Exhibit 99.8
(Multicurrency-Cross Border)
ISDA(R)
International Swap Dealers Association Inc.
MASTER AGREEMENT
Dated as of August 10,2000
ENRON NORTH AMERICA CORP. and THE NEW POWER COMPANY
have entered into and/or anticipate entering into one or more transactions (each
a "Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. OBLIGATIONS.
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing,
(2) the conditions precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.
Copyright (C) by International Swap Dealers Association, Inc.
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(A) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that
such deduction or withholding is required or receiving notice that
such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes,
whether assessed against X or Y) will equal the full amount Y would
have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to
the extent that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure would
not have occurred but for (I) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (II) a Change in Tax
Law.
2 ISDA(R) 1992
(ii) LIABILITY. If:--
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any
deduction or withholding in respect of which X would not be required
to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary
action to authorise such execution, delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or 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)).
3 ISDA(R) 1992
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default
or, to its knowledge, Termination Event with respect to it has occurred and is
continuing and no such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement or any Credit
Support Document to which it is a Party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment under
this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of such
demand), with any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be executed and
to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
4 ISDA(R) 1992
organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full
force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms) prior to the satisfaction
of all obligations of such party under each Transaction to which
such Credit Support Document relates without the written consent of
the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the
validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf):
(vi) CROSS DEFAULT. If "Cross Default is specified in the Schedule as
applying to the Party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however
5 ISDA(R) 1992
described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule) which
has resulted in such Specified Indebtedness becoming, or becoming capable
at such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its creditors;
(4) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A)
results in a judgment of insolvency or bankruptcy or the entry of an
order for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed
or restrained, in each case within 30 days thereafter; (8) causes or
is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any
of the events specified in clauses (1) to (7) (inclusive); or (9)
takes any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer:--
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event
6 ISDA(R) 1992
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is
required to be paid in respect of such Tax under Section 2(d)(i)(4) (other
than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which
the other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(A)(VIII) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be time Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the
Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
7 ISDA(R) 1992
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other Party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1),(3),(5),(6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying the
nature of that Termination Event and each Affected Transaction and will
also give such other information about that Termination Event as the other
party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and obligations
under this Agreement in respect of the Affected Transactions to another of
its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(iv) RIGHT TO TERMINATE. If:--
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to
all Affected Transactions within 30 days after an Affected Party
gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is
only one Affected Party may, by not more than 20 days notice to the other
party and provided that the relevant Termination Event is then
8 ISDA(R) 1992
continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under Section
6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in
respect of the Terminated Transactions will be required to be made, but
without prejudice to the other provisions of this Agreement. The amount,
if any, payable in respect of an Early Termination Date shall be
determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of
such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an Event
of Default:--
(1) FIRST METHOD AND MARKET QUOTATION. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Defaulting Party.
(2) FIRST METHOD AND LOSS. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) SECOND METHOD AND MARKET QUOTATION. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the
9 ISDA(R) 1992
Non-defaulting Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party. If
that amount is a positive number, the Defaulting Party will pay it
to the Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party.
(4) SECOND METHOD AND LOSS. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:--
(1) ONE AFFECTED PARTY. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and
to the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the
Transactions are being terminated, Loss shall be calculated in
respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with the
lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other Party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
10 ISDA(R) 1992
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
11 ISDA(R) 1992
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement xxxx survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, 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.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
12 ISDA(R) 1992
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will he governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Xxx 0000 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any
13 ISDA(R) 1992
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" MEANS any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
14 ISDA(R) 1992
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(A) and, if applicable,
in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have
15 ISDA(R) 1992
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the Party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
16 ISDA(R) 1992
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17 ISDA(R) 1992
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be in the average
of the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
ENRON NORTH AMERICA CORP. THE NEW POWER COMPANY
---------------------------------- ----------------------------------------
(Name of Party) (Name of Party)
[INITIALS] [INITIALS]
----------
[LEGAL]
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
------------------------------ ------------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxxx
------------------- -------------------------
Title: Vice President Title: VP
------------------- -------------------------
Date: August 10, 2000 Date: August 8, 2000
------------------- -------------------------
[INITIALS]
----------
[CREDIT]
18 ISDA(R) 1992
EXECUTION COPY
SCHEDULE
TO THE
MASTER AGREEMENT
(MULTICURRENCY-CROSS BORDER)
DATED AS OF AUGUST 10, 0000
XXXXXXX
XXXXX XXXXX XXXXXXX CORP., A THE NEW POWER COMPANY, A CORPORATION
CORPORATION ORGANIZED UNDER THE LAW OF THE STATE ORGANIZED UNDER THE LAW OF THE STATE OF
OF DELAWARE ("PARTY A"), AND DELAWARE ("PARTY B")
PART 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY" means in relation to Party A, none; and in relation
to Party B, none.
(b) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A, and will apply to Party B.
"THRESHOLD AMOUNT" means: with respect to Party A, U.S. $100,000,000 (or
its equivalent in another currency); with respect to Party A's Credit
Support Provider, U.S. $100,000,000 (or its equivalent in another
currency); and with respect to Party B's Credit Support Provider, U.S.
$1,000,000 (or its equivalent in another currency); PROVIDED, THAT, such
Threshold Amount shall apply individually and not collectively with
respect to each entity set forth above notwithstanding anything to the
contrary set forth in Section 5(a)(vi) of the Master Agreement.
(c) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) as
amended below will apply to Party A and to Party B.
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to Party A or to Party B.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e): (i)
Loss will apply, and (ii) the Second Method will apply.
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) Section 5(b)(iv) is hereby amended by adding the following phrase
between the closing parenthesis and the semicolon at the end thereof: "PROVIDED,
HOWEVER, that the foregoing action or event shall not constitute a Termination
Event (1) if after such action or event such resulting, surviving, or transferee
entity (which entity is the successor-in-interest to such party) is directly or
indirectly owned or controlled by such party's Credit Support Provider, if any,
and the Credit Support Documents supporting such party's obligations remain in
full force and effect, or (2) so long as in connection with or after such action
or event X or its successor or transferee provides (or causes to be provided) to
the other party ("Y") within two Local Business Days of Y's written demand
therefor Eligible Credit Support in an amount satisfactory to Y in its sole
discretion. If such Eligible Credit Support is provided, it shall be in addition
to Eligible Credit Support required under the ISDA Credit Support Annex attached
hereto as ANNEX A, but it shall be otherwise administered under ANNEX A."
Page 1
(h) "CONTRACTUAL CURRENCY" unless otherwise specified in a Confirmation,
shall mean United States Dollars.
PART 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e), Party A and Party
B make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii), or 6(e)) to be
made by it to the other party under this Agreement. In making this
representation, it may rely on (i) the accuracy of any representations
made by the other party pursuant to Section 3(f), (ii) the satisfaction of
the agreement contained in Section 4(a)(i) or 4(a)(iii) and the accuracy
and effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii), and (iii) the satisfaction of the agreement
of the other party contained in Section 4(d), PROVIDED that it shall not
be a breach of this representation where reliance is placed on Clause (ii)
and the other party does not deliver a form or document under Section
4(a)(iii) by reason of material prejudice to its legal or commercial
position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f), Party A and Party
B make the following representations:
(i) The following representation applies to Party A:
Party A is a corporation organized under the laws of the State of
Delaware.
(ii) The following representation applies to Party B:
Party B is a corporation organized under the laws of the State of
Delaware.
PART 3. AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Section 4(a), each party agrees to deliver the
following documents, as applicable:
(a) Tax forms, documents, or certificates to be delivered are: United
States Internal Revenue Service Form W-9.
(b) Other documents to be delivered are:
PARTY REQUIRED FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO BE COVERED BY
TO DELIVER DELIVERED SECTION 3(d)
DOCUMENT REPRESENTATION
Party A and Duly executed Credit Support At execution of this Yes
Party B Documents specified in Part 4(d) Master Agreement
Page 2
Party A and Duly executed tax forms, documents, or At execution of this Master Yes
Party B certificates referenced in Part 3(a) Agreement and as otherwise
above provided in Part 3(a) above
Party A and Evidence of authority and specimen At execution of this Master Yes
Party B signatures with respect to the party's Agreement
and its Credit Support Provider's (if any)
signatories executing this Agreement or
any Credit Support Document
Party A Annual Audited Consolidated Financial Promptly following demand by Yes
Statement of Party A's Credit Support Party B, but in no event later
Provider certified by independent public than 120 days after the end
accountants of each fiscal year of
Party A's Credit Support
Provider if such Financial
Statement is not available on
"XXXXX" or Party A's Credit
Support Provider's home page
on the World Wide Web at
xxx.xxxxx.xxx
Party A Quarterly Unaudited Consolidated Promptly following demand Yes
Financial Statement of Party A's Credit by Party B, but in no event
Support Provider later than 60 days after the
end of each of the first three
fiscal quarters of each fiscal
year of Party A's Credit
Support Provider if such
Financial Statement is not
available on "XXXXX" or Party
A's Credit Support Provider's
home page on the World Wide
Web at xxx.xxxxx.xxx
Page 3
Party B Annual Audited Consolidated Financial Promptly following demand by Yes
Statement of Party B's Credit Party A, but in no
Support Provider certified by event later than
independent public accountants 120 days after the end of each
fiscal year of Party B's
Credit Support Provider
Party B Quarterly Unaudited Consolidated Promptly following demand by Yes
Financial Statement of Party B's Credit Party A, but in no event later
Support Provider than 60 days after the end of
each of the first three fiscal
quarters of each fiscal year
of Party B's Credit Support
Provider
PART 4. MISCELLANEOUS.
(a) ADDRESSES FOR NOTICES. Section 12(a) is hereby amended to delete the
following phrase from the second and third line thereof: "(except that a notice
or other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system)". For the purpose of Section 12(a)
of this Agreement:
Address for notices or communications to Party A:
Address: Enron North America Corp. Facsimile No.: (000) 000-0000
X.X. Xxx 0000 Telephone No.: (000) 000-0000
Xxxxxxx, Xxxxx 00000-0000
Street Address: 0000 Xxxxx Xxxxxx
(for courier delivery) Xxxxxxx, Xxxxx 00000
Attn: Director, Documentation Department
A copy of any notice sent to Party A pursuant to Section 5 or 6 or ANNEX A must
also be sent to (i) Enron Corp., Attention: Corporate Secretary at the above
address and facsimile no. (000) 000-0000, and (ii) Enron North America Corp.,
Attention: Assistant General Counsel, Trading Group at the above address and
facsimile no. (000) 000-0000.
Address for notices or communications to Party B:
Address: The New Power Company Facsimile No.: (000) 000-0000
Street Address: 00 Xxxxxxxxx Xxxxxx Telephone No.: (000) 000-0000
(for courier delivery) Xxxxxxxxx, XX 00000
Attn.: Xxxx Xxxxx
(b) OFFICES; MULTIBRANCH PARTIES. The provisions of Section 10(a) will be
applicable. For the purpose of Section 10(c): Party A is not a Multibranch Party
and Party B is not a Multibranch Party.
Page 4
(c) CALCULATION AGENT. The Calculation Agent is Party A.
(d) CREDIT SUPPORT DOCUMENTS. Details of any Credit Support Document, each
of which is incorporated by reference in, and made part of, this Agreement and
each Confirmation (unless provided otherwise in a Confirmation) as if set forth
in full in this Agreement or such Confirmation: (i) Guaranty dated as of the
date hereof by Enron Corp. in favor of Party B as beneficiary thereof in the
form attached hereto as EXHIBIT A, (ii) Guaranty dated as of the date hereof by
TNPC, Inc. in favor of Party A as beneficiary thereof in the form attached
hereto as EXHIBIT B, and (iii) ISDA Credit Support Annex attached hereto as
ANNEX A.
