Exhibit 10.1

 
Master Power
 
Purchase & Sale
 
Agreement
 

 
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Version 2.1 (modified 4/25/00)
(c)COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers
Association
ALL RIGHTS RESERVED UNDER U.S. AND FOREIGN LAW, TREATIES AND CONVENTIONS
AUTOMATIC LICENSE - PERMISSION OF THE COPYRIGHT OWNERS IS GRANTED FOR
REPRODUCTION BY DOWNLOADING FROM A COMPUTER AND PRINTING ELECTRONIC COPIES OF
THE WORK. NO AUTHORIZED COPY MAY BE SOLD. THE INDUSTRY IS ENCOURAGED TO USE THIS
MASTER POWER PURCHASE AND SALE AGREEMENT IN ITS TRANSACTIONS. ATTRIBUTION TO THE
COPYRIGHT OWNERS IS REQUESTED.

 

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MASTER POWER PURCHASE AND SALES AGREEMENT
TABLE OF CONTENTS
 
 
 
 
 
COVER SHEET
 
1
 
 
 
GENERAL TERMS AND CONDITIONS
 
6
 
 
 
ARTICLE ONE:
GENERAL DEFINITIONS
 
6
 
 
 
 
ARTICLE TWO:
TRANSACTION TERMS AND CONDITIONS
 
11
 
2.1
Transactions
 
11
 
2.2
Governing Terms
 
11
 
2.3
Confirmation
 
11
 
2.4
Additional Confirmation Terms
 
12
 
2.5
Recording
 
12
 
 
 
 
 
ARTICLE THREE:
OBLIGATIONS AND DELIVERIES
 
12
 
3.1
Seller's and Buyer's Obligations
 
12
 
3.2
Transmission and Scheduling
 
12
 
3.3
Force Majeure
 
13
 
 
 
 
 
ARTICLE FOUR:
REMEDIES FOR FAILURE TO DELIVER/RECEIVE
 
13
 
4.1
Seller Failure
 
13
 
4.2
Buyer Failure
 
13
 
 
 
 
 
ARTICLE FIVE:
EVENTS OF DEFAULT; REMEDIES
 
13
 
5.1
Events of Default
 
13
 
5.2
Declaration of an Early Termination Date and Calculation of Settlement Amounts
 
15
 
5.3
Net Out of Settlement Amounts
 
15
 
5.4
Notice of Payment of Termination Payment
 
15
 
5.5
Disputes With Respect to Termination Payment
 
15
 
5.6
Closeout Setoffs
 
16
 
5.7
Suspension of Performance
 
16
 
 
 
 
 
ARTICLE SIX:
PAYMENT AND NETTING
 
16
 
6.1
Billing Period
 
16
 
6.2
Timeliness of Payment
 
17
 
6.3
Disputes and Adjustments of Invoices
 
17
 
6.4
Netting of Payments
 
17
 
6.5
Payment Obligation Absent Netting
 
17
 
6.6
Security
 
18
 
6.7
Payment for Options
 
18
 
6.8
Transaction Netting
 
18

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ARTICLE SEVEN:
LIMITATIONS
 
18
 
7.1
Limitation of Remedies, Liability and Damages
 
18
 
 
 
 
 
ARTICLE EIGHT:
CREDIT AND COLLATERAL REQUIREMENTS
 
19
 
8.1
Party A Credit Protection
 
19
 
8.2
Party B Credit Protection
 
21
 
8.3
Grant of Security Interest/Remedies
 
22
 
 
 
 
 
ARTICLE NINE:
GOVERNMENTAL CHARGES
 
23
 
9.1
Cooperation
 
23
 
9.2
Governmental Charges
 
23
 
 
 
 
 
ARTICLE TEN:
MISCELLANEOUS
 
23
 
10.1
Term of Master Agreement
 
23
 
10.2
Representations and Warranties
 
23
 
10.3
Title and Risk of Loss
 
25
 
10.4
Indemnity
 
25
 
10.5
Assignment
 
25
 
10.6
Governing Law
 
25
 
10.7
Notices
 
26
 
10.8
General
 
26
 
10.9
Audit
 
26
 
10.10
Forward Contract
 
27
 
10.11
Confidentiality
 
27
 
 
 
 
 
SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS
 
28
 
 
 
SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS
 
32
 
 
 
EXHIBIT A: CONFIRMATION LETTER
 
39

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MASTER POWER PURCHASE AND SALE AGREEMENT
COVER SHEET
This Master Power Purchase and Sale Agreement ("Master Agreement" ) is made as
of the following date: _________________ ("Effective Date"). The Master
Agreement, together with the exhibits, schedules and any written supplements
hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated
collateral, credit support or margin agreement or similar arrangement between
the Parties and all Transactions (including any confirmations accepted in
accordance with Section 2.3 hereto) shall be referred to as the "Agreement." The
Parties to this Master Agreement are the following:
 
 
 
 
 
 
 
 
 
 
 
Name ("_________________" or "Party A")
 
Name ("Counterparty" or "Party B")
 
 
 
All Notices:
 
 
All Notices:
 
 
 
 
 
 
Street:
 
 
Street:
 
 
 
 
 
 
City:
 
Zip:
 
 
City:
 
Zip:
 
 
 
 
 
 
 
Attn: Contract Administration
 
Attn: Contract Administration
Phone:
 
 
Phone:
 
Facsimile:
 
 
Facsimile:
 
Duns:
 
 
Duns:
 
Federal Tax ID Number:
 
 
Federal Tax ID Number:
 
 
 
 
 
Invoices:
 
 
Invoices:
 
Attn:
 
 
Attn:
 
Phone:
 
 
Phone:
 
Facsimile:
 
 
Facsimile:
 
 
 
 
 
 
Scheduling:
 
 
Scheduling:
 
Attn:
 
 
Attn:
 
Phone:
 
 
Phone:
 
Facsimile:
 
 
Facsimile:
 
 
 
 
 
 
Payments:
 
 
Payments:
 
Attn:
 
 
Attn:
 
Phone:
 
 
Phone:
 
Facsimile:
 
 
Facsimile:
 
 
 
 
 
 
Wire Transfer:
 
Wire Transfer:
BNK:
 
 
BNK:
 
ABA:
 
 
ABA:
 
ACCT:
 
 
ACCT:
 
 
 
 
 
 
Credit and Collections:
 
Credit and Collections:
Attn:
 
 
Attn:
 
Phone:
 
 
Phone:
 
Facsimile:
 
 
Facsimile:
 
 
 
 
 
 
With additional Notices of an Event of Default or Potential Event of Default to:
 
With additional Notices of an Event of Default or Potential Event of Default to:
Attn:
 
 
Attn:
 
Phone:
 
 
Phone:
 
Facsimile:
 
 
Facsimile:
 

1
 

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The Parties hereby agree that the General Terms and Conditions are incorporated
herein, and to the following provisions as provided for in the General Terms and
Conditions:
 
 
 
 
 
 
 
 
 
 
 
Party A Tariff
 
 
Tariff
 
 
Dated
 
 
Docket Number
 
 
 
 
 
 
 
 
 
 
 
 
Party B Tariff
 
 
Tariff
 
 
Dated
 
 
Docket Number
 

 
 
 
 
 
 
 
 
 
Article Two
 
 
 
 
 
 
 
Transaction Terms and Conditions
o Optional provision in Section 2.4. If not checked, inapplicable.
 
 
 
 
 
 
Article Four
 
 
 
 
 
 
 
Remedies for Failure
to Deliver or Receive
o Accelerated Payment of Damages. If not checked, inapplicable.
 
 
 
 
Article Five
o Cross Default for Party A:
 
 
Events of Default; Remedies
o Party A:__________________
Cross Default Amount $ ________
 
 
 
 
o Other Entity: _____________
Cross Default Amount $ ________
 
 
 
 
o Cross Default for Party B: ________
 
 
 
o Party B: _________________
Cross Default Amount $ ________
 
 
 
 
o Other Entity: ______________
Cross Default Amount $ ________
 
 
 
 
5.6 Closeout Setoff
 
 
 
 
o
Option A (Applicable if no other selection is made.)
 
 
 
 
 
 
o
Option B - Affiliates shall have the meaning set forth in the Agreement unless
otherwise specified as follows: ___________________________________
 
 
 
 
 
 
 
 
 
 
o
Option C (No Setoff)
 
 
 
 
 
 
Article 8
8.1 Party A Credit Protection:
 
 
Credit and Collateral Requirements
 
(a) Financial Information:
 
 
 
 
 
o
     Option A
 
 
 
 
 
 
o
     Option B Specify: ____________
 
 
 
 
 
 
o
     Option C Specify: ____________
 
 
 
 
 
 
(b) Credit Assurances:
 
 
 
 
 
o
     Not Applicable
 
 
 
 
 
 
o
     Applicable
 
 
(c) Collateral Threshold:
 
 
 
 
 
o
     Not Applicable
 
 
 
 
 
 
o
     Applicable
         

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If applicable, complete the following:
 
 
 
 
 
Party B Collateral Threshold: $__________; provided, however, that Party B's
Collateral Threshold shall be zero if an Event of Default or Potential Event of
Default with respect to Party B has occurred and is continuing.
 
 
 
 
 
Party B Independent Amount: $ _______________
 
 
 
 
 
Party B Rounding Amount: $ _______________
 
 
 
 
 
(d) Downgrade Event:
 
 
 
 
 
o
Not Applicable
 
 
 
 
 
 
o
Applicable
 
 
 
 
 
 
If applicable, complete the following:
 
 
 
 
 
o
It shall be a Downgrade Event for Party B if Party B's Credit Rating falls below
__________ from S&P or __________ from Moody's or if Party B is not rated by
either S&P or Moody's
 
 
 
 
 
 
o
Other: ____________________________________
 
 
 
Specify: ____________________________________
 
 
 
 
 
 
(e) Guarantor for Party B: _____________________________
 
 
 
 
 
 
Guarantee Amount:
 
 
 
 
 
 
8.2 Party B Credit Protection:
 
 
 
 
 
(a) Financial Information:
 
 
o
Option A
 
 
o
Option B Specify: ___________________
 
 
o
Option C Specify: ___________________
 
 
 
 
 
 
(b) Credit Assurances:
 
 
o
Not Applicable
 
 
o
Applicable
 
 
 
 
 
 
(c) Collateral Threshold:
 
 
o
Not Applicable
 
 
o
Applicable
 
 
If applicable, complete the following:
 
 
 
 
 
Party A Collateral Threshold: $__________; provided, however, that Party A's
Collateral Threshold shall be zero if an Event of Default or Potential Event of
Default with respect to Party A has occurred and is continuing.
 
 
 
 
 
Party A Independent Amount: $ _________________
 
 
 
 
 
Party A Rounding Amount: $ _________________

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(d) Downgrade Event:
 
 
 
 
 
o
Not Applicable
 
 
o
Applicable
 
 
 
 
 
 
If applicable, complete the following:
 
 
 
 
 
o
It shall be a Downgrade Event for Party A if Party A's Credit Rating falls below
__________ from S&P or __________ from Moody's or if Party A is not rated by
either S&P or Moody's
 
 
 
 
 
 
o
Other:
 
 
 
Specify: ____________________________________________
 
 
 
 
 
 
(e) Guarantor for Party A: _____________________________________
 
 
 
 
 
 
Guarantee Amount: __________________________________
 
 
 
 
 
 
 
 
Article 10
 
 
 
 
 
 
 
Confidentiality
 
o Confidentiality Applicable
If not checked, inapplicable.
 
