Exhibit 99.3
MASTER CROSS-PRODUCT NETTING, SETOFF, AND SECURITY AGREEMENT
This Master Cross-Product Netting, Setoff, and Security Agreement (this
"AGREEMENT") is made and entered into effective as of March 14, 2001 by, between
and among The New Power Company, a Delaware corporation ("NEWPOWER"), Enron
North America Corp., a Delaware corporation ("ENA"), and Enron Energy Services,
Inc., a Delaware corporation ("EES," and together with ENA, collectively, the
"ENRON PARTIES").
RECITALS
ENA and NewPower are parties to that certain Enfolio(R) Master Firm
Purchase/Sale Agreement, effective as of January 1, 2000 (as assigned to
NewPower and together with all confirmations, annexes, appendices, and exhibits
thereto and transactions thereunder, the "XXX-XXXXXXXX ENFOLIO(R) MASTER
AGREEMENT"), between ENA and Columbia Energy Services Corporation ("CES"), which
was assigned by CES to NewPower (as amended, modified and assigned to NewPower
pursuant to that certain Asset Purchase Agreement, dated June 29, 2000 (the
"ASSET PURCHASE AGREEMENT").
ENA and NewPower are parties to that certain ISDA Master Agreement, dated as of
August 10, 2000 (together with all confirmations, annexes, appendices, and
exhibits thereto and transactions thereunder, the "XXX-XXXXXXXX ISDA MASTER
AGREEMENT").
NewPower Holdings, Inc., a Delaware corporation ("HOLDINGS") (f/k/a TNPC, Inc.,
f/k/a EMW Energy Services Corp.) is the guarantor under that certain guaranty,
dated as of March 14, 2001 (the "HOLDINGS GUARANTY", annexed hereto as Exhibit
"A"), pursuant to which Holdings irrevocably and unconditionally guarantees,
subject to the limitations specified therein, the obligations of NewPower under
this Agreement and the Underlying Master Agreements in an aggregate amount up to
$20 million, such Holdings Guaranty to be delivered by NewPower to the Enron
Parties within 10 Business Days of the date hereof.
Enron Corp., an Oregon corporation ("ENRON") is the guarantor under that certain
guaranty, dated as of March 14, 2001 (the "ENRON GUARANTY", annexed hereto as
Exhibit "B"), pursuant to which Enron irrevocably and unconditionally
guarantees, subject to the limitations specified therein, the obligations of the
Enron Parties under this Agreement and the underlying Master Agreements in an
aggregate amount up to $105 million, such Enron Guaranty to be delivered by the
Enron Parties to NewPower within 10 Business Days of the date hereof.
EES and Holdings are parties to that certain Master Purchase & Sales Agreement,
effective as of January 6, 2000 between EES and Holdings, which was assigned by
Holdings to NewPower pursuant to that certain Assignment and Consent, dated as
of March 1, 2001 (the "ASSIGNMENT AGREEMENT") between Holdings, NewPower and EES
(as so assigned, together with all confirmations, annexes, appendices,
amendments, and exhibits thereto and transactions thereunder, the "EES-NEWPOWER
MASTER GAS AGREEMENT").
EES and Holdings are parties to that certain Master Energy Purchase & Sale
Agreement, effective as of January 6, 2000 between EES and Holdings, which was
assigned by Holdings to NewPower pursuant to the Assignment Agreement (as so
assigned, together with all
confirmations, annexes, appendices, amendments, and exhibits thereto and
transactions thereunder, the "EES-NEWPOWER MASTER POWER AGREEMENT").
The XXX-XxxXxxxx Enfolio(R) Master Agreement, the XXX-XxxXxxxx ISDA Master
Agreement, the EES-NewPower Master Gas Agreement, and the EES-NewPower Master
Power Agreement are referred to herein, collectively, as the "UNDERLYING MASTER
Agreements", and each individually, as an "UNDERLYING MASTER AGREEMENT".