(e) CREDIT SUPPORT PROVIDER. (i) Credit Support Provider means in relation
to Party A, Enron Corp., and (ii) Credit Support Provider means in relation to
Party B, TNPC, Inc.
(f) NETTING OF PAYMENTS. Section 2(c)(ii) will not apply to all
Transactions.
(g) GOVERNING LAW. THIS AGREEMENT AND EACH CONFIRMATION WILL BE GOVERNED
BY, AND CONSTRUED, INTERPRETED, AND ENFORCED IN ACCORDANCE WITH, THE SUBSTANTIVE
LAW OF THE STATE OF
TEXAS (WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE).
(h) JURISDICTION. Section 13(b) is hereby deleted in its entirety and
replaced with the following:
(b) AGREEMENT TO ARBITRATE: 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"), even though some or all of
such Claims allegedly are extra-contractual in nature, whether such Claims
sound in contract, tort, or otherwise, at law or in equity, under state or
federal law, whether provided by statute or the common law, for damages or
any other relief, shall be resolved by binding arbitration.
CONDUCT OF THE ARBITRATION, AND AUTHORITY OF THE ARBITRATORS: 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 parties' 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.
FORUM FOR THE ARBITRATION AND SELECTION OF ARBITRATORS: The arbitration
proceeding shall be conducted in Houston,
Texas. Within thirty days of the
notice of initiation of the arbitration procedure, each party 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 either party and does not have a direct or
indirect interest in either 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
Page 5
or for vacating the arbitrators' award that either of such arbitrators has
past or present minimal relationships with the party that appointed such
arbitrator.
CONFIDENTIALITY: To the fullest extent permitted by law, any arbitration
proceeding and the arbitrators award shall be maintained in confidence by
the parties.
(i) PROCESS AGENT. For the purpose of Section 13(c): Party A appoints as
its Process Agent, The Corporation Trust Company, having an office in
Wilmington, Delaware on the date of this Agreement at Corporation Trust Center,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000; Party B appoints as its Process
Agent, The Corporation Trust Company, having an office in Wilmington, Delaware
on the date of this Agreement at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
PART 5. OTHER PROVISIONS.
(a) CONDITIONS PRECEDENT. The condition precedent set forth in clause (1)
of Section 2(a)(iii) shall not apply to payments owed by a party if the other
party shall have satisfied in full all its payment obligations under Section
2(a)(i) and shall at the relevant time have no future payment obligations
whether absolute or contingent, under Section 2(a)(i).
(b) REPRESENTATIONS. Section 3 is hereby amended by adding at the end
thereof the following Subsections (g), (h), (i), and (j):
(g) LINE OF BUSINESS. (i) It is entering into this Agreement,
including without limitation, any Credit Support Document to which it is a
party and each Transaction, in conjunction with its line of business
(including financial intermediation services) or the financing of its
business; and (ii) with respect to Options (other than weather-related
options), it is a producer, processor, commercial user of, or merchant
handling, the commodity subject to the Transaction or the products or
byproducts thereof, and is entering into each Option Transaction solely
for purposes related to its business as such; and (iii) with respect to
any weather-related Transactions, it is exposed in the conduct of its
business to the risk of variations in weather and is entering into such
Transactions to manage or offset such risks.
(h) ELIGIBLE SWAP PARTICIPANT. It constitutes an "eligible swap
participant" as such term is defined in Rule 35.1(b)(2) of the Commodity
Futures Trading Commission, 17 C.F.R.ss.35.1(b)(2) (1993).
(i) CUSTOMIZATION AND CREDITWORTHINESS. The economic terms of this
Agreement, any Credit Support Document to which it is a party, and each
Transaction have been individually tailored and negotiated by it; the
creditworthiness of the other party was a material consideration in its
entering into or determining the terms of this Agreement, such Credit
Support Document, and such Transaction.
(j) NO RELIANCE. In connection with this Agreement, any Credit
Support Document to which it is a party, and each Transaction: (i) it is
acting as principal; (ii) the other party is not acting as a fiduciary or
financial or investment advisor for it; (iii) it is not relying upon any
representations (whether written or oral) of the other party other than
the representations expressly set forth in this Agreement and in such
Credit Support Document; (iv) it has not been given by the other party
(directly or indirectly through any other person) any advice, counsel,
assurance, guarantee, or representation whatsoever as to the expected or
projected success, profitability, return, performance, result, effect,
consequence, or benefit (either legal, regulatory, tax, financial,
accounting, or otherwise) of this Agreement, such Credit Support Document,
or such Transaction; (v) it has consulted with its own legal, regulatory,
tax, business, investment,
Page 6
financial, and accounting advisors to the extent it has deemed necessary,
and it has made its own investment, trading, hedging, and other decisions
based upon its own judgment and upon any advice from such advisors as it
has deemed necessary, and not upon any view expressed by the other party;
(vi) its decisions have been the result of arm's length negotiations
between the parties; and (vii) it is entering into this Agreement, such
Credit Support Document, and such Transaction with a full understanding of
all of the risks hereof and thereof (economic and otherwise), and it is
capable of assuming and willing to assume those risks.
(c) REFERENCE MARKET-MAKERS. The definition of "REFERENCE MARKET-MAKERS"
in Section 14 is hereby amended by deleting clause (b) thereof.
(d) DEFINITIONS. This Agreement, each Confirmation, and each Transaction
are subject to the 1991 ISDA Definitions, as such definitions may be amended,
supplemented, replaced or modified from time to time (collectively, the
"Definitions"), each as published by the International Swaps and Derivatives
Association, Inc. ("ISDA"), and will be governed in all respects by the
Definitions (except that any references to "Swap Transactions" in the
Definitions will be deemed to be references to "Transactions"). The Definitions
are incorporated by reference in, and made part of, this Agreement and each
relevant Confirmation as if set forth in full in this Agreement and such
Confirmation. In the event of any inconsistency between the provisions of this
Agreement and the Definitions, this Agreement will prevail.
(e) PROCEDURES FOR ENTERING INTO TRANSACTIONS. The parties hereby amend
Section 9(e)(ii) by adding the following sentences at the end thereof: "On or
promptly following the Trade Date of a Transaction, Party A will send to Party B
a Confirmation. Party B will promptly thereafter confirm the accuracy of, or
request the correction of, such Confirmation. If any dispute shall arise as to
whether an error exists in a Confirmation, the parties shall in good faith make
reasonable efforts to resolve the dispute. If Party B fails to accept or dispute
the Confirmation in the manner set forth above within two Local Business Days
after it was effectively sent to Party B, the Confirmation shall be deemed to
correctly reflect the parties' agreement on the terms of the Transaction
referred to therein, absent manifest error. The requirement of this Section and
elsewhere in this Agreement that the parties exchange Confirmations shall for
all purposes be deemed satisfied by a Confirmation sent and an acknowledgment
deemed given as provided herein."
(f) RECORDING. Each party consents to the recording, at any time and from
time to time, by the other party of any and all communications between officers
or employees of the parties, and waives any further notice of such recording.
(g) SETOFF. (A) Upon the designation or deemed designation of an Early
Termination Date the Non-defaulting Party or the non-Affected Party (in either
case, "X") may, at its option and in its discretion, setoff, against any amounts
owed to the Defaulting Party or Affected Party (in either case, "Y") in Dollars
or any other currency by X or any Affiliate of X under this Agreement or
otherwise, any amounts owed in Dollars or any other currency by Y to X or any of
its Affiliates (irrespective of place of payment or booking office of the
obligation) under this Agreement or otherwise. The obligations of Y and X under
this Agreement in respect of such amounts shall be deemed satisfied and
discharged to the extent of any such setoff. For this purpose, the amounts
subject to the setoff to the extent necessary may be converted by X into the
Termination Currency at the rate of exchange at which X, acting in a reasonable
manner and in good faith, would be able to purchase the relevant amount of the
currency being converted. X will give Y notice of any setoff effected under this
section as soon as practicable after the setoff is effected provided that
failure to give such notice shall not affect the validity of the setoff. If an
obligation is unascertained, X may in good faith estimate that obligation and
set-off in respect of the estimate, subject to the relevant party accounting to
the other when the obligation is ascertained. Nothing herein shall be effective
to create a charge or other security interest. This setoff provision shall be
without prejudice and in addition to any right of setoff, combination of
accounts, lien or other right to which any party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).
Page 7
(B) Notwithstanding any provision to the contrary contained in this
Agreement, the Non-defaulting Party or non-Affected Party, as the case may be,
shall not be required to pay to the Defaulting Party or Affected Party any
amount under Section 6(e) until the Non-defaulting Party or non-Affected Party
receives confirmation satisfactory to it in its reasonable discretion (which may
include an opinion of its counsel) that all other obligations of any kind
whatsoever (whether pursuant to Specified Indebtedness as defined herein or
otherwise) of the Defaulting Party or Affected Party to make any payments to the
Non-defaulting Party or non-Affected Party or any of its Affiliates under this
Agreement or otherwise which are due and payable as of the Early Termination
Date hereof have been fully and finally performed.
(h) LIMITATION OF LIABILITY. NO PARTY SHALL BE REQUIRED TO PAY OR BE
LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT
DAMAGES (WHETHER OR NOT ARISING FROM ITS NEGLIGENCE) TO ANY OTHER PARTY;
PROVIDED, HOWEVER, THAT NOTHING IN THIS PROVISION SHALL AFFECT THE
ENFORCEABILITY OF SECTION 6(e) OF THIS AGREEMENT. IF AND TO THE EXTENT ANY
PAYMENT REQUIRED TO BE MADE PURSUANT TO THIS AGREEMENT IS DEEMED TO CONSTITUTE
LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH DAMAGES ARE
DIFFICULT OR IMPOSSIBLE TO DETERMINE AND THAT SUCH PAYMENT IS INTENDED TO BE A
REASONABLE AND GENUINE PRE-ESTIMATE AND APPROXIMATION OF THE AMOUNT OF SUCH
DAMAGES AND NOT A PENALTY.
(i) CONFIDENTIALITY. The contents of this Agreement and all other
documents relating to this Agreement, and any information made available by one
party or its Credit Support Provider to the other party or its Credit Support
Provider with respect to this Agreement is confidential and shall not be
disclosed to any third party (nor shall any public announcement relating to this
Agreement be made by either party), except for such information (i) as may
become generally available to the public, (ii) as may be required or appropriate
in response to any summons, subpoena, or otherwise in connection with any
litigation or to comply with any applicable law, order, regulation, ruling, or
accounting disclosure rule or standard, (iii) as may be obtained from a
non-confidential source that disclosed such information in a manner that did not
violate its obligations to the non-disclosing party or its Credit Support
Provider in making such disclosure, or (iv) as may be furnished to the
disclosing party's Affiliates, and to each of such person's auditors, attorneys,
advisors or lenders which are required to keep the information that is disclosed
in confidence.
(j) TRANSFER. Section 7 is hereby amended by adding the following
Subsection (c):
"(c) Party A and/or Party B may transfer its rights and obligations
under this Agreement, in whole but not in part, to any Affiliate so long
as the obligations of such Affiliate are guaranteed by Enron Corp., with
respect to Party A, and TNPC, Inc., with respect to Party B, pursuant to a
guaranty substantially similar to the one provided on behalf of Party A
and Party B hereunder, provided that such transfer will not give rise to a
Termination Event or an Event of Default."