 
 
 
 
 
 
 
Schedule M
 
 
 
 
 
 
 
 
 
o Party A is a Governmental Entity or Public Power System
 
 
o Party B is a Governmental Entity or Public Power System
 
 
o Add Section 3.6. If not checked, inapplicable
 
 
o Add Section 8.6. If not checked, inapplicable
 
 
 
Other Changes
 
Specify, if any: ___________________________________
         

4
 

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IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly
executed as of the date first above written.
 
 
 
Party A Name
 
Party B Name
 
 
 
By:
 
 
By:
 
 
 
 
 
 
Name:
 
 
Name:
 
 
 
 
 
 
Title:
 
 
Title:
 

DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a
committee of representatives of Edison Electric Institute ("EEI") and National
Energy Marketers Association ("NEM") member companies to facilitate orderly
trading in and development of wholesale power markets. Neither EEI nor NEM nor
any member company nor any of their agents, representatives or attorneys shall
be responsible for its use, or any damages resulting therefrom. By providing
this Agreement EEI and NEM do not offer legal advice and all users are urged to
consult their own legal counsel to ensure that their commercial objectives will
be achieved and their legal interests are adequately protected.
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GENERAL TERMS AND CONDITIONS
ARTICLE ONE: GENERAL DEFINITIONS
          1.1 "Affiliate" means, with respect to any person, any other person
(other than an individual) that, directly or indirectly, through one or more
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 fifty percent (50%) or more of the outstanding capital stock or other equity
interests having ordinary voting power.
          1.2 "Agreement" has the meaning set forth in the Cover Sheet.
          1.3 "Bankrupt" means with respect to any entity, such entity (i) files
a petition or otherwise commences, authorizes or acquiesces in the commencement
of a proceeding or cause of action under any bankruptcy, insolvency,
reorganization or similar law, or has any such petition filed or commenced
against it, (ii) makes an assignment or any general arrangement for the benefit
of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced),
(iv) has a liquidator, administrator, receiver, trustee, conservator or similar
official appointed with respect to it or any substantial portion of its property
or assets, or (v) is generally unable to pay its debts as they fall due.
          1.4 "Business Day" means any day except a Saturday, Sunday, or a
Federal Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close
at 5:00 p.m. local time for the relevant Party's principal place of business.
The relevant Party, in each instance unless otherwise specified, shall be the
Party from whom the notice, payment or delivery is being sent and by whom the
notice or payment or delivery is to be received.
          1.5 "Buyer" means the Party to a Transaction that is obligated to
purchase and receive, or cause to be received, the Product, as specified in the
Transaction.
          1.6 "Call Option" means an Option entitling, but not obligating, the
Option Buyer to purchase and receive the Product from the Option Seller at a
price equal to the Strike Price for the Delivery Period for which the Option may
be exercised, all as specified in the Transaction. Upon proper exercise of the
Option by the Option Buyer, the Option Seller will be obligated to sell and
deliver the Product for the Delivery Period for which the Option has been
exercised.
          1.7 "Claiming Party" has the meaning set forth in Section 3.3.
          1.8 "Claims" means all third party claims or actions, threatened or
filed and, whether groundless, false, fraudulent or otherwise, that directly or
indirectly relate to the subject matter of an indemnity, and the resulting
losses, damages, expenses, attorneys' fees and court costs, whether incurred by
settlement or otherwise, and whether such claims or actions are threatened or
filed prior to or after the termination of this Agreement.
          1.9 "Confirmation" has the meaning set forth in Section 2.3.
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          1.10 "Contract Price" means the price in $U.S. (unless otherwise
provided for) to be paid by Buyer to Seller for the purchase of the Product, as
specified in the Transaction.
          1.11 "Costs" means, with respect to the Non-Defaulting Party,
brokerage fees, commissions and other similar third party transaction costs and
expenses reasonably incurred by such Party either in terminating any arrangement
pursuant to which it has hedged its obligations or entering into new
arrangements which replace a Terminated Transaction; and all reasonable
attorneys' fees and expenses incurred by the Non-Defaulting Party in connection
with the termination of a Transaction.
          1.12 "Credit Rating" means, with respect to any entity, the rating
then assigned to such entity's unsecured, senior long-term debt obligations (not
supported by third party credit enhancements) or if such entity does not have a
rating for its senior unsecured long-term debt, then the rating then assigned to
such entity as an issues rating by S&P, Moody's or any other rating agency
agreed by the Parties as set forth in the Cover Sheet.
          1.13 "Cross Default Amount" means the cross default amount, if any,
set forth in the Cover Sheet for a Party.
          1.14 "Defaulting Party" has the meaning set forth in Section 5.1.
          1.15 "Delivery Period" means the period of delivery for a Transaction,
as specified in the Transaction.
          1.16 "Delivery Point" means the point at which the Product will be
delivered and received, as specified in the Transaction.
          1.17 "Downgrade Event" has the meaning set forth on the Cover Sheet.
          1.18 "Early Termination Date" has the meaning set forth in Section
5.2.
          1.19 "Effective Date" has the meaning set forth on the Cover Sheet.
          1.20 "Equitable Defenses" means any bankruptcy, insolvency,
reorganization and other laws affecting creditors' rights generally, and with
regard to equitable remedies, the discretion of the court before which
proceedings to obtain same may be pending.
          1.21 "Event of Default" has the meaning set forth in Section 5.1.
          1.22 "FERC" means the Federal Energy Regulatory Commission or any
successor government agency.
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          1.23 "Force Majeure" means an event or circumstance which prevents one
Party from performing its obligations under one or more Transactions, which
event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the
negligence of, the Claiming Party, and which, by the exercise of due diligence,
the Claiming Party is unable to overcome or avoid or cause to be avoided. Force
Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's
inability economically to use or resell the Product purchased hereunder; (iii)
the loss or failure of Seller's supply; or (iv) Seller's ability to sell the
Product at a price greater than the Contract Price. Neither Party may raise a
claim of Force Majeure based in whole or in part on curtailment by a
Transmission Provider unless (i) such Party has contracted for firm transmission
with a Transmission Provider for the Product to be delivered to or received at
the Delivery Point and (ii) such curtailment is due to "force majeure" or
"uncontrollable force" or a similar term as defined under the Transmission
Provider's tariff; provided, however, that existence of the foregoing factors
shall not be sufficient to conclusively or presumptively prove the existence of
a Force Majeure absent a showing of other facts and circumstances which in the
aggregate with such factors establish that a Force Majeure as defined in the
first sentence hereof has occurred. The applicability of Force Majeure to the
Transaction is governed by the terms of the Products and Related Definitions
contained in Schedule P.
          1.24 "Gains" means, with respect to any Party, an amount equal to the
present value of the economic benefit to it, if any (exclusive of Costs),
resulting from the termination of a Terminated Transaction, determined in a
commercially reasonable manner.
          1.25 "Guarantor" means, with respect to a Party, the guarantor, if
any, specified for such Party on the Cover Sheet.
          1.26 "Interest Rate" means, for any date, the lesser of (a) the per
annum rate of interest equal to the prime lending rate as may from time to time
be published in The Wall Street Journal under "Money Rates" on such day (or if
not published on such day on the most recent preceding day on which published),
plus two percent (2%) and (b) the maximum rate permitted by applicable law.
          1.27 "Letter(s) of Credit" means one or more irrevocable, transferable
standby letters of credit issued by a U.S. commercial bank or a foreign bank
with a U.S. branch with such bank having a credit rating of at least A- from S&P
or A3 from Moody's, in a form acceptable to the Party in whose favor the letter
of credit is issued. Costs of a Letter of Credit shall be borne by the applicant
for such Letter of Credit.
          1.28 "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 Terminated Transaction, determined in a commercially
reasonable manner.
          1.29 "Master Agreement" has the meaning set forth on the Cover Sheet.
          1.30 "Moody's" means Moody's Investor Services, Inc. or its successor.
          1.31 "NERC Business Day" means any day except a Saturday, Sunday or a
holiday as defined by the North American Electric Reliability Council or any
successor organization thereto. A NERC Business Day shall open at 8:00 a.m. and
close at 5:00 p.m. local time for the relevant Party's principal place of
business. The relevant Party, in each instance unless otherwise specified, shall
be the Party from whom the notice, payment or delivery is being sent and by whom
the notice or payment or delivery is to be received.
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          1.32 "Non-Defaulting Party" has the meaning set forth in Section 5.2.
          1.33 "Offsetting Transactions" mean any two or more outstanding
Transactions, having the same or overlapping Delivery Period(s), Delivery Point
and payment date, where under one or more of such Transactions, one Party is the
Seller, and under the other such Transaction(s), the same Party is the Buyer.
          1.34 "Option" means the right but not the obligation to purchase or
sell a Product as specified in a Transaction.
          1.35 "Option Buyer" means the Party specified in a Transaction as the
purchaser of an option, as defined in Schedule P.
          1.36 "Option Seller" means the Party specified in a Transaction as the
seller of an option , as defined in Schedule P.
          1.37 "Party A Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party A.
          1.38 "Party B Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party B.
          1.39 "Party A Independent Amount" means the amount , if any, set forth
in the Cover Sheet for Party A.
          1.40 "Party B Independent Amount" means the amount , if any, set forth
in the Cover Sheet for Party B.
          1.41 "Party A Rounding Amount" means the amount, if any, set forth in
the Cover Sheet for Party A.
          1.42 "Party B Rounding Amount" means the amount, if any, set forth in
the Cover Sheet for Party B.
          1.43 "Party A Tariff" means the tariff, if any, specified in the Cover
Sheet for Party A.
          1.44 "Party B Tariff" means the tariff, if any, specified in the Cover
Sheet for Party B.
          1.45 "Performance Assurance" means collateral in the form of either
cash, Letter(s) of Credit, or other security acceptable to the Requesting Party.
          1.46 "Potential Event of Default" means an event which, with notice or
passage of time or both, would constitute an Event of Default.
          1.47 "Product" means electric capacity, energy or other product(s)
related thereto as specified in a Transaction by reference to a Product listed
in Schedule P hereto or as otherwise specified by the Parties in the
Transaction.
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          1.48 "Put Option" means an Option entitling, but not obligating, the
Option Buyer to sell and deliver the Product to the Option Seller at a price
equal to the Strike Price for the Delivery Period for which the option may be
exercised, all as specified in a Transaction. Upon proper exercise of the Option
by the Option Buyer, the Option Seller will be obligated to purchase and receive
the Product.
          1.49 "Quantity" means that quantity of the Product that Seller agrees
to make available or sell and deliver, or cause to be delivered, to Buyer, and
that Buyer agrees to purchase and receive, or cause to be received, from Seller
as specified in the Transaction.
          1.50 "Recording" has the meaning set forth in Section 2.4.
          1.51 "Replacement Price" means the price at which Buyer, acting in a
commercially reasonable manner, purchases at the Delivery Point a replacement
for any Product specified in a Transaction but not delivered by Seller, plus (i)
costs reasonably incurred by Buyer in purchasing such substitute Product and
(ii) additional transmission charges, if any, reasonably incurred by Buyer to
the Delivery Point, or at Buyer's option, the market price at the Delivery Point
for such Product not delivered as determined by Buyer in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Buyer be required to
utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition,
Buyer shall be considered to have purchased replacement Product to the extent
Buyer shall have entered into one or more arrangements in a commercially
reasonable manner whereby Buyer repurchases its obligation to sell and deliver
the Product to another party at the Delivery Point.
          1.52 "S&P" means the Standard & Poor's Rating Group (a division of
McGraw-Hill, Inc.) or its successor.
          1.53 "Sales Price" means the price at which Seller, acting in a
commercially reasonable manner, resells at the Delivery Point any Product not
received by Buyer, deducting from such proceeds any (i) costs reasonably
incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the
third party purchasers, or at Seller's option, the market price at the Delivery
Point for such Product not received as determined by Seller in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Seller be required to
utilize or change its utilization of its owned or controlled assets, including
contractual assets, or market positions to minimize Buyer's liability. For
purposes of this definition, Seller shall be considered to have resold such
Product to the extent Seller shall have entered into one or more arrangements in
a commercially reasonable manner whereby Seller repurchases its obligation to
purchase and receive the Product from another party at the Delivery Point.
          1.54 "Schedule" or "Scheduling" means the actions of Seller, Buyer
and/or their designated representatives, including each Party's Transmission
Providers, if applicable, of notifying, requesting and confirming to each other
the quantity and type of Product to be delivered on any given day or days during
the Delivery Period at a specified Delivery Point.
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          1.55 "Seller" means the Party to a Transaction that is obligated to
sell and deliver, or cause to be delivered, the Product, as specified in the
Transaction.
          1.56 "Settlement Amount" means, with respect to a Transaction and the
Non-Defaulting Party, the Losses or Gains, and Costs, expressed in U.S. Dollars,
which such party incurs as a result of the liquidation of a Terminated
Transaction pursuant to Section 5.2.
          1.57 "Strike Price" means the price to be paid for the purchase of the
Product pursuant to an Option.
          1.58 "Terminated Transaction" has the meaning set forth in Section
5.2.
          1.59 "Termination Payment" has the meaning set forth in Section 5.3.
          1.60 "Transaction" means a particular transaction agreed to by the
Parties relating to the sale and purchase of a Product pursuant to this Master
Agreement.
          1.61 "Transmission Provider" means any entity or entities transmitting
or transporting the Product on behalf of Seller or Buyer to or from the Delivery
Point in a particular Transaction.
ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS
          2.1 Transactions. A Transaction shall be entered into upon agreement
of the Parties orally or, if expressly required by either Party with respect to
a particular Transaction, in writing, including an electronic means of
communication. Each Party agrees not to contest, or assert any defense to, the
validity or enforceability of the Transaction entered into in accordance with
this Master Agreement (i) based on any law requiring agreements to be in writing
or to be signed by the parties, or (ii) based on any lack of authority of the
Party or any lack of authority of any employee of the Party to enter into a
Transaction.
          2.2 Governing Terms. Unless otherwise specifically agreed, each
Transaction between the Parties shall be governed by this Master Agreement. This
Master Agreement (including all exhibits, schedules and any written supplements
hereto), , the Party A Tariff, if any, and the Party B Tariff, if any, any
designated collateral, credit support or margin agreement or similar arrangement
between the Parties and all Transactions (including any Confirmations accepted
in accordance with Section 2.3) shall form a single integrated agreement between
the Parties. Any inconsistency between any terms of this Master Agreement and
any terms of the Transaction shall be resolved in favor of the terms of such
Transaction.
          2.3 Confirmation. Seller may confirm a Transaction by forwarding to
Buyer by facsimile within three (3) Business Days after the Transaction is
entered into a confirmation ("Confirmation") substantially in the form of
Exhibit A. If Buyer objects to any term(s) of such Confirmation, Buyer shall
notify Seller in writing of such objections within two (2) Business Days of
Buyer's receipt thereof, failing which Buyer shall be deemed to have accepted
the terms as sent. If Seller fails to send a Confirmation within three (3)
Business Days after the Transaction is entered into, a Confirmation
substantially in the form of Exhibit A, may be forwarded by Buyer to Seller. If
Seller objects to any term(s) of such Confirmation, Seller shall notify Buyer of
such objections within two (2) Business Days of Seller's receipt thereof,
failing which Seller shall be deemed to have accepted the terms as sent. If
Seller and Buyer each send a Confirmation and neither Party objects to the other
Party's Confirmation within two (2) Business Days of receipt, Seller's
Confirmation shall be deemed to be accepted and shall be the controlling
Confirmation, unless (i) Seller's Confirmation was sent more than three (3)
Business Days after the Transaction was entered into and (ii) Buyer's
Confirmation was sent prior to Seller's Confirmation, in which case Buyer's
Confirmation shall be deemed to be accepted and shall be the controlling
Confirmation. Failure by either Party to send or either Party to return an
executed Confirmation or any objection by either Party shall not invalidate the
Transaction agreed to by the Parties.
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          2.4 Additional Confirmation Terms. If the Parties have elected on the
Cover Sheet to make this Section 2.4 applicable to this Master Agreement, when a
Confirmation contains provisions, other than those provisions relating to the
commercial terms of the Transaction (e.g., price or special transmission
conditions), which modify or supplement the general terms and conditions of this
Master Agreement (e.g., arbitration provisions or additional representations and
warranties), such provisions shall not be deemed to be accepted pursuant to
Section 2.3 unless agreed to either orally or in writing by the Parties;
provided that the foregoing shall not invalidate any Transaction agreed to by
the Parties.
          2.5 Recording. Unless a Party expressly objects to a Recording
(defined below) at the beginning of a telephone conversation, each Party
consents to the creation of a tape or electronic recording ("Recording") of all
telephone conversations between the Parties to this Master Agreement, and that
any such Recordings will be retained in confidence, secured from improper
access, and may be submitted in evidence in any proceeding or action relating to
this Agreement. Each Party waives any further notice of such monitoring or
recording, and agrees to notify its officers and employees of such monitoring or
recording and to obtain any necessary consent of such officers and employees.
The Recording, and the terms and conditions described therein, if admissible,
shall be the controlling evidence for the Parties' agreement with respect to a
particular Transaction in the event a Confirmation is not fully executed (or
deemed accepted) by both Parties. Upon full execution (or deemed acceptance) of
a Confirmation, such Confirmation shall control in the event of any conflict
with the terms of a Recording, or in the event of any conflict with the terms of
this Master Agreement.
ARTICLE THREE: OBLIGATIONS AND DELIVERIES
          3.1 Seller's and Buyer's Obligations. With respect to each
Transaction, Seller shall sell and deliver, or cause to be delivered, and Buyer
shall purchase and receive, or cause to be received, the Quantity of the Product
at the Delivery Point, and Buyer shall pay Seller the Contract Price; provided,
however, with respect to Options, the obligations set forth in the preceding
sentence shall only arise if the Option Buyer exercises its Option in accordance
with its terms. Seller shall be responsible for any costs or charges imposed on
or associated with the Product or its delivery of the Product up to the Delivery
Point. Buyer shall be responsible for any costs or charges imposed on or
associated with the Product or its receipt at and from the Delivery Point.
          3.2 Transmission and Scheduling. Seller shall arrange and be
responsible for transmission service to the Delivery Point and shall Schedule or
arrange for Scheduling services with its Transmission Providers, as specified by
the Parties in the Transaction, or in the absence thereof, in accordance with
the practice of the Transmission Providers, to deliver the Product to the
Delivery Point. Buyer shall arrange and be responsible for transmission service
at and from the Delivery Point and shall Schedule or arrange for Scheduling
services with its Transmission Providers to receive the Product at the Delivery
Point.
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          3.3 Force Majeure. To the extent either Party is prevented by Force
Majeure from carrying out, in whole or part, its obligations under the
Transaction and such Party (the "Claiming Party") gives notice and details of
the Force Majeure to the other Party as soon as practicable, then, unless the
terms of the Product specify otherwise, the Claiming Party shall be excused from
the performance of its obligations with respect to such Transaction (other than
the obligation to make payments then due or becoming due with respect to
performance prior to the Force Majeure). The Claiming Party shall remedy the
Force Majeure with all reasonable dispatch. The non-Claiming Party shall not be
required to perform or resume performance of its obligations to the Claiming
Party corresponding to the obligations of the Claiming Party excused by Force
Majeure.
ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE
          4.1 Seller Failure. If Seller fails to schedule and/or deliver all or
part of the Product pursuant to a Transaction, and such failure is not excused
under the terms of the Product or by Buyer's failure to perform, then Seller
shall pay Buyer, on the date payment would otherwise be due in respect of the
month in which the failure occurred or, if "Accelerated Payment of Damages" is
specified on the Cover Sheet, within five (5) Business Days of invoice receipt,
an amount for such deficiency equal to the positive difference, if any, obtained
by subtracting the Contract Price from the Replacement Price. The invoice for
such amount shall include a written statement explaining in reasonable detail
the calculation of such amount.
          4.2 Buyer Failure. If Buyer fails to schedule and/or receive all or
part of the Product pursuant to a Transaction and such failure is not excused
under the terms of the Product or by Seller's failure to perform, then Buyer
shall pay Seller, on the date payment would otherwise be due in respect of the
month in which the failure occurred or, if "Accelerated Payment of Damages" is
specified on the Cover Sheet, within five (5) Business Days of invoice receipt,
an amount for such deficiency equal to the positive difference, if any, obtained
by subtracting the Sales Price from the Contract Price. The invoice for such
amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES
          5.1 Events of Default. An "Event of Default" shall mean, with respect
to a Party (a "Defaulting Party"), the occurrence of any of the following:
 