Each Enron Party desires now to provide in this Agreement for its right to
terminate, liquidate, net, setoff, and apply Collateral upon a Default by
NewPower under any one or more of the Underlying Master Agreements as herein
specified, including, without limitation, by permitting each and every Enron
Party to terminate, liquidate, net, setoff, and apply Collateral across all of
the Underlying Master Agreements and to treat the Underlying Master Agreements
as a single agreement for such purposes, whether or not the Obligations arising
under the Underlying Master Agreements are in connection with (a) cash settled
Transactions or physically settled Transactions or (b) securities, forward
contracts, commodities contracts, repurchase agreements, or swap agreements.
NewPower desires now to provide in this Agreement for its right to terminate,
liquidate, net, setoff, and apply Collateral upon a Default by any Enron Party
under any one or more of the Underlying Master Agreements as herein specified,
including, without limitation, by permitting NewPower to terminate, liquidate,
net, setoff, and apply Collateral across all of the Underlying Master Agreements
and to treat the Underlying Master Agreements as a single agreement for such
purposes, whether or not the Obligations arising under the Underlying Master
Agreements are in connection with (a) cash settled Transactions or physically
settled Transactions or (b) securities, forward contracts, commodities
contracts, repurchase agreements, or swap agreements.
NOW THEREFORE, for and in consideration of the mutual agreements herein
made and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, including, without limitation, certain amendments
to the Underlying Master Agreements, the Parties agree as follows:
1. DEFINITIONS. (a) Defined terms used or incorporated by reference in
this Agreement and not otherwise defined herein have the same meanings in this
Agreement as given to them by the respective Underlying Master Agreement. In the
event of any conflict or inconsistency between a term defined herein and in any
of the Underlying Master Agreements, such term as used in this Agreement shall
govern and have the meaning ascribed to it in this Agreement.
(b) The following terms used in this Agreement are defined as follows:
"BUSINESS DAY" means a day on which commercial banks and foreign exchange
markets settle payments and are open for general business in the location of the
head office of each Party.
"CODE" means the United States Bankruptcy Code, 11 U.S.C.ss.ss.101-1330.
"COLLATERAL" has the meaning set forth in Section 6.
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"COVENANT COMPLIANCE CERTIFICATE" has the meaning set forth in section
7(c).
"CREDIT RATING" means with respect to an entity, on any date of
determination, the respective ratings then assigned to such entity's unsecured,
senior long-term debt or depository obligations (not supported by third-party
credit enhancement) by S&P, Moody's or other specified rating agency or agencies
as may be agreed to by the Parties.
"DEBT" has the meaning set forth in Section 101 of the Code.
"DEFAULT" has the meaning set forth in Section 2.
"DEFAULTING PARTY" means an Enron Party when a Default has occurred with
respect to any Enron Party ("DEFAULTING ENRON PARTY), and NewPower when a
Default has occurred with respect to NewPower ("DEFAULTING NEWPOWER").
"ENRON AFFILIATES" means each Enron Party and each of its now and
hereafter existing affiliates.
"EXPOSURE THRESHOLD" means for each Party, the respective amount
designated for such Party in Section 6(g).
"FINAL SETTLEMENT AMOUNT" has the meaning set forth in Section 4.
"GAAP" means generally accepted accounting principles established by the
Financial Accounting Standards Board.
"GUARANTIES" means, collectively, the Holdings Guaranty and the Enron
Guaranty.
"LETTER OF CREDIT" means an irrevocable, transferable standby letter of
credit, in a form acceptable to the beneficiary thereof, issued by a United
States commercial bank or a foreign bank with a United States branch, with such
bank having a credit rating of "A-" or higher from S&P or "A3" or higher from
Moody's.
"MATERIAL ADVERSE CHANGE" means (a) with respect to NewPower, either that
(i) the NewPower Affiliates hold, on a consolidated basis, unencumbered cash,
cash equivalents and/or marketable securities less debt, surety bonds, letters
of credit and an amount equal to obligations claimable against guarantees issued
by Holdings in an aggregate amount of less than $100,000,000 or (ii) the
aggregate value of all of the NewPower Affiliates' tangible assets on a
consolidated basis exceeds the aggregate value of all of their liabilities on a
consolidated basis by an amount of less than $300,000,000, in both cases
determined in accordance with GAAP, and (b) with respect to the Enron Parties,
either that (i) Enron is assigned a Credit Rating below "BBB-" by S&P or below
"Baa3" by Moody's or (ii) Enron fails to have a Credit Rating.
