EXHIBIT 99.0
MASTER NETTING, SETOFF,
AND SECURITY AGREEMENT
This Master Netting, Setoff, and Security Agreement (including the Collateral
Annex, collectively, the "Agreement") is made and entered into effective as of
November 14, 2001 among the Counterparty Party (as defined below) and the Enron
Parties (as defined below).
The Enron Parties and the Counterparty Parties have entered into the agreements
(and Transactions, schedules, annexes and confirmations thereunder) referenced
on Exhibit A hereto, as such agreements have been or may be amended, restated,
supplemented or otherwise modified (collectively, the "Existing Underlying
Master Agreements," and each individually, an "Existing Underlying Master
Agreement").
The Enron Parties and the Counterparty Parties may after the date of this
Agreement enter into master agreements or other confirmation agreements in the
nature of "forward contracts" and "swap agreements" as defined in the United
States Bankruptcy Code, 11 U.S.C. Secs. 101-1330 (such agreements, as same may
be amended, restated, supplemented, or otherwise modified from time to time, and
including all Transactions, schedules, annexes, and confirmations thereunder,
together with the Existing Underlying Master Agreements, are referred to herein,
collectively, as the "Underlying Master Agreements," and each individually, as
an "Underlying Master Agreement."
Each Enron Party desires now to provide in this Agreement for its right to
terminate, liquidate, net, setoff, and apply Collateral upon a Default by any
Counterparty Party under any one or more of the Underlying Master Agreements as
herein specified, including, without limitation, by permitting each Enron Party
to terminate, liquidate, net, setoff, and apply Collateral across all of the
Underlying Master Agreements and to treat the Underlying Master Agreements as a
single agreement for such purposes, whether or not the Obligations arising under
the Underlying Master Agreements are in connection with (a) cash settled
Transactions or physically settled Transactions or (b) securities, forward
contracts, commodities contracts, repurchase agreements, or swap agreements.
Each Counterparty Party desires now to provide in this Agreement for its right
to terminate, liquidate, net, setoff, and apply Collateral upon a Default by any
Enron Party under any one or more of the Underlying Master Agreements as herein
specified, including, without limitation, by permitting each Counterparty Party
to terminate, liquidate, net, setoff, and apply Collateral across all of the
Underlying Master Agreements and to treat the Underlying Master Agreements as a
single agreement for such purposes, whether or not the Obligations arising under
the Underlying Master Agreements are in connection with (a) cash settled
Transactions or physically settled Transactions or (b) securities, forward
contracts, commodities contracts, repurchase agreements, or swap agreements.
NOW THEREFORE, for and in consideration of the mutual agreements herein
made and other good and valuable consideration, including, without limitation,
amendments to the Underlying Master Agreements set forth herein, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS. (a) Defined terms used or incorporated by reference in
this Agreement and not otherwise defined herein have the same meanings in this
Agreement as given to them by the respective Underlying Master Agreement. In the
event of any conflict or inconsistency between a term defined herein and in any
of the Underlying Master Agreements, such term as used in this Agreement shall
govern and have the meaning ascribed to it in this Agreement.
(b) The following terms used in this Agreement are defined as follows:
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"Affiliate" means, with respect to any person, any other person that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such person. For this purpose,
"control" means the direct or indirect ownership of twenty percent or more of
the outstanding capital stock or other equity interest having ordinary voting
power, and "person" means any entity other than an individual.
"Business Day" means a day on which commercial banks settle payments and
are open for general business in New York City.
"Claims" has the meaning set forth in Section 15.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sections 101,
et. seq., as the same may be amended from time to time.
"Collateral" means Eligible Collateral as defined in the Collateral
Annex.
"Collateral Administrator" means the Party designated in the Collateral
Annex to administer the Collateral for each respective Group in accordance with
the Collateral Annex.
"Collateral Annex" means the Collateral Annex attached hereto as Annex A
and made a part of this Agreement.
"Costs" means brokerage fees, commissions and other similar third party
transaction costs and expenses reasonably incurred by the Non-Defaulting Party
either in terminating any arrangement pursuant to which it has hedged its
obligations or entering into new arrangements that replace a terminated
Transaction and all reasonable attorneys' fees and expenses incurred by the
Non-Defaulting Party in connection with the termination of a Transaction.
"Counterparty Affiliate" means each Counterparty Party and each of its
now and hereafter existing Affiliates.
"Counterparty Group" means all Counterparty Parties.