 
 
 
 
(a)
the failure to make, when due, any payment required pursuant to this Agreement
if such failure is not remedied within three (3) Business Days after written
notice;

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(b)
any representation or warranty made by such Party herein is false or misleading
in any material respect when made or when deemed made or repeated;
 
 
 
 
(c)
the failure to perform any material covenant or obligation set forth in this
Agreement (except to the extent constituting a separate Event of Default, and
except for such Party's obligations to deliver or receive the Product, the
exclusive remedy for which is provided in Article Four) if such failure is not
remedied within three (3) Business Days after written notice;
 
 
 
 
(d)
such Party becomes Bankrupt;
 
 
 
 
(e)
the failure of such Party to satisfy the creditworthiness/collateral
requirements agreed to pursuant to Article Eight hereof;
 
 
 
 
(f)
such Party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all of its assets to, another entity and, at the
time of such consolidation, amalgamation, merger or transfer, the resulting,
surviving or transferee entity fails to assume all the obligations of such Party
under this Agreement to which it or its predecessor was a party by operation of
law or pursuant to an agreement reasonably satisfactory to the other Party;
 
 
 
 
(g)
if the applicable cross default section in the Cover Sheet is indicated for such
Party, the occurrence and continuation of (i) a default, event of default or
other similar condition or event in respect of such Party or any other party
specified in the Cover Sheet for such Party under one or more agreements or
instruments, individually or collectively, relating to indebtedness for borrowed
money in an aggregate amount of not less than the applicable Cross Default
Amount (as specified in the Cover Sheet), which results in such indebtedness
becoming, or becoming capable at such time of being declared, immediately due
and payable or (ii) a default by such Party or any other party specified in the
Cover Sheet for such Party in making on the due date therefor one or more
payments, individually or collectively, in an aggregate amount of not less than
the applicable Cross Default Amount (as specified in the Cover Sheet);
 
 
 
 
(h)
with respect to such Party's Guarantor, if any:
 
 
 
 
 
(i)
if any representation or warranty made by a Guarantor in connection with this
Agreement is false or misleading in any material respect when made or when
deemed made or repeated;
 
 
 
 
 
 
(ii)
the failure of a Guarantor to make any payment required or to perform any other
material covenant or obligation in any guaranty made in connection with this
Agreement and such failure shall not be remedied within three (3) Business Days
after written notice;

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(iii)
a Guarantor becomes Bankrupt;
 
 
 
 
 
 
(iv)
the failure of a Guarantor's guaranty to be in full force and effect for
purposes of this Agreement (other than in accordance with its terms) prior to
the satisfaction of all obligations of such Party under each Transaction to
which such guaranty shall relate without the written consent of the other Party;
or
 
 
 
 
 
 
(v)
a Guarantor shall repudiate, disaffirm, disclaim, or reject, in whole or in
part, or challenge the validity of any guaranty.