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"MOODY'S" means Xxxxx'x Investor Services, Inc. or a successor (if any).
"NEWPOWER AFFILIATES" means NewPower and each of its now and hereafter
existing affiliates.
"NON-DEFAULTING PARTY" means any Enron Party when a Default has occurred
with respect to NewPower, and NewPower when a Default has occurred with respect
to any Enron Party.
"OBLIGATION" or "OBLIGATIONS" means each and every obligation or liability
NewPower owes to any Enron Party or any Enron Party owes to NewPower, whether
financial or physical including, without limitation, payment and delivery
obligations, each and every obligation or requirement under an Underlying Master
Agreement, a Transaction, or hereunder, any Debt, any obligation arising under a
guarantee, with respect to an Underlying Master Agreement that NewPower has
provided to any Enron Party or than any Enron Party has provided to NewPower,
and each and every obligation or requirement under any Transaction, Underlying
Master Agreement, or this Agreement to maintain or deliver Collateral with
respect thereto (whether or not performance is due) or in connection with a
guarantee, or acceleration, cancellation, termination, or liquidation of a
guarantee, whether arising under an Underlying Master Agreement, this Agreement,
heretofore, or hereafter and whether fixed, matured, unmatured, liquidated,
unliquidated, or contingent.
"PARTY" means NewPower, on the one hand, or ENA, and/or EES, on the other
hand, as the context indicates.
"S&P" means Standard & Poor's, a division of the XxXxxx-Xxxx Companies, or
a successor (if any).
"SETTLEMENT AMOUNT" means, in respect of any Underlying Master Agreement,
the net amount that is due and payable by one Party to the other Party upon (A)
such agreement having been accelerated, terminated, liquidated, or cancelled in
accordance with the terms of the Underlying Master Agreement (including by way
of automatic early termination), (B) the resulting Obligations of each Party
having been determined in accordance with the terms of the Underlying Master
Agreement, and (C) in accordance with the applicable Underlying Master
Agreement, those Obligations having been netted and reduced by the exercise of
rights to apply margin or other credit support delivered under or held in
connection with such agreement.
"TRANSACTION" or "TRANSACTIONS" means each and every trade, transaction,
or other open contractual commitment, between any Enron Party and NewPower
arising under the Underlying Master Agreements.
"UNDERLYING MASTER AGREEMENTS CLOSE-OUT" has the meaning set forth in
Section 2.
2. DEFAULT AND REMEDIES. (a) Each of the occurrence of (i) a default, event of
default, or other event on the basis of which a Party has the contractual right
to accelerate, terminate (including
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automatic early termination), liquidate, or cancel all Transactions under any of
the Underlying Master Agreements and such Party exercises its contractual right
to accelerate, terminate, liquidate, or cancel all Transactions under such
agreement, (ii) any representation or warranty made or repeated by a Party
hereunder proves to have been incorrect or misleading in any material respect
when made or repeated, (iii) a Party being in violation of a covenant made
hereunder, or (iv) a Party's failure to comply with Collateral requirements
under Section 6(g) hereof, constitutes a "DEFAULT" under this Agreement without
regard to any cure periods or conditions relating to the giving of notice or the
passage of time provided for in any of the Underlying Master Agreements;
provided, the failure to provide a Covenant Compliance Certificate as specified
in Section 7(c) of this Agreement shall constitute a Default hereunder only if
such failure is not remedied on or before two Business Days after written notice
of such failure is provided to NewPower.