"Counterparty Guaranty" means the guaranty of Calpine Corporation to be
delivered to Enron Group pursuant to this Agreement substantially in the form
attached hereto.
"Counterparty Party(ies)" means Calpine Energy Services, L.P.
"Credit Rating" means with respect to an entity, on any date of
determination, the respective ratings then assigned to such entity's unsecured,
senior long-term debt or depository obligations (in each case, not supported by
third-party credit enhancement) by S&P, Xxxxx'x or other specified rating agency
or agencies as may be agreed to by the Parties.
"Debt" has the meaning set forth in Section 101 of the Code.
"Default" means the occurrence of a (i) default, event of default, or
other event (including the passage of time) that results in a Party having an
immediate contractual right to accelerate, terminate, liquidate, or cancel
Transactions under any Underlying Master Agreement, or (ii) representation or
warranty made or repeated by a Party hereunder being incorrect or misleading in
any material respect when made or repeated, or (iii) violation of a covenant
made hereunder including, without limitation, the Collateral requirements under
Section 5 hereof.
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"Defaulting Group" means (i) Enron Group when a Default has occurred
with respect to any Enron Party ("Defaulting Enron Party") and (ii) Counterparty
Group when a Default has occurred with respect to any Counterparty Party
("Defaulting Counterparty Party").
"Defaulting Party" means each Enron Party when a Default has occurred
with respect to any Defaulting Enron Party, and each Counterparty Party when a
Default has occurred with respect to any Defaulting Counterparty Party.
"Early Termination Date" has the meaning set forth in Section 2.
"Eligible Collateral" has the meaning set forth in the Collateral Annex.
"Enron Affiliate" means each Enron Party and each of its now and
hereafter existing Affiliates.
"Enron Group" means all Enron Parties.
"Enron Guaranty" means the guaranty of Enron Corp. to be delivered to
Counterparty Party pursuant to this Agreement substantially in the form
attached hereto.
"Enron Parties" means Enron North America Corp. and Enron Power
Marketing, Inc.
"Exposure" means on any date, the amount that would be payable by one
Party (First Party) to another Party (Second Party) under an Underlying Master
Agreement if pursuant thereto Second Party was entitled to and did terminate all
Transactions and accelerate First Party's payment Obligations under such
agreement as of such date on the basis of a default (within the meaning of such
Underlying Master Agreement) by First Party, whether or not such default,
termination, and acceleration actually occurs; provided, Exposure will be
calculated using mid-market estimates determined using good faith efforts.
"Exposure Threshold" means the amount set forth opposite the highest Credit
Rating (as defined in the Collateral Annex), be it S&P or Xxxxx'x, for Calpine
Corporation or Enron Corp., as the case may be
Exposure Threshold S&P Xxxxx'x
------------------ --- -------
$100,000,000 BBB- or above Baa3 or above
$50,000,000 BB+ Ba1
$25,000,000 BB Ba2
$0 below BB below Ba2
provided, the Exposure Threshold for a Group shall be zero upon the occurrence
and during the continuance of a Material Adverse Change, a Default, or Potential
Event of Default by or in respect of any of the entities comprising that Group.
"Final Settlement Amount" has the meaning set forth in Section 3.
"Gains" means, with respect to any Party, an amount equal to the present
value of the economic benefit to it, if any (exclusive of Costs), resulting from
the termination of a Transaction, determined in a commercially reasonable
manner.
"Group" means Enron Group or Counterparty Group, as applicable.
"Guarantor" means with respect to Enron Group, Enron Corp., and with
respect to Counterparty Group, Calpine Corporation.
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"Guaranty" means the Counterparty Guaranty or the Enron Guaranty, as the
context indicates.
"Involuntary Bankruptcy" means the filing of a petition under the Code
for the entry of an order for relief against a Counterparty Party or an Enron
Party.
"Letters of Credit" has the meaning set forth in the Collateral Annex.
"Losses" means, with respect to any Party, an amount equal to the
present value of the economic loss to it, if any (exclusive of Costs), resulting
from termination of a Transaction, determined in a commercially reasonable
manner.
"Material Adverse Change" shall have the meaning set forth in the
Collateral Annex.
"Non-defaulting Group" means (i) Counterparty Group when a Default has
occurred with respect to a Defaulting Enron Party and (ii) Enron Group when a
Default has occurred with respect to a Defaulting Counterparty Party.