(k) APPLICABLE RATE. The definition of "APPLICABLE RATE" set forth in
Section 14 is hereby amended by adding to the end of Subsection (b) of the
definition after the word "Rate" the following provision: "; PROVIDED, HOWEVER,
that if the payee is a Defaulting Party for purposes of Section 6(e), then the
rate shall be the Non-default Rate."
(l) SEVERABILITY. If any term, provision, covenant or condition of this
Agreement, or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if this Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Agreement and the deletion of such
Page 8
portion of this Agreement will not substantially impair the respective benefits
or expectations of the parties to this Agreement; PROVIDED, HOWEVER, that this
severability provision shall not be applicable if any provision of Section 1, 2,
5 or 6 (or any definition or provision in Section 14 to the extent it relates
to, or is used in or in connection with any such Section) shall be so held to be
invalid or unenforceable.
(m) LIMITATION OF RATE. Notwithstanding any provision to the contrary
contained in this Agreement, in no event shall the Default Rate, Non-default
Rate, or Termination Rate 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 on the subject indebtedness under the law applicable to
such party.
(n) EXISTING TRANSACTIONS. In the event that the parties have entered into
Transactions prior to the date of this Agreement (collectively, the "Prior
Transactions"), the parties agree that all such Prior Transactions shall
constitute Transactions under and governed by this Agreement. To the extent of
any conflict between the terms and provisions of the Prior Transactions and the
terms and provisions of this Agreement, the terms and provisions of this
Agreement shall control.
PART 6. ADDITIONAL PROVISIONS FOR COMMODITY DERIVATIVES TRANSACTIONS.
(a) The 1993 ISDA Commodity Derivatives Definitions, as amended,
supplemented, replaced or modified from time to time, (the "Commodity
Definitions") are incorporated by reference in this Agreement and the relevant
Confirmations with respect to "Transactions," as defined by the Commodity
Definitions, in commodities, except as otherwise specifically provided in the
relevant Confirmation. All terms used in this Part 6 that are not otherwise
defined shall have the meanings given to them in the Commodity Definitions.
(b) In lieu of Section 7.4(d) of the Commodity Definitions, the "Market
Disruption Events" specified in Section 7.4(c)(i), (c)(ii), (c)(iii), (c)(iv),
(c)(v) and (c)(viii) of the Commodity Definitions shall apply, except as
otherwise specified in the relevant Confirmation.
(c) Section 7.4(c)(viii) of the Commodity Definitions is hereby amended by
the addition of the following at the end thereof:
"For these purposes, a limitation of trading on any Commodity
Business Day shall be deemed to be material only if the relevant Exchange
establishes limits on the range within which the price of the Futures
Contract may fluctuate in the first nearby month and the closing or
settlement price of such Futures Contract on such day is at the upper or
lower limit of that range."
(d) Section 7.5(e) of the Commodity Definitions is hereby deleted.
(e) "Additional Market Disruption Events" shall apply only if so specified
in the relevant Confirmation.
(f) The following "Disruption Fallbacks" specified in Section 7.5(c) of
the Commodity Definitions shall apply, in the following order, except as
otherwise specified in the relevant Confirmation:
(i) "Postponement", with three (3) Commodity Business Days as the
Maximum Days of Disruption;
(ii) "Fallback Reference Price" (if the relevant parties have specified
an alternate Commodity Reference Price in the Confirmation);
Page 9
(iii) "Negotiated Fallback" (provided that the reference in Section
7.5(c)(iv) to "fifth Business Day" shall be amended to be "twelfth
Business Day"); and
(iv) The Relevant Price will be determined and calculated as set forth in
the definition of "Commodity-Reference Dealers", however,
notwithstanding any reference to the number of Specified Prices in
such definition, Party A shall obtain in good faith quotations from
two (2) leading dealers in the relevant market and the price for
that Pricing Date will be the arithmetic mean of the Specified
Prices.
(g) For purposes of any Transaction in which paper or pulp is the relevant
Commodity, the phrase "within 30 calendar days" in line 5 of Section 7.3 of the
Commodity Definitions shall be replaced by the phrase "within 40 calendar days."
(h) For purposes of any Transaction in which the relevant Commodity is
traded in a market that is less liquid than other OTC derivatives markets, Party
B recognizes that (i) such market is less liquid than other OTC derivatives
markets; (ii) it may be more difficult for it to obtain quotations from a
marketmaker or other dealer that is not a party to the Transaction and
consequently to establish an independent value for the Transaction; (iii) any
prices or terms quoted by Party A for entering into, modifying, or terminating a
Transaction, although based upon what Party A believes to be a commercially
reasonable valuation methodology, may be different than if this market were more
mature and liquid; and (iv) any valuations which may be provided by Party A do
not necessarily reflect Party A's internal bookkeeping or theoretical
model-based valuations of the Transaction and may reflect other factors,
including without limitation the creditworthiness of a counterparty, costs of
carry, use of capital, and profit.
EXECUTED effective as of the date first written above.
ENRON NORTH AMERICA CORP. THE NEW POWER COMPANY
[INITIALS] [INITIALS]
----------
[LEGAL]
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
------------------------------ ---------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxxxx
------------------------------ ---------------------------------
Title: Vice President Title: VP
------------------------------ ---------------------------------
Date: August 10, 2000 Date: August 8, 2000
------------------------------ ---------------------------------
[INITIALS]
----------
[CREDIT]
ANNEX A ISDA CREDIT SUPPORT ANNEX, including Paragraph 13 thereto
SCHEDULE 1 IRREVOCABLE TRANSFERABLE STANDBY LETTER OF CREDIT
EXHIBIT A FORM OF GUARANTY (PARTY A)
EXHIBIT B FORM OF GUARANTY (PARTY B)
Page 10
(Bilateral Form) (ISDA Agreements Subject to New York Law Only)
ANNEX A
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
MASTER AGREEMENT (MULTICURRENCY-CROSS BORDER)
---------------------------------------------
dated as of August 10, 0000
xxxxxxx
XXXXX XXXXX XXXXXXX CORP. THE NEW POWER COMPANY
--------------------------------------and---------------------------------------
("Party A") ("Party B")
This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.
Accordingly, the parties agree as follows:--
PARAGRAPH I. INTERPRETATION
(a) DEFINITIONS AND INCONSISTENCY. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified pursuant to
Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs
of this Annex. In the event of any inconsistency between this Annex and the
other provisions of this Schedule, this Annex will prevail, and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex,
Paragraph 13 will prevail.
(b) SECURED PARTY AND PLEDGOR. All references in this Annex to the "Secured
Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor") will be to the other party when
acting in that capacity; PROVIDED, HOWEVER, that if Other Posted Support is held
by a party to this Annex, all references herein to that party as the Secured
Party with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.
PARAGRAPH 2. SECURITY INTEREST.
Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party hereunder.
Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral, the
security interest and lien granted hereunder on that Posted Collateral will be
released immediately and, to the extent possible, without any further action by
either party.
Copyright(C) by International Swaps and Derivatives Association, Inc.
PARAGRAPH 3. CREDIT SUPPORT OBLIGATIONS
(a) DELIVERY AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by the
Secured Party on or promptly following a Valuation Date, if the Delivery Amount
for that Valuation Date equals or exceeds the Pledgor's Minimum Transfer Amount,
then the Pledgor will Transfer to the Secured Party Eligible Credit Support
having a Value as of the date of Transfer at least equal to the applicable
Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified
in Paragraph 13, the "DELIVERY AMOUNT" applicable to the Pledgor for any
Valuation Date will equal the amount by which:
(i) the Credit Support Amount
exceeds
(ii) the Value as of that Valuation Date of all Posted Credit Support held
by the Secured Party.
(b) RETURN AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by the
Pledgor on or promptly following a Valuation Date, if the Return Amount for that
Valuation Date equals or exceeds the Secured Party's Minimum Transfer Amount,
then the Secured Party will Transfer to the Pledgor Posted Credit Support
specified by the Pledgor in that demand having a Value as of the date of
Transfer as close as practicable to the applicable Return Amount (rounded
pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the
"RETURN AMOUNT" applicable to the Secured Party for any Valuation Date will
equal the amount by which:
(i) the Value as of that Valuation Date of all Posted Credit Support held
by the Secured Party
exceeds
(ii) the Credit Support Amount.
"CREDIT SUPPORT AMOUNT" means, unless otherwise specified in Paragraph 13, for
any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus
(ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any,
minus (iii) all Independent Amounts applicable to the Secured Party, if any,
minus (iv) the Pledgor's Threshold; PROVIDED, HOWEVER, that the Credit Support
Amount will be deemed to be zero whenever the calculation of Credit Support
Amount yields a number less than zero.
PARAGRAPH 4. CONDITIONS PRECEDENT, TRANSFER TIMING, CALCULATIONS AND
SUBSTITUTIONS
(a) CONDITIONS PRECEDENT. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii), 5 and
6(d) is subject to the conditions precedent that:
(i) no Event of Default, Potential Event of Default or Specified Condition
has occurred and is continuing with respect to the other party; and
(ii) no Early Termination Date for which any unsatisfied payment
obligations exist has occurred or been designated as the result of an
Event of Default or Specified Condition with respect to the other party.
(b) TRANSFER TIMING, Subject to Paragraphs 4(a) and 5 and unless otherwise
specified, if a demand for the Transfer of Eligible Credit Support or Posted
Credit Support is made by the Notification Time, then the relevant Transfer will
be made not later than the close of business on the next Local Business Day; if
a demand is made after the Notification Time, then the relevant Transfer will be
made not later than the close of business on the second Local Business Day
thereafter.
(c) CALCULATIONS. All calculations of Value and Exposure for purposes of
Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation
Time. The Valuation Agent will notify each party (or the other party, if the
Valuation Agent is a party) of its calculations not later than the Notification
Time on the Local Business Day following the applicable Valuation Date (or in
the case of Paragraph 6(d), following the date of calculation).
2 ISDA(R) 1994
(d) SUBSTITUTIONS.
(i) Unless otherwise specified in Paragraph 13, upon notice to the Secured
Party specifying the items of Posted Credit Support to be exchanged, the
Pledgor may, on any Local Business Day, Transfer to the Secured Party
substitute Eligible Credit Support (the "SUBSTITUTE CREDIT SUPPORT"); and
(ii) subject to Paragraph 4(a), the Secured Party will Transfer to the
Pledgor the items of Posted Credit Support specified by the Pledgor in its
notice not later than the Local Business Day following the date on which
the Secured Party receives the Substitute Credit Support, unless otherwise
specified in Paragraph 13 (the "Substitution Date"); PROVIDED that the
Secured Party will only be obligated to Transfer Posted Credit Support
with a Value as of the date of Transfer of that Posted Credit Support
equal to the Value as of that date of the Substitute Credit Support.
PARAGRAPH 5. DISPUTE RESOLUTION
If party (a "Disputing Party") disputes (I) the Valuation Agent's calculation of
a Delivery Amount or a Return Amount or (II) the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party
will notify the other party and the Valuation Agent (if the Valuation Agent is
not the other party) not later than the close of business on the Local Business
Day following (X) the date that the demand is made under Paragraph 3 in the case
of (I) above or (Y) the date of Transfer in the case of (II) above, (2) subject
to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to
the other party not later than the close of business on the Local Business Day
following (X) the date that the demand is made under Paragraph 3 in the case of
(I) above or (Y) the date of Transfer in the case of (II) above, (3) the parties
will consult with each other in an attempt to resolve the dispute and (4) if
they fail to resolve the dispute by the Resolution Time, then:
(i) In the case of a dispute involving a Delivery Amount or Return Amount,
unless otherwise specified in Paragraph 13, the Valuation Agent will
recalculate the Exposure and the Value as of the Recalculation Date by:
(A) utilizing any calculations of Exposure for the Transactions (or
Swap Transactions) that the parties have agreed are not in dispute;
(B) calculating the Exposure for the Transactions (or Swap
Transactions) in dispute by seeking four actual quotations at
mid-market from Reference Market-makers for purposes of calculating
Market Quotation, and taking the arithmetic average of those
obtained; PROVIDED that if four quotations are not available for a
particular Transaction (or Swap Transaction), then fewer than four
quotations may be used for that Transaction (or Swap Transaction);
and if no quotations are available for a particular Transaction (or
Swap Transaction), then the Valuation Agent's original calculations
will be used for that Transaction (or Swap Transaction); and
(C) utilizing the procedures specified in Paragraph 13 for
calculating the Value, if disputed, of Posted Credit Support.