          5.2 Declaration of an Early Termination Date and Calculation of
Settlement Amounts. If an Event of Default with respect to a Defaulting Party
shall have occurred and be continuing, the other Party (the "Non-Defaulting
Party") shall have the right (i) to designate a day, no earlier than the day
such notice is effective and no later than 20 days after such notice is
effective, as an early termination date ("Early Termination Date") to accelerate
all amounts owing between the Parties and to liquidate and terminate all, but
not less than all, Transactions (each referred to as a "Terminated Transaction")
between the Parties, (ii) withhold any payments due to the Defaulting Party
under this Agreement and (iii) suspend performance. The Non-Defaulting Party
shall calculate, in a commercially reasonable manner, a Settlement Amount for
each such Terminated Transaction as of the Early Termination Date (or, to the
extent that in the reasonable opinion of the Non-Defaulting Party certain of
such Terminated Transactions are commercially impracticable to liquidate and
terminate or may not be liquidated and terminated under applicable law on the
Early Termination Date, as soon thereafter as is reasonably practicable).
          5.3 Net Out of Settlement Amounts. The Non-Defaulting Party shall
aggregate all Settlement Amounts into a single amount by: netting out (a) all
Settlement Amounts that are due to the Defaulting Party, plus, at the option of
the Non-Defaulting Party, any cash or other form of security then available to
the Non-Defaulting Party pursuant to Article Eight, plus any or all other
amounts due to the Defaulting Party under this Agreement against (b) all
Settlement Amounts that are due to the Non-Defaulting Party, plus any or all
other amounts due to the Non-Defaulting Party under this Agreement, so that all
such amounts shall be netted out to a single liquidated amount (the "Termination
Payment") payable by one Party to the other. The Termination Payment shall be
due to or due from the Non-Defaulting Party as appropriate.
          5.4 Notice of Payment of Termination Payment. As soon as practicable
after a liquidation, notice shall be given by the Non-Defaulting Party to the
Defaulting Party of the amount of the Termination Payment and whether the
Termination Payment is due to or due from the Non-Defaulting Party. The notice
shall include a written statement explaining in reasonable detail the
calculation of such amount. The Termination Payment shall be made by the Party
that owes it within two (2) Business Days after such notice is effective.
          5.5 Disputes With Respect to Termination Payment. If the Defaulting
Party disputes the Non-Defaulting Party's calculation of the Termination
Payment, in whole or in part, the Defaulting Party shall, within two (2)
Business Days of receipt of Non-Defaulting Party's calculation of the
Termination Payment, provide to the Non-Defaulting Party a detailed written
explanation of the basis for such dispute; provided, however, that if the
Termination Payment is due from the Defaulting Party, the Defaulting Party shall
first transfer Performance Assurance to the Non-Defaulting Party in an amount
equal to the Termination Payment.
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          5.6 Closeout Setoffs.
          Option A: After calculation of a Termination Payment in accordance
with Section 5.3, if the Defaulting Party would be owed the Termination Payment,
the Non-Defaulting Party shall be entitled, at its option and in its discretion,
to (i) set off against such Termination Payment any amounts due and owing by the
Defaulting Party to the Non-Defaulting Party under any other agreements,
instruments or undertakings between the Defaulting Party and the Non-Defaulting
Party and/or (ii) to the extent the Transactions are not yet liquidated in
accordance with Section 5.2, withhold payment of the Termination Payment to the
Defaulting Party. The remedy provided for in this Section 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).
          Option B: After calculation of a Termination Payment in accordance
with Section 5.3, if the Defaulting Party would be owed the Termination Payment,
the Non-Defaulting Party shall be entitled, at its option and in its discretion,
to (i) set off against such Termination Payment any amounts due and owing by the
Defaulting Party or any of its Affiliates to the Non-Defaulting Party or any of
its Affiliates under any other agreements, instruments or undertakings between
the Defaulting Party or any of its Affiliates and the Non-Defaulting Party or
any of its Affiliates and/or (ii) to the extent the Transactions are not yet
liquidated in accordance with Section 5.2, withhold payment of the Termination
Payment to the Defaulting Party. The remedy provided for in this Section 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).
          Option C: Neither Option A nor B shall apply.
          5.7 Suspension of Performance. Notwithstanding any other provision of
this Master Agreement, if (a) an Event of Default or (b) a Potential Event of
Default shall have occurred and be continuing, the Non-Defaulting Party, upon
written notice to the Defaulting Party, shall have the right (i) to suspend
performance under any or all Transactions; provided, however, in no event shall
any such suspension continue for longer than ten (10) NERC Business Days with
respect to any single Transaction unless an early Termination Date shall have
been declared and notice thereof pursuant to Section 5.2 given, and (ii) to the
extent an Event of Default shall have occurred and be continuing to exercise any
remedy available at law or in equity.
ARTICLE SIX: PAYMENT AND NETTING
          6.1 Billing Period. Unless otherwise specifically agreed upon by the
Parties in a Transaction, the calendar month shall be the standard period for
all payments under this Agreement (other than Termination Payments and, if
"Accelerated Payment of Damages" is specified by the Parties in the Cover Sheet,
payments pursuant to Section 4.1 or 4.2 and Option premium payments pursuant to
Section 6.7). As soon as practicable after the end of each month, each Party
will render to the other Party an invoice for the payment obligations, if any,
incurred hereunder during the preceding month.
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          6.2 Timeliness of Payment. Unless otherwise agreed by the Parties in a
Transaction, all invoices under this Master Agreement shall be due and payable
in accordance with each Party's invoice instructions on or before the later of
the twentieth (20th) day of each month, or tenth (10th) day after receipt of the
invoice or, if such day is not a Business Day, then on the next Business Day.
Each Party will make payments by electronic funds transfer, or by other mutually
agreeable method(s), to the account designated by the other Party. Any amounts
not paid by the due date will be deemed delinquent and will accrue interest at
the Interest Rate, such interest to be calculated from and including the due
date to but excluding the date the delinquent amount is paid in full.
          6.3 Disputes and Adjustments of Invoices. A Party may, in good faith,
dispute the correctness of any invoice or any adjustment to an invoice, rendered
under this Agreement or adjust any invoice for any arithmetic or computational
error within twelve (12) months of the date the invoice, or adjustment to an
invoice, was rendered. In the event an invoice or portion thereof, or any other
claim or adjustment arising hereunder, is disputed, payment of the undisputed
portion of the invoice shall be required to be made when due, with notice of the
objection given to the other Party. Any invoice dispute or invoice adjustment
shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is
resolved. Upon resolution of the dispute, any required payment shall be made
within two (2) Business Days of such resolution along with interest accrued at
the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the
Party receiving such overpayment from subsequent payments, with interest accrued
at the Interest Rate from and including the date of such overpayment to but
excluding the date repaid or deducted by the Party receiving such overpayment.
Any dispute with respect to an invoice is waived unless the other Party is
notified in accordance with this Section 6.3 within twelve (12) months after the
invoice is rendered or any specific adjustment to the invoice is made. If an
invoice is not rendered within twelve (12) months after the close of the month
during which performance of a Transaction occurred, the right to payment for
such performance is waived.
          6.4 Netting of Payments. The Parties hereby agree that they shall
discharge mutual debts and payment obligations due and owing to each other on
the same date pursuant to all Transactions through netting, in which case all
amounts owed by each Party to the other Party for the purchase and sale of
Products during the monthly billing period under this Master Agreement,
including any related damages calculated pursuant to Article Four (unless one of
the Parties elects to accelerate payment of such amounts as permitted by Article
Four), interest, and payments or credits, shall be netted so that only the
excess amount remaining due shall be paid by the Party who owes it.
          6.5 Payment Obligation Absent Netting. If no mutual debts or payment
obligations exist and only one Party owes a debt or obligation to the other
during the monthly billing period, including, but not limited to, any related
damage amounts calculated pursuant to Article Four, interest, and payments or
credits, that Party shall pay such sum in full when due.
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          6.6 Security. Unless the Party benefiting from Performance Assurance
or a guaranty notifies the other Party in writing, and except in connection with
a liquidation and termination in accordance with Article Five, all amounts
netted pursuant to this Article Six shall not take into account or include any
Performance Assurance or guaranty which may be in effect to secure a Party's
performance under this Agreement.
          6.7 Payment for Options. The premium amount for the purchase of an
Option shall be paid within two (2) Business Days of receipt of an invoice from
the Option Seller. Upon exercise of an Option, payment for the Product
underlying such Option shall be due in accordance with Section 6.1.
          6.8 Transaction Netting. If the Parties enter into one or more
Transactions, which in conjunction with one or more other outstanding
Transactions, constitute Offsetting Transactions, then all such Offsetting
Transactions may by agreement of the Parties, be netted into a single
Transaction under which:
 
 
 
 
(a)
the Party obligated to deliver the greater amount of Energy will deliver the
difference between the total amount it is obligated to deliver and the total
amount to be delivered to it under the Offsetting Transactions, and
 
 
 
 
(b)
the Party owing the greater aggregate payment will pay the net difference owed
between the Parties.