"Non-defaulting Party" means any Enron Party when a Default has occurred
with respect to any Counterparty Party, and any Counterparty Party when a
Default has occurred with respect to any Enron Party.
"Obligation" or "Obligations" means each and every obligation to (a) pay
any amount or (b) maintain and/or deliver Collateral that any Counterparty Party
owes to any Enron Party or any Enron Party owes to any Counterparty Party
arising pursuant to: an Underlying Master Agreement, a Transaction, this
Agreement, or a guarantee provided by or on behalf of any Counterparty Party to
any Enron Party or provided by or on behalf of any Enron Party to any
Counterparty Party in connection with an Underlying Master Agreement, this
Agreement or a Guaranty, whether or not such obligation to pay or maintain
and/or deliver Collateral or other liability or guaranty is due, fixed, matured,
unmatured, liquidated, unliquidated, or contingent.
"Party" means any Enron Party or any Counterparty Party as the context
indicates, and "Parties" means all of the foregoing.
"Potential Event of Default" means any event which, with the giving of
notice or the lapse of time or both, would constitute a Default.
"Setoff" means the right of a Non-defaulting Party to setoff (including
by set-off, offset, combination of accounts, retention, or withholding across or
within each or all of the Underlying Master Agreements) any sum, amount, or
Obligation (whether physically or financially settled, fixed, liquidated,
unliquidated, matured, unmatured or contingent) owed by any Non-defaulting Party
to any Defaulting Party under the Underlying Master Agreements, this Agreement
or any other agreements, against any sum, amount, or Obligation (whether
physically or financially settled, fixed, liquidated, unliquidated, matured,
unmatured or contingent) owed by any Defaulting Party to any Non-defaulting
Party under the Underlying Master Agreements, this Agreement or any other
agreements. The foregoing is in addition to, and not in limitation of, any other
right or remedy available to the Non-defaulting Party (including, without
limitation, any right of setoff, offset, combination of accounts, deduction,
counterclaim, retention, or withholding), whether arising by agreement,
including, without limitation, this Agreement and any of the Underlying Master
Agreements and with particularity, rights therein with respect to any Enron
Affiliate or any Counterparty Affiliate, applicable law, equity, or otherwise.
"Settlement Amount" means, in accordance with any applicable Underlying
Master Agreement(s), the net amount that is due and payable by one Party to the
other Party upon (i) such Underlying Master Agreement(s) having been
accelerated, terminated, liquidated, or cancelled (including
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by way of automatic early termination), (ii) the resulting Obligations of each
Party having been determined, and (iii) those Obligations having been netted and
reduced by the exercise of rights to apply Collateral (if any) delivered under
or held in connection with such Underlying Master Agreement(s).
"Termination Date" has the meaning set forth in Section 5(g).
"Transaction" or "Transactions" means each and every trade, transaction,
or other open contractual commitment, between any Enron Party and any
Counterparty Party arising under the Underlying Master Agreements.
"Underlying Master Agreements Close-Out" has the meaning set forth in
Section 2.
2. REMEDIES UPON DEFAULT. (a) Except as provided in Section 2(c) below,
upon the occurrence and continuance for two (2) Business Days of a Default in
respect of any Defaulting Party, the Non-defaulting Group may, by delivery of
notice thereof in accordance with Section 11 below specifying the relevant
Default and declaring the Defaulting Group in default of all Underlying Master
Agreements, (i) designate a date (the "Early Termination Date"), which is no
earlier than a date which is two (2) Business Days after the date such notice is
delivered and no later than 20 days after the date such notice is delivered, as
an Early Termination Date and accelerate, cancel, terminate, liquidate, and
otherwise close-out all Transactions under the Underlying Master Agreements as
of such designated date; (ii) exercise rights of Setoff, netting, and/or
recoupment in accordance with the terms of the Underlying Master Agreements;
(iii) with respect to each Defaulting Party, withhold performance of each
Non-defaulting Party's Obligations to each Defaulting Party to pay, secure,
setoff against, net, and/or recoup such Defaulting Party's Obligations to such
Non-defaulting Party; (iv) retain, foreclose, collect, sell, or otherwise
liquidate any Collateral in any order and at any time, and apply the proceeds
thereof to satisfy each Defaulting Party's Obligation to each Non-defaulting
Party; (v) suspend delivery or receipt of any commodity under any Underlying
Master Agreement; (vi) convert any Obligation from one currency into another
currency as set forth in Section 4; and/or (vii) take any other action permitted
by law or in equity or by any Transaction necessary or appropriate to protect,
preserve, or enforce its rights or to reduce any risk of loss or delay, except
to the extent any such action is proscribed or limited herein. Any one or more
of the foregoing acts shall be referred to herein as an "Underlying Master
Agreements Close-Out."