(ii) In the case of a dispute involving the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, the Valuation Agent will
recalculate the Value as of the date of Transfer pursuant to Paragraph 13.
Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) not
later than the Notification Time on the Local Business Day following the
Resolution Time. The appropriate party will, upon demand following that notice
by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.
3 ISDA(R) 1994
PARAGRAPH 6. HOLDING AND USING POSTED COLLATERAL
(a) CARE OF POSTED COLLATERAL. Without limiting the Secured Party's rights under
Paragraph 6(c), the Secured Party will exercise reasonable care to assure the
safe custody of all Posted Collateral to the extent required by applicable law,
and in any event the Secured Party will be deemed to have exercised reasonable
care if it exercises at least the same degree of care as it would exercise with
respect to its own property. Except as specified in the preceding sentence, the
Secured Party will have no duty with respect to Posted Collateral, including,
without limitation, any duty to collect any Distributions, or enforce or
preserve any rights pertaining thereto.
(b) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS.
(i) GENERAL. Subject to the satisfaction of any conditions specified in
Paragraph 13 for holding Posted Collateral, the Secured Party will be
entitled to hold Posted Collateral or to appoint an agent (a "Custodian")
to hold Posted Collateral for the Secured Party. Upon notice by the
Secured Party to the Pledgor of the appointment of a Custodian, the
Pledgor's obligations to make any Transfer will be discharged by making
the Transfer to that Custodian. The holding of Posted Collateral by a
Custodian will be deemed to be the holding of that Posted Collateral by
the Secured Party for which the Custodian is acting.
(ii) FAILURE TO SATISFY CONDITIONS. If the Secured Party or its Custodian
fails to satisfy any conditions for holding Posted Collateral, then upon a
demand made by the Pledgor, the Secured Party will, not later than five
Local Business Days after the demand, Transfer or cause its Custodian to
Transfer all Posted Collateral held by it to a Custodian that satisfies
those conditions or to the Secured Party if it satisfies those conditions.
(iii) LIABILITY. The Secured Party will be liable for the acts or
omissions of its Custodian to the same extent that the Secured Party would
be liable hereunder for its own acts or omissions.
(c) USE OF POSTED COLLATERAL. Unless otherwise specified in Paragraph 13 and
without limiting the rights and obligations of the parties under Paragraphs 3,
4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting Party or an
Affected Party with respect to a Specified Condition and no Early Termination
Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then the Secured Party
will, notwithstanding Section 9-207 of the New York Uniform Commercial Code,
have the right to:
(i) sell, pledge, rehypothecate, assign, invest, use, commingle or
otherwise dispose of, or otherwise use in its business any Posted
Collateral it holds, free from any claim or right of any nature whatsoever
of the Pledgor, including any equity or right of redemption by the
Pledgor; and
(ii) register any Posted Collateral in the name of the Secured Party, its
Custodian or a nominee for either.
For purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the Secured Party will be deemed to continue to
hold all Posted Collateral and to receive Distributions made thereon, regardless
of whether the Secured Party has exercised any rights with respect to any Posted
Collateral pursuant to (i) or (ii) above.
(d) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) DISTRIBUTIONS. Subject to Paragraph 4(a), if the Secured Party
receives or is deemed to receive Distributions on a Local Business Day, it
will Transfer to the Pledgor not later than the following Local Business
Day any Distributions it receives or is deemed to receive to the extent
that a Delivery Amount would not be created or increased by that Transfer,
as calculated by the Valuation Agent (and the date of calculation will be
deemed to be a Valuation Date for this purpose).
4 ISDA(R) 1994
(ii) INTEREST AMOUNT. Unless otherwise specified in Paragraph 13 and
subject to Paragraph 4(a), in lieu of any interest, dividends or other
amounts paid or deemed to have been paid with respect to Posted Collateral
in the form of Cash (all of which may be retained by the Secured Party),
the Secured Party will Transfer to the Pledgor at the times specified in
Paragraph 13 the Interest Amount to the extent that a Delivery Amount
would not be created or increased by that Transfer, as calculated by the
Valuation Agent (and the date of calculation will be deemed to be a
Valuation Date for this purpose). The Interest Amount or portion thereof
not Transferred pursuant to this Paragraph will constitute Posted
Collateral in the form of Cash and will be subject to the security
interest granted under Paragraph 2.
PARAGRAPH 7. EVENTS OF DEFAULT
For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default will
exist with respect to a party if:
(i) that party fails (or fails to cause its Custodian) to make, when due,
any Transfer of Eligible Collateral, Posted Collateral or the Interest
Amount, as applicable, required to be made by it and that failure
continues for two Local Business Days after notice of that failure is
given to that party;
(ii) that party fails to comply with any restriction or prohibition
specified in this Annex with respect to any of the rights specified in
Paragraph 6(c) and that failure continues for five Local Business Days
after notice of that failure is given to that party; or
(iii) that party fails to comply with or perform any agreement or
obligation other than those specified in Paragraphs 7(i) and 7(ii) and
that failure continues for 30 days after notice of that failure is given
to that party.
PARAGRAPH 8. CERTAIN RIGHTS AND REMEDIES
(a) SECURED PARTY'S RIGHTS AND REMEDIES. If at any time (1) an Event of Default
or Specified Condition with respect to the Pledgor has occurred and is
continuing or (2) an Early Termination Date has occurred or been designated as
the result of an Event of Default or Specified Condition with respect to the
Pledgor, then, unless the Pledgor has paid in full all of its Obligations that
are then due, the Secured Party may exercise one or more of the following rights
and remedies:
(i) all rights and remedies available to a secured party under applicable
law with respect to Posted Collateral held by the Secured Party;
(ii) any other rights and remedies available to the Secured Party under
the terms of Other Posted Support, if any;
(iii) the right to Set-off any amounts payable by the Pledgor with respect
to any Obligations against any Posted Collateral or the Cash equivalent of
any Posted Collateral held by the Secured Party (or any obligation of the
Secured Party to Transfer that Posted Collateral); and
(iv) the right to liquidate any Posted Collateral held by the Secured
Party through one or more public or private sales or other dispositions
with such notice, if any, as may be required under applicable law, free
from any claim or right of any nature whatsoever of the Pledgor, including
any equity or right of redemption by the Pledgor (with the Secured Party
having the right to purchase any or all of the Posted Collateral to be
sold) and to apply the proceeds (or the Cash equivalent thereof) from the
liquidation of the Posted Collateral to any amounts payable by the Pledgor
with respect to any Obligations in that order as the Secured Party may
elect.
Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold on a
recognized market, and, accordingly, the Pledgor is not entitled to prior notice
of any sale of that Posted Collateral by the Secured Party, except any notice
that is required under applicable law and cannot be waived.
5 ISDA(R) 1994
(b) PLEDGOR'S RIGHTS AND REMEDIES. If at any time an Early Termination Date has
occurred or been designated as the result of an Event of Default or Specified
Condition with respect to the Secured Party, then (except in the case of an
Early Termination Date relating to less than all Transactions (or Swap
Transactions) where the Secured Party has paid in full all of its obligations
that are then due under Section 6(e) of this Agreement):
(i) the Pledgor may exercise all rights and remedies available to a
pledgor under applicable law with respect to Posted Collateral held by the
Secured Party;
(ii) the Pledgor may exercise any other rights and remedies available to
the Pledgor under the terms of Other Posted Support, if any;
(iii) the Secured Party will be obligated immediately to Transfer all
Posted Collateral and the Interest Amount to the Pledgor; and
(iv) to the extent that Posted Collateral or the Interest Amount is not so
Transferred pursuant to (iii) above, the Pledgor may:
(A) Set-off any amounts payable by the Pledgor with respect to any
Obligations against any Posted Collateral or the Cash equivalent of
any Posted Collateral held by the Secured Party (or any obligation
of the Secured Party to Transfer that Posted Collateral); and
(B) to the extent that the Pledgor does not Set-off under (iv)(A)
above, withhold payment of any remaining amounts payable by the
Pledgor with respect to any Obligations, up to the Value of any
remaining Posted Collateral held by the Secured Party, until that
Posted Collateral is Transferred to the Pledgor.
(c) DEFICIENCIES AND EXCESS PROCEEDS. The Secured Party will Transfer to the
Pledgor any proceeds and Posted Credit Support remaining after liquidation,
Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in
full of all amounts payable by the Pledgor with respect to any Obligations; the
Pledgor in all events will remain liable for any amounts remaining unpaid after
any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b).
(d) FINAL RETURNS. When no amounts are or thereafter may become payable by the
Pledgor with respect to any Obligations (except for any potential liability
under Section 2(d) of this Agreement), the Secured Party will Transfer to the
Pledgor all Posted Credit Support and the Interest Amount, if any.
PARAGRAPH 9. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated as of each date on which it, as the Pledgor, Transfers Eligible
Collateral) that:
(i) it has the power to grant a security interest in and lien on any
Eligible Collateral it Transfers as the Pledgor and has taken all
necessary actions to authorize the granting of that security interest and
lien;
(ii) it is the sole owner of or otherwise has the right to Transfer all
Eligible Collateral it Transfers to the Secured Party hereunder, free and
clear of any security interest, lien, encumbrance or other restrictions
other than the security interest and lien granted under Paragraph 2;
(iii) upon the Transfer of any Eligible Collateral to the Secured Party
under the terms of this Annex, the Secured Party will have a valid and
perfected first priority security interest therein (assuming that any
central clearing corporation or any third-party financial intermediary or
other entity not within the control of the Pledgor involved in the
Transfer of that Eligible Collateral gives the notices and takes the
action required of it under applicable law for perfection of that
interest); and
(iv) the performance by it of its obligations under this Annex will not
result in the creation of any security interest, lien or other encumbrance
on any Posted Collateral other than the security interest and lien granted
under Paragraph 2.
6 ISDA(R) 1994
PARAGRAPH 10. EXPENSES
(a) GENERAL. Except as otherwise provided in Paragraphs 10(b) and 10(c), each
party will pay its own costs and expenses in connection with performing its
obligations under this Annex and neither party will be liable for any costs and
expenses incurred by the other party in connection herewith.
(b) POSTED CREDIT SUPPORT. The Pledgor will promptly pay when due all taxes,
assessments or charges of any nature that are imposed with respect to Posted
Credit Support held by the Secured Party upon becoming aware of the same,
regardless of whether any portion of that Posted Credit Support is subsequently
disposed of under Paragraph 6(c), except for those taxes, assessments and
charges that result from the exercise of the Secured Party's rights under
Paragraph 6(c).
(c) LIQUIDATION/APPLICATION OF POSTED CREDIT SUPPORT. All reasonable costs and
expenses incurred by or on behalf of the Secured Party or the Pledgor in
connection with the liquidation and/or application of any Posted Credit Support
under Paragraph 8 will be payable, on demand and pursuant to the Expenses
Section of this Agreement, by the Defaulting Party or, if there is no Defaulting
Party, equally by the parties.