(b) Upon the occurrence and continuance of a Default, the Non-defaulting
Party may, by not more than 20 days notice to the Defaulting Party specifying
the relevant Default (i) consider and declare the Defaulting Party in default of
all of the Underlying Master Agreements and all Transactions thereunder and by
designating a date not earlier than the date such notice is effective but not
later than the date that is 10 days after the date such notice is effective,
accelerate, cancel, terminate, and liquidate, or otherwise close-out all
Transactions as of such designated date; (ii) setoff, net, and/or recoup the
Non-defaulting Party's Obligations to the Defaulting Party against each
Defaulting Party's Obligations to the Non-defaulting; (iii) retain any
Collateral; (iv) with respect to a Defaulting Party, withhold payment and
performance of the Non-defaulting Party's Obligations to the Defaulting Party to
pay, secure, setoff against, net, and/or recoup any Defaulting Party's
Obligations to the Non-defaulting; (v) foreclose, collect, sell, or otherwise
liquidate any Collateral in any order and at any time, and apply the proceeds
thereof to satisfy a Defaulting Party's Obligation to any Non-defaulting Party;
(vi) convert any Obligation from one currency into another currency as set forth
in Section 5; and/or (vii) take any other action permitted by law or in equity
or by any Transaction necessary or appropriate to protect, preserve, or enforce
its rights or to reduce any risk of loss or delay. Any one or more of the
foregoing acts shall be referred to herein as the "UNDERLYING MASTER AGREEMENTS
CLOSE-OUT."
(c) Any requirements under the Underlying Master Agreements for
accelerating, terminating, liquidating, canceling, or otherwise closing-out
Transactions thereunder are hereby amended and shall be satisfied by compliance
with the notice provisions set forth in Sections 2(b) and 12 of this Agreement.
If a Default occurs and the Non-defaulting Party does not elect to cause the
Underlying Master Agreements Close-Out, each Party shall retain its rights and
obligations under each Underlying Master Agreement with respect thereto.
3. SETOFF. Upon (a) the occurrence and continuance of a Default in respect
of a Defaulting Party and (b) the Non-defaulting Party's exercise of the
Underlying Master Agreements Close-Out, the Non-defaulting Party may, without
prior notice, setoff (including by set-off, offset, combination of accounts,
retention, or withholding across or within each or all of the Underlying Master
Agreements) any sum, amount, or Obligation (whether physically or financially
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settled, matured or unmatured) owed by any Non-defaulting Party to any
Defaulting Party against any sum, amount, or Obligation (whether physically or
financially settled, matured or unmatured) owed by any Defaulting Party to any
Non-defaulting Party. The foregoing is in addition to, and not in limitation of,
any other right or remedy available to the Non-defaulting Party (including any
right of setoff, offset, combination of accounts, deduction, counterclaim,
retention, or withholding), whether arising by agreement, (including, without
limitation, any of the Underlying Master Agreements or the Guaranties and with
particularity, rights therein with respect to the Parties to this Agreement and
their affiliates), applicable law, equity, or otherwise.
4. SETTLEMENT. Upon (a) the occurrence and continuation of a Default and
(b) the Non-defaulting Party's exercise of the Underlying Master Agreements
Close-Out, the Settlement Amount under each of the Underlying Master Agreements
shall be determined in accordance with the terms of such agreement as if a
Default has occurred, giving the Non-defaulting Party the right to accelerate,
terminate and liquidate the Transactions under each Underlying Master Agreement
in accordance with the terms of each such agreement and, upon such
determination, all Settlement Amounts shall be netted and reduced by the
exercise of rights to apply margin or other credit support delivered under or
held in connection therewith and pursuant to all rights granted in this
Agreement (the "FINAL SETTLEMENT AMOUNT"); provided, if a Settlement Amount has
been setoff in whole or in part, such Settlement Amount, to the extent of such
setoff, shall be deemed to have been discharged and no longer due under the
relevant Underlying Master Agreement. Upon determination of the Final Settlement
Amount the Non-defaulting Party shall provide the Defaulting Party with a
statement showing in reasonable detail the calculation of the Final Settlement
Amount (including all relevant quotations with respect to the Transactions). The
Final Settlement Amount shall be payable by the Party from whom such payment is
due on the third Business Day after the statement is provided. In the event of a
dispute as to the Final Settlement Amount payable by a Party, such Party shall,
within the time proscribed herein, pay the undisputed amount of the Final
Settlement Amount. The Parties shall in good faith seek to resolve such disputed
amount of the Final Settlement Amount without delay. If the Parties are unable
to resolve the disputed amount of the Final Settlement Amount within 10 days,
the matter shall be submitted to arbitration in accordance with Section 16
hereof. The Final Settlement Amount shall bear interest at the highest rate
provided for in any of the Underlying Master Agreements; provided, such rate
shall not exceed the maximum non-usurious interest rate, if any, that at any
time or from time to time may be contracted for, taken reserved, charged, or
received thereon under any applicable law.