(b) If a Default occurs and a Non-defaulting Party elects to forebear
from causing an Underlying Master Agreements Close-Out with respect to an
Underlying Master Agreement, each Party shall retain its rights and obligations
under such Underlying Master Agreement with respect thereto until the earlier of
the date on which (i) such Default is cured or (ii) the Non-defaulting Party
elects to cause the Underlying Master Agreements Close-Out.
(c) Notwithstanding anything herein or in any Underlying Master
Agreement to the contrary, if the Default giving rise to a Non-defaulting
Group's rights hereunder is an Involuntary Bankruptcy, any notice period or
grace period referenced in Section 2(a) shall not apply and the Non-defaulting
Group may immediately exercise the rights granted herein without prior notice to
the Defaulting Group.
(d) In the event that a Non-defaulting Group elects to cause the
Underlying Master Agreements Close-Out, any and all notification requirements
under the Underlying Master Agreements for accelerating, terminating,
liquidating, or otherwise closing-out Transactions thereunder shall be
superseded by Section 2(a) and shall be satisfied in all respects by the notice
provided for in section 2(b) and, with particularity, any automatic termination
provided for in any Underlying Master Agreement shall be inapplicable thereto.
3. SETTLEMENT. The Settlement Amount under each of the Underlying Master
Agreements shall be determined in accordance with the terms of such agreement.
If an Underlying Master Agreement does not provide a mechanism for calculating
the Settlement Amount thereunder, the Settlement Amount shall
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equal the sum of (a) the Losses or Gains relating to each Transaction, plus (b)
Costs that the Non-Defaulting Party incurs as a result of the termination and
liquidation of each Transaction. All Settlement Amounts shall be netted against
each other and the resulting net amount may be reduced by the exercise of rights
to apply Collateral delivered under or held in connection therewith and pursuant
to all rights granted in this Agreement (as so netted and reduced, the "Final
Settlement Amount"); provided, if a Settlement Amount has been setoff in whole
or in part, such Settlement Amount, to the extent of such setoff, shall be
deemed to have been discharged and no longer due under the relevant Underlying
Master Agreement. Upon determination of the Final Settlement Amount,
Non-defaulting Group shall provide Defaulting Group with a statement showing the
calculation of the Final Settlement Amount. The Final Settlement Amount shall be
payable by the Group from which such payment is due on the third Business Day
after the statement is delivered to such Group. In the event of a dispute as to
the Final Settlement Amount payable by a Group, such Group shall, within the
time proscribed herein, pay the undisputed amount of the Final Settlement
Amount. The Parties shall in good faith seek to resolve such disputed amount of
the Final Settlement Amount without delay. If the Parties are unable to resolve
the disputed amount of the Final Settlement Amount within ten (10) days, the
matter shall be submitted to arbitration in accordance with Section 15. The
Final Settlement Amount shall bear interest at the highest rate provided for in
any of the Underlying Master Agreements; provided, such rate shall not exceed
the maximum non-usurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged, or received thereon under
any applicable law. Nothing in this Section 3 shall be construed to restrict or
preclude Non-defaulting Group from realizing on Collateral at any time after the
Final Settlement Amount has been calculated by Non-defaulting Group,
notwithstanding (and without awaiting the outcome of) any dispute as to the
Final Settlement Amount payable.
4. CURRENCY. In order to effect the provisions of this Agreement, any
amounts subject hereto may be converted into another currency specified in any
of the Underlying Master Agreements at the rate of exchange at which the Party
so converting, acting in a reasonable manner and in good faith, would be able to
purchase the relevant amount of the currency being converted.
5. COLLATERAL. Prior to the Termination Date during the term of this
Agreement, the provisions hereof, including the Collateral Annex, replace the
separate exposure thresholds and Collateral requirements set forth in each
Underlying Master Agreement with the Exposure Thresholds and aggregate
Collateral requirements set forth in this Agreement, including the Collateral
Annex, covering all Underlying Master Agreements. Notwithstanding anything to
the contrary contained in any Underlying Master Agreement or in any
documentation comprising or pertaining to Collateral or other credit support and
subject to Section 2(c), the determination and application of Collateral
requirements and rights shall be in accordance with the following provisions so
long as this Agreement is in force and effect.
