long as such Party diligently pursues the
preparation, certification and delivery of the
statements.
8.3. Notices . All notices,
demands, requests, statements, Confirmations, payments, or other
communications between the Parties shall be made as specified in
Exhibit “A”. Notices and other communications required
to be in writing shall be delivered by letter, facsimile, or other
documentary form. All notices and other written communications
shall be effective upon receipt if sent by facsimile, the next
Business Day if sent by overnight courier, or three days later if
mailed, provided, however, that receipt after 5:00 p.m. local time
of the recipient shall be effective the following Business Day. A
Party may change its addresses by providing notice of same in
accordance herewith.
8.4. Governing Law . THIS
AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW OR CHOICE OF LAWS.
8.5. Survival . The following
provisions shall survive the expiration or termination of this
Master Agreement Sections 1.3, 3.3, 3.5, 4.2, 5.1, 5.2,
6.2,
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6.3, 8.3, 8.4, 8.5, 8.6, 8.7, and 8.8. The
provisions of an