PARAGRAPH 11. MISCELLANEOUS
(a) DEFAULT INTEREST. A Secured Party that fails to make, when due, any Transfer
of Posted Collateral or the Interest Amount will be obligated to pay the Pledgor
(to the extent permitted under applicable law) an amount equal to interest at
the Default Rate multiplied by the Value of the items of property that were
required to be Transferred, from (and including) the date that Posted Collateral
or Interest Amount was required to be Transferred to (but excluding) the date of
Transfer of that Posted Collateral or Interest Amount. This interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed.
(b) FURTHER ASSURANCES. Promptly following a demand made by a party, the other
party will execute, deliver, file and record any financing statement, specific
assignment or other document and take any other action that may be necessary or
desirable and reasonably requested by that party to create, preserve, perfect or
validate any security interest or lien granted under Paragraph 2, to enable that
party to exercise or enforce its rights under this Annex with respect to Posted
Credit Support or an Interest Amount or to effect or document a release of a
security interest on Posted Collateral or an Interest Amount.
(c) FURTHER PROTECTION. The Pledgor will promptly give notice to the Secured
Party of, and defend against, any suit, action, proceeding or lien that involves
Posted Credit Support Transferred by the Pledgor or that could adversely affect
the security interest and lien granted by it under Paragraph 2, unless that
suit, action, proceeding or lien results from the exercise of the Secured
Party's rights under Paragraph 6(c).
(d) GOOD FAITH AND COMMERCIALLY REASONABLE MANNER. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.
(e) DEMANDS AND NOTICES. All demands and notices made by a party under this
Annex will be made as specified in the Notices Section of this Agreement, except
as otherwise provided in Paragraph 13.
(f) SPECIFICATIONS OF CERTAIN MATTERS. Anything referred to in this Annex as
being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
7 ISDA(R) 1994
PARAGRAPH 12. DEFINITIONS
As used in this Annex:--
"CASH" means the lawful currency of the United States of America.
"CREDIT SUPPORT AMOUNT" has the meaning specified in Paragraph 3.
"CUSTODIAN" has the meaning specified in Paragraphs 6(b)(i) and 13.
"DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
"DISPUTING PARTY" has the meaning specified in Paragraph 5.
"DISTRIBUTIONS" means with respect to Posted Collateral other than Cash, all
principal, interest and other payments and distributions of cash or other
property with respect thereto, regardless of whether the Secured Party has
disposed of that Posted Collateral under Paragraph 6(c). Distributions will not
include any item of property acquired by the Secured Party upon any disposition
or liquidation of Posted Collateral or, with respect to any Posted Collateral in
the form of Cash, any distributions on that collateral, unless otherwise
specified herein.
"ELIGIBLE COLLATERAL" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"ELIGIBLE CREDIT SUPPORT" means Eligible Collateral and Other Eligible Support.
"EXPOSURE" means for any Valuation Date or other date for which Exposure is
calculated and subject to Paragraph 5 in the case of a dispute, the amount, if
any, that would be payable to a party that is the Secured Party by the other
party (expressed as a positive number) or by a party that is the Secured Party
to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions)
were being terminated as of the relevant Valuation Time; PROVIDED that Market
Quotation will be determined by the Valuation Agent using its estimates at
mid-market of the amounts that would be paid for Replacement Transactions (as
that term is defined in the definition of "Market Quotation").
"INDEPENDENT AMOUNT" means, with respect to a party, the amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.
"INTEREST AMOUNT" means, with respect to an Interest Period, the aggregate sum
of the amounts of interest calculated for each day in that Interest Period on
the principal amount of Posted Collateral in the form of Cash held by the
Secured Party on that day, determined by the Secured Party for each such day as
follows:
(x) the amount of that Cash on that day; multiplied by
(y) the Interest Rate in effect for that day; divided by
(z) 360.
"INTEREST PERIOD" means the period from (and including) the last Local Business
Day on which an Interest Amount was Transferred (or, if no Interest Amount has
yet been Transferred, the Local Business Day on which Posted Collateral in the
form of Cash was Transferred to or received by the Secured Party) to (but
excluding) the Local Business Day on which the current Interest Amount is to be
Transferred.
"INTEREST RATE" means the rate specified in Paragraph 13.
"LOCAL BUSINESS DAY", unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b) thereof will be deemed to include a
Transfer under this Annex.
8 ISDA(R) 1994
"MINIMUM TRANSFER AMOUNT" means, with respect to a party, the amount specified
as such for that party in Paragraph 13; if no amount is specified, zero.
"NOTIFICATION TIME" has the meaning specified in Paragraph 13.
"OBLIGATIONS" means, with respect to a party, all present and future obligations
of that party under this Agreement and any additional obligations specified for
that party in Paragraph 13.
"OTHER ELIGIBLE SUPPORT" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"OTHER POSTED SUPPORT" means all Other Eligible Support Transferred to the
Secured Party that remains in effect for the benefit of that Secured Party.
"PLEDGOR" means either party, when that party (i) receives a demand for or is
required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has
Transferred Eligible Credit Support under Paragraph 3(a).
"POSTED COLLATERAL" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted Collateral in
the form of Cash.
"POSTED CREDIT SUPPORT" means Posted Collateral and Other Posted Support.
"RECALCULATION DATE" means the Valuation Date that gives rise to the dispute
under Paragraph 5; PROVIDED, HOWEVER, that if a subsequent Valuation Date occurs
under Paragraph 3 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 3.
"RESOLUTION TIME" has the meaning specified in Paragraph 13.
"RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
"SECURED PARTY" means either party, when that party (i) makes a demand for or is
entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds
or is deemed to hold Posted Credit Support.
"SPECIFIED CONDITION" means, with respect to a party, any event specified as
such for that party in Paragraph 13.
"SUBSTITUTE CREDIT SUPPORT" has the meaning specified in Paragraph 4(d)(i).
"SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
"THRESHOLD" means, with respect to a party, the amount specified as such for
that party in Paragraph 13; if no amount is specified, zero.
"TRANSFER" means, with respect to any Eligible Credit Support, Posted Credit
Support or Interest Amount, and in accordance with the instructions of the
Secured Party, Pledgor or Custodian, as applicable:
(i) in the case of Cash, payment or delivery by wire transfer into one or
more bank accounts specified by the recipient;
(ii) in the case of certificated securities that cannot be paid or
delivered by book-entry, payment or delivery in appropriate physical form
to the recipient or its account accompanied by any duly executed
instruments of transfer, assignments in blank, transfer tax stamps and any
other documents necessary to constitute a legally valid transfer to the
recipient;
(iii) in the case of securities that can be paid or delivered by
book-entry, the giving of written instructions to the relevant depository
institution or other entity specified by the recipient, together with a
written copy thereof to the recipient, sufficient if complied with to
result in a legally effective transfer of the relevant interest to the
recipient; and
(iv) in the case of Other Eligible Support or Other Posted Support, as
specified in Paragraph 13.
9 ISDA(R) 1994
"VALUATION AGENT" has the meaning specified in Paragraph 13.
"VALUATION DATE" means each date specified in or otherwise determined pursuant
to Paragraph 13.
"VALUATION PERCENTAGE" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.
"VALUATION TIME" has the meaning specified in Paragraph 13.
"VALUE" means for any Valuation Date or other date for which Value is calculated
and subject to Paragraph 5 in the case of a dispute, with respect to:
(i) Eligible Collateral or Posted Collateral that is:
(A) Cash, the amount thereof; and
(B) a security, the bid price obtained by the Valuation Agent
multiplied by the applicable Valuation Percentage, if any;
(ii) Posted Collateral that consists of items that are not specified as
Eligible Collateral, zero; and
(iii) Other Eligible Support and Other Posted Support, as specified in
Paragraph 13.
10 ISDA(R) 1994
PARAGRAPH 13
TO THE
ISDA CREDIT SUPPORT ANNEX
DATED AS OF AUGUST 10, 0000
XXXXXXX
XXXXX XXXXX XXXXXXX CORP., A THE NEW POWER COMPANY, A CORPORATION
CORPORATION ORGANIZED UNDER THE LAW OF ORGANIZED UNDER THE LAW OF THE STATE
THE STATE OF DELAWARE ("PARTY A"), AND OF DELAWARE ("PARTY B")
PARAGRAPH 13. ELECTIONS AND VARIABLES.
(a) SECURITY INTEREST FOR "OBLIGATIONS". The term "OBLIGATIONS" as used in this
Annex includes the following additional obligations:
With respect to Party A: None.
With respect to Party B: None.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT, AND CREDIT SUPPORT AMOUNT.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
(B) "RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
(C) "CREDIT SUPPORT AMOUNT" will mean the higher of (i) the amount
calculated as provided in the definition of that term in Paragraph 3 and
(ii) the sum of the Pledgor's Independent Amounts; PROVIDED, THAT, the
Credit Support Amount shall be deemed to be zero on any Valuation Date in
which there are no Transactions outstanding and Party A and Party B have
no obligations, contingent or otherwise, to each other under this
Agreement or any Credit Support Document.
(ii) ELIGIBLE COLLATERAL. The following items will qualify as "ELIGIBLE
COLLATERAL" for the party specified.
VALUATION
PARTY A PARTY B PERCENTAGE
(A) Cash |X| |X| 100%
(B) Negotiable debt obligations |_| |_| 98%
issued by the U.S. Treasury
Department having an
original maturity at issuance
of not more than one year
("Government Obligations")
Annex A
Page 1
(C) Other: None
(iii) OTHER ELIGIBLE SUPPORT. The following items will qualify as "OTHER
ELIGIBLE SUPPORT" for the party specified:
VALUATION
PARTY A PARTY B PERCENTAGE
Letters of Credit |X| |X| 100% unless either (i) a
Letter of Credit Default
shall apply with respect
to such Letter of Credit
or (ii) twenty (20) or
fewer Local Business Days
remain prior to the
expiration of such Letter
of Credit, in which case
the Valuation Percentage
shall be 0.
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means with respect to a party, the amount
specified as such for that party in each Confirmation, or if no amount is
specified, zero.
(B) "THRESHOLD" means with respect to Party A, U.S. $10,000,000 and with
respect to Party B, U.S. $0; provided, however, that the Threshold for
Party A shall be zero upon the occurrence and during the continuance of a
Material Adverse Change or an Event of Default or Potential Event of
Default with respect to such party.
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Party A: U.S. $0.
"MINIMUM TRANSFER AMOUNT" means with respect to Party B: U.S. $0.
(D) ROUNDING. The Delivery Amount will be rounded up to the nearest
integral multiple of U.S. $250,000 and the Return Amount will be rounded
down to the nearest integral multiple of U.S. $250,000.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means, for purposes of Paragraph 3, the party making
the demand under Paragraph 3; for purposes of Paragraph 4(d), the Secured
Party for purposes of calculating the Value of the Substitute Credit
Support and Posted Credit Support involved in the substitution; for
purposes of Paragraph 5, the Secured Party; and for purposes of Paragraph
6(d), the Secured Party receiving or deemed to receive the Distributions
or the Interest Amount, as applicable; provided, however, that in all
cases, if an Event of Default or Potential Event of Default or Specified
Condition has occurred and is continuing with respect to the party
designated as the Valuation Agent, then in such case, and for so long as
the Event of Default or Potential Event of Default or Specified Condition
continues, the other party shall be the Valuation Agent.
(ii) "VALUATION DATE" means any Local Business Day.