Each single Transaction resulting under this Section shall be deemed part of the
single, indivisible contractual arrangement between the parties, and once such
resulting Transaction occurs, outstanding obligations under the Offsetting
Transactions which are satisfied by such offset shall terminate.
ARTICLE SEVEN: LIMITATIONS
          7.1 Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH
HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT
SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN
EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE
OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT
LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, 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 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 CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM
OR LOSS.
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ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS
          8.1 Party A Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8.1(a) is specified on the Cover Sheet, Section 8.l(a) Option C shall apply
exclusively. If none of Sections 8.1(b), 8.1(c) or 8.1(d) are specified on the
Cover Sheet, Section 8.1(b) shall apply exclusively.
                    (a) Financial Information. Option A: If requested by Party
A, Party B shall deliver (i) within 120 days following the end of each fiscal
year, a copy of Party B's annual report containing audited consolidated
financial statements for such fiscal year and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of Party
B's quarterly report containing unaudited consolidated financial statements for
such fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as Party B diligently pursues the
preparation, certification and delivery of the statements.
          Option B: If requested by Party A, Party B shall deliver (i) within
120 days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.
          Option C: Party A may request from Party B the information specified
in the Cover Sheet.
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                    (b) Credit Assurances. If Party A has reasonable grounds to
believe that Party B's creditworthiness or performance under this Agreement has
become unsatisfactory, Party A will provide Party B with written notice
requesting Performance Assurance in an amount determined by Party A in a
commercially reasonable manner. Upon receipt of such notice Party B shall have
three (3) Business Days to remedy the situation by providing such Performance
Assurance to Party A. In the event that Party B fails to provide such
Performance Assurance, or a guaranty or other credit assurance acceptable to
Party A within three (3) Business Days of receipt of notice, then an Event of
Default under Article Five will be deemed to have occurred and Party A will be
entitled to the remedies set forth in Article Five of this Master Agreement.
                    (c) Collateral Threshold. If at any time and from time to
time during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party A
plus Party B's Independent Amount, if any, exceeds the Party B Collateral
Threshold, then Party A, on any Business Day, may request that Party B provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party B's Independent Amount, if any, exceeds the Party B
Collateral Threshold (rounding upwards for any fractional amount to the next
Party B Rounding Amount) ("Party B Performance Assurance"), less any Party B
Performance Assurance already posted with Party A. Such Party B Performance
Assurance shall be delivered to Party A within three (3) Business Days of the
date of such request. On any Business Day (but no more frequently than weekly
with respect to Letters of Credit and daily with respect to cash), Party B, at
its sole cost, may request that such Party B Performance Assurance be reduced
correspondingly to the amount of such excess Termination Payment plus Party B's
Independent Amount, if any, (rounding upwards for any fractional amount to the
next Party B Rounding Amount). In the event that Party B fails to provide Party
B Performance Assurance pursuant to the terms of this Article Eight within three
(3) Business Days, then an Event of Default under Article Five shall be deemed
to have occurred and Party A will be entitled to the remedies set forth in
Article Five of this Master Agreement.
          For purposes of this Section 8.1(c), the calculation of the
Termination Payment shall be calculated pursuant to Section 5.3 by Party A as if
all outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party B to Party A, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.
                    (d) Downgrade Event. If at any time there shall occur a
Downgrade Event in respect of Party B, then Party A may require Party B to
provide Performance Assurance in an amount determined by Party A in a
commercially reasonable manner. In the event Party B shall fail to provide such
Performance Assurance or a guaranty or other credit assurance acceptable to
Party A within three (3) Business Days of receipt of notice, then an Event of
Default shall be deemed to have occurred and Party A will be entitled to the
remedies set forth in Article Five of this Master Agreement.
                    (e) If specified on the Cover Sheet, Party B shall deliver
to Party A, prior to or concurrently with the execution and delivery of this
Master Agreement a guarantee in an amount not less than the Guarantee Amount
specified on the Cover Sheet and in a form reasonably acceptable to Party A.
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          8.2 Party B Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8.2(a) is specified on the Cover Sheet, Section 8.2(a) Option C shall apply
exclusively. If none of Sections 8.2(b), 8.2(c) or 8.2(d) are specified on the
Cover Sheet, Section 8.2(b) shall apply exclusively.
                    (a) Financial Information. Option A: If requested by Party
B, Party A shall deliver (i) within 120 days following the end of each fiscal
year, a copy of Party A's annual report containing audited consolidated
financial statements for such fiscal year and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of such
Party's quarterly report containing unaudited consolidated financial statements
for such fiscal quarter. In all cases the statements shall be for the most
recent accounting period and prepared in accordance with generally accepted
accounting principles; provided, however, that should any such statements not be
available on a timely basis due to a delay in preparation or certification, such
delay shall not be an Event of Default so long as such Party diligently pursues
the preparation, certification and delivery of the statements.
          Option B: If requested by Party B, Party A shall deliver (i) within
120 days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.
          Option C: Party B may request from Party A the information specified
in the Cover Sheet.
                    (b) Credit Assurances. If Party B has reasonable grounds to
believe that Party A's creditworthiness or performance under this Agreement has
become unsatisfactory, Party B will provide Party A with written notice
requesting Performance Assurance in an amount determined by Party B in a
commercially reasonable manner. Upon receipt of such notice Party A shall have
three (3) Business Days to remedy the situation by providing such Performance
Assurance to Party B. In the event that Party A fails to provide such
Performance Assurance, or a guaranty or other credit assurance acceptable to
Party B within three (3) Business Days of receipt of notice, then an Event of
Default under Article Five will be deemed to have occurred and Party B will be
entitled to the remedies set forth in Article Five of this Master Agreement.
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                    (c) Collateral Threshold. If at any time and from time to
time during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party B
plus Party A's Independent Amount, if any, exceeds the Party A Collateral
Threshold, then Party B, on any Business Day, may request that Party A provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party A's Independent Amount, if any, exceeds the Party A
Collateral Threshold (rounding upwards for any fractional amount to the next
Party A Rounding Amount) ("Party A Performance Assurance"), less any Party A
Performance Assurance already posted with Party B. Such Party A Performance
Assurance shall be delivered to Party B within three (3) Business Days of the
date of such request. On any Business Day (but no more frequently than weekly
with respect to Letters of Credit and daily with respect to cash), Party A, at
its sole cost, may request that such Party A Performance Assurance be reduced
correspondingly to the amount of such excess Termination Payment plus Party A's
Independent Amount, if any, (rounding upwards for any fractional amount to the
next Party A Rounding Amount). In the event that Party A fails to provide Party
A Performance Assurance pursuant to the terms of this Article Eight within three
(3) Business Days, then an Event of Default under Article Five shall be deemed
to have occurred and Party B will be entitled to the remedies set forth in
Article Five of this Master Agreement.
          For purposes of this Section 8.2(c), the calculation of the
Termination Payment shall be calculated pursuant to Section 5.3 by Party B as if
all outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party A to Party B, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.
                    (d) Downgrade Event. If at any time there shall occur a
Downgrade Event in respect of Party A, then Party B may require Party A to
provide Performance Assurance in an amount determined by Party B in a
commercially reasonable manner. In the event Party A shall fail to provide such
Performance Assurance or a guaranty or other credit assurance acceptable to
Party B within three (3) Business Days of receipt of notice, then an Event of
Default shall be deemed to have occurred and Party B will be entitled to the
remedies set forth in Article Five of this Master Agreement.
                    (e) If specified on the Cover Sheet, Party A shall deliver
to Party B, prior to or concurrently with the execution and delivery of this
Master Agreement a guarantee in an amount not less than the Guarantee Amount
specified on the Cover Sheet and in a form reasonably acceptable to Party B.
          8.3 Grant of Security Interest/Remedies. To secure its obligations
under this Agreement and to the extent either or both Parties deliver
Performance Assurance hereunder, each Party (a "Pledgor") hereby grants to the
other Party (the "Secured Party") a present and continuing security interest in,
and lien on (and right of setoff against), and assignment of, all cash
collateral and cash equivalent collateral and any and all proceeds resulting
therefrom or the liquidation thereof, whether now or hereafter held by, on
behalf of, or for the benefit of, such Secured Party, and each Party agrees to
take such action as the other Party reasonably requires in order to perfect the
Secured Party's first-priority security interest in, and lien on (and right of
setoff against), such collateral and any and all proceeds resulting therefrom or
from the liquidation thereof. Upon or any time after the occurrence or deemed
occurrence and during the continuation of an Event of Default or an Early
Termination Date, the Non-Defaulting Party may do any one or more of the
following: (i) exercise any of the rights and remedies of a Secured Party with
respect to all Performance Assurance, including any such rights and remedies
under law then in effect; (ii) exercise its rights of setoff against any and all
property of the Defaulting Party in the possession of the Non-Defaulting Party
or its agent; (iii) draw on any outstanding Letter of Credit issued for its
benefit; and (iv) liquidate all Performance Assurance then held by or for the
benefit of the Secured Party free from any claim or right of any nature
whatsoever of the Defaulting Party, including any equity or right of purchase or
redemption by the Defaulting Party. The Secured Party shall apply the proceeds
of the collateral realized upon the exercise of any such rights or remedies to
reduce the Pledgor's obligations under the Agreement (the Pledgor remaining
liable for any amounts owing to the Secured Party after such application),
subject to the Secured Party's obligation to return any surplus proceeds
remaining after such obligations are satisfied in full.
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ARTICLE NINE: GOVERNMENTAL CHARGES
          9.1 Cooperation. Each Party shall use reasonable efforts to implement
the provisions of and to administer this Master Agreement in accordance with the
intent of the parties to minimize all taxes , so long as neither Party is
materially adversely affected by such efforts.
          9.2 Governmental Charges. Seller shall pay or cause to be paid all
taxes imposed by any government authority("Governmental Charges") on or with
respect to the Product or a Transaction arising prior to the Delivery Point.
Buyer shall pay or cause to be paid all Governmental Charges on or with respect
to the Product or a Transaction at and from the Delivery Point (other than ad
valorem, franchise or income taxes which are related to the sale of the Product
and are, therefore, the responsibility of the Seller). In the event Seller is
required by law or regulation to remit or pay Governmental Charges which are
Buyer's responsibility hereunder, Buyer shall promptly reimburse Seller for such
Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may
deduct the amount of any such Governmental Charges from the sums due to Seller
under Article 6 of this Agreement. Nothing shall obligate or cause a Party to
pay or be liable to pay any Governmental Charges for which it is exempt under
the law.
ARTICLE TEN: MISCELLANEOUS
          10.1 Term of Master Agreement. The term of this Master Agreement shall
commence on the Effective Date and shall remain in effect until terminated by
either Party upon (thirty) 30 days' prior written notice; provided, however,
that such termination shall not affect or excuse the performance of either Party
under any provision of this Master Agreement that by its terms survives any such
termination and, provided further, that this Master Agreement and any other
documents executed and delivered hereunder shall remain in effect with respect
to the Transaction(s) entered into prior to the effective date of such
termination until both Parties have fulfilled all of their obligations with
respect to such Transaction(s), or such Transaction(s) that have been terminated
under Section 5.2 of this Agreement.
          10.2 Representations and Warranties. On the Effective Date and the
date of entering into each Transaction, each Party represents and warrants to
the other Party that:
 
 
 
 
(i)
it is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its formation;

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(ii)
it has all regulatory authorizations necessary for it to legally perform its
obligations under this Master Agreement and each Transaction (including any
Confirmation accepted in accordance with Section 2.3);
 
 
 
 
(iii)
the execution, delivery and performance of this Master Agreement and each
Transaction (including any Confirmation accepted in accordance with Section 2.3)
are within its powers, have been duly authorized by all necessary action and do
not violate any of the terms and conditions in its governing documents, any
contracts to which it is a party or any law, rule, regulation, order or the like
applicable to it;
 
 
 
 
(iv)
this Master Agreement, each Transaction (including any Confirmation accepted in
accordance with Section 2.3), and each other document executed and delivered in
accordance with this Master Agreement constitutes its legally valid and binding
obligation enforceable against it in accordance with its terms; subject to any
Equitable Defenses.
 