5. CURRENCY. In order to effect the provisions of this Agreement, any
amounts subject hereto may be converted into another currency specified in any
of the Underlying Master Agreements at the rate of exchange at which the Party
so converting, acting in a reasonable manner and in good faith, would be able to
purchase the relevant amount of the currency being converted; provided, amounts
shall not be converted into a currency that is specified in fewer than fifty
percent (50%) of the Transactions at the time of such conversion.
6. SECURITY INTEREST AND LIEN; LETTERS OF CREDIT; EXPOSURE THRESHOLDS. (a)
Each Enron Party hereby grants to NewPower a continuing security interest in and
assigns (notwithstanding any limitation in any of the Underlying Master
Agreements) to NewPower (i) all securities, monies, or other property now or
hereafter held or carried by NewPower in any
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accounts of any Enron Party or otherwise held or subject to the control or
dominion of NewPower or any agent thereof (including any margin posted) under
this Agreement or the Underlying Master Agreements, (ii) any rights any Enron
Party has in any Obligations of NewPower arising under this Agreement or the
Underlying Master Agreements, and (iii) all proceeds of or distributions on any
of the foregoing.
(b) NewPower hereby grants to each Enron Party a continuing security
interest in and assigns (notwithstanding any limitation in any of the Underlying
Master Agreements) to each Enron Party (i) all securities, monies, or other
property now or hereafter held or carried by any Enron Party in any accounts of
NewPower or otherwise held or subject to the control or dominion of any Enron
Party or any agent thereof (including any margin posted) under this Agreement or
the Underlying Master Agreements, (ii) any rights NewPower has in any
Obligations of any Enron Party arising under this Agreement or the Underlying
Master Agreements, and (iii) all proceeds of or distributions on any of the
foregoing.
All property set forth in the foregoing paragraphs (a) and (b), and all
Letters of Credit, are referred to herein as "COLLATERAL."
(c) All Collateral pledged by any Party in connection with a particular
Transaction or Transactions shall secure first its Obligations under that
Transaction or those Transactions, and second its Obligations under all other
Transactions. In furtherance of the foregoing, any Underlying Master Agreements
more particularly describing any property that is Collateral is hereby
incorporated by reference herein as if fully set forth herein.
(d) Each Enron Party agrees to act as the agent and bailee of each other
Enron Party in respect of the Collateral and shall hold any Collateral both as
secured party and as agent and bailee of each other Enron Party as a secured
party. NewPower hereby irrevocably appoints each Enron Party severally to be its
attorney in the name of and on behalf and as the act and deed of NewPower or
otherwise under a power coupled with an interest to execute, sign, seal, and
deliver any documents which each Enron Party may require for perfecting its
security interest in the Collateral or upon the occurrence of a Default vesting
the Collateral in each Enron Party or its nominees or any purchaser, and
otherwise generally to sign, seal, deliver, and otherwise perfect any such legal
or other charge or assignment and all documents, and to do all such acts and
things as may be required for the full exercise of the powers hereby conferred,
including filing any financing statements and charges, and upon the occurrence
of a Default, any sale, lease, realization, or other disposition of the
Collateral or the enforcement of any of the Enron Parties' rights hereunder or
otherwise.
(e) Each Enron Party hereby irrevocably appoints NewPower to be its
attorney in the name of and on behalf and as the act and deed of such Enron
Party or otherwise under a power coupled with an interest to execute, sign,
seal, and deliver any documents which NewPower may require for perfecting its
security interest in the Collateral or upon the occurrence of a Default vesting
the Collateral in NewPower or its nominees or any purchaser, and otherwise
generally to sign, seal, deliver, and otherwise perfect any such legal or other
charge or assignment and all documents, and to do all such acts and things as
may be required for the full
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exercise of the powers hereby conferred, including filing any financing
statements and charges, and upon the occurrence of a Default, any sale, lease,
realization, or other disposition of the Collateral or the enforcement of
NewPower's rights hereunder or otherwise.