Annex A
Page 2
(iii) "VALUATION TIME" means:
|_| the close of business in the city of the Valuation Agent on
the Valuation Date or date of calculation, as applicable;
|X| the close of business in the city of the Valuation Agent on
the Local Business Day before the Valuation Date or date of
calculation, as applicable;
provided that the calculations of Value and Exposure will be made as of
approximately the same time on the same date.
(iv) "NOTIFICATION TIME" means 10:00 a.m., New York time, on a Local
Business Day:
(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES. The following
Termination Event(s) will be a "SPECIFIED CONDITION" for the party specified
(that party being the Affected Party if the Termination Event occurs with
respect to that party):
SPECIFIED CONDITION PARTY A PARTY B
Illegality |X| |X|
Tax Event |X| |X|
Tax Event Upon Merger |X| |X|
Credit Event Upon Merger |X| |X|
Additional Termination Event(s): None None
(e) SUBSTITUTION.
(i) "SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
(ii) CONSENT. If specified here as applicable, then the Pledgor must
obtain the Secured Party's consent for any substitution pursuant to
Paragraph 4(d): Inapplicable.
(f) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 1:00 p.m., New York time, on the third Local
Business Day following the date on which notice of the dispute is given
under Paragraph 5.
(ii) VALUE. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support as of the relevant calculation date will be
calculated as follows:
(1) With respect to cash, the face amount thereof; and
(2) With respect to any Government Obligations, the sum of (A)(x)
the mean of the high bid and low asked prices quoted on such date by
two principal market makers of recognized national standing (each a
"PRINCIPAL MARKET MAKER") for such Government Obligations chosen by
the Valuation Agent, or (y) if quotations are not available from two
Principal
Annex A
Page 3
Market Makers for such date, the mean of such high bid and low asked
prices as of the day next preceding such date, on which such
quotations were available, plus (B) the accrued interest on such
Government Obligations (except to the extent Transferred to a party
pursuant to any applicable provision of this Annex or included in
the applicable price referred to in (A) of this clause (2)) as of
such date, multiplied by the applicable Valuation Percentage.
(iii) ALTERNATIVE: The provisions of Paragraph 5 will apply except to the
following extent; pending the resolution of a dispute, Transfer of the
undisputed Value of Eligible Credit Support or Posted Credit Support
involved in the relevant demand will be due as provided in Paragraph 5 if
the demand is given by the Notification Time but will be due on the second
Local Business Day after the demand if the demand is given after the
Notification Time.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS. Party A and its
Custodian will be entitled to hold Posted Collateral pursuant to Paragraph
6(b); PROVIDED THAT the following conditions applicable to it are
satisfied:
(1) Party A is not a Defaulting Party and Party A's Credit Support
Provider has a Credit Rating from S&P and the lowest Credit Rating
for Party A's Credit Support Provider is "BBB-" or higher by S&P.
(2) Posted Collateral may be held only in the following
jurisdictions: Any jurisdiction within the United States.
(3) The Custodian is a Qualified Institution (as defined below),
approved by Party B (which approval shall not be unreasonably
withheld). The Custodian shall hold the Posted Collateral in a
segregated, safekeeping or custody account within the Custodian with
the title of such account indicating that the property contained
therein is being held as Posted Collateral for the ownership of
Party B, subject to the security interest of Party A.
Party B and its Custodian will be entitled to hold Posted Collateral
pursuant to Paragraph 6(b); PROVIDED THAT the following conditions
applicable to it are satisfied:
(1) Party B is not a Defaulting Party.
(2) Posted Collateral may he held only in the following
jurisdictions: Any jurisdiction in the United States.
(3) The Custodian is a Qualified Institution, approved by Party A
(which approval shall not be unreasonably withheld). The Custodian
shall hold the Posted Collateral in a segregated, safekeeping or
custody account within the Custodian with the title of such account
indicating that the property contained therein is being held as
Posted Collateral for the ownership of Party A, subject to the
security interest of Party B.
If a party or its Custodian is not eligible to hold Posted
Collateral pursuant to this Section, then it shall be considered a
"Downgraded Party" (as defined in Paragraph 13(g)(ii)) and Posted
Collateral shall be maintained in accordance with Paragraphs 13(g)(ii) and
13(h)(iii).
Annex A
Page 4
(ii) USE OF POSTED COLLATERAL.
The provisions of Paragraph 6(c) will apply to the parties; PROVIDED,
HOWEVER, that if a party or its Custodian is not eligible to hold Posted
Collateral pursuant to Paragraph 13(g)(i) (such party shall be the
"DOWNGRADED PARTY" and the event that caused it to be ineligible to hold
Posted Collateral shall be a "CREDIT RATING EVENT"), then:
(1) the provisions of Paragraph 6(c) will not apply with respect to
the Downgraded Party as the Secured Party; and
(2) the Downgraded Party shall be required to deliver (or cause to
be delivered) not later than the close of business on the second
Local Business Day following such Credit Rating Event all Posted
Collateral in its possession or held on its behalf to a commercial
bank or trust company organized under the law of the United States
or a political subdivision thereof, with a Credit Rating of at least
"A-" in the case of S&P or "A3" in the case of Xxxxx'x ("QUALIFIED
INSTITUTION"), approved by the non-Downgraded Party (which approval
shall not be unreasonably withheld) to a segregated, safekeeping or
custody account ("COLLATERAL ACCOUNT") within such Qualified
Institution with the title of the Collateral Account indicating that
the property contained therein is being held as Posted Collateral
for the Downgraded Party. The Qualified Institution shall serve as
Custodian with respect to the Posted Collateral in the Collateral
Account, and shall hold such Posted Collateral in accordance with
the terms of this Annex and for the security interest of the
Downgraded Party and, subject to such security interest, for the
ownership of the non-Downgraded Party.
(iii) For purposes of Section 5(a)(iii) of this Agreement, failure by a
party or its Custodian to comply with any of the obligations under this
Paragraph 13(g) will constitute an Event of Default with respect to such
party if the failure continues for two (2) Local Business Days after
notice of the failure is given to that party.
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" will be: Federal Funds Effective
Rate as from time to time in effect.
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the Interest Amount will
be made on the last Local Business Day of each calendar month and on any
Local Business Day that Posted Collateral in the form of Cash is
Transferred to the Pledgor pursuant to Paragraph 3(b).
(iii) ALTERNATIVE TO INTEREST AMOUNT AND OTHER MATTERS. The provisions of
Paragraphs 6(d)(i) and (ii) will apply except as modified below.
(A) If the provisions of Paragraph 6(c) do not apply to a party as a
result of a Credit Rating Event described in Paragraph 13(g)(ii), the
provisions of Paragraphs 6(d)(i) and 6(d)(ii) will not apply, Posted
Collateral consisting of Government Obligations, if any, including all
Distributions with respect to such Posted Collateral, shall be maintained
in the Collateral Account by the Qualified Institution pursuant to
Paragraph 13(g)(ii), and the investment of the Posted Collateral
consisting of Cash shall be governed in accordance with the following
provisions:
The Qualified Institution holding the Posted Collateral will invest and
reinvest or procure the Investment and reinvestment of the Posted
Collateral in accordance with the written instructions
Annex A
Page 5
of the Pledgor, subject to the approval of such instructions by the
Secured Party (which approval shall not be unreasonably withheld),
provided that the Secured Party shall not be required to so invest or
reinvest or procure such investment or reinvestment if an Event of Default
or Potential Event of Default or Specified Condition with respect to the
Pledgor shall have occurred and be continuing. The Secured Party shall
have no responsibility for any losses resulting from any investment or
reinvestment effected in accordance with the Pledgor's instructions.
For purposes of Section 5(a)(iii) of this Agreement, failure by a party to
comply with any of the obligations under this Paragraph 13(h)(iii)(A) will
constitute an Event of Default with respect to such party if the failure
continues for two (2) Local Business Days after notice of the failure is
given to that party.
(B) If Transfer of an Interest Amount (or any portion thereof) to a
Pledgor on any day would result in, or increase, a Delivery Amount
(treating the day as a Valuation Date, as provided in Paragraph 6(d)(ii))
but the Pledgor would nonetheless have no obligation to make a Transfer
pursuant to Paragraph 3(a) on that day if it were a Valuation Date
(because the Delivery Amount is lower than the Pledgor's Minimum Transfer
Amount or otherwise), the Secured Party will be required to Transfer that
Interest Amount (or portion thereof) to the Pledgor, notwithstanding
anything to the contrary in Paragraph 6(d)(ii).
(i) ADDITIONAL REPRESENTATION(S) AND COVENANTS.
Each party represents and covenants to the other party (which representations
and covenants will be deemed to be repeated as of each date on which it, as the
Pledgor, Transfers Eligible Credit Support (or, in the case of after-acquired
Eligible Credit Support, at the time the other party or its agent acquires
rights therein), and which covenants will be deemed to apply at all times) that
with respect to the issuance, renewal, substitution, or increase (as the case
may be) of a Letter of Credit, such Letter of Credit is the legal, valid, and
binding obligation of the issuer thereof, enforceable in accordance with its
terms.
(j) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT.
(i) "VALUE" with respect to Other Eligible Support and Other Posted
Support means: The Valuation Percentage times the stated amount then
available under the Letter of Credit to be unconditionally drawn by the
Secured Party.
(ii) "TRANSFER" with respect to Other Eligible Support and Other Posted
Support means: For purposes of Paragraph 3(a), delivery of the Letter of
Credit by the Pledgor to the Secured Party at the address specified in
this Annex or delivery of an executed amendment to such Letter of Credit
(extending the term or increasing the amount available to the Secured
Party thereunder) by the Pledgor to the Secured Party at the address
specified in this Annex; and for purposes of Paragraph 3(b), return of the
Letter of Credit by the Secured Party to the Pledgor, at the address
specified in this Annex, or delivery of an executed amendment to the
Letter of Credit in form and substance satisfactory to the Pledgor,
reducing the amount available to the Secured Party thereunder by the
Pledgor to the Secured Party at the address specified in this Annex.
(iii) All Other Eligible Support and Other Posted Support consisting of
Letters of Credit shall be issued and maintained in accordance with the
provisions set forth in EXHIBIT A and SCHEDULE 1 attached hereto.
Annex A
Page 6
(k) DEMANDS AND NOTICES.
All demands, specifications, and notices under this Annex will be made pursuant
to the Notices Section of this Agreement.
(l) ADDRESSES FOR TRANSFERS.
Party A: To be provided in notice requesting delivery/return of
Eligible Credit Support/Posted Credit Support.
Party B: To be provided in notice requesting delivery/return of
Eligible Credit Support/Posted Credit Support.
(m) OTHER PROVISIONS.
(i) Paragraph 12 of this Annex is hereby amended by adding the following:
"CREDIT RATING" means with respect to a party (or its Credit Support
Provider, as the case may be) or entity, on any date of determination, the
respective ratings then assigned to such party's (or its Credit Support
Provider's, as the case may be) or entity's unsecured, senior long-term
debt or deposit obligations (not supported by third party credit
enhancement) by S&P, Moody's or the other specified rating agency or
agencies.
"FEDERAL FUNDS EFFECTIVE RATE" means, for the relevant determination date
the rate opposite the caption "Federal Funds (Effective)" as set forth in
the weekly statistical release designated as H.15 (519), or any successor
publication, published by the Board of Governors of the Federal Reserve
System.
"LETTER OF CREDIT" means an irrevocable, transferable, standby letter of
credit, issued by a major U.S. commercial bank or foreign bank with a U.S.
branch office with a Credit Rating of at least "A-" by S&P and "A3" by
Moody's, utilizing the form set forth in SCHEDULE 1 attached hereto, with
such changes to the terms in that form as the issuing bank may require and
as may be acceptable to the party in whose favor the letter of credit is
issued. Each Letter of Credit shall be a Credit Support Document.