 
 
 
(v)
it is not Bankrupt and there are no proceedings pending or being contemplated by
it or, to its knowledge, threatened against it which would result in it being or
becoming Bankrupt;
 
 
 
 
(vi)
there is not pending or, to its knowledge, threatened against it or any of its
Affiliates any legal proceedings that could materially adversely affect its
ability to perform its obligations under this Master Agreement and each
Transaction (including any Confirmation accepted in accordance with Section
2.3);
 
 
 
 
(vii)
no Event of Default or Potential Event of Default 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 Master
Agreement and each Transaction (including any Confirmation accepted in
accordance with Section 2.3);
 
 
 
 
(viii)
it is acting for its own account, has made its own independent decision to enter
into this Master Agreement and each Transaction (including any Confirmation
accepted in accordance with Section 2.3) and as to whether this Master Agreement
and each such Transaction (including any Confirmation accepted in accordance
with Section 2.3) is appropriate or proper for it based upon its own judgment,
is not relying upon the advice or recommendations of the other Party in so
doing, and is capable of assessing the merits of and understanding, and
understands and accepts, the terms, conditions and risks of this Master
Agreement and each Transaction (including any Confirmation accepted in
accordance with Section 2.3);
 
 
 
 
(ix)
it is a "forward contract merchant" within the meaning of the United States
Bankruptcy Code;

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(x)
it has entered into this Master Agreement and each Transaction (including any
Confirmation accepted in accordance with Section 2.3) in connection with the
conduct of its business and it has the capacity or ability to make or take
delivery of all Products referred to in the Transaction to which it is a Party;
 
 
 
 
(xi)
with respect to each Transaction (including any Confirmation accepted in
accordance with Section 2.3) involving the purchase or sale of a Product or an
Option, it is a producer, processor, commercial user or merchant handling the
Product, and it is entering into such Transaction for purposes related to its
business as such; and
 
 
 
 
(xii)
the material economic terms of each Transaction are subject to individual
negotiation by the Parties.

          10.3 Title and Risk of Loss. Title to and risk of loss related to the
Product shall transfer from Seller to Buyer at the Delivery Point. Seller
warrants that it will deliver to Buyer the Quantity of the Product free and
clear of all liens, security interests, claims and encumbrances or any interest
therein or thereto by any person arising prior to the Delivery Point.
          10.4 Indemnity. Each Party shall indemnify, defend and hold harmless
the other Party from and against any Claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period when
control and title to Product is vested in such Party as provided in Section
10.3. Each Party shall indemnify, defend and hold harmless the other Party
against any Governmental Charges for which such Party is responsible under
Article Nine.
          10.5 Assignment. Neither Party shall assign this Agreement or its
rights hereunder without the prior written consent of the other Party, which
consent may be withheld in the exercise of its sole discretion; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is equal to or higher than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets whose creditworthiness is equal to or higher
than that of such Party; provided, however, that in each such case, any such
assignee shall agree in writing to be bound by the terms and conditions hereof
and so long as the transferring Party delivers such tax and enforceability
assurance as the non-transferring Party may reasonably request.
          10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL
WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT.
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          10.7 Notices. All notices, requests, statements or payments shall be
made as specified in the Cover Sheet. Notices (other than scheduling requests)
shall, unless otherwise specified herein, be in writing and may be delivered by
hand delivery, United States mail, overnight courier service or facsimile.
Notice by facsimile or hand delivery shall be effective at the close of business
on the day actually received, if received during business hours on a Business
Day, and otherwise shall be effective at the close of business on the next
Business Day. Notice by overnight United States mail or courier shall be
effective on the next Business Day after it was sent. A Party may change its
addresses by providing notice of same in accordance herewith.
          10.8 General. This Master Agreement (including the exhibits, schedules
and any written supplements hereto), the Party A Tariff, if any, the Party B
Tariff, if any, any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any
Confirmation accepted in accordance with Section 2.3) constitute the entire
agreement between the Parties relating to the subject matter. Notwithstanding
the foregoing, any collateral, credit support or margin agreement or similar
arrangement between the Parties shall, upon designation by the Parties, be
deemed part of this Agreement and shall be incorporated herein by reference.
This Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party or the
other as a result of the preparation, substitution, submission or other event of
negotiation, drafting or execution hereof. Except to the extent herein provided
for, no amendment or modification to this Master Agreement shall be enforceable
unless reduced to writing and executed by both Parties. Each Party agrees if it
seeks to amend any applicable wholesale power sales tariff during the term of
this Agreement, such amendment will not in any way affect outstanding
Transactions under this Agreement without the prior written consent of the other
Party. Each Party further agrees that it will not assert, or defend itself, on
the basis that any applicable tariff is inconsistent with this Agreement. This
Agreement shall not impart any rights enforceable by any third party (other than
a permitted successor or assignee bound to this Agreement). Waiver by a Party of
any default by the other Party shall not be construed as a waiver of any other
default. Any provision declared or rendered unlawful by any applicable court of
law or regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as "Regulatory Event")
will not otherwise affect the remaining lawful obligations that arise under this
Agreement; and provided, further, that if a Regulatory Event occurs, the Parties
shall use their best efforts to reform this Agreement in order to give effect to
the original intention of the Parties. The term "including" when used in this
Agreement shall be by way of example only and shall not be considered in any way
to be in limitation. The headings used herein are for convenience and reference
purposes only. All indemnity and audit rights shall survive the termination of
this Agreement for twelve (12) months. This Agreement shall be binding on each
Party's successors and permitted assigns.
          10.9 Audit. Each Party has the right, at its sole expense and during
normal working hours, to examine the records of the other Party to the extent
reasonably necessary to verify the accuracy of any statement, charge or
computation made pursuant to this Master Agreement. If requested, a Party shall
provide to the other Party statements evidencing the Quantity delivered at the
Delivery Point. If any such examination reveals any inaccuracy in any statement,
the necessary adjustments in such statement and the payments thereof will be
made promptly and shall bear interest calculated at the Interest Rate from the
date the overpayment or underpayment was made until paid; provided, however,
that no adjustment for any statement or payment will be made unless objection to
the accuracy thereof was made prior to the lapse of twelve (12) months from the
rendition thereof, and thereafter any objection shall be deemed waived.
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          10.10 Forward Contract. The Parties acknowledge and agree that all
Transactions constitute "forward contracts" within the meaning of the United
States Bankruptcy Code.
          10.11 Confidentiality. If the Parties have elected on the Cover Sheet
to make this Section 10.11 applicable to this Master Agreement, neither Party
shall disclose the terms or conditions of a Transaction under this Master
Agreement to a third party (other than the Party's employees, lenders, counsel,
accountants or advisors who have a need to know such information and have agreed
to keep such terms confidential) except in order to comply with any applicable
law, regulation, or any exchange, control area or independent system operator
rule or in connection with any court or regulatory proceeding; provided,
however, each Party shall, to the extent practicable, use reasonable efforts to
prevent or limit the disclosure. The Parties shall be entitled to all remedies
available at law or in equity to enforce, or seek relief in connection with,
this confidentiality obligation.
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SCHEDULE M
(THIS SCHEDULE IS INCLUDED IF THE APPROPRIATE BOX ON THE COVER SHEET IS MARKED
INDICATING A PARTY IS A GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEM)
          A. The Parties agree to add the following definitions in Article One.
 
 
 
          "Act" means ______________________________.[1]
 
 
 
          "Governmental Entity or Public Power System" means a municipality,
county, governmental board, public power authority, public utility district,
joint action agency, or other similar political subdivision or public entity of
the United States, one or more States or territories or any combination thereof.
 
 
 
          "Special Fund" means a fund or account of the Governmental Entity or
Public Power System set aside and or pledged to satisfy the Public Power
System's obligations hereunder out of which amounts shall be paid to satisfy all
of the Public Power System's obligations under this Master Agreement for the
entire Delivery Period.
 
 
          B. The following sentence shall be added to the end of the definition
of "Force Majeure" in Article One.
 
 
          If the Claiming Party is a Governmental Entity or Public Power System,
Force Majeure does not include any action taken by the Governmental Entity or
Public Power System in its governmental capacity.
 
 
          C. The Parties agree to add the following representations and
warranties to Section 10.2:

 
 

1 Cite the state enabling and other relevant statutes applicable to Governmental
Entity or Public Power System.

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Further and with respect to a Party that is a Governmental Entity or Public
Power System, such Governmental Entity or Public Power System represents and
warrants to the other Party continuing throughout the term of this Master
Agreement, with respect to this Master Agreement and each Transaction, as
follows: (i) all acts necessary to the valid execution, delivery and performance
of this Master Agreement, including without limitation, competitive bidding,
public notice, election, referendum, prior appropriation or other required
procedures has or will be taken and performed as required under the Act and the
Public Power System's ordinances, bylaws or other regulations, (ii) all persons
making up the governing body of Governmental Entity or Public Power System are
the duly elected or appointed incumbents in their positions and hold such
positions in good standing in accordance with the Act and other applicable law,
(iii) entry into and performance of this Master Agreement by Governmental Entity
or Public Power System are for a proper public purpose within the meaning of the
Act and all other relevant constitutional, organic or other governing documents
and applicable law, (iv) the term of this Master Agreement does not extend
beyond any applicable limitation imposed by the Act or other relevant
constitutional, organic or other governing documents and applicable law, (v) the
Public Power System's obligations to make payments hereunder are unsubordinated
obligations and such payments are (a) operating and maintenance costs (or
similar designation) which enjoy first priority of payment at all times under
any and all bond ordinances or indentures to which it is a party, the Act and
all other relevant constitutional, organic or other governing documents and
applicable law or (b) otherwise not subject to any prior claim under any and all
bond ordinances or indentures to which it is a party, the Act and all other
relevant constitutional, organic or other governing documents and applicable law
and are available without limitation or deduction to satisfy all Governmental
Entity or Public Power System' obligations hereunder and under each Transaction
or (c) are to be made solely from a Special Fund, (vi) entry into and
performance of this Master Agreement and each Transaction by the Governmental
Entity or Public Power System will not adversely affect the exclusion from gross
income for federal income tax purposes of interest on any obligation of
Governmental Entity or Public Power System otherwise entitled to such exclusion,
and (vii) obligations to make payments hereunder do not constitute any kind of
indebtedness of Governmental Entity or Public Power System or create any kind of
lien on, or security interest in, any property or revenues of Governmental
Entity or Public Power System which, in either case, is proscribed by any
provision of the Act or any other relevant constitutional, organic or other
governing documents and applicable law, any order or judgment of any court or
other agency of government applicable to it or its assets, or any contractual
restriction binding on or affecting it or any of its assets.
 
 
          D. The Parties agree to add the following sections to Article Three:
 
 
          Section 3.4 Public Power System's Deliveries. On the Effective Date
and as a condition to the obligations of the other Party under this Agreement,
Governmental Entity or Public Power System shall provide the other Party hereto
(i) certified copies of all ordinances, resolutions, public notices and other
documents evidencing the necessary authorizations with respect to the execution,
delivery and performance by Governmental Entity or Public Power System of this
Master Agreement and (ii) an opinion of counsel for Governmental Entity or
Public Power System, in form and substance reasonably satisfactory to the Other
Party, regarding the validity, binding effect and enforceability of this Master
Agreement against Governmental Entity or Public Power System in respect of the
Act and all other relevant constitutional organic or other governing documents
and applicable law.

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          Section 3.5 No Immunity Claim. Governmental Entity or Public Power
System warrants and covenants that with respect to its contractual obligations
hereunder and performance thereof, it will not claim immunity on the grounds of
sovereignty or similar grounds with respect to itself or its revenues or assets
from (a) suit, (b) jurisdiction of court (including a court located outside the
jurisdiction of its organization), (c) relief by way of injunction, order for
specific performance or recovery of property, (d) attachment of assets, or (e)
execution or enforcement of any judgment.
 