(f) Notwithstanding any provisions of any of the Underlying Master
Agreements, all Letters of Credit permitted as credit support thereunder issued
for the account of NewPower shall name each Enron Party as a beneficiary thereof
and shall provide for the joint and several right of each beneficiary to draw
thereon. The Parties agree and covenant to each other to forthwith and without
delay cause the amendment or reestablishment of all Letters of Credit issued for
its account pursuant to the Underlying Master Agreements in accordance with the
foregoing criteria.
(g) Each Party to an Underlying Master Agreement agrees that the
provisions thereof are hereby amended to replace the determination of separate
Collateral requirements under each Underlying Master Agreement with the
determination of an aggregate net Collateral requirement under all Underlying
Master Agreements on the basis of the provisions of this Agreement. The exposure
thresholds applicable to Collateral requirements however defined or set forth in
the Underlying Master Agreements shall not apply and the following Exposure
Thresholds shall apply to the aggregate exposure under all of the Underlying
Master Agreements: with respect to the Enron Parties, an aggregate amount equal
to U.S.$100,000,000, and, with respect to NewPower, an aggregate amount equal to
U.S.$15,000,000; provided, the Exposure Threshold with respect to a Party shall
be zero upon the occurrence and during the continuance of, with respect to such
Party, a Material Adverse Change or upon the occurrence of a Default.
Notwithstanding the fact that other of the Underlying Master Agreements may
provide otherwise, the evaluation of aggregate exposures and the Collateral
requirements (including as to type and amount) under this Agreement shall occur
in accordance with the provisions, criteria, and timing for such purpose, set
forth in the Credit Support Annex to the XXX-XxxXxxxx ISDA Master Agreement
("Credit Support Annex") including such provisions, criteria and timing
applicable to "Transfer Timing" set forth in Paragraph 4(b) thereof and "Events
of Default" set forth in Paragraph 7 thereof; provided, however, that (i) the
Exposure Thresholds set forth above with respect to each Party shall apply to
this Agreement and shall be treated in the same manner as "Threshold" is treated
in Paragraph 3 of the Credit Support Annex (including with respect to the
application and effect of "Exposure" in such Paragraph 3 of the Credit Support
Annex) (and including the applicable provisions of Paragraph 13 of the Credit
Support Annex) and (ii) the Letter of Credit provisions and any form for a
Letter of Credit for the account of NewPower are hereby conformed to (A) require
the names of each Enron Party to be stated as beneficiaries of the Letter of
Credit, and (B) allow such beneficiaries individually, jointly, or severally to
draw on such Letter of Credit upon any Default hereunder by NewPower, all in a
manner satisfactory to the Enron Parties.
7. REPRESENTATIONS AND WARRANTIES; COVENANTS. (a) Each Party represents
and warrants to the other that (i) it is duly authorized to execute and deliver
this Agreement and to perform its obligations hereunder and has taken all
necessary actions to authorize such execution, delivery, and performance, (ii)
the person signing this Agreement on its behalf is
8
duly authorized to do so on its behalf, and (iii) this Agreement constitutes its
legal, valid, and binding obligation, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency,
conservatorship, receivership, moratorium, or other similar laws affecting
creditors' rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law). Each Party represents and warrants to the
other that it has not assigned, transferred, created, or permitted to exist any
lien or other encumbrance on, or otherwise disposed of, or purported to assign,
transfer, create, or permit to exist any lien or other encumbrance on, or
otherwise dispose of, any of its rights to any amounts that may be owed to it
under any of the Underlying Master Agreements to any third party.
(b) Each Party covenants to the other that so long as this Agreement is in
effect, it will not assign, transfer, create, or permit to exist any lien or
other encumbrance on, or otherwise dispose of, any of its rights to any amounts
that may be owed to it under any of the Underlying Master Agreements, to any
third party.