"MATERIAL ADVERSE CHANGE" means with respect to Party A, its Credit
Support Provider's Credit Rating is below "BBB-" by S&P.
"MOODY'S" means Xxxxx'x Investors Service, Inc. or its successor.
"S&P" means the Standard & Poor's Rating Group (a division of XxXxxx-Xxxx,
Inc.) or its successor.
(ii) Paragraph 6(d)(i) is hereby amended by adding the following sentence:
"Subject to Paragraph 4(a) and only to the extent contemplated in
the previous sentence, if a Secured Party receives or is deemed to receive
Distributions on a day that is not a Local Business Day, or after its
close of business on a Local Business Day, it will Transfer Distributions
to the Pledgor on the second following Local Business Day."
Annex A
Page 7
(iii) Paragraph 7(i) is hereby amended by deleting the words "Eligible
Collateral" and replacing them with the words "Eligible Credit Support."
Annex A
Page 8
EXHIBIT A
TO PARAGRAPH 13
OF ANNEX A
LETTER OF CREDIT PROVISIONS
I. LETTERS OF CREDIT. Posted Credit Support provided by one party ("X") for the
benefit of the other ("Y") in the form of a Letter of Credit shall be subject to
the following provisions.
(a) Any Letter of Credit shall be delivered by X to such address as Y
shall specify and shall be maintained for the benefit of Y or its
designee. X or the issuer of the Letter of Credit shall (i) renew or cause
the renewal of each outstanding Letter of Credit on a timely basis as
provided in the relevant Letter of Credit, (ii) if the bank that issued an
outstanding Letter of Credit has indicated its intent not to renew such
Letter of Credit, provide either a substitute Letter of Credit or other
Eligible Credit Support, in each case at least twenty (20) Local Business
Days prior to the expiration of the outstanding Letter of Credit, and
(iii) if a bank issuing a Letter of Credit shall fail to honor Y's
properly documented request to draw on an outstanding Letter of Credit,
provide for the benefit of Y either a substitute Letter of Credit that is
issued by a bank acceptable to Y or other Eligible Credit Support, in each
case within two (2) Local Business Days after such refusal.
(b) Upon the occurrence of a Letter of Credit Default, X agrees to deliver
to Y either a substitute Letter of Credit or other Eligible Credit
Support, in each case on or before the second Local Business Day after the
occurrence thereof (or on or before the fifth Local Business Day after the
occurrence thereof if only clause (i) under the definition of Letter of
Credit Default applies). "LETTER OF CREDIT DEFAULT" shall mean with
respect to an outstanding Letter of Credit, the occurrence of any of the
following events: (i) the issuer of such Letter of Credit shall fail to
maintain a Credit Rating of at least "A-" by S&P or "A3" by Moody's; (ii)
the issuer of the Letter of Credit shall fail to comply with or perform
its obligations under such Letter of Credit if such failure shall be
continuing after the lapse of any applicable grace period; (iii) the
issuer of such Letter of Credit shall disaffirm, disclaim, repudiate or
reject, in whole or in part, or challenge the validity of, such Letter of
Credit; (iv) such Letter of Credit shall expire or terminate, or shall
fail or cease to be in full force and effect at any time during the term
of this Agreement; or (v) any event analogous to an event specified in
Section 5(a)(vii) of this Agreement shall occur with respect to the issuer
of such Letter of Credit; PROVIDED, HOWEVER, that no Letter of Credit
Default shall occur in any event with respect to a Letter of Credit after
the time such Letter of Credit is required to be canceled or returned to X
in accordance with the terms of this Agreement.
(c) As one method of providing additional Posted Credit Support, X may
increase the amount of an outstanding Letter of Credit or establish one or
more additional Letters of Credit.
(d) (i) A Letter of Credit shall provide that Y may draw upon the Letter
of Credit in an amount that is equal to all amounts that are due and owing
from X but have not been paid to Y within the time allowed for such
payments under this Agreement. A Letter of Credit shall provide that a
drawing may he made on the Letter of Credit upon submission to the bank
issuing the Letter of Credit of one or more certificates of Y in
accordance with the specific requirements of the Letter of Credit.
(ii) Upon or at any time after the occurrence of an Event of Default with
respect to X, Y may draw on the entire, undrawn portion of any outstanding
Letter of Credit upon submission to the bank issuing such Letter of Credit
of one or more certificates in accordance with the specific requirements
of the Letter of Credit. Cash proceeds received from drawing upon the
Letter of Credit shall be deemed Posted Collateral and shall either be (y)
applied against all amounts that are due and owing from X but have not
been paid to Y within the time allowed for such payments under this
Agreement or (z) maintained in accordance with this Annex. Notwithstanding
Y's receipt of Cash under the Letter of Credit, X shall remain liable to Y
for any failure to Transfer sufficient
EXHIBIT A
to Paragraph 13
of Annex A
Page 1
Eligible Credit Support to Y in accordance with the terms of this Annex.
In addition, X shall remain liable for any amounts owing to Y and
remaining unpaid after the application of the amounts so drawn by Y.
(e) If a party's Credit Support Provider shall furnish a Letter of Credit
hereunder, the amount otherwise required under such Letter of Credit may
at the option of such Credit Support Provider be reduced by the amount of
any Letter of Credit established by such party (but only for such time as
such party's Letter of Credit shall be in effect). In the event a party
shall be required to furnish a Letter of Credit hereunder, the amount
otherwise required under such Letter of Credit may at the option of such
party be reduced by the amount of any Letter of Credit established by such
party's Credit Support Provider (but only for such time as such Credit
Support Provider's Letter of Credit shall be in effect).
(f) Upon or at any time after the occurrence or deemed occurrence of an
Early Termination Date as a result of a Termination Event and the failure
of X to make all payments due and owing to Y in accordance with the terms
of this Agreement, Y may draw on any outstanding Letter of Credit in an
amount equal to such amounts owing to it. X shall remain liable for any
amounts owing to Y and remaining unpaid after the application of the
amounts so drawn by Y.
(g) The provisions of this EXHIBIT A shall constitute agreements for all
purposes of this Agreement and this Annex, including Section 5(a)(iii) of
this Agreement.
EXHIBIT A
to Paragraph 13
of Annex A
Page 2
SCHEDULE 1
IRREVOCABLE TRANSFERABLE STANDBY LETTER OF CREDIT FORMAT
DATE OF ISSUANCE: ______________
[Address]
Re: Credit No. _______________
We hereby establish our Irrevocable Transferable Standby Letter of Credit
in your favor for the account of ______________ (the "Account Party"), for the
aggregate amount not exceeding _____________ United States Dollars ($_____),
available to you at sight upon demand at our counters at (LOCATION) on or before
the expiration hereof against presentation to us of one or more of the following
statements, dated and signed by a representative of the beneficiary:
1. "An Event of Default (as defined in the Master Agreement dated as of
________ between beneficiary and Account Party, as the same may have
been amended (the "Master Agreement")) has occurred and is
continuing with respect to Account Party under the Master
Agreement."; or
2. "An Early Termination Date (as defined in the Master Agreement) has
occurred as a result of a Termination Event (as defined in the
Master Agreement) and Account Party has failed to make all payments
due and owing to beneficiary in accordance with the terms of the
Master Agreement."
The amount which may be drawn by you under this Letter of Credit shall be
automatically reduced by the amount of any drawings paid through the Issuing
Bank referencing this Letter of Credit No. ____. Partial drawings are permitted
hereunder.
This Letter of Credit shall expire ________ (____) days from the date of
issuance, but shall automatically extend without amendment for additional
_______________ (______)-day periods from such expiration date and from
subsequent expiration dates, if you, as beneficiary, and the Account Party have
not received due notice of our intention not to renew ninety (90) days prior to
any such expiration date.
We hereby agree with you that documents drawn under and in compliance with
the terms of this Letter of Credit shall be duly honored upon presentation as
specified.
This Letter of Credit shall be governed by the Uniform Customs and
Practice for Documentary Credits, 1993 Revision, International Chamber of
Commerce Publication No. 500 (the "UCP"), except to the extent that the terms
hereof are inconsistent with the provisions of the UCP, including but not
limited to Articles 13(b) and 17 of the UCP, in which case the terms of this
Letter of Credit shall govern.
With respect to Article 13(b) of the UCP, the Issuing Bank shall have a
reasonable amount of time, not to exceed three (3) banking days following the
date of its receipt of documents from the beneficiary, to examine the documents
and determine whether to take up or refuse the documents and to inform the
beneficiary accordingly.
In the event of an Act of God, riot, civil commotion, insurrection, war or
any other cause beyond our control that interrupts our business (collectively,
an "Interruption Event") and causes the place for presentation of this Letter of
Credit to be closed for business on the last day for presentation, the expiry
date of this Letter of Credit will be automatically extended without amendment
to a date thirty (30) calendar days after the place for presentation reopens for
business.
This Letter of Credit is transferable, and we hereby consent to such
transfer, but otherwise may not be amended, changed or modified without the
express written consent of the beneficiary, the Issuing Bank and the Account
Party.
[BANK SIGNATURE]
EXHIBIT A
ENRON CORP.
GUARANTY
This Guaranty (the "Guaranty"), dated as of August 10, 2000, is made and
entered into by ENRON CORP., an Oregon corporation ("Guarantor").
W I T N E S S E T H:
WHEREAS, THE NEW POWER COMPANY, a Delaware corporation ("Counterparty")
and ENRON NORTH AMERICA CORP. ("Enron"), a wholly owned subsidiary of Guarantor,
are contemplating entering into one or more swap, option or other
financially-settled derivative transactions, which transactions will be
evidenced by one or more swap agreements, confirmations and/or master
agreements, including without limitation, the Master Agreement of even date
herewith (the "Master Agreement") (all such swap, option or other
financially-settled derivative transactions and the agreements evidencing same,
including without limitation, the Master Agreement, whether entered into prior
to, on or after the date hereof, as the same may from time to time be modified,
amended and supplemented, shall be referred to herein collectively as the
"Contract"); and
WHEREAS, Guarantor will directly or indirectly benefit from the
transactions to be entered into between Enron and Counterparty,
NOW THEREFORE, in consideration of Counterparty entering into the
Contract, Guarantor hereby covenants and agrees as follows:
1. GUARANTY. Subject to the provisions hereof, Guarantor hereby
irrevocably and unconditionally guarantees the timely payment when due of the
obligations of Enron (the "Obligations") to Counterparty under the Contract.
This Guaranty shall constitute a guarantee of payment and not of collection. The
liability of Guarantor under the Guaranty shall be subject to the following:
(a) Guarantor's liability hereunder shall be and is specifically
limited to payments expressly required to be made under the Contract (even
if such payments are deemed to be damages) and, except to the extent
specifically provided in the Contract, in no event shall Guarantor be
subject hereunder to consequential, exemplary, equitable, loss of profits,
punitive, tort, or any other damages, costs, or attorney's fees.
(b) The aggregate amount covered by this Guaranty shall not exceed
U.S. $10,000,000.
2. DEMANDS AND NOTICE. Upon the occurrence and during the continuance of
an Event of Default, if Enron fails or refuses to pay any Obligations and
Counterparty has elected to exercise its rights under this Guaranty,
Counterparty shall make a demand upon Guarantor (hereinafter referred to as a
"Payment Demand"). A Payment Demand shall be in writing and shall reasonably and
briefly specify in what manner and what amount Enron has failed to pay and an
explanation of why such payment is due, with a specific statement that
Counterparty is calling upon Guarantor to pay under this Guaranty. A Payment
Demand satisfying the foregoing requirements shall be required with respect to
Obligations before Guarantor is required to pay such Obligations hereunder and
shall be deemed sufficient notice to Guarantor that it must pay the Obligations
within five (5) Business Days after its receipt of the Payment Demand. A single
written Payment Demand shall be effective as to any specific default during the
Exhibit A
Page 1
continuance of such default, until Enron or Guarantor has cured such default,
and additional written demands concerning such default shall not be required
until such default is cured.
3. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that:
(a) it is a corporation duly organized and validly existing under
the laws of the State of Oregon and has the corporate power and authority
to execute, deliver and carry out the terms and provisions of the
Guaranty;
(b) no authorization, approval, consent or order of, or registration
or filing with, any court or other governmental body having jurisdiction
over Guarantor is required on the part of Guarantor for the execution and
delivery of this Guaranty; and
(c) this Guaranty, when executed and delivered, will constitute a
valid and legally binding agreement of Guarantor, except as the
enforceability of this Guaranty may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and by general principles of
equity.
4. SETOFFS AND COUNTERCLAIMS. Without limiting Guarantor's own defenses
and rights hereunder, Guarantor reserves to itself all rights, setoffs,
counterclaims and other defenses to which Enron or any other affiliate of
Guarantor is or may be entitled to arising from or out of the Contract or
otherwise, except for defenses arising out of the bankruptcy, insolvency,
dissolution or liquidation of Enron.
5. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived or supplemented except in a writing signed by
Guarantor and Counterparty.
6. WAIVERS. Guarantor hereby waives (a) notice of acceptance of this
Guaranty; (b) presentment and demand concerning the liabilities of Guarantor,
except as expressly hereinabove set forth; and (c) any right to require that any
action or proceeding be brought against Enron or any other person, or except as
expressly hereinabove set forth, to require that Counterparty seek enforcement
of any performance against Enron or any other person, prior to any action
against Guarantor under the terms hereof.
Except as to applicable statutes of limitation, no delay of Counterparty
in the exercise of, or failure to exercise, any rights hereunder shall operate
as a waiver of such rights, a waiver of any other rights or a release of
Guarantor from any obligations hereunder.
Guarantor consents to the renewal, compromise, extension, acceleration or
other changes in the time of payment of or other changes in the terms of the
Obligations, or any part thereof or any changes or modifications to the terms of
the Contract.
Guarantor may terminate this Guaranty by providing written notice of such
termination to Counterparty and upon the effectiveness of such termination,
Guarantor shall have no further liability hereunder, except as provided in the
last sentence of this paragraph. No such termination shall be effective until
five (5) Business Days after receipt by Counterparty of such termination notice.
No such termination shall affect Guarantor's liability with respect to any
Transaction (as defined in the Contract) entered into prior to the time the
termination is effective, which Transaction shall remain guaranteed pursuant to
the terms of this Guaranty.
7. NOTICE. Any Payment Demand, notice, request, instruction,
correspondence or other document to be given hereunder by any party to another
(herein collectively called "Notice") shall be in writing and delivered
personally or mailed by certified mail, postage prepaid and return receipt
requested, or by telegram or telecopier, as follows:
Exhibit A
Page 2
To Counterparty: The New Power Company To Guarantor: Enron Corp.
00 Xxxxxxxxx Xxxxxx 0000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxx, Xxxxx 00000
Attn.: Xxxx Xxxxx Attn.: Vice President,
Fax No.: (000) 000-0000 Finance and Treasurer
Fax No.: (000) 000-0000
A copy of any notice sent to Guarantor pursuant hereto must also be sent to the
above address to: (i) Enron Corp., Attention: Corporate Secretary, Fax No. (713)
000-0000, and (ii) Enron North America Corp., Attention: Assistant General
Counsel, Trading Group, Fax No. (000) 000-0000.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by telegram or
telecopier shall be confirmed promptly after transmission in writing by
certified mail or personal delivery. Any party may change any address to which
Notice is to be given to it by giving notice as provided above of such change of
address.
8. MISCELLANEOUS. This Guaranty shall in all respects be governed by, and
construed in accordance with, the law of the State of
Texas, without regard to
principles of conflicts of laws. This Guaranty shall be binding upon Guarantor,
its successors and assigns and inure to the benefit of and be enforceable by
Counterparty, its successors and assigns. The Guaranty embodies the entire
agreement and understanding between Guarantor and Counterparty and supersedes
all prior agreements and understandings relating to the subject matter hereof.
The headings in this Guaranty are for purposes of reference only, and shall not
affect the meaning hereof.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty on August
___, 2000, but it is effective as of the date first above written.
ENRON CORP.
By: ____________________________________
Name: __________________________________
Title: _________________________________
Exhibit A
Page 3
EXHIBIT B
TNPC, INC.
GUARANTY
This Guaranty (the "Guaranty"), dated as of August 10, 2000, is made and
entered into by TNPC, INC., a Delaware corporation ("Guarantor").
W I T N E S S E T H:
WHEREAS, THE NEW POWER COMPANY, a wholly owned subsidiary of Guarantor
("Counterparty") and ENRON NORTH AMERICA CORP., a Delaware corporation
("Enron"), are contemplating entering into one or more swap, option or other
financially-settled derivative transactions, which transactions will be
evidenced by one or more swap agreements, confirmations and/or master
agreements, including without limitation, the Master Agreement of even date
herewith (the "Master Agreement") (all such swap, option or other
financially-settled derivative transactions and the agreements evidencing same,
including without limitation, the Master Agreement, whether entered into prior
to, on or after the date hereof, as the same may from time to time be modified,
amended and supplemented, shall be referred to herein collectively as the
"Contract"); and
WHEREAS, Guarantor will directly or indirectly benefit from the
transactions to be entered into between Enron and Counterparty.
NOW THEREFORE, in consideration of Enron entering into the Contract,
Guarantor hereby covenants and agrees as follows:
1. GUARANTY. Subject to the provisions hereof, Guarantor hereby
irrevocably and unconditionally guarantees the timely payment when due of the
obligations of Counterparty (the "Obligations") to Enron under the Contract.
This Guaranty shall constitute a guarantee of payment and not of collection. The
liability of Guarantor under the Guaranty shall he subject to the following:
(a) Guarantor's liability hereunder shall be and is specifically limited
to payments expressly required to be made under the Contract (even if such
payments are deemed to be damages) and, except to the extent specifically
provided in the Contract, in no event shall Guarantor be subject hereunder
to consequential, exemplary, equitable, loss of profits, punitive, tort,
or any other damages, costs, or attorney's fees.
(b) The aggregate amount covered by this Guaranty shall not exceed U.S.
$1,000,000.
2. DEMANDS AND NOTICE. Upon the occurrence and during the continuance of
an Event of Default, if Counterparty fails or refuses to pay any Obligations and
Enron has elected to exercise its rights under this Guaranty, Enron shall make a
demand upon Guarantor (hereinafter referred to as a "Payment Demand"). A Payment
Demand shall be in writing and shall reasonably and briefly specify in what
manner and what amount Counterparty has failed to pay and an explanation of why
such payment is due, with a specific statement that Enron is calling upon
Guarantor to pay under this Guaranty. A Payment Demand satisfying the foregoing
requirements shall be required with respect to Obligations before Guarantor is
required to pay such Obligations hereunder and shall be deemed sufficient notice
to Guarantor that it must pay the Obligations within five (5) Business Days
after its receipt of the Payment Demand. A single written Payment Demand shall
be effective as to any specific default during the continuance of such default,
until Counterparty or Guarantor has cured such default, and additional written
demands concerning such default shall not be required until such default is
cured.
3. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that:
Exhibit B
Page 1
(a) it is a corporation duly organized and validly existing under the laws
of the State of Delaware and has the corporate power and authority to
execute, deliver and carry out the terms and provisions of the Guaranty;
(b) no authorization, approval, consent or order of, or registration or
filing with, any court or other governmental body having jurisdiction over
Guarantor is required on the part of Guarantor for the execution and
delivery of this Guaranty; and
(c) this Guaranty, when executed and delivered, will constitute a valid
and legally binding agreement of Guarantor, except as the enforceability
of this Guaranty may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity.
4. SETOFFS AND COUNTERCLAIMS. Without limiting Guarantor's own defenses
and rights hereunder, Guarantor reserves to itself all rights, setoffs,
counterclaims and other defenses to which Counterparty or any other affiliate of
Guarantor is or may be entitled to arising from or out of the Contract or
otherwise, except for defenses arising out of the bankruptcy, insolvency,
dissolution or liquidation of Counterparty.
5. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be
amended, modified, altered, waived or supplemented except in a writing signed by
Guarantor and Enron.
6. WAIVERS. Guarantor hereby waives (a) notice of acceptance of this
Guaranty; (b) presentment and demand concerning the liabilities of Guarantor,
except as expressly hereinabove set forth; and (c) any right to require that any
action or proceeding be brought against Counterparty or any other person, or
except as expressly hereinabove set forth, to require that Enron seek
enforcement of any performance against Counterparty or any other person, prior
to any action against Guarantor under the terms hereof. Except as to applicable
statutes of limitation, no delay of Enron in the exercise of, or failure to
exercise, any rights hereunder shall operate as a waiver of such rights, a
waiver of any other rights or a release of Guarantor from any obligations
hereunder. Guarantor consents to the renewal, compromise, extension,
acceleration or other changes in the time of payment of or other changes in the
terms of the Obligations, or any part thereof or any changes or modifications to
the terms of the Contract.
Guarantor may terminate this Guaranty by providing written notice of such
termination to Enron and upon the effectiveness of such termination, Guarantor
shall have no further liability hereunder, except as provided in the last
sentence of this paragraph. No such termination shall be effective until five
(5) Business Days after receipt by Enron of such termination notice. No such
termination shall affect Guarantor's liability with respect to any Transaction
(as defined in the Contract) entered into prior to the time the termination is
effective, which Transaction shall remain guaranteed pursuant to the terms of
this Guaranty.
7. NOTICE. Any Payment Demand, notice, request, instruction,
correspondence or other document to be given hereunder by any party to another
(herein collectively called "Notice") shall be in writing and delivered
personally or mailed by certified mail, postage prepaid and return receipt
requested, or by telegram or telecopier, as follows:
To Enron North America Corp. To Guarantor: TNPC, INC.
Enron:
0000 Xxxxx Xxxxxx 00 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000 Xxxxxxxxx, XX 00000
Attn.: Director, Documentation Attn.: Xxxx Xxxxx
Department Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
Exhibit B
Page 2
A copy of any notice sent to Enron pursuant hereto must also be sent to the
above address to: (i) Enron Corp., Attention: Corporate Secretary, Fax No. (713)
000-0000, and (ii) Enron North America Corp., Attention: Assistant General
Counsel, Trading Group, Fax No. (000) 000-0000.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipients next business day after receipt if not received
during the recipient's normal business hours. All notices by telegram or
telecopier shall be confirmed promptly after transmission in writing by
certified mail or personal delivery. Any party may change any address to which
Notice is to be given to it by giving notice as provided above of such change of
address.
8. MISCELLANEOUS. This Guaranty shall in all respects be governed by, and
construed in accordance with, the law of the State of
Texas, without regard to
principles of conflicts of laws. This Guaranty shall be binding upon Guarantor,
its successors and assigns and inure to the benefit of and be enforceable by
Enron, its successors and assigns. The Guaranty embodies the entire agreement
and understanding between Guarantor and Enron and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
headings in this Guaranty are for purposes of reference only, and shall not
affect the meaning hereof.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty on August
___, 2000, but it is effective as of the date first above written.
TNPC, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
Exhibit B
Page 3