 
          E. If the appropriate box is checked on the Cover Sheet, as an
alternative to selecting one of the options under Section 8.3, the Parties agree
to add the following section to Article Three:
 
 
          Section 3.6 Governmental Entity or Public Power System Security. With
respect to each Transaction, Governmental Entity or Public Power System shall
either (i) have created and set aside a Special Fund or (ii) upon execution of
this Master Agreement and prior to the commencement of each subsequent fiscal
year of Governmental Entity or Public Power System during any Delivery Period,
have obtained all necessary budgetary approvals and certifications for payment
of all of its obligations under this Master Agreement for such fiscal year; any
breach of this provision shall be deemed to have arisen during a fiscal period
of Governmental Entity or Public Power System for which budgetary approval or
certification of its obligations under this Master Agreement is in effect and,
notwithstanding anything to the contrary in Article Four, an Early Termination
Date shall automatically and without further notice occur hereunder as of such
date wherein Governmental Entity or Public Power System shall be treated as the
Defaulting Party. Governmental Entity or Public Power System shall have
allocated to the Special Fund or its general funds a revenue base that is
adequate to cover Public Power System's payment obligations hereunder throughout
the entire Delivery Period.
 
 
          F. If the appropriate box is checked on the Cover Sheet, the Parties
agree to add the following section to Article Eight:
 
 
          Section 8.4 Governmental Security. As security for payment and
performance of Public Power System's obligations hereunder, Public Power System
hereby pledges, sets over, assigns and grants to the other Party a security
interest in all of Public Power System's right, title and interest in and to
[specify collateral].

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          G. The Parties agree to add the following sentence at the end of
Section 10.6 - Governing Law:
 
 
NOTWITHSTANDING THE FOREGOING, IN RESPECT OF THE APPLICABILITY OF THE ACT AS
HEREIN PROVIDED, THE LAWS OF THE STATE OF _____________[2] SHALL APPLY.

 
 
 

2 Insert relevant state for Governmental Entity or Public Power System.

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SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS
          "Ancillary Services" means any of the services identified by a
Transmission Provider in its transmission tariff as "ancillary services"
including, but not limited to, regulation and frequency response, energy
imbalance, operating reserve-spinning and operating reserve-supplemental, as may
be specified in the Transaction.
          "Capacity" has the meaning specified in the Transaction.
          "Energy" means three-phase, 60-cycle alternating current electric
energy, expressed in megawatt hours.
          "Firm (LD)" means, with respect to a Transaction, that either Party
shall be relieved of its obligations to sell and deliver or purchase and receive
without liability only to the extent that, and for the period during which, such
performance is prevented by Force Majeure. In the absence of Force Majeure, the
Party to which performance is owed shall be entitled to receive from the Party
which failed to deliver/receive an amount determined pursuant to Article Four.
          "Firm Transmission Contingent - Contract Path" means, with respect to
a Transaction, that the performance of either Seller or Buyer (as specified in
the Transaction) shall be excused, and no damages shall be payable including any
amounts determined pursuant to Article Four, if the transmission for such
Transaction is interrupted or curtailed and (i) such Party has provided for firm
transmission with the transmission provider(s) for the Product in the case of
the Seller from the generation source to the Delivery Point or in the case of
the Buyer from the Delivery Point to the ultimate sink, and (ii) such
interruption or curtailment is due to "force majeure" or "uncontrollable force"
or a similar term as defined under the applicable transmission provider's
tariff. This contingency shall excuse performance for the duration of the
interruption or curtailment notwithstanding the provisions of the definition of
"Force Majeure" in Section 1.23 to the contrary.
          "Firm Transmission Contingent - Delivery Point" means, with respect to
a Transaction, that the performance of either Seller or Buyer (as specified in
the Transaction) shall be excused, and no damages shall be payable including any
amounts determined pursuant to Article Four, if the transmission to the Delivery
Point (in the case of Seller) or from the Delivery Point (in the case of Buyer)
for such Transaction is interrupted or curtailed and (i) such Party has provided
for firm transmission with the transmission provider(s) for the Product, in the
case of the Seller, to be delivered to the Delivery Point or, in the case of
Buyer, to be received at the Delivery Point and (ii) such interruption or
curtailment is due to "force majeure" or "uncontrollable force" or a similar
term as defined under the applicable transmission provider's tariff. This
transmission contingency excuses performance for the duration of the
interruption or curtailment, notwithstanding the provisions of the definition of
"Force Majeure" in Section 1.23 to the contrary. Interruptions or curtailments
of transmission other than the transmission either immediately to or from the
Delivery Point shall not excuse performance
          "Firm (No Force Majeure)" means, with respect to a Transaction, that
if either Party fails to perform its obligation to sell and deliver or purchase
and receive the Product, the Party to which performance is owed shall be
entitled to receive from the Party which failed to perform an amount determined
pursuant to Article Four. Force Majeure shall not excuse performance of a Firm
(No Force Majeure) Transaction.
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          "Into ______________ (the "Receiving Transmission Provider"), Seller's
Daily Choice" means that, in accordance with the provisions set forth below, (1)
the Product shall be scheduled and delivered to an interconnection or interface
("Interface") either (a) on the Receiving Transmission Provider's transmission
system border or (b) within the control area of the Receiving Transmission
Provider if the Product is from a source of generation in that control area,
which Interface, in either case, the Receiving Transmission Provider identifies
as available for delivery of the Product in or into its control area; and (2)
Seller has the right on a daily prescheduled basis to designate the Interface
where the Product shall be delivered. An "Into" Product shall be subject to the
following provisions:
          1. Prescheduling and Notification. Subject to the provisions of
Section 6, not later than the prescheduling deadline of 11:00 a.m. CPT on the
Business Day before the next delivery day or as otherwise agreed to by Buyer and
Seller, Seller shall notify Buyer ("Seller's Notification") of Seller's
immediate upstream counterparty and the Interface (the "Designated Interface")
where Seller shall deliver the Product for the next delivery day, and Buyer
shall notify Seller of Buyer's immediate downstream counterparty.
          2. Availability of "Firm Transmission" to Buyer at Designated
Interface; "Timely Request for Transmission," "ADI" and "Available
Transmission." In determining availability to Buyer of next-day firm
transmission ("Firm Transmission") from the Designated Interface, a "Timely
Request for Transmission" shall mean a properly completed request for Firm
Transmission made by Buyer in accordance with the controlling tariff procedures,
which request shall be submitted to the Receiving Transmission Provider no later
than 30 minutes after delivery of Seller's Notification, provided, however, if
the Receiving Transmission Provider is not accepting requests for Firm
Transmission at the time of Seller's Notification, then such request by Buyer
shall be made within 30 minutes of the time when the Receiving Transmission
Provider first opens thereafter for purposes of accepting requests for Firm
Transmission.
          Pursuant to the terms hereof, delivery of the Product may under
certain circumstances be redesignated to occur at an Interface other than the
Designated Interface (any such alternate designated interface, an "ADI") either
(a) on the Receiving Transmission Provider's transmission system border or (b)
within the control area of the Receiving Transmission Provider if the Product is
from a source of generation in that control area, which ADI, in either case, the
Receiving Transmission Provider identifies as available for delivery of the
Product in or into its control area using either firm or non-firm transmission,
as available on a day-ahead or hourly basis (individually or collectively
referred to as "Available Transmission") within the Receiving Transmission
Provider's transmission system.
          3. Rights of Buyer and Seller Depending Upon Availability of/Timely
Request for Firm Transmission.
          A. Timely Request for Firm Transmission made by Buyer, Accepted by the
Receiving Transmission Provider and Purchased by Buyer. If a Timely Request for
Firm Transmission is made by Buyer and is accepted by the Receiving Transmission
Provider and Buyer purchases such Firm Transmission, then Seller shall deliver
and Buyer shall receive the Product at the Designated Interface.
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          i. If the Firm Transmission purchased by Buyer within the Receiving
Transmission Provider's transmission system from the Designated Interface ceases
to be available to Buyer for any reason, or if Seller is unable to deliver the
Product at the Designated Interface for any reason except Buyer's
non-performance, then at Seller's choice from among the following, Seller shall:
(a) to the extent Firm Transmission is available to Buyer from an ADI on a
day-ahead basis, require Buyer to purchase such Firm Transmission from such ADI,
and schedule and deliver the affected portion of the Product to such ADI on the
basis of Buyer's purchase of Firm Transmission, or (b) require Buyer to purchase
non-firm transmission, and schedule and deliver the affected portion of the
Product on the basis of Buyer's purchase of non-firm transmission from the
Designated Interface or an ADI designated by Seller, or (c) to the extent firm
transmission is available on an hourly basis, require Buyer to purchase firm
transmission, and schedule and deliver the affected portion of the Product on
the basis of Buyer's purchase of such hourly firm transmission from the
Designated Interface or an ADI designated by Seller.
 
 
 
          ii. If the Available Transmission utilized by Buyer as required by
Seller pursuant to Section 3A(i) ceases to be available to Buyer for any reason,
then Seller shall again have those alternatives stated in Section 3A(i) in order
to satisfy its obligations.
 
 
 
          iii. Seller's obligation to schedule and deliver the Product at an ADI
is subject to Buyer's obligation referenced in Section 4B to cooperate
reasonably therewith. If Buyer and Seller cannot complete the scheduling and/or
delivery at an ADI, then Buyer shall be deemed to have satisfied its receipt
obligations to Seller and Seller shall be deemed to have failed its delivery
obligations to Buyer, and Seller shall be liable to Buyer for amounts determined
pursuant to Article Four.
 
 
 
          iv. In each instance in which Buyer and Seller must make alternative
scheduling arrangements for delivery at the Designated Interface or an ADI
pursuant to Sections 3A(i) or (ii), and Firm Transmission had been purchased by
both Seller and Buyer into and within the Receiving Transmission Provider's
transmission system as to the scheduled delivery which could not be completed as
a result of the interruption or curtailment of such Firm Transmission, Buyer and
Seller shall bear their respective transmission expenses and/or associated
congestion charges incurred in connection with efforts to complete delivery by
such alternative scheduling and delivery arrangements. In any instance except as
set forth in the immediately preceding sentence, Buyer and Seller must make
alternative scheduling arrangements for delivery at the Designated Interface or
an ADI under Sections 3A(i) or (ii), Seller shall be responsible for any
additional transmission purchases and/or associated congestion charges incurred
by Buyer in connection with such alternative scheduling arrangements.