(c) NewPower covenants that within five (5) Business Days after receiving
a request from Enron in accordance with the provisions of Section 12, it shall
deliver to Enron a certificate of a responsible officer of Holdings (a "COVENANT
COMPLIANCE CERTIFICATE") certifying that a Material Adverse Change with respect
to NewPower does not then exist. The Covenant Compliance Certificate shall be
substantially in the form attached hereto as Exhibit "C" and shall, among other
requirements specified therein, state in Attachment 1 Item III the then-current
amount claimable against Holdings under guaranties issued by Holdings. In the
event NewPower delivers a Covenant Compliance Certificate that does not show the
amounts claimable against Holdings under such guaranties, then in such case, the
amount claimable against Holdings under such guaranties shall be deemed to be
the full face amount of such guaranties, and the existence of a Material Adverse
Change with respect to NewPower shall be determined accordingly.
8. INTERPRETATION AND HEADINGS. The Parties intend that this Agreement
constitutes and should be deemed to be a "master netting agreement" and that the
Parties are and should be deemed to be "master netting agreement participants"
within the meaning of and as such terms are used in any law, rule, regulation,
statute or order applicable to the Parties' rights herein, whether now or
hereafter enacted or made applicable. The use of headings and subheadings in
this Agreement, and the division of this Agreement into sections and
sub-sections, are for convenience of reference only and shall not affect the
interpretation or construction of this Agreement.
9. GOVERNING LAW. The rights of the Parties under this Agreement shall be
in addition to, and not in limitation or exclusion of, any other rights that
they may have (whether by agreement, operation of law, or otherwise). This
Agreement shall be governed by, and construed in accordance with the laws of the
jurisdiction specified in the Underlying Master Agreements; provided, in the
event of any inconsistency as to the governing law under any of the Underlying
Master Agreements, this Agreement shall be construed in accordance with the
substantive law of the State of New York (without reference to its choice of law
doctrine).
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10. JURISDICTION. Any provisions in the Underlying Master Agreements
regarding jurisdiction, waiver of immunity, waiver of trial by jury, and process
shall apply to this Agreement in the same manner and to the same extent as if
such references were contained in this Agreement.
11. ASSIGNMENT. Any assignment or other transfer of an Underlying Master
Agreement and Transactions subject thereto, whether by any permitted
consolidation or amalgamation with, merger with or into, or transfer of
substantially all of its assets to, another entity, or as otherwise permitted
pursuant to the terms of an Underlying Master Agreement, by any Enron Party to
any Enron Affiliate, or by NewPower to a NewPower Affiliate, shall be made
subject to this Agreement and provide that such assignee or other transferee
executes this Agreement as a condition to the effectiveness of any such
assignment or other transfer. Other than as provided in the preceding sentence,
this Agreement shall not be assigned (whether by way of security or otherwise)
by any Enron Party or NewPower without the prior written consent of the
non-assigning Party pROVIDED, HOWEVER, that (a) if an assignment is to an
affiliate that has equal or greater financial capability, such consent shall not
be unreasonably withheld and (b) if an assignment is to an unaffiliated
third-party, such consent may be given or withheld in the sole discretion of the
non-assigning Party. Any purported assignment or other transfer that is not in
compliance herewith shall be void.
12. NOTICES. (a) Any and all notices, statements, demands, or other
communications hereunder shall be given by a Party to the other Party by
telephone, mail, facsimile, e-mail, electronic message, or messenger, to the
individuals and at the facsimile numbers, e-mail addresses or other locations as
appropriate and as set forth in the Underlying Master Agreements and as set
forth in Section 12(b) below. In the event there is an inconsistency in the
notice provisions of the Underlying Master Agreements, notice that is in
substantial compliance with such provision in any of the Underlying Master
Agreements shall be effective notice hereunder provided that such notice also
complies with Section 12(b) below. Any notice, statement, demand, or other
communication hereunder will be deemed delivered on the day and at the time on
which it is received or, if not received, on the day and at the time on which
its delivery was in good faith attempted; provided, any notice given by a Party
to the other Party by telephone shall be deemed delivered only if (i) such
notice is followed by written confirmation thereof, and (ii) at least one of the
other means of providing notice that are specifically listed above has
simultaneously been attempted in good faith by the notifying Party.