(a) Any Eligible Collateral provided (before, on or after the date of
this Agreement) in respect of any Obligations, by or on behalf of any
Counterparty Party to any Enron Party, shall secure the aggregate of the
Obligations of Counterparty Group to Enron Group and the administration of such
Collateral shall be governed by the Collateral Annex as of the effective date of
this Agreement. Any Collateral provided (before, on or after the date of this
Agreement) in respect of any Obligations, by or on behalf of any Enron Party to
any Counterparty Party, shall secure the aggregate of the Obligations of Enron
Group to Counterparty Group and the administration of such Collateral shall be
governed by the Collateral Annex as of the effective date of this Agreement.
(b) In the event of the occurrence of an Early Termination Date under
any Underlying Master Agreement (and as defined therein) occasioned by an event
other than a Default, the Collateral Administrator for Enron Group and
Counterparty Group, as the case may be, shall have the right to apply Collateral
to satisfy the Obligations under the subject Underlying Master Agreement in
accordance therewith.
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(c) The Collateral Administrator designated as such by Enron Group in
the Collateral Annex agrees to act as the agent and bailee of each other Enron
Party in respect of the Collateral and shall hold any Collateral both as secured
party and as agent and bailee of each other Enron Party as a secured party. Each
Counterparty Party hereby irrevocably appoints such Collateral Administrator to
be its attorney in the name of and on behalf and as the act and deed of such
Counterparty Party or otherwise under a power coupled with an interest to
execute, sign, seal, and deliver any documents which Enron Group may require for
perfecting its security interest in the Collateral or upon the occurrence of a
Default vesting the Collateral in Enron Group or its nominees or any purchaser,
and otherwise generally to sign, seal, deliver, and otherwise perfect any such
legal or other charge or assignment and all documents, and to do all such acts
and things as may be required for the full exercise of the powers hereby
conferred, including filing any financing statements and charges, and upon the
occurrence of a Default, any sale, lease, realization, or other disposition of
the Collateral or the enforcement of any Enron Group's rights hereunder or
otherwise.
(d) The Collateral Administrator designated as such by Counterparty
Group in the Collateral Annex agrees to act as the agent and bailee of each
other Counterparty Party in respect of the Collateral and shall hold any
Collateral both as secured party and as agent and bailee of each other
Counterparty Party as a secured party. Each Enron Party hereby irrevocably
appoints such Collateral Administrator to be its attorney in the name of and on
behalf and as the act and deed of such Enron Party or otherwise under a power
coupled with an interest to execute, sign, seal, and deliver any documents which
Counterparty Group may require for perfecting its security interest in the
Collateral or upon the occurrence of a Default vesting the Collateral in
Counterparty Group or its nominees or any purchaser, and otherwise generally to
sign, seal, deliver, and otherwise perfect any such legal or other charge or
assignment and all documents, and to do all such acts and things as may be
required for the full exercise of the powers hereby conferred, including filing
any financing statements and charges, and upon the occurrence of a Default, any
sale, lease, realization, or other disposition of the Collateral or the
enforcement of any Counterparty Group's rights hereunder or otherwise.
(e) Notwithstanding any provisions of any of the Underlying Master
Agreements to the contrary, all non-cash Eligible Collateral issued or delivered
by or for the account of any Counterparty Party shall name the Collateral
Administrator designated by Enron Group "for itself or as Agent for [list each
Enron Party]" as a beneficiary thereof, and all non-cash Eligible Collateral
issued or delivered by or for the account of any Enron Party shall name the
Collateral Administrator designated by Counterparty Group "for itself or as
Agent for [list each Counterparty Party]" as a beneficiary thereof, and in each
case shall provide for the right of each such named beneficiary to draw thereon
upon the occurrence of a Default under this Agreement and any other drawing
condition set forth in the applicable Underlying Master Agreement. The Parties
agree and covenant to each other to forthwith and without delay cause the
amendment or reestablishment of all Letters of Credit issued pursuant to the
Underlying Master Agreements in accordance with the foregoing criteria.
(f) Each Party to an Underlying Master Agreement agrees that the
provisions thereof are hereby amended to replace the determination of separate
Collateral requirements under each Underlying Master Agreement with the
determination of an aggregate net Collateral requirement set forth in the
Collateral Annex.