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          B. Timely Request for Firm Transmission Made by Buyer but Rejected by
the Receiving Transmission Provider. If Buyer's Timely Request for Firm
Transmission is rejected by the Receiving Transmission Provider because of
unavailability of Firm Transmission from the Designated Interface, then Buyer
shall notify Seller within 15 minutes after receipt of the Receiving
Transmission Provider's notice of rejection ("Buyer's Rejection Notice"). If
Buyer timely notifies Seller of such unavailability of Firm Transmission from
the Designated Interface, then Seller shall be obligated either (1) to the
extent Firm Transmission is available to Buyer from an ADI on a day-ahead basis,
to require Buyer to purchase (at Buyer's own expense) such Firm Transmission
from such ADI and schedule and deliver the Product to such ADI on the basis of
Buyer's purchase of Firm Transmission, and thereafter the provisions in Section
3A shall apply, or (2) to require Buyer to purchase (at Buyer's own expense)
non-firm transmission, and schedule and deliver the Product on the basis of
Buyer's purchase of non-firm transmission from the Designated Interface or an
ADI designated by the Seller, in which case Seller shall bear the risk of
interruption or curtailment of the non-firm transmission; provided, however,
that if the non-firm transmission is interrupted or curtailed or if Seller is
unable to deliver the Product for any reason, Seller shall have the right to
schedule and deliver the Product to another ADI in order to satisfy its delivery
obligations, in which case Seller shall be responsible for any additional
transmission purchases and/or associated congestion charges incurred by Buyer in
connection with Seller's inability to deliver the Product as originally
prescheduled. If Buyer fails to timely notify Seller of the unavailability of
Firm Transmission, then Buyer shall bear the risk of interruption or curtailment
of transmission from the Designated Interface, and the provisions of Section 3D
shall apply.
          C. Timely Request for Firm Transmission Made by Buyer, Accepted by the
Receiving Transmission Provider and not Purchased by Buyer. If Buyer's Timely
Request for Firm Transmission is accepted by the Receiving Transmission Provider
but Buyer elects to purchase non-firm transmission rather than Firm Transmission
to take delivery of the Product, then Buyer shall bear the risk of interruption
or curtailment of transmission from the Designated Interface. In such
circumstances, if Seller's delivery is interrupted as a result of transmission
relied upon by Buyer from the Designated Interface, then Seller shall be deemed
to have satisfied its delivery obligations to Buyer, Buyer shall be deemed to
have failed to receive the Product and Buyer shall be liable to Seller for
amounts determined pursuant to Article Four.
          D. No Timely Request for Firm Transmission Made by Buyer, or Buyer
Fails to Timely Send Buyer's Rejection Notice. If Buyer fails to make a Timely
Request for Firm Transmission or Buyer fails to timely deliver Buyer's Rejection
Notice, then Buyer shall bear the risk of interruption or curtailment of
transmission from the Designated Interface. In such circumstances, if Seller's
delivery is interrupted as a result of transmission relied upon by Buyer from
the Designated Interface, then Seller shall be deemed to have satisfied its
delivery obligations to Buyer, Buyer shall be deemed to have failed to receive
the Product and Buyer shall be liable to Seller for amounts determined pursuant
to Article Four.
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          4. Transmission.
 
 
 
          A. Seller's Responsibilities. Seller shall be responsible for
transmission required to deliver the Product to the Designated Interface or ADI,
as the case may be. It is expressly agreed that Seller is not required to
utilize Firm Transmission for its delivery obligations hereunder, and Seller
shall bear the risk of utilizing non-firm transmission. If Seller's scheduled
delivery to Buyer is interrupted as a result of Buyer's attempted transmission
of the Product beyond the Receiving Transmission Provider's system border, then
Seller will be deemed to have satisfied its delivery obligations to Buyer, Buyer
shall be deemed to have failed to receive the Product and Buyer shall be liable
to Seller for damages pursuant to Article Four.
 
 
 
          B. Buyer's Responsibilities. Buyer shall be responsible for
transmission required to receive and transmit the Product at and from the
Designated Interface or ADI, as the case may be, and except as specifically
provided in Section 3A and 3B, shall be responsible for any costs associated
with transmission therefrom. If Seller is attempting to complete the designation
of an ADI as a result of Seller's rights and obligations hereunder, Buyer shall
co-operate reasonably with Seller in order to effect such alternate designation.

          5. Force Majeure. An "Into" Product shall be subject to the "Force
Majeure" provisions in Section 1.23.
          6. Multiple Parties in Delivery Chain Involving a Designated
Interface. Seller and Buyer recognize that there may be multiple parties
involved in the delivery and receipt of the Product at the Designated Interface
or ADI to the extent that (1) Seller may be purchasing the Product from a
succession of other sellers ("Other Sellers"), the first of which Other Sellers
shall be causing the Product to be generated from a source ("Source Seller")
and/or (2) Buyer may be selling the Product to a succession of other buyers
("Other Buyers"), the last of which Other Buyers shall be using the Product to
serve its energy needs ("Sink Buyer"). Seller and Buyer further recognize that
in certain Transactions neither Seller nor Buyer may originate the decision as
to either (a) the original identification of the Designated Interface or ADI
(which designation may be made by the Source Seller) or (b) the Timely Request
for Firm Transmission or the purchase of other Available Transmission (which
request may be made by the Sink Buyer). Accordingly, Seller and Buyer agree as
follows:
 
 
 
          A. If Seller is not the Source Seller, then Seller shall notify Buyer
of the Designated Interface promptly after Seller is notified thereof by the
Other Seller with whom Seller has a contractual relationship, but in no event
may such designation of the Designated Interface be later than the prescheduling
deadline pertaining to the Transaction between Buyer and Seller pursuant to
Section 1.
 
 
 
          B. If Buyer is not the Sink Buyer, then Buyer shall notify the Other
Buyer with whom Buyer has a contractual relationship of the Designated Interface
promptly after Seller notifies Buyer thereof, with the intent being that the
party bearing actual responsibility to secure transmission shall have up to 30
minutes after receipt of the Designated Interface to submit its Timely Request
for Firm Transmission.

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          C. Seller and Buyer each agree that any other communications or
actions required to be given or made in connection with this "Into Product"
(including without limitation, information relating to an ADI) shall be made or
taken promptly after receipt of the relevant information from the Other Sellers
and Other Buyers, as the case may be.
 
 
 
          D. Seller and Buyer each agree that in certain Transactions time is of
the essence and it may be desirable to provide necessary information to Other
Sellers and Other Buyers in order to complete the scheduling and delivery of the
Product. Accordingly, Seller and Buyer agree that each has the right, but not
the obligation, to provide information at its own risk to Other Sellers and
Other Buyers, as the case may be, in order to effect the prescheduling,
scheduling and delivery of the Product

          "Native Load" means the demand imposed on an electric utility or an
entity by the requirements of retail customers located within a franchised
service territory that the electric utility or entity has statutory obligation
to serve.
          "Non-Firm" means, with respect to a Transaction, that delivery or
receipt of the Product may be interrupted for any reason or for no reason,
without liability on the part of either Party.
          "System Firm" means that the Product will be supplied from the owned
or controlled generation or pre-existing purchased power assets of the system
specified in the Transaction (the "System") with non-firm transmission to and
from the Delivery Point, unless a different Transmission Contingency is
specified in a Transaction. Seller's failure to deliver shall be excused: (i) by
an event or circumstance which prevents Seller from performing its obligations,
which event or circumstance was not anticipated as of the date the Transaction
was agreed to, which is not within the reasonable control of, or the result of
the negligence of, the Seller; (ii) by Buyer's failure to perform; (iii) to the
extent necessary to preserve the integrity of, or prevent or limit any
instability on, the System; (iv) to the extent the System or the control area or
reliability council within which the System operates declares an emergency
condition, as determined in the system's, or the control area's, or reliability
council's reasonable judgment; or (v) by the interruption or curtailment of
transmission to the Delivery Point or by the occurrence of any Transmission
Contingency specified in a Transaction as excusing Seller's performance. Buyer's
failure to receive shall be excused (i) by Force Majeure; (ii) by Seller's
failure to perform, or (iii) by the interruption or curtailment of transmission
from the Delivery Point or by the occurrence of any Transmission Contingency
specified in a Transaction as excusing Buyer's performance. In any of such
events, neither party shall be liable to the other for any damages, including
any amounts determined pursuant to Article Four.
          "Transmission Contingent" means, with respect to a Transaction, that
the performance of either Seller or Buyer (as specified in the Transaction)
shall be excused, and no damages shall be payable including any amounts
determined pursuant to Article Four, if the transmission for such Transaction is
unavailable or interrupted or curtailed for any reason, at any time, anywhere
from the Seller's proposed generating source to the Buyer's proposed ultimate
sink, regardless of whether transmission, if any, that such Party is attempting
to secure and/or has purchased for the Product is firm or non-firm. If the
transmission (whether firm or non-firm) that Seller or Buyer is attempting to
secure is from source to sink is unavailable, this contingency excuses
performance for the entire Transaction. If the transmission (whether firm or
non-firm) that Seller or Buyer has secured from source to sink is interrupted or
curtailed for any reason, this contingency excuses performance for the duration
of the interruption or curtailment notwithstanding the provisions of the
definition of "Force Majeure" in Article 1.23 to the contrary.
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          "Unit Firm" means, with respect to a Transaction, that the Product
subject to the Transaction is intended to be supplied from a generation asset or
assets specified in the Transaction. Seller's failure to deliver under a "Unit
Firm" Transaction shall be excused: (i) if the specified generation asset(s) are
unavailable as a result of a Forced Outage (as defined in the NERC Generating
Unit Availability Data System (GADS) Forced Outage reporting guidelines) or (ii)
by an event or circumstance that affects the specified generation asset(s) so as
to prevent Seller from performing its obligations, which event or circumstance
was not anticipated as of the date the Transaction was agreed to, and which is
not within the reasonable control of, or the result of the negligence of, the
Seller or (iii) by Buyer's failure to perform. In any of such events, Seller
shall not be liable to Buyer for any damages, including any amounts determined
pursuant to Article Four.
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EXHIBIT A
EXHIBIT A
          MASTER POWER PURCHASE AND SALE AGREEMENT
CONFIRMATION LETTER
This confirmation letter shall confirm the Transaction agreed to on ___________,
___ between __________________________ ("Party A") and _____________________
("Party B") regarding the sale/purchase of the Product under the terms and
conditions as follows:
 
 
 
 
Seller:
 
 
 
 
 
 
 
Buyer:
 
 
 

 
Product:
 
 
 
 
 
o
Into _________________, Seller's Daily Choice
 
 
o
Firm (LD)
 
 
o
Firm (No Force Majeure)
 
 
o
System Firm
 
 
 
(Specify System:
 
)
 
 
 
 
o
Unit Firm
 
 
 
 
 
 
 
(Specify Unit(s):
 
)
 
 
 
 
o
Other
 
 
 
 
o
Transmission Contingency (If not marked, no transmission contingency)
 
 
 
o
FT-Contract Path Contingency
o      Seller
o      Buyer
 
 
 
 
 
 
o
FT-Delivery Point Contingency
o      Seller
o      Buyer
 
 
 
 
 
 
o
Transmission Contingent
o       Seller
o      Buyer
 
 
 
 
 
 
o
Other transmission contingency
 
 
 
 
(Specify:
 
)
 
 
             

 
 
 
 
Contract Quantity:
 
 
 
 
 
Delivery Point:
 
 
 
 
 
Contract Price:
 
 
 
 
 
Energy Price:
 
 
 
 
 
Other Charges:
 
 

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Confirmation Letter
Page 2
 
 
 
Delivery Period:
 
 
Special Conditions:
 
 
Scheduling:
 
 
Option Buyer:
 
 
Option Seller:
 
 
Type of Option:
 
 
Strike Price:
 
 
Premium:
 
 
Exercise Period:
 
 

          This confirmation letter is being provided pursuant to and in
accordance with the Master Power Purchase and Sale Agreement dated
______________ (the "Master Agreement") between Party A and Party B, and
constitutes part of and is subject to the terms and provisions of such Master
Agreement. Terms used but not defined herein shall have the meanings ascribed to
them in the Master Agreement.
 
 
 
[Party A]
 
 
[Party B]
 
 
 
 
 
 
Name:
 
 
Name:
 
Title:
 
 
Title:
 
Phone No:
 
 
Phone No:
 
Fax:
 
 
Fax:
 
 
 
 

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