(b) In addition to the notice provisions set forth in Section 12(a) above,
notice under this Agreement shall be effective only if also given as follows:
If to NewPower: Address: Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Managing Director, Law and Government Affairs
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If to ENA: Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Director, Documentation Department
with copies to:
Enron North America Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Assistant General Counsel, Trading Group
and
Enron Corp
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Corporate Secretary
If to EES: Enron Energy Services, Inc.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
13. CONFLICTS AND INCONSISTENCIES. In the event of any conflict or
inconsistency between this Agreement and any of the Underlying Master Agreements
concerning the matters set forth in this Agreement, the provisions of this
Agreement shall govern.
14. CONTINUATION OF MASTER AGREEMENTS AND SEVERABILITY. (a) Except as
amended by this Agreement, the Underlying Master Agreements shall remain in full
force and effect. Subject to Section 14(b), in the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal, or
unenforceable in any respect under the law of any jurisdiction, the validity,
legality, and enforceability of the remaining provisions under the law of such
jurisdiction, and the validity, legality, and enforceability of such provisions
and any other provisions under the law of any other jurisdiction, shall not in
any way be affected or impaired thereby.
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(b) If either Sections 2 or 3 hereof is deemed or held to be
invalid, illegal, or unenforceable, this Agreement shall be deemed to be null
and void in its entirety and without any further force or effect.
15. NO WAIVER. A failure or delay in exercising any right, power, or
privilege in respect of the Underlying Master Agreements or this Agreement will
not be presumed to operate as a waiver of that right, power, or privilege, and a
single or partial exercise of any right, power, or privilege will not be
presumed to preclude any subsequent or further exercise of that right, power, or
privilege, or the exercise of any other right, power, or privilege.
16. ARBITRATION. Any claim, counterclaim, demand, cause of action,
dispute, and controversy arising out of or relating to this Agreement or the
relationship established by this Agreement, any provision hereof, the alleged
breach thereof, or in any way relating to the subject matter of this Agreement,
involving the Parties and/or their respective representatives (collectively, the
"CLAIMS") shall be resolved by binding arbitration. Arbitration shall be
governed by the Federal Arbitration Act and conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
validity, construction, and interpretation of this agreement to arbitrate, and
all procedural aspects of the arbitration conducted pursuant hereto shall be
decided by the arbitrators. In deciding the substance of the Claims, the
arbitrators shall refer to the governing law. It is agreed that the arbitrators
shall have no authority to award treble, exemplary or punitive damages of any
type under any circumstances whether or not such damages may be available under
state or federal law, or under the Federal Arbitration Act, or under the
Commercial Arbitration Rules of the American Arbitration Association, the
Parties hereby waiving their right, if any, to recover any such damages. The
arbitration proceeding shall be conducted in Houston, Texas. Within thirty days
of the notice of initiation of the arbitration procedure, each of (a) one of the
Enron Parties and (b) NewPower shall select one arbitrator. The two arbitrators
shall select a third arbitrator. The third arbitrator shall be a person who has
over eight years professional experience in over-the-counter derivative products
and who has not previously been employed by any party and does not have a direct
or indirect interest in any party or the subject matter of the arbitration.
While the third arbitrator shall be neutral, the two party-appointed arbitrators
are not required to be neutral, and it shall not be grounds for removal of
either of the two party-appointed arbitrators or for vacating the arbitrators'
award that either of such arbitrators has past or present minimal relationships
with any party. To the fullest extent permitted by law, any arbitration
proceeding and the arbitrators' award shall be maintained in confidence by the
Parties.
17. TERM. This Agreement shall continue in effect from the date
hereof until terminated by agreement of the Parties; however, notwithstanding
the foregoing, any Party shall have the right to terminate this Agreement by
written notice to the other Parties upon such time as there are fewer than two
Underlying Master Agreements in effect that have Transactions.
18. AMENDMENT. This Agreement may not be amended, except by a signed
amendment to this Agreement. Confirmations will not serve as an amendment.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by facsimile or original signature and in multiple counterparts, each of whom is
deemed an original and effective as one document, all as of the date first
written above.
ENRON NORTH AMERICA CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxxxx
-------------------------
Title: Vice President
------------------------------
ENRON ENERGY SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Print Name: Xxxxxx X. Xxxxxxxx
-------------------------
Title: Vice President
------------------------------
THE NEW POWER COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Print Name: Xxxxxxx X. Xxxxxx
-------------------------
Title: Managing Director
------------------------------
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