(g) At such time as this Agreement has been terminated or is otherwise
no longer in force and effect for any reason (the "Termination Date"), the
exposure thresholds and collateral requirements set forth in the Underlying
Master Agreements shall be effective between the Parties to each such Underlying
Master Agreement as therein stated. As of and from the Termination Date, the
Collateral held by Enron Group and Counterparty Group shall continue to be
maintained and secure the Obligations of Counterparty Group and Enron Group,
respectively. Within a reasonably practicable time thereafter, but no later than
thirty (30) Business Days, the Collateral Administrator for each Group shall
provide a written notice to the other Group setting forth the distribution of
the Collateral held by it
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applicable to each Underlying Master Agreement effective as of the Termination
Date, which distribution may be determined in the sole discretion of each
Collateral Administrator; provided, should a Default occur under any remaining
Underlying Master Agreement prior to such written notice, Non-defaulting Party
shall have the right to apply Collateral to satisfy the Obligations under any
such Underlying Master Agreement in accordance therewith. Each Party confirms
and ratifies the grant of security interest set forth in Paragraph 2 of the
Collateral Annex covering the Collateral, as may be distributed among the
Underlying Master Agreements in accordance herewith as of the Termination Date.
6. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to
the other that (a) it is duly authorized to execute and deliver this Agreement
and to perform its obligations hereunder and has taken all necessary actions to
authorize such execution, delivery, and performance, (b) the person signing this
Agreement on its behalf is duly authorized to do so on its behalf, and (c) this
Agreement constitutes its legal, valid, and binding obligation, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, conservatorship, receivership, moratorium, or other
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law). Each Party
represents and warrants to the other that it has not assigned, transferred,
created, or permitted to exist any lien or other encumbrance on, or otherwise
disposed of, or purported to assign, transfer, create, or permit to exist any
lien or other encumbrance on, or otherwise dispose of, any of its rights to any
amounts that may be owed to it under any of the Underlying Master Agreements to
any third party, and covenants that, so long as this Agreement is in effect, it
will not assign, transfer, create, or permit to exist any lien or other
encumbrance on, or otherwise dispose of, any of its rights to any amounts that
may be owed to it under any of the Underlying Master Agreements, to any third
party, except as may be herein permitted.
7. INTERPRETATION AND HEADINGS. The Parties intend that this Agreement
constitutes and should be deemed to be a "master netting agreement" and that the
Parties are and should be deemed to be "master netting agreement participants"
within the meaning of and as such terms are used in the Code or any other law,
rule, regulation, statute, or order applicable to the Parties' rights herein.
The use of headings and subheadings in this Agreement, and the division of this
Agreement into sections and sub-sections, are for convenience of reference only
and shall not affect the interpretation or construction of this Agreement.
8. GOVERNING LAW. The rights of the Parties under this Agreement shall
be in addition to, and not in limitation or exclusion of, any other rights that
they may have (whether by agreement, operation of law, or otherwise). The Enron
Parties and the Counterparty Parties hereby amend the Underlying Master
Agreements, Transactions and guarantees issued in connection with the Underlying
Master Agreements to provide that, notwithstanding anything therein to the
contrary, if a Party elects to exercise its rights hereunder, the applicable
Underlying Master Agreements and any Transactions thereunder and any guarantees
related thereto shall be governed by and construed in accordance with the laws
of the State of New York (without reference to its choice of law doctrine), but
only for the purpose of a Party exercising its rights hereunder. In addition,
this Agreement shall be governed by and construed in accordance with the laws of
the State of New York (without reference to its choice of law doctrine).
9. JURISDICTION. To the extent any provisions in the Underlying Master
Agreements, Transactions or guarantees issued in connection with Underlying
Master Agreements regarding jurisdiction, waiver of immunity, waiver of trial by
jury, and process are inconsistent with Section 15 or would impede the ability
of a party hereto to exercise its rights under this Agreement, such provisions
shall be null and void.
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10. ASSIGNMENT AND AMENDMENT. (a) Any assignment or other transfer of an
Underlying Master Agreement and Transactions subject thereto by any Enron Party
to an Enron Affiliate or by any Counterparty Party to a Counterparty Affiliate
permitted under an Underlying Master Agreement, including, without limitation,
whether by any permitted consolidation or amalgamation with, merger with or
into, or transfer of substantially all of its assets to such entity or other
similar transaction or series of transactions, shall be made without relieving
the assigning Party from liability thereunder and subject to this Agreement, and
shall provide that such assignee or other transferee shall execute this
Agreement as a condition to the effectiveness of any such assignment or other
transfer.
(b) If any Underlying Master Agreement permits assignment of it and
Transactions thereunder as security, then notwithstanding the provisions of such
Underlying Master Agreement, such Underlying Master Agreement and Transactions
thereunder and this Agreement, and any rights therein, may be assigned or
otherwise transferred as security only if the assignment or other transfer (i)
is made subject to this Agreement and any rights in favor of a Party under this
Agreement (whether by setoff, Underlying Master Agreements Close-Out, or
otherwise), and (ii) does not increase the obligations of, or reduce the rights
of, the nonassigning Party, all in substance and form reasonably satisfactory to
the nonassigning Party.
(c) Other than as expressly set forth in this Section 10 and
notwithstanding any provision in any of the Underlying Master Agreements to the
contrary, the Underlying Master Agreements and Transactions thereunder shall not
be assigned (whether by way of security or otherwise) by any Enron Party or any
Counterparty Party without the prior written consent of Counterparty Party or
Enron Party, respectively.
(d) This Agreement shall not be assigned (whether by way of security or
otherwise) by any Enron Party or any Counterparty Party without the prior
written consent of Counterparty Group or Enron Group, respectively.
(e) Any purported assignment or other transfer that is not in compliance
herewith shall be void.
(f) This Agreement may not be amended by any Party without the prior
written consent of each Party. Confirmations under an Underlying Master
Agreement will not serve as an amendment.
11. NOTICES. Any and all notices, statements, demands, or other
communications under this Agreement shall be given by mail, facsimile
transmission, electronic message system, or messenger, to the individuals and at
the facsimile numbers, electronic message addresses, or other locations set
forth below.
Address for notices or communications to Enron Party:
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 Enron Party pursuant to Section or Section 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.
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Address for notices or communications to Counterparty Party:
Address: Calpine Energy Services, L.P. Facsimile No.: (000) 000-0000
Street Address: 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 Telephone No.: (000) 000-0000
(for courier Xxxxxxx, Xxxxx 00000
delivery) Attn: Contract Administration
Any notice or other communication in respect of this Agreement given in any
manner herein permitted to the address or number or in accordance with the
electronic messaging system details above provided will be deemed effective as
follows: (i) if in writing and delivered in person or by courier, on the date it
is delivered; (ii) 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); (iii) 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; (iv) if sent by electronic messaging system, on
the date that electronic message is received; in each case unless the date of
that delivery (or attempted delivery) or that receipt, as applicable, is not a
Business Day, or that communication is delivered (or attempted) or received, as
applicable, after the close of business on a Business Day, in which case that
communication shall be deemed given and effective on the first following day
that is a Business Day. Either Party may by notice to the others change the
address, facsimile number, or electronic messaging system details at which
notices or other communications are to be given to it.
12. CONFLICTS AND INCONSISTENCIES. In the event of any conflict or
inconsistency between this Agreement and any of the Underlying Master Agreements
concerning the matters set forth in this Agreement, the provisions of this
Agreement shall govern.
13. CONTINUATION OF MASTER AGREEMENTS AND SEVERABILITY. (a) Except as
amended by this Agreement, the Underlying Master Agreements shall remain in full
force and effect. Subject to Section 13(b), in the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal, or
unenforceable in any respect under the law of any jurisdiction, or becomes or is
rendered unlawful by any applicable court of law or regulatory agency because of
a statutory change, the validity, legality, and enforceability of the remaining
provisions under the law of such jurisdiction, and the validity, legality, and
enforceability of such provisions and any other provisions under the law of any
other jurisdiction, shall not in any way be affected or impaired thereby, and
the Parties shall use their best efforts to reform this Agreement to give effect
to the original intention of the Parties as indicated herein.
(b) If Section 2(a) hereof in its entirety is deemed or held to be
invalid, illegal, or unenforceable, after the Parties have used their best
efforts to reform Section 2(a) and/or this Agreement to give effect to the
original intention of the Parties as indicated herein, this Agreement shall be
deemed to be null and void in its entirety and without any further force or
effect and the provisions of the Underlying Master Agreements amended and
superseded by this Agreement shall thereupon be enforceable in accordance with
their terms.
14. NO WAIVER. A failure or delay in exercising any right, power, or
privilege in respect of the Underlying Master Agreements or this Agreement will
not be presumed to operate as a waiver of that right, power, or privilege, and a
single or partial exercise of any right, power, or privilege will not be
presumed to preclude any subsequent or further exercise of that right, power, or
privilege, or the exercise of any other right, power, or privilege.
15. ARBITRATION. Notwithstanding anything in any Underlying Master
Agreements, Transaction or guaranty issued in connection with an Underlying
Master Agreement to the contrary, 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
10
thereof, or in any way relating to the subject matter of this Agreement,
involving the Parties and/or their respective representatives (collectively, the
"Claims") shall be resolved by binding arbitration. Arbitration shall be
governed by the Federal Arbitration Act and conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
validity, construction, and interpretation of this agreement to arbitrate, and
all procedural aspects of the arbitration conducted pursuant hereto shall be
decided by the arbitrators. In deciding the substance of the Claims, the
arbitrators shall refer to the governing law. It is agreed that the arbitrators
shall have no authority to award treble, exemplary or punitive damages of any
type under any circumstances whether or not such damages may be available under
state or federal law, or under the Federal Arbitration Act, or under the
Commercial Arbitration Rules of the American Arbitration Association, the
Parties hereby waiving their right, if any, to recover any such damages. The
arbitration proceeding shall be conducted in Houston, Texas. Within thirty days
of the notice of initiation of the arbitration procedure, each of Enron Party
and Counterparty 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 any Party and does not have a direct or
indirect interest in any Party or the subject matter of the arbitration. While
the third arbitrator shall be neutral, the two Party-appointed arbitrators are
not required to be neutral, and it shall not be grounds for removal of either of
the two Party-appointed arbitrators or for vacating the arbitrators' award that
either of such arbitrators has past or present minimal relationships with any
Party. To the fullest extent permitted by law, any arbitration proceeding and
the arbitrators' award shall be maintained in confidence by the Parties.
16. AGENT FOR PURPOSES OF FUTURE AMENDMENTS TO AGREEMENT. (a) Each
Counterparty Party hereby irrevocably appoints Calpine Energy Services, L.P. to
be its agent and attorney in the name of and on behalf and as the act and deed
of such Counterparty Party to execute, sign, seal, and delivery any documents
required for purposes of making any amendments to this Agreement.
(b) Each Enron Party hereby irrevocably appoints Enron North America
Corp. to be its agent and attorney in the name of and on behalf and as the act
and deed of such Enron Party to execute, sign, seal, and delivery any documents
required for purposes of making any amendments to this Agreement.
17. LIMITATION OF REMEDIES, LIABILITY AND DAMAGES. NOTWITHSTANDING
ANYTHING HEREIN OR IN AN UNDERLYING MASTER AGREEMENTS, ANY TRANSACTION OR ANY
GUARANTY ISSUED IN CONNECTION WITH AN UNDERLYING MASTER AGREEMENT TO THE
CONTRARY, NO PARTY SHALL BE LIABLE HEREUNDER OR UNDER ANY UNDERLYING MASTER
AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT
DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN
TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT
OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE
OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING
THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID
HEREUNDER OR UNDER ANY UNDERLYING MASTER AGREEMENT ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
CALCULATED HEREUNDER OR UNDER THE UNDERLYING MASTER AGREEMENT CONSTITUTE A
REASONABLE APPROXIMATION OF THE HARM OR LOSS.
18. TERM. This Agreement shall continue in effect from the date hereof
until terminated by agreement of the Parties; however, notwithstanding the
foregoing, any Party shall have the right to
11
terminate this Agreement by written notice to the other Parties upon such time
as there are fewer than two Underlying Master Agreements in effect that have
outstanding Transactions.
19. MISCELLANEOUS. All of the Parties will use best efforts to deliver
Guaranty(s) and other agreements necessary to fulfill the purposes of this
Agreement as soon as practicable and in any event on or prior to December 31,
2001.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by facsimile or original signature and in multiple counterparts, each of which
is deemed an original and effective as one document, all as of the date first
written above.
"ENRON GROUP"
ENRON NORTH AMERICA CORP.
BY:
---------------------------------------
PRINTED NAME:
-----------------------------
TITLE:
-------------------------------------
ENRON POWER MARKETING, INC.
BY:
---------------------------------------
PRINTED NAME:
-----------------------------
TITLE:
-------------------------------------
"COUNTERPARTY GROUP"
CALPINE ENERGY SERVICES, L.P.
BY:
---------------------------------------
PRINTED NAME:
-----------------------------
TITLE:
-------------------------------------